N.D. Cent. Code § 10-32.1-37

10-32.1-37. Special litigation committee

1. If a limited liability company is named as or made a party in a derivative proceeding,

then the company may appoint a special litigation committee to investigate the claims

asserted in the proceeding and determine whether pursuing the action is in the best

interests of the company. If the company appoints a special litigation committee, then

on motion by the committee made in the name of the company, except for good cause

shown, the court shall stay discovery for the time reasonably necessary to permit the

committee to make its investigation. This subsection does not prevent the court from

enforcing the right of a person to information under section 10-32.1-42 or, for good

cause shown, granting extraordinary relief in the form of a temporary restraining order

or preliminary injunction.

2. A special litigation committee may be composed of one or more disinterested and

independent individuals, who may be members.

3. A special litigation committee may be appointed:

a. In a member-managed limited liability company:

(1) By the consent of a majority of the members not named as defendants or

plaintiffs in the proceeding; and

(2) If all members are named as defendants or plaintiffs in the proceeding, then

by a majority of the members named as defendants;

b. In a manager-managed limited liability company:

(1) By a majority of the managers not named as defendants or plaintiffs in the

proceeding; and

(2) If all managers are named as defendants or plaintiffs in the proceeding, then

by a majority of the managers named as defendants; and

c. In a board-managed limited liability company:

(1) By a majority of governors not named as defendants or plaintiffs in the

proceeding; and

(2) If all governors are named as defendants or plaintiffs in the proceeding, then

by a majority of the governors named as defendants.

4. After appropriate investigation, a special litigation committee may determine that it is in

the best interests of the limited liability company that the proceeding:

a. Continue under the control of the plaintiff;

b. Continue under the control of the committee;

c. Be settled on terms approved by the committee; or

d. Be dismissed.

5. After making a determination under subsection 4, a special litigation committee shall

file with the court a statement of its determination and its report supporting its

determination, giving notice to the plaintiff. The court shall determine whether the

members of the committee were disinterested and independent and whether the

committee conducted its investigation and made its recommendation in good faith,

independently, and with reasonable care, with the committee having the burden of

proof. If the court finds that the members of the committee were disinterested and

independent and that the committee acted in good faith, independently, and with

reasonable care, then the court shall enforce the determination of the committee.

Otherwise, the court shall dissolve the stay of discovery entered under subsection 1

and allow the action to proceed under the direction of the plaintiff.