Crane Company v. American Standard, Inc.

Crane and Company (Crane) (plaintiff) and American Standard, Inc. (Standard) (defendant) battled to acquire Westinghouse Air Brake Company (Westinghouse). Westinghouse’s board agreed to merge with Standard, but the agreement required Westinghouse’s shareholders’ approval. Crane countered with an offer worth $50 per Westinghouse share. On the supposed last day of Crane’s offer, Westinghouse’s stock opened trading at $45.25 per share. However, Standard purchased 82,000 shares that day at increasing prices up to $60 per share while also secretly agreeing to off-market sales of 120,000 Westinghouse shares for approximately $44.50 per share. Westinghouse’s shareholders approved the Standard merger. Following the merger, Crane—which had acquired Westinghouse shares in its bid—had its Westinghouse shares converted to Standard shares. Crane sold most of its Standard shares after Standard threatened an antitrust action. Crane sued Standard and others, alleging they violated §§ 9 and 10(b) of the Securities Exchange Act and Securities and Exchange Commission (SEC) Rules 10b-5 and 10b-6 by committing fraud and market manipulation. Specifically, Crane asserted that Standard violated § 10(b) and Rule 10b-5 by failing to disclose its manipulative activities and violated § 9 and Rule 10b-6 by inducing Crane to sell its Westinghouse and Standard shares at prices affected by Standard’s misconduct. The district court dismissed for lack of standing. The court of appeals reversed and remanded, ruling that Crane had standing under §§ 9 and 10(b). While the case was on remand, the Supreme Court held that an unsuccessful tender offeror did not have standing to sue for damages under § 14(e) of the act. The district court then ruled that the Supreme Court’s decision meant that Crane did not have standing under § 10(b), Rule 10b-5, or § 9(f). Crane appealed.