## Facts

- On July 15, 1981, E.I. DuPont de Nemours & Company (DuPont) made a tender offer for Conoco, Inc. shares as part of an intended merger.
- The offer gave Conoco shareholders a choice of $95 in cash or 1.7 shares of DuPont stock for each Conoco share tendered.
- On July 31, 1981, Conoco’s board declared a dividend payable September 14, 1981, to shareholders of record on August 14, 1981.
- DuPont later increased the cash alternative to $98 per share.
- On August 4, 1981, DuPont purchased more than 38 million Conoco shares.
- Caleb & Co. and other tendering Conoco shareholders sued (as a putative class) DuPont and First Jersey National Bank (First Jersey), DuPont’s tender-offer agent/depositary, and also named Conoco in connection with the dividend and related disclosures.
- Plaintiffs alleged they were entitled to the declared Conoco dividend because their tenders occurred after the dividend was declared, and they also alleged DuPont failed to pay tender consideration “promptly” as required by SEC Rule 14e-1(c).
- DuPont and First Jersey moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6).

## Issues

1. Whether the complaint stated a claim that DuPont (and its agent) violated SEC Rule 14e-1(c) by failing to pay tendering shareholders promptly after accepting their shares.
2. Whether tendering shareholders plausibly stated a claim that they were entitled to receive (or be compensated for) Conoco’s declared dividend despite tendering their shares into DuPont’s offer.
3. Whether the pleadings and the tender-offer materials alleged actionable misstatements, omissions, or enforceable offer terms sufficient to survive dismissal, including any claimed obligation to pay before a specified date.

## Decision

- The court denied the motion to dismiss as to the “prompt payment” claim under Rule 14e-1(c), holding the allegations were sufficient at the pleading stage.
- The court allowed the dividend-related theory to proceed in part based on plaintiffs’ allegations about the effect of tendering on dividend rights and the language of the tender-offer materials.
- The court dismissed Count Two only to the extent it was premised on an alleged obligation to pay “promptly” before August 17 (as framed in the pleadings and offer documents), while otherwise permitting the case to continue.

## Legal Principles

- On a Rule 12(b)(6) motion, the court accepts well-pleaded factual allegations as true and asks whether the complaint states a legally recognized claim.
- SEC Rule 14e-1(c) requires a tender offeror to pay the offered consideration promptly after the tender offer closes and shares are accepted; whether payment was “prompt” can depend on the alleged timing and circumstances.
- A shareholder’s right to a declared dividend after tendering shares may turn on when ownership is treated as transferring and on the terms described in the tender-offer documents and related public statements.
- Where the offer materials can reasonably be read as creating obligations about payment timing or the treatment of dividend rights, plaintiffs may proceed past dismissal, even if defendants dispute that reading.

## Conclusion

Caleb held that tendering Conoco shareholders plausibly alleged that DuPont and its depositary failed to pay promptly under Rule 14e-1(c) and stated dividend-related claims grounded in the tender-offer terms and disclosures; the court largely denied dismissal, trimming only the portion of Count Two tied to an asserted duty to pay before August 17.


Caleb & Co. v. E.I. DuPont de Nemours & Company, 615 F. Supp. 96 (1985)