Court Opinion

ID: 9459245
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:14:47.396688+00
Date Added: 2024-06-11T17:36:05.320143
License: Public Domain

CLARK, Circuit Judge
(concurring in part and dissenting in part):
After the verdict in this case the judge who tried it observed that had he been the fact finder he would have reached a different result. My study of this record leaves me with the same impression. Therefore I cannot say that the evidence of fraud in this case in any way approached the “overwhelming” mark recorded by the majority opinion. Nevertheless, this study does convince me that the case was properly submitted to the jury to determine the basic issue of 10b-5 liability. I therefore concur in that portion of the result reached by the majority opinion which would affirm that action.
The majority held that “. . . majority stockholders . . . [have] a fiduciary duty to act in the best interest of the minority shareholders.” Such a rule overstates my conception of this legal duty. While a majority shareholder’s dealings with a corporation are subject to rigorous scrutiny for basic fairness, an inherently fair transaction should be upheld even though it not be in the best interest of the minority. For example, a majority shareholder should not be precluded from collecting a valid debt which the corporation owes to him, though it obviously would be in the minority’s best interest for him to fore-go collection.
I respectfully dissent from the award of exemplary damages. First, I do not believe that such an award can be upheld in this ease as a pendent Texas law claim. The record shows that the jury was charged only in terms of a 10b-5 cause of action. Since that is the case that was presented, I would hold it was the only case decided. Second, my view on pendent jurisdiction indicates that I must reach the question the majority pretermits — does I0b-5 allow the award of exemplary damages? This dissent is an inappropriate place for extended reasoning. Suffice it to say that I would generally follow the reasoning of the Second and Tenth Circuits in concluding that this provision will not support such an award. See deHass v. Empire Petroleum Co., 435 F.2d 223 (10th Cir. 1970); Green v. Wolf Corp., 406 F.2d 291 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969).