This section contains the nature of the case and procedural background.

RCA (D) agreed to merge with GE. The stock at issue in this particular case was cumulative preferred stock, and under the merger agreement, each share of that stock would be converted to $40.00 cash. Rauch (P) held 250 such shares and as per the redemption procedures in D's certificate of incorporation P was entitled to $100 per share. P claimed that the merger constituted a liquidation or dissolution or winding up of D and that the agreement with GE was a violation of the rights of the preferred shareholders of D. P sued under diversity in a class action. D moved to dismiss under 12(b)(6), and P moved for summary judgment. The district court concluded that the merger was bona fide and under the doctrine of independent legal significance, dismissed the complaint. P appealed.

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