t c memo united_states tax_court fmc corporation and subsidiaries petitioner v commissioner of internal revenue respondent docket no filed date p paid the investment banking firm of goldman sachs co g approximately dollar_figure million to advise it financially on a recapitalization one of g’s employees disclosed non-public information on the recapitalization to various wall street professionals including ib ib traded p’s stock on the basis of this non-public information p first announced that it would redeem each share of p stock held by the public in exchange for cash of dollar_figure and one share of stock in the new company p later increased the cash payment to sec_80 per share and effectuated the recapitalization at that price p’s cash payment under the revised plan less the cash payment which it would have made under the original plan equaled dollar_figure subsequently p sued g ib and others in a federal district_court in tllinois alleging among other things that they were responsible for the increased cash payment the district_court dismissed the complaint in full but the court_of_appeals for the seventh circuit reversed upon remand the district_court dismissed the complaint -- - for failure to state a claim but only in part after the case was transferred to a federal district_court in new york all of the defendants except g settled the court later granted g’s motion for summary_judgment and the court_of_appeals for the second circuit upheld the judgments by both district courts p claimed a dollar_figure theft_loss deduction on its federal_income_tax return held p is collaterally estopped from claiming that it sustained a theft_loss by virtue of the additional cash payment of dollar_figure the disposition of the prior action in g’s favor rested on findings that p redeemed its stock for no more than it was worth and thus sustained no cognizable injury from the disclosure of the confidential information f brook voght and david b blair for petitioner lawrence c letkewicz for respondent memorandum opinion laro judge petitioner petitioned the court to redetermine respondent’s determination of a dollar_figure deficiency in its federal_income_tax petitioner’s sole assignment of error concerns respondent’s disallowance of a dollar_figure theft_loss deduction claimed for that year petitioner alleged in its petition that the theft_loss related to the fraudulent and illegal activities of ivan f boesky boesky which caused petitioner to redeem its stock old fmc stock at an artificially increased price respondent moves the court to adjudicate this case summarily under rule ’ asserting that petitioner is collaterally estopped from proving that it is entitled to such a loss respondent bases his motion on the pleadings and the parties’ stipulation of facts and accompanying exhibits respondent supports his motion with a memorandum of law petitioner objects to respondent’s motion petitioner asserts that collateral_estoppel does not apply in this case petitioner embodied its objection ina brief that it filed with the court in response to respondent’s motion we agree with respondent that petitioner is collaterally estopped from claiming the referenced theft_loss we set forth our reasoning below background the parties have stipulated facts and exhibits for purposes of this case we have derived most of the facts set forth in this background section from that stipulation of facts and those accompanying exhibits we have derived the remaining facts from the pleadings see rule c petitioner is a delaware corporation whose principal_place_of_business was in chicago illinois when its petition was filed from january through date its stock the old fmc unless otherwise indicated rule references are to the tax_court rules_of_practice and procedure - stock traded at between dollar_figure and dollar_figure per share in date following its redemption of million shares approximately percent of old fmc stock at an average price of approximately dollar_figure per share old fmc stock traded at approximately dollar_figure per share in early petitioner retained the investment banking firm of goldman sachs co goldman to advise it financially on a possible corporate restructuring goldman implemented its normal procedures for maintaining the confidentiality of information relating to petitioner including assigning petitioner’s project with a code name petitioner agreed to pay goldman a fee of approximately dollar_figure million upon consummation of any restructuring david s brown brown was a goldman employee who was not assigned to petitioner’s project unbeknownst to goldman brown had been providing non-public information on pending transactions to a number of individuals including boesky ira sokolow sokolow of shearson lehman bros inc shearson and dennis levine levine of drexel burnham lambert drexel while working for goldman brown learned that petitioner was considering a major transaction and passed on that information to sokolow sokolow passed on the information to levine and levine passed on the information to boesky - from february through boesky and his affiliated entities purchased big_number shares of old fmc common_stock accounting for approximately percent of the stock’s trading volume during that period the stock opened at dollar_figure per share on date and it traded at a high of dollar_figure per share on the morning of date during that morning petitioner asked the new york stock exchange to suspend trading of its stock and announced that it was considering a recapitalization the next day petitioner announced that its board_of directors board had approved a plan of recapitalization first plan under which it would purchase hach share of old fmc stock held by its management for shares of common_stock new fmc stock in the recapitalized company each share of old fmc stock held by