Suing for Shareholder Oppression Over Other Allegations the Right Move for These Lawyers

After discussions about going public, Promega Corp., a privately-held biotech company based in Wisconsin, decided instead to remain a privately held company back in 2014 and tried to buy back the stock owned by its minority shareholders and regain a controlling interest in the company. Those minority shareholders claimed the price at which Promega wanted to buy back their shares was deeply discounted, and when they tried to negotiate for a higher price point, Promega allegedly refused, which ultimately led to the massive lawsuit between the company and its minority shareholders that dragged on for about five years.

The team of attorneys arguing the case for the minority shareholders was headed by James Southwick and Alex Kaplan, two partners of the Susman Godfrey law firm in Houston, Texas. They recently announced that the lawsuit settled for $300 million, a victory to which they attribute their months of research and preparation leading up to the trial, as well as their decision to stick to one main allegation: shareholder oppression.

Other attorneys might have argued that the defendants had breached their fiduciary duty to their shareholders, or they would have alternated between making the case for shareholder oppression, arguing breach of fiduciary duty, and making the case for other allegations throughout the course of the trial. Instead, Southwick and Kaplan decided their best bet was to argue that Promega had tried to oppress its shareholders and to continue to make that case throughout the month-long bench trial. It was an unusual strategy, but one that ultimately paid off.

At the end of the trial, the judge said she was leaning heavily towards finding in favor of the plaintiffs and requiring Promega to buy back shares from its minority investors. There was some debate over the best way to determine a fair share price for the minority investors, and the judge expressed some doubt about how the company would come up with the funds, saying they might have to dissolve the company, but she was hoping they would find another option.

In the end, a third party, Eppendorf AG, a German company that makes life science instruments, agreed to buy some of the minority investors’ shares, with Promega buying back the rest. A spokesperson for Promega released a statement saying the settlement agreement benefits everyone involved, reaffirming the company’s determination to continue as a private and independent company.

Trying to find a way to pay for the settlement was just one reason it took so long. First, Promega’s lead attorney passed away, then the court allowed the deadline for the post-trial briefing to be extended. Then Promega had to try and find a way to come up with the funds for the settlement, and of course, the COVID-19 pandemic did its part in delaying the final settlement.

Whether other attorneys representing minority shareholders will use Southwick and Kaplan’s strategy in their cases has yet to be determined, but at the very least, they have succeeded in creating a new precedent for this kind of lawsuit, which could benefit minority shareholders in the future.


At Lubin Austermuehle, we’re all business when it comes to offering the highest level of quality service to businesses engaged in complex business disputes, whether it’s shareholder oppression, breach of contract, defamation and far more. We’re also class action attorneys who have earned a reputation for victories, including what Crain’s Chicago Business called “the largest class action settlement in Illinois.” From Schaumburg to the Wheaton, we are here for you. Call and take advantage of our FREE consultation where we can discuss your specific needs and wishes and our ability to meet them. Contact us here or call us on our locally at 630-333-0333.


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