Panter v. Marshall Field & Co.

• Citation: 486 F. Supp. 1168
• Decision Date: 03 March 1980
• Docket Number: 78 C 1141,78 C 620,78 C 1700,78 C 2373 and 78 C 2480.,78 C 2067,78 C 1179,No. 78 C 537,78 C 2556,78 C 537
• Court: U.S. District Court — Northern District of Illinois
• Parties: Ruth PANTER et al., Richard Weiss, Alan Markovitz, Paul Kriendler, David H. Greenstein, Ronald Egnor, William Saltiel et al., Michael DeBartolo, Joseph Berke, Plaintiffs, v. MARSHALL FIELD & COMPANY et al., Defendants.

486 F. Supp. 1168

Ruth PANTER et al., Richard Weiss, Alan Markovitz, Paul Kriendler, David H. Greenstein, Ronald Egnor, William Saltiel et al., Michael DeBartolo, Joseph Berke, Plaintiffs, v. MARSHALL FIELD & COMPANY et al., Defendants.

Nos. 78 C 537, 78 C 620, 78 C 1179, 78 C 1141, 78 C 1700, 78 C 2556, 78 C 2067, 78 C 2373 and 78 C 2480.

United States District Court, N. D. Illinois, E. D.

March 3, 1980.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert S. Atkins, Freeman, Atkins & Coleman, Ltd., Alan L. Unikel, Rosenberg, Savner & Unikel, Chicago, Ill., Donald H. Weinberg, Kohn, Savett, Marion & Graf, Philadelphia, Pa., Arthur T. Susman, Richard Prins, Robert D. Allison, Prins, Flamm & Susman, Ltd., Harry A. Young, Jr., Bilandic, Neistein, Richman, Hauslinger & Young, Ltd., Lawrence H. Eiger, Much, Shelist, Freed, Denenberg, Amend & Eiger, P. C., Chicago, Ill., George P. Birnbaum, Ira B. Rose, Phillips, Nizer, Benjamin, Krim & Ballon, Stuart D. Wechsler, Robert Harwood, Edward Labaton, Kass, Goodkind, Wechsler & Labaton, New York City, Sherrie R. Savett, Berger & Montague, P. C., Steven Kapustin, Mitchell Kramer, Kramer & Salus, Philadelphia, Pa., Hugh J. Schwartzberg, Schwartzberg, Barnett & Cohen, Max Sherman, Dvorkin & Sherman, Chicago, Ill., for plaintiffs.

Bryson Burnham, Tyrone Fahner, Charles W. Mulaney, Jr., Kelly R. Welsh, Mayer, Brown & Platt, Hammond E. Chaffetz, Joseph DuCoeur, Donald G. Kempf, Jr., Kirkland & Ellis, Michael W. Coffield, Daniel J. Pope, Charles W. Deuser, II, Coffield, Ungaretti, Harris & Slavin, Lowell E. Sachnoff, Marvin A. Tenenbaum, Sachnoff, Schrager, Jones, Weaver & Rubenstein, Chicago, Ill., for defendants.

MEMORANDUM

LEIGHTON, District Judge.

This is a consolidated jury trial of four out of nine related class suits in which the complaints allege violations of Sections 10b, 14d, and 14e of the 1934 Securities and Exchange Act. Twenty-one plaintiffs, on their behalf and representing four subclasses of 16,662 shareholders who own 9,054,065 shares of common stock of Marshall Field & Company, a Chicago based department store, sue for preliminary and permanent injunction, damages, and other relief. The suits are brought under federal securities laws and rules and regulations of the Securities and Exchange Commission. Plaintiffs invoke the jurisdiction of this court pursuant to 15 U.S.C. § 78aa; and they allege pendent claims based on doctrines of the common law.

In the earliest suit filed in this court, 78 C 537, plaintiffs and class representatives are Alice D. Sinsheimer,¹ Sam Brown, Arnold Kamerling, Julius Green, George A. Levitt, Jack Stacey, Jr., Estelle A. Stacey, Anita H. Johnson, Donald E. Tracy, Barber J. Tracy, Irving J. Hillman and Stanley Bernstein; in the next, 78 C 620, Richard Weiss; in the next, 78 C 1141, Paul Kriendler of New Jersey;² in the next, 79 C 1179, Allen J. Markovitz of Pennsylvania; in the next, 78 C 1700, David H. Greenstein; in the next, 78 C 2067, William Saltiel and Clarice Saltiel; in the next, 78 C 2373, Michael DeBartolo of New York; in the next 78 C 2480, Joseph Berke; and in the last filed of these cases, 78 C 2556, Ronald Egnor of New York. Plaintiffs, in varying amounts, are owners of the common stock of Marshall Field & Company, a Delaware corporation with its principal offices in Chicago, Illinois.

