Minority approval would have insulated the merger from later attack. Both of these arguments fail. On the first front, causation would turn on speculation. In other words, if directors could have thought in the future to nix a transaction due to minority disapproval, there is causation of damages from an improper solicitation. True, but directors could have thought differently and proving how directors actually thought at the time is an evidentiary impossibility. The first argument therefore fails. The second front also fails. The premise here is that the improper solicitation gave the merger board of directors a new immunity to a lawsuit and deprived the plaintiff from suing in the future. However, there is no indication that the proxy solicitation here caused a loss of the right to sue. Here’s how the immunity provision works: The state statute bars a shareholder from seeking to void a transaction tainted by a director’s conflict if minority shareholders ratified the transaction FOLLOWING disclosure of the material facts of the transaction and the conflict. But here, the conflict was never known to the minority shareholders before they ratified. Thus, they could not have ratified following
disclosure but only ratified pre-disclosure. The minority vote thus gave no protection to FABI or VBI. Concurring Opinions: The statement of the directors here need not only be taken as a statement of belief but as a statement of fact as well. Dissenting Opinions: FABI and VBI retained the option to back out of the transaction if dissatisfied with the minority shareholder response. VBI could have voted here to nix the merger and maintain a better public relations stance. Causation should have been found here. Full disclosure may have cause FABI and VBI to pull out, and the resulting injury to minority shareholders would have been averted. True, FABI and VBI may have elected to stay with the merger plans. However, the idea that the minority shareholders lost the opportunity to avoid injury by FABI and VBI to pull out was definitely caused by the proxy misstatement.
Elan Weinreb October 31, 2000 Corporations Austin v. Consolidated Edison of New York, Inc. 788 F. Supp. 192 (S.D.N.Y. 1992) Rule of Law: A proposal that relates to the age of retirement for a company’s employees is part of the day to day operations of a business and, as such, comes under a Rule 14a-8 exception (Rule 14a-8[i]). A company need not include such a proposal with its proxy statement. Case Facts: Three plaintiffs, stockholders of defendant ConEd, wanted to force ConEd to put within its proxy statement for an upcoming shareholders’ meeting a non-binding resolution endorsing the idea that defendant’s employees should be allowed to retire after 30 years of service, regardless of age. The resolution’s text was also scheduled to be adopted by a Local Union as an objective in its forthcoming negotiations with ConEd, and two of the plaintiffs had tie-ins to this union. After asking the SEC for a no-action letter and receiving it, ConEd refused
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