Don't miss this year's open enrollment period for TBA’s BlueCross BlueShield of Tennessee group health plan, an affordable and quality association insurance plan. The deadline to apply is Dec. 15. This TBA-exclusive plan is guaranteed issue, has no health questions and no pre-existing condition exclusions. The plan also now includes the added benefit of a $15,000 life insurance policy for each employee subscribed to the health plan. Don’t delay, get a quote today!

The TBA Law Tech Section is excited to offer three different law tech themed lunch and learn programs this winter in three cities across the state of Tennessee featuring local speakers. The Knoxville program will take place on Dec. 15 and will discuss cybersecurity. Join us on Feb. 7 for the Nashville program, which will have a special 2-hour long infamous "Bill & Phil Show" that explores the practical applications of Artificial Intelligence (AI) in the real world both in legal-specific technology and in productivity gadgets used by professionals of all stripes. Since AI is such a hot topic, the March 15 Memphis program will also focus on AI by first providing a general introduction to AI and a second session focusing on the ethical implications of this booming technology.

Check out all the programs and register today!

So you finished your CLE in February! What can you carryover for 2024? We are glad you asked! Take your time and enjoy some of our fun-themed packages, live interactive webcasts, 1-Click package by practice area or just use our search function to create your own learning path with a la carte CLE. Enjoy webcasts, 1-Click Packages by Practice Area, or check out the full catalog here.

The Libertarian Party of Tennessee on Friday sued state officials over “unduly burdensome” ballot access requirements for minor parties, reports the Commercial Appeal. The lawsuit asks for a court order to ensure that Libertarian candidates are listed as members of their party on ballots for the Nov. 5, 2024, election. Under current laws, third parties running for statewide office must collect more than 43,000 signatures from registered voters while candidates running as Republicans, Democrats or independents need only 25 signatures. Political parties have previously challenged Tennessee’s ballot requirements. In 2013, a judge ordered the party’s candidate for the state House of Representatives be listed as “Libertarian” on ballots.

Along with the ever-increasing importance of information in our society come various legal rights to access that information. Some of those rights to information have been established for decades.[1] Other information access rights are nascent, with some not yet in existence. [2]

Since the enactment of the Tennessee Revised Limited Liability Act (“Act”) nearly two decades ago, members of Tennessee limited liability companies have had a general, if somewhat qualified, right of access to the LLC’s documents.[3] Several qualifications to this right notwithstanding, a member’s right to information or access to records is a right that may not be unreasonably restricted in the company’s articles of organization or operating agreement.[4] Particularly for LLCs with a relatively large number of members, the issue of information access rights may warrant consideration at formation, followed by periodic re-evaluation.

As in many other areas of LLC governance, an initial place to start is determining whether any statutory provisions may or should be altered in the LLC’s governing documents. There are several factors to consider for companies wanting to delineate the right to information beyond the statutory provisions.[5] Regarding the scope of documents that may be requested, current members, former members and financial rights holders are categorically entitled to “information reasonably required to comply with the requirements of either federal or state tax laws concerning their financial rights.”[6] As stated in the statute, this right would only apply to former members (including deceased former members or those under legal disability) during the periods in which they were members; however, current members are entitled to such information without demand. Beyond that, however, at the categorical level, only “information concerning the LLC’s business or affairs reasonably required for the proper exercise of the member’s rights and performance of the member’s duties under the LLC documents” or the Act must be provided by the LLC without demand. This category would not likely apply to former members or financial rights holders.[7] At a more specific level, LLCs should remain mindful of the list of record categories required to be maintained per the Act.[8] At a minimum, current members are likely to have rights to these twelve categories of documents upon written demand.

Beyond the required provisions, most of which are addressed above, LLCs may consider some narrowing provisions. As to former members, beyond any information necessary for tax return preparation (which, for past years, should likely have been provided previously), LLCs may consider whether a written demand for company information is for a “proper purpose” and the request must relate to the periods during which they were members. Likewise, even for current members, a request for information that is not reasonable or, under the particular circumstances for the request, is improper, need not be honored. Confidentiality considerations may also come into play here, including the execution of separate agreements, such as non-disclosure agreements and requiring any agents of members to likewise agree to restrictions on use and disclosure. The costs for responding to information requests may be assessed against members; however, copies of the LLC governing documents and the records required to be maintained under § 48-249-406 must be copied upon demand at the LLC’s expense. As applicable, provisions for information access by managers, directors and officers may also be included in the LLC governing documents.

