UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT
TO RULE 13d-2(a)
(Amendment No. 26)*
First Financial Fund, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
320228109
(CUSIP Number)
Stephen C. Miller, Esq.
Krassa & Miller, LLC
1680 38th Street, Suite 800
Boulder, Colorado 80301
(303) 444-5483
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 20, 2002
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. 0
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See ss.240.13d-7 for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Ernest Horejsi Trust No. 1B
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power 1,795,100
Shares Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 1,795,100
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,795,100
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 7.60%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Lola Brown Trust No. 1B
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power 2,568,200
Shares Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 2,568,200
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,568,200
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 10.87%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Mildred B. Horejsi Trust
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization New York
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Number of 7. Sole Voting Power 1,922,400
Shares Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 1,922,400
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,922,400
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 8.14%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Stewart R. Horejsi Trust No. 2
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power 1,697,900
Shares,Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 1,697,900
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,697,900
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 7.19%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Susan L. Ciciora Trust
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power 1,359,800
Shares Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 1,359,800
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,359,800
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 5.76%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
John S. Horejsi Trust
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power 100
Shares Bene-
ficially 8. Shared Voting Power
Owned by Each
Reporting 9. Sole Dispositive Power 100
Person With
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
100
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 0.0004%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Badlands Trust Company
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC OO
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization South Dakota
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Number of 7. Sole Voting Power
Shares Bene-
ficially 8. Shared Voting Power 1,359,900
Owned by Each
Reporting 9. Sole Dispositive Power
Person With
10. Shared Dispositive Power 1,359,900
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,359,900
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 5.76%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP No. 320228 10 9
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)
Stewart R. Horejsi
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(A)
(B)
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3. SEC Use Only
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4. Source of Funds (See Instructions) Not applicable
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power 0
Shares Bene-
ficially 8. Shared Voting Power 0
Owned by Each
Reporting 9. Sole Dispositive Power 0
Person With
10. Shared Dispositive Power 0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
0
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) X
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13. Percent of Class Represented by Amount in Row (11) 0%
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14. Type of Reporting Person (See Instructions) IN
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Amendment No. 26 to Statement on Schedule 13D
This amended statement on Schedule 13D relates to the Common Stock,
$.001 par value per share (the "Shares"), of First Financial Fund, Inc.,
a Maryland corporation (the "Company"). Items 4 and 7 of this statement,
previously filed by the Ernest Horejsi Trust No. 1B (the "Trust"), the
Lola Brown Trust No. 1B (the "Brown Trust"), the Mildred B. Horejsi Trust
(the "Mildred Trust"), the Stewart R. Horejsi Trust No. 2 (the "Stewart
Trust"), the John S. Horejsi Trust (the "John Trust"), and the Susan L.
Ciciora Trust (the "Susan Trust") as the direct beneficial owner of
Shares, and Badlands Trust Company ("Badlands") and Stewart R. Horejsi,
by virtue of the relationships described previously in this statement,
are hereby amended as set forth below.
Item 4. Purpose of Transaction.
No change except for the addition of the following:
As previously reported in this statement on Schedule 13D, at a hearing
held on September 10, 2002, the United States District Court for the
District of Maryland (the "District Court") granted an injunction in
connection with the lawsuit filed against the Company regarding the
Company's bylaw requiring a 50% vote of all outstanding shares in order
to elect directors (the "By-Law Lawsuit"). The injunction enjoined the
Company's Board from holding any meeting "pending entry of a final
opinion and order on the merits of the case."
On September 19, 2002, Judge Motz entered a final Opinion and Order in
favor of the Brown Trust, ruling that the Company's bylaw is invalid
under the Maryland General Corporation Law. A judgment was entered in
favor of the Brown Trust enjoining the Company to seat Dr. Dean Jacobson
and Mr. Joel Looney as directors.
Subsequently, the Company filed a Motion for Stay Pending Appeal ("Motion
for Stay") in the By-Law Lawsuit. The Company requested that the
District Court stay the September 19, 2002 Order pending the outcome of
an appeal to the United States Court of Appeals for the Fourth Circuit.
