Friday, November 22, 2013

Schreiber v. Burlington Northern, Inc. case brief

Schreiber v. Burlington Northern, Inc. case brief summary
472 U.S. 1 (1985)

On certiorari from the United States Court of Appeals for the Third Circuit, petitioner challenged a ruling that dismissed its federal securities law suit, under 15 U.S.C.S. § 78n(e), on grounds that petitioner failed to establish a misrepresentation or nondisclosure by respondents that rendered respondents' conduct a manipulative act, as required by § 78n(e).

Respondent company's shareholders subscribed to a hostile tender offer for respondent company by another company. However, the other company did not accept the tendered shares but instead negotiated with respondent company and ultimately announced a new and friendly takeover agreement. The new takeover agreement was oversubscribed, and consequently, any shareholder that re-tendered was subject to substantial proration. Petitioner initiated suit on behalf of herself and other similarly situated shareholders, alleging that respondent company and the other company violated 15 U.S.C.S. § 78n(e). The trial court dismissed the suit on grounds that the alleged manipulation did not involve a misrepresentation, and thus did not violate § 78n(e).


  • On certiorari, the Court affirmed holding that "manipulative" acts under § 78n(e) required misrepresentation or nondisclosure. 
  • As such, respondents' conduct was not manipulative, and thus petitioner was properly non-suited.

The Court affirmed the appeals court decision. The Court ruled that the term "manipulative" as used the securities statute required misrepresentation or nondisclosure, and envisioned conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities. As such, respondents' conduct was not manipulative, and petitioner's suit was properly dismissed.

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