Rauchman v. Mobil Corp.
Sixth Circuit Court of Appeals
739 F.2d 205 (1984)
Rauchman (plaintiff) owns voting shares of stock in Mobil Corp. (defendant). Rauchman was concerned that the Mobil board included an OPEC citizen, following the appointment of Mr. Olayan, a Saudi Arabian citizen. Pursuant to Securities and Exchange Commission (SEC) Rule 14a-8(a), Rauchman proposed an amendment to the corporation’s bylaws, to be included in Mobil’s proxy statement for the company’s 1982 annual meeting. The proposal would have amended Mobil’s bylaws to prevent a citizen of any OPEC country from sitting on the board of directors. Mobil refused to include the proposal in its proxy statement for the 1982 annual meeting, on the basis that SEC Rule 14a-8(c)(8) allows a company to exclude a proposal relating to an election to office of the board of directors, and Mr. Olayan was eligible for reelection at the 1982 annual meeting. Rauchman brought suit in the United States District Court for the Southern District of Ohio, in an attempt to force Mobil to include the proposal in its proxy statement. The court found that the proposal related to an election to office, because if the proposal was adopted, Mr. Olayan would be ineligible to sit on Mobil’s board. The court held that Mobil had properly refused to include the proposal, and granted Mobil’s motion for summary judgment.
Rule of Law
Holding and Reasoning (Engel, J.)