Gimpel v. Bolstein - 125 Misc. 2d 45, 477 N.Y.S.2d 1014 (Sup. Ct. 1984)

Rule:

One definition of oppression within the meaning of N.Y. Bus. Corp. Law § 1104-a is a violation by the majority of the "reasonable expectations" of the majority. The majority of the leading New York cases accept this definition. The second definition is derived from British law, and describes "oppressive conduct" as burdensome, harsh and wrongful conduct; a lack of probity and fair dealing in the affairs of a company to the prejudice of some of its members; or a visible departure from the standards of fair dealing, and a violation of fair play on which every shareholder who entrusts his money to a company is entitled to rely.

Facts:

Robert Gimpel was a shareholder in Gimpel Farms, Inc. Believing himself oppressed by the conduct of his fellow shareholders, he brought a petition to dissolve the corporation pursuant to section 1104-a of the Business Corporation Law and a derivative action pursuant to section 626 of the Business Corporation Law. The corporation and his fellow shareholders moved to consolidate and dismiss both suits for failure to state a cause of action. 

Issue:

Were Gimpel’s discharge and his later exclusion from corporate management oppressive?

Answer:

No

Conclusion:

The court applied the reasonable expectations of the parties' test for oppressiveness and found that the facts did not warrant dissolution. The court also applied the lack of fair dealing test of oppressiveness and found that Gimpel’s discharge and his later exclusion from corporate management were not oppressive. The corporation's policy of not paying dividends was firmly established and it was not required to change its policy. However, the court found that the corporation must allow Gimpel full access to the corporate records and they must either alter the corporate financial structure, start paying dividends, or buy out Gimpel’s interest. In the derivative action, the court directed the corporation to allow the shareholder full access to the books and declined to interfere in the business judgment decisions of the corporation.