Flake v. Hoskins (55 F. Supp. 2d 1196, 1999)

MEMORANDUM AND ORDER

VRATIL, District Judge.

This matter comes before the Court on defendants’ Motion To Dismiss Pursuant to Fed. R. Civ, P. 12(b)(1) and 12(b)(6) (Doc. # 18) filed January 6, 1999, defendants’ Motion For Reconsideration (Doc. # 43) filed March 18, 1999, and defendants’ Motion For Oral Argument (Doc. # 44) filed March 23, 1999. Defendants move to dismiss, all six of plaintiffs claims. Defendants also seek reconsideration of the Court’s refusal to consider evidence outside of the complaint, in connection with the motion to dismiss. For the reasons stated below, the Court finds that the motion for reconsideration should be denied and that the motion to dismiss should be sustained in part and denied in part. The Court held oral argument on May 26,1999, and therefore sustains defendants’ motion for oral argument.

Motion For Reconsideration

The Court has discretion whether to grant or deny a motion to reconsider. See Hancock v. City of Oklahoma City, 857 F.2d 1394, 1395 (10th Cir.1988). The Court may recognize any one of three grounds justifying reconsideration: an intervening change in controlling law, availability of new evidence, or the need to correct clear error or prevent manifest injustice. See Major v. Benton, 647 F.2d 110, 112 (10th Cir.1981); Burnett v. Western Resources, Inc., 929 F.Supp. 1349, 1360 (D.Kan.1996). A motion to reconsider is not a second chance for the losing party to make his strongest case or to dress up arguments that previously failed. Shinwari v. Raytheon Aircraft Co., 25 F.Supp.2d 1206, 1208 (D.Kan.1998) (citing Voelkel v. General Motors Corp., 846 F.Supp. 1482, 1483 (D.Kan.), aff'd 43 F.3d 1484 (10th Cir.1994)). Such motions are not appropriate if the movant only wants the Court to revisit issues already addressed or to hear new arguments or supporting facts that could have been presented originally. Id. (citing Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir.1991), cert. denied, 506 U.S. 828, 113 S.Ct. 89, 121 L.Ed.2d 51 (1992)).

On March 16, 1999, the Court entered an order stating that it would not consider matters outside of the pleadings when ruling on defendants’ motion to dismiss. See Order (Doc. # 40) filed March 16, 1999. Defendants ask the Court to reconsider that decision, but they have not demonstrated any of the three grounds which might justify relief. The issue has been already addressed. While defendants cite cases which allow the consideration of outside documents, the matter is within the Court’s discretion. See Lowe v. Town of Fairland, 143 F.3d 1378, 1381 (10th Cir.1998); GFF Corp. v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th Cir.1997). The Court finds that consideration of such evidence is better suited for a motion for summary judgment and exercises its discretion in refusing to consider the outside evidence at this earlier stage of the litigation.

Motion to Dismiss Standard

In ruling on a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), the Court must assume as true all well pleaded facts in plaintiffs complaint and view them in a light most favorable to plaintiff. Zinermon v. Burch, 494 U.S. 113, 118, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990); see also Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984).

The Court must make all reasonable inferences in favor of plaintiff. Zinermon, 494 U.S. at 118, 110 S.Ct. 975; see also Fed.R.Civ.P. 8(a); Lafoy v. HMO Colorado, 988 F.2d 97, 98 (10th Cir.1993). The issue in reviewing the sufficiency of plaintiffs complaint is not whether he will prevail, but whether he is entitled to offer evidence to support his claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). The Court may not dismiss a cause of action for failure to state a claim unless it appears beyond a doubt that plaintiff can prove no set of facts in support of his theory of recovery that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Jacobs, Visconsi & Jacobs, Co. v. City of Lawrence, 927 F.2d 1111, 1115 (10th Cir.1991). Although plaintiff need not precisely state each element of his claims, he must plead minimal factual allegations on those material elements that must be proved. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991).

Facts

Plaintiff brings this action individually and on behalf of a class of shareholders of J.C. Nichols Company (“JCN”), a Missouri corporation, and on behalf of a subclass of shareholders who obtained JCN stock through participation in the JCN Employee Stock Ownership Plan (“ESOP”). Plaintiff brings suit against JCN; High-woods Properties, Inc. (“Highwoods”); William K. Hoskins, the former chairman of JCN’s board of directors (“board”); Barret Brady, former president, chief executive officer and director of JCN; and Clarence L. Roeder, Kay Nichols Callison, John A. Ovel, Thomas J. Turner, III, William V. Morgan and Mark C. Demetree, former directors of JCN.

Under Section 2.35 of the trust agreement which governs the ESOP, JCN is the “plan administrator,” which the agreement defines as the person designated to administer the ESOP. Under Section 13.11, the plan administrator is a named fiduciary of the plan.

Section 2.17 also defines a plan fiduciary as any person who

(a) exercises any discretionary authority or discretionary control respecting management of this Plan or exercises any authority or control with respect to management or disposition of the Trust’s assets,

(b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Trust or has any authority or responsibility to do so, or

(c) has any discretionary authority or discretionary responsibility in the administration of the Plan, including, but not limited to, the Trustees, the Employer and its representative body, and the Plan administrator.

Under Section 6.12 of the trust agreement, if the trustee received from someone other than JCN an unsolicited offer to purchase JCN stock, the trustee was required to ask the JCN board of directors for an advisory opinion whether the sale would be in the best interests of ESOP participants and beneficiaries.

ESOP participants had the right to vote their own shares, but could delegate their shares to be voted by the trustee of the JCN Employee Stock Option Trust (“ESOT”). The ESOT held some 1.4 million shares of JCN stock in trust on behalf of over 600 ESOP participants. The ESOT held over 30 percent of JCN’s outstanding stock.

Starting on April 18, 1997, Intrust Bank, N.A. (“Intrust”) served as trustee of the ESOT. Plaintiff was a member of the ESOP. As of May 29, 1998, JCN had approximately 4.6 million shares of outstanding common stock, with 3.2 million shares held by 148 shareholders and the remaining shares held by the trust on behalf of more than 600 ESOP participants.