its thrift_plan for four shares of new fmc stock and dollar_figure cash and each share of old fmc stock held by public shareholders for one share of new fmc stock and dollar_figure cash pursuant to the first plan petitioner would purchase approximately percent of its ownership from public shareholders goldman had opined as to those shareholders that they would receive under the first plan fair consideration for their shares goldman believed that each share of new fmc stock morgan stanley co morgan stanley also rendered a similar opinion - - was worth dollar_figure and that each holder of old fmc stock would receive consideration of dollar_figure per share old fmc stock reopened for trading on date and it closed that day at dollar_figure during the week of date holders of old fmc stock filed three purported class action lawsuits against petitioner and each of its directors in the court of chancery of the state of delaware the complaints alleged among other things that the first plan permitted petitioner's management and employees to increase their ownership of the company at a low and unfair price from march through date boesky and various entities controlled by him purchased big_number shares of old fmc stock nearly percent of the stock's trading volume during that period on date boesky filed a schedule 13d with the securities_and_exchange_commission sec disclosing these purchases by mid-april old fmc stock was trading in the range of dollar_figure to dollar_figure per share during the week of date goldman advised petitioner that due to the increase in the price of old fmc stock goldman would withdraw its fairness opinion unless petitioner either increased the cash paid to public shareholders or decreased the number of shares of new fmc stock paid to management and the thrift_plan petitioner did not consider reducing the number of shares of new fmc stock paid to management and the thrift_plan as a viable option because among other things petitioner wanted the recapitalization to effect a 20-percent shift in ownership so that the public shareholders could treat their cash distributions as capital_gains rather than as dividends due to the increased trading price for old fmc stock and on the advice of goldman morgan stanley morgan guaranty trust company morgan guaranty and outside counsel petitioner's board approved on date a revised plan of recapitalization revised plan which increased the cash payment to public shareholders to dollar_figure per share goldman now believed that each share of new fmc stock was worth dollar_figure instead of dollar_figure and that each holder of old fmc stock would receive the equivalent of dollar_figure petitioner announced the revised plan on date approximately days before the plaintiffs in the purported class action lawsuits agreed to resolve their claims subject_to among other things payment to them of dollar_figure million and the revision of the first plan both goldman and morgan stanley opined to petitioner's board by letters dated date and date respectively that the consideration to be received by public shareholders under the revised plan was fair the revised plan was approved by petitioner's shareholders at the annual meeting held on date and petitioner completed the - - recapitalization days later public shareholders received dollar_figure cash and one share of new fmc stock for each share of old fmc stock the cash payment made by petitioner under the revised plan less the cash payment which it would have made under the first plan equaled dollar_figure big_number shares multiplied by the dollar_figure difference between dollar_figure and dollar_figure petitioner had obtained preliminary financing for the first plan with a consortium of banks led by morgan guaranty with the additional dollar_figure in cash required for the revised plan the banks revised the terms of the loans to impose restrictive covenants on petitioner and refused to fund the additional cash payment so that petitioner had to raise the funds through a senior subordinated debt offering the change in financing also led the rating agencies to downgrade petitioner’s debt on date the sec filed a complaint for injunctive and other equitable relief against boesky in the u s district_court for the southern district of new york the complaint alleged that boesky was part of a trading scheme in which brown sokolow levine and others gathered material non- public information on pending business combinations or other extraordinary_transactions the complaint alleged that levine conveyed this information to boesky who traded on the basis of the information knowing or recklessly disregarding that the - information had been obtained in breach of fiduciary obligations to keep the information confidential the complaint alleged that on the basis of material non-public information that boesky had obtained through this trading scheme boesky had traded in the securities of certain companies including from february to petitioner boesky settled this complaint agreeing to pay a dollar_figure million fine to disgorge another dollar_figure million in profits from his illegal activities to refrain from further violations of the securities laws and to cooperate in a federal investigation into his and others’ illegal activities in date petitioner filed a 16-count complaint complaint in u s district_court for the northern district of tllinois against boesky brown levine sokolow goldman drexel and shearson collectively defendants counts i through v alleged violations of federal securities laws counts vi through viii alleged violations of the racketeer influenced and corrupt organizations act rico u s c sections and c counts ix through xvi alleged violations of common_law all sixteen counts alleged that petitioner had suffered damages in excess of dollar_figure million paragraph