Paul H. STRINGER and Timothy D. Schubert, Petitioners on Review, v. CAR DATA SYSTEMS, INC., an Oregon corporation; Consumer Data Systems, Inc., an Oregon corporation; James L. Adkisson; David W. Agnor; Sharon Agnor; James L. Agnor; Arlene L. Belanger; Peter G. Bock; Susan D. Ebner; Mark S. Boyd; Jeffrey Scott Carlson; Lawrence R. Custer; Stephen J. Ebner; William A. Henry; John H. Hodges, Sr.; Bernal Hug, Jr.; Virginia Hug; Celas A. Hug; Kent Hug; Cheryl Hug; Paul E. Johnson; Corleen Johnson; Mark Anthony Royal Kallenberger; David E. Lamb; Jacqueline C. Lamb; Steven D. Lee; Claudia J. Lee; Leslie R. Lock; Terry R. Lock; Steve P. Nagel; Henry B. Shafer; Bob Sievers, Jr.; Judy A. Sievers; Donald Smith; Richard M. Botteri and Weiss, Descamp & Botteri, a professional corporation, an Oregon professional corporation, Respondents on Review, and Elizabeth A. PERRY and James B. Kargman, Nominal Defendants.
CC A8907-04022; CA A65113; SC S38792
Supreme Court of Oregon
January 28, 1993
reconsideration denied by opinion January 28, 1993
314 Or. 576, 841 P.2d 1183
PETERSON, J.
Argued and submitted May 5, decision of Court of Appeals and judgment of circuit court affirmed November 19, 1992
See 315 Or 308, 844 P2d 905 (1993)
Robert J. McGaughey, of McGaughey & Georgeff, Port-
Mark A. Turner, of Ater Wynn Hewitt Dodson & Skerritt, Portland; Carolyn E. Wells, of Miller Nash Wiener Hager &
Glen H. Downs, Portland, filed a brief on behalf of amicus curiae Oregon Trial Lawyers Association.
PETERSON, J.
Unis, J., filed an opinion concurring in part and dissenting in part in which Fadeley, J., joined.
This case involves what courts and commentators have described as a “cash-out merger,” a “squeeze-out merger,” or a “freeze-out merger.” In this opinion, we will use the term “cash-out merger.” Under
Plaintiffs were minority shareholders in Consumer Data Systems, Inc. (CDS), an Oregon corporation. They filed this action, claiming a violation of various rights incident to a cash-out merger involving CDS and another corporation, Car Data Systems, Inc. (Car Data). Plaintiffs allege that other CDS shareholders and directors breached a fiduciary duty owed to plaintiffs as minority shareholders. They seek compensatory and punitive damages.1 The trial court dismissed their complaint for failure to state a claim, ORCP 21A(8), and the Court of Appeals affirmed. Stringer v. Car Data Systems, Inc., 108 Or App 523, 821 P2d 418, modified on reconsideration, 110 Or App 14, 821 P2d 418 (1991). We affirm the decision of the Court of Appeals, but on different grounds.
Before turning to the facts, a brief summary of cash-out mergers is appropriate.
At common law, each shareholder of a corporation was considered to have a “vested right” in the corporation. As a result, the rule in many jurisdictions was that a single shareholder could veto a proposed business combination. See Annot, Valuation of Stock of Dissenting Shareholders in Case of Consolidation or Merger of Corporation, Sale of its Assets, or the Like, 48 ALR3d 430, 435 (1973); Chicago Corp. v. Munds, 20 Del Ch 142, 172 A 452, 455 (1934).
Legislatures, courts, and commentators found that the right of a single shareholder to veto business transactions
The rejection of a minority veto and the recognition of majority rule has not occurred without regard for the potential abuses of a majority‘s power directed against minority interests. The linchpin of a dissenter‘s protection in merger cases is found in the statutory appraisal remedy. This remedy is designed to provide statutory protection to those minority shareholders who do not concur with the decision of the majority shareholders.
