Court Opinion

ID: 8988710
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:59:19.571947+00
Date Added: 2024-06-11T17:10:50.858425
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
concurring in part and dissenting in part:
Because the latest changes in the majority opinion were made after the majority and dissenting slip opinions were circulated, the changes readily are discernible to those who received the original slips. Accordingly, rather than address the majority’s alterations in piecemeal fashion, I have eliminated the first paragraphs of my already-filed dissent and substitute therefor the following few paragraphs as a preamble to this refiled dissent.
To set the stage for this preamble, I would remind the reader that the proxy statement at issue herein disclosed to all shareholders that “[pjrior to her death in March, 1980, Mrs. Loehmann and other representatives of her family’s interests determined that it would be in the best interests of her family to consider a sale of the Company Common Stock held by her family”; that negotiations for such sale were commenced prior to Mrs. Loehmann’s death and continued thereafter by her family interests until they culminated in the sale at issue herein. Plaintiff contends that this informative disclosure of the Loehmann family’s desire to sell was not enough; that the shareholders should have been informed that the Loehmann family had such an urgent need for cash to pay estate taxes, they were willing to sell their *680stock at a substantial loss to raise the money. Judge Sprizzo, relying on the deferred payment provisions of 26 U.S.C. § 6166, held that no such need existed. 715 F.Supp. at 86-87. As will appear later in this opinion, I agree. In their latest additions to the majority opinion, my colleagues state that a shareholder informed of the substantial tax liability “could deduce that the Loehmann family desired a ‘quick sale’ for estate tax purposes”; that "this information could lead the stockholder to infer that the majority stockholder’s urgent need for cash, coupled with the control such a stockholder is able to exercise over the affairs of the company,1 had caused the Board of Directors to endorse a sale below the stock’s value, the financial appraisal contained in the proxy statement notwithstanding”; that “a reasonable shareholder — fully informed of the majority shareholder’s urgent need for cash— could consider that fact important in valuing the stock” (emphasis supplied).
Although the issues raised by the majority’s use of the word “could” are discussed generally in the portions of this opinion that preceded the majority’s latest amendments, this is an appropriate time to point out, at least in preliminary form, that, as used in this manner, the crucial word should not be “could”, but instead should be “would”. The word “could” expresses a contingency that may be possible and nothing more. United States Casualty Co. v. Kelly, 78 Ga.App. 112, 116, 50 S.E.2d 238 (1948). Like the word “might”, the word “could” is not synonymous with the word “would”. Gehrig v. Chicago & Alton Ry. Co., 201 Ill.App. 287, 293 (1916).
Assuming that, despite the speculation inherent in the use of the word “could”, its use would be sufficient to defeat an ordinary motion for summary judgment, but see Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38, 42 (2d Cir.1986), it is not sufficient to demonstrate the Securities Exchange Act violation alleged herein. Under that Act, “[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.” TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 2132, 48 L.Ed.2d 757 (1976) (emphasis supplied); see also Basic, Inc. v. Levinson, 485 U.S. 224, 231, 108 S.Ct. 978, 983, 99 L.Ed.2d 194 (1988).
I cannot conclude this preamble without commenting upon my colleague’s continued heavy-handed attempts to distinguish this case from Rodman v. Grant Foundation, 608 F.2d 64 (2d Cir.1979). In this case, as in Rodman, “the proposed actions of the company and their effect on stockholdings were fully disclosed.” Id. at 71. Moreover, the Loehmann family’s desire to dispose of its stock, if not as self-evident as the desire to purchase in Rodman, was disclosed in the proxy statement itself. Nowhere is the majority's misstatement of the law more evident than in its misuse of a partial quote from this court’s opinion in Rodman:
Applying that test, there was enough evidence here for a rational jury to reach the conclusion that the omitted information “might have induced shareholders to vote against the [merger],” Rodman, 608 F.2d at 71, making its omission a material one for securities law purposes.
Judge Friendly rejected this exposition of the law long before Rodman, when he said:
While the difference between “might” and “would” may seem gossamer, the former is too suggestive of mere possibility, however unlikely.
Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1302 (2d Cir.1973).
Now I return to the remainder of my dissent as it was filed and circulated on November 1, 1990.
