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Access over workers' compensation decisions, including En Banc, Significant Panel Decisions, and writ-denied cases.

Case No. 2018 NY Slip Op 28137
Regular Panel Decision
Apr 27, 2018

Matter of Xerox Corp. Consolidated Shareholder Litig.

The case concerns a proposed transaction where Fujifilm Holdings Corp. would acquire a 50.1% controlling interest in Xerox Corp. for no cash payment to Xerox shareholders. Major Xerox shareholders, including Darwin Deason and several pension funds, sought preliminary injunctions, alleging that Xerox CEO Jeff Jacobson was conflicted during negotiations, prioritizing his self-interest in retaining his CEO position, and that the Xerox Board failed its fiduciary duties by approving a deal disproportionately favorable to Fuji. The court found a likelihood of success on claims that Jacobson breached his fiduciary duties and that the Board failed to properly supervise him, leading to a "cashless acquisition" for Fuji, which the court stated "enabled Fuji to 'take control of Xerox without spending a penny.'" Consequently, the court granted preliminary injunctions, enjoining the proposed transaction and mandating the waiver of Xerox's advance notice bylaw deadline to allow shareholders to nominate an alternative slate of directors, allowing shareholders a fair opportunity to consider nominations given the material, post-deadline changes and the egregious terms of the proposed control transfer.

Shareholder LitigationPreliminary InjunctionFiduciary Duty BreachCorporate GovernanceMerger and AcquisitionAdvance Notice BylawProxy ContestConflicted CEOBoard of DirectorsCorporate Control
References
20
Case No. MISSING
Regular Panel Decision

Bush v. Brunswick Corp.

This case addresses whether shareholders of a target company, ICO, can sue an acquiring company, Brunswick, for damages resulting from the diminution of stock value due to an alleged breach of a Merger Agreement. The majority shareholders intervened in ICO's lawsuit against Brunswick, but the trial court struck their petition, ruling they were not intended third-party beneficiaries entitled to enforce the agreement, based on a clause stating the agreement was "not intended to confer upon any other person any rights or remedies hereunder." On appeal, the court examined the Merger Agreement and a related Shareholder Agreement, concluding that the shareholders were indeed intended third-party beneficiaries and the exclusionary clause did not apply to them, as they were integral participants in the merger. The court reversed the trial court's order and remanded the case for further proceedings.

Merger AgreementShareholder RightsThird-Party BeneficiaryBreach of ContractStock Value DiminutionInterventionAppellate ReviewContract InterpretationCorporate LawAnticipatory Breach
References
22
Case No. MISSING
Regular Panel Decision

In re Cablevision Systems Corp. Shareholders Litigation

This case addresses a motion for attorneys' fees and expenses in a class action brought by minority shareholders of Cablevision against the Dolan family and Cablevision's directors. The shareholders alleged breaches of fiduciary duty concerning two merger proposals and a special dividend. Plaintiffs' counsel actively participated in negotiations, leading to an increased share price offer and other concessions in the merger agreement, although the merger was ultimately rejected by the shareholders. The court granted the motion to the extent of ordering a hearing to determine the reasonable value of legal services, applying the "substantial benefit" rule and finding defendants judicially estopped from denying the benefit of counsel's efforts. The opinion discusses the criteria for class certification, the "common fund" doctrine, and the appropriate method for calculating attorneys' fees.

Class ActionShareholder LitigationAttorneys' FeesMerger and AcquisitionFiduciary DutyCorporate GovernanceSpecial CommitteeStock ValuationSettlement NegotiationsJudicial Estoppel
References
13
Case No. MISSING
Regular Panel Decision
Feb 08, 1984

Klein v. Jamor Purveyors, Inc.

