Guenther v. Pacific Telecom, Inc.

123 F.R.D. 341 (1988)

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Guenther v. Pacific Telecom, Inc.

United States District Court for the District of Oregon
123 F.R.D. 341 (1988)

Douglas Halasz headshot
  • Written by Douglas Halasz, JD

Facts

Several minority shareholders (plaintiffs) of American Network, Inc. (AmNet) (defendant) sued AmNet and its directors, as well as Pacific Telecom, Inc. and its directors, and Price Waterhouse & Co., Inc. and its accountant (defendants) (collectively, the corporations and directors) and asserted direct and derivative claims for breach of fiduciary duty. Thereafter, the minority shareholders in question agreed to exchange all of their AmNet shares for the right to receive a payment. Consequently, the corporations and directors moved to dismiss the claims for breach of fiduciary duty on the ground that the now former minority shareholders were no longer shareholders of AmNet.

Rule of Law

Issue

Holding and Reasoning (Marsh, J.)

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Casebooks

Business Associations

Key Terms

  • ShareholderOne holding stock in a public or private corporation.
  • Shareholder Derivative SuitA lawsuit in which one or more shareholders of a corporation sue to assert a claim on behalf of the corporation itself or the shareholders at large, usually because the corporation has failed to assert the claim. An example of a shareholder derivative suit is a claim for usurping a corporate opportunity or other breach of fiduciary duty to the corporation. A shareholder derivative suit may also be called a shareholder derivative action.
  • Motion to DismissA party’s official request that a court dismiss a claim or claims, often because the claim is procedurally deficient or there has been a settlement or withdrawal.
  • DirectorsIndividuals selected by election or appointment to manage a business or corporation.
  • CorporationA business that is a legal entity and shares in the profits of the business but whose owners are not personally liable for any debts or losses of the business.
  • Breach of Fiduciary DutyTort for breaching a duty one party owes to another party arising out of the fiduciary relationship between the parties. Under Restatement (Second) of Torts § 874, a breach of fiduciary duty subjects a fiduciary to liability for harm caused by the breach.
  • IndemnificationA promise to cover a loss suffered by someone else.
  • CreditorSomeone to whom a debt is owed.
  • Derivative ClaimIn business law, a claim that a shareholder brings on behalf of the company based on harm that the shareholder suffers only indirectly, for example, because the injury lowered the value of the company’s stock and, therefore, the value of the shareholder’s shares.
  • Direct ClaimIn business law, a claim that a company or shareholder asserts on the basis of alleged harm suffered directly at the hands of the defendant.

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