Kaplan v. Booth Creek Ski Grp., Inc.

• Decision Date: 20 November 2001
• Docket Number: No. 98–560.,98–560.
• Citation: 147 N.H. 202,785 A.2d 412
• Court: New Hampshire Supreme Court
• Parties: Andrew S. KAPLAN and another, v. BOOTH CREEK SKI GROUP, INC. and another.

147 N.H. 202

785 A.2d 412

Andrew S. KAPLAN and another,

v.BOOTH CREEK SKI GROUP, INC. and another.

No. 98–560.

Supreme Court of New Hampshire.

Nov. 20, 2001.

Orr & Reno, P.A., of Concord (Bradford W. Kuster on the brief), and L'Abbate, Balkan, Colavita & Contini, L.L.P., of Garden City, New York (Noah Nunberg orally), for the plaintiffs.

Sheehan, Phinney, Bass + Green, P.A., of Manchester (Michael C. Harvell & a. on the brief, and Mr. Harvell orally), for the defendants.

DUGGAN, J.

The plaintiffs, Andrew S. Kaplan and James F. Miles, shareholders of Loon Mountain Recreation Corporation (Loon), Inc., sought to prevent the acquisition of Loon by the defendants, Booth Creek Ski Group (Booth Creek) and its subsidiary, LMRC Acquisition Corporation, until the defendants complied with the requirements of RSA chapter 421–A (1987), the Security Takeover Disclosure Act (Takeover Act). The plaintiffs appeal from an order of the Superior Court (Lynn , J.) dismissing their equity action on the basis that the Takeover Act does not apply to the merger between Loon and Booth Creek. We affirm.

In September 1997, the board of directors of Loon, which owns and operates Loon Mountain ski resort, reached a merger agreement with the board of directors of Booth Creek, a Delaware corporation, allowing Booth Creek to acquire all of Loon's stock. Under the merger agreement, after Booth Creek acquired all of Loon's shares, a subsidiary of Booth Creek would merge with Loon, making Loon the surviving corporation and a wholly-owned subsidiary of Booth Creek. During negotiations, Booth Creek requested that Loon obtain and deliver to Booth Creek shareholder agreements from the holders of a majority of the Loon shares promising to vote in favor of the merger. On the same day the merger agreement was executed, Booth Creek entered into shareholder agreements with sixteen Loon shareholders holding 57.3% of the outstanding common stock. The terms of each shareholder agreement required that the shareholder grant his or her irrevocable proxy to Booth Creek to approve the acquisition by Booth Creek of Loon pursuant to the terms of the merger agreement.

On September 25, 1997, Booth Creek asked the New Hampshire Bureau of Securities Regulation (Bureau) to issue a "no-action" ruling with respect to the application of RSA chapter 421–A to Booth Creek's purchase of Loon. On October 6, 1997, finding that the transaction between Booth Creek and Loon constituted a non-hostile takeover, the Bureau ruled that RSA chapter 421–A did not apply and issued a no-action order. As a result, Booth Creek did not prepare a registration statement as required by RSA 421–A:3.

Soon thereafter, Loon provided the plaintiffs and other shareholders of Loon common stock with a copy of a Loon proxy solicitation statement for the annual shareholders' meeting, at which the shareholders would be asked to vote on the merger agreement. The proxy statement did not include a copy of the complete merger agreement between Booth Creek and Loon. It also did not provide any information regarding Booth Creek's officers and directors.

On October 14, 1997, the plaintiffs requested the Bureau to reconsider its no-action order. Before the Bureau responded, the plaintiffs filed actions in superior court. The Bureau subsequently denied the plaintiffs' request for reconsideration.

The parties were unable to close the transaction by the originally established November 30, 1997 deadline, so Booth Creek and Loon executed an amendment to the merger agreement. Although the terms of the amended agreement deviated from the original agreement, the Bureau issued an order finding that the amended provisions did not substantively deviate from the original agreement and therefore the no-action order remained applicable to the amended transaction. The merger transaction ultimately closed on February 26, 1998.

The plaintiffs instituted consolidated actions for declaratory and injunctive relief, pursuant to RSA chapter 421–A, seeking to prevent the acquisition of Loon by Booth Creek until the defendants complied with the requirements of the Takeover Act. The superior court initially denied the defendants' motion to dismiss, holding that the Takeover Act was applicable to all takeovers, whether hostile or consensual. Upon reconsideration, the superior court reversed itself, ruling that the Takeover Act did not apply. The court explained that although it is theoretically possible to find that the shares acquired by Booth Creek indirectly stemmed from a takeover bid by Booth Creek, this result would require a strained reading of the Takeover Act far removed from its central purpose as revealed by its legislative history. The plaintiffs appeal, arguing that the trial court erred by: (1) holding that RSA chapter 421–A does not encompass statutory mergers; and (2) granting the motion to dismiss based on incorrect factual allegations.

