Issue May/June 2019

May 2019

Allison v. Eriksson — Remedies Available to Minority LLC Members in Freeze-Out Mergers

Under M.G.L. c. 156C, § 60(b), members of a Massachusetts limited liability company (LLC) who object to a merger are left with only one option: to resign and have their interest bought out by the majority. However, in Allison v. Eriksson, the Supreme Judicial Court (SJC) clarified that members opposing the merger of their LLC are entitled to additional equitable remedies beyond the scope of the statute if the majority member or members breached their fiduciary duties to the minority member in the process of effectuating the merger. 479 Mass. 626, 98 N.E.3d 143 (2018). In such a case, the courts have discretion to tailor equitable relief for the dissenting minority while also keeping in mind the best interests of the LLC, which may include rescinding the merger, or even modifying the operating agreement of the new LLC. This rule is applicable to “freeze-out mergers,” which occur when the majority members or member merge the business into a new entity with the purpose of eliminating, or “freezing out,” the minority.

OSHA Standards Impermissibly Applied to Construction Employers Are Held Invalid

The United States Occupational Safety and Health (OSH) Review Commission has ruled that the secretary of labor impermissibly applied certain OSH Administration (OSHA) standards to construction employers. On Sept. 28, 2018, the commission vacated an OSHA citation issued to Kiewit Power Construction Company (Kiewit) for allegedly violating the “quick-drenching” standard in 29 C.F.R. s 1926.50(g). The commission held that the standard was initially promulgated to cover non-construction employers and that the secretary of labor impermissibly expanded the standard’s scope to apply it to private parties engaged in the construction industry who did not participate in the notice-and-comment procedure. There are 146 other paragraphs in OSHA’s regulations, Part 1926, that may be invalid in the wake of the commission’s decision.

Navigating Informed Consent to the Road That Ought to Be More Traveled

While the practices of collaborative law and mediation are innovative shifts from the traditional adversarial legal model in the area of conflict resolution, lawyers must still adhere to the ethical rules of the legal field and obtain informed consent from clients involved in the processes. To borrow (and turn) a phrase from Professor Christopher Fairman, “Collaborative law and mediation’s glass ceiling is legal ethics.”

Sen. Jason Lewis’ Legislative Bill to Impose Income Tax on Millionaires

The millionaires tax, originally proposed by the Raise Up Massachusetts coalition, which represents community organizations, religious groups and labor unions, sought to apply a 4 percent surtax on income over $1 million of each Massachusetts taxpayer. Raise Up developed an initiative petition, the Fair Share Amendment, to amend the Massachusetts Constitution to allow that surtax and to earmark the surtax revenues for transportation and education. New revenue is necessary to rebuild crumbling roads, bridges and paths; improve public schools; invest in fast and reliable public transportation; make public higher education affordable; expand opportunities for healthy walking and bicycling; and give every child access to high-quality early childhood education and pre-kindergarten programs.