3.1. Precedents Cited

A. Standards of review and summary judgment framing

The court restated de novo summary-judgment review through familiar Sixth Circuit authority: Wilmington Tr. Co. v. AEP Generating Co. (with the summary judgment formulation drawn from Thomas M. Cooley Law Sch. v. Kurzon Strauss, LLP), and clarified “genuine dispute” analysis via Davis v. Sig Sauer, Inc. (quoting Troutman v. Louisville Metro Dep't of Corr.), while emphasizing inference-drawing under Sigler v. Am. Honda Motor Co. (quoting Singfield v. Akron Metro. Hous. Auth.). These cases primarily served to justify reversal where fact disputes remained (notably: whether Boyd was told equity financing was being pursued).

B. Contract timing: “effective date” vs. execution/delivery

To exclude post-redemption events (including the December 18 call), the court treated the redemption agreement’s stated “effective” and “Closing Date” (Dec. 17, 2020) as controlling. It relied on Michigan interpretive principles from Davis v. LaFontaine Motors, Inc. (enforce unambiguous contract terms), and contrasted execution norms in In re Estate of Koch (execution typically requires signing and delivery) with the ability to backdate effectiveness, illustrated by Opera Block Props., Inc. v. Auto-Owners Ins. Co.. The court bolstered this contract-law point with persuasive authorities: Am. Cyanamid Co. v. Ring, Monahan v. Fid. Mut. Life Ins. Co., and the interpretive maxim from Rogers v. Great N. Life Ins. Co.. The practical legal consequence: fiduciary/securities duties tied to shareholder status generally stop on the contract’s effective date, even if delivery occurred later.

C. Michigan fiduciary duty: rejecting Delaware/federal materiality

The centerpiece of the opinion is its Erie-style choice of substantive standard for Michigan common-law fiduciary duty. The court invoked the state-law hierarchy approach in Am. Tooling Ctr. Inc. v. Travelers Cas. & Sur. Co. of Am. (following the state’s highest court; otherwise follow intermediate courts absent conviction the supreme court would differ), and Ziegler v. IBP Hog Mkt., Inc..

The Sixth Circuit anchored Michigan’s candor duty in Murphy v. Inman, which states directors must “disclose all material facts within their knowledge that may influence shareholder action,” and traced that language to Reed v. Pitkin. For closely held corporations, it added the “higher standard” from Estes v. Idea Eng'g & Fabrications, Inc., analogizing to partnership-like disclosure duties described in Band v. Livonia Assocs..

Against that Michigan baseline, the court explained why Delaware’s approach did not control. Delaware’s duty-of-candor materiality in Rosenblatt v. Getty Oil Co. tracks the federal proxy materiality test from TSC Indus., Inc. v. Northway, Inc. (omission material if there is a “substantial likelihood” a reasonable shareholder would consider it important). The Sixth Circuit found Michigan’s “may influence” phrasing and its strong context sensitivity (especially for closely held entities) conflicts with importing TSC wholesale into Michigan common law.

D. Federal securities law: duty vs. materiality for contingent events

The court recited the six elements of Section 10(b) via Matrixx Initiatives, Inc. v. Siracusano (quoting Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc.). It then used In re Omnicare, Inc. Securities Litigation to separate (i) whether an omission is actionable (duty to disclose) from (ii) whether it is material.

On duty, the court relied on Chiarella v. United States for the principle that a fiduciary or trust relationship can create a duty to disclose. It noted close-corporation redemption authority from Jordan v. Duff & Phelps, Inc. and a Sixth Circuit example, Greening v. Litton Indus. Automation Sys., Inc.. It corrected defendants’ overbroad “silence is not misleading” argument by pointing out In re Ford Motor Co. Sec. Litig., Class Action actually says silence is not misleading absent a duty to disclose.

On materiality, the court applied Basic Inc. v. Levinson and its probability/magnitude balancing test (rooted in SEC v. Texas Gulf Sulphur Co. and elaborated by SEC v. Geon Indus., Inc.). It also relied on merger/overture cases to hold early-stage interest is often not material: Sixth Circuit’s Filing v. Phipps (quoting Glazer v. Formica Corp.), plus Taylor v. First Union Corp. of S.C. and Jackvony v. RIHT Fin. Corp.. In contrasting cases where plans become “purposeful action,” it cited Castellano v. Young & Rubicam, Inc. and Finnerty v. Stiefel Lab'ys, Inc..

E. Appellate disposition and “affirm on any ground”

In addressing an issue not reached by the district court (equity financing omission materiality under federal law), the court invoked Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc. for the principle that the court may affirm on any ground supported by the record.

