Nano Dimension Ltd. v. Murchinson Ltd.

102 F.4th 136

• Court: Court of Appeals for the Second Circuit
• Decided: May 20, 2024
• Docket: 23-1141
• Status: Published

Opinion

23-1141-cv Nano Dimension Ltd. v. Murchinson Ltd.

United States Court of Appeals for the Second Circuit _______________________________________

August Term 2023

(Argued: May 14, 2024 Decided: May 20, 2024)

No. 23-1141-cv _______________________________________

Nano Dimension Ltd.,

Plaintiff-Appellant,

v.

Murchinson Ltd., EOM Management LTD, Nomis Bay Ltd., BPY Limited, Boothbay Fund Management, LLC, Boothbay Absolute Return Strategies, LP, Boothbay Diversified Alpha Master Fund, LP, Anson Advisors Inc., Anson Funds Management LP, Anson Management GP LLC,

Defendants-Appellees. _______________________________________

Before: BIANCO, NARDINI, and KAHN, Circuit Judges.

In this appeal, Nano Dimension Ltd. (“Nano”) challenges the district court’s dismissal of its claims alleging violations of Section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d). We conclude that the district court properly dismissed Nano’s claims as moot because the alleged Section 13(d) violations were cured while this case was pending before the district court, and there is no basis for injunctive relief. Accordingly, we AFFIRM the judgment of the district court. MELISSA R. GINSBERG (Jonathan G. Kortmansky, on the brief), BraunHagey & Borden LLP, New York, New York for Plaintiff-Appellant.

MICHAEL E. SWARTZ (Randall T. Adams, Mark L. Garibyan, and Erika L. Simonson, on the brief), Schulte Roth & Zabel LLP, New York, New York for Defendants- Appellees Anson Advisors Inc., Anson Funds Management LP, and Anson Management GP LLC.

Thomas J. Fleming (Adrienne M. Ward and Sahand Farahati, on the brief), Olshan Frome Wolosky LLP, New York, New York, for Defendants-Appellees Murchinson Ltd., EOM Management LTD, Nomis Bay Ltd., and BPY Limited. PER CURIAM:

Plaintiff-Appellant Nano Dimension Ltd. (“Nano”) appeals from the

judgment of the United States District Court for the Southern District of New York

(Jennifer Louise Rochon, Judge) dismissing as moot its securities claims against

Defendants-Appellees Murchinson Ltd., EOM Management LTD, Nomis Bay Ltd.,

and BPY Limited (collectively, “Murchinson”), and Anson Advisors Inc., Anson

Funds Management LP, and Anson Management GP LLC (collectively, “Anson”

and together with Murchinson, “Defendants”). Nano alleged violations of Section

13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C.

§ 78m(d). We conclude that the district court properly dismissed Nano’s claims as

moot because the alleged Section 13(d) violations were cured while this case was

2 pending before the district court, and there is no basis for injunctive relief.

Accordingly, we AFFIRM the judgment of the district court.

BACKGROUND

In the operative amended complaint, Nano, an Israeli 3D printing and

manufacturing company that trades on the NASDAQ stock exchange, alleged that

Defendants failed to disclose that they acted as a group when acquiring more than

five percent of Nano’s American Depository Shares (“ADSs”), in violation of

Section 13(d) of the Exchange Act, 15 U.S.C. § 78m(d). 1 As relief, Nano sought an

order directing Defendants to disclose their alleged group status on amended

Schedule 13Ds, 2 and an injunction prohibiting Defendants from acquiring

additional ADSs or voting their existing ADSs pending completion of the

amended filings. In response to Nano’s lawsuit, Defendants amended their

Schedule 13D filings, appending Nano’s complaint and stating that the allegations

therein were without merit. 3 The district court subsequently dismissed Nano’s

1 Nano also asserted claims for breach of contract, tortious interference, and unjust enrichment but has abandoned those claims on appeal.

2 A Schedule 13D is the filing required under Section 13(d). See 17 C.F.R. § 240.13d-1.

3 Murchinson and Anson disclosed that they had separately acquired 5.1% of Nano’s ADSs in Schedule 13Ds filed on January 23, 2023 and March 9, 2023, respectively. Defendants then amended their Schedule 13D filings to disclose Nano’s initial complaint, which was filed on March 27, 2023, as well as its amended complaint, which was filed on June 22, 2023.

3 Section 13(d) claims with prejudice, concluding that they were moot in light of

Defendants’ amended filings. On appeal, Nano challenges the district court’s

dismissal of its claims, arguing that: (1) Defendants’ amended filings did not

satisfy Section 13(d)’s disclosure requirements; and (2) even if they did, Nano is

entitled to retroactive injunctive relief.

