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March 11 — The Third Circuit will hear oral arguments April 8 in Wal-Mart's appeal of a district court ruling that the megastore couldn't omit a shareholder proposal related to its gun sales under the SEC's the “ordinary business” proxy exclusion rule.
According to a March 11 notice to counsel, each side will have 15 minutes to argue their case during the 11 a.m. hearing in the Albert Branson Maris Courtroom in Philadelphia.
Wal-Mart has argued that the U.S. District Court for the District of Delaware's December 2014 decision must be reversed because it contravenes decades of SEC guidance under Rule 14a-8(i)(7).
In briefs filed with the U.S. Court of Appeals for the Third Circuit, the megastore has argued that pursuant to Third Circuit precedent, the Securities and Exchange Commission's interpretation of 1934 Securities Exchange Act Rule 14a-8(i)(7) must be given “controlling weight.”
The SEC staff had not objected to Wal-Mart's omission of the resolution filed by Trinity Wall Street, which sought to provide more oversight and reporting regarding the guns sold at the chain's stores. However, the Delaware district court reasoned that because the resolution sought board oversight of the development of corporate policy, it did not impact the day-to-day implementation of the policy and thus did not dictate what products Wal-Mart could sell.
Conversely, Trinity and supporting amici—including 38 corporate and securities law professors, and parents of children who were killed in the December 2012 mass shooting at Sandy Hook Elementary School in Connecticut—argued in recent filings that the district court's ruling should be affirmed, asserting that Trinity's proposal did not try to dictate to Wal-Mart's board how the store should be operated or what products the company should sell.
Other commenters have observed that if the district court is upheld, that may result in increased litigation and costs for companies, as well as changes in their proxy strategies.
The parties recently sparred about whether recent remarks by SEC Commissioner Daniel Gallagher support Wal-Mart's position.
Wal-Mart's reply brief in support of its appeal is available at http://www.bloomberglaw.com/public/document/Trinity_Wall_Street_v_WalMart_Stores_Inc_Docket_No_1404764_3d_Cir/8.
Trinity's response brief is available at http://www.bloomberglaw.com/public/document/Trinity_Wall_Street_v_WalMart_Stores_Inc_Docket_No_1404764_3d_Cir/7.
Wal-Mart's opening brief in support of its appeal is available at http://op.bna.com/car.nsf/r?Open=mgre-9stlv5.
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