## Facts

- MacAndrews & Forbes Group, Inc. (MAF) acquired Technicolor, Inc. in 1982–83 through a two-step transaction: a tender offer followed by a cash-out merger via MAF’s wholly owned subsidiary.
- In the second-step merger, remaining minority stockholders were cashed out for $23 per share.
- Cinerama, Inc., a minority holder (about 4.4–4.5%), did not tender and instead dissented and filed a statutory appraisal petition under DGCL § 262.
- During discovery in the appraisal case, Cinerama claimed it discovered facts suggesting fraud and breaches of fiduciary duty in connection with the merger (including self-dealing and waste).
- Cinerama then filed a separate individual action seeking damages (including rescissory damages) for alleged fraud and fiduciary misconduct related to the merger.
- The Court of Chancery allowed both actions to proceed through discovery but required Cinerama to elect between appraisal and the damages action before trial.
- An interlocutory appeal was taken to determine whether and when a dissenting stockholder must choose between appraisal and an individual fiduciary-duty/fraud claim.

## Issues

1. Whether a stockholder who has invoked DGCL § 262 appraisal is barred from later asserting an individual claim for fraud or breach of fiduciary duty arising from the same merger.
2. If both claims may be maintained, whether the stockholder can be compelled to elect between appraisal and equitable/damages relief before trial to prevent duplicative recovery.

## Decision

- The Delaware Supreme Court reversed the portion of the interlocutory order requiring a pretrial election of remedies.
- The Court held that commencing an appraisal action does not, by itself, preclude a later-discovered individual claim for fraud or breach of fiduciary duty connected to the merger.
- The Court permitted the stockholder to proceed with both the appraisal proceeding and the fiduciary-duty/fraud action at least through trial.
- The case was remanded for further proceedings, with the understanding that safeguards against double recovery could be applied at a later stage.

## Legal Principles

- Statutory appraisal under DGCL § 262 is a limited remedy focused on determining “fair value” as of the merger date and is not designed to provide full relief for fraud or fiduciary breaches.
- Appraisal and an individual equitable action for fiduciary misconduct in a merger are cumulative, not exclusive, remedies before judgment when the fiduciary claim is later discovered.
- Election-of-remedies doctrine prevents double recovery, but an inflexible, categorical requirement to elect before trial is improper where factual development is incomplete.
- A dissenting stockholder does not waive later-discovered individual fraud or fiduciary-duty claims merely by first pursuing appraisal.

## Conclusion

A dissenting stockholder who files a DGCL § 262 appraisal petition may also pursue a later-discovered individual action for merger-related fraud or fiduciary breaches through trial, without being forced to elect a remedy before trial, though final relief must be structured to prevent duplicative recovery.


Cede & Co. v. Technicolor, Inc., 542 A.2d 1182 (Del. 1988)