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Home > School of Law > Student > Law Review > Vol. 33 (2011) > Iss. SYMPOSIUM: FIDUCIARY DUTIES IN THE CLOSELY HELD FIRM 35 YEARS AFTER WILKES V. SPRINGSIDE NURSING HOME

 

Western New England Law Review

Abstract

This Article asserts that Wilkes v. Springside Nursing Home, Inc. should be at least as memorable as Donahue v. Rodd Electrotype Co., and is, in a practical sense, substantially more important. The assertion rests on two propositions: first, that Donahue announces admirable sentiments but provides little practical guidance; second, that Wilkes provides the best practical rule for adjudicating “oppression” claims when the alleged victim is also a miscreant or for some other reason the dispute is grey rather than black and white. In particular, this Article asserts that Wilkes’s multistep, burden-shifting rule is a nuanced and effective method for accommodating both a victim’s claim of majoritarian wrongdoing and the majority’s claim of legitimate motive and even business necessity.

Because this symposium is for Wilkes rather than Donahue, description and praise of Wilkes occupies most of this Article, which begins, however, by putting Donahue in its place. Part I describes the role of Donahue—then and now. Part II describes the “schizoid fiduciary duties” among owners within closely held businesses, states the Wilkes test, and explains that test’s genius for dealing with complex disputes among co-owners. Part III further delineates and explains the Wilkes test. Part IV notes that, structurally and conceptually, Wilkes succeeded in putting new wine in old bottles, giving the Wilkes rule a familiar feel despite its novel approach. Part V uses two cases in which “oppressed” shareholders were also miscreants and shows how application of the Wilkes rule would have produced a more nuanced analysis and a better result. This Article concludes with some thoughts on the influence of Wilkes in Massachusetts and elsewhere

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