Goldberg v. Meridor

In this derivative action in the District Court for the Southern District of New York, David Goldberg, a stockholder of Universal Gas & Oil Company, Inc. (UGO), a Panama corporation having its principal place of business in New York City, sought to recover damages and to obtain other relief against UGO's controlling parent, Maritimecor, S.A., also a Panama corporation; Maritimecor's controlling parent, Maritime Fruit Carriers Company Ltd., an Israel corporation; a number of individuals who were directors of one or more of these companies; the investment firm of Hornblower & Weeks, Hemphill, Noyes, Inc.; and the accounting firm of Laventhal & Horwath, with respect to transactions which culminated in an agreement providing for UGO's issuance to Maritimecor of up to 4,200,000 shares of UGO stock and its assumption of all of Maritimecor's liabilities (including a debt of $7,000,000 owed to UGO) in consideration of the transfer of all of Maritimecor's assets (except 2,800,000 UGO shares already held by Maritimecor). It suffices at this point to say that the complaint, filed February 3, 1976, alleged that the contract was grossly unfair to UGO and violated both § 10(b) of the Securities Exchange Act and the SEC's Rule 10b-5 and common law fiduciary duties. By notice of motion filed June 2, 1976, the nominal defendant UGO moved for a stay pending plaintiff's posting security for expenses and costs under § 627 of the N.Y. Business Corporation Law. By order filed July 30, 1976, the district court ruled that following receipt of UGO's shareholder list, Goldberg was required either to meet the exemptions from posting security under § 627, post the security otherwise required in an amount to be determined, or "amend his complaint in this action to eliminate any and all claims based on or arising out of state common law or state statutory law."

Goldberg chose the latter course. The amended complaint, filed August 27, 1976, which was largely repetitive of the original complaint save for the omission of reference to state law claims, made the following principal allegations: The defendants engaged in "a conspiracy or plan" "to cause UGO to raise funds from the public by a public offering and then by various transactions hereafter set forth, including the transfer of UGO stock to Maritimecor for the latter's assets and liabilities, use the proceeds of the offering and the assets of UGO for the benefit of defendants Maritimecor and Maritime Fruit." In May 1972 defendants caused UGO to issue a prospectus offering for sale 11,000 units consisting of 363,000 shares of common stock and $11,000,000 worth of 8% Convertible debentures. The prospectus stated that all the proceeds of the offering would be used to finance the construction and purchase of three tankers for the transportation of liquified gas and that UGO's business would be the transportation of such gas. In 1974 defendants caused UGO to sell the contracts for two of the vessels, for a total price of $25,000,000 of which $14,000,000 was profit. During 1974 and up to August 1975, defendants caused UGO to make loans to Maritimecor so that $7,000,000 was owed by the latter. In August 1975 defendants caused UGO to enter into the agreement described in the first paragraph of this opinion, which was later carried out at least to the extent of the transfer of Maritimecor's assets and liabilities to UGO. The "agreement and transfer was fraudulent and unfair in that the assets of Maritimecor were overpriced and of insufficient value, the liabilities of Maritimecor either exceeded the value of its assets or were so great that the net asset value was insufficient consideration, the liabilities included a $7,000,000 debt to UGO from Maritimecor, and the purpose and intent of said transaction was to cause the dissipation of the substantial assets of UGO for the benefit of defendants, Maritimecor and Maritime Fruit. (T)he defendants . . . knew at the time, or had reasonable cause to know and were negligent in not ascertaining that the agreement and transfer were a fraud and unfair to UGO, and that the net value of the assets of Maritimecor was far less than the value of the shares of UGO to be issued to Maritimecor, or that Maritimecor's liabilities exceeded its assets." Then came paragraph 19, which alleged as follows:

The issuance of the aforesaid prospectus and the foregoing transactions constituted the employment of a device, scheme or artifice to defraud, the making of untrue statements of material fact and the omission to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and the engaging in acts, practices, and courses of conduct which operated as a fraud or deceit upon UGO as the seller of up to 4,200,000 shares of UGO's common stock for Maritimecor's liabilities and assets, and upon UGO's minority stockholders.

