Gathering Evidence in a Dispute With a Co-Owner

What Company Records Can You Copy Without Inviting a Counterclaim?

Records you already see in your role, copied for the dispute and kept for that use, carry the least risk. The risk grows when copies leave the company for another use, contain trade secrets, or come from places your role never reached. Keeping copies has its own limit: Minnesota punishes anyone who “intentionally retains copies of any computer software or electronic data beyond the individual’s authority” (Minn. Stat. § 609.89, subd. 1). Minnesota’s trade secrets act reaches acquiring a trade secret by a person who knows or has reason to know it “was acquired by improper means,” as well as disclosing or using one (Minn. Stat. § 325C.01, subd. 3). A partner, a member of a member-managed LLC, and the managers or governors of other LLCs also owe a statutory duty to account for benefit from using company property, which their agreement may limit. Who owes which duty depends on the type of company:

• LLC. In a member-managed LLC, a member’s duty of loyalty includes the duty “to account to the company and to hold as trustee for it any property, profit, or benefit derived by the member,” including benefit “from a use by the member of the company’s property” (Minn. Stat. § 322C.0409, subd. 2). In a manager-managed LLC, “Subdivisions 1, 2, 3, and 5 apply to the manager or managers and not the members” (subd. 7), and in a board-managed LLC, “Subdivisions 1, 2, 3, and 5 apply to the governors and not the members” (subd. 8). In both, “A member does not have any fiduciary duty to the company or to any other member solely by reason of being a member” (subd. 7 and subd. 8). Every member must still act “consistently with the contractual obligation of good faith and fair dealing” (§ 322C.0409, subd. 4). “If not manifestly unreasonable,” an operating agreement may “restrict or eliminate the duty” to account for that benefit (Minn. Stat. § 322C.0110, subd. 4).
• Partnership. A partner’s duty of loyalty reaches any benefit “derived from a use by the partner of partnership property” (Minn. Stat. § 323A.0404(b)(1)). The partnership agreement may not eliminate that duty, but “the partnership agreement may identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable” (Minn. Stat. § 323A.0103(b)(3)(i)). Every partner must also “discharge the duties to the partnership and the other partners under this chapter or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing” (§ 323A.0404(d)). The partnership agreement may not eliminate that obligation, “but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable” (§ 323A.0103(b)(5)).
• Closely held corporation. In deciding what relief to grant in a lawsuit between owners, a court must consider “the duty which all shareholders in a closely held corporation owe one another to act in an honest, fair, and reasonable manner in the operation of the corporation” (Minn. Stat. § 302A.751, subd. 3a). The same section lets a shareholder sue when “the directors or those in control of the corporation have acted in a manner unfairly prejudicial toward one or more shareholders in their capacities as shareholders or directors of a corporation that is not a publicly held corporation, or as officers or employees of a closely held corporation” (subd. 1(b)(3)), the basis for a shareholder oppression claim. Your own conduct with company records can become part of that case. A co-owner who is also a director has a separate standard: “A director shall discharge the duties of the position of director in good faith, in a manner the director reasonably believes to be in the best interests of the corporation” (Minn. Stat. § 302A.251, subd. 1).

Trade secrets add a separate limit. Under the Minnesota Uniform Trade Secrets Act, a trade secret can be “information, including a formula, pattern, compilation, program, device, method, technique, or process,” that meets two conditions (Minn. Stat. § 325C.01, subd. 5). It “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use,” and it “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy” (subd. 5). A customer compilation that meets both conditions can qualify. Misappropriation includes disclosing or using one “without express or implied consent” by a person who, “at the time of disclosure or use, knew or had reason to know that the discloser’s or user’s knowledge of the trade secret was,” among other grounds, “acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use” (subd. 3). It also includes “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means” (subd. 3). “Improper means” includes “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means” (subd. 2). The federal Defend Trade Secrets Act gives the owner its own civil action “if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce” (18 U.S.C. § 1836(b)(1)).

I suggest copying only what bears on the dispute and keeping it with your lawyer rather than using it in the business. I also suggest reading your shareholder agreement, operating agreement, and any employment agreement for confidentiality terms first, because those terms can add duties the statutes do not. For an LLC or partnership, the agreement can also narrow the statutory loyalty duties.

How Do Computer and Wiretap Laws Limit What You Collect?

Minnesota makes it a crime to intentionally and “without authorization” penetrate “a computer security system” (Minn. Stat. § 609.891, subd. 1). Authorization means acting “with the permission of the owner of the computer, computer system, computer network, computer software, or other property,” and the owner may limit it by “giving the user actual notice orally or in writing” (Minn. Stat. § 609.87, subd. 2a). When the company owns the system, the company’s permission is the one that counts. If the company gives you written notice ending your access, logging in again with an old password can fall within that crime, whose elements include intentional access without authorization through a security system.

A separate Minnesota crime, computer or electronic data theft, reaches anyone who “intentionally and without authorization or claim of right accesses or copies any computer software or electronic data and uses, alters, transfers, retains, or publishes” it, or who “intentionally retains copies of any computer software or electronic data beyond the individual’s authority” (Minn. Stat. § 609.89, subd. 1). “Electronic data” means “records or information in digital form on a computer, computer network, computer system, or in computer software that can be stored, transmitted, or processed” (Minn. Stat. § 609.87, subd. 17).

The federal Computer Fraud and Abuse Act defines exceeding authorized access as using authorized access “to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter” (18 U.S.C. § 1030(e)(6)). The U.S. Supreme Court applied that definition in a criminal case against a police sergeant who ran a database search for money. It held that he did not exceed authorized access, “even though he obtained information from the database for an improper purpose,” because his access already reached that information (Van Buren v. United States, 593 U.S. 374 (2021)). In footnote 8, the Court left open whether that test “also looks to limits contained in contracts or policies.” A motive to win the dispute does not by itself turn your ordinary access into a federal violation, but the Minnesota statutes above and your agreements still apply. The act’s crimes carry further elements, and its civil action “may be brought only if the conduct involves 1 of the factors set forth in subclauses” of the act’s list of losses and harms (18 U.S.C. § 1030(g)).

Reading another person’s email raises a different statute. Minnesota punishes anyone who “intentionally accesses without authorization a facility through which an electronic communication service is provided” and thereby obtains a stored communication, among other elements (Minn. Stat. § 626A.26, subd. 1). The federal parallel is 18 U.S.C. § 2701. The exceptions include conduct authorized “by the person or entity providing a wire or electronic communications service” and conduct authorized “by a user of that service with respect to a communication of or intended for that user” (Minn. Stat. § 626A.26, subd. 3). Your own inbox is yours to save; your co-owner’s inbox needs your co-owner’s or the provider’s authorization.

Recording your own calls is treated differently. Minnesota’s wiretap statute permits a private person to intercept a communication “where such person is a party to the communication or where one of the parties to the communication has given prior consent to such interception unless such communication is intercepted for the purpose of committing any criminal or tortious act” (Minn. Stat. § 626A.02, subd. 2(d)). 18 U.S.C. § 2511(2)(d) sets the same federal rule. This page covers Minnesota and federal law only; a participant in another state may bring that state’s law into play.

How Does a Written Demand to Inspect Company Records Work?

Each Minnesota entity statute gives owners a right to inspect company records, including records their role does not give them, and the steps differ by entity. A shareholder of a corporation that is not publicly held makes a written demand, as does a member of a manager-managed or board-managed LLC. A member of a member-managed LLC gives reasonable notice, and a partnership must give partners access to its books and records; limited partners follow a separate statute, Minn. Stat. § 321.0304. Three of them, §§ 302A.461, 322C.0410, and 321.0304, set ten-day response periods.

Corporations. A shareholder of a corporation that is not publicly held “has an absolute right, upon written demand, to examine and copy, in person or by a legal representative, at any reasonable time, and the corporation shall make available within ten days after receipt by an officer of the corporation of the written demand” the share register and the records listed in subdivision 2 (Minn. Stat. § 302A.461, subd. 4(a)). That list includes “records of all proceedings of the board for the last three years,” along with the articles, bylaws, and required financial statements (subd. 2). On the corporation’s application, a court “may issue a protective order permitting the corporation to withhold portions of the records of proceedings of the board,” for limited and renewable periods, to prevent “premature disclosure of confidential information which would be likely to cause competitive injury to the corporation,” and a court may also “impose other reasonable restrictions on the nature of the corporate records that may be copied or examined under subdivision 4 or the use or distribution of the records by the demanding shareholder” (subd. 4a). Other records, such as bank statements, are available only on written demand and only if the shareholder demonstrates a proper purpose, meaning one “reasonably related to the person’s interest as a shareholder” (subd. 4(b), (d)). If the corporation refuses, a court may “specifically enforce this section and award expenses, including attorney fees and disbursements” (subd. 4(e)). Records obtained this way carry a limit: a shareholder “may not use or furnish to another for use the corporate record or a portion of the contents for any purpose other than a proper purpose” (subd. 4b). The page on demanding corporate records as a shareholder walks through the demand in more detail.

LLCs. The right depends on how the LLC is managed (Minn. Stat. § 322C.0410):

• In a member-managed LLC, “On reasonable notice, a member may inspect and copy during regular business hours” company records, “to the extent the information is material to the member’s rights and duties under the operating agreement or this chapter” (subd. 1).
• In a manager-managed or board-managed LLC, the member must make “a demand in a record received by the company, describing with reasonable particularity the information sought and the purpose for seeking the information” (subd. 2). The member must seek the information “for a purpose material to the member’s interest as a member,” and “the information sought is directly connected to the member’s purpose.” Within ten days after receiving that demand, the company “shall in a record inform the member that made the demand” of the information it will provide and when and where it will provide it. If it declines to provide any demanded information, the company must give “the company’s reasons for declining.”

The company may impose reasonable conditions, including “imposing nondisclosure and safeguarding obligations on the recipient,” and “the company has the burden of proving reasonableness” (subd. 7). An operating agreement may not “unreasonably restrict the duties and rights stated in section 322C.0410” (Minn. Stat. § 322C.0110, subd. 3).

Partnerships. “A partnership shall provide partners and their agents and attorneys access to its books and records,” and “The right of access provides the opportunity to inspect and copy books and records during ordinary business hours” (Minn. Stat. § 323A.0403(b)). A limited partner’s records rights are in Minn. Stat. § 321.0304.

A lawsuit is not the only way to get records. A direct request to your co-owner, or an agreement that the company’s outside accountant send both owners the same monthly reports, may produce what you need at no cost and keeps the formal demand available. I suggest putting the formal demand in writing even when you expect cooperation, because the written demand is what starts the statutory response periods. A CPA you hire can read the general ledger and bank records the demand produces, which may cost less than having a lawyer do that review.

When Does the Duty to Preserve Evidence Begin?

The duty to preserve begins before any lawsuit. In a case about a homeowner who had stucco removed before suing the sellers and contractors, the Minnesota Supreme Court said the duty exists “whenever a party knows or should know that litigation is reasonably foreseeable” (Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011)). It also reaffirmed that “custodial parties have a duty to preserve relevant evidence for use in litigation.” The court added that “even when a breach of the duty to preserve evidence is not done in bad faith, the district court must attempt to remedy any prejudice.”

For text messages and email, Minnesota’s court rules add a specific test. Rule 37.05 applies “If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery” (Minn. R. Civ. P. 37.05). On a finding of prejudice, the court “may order measures no greater than necessary to cure the prejudice.” Harsher measures are available “only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation”: the court may “presume that the lost information was unfavorable to the party,” instruct the jury on that presumption, or “dismiss the action or enter a default judgment.”

In an owner dispute, I suggest treating the duty as running from the moment you begin considering a lawsuit yourself, because the test is when a party “knows or should know that litigation is reasonably foreseeable.” At the latest, I suggest treating it as running from the first time either owner raises a lawsuit, a buyout through lawyers, or a dissolution. The same duty binds your co-owner, so a written request that the company preserve its email, accounting files, and phone records is worth sending early. The page on when missing emails become spoliation covers what a court does when they disappear.

How Should You Preserve Your Own Texts and Email?

I suggest keeping the originals where they are, stopping anything that deletes them automatically, and making complete copies you control, because Rule 37.05 asks whether a party took “reasonable steps” to preserve them. These are the steps I suggest:

1. Leave the originals alone. Deleting, editing, or tidying a thread can look like destruction even when it is not, so I suggest leaving every message in place.
2. Turn off automatic deletion. If your phone or email account is set to delete older messages, I suggest turning that setting off for every account that holds messages with your co-owner.
3. Export complete threads. A full export showing dates, times, and participants is harder to challenge than selected screenshots. I suggest storing the export of your personal accounts somewhere you alone control, such as a personal drive.
4. Give notice before replacing a device. In Miller, the court held that “a custodial party with a legitimate need to destroy evidence may be absolved of a failure to preserve evidence by providing sufficient notice and a full and fair opportunity to inspect the evidence to a noncustodial party,” and it called it “the better practice to explicitly provide such a notice, and particularly to provide it in written form.” The court limited that holding to intentional destruction “when the custodial party has a legitimate need to destroy the evidence and the destruction is not done in bad faith.” I suggest written notice and an offer to let your co-owner inspect before you trade in a phone or wipe a laptop.
5. Use a personal account with your own lawyer. The company controls its email system, and the company’s lawyer represents the company, so I suggest writing to your own lawyer only from a personal account.

If you run the company’s systems yourself, the duty can reach company data as well as your own, and a litigation hold notice to employees is the tool for suspending routine deletion.

When Is a Forensic Copy Worth the Cost?

A forensic copy is worth the cost when a device is about to be replaced, when you need deleted data recovered, or when you expect the other side to challenge whether your messages are complete. A forensic image is a full copy of a phone’s or computer’s storage made by an examiner who can later explain how the copy was made. For a thread whose authenticity no one disputes, a complete export from the phone may be enough.

The other side can ask to examine your devices too. Rule 34.01 lets a party request another party “to produce and permit the party making the request, or someone acting on the requesting party’s behalf, to inspect and copy, test, or sample” electronically stored information (Minn. R. Civ. P. 34.01). A forensic image made early, before anything changes, gives you a fixed version of the device to produce. If the phone itself is later lost or replaced, the image may let its contents be restored, and Minn. R. Civ. P. 37.05 applies only to lost information that “cannot be restored or replaced through additional discovery.”

How Should You Organize What You Collect?

I suggest one index that lists each item, its date, its source, how you obtained it, where the original is kept, and what it shows. One list is easier to hand your lawyer and to search. The column for how you obtained each item matters most in an owner dispute, because it answers the counterclaim questions above. It records whether the item came from your own account, from access your role gave you, from a statutory demand, or from discovery.

I suggest working only from copies and keeping each original unaltered, because a document you have marked up or renamed is harder to prove is the same document you received. A litigation evidence index template sets out the columns and how the index later serves disclosure and exhibit rules. Keeping the index with your lawyer, rather than in a company system your co-owner can reach, keeps your working notes out of the company’s files.

What Will Discovery Reach Once a Lawsuit Is Filed?

Once a lawsuit is filed and the parties have conferred on a discovery plan, you can request records from the other parties through discovery and from nonparties by subpoena. Minnesota’s rules provide that “parties may not seek discovery from any source before the parties have conferred and prepared a discovery plan as required by Rule 26.06(c),” unless the case is exempt from initial disclosure or a stipulation or court order allows it (Minn. R. Civ. P. 26.04(a)). The rules then let a party obtain “any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case” (Minn. R. Civ. P. 26.02(b)). A document request reaches electronically stored information “in the possession, custody or control of the party upon whom the request is served” (Minn. R. Civ. P. 34.01), so when the company is a party, a request served on it can reach the company’s email and accounting files.

Records held by others are reachable by subpoena. A subpoena may command a nonparty, such as the company’s bank or outside accountant, to produce “designated books, documents, electronically stored information, or tangible things in the possession, custody or control of that person” (Minn. R. Civ. P. 45.01(a)(3)). The other parties get notice first: “Any use of a subpoena, other than to compel attendance at a trial, without prior notice to all parties to the action, is improper and may subject the party or attorney issuing it, or on whose behalf it was issued, to sanctions” (Minn. R. Civ. P. 45.01(e)). Notice of a document production “must be served in the manner prescribed by Rule 5.02 on each party to the action, at least seven days before the required production” (Minn. R. Civ. P. 45.02(a)). The page on civil discovery in Minnesota explains how proportionality limits what either side can demand. Discovery works both ways: within the same nonprivileged, relevant, and proportional limits, what you collected, and how you collected it, can be open to your co-owner’s requests too.

Building a Clean Record Against a Co-Owner

In a co-owner dispute, I suggest building your record only from evidence you obtained lawfully and kept intact, because how you got each item can become part of the dispute. That means your own messages preserved from the start, company records your role or a written demand gave you, and the rest through discovery. For the claims and remedies themselves, the ownership disputes page is the place to start, and the page on choosing a lawyer for a dispute with a co-owner covers what to weigh in hiring one.

If you are heading into a dispute with a co-owner and want to know what to collect and demand on your facts, email [email protected] with a brief description. I can then start an intake and conflict check before you send any confidential documents.