The Loehmann Family’s Motivation
On several occasions, the Supreme Court and this court have emphasized the desira*681bility of deterring securities law actions involving nondisclosure that are brought solely for their potential settlement value. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 210-11 n. 30, 96 S.Ct. 1375, 1389 n. 30, 47 L.Ed.2d 668 (1976); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 740-41, 95 S.Ct. 1917, 1927-28, 44 L.Ed.2d 539 (1975); Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 114-15 (2d Cir.1982). The sentiments expressed in these holdings make the following comments by Judge Sprizzo to plaintiffs counsel during the argument that preceded the Judge’s grant of summary judgment herein an appropriate backdrop for the discussion that follows in this opinion:
I know that for the past five years you and Mr. Kaufman have wanted to expand this case very far, but I have limited this case and I am going to continue to limit this case to the issues resolved by my prior decision. I tell you as a matter of law that I think I may have been wrong in even letting you go this far. As a matter of law, I have difficulty with the notion that any stockholder is entitled to rely as a matter of law upon what a majority stockholder does or does not do. But I have given you the benefit of the doubt on that for the sake of an expeditious appeal and one appeal. I think you are probably wrong on the law. ******
I have had a lot of patience in this case. The time has come for this case to go on its appellate road. I am tired of these loose allegations. We have been going through this for four years. Mr. Kaufman argued a motion before me four years ago in which he was throwing out facts in the argument which weren’t in his brief and weren’t anywhere. I have had a lot of patience. Now the time has come to be specific.
Where is your affirmative evidence that the estate had a [sic] urgent need for cash and Mrs. Stafford knew it? The more I think about this case, the more I become convinced as a matter of law it is not material.
******
With respect to the other question of whether there were material misrepresentations with respect to the existence or nonexistence of an estate tax motive or an urgent need for cash, which is one of the issues left open by prior decision, I say at the outset that I am not entirely sure that that is material. I at least in terms of the prior motion found that it might be and that it might raise a jury question. I am not sure that is correct. I am not so sure that the motives of the majority shareholder or the reasons why they sell or even the tax circumstances surrounding their sale are the kind of thing that a reasonable shareholder should be entitled to rely upon as a matter of law. So I have a serious question as to whether that circumstance is material as a matter of law.
It seems to me that it would be a rather large leap to turn every Section 14 case into a tax case and decide whether the tax consequences did or did not justify the decision of the majority shareholder to sell. I think it would be an unwarranted extension of the securities laws. If it is going to happen, it should happen at a higher level than mine, as I have indicated in a prior case.
I will say this much: There is no proof in this record that the price paid for the stock was in any way inadequate or inappropriate or below the value of the stock. The only inference we are trying to draw about some lack of value here is the fact that the majority shareholder might have been involved in some kind of a fire-sale mentality which influenced the other shareholders. I have very serious questions whether a shareholder can reasonably rely upon what a majority shareholder does anyway, because it seems to me he as a matter of policy should make his own decision based upon what he thinks he ought to do, and the law should not reward him for relying upon what a majority shareholder does. In any event, *682there is no evidence in this record which will support a rational jury finding that there was such an urgent need for cash that the decision of the majority shareholder to sell was in effect sufficient to draw an inference that she was willing to sell at less than the stock’s value.
I think the time has come to grant summary judgment in this case.
sfc iji * * * j}¡
The case has been around for four or five years. It is time to test its legal sufficiency in the Court of Appeals.
Because our review of the district court’s grant of summary judgment is plenary, we are not bound by the above-quoted language. Burtnieks v. City of New York, 716 F.2d 982, 985 (2d Cir.1983). However, we are required to pass upon the merits of the district court’s decision in accordance with the principles laid down by the Supreme Court in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986), Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986), and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986), and in prior decisions of our own court, e.g., Law Firm of Daniel P. Foster, P. C. v. Turner Broadcasting Sys., Inc., 844 F.2d 955, 959 (2d Cir.), cert. denied, 488 U.S. 994, 109 S.Ct. 559, 102 L.Ed.2d 585 (1988). These cases hold that once a party moves for summary judgment on the ground that there is no material issue for trial, his opponent must go beyond the pleadings, and, by reference to affidavits, depositions, admissions, and answers to interrogatories, designate specific facts showing that there is a genuine material issue for trial. The following review of pertinent law points to only one conclusion — whether alleged tax problems in the Anita Loehmann estate were a motivating factor in the Loehmann family’s decision to sell their stock was not a genuine material issue for trial.
