Respondent corporation brought this action against petitioner to
enjoin him from voting or pledging his stock in respondent and from
acquiring additional shares, and to require him to divest himself
of the stock that he already owned. Respondent claimed that the
failure of petitioner, who had acquired more than 5% of
respondent's stock, to make timely disclosure as required by §
13(d) of the Securities Exchange Act of 1934, as added by the
Williams Act, was a scheme to defraud respondent and its
stockholders. Petitioner, who had filed the disclosure schedule
about three months after the statutory filing time, contended that
the Williams Act violation, which he readily conceded, resulted
from his lack of familiarity with the securities laws, and that
neither respondent nor its shareholders had been harmed. The
District Court granted petitioner's motion for summary judgment,
having found no material issues of fact regarding petitioner's lack
of willfulness in failing to make a timely filing and no basis in
the record for disputing petitioner's claim that he first
considered the possibility of obtaining control of respondent
sometime after he discovered his filing obligation. It concluded
that respondent had suffered no cognizable harm from the late
filing, and that this was not an appropriate case in which to grant
injunctive relief. The Court of Appeals reversed, concluding that
respondent was harmed by having been delayed in its efforts to
respond to petitioner's potential to obtain control of the company
but that, in any event, respondent was not required to show
irreparable harm as a prerequisite to obtaining permanent
injunctive relief since, as the securities' issuer, respondent was
in the best position to assure that § 13(d)'s filing requirements
were being timely and fully complied with.
Held: A showing of irreparable harm, in accordance with
traditional principles of equity, is necessary before a private
litigant can obtain injunctive relief based upon § 13(d) of the
Securities Exchange Act. Pp.
422 U. S.
57-65.
(a) The Court of Appeals erred in concluding that respondent
suffered "harm" because of petitioner's technical default,
since
Page 422 U. S. 50
petitioner has not attempted to obtain control of respondent,
has now made proper disclosure, and has given no indication that he
will not report any material changes in his disclosure schedule.
Pp.
422 U. S.
58-59.
(b) Persons who allegedly sold their stock to petitioner at
unfairly depressed pre-disclosure prices have adequate remedies by
an action for damages, and those who would not have invested, had
they thought a takeover bid was imminent, are not threatened with
injury. Pp.
422 U. S.
59-60.
(c) The District Court was entirely correct in insisting that
respondent satisfy the traditional prerequisites of extraordinary
equitable relief by establishing irreparable harm, and its
conclusions that petitioner acted in good faith and promptly filed
a disclosure schedule when he became aware of his obligation to do
so support the exercise of that court's sound judicial discretion
to deny the application for an injunction, relief that is
historically "designed to deter, not to punish."
Hecht Co. v.
Bowles, 321 U. S. 321,
321 U. S. 329.
Pp.
422 U. S.
60-62.
(d) Respondent is not relieved of the burden of establishing
those prerequisites simply because it is asserting a so-called
implied private right of action under § 13(d). Pp.
422 U. S.
62-65.
500 F.2d 1011, reversed and remanded.
BURGER, C.J., delivered the opinion of the Court, in which
STEWART WHITE, BLACKMUN, POWELL, and REHNQUIST, JJ., joined.
BRENNAN, J., filed a dissenting opinion, in which DOUGLAS, J.,
joined,
post, p.
422 U. S. 65.
MARSHALL, J., dissented.
MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari in this case to determine whether a
showing of irreparable harm is necessary for a private litigant to
obtain injunctive relief in a suit
Page 422 U. S. 51
under § 13(d) of the Securities Exchange Act of 1934, 48 Stat.
894, as added by § 2 of the Williams Act, 82 Stat. 454, as amended,
84 Stat. 1497, 15 U.S.C. § 78m(d). 419 U.S. 1067 (1974). The Court
of Appeals held that it was not. 500 F.2d 1011 (CA7 1974). We
reverse.
I
Respondent Mosinee Paper Corp. is a Wisconsin company engaged in
the manufacture and sale of paper, paper products, and plastics.
Its principal place of business is located in Mosinee, Wis., and
its only class of equity security is common stock which is
registered under § 12 of the Securities Exchange Act of 1934, 15
U.S.C. § 78
l. At all times relevant to this litigation
there were slightly more than 800,000 shares of such stock
outstanding.
