Virginia Bankshares, Inc v. Sandberg

501 U.S. 1083 (1991)


In December 1986, First American Bankshares, Inc. (FABI), a bank holding company, began a freeze-out' merger, in which the First American Bank of Virginia (Bank) eventually merged into Virginia Bankshares, Inc (Defendant-Petitioner), a wholly owned subsidiary of FABI. D owned 85 % of the Bank's shares, the remaining 15% being in the hands of 2,000 minority shareholders. FABI hired an expert firm to give the opinion as to the appropriate price for shares of the minority holders. The firm responded that $42 a share would be a fair price. The executive committee approved the merger proposal at that price, and the full board followed suit. Although the law required only that merger propositions be submitted to a vote at a shareholder's meeting and that the circulation of statements preceded it, the directors solicited proxies on the proposal at the meeting set for April 21, 1987. In its solicitation, the directors stated that they approved the merger because of the opportunity for minority shareholders to achieve a high value for their stock. Sandberg (Plaintiff-Respondent) did not give his proxy and after a merger sought damages. The jury returned a verdict for the P. The U.S. Court of Appeals for the fourth circuit affirmed the judgment, holding that certain statements in the proxy solicitation were materially misleading for purposes of the Rule, and that respondent could maintain her action even though her votes had not been needed to effectuate the merger.