Carolina Casino, Inc. ("CC") is a private-company casino operating in Nevada, a Delaware corporation, located just off of the Las Vegas strip. CC’s board of directors comprises Fred Financier ("FF"), Gary Gambler ("GG"), Jerry Jackpot ("JJ"), and Rory Roulette ("RR"). The four directors held meetings, at which quorum was always present, to decide a few actions:
(1) Whether to renew the food services contract with GG’s daughter’s high-priced restaurant, called Valerie Vendors, Inc. ("VV"), which supplies all of the many buffets held at the casino, and which contract both includes the food delivery, menu design, and the catering ; and
(2) Whether to sell CC to the Lux Lottery ("LL"), the preeminent casino on the Las Vegas strip, and if so, at what price.
The board of CC decided to renew the contract with VV, with all votes affirmative from each of the four members. Assume they knew that VV was owned by GG’s daughter. Notice of renewal was then sent to VV. The next day, the meeting reconvened at the CC casino bar, where only FF, JJ, and RR were present. After many drinks and some cocaine, the three decided to sell CC to LL for $100 million in a forward triangular merger. The three reasoned that: (1) the price was fair given the faltering economy and that less people may be willing to travel to Las Vegas to gamble, and (2) many of the casinos off of the strip were seeing 20% less visitors since 2022. It was noted, in discussion, though, that the CC casino makes more than $50 million in revenues per year and $10 million in profits per year, which is more than 10% extra profit than its peer casinos off of the strip.
VV refuses to do business with LL because LL is a casino that opposes union-activity. Assume also that VV owns 5% of the shares of CC. If VV wants to sue for any action possible, who would she sue and how would the court rule? How would your answer change if LL had offered a $10 million kicker to each of FF and RR to secure their vote.
