## Facts

- A real-estate limited partnership issued nonrecourse promissory notes to the public under an indenture; the notes were registered under Exchange Act § 12(g).
- The notes paid quarterly interest (10% per year), had principal due in 1994, were secured by partnership real property, and also purported to give holders rights to residual sale proceeds after specified preferential returns.
- The partnership later defaulted on the notes, and noteholders were told they would not receive any residual proceeds.
- Shortly before a tender offer, the indenture trustee amended the indenture at a bidder’s request to separate the residual-interest feature from the notes; the issuer submitted the change to the SEC and then withdrew it after SEC comments.
- The bidder made a tender offer to purchase the outstanding notes.
- A noteholder trustee sued the bidder, the indenture trustee, and the general partner, alleging the tender offer was structured and disclosed in a manner that avoided Williams Act tender-offer requirements and omitted material information, asserting claims under Exchange Act §§ 14(d) and 14(e).
- Defendants moved to dismiss.

## Issues

1. Whether Exchange Act § 14(d), including § 14(d)(4), implies a private right of action for security holders to sue over alleged tender-offer disclosure/procedural violations.
2. Whether plaintiffs could proceed under § 14(e) for allegedly misleading statements or omissions in connection with the tender offer.

## Decision

- The court granted the motion to dismiss as to the claims brought under Exchange Act § 14(d), including § 14(d)(4).
- The court held § 14(d) does not provide an implied private right of action for target security holders.
- The opinion’s lasting holding addressed § 14(d); publicly available descriptions do not clearly establish the full disposition of any § 14(e) claim beyond recognizing that § 14(d) itself could not support private relief.

## Legal Principles

- An implied private right of action exists only where congressional intent to create a private remedy is shown; courts analyze intent primarily through statutory text, structure, and legislative history (often framed through the Cort v. Ash factors as refined by later Supreme Court cases).
- Exchange Act § 14(d), including § 14(d)(4), does not imply a private right of action; enforcement is primarily through the SEC and the statute’s existing remedial scheme.
- Private tender-offer litigation must rely on provisions that support private enforcement (commonly § 14(e) and, where applicable, Rule 10b-5), not § 14(d) itself.

## Conclusion

The court dismissed tender-offer claims premised on Exchange Act § 14(d), holding that Congress did not create an implied private right of action under that provision (including § 14(d)(4)), thereby limiting private plaintiffs to other available antifraud or disclosure theories rather than § 14(d) enforcement.


Erickson v. Wheatley Ventures, No. C-96-2934 MHP, 1997 WL 119849 (N.D. Cal. Mar. 4, 1997)