Amicus Curiae Brief — Grimes v. Centerior Energy Corp.

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Supreme Court of the Gnited States

OCTOBER TERM, 1990

C.L. GRIMES,

Petitioner,

v.

CENTERIOR ENERGY CORPORATION,

Respondent.

MOTION OF UNITED SHAREHOLDERS ASSOCIATION

FOR LEAVE TO FILE BRIEF AS AMICUS CURIAE AND

BRIEF OF UNITED SHAREHOLDERS ASSOCIATION AS

AMICUS CURIAE IN SUPPORT OF PETITION FOR A

WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT

JOHN T. MURRAY

Counsel of Record

300 Central Avenue

P.O. Box 19

Sandusky, OH 44871-0019

(419) 627-9700

Attorney for Amicus Curiae

United Shareholders Association

1667 K Street, N.W.

Suite 770

Washington, D.C. 20006

(202) 393-4600

December 20, 1990

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

Cae ae ee 3!

ie Sy aa Teka.

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1990

No. 90-647

C.L. GRIMES,

Petitioner,

Vv.

CENTERIOR ENERGY CORPORATION,

Respondent.

MOTION OF UNITED SHAREHOLDERS ASSOCIATION

FOR LEAVE TO FILE BRIEF AS AMICUS CURIAE

United Shareholders Association (‘‘USA’’) respect-

fully moves the Court for leave to file the attached

brief as amicus curiae in support of the petition for

certiorari in this case.

Written consent to filing of such a brief has been

given by the petitioner and has been filed with the

Clerk. The respondent, however, has refused consent—

on the stated ground that doing so “would not be in

the best interests” of the respondent. USA respectfully

submits, however, that for its brief to be received would

be in the best interests of justice and materially helpful

to the Court.

As is set forth in more detail in the proposed brief

under “Interest of the Amicus Curiae,” USA is a na-

tionwide grass-roots organization of 64,000 stockhold-

ers, with a record of successful action to protect and

2

enhance the rights of the American investor; with a

particular interest in reform of corporate governance;

and with a special interest in the SEC’s rules enabling

stockholders’ proposals for reform to be included in

proxy materials and brought before the shareholders

for a vote.

From the perspective of its extensive and well-de-

veloped interests and experience in the field here in-

volved, USA is in a position to bring to the Court’s

attention the degree to which the implications of the

opinion below transcend the particular stockholder pro-

posal under review, and threaten a broad undermining

of the stockholder proposal rules; and is in a position

also to discuss in depth the way in which the SEC’s

customary procedure in stockholder proposal cases con-

fers upon the opinion below a special “‘leverage’’ that

at first sight it might not appear to have.

USA thus believes that, in the words of Rule 37.1,

its brief will “bring relevant matter to the attention

of the Court that has not already been brought to its

attention by the parties,’ and hence can be “of con-

siderable help to the Court.”

USA takes no position with respect to the particular

stockholder proposal here involved.

December 20, 1990

Respectfully submitted,

/s/ John T. Murray

JOHN T. MURRAY

Counsel of Record

300 Central Avenue

P.O. Box 19

, OH 44871-0019

(419) 627-9700

Attorney for Amicus Curiae

United Shareholders Association

1667 K Street, N.W.

Suite 770

Washington, D.C. 20006

(202) 393-4600

QUESTION PRESENTED

The amicus curiae adopts the statement of the

question presented in the petition for certiorari.

TABLE OF CONTENTS

QUESTION PRESENTED ...............ecesesseseseseeseeeneeseeeees

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TABLE OF AUTHORITIES

BRIEF OF UNITED SHAREHOLDERS ASSOCIA-

TION AS AMICUS CURIAE IN SUPPORT OF

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COLUMBIA CIRCUIT

I.

I.

Il.

INTEREST OF THE AMICUS CURIAE ....

SUMMARY OF ARGUMENT ......................

