The FAA, the New York Convention, and "Effective Vindication"
A very interesting case, Suazo v. NCL (Bahamas), Ltd., was recently handed down by the U.S. Court of Appeals for the Eleventh Circuit. The case involved a cruise ship employee who was injured on the job and whose employment contract contained an arbitration agreement governed by the New York Convention and Chapter 2 of the Federal Arbitration Act. The question was whether the employee could bar arbitration by showing that high costs may prevent him from effectively vindicating his federal statutory rights in the arbitral forum.
The matter came up as part of a motion to compel arbitration, and the court held that "Our New York Convention precedent suggests (but does not hold) that a party may only raise this type of public-policy defense in opposition to a motion to enforce an arbitral award after arbitration has taken place, and not in order to defeat a motion to compel arbitration." This approach is, of course, problematic if one concludes that it will be difficult if not impossible to vindicate one's rights initially if one cannot afford to pursue the claim (here the court decided that the claimant had not made the appropriate showing, so the court was able to take a "no harm, no foul" perspective). However, the decision appears correct under the New York Convention.
Some might say that the advent of third party funding and availability of contingent fee attorneys in the United States would allow worthy claimants to assert their claims, but there is no guarantee that a third party funder or contingent fee attorney will take any particular case. While it is unclear how often this type of scenario will arise in the future, the case does identify a significant area of tension between domestic law and international law.
The NY Times today described the increasing use of arbitration clauses for Silicon Valley and other similar start-up firms. This issue is nothing new to readers of this post, but it perhaps shows that even Silicon Valley isn't immune from broader workplace trends (although they certainly put a nicer spin on it). As always, the devil is likely in the details. Workers represented by experienced unions tend to fare well under arbitration systems, while individual employees--or those trying to form class actions--are far less likely to see the benefits of one-sided arbitration agreements. As the article notes, the Consumer Financial Protection Bureau is seeking new rules for commercial arbitration, but aside from the NLRB, there seems little that agencies are doing for employees.
The [Second Circuit] overturned the district court’s vacatur of what the parties (including the union) all characterized as an arbitrator’s award. The “arbitrator” in the case was NFL Commissioner Roger Goodell, who under the clear language of the collective bargaining agreement, was allowed to appoint himself as the hearing officer reviewing his decision to suspend Brady.
The Second Circuit’s opinion was totally consistent with the Supreme Court’s doctrine on the limited judicial review available for arbitration awards. The twist in this case is that the arbitrator was not a neutral party – Goodell was reviewing his own decision. The Second Circuit said that since the CBA specifically provided for this unusual review process, the court had to adhere to what the parties had agreed to. Although that seems right in the collective bargaining context when both parties are on somewhat equal footing in terms of bargaining power, hopefully that reasoning will not be carried over into consumer and employment arbitrations where the individual consumer or employee may not realize that he or she is “agreeing” to a partial arbitrator. After all, the Supreme Court has said that the reason that the FAA allows for enforcement of arbitration agreements is to allow for an alternative to litigation in court, which presumes some minimal level of procedural fairness and neutrality.
I had the pleasure of seeing Ted St. Antoine (Michigan - emeritus and former dean) speak at today's Ohio State Journal on Dispute Resolution's Schwartz Lecture on Dispute Resolution. His topic was Labor and Employment Arbitration Today: A Midlife Crisis or a New Golden Age? OSU Dean Alan Michaels gave an eloquent and heartfelt introduction in which he aptly praised Ted for mentoring and nurturing several generations of labor scholars and practitioners (and, true to form, Ted spent much of his lecture praising the empirical work of Alex Colvin).
I still have a handwritten note Ted sent me, when I was still in practice, congratulating me on my first publication. Ted is a terrific role model, and it was a special pleasure to see him again today.
Since I tend to be foolishly optimistic, I've been wondering for a while (without actually putting in the effort to research the point) whether there's a silver lining to the current tendency to shuttle discrimination complaints to arbitration -- the possible inapplicability of statutory time limitations on bringing suits. Of course, Title VII doesn't have a traditional statute of limitations at all (i.e., a period measured from the accrual of the cause of action to the filing of a complaint in court), but rather has two separate temporal requirements that must be satisfied -- one (usually 300 days) for filing a charge with the EEOC and a second (90 days) for filing suit after receipt of a right to sue letter.
Under one paradigm (arbitrator subs in for the court to decide a case as a court would) the answer would be yes, but under another (arbitration is an alternative dispute resolution system subject to its own rules) the answer might be no. Plus, not only is the statutory language concerning pursuit of claims framed in terms of filing a "civil action" (which was not enough for the Court to find arbitration superseded) but arguably this whole structure is designed to filter disputes through a judicial process. That might mean that the procedural requirements are simply inapposite when arbitration is the dispute resolution procedure, which in turn might mean no statute of limitations at all for arbitration (the arbitrator could apply something like laches), and maybe no requirement at all of filing a charge with the EEOC.
Obviously, any movement along these lines would be employee-friendly, although it wouldn't address some of the serious problems of mandatory arbitration, including the typical clauses that foreclosing class claims in both court and arbitration.
The question came to mind in light of a case decided by the Second Circuit last August. The decision, Anthony v. Affiliated Computer Services, is less than definitive both because it is nonprecedential and because it arose in the context of an attack on an arbitration award. The arbitrator had found the plaintiff's claim under various antidiscrimination statutes barred by his failure to file for arbitration within 90 days of receipt of the EEOC's right to sue letter, and the Second Circuit upheld the award as not exceeding the arbitrator's authority. Less than a ringing endorsement of the decision and suggestive of the possibility that the court might also have upheld an award based on exactly the opposite reasoning.
But Anthony does raise the issue of what the right answer should be for arbitrators who are faced with this question.
Of course, silver linings in nature are transitory, and, even if arbitrators were to hold statutory procedures inapplicable in arbitration, employers are likely to add their own limitations periods to arbitration awards and, given the Supreme Court's sweeping readings of the FAA, those are likely to be upheld under current law.
Is Mandatory Arbitration Bad for Business?
A recent article in The Economist, The big fight, notes that European companies are far ahead of American companies in developing dispute esolution systems for consumer disputes, especially in online ADR. I think a good case can be made that SCOTUS's pro-arbitration line of cases -- especially those that all but extinguish consumer class actions -- have removed the incentive for American companies to invest in developing effective dispute-resolution programs. As a result, American companies risk falling yet farther behind their European competitors.
The more consumer-friendly stance [of European companies] did not just evolve in the courts but was to a large degree the result of a decision y the European Commission more than 20 years ago to make all small print subject to being examined and potentially overturned by the courts.... The most recent [directive] gives a shot in the arm to ADR, by for instance forcing businesses to inform consumers of their dispute-resolution options.... Firms won't be forced to sign up to an ADR scheme, but eh hope is that most will feel obliged to as the directive takes hold.
Europe also leads the way in developing online mechanisms for mediating the millions of cross-border e-commerce disputes that arise each year.
As some of you may know, another case involving class waivers in the employment/labor context was heard Friday by the Seventh Circuit. The case, Lewis v. Epic Systems, Inc. (No. 15-2997) (here's the district court opinion), saw the National Labor Relations Board (NLRB) filing an amicus brief. While it is unclear how the Seventh Circuit will rule in this instance, it would seem that the Supreme Court will soon need to address this issue, either to resolve the split between agency (NLRB) determinations on the proper reading of the National Labor Relations Act and various federal court rulings (if the Seventh Circuit follows the approach used by other federal courts since the D.R. Horton case), or between different federal courts (if the Seventh Circuit adopts the NLRB approach).
A recent Fourth Circuit consumer arbitration decision has an interesting discussion on arbitration agreement enforceability that has implications for the employment and labor arbitration arenas. Hayes v. Delbert Services, Docket No. 15-1170 (4th Cir. 2/2/16).
Western Sky was an online lender owned by Martin Webb. Webb was a member of the Cheyenne River Sioux Tribe, and Western Sky's offices were located on the Cheyenne River Indian Reservation in South Dakota. From its base on the Reservation, Western Sky issued payday loans to consumers across the country. Named Plaintiff James Hayes took a loan from Western Sky for about $2500 and an annual interest rate of 140% . Over the four-year life of Hayes's loan he would have paid more than $14,000. Western Sky all but conceded in the litigation that its loan practices violated a wide variety of federal and state laws.
This Loan Agreement is subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation. By executing this Loan Agreement, you, the borrower, hereby acknowledge and consent to be bound to the terms of this Loan Agreement, consent to the sole subject matter and personal jurisdiction of the Cheyenne River Sioux Tribal Court, and that no other state or federal law or regulation shall apply to this Loan Agreement, its enforcement or interpretation.
IS MADE PURSUANT TO A TRANSACTION INVOLVING THE INDIAN COMMERCE CLAUSE OF THE CONSTITUTION OF THE UNITED STATES OF AMERICA, AND SHALL BE GOVERNED BY THE LAW OF THE CHEYENNE RIVER SIOUX TRIBE. The arbitrator will apply the laws of the Cheyenne River Sioux Tribal Nation and the terms of this Agreement.
This appears to be a pretty extreme case of a waiver. In the employment and labor arena, the Fourth Circuit’s reasoning might have some play if there is an arbitration clause that appears to effectively waive all the rights of a party under an otherwise applicable law, such as Title VII or the FLSA. But the Fourth Circuit made it clear that it considers the Supreme Court’s decisions in ATT v. Concepcion and Italian Colors to limit that inquiry by embracing the enforceability of waivers of certain procedural or attendant rights, such as class actions, that merely make it more difficult or costly to pursue a federal remedy.
