Court Opinion

ID: 9704768
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:45:44.055309+00
Date Added: 2024-06-11T18:22:05.141113
License: Public Domain

LARSEN, Justice,
dissenting.
I dissent.
The Majority claims that it “does not condone the manner in which appellants and other minority stockholders were deprived of their equitable interest in J & L” and that it is “not unmindful of the grave unfairness and fraud frequently present in mergers of this type, especially where there is a ‘cash-out’ of the minority stockholders.” Notwithstanding the Majority’s alleged concern for minority stockholders, the Majority refuses to permit appellants’ post-merger challenge to the validity of the instant merger, holding that appellants’ “exclusive” post-merger remedy is “the right . to demand an appraisal of the fair value of their stock and its purchase at that price by the corporation.” I dissent from this holding; stockholders who allege that a merger is “fraught with fraud or fundamental unfairness” should be permitted to challenge the validity of said merger at any time, including post-merger. In support thereof, I cite the opinion of the Delaware Supreme Court in Roland International Corp. v. Najjar, Del., 407 A.2d 1032 (1979), a case similar to the one at bar:
*535[A] [fiduciary] duty is owed by the majority stockholders (who have the power to control corporate property, and indeed, corporate destiny) to the minority stockholders of the corporation when dealing with the latter’s property. It may not be circumvented by full compliance with the procedures permitted under and required by the corporation statutes, nor is it discharged by remitting minority shareholders to a statutory appraisal remedy (often based upon the status of the market and the elements of an appraisal), the timing of which is entirely within the control of the majority. The fiduciary duty is violated when those who control a corporation’s voting machinery use that power to “cash out” minority shareholders, that is, to exclude them from continued participation in the corporate life, for no reason other than to eliminate them. [Emphasis provided]
FLAHERTY, J., joins this dissenting opinion.