Submitted: December 13, 2017
Appeal
from United States District Court for the District of
Nebraska - Omaha
Before
WOLLMAN, LOKEN, and MELLOY, Circuit Judges.
LOKEN,
Circuit Judge.
Streck,
Inc. ("Streck") is a successful, closely held
Nebraska corporation founded by Dr. Wayne Ryan in 1982. In
1985, Dr. Ryan and his wife Eileen gifted equal amounts of
voting and nonvoting Streck stock to their five children.
Daughter Constance Ryan ("Connie") has been
president of Streck since 1993 and CEO and chairman of the
board since 2013. In mid-2012, exercising its right to
purchase under a revised Redemption Agreement
("RRA"), Streck purchased daughter Stacy Ryan's
voting and nonvoting shares for $9, 280, 235. In August 2015,
Stacy filed this action against Streck and Connie, alleging
violations of § 10(b) of the Securities Exchange Act of
1934, 15 U.S.C. § 78j(b); Securities and Exchange
Commission Rule 10b-5, 17 C.F.R. § 240.10b-5; and
multiple violations of Nebraska law in connection with
Streck's redemption of Stacy's stock.[1] The district
court[2] granted Defendants' motions to dismiss
and denied post-dismissal motions to alter or amend the
judgment and for leave to file an amended complaint. Stacy
appeals those rulings. We affirm the order dismissing the
Complaint but remand for further consideration of whether
Stacy's post-dismissal motion to alter or amend presented
newly discovered evidence warranting alteration of the order
dismissing her breach of contract claim.
I.
Background
The
following facts are alleged in Stacy's 124-paragraph
Complaint and are taken as true for the purposes of ruling on
Defendants' motions to dismiss under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. Taking into account
subsequent stock splits, the Ryans gifted each of their
children 5, 500 voting shares and 2, 789, 470 nonvoting
shares of Streck stock. All five children executed stock
redemption agreements in 1989 and 2003 providing that each
would receive book value if he or she redeemed shares with
Streck. In mid-2007, without Stacy's knowledge, Streck
and Connie revoked Connie's stock redemption agreement,
and Connie purchased 154, 000 Streck voting shares, without
Board approval, in exchange for her promissory note.
In
December 2007, Connie sent Stacy the proposed RRA, which
significantly revised the prior agreement. Paragraph 7 of the
RRA provided that Streck "shall have the right to
repurchase the stock, in whole or in part, owned by
Stockholder at any time." Paragraph 9 provided that the
stock "shall be purchased at the fair market value of
the stock (subject to any applicable discounts or
adjustments) as set forth in the most recent valuation
prepared by Juris Valuation Advisors [JVA] . . . immediately
preceding the date of the written notification of the option
exercised by Stockholder or the Corporation." Connie
advised that fair market value would be determined by JVA on
an annual basis. Though initially hesitant, Stacy signed the
RRA after being told it was intended for use if Streck was
sold to a third party and negotiating a
"tag-along/drag-along" provision giving her the
right to receive the same price as controlling shareholders
if at least 51% of Streck's stock was sold. Unbeknownst
to Stacy, while her other siblings signed RRAs, Connie did
not.
In
March 2012, Dr. Ryan notified the Ryan siblings he planned to
buy all outstanding Streck stock and remain CEO with new
management, and that the most recent stock valuation was
$3.32 per nonvoting share and $3.49 per voting share, giving
them each a total valuation of almost $9.3 million. In April,
he emailed the siblings asking if they wanted to retain
ownership of their shares. Stacy replied that she was
concerned about Connie's involvement in Streck and wanted
more information before deciding whether to sell her shares.
She received no response.
