Derivative Claims Required to be Arbitrated
A recent Chancery Court decision applied the demand futility analysis in the LLC context and also determined that the conduct of the defendant in the litigation resulted in a waiver of the right to argue that the plaintiff could not proceed derivatively. In any event, the court also found that demand was futile under the facts. However, the derivative claims were subject to an arbitration clause. The decision included an uncommon discussion of those situations, such as equitable estoppel, where a signatory to an arbitration clause may be required to arbitrate with a non-signatory and vice-versa (i.e., in some circumstances, a non-signatory may be required to arbitrate with a signatory to an arbitration clause.) Ishimaru v. Fung, et al., download pdf file.
