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The Facts of the Case
The Alpert v. 28 William St. Corp case is a summary judgment case in which the plaintiffs, Alpert and Karan, appeal the dismissal of their complaint. The plaintiffs alleged the defendants engaged in a fraudulent scheme to force them to sell their apartment below-market value (Mann & Roberts, 2017). The defendants are the corporation that owns the building, the manager of the building, and the real estate broker who represented the buyers. The court found no evidence of fraud or misrepresentation on the part of the defendants, and the plaintiffs had failed to state a claim upon which relief could be granted. The court also found that the plaintiffs had waived their right to assert any claims by entering into a cash-out combination agreement with the buyers (Mann & Roberts, 2017). As a result, the court granted summary judgment in favor of the defendants and dismissed the case.
The Issue with the Law the Court is Considering
The law the court is considering in Alpert v. 28 William St. Corp cash-out merge states that when two companies merge, they must pool their assets and liabilities and account for them on a stock-for-stock basis. The issue with this law is that it does not consider the different values of the company’s assets and liabilities (Mann & Roberts, 2017). The failure to assess each firm’s worth can lead to one company being overvalued and the other being undervalued. In addition, the business combination rule can create problems for companies trying to raise capital because they may be forced to sell assets at below-market prices to meet the requirements of the merger. As a result, the business combination rule may negatively impact companies’ ability to raise capital and may lead to mergers that are not in the best interests of shareholders.
How the Law was Applied in this Case
In the case of Alpert v. 28 William St. Corp, the court was tasked with deciding how the law should be applied when two landlords were trying to cash out on a unit they had renovated and sold. The landlord, who had initially renovated and sold the property, argued that he should be able to keep the entire profit from the sale, as he had put in the time and effort to fix it up. However, the other landlord argued that he was entitled to half of the profits because he had contributed half of the renovation. The court ultimately sided with the first landlord, holding that he was not required to share the profits from the sale with the other landlord (Mann & Roberts, 2018). However, the court also noted that this case was unique and that the outcome may have been different if the facts had been different.
Conclusion of the Court
The court applied the law by finding that the cash-out combinations were inappropriate for the property. The court noted that the property was located in a residential area and that the zoning regulations did not allow commercial development. As a result, the court found that the cash-out combinations were not permissible and ordered the developer to remove them from the property. The defendant and the plaintiff’s purchase of the property was also a cash-out combination on July 7, 1982, and the buyer was entitled to a title deed to the property (Mann & Roberts, 2017). Accordingly, the defendant is ordered to execute and deliver an act to the property to the plaintiff within 30 days of the date of this order. This case is significant because it demonstrates how courts can apply the law to prevent developers from making property changes that would negatively impact the surrounding community.
AT & T Takeover Case
In March of 2011, AT&T announced its plans to take over T-Mobile. The department unanimously approved the deal of Justice, and the department also approved the contract after the Federal Communications Commission approved the agreement. The Department of Justice issued a footnote to one of its letters. This would have made AT&T the largest mobile phone company in the US. The takeover was worth $39 billion, and the Department of Justice (DOJ) and the Federal Communications Commission (FCC) filed lawsuits to stop the merger, indicating that it was illegal for the companies to merge (Boliek, 2021). The agencies cited concerns that the merger would allow AT&T to raise prices on consumer services, including its cellular. They also argued that it would reduce competition and increase consumer prices (Romm & Fung, 2021). AT&T withdrew its offer in December 2011, and they had to pay T-Mobile $3 billion as part of the breakup fee. T-Mobile also got access to some of AT&T’s spectrum, which helped them improve their network (Romm & Fung, 2021). In 2013, Sprint tried to take over T-Mobile, but the DOJ ended that agreement.
In 2018, T-Mobile and Sprint announced that they would merge, creating a new company called T-Mobile. The merger faced significant opposition from the FCC and the Department of Justice. They raised concerns that it would reduce competition in the wireless market and lead to higher consumer prices (Branch, 2019). However, in 2019 a federal judge ruled that the merger could proceed, and T-Mobile officially acquired Sprint in April 2020 (Boliek, 2021). It remains to be seen how T-Mobile will price its services going forward, but the quality of service will likely improve due to the merger (Abbott, 2022). T-Mobile has already begun to roll out its 5G network, which is faster and more reliable. The new regulation will reduce competition among other communication platforms, helping them compete with the big tech companies dominating the industry.
The telephone company Shawnee Telecom Resources, INC (STR), Shawnee, and the shareholders of Kohl’s Corporation (Kohl’s), brought suit in the district court against Kohl’s and its directors. The Shawnee Company challenged the validity of specific provisions in Kohl’s Certificate of Incorporation and By-Laws, which they claimed had the effect of entrenching incumbent management and precluding a takeover bid by STR. Kohl claimed that the indicated value did not reflect the correct value of the company (Thomas, 2022). Shawnee is a Wisconsin corporation that owns directly or indirectly 2,500 shares of common stock of Kohl. The Browns are residents of Virginia and own 2,000 shares of Kohl’s common stock.
The case of STR, Shawnee, and the shareholders of Kohl’s Corporation is about the company’s free cash flow and how to value the company. STR is a New Jersey corporation whose sole business activity is holding those assets acquired from Shawnee in exchange for all the issued and outstanding shares of its common stock. When the complaint was filed, Shawnee owned approximately 67 percent of Kohl’s outstanding common stock. The ongoing case, with STR alleging that Kohl’s illegally thwarted their takeover attempt. The current status of the case is that it is inactive.
References
Abbott, T. (2022). How the Sprint and T-Mobile Merger Will affect you: What we know. Reviews.org. Web.
Boliek, B. (2021). Antitrust and high-tech: A tale of two mergers [SSRN Scholarly Paper]. Web.
Branch, T. (2019). The merger of T-Mobile and Sprint [SSRN Scholarly Paper]. Web.
Mann, R. A., & Roberts, B. S. (2017). Smith & Roberson’s business law (17 ed.). Cengage Learning.
Romm, T., & Fung, B. (2021). T-mobile and Sprint announce plans to merge. The Washington Post. Web.
Thomas, L. (2022). Kohl’s says takeover offers undervalue its business, initiates ‘poison pill.’ CNBC. Web.
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