In the ruling, Fifth Circuit Judge Emilio M. Garza says Whitestone's board acted within its bounds and in the best interests of shareholders. Furthermore, the ruling found no fault with Whitestone's repealing a bylaw provision that permitted shareholders to remove board trustees by majority written consent. The ruling came with a warning, however, that the Maryland Unsolicited Takeover Act, which Whitestone REIT opted into for protection, shouldn't be an invitation for "unqualified management protection and entrenchment."

Hartman says his problems started with a preliminary ruling issued last April by US District Judge Vanessa D. Gilmore for the Southern District of Texas in Houston. Despite the latest court affirmation, he still contends the judge erred in supporting Whitestone's board's bylaw changes. He claims the decision is in direct contrast with legal trends in corporate governance during the past several years.

Hartman tells GlobeSt.com that the Fifth Circuit ruling won't discourage him from proving that Whitestone REIT's bylaw changes, which were approved by that board of directors almost a year ago, weren't in the best interest of shareholders. Although Hartman won't discuss his next legal steps, he made it clear the fight isn't over yet. "My response to this is what it's always been," he says. "I'm going to keep fighting for the little guys, for the smaller shareholders. What this current board has done is to entrench itself and disenfranchise the shareholders."

Whitestone REIT did not return a telephone call to comment on the decision. In a press release issued yesterday, a REIT spokesman did say "our trustees have always been confident that we acted in the best interests of the shareholders so it is gratifying that the appeals judges agreed."