In April, 1971, petitioner Francis A. Rondeau, a Mosinee
businessman, began making large purchases of respondent's common
stock in the over-the-counter market. Some of the purchases were in
his own name; others were in the name of businesses and a
foundation known to be controlled by him. By May 17, 1971,
petitioner had acquired 40,413 shares of respondent's stock, which
constituted more than 5% of those outstanding. He was therefore
required to comply with the disclosure provisions of the Williams
Act [
Footnote 1] by filing a
Schedule 13D
Page 422 U. S. 52
with respondent and the Securities and Exchange Commission
within 10 days. That form would have disclosed, among other things,
the number of shares beneficially
Page 422 U. S. 53
owned by petitioner, the source of the funds used to purchase
them, and petitioner's purpose in making the purchases.
Petitioner did not file a Schedule 13D, but continued to
purchase substantial blocks of respondent's stock. By July 30,
1971, he had acquired more than 60,000 shares. On that date, the
chairman of respondent's board of directors informed him by letter
that his activity had "given rise to numerous rumors" and "seems to
have created some problems under the Federal Securities Laws. . .
." Upon receiving the letter, petitioner immediately stopped
placing orders for respondent's stock, and consulted his attorney.
[
Footnote 2] On August 25,
1971, he filed a Schedule 13D which, in addition to the other
required disclosures, described the "Purpose of Transaction" as
follows:
"Francis A. Rondeau determined during early part of 1971 that
the common stock of the Issuer [respondent] was undervalued in the
over-the-counter market and represented a good investment vehicle
for future income and appreciation. Francis A. Rondeau and his
associates presently propose to seek to acquire additional common
stock of the Issuer in order to obtain effective control of the
Issuer, but such investments as originally determined were and are
not necessarily made with this objective in mind. Consideration is
currently being given to making a
Page 422 U. S. 54
public cash tender offer to the shareholders of the Issuer at a
price which will reflect current quoted prices for such stock with
some premium added."
Petitioner also stated that, in the event that he did obtain
control of respondent, he would consider making changes in
management
"in an effort to provide a Board of Directors which is more
representative of all of the shareholders, particularly those
outside of present management. . . ."
One month later, petitioner amended the form to reflect more
accurately the allocation of shares between himself and his
companies.
On August 27, respondent sent a letter to its shareholders
informing them of the disclosures in petitioner's Schedule 13D.
[
Footnote 3] The letter stated
that, by his "tardy filing," petitioner had "withheld the
information to which you [the shareholders] were entitled for more
than two months, in violation of federal law." In addition, while
agreeing that "recent market prices have not reflected the real
value of your Mosinee stock," respondent's management could
"see little in Mr. Rondeau's background that would qualify him
to offer any meaningful guidance to a Company in the highly
technical and competitive paper industry."
Six days later, respondent initiated this suit in the United
States District Court for the Western District of Wisconsin. Its
complaint named petitioner, his companies, and two banks which had
financed some of petitioner's purchases as defendants, and alleged
that they were engaged in a scheme to defraud respondent and its
shareholders in violation of the securities laws. It alleged
further that shareholders who had
"sold shares without
Page 422 U. S. 55
the information which defendants were required to disclose
lacked information material to their decision whether to sell or
hold,"
and that respondent "was unable to communicate such information
to its stockholders, and to take such actions as their interest
required." Respondent prayed for an injunction prohibiting
petitioner and his codefendants from voting or pledging their stock
and from acquiring additional shares, requiring them to divest
themselves of stock which they already owned, and for damages. A
motion for a preliminary injunction was filed with the complaint
but later withdrawn.
