Friday, November 22, 2013

Stringer v. Car Data Systems, Inc. case brief

Stringer v. Car Data Systems, Inc. case brief summary
841 P.2d 1183 (1992)


CASE SYNOPSIS
Plaintiff shareholders filed suit against defendants, corporation, majority shareholders and directors, and claimed a violation of their rights incident to a cash-out merger. The shareholders challenged when the Court of Appeals (Oregon) affirmed the trial court's dismissal, for failure to state a claim, of their complaint that the majority shareholders and directors conspired to breached a fiduciary duty owed to them as minority shareholders.

CASE FACTS
The minority shareholders alleged that the majority shareholders owed them a duty of loyalty, good faith, fair dealing, and full disclosure that was breached when the majority transferred corporate assets to themselves and offered the minority shareholders a fraction of the true value of their shares.

DISCUSSION

  • The court held that the minority shareholders had not alleged any fraudulent or misleading representations that were relied upon, but only that the amount paid by the corporation was unfair and unreasonably low in an attempt to avoid paying fair value to the minority shareholders for their shares. 
  • The complaint contained no allegations of fact that, if proved, would have supported a punitive damages award. 
  • The allegations showed only a disagreement as to price with no allegations that permitted any inference of self-dealing, fraud, deliberate waste of corporate assets, misrepresentation, or other unlawful conduct. 
  • The remedy afforded by the appraisal statutes, Or. Rev. Stat. § 60.551 to 60.594, was the exclusive remedy for the minority shareholders even if the majority shareholders acted arbitrarily or vexatiously or not in good faith.

CONCLUSION
The judgment in favor of the corporation, majority shareholders, and directors was affirmed.

Recommended Supplements for Corporations and Business Associations Law

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