North Dakota Code 10-32.1-37 – Special litigation committee
1. If a limited liability company is named as or made a party in a derivative proceeding, then the company may appoint a special litigation committee to investigate the claims asserted in the proceeding and determine whether pursuing the action is in the best interests of the company. If the company appoints a special litigation committee, then on motion by the committee made in the name of the company, except for good cause shown, the court shall stay discovery for the time reasonably necessary to permit the committee to make its investigation. This subsection does not prevent the court from enforcing the right of a person to information under section 10-32.1-42 or, for good cause shown, granting extraordinary relief in the form of a temporary restraining order or preliminary injunction.
Terms Used In North Dakota Code 10-32.1-37
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Temporary restraining order: Prohibits a person from an action that is likely to cause irreparable harm. This differs from an injunction in that it may be granted immediately, without notice to the opposing party, and without a hearing. It is intended to last only until a hearing can be held.
2. A special litigation committee may be composed of one or more disinterested and independent individuals, who may be members.
3. A special litigation committee may be appointed:
a. In a member-managed limited liability company:
(1) By the consent of a majority of the members not named as defendants or plaintiffs in the proceeding; and
(2) If all members are named as defendants or plaintiffs in the proceeding, then by a majority of the members named as defendants; b. In a manager-managed limited liability company:
(1) By a majority of the managers not named as defendants or plaintiffs in the proceeding; and
(2) If all managers are named as defendants or plaintiffs in the proceeding, then by a majority of the managers named as defendants; and c. In a board-managed limited liability company:
(1) By a majority of governors not named as defendants or plaintiffs in the proceeding; and
(2) If all governors are named as defendants or plaintiffs in the proceeding, then by a majority of the governors named as defendants.
4. After appropriate investigation, a special litigation committee may determine that it is in the best interests of the limited liability company that the proceeding:
a. Continue under the control of the plaintiff; b. Continue under the control of the committee; c. Be settled on terms approved by the committee; or d. Be dismissed.
5. After making a determination under subsection 4, a special litigation committee shall file with the court a statement of its determination and its report supporting its determination, giving notice to the plaintiff. The court shall determine whether the members of the committee were disinterested and independent and whether the committee conducted its investigation and made its recommendation in good faith, independently, and with reasonable care, with the committee having the burden of proof. If the court finds that the members of the committee were disinterested and independent and that the committee acted in good faith, independently, and with reasonable care, then the court shall enforce the determination of the committee. Otherwise, the court shall dissolve the stay of discovery entered under subsection 1 and allow the action to proceed under the direction of the plaintiff.