In late 1996 and during the first half of 1997, JCN became a potential takeover target, with parties offering to purchase some or all JCN stock. On October 23, 1996, Integrated Property Management, Inc. (“Integrated”) offered to buy all ESOP shares for $32.00 per share. At the time, the ESOP shares amounted to 22 percent of the outstanding stock of JCN. Around March of 1997, Realty Capital Corporation (“Realty”) offered to purchase all ESOP shares at about $26.00 per share.

The Nichols family has owned JCN stock for decades, and its average tax basis in the stock is extremely low. Plaintiff alleges that defendants therefore wanted to prevent a cash buyout of JCN and instead looked for stock-for-stock transactions. Plaintiff alleges that defendants acted to limit the Nichols family tax liability, regardless of the benefits to the remaining JCN shareholders. The Nichols family controlled the JCN board, both through its power as a 26 percent shareholder, and through family and business relationships with several of the individual defendants.

Around May of 1997, realizing that JCN was a potential takeover target and that its control of JCN was threatened, the JCN board disseminated a proxy which attempted to solicit shareholder approval of antitakeover measures. At the same time, the individual defendants delayed transferring to the ESOT some 680,000 shares of stock to which it was entitled. If the ESOT had received these shares, it would have owned 33 percent of JCN instead of 22 percent, and would have been the single largest JCN,shareholder.

On May 9, 1997, Realty offered to purchase all shares of JCN for at least $26 per share in cash, or some higher price. The individual defendants voted unanimously to reject Realty’s offer. On May 15, 1997, JCN issued a press release stating that it was “not for sale.” The press release quoted Mr. Brady as stating that “[JCN’s] opportunities for growth and development have never been more positive or more exciting.” The press release also expressed the board’s “strong belief that the proposed antitakeover measures are in the best interests of the shareholders of the Company.”

As ESOT trustee, Intrust resisted defendants’ antitakeover measures because the “poison pills” would adversely affect the ability of shareholders such as the ESOP to maximize the value of their stock. As a result, JCN removed the proposals from the agenda for the shareholder meeting in May 1997.

Around June 13, 1997, Realty offered to purchase the ESOP shares for $36 per share, At that time, the ESOT held 31 percent of JCN’s stock on behalf of ESOP participants. In June of 1997, Maefield Development Corporation (“Maefield”) also communicated to Intrust an offer to purchase the ESOP shares. Intrust relayed both offers to the JCN board.

Around July of 1997, in an effort to seek control of the company, Cerberus Partners (“Cerberus”) offered to buy the ESOP shares for $42 cash per share. Intrust communicated this offer to the JCN board. Around the same time, two other sophisticated investors, Franklin Mutual Advisors and Angelo, Gordon & Co., acquired almost nine percent of JCN. Around August 8, 1997, Cerberus amended its offer to include the 680,000 shares which JCN owed the ESOP.

The JCN board responded to Intrust’s requests for advisory opinions by advising Intrust to decline Realty’s offer in light of the higher offers it had received, and to seek an extension from Maefield to allow the JCN board time to consider the Mae-field offer.

As a result of Intrust’s requests, the JCN board accelerated its antitakeover strategy to counter the cash offers and Intrust’s strong support of a sale of JCN. In order to entrench themselves in their positions, some JCN executives entered agreements that would force JCN to pay them a total of $10.7 million if their employment was terminated under a change in control of the company.

On July 25, 1997, the JCN board held a special meeting, stating that its purpose was to consider information from Intrust regarding an offer to purchase JCN stock. The board, however, did not consider that inquiry in any meaningful way. Instead, in direct response to threats to its control, especially the accumulation of JCN stock by Cerberus, the JCN board adopted a second poison pill defense. The board gave existing shareholders the. right to purchase one share of JCN common stock for each share owned, at half the market price, if a new investor acquired 15 percent or more of JCN’s stock. This provision had the purpose and effect of greatly diluting the percentage holding of any investor who obtained more than 15 percent of the company. The board also provided that these purchase right measures would not go into effect (or could be suspended) if JCN’s directors approved a stock purchase by an interested investor. The board thereby discriminated against unfriendly offerors and tilted the playing field to favor those bidders who were willing to make an offer which benefitted defendants and the Nichols family.

Around July of 1997, the JCN board took further measures to thwart cash bidders. The board engaged Morgan Stanley, purportedly for the purpose of reviewing “various capital planning and strategic alternatives available to JCN.” In the proxy, the individual defendants stated that JCN was retaining Morgan Stanley “because management of JCN had identified significant development projects and outlined a strategy for growth with which it was prepared to succeed.” The true motive, however, was to find and justify a “white knight” bidder to avoid a cash buyout.

JCN stated that Morgan Stanley presented it with four options: (1) a private issuance of convertible preferred stock; (2) a private issuance of JCN common stock; (3) a public offering of JCN common stock; or (4) a strategic combination with a public real estate company or a public real estate investment trust (“REIT”).

In September of 1997, Bosfield LLC (“Bosfield”), an affiliate of Maefield, offered to purchase the ESOP shares at $59.00 per share for a total purchase price of $82,000,000.00, on the condition that the JCN board remove its poison pills. Intrust accepted the offer, believing that it was in the best interests of the ESOP participants. The deal was never consummated, however, because the JCN board refused to lift the poison pills.

During the fall of 1997, substantial and well-financed entities such as Duke Realty Investments Inc. and Simon DeBartolo Group, Inc. (“Duke/Simon”) expressed interest in acquiring JCN for cash. The individual defendants, however, prevented any acquisition.

Around November of 1997, Intrust retained Duff & Phelps to determine the fair market value of JCN stock. JCN agreed to indemnify Duff & Phelps for the appraisal. Duff & Phelps valued the JCN stock at $61 per share as of October 31, 1997. Intrust therefore rejected as insufficient the Cerberus offer of $42 per share.

On November 18, 1997, Duke/Simon signed the confidentiality agreement which was necessary for it to receive the access to books and records that would enable it. to make an offer. The JCN board, however, refused to provide Duke/Simon sufficient information necessary to make a proposal.

Around December 19, 1997, Bosfield sent Intrust an amendment to its ESOP stock purchase offer, increasing the purchase price for the ESOP stock to $70 per share. Intrust forwarded a copy of the amended offer to JCN’s general counsel, but the JCN board did not respond to Bosfield’s offer.

