The law of the case doctrine posits that findings of fact and conclusions of law by an appellate court are generally binding in all subsequent proceedings in the trial court or in a later appeal. Much like the stare decisis doctrine, it is founded on the principles of efficiency, finality, stability, and respect for the judicial system. The doctrine is meant to bring some closure to matters already decided in a given case by the highest court of a particular jurisdiction. A trial court may make any order or direction in further progress of the case so long as it is not inconsistent with the decision of the appellate court, as to any question not settled by the decision.
A corporation, with the approval from a majority of it's shareholders, entered a merger with its wholly-owned subsidiary. The surviving corporation was the corporation and not the subsidiary. The minority shareholders, the owners of 201,200 shares, sought a cash-out merger due to the transaction and sought the court's help in the stocks valuation. Following five earlier appeals and remands, the trial court valued each share at $ 21.98 and entered a judgment in the principal amount of $ 4,422,376 with pre-judgment and post-judgment interest. The owners of stock sought review of the decision raising two arguments for our consideration. First, the Court of Chancery erred in it's appraisal of the fair value of the corporations shares. Second, the Court of Chancery erred, as a matter of law, in awarding post-judgment interest of 10.32% compounded annually from the merger date until only August 2, 1991.
Did the Court of Chancery err in its valuation?
The Court held that that the Court of Chancery's valuation model is supported by record evidence and was the product of an orderly and logical deductive process. In light of the record, the 15.28 percent discount rate and $ 19.9 million corporate debt were clearly established as the law of the case. To avoid the discount rate and corporate debt figures which were the law of the case, the trial court was required to determine that the findings were "clearly wrong." It did not. There was no evidence in the record to show that these earlier findings of the trial court were clearly wrong, or that they produced an injustice. The only circumstance that had changed since that judgment was the remand for a new trial, which was not a basis to change matters already decided and not appealed. Because there was no available exception to the law of the case doctrine, the findings on the discount rate and corporate debt were binding upon the trial court.