This section contains the nature of the case and procedural background.

In February 1969, National Industries acquired 34% of D voting securities from Charles Schmidt and his family. Mr. Schmidt was the founder and president of the company and resigned after the purchase in October of 1969. Five National nominees were placed on D's board. The D board, with the attending National nominees abstaining, approved a proposal to liquidate and sell all of D's assets to National. D and National issued a joint proxy statement to their shareholders, recommending approval of the proposal. The proxy solicitation was successful, D was placed in liquidation and dissolution, and the exchange of shares was effected. P claimed the proxy was incomplete and misleading, as it did not state that Schmidt's sale to National had already given them control of D. P seeks money damages, restitution, and other equitable relief. P moved for summary judgment on the issue of D's and National's liability. The District Court denied the motion. The Court of Appeals reversed the District Court's denial of summary judgment to P on its Rule 14a-9 claims, holding that certain omissions of fact were material as a matter of law. The Supreme Court granted certiorari because the standard applied by the Court of Appeals in resolving the question of materiality appeared to conflict with the standard applied by other Courts of Appeals.

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