Realizing that it was “in play,” JCN changed its earlier position of refusing sale and focused on entering into a combination with another real estate company. JCN refused offers to finance a private placement of convertible preferred stock by La-zard Freres Real Estate Investors, LLC (“Lazard”) and Blackacre Capital Group (“Blaekacre”), an affiliate of Cerberus. Instead, JCN commenced negotiations with Highwoods to allow Highwoods to effectively take control and buy out JCN for stock, thus rescuing JCN from a potential cash acquisition. Around December 22, 1997, JCN entered into a merger agreement with Highwoods and an affiliate of Highwoods.

Under the terms of the agreement, Highwoods would acquire all of the outstanding shares of JCN. In exchange, for each share of JCN stock, JCN shareholders could elect to receive either (1) between 1.84 and 2.03 shares of stock in Highwoods, depending on a 20-day moving average of the share price of Highwoods, or (2) $65 in cash. The cash payment to JCN shareholders was limited to 40 percent of the total consideration, however, and in the event that more than 40 percent of JCN shareholders elected to receive cash, those shareholders would receive proportionate amounts of cash and High-woods stock.

The merger agreement stated that the acquisition was subject to the approval of a two-thirds majority of JCN shareholders. In the event that JCN’s directors failed to recommend the approval of the merger, or recommended an alternate transaction, the merger would be terminated and JCN would be obligated to pay Highwoods a termination fee up to $17.2 million.

Around December 23, 1997, Cerberus filed a notice with the Securities and Exchange Commission (“SEC”), advising that it might ask JCN shareholders to reject the proposed transaction with Highwoods because the consideration was too low, the termination fee was too high, and the transaction had the air of a “white knight” arrangement which would allow Highlands to buy JCN for a lower-than-market price in exchange for allowing JCN managers and directors to keep their jobs.

Around December 23, 1997, Duke/Simon sent a letter to some of the individual defendants, advising that JCN had failed to provide all information necessary for it to make a bid. Duke/Simon stated that it believed the value of JCN stock might be significantly greater than $65 per share, and that if JCN provided Duke/Simon access to JCN management and additional information, Duke/Simon would move “very expeditiously to confirm the stock price and develop a strategy that would deal with any relevant non-financial constraints.” Duke/Simon expressed an interest in a transaction that would “result in significantly more value to the Nichols’ shareholders” than that provided by the proposed acquisition by Highwoods.

On January 12, 1998, Duke/Simon indicated to Mr. Brady that it anticipated making an offer of at least $75 per share, and that it was prepared to structure the offer to include both cash and stock. Defendants never provided Duke/Simon the information it requested, however, and they did not meaningfully discuss with Duke/Simon an alternative transaction that could provide greater consideration than the Highwoods acquisition. Defendants also failed to disclose Duke/Simon’s interest to JCN shareholders. Because of this hostility, Duke/Simon notified the JCN board on January 28, 1998 that it would not proceed in a transaction with JCN.

Similarly, Intell Management and Investment Company (“Intell”) complained on several occasions in January and February of 1998 about JCN’s repeated refusals to meet or provide pertinent books and records. Intell cited this lack of information, along with the high termination fees and JCN’s requirement that Intell deposit $17.2 million to cover the fee, as reasons for ceasing its efforts to purchase JCN. Cerberus also stated that the lack of information, high termination fee, and JCN’s “standstill clause” in its confidentiality agreement all constituted efforts by defendants to “chill bidding.”

Despite these obstacles, several bidders expressed interest in purchasing JCN at higher prices than the $65 per share which Highwoods had offered. Around February 11, 1998, Intell advised the JCN board that it was interested in purchasing JCN at $75 per share in cash. Given the high termination fee and defendants’ commitment to the Highwoods’ acquisition, however, Intell, made its offer contingent on the JCN shareholders rejecting the High-woods offer. On June 17, 1998, Blackacre offered to purchase JCN for $70 cash per share.

Intrust repeatedly requested that JCN indemnify Duff & Phelps for a current appraisal of the value of JCN’s stock, as it had done in the past. JCN refused to do so. Without an indemnification agreement, Intrust was unable to retain Duff & Phelps. The individual defendants refused to indemnify an appraisal because they knew that Intrust was not permitted to make its own recommendations to ESOP participants, but could provide them with Duff & Phelps’ conclusion and recommendation. As a result, the individual defendants prevented ESOP participants from casting an informed vote.

Around June 2, 1998, Highwoods and JCN disseminated a “Joint Proxy Prospectus” to solicit shareholder approval of the Highwoods’ acquisition. The proxy was filed with the SEC and acted as a registration statement and prospectus for the issuance of Highwoods stock to shareholders as part of the acquisition. Plaintiff alleges that the proxy contained false and misleading statements and omissions of material fact which, if disclosed, would have significantly altered the total mix of available information.

Throughout the proxy, JCN’s board of directors stated that they believed the acquisition was in the best interests of JCN shareholders. The board did not have a reasonable basis for this recommendation, however, because (1) individual defendants knew about and had received cash bids which offered JCN shareholders greater consideration at less risk than the consideration being offered by Highwoods; (2) the average trading price of Highwoods stock since the acquisition was approximately $28.17 (around the time plaintiff filed this action), making the consideration received by Highwoods shareholders for each converted JCN share approximately $57.20; (3) the board’s conduct had thwarted other, higher bidders for JCN stock, (4) the board refused to consider cash bids because of the tax consequences to the Nichols family, and (5) JCN could have financed a convertible preferred stock offering.

The proxy stated that the JCN board favored a convertible preferred offering but because it was unable to obtain Intrust’s support for such an action, the board feared that it would not be able to get the required 50 percent shareholder vote which would allow it to authorize the issuance of such securities. According to the proxy, this fear caused the board to reject a convertible preferred offering. The proxy did not specify how or when Intrust had stated that it would not support a private issuance of convertible preferred stock. Intrust never publicly expressed any opposition to such an issuance. Furthermore, prior to the merger agreement, both Lazard and Cerberus had offered to do a convertible preferred offering — contradicting the board’s statement that such an offering was its first choice. Also, the proxy did not disclose the fact that Bosfield had offered $70 per share for the ESOP shares.

