Shareholders in Privity With Earlier Litigants
The fundamental nature of a derivative suit is that the corporation, rather than the individual shareholders, represent the real plaintiff. It is in this context the Minnesota Court of Appeals considered a matter of first impression raised in a dispute between shareholders in a closely held corporation. The appellants argued they were not parties in a prior case so res judicata cannot apply. The respondents countered that shareholders bringing a later derivative claim share privity with different shareholders from that corporation who brought a similar derivative claim. The court held under the doctrine of res judicata shareholders who bring later derivative claims share privity with different shareholders of the same corporation from an earlier lawsuit alleging derivative claims when the two suits involve claims arising from the same set of factual circumstances.