Opinion ID: 2189591
Heading Depth: 1
Heading Rank: 10

Heading: Mere Reorganization Inapplicable

Text: The second recognized exception to the general rule of Lewis v. Anderson provides that derivative standing will not be eliminated where the merger is in reality a reorganization which does not affect plaintiff's ownership of the business enterprise. [33] The primary precedents relied upon by the plaintiff in this appeal to overrule Lewis v. Anderson permitted derivative standing only because the facts of those cases fall into that second recognized exception. Both Schreiber v. Carney and Helfand v. Gambee , for example, involved applications of the Lewis v. Anderson mere reorganization exception. [34] The present case involves the merger of two unrelated corporations. In Bonime v. Biaggini , [35] the Court of Chancery held that a merger of two independent corporations extinguishes a stockholder's standing to pursue derivative claims on behalf of the disappearing corporation. [36] In distinguishing the case from Schreiber, the Court of Chancery in Bonime v. Biaggini stated: Here SPSF, as presently constituted, is the result of a merger of two distinct corporations each of which had separate boards, officers, assets and stockholders.... SPFS is distinctly different from either of its constituent corporations, Southern Pacific or Santa Fe.... In short, the entire corporate mix is distinctly different from that of Southern Pacific as its existed when plaintiffs' claim arose. As a consequence the shares held by plaintiffs represent property interests also distinctly different from that which they held as shareholders of Southern Pacific. They thereupon have lost standing to maintain this derivative litigation. [37] The mere organization exception of Lewis v. Anderson has no applicability to this case. Amax Gold and Kinross were two distinct corporations, each with its own board of directors, officers, assets and stockholders. In this case, as in Bonime v. Biaggini , the Kinross Merger was far more than a corporate reshuffling. The equitable concerns that have caused Delaware courts to allow a plaintiff equitable standing following a mere corporate reorganization are not extant in the case sub judice.