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NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LESLEE SCALLON, a California resident 

individually and derivatively on behalf of 

Henry Enterprises Inc. and JAY 

GAIRSON, a Washington resident, 

individually and derivatively on behalf of 

Henry Enterprises Inc.,

 Plaintiffs - Appellees,

 v.

SCOTT HENRY’S WINERY CORP.; et 

al.,

 Defendants,

and

HENRY ENTERPRISES, INC., Nominal 

Defendant,

 Defendant - Appellant.

No. 15-35952

D.C. No. 6:14-cv-01990-MC

MEMORANDUM*

Appeal from the United States District Court

for the District of Oregon

Michael J. McShane, District Judge, Presiding

 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

FILED

APR 11 2017

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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Argued and Submitted March 10, 2017

Portland, Oregon

Before: LEAVY and FRIEDLAND, Circuit Judges, and BENITEZ, District 

Judge.**

Henry Enterprises, Inc. (“HEI”) appeals from the district court’s ruling that 

Or. Rev. Stat. § 60.952(6), a share buyout provision applicable to close corporation 

disputes, does not apply to derivative shareholder actions, like the one Plaintiffs 

brought here. Or. Rev. Stat. § 60.952(6) permits a defendant to shortcut litigation 

by purchasing the plaintiff’s shares for fair value. We have jurisdiction under 28 

U.S.C. § 1292(b) and review questions of statutory interpretation de novo. To 

determine whether the statute applies to derivative actions, we examine the 

statute’s text and context and, to the extent it appears useful, the legislative history. 

State v. Gaines, 206 P.3d 1042, 1050 (Or. 2009) (en banc). Applying this 

methodology, we hold that the buyout provision applies to derivative proceedings 

and reverse.

First, the plain meaning of the statute’s text indicates that the buyout 

provision applies to derivative actions. The relevant text provides that “the 

corporation or one or more shareholders may elect” to exercise the buyout option 

“after the filing of a proceeding under subsection (1).” Or. Rev. Stat. § 60.952(6). 

 ** The Honorable Roger T. Benitez, United States District Judge for the 

Southern District of California, sitting by designation.
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A “proceeding under subsection (1)” is a “proceeding by a shareholder” alleging 

certain types of claims. Or. Rev. Stat. § 60.952(1). A “proceeding by a 

shareholder” includes both direct and derivative actions. See In re Conduct of 

Kinsey, 660 P.2d 660, 666 (Or. 1983) (per curiam) (explaining that a derivative 

action is a lawsuit brought by a shareholder to enforce a corporate right); Lee v. 

Mitchell, 953 P.2d 414, 423-24 (Or. Ct. App. 1998) (explaining that a direct 

shareholder action is a lawsuit brought by a shareholder to enforce rights owed to 

the plaintiff as an individual). In fact, Oregon law requires the person bringing a

derivative proceeding to be a shareholder. Or. Rev. Stat. § 60.261. 

Furthermore, the types of claims set forth in subsection (1) include claims 

traditionally brought derivatively. For instance, the statute applies to proceedings 

where “[t]he corporate assets are being misapplied or wasted.” Or. Rev. Stat. 

§ 60.952(1)(d). Waste or misapplication of corporate assets is a corporate injury. 

See, e.g., North v. Union Sav. & Loan Ass’n, 117 P. 822, 825 (Or. 1911); Noakes v. 

Schoenborn, 841 P.2d 682, 686 (Or. Ct. App. 1992). Because subsection (1) 

describes claims generally brought derivatively, the statute must apply to 

derivative proceedings. 

Second, Oregon courts applied similar predecessor statutes in derivative 

actions. See, e.g., Chiles v. Robertson, 767 P.2d 903 (Or. Ct. App. 1989); Serbick 

v. Timpte-Pac., Inc., 746 P.2d 1167 (Or. Ct. App. 1987); cf. Baker v. Commercial 
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Body Builders, Inc., 507 P.2d 387 (Or. 1973). Importantly, the Oregon legislature 

enacted Or. Rev. Stat. § 60.952 to reflect this prior judicial practice. Hickey v. 

Hickey, 344 P.3d 512, 520 (Or. Ct. App. 2015). Therefore, Or. Rev. Stat. § 60.952 

should be applied in the same way.

Third, the legislative history supports applying the buyout provision in 

derivative proceedings. The legislature wanted the provision to be used to end 

costly litigation early. See Tape Recording, Oregon Senate Committee on 

Business, Labor and Economic Development, SB 116, Jan. 15, 2001, (later 

incorporated into SB 118), Tape 2, Side A (statement of Robert Art); see also Or. 

Rev. Stat. § 60.952(6) (stating that buyout right must be invoked within 90 days 

after the filing of a proceeding). A holding that the statute does not apply to 

derivative proceedings would undermine that statutory purpose. 

In conclusion, the text, context, and legislative history of Or. Rev. Stat. 

§ 60.952 demonstrate that the statute applies to derivative proceedings.

REVERSED.