by Matt Albaugh , Jason Asmus , Julie Crocker , William Doyle and Chris Brown
Earlier this week, the Delaware Court of Chancery ruled that AT&T
breached its duty of loyalty by engaging in an unfair and
self-interested transaction as part of a minority-partner freeze-out.
In In re Cellular Telephone Partnership Litigation,
(C.A. No. 6885-VCL) (Del. Ch. March 9, 2022), Vice Chancellor Laster
issued a detailed, 134-page opinion following a five-day trial last
year. The decision was a bellwether for 12 other similar freeze-out transactions that AT&T performed around the country.
AT&T's partnerships originated in the 1980s as part of the Federal Communications Commission's (FCC) lottery system for awarding cellular telephone networks in various geographic areas. At the time, lottery participants would commonly enter into arrangements similar to an
office pool - if one of the pool participants won the FCC's lottery,
the winner received a 50.01% partnership interest and the others
received shares of the remaining 49.99% interest. A pool participant
for the Salem, Ore. area won and promptly sold its controlling
partnership interest to AT&T.
https://www.mondaq.com/unitedstates/trials-appeals-compensation/1172172/att-breaches-duty-of-loyalty-in-freeze-out-of-minority-partners-and-hit-with-millions-in-damages
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