The opinion of the court was delivered by: KELLY
JAMES McGIRR KELLY, District Judge.
This is a civil action commenced by a minority shareholder against a corporation and its directors, several of whom are also majority shareholders. Plaintiff's Amended Complaint sets forth claims based upon common law fraud, securities fraud, misrepresentation, and breach of duty. These claims arise from several securities transactions involving Custom-Bilt's corporate predecessor occurring over the past 15 years, which include: (1) the offering in 1969 and 1970 of shares of the defendant Custom-Bilt Machinery, Inc.; (2) the establishment in 1978 by Custom-Bilt of an Employee Stock Option Plan; (3) the repurchase in 1980 by Custom-Bilt of certain of the shares issued in the offerings of 1969 and 1970; and (4) the contribution to and valuation of Custom-Bilt shares by the Employee Stock Option Plan. In substance, plaintiff alleges that the defendants have engaged in fraudulent conduct regarding the issuance, repurchase and valuation of these shares. Plaintiff brings this action as the real party in interest, as defined by Rule 17(a) of the Federal Rules of Civil Procedure, as the beneficial owner of some 10,000 shares of Custom-Bilt Class A common stock registered in the name of Creative Aids, Inc. At the time of the events complained of, plaintiff was president of Creative Aids, Inc.
Presently before the Court are plaintiff's Motion to Permit Dynamism USA to Appear as Amicus Curiae and plaintiff's Motion to Strike Affirmative Defenses and to Dismiss Defendants' Counterclaims.
Plaintiff alleges in his Complaint the following facts giving rise to his cause of action:
Custom-Bilt Machinery, Inc. ("Custom-Bilt #2") now designs and manufactures specialized equipment for the graphic arts industry and composes and prints advertising. It is the successor to Advance Enterprises, Inc. ("Advance"). Advance was created by merger of Custom-Bilt Machinery, Inc. ("Custom-Bilt #1") and Apollo Ad Service, Inc. ("Apollo") as of June 30, 1969, and continued such corporate status for some fourteen (14) years until June, 1983, when Advance was succeeded by Custom-Bilt #2, with Apollo becoming a subsidiary company.
In October, 1969, following the merger of Custom-Bilt # 1 and Apollo into Advance, Advance offered to sell 50,000 shares of Class A common stock, without underwriters, to a limited group of outside investors in a private offering at a price of $6.00 per share. On May 6, 1970, and June 28, 1971, respectively, Creative Aids, Inc. ("Creative Aids") subscribed to purchase 3,000 and 10,000 shares of Advance Class A common stock at the price of $6.00 per share. Creative Aids was one of at least fourteen (14) outside investors who subscribed to Advance's private offering. The total number of shares sold pursuant to the private offering was reported to be 52,900 shares, at a total purchase price of $317,400.00.
Effective January 1, 1978, Advance established an Employee Stock Ownership Plan ("ESOP"), as defined in section 4975(e)(7) of the Internal Revenue Code, to invest in Advance's Class A common stock for the benefit of its employees. Under the ESOP, the amount of Advance's annual contribution to the plan was determined, subject to IRS limitations, by Advance's Board of Directors, and Advance's contribution to the plan was allocated among Advance's eligible employees based upon the employees' annual compensation. In a tender offer dated June 9, 1980, Advance's ESOP offered to purchase all of Advance's Class A common stock held by unaffiliated shareholders at $7.00 per share. Apparently, all of the tender offer except for the 10,000 shares allegedly owned by plaintiff and a total of 3,000 additional shares allegedly owned by plaintiff's wife and their two (2) children.
Plaintiff avers that evidence will establish that, beginning with the merger of Apollo and Custom-Bilt # 1 in June, 1969, and the limited private offering of 50,000 shares of Advance Class A common stock at $6.00 per share in November, 1969, Advance, by the named defendant directors, jointly and/or severally, sought to deceive and mislead the investors who had purchased the stock in the limited private offering, about the true value of their stock, the object of which was to deprive the outside investors of a fair return on their investment so that the shares could be repurchased at an unconscionably low price for the benefit of defendant directors and other "insiders".
A. Motion of Dynamism USA to Appear as Amicus Curiae
Dynamism USA (United in Spiritual Adoration) is a nonprofit corporation of which plaintiff is the founder and president. The objective of the corporation, as stated in its corporate charter, is to undertake actions on behalf of persons of small or moderate means "in ways that will increasingly assure that they fairly share in the enjoyment of the fruits of their labor, whether working for themselves or others." Motion by Dynamism USA to Appear as Amicus Curiae (" Amicus Motion"), Exhibit A. In addition, Dynamism USA seeks to obtain for its clients "effective and enduring representation in the decision making councils of governmental, institutional, quasi-public and private . . . enterprise organizations of the country; as well as by applying processes which will substantially lessen and/or obtain direct or indirect reimbursement for the unfair exploitation to which they may have been subjected." Id. Dynamism USA seeks to appear as amicus curiae in this action on behalf of those persons who accepted the tender offer on June 9, 1980. Plaintiff's Affidavit, attached to the moving papers states that he believes these persons were fraudulently manipulated into accepting the ESOP's tender offer of June 9, 1980. Amicus Motion Affidavit at 3.
The legal definition of amicus curiae is as follows:
Means literally, friend of the court. A person with strong interest or views on the subject matter of an action may petition the court for permission to file a brief, ostensibly on behalf of a party but actually to suggest a rationale consistent with its own views.
Black's Law Dictionary 75 (5th ed. 1979).
Inasmuch as an amicus is not a party and "does not represent the parties but participates only for the benefit of the court, it is solely within the discretion of the court to determine the fact, extent, and manner of participation by the amicus." Alexander v. Hall, 64 F.R.D. 152, 155 (D.C.1974)(collecting cases). While the "discretion of the court" is a phrase which can accommodate a number of unusual circumstances, I see no useful purpose to be served by permitting Dynamism USA to appear as amicus. As the Court stated in Strasser v. Doorley, 432 F.2d 567 (1st Cir. 1970),
Id. at 569 (footnotes omitted).
None of the factors noted in Strasser support permitting Dynamism USA to appear as amicus. Furthermore, both the class action device under Rule 23 as well as intervention under Rule 24 of the Federal Rules of Civil Procedure exist as possible means by which Dynamism USA or its members or constituents may appear before the Court. The Court sees no benefit to be gained ...