Court Opinion

ID: 9476885
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:08:09.145042+00
Date Added: 2024-06-11T17:45:33.994276
License: Public Domain

MINER, Circuit Judge,
dissenting:
Since I cannot agree that there is any triable issue of fact as to whether TWA’s July 29, 1983 prospectus contained any untrue material fact or omitted to state any material fact, I respectfully dissent.
*738Although the spin-off of TWA always was a possibility, it was only one of a number of options available to TWC management for dealing with its problems in regard to TWA at the time the prospectus was issued. It seems clear that no decision of any kind was made until Goldman Sachs placed seven alternative choices before the TWC Board of Directors on September 6,1983. The Goldman Sachs report was referred to the Board’s Finance Committee for consideration, and, on September 27, 1983, the Committee recommended one of the seven options — development of a program to separate TWA from TWC. The directors did not adopt a formal plan of separation until October 23, 1983, almost three months after the issuance of the prospectus upon which plaintiff predicates his claim.
The prospectus gave specific notice to prospective shareholders of TWA that TWC might not provide the same financial support to TWA as it had provided in the past. The shaky financial condition of TWA was apparent from the financial information furnished to those interested in purchasing shares at the public offering, and the prospectus gave further notice that TWC might “sell or otherwise dispose of” its shares of TWA. The information provided was full and complete, potential investors were cautioned adequately as to the problems facing the company, and there was no false representation of any kind. A jury should not be afforded the opportunity to speculate otherwise.
I cannot agree that the statement in the prospectus giving notice of the possibility of withdrawal of financial support by TWC “did not give any fair indication that TWA’s status as a TWC subsidiary might be terminated.” The withdrawal of financial support could be seen to lead to a total collapse of TWA, let alone termination of its status as a subsidiary. Moreover, another provision in the prospectus warning that TWC might sell its shares clearly indicated the possibility of spin-off. The risky nature of an investment in TWA should have been apparent to all those who took the time to examine the prospectus. Nor do I agree that there is an issue whether stock purchasers can be charged with knowledge that Goldman Sachs was undertaking a study involving the “live” option of separation. It seems to me that there was no need to notify prospective purchasers of the study at all, because the study was in progress and had produced no options, “live” or otherwise, at the time of the public offering.
The mere fact that the Odyssey proxy battle centered on a proposal for “disaggregation” of TWC’s subsidiaries does not create a triable issue as to whether divestiture of TWA should have been included in the prospectus. The Odyssey proposal was defeated, partially on the strength of the pending Goldman Sachs review of all available “structural and financial” alternatives. Although Mr. Salizzoni, a senior vice-president and director of TWC, had concluded in June 1983 that separation was desirable, there is no indication that his opinion was imparted to any other board member or that any other board member held the same view. In point of fact, Odyssey’s defeat in the proxy contest represented a corporate rejection of the separation proposal. With regard to the Casati notes, I fail to see how the idle scribblings of a minor functionary of Goldman Sachs during a meeting with TWC representatives could possibly be indicative of material facts required to be revealed in a prospectus.
Resolution of the question of materiality requires an assessment of the “probability that the event will occur.” SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 849 (2d Cir.1968) (in banc), cert. denied, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969). There simply is no way in which the evi*739dence can be viewed so as to permit a finding that spin-off was any more probable at the time the prospectus was issued than any of the six other options eventually considered. That being so, and there being no genuine factual issue of any kind remaining in the case, summary judgment must be granted to the defendants. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, —, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202, 213 (1986). Where summary judgment is appropriate, it should be granted without hesitation. See Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11-12 (2d Cir.1986), cert. denied, — U.S.-, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). See generally New York State Bar Assoc. Comm, on Fed. Courts, Summary Judgment in the Second Circuit (Mar. 23, 1987) (unpublished manuscript). I respectfully suggest that it is appropriate here.