Defendants filed motions to dismiss the amended complaint for failure to state a claim under § 10(b) of the Securities Exchange Act and Rule 10b-5. In answer to defendants' argument "that deception and non-disclosure is a requirement for a 10b-5 case" which was disputed as a matter of law, plaintiff's counsel submitted an affidavit asserting that "insofar as plaintiff Goldberg, a minority shareholder is concerned, there has been no disclosure to him of the fraudulent nature of the transfer of Maritimecor assets and liabilities for stock of UGO". Counsel annexed two press releases dated August 1 and December 19, 1975, which described the agreement for and the consummation of the UGO-Maritimecor transaction. Counsel asserted that these press releases failed to disclose the facts noted in the margin1 or "the conflicts of interest of the principals".2 Counsel requested that he be given leave to replead should the court find any defect in the manner of pleading. In a further affidavit addressed to the question of damage, counsel averred that at the end of 1974 UGO had current assets of about $41 million and current liabilities of $2 million but that after the transfer Maritimecor's net current liabilities of $42.5 million caused UGO to wind up with a deficit of about.$3.6 million of current liabilities. He also alleged that as a result of the transaction UGO had defaulted in its obligations and its ships were being seized by creditors.

On February 11, 1977, Judge Lasker filed an opinion, 426 F.Supp. 1059, that granted the motions to dismiss. He thought the case was governed by Popkin v. Bishop, 464 F.2d 714 (2 Cir. 1972), rather than by our en banc decisions in Schoenbaum v. Firstbrook, 405 F.2d 215 (2 Cir. 1968), cert. denied, 395 U.S. 906, 89 S.Ct. 1747, 23 L.Ed.2d 219 (1969), and Drachman v. Harvey, 453 F.2d 722 (2 Cir. 1972), and held that Marshel v. AFW Fabric Corp., 533 F.2d 1277 (2 Cir.), vacated and remanded for consideration of mootness, 429 U.S. 881, 97 S.Ct. 228, 50 L.Ed.2d 162 (1976), and Green v. Santa Fe Industries, Inc., 533 F.2d 1283 (2 Cir.), which was pending before the Supreme Court on grant of certiorari, 429 U.S. 814, 97 S.Ct. 54, 50 L.Ed.2d 74 (1976), were limited to the situation of "going private". He denied leave to amend, as hereafter discussed. After the reversal of Green, 462 U.S. 430, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977), the judge filed a memorandum adding to the opinion fn. 4 to the effect that the Supreme Court's decision rendered his analysis of our decision moot but lent substantial support to the result.

Before proceeding further, we must deal with the district court's refusal to permit amendment of the complaint to include reference to the two press releases or otherwise to claim deception. The judge's explanation of this was as follows, 426 F.Supp. at 1064:

There have already been two complaints. . . . Both are prime examples of an attempt to fit the square peg of a state law claim into the round hole of a 10b-5 allegation. When the original complaint was dismissed for failure to post security or obtain the requisite support from other minority shareholders, Goldberg was made exquisitely aware of the need to limit this amended pleading to a federal claim, unless he could post security under state law, which he could not. Although he now contends that he could allege that (he) was deceived by the defendants with regard to the terms of the transaction with Maritimecor, he chose to frame the amended complaint in such a way as to exclude this element altogether. There is a limit to the time and energy a federal court should accord to marginal federal causes of action which are fully capable of being vindicated in state court. Presumably, if the element of deceit formed any significant aspect of Goldberg's claim, or was responsible for the alleged injury to UGO, Goldberg could have been expected to have plead such facts before the third go-round.