Lise Gelernter of Buffalo sent out the following to the National Academy of Arbitrators listserv. Although DirectTV is a consumer case, she thought it might be of interest to us employment types.
The Supreme Court just decided another consumer-related arbitration case (copy attached) -- DirecTV v. Imburgia. In this case, the Court considered a class-action waiver in a 2007 contract that customers had with DirecTV in California. The contract waived access to class action arbitration, EXCEPT " 'if the law of your state' does not permit agreements barring class arbitration, then the entire agreement to arbitrate becomes unenforceable." (Quoting from Justice Ginsburg's dissent).
The California Court of Appeal held that the "law of your state" language meant state law regardless of whether it was later preempted by the FAA (as it was in the Concepcion case). Since California law ruled out the banning of class arbitrations, the California court had held that the clause was unenforceable in California.
The majority didn't buy it, in a 6-3 decision written by Justice Breyer. Justice Thomas dissented on the basis that he does not believe that the FAA is applicable in state court. Justice Ginsburg wrote another dissent, joined by Justice Sotomayor, in which she said the California court had correctly interpreted the clause and the meaning of the term "law of your state."
It's an interesting lineup -- in the Concepcion case, Scalia wrote the 5-4 decision, joined by Roberts, Alito, Kennedy and Thomas. Breyer wrote the dissent in Concepcion, joined by Sotomayor, Ginsburg and Kagan. In contrast, in the DirecTV case, Breyer wrote the majority 6-3 decision, joined by the same judges as in the Concepcion majority, except for Thomas, with the addition of Kagan. It looks like Breyer and Kagan, although they dissented in Concepcion case, decided that parties had to adhere to Concepcion as the law of the land.
In an interesting twist, DirecTV is now owned by AT&T, the company in the Concepcion case.
Keep in mind that class action arbitration is still a possibility in restricted circumstances, even under the recent Supreme Court apparent expansion of FAA preemption. In Oxford Health Plans v. Sutter, 133 S. Ct 2064 (2013), the Supreme Court refused to vacate an arbitrator's decision that had construed ambiguous language in a contract to permit class action arbitrations. However, many corporations rewrote their arbitration clauses after Concepcion to be very unambiguous about prohibiting class arbitrations.
And I could add, from the employment side, that the NLRB's Horton rule is still being heavily litigated in the courts, although we have yet to see a circuit court decision upholding the principle that an agreement waiving all right to class relief violates the NLRA and Norris LaGuardia.
This is old news for most readers of this blog, but it's nice to see a paper like the New York Times highlight the issue of arbitration waivers. In particular, an article today talks about the Supreme Court's approval of arbitration class action waivers, including some backstory of the Italian Colors restaurant.
especially in the consumer and employee contexts.
If you are interested in the amicus brief, please contact [Imre].
The new historical evidence Imre refers to is hot -- a complete game-changer, if SCOTUS is willing to admit it got Gilmer and Southland wrong. Stay tuned!
This article examines the negative impact that the U.S. Supreme Court’s recent jurisprudence interpreting the Federal Arbitration Act (“FAA”) will have on the ability of states to promote the public interests that ground state employment regulation and argues for a reordering of the relationship between federal arbitration law and state public-policy-based employment arbitration doctrine. The article proceeds in three steps. First, the article demonstrates that the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion and 2013 decision in American Express Co. v. Italian Colors Restaurant together extinguish the state effective-vindication and public policy exceptions to FAA application. In doing so, this case law preempts a significant amount of state employment arbitration regulation and, thus, enables employers to use employment arbitration agreements imposed on employees as a condition of employment as a means to evade the strictures of state employment regulation. Second, the article argues that, as a normative matter, the FAA should allow for consideration of the public interest in determining whether an employment arbitration agreement will be enforceable. Thus, in practice, the FAA should allow for consideration of the need for a worker to effectively vindicate her state statutory employment rights and for consideration of her ability to do so in arbitration. Finally, the article suggests a way forward. Specifically, the article proposes that Congress limit the FAA’s preemptive scope by carving out an exception to section 2 of the FAA that would allow states to regulate predispute employment arbitration agreements subject to the approval of the U.S. Department of Labor or a similar body. Pursuant to this reform, a state would be authorized to propose employment arbitration regulations tailored to the specifics of that state’s employment statutes. A federal overseer with expertise in employment law would be charged, however, with evaluating any such proposed employment arbitration regulation by balancing the federal interest in promoting arbitration agreements as written with the state interest in vindicating state statutory employment rights.
This Note argues that deference is also warranted for the Board’s finding that the NLRA provides employees with a substantive statutory right to pursue legal claims collectively, which would render the arbitration agreements waiving that right unenforceable under the FAA. Although most of the Board’s discussion of the FAA is not entitled to deference, the Board’s finding that concerted legal activity is a substantive right under the NLRA is different. That determination is based on the NLRB’s interpretation of the nature of the rights guaranteed by the NLRA, the statute it administers, and therefore Chevron deference applies.
Needless to say, I'm persuaded -- although I'm a pretty easy sell when it comes to Horton!
Although the Fifth Circuit tried to put a stake in the heart of the NLRB's Horton decision, the Board confirmed its vitality today in its opinion in Murphy Oil U.S.A. The bottom line: the NLRB "reaffirmed the D.R. Horton rationale and applied it to find that the employer violated section 8(a)(1) of the NLRA "by requiring its employees to agree to resolve all employment-related claims through individual arbitration" and by trying "to enforce the unlawful agreements in Federal district court" when employees filed a collective action against the company under the FLSA.
Tim Glynn and I have written about the issue before, and I've blogged about it on Workplace Prof , so I won't belabor the point. Suffice it to say that, although Horton has to date not been well-received outside of the Board and the law reviews, the jury is still out on whether the NLRA bars employers from foreclosing any kind of concerted action in a court or arbitral forum. Indeed, there's an appeal before the Second Circuit which will provide another opportunity for the viability of the theory to be tested.
the Board of Governors of the National Academy of Arbitrators has approved a set of Guidelines for professional standards for arbitrators in mandatory employment arbitration proceedings. The Guidelines were developed over a two year period by a special Academy committee of a dozen members. The committee was chaired by Professor Theodore J. St. Antoine.
From a review, you will see that the Guidelines improve upon current arbitration rules and ethical standards for mandatory employment arbitration cases. Topics that are covered include limits on the source of an arbitrator's appointment, initial and continuing disclosure obligations, arbitrator disqualification, prehearing discovery, prohibited ex parte communications, monetary deposits, addressing issues of public law, and post-award clarification of a decision. It is anticipated that the Guidelines will be helpful in promoting heightened standards of professional responsibility in a manner that will be fair and of benefit for both claimants and respondents in the field.
The Supreme Court ruled in American Express Co. v. Italian Colors Restaurant, 570 U.S. -- 186 L. Ed. 2d 417, 133 S. Ct. 2403 (2013), that class action waivers ordinarily must be enforced under the Federal Arbitration Act even when the cost of an arbitration exceeds a claimant's potential recovery. This essay suggests, however, that employee waivers of class treatment in arbitrations are not appropriate for claims under Title VII of the Civil Rights Act of 1964 because of enforcement provisions unique to that statute. Because Congress has effectively set its legislative face against limits on employee access to class treatment, employee class treatment waivers are unenforceable as to Title VII status discrimination and retaliation claims.
The article focuses on a number of provision in Title VII that the author argues show a commitment to judicial enforcement that the Court found absent in the Sherman Act in Italian Colors. These provisions are also largely absent from the ADEA, which draws its enforcement scheme from the FLSA, so the Gilmer decision doesn't, in theory at least, foreclose the argument.
As someone who has railed unsuccssfully against the arbitration tide in the past, I wish the argument luck without being super optimistic about its success!
Binding the United States to Arbitrate?
False Claims Act suits come in two flavors – those brought by “relators” on behalf of the United States to recover for harm caused by false or fraudulent submission of claims to the government and retaliation suits seeking damages as the result of adverse employment actions resulting from plaintiff’s whistleblowing activity. 31 U.S.C. § 3730(h)(1). Of course, relators are typically, although not always, employees of the defendant since such persons are usually best positioned to know about fraudulent claims. And, of course, both kinds of claims can be, and often are, brought in the same action.
Where, if at all, does arbitration fit into this structure? A recent case raised, but did not exactly resolve, the question. United States ex rel. Paige v. BAE Sys. Tech., 2014 U.S. App. LEXIS 9676, 9-12 (6th Cir. May 22, 2014), involved an effort by defendant to shunt an FCA retaliation claim into arbitration. The Sixth Circuit refused to do so because the employment contract in question provided only for arbitral resolution of claims arising under that agreement. The FCA “is purely statutory and exists independent of the Agreement.” While the FCA bars retaliation with respect to “"terms and conditions of employment," it is not limited to breach of any given employment contract. Thus, the arbitration clause simply did not reach the FCA claim at bar.
If employment law teaches us anything, however, it is that employers are adept at responding to limiting judicial constuctions of the language of their agreements with workers, and we can be confident that, unlike the agreement in BAE, future arbitration agreements will explicitly require the arbitration of FCA claims. In fact, BAE’s form was odd because it did not refer to statutory claims at all, and the Sixth Circuit provided examples of language that apparently would reach such claims.
