Roosevelt v. E.I. Du Pont De Nemours & Co.

E.I. Du Pont De Nemours & Co. (Du Pont) (defendant) set a goal of eliminating production of chloroflourocarbons (CFCs) “as soon as possible, but at least by the year 2000.” Friends of the Earth Oceanic Society (Friends) presented a proposal for inclusion in Du Pont’s proxy materials for the 1991 shareholder meeting in the name of shareholder Amelia Roosevelt. The proposal dealt with (1) the date Du Pont would stop production of CFCs and halons and (2) a shareholders’ report concerning research, development, and marketing of chemical substitutes. Du Pont informed the Securities and Exchange Commission (SEC) that it did not believe it was required to include the proposal in the materials sent to shareholders. Friends argued that the proposal had to be included. SEC staff responded by issuing a “no-action letter” indicating that the materials were excludable under SEC Rule 14a-8(c)(7) because they “relat[ed] to the conduct of the [company’s] ordinary business operations.” Roosevelt sued in district court, and the court confirmed that the materials were excludable under the ordinary business operations exception of SEC Rule 14a-8(c)(7) (now revised Rule 14a-8(i)(7)). After litigation began, the President announced that the elimination of CFCs and halons was being accelerated, and Du Pont moved up its target date to the end of 1995. Roosevelt appealed to the United States Court of Appeals for the District of Columbia Circuit. The SEC filed an amicus brief taking the position that the half of Roosevelt’s proposal related to the timeframe for phasing out CFCs was not within the ordinary business operations exception, but that the shareholder report section was excludable.