Opinion ID: 783045
Heading Depth: 4
Heading Rank: 2

Heading: Fundamental Matters

Text: 39 Appellants contend that, even if a new agreement will be executed during the Beck's integration process, such matters would not be considered fundamental within the meaning of section 2.9. The overall plan or scheme of the LF I Agreement, they argue, provides majority rule for all matters arising in the course of managing LF I, except for a narrow subset of issues that are most central to corporate structure and governance. According to Appellants, only agreements involving these basic, i.e. core, issues of corporate structure and governance — a categorical distinction which excludes matters related to the Beck's integration — are considered fundamental matters under section 2.9. However, the subject matter of a particular agreement is not dispositive of whether it is deemed a fundamental matter. 40 Based on the evidence in the record regarding the complexity and multi-faceted nature of the Beck's integration, related-party agreements that have been or will be entered in furtherance of the integration might not implicate core issues of corporate structure and governance but would nonetheless be covered by section 2.9(v). The relationship between the parties to a new agreement, rather than the subject matter of the agreement, determines whether Wisdom may exercise its minority veto power under section 2.9(v). Section 2.9(v) provides Wisdom with a defense against self-dealing, related-party agreements and does not limit the exercise of this veto power to only those agreements between related parties that affect the governance or structure of LF I or LUSA. It should be recalled that section 2.9(v) defines as fundamental matters: the entry by [LF I] or any of its subsidiaries [LUSA] into or material modifications of any agreement with any Member [Labatt] or any of their respective affiliates. LF I Agmt., § 2.9(v). 41 Appellants do not seriously contest that the plain language of section 2.9(v) supports such a reading. Instead, Appellants argue that, despite the plain language, the true meaning can only be gleaned by examining section 2.9(v) in the context of section 2.9 generally, which, they say, pertains exclusively to core matters of corporate structure or governance. To read section 2.9 more broadly, they argue, would be inconsistent with the overall plan or scheme of the LF I Agreement providing for majority rule over the vast majority of business matters. We disagree. 42 Section 2.9 characterizes a number of matters as fundamental that arguably implicate core issues of corporate structure or governance, including reduction of LF I's outstanding shares, LF I Agmt., § 2.9(I), changes affecting LF I's Main Business Purpose and other lines of business, id. §§ 2.9(ii) and (iii), mergers and acquisitions above a certain size, id. § 2.9(iv), and LF I pursuing bankruptcy proceedings, id. § 2.9(vii). At the same time, however, section 2.9 also characterizes a number of matters as fundamental that do not involve core corporate structure and governance, such as a change in LF I's external auditors, id., § 2.9(vi), allocations of profits and losses, id., § 2.9(ix), and allocation of marketing expenses not consonant with the POM Agreement, id., § 2.9(xiii). Accordingly, restricting section 2.9(v)'s scope to cover only related-party agreements involving purported core issues of corporate structure or governance would deprive Wisdom of the full benefit of its bargained-for minority veto power. We decline the invitation to rewrite the LF I Agreement in this manner. 43 We therefore agree with the district court that section 2.9(v) provides Wisdom with a veto power over the type of related-party, self-dealing agreements associated with the Beck's integration. It follows, then, that approving the Resolution by a simple majority vote and proceeding with the Beck's integration over Wisdom's negative vote breached the LF I Agreement. Accordingly, the district court did not err when it concluded that Wisdom would likely succeed on the merits of its claim. 44 The question then becomes whether the evidence supports the district court's conclusion that Wisdom has demonstrated irreparable harm. We think it does.