Mills v. Electric Auto-Lite Co.

Electric Auto-Lite Company (defendant) merged with Mergenthaler Linotype Company, and Mills and other Electric shareholders (plaintiffs) sued to set aside the merger, arguing the proxy statement violated Section 14(a) of the Securities Exchange Act by telling shareholders Electric's board had approved the merger without disclosing that all of Electric's directors were themselves Mergenthaler nominees under Mergenthaler's control. The district court found the omission material and found sufficient causation between the Section 14(a) violation and the plaintiffs' harm, but the Seventh Circuit, while agreeing the proxy statement was improper, reversed on causation after concluding the merger terms were actually fair; the U.S. Supreme Court granted certiorari.