The interpretation of a statute is ultimately a question of law for this court. See Gaucher v. Cold Springs RV Corp. , 142 N.H. 299, 301, 700 A.2d 299 (1997). In any statutory interpretation case, we determine the legislature's intent by turning first to the language in the statute itself. See Silva v. Botsch , 120 N.H. 600, 601, 420 A.2d 301 (1980). In conducting our analysis, "we will focus on the statute as a whole, not on isolated words or phrases."

Snow v. American Morgan Horse Assoc. , 141 N.H. 467, 471, 686 A.2d 1168 (1996). Although we "will not look beyond the language of a statute to determine legislative intent if the statute's language is clear and unambiguous," State v. Rothe , 142 N.H. 483, 485, 703 A.2d 884 (1997), "[w]here the statutory language is ambiguous or where more than one reasonable interpretation exists, we review legislative history to aid in our analysis." K & J Assoc. v. City of Lebanon , 142 N.H. 331, 333, 703 A.2d 253 (1997).

The Takeover Act requires entities making takeover bids to file with the secretary of state and the target company a registration statement containing information such as the offeror's identity, the extent of its financial assets, and its long term plans upon gaining control of the target company. See RSA 421–A:3, :4 (1998). The Takeover Act defines a "takeover bid" as:

The acquisition of, offer to acquire, or request or invitation for tenders of an equity security of a corporation organized under the laws of this state ..., if after acquisition thereof the offeror would, directly or indirectly, be a record or beneficial owner of more than 5 percent of any class of the issued and outstanding equity securities of such corporation.

RSA 421–A:2, VI. The Takeover Act defines an "offeror" as "a person who makes, or in any way participates or aids in making a takeover bid." RSA 421–A:2, IV. The plaintiffs assert that the transaction between Loon and Booth Creek falls within the statutory definition of "takeover bid" because Booth Creek accomplished its acquisition of Loon by offering to acquire or requesting the tenders of the equity securities of Loon, thereby becoming the beneficial owner of one hundred percent of the equity securities of Loon. The plaintiffs further argue that the Takeover Act was intended to encompass all acquisitions, including statutory mergers under RSA 293–A:11.01 – 09 (1999). The plaintiffs' interpretation, however, is overbroad and contrary to the purpose of the Takeover Act.

The definition of a "takeover bid" covers three situations: (1) acquisitions of an equity security; (2) offers to acquire an equity security; and (3) requests or invitations for tenders of an equity security. See RSA 421 A:2, VI. The Takeover Act on its face is ambiguous as to whether the legislature intended the "acquisition of, offer to acquire, or request or invitation for tenders of an equity security" to include statutory mergers. Consequently, we must determine the intent of the legislature in enacting RSA chapter 421–A. See Larose v. Superintendent, Hillsborough County Correction Admin. , 142 N.H. 364, 366, 702 A.2d 326 (1997). A review of the legislative history, purpose, and various provisions of the Takeover Act makes clear that the Takeover Act was not intended to include statutory mergers.

Prior to the 1960's, tender offers were largely unregulated by both the federal and State government. See 13 Z. Cavitch, Business Organizations § 166A.01 (2000). In 1968, the federal government began regulating tender offers under the Williams Act, 15 U.S.C. §§ 78m(d) - (e), 78n(d) - (f) (1994 & Supp. V 1999), which requires disclosure of important information by anyone seeking to acquire more than five percent of a company's securities by direct purchase or tender offer. See Sheffield v. Consolidated Foods Corp. , 302 N.C. 403, 276 S.E.2d 422, 427–28 (1981). The New Hampshire Takeover Act was enacted in an effort to remedy perceived inadequacies in the Williams Act. See N.H.S. Jour. 455–58 (1977). Because the Williams Act as originally enacted allowed tender offers to proceed for ten days prior to the filing of information about the tender offeror and its offer, the Takeover Act was passed in an attempt to correct this potential loophole. See id .

Although neither the Williams Act nor the Takeover Act defines a tender offer, it has been conventionally defined as:

[A] publicly made invitation addressed to all shareholders of a corporation to tender their shares for sale at a specified price. Cash or other securities may be offered to the shareholders as consideration; in either case, the consideration specified usually represents a premium over the current market price of the securities sought. This opportunity to tender shares at a premium remains open for only a limited period of time, often about two weeks.

Sharon Steel Corp. v. Whaland , 121 N.H. 607, 615, 433 A.2d 1250 (1981), vacated and remanded on other grounds , 458 U.S. 1101, 102 S.Ct. 3474, 73 L.Ed.2d 1361 (1982), rev'd on other grounds , 124 N.H. 1, 466 A.2d 919 (1983). Due to their...