From our private database of 12,700+ case briefs...
Birnbaum v. Newport Steel Corp.
United States Court of Appeals for the Second Circuit
193 F.2d 461 (1952)
Newport Steel Corporation was controlled by Russell Feldman (defendant), a director and holder of 40 percent of the company’s stock. Thousands of small investors held the remainder of Newport’s stock. In June 1950, Follansbee Steel Corporation proposed a merger with Newport which would have been highly profitable to Newport’s shareholders. Feldman and the other directors of Newport (defendants), whom Feldman controlled, rejected Follansbee’s offer. Feldman instead sold his Newport stock to Wilport Company (defendant) at twice the market rate. Wilport, a consortium of manufacturers, intended to use Newport’s production capacity as a captive supply of steel during an international shortage. Prior to the sale of his stock, Feldman wrote to Newport’s shareholders and stated that the negotiations with Follansbee had been terminated due to an uncertain internal situation. After the sale, the incoming president of Newport informed the shareholders of Feldman’s sale of stock but did not disclose the sale price or Wilport’s intentions with the company. A group of shareholders of Newport brought a derivative suit on behalf of the corporation against Feldman, the other directors, Wilport, and Wilport’s new directors and officers. They alleged that a fraud had been perpetrated upon the shareholders of Newport in connection with the sale of Feldman’s stock, in violation of SEC Rule 10b-5. The trial court granted the defendants’ motion to dismiss, holding that Rule 10b-5 protected only purchasers or sellers of stock. The shareholders appealed.
Rule of Law
Holding and Reasoning (Hand, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 119,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 12,700 briefs, keyed to 172 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.