of the complaint alleged as adverse financial consequences to fmc as a direct and proximate result of the illegal conduct alleged herein fmc paid approximately dollar_figure million more for the publicly held common_stock of fmc tendered in response to fmc's purchase offer than fmc would have paid absent the illegal conduct -- - the district_court judge ann c williams presiding dismissed the federal claims set forth in the complaint holding that petitioner lacked the requisite constitutional standing to sue and refused to exercise pendant jurisdiction over the state law claims 673_fsupp_242 n d ill the court_of_appeals for the seventh circuit reversed holding that petitioner had the requisite standing to sue in federal court by virtue of the wrongful misappropriation of its confidential business information and the use of that information to further insider trading 852_f2d_981 7th cir subsequently on or about date petitioner filed a first amended complaint first amended complaint containing counts all of which alleged again that petitioner suffered damages in excess of dollar_figure million paragraph b of the first amended complaint alleged as adverse financial consequences to fmc that the price of fmc's common_stock was wrongfully manipulated causing fmc to revise its planned recapitalization and pay approximately dollar_figure million more in cash than fmc would have paid for its publicly held common_stock tendered in response to fmc's offer to purchase old fmc stock and to sell new fmc stock upon remand the district_court dismissed with prejudice for failure to state a claim petitioner's claims under the securities laws holding that petitioner had failed to establish that it suffered any actual economic damages from the defendants’ use of insider information 727_fsupp_1182 n d ill the court also dismissed without prejudice goldman shearson and drexel from two of the three rico counts the court denied the defendants' motion to dismiss the remaining claims all of which were made against the individual defendants and the boesky entities or concerned petitioner’s pendant state law claims id pincite on date the judicial panel on multi-district litigation transferred the case of fmc corp v boesky supra to senior district judge milton pollack judge pollack of the u s district_court for the southern district of new york to coordinate or consolidate pretrial proceedings in in re ivanf boesky sec litig mdl no all of the defendants except for goldman ultimately settled with petitioner boesky and his entity cx partners agreed to pay petitioner dollar_figure million plus interest from amounts that cx partners received from boesky’s disgorgement fund and shearson agreed to pay petitioner dollar_figure brown levine sokolow and the other defendants were insolvent but agreed to cooperate with petitioner on date upon motion by the sec the u s district_court for the southern district of new york approved payment of dollar_figure from boesky’s disgorgement fund to cx partners of which dollar_figure million plus interest was to be paid to petitioner in satisfaction of the settlement agreement on date the u s district_court for the southern district of new york approved a plan of distribution from boesky’s disgorgement fund to persons who sold old fmc stock from february through date on or about date petitioner filed a second amended complaint second amended complaint the second amended complaint generally contains the same counts as the complaint and the first amended complaint plus an additional common_law count the second amended complaint notes that petitioner's securities law counts and its allegation that petitioner sustained damages in excess of dollar_figure million had been dismissed but were alleged again to preserve petitioner's rights to seek reconsideration of that dismissal and to appeal paragraph b of the second amended complaint alleges as adverse financial consequences to fmc that the price of fmc's common_stock was wrongfully manipulated causing fmc to revise its initial recapitalization plan and pay approximately dollar_figure million more in cash than fmc would have paid for its publicly held common_stock tendered in response to fmc's offer to purchase old fmc stock and to sell new fmc stock subsegquently at the direction of judge pollack petitioner filed a revised second amended complaint omitting claims that had previously been dismissed or settled on date goldman moved for summary_judgment on all of petitioner's remaining claims for the limited purpose of that motion goldman agreed that it had a contractual fiduciary or other duty to petitioner to keep information relating to its restructuring plan confidential and that this duty had been breached after a 3-day evidentiary hearing held under rule e of the federal rules of civil procedure the court granted goldman's motion for summary_judgment on the remaining claims against goldman see 825_fsupp_623 s d n y upon appeal the court_of_appeals for the second circuit upheld the judgments of the u s district courts for the northern district of illinois and the southern district of new york see 36_f3d_255 2d cir that judgment became final during on its federal_income_tax return petitioner claimed a theft_loss deduction of dollar_figure respondent disallowed this deduction in full discussion we must decide whether petitioner is collaterally estopped from proving that it is entitled to deduct the claimed theft_loss respondent moves the court to decide this issue summarily asserting that collateral_estoppel prevents petitioner from deducting such a loss petitioner objects to respondent’s motion petitioner asserts that two elements of collateral_estoppel have not been met first petitioner argues the factual and legal issues presented here are different from the -- issues presented in petitioner’s prior case