DISCUSSION

We review de novo the district court’s determination that Nano’s Section

13(d) claims were moot and its decision to dismiss those claims pursuant to

Federal Rule of Civil Procedure 12(b)(6). See Lowinger v. Morgan Stanley & Co. LLC,

841 F.3d 122, 129 (2d Cir. 2016); Cnty. of Suffolk, N.Y. v. Sebelius, 605 F.3d 135, 139

(2d Cir. 2010).

Section 13(d), which was added to the Exchange Act by the Williams Act,

Pub. L. No. 90-439, 82 Stat. 454 (1968), requires any group acquiring beneficial

ownership of more than five percent of an issuer’s equity securities to file with the

Securities and Exchange Commission (“SEC”) a Schedule 13D disclosing, inter alia,

the members of the group. 4 See 15 U.S.C. § 78m(d)(1), (3); 17 C.F.R. § 240.13d-101

4 SEC Rule 13d-5 defines a group acquiring beneficial ownership as “two or more persons agree[ing] to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer[.]” 17 C.F.R. § 240.13d-5(b)(1)(i).

4 (Schedule 13D); accord Hallwood Realty Partners, L.P. v. Gotham Partners, L.P., 286

F.3d 613, 617 (2d Cir. 2002). It is well established that “an issuer has an implied

right of action to seek injunctive relief for a violation of [S]ection 13(d).” CSX Corp.

v. Child.’s Inv. Fund Mgmt. (UK) LLP, 654 F.3d 276, 284 (2d Cir. 2011). However, as

we have emphasized, “an injunction will issue for a violation of [Section] 13(d)

only on a showing of irreparable harm to the interests which that section seeks to

protect.” Treadway Cos. v. Care Corp., 638 F.2d 357, 380 (2d Cir. 1980). The goal of

Section 13(d) is “to alert the marketplace to every large, rapid aggregation or

accumulation of securities . . . which might represent a potential shift in corporate

control.” GAF Corp. v. Milstein, 453 F.2d 709, 717 (2d Cir. 1971); see also Rondeau v.

Mosinee Paper Corp., 422 U.S. 49, 58 (1975) (“The purpose of the Williams Act is to

insure that public shareholders who are confronted by a cash tender offer for their

stock will not be required to respond without adequate information regarding the

qualifications and intentions of the offering party.”). Accordingly, once the

required disclosures are made, the “informative purpose” of Section 13(d) is

satisfied and “there [is] no risk of irreparable injury and no basis for injunctive

relief.” Treadway Cos., 638 F.2d at 380 (affirming dismissal of Section 13(d) claims

after defendant’s amended Schedule 13D cured the alleged deficiencies in its

5 filings); see also Rondeau, 422 U.S. at 59 n.9 (concluding that injunctive relief was

not available “to remedy a [Section] 13(d) violation following compliance with the

reporting requirements”).

Here, the district court dismissed Nano’s claims after concluding that

Defendants’ amended Schedule 13Ds satisfied Section 13(d)’s disclosure

requirements. Relying on Avnet, Inc. v. Scope Industries, 499 F. Supp. 1121 (S.D.N.Y.

1980), and other decisions that have followed Avnet, 5 the district court determined

that, because there was a good faith dispute as to whether Defendants had in fact

acted as a group, disclosure of Nano’s allegations and Defendants’ countervailing

position was sufficient. See Nano Dimension Ltd. v. Murchinson Ltd., 681 F. Supp.

3d 168, 185–88 (S.D.N.Y. 2023). Nano challenges this conclusion on appeal,

arguing that “Section 13(d) requires that a party disclose the actual truth (e.g.,

whether they are acting as a group),” and that Defendants’ disclosure and denial

5 See, e.g., Cartica Mgmt., LLC v. CorpBanca, S.A., 50 F. Supp. 3d 477, 496 (S.D.N.Y. 2014) (“The disclosures, which explain [plaintiff’s] complaint, refute the allegations, and disclaim that [one defendant] has formed a group with the [other] defendants, were sufficient.”); Lions Gate Ent. Corp. v. Carl C. Icahn, No. 10-cv-08169 (HB), 2011 WL 1217245, at *1 (S.D.N.Y. Mar. 30, 2011) (“Courts in this District and elsewhere have held that in an action claiming a failure to disclose under the [Exchange] Act, a defendant’s filing an amendment to its Schedule 13D and attaching plaintiff’s complaint is sufficient to satisfy Williams Act requirements and moot any Williams Act claim.” (internal quotation marks and citation omitted)); Taro Pharm. Indus., Ltd. v. Sun Pharm. Indus., Ltd., No. 09-cv-8262 (PGG), 2010 WL 2835548, at *10 (S.D.N.Y. July 13, 2010) (“[T]he courts that have considered this issue have generally held that annexing a copy of a complaint to an amended filing is sufficient to satisfy Williams Act requirements and moot any Williams Act claim.”).

