Broker-Dealer Litigation - Greenberg Traurig LLP

and created an uncertainty that KBR was entitled to have clarified. Subsequently, Chevedden
filed motions for reconsideration all of which were denied.
LNB Bancorp, Inc. v. Osborne, 2011 U.S. Dist. LEXIS 137705 (E.D.Ohio, Nov. 30, 2011)
Defendant, Osborne, was a shareholder of LNB. In 2008, he mounted a proxy contest
seeking to compel LNB to include language in its proxy materials. This contest was resolved
with a settlement agreement pursuant to which Osborne was entitled to designate two members
of LNB’s board. The term of the agreement lasted for 18 months, or until those board members
resigned. In 2009, Osborne filed an amended Schedule 13D indicating his intent to conduct a
proxy campaign to elect his nominees to LNB’s board. LNB filed suit seeking to enforce the
terms of the agreement. Osborne was preliminarily enjoined from engaging in activities
prohibited by the settlement agreement. In February 2010, Osborne filed a motion to dissolve
the preliminary injunction, on the grounds that the agreement was no longer in effect. The
district court found that because Osborne’s designees had not resigned from the board, the
agreement was still in effect, and therefore denied the motion. On appeal, the Sixth Circuit
upheld the reasoning of the district court. LNB moved for partial summary judgment, which
motion was granted in part and denied in part. Osborne moved for summary judgment, arguing
contra LNB that he had not violated Section 14(a) of the Exchange Act by omitting from his
preliminary proxy filings any mention of an intent to merge LNB with another company, PVF, or
by stating his belief that the agreement had been terminated. The court found that material issues
of fact remained with respect to these points, and accordingly denied Osborne’s motion for
summary judgment.
Black v. Cincinnati Fin. Corp., 2011 U.S. Dist. LEXIS 46852 (S.D. Ohio 2011)
The U.S. District Court for the Southern District of Ohio denied plaintiff’s motion for a
temporary restraining order and preliminary injunction to prevent Cincinnati Financial from
holding a shareholder vote. Plaintiff further requested that Cincinnati Financial be ordered to
revise its 2011 Proxy Statement in order to ensure compliance with Section 14(a) of the
Securities Exchange Act of 1934.
The court found that plaintiff was unlikely to succeed on the merits of the claim that the
defendant violated Section 14(a). Plaintiff alleged that the 2011 Proxy Statement contained false
and misleading statements regarding the company’s senior executive compensation plan’s
compliance with Section 162(m) of the Internal Revenue Code. Specifically, plaintiff contended
that the performance goals in the company’s stock plan were too broad to qualify for the tax
exemption offered by Section 162(m). Upon a review of Section 162(m), the court found that
the 2011 Proxy Statement issued by the defendant fully complied with its disclosure obligations
regarding the compensation plan’s compliance with Section 162(m). Accordingly, the court
found that plaintiff is unlikely to succeed on its claim that a violation of Section 14(a) occurred.
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