After two years of negotiations, the four shareholders and founders of Access, Inc. sold their health-care start-up to a subsidiary of Res-Care, Inc. and agreed to stay on as employees, based on assurances from the buyer that Res- Care would not merge with VOCA of North Carolina. The Access shareholders had explained to Res-Care that they were all former employees of VOCA and had left to form Access, because of differences over the way VOCA was run. They made it clear to Res-Care that they would not sell their shares without assurances that they would never be affiliated with VOCA or their former supervisor.
Res-Care’s chief development officer told the shareholders that his company was not interested in buying VOCA, because it had poor profits and was poorly managed. Res-Care’s vice president of the central region made similar assurances in a later meeting.
A week after the Access shareholders signed the deal Res-Care announced that it had signed a letter of intent to buy VOCA. The Access shareholders’ former boss at VOCA was given the job of statewide director, thereby becoming the Access shareholders’ new supervisor.
Do the former Access shareholders have any legal basis for suing Res-Care? Assume that the acquisition agreement between the Access shareholders and Res-Care contained no representation or warranty by Res-Care regarding a possible merger with VOCA, and that it contained a standard merger clause stating that the written acquisition agreement superseded any and all prior negotiations and oral statements. What could the Access shareholders have done to avoid this dispute? [Godfrey v. Res-Care, Inc., N.C. App. No. COA 03-790 (N.C. July 6, 2004).]