Justia U.S. 8th Circuit Court of Appeals Opinion SummariesArticles Posted in Mergers & Acquisitions
Chase v. First Federal Bank of Kansas City
The Eighth Circuit affirmed the district court's dismissal of plaintiffs' putative class action against First Federal and former directors of Inter-State. Plaintiffs alleged that Inter-State's merger with First Federal was inequitable because Inter-State had $25 million more than First Federal in excess capital. Plaintiffs claimed that the surplus should have been distributed to Inter-State's members instead of becoming part of the merged entity, and that the decision to merge should have been decided by a vote of Intra-State's members. The court held that the district court correctly concluded, based on long-standing Supreme Court precedent, that Inter-State's members did not have an ownership interest in its surplus. Even assuming a provision in Inter-State's charter was unique and that this was a case of first impression, the court held that Inter-State's members would not have an ownership interest in the $25 million surplus based on the provision's plain language. Therefore, without an ownership interest, plaintiffs have not stated a claim against defendants and the district court properly dismissed their claims expressly premised on an ownership interest in the surplus. View "Chase v. First Federal Bank of Kansas City" on Justia Law
Federal Trade Commission v. Sanford Health
The FTC and the State of North Dakota moved to enjoin Sanford Bismarck's acquisition of Mid Dakota, alleging that the merger violated section 7 of the Clayton Act. The district court determined that plaintiffs would likely succeed in showing the acquisition would substantially lessen competition in four types of physician services in the Bismarck-Mandan area. The Eighth Circuit affirmed the district court's grant of a preliminary injunction, holding that the district court did not improperly shift the ultimate burden of persuasion to defendants and properly followed the analytical framework in U.S. v. Baker Hughes, Inc., 908 F.ed 981 (D.C. Cir. 1990); the district court did not clearly err in defining the relevant market; and the district court's finding on merger-specific efficiencies was not clear error. View "Federal Trade Commission v. Sanford Health" on Justia Law
Horras v. American Capital Strategies, Ltd.
Plaintiff, an Iowa citizen with a home health care business, merged his business with other home health care providers to form Auxi, Inc., a Delaware corporation. After the merger, ACS acquired control of Auxi and then sold Auxi to HHC. Auxi did not inform plaintiff of the sale and plaintiff received no compensation for his shares of Auxi stock. Plaintiff filed suit against ACS claiming breach of fiduciary duty and breach of contract. The court concluded that plaintiff pleaded insufficient facts to support a claim that ACS breached its fiduciary duties as a majority shareholder; although plaintiff's complaint alleged damages, it contained no facts identifying the existence of a contract between ACS and plaintiff or its terms; and plaintiff pleaded no facts suggesting that the alleged contract between ACS and HHC manifested an intent to benefit him. Accordingly, the court affirmed the district court's dismissal of both claims. The court also concluded that the district court did not abuse its "considerable discretion," in concluding that it was not required to allow plaintiff to amend the post-judgment complaint where plaintiff never sought to amend until after dismissal, despite being on notice of the need to amend. View "Horras v. American Capital Strategies, Ltd." on Justia Law
Rolwing v. Holdings, Inc.
After a merger between Nestle and Ralston Purina, plaintiff, a book-entry shareholder, filed this putative class action in Missouri state court on behalf of himself and all other Ralston Purina book-entry shareholders at the time of the execution of the merger agreement. Plaintiff claimed that Nestle was required to pay the class on a certain date, Nestle's payment was delinquent, and therefore the class was entitled to interest on the payment. Nestle subsequently appealed the district court's order remanding the putative class action to the state courts of Missouri. Because at the time the case was removed it did not meet the amount in controversy requirements for federal subject matter jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. 1332(d), 1453, 1711-15, the court affirmed the order of the district court.
Dakota, MN & Eastern R.R. Corp. v. Schieffer
Defendant entered into an Employment Agreement with his employer before the employer entered into a merger. After defendant was terminated by his employer and post-merger disputes arose as to the amounts his employer owed him, defendant filed a demand for arbitration under the Employment Agreement's arbitration provision. The employer commenced this action to enjoin the arbitration as preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The employer alleged federal question jurisdiction under 28 U.S.C. 1331 because the severance dispute "arises out of an [ERISA] employee benefit plan" and therefore state law claims were preempted, and supplemental jurisdiction under 18 U.S.C. 1367 over non-ERISA claims. The court considered ERISA's statutory language, purpose, and historical context and held that an individual contract providing severance benefits to a single executive employee was not an ERISA employee welfare benefit plan within the meaning of section 1002(1). The court also held that ERISA preempted state laws that "relate to" an employee benefit plan. Consequently, further questions arose because the Employment Agreement included two provisions that could "relate" to the Employment Agreement to other programs of the employer that were ERISA plans. As neither parties nor the district court considered this jurisdictional issue, the court remanded for further proceedings.