One device commonly used to eliminate minority shareholders who disagree with the majority shareholders about corporate decision-making is the cash-out merger. A typical cash-out merger, and the appraisal remedy, are described in 1 F.H. O‘Neal & R. Thompson, O‘Neal‘s Oppression of Minority Shareholders 21-22, § 5:04 (2d ed):
“Controlling shareholders often utilize a statutory merger as an instrument for squeezing out minority shareholders or altering their rights and preferences. In every state the corporation statute provides a statutory procedure by which two or more corporations can be combined into a single corporation even though less than all shareholders approve. * * *
“* * * * *
“Under the typical procedure for merger, the directors of the combining companies adopt a plan of merger, which sets forth the terms and conditions of the merger, including the manner in which shares of each of the constituent corporations are to be converted into shares, obligations, or other securities of the surviving corporation, or into cash or other property. The board then submits the plan to the shareholders of each constituent corporation. Depending on the corporation statute in the particular jurisdiction, the plan must be approved by holders of a majority or another specified proportion of each company‘s shares or by holders of a majority or specified proportion of shares with voting rights. * * * If the plan receives the required approval, it is then filed in a specified public office. A shareholder who dissents from a merger can force the corporation in which he has held stock
or the surviving corporation, depending upon the statute, to purchase his shares at their appraised value.” (Footnotes omitted.)
Undeniably, such mergers have a coercive element.
“Freezeouts, by definition, are coercive: minority stockholders are bound by majority rule to accept cash or debt in exchange for their common shares, even though the price they receive may be less than the value they assign to those shares. But this alone does not render freezeouts objectionable. Majority rule always entails coercion. It is, nonetheless, an acceptable rule of governance if all members of the voting constituency share a common goal and if all will be identically affected by the outcome of the vote. In the ordinary arm‘s-length merger negotiated by the managements of two unrelated corporations, stockholders of the merged entity are properly viewed as having a common interest in maximizing the returns on their stock, whether through periodic dividends or through sale or liquidation of the firm. Once approved by a statutory majority, the terms of such a merger will apply equally to each of the merging company‘s stockholders, and the common decision will satisfy the principle that all members of the class be treated alike. Majority rule is thus an appropriate means of deciding whether an arm‘s-length merger should be allowed, and it is of course a universal feature of the corporate law. Despite the element of coercion, dissenters to such a merger are bound, or remitted to an appraisal proceeding, by vote of a majority of their class, because it is assumed that any disagreement among the stockholders involves nothing more than a practical judgment about the best way to achieve a common aim.” Brudney & Chirelstein, A Restatement of Corporate Freezeouts, 87 Yale LJ 1354, 1357-58 (1978).
The Oregon statutes that permit cash-out mergers,
“(1) Subject to subsection (2) of this section, a shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder‘s shares in the event of, any of the following corporate acts:
“(a) Consummation of a plan of merger to which the corporation is a party if shareholder approval is required for the merger by
ORS 60.487 or the articles of incorporation and the shareholder is entitled to vote on the merger or if thecorporation is a subsidiary that is merged with its parent under ORS 60.491 ;“(b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will he acquired, if the shareholder is entitled to vote on the plan[.]”
Dissenters from a proposed merger have a right to demand payment for their shares.
“A shareholder entitled to dissent and obtain payment for the shareholder‘s shares under
ORS 60.551 to60.594 may not challenge the corporate action creating the shareholder‘s entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.”
Plaintiffs brought this action, claiming that defendants acted unlawfully incident to the transfer of CDS shares to Car Data, squeezing out plaintiffs. The trial court granted defendants’ motions to dismiss for failure to state a claim. ORCP 21A(8).
