                                                                                                                           Opinions of the United
1999 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-21-1999

In Re: Rockefeller
Precedential or Non-Precedential:

Docket 98-5394




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Recommended Citation
"In Re: Rockefeller" (1999). 1999 Decisions. Paper 210.
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Filed July 19, 1999

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 98-5394 & 98-5395

IN RE: ROCKEFELLER CENTER PROPERTIES, INC.
SECURITIES LITIGATION

       FRANK DEBORA;
       WILSON WHITE;
       STANLEY LLOYD KAUFMAN, JR.;
       JOSEPH GROSS,
       Appellants at No. 98-5394

       CHARAL INVESTMENT COMPANY, INC,
       a New Jersey Corporation; C.W. SOMMER & CO.,
       a Texas Partnership, on behalf of themselves and
       all others similarly situated; ALAN FREED;
       JERRY CRANCE; HELEN SCOZZANICH;
       SHELDON P. LANGENDORF; RITA WALFIELD;
       ROBERT FLASHMAN; and RENEE B. FISHER
       FOUNDATION, Renee B. Fisher Foundation, Inc.,
       Appellants at No. 98-5395

On Appeal from the United States District Court
for the District of Delaware
D.C. Civil Action No. 96-cv-00543
(Honorable Roderick R. McKelvie)

Argued March 10, 1999

Before: MANSMANN, SCIRICA and NYGAARD,
Circuit Judges

(Filed July 19, 1999)
MICHAEL D. DONOVAN, ESQUIRE
 (ARGUED)
Donovan & Miller
1608 Walnut Street, Suite 1400
Philadelphia, Pennsylvania 19103

JAMES C. STRUM, ESQUIRE
PAMELA S. TIKELLIS, ESQUIRE
Chimicles & Tikellis
One Rodney Square
P.O. Box 1035
Wilmington, Delaware 19899

 Attorneys for Appellants

MAX GITTER, ESQUIRE (ARGUED)
Paul, Weiss, Rifkind, Wharton
 & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064

 Attorney for Appellees,
Goldman Sachs Mortgage Co.,
Whitehall Street Real Estate
Limited Partnership V, W.H.
Advisors, Inc. V, WH Advisors, L.P.
V, The Goldman Sachs Group,
L.P., Goldman, Sachs & Co., and
Daniel M. Neidich

RICHARD D. ALLEN, ESQUIRE
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899

RUSSELL E. BROOKS, ESQUIRE
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005

 Attorneys for Appellee,
David Rockefeller

                           2
       ROBERT K. PAYSON, ESQUIRE
       ARTHUR L. DENT, ESQUIRE
       Potter, Anderson & Corroon
       Hercules Plaza
       1313 Market Street
       P.O. Box 951
       Wilmington, Delaware 19899

        Attorneys for Appellees,
       Peter D. Linneman and
       Richard M. Scarlata

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This securities appeal arises from the acquisition of
Rockefeller Center Properties, Inc. by a group of investors
led by Whitehall Street Real Estate Limited Partnership V.
Plaintiffs are former Rockefeller Center Properties, Inc.
shareholders who allege the proxy statement and other
documents prepared in connection with the acquisition
were materially misleading because they failed to disclose
(1) that the Whitehall Group was negotiating to sell roughly
20% of Rockefeller Center to General Electric following the
acquisition and (2) that, as a result of the acquisition, the
Whitehall Group would own transferable development
rights (air rights) associated with Rockefeller Center.1 The
District Court granted defendants summary judgment on
both claims, holding the failure to disclose such
negotiations and the acquisition of development rights was
not material. We will vacate and remand its grant of
summary judgment on plaintiffs' sale negotiations claim
but will affirm the grant of summary judgment on the
transferable development rights claim.
_________________________________________________________________

1. Defendants include some members of the Whitehall Group, some of
their affiliates and former officers and directors of Rockefeller Center
Properties, Inc.

                               3
I.

Rockefeller Center Properties, Inc. was a real estate
investment trust created in 1985 via a $750 million initial
public offering of common stock. Rockefeller Center
Properties, Inc. used the offering proceeds together with
$550 million raised through the sale of discounted
debentures to make a $1.3 billion loan to Rockefeller
Center Properties and RCP Associates, two partnerships
(the "Partnerships")2 that at the time owned most of
Rockefeller Center, in midtown Manhattan. To secure the
loan, Rockefeller Center Properties, Inc. received two
mortgages on the Partnerships' interests in Rockefeller
Center.

In the fall of 1994, Rockefeller Center Properties, Inc.
realized it lacked sufficient cash to make upcoming
debenture payments. In order to avoid default, it signed
financing agreements with Whitehall Street Real Estate
Limited Partnership V and Goldman Sachs & Co. Whitehall
agreed to make a $150 million loan to Rockefeller Center
Properties, Inc. in exchange for an assignment of part of the
Rockefeller Center mortgages, warrants for Rockefeller
Center Properties, Inc. stock and "excess" cash. Goldman
Sachs bought $75 million of Rockefeller Center Properties,
Inc. debentures in exchange for a seat on Rockefeller
Center Properties, Inc.'s board of directors. Goldman Sachs
subsequently designated defendant Daniel M. Niedich, who
served as a director until August 1995.

Rockefeller Center Properties, Inc.'s financial problems
were soon compounded by the Partnerships' financial
problems. On May 11, 1995, the Partnerships filed for
Chapter 11 bankruptcy and ceased making mortgage
payments. Realizing that without these payments it would
soon be unable to meet its own financial obligations,
Rockefeller Center Properties, Inc.'s board of directors
began to consider recapitalization and acquisition
proposals. Three groups expressed significant interest. The
first group was led by Samuel Zell, a Chicago real-estate
_________________________________________________________________

2. The partnerships were owned by The Rockefeller Group, Inc. ("RGI"),
which was in turn owned by the Mitsubishi Estate Co. of Japan and
Rockefeller family trusts.

                               4
investor, and included General Electric Company, whose
subsidiary the National Broadcasting Company leased
approximately 20% of Rockefeller Center. The second was
led by Gotham Partners, L.P., an investment firm that held
5.6% of Rockefeller Center Properties, Inc.'s shares. The
third group included Whitehall Street Real Estate Limited
Partnership V, Goldman Sachs & Co., Daniel M. Niedich
and David Rockefeller. On August 11, 1995, Rockefeller
Center Properties, Inc. entered into a combination
agreement with the Zell Group, in which the Zell Group
pledged a $250 million cash capital contribution plus $700
million in new financing. The agreement also contained an
escape clause under which Rockefeller Center Properties,
Inc. could terminate the combination plan and pursue
another proposal it considered superior.

