Shareholder suits against a company are fairly common everywhere, including in Oregon. One recent business litigation dispute gaining some public attention was a charge by two Xerox Corp. shareholders that a proposed business transaction with Fujifilm would hurt all Xerox shareholders. It was alleged that the CEO of Xerox continued to negotiate the transaction after management officials told him not to proceed further. However, Xerox stated that the CEO was authorized to continue negotiating.
One of the allegations against Xerox was that the company was breaching its fiduciary duty owed to the shareholders. Interestingly, the precise facts of the deal between Xerox and Fujifilm that is fueling the controversy have not been revealed in public press reports. In any event, the company seemingly won the battle recently when an appellate court ruled that the complaining shareholders did not have a case. Similar allegations of a fiduciary breach by Fujifilm in aiding and abetting Xerox had been a part of the case and were also dismissed.
Earlier in the case, a New York judge had granted a preliminary injunction against the deal. That court-ordered prohibition was the subject of the appeal. The dispute mushroomed into a wide controversy within Xerox and resulted in the termination and replacement of the company’s CEO and half of its board of directors back in May.
After the shakeup of leadership, Xerox also terminated the intended transaction itself. Related business litigation by Fuji against Xerox for $1 billion continues in another court for breach of the intended agreement. The reversal of the preliminary injunction by the appellate court now apparently creates a bizarre result in which the deal may be resurrected. What effect the appellate decision may have on the ongoing suit by Fuji and the ramifications within Xerox remain to be seen. Similar complex disputes are litigated in both the state and federal courts located in Oregon.