Plaintiffs’ complaint alleges that plaintiffs Stringer and Schubert and two other shareholders owned 43 percent of the shares of CDS. Thirty-two individuals, including the six directors of CDS, owned the remaining 57 percent of CDS. According to the complaint, “[i]n late 1988 or early 1989, the CDS Directors and the larger CDS shareholders, Donald Smith, Mark Kallenberger and Lawrence Custer * * *, decided to squeeze the Minority Shareholders out of their ownership in CDS and to offer them a nominal sum for their stock, which sum was significantly below the fair market value of the stock.” The directors and larger shareholders formed a new company that subsequently became Car Data, transferred their shares in CDS to Car Data in exchange for its stock, and solicited all the remaining shareholders, except
Plaintiffs claimed that their shares were worth at least $0.10 per share and refused to accept the $0.002 offered them. Car Data rejected plaintiffs demand for $0.10 per share and instituted an appraisal proceeding in the circuit court pursuant to
The circuit court stayed the proceedings in the present case pending trial of the appraisal case. The appraisal
Defendants moved to dismiss plaintiffs’ claim on the grounds that (1) plaintiffs’ sole remedy is under the appraisal procedure, and (2) even if appraisal is not the sole remedy, plaintiffs’ complaint “fail[s] to state facts to support a claim for relief * * * for breach of fiduciary duty.” The circuit court dismissed plaintiffs’ complaint.
Plaintiffs appealed, pursuing their damages claims on theories of breach of fiduciary duty and civil conspiracy, but abandoned their derivative claim and rescission claim. The Court of Appeals affirmed. Stringer v. Car Data Systems, Inc., supra, 108 Or App at 527-28; id., 110 Or App at 17 (on reconsideration).
Because this case comes to us on appeal of an order of dismissal, we must determine whether the complaint states a claim. In considering the sufficiency of plaintiffs’ complaint, we accept all well-pleaded allegations of the complaint as true and give plaintiffs the benefit of all favorable inferences that may be drawn from the facts alleged. Madani v. Kendall Ford, Inc., 312 Or 198, 201, 818 P2d 930 (1991). We quote pertinent portions of plaintiffs’ complaint:
“12.
“Throughout 1988 and into 1989, CDS experienced continued success in selling its product. Its revenues during this period were increasing at a much faster rate than its expenses. All shareholders had a reasonable belief that the value of CDS would rise significantly over the next few years.
“13.
“In late 1988 or early 1989, the CDS Directors and the larger CDS shareholders, Donald Smith, Mark Kallenberger and Lawrence Custer (collectively referred to herein as the ‘Controlling Shareholders‘), decided to squeeze the Minority Shareholders out of their ownership in CDS and to offer them a nominal sum for their stock, which sum was significantly below the fair market value of the stock (the ‘Plan‘). The principal purpose of the Plan was to deprive the Minority Shareholders of most of the present value of their stock in
CDS and to deprive the Minority Shareholders of their share of the anticipated significant rise in the value of CDS stock over the next few years. “* * * * *
“24.
“Throughout April 1989, while all defendants were carrying forth the Plan to squeeze out the Minority Shareholders, all defendants knew the $0.002 per share to be offered the Minority Shareholders was grossly less than the present fair market value of the shares.
“25.
“Throughout April 1989, while all defendants (except Kargman and Perry) were carrying forth the Plan to squeeze out the Minority Shareholders, all such defendants believed that the value of the CDS stock would greatly increase over the next few years, based on the increased business sales and profitability of CDS.
“26.
“In early 1989, CDS received an offer from a third party to purchase substantially all of the corporation‘s assets. This offer was at a price substantially greater than $0.002 per share.
“27.
“At a shareholders’ meeting on February 6, 1989, the shareholders voted to reject this offer. All of the Majority Shareholders voted to reject this offer.”
The thrust of plaintiffs’ claims here is this (quoting from their brief):
“The majority shareholders owe a duty of loyalty, good faith, fair dealing, and full disclosure to the minority shareholders. This duty is breached when the majority transfers corporate assets to themselves and offers the minority a mere fraction of the true value of their shares.”
