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 Lovenheim.
    • 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 economic significance.”