Rauchman v. Mobil Corp.

739 F.2d 205 (6th Cir. 1984)

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Nature of the Case

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Facts

Rauchman (P) owns 64 voting shares of Mobil (D) stock. In 1981, P submitted a proposed amendment to D's by-laws for inclusion in the proxy statement for the 1982 annual meeting. The proposal sought to exclude citizens of countries belonging to OPEC as unqualified to sit on the board. Suliman Olayan, a Saudi Arabian citizen, was eligible for re-election in 1982. D contacted the SEC for permission to exclude the proposal from the proxy, which was given. D claims that Olayan was eligible for reelection at Mobil's 1982 annual meeting. The SEC staff stated that the material relates to the election to office of the Company's Board of Directors. It was reasoned that since the proposal and supporting statement called into question the qualifications of Mr. Olayan for reelection and thus the proposal may be deemed an effort to oppose management's solicitation on behalf of the reelection of this person. P brought suit to force D to include the proposal in the Company's proxy statement. The district court assumed that P had a private right of action under section 14(a) and rule 14a-8. It found that D properly excluded P's proposal from its proxy statement because the proposal related to an election to office. D's proposal was clearly intended to render Mr. Olayan ineligible to serve as a Mobil director. P appealed.