As stated above,
“The accompanying proposals as a whole are designed to benefit both minority shareholders and controlling shareholders. Minority shareholders benefit because the assertion of their rights is made easier, and penalties are introduced for vexatious obstruction by corporate management. Controlling shareholders benefit directly and indirectly. They benefit directly by the added incentives for dissenters to settle without a judicial appraisal. They benefit indirectly because the provision of an adequate appraisal right diminishes the justification for courts to enjoin or set aside corporate changes because of the absence of an ‘adequate remedy at law,’ or because the corporate action ‘would operate as a fraud.’ ” Conard, Amendments of Model Business Corporation Act Affecting Dissenters’ Rights (Sections 73, 74, 80, and 81), 33 Bus Law 2587, 2593 (1978).
In order to decide whether plaintiffs have a claim in addition to their rights under the appraisal procedure statutes, we must look more closely at those statutes. After both corporations have “consummated” a plan of merger,
First, a dissenting shareholder must give notice of intent to demand payment for his or her shares,
A dissenter who is dissatisfied with the price paid may notify the corporation and demand payment of the dissenter‘s estimate of the shares’ “fair value.”6
In circuit court appraisal proceedings, dissenting shareholders who have been paid less than fair value of their shares by the corporation are entitled to a court award of the difference between the amount paid by the corporation and the fair value of the shares, plus interest. With exceptions not relevant here, the corporation also is required to pay “all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court.”
In addition, dissenters are entitled to “fees and expenses of [their] counsel and experts” if (1) “the corporation did not substantially comply with * * *
Under
The fair value of corporate stock may be more or less than the sum of the parts of the corporation, depending on a host of factors. In determining the fair value of stock in a closely held corporation,
Plaintiffs’ complaint in this case alleged neither fraud nor misleading representations that were relied upon by plaintiffs. From plaintiffs’ complaint, one can infer only that the amount paid by CDS was unfair and unreasonably low, in an attempt to avoid paying fair value to plaintiffs for their shares.
Cases such as this are the very kind addressed by the statutory scheme. With the exception of punitive damages, every element of damages that plaintiffs seek herein is recoverable under
The last clause of
” ‘Thus, market value, asset value, dividends, earning prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of merger and which throw any light on future prospects of the merged corporation are not only pertinent to an inquiry as to the value of the dissenting stockholders’ interest, but must be considered by the agency fixing the value.’
“This is not only in accord with the realities of present day affairs, but it is thoroughly consonant with the purpose and intent of our statutory law.” Id. at 713 (quoting Tri-Continental Corp. v. Battye, 74 A2d 71, 72 (Del 1950)).
“But elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.” Id. at 713.
Plaintiffs’ complaint clearly alleges a disagreement as to valuation, and we also can infer payment by Car Data of an unreasonably low price. Where the allegations show only a disagreement as to price, however, with no allegations that permit any inference of self-dealing, fraud, deliberate waste of corporate assets, misrepresentation, or other unlawful conduct, the remedy afforded by
It may be that the $0.002 offer was insulting to plaintiffs, and it may even have been motivated by bad faith. But, because the facts alleged in the complaint, if established, support no claim for damages apart from the fair value of the
The decision of the Court of Appeals and the judgment of the circuit court are affirmed.
UNIS, J., concurring in part, dissenting in part.
The issue in this case is whether plaintiffs’ complaint states a claim for breach of fiduciary duty and civil conspiracy. I cannot agree with the majority‘s holding that plaintiffs’ complaint fails to state a claim under either theory. I would hold that plaintiffs’ complaint states a claim for breach of fiduciary duty and civil conspiracy against all defendants1 except defendant attorneys.2 I agree with the majority that the complaint does not state a claim against defendant attorneys. I, therefore, concur in part and dissent in part.
Because plaintiffs’ complaint was dismissed for failure to state a claim pursuant to ORCP 21 A(8),3 this court must accept the allegations in the complaint as “true,” Madani v. Kendall Ford, Inc., 312 Or 198, 201, 818 P2d 930 (1991), and as “facts,” Nicholsen v. Blachly, 305 Or 578, 580, 753 P2d 955 (1988). Moreover, as the majority recognizes, we must give plaintiffs the benefit of all favorable inferences that may be drawn from the allegations. 314 Or at 584. Applying these principles, the following seems to be a fair summary of those pleaded “facts” and favorable inferences to be drawn therefrom.