In the fall of 1995, the Partnerships filed a Chapter 11
reorganization plan in which they agreed to transfer full
ownership of Rockefeller Center to Rockefeller Center
Properties, Inc. Also in the fall, the Zell, Gotham and
Whitehall Groups continued to submit additional proposals
to Rockefeller Center Properties, Inc. In September,
Rockefeller Center Properties, Inc.'s board rejected the
Whitehall Group's offer to buy out Rockefeller Center
Properties, Inc. for $100 million, an amount that equaled
$6.50 per share. It also rejected the Gotham Group's $105
million rights offering proposal. But in November the board
unanimously approved the Whitehall Group's all-cash
merger bid of $8.00 per share, believing this offer was
superior to the Zell Group's final bid, which contained both
cash and debt components and was valued at $7.65 to
$7.76 per share.3 At about the same time, Rockefeller
Center Properties, Inc., Whitehall and Goldman Sachs
entered into a rights offering agreement under which
Rockefeller Center Properties, Inc. would be able to make a
$200 million public rights offering4 if Rockefeller Center
_________________________________________________________________

3. The Whitehall Group's $8.00 per share bid appears to represent a 50%
premium over the price of Rockefeller Center Properties, Inc. stock before
the bidding for Rockefeller Center Properties, Inc. began.
4. In a rights offering, an issuer's existing shareholders "are granted
the
opportunity (i.e., right) to purchase [a] new offering of shares, usually
at
a discount below their current market price."See JAMES D. COX ET AL.,
SECURITIES REGULATION 217 (2d ed. 1997).

                                5
Properties, Inc.'s shareholders did not approve the
Whitehall Group's bid.

On February 14, 1996, Rockefeller Center Properties, Inc.
filed a final proxy statement regarding the Whitehall
Group's proposed merger with the SEC and distributed it to
shareholders. The proxy statement represented that
Rockefeller Center Properties, Inc.'s board believed the
company might not remain solvent if the merger failed and
explained that the rights offering might be pursued if the
merger were rejected. It also stated that the board believed
the rights offering, even if successful, would not allow
Rockefeller Center Properties, Inc. to take ownership of
Rockefeller Center. In addition, the proxy statement
mentioned an appraisal valuing Rockefeller Center at $1.25
billion. The appraisal stated that this amount did not
include any transferable development rights, or air rights,5
associated with Rockefeller Center because Rockefeller
Center Properties, Inc.'s mortgage did not encumber those
rights.

The proxy statement also contained a detailed description
of the Whitehall Group's plans if the merger were approved.
It stated that the Whitehall Group would take title to
Rockefeller Center and raise at least $430 million in debt
financing, part of which would be used to repay Rockefeller
Center Properties, Inc.'s existing debt.

In addition, the proxy statement contained references to
possible "credit lease financing" transactions with General
Electric. Specifically, it described a September 1995
transaction in which Rockefeller Center Properties, Inc.,
_________________________________________________________________

5. In New York City, a real property owner who acquires air rights from
another property can develop his own property beyond the limits zoning
laws would otherwise impose. Air rights are created when "owners of real
property [do] not develop[ ] their property to the full extent" allowed by
the zoning laws. Penn Central Transp. Co. v. New York City, 438 U.S.
104, 113-14 (1978). Air rights associated with a property designated as
a landmark--as Rockefeller Center is--have a limited number of possible
purchasers: the rights may be transferred only to directly adjacent lots
within the same block, lots directly across the street and any lot that is
part of a chain of lots under common ownership with the landmark and
separated from the landmark only by streets.

                               6
General Electric and a Zell affiliate agreed to modify NBC's
lease so that Rockefeller Center Properties, Inc. could
obtain credit lease financing6 and referred to the February
1996 Schedule 13E-3 in which Rockefeller Center
Properties, Inc. reported this transaction with the SEC. The
possibility of a lease modification was also briefly
mentioned in documents presented to Rockefeller Center
Properties, Inc.'s board by the company's financial advisors
and later filed with the SEC. Finally, the proxy statement
mentioned the possibility of "a credit leasefinancing
arrangement relating to a lease from, or guaranteed by, GE"
in connection with the rights offering. It does not appear
that the proxy statement mentioned whether the Whitehall
Group contemplated pursuing a lease financing with NBC,
General Electric or anyone else.

Accompanying the proxy statement were a letter signed
by Rockefeller Center Properties, Inc.'s president and its
chairman of the board as well as a letter from the board.
The first letter described the rights offering agreement,
stating that Rockefeller Center Properties, Inc. had not
decided whether it would pursue such an offering if the
merger failed. The second letter stated that the board had
unanimously approved the merger.

On March 25, 1996, Rockefeller Center Properties, Inc.'s
shareholders approved the merger. Soon thereafter, the
Bankruptcy Court approved the Partnerships'
reorganization plan, which transferred Rockefeller Center to
the Whitehall Group.

On April 23, 1996, Rockefeller Center Properties, Inc.
agreed to sell General Electric the property subject to the
NBC lease for $440 million, an amount defendants claim
was equal to the present value of the future payments due
under the lease. A May 6, 1996 Wall Street Journal article
_________________________________________________________________

6. A credit lease financing is a form of asset securitization in which the
right to receive future lease payments is sold for the present value of
those payments. See RICHARD R. GOLDBERG, "Commercial Real Estate
Securitization: Capital Markets Financing for Debt and Equity," 2
MODERN REAL ESTATE TRANSACTIONS 1745 (11th ed.). Foran overview of asset
securitization, see generally Steven L. Schwarcz, The Alchemy of Asset
Securitization, 1 STAN. J.L. BUS. & FIN. 133 (1994).

                                7
describing the sale mentioned that General Electric and
NBC had been considering this transaction for over two
years. In a June 6, 1996 New York Daily News article, an
NBC executive vice president stated that NBC began
thinking about the transaction in 1995.

II.