F. State securities statute and remaining state tort principles

For the Michigan Uniform Securities Act claim, the court adopted the district court’s parallelism rationale, citing JAC Holding Enters., Inc. v. Atrium Cap. Partners, LLC. For fraud by omission, it relied on McMullen v. Joldersma (fraud may be satisfied by failure to disclose when a duty exists), and noted waiver/forfeiture principles in passing with Talmer Bank & Tr. v. Minton Firm, P.C..

G. Financial terminology

The opinion defined EBITDA by citing Teamsters Local 237 Welfare Fund v. ServiceMaster Global Holdings, Inc., reflecting the court’s attention to how valuation discussions are understood in financing disputes.

3.2. Legal Reasoning

A. Sorting the alleged omissions (and why timing matters)

The court carefully identified which “omissions” could legally matter, because omission-based liability depends on a duty that exists at the time of non-disclosure. It held two factual disputes or legal filters were decisive:

1. Was Boyd told that private equity was being pursued? Boyd’s deposition reflected that private equity was discussed at least in passing during a June 2020 Idaho visit. Yet the court held a jury could still infer that Boyd’s comments were unsolicited opinions rather than a response to an actual disclosure that NBR was pursuing private equity. This created a genuine dispute of material fact, defeating summary judgment on the Michigan fiduciary-duty theory.
2. Could Boyd rely on Avista’s December 18 “strawman proposal”? No—because the redemption agreement was “effective” and had a defined “Closing Date” of December 17. The court treated the effective date as legally controlling for Boyd’s shareholder status, cutting off post-effective-date duty-based claims.

B. The pivotal doctrinal move: Michigan fiduciary “materiality” is not federal/Delaware “materiality”

The opinion’s most consequential holding is methodological: when adjudicating Michigan common-law fiduciary claims for nondisclosure, a federal court may not default to Delaware’s Rosenblatt/TSC materiality framework simply because it is prominent in corporate law. The Sixth Circuit treated Michigan’s own phrasing as meaningfully different—directors must disclose facts that “may influence” shareholder action, and context (including “closely held” status) can heighten the candor duty.

This is not merely semantic. The federal/Delaware test requires a “substantial likelihood” of significance to a reasonable investor, whereas Michigan’s articulation tolerates liability for omissions that could influence a shareholder’s decision-making even if the effect is uncertain, individualized, or context-driven.

C. Federal securities claim: duty may exist, but materiality fails under Basic

The court essentially assumed Boyd could establish an actionable duty to disclose in a close-corporation redemption setting, but held he could not satisfy federal materiality. Under Basic Inc. v. Levinson, the probability side of the balance was too low on December 17: Avista had made an outreach, there was an introductory call/exchange of high-level financials and an NDA, but not negotiations, diligence, board action, term sheets, or concrete pricing/structure. And NBR’s general consideration of equity financing remained secondary and incipient, especially given its ongoing push for debt financing.

The court stressed that magnitude alone (a potentially transformative deal) cannot establish materiality; probability evidence must also show meaningful ripening beyond early-stage overtures.

D. Linking fiduciary duty to fraud by omission under Michigan law

Once the fiduciary-duty claim survived, the fraud-by-omission/inducement claims survived as well, because Michigan recognizes fraud can be grounded in nondisclosure where a duty to speak exists (McMullen v. Joldersma). The court treated the district court’s contrary result as derivative of the same mistaken materiality standard.

3.3. Impact

A. For Michigan closely held corporations and director-led redemptions

The decision materially raises the litigation risk of director/shareholder buyouts (including company redemptions) in Michigan closely held corporations: director-defendants cannot rely on the more defendant-friendly federal/Delaware “substantial likelihood” materiality concept to defeat state fiduciary nondisclosure claims at summary judgment. If undisclosed information may influence the selling shareholder—especially where the insiders are pursuing financing, liquidity, or strategic alternatives—Michigan common-law exposure increases.

B. For federal securities pleading and proof strategies

The opinion also clarifies a practical divide: facts may be immaterial under federal securities law yet actionable under Michigan fiduciary law. Plaintiffs in similar disputes may increasingly frame cases as fiduciary-duty and fraud-by-omission claims (state common law), while defendants will seek removal/preemption arguments or contractual waivers/releases—though those, too, can be attacked as fraudulently induced if duties were breached.

C. For transactional drafting and timing controls

The court’s effective-date analysis reinforces that transactional documents can define when shareholder status (and attendant duties) terminate. Parties who care about cutoffs for disclosure and duty should draft “effective date,” “closing,” and delivery conditions carefully. The case also signals that “backdating” effectiveness is enforceable in Michigan contract interpretation when clearly expressed, which can be outcome-determinative for omission-based claims tied to status.

D. For district courts applying state fiduciary law in the Sixth Circuit

The opinion is a cautionary precedent against reflexively importing Delaware corporate doctrines into Michigan common law, particularly where the Michigan Supreme Court has articulated its own standard and where closely held context changes the duty’s intensity.