Mccallum v. Rosen's Diversified, Inc.

153 F.3d 701 (8th Cir. 1998)

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Nature of the Case

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Facts

Elmer and Ludwig Rosen founded RDI as a livestock trading business in the late 1940s. They were brothers. RDI grew into a thriving company with $400 million in sales by 1992. Members of the Rosen family own the majority of RDI's outstanding capital stock. McCallum (P) was hired as CEO. RDI performed well under P and P was rewarded with a bonus of $186,815 in cash and 12,000 shares of common stock. There was no shareholder’s agreement or any mechanism for the transfer of those shares if circumstances changed. By 1991, P was terminated, and P then proposed that RDI redeem his shares for $5 million. RDI offered $600,000, which was at a small premium over the value determined by the annual valuation for RDI's Employee Stock Ownership Program (ESOP). The parties could not agree on the price, and this litigation was the result. P alleged that RDI controlling shareholders have acted unfairly prejudicial to him in that they undermined his authority as CEO, excluded him from important company decisions, engaged in conduct to minimize the value of the shares, terminated his employment, offered to buy his shares at an artificially low price, denied him access to books and records, engaged in self-dealing and commingled personal ventures with the affairs of the company. Most of P's allegations were dismissed as improperly pleaded derivative claims. The court then dismissed P's request for a buyout of his stock in a summary judgment motion, P appealed.