Securities and Exchange Commission v. Medical Committee for Human Rights

PETITIONER: Securities and Exchange Commission
RESPONDENT: Medical Committee for Human Rights
LOCATION: Maxwell Street Police Station

DOCKET NO.: 70-61
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 404 US 403 (1972)
ARGUED: Nov 10, 1971
DECIDED: Jan 10, 1972

ADVOCATES:
Erwin N. Griswold - for petitioner
Roberts B. Owen - for respondent

Facts of the case

Question

Media for Securities and Exchange Commission v. Medical Committee for Human Rights

Audio Transcription for Oral Argument - November 10, 1971 in Securities and Exchange Commission v. Medical Committee for Human Rights

Warren E. Burger:

We will hear the Securities and Exchange Commission against the National Committee, Mr. Solicitor General.

Erwin N. Griswold:

May it please the Court.

This case comes here on a writ of certiorari to the United States Court of Appeals, for the District of Columbia Circuit.

It arises under Section 14a of the Securities Exchange Act of 1934 relating to Proxy Solicitation and under the regulations, under that Act and it raises questions of the reviewability of action or non-action of the Commission with respect to proxy materials.

The text of Section 14a is printed on page 49 of the Commission’s brief.

It makes it unlawful to use the facilities of the mails or of interstate commerce or of an exchange in contravention of such rules and regulations as the commission may prescribe as necessary or appropriate in the public interest or for the protection of investors to solicit or permit the use of his name to solicit any proxy or consent with respect to any security.

But that is simply a delegation through the Commission to make rules with respect to proxies in the public interest or for the protection of investors.

And at this point I would also like to bring to the Court’s attention a Section 2e of the Securities, Section 21e of the Securities and Exchange Act of 34 which is also printed on page 49 of the government’s brief, which authorizes the Commission, whenever it appears that there is a violation of the Act or about to be a violation of the Act, it may in its discretion bring an action in the appropriate United States Districts Court.

Finally, I would call attention to the regulations which the Commission has made under Section 14a, specifically those relating to proposals of security holders which is Rule 14a-8 of the Commission Rules that is rather long but it is set out in full on pages 51 to 55 of the Commission’s brief.

And with this as the legal setting, I turn to the facts.

The respondent here is the Medical Committee on Human Rights.

The record does not show whether it is a corporation or a voluntary association and nor does it show how the Committee is made up or how its spokesman are authorized.

The record does show that early in 1968, it acquired by gift five shares of the common stock of Dow Chemical Corporation, a Delaware Corporation.

Even before the shares were registered in its name, it made a request on the company to include a proposal and its proxy material for the 1968 Annual Meeting of Dow, that request related to the sale of Napalm by Dow, but it came too late for action at the 1968 meeting.

Early in 1969, the Medical Committee sent a new request to Dow asking that they be submitted to the Dow shareholders in Dow’s proxy solicitation for the 1969 Annual meeting.

A proposal requesting that the company’s charter be amended with respect to the sale of Napalm.

That appears on pages 10 and 12 of the appendix.

On the advise of its general counsel, Dow decided to omit the proposal in accordance with rule 14a-8(d) Dow notified both the Committee and the Commission of its decision stating its reasons and including an opinion of counsel as required by the rule.

The Committee then modified this proposal so that it would propose a resolution which would amend the company’s bylaws so as to prohibit the manufacturer of Napalm and asked the Commission staff to review the matter.

On February 16, 1969, the Commission staff informed the Committee and Dow that it would not recommend any action to the Commission if the proposal was omitted from Dow’s proxy material.

The Committee’s counsel then asked that the Commission itself review the staff’s position.

And on March 24th 1969, the Commission as shown by its minute book, “Determined to raise no objection to the omission from the management’s proxy statement of certain resolutions proposed by the Medical Committee for Human Rights”.

Now, I would suggest that this is a little like a denial of a writ of certiorari by this court, which amounts to a statement that this court will take no action with respect to a decision below and is not in anyway a decision by this court as to the merits of the case.

On May 29th, 66 days after the Commission’s no action determination, the Committee filed a petition for review of the Commission’s action in the United States Court of Appeals for the District of Columbia Circuit.

And this brings us to a threshold difficulty with the case.

The statute under which this proceeding was brought.

Section 25a of the Securities Exchange Act printed on page 50 of the Commission’s brief provides that a petition for review maybe filed “Within 60 days after the entry of such order”.

Potter Stewart:

Mr. Solicitor General, I am curious this is brought up only in the reply brief is it not?

Erwin N. Griswold:

It was referred to in the main brief, I suggest that it is jurisdictional and I simply want to submit it for the court’s consideration on that basis.

It is certainly noble to say that an order is not entered until a written notice of it is given.