San Francisco Real Estate Investors v. Real Estate Inv. Trust of America

Decision Date09 November 1982
Docket NumberNo. 82-1831,82-1831
Citation692 F.2d 814
PartiesFed. Sec. L. Rep. P 98,870 SAN FRANCISCO REAL ESTATE INVESTORS, Plaintiff, Appellant, v. REAL ESTATE INVESTMENT TRUST OF AMERICA, et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Jeffrey B. Rudman, with whom Earle C. Cooley, and Hale and Dorr, Boston, Mass., were on brief, for plaintiff, appellant.

Don M. Kennedy, with whom Paul F. Ware, Jr., Thomas J. Griffin, Jr., and Goodwin, Procter & Hoar, Boston, Mass., were on brief, for defendants, appellees.

Before COFFIN, Chief Judge, CAMPBELL and BREYER, Circuit Judges.

BREYER, Circuit Judge.

In this expedited appeal, San Francisco Real Estate Investors (SFREI), the appellant, challenges the validity of a temporary restraining order entered by the district court, which extends (from November 6, 1982 until November 18, 1982) the "proration date" connected to its tender offer for shares of Real Estate Investment Trust of America (REITA), the appellee. The "proration date" marks the end of the period during which a shareholder who subscribes to a tender offer for a fixed number of shares, is guaranteed that at least some of his shares will be purchased. If the offer is oversubscribed during that period, the offeror's purchase of a fixed number of shares is "prorated" equitably among all tendering shareholders. After that period, if the offer has not been fully subscribed, the offeror can buy shares on a "first come, first served" basis. Under the terms of the Williams Act, the offeror must choose a "proration date" at least ten days after the beginning of the offer. See 15 U.S.C. Sec. 78n(d)(6).

SFREI's basic claim is that the district court was without legal basis to extend this date. We agree with SFREI that the district court's order is improper. We also agree that time is of the essence. We have therefore decided to vacate the order of the district court, effective immediately. We write this brief opinion to explain our reasons for doing so.

SFREI is a California business trust that invests in commercial real estate. On October 28, 1982, it made a public tender offer for the shares of REITA at a price of $40 per share. The terms of the offer made clear that SFREI would stand obliged to buy only 558,000 shares--enough, when added to its present holdings, to give it control. The offer was conditioned upon the tender of at least 149,000 shares. The offer also was conditioned upon SFREI's obtaining a preliminary injunction against the enforcement of a recently enacted REITA by-law that forbade any one shareholder from owning more than 9.8 percent of REITA's shares. The offer's "proration period" was to end on November 6, 1982, and the "withdrawal date"--the date prior to which any tendering shareholder was free to change his mind and withdraw--was to be Thursday, November 18. SFREI would not actually buy any shares prior to November 19, 1982. There were other terms and conditions as well.

SFREI immediately initiated a civil action in the Massachusetts federal district court seeking to invalidate and enjoin the enforcement of REITA's "stock ownership" by-law. REITA counterclaimed, alleging a series of violations of the Securities and Exchange Act of 1934, 15 U.S.C. Secs. 78a et seq., and the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. Secs. 1961-68. The district court agreed to conduct a hearing on November 16 to consider the propriety of a preliminary injunction, as well as the validity of the contested by-law.

On November 4, REITA asked the district court to issue a temporary restraining order. It requested the court to order SFREI not to proceed with its tender offer until the court heard argument on November 16. It also asked the court to extend the offer's proration date and withdrawal date until after the November 16 hearing.

On November 5, the district court held a hearing on REITA's request. It denied most of the relief sought, but it ordered the proration date extended from November 6 to November 18. The court reasoned that REITA had shown some likelihood of success as to its by-law; it felt that REITA would be irreparably harmed were the relief not granted; and it concluded that REITA's shareholders should not be forced to tender or withdraw their shares without benefit of the court's "resolution of the underlying legal question." It added that its order would "preserve the status quo," and that without the proration date extension, the by-law would be nullified "as a practical matter."

SFREI immediately appealed and sought from this court a stay of the order pending appeal. The stay was denied, but we set the matter for argument and heard argument this morning.


As counsel for SFREI concedes, temporary restraining orders are ordinarily not appealable on an interlocutory basis. Under 28 U.S.C. Sec. 1292(a)(1), courts of appeals have jurisdiction over interlocutory appeals from orders granting "injunctions," but the term "injunction" is understood not to encompass temporary restraining orders. See Massachusetts Air Pollution and Noise Abatement Committee v. Brinegar, 499 F.2d 125 (1st Cir.1974). However, the use of the "temporary restraining order" label by a district court does not defeat appealability if the order is in substance a preliminary injunction. See Sampson v. Murray, 415 U.S. 61, 86-88, 94 S.Ct. 937, 951-952, 39 L.Ed.2d 166 (1974); Adams v. Vance, 570 F.2d 950 (D.C.Cir.1978). When particular temporary restraining orders lack the features of short duration and ex parte presentation that are normally associated with them, courts have taken jurisdiction over appeals in appropriate circumstances. See Sampson v. Murray, 514 U.S. at 86-88 & n. 58, 94 S.Ct. at 951-952 & n. 58; Massachusetts Air Pollution and Noise Abatement Committee v. Brinegar, 499 F.2d at 126 (dictum); ITT Lamp Division v. Minter, 435 F.2d 989, 991 n. 2 (1st Cir.1970), cert. denied, 404 U.S. 874, 92 S.Ct. 27, 30 L.Ed.2d 120 (1971); see also Wright & Miller, Federal Practice and Procedure Sec. 2962, at 619-21 (1973).

The present case presents several considerations that militate in favor of assuming jurisdiction. As the district court itself noted, both parties had notice of the application for a temporary restraining order, and both sides not only filed relatively extensive written memoranda but were given the opportunity to make oral presentations as well. In significant respects, the proceeding below thus came close to that ordinarily associated with an appealable preliminary injunction. Moreover, while the order is of brief duration, it extends beyond the ten-day period to which Fed.R.Civ.P. 65(b) limits temporary restraining orders. See Pan American World Airways, Inc. v. Flight Engineers International Ass'n, 306 F.2d 840 (2d Cir.1962). In addition, the harm both to SFREI and to those REITA shareholders who would have participated in a lawful tender offer may well be irrevocable by the time the district court considers the validity of the by-law on November 16.

Finally, the district court itself initially characterized what it had done as the entry of a preliminary injunction. It apparently changed its...

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