Also known as: oppressive action · oppression · oppressive conduct · shareholder oppression
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
Discovery requests or tactics that subject a party or person to annoyance, embarrassment, or undue burden or expense. A court may issue a protective order upon a showing of good cause to shield against such conduct after the movant certifies a good-faith effort to resolve the dispute without court intervention.
Conduct by directors or controlling shareholders of a close corporation that unfairly disadvantages minority shareholders through freeze-outs or denial of expected benefits. Such actions supply a statutory ground for involuntary dissolution when they meet the standard of oppression under applicable business corporation statutes.
Each sense below has its own examples, sources, and questions.
Discovery requests or tactics that subject a party or person to annoyance, embarrassment, or undue burden or expense. A court may issue a protective order upon a showing of good cause to shield against such conduct after the movant certifies a good-faith effort to resolve the dispute without court intervention.
Select any source to read its text and confirm it supports the definition.
Conduct by directors or controlling shareholders of a close corporation that unfairly disadvantages minority shareholders through freeze-outs or denial of expected benefits. Such actions supply a statutory ground for involuntary dissolution when they meet the standard of oppression under applicable business corporation statutes.
Select any source to read its text and confirm it supports the definition.
West Foundation served Crest Structures with forty-five document requests and thirty interrogatories seeking every job-site text message and internal email over three years. Crest employs only twelve people and faces more than twenty-five thousand dollars in compliance costs. The court grants Crest's motion for a protective order because the requests impose oppression and undue burden shortly before trial.
The movant must demonstrate good cause that the discovery will cause annoyance, embarrassment, oppression, or undue burden or expense. The motion must also certify a good-faith effort to resolve the dispute without court action.
Supporting sources
Olive Okafor and her brother each own half the shares of a family manufacturing company. After a dispute the brother stops all dividends and hires his children at inflated salaries. Olive petitions for dissolution. The court finds the brother's actions oppressive toward the minority shareholder and orders dissolution or a buyout.
Odilia Okamura, Orlando Okafor, and a third investor sign a shareholders' agreement requiring unanimous board votes on major decisions. The two majority holders later amend the bylaws to eliminate the requirement and exclude Odilia from management. Odilia sues. The court holds the amendment oppressive and voids it as a breach of the agreement.
Ophelia O'Brien owns twenty percent of Oceanview Properties. The majority shareholders transfer prime development parcels to a new entity they control and refuse Ophelia any distribution. She seeks dissolution. The court finds the transfers oppressive and orders the majority to buy her shares at fair value.
Oscar Ortiz holds non-voting shares in Omega Energy. The controlling family refuses to repurchase his shares or declare dividends while paying themselves large salaries. Oscar petitions for relief. The court determines the refusal constitutes oppressive conduct and grants a buyout remedy.
Oppressive conduct requires a showing that controlling persons have engaged in freeze-outs, denial of benefits, or other actions that unfairly disadvantage minority shareholders in a close corporation. Simple business disputes or policy differences do not suffice.
Supporting sources
…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…