Shareholder Oppression

A 20% or greater shareholder in a closely held New York corporation may commence a special action for dissolution of the corporation on the grounds that those in control have either committed “illegal, fraudulent or oppressive actions toward the complaining shareholder” or have “looted, wasted or diverted for non-corporate purposes the corporation’s assets.”
Continue Reading New York Court of Appeals Denies Applicability of Minority Discounts In Oppression Cases

In 1993, the New Jersey Supreme Court conferred great powers to Courts when adjudicating minority oppression claims. Brenner v. Berkowitz, 134 N.J. 488 (1993). Last year, the New Jersey Supreme Court conferred even greater equitable powers to Chancery Division Judges deciding inter-company disputes. Sipko v. Koger, Inc., 214 N.J. 364, 383-384 (2013).
Continue Reading New Jersey Supreme Court Confers Greater Equitable Powers to Chancery Court Judges When Adjudicating Intra-Company Disputes

On March 11, 2014, the Supreme Court of New York, New York County, denied a motion for summary judgment seeking to dismiss a Special Proceeding for Judicial Intervention seeking dissolution of three New York corporations premised upon violations of New York’s Minority Oppression Statute. Quazzo v. 9 Charlton Street Corp., 2014 N.Y. Misc. 1093; N.Y. Slip. Op. 30625 (U) (March 11, 2014).
Continue Reading New York County Supreme Court Justice Denied Majority Shareholders’ Motion to Dismiss Minority Oppression Claim

An oppressed minority shareholder in a New York corporation may commence a special proceeding for judicial dissolution Business Corporation Law § 1104-a (a)(1) and (a)(2).
Continue Reading New York Minority Oppression Statute Permits Oppressed Minority Shareholders to Commence Special Proceeding for Judicial Dissolution

In 1982, the New Jersey Supreme Court in the oft-cited decision Crowe v. DeGioia, 90 N.J. 126 (1982), set forth the factors Courts should consider when petitioned for injunctive relief. For the past thirty-plus years, litigants arguing in favor of the issuance of an interlocutory injunction asserted their clients have demonstrated by “clear and convincing evidence” that: (1) there is no adequate remedy at law and the irreparable harm to be suffered in the absence of injunctive relief is substantial and imminent; (2) there is a reasonable probability of success on the merits; (3) the equities and hardships favors injunctive relief; and (4) the public interest will not be harmed. Id. at 520; McKenzie v. Corzine, 396 N.J. Super. 405, 414 (App. Div. 2007).
Continue Reading NJ Appellate Division Affords Oppressed Minority Shareholders More Protections to Maintain the Status Quo During the Pendency of the Litigation

The Ohio Supreme Court in the seminal case Crosby v. Beam, 47 Ohio St. 3d 105 (1989) set forth protections for Ohio minority shareholders. Minority shareholders sought redress via the Ohio courts. In their complaint, the minority shareholders alleged that the majority shareholders had oppressed them by: (1) awarding themselves unreasonable salaries; (2) using corporate property for their personal enterprise; (3) having the company purchase life-insurance only for the majority’s benefit; and (4) taking improper, low-interest loans from the company.
Continue Reading Seminal Ohio Case Protects Oppressed Minority Shareholders

Recently, the New Jersey Appellate Division affirmed a Monmouth County General Equity Judge’s finding in favor of an oppressed minority shareholder. Kaible v. Gropack, 2013 N.J. Super. Unpub. LEXIS 1453 (App. Div. 2013). The Appellate Division also affirmed the Trial Court’s verdict in favor of the oppressed minority shareholder which awarded him damages and attorneys’ fees pursuant to the New Jersey Minority Oppression statute. See N.J.S.A. 14A:12-7(c); & N.J.S.A.14A:12-7(8)(d).
Continue Reading New Jersey Appellate Division Affirms Trial Court’s Finding of Shareholder Oppression and Award of Compensatory Damages and Attorney’s Fees

Unlike the New Jersey Business Corporation Act (“BCA”), the Limited Liability Company Act, N.J.S.A. 42:2B-1 to -70 (“LLCA”) had no equivalent oppressed shareholder provision. See, Denike v. Cupo, 394 N.J. Super. 357, 378, 926 A.2d 869 (App. Div. 2007), rev’d on other grounds, 196 N.J. 502, 958 A.2d 446 (2008). Fortunately for oppressed members of a New Jersey LLC, the LLCA has since been repealed. See L. 2012, c. 50, (eff. March 18, 2013) (enacting the Revised Uniform Limited Liability Company Act [the “RULLCA”], making the RULLCA applicable to all New Jersey LLCs formed after the legislation’s effective date, and replacing the LLCA with the RULLCA as to all existing LLCs as of March 1, 2014).
Continue Reading New Jersey’s Revised Uniform Limited Liability Company Act affords Minority Members of LLC’s protection from Oppression

Often oppressed minority shareholders cannot afford the cost to retain an attorney to stand up to the oppressor. The majority shareholder will use the company’s financial resources to pay their attorney while the oppressed minority shareholder will be forced to cover their attorney fees personally. Although, Courts have discretion to award counsel fees, rarely do they award them to the oppressed.

Continue Reading Contingency Fee and Other Alternative Fee Arrangements