Justia Business Law Opinion Summaries

At issue in this case was the construction of Mass. Gen. Laws ch. 156D, 14.30, the corporate dissolution statute, which allows a shareholder to petition a judge of the superior court to dissolve a corporation in the event of a deadlock between its directors. Plaintiff and Defendant were the sole shareholders and directors of a corporation. Plaintiff filed a petition pursuant to the corporate dissolution statute seeking to dissolve the corporation. After a jury-waived trial, Plaintiff also filed a separate claim for contempt of court. Defendant counterclaimed. A judge rejected all of Plaintiff’s claims and Defendant’s counterclaims. The Supreme Judicial Court remanded the matters, holding (1) the impasse as to fundamental matters of corporate governance and operations existing under these circumstances gave rise to a state of “true deadlock” such that the remedy of dissolution provided by the statute was allowable; (2) because dissolution is a discretionary remedy, the superior court must make a determination as to whether it is the appropriate remedy under the circumstances; and (3) the superior court must consider the allegations raised in the complaint for contempt concerning conduct that occurred after the trial. View "Koshy v. Sachdev" on Justia Law

Plaintiff, a shareholder of a Corporation, made a demand for corporate records pursuant to Mass. Gen. Laws ch. 156D. 16.02(b), claiming that he needed to inspect the records in order to investigate his allegation that the board of directors had committed a breach of its fiduciary duty of oversight. After the Corporation rejected the demand Plaintiff commenced an action in the superior court seeking an order compelling the Corporation to make the requested corporate records available to Plaintiff. The trial judge dismissed the complaint with prejudice, determining that Plaintiff had failed to meet his burden of showing a proper purpose to inspect corporate records under section 16.02(b). The Supreme Judicial Court vacated the judgment dismissing Plaintiff’s claim for inspection and remanded, holding that the trial judge applied too demanding a standard in determining whether Plaintiff had a proper purpose. View "Chitwood v. Vertex Pharmaceuticals, Inc." on Justia Law

In these consolidated cases, shareholders of a publicly traded corporation (Plaintiffs) filed a complaint claiming that a merger transaction proposed by the board of directors would result in the effective sale of the corporation for an inadequate price. The superior court allowed Defendants’ motion to dismiss for failure to state a claim, concluding that the board owed no fiduciary duty directly to the shareholders and that the action was necessarily derivative. At issue on appeal was whether Plaintiffs must bring their claims against the members of the corporation’s board of directors as a derivative action on behalf of the corporation or may bring it directly on their own behalf. The Supreme Judicial Court affirmed, holding (1) the injury claimed by Plaintiffs, and the alleged wrong causing it, fit squarely within the framework of a derivative action; and (2) Plaintiffs’ claim was properly dismissed because they did not bring their claim as a derivative action. View "International Brotherhood of Electrical Workers Local No. 129 Benefit Fund v. Tucci" on Justia Law