Company Founders v. Majority Shareholder

We defended the founders of an environmental startup company with the ambitious goal of creating biofuels from algae, in a breach of fiduciary duty lawsuit in San Mateo Superior Court. Soon after investing, the company’s majority shareholder lost interest, abandoned his position on the company’s board, and set about trying to get investment back.  He used a “blocking right” to thwart future fundraising in an effort to force the company to either liquidate or be pushed into bankruptcy, so he could secure a generous buy-out. When that failed, the majority shareholder filed a derivative lawsuit accusing the founders of breaching their fiduciary duties.  We successfully moved to dismiss those claims with prejudice, and moved forward with our counterclaims alleging breach of fiduciary duty, fraudulent concealment, promissory fraud, and breach of the covenant of good faith and fair dealing. High profile experts weighed in on the fiduciary duties of majority shareholders, including a former Delaware Supreme Court justice and the author of a leading treatise on oppression of minority shareholders. The case settled shortly before trial with a substantial payment to the founders. 

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