Court ruling highlights why clear agreements matter when ending employment and redeeming shares

A Nebraska Supreme Court decision clarifies how professional corporations can end employment and redeem shares of shareholder-employees under clear bylaws.

On October 10, 2025, the Nebraska Supreme Court affirmed summary judgment in favor of Pathology Medical Services, P.C., a closely held professional corporation of pathologists, in a dispute brought by Dr. Scott M. Noel. Noel, who joined the company in 1994 and became a shareholder in 1996, held various roles including medical director, compliance officer, and corporate secretary. His shareholder status was tied to his employment, as required by the company’s bylaws and annual employment agreements.

In 2021, following documented workplace incidents and internal tensions, Pathology Medical’s board – composed of fellow pathologist-shareholders – chose not to renew Noel’s employment contract for 2022. According to the bylaws, this ended Noel’s eligibility to remain a shareholder and triggered redemption of his shares at book value.

Noel was offered $46,691.30 for his shares, calculated per the bylaws and supported by an accounting review. He did not cash the check or transfer his shares, instead filing suit alleging breach of fiduciary duty, shareholder oppression, and challenging the noncompetition clause in his employment agreement. Noel claimed he had a reasonable expectation of continued employment until retirement, that the...

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