Longtime readers of this blog may recall a post I wrote three years ago titled Minority Shareholder Oppression in the #MeToo Era. The post highlighted an apparent first-of-its-kind decision in a judicial dissolution case brought by certified public accountant Diane Straka, a minority shareholder of an accounting firm. The court upheld her claim of oppression by the male, majority shareholders based on their toleration of demeaning behavior directed at Ms. Straka by a senior employee at the firm and other discriminatory conduct concerning her profit-sharing and management role. Central to the court’s decision in Straka was its finding that the majority shareholders “and indeed, any shareholder of any corporation, should know that a female shareholder reasonably expects to be treated with equal dignity and respect as male shareholders forming the majority.”
No one should be under the illusion that the fact pattern presented in Straka presents a singular anomaly in the world of closely held companies. Nor should anyone underestimate the complexity of the reasons why female business owners who suffer discrimination in its various forms at the hands of their partners don’t come forward, much less sue their partners. Nor should anyone think there are easy legal solutions under existing common and positive law that would resolve the tension between society’s interests in protecting individuals from discriminatory behavior violating our fundamental cultural and legal norms, and promoting the freedom of business owners to order their business affairs and partner relations as they know best to maximize productivity and economic growth.
Which is why it’s important to bring to interested readers’ attention two recent, thought-provoking articles authored by two law professors with legions more knowledge and insight concerning these issues than I possess. Last year, the Indiana Law Review published an article by Professor Meredith Miller of the Touro Law Center entitled Challenging Gender Discrimination in Closely Held Firms: The Hope and Hazard of Corporate Oppression Doctrine, available on SSRN here. More recently, the Houston Law Review published an article by Professor Ann Lipton of the Tulane University Law School entitled Capital Discrimination, available on SSRN here. Continue Reading It’s Time to Address Sex Discrimination Against Women Owners of Closely Held Companies, Say These Two Law Professors