Court Opinion

ID: 9467966
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:00:45.743856+00
Date Added: 2024-06-11T17:40:36.735820
License: Public Domain

PELL, Circuit Judge,
dissenting.
Because I am in disagreement with the result that the majority of the panel has reached, I respectfully dissent.
The majority opinion is substantially based upon the concept that Judge McGarr considered “that the announcement of the increase in the number of shares [Wheelabrator-Frye, Inc. (WFI)] obligated itself to buy created a new tender offer.” I do not read Judge McGarr’s order as explicitly so stating. Instead he made it quite clear that he was not concerned with what was an amendment and what was not an amendment and what was a new tender offer and what was not a new tender offer but he was more concerned with the fact that the whole object of the regulation was the opportunity of shareholders to evaluate competing contentions.1 On that basis he thought the short time remaining until the expiration of the WFI offer was insufficient for the making of a proper decision. Judge McGarr did think that once the time was extended, he had no discretion to deviate from the prescribed notice time which would have been applicable if there had been a new tender offer. To the extent that the majority opinion holds that the *494time frame set up by Judge MeGarr’s order was too long, I am in agreement.
At this point I turn to the amicus curiae memorandum of the Securities and Exchange Commission (SEC) filed the day after the oral argument in this appeal. The SEC memorandum, which is not discussed in the majority opinion, relied in its Statement of the Case on publicly available SEC filings and the briefs of the parties before the court. It is not clear whether the SEC in preparing its memorandum had before it the brief of WFI filed early in the morning two days earlier, i. e., September 22, or the answer brief of McDermott filed about 5 p. m. on September 22. I will, however, assume the SEC had the two briefs.
In any event, the SEC in its memorandum assumed that the district court had concluded that WFI’s increase in the number of shares specified in its tender offer “constituted a new tender offer within the meaning of the Williams Act.” The SEC, while disagreeing that it was a new tender offer, then set forth its own views as follows:
It does not necessarily follow, however, that Wheelabrator, after announcing a material change in its tender offer on the last day of the offer, was free to permit the offer to expire that same day. While we disagree with the district court’s conclusion that there was a new offer and its order that the new offer be open for 20 days, we believe that Commission Rule 14d-4(c), which requires that a “material change” in the terms of a tender offer “shall be promptly disseminated to security holders in a manner reasonably designed to inform security holders of such change,” may have necessitated a brief extension of the tender offer in order to permit such dissemination.
Clearly it seems to me that the WFI offer in question did result in a “material change” in the terms of the tender offer and therefore Judge MeGarr properly required a prompt dissemination “to security holders in a manner reasonably designed to inform security holders of such change.” His only error in my opinion was in the determination of the length of the period of time which should follow.
The panel of this court heard this appeal on the second week day after the order was entered, with briefs being filed on the first of those week days because of the emergency aspects of the situation, and was compelled to reach a hurried decision notwithstanding unavoidable substantial alternative time commitments with which each member of the panel was confronted. We have not lived with this tender offer battle as has Judge MeGarr nor do we have the expertise in the field of the governmental agency here involved. This deference, of course, is particularly applicable for determining the operation of a statute under which an agency operates.2 In addition to other aspects creating difficulty in the proper disposition of this case, it appears WFI submitted a number of affidavits in support of its emergency motion, none of which were presented to or considered by the district court. It is difficult to tell in the hurried consideration of this case the extent to which these affidavits not properly a part of the record were influential in the decision of this court.
Judge MeGarr concluded that the change proposed by WFI was not a simple amendment but a significant change in the tender offer and the offer therefore had to be extended. I agree with this conclusion. Aside from the fact that WFI was obligating itself for 2.5 million shares more than it had previously obligated itself, which fact per se would seem to have a direct bearing upon the number of shares that might be tendered, the most significant aspect is that the change of obligation from 27% to 49% of the company stock guaranteed the absolute control of Pullman, which was not true prior to the change.
*495Judge McGarr obviously was endeavoring to apply equitable principles of fair notice for the purpose of letting the marketplace decide where its interest lay by having a reasonable opportunity to evaluate the competing contentions. In its appeal here WFI complains that the court order deprives it of the results of the decision of the marketplace. WFI displayed less concern at an earlier time in this litigation when an increase in the McDermott offer resulted in McDermott being subject to the same time requirements that are now being imposed on WFI. Finally, in exercising his equitable discretion so that the parties would be treated equally, in the September 19th order Judge McGarr simultaneously extended the McDermott offer within the same time frame applicable to WFI.
As to what the appropriate remedy should be on this appeal I again refer to the SEC brief which concludes as follows:
Where, as in this case, there is a serious question whether a tender offeror has complied with the dissemination requirements of Commission Rule 14d-4(c), we believe that ordinarily a remand to the district court would be appropriate in order that it may consider whether adequate dissemination was effected. Should the district court find, on remand, that Rule 14d-4(c) was violated, the Commission is of the view that the district court could appropriately exercise its equitable powers to require a brief extension of the tender offer so as to permit adequate dissemination of the material change to security holders and an opportunity for them to react to it. Moreover, to ensure equal treatment of tendering security holders, the court could provide proration during the extension.
In this case the district court’s order opening the tender offer for an additional 20 days has, by this time, had the effect of providing such brief extension as might be required by Rule 14d-4(c). We note, however, that the district court did not require proration during that brief period to ensure that late tendering shareholders would be included. This Court should take these considerations in account in determining what remedy, if any, to direct.
The SEC in the final paragraph above appears to be of the opinion, as its brief was filed on September 24, that a five day extension of time would be adequate. It is no answer in the present case, however, to say that more than five days have expired and therefore it is appropriate for this court to vacate the district court order. The financial world is obviously aware of the fact that WFI has appealed the order and that this court has determined the appeal to be of sufficient importance to give it an unusually expedited emergency hearing. I find it inconceivable to think that the shareholders, who have existing tender offers directed to WFI, would in this posture of the litigation dare to withdraw the tendered shares with the chance of finding a day later that this court had vacated the district court’s order with their having no further right to return to the tendering status. The sophisticated arbitrageurs who undoubtedly are the dominant shareholders in this tender would certainly be expected to let the status quo stand until the viability of Judge McGarr’s order had been determined.
In my opinion the proper remedy of this court would have been to remand to the district court along the lines suggested by the above quoted conclusion of the SEC brief. Assuming that the district court concluded that the adequate dissemination had now been effected, perhaps only a day or two extension would now be needed to permit proration and withdrawal during the extended period of this extension. Whatever extension was determined to be appropriate should also be applicable to McDermott.

