Plaintiffs brought this class action seeking damages for the allegedly inadequate price paid for the publicly held Class A shares of John Q. Hammons Hotels, Inc. (the “Company”) arising out of a merger of the Company with a third party. Plaintiffs alleged that the consideration paid in the merger to John Hammons, the Company’s controlling stockholder, for his Class B stock unfairly favored him at the expense of the Class A stockholders, and claimed that Hammons and the Company board breached their fiduciary duties. The Court, on cross-motions for summary judgment, held that although the use of procedural protections for the minority shareholders could have resulted in the application of the business judgment rule, the procedures used were not sufficient and therefore the entire fairness standard of review was appropriate. The Court, however, denied the motions for summary judgment as to the fairness of price and fair dealing because of the existence of material factual issues.
