Many practitioners in Pennsylvania have long been of the view that in the case of a Pennsylvania merger, no legal claim under state law seeking equitable relief or damages based on unfairness of the merger, or even fraud, could be brought by shareholders after the merger closed. At that point, shareholders, it was thought, are limited to their rights to receive the fair value of their shares in accordance with statutory dissenters’ rights. This view was based on the Pennsylvania Supreme Court decision in In re Jones & Laughlin Steel Corporation, 412 A.2d 1099 (1980). There, the court stated, based on an analysis of provisions in the Pennsylvania Business Corporation Law of 1933:
“We wish to emphasize that today’s decision does not condone the manner in which appellants and other minority shareholders were deprived of their equitable interest in J&L. We are not unmindful of the grave unfairness and fraud frequently present in mergers of this type, especially where there is a 'cash-out' of the minority shareholders. See Brudney & Chirelstein, A Restatement of Corporate Freezeouts, 84 Yale L. Rev. 1354, 1358-9, 1367-70 (1978). Our concern, however, does not change the view that appellants’ post-merger remedies were limited to the appraisal of their stock.” 412 A.2d at 1104.
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