Perhaps the first case in this circuit to interpret the antifraud provisions of section 14 was Doyle v. Milton, 73 F.Supp. 281 (S.D.N.Y.1947). The court held there that motivation, not otherwise unlawful, is not a required disclosure under the Act. Id. at 286. From that early date to the present time, our district judges consistently have reasoned in the same manner. See, e.g.:
Stedman v. Storer, 308 F.Supp. 881, 887 (S.D.N.Y.1969) (no material omission in directors’ failure to discover and adjudge faithless motives for their actions and announce the same);
Lewis v. Dansker, 357 F.Supp. 636, 643-45 (S.D.N.Y.1973) (no violation of section 14(a) for failure of proxy statement to describe defendant’s potential tax benefits), modified on other grounds, 68 F.R.D. 184 (S.D.N.Y.1974);
Lewis v. Oppenheimer & Co., 481 F.Supp. 1199, 1206 (S.D.N.Y.1979) (“The income tax situation of each stockholder is personal business, and absent injury to the corporation, is irrelevant to damage claims under the federal securities laws.”);
Gluck v. Agemian, 495 F.Supp. 1209, 1214 (S.D.N.Y.1980) (disclosure of subjective motive not required under the federal securities law);
Chock Full O ’Nuts Corp. v. Finkelstein, 548 F.Supp. 212, 218 (S.D.N.Y.1982) (“Failure to disclose subjective interests of a sort obvious to the reasonable investor is not a violation of the disclosure requirements of the federal securities laws so long as the relevant underlying facts are disclosed.”);
Koppel v. Wien, 575 F.Supp. 960, 967 (S.D.N.Y.1983) (“no federal securities law duty to disclose one’s motives”), rev’d and remanded on other grounds, 743 F.2d 129 (2d Cir.1984);
Hecco Ventures v. Avalon Energy Corp., 606 F.Supp. 512, 519 (S.D.N.Y.1985) (“[Ejven if the purported ill motives of ‘locking up’ and entrenching Del-tec’s control lay behind the proposals, there would be no resulting disclosure duty.”);
Lewis v. Potlatch Corp., 716 F.Supp. 807, 809 (S.D.N.Y.1989) (directors not required to disclose that motive for proposed voting rights amendment was to entrench management).
*683Most of the more recent district court opinions have cited this court’s decision in Rodman v. Grant Foundation, supra, 608 F.2d 64, as authority for their holdings. See Lewis v. Potlatch Corp., supra, 716. F.Supp. at 809; Hecco, supra, 606 F.Supp. at 519; Chock Full O’Nuts, supra, 548 F.Supp. at 218; Gluck, supra, 495 F.Supp. at 1213-16. We held in Rodman that the failure of a proxy statement to disclose that the repurchase of outstanding corporate stock was for the purpose of entrenching management in control was not a violation of section 14(a). We said that, in the absence of some ulterior wrongful design hinging upon entrenchment, the corporate directors were not required to state the motivation for the purchases. Id. at 71. Among the cases that we cited in support of this proposition were Doyle v. Milton, supra, 73 F.Supp. 281; Stedman v. Storer, supra, 308 F.Supp. 881; Golub v. PPD Corp., 576 F.2d 759 (8th Cir.1978); and Crane Co. v. Westinghouse Air Brake Co., 419 F.2d 787 (2d Cir.1969), cert. denied, 400 U.S. 822, 91 S.Ct. 41, 27 L.Ed.2d 50 (1970). In Crane, 419 F.2d at 795, we quoted with approval the statement of the district court that “[t]he securities laws are concerned with the facts presented to the stockholders, not with the motives underlying these facts.”
In cases subsequent to Rodman, we have emphasized that the Securities Exchange Act’s ban on manipulation is intended to prohibit conduct that artificially and misleadingly affects market activity; it is not intended to provide a cause of action for breaches of fiduciary duty, corporate mismanagement or self-serving reasons for managerial acts. “The disclosure required by the Act,” we said, “is not a rite of confession or exercise in common law pleading.” Data Probe Acquisition Corp. v. Datatab, Inc., 722 F.2d 1, 5-6 (2d Cir. 1983), cert. denied, 465 U.S. 1052, 104 S.Ct. 1326, 79 L.Ed.2d 722 (1984).
