Gwyn R. Hartman Revocable Living Trust v. S. Mich. Bancorp, Inc.

780 F.3d 724 (6th Cir. 2015)

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Nature of the Case

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Facts

Bancorp's (D) bylaws do not permit it to claw back fees paid to directors found liable for breaching their fiduciary duties. P, a Bancorp shareholder, drafted a one-paragraph resolution exhorting D's board to fill that gap. P asked the board to include the resolution in D's proxy statement for the upcoming annual meeting along with a two-paragraph 'supporting statement' invoking the need for more 'director accountability.' The board refused. The March 2013 proxy statement told shareholders merely that a shareholder planned to propose a resolution urging the board to amend the company's bylaws. D made sure everyone knew the board would vote it down. The statement said nothing else about the proposal or its substance. P objected to the sufficiency of the disclosure, and objected again when the proposal came up for a vote; 150,000 shares favored the proposal, and more than 1.7 million shares opposed it. P sued D and Castle, the company's chairman and CEO. The court dismissed the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. P appealed.