against goldman second petitioner argues the issue of whether it suffered a theft_loss on account of the insider trading of boesky and his co-conspirators collectively boesky was not actually litigated in the prior case because petitioner contends the issue was not necessary to a holding there summary_judgment is intended to expedite litigation and to avoid unnecessary and expensive trials of phantom factual issues 106_tc_441 affd without published opinion 139_f3d_907 9th cir 106_tc_343 the concept of summary_judgment is specifically recognized by this court and is deeply ingrained in our procedural rules see rule a hither party may move with or without supporting affidavits for a summary adjudication in the moving party’s favor upon all or any part of the legal issues in controversy a decision on the merits of a taxpayer's claim can be made through summary_judgment if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b see also 90_tc_753 because summary_judgment decides against a party before trial we grant -- - such a remedy cautiously and sparingly and only after carefully ascertaining that the requirements for summary_judgment have been met p x mkts inc v commissioner supra pincite boyd gaming corp v commissioner supra pincite among the principles relevant to summary_judgment are the moving party must show the absence of any material fact in dispute and that it is entitled to judgment as a matter of law the factual materials and resulting inferences must be viewed in the light most favorable to the opposing party and the opposing party must set forth specific facts to show a genuine issue of material fact for trial and cannot rest upon mere allegations or denials 105_tc_141 collateral_estoppel may apply in federal tax cases 333_us_591 and summary_judgment may be used to establish matters covered by collateral_estoppel brotman v commissioner supra pincite if collateral_estoppel applies issues which were litigated and decided in an earlier case on one cause of action may not be relitigated by the parties or their privies on a different cause of action 440_us_147 439_us_322 n commissioner v sunnen supra pincite collateral_estoppel conserves judicial resources and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions montana v united_states -- - supra pincite 91_tc_273 collateral_estoppel applies when six conditions are met first the issue in the later case must be identical in all respects to the issue decided in the prior case commissioner v sunnen supra pincite 90_tc_162 affd 904_f2d_525 9th cir second a final judgment must have been rendered in the prior case by a court of competent jurisdiction peck v commissioner supra pincite 62_tc_607 third collateral_estoppel must be asserted in the later case against a party to the prior case or against a privy to that party peck v commissioner supra pincite gammill v commissioner supra pincite see also parklane hosiery co v shore supra mutuality of parties is not necessary for collateral_estoppel fourth the issue in the later case must be one that the parties to the prior case actually litigated and that was essential to the prior decision commissioner v sunnen supra pincite peck v commissioner supra pincite fifth the controlling facts and legal principles must remain unchanged from the prior litigation commissioner v sunnen supra pincite peck v commissioner supra pincite sixth no special circumstances exist that would warrant the trial_court in the later case to exercise its discretion to find an exception to the normal rules of preclusion montana v united_states supra pincite meier v commissioner supra pincite petitioner acknowledges that the satisfaction of these six conditions would lead to the application of collateral_estoppel petitioner focuses solely on the first and fourth elements arguing that these two elements have not been met petitioner argues that the factual and legal issues here are different than those issues in its case against goldman and the issue of whether it suffered a theft_loss on account of boesky’s insider trading was not actually litigated in the prior case because it contends that issue was not necessary to a holding there we address these two elements seriatim and then turn to the sixth element concerning our discretion to find an exception for special circumstances similarity of issues petitioner argues that the factual and legal issues here are fundamentally different from those in its prior case petitioner asserts that the cases are different factually in that the prior case decided only its limited claims against goldman whereas the current case centers on the actions of boesky in the context of a federal_income_tax deduction moreover petitioner asserts the cases are factually different in that the prior case did not concern the current issue of whether the value of old fmc stock was artificially inflated by boesky’s illegal actions as to the -- - difference in legal issues petitioner asserts the prior decision rested primarily on the legal conclusion that petitioner and its shareholders were a single economic unit petitioner asserts that a corporation and its shareholders are not a single economic unit for purposes of this case we reject petitioner’s argument that the issue at hand was not at issue in its prior case although we agree with petitioner that its theft_loss deduction for federal_income_tax purposes was not at issue there the focus of collateral_estoppel is set appropriately on the identity of issues and not on the identity of legal proceedings collateral_estoppel may apply to an issue of fact or law that was litigated in a prior action even though that litigation related to a claim that is absent from the current case brotman v commissioner t c pincite bertolli v commissioner 103_tc_501 our decision as to the validity of petitioner’s claimed theft_loss