Justia Corporate Compliance Opinion Summaries

Davidson Directors and PBGC appealed the district court's order to distribute all of News-Journal assets to Cox, a long-time shareholder of the closely-held News-Journal. The court vacated the order, interpreting Florida's election-to-purchase statute to require that any payment made as a result of a corporation's share repurchase decision complied with the distribution requirements of Fla. Stat. 607.06401, which prohibited the distribution of corporate assets to a shareholder if it would render the corporation insolvent. Because the court considered any payment to Cox a distribution to a shareholder within the meaning of the statute, the district court erred when it ordered the distribution of all of News-Journal's assets to Cox without applying the insolvency test contained in the statute. If on remand, the district court finds a distribution to Cox would violate the statute, News-Journal's other creditors should receive payment before any distribution is made to Cox. View "Cox Enterprises, Inc. v. Pension Benefit Guaranty Corp; Cox Enterprises, Inc. v. Davidson, et al." on Justia Law

Harold and his son William started a corporation, operated by William. Harold made loans to the corporation. When the corporation ceased operating William and his wife formed PCI-2 to take its place; despite an agreement, Harold's loans were not repaid and Harold made loans to PCI-2, lending about $300,000 to PCI-1 and PCI-2. William and his wife acquired other corporations and substantial real estate holdings. One business, WEL, issued one share of stock to Harold and nine shares to Harold as custodian for William's infant son, L.L. Harold was a director of WEL. William and his wife divorced. In 2004, Harold filed a loan repayment lawsuit against WEL and PCI-2; William did not defend, asserting there was no money. Harold obtained default judgments of $1,107,550 and $1,204,439, commenced execution proceedings against property that WEL owned, and obtained approximately $320,000 in proceeds. In the Bankruptcy Court, a custodian for shares owned by L.L. sought to recover $345,000 from Harold, claiming that Harold breached his fiduciary duties owed to L.L. The Bankruptcy Court and the district court rejected the claim. The Third Circuit reversed. Harold breached his duties as a WEL director and as a custodian for L.L.'s shares. View "In re: Lampe, Jr" on Justia Law

Plaintiff filed this action seeking books and records from HP under 8 Del. C. 220. At issue was whether a letter concerning allegedly inappropriate conduct by a corporate executive should be kept under seal. The court held that the Court of Chancery acted well within its discretion in holding that the intervenor did not establish good cause to maintain the confidentiality of the letter and therefore, the letter should be unsealed. View "Hurd v. Espinoza and Hewlett-Packard Co." on Justia Law

Sagarra, a Spanish corporation, was a minority shareholder of Uniland, also a Spanish corporation. Sagarra brought a Court of Chancery action to rescind the sale, by CPV, of Giant, to Uniland. CPV was the controlling stockholder of both Giant and Uniland. Sagarra purported to sue derivatively on behalf of a wholly-owned Delaware subsidiary of Uniland, UAC, which was specifically created as the vehicle to acquire Giant. Defendants moved to dismiss the complaint on the ground that Sagarra lacked standing to enforce a claim on behalf of UAC. The Court of Chancery held that Sagarra's standing to sue was governed by Spanish law, because Uniland - the only entity in which Sagarra owned stock - was incorporated in Spain. The court upheld the Court of Chancery's reasoning and judgment because Sagarra failed to satisfy the demand requirements of Spanish law. View "Sagarra Inversiones, S.L., v. Cementos Portland Valderrivas, S.A., et al." on Justia Law

Plaintiffs sought a preliminary injunction against the acquisition of Compellant by Dell. The parties settled after significant discovery but before merits briefing or a hearing. The settlement consideration consisted of modifications to the deal protections in the merger agreement, including the rescission of a stockholder rights plan adopted in connection with the transaction, and six supplemental disclosures. Plaintiffs applied for a fee of $6 million and defendants argued for not more than $1.25 million. In addressing the fee application, and thus to estimate the value of the resulting benefits conferred by the settlement, the court relied primarily on four studies that measured market-wide rates of topping bid activity and the incremental value generated by multiple bidders. The court also evaluated the benefits conferred by the supplemental disclosures. In total, the court awarded $2.4 million. View "In re Compellent Technologies, Inc. Shareholder Litigation" on Justia Law

This action involved a challenge to a decision by the board of directors of a company to call certain of its outstanding shares. The purchasers of those shares claimed that the company called the shares at a below market price in violation of the express terms of the contracts governing the shares as well as the implied covenant of good faith and fair dealing. The company moved to dismiss the purchaser's complaint for failure to state a claim. The court found that the purchaser had alleged facts that conceivably would support a conclusion that the call price was set below fair market value and that the company acted in bad faith by setting the call price at that value. Therefore, the court denied the company's motion to dismiss. View "Clean Harbors, Inc. v. Safety-Kleen, Inc." on Justia Law

Appellant, a former shareholder in Wachovia, sought to recover personally for the decline in value of his shares of Wachovia stock during the recent financial crisis. The district court dismissed the suit, concluding that appellant's complaint stated a claim derivative of injury to the corporation and that he was therefore barred from bringing a direct or individual cause of action against defendants. The court held that because appellant's varied attempts to recast his derivative claim as individual were unavailing, the judgment of the district court was affirmed. View "Rivers, Jr. v. Wachovia Corp., et al." on Justia Law

The Wyoming Division of Banking performed a Wyoming Uniform Consumer Credit Code compliance examination of Onyx Acceptance Corporation and determined it was improperly charging its Wyoming customers fees for making payments by telephone or internet. The Division ordered Onyx to stop charging the fees and refund the fees collected. The Office of Administrative Hearings issued a recommended order granting summary judgment for the Division. Consistent with the recommended decision, the administrator of the Code issued an order finding that Onyx violated the Code when it charged the fees. The district court reversed, concluding that the fees were not covered by the Code and, therefore, Onyx did not violate the Code by charging them to customers who opted to pay by phone or internet. The Supreme Court affirmed, holding that Onyx did not violate the Code and summary judgment in its favor was appropriate. Remanded. View "Vogel v. Onyx Acceptance Corp." on Justia Law

A tax employee of defendant, terminated after reporting an alleged tax fraud scheme to the company and federal enforcement agencies, filed suit asserting claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c) and 1962(d). The district court dismissed, finding that the predicate acts alleged were either unrelated or did not proximately cause plaintiff's injuries. The Seventh Circuit reversed. The retaliatory actions were related to the alleged tax fraud scheme, under the Supreme Court's "continuity plus relationship" test. Since enactment of the Sarbanes-Oxley Act, 18 U.S.C. 1513(e) retaliation against an employee constitutes racketeering. Retaliatory acts are inherently connected to the underlying wrongdoing exposed by the whistleblower, even though they occur after the coverup is exposed. In this case, the retaliatory acts were not isolated events, separate from the tax fraud. Plaintiff properly alleged that his termination was proximately caused by a RICO predicate act of retaliation. View "DeGuelle v. Camilli" on Justia Law

Plaintiffs commenced an action and moved for preliminary injunction seeking to enjoin defendants, the board of trustees, from demolishing a certain church building. At issue was whether section 5 of the Religious Corporations Law granted plaintiffs, former parishioners of the church incorporated as a religious corporation, the authority to challenge the board of trustees' decision to demolish the church. The court held that plaintiffs have no basis to challenge the actions properly voted upon by the board of trustees and sanctioned by the archbishop. Accordingly, the order of the Appellate Division was affirmed. View "Blaudziunas v Egan" on Justia Law