In Field v. Trump, 850 F.2d 938, 947 (2d Cir.1988), cert. denied, 489 U.S. 1012, 109 S.Ct. 1122, 103 L.Ed.2d 185 (1989), we cited Data Probe, supra, for the proposition that we will not “embark ... on a course leading to a federal common law of fiduciary obligations.” We also quoted Maldonado v. Flynn, 597 F.2d 789, 796 (2d Cir.1979), for the proposition that section 14(a) does not provide a remedy for “failure to disclose an alleged ulterior motive for a fully described corporation action.” 850 F.2d at 947.
The Second Circuit is not unique in these holdings. See, e.g.:
Lessler v. Little, 857 F.2d 866, 875 (1st Cir.1988) (defendants not required to disclose “true motivation” in selling company assets), cert. denied, 489 U.S. 1016, 109 S.Ct. 1130, 103 L.Ed.2d 192 (1989); Biesenbach v. Guenther, 588 F.2d 400, 402 (3d Cir.1978) (defendants not liable for failure to disclose “true purpose” behind their activities);
Ward v. Succession of Freeman, 854 F.2d 780, 791 (5th Cir.1988) (“Case law clearly holds that a defendant’s motive is not a material ‘fact.’ ”), cert. denied, 490 U.S. 1065, 109 S.Ct. 2064, 104 L.Ed.2d 629 (1989);
Alabama Farm Bureau Mutual Casualty Co. v. American Fidelity Life Ins. Co., 606 F.2d 602, 610 (5th Cir.) (failure of controlling shareholder or corporate official to disclose his motives in entering a transaction does not violate section 10b-5), cert. denied, 449 U.S. 820, 101 S.Ct. 77, 66 L.Ed.2d 22 (1980);
Panter v. Marshall Field & Co., 646 F.2d 271, 288 (7th Cir.) (defendants not required to reveal their “impure motives” for entering an allegedly improper transaction), cert. denied, 454 U.S. 1092, 102 S.Ct. 658, 70 L.Ed.2d 631 (1981); Golub v. PPD Corp., supra, 576 F.2d 759, 765 (8th Cir.1978) (defendants not required to disclose the “true motivation” of management in selling company assets);
Vaughn v. Teledyne, Inc., 628 F.2d 1214, 1221 (9th Cir.1980) (corporate officers under no duty to disclose “precise motive” or purpose for engaging in particular course of action so long as motive is not “manipulative or deceptive”).
Judge Cardamone’s statements {supra, at 670) that Mendell “believed” that Mrs.
*684Stafford had a conflict of interest and that Mendell “claims” that Mrs. Stafford had the ability to persuade other directors and shareholders to approve the transaction are not “specific facts” showing that there is a genuine issue for trial as required by Fed. R.Civ.P. 56(e). Neither is the majority’s statement {supra, at 676) that “[fjurther questions of fact exist regarding whether Stafford’s influence on the board of directors was so great that the merger proposal was adopted in order to allow the Loehmanns to raise needed cash.” This action has been pending since January 5, 1981. Plaintiff has deposed over seventeen witnesses, seven of whom were company directors. In addition to Mrs. Stafford, six of the directors owned company stock. One owned 171,743 shares; others owned respectively 40,610, 1,170, 1,000, and 100 shares. All of them were knowledgeable business people, and all denied being influenced in any way by the estate tax problems of the Loehmann family. All of them stood to sustain substantial losses if their stock was undervalued in the merger. In Matsushita Elec. Indus., supra, 475 U.S. at 587, 106 S.Ct. at 1356, the Court said that “if the factual context renders [plaintiff’s] claim implausible — if the claim is one that simply makes no economic sense— [plaintiff] must come forward with more persuasive evidence to support [his] claim than would otherwise be necessary.” In the instant case, plaintiff has produced no evidence at all that the knowledgeable and experienced members of the Loehmann board were influenced to take substantial losses on their own investments in order to assist the Loehmann family with its alleged estate tax problems. Indeed, plaintiff’s claim against the individual directors is based primarily upon their alleged negligence in not knowing why the Loehmann family wanted to sell its stock. See Plaintiff-Appellant’s Reply Brief at 19.
