Opinion
CIVIL ACTION NO. 01-2007.
April 22, 2002
MINUTE ENTRY
Before the Court is what shall be treated as a motion by Defendant Ronald J. Schaefer to appear on behalf of his co-Defendant, Cobalt LLC ("Cobalt"), an entity of which he claims to be the sole "employee, owner and shareholder" (sic). The Court reads the motion as seeking an exception to the general rule preventing non-attorneys from appearing here on behalf of anyone except themselves. See 28 U.S.C. § 1654. Even assuming, without deciding, that Schaefer is the sole employee and shareholder, the motion is denied. Schaefer appears to raise four grounds purportedly justifying his appearance for Cobalt: (1) even if non-attorneys may not represent corporations, they may represent limited liability companies ("LLCs"); (2) Schaefer is Cobalt's sole employee and shareholder; (3) he is in prison; and (4) Cobalt cannot afford an attorney.
First, to the extent Schaefer contends that he should be able to represent Cobalt LLC because it is a limited liability company and thus not subject to the rule barring non-attorneys from appearing for corporations, the Court disagrees.
The Fifth Circuit has held "that a corporation as a fictional legal person can only be represented by licensed counsel." Donovan v. Road Rangers Country Junction, Inc., 736 F.2d 1004, 1005 (5th Cir. 1984), cert. denied, 469 U.S. 1217, 105 S.Ct. 1198, 84 L.Ed.2d 342 (1985) (citing K.M.A., Inc. v. Gen. Motors Acceptance Corp., 652 F.2d 398, 399 (5th Cir. 1982)). Similarly, a partnership may only appear in court through counsel. See Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1309-10 (2d Cir. 1991).
Under Louisiana law, an LLC is neither a corporation nor a partnership, but rather has the powers of both types of entities. See § 12:1303; Susan Kalinka, The Louisiana Limited Liability Company Law After "Check-the-Box," 57 La. L. Rev. 715, 715 (1997).
Louisiana law provides that an LLC may be organized by statute and may conduct business for any lawful purpose. See La. R.S. § 12: 1302A. The LLC is made up of two or more members, see § 12:1301A(10), i.e., persons with rights including shares of the profits and losses of the LLC, the right to receive distributions of the LLC's assets, and any right to vote or participate in management, see § 12:1301A(14). Unless otherwise provided in the articles of organization, management of the LLC is vested in the members, subject to any provision in a written operating agreement restricting or enlarging their management rights and duties. See § 12:1311. Subject to certain exceptions, the members or managers are not personally liable for the LLC's actions. See §§ 12:1314, 12:1315.
Accordingly, as an LLC is a hybrid of a corporation and a partnership, "an LLC should be governed on this issue by the same rules that apply to those entities." In re ICLNDS Notes Acquisition, LLC, 259 B.R. 289, 294 ((Bankr. N.D. Ohio 2001). Thus, regardless of whether the LLC may be characterized as a corporation, a partnership, or a hybrid, it may only appear in court through counsel. Therefore, Cobalt LLC may not be represented by Schaefer in this case.
Second, to the extent Schaefer argues that he may appear here because he is Cobalt LLC's sole employee and shareholder, the Court declines to grant such an exception. See Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1427 (7th Cir. 1985) (corporation's president and sole stockholder could not represent corporation because, inter alia, "he did not represent other interests such as those of creditors").
Third, to the extent Schaefer contends that the Court should allow him to appear for the LLC because he is in prison, the Court rejects such a contention. In light of the facts here, this Court will not bestow a right on Schaefer he would not otherwise enjoy were he not imprisoned.
Finally, to the extent Schaefer seeks an exception to appear on Cobalt's behalf because Cobalt cannot afford an attorney, the Court again denies the request. See Reed v. Johnson, No. 93-1652, 1995 U.S. Dist. LEXIS 15024 (E.D. La. Oct. 10, 1995).
The Court recognizes the apparent harshness of this rule in a situation such as that alleged here, i.e., where a legal entity consisting of a sole employee and shareholder is unable to afford counsel. The Court notes, however, that Schaefer himself remains in the lawsuit pro se. The Court will therefore defer any ruling on a motion for final judgment of default against Cobalt until Schaefer's claims are resolved.
Accordingly,
IT IS ORDERED that:
Schaefer also requests the Court's advice regarding a discovery and a substantive legal issue. The Court declines these requests — given its neutral role and authority here, it is not in a position to provide legal advice to a party before it.