*3
standing Liberty stock to approximately
VANCE,
Before TJOFLAT and
Circuit
purchase
6.5%. This additional
was the
MORGAN,
Judges, and
Senior Circuit
subject of
Amendment
to Charter’s
Judge.
schedule 13D.
TJOFLAT,
Judge:
Circuit
February
On
Liberty brought
case,
upon
this securities
we
against
are called
this suit
Charter
the district
bring
to decide whether
alleging
an
can
suit
court
had
Charter
embarked
10(b),13(d),
14(d)
(e)
under sections
and
and
reap
on
unlawful scheme
profits
illicit
of the
Exchange
Securities and
Act of
manipulating
Liberty
the market for
(the
Act)
Exchange
require
bring
upward
stock to
displace-
about an
opinion
following
1. We shall refer in
promulgated
note 15. The text of rule 10b-5
sections of
1934 Act
their
provided
historical no-
thereunder
is
at note 16. The
infra
They
menclature.
are codified as follows:
pertinent
13(d)
part
text of the
of section
provided
Exchange
perti-
at
(1982)
note 8. The text of the
§
15 U.S.C. 78
Securities
Act
infra
parts
14(d)
provided
nent
of section
of 1934
infra
14(e)
note 11.
text
provided
The
of section
§
Section
78i
12.
note
infra
10(b)
78j(b)
§
Section
13(d)
78m(d)
§
Section
Inc., CIGI, Inc.,
Group,
2. Charter
Insurance
78n(d)
§
Section
Security
(Loui-
Charter
Company
Life Insurance
78n(e)
14(e)
siana),
Security
Compa-
Charter
Life Insurance
13(d), 14(d),
14(e)
part
Sections
are
(New
ny
Jersey),
Security
and Charter
In-
Life
Exchange
Williams
amendments to the
(New York).
Company
surance
adopted in 1968.
pertinent part
of the
text
of section 9 is
filing requirements
3.
under section
provided
at note 14. The
text
infra
provided
at note 8.
infra
Exchange
provided
of the
isAct
infra
court, acting
pre-
February
on
“attempting
Charter’s
mo-
price,
ment in the
Liberty”4
tion,
Liberty’s
complaint
control
cipitate an auction
dismissed
misleading schedule
use of false
Liberty
leave to amend.
filed an amended
Liberty
alleged
13D statements.
May
complaint on
provi-
violated various
Charter’s
conduct
alleged
complaint
in its
amended
state
Act5 and of
sions
pursued widespread
had
Charter
requir-
injunctive
order
sought
law6
pervasive
scheme
violation of the Ex-
of all its
divest itself
ing
change
expense
Act to enrich itself at the
interim to refrain
shares and in
investing public,
including
former
those shares
exercising
vote
present Liberty
shareholders.
Char-
a stockholder
participate
otherwise
putative
ter’s
scheme
to accumulate a
to dis-
Charter moved
Liberty's
affairs.
enough
large
shares
block
February
complaint
Liberty’s
miss
*4
either to sell
shares
enable Charter
the
at a
filed a second
Charter
February
On
premium
Liberty’s
control
or
to coerce
13D,
in-
which
to its schedule
amendment
management
give
to
Charter business con-
complaint Liberty
copy of the
corporated a
cessions to the economic detriment of Lib-
and set forth
district court
had filed
the
erty
Liberty’s
shareholders.
amended com-
respect
Liberty’s
to
position with
Charter’s
plaint
claims for re-
asserted three distinct
reported
2 also
Amendment
allegations.
sought
injunc-
claim
lief. Each
the same
78,-
an additional
acquisition of
Charter’s
Liberty
tive relief
had asked for
the
Liberty
raising its
stocks
000 shares of
original complaint:
court
the
order
March
holdings
approximately
to
On
6.9%.
holdings
of
Charter
to divest
itself
its
of
filed a third amendment
Charter
stock,
Liberty
rescinding its
by
pur-
either
13D,
acquisi-
reporting
to
the
its schedule
market,
selling
open
the
chases or
and
188,200 shares which
tion of an additional
pending such divestiture
to refrain from
holdings
approximately
to
its
increased
voting
exercising
or
its
its shares
otherwise
outstanding Liberty com-
the
of
total
7.9%
rights
April
the district
in those shares.7
mon stock. On
rights
Liberty
present
Precisely
meaning
to
shareholders or to the
of share-
4.
intended
what
past
convey by
we
sold
to
use of the word “auction”
holders who
shares Defend-
scheme;
pursuant
ants
to
cannot determine.
their unlawful
Defendants,
officers,
Enjoining
II.
their
Liberty alleged
5.
violated sections
Charter
persons
employees
agents, and
and
all other
9, 10(b),
14(e)
Exchange
13(d),
of
and
acting in concert with or
on behalf of
Act,
promulgated pursuant
and SEC rule 10b-5
Defendants,
indirectly,
directly
from:
or
10(b).
provid-
provisions
These
also
to section
(a)
attempting
acquire any
acquiring or
Liberty’s
against ed the basis
claims
stock;
Liberty
of
National common
shares
complaint.
See
text
in the amended
infra
(b)
disseminating
filing
any
or
false or mis-
Subject
jurisdiction over this action
3-6.
matter
leading
or
Schedule 13D statements
other
by
court
was conferred on the district
purchases or
documents related to
sales of
Exchange
§
15 U.S.C. 78aa
by
Liberty National securities
Defendants
respect
or to Defendants' intentions with
committing
Liberty charged
Charter with
sales;
purchases
such
and
common law
and various other common
fraud
(c)
by
voting
person
any
proxy
or
shares
Liberty
statutory
law and
abandoned
torts.
stock;
Liberty
of
National common
complaint,
claims
see
these
when
amended
(d)
using
attempting
or
to use
otherwise
3; they
text
in this
are not involved
infra
Liberty
any shares of
National common
appeal, and will not
mentioned further.
controlling
affecting
as a means of
or
stock
Subject
jurisdiction
matters
matter
over these
Liberty
management
of
National for the
by
the doc-
was conferred on
district court
advancing
purpose of
the interests
of
pendent jurisdiction.
trine of
otherwise;
or
Defendants
(e)
Liberty specifically
following
requested
exercise,
re-
exercising
attempting
or
di-
lief:
indirectly, any
upon
rectly or
influence
Liberty
management
Requiring
National for the
I.
rescind
of
Defendants to offer to
advancing
purpose
purchases
interests of
or otherwise divest themselves
otherwise;
Liberty
Defendants or
(f)
or
of all shares of
National stock owned
them,
any
taking
attempting
orderly
or
to take
other
in an
manner
without
and
prejudice
Liberty
steps in
their unlawful
furtherance
interests
National's
Liberty’s first
claim
relief was
Charter,
based
Liberty alleged
in carrying
13(d)8
on section
the Exchange
out
acquire
position,
Act.
its scheme to
control
manipulate
any
major change
scheme to
the market for Liber-
or to make
other
in its
structure;
ty
attempt
precipi-
corporate
National
or to
business
stock
or
(D)
security
tate an
control of
the number
of such
auction for
Na-
of shares
owned,
beneficially
which
tional.
and the num-
concerning
Declaring
decreeing
ber of
III.
shares
there is a
acquire, directly
(i)
indirectly, by
or
National is entitled to refuse to transfer on its
(ii)
person,
such
any
purchased
each associate of
books
stock
Defendants or
person, giving
background,
such
any
recognize
of them
refuse to
and to
residence,
identity,
citizenship
any
purchased by
each
respect
vote with
stock
associate;
them;
such
any
Defendants or
(E)
contracts,
any
information as
ar-
Granting
IV.
