Opinion · Court of Appeals for the Fifth Circuit

Woolf v. S. D. Cohn & Co.

546 F.2d 1252

Type: Opinion
Court: Court of Appeals for the Fifth Circuit
Jurisdiction: Federal
Date: 1977-02-14
Topic: bankruptcy

PER CURIAM: The Supreme Court of the United States, on writ of certiorari, vacated the judgments of this Court in this cause and remanded the cause “for further consideration in light of TSC Industries v. Northway, Inc., 426 U.S. 438 (1976)”. TSC Industries, Inc. v. Northway, 1976, 426 U.S. 438, 96 S.Ct. 2126, 48 L.Ed.2d 757, involved an alleged violation of the Securities and Exchange Act of 1934 and rules promulgated under the Act in regard to proxy statements. In its opinion in that case the Supreme Court, in the following language, formulated the standard for materiality of an omitted fact: [A]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.

Citator

UpLaw has not yet analyzed Woolf v. S. D. Cohn & Co.. The absence of a flag is not a finding that it is good law.

Authority status: pending
Cited by: 7 opinions

WOOLF v. S. D. COHN CO.,546 F.2d 1252(5th Cir. 1977)

SHIRLEY WOOLF AND ROBERT MILBERG, PLAINTIFFS-APPELLANTS, v. S. D. COHN

COMPANY AND SIDNEY D. COHN, DEFENDANTS THIRD-PARTY PLAINTIFFS-APPELLEES,

FIBERGLASS RESOURCES CORPORATION, THIRD-PARTY DEFENDANT.

SHIRLEY WOOLF ET AL., PLAINTIFFS-APPELLANTS, v. S. D. COHN COMPANY ET AL.,

DEFENDANTS THIRD-PARTY PLAINTIFFS-APPELLEES, v. FIBERGLASS RESOURCES

CORPORATION, THIRD-PARTY DEFENDANT-APPELLEE.

Nos. 73-4044, 74-2449.

United States Court of Appeals, Fifth Circuit.

February 14, 1977.

Rehearing Denied March 15, 1977.

Lewis W. Miles II, Richard E. Reckson, Miami, Fla., for plaintiffs-appellants.

Aaron Podhurst, Robert Orseck, Miami, Fla., for defendants third-party plaintiffs-appellees.

Terrence J. Russell, Fort Lauderdale, Fla., for Fiberglass Resources Corp.

Appeals from the United States District Court for the Southern District of Florida.

Before RIVES, WISDOM and COLEMAN, Circuit Judges.Page 1253

PER CURIAM:

[1] The Supreme Court of the United States, on writ of certiorari, vacated the judgments of this Court in this cause and remanded the cause "for further consideration in light ofTSC Industriesv. Northway, Inc.,426 U.S. 438(1976)".

[2]TSC Industries, Inc. v. Northway,1976,426 U.S. 438,96 S.Ct. 2126,48 L.Ed.2d 757, involved an alleged violation of the Securities and Exchange Act of 1934 and rules promulgated under the Act in regard to proxy statements. In its opinion in that case the Supreme Court, in the following language, formulated the standard for materiality of an omitted fact:

[A]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. This standard is fully consistent withMillsgeneral description of materiality as a requirement that "the defect have a significantpropensityto affect the voting process." It does not require proof of a substantial likelihood that disclosure of the omitted fact would have caused the reasonable investor to change his vote. What the standard does contemplate is a showing of a substantial likelihood that, under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder. Put another way, there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the "total mix" of information made available. . . .

[3] This Court inWoolf v. S. D. Cohn Company,1975, 5 Cir.,515 F.2d 591,614had used the following test:

It follows that they must show that the omissions or misrepresentations of information that make the § 4(2) exemption unavailable to the defendants, in their cumulative effect, were such that a reasonable investor, had the information registration would have afforded been available, might have considered them important in the making of his investment decision. They need not show that they themselves would have relied on the information the defendants failed to disclose.Affiliated Ute Citizens of the State ofUtah v. United States,1972,406 U.S. 128,92 S.Ct. 1456,31 L.Ed.2d 741. . . .

[4] InTSC Industriesthe Supreme Court expressly rejected themightformulation as "too suggestive of mere possibility, however unlikely".

[5] InTSC Industriesthe Supreme Court also pointed out that:

The determination [of materiality] requires delicate assessments of the inferences a "reasonable shareholder" would draw from a given set of facts and the significance of those inferences to him, and these assessments are peculiarly ones for the trier of fact. Only if the established omissions are "so obviously important to an investor, that reasonable minds cannot differ on the question of materiality" is the ultimate issue of materiality appropriately resolved "as a matter of law" by summary judgment.

[6] Accordingly, we vacate our judgments in this cause and remand the case to the district court for reconsideration in the light ofTSC Industries v. Northway, Inc.The district court may decide the matter on the original record or, in its discretion, conduct a hearing on the materiality of the defendants' alleged misrepresentations and omissions.

[7] VACATED and REMANDED.Page 1254