Court Opinion

ID: 9776832
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:46:13.165098+00
Date Added: 2024-06-11T07:30:01.781832
License: Public Domain

GONZALEZ, Justice,
concurring.
I agree that a single shareholder can maintain a derivative action, but disagree with the suggestion that a shareholder must always purport to represent a class of similarly situated shareholders before he or she has standing to sue. The court of appeals upheld the dismissal of this shareholder’s derivative suit based on his failure to comply with Texas Rule of Civil Procedure 42(a). Today the court perpetuates this confusion by stating that “the plaintiff adequately and fairly represented those shareholders similarly situated.” 796 S.W.2d 162.
According to Webster’s Third New International Dictionary 416 (1961), a class is “a group, set, or kind sharing common attributes.” The definition necessarily implies that a class consists of more than one person or thing. Therefore, a “class of one” is an oxymoron, as is “a shareholder similarly situated with him or herself.” 1
A shareholder bringing a derivative suit is not required to prove that he or she represents a class. Article 5.14 of the Texas Business Corporation Act specifies the requirements a plaintiff must comply with to bring a derivative suit. Basically, the plaintiff must prove two things — 1) ownership at the time of the transaction of which he or she complains and 2) the efforts that he or she made to have the suit brought for the corporation by the board of directors or reasons for not making any such efforts (e.g. the suit is against the directors so they would not bring a suit by the corporation against themselves). Tex.Bus. Corp.Act Ann. art. 5.14 (Vernon 1980).
There is no requirement that the plaintiff represent or have the support of a specific number of shareholders or percentage of shares. Texas Rule of Civil Procedure 42(a) pertaining to class actions, however, contains the following language:
The derivative suit may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders similarly situated in enforcing the right of the corporation.
*164Tex.R.Civ.P. 42(a). This language was not intended to require that a class be represented. Instead, this language is only operative when there are shareholders similarly situated to the plaintiff who would constitute a class. Only then is the plaintiff required to prove his or her ability to adequately represent the interests of the class. Therefore, any reference to a class with regard to a single plaintiff shareholder who is not similarly situated with other shareholders is extraneous and confusing. Since neither party contends that there are any shareholders similarly situated with the plaintiff, this plaintiff need not prove that he adequately represents a class or that he is similarly situated with himself.
For these reasons, I concur in the judgment.

. In Halsted Video, Inc. v. Guttillo, the court held that a single plaintiff shareholder did not have to represent the interests of shareholders with whom he is not similarly situated and that the plaintiff was a "legitimate class of one." 115 F.R.D. 177, 180 (N.D.Ill.1987); see also Jordan v. Bowman Apple Prods. Co., 728 F.Supp. 409, 413 (W.D.Va.1990) (single plaintiff constitutes class of one and adequately and fairly represents those shareholders similarly situated); accord Brandon v. Brandon Constr. Co., 776 S.W.2d 349, 354 (Ark.1989) (class of one may maintain derivative action).