In Facchina v. Malley, read opinion here , the Chancery Court addressed the issue of: "who is the managing member of the nominal defendant Child Care of Irvine, LLC? " (The LLC apparently was not represented in the case.) The entity originally formed was a corporation, which later merged into the LLC. A Shareholders’ Agreement had been entered into before the merger into the LLC, and the Court noted that regardless of the name, if the parties agreed to be governed by such a document, even if the nomenclature was not appropriate, that such an agreement could be binding on the LLC members since the label is not important (citing 6 Del. C. Section 18-101(7)).
One of the issues in the case, based in part on the misnamed document, was whether control of the entity was determined by a "head count" or "majority equity ownership". Regardless of the title, the Court viewed the real issue as one of control, as opposed to who got to be called a manager. Importantly, at footnote 8, the Court observed, without deciding, that Section 18-401 and Section 18-101(10) of the Delaware LLC Act could be read as "providing that a limited liability company without an operating agreement cannot have a "manager"". The Court did not need to decide that issue due to the majority interest of one of the parties and the provision of the LLC Act that provides for management of the LLC, "unless otherwise provided" in an LLC agreement, to be vested in the members according to the current percentage of their interest in the profits of the LLC. See Section 18-402.
The Court applied the internal affairs doctrine to the issue of who controlled the Delaware LLC, regardless of its place of operations. The Court also addressed the defenses alleged of waiver, estoppel and acquiescence, none of which were availing, and noted that the parties did not raise any differences between Delaware or California law on those defenses.