minority shareholder rights

David F. Johnson presented his paper “Business Divorce: Minority Shareholder Rights In Texas” to the State Bar of Texas’s Business Disputes Course on September 2-3, 2021. This presentation addressed shareholder oppression claims in Texas, minority shareholder rights (such as contractual rights, stock rights, disclosure rights, distribution rights, employment rights, and

In TSA-Tex. Surgical Assocs., L.L.P. v. Vargas, one partner sued his other partners for various claims regarding the defendants attempt to squeeze the plaintiff out of the partnership. No. 14-19-00135-CV, 2021 Tex. App. LEXIS 1330 (Tex. App.—Houston [14th Dist.] February 25, 2021, no pet. history). The defendants filed a motion to dismiss under the Texas Citizens Participation Act (TCPA), and the trial court denied the motion. The defendants appealed.

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The TCPA was enacted “to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury.” Id. (citing Tex. Civ. Prac. & Rem. Code § 27.002). It does so by authorizing a party to file a motion to dismiss a legal action that “is based on, relates to, or is in response to a party’s exercise of the right of free speech, right to petition, or right of association.” Id.

The court of appeals affirmed the denial of the motion to dismiss under the TCPA. The defendants argued that the plaintiff’s claims were based on, related to, or in response to the exercise of free speech because the claims purportedly involve communications regarding the provision of medical services. The court of appeals disagreed:

In Katz v. Intel Pharma, LLC, a minority member of a limited liability company sued a former manager for breach of fiduciary duty in a derivative action. No. H-18-1347, 2020 U.S. Dist. LEXIS 120389 (S.D. Tex. July 9, 2020). The defendant filed a motion for summary judgment, alleging that he did not owe any fiduciary duties, and even if he did, the minority member could not raise them after the company was no longer in existence. The federal district court denied the motion.