Lovenheim v. Iroquois Brands, Ltd.

618 F.Supp. 554 (D.D.C. 1985)


Lovenheim (P), owns shares of Iroquois Brands, Ltd. (D). P is distraught over the procedures that D uses to force-feed geese. P submitted a proxy whereby shareholders would be allowed to vote on whether they were in favor of the treatment of the force-feeding of geese. D refused to allow P's information to appear on proxy materials. D argues that the P's proposal has little economic impact on the firm and therefore it should not be compelled to include it in the proxy materials. D argues that the economic impact of the proxy question concerned only 0.05% of the assets of the firm. P brought an action to compel D to submit his proposal on the proxy materials. P's right to compel D to insert information in the proxy materials turns on the applicability of section 14(a) and the shareholder proposal rule promulgated by the SEC, Rule 14a-8.3. D has refused to allow P's proposal to be included in proxy materials. D relies on Rule 14a-8(c)(5): an issuer of securities 'may omit a proposal and any statement in support thereof' from its proxy statement and form of proxy: if the proposal relates to operations which account for less than 5 percent of the issuer's total assets at the end of its most recent fiscal year, and less than 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the issuer's business.