## Facts

- NYCERS, a Dole shareholder, submitted a Rule 14a-8 proposal requesting creation of a board committee of outside directors to evaluate how major national health-care reform models could affect Dole’s costs and competitiveness and to prepare a report available to shareholders on request.
- Dole sought to omit the proposal from its proxy materials, asserting it related to employee benefits and thus ordinary business, and arguing the proposal implicated political or legislative processes and was otherwise excludable.
- SEC staff issued a no-action letter stating it would not recommend enforcement action if Dole omitted the proposal, and the SEC denied NYCERS’s request for review.
- NYCERS filed suit shortly before the annual meeting and moved by order to show cause for a preliminary injunction barring proxy solicitation without disclosure of the proposal or, alternatively, requiring a supplemental mailing.
- NYCERS supported its request with materials addressing the scale of employer health-care costs and the potential financial impact of reform models on companies like Dole; the court held a hearing with legal argument but no live witness testimony.

## Issues

1. Whether NYCERS satisfied the requirements for a preliminary injunction compelling inclusion of its Rule 14a-8 proposal in Dole’s proxy materials for the upcoming annual meeting.
2. Whether Dole could exclude the proposal under Rule 14a-8 exceptions, including ordinary business operations, insignificance, or lack of shareholder power to effectuate because the subject related to national health-care policy.

## Decision

- The court granted NYCERS’s motion for a preliminary injunction.
- The court ordered Dole to include NYCERS’s shareholder proposal in its proxy materials for the June 4, 1992 annual meeting.
- The court found NYCERS showed irreparable harm because exclusion from the proxy for that annual meeting would deprive shareholders of the opportunity to vote on the proposal in that election cycle.
- The court found NYCERS demonstrated a likelihood of success on the merits that the proposal was not properly excludable under Rule 14a-8.

## Legal Principles

- Rule 14a-8’s “ordinary business operations” exclusion does not permit omission of a shareholder proposal that addresses a significant corporate policy or strategy question with substantial potential economic impact, even if it relates generally to employee benefits or intersects with public policy debates.
- A proposal framed as an internal corporate evaluation and reporting request may be within shareholders’ proper sphere, notwithstanding that the topic concerns possible legislative outcomes.
- Arguments that a proposal is “insignificant” fail where the record supports that the subject matter could materially affect the company’s cost structure and competitive position.
- SEC staff no-action letters are relevant but nonbinding in judicial review of whether a proposal may be excluded under the federal proxy rules.
- Conclusory reliance on Rule 14a-8 exclusions, without meaningful evidentiary rebuttal to the proposal’s asserted strategic and financial significance, supports a finding of likely success for the proponent.

## Conclusion

The court required Dole to include NYCERS’s health-care reform impact proposal in its proxy materials, holding that the proposal concerned significant strategic and economic considerations for the company and therefore was not properly excludable under Rule 14a-8 based on ordinary business, insignificance, or political-character theories.


N.Y.C. Emps.' Ret. Sys. v. Dole Food Co., 795 F. Supp. 95 (S.D.N.Y. 1992)