2011 Cornerstone Casework: John Q. Hammons Hotels Inc.

This class-action case arose from the merger and privatization of publicly traded John Q. Hammons Hotels Inc. The plaintiffs alleged that John Q. Hammons, as the controlling stockholder, used his position to negotiate private benefits for himself that weren’t shared with minority stockholders. A trial was held in June 2010 in Georgetown, Del. The Delaware Chancery Court determined the merger price was fair to minority stockholders, that the process leading to the merger was fair and that Hammons breached no duty to minority shareholders. The trial court’s decision was appealed to the Delaware Supreme Court, which upheld the decision in August of this year. Shareholders sought damages in excess of $93 million. The decisions analyzed in-depth use of the business judgment and entire fairness review standards by which the decisions of corporate fiduciaries are judged.

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