Court Opinion

ID: 9427671
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:21:33.247719+00
Date Added: 2024-06-11T17:23:08.953709
License: Public Domain

Mr. Justice White,
with whom Mr. Justice Brennan and Mr. Justice Marshall join, dissenting.
When Great Western proposed in Dallas, Tex., to make a cash tender offer for up to two million shares of Sunshine, officials in Idaho, Maryland, and New York indicated that the offer would be subject to the corporate takeover statute of each State. Having complied with the provisions of the Williams Act governing tender offers and believing that extraterritorial application of the additional requirements of the state statutes was pre-empted by and in conflict with the federal statute, Great Western brought suit in Federal District Court for the Northern District of Texas for declaratory and injunc-tive relief against enforcement of the state statutes. Because I conclude that venue in that District and personal jurisdiction over the defendant state officials were authorized by § 27 of the Securities Exchange Act of 1934, 15 U. S. C. § 78aa, I disagree with the Court’s disposition of this appeal and would reach the merits of Great Western’s contention that Idaho’s statute is pre-empted by the Williams Act.
I
The Williams Act was enacted in the form of a set of amendments to the Securities Exchange Act, which, like the *188Securities Act of 1933, contains its own venue provision. Section 27 prescribes two separate requirements — one relating to the attributes of the judicial district in which suit is brought, and the second relating to the nature of the suit. I consider these in turn.
A
Comparison of the terms of § 27 with the terms of the general federal venue statute, 28 U. S. C. § 1391 (b), shows the relative ease with which venue may be obtained in suits brought under the Securities Exchange Act. Whereas under § 1391 (b) venue is proper only in a judicial district that is either where (a) the defendant(s) reside, or (b) “the claim arose,” under § 27 suit may be brought in any district that is either where (a) the defendant may be found, is an inhabitant, or transacts business, or (b) “any act or transaction constituting the violation occurred.” As the majority notes, some courts have been reluctant to embrace the view that a claim may arise in more than one district for purposes of § 1391 (b). On the other hand, it has been widely accepted that there may be more than one district where acts constituting a violation may occur for purposes of § 27, and indeed that the act on which venue is predicated need be only a “material” part of an alleged violation of the Securities Exchange Act.1 “Without question, the intent of the venue . . . provisions of the securities laws is to grant potential plaintiffs liberal choice in their selection of a forum.” Ritter v. Zuspan, 451 F. Supp. 926, 928 (ED Mich. 1978). 'Given the underlying policy of § 27 to confer venue in a wide variety of districts in order to ease the task of enforcement of federal securities law, it would be anomalous indeed if venue were not available in the North*189ern District of Texas in this case. Faced with the alternative left to it by the majority — of instituting separate suits in each State attempting to apply its extraterritorial takeover law, or perhaps waiting and defending separate enforcement actions brought by each State — Great Western might well choose to forgo its tender offer altogether, a result not in keeping with the purposes of the Williams Act or § 27. Although in this case only three States indicated an intention to assert jurisdiction over the tender offer, and only Idaho ultimately attempted to enforce its statute, it is important to note that there are analogous statutes in a total of 36 States.2
With the foregoing in mind, even if the claim in this case did not arise in Dallas within the meaning of § 1391 (b), Dallas is a place where an act constituting an alleged violation of the Williams Act occurred, because it is where appellants sought to apply Idaho’s statute. Of course, for purposes of determining whether venue requirements were met, the substantive allegations of Great Western’s claim — that is, that Idaho’s statute conflicts with the Williams Act — must be accepted as true. The specific act alleged to violate a duty created by the Williams Act is the application of the Idaho statute to the Dallas tender offer. The gist of the act complained of being extraterritorial application of Idaho’s statute, this act obviously occurs not only in Idaho but also in the district where the extraterritorial tender offer is made.
B
Having determined that the Northern District of Texas has the required relationship to the claim in this case, venue in that District was proper under § 27 as long as the second general requirement of the provision was met; that is, if it may be said that Great Western’s suit was “to enforce any liability *190or duty created by this chapter , or to enjoin any violation of such chapter . . . .” In the majority’s view, the term “duty created by this chapter” means only those duties “explicitly” prescribed by a provision of the Williams Act. Ante, at 181-182. The majority would further restrict the term to refer only to duties imposed on “participants in the securities market,” ante, at 181, which presumably does not include officials seeking to enforce state corporate takeover laws.
But § 27 does not provide that the duty must be “explicitly” stated in a provision of the Williams Act or that only “participants in the securities market” have duties under the Act. Rather, it broadly encompasses all suits to enforce “any . . . duty created by” the Act. Here respondent sought an injunction against enforcement of Idaho’s statute as applied to its interstate tender offer, on the ground that such enforcement is pre-empted by and in conflict with the Williams Act. The only question, then, is whether the Williams Act imposes on state officials, expressly or impliedly, the duty not to enact or enforce legislation inconsistent therewith. In my view, the answer to this question must be in the affirmative. The Supremacy Clause of the Constitution provides that if state law conflicts with federal law, federal law prevails. Given this command, the very enactment and existence of the Williams Act pre-empts and invalidates all conflicting state efforts to regulate cash tender offers. Viewed from the perspective of potential offerors, the existence of the Act creates the right not to be subject to conflicting state regulation. Viewed from the perspective of state officials, the existence of the Act creates a duty not to undertake conflicting regulation efforts.
That the duty alleged to have been violated in this case would not exist in the absence of the Supremacy Clause does not make the duty any less a creation of the Williams Act. “[A] 11 federal actions to enjoin a state enactment rest ultimately on the Supremacy Clause,” Swift & Co. v. Wickham, 382 U. S. 111, 126 (1965), whether the substantive federal *191law relied upon be a statute — as in Swift3 and as in this case— or another provision of the Constitution, such as the Commerce Clause. Thus, the command of the Supremacy-Clause is necessary to the authoritative ¿ssertion of any federal right or counterpart duty, and imposes the general duty not to act in a manner inconsistent with federal law. However, the specific duty alleged to have been violated in this case — not to enforce extraterritorial state takeover laws such as Idaho’s — is imposed by the existence of pre-emptive federal regulation.4 Just as various provisions of the Williams Act create certain duties on the part of participants in the securities market, the Williams Act as a whole creates the duty on the part of state officials not to regulate in a manner inconsistent with that Act.
II
Once it is determined that § 27 contemplates venue for Great Western’s claim in the Northern District of Texas, the federal court in that District also had personal jurisdiction over the Idaho defendants, they having been served in a “district . . . wher[e] . . . found,” there being no objection to the *192manner of service of process, and there being no restrictions imposed by the Constitution on the exercise of jurisdiction by the United States over its residents, see Fitzsimmons v. Barton, 589 F. 2d 330 (CA7 1979).5