This case involves an appeal concerning the enforceability of an alleged oral modification to a written corporate shareholders' agreement. The original agreement, between Jack Klein (decedent), Michael Jacobson, and Jamor Purveyors, Inc., stipulated a $55,000 buy-out price for a deceased shareholder's stock. The plaintiff, as executrix of Klein's estate, claimed an oral agreement increased this buy-out price to $155,000. Special Term dismissed the claims, asserting the oral modification was barred by the Statute of Frauds and a clause in the original agreement requiring written modifications. The Appellate Court affirmed this decision, ruling that the alleged oral agreement fell within the Statute of Frauds and that the plaintiff's arguments regarding memoranda, partial performance, and equitable estoppel were insufficient to satisfy the statute or overcome its provisions. The court also upheld the interpretation that the agreement's modification clause precluded oral changes.

oral agreementStatute of Fraudsshareholders' agreementcorporate buy-outcontract modificationpart performanceequitable estoppelAppellate DivisionCPLRGeneral Obligations Law
References
13
Case No. 06-15-00051-CV
Regular Panel Decision
Mar 23, 2015

Mary Flentge McAuley, Willie O. Flentge, Jr., and Charles Ray Flentge v. Carl Dean Flentge, Independent of the Estate of Laverna Flentge, Carl Dean Flentge, David Flentge and Daniel Junek, Independent of the Estate of Willie Otto Flentge, Sr., Individually, and as Shareholders and on Behalf of W.L. Ranch, Inc

The case involves a shareholder derivative suit and declaratory judgment action. Cross-Appellants, who are majority shareholders, are appealing a trial court's directed verdict that denied their claims for breach of fiduciary duties against Cross-Appellees. The Cross-Appellants allege that the Cross-Appellees, acting as corporate officers and purported directors of W.L. Ranch, Inc., engaged in ultra vires acts including misappropriating corporate property, filing false statements, increasing their own share interests, and unauthorized management. The Cross-Appellants argue that they presented sufficient evidence of breach of fiduciary duties and "benefits" gained by Cross-Appellees, shifting the burden of proof to Cross-Appellees, who failed to demonstrate fairness. The trial court's erroneous directed verdict, which was based on a perceived lack of economic damages, also precluded Cross-Appellants from claiming statutory reimbursement for attorney's fees under the equitable common fund doctrine for actions that substantially benefited the corporation.

Shareholder Derivative SuitBreach of Fiduciary DutyDirected Verdict AppealCorporate GovernanceFiduciary Duty of OfficersFiduciary Duty of DirectorsCorporate MisappropriationUltra Vires ActsCorporate Property DisputeShareholder Rights
References
53
Case No. MISSING
Regular Panel Decision
Apr 29, 2014

Priestley v. Panmedix Inc.

Katherine Priestley, a judgment creditor of Panmedix, Inc., initiated a lawsuit to set aside a Security Agreement between Panmedix and a group of its creditors (Respondent Creditors) as a fraudulent conveyance under New York Debtor and Creditor Law. The Security Agreement, executed after Priestley's security interest expired, granted interests in Panmedix's assets to its insiders (officers, directors, shareholders, and their affiliates) and other creditors. The court found the agreement to be constructively fraudulent due to disproportionately small consideration (four months' forbearance) and actual fraud, evidenced by numerous "badges of fraud," including the close relationship between parties, the unusual nature of the transfer, and the transferor's awareness of Priestley's claim and inability to pay. The agreement preferentially treated a controlling group of shareholders and insiders to the detriment of Priestley. Consequently, the Court granted Priestley's motion for summary judgment and denied the respondents' motion, deeming the Security Agreement a fraudulent conveyance.

Fraudulent ConveyanceSummary JudgmentSecurity AgreementDebtor and Creditor LawNew York LawInsider TransactionsPreferential TreatmentUCC Financing StatementJudgment CreditorPanmedix Inc.
References
28
Case No. MISSING
Regular Panel Decision
Jun 16, 2015

Texas Ear Nose & Throat Consultants, PLLC, Joseph Edmonds, Newton Duncan and James Albright v. John K. Jones M.D.

