LOCATION:Detroit Police Headquarters
DOCKET NO.: 74-1471
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Seventh Circuit
CITATION: 426 US 438 (1976)
ARGUED: Mar 03, 1976
DECIDED: Jun 14, 1976
Harry B. Reese – for respondent
Joseph N. Morency, Jr. – for petitioners
Media for TSC Industries, Inc. v. Northway, Inc.
Audio Transcription for Opinion Announcement – June 14, 1976 in TSC Industries, Inc. v. Northway, Inc.
In the third case, 74-1471, TSC Industries versus Northway is here on the writ of certiorari to the Court of Appeals from the Seventh Circuit.
The dispute in this case centers about the acquisition of TSC Industries by National Industries.
Shareholder approval of the acquisition was secured to use of a joint proxy statement issued by TSC and National.
Northway, a TSC shareholder brought this suit against TSC and National claiming among other things that the joint proxy statement was materially misleading in violation of Section 14a of the Securities Exchange Act of 1934 and Section Rule 14A-9 promulgated there under.
Northway’s claim insofar as it concerns us was that the proxy statement of certain material facts relating to the degree of National’s control over TSC at the time the statement was issued, and the favorability of the terms to the proposed transaction to TSC shareholders.
Northway moved for summary judgment in the District Court on the issue of TSC’s and National’s liability.
The District Court denied the motion but the Court of Appeals reversed.
The Court of Appeals held that certain omissions of the facts in the proxy statement were material as a matter of law and did not waive as therefore entitled to summary judgment.
We granted certiorari to clarify the definition of was the material fact under Rule 14A-9.
A fact is material in our view if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.
Under that standard the alleged omission in this case were not as far as the record reveals, materially misleading as a matter of law and Northway was not entitled to summary judgment.
The judgment of Court of Appeals is therefore reversed and the case is remanded for further proceedings consistent with our opinion.
Mr. Justice Stevens took no part in the consideration of decision on this case.
Warren E. Burger:
Thank you Mr. Justice Marshall.