Also known as: oppressions · oppressive conduct
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
Unfair treatment of minority shareholders by those in control of a close corporation, typically through exclusion from management, diversion of assets, or denial of information and benefits.
A form of undue harm or burden arising from discovery that justifies issuance of a protective order to shield a party from annoyance, embarrassment, or excessive expense.
Each sense below has its own examples, sources, and questions.
Unfair treatment of minority shareholders by those in control of a close corporation, typically through exclusion from management, diversion of assets, or denial of information and benefits.
In Donahue v. Rodd Electrotype, controlling shareholders repurchase shares from a majority holder at a premium while refusing the same opportunity to the minority. The court holds this selective treatment constitutes oppression and requires equal opportunity for the minority to sell on the same terms.
In Nixon v. Blackwell, controlling shareholders refuse to provide a market or buyout mechanism for minority shares while maintaining one for themselves. The court finds the resulting lack of liquidity and unequal treatment amounts to oppression warranting equitable relief.
In McQuade v. Stoneham, majority shareholders remove a minority shareholder from his corporate position and salary after a dispute. The court recognizes the action as oppressive because it uses control over employment to disadvantage the minority without legitimate business justification.
In Jones v. H. F. Ahmanson & Co., controlling shareholders transfer valuable corporate opportunities to an entity they own exclusively. The court holds that this self-dealing and exclusion of minority owners from the benefits constitutes oppression.
In New York Times v. Sullivan, a public official claims a publication's statements oppress his reputation and seeks damages. The Court applies heightened standards to prevent oppressive use of libel law against protected speech, limiting recovery to cases of actual malice.
Oppression includes excluding minority owners from management, denying access to records, diverting corporate assets to controllers' personal ventures, and terminating minority employment without legitimate purpose. These actions allow courts to order dissolution or other equitable relief under statutes like MBCA 14.30.
Deadlock involves inability to act due to equal voting splits. Oppression requires affirmative misconduct by controllers that unfairly harms minorities, such as asset transfers or record denial. Both can independently justify dissolution, but oppression focuses on abuse of power rather than impasse.
A form of undue harm or burden arising from discovery that justifies issuance of a protective order to shield a party from annoyance, embarrassment, or excessive expense.
Silver Logic moves for a protective order after Mountain Systems requests its proprietary algorithm reports. The court finds that unrestricted production to a direct competitor would expose trade secrets and impose competitive harm. It grants the order limiting disclosure to outside counsel only, preventing oppression from the discovery demands.
A party may obtain a protective order upon showing good cause that discovery would cause oppression, such as competitive harm from disclosing trade secrets to a rival. The court may limit disclosure methods or require attorneys-eyes-only protections after the movant certifies good-faith conferral efforts.
…to sell its assets at an inadequate price to the majority shareholders . . ..” F. H. O’Neal and J. Derwin, Expulsion or Oppression of Business Associates, 42 (1961). In particular, the power of the board of directors, controlled by the majority, to declare or withhold dividends and to deny the minority employment is…
…S. Shrager and Elizabeth Frost eds., 1986). [^maj-17]: Compare Robert B. Thompson, The Shareholder’s Cause of Action for Oppression
…here, to eliminate the minority. In Stauffer , a § 253 case, the Court carefully examined plaintiffs' charges of majority oppression
No. Unconscionability focuses on the circumstances of formation and substantive harshness rather than whether the party read every term. Oppressive terms presented in an emergency or on a take-it-or-leave-it basis remain subject to judicial refusal even if signed unread.
The court may refuse to enforce the entire contract, strike the oppressive term and enforce the remainder, or limit the term's application to avoid the unconscionable result. It need not void the whole agreement or require proof of fraud or duress.