deduction requires that we find the value of the old fmc stock at the time of petitioner’s recapitalization see sec_1_165-8 income_tax regs the courts in petitioner’s prior case against goldman also had to make that factual determination in order for them to decide petitioner’s claim for damages contrary to petitioner’s assertion the fact that the courts in the prior case did not decide a specific claim against boesky does not prevent this court from applying collateral_estoppel to -- the facts at hand our application of collateral_estoppel is driven by the critical fact that the other courts had before them the value of the old fmc stock at the time of petitioner’s recapitalization and that we have the same issue here our conclusion that the value of the old fmc stock was and is at issue in the respective case sec_1s supported by our reading of the relevant allegations in petitioner’s pleadings in the respective cases petitioner’s current allegations as to the theft_loss are in all material respects the same as its corresponding prior allegations as to damages the petition alleges as to the claimed theft_loss that boesky obtained confidential information about its recapitalization and made a series of large illegal trades in old fmc stock boesky's illegal activities manipulated the price of fmc shares by artificially increasing it through market misinformation including the filing of a false schedule 13d and the increased share price damaged fmc by fraudulently causing management to revise the recapitalization plan and pay out dollar_figure of additional cash the petition alleges further that boesky's illegal conduct artificially inflated the price of old fmc stock causing petitioner to revise the first plan and to pay to its shareholders dollar_figure more than it had originally planned - - the prior pleadings in turn allege as to damages that the conduct of boesky goldman and others in connection with the recapitalization violated both securities law and rico boesky defrauded petitioner boesky induced or participated in a breach of fiduciary duty by goldman boesky wrongfully interfered with petitioner's contractual relationship with goldman and boesky together with goldman misappropriated petitioner's business and proprietary information and wrongfully interfered with its prospective economic relationship with its shareholders the first amended complaint alleges and the other prior pleadings allege similarly that petitioner’s damages resulting from the illegal conduct of the defendants include that the price of fmc's common_stock was wrongfully manipulated causing fmc to revise its planned recapitalization and pay approximately dollar_figure million more in cash than fmc would have paid for its publicly held common_stock tendered in response to fmc's offer to purchase old fmc stock and to sell new fmc stock xk k fach count of the prior pleadings with the exception of one count in the second amended complaint alleges that petitioner’s damages exceeded dollar_figure million this amount corresponds to the claimed theft_loss in that it approximates the sum of the the prior pleadings also allege fraudulent inducement negligence breach of fiduciary duty and breach of contract by goldman --- - dollar_figure additional cash payment the claimed theft_loss and goldman’s dollar_figure million fee we conclude that the issue here as to value is the same as in the prior case accordingly we hold that this element of collateral_estoppel is present in the instant case issue actually litigated and essential to prior decision petitioner asserts that the issue of whether it suffered a theft_loss on account of boesky’s insider trading was not actually litigated in the prior case because petitioner contends it was not necessary to a holding there petitioner recognizes that judge pollack stated that petitioner had presented no evidence that the value of the old fmc shares was less than the dollar_figure that it ultimately paid for those shares and the court_of_appeals for the second circuit made similar statements as to that value petitioner discredits the courts’ statements on the value of old fmc stock as dicta we disagree with petitioner that the courts’ statements on value are dicta first as to the district_court judge pollack’s discussion of value was necessary to his holding there it received the full and careful consideration of the court that uttered it and it could not have been deleted without seriously impairing the analytical foundations of the holding 798_f2d_1075 7th cir a dictum is a statement in a judicial opinion that could - have been deleted without seriously impairing the analytical foundations of the holding--that being peripheral may not have received the full and careful consideration of the court that uttered it in deciding petitioner’s claims in that case the court observed initially that petitioner had before the court two theories for the recovery_of damages one of which was for the loss of the value of confidential information 825_fsupp_623 s d n y as to that theory the court stated the question here is what legally compensable value did fmc hold on behalf of its shareholders in keeping confidential prior to those dates information relevant to its planned restructure of the interests of its public and management shareholders in the corporate equity that was compromised by the alleged premature disclosure caused by goldman sachs' employees and what is the best legal measure of that diminution in value of the information or plan as demonstrated by specific facts presented to the court id pincite in deciding that question the court first noted the exclusive use of the only information shown to have been leaked that a possible recapitalization was in the works unintentionally inured to the benefit---not the detriment----of the public shareholders