Long Island Lighting Company v. Barbash
United States Court of Appeals for the Second Circuit
779 F.2d 793 (2d Cir. 1985)
Matthews (defendant) launched a proxy contest for control of Long Island Lighting Company (LILCO) (plaintiff) to urge public ownership of the utility. Matthews acquired sufficient shares of LILCO to demand a special shareholders’ meeting to consider his proposal. Matthews’s supporters published a newspaper ad. The ad accused LILCO of mismanagement and passing through the unnecessary construction costs of a nuclear power plant to consumers, and it asked for support for a campaign to have the public power authority acquire LILCO. LILCO alleged that the ad was unlawful, because it constituted a proxy solicitation without the filing of a proxy statement, as required by the Securities and Exchange Commission (SEC), and that the ad was false and misleading. LILCO sought to enjoin any more solicitation of shareholders until the false statements were corrected and an appropriate SEC filing had been made. The discovery was abbreviated. The district court held that the ad did not constitute a proxy solicitation, because it appeared in a general publication and could only indirectly affect the proxy contest at LILCO.
Rule of Law
Holding and Reasoning (Cardamone, J.)
Dissent (Winter, J.)
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