MA STATEMassachusetts Supreme Judicial Court
1997

Demoulas v. Demoulas Super Markets, Inc.

424 Mass. 501Massachusetts Supreme Judicial Court • Decided 1997Remanded
FLAGSHIPBroad IndemnificationCited 390 times

HOLDING

A shareholder sued company executives for secretly taking business opportunities that belonged to the company. The Massachusetts Supreme Court ruled that shareholders can sue for this kind of wrongdoing, even if the company's voting trust agreement tried to block such lawsuits. The court said you cannot use contract language to prevent someone from suing over breach of fiduciary duty—it violates public policy. This matters to subcontractors because it reinforces that company owners and managers cannot hide behind agreements to shield themselves from accountability when they divert business opportunities.

KEY FINDINGS

Broad Indemnification

Exculpatory clauses that block shareholder derivative suits for breach of fiduciary duty are unenforceable, even if written into voting trust agreements or corporate documents.

FULL COURT OPINION