What happens when such clauses are written to embrace FCA claims? Although a district court opinion in 2000 found such a clause invalid, Nguyen v. City of Cleveland, 121 F. Supp. 2d 643, 647 (N.D. Ohio 2000), more recent authority – in line with the Supreme Court’s enshrinement of the Federal Arbitration Act as a “superstatute”-- goes the other way. For example, United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 381 (4th Cir. 2008), rejected the argument that the FCA barred waiver of rights to bring suit in federal court.
Both BAE and Kellogg Brown & Root involved FCA retaliation claims. In such cases the plaintiff is not merely a relator but, instead or in addition, is suing on his own behalf. Even assuming that the FAA permits employees to agree to arbitrate their own claims, would an agreement to arbitrate (if broadly enough framed) bar court suit by the employee acting as a relator?
This is a much more problematic scenario, both pragmatically and legally. Practically speaking, the FCA’s procedures cut against arbitration but probably don’t preclude it: a relator must file her complaint under seal, and the period of nondisclosure (in theory 60 days but almost always extended far longer, sometimes years) allows the Department of Justice to decide whether to intervene to pursue the litigation itself. Thus, the normal motion to stay a suit pending arbitration is not a good fit with this somewhat unusual procedure and filing for arbitration before bringing a qui tam suit might trigger the FCA’s public disclosure bar. See United States ex rel. Cassaday v. KBR, Inc., 590 F. Supp. 2d 850 (S.D. Tex. 2008). Further, should the DoJ in fact intervene, the suit becomes not only in name but also in reality one prosecuted by the government. It would seem that the original relator’s agreement to arbitrate, if not simply irrelevant at this point, could not limit the federal government’s right to proceed. EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) (individual employee’s arbitration agreement could not limit EEOC’s right to seek victim-specific relief for such an individual).
But what if Justice chooses not to intervene? In that case, the original relator (who, by hypothesis agreed to arbitrate all claims against the defendant) could be faced with a motion to stay pending arbitration, and the court would have to confront the conceptual objection. Put simply, that is that the government (represented by the relator) can’t be bound by an agreement entered into by the relator in her private capacity. And an FCA suit is not merely in the name of the government: even when the DoJ does not intervene, the bulk of any judgment will go to the United States Treasury and any settlement with the defendant requires Justice approval.
Some analogies cut in this direction. For example, an employee cannot waive his or her right to report legal violations to the government. Any agreement to do so is null and void. E.g., EEOC v. Frank's Nursery & Crafts, Inc., 177 F.3d 448 (6th Cir. 1999).
While Iskanian involved a federalism question absent where the FCA is concerned – whether the FAA deprived California of the power to deputize employees to prosecute Labor Code violations on the state's behalf – the result seems correct and applicable to the FCA. Despite those problems, a recent district court decision in the FCA context held in favor of arbitration. Deck v. Miami Jacobs Bus. College Co., 2013 U.S. Dist. LEXIS 14845 (S.D. Ohio Jan. 31, 2013). Contra Mikes v. Strauss, 889 F. Supp. 746 (S.D.N.Y. 1995) (dicta suggesting that the plaintiff, as relator, stands as a private representative of the government and, since the government was not a party to any arbitration agreement, a plaintiff, suing on the government's behalf is not bound).
Assuming that FCA claims per se are not arbitrable but retaliation claims are, courts will have to struggle with questions of preclusion. The two claims in the two fora are almost certain to overlap, and, should the relator proceed with the arbitration (or the defendant move to compel arbitration), the arbitral award will almost always be issued before a court decision. Is it issue preclusive? A fascinating question for civil procedure buffs, but well beyond the scope of this post. FWIW, my instinct is that preclusion shouldn’t work. But, especially when it comes to arbitration’s reach, I’ve been wrong before!
Thanks to Angela Raleigh, Seton Hall class of 2016, for her help on this.
Just a friendly reminder from conference organizers, Melissa Hart and Scott Moss at the University of Colorado Law School, that the deadline to register to attend, and/or present a paper at, the 9th Annual Labor and Employment Scholars Colloquium is Friday, August 1, 2014. The Colloquium is scheduled in Boulder between September 11-13, 2014.
Please direct any questions to Melissa Hart (Melissa.Hart@Colorado.EDU) or Scott Moss (Scott.Moss@Colorado.EDU).
John Dunsford is one of the nation's foremost arbitrators and labor law scholars. For more than four decades, labor unions and companies have entrusted him to settle their differences.
"I view the selection to arbitrate as a privilege," says Professor Dunsford. "One of the highest compliments you can receive is to be asked by parties with adverse interests to consider their differences and offer solutions. It's very rewarding."
Dunsford was a young college professor when the legendary scholar and arbitrator Leo Brown, SJ, tapped him in the early 1960s to be an apprentice.
""Among the many things Fr. Brown taught me was to try to understand the underlying problem of whatever case is given to you,"" Dunsford remembers. "Sometimes it's not apparent and other times you have to dig for it, but if you can help the parties resolve their dispute and do something to help their relationship along the way then you've done a lot."
As Professor Dunsford's reputation as a thoughtful and unbiased arbitrator grew, so did his client list. Over the span of his career, Dunsford has arbitrated nearly 1,000 disputes for groups such as U.S. Steel and the United Steelworkers of America and the National Football League and the Bert Bell Retirement and Pension Plan\; Southwestern Bell and the Communications Workers of America\; the International Revenue Service and the National Treasury Employees Union. He has arbitrated for virtually all of the U.S. airlines and their unions. Most recently, he participated in an interest arbitration between Alaska Airlines and the Transport Workers Union to set rates during the difficult economic times following 9/11. He is a permanent arbitrator for John Deere & Company and the United Auto Workers.
Professor Dunsford has held several leadership positions with the prestigious National Academy of Arbitrators, including serving as president in 1984-1985. In 2000, he was named a fellow in the College of Labor and Employment Lawyers. From 1987-1994, he directed the School's Wefel Center for Employment Law and remains a senior consultant. He was the McDonnell Professor of Justice in American Society from 1982-1987.
Except for a two-year break in the late 1970s when he practiced arbitration full time, Professor Dunsford has been teaching labor law at the School of Law since the early 1960s. In addition to a book, individuals and Unions, he has written numerous articles and chapters on labor law, arbitration, and the U.S. Constitution and personal freedom. Currently, his research interest is in the area of church-state relations, specifically tuition vouchers that allow parents the option of using state money to send their children to the schools of their choice.


An article of personal property that has been so attached or wrought into land, or a building on land, that it becomes part and parcel of the land and may only be removed with the consent of the owner of the land. An article of personalty that has been so attached to real estate as to become a part thereof, even though it may retain its separate physical identity. Any chattel that has been so affixed to land that, in the view of the law, it has taken on a nature that makes it part of the land, loses its character as a chattel; it becomes a part of, and passes with, the ownership of land (thus, in the US, a fixture is referred to sometimes as a 'chattel fixture'); "a fixture is a former chattel which, while retaining its separate physical identity, is so connected with the realty that a disinterested observer would consider it a part thereof." 5 Am.L.Prop., § 19.1. Ultimately a fixture becomes the property of the owner of the freehold or fee interest, unless there is clear evidence to the contrary (South Staffordshire Water Co v Sharman  2 QB 44; Commercial Finance Co. v. Brooksville Hotel Co., 98 Fla 410, 123 So 814, 64 ALR 1219 (1929); In re Walker Bin Co., 9 F Supp 367, 369 (DC NY 1935)). The principle that an item secured to the land may become part of the realty is recognized in Roman law (by accessio); in the civil law; and, since the 16th century, has been part of the common law. Once an item becomes a 'fixture', it may not be removed by an occupier or a tenant of land, even though initially it was the property of that party; unless the consent of the owner, or a person who has contracted to be the owner, has been obtained or unless there is a statutory provision which overrules the dictum quidquid plantatur solo, solo cedit, 'whatever is affixed to soil, belongs to the soil'.
At common law, in determining whether an item has become a fixture, it is necessary to consider (a) the purpose, intent or object of the annexation; and (b) the degree or manner of annexation to the land or a building thereon. There must be a union between the chattel and the land; a lack of physical attachment mitigates against an item being considered a fixture However, an object resting on the ground by its own weight alone can be a fixture, provided it is clearly intended to form an adjunct to the soil or a building thereon (Snedeker v. Warring, 12 NY 170, 175 (1854); Holland v Hodgson (1872) LR 7 CP 335; Berkley v Poulett (1976) 241 EG 911). Thus, the 'object and purpose of annexation' test is more likely than the 'degree of annexation' test to be decisive. When the intention is to improve the property permanently the personal property becomes a fixture, but if it is well secured purely to ensure its proper safety, use or better enjoyment it is likely to remain a chattel "the question is not whether the thing itself is easily removed but whether it is an essential part of the building itself." D'Eyncourt v Gregory (1866) LR 3 Eq 382, 396. Nonetheless, the onus must be on the person who affixed it to show that it was intended all along to continue as a chattel, or (especially if the chattel is fixed only by its own weight) for the owner of the land to show that it has ceased to be a chattel (Holland v Hodgson, supra).
In the final analysis, what constitutes a fixture is a question to be determined by the facts in each case. An item fixed solely by its own weight generally remains a chattel; and an item molded into a scheme of ornamentation, so that the scheme would be wholly inadequate without it, usually becomes a fixture. However, both these propositions may be reversed if that would lend better credence to the predetermination of the parties. Thus, items fixed purely for domestic ornamentation may be removed before the end of a lease, or prior to an unconditional contact of sale, without notice to the landlord or prospective purchaser, but trees and plants are an essential part of the land and should not be removed without prior agreement.
