RESPONDENT: Dynamics Corporation of America
LOCATION: Craig, Colorado
DOCKET NO.: 86-71
DECIDED BY: Rehnquist Court (1986-1987)
LOWER COURT: United States Court of Appeals for the Seventh Circuit
CITATION: 481 US 69 (1987)
ARGUED: Mar 02, 1987
DECIDED: Apr 21, 1987
John F. Pritchard - on behalf of Appellant Indiana
James A. Strain - on behalf of Appellant CTS Corporation
Lowell E. Sachnoff - on behalf of Appellee Dynamics Corporation of America, et al
Facts of the case
Media for CTS Corporation v. Dynamics Corporation of AmericaAudio Transcription for Oral Argument - March 02, 1987 in CTS Corporation v. Dynamics Corporation of America
Audio Transcription for Opinion Announcement - April 21, 1987 in CTS Corporation v. Dynamics Corporation of America
William H. Rehnquist:
The opinion of the Court in No. 86-71, CTS Corporation versus Dynamics Corporation of America and a related case will be announced by Justice Powell.
Lewis F. Powell, Jr.:
This case is here from the Court of Appeals for the Seventh Circuit.
The case presents two questions as to the validity of Indiana's Control Share Acquisition Act.
First, whether the Federal Williams Act preempts the Indiana law; second, whether the state law violates the Dormant Commerce Clause.
The Indiana Act applies to tender offers.
It limits the voting rights that an entity gains when it purchases a specified percentage of the shares of an Indiana corporation.
It provides that the purchaser does not acquire voting rights unless the remaining shareholders vote to grant such rights.
Appellee, Dynamics Corporation, made a tender offer for 18% of the shares of appellant CTS, a corporation of Indiana.
When CTS invoked the provisions of the Indiana Act, Dynamics sought and obtained an injunction from a Federal District Court in Illinois.
That court concluded that the Indiana law is preempted by the Williams Act and also violates the Commerce Clause.
The Court of Appeals affirmed.
For the reason stated in an opinion filed today with the Clerk, we reverse.
We hold that the Indiana Act does not conflict with any expressed provision of the Williams Act nor does it undermine the basic purposes of that Act.
Similarly, we conclude that the Indiana law does not violate the Commerce Clause.
The Indiana statute applies evenhandedly to tender offers, whether they are initiated by residents of Indiana or residents of other states.
Also, the Indiana statute applies only to the governance of Indiana corporations.
Therefore, there is little or no risk of inconsistent regulation by other states.
Justice Scalia has filed an opinion concurring in part and concurring in the judgment; Justice White has filed a dissenting opinion, in part of which Justices Blackmun and Stevens have joined.