Justia Securities Law Opinion Summaries

In 2006, Respondent Cordillera Fund, LP, purchased shares in Appellant American Ethanol for $3 per share. In 2007, shareholders of American Ethanol sought to merge with AE Biofuels, and notified their shareholders of its intent. Respondent notified American Ethanol of its intent to dissent, and demanded payment for its shares. The merger was approved by the shareholders. When the merged company refused to pay, Respondent filed suit at the district court. Ultimately the issue for the district court to resolve involved the fair value of Respondentâs shares at the time of the merger. Appellants offered respondent $0.15 per share; Respondent maintained the fair value was $3 per share. The parties went to court because neither could agree on the value. The court entered a judgment in favor of Respondent, determining that $3 per share was the fair value. On appeal, Appellants contended that the district court abused its discretion in determining the fair value of the shares. The Supreme Court concluded that appellants did not demonstrate that the district court abused its discretion, and affirmed the courtâs ruling in favor of Respondent.

The Montana Department of Revenue ("Department") appealed a judgment reversing the State Tax Appeal Board's ("STAB") conclusion that the Department had applied a "commonly accepted" method to assess the value of PacificCorp's Montana properties. At issue was whether substantial evidence demonstrated common acceptance of the Department's direct capitalization method that derived earnings-to-price ratios from an industry-wide analysis. Also at issue was whether substantial evidence supported STAB's conclusion that additional obsolescence did not exist to warrant consideration of further adjustments to PacifiCorp's taxable value. The court held that substantial evidence supported the Department's use of earnings-to-price ratios in its direct capitalization approach; that additional depreciation deductions were not warranted; and that the Department did not overvalue PacifiCorp's property. The court also held that MCA 15-8-111(2)(b) did not require the Department to conduct a separate, additional obsolescence study when no evidence suggested that obsolescence existed that has not been accounted for in the taxpayer's Federal Energy Regulatory Commission ("FERC") Form 1 filing. The court further held that STAB correctly determined that the actual $9.4 billion sales price of PacifiCorp verified that the Department's $7.1 billion assessment had not overvalued PacifiCorp's properties.

The company was established in 1998 to develop systems for high-speed Internet connections for home computers. After a decision to not respond to an acquisition offer, the company was in financial trouble by 2000 and took an $11 million loan for 90 days and a second loan for $9 million, on which it defaulted. The company exchanged its assets for stock in an amount that would have satisfied creditors and preferred stockholders. The stock, the company's only asset in bankruptcy, fell to a value less than the claims of creditors. Common shareholders brought suit. The district court entered summary judgment for the defendants. The Seventh Circuit reversed and remanded, stating that the company's failure was not likely solely the result of the "burst of the dot-com bubble." Even if the directors were excused from liability for failure to exercise due care, as permitted by Delaware law, there was evidence of disloyalty, which was not excused. Evidence of disloyalty switched the burden of proving "entire fairness" with respect to the loans on the directors. There was enough evidence of causation and that certain preferred stockholders (venture capital groups) aided and abetted the directors to submit the question to a jury.