Union Of Needletrades, Industrial And Textile Employees v. May Department Stores C

1997 WL 714886

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Nature of the Case

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Facts

Union (P) sued May (D) for declaratory and injunctive relief in that D's proxy solicitations violated 14(a) and various related rules (14a-4(a), 14a-4(b) and 14a-4(c)). P also claimed that the proxy statement of D contained false and misleading statements in violation of 14(a) and Rule 14a-9. D moved to dismiss the complaint for failure to state a claim upon which relief may be granted under FRCP 12(b)(6) and failure to plead fraud with specificity under FRCP 9(b). These events transpired from the following circumstances. P sent a letter to D claiming status as a D shareholder with the intent to submit three proposals at the upcoming D annual meeting. P wanted to eliminate D's shareowner rights plan, declassify D's board of directors and modify D's vendor standards of conduct. The letter did not ask that any of these proposals be included in the proxy solicitation materials that D intended to send to its shareholders prior to the annual meeting. Ps then filed their materials with the SEC for review. When D issued its proxy materials, it included the second and third proposals of P based on other parties soliciting those issues. P's started their own independent proxy solicitation and issued their own proxies to D shareholders. P only distributed the shareowner rights plan. D then distributed a second proxy that listed P's anti-poison pill proposal as a separate voting item. D then instructed its shareholders that if they had returned the first proxy and did not return the second proxy, it would use their proxies to vote against the P proposal. P's proposal was narrowly defeated, but if D only considered proxies which afforded shareowners the opportunity to vote on the antipoison pill proposal, P's initiative would have been approved. The fight was over the discretionary authority of D to vote the first proxies against the poison pill.