Broker-Dealer Litigation - Greenberg Traurig LLP

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Jasin v. Kozlowski, 2011 U.S. Dist. LEXIS 91802 (M.D. Pa., Nov. 3, 2010).
This matter came to the court on defendants’ motion for reconsideration and on
defendants’ independent motion for summary judgment. Regarding the former, the defendant
moved for reconsideration of the court’s previous order granting in part and denying in part
defendants’ motion for summary judgment on the ground that plaintiff could not identify any
evidence of loss causation, as required under sections 14(a) and 10(b) of the 1934 Securities and
Exchange Act. In granting the defendants’ motion for reconsideration, the court held it had
committed an error of fact in considering an expert report that had been “submitted on behalf of
a plaintiff in a different case.” Id. at *21. Consequently, as the expert report was the “only
competent evidence presented by plaintiff to establish loss causation, plaintiff [was] unable to
establish violations of sections 10(b) and 14(a).” Id.
KBR, Inc. v. Chevedden, 776 F.Supp.2d 415 (S.D.Tex. 2011)
KBR Inc. v. Chevedden, 2011 U.S. Dist. LEXIS 36431 (S.D. Tex. Apr. 4, 2011).
KBR, Inc. v. Chevedden, 2011 U.S.Dist.LEXIS 139257 (S.D.Tex., Dec. 5, 2011)
Chevedden, a shareholder of KBR, submitted a shareholder proposal to be included in
KBR’s proxy statement for its May 2011 annual shareholder meeting. Chevedden submitted a
written statement from RAM Trust Services (RTS) affirming that he had met the ownership
requirements under Rule 14a-8(b)(1). KBR responded that because RTS was not a record holder
of KBR stock, additional documentation would be required. Chevedden did not supply the
additional documentation requested. KBR filed suit seeking a declaratory judgment that KBR
was not required to include Chevedden’s shareholder proposal in its proxy statement.
In ruling on Chevedden’s motion to dismiss, the court found that there is a private cause
of action to enforce Rule 14a-9, and that a public company has standing to seek a declaratory
judgment that a shareholder’s proposal is properly excluded from a proxy statement because the
shareholder’s ability to sue or challenge the exclusion creates uncertainty warranting judicial
resolution. In a previous case, involving the same plaintiff, the court had found the same type of
letter from an introducing broker (such as RTS) insufficient under Rule 14a-8. The court ruled
that KBR could exclude Chevedden’s proposal, but before granting KBR’s summary judgment
motion, requested that the parties address no-action letters issued by the SEC in additional
briefing.
Both parties submitted additional briefings, but Chevedden did not comment on SEC noaction-letter
decisions. Instead, Chevedden made promised that he would not sue the Plaintiff if
it elected to remove his proposal from its proxy materials. In granting KBR’s motion for
summary judgment, the court stated that, although Chevedden had promised not to sue, the
promise did not eliminate any case or controversy. Chevedden’s refusal to withdraw his
proposal after requests from KBR to do so demonstrated his inclination to continue to litigate
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