National such other
rangements,
understandings
any
or
just
and further
this Court
deem
relief as
person
respect
securities of the
proper.
issuer, including but not limited to transfer
securities,
(amend-
ventures,
joint
8. Section
of the Williams Act
loan
Act),
calls,
78m(d)
option arrangements, puts
guar-
or
ments to the
15 U.S.C.
or
loans,
guaranties against
provides
pertinent part;
anties of
loss
or
guaranties
profits,
division of losses or
(d)
acquiring
Reports by persons
more than
profits,
giving
withholding
or the
per
five
centum certain classes of securities
proxies, naming
persons
with whom
who,
(1) Any person
acquiring
after
direct-
(cid:127)
contracts, arrangements,
such
or under-
ly
indirectly
ownership
beneficial
*5
into,
standing
giving
have been entered
and
security]
any
directly
[covered
...
or indi-
the details thereof.
rectly
per
the beneficial owner more
than
(2)
any
change
If
material
occurs in the
shall,
days
centum of such class
within ten
facts set forth in
the statements
the issuer
acquisition, send
after such
to the issuer of
exchange,
and the
in the
and
statement filed
office,
security
principal
the
at its
executive
Commission,
with the
an amendment shall be
mail,
by registered or certified
send to each
exchange
transmitted to the
and the
traded,
exchange
security
where the
and
Commission,
and shall be filed
the
Commission,
file with the
a statement con-
regulations
accordance with
and
such rules
as
information,
taining
following
such of the
may prescribe
necessary
the Commission
as
information,
and such additional
as the Com-
appropriate
public
or
in the
interest or for the
may by
regulations, pre-
mission
and
rules
protection of investors.
necessary
appropriate
pub-
scribe as
or
in the
* * * * * *
protection
lic interest or for the
of investors—
(5)
Commission, by
regulation
The
rule or
(A)
residence,
background,
identity,
the
and
order,
by
may permit any person
or
to file in
of,
citizenship
and
and the nature of such
required by paragraph
lieu of the statement
ownership by,
person
beneficial
such
and
(1)
regula-
of this subsection
the rules and
or
by
persons
all
whom or
other
on whose
thereunder,
stating
tions
the
notice
name of
purchases
behalf the
have been or are to be
person,
any
such
the
of shares of
number
effected;
equity
(1)
subject
paragraph
securities
(B) the
amount of the
source and
funds or
him,
by
which are
the
owned
date of their
other
used or to be
consideration
used in
acquisition and such other information as the
making
purchases,
any part
the
and if
of the
may specify,
appears
Commission
if it
to the
purchase price
represented
or is to be
Commission that such securities were ac-
represented by
or other
funds
consideration
quired by
person
ordinary
such
in the
course
borrowed or otherwise obtained for the
acquired
of his business and were not
for the
purpose
holding,
trading
acquiring,
or
purpose of and
have the
do not
effect of
security,
description
such
of the
transac-
changing
influencing
or
the control of the
thereto,
parties
tion and the
of the
names
partici-
issuer nor in
with or as a
connection
except
a source
that where
of funds is a
pant
any
having
purpose
such
transaction
ordinary
loan made in the
course of busi-
or effect.
bank,
by
ness
as defined in section
(6)
provisions
subsection shall
title,
78c(a)(6)
person filing
if the
of this
apply
not
to—
requests,
such
the name of the
statement so
*
*
*
*
*
*
bank
made available to the
shall not be
public;
(D) any acquisition
proposed acquisition
or
(C)
purchases
Commission,
purpose
pro-
security
if the
of the
or
of a
the
which
order,
spective purchases
acquire
regulations
is to
control of
rules or
shall ex-
securities,
empt
provisions
the business of the issuer of the
from the
of this subsection
of,
any plans
persons
purpose
proposals
such
as not entered
the
into for
and
issuer,
of,
liquidate
having
changing
such
to sell its
not
the
effect
or influ-
persons,
encing
merge with
the
the issuer or
assets to or
other
control of
otherwise
purchaser,
funds,
the source of the
misleading schedule 13D
and
false
filed
purpose
acquisition
and
pur-
statements.
plans.9
chaser’s future
anyone acquiring more
requires
equity
class
percent
than five
Liberty did
allege
how the false
with the
company registered
aof
securities
13D
schedule
statement enabled
Charter
Commission,
any ex-
file with
SEC
acquire
stock;
Liberty
shares of
Liberty
traded, and
stock is
which the
changes on
pled no facts that
indicated that Charter’s
13D state-
schedule
company-a
issuing
13D statement was ever communicated to
(a)
things:
forth, among other
setting
ment
market or
the Liberty
shareholders
pur-
identity of
background
sold to
who
Charter.10 Nor did
(b)
of funds used
source
chaser;
injured
allege
how was
Charter’s 13D
securities;
(c)
pur-
purchase
Notwithstanding
statement.
the lack of
purchaser’s
acquisition
pose of the
any allegation
relationship
causal
be-
respect
and intentions
plans
future
tween Charter’s
schedule 13D statement
12(b)20, 17 C.F.R.
rule
SEC
the issuer.
acquisition
Liberty stock,
and Charter’s
promulgated
240.12(b)-20
sought
injunctive
nevertheless
updating of
periodic
13(d), requires
relief stated above:
Charter
divest-
changes
to reflect
13D statements
schedule
ed of its Liberty shares.
disclosed.
previously
facts
in the
Liberty’s second claim
relief
was that
13D state-
schedule
Charter’s
alleged
thereto,
engaged
in a tender offer in
amendments
viola-
ment,
including
14(d)11
(e)12
identity
of sections
misleading
as
false
was
New
purposes
York and
comprehended
laws New
within
of the insurance
as
Jersey.
this subsection.
defendants have
that the
failed
disclose
It
complaint alleged that
amended
Charter’s
9. illegal
engaged
tender offer.
in an
amended,
filing,
willfully
false
13D
violated
that defendants
disclose
It failed
following
misleading
respects:
in the
Improve-
Antitrust
Hart-Scott-Rodino
*6
falsely
purchases
that defendants’
It
Liberty
stated
("Hart-Scott-Rodino”), 15
Act of 1976
ments
“primarily
National shares were
for
U.S.C. 18a.
that
and did
disclose
defend-
investment”
plan
acquire
purpose
ants’
and
was to
9.9%
gain
plaintiff’s
Liberty alleged
information
stock in order to
influential
that
the false
position
plaintiff
in
or
or
sell their
its schedule 13D statement
dominant
disclosed in
Charter
Charter,
premium.
pre-
a
highly
"control"
to
and thus
shares
favorable
purchases
Liberty,
sumably
It failed to disclose
of Lib-
and if
to
disclosed
beneficial
erty
part
were
are
of an
National stock
and
de-
create an increased
the market would
to
acquire positions
consequent
of influ-
Liberty
overall scheme to
in
and a
rise
for
stock
mand
companies.
and
in several
ence
dominance
price;
schedule 13D state-
and that Charter’s
its
were
It failed to disclose that there
and
highly dam-
disclose information
ment
to
failed
arrangements
agree-
understandings,
Charter,
Liber-
aging
and thus detrimental to
to
to,
among
respect
with
ments
the defendants
position, implying
ty
gained a
Charter
control
if
alia,
holding
voting
purchase,
inter
to
communicated
the information were
that if
Liberty
market,
National shares.
off of
would cause a sell
to
the funds used to
It failed
disclose that
price.
consequent
and a
fall in
stock
purchase Liberty National securities were ob-
illegal
single
through
premi-
tained
sale
14(d)
(amend-
11. Section
of the Williams Act
product
um deferred annuities
insurance
[an
Exchange Act),
7n(d)
ments to
15 U.S.C. §
single large
purchaser pays
for which
(1982), provides
pertinent part:
exchange
premium
present
for an
in the
annuity to
time in
fu-
commence some
by
(d)
of more than
offer
owner
Tender
being
subject to
and are therefore
re-
ture]
securities; excep-
per
of class of
centum
five
or
scinded
refunded.
tions
Raymond
to
K.