Plaintiffs filed suit on November 15, 1996, claiming that
defendants violated Sections 10(b) and 14(a) of the
Securities Exchange Act of 1934, 15 U.S.C. S 78aa et seq.,
and SEC rules promulgated thereunder through
misstatements and omissions in connection with their
acquisition of Rockefeller Center Properties, Inc. Plaintiffs
made essentially four allegations, two of which they raise
on appeal: first, that defendants failed to disclose the
Whitehall Group's intention to sell a portion of Rockefeller
Center to General Electric, and second, that defendants
failed to disclose the existence of the air rights and the fact
that the Whitehall Group would acquire them if its merger
bid were approved.7

On April 30, 1997, defendants filed a motion to dismiss,
supporting this motion with an affidavit containing, inter
alia, a 1994 appraisal of Rockefeller Center and newspaper
articles discussing the 1995 "bidding war" for Rockefeller
Center Properties, Inc. Defendants also referred to a
January 1997 affidavit containing several documents
Rockefeller Center Properties, Inc. had filed with the SEC.
Plaintiffs responded to defendants' motion on July 9, 1997,
submitting the Form 10-K Rockefeller Center Properties,
Inc. filed with the SEC in 1996, the Form 10-K the
Rockefeller Center Properties Trust filed in 1997, two
bankruptcy disclosure statements filed by the Partnerships
_________________________________________________________________

7. In District Court, plaintiffs also claimed that defendants failed to
disclose the interest of certain companies in leasing property at
Rockefeller Center at "premium rates" and alleged that defendants
"understated the potential alternatives to the merger" with the Whitehall
Group. The District Court granted defendants summary judgment on
these claims because it concluded the misstatements or omissions
plaintiffs alleged were not material. These claims have not been raised on
appeal.

                               8
and a transcript from the Partnerships' bankruptcy
hearings.

On October 7, 1997, the court heard argument on the
motion to dismiss. Following argument, plaintiffs submitted
a letter from Winthrop, Stimson, Putnam & Roberts, a New
York law firm, to the New York City Planning Commission
regarding the Rockefeller Center air rights. Later, plaintiffs
also submitted two newspaper articles "discussing the
interest of several parties in Rockefeller Center."

The District Court issued its ruling on December 7, 1997.
Because the court had considered "affidavits and other
evidence submitted by the parties," it converted the motion
to dismiss into a motion for summary judgment under Rule
12(b). The District Court granted defendants summary
judgment with respect to the General Electric sale
negotiations claim. After suggesting that defendants'
disclosure may have been sufficient, the court observed
that "[p]laintiffs offer no proof that defendants knew of the
details of [the General Electric] transaction at the time of
the Proxy Statement or the shareholder vote." But the court
decided it need not resolve either issue because it
concluded the General Electric transaction was not
materially different from the potential lease financing
disclosed in the proxy statement. It reasoned that because
both a sale and a lease financing provide an "immediate
source of cash," they are economically identical. It added
that because General Electric's general interest in
Rockefeller Center was "well-known," the details of the
potential transaction were not material. Finally, the court
noted that General Electric was a rival bidder but did not
offer more than the Whitehall Group, a fact which
suggested to the court that no reasonable shareholder
would have considered the potential sale of part of
Rockefeller Center important in deciding how to vote on the
merger.

The District Court refused to grant defendants summary
judgment on plaintiffs' transferable development rights (air
rights) claim. Finding the proxy statement did not disclose
that Rockefeller Center Properties, Inc. would acquire the
air rights when it acquired Rockefeller Center, the court
then examined whether this omission was material. The

                               9
court determined it could not conclude the air rights were
immaterial because it had no evidence to support
defendants' claims that the air rights were either impossible
to value or of minimal value.

On December 23, 1997, plaintiffs moved for reargument
or, in the alternative, for certification for interlocutory
appeal, claiming the District Court had improperly
converted the motion to dismiss into a motion for summary
judgment. They also filed a Rule 56(f) affidavit documenting
their need for discovery. On March 4, 1998, defendants
moved for summary judgment on plaintiffs' air rights claim.
They supported this motion with affidavits from Robert Von
Ancken, a real estate appraiser who had appraised
Rockefeller Center in 1994, and Norman Marcus, former
general counsel to the New York City Planning Commission
and author of many laws governing air rights. Von Ancken
explained his appraisal of Rockefeller Center had ascribed
no value to the air rights because the "possibility they
would be sold for value was too remote and speculative." He
added that only one site--Rockefeller Plaza West--could
feasibly make use of the air rights and explained that
Rockefeller Plaza West could obtain air rights from a
number of properties other than Rockefeller Center. Based
on these facts, Von Ancken stated the air rights were worth
at most $8.5 million. Marcus agreed that Rockefeller Plaza
West was the only practical receiving site for the air rights.

Plaintiffs responded with three declarations of their own.
Michael Ryngaert, a professor of finance and former senior
economist at the SEC, explained the air rights could be
valued using methods employed to price stock options and
concluded the omission of the air rights and the sale
negotiations with NBC were, when combined, materially
misleading. Mary Beach, a former senior associate director
with the SEC, agreed with Ryngaert's assessment. Peter
Korpacz, a real estate appraiser, valued the air rights at "at
least $30 million" and disputed Von Ancken and Marcus's
conclusion that a number of sites could transfer air rights
to Rockefeller Plaza West.

On July 10, the District Court declined to reverse its
decision to convert the motion to dismiss into a motion for
summary judgment. The District Court also rejected

                               10
plaintiffs' claim they had not received notice of conversion
as required by Rule 12(b) and Rose v. Bartle, 871 F.2d 331,
340 (3d Cir. 1989), although without explanation. The court
then granted defendants' motion for summary judgment on
the air rights claim. After reviewing all the evidence, the
court observed the highest value assigned to the air rights
was a newspaper article's $42 million estimate. The court
stated that even this number was small when compared to
Rockefeller Center's $1.2 billion value and therefore
concluded that "no reasonable trier of fact would conclude
[the failure to mention the air rights was] a material
omission."

This appeal followed.

III.

Because the plaintiffs asserted claims under the
Securities Exchange Act of 1934, the District Court had
federal question jurisdiction under 15 U.S.C. S 78aa and 28
U.S.C. S 1331. We have jurisdiction under 28 U.S.C.
S 1291.

IV.

There are two issues on appeal: whether the District
Court's conversion of the motion to dismiss was proper with
respect to plaintiffs' General Electric negotiations claim8
and whether the District Court correctly concluded the
failure to disclose that the Whitehall Group would acquire
Rockefeller Center's transferable development rights (air
rights) was not material. Both issues are subject to plenary
review. See Ford Motor Co. v. Summit Motor Prods. Inc., 930
F.2d 277, 284 (3d Cir. 1991) (plenary review on decision to
convert); In re Unisys Sav. Plan Litig., 74 F.3d 420, 433 (3d
Cir. 1996) (plenary review on a grant of summary
judgment).
_________________________________________________________________

8. The propriety of conversion with respect to the air rights claims is
not
at issue. The District Court did not grant summary judgment on those
claims as the result of conversion but because of defendants' motion for
summary judgment.

