By: Chauna A. Abner*

This article first appeared in a recent issue of the Delaware Business Court Insider, and is reproduced here with their kind permission.

The Delaware Court of Chancery recently confirmed that when an LLC’s operating agreement provides that a managing board will manage the company, absent language to the contrary, all decisions must be made by the managing board—even  when the decision is whether to remove two of the three members of the board.

In Ropko v. Burdi, C.A. No. 2024-1193-PAF (Del. Ch. Mar. 16, 2026), two of the three members of McNeil Investment Group, LLC (“MIG”)’s managing board (the “Managers”)  filed suit against the third manager, who was also the Executive Chairman and founder of the company (“Executive Chairman”) after the Executive Charman purported to remove the Managers from the 3-manager board.

As part of a restructuring of MIG, the parties executed a letter agreement (“Voting Agreement”) providing that so long as the Executive Chairman is a member of the Board, actions of the Board will require his consent and the Managers “will vote in the same manner” as him. Two days later, MIG adopted the operative operating agreement which vested management of the company in the Managing Board and provided that the Managing Board consisted of the Managers and the Executive Chairman. Just over a year later, the Executive Chairman issued a written consent purporting to remove the Managers from the Board. The Written consent was signed by the Executive Chairman individually and on behalf of the Managers “pursuant to that certain [Voting] Agreement.”

The Managers filed suit seeking declaratory relief that their removal was improper and attorneys’ fees pursuant to MIG’s operating agreement. After a two-day trial and post-trial briefing, the Court found in favor of the Managers on both issues. The Executive Chairman argued that the Voting Agreement authorized him to vote on the Managers’ behalf in their capacities as members of the Board of Managers. The Court rejected this argument explaining that although the LLC Act allows managers to vote by proxy, an agreement to vote by proxy must include language of “clear agency appointment.” The Court concluded that there was no language in either the operating agreement or the Voting Agreement that authorized the Executive Chairman to act on behalf of the Managers.

The Executive Chairman also argued that, Voting Agreement aside, the formalities associated with the removal should be excused because “a contractual party need not perform a futile act.” The Court rejected this argument too. The Court analyzed the  limited body of case law in Delaware addressing futility in the context of contract compliance and explained that this body of case law has been limited to notice-and-cure provisions that do not apply here. In declining to apply the futility doctrine, the Court reinforced the well-established principle that “[w]hen an alternative entity agreement prescribes how its governing body must act, the governing body may not ignore it. Nor will this court refuse to enforce it merely because on party deems it to be inconvenient.”

After finding that the Executive Chairman violated the operating agreement by purporting to remove the Managers, the Court went on to hold that the Managers were entitled to their reasonable attorneys’ fees and expenses in the litigation pursuant to the fee-shifting provision of the operating agreement.

The Court’s decision provides helpful reminders to practitioners:

  • Proxy instruments must expressly evidence an agency relationship between the principal and proxy holder to be valid;
  • If the intent is for a board of managers to be able to remove board members without requiring the approval of those members, then the operating agreement should clearly state so; and
  • The Court has yet to permit the doctrine of futility to be employed to excuse board governance formalities.

*Chauna is a business and commercial litigation Partner at Lewis Brisbois where she represents clients to resolve a wide range of business disputes in state and federal court and in arbitration. Chauna’s practice focuses on high-stakes disputes of corporations and other forms of entities, stockholders, members of boards of directors, and members and managers of LLCs. She has extensive experience in matters involving demands for books and records, fiduciary duties, and corporate governance.