The third sentence conveys a rather misleading impression as to the court's earlier ruling. The court had offered Goldberg a choice between complying with New York Business Corporation Law § 627 or dropping any reference to state claims. When Goldberg chose to do the latter, nothing had yet been said by the defendants or the judge concerning the alleged inadequacy of his pleading of the federal claim. Goldberg had indeed been made "exquisitely aware" that he must drop his state claim if he wished to avoid compliance with § 627 of the New York Corporation Law, but not at all that he had failed to plead a federal claim through insufficient reference to deception. In every real sense when Goldberg requested further leave to amend he thus was seeking a second round, not a third. If Goldberg's counsel had been earlier made aware of the alleged deficiency in his complaint, it would have been easy for him to include in his first amended complaint reference to the press releases and the contrast between their complacent tone and the grim actualities asserted in counsel's affidavit on damage and also to include the fact, which had already surfaced in discovery, that one of UGO's directors, Martin Siem, claimed that he had been deceived or at least had not been fully informed with regard to the Maritimecor transaction. When counsel requested leave to replead, no answers had yet been filed. Contrast Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1085-1087 (2 Cir., 1977). The considerations explicated in Schoenbaum, supra, 405 F.2d at 218, as to the undesirability of granting summary judgment to defendants in a stockholder's derivative suit before discovery has been completed, see also 6 J. Moore, Federal Practice P 56.17(60), at 56-1065 (1976 ed.), dictate liberality in allowing such complaints to be amended to reflect facts already discovered. We are therefore constrained to hold that the refusal of leave to amend was an abuse of discretion and to treat the cases as if an amendment, at least in the two respects noted, had been allowed.

If the complaint were thus amended, we would deem it clear that, so far as this court's decisions are concerned, the case would be governed by Schoenbaum rather than by Popkin.3 The August 1 press release held out an inviting picture that

As a result of the transaction, UGO will replace Maritimecor as the principal operating subsidiary of MFC and, as such, will engage in a diversified line of shipping and shipping related activities including the sale of ships and ship-building contracts, the operation of reefers and tankers, and upon their delivery, product carriers and oil drilling rigs, and underwriting marine insurance.4

when allegedly the truth was that UGO had entered into a transaction that would ensure its doom. Popkin was specifically rested on its special facts. The plaintiff was taken to have conceded that the complaint did not allege misrepresentation or non-disclosure and that he relied solely on the unfairness of the merger terms, see 464 F.2d at 718 & n. 9, 720. The opinion expressly noted that "(u)nquestionably this court has recognized that the Rule 10b-5 reaches beyond traditional stock transactions and into the board rooms of corporations" and that "assertions by a defendant that the misconduct complained of 'really' amounts to 'just' corporate mismanagement will not cut off a plaintiff's federal remedy." 464 F.2d at 718. The court likewise quoted with approval, 464 F.2d at 719, Judge Hays' statement in dissenting from the panel opinion in Schoenbaum,

In order to establish fraud it is surely not necessary to show that the directors deceived themselves. It must be enough to show that they deceived the shareholders, the real owners of the property with which the directors were dealing. Deception of the shareholders (with the exception of the majority stockholder which was a party to the transactions) is established by showing that the directors withheld from them information that would have revealed the true value of the treasury stock.

and the statement in his opinion for the en banc court in that case,

Moreover, Aquitaine and the directors of Banff were guilty of deceiving the stockholders of Banff (other than Aquitaine). (Footnote omitted.)

The observation in Popkin, 464 F.2d at 719, that "our emphasis on improper self-dealing did not eliminate nondisclosure as a key issue in the Rule 10b-5 cases" followed a statement that when, as here, state law does not demand prior shareholder approval of a transaction, "it makes sense to concentrate on the impropriety of the conduct itself rather than on the 'failure to disclose' it because full and fair disclosure in a real sense will rarely occur. It will be equally rare in the legal sense once the view is taken as we did in Schoenbaum that under federal securities law disclosure to interested insiders does not prevent a valid claim that fraud was committed upon 'outsiders' (such as minority shareholders) whatever the requirements of state corporate law may be." Id. The ruling of Popkin was that in the opposite situation, where "merger transactions . . ., under state law, must be subjected to shareholder approval . . . if federal law ensures that shareholder approval is fairly sought and freely given, the principal federal interest is at an end," 464 F.2d at 720, see also id. n.17. Clearly that is not this case. Cf. Smallwood v. Pearl Brewing Co., 489 F.2d 579, 598 n.27 (5 Cir.), cert. denied, 419 U.S. 873, 95 S.Ct. 134, 42 L.Ed.2d 113 (1974).

The ruling that this case is attracted by Schoenbaum rather than by Popkin by no means ends our inquiry. Rather it brings us to the serious question whether Schoenbaum can be here applied consistently with the Supreme Court's decision in Santa Fe Industries, Inc. v. Green, supra. We think it can be and should.