                               11
A. Conversion

1.

Fed. R. Civ. P. 12(b) provides that if on a 12(b)(6) motion
to dismiss

       matters outside the pleading are presented to and not
       excluded by the court, the motion shall be treated as
       one for summary judgment as provided in Rule 56, and
       all parties shall be given reasonable opportunity to
       present all material made pertinent to such a motion
       by Rule 56.

The process of treating a motion to dismiss as a motion
for summary judgment is known as "conversion." When
reviewing a District Court's decision to convert a motion to
dismiss into a motion for summary judgment, we typically
examine three issues: first, whether the materials
submitted require conversion; second, whether the parties
had adequate notice of the district court's intention to
convert; and third, if the parties did not have notice,
whether the court's failure to provide notice was harmless
error. See Rose v. Bartle, 871 F.2d 331 (3d Cir. 1989).9

Although the plain language of Rule 12(b) seems to
require conversion whenever a district court considers
materials outside the pleadings, we and other courts of
appeals have held that a court may consider certain
narrowly defined types of material without converting the
motion to dismiss. In In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410 (3d Cir. 1997), we held that a court
can consider a " `document integral to or explicitly relied
upon in the complaint.' " Burlington , 114 F.3d at 1426
(quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220
(1st Cir. 1996)). And in PBGC v. White Consol. Indus., 998
F.2d 1192, 1196 (3d Cir. 1993), we decided that a district
court may examine an "undisputedly authentic document
that a defendant attaches as an exhibit to a motion to
dismiss if the plaintiff 's claims are based on the
_________________________________________________________________

9. For a comprehensive discussion of conversion, see 5A CHARLES ALAN
WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE S 1366 (2d ed.
1990 & Supp. 1999).

                               12
document." The rationale for these exceptions is that "the
primary problem raised by looking to documents outside
the complaint--lack of notice to the plaintiff--is dissipated
`[w]here plaintiff has actual notice . . . and has relied upon
these documents in framing the complaint.' " See
Burlington, 114 F.3d at 1426 (quoting Watterson v. Page,
987 F.2d 1, 3-4 (1st Cir. 1993)).10

When a District Court decides to convert a motion to
dismiss into a motion for summary judgment, it must
provide the parties "reasonable opportunity" to present all
material relevant to a summary judgment motion. Fed. R.
Civ. P. 12(b). The parties can take advantage of this
opportunity only if they have "notice of the conversion."
Rose v. Bartle, 871 F.2d 331, 340 (3d Cir. 1989). In Rose,
we held that notice must be "unambiguous" and must
"fairly apprise[ ]" the parties that the court intends to
convert the motion. Id. at 341-42. We acknowledged that
notice need not be express to meet these standards but
recommended that District Courts provide express notice
when they intend to convert a motion to dismiss. See id. at
342.11 We also suggested that notice might be provided
through the court's orders or at a hearing. See id. at 341-
42. In this case, plaintiffs claim they did not learn of the
court's intention to convert the motion until it granted
summary judgment.

2.

We believe the District Court did not provide adequate
notice of conversion. The record contains no orders
suggesting the District Court would convert the motion to
dismiss. Nor did the District Court provide notice at the
October 7, 1997 hearing on the motion to dismiss. Rather,
_________________________________________________________________

10. For an analysis of materials courts consider on 12(b)(6) motions, see
Kurtis A. Kemper, Annotation, What Matters Not Contained in the
Pleadings May Be Considered in Ruling on a Motion to Dismiss under Rule
12(b)(6) of the Federal Rules of Civil Procedure or Motion for Judgment on
the Pleadings Under Rule 12(c) Without Conversion to Motion for Summary
Judgment, 138 A.L.R. FED. 393 (1997).

11. We reaffirm this recommendation because express notice is easy to
give and removes ambiguities.

                               13
at the hearing the court repeatedly stated that it was
deciding a motion to dismiss. See Appendix at 1254 ("If
[plaintiffs] survive the motion to dismiss . .. ."); id. at 1273
("I am not saying I am going to deny the motion to
dismiss."); id. at 1292 ("[I]f I .. . grant the motion to
dismiss . . . ."); id. (speaking of defendants' motion as "a
motion to dismiss"); id. at 1294 (speculating on future
proceedings if "there is a failure in the pleadings . . . .").12

Defendants maintain that plaintiffs had constructive
notice of conversion because they chose to submit material
beyond the pleadings.13 We note that some courts of
appeals have decided a party who submits material outside
the pleadings is on constructive notice of conversion. See,
e.g., San Pedro Hotel Co. v. City of Los Angeles, 159 F.3d
470, 477 (9th Cir. 1998) (holding that when a party
submits matters outside the pleadings, he has notice
conversion may occur); Collier v. City of Chicopee, 158 F.3d
601, 603 (1st Cir. 1998) (same); Laughlin v. Metropolitan
Washington Airports Auth., 149 F.3d 253, 260-61 (4th Cir.
1998) (same); Arnold v. Air Midwest, Inc., 100 F.3d 857,
859 n.2 (10th Cir. 1996) (same). But at least one other
circuit has required express notice of conversion. See Jones
v. Automobile Ins. Co., 917 F.2d 1528, 1532-33 (11th Cir.
1990) (holding that District Court must provide ten days
"express notice"). Defendants assert we adopted a
constructive notice approach in Hilfirty v. Shipman, 91 F.3d
573 (3d Cir. 1996), claiming that Hilfirty holds that a party
who submits material outside the pleadings "is deemed to
be on notice that the motion [to dismiss] will be converted."
We disagree. Hilfirty explicitly states that the "primary
_________________________________________________________________

12. We also note that defendants not only failed to suggest conversion
was required but instead stated the court was deciding a motion to
dismiss. See id. at 1272 ("I am quoting the position on a motion to
dismiss."). Defendants argue that statements made at the October 7
hearing are irrelevant to the notice issue because plaintiffs submitted
material beyond the pleadings only after the hearing. But both parties
submitted material beyond the pleadings before October 7; defendants
alone submitted twenty-two exhibits totaling more than seven hundred
pages prior to the hearing.

