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Corporations Keyed to Klein
Elf Atochem North America, Inc. v. Jaffari
Facts
In 1996, Appellant contracted with Appellee to form an LLC incorporated in Delaware that would produce more environmentally-friendly maskants for the aerospace and aviation industries. Appellant produces solvent-based maskants which have been classified as hazardous. Appellant provided much-needed financial backing for Appellee’s operation, while Appellee retained 70% of the profits from the newly formed LLC. The LLC agreement called for all disputes to be settled through arbitration in San Francisco. Appellant brought this action in 1998 in a Delaware court against Appellee for breach of contract, breach of fiduciary duty and tortuous interference. Appellant argued that since LLC was formed prior to the formation of the LLC agreement, and because the LLC never signed the agreement then the agreement and its arbitration provision are not effective over this dispute. Appellant also argued that the claims were derivative instead of direct, and that the Delaware Court of Ch ancery has special jurisdiction.
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