Direct v. Derivative Shareholder Claims & Minnesota Courts’ Practice of “Unpublished Decisions”

In Minnesota, as in many states, courts draw a distinction between claims that company shareholders can bring: direct vs. derivative claims. In short, shareholders sometimes bring claims against companies because, they allege, the companies have harmed the shareholders directly. In other cases, however, shareholders bring claims against companies, alleging that company actions hurt the company itself and the shareholders are indirectly or derivatively harmed due to their ownership interests in the companies.

Because there are important differences between the legal processes (and likely recoveries) for direct vs. derivative shareholder claims, disputes can arise as to whether a shareholder’s claims are one or the other.

Wouldn’t it be nice to get some additional analysis and direction from Minnesota’s appellate courts on this?

Why, yes it would be nice. So why would the Minnesota Court of Appeals issue a ruling on this thorny subject in a large and significant lawsuit but then designate the decision “unpublished,” which means the decision is “not precedential”?

We will never know.

In California, litigants can petition the court to change the designation of an opinion from “unpublished” to “published” but not here in Minnesota.

Many have challenged “unpublished opinions” as unconstitutional.

As Ms. Erica S. Weisgerber pointed out in her 2008 Georgetown Law Review note challenging the constitutionality of “unpublished opinions”:

The term ‘unpublished opinions’ is somewhat of a misnomer…. Unpublished opinions are not included in the official volumes of published rulings, but this does not mean that they are actually not published anywhere. The opinions are still public records, often available on court websites, in the Federal Appendix, and on Lexis and Westlaw. Thus, though designated unpublished, these opinions are usually readily available and as accessible for research as published opinions.

Regardless of whether unpublished opinions, generally, rise to the level of a constitutional violation, it is regrettable that the Minnesota Court of Appeals would issue a ruling on a complicated aspect of our law, in an area where the Court actually affirmatively recognizes the dearth of guiding Minnesota law (“Because Minnesota appellate courts infrequently review shareholder derivative actions, we turn to Delaware law“), and then hold that the decision cannot be cited as precedent in later cases.