The defendants are Marshall Field & Company,³ Angelo R. Arena, George C. Rinder, and Arthur E. Osborne, president and chief executive officer, executive vice president, and senior vice president, respectively, of Marshall Field; Jean Allard, Edward McCormick Blair, John M. Budd, Albert B. Dick, III, Howard M. Packard, John M. Simpson and Harold Byron Smith, Jr., directors of the company.⁴ Each defendant, also in varying amounts, is a Marshall Field shareholder.

In a stipulation of the parties approved by this court in a pretrial order, it has been agreed that trial on the pleadings in Weiss, 78 C 620, Egnor, 78 C 2556, and Berke, 78 C 2480, will be binding on all parties in these consolidated cases with the exception of the plaintiffs in Panter, 78 C 537.

In each of these consolidated class suits, after the jurisdictional, venue, and general class allegations, plaintiffs complain⁵ that in early October, 1977, a California corporation named Carter Hawley Hale, through certain members of its board of directors, approached Marshall Field & Company and expressed an interest in the two companies beginning to negotiate a merger; that this interest continued from that time through and including February 21, 1978; that on December 12, 1977, Carter Hawley Hale delivered a letter to Field proposing that it consider a transaction whereby Carter Hawley Hale would exchange a quantity of its common stock for outstanding stock of Field; that included in the proposal was the understanding that Field shareholders would have the option of receiving cash up to 49% of the total transaction; that on the same day, Carter Hawley Hale issued a press release announcing this communication that was transmitted by it to Field; that from time to time prior to that date, substantial, listed companies, other than Carter Hawley Hale, also approached Field proposing a merger or other form of permanent relationship between Field and those companies; that in February, 1978, Carter Hawley Hale announced that a specific tender offer would be made for Field's common stock under the terms of which Carter Hawley Hale would acquire outstanding common stock of Field for cash and stock amounting to approximately $42.00 per share; that Section 14(e) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78n(e), provides in its pertinent part that:

It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation.

It is further alleged that, in spite of the prohibitions contained in Section 14(e), defendants, the directors of Marshall Field, conspired to and did embark on a course of conduct designed to deceive plaintiffs and other class members in order to induce plaintiffs and other class members to oppose the tender offer. It is also alleged that defendants conspired and embarked upon a course of manipulative acts and practices designed substantially to inhibit plaintiffs and other class members from accepting the tender offer. Plaintiffs allege a course of conduct, followed by defendants, aimed at defeating the tender offer of Carter Hawley Hale, and misleading and deceiving Field's shareholders and the public with regard to the company's plans for corporate expansion. In other counts of the complaints, it is alleged that the same course of conduct unlawfully violates Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10(b)-5 promulgated thereunder by the Securities and Exchange Commission; and further, that the acts of the defendants about which plaintiffs complain, and which they allege are unlawful, were breaches of fiduciary obligations which defendants, as Marshall Field directors, owed to the stockholders of the company, including plaintiffs and other members of the class. Plaintiffs pray for injunctive relief, damages which one plaintiff claims exceed $200 million, the award of attorneys' fees and costs, and such other relief as the court may deem just and proper.

Defendants have answered each complaint, and they deny all allegations which charge that they, in any way, have violated any of the provisions of the Securities and Exchange Act of 1934, Section 10b or 14(e), or any fiduciary duty owed to the stockholders of Marshall Field & Company. They admit, however, that on or about December 12, 1977, Carter Hawley Hale delivered a letter to Field, but state that the letter speaks for itself; that in connection with the letter, defendants caused to be published a communication in the Chicago Tribune that incorporated a letter to Field employees; that they mailed a letter to Field's shareholders; that they filed a lawsuit in the United States District Court for the Northern District of Illinois against Carter Hawley Hale; that thereafter they agreed to acquire five former Liberty House Stores in Washington and Oregon, and announced plans to open and operate a store in Houston, Texas; and that Field is considering the establishment of other stores in other areas of the country including Northbrook, Illinois, and the southwest United States. They further admit that Field has discussed with others the possible acquisition of other stores.

In addition, defendants have pled affirmative defenses, including their allegation that plaintiffs' complaints fail to state a claim on which relief can be granted by this court; that the complaints fail to satisfy the requirements of Rule 23, Federal Rules of Civil Procedure, precluding plaintiffs from proceeding in these class suits; that the complaints fail to satisfy the requirements of Rule 23.1 of the Federal Rules of Civil Procedure, and thus plaintiffs cannot proceed with a derivative suit; and that the complaints are barred in whole or in part by the applicable statutes of limitations. Defendants request the court to dismiss plaintiffs' complaints, award them costs and fees, and grant them such other and further relief as may be appropriate.

After four weeks in which the jury has heard evidence consisting of testimony of thirteen witnesses, excerpts from four depositions, a vast number of exhibits, and several stipulations, plaintiffs have rested their case in chief; defendants now move for dismissal pursuant to Rule 41(b), or in the alternative, for...