J. I. Case Co. v. Borak case brief summary
377 U.S. 426 (1964)
CASE FACTS
The United States Supreme Court affirmed an appellate court's judgment, which in reversing a district court on a count based on an alleged violation of § 14(a) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(a), held that the district court had the power to grant remedial relief under the Act.
DISCUSSION
OUTCOME
The judgment was affirmed because a federal cause of action was authorized for rescission or damages to a corporate stockholder. Here, respondent had suffered from petitioner's consummated merger, which was allegedly effected pursuant to the use of a proxy statement containing false and misleading statements.
Recommended Supplements for Administrative Law Examples & Explanations: Administrative Law, Fourth Edition
Administrative Law and Process: In a Nutshell (Nutshell Series)
377 U.S. 426 (1964)
CASE SYNOPSIS
Petitioner corporation challenged a
judgment from the United States Court of Appeals for the Seventh
Circuit, which, on interlocutory appeal, reversed in favor of
respondent shareholder. The shareholder had alleged deprivation of
his and other shareholders' pre-emptive rights by a merger allegedly
effected by circulation of a false and misleading proxy statement in
violation of § 14(a) of the Securities Exchange Act of 1934, 15
U.S.C.S. § 78n(a).CASE FACTS
The United States Supreme Court affirmed an appellate court's judgment, which in reversing a district court on a count based on an alleged violation of § 14(a) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(a), held that the district court had the power to grant remedial relief under the Act.
DISCUSSION
- The Court, agreeing with the court of appeals, concluded that § 27 of the Act, 15 U.S.C.S. § 78aa, authorized a federal cause of action for rescission or damages to respondent, a corporate shareholder, with respect to a consummated merger that was authorized pursuant to the use of a proxy statement alleged to contain false and misleading statements violative of § 14(a) of the Act.
- Private parties had a right under § 27 to bring suit for violation of § 14(a) of the Act.
- Under the circumstances here, it was the duty of the courts to be alert to provide such remedies as were necessary to make effective the congressional purpose, namely, to prevent management or others from obtaining authorization for corporate action by means of deceptive or inadequate disclosure in proxy solicitation.
- Accordingly, federal courts had the power to grant all necessary remedial relief.
OUTCOME
The judgment was affirmed because a federal cause of action was authorized for rescission or damages to a corporate stockholder. Here, respondent had suffered from petitioner's consummated merger, which was allegedly effected pursuant to the use of a proxy statement containing false and misleading statements.
Recommended Supplements for Administrative Law Examples & Explanations: Administrative Law, Fourth Edition
Administrative Law and Process: In a Nutshell (Nutshell Series)
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