## Facts

- Daimler-Benz AG and Chrysler Corporation agreed in 1998 to a stock-for-stock combination creating DaimlerChrysler AG.
- The transaction was publicly described as a “merger of equals,” with governance and management portrayed as shared between former Daimler-Benz and Chrysler executives.
- After closing, several former Chrysler executives departed, increasing former Daimler-Benz executives’ control.
- In 2000, Daimler’s CEO Jürgen Schrempp gave an interview suggesting the “merger of equals” characterization was strategic and that the post-merger control shift was consistent with Daimler’s pre-merger aims.
- Tracinda Corporation (a large Chrysler shareholder) alleged it voted for the deal and exchanged shares in reliance on the “merger of equals” theme and related proxy/registration materials, and that it would have demanded a change-in-control premium had it known the deal was effectively a takeover.
- Tracinda sued DaimlerChrysler and individuals under federal securities laws (including § 10(b)/Rule 10b-5 and § 14(a)) and asserted related state-law theories.
- After a jury trial in the District of Delaware, the jury found for defendants on Tracinda’s core fraud claims; judgment was entered for defendants.
- Tracinda appealed based on alleged instructional and evidentiary error and alleged misapplication of materiality, reliance, and causation; defendants cross-appealed on certain issues.

## Issues

1. Whether descriptions of the transaction as a “merger of equals,” and related statements or omissions, constituted materially misleading misrepresentations actionable under § 10(b)/Rule 10b-5 and § 14(a).
2. Whether the evidence permitted the jury to find Tracinda did not actually and reasonably rely on the challenged statements in approving the merger.
3. Whether Tracinda proved loss causation linking its claimed economic harm to revelation of the alleged fraud rather than post-merger business conditions.
4. Whether alleged errors in jury instructions or evidentiary rulings required a new trial.

## Decision

- The Third Circuit affirmed the district court’s final judgment for defendants and left the jury’s defense verdict intact.
- The court held there was no reversible error in the jury instructions or evidentiary rulings.
- The court concluded the record supported the jury’s rejection of Tracinda’s securities-fraud theories, including on materiality, reliance, and loss causation.
- Defendants’ cross-appeal did not alter the affirmance of the defense judgment.

## Legal Principles

- Generalized deal characterizations and slogans (such as “merger of equals”) are commonly nonactionable where, in context, they function as high-level promotional statements rather than concrete representations of future governance outcomes.
- Materiality and misleadingness are assessed in light of the total mix of information provided in formal offering and solicitation documents, including detailed structural disclosures and risk warnings.
- Reliance must be actual and reasonable; a sophisticated investor’s access to and ability to evaluate comprehensive proxy/registration materials can support a finding that reliance on generalized public messaging was not proven.
- Loss causation requires a causal link between the alleged fraud and the claimed economic loss; in post-transaction settings, juries may attribute stock declines to business performance and market factors rather than corrective revelations.
- Appellate review is deferential to jury verdicts and to trial-court discretion on instructions and evidentiary rulings absent prejudicial error.

## Conclusion

The Third Circuit affirmed a jury verdict for DaimlerChrysler and related defendants, holding that the “merger of equals” theme was not actionable as presented in context and that the jury could reasonably reject Tracinda’s proof of reliance and loss causation under federal securities law.


Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212 (3d Cir. 2007)