In both considering adding or amending provisions in LLC governing documents and handling information access requests, LLCs should be mindful of the statutory remedy available to both members and holders of financial rights to seek judicial enforcement of access rights to company information. While not squarely addressed in Tennessee, Delaware courts have held that there is no obligation to create documents that do not exist in response to an information request.[9] For those documents that are in existence and within the right to inspect, Tennessee courts may award the requesting member attorney’s fees and costs if the court finds the access request was denied “without a reasonable basis for doubt regarding the right of the member or holder of financial rights to inspect the records demanded.”[10]

The provision of certain LLC records and other company information to the appropriate constituents is typically a matter of routine operation. However, given the potential for dispute and unnecessary expense when faced with non-routine requests, particularly those that may be improper or repeated, access to company information is an area that may merit consideration in the LLC’s governing documents. Statutory provisions and governing documents should be carefully considered to ensure that information access rights are appropriately balanced with the company’s need to respond to these requests appropriately yet efficiently.

Justin Joy is a shareholder in the Memphis office of Lewis Thomason PC, and he is a former chair and current executive council member of the TBA Business Law Section. In addition to a range of experience in information privacy, cybersecurity and health law matters, Joy has a variety of experience in various civil litigation matters, including business and commercial litigation, insurance coverage disputes and business torts. He also provides counsel to small and midsize private businesses in various governance, operational and strategic matters.

The U.S. Senate has voted 80-12 to elevate U.S. Magistrate Irma Carrillo Ramirez to the 5th U.S. Circuit Court of Appeals, reports Reuters. Ramirez will be that court’s first Latina judge and the fifth active Democratic appointee on a court dominated by 12 judges nominated by Republican presidents. The bipartisan vote reflected the support of Texas' two Republican senators, John Cornyn and Ted Cruz. Overall, the Senate has now confirmed 160 of Biden's judicial nominees.

If you are a business lawyer with a practice that is primarily transactional, you may not have given much thought to personal jurisdiction since you took the bar exam. However, if your business clients operate in states other than Tennessee, you should take notice of the U.S. Supreme Court’s decision earlier this year in Mallory v. Norfolk Southern Railway Co. Mallory increases the likelihood that corporations and other entities doing business outside their home states will have to defend suits brought in state courts elsewhere, even if the suits are unrelated to their business contacts in those states.

Under the traditional rule of Pennoyer v. Neff (1878), defendants could only be sued in states where they had a presence (like their domicile or principal place of business) or had consented to jurisdiction. Recognizing the nationalization of our modern economy, the U.S. Supreme Court held in International Shoe Co. v Washington (1945) that due process permitted personal jurisdiction over out-of-state defendants even without presence or consent, so long as those defendants have “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” 

Language in International Shoe led courts to develop two types of personal jurisdiction: specific jurisdiction and general jurisdiction. Specific jurisdiction over an out-of-state defendant can exist anywhere, but only if the court determines that the plaintiff’s claims arise out of or relate to the defendant’s contacts with the forum state. General jurisdiction is broader, because it allows the defendant to face any cause of action in a particular jurisdiction. Because of that, the Supreme Court in Goodyear Dunlop Tires Ops., S.A. v. Brown (2011) and Daimler AG v. Bauman (2014) limited general jurisdiction to states where defendants are “at home.” For a corporate defendant, barring extraordinary circumstances, that means the state where it is incorporated or has its principal place of business.

This seemed like settled law until Mallory. The plaintiff, Robert Mallory, alleged he contracted cancer during his 20-year career working for Norfolk Southern railroad, which is incorporated and has its corporate headquarters in Virginia. Norfolk Southern typically could be subject to general jurisdiction only in Virginia and to specific jurisdiction on Mallory’s claims only in Ohio and Virginia, where he had worked for the railroad. However, Mallory filed his lawsuit in state court in Pennsylvania, where Norfolk Southern has 2,000 miles of tracks and 5,000 employees.

