Shareholder Disputes

Minority shareholder oppression and freeze-outs

The signature dispute in a closely held corporation is the squeeze-out: a majority that fires the minority owner, cuts off dividends, strips them of a board seat, or denies them any return while drawing salaries and perks for themselves. Washington recognizes this as oppression, and a shareholder can petition for judicial dissolution when those in control act illegally, oppressively, or fraudulently (RCW 23B.14.300(2)). Our Supreme Court measures oppression against the minority owner's reasonable expectations (Scott v. Trans-System, Inc.). Dissolution is rarely the real goal, though, because the statute lets the corporation or the other shareholders elect to buy the petitioner's shares at fair value instead (RCW 23B.14.340), and that buyout is usually where these cases resolve.

Breach of fiduciary duty by directors, officers, and controllers

Directors and officers owe the corporation duties of care and loyalty (RCW 23B.08.300 for directors; RCW 23B.08.420 for officers), and a controlling shareholder owes duties to the minority. When a director diverts a corporate opportunity, approves a self-dealing contract, or pays themselves at the company's expense, that is a breach we can pursue, and Washington's conflicting-interest-transaction statutes set out when such a deal survives and when it doesn't (RCW 23B.08.700 through .730). We also defend directors and officers whose ordinary business judgment is being second-guessed after the fact, because a decision that simply didn't work out is protected by the business judgment rule and is a very different thing from disloyalty.

Derivative actions on the corporation's behalf

Not every wrong to a shareholder is the shareholder's own claim. When the harm runs to the corporation itself, like a director's self-dealing that drained company value, the claim is derivative and must be brought on the corporation's behalf (RCW 23B.07.400). Washington requires a written demand on the board and, in most cases, a ninety-day wait before suit, and the recovery belongs to the company rather than the suing shareholder. Getting the direct-versus-derivative line right early matters, because it controls who can sue, what must be pleaded, and who ultimately recovers. We frame the claim correctly from the start and litigate the demand and standing fights that often decide these cases.

Inspection of corporate books and records

Disputes often begin when the controlling group stops sharing information. A Washington shareholder has a statutory right to inspect corporate records, including minutes, accounting records, and the shareholder list, for a proper purpose and on five business days' written demand (RCW 23B.16.020), and the corporation must keep those records in the first place (RCW 23B.16.010). When management stonewalls, we move to compel inspection, and the court can order production and award the shareholder's costs and fees (RCW 23B.16.040). Getting the records is frequently the first real step in a shareholder dispute, because it surfaces the self-dealing, the diverted money, or the mismanagement that prompted the concern.

Dissenters' rights, appraisal, and forced buyouts

When the majority pushes through a merger, a sale of substantially all the company's assets, or another transaction that cashes out or transforms a minority stake, Washington gives the dissenting shareholder appraisal rights: the right to demand the fair value of their shares and have a court determine it if the parties can't agree (RCW 23B.13.020 and RCW 23B.13.200 through .300). These fights turn on valuation, on what counts as fair value, what discounts apply, and what the shares are really worth, so we work with valuation experts and litigate the appraisal proceeding itself. The same fair-value question drives the buyout election that resolves most oppression cases, which makes valuation the issue that quietly drives nearly every shareholder dispute.