Lovenheim v. Iroquois Brands, Ltd.
618 F.Supp. 554 (D.D.C. 1985)
Lovenheim was a shareholder of
a corporation called Iroquois. Iroquois was a food distributor that was
importing foie gras. Lovenheim objected to foie gras on an animal rights
basis and wanted Iroquois to stop importing it.
Lovenheum submitted a shareholder
proposal asking the shareholders to
vote on a proposal to form a committee to study the ethical implications
of foie gras and consider whether Iroquois should stop importing it.
The Securities Exchange
Act of 1934 (Rule 14a-8) says that any shareholder who meets the
ownership requirements of the rule and who submits a proposal in a timely
fashion and in proper form can have the proposal included in the
company's proxy materials for a vote at the shareholder annual meeting.
The directors refused to add
Lovenheim's proposal to the proxy materials. Lovenheim sued.
The directors argued that 14a-8(c)(5) (now 14-8(i)(5)) provided an exception that said shareholder
proposals did not have to be included if they were not
"significantly related" to company business.
The directors noted that
foie gras sales were only 0.05% of Iroquois' net assets.
Lovenheim argued that even
if the foie gras was not 'economically significant,' it was still
'ethically and socially significant.'
The Trial Court found for
The Trial Court looked to
some statements made by the Security and Exchange Commission (SEC) saying
that, "the meaning of 'significantly related' is not limited to