Wellman v. Dickinson

Fairleigh Dickinson, Jr. (defendant) was a major stockholder of Becton, Dickinson & Company (Becton) (plaintiff). Dickinson held roughly 6 percent of Becton’s outstanding shares. Dickinson managed Becton until 1974, when Dickinson became chairman of the board. After significant conflict arose between Dickinson and Becton’s new management, Dickinson was removed by a vote of the board of directors on April 20, 1977. Dickinson then met with Salomon Brothers (Salomon), an investment-banking firm, to discuss how to regain control of Becton. Eventually, a plan was formed in which Dickinson would collaborate with other outside directors who held stock and would sell a block of the company’s shares to a corporation interested in taking over Becton. Salomon and F. Eberstadt & Company, Inc. (Eberstadt) would approach a corporation and inform the corporation of Dickinson’s distaste for the new management of Becton. On November 28, 1977, Sun Company, Inc. (Sun Company) was approached by Salomon and Eberstadt. Sun Company was informed that 15 percent of Becton’s outstanding stock was available from Dickinson and the other outside directors, Dan Lufkin and J. H. Dunning. The Chemical Fund, a mutual fund that owned shares of Becton, would also be made available. The Securities and Exchange Commission (SEC) (plaintiff), Becton, and Becton’s shareholders (plaintiffs) all brought actions against Dickinson, arguing that Dickinson had violated § 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d). The district court ruled against Dickinson, and Dickinson appealed.