Open App →
Home › Case briefs › Corporations

Kennecott Copper Corporation v. Curtiss-Wright Corporation

United States Court of Appeals for the Second Circuit · 1978 · Corporations
584 F.2d 1195 (1978)
Updated
CorporationsProxy solicitationClayton ActWilliams ActRule 14a-9material misstatementproxy contestfull disclosure

Facts

After Kennecott sold Peabody and received substantial cash and notes, it bought Carborundum instead of distributing the proceeds to shareholders. Curtiss-Wright acquired 9.9% of Kennecott, proposed a minority slate for Kennecott's board, and then ran its own slate on a platform urging sale of Carborundum and a major cash distribution or tender offer to Kennecott shareholders. In its proxy materials, Curtiss-Wright stated that it had not made a detailed study of the consequences of its plan but believed Kennecott could continue operations. Kennecott sued, claiming proxy, antitrust, and Williams Act violations, while also issuing its own proxy materials criticizing Curtiss-Wright's plan.

Issue

Whether Curtiss-Wright's proxy materials violated Rule 14a-9, whether Curtiss-Wright's stock acquisition and proposed board representation violated Sections 7 and 8 of the Clayton Act, and whether Kennecott could sustain the injunction by arguing Curtiss-Wright's purchases constituted a Williams Act tender offer. Also at issue was the proper equitable relief in light of the proxy contest.

Rule

Under Rule 14a-9, proxy disclosures are judged by fair accuracy, not perfection; not every imprecise phrasing is materially misleading, especially in a contested election, and there is no requirement that a material fact be expressed in particular words. A Section 7 Clayton Act claim requires adequate definition of the relevant market and reliable evidence of concentration and probable anticompetitive effect. Section 8 of the Clayton Act does not support a general rule prohibiting interlocking directorships between parent companies merely because their subsidiaries compete. For Williams Act purposes, a tender offer has the conventional characteristics of a bid to buy shares, usually at a premium, on stated conditions, and ordinary market or negotiated purchases without such features are not tender offers on this record.

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

  • The court's holding and reasoning
  • Doctrine tests, pitfalls & exam hypotheticals
  • 10 practice questions + 4 AI-graded essays on this case
Sign up free to see more →
Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.
Blue Mesa Metals, a Nevada corporation based in Reno, is in a contested director election with shareholder insurgent Priya Desai. Desai’s proxy statement says she has "not completed a detailed analysis" of Blue Mesa’s ability to fund a proposed special dividend, then briefly explains the financial materials she reviewed and why she still believes operations could continue.

Blue Mesa sues, arguing the statement is materially misleading because shareholders might assume Desai conducted a far more exhaustive review than she actually did. Which is the strongest answer?

Explanation. The majority held that Rule 14a-9 demands fair accuracy, not perfection. A proxy statement is not materially misleading merely because a court prefers different phrasing, so long as the statement gives shareholders a sufficiently accurate picture of the limited analysis performed.