Before we address ourselves directly to the Green opinion, it will be useful to review the development of the law on the application of § 10(b) and Rule 10b-5 to derivative actions. There can be no doubt that the Securities Exchange Act "protects corporations as well as individuals who are sellers of security" and that it is irrelevant that "the transaction is not conducted through a securities exchange or an organized over-the-counter market." Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 10-11, 92 S.Ct. 165, 168, 30 L.Ed.2d 128 (1971). The Court there quoted with approval the language in Hooper v. Mountain States Securities Corp., 282 F.2d 195, 203 (5 Cir. 1960), cert. denied, 365 U.S. 814, 81 S.Ct. 695, 5 L.Ed.2d 693 (1961),

Considering the purpose of this legislation, it would be unrealistic to say that a corporation having the capacity to acquire $700,000 worth of assets for its 700,000 shares of stock has suffered no loss if what it gave up was $700,000 but what it got was zero.

and made the oft-quoted pronouncement, 404 U.S. at 12, 92 S.Ct. at 168, paraphrasing its earlier decision as to construction of the anti-fraud provision of the Investment Advisers Act of 1940, see SEC v. Capital Gains Research Bureau, 375 U.S. 180, 195, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963), that

Section 10(b) must be read flexibly, not technically and restrictively.

The problem with the application of § 10(b) and Rule 10b-5 to derivative actions has lain in the degree to which the knowledge of officers and directors must be attributed to the corporation, thereby negating the element of deception. Our first important encounter with this problem was in Ruckle v. Roto American Corp., 339 F.2d 24 (2 Cir. 1964). We rejected the attribution, saying 339 F.2d at 29:

We come then to the question whether it is possible within the meaning of Section 10(b) and Rule 10B-5 for a corporation to be defrauded by a majority of its directors. We note at the outset that in other contexts, such as embezzlement and conflict of interest, a majority or even the entire board of directors may be held to have defrauded their corporation. When it is practical as well as just to do so, courts have experienced no difficulty in rejecting such cliches as the directors constitute the corporation and a corporation, like any other person, cannot defraud itself.

If, in this case, the board defrauded the corporation into issuing shares either to its members or others, we can think of no reason to say that redress under Rule 10B-5 is precluded, though it would have been available had anyone else committed the fraud. There can be no more effective way to emasculate the policies of the federal securities laws than to deny relief solely because a fraud was committed by a director rather than by an outsider. Denial of relief on this basis would surely undercut the congressional determination to prevent the public distribution of worthless securities.

Although it was there claimed that certain directors withheld information from others, the above quoted passage indicated in dictum that not only the majority but even the entire board, fully informed, could be held to have defrauded the corporation if they all had an interest in a transaction adverse to it. Less than a month later, however, another panel declined to follow the Ruckle dictum. O'Neill v. Maytag, 339 F.2d 764, 767 (2 Cir. 1964).

The future, both in this circuit and in others, lay with the Ruckle dictum rather than with O'Neill. Dasho v. Susquehanna Corp., 380 F.2d 262, 270 (7 Cir.) ("concurring" opinion), cert. denied, 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 470 (1967), refused to "differentiate between situations where the directors were unanimous in wrongdoing and those where less than all were involved." In Pappas v. Moss, 393 F.2d 865, 869 (3 Cir. 1968), the court said in rejecting defendants' claim that "the corporation was not deceived" in issuing stock to insiders and others at a low price because "all of its agents (directors) here were aware of the true facts":

if a "deception" is required in the present context, it is fairly found by viewing this fraud as though the "independent" stockholders were standing in the place of the defrauded corporate entity at the time the original resolution authorizing the stock sales was passed. . . . Certainly the deception of the independent stockholders is no less real because, "formalistically", the corporate entity was the victim of the fraud.

