Brief Fact Summary. Plaintiff, Peter Lovenheim, sought a preliminary injunction against Defendant, Iriquois Brands, Ltd., in order to insert information in a proxy statement.
Synopsis of Rule of Law. Under Rule 14a-8(c)(5), a shareholder proposed resolution for a proxy statement can only be turned down when the proposal both concerns less than 5% of total earnings or assets, and when it is not significantly related to the business.
Issue. The issue is whether a company could refuse a shareholder proposal for a proxy statement if the proposal concerned less than 5% of the business sales, and the proposal was not economically based.
Held. The court held that precedent demonstrated that Rule 14a-8(c)(5) would only omit proposals that were less than the minimum 5% of sales and not significantly related to the business. In this case, the pate issue was significant to its pate business regardless that it did not comprise greater than 5% of sales. Prior cases also demonstrated that Congress wanted to ensure that non-economic factors could be considered as relevant to the business.
Discussion. The court holds that both sections of Rule 14a-8(c)(5) need to be met. The ruling is consistent with the idea that not all decisions made by a corporation will be made solely along economic lines.