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Day v. Sidley & Austin
United States District Court, District of Columbia
394 F. Supp. 986 (1975)
Day (plaintiff) was the senior underwriting partner in the Washington office of the Sidley & Austin law firm (S&A) (defendant). S&A’s partnership agreement, which Day signed, provided that all matters of firm policy would be decided by the executive committee, of which Day was not a member. In early 1972, S&A’s executive committee discussed merging S&A with another law firm (Lieberman Firm). In July 1972, the merger was approved by a vote of S&A’s underwriting partners. Day himself voted in favor of the merger. After several more meetings of the underwriting partners, the terms of the merger were entered into an amended partnership agreement, which Day signed. Soon thereafter, the executive committee of the combined firm decided to move S&A’s office to a new location and appoint a former chairman of the Lieberman firm as co-chairman of the new firm. Day resigned soon thereafter, stating that the appointment of the co-chairman and office move made his job “intolerable.” Day subsequently filed suit against S&A, alleging that S&A violated its fiduciary duty by commencing merger negotiations without consulting non-executive committee partners, and by not informing those partners of the changes that would result from the merger.
Rule of Law
Holding and Reasoning (Parker, J.)
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