Dealing with the argument that there must be either affirmative misrepresentation to stockholders or the misleading of a minority of the directors, Judge Seitz wrote, 393 F.2d at 869-70:

We think these references as to their position indicate that their construction of Rule 10b-5 is untenable. It exalts form over substance. Indeed, it seems to suggest that there is an inverse relationship between the application of the Rule and the number of directors participating in a fraud on its corporation. Finally, it restricts the application of the Rule in a way which is at odds with its basic purpose. See McClure v. Borne Chem. Co., 292 F.2d 824 (3rd Cir.), cert. denied, 368 U.S. 939, 82 S.Ct. 382, 7 L.Ed.2d 339 (1961).5

We cited Pappas with approval in the en banc opinion in Schoenbaum, 405 F.2d at 220,

Moreover, Aquitaine and the directors of Banff were guilty of deceiving the stockholders of Banff (other than Aquitaine). See Pappas v. Moss, 393 F.2d 865 (3d Cir. 1968).

thereby effectively overruling any requirement of O'Neill that there must be one virtuous or ignorant lamb among the directors in order for liability to arise under § 10(b) or Rule 10b-5 on a deception theory as to securities transactions with a controlling stockholder.6 See Jennings & Marsh, Securities Regulation 998-99 (1977). See also SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 865 n.1 (2 Cir. 1968) (Friendly, J., concurring), cert. denied, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969).

We followed Schoenbaum in Drachman v. Harvey, 453 F.2d 722, 736 (2 Cir. 1972) (en banc ), although in that case not all the directors were parties to the fraud, and in Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374 (2 Cir. 1974), cert. denied, 421 U.S. 976, 95 S.Ct. 1976, 44 L.Ed.2d 467 (1975). Schoenbaum has been generally applauded by commentators, even though it may sometimes have been read to mean more than it does or than is needed to call for a reversal here. See, e.g., Bloomenthal, From Birnbaum to Schoenbaum: The Exchange Act and Self-Aggrandizement, 15 N.Y.L.F. 332 (1969) (making the perceptive suggestion that "it is inconceivable that a court which in Texas Gulf Sulphur (401 F.2d 833 (2 Cir. 1968), cert. denied, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969)) emphasized the disclosure purposes of the Exchange Act could have reached any different result in Schoenbaum "); Folk, Corporation Law Developments 1969, 56 Va.L.Rev. 755, 805-12 (1970); Comment, Schoenbaum v. Firstbrook: The "New Fraud" Expands Federal Corporation Law, 55 Va.L.Rev. 1103 (1969); Note, The Controlling Influence Standard in Rule 10b-5 Corporate Mismanagement Cases, 86 Harv.L.Rev. 1007 (1973); Note, Schlick v. Penn-Dixie Cement Corp.: Fraudulent Mismanagement Independent of Misrepresentation or Nondisclosure Violates Rule 10b-5, 63 Calif.L.Rev. 563 (1975); 41 Ford.L.Rev. 742 (1973); see also Bahlman, Rule 10b-5: The Case for its Full Acceptance as Federal Corporation Law, 37 U.Cinn.L.Rev. 727, 735-36 (1968) (criticizing the panel opinion in Schoenbaum ); but see Note, Civil Liability Under Section 10B and Rule 10B-5: A Suggestion for Replacing the Doctrine of Privity, 74 Yale L.J. 658, 681-82 (1965); Comment, 47 N.Y.U.L.Rev. 1279 (1972). It likewise is viewed with approval indeed seemingly would be adopted by §§ 1303 and 1402(c) of the proposed ALI Federal Securities Code, Tent. Draft No. 2 (March 1973) and revised comments in Reporter's Revision of Text of Tentative Drafts Nos. 1-3, pp. 104-06 (Oct. 1, 1974), see also §§ 234D(c) and 1301. It has also found favor in other circuits. A notable instance is Shell v. Hensley, 430 F.2d 819, 827 (5 Cir. 1970), where the court in a derivative suit rejected a claim that no "causal deceit" existed when the corporation's board knew all the facts, saying:

When the other party to the securities transaction controls the judgment of all the corporation's board members or conspires with them or the one controlling them to profit mutually at the expense of the corporation, the corporation is no less disabled from availing itself of an informed judgment than if the outsider had simply lied to the board. In both situations, the determination of the corporation's choice of action in the transaction in question is not made as a reasonable man would make it if possessed of the material information known to the other party to the transaction.7

See also Rekant v. Desser, 425 F.2d 872, 879-82 (5 Cir. 1970); Jannes v. Microwave Communications, Inc., 461 F.2d 525, 529 (7 Cir. 1972); Bailey v. Meister Brau, Inc., 535 F.2d 982, 993 (7 Cir. 1976); 1 Bromberg, Securities Law: Fraud §§ 4.7(544)-(545) (collecting cases and noting, at pp. 84.51-84.52 that "(m)ost courts have now modified their views of deception to accommodate . . . (1) informational deception of a non-decision-maker who has a role or economic interest (minority director, shareholder, or creditor) or (2) non-informational deception measured by economic injury (to the company of other parties with real economic interest) equivalent to that resulting from informational deception of decision makers").

