Minority and Majority Shareholders Beware – Lessons from Notz v. Everett Smith Group, Ltd. 2009 WI 30
In the recent Wisconsin Supreme Court case Notz v. Everett Smith Group, Ltd. 2009 WI 30, there are important lessons for both majority and minority shareholders.
Lessons for Minority Shareholders. If you are a minority shareholder in a corporation and you believe that the majority has breached its fiduciary duty to you and caused you harm by foregoing a corporate opportunity, make sure that you allege and can demonstrate with evidence that it harmed you specifically and be able to allege and show that you were not just harmed the same as all other shareholders. Failure to allege and show specific harm will result in failure or dismissal of your claim, according to the Wisconsin Supreme court. Specifically, the court held that “the loss of a corporate opportunity and the sale of a subsidiary with high growth potential – – caused harm primarily to the corporation . . .” Notz at para. 38, and therefore the court affirmed the dismissal of Notz’s (the minority shareholder) claim for breach of fiduciary duty against the board of directors and majority shareholder.