Yes, the company had to tell him. Because Duff & Phelps is a small, private company, telling Jordan wouldn't have leaked the secret to the world and ruined the deal. Companies have a special duty to be honest and fair with their shareholders, especially employees they're buying stock from. Jordan's choice to quit was also a choice to sell his stock, so it was a huge financial decision, and he deserved to know the important facts. The company couldn't use the fact that he was an 'at-will' employee to trick him out of a huge profit.

No, the company owed him nothing. Jordan could be fired at any time. Even if the company had told him about the secret deal, they could have just fired him right then and forced him to sell his stock anyway. Since he had no real power to use the information to his benefit, the company had no duty to tell him. He signed a contract that tied his stock to his job, and he chose to leave that job.

Yes, I agree the first judge was wrong and the case should go to trial. I agree with the main opinion that the rule for big public companies doesn't apply here to a small private one. I'm just writing this to say I'm still undecided on what the rule should be for the big public companies, since we didn't fully debate that.

Yes, Duff and Phelps should have told Jordan about the important news that could have changed his mind about selling his stock, because the company had a duty to share important information with employee-owners like him. It would have been unfair for Duff and Phelps to fire Jordan just to keep him from getting the benefits of the company sale. The main questions of whether the news was actually important enough and exactly when the stock sale happened are for a jury to decide. If Duff and Phelps broke its duty, it should pay Jordan the difference between what he got for his stock and what it was really worth.

I agree with the majority that this small, private company had a duty to share the important news with Jordan, and that a jury should hear the case. But I want to note that I'm not deciding here whether big, public companies have the same duty to share news about company sales before they are finished.

I disagree with the majority. The agreement between Jordan and Duff and Phelps made it clear that Jordan would lose his stock if he ever left his job. This means Duff and Phelps didn't have any duty to tell him about the sale talks, because they could have fired him anytime and kept him from getting any benefit from the sale anyway. The majority's new rule will disrupt the way a lot of small, private companies and their employee-owners do business.

Because this duty is an estimate of "what parties would agree to if they dickered about the subject explicitly, parties may contract with greater specificity for other arrangements."

—duty to disclose merger negotiations to an employee who departs voluntarily and cashes in his shares as a condition of termination

—stating that "[c] lose corporations buying their own stock, like knowledgeable insiders of closely held firms buying from outsiders, have a fiduciary duty to disclose material facts

N] o one... doubts that an avowedly opportunistic discharge is a breach of contract, although the employment is at-will

There are two standard measures of damages in securities law. One, the `rescissionary'measure of damages, is based on defendants' gain.... The other, the `market'measure of damages, is based on the plaintiffs' loss

This was a close case on liability for fraud, and it makes sense to scale down an award of damages in recognition of a distinct possibility that the judgment may be premised on a mistaken finding of liability.

To satisfy the "special facts" requirement, a plaintiff generally must point to knowledge of a substantial transaction, such as an offer for the whole company.

Doubts should therefore be resolved against finding that the appellee's failure to file a cross-appeal forfeited his right to argue an alternative ground.

As noted by the Seventh Circuit, "employment at will is...(one in which a particular duration (`at will') is implied in the absence of a contrary expression.... ").

As the Seventh Circuit noted, "Cross-appeals for the sole purpose of making an argument in support of the judgment are worse than unnecessary" because such appeals needlessly delay and complicate the proceedings.

Yes, a closely held corporation has a fiduciary duty to disclose material information about merger negotiations to a departing employee-shareholder. The 'price and structure' rule, which permits public corporations to remain silent about preliminary merger talks to avoid disrupting negotiations, does not apply to closely held corporations because information can be conveyed to a small number of shareholders without public disclosure. The duty to disclose arises from the state-law fiduciary duty that insiders in a close corporation owe to shareholders, especially when the corporation is repurchasing its own stock. Jordan's resignation was an 'investment decision' because it directly triggered the sale of his securities, and information about a potential merger was material to that decision. The firm's ability to fire Jordan as an at-will employee does not negate this duty, as the implied covenant of good faith and fair dealing prevents the firm from acting opportunistically to deprive an employee of the value of their stock.

No, the corporation did not have a duty to disclose this information to Jordan. The shareholder agreement, combined with Jordan's at-will employment status, stripped him of any right to benefit from the information. Because Duff & Phelps could have fired Jordan at any time for any reason—even immediately after disclosing the merger talks—it effectively held a call option on his shares at book value. A duty to disclose is meaningless where the recipient of the information has no right to act on it. The parties contracted for a relationship where stock ownership was entirely contingent on employment, thus waiving any default fiduciary duty of disclosure related to the firm's long-term value.

Yes, the case should be remanded for trial. This opinion agrees with the majority's conclusion that the 'price and structure' rule of disclosure does not apply to a closely held corporation in this context. The concurrence is written separately to clarify that the author reserves judgment on the broader question of whether the 'price and structure' rule is appropriate for publicly held companies, an issue not fully argued in this case or in Flamm v. Eberstadt.

Yes, Duff and Phelps had a duty to disclose the material fact of the merger negotiations to Jordan before repurchasing his shares, because closely held corporations owe a fiduciary duty of disclosure to their shareholders in such circumstances. The scope of this duty depends on what the parties would have agreed to if they had negotiated it, considering factors like the firm's need for confidentiality and the shareholder's ability to benefit from the information. Here, Jordan's employment-at-will status did not negate Duff and Phelps's disclosure duty, as firing him to deprive him of the merger's benefits would have been impermissibly opportunistic. The key issues of the materiality of the undisclosed information and the timing of the stock sale are jury questions. Damages should put the parties in the positions they would have occupied absent the breach of duty, potentially based on the stock's fair market value when Jordan resigned.

I agree with the majority's application of Michaels v. Michaels to impose a disclosure duty on this closely held corporation, and with the remand for trial. However, I write separately to note that I have not yet taken a position on adopting the 'price-and-structure' rule limiting disclosure duties for public companies, an issue not squarely presented here.

I respectfully dissent. The stockholder agreement, by expressly tying Jordan's stock ownership to his at-will employment status, negated any duty for Duff and Phelps to disclose the merger negotiations. Duff and Phelps could have fired Jordan at any time, depriving him of the merger's benefits, so disclosure would have made no difference. The parties' contract allocated the risks and precluded any such duty. The majority's rule will disrupt the settled expectations of closely held corporations and their employee-shareholders.

Jordan v. Duff and Phelps, Inc.

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