# Appendix — Boeing Co. v. Van Gemert > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0069%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1980 - **Citation:** 444 U.S. 472 ## Text | FILED APPENDIX JUN 27 1979 | MICHAEL RODAK, JR., CLERK IN THE Supreme Court of the United States OCTOBER TERM, 1978 No. 78-1327 THE BOEING COMPANY (formerly The Boeing Airplane Company), e¢ al., Petitioners, v. WILLIAM R. VAN GEMERT, e¢ al., Respondents. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT PETITION FOR CERTIORARI FILED FEBRUARY 26, 1979 CERTIORARI GRANTED MAY 14, 1979 TABLE OF CONTENTS Opinion of the Court of Appeals en banc .......... la Opinion of the Court of Appeals in Van Gemert III 27a Order of the District Court dated June 30,1977 .... 39a Order of the District Court dated September 22,1977 43a Opinion of the Court of Appeals in Van Gemert II 45a Opinion of the Court of Appeals in Van Gemert I... 58a Opinion of the District Court dated May 11,1978 .. 83a Chronological List of Relevant Docket Entries .... 87a APPENDIX A la UNITED STATES COURT OF APPEALS For tHE Seconp Crcuit —o— No. 551—September Term, 1977. (Submitted August 18,1978 Decided December 21, 1978.) Docket No. 77-7547 En Bane —- Wim R. Van Gemeant, et al., Plaintiffs-Appellees, ili Tue Bortne Company (formerly The Boeing Airplane Company), e¢ al., Defendants-Appellants. — Before: Kavurman, Chief Judge, Fernserc, MAnsFIELD, MuLLican, OaKEs, Timpers, Gurretn, VAN GRAAFEILAND and Mesku11, Circuit Judges. — Appeals from an order entered in the United States District Court for the Southern District of New York, Sylvester J. Ryan, J., awarding counsel fees, expenses and disbursements to be paid from the total amount of a class action judgment. Following a decision by a panel of this ) 5285 2a court, 573 F.2d 733 (2d Cir. 1978), the court granted a rehearing en banc. The order of the district court is affirmed. Bn. 7 Davis Pouk AND WarpweLi, New York, New York, for Defendants-A ppellants. Kass, GoopkinD, WECHSLER AND Gerstein, New York, New York (Stuart D. Wechsler, Wil- liam A. Kass, Robert S. Churchill, Samuel K. Rosen, Joseph V. Sternberg, of counsel) ; Natuan, MANNHEIMER, ASCHE, WINER AND Frrepman (Norman Winer), New York, New York; Irvinc Sternman, New York, New York, for Plaintiff s-A ppellees. Louis J. Lerxowrrz, Attorney General of the State of New York (Samuel A. Hirshowitz, First Assistant Attorney General, Warren M. Goidel, Carole L. Weidman, Arthur B. Wolfish, of counsel), for New York State Department of Audit and Control, amicus curiae. Grorce J. SoLLepER, JR., Special Master, New York, New York, amicus curiae. Mon. ae ae Kaurman, Chief Judge: Attorneys litigating class actions have been variously described as “economically rational entrepreneurs,” cham- pions of aggrieved individuals for whom a conventional lawsuit would not be feasible, and the recipients of a “golden harvest of fees.” These diverse perspectives, how- 5286 3a ever, are united by a common theme of which we are not unaware. The conduct of class action litigation is affected by the principles governing the compensation of the at- torneys who bring them. Today we decide, in a case of first impression, that the fees and costs of counsel may be assessed against the un- claimed portion of a class action judgment. Our conclu- sion is predicated on considerations of equity and sound policy and is sustained as well by longstanding precedent. To hold otherwise, we believe, would engender serious un- fairness to claiming class members and their lawyers, with- out any corresponding benefit to absentees. Moreover, a contrary result would place enormous pressure on attor- neys to settle at all costs, and would deter them from in- stituting meritorious suits. I. In February 1966, the Boeing Company decided to call for redemption its issue of 444% Converted Subordinated Debentures, due July 1, 1980. Pursuant to the terms of the Indenture Agreement, Boeing published notices of its intention in two national newspapers. Boeing also mailed notices to those investors who had registered their deben- tures. Holders of $1,544,300 of unregistered debentures, however, did not learn of the call until after the conversion deadline of midnight, March 29, 1966, set by Boeing. At the stroke of twelve their right to convert $100 in principal of bonds into two shares of common stock ex- pired. The two shares were worth $316.25 that day, but the unwitting bondholders were left only with the small consolation of having the right to redeem for $103.25, a figure fixed in the Indenture. William Van Gemert and several other nonconverting bondholders brought a class action against Boeing, alleg- 5287 4u ing that they had received inadequate and unreasonable notice of Boeing’s decision. The plaintiffs contended that Boeing was civilly liable under the Securities Exchange Act of 1934,’ the Securities Act of 1933,? the Trust Inden- ture Act of 1939,? and New York law.* After a full trial, Judge Ryan dismissed the complaint, having held that Boeing was required to do no more than fulfill notice requirements stated in the Trust Indenture Agreement. On appeal, we decided that the New York law of contracts imposed an implied duty on Boeing—not satis- fied by its newspaper advertisements and “eleventh hour” news release—to provide reasonable notice of its intention to redeem the debentures. Accordingly, we held that Boe- ing was liable despite its compliance with the notice provi- sions of the Indenture Agreement and remanded the case to Judge Kyan for a determination of damages. Van Gemert v. Boeing Co., 520 F.2d 1373, 1383 (2d Cir, 1975) [Van Gemert I}. Judge Ryan then proceeded to calculate damages based on the difference between the redemption price of the de- bentures and the value, as of March 29, 1966, of the shares of common stock into which they could have been con- verted. We affirmed this ruling, but held, contrary to Judge Ryan, that the plaintiffs were entitled to prejudgment in- terest. Van Gemert v. Boeing Co., 553 F.2d 812, 813 (2d —S 1 15 U.S.C. §78f. The plaintiffs contended that Bocing was liable under the Act for violating the New York Stock Exchange Listing Agreement and Section A1l0 of the New York Stock Exchange Com pany Manual, on the theory that the statute requires stock exchanges to adopt such rules. 2 15 U.8.C. § 77a et seq. 3 15 U.S.C. $§77aaa et seq. 4 This claim was heard pursuant to the pendent jurisdiction of the federal courts. See United Mine Workers v. Gibbs, 383 U.S. 715 (1966). 5288 5a Cir. 1977) (Van Gemert II). Since $1,544,300 in principal amount of unregistered debentures had not been converted, it was a simple task to determine that the class members had suffered damages in the sum of $3,289,359.° In the Van Gemert II appeal, the law firm of Kass, Good- kind, Wechsler and Gerstein, a member of the committee of attorneys for the plaintiffs,° urged for the first time that members of the class who filed proper proofs of claim should be permitted to receive, on a pro rata basis, the unclaimed portion of the total damage award. Boeing re- sponded in opposition that these funds should be returned to it. Without reaching a conclusion as to the ultimate dis- position of unclaimed damages, we rejected the firm’s pro- posal. Id. at 815-16. Such a plan, we held, constituted a form of fluid class recovery, involving distribution of the unclaimed portion of the judgment to a “next-best” class in contravention of Eisen v. Carlisle & Jacquelin, 479 F.2d 1005 (2d Cir. 1973), vacated and remanded on other grounds, 417 U.S. 156 (1974). We stated that the procedure suggested by the Kass firm would result in the expropriation of the claims of the silent class members and accordingly, create a windfall for those who filed claims. The panel also concluded that the proposal could not be justified on the ground that claiming class members would use a por- tion of the unclaimed funds to defray their legal expenses. This, it was decided, would require Boeing to pay indi- rectly for the legal expenses of successful litigants. Upon a second remand to Judge Ryan for entry of judg- ment, he ordered that plaintiffs’ attorneys be awarded 5 According to the report of the Special Master appointed by Judge Ryan, filed with this court as a brief amicus curiac, the judgment fund now exceeds $6,500,000, including prejudgment interest. 6 The other members of the committee were Nathan, Mannheimer, Asche, Winer & Friedman, and Irving Steinman. 5289 Ou their fees, expenses and disbursements from the total amount of the judgment. He concluded that it was equi- table for all class members—claiming and nonclaiming alike—to bear a pro rata share of the costs of producing the judgment in their favor.’ Boeing appealed this ruling as contrary to the mandate of Van Gemert II, contending that the attorneys should receive compensation only from the claimed portion of the judgment. A panel of this court, in an opinion written by Judge Van Graafeiland, held that the claims of individual class members could not be treated collectively, as if they be- longed to the class as a whole, and that because absent class members had not received the benefit of the attorneys’ labors, no charge or assessment may be made against their undistributed shares. Van Gemert v. Boeing Co., 573 F.2d 733, 736 (2d Cir. 1978) (Van Gemert III).° Because of the significance of the issues in this case for the conduct of class action litigation, we decided to rehear the case en banc. We now affirm the judgment of the district court. 7 Under Judge Ryan’s order, each class member’s contribution to the total amount of attorneys’ fees must bear the same ratio to all such fees as his own recovery bears to the total class recovery. 8 Judge Oakes dissented in part on the ground that the principles governing the award of attorneys’ fees are inapplicable to costs and disbursements. Van Gemert J11, 573 F.2d at 738. 9 Having briefed the issue at our request, Boeing presents the thresh old urgument that > under the “law of the case doctrine,” Van Gemert 11 precludes the reeovery of costs and attorneys’ fees from the unclaimed portion of the bondholders’ judgment. We cannot accept this contention. Van Gemert IL held that class members who filed proofs of claim could not be uwarded the unclaimed portion of the judgment on a pro rata basis, even if some of those funds were to be used to pay their lawyers. To allow the money judgment to be distributed in such a fashion would countenance “expropriation” of the shares of abscntees, and would enable well-informed claimants to avoid paying any at- 5290 7a I. Any consideration of the propriety of awarding attor- neys’ fees in the federal courts must begin with Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). In that seminal case, the Supreme Court decided that, absent statutory authorization, the federal courts may not shift the costs of litigation from the winning to the losing party. The Alyeska Court noted, however, that there are two exceptions to this rule. First, there is inherent power in the courts to assess attorneys’ fees for the “will- torneys’ fees at all. Van Gemert III raises the wholly different ques- tion whether the lawyers for the class may be awarded their fees and disbursemerts from the judgment considered as a common fund. The claiming class members will not receive a “windfall,” for no pay- ment of funds to a “next-best” class of persons is contemplated by Judge Ryan’s order. Rather, the costs of the litigation will be borne by the entire fund, and each class member will be required to pay his proportionate share of attorneys’ fees. Even if Van Gemert II had reached the issue raised on this appeal, the law of the case doctrine would not dictate that we treat its ruling as dispositive. Boeing, citing Bromley v. Crisp, 561 F.2d 1351, 1363 (10th Cir. 1977) (en banc), cert. denied, 98 8. Ct. 1458 (1978), and Lathan v. Brinegar, 506 F.2d 677, 691 (9th Cir. 1974) (en banc), argues that it would be prudent for the court sitting en banc to con- sider itself bound by the law of the case established by a panel on an earlier appeal, when that ruling was not reviewed en banc. We believe, however, that such a rule would be far too restrictive and that, sitting en banc, we may overrule any panel decision that a majority of the active judges believes was wrongly decided, unless a party would be seriously prejudiced as a result, First National Bank of Hollywood v. American Foam Rubber Corp., 530 F.2d 450, 453 2.3 (2d Cir. 1976). The purpose of the “law of the case” doctrine is to prevent the continuous relitigation of issues decided by a panel at an earlier stage of a suit. The doctrine, which is in any event no more than an appeal to the “good sense” of the court, see, ¢.g., Zdanok v. Glidden Corp., 327 F.2d 944, 952-53 (2d Cir. 1964), is properly ap- plied to the district court and to other panels of the Court of Appeals. It cannot immunize panel decisions from review by the court en banc. Accord, In re Central R.R. Co., 485 F.2d 208, 210-11 (3d Cir. 1973) (en banc). And, given the rarity with which petitions for rehearing en banc are granted, the spectre conjured by Boeing of continual “second guessing” of panel decisions is insubstantial indeed. 5291 8a ful disobedience of a court order,” or when a party has acted in bad faith, id. at 258-59. Second, historically, the federal courts have exercised an equitable power to allow attorneys’ fees and costs to be charged against a fund created, increased, or protected by successful’® litigation. Id. at 257-58. The application for the fees may be made by the plain- tiffs themselves, Trustees v. Greenough, 105 U.S. 527 (1881), on the ground that they have performed a service benefiting others similarly situated. But a plaintiff’s at- torney may himself present a claim to compensation and reimbursement for expenses from the fund, on the theory that he has provided or preserved a benefit—the fund itself—and that the reasonable value of his services should be borne proportionately by all plaintiffs. Central R.R. € Banking Co. v. Pettus, 113 U.S. 116 (1885). The paradigmatic common fund is an express trust, as in Greenough. Litigation can also “create” a fund, as when the assets of a debtor are brought within the reach of creditors, Pettus, supra. Nevertheless, the common fund doctrine has not been restricted to equitable actions in which the court exercised contro] over a “res”. In City of Detroit v. Grinneil Corp., 495 F.2d 448, 454, 468-69 (2d Cir. 1974), we awarded attorneys’ fees out of the settlement fund in a private antitrust class action suit. Similarly, since a money judgment is itself an identifiable asset on which the trial court may impose a charge, such judgments have also been accorded common fund treatment, see, e.g., 10 The common fund doctrine may be invoked only by successful liti- gants, see Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 275 (1975). It “would be a strange inversion if the {common fund) doctrine enabled losers in adversary contests to charge their counsel fees to winners.” Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds,” 87 Harv. L. Rev. 1597, 1626-27 (1974). 5292 9a Union Cent. Life Ins. Co. v. Hamilton Steel Prods., Inc., 493 F.2d 76 (7th Cir. 1974); see generally, Dawson, Law- yers and Involuntary Clients in Public Interest Litigation, 88 Harv. L. Rev. 849, 920 (1975); Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds, 87 Harv. L. Rev. 1597, 1620-24 (1974). In Alyeska Pipeline Service Co., supra, 421 U.S. at 265 n.39, the Supreme Court established criteria for determin- ing whether benefits derived from litigation could properly be treated as a common fund. The Court stated that the common fund rationale was ill-suited to public interest litigation involving nebulous benefits accruing to a vast class of people. Accordingly, a common benefit did not accrue from litigation over the environmental impact of the trans-Alaska pipeline. The Court declared: In this Court’s common-fund and common-benefit deci- sions, the classes of beneficiaries were small in number and easily identifiable. The benefits could be traced with some accuracy, and there was reason for confi- dence that the costs could indeed we shifted with some exactitude to those benefiting. In this case, however, sophisticated economic analysis could be required to gauge the extent to which the general public, the sup- posed beneficiary, as distinguished from selected ele- ments of it, would bear the costs. Id. We believe that the judgment against Boeing constitutes a common fund within the meaning of Alyeska." The class ll The common fund doctrine also presupposes that the court has “the authority to adjudicate the rights and duties” of those with an interest in the fund, Dawson, supra, note 10 at 1618. Although the beneficiaries need not sue as a class to meet this criterion, United States v. ASCAP, 466 F.2d 917, 919 (2d Cir. 1972), a class action presents the clearest case for the exercise of such judicial authority. The plaintiffs in the suit before us were certified as a 23 (b) (1) class 5293 10a of debenture holders here is comparable in size to that of the creditors in Pettus and the bondholders in Greenough. Moreover, the Van Gemert class is smaller than the class of 85,000 union members in Hall v. Cole, 412 U.S. 1 (1973) and the 8,987 shareholders in Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970)—two eases cited with approval in Alyeska.* Nor is the class membership here difficult to identify for the purposes of tracing the benefits accurately. Unlike the sprawling throng of potential beneficiaries in Alyeska—all those who would derive benefits from a pris- tine Alaskan wilderness—the beneficiaries of this action form a well-defined class, limited to those who failed to convert unregistered bonds of a specific issue of Boeing debentures. The names of the individual bondholders are not, to be sure, always ascertainable. But since each un- converted debenture is readily identifiable—and in fact bears an explicit number—it is quite evident that the dam- ages owed to each plaintiff can be traced to each deben- ture with perfect accuracy. Klementary arithmetic, not “sophisticated economic analysis”, is all that is required to determine the distribution of benefits. To calculate the amount of the judgment, it was necessary only to subtract the redemption price of each debenture from the value of the two shares of common stock to which it could have been converted. And it is equally simple to prorate the under the Federal Rules. No class member could have opted out of such a suit even if he had desired to do so; once the class was certified, no other forum could have adjudicated their rights with respect to the fund. 12 In Brennan v. United Steclworkers of America, 553 F.2d 586 (3d Cir. 1977), the court ruled that a common benefit could acerue to a class of 1,400,000 union members, noting that the plaintiff class need not be small in “absolute numbers.” Id. at 606. Sce also, Yablonski v. United Mine Workers of America, 466 F.2d 424 (D.C. Cir. 1972), cert. denied, 412 U.S. 918 (1973) (class of 162,000 union members). 5294 lla cost of the suit with complete exactitude so that each deben- ture holder’s recovery is taxed with the cost of vindicating his interest." Indeed, the “identification” and “tracing” criteria are met more completely in the case before us than in either Hall or Mills, neither of which involved tangible economic benefits at all. III. The panel in Van Gemert III held that the common fund doctrine requires that expenses be assessed only against those who have actually claimed the fruits of the litigation, because no one else has benefited from the suit. We believe this construction of the concept of a “benefit” is too narrow and is not supported by the common fund case law. In Greenough, the Court noted that not every bondholder had filed claims against the fund, but nevertheless charged the entire fund with costs and fees. 105 U.S. at 529, 531. In Sprague v. Ticonic National Bank, 307 U.S. 161 (1939), the plaintiff sued individually to establish her right, as a beneficiary of a trust consisting of bonds held by a bank, to a lien on the proceeds from the sale of the bonds. In the process, she established the right of thirteen other beneficiaries to recover a share of the trust’s assets. The Court, in an opinion by Justice Frankfurter, allowed the plaintiff to recover her attorney’s fees out of those assets, although it was by no means clear that the other cestuts que trust would bring suit. If a plaintiff class-member is adjudicated to have an interest in a fund, he has benefited within the meaning of the common fund doctrine. 13 Sce note 7 supra. 14 Citing the venerable Williston, our Brother Van Graafeiland main- tains that the common fund doctrine is inapplicable unless the benefit conferred is knowingly accepted. Any requirement that the absentees 5295 2a The rationale for such a rule is evident, as the case before us indicates. A portion of the judgment won by plaintiffs’ attorneys—at least $213 for each unconverted debenture—is due every member of the class. Fach plain- tiff has a present vested interest in the class recovery, and his share of the judgment may be received on request. It cannot be urged convincingly, then, that the absent plain- tiffs have not received a benefit from the litigation. Our conclusion that the district court properly charged attorneys’ fees against the shares of nonclaiming class members is far from heretieal. At common law, an attor- ney’s lien attached to a judgment obtained for his chent, as security for his fees and expenditures. See Restatement (2d) Agency § 464(e). Under this doctrine, which is as actually file claims, however, is foreclosed by Sprague and Greenough. Moreover, as Jlaynes vo Rederi A/S Aladdin, 362° Fitd 345, 3051 (Sth Cir, 1966), cert. denied, 385 U.S. 1020 (1967) noted, it is sufficient if the attorneys’ services and the benefits accruing from it are “im pliedly” accepted. Manifestly, plaintiffs in a 238 (b)(3) ehiss action, who have been provided with notice and an opportunity to opt out of the suit, must be said to have accepted the attorneys’ services, and the benefits that may flow from them. Of course, class actions certified under Rule 23¢b)(2) or, as in this ease, 23(b)(1), do not contain an opt-out privilege. This reflects the conclusion of those who drafted the Rules that) individual choice should be subordinated to the interests of the class as a whole to avoid inconsistent judgments or prejudice to absent clase members, Beeause clasa certification represents ao judicial determination that the absen tees are adequately represented, it} would) frustrate the Rule if) we were to require an investigation into each plaintiff's willingness to accept the benctita of the litigation. Our conclusion reata on firm foundations, for absentees are in no way harmed by our decision. Tt simply does not aeeord with fact to argue, as the minority seems to, that) beeause ao deduction: from the shares of unnamed plaintiff™ has been made for attorneys’ fees, they are being held liable for more than they have gained. Lf, as we hold, they have benefited from the judgment, it is appropriate to charge them their pro rata share. And if, as the dissent contends, they have gained nothing by the victory against Booing, then it is difficult to understand how a deduction from the spoils of that victory can be said to have injured them. The disacnters cannot have it both ways. 5296 l3a American as the “American Rule” against charging the losing party with the fees of his adversary, the attorney is himsclf entitled to have the judgment enforced and com- pensation paid, id. and comment n.; Falcone v. Hall, 235 F.2d 860 (D.C. Cir. 1956). Indeed, in Pettus, Justice Harlan noted that under state law the lien of plaintiffs’ attorney could not be defeated by the successful purchase of the plaintiffs’ claims. 113 U.S. at 127-28. Thus, since the attorney’s right to his fee arose out of his creation of the judgment and not his client’s receipt of the proceeds, our interpretation of the common fund doctrine is in har- mony with time-honored principles of the common law.** In contrast to the “expropriation” feared in Van Gemert II, deducting fees from each plaintiff’s share in the judg- 15 The argument that there is no attorney-client relationship between the absentees and class counsel is not persuasive. A certification under Rule 23(c) makes the class the attorney’s client for all practical pur- poses, Developments in the Law: Class Actions, 89 Harv. L. Rev. 1318, 1592-97 (1976). The judgment in a class action is not secure from collateral attack unless the absentees were adequately and vigorously represented. Without question, it is settled that the attorney is not free to advocate the interests of the named plaintiffs alone. See Gonzales v. Cassidy, 474 F.2d 67, 75-76 (Sth Cir. 1973). And absen tees do not cease to be clients simply because they fail to claim their portion of the class recovery. It begs the question to argue that since absentees are not parties for all purposes, they cannot be parties when the objective is to award attorneys’ fees. The absentees are certainly parties in the most fundamental sense, for, as we have already indicated, they are bound by the judgment. Whether a given procedural rule should be applied to those who are not named plaintiffs depends on the function of the rule. Absentees are not considered parties against whom counter. claims under Fed. R. Civ. P. 13 may be asserted, because “the right to counterclaim is readily subject to abuse as a tactical device to encourage plaintiffs to opt out.” See, e.g. Donson Stores, Inc. V. American Bakeries Co., 58 F.R.D. 485, 489 (S.D.N.Y. 1973). There can be no comparable objection to treating unnamed plaintiffs as parties for the purpose of assessing attorneys’ fees, for no affirmative burden is placed on them by our ruling today. Indeed, it is only when the case is resolved in their favor, because of their counsel's efforts, that fees are assessed. 5297 l4a poset eis some plaintiffs at the expense of ‘ ach plaintiff will receive i share of the recovery, less attorneys’ un nae ~ size of the unclaimed portion of the fund ” 1} is j : a “fluid recovery” case. . mes We believe, moreover, that a ruling for Boeing would be unfair to both the claiming plaintiffs and the aa i torneys, and would deter lawyers from bringing resent si lawsuits. In setting attorneys’ fees in class aulien thi 8 courts must multiply the number of hours spent pe : — by an appropriate hourly rate, and then Just the fee to take into account the difficulty of the case, the attorney’s risk in eo undertak ’ representation." ing it, and the quality of If victorious attorneys were permitted to charge fees on] against claiming class members, the standards ented rd the courts to ensure rationality and fairness in fee sett z would go for nought, because the compensation the ong 16 Ph therefore do not find apposite to our holding absent ae A hs ¢ II that claimants may be encouraged to kee In any sk a uninformed about the judgment in their ht me gl eget nee 0 Judge will invariably require that adequate . provided. In the instant a ¥ : case, Jud spin mater forth pups, nh wasn Pea gy sh ye quel could be ascertained, and to all brokerage perch a biol = —— a with instructions to — ercat Wruuiam R. Van Geert, et al., Appellants, —_—V Tue Borneo Co., et al., Appellees. 4 ¢ Yy Before: Lumcarp, Oakes and TIMBERS, Circuit Judges. -_— == i Suit by holders of convertible debentures who failed to convert prior to company’s redemption claiming insufficient notice of redemption provided. The United States District Court for the Southern District of New York, Sylvester J. Ryan, Judge, held that the notice provided by the com- pany complied with the provisions in the debenture and underlying Trust Indenture; that the Trust Indenture Act of 1939 and the company’s Listing Agreement with the New York Stock Exchange were not violated; and that appellants had no standing to raise a claim based upon an alleged failure to make a necessary adjustment in the 54a conversion rate. Held, that the appellants had stated a valid claim, Judgment reversed. Sruart D. WecHsLeER, Kass, Goopkinp, WECHSLER & Gerstein, New York, N.Y.; Sachnoff, Schrager, Jones & Weaver, Ltd., Chicago, Ill.; Elson, Lassers & Wolfe, Chicago, Il, for Appellants. NorMan Winer, NatHan, MANNHEIMER, ASCHE, Winer & Friepman, New York, N.Y., for Appellants. S. Hazarp Gituespiz, Davis Potk & WarpweELL, New York, N.Y. (David E. Wagoner, Per- kins, Coie, Stone, Olsen & Williams, Seattle, Wash., William H. Levit, Jr., Hughes, Hub- bard & Reed, Los Angeles, Cal., of counsel), for Appellees. ee oe Oaxes, Circuit Judge: This appeal is from a judgment dismissing the amended complaint in a consolidation class action brought by non- converting holders of The Boeing Company’s “412%. Con- vertible Subordinated Debentures, due July 1, 1980.” The complaint was jurisdictionally based on the Securities Ex- change Act of 1934 as amended, the Securities Act of 1933 as amended, the Trust Indenture Act of 1939 as amended and the principles of pendent jurisdiction.’ The gist of the complaint was that the appellants and their class had inadequate and unreasonable notice of Boeing’s intention to redeem or “call” the convertible debentures in question and were hence unable to exercise their conversion 1 See note 19 infra. 