6 of Nano’s allegations could not remedy any violation of the statute. Appellant’s Br.

at 29. We disagree.

Section 13(d) is satisfied “when the shareholders receive the information

required to be filed.” Treadway Cos., 638 F.2d at 380. In Avnet, the court addressed

defendants’ disclosure obligations in the context of “a genuine and vigorous

dispute . . . as to whether the [information] which the plaintiff alleges is required

to be disclosed is actually a fact.” 499 F. Supp. at 1125. Reasoning that “defendants

were not required to state in their schedules that the alleged facts were actually

true,” the court concluded that “disclosure of the possibility of the alleged fact, and

the conflicting positions taken by the parties [was] sufficient.” Id. (emphasis

added). Thus, the court held that an amended Schedule 13D appending the

complaint and denying the plaintiff’s allegations satisfied Section 13(d), because

“the only certain factual statement” was that there was “a possibility” of the

disputed fact, and disclosure of the allegations “sufficiently inform[ed] [plaintiff’s]

shareholders of that possibility and of the parties’ positions on that point.” Id. at

1126.

We agree with the rule espoused in Avnet, which is consistent with our cases

cautioning that “[t]he disclosure required by the [Williams] Act is not a rite of

7 confession,” but rather “[w]hat is required is the disclosure of material objective

factual matters.” Data Probe Acquisition Corp. v. Datatab, Inc., 722 F.2d 1, 5–6 (2d

Cir. 1983); see also Mo. Portland Cement Co. v. Cargill, Inc., 498 F.2d 851, 872–73 (2d

Cir. 1974) (holding that Cargill need not disclose a potential antitrust violation

because “it would have been reasonable for Cargill’s management to conclude that

no antitrust obstacles actually existed,” but that if the Federal Trade Commission

were to file a complaint, Cargill “should disclose that fact, with whatever

reasonable comments Cargill may choose to make about it.”).

Applying that rule here, the district court correctly concluded that

Defendants’ amended filings satisfied Section 13(d), warranting dismissal of

Nano’s claims. The district court found that Defendants vigorously disputed

Nano’s allegations that they had acted as a group, noting that they had repeatedly

detailed in public filings their “good faith dispute of [Nano’s] claims.” Nano

Dimension Ltd., 681 F. Supp. 3d at 186. Although Nano argues on appeal that the

district court erred by making a factual finding at the motion-to-dismiss stage, we

find this contention unpersuasive. The district court did not, as Nano asserts,

make a factual finding as to Defendants’ subjective intent. Instead, it made the

threshold observation that Nano and Defendants disputed certain facts about the

8 nature of the relationship between the Defendants. The district court then

concluded that Defendants’ amended Schedule 13Ds satisfied Section 13(d)’s

disclosure requirements because they detailed Nano’s claims and Defendants’

responses, allowing “members of the public the opportunity to assess the

information themselves.” Id. at 186.

We reach the same conclusion here. As correctly explained by the court in

Avnet, genuine factual disputes need not be resolved to satisfy Section 13(d);

instead, “the law requires only that the disputed facts and the possible outcomes

be disclosed.” 499 F. Supp. at 1125. The record here demonstrated a dispute as to

whether Defendants acted as a group, and Nano presented no plausible basis in

its complaint to reasonably infer that the dispute was not genuine or in good faith.

Defendants’ amended filings disclosed the possibility of the disputed fact, and we

agree with the district court that “Section 13(d) requires no more in this case.”

Nano Dimension Ltd., 681 F. Supp. 3d at 186. In other words, because the

“informative purpose” of Section 13(d) was satisfied in this case, there was “no

basis for injunctive relief” and Nano’s claims were properly dismissed as moot.

Treadway Cos., 638 F.2d at 380.

9 Nano further argues that, even if Defendants’ amended disclosures satisfied

Section 13(d), its claims should survive a motion to dismiss because it is still

entitled to retroactive injunctive relief. In particular, Nano asserts that “[e]quitable

relief—including, inter alia, rescission of Defendants’ unlawfully purchased

ADS[s] and vacatur of their illegally cast votes—remains appropriate to address

Defendants’ violations of Section 13(d)” before May 2023, when Defendants filed

their amended Schedule 13Ds. Appellant’s Br. at 28. We disagree.