In the US, whether an item may be considered to have become a fixture may be said to depend on "the facts and circumstances of the particular case, including the relationship of the parties, and is determined by the united application of the requisites, annexation, adaptation and intention." 36A C.J.S., Fixtures, § 1. As a rule, the principles have followed the common law (which in turn are not dissimilar to Roman and civil law), although the courts have tended (since Teaff v. Hewitt, 1 Ohio St 530 (1853)) to place more emphasis on the question of intention as a test in deciding whether an item has become a fixture and (as in English law) the mere fact of annexation to land or buildings has lost some of its primacy. In most jurisdictions, the factors for determining whether an item has become a fixture may be summarized as: (i) the mode and sufficiency of annexation (Crane Erectors & Riggers v. La Salle Nat'l Bank, 125 Ill App.3d 658, 466 NE.2d 397 (1984); George v. Commercial Credit Corp., 440 F.2d 551 (7th Cir. Wis 1971)); (ii) the purpose and intent behind the annexation, especially whether annexation is necessary for the proper use of the item (Am. Tel. & Telegraph Co. v. Muller, 299 F Supp 157 (D SC 1968); WO Co. v. Benjamin Franklin Corp., 562 F.2d 1339, 1344 (1st Cir. NH 1977)); (iii) the degree to which the item has become adapted to be used as part of the property (Manufacturers Bank & Trust Co. v. Lauchli, 118 F.2d 607 (8th Cir. Mo 1941)); and (iv) the ease with which the article may be removed without injury to the premises (First Nat'l Bank v. Whirlpool, 517 SW.2d 262 (Tex 1974); Allstate Ins. Co. v. County of Los Angeles, 161 Cal App.3d 877, 207 Cal Rptr 888 (1984)). Thus, such items as a kitchen cabinet, an air-conditioning unit or a gas or electric range (even though such items may be easily removed) are usually installed as an essential item to an apartment and, therefore, are clearly intended to remain as fixtures (Mortgage Bond Co. v. Stephens, 181 Okla 419, 74 P.2d 361 (1937); State Mutual v. Trautwein, 414 SW.2d 587 (Ky 1967); Anno: 64 ALR 1222: Refrigerators as Fixtures; Anno: 43 ALR2d 1378: Air-conditioning Plant, Equipment, Apparatus, or the Like as Fixture; Anno: 57 ALR2d 1103: Electric Range as Fixture). Wall-to-wall carpeting is not necessarily a fixture, provided it can be removed without damaging the property and was not intended to become part of the property (Hartford Fire Ins. Co. v. Balch, 350 P.2d 514 (Okla 1960); cf. Haverfield Company v. Siegel, 366 SW.2d 790 (Tex Civ App 1963); Anno: 55 ALR2d 1044: Carpets, Linoleum, or Like as Fixture). Other items that have been held to be fixtures include: chairs fixed to the floor of a theatre; wall beds; a chair lift at a ski resort; and a solar water heater panel. Most jurisdictions accept that items affixed for trade or manufacture can be removed at the end of the lease by the tenant (Anderson-Tully Co. v. United States, 189 F.2d 196 (5th Cir. Miss 1951); Moss v. Rocky Point Park, Inc., 103 A.2d 72 (RI 1954)). In this respect, most jurisdictions do not follow the common law view that an agricultural fixture is not a trade fixture, but consider any such item like any other trade fixture and allow its removal at the end of a lease, unless it is permanently fixed to the land and is clearly intended as an integral part of a farm. American courts increasingly give greater significance to modern expectations and accepted practices than to the older English rules of 'fixing'.
In English law, items that have been held to remain chattels include light bulbs; a valuable tapestry fixed with battens to the wall of a private residence solely for its protection; an ornamental chimney piece; ornamental paneling; seats bolted in the auditorium of a theatre; an army hut bolted in sections to a concrete foundation. A plumbed in washing machine, a gas fire, and a bedroom headboard must each be fixed for its proper enjoyment, but none of these is intended normally to enhance, or become an essential part of the freehold. Items held to have become fixtures include a tapestry set into the wall as part of the design and decoration of a house; seats secured to the floor of a cinema hall; 436 power looms installed in a mill; door and window fastenings; gratings to sinks and gullies; and statues and stone garden seats secured by their own weight but forming part of a formal garden design. Thus, there are no hard and fast rules that may be used to decide if a chattel has become a fixture, as Lord Lindley said in Reynolds v Ashby & Sons  AC 466, 473-74 (HL): "My Lords, I do not profess to be able to reconcile all the cases on fixtures, still less all that has been said about them. In dealing with them attention must be paid not only to the nature of the thing and to the mode of attachment, but to the circumstances under which it was attached, the purpose to be served and … to the position of the rival claimants to the thing in dispute". However, since that date the common law precedents have established five general rules, which are well enumerated in Canada as: (i) articles attached only by weight are not fixtures, unless intention or purpose indicates otherwise; (ii) annexation favors the determination that an item is a fixture; (iii) degree and object of the annexation may patently show the change in the nature of a chattel; (iv) intention is important where it flows from (iii); and (v) the tenant has a right to remove 'trade fixtures' (Stack v T Eaton Co (1902), 4 OLR 338 (Can); Reid v Smith (1906) 3 CLR 656 (Aus); MacMillan Bloedel Ltd v Sunshine Coast Assessor (1982) 19 MPLR 204, 210 (BC Can)).
Even when a chattel has been so affixed to premises so as to be classifiable as a fixture, it may be possible for the person who fixed it to remove it because of (a) a covenant or agreement with the landowner; (b) a common law rule; or (c) a statutory provision. Thus, at common law, a fixture attached to land or a building for the purpose of a tenant's trade or business – a 'trade fixture' – is considered prima facie to be removable by the tenant at the end of a lease–it is presumed that there is no intention to make the 'trade' fixture a permanent part of the realty (Poole's Case (1703) 1 Salk 368, 91 Eng Rep 320; Fisher v Dixon (1845) 12 Cl & F 312, 8 Eng Rep 1426 (HL); Wiggins Ferry Co. v. Ohio & Mississippi R. Co., 142 US 396, 12 S Ct 188, 35 L Ed 1055, 1063 (1892); Shields v. Hansen, 201 Wis 349, 230 NW 51, 52 (1930)). Items that a tenant has a right to remove (either because they are installed for convenience, as a trade fixture, or as an agricultural tenant's fixture) may be referred to as 'tenant's fixtures', and those that he may not remove, whether fixed by the landlord or the tenant, may be referred to as 'landlord's fixtures'.
At common law, any fixtures that a tenant has a right to remove must be taken out of the premises during the term of the lease, unless there is an agreement with the landlord to the contrary. Accordingly, at the end of a lease, when a tenant leaves and gives up any right to possession, all fixtures from that time forth become the property of the landlord (Pugh v Arton (1869) LR 8 Eq 626; Barff v Probyn (1895) 64 LJ QB 557, [1895-9] All ER Rep 1038; 51C C.J.S., L & T, § 397), whether they were affixed so as to become part of the realty, or whether they were fixed for the tenant's enjoyment or for trade purpose. However, if the tenant holds over (either by agreement or statutory right), or if the tenancy is renewed, the tenant has a right to remove his fixtures until he finally gives up possession (New Zealand Government Property Corporation v H M and S Ltd  QB 1145,  262 EG 765,  1 All ER 624 (CA); Lilenquist v. Pitchford's, Inc., 525 P.2d 93 (Or 1973); 35 Am.Jur.2d., Fixtures, § 42). At common law, (a view still supported reluctantly by the English courts) once a lease has expired all rights of the tenant to remove any fixture also expires (Pugh v Arton, supra; Re Palmiero: debtor 3666 of 1999  38 EG 195, 196) In the US, in some jurisdictions, after the end of a tenancy that was held for an uncertain duration (such as a tenancy at will), a reasonable period of time is allowed for the removal of fixtures; but not if a notice to vacate is of sufficient duration that the tenant could have removed the items during that period (36A C.J.S., Fixtures, § 41g).
A freeholder may remove any item from his property; but once he has contracted to sell the land he may only remove items that are clearly chattels, unless he expressly agrees to the contrary. English statute law provides that a conveyance of land is deemed to pass all fixtures (but not chattels) to the purchaser, unless an item is expressly reserved by the vendor (Law of Property Act 1925, s. 62(1)); as does a transfer by will (Re Whaley, Whaley v Roehrich  1 Ch 615)—this applies to items that would, as between landlord and tenant, be considered as tenant's fixtures.
In the US, a sale of land generally includes any permanent fixtures, unless an item is expressly excluded; although "there is no general rule as to what personalty will fall within a provision of a land contract covering personal property on, or attached to, or used in connection with the premises, since such a matter is a question of intent as disclosed by the particular instrument." 77 Am.Jur.2d., Vendor and Purchaser, § 99, p. 193 (Anno: 97 ALR3d 1220: Damages—Vendor's Removal of Property).
A mortgagee's right to land includes fixtures annexed thereto, even though they are not specified in the mortgage deed, and the mortgagee acquires a right to items annexed by the mortgagor whether annexed before or after he takes possession; although this rule normally excludes items that would be 'tenant's fixtures' (Longbottom v Berry (1869) LR 5 QB 137; Holland v Hodgson, supra; Standard Oil Co. v. La Crosse Super Auto Service, 217 Wis 237, 258 NW 791 (1935); Anno: 99 ALR 69: Fixtures—Filling Station; Metropolitan Life Ins. Co. v. Kimball, 163 Or 31, 94 P.2d 1101 (1939)).
