New York Court of Appeals Affirms Dismissal of Claims Against Olshan Client

On February 13, 2025, in a 4-3 Opinion, the New York Court of Appeals affirmed the dismissal of all claims against Olshan’s client in a case involving significant issues of Delaware law relating to Delaware limited liability company agreements and the ability of a manager to amend the agreement to include new terms favorable to the manager. The Opinion affirmed a decision of the Appellate Division, First Department, which in turn upheld a New York Supreme Court decision dismissing all claims against Olshan’s client in a lawsuit over an alleged oral agreement regarding Plaintiff-Appellant’s $3 million investment in Digipac, LLC (“Digipac”). Plaintiff-Appellant claimed Defendant-Respondent – Digipac’s manager – failed to honor an agreement allowing him to cash out within five years, but the trial court found this alleged oral agreement to be overridden by the terms of Digipac’s amended LLC Agreement, which included a merger clause, and deemed the oral agreement vague and indefinite. The Appellate Division affirmed this ruling, applying Delaware law. The New York Court of Appeals also affirmed, holding that the Plaintiff-Appellant was bound by the original and amended LLC Agreements without his signature, Defendant-Respondent was expressly entitled to amend Digipac’s original LLC Agreement based upon the terms of the original agreement, and that the terms of Digipac’s amended LLC Agreement, including the merger clause therein, barred Plaintiff-Appellant’s claims. The Court of Appeals further rejected Plaintiff-Appellant’s argument that the alleged oral agreement was entered by Defendant-Respondent solely in his personal capacity, where the alleged oral agreement clearly implicated Defendant-Respondent’s role as manager of Digipac. Olshan partner Kerrin Klein appeared before the New York Court of Appeals to argue on behalf of Defendant-Respondent. The New York Court of Appeals’ Opinion may be found here. The Olshan team representing Defendant-Respondent was led by litigation partners Thomas Fleming and Kerrin Klein.