and the insiders commensurably shared the benefit of the rise and assertion of a stock price expressing the value of the equity as elaborated below fmc has failed to adduce any admissible evidence of specific facts that fmc sustained any increase in costs to it incurred to effectuate the restructure or that any legitimate and legally cognizable value held by fmc in the financial information which benefitted all its shareholders at no cost to the company was diminished in any way by premature disclosure correspondingly the best measure of the compensable cost incurred by fmc or diminution in value of its plan - - is zero fmc has thus failed to meet its evidentiary burden of adducing specific facts to evidence cognizable injury or damage to its shareholders or itself assertable against goldman sachs id the court then concluded a careful consideration of the full record before the court in the light most favorable to fmc plainly shows that fmc failed to adduce admissible evidence of specific facts showing that the price paid_by fmc to its own shareholders for the restructure was anything other than a fair price established by the open market id the court reasoned an understanding of the essential economic nature of fmc's recapitalization transaction is crucial to the proper resolution of the issues before the court in essence the transaction was intended to increase the proportion of fmc's equity held by management and to correspondingly decrease that proportion held by public shareholders this would be achieved by returning to public shareholders through cash payments a fraction of their equity_investment in fmc while leaving intact and unchanged management's equity_investment the result being of course that management would end up with a larger proportionate share of the reduced total equity_investment in fmc the transaction would be fair to all parties if and only if the public shareholders received in cash the fair value of the equity they were asked to give up measured by open market values if they received more than the fair value of the equity given up they would benefit at the cost of management if they received less than the fair value of the equity given up they would be disadvantaged to the benefit of management fmc's claim suggests that it was harmed because its shareholders received too much--a remarkable proposition that was twice soundly rejected by the district_court in chicago prior to the transfer to this court as judge williams pointed out the transaction essentially is an instance of self-dealing between management and public shareholders 673_fsupp_242 n d ill -- - boesky's purchases of fmc stock as the market price advanced wiped out any premium in the deal price over the market price that the management shareholders expected would exist in their favor over the interests of the public shareholders no admissible evidence was presented by fmc that the pre-transaction market price of fmc stock was artificially high and did not represent the stock's true fair value nor was there any other indication by specific fact that the recapitalization overcompensated fmc's public shareholders for the equity they gave up further all shareholders including the management shareholders shared in the benefits of the rise in price of fmc's stock the new fmc shares which were projected under the revised recapitalization to trade at about dollar_figure per share opened actually at dollar_figure this unerringly suggests that the projected price was in fact a slight under-valuation of the true fair value of fmc stock and not inflated where the factual context renders plaintiffs' claim implausible--if the claim is one that simply makes no economic sense--- plaintiffs must come forward with more persuasive evidence to support their claim than would otherwise be necessary 475_us_574 106_sct_1348 89_led_538 fmc's bald assertion that the market price of fmc stock was artificially high in april because of boesky's buying program falls far short of this standard and is unsupported by specific facts boesky may have reaped illegal profits in trading on the non-public information that a recapitalization was brewing and he was sued by fmc therefor and settled in cash with fmc but the only other parties who suffered legally cognizable injury would be those who bought or sold securities with boesky directly or even indirectly through the market not fmc whose recapitalization was neither executed on the market nor approved by fmc's shareholders until date well after the non-public information had been publicly disclosed by fmc itself first on april 2nd when it publicly filed its form s-2 with the sec and again on may 2nd when it publicly issued its joint proxy statement prospectus - - the value to fmc of keeping the financial information confidential until date--allowing fmc to consummate a recapitalization at dollar_figure per share less than what eventually proved to be a fair price for the public shareholders' stock--is not a legitimate and legally cognizable value for which fmc may seek legal recourse fmc's insiders were not privileged to appropriate confidential corporate information for their own benefit and to the detriment of public shareholders corporate insiders have an obligation to place the shareholder's welfare before their own 445_us_222 100_sct_1108 63_led_348 id pincite footnote refs omitted a discussion of the value of old fmc stock was also at the heart of the decision of the court_of_appeals for the second circuit in 36_f3d_255 2d cir when it affirmed judge pollack’s decision upon appeal the court_of_appeals for petitioner argues that judge pollack did not find as a fact that the value of old fmc stock was dollar_figure at the time of the recapitalization but simply concluded that petitioner did not provide any admissible evidence to support a lower