Recall that the Jones v. Scruggs case is on appeal to the Mississippi Supreme Court about whether to uphold sanctions against Scruggs Katrina Group joint venturers Lovelace law firm, Don Barrett and Barrett’s firm. Scruggs and his firm and David Nutt and his firm had earlier settled with Jones, leaving Lovelace and Barrett arguing that they should not be sanctioned by being denied referral to arbitration.
So– when a partner or joint venturer does something illegal or to advance the interests of the partnership, the partners can be liable, even though they are “innocent” in the sense of having had nothing to do with the illegal conduct. On the other hand, if the partner acting illegally is acting outside the ordinary course of the partnership business, the partners would not be liable.
When does doing-something-illegal become acting-outside-the-ordinary-course-of-business letting the other partners off the hook?