Wertheim Schroder & Co. v. Avon
United States District Court for the Southern District of New York
1993 WL 126427 (1993)
- Written by Eric Miller, JD
Facts
Avon Products, Inc. (Avon) (defendant) sought to reduce the annual dividend on its common stock from $2 to $1 per share. As part of the plan, Avon issued a new series of preferred stock called Preferred Equity-Redemption Cumulative Stock (PERCS), effective through September 1, 1991, for stockholders who wanted to continue receiving the $2 per-share annual dividend. The PERCS terms included an accelerated-redemption provision stating that PERCS holders would be entitled to a one-for-one exchange for common stock or cash, plus unpaid dividends, if Avon paid a cumulative annual dividend of $1.50 per share or more on the common stock. PERCS holders also had the option of a redemption at certain fixed prices. Wertheim Schroder & Co. (Wertheim) (plaintiff) acquired approximately 138,000 PERCS shares. In February 1991, Avon declared a special dividend of $3 per share of common stock in addition to its quarterly dividend of $0.35 per share, though the special dividend was not to be paid until September 16. Wertheim brought a breach-of-contract claim against Avon in federal district court, arguing that the declaration of the special dividend triggered the accelerated-redemption provision. Avon moved for summary judgment.
Rule of Law
Issue
Holding and Reasoning (Leisure, J.)
What to do next…
Here's why 829,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,400 briefs, keyed to 994 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.
