*1 AND EXCHANGE COMMISSION SECURITIES FOR HUMAN RIGHTS MEDICAL COMMITTEE January Argued 10, 1972 70-61. November 1971 Decided No. Solicitor General Griswold argued peti- the cause for tioner. With him on the briefs were Daniel M. Fried- man, Terry William Bray, Loomis, Philip Jr., A. David Ferber, Richard E. Nathan.
Roberts B. Owen argued the cause for respondent. With him on the brief was Michael Boudin.
Roger S. Foster and Charles R. Halpern filed a brief Project Corporate on Responsibility as amicus curiae urging affirmance. opinion
MR. delivered Marshall Justice Court. *2 Human Rights acquired
The Committee for Medical by shares of stock in Dow Chemical Co. gift five 1968, March the wrote a Committee’s national chairman policy letter company to the concern over expressing napalm. to The respect production with the and sale of requested letter also that there included the com- pany’s for proxy proposal statement 1968 a to amend Incorporation prohibit Dow’s Certificate of the sale napalm purchaser of unless gives the reasonable assur- napalm ance that the not be used against human beings. replied Dow proposal that the too for late inclusion in the proxy for statement and discussion year’s at that annual meeting, but that it would be re- considered the following year.
In an exchange of letters with Dow in 1969, the Com- mittee indicated its belief that it had a right Rule 14a-8 of the Securities and Exchange Commission, CFR (1970) § 240.14a-8 (promulgated pursuant 14§to (a) of the Securities Act Exchange Stat. as amended, 15 U. C. (a)), § 78n proposal have its included in the company’s proxy for statement consider- by ation all shareholders. On February 7, responded that it intended to omit (some- what modified) from the 1969 statement under au- thority of subsections by SEC Rule relied on the Committee permitted that omission of shareholder proposals under two sets of circumstances:
§ 240.14a-8 (c) (2) it clearly appears — “If the proposal by the security holder primarily purpose enforcing personal claim or redressing a personal grievance against the issuer or its management, primarily for the purpose of promoting general economic, political, racial, social religious, or similar causes”; or proposal consists (c) (5) § 240.14a-8 — “If management request a recommendation or relating matter to a respect take action with of the operations ordinary business conduct issuer.” be re- decision requested that Dow's
The Committee February 18, 1969, On by viewed the staff the SEC. Fi- Corporation Division of Chief Counsel to inform Committee both and the nance wrote not recommend action Division will them that “this from the if is omitted to the Commission The SEC App. management’s material.” by the Committee granted request Commissioners it. affirmed they the Division’s decision and review *3 and obtained 43. The then App. sought Committee in United States of the Commission’s decision the review Circuit. for District Columbia Appeals Court held July 1970, Appeals that 8, Court On (a) § of the was reviewable decision SEC 78y C. Exchange § Act of the Securities clearly was Dow’s decision (a); that while review of reviéw of decision court, available in district the SEC’s appeals; court of that could also be obtained in a extremely validity of Commission’s determination in of its failure to state reasons dubious, especially light that the case should conclusion; its and supporting Commission for reconsideration and remanded to the C. App. statement of reasons. 139 U. D. here, for petitioned 2d The Commission review
F. 659. March granted and we certiorari on 1971. U. S. subsequent to the place, Events taken decision have below, subsequent and to our by the court some decision certiorari, require that that we dismiss this grant has now case on the that become moot. ground January 1971, the Medical Committee proxy- in Dow’s 1971 napalm resolution inclusion
its acquiesced in the Dow Commit- This time statement. proposal. At the annual and included request tee’s May in 1971, Dow’s shareholders meeting stockholder’s than all proposal. Committee’s Less voted on the 3% supported it, pursuant and to Rule voting shareholders (i), (c) (4) (i), 17 CFR 240.14a-8 (c)(4) § 14a-8 substantially may exclude the same the same proposal years. from its materials the next three We find controversy. that this series of events has mooted the
Respondent
that
argues
it will continue
urge
adoption
in proxy
its inclusion
state
ments,
likely
and that it is
reject
that Dow will
inclusion
in the future as it
in
past.
has
It
per
is true
that
mitting
to be included in the 1971 proxy
statement Dow stated that it adhered to
opinion
its
the proposal might properly be omitted and
was without prejudice
inclusion
to future exclusion.