0a rights before the deadline in the call of midnight, March 99, 1966. Their damage lay in the fact that the redemption price for each $100 of principal amount of debentures was only $103.25, while under the conversion rate of, at a minimum, two shares of common stock for each $100 of principal amount of debentures, the stock was worth $316.95 on March 29, 1966, the cut-off date for the exercise of conversion privileges, or within 30 days thereafter, $364.00. The named appellants number 56, and the total loss alleged is over $2 million. The United States District Court for the Southern Dis- trict of New York, Sylvester J. Ryan, Judge, held that Boeing complied with the notice provisions spelled out in the debentures and in the Indenture of Trust Dated July 1, 1958 (the Indenture), between Boeing and The Chase Manhattan Bank (Chase), Trustee, and that it was re- quired to do no more; that the Trust Indenture Act of 1939, 15 U.S.C. §§77aaa et seq., was not violated; that if Boeing’s Listing Agreement with the New York Stock Ex- change (NYSE) were violated, it gave appellants no claim for relief; and that even if, as appellants claim, an adjust- ment in the conversion rate were required, and that failure to make the adjustment gave rise to a cause of action, ap- pellants had no standing to raise the claim since they did not exercise their conversion rights. We reverse and re- mand on the ground that there was an obligation on Boeing’s part to give reasonably adequate notice of the redemption to the debenture holders, which obligation was not fulfilled in this instance. Most of the facts are not in dispute; indeed, we com- mend the parties, and the court below, for agreeing to a 59-page statement as to facts, incorporating some 55 ex- hibits, and to what certain witnesses would testify if called at trial. 56a Tut Issue or DEBENTURES On July 15, 1958, each Boeing shareholder was given the right to purchase $100 of convertible debentures for each 93 shares of stock then held.? The debentures were to pay interest of 414 per cent per annum and were to be con- vertible by the debenture-holder into common stock at a rate (subject to adjustment) of two shares per $100 prin- cipal amount of debentures. Chase was appointed trustee under the Indenture Agreement, and the debentures, as well as the stock reserved for issuance upon conversion of the debentures, were listed on the NYSE. Application for such listing had been made pursuant to a Listing Agree- ment between Boeing and the Exchange. Subscrintions for a total of $29,578,500 of debentures were received? and the balance of $1,019,100 was purchased by the underwriters. Chase as trustee then authenticated and the subscription agent delivered by registered mail the entire $30,597,600 aggregate amount of debentures in coupon form to the persons designated in the warrants surrendered or their agents,‘ but no list of these was kept by Boring or Chase.* 2 Total trading in the debenture rights was 1,702,200, but since no in. formation is available on the number or retrades there is no way of knowing exactly how many rights were not traded. At the least, huw- ever, 5,335,248 rights were not traded on the Exchange. 3 One may estimate, from the number of rights not traded on the Ex change, approximately $21 million worth of the debentures were pur- chased by Boeing stockholders or their donees. 4 Between August 4, 1958, when the debentures were admitted to trading on the NYSE, and March 29, 1966, when conversion rights expired, a total of $68,694,000 face amount of debentures were traded. It is not known how many of the debentures were held by original subecribers at the later date. 5 City Bank-Farmers Trust Company, the subscription agent, retained through the ultimate date on which conversion rights expired the names and addresses of stockholders to whom the warrants were sent, as well 57a A number of provisions in the debenture, the Indenture Agreement, the prospectus, the registration statement for the debentures and the Listing Agreement with the NYSE dealt with the possible redemption of the debentures by Boeing and the notice debenture-holders were to receive of a redemption call so that they might timely exercise their right to convert the debentures into common stock rather than have their debentures redeemed at face value. The debentures themselves provided: The holder of this Debenture is entitled, at his option, at any time on or before July 1, 1980, or in case this Debenture shall be called for redemption prior to such date, up to and including but not after the tenth day prior to the redemption date, to convert this Debenture . at the principal amount hereof, or such portion hereof, into shares of Capital U.ock of the Company... The Debentures are subject to redemption as a whole or in part, at any time or times, at the option of the Company, on not less than 30 nor more than 90 days’ prior notice, as provided in the Indenture, at the fol- lowing redemption prices (expressed in percentages of the principal amount) ... This Debenture may be registered as to principal upon presentation at the office or agency of the Com- pany, in the Borough of Manhattan, The City of New York, New York,... (Emphasis added.) as lists of the names and addresses of stockholders of record for the payment of dividends in May and August of 1958, and the warrants themselves when they were tendered. Although the list of stockholders was destroyed in 1964, the warants which bear the names and addrenses of the original subscribers are presently in the possession of a snecessor agent. 58a The Indenture itself, a 113-page printed booklet, pro- vides in Art. V, § 5.02, as follows: In case the Company shall desire to exercise the right to redeem all or any part of the debentures, as the case may be, pursuant to Section 5.01, it shall pub- lish prior to the date fixed for redemption a notice of such redemption at least twice in an Authorized News- paper, the first such publication to be not less than 30 days and not more than 90 days before the date fixed for redemption. Such publication shall be in succes- sive weeks but on any day of the week... . hs The Indenture also provided that debenture-holders who registered their bonds would receive notice by mail of any redemption call by the Boeing directors. While the prospectus for the debenture issue did not refer to any registration rights, it did state that redemp- tion could occur “on not less than 30 days’ and not more than 90 days’ published notice.” The NYSE Listing Agreement dated November 5, 1957, incorporated by reference into the listing application filed by Boeing in respect to the debenture issue, provided in Part III, Paragraph 4, as follows: 4. The Corporation will publish immediately to the holders of any of its securities listed on the Exchange any action taken by the Corporation with respect to dividends or to the allotment of rights to subscribe or to any rights or benefits pertaining to the ownership of its securities listed on the Exchange; and will give prompt notice to the Exchange of any such action; and will afford the holders of its securities listed on the 6 An “Authorized Newspaper” is defined as one published at least five days a week and of general circulation in the horough of Manhattan, N.Y. See Indenture, Art. I, § 1.01. 59a Exchange a proper pertod within which to record their interests and to exercise their rights. . . . (Emphasis added.) Section A10 of the NYSE “Company Manual” specif- ically defines what is meant by publicity in the Listing Agreement: Publicity: The term “publicity,” as used . . . below, and as used in the listing agreement in respect of redemption action, refers to a general news release, and not to the formal notice or advertisement of re- demption sometimes required by provisions of an inden- ture or charter. Such news release shall be made as soon as possible after corporate action which will lead to, or which looks toward, redemption is taken... and shall be made by the fastest available means, i.e., telephone, telegraph or hand-delivery. To insure coverage which will adequately inform the public, the news should be released to at least one or more newspapers of general circulation in New York City which regularly publish financial news, or to one or more of the national news-wire services (Associated Press, United Press International), in addition to such other release as the company may elect to make. Section A10 of the Company Manual also provides spe- cifically that when a convertible security is to be redeemed, the news release must include the rate of conversion and the date and time when the conversion privilege expires. It further provides that in addition to the immediate news release the company must give notice immediately to the NYSE itself, so as to enable the NYSE to take any neces- sary action with respect to further trading in the security. A eee 60a Tue Cay anv Its CrrcuMSTANCES—HEREIN OF THE Notice AcTUALLY GIVEN On February 28, 1966, the Boeing board of directors inter alia authorized the president, vice president-finance or treasurer to call for redemption on a date to be selected by them or any one of them, all of the convertible deben- tures outstanding under the indenture of July 1, 1958. That same (lay a news release, headlining 1965 sales and net earnings, and referring to a contemplated stock increase, stock split and post-split dividends, mentioned that “Tt}he company’s management was also authorized to call for re- demption at a future date all of company’s outstanding 41%, percent convertible subordinated debentures.” This statement, which did not mention even the tentative dates for redemption and expiration of the conversion rights of debenture holders that had been settled upon, was released by the Bocing “News Bureau” nationally to the financial editors of the New York Times, the New York Herald- Tribune, the Wall Street Journal and other major national newspapers, in addition to the major wire services (Asso- ciated Press, United Press International and Dow Jones & Co.). A short time after the February 28 board mecting, Boeing fifmed up the key dates, complied with the inden- ture notice requirements and communicated to some extent with the Exchange proper. On March 2, 1966, at the home office in Seattle, at a meeting of Boeing officers, bankers and lawvers, it was decided to fix March 8 as the date for the first publication of the formal notice of redemption, April 8 as the redemption date and March 29 as the date for expiration of the conversion privilege. The second date for publication of the formal notice, March 18, was also fixed upon at this March 2 meeting, and Chase was notified to publish the redemption notice on those dates in all edi- tions of the Wall Street Journal. All editions of the Journal carried the formal notices on March 8 and 18; the notices were in due form if not of extensive size.’ It is conceded by the appellants that the formal requirements of the In- denture were met by the Company and Trustee. It was not until March 7, the day before the publication of the first formal notice of redemption, that the NYSE was itself notified of the firmed-up dates for redemption," conversion and notice. This was done by a telephone call from Company counsel in Seattle to the Exchange. While the court below found in part that “Boeing did comply with the publicity requirements of the Exchange” and while Company counsel “felt” on the basis of his tele- phone call “that we had complied with the recommended procedures [of the Stock Exchange Manual],” this find- ing and feeling are in the face of Boeing’s response admitting appellants’ demand for admission That Boeing did not issue any general publicity re- lease, as that term is defined in Section A-10 of the New York Stock Exchange Company manual, con- cerning the call of the debentures during the period from March 1, through March 24, 1966. This admission was reconfirmed by counsel for Boeing below and on appeal in the course of an “opening” state- ment to the court. The original news release of February 98 did not qualify sinee the dates of conversion and re- demption had not heen fixed and the Manual requires in the ease of convertible securities that the publicity set forth “the rate of conversion and the date and time when the conversion privilege will finally expire” and that if — 7 We estimate their size as 5” x 5%". R The Exchange had been sent a communication concerning the redemp- tion on March 1, 1966, but at that time no redemption date had heen established. Ee ———————————— 62a such data are not known at the time publicity is given initially, “similar publicity shall be given immediately it becomes known or determined.” The formal notices did not qualify since the Manual refers to a “general news release,” and not to the formal notice or advertisement of redemption. In this regard it is interesting to note that a letter dated March 9 from the stock list depart- ment of the Exchange to Boeing indicates that “We have noted the recent advertisement advising of the call for redemption” and also asks for a copy of the authorizing resolution. There was, in short, no general news release as called for by the Listing Agreement as amplified in the Com- pany Manual until on the eve of expiration of the conver- sion rights, March 25, 1966, it appeared that $10,849,300 face amount of debentures—over one-half of those out- standing at that time—remained unconverted. At that point Boeing issued a press release’ and then on March 9 DEBENTURE CONVERSION DaTE MaRCH 29 Final date for conversion of The Boeing Company's 4% per vent convertible subordinated debentures to Boeing common stock is Tuesday, March 29, as announced in advertising by the company on March 8, 9 and 10. The conversion rights provide for issuance of two shares of common stock in the company for each $100 bond. The company's notice of redemption announced that all outstanding debentures would be redeemed on or after April 8 at the redemption price of 103.25 per cent of their principal amount, together with accrued interest to that date. Closing price of the stock as of March 25 was $154.5, represent- ing a substantial advantage to holders of the bonds if the conversion is elected. From January 1, 1965 through March 25, 1966, the sales price for the common stock of The Boeing Company ranged from a high of $175.25 to a low of $60.375 per share. As was pointed out in the notice of redemption, so long as the market price of the common stock is $52.24 or more per sharo, a debenture holder would receive upon conversion before the March 29 deadline, common stock having a greater value than the cash he would receive if he sur- rendered the debenture for redemption. 