In the US, the Uniform Commercial Code (which deals primarily with commercial transactions and goods and not real estate) stipulates that "goods are 'fixtures' when they become so related to particular real estate that an interest in them arises under real estate law" UCC § 9-313(1)(a). The Code deals with the priority of 'security interests' in goods and the position when they become fixtures. However, the code expressly excludes "ordinary building materials incorporated into an improvement on the land" UCC § 9-313(2). The Code provides that goods may retain their chattel nature in respect of chattel financing, and therefore their priority as regards creditors, if they are not integrally incorporated into the real estate. Also, the code sets out priority requirements as between a real estate mortgagee and a holder of a purchase-money security interest in the 'chattel' that has been attached to the realty. This provision of the Code has been statutorily adopted in some states, although it has been significantly modified in many states.
See also accession, agricultural tenant's fixture(Eng), appurtenance, immeuble, compensation for improvements, constructive annexation, emblements, financing statement(US), mobile home.
Anno: 17 ALR3d 1381: Insurance—'Fixtures'.
R. Kratovil, Fixtures and the Real Estate Mortgage, (1948) 97 U. Penn. L. Rev. 180, 210; (1957) 6 Kan L. Rev. 66.
R.J. Werner and R. Kratovil. Real Estate Law (10th ed. 1993), Ch. 3 'Fixtures'.
G.S. Nelson and D.A. Whitman. Real Estate Finance Law (3rd ed. 1994), §§ 9.5-9.7.
G.J. Siedel and J.K. Cheezem. Real Estate Law (4th ed. 1999), pp. 31-58.
M.R. Friedman. Friedman on Leases (4th ed. 1997), Ch. 24 'Fixtures'.
35 Am.Jur.2d., Fixtures, §§ 1-131.
36A Cor.Jur.Sec., Fixtures, §§ 1-67.
2 Tiffany on Real Property (3rd ed. 1939), §§ 606-626.
5 Powell on Real Property, Ch. 57 'Fixtures'.
5 Thompson on Real Property (2d ed. 1994), § 13.05, Ch. 46 'Fixtures'.
A.M. Squillante. The Law of Fixtures: Common Law and the Uniform Commercial Code (1992).
G.W. Hinde and D.W. McMorland. Land Law in New Zealand (1997), pp. 918-927.
A.J. Bradbrook et al. Australian Real Property Law (2d ed. 1997), Ch. 15, I 'Fixtures'.
S. Hepburn. Principles of Property Law (Australia) (1998), pp. 129-139.
Anger and Honsberger: Law of Real Property (Canada) (2d ed. 1985), Ch. 21 'Fixtures'.
Megarry & Wade: The Law of Real Property (5th ed. 1984), pp. 730-738.
Maudsley & Burn's Land Law: Cases and Materials (7th ed. 1998), pp. 90-95.
Cheshire and Burn's Modern Law of Real Property (15th ed. 1994), pp. 143-148.
1 Hill & Redman's Landlord and Tenant Law, paras. A[1641-1707].
1 Woodfall's Law of Landlord and Tenant, paras. 13.131-13.136.
27(1) Halsbury's Laws of England, Landlord and Tenant (4th ed. Reissue), paras. 143-156.


text:
This appeal arose from a conflict among the three members of IE Test, LLC (IE Test). After a dispute between defendant Kenneth Carroll and the other members, Patrick Cupo and Byron James, IE Test filed an action to expel Carroll, pursuant to the Limited Liability Company Act (LLCA). In 2004,Carroll and Cupo formed Instrumentation Engineering, LLC. Carroll owned a fifty-one percent interest in Instrumentation Engineering, and Cupo owned the remaining forty-nine percent. James was employed by Instrumentation Engineering, initially as Business Development Manager and later as Vice President. Carroll, Cupo, and James entered into a preliminary agreement stating intention to enter into an operating agreement for IE Test. Carroll claimed that Instrumentation Engineering owed substantial sums to him and his companies, and that became a point of contention among Cupo, James, and Carroll soon after they agreed to share ownership of IE Test. Carroll acknowledged that IE Test had no legal obligation to repay him for losses sustained because of Instrumentation Engineering's bankruptcy, but pressed for compensation that would allow him to recover some of his lost investment. By early 2010, Cupo and James were actively pursing a strategy to use the LLCA to expel Carroll as a member of the LLC. The trial court found in IE Test's favor on its claim based on subsection 3(c), reasoning that the "not reasonably practicable" language imposed a less stringent standard than did subsection 3(a). The trial court granted IE Test's motion for partial summary judgment and expelled Carroll as an LLC member. Carroll appealed. In an unpublished opinion, an Appellate Division panel affirmed, construing N.J.S.A.42:2B-24(b)(3), and its counterpart provision in the Revised Uniform Limited Liability Company Act (RULLCA), N.J.S.A.42:2C-46(e), to mandate that a trial judge engage in predictive reasoning in order to evaluate the future impact of an LLC member's current conduct. The panel found that Carroll's relationship with Cupo and James never recovered from Carroll's demand that he be compensated in a manner that permitted him to recoup his lost investment. The Supreme Court reversed. Applied to the record of this case, the standard of subsection 3(c) did not warrant a grant of partial summary judgment expelling Carroll from IE Test.
In this appeal, the Court considers the Limited Liability Company Act (LLCA) and the circumstances under which N.J.S.A.42:2B-24(b)(3)(c)(subsection 3(c)) authorizes the expulsion of a member of a limited liability company (LLC).
This appeal arises from a conflict among the three members of IE Test, LLC (IE Test), a business formed as an LLC. After a dispute between defendant Kenneth Carroll (Carroll) and the other members, Patrick Cupo (Cupo) and Byron James (James), IE Test filed an action to expel Carroll, pursuant to the LLCA. The dispute stemmed from the failure of a prior business in which IE Test s three LLC members were involved. In 2004,Carroll and Cupo formed Instrumentation Engineering, LLC (Instrumentation Engineering). Carroll owned a fifty-one percent interest in Instrumentation Engineering, and Cupo owned the remaining forty-nine percent. James was employed by Instrumentation Engineering, initially as Business Development Manager and later as Vice President.
Carroll, Cupo, and James entered into a preliminary agreement stating intention to enter into an operating agreement for IE Test. They acknowledged that from the inception of IE Test, the Members of the Company and their LLC Percentage Interests have been and are: Kenneth Carroll (33%), Pat Cupo (34%) [and] Byron James (33%). IE Test reported revenue in the amount of $1,232,078 during the first half of 2010. Carroll s claim that Instrumentation Engineering owed substantial sums to him and his companies became a point of contention among Cupo, James, and Carroll soon after they agreed to share ownership of IE Test. Carroll acknowledged that IE Test had no legal obligation to repay him for losses sustained because of Instrumentation Engineering s bankruptcy, but pressed for compensation that would allow him to recover some of his lost investment. By early 2010, Cupo and James were actively pursing a strategy to use the LLCA to expel Carroll as a member of the LLC. Thereafter, IE Test filed this action, asserting claims for breach of fiduciary duty of loyalty, breach of fiduciary duty of care, breach of contract and breach of the implied covenant of good faith and fair dealing, and sought the expulsion of Carroll as an LLC member pursuant to N.J.S.A.42:2B-24(b)(3)(a) (subsection 3(a)) or, in the alternative, under subsection 3(c).
Following discovery, IE Test filed a motion for partial summary judgment, in which it sought judgment in its favor based on two theories. First, invoking subsection 3(a), IE Test contended that Carroll had engaged in wrongful conduct that adversely and materially affected the LLC s business. Second, IE Test claimed that Carroll had engaged in conduct which made it not reasonably practicable to carry on IE Test s business and that he should be expelled from the LLC under subsection 3(c). The trial court rejected the subsection 3(a) claim, finding that Carroll s insistence on specific compensation terms did not amount to wrongful conduct within the meaning of subsection 3(a). The trial court, however, found in IE Test s favor on its claim based on subsection 3(c), reasoning that the not reasonably practicable language of subsection 3(c) imposed a less stringent standard than did subsection 3(a). The trial court granted IE Test s motion for partial summary judgment and expelled Carroll as an LLC member. Carroll appealed. In an unpublished opinion, an Appellate Division panel affirmed that judgment. The panel construed N.J.S.A.42:2B-24(b)(3), and its counterpart provision in the Revised Uniform Limited Liability Company Act (RULLCA), N.J.S.A.42:2C-46(e),to mandate that a trial judge engage in predictive reasoning in order to evaluate the future impact of an LLC member s current conduct. The panel found that Carroll s relationship with Cupo and James never recovered from Carroll s demand that he be compensated in a manner that permitted him to recoup his lost investment.
This Court granted Carroll s petition for certification. 222 N.J.15 (2015).
HELD: A disagreement among LLC members over the terms of an operating agreement does not necessarily compel the expulsion of a dissenting LLC member. If an LLC s members can manage the LLC without an operating agreement, invoking as necessary the default majority-rule provision of the LLCA, then a conflict among LLC members may not warrant a member s expulsion under the LLCA. Subsection 3(c) does not warrant a grant of partial summary judgment expelling Carroll from IE Test.
The judgment of the Appellate Division is REVERSED. The matter is REMANDED to the trial court for further proceedings consisted with this opinion.
CHIEF JUSTICE RABNER; JUSTICES LaVecchia, ALBIN, FERNANDEZ-VINA, and SOLOMON; and JUDGE CUFF (temporarily assigned) join in JUSTICE PATTERSON S OPINION.
