Cardiff Acquisitions, Inc. v. Hatch (751 F.2d 906, 1984)

HEANEY, Circuit Judge.

Cardiff Acquisitions, Inc., and Cardiff Equities Corporation (Cardiff) appeal from a district court order dismissing Cardiff’s complaint requesting preliminary and permanent injunctive relief preventing the Commissioner of Commerce, the Attorney General, and the Conwed Corporation from enforcing the Minnesota Corporate TakeOvers Act, 1984 Minn.Laws ch. 488, to be codified as Minn.Stat.Ann. chs. 80B and 302A. The district court held that the Act does not violate either the commerce or the supremacy clause of the United States Constitution. It reasoned that the Minnesota Take-Overs Act does not directly regulate interstate commerce, because “its scope is limited to Minnesota shareholders of companies that have a substantial nexus with the state [and] Minnesota claims no right under the statute to suspend the effect of a tender offer with regard to shareholders outside of Minnesota.” Cardiff Acquisitions, Inc. v. Hatch, 597 F.Supp. 1493, at 1497 (D.Minn.1984).

The district court recognized that the statute has indirect effects on interstate commerce, but it determined that these effects were outweighed by the state's legitimate interest in protecting local investors, Id. at 1497-1498.

The district court a]g0 held that the take. 0Ver statute does not violate the supremacy clause of the United States Constitution. It reasoned that Section 28(a) of the Securities Exchange Act of 1934 specifically permits states to enact tender offer legislation consistent with the Williams Act, 15 U.S.C. §§ 78m(d)-(e) and 78n(d)-(f) (1982). It stated:

The Minnesota Act is consistent with the ParP°se+sof the Williams Minne’ sfafCí 18 essentially a dlScloSur® ** thfu r^”res df osarue Parallel that m the Williams Act. The purpose of the disclosure requirements under both acts is shareholder protection. The principal additional disclosure required under the Minnesota Act (the effect that a takeover wil1 hav® on the state) is not in any mconsistent to th+e PurPose °f„ th® disclosure requirements under federal law and serves to protect the unique interests of Minnesota shareholders. c