Flight Options International v. Flight Options LLC, 2005 WL 2335353 (Del.Ch.), download file, involved two members of an LLC for which all of the capital and credit needed to maintain the company was provided by the majority owner. The parties agreed that the issues were arbitrable and did not address whether the court had the right to determine that arbitrability. Rather, the court addressed the more relaxed standard for preliminary injunction in aid of arbitration. The court granted a preliminary injunction to last not more than 30 days and during that period the parties were given the opportunity to seek interim injunctive relief through the American Arbitration Association.
The court noted that substantial dilution can be the basis for establishing the irreparable harm needed for an injunction even where, as here, preemptive rights were waived.
The court also reviewed the LLC Agreement to determine that claims for breach of fiduciary duty were not waived in that agreement–due to the nature of the LLC statute in Delaware that allows such claims to be waived.
(Editor’s note: Although a redacted public version of this opinion was released in September, it did not appear on the court’s website and so was not summarized earlier).