In deciding limited cross motions for summary judgment, the Court of Chancery held that the absolute litigation privilege did not preclude the repurchase of a member’s interest where the right to repurchase was allegedly triggered by a violation of a non-disparagement clause in the parties’ LLC agreement. In explaining that Delaware recognizes the right of a party to pursue claims in court without fear of incurring liability for their statements in a judicial proceeding, the Court nonetheless held that the absolute litigation privilege did not render the repurchase void. Citing the primacy of freedom of contract under Delaware law, the sophistication of the parties, and the plaintiff’s ability to pursue litigation claims for the value of the membership interest, the Court held that it “doesn’t offend the public policy of this state” for a Delaware LLC’s operating agreement to condition membership on whether a member makes disparaging remarks about the business.
