Kennecott Copper Corp. v. Curtiss-Wright Corp.

After Kennecott (plaintiff) sold a subsidiary and used proceeds to buy another company rather than distribute funds to shareholders, Curtiss-Wright (defendant), a 9.9 percent shareholder, proposed its own slate of directors and advocated distributing funds via dividend or tender offer, disclosing in its proxy materials that it hadn't conducted a "detailed study" of the consequences of its plan. Kennecott's own proxy materials claimed that distributing the funds "would not be consistent with the maintenance of Kennecott as a viable company" and that doing so would trigger loan default, even though it didn't appear Kennecott's board or advisers had actually reached that conclusion, and the banks involved wouldn't confirm they'd actually declare a default. Kennecott sued alleging Curtiss's proxy solicitations were misleading; the district court agreed, enjoined Curtiss from voting at the shareholder meeting, and Kennecott's slate was elected by a slim majority. Curtiss appealed.