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Judith S. Feder v. Martin Marietta Corporation and Sperry Rand Corporation Case Brief
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Case Brief Summary & Legal Analysis
tl;dr: A corporation was held liable for short-swing profits because its CEO, serving on another company’s board, was deemed its “deputy.” This made the corporation an insider “director” under Section 16(b), even though the stock sales occurred after the CEO resigned from the board.
Legal Significance: Establishes that a corporation can be a “director” under Section 16(b) through the deputization theory. Liability attaches to profits from sales made within six months of purchase, even if the sale occurs after the deputy resigns from the board.
Judith S. Feder v. Martin Marietta Corporation and Sperry Rand Corporation Law School Study Guide
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Case Facts & Court Holding
Key Facts & Case Background
Martin Marietta Corporation (“Martin”) began accumulating a large block of Sperry Rand Corporation (“Sperry”) stock. George M. Bunker, Martin’s President and CEO, had ultimate authority over all of Martin’s investments, including the Sperry purchases. After Martin had acquired a substantial position, Sperry invited Bunker to join its board of directors. The Martin board formally approved Bunker’s acceptance of the directorship after being informed of Martin’s significant investment in Sperry. During Bunker’s four-month tenure as a Sperry director, Martin purchased an additional 101,300 shares of Sperry stock. Shortly after Bunker resigned from the Sperry board, Martin sold its entire holding of Sperry stock, realizing a “short-swing” profit on the shares purchased while Bunker was a director. In his resignation letter, Bunker stated that it had appeared to Sperry that Martin’s “ownership of a substantial number of shares…should have representation on your Board.” A Sperry shareholder, Judith Feder, brought a derivative suit to recover these profits for Sperry under Section 16(b) of the Securities Exchange Act of 1934.
Court Holding & Legal Precedent
Issue: Can a corporation be deemed a “director” under Section 16(b) through the deputization of its agent, and if so, is it liable for short-swing profits on stock purchased while its deputy served as a director but sold within six months of purchase after the deputy’s resignation?
Yes. The court held that Martin Marietta was a “director” of Sperry Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ips
IRAC Legal Analysis
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Legal Issue
Can a corporation be deemed a “director” under Section 16(b) through the deputization of its agent, and if so, is it liable for short-swing profits on stock purchased while its deputy served as a director but sold within six months of purchase after the deputy’s resignation?
Conclusion
This case solidifies the deputization theory as a viable means of imposing Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad mini
Legal Rule
A corporation may be considered a "director" for the purposes of Section Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla par
Legal Analysis
The court applied the "deputization theory," first articulated in *Rattner v. Lehman* Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate
Flash-to-Full Case Opinions
Flash Summary
- A corporation is a “director” under § 16(b) if it deputizes