Jordan v. Duff and Phelps, Inc

Facts

Plaintiff was a securities analyst for Defendant. Due to a falling-out between his wife and mother, Plaintiff believed that it would best to relocate. Because Defendant could not use his services except in the office he was currently in, Plaintiff landed a job with another company in late 1983. While he was employed with Defendant, Plaintiff bought 188 (out of 20,100) shares at book value and could have bought 62 more shares if he wanted them. Per the agreement, Plaintiff was to receive book value of the shares upon the termination of his employment, and the book value would be determined as the value of the prior December 31st. Plaintiff stayed with the company an extra period of time in order to get the book value for December 31, 1983 instead of 1982. He received a check for $23,225, but before he cashed it he noticed that Defendant had been in merger talks with another company (talks that took place before Plaintiff’s resignation) that would have put the shares he wa s eligible for at a value of $452,000, plus be entitled to another $194,000 in “earn-out” money. Plaintiff wanted his stock back, but Defendant refused. Plaintiff brought this action, arguing that if he had information concerning the merger that he would have altered his plans and staid with the company. Defendant argued that they were under no obligation to disclose information, especially in this case where there was no agreement as to the price and structure of the merger. Defendant also argued that it was moot to give him the stock back after he resigned because the share agreement provided that Plaintiff had to sell his shares back after he resigned.