“Under Massachusetts law,” Judge Salinger observed in Stone v. Remillard, “a corporation does not owe a fiduciary duty to its shareholders.” In support of that blackletter law, Judge Salinger cited to footnote three of Merola v. Exergen Corp., 423 Mass. 461 (1996).

The question of whether a corporation owes fiduciary obligations to its shareholders arose in the context of a corporate dispute involving Twin Coast Metrology, Inc., a closely held corporation.

Judge Salinger noted that “in Selmark Associates, Inc. v. Ehrlich, 467 Mass. 525, 526 (2014), the Supreme Judicial Court affirmed a verdict in favor of a shareholder on his breach of fiduciary duty counterclaim against a corporation.” But as Judge Salinger pointed out:

[I]t appears that the issue of whether a corporation owes a fiduciary duty to its shareholders was never raised in Selmark, and the Court never overruled or even address[ed] its clear holding in Merola that corporations owe no such duty. As a result, Selmark does not hold that corporations owe a fiduciary duty to their shareholders. . . . “Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.” McEvoy Travel Bureau, Inc. v. Norton Co., 408 Mass, 704, 719 n.12 (1990), quoting Webster v. Fall, 266 U.S. 507, 511 (1925).

Stone, et al. v. Remillard, et al.

May 1, 2018