63a 98 the Company republished its earlier advertisement in all editions of the Wall Street Journal (Eastern, Mid- Western, Pacific Coast and South-West) and the New York Times, and additionally advertisements were placed. This later action had what the court below termed a “dra- matic and widespread rippling effect.” Some $9,305,000 of debentures were converted on March 28 and 29. The ripples, however, had not spread to the appellants’ class by the midnight deadline on the 29th; they literally went to sleep with $1.5 million of debentures’ that were worth $4 million if only converted. It is true, however, and the court did properly find, that in addition to the publication of the two formal indenture notices, notices of the dates of the call and the expiration of the conversion privilege on March 29, 1966, were carried on the following services: NYSE ticker on March 8, 23, 24, 25, 26 and 28, 1966; NYSE Bulletin on March 11, 18 and 25, 1966; The Commercial and Financial Chronicle on March 14, 21 and 28, 1966; Standard & Poor’s Bond Out- look on March 19, 1966; Standard & Poor’s Called Bond Record on March 9, 11, 18 and 29, 1966 ; Moody’s Industrials on March 11, 1966. Articles about these dates were also carried in the Seattle Post Intelligencer on March 25, 1966; the Seattle Times on March 27, 1966; and the Financial World on March 23, 1966; and the notice was also carried in the Associated Press Bond Tables published on one or more days in at least 30 newspapers published in major cities across the United States. But almost all of these notices or items were in fine print, buried in the multitude of information and data published about the financial mar- kets and searecly of a kind to attract the eye of the average lay investor or debenture holder. On March 9, 1966, the listing in the New York Times for the convertible deben- tures read, for example: “Boeing ev 4% s 80.” The change 64a on March 10 was to “Boeing 4% s 80 eld,” giving the in- vestor in Dubuque or Little Rock or Lampasas only 19 days to pick up this change and figure that “cld” meant “called.” Proof of the inadequacy of these notices lies in the fact that, despite the dramatic disparity between the value of the debentures unconverted and the conversion stock, over one-half of the debentures outstanding on the date of the first notice remained unconverted until the gen- eral publicity release on the eve of expiration of the con- version privilege.’ Because the appellants place some emphasis on the fact, although we do not reach their contention of unreasonable notice based on it, we should mention that Boeing made no attempt to mail notice to the original subscribers (which could have been done at concededly nominal expense), and neither Boeing nor Chase inquired of or gave notice to col- lecting banks which had tendered for collection coupons bearing the payment dates of July 15, 1965, or January 15, 1966, the last two coupons before the redemption, either of which might have had some beneficial effect." THe CoNTENTIONS OF THE PARTIES Bocing rests its defense primarily upon the notice spe- cified in the debentures and Indenture, pointing out that in 1958 when the debentures were issued, “the risk that actual notice might not be received by subsequent holders of the debentures was clearly accepted by all even re- 10 On March 8, 1966, $21,514,700 face amount of debentures were still outstanding. On March 25, 1966, as stated, four days before the expira- tion of the conversion privilege, over one-half of these $10,849,300, had not been converted. 1} Nor do we reach the legal argument under the Trust Indenture Act, 15 U.8.C. §77bbb, based upon the Indenture's provisions requiring Boeing to give Chase lists of the names and addresses of debenture holders obtained by the former, and the token compliance therewith. 69a motely familiar with the nature of such debentures.” (Brief at 20-21.) It was “just such a risk” that led Boeing to ex- tend to its stockholders and others who were investing $30 million in these securities the opportunity to register, see Kaplan v. Vornado, Inc., 341 F. Supp. 212, 216 (N.D. Ill. 1971), an opportunity availed of by only 7 per cent of the debenture holders.? For the proposition that notice by publication provided for here was “standard and con- formed with the custom and practice prevailing in the trade in 1958,” we are referred by Boeing to Gampel v. Burling- ton Industries, Inc., 43 Misc. 2d 820, 252 N.Y.S.2d 500 (Sup. Ct. 1964), where Justice Korn did not discuss the custom and practice in the trade but did hold that publication in the Wall Street Journal even during a newspaper delivery strike conformed to a provision in the Burlington Indus- tries debentures similar to the one in the case at bar." There are four main strings to the appellants’ bow. The first is that Boeing is civilly liabie under federal law for violation of the NYSE Listing Agreement and Section A10 of the NYSE Company Manual since their require- ments are an extension of the Securities Exchange Act of 1924 and an integral part of the statutory scheme under which exchanges are required to adopt rules, 15 U.S.C. &78f, which may be ordered by the Commissiém to be altered, 15 U.S.C. §¢ 78s, and the violation of which may give rise to a civil action under federal law. Cf. Buttrey «. Merril! Lynch, Pierce, Fenner & Smith, Inc., 410 F.2d 135 (7th Cir.), cert. denied, 396 U.S. 838 (1969). The second 12 Through April & 1966, $1,838,000 in face amount of the debentures were registered as to principal and interest and $337,700 as to principal only; thus, approximately 7 per cent of the debentures were in fact registered so that their holders thereby automatically received notice from the trustee. 13 See generally Miller, How to Call Your Convertibles, Har. Bus. Rev. 66 (May/June 1971). 66a is that appellants are third party beneficiaries under state law of the Boeing-NYSE Listing Agreement, as amplified by the Company Manual. Lawrence v. Fox, 20 N.Y. 268 (1859). See Weinberger v. New York Stock Exchange, 335 F. Supp. 139 (S.D.N.Y. 1971) (Gurfein, J.) (Exchange li- able under agreement with SEC to limited partner of bank- rupt member firm inadequately supervised by Exchange). The third claim of appellants is that the Indenture is in the nature of a contract of adhesion, a standardized con- tract between parties of disparate bargaining power, un- conscionable features of which are unenforceable as a matter of policy, a concept perhaps first advanced as to indentures of trust covering convertible debentures in a student note, Convertible Securities: Holder Who Fails to Convert Before Expiration of the Conversion Period, 54 Cornell L. Rev. 271 (1969). Cf. Gray v. Zurich Insurance Co., 65 Cal.2d 263, 269, 419 P.2d 168, 171, 54 Cal. Rptr. 104, 107 (1966). See Kessler, Contracts of Adhesion—Sume Thoughts About Freedom of Contract, 43 Colum. I.. Rev. 629 (1943). The fourth ground is that the call was illegal and therefore void because it was based upon a conversion rate of 2.00 shares per $100 face amount of debentures when as a result of two stock dividends and an acquisition it should have been on a 2.05 or a 2.08 ratio. THE FeperaL Law Cuam The claim that Boeing is civilly liable under federal law for violation of the NYSE Listing Agreement and Section A10 of the Company Manual is a colorable one. The List- ing Agreement and Company Manual are “instruments corresponding” to rules of the Exchange within Section 6(a)(3) of the Securities Exchange Act of 1934, 15 U.S.C. § 78f(a)(3). For the debentures here in question to be listed on the Exchange, application under the Listing 67a Agreement had to be made. Boeing did not comply with the publicity requirements of the Exchange. In O N eill v. Maytag, 339 F.2d 764, 770 (2d Cir. 1964), we did say, however, in the context of a stockholder’s derivative suit arising out of an air carrier’s purchase of its own stock, that a transaction which violated at Exchange rule did not give rise to a cause of action under federal law, at least against a listed company or its officers. But as the Supreme Court held in J. I. Case Co. v. Borak, 377 U.S. 426 (1964), private parties have both derivative and direct rights of action to bring suit for violations of the Securities Exchange Act of 1934 and SEC rules and regulations issued thereunder, rights the explication of which take up a fair amount of Second Circuit judicial time. We extended this at least by dictum to include viola- tion of stock exchange and securities dealers’ association rules designed for the direct protection of investors, at least in a suit against an Exchange member, in Colonial Realty Corp. v. Bache & Co., 358 F.2d 178 (2d Cir.), cert. denied, 385 U.S. 817 (1966). There, Judge Friendly, speak- ing for a unanimous court, pointed out that “the concept of supervised self-regulation is broad enough to encompass a rule which provides what amounts to a substitute for a regulation by the SEC itself.” 358 F.2d at 182. Again, “(al particular stock exchange rule could thus play an integral part in SiC regulation notwithstanding the Commission’s devision to take a back-seat role in its promulgation and en- foreement ...,” id., giving as an example NYSF Rule 452 whieh prohibits a member from voting stock held in a street name without specific instructions from the beneficial owner. Id. at n.4. Judge Friendly then went on to say that what emerges is that whether the courts are to imply federal civil liability for violation of exchange or denler association rules by a member cannot be deter- 68a mined on the simplistic all-or-nothing basis urged by the two parties; rather, the court must look to the nature of the particular rule and its place in the reg- ulatory scheme, with the party urging the implication of a federal liability carrying a considerably heavier burden of persuasion than when the violation is of the statute or an SEC regulation. The case for implication would be strongest when the rule imposes an explicit duty unknown to the common law. Id." See Lowenfels, Liability under Exchange Rules, 2 Rev. of Securities Regulation 841 (1969). See also But- trey v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra (upholding implied private right based. upon the so-called “Know Your Customer” rule, which is Rule 405 of the NYSE, against a party not a stock exchange member). Nevertheless, we do not now take the position that ap- pellees advance and the court below apparently accepted that violation of an exchange rule cannot under any arin cumstances give rise to civil liability under the federal acts. Such a position would be in conflict with our own most recent stutements on this subject as well as some of the developing case law. See, e.g., Judge Weinfeld’s opinion in Starkman v. Scroussi, CCH Fed. Sec. 1. Rep. 7 94,600 [1973-74 transfer binder] (S.D.N.Y. 1974) (con- 14 The court went on to hold, however, that the rules at issue in Colonial Realty Cory v. Bache & Co., 358 F.2d 178 (21 Cir.), cert. denied, 385 U.B. 817 (1966), were “near the opposite pole,” that is to say ‘they were “something of u« catchall” which related to unethical behasiae as well as illegal conduct. It is to be noted that Colonia! Realty was not the first Second Cireuit case dealing with stock exchange ‘Velen In Baird v. Franklin, 141 F.2d 238 (2d Cir.), cert. dented, 323 Us. 737 (1944), the court recognized that culpable failure by a stock miteane to enforce rules adopted pursuant to ¢6(h) of the Securities Exchange Act might give rise to a federal claim against the erchange = : investor injured thereby. Sce also Silver v. NYSE, 302 F.2d 114, 719 (2d Cir. 1962), rev'd on other orounds, 373 UB. 241 (1963) ee —_—=— duct in violation of Rule 345.17 of the Exchange prohibit- ing registered representatives from guaranteeing any cus- tomer against loss in his account or receiving a share in the profits or sharing in the losses of a customer’s account, held actionable); SEC v. First Securities Co. of Chicago, 463 F.2d 981 (7th Cir.), cert. denied, 409 U.S. 880 (1972) (violation of NASD rule protecting public gives rise to private damage action). Cf. Landy v. Federal Deposit In- surance Corp., 486 F.2d 139, 164-66 (3d Cir. 1973), cert. denied, 416 U.S. 960 (1974). It would also run contrary to a position we find in- viting, that to the American investing public listing on the New York Stock Exchange carries with it implicit guarantees of trustworthiness. The public generally under- stands that a company must meet certain qualifications of financial stability, prestige, and fair disclosure, in order to be accepted for that listing, which is in turn so helpful to the sale of the company’s securities. Similarly it is held out to the investing public that by dealing in secur- ‘ties listed on the New York Stock Exchange the investor will be dealt with fairly and pursuant to law. This would be particularly true as to the convertible securities market which differs from the market for other corporate debt in that it is composed primiraly of individuals. See 1A Dewing, The Financial Policy of Corporations 268-71 (5th vd. 1953).'© Some investors miss the notices of redemption 15 The aggregate amount of convertible bonds outstanding of companies lixted on the New York Stock Exchange in March of 1963, according to Standard & Poor's Earnings and Rating Bond Guide, was $2,300,000,000, of those listed on the American Stock Exchange $92,000,000, and of unlisted companies $380,000,000, See 2 Report of Special Study of Securities Markets made pursuant to Section 19(d) of Securities Ex- change Act of 1924 at 23. The Commission is well aware that individual aharcholdera to whom rights to subscribe to debentures are distributed by the corporations have no control over the time of distribution or whether there should be a distribution. Hence they are “participating in the market involontarily, so to speak... .” Id. at 24. ——— 70a and of expiration of conversion rights, while others “do not know that they should look for them.” Note, 54 Cornell L. Rev. at 274 n.16."* Appellees argue, however, that the self-regulation system of the 1934 Act applies in its terms only to Exchange mem- bers, as opposed to issuers, and that the legislative history indicated congressional intention not to extend coverage of the Exchange rules and regulations to issuers. In this connection appellees maintain that Congress did consider such an extension as evidenced by a proposed § 12(b) (1) to the Securities Exchange Act quoted in Cong. Ree. 8584 (1934), which was never adopted. Id. at 8586. The provi- sion, however, was to require listed companies to agrec with the Exchange to comply with the Exchange Act and the Commission’s rules and regulations, and much of the debate related to whether the provision was necessary at all since such companies would have to comply with the law regardless of any such agreement.'” Omitting the section 16 17 Cases involving generally broad standards of conduct and having nothing to do with disclosure, see, ¢.9., Hecht Vv. Harris, Upham & Co., 283 F. Supp. 417 (N.D. Cal. 1968), modified on other grounds, 430 F.2d 1202 (9th Cir. 1970), require the presence of fraud to create a right of action under federal law, but this is because the only action or conduet proscribed by the rule in fraudulent conduct. Here, however, is involved a notice or notification rule. Senator Hastings made the following statement in connection with the legislation : I do not quite understand why they want to get the issuer of the security on record, in the form of an agreement, not to violate a particular law, because it must be admitted that, if the law itself is valid, and if the rules and regulations made by tho commission are valid, and the person entering into the agreoment has brought himself within the law by offering hin securities for sale, then certainly, it seems to me, the point of compelling him to sign a paper that he will abide by the laws and rules made by the com. mission must have back of it something which those of us who studied the bill do not quite understand. 