Gerber v. Computer Associates Int'l, Inc.

303 F.3d 126 (2002)

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Gerber v. Computer Associates Int'l, Inc.

United States Court of Appeals for the Second Circuit
303 F.3d 126 (2002)

Facts

Computer Associates International, Inc. (CA) (defendant) sought to acquire On-Line Software International, Inc. (On-Line). CA issued a press release on August 16, 1991, stating it had reached an agreement in principle with On-Line to acquire all of On-Line’s outstanding common stock for $15.75 per share subject to board and regulatory approval and execution of agreements. The merger agreement was signed on August 21, as was a $5,000,000 non-compete agreement with On-Line’s chairman and chief executive officer, Jack Berdy (defendant). The offer, which was scheduled to expire on September 20, was disseminated to On-Line shareholders the following day. A majority of shareholders tendered their shares. Berdy was paid on September 25 before any other shareholder was paid. Joel Gerber (plaintiff), an On-Line shareholder, brought a class action against CA, its wholly owned subsidiary LWB Merge, Inc., CA’s chairman, CA’s chief operating officer, and Berdy (defendants). Gerber claimed that CA paid more to Berdy than to other On-Line shareholders in violation of the Williams Act. A jury returned a verdict for Gerber and the class. On appeal, CA argued that the Williams Act claims were insufficient because the Berdy agreement was executed before, and the $5,000,000 was paid after, the tender offer.

Rule of Law

Issue

Holding and Reasoning (Parker Jr., J.)

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