13. For a discussion of these varying approaches, see 2 JAMES WM. MOORE
ET AL., MOORE'S FEDERAL PRACTICE P 12.34 (3d ed. 1999).

                               14
reason" notice was deemed adequate was that some of the
motions to dismiss had been framed in the alternative as
motions for summary judgment. Hilfirty, 91 F.3d at 578-79.
Because defendants' motion to dismiss here was not framed
in the alternative as a motion for summary judgment, we
think Hilfirty is inapposite. In addition, the District Court in
Hilfirty did not expressly and repeatedly state it was
deciding a motion to dismiss.

3.

A district court's failure to provide notice compels
reversal unless the failure is harmless error. See Rose at
342. Failure to provide notice is harmless error if the
plaintiff 's complaint would not have survived a motion to
dismiss. See id. In this case the motion to dismiss must be
informed by the pleading standards of the Private Securities
Litigation Reform Act, 15 U.S.C. S 78u-4 et seq. In the past,
we have applied the harmless error analysis where we
determined the parties did not have notice of conversion.
See Rose v. Bartle, 871 F.2d 331 (3d Cir. 1989), Hancock
Industries v. Schaeffer, 811 F.2d 225 (3d Cir. 1987); Davis
Elliott International, Inc. v. Pan American Container Corp.,
705 F.2d 705 (3d Cir. 1983). In each case, we were able to
determine the propriety of dismissal by applying
established law to relatively straightforward allegations in
the complaint. Although material beyond the pleadings had
been submitted, it does not appear to have been
voluminous or to have raised complex issues of pleading.

When appropriate, a court of appeals may decide a
motion to dismiss even after conversion. But in cases like
this one, involving complex principles of law and
voluminous materials (an 1800-page Appendix), the District
Court, which is familiar with the record, is better suited for
this task in the first instance. Furthermore, the motion to
dismiss here involves interpreting a recently-enacted law--
the Private Securities Litigation Reform Act--whose scope is
still being defined. In addition, the parties briefed and
argued their cases prior to our recent decision in In re
Advanta Corporation Securities Litigation, #6D 6D6D# F.3d ___ (3d
Cir. 1999), setting forth the pleading standard under
section 78u-4(b)(2) of the Reform Act. We believe the wiser

                               15
course is to vacate the grant of summary judgment on this
claim and remand so the parties have the opportunity to
frame their arguments in light of this opinion and Advanta.

For these reasons, we will vacate and remand the District
Court's grant of summary judgment on plaintiffs' General
Electric sale negotiations claim.

B. Transferable Development Rights (Air Rights)

Plaintiffs assert that the failure to disclose the existence
and value of the air rights was a "material omission"
violating Rules 10b-5 and 14a-9.14 An omitted fact is
immaterial unless "there is a substantial likelihood that a
reasonable shareholder would consider it important in
deciding how to vote," TSC Indus., Inc. v. Northway, Inc.,
426 U.S. 438, 449 (1976), and unless its "disclosure . . .
would have been viewed by the reasonable shareholder as
having significantly altered the `total mix' of information
made available." Id. In In re Burlington Coat Factory Sec.
Litig., 114 F.3d 1410, 1427 (3d Cir. 1997), we held an
omission is immaterial as a matter of law if the facts
omitted "would have had no more than a negligible impact
on a reasonable investor's prediction of the firm's future
earnings." In determining the effect of an omission, we
examine whether the information omitted is speculative or
unreliable, see In re Craftmatic Sec. Litig., 890 F.2d 628,
644 (3d Cir. 1989), or if it is contingent. See Lewis v.
_________________________________________________________________

14. Rule 10b-5, promulgated by the SEC underS 10(b), forbids the
omission of "a material fact necessary in order to make . . . statements
made . . . not misleading." In order to state a 10b-5 claim based on the
omission of a material fact, a plaintiff must show"that the defendant i)
made . . . omissions; ii) of material fact; iii) with scienter; iv) in
connection with the purchase or sale of securities; v) upon which the
plaintiff relied; and vi) that reliance proximately caused the plaintiff
's
injury." In re Phillips Petroleum Sec. Litig. , 881 F.2d 1236, 1244 (3d
Cir.
1989).

Rule 14a-9, promulgated by the SEC under S 14(a), prohibits the
solicitation of proxies by means of a proxy statement that contains a
statement that "is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to make the
statements therein not false or misleading."

                               16
Chrysler Corp., 949 F.2d 644, 652-53 (3d Cir. 1991). These
considerations are especially relevant when the information
omitted is "soft" information, a term which includes
statements such as estimates and appraisals. See
Craftmatic, 890 F.2d at 642-43.

Plaintiffs claim the District Court erred in determining
the materiality of the air rights by comparing their value to
the value of Rockefeller Center. Asserting that knowledge of
the air rights and their value would have been important to
a reasonable shareholder's decision on whether to vote for
the merger, plaintiffs note their expert appraised the air
rights at "at least $30 million" and that defendants had
promised to pay shareholders $308 million to complete the
merger. From these facts they contend a reasonable
shareholder would have determined that defendants should
have paid shareholders $30 million more. (This $30 million
breaks down to nearly eighty cents per share--roughly ten
percent of price proposed by the Whitehall Group.)

Defendants offer three reasons we should affirm the
District Court's grant of summary judgment on the air
rights issue. First, they claim that Rockefeller Plaza West--
the only practical receiving site for the air rights--has
recently been developed without any air rights, which in
their eyes "prove[s] conclusively" the air rights never had
any value. Second, they contend they did disclose the
Whitehall Group would acquire the air rights through the
acquisition of Rockefeller Center Properties, Inc.;
specifically, that Rockefeller Center Properties, Inc.
documents filed with the SEC disclosed that Rockefeller
Center had air rights and the Proxy Statement disclosed
that the Whitehall Group would acquire Rockefeller Center
through the acquisition. They contend these documents
disclosed the impending transfer of the air rights because
"Rockefeller Center" "naturally includes" the air rights
associated with it. Finally, defendants maintain the air
rights were immaterial because their sale was contingent
and speculative and even the $30 million value proffered by
plaintiffs was negligible compared to Rockefeller Center's
$1.2 billion value and would have played no role in the
reasonable shareholder's voting decision.

