biz org class 24

proxy positions have no bright line rule between policy and personnel, but of course, the parties are going to argue policy. and can argue a policy dispute even if it's really a personal argument.

rosenfeld. the dissent also agreed with the majority in respect to the expenses that were reembirsed and wehther they were fair/reasonable. dissent said that it was more than just the conveying of inforamtion to share holders, they were also wined and dined and the extraordinary expenses did not have to be incurred to just convey information. because of this, the reimbursements were not reasonable.

very fact specific cases.

business judgment rule will be relevant throughout the entire coursework.
putting everything together: make corporate decisions in good faith to ward against insurgence.

proxy cases:
1. starting point is securities act of 1934
2. section 14 gives SEC the authority to pursue and make rules and regulations about promulgate section 14
3. rule 14(a)(9) is the rule promulgated to s. 14 that makes it such that anytime there's a materially missing statement, it gives rise to civil damages or rescission
4. rule 14(a)(9) has been violated when...

does a violation of 14(a)(9) give rise to a private cause of action for private parties?
yes -- need private parties because the government and the SEC can't do it all

borak is a proxy issue, where the proxies were gotten through misleading efforts. and the case says, yes private parties can bring an action, don't have to wait for the SEC. it's an implied right of action.

mills v. electric
didn't disclose that mergenthauer owned auto-lite and was the quintessential controlling party:
plaintiff's challenge was that the proxy solicitation materials disclosed the merger but not the fact that mergenthauer, the acquiring party, owned the majority shares. lower court said that if the defendants could prove the merger was fair, there was no question of proxy misrepresentation, becuase shareholders wouldn't have needed the information that was omitted. plaintiffs showed causation -- fairness is relevant, but we don't awnt to sanction violation of the proxy standards articulated in rule 14(a)(9). the facts that were left out were material and were misleading, and a violation. we have to look at the proxy solicitation: was the solicitation essential to getting the merger done?

lovenheim:
why is it a request and not a demand that the shareholders