Berreman v. W. Publ'g Co. - 615 N.W.2d 362 (Minn. Ct. App. 2000)

Rule:

Unfairly prejudicial conduct under Minn. Stat. § 302A.751, subd. 1(b)(3), is conduct that frustrates the reasonable expectations of shareholders in their capacity as shareholders or directors of a corporation that is not publicly held or as officers or employees of a closely held corporation.

Facts:

Thomas Berreman appealed from summary judgment dismissing his action against West Publishing Company and three West directors (collectively "West"). Berreman alleged three causes of action: breach of fiduciary duty, unfairly prejudicial conduct in violation of Minn. Stat. § 320A.751, subd. 1(b)(3) (1994), and fraud. Berreman's claims were based on his assertion that West had a duty to disclose to him, before Berreman retired from West and sold his stock back to the company in June 1995, that three of West's directors had begun to consider the sale of West and had engaged an investment-banking firm to explore West's options. On cross-motions for summary judgment, the district court granted summary judgment to West on all of Berreman's claims. 

Issue:

Did the district court err by granting summary judgment to West on Berreman's claim of unfairly prejudicial conduct under Minn. Stat. § 302A.751, subd. 1(b)(3) (1994)?

Answer:

No

Conclusion:

Applying the probability-magnitude test, the court held that the facts known to West at the time Berreman resigned were immaterial as a matter of law. The court additionally concluded that West’s conduct did not frustrate Berreman’s reasonable expectations as a shareholder. As a result, Berreman did not have a reasonable expectation that he would be informed of any speculative discussions West’s directors had about the financial future of West. Therefore, West’s conduct was not unfairly prejudicial to Berreman, and he was not entitled to equitable relief under the state statutes. Moreover, the court found no evidence of fraud.