It failed
disclose that
Mason
(“St.
(1)
any person,
(“Mason”)
Paper Company
It
unlawful for
...
and St. Joe
shall be
Charter,
Joe”),
[any registered
offer for
to make
security]
tender
substantial shareholders
if,
thereof,
Charter,
may
such
be
to
after consummation
deemed
"control”
would, directly
indirectly,
(the
Testamentary
person
be the
Alfred
or
the
"Trust”)
I. DuPont
Trust
per
centum
may
deemed
"control"
Joe.
beneficial owner more than
be
St.
have con-
that defendants
It failed
disclose
in violation
their investment activities
ducted
55J
14(e)
According
Exchange
Liberty,
prohibits
Act.
fraudulent
conduct
in con-
nection with a
purchased
tender offer.
large
Charter
solicited
premium,
at a
blocks of
shares
Liberty alleged
failed to file
this constituted
offer.
Section
tender
required
information
persons making
requires
14(d), and that
false
Charter’s
and mislead-
for
certain
tender offer
securities disclose
ing schedule 13D statement
amounted to
by
prescribed
filing it with the
information
fraudulent
14(e).
conduct under
SEC. This information includes all
is Liberty did not allege
injured
how it was
by
required
filing.
in a section
this fraudulent
Nor
conduct.
did
ties taken
cording
than all the
ties to
days
terest or for the
or
class,
invitation
and at
wise
or
tation, except
published
of the
as
tender offer or
tenders
may prescribe
for tenders shall
of the offer or
of seven
such rules and
investors.
reject
filed as a
the holders of
or
requests
such statement as the Commission
rules and
contain such
terest or for the
tisements
sion
as
of such
offer or
cified in section
ment
person
ed or sent
such additional information
(6)
(5)
(4) Any
security
willing
necessary
inviting
request
necessary
each
depositor
public
prescribe by
may by
after
Where
Securities
and where a
containing
a tender
original
[*]
deposited pursuant
any
has filed
class,
request
pro
days
or
depositor.
making
or sent
are first
regulations prescribe....
to take
up
solicitation
the number
holders than
time
copies
part
or invitation for
tenders of
interest or
or
outstanding equity
invitations
[*]
any person
rata,
or
or
rules and
shall be
unless at the
as the Commission
after
tender
given
regulations
request
offer or
such a
withdrawn
after
or invitation
of such statement and shall
appropriate
appropriate in the
protection
be made
such
protection
[13(d)
deposited pursuant
or
necessary
a tender offer or
up
rules,
of
request
disregarding
published
[*]
greater
information
given
time until the
sixty days
the offer or
and
offer
the Commission a state
such a
or
taken
of
for the
or invitation are first
time definitive
security
for tenders or adver
security
such
makes a tender
regulations
regulations,
request
[*]
recommendation to
securities
pay
to
in accordance
provisions
as the
thereto within ten
number of securi-
or
of investors.
time
or
in the
tenders,
security
information
security
are first
person
or
up
as the
request
or on behalf of
for,
appropriate
invitation for
securities of
investors. All
[*]
protection
fractions,
sent or
holders such
or
copies
as
contained
Commission
may
request
the securi-
requesting
expiration
public
public
accept
invitation
deposited
nearly
prescribe
Commis
or order
holders,
may by
publish
for less
shall be
[*]
or invi-
of this
bound
copies
other-
of the
offer,
given
date
Act]
spe
ac-
in-
in
or
or
as
12. Section
ments to the
(1982), provides:
fraudulent, deceptive, manipulative
practices,
solicitation of
or
to or in
omit to state
order to make the statements
light
purposes
are
lative.
tices
any untrue
ably
(e)
pursuant
sion of fact with
invitation. The
lations
tation
request
before the
tenders
er whose securities are taken
increased
crease in
creasing
tender
invitation for
securities
holders,
ited
subsection shall
published
ulations
provisions
It shall be
prehended
trol of the
section.
into for the
effect
(8)
(C)
(7)
such
request
Untrue
made,
apply
designed
within ten
as
Where
which the
[*]
define,
or invitation.
offer or
before the
securities,
of,
as
favor of
the consideration offered to holders
of this
14(e)
the consideration offered to
in
to the tender offer or
have been taken
consideration
tenders
not
or sent or
provisions
or
statement
Exchange
or
described
variation
fraudulent,
changing
circumstances
statement
unlawful
connection
[*]
of this subsection as not entered
any person
within the
issuer or otherwise as not com-
any
misleading,
purpose
invitation
security
tenders
of Williams Act
and
subsection,
also
Commission,
order,
prevent,
days
offer
Commission
any
of, any security—
request
material
[*]
such
expiration
prescribe
respect
given
apply
of material
Act),
of this subsection shall
for
or
after notice of an in-
such
for,
of,
of a
shall
holders in
deceptive, manipu-
to each
paragraph
purposes
person
varies the
influencing
the tender offer or
[*]
any person
such acts and
or to
and not
up by
15 U.S.C. §
or
or
by
fact
offer,
exempt
material fact or
to tender offer
security
any
securities
tenders,
up
request
rules and
means reason-
thereof
invitation for
shall,
engage
[*]
made,
security
shall
fact or omis-
necessary
or not such
rules or
tender
such
of this sub-
which
or
request,
request
having
opposition
terms of a
from the
the con-
to make
*7
(amend-
paid
holders.
security
pay
for the
[*]
or invi-
or
acts or
person
in
in the
78n(e)
is first
depos-
by
prac-
regu-
hold-
offer
they
reg-
any
any
in-
or
or
in
illegal
13D
and made
fail-
ule
statement
injured
Charter’s
allege
it was
how
pursued
offer as
scheme.
tender
14(d).13 Liberty
with section
comply
ure
Charter,
seeking a
in
alleged
merely
contains,
subsections, a
in four
Section 9
Liberty, had
sec-
price
in
position
variety
against
violated
ma-
proscriptions
control
of
(e)
Liberty
of action
nipulation,
was
and creates a cause
tions
purchase or
“any person
of
who shall
favor
requiring
injunction
entitled to an
therefore
any security
manipulated price].”
sell
[a
holdings
to divest
itself
Charter
provisions of
specify
did
Liberty.
supposedly
9 that Charter
violat-
for relief
based
Liberty's third claim
allege
It
had mani-
did
that Charter
ed.17
10(b)15
Exchange
on sections 914
price
Liberty stock
the market
pulated
by the
promulgated
Act and rule 10b-516
had filed a false schedule 13D state-
alleged
that Charter
Commission.
inducing
pur-
purpose
“for
ment
in a
by engaging
laws
violated these
others,”
stock) by
(Liberty
or sale of
chase
manipulate
for Liber-
the market
scheme to
(a)(2)
conceivably stating a subsection
thus
upward displace-
ty
bring
stock to
about
(4)
allege,
Liberty did not
or
violation.
According
Liberty,
price.
however,
ment
in the
manipulated
Charter
how
misleading sehed-
filed a false and
or
its false schedule 13D state-
market
10(b),
78j(b)
pro-
filing,
§
Lib-
Section
15 U.S.C.
made a section
15.
13. Had Charter
part:
erty
permitted
file a coun-
vides in
have been
allege
did not
that the
terstatement.
It shall be unlawful ...
any
injured
deprivation
opportunity
it in
of that
* * * * * *
way.
(b)
employ, in connection with
to use or
any
purchase
any security
or sale
...