Schoenbaum, then, can rest solidly on the now widely recognized ground that there is deception of the corporation (in effect, of its minority shareholders) when the corporation is influenced by its controlling shareholder to engage in a transaction adverse to the corporation's interests (in effect, the minority shareholders' interests) and there is nondisclosure or misleading disclosures as to the material facts of the transaction. Assuming that, in light of the decision in Green, the existence of "controlling influence" and "wholly inadequate consideration" an aspect of the Schoenbaum decision that perhaps attracted more attention, see 405 F.2d at 219-20 can no longer alone form the basis for Rule 10b-5 liability, we do not read Green as ruling that no action lies under Rule 10b-5 when a controlling corporation causes a partly owned subsidiary to sell its securities to the parent in a fraudulent transaction and fails to make a disclosure or, as can be alleged here, makes a misleading disclosure. The Supreme Court noted in Green that the court of appeals "did not disturb the District Court's conclusion that the complaint did not allege a material misrepresentation or nondisclosure with respect to the value of the stock" of Kirby; the Court's quarrel was with this court's holding that "neither misrepresentation nor nondisclosure was a necessary element of a Rule 10b-5 action", 430 U.S. at 470, 97 S.Ct. at 1299, and that a breach of fiduciary duty would alone suffice, see fn. 8. It was because "the complaint failed to allege a material misrepresentation or material failure to disclose" that the Court found "inapposite the cases (including Schoenbaum ) relied upon by respondents and the court below, in which the breaches of fiduciary duty held violative of Rule 10b-5 included some element of deception", 430 U.S. at 475, 97 S.Ct. at 1301, see fn. 15. While appellant is wrong in saying that the Court "approved" these cases, there is no indication that the Court would have casually overturned such an impressive and unanimous body of decisions by courts of appeals. To the contrary, the Court used rather benign language about them, saying that they "forcefully reflect the principle that '(s)ection 10(b) must be read flexibly not restrictively' and that the statute provides a cause of action for any plaintiff who 'suffer(s) an injury as a result of deceptive practices touching its sale (or purchase) of securities . . . ,' " citing the Superintendent of Insurance case, supra, 404 U.S. at 12-13, 92 S.Ct. 165. Mr. Justice White simply distinguished these cases as not supporting the position we had taken in Green, namely, "that a breach of fiduciary duty by majority stockholders, without any deception, misrepresentation, or nondisclosure, violates the statute and the Rule." (Emphasis supplied.)

Here the complaint alleged "deceit . . . upon UGO's minority shareholders" and, if amendment had been allowed as it should have been, would have alleged misrepresentation as to the UGO-Maritimecor transaction at least in the sense of failure to state material facts "necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading," Rule 10b-5(b).8 The nub of the matter is that the conduct attacked in Green did not violate the " 'fundamental purpose' of the Act as implementing a 'philosophy of full disclosure' ", 430 U.S. at 478, 97 S.Ct. at 1303; the conduct here attacked does.

Defendants contend that even if all this is true, the failure to make a public disclosure or even the making of a misleading disclosure would have no effect, since no action by stockholders to approve the UGO-Maritimecor transaction was required. Along the same lines our brother Meskill invoking the opinion in Green, 430 U.S. at 474 n.14, 97 S.Ct. at 1301 n.14, contends that the defendants' acts were not material since plaintiff has failed adequately to allege what would have been done had he known the truth.

In TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 2133, 48 L.Ed.2d 757 (1976), a case arising under Rule 14a-9, the Court laid down the standard of materiality as "a showing of a substantial likelihood that, under all the circumstances, th