LLC Operating Agreement subject to statute of frauds

In a case of first impression, a recent Delaware Chancery Court decision, Olson v. Viking Global Investors LP et al, found as a matter of law that LLC operating agreements are subject to the statute of frauds.  The case involved a dispute among the founders of a hedge fund of what was owed to a founders upon his removal from the company. The founder claimed he was entitled to a multiyear earnout worth over $100 million, based on the provisions of an LLC operating agreement that apparently was unsigned.  In contrast, relevant signed documents provided that the founder was entitled only to his capital account and compensation owed upon leaving the company.  Because the earnout involved a multiyear arrangement, the court considered whether the statute of frauds would govern, and then found in favor of that position as a matter of law.

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