Judge Cardamone’s reliance upon SEC v. Parklane Hosiery Co., 558 F.2d 1083 (2d Cir.1977), is misplaced. At the outset, Judge Cardamone neglects to note that, unlike the instant case, Parklane was a Commission action for an injunction, not a private action for damages. See id. at 1088. Moreover, my colleague’s summary reference to Parklane omits several important and distinguishing facts. Perhaps this best can be illustrated by reference to District Judge Duffy’s opinion in Parklane, 422 F.Supp. 477 (S.D.N.Y.1976). This shows that Herbert Somekh, the owner of a controlling interest in Parklane, decided to have the company go private by purchasing the publicly owned shares. The SEC contended that Somekh’s true intention in proposing the merger was to “bail out his personal financial situation.” Id. at 482. Judge Duffy found that this was Somekh’s “overriding purpose.” Id. We agreed. 558 F.2d at 1086. Moreover, said Judge Duffy, “There is not so much as a hint of Somekh’s huge debts in the proxy statement.” 422 F.Supp. at 482. Again we agreed. 558 F.2d at 1086. As correctly described by Judge Pollack in Lewis v. Oppenheimer, supra, 481 F.Supp. at 1206, Somekh’s conduct was a “flagrant misappropriation of corporate assets for personal use.”
Judge Cardamone also fails to note that Somekh retained an outside financial house to appraise the Parklane shares and misled the appraisers as to the facts surrounding the proposed merger.
Russ [vice-president of the appraising company] testified that at the time he conducted the appraisal he was not told and was not aware of Somekh’s plans to use nearly $1 million of corporate assets to reduce his personal indebtedness. He was equally unaware of Somekh’s intention to sell real property to the corporation. At no time was Russ, or anyone else at his firm, informed of the negotiations with the Federal Reserve Board with respect to cancellation of the leasehold at Nassau and John Streets.
422 F.Supp. at 483-84. By referring to the presumably honest appraisal in the proxy statement, Somekh was not simply failing to disclose facts; he was intentionally deceiving the shareholders concerning the soundness and validity of the appraisal. Somekh’s looting of Parklane’s treasury is a far cry from the conduct complained of in the instant case.
*685Because the overwhelming weight of authority cited herein establishes as a matter of law that section 14(e) was not violated by the failure of the Loehmann Company’s Proxy Statement to disclose the Loehmann family’s estate tax situation, there is no compelling need to discuss the merits of plaintiff’s claims concerning the family’s alleged tax problems. However, because I fully agree with Judge Sprizzo that plaintiff’s claims on this issue are completely without merit, I would be remiss if I did not say so.
Mendell alleges in his complaint that it was “necessary for the defendant Stafford and the Loehmann family to make a prompt sale of their stock in Loehmann’s for tax reasons and other reasons personal to them”; that they “were faced with the urgent necessity of raising large amounts of cash to pay estate taxes.” Mendell makes the same argument in his brief: “LOEHMANN’S WAS BEING SOLD BECAUSE THE LOEHMANN FAMILY HAD AN URGENT NEED FOR CASH TO PAY ESTATE TAXES AND ... PRICE WAS A SUBORDINATE CONSIDERATION.” Plaintiff-Appellant’s Brief at 27.
Simple mathematics belie this assertion. The stock’s book value was approximately $13.50 per share. During 1980, the stock traded on the American Stock Exchange at an average price of around 23V2. The Loehmann family owned 786,812 shares which it agreed to sell for $31.30 a share. As Judge Sprizzo noted, plaintiff has come forward with no proof that the stock was worth more than $31.30 a share. However, if the $31.30 represented an undervaluation of only $1.27 a share, the total loss to the Loehmann family from the sale would be $1 million. If the undervaluation was $5.00 a share, the Loehmann family’s loss would be $3,934,060. If the undervaluation was $10.00 a share, their loss would be $7,868,-120. If, as Mendell alleges without any basis in his complaint, the undervaluation was at least $14.00 a share, the Loehmann family’s loss would be at least $11,015,368.2 Mendell’s allegation that price was a “SUBORDINATE CONSIDERATION” is ridiculous on its face.
The Proxy Statement disclosed that Charles Loehmann, the founder of the Company and Chairman of the Board, died in 1977 and that after his death his surviving family felt it would be in their best interest to dispose of the stock that he had owned. The Proxy Statement also informed shareholders that the Loehmann family’s feelings in this regard already had been disclosed publicly in filings with the SEC.