15 U.S.C.
9 of the
manipulative
deceptive device
contri-
or
or
(1982), provides:
§ 78i
reg-
vance
of such rules and
in contravention
Manipulation
security prices
§
(a)
may prescribe
78i.
ulations as the Commission
purchase
relating to
or sale
Transactions
appropriate
public
necessary
interest
or
security
protection
or for the
of investors.
any person,
...
be unlawful for
It shall
effect,
(2)
Employment
Manipulative
a series
transactions
Rule 10b-5.
To
...
240.10(b)-5
registered
creating
any security
actual or
Deceptive
...
Devices. 17 C.F.R.
trading
security
or
apparent active
in such
price
raising
depressing
securi-
or
of such
any person, directly
It
unlawful for
shall be
inducing
ty,
purpose
purchase
for the
any
indirectly,
or
or
the use of
means
security by
or
such
others.
sale of
commerce,
instrumentality
or of
of interstate
mails,
any facility
any
national
or of
* * * * * *
(4)
person
purchasing or offer-
If a ...
...
exchange,
securities
make,
security,
regard-
ing
device,
purchase
scheme,
(a)
any
employ
or arti-
To
ing
security
any
purpose
of induc-
...
fice
defraud.
security, any
ing
purchase
sale of such
or
(b)
any
a ma-
untrue statement of
To make
at the
and in the
which was
time
statement
light
fact
terial
or to omit to state material
fact
it was
the circumstances under which
necessary
made,
in order to make
statements
made,
misleading
respect
or
false
light of
circumstances under
in the
fact,
had
which he knew or
made,
material
misleading,
they
were
ground to believe was so false or
reasonable
misleading.
act,
(c)
engage
practice,
course
To
operates
operate
or would
of business which
*8
*
*
*
*
*
*
any person,
upon
as a
or deceit
fraud
any
liable;
purchase
(e)
equity
with
or sale of
in
in connection
Persons
suits
law or
willfully
Any person
participates
security.
in
who
any
subsec
act or
in violation of
transaction
(a)
types
deals
six
of transac-
section,
Subsection
with
(b),
17.
(a),
(c)
be
or
of this
shall
tions
concerning
purchase
or sale of securi-
tions
any person
purchase or
liable to
who shall
(b),
(section 9(a) (1
6));
through
subsections
ties
any security
price
was affected
sell
at a
which
(d)
relating
(c),
to
transaction,
arid
concern transactions
person so
such act or
and the
straddles,
calls,
Liberty's
options.
com-
any
puts,
or
injured may
equity
sue in
or
law
allegations implicating
plaint
sub-
no
competent jurisdiction
contained
to recover
court of
damages
(b), (c),
(d),
implicating
or
and none
any
sections
result
such act
sustained as a
of
(6).
(a)(1), (3), (5), or
subsections
or transaction....
any Liberty
12(b)
ment was communicated
to
of the Federal
of
Rules
Civil Proce-
Finally,
considered,
or induced
sales.
shareholders
dure because it
in addition to
allege
did
it
Liberty
pur-
allegations
not
that
was a
of Liberty’s amended com-
or
a security
chaser
seller of
authorized to
plaint,
amendment
5 to
13D
Charter’s
9;
it
bring
simply
statement,
suit under section
con-
which summarized the amended
cluded that
had
because Charter
violated
complaint,
copy
attached a
of it as an ex-
9, Liberty
injunc-
was entitled to an
hibit, and
position
set forth Charter’s
with
requiring
to
itself
all
Charter
divest
of
respect
allegations
therein.
The
Liberty
stock.
court
concluded that
Liberty’s
none of
three claims stated a
of
cause
action and
10(b)
prohibit
rule
10b-5
Liberty’s
dismissed
complaint
prej-
without
employment
manipulative
of
and deceptive
udice.18
devices, including false statements of mate-
facts, “in
purchase
rial
connection with the
The district
court dismissed the first
any security.”
Liberty, again,
and sale of
on
ground
claim the
that an issuer does not
allege
purchaser
did
not
that
was a
standing19
have
challenge
suf-
facially
of
stock
Liberty
seller
transaction
ficient
filing.
schedule 13D
The court dis-
alleged manipulation
affected
Charter’s
missed the
ground
second claim on the
Liberty
or false schedule 13D statement.
Liberty
allege
had failed to
facts
alleged only
en-
that because Charter had
reasonably
which one could
conclude that
gaged
Liberty
in such
conduct
entitled
Charter had made a tender offer within the
requiring
to a court order
divest meaning of section 14. The court dis-
holdings
Liberty.
itself of all of its
ground
missed the
claim on the
third
Liberty’s
sections 9 and
Charter moved
dismiss
rule 10b-5 do not
complaint on
May
someone,
amended
1982. The
create
cause of action for
like
Liberty,
court
district
treated the motion as a mo-
purchaser
who is neither a
nor a
summary judgment
security.
tion for
rule
of a
Liberty
seller
appeals.20
now
provide
explana-
district
did
plaintiff may
spe-
The
court
since
not have been
why
Liberty's
cially
tion of
dismissed
amended
substantially injured,
com-
may
there
be no
plaint
prejudice.
without
"Title 28 U.S.C.
justiciable
controversy.
case or
provides
appeals
of
§ 1291
court
shall
us,
case before
the issue is not stand-
jurisdiction
appeals
have
all
deci-
from ‘final
existence, limits,
ing, but
rather
con-
sions’
district court. A dismissal without
private
rights
tours
of action under
appealed
prejudice can be
a final
as
order.”
issuer,
Liberty,
the securities
as
not a
laws.
Smith,
Forestry Corp. v.
Davis
None statement, 13D Liberty presents schedule bases claims amendments, explicitly ac- was made in connection appeal creates a Liberty issuer, Liberty, any purchase or sale of stock. of an such on behalf making corpo- greater difficulty Liberty alleged, explana- also without tion, injured by possible early though acquisitions, the mechanism rate Liberty employees, alleged difficulty whose retire- wrongs retirement create which Charter's price ment income tied now inflated making acquisitions is not made addition, Liberty alleged Liberty's stock. pleadings. clear injury occasioned shareholders
555 Moreover, Liberty’s allegations factual allegation did no factual that any transaction permit not even the inference that Char- was any way affected in by Charter’s al- ter’s schedule 13D statements allowed legedly false schedule 13D statement. purchase Liberty Charter to stock at a
price
Second,
different
that which would have
there is no implied right
prevailed.
otherwise
of action in an issuer of the securities in
purchase
volved in a
made in violation of
precise meaning
The
of “in connec
compel
rule 10b-5 to
wrongdoer
provided
with” is
neither
rescind the transaction or otherwise divest
10(b)nor rule
10b-5.
case law reveals
himself of the
acquired.
securities he
Im
that in order for this element to be satis
plied private rights of action under section
there
fied
must be some causal relationship
10(b),
10b-5,
violations
rule
alleged
deception
between
and some
recognized
been
by district and circuit
consequent purchase or sale. Courts have
1946,
courts since
Kardon v. National
spoken of this connection in terms of re
Co.,
Gypsum
F.Supp.
69
(E.D.Pa.1946),
512
See,
liance and causation.
e.g., Rogen v.
and have been
confirmed
Supreme
260,
Corp.,
F.2d
(1st
Ilikon
361
266-268
Court since 1971. Superintendent
Cir.1966);
Park,
In
Inc.,
List v. Fashion
340
surance v.
457,
(2d Cir.1965),
Co.,
Bankers
&
denied,
Casualty
F.2d
cert.
Life
6,
9,
165,
Lerner,
9,
13 n.
811,
sub
S.Ct.
nom. List v.
382 U.S.
n.