                               17
We need not decide whether $30 million is material when
compared either to the $1.2 billion value of Rockefeller
Center or to the $308 million plaintiffs received from the
Whitehall Group because plaintiffs have provided no
evidence the air rights would be sold, that the Whitehall
Group planned to sell them or that one of the possible
receiving sites had expressed any interest in acquiring them
at any point in the future. Without such evidence, the value
shareholders (as opposed to appraisers) would attach to the
air rights is contingent and speculative, which weighs
against a finding of materiality. In addition, full disclosure
of the air rights would have mentioned not only their
possible value but also the limited prospect they would ever
be sold. For these reasons, we do not think disclosure of
the air rights would have been important to a reasonable
shareholder's voting decision. Therefore we will affirm the
District Court's grant of summary judgment on plaintiffs'
air rights claims.

V.

For these reasons, we will vacate and remand the District
Court's grant of summary judgment on plaintiffs' General
Electric sale negotiations claim but will affirm its grant of
summary judgment on their air rights claim. We will
remand for proceedings consistent with this opinion.

                               18
NYGAARD, Circuit Judge, concurring and dissenting.

I agree that the District Court's grant of summary
judgment was proper as to plaintiffs' air rights claims, but
for reasons different from those relied on by the majority. I
also believe that although the District Court erred by
converting defendant's motion to dismiss into one for
summary judgment, that error was harmless.

A. Air Rights

It is undisputed that the total appraised value of
Rockefeller Center was $1.25 billion. It is also undisputed
that 38.2 million shares were transferred during the buyout
merger and that these shares were transferred at a price of
$8.00 per share. Further, the Record shows that, viewing
the proffered evidence in the light most favorable to the
shareholders, the highest possible value for the air rights
was $42 million. By the following calculations, its"true" per
share values result:1

       $1.25 billion #45# 38.2 million shares = $32.72 per share
       $1.25 billion + $42 million = $1.292 billion
       $1.292 billion #45# 38.2 million shares = $33.82 per share

Taking these figures and using basic ratios and
proportions, it is clear that the resulting increase in share
value is approximately 3.25%:
_________________________________________________________________

1. Although the shareholders do not dispute the $1.25 billion or the $42
million figures, they argue that the appropriate comparison for
materiality is the potential value of the air rights if the shareholders'
proposed minimum value of $30 million was incorporated into the per
share value. Thus, they assert that they would not have considered
$8.00 per share to be a "fair" amount if they knew that the $1.2 billion
appraisal did not consider the potential windfall of transferring the air
rights. They suggest that the undeveloped air rights add at least an
additional $0.78 to the per share value and this 10% increase in value
is material. However, the shareholders' argument does not take into
consideration that the $8.00 per share figure does not represent the
"true" value of Rockefeller Center. Instead, it represents the distressed
or
fire sale value. As such, the proper measure of value cannot be
determined by merely tacking on a hypothetical value of the air rights to
the $8.00 per share value.

                               19
       $32.72/share #45# $8.00/share = $33.82/share #45# X
       X = $8.26/share
       $8.26/share is a value increase of approximately
       3.25% over the base value of $8.00/share.

A 3.25% increase in value is immaterial. For this reason, I
conclude that the District Court properly granted summary
judgment.

Moreover, the shareholders were placed on notice that
the air rights were transferable as part of the Buyout
Merger. The 10k annual reports, which were incorporated
by reference into the proxy statements, disclosed that the
air rights were allocable to Rockefeller Center under New
York law and that under the RCPI mortgages the
partnership owners reserved the right to transfer these
rights. See JA 950 (stating that "there is allocable to the
Property the right to develop up to approximately 2.0
million square feet of floor areas" that "may be transferred
to other properties or, with the approval of the New York
City Landmarks Preservation Commission, used to
construct additional floor area within the Property," and
advising that "[t]he Borrower has reserved the right to
transfer these rights" and "all of the Borrower's rights to the
air space above the Music Hall, together with easements for
support, operations and access." The 10k annual report
also reveals that "as part of the settlement of a lawsuit,
100,000 square feet of these [air] rights were added to the
Mortgage."). I therefore conclude that the possible transfer
of the air rights was properly disclosed to the shareholders.

B. Conversion of the Motion to Dismiss Plaintiffs' General
       Electric Negotiations Claim

The majority has done a fine analysis, and I agree that
the District Court improperly converted the motion by
failing to provide the plaintiffs with adequate notice of the
conversion. I do not believe, however, that the proper
mandate is to vacate and remand. Rather, I would inquire
whether the conversion was harmless error by determining
whether the plaintiffs' claims could have been dismissed
under Rule 12(b)(6). We may affirm a judgment"if it
appears that there is no set of facts on which plaintiffs
could possibly recover." Rose v. Bartle, 871 F.2d 331, 342

                                20
(3d Cir. 1989) (citing Hancock Indus. v. Schaeffer, 811 F.2d
225, 229 (3d Cir. 1987)).

It is undisputed that the following documents were
submitted by the parties either to support, or oppose, the
motion to dismiss the GE negotiations claim:

       By the shareholders:

       (1) an affidavit of Pamela S. Tikellis authenticating
       copies of documents incorporated into the proxy
       statement and amended complaint including RCPI's
       annual reports for the years 1995 and 1996, filed on
       SEC Form 10-k

       (2) three filings with   the United States Bankruptcy
       Court for the Southern   District of New York (the
       shareholders requested   that the District Court take
       judicial notice of the   bankruptcy court filings)

       (3) two publicly filed letters from the New York City
       Planning Commission which was obtained under the
       Freedom of Information Act

       (4) articles from the New York Times dated September
       10, 1995 and September 12, 1995

       (5) a Form 13D/A filed with the SEC by defendant
       Goldman Sachs & Co. on May 3, 1996 that was relied
       upon by the shareholders in their Amended Complaint

       (6) the transcript of a Bankruptcy Court hearing
       concerning the defaulted owners' Chapter 11 plan

       By the Defendants:

       (1) two affidavits of Robert Payson authenticating
       copies of a publicly filed Proxy Statement and other
       SEC filings which the shareholders relied on for their
       claims

       (2) excerpts from the defaulting owners' Second
       Amended Joint Plan of Reorganization filed in the
       bankruptcy court on February 8, 1996

       (3) copies of new articles and other documents
       mentioned in the shareholders complaint

                                 21
After receiving these various affidavits and other
 538<!>documents, the District Court converted defendant's

12(b)(6) motion to dismiss to a Rule 56 motion for summary
judgment.

