Representing five minority investors in a growth-stage company, C&H successfully defended plaintiffs’ claim that the investors supposedly “aided and abetted” the alleged acts of the company—even though the investors had no management role. The plaintiffs are former employees who sued the company and its CEO for alleged employment acts. According to plaintiffs, they had approached certain investors with their workplace grievances, and the minority investors’ response did not satisfy the employees.
C&H moved to dismiss the lawsuit in its entirety as to its clients. In this motion, C&H argued that Colorado law barred claims against its clients for the LLC’s actions, or for aiding and abetting the LLC’s actions, as they were non-employee, minority LLC members. Nor could they be liable under Colorado law for the inaction or nonfeasance alleged in the complaint. Plaintiffs had wanted the member defendants to use their voting rights to remove the manager, but they did not own a collective two-thirds ownership interest required to do so. Further, in their complaint, plaintiffs failed to plead nonconclusory facts against each individual member defendant. Such collective “group pleading” allegations are not enough to state a claim under Warne v. Hall, 2016 CO 50, which adopted the U.S. Supreme Court’s plausibility standard from Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
In granting C&H’s motion to dismiss with prejudice, the court’s order recognized that non-management, non-employee, minority LLC investors cannot be held liable for a work environment they did not participate in or condone—and that company liability cannot be attributed to such LLC members.
Plaintiffs did not appeal the dismissal.
The C&H team consisted of C&H co-founder Dave Holman and paralegal Debbie Werth.
