Rogers v. American Can Company, 13493-13495.
Citation | 305 F.2d 297 |
Decision Date | 15 June 1962 |
Docket Number | No. 13493-13495.,13493-13495. |
Parties | Alexander ROGERS, on Behalf of Himself and All Other Stockholders of Metal & Thermit Corporation, Appellee, v. AMERICAN CAN COMPANY, a Corporation, Charles J. Beasley, Robert G. Fuller, H. E. Martin, Cornelius W. Middleton, William P. Palmer, Walton S. Smith, William C. Stolk, Russell C. Taylor and Metal & Thermit Corporation, a Corporation, American Can Company, Metal & Thermit Corporation, Charles J. Beasley and Walton S. Smith, Appellants. |
Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
Emory C. Risley, Newark, N. J. (Stryker, Tams & Horner, Newark, on the brief), for Metal & Thermit Corp.
Alfred C. Clapp, Newark, N. J. (Clapp & Eisenberg, Newark, N. J., Robert P. Gorman, John B. M. Frohling, Newark, N. J., on the brief), for Beasley and Smith.
Donald B. Kipp, Newark, N. J. (Pitney, Hardin & Ward, Newark, N. J., William P. Reiss, Newark, N. J., Clyde A. Szuch, Maplewood, N. J., on the brief), for American Can Co.
Charles J. Milton, Jersey City, N. J., for appellee.
Before GOODRICH, STALEY and FORMAN, Circuit Judges.
This is a stockholder's derivative action brought by Alexander Rogers, as plaintiff in the United States District Court for the District of New Jersey for himself and other similarly situated stockholders of Metal & Thermit Corporation (M & T), a New Jersey corporation, on behalf of that corporation against American Can Company (Canco), likewise a New Jersey corporation, eight individuals,1 Charles J. Beasley, Robert G. Fuller, H. E. Martin, Cornelius W. Middleton, William P. Palmer, Walton S. Smith, William C. Stolk and Russell C. Taylor, who, with four others, constituted the Board of Directors of M & T, and M & T itself.
The suit was instituted under §§ 4 and 16 of the Clayton Act, 15 U.S.C.A. §§ 15 and 26, for violations of §§ 1 and 2 of the Sherman Act and §§ 7 and 8 of the Clayton Act, 15 U.S.C.A. §§ 1, 2, 18 and 19.2
It came before the District Court on motions addressed to the amended complaint, which alleges, among other things, the following: that plaintiff holds 4200 shares of the common stock of M & T; that Canco and the individual defendants above named have effective control of M & T "by virtue of their stock ownership, control of proxy material, and control of the management and operations of Metal & Thermit Corporation, and they have, in effect, caused a merger of these two corporations."; that in February 1957 the Board of Directors of M & T were unable to agree upon the selection of candidates for a board of twelve directors to be presented at the annual stockholders' meeting held in April 1957; that Canco and the individual defendants organized a proxy contest committee and commenced the solicitation of proxies; that thereafter plaintiff organized a proxy contest committee, which resulted in the election of eight of the nominees on the Canco slate and four nominees on the slate of the plaintiff's committee; that Canco financed the campaign of its slate while plaintiff helped to finance the campaign of his slate; that a similar contest ensued for the election of directors at the annual meeting of M & T on April 10, 1958; that at the request of the plaintiff the following proposed statement was included in the management proxy statement:
that the said resolution and statement were also circulated to the stockholders as part of the proxy form and ballot by the plaintiff's proxy contest committee; that at the 1958 meeting 579,945 shares voted against the proposal and 185,731 shares voted for the proposal; that the stockholders also reelected the eight individual defendants as directors.
The amended complaint further alleges that M & T is the largest producer of tin chemicals in the United States and makes 50 percent of all the detinned scrap and tin derived from the detinning of tinplate scrap; that it has plants in Carteret, New Jersey; East Chicago, Indiana; Piscatawaytown, New Jersey; South San Francisco, California; Beaver Dam, Hanover County, Virginia; Carrollton, Kentucky; and research laboratories in Rahway, New Jersey, and Detroit, Michigan; that it was organized in 1908 and as of December 31, 1957 had total assets of over $24,000,000 and gross sales of over $42,000,000; that the sale of products resulting from the detinning of tinplate scrap accounted for approximately 40 percent of the total gross sales and approximately 66 percent of the total net profits of M & T for the year 1957; that the principal supplier of tinplate scrap to M & T is Canco in the amount of approximately 150,000 tons of tinplate annually, having an approximate value of $7,000,000; that most purchases of tinplate scrap by M & T are made on a contract basis in the following market areas in the United States and Canada: The Eastern Market (Philadelphia); The Mid-Western Market (East Chicago); and West Coast Market (San Francisco) and Canada.
The amended complaint also alleges that:
;
that the only competition presently existing for the purchase of tinplate scrap is among M & T, Vulcan Materials Company, and a few local processors in the eastern and mid-western markets; that M & T and its subsidiary and affiliated companies purchased tinplate scrap for detinning purposes in the following approximate percentages of all purchases of tinplate scrap in the several geographical areas during the year 1957:
"Eastern Market Area (Philadelphia) .............. 40% Mid-Western Market Area (East Chicago) .............. 54% West Coast Market Area (San Francisco) ............. 100% Total of United States Market Areas ................ 50%"
and that in view of Canco's fiduciary relationship, as a dominant stockholder of M & T, Canco cannot enter the detinning business and utilize the process of M & T unless it merges with M & T.
It is further alleged that Canco acquired a portion of the common stock of M & T at the time of its organization in 1908 and that M & T operated as an independent company with representatives of Canco serving as directors until 1954 when the defendant H. E. Martin was elected President of M & T; that beginning in 1955 the defendants have been and are engaged in a continuing combination, conspiracy and agreement to lessen competition substantially and monopolize interstate trade and commerce in the purchase and sale of tinplate scrap, the substantial terms of which are:
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