B. The Principle Followed by the Court of

See Dey eens The Deck-

Proposal Rules

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C. This Court Should Exercise Its Authority

Because of the Special and Peculiar “Le-

verage” of the Decision Below ...............

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TABLE OF AUTHORITIES

CASES: gins

Brooks v. Standard Co. (New Jersey),

F. due. 810 SDN. IEE <nemneeatateseavtninn 12

v. SEC, 290 F.2d 541 (8th Cir. 1961), 289

F.3d 242 (th Ci. 1 1961), 266 F.2d 33 (8th Cir. a

JI. Case Co. v. Borak, 377 U.S. 426 (1964) sien 6

Jansky v. Miller, 474 F.2d 365 (9th Cir. 1973) .... 11

Kizmiller v. SEC, 492 F.2d 641 (D.C. Cir.

SN achat inte brnnieniniiinmnmenrenevnnn 6,11,13

Lovenheim v. I: is Brands, Lid., 618 F.Supp

Fe SE Sitrcceneitivinnenmnemnennees 12

Medical Committee Human Rights v. SEC,

STE | tierkreeenniniestenmnvern 5,7,11

Mougios v. W.R. Grace & Co., 52 F.R.D. 576

ION CI dacnchcininiecitenindietiisengeernmenseneeeveeee 12

New Paes City Employees’ ——s System v

American Brands, Inc., F.Supp. 1382

es IE tiietnncdeeanternncusinienneteeernaveernevece 12

Peck v. Greyhound Corp., 97 F.Supp. 679 (S.D.N.Y.

BS A an eee 12

Rauchman v. Mobil Corp., 739 F.2d 205 (6th Cir.

SET scitiennalinahaeniimingeseesyesnmmeneeuranreaNeT 11

STATUTES:

Securities Exchange Act of 1934, § 25(a), 15 U.S.C.

SEIT A ciihinsaiceewssnenasestbiantanoviateieartinsemaeete 5

REGULATIONS:

SEC Rule 14a-&(cX8), 17 C.F.R. § 240.14a-8(cX8) .. 11

SEC Rule 14a-8(cX13), 17 C.F.R. § 240.142-

NE eillcisdiicinictieianinsnipniiiinniinietinadinicsvesittiinaneitanenee 11

iv

Table of Authorities Continued

OTHER AUTHORITIES:

No. 34-23486 co Fed. Sec. L.

Rep. (CCH) ¢ 84,018 (July 31, 1986) .............

Curzan and Pelesh, Revitalizing Corporate Democ-

rang: Cones of Investment a pneere. Veting

on Proxy Issues, arv.

L. Rev. 670 980) Ve eee eee eee eee eee eee es Veveeeeeeeeee eee

E. Herman, Conflicts of Interest (1975) veececceccocsse.

.

VEVERLULEU LUD E SELL L SEES ELE Lede bee Deeb bee eebebeeebebeeeeeeeees

Poison Pills (March 1986) vocccccccccccccocccoeoeeseee.,

SEC O ef Economist, Effects of Poison

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IN THE

Supreme Court of the GAnited States

OCTOBER TERM, 1990

No. 90-647

(es ee

C.L. GRIMES,

Vv.

CENTERIOR ENERGY CORPORATION,

Respondent.

BRIEF OF UNITED SHAREHOLDERS ASSOCIATION AS

AMICUS CURIAE IN SUPPORT OF PETITION FOR A

WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT

United Shareholders Association (“USA”), as ami-

cus curiae, respectfully urges that the petition for

certiorari in this case be granted.

The interpretation which the opinion below in this

case has placed on the SEC’s stockholder proposal

rules is a grave setback to the cause of shareholder

democracy. USA respectfully submits that this Court’s

review and correction of that interpretation is essen-

tial. (USA takes no position as to the merits of the

specific proposal here involved).