On June
19, Dr. Ryan wrote Stacy that Streck had decided to redeem
her shares for $9, 280, 235 and she was required to sign the
enclosed Stock Purchase Agreement (SPA) to complete the
transaction. Stacy refused to sign the SPA. Streck wired
payment for her shares to her bank account. When Stacy
returned the payment, Dr. Ryan wrote that Stacy was no longer
a Streck shareholder, the money was available to her, and
Streck would follow the Nebraska guidelines for unclaimed
property if she did not claim it. Streck's counsel denied
Stacy's request for corporate records because she was not
a shareholder. The notes of a June 11 meeting between Connie,
Dr. Ryan, and his estate-planning lawyer reflect that
redemption of the shares of siblings other than Connie would
be completed by the end of Streck's fiscal year, after
which Streck would distribute $10 million to each of the
remaining shareholders -- Dr. Ryan, Eileen, and Connie. On
July 13, Dr. Ryan sent a memo to the siblings other than
Stacy and Connie offering to purchase their stock for $3.49
per voting share and $3.32 per nonvoting share if they agreed
to sell before July 27, 2012.
Streck's
attorneys continued to urge Stacy to sign the SPA, advising
that her siblings -- including Connie -- had signed SPAs and
would be receiving the same price as Stacy for their voting
and nonvoting shares. On August 22, Stacy signed the SPA,
crossing out a mutual release of claims provision, a change
that Streck accepted. The SPA provided that Stacy's $9,
280, 235 payment was "determined according to paragraph
9 of the [RRA]." Unbeknownst to Stacy, Connie did not
execute an SPA and retained her shares. When Eileen died in
2013, Connie inherited 159, 500 voting shares pursuant to a
2007 change to Eileen's trust, giving Connie two-thirds
voting control of Streck. Stacy alleged that a professional
appraisal completed in 2014 determined that the fair market
value of outstanding Streck stock on March 7, 2013, with
applicable discounts, was $8.33 per voting share and $8.09
per nonvoting share.
After
voluntarily dismissing an amended complaint filed in state
court, Stacy filed this action in federal court, alleging
that a series of wrongful acts by Connie and Streck caused
her to execute the SPA and complete the redemption of her
shares in Streck "for substantially less than fair
market value under the terms of the [RRA]." In addition
to claims under Section 10(b) of the Exchange Act and SEC
Rule 10b-5, she alleged violations of the Securities Act of
Nebraska, [3] breach of fiduciary duty, shareholder
oppression, conversion, tortious interference with business
expectancy, unjust enrichment, fraudulent misrepresentation
and inducement, and breach of contract. For relief, Stacy
sought to invalidate Connie's 2007 purchase of 154, 000
voting shares, rescind the SPA, set aside the redemption of
Stacy's shares, and "damages to which Plaintiff is
entitled."
In the
February 2016 order granting Defendants' motions to
dismiss, the district court took judicial notice of an
October 2011 JVA valuation determining that Streck stock was
worth $3.49 per voting share and $3.32 per nonvoting share,
the prices at which Streck redeemed Stacy's shares. The
district court dismissed Stacy's claims under federal and
Nebraska securities laws, and her claims of fraud, breach of
fiduciary duty and shareholder oppression, because Stacy did
not plausibly allege that wrongful acts caused her loss --
she had "consented to Streck's repurchase of the
stock at Streck's sole election" in the RRA and did
not plead "sufficient facts to raise an inference that
Defendants somehow manipulated the 2011 Valuation
itself." The court dismissed conversion, tortious
interference, and unjust enrichment claims because "the
facts as pled in the Complaint reveal that Streck redeemed
Stacy Ryan's shares in a method consistent with [her]
rights under the [RRA]." The court dismissed the breach
of contract claims because higher share valuations in the
2014 appraisal were not evidence contradicting the SPA
provision that the purchase price paid for Stacy's shares
was "determined according to paragraph 9 of the
[RRA]."
Following
entry of judgment of dismissal, Stacy filed a timely motion
to alter or amend the judgment and for leave to file an
amended complaint. See Fed.R.Civ.P. 15(a)(2), 59(e).
The district court denied that motion and a subsequent Rule
59(e) motion. We will discuss these rulings in Part III of
this opinion.
II.
The Order ...