Simpson Thacher has achieved a victory before the New York Court of Appeals on behalf of Ropes & Gray LLP and Fish & Neave LLP, which merged into Ropes & Gray in 2005. Prior to the merger, Fish & Neave passed by majority vote an amendment to its partnership agreement that changed the partnership’s accounting system and the provisions governing withdrawal payments to withdrawing partners.
After the passing of the amendment, the plaintiffs in this case withdrew from Fish & Neave and received withdrawal payments based on the amended provision. The plaintiffs thereafter filed a breach of contract lawsuit against Ropes & Gray and Fish & Neave claiming that they were owed withdrawal payments based on the old withdrawal provision because the amendment was invalid. Plaintiffs contended that the partnership agreement, although it had a general majority to rule provision, did not permit amendments by less than unanimous vote, that the amendment was discriminatory, and that their rights to withdrawal payments were vested and, therefore, could not be amended without their consent.
Simpson Thacher gained dismissal of the Complaint in the motion court, and the Appellate Division, First Department, affirmed the dismissal. The New York Court of Appeals granted plaintiffs leave to appeal.
On May 8 the Court of Appeals unanimously affirmed the Appellate Division’s order dismissing plaintiffs’ complaint. The Court of Appeals held that the majority rule provision in Fish & Neave’s partnership agreement was unambiguous and provided that all questions, including the question to amend the agreement, may be decided by majority vote. Therefore, the Court concluded that a majority vote sufficed to pass the amendment to the partnership agreement’s withdrawal provisions and plaintiffs’ other arguments lacked merit.
The Simpson Thacher team included Roy L. Reardon, William Efron, Ryan Kane and Craig Waldman. Paralegal Doug Henderson also assisted with the Court of Appeals brief.