Also known as: LLC · limited liability company · limited liability companies
Written by attorneys · grounded in primary & secondary sources — see below
A business entity formed under state statutes that shields members from personal liability for entity obligations while permitting flexible management structures and pass-through taxation.
Lena Lawson and two out-of-state investors form an LLC to purchase commercial property. When the LLC sues a local supplier in federal court, the defendant moves to dismiss for lack of diversity. The court determines the LLC's citizenship by reference to each member's state of citizenship rather than any state of formation or principal office.
Lars Lindstrom and Leah Lamb operate an LLC that dissolves after paying all creditors. The remaining surplus equals the members' unreturned capital contributions plus additional profits. The liquidator first returns the unreturned contributions to each member before allocating the balance in proportion to their pre-dissolution distribution rights.
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Lila Lin's Delaware LLC maintains its only U.S. sales office in New Jersey and sells products nationwide. A California plaintiff injured by one of the products sues the LLC in California federal court. The court holds that the LLC's contacts are insufficient to support general jurisdiction over claims unrelated to California.
Lamar Lewis's LLC purchases securities in reliance on misstatements by a public company. After the truth emerges and the price drops, the LLC sues under Rule 10b-5. The court examines whether the LLC qualifies as a purchaser with standing to assert the fraud-on-the-market presumption.
Lillian Locke's LLC board approves a merger with a controlling stockholder. A majority of the disinterested LLC members later approve the transaction after full disclosure. The court applies the business judgment rule to dismiss the ensuing challenge because the informed member vote ratified the deal.
Legacy Motors, an LLC, buys shares of a public company during the class period. When corrective disclosures cause a price drop, the LLC seeks class certification. The court requires the LLC to prove that the market for the shares was efficient so the fraud-on-the-market presumption can apply to its purchases.
An LLC is treated as an unincorporated association. Its citizenship is therefore the citizenship of each of its members rather than any state of formation or principal place of business.
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After creditors are paid, surplus first returns unreturned capital contributions to holders of transferable interests and then allocates any remainder in proportion to pre-dissolution distribution rights.
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Yes. The UCC expressly includes a limited liability company within the definition of 'person.'
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No. Subsections that restrict enforcement against account debtors do not apply to a security interest in an ownership interest in a limited liability company.
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…the United States, where its subsidiary, Mercedes-Benz USA, LLC (MBUSA), distributes Daimler vehicles. MBUSA is a Delaware limited liability company and has its principal place of business in New Jersey. MBUSA’s marketing and sales efforts in California are undertaken by a regional office in Costa Mesa and a network of independent…