The proxy stated that the acquisition was necessary to JCN’s business strategy. The acquisition was not consistent, however, with JCN’s business history or business plan. JCN had never sought a strategic combination in order to obtain financing, and the acquisition was not consistent with either its prior business plans or history or its long term business plan. In addition, the acquisition was not necessary in order to obtain financing. JCN had $40 million in cash, only $23 million in mortgage debt, a good cash flow and money from a tax increment financing.

The proxy stated that the JCN board had authorized Morgan Stanley to “canvass” parties that it considered most likely to enter either a private issuance of JCN common stock or a strategic merger with JCN. The proxy failed to mention that the board did not authorize Morgan Stanley to seek bidders for an acquisition of JCN.

The proxy was misleading in its reliance on Morgan Stanley’s fairness opinion. While the opinion stated that the acquisition was fair to shareholders from a financial point of view, the opinion was incomplete and inadequate. The proxy did not state the limitations that JCN placed on Morgan Stanley. For instance, JCN did not ask Morgan Stanley to opine about the fairness of the acquisition as compared to other potential combinations or a cash sale of the company. Morgan Stanley also assumed that the information which the JCN board had provided reflected the “best currently available estimates and judgments of the future financial performance of the Company....” JCN’s board, however, had only provided Morgan Stanley a common stock valuation by Houlihan Lokey Howard & Zukin, valuing JCN stock as of December 31, 1996. This appraisal was outdated. The Morgan Stanley opinion also failed to account for the outstanding cash offers for JCN’s stock, and Morgan Stanley therefore did not have sufficient information to form an opinion whether the acquisition was fair.

The proxy stated that the JCN board engaged Morgan Stanley to “review various capital planning and strategic alternatives available to JCN ... because management of JCN had identified significant development projects and outlined a strategy for growth with which it was prepared to proceed.” Plaintiff alleges that the individual defendants failed to disclose the real reason for entering the acquisition: the fact that the JCN board perceived a threat to its control of JCN and the fact that a cash acquisition of JCN posed a threat of adverse tax consequences to the Nichols family.

The proxy did not disclose that the individual defendants had refused to indemnify Duff & Phelps for an appraisal of the ESOP stock. Without this appraisal, ESOP participants lacked material information necessary for an informed decision about the acquisition.

The proxy represented that Intrust had expressed satisfaction with the general terms of the acquisition as presented on November 25, 1997. This representation was false and misleading because the general terms of the initial agreement were not the same as the final terms of the agreement. Intrust never expressed satisfaction with the general terms of the final agreement.

As noted above, the ESOT held over 30 percent of JCN’s outstanding stock. ESOP votes were therefore crucial to the two-thirds margin necessary to approve the acquisition. A special shareholders’ meeting was scheduled for July 1, 1998, for a vote on the acquisition. Before that meeting, individual defendants embarked on an extremely aggressive campaign to gain favorable votes from ESOP participants by mailing letters, directly telephoning ESOP participants, encouraging ESOP participants to attend meetings with defendants, and establishing a toll-free “helpline” exclusively for ESOP participants.

On June 8, 1998, William Hoskins sent a letter to ESOP participants on behalf of the entire JCN board. The letter was incorporated as part of the proxy. The letter was sent only to ESOP participants, but claimed that the board was acting in its “fiduciary responsibility to protect the interests of all shareholders.” The letter provided selected and incomplete bits of information from the proxy and effectively encouraged ESOP participants not to read the proxy itself. The letter stated that “[defendants] know the proxy is long and complicated” and that they therefore wanted to explain “in less legalistic terms what we view as the key points.” The letter encouraged ESOP participants to call JCN’s proxy solicitation firm, rather than reading the “lots of pieces of paper that are very legally oriented.” The proxy solicitation firm, however, used a highly aggressive method to coerce participants into approving the acquisition.

The letter of June 8 repeatedly stressed that the acquisition was the best and only offer, ignoring the numerous other expressions of interest in JCN and its stock. The letter stated that of the companies which Morgan Stanley had canvassed in 1997, Highwoods was the only one to make a definitive offer for JCN. It failed, however, to outline the numerous obstacles in the merger agreement that prevented other bidders. The letter described two “large, prominent real estate companies” that “reviewed our records and then indicated they had decided NOT to pursue a transaction.” It failed to state, however, that the companies to which it referred— Duke/Simon — protested the lack of information which the JCN board provided and were not allowed to make an adequate proposal.

The June 8 letter referred to Intell as “a little known company” and understated In-tell’s strong interest, stating that Intell said “it MIGHT consider making an offer” for JCN and that Intell “ha[d] hinted that it might make a higher offer.” In a letter dated February 11, 1998, however, Intell stated that if JCN shareholders voted down the acquisition, it intended to pursue an acquisition of JCN for $75 per share in cash. The letter failed to disclose the reasons for Intell’s failure to make a definitive offer — the $17.2 million breakup fee and the $17.2 million deposit.

The June 8 letter repeatedly suggested that if ESOP participants elected the cash option, they would receive a full $65 value of consideration, or a pro-rata amount of cash “with the remainder in Highwoods stock.” The letter stated in bold print that: “WE URGE YOU TO INSTRUCT THE TRUSTEE TO VOTE YOUR SHARES IN FAVOR OF THE HIGH-WOODS MERGER.”

Like the proxy, the letter of June 8 also stated that Morgan Stanley had “advised the Board that this is a fair price” but failed to mention the limits on Morgan Stanley’s engagement or the fact that Morgan Stanley’s opinion was based on stale appraisals.

Despite the fact that the board had actual knowledge of the Bosfield offer, the letter of June 8 stated that “[w]e also understand (that Bosfield) made its interest known to the Trust.” 'The letter failed to mention that Bosfield had actually made an offer three days before the board executed the merger agreement with High-woods. The letter also failed to mention that the board had not rendered an advisory opinion regarding Bosfield’s offer.

The letter of June 8 also referred to the $17.2 million termination fee as “customary in merger agreements.” The board further stated that “we would not expect this provision to impede a serious bidder from making a higher offer.” Plaintiff alleges that this statement was false because the very purpose of the termination fee was to impede other potential bidders.

