## Facts

- Irex Corporation, a closely held Pennsylvania corporation, completed a 2006 squeeze-out merger with a subsidiary of North Lime Holdings Corp.
- Minority shareholders, including Mitchell Partners, L.P., were cashed out and received no equity in the surviving entity.
- Mitchell objected that the transaction price undervalued its shares and favored insiders.
- As a dissenting shareholder, Mitchell invoked statutory dissenter’s rights under the Pennsylvania Business Corporation Law (BCL), including judicial appraisal of the “fair value” of its shares.
- Irex initiated a state-court appraisal proceeding under the BCL to determine fair value.
- Mitchell also filed a separate federal diversity action asserting common-law claims (including breach of fiduciary duty, fraud, and unjust enrichment) and seeking damages and equitable relief beyond appraisal.
- The dispute centered on 15 Pa.C.S. § 1105, which states that dissenter’s rights are “exclusive” absent “fraud or fundamental unfairness.”

## Issues

1. Whether 15 Pa.C.S. § 1105 makes statutory appraisal the exclusive post-merger remedy for dissenting shareholders.
2. Whether allegations of “fraud or fundamental unfairness” permit dissenting shareholders to pursue post-merger common-law claims in addition to appraisal.

## Decision

- The Pennsylvania Supreme Court answered the certified question by holding that § 1105 bars post-merger remedies other than appraisal only when fraud or fundamental unfairness is not present.
- The Court concluded that when a dissenting shareholder adequately alleges fraud or fundamental unfairness, § 1105 does not foreclose post-merger claims for damages or equitable relief.
- The Court rejected the view that the fraud/fundamental-unfairness language is limited to pre-merger injunctive relief.
- The Court’s answer was returned to the Third Circuit for further proceedings consistent with this interpretation.

## Legal Principles

- Under 15 Pa.C.S. § 1105, appraisal and related dissenter’s rights are generally the exclusive remedy for dissenting shareholders challenging merger consideration.
- The statutory exclusivity rule applies only “absent fraud or fundamental unfairness”; those allegations operate as a substantive exception that can permit additional post-merger remedies.
- Statutory language should be read to give effect to all terms; limiting the exception to injunctions would improperly nullify the clause as applied to the exclusivity provision.
- Appraisal addresses valuation disputes, but it does not necessarily displace judicial remedies for alleged serious misconduct connected to a merger.

## Conclusion

The court held that Pennsylvania’s appraisal remedy is the exclusive post-merger remedy for dissenters only when the merger is not alleged to involve fraud or fundamental unfairness; where such allegations are adequately pleaded, shareholders may pursue post-merger common-law claims in addition to appraisal.


Mitchell Partners, L.P. v. Irex Corp., 617 Pa. 423, 53 A.3d 39 (Pa. 2012)