I. INTEREST OF THE AMICUS CURIAE

USA is a nonprofit grass-roots organization of in-

dividual stockholders, large and small, with 38 local

chapters and a headquarters in Washington, which in

the four years since its foundation has grown to a

membership of 64,000 individual stockholders in all

50 states. Organized in response to the growing per-

ception that lack of management accountability has

spawned an era of bloated, unresponsive corporations

characterized by empire-building and bureaucracy, and

currently chaired by a former Commissioner of the

SEC, it is dedicated to protecting and enhancing the

rights of the American investor. Its agenda includes,

among other things, the elimination of management

schemes such as “greenmail’” eliminating, or requir-

ing shareholder votes on, such other abusive schemes

as multi-million-dollar “‘golden parachute” deals? and

“poison pill’’ arrangements;? and reform of the proxy

1 “Greenmail” is the purchase by management of the stock of

one shareholder at a premium price and pursuant to an offer

that is not available to the company’s other shareholders. Green-

mail payments eliminate a challenge to management and typi-

cally result in sharp reductions to a company’s share value.

2“Golden parachutes” are severance contracts which guar-

antee to existing management that if they lose their jobs as a

result of a change of corporate control, they will receive payment

of a specified amount, usually several times their regular annual

compensation.

$ “Poison pill’ plans involve the issuance of rights to buy stock

at a discount, which are triggered by the acquisition of a thresh-

old level of stock which has not received the approval of the

incumbent board. By diluting the equity and voting rights of an

acquiring shareholder, poison pills render uneconomic the ac-

quisition of a controlling interest in a company without approval

of the incumbent board. See Concept Release on Takeovers and

Contests for Corporate Control: Advance Notice of Possible Com-

mission Actions, Exchange Act Release No. 34-23486, [1986

Transfer Binder] Fed. Sec. L. Rep. (CCH) { 84,018 (July 31,

1986); SEC Office of Chief Economist, The Effects of Poison

6A NAINA, URNS BEEN NO ELD ARE AM. ie ten Se

M ROLL Cin R EAE A ABI Oe Np PE RE

voting system to ensure fairness and greater oppor-

tunity for shareholder involvement. USA seeks to

place stockholder proposals onto corporate proxy bal-

lots, participates in SEC and court proceedings, lob-

bies in Congress and the states, and conducts

educational activities. It publishes an annual ‘Share-

holder 1000” rating of 1,000 of America’s largest cor-

porations by their responsiveness to shareholders, and

creates an annual “Target 50” program targeting 50

of the country’s worst offenders of shareholder rights

for direct action in boardrooms and at annual share-

holder meetings.

USA has been effective. As is discussed in further

detail infra, management is generally hostile to stock-

holder proposals—especially to proposals for reform

of corporate governance that might reduce their priv-

ileges and perquisites—and even if a stockholder pro-

posal manages to get on the proxy, management

usually sees that it is voted down. Nevertheless, in

1990 USA obtained majority votes in favor of share-

holder rights proposals at six major companies; se-

cured overall support for its proposals exceeding 35%

at 35 targeted companies where votes were recorded;

secured agreement by management at six companies

to adopt confidential proxy voting in response to

shareholder proposals; and secured consideration of

proxy proposals on “‘golden parachutes’’ at eight com-

panies.

The ability to have a proposal included in proxy

materials under the SEC’s stockholder proposal rules

Pills on the Wealth of Target Shareholders (October 1986); SEC

Office of Chief Economist, The Economics of Poison Pills (March

1986). ,

a

is the most potent single weapon in USA’s efforts to

secure corporate governance reforms of this kind.

USA is thus vitally interested in anything that nar-

rows or weakens these rules—as does the opinion of

the court of appeals in this case.

Il. SUMMARY OF ARGUMENT

The interpretation of the SEC’s stockholder pro-

posal rules enunciated by the court of appeals in this

case is of broad applicability and will seriously impede

the ability of stockholders to have proposals for re-

form of corporate governance included in proxy ma-

terials for stockholders’ meetings. Although there is

a great deal of stockholder proposal activity before

the SEC’s staff, because of special procedural pecul-

iarities the stockholder proposal rules have only rarely

come before the courts. This confers a disproportion-

ate “leverage” upon the opinion below, emphasizing

the appropriateness of this Court’s guidance.

