Also known as:willful violations · wilful violation · wilful violations · knowing violation · intentional violation
Written by attorneys — see sources below.
Conduct undertaken with knowledge that it violates a legal duty or with reckless disregard of whether the conduct is unlawful. The standard appears in fiduciary duty provisions that shield managers from liability for ordinary negligence but impose responsibility for this elevated form of misconduct.
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How its tested
Common Examples
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LLC Member Orders Illegal Disposal
Wren Wright, managing member of Wolverine Steel LLC, received a report that certain waste drums contained regulated toxins requiring off-site transport. Wright directed the crew to bury the drums on site and omit required paperwork to avoid regulatory costs. The limited partners later sued Wright for breaching the duty of care. The court found the directive constituted willful violation because Wright acted with knowledge of the legal requirements and deliberately chose to ignore them.
General Partner Locks Emergency Exits
Warren Wu, general partner of Westmont Healthcare LP, received written fire-marshal notices that locking rear exits during business hours violated the fire code. Wu nevertheless ordered store managers to keep the exits locked to deter theft. Limited partners sued for breach of the duty of care. The court held that Wu's conduct after receiving explicit regulatory warnings amounted to willful violation.
Wanda Williams, a partner in Willowbrook Capital, knew a severe storm forecast existed and the vessel's backup radio was inoperable. Williams nevertheless sailed the chartered vessel to meet a deadline. The partnership suffered major damage and rescue costs. The court concluded that proceeding under those known conditions constituted willful violation of the duty of care.
Officer Commits Criminal Tax Offense
Wesley Wong, an officer of Wrightway Engineering, knowingly filed false corporate tax returns to reduce the company's liability. When shareholders later sought indemnification for related penalties, the court denied protection. The intentional filing of false returns qualified as willful violation of criminal law, removing any right to indemnification.
Exculpatory Clause Cannot Cover Willful Acts
Wilma Wright, general partner of a limited partnership, inserted a clause purporting to eliminate liability for any intentional environmental violations that reduced costs. The partnership later incurred massive fines after Wright directed illegal dumping. Limited partners challenged the clause. The court held that the agreement could not exonerate willful violation of law.
After-Acquired Evidence of Willful Conduct
An employee discharged for alleged age discrimination later admitted during discovery that she had falsified expense reports. The employer argued the misconduct would have justified termination anyway. The court examined whether the employee's conduct rose to willful violation of company policy and law. Because the falsification was knowing and deliberate, the employer could limit back-pay damages.
McKennon v. Nashville Banner Publishing Co.513 U.S. 352, 358, 362 (1995)
Christine McKennon worked for the Nashville Banner Publishing Company for some 30 years. She was discharged at age 62. The Banner claimed the action was part of a workforce reduction plan necessitated by cost considerations. McKennon believed her age explained the dismissal and filed suit in the United States District Court for the Middle District of Tennessee alleging violation of the Age Discrimination in Employment Act of 1967.
McKennon sought a variety of legal and equitable remedies available under the ADEA, including backpay. In preparation of the case, the Banner took McKennon's deposition. During the deposition, she testified that during her final year of employment she had copied several confidential documents bearing upon the company's financial condition. She showed them to her husband. Her motivation was an apprehension she was about to be fired because of her age. She removed and copied the documents for insurance and protection.
A few days after these deposition disclosures, the Banner sent McKennon a letter declaring that removal and copying of the records was in violation of her job responsibilities and advising her that she was terminated. The letter recited that had it known of McKennon's misconduct it would have discharged her at once for that reason. For purposes of summary judgment, the Banner conceded its discrimination against McKennon.
The District Court granted summary judgment for the Banner, holding that McKennon's misconduct was grounds for her termination and that neither backpay nor any other remedy was available to her under the ADEA. The United States Court of Appeals for the Sixth Circuit affirmed on the same rationale. The Supreme Court granted certiorari. The grant resolved conflicting views among the Courts of Appeals on the question whether all relief must be denied when an employee has been discharged in violation of the ADEA and the employer later discovers some wrongful conduct that would have led to discharge if it had been discovered earlier.
How does willful violation differ from gross negligence under partnership duty-of-care provisions?
Willful violation requires either intentional misconduct or knowing disregard of a legal duty. Gross negligence involves a severe departure from the standard of care without the element of actual knowledge or intent. The statutes list both as separate bases for breaching the duty of care.
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Can a partnership agreement validly eliminate liability for willful violation?
No. Uniform acts expressly prohibit partnership agreements from relieving or exonerating any person from liability for conduct involving willful or intentional misconduct or knowing violation of law. Any clause attempting to do so is unenforceable.
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What mental state satisfies the willful violation standard for ADEA liquidated damages?
The Supreme Court has held that an employer acts willfully when it knew or showed reckless disregard for whether its conduct was prohibited by the ADEA. Proof that the employer merely should have known is insufficient.
Supporting sources
498 U.S. 192, 111 S. Ct. 604, 112 L. Ed. 2d 617
…of its instructions, the trial court advised the jury that to prove "willfulness" the Government must prove the voluntary and intentional violation of a known legal duty, a burden that could not be proved by showing mistake, ignorance, or negligence. The court further advised the jury that an objectively reasonable good-faith…