Tag: Shareholder Oppression

Unlike the New Jersey Business Corporation Act (“BCA”), the Limited Liability Company Act, N.J.S.A. 42:2B-1 to -70 (“LLCA”) had no equivalent oppressed shareholder provision. See, Denike v. Cupo, 394 N.J. Super. 357, 378, 926 A.2d 869 (App. Div. 2007), rev’d on other grounds, 196 N.J. 502, 958 A.2d 446 (2008). Fortunately for oppressed members of a New Jersey LLC, the LLCA has since been repealed. See L. 2012, c. 50, (eff. March 18, 2013) (enacting the Revised Uniform Limited Liability Company Act [the “RULLCA”], making the RULLCA applicable to all New Jersey LLCs formed after the legislation’s effective date, and replacing the LLCA with the RULLCA as to all existing LLCs as of March 1, 2014).

In addition to oppression claims, the following causes of action may be applicable and therefore should be included in the complaint or asserted against the Plaintiff when filing counterclaims:

Often, business break-up or oppression litigation will include allegations that one side or the other breached fiduciary duties. Courts have consistently recognized shareholders who owe certain fiduciary duties to the other shareholders and corporate entity.

The breakup of a corporation, limited liability company or partnership is an extremely complicated and stressful process.

New York applies the “reasonable expectations of the shareholder” test when determining whether or not a minority shareholder has been oppressed.

Although, there are two lines of Pennsylvania cases which define shareholder oppression differently, it appears that the majority view is that Pennsylvania, like New Jersey and New York applies the “reasonable expectations” of the shareholder test.

On June 14, 2013, the New Jersey Appellate Division released a decision in a minority oppression case. In Kaible v. Gropack, A-5666-1T3, the Appellate Division affirmed a trial court’s finding that the Plaintiff was the victim of oppression. Moreover, the Kaible Court affirmed the trial court’s decision to award counsel fees to the Plaintiff.