2022 Pennsylvania Consolidated & Unconsolidated Statutes
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 88 - Limited Liability Companies
Section 8882 - Derivative action

(a) General rule.--Subject to section 8883 (relating to eligible plaintiffs and security for costs) and subsection (b), a plaintiff may maintain a derivative action to enforce a right of a limited liability company only if:

(1) the plaintiff first makes a demand on the company or the other members in a member-managed limited liability company, or the managers of a manager-managed limited liability company, requesting that the company bring an action to enforce the right and:

(i) if a special litigation committee is not appointed under section 8884 (relating to special litigation committee), the members in a member-managed company or managers of a manager-managed company determine that:

(A) an action based on some or all of the claims asserted in the demand not be brought by the company but that the company not object to an action being brought by the party that made the demand; or

(B) an action already commenced continue under the control of the plaintiff; or

(ii) if a special litigation committee is appointed under section 8884, a determination is made:

(A) under section 8884(e)(1) that the company not object to the action; or

(B) under section 8884(e)(5)(i) that the plaintiff continue the action;

(2) demand is excused under subsection (b);

(3) the action is maintained for the limited purpose of seeking court review under section 8884(f); or

(4) the court has allowed the action to continue under the control of the plaintiff under section 8884(f)(3)(ii).

(b) Prior demand excused.--

(1) A demand under subsection (a)(1) is excused only if the plaintiff makes a specific showing that immediate and irreparable harm to the limited liability company would otherwise result.

(2) If demand is excused under paragraph (1), demand should be made promptly after commencement of the action.

(c) Contents of demand.--A demand under this section must be in record form and give notice with reasonable specificity of:

(1) the material facts relied upon to support each of the claims made in the demand against each proposed defendant; and

(2) in the case of a derivative action commenced by a member or manager, the basis on which the person making the demand has standing under section 8883.

(d) Additional claims.--If a derivative action is commenced after a demand has been made under this section and includes a claim that was not fairly subsumed under the demand, a new demand must be made with respect to that claim. The new demand shall not relate back to the date of the original demand for purposes of subsection (e).

(e) Statute of limitations.--The making of a demand tolls any applicable statute of limitations with respect to a claim asserted in the demand until the earlier of the date:

(1) the plaintiff making the demand is notified either:

(i) that the managers or members have decided not to bring an action and not to appoint a special litigation committee; or

(ii) of a determination under section 8884(e) after the appointment of a special litigation committee under section 8884; or

(2) the plaintiff commences an action asserting the claim.

(f) Cross reference.--See section 8815(c)(17) (relating to contents of operating agreement).

(Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)

2022 Amendment. Act 122 amended subsecs. (a)(1)(i), (b)(1) and (c).