Opinion ID: 1927508
Heading Depth: 3
Heading Rank: 1

Heading: The Concession Argument

Text: Plaintiff points to three instances in which he alleges that Bancorp conceded that a quasi-appraisal remedy could be imposed against it for disclosure violations by the director defendants. Plaintiff first points to the reply brief of Bancorp on the motion for a preliminary injunction, where it stated: This Court has directly rejected such arguments, holding that even in the context of an exchange offer, the courts may fashion a non-statutory quasi-appraisal remedy... [for] tendering shareholders if they are proven correct with respect to their non-disclosure or other fiduciary duty claims. In re Ocean Drilling & Exploration Co. Shareholders Litig., Del.Ch. [17 Del.J.Corp.L. 326, 341, 1991 WL 70028 (1991)]. While such a remedy involves a significant expenditure in terms of time and legal fees, the irreparability of any harm caused by the defendants' conduct is limited to a large extent by the availability of the quasi-appraisal remedy. Second, plaintiff claims that a statement by defense counsel during oral argument before the Court of Chancery on the preliminary injunction is a concession. This is the same statement which plaintiff claimed, in the first appeal, constituted a waiver of the Section 102(b)(7) protection of the director defendants. Arnold I, 650 A.2d at 1288-1289. There, counsel for all defendants stated: I believe the Court could attempt to determine the value of non-disclosures, so to speak, or determine a quasi-appraisal remedy. Id. at 1289. This Court held that this statement hardly constitutes the unequivocal facts necessary to find a voluntary, intentional relinquishment of the protection of Section 102(b)(7). Id. Plaintiff also asserts that Bancorp again conceded a quasi-appraisal remedy on appeal to this Court in Arnold I. In the Supplemental Answering Brief of all defendants, it was stated: Importantly, defendants noted in their briefs that the trial court could fashion appropriate quasi-appraisal or other remedies in the event plaintiff proved its case, but simultaneously stated that Section 102(b)(7) protected the directors from monetary damages. Contrary to plaintiff's contention, these positions are not inconsistent, since if plaintiff were to prove the proper elements of a cause of action (which he has not done), the remedies may run against the corporate defendants. Gaffin v. Teledyne, Inc., Del.Supr., 611 A.2d 467, 472 (1992) (relied upon by plaintiff recognizing that a corporation may be liable for disclosure violations if the elements of equitable or legal fraud are established); In Re [re] Ocean Drilling & Exploration Co. Sh. Litig. [17 Del.J.Corp.L. 326] (the case cited by defendants at oral argument and in briefs below, noting the availability of quasi-appraisal remedy against the corporate tender offeror). The Court of Chancery concluded that the corporate defendants consistently characterized quasi-appraisal as a remedy, not a cause of action. Arnold II, mem. op. at 11. The corporate defendants, according to the Court of Chancery, were merely asserting that, if there were a disclosure violation by the corporate defendants or a bad faith breach by the directors of their fiduciary duties, these wrongs could be remedied by a quasi-appraisal. Since the corporate defendants have not yet been found to have committed a disclosure violation and the directors' disclosure violation was a good faith omission, the concession is not applicable.