Lohnes v. Level 3 Communications, Inc.

D. Massachusetts

Lohnes v. Level 3 Communications, Inc.

135 F. Supp. 2d 105, 2001 U.S. Dist. LEXIS 4010, 2001 WL 304040

CourtDistrict Court, D. Massachusetts

DecidedMarch 26, 2001

DocketCIV. A. 99-12304-EFH

StatusPublished

Cited by1 cases

This text of 135 F. Supp. 2d 105 (Lohnes v. Level 3 Communications, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Lohnes v. Level 3 Communications, Inc., 135 F. Supp. 2d 105, 2001 U.S. Dist. LEXIS 4010, 2001 WL 304040 (D. Mass. 2001).

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Opinion

*106 MEMORANDUM AND ORDER

HARRINGTON, Senior District Judge.

Defendant Level 3 Communications, Inc., has moved for summary judgment against Plaintiff Paul R. Lohnes, on all four counts of Plaintiffs Complaint which seeks an additional 8,541 shares of Level 3 Communications, Inc.’s common stock as a result of the defendants’ decision to issue a two-for-one stock split. After hearing oral argument on the matter, this Court grants Defendant’s Motion for Summary Judgment.

The sole issue in dispute is whether a two-for-one stock split issued in the form of a stock dividend constitutes a “capital reorganization” as that term appears in the stock warrant agreement between the parties. While neither party was able to cite a case directly on point, Prescott, Ball & Turben v. LTV Corp., 531 F.Supp. 213, 219-20 (S.D.N.Y.1981), held that in the context of a trust indenture, capital reorganization “contemplate[d] an exchange or alteration in the existing ownership form of the interest held by [the corporation’s] common shareholders before a particular transaction [could] be classified as a capital reorganization.... ” In granting summary judgment, the court in Prescott agreed that the stock distribution was simply a stock dividend issued exclusively to the corporation’s shareholders, not a capital reorganization. See id. at 220. Further, Black’s Law Dictionary defines “reorganization,” in pertinent part, as a “[g]eneral term describing corporate amalgamations or readjustments occurring, for example, when one corporation acquires another in a merger or acquisition, a single corporation divides into two or more entities, or a corporation makes a substantial change in its capital structure.” Id. at 1299 (6th ed.1990).

Applying those definitions, this Court rules that as a matter of law, a two-for-one stock split, as it occurred in this case, does not constitute a capital reorganization. Therefore, plaintiff is not entitled to any additional shares beyond the 8,541 he has already received.

Defendant’s Motion for Summary Judgment is hereby granted.

SO ORDERED.

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*106 MEMORANDUM AND ORDER

HARRINGTON, Senior District Judge.

Defendant Level 3 Communications, Inc., has moved for summary judgment against Plaintiff Paul R. Lohnes, on all four counts of Plaintiffs Complaint which seeks an additional 8,541 shares of Level 3 Communications, Inc.’s common stock as a result of the defendants’ decision to issue a two-for-one stock split. After hearing oral argument on the matter, this Court grants Defendant’s Motion for Summary Judgment.

The sole issue in dispute is whether a two-for-one stock split issued in the form of a stock dividend constitutes a “capital reorganization” as that term appears in the stock warrant agreement between the parties. While neither party was able to cite a case directly on point, Prescott, Ball & Turben v. LTV Corp., 531 F.Supp. 213, 219-20 (S.D.N.Y.1981), held that in the context of a trust indenture, capital reorganization “contemplate[d] an exchange or alteration in the existing ownership form of the interest held by [the corporation’s] common shareholders before a particular transaction [could] be classified as a capital reorganization.... ” In granting summary judgment, the court in Prescott agreed that the stock distribution was simply a stock dividend issued exclusively to the corporation’s shareholders, not a capital reorganization. See id. at 220. Further, Black’s Law Dictionary defines “reorganization,” in pertinent part, as a “[g]eneral term describing corporate amalgamations or readjustments occurring, for example, when one corporation acquires another in a merger or acquisition, a single corporation divides into two or more entities, or a corporation makes a substantial change in its capital structure.” Id. at 1299 (6th ed.1990).

Applying those definitions, this Court rules that as a matter of law, a two-for-one stock split, as it occurred in this case, does not constitute a capital reorganization. Therefore, plaintiff is not entitled to any additional shares beyond the 8,541 he has already received.

Defendant’s Motion for Summary Judgment is hereby granted.

SO ORDERED.

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135 F. Supp. 2d 105, 2001 U.S. Dist. LEXIS 4010, 2001 WL 304040, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lohnes-v-level-3-communications-inc-mad-2001.

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