20.1

In 2007, eBay started an online classified business called Kijiji, which was designed to complete with craigslist, the most widely used online classifieds website in the United States. At the time that it started Kijiji, eBay owned 28.4% of Craigslist and was one of only three stock holders. As a result of choosing to compete with Craigslist and pursuant to the Craigslist stockholders' agreement, eBay lost certain contractual consent rights and the right of first refusal over the shares it owned. The other two stockholders asked to eBay refused. The two stockholders responded, in their capacity as directors, by (1) adopting a plan that restricted eBay from purchasing additional Craigslist shares and hampered eBay'sability to sell its shares to third parties, (2) implementing a staggered board to make it impossible for eBay to unilaterally elect a director to the Craigslist board, and (3) seeking to obtain a right of first refusal in Craigslist's favor over the shares eBay owned through scheme that reduced eBay's ownership in craigslist from 28.4% to 24.9%. eBay sued, asserting that the other two stockholders had breached the fiduciary duties that owned eBay as a minority stockholder. What was the result?

20.3

Missouri Fidelity Union Trust Life Insurance Company stock was trading at $2.63 per share. Eight directors sold their shares for $7.00 per share, conditioned on the resignation of eleven of the fifteen directors of the corporation and the provision that five nominees of the buyer be elected as a majority of the executive and investment committees. Did the directors violate their fiduciary duty? Would the answer be different if the directors had controlled a majority of voting stocks?

21.2

Rock Corporation proposed to merge with Quarry, Inc. Quarry will first obtain the approval of its shareholders; then, by operation of law, the Quarry shares will become shares for the survivor corporation, Rock Quarry, Inc. Is it necessary to register the Rock Quarry shares?

Suppose that prior to the merger Felda Flintstone owned 30% of Quarry's stock, which she had acquired three years before in a private placement. She will own only 2% of the Rock Quarry shares and will not be an officer or director of Rock Quarry. May she freely resell her Rock Quarry shares. Would it matter whether they were registered in connection with the merger?

21.5

Duke Distribution, Inc. recently had public offering of its shares. The company's attorneys, its CPAs, and the underwriter's attorneys worked diligently to meet a tight deadline that management had imposed.

Unfortunately, in its haste to meet the deadline, Duke's team failed to include several items in the registration statement. The prospectus failed to mention that while Duke's inventory-to-sales ratio had been constant over the past few years, most competitors' ratios had declined significantly over the same period. It also failed to mention that the company leases warehouses from a partnership consisting of three of its directors. The leases require rent that is about 8% higher than the market rate for equivalent facilities. After the IPO, the company engaged in additional transactions with insiders.

Now the economy has softened, and competition has increased. The PRICE OF Duke stock has fallen from $15 to $10. IS there a cause of action? Against whom? What are the defenses?