After three months of pretrial proceedings, petitioner moved for
summary judgment. He readily conceded that he had violated the
Williams Act, but contended that the violation was due to a lack of
familiarity with the securities laws, and that neither respondent
nor its shareholders had been harmed. The District Court agreed. It
found no material issues of fact to exist regarding petitioner's
lack of willfulness in failing to timely file a Schedule 13D,
concluding that he discovered his obligation to do so on July 30,
1971, [
Footnote 4] and that
there was no basis in the record for disputing his claim that he
first considered the possibility of obtaining control of respondent
some time after that date. The District Court therefore held that
petitioner and his codefendants "did not engage in intentional
covert, and conspiratorial conduct in failing to timely file the
13D Schedule." [
Footnote 5]
Page 422 U. S. 56
Similarly, although accepting respondent's contention that its
management and shareholders suffered anxiety as a result of
petitioner's activities and that this anxiety was exacerbated by
his failure to disclose his intentions until August, 1971, the
District Court concluded that similar anxiety "could be expected to
accompany any change in management," and was "a predictable
consequence of shareholder democracy." It fell far short of the
irreparable harm necessary to support an injunction, and no other
harm was revealed by the record; as amended, petitioner's Schedule
13D disclosed all of the information to which respondent was
entitled, and he had not proceeded with a tender offer. Moreover,
in the view of the District Court, even if a showing of irreparable
harm were not required in all cases under the securities laws,
petitioner's lack of bad faith and the absence of damage to
respondent made this "a particularly inappropriate occasion to
fashion equitable relief. . . ." Thus, although petitioner had
committed a technical violation of the Williams Act, the District
Court held that respondent was entitled to no relief, and entered
summary judgment against it. [
Footnote 6]
The Court of Appeals reversed, with one judge dissenting. The
majority stated that it was "giving effect" to the District Court's
findings regarding the circumstances of petitioner's violation of
the Williams Act, [
Footnote 7]
but
Page 422 U. S. 57
concluded that those findings showed harm to respondent because
it "was delayed in its efforts to make any necessary response to"
petitioner's potential to take control of the company. In any
event, the majority was of the view that respondent
"need not show irreparable harm as a prerequisite to obtaining
permanent injunctive relief in view of the fact that as issuer of
the securities it is in the best position to assure that the filing
requirements of the Williams Act are being timely and fully
complied with and to obtain speedy and forceful remedial action
when necessary."
500 F.2d at 1016-1017. The Court of Appeals remanded the case to
the District Court with instructions that it enjoin petitioner and
his codefendants from further violations of the Williams Act and
from voting the shares purchased between the due date of the
Schedule 13D and the date of its filing for a period of five years.
It considered "such an injunctive decree appropriate to neutralize
[petitioner's] violation of the Act and to deny him the benefit of
his wrongdoing."
Id. at 1017. We granted certiorari to
resolve an apparent conflict among the Courts of Appeals and
because of the importance of the question presented to private
actions under the federal securities laws. We disagree with the
Court of Appeals' conclusion that the traditional standards for
extraordinary equitable relief do not apply in these circumstances,
and reverse.
II
As in the District Court and the Court of Appeals, it is
conceded here that petitioner's delay in filing the Schedule 13D
constituted a violation of the Williams Act. The narrow issue
before us is whether this record supports the grant of injunctive
relief, a remedy whose basis "in the federal courts has always been
irreparable harm and inadequacy of legal remedies."
Beacon
Theatres, Inc. v. Westover, 359 U. S. 500,
359 U. S.
506-507 (1959).
Page 422 U. S. 58
The Court of Appeals' conclusion that respondent suffered "harm"
sufficient to require sterilization of petitioner's stock need not
long detain us. The purpose of the Williams Act is to insure that
public shareholders who are confronted by a cash tender offer for
their stock will not be required to respond without adequate
information regarding the qualifications and intentions of the
offering party. [
Footnote 8] By
requiring disclosure of information to the target corporation as
well as the Securities and Exchange Commission, Congress intended
to do no more than give incumbent management an opportunity to
express and explain its position. The Congress expressly disclaimed
an intention to provide a weapon for management to discourage
takeover bids or prevent large accumulations of stock which would
create the potential for such attempts. Indeed, the Act's draftsmen
commented upon the "extreme care" which was taken "to avoid tipping
the balance of regulation either in favor
Page 422 U. S. 59
of management or in favor of the person making the takeover
bid." S.Rep. No. 550, 90th Cong., 1st Sess., 3 (1967); H.R.Rep. No.
1711, 90th Cong., 2d Sess., 4 (1968).