As frequently happens, see Sheffield, Liquidity Problems of Owners of Closely Held Corporations: Relief Provided by Sections 303 and 6166, 38 U.Fla.L.Rev. 787, 787-88 (1986), the estates of both Charles Loehmann and his widow, Anita Loehmann, did not have sufficient liquid assets to pay all of the estate taxes at once. However, because of the estates’ substantial holdings in Loehmann’s Inc., they were entitled to the benefits of section 6166 of the Internal Revenue Code, 26 U.S.C. § 6166. Prior to the enactment of section 6166, estates such as those of Mr. and Mrs. Loehmann could raise money for payment of estate taxes either by selling stock or by borrowing from private institutions, often a difficult and expensive proposition. Section 6166 was enacted for the specific purpose of alleviating this need. Priv.Ltr.Rul. 8213075 (Dec. 30, 1981), reprinted in 6 Modern Estate Planning, App. 1289, 1292 (1988). Under section 6166(a), a decedent’s executor may elect to pay the estate tax in up to ten installments, the first of which is not due for five years. Although interest must be paid yearly on the unpaid amount of the tax, the interest rate on a substantial portion of the unpaid principal is only 4 percent. 26 U.S.C. § 6601(j). The practical effect of a section 6166 election is that the government, rather than a private institution, becomes the lending party, and it loans at an advantageous rate of interest that is tax deductible. See Estate of Bahr v. Comm’n, 68 T.C. 74, 82 (1977). Con*686gress felt that the “5-year deferral period plus the reduced interest rate ... should in most cases give the business time to generate sufficient funds to pay the estate tax and interest thereon without the business having to be sold to satisfy the estate tax liability_” H.R.Rep. 1380, 94th Cong., 2d Sess. 32 (1976), 1976-3 (Vol 3) C.B. 735, 766 (quoted in Priv.Ltr.Rul. 8446009 (July 12, 1984), reprinted, in 6 Modern Estate Planning, supra, App. 1296.3, at 1296.4).
Utilization of the benefits of section 6166 is not a desperation measure, as Mendell would have us believe. One writer suggests that the section can be utilized by an estate without a liquidation problem and therefore should be considered as a possible estate planning tool. Sheffield, supra, 38 U.Fla.L.Rev. at 809. Attorney James Pressly, a trust and estate specialist who advised the Loehmann family on estate matters, testified unequivocally on deposition as follows:
Q. Do you have an understanding as to whether at the time of the merger the Loehmann family shareholders promised to make a sale of their Loeh-mann stock because they urgently needed money to pay estate taxes?
A. They did not urgently need to raise money to pay estate taxes.
Q. Is that because of the availability of various deferral techniques or borrowing of money?
A. Yes.
I agree.3
Before liability can be predicated upon the omission of an alleged fact from a proxy statement, there must be a showing that the alleged fact is true. United States v. Matthews, 787 F.2d 38, 45 (2d Cir.1986). The disclosure must be of “hard facts which definitely affect a company’s financial prospect.” Reiss v. Pan American World Airways, Inc., 711 F.2d 11, 14 (2d Cir.1983). Given the ready availability of section 6166, Mendell’s contention that the Loehmanns were required to sell their stock in order to pay estate taxes is simply untrue. Assuming that a jury was given the horrendous task of measuring the alleged loss to the Loehmann family from selling their 786,812 shares of stock at a yet to be proven undervalued price against the alleged tax benefits resulting from the sale (which my colleagues say may not be considered), the most favorable verdict that Mendell could hope to secure would be that the sale was more desirable financially to the Loehmanns than a section 6166 tax deferment. Assuming further that in preparing its Proxy Statement the board could have summarized with even some degree of accuracy the financial pros and cons of the several possible ways of handling the Loeh-mann family’s estate taxes, a matter concerning which the writer and his colleagues obviously disagree, it is doubtful indeed that such summary would have any meaning whatever to the average shareholder. He would simply be buried “in an avalanche of trivial information — a result that is hardly conducive to informed decision-making.” TSC Indus., Inc. v. Northway, Inc., supra, 426 U.S. at 448-49, 96 S.Ct. at 2132. Every shareholder with common sense knew that, when the Loehmanns offered their stock for sale at $31.30 a share, the sale of the stock was more desirable to them than its retention.
