Metropolitan Life Insurance Company v. RJR Nabisco, Inc.
United States District Court for the Southern District of New York
716 F. Supp. 1504 (1989)
- Written by Sean Carroll, JD
Facts
Metropolitan Life Insurance Company (MetLife) and Jefferson-Pilot Life Insurance Co. (plaintiffs), two “sophisticated investors,” owned bonds in RJR Nabisco, Inc. (RJR) (defendant). There were express provisions in the bond indentures that allowed RJR to merge and/or sell its assets, as well as to assume additional debt. There were no express provisions that restricted RJR’s assumption of new debt or that required a payout on the bonds upon a leveraged buyout. RJR produced MetLife memoranda indicating that MetLife, through past experiences with leveraged buyouts, recognized an inability to force a payout without an express provision in the bond indenture. RJR accepted a leveraged buyout proposal that significantly reduced the value of the plaintiffs’ bonds. The plaintiffs brought suit, alleging that RJR breached an implied covenant of good faith and fair dealing by taking on the additional debt necessary to approve the buyout and thereby allowing the value of the bonds to drop. RJR moved for summary judgment.
Rule of Law
Issue
Holding and Reasoning (Walker, J.)
What to do next…
Here's why 804,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