See also Electronic
Specialty Co. v. International Controls Corp., 409 F.2d 937,
947 (CA2 1969).
The short of the matter is that none of the evils to which the
Williams Act was directed has occurred or is threatened in this
case. Petitioner has not attempted to obtain control of respondent,
either by a cash tender offer or any other device. Moreover, he has
now filed a proper Schedule 13D, and there has been no suggestion
that he will fail to comply with the Act's requirement of reporting
any material changes in the information contained therein.
[
Footnote 9] 15 U.S.C. §
78m(d)(2); 17 CFR § 240.13d-2 (1974). On this record, there is no
likelihood that respondent's shareholders will be disadvantaged
should petitioner make a tender offer, or that respondent will be
unable to adequately place its case before them should a contest
for control develop. Thus, the usual basis for injunctive relief,
"that there exists some cognizable danger of recurrent violation,"
is not present here.
United States v. W. T. Grant Co.,
345 U. S. 629,
345 U. S. 633
(1953).
See also Vicksburg Waterworks Co v. Vicksburg,
185 U. S. 65,
185 U. S. 82
(1902).
Nor are we impressed by respondent's argument that an injunction
is necessary to protect the interests of its shareholders who
either sold their stock to petitioner at pre-disclosure prices or
would not have invested had they known that a takeover bid was
imminent. Brief for
Page 422 U. S. 60
Respondent 13, 20-21. As observed, the principal object of the
Williams Act is to solve the dilemma of shareholders desiring to
respond to a cash tender offer, and it is not at all clear that the
type of "harm" identified by respondent is redressable under its
provisions. In any event, those persons who allegedly sold at an
unfairly depressed price have an adequate remedy by way of an
action for damages, thus negating the basis for equitable relief.
[
Footnote 10]
See
Youngstown Sheet & Tube Co. v. Sawyer, 343 U.
S. 579,
343 U. S. 595
(1952) (Frankfurter, J., concurring). Similarly, the fact that the
second group of shareholders for whom respondent expresses concern
have retained the benefits of their stock and the lack of an
imminent contest for control make the possibility of damage to them
remote, at best.
See Truly v.
Wanzer, 5 How. 141,
46 U. S.
142-143 (1847).
We turn, therefore, to the Court of Appeals' conclusion that
respondent's claim was not to be judged according to traditional
equitable principles, and that the bare fact that petitioner
violated the Williams Act justified entry of an injunction against
him. This position would seem to be foreclosed by
Hecht Co. v.
Bowles, 321 U. S. 321
(1944). There, the administrator of the Emergency Price Control Act
of 1942 brought suit to redress violations of that statute. The
fact of the violations was admitted, but the District Court
declined to enter an injunction because they were inadvertent, and
the defendant had taken immediate steps to rectify them. This Court
held that such an exercise of equitable discretion was proper
despite § 205(a) of the Act, 56 Stat. 23, 50
Page 422 U. S. 61
U.S.C.App. § 925(a) (1940 ed., Supp. II), which provided that an
injunction or other order "shall be granted" upon a showing of
violation, observing:
"We are dealing here with the requirements of equity practice
with a background of several hundred years of history. . . .
The historic injunctive process was designed to deter, not to
punish. The essence of equity jurisdiction has been the power
of the Chancellor to do equity and to mould each decree to the
necessities of the particular case. Flexibility, rather than
rigidity, has distinguished it. The qualities of mercy and
practicality have made equity the instrument for nice adjustment
and reconciliation between the public interest and private needs,
as well as between competing private claims. We do not believe that
such a major departure from that long tradition as is here proposed
should be lightly implied."
321 U.S. at
321 U. S.
329-330. (Emphasis added.)
This reasoning applies
a fortiori to actions involving
only "competing private claims," and suggests that the District
Court here was entirely correct in insisting that respondent
satisfy the traditional prerequisites of extraordinary equitable
relief by establishing irreparable harm. Moreover, the District
Judge's conclusions that petitioner acted in good faith and that he
promptly filed a Schedule 13D when his attention was called to this
obligation [
Footnote 11]
support the exercise of the court's sound judicial
Page 422 U. S. 62
discretion to deny an application for an injunction, relief
which is historically "designed to deter, not to punish," and to
permit the court "to mould each decree to the necessities of the
particular case."
