## Facts

- Grand Metropolitan Limited formed GM Sub Corporation to acquire Liggett Group, Inc.
- In spring 1980, GM Sub made a tender offer for all Liggett common stock at $69 per share; Liggett’s board approved and recommended it.
- GM Sub obtained about 87.4% of Liggett shares through the tender offer; Gabelli & Co., Inc. Profit Sharing Plan, a minority holder, refused to tender 800 shares.
- Liggett had historically declared a third-quarter dividend in July, but no July dividend was declared or paid in 1980.
- On July 16, 1980, Gabelli filed a putative class action seeking to compel declaration and payment of the omitted dividend; it did not seek to enjoin the merger or challenge the merger price.
- On August 6, 1980, a cash-out merger became effective and the remaining minority shares were cashed out at $69 per share.
- Gabelli alleged the controlling stockholder caused the dividend omission to disadvantage the minority before the cash-out, constituting a breach of fiduciary duty.

## Issues

1. Whether a minority stockholder may compel declaration and payment of a dividend based on allegations that a controlling stockholder caused the corporation to omit a historically regular dividend in connection with a pending cash-out merger.
2. Whether allegations of a missed “customary” dividend, without particularized facts of improper motive, self-dealing, or unfairness, state a claim for breach of fiduciary duty sufficient to survive a motion to dismiss.

## Decision

- The Court of Chancery granted defendants’ motion to dismiss for failure to state a claim.
- The court held the complaint, as pleaded, did not allege sufficient facts to justify judicial compulsion of a dividend.
- Dismissal was granted with leave to amend.

## Legal Principles

- Dividend declaration decisions are generally committed to the board of directors’ business judgment; courts will not compel a dividend absent well-pleaded facts showing fraud, bad faith, or breach of fiduciary duty.
- Stockholders have no vested right to a dividend until the board declares one; a consistent history of dividends does not create an enforceable entitlement in a particular year.
- In control contexts, fiduciary-duty claims must be supported by concrete, particularized allegations connecting the challenged conduct to actionable unfair dealing or self-dealing; conclusory assertions based on changed corporate practice are insufficient.

## Conclusion

The court dismissed a minority stockholder’s attempt to force payment of an omitted customary dividend because the complaint did not plead particularized facts showing that the dividend decision constituted actionable fiduciary misconduct, while allowing amendment if such facts could be pleaded.


Gabelli & Co., Inc. Profit Sharing Plan v. Liggett Grp., Inc., 444 A.2d 261 (Del. Ch. 1982)