the fact that it had already stopped its proxy solicitation upon learning of the statute's passage. The Court, emphasizing the short notice on which it was being asked to decide significant and complicated constitutional questions, declined to grant preliminary injunctive relief on the ground that irreparable harm to plaintiff had not yet been demonstrated. The Court stated that if NUI did, in fact, lose the next day's election, it could return to Court to argue that an unconstitutional statute had contributed to its defeat.
On February 2, 1984, the annual NJR shareholders meeting took place. Plaintiff complains that at the meeting, NJR President Dolan improperly predicted victory for NJR's slate of directors by stating, "We have had a long history of stockholder loyalty and support, and it will be the same stockholder support that will cause us to win this proxy contest." The election went forward, with approximately 91% of all outstanding shares voted. The result was victory for NJR: roughly 63% of the votes cast were in favor of the incumbent NJR Board, while 37% of the votes cast were in favor of the slate of directors proposed by NUI. A little over two months later, NUI filed an amended complaint; the present motions followed.
A. The motions
Plaintiff's amended complaint contains five counts. Counts One and Two, brought pursuant to § 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(a), and Rule 14a-9(a), 17 C.F.R. § 240.14a-9(a) (1983), promulgated thereunder, recite the series of statements made and actions taken by NJR in the period prior to the election that purportedly resulted in the misleading of shareholders. Counts Three and Four allege that the statute passed on January 31, 1984, impermissibly constrains proxy solicitation in violation of the Supremacy Clause, the Commerce Clause and the first amendment to the Constitution. Count Five alleges alternatively that if the statute is constitutional, NJR's failure to comply with its terms is cause for invalidation of the election.
Defendant Kimmelman, joined by defendant NJR, has moved to dismiss on several jurisdictional theories. In addition, defendant NJR moves for judgment on the pleadings as to Counts One and Two of the amended complaint, the claims seeking compensatory and injunctive relief for alleged violations of Rule 14a-9(a). Plaintiff and defendants have cross-moved for partial summary judgment on Counts Three and Four, the claims seeking a new election due to the alleged unconstitutionality of § 48:2-51.1. Finally, defendant NJR moves to dismiss Count Five, the claim asking for a new election on the grounds that NJR did not itself comply with the dictates of § 48:2-51.1.
B. Defendant Kimmelman's motion to dismiss: case or controversy, standing, mootness, arising under jurisdiction
Defendant Kimmelman moves to dismiss Counts Three and Four, the only counts in which he is named, on a variety of jurisdictional grounds. These interrelated arguments share an analytical theme, which can be expressed in the following proposition: Since neither the Attorney General nor the BPU has ever threatened or taken action against NUI or its agents as a result of any events taking place during the proxy fight, NUI has no basis to bring suit on the statute. Thus defendant Kimmelman argues, "Plaintiff merely alleges that it was exposed to putatively illegal conduct by the existence of the statute; this allegation without apparent harm, is simply not enough to bring it within the confines of federal court jurisdiction." Br. of Def. Kimmelman at 10.
To unravel defendant Kimmelman's arguments, we must first recast the characterization of plaintiff's amended complaint. Defendant incorrectly contends that plaintiff alleges no "apparent harm" -- plaintiff most specifically claims that it lost an election due, in part, to the passage of an unconstitutional statute. Moreover, in addition to plaintiff's argument that the mere existence of the statute served to confuse shareholders as to the legality of NUI's proxy efforts, plaintiff alleges that it expressly halted its proxy solicitation upon the passage of the statute which, accordingly, undermined its election undertakings. We find that plaintiff has clearly presented a live case or controversy.
We correspondingly hold that plaintiff has standing to maintain this action. As recently restated in Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982):
At an irreducible minimum, Art. III requires the party who invokes the court's authority to "show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant," Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 60 L. Ed. 2d 66, 99 S. Ct. 1601 (1979), and that the injury "fairly can be traced to the challenged action" and "is likely to be redressed by a favorable decision," Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976).
In this case, plaintiff has not raised a mere academic question of a statute's constitutionality for the Court's advisory consideration -- rather, plaintiff has claimed that an unconstitutional statute both affected its behavior (in terms of proxy solicitation) and altered the course and result of an election in a manner detrimental to NUI. We hold that plaintiff need allege no more in order to satisfy traditional notions of standing.
While defendant Kimmelman would require that plaintiff prove with certainty that the statute caused NUI to lose the election in order to establish its standing to bring this action, we think such a requirement demands too much. Plaintiff need not prove liability as a prerequisite to bringing a lawsuit. Plaintiff has alleged sufficient injury attributable to defendants to allow this suit to continue.
Defendant Kimmelman further argues that Counts Three and Four do not "arise under" the Constitution or federal law because they merely assert a federal defense to a possible future state enforcement of the statute in question. While the general task of defining the contours of those cases "arising under" the Constitution, laws, or treaties of the United States has been aptly likened to the task of the daughters of Danaus, see Stone & Webster Engineering Corp. v. Ilsley, 690 F.2d 323, 328 n.4 (2d Cir. 1982), the Third Circuit has announced in a more specific context that a complaint seeking a declaratory judgment that federal law preempts state regulation does not state a cause of action arising under federal law when the federal issue is simply in the nature of a defense to a state law claim. See Exxon Corp. v. Hunt, 683 F.2d 69, 73 (3d Cir. 1982), cert. denied, 459 U.S. 1104, 74 L. Ed. 2d 952, 103 S. Ct. 727 (1983); but see Stone & Webster Engineering Corp., 690 F.2d at 327 (questioning "narrow" view of "arising under" jurisdiction advanced by courts including the Third Circuit). Thus, we do not quarrel with defendant Kimmelman's formulation of the law. Once more, however, we differ in our characterization of plaintiff's action. Were plaintiff simply seeking a declaration that § 48:2-51.1 is unconstitutional because it is preempted by federal proxy regulations, thereby attempting to stave off a prospective state enforcement proceeding, we might have cause to hesitate in retaining jurisdiction. But NUI's amended complaint reveals and seeks much more. Plaintiff attacks the statute under the Supremacy Clause, the Commerce Clause and the first amendment,
not merely as a "federal defense" to a feared future enforcement action, but rather as a means to redress perceived wrongs: the stifling of its proxy efforts and the loss of the shareholders election. In addition to declaratory relief, plaintiff seeks affirmative injunctive relief, both in the form of a new election and against future enforcement of the statute. We find this case to be factually distinct from Exxon Corp., and cases cited therein, and conclude that subject matter jurisdiction is properly grounded in 28 U.S.C. § 1331.
C. Defendant NJR's motion for judgment on the pleadings on Counts One and Two
Defendant NJR moves pursuant to Fed. R. Civ. P. 12(c) for judgment on the pleadings as to Counts One and Two, arguing that even if every factual allegation in the amended complaint is assumed to be true, NJR is entitled to judgment as a matter of law. Because matters outside the pleadings have been presented on this motion (e.g., statements made by counsel at the February 1, 1984 hearing), the motion will be converted to one for summary judgment. See 5 C. Wright & A. Miller, Federal Practice & Procedure, § 1369 (1984).
Rule 14a-9(a), 17 C.F.R. § 240.14a-9(a), promulgated by the Securities and Exchange Commission pursuant to authority granted by the Securities Exchange Act of 1934, 15 U.S.C. § 78n,
prohibits the use of false or misleading statements or omissions with respect to a registered security, stating:
No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting or other communication, written or oral, containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.