Id. at
321 U. S. 329.
As MR. JUSTICE DOUGLAS aptly pointed out in
Hecht Co., the
"grant of
jurisdiction to issue compliance orders hardly
suggests an absolute duty to do so under any and all
circumstances."
Ibid. (emphasis in original).
Respondent urges, however, that the "public interest" must be
taken into account in considering its claim for relief, and relies
upon the Court of Appeals' conclusion that it is entitled to an
injunction because it "is in the best position" to insure that the
Williams Act is complied with by purchasers of its stock. This
argument misconceives, we think, the nature of the litigation.
Although neither the availability of a private suit under the
Williams Act nor respondent's standing to bring it has been
questioned here, this cause of action is not expressly authorized
by the statute or its legislative history. Rather, respondent is
asserting a so-called implied private right of action established
by cases such as
J. I. Case Co. v. Borak, 377 U.
S. 426 (1964). Of course, we have not hesitated to
recognize the power of federal courts to fashion private remedies
for securities laws violations when to do so is consistent with the
legislative scheme and necessary for the protection of investors as
a supplement to enforcement by the Securities and Exchange
Commission.
Compare J. I. Case Co. v. Borak, supra, with
Securities Investor Protection Corp. v. Barbour, 421 U.
S. 412
Page 422 U. S. 63
(1975). However, it by no means follows that the plaintiff in
such an action is relieved of the burden of establishing the
traditional prerequisites of relief. Indeed, our cases hold that
quite the contrary is true.
In
Deckert v. Independence Shares Corp., 311 U.
S. 282 (1940), this Court was called upon to decide
whether the Securities Act of 1933 authorized purchasers of
securities to bring an action to rescind an allegedly fraudulent
sale. The question was answered affirmatively on the basis of the
statute's grant of federal jurisdiction to "enforce any liability
or duty" created by it. The Court's reasoning is instructive:
"The power
to enforce implies the power to make
effective the right of recovery afforded by the Act. And the power
to make the right of recovery effective implies the power to
utilize any of the procedures or actions normally available to the
litigant according to the exigencies of the particular case. If
petitioners' bill states a cause of action when tested by the
customary rules governing suits of such character, the Securities
Act authorizes maintenance of the suit. . . ."
311 U.S. at
311 U. S. 288.
In other words, the conclusion that a private litigant could
maintain an action for violation of the 1933 Act meant no more than
that traditional remedies were available to redress any harm which
he may have suffered; it provided no basis for dispensing with the
showing required to obtain relief. Significantly, this passage was
relied upon in
Borak with respect to actions under the
Securities Exchange Act of 1934.
See 377 U.S. at
377 U. S.
433-434.
Any remaining uncertainty regarding the nature of relief
available to a person asserting an implied private right of action
under the securities laws was resolved in
Mills v. Electric
Auto-Lite Co., 396 U. S. 375
(1970).
Page 422 U. S. 64
There, we held that complaining shareholders proved their case
under § 14(a) of the 1934 Act by showing that misleading statements
in a proxy solicitation were material and that the solicitation
itself "was an essential link in the accomplishment of" a merger.
We concluded that any stricter standard would frustrate private
enforcement of the proxy rules, but Mr. Justice Harlan took pains
to point out:
"Our conclusion that petitioners have established their case by
showing that proxies necessary to approval of the merger were
obtained by means of a materially misleading solicitation implies
nothing about the form of relief to which they may be entitled. . .
. In devising retrospective relief for violation of the proxy
rules, the federal courts should consider the same factors that
would govern the relief granted for any similar illegality or
fraud. . . . In selecting a remedy, the lower courts should
exercise 'the sound discretion which guides the determinations of
courts of equity,' keeping in mind the role of equity as 'the
instrument for nice adjustment and reconciliation between the
public interest and private needs as well as between competing
private claims.'"