23,
(1971),
(1965),
L.Ed.2d 128
transaction,
731,
court
before the
at
Thus
10(b) plaintiffs
insiders. Id. at
95 S.Ct.
section
they
claimed
an
persons
argued
who
it cannot be
that the absence of
were
they
had
bought
securities
express
over-
cause of action was mere
The
by the defendant.
misled
been
sight or error.
bring
suit was
issuer to
right of an
Rehnquist,
speaking
Justice
for
plaintiffs were
Chip
The Blue
involved.
Court, did not limit
rationale
his
to statuto-
Trading
Chip
Blue
former retailers
ry language
legislative
and
history. Not-
had been deceived
Company who
Stamp
ing that
we
ac-
deal
“[w]hen
dis-
prospectus and
pessimistic
overly
an
tions
Rule
under
10b-5 we deal with a
in the com-
shares
purchasing
from
suaded
judicial
grown
oak which
little
has
de-
consent
to an antitrust
pursuant
pany
more than a
acorn” and that
first
given
had been
they
in which
cree
„“[s]uch
may
growth
quite
be
consistent
was intended
of what
rights
purchase
congressional
enactment and with
The
later
was,
bargain.
stock
be,
and
judiciary
the role of the
to recov-
federal
in inter-
they sought
and
up in value
went
preting it,”
in value of
the rise
id. at
95
at
damages for
er
pur-
they would have
they claimed
policy
shares
then turned
Justice
his attention to
deceptively pessimistic
for
chased but
considerations, in order to aid the
Court
prospectus.
determining
implying
a cause of
Chip
plaintiffs
behalf
the Blue
10(b) ac-
whether section
To determine
purpose
was “consistent” with the
of Con-
for
buyers a
of action
putative
corded
gress.
Id.
Supreme
damages, the
Court construed
overriding
The
concern
Court’s
Congress
enacting
intent of
10(b)
rule
there
under section
10b-5
10(b).
three
of con-
used
tools
Court
opportunities
his-
for
analysis, legislative
“vexatious”
textual
extensive
struction:
tory
policy considerations. Section
speculative
litigation
highly
claims. Id.
10(b)
expres-
use
10b-5 both
and rule
739-49,
at
The Court
at
95 S.Ct.
1927-32.
purchase
“in connection with
sion
pointed out that
security.”
pointed
sale of
Court
damages
by purchas-
While the
suffered
at the time
enactment
out that both
§ 10(b)
pursuing a
ers and sellers
subsequently
considering
amendments
of action
on occasion be difficult
Congress
language
amend
declined to
ascertain,
purchasers
in the
such
main
10(b)
permit
a wider class
of section
recovery
least
and sellers at
seek to base
clearly
implying that
it was
plaintiffs,
on a demonstrable number of shares
fully
intended the narrow
aware of
contrast,
putative plaintiff,
traded.
“purchase
term
and sale.”
reading of the
purchases nor
securi-
who neither
sells
n.
& n.
750
Id.
732-3
intangible
ties but
for
eco-
sues instead
1932 n. 13.
also
n.&
injury
nomic
such
loss of a noncon-
willing
itself to
and able
showed
sell,
buy
opportunity
tractual
non-purchaser-seller,
provide a
to a
seeking
likely
largely
more
to be
con-
in particular,
when it chose
an
speculative recovery in
jectural and
16(b)
do
so. Section
will
which the number of shares involved
(1982),
78p(b)
example,
U.S.C.
for
subjective hy-
depend
plaintiff’s
provides
on the
a cause of action on behalf of
profits
pothesis.
to recover
from transactions
issuers
suing
actually considering
money damages
The Court was
the wide
sellers from
ly
rule
See
note 26.
followed “Birnbaum rule” which had its roots
10b-5.
infra
equity;
Corp.,
actually
action in
Newport
in Birnbaum v.
461,
Steel
F.2d
Birnbaum was
denied,
however,
(2d Cir.),
applied
most courts that
it did so
cert.
See,
damages
e.g., Ha
actions.
its
We cannot
III.
As our
Liberty’s
discussion of
knowledge
A little
of the delicate nature
10(b)-rule
section
corporate
illustrates,
claim
of the market for
control con-
10b-5
gravamen
Liberty’s
no
of all
vinces us that there is
sound reason to
claims is
provide an additional shield—in the form of
that Charter filed
and misleading
a false30
16(b)
we
29. This
28. Section
referred to in our
would be true whether Charter were
prong
simply
discussion of the second
of Cort is also
purchases
dump
forced to
rescind its
inquiry under
the third
informative
for our
its shares
In the
on
market.
former case the
16(b)
specific
prong.
provision
makes
simply
shock to the market would
occur one
by shareholders
be-
for a derivative action
on
step
Liberty
later. The former
shareholders
management
corporation, when
half of the
who sold to Charter showed themselves unwill-
unwilling
bring a section
action. Nor-
ing
Liberty
price
hold
shares
low
mally,
management who decides
it is
therefore,
paid;
higher price
Charter
fully
bring
an issuer
aware,
was
shall
suit.
prevails, they
expected
now
to be even
be,
as we must
the interests of
unwilling
Liberty.
more
to hold
shares
management
shareholders of the firm
and the
issuer,
represented by
as
are not identical. The
moving
original
30. We
from the
note that
in
management,
unselfish observer of the
is not an
complaint
complaint, Liberty,
to the amended
Management
transactions
in its
is there-
stock.
changed
allegations.
original
In
its
com-
policeman
fore a most
of section
unsuitable
plaint Liberty stated that Charter’s assertion that
10(b).
grips
comes to
dent that
with the existence
question
statement.31
schedule 13D
on
address,
implied private rights
of and limits
assessing
Liber-
we must now
13(d).33
relief,
parties
an
action under section
Both
is whether
ty’s first claim
Paper
Corp.,
Rondeau Mosinee
cite
implied right of action under
issuer has an
in- U.S.
Ash,
L.Ed.2d 182
progeny:
and its
congressional
discerning
tool for
a class for whose with a
plaintiff
a member of
on the Cort
gloss
intent. Curran
enacted;
placed a
especial
statute was
benefit
*16
inquiry. Curran holds
that
v. Ash
the fact
(2)
implicit
or
any explicit
there
whether
is
“compre
Congress has conducted a
that
congressional
intent
create
indication of
significant
reexamination
and
private remedy for this
plain
hensive
deny
this
left
intact
tiff;
remedy for
amendment of
statute
(3)
private
[a
and]
whether this
provisions
which the
statutory
the
consistent with
plaintiff
would be
[routinely
had
and consiste
federal courts
legislative
underlying
purpose
of
of action is itself
ntly]
implied
of ac
cause
scheme;
(4)
cause
affirmatively in
evidence that
Congress
state
relegated to
traditionally
tion
one
is
remedy.”
preserve
that
456 U.S.
tended
law,
inappropriate
so
that
would
(footnote
omit
solely on
102 S.Ct. at
infer a
based
cause of action
ted,
added).35
emphasis
This evidence is
begin with the
we
federal law. Once more
legislators
aggregate
of our
tive and
minds
at 1839.
