B&O Minority Stockholders Sue Again
BALTIMORE (AP) _ Minority shareholders of the B&O Railroad have filed suit against the railroad and its parent company, CSX Corp., accusing them of systematically and fraudulently attempting to deprive the stockholders of the right to participate in B&O’s growth.
The class-action suit filed in U.S. District Court this week also claims that the recent merger of the B&O into CSX is ″tainted with fraud, self- dealing and overreaching.″
The suit, filed under the Racketeer Influenced and Corrupt Organization Act, seeks treble damages for the plaintiffs. No specific dollar amounts are mentioned, because the damages would depend on what value the court places on the stock.
The B&O was an independent company until 1963, when it was acquired by the Chesapeake and Ohio Railway, which then changed its name to the Chessie System Railroads. The Seaboard railroad system bought the Chessie System in 1980, and the company later changed its name to CSX.
CSX merged the B&O into its transportation division in December.
The B&O offered the minority stockholders $113 a share for its 129,000 shares outstanding, but the stock is really worth about $340 a share, the suit contends.
The suit is the fourth of its kind to be filed against B&O. Attorneys for the plaintiffs moved last week in Baltimore City Circuit Court to have the other actions certified as class actions. The plaintiffs in all the suits contend the $113 offering is grossly undervalued.
The latest lawsuit, filed on behalf of Wyoming, Illinois and North Carolina residents who own more than 5,200 shares combined, accuses CSX of engaging, ″through a series of complex corporate transactions, in fraudulent schemes designed to deprive the minority equity holders of B&O of their right to participate in the growth, earnings and appreciation of B&O and its unique and valuable assets.″
Robert F. Hochwarth, a CSX attorney, denied the allegation. He said the real complaint with the three previous lawsuits is that the B&O offer of $113 per share is unfair, and that according to state law, the shareholders should seek an appraisal, rather than file suit.
Hochwarth declined to comment on the new charges, since he had not seen the suit.