“The ‘Handshake Agreement’ Claims”
It is conceded by all concerned that defendant Greenberg, the President, Chief Executive Officer and a Director of Loeh-mann’s Inc., was one of the most capable chain store executives in the country. His annual salary was $200,000, and in addition he was entitled to substantial fringe benefits. The Proxy Statement disclosed that Greenberg’s employment contract would remain in effect after the merger, and continued:
It is also anticipated that following the consummation of the Merger, additional *687incentive arrangements may be established for Mr. Greenberg and other key employees which may consist of employment agreements, stock appreciation rights, performance related awards or other types of compensation. It is not expected that the exact nature and details of these arrangements will be determined until several months after the Effective Time.
The Proxy Statement also provided that each share of the Company’s stock “shall, by virtue of the Merger, automatically be deemed for all purposes to represent only the right of the holder to receive $31.30 per share in cash or to perfect any rights of appraisal which a shareholder may have as a dissenting shareholder and shall not represent shares of the Company as the surviving corporation or of any other party to the Merger Agreement.” It also provided that “[njeither Mr. Greenberg nor any other present director or officer of the Company owns beneficially or will acquire an equity or debt interest” in the merging companies. This latter assertion cannot reasonably be construed to mean that these individuals never would acquire an equity or debt interest in AEA, LHI, LH Holdings or LH Investors. The more sensible construction is that, as part of the merger transaction itself, the officers and directors would receive only cash for their stock and would not acquire an equity interest in the merging companies.
After the merger was consummated, Greenberg entered into a twelve-page contract with LH Investors, Inc. for the purchase of 8,000 shares of “Class A stock” of LH Investors, Inc. on what appears to have been favorable terms. Mendell contends, in substance, that this complicated twelve-page contract was simply a formalization of a pre-merger “Handshake Agreement” and that Loehmann’s Proxy Statement was manipulative and deceptive under section 14(e) for failure to disclose the existence of the Handshake Agreement. I disagree.
To merit recognition in the Proxy Statement as an enforceable contract, the so-called “Handshake Agreement” must in fact have been an enforceable contract. The word “agreement” is not necessarily synonymous with the word “contract.” Hunter v. Anderson, 74 F.Supp. 721, 722 (N.D.Tex.1947). It “contains no implication that legal consequences are or are not produced.” Restatement (Second) of Contracts § 3 Comment “a”; see also Willi-ston on Contracts § 2 at 6-7 (3d ed.); 3 C.J.S. Agreement at 514-15. Although Mendell was permitted to conduct an exhaustive fishing expedition, he has not identified the parties to the so-called “Handshake Agreement”, and no enforceable terms of that Agreement have been disclosed. As a matter of fact, every person who might have been a party to the alleged “Handshake Agreement” has denied under oath that any conversations relating to Greenberg’s future interests in the merged Company took place.
My colleagues say, however, that a reasonable juror could conclude “that AEA had planned prior to the merger to give Loehmann’s management, including Green-berg, shares of stock in LH Investors.” Assuming for the sake of argument that this is so, such planning certainly does not constitute a handshake agreement. Moreover, the so-called “planning” would fall squarely within the Proxy Statement’s provision that it is “anticipated that following the consummation of the Merger, additional incentive arrangements may be established for Mr. Greenberg and other key employees which may consist of employment agreements, stock appreciation rights, performance related awards or other types of compensation.” A stronger statement than this concerning Green-berg’s lawful expectations might itself have constituted a violation of section 14(e). See Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937, 948 (2d Cir.1969); United States v. Matthews, supra, 181 F.2d at 45; Reiss v. Pan American World Airways, supra, 711 F.2d at 14.
In my opinion, this case epitomizes the fears expressed by Justice Rehnquist in Blue Chip Stamps, supra, 421 U.S. at 740, 95 S.Ct. at 1927, where he said that
*688in the field of federal securities laws governing disclosure of information even a complaint which by objective standards may have very little chance of success at trial has a settlement value to the plaintiff out of any proportion to its prospect of success at trial so long as he may prevent the suit from being resolved against him by dismissal or summary judgment.
I would dismiss the complaint in toto.

. Similar computations can be made with regard to the various corporate directors whose holdings have been described above.

. Pressly's October 22, 1980 letter is not to the contrary. In this letter, Pressly discussed the possible pros and cons of filing Anita Loeh-mann’s estate tax return (and opting for section 6166 payment) prior to the January 2, 1981 scheduled closing date for the merger. Because the IRS granted an extension of time for the filing until after the merger, the discussion became moot.