78 Cong. Rec. at 8585 (1934). While Senator Hastings’ amendment was defeated, the language he objected to was deleted in conference. ae Tle in question would apparently indicate merely a recognition that the provision was unnecessary. The legislative his- tory is thus at most equivocal on the question whether Congress intended to insulate issuers from liability in the event that they violated an Exchange rule.” Appellees argue also that the Exchange’s remedies are limited to delisting. See Report of Special Study of Se- curity Markets of the Securities and Exchange Commis- sion, H.R. Doe. No. 95, 88th Cong., 1st Sess., Pt. IV, ch. XII at 566-67; Intercontinental Industries, Inc. v. Amer- ican Stock Exchange, 452 F.2d 935 (5th Cir. 1971), cert. denied, 409 U.S. 842 (1972) (permitting delisting). But no authority holds that the exclusive remedy against & listed company is delisting. The claim for relief is suffi- cient for jurisdictional purposes in any event."* 18 Provisions of the Listing Agreement requiring the corporation to, ¢.9. “promptly notify the Exchange of any changes of officers or directors,” Part I, 2, would not seem to give rise in any event to & liability to a securities holder. The provisions of the Listing Agreement here in question, however, were to “afford the holders of its securities listed on the Exchange a proper period within which . . . to exercise their rights..." 19 United Mine Workers v. Gibbs, 383 U.S. 715, 724 (1966). See Hudak y. Economic Research Analysts, Inc., 499 F.2d 996, 1001 (5th Cir. 1974); Parrent v. Midwest Rug Mills, Inc., 455 F.2d 123, 129 (7th Cir. 1972). The writer of the opinion for himself alone would hold that even if there were such a duty it would be essentially coterminus with a contractual duty to the appellants as third party beneficiaries. As he views it, the limited notification provisions of the Indenture and debenture were modified by virtue of the application for listing on the ntock exchange, which specifically incorporated by reference the Listing Agreement of November 5, 1957, to which we have 60 frequently alluded. Sree Lawrence v. For, 20 N.Y. 268 (1859) ; Seaver v. Ransom, 224 N.Y. 242, 120 N.F. 629 (1918); Weinberger v. NYSE, 335 F. Supp. 139 (@.D.N.Y. 1971). The duty of a listed company to its own securities holders to treat them fairly is founded in fundamental concepts of the law pertaining to corporate fiduciaries. Cohen v. Beneficial Indus- trial Loan Corp., 337 U.S. 541 (1949) ; Pepper v. Litton, 308 UB. 295 (1929); Chrie-Cra/t Industries, Ino. ¥. Piper Aircraft Corp., 480 F.2d 441 (2d Cir.), cert. denied, 414 U.S. 910 (1978). Security holders of a 72a Tue INADEQUACY oF THE Boginc NoTICcE The notice Boeing gave, we hold, had two deficiencies. First, Boeing did not adequately apprise the debenture holders what notice would be given of a redemption call. Investors were not informed by the prospectus or by the debentures that they could receive mail notice by reg- istering their debentures, and that otherwise they would have to rely primarily on finding one of the scheduled ad- vertisements in the newspaper or on keeping a constant eye on the bond tables. Second, the newspaper notice given by Boeing was itself inadequate. The first factor we think highly significant. Many of the debenture holders might well have decided to register their bonds, had the significance of registration, or of the failure to register, been brought home in the materials generally available to the purchasers of the debentures. No detailed information as to notice was given on the face of the debentures, even in the fine print. The debentures stated simply: The debentures are subject to redemption, as a whole or in part, at any time or times, at the option of the Company, in not less than 30 nor more than 90 days’ nrior notice, as provided in the Indenture . . . ) corporation are in a very real sense creditor beneficiaries, see 1 Restate. ment of Contracts $136 (1932), to whom an underlying duty of fair treatment is owed by the corporation or majority stockholders or controlling directors and officers thereof. While it may he said that the Indenture itself is a contract, Kaplan v. Vornado, Inc., 341 F. Supp 212 (N.D. IN. 1971); Buchman v. American Foam Rubber Corp., 250 F. Supp. 60 (8.D.N.Y. 1965), it was clearly entered into with listing on the NYSE in mind and was substantially simultaneous in execution and coordinate in operation with the listing application. On this basis it would be unnecessary in the writer's view to reach the ground upon which the court relies, but since this view ic individual only, he join in the ground for decision taken. oe 73a There was no indication that registration would mean that a debenture holder would receive mail notice. Nor was there any indication of the extent of newspaper no- tice to be provided—either as to the papers that would be used or how often the notice would be published. De- benture holders were simply referred by the debenture, us well as by the prospectus, to the 113-page Indenture Agreement, which, to be sure, was available to debenture holders or prospective purchasers upon request, but which was not circulated generally with the warrants or deben- tures. We have dwelt at length in the facts on the newspaper notice actually given. While it may have conformed to the requirements of the Indenture it was simply insufficient to give fair and reasonable notice to the debenture holders. The duty of reasonable notice arises out of the contract between Boeing and the debenture holders, pursuant to which Boeing was exercising its right to redeem the de- bentures. An issuer of debentures has a duty to give ade- quate notice either on the face of the debentures, Abram- son v. Burroughs Corp., CCH Fed. Sec. L. Rep. [1971-72 transfer binder] {| 93,456 (S.D.N.Y. 1972) (Lumbard, C.J., sitting by designation), or in some other way, of the notice to be provided in the event the company decides to redeem the debentures. Absent such advice as to the specific notice agreed upon by the issuer and the trustee for the debenture holders, the debenture holders’ reason- able expectations as to notice should be protected. For less sophisticated investors (it will be recalled that warrants for the purchase of debentures were issued to all Boeing shareholders), putting the notice provisions only in the 113-page Indenture Agreement was effectively no notice at all. It was not reasonable for Boeing to expect these investors to send off for, and then to read under- 74a IE the 113-page Indenture Agreement referred to oth the prospectus and the debentures themselves in order to find out what notice would be provided in th event of redemption. ; Bocing could very easily have run more than two ad vertisements in a single paper prior to the huneaatl ‘o o (March 28), at which time it issued its belated news = lease and advertised for the third time in the Wall SI ~s Journal and for the first time in the New York Time Moreover, in the same period that the debentures meg the process of being redeemed, Boeing was sae ies its annual meeting (to be held April 24). Proxy sauna were being prepared throughout March and om finally mailed sometime between March 24 and Mareh 0, an a could readily have arranged the redemption dates e proxy mailing so that notice of the redemptio dates could have been included in the envelope with the proxy materials. Thus at no extra cost except that t printing brief ‘notices, at least all Boeing sharehold " would have received mail notice, and peaeianaiiey a ‘i if. icant number of the plaintiff class owned Bocing ae stock, as well as debentures, in 1966. Had Boein ar tempted such mail notice, or mail notice to bana. ne scribers, and also given further newspaper publicity oith : by appropriate news releases or advertising earlier in the redemption period, we would have a different and nennemeniee and sufficient notice might well be ead Nothing that we have said is inconsistent with ake Abramson v. Burroughs Corp., supra, or with Kaplan 4 Vornado, Inc., supra. These eases are dleidneraidhable on their facts as well as in respect to the legal arg , ‘ Sa guments In Abramson the court was presented with the claim that Rule 10b-5 was violated in connection with the sale 73a of certain convertible debentures. As here, a nonconvert- ing debenture holder was suing for the amounts lost when he failed to convert before the expiration of the conver- sion period and he challenged the notice procedures in connection with the redemption. In Abramson, however, the principal contention was that there were material omis- sions in the prospectus issued in connection with the sale of the debentures. Abramson alleged that the notice pro- visions in the prospectus were misleading in that they omitted the nature and frequency of notice that bond- holders would receive. Judge Lumbard in Abramson found quite to the con- trary that the face of the debentures—unlike those here— stated exactly what notice would be provided, notice which incidentally was at least twice that required here, making specific reference to publication once a week for four weeks in a newspaper of general circulation in New York and one in Detroit. Thus the Burroughs debentures in Abramson specifically informed the investor where and how often notice of redemption would be published so that he could make a reasonable evaluation of the likelihood that he would receive such notice or take steps to increase the chances that he would see it either by subscribing to the Wall Street Journal or the like, by contacting a broker to handle the matter for him, or by registration.” The notice provisions in Abramson were minimal but sufficient to clear judicial approval; the notice here was ee ee 20 In Abramson, moreover, the court emphasized that the debentures in issue specifically stated on their face that the bonds could be regis- tered, and if registered that notice of a call would be provided to registered holders by mail. The court therefore concluded that the nonconverting debenture holders had themselves to blame for not receiv- ing notice. Here, there was no such explicit information on the Boeing debentures. While the debentures did, state that they could be regis- tered, as we have said, there was no indication that registration would protect the investor by providing him with notice by mail. 76a significantly less. Moreover, the Boeing debentures them- selves were somewhat misleading. While they indicated that redemption could be made on not less than 380 days’ notice, one would have had to have been, if not a lawyer, at least an experienced and knowledgeable investor, to read the fine print two paragraphs previously which said that the conversion right ran only “to and including but not after the tenth day prior to the redemption date... .” In Kaplan v. Vornado, Inc., supra, where the percentage of nonredeeming debenture holders was under 5 per cent as opposed to the 7 per cent here, in addition to notices published in the New York ‘Times in accordance with the indenture agreement there was a press release prior thereto which resulted in publications of the announcement of redemption in the Wall Street Journal, Women’s Wear Daily, Daily News Record, Homes Furnishing Daily, and on the Reuters and Dow-Jones wire services. The court in Kaplan specifically found that “the essential facts of the defendant’s redemption and of the termination of the holders’ conversion rights were printed in these news items.” 341 F. Supp. at 213.?! What one buys when purchasing a convertible deben- ture in addition to the debt obligation of the company incurred thereby is principally the expectation that the stock will increase sufficiently in value that the conversion right will make the debenture worth more than the debt. The debenture holder relies on the opportunity to make a proper conversion on due notice. Any loss oceurring to him from failure to convert, as here, is not from a risk inherent in his investment but rather from unsatisfactory notification procedures. See Note, 54 Cornell L. Rev. at 21 The writer would note that in Kaplan the company did indeed comply with the NYSE Listing Agreement-Company Manual requirement of a general news release at the start of the redemption. 77a 971. See also Miller, How to Call Your Convertibles, Harv. Bus. Rev. 66, May/June 1971.” The debenture holder’s expectancy is that he will receive reasonable notice and it is his reliance on this expectancy that the courts will protect. See generally Fuller & Perdue, The Reliance In- terest in Contract Damages, 46 Yale L.J. 52, 373 (1936- 37). See, e.g., Associated Perfumers, Inc. Vv. Andelman, 316 Mass. 176, 55 N.E.2d 209 (1944). See also Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374 (2d Cir. 1974), cert. denied, 43 U.S.L.W. 3611 (U.S. May 19, 1975). Had there been proper publication, a reasonable investor un- doubtedly would have taken action to prevent the loss occurring to him. ' P Of course, it may be suggested that the appellee - poration itself was not the beneficiary of the appellants loss; rather, the corporate stockholders benefited by not having their stock watered down by the number of shares necessary to convert appellants’ debentures. But an award against Boeing will in effect tend to reduce pro tanto the equity of shareholders in the corporation and thus to a large extent those who were benefited, one might almost say unjustly enriched, will be the ones who pay appellants loss.” 22 Obviously, where a conversion is not made there may be costs to the company itself which unnecessarily has to make redemption pay- outs. Miller, Harv. Bus. Rev. at 67. Miller goes on to say that “news- papers have not proved an effective conduit, and because of odio corporate officer must concentrate on the mailing approach.” Perhaps one solution to the overall problem would be the English one, whereby the convertible debenture is considered converted once the total principal amount of the issue outstanding is less than 25 per cent of its original aise. Id. at 70. 