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On December 12, 1991, NYCERS, a sizeable holder of Dole stock, notified Dole of its intention to present a proposal relating to national health care policy at the company's 1992 annual meeting set to occur on June 4, 1992. NYCERS requested Dole to include, pursuant to SEC rules, the proposal in the proxy materials to be sent to shareholders in preparation for the meeting. The SEC has established rules governing, inter alia, the inclusion of shareholder proposals in a company's proxy statement. In particular, SEC Rule 14a-8, 17 C.F.R. § 240.14a-8, requires a company receiving notice of a shareholder's "intention to present a proposal for action at a forthcoming meeting" to "set forth the proposal in its proxy statement. . . ." 17 C.F.R. § 240.14a-8(a). The shareholder must meet certain eligibility requirements, id. § 240.14a-8(a)(1), and the company may omit proposals under certain circumstances enumerated in the Rule, id. § 240.14a-8(c).

NYCERS' proposal consisted of a resolution by the shareholders

request[ing] the Board of Directors to establish a committee of the Board consisting of outside and independent directors for the purpose of evaluating the impact of [several major] health care reform proposals being considered by national policy makers on the company and [its] competitive standing in domestic and international markets. . . .

Dole management, believing the proposal to be an improper subject for shareholder consideration, wrote to the SEC to seek a ruling on the propriety of omitting the proposal from the proxy materials. On February 10, 1992, the Chief Counsel's Office issued a no-action letter stating that it would not recommend enforcement action against Dole if the company decided to exclude NYCERS' proposal from the proxy materials. The no-action letter concluded that the proposal was "directed at involving [Dole] in the political or legislative process." According to the Chief Counsel's Office, the subject matter of the proposal involved Dole's ordinary business operations, and therefore Dole was entitled to omit the proposal from the proxy statement 1433*1433 under Rule 14a-8(c)(7), 17 C.F.R. § 240.14a-8(c)(7).

The SEC denied NYCERS' request for further review, prompting NYCERS to institute the instant action on April 9, 1992. The complaint sought preliminary and permanent injunctive relief to force Dole to include NYCERS' proposal in the proxy statement. After conducting a hearing on the matter, the district court concluded that the proposal was not excludable under any of Rule 14a-8(c)'s provisions. The district court granted the injunction and ordered Dole to include the proposal in its proxy materials.

On April 29, Dole sought from this Court an expedited appeal, which was granted in light of the impending shareholder meeting. Dole did not, however, request either the district court or this Court to stay the injunction pending appeal. Thus, rather than risk contempt, Dole complied with the district court's order by preparing and mailing its proxy statement containing the NYCERS proposal. The materials also included management's recommendation to vote against the proposal.

We heard the expedited appeal on May 27 and, with Judge Pollack dissenting, issued a summary order on May 28 finding the matter moot and stating that a full opinion would follow. The annual meeting occurred on schedule and the NYCERS proposal was defeated, garnering just over six percent of the total votes cast. This fact permits NYCERS to resubmit the proposal next year. See 17 C.F.R. § 240.14a-8(c)(12)(i) (proposal dealing with substantially similar subject matter as prior proposal may be omitted by company if prior proposal received less than three percent of total votes cast).


969 F.2d 1430 (1992)



DOLE FOOD COMPANY, INC., Defendant-Appellant.

No. 1787, Docket 92-7478. United States Court of Appeals, Second Circuit.

Argued May 27, 1992.

Decided July 22, 1992.

New York Law School location: File # 1477, Box #130