34. See
keep periodic reports 78p(b), and file U.S.C. records 78r(a), governmental enable the relevant author- and that is evidence “[t]here [in perform ities to regulatory their func- legislative history] support the view that reports tions. The provide and records § 18(a) provide was intended to the exclu- regulatory authorities with the neces- sive for misstatements contained in sary compliance information to oversee any reports Commission, filed with the in- with and enforce the various statutes § cluding pursuant 17(a).” those filed regulations they with which are con- Id. at (footnote at 2488 case, 17(a) cerned. In this reports, omitted, added). emphasis along inspections and other informa- is 17(a) identical to section tion, enable Commission and Ex- “neither rights private confers change to compliance ensure with the parties nor proscribes any conduct un- rule,” capital “net principal regula- lawful.” Id. at 2486. It tory tool which the Commission and simply requires persons acquiring a sub- financial monitor health of stantial a firm brokerage protect report firms and interest their customers from in acquisition Commission, the risks involved the ex- leaving their cash and securities with changes, and the issuer. Like section broker-dealers. The information con- 17(a), there no basis in the statute’s § 17(a) reports tained in intended .language for implying private right of Commission, provide Ex- and, action in anyone, 17(a), like section change, other with a suf- authorities 13(d)’s legislative history contains ficiently warning to enable them to early suggestion no such intended protect take appropriate action inves- of action. collapse tors financial before the purposes For analy- Cort v. intent Ash particular broker-dealer involved. But only significant sis the difference between § 17(a) stretch of its does statutes, plaintiffs two as the language purport confer dam- applied them in Touche Ross and in this ages or, indeed, rights any remedy in the case, that, here, the issuer received a event the regulatory authorities are un- copy achieving filing, objectives successful their SEC while in Touche and the broker plaintiff becomes insolvent before Ross the trustee’s customer bene- *19 Congress inference is difference, suasive did not how- This did not.40 ficiaries supplement analogy we intend Commission and ever, from the does detract cases. enforcement of the two shareholder the statute drawn between for the strong precedent remedy the issuer Liberty pro- has Ross Touche the sort Congress did not intend in this case. posed view brought. Liberty has claim Congressional to imply intent not why we other reasons are still There right Liberty brought of action has is also no such Congress harbored conclude apparent made when one focuses on the enforcement to the intent. In addition injunctive Liberty seeks; particular expressly provided Congress mechanisms inappropriate lacking pro- it is both 18(a), 9, 16(b) provided in sections portion wrong alleged.42 to the Exchange 15 U.S.C. 21 of the section 13(d) per- duty creates an affirmative a § enforc- (1982), express method of an 78u after he acquired son has more than five 13(d). Section of section ing provisions percent of the of an to file a shares issuer to investi- the Commission 21 authorizes purposes. for purely form informational It provision possible violation of gate the us strikes that the obvious antidote for Commission empowers It Act. filing. allegedly filing false is a corrected against federal court bring suit in request a Yet does not such reme- violator, autho- suspected, expected, Instead, dy. major a it seeks to force a viola- any evidence it to forward rizes holdings stockholder unload its vast the com- for Attorney General tion to the power voting to lose its over shares his proceedings of criminal mencement relief, primary if owns. The effect of such § (1982). The 78u discretion. U.S.C. market granted, would be to lower the found in Transamerica Supreme Court shares, price plainly which provides statutory scheme a that where beneficial to shareholders. would not be chary of must be “a court explicit remedies plainly contrary result would be This 21, 100 444 U.S. at reading it.” others into adopting intent in the Wil- congressional light of these extensive 247. In S.Ct. at Act. liams it can- mechanisms enforcement and varied Cort, then, prong the second Under to di- failed argued that not be statutory language, from we conclude problem enforc- rect its attention setting, the Court’s Rather, per- the contextual 13(d).41 the more ing section 78i(e) (1982), 9(e), provides for § U.S.C. likely a Although the to know that purchasers right on behalf of private of action buyer acquired out- a of its has more than 5% injured as a result of an are standing and sellers who file sched- shares and must therefore 16(b), manipulation. Section statement, illegal price to believe ule there is no reason 13D right private 78p(b) creates knowledgeable U.S.C. particularly are that issuers issuer to recover funds action on behalf be con- information that should substantive trading insiders. We of certain from That information tained those statements. to do when it chose this that rath- from purchaser and his intentions infer Congress so. concerns explicitly private Therefore, to create argument can- knew how er than the issuer. behalf of the issuer. uniquely well of action on the issuer is not be made that based situated to enforce unique Even the superior ability as an issuer in detect falsehoods. is far statement, seeking a fact 13D in a suit for violation of such relief failure to file schedule See, Milstein, 13(d). particularly e.g., Corp. well perhaps GAF issuers know, argue issuer en- ("requested placed for that the Milsteins be does F.2d at 714 required (3) voting any permanently enjoined from ... All the information forcement. during be con- acquired could the con- of section shares of GAF stock SEC enforcement Commis- spiracy”); the issuer Portland Cement Co. v. H.K. in letter from Missouri tained dangers Co., ("that any sion, avoiding vexatious thereby F.2d at 391 shares Porter divested; an issuer acquired creation litigation in the ... should inherent Porter voting enjoined such should be form cause of action. that Porter shares”); Corp. Lampert, General Aircraft (4) (“enjoining appellant from rights ... F.2d provides 41. stock”). voting any places. Sec- GAC other expressly in several of action *20 subsidiary questions, interpretation licly companies held have an insufficient relationship wrong the alleged the between incentive to adequately monitor the man- requested relief in agement and the this case that of the Nevertheless, firm. these legislative there was no clear intent to im- shareholders are not bereft all relief ply an issuer of action to obtain the from improper or management. inefficient ouster a shareholder who has made a shareholders, Large or outsiders who filing. false schedule 13D challenge management, help incumbent protect the small shareholders’ in interest inquiry, The final Cort and the one we monitoring by possibly challenging dispositive — think of the before us —in- management. cumbent The more obstacles Liberty is the placed path that are in the of those who underlying seeks is consistent with the pur- acquire large holdings, and the more pose of the scheme. We are expensive and consuming time the take is convinced that it not. process becomes, over protection the less mainly Williams dealt for the small shareholder. legisla- tender It clear from the offers. inappropriateness of implying the history tive that the framers the of Wil- remedy Liberty seeks is by illustrated an sought liams Act to “take extreme care to consequences examination of the rem- tipping avoid regulation the balance of ei- edy existing would visit on ther shareholders. management in favor of or in favor of While section is intended to person making bid,” the ensure the takeover provision the of information the goal that their to market promote to “full and through Commission, exchanges the the fair disclosure for the benefit of investors management, and it is while at the same time the investors providing offer- who are the management equal intended beneficiaries of this opportunity to present legislation, requested their S.Rep. case.” the relief No. 550 at 3. the is- suer,' here, give To ambiguous, best relief asks would even in its purpose. defeat this immediate effect When outsider ac- on the shareholders. Re- quires large quiring amount of stock a publicly Charter divest itself of shares, company held this very by selling creates least them back non-parties to potential market, nascent conflict between the or on the open depress will management. outsider and permit To price, by increasing supply issuer to oust the new simply stockholder stock the market a correspond- without because he filing made false would tip ing increase in the Removing demand. vot- management, balance towards thereby ing power from Charter will have ef- injuring existing Moreover, removing investors. fect of monitoring outside management incumbent could solidify management its signifi- shareholder with position by subjecting policing to suit manage- outsider cant financial interest who Thus, accumulated than remedy sought more ment. divestiture 5% shares of company, only and thus discour- the “issuer” illustrates too well age such accumulations. The threat of this that the interests of shareholders and man- litigation sort of might agement likely remove from the are not to be identical with player field a whose regard policing filings. self-interest is moni- schedule 13D tor management, and poised who is is a manage While there sense which mount a proxy fight or a tender offer. acting through the ment issuer can effic
Ever since Berle work, & iently Means’ seminal reflect collective interests of Corporation The Modern stockholders, this Prop- Private does hold true when erty it has generally been recog- the interests the stockholders and man nized that small large pub- agement shareholders in adverse one another.43 13(e) 43. Section imposed requirements Williams similar those 15 U.S.C. on out- 78m(e) (1982), provides 13(d). authority for the SEC siders This demonstrates a require comply the issuer recognition part reporting clear on the might party’s threaten- find fault with perceived an outsider When insiders, management schedule 13D displace ing amendment move the protecting court issue an requiring economic interest order party has a clear might not position, though why to show cause it should not its even be held in firm or contempt inadequate interest of the filing economic amend- *21 private aof issued, The creation ment. shareholders. If the show order firm would of the on behalf again required of action court would once find corpo- use management intent, allow incumbent party’s process and the of an own, to resources, their rather than rate filing pro- amended and a show cause new outsiders. aggressive harass burden ceeding begin might well anew. for the out- Moreover, it be difficult would precedential A us final concern to is the litigation by any sider to avoid vexatious a in this effect divestiture order case would craftsmanship fil- his of manner careful general- on have the market securities management would ing; the incumbent all ly. contemplating acquisition Parties its to maintain claim have to demonstrate large holdings compa- publicly of traded be that the outsider’s for relief would nies would be faced with substantial trans- of his intentions 13D statement schedule 13(d) action in the form of costs section issuer or respect to the was false with litigation expenses, including delay, when- un- misleading. Whether outsider is perceived by management ever incumbent equivocates as his inten- equivocal as a threat to their economic welfare. The allege, as tions, simply could the issuer chilling remedy Liberty of effect case, that true inten- Liberty did in this his approve us a could have deleterious Judge Friendly As opposite. tions are impact corporate on the market for control in one the first cases to pointed out of generally. and the of securities value We the Williams “It would be construe agree therefore district court that with infringement regula- of these serious 13(d) under ex- no cause section to overstate the
tions the outsider] [for Liberty requests.44 ists for the relief plans as to understate definiteness of [its] Specialty them.” Co. Inter- Electronic Corp., 409 F.2d Controls IV.
