## Facts

- Humana, a health-care company, sought to acquire control of American Medicorp through a tender offer involving cash and securities at a premium to market price.
- Medicorp’s board promptly informed shareholders it considered Humana’s proposal not advantageous.
- Humana filed suit alleging Medicorp made material misrepresentations and omissions about Humana’s offer in violation of Exchange Act § 14(e); Medicorp counterclaimed alleging § 14(e) violations by Humana.
- Humana filed an SEC registration statement for the securities component of its offer; after it became effective, Humana commenced a tender offer scheduled to expire January 10, 1978 (unless extended).
- Shortly before Humana’s offer began, TWA and its wholly owned subsidiary Hilton announced a competing partial tender offer to buy 64% of Medicorp shares for $20 per share, with a stated intention to acquire remaining shares later for consideration represented to have an anticipated $20-per-share value.
- Humana asserted that communications and conduct associated with the competing offer and the ongoing contest misled or improperly pressured Medicorp shareholders, implicating § 14(e).
- Humana moved for leave to file a second amended and supplemental complaint to add TWA and Hilton as defendants, assert § 14(e) claims based on the competing offer, and obtain injunctive relief.

## Issues

1. Whether a tender offeror has standing under Exchange Act § 14(e) to seek injunctive relief against a competing offeror for alleged misrepresentations or other violations in connection with an ongoing tender offer, in light of Piper v. Chris-Craft Industries, Inc.

## Decision

- The court granted Humana leave to amend and supplement its complaint to add TWA and Hilton as defendants and to pursue § 14(e) claims seeking injunctive relief.
- The court held that, notwithstanding Piper’s rejection of a tender offeror’s private damages remedy under the Williams Act, a competing tender offeror may have standing to seek injunctive relief for alleged § 14(e) violations during an ongoing contest.
- The court distinguished Piper as addressing post-contest monetary damages rather than prospective equitable relief aimed at preventing misleading disclosures during a tender offer.

## Legal Principles

- The Williams Act is principally a disclosure-based scheme aimed at protecting shareholders of target corporations.
- Piper bars implying a private damages remedy for a tender offeror under § 14(e) where the recovery would not directly benefit the protected class (target shareholders).
- Piper does not necessarily foreclose injunctive standing for tender offerors; equitable relief sought during an active tender offer may further shareholder protection by correcting or preventing misleading or coercive communications.
- In fast-moving tender offers, permitting injunction actions by a competing offeror can serve the statute’s shareholder-protection purpose by providing timely private enforcement in addition to SEC oversight.

## Conclusion

The court permitted Humana to amend its pleadings to sue a rival bidder and its affiliate under § 14(e) and held that, after Piper, a competing tender offeror may still seek injunctive relief to address alleged disclosure violations during an ongoing tender offer contest.


Humana, Inc. v. American Medicorp, Inc., 445 F. Supp. 613 (S.D.N.Y. 1977)