Human Resource Selection 9th Edition by Marianne Jennings

Exercise 2

William H. Sullivan, Jr., gained control of the New England Patriots Football Club (Patriots)by forming a separate corporation (New Patriots)and merging it with the old one. Plaintiffs are a class of stockholders who voted to accept New Patriots' offer of $15 a share for their common stock in the Patriots' corporation. They now claim that they were induced to accept this offer by a misleading proxy statement drafted under the direction of Mr. Sullivan, who owned a controlling share in the voting stock of the Patriots at the time of the merger. The proxy statement, plaintiffs claim, contained various misrepresentations designed to paint a gloomy picture of the financial position and prospects of the Patriots, so that the shareholders undervalued their stock. They seek to rescind the merger or to receive a higher price per share for the stock they sold. Does the court have the authority to rescind under Section 14? [ Pavlidis v New England Patriots Football Club , 737 F.2d 1227 (1st Cir. 1984)]