national
Cir.1969).
(2d
relief, though
claim for
Liberty’s second
claim, actually presents
one
two
stated as
filing
a
Measuring the truthfulness of
action,
seeking
causes of
each
discrete
problems for a dis-
pose significant
could
required
same relief:
that Charter be
might find it
trict
well. The court
court as
Liberty holdings
divest itself
its
difficult,
an extensive evidentia-
even after
subjective
enjoined from
pending such divestiture
vot-
ry
to determine the
proceeding,
ing any
Liberty’s
its
first cause
party filing the schedule
shares.
intentions
made
it
it. And
action is that Charter
a tender
time
filed
13D
at the
statement
complying
filing
it offer without
re-
made its determination
once the court
14(d) of
the Ex-
difficulty withdrawing
quirements
from the
might have
order,
change Act;
neglected
it
submit an
in-
dispute. Having entered
coercive
Liberty’s
contempt
statement to the SEC.
through the court’s
formation
enforceable
of action is that Charter in
party to amend its
second cause
power, requiring the
making
certain
faced with
the tender offer committed
13D,
court could be
schedule
14(e)
example,
acts in violation of section
For
fraudulent
still
proceedings.
further
open
management acting through
supra
court left
note 19. The
the interests of
might
detrimental
sued Charter
of whether
could have
had
be adverse
best interest
the shareholders.
See
failed to file a schedule 13D.
Ron-
deau,
compel-
supra text
20-21. We find no
holding
to find-
The district court limited
analysis
distinguish
ling
Cort
basis
our
action)
(cause
ing
standing
no
behalf
two
situations.
challenge
facially
the issuer to
sufficient 13D
filing,
this case. See
such as the one
involved
Act;
it filed a false schedule 13D
Court addressed the exist
not inform
statement.
does
us
ence and limits on
rights of action
statutory
how
these
either of
violations
(e)
under sections
in Piper v.
injured
Liberty why
intended
Industries,
Inc., 430
Chris-Craft
that the
relief it seeks be means
en-
Piper,
L.Ed.2d
forcing these
laws.
two
while not on all fours with the case before
us, is
extremely
nevertheless
useful for
14(d) requires
persons
mak-
achieving
proper
understanding
im
ing
a tender
offer
securities disclose
plied rights of
prescribed
action under
by filing
certain
information
sections
(e).
issuer,
Chris-Craft was an
the Commission and the
unsuccessful
14(e)
tender
prohibits
damages
fraudulent
offeror who sought
conduct
against
management
connection with such
tender
company
offer.
*22
over,
must
sought
Piper, Piper’s
surmount two hurdles before
to take
invest
it
adviser,
can recover under either of these two
Bangor
ment
and
Corpora
Punta
45
First, Liberty
sections.
must
tion,
demonstrate
knight”
successful “white
implied right
that an
of action exists on defeated
in
Chris-Craft
its
for
bid
control
type
behalf of an issuer for the
of injunc-
Piper.
Court held that
Second,
sought.
tive relief
must
purpose
since
of the Williams Act was
alleged
permit
have
sufficient facts to
a
provide protection
to
and
shareholders
court to infer that Charter conducted a
offerors,
not for
implied
tender
no
cause of
tender offer. We conclude
the right
action would lie for a defeated tender offer-
of action
asserts cannot
implied
or.46
under either section. Accordingly, we need
stated;
specifically
The Court
not determine whether Charter made a
holding
one,
Our
is a limited
whether
tender offer.
shareholder-offerees,
protected
the class
14(d)
(e)
by
Sections
and
do not
their
§ 14(e),
implied
have an
cause of ac-
language
private rights
create
of action.
§ 14(e)
us,
tion under
is not before
and
The existence
limits on the
to
we intimate no
view the matter. Nor
bring
private
are,
cause of action
as we
target corporation’s standing
is the
stated,
judicial
have
origin.
ques-
sue in
in
only
issue
this case. We hold
whether,
when,
tion of
an issuer can
offeror,
that a tender
suing
capaci-
its
bring
14(d)
(e)
an action under sections
ty
bidder,
as a takeover
does not
is
13(d),
similar to that under section
in that
standing
damages
sue
all of these sections
incorporated
were
into
§ 14(e).
byAct
the Williams Act and
42
(empha-
Id. at
n.
VANCE, concurring in at 1956-1960. Judge, 99 S.Ct. Circuit dissenting part: part and expounded upon Curran, the Court contemporary legal significance of the respect join majority’s opinion I surrounding a enactment: statute’s context 10(b). The precepts Merrill to section Smith, Pierce, “Congress presumed Fenner & Inc. to be aware of Lynch, Curran, judicial interpretation administrative however, compel interpreta adopt me to of a statute and L.Ed.2d a statute without of action exist when it re-enacts causes conclude 13(d), 14(d) 14(e) change....” under sections *25 relief. injunctive to seek permit 66, at n. at n. 102 S.Ct. 1841 456 U.S. 382 Pons, 434 U.S. v. (quoting Lorillard 66 body of Divining intent of a the collective 866, 870, 40 575, 580, 55 L.Ed.2d 98 S.Ct. fraught task with difficul- lawmakers is a (1978)). ty, and it is this task that divides the court. determining private whether view, In my majority’s resolution of the in a implicit federal Liberty's Act action claims under the Williams by the statutory when statute scheme emphasis By undue places on Cort Ash. issue, initial on that the is silent lending nearly terms each Cort factors on the state of the law at must be weight, my colleagues pre- focus equal embrace legislation was enacted.... time the cisely application the mechanical the of Cort legislation, Congress enacts new rejected When Supreme the Court in Touche Congress intend 560, question is whether 442 Redington, & Co. v. U.S. Ross sup private remedy 2479, 2488-89, create a as 575-76, 61 L.Ed.2d ed express pro enforcement Club, (1979). plement v. Sierra See California Congress 1775, of the statute. When 302, 1783, visions 451 U.S. in statutory which an in a context (1981) (Rehnquist, J,, acts concur- L.Ed.2d 101 already private remedy has been implied Supreme ring). years since Cort Act).2 H.R.Rep. recognized inquiry courts ... No. Cong., 90th 2d (1968), logically Congress is different. need not Sess. Cong. 3-4 U.S.Code & Admin. remedy, p. 2811; intended create a new S.Rep. News No. 90th existed; already question one since Cong., Sess. 2-5 1st On the Senate Congress preserve intended floor, explained: Williams Senator pre-existing remedy. What bill would provide do is to at 102 S.Ct. kind of the same disclosure requirements the Curran Accordingly, exist, viewed the Court example, now for which in contests comprehensive amendment of proxies for through controlling owner- Commodity Exchange (CEA),1 Act which ship company. in a expressly displace did not the unanimous implying case law for dam- patterned on the present law and [It] ages, proof Congress positively as in- regulations govern which proxy con- implied judicially
tended to retain the
reme-
tests.
dy.
