Santa Fe Industries, Inc. v. Green

Santa Fe Industries (defendant), owning 95 percent of Kirby Lumber, used Delaware's short-form merger statute to buy out the remaining minority shareholders (plaintiffs) for $150 per share based on a Morgan Stanley appraisal, without needing their approval, though the statute allowed dissenting shareholders to seek a fairer valuation in Delaware's Chancery Court. Instead of pursuing that state remedy, the minority shareholders sued in federal court, alleging the appraisal itself was fraudulent under SEC Rule 10b-5; the district court dismissed for failing to allege a material misrepresentation or nondisclosure, and the Second Circuit agreed no misrepresentation was alleged but reversed anyway, holding misrepresentation wasn't an essential element of a 10b-5 claim.