Opinion ID: 2276854
Heading Depth: 1
Heading Rank: 2

Heading: Original Mandate

Text: In Technicolor IV, this Court held that the original trial judge committed reversible error by applying a legally erroneous majority acquiror principle. As a result of that error, the original trial judge failed to value Technicolor on the merger date as it was then operating pursuant to the Perelman Plan, but instead valued the company on the date of the merger `but for' the Perelman Plan; or, in other words, by valuing Technicolor as it was operating on October 29, 1982, pursuant to the Kamerman Plan. [13] We also noted that [t]he fundamental nature of the disagreement between the parties about the Perelman Plan and the Kamerman Plan . . . resulted in different factual assumptions by their respective experts. [14] This Court then determined that the original trial judge had arrived at an understatement of Technicolor's fair value in the 1990 opinion because he had valued Technicolor pursuant to a discounted cash flow model with the negative factual input and assumptions from the Kamerman Plan rather than the Perelman Plan. [15] That model was Technicolor's Alcar model which the original trial judge adopted as his valuation model. Accordingly, we held that the original trial judge's attribution of only a $4.43 per share value difference between the Perelman Plan and the Kamerman Plan was not to be regarded as the law of the case. [16] In Technicolor IV, we stated that upon remand, it is within the Court of Chancery's discretion to select one of the parties' valuation models as its general framework, or [to] fashion its own. [17] With respect to the discounted cash flow inputs to be used on remand as the components in any model, however, we noted that the original trial judge's legally erroneous majority acquiror principle had permeated [his] factual assumptions so pervasively that: We are unable to determine from the record how much of the input accepted by the Court of Chancery was predicated upon its erroneous legal theory and how much was properly attributable to its assessment of credibility or a weighing of the evidence. [18] That observation was the predicate for our conclusion that on remand Cinerama must be allowed to renew all of its formulaic and factual arguments before the recalculation of fair value is made. [19] Accordingly, this Court's remand to the Court of Chancery in Technicolor IV mandated a new appraisal of Technicolor under the Perelman Plan based upon factual findings that were completely independent of the original trial judge's legally erroneous majority acquiror principle. The single most important issue presented to the successor judge at the outset of the proceedings on remand was to decide whether the new appraisal valuation mandated by this Court could be accomplished without having an entirely new trial. The successor judge's opinion acknowledges that: the Supreme Court explicitly instructed me to reappraise Technicolor assuming the Perelman's plan utilization of assets and to give Cinerama the opportunity to not only challenge the [original judge's] findings of fact and law where tainted by his `erroneous legal theory' but to reargue every underlying fact and legal issue upon which he ruled. The successor judge contemplates comporting with our mandate on remand by a process that begins with the original trial judge's 1990 valuation opinion and then focuses on ascertaining which factual findings may be reused in his own new appraisal of Technicolor because they are unrelated to his predecessor's legally erroneous majority acquiror principle. When this same successor judge engaged in a similar process under analogous remand circumstances, following the issuance of this Court's mandate in Gonsalves I, [20] his resultant valuation determination was reversed by this Court in Gonsalves II. [21] The successor judge did not want these remanded proceedings to begin on either an erroneous legal or factual premise. Consequently, he invited both Technicolor and Cinerama to seek the present interlocutory review by this Court regarding his proposed course of action in response to our mandate in Technicolor IV.