404 U.S. 403 (1972), 70-61, Securities and Exchange Commission v. Medical Committee for Human Rights
|Docket Nº:||No. 70-61|
|Citation:||404 U.S. 403, 92 S.Ct. 577, 30 L.Ed.2d 560|
|Party Name:||Securities and Exchange Commission v. Medical Committee for Human Rights|
|Case Date:||January 10, 1972|
|Court:||United States Supreme Court|
Argued November 10, 1971
CERTIORARI TO THE UNITED STATE COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
The Court of Appeals, overruling the contentions of the Securities and Exchange Commission (SEC), held that it had jurisdiction to review the SEC's "extremely dubious" determination not to oppose the Dow Chemical Co.'s refusal of respondent shareholder's request to include its proposal for a corporate charter amendment in Dow's proxy statement. Thereafter, Dow acquiesced in the request, and, at its annual meeting, less than 3% of the voting stockholders supported the respondent's proposal, as a result of which the company, under an SEC rule, may exclude the proposal from its proxy material for a three-year period.
Held: Since it is extremely doubtful that, at the end of that period respondent, will resubmit the proposal and Dow will refuse it, the case is now moot. Pp. 405-407.
139 U.S.App.D.C. 226, 432 F.2d 659, vacated and remanded.
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE, and BLACKMUN, JJ., joined. DOUGLAS, J., filed a dissenting opinion, post, p. 407. POWELL and REHNQUIST, JJ., took no part in the consideration or decision of the case.
MARSHALL, J., lead opinion
MR. JUSTICE MARSHALL delivered the opinion of the Court.
The Medical Committee for Human Rights acquired by gift five shares of stock in Dow Chemical Co. In March, 1968, the Committee's national chairman wrote a letter to the company expressing concern over its policy with respect to the production and sale of napalm. The letter also requested that there be included in the company's proxy statement for 1968 a proposal to amend Dow's Certificate of Incorporation to prohibit the sale of napalm unless the purchaser gives reasonable assurance that the napalm will not be used against human beings. Dow replied that the proposal was too late for inclusion in the 1968 proxy statement and for discussion at that year's annual meeting, but that it would be reconsidered the following year.
In an exchange of letters with Dow in 1969, the Committee indicated its belief that it had a right under Rule 14a-8 of the Securities and Exchange Commission, 17 CFR § 240.14a-8 (1970) (promulgated pursuant to § 14(a) of the Securities Exchange Act of 1934, 48 Stat. 895, as amended, 15 U.S.C. § 78n(a)), to have its proposal included in the company's proxy statement for consideration by all shareholders. On February 7, 1969, Dow responded that it intended to omit the proposal (somewhat modified) from the 1969 statement under the authority of subsections of the SEC Rule relied on by the Committee that permitted omission of shareholder proposals under two sets of circumstances:
§ 240.14a-8(c)(2) --
If it clearly appears that the proposal is submitted by the security holder primarily for the purpose of enforcing a personal claim or redressing a personal grievance against the issuer or its management, or primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes;
§ 240.14a-8(c)(5) --
If the proposal consists of a recommendation or request that the management take action with respect to a matter relating to the conduct of the ordinary business operations of the issuer.
The Committee requested that Dow's decision be reviewed by the staff of the SEC. On February 18, 1969, the Chief Counsel for the Division of Corporation Finance wrote both Dow and the Committee to inform them that "this Division will not recommend any action to the Commission if this proposal is omitted from the management's proxy material." App. 21. The SEC Commissioners granted a request by the Committee that they review the Division's decision and affirmed it. App. 43. The Committee then sought and obtained review of the Commission's decision in the United States Court of Appeals for the District of Columbia Circuit.
On July 8, 1970, the Court of Appeals held that the decision of the SEC was reviewable under § 25(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78y(a); that, while review of Dow's decision was clearly available...
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