Plaintiffs Stringer and Schubert and three others founded CDS in 1986. Stock was sold in the corporation until, in 1989, there were 36 shareholders. Stringer and Schubert,
According to the complaint, CDS was successful during this period, and revenues were increasing faster than expenses. In early 1989, again according to the complaint, a third party made a written offer to purchase CDS at a price substantially above what was subsequently offered during the “squeeze-out” merger at issue here. CDS, by vote of the majority of shareholders, rejected the third party‘s offer.
The complaint alleges the following:
“In late 1988 or early 1989, the CDS Directors and the larger CDS shareholders, Donald Smith, Mark Kallenberger and Lawrence Custer (collectively referred to herein as the ‘Controlling Shareholders‘), decided to squeeze the Minority Shareholders out of their ownership in CDS and to offer then a nominal sum for their stock, which sum was significantly below fair market value of the stock (the ‘Plan‘). The principal purpose of the Plan was to deprive the Minority Shareholders of most of the present value of their stock in CDS and to deprive the Minority Shareholders of their share of the anticipated significant rise in the value of CDS stock over the next few years.” (Emphasis added.)
The complaint goes on to allege that the directors and the three larger majority shareholders, whom plaintiffs describe in their complaint as the “Controlling Shareholders,” retained defendant attorneys to incorporate a new corporation, Car Data, as the vehicle for the completion of this plan.
The complaint also alleges that, in furtherance of the plan, the CDS directors and the “Controlling Shareholders” transferred all their CDS stock to Car Data and then solicited the participation of all CDS shareholders except plaintiffs and the two nominal defendants. Once Car Data had obtained by these means a majority of the stock of CDS, a merger was proposed between CDS and Car Data.
As majority shareholder of CDS, Car Data approved the merger with a stock value of $0.002 per share, a price far below that previously offered by the third party. The stockholders of Car data, i.e., the board of directors of CDS and all the former shareholders of CDS except plaintiffs and the two
BREACH OF FIDUCIARY DUTY CLAIM
In plaintiffs’ claim for breach of fiduciary duty, plaintiffs allege that the above acts by the directors, the collective majority of CDS shareholders and Car Data, constitute a breach of their fiduciary duty to the minority shareholders, including plaintiffs. Plaintiffs seek, inter alia, rescission of the merger or, in the alternative, damages equal to the fair market value of plaintiffs’ proportionate share of defendant Car Data on the date of trial, plus punitive damages.
The majority holds that the allegations in plaintiffs’ complaint “show only a disagreement as to price” and do not “permit any inference of self-dealing, fraud, deliberate waste of corporate assets, misrepresentation, or other unlawful conduct.” 314 Or at 590. The majority concludes that plaintiffs have no claim against defendants apart from their remedy under the appraisal statutes,
In 1987, the legislature adopted the
The statutory provisions relating to the appraisal procedure are subject to
Although the type of “unlawful” or “fraudulent” conduct required by
“Because of the variety of situations in which unlawfulness and fraud may appear, this section makes no attempt to specify particular illustrations. Rather, it is designed to recognize and preserve the principles that have developed in the case law of Delaware, New York and other states with regard to the effect of dissenters’ rights on other remedies of dissident shareholders.” Id. at 1367 (emphasis added).
Thus, “[i]f the corporation attempts an action in violation of the corporation law on voting, in violation of clauses in articles of incorporation prohibiting it, by deception of shareholders, or in violation of a fiduciary duty,” it cannot later hide behind the appraisal remedy provision of the RMBCA. Id. at 1366.