However,
does not
this
the controversy
create
necessary for us
jurisdiction
to retain
to decide the merits.
Whether or not the
actually
Committee will
resubmit its
proposal or a similar one in 1974 is purely a matter of
conjecture at
point,
as is whether or not
accept
If
it.
Dow were likely to repeat
its allegedly
illegal conduct, the case would not be
Walling
moot. See
*4
v. Helmerich
Payne,
&
323 U.
37,
43 (1944);
United States v.
Co.,
W. T. Grant
407 only in may act courts that federal is well settled “[I]t controversy.” Benton cáse or justiciable of context a lack “Our 784, (1969). 788 Maryland, v. 395 U. S. require- from the derives moot to review cases jurisdiction under which III of the Constitution of Article ment the existence depends upon judicial power exercise Inc., Jafco, Liner U. S. controversy.” v. a case Education, v. Board cf. Doremus (1964); 306 n. 301, Appeals of the Court judgment Accordingly, court for remanded and the case vacated is dismissal. Rehnquist Justice Powell
MR. Justice and Mr. case. or decision of this in consideration part no took dissenting. Douglas, Mr. Justice judgment from the I must dissent all respect, With moot because case has become of the Court that this in the decision acquiesced Dow Chemical Co. in dispute Appeals underlying Court of below. The between Dow essentially private one, this case it has though Rights, the Medical Committee Human In Dow refused to submit public overtones. large proposal to its shareholders the Medical Committee’s corporate charter to forbid Dow amend its in 1970. refused napalm. manufacture of Appeals in the Court of Only 1971, after the decision of to be permit did Dow such review, now so, however, doing a vote. resolutely reject right affirmed its time. future my did not, view,
This conduct moot gratuitous il controversy. voluntary “Mere cessation of allegedly United States moot conduct does not a case.” legal Assn., Export Phosphate If could, U. S. *5 always then a be defendant would “free to return to his old ways.” Co., United States v. W. T. Grant S.U. 629, 632.1
But poor it is said that because of the made showing by finally the when submitted, Dow could refuse to years resubmit it for three not SEC rules at Ante, issue in this case. at The Court suggests “purely conjecture” it is matter of pro- the posal again will expiration the of this period, attempt and that Dow reject it. The Court think seems to that Dow’s best strategy, given proposal’s the poor is showing, go to let it vote, to a rather than protracted undertake litigation. Ibid.
This assumption, however, only is not it baseless, is Grant, supra, irrelevant. an antitrust violation was charged because of an interlocking directorate. In re- sponse to the suits, the interlocking resigned, directors Walling 1 See also Payne, Helmerich & where we held involving that a case legality the of “split-day contracts” under the Fair Labor Standards Act not was rendered by moot the company’s defendant of abandonment the during contracts litigation. "Despite respondent’s voluntary cessation of chal lenged conduct, controversy parties between the over legality split-day plan still . . . Respondent remains. con has sistently urged validity split-day plan pre and would sumably be free to illegal resume the use this plan were not some Id., effective restraint made.” at 43. vitality controversy The recognized by the Solicitor
General, himself, virtually to argument. the moment of oral While he has abruptly argu- reversed his position, prior the force his ment quotation remains Citing undiminished. the above from Walling, he said: reasoning Walling “The same applies [as Court] dispute respondent between and over whether the latter required pro- to distribute to its shareholders the Committee’s posal. required Dow continues insist that it is not to distribute proposal, and even if does so this year [1971] defeated, may reject years.” it in future First Reply Brief for Petitioner 5. *6 court their companies represented to the
and defendant disposed of not to revive the interlock. We intention profession summary in fashion. a “Such argument Id., Here, not moot.” at 633. does suffice to make a case we representation not the minimal has even made Grant, rejected likely in nor it to do so. for controversy