The letter of June 8 also suggested that ESOP shareholders would suffer dire consequences if they did not approve the acquisition:

If the merger is not approved, the Company will have to move quickly to raise capital or borrow funds to meet its cash needs. In the event J.C. Nichols were to sell common stock to generate cash, it may be forced to do so at a price below $65 per share.

The letter failed to state that (1) JCN’s financial position made it an attractive borrower to any commercial lender; (2) both Blackacre and Lazard had already indicated an interest in infusing capital into JCN through a preferred stock offering; and (3) even after the merger agreement had been executed, JCN stock traded above $65 because the market assumed that JCN would attract a higher offer.

The June 8 letter also mentioned High-woods’ decision to terminate the ESOP, which would be attractive to ESOP participants who would be able to receive an early distribution of their retirement assets.

On June 16, 1998, the JCN board sent a letter to all shareholders that was substantially identical to its June 8 letter to ESOP participants.

On June 18, 1998, the JCN board sent another letter to ESOP participants, advising that Columbia Financial Advisors had completed an analysis of the company’s value as of December 31, 1997, and valued the company for ESOP purposes at $65 per share. The letter falsely asserted that Intrust had acknowledged to JCN that Columbia was “totally independent.” The letter also stated that due to Columbia’s valuation, the JCN board “[saw] no reason for the Trust to spend an additional $125,-000 of your money — beyond the $1.2 million of trust expenses already incurred over the last year — on yet another opinion from Duff and Phelps.” This statement failed to mention the relative staleness of the Columbia Financial appraisal, as compared to a new appraisal by Duff & Phelps. The letter also failed to inform ESOP participants that the Columbia Financial appraisal did not take into account any of the interest in the stock after December 31, 1997. The letter also referred to Intrust’s request for indemnification of Duff & Phelps as “unprecedented,” despite the fact that it had previously been common practice, as evidenced by the fact that JCN had indemnified Duff & Phelps in 1997.

The June 18 letter stated that the board was “confident that the Trustee will agree” that the acquisition was in the best interests of shareholders, even though the board knew at the time of the letter that Intrust did not intend to vote for the merger and that JCN’s refusal to indemnify Duff & Phelps prevented Intrust from obtaining an independent valuation on which to base its opinion.

The June 18 letter also stated that on May 27, 1998, at the request of High-woods, the JCN board had resolved to terminate the ESOP if the acquisition was successful. Like the June 8 letter, the June 18 letter also was incorporated in the proxy,

On July 1, 1998, at the special meeting of shareholders, 76 percent of the outstanding JCN shares approved the acquisition. Around July 13,1998, the acquisition was consummated. Each JCN shareholder who opted to receive stock received 2.03 shares of Highwoods stock for each JCN share. Since the acquisition, Highwoods stock has steadily fallen. It recently traded as low as $22.75, which is equivalent to $46.18 for a converted JCN share. More than 40 percent of JCN shareholders opted to receive cash from the acquisition. Each shareholder who opted for cash therefore received only a portion of his or her consideration in cash and the remainder in Highwoods stock. The consideration which JCN shareholders received as a result of the acquisition was far less than what they could have received from a competitive offer for JCN. Because High-woods’ stock has declined, the value of shareholder consideration is less than the agreed $65 per share. Also as a result of the acquisition, shareholders who had 100 percent control of JCN now have less than 10 percent control of Highwoods.

Defendants terminated Intrust as trustee around July 13, 1998, because Intrust had opposed the acquisition and believed that JCN and its officers and directors had breached their fiduciary duties to their shareholders.

Plaintiff brings six claim against defendants. Plaintiff first claims that JCN and the individual defendants violated their fiduciary duties to plaintiff under Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1985), and Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del.1985). Plaintiff also claims that JCN and the individual defendants violated fiduciary duties which they owed to the ESOP participants under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”). In his third claim, plaintiff alleges that all defendants violated Section 14(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 77n, by making material misrepresentations and omissions in the proxy. Likewise, in his fourth claim, plaintiff alleges that Highwoods violated Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k by making material misrepresentations and omissions in the registration statement which Highwoods filed in conjunction with the acquisition of JCN. Plaintiffs fifth claim alleges that all defendants violated Section 12(2) of the Securities Act of 1933, 15 U.S.C. § 771, by making false statements in the proxy, which constituted a prospectus. Finally, plaintiffs sixth claim alleges that the individual defendants are liable for the violations alleged in plaintiffs third, fourth, and fifth claims because they were control persons under Section 15 of the Securities Act of 1933 and Section 20 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 77o, 78t.

Defendants deny that they violated fiduciary duties under Revlon, Unocal, or ERISA. Defendants specifically argue that they were not ERISA fiduciaries in regard to the conduct that plaintiff challenges. They also argue that plaintiff has failed to state a claim under federal securities law because (1) plaintiff fails to allege how certain statements were false; (2) some of the alleged misrepresentations and omissions were not material, while others were actually true and fully disclosed; and (3) some of the alleged omissions are merely disguised claims for breach of fiduciary duty. Defendants also argue that they are not liable in plaintiffs fourth and fifth claims because the Highwoods acquisition was not a public offering. Finally, defendants argue that plaintiffs sixth claim should be dismissed because “control person” liability is not implicated unless plaintiff first shows a primary violation of the securities law.

Analysis

A. Count I — Breach Of Fiduciary Duty

Plaintiff first claims that JCN and the individual defendants violated their fiduciary duties to JCN shareholders. Defendants ask the Court to dismiss Count I, arguing that they are entitled to the benefit of the business judgment rule because they did not owe enhanced fiduciary duties to JCN shareholders.

Under the business judgment rule, directors generally receive wide latitude in their corporate decisions. Herbik v. Rand, 732 S.W.2d 232 (Mo.App.1987). “The business judgment rule protects the directors and officers of a corporation from liability for intra vires decisions within their authority made in good faith, uninfluenced by any other consideration than the honest belief that the action subserves the best interests of the corporation.” Nixon v. Lichtenstein, 959 S.W.2d 854 (Mo.App.1997) (quoting McKnight v. Midwest Eye Institute of Kansas City, Inc., 799 S.W.2d 909, 913 (Mo.App.1990)). When a corporate director or officer’s decision falls within the business judgment rule, the Court will not interfere with that decision. Id.

