Breach of Fiduciary Duty Archives

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Former President Sues Keystone Engineering Company, KE Company Acquisition Corp., Cornerstone Capital Holdings, LLC and Oasis Outsourcing, Inc.: Suit Highlights Retaliation; FEHA Retaliation, Gender Discrimination; Age Discrimination, Sexual Orientation Discrimination, Failure to Prevent Discrimination, Wrongful Termination, Unfair Competition, Breach of Fiduciary Duty of Majority Shareholders and Accounting.

EL SEGUNDO, CA (February 23, 2016)— Jamie Vitalich, an accomplished female aerospace industry executive recently filed suit in Los Angeles Superior Court against Keystone Engineering Company, KE Company Acquisition Corp., Cornerstone Capital Holdings, LLC and Oasis Outsourcing, Inc. The suit accuses defendants of whistleblower retaliation, FEHA retaliation, gender discrimination, age discrimination, sexual orientation discrimination, failure to prevent discrimination, wrongful termination, unfair competition, breach of fiduciary duty of majority shareholders, and demands an accounting.

According to the Complaint, the decision makers for the company stated that the Company ”would gain more business with a male President,” and shortly thereafter re-assigned Jamie, marginalized her, demoted her .and promoted a male to President, Ian Ballinger, who then terminated Jamie.

Defendants originally recruited and hired Jamie in 2013. The Complaint goes on to allege that her tenure as President “was marked with achievements , which included: coordinating the implementation of independent IT, HR, quality management and operational finance systems; overseeing the divestiture of the Ontario facility for $7.5 million; and facilitating a company profit that reduced Keystone’s longstanding debt to $1 million.” Prior to her termination Jamie questioned “why Keystone was paying ….a Cornerstone employee…more than 50% of her salary.” The Complaint also alleges that prior to her termination, she questioned “a discrepancy of roughly $300,000 in the statement of the company’s profits between the set of books used to determine the employees’ 2014 profit-sharing and the set of books audited by a third-party auditor.” The Complaint further alleges, that contrary to the stated belief that the Company “would gain more business with a male President”, “with Ballinger at the helm, Keystone’s profits had plunged. Jamie, irrespective of retaining the title of COO, was systematically excluded from meetings vital to the proposal process, including customer proposals and visits, and was, instead, assigned menial, demeaning duties by Bushell and Ballinger.” The Complaint goes on to allege that the “campaign to oust Jamie from Keystone so the ‘face’ of the company would be a man culminated in the pretextual elimination of her COO position and her ….termination…”

“The actions as alleged in the Complaint highlight the destructive impact of illegal discrimination. The case also touches on current themes of discrimination in the world of private equity, venture capital and their portfolio companies (e.g., Tinder lawsuit) and the emerging area of law finding joint employer relationships. We’re eager to commence discovery to determine whether Defendants’ stated rationale was merely a pre-text to cover up a wrongful termination.” says Chris Adishian.

The lawsuit seeks damages for lost wages, benefits and career opportunities, special damages, punitive damages, interest, and attorneys’ fees and costs and an accounting. Click here to read a copy of the Complaint.

About Adishian Law Group, P.C. Adishian Law Group (https://adishianlaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. As of November 2015, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 9 foreign countries in over 480 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

Minority shareholder rights in California include protections from a breach of fiduciary duty by the majority shareholder.

Majority shareholders may be held liable for damages for breach of a fiduciary obligation to minority shareholders, Jones v. H. F. Ahmanson & Co., 1 Cal.3d 93, 81 Cal.Rptr. 592, 460 P.2d 464; Brown v. Halbert, 271 A.C.A. 307, 316, 76 Cal.Rptr. 781; and 3 Witkin, Summary of Calif. Law (1960) Corporations, s 99, p. 2390 (1967 Supp. p. 998). A majority shareholder breaches his fiduciary duties to the minority when he uses his control to distribute a disproportionate share of corporate profits (whether in the form of a dividend of excessive executive compensation), depriving the minority of its fair share of corporate profits. See Jara v. Suprema Meats (2004) 121 C.A.4th 1238, 18 C.R.3d 187; Witkin Summary of California Law, Tenth Edition 2. [§ 181].

In Jara, the court found that a minority shareholder had the right to bring an individual action against the corporation for excessive compensation paid to the two other shareholders, who were also executives and directors of the corporation. The court stated, “The objective of encouraging intracorporate resolution of disputes and protecting managerial freedom becomes meaningless where defendants constitute the entire complement of the board of directors and all the corporate officers.” See Jara, supra, at 1259.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian: