Medtronic’s Ireland Move Garners Shareholder Lawsuit

Medtronic’s relocation of its nominal corporate headquarters to Ireland last year generated a capital gains tax bill for about 20 percent of its shareholders. An activist shareholder is trying to mount a class action that would require the company to pay those costs, and the case is now before the Minnesota Supreme Court. Making his case in oral arguments, the plaintiff’s attorney said the court needs to consider whether the company should be able to “enter into a transaction to save income taxes that otherwise it would have to pay, and in the process of doing so, shift that tax burden to a small minority.” Representing the company, Robins Kaplan attorney Eric Magnuson, making the case that the claims in this case are derivative and not “direct,” argued that all shareholders were affected equally, in that they all “suffered a taxable event,” even though how much that event cost them varied with circumstance. Magnuson was chief justice of the Minnesota Supreme Court from 2008-2010.