Nosirrah Management, LLC v. AutoZone, Inc., 2:24-cv-02167

Nosirrah Management, LLC (shareholder of AutoZone) sued William C. Rhodes III, a former AutoZone officer/director, to recover short-swing profits under Section 16(b) of the Securities Exchange Act.
Rhodes set up two Grantor Retained Annuity Trusts (GRATs) in 2020, to which he contributed AutoZone stock; he received annuity payments in stock from these GRATs in 2022 and then sold some of the shares within six months.
Plaintiff alleged this sale constituted a short-swing transaction subject to § 16(b) disgorgement.
Both parties filed motions for summary judgment; central questions were standing and whether the GRAT-related acquisitions and sales triggered § 16(b) liability.
The case turned on whether an SEC exemption (Rule 16a-13: change in form of beneficial ownership without a changed pecuniary interest) applied.
The court granted partial summary judgment to both sides, ultimately dismissing the case after finding the transaction exempted and Plaintiff had standing.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing – Injury in Fact	Nosirrah need not show direct damages, as suit is derivative on behalf of issuer for breach of fiduciary duty.	Pure statutory violation isn't a concrete injury; no standing.	Plaintiff has standing—derivative Section 16(b) claims allege sufficient injury.
Section 16(b) Liability – Purchase	Rhodes was not a beneficial owner with pecuniary interest when stock was in GRATs; thus, reacquisition by annuity is a non-exempt purchase.	Rhodes retained a pecuniary interest as grantor/trustee/annuitant; reacquisition only changed form of ownership, so transaction is exempt.	Rhodes' interest was both direct and indirect; transaction is exempt under Rule 16a-13.
Rule 16a-13 Exemption – Applicability	Exemption does not apply as Rhodes' interest changed materially; no same pecuniary interest.	Pecuniary interest did not change; form shifted from indirect to direct, which Rule 16a-13 exempts.	Rule 16a-13 applies; form of ownership changed, but not pecuniary interest.
Status of Remainder Beneficiaries	Remainder interests of Rhodes’ children defeat his beneficial ownership claim during GRAT terms.	Remainder beneficiaries lack investment control and thus are not beneficial owners.	Children not beneficial owners; Rhodes solely had beneficial ownership for 16(b).

Lujan v. Defenders of Wildlife, 504 U.S. 555 (establishing federal standing's injury-in-fact requirement)
Spokeo, Inc. v. Robins, 578 U.S. 330 (concrete injury required for statutory standing)
TransUnion LLC v. Ramirez, 594 U.S. 413 (standing demands a close historical or common-law analog)
Reliance Elec. Co. v. Emerson Elec. Co., 404 U.S. 418 (Section 16(b) is strictly construed as a mechanical rule)
Sterman v. Ferro Corp., 785 F.2d 162 (Sixth Circuit Section 16(b) elements)
Bruederle v. Louisville Metro Gov’t, 687 F.3d 771 (summary judgment materiality standard)
Robertson v. Lucas, 753 F.3d 606 (all inferences drawn in favor of nonmovant on SJ)