Ill. ARGUMENT

Two aspects of the decision of the court of appeals

are particularly important to consideration of the

petition for certiorari. One is the very broad and

sweeping nature of the principle followed by the court

of appeals—far transcending the significance of this

particular case. The other is the great “‘leverage”’ of

this one decision, because of procedural peculiarities

which sharply limit the number of court of appeals

interpretations of the stockholder proposal rules. Be-

fore discussing these, we will put them in context by

describing in simplified form what happens under the

SEC’s stockholder rules when a stockholder offers a

5

proposal for inclusion in the proxy materials for an

annual or special meeting of a corporation.‘

A. The Stockholder Proposal Process

A qualified stockholder initiates his proposal by ask-

ing management to include it and a supporting state-

ment in the proxy materials for the meeting. If

management does not wish to do so, it files with the

SEC staff a statement of why it contends the proposal

falls within one of 13 excluded categories. If the staff

disagrees, management usually does not pursue the

matter further, and includes the material in the proxy

materials, expecting that most proxies will support

management against the proposal (see infra). If the

staff agrees with management, it issues a ‘‘no-action’”’

letter advising that it will not recommend that the

Commission institute enforcement action against the

company if it refuses to include the proposal.

If the staff does that, at this point the stockholder

has no further administrative remedies. Appeal to the

Commission will be fruitless, for the Commission will

decline to construe and enforce its own rules. This

singular practice reflects continuing Commission re-

sistance, after more than twenty years, to the deci-

sion of the District of Columbia Circuit in Medical

Committee for Human Rights v. SEC, 432 F.2d 359

(D.C. Cir. 1970), vacated as moot, 404 U.S. 403 (1972

), that a Commission ruling that a proposal need not

be included in proxy materials was reviewable in the

court of appeals under § 25(a) of the Securities Ex-

change Act of 1934, 15 U.S.C. § 78y. The Commission

‘The stockholder proposal rules are described in detail in the

Petition, and set forth in full in its Appendix.

6

obtained a writ of certiorari in that case, but after

oral argument it procured vacation of the writ on

grounds of mootness. 404 U.S. 403. Subsequently, the

District of Columbia Circuit held, in Kixmiller v. SEC,

492 F.2d 641 (D.C. Cir. 1972), that a staff no-action

letter, as opposed to a ruling by the Commission it-

self, was not reviewable under the Securities Ex-

change Act. The Commission has accordingly left such

matters to the staff ever since.

The stockholder’s only recourse, therefore, is a dis-

trict court action against the company—founded not

on any statutory authority, but on the implied right

of action derived from J.J. Case Co. v. Borak, 377

U.S. 426 (1964)—to enjoin dissemination of proxy ma-

terials that omit his proposal. Since time is usually

short, this generally entails an application for tem-

porary restraining order and preliminary injunction.