Mallory’s hook to sue Norfolk Southern in Pennsylvania was that the railroad is registered to do business there and Pennsylvania has a corporate registration statute that is broader than most states. Specifically, the statute says that by registering to do business in Pennsylvania, out-of-state corporations consent to general personal jurisdiction in the Pennsylvania courts to the same extent as corporations that are headquartered in the state. Thus, Mallory argued, Pennsylvania courts should exercise personal jurisdiction over Norfolk Southern under the traditional basis of consent.

Mallory found support in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co. (1917), which had upheld the use of corporate registration statutes like this one to confer general jurisdiction over out-of-state businesses. However, Norfolk Southern argued, and the Pennsylvania Supreme Court agreed, that Pennsylvania Fire had been implicitly overruled by the U.S. Supreme Court’s due process decisions in International Shoe and subsequent cases. The Pennsylvania Supreme Court struck down the Pennsylvania corporate registration statute as violating the due process clause. 

In a slim majority opinion authored by Justice Gorsuch, the U.S. Supreme Court reversed the state supreme court and upheld Pennsylvania’s corporate registration statute. The court held that Pennsylvania Fire was still good law and controlled Mallory’s case. More specifically, International Shoe and its progeny that are based upon the due process clause only apply when the out-of-state defendant is not present in the forum state or has not consented to jurisdiction in the forum state. Here, Norfolk Southern had consented to general jurisdiction in Pennsylvania by the terms of the state’s corporate registration statute, and that ended the inquiry. In a dissent written by Justice Barrett, four justices expressed their view that the Pennsylvania corporate registration statute “clearly, palpably and plainly” violates the due process clause as interpreted in International Shoe and Daimler. 

The dissenting justices are correct that if more states follow Pennsylvania’s lead and pass broad corporate registration statutes, then the Mallory decision would effectively gut the court’s previous decisions on general jurisdiction. Those states could then require a corporate defendant to defend any civil suit, even when that defendant is not “at home” in the forum state. Of course, defendants have the option of not doing business in a state that has such a statute, but that is not realistic for a railroad like Norfolk Southern or countless other businesses with a national infrastructure and customer base. This will bear watching as state legislatures around the country consider their next move. 

This article was contributed by Matt Lyon. He is a member of the TBA Business Law Section’s Executive Council and vice president and dean of the Lincoln Memorial University Duncan School of Law in Knoxville. He teaches contracts, business associations, civil procedure and payment systems. Prior to joining the LMU Law faculty in 2011, Lyon served as senior judicial clerk to Justice Gary R. Wade of the Tennessee Supreme Court and was a commercial litigation associate at Sidley Austin LLP in Chicago. Matt can be reached at Matthew.Lyon@lmunet.edu or 865-545-5318.

A new report shows students at California law schools not accredited by the American Bar Association (ABA) had a pass rate of just 21% on the July 2022 bar exam. Reuters reports that according to the state bar’s first-ever comprehensive Law School Profile released Friday, graduates of ABA approved law schools had a pass rate of 67%. The report also showed that California law schools unaccredited by the ABA have cheaper tuition and more diverse student bodies than their ABA-accredited counterparts. The report raises policy questions about the future of law school regulation in California. The state bar said it plans to conduct further research on the trends identified in the new report.

Volunteer Lawyers & Professionals for the Arts (VLPA), Volunteer Income Tax Assistance (VITA) and the Nashville Financial Empowerment Center (FEC) will hold a pro bono tax consultation clinic for artists, musicians and creatives on Wednesday from 5-7 p.m. CST. Attendees will learn how to file their taxes or can meet with a financial counselor to discuss ways to manage debt or repair credit scores. The clinic is presented by the United Way of Greater Nashville. It will take place at the FEC office, 217 South 10th St., Nashville 37206. Learn more or sign up to volunteer.

A special report looking at the state of the Shelby County Criminal Court has found a significant decline in the number of annual trials and an increase in the length of time it takes for cases to come to trial. The Commercial Appeal looks at the findings of former Shelby County Criminal Court Judge Bobby Carter, who was asked to conduct the investigation by Memphis Mayor Jim Strickland. Carter found that fewer than 40 trials occurred this year compared to years past when some 200 trials took place. Carter also found that the length of time it takes cases to reach trial has made plea deals less attractive to defendants, amplifying the backlog of cases. Read the full report and Carter’s recommendations for addressing these challenges.