23 On the remand for a determination of damages, it might be appro- priate for the district court to allow Boeing to meet the liability resulting from this case by issuing stock. That is what the plaintiffs would have had if they had received notice of the redemption call, and one of the purposes of the redemption was to enable the company 78a On the foregoing basis it is unnecessary for us to de- termine whether there is any cause of action under the Trust Indenture Act, 15 U.S.C. § 77bbb, as appellants con- tend. Nor, because appellants would not have standing to assert it, do we ground liability upon or make reference in the context of liability to appellants’ argument that the call was illegal in the first instance because it was based upon an improper conversion rate. DAMAGES AND THE “CONVERSION RATE” We must, however, in remanding to the district court for a determination of damages, take note of the conversion rate argument which was rejected by the court below. That argument was essentially that the 4 per cent stock dividend declared in November, 1958, the 2 per cent stock dividend declared in November, 1959, and the acquisition by Boeing on March 31, 1960, of substantially all the assets of Vertol Aircraft Corp. necessitated an adjustment in the conver- sion rate of two shares of Boeing stock for each $100 of debentures in accordance with Section 4.05 of the In- denture.** At all times after these three transactions, Boeing treated the conversion rate as 2.0448. Because that rate was under 2.045, no adjustment was required under the Indenture § 4.05(f), which provided in part that Whenever the amount by which the conversion rate would be changed in accordance with the foregoing provisions of this Section 4.05 is less than one-twen- tieth of a share of Capital Stock the Company at its option need not make such adjustment at that time. to exchange debt for equity capital. It would thus seem appropriate for Boeing to be able to issue stock to meet all or part of this liability, with, of course, the shares being valued according to their market value at date of issuance. 24 The section is four printed pages long and therefore wil) not be reprinted here in its entirety. + a 79a Appellants on the other hand contend that the proper conversion rate was at least 2.045 or as high as 2.08. On November 4, 1958, Boeing declared a 4 per cent stock dividend and issued 281,537 shares therefor. Section 4.05(b)iv states that in the case of shares so issued the consideration therefor shall be “deemed to be the number of shares so issued multiplied by the market value thereof.” *5 Boeing initially calculated the market value by including the stock dividend shares in the number of shares outstanding to obtain the market value of the post dividend stock, i.e., by dividing the closing price of the stock on November 4 of $56.875 by 1.04 since there were 104 shares where there had been 100. This resulted in a market value figure rounded off to $54.75 which, multiplied by the number of stock dividend shares issued, gave a total consideration therefor of $15,414,151.%* On this basis the calculated rate was 1.9927 but since the indenture re- quired that the conversion rate not be below 2.00, note 25 Market value in connection with a limited stock dividend is defined in Section 1.01 as follows: For the purposes of this definition market value shall mean the last reported sale price of the Capital Stock of the New York Stock Exchange (or if not listed on the New York Stock Exchange, then on any national securities exchange where listed) on the date of declaration of each stock dividend involved or, if there shall not have been a sale on such date, on the basis of the average of the bid and asked quotations therefor on said exchange on such date, or if the Capital Stock shall not then be listed on any national securities exchange, on the basis of the average of the bid and asked quotations in the over-the-counter market on such date. 26 That consideration and the number of shares issued were to be added to the initial consideration of $351,872,350 and 7,037,447 (valued at $50 per share) shares. Under the basic conversion rate formula the product of $100 and the number of resulting shares is divided by the aggregate consideration. “The resulting quotient, adjusted to the nearest one-hundredth, shall thereafter be the conversion rate (until further adjusted) if it is greater than the basie conversion rate {of 2.00 shares for each $100 debenture].” Sec. 4.05(a). But if the adjusted rate is less than 2.00 the basic conversion rate of 2.00 governs. 80a 26 supra, the rate remained at 2.00. Appellants agree that the rate should be 2.00 but contend that the con- sideration for the stock dividend shares should be treated as at $14,076,850, the figure which would result from a flat 2.00 or $50 per share rate (above which stock dividend shares could not be valued under the limitations of Section 4.05(a), note 26 supra). Initially the 2 per cent stock dividend of 147,489 shares on November 2, 1959, was treated by Boeing in the same way as the previous year’s dividend. The November 2, 1959, closing price of $30.375 per share was divided by 1.02 to obtain a quotient of $29.77 which, multiplied by the number of shares (147,489), gave additional con- sideration of $4,390,748 to be added to the aggregate con- sideration (under Section 4.05(b))*’ after the prior stock dividend. The gist of appellants’ complaint about the conversion rate is that in connection with the acquisition of Vertol Aircraft assets in 1960 for 472,736 shares of Boeing, not only were the Vertol assets overevaluated and evaluated at the wrong time so as to obtain the highest evaluation, but the prior stock dividend adjustments were recomputed to the debenture holders’ disadvantage. The argument is that all this was done having the conversion rate pre- cisely in mind and with the purpose of keeping it at 2.044999 or below so as to avoid adjustment. (See Ex- hibit 28.) The recomputation of the stock dividend adjustments was as follows. The full share price of $56.875 at the close of the 1958 dividend day was taken, that is, the stock dividend shares were not included in the number of shares outstanding. Thus the consideration received was calculated at $16,012,417 (281,537 x 56.875) rather than 27 Appellanta overlook the aggregate aspect of Section 4.05(b). TR Ye STAUNTON TOPE OS OTE PITS BOM IM TEEREUER I un rms 8la the $15,414,151 previously used. The same was done in connection with the 1959 2 per cent stock dividend, result- ing in increased consideration of $4,479,979 rather than the $4,390,748 previously used. Appellants urge that Boeing thereby “added” consideration received of $1,935,- 567 from the 1958 dividend (because appellants would treat that as $14,075,850) and $87,843 from the 1959 dividend, thus leaving at the end of this recomputation a conversion rate of 2.0052 rather than one of 2.0161. But the lower court found, and we agree, that while appellants’ computa- tions, or at least Boeing’s original ones, better represent the economic realities and more accurately follow general accounting practice, there was discretion in the Board under Section 1.01, note 25 supra, not to include the dividend shares in computing the market value. In connection with the Vertol acquisition, the value placed on it for purposes of determination of the con- version rate was the market value of the Boeing stock on November 13, 1959, at 335%, for a total of $15,895,748. Appellants argue that three different valuations would have been more accurate and fairer: the valuation on March 31, 1960, of the Vertol assets as recorded on the Boeing books at $12,435,138.47; that on January 18, 1960, when the contract of acquisition was signed and the Boeing stock worth 305; or that on March 30, 1960, when the contract was closed and the Boeing stock worth 24%. Any one of these valuation measures would have increased the conversion ratio to over 2.045. But Section 4.05(b)(2) of the Indenture provided that “in the case of the issuance of shares for consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the board of directors.” The district court’s finding was that there was no evidence that Boeing “had any purpose of delib- 82a erately hurting its debenture holders” and that while it was true that on November 13, 1959, the acquisition was still tentative, the board of directors had a colorable right to fix the fair value of the consideration as of November 13, 1959. That decision was one made, the court below found, in good faith and with the approval of accountants, audi- tors, investment bankers and counsel. Consequently, the court found that the decision was not subject to attack. See Morris v. Standard Gas & Electric Co., 31 Del. Ch. 20, 63 A.2d 577 (1949). We do not believe the trial court’s findings clearly erroneous. On those findings the conclu- sion of law was correct. In short, we affirm so much of the trial court’s opinion as relates to the conversion rate. Judgment affirmed in part; reversed and remanded in part. APPENDIX F ~ Were, cht iihe ws exis Bigs ee - Bs . ae = GT ote SNP CELE Rows 83a Opinion UNITED STATES DISTRICT COURT SoutHern District or New York 66 Civ. 1820 ,% vv Wim R. Van Gemert, et al., Plaintiffs, onion Tue Bozrne Company (formerly Bozmva Armpiane Company), et al., Defendants. ¢—- Plaintiffs’ counsel in these consolidated class actions have moved for an award of attorneys’ fees. These actions were filed in 1966 by non-converting holders of certain subor- dinated debentures of the Boeing Company. The gravamen of the complaints is that plaintiffs and other class members had inadequate and unreasonable notice of Boeing’s in- tention to “call” the convertible debentures, in question, and were unable to exercise their conversion rights before the deadline. In November 1973, after trial, I rendered a decision dis- missing the action and entering judgment for defendants. On July 14, 1975, the Court of Appeals held that the notice of redemption was deficient and constituted a violation of the securities laws. Van Gemert v. Boeing, 520 F2d 1375 (2d Cir. 1975). ee Sb A MS ae I a a a ee ee 84a Opinion On June 30, 1977, this court signed a judgment in favor of plaintiffs in the amount of $5,749,005.83. On or about July 20, 1977, Boeing deposited, pursuant to the judgment, $5,749,990.83, which with interest has grown today to more than $6,000,000.00. The Judgment provided that plaintiffs’ counsel would be awarded fees and expenses from the total amount of the judgment. Boeing appealed this porticn of the judgment, and on March 27, 1978 the Court of Appeals issued an opinion holding that attorneys’ fees and expenses may not be paid from any amount of the judgment which is not claimed by absent class members. The decision of the Court of Appeals states that the payment of attorneys’ fees and expenses must be deferred until after all the proofs of claims have been processed. After entry of the judgment and before the Court of Ap- peals’ decision of March 27, 1978, plaintiffs’ attorneys filed extensive fee applications. I have reviewed those applica- tions and am familiar with the excellent quality of the work performed by plaintiffs’ counsel. Plaintiffs’ counsel have made new law and have been involved in a trial on the merits and three appeals to the Court of Appeals. They have not received any remuneration for their services to date in the nearly twelve years that this litigation has lasted. They deserve to be well compensated. Nevertheless, in light of the Court of Appeals’ recent opinion, it would be premature for me to make a fee award at this time. The Special Master is in the process of attempting to locate class members. This is complicated by the fact that the debentures in question were ‘‘bearer’’ bonds. eS. Sra Pee 85a Opinion After all claims have been finally determined, I will issue an award to plaintiffs’ attorneys taking into consideration the quality of their work and the length of time that this litigation has lasted.° So OnpERED. /s/ Syivester J. Ryan United States District Judge Dated: New York, New York May 11, 1978 * The Court also has in mind the fact that interest is etn on the settlement fund. Because of the delay in paying attorneys fees, I will consider at the time the fees are set whether the interest on that portion allotted to fees should also be paid to the attorneys. 87a Chronological List of Relevant Docket Entries APPENDIX fay UNITED STATES DISTRICT COURT SouTHERN Distnict or New York 66 Civ. 1820 DATE PROCEEDINGS 6-23-66 Filed complaint and issued summons. 7- 7-66 Filed summons & ret—Served Boeing Co. 6-24-66 —Chase Manhattan Bk. 6-27-66—Unable to find Artemus S. Gates—Served Thomas R. Wilcox 6-24-66. 7-15-66 Filed stip & order extending deft’s time to ans to 8-12-66—Tyler, 7-15-66 Filed ANSWER of deft. Boeing Co. 7-19-66 Filed pltff’s notice to take deposition of the following defts. T.R. Wilcox, Boeing Co. & the Chase Manhattan Bank. 7-20-66 Filed defts. notice of motion for appointment of Rule 2 Judge. 7-20-66 Filed Memo Endorsed on motion of 7-20-66. After hearing, this motion is denied without prejudice to renewal when the shortage of ju- dicial manpower in this district is relieved. So ordered, Ryan, Ch.J. 7-28-66 Filed stip. & order adjourning the time of defts. Boeing Co, Wilcox & Chase Man. depositions to 9-20-66 Palmieri, J. 8-10-66 Filed stip. & order—extending deft. (Chase Man- hattan Bk) to answer to 9-15-66—Tenney, J. 88a Chronological List of Relevant Docket Entries DATE 8-15-66 8-29-66 9- 6-66 9- 6-66 9-12-66 9-13-66 9-23-66 9-27-66 9-27-66 9-27-66 9-27-66 PROCEEDINGS Filed order—ordered that an explanatory note, in the form annexed hereto, be included with the notice to be seni by direct mailing as prescribed in the third ordering paragraph of the order to show cause herein dated 7-21-66 Ryan, Ch. J. m/n Filed defts’ (Boeing, etano) notice of mailing re: supplemental list of debenture holders. Filed affdvt. of service on persons in charge (filed in court). Filed affdvt. of Robert F. Dobbin (filed in court). Filed stip & order extending deft’s (Chase Man- hattan) time to answer to 10-18-66—Levet, J. Filed notice of appearance for Marian S. Mitchell. Filed stip. & order adjourning depositions to 10-20-66—Bryan, J. Filed affdvt. of S. Hazard Gillespie. Filed special appearance by Henry J. Hoff to object to his inclusion in a class represented by pltffs. Filed defts’ (Boeing & Wilcox) affdvt. & show cause order to determine action to be maintained as a class action, ete.