Merriam v. Demoulas Super Markets, Inc.
Demoulas Super Markets (DSM) was a closely held Massachusetts corporation. In this case, several minority Class A stockholders (Sellers), whose offer to sell their shares to DSM was rejected, brought an action seeking a declaration that, consistent with DSM's articles of organization (articles), Sellers could dispose of their shares in any manner they saw fit. DSM counterclaimed, claiming that Sellers could not sell their shares to any buyer who would imperil DSM's status as a Subchapter S Corporation and that Sellers were obligated to reoffer their shares to DSM before selling them to a third party on more favorable terms. A superior court judge declared (1) Sellers were not bound by the articles from freely transferring their stock, and (2) Sellers were not obligated to reoffer their shares to DSM before offering them to a third party on more favorable terms than those arrived at by arbitrators designated in accordance with the articles. The Supreme Court affirmed, holding (1) Sellers were not bound by fiduciary duty and could sell their shares regardless of whether the buyer's ownership would terminate DSM's S corporation status; and (2) DSM's articles did not create a preemptive right of first offer held by DSM. View "Merriam v. Demoulas Super Markets, Inc." on Justia Law