Blau v. Lehman
United States Supreme Court
368 U.S. 403 (1962)
Joseph A. Thomas (defendant) was a partner of Lehman Brothers (Lehman) (defendant) and a director of Tide Water Associated Oil Company (Tide). In a six-month period between 1954 and 1955, Lehman bought and sold 50,000 shares of Tide stock for a profit of $98,686.77. Tide shareholder Blau (plaintiff) brought a derivative suit in district court on behalf of Tide to recover the profits Lehman made on the transactions under the Securities and Exchange Act of 1934 (SEA), 15 U.S.C. § 16(b). Blau claimed Thomas was a deputy of Lehman and used inside knowledge to counsel Lehman in the transactions. At the bench trial, there was evidence that Lehman member Hertz had taken a position on Tide’s board to benefit Lehman and recommended Thomas to replace him for that reason. Evidence was also presented that Thomas did not use his Tide knowledge to help Lehman, did not provide counsel or even know about the transactions in question beforehand, and disclaimed any profits from the transactions. The court found that under Rattner v. Lehman, 193 F.2d 564 (2d Cir. 1952), Lehman was not liable for the profits due to Thomas’ board membership. Nevertheless, the court held Thomas liable for $3,893.41, his share of the profits realized. The United States Court of Appeals for the Second Circuit affirmed. The Securities and Exchange Commission (SEC) moved for permission to file an amicus petition for rehearing en banc, but was refused. Blau petitioned the United States Supreme Court for certiorari, which was granted.
Rule of Law
Holding and Reasoning (Black, J.)
Dissent (Douglas, 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 148,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,300 briefs, keyed to 182 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.