—hefore Judge Ryan 3-29-66 —Room 129. Filed memo endorsed on show cause order filed 9-27-66—This application is granted; see opinion filed herewith; submit order—Ryan, J. SS Een POO Oe IRE ET, 89a Chronological List of Relevant Docket Entries DATE. 9-27-66 9-27-66 9-27-66 9-27-66 9-27-66 9-27-66 9-27-66 9-27-66 9-28-66 9-28-66 PROCEEDINGS Filed memorandum of pltffs. in support of mo- tion for preliminary injunction. Filed memorandum of defts. in opposition to mo- tion for preliminary injunction. Filed pltffs’ affdvt. & notice of motion for a preliminary injunction—ret. before Ryan, J.— 9-19-66—rm. 129. Filed affdvt. of Everett I. Willis. Filed memo endorsed on pltffs’ motion for pre- liminary injunction filed 9-27-66—Motion denied ; So ordered—Ryan, J.—maiied notice. Filed affdvt. of S. Hazard Gillespie in opposition. Filed transcript of record of proceedings of 9-19-66. Filed Opinion # 32,776—motion to determine action as a class action is granted and that all the actions pending in this court should be consolidated. Let an appropriate order be sub- mitted granting the relief sought—Ryan, J. Filed application of Abraham Freedman that counsel in the Philadelphia action be permitted to participate in the within proceeding pending the formal transfer of the proceeding from Philadelphia to N.Y. Filed memo endorsed—application to participate granted—So Ordered—Ryan, Ch.J. elation 90a Chronological List of Relevant Docket Entries DATE 9-28-66 9-28-66 9-28-66 9-28-66 9-28-66 9-28-66 9-28-66 9-28-66 PROCEEDINGS Filed petitioner’s notice of motion for leave to appear & to extend time to file pleadings. Filed memo endorsed—motion to intervene as party pltff is granted—J. Weil is permitted to appear for J. Weil & S. Weil within 30 days designates an atty within this Dist—So Ordered —Ryan, J. Filed pltff’s notice of motion to consolidate ac- tion of Jack Diener with 66-1820. Filed memo endorsed—imotion to consolidate ac- tion transferred from Dist. of Columbia with 66-1820 is granted—B. Gordon & M. Miller— firm of Danzansky & Dickey of Wash., D.C. are permitted to appear as atty for Jack Diener in the consolidated action provided within 30 days they designate an atty with offices in this Dist.— So Ordered—Ryan, J. Filed pltff’s affidvt & notice of motion to amend complaint ret 9-6-66. Filed memo endorsed—no opposition to amend- ing complaint—motion granted—So Ordered— Ryan, J. Filed pltff’s affdvt & notice of motion to consoli- date ret 9-6-66. Filed memo endorsed—application for consolida- tion is granted—settle order on notice further & additional provisions will be made later Re: proceedings etc. So Ordered—Ryan, J. 7 oe hie ela de 9la Chronological List of Relevant Docket Entries DATE 10- 4-66 10- 4-66 10-14-66 10-17-66 10-17-66 10-18-66 10-18-66 10-18-66 PROCEEDINGS Filed order consolidating this action with 6 other actions for all pretrial proceedings and for trial purposes and the present & former debenture- holders be permitted to intervene and come into this consolidated action as pty. pltffs.—& caption be deemed amended to include their names— Ryan, J. Filed order that a pretrial conference in each of the consolidated actions shall be held on 10-25-66 —at 2:00 p.m. in Room 3001—Ryan, J. Filed amended complaint. Filed statement of James I. McClintock as counsel. Filed memo endorsed on statement of counsel— The within application of James I. McClintock is granted—said counsel be permitted to appear as an atty. in this & related consolidated action; he has designated Mendel Lurie as the person within this district to receive service of papers on his behalf in this action—So ordered—Ryan,J. Filed notice of appearance for Vincente J. Bon- nard. Filed affdvt. & notice of motion of Chase Man- hattan Bank to dismiss amended complaint—ret. before Ryan, J.—10-27-66—room 3001. Filed memorandum in support of motion by Chase Manhattan Bank. 92a Chronological List of Relevant Docket Entries DATE 10-25-66 10-25-66 10-26-66 10-26-66 10-31-66 10-31-66 11- 1-66 11-21-66 11-29-66 12- 2-66 12-19-66 PROCEEDINGS Filed stip. & order extending time for deft. Chase Manhattan Bank to answer amended com- plaint to 11-17-66—MaeMahon, J. Before Ryan, J.—pre-trial hearing. Filed pltffs’ (Van Gemert) affdvt. & notice of motion to appoint Gen’l counsel ret. before Ryan, J. Filed memo endorsed on motion filed 10-26-66— Motion withdrawn without prejudice, Ryan, J. Filed pre-trial order + 1-actions consolidated to bear No. 66-1820—the consolidated amended com- plaint shall be filed & served on or before 11-21-66 —defts’ answers or motions as to the consoli- dated amended complaint shall be filed & served on or before 12-12-66—ete.—Ryan, J. Filed affdvt. of Everett I. Willis. Filed copy of pre-trial order # 1. Filed stip & order extending pltffs’ Committee to file a consolidated amended complaint to 11-28-66—Ryan, J. Filed stip & order extending time of pltffs’ to serve a consolidated complaint to 12-5-66—Ryan, J. Filed stip & order extending pltffs’ time to file a consolidated amended complaint to 12-19-66— Ryan, J. Filed consolidated complaint. a ae ee 93a Chronological List of Relevant Docket Entries DATE 12-29-66 12-29-66 12-29-66 12-29-66 12-29-66 12-29-66 12-29-66 1- 3-67 1-11-67 1-18-67 1-30-67 PROCEEDINGS Filed affdvt. of Abraham E. Freedman in re- buttal to reply affdvt. of Chase Manhattan Bank. Filed affdvt. of Stuart D. Wechsler. Filed reply affdvt. of Everett I. Willis. Filed affdvt. of S. Edward Mittler in opposition to motion for dismissal of amended complaint. Filed supplemental affdvt. of Everett I. Willis. Filed transcript of record of proceedings of 10-27-66. Filed memo endorsed on motion of deft. Chase Manhattan Bank filed 10-18-66—The Clerk is directed to enter judgment forthwith dismissing the complaint for lack of jurisdiction against deft. The Chase Manhattan Bank. So ordered— Ryan, J. Filed Judgment—ordered, adjudged and de- creed: that the Count XII of the consolidated complaint be stricken, and that the defendant, The Chase Manhattan Bank have judgment against the plaintiffs dismissing the action as to it—Ryan, J.—judgment entered—-Clerk mailed notice ent 1-3-67. Filed ANSWER of deft’s The Boeing Co. & Thomas R. Wilcox. Filed pitffs’ demand for jury trial. Filed pltff’s Committee joint list of documents to be produced by deft Boeing. eeeeeemeneeeeeeee ee 94a Chronological List of Relevant Docket Entries DATE 1-30-67 1-30-67 2-20-67 3-10-67 3-29-67 7-28-67 7-28-67 PROCEEDINGS Filed stip. & order extending defts’ time to object to in whole or in part re: jury demand to & in- cluding such time as shall be specified by the court at or as a result of the pretrial hearing ordered to be held by paragraph 11 of pretrial order No. 1 entered 10-31-66—Ryan, J. Filed stip. & order extending time for pltffs. to serve a joint list of documents to be produced to 1-30-67—on or before 2-20-67 defts. shall produce for inspection so much of pltffs’ joint list of documents as to which they have no ob- jection—Ryan, J. Filed stip & order extending time for deft Boeing to produce for inspection documents indicated to 3-6-67—McLean, J. Filed stip & order extending time for deft’ Boeing to produce for inspection documents indicated to 3-20-67—all papers in answer to ob- jections shall be served on or before 3-27-67— Metzner, J. Filed stip & order extending time for deft’ Boeing to produce for inspection documents indicated to 4-3-67—all papers in answer to ob- jections shall be served on or before 4-10-67— Bryan, J. Filed transcript of record of proceedings of 9-6-66. Filed transcript of record of proceedings of 9-19-66. 95a Chronological List of Relevant Docket Entries DATE 7-28-67 7-28-67 7-28-67 7-28-67 7-28-67 12- 7-67 1- 3-68 2-14-68 7- 5-68 1-10-69 4- 8-69 5-16-69 6-26-69 PROCEEDINGS Filed transcript of record of proceedings of 9-26-66. Filed transeript of record of proceedings of 10-4-66. Filed transcript of record of proceedings of 10-25-66. Filed transcript 10-27-66. Filed transcript of record of proceedings of 10-31-66. Filed written interrogs served by pltffs’ on defts. Filed notice of change of firm name of deft’s Boeing Co. & T.R. Wilcox attorneys. Filed Answers of Defts the Boeing Co. and Thomas R. Wilcox to Written Interrogs served by Pitffs on Defts. File appearance of Edward A. Pagels. f record of proceedings of ° Filed notice to take deposition by pltff’s of H.W. Haynes—1-23-69 and H.F. Olsen—1-24-69. Filed notice by pltff’s to take deposition of H.W. Hayes & H.F. Olson on 4-9-10-11-69. Filed defts’ interrogs. Filed s/ pltffs affdvt & Notice of motion to vacate dismissal in 67 C 1053 and consolidate this action with 67 C 1053, ret: 6/24/69 before Sugarman Ch.J. 96a Chronological List of Relevant Docket Entries DATE 6-26-69 6-27-69 6-30-69 7- 1-69 11- 3-69 6- 5-70 8- 6-71 2-16-72 PROCEEDINGS Filed affdvt. of Irving Steinman re: consolida- tion. Filed order that action is hereby referred to Judge Ryan, for all purposes. Sugarman, CH ; Filed 2nd memo. Endorsed on pltff’s motion filed 6-26-69: T have been designated as Rule 2 judge in these actions. Both actions present common questions of fact, and they are consolidated. So ordered. Ryan, J. Filed deft’s (Boeing Co. & T.R. Wileox) demand that plitff’s furnish names & addresses of its principal officers. Filed pitff’s answers to deft’s interrogs. Filed Pitff’s motion for an order setting a date for trial of this action. Filed Stipulation & order of statement as to certain facts & what certain witnesses would testify to if called at trial as indicated. So ordered-Ryan, J. Filed ORDER that on or before 2-18-72 all re- quests for admission by either pltffs or defts under R. 36 FRCP shall be served, filed with the Clerk of this Court and delivered to Chambers of Ryan J. On or before 3-3-72 all responses to any requests for admission shall be served, filed with the Clerk of this Court and delivered to Ryan J. On or before 3-15-72 pitffs shall serve their brief or briefs, file copies with the Clerk of this Court and deliver copies to Ryan J. On or before 5-1-72 defts will serve & file with Clerk 97a Chronological List of Relevant Docket Entries DATE 2-18-72 3- 3-72 3- 3-72 3-10-72 3-15-72 4-13-72 5-15-72 5-15-72 5-15-72 5-15-72 5-31-72 PROCEEDINGS & deliver to Ryan J. certain affdvs, briefs ete. and on or before 6-1-72 the pltffs shall serve, file with Clerk & deliver to Ryan J. Lists, briefs as indicated. After the Court has had an oppor- tunity to consider the parties’ briefs and related papers a date will be fixed for a pre-trial con- ference. Ryan J. m/n Filed Defts’ request for admissions pursuant to R. 36 FRCP. Filed Pltffs’ admissions pursuant to R. 36 FRCP. Filed Defts’ response to pltffs’ request for ad- missions. (Defts Boeing Co. & Thomas R Wilcox) Filed Pitffs’ motion for an order directing that pitffs’ requests for admissions are admitted or in the alternative that deft be ordered to serve amended answers or that a hearing be held. Ret. 3-20-72. Filed pltffs’ Brief in favor of judgment. Filed Transcript of record of proceedings, dated 2-4-62. Filed Defts’ statement pursuant to Rule 9 (g). Filed Defts’ List of witnesses and exhibits. Filed Defts The Boeing Co. and T.R. Wilcox’s proposed pre-trial order. Filed Defts’ memorandum prior to trial. Filed Transcript of Record of Proceedings dated 2/4/72. 98a Chronological List of Relevant Docket Entries DATE 6-19-72 1l- 8-72 11-15-72 11-16-72 11-17-72 11-20-72 1-12-73 1-12-73 1-12-73 1-26-73 2-70-73 11-29-73 PROCEEDINGS Filed Pltffs’ reply supple, trial memorandum. Filed defts’ Supplemental Memorandum Prior to Trial. Before; Judge Ryan, Non-Jury Trial Begun. Trial Continued. Trial ss Trial continues and concluded—Decision Re- served. All proposed findings and conclusions and memorandum to be submitted by 1-12-73— All replies and responses be submitted by 1-24-73. Filed Dfts. Memorandum Re Proposed Findings of Fact & Conclusions of Law. Filed Dfts. Proposed Findings of Fact & Con- clusions of Law. Filed Pitffs. Proposed Findings of Fact. Filed Pitffs. Comments on Dfts. Proposed Find- ings. Filed Transcript of proceedings dated 11/15/72, 11/16/72, 11/17/72. Filed Opinion # 40067. The Clerk is directed forthwith to enter judgment for defts. dismissing the complaints in the following 10 actions, 66 Civ. 1820, 66 Civ. 2384, 66 Civ. 2385, 66 Civ. 2640, 66 Civ. 2786, 66 Civ. 3005, 66 Civ. 3054, 66 Civ. 3403, 67 Civ. 280, 67 Civ. 1053. Ryan J. (mailed notice) eee eae 99a Chronological List of Relevant Docket Entries DATE 11-30-73 12-26-73 12-27-73 12-27-73 12-28-73 12-28-73 12-27-73 12-27-73 PROCEEDINGS Filed Judgment. Ordered that defts. The Boe- ing Co. et al. have judgment against the pitffs. William R. Van Gemert, et al., dismissing the complaints in the following 10 actions, 66 Civ. 1820, 66 Civ. 2384, 66 Civ. 2385, 66 Civ. 2640, 66 Civ. 2786, 66 Civ. 3005, 66 Civ. 3054, 66 Civ. 3403, 67 Civ. 280, 67 Civ. 1053, on the merits with costs to be taxed. Clerk. (mailed notice) Filed Pitffs. Notice of Appeal. (Edward Mit- tler) mailed notice. (re: jud. 11/30/73) Filed Pltffs. Appellants Notice of Appeal. (mailed notice) (re: jud. 11/30/73) Filed Notice of Appeal by Pitffs. From judg- ment entered 11/29/73 & final judgment entered 11/30/73. (mailed notice) Filed Notice of appeal by plaintiffs from judg- ment entered 11/30/73. (mailed notice) Filed Notice of appeal by plaintiffs from judg- ment entered 11/30/73. (mailed Notice) Filed bond undertaking for costs on appeal (Bond No. J 8772 227) for the following Plain- tiffs; Gemert, Henning, Houchins, Pearlman and Chariott. ($250.00 Bond.) Filed Bond undertaking for costs on appeal (Bond No. J 2772 228) for the following plain- tiffs; Gemert, Henning, Houchins, Pearlman and Chariott. ($250.00 Bond.) 100a Chronological List of Relevant Docket Entries DATE 12-28-73 1- 7-74 1- 7-74 1- 9-74 1-11-74 1-25-74 1-25-74 PROCEEDINGS Filed Bond undertaking for cost on appeal (Bond No. J. 87 72 229) in favor of The Boeing Co. (Formerly Boeing Airplane Co.) et al. in the amount of $250.00. Filed Stip & Order that the Notice of Appeal dated 12/26/73 have agreed that Chase Man- hattan Bank is not a deft. & was not a party of the judgment appealed from. The Chase Man- hattan Bank is deleted from the Notice of appeal, etc. Ryan J. Filed Stip & Order that the Notice of Appeal dated 12/28/73 have agreed that Chase Manhat- tan is not a deft. & was not a party of the judg- ment appealed from. The Chase Manhattan Bank is deleted from the Notice of Appeal, ete. Ryan J. Filed Stip & Order that the Chase Manhattan Bank is not a deft & was not a party to the judgment appealed from The Chase Manhattan Bank & its attys are deleted from said Notice of Appeal, ete. Ryan J. Filed Notice of Change of Address for Russell E. Gary, 1335 Lincoln Road, Miami Beach, Florida 33139. Filed Memorandum in support of motion by Defts Boeing & Wilcox for order determining this action to be