Once it
legis-
resolved
24,665 (1967).
Cong.Rec.
intent,
the Curran perceived
lative
upon
Cort
remaining
no need to dwell
significance
The
of this lineage lies in J.I.
Id. factors.
102 S.Ct.
Borak,
Case
Co.
573
66, 102
1839,
(1975),
379,
Court conferred the
at
382 n.
S.Ct. at
456 U.S.
694-703,
66; Cannon,
Exchange
441
at
Commodity
pri
U.S.
1841 n.
Commission with
at
99 S.Ct.
1956-1960.
mary jurisdiction over
actions to
Curran Court sub
enforce the CEA.
that notion. To
The courts did not refute
characterized Deaktor sequently
having
preliminary to the
the extent
issues
“simply
assumed”
CEA afforded
courts,
litigated
merits were
before
right
implied
an
of action. 456
at
U.S.
outstanding
question was
65,
existed,
ests.5 This
with others
certain
the claim to
im-
extending the reach of section
and
plied cause of action under section
mandating
pur-
databank
centralized
for
stronger
parallel
even
the
than
claim in
poses
consolidating ownership
informa-
Act,
Curran.
Williams
unlike the
tion,
strengthen
bespeaks a clear intent to
CEA,
originally
judicial
enacted
regulatory
the overall
scheme consistent
favoring implied
action,
climate
causes of
private right
with a
of enforcement.
patterned
Cf.
very
and was
after
provi-
Curran,
394,
456
Likewise, nothing in
precludes
private remedy.
Curran
awith
Not even
CEA
congressional
giving
us from
action in the
lay
could
claim
ancestry.
in Curran
to such
implied
judicially
dispositive
face of
relief
pressing need,
no
given
There was
Borak
weight despite
fact
Congress
that
did
Rondeau,
Congress
to reexamine
debate the merits of
relief in
establishing
redress,
the case law
the deliberations over the
course
passed up
opportunity
it twice
1977 amendments.
Northwest Air-
Cf.
so.6 For these
I am
do
reasons
convinced
lines,
Transport
Union,
Inc. v.
Workers
obliged
that we are
to follow Curran.
77, 94,
1582,
1571,
451 U.S.
resolving
In
fact,
L.Ed.2d
In
Herman &
intent, several considerations recommend
Huddleston,
375,
MacLean
459 U.S.
against
majority’s
resort
to Touche
L.Ed.2d 548
the Su-
Redington,
Ross &
Co.
preme
unanimously
held that
(1979). First,
Ct.
575
1977,
14(d)
while sections
Importantly,
amendment
from Touche Ross.
fers
14(e)
scrutiny
similar
money
a claim for
have not received
Ross
involved
Touche
1970,
a different con-
damages
injunctive
relief.8
since
does not dictate
rather than
of
to Touche Ross
is no
the existence of causes
Finally,
analogy
clusion
All
provisions.
of the
the latter
for a direct examination
substitute
the same
Act.9
three sections were cut from
origins of the Williams
“
14(a)
all thus came into
bolt —section
—and
“judicial legislation”
just
‘It is
as much
Borak.
being stamped
imprint
of
remedy which
for a court
to withdraw
13(d) is
Congress’ reevaluation of section
as to
Congress expected to be continued
in 1977
significant because it confirmed
Congress never had in
improvise one that
”
was
of
three sections as of
what
true
all
Curran,
100,
at 394 n.
mind.’
456 U.S.
1968,
is,
Congress expected
that
that
Leist v.
(quoting
at
n. 100
102 S.Ct.
1847
section with the inci-
courts to clothe each
(2d
283,
Cir.1980)).
Simplot, 638 F.2d
313
relief,
judicial
as the
dents of
examination, under Cannon
foregoing
14(a) in Borak.
Court had done with section
legal
Curran,
contemporary
surrounding the enactment
context
in this case thus
into
The issue
devolves
13(d)
section
reveals that
amendments of
ques-
standing
because it raises the
one
Congress
private
to create
intended
issuer,
prop-
Liberty, as the
tion whether
complete, the
of action. This examination
injunction
erly authorized
seek an
issuers fall out
majority’s argument
body.
as a
the benefit
shareholders
special
for whose
benefit
the class
side
no
that Con-
There is of course
13(d)
lapses
irrelevance.
enacted
into
section
framing
Act
took
gress in
the Williams
“[T
no
for us to
need
]here
tipping
pains
the balance
to “avoid[]
fac
‘trudge through all four of the [Cort]
management
in favor of
regulation either
legis
dispositive question of
when the
tors
making
person
the take-
or in favor of the
” Curran,
lative intent has been resolved.’
1711,
Cong.,
H.R.Rep. No.
90th
over bid.”
388,
(quoting
at 1844
lack the and the information to
protect with, begin their To interests.
schedule 13D statements are distributed to
issuers, Commission, exchanges, and the public.
but not to the shareholder Furthermore, 78m(d)(1). only tar
U.S.C. get corporations familiarity have FERNANDEZ-ROQUE, al., Rafael et recognize day-to-day operations to inaccu Garcia-Mir, al., Moises et Orlando racies correct them. Indiana Nation Chao-Estrada, Plaintiffs-Appellees, Rich, 1180, 1185 Corp. al 712 F.2d n. 2 v. & (7th Milstein, Cir.1983); Corp. GAF v. v. 719-21; Steinberg, Propriety F.2d at SMITH, al., French et William Scope Un Cumulative Remedies Defendants-Appellants. Laws, der the Federal Securities 67 Cor Pip nell L.Rev. 598 n. FERNANDEZ-ROQUE, al., Rafael et er, Supreme recognized Court that mis Plaintiffs-Appellees, leading injure corporation statements by committing deceit on the shareholders SMITH, al., William French et as a whole. See 430 U.S. at n. Defendants-Appellants. parties 21. S.Ct. at n. As best able Nos. 83-8628. misrepresentations, to detect issuers standing accuracy to ensure the of the of United of Appeals, States Court filings feror’s for the benefit of the share Eleventh Circuit. body.10 holder June 1984. I by observing close principal that the effect of Curran is refrain from con-
ducting independent judicial discourse proper legislation ends of and the ways
best I to achieve them. would not
second-guess, does, majority the ad-
visability standing injunctive
relief under the cloak of Cort Ash be- respect
cause our under role Curran
congressional intent as determined under case, guidance of that whether or not
policy I considerations so advise. am fur- scrutiny
ther satisfied careful of self-
serving judi- management claims and the tailoring injunctive
cious relief can avoid
most if not all of the deleterious effects the
majority I conjures. For these reasons grant standing Liberty' sue Rondeau, example,
10. Piper's holding because detract from Rondeau deciding injunctive assumed relief denying standing without its terms is limited goal in favor of the issuer would serve damages competing suing for offerors neutrality toward ... which is "directed 14(e). at 42 n. n. Id. protection Piper, of investors." Piper 97 S.Ct. at does decision