On September 20, 2002, the Brown Trust filed an Opposition to Defendant's
Motion for Stay Pending Appeal ("Opposition to Motion for Stay"), which
is attached to this statement as an exhibit. The Brown Trust requested
the District Court deny the Company's Motion for Stay. The Opposition to
Motion for Stay in the By-Law Lawsuit is attached hereto as Exhibit 16
and incorporated in this statement by reference.
On September 20, 2002, the District Court held a hearing on the Company's
Motion for Stay. Judge Motz presided and stayed the effectiveness of his
ruling until October 4, 2002, and reinstated his injunction enjoining the
Company's Board from holding any meetings during the pendency of the
stay. Judge Motz indicated that he was granting the stay so as to allow
at least one judge of the Fourth Circuit time to review the issue. Judge
Motz further indicated that he continues to believe the September 19,
2002 ruling is correct and that the plaintiff ought to prevail on the
merits of the case. In addition, Judge Motz reiterated his tentative
conclusion that the Company's bylaw is also invalid under the Investment
Company Act of 1940, though he did not need to reach that question
because of his ruling under the Maryland General Corporation Law. The
two-week stay will expire at 5:00 p.m. on Friday, October 4, 2002.
Item 7. Material to be Filed as Exhibits.
Exhibit 16. Badland's Opposition to Defendant's Motion for
Stay Pending Appeal filed on September 20, 2002.
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Date: September 25, 2002
/s/ Stewart R. Horejsi
Stewart R. Horejsi
/s/ Stephen C. Miller
Stephen C. Miller, as Vice President of
Badlands Trust Company, trustee of the
Ernest Horejsi Trust No. 1B, the Lola
Brown Trust No. 1B, the Mildred B.
Horejsi Trust, the Stewart R. Horejsi
Trust No. 2, the Susan L. Ciciora
Trust, and the John S. Horejsi Trust.
EXHIBIT 16
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Northern Division
______________________________________
)
BADLANDS TRUST COMPANY, )
a South Dakota corporation, )
as Trustee for )
)
LOLA BROWN TRUST No. 1B, )
)
Plaintiff, )
)
v. ) )
FIRST FINANCIAL FUND, INC., )
a Maryland corporation, )
)
Defendant, )
_______________________________________)
Civil No. JFM 02-CV-2423
BADLANDS' OPPOSITION TO
DEFENDANT'S MOTION FOR STAY PENDING APPEAL
On August 12, 2002, Dr. Jacobson and Mr. Looney polled nearly
sixty percent of the shareholders' vote in a hotly contested election
for the two open board seats. Before and since that election, the
management of First Financial has endeavored at every turn to seat the
incumbent directors who polled only forty percent of the vote. The
motion for stay pending appeal - submitted in the name of First
Financial - is only the most recent incarnation of management's
effort. It, however, has less merit than management's prior
arguments. Accordingly, the Court should summarily deny the motion.
Three times now the Court has indicated that Dr. Jacobson and Mr.
Looney should be seated as directors. At the hearing on Badlands's
application for a temporary restraining order, the Court observed the
it did not believe that the incumbent directors should be holding
office. Trans., August 28, 2002, at 29. On September 10, 2002, the
Court held that Badlands was "very likely to prevail on the merits..."
Trans., Sept. 10, 2002, at 77. And, finally, on September 19, 2002,
the Court ruled for Badlands on the merits and ordered Dr. Jacobson
and Mr. Looney seated as the duly elected directors.
In one fell swoop, by way of a few page motion for stay, the
current management of First Financial seeks to undo the Court's
careful consideration of the issues, its ruling on the merits, its
balancing of the harms, and its consideration of the public interest.
Significantly, management does not even purport to point to any error
in the Court's opinion. That, in itself, should be fatal to its
request for a stay pending appeal.
Nor has management shown that First Financial Fund, Inc. itself -
as opposed to its present officers, its present sponsor, Prudential
Funds, or its present administrator, Wellington - is likely to suffer
irreparable harm. And management totally discounts the harm that
Badlands suffers every day its nominees are not seated as directors.
Instead, management's incumbents and their sponsors, in baldly
asserting that control of the Fund by newly elected independent
directors would constitute irreparable harm, arrogantly assume that
only they know what is best is for the corporation and that the 48% of
all shares who voted for new directors - representing an investment of
some $145,000,000 - don't know what's best for their own investment.
And they do this with the Fund's money, continuing to spend the
shareholders' money to maintain their positions, even though the
shareholders voted them out.
A stay of a final ruling pending appeal is a truly extraordinary
remedy - more difficult to obtain than temporary or preliminary
injunctive relief. As will be seen below, four factors must be
considered independently, and each weighs heavily against the current
management of First Financial. Accordingly, the motion for stay
should be summarily denied.
STANDARD OF REVIEW
The standard for granting a stay pending appeal is the fourfold
rule initially adopted in this circuit in Airport Comm. of Forsyth
Co., N.C. v. Civil Aeronautics Board, 296 F.2d 95, 96 (4th Cir. 1961):
1) Has the petitioner made a strong showing that it is likely
to prevail upon the merits of its appeal?
2) Has the petitioner shown that without such relief it will be
irreparably injured?
3) Would the issuance of a stay substantially harm other
parties interested in the proceedings?
4) Wherein lies the public interest?
(Emphasis added.) The rule is not the same as the well-known
"balancing of hardships" standard applied to motions for preliminary
injunction.
This standard was most recently applied in Kentuckians for the
Commonwealth, Inc v. Rivenburgh, 206 F. Supp. 2d 782, 792 (S.D. W.Va.
2002). As Chief Judge Haden observed there:
The four factors are 'essentially independent'
and each question must be answered. The stay
standard is stricter than that applied to a
request for interlocutory relief.
Kentuckians for the Commonwealth (quoting Blackwelder Furniture Co. v.
Seilig Manufacturing Co., 550 F.2d 189, 196 (4th Cir. 1977)).
Blackwelder itself points out the differences between the
preliminary injunction standard and the "stringent" stay pending
appeal standard. There, the trial court denied a plaintiff's motion
for a preliminary injunction. In doing so, the district court cited
the Airport Commission four-part standard, above, including the
"strong showing that it is likely to prevail" on the merits prong, and
applied the factors separately, without balancing. In reversing this
error, the Blackwelder court developed this Circuit's now well-known
preliminary injunction standard. But in doing so, the Blackwelder
court reiterated the difference between a preliminary injunction and a
stay pending appeal:
The district court's reliance on the different
standards of Airport Comm'n of Forsyth Co. and
Camp ... was misplaced - though understandably
so. Even the treatise writers have mistakenly
equated the stringent standards of those cases
with the more flexible rule of Sinclair Refining
[applicable to preliminary injunctions and
reiterated by the Fourth Circuit in Blackwelder].
... But there is a difference. The cases
relied upon by the district court deal with the
question of the issuance vel non of an appellate
stay pending review of an administrative order or
a trial court decision that dealt with the merits
of a controversy....
In cases like Airport and Camp a judicial or
quasi-judicial body has already passed upon the
merits of a question and typically has also
denied a discretionary stay of its decision; only
then is the motion made for an appellate stay.
For a stay to issue under such circumstances, we
adopted in Airport Comm'n of Forsyth, supra, 296
F.2d at 96, the requirement ... that a "strong
showing" of probable success on appeal be made,
for otherwise there is "no justification for the
[appellate] court's intrusion into the ordinary
processes of administrative and judicial review."
Likewise, Long v. Robinson, 432 F.2d 977 (4 Cir.
1970), another "strong showing" case from this
circuit, involved a stay-pending-appeal
situation, in which the district court had fully
considered the merits of the controversy,
rendered its final decree, and refused the
request for an interim stay. Judge Winter
explained in Long that the petitioner's burden in
seeking injunctive relief is substantially
greater on appeal. 432 F.2d at 979. ... And
this is especially so where the lower court has
adversely determined the merits of the
controversy.
Blackwelder, 550 F.2d at 193-94 (footnotes and citations omitted; bold
emphasis added).
The command and reasoning of Blackwelder is clear: in the case of
a preliminary injunction the court is to apply a "balance of hardship"
test, but that standard is deliberately weaker than the "stringent"
test to be applied in a case seeking a stay pending appeal. In the
latter case, "where the lower court has adversely determined the
merits of the controversy," an appellant must make "a strong showing
that it is likely to prevail upon the merits" in order to obtain a
stay. Mere balancing and "serious questions" will not suffice.
Management errs when it argues otherwise.
ARGUMENT
I. MANAGEMENT HAS NOT MADE A "STRONG SHOWING"
THAT IT IS LIKELY TO SUCCEED ON THE MERITS
Three times now this Court has considered management's arguments.
And all three times the Court has rejected them on the same grounds.
Most recently the Court concluded that management's argument had
"superficial appeal" but that the legislative background and intent to
the contrary was "clear." Opinion, at 3-4.
And it bears noting that, while the Court did not need to reach
the Investment Company Act question in issuing its permanent
injunction, the Court tentatively concluded that "plaintiff wins under
the Investment Company Act" as well. Trans. of Sept. 10, 2002
hearing, p. 72. On appeal, Badlands will be entitled to urge the
Investment Company Act as independent grounds for affirmance. In
order to obtain a stay here, then, management must also make a strong
showing that it is likely to prevail on that Act as well.
II. DEFENDANT HAS NOT SHOWN THAT IT
WILL BE IRREPARABLY HARMED
Current management has failed to show any harm to First Financial
Fund, Inc. - as opposed to itself - if management's motion for a stay
were to be denied. The "harm" that the motion really seeks to prevent
is "harm" to current management arising from the potentiality that the
board will change management. That, however, is demonstrably not harm
to First Financial itself.
First, current management entirely ignores the law applicable to
directors and the exercise of their duties under Maryland law. Under
the MGCL, four of the five directors of First Financial - the two
newly elected directors and the two directors previously elected whose
terms have not expired - are "independent and disinterested when
making any determination or taking any action as a director" under the
Investment Company Act of 1940. MGCL Section 2-405.3. And though not
acknowledged by current management's motion, a director is charged
with the duty to act in "good faith," in "a manner he reasonably
believes to be in the best interests of the corporation," and with
"the care that an ordinarily prudent person in a like position would
use under similar circumstances." MGCL Section 2-405.1(a). "Thus,
any exercise of the corporate power to institute litigation and the
control of any litigation to which the corporation becomes a party
rests with the directors or, by delegation, the officers they
appoint." Werbowsky v. Collomb, 362 Md. 581, ___, 766 A.2d 123, 133
(2001). Management's motion for a stay is nothing less than an effort
to usurp the power of the duly elected directors to direct and control
of any litigation to which the corporation is a party. Moreover,
current management does so by sheer speculation as to what the
directors will decide.
Further, current management does not claim that the directors are
in jeopardy of violating any of these duties. Indeed, the motion is
notable in that it does not even allege that a decision to forego an
appeal would be a breach of the directors' fiduciary duty to the
corporation and a violation of the business judgment rule. That
omission is telling. It reveals that the motion is really an effort
by management, and not First Financial itself, to maintain
management's position and to do so at First Financial's shareholders'
expense, even if the directors elected by a majority of the voting
shares were to decide to the contrary.
This Court has already found that one of the "concerns that
originally led to the enactment of the [ICA] was entrenched management
retaining control." Tr., August 28, 2002 at 34. As the Court has
ruled: "Unquestionably, the two directors nominated and supported by
defendant were not elected at the last meeting. That much we
definitely know." Tr., September 10, 2002 at 72. The motion for a
stay unabashedly seeks to maintain those unelected directors in office
for the benefit of management, not First Financial itself. And it
certainly is not harm to First Financial where there is an absence of
any suggestion or allegation that such a change in management would
constitute a violation of the directors' duties and a violation of the
business judgment rule.
III. BADLANDS WILL BE HARMED BY THE
CONTINUED DENIAL OF THE POWER OF ITS VOTES
The real harm here is to Badlands, not movant. Current
management is so bold as to argue that the holdover unelected
directors should continue to direct the affairs of First Financial
during the pendency of an entire appeal:
[T]he directors of a corporation and of a
registered investment company have ongoing
duties. The Court should therefore stay its
Judgment and allow the current directors to meet
to address matters as they arise during the
pendency of the appeal.
Def. Stay Br. at 4 (emphasis added). That argument, however, ignores
the serious harm to Badlands (and to First Financial itself) already
found by the Court on several occasions:
I think that there is a harm in an investment
company essentially being directed by two
directors, including in its directors meeting two
directors who I think, as I will say in a moment,
I do not believe should be holding office. And
so I do think that that is itself a serious harm
being suffered by the plaintiffs, which people
are entitled to sit in those positions.
Tr., August 28, 2002 at 29-30. And, on September 10, 2002:
I do believe that the plaintiff will be harmed by
having a board meeting on which it was not
represented when I think it should be, because I
think its two persons who won the voting should
be there.
Tr., September 10, 2002 at 70. And:
I do not believe that a corporation governed by
the Investment Company Act should be having board
meetings in which elected directors are not
represented. Certainly, it shouldn't be holding
board meetings where someone who has not been
elected, whose term has expired, [would] be
participating.
Id. at 71. Yet, current management's motion proposes just this event
- allow the expired directors to sit as duly elected and valid
directors in contravention of the wishes of sixty percent of the
voting shares of First Financial. As the Court has already
recognized, that would irreparably harm Badlands. It would also
irreparably harm the shareholders of First Financial. Indeed, it
would irreparably harm First Financial itself.
IV. THE PUBLIC INTEREST IS THAT
THE SHAREHOLDERS' VOTE BE RESPECTED
The public interest is best served by respecting the
shareholders' vote. As the Court recognized early on, the best
indicator of the public interest in the language and policy of Section
16 of the Investment Company Act that directors of investment
companies should be elected and that directors whose terms have
expired "shall not serve."
Current management's speculation that this case has great
precedential value for numerous investment companies, Def. Stay Br. at
5-6, is just that - speculation. Notably absent, again, is any
citation to even one investment company that has a similarly offensive
bylaw. The legal question here is not difficult, and does not appear
to have broad effect. The public interest requires that the
shareholder vote be respected and implemented.
CONCLUSION
WHEREFORE, Badlands requests that this Court deny Defendant's
Motion For Stay Pending Appeal.
Respectfully submitted,
/s/ James H. Hulme
James H. Hulme, Bar No. 00875
Donald B. Mitchell, Jr., Bar No. 22944
J. Marcus Meeks, Bar No. 15191
ARENT FOX KINTNER PLOTKIN & KAHN
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
T: (202) 857-6000
Attorneys for Plaintiff Badlands Trust Company
Footnotes:
1. The same four-part test for a stay pending appeal, with its
requirement of a "strong showing" that the appellant is likely to
prevail, applies whether the stay pending appeal is sought in the
district court under F.R. Civ. P. 62(c) or in the appellate court
under F.R.A.P. 8(a). See Hilton v. Braunskill, 481 U.S. 770, 776,
107 S. Ct. 2113, 2119 (1987).
2. Management, paying only lip service to Airport Commission,
argues that "strong likelihood" standard does not mean what it says.
Defendant Stay Br. at 2. Management cites Goldstein v. Miller, 488
F. Supp. 977 (D. Md. 1980) (Kaufman, J.), for the proposition that if
the question is "difficult" or "serious" then that is enough.
Goldstein, however, involved the intervening issuance of a Supreme
Court opinion contrary to the ruling of the district court from which
the appeal had been taken and of which the stay was sought.
3. Similarly, Management asserts that the possibility that the new
Board may replace the Fund's officers and that the new Board may decide
not to spend the shareholders' money to pursue an appeal of this
Court's ruling in itself constitutes irreparable harm and should end
this Court's inquiry. Defendant Stay Br. at 4. But the cases are
to the contrary. As the Third Circuit explained, "the fact that the
decision on the stay may be dispositive of the appeal in some cases is
a factor that an appellate court must consider, but that alone does
not justify pretermitting an examination of the nature of the
irreparable injury alleged and the particular harm that will befall
the appellant should the stay not be granted." Republic of the
Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, 658 (3d
Cir. 1991) (emphasis added).
4. Cf., In re Masterwear Corp., 233 B.R. 266, 273 (Bankr. S.D.N.Y.
1999) ("a legitimate pending election contest would not prevent the ...
Board from firing the Firm. The Firm's fundamental premise - that
the displaced board continues to govern until the dispute is resolved -
is wrong. To the contrary, the newly elected directors continue as de
facto directors until a court of competent jurisdiction ousts them").
5. The only director who is not independent is Mr. Mooney, the
current president and current counsel's client.
6. This is also known as the "business judgment rule."
Independent Distributors, Inc. v. Katz, 99 Md. App. 441, 637 A.2d
886, cert. denied, 335 Md. 697 (1994).