More from the Ky Supreme Court on Piercing the Veil

Another Piercing case before the Kentucky Supreme Court –

Schultz v. General Electric Healthcare Financial Services, Inc.

       In addition to the Inter-Tel Technologies case currently before the Supreme Court, there is likewise Schultz v. General Electric Healthcare Financial Services, Inc., 2010-SC-183-DG.  This case was argued on August 18.  While the procedural history of the case will no doubt be at issue, GE having been granted a motion to pierce the veil on a judgment on the pleadings, the core question involves whether piercing is justified when the sole shareholder diverted corporate assets to his own benefit rather than for the disposition of the creditor’s claim.  Shades of Bear Inc. v. Smith are obvious.

Class Action Arbitration Oral Argument Rescheduled

Class Action Arbitration Oral Argument Rescheduled

     As previously noted, in Schnuerle v. Insight Communications Co., L.P., ____ S.W.3d ____, 2010 WL 5129850, 2010 Ky LEXIS 288 (Ky. 2010), the Kentucky Supreme Court, in reliance upon a decision of the 9^th Circuit Court of Appeals (Discover Card), struck down a waiver of class action arbitration set forth in a consumer contract.  Subsequent to that ruling, in ATT Mobility LLC v. Concepcion, 563 U.S. ____ (2011), the United States Supreme Court upheld waivers of class action arbitration, specifically overruling the Discover Card decision relied upon by the Kentucky Supreme Court. 

     The matter is going back to the Kentucky Supreme Court (2008-SC-789).  There will be consideration as to whether the Concepcion decision does or does not require a reversal of the Kentucky Supreme Court’s in Schnuerle to the effect that the waiver of class action arbitration as set forth in the agreement with Insight Communications will or will not be enforceable.

     This case was originally scheduled to be argued on October 19.  It has been rescheduled for January 18.

Upcoming from the Kentucky Supreme Court - Valuation in Dissenter Rights Actions

Upcoming from the Kentucky Supreme Court -

Valuation in Dissenter Rights Actions

Shawnee Telecom, Inc. v Kathy Brown, 2009-SC-000574-DG, was argued to the Supreme Court on April 13, 2011.  This case will provide guidance on whether or not a marketability discount may be applied in valuing the shares of a dissenting shareholder.

In Ford v. Courier-Journal Job Printing Co., Inc., 639 S.W.2d 553 (Ky. App. 1982), the Court permitted a 25% discount on the shares held by a dissenter from a sale of substantial (but not all) corporate assets.  No published decision again reviewed the point until 2009.

That case was Shawnee Telecom, Inc. v. Kathy Brown, 2009 WL 2475269 (Ky. App. 2009).  In this opinion, designated “Not to be Published,” the Court of Appeals reversed the trial court for permitting a 25% discount of Brown’s shares, she having dissented from the terms of a squeeze out merger.  Quoting a decision of the Delaware Supreme Count, the Court of Appeals wrote:

To fail to accord to a minority shareholder the full proportionate value of his shares imposes a penalty for lack of control, and unfairly enriches the majority shareholders.

After the Court of Appeals’ ruling in Shawnee Telecom, an en banc decision of the Court of Appeals expressly overruled the Ford decision.  Brooks v. Brooks Furniture Mfgrs., Inc., 325 S.W.3d 904 (2010).

The Brooks case, like Shawnee Telecom, involved a squeeze merger.  Curiously, it was Shawnee Telecom, an unpublished and unanimous decision of the Court of Appeals, and not the published en banc ruling in Brooks from which there was a dissent, that was appealed to the Kentucky Supreme Court.  Likewise it is curious that it is the rather more cursory Shawnee Telecom decision, as contrasted with the significantly more in-depth analysis in the Brooks opinion, that comes before the high court.

Upcoming from the Ky Supreme Court - Class Action Arbitration

Upcoming from the Ky Supreme Court – Enforcement of

Class Arbitration Waivers

In Schnuerle v. Insight Communications Co., L.P., ____ S.W.3d ____, 2010 WL 5129850, 2010 Ky LEXIS 288 (Ky. 2010), the Kentucky Supreme Court, in reliance upon a decision of the 9^th Circuit Court of Appeals (Discover Card), struck down a waiver of class action arbitration set forth in a consumer contract.  Subsequent to that ruling, in ATT Mobility LLC v. Concepcion, 563 U.S. ____ (2011), the United States Supreme Court upheld waivers of class action arbitration, specifically overruling the Discover Card decision relied upon by the Kentucky Supreme Court. 

This matter is going back to the Kentucky Supreme Court to be argued on October 19 (2008-SC-789).  There will be consideration as to whether the Concepcion decision does or does not require a reversal of the Kentucky Supreme Court’s in Schnuerle to the effect that the waiver of class action arbitration as set forth in the agreement with Insight Communications will or will not be enforceable.

Upcoming from the Ky Supreme Court - Piercing the Veil

Upcoming from the Ky Supreme Court – Piercing the Veil

Inter-Tel Technologies v. Linn Station Properties, 2009-SC-819 was argued on August 18, 2011.  The case involves a double pierce (through to the corporate grandparent) for liability on a default judgment on a lease.

The briefs (available from the Northern Ky – Chase collection at http://chaselaw.nku.edu/library/electronic_resources/oral_arguments.php) are a great resource on the law (or at least two contrasting views on the law) of piercing.