DocketNumber： A8907-04022; CA A65113
Judges： Richardson, Deits, De Muniz
Filed Date： 11/27/1991
Status： Precedential
Modified Date： 11/13/2024
Court of Appeals of Oregon.
Robert J. McGaughey, and McGaughey & Georgeff, Portland, for petition.
Before RICHARDSON, P.J., and DEITS and De MUNIZ, JJ.
On Appellants' Petition for Reconsideration September 27, 1991.
RICHARDSON, Presiding Judge.
Plaintiffs seek Supreme Court review and our reconsideration of our opinion. ORAP 9.15. We allow reconsideration to address one of their arguments.
We said:
"We agree with defendants that only an individual or a small group of shareholders who own a majority of the voting shares, or shareholders who, for other reasons, have domination or control, owe fiduciary obligations to the minority. See Zidell v. Zidell, Inc. (24128), 277 Or. 413, 418, 560 P.2d 1086 (1977), and authorities there cited; Chiles v. Robertson, 94 Or. App. 604, 619-23, 767 P.2d 903, modified 96 Or. App. 658, 774 P.2d 500, rev. den. 308 Or. 592, 784 P.2d 1099 (1989). We also agree that none of the 32 shareholder defendants is a majority shareholder. Plaintiffs appear to understand ``majority shareholder' to mean every shareholder who participates in any majority vote. That understanding is wrong. The question is whether a given shareholder or small number of shareholders has the requisite power to dictate or dominate corporate decisions, not whether a group of small shareholders happens to have outvoted another group on a particular occasion." 108 Or. App. 523, 527, 816 P.2d 677 (1991). (Footnote omitted.)
Plaintiffs contend, in essence, that the quoted statement is wrong, because any number of shares or shareholders that constitutes a majority and that act in concert can have the control necessary to give rise to a fiduciary duty to the minority. Although we disagree with the full thrust of that contention, we agree that our statement says more than we intended. Controlling status is not necessarily limited in all instances to "an individual or a small group of shareholders." However, we adhere to our conclusion that, as a matter of law, controlling status cannot be ascribed *420 to the 32 individual shareholders who were able to outvote the other four by 57 percent to 43 percent on the particular issue involved here.
Plaintiffs' argument is not advanced by their insistence that the 32 shareholder defendants acted "in concert." That characterization adds nothing to the fact that those defendants were able to achieve a majority vote on the matter in question. We said in our opinion that "[t]hey simply exercised the rights of shareholders to dispose of their stock and to participate in corporate governance." 108 Or. App. at 528-29, 816 P.2d 677. (Footnote omitted.) That right of participation includes communication with and persuasion of other shareholders with regard to corporate matters. Were the rule otherwise, controlling status would attach to every shareholder who joins in a majority vote and who has not avoided all contact with other shareholders before casting the vote. Under plaintiffs' view, an owner of five shares of General Motors who responds favorably to a successful proxy solicitation would owe a fiduciary obligation to the president of the company, if the latter happens to vote differently. That would be absurd.
Reconsideration allowed; opinion modified and adhered to as modified.