## Facts

- Julius and Eddie Trump sought to acquire Pay’n Save Corporation through a leveraged buyout structured as a two-step transaction: a tender offer followed by a cash-out merger.
- In early September 1984, Pay’n Save’s board accepted a proposal for a tender offer at $22.50 per share and a follow-on merger at the same price; two directors, Samuel Stroum and Stuart Sloan, publicly opposed the deal.
- On September 12, 1984 (after the market closed), the Trumps notified the board they were withdrawing the initial tender offer to negotiate with the dissident directors.
- The Trumps entered a separate agreement with Stroum and Sloan: an option to buy their shares at $23.50 per share and an additional $900,000 labeled as “fees and expenses,” yielding an alleged effective $25.00 per share for the dissidents.
- Later on September 12, the Trumps announced a “new” tender offer at $23.50 per share; the board announced it publicly on September 13.
- Bertram Field tendered his shares in the second tender offer at $23.50 and alleged the side arrangement unlawfully provided a higher price to the dissident directors.
- Field filed a putative class action asserting claims under § 14(d)(7) (best-price rule), Rule 10b-13, disclosure provisions (§§ 10(b), 14(a), 14(e) and related rules), civil RICO predicated on the securities claims, and related state-law claims.
- The district court dismissed the amended complaint under Rules 12(b)(1) and 12(b)(6), and Field appealed.

## Issues

1. Whether a side deal allegedly providing dissident directors a higher effective per-share price violated Exchange Act § 14(d)(7) when the bidder had announced withdrawal of an earlier tender offer before the side deal and then launched a later “new” tender offer.
2. Whether a shareholder who tendered in the later tender offer could pursue claims under SEC Rule 10b-13 based on purchases/arrangements outside the tender offer.
3. Whether the pleadings stated actionable federal disclosure claims, and whether civil RICO claims could proceed when predicated on inadequately pleaded securities violations.

## Decision

- The Second Circuit affirmed dismissal of the amended complaint in full.
- No § 14(d)(7) claim was stated because the side agreement occurred after effective withdrawal of the initial tender offer and was not consideration paid “pursuant to” a pending tender offer.
- The later tender offer was treated as a separate offer in which all tendering shareholders received the same price ($23.50), so the best-price rule was not violated within that offer.
- Field was not a proper party to invoke Rule 10b-13 on the alleged facts and tender-offer sequence.
- The disclosure-based securities claims were inadequately pleaded; the RICO counts failed because they depended on the deficient securities allegations.
- Certiorari was denied.

## Legal Principles

- Exchange Act § 14(d)(7) prohibits paying greater consideration to any security holder than to others only for consideration paid “pursuant to” the tender offer, which the court treated as limited to the pendency of a particular offer.
- A bidder’s effective withdrawal of a tender offer can end the temporal scope of § 14(d)(7) for that offer, so subsequent side transactions may fall outside the statute if not tied to a live offer.
- A later tender offer may be analyzed as a distinct transaction; equal pricing among tendering holders in that later offer defeats a best-price claim as to that offer.
- Rule 10b-13 enforcement in private litigation requires a plaintiff whose interests fall within the rule’s intended protective scope as applied to the challenged conduct.
- Securities disclosure claims require adequately pleaded material misstatements or omissions; civil RICO claims predicated on alleged securities violations fail when the predicate securities claims are not sufficiently alleged.

## Conclusion

The Second Circuit upheld dismissal of shareholder claims arising from a leveraged buyout tender-offer sequence, concluding that a side arrangement with dissident directors made after withdrawal of an earlier offer did not violate the Williams Act best-price rule, that the later tender offer paid all tendering holders equally, and that the remaining securities, Rule 10b-13, and RICO theories were inadequately pleaded.


Field v. Trump, 850 F.2d 938 (2d Cir. 1988), cert. denied, 109 S. Ct. 1112 (1989)