In its amended complaint, Nano alleged that Defendants started violating

Section 13(d) in September 2022, when they collectively acquired more than five

percent of Nano’s ADSs. On January 22, 2023, Murchinson called for a special

meeting of Nano’s shareholders, which was held on March 20, 2023 (the “Special

Meeting”). The day after Murchinson called for the Special Meeting, it filed its

initial Schedule 13D. Nano alleged that the Special Meeting was “fake” and

“invalid as a matter of Israeli law,” Joint App’x at 453, and argues on appeal that

the votes Defendants cast at this meeting must be canceled “to prevent irreparable

harm resulting from those improper votes and Defendants’ ongoing attempts to

10 change Nano’s governance,” Appellant’s Br. at 45–46. 6 Nano also argues that

Defendants’ ADS purchases between September 2022 and May 2023 must be

rescinded.

As the Supreme Court has recognized, Section 13(d) is not “a weapon for

management to discourage takeover bids or prevent large accumulations of stock

which would create the potential for such attempts.” Rondeau, 422 U.S. at 58. In

accordance with that principle, we have held that “injunctive share sterilization”—

i.e., an injunction negating votes cast by disputed shares—is not available under

Section 13(d), at least where corrective disclosures have been made and the vote

in question did not effect a change in control over the issuer. 7 See CSX Corp., 654

F.3d at 286–87; Treadway Cos., 638 F.2d at 380, 380 n.45; see also Rondeau, 422 U.S. at

57–58 (concluding that an injunction prohibiting the defendant from voting the

shares purchased while in violation of Section 13(d) was not available because he

later complied with the statute and did not attempt to obtain control of the issuer).

6 Nano advises that “[t]he changes purportedly approved at the March 2023 meeting have not yet been implemented due to ongoing litigation in Israel addressing Defendants’ separate violations of the Israel Companies law.” Appellant’s Br. at 46 n.13.

7 Both parties approvingly cite Raybestos-Manhattan, Inc. v. Hi-Shear Indus., 503 F. Supp. 1122, 1133 (E.D.N.Y. 1980), which held that “[t]he only situation in which disenfranchisement or divestiture may be permissible remedies for Section 13(d) violations is when the defendant obtains effective control of plaintiff through stock purchases before it comes into compliance with Section 13(d).” See Appellant’s Br. at 52; Appellee’s Br. at 53.

11 Here, because the Special Meeting involved the election of only two of seven

directors, Nano is not entitled to such retroactive relief.

Still, Nano argues that injunctive share sterilization is appropriate in this

case because Defendants had not yet filed amended Schedule 13Ds at the time of

the Special Meeting. To be sure, our cases have “le[ft] open the question of what

remedies might be appropriate when disclosure that is timely with respect to a

proxy contest is not made,” CSX Corp., 654 F.3d at 287; however, Nano cannot

identify a single case from this Circuit where an issuer was granted this form of

injunctive relief after the vote had taken place. See Piper v. Chris-Craft Indus., Inc.,

430 U.S. 1, 42 (1977) (“[I]n corporate control contests[,] the stage of preliminary

injunctive relief, rather than post-contest lawsuits, is the time when relief can best

be given.” (internal quotation marks and citation omitted)). In any event, Nano

has not adequately alleged that the Special Meeting—which took place before Nano

filed its initial complaint—caused irreparable harm to the informational interests

that Section 13(d) seeks to protect. See Treadway Cos., 638 F.2d at 380. Defendants

did not attempt to obtain control of Nano and, for the reasons discussed supra,

have adequately complied with Section 13(d)’s disclosure requirements; thus,

“[o]n this record there is no likelihood that [Nano’s] shareholders will be

12 disadvantaged should [Murchinson or Anson] make a tender offer, or that [Nano]

will be unable to adequately place its case before them should a contest for control

develop.” Rondeau, 422 U.S. at 59. Accordingly, Nano is not entitled to injunctive

relief, retrospective or otherwise.

CONCLUSION

We have considered Nano’s remaining arguments and find them to be

without merit. 8 Accordingly, we AFFIRM the order of the district court.

8 To the extent that Nano argues that the district court erred in dismissing the complaint without providing it with an opportunity to re-plead in a second amended complaint, we find that argument unpersuasive. Nano did not request leave to re-plead and has failed to articulate how any additional allegations could correct the substantive deficiencies identified by the district court in dismissing its amended complaint. Thus, we discern no error in the district court’s dismissal of the complaint with prejudice. See Gallop v. Cheney, 642 F.3d 364, 369 (2d Cir. 2011) (concluding that “no court can be said to have erred in failing to grant a request [for leave to amend] that was not made,” especially when the plaintiff has provided no “indication that [he] could—or would— provide additional allegations that might lead to a different result”).