Plaintiff argues that this case invokes an enhanced fiduciary standard because the JCN board had duties under both Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1985) and Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del.1985). Defendants disagree, arguing that plaintiffs complaint does not fall within the circumstances giving rise to Revlon duties and that defendants’ actions were reasonable under Unocal.

1. Revlon

Under Revlon, once directors decide to sell or break up the corporation, they have a legal duty to maximize shareholders’ value. 506 A.2d at 182. This duty arises

(1) “when a corporation initiates an active bidding process seeking to sell itself or to effect a business reorganization involving a clear break-up of the company,” (2) “where, in response to a bidder’s offer, a target abandons its long-term strategy and seeks an alternative transaction involving the break-up of the company;” or (3) when approval of a transaction results in a “sale or change of control.” In the latter situation, there is no “sale or change in control” when “ ‘[c]ontrol of both [companies] remain[s] in a large, fluid, changeable and changing market.’ ”

In re Santa Fe Pac. Corp. Shareholder Litigation, 669 A.2d 59, 71 (Del.1995) (quoting Arnold v. Society for Sav., Bancorp, Inc., 650 A.2d 1270, 1290 (Del.1994) (citations omitted)).

Defendants first challenge the proposition that Missouri would adopt Revlon’s, duty to obtain the best available value. Defendants argue that under Revlon, the JCN board was require to seek and accept the best possible price, while R.S.Mo. § 351.347 requires a corporate board to consider various criteria when deciding whether to accept an offer. The Court first notes that Missouri looks to Delaware law in examining corporate actions. See AHI Metnall, L.P. v. J.C. Nichols Co., 891 F.Supp. 1852, 1356 (W.D.Mo.1995) (applying Delaware’s Unocal standard to Missouri corporation). Second, the duties of a corporate board under Revlon are not truly different from its duties under R.S.Mo. § 351.347. Revlon does not require a board to accept the highest offer regardless of any other considerations. Rather, the board must simply accept the best alternative for shareholders, all things considered.

In assessing the bid and the bidder’s responsibility, a board may consider, among various proper factors, the adequacy and terms of the offer, its fairness and feasibility; the proposed or actual financing for the offer, and the consequences of that financing; questions of illegality; the impact of both the bid and the potential acquisition on other constituencies, provided that it bears some reasonable relationship to general shareholder interests; the risk of nonconsu-mation; the basic stockholder interests at stake; the bidder’s identity, prior background and other business venture experiences; and the bidder’s business plans for the corporation and their effects on stockholder interests.

Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261, 1282 n. 29 (Del.1989). The possible factors to consider under Revlon track those listed in R.S.Mo. § 351.347. The only noticeable difference is that Section 3.51.347(1)(4) allows the board to consider the effect of the sale on other constituencies, without expressly requiring a link to general shareholder interests. This difference does not appear to be significant, however, because in all business actions, a corporate board of directors owes a fiduciary duty to shareholders and must generally operate for their benefit. Any consideration of other constituencies must therefore have at least a reasonable relationship to the general interests of shareholders. The Court therefore finds that Missouri law does not differ in any way that would eliminate the duties of the JCN board under Revlon.

Defendants claim that the JCN board did not initiate any bidding process. Therefore, they argue that plaintiff does not fit the first Revlon situation, which occurs when a corporation initiates an active bidding process seeking to sell itself or to effect a business reorganization involving a clear break up of the company. Plaintiffs response is that the board did decide to put JCN up for sale, after receiving escalating bids for the ESOP stock.

Plaintiffs response does not address whether this allegation is sufficient to bring himself within the first prong of Revlon. At the hearing on defendants’ motion to dismiss, plaintiff argued that JCN initiated a “limited” bidding process. Plaintiffs complaint, however, does not allege an active bidding process; it alleges that defendants specifically sought a white knight buyer. The record contains no allegation that JCN received or solicited other bids. Plaintiffs complaint therefore does not allege facts that place plaintiff within the first category.

Plaintiff argues that the board’s conduct falls within the second category, which involves a situation where, “in response to a bidder’s offer, a target abandons its long-term strategy and seeks an alternative transaction involving the break up of the company.” Plaintiff alleges that the board determined to put the company up for sale after receiving escalating bids for the ESOP stock., Defendants counter that no facts suggest that the board intended to break up JCN. To allege a break up of a corporation, plaintiff must allege that defendants’ actions end the corporate existence of the company. Revlon, 506 A.2d at 173 (break up when purchaser intended to split corporation and dispose of assets); Paramount Communications, Inc. v. QVC Network, Inc., 637 A.2d 34 (merger or sale does not equate to break up of corporation); Marcel Kahan, Paramount or Paradox: The Delaware Supreme Court’s Takeover Jurisprudence, 19 J. Corp. L. 583, 600-01 (1994) (break up concerns splitting assets of corporation); Lawrence A. Cunningham & Charles M. Yablon, Delaware Fiduciary Duty Laic After QVC And Technicolor: A Unified Standard (And The End of Revlon Duties?), 49 Bus. Law. 1593, 1618 (1994) (break up concerns sale of “individual divisions”). Plaintiff does not allege that defendants sought a transaction that would break up the corporation. Indeed, plaintiff alleges the opposite — that defendants sought a transaction that would keep JCN intact and thus enable JCN executives to maintain their management positions.

Finally, under the third category — which applies when approval of a transaction results in a “sale or change of control” — defendants argue that plaintiffs claim must be dismissed because he cannot show a sale or change of control of JCN. Plaintiff fails to allege a sale or change in control when “ ‘[e]ontrol of both [companies] remain[s] in a large, fluid, changeable and changing market.’ ” Arnold, 650 A.2d at 1289 (quoting QVC, 637 A.2d at 47). This is true even when former stockholders of the company are reduced to minority shareholders in the acquiring company. Id. at 1290; see also Santa Fe, 669 A.2d at 71. Plaintiff attempts to evade this obstacle in various ways.

Plaintiff first argues that JCN had a change in control because it was a publicly-held corporation, while Highwoods’ structure as an REIT eliminates the right of public shareholders to obtain a controlling share in the corporation. Plaintiff argues that Highwoods is not subject to control because it would lose its tax status as an REIT if one shareholder held more than 9.8 percent of the stock in Highwoods. The complaint, however, does not allege that Highwoods was an REIT. Second, Highwoods’ status as an REIT does not by itself prevent a shareholder from obtaining more than 9.8 percent of its shares; High-woods would simply lose its REIT status if a shareholder did obtain a controlling share. See 26 U.S.C. § 856.

