Fiduciary Duties and Minority Shareholder Oppression From the Defense Perspective: Differing Approaches in Texas, Delaware, and Nevada

Suits by minority shareholders in Texas are on the rise and represent an expanding,cutting-edge area of civil litigation in this state and across the country. While the TexasSupreme Court and several appellate courts in Texas have yet to recognize a cause of actionfor shareholder oppression or to define its parameters, a growing number of courts have upheldclaims for shareholder oppression or at least recognized it as a viable claim. But these courts’justifications for recognizing a broad shareholder oppression claim are questionable, becausethey rely on: (1) a Texas Supreme Court case that never blessed shareholder oppression as avalid claim; (2) a Texas receivership statute that allows relief from oppression only in limitedand extreme circumstances; and (3) a Texas appellate court case that relied on the previous twofaulty grounds and on inapplicable case law from other jurisdictions. The Texas SupremeCourt recently granted review to a shareholder oppression case (Ritchie v. Rupe), and willconfront this issue in the very near future. Argument was heard on February 26, 2013.