maintained as a class action. Filed Pitff’s memo in support of motion for summary judgment. Chronological List of Relevant Docket Entries DATE 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 1-25-74 2- 1-74 11-18-74 11-18-74 11-20-75 10la PROCEEDINGS Filed Pitff’s post-trial memo of law with respect to Boeing’s violation of Stock Exchange Rules. Filed Pitff’s reply supplemental Trial Memo. Filed Pitff’s memo in response to Deft’s Post- Trial Papers. Filed Notice of Motion by Kass, Goodkind, Wechsler & Gerstein. Filed Pitff’s Supplemental Trial Memo. Filed Pitff’s Proposed Findings of Fact & Ete. Filed Pitff’s List of Witnesses & Exhibits. Filed Motion to require answering papers to motion for summary judgment. Filed Motion to require answering papers to motion for summary judgment. | Filed Motion for a trial date by pltffs. Filed request for admission of facts by Pitffs. Filed Stip. with respect to Pltffs requests for admission of facts. Filed Statement under Rule 9(g) by pltff. Comm. Certified record to the USCA. Certified Record to the USCA. Filed stipulation designating exhibits to be transmitted to the U.S.C.A. Filed True Copy of USCA Mandate with opinion attached. Ordered that the judgment of said district court is affirmed in part & reversed in 102a Chronological List of Relevant Docket Entries DATE 12-12-75 12-12-75 12-29-75 1-16-76 1-21-76 1-23-76 1-30-76 2-19-76 PROCEEDINGS part & that the action is remanded in part for further proceedings in accordance with the opinion of this court with costs to be taxed against the appellees. Docketed as a judgment # 75,926 on 11-24-75. Entered 12-5-75. (mailed notice) Filed Pitffs. Van Gemert, Henning, Houchins, Pearlman, Chariott affidavit and notice of motion for an order awarding judgment to pltffs. in the amounts as indicated etc. Ret. 12-27-75. Filed Pitffs. Van Gemert, Henning, Houchins, Pearlman, Chariott Memorandum of Law with respect to Damages to be awarded. Filed Stip & Order that pltffs. motion (Van Gemert, Henning, Houchins, Pearlman & Chari- ott) is adjourned to 1-26-75, ete. Ryan J. Filed Pitffs. Interrog. pursuant to FRCP 33. Filed Pitff. Irving Steinman Committee Memo- randum in support of motion for Judgment. Filed Affidavit in response to motion to assess damages & in support of request for adjourn- ment by 8S. Hazard Gillespie. Filed Affidavit by S. Hazard Gillespie in support of the suggestions as to the procedure for deposi- tion of the remaining issues, by Norman Winer. Filed Affidavit by Stuart D. Wechsler in opposi- tion to the suggestions as to procedure for dis- position of remaining issues made by Norman Winer & supported by defts. attys. BRR gS 103a Chronological List of Relevant Docket Entries DATE 3-29-76 3-29-76 3-29-76 3-29-76 3-29-76 3-30-76 4- 8-76 4-13-76 4-21-76 4-22-76 4-28-76 5-27-76 6- 3-76 PROCEEDINGS Filed Affidavit of S. Hazard Gillespie atty for deft, in opposition to the motion of pltffs ete, as indicated. Filed memorandum of defts named in opposition to motion of certain pltffs, etc, as indicated. Filed Exhibits (Volume 1) to the affidavit of S. Hazard Gillespie. Filed Exhibits (Volume 2) to the affidavit of S. Hazard Gillespie. Kiled defts answers to defts interrogatories. Filed Plitffs Affidavit & Notice of Motion rtble before Ryan J. to set a date for argument on the issues of law indicated. Filed revised copy of Schedule A. (Computation of Damages.) Filed transcript of record of proceedings dtd. 9-19-66. Filed Reply memorandum of law with respect to damages to be awarded. Filed Reply memorandum in support of motion for judgment, as indicated. Filed Pitffs. Memorandum of Law on issue of damages submitted on behalf of all members of the class. Filed reply memorandum of the Boeing Company and Thomas R. Wilcox, ete, as indicated. Filed memorandum for pltffs as indicated. ‘7 ; ' j ,| ii i} | , a | fi } | we 104a Chronological List of Relevant Docket Entries DATE 8-27-76 9-20-76 1l- 8-76 11-18-76 11-18-76 11-22-76 11-22-76 11-20-76 PROCEEDINGS Filed True Copy of order and petition from the U.S.C.A.P. of a mandamus. Ordered that said petition is hereby denied without prejudice to the bringing of a new petition or proceeding on or before Nov J, 1976. M/N Filed Satification of Judgment for Costs #75,926 for defts appellees The Boeing Company and Thomas R. Wilcox. Filed Opinion #45342; Settle Order in ac- cordance with the opinion stated. In the event the parties cannot agree on reasonable fees for pitffs counsel, affidavits in support thereof are to be submitted to the Court for determination within thirty days from the date hereof, Ryan, J. M/N. Filed Pitffs Notice of Motion for reconsideration of its opinion dtd 11-8-76 rtble on 12-2-76. Filed memorandum of law in behalf of all pitffs in support of motion to reconsider. Filed memo of the Boeing Company and Thomas R. Wilcox in opposition to pltffs motion ete, as indicated. Filed memorandum of the Boeing Company and Thomas R. Wilcox in response to certain issues ete, as indicated. Filed corrected memorandum of the Boeing Company and Thomas R. Wilcox in response to certain issues raised by the proposed orders. 105a Chronological List of Relevant Docket Entries DATE 11-26-76 12- 1-76 12- 1-76 12- 2-76 12- 2-76 12- 3-76 12- 6-76 12-20-76 12-20-76 12-20-76 12-28-76 PROCEEDINGS Filed Pitffs memorandum of Jaw to reconsider with respect to interest. Filed Reply memorandum of the Boeing Com- pany and Thomas R. Wilcox, etc, as indicated. Filed memorandum of law of the Boeing Com- pany, ete. as indicated. Filed Pitffs memorandum in support of pltffs motion for reconsideration as indicated. Filed Reply and supplemental memorandum in behalf of pltffs in support of motion to recon- sider, etc, as indicated. Filed Pltffs memorandum in response to defts reply memorandum ete, as indicated. Filed True Copy of an order from the U.S.C.A.P. that the petition for a writ of mandamus filed by petitioners on 11-3-76 is withdrawn. M/N. Filed motion for consideration by pltffs as in- dicated. The motion to reconsider is granted and upon reconsideration, the decision is adhered to, Ryan, J. M/N. Filed memo endorsed on motion filed 11-18-76. The motion to reconsider is granted, and upon reconsideration, the decision is adhered to, Ryan, J. M/N. Filed judgment #77,129 ordered that pltffs shall recover as their damages the sum of $3,289,359.00 PR eS a! DATE i 1- 6-77 | 1-24-77 | 1-24-77 2- 7-77 106a : | Chronological List of Relevant Docket Entries PROCEEDINGS and each member of class who has not redeemed his debenture ete shall receive $316.25 .. . . each pltff who has redeemed his debenture will re- ceive 213.00... all members shall receive interest at the rate allowed from date of this judgment to date of payment . . . ordered within 30 days from the date of this order pltffs attnys shall submit to Court a plan mailing of notice to class. ... within 30 days from date of this order parties may submit plan for payment by a bank ete. ordered in event that parties cannot agree on fees affidavits shall be submitted to Court... . Ordered this court shall retain jurisdiction pend- ing implementation of this Judgment and order. Ryan J. Judgment entered 12-30-76 (ent on docket on 1-3-77) m/n. Filed Pitffs. Notice of Appeal from judgment entered 12-28-76. (mailed notice) Filed Notice of Appeal by plaintiffs. m/n. Filed Affidavit of Michael P. Fuchs, attorney for plaintiffs-appellant, certifying that the major portion of file is in the Federal Warehouse; that record will be transmitted to U.S.C.A. reflecting those documents that are physically in the pos- session of the Clerk’s Office of the District Court; that the file presently in the Federal Warehouse has been ordered by the Clerk of the District Court; and that the record will be supplemented when file is received in the District Court. Filed Notice that the supplemental record has been certified and transmitted to the U.S.C.A. ee 107a Chronological List of Relevant Docket Entries DATE 1-28-77 3-17-77 5-10-77 6-23-77 T- 2-77 7- 6-77 7- 6-77 PROCEEDINGS Filed stip & order that the time for submission to the court of a plan or plans for mailing of notice to debenture holders and former deben- ture holders, for submitting plans for payment, and for submitting plans for payment, and for submitting affdvt in support of pltffs’ counsel fees, referred to in the order this court entered on 12-28-76 is extended to one week after the determination, discontinuance or cther disposi- tion of the appeals from asid arder. to the US.C.A..... BRYAN.J. Filed notice that the supplemental record on ap- peal has been certified and transmitted to the U.S.C.A. Filed true copy of USCA order with opinion attached reversing in part, remanding action to the D.C. for further proceedings without costs. Judgment entered. . . . Clerk. m/n. Filed deft Boeing response to certain issues raised by pltff prposed orders. Filed Pitff’s Reply Memo to Deft;’s Response to certain Issues raised by pltff’s proposed orders. Filed Pitffs. Memoradum in reply to the Memo- randum of Boeing Co. & Thomas R. Wilcox Re- garding the proposed J udgments. Filed judgment and order that pitff class a. damages with interest with costs to be tax that pltff attny be awarded fees paid out be judgment ete; that defts deposit that amt. of this 108a Chronological List of Relevant Docket Entries DATE 7- 6-77 7-19-77 7-19-77 7-20-77 7-25-77 7-25-77 7-28-77 7-28-77 7-29-77 7-29-77 7-29-77 PROCEEDINGS judgment in a commercial bank at 6% per annum within 15 days ete.; that George Polleder is apptd Special Master to supervise the effectua- tion of this judgment. Ryan J. Judgment ent. Clerk 7-8-77. (on docket 7-11-77) m/n Filed memo end. on judgment . . . Counsel are directed to meet with Spec. Master to agree ona proposed plan to distribute judgment. Ryan J. m/n. Filed deft notice of motion and affidavit for order amending portion of judgment of 6-30-77 relating to attnys fees. ret. 7-28-77 at 9:30AM. Filed memo of deft in support of motion to amend judgment and order. Filed oath & consent of Special Master. Filed pltff’s Memorandum in opposition to defts’ motion to amend the Judgment and Order. Filed Pltffs’ Memorandum in opposition to mo- tion to amend the Jugment and order. Filed pltff memo in behalf of pltff in opposition to motion to amend judgment. Filed application of I. Steinman for application of fees and expenses. Filed pltff memo in support of fee application. Filed application of Kass Goodkind for award of attny’s fees. Filed Appendix to application Vol 1. 109a Chronological List of Relevant Docket Entries DATE 7-29-77 8- 2-77 8- 3-77 8- 3-77 8- 8-77 9- 1-77 9-16-77 9-22-77 9-22-77 9-22-77 10- 5-77 PROCEEDINGS Filed Exhibits to application. Filed index to affirmation of services. Filed notice of filing and proof of service. Filed reply memo of deft in support of motion to amend judgment and order. Filed comments on behalf of pltff on Boeing’s reply memo. Filed pltfs’ Answering affidavit to certain appli- cations for allowances by Irving Steinman. Filed Answering Affidavit to certain Fee Apph.- cations, for pltffs, by Stuart D. Wechsler. (with 1 volume of exhibits) Filed deft’s Affidavit in support of response to fee applications by various pltffs’ attys. by S. Hazard Gillespie. Filed defts’ memorandum in response to fee applications. Filed Memo endorsed on Notice of Motion ones 7-19-77, ordered that the members of the Pitffs Committee of attys. be awarded their fees, ex- penses & disbursements as fixed by the court to be paid out of said total amt. of this judgt. and as indicated..... Ryan, J. m/n Filed Response of Alex Elson, Willard J. Las- sers and Aaron S. Wolff of Chicago, Illinois Members of the firm of Elson, Lassers & Wolff to answering affidvt. of Irving Steinman & sup- plemental affirmance with reference to fees of Norman Winer. 110a Chronological List of Relevant Docket Entries DATE 10- 5-77 10-21-77 1l1- 9-77 11- 9-77 3-15-78 3-15-78 3-10-78 PROCEEDINGS Filed Notice of filing & proof of service. Filed defts’ Notice of Appeal to USCA for second Circuit from the Judgt. & Order dated 6-30-77 & the Order dated 9-22-77 denying the defts’ motion to amend said Judgt. & Order. m/copies. Filed stipulation designating record on appeal. Filed Notice of certification on record on appeal. Filed pitffs Affirmation under penalties of per- Jury, served by George J. Solleder, Jr. Esq. Special Master, with a notice of petition & a proposed order to be settled before this court on 2-27-78, made suggestions to the Special Master in connection with the documents in- volved, Joined in the request that the order be signed. by Irving Steinman. Filed Affirmation of pltffs. by Norman Winer. Filed ORDER that the form of Notice (Exhibit “A”) Proof of Claim (Exhibit “B”) Notice to brokerage firms, banks & other financial institu- tions ete. they are approved & confirmed, Ordered that the Notice of Availability (I¢xhibit D) shall be published in the NY Times ete, the first pub- lication not later than 4-1-78 after the signing of this Order, ete. Ordered, that the Special Master be & is allowed the sum of $7,800., as an initial payment for his services rendered up to 12-31-77, such payment to be made from the Judgment Fund. Ryan, J. m/n llla Chronological List of Relevant Docket Entries DATE. 5-11-78 6-19-78 8-16-78 PROCEEDINGS Filed OPINION # 47198, IItff’s counsel in these consolidated class actions have moved for an award of attnys’ fees. The Judgt. provided that pltffs’ counsel would be awarded fees & expenses from the total amt. of the judgt. Boeing appealed this portion of the judgt. & on 3-27-78 the Court of Appeals issued an opinion not to be paid from any amt. of the judgt. which is not claimed by absent class members. The Special Master is in the process of attempting to locate class members, etc. After all claims have been finally determined, an award to pltffs attnys. taking into consideration the quality of their work & the length of time that this litigation has lasted. So ordered Ryan, J., # m/n Filed ORDER, ordered that the publication of the Notice of Availability, in the N.Y. Times 5.-2-78 & 5-3-78 is approved. Ordered that the withdrawal from the Judgt. Fund of the sum of $49,672.04 ete. Ordered that the withdrawal from the Judgt. Fund in the sum of $1,957.12 in pay- ment of the invoices etc. Ordered that the Spe- cial Master is allowed in the sum of $12,750.00 in payment for his services rendered etc.. Ryan, J.m/n Filed ORDER, ordered that time for filling Proofs of Claim is ext. to 3-1-79, further ordered, that the Special Master is authorized to send an additional Notice to debentureholders who have not filed a Proof of Claim. Ryan, J. m/n ' i 112a Chronological List of Relevant Docket Entries DATE 10- 4-78 10-10-78 10 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0069%3A02. Public record. Not legal advice.