Court Opinion

ID: 6759479
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:30:06.381223+00
Date Added: 2024-06-11T16:02:33.299105
License: Public Domain

Douglas, J.,
dissenting. I am disturbed that a majority of this court feels constrained to put themselves in the position of acting as a “super” board of directors of a corporation. Appellees principally argued this case in the lower courts on the basis of the business judgment rule because said rule so obviously applies. It is my guess that had a majority of this court either agreed with the decision made by the board of directors or looked favorably on the party urging application of the rule, they would have had little difficulty in finding that the rule applies in this case. Certain members of the majority are fond of talking about preordained results. Now it is clear why they are able to speak with such authority on the subject.
While it is clear to me, for reasons expressed by others, that the business judgment rule applies, I write in dissent for another reason. Appellants originally brought this action contending that the $6,000,000 price paid by the Cleveland Browns Football Company, Inc. (“Browns”) for all of the stock of the Cleveland Stadium Corporation (“CSC”) was excessive and thus unfair to minority shareholders in the Browns. The suit also contended that majority shareholder and chief executive officer, Arthur B. Modell, had engineered the transaction by exercising his influence over the members of the board of directors who voted in favor of the purchase.
Confirming this, appellants’ merit brief in this court states, in part, that “* * * plaintiffs opposed the acquisition on the ground that the $6,000,000 price was at least $4,000,000 too high and, after the acquisition was approved by the Browns [sic] directors (on March 16, 1982), instituted the present action.” (Emphasis sic.) Appellants’ brief also states that “[a]fter a four-week trial in the summer of 1984, Common Pleas Court Judge John Angelotta voided the transaction on the ground that the $6,000,000 price was not ‘fair’ to the corporation (or the minority shareholders) and that the ‘manner in which the subject transaction was initiated, structured, negotiated and disclosed to plaintiffs * * * did not satisfy any reasonable concept of fair dealing.’ ”
Thus, it is clear the appellants’ cause of action is founded on the fact that the Browns paid too much for the stock of CSC, that the purchase price of $6,000,000 was unfair and was, at least, $4,000,000 too high.
Such contentions and statements, on their face, appear to raise legitimate concerns and thus on appeal to this court it became necessary to wrestle with the intricacies of the transaction. In doing so, I found myself being torn between the Delaware law concerning the business judgment rule and the findings of the trial court that the transaction was clearly unfair to appellants. Then, while the case was pending in this court on appeal, an event occurred that brought, at least for me, the entire transaction and the majority opinion into sharp focus.
On March 12, 1986, as part of the within case, appellants filed with this court a “Motion for Temporary Injunction.” Appellants sought to enjoin the sale, by the Browns, of the stock in question. Apparently a com*42pany, owned in part by Modell, offered to purchase the CSC (now “Gesta, Inc.”) stock from the Browns for the sum of $7,000,000. By seeking the injunction, appellants were attempting to stop a sale of the disputed stock for $1,000,000 more than the Browns had paid for the stock and an amount that was at least $4,000,000 more than appellants contended the stock was worth. If the unfairness of the original transaction was really what was concerning appellants, it would seem that the proposed sale was to their benefit and would have settled the entire controversy.
That this was apparently not what this case was all about became even more clear when appellants’ injunction motion, filed March 12, 1986, was delivered to my office at 10:45 a.m. on March 13, 1986 and I was asked to vote on it on the same day. I respectfully suggested that we wait at least until the next day to give appellees a chance to respond by way of brief or memorandum. I was informed that the vote would be released that same day at 3:30 p.m.
I voted “no” on the motion. I did so, in part, because of the following: (1) Section 16, Article I of the Ohio Constitution reads: “All courts shall be open, and every person, * * * shall have remedy by due course of law, and shall have justice administered without denial * * *.” (Emphasis added.) (2) Civ. R. 65(C) reads, in part: “[N]o temporary restraining order or preliminary injunction is operative until the party obtaining it gives a bond executed by sufficient surety, approved by the clerk of the court granting the order or injunction, in an amount fixed by the court or judge allowing it, to secure to the party enjoined the damages he may sustain, if it is finally decided that the order or injunction should not have been granted.” (Emphasis added.) (3) Civ. R. 65(B)(1) reads: “[NJo preliminary injunction shall be issued without reasonable notice to the adverse party. * * *” (Emphasis added.) (4) Civ. R. 65(D) provides, in part: “[Ejvery order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in terms * * (Emphasis added.) (5) Canon 3A(4) of the Code of Judicial Conduct provides, in part: “A judge should accord to every person who is legally interested in a proceeding, or his lawyer, full right to be heard according to law * * *.” (Emphasis added.)
Appellees were denied an open court and were not accorded remedy by due course of law. No bond was offered by appellants nor did this court require or even fix a bond to be posted by appellants. Reasonable notice was not given to appellees of the issuing of the injunction and no reasons were given for its issuance. Appellees were not given full right to be heard and, in fact, the court did not even have the benefit of appellees’ counsels’ arguments in opposition to the request for injunction. In short, it seemed to be a strange, as well as unfair, way to proceed.
After reviewing the original testimony, the law on the business judgment rule and the subsequent happenings in this court, I have concluded *43that the court of appeals was correct in its perceptive analysis and I would affirm the judgment of that court.
Accordingly I dissent herein.
Wright, J., concurs in the foregoing dissenting opinion.