In Bruemmer v. Gilligan, the Ohio Court of Appeals reviewed a dispute between a minority shareholder and the majority owners of a company. The case centered on whether the termination of the minority shareholder’s employment constituted a breach of fiduciary duty or wrongful termination. The appellate court ultimately upheld the trial court’s ruling, finding that the termination was justified and rejecting the shareholder’s claims.
Business Justification for Termination
Matthew D. Bruemmer, a 0.7% minority shareholder and employee of Gilligan Company LLC and GOC Realco LLC, was terminated in October 2021. According to the majority shareholders, his termination was due to repeated failures to perform job duties, failure to follow supervisor directives, and disruptive conduct in the workplace. The company had issued warnings regarding his performance, but Bruemmer did not correct the identified issues.
Following his termination, Bruemmer was required to sell back his ownership interest in the companies under the terms of preexisting redemption agreements. The agreements governed the buyout of his shares but did not address his employment status. After the buyout, Bruemmer sued the majority shareholders, alleging wrongful termination and breach of fiduciary duty.
Court Rejects Shareholder’s Claims
The Ohio Court of Appeals ruled that majority shareholders in a close corporation owe a heightened fiduciary duty to minority shareholders but may terminate their employment if a legitimate business reason exists. The court found that Bruemmer’s termination was based on clear performance issues, including insubordination, failure to complete assigned tasks, and refusal to comply with scheduling policies.
Bruemmer contended that he had never received prior written reprimands or performance improvement plans. However, the court determined that his continued noncompliance with company procedures and supervisor directives justified the company’s decision. Additionally, the court noted that Bruemmer had been given significant benefits beyond what was required, such as favorable stock option loans and a high salary relative to his role.
The appellate court affirmed the trial court’s summary judgment in favor of the majority shareholders, ruling that the company’s actions were lawful and did not violate any fiduciary obligations.
Employment Law Representation
For those facing employment disputes related to termination, fiduciary duties, or workplace policies, our labor and employment law team at Whitcomb, Selinsky, PC can provide legal guidance. Contact us to discuss your case and explore your legal options.
Joe Whitcomb
