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November 15, 1989

PHILIP M. LYNCH, Plaintiff,

Brian Barnett Duff, United States District Judge.

The opinion of the court was delivered by: DUFF


 Plaintiff Philip Lynch brings this suit against defendants Marklin of America, Inc. ("MOA"), Marklin, Inc. ("Marklin"), Gebr. Marklin & Cie. GmbH ("GMBH"), and Gerhard Kelter, Jr. alleging violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) et seq. (§ 10(b)), and the common law. On July 7, 1989, this court dismissed the plaintiff's complaint for failing to state a claim. Lynch v. Marklin, 88 C 3725, slip op. (N.D.Ill. July 7, 1989) ("the July 7 Order"). The plaintiff now has moved for leave to file an amended complaint but the defendant objects to this motion on the grounds that the amended complaint still does not state a viable claim. For the reasons set forth below, the motion to file the amended complaint will be granted.


 In the July 7 Order, this court set forth the factual allegations of the original complaint in some detail. Since these allegations remain substantially unchanged in the amended complaint, this court will proceed with the discussion of the specific claims, citing the changes only when relevant.

 Counts I-II

 The plaintiff agrees that the amended complaint does not substantively affect these three federal securities law claims, so they will be dismissed again.

 Count IV

 Count IV of the amended complaint is re-titled "Oppression of Minority Shareholder by GmbH and MOA." The allegations in the amended Count IV differ from the original in several important respects. Now Lynch alleges that Marklin is a closely held corporation, whose shares are not publicly traded. Lynch claims that GMBH and MOA (GMBH owning 100% of MOA, and MOA owning 80% of Marklin) acted to depress the value of Marklin in order to force a buy-out of Lynch's shares (representing the remaining 20% ownership of Marklin) for less than their fair value. That, Lynch alleges, was a beach of fiduciary duty for which he is entitled to damages.

 Count IV of the original complaint alleged that GMBH and MOA "breached their fiduciary duties to Lynch by failing to manage [Marklin] in such a manner as to maximize profits for the benefit of Lynch's position as a minority shareholder." After first holding that Delaware law controls the question, this court, in the July 7 Order, held that under Delaware law, Lynch had stated a derivative, rather than a direct claim *fn1" and, since he no longer owned stock in the company, had no standing to assert it. The July 7 Order at 6-7, citing Kramer v. Western Pacific Industries, 546 A.2d 348, 353 (Del. 1988) (stockholder "actions charging 'mismanagement which depresses the value of stock [allege] a wrong to the corporation; i.e., the stockholders collectively, to be enforced by a derivative action.'") (citations omitted).

 Delaware does, however, allow individual actions by former shareholders who have suffered certain types of direct harm because of a particular corporate action, since "'no one would assert that a former owner suing for loss of property through deception or fraud has lost standing to right the wrong that arguably caused the owner to relinquish ownership or possession of the property.'" Kramer at 354, citing Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1188 (Del. 1988). In Delaware, then, direct attacks on corporate restructurings may be maintained even after the transaction has been completed. Cede & Co. at 1188; Rand v. Western Airlines Inc., Civil No. 8632, slip op. at 2 (Del.Ch. 1989). Accordingly, a former shareholder may directly challenge a merger which terminated the shareholder's status, if the merger itself is the subject of a claim of fraud. Lewis v. Anderson, 477 A.2d 1040 (Del. 1984).

 In the instant case, Lynch alleges that the buy-out of his share of Marklin was effected in order to deny him the fair value of his holdings. Thus, he has standing to pursue his claim even though he no longer holds shares in Marklin.

 Count V

 Count V of the amended complaint alleges that GMBH committed common law fraud against the plaintiff in 1983 by intentionally misrepresenting to him, through its Chief Executive Officer, Mr. Motte, that it intended a long-term relationship with the plaintiff, that profits were a long-term rather than a short-term goal, and that the plaintiff need not be concerned with the low short-term profits of the company. *fn2" These allegations, as amended, satisfy Rule 9(b)'s particularity requirement. Further, although the defendant interposed additional arguments for dismissal of the fraud claim in its motion to dismiss ...

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