979 F.2d 924 (1992)
Plaintiffs were class of former minority shareholders of defendant subsidiary. Defendants were two corporations, defendant subsidiary and defendant parents, as well as various officers, directors, and attorneys associated with the corporations. In connection with a proposed merger of defendant subsidiary into defendant parent, defendants issued a joint proxy that was distributed to all shareholders. Plaintiffs alleged that material misrepresentations therein induced them to exchange their undervalued shares of defendant subsidiary common stock for overvalued shares of new preferred stock in defendant parent. On appeal, defendants argued that an intervening Supreme Court decision precluded minority shareholders' relief under the Securities and Exchange Act of 1934 § 14(a), 15 U.S.C.S. § 78n(a), when they were unable to affect the outcome of a merger vote.
The court disagreed because the injury sustained by minority shareholders powerless to affect the outcome of a merger vote was not the merger but loss of appraisal right.
Decision that imposed liability was affirmed in part and remanded in part. Although finding of materiality in proxy satisfied elements of loss and transaction causation for forfeited state appraisal rights, plaintiffs must also prove that they in fact lost state appraisal rights. Damages calculation affirmed.
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