471 F.2d 815 (7th Cir. 1973), 71-1462, Hohmann v. Packard Instrument Co., Inc.
|Citation:||471 F.2d 815|
|Party Name:||Arthur J. HOHMANN, Plaintiff-Appellant, and Harold S. Burman et al., Plaintiffs-Appellants, v. PACKARD INSTRUMENT COMPANY, INC., et al., Defendants-Appellees.|
|Case Date:||January 17, 1973|
|Court:||United States Courts of Appeals, Court of Appeals for the Seventh Circuit|
Argued Oct. 20, 1972.
A. Bradley Eben, Arnold I. Shure, John Enright, Chicago, Ill., for plaintiffs-appellants.
George S. Hoban, Perry L. Fuller, George W. Hamman, Roger W. Barrett, Chicago, Ill., for defendants-appellees.
Before HASTINGS, Senior Circuit Judge, CUMMINGS, Circuit Judge, and GORDON, District Judge. [*]
HASTINGS, Senior Circuit Judge.
This long pending litigation first began in 1963 when two actions were filed
in the federal district court. The cases were subsequently consolidated for trial and finally proceeded to trial by jury in March 1971. At the conclusion of plaintiffs' evidence, the trial court granted the motions of all defendants for a directed verdict and entered judgment against plaintiffs and for defendants. Plaintiffs appealed. We affirm.
On May 29, 1963, in No. 63-C-953, Arthur J. Hohmann filed his action alleging a violation by defendants of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78j(b), and Rule 10(b)-5(2) promulgated thereunder, which proscribes the use of a manipulative device or contrivance prohibited by the rules and regulations of the Securities and Exchange Commission. Hohmann is the sole plaintiff and is an investment counselor residing in London, England, and at the time was engaged in the advertising business. This shall be referred to as the Hohmann case.
On June 4, 1963, in No. 63-C-981, Harold S. Burman, Robert L. Burman and Marshall R. Burman, d/b/a Burman Investments, a partnership, (together with Charles Ashbrook, later dismissed as a plaintiff) filed their action (later amended), alleging a violation by defendants of § 11 of the Securities Act of 1933, 15 U.S.C.A. § 77k. They claimed that a prospectus filed with a registration statement of Packard Instrument Company, Inc., for a stock offering in 1963, was untrue and misleading because of the omission of material facts required to be stated therein. The Burmans are three brothers, one of whom filed the action as an attorney. This shall be referred to as the Burman case.
Each of these actions was brought by plaintiffs on their own behalf and as a class action on behalf of persons similarly situated. After extensive discovery and during preparation for trial, the trial court, on June 30, 1967, on motion of defendants, entered an interlocutory order striking the class actions of the two complaints. Hohmann v. Packard Instrument, N.D.Ill., 43 F.R.D. 192 (1967). On appeal, we held the actions were properly brought as class actions and reversed. Hohmann v. Packard Instrument Co., 7 Cir., 399 F.2d 711 (1968).
Remaining as named defendants at the subsequent trial and common to both suits were (1) Packard Instrument Company, Inc. (Packard Instrument), an Illinois corporation located in Brookfield, Illinois, with its principal manufacturing business in Downers Grove, Illinois; (2) Lyle E. Packard, its president, chairman of the board, a director and majority stockholder; (3) A. G. Becker & Co., Incorporated (Becker), an Illinois corporation, of Chicago, which underwrites and sells securities; and (4) Joseph J. Levin, chairman of the executive committee of Becker and also a director of Packard Instrument.
In this consolidated class action the class was defined to be all persons who purchased shares of stock in Packard Instrument during the period from February 19, 1963, through March 26, 1964, inclusive. After a history of intermittent vigorous prosecution and bitter defense from 1963 to March 1, 1971, the case was called for trial by jury on the latter date. The trial proceeded until plaintiffs rested their case on March 11, 1971. On that date the trial court granted the motions of all defendants for a directed verdict and entered judgment against plaintiffs and for all defendants.
The technical nature of the devices manufactured by Packard Instrument causes us to accept its undisputed description of the same on brief and as substantially represented in its prospectus of February 19, 1963, as follows:
"The company's products are instruments for the detection and measurement of radioactive isotopes used primarily in tracer studies in scientific research. The principal purchasers of the equipment are research laboratories of universities and colleges, governmental research centers, privately supported research facilities and research hospitals, as well as the United
States Government and Veterans Administration Hospitals.
"The principal product of the company is the Tri-Carb Liquid Scintillation Spectrometer. The instrument is used for detection and measurement of radioactive isotopes. A radioactive sample to be identified and counted is placed in a solution of liquid scintillator and placed between the instrument's two photomultiplier tubes. The solution produces an extremely small burst of light or scintillation for each radioactive emanation or particle that occurs in the sample. The scintillations are converted to bursts of electrons within the photomultipliers and greatly amplified to produce electrical impulses. The impulses are further amplified electronically and measured and counted by means of highspeed type circuitry.
"The particular value of the Tri-Carb Spectrometer in research lies in the ability to measure automatically and accurately large numbers of radioactive samples. Radioactive isotopes are used in investigations and research into cancer...
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