More importantly, the fact that no one can obtain a controlling share of High-woods does not help plaintiffs claim. JCN shareholders have not lost their powers as public shareholders in JCN for a corporation that is controlled by someone else. See QVC, 637 A.2d at 43 (control changed when one individual would obtain voting control instead of public market). JCN shareholders did not lose their power to elect directors or veto charter amendments, mergers, consolidations, sales of all assets, and dissolutions of Highwoods. See id. at 43. JCN shareholders simply suffered a dilution of voting power. This fact alone is not sufficient to constitute a change of control; a dilution of shares occurs in every stock-for-stock transaction. See Arnold, 650 A.2d at 1290; Santa Fe, 669 A.2d at 71. Even though no particular shareholder has a controlling share, control remains in the hands of shareholders who “have virtually identical interests with respect to the company: to maximize the value of their shares.” See Kahan, 19 J. Corp. L. at 595. Before the Highwoods acquisition, a large, fluid market held control over JCN. After the acquisition, a large, fluid market held control over High-woods.

Plaintiff argues that the cases cited by defendants involved stock for stock mergers, while the merger here involves cash and Highwoods stock for JCN stock. Plaintiff cites no case law which makes such a distinction, and the Court fails to see the difference. JCN shareholders had the ability to choose a straight stock for stock merger if they so desired. The dilution of stock is not sufficient to establish a change of control. Any other reduction that shareholders suffered as a result of the cash/stock alternative was at their own discretion. A shareholder cannot accept the partial cash buy-out and then complain that his or her power as a shareholder has been wrongfully reduced as a result of that choice.

Plaintiff also argues that the difference in size between JCN and Highwoods shows a change in control because the merger was not between “equals.” Plaintiff cites no case law which finds a change of control based solely on a merger of unequal corporations. The only relevance that the Court can ascertain by any difference in size is simply that JCN shareholders have suffered a substantial dilution in their voting'power. Again, such a dilution is not enough to show a change of. control.

Plaintiff is unable to meet any of the three circumstances which’give rise to enhanced scrutiny under Revlon. Plaintiff seeks leave to amend his complaint, and the Court should grant leave under Fed.R.Civ.P. 15(a) unless such an amendment would be futile. Grossman v. Novell, Inc., 120 F.3d 1112, 1126 (10th Cir.1997). At this point, the Court cannot say-that plaintiff cannot plead any facts that would allow a claim under Revlon. Specifically, plaintiff might be able to allege that JCN falls within the first circumstance by initiating an active bidding process before ae-' cepting the Highwoods offer. The extent to which JCN solicited bids and potential purchasers is currently unclear. Local Court rules establish the procedure that must be followed, however, in seeking leave to amend. Specifically, D. Kan. Rule 15.1 states that a motion for leave to amend must include a signed original of the proposed amended pleading. Without reference to the specific, language of the proposed amendment, the Court cannot speculate whether plaintiff might be able to allege an actionable claim under Revlon. The Court therefore declines plaintiffs current request for leave to amend, without prejudice to future consideration of that issue in compliance with D.Kan. Rule 15.1.

2. Unocal

Under Unocal Corp. v. Mesa Petroleum Co., enhanced judicial scrutiny applies “whenever the record reflects that a board of directors took defensive measures in response to a ‘perceived threat to corporate policy and effectiveness which touches upon issues of control.’ ” Unitrin, Inc. v. American Gen. Corp., 651 A.2d 1361, 1372 n. 9 (Del.1995). Once plaintiff establishes that defensive measures have been employed in a contest for control, the board has the burden of showing (1) that it “had reasonable grounds for believing that a danger to corporate policy and effectiveness existed,” and (2) “that [its] defensive response was reasonable in relation to the threat posed.” Once the board has established the reasonableness of its perception of a threat and the proportionality of the response, it receives the protection of the business judgment rule. Santa Fe, 669 A.2d at 71 (citations omitted).

Defendants argue that they had reasonable grounds to believe that JCN faced the threat of a two-tiered hostile takeover where one of the offering companies would achieve control of JCN and then force minority shareholders to dispose of their shares at a reduced price, and that past offers to purchase the ESOP stock were inadequate. Defendants argue that based on these reasonable beliefs, they took reasonable measures in adopting the shareholder rights plan on July 25, 1997, and that, plaintiffs claims must therefore be dismissed.

The Court cannot conclude solely from plaintiffs complaint, however, that defendants reasonably perceived the threat of a two-tiered takeover. In Santa Fe, the Delaware Supreme Court noted that claims under Unocal can rarely be disposed of on a motion to dismiss:

The complaint does not admit that the Board had proper grounds for its decision.

Nor does the Board enjoy a presumption to that effect.... As the terminology of enhanced judicial scrutiny implies, boards can expect to be required to justify their decisionmaking, within a range of reasonableness, when they adopt defensive measures with implications for corporate control. This scrutiny will usually not be satisfied by resting on a defense motion merely attacking the pleadings.

Santa Fe, 669 A.2d at 72. Defendants bear the burden of proving that their belief was reasonable, and the allegations of the complaint are not sufficient to discharge their burden.

Defendants argue that Delaware courts have recognized that potential two-tier takeovers justify defensive measures. Defendants cite Unocal, 493 A.2d at 956; Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334, 1342 (Del.1987); and Gilbert v. El Paso Co., 575 A.2d 1131, 1145 (Del.1990). None of these cases, however, require the Court to find that defendants reasonably perceived a threat in the facts of this case. Both Unocal and Ivanhoe, involved fully-disclosed two-tier takeover attempts: the offerors had stated their intention to use such a coercive method. See Unocal, 493 A.2d at 949; Ivanhoe, 535 A.2d at 1339. Only Gilbert involved a situation like plaintiff alleges here, where the offeror did not expressly admit that it would use a two-tier takeover. See Gilbert, 575 A.2d at 1134-35. In Gilbert, however, defendants moved for summary judgment and the record contained evidence that the offeror’s true motive was to acquire all of the target corporation. See id.