The Official Comment to RMBCA section 13.02(b) singles out Weinberger v. UOP, Inc., 457 A2d 701 (Del Supr 1983), as an example of the case law that section 13.02(b) was designed to recognize and preserve. Id. at 1367. Weinberger recognizes that the statutory appraisal remedy may not be adequate, “particularly where fraud, misrepresentation, self-dealing, deliberate waste of corporate assets or gross and palpable overreaching are involved.” Weinberger v. UOP, Inc., supra, 457 A2d at 714. Post-Weinberger Delaware decisions clearly recognize that appraisal rights are not the exclusive remedy in the face of allegations of misconduct.
In Sealy Mattress Co. of N.J., Inc. v. Sealy, Inc., 532 A2d 1324 (Del Ch 1987), the Delaware Court of Chancery
In Sealy Mattress, the court noted that the corporation‘s directors “were obliged to make an informed, deliberate judgment, in good faith, that the merger terms, including the price, were fair and that the merger would not become a vehicle for economic oppression.” Id. Moreover, noted the Delaware court, “the directors (and the majority stockholder, to the extent that it involved itself in such matters) were obliged to disclose with entire candor all material facts concerning the merger, so that the minority stockholders would be able to make an informed decision as to whether to accept the merger price or to seek judicial remedies such as appraisal, an injunction, or a post-merger damage action.” Id.
As in Sealy, none of the fiduciary obligations owed by corporate directors and majority shareholders were satisfied in this case.4 Plaintiffs Stringer and Schubert alleged that the directors of CDS, acting with three certain larger CDS shareholders, developed a plan to squeeze out plaintiffs for a nominal sum, a sum significantly below the fair market value of plaintiffs’ shares. The squeeze-out merger was implemented just after the majority shareholders had rejected a third-party offer to purchase substantially all of CDS assets at a price substantially greater than the $0.002 per share price set in the squeeze-out merger. The squeeze-out merger would have permitted the majority shareholders, which
Such conduct by directors and the large shareholders does not meet duties of good faith and fair dealing imposed by Oregon law. See, e.g., Zidell v. Zidell, Inc. (24128), 277 Or 413, 418, 560 P2d 1086 (1977) (“those in control of corporate affairs have fiduciary duties of good faith and fair dealing toward minority shareholders“);
The majority admits that “[p]laintiffs’ complaint clearly alleges a disagreement as to valuation, and we also can infer payment by Car Data of an unreasonably low price.” 314 Or at 590 (emphasis added). The majority, however, concludes that the only complaint plaintiffs make is the price of CDS‘s stock. Id. That interpretation ignores the means by which that price was alleged to have been determined, and who made that determination.
According to the allegations in plaintiffs’ complaint and to inferences favorable to plaintiffs that may be drawn from those allegations, the directors of CDS hatched a plan to capture some of the corporation‘s stock at a bargain. This action, again taken from the complaint, was undertaken immediately following a purchase offer that these same directors, in their official capacity, had rejected. The inference drawn is that the directors of CDS, realizing the value of their stock, determined to capture as much of that value as possible
To that end, the complaint alleges, the directors formed a paper corporation that had no assets whatsoever. The directors then transferred their CDS stock to the new corporation, Car Data. The complaint alleges that the purpose of the new corporation was to deprive a minority of the shareholders of CDS stock of the value of that stock. Surely the majority does not mean to hold that it is lawful for the directors of a corporation to plot unlawfully against some of the corporation‘s shareholders as long as those shareholders can subsequently defeat the unlawful plot through judicial action to determine the fair value of the company‘s stock. Yet that is the effect of the majority‘s holding.
I believe that the complaint alleges a breach of the fiduciary duty that the directors of CDS owed to plaintiffs as shareholders of CDS. The complaint does not allege that the directors wanted to “squeeze out” minority shareholders for the benefit of the corporation; it alleges that they conspired to steal some or most of the value of their stock by using a pseudo squeeze-out merger.6 Car Data, the majority shareholder of CDS, was the vehicle used to accomplish that goal. The other shareholders who then joined the directors are implicated in the same misconduct.7 Though they may not, as the majority states, have owed plaintiffs a fiduciary duty as shareholders, it nonetheless would be unlawful for them to conspire with the directors of the corporation to increase the value of their stock by creating a paper corporation with the intent to devalue temporarily the corporation‘s stock.