 See Puma v. Marriott, 294 F. Supp. 1116, 1120 (Del. 1969); Prettner v. Aston, 339 F. Supp. 273 (Del. 1972); Mayer v. Development Corp. of America, 396 F. Supp. 917, 928-930 (Del. 1975). See also Black & Co. v. Nova-Tech, Inc., 333 F. Supp. 468 (Ore. 1971).

 See Note, Securities Law and the Constitution: State Tender Offer Statutes Reconsidered, 88 Yale L. J. 510, 514-515, n. 29 (1979).

 A claim of pre-emption is based on an alleged violation of a federal statute. In Swift, appellants — poultry packing companies — alleged that “enforcement [of a New York statute’s labeling requirements] would violate the . . . overriding requirements of [a federal labeling statute].” 382 U. S., at 114. Similarly, state welfare practices may be challenged on the ground that they conflict with the Social Security Act, see, e. g., Edelman v. Jordan, 415 U. S. 651, 675 (1974); Hagans v. Lavine, 415 U. S. 528 (1974); King v. Smith, 392 U. S. 309, 312 n. 3 (1968).

 The Court of Appeals concluded that appellants’ duty was created by § 28 (a) of the Securities Exchange Act of 1934, 15 U. S. C. § 78bb (a). See Great Western United Corp. v. Kidwell, 577 F. 2d 1256, 1271-1272 (CA5 1978). However, the duty not to act in a manner inconsistent with the Williams Act would exist even without § 28 (a). Of course, that provision may be relevant in considering the merits of Great Western’s claim of pre-emption, in that it may shed light on the nature and scope of state regulation of tender offers that would not be in conflict with the Williams Act.

 Appellants also raise the issue whether a tender offeror has a cause of action “under the Williams Act amendments to the Securities Exchange Act of 1934 to challenge the constitutionality of state corporate takeover laws.” Juris. Statement 4. In Piper v. Chris-Craft Industries, Inc., 430 U. S. 1, 47 n. 33 (1977), we left open the question “whether as a general proposition a suit in equity for injunctive relief . . . would lie in favor of a tender offeror” under an antifraud provision of the Williams Act. See also Touche Boss & Co. v. Bedington, 442 U. S. 560, 577 (1979), rejecting the notion that §27 of the Securities Exchange Act of 1934 creates any implied cause of action. However, the complaint alleged a cause of action not only under the Williams Act and § 27, but also under 42 U. S. C. § 1983, see App. 3-4, 13, which applies in suits against state officials. Because the pre-emption claim alleges deprivation of a right secured by a federal statute, see Part I-B of text, supra, it states a cause of action under the “and laws” provision of § 1983.