The general rule is that "a district court ruling on a
motion to dismiss may not consider matter extraneous to
the pleadings." In re Burlington Coat Factory Sec. Litig, 114
F.3d 1410, 1426 (3d Cir. 1997); see also 5A Charles Alan
Wright & Arthur Miller, Federal Practice and Procedure
S 1366, at 93 (West 1990) (observing that Rule 12(b)(6)
commands a court to convert a motion to dismiss into a
motion for summary judgment "[o]nce the court decided to
accept matters outside the pleading"). However, we have
carved out some exceptions to this general rule. For
example, a " `document integral to or explicitly relied upon
in the complaint' may be considered `without converting the
motion to dismiss into one for summary judgment.' "
Burlington Coat, 114 F.3d at 1426 (quoting Shaw v. Digital
Equipment Corp., 82 F.3d 1194, 1220 (3d Cir. 1996)). Thus,
when an Amended Complaint quotes from certain press
releases and public announcements, we may consider the
entire text of those public statements. See Id. (commenting
that "plaintiffs cannot prevent a court from looking at the
texts of the documents on which its claim is based by
failing to attach or explicitly cite them"); In re
Westinghouse, 90 F.3d 696, 707 (3d Cir. 1996).

We have also allowed a court to consider matters of
public record when ruling on a motion to dismiss. See
Pension Benefit Guar. Corp. v. White Consol. Indus., Inc.,
998 F.2d 1192, 1196 (3d Cir. 1993). For purposes of a
motion to dismiss, however, matters of public record do not
include all documents which may be accessible to the
public. Rather, it has been limited to the following
documents: criminal case dispositions such as convictions
or mistrials, letter decision of government agencies and
published reports of administrative bodies. See id. at 1197
(citations omitted). Specifically, we have excluded from our
definition of public record, for purposes of a motion to
dismiss, material that "might be subject to disclosure under
the [Freedom of Information Act]." Id. The reasoning for
distinguishing between other recognized public documents

                                22
and information obtained through the Freedom of
Information Act is that the public does not have unqualified
access to these documents; potential obstacles exist. First,
one must submit a request for the information to a
Disclosure Officer. See 29 C.F.R. #8E8E # 2603.32-2603.33.
Second, the request may be denied if the company or entity
considers the information non-disclosable. See id.
SS 2603.37-2603.38. Third, many categories of information
may not be given to the public. See id.SS 2603.17-2603.19,
2603.21. Finally, a requestor may appeal a denial under
the Freedom of Information Act. See S 2603.39. Thus, the
two letters submitted by the shareholders that involved
correspondence from the New York City Planning
Commission and that were obtained through the Freedom
of Information Act cannot be considered on a motion to
dismiss.

First, I agree with the approach of the Courts of Appeal
for the Second and Fifth Circuits and would allow the
District Court to take judicial notice of all public disclosure
documents which are either required to be filed with the
SEC or are actually filed with the SEC. See Kramer v. Time
Warner, Inc., 937 F.2d 767, 774 (2d Cir. 1991); Lovelace v.
Software Spectrum Inc., 78 F.3d 1015, 1018 (5th Cir. 1996).
As the Court of Appeals for the Second Circuit said:

       the documents are required by law to be filed with the
       SEC, and no serious questions as to their authenticity
       can exist. Second, the documents are the very
       documents that are alleged to contain the various
       misrepresentations or omissions and are relevant not
       to prove the truth of their contents but only to
       determine what the documents stated. Third, a plaintiff
       whose complaint alleges that such documents are
       legally deficient can hardly show prejudice resulting
       from a court's studying of the documents

       . . .

       This of course includes related documents that bear on
       the adequacy of the disclosure as well as documents
       actually alleged to contain inadequate or misleading
       statements. We stress that our holding relates to public
       disclosure documents required by law to be filed, and

                               23
       actually filed, with the SEC, and not to other forms of
       disclosure such as press releases or announcements at
       shareholder meetings.

Kramer, 937 F.2d at 774. This approach is consistent with
our practice of allowing consideration of indisputably
authentic documents which serve as the basis for plaintiffs'
complaint. See Pension Benefit Guar. Corp., 998 F.2d at
1196-97 (holding that "a court may consider an
undisputably authentic document that a defendant
attaches as an exhibit to a motion to dismiss if the
plaintiff 's claims are based on the document" because
"[w]hen a complaint relies on a document . . . the plaintiff
obviously is on notice of the contents of the document, and
the need for a chance to refute evidence is greatly
diminished").

I conclude that the District Court could properly consider
the authenticated copies of SEC filings submitted by both
the shareholders and the defendants, which relate to or are
the basis for the shareholders' complaint, on a motion to
dismiss. In sum, the documents which are properly
considered on a motion to dismiss are:

       (1) an affidavit of Pamela S. Tikellis authenticating
       copies of documents incorporated into the proxy
       statement and amended complaint including RCPI's
       annual reports for the years 1995 and 1996, filed on
       SEC Form 10-k;

       (2) articles from the New York Times dated September
       12, 1995 and referenced in first Consolidated Amended
       complaint;

       (3) a Form 13D/A filed with the SEC by defendant
       Goldman Sachs & Co. on May 3, 1996 that was relied
       upon by the shareholders in their Amended Complaint;

       (4) two affidavits of Robert Payson authenticating
       copies of publicly filed Proxy Statement and other SEC
       filings which the shareholders relied on for their
       claims;

       (5) copies of news articles and other documents
       mentioned in the shareholders complaint.

                               24
Looking at what can be properly considered on a motion to
dismiss, the District Court's error of conversion is harmless
because these documents support a dismissal of the
complaint for failure to state a claim.
 949<!>A determination of materiality "requires delicate

assessments of the inferences a `reasonable shareholder'
would draw from a given set of facts and the significance of
those inferences to him." TSC Indus., Inc. v. Northway, Inc.,
426 U.S. 438, 450, 96 S. Ct. 2126, 2133 (1976); see
Shapiro v. UJB Fin. Corp., 964 F.2d 272, 281 n.11 (3d Cir.
1992). Thus, materiality is often a question for a jury. See
TSC, 426 U.S. at 450, 96 S. Ct. at 2133. However, when a
complaint alleging securities fraud contains claims of
omissions or misstatements that are "so obviously
unimportant to an investor that reasonable minds cannot
differ on the question of materiality," we may deem the
misrepresentations and omissions immaterial as a matter of
law. In re Westinghouse, 90 F.3d at 710; see In re
Craftmatic Sec. Litig., 890 F.2d 628, 641 (3d Cir. 1989).

