Brief Fact Summary. Plaintiffs, Stewart Austin et al., sought an injunction against Defendant, Consolidated Edison Company of New York, to insert a proposal in an upcoming proxy statement that would allow for retirement from Defendant after 30 years of service.
Synopsis of Rule of Law. Pension issues are typically considered to be exempt from Rule 14(a)-8(a) proposal submission requirements as they are considered ordinary business operations.
Where, however, the grant of the preliminary injunction will give the movant essentially all the relief he seeks, the injunction is often deemed mandatory rather than prohibitory, and a somewhat higher standard is applied, under which the movant must show a substantial likelihood of success on the merits, rather than merely a likelihood of success.View Full Point of Law
Issue. The issue is whether Plaintiff’s proposal can be denied entry into a proxy statement because it falls under the ordinary business operations exception in Rule 14(a)-8(c).
Held. Summary judgment was granted to Defendant because the proposal does fall under Rule 14(a)-8(c) governed by the Securities Exchange Act. In order to succeed in obtaining an injunction, a party must show that they would be successful on the merits and Plaintiffs did not meet their burden. Pension issues have been traditionally considered normal business operations as evidence by the fifty-plus no-action letters issued by the SEC on the subject.
Discussion. Unlike the court in The New York City Employees’ Retirement System v. Dole Food Co., this court here is deferential to SEC no-action letters, particularly since there were so many on this issue.