Tuesday, August 20, 2019
A recent California court order granting a motion for final settlement in an antitrust class action suit appears to have left LLCs out as "person(s)" in the definitions. Here's the clause, which is repeated a few times in the Settlement Agreement:
(w) “Person(s)” means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and any spouses, heirs, predecessors, successors, representatives or assignees of any of the foregoing.
IN RE: LITHIUM ION BATTERIES ANTITRUST LITIGATION, 2019 WL 3856413, Slip Copy (N.D.Cal. Aug. 16, 2019) (emphasis added).
A "limited liability corporation" and a "corporation" are the same thing. I am certain the "limited liability corporation" language was intended to cover "limited liability companies" or LLCs. But it doesn't cover LLCs, which are different entities. Of course, the fact that the definition includes all "unincorporated associations," LLCs are included, but this is sloppy and in my humble view, should never have been approved.
California has been know to make this distinction murky (see here) and some California courts like to just plain get it wrong. But this is a settlement that is being reviewed by the court, and I am willing to bet this language is in all sorts of settlement agreements because they are cutting and pasting the definitions from settlement to settlement.
From now on, I say courts should deny these agreements when proposal gets things like this wrong. Or better yet, reduce the legal fees, so it doesn't harm the class, but let's the lawyers know they should be drafting carefully. Sure, it's not a huge deal in this case, but it sure would be nice if more courts would send the message that LLCs are not corporations. Because they're not.