Here the Court must view all allegations in plaintiffs favor. The complaint merely alleges that offers were made; it does not allege that any of the offers were part of a two-tiered takeover. Defendants’ cases do not support their argument that they reasonably perceived a threat of a two-tiered offer simply because an initial offer was made. All cases cited by defendants involved further evidence which indicated to the target board that defensive measures were necessary. Here, viewing the allegations in plaintiffs favor, the complaint simply alleges that the offers for the ESOP shares enhanced shareholder value.

The Court recognizes that the offers themselves suggest a potential for a two-tiered takeover. The mere potential, however, is not sufficient to meet defendants’ burden of showing a reasonable fear. To meet their burden, defendants must also show that they conducted a reasonable investigation to develop their fear. See Gilbert, 575 A.2d at 1144; Paramount Communications, Inc. v. Time, Inc., 571 A.2d 1140, 1152 (Del.1989). Nothing in the complaint hints at any investigation into the offers, let alone a reasonable investigation to determine whether the threat required defensive measures and if so, which ones. In addition, defendants must take the defensive actions in good faith. See id. Clearly the complaint does not require the Court to find that defendants implemented the shareholder rights plan in good faith on behalf of JCN shareholders, especially the shareholders that might get squeezed out by such a takeover. See ¶¶ 33, 43, 53.

Defendants argue that they had reason to believe that the initial offers prior to July 25, 1997 were inadequate. This argument derives from plaintiffs allegation that the successful Highwoods offer of $65 was inadequate. Defendants argue that because all offers before July 25 were significantly less than $65, defendants obviously had reason to believe that these offers were inadequate. Defendants’ argument, however, twists plaintiffs allegations. Plaintiff does allege that the Highwoods offer was inadequate at $65, but this allegation is based on the course of events leading up to Highwoods’ offer. Viewing the complaint in the light most favorable to plaintiff, it shows a steady stream of escalating offers as the competition for control of JCN heated up. Plaintiff alleges that by the end of this competition, $65 per share was inadequate. This allegation does not necessarily mean that $65 was inadequate six months earlier. Nothing in the complaint indicates that the board reasonably believed that the standing offers on July 25, 1997 were inadequate. Unless defendants are able to see the future, the final merger price, which was not known on July 25, 1997, cannot form the grounds for such a belief. While the board may have had reason to believe that the earlier offers were inadequate, the facts which might support that belief are not in plaintiffs complaint. In addition, the complaint does not suggest that defendants conducted a reasonable investigation into the value of the stock or made their decision in good faith. See Gilbert, 575 A.2d at 1144; Paramount Communications, Inc. v. Time Inc., 571 A.2d at 1152.

Plaintiff has met his burden of alleging that defendants took defensive measures in response to a contest for control. See Santa Fe, 669 A.2d at 71. Defendants have failed to meet their burden of showing that the board’s actions were reasonable as a matter of law. The Court therefore denies defendants’ motion to dismiss plaintiffs breach of fiduciary duty under Unocal.

B. Count II — Breach Of Fiduciary Duty Under ERISA

Plaintiff claims that defendants’ treatment of the ESOP shareholders constitutes a breach of fiduciary duty under ERISA. Defendants argue that they were not fiduciaries under ERISA and that even if they were, the challenged actions were not within the scope of their fiduciary duties under ERISA.

Under ERISA, defendants can become fiduciaries in three different ways:

[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

29 U.S.C. § 1002(21)(A).

In determining whether defendants are fiduciaries under ERISA, the Court first examines the terms of the ERISA plan. See Varity Corp. v. Howe, 516 U.S. 489, 502, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). Fiduciary duty is not an all-or-nothing concept; defendants have fiduciary duties only over those activities for which they are responsible. See Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 61 (4th Cir.1992). The ESOP plan lists JCN and its “representative body” as fiduciaries responsible for administering the plan. Plaintiff alleges that the JCN board is JCN’s “representative body.”

The plan gave defendants the power to “administer” or “manage” the trust, but it did not give them control «over the investment or sale of ESOP shares. See Sections 2.35, 2.17(a), (c) (Complaint ¶ 25, 26). The plan states that administration and management of the ESOP involve tasks and duties which are separate from the “management or disposition of the Trust’s assets.” See Section 2.17(a), (c) (Complaint ¶ 25). Plaintiff alleges that the JCN board had discretionary authority or control over ESOP assets because the plan required that Intrust, as trustee, submit all offers for ESOP shares for an advisory opinion by the JCN board. See Section 6.12 (Complaint ¶28). Plaintiff does not allege that Intrust was required to follow the board’s opinion, however, or that Intrust was in any other way limited in accepting an offer to purchase stock. Likewise, the fact that the plan gave defendants the power to remove the trustee does not establish that they had authority over the disposition of ESOP assets. See Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., Inc., 793 F.2d 1456, 1460 (5th Cir.1986). The plan therefore does not show that defendants had any authority or control over Intrust. Under the plan, defendants were not fiduciaries regarding the actual disposition of trust assets; they were only fiduciaries regarding (1) plan administration, (2) the issuance of advisory opinions regarding disposition of the trust assets, and (3) removing the trustee.

Because the plan did not make defendants fiduciaries regarding the disposition of ESOP assets, plaintiff alleges that defendants nevertheless exercised discretionary authority or control over the management and disposition of plan assets. The complaint contains no indication, however, that defendants had control or authority over the disposition of ESOP assets. Indeed, plaintiffs complaint suggests that defendants did not control the disposition of assets, because Intrust accepted the Bosfield offer despite defendants’ opposition. If defendants had the power to manage and dispose of ESOP shares, they could have merely rejected the offers, instead of creating poison pills which affected the entire corporation. In addition, defendants would not have needed to send letters to ESOP shareholders to influence their votes for the Highwoods acquisition.

Plaintiffs argue that defendants’ creation of poison pills and other prohibitive acts show an exercise of actual control over ESOP shares. Defendants did not take such action, however, because they had authority over the ESOP assets; they took such action because while they were able to control the entire corporation, they lacked the ability to control the disposition of ESOP assets. ERISA contemplates that an employer often will act as both an employer and plan fiduciary, and not all of an employer’s business