Michael Kuebler v. Vectren Corporation, 13 F.4th 631

Background

Vectren (Indiana utility) agreed to be acquired by CenterPoint for $72.00 per share in cash; Merrill Lynch provided a fairness opinion using discounted cash‑flow (DCF) and other valuation analyses.
Merrill Lynch’s DCF summary in the proxy disclosed consolidated projections (net income, EBITDA, capex) and discount‑rate ranges by business segment, and reported an implied equity value range of $59.00 to $75.25 per share; the proxy did not include (a) Unlevered Cash Flow Projections (2018–2027) or (b) Business Segment Projections.
Seven shareholders sued under Section 14(a), first seeking to enjoin the shareholder vote (denied), then amending to seek damages for alleged misleading omissions in the proxy.
The district court dismissed the amended complaint for failure to plead materiality of the omitted projections and loss causation; plaintiffs attached an expert affidavit (Keath) that the district court did not consider.
The Seventh Circuit affirmed: it held the Keath affidavit could be considered at the motion‑to‑dismiss stage but concluded plaintiffs still failed to plausibly allege materiality or economic loss; Section 20(a) claim failed as derivative.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Materiality of omitted Unlevered Cash Flow and Business Segment projections	Omitted metrics were key inputs to Merrill Lynch’s DCF and their absence made the DCF summary misleading; shareholders needed them to assess fair value.	Proxy provided a fair summary (consolidated projections, discount ranges, DCF results); additional internal inputs were unnecessary and not likely to alter the total mix.	Omitted projections immaterial as a matter of law given the extensive disclosures in the proxy; plaintiffs failed to show a substantial likelihood disclosure would have altered the total mix.
Loss causation / economic harm	Misleading proxy prevented shareholders from discovering undervaluation and thus caused economic loss.	Plaintiffs do not allege actual economic loss or a viable superior offer; allegations are speculative hindsight and do not plausibly show the proxy caused monetary loss.	Plaintiffs failed to plead economic loss; loss causation not satisfied.
Entitlement to advisor’s inputs to replicate valuation	Shareholders are entitled to the underlying inputs so they can independently verify Merrill Lynch’s valuation.	Section 14(a) does not require disclosure of every advisor input; shareholders are not entitled to a ‘‘super‑appraiser’’ toolbox and disclosure burdens must be limited.	Court rejects right to all advisor inputs; Section 14(a) does not mandate disclosure of every internal metric used by an advisor.
Consideration of expert affidavit (Keath) at motion to dismiss	Keath affidavit shows likely evidentiary support for plaintiffs’ materiality theory and should be considered.	Affidavit is merely evidence and not part of the complaint.	Appellate court: plaintiffs may submit such evidence opposing a Rule 12(b)(6) motion, but here the affidavit did not make materiality plausible.

Key Cases Cited

TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976) (articulates the standard for materiality in proxy disclosures — whether omitted fact would significantly alter the total mix of information)
Mills v. Electric Auto‑Lite Co., 396 U.S. 375 (1970) (proxy solicitation can be the causal link for transaction causation)
Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005) (distinguishes transaction causation from loss causation; both required in securities claims)
Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991) (discusses when proxy solicitation is an essential link and causation limits)
Beck v. Dobrowski, 559 F.3d 680 (7th Cir. 2009) (Section 14(a) dismissal for lack of materiality where plaintiffs only showed they would have "liked" more information)
Carvelli v. Ocwen Financial Corp., 934 F.3d 1307 (11th Cir. 2019) (puffery doctrine and when statements are so obviously unimportant that reasonable minds could not differ)
Campbell v. Transgenomic, Inc., 916 F.3d 1121 (8th Cir. 2019) (contrast: stock‑for‑stock deal where omitted projections could be material because acquiror’s financials affected shareholders’ choice)
Smith v. Robbins & Myers, Inc., 969 F. Supp. 2d 850 (S.D. Ohio 2013) (denial of dismissal where facts alleged that advisor used flawed inputs and sale process was tainted)