Essex Universal Corporation v. Yates

Yates (defendant), Republic Pictures' president and chairman, agreed to sell Essex (plaintiff) 28.3% of Republic's shares - functionally equivalent to share control given the company's over 1,500 shareholders - with the agreement calling for immediate transfer of board control through resignations of a majority of Republic's directors, replaced by Essex's chosen nominees; ordinarily, because only a third of directors turned over each year, Essex would not otherwise have achieved official board control for about 18 months. When it came time to close, Yates backed out; Essex sued, and the district court granted Yates summary judgment on the ground that the immediate-control clause was illegal per se. Essex appealed.