This case involves consolidated cross-appeals stemming from the departure of John Jones, a founding member, from Texas Ear Nose & Throat Consultants, PLLC (TENT). Jones sued TENT and other members for breach of agreements, shareholder oppression, and denial of access to records, while TENT counter-claimed for breach of contract. A jury found both TENT and Jones breached agreements, with TENT breaching first, and also found shareholder oppression, leading to a trial court judgment awarding damages and attorney's fees to both sides, and ordering a buy-out of Jones's membership. On appeal, the court modified the award of attorney's fees for denial of access to be against TENT and remanded for recalculation. It reversed the trial court's buy-out order and remanded Jones's shareholder oppression claims for further consideration under evolving legal standards. The court also reversed TENT's award of damages and attorney's fees for Jones's alleged breach of contract, effectively rendering a take-nothing judgment on those claims. The remainder of the judgment was affirmed as modified.

Shareholder OppressionBreach of ContractLimited Liability Company (LLC)Partnership DisputeEmployment AgreementAncillary IncomeAttorney's FeesAccess to RecordsRetirement NoticeDamages Calculation
References
63
Case No. MISSING
Regular Panel Decision

In Re Southern Electronics Co., Inc.

The debtor, Southern Electronics Company, Inc., filed for Chapter 11 bankruptcy and proposed to reject its collective bargaining agreement with the Communications Workers of America (CWA). The debtor argued that the seniority provisions of the agreement protected unproductive employees, contributing to financial losses. The court reviewed legal standards for rejecting such agreements, opting for a 'balancing of the equities' test. Despite concerns about the debtor's intransigence and lack of documentation for employee unproductivity, the court found the agreement burdensome due to potential arbitration costs and critical need for reorganization funds contingent on rejection. Ultimately, the court permitted the rejection of the agreement and confirmed the debtor's plan of reorganization, prioritizing the continuation of the business and the interests of current employees and unsecured creditors over the perpetuation of the collective bargaining agreement.

BankruptcyChapter 11Collective Bargaining AgreementContract RejectionLabor LawDebtor in PossessionSeniority ClauseUnfair Labor PracticeReorganization PlanEquities Balancing Test
References
14
Case No. MISSING
Regular Panel Decision

In re Arbitration between Arthur Murray, Inc. & Ricciardi

Justice Froessel dissents, advocating for the modification of the lower court's order. The petitioner seeks to stay arbitration concerning a dispute stemming from nine identical franchise agreements. Justice Froessel argues that the clear language of these agreements, coupled with the absence of a clause preventing unreasonable withholding of consent and the specific nature of the agreements, grants the petitioner the right to refuse consent to their assignment, citing several cases including Allhusen v. Caristo Constr. Corp. The dissenting opinion also asserts that the rule of good faith does not apply in this context. Consequently, it is argued that the portion of the dispute related to damages from the arbitrary withholding of consent to assignments is not arbitrable. Therefore, the orders of the court below should be modified to grant the petitioner's application to stay arbitration regarding the damages claim arising from the refusal to consent to the assignment of franchise agreements; otherwise, affirmed.

arbitration stayfranchise agreementsassignment of contractsconsent withholdingcontract interpretationgood faith rulenon-arbitrable claimsappellate reviewdissenting opinioncontractual rights
References
12
Case No. MISSING
Regular Panel Decision
Mar 19, 2002

Claim of Estate of Lutz v. Lakeside Beikirk Nursing Home

The case involves an appeal by a claimant from two Workers' Compensation Board decisions concerning a waiver agreement. The decedent, Beverly Lutz, her employer, and carrier had a proposed settlement agreement that was filed but not yet approved when she died. The Board, through Commissioner Tremiti, refused to honor the agreement after the carrier and Special Funds withdrew their consent. Although an approval notice was mistakenly issued, the Board later corrected it, ruling the agreement was never approved. The appellate court affirmed the Board's decision, holding that the Board had continuing jurisdiction to correct its error and that the withdrawal of consent by the carrier and Special Funds justified the disapproval of the agreement.

Workers' CompensationSettlement AgreementWaiver AgreementDeath BenefitsBoard ReviewJurisdictionConsent WithdrawalStatutory InterpretationRegulation ValidityAppellate Review
References
11
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