Fed. Sec. L. Rep. P 93,409 Richard J. Sargent v. Genesco, Inc.

Fifth Circuit

Fed. Sec. L. Rep. P 93,409 Richard J. Sargent v. Genesco, Inc.

458 F.2d 9

CourtCourt of Appeals for the Fifth Circuit

DecidedAugust 3, 1972

Docket72-1536

StatusPublished

Cited by5 cases

This text of 458 F.2d 9 (Fed. Sec. L. Rep. P 93,409 Richard J. Sargent v. Genesco, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Fed. Sec. L. Rep. P 93,409 Richard J. Sargent v. Genesco, Inc., 458 F.2d 9 (5th Cir. 1972).

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BY THE COURT:

In this derivative class action certain shareholders of Leeds Shoes, Inc. seek an injunction pending appeal in order to restrain the defendants from mailing allegedly false and misleading proxy materials connected with the proposed sale of Leeds’ assets to Wolverine World-Wide, Inc. Their application for such interim relief alleges that the class of plaintiffs (all Leeds’ shareholders) will suffer irreparable harm in the event the representations contained in the proxy materials are ultimately found to be violative of § 14 of the Securities Exchange Act of 1934 because the proposed mailing will permanently alter the status quo and thereafter render impractical, if not impossible, any form of effective relief for the defendants’ misconduct.

Recognizing the difficulty involved in unraveling a tangled corporate transaction after its consummation, we are nevertheless convinced that the District Court’s broad equity power will be capable of fashioning an adequate remedy for any violation of the securities laws which may result if the disputed mailing of the proxy materials takes place. By initiating these proceedings the plaintiffs have clearly forewarned the defendants of the potential consequences of their failure to comply with § 14. Effective equitable relief is not foreclosed simply because the contested corporate action — in this case, the mailing of the proxy materials as the first stage in the transfer of Leeds’ assets — has already transpired. Under such circumstances corporate realignments and securities transactions, no matter how intricate or far-reaching, enjoy no special immunity. What has been done may be undone if necessary. Mills v. Electric [11]*11Auto-Lite Co., 1970, 396 U.S. 375, 386, 90 S.Ct. 616, 622, 24 L.Ed.2d 593, 603; cf. Hamer v. Campbell, 5 Cir., 1966, 358 F.2d 215, cert. denied, 385 U.S. 851, 87 S.Ct. 76, 17 L.Ed.2d 79.

Without prejudice to their right to seek further equitable relief from the District Court, the plaintiffs’ application for an injunction pending appeal is denied. As it is apparent that further action by the Trial Judge is required, the case is remanded to the District Court.

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BY THE COURT:

In this derivative class action certain shareholders of Leeds Shoes, Inc. seek an injunction pending appeal in order to restrain the defendants from mailing allegedly false and misleading proxy materials connected with the proposed sale of Leeds’ assets to Wolverine World-Wide, Inc. Their application for such interim relief alleges that the class of plaintiffs (all Leeds’ shareholders) will suffer irreparable harm in the event the representations contained in the proxy materials are ultimately found to be violative of § 14 of the Securities Exchange Act of 1934 because the proposed mailing will permanently alter the status quo and thereafter render impractical, if not impossible, any form of effective relief for the defendants’ misconduct.

Recognizing the difficulty involved in unraveling a tangled corporate transaction after its consummation, we are nevertheless convinced that the District Court’s broad equity power will be capable of fashioning an adequate remedy for any violation of the securities laws which may result if the disputed mailing of the proxy materials takes place. By initiating these proceedings the plaintiffs have clearly forewarned the defendants of the potential consequences of their failure to comply with § 14. Effective equitable relief is not foreclosed simply because the contested corporate action — in this case, the mailing of the proxy materials as the first stage in the transfer of Leeds’ assets — has already transpired. Under such circumstances corporate realignments and securities transactions, no matter how intricate or far-reaching, enjoy no special immunity. What has been done may be undone if necessary. Mills v. Electric [11]*11Auto-Lite Co., 1970, 396 U.S. 375, 386, 90 S.Ct. 616, 622, 24 L.Ed.2d 593, 603; cf. Hamer v. Campbell, 5 Cir., 1966, 358 F.2d 215, cert. denied, 385 U.S. 851, 87 S.Ct. 76, 17 L.Ed.2d 79.

Without prejudice to their right to seek further equitable relief from the District Court, the plaintiffs’ application for an injunction pending appeal is denied. As it is apparent that further action by the Trial Judge is required, the case is remanded to the District Court.

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458 F.2d 9, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fed-sec-l-rep-p-93409-richard-j-sargent-v-genesco-inc-ca5-1972.

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