Paul A. Sandars, III, argued the cause for appellant (Lum, Drasco & Positan, attorney; Mr. Sandars and Scott E. Reiser, of counsel and on the brief).
Eric J. Szoke argued the cause for respondent (Steven Robert Lehr, attorney).
This appeal arises from a conflict among the three members of IE Test, LLC (IE Test), an engineering consultant business formed as a limited liability company (LLC). In the wake of a dispute about the terms of an operating agreement between defendant Kenneth Carroll (Carroll) and the LLC s other members, Patrick Cupo (Cupo) and Byron James (James), IE Test filed an action to expel Carroll as an LLC member, pursuant to the Limited Liability Company Act, N.J.S.A. 42:2B-1 to -70 (LLCA). The trial court granted partial summary judgment and ordered that Carroll be disassociated from IE Test. It based its ruling on a provision of the LLCA that authorized the expulsion of an LLC member by judicial determination if the court finds that the member has engaged in conduct relating to the LLC s business which makes it not reasonably practicable to carry on the business with the LLC member remaining part of the LLC. N.J.S.A. 42:2B-24(b)(3)(c) (subsection 3(c)). The Appellate Division affirmed the trial court s judgment.
We construe the Legislature s intent when it enacted subsection 3(c) of the LLCA, and an analogous provision in the LLCA s successor statute, the Revised Uniform Limited Liability Company Act, N.J.S.A. 42:2C-1 to -94 (RULLCA). We hold that a disagreement among LLC members over the terms of an operating agreement does not necessarily compel the expulsion of a dissenting LLC member. If an LLC s members can manage the LLC without an operating agreement, invoking as necessary the default majority-rule provision of the LLCA, then a conflict among LLC members may not warrant a member s expulsion under the LLCA. To assist trial courts in determining whether it is not reasonably practicable to operate an LLC in light of the LLC member s conduct, we adopt a series of factors.
Applied to the record of this case, the standard of subsection 3(c) does not warrant a grant of partial summary judgment expelling Carroll from IE Test. Accordingly, we reverse the Appellate Division s judgment and remand this matter to the trial court.
We derive our summary of the facts from the summary judgment record.
The dispute that prompted this litigation stemmed from the failure of a prior business in which IE Test s three LLC members were involved. In 2004, Carroll and Cupo formed Instrumentation Engineering, LLC (Instrumentation Engineering) pursuant to Delaware s LLC laws. By agreement, Carroll owned a fifty-one percent interest in Instrument Engineering, and Cupo owned the remaining forty-nine percent. James was employed by Instrumentation Engineering, initially as Business Development Manager and later as Vice President.
In July 2009, following a series of financial setbacks, Instrumentation Engineering filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of New Jersey. In the bankruptcy proceeding, Carroll claimed that Instrumentation Engineering owed him and his companies $2,543,318. Although the record does not reveal whether Instrumentation Engineering s debt to Carroll was discharged in bankruptcy, the parties agree that the company did not repay the debt.
As Instrumentation Engineering s business failed, its owners contemplated a new venture. Shortly before Instrumentation Engineering filed for Chapter 7 bankruptcy, Cupo formed IE Test as a New Jersey LLC. The LLC s business is the design of testing systems used by manufacturers to evaluate their products.
Cupo was initially IE Test s sole member. According to Cupo, two months after IE Test was formed, he sold a fifty-percent interest in the LLC to James. Carroll purchased the intellectual property and hardware that had been used in the business of Instrumentation Engineering from the trustee of that entity s estate in bankruptcy. Carroll contends that he transferred those assets to IE Test, but Cupo disputes that contention.
Carroll, Cupo, and James entered into a preliminary agreement. In that document, Carroll, Cupo, and James stated their intention to enter into an operating agreement for IE Test. They acknowledged that from the inception of IE Test, the Members of the Company and their LLC Percentage Interests have been and are: Kenneth Carroll (33%), Pat Cupo (34%) [and] Byron James (33%).
The LLC members were assigned divergent roles in the business of IE Test. Cupo managed the engineering, manufacturing, and financial components of the business. James was responsible for business development. Carroll s role was limited; he was not expected to become involved in the day-to-day management of IE Test, and the record confirms that he did not do so. Carroll maintained no office at IE Test s facility and participated in only one sales call. IE Test does not contend that Carroll ever intervened, or attempted to intervene, in IE Test s day-to-day operations.
IE Test developed an increasingly successful business throughout the period in which it operated with Carroll as an LLC member. After a modest beginning in 2009, during which it earned $396,597, IE Test reported revenue in the amount of $1,232,078 during the first half of 2010. Cupo and James drew salaries in the amount of $170,000 per year, and several $10,000 bonuses. IE Test paid Carroll no salary or bonus at any time.
Carroll s claim that Instrumentation Engineering owed substantial sums to him and his companies became a point of contention among Cupo, James, and Carroll soon after they agreed to share ownership of IE Test. Carroll acknowledged that IE Test had no legal obligation to repay him for losses sustained because of Instrumentation Engineering s bankruptcy. He pressed, however, for compensation that would allow him to recover some of his lost investment in Instrumentation Engineering.
An e-mail exchange between Cupo and James in October 2009 described the two options proposed by Carroll as alternative frameworks for an operating agreement: either an arrangement whereby Carroll would be paid an equal share of IE Test s profits with a premium, or the payment of a salary to Carroll plus an equal share of the profits. James and Cupo then agreed that they did not want to work with Carroll. James commented, however, that Carroll would not walk away from the business unless Cupo and James agreed to one of his alternative proposals for his compensation.
It is unclear precisely when Cupo and James decided to file an action to disassociate Carroll as an LLC member pursuant to N.J.S.A. 42:2B-24(b)(3). By early January 2010, however, they were actively pursuing that strategy. In a January 5-6, 2010 e-mail exchange about the best way to remove Carroll as an LLC member, Cupo and James discussed the option of filing a lawsuit to expel him from the company. James wrote that [n]o one is getting rich here and a third partner will most likely lead to the failure of the business.
The three LLC members met on January 7, 2010. According to Cupo and James, their plans for IE Test did not align with those of Carroll, and the company could not, then or in the foreseeable future, afford a third member. Carroll contends that Cupo and James declined to honor his ownership interest in IE Test and refused to enter into an operating agreement. At that point, the three LLC members ceased communicating about the operation of their business.
Through his counsel, Carroll proposed an operating agreement to Cupo and James on September 7, 2010. The record contains no evidence that Cupo or James produced a draft operating agreement after rejecting Carroll s proposal. It is undisputed that no operating agreement for IE Test was ever executed.
Following the depositions of Carroll, Cupo, and James, and other discovery, IE Test filed a motion for partial summary judgment. It sought judgment in its favor on its claim for expulsion based upon two alternative theories. First, invoking subsection 3(a), IE Test contended that Carroll had engaged in wrongful conduct that adversely and materially affected the limited liability company s business. N.J.S.A. 42:2B-24(b)(3)(a). Second, IE Test claimed that Carroll had engaged in conduct which made it not reasonably practicable to carry on IE Test s business, and that he should be expelled from the LLC pursuant to N.J.S.A 42:2B-24(b)(3)(c). In a cross-motion, Carroll sought summary judgment dismissing plaintiff s claims with prejudice and awarding counsel fees pursuant to the Frivolous Litigation Statute,N.J.S.A. 2A:15-59.1.
The trial court rejected IE Test s claim based on subsection 3(a). The court noted that Cupo and James wanted no further interaction with Carroll. It stated that it was skeptical that Carroll could remain a passive member of the LLC. Nonetheless, the court found that Carroll s insistence on specific compensation terms did not amount to wrongful conduct within the meaning of subsection 3(a). It concluded that although Carroll s demands may have been unreasonable, those demands were not unlawful, and inflicted no harm on IE Test.
The trial court, however, found in IE Test s favor on its claim based on subsection 3(c). It reasoned that the not reasonably practicable language of subsection 3(c) imposed a less stringent standard than did subsection 3(a). In its application of that standard, the trial court focused on problems that could arise in the future. The court stated that because of the LLC members continuing dispute, it might prove impossible for Cupo and James to secure Carroll s approval of essential documents. The court concluded that Carroll s continued involvement would generate more controversy and further litigation. It therefore ruled that it was not reasonably practicable for the business to continue with Carroll involved, and that IE Test had satisfied the standard of subsection 3(c).
The trial court granted IE Test s motion for partial summary judgment and denied Carroll s cross-motion for summary judgment. It expelled Carroll as an LLC member, effective immediately. At Carroll s request, the court stayed its judgment of expulsion pending appeal. The trial court conducted a bench trial to determine the value of IE Test, and valued the LLC at $683,173.2 The court then entered final judgment for Carroll in the amount of $227,497, representing thirty-three percent of the total value of IE Test, plus prejudgment interest in the amount of $14,976.
Carroll appealed the trial court s judgment. In an unpublished opinion, an Appellate Division panel affirmed that judgment. The panel construed N.J.S.A. 42:2B-24(b)(3) and its counterpart provision in the RULLCA, N.J.S.A. 42:2C-46(e), to mandate that a trial judge engage in predictive reasoning in order to evaluate the future impact of an LLC member s current conduct. The panel found that Carroll s relationship with Cupo and James never recovered from Carroll s demand that he be compensated in a manner that permitted him to recoup his lost investment. It reasoned that as a consequence of that rift, the continued operation of IE Test with Carroll as a member was not reasonably practicable under subsection 3(c).
