Rauch v. RCA Corporation
United States Court of Appeals for the Second Circuit
861 F.2d 29 (2d Cir. 1988)
Relevant factsFree
When General Electric acquired RCA Corporation (defendant), all RCA stock was converted into cash, with preferred shares converted at $40 each even though RCA's certificate of incorporation specified $100 per share if the corporation ever chose to redeem the preferred stock; Rauch (plaintiff), a preferred shareholder, sued for the $100 redemption price, but the district court dismissed, finding GE's acquisition was a merger rather than a stock redemption by RCA. Rauch appealed.
IssueFree
Whether a conversion of shares to cash carried out to accomplish a merger can be legally considered a redemption of shares by a corporation.