396 U.S. at
396 U. S. 386,
quoting
Hecht Co. v. Bowles, 321 U.S. at
321 U. S. 329.
Considering further the remedies which might be ordered, we
observed that "the merger should be set aside only if a court of
equity concludes, from all the circumstances, that it would be
equitable to do so," and that "damages should be recoverable only
to the extent that they can be shown." 396 U.S. at
396 U. S. 388,
396 U. S.
389.
Mills could not be plainer in holding that the
questions of liability and relief are separate in private actions
under the securities laws, and that the latter is to be determined
according to traditional principles. Thus, the fact
Page 422 U. S. 65
that respondent is pursuing a cause of action which has been
generally recognized to serve the public interest provides no basis
for concluding that it is relieved of showing irreparable harm and
other usual prerequisites for injunctive relief. Accordingly, the
judgment of the Court of Appeals is reversed and the case is
remanded to it with directions to reinstate the judgment of the
District Court.
So ordered.
MR. JUSTICE MARSHALL dissents.
[
Footnote 1]
The Williams Act added § 13(d) to the securities Exchange Act of
1934, which has been further amended to provide in relevant
part:
"(d)(1) Any person who, after acquiring directly or indirectly
the beneficial ownership of any equity security of a class which is
registered pursuant to section 78
l of this title, or any
equity security of an insurance company which would have been
required to be so registered except for the exemption contained in
section 78
l(g)(2) (G) of this title, or any equity
security issued by a closed-end investment company registered under
the Investment Company Act of 1940, is directly or indirectly the
beneficial owner of more than 5 per centum of such class shall,
within ten days after such acquisition, send to the issuer of the
security at its principal executive office, by registered or
certified mail, send to each exchange where the security is traded,
and file with the Commission, a statement containing such of the
following information, and such additional information, as the
Commission may by rules and regulations prescribe as necessary or
appropriate in the public interest or for the protection of
investors -- "
"(A) the background and identity of all persons by whom or on
whose behalf the purchases have been or are to be effected;"
"(B) the source and amount of the funds or other consideration
used or to be used in making the purchases, and if any part of the
purchase price or proposed purchase price is represented or is to
be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, or
trading such security, a description of the transaction and the
names of the parties thereto, except that, where a source of funds
is a loan made in the ordinary course of business by a bank, as
defined in section 78c(a)(6) of this title, if the person filing
such statement, so requests, the name of the bank shall not be made
available to the public;"
"(C) if the purpose of the purchases or prospective purchases is
to acquire control of the business of the issuer of the securities,
any plans or proposals which such persons may have to liquidate
such issuer, to sell its assets to or merge it with any other
persons, or to make any other major change in its business or
corporate structure;"
"(D) the number of shares of such security which are
beneficially owned, and the number of shares concerning which there
is a right to acquire, directly or indirectly, by (i) such person,
and (ii) by each associate of such person, giving the name and
address of each such associate; and"
"(E) information as to any contracts, arrangements, or
understandings with any person with respect to any securities of
the issuer, including but not limited to transfer of any of the
securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or guaranties
of profits, division of losses or profits, or the giving or
withholding of proxies, naming the persons with whom such
contracts, arrangements, or understandings have been entered into,
and giving the details thereof."
82 Stat. 454, as amended, 15 U.S.C. § 78m(d)(1). The Commission
requires the purpose of the transaction to be disclosed in every
Schedule 13D, regardless of an intention to acquire control and
make major changes in its structure.
See 17 CFR §§
240.13d-1, 240.13d-101 (1974).
[
Footnote 2]
Although some outstanding orders were filled after July 30,
1971, petitioner placed no new orders for respondent's stock after
that date.
[
Footnote 3]
Respondent simultaneously issued a press release containing the
same information. Almost immediately, the price of its stock jumped
to $19-$21 per share. A few days later, it dropped back to the
prevailing price of $12.50-$14 per share, where it remained.
[
Footnote 4]
The District Court pointed out that, prior to December 10, 1970,
a Schedule 13D was not required until a person's holdings exceeded
10% of a corporation's outstanding equity securities,
see
Pub.L. 91-567, 84 Stat. 1497, and credited petitioner's testimony
that he believed the 10% requirement was still in effect at the
time he made his purchases. Indeed, the chairman of respondent's
board of directors was not familiar with the Williams Act's filing
requirement until shortly before he sent the July 30, 1971,
letter.
