Where Do I File A Shareholder Lawsuit?

Unless you have majority control over a corporation, your interests as a shareholder are heavily dependent on the conduct of other parties. Your ability to take legal action against the majority shareholder, corporate officers/directors, and even the company itself is a potentially powerful legal remedy. This raises an important question: Where do you file a shareholder lawsuit? The answer depends on several factors. Here, our Miami shareholder rights lawyers provide a guide to the key things to consider when deciding where to file a shareholder lawsuit.

Step #1: You Must Determine Whether You Can Sue: Mandatory Arbitration Clauses 

Many modern shareholder agreements contain mandatory arbitration clauses. In effect, a mandatory arbitration provision holds that parties to the agreement must arbitrate any dispute instead of pursuing litigation. Are mandatory arbitration clauses enforceable in shareholder disputes in Florida? It depends on the circumstances. In general, a forced arbitration clause is:

• Enforceable for a breach of shareholder agreement claims;
• Not enforceable for fraud claims; and
• Usually not enforceable for federal securities law violations.

If you did sign an agreement with a mandatory arbitration provision, your right to file a lawsuit will depend on the nature of your claim. You will typically be required to go through the arbitration process if you are filing a claim for breach of the shareholder agreement. However, you probably cannot be compelled to arbitrate a fraud claim.

 Step #2: You Must Determine in Which Court to File: Federal Court versus State Court 

Some shareholder disputes are handled in federal court. However, the majority of shareholder disputes are heard in state court. Whether your case should be filed in federal court or state court depends on the specific circumstances. An experienced Florida shareholder rights lawyer can review the matter and help you determine if you should file a lawsuit in federal court or state court. Filing in the right venue is critically important. 

Step #3: You Must Determine Where to File: Florida versus Other States 

Another complicating factor for shareholder lawsuits is that multiple states may have jurisdiction over the case. Most often, a shareholder lawsuit will be heard in the state where the company is incorporated or where the company has its primary headquarters. A shareholder lawsuit may also arise in a state where there is sufficient contact between the plaintiff, the defendant, and core legal issue in dispute. While many shareholder disputes are heard in Florida courts, it is not uncommon for a case to be heard in another state. For example, many mid-sized and large companies are incorporated in Delaware, which has a well-established body of case law for corporate disputes.

Contact Our Florida Shareholder Rights Attorneys Today

At Pike & Lustig, LLP, we have deep experience representing shareholders in complex legal disputes. If you have any questions about filing a shareholder lawsuit, our attorneys are here as a legal resource. Contact us today to set up your completely confidential, no commitment case review. We provide shareholder litigation representation to clients throughout Southeastern Florida.