Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

COLLINS v. SIGNETICS CORP.

October 14, 1977

DONALD M. COLLINS and JOHN R. CILLAG
v.
SIGNETICS CORPORATION and CORNING GLASS WORKS



The opinion of the court was delivered by: MCGLYNN

 McGLYNN, J.

 This law suit is a class action seeking damages based on alleged violations of numerous provisions of both the Securities Act of 1933 ('33 Act) and of the Securities Exchange Act of 1934 (Exchange Act) and the rules promulgated under the Exchange Act. Presently before the court are the defendants' motions for summary judgment on the first and second counts of plaintiff's complaint and their motion for redefinition of the class. Also before the court at this time is a motion of the plaintiff to compel discovery and a request renewed in one of plaintiff's memoranda to expand the class.

 The factual allegations of the complaint can be briefly summarized as follows. Defendant Signetics Corporation made a public offering of 1,300,000 shares of its common stock pursuant to a registration statement which became effective on November 1, 1973. Defendant Corning Glass Works owned 92% of Signetics Corporation prior to the offering and 70% of that stock subsequent to the offering. At some time before the public offering Corning determined that it would be best to withdraw its investment in Signetics by selling all of its interests therein. Prior to, during, and after the offering Corning Glass Works is alleged to have actively pursued its goal of selling its interest in Signetics Corporation. This information was not disclosed to the public in the offering's registration statement or prospectus even though Signetics Corporation was aware of Corning's intentions and in fact Signetics' personnel assisted Corning in the search to find a buyer.

 One year and one half after the public offering, Corning accomplished its goal of divesting itself of Signetics stock. This was done by arranging a merger of Signetics into a subsidiary of United States Philips Corporation whereby existing shareholders of Signetics would be required to surrender their stock for $8.00 per share in cash. The proxy statement mailed in conjunction with this merger is the subject of the third count of plaintiffs' complaint which is not presently being challenged by defendants' motion for summary judgment.

 The record in this case is somewhat confused because plaintiff has apparently expanded its asserted bases of recovery in response to the defendants' motions. Plaintiffs' present theory of the case is most clearly and succinctly set out in a letter to the court dated September 15, 1977 containing factual allegations and to which was attached a "Statement of Legal Theories". For the purposes of these motions, I will treat the allegations and theories presented in this letter and statement as being part of the complaint. I will, however, require that the plaintiffs formally amend their complaint to accurately present the various causes of action.

 For the purpose of further clarification, I will summarize what I view to be the current substance of the complaint. The first count is being pursued by plaintiff Cillag for himself and on behalf of the certified class of individuals who purchased Signetics stock on November 1, 1973 for $17.00 per share pursuant to the public offering by Signetics. It asserts that the failure of the defendants to reveal to the public that Corning Glass Works intended to sell its interest in Signetics and was actively seeking a buyer violated Sections 11(a), 12(2), 15 and 17(a) of the '33 Act and Sections 10(b), 18(a) and 20(a) and the rules and regulations of the Exchange Act. The second count of the complaint is based on the same failure to reveal Corning's intentions with regard to its continued ownership of Signetics stock. The difference between the two counts is in the plaintiffs. Plaintiff Collins, who purchased his stock on the over-the-counter market on February 1, 1974 for $13.75 per share, seeks damages alleging only violations of the Exchange Act. Plaintiff Cillag also seeks damages under this count, but his claim under this count is identical to his claim under the first count and I will therefore disregard it. Cillag also requests to represent an additional class of defendants under Count II to consist of individuals who purchased stock after the date of the public issuance and continued to hold their stock until the date of the merger.

 As to the first count of the complaint, I find that a genuine issue of material fact does exist which precludes the court from granting defendants' motion for summary judgment. In order to simplify future proceedings, however, I believe it is appropriate at this time for me to declare that I find that the complaint does not state a cause of action under either Section 12(2) or Section 17 (a)(2) of the '33 Act and to discuss my reasons for that determination.

 The plaintiffs did not purchase their shares from either of the defendants, but rather purchased them, either directly or indirectly, from the underwriters of the offering who are not parties to this action. There is no allegation that either defendant controlled any of the underwriters or that the underwriters acted as agents for the defendants. The relevant text of Section 12 is:

 
Any person who --
 
. . .
 
(2) offers or sells a security . . . by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known of such untruth or omission,
 
shall be liable to the person purchasing such security ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.