In Metro Commercial Management Services, Inc. v. Van Istendal, the Appellate Division affirmed the trial court's granting of summary judgment on appellant's counterclaim for shareholder oppression. We support the decision.

Nancy Van Istendal was a long-term accountant for the respondent real estate management company. In 2001, she became the chief financial officer and a 12 percent shareholder, subject to a Stock Purchase and Transfer Restriction Agreement. In 2002, she also became eligible to receive additional shares through a stock option plan. The agreement specifically stated that respondent was an “employee-at-will” and could be terminated by Metro “at any time for any reason.” Upon termination of employment, Van Istendal was required to offer to sell her shares back to the president or the company. The price for the shares would be fair market value to be determined by averaging each side's appraisal and that of a neutral third party.

In an initial action after her termination in 2015, Van Istendal sought reinstatement of employment and alleged that she was an oppressed shareholder under N.J.S.A. 14A: 12-7(1)(c). Her complaint was dismissed without prejudice. The trial court found no shareholder oppression with regard to her termination and that, based on her at-will status, Van Istendal had no reasonable expectation of continued employment.

In the second action which is the subject of the published opinion, Metro filed a complaint to compel Van Istendal to sell her shares in accordance with the appraisal method established in the agreement. Appellant counterclaimed for reinstatement and alleged instances of shareholder oppression and breaches of fiduciary duty. Since her complaint had been dismissed without prejudice, Van Istendal insisted that her claims remained viable. Metro moved for summary judgment on the counterclaim. Judge Dow confirmed her original opinion, holding that the at-will section of the agreement, acknowledging a right to termination by the employer, was conclusive and the employee had “no reasonable expectation of continued employment.” She also held that the disputed actions of the president of Metro fell within his powers as president. Judge Dow dismissed the claim again.

Upon review, the Appellate Division recited the relevant provision of N.J.S.A. 14A:12-7(1)(c), where a shareholder oppression action may be bought when the directors have “acted fraudulently or illegally, mismanaged the corporation, or abused their authority as officers or directors or have acted oppressively or unfairly.” Under such Supreme Court cases as Brenner v. Berkowitz, oppression of minority shareholders does not require illegality or fraud. It may be the “frustrat[ion] [of] a shareholder's reasonable expectations.” Under case law, termination of employment may constitute oppression where a person acquires a minority interest “for the assurance of employment in the business in a managerial position.” The Appellate Division held, however, that the language in the agreement was so specific as to Von Istendal's at-will status and termination “at any time for any reason,” that appellant could not have a “reasonable expectation of continuing employment with Metro.”

We agree. While the shareholder oppression statute is an effective tool to protect minority shareholders, a specific and definitive provision in a shareholder agreement acknowledging at-will status along with a balanced appraisal system to establish fair market value for the buyout of the departing shareholder employee should not sustain a cause of action for shareholder oppression.