An omission or misrepresentation is material if"there is
a substantial likelihood that the disclosure would have
been viewed by the reasonable investor as having
`significantly altered the "total mix" of information' available
to that investor." In re Westinghouse, 90 F.3d at 714
(quoting Shapiro, 964 F.2d at 281 n.11). Thus, the
shareholders need not prove that disclosure of the allegedly
omitted facts would have changed their vote regarding the
buy-out merger. See TSC, 426 U.S. at 449, 96 S. Ct. at
2132; see also Virginia Bankshares, Inc. v. Sandberg, 501
U.S. 1083, 1097-98, 111 S. Ct. 2749, 2760-61 (1991).

Further, although information may be relevant and an
investor may want to know that information, it may be "of
such `dubious significance' as to be `trivial,' and `hardly
conducive to informed decision making,' so that to
reasonable shareholders, such omission must be
immaterial as a matter of law." In re Westinghouse, 90 F.3d
at 714 (quoting In re Westinghouse Securities Litigation, 832
F. Supp. 948, 972 (W.D. Pa. 1993) (other quotations
omitted)). Additionally, we have cautioned that when
plaintiffs allege a claim akin to "failing to predict the future"
it is often "difficult to ascertain whether the reasonable

                               25
investor would have considered the omitted information
significant at the time" especially "where an event is
contingent or speculative in nature." Shapiro , 964 F.2d at
283. However, these "opinions, predictions and other
forward-looking statements are not per se inactionable." In
re Donald J. Trump Sec. Litig, 7 F.3d 357, 368 (3d Cir.
1993). Materiality of contingent or speculative information
or events depends on "a balancing of both the indicated
probability that the event will occur and the anticipated
magnitude of the event in light of the totality of the
company activity." Basic, Inc. v. Levinson , 485 U.S. 224,
232 (1988)(citations omitted). "If the speaker does not
genuinely and reasonably believe the opinions, then
plaintiffs may support a claim for misrepresentation." Id.

In light of our recent opinion in In re Advanta Securities
Litigation, No. 98-1846, 1999 WL 395997 (3d Cir. June 17,
1999), plaintiffs alleging a claim under 10b-5 must" `state
with particularity facts giving rise to a strong inference' of
scienter." Id. at n.5 (quoting 15 U.S.C.S 78u-4(b)(2) (West
Supp. 1999)). Although this pleading standard was not
clear at the time plaintiffs filed their complaint, I do not
believe Advanta requires a remand because plaintiffs'
claims concerning the GE negotiations cannot withstand a
motion to dismiss even when the more lenient requirements
of Federal Rule of Civil Procedure 9(b) are applied. Further,
unlike my colleagues, I do not believe that the"complex
principles of law and voluminous materials" render the
District Court "better suited" to determine whether
plaintiffs' claims survive a motion to dismiss. I suggest the
record supports the conclusion that the District Court's
conversion of the motion to dismiss was harmless error.

On appeal, the shareholders raise three main arguments
to support their contention that the District Court erred by
granting summary judgment as to the shareholders' claims
that the Board failed to disclose negotiations involving the
sale of twenty percent of Rockefeller Center for $440
million. I will address each argument in turn.

1. Materiality of the Sale Negotiations was a question for
       the jury

The shareholders argue that they "had a number of
choices when defendants solicited their proxies."

                                26
Shareholders' Br. at 35. This is a classic example of "fraud
by hindsight." As the District Court observed, none of the
facts presented by the shareholders, indeed, no set of facts,
support the shareholders' allegations that the Investor
Group did not disclose material negotiations for the sale of
a part of Rockefeller Center before the Buy-out Merger vote.
None of the newspaper articles reveal that firm negotiations
were underway. Rather, the articles show that at some
point everything under the sun was being negotiated with
numerous corporate entities to salvage the financial status
of Rockefeller Center. Thus, the sale of Rockefeller Center
was so speculative that it was immaterial as a matter of
law.

2. The Buy-Out Group's Uncorrected Denial of any Plan to
       Sell Part of Rockefeller Center in the Next Two Years

The shareholders also contend that Goldman Sachs and
the defendants had a duty to disclose that they were
contemplating a sale to GE/NBC especially in light of
Goldman Sachs's statement that it did not have a plan "to
sell any or all of the twelve buildings [at Rockefeller Center]
in the next few years." The District Court correctly decided
that non-disclosure of potential negotiations was
immaterial as a matter of law. It is well settled, even
mandated by SEC regulations, that a company is barred
from including in proxy materials any tentative negotiations
or plans, especially when those plans are only speculative.
Further, this comment by Goldman Sachs cannot be
attributed to the Investor Group. This statement was made
on or before September 19, 1995, approximately ten to
thirteen days before the Investor Group was formed. A 125.
Therefore, the Investor Group and other defendants did not
have a duty to update the statements originally made by
Goldman Sachs.

3. A Sale is not "The Economic Equivalent" of a "Credit
       Lease Financing Agreement"

The District Court concluded that:

       GE's interest in RCPI and in Rockefeller Center was
       well known. GE was a member of one of the three
       major groups bidding on RCPI in the fall of 1995, and
       GE's involvement in the bidding process was well

                               27
       documented in the Proxy Statement. Defendants
       specifically disclosed the agreement between GE, the
       Zell Group, and RCPI to arrange a `lease financing'
       based on GE's credit rating.

Charal Invest. Co. v. Rockefeller, Civ. A. No. 96-543-RRM,
slip. op. at 16 (D. Del. Dec. 10, 1997). The shareholders
urge that there is a critical distinction between a lease
financing agreement and a sale to GE/NBC. According to
the shareholders, a credit lease financing agreement was
subject to several conditions and "[t]he Proxy Statement . . .
gave no indication that the cash which could be obtained
from the credit lease financing would be adequate for RCPI
to own and operate Rockefeller Center." Shareholders Br. at
41. The shareholders submit that a sale, in contrast,
"would have provided an immediate source of cash to RCPI
without increasing the REIT's debt." Id. at 42. To support
this argument, the shareholders take a passage from a
Bankruptcy Court proceeding out of context and attempt to
persuade this court that the statement, "The economics are
so different now we ought to look at this from a different
point of view" allows the "natural inference" that had the
potential sale to GE/NBC been disclosed, "the cash
generated by the sale would have sufficed for RCPI to
assume control of Rockefeller Center without securing
additional capital form its shareholders or other sources."
Id. at 43. A full reading of the Bankruptcy proceeding,
however, shows that this statement was made in
connection to whether the Debtors' bankruