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Healey v. Catalyst Recovery of Pennsylvania, Inc.

616 F.2d 641 (1980)

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Healey v. Catalyst Recovery of Pennsylvania, Inc.

United States Court of Appeals for the Third Circuit
616 F.2d 641 (1980)

KS

Facts

Michael J. Healey (plaintiff) was president of Catalyst Regeneration Services, Inc. (CRS) and owned 20 percent of the company. SCR, Inc. was established in 1975 and quickly moved to acquire CRS. SCR established an agreement in principle with all CRS shareholders except Healey to purchase 80 percent of CRS stock for $5.25 a share. SCR directors then approached Healey about purchasing his 20 percent of CRS stock. Healey requested information about SRC, its board members and shareholders, and its business plans. Healey never received some of the requested information. Healey continued to be a minority shareholder of CRS at the time SCR organized the merger of CRS into Catalyst Recovery of Pennsylvania, Inc. (defendant). Healey then filed suit in federal court, arguing that the failure of Catalyst, as well as other related corporations and individuals (defendants) (collectively, Catalyst), to provide the information he had requested violated § 10(b) of the Securities and Exchange Act of 1934 and SEC Rule 10b-5. Healey argued that if he had been given all the information that he initially requested, he could have enjoined the merger in state court. The district court agreed and awarded Healey damages for a violation of Rule 10b-5 and § 10(b). Catalyst appealed.

Rule of Law

Issue

Holding and Reasoning (Seitz, C.J.)

Dissent (Aldisert, J.)

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