value we do not read this quoted language as narrowly as petitioner all the same the application of collateral_estoppel is not precluded simply because a party such as petitioner did not produce all of its evidence in the prior case 159_f2d_391 3d cir affirming a memorandum opinion of this court evidence which by due diligence could have been produced in the prior case is considered to have been available at the first case and to the extent relevant to the issue in dispute should have been introduced at the time of the prior case see 56_tc_895 54_tc_1562 in this regard we reject petitioner’s assertions that judge pollack made a conscious effort to prevent it from presenting any evidence as to the applicable_value of the old fmc stock and that he otherwise minimized the probative value of any such evidence by considering it irrelevant to the case before him - - the second circuit began its analysis with a general overview of the case at its heart this appeal is about injury fmc claims it spent dollar_figure million more on its restructuring than it should have and seeks to shift that cost to goldman because of the illegal conduct of goldman's employees brown and brosens fmc alleges that it is entitled to four types of relief first consequential damages based on the entire dollar_figure million differential between the original restructuring plan and the consummated plan caused by goldman's violations second compensatory_damages for the lost value of its confidential information that was misappropriated and prematurely disclosed third disgorgement of boesky's profits on the grounds that goldman aided and abetted his violations of rule 10b-5 and fourth restitution of goldman's dollar_figure million fee because of goldman's breach of its contractual and fiduciary duties we agree with the combined decisions of district judges williams and pollack that fmc has either not alleged or is unable to prove a compensable_injury x we agree that under the undisputed facts of this case the dollar_figure million differential the cost of creating the confidential financial projections and goldman's fee cannot be recovered by fmc in addition because fmc has failed to state a claim against goldman under rule 10b-5 it cannot recover boesky's profits id pincite the court_of_appeals for the second circuit discussed in detail its reasoning for rejecting petitioner’s claim for damages as to the dollar_figure million differential the court stated fmc seeks to recover the dollar_figure million difference in the amounts it paid out to shareholders under the plan originally proposed and the one eventually accomplished it claims that judge pollack erred in granting summary_judgment because t he jury could reasonably conclude that boesky's trading was a substantial factor in the rise of the price of fmc stock and that the rise in the price of the stock forced fmc to abandon its original recapitalization -- p7 - plan in seeking to recover the additional_amounts paid to its shareholders fmc overlooks one important circumstance because the excess amounts inured to the benefit of fmc's shareholders fmc cannot claim that it was injured thereby fmc's restructuring involved on the one hand a pro_rata distribution of corporate assets to the public shareholders in return for their surrender of a portion of the publicly held equity the management shareholders in contrast would maintain their current equity holdings with the result being of course that management would end up with a larger proportionate share of the reduced total equity_investment in fmc fmc f_supp pincite aside from the purpose of discouraging takeover bidders by simultaneously increasing the percentage of shares held by management and fmc's debt-to-equity_ratio the economic_effect of the transaction essentially was a wash--a zero sum transaction in which there were no special preferences afforded or profits to be made by design every shareholder was supposed to receive identical consideration for each share given up in an amount egual to the value of each share id pincite the court did note initially that fmc cannot claim injury because the additional cash payment inured to the benefit of its shareholders id pincite this was the basis for the district court's dismissal of fmc's securities law claims fmc corp v boesky f_supp pincite however the court_of_appeals for the second circuit's decision did not rest as alleged by petitioner on a legal theory of equivalence between a corporation and its shareholders the court explained fmc's duty was to provide fmc public shareholders with consideration equal in value to that received by the management shareholders and to disclose fully all information relevant to the public shareholders' evaluation of the deal as judge pollack put it fmc had no legitimate interest in short-changing the - - public shareholders in the restructure and achieving a windfall profit for themselves by maintaining in confidence business information pertinent to the fair value of the stock fmc f_supp pincite fmc's claim that boesky's insider trading caused the deal to be revised therefore misses the point because fmc's duties included making complete disclosure and fully compensating its shareholders beyond showing that the transaction became more expensive fmc must at least show that it paid more for the stock than it was worth fmc could not seek the minimum premium but rather was obligated to offer a fair price because the shareholders were the equitable owners of the information no claim of injury can lie where premature disclosure of that information benefitted them in their dealings with the fmc see fmc f_supp pincite judge pollack determined and we agree that fmc presented no evidence that the stock was not worth the dollar_figure per share price ultimately paid or that the dollar_figure per share originally contemplated was adequate to compensate the public shareholders see id pincite fmc cannot claim that boesky stole a premium the company was entitled to since fmc had no legitimate interest in realizing a gain at its public shareholders' expense therefore even if boesky's trades caused the stock price to rise prematurely because the transaction was approved by both the shareholders and the board_of directors fmc cannot claim injury unless it shows at a minimum that the price increase also was artificial moreover the court concluded that the record was sufficient to establish that old fmc stock was worth at least dollar_figure at the time of the recapitalization the court observed that the dollar_figure per share figure was warranted based on all available information is evident from the fact that fmc's board_of directors voted to increase the cash payout and to continue to recommend the deal to the shareholders see 946_f2d_998 2d cir finding directors' valuation to be relevant in establishing fair price - - higher than market price cert_denied 502_us_1122 112_sct_1244 117_led_477 in addition on date three weeks after fmc fully disclosed the projections and well after boesky divested his interest in the company fmc stock was still trading around dollar_figure per share furthermore the stub share which was valued by fmc at about dollar_figure per share actually opened at dollar_figure per share indicating that the stock probably was still slightly undervalued in the transaction despite the increased cash payout see fmc f_supp pincite in the face of this proof that the dollar_figure per share figure was fair fmc produced no evidence to the contrary the absence of evidence that the dollar_figure million increased payout constituted something other than fmc giving its public shareholders full consideration for their stock is fatal to fmc's recovery_of these amounts as our guotations from the court’s opinion show the court_of_appeals for the second circuit did not merely hold that a corporation can never be damaged when it distributes corporate assets to the beneficial owners of those assets i1 e the shareholders the essence of the court’s decision is that petitioner failed to prove that it paid more than a fair price for old fmc stock as mentioned above the absence of sufficient proof in the prior case precludes any claim by petitioner here that it sustained a theft_loss as a result of the additional dollar_figure per share cash payment to its public shareholders petitioner simply gave its public shareholders something of value for equal value in return petitioner points to the statement of the court_of_appeals for the seventh circuit in 852_f2d_981 7th cir that brown stole to put it bluntly the mere fact that brown stole the information does not mean as -- - we conclude that the parties to the prior case actually litigated the issue before us today and that the issue was essential to the prior decision accordingly we hold that this element of collateral_estoppel is present in the instant case absence of special circumstances we consider whether special circumstances warrant an exception to the normal rules of preclusion 440_us_147 105_tc_141 special circumstances include the absence of a full and fair opportunity to litigate the issue in the prior case brotman v commissioner supra pincite a mere allegation that the earlier decision was wrong will not suffice id collateral_estoppel will not apply only if there is reason to doubt the guality extensiveness or fairness of procedures followed in prior litigation montana v united_states supra pincite n there is no reason to question any aspect of the procedures followed by the courts in the prior case those procedures amply afforded petitioner the opportunity to litigate its case in fact after the prior case was transferred to judge pollack petitioner conducted substantial discovery over a period of almost years fmc corp v boesky f 3d pincite the court also held a 3-day evidentiary hearing on goldman's motion for petitioner would have it be that petitioner is entitled to its claimed theft_loss --- - summary_judgment at which numerous witnesses testified not only did petitioner have a full and fair opportunity to litigate the damages issue in the prior case it had every incentive as the plaintiff in that case to litigate the issue aggressively the fact that petitioner may have settled with boesky or otherwise lacked an incentive to litigate against boesky because he could not pay the sought-after damages does not mean that petitioner also lacked the same incentive as to goldman we conclude that no special circumstances exist to cause us to exercise our discretion to warrant an exception to the normal rules of preclusion we hold that petitioner is collaterally estopped from deducting a theft_loss in an amount equal to the additional cash payment of dollar_figure petitioner’s petition to this court to allow it to deduct such a theft_loss is merely a request to relitigate the applicable_value of the old fmc stock in an attempt to ascertain a value that will compel the treasury to subsidize petitioner’s redemption of its shares from its public shareholders petitioner’s position in this court however continues to be essentially the same as the position that it advanced in its prior case to wit that it was harmed because its shareholders received too much as recognized by judge pollack when he rejected that position the position is ‘a remarkable proposition that was twice soundly rejected by the - - district_court in chicago fmc corp v boesky f_supp pincite all arguments for a contrary holding have been considered and have been rejected as meritless to the extent not discussed herein accordingly an order will be issued granting respondent’s motion for summary_judgment and decision will be entered for respondent