Court Holds Internal Affairs Doctrine Typically Covers Breach Of Fiduciary Claims Despite No Averment Of Fiduciary Duty

California's Revised Uniform Limited Liability Company Act provides "The law of the state . . . under which a foreign limited liability company is formed governs all of the following: The organization of the limited liability company, its internal affairs, and the authority of its members and managers." Cal. Corp. Code § 17708.01(a). Notably, the statute does not define what constitutes an LLC's internal affairs.

In Gill v. Marsh USA, Inc., 2024 WL 3463351, a Delaware LLC filed a counterclaim against a former employee. As an initial matter, U.S. District Court Judge Richard Seeborg ruled that the viability of the counterclaim turned on the choice of law under which the claim arises, and the parties dispute whether Delaware or California law is applicable. The LLC contended that California law governs this claim because it does not arise out of a failure or breach related to the actual governance of the…