Opinion
No. CIV 14-0369 JB/FHM
09-12-2017
SFF-TIR, LLC; STUART FAMILY FOUNDATION, INC.; ALAN STUART 2012 GST FAMILY TRUST; STUART 2005 GST FAMILY TRUST; CELEBRATION, LLC; ANURAG AGARWAL; PETER BUCKLEY; VINCENT SIGNORELLO and RODNEY M. REYNOLDS, Plaintiffs, v. CHARLES C. STEPHENSON, JR.; CYNTHIA A. FIELD; PETER BOYLAN, III; LAWERENCE FIELD; CYPRESS ENERGY PARTNERS-TIR, LLC; CEP CAPITAL PARTNERS, LLC; CYPRESS ENERGY HOLDINGS, LLC and TULSA INSPECTION RESOURCES, LLC, Defendants.
Counsel: Jamison A. Diehl Akin Gump Strauss Hauer & Feld LLP New York, New York -- and -- R. Stratton Taylor Toney Daniel Foster Mark H. Ramsey Clinton Derek Russell Jacob Riley Daniel Taylor, Foster, Mallett, Downs, Ramsey & Russell Claremore, Oklahoma -- and -- Stuart Kagen Joshua C. Gillette Daniel A. Cohen Kyla Janine Grant Kagen & Caspersen New York, New York Attorneys for the Plaintiffs Frederic Dorwart Paul DeMuro Sarah Wishard Poston John Daniel Clayman Nora Rose O'Neill Fredric Dorwart Lawyers Tulsa, Oklahoma Attorneys for the Defendants
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on the Defendants' Bench Brief on Proposed Instruction No. 23 of Court's Fourth Proposed Jury Instructions of September 5, 2017, filed September 8, 2017 (Doc. 403)("Objection"). The Defendants object to the last sentence of proposed Instruction No. 23 of the Court's Fifth Proposed Jury Instructions, filed September 8, 2017 (Doc. 406)("Jury Instructions"): "Reliance of a price determined in a thinly traded, illiquid, market is evidence of a price's unfairness." Jury Instructions at 47. According to the Defendants, that sentence "transform[s] factually-dependent evidentiary comments of various Chancery judges into absolute, unequivocal statements of law." Objection at 1.
The Defendants are correct. While the Delaware Court of Chancery has said that "reliance on a price determined in a thinly traded, illiquid, market is evidence of a price's unfairness," Gesoff v. IIC Indus. Inc., 902 A.2d 1130, 1154 (Del. Ch. 2006)(Lamb, V.C.), those statements, when read in context, indicate at most that market price in a thin market is an unreliable indicator of fair value, see Gesoff v. IIC Indus. Inc., 902 A.2d at 1154 (remarking that the merger price of a company's shares was unfair because -- among other things -- it was lower than the share's market price even though the market was illiquid); Dunmire v. Farmers & Merchants Bancorp, 2016 WL 6651411, at *10 (Del. Ch. Nov. 10, 2016)(declining to rely on a guideline company valuation because it based its valuation on the stock prices of companies that were not actively traded). A market price is not unfair just because it is unreliable; a market price that exceeds a stock's fair value is not reliable, but it is not unfair vis-à-vis the seller.
IT IS ORDERED that the objection in Defendants' Bench Brief on Proposed Instruction No. 23 of Court's Fourth Proposed Jury Instructions of September 5, 2017, filed September 8, 2017 (Doc. 403), is sustained.
/s/_________
UNITED STATES DISTRICT JUDGE
Counsel:
Jamison A. Diehl
Akin Gump Strauss Hauer & Feld LLP
New York, New York -- and -- R. Stratton Taylor
Toney Daniel Foster
Mark H. Ramsey
Clinton Derek Russell
Jacob Riley Daniel
Taylor, Foster, Mallett, Downs, Ramsey & Russell
Claremore, Oklahoma -- and -- Stuart Kagen
Joshua C. Gillette
Daniel A. Cohen
Kyla Janine Grant
Kagen & Caspersen
New York, New York
Attorneys for the Plaintiffs Frederic Dorwart
Paul DeMuro
Sarah Wishard Poston
John Daniel Clayman
Nora Rose O'Neill
Fredric Dorwart Lawyers
Tulsa, Oklahoma
Attorneys for the Defendants