Wilson v. Great American Industries, Inc.
United States Court of Appeals for the Second Circuit
979 F.2d 924 (1992)
Great American Industries, Inc. (GAI) (defendant) owned 73 percent of the stock of Chenango Industries, Inc. (Chenango) (defendant) and wanted to obtain full ownership. GAI therefore proposed a merger in which Chenango shareholders would receive preferred stock in GAI. New York law did not require GAI to issue a full proxy statement regarding the proposed merger, but GAI nonetheless did so. The proxy statements contained material misrepresentations which underrepresented Chenango’s value. A sufficient number of minority shareholders voted in favor of the merger to deprive Chenango’s shareholders of appraisal rights under New York law. Some Chenango minority shareholders (plaintiffs) sued GAI, Chenango, and several officers and directors associated with the companies. They asserted a cause of action under SEC Rule 14a-9, alleging that the material misstatements induced the minority shareholders to vote in favor of a merger that was unfair to them, thereby causing them to suffer a loss. GAI responded that causation was lacking. Because New York law required only a two-thirds vote to approve a merger, GAI argued, it could have accomplished the merger even if all minority shareholders opposed it. The minority shareholder plaintiffs argued, however, that GAI needed more than the 73 percent to obtain certain favorable tax treatment, and further that a higher percentage would deprive the minority shareholders of their appraisal rights. The trial court ruled in favor of the minority shareholders. GAI and the other defendants appealed, arguing that a recently-decided Supreme Court case, Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991), mandated the dismissal of the case.
Rule of Law
Holding and Reasoning (Cardamone, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 166,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,800 briefs, keyed to 187 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.