Zutrau v. Jansing

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Defendant, the president, sole director, and majority stockholder of a private Delaware corporation specializing in proxy servicing, hired Plaintiff to work for the company in the early 2000s. Beginning in 2004, Plaintiff and Defendant were the sole stockholders of the company. Defendant fired Plaintiff in 2007. In 2012, Plaintiff commenced this action, asserting derivative claims challenging numerous actions taken by Defendant in the course of running the company. Plaintiff then amended her complaint to add claims challenging the propriety in a reverse stock split executed by Defendant in which he cashed out Plaintiff’s shares. The Court of Chancery held (1) Plaintiff succeeded in demonstrating that Defendant breached his fiduciary duties to the company in certain instances; (2) Plaintiff failed to prove her claim that Defendant executed the reverse stock split for the bad faith purpose of depriving Plaintiff of derivative standing; (3) Defendant violated 8 Del. C. 155 by failing to provide fair value for Plaintiff’s fractional shares in the reverse stock split; and (4) Plaintiff failed to prove that Defendant engaged in equitable fraud or negligent misrepresentation. View "Zutrau v. Jansing" on Justia Law