## Facts

- Long Island Lighting Company (LILCO), a Long Island electric utility, faced public controversy involving the Shoreham Nuclear Power Plant and service problems after Hurricane Gloria.
- LILCO scheduled a special shareholders’ meeting for December 12, 1985 to elect a new board of directors.
- A citizens group, including Maurice Barbash and others, organized to oppose LILCO’s management and advocated replacing LILCO with a public power authority; related individuals participated in an effort to influence the upcoming meeting.
- LILCO alleged defendants disseminated messages in a full-page newspaper advertisement and radio spots that were materially false and misleading.
- LILCO asserted the communications were connected to the impending shareholder vote and were intended to affect the proxy contest for corporate control.
- LILCO sued under § 14(a) of the Securities Exchange Act of 1934 and SEC Rules 14a-9 and 14a-11, seeking injunctive relief to halt further dissemination unless defendants complied with proxy rules and corrected alleged misstatements.

## Issues

1. Whether defendants’ newspaper and radio advertisements were “solicitations” subject to § 14(a) and SEC proxy rules.
2. Whether the challenged statements were materially false or misleading under Rule 14a-9.
3. Whether summary judgment and dismissal were proper on a highly compressed record, given the requested injunctive relief and asserted First Amendment concerns.

## Decision

- The district court granted summary judgment to defendants and dismissed the complaint, reasoning the advertisement was not a proxy solicitation and that applying proxy rules to such public advocacy would violate the First Amendment.
- The Second Circuit vacated the summary judgment and remanded for further proceedings.
- The Second Circuit held the case required fuller factual development before deciding solicitation status, material falsity, and any constitutional limitations.
- The Second Circuit criticized the truncated procedure—delaying then ordering discovery to be completed in a single day—and concluded the record was inadequate for merits resolution by summary judgment.

## Legal Principles

- Summary judgment is generally improper where material facts are disputed or undeveloped, particularly in Rule 14a-9 claims that turn on content, truth or falsity, context, and likely effect on shareholder voting.
- Communications reasonably calculated to influence shareholders’ voting decisions may fall within § 14(a)’s reach even if distributed through general media; whether a given communication is a “solicitation” is context-dependent.
- First Amendment concerns do not automatically bar application of federal proxy-fraud rules; constitutional analysis depends on the nature of the speech and its connection to a proxy contest.
- Trial courts may act quickly in time-sensitive corporate-control disputes, but procedures must still allow sufficient development of the facts to permit reliable adjudication.

## Conclusion

The Second Circuit vacated the dismissal because the expedited, limited record did not permit a sound determination of whether the advertisements were proxy solicitations containing materially misleading statements under § 14(a) and Rule 14a-9, or whether First Amendment considerations limited enforcement in the specific factual setting.


Long Island Lighting Co. v. Barbash, 779 F.2d 793 (2d Cir. 1985)