This is not a that could not arise Zwickler, decades, Golden contro- v. 394 U. S. versy possible whose decision have no future effect could Johnston, Atherton Mills on the parties, years past fought has four tooth and nail obligation proposal. to include this While shareholder if might subsequent case become moot events made “[a] absolutely clear the allegedly that behavior wrongful Phosphate could expected not reasonably recur,” Assn., Export supra, hardly the situ- ation here. litigation formally
While this is not between Dow and Committee, Medical but between the SEC and the Medical Committee, it does involve a panoply whole procedural3 substantive2 and in rights connection with corporation’s obligation pro- include shareholder posals in materials. The modern super-corpora- tions, of which one, Dow is wield virtually immense, unchecked, power. say4 they Some are “private governments,” whose decisions affect the lives us all.5 philosophy The of our I times, think, requires that such 2 generally Note, (1971). See 84 Harv. L. Rev. 700 generally Note, See (1971). 84 Harv. L. Rev. 835 4 See, g., Miller, e. “Techno-Corporate” Toward the State? —An Essay in Constitutionalism, American (1968); Vill. L. Rev. J. Galbraith, The New (1967); Berle, Industrial State A. Economic Power Society and the Free 5A. suggested, Berle has example, “The recession part of 1956 inwas due to the fact that the three principal manufacturers, automobile Motors, Ford, General Chrysler, sold 8 previous year. million cars in the The National that of the standard than
enterprises higher be held to a single- exalts a marketplace” which “morals profits as myopic determination to maximize minded, concern. corporate end-all of the traditional be-all and prac- having legality interest “public The a mootness conclusion.” settled, against tices militates Grant, supra, at 632. antipathy assume Dow’s
There is no reason to inclusion of this will be shareholder *7 today. adopt it Perhaps in 1974 than is less by just to it But it given the advice Court. superior position its makes likely to decide financial as which litigation preferable alternative, continued proxy rules more may now be conducted under favorable corporate management6 present than are the to rules. City Bank Economic Review estimated the 'normal’ market for cars following year the time at 6 million. The the motorcar com- cars, and, naturally, only purchased 4 far less panies sold million materials, glass, suppliers their of raw et cetera. The effect from 2 employment severe.” The Three Faces of Power 31 n. on recently regard, be noted that the SEC has should might strengthen proposed rules which amendments to permit company a to Dow’s hand. The new rules would refuse which, alia, any proposal inter submit vote a shareholder recommendation, request “(ii) or mandate that action consists of a any matter, respect including general economic, be taken with cause, racial, religious, sig- not political, social or similar nificantly the issuer or is not within related to the business of (c)(2), Proposed the issuer.” amendment to Rule 14a-8 control of Exchange Act Release No. Dec. Securities sentiment, however, for a more liberal There is substantial by approach proxy proposals than is evidenced to shareholder Muskie, current, for exam- proposed, much less the rules. Senator Congress, “Corporate ple, a bill in the last entitled the introduced alia, have, Participation Act,” which would inter barred exclusion may ground “on the that such of a shareholder issues, economic, racial, religious, similar unless political, involve monuments to list joins growing case now This responsi- constitutional of its abdication present Court’s jurisdiction. within its properly bility decide cases ante, Connor, p. 270, at Picard v. g., (Doug- e. See, ante, Rice, p. North Carolina las, J., dissenting); McClanahan dissenting statement); J., at 248 (Douglas, ante, Hartzell, J., p. 16, at v. Morauer & (Douglas, I dissent. again, Once dissenting). *8 the control of the issuer.” proposed is not within
the matter or action corporation that a 4003, 2, Cong., 2d For the view 91st Sess. § required shareholder which should be to include law, subject” applicable “proper for shareholder action state SEC, Rev. Chisum, Proxy Proposals 12 Ariz. L. Napalm, see (1971). Note, See also 84 Harv. L. Rev.