U.S. District Judge Sarah Evans Barker in Indianapolis ruled in favor of Emmis’ motions for judgment, while denying motions by the dissident shareholders, and said she will order final judgment in the case.
“We were confident in our position, and the federal court has confirmed it,” Jeff Smulyan, president and chief executive of Emmis, said in a statement Tuesday.
The Indianapolis media company, which owns radio stations and publishes city magazines, has been fighting the preferred shareholders in court ever since five of them, including four investment funds, objected to Emmis eliminating their stock dividends and stripping preferred shareholders of voting rights.
The dissident shareholders, who rejected Emmis’ offer to buy their shares at reduced prices, accused the company of “unfair, strong-arm tactics to ensure the plaintiffs would never receive those dividends,” which were worth more than $10 million. The lawsuit charged Emmis with breaching its fiduciary duties to shareholders and sought unspecified damages.
Plaintiffs in the suit were Corre Opportunities Fund, New York; Zazove Associates, Incline Village, Nev.; DJD Group, Tampa, Fla.; First Derivative Traders, Wynnewood, Pa.; and Kevan Fight, Ohio.
An attorney for the plaintiffs, Wayne Turner of Indianapolis, said his clients “respectfully disagree” with Barker’s ruling and will appeal.
Emmis took the disputed actions as it faced a fiscal crisis during the recession of 2007-09, when its stock price plummeted on declining ad revenues.
In her 44-page ruling dated Feb. 28, Barker rejected the plaintiffs’ arguments, saying Indiana law doesn’t outline fiduciary duties owed by a corporation to its shareholders and noting that the plaintiffs conceded that Emmis’ disputed actions “benefited Emmis greatly.”
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