Cox Enterprises, Inc. v. Pension Benefit Guarantee Corporation
666 F.3d 697
11th Cir.2012Background
- Cox, a minority shareholder of News-Journal, sued News-Journal for waste and mismanagement, triggering Florida’s election-to-purchase statute, Fla. Stat. § 607.1436.
- News-Journal elected to repurchase Cox’s shares; the court valued Cox’s stock at $129.2 million and set payment terms.
- When News-Journal’s ability to pay deteriorated, a district-court receiver was appointed to manage assets and oversee a possible sale.
- A receivership followed with Cox claiming the $129.2 million, PBGC claiming pension-plan deficiencies, and others asserting various creditor rights.
- The district court ordered News-Journal’s assets distributed to Cox as payment for the shares, which prompted this appeal.
- The Eleventh Circuit vacated the district court’s order and held that any payment to Cox must comply with Florida’s distributions-to-shareholders statute, § 607.06401, and its timing provisions under § 607.06401(6) and (8).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the district court’s asset distribution to Cox comply with § 607.1436(8)? | PBGC/Davidson argue no; distribution must satisfy § 607.06401. | Cox argues § 607.1436(8) does not forbid the implied payment. | No; must satisfy § 607.06401(3) timing. |
| Should Cox have priority over other creditors in the distribution? | Cox contends entitled to payment under repurchase order. | Creditors’ rights prevail; equity should not preempt. | District court erred; must assess insolvency before distribution. |
| Was Truilo’s rabbi-trust contribution properly denied? | Truilo seeks recognition of the rabbi-trust claim. | Denying the claim to Trustee contributions is appropriate. | Issue not resolved on remand due to § 607.1436(8) analysis. |
| Did the district court err in denying the Davidsons’ indemnification claim? | Davidsons seek indemnification for acts as officers/directors. | Indemnification denied under receivership/insolvency context. | Not resolved; depend on § 607.1436(8) analysis on remand. |
| Should PBGC receive an offset from News-Journal’s future tax refunds under FDCPA? | PBGC seeks offset under federal debt-collection act. | Offset denied; receivership disposition controls. | Not decided; remand to apply § 607.1436(8) insolvency test. |
Key Cases Cited
- Godfrey v. BellSouth Telecomms., Inc., 89 F.3d 755 (11th Cir. 1996) (abuse of discretion standard in equitable decisions; law interpreted de novo for statutory issues)
- Commodity Futures Trading Comm’n v. Wilshire Inv. Mgmt. Corp., 531 F.3d 1339 (11th Cir. 2008) (statutory interpretation of disclosures and fiduciary duties; de novo review on pure legal questions)
- Estate of Shelfer v. C.I.R., 86 F.3d 1045 (11th Cir. 1996) (purely legal review of statutory interpretation; de novo for statutory questions)
- Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452 (Fla. 1992) (statutory construction; harmonization of related provisions)
- Gomez v. Village of Pinecrest, 41 So.3d 180 (Fla. 2010) (plain and unambiguous statutory language governs)