News & Insights

Recent Case of Interest where Court Upholds Ownership Threshold for Shareholder Derivative Actions Under Texas SB 29

Apr 30, 2026

In Gusinsky v. Reynolds, No. 3:25-CV-1234, 2026 WL 747179 (N.D. Tex. 2025), Vladimir Gusinsky, a shareholder of Southwest Airlines Co., brought a derivative action against the company’s board of directors, alleging breaches of fiduciary duty. He challenged the elimination of the “Bags Fly Free” policy and the adoption of amended bylaws imposing a 3% ownership threshold for initiating derivative suits, contending these actions were intended to entrench management.

The court dismissed the claims, holding that Texas Senate Bill 29 (SB 29) expressly permits corporations to adopt such ownership thresholds and barred Gusinsky’s suit. Because he did not satisfy the 3% requirement and filed after SB 29’s effective date, he lacked standing. The court further rejected his constitutional and contract-based arguments, concluding that SB 29 did not retroactively impair any rights and that the bylaws were not unreasonable. It also emphasized that fiduciary duty claims related to the adoption of the bylaws were themselves derivative and therefore subject to the same statutory bar.

The decision underscores the significance of SB 29 in shaping shareholder litigation and corporate governance in Texas. By upholding the enforceability of ownership thresholds, the court reinforced a mechanism that may deter non-meritorious derivative actions while also limiting the ability of minority shareholders to pursue claims on behalf of the corporation.

No information in this communication is intended to constitute specific legal advice. For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at phuttenbach@craincaton.com.

Thanks,

Pat

VLADIMIR GUSINSKY