Get more case briefs explained with Quimbee. Quimbee has over 16,300 case briefs (and counting) keyed to 223 casebooks ► https://www.quimbee.com/case-briefs-o...
Coggins v. New England Patriots Football Club, Inc. | 492 N.E.2d 1112 (1986)
Generally, in corporate mergers, majority shareholders owe fiduciary duties to minority shareholders to act with a corporate purpose that’s valid and legitimate. These fiduciary duties become especially important in the context of a freeze-out merger, or a merger where the majority shareholders of the corporation remove all minority shareholders. In the 1986 case Coggins versus New England Patriots Football Club, the Massachusetts Supreme Judicial Court considered whether the majority shareholder of a professional football team could use a freeze-out merger to pay off personal loans given to that shareholder to acquire corporate control.
In 1959, William Sullivan Junior purchased the New England Patriots, a professional football team, for $25,000. After incorporating the team, nine other investors contributed $25,000 each and received 10,000 shares of voting stock in return. The corporation then sold 120,000 shares of nonvoting common stock to the public.
From the team’s inception until 1974, Sullivan had control of the corporation and served as president. However, in 1974, the other voting shareholders ousted Sullivan from the presidency and operating control. Following the ouster, Sullivan sought to regain control of the corporation.
In 1975, Sullivan succeeded in regaining control by purchasing all 100,000 of the voting shares of the corporation at $102 per share. To finance the purchase, Sullivan borrowed more than $5 million from two banks. As a condition of the bank loans, Sullivan agreed to use his best efforts to reorganize the Patriots so that the corporation’s income could be used to pay off the debt. But to accomplish this, Sullivan had to eliminate the nonvoting shares of common stock.
In 1976, Sullivan organized a new corporation known as the New England Patriots Football Club and sought to merge the old corporation with the new corporation. Under the proposed merger agreement, the voting stock of the old corporation would be extinguished, and the nonvoting stock of the old corporation would be exchanged for fifteen dollars per share. Sullivan also agreed to give the new corporation his voting shares in return for 100 percent of the new corporation’s stock. The merger was later approved by a majority of the nonvoting shareholders and consummated.
Subsequently, David Coggins and other shareholders of nonvoting stock sued the Patriots in state superior court challenging the legality of the merger. Following a bench trial, the court found in favor of Coggins but ruled that the merger shouldn’t be undone and that the plaintiffs were only entitled to damages. Both parties then appealed to the Massachusetts Supreme Judicial Court.
Want more details on this case? Get the rule of law, issues, holding and reasonings, and more case facts here: https://www.quimbee.com/cases/coggins...
The Quimbee App features over 16,300 case briefs keyed to 223 casebooks. Try it free for 7 days! ► https://www.quimbee.com/case-briefs-o...
Have Questions about this Case? Submit your questions and get answers from a real attorney here: https://www.quimbee.com/cases/coggins...
Did we just become best friends? Stay connected to Quimbee here: Subscribe to our YouTube Channel ► https://www.youtube.com/subscription_...
Quimbee Case Brief App ► https://www.quimbee.com/case-briefs-o...
Facebook ► / quimbeedotcom
Twitter ► / quimbeedotcom
#casebriefs #lawcases #casesummaries
Информация по комментариям в разработке