With supporting papers and any necessary evidentiary

hearing, this can be an expensive and somewhat com-

plicated process, and not many of these actions have

been brought. And even stockholders who have the

resources to get this far will generally give up if they

fail to secure preliminary relief at this point.®

5 The District of Columbia Circuit commented long ago on the

undesirability of the practice the SEC has elected to follow,

especially from the viewpoint of the small stockholder. “There

is also, it: seems to us, an independent public interest in having

the controversy decided in its present posture [i.e., by way of

SEC decision followed by court of appeals review] rather than

in the context of a private action against the company. The

primary and explicit purpose of section 14(a) is ‘the protection

of investors,’ and the primary means of reaching this goal is

through Commission regulation of proxy statements, not through

private actions by individual security holders. For the small

investor, personal recourse to the Commission’s proxy proce-

Now, though the stockholders own the company and

in a real sense are the company, all too often present-

day managements regard them much as medieval

kings regarded their citizenry: ignorant and poten-

tially turbulent folk who should stay quiet and let

their betters run things. To such managements, stock-

holders’ meetings are charades,* and stockholder pro-

posals are irritations at best, if not outright lése-

majesté. Such managements are inclined to fight these

battles to the last ditch, seizing upon any plausible

argument why the proposal falls within one of the 13

exclusions. Moreover, even stockholder proposals that

do manage to make it to the proxy materials stand

little chance of adoption. In most companies, proxy

voting is non-confidential: management knows how

every stockholder votes. As a result, many stock-

holders fear to vote against management, whatever

their views as to the merits of a proposal.

“{E}mployees are loath to vote against their superiors.

Investment analysts may not wish to offend manage-

ment because it might affect their access to infor-

mation. Fiduciaries, like banks, insurance companies

dures without benefit of counsel may well be the only practicable

method of contesting a management decision to exclude his proxy

proposal. In this situation, ... it is particularly important that

the Commission look carefully at the merits of the shareholder’s

proposal, and that it do so pursuant to an accurate —

of the Congressional intent underlying the proxy statute. .

Direct judicial review of Commission proxy decisions is unques-

tionably the most logical and efficient means of achieving this

objective.” Medical Committee for Human Rights v. SEC, 432

F.2d 659, 672 (D.C. Cir. 1970), vacated as moot, 404 U.S. 403

(1972\Xfootnotes and citations omitted).

* One leading authority has called them ‘a kind of ancient

meaningless ritual.” A.A. Berle, Economic Power and the Free

Society 7 (1957).

and pension fund managers, must consider their flow

of business from corporations... .’’? Bank trust offi-

cers in particular fear to jeopardize the bank’s rela-

tions with the company, and worry that failure to

support management may deter other companies from

placing their pension funds with the bank.*®

So though the stockholder proposal rules offer the

only presently available path to real shareholder de-

mocracy, that path is a difficult and rocky one at

best. The principle followed by the court of appeals

in the present case makes it more so.

B. The Principle Followed by the Court of Appeals

Broadly Undermines the Stockholder Proposal Rules

In the decision below the court of appeals recog-

nized that in promulgating the current version of the

“ordinary business” exception to the stockholder pro-

posal rules, the SEC made it clear that “proposals

... that have major implications . . . [are] considered

beyond the realm of a [corporation’s] ordinary busi-

ness activities,’ so that ‘only those proposals involv-

ing ‘business matters that are mundane in nature and

do not involve any substantial policy’ considerations

7S. Rep. No. 100-265, 100th Cong. lst Sess. 126n.90

(1987Xviews of Senator D’Amato).

® See Curzan and Pelesh, Revitalizing Corporate Democracy:

Control of Investment Managers’ Voting on Social Responsibility

Proxy Issues, 93 Harv. L. Rev. 670, 687 (1980); Pozen, Financial

Institutions: Cases, Materials and Problems on Investment Man-

agement 13 (1978); E. Herman, Conflicts of Interest 28 (1975).

Indeed, there exists a so-called ‘Wall Street Rule,” which de-

crees that if an investment manager disapproves of the position

of management he should either “swallow his qualms or sell the

stock.” Curzan and Pelesh, supra, at 686.

9

may be omitted under [the ‘ordinary business’] ex-

emption. ...” Petition for Certiorari, Appendix (‘‘Pet.

App.”) at 6a, quoting the SEC’s statement at 41 Fed.

