Edgar v. MITE Corporation

PETITIONER: Edgar
RESPONDENT: MITE Corporation
LOCATION: José Aponte de la Torre Airport, formerly Roosevelt Roads Naval Station

DOCKET NO.: 80-1188
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 457 US 624 (1982)
ARGUED: Nov 30, 1981
DECIDED: Jun 23, 1982

ADVOCATES:
Eugene D. Berman - Argued the cause for the State of New York as amicus curiae urging reversal
Russell C. Grimes, Jr. - Argued the cause for the appellant
Richard W. Hulbert - Argued the cause for the appellees
Stephen M. Shapiro - Argued the cause for the Securities and Exchange Commission as amicus curiae urging affirmance

Facts of the case

The MITE Corp, organized under Delaware laws with its principal office in Connecticut, initiated a tender offer for all outstanding shares of Chicago Rivet & Machine Co., an Illinois corporation. The Illinois Business Take-Over Act requires a tender offeror to notify the Secretary of State and the target company of its intent to make a tender offer and the terms of the offer 20 days before the offer becomes effective. During that time, the target company, but not the offeror, is free to disseminate information about the offer to the target company's shareholders. In addition, the Secretary of State could call a hearing, and the offer could not proceed until the hearing was completed. Finally, the Secretary of State could deny registration of a takeover offer he or she found inequitable. MITE Corp. sought and won a declaratory judgment holding that the Illinois Act was pre-empted by the Williams Act, 15 U.S.C. Sections 78m(d)-(e) and 78n(d)-(f), and that it violated the Commerce Clause.

Question

Is the Illinois Business Take-Over Act unconstitutional under the Supremacy and Commerce Clauses of the U.S. Constitution?

Media for Edgar v. MITE Corporation

Audio Transcription for Oral Argument - November 30, 1981 in Edgar v. MITE Corporation

Warren E. Burger:

We will hear argument next in Edgar against the Mite Corporation.

Mr. Grimes, I think you may proceed whenever you are ready.

Russell C. Grimes, Jr.:

Mr. Justice, and may it please the Court, Mite Corporation initiated this action on January 19th, 1979, in the District Court for the Northern District of Illinois, seeking a declaratory judgment that the Illinois Business Takeover Act is void.

Mite alleged that the Illinois Act is pre empted by the Williams Act, and constitutes an impermissible burden on interstate commerce.

Mite also sought injunctive relief prohibiting the Illinois Secretary of State from applying the Illinois Act against Mite in connection with its takeover of Chicago Rivet and Machine Company--

Incidentally, Mr. Grimes, if it were pre empted, I guess you don't get to the commerce clause issue.

Russell C. Grimes, Jr.:

--I think the--

If the Williams Act pre empted your statute.

Russell C. Grimes, Jr.:

--I think that would preclude getting to the commerce clause.

Yes.

Mr. Grimes, I would like to ask you a question along the lines that Justice Brennan just asked.

There is a difference... Do you think Judge Cudahy would have written the same opinion had the Congress not passed the Williams Act?

Russell C. Grimes, Jr.:

Of course, within the Seventh Circuit or below, it is possible, I mean, to decide both decisions... both grounds in case one would be reversed on appeal, I would imagine.

If the Williams Act were not passed, there would... you could still have, I suppose, a pre emption ground even in the absence of Congressional action.

What would pre empt?

Russell C. Grimes, Jr.:

Well, there would be nothing to pre empt here, because, I mean, with the Section 28(a) of the Securities Exchange Act of 1934.

I mean, supposing Congress simply had not gotten into this field at all, and left it to the states, the same way that it had attempted to preserve state blue sky laws in the 1934 or 1933 legislation.

Do you think that the Seventh Circuit would have come out the same way as a burden on interstate commerce, a constitutional, straight constitutional holding, without any action of Congress?

Russell C. Grimes, Jr.:

I am not sure, Justice Rehnquist.

I think in that situation, the Seventh Circuit could have gone to the commerce aspect, if there were no Congressional legislation in the field.

Well, it certainly could have.

Do you think it would have been proper under the decisions of this Court for it to have done so?

Russell C. Grimes, Jr.:

Well, I would recognize you avoid reaching... you know, deciding on the constitutional issue if any other ground is possible, but of course, even when something is pre empted you are still under... it would be unconstitutional under the supremacy clause.

I am not sure exactly--

But if there weren't any claim of statutory pre emption, just a straight commerce clause argument, wouldn't the commerce clause argument be the same whether or not the Williams Act existed?

Russell C. Grimes, Jr.:

--I think the commerce clause issue would be the same regardless--

Well, if it was, if it were the same, wouldn't it have been decided the same, whether or not the Williams Act was in the picture?

Russell C. Grimes, Jr.:

--I think the commerce clause would... the commerce--

That's what the Justice is asking you.

Russell C. Grimes, Jr.:

--Yes, the commerce clause issue stands or falls regardless of the Williams Act.