. This is not a mere matter of disagreement over semantics but rather, it is, in fairness to Judge McGarr, that it should be made clear that Judge McGarr made no explicit finding that a “new tender offer” had been made. It is true, as the majority opinion quotes, that the trial judge at one point, long after he had announced his decision to issue his order, referred to it as “being a new offer.” As will be mentioned subsequently it was, indeed, a new offer.
Much earlier statements of Judge McGarr, however, indicate the rationale of his decision to give shareholders time to consider the change in the existing tender offer. Thus,
The change here is not complex. But the circumstances and the background against which the change is made make it one which this continue to affect the shareholders’ interest in the circumstance where they do not have the time because the tender offer expires at midnight to consider it, because the Wheelabrator offer expires at midnight tonight to consider it.
My overriding concern the last time remains the same today, and that is that the whole object of regulation was not to be technical about what is an amendment and what isn’t an amendment, what is a new tender and what isn’t a new tender, but in every instance to use the phrase that has been bandied about here-let the marketplace decide, and let the market decide, and the opportunity to evaluate the competing contentions and determine what its own interest is. So while this new change is not material and as complex as the other one was that I consider, it is very significant as a change in terms of the interest of the shareholder. And they should have more than six hours, or how many hours they have, to decide.
I will grant the temporary restraining order sought and require an extension of ten days as the relief sought.
At a later point in the hearing, Judge McGarr stated:
And I think that the issue of control, the issue of raising the number of shares sought from a lesser number to 42 [sic 49?] percent is a sufficiently significant change to bring it within the philosophy of the regulation. And that is to afford an opportunity for the shareholders to consider it and not have to make their decision in a matter of hours without adequate information.

. “Interpretive regulations by officers, administrative agencies, departmental heads and others officially charged with the duty of administering and enforcing a statute, and their practices which reflect the understanding they have of provisions they are charged to carry out, have great weight in determining the operation of a statute.” 2A C. Sands, Sutherland Statutory Construction § 49.05 at 238 (4th ed. 1973).