Reg. 52,998 (1976). But, having enunciated this prin-

ciple, the court did not inquire whether the proposal

before it had “‘major implications.’’ Rather, it inquired

whether the proposal was “limited in reach’’ solely

to major implications,? and held that if it was not—

if it could have any minor implications under any

nypothetical circumstances—then it fell within the

“ordinary business’ exclusion no matter how great

its major implications might be.’ As applied by the

court in the present case, this produced what the

Petition calls the “any subsequent action” test: man-

agement can exclude a stockholder proposal for a

change in corporate governance from the proxy ma-

terials under the “ordinary business’ exclusion if

there are any circumstances under which an ordinary

business action might be taken under the proposed

new corporate governance. Petition for Certiorari at

9.

This test would enable hostile management to ex-

clude many, if not indeed the great majority of, pro-

*“(Tjhe proposal is not limited in reach to those capital ex-

penditure decisions involving substantial policy considerations of

very large sums, but potentially extends to capital expenditures

of any kind.” Pet. App. 7a-8a.

© “For example, if in a given year no dividends were paid,

all capital expenditure decisions for the following year, no matter

how small, would have to be made by the shareholders. In such

circumstances, Grimes’s proposal would involve them in such

minor or routine day-to-day decisions as the purchase of type-

writers or the replacement of worn-out machinery. Such deci-

sions would clearly be matters of ordinary business operations.”

Pet. App. 8a.

10

posals for significant reform of corporate governance.

For example, USA opposes “classified boards,’”’ under

which directors are elected for staggered terms to

forestall clean-sweep replacement of unsatisfactory

management by the shareholders. But a proposal to

abolish a classified board will evidently be caught by

the “any subsequent action” test, since the ordinary

business of any corporation is conducted by its board.

Again, USA supports confidential proxy voting, to

eliminate the abuses that flow from management’s

knowledge of how every stockholder votes; the ex-

tension of this reform is one of USA’s “Target 50”

goals for 1991. But under the “‘any subsequent ac-

tion” test, any effort to put confidential voting on a

corporate ballot is likely to be blocked on the ground

that one result might be confidential voting on some

ordinary business matter. These are but two exam-

ples, drawn from USA’s current agenda, of many that

might be offered.

But there is a wider ground for concern. The rea-

soning behind the “any subsequent action’’ test ap-

plied by the court of appeals is not only broader than

its application to the particular proposal here in-

volved; it extends potentially to other situations than

a ‘‘subsequent action” and other exemptions besides

that for ‘“‘ordinary business.’’ The court’s basic rea-

soning is that a proposal must be “limited in reach’”’

solely and exclusively to matters that fall totally out-

side the 13 exclusions, and that if under any set of

hypothetical circumstances some connection can be

made between the proposal and one of the 13 exclu-

sions, then the proposal is exempt and can be omitted

by management. On this logic, a proposal for confi-

dential proxy voting could arguably be excludable un-

11

der the exemption for proposals that relate to an

election to office.'! On this logic, since one side effect

of a “poison pill” plan will be to dilute the dividends

of existing shares in proportion to the amount of new

stock issued, a proposal requiring shareholder ap-

proval of such plans could be excludable under the

exemption for proposals dealing with specific amounts

of dividends. Such an interpretation of the stock-

holder proposal rules is diametrically opposed to their

remedial intent and spirit, and USA does not suggest

that such interpretations would ultimately be adopted.

But they illustrate the kind of obstacles to corporate

reform which the reasoning of the court of appeals

affords to any management resolved upon a last-ditch

defense.

C. This Court Should Exercise Its Authority Because of

the Special and Peculiar ‘“‘Leverage’’ of the

Decision Below

Though the stockholder proposal rules have been

on the books in some form since 1942, USA has found

only five other reported cases in which they have been

addressed by the courts of appeal,plus five more

11 A proposal is exempted “‘if the proposal relates to an elec-

tion to office.” SEC Rule 14a-8(cX8), 17 C.F.R. § 240.14a-8(cX8).

12 A proposal is exempted “‘if the proposal relates to specific

amounts of cash or stock dividends.’’ SEC Rule 14a-8(c\X13), 17

C.F.R. § 240.14a-8(c\(13).

18 Rauchman v. Mobil Corp., 739 F.2d 205 (6th Cir. 1984);

Jansky v. Miller, 474 F.2d 365 (9th Cir. 1973); Kixmiller v.

SEC, 492 F.2d 641 (D.C. Cir. 1972); Medical Committee for

Human Rights v. SEC, 432 F.2d 659 (D.C. Cir. 1970), vacated

as moot, 404 U.S. 403 (1972); and Dyer v. SEC, 290 F.2d 541

(8th Cir. 1961), 289 F.2d 242 (8th Cir. 1961), 266 F.2d 33 (8th

Cir. 1959).

12

apparently unappealed reported district court cases;"

none of which offers any significant substantive inter-

pretation. USA recognizes that ordinarily this would

militate against grant of certiorari, on the ground

that the topic was of limited interest, or was one as

to which the courts of appeals should be let alone to

explore its implications before this Court steps in.

Here, however, appearances are deceiving. The

paucity of court decisions under the stockholder pro-

posal rules reflects only the exceptional procedural

aspect of these cases, described at pp. 5-7 supra,

under which the SEC leaves them to the staff and

very few of them reach even the district courts, much

less the courts of appeal. This does not mean the

topic is not a lively one. For by contrast, entries for

staff actions under those rules cover some eight pages

in the relevant CCH volume, Fed. Sec. L. Rep. (CCH)

q 24,151.80 at 17,691-14 to 17,691-21, embracing per-

haps 150 such actions; and Lexis reports a total of

no less than 4,537 staff letters since 1971 which ap-

pear to deal with stockholder proposals.'* Under these

circumstances, the paucity of court decisions in this

‘* New York City Employees’ Retirement System v. American

Brands, Inc., 634 F.Supp. 1382 (S.D.N.Y. 1986); Lovenheim v.

Iroquois Brands, Ltd., 618 F.Supp. 554 (D.D.C. 1985); Mougios

v. W.R. Grace & Co., 52 F.R.D. 576 (S.D.N.Y. 1971); Brooks v.

Standard Oil Co. (New Jersey) , 308 F.Supp. 810 (S.D.N.Y.

1969); Peck v. Greyhound Corp., 97 F.Supp. 679 (S.D.N.Y. 1951).

‘6 This is the number of items reported by Lexis in its NOACT

file under GENFED and FEDSEC, searched for “l4a-8” and

“proposal”’ and ‘stockholder or shareholder.” Because of their

great number USA has not examined all these individually and

accordingly cannot represent that all constitute rulings on in-

dividual stockholder proposals. But it is very evident in any case

that the subject-matter is an extremely active one.

13

otherwise busy field actually makes this Court’s in-

tervention more iate rather than less, for it

confers an “leverage” on the decision

below which it would not otherwise have.

Given the extraordinary importance of the stock-

holder proposal rules to corporate democracy and to

badly-needed reform of corporate governance, Amer-

ican stockholders deserve more guidance than the il-

logical decision of the court below in this case and

the ad hoc views of harassed middle-level administra-

tive staff—which are ‘“‘considerably less authoritative”’

than would be “the definitive views of an agency

head.”’"* Under present circumstances, stockholders

can only get such guidance from this Court. The sit-

uation is thus eminently appropriate for exercise of

this Court’s certiorari jurisdiction.

IV. CONCLUSION

The decision below has broad implications. The topic

dealt with is one of fundamental importance. The

guidance of this Court is badly needed. The petition

for certiorari should be granted.

'* Kiemiller v. SEC, 492 F.2d 641, 644n.13 (D.C. Cir. 1974).

December 20, 1990

14

Respectfully submitted,

JOHN T. MURRAY

Counsel of Record

300 Central Avenue

P.O. Box 19

Sandusky, OH 44871-0019

(419) 627-9700

Attorney for Amicus Curiae

United Shareholders Association

1667 K Street, N.W.

Suite 770

Washington, D.C. 20006

(202) 3938-4600