The inference fairly drawn from the complaint is that there was no “merger” in this case to which one could apply an appraisal remedy. Car Data, the complaint alleges, was no more than the alter ego of CDS‘s own directors and
Had the three larger majority shareholders (“Controlling Shareholders“) conspired with the CDS directors to reject a legitimate purchase offer and then sold all CDS‘s assets to Car Data at far below market value so that they could resell Car Data at a windfall price, I do not believe that the majority would find it as difficult to find “overreaching.” Yet, in this case, an allegation that certain shareholders and the directors of CDS created a paper corporation in order to accomplish the same result through a “merger” is considered insufficient. I do not believe that the drafters of the RMBCA or the Oregon legislature intended to create a vehicle for this kind of business practice simply because they wished to facilitate legitimate business mergers when there is a disagreement among shareholders over the wisdom of the merger.
In Joseph v. Shell Oil Co., 498 A2d 1117, 1122 (Del Ch 1985), the Delaware Court of Chancery cautioned:
“Because all inferences in the allegations in a complaint must be construed in favor of the plaintiffs, and because each suit is unique, complaints asserting a claim of unfair dealing as to a tender offer or freeze-out merger must be read carefully to determine if an appraisal will provide an adequate remedy if the claims prove to be true. Great care must be taken not to unjustifiably relegate objecting stockholders to an appraisal proceeding because to do so might have the result of precluding the imposition of an adequate remedy for serious breaches of fiduciary duty.”
Appraisal actions are exclusive remedies only when the disagreement is over whether or not to accept an otherwise legitimate merger offer. When that is not the case, other courts allow actions to be pursued apart from an appraisal statute. See, e.g., Rabkin v. Phillip A. Hunt Chemical Corp., 498 A2d 1099 (Del Supr 1985); Coggins v. New England Patriots Football Club, Inc., 397 Mass 525, 492 NE2d 1112 (1986); Edelman v. Fruehauf Corp., 798 F2d 882, 886-87 (6th Cir 1986); Stepak v. Schey, 51 Ohio St 3d 8, 553 NE2d 1072 (1990).
Plaintiffs’ complaint, in my opinion, also states a claim for civil conspiracy. In Bonds v. Landers, 279 Or 169, 566 P2d 513 (1977), this court upheld a judgment based on a theory of civil conspiracy,8 stating:
” ‘A civil conspiracy is a combination of two or more persons by concerted action to accomplish an unlawful purpose, or to accomplish some purpose not in itself unlawful by unlawful means.’ 15A CJS 596, Conspiracy § 1(1), citing Bliss v. Southern Pacific Co., 212 Or 634, 321 P2d 324 (1958); Pitts v. King, 141 Or 23, 15 P2d 379, [modified 141 Or 35, 15 P2d 472 (1932)].” 279 Or at 174.
Plaintiffs allege that defendants adopted a “plan” to deprive plaintiffs of the value of their stock. The underlying wrongful act was the breach of fiduciary duty by the directors and the collective majority of shareholders. Thus, the “concerted action” or “plan” of defendants to accomplish this unlawful act constitutes civil conspiracy.
CONCLUSION
In sum, I concur in that part of the majority‘s opinion that holds that plaintiffs’ complaint fails to state a claim for breach of fiduciary duty and civil conspiracy against defendant attorneys. As against all other defendants, however, plaintiffs’ complaint alleges facts that, if proved and considered along with favorable inferences to be drawn therefrom, would establish their right to recover for breach of fiduciary duty and civil conspiracy. I would hold, therefore, that defendants’ ORCP 21 A(8) motions should have been denied, except as to defendant attorneys.
Fadeley, J., joins in this opinion.