We granted Carroll s petition for certification. 222 N.J. 15 (2015).
Carroll argues that the trial court s order disassociating him from IE Test deprived him of protections that the Legislature conferred on minority investors when it enacted the LLCA. He contends that the LLCA resolves any concerns about disruption in the company s management, because the statute provides for majority rule in management decisions in the absence of an operating agreement. Carroll notes the absence of evidence that he interfered with the day-to-day running of the business, that he disparaged Cupo or James to employees, vendors or clients, or that he withheld necessary signatures on papers or information essential to the running of the business. He argues that Cupo and James expelled him as an LLC member because it was financially advantageous for them to do so, and that they used the alleged impasse over an operating agreement as a pretext. Carroll states that prior to the summary judgment proceedings, he was never advised that IE Test had difficulty securing financing and represents that he would be willing to assist in the financing of IE Test in the event that the lack of an operating agreement impedes the company s effort to obtain financing from a bank.
IE Test counters that the trial court s finding -- that it was not reasonably practicable for IE Test to continue in business with Carroll remaining an LLC member -- was firmly grounded in the record. It argues that subsection 3(c) requires a trial court to anticipate future conflicts that may make it impossible to conduct the business with a dissenting LLC member. IE Test represents that the parties impasse has already proven to be a significant impediment to its business. It claims that in the absence of an operating agreement, it is unable to secure a line of credit or financing from a bank.
IE Test acknowledges that there are default provisions in the LLCA that permit an LLC to be managed by majority rule, but notes that there are some decisions, such as the admission of new LLC members or dissolution, that require unanimous consent. IE Test contends that it was inevitable that Carroll s dispute with the other LLC members would undermine IE Test s operations, and that the trial court and Appellate Division properly applied the LLCA s expulsion remedy.
The provision at issue in this case, subsection 3(c), is part of the LLCA, a comprehensive statutory scheme that governed all New Jersey LLCs for two decades, and was in effect when the trial court granted partial summary judgment.3 Pursuant to the LLCA, an LLC formed under its provisions or qualified to do business in New Jersey would be classified as a partnership unless classified otherwise for federal income tax purposes, in which case the limited liability company shall be classified in the same manner as it is classified for federal income tax purposes. N.J.S.A. 42:2B-69. The statute was intended to be liberally construed to give the maximum effect to the principle of freedom of contract and to the enforceability of operating agreements. N.J.S.A 42:2B-66(a).
The LLCA authorized LLC members to enter into an operating agreement governing the affairs of [an LLC] and the conduct of its business. N.J.S.A. 42:2B-2; see also N.J.S.A. 42:2B-22(a)-(b) (providing for operating agreement that sets forth classes or groups of members and prescribing rights, powers and duties of classes or groups of members); N.J.S.A. 42:2B-29(a)-(b) (authorizing operating agreement that sets forth classes and groups of managers and rights granted to them). The statute thus encouraged LLC members to collectively devise an individualized governance and management plan that best advanced the goals of their business.
Thus, the Legislature ensured that even in the absence of an operating agreement, decisions regarding an LLC s operations could be made by majority rule, based on the percentage of each member s interest in the company. Ibid.
Accordingly, if a court makes a judicial finding that an LLC member meets the standard of one of the three subsections, it must grant the remedy of expulsion. Ibid. In the wake of a judicial determination disassociating the LLC member from the LLC, that member s interest is immediately limited to the rights of an assignee of a member s limited liability interest[,] subject to the provisions of N.J.S.A.42:2B-39, which addressed determination of the fair value of the LLC distribution. N.J.S.A.42:2B-24.1. In that event, the member may no longer take part in decisions affecting the company, and may lose part or all of his or her investment in the business.
We construe subsection 3(c), which authorized the expulsion of an LLC member by judicial determination, based on the member s conduct relating to the [LLC] which makes it not reasonably practicable to carry on the business with the member as a member of the [LLC.] N.J.S.A.42:2B-24(b)(3)(c).
The Legislature directs that when we interpret its statutes, words and phrases shall be read and construed with their context, and shall, unless inconsistent with the manifest intent of the legislature or unless another or different meaning is expressly indicated, be given their generally accepted meaning, according to the approved usage of the language. N.J.S.A.1:1-1. If the statutory language is clear, the inquiry ends, because the sole function of the courts is to enforce [the statute] according to its terms. Velasquez ex rel. Velasquez v. Jiminez, 172 N.J.240, 256 (2002) (quoting Hubbard ex rel. Hubbard v. Reed, 168 N.J.387, 392 (2001)).
We are, however, assisted in discerning the Legislature s intent by comparing subsection 3(c) with subsection 3(a), which provided an alternative ground for the expulsion of an LLC member by judicial determination. N.J.S.A.42:2B-24(b)(3)(a), (c); see alsoL.A. v. Board of Educ. of Trenton, 221 N.J. 192, 201 (2015) (noting that [w]hen, as here, an issue concerns more than one statutory provision, [r]elated parts of an overall scheme can . . . provide relevant context. ) (second and third alterations in original) (quoting Beim v. Hulfish, 216 N.J. 484, 498 (2014)). Subsection 3(a) required finding that the member engaged in wrongful conduct that adversely and materially affected the limited liability company s business[.] N.J.S.A.42:2B-24(b)(3)(a). Subsection 3(c) did not require that the LLC member s conduct be wrongful in order to warrant expulsion of that member. In that regard, subsection 3(c) was more expansive than subsection 3(a).
The language of subsection 3(c) differed from the language of subsection 3(a) in a second respect. 3 Subsection 3(a) involved any wrongful conduct by an LLC member that has adversely and materially affected [the LLC s] business. N.J.S.A.42:2B-24(b)(3)(a). Under subsection 3(c), a court considers only conduct by the LLC member relating to the limited liability company business. N.J.S.A.42:2B-24(b)(3)(c). Thus, the Legislature clearly did not intend that disagreements and disputes among LLC members that bear no nexus to the LLC s business will justify a member s expulsion under subsection 3(c).
3 Subsections 3(a) and 3(c) used different language to describe the impact that the LLC member s conduct must have on the LLC in order to warrant expulsion. To disassociate an LLC member from the LLC under subsection 3(a), a court must find that the member s wrongful conduct has adversely and materially affected the company s business. N.J.S.A.42:2B-24(b)(3)(a). That language suggests that to justify expulsion under subsection 3(a), the member s wrongful conduct must have damaged the LLC s business in the past. Ibid. In contrast, subsection 3(c) did not mandate a finding that the LLC member s conduct has materially affected the business. N.J.S.A.42:2B-24(b)(3)(c). Under subsection 3(c), the court prospectively analyzes the impact of that conduct on the LLC s future.
Significantly, the Legislature did not authorize a court to premise expulsion under subsection 3(c) on a finding that it would be more challenging or complicated for other members to run the business with the LLC member than without him. Nor does the statute permit the LLC members to expel a member to avoid sharing the LLC s profits with that member. Instead, the Legislature prescribed a stringent standard of prospective harm: the LLC member s conduct must be so disruptive that it is not reasonably practicable to continue the business unless that member is expelled. N.J.S.A.42:2B-24(b)(3)(c).
Interpreting the statutory text, [w]e ascribe to the statutory words their ordinary meaning and significance[.] DiProspero v. Penn, 183 N.J.477, 492 (2005) (citing Lane v. Holderman, 23 N.J. 304, 313 (1957)). Black s Law Dictionary defines reasonable to mean fair, proper or moderate under the circumstances; sensible. Black s Law Dictionary1456 (10th Ed. 2014). It defines practicable to denote reasonably capable of being accomplished; feasible in a particular situation. Id. at 1361. Thus, the pivotal language suggests that it must be unfeasible, despite reasonable efforts, to keep the LLC operating while the disputed member remains affiliated with it.
A review of other components of the LLCA statutory scheme confirms that subsection 3(c) is not necessarily satisfied by the mere existence of a conflict among LLC members. SeeIn re D.J.B., 216 N.J.433, 440 (2014) (noting [s]tatutes must also be read in their entirety ) (quoting Burnett v. Cty. of Bergen, 198 N.J.408, 421 (2009)). The LLCA s default provisions authorized majority rule in such matters as merger or consolidation, day-to-day management, and wind-up of affairs of an LLC, even if the LLC members failed to reach consensus on the conduct of the business. N.J.S.A.42:2B-20(b)(1), -27(a)(1), -50(a). Consequently, disputes among LLC members on most issues relating to their business could be resolved by majority vote. Ibid. Thus, it is possible that, despite an impasse among LLC members regarding the company s management, an LLC could be effectively operated pursuant to the default provisions of the LLCA.
In short, LLC members seeking to expel a fellow member under subsection 3(c), or its counterpart in the RULLCA, N.J.S.A. 42:2C-46(e)(3), are required to clear a high bar. Neither provision authorizes a court to disassociate an LLC member merely because there is a conflict. N.J.S.A.42:2B-24(b)(3)(c); N.J.S.A.42:2C-46(e)(3). Instead, both provisions require the court to evaluate the LLC member s conduct relating to the LLC, and assess whether the LLC can be managed notwithstanding that conduct, in accordance with the terms of an operating agreement or the default provisions of the statute. Ibid.
A trial court considering an application to expel a member under N.J.S.A.42:2B-24(b)(3)(c) of the LLCA, or the analogous not reasonably practicable standard of the RULLCA, N.J.S.A. 42:2C-46(e)(3), should conduct a case-specific analysis of the record using those factors, and other considerations raised by the record, with no requirement that all factors support expulsion, and no single factor determining the outcome.
In considering IE Test s motion for partial summary judgment, the trial court s task was to view the evidential materials presented in the light most favorable to the non-moving party, and decide whether the record was sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J.520, 540 (1995); see alsoR. 4:46-2(c) (authorizing grant of summary judgment if record show[s] that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law ). When the factors relevant to subsection 3(c) are applied here, with the facts construed in favor of Carroll in accordance with Rule 4:46-2(c), the record reveals genuine issues of material fact that warrant the denial of partial summary judgment and preclude the remedy of expulsion.
We first review the nature of Carroll s conduct relating to the LLC s business. By his own admission, Carroll had no legal right to recover his lost investment in Instrumentation Engineering through his interest in IE Test. Nonetheless, he sought a compensation arrangement that would accomplish that goal. He unsuccessfully attempted to persuade Cupo and James to sign an operating agreement to that effect, and thereby provoked a distracting dispute among the LLC members that was never resolved. The record, however, is devoid of evidence that Carroll actively interfered with IE Test s business, or that he used the impasse over the compensation issue as an excuse to undermine that business by failing to cooperate when needed. He sought no role in the LLC s management, and participated in only one sales call on its behalf. There is no indication that he undermined IE Test to employees, vendors, or clients. In short, despite his insistence on generous compensation, Carroll permitted the LLC to operate unimpeded. Based on the summary judgment record, the first factor does not weigh in favor of a finding that continuing IE Test s business with Carroll remaining an LLC member was not reasonably practicable.
Applying the second and third factors, the court considers whether the entity may be managed with the LLC member remaining, so as to promote the purposes for which it was formed, and whether the dispute among the LLC members precludes them from working with one another to pursue the LLC s goals. As to those issues, there are genuine issues of material fact in the record.
It appears that the business operated with increasing revenue despite the deteriorating relationship between Carroll and the other LLC members. Although IE Test maintains that because it has no operating agreement, it has been unable to secure a line of credit or bank financing, the proofs that it submitted to the trial court did not substantiate that claim. Moreover, Carroll contends that before the question was disputed in court, he was never informed by Cupo or James that IE Test had difficulty in obtaining a line of credit or financing. Carroll offers to assist in the LLC s financing, if necessary. In short, the parties dispute whether Carroll s insistence on being compensated for his prior losses precluded the LLC members common pursuit of IE Test s goals, or prevented the successful management of their business by obtaining necessary financing.
The fourth and fifth factors require a determination of whether there is a deadlock among the members and whether, notwithstanding such a deadlock, members can make decisions on the management of the company, pursuant to the operating agreement or in accordance with applicable statutory provisions. Those factors also weigh against the grant of partial summary judgment in this case. IE Test has not claimed, let alone established, that the three LLC members reached a deadlock regarding the company s management. Although IE Test contends that there is an impasse over the terms of an operating agreement, there is no evidence that Cupo and James proposed an alternative draft after rejecting Carroll s proposal. Moreover, even Carroll s failure to agree on a counterproposal would not, without more, justify his expulsion as an LLC member; in accordance with the LLCA, IE Test has been effectively managed without an operating agreement. With all inferences drawn in favor of Carroll, the record does not demonstrate that any deadlock among the LLC members threatened IE Test s business. Thus, the fourth and fifth factors do not support the trial court s grant of partial summary judgment.
Under the sixth and seventh factors, the court considers whether, due to the LLC s financial position, there is still a business to operate, and whether it is fundamentally feasible for the company to continue in business with the LLC member remaining a member. Those factors similarly weigh against the trial court s grant of summary judgment on the record of this case. There is no dispute that when the trial court ruled on IE Test s motion, the business remained in operation; indeed, its revenue evidently increased despite Carroll s continued involvement. Thus, the sixth and seventh factors do not favor the remedy imposed by the trial court.
In sum, when the record is viewed in accordance with the summary judgment standard of Rule 4:46-2(c), it does not support the trial court s finding that it was not reasonably practicable to carry on IE Test s business with Carroll remaining an LLC member. N.J.S.A. 42:2B-24(b)(3)(c). IE Test was not entitled to a judicial determination expelling Carroll as an LLC member. Accordingly, the trial court s grant of partial summary judgment constituted error.
The judgment of the Appellate Division is reversed, and the matter is remanded to the trial court for proceedings consistent with this opinion.
1 Carroll filed a counterclaim against IE Test and a third-party complaint against Cupo and James, alleging that they agreed to compensate him for the money owed to him by the prior business, Instrumentation Engineering; that counterclaim was dismissed by stipulation.
2 The trial court s valuation of IE Test is not before the Court in this appeal.
3 The LLCA governed LLCs in New Jersey from its effective date, January 26, 1994, until March 18, 2013. L. 2012, c. 50, 95. The LLCA was then repealed and replaced by the RULLCA, a comprehensive, fully integrated second generation LLC statute that takes into account the best elements of first generation LLC statutes (such as [the LLCA]) . . . and two decades of legal developments in the field. Sponsors Statement to Assembly No. 1543 (2012). All LLCs in New Jersey are now subject to the RULLCA. L. 2013, c. 276, 9.
4 Alternatively, an LLC member could be expelled in accordance with the terms of the operating agreement. N.J.S.A. 42:2B-24(b)(1). Unless otherwise provided in an operating agreement, or with the written consent of all members, an LLC member could be disassociated by resignation, N.J.S.A. 42:2B-24(a)(1); by virtue of an event agreed to in the operating agreement as causing the member s dissociation, N.J.S.A. 42:2B-24(a)(2); or by the occurrence of the member s bankruptcy and other events enumerated in the statute, N.J.S.A. 42:2B-24(a)(3)(a) to (d). In addition, by unanimous vote of the LLC members, a member could be expelled from the LLC if it is unlawful to carry on the [LLC] with that member; in the event of certain transfers of the LLC member s interest in the LLC; within 90 days of certain events affecting the legal status of a corporate LLC member; or in case of the dissolution and windup of an LLC member that is itself an LLC or partnership. N.J.S.A. 42:2B-24(b)(2)(a)-(d).
5 The not reasonably practicable language of subsection 3(c) closely tracks the language of Section 601(6) of the Uniform Limited Liability Company Act (Uniform Act). The Uniform Act includes no commentary addressing the meaning of that term. Unif. Ltd. Liab. Co. Act 601(6) (Nat l Conference of Comm rs on Unif. Laws 1996).
6 In the RULLCA, the Legislature retained the text of N.J.S.A. 42:2B-24(b)(3), amended only to substitute the term judicial determination for judicial order and to make other minor changes. Compare N.J.S.A. 42:2B-24(b)(3), with N.J.S.A. 42:2C-46(e)(3). For purposes of the not reasonably practicable standard analyzed in this opinion, the two statutes are identical.
7 These factors are substantially based on a standard distilled from case law in various jurisdictions by a Colorado appellate court in Gagne v. Gagne, 338 P.3d 1152, 1159-60 (Colo. App. 2014). The court in Gagne construed a Colorado statute that addressed dissolution of an LLC, not the expulsion of an LLC member. That statute required, as a prerequisite to dissolution, a finding that it was not reasonably practicable to carry on [an LLC s] business. Gagne, supra, 338 P.3d at 1159-60 (citing Colo. Rev. Stat. 7-80-810(2) (2015)). Two of the factors addressed in Gagne, whether the management of the entity is unable or unwilling reasonably to permit or promote the purposes for which the company was formed, and whether a member or manager has engaged in misconduct, are inconsistent with subsection 3(c) of the LLCA, and we accordingly amend those factors to conform to our statute. Id. at 1160.

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On the grounds of Art. 157 of POSA in connection with Art. 154 of the Public Offering of Securities Act and in connection with the expired deadline for acceptance of the tender offer submitted by Sopharma AD to the shareholders of Unipharm AD, we inform you about the results of the tender offering submitted by Sopharma AD for the purchase of the shares of the other shareholders of Unipharm AD.
Company, object of the offer: Unipharm AD, with management address Sofia 1797, Studentski grad, zh.k. Darvenitsa, Trayko Stanoev Str.
Tender offeror: Sopharma AD, with address: Sofia, Nadezhda district, 16, Iliensko shose Str.
Price offered per share: BGN 4.35 (four leva thirty-five stotinki) Number of persons accepted the tender offer: 65 Shareholder with total number of shares: 1 125 021, representing 18.75% of the capital of Unipharm AD.
As a result of the tender offer and after the conclusion of the transactions with the shareholders that have accepted it, Sopharma AD will directly own 96.63% of the shares of Unipharm AD. Sopharma AD has the right, within three months from the closing date of the tender offer, to submit, after obtaining the approval of the FSC, an offer for the purchase of the shares of the remaining shareholders of Unipharm AD on the grounds of Art. 157a of POSA. In addition, according to the provisions of Art. 157b of the POSA, each shareholder is entitled to require from Sopharma AD to redeem his/her shares until 19 September 2017. The request must be in writing and contain information about the shareholder and the shares he owns. The request should be addressed to the authorized investment intermediary Elana Trading AD. The price per share of Unipharm AD for the proposal under Art. 157a and in exercising the rights of the shareholders under Art. 157b, in accordance with the provisions of Art. 157a, para. 3 is equal to the price of the tender offering of BGN 4.35 per share.
The results of the tender offering were published by the tender offeror in the newspapers "Capital Daily" and "Sega" as of 21.06.2017.