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Bender v. Jordan

May 31, 2007

MORTON A. BENDER, ET AL. PLAINTIFFS,
v.
CAROLYN D. JORDAN, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

Carolyn D. Jordan and David Wilmot used to be Chairman and Vice Chairman, respectively, of the Board of Directors of Independence Federal Savings Bank ("IFSB" or "Bank"). They and former Bank President Thomas Batties are the remaining Defendants in this lawsuit brought by disaffected shareholder Morton A. Bender.*fn1 The parties have been engaged in a gigantic struggle for control of the Bank, most recently evidenced by this suit in which Mr. Bender challenges an October 2005 shareholder vote for members of the Board. In a decision dated July 21, 2006, this Court found that Mr. Bender had demonstrated a likelihood of success that he would prove that Ms. Jordan and Messrs. Wilmot and Batties, with others, violated the securities laws and the Bank's bylaws by their actions leading up to, and conducting, the shareholders' meeting. See July 21, 2006, Memorandum Opinion [Dkt. #50]. The Court entered a preliminary injunction, enjoining the Bank and its Board from disseminating proxy materials to shareholders and holding shareholders' meetings until further order. Id. at 6; July 21, 2006, Order [Dkt. #51]. The Defendants -- five members of the Board and Mr. Batties -- immediately appealed the decision to the D.C. Circuit Court of Appeals. See Defendants' Notice of Interlocutory Appeal [Dkt. #56.] Since that time, however, all five Directors and Mr. Batties have resigned their positions.*fn2 Messrs. Wilmot and Batties and Ms. Jordan have sold their stock in the Bank. See Defs.' Mot. at 8. The appeal to the Court of Appeals was withdrawn in December 2006, just as briefs would have been due.*fn3 Mr. Bender has dismissed his claims against all but the three remaining Defendants,*fn4 who now seek dismissal on the basis that the claims are moot. Mr. Bender opposes the motion to dismiss.

Mr. Bender has the essential relief he sought: the five Directors and Mr. Batties are no longer running the Bank and it is controlled now by his four nominees remaining on the Board. Mr. Bender does not seek monetary damages from the Defendants and none of them holds a position as Director, Officer, or Shareholder against whom further injunctive relief would be appropriate.

You have won, Mr. Bender. The case is now moot and will be dismissed.

I. BACKGROUND

The First Amended Complaint, filed on September 22, 2006, prayed for the following relief:

(A) grant preliminary and permanent injunctive relief requiring the Director Defendants and Defendant Batties to comply with Section 13(d) of the Exchange Act, and the regulations thereunder, fully disclosing their plans and purposes concerning IFSB;

(B) grant preliminary and permanent injunctive relief requiring the Director Defendants and Defendant Batties to comply with 14(a) of the Exchange Act, and the regulations thereunder, and 12 C.F.R. § 569 to disclose to the shareholders, in any future solicitations, the falsity and misleading nature of the 2005 Proxy Materials, the May 2005 Committee to Save Correspondence, and the October 2005 Letter to Shareholders, and to further disclose Defendants' and the Bank's involvement in the May and October 2005 correspondence[;]

(C) grant injunctive relief voiding the election results of the October 26, 2005 Shareholders' Meeting;

(D) grant injunctive relief preventing the Director Defendants from causing the Bank to hold an Annual or Special Meeting of the Shareholders until further Order of this Court;

(E) grant injunctive relief requiring the Defendants and the Bank to conduct any future Annual or Special Meeting of the Shareholders in conformance with Roberts Rules of Order and the Bank's Bylaws, and to enjoin any further allocation of votes after the closing of the polls, and to enjoin the counting of broker routine votes for Management Nominees in the absence of express direction from the beneficial shareholder[;]

(F) grant injunctive relief neutralizing all of the Participant Shares and the Thompson Shares in any future election of Directors;

(G) grant injunctive relief preventing Defendant IFSB from indemnifying (or making advance payments to) the Director Defendants and Defendant ...


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