[
Footnote 5]
The District Court also concluded that respondent's management
was not unaware of petitioner's activities with respect to its
stock. It found that, by July, 1971, there was considerable "street
talk" among brokers, bankers, and businessmen regarding his
purchases, and that the chairman of respondent's board had been
monitoring them.
[
Footnote 6]
The District Court also dismissed respondent's claims that
petitioner had violated other provisions of the securities laws.
Review of these rulings was not sought in the Court of Appeals, and
they are not now before us.
[
Footnote 7]
The Court of Appeals also agreed with the District Court that
the disclosures in petitioner's amended Schedule 13D were
adequate.
[
Footnote 8]
The Senate Report describes the dilemma facing such a
shareholder as follows:
"He has many alternatives. He can tender all of his shares
immediately and hope they are all purchased. However, if the offer
is for less than all the outstanding shares, perhaps only a part of
them will be taken. In these instances, he will remain a
shareholder in the company, under a new management which he has
helped to install without knowing whether it will be good or bad
for the company."
"The shareholder, as another alternative, may wait to see if a
better offer develops, but, if he tenders late, he runs the risk
that none of his shares will be taken. He may also sell his shares
in the market or hold them and hope for the best. Without knowledge
of who the bidder is and what he plans to do, the shareholder
cannot reach an informed decision."
S.Rep. No. 550, 90th Cong., 1st Sess., 2 (1967).
However, the Report also recognized "that takeover bids should
not be discouraged, because they serve a useful purpose in
providing a check on entrenched but inefficient management."
Id. at 3.
[
Footnote 9]
Because this case involves only the availability of injunctive
relief to remedy a § 13(d) violation following compliance with the
reporting requirements, it does not require us to decide whether or
under what circumstances a corporation could obtain a decree
enjoining a shareholder who is currently in violation of § 13(d)
from acquiring further shares, exercising voting rights, or
launching a takeover bid, pending compliance with the reporting
requirements.
[
Footnote 10]
The Court was advised by respondent that such a suit is now
pending in the District Court and class action certification has
been sought. Although we intimate no views regarding the merits of
that case, it provides a potential sanction for petitioner's
violation of the Williams Act.
[
Footnote 11]
In its brief on the merits, respondent argues that "genuine
issues of material fact exist as to the knowledge, motives,
purposes and plans in [petitioner's] rapid acquisition of" its
stock, and that, at the very least, the case should be remanded for
trial on these issues. This point was not raised in the petition
for certiorari or respondent's opposition thereto, nor was it made
the subject of a cross-petition. Because it would alter the
judgment of the Court of Appeals, which, like that of the District
Court, had effectively put an end to the litigation, rather than
providing an alternative ground for affirming it, we will not
consider the argument when raised in this manner.
See Mills v.
Electric Auto-Lite Co., 396 U. S. 375,
396 U. S. 381
n. 4 (1970);
Morley Constr. Co. v. Maryland Cas. Co.,
300 U. S. 185,
300 U. S.
191-192 (1937).
Cf. Wiener v. United States,
357 U. S. 349,
357 U. S. 351
n. (1958).
MR. JUSTICE BRENNAN, with whom MR. JUSTICE DOUGLAS joins,
dissenting.
I dissent. Judge Pell, dissenting below, correctly in my view,
read the decision of the Court of Appeals to construe the Williams
Act, as I also construe it, to authorize injunctive relief upon the
application of the management interests
"irrespective of motivation, irrespective of irreparable harm to
the corporation, and irrespective of whether the purchases were
detrimental to investors in the company's stock. The violation
time-wise is . . . all that is needed to trigger this result."
500 F.2d 1011, 1018 (CA7 1974). In other words, the Williams Act
is a prophylactic measure conceived by Congress as necessary to
effect the congressional objective "that investors and management
be notified at the earliest possible moment of the potential for a
shift in corporate control."
Id. at 1016. The violation
itself establishes the actionable harm, and no showing of other
harm is necessary to secure injunctive relief. Today's holding
completely undermines the congressional purpose to preclude inquiry
into the results of the violation.