## Facts

- Joseph G. Chambers, a Briggs & Stratton Corporation shareholder, used the corporation’s advance-notice bylaw procedure to nominate William P. Dixon for election to the board at the October 19, 1994 annual meeting.
- The bylaws required timely written notice and specified information about the nominating shareholder and the nominee; Chambers complied.
- Briggs mailed its proxy statement and proxy card on September 8, 1994, listing only management’s three director nominees and omitting Dixon and his candidacy.
- Chambers sued under § 14(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-9, alleging the omission rendered the proxy solicitation false or misleading due to a material omission.
- Chambers sought injunctive relief requiring (1) a supplemental proxy statement and (2) a new proxy card listing Dixon as a nominee.
- Briggs argued federal proxy rules do not require management to include dissident nominees on its proxy card and asserted equitable defenses based on Chambers’s delay and the costs already incurred for the mailing.
- The court treated Chambers’s request as a motion for preliminary injunction.

## Issues

1. Whether omitting a properly shareholder-nominated director candidate from management’s proxy materials constituted a material omission making the solicitation false or misleading under § 14(a) and Rule 14a-9.
2. If relief was warranted, whether the court should require only corrective disclosure or also compel management to list the dissident nominee on its proxy card.

## Decision

- The court granted the motion in part and denied it in part.
- It ordered Briggs to issue supplemental proxy materials to correct a material omission by informing shareholders about Dixon’s nomination and providing related information.
- It declined to require Briggs to place Dixon’s name on the management proxy card.
- It rejected Briggs’s “unclean hands” argument to the extent it would bar disclosure-oriented relief, emphasizing shareholder protection and the integrity of the proxy process.

## Legal Principles

- Under Rule 14a-9, proxy solicitations may not omit material facts necessary to make statements not misleading; materiality turns on what a reasonable shareholder would consider important in deciding how to vote.
- The existence and identity of a properly nominated dissident director candidate may be material in a director election and may require disclosure in management’s proxy materials to avoid misleading shareholders.
- § 14(a) generally does not require corporate management to include dissident nominees on management’s proxy card; dissidents ordinarily must conduct their own proxy solicitation if they seek votes for their candidates.
- In preliminary-injunction requests involving proxy disclosures, courts weigh likelihood of success, irreparable harm, balance of hardships, and shareholder/public interest; remedies may be tailored to disclosure rather than compelled solicitation.

## Conclusion

The court held that management’s failure to disclose a properly nominated dissident candidate could constitute a material omission requiring corrective supplemental disclosures, but it refused to force the corporation to list the dissident nominee on management’s proxy card.


Chambers v. Briggs & Stratton Corp., 863 F. Supp. 900 (E.D. Wis. 1994)