United Paperworkers International Union v. International Paper Company

International Paper Company (Company) (defendant) was a large public company. Certain shareholders requested a shareholder proposal in the proxy statement for Company’s annual meeting, recommending that Company implement environmental-accountability principles. In its proxy statement, Company responded by opposing the proposal and contending that it maintained long-standing environmental policies, had its own principles with overlapping audit and reporting requirements, invested heavily in environmental protection, and had a strong environmental-compliance program. In its Form 10-K Report filed with the Security and Exchange Commission (SEC), Company disclosed that it had been accused of numerous environmental offenses, pleaded guilty to felonies, and agreed to pay huge fines. United Paperworkers International Union (Union) (plaintiff) unsuccessfully tried to delay the annual meeting. The resolution failed and received approximately 6 percent of the votes cast. Union sued Company, arguing that Company’s response violated the SEC’s proxy rules by containing false and misleading representations and omissions. Company argued, among other things, that its proxy statement was not misleading when read in conjunction with its annual report, the Form 10-K Report, and various news reports. The district court ruled that the proxy statement was materially misleading. Company appealed.