Webster Eisenlohr, Inc. v. Kalodner

Andrew Speese sued his company, Webster Eisenlohr, Inc. (Webster) (plaintiff), on behalf of the company’s preferred stockholders. The dispute in the case was whether, under Webster’s certificate of incorporation, the preferred stockholders had exclusive voting power or only the power to vote along with the common stock under given circumstances. After Speese brought suit, Webster sent a financial report to its stockholders, and wrote a letter to its preferred stockholders offering to purchase their interests. As a result, some of the preferred stockholders disposed of their shares. Harry Kalodner (defendant) was one of the judges of the United States District Court for the Northern Eastern District of Pennsylvania who heard Speese’s case against Webster. Kalodner received copies of the financial report and letter. He believed that the financial report was misleading, and that the letter failed to disclose material facts. Speese did not question the truth of the financial report, or the reliability of the letter. Nevertheless, Kalodner appointed a special master, under Rule 53 of the Federal Rules of Civil Procedure (the Rules), to investigate the financial report and letter. Webster then brought this action against Kalodner, seeking a vacation of Kalodner’s order, a writ of mandamus directing the district court to vacate the appointment of the special master, and a writ of prohibition directed to the special master to prevent him from carrying out Kalodner’s order.