Stringer v. Car Data Systems, Inc.

Stringer and Schubert (plaintiffs), along with two others, owned 43 percent of Consumer Data Systems (CDS), while the remaining 32 majority shareholders -- the entire board -- owned 57 percent. The majority shareholders transferred their CDS shares into a new corporation, Car Data Systems, Inc. (defendant), which then merged with CDS over the minority's objection, offering minority shareholders just $0.002 per share, even though Stringer and Schubert claimed the shares were worth at least $0.10 and that the majority knew the offered price was unfairly low. Stringer and Schubert sued for breach of fiduciary duty rather than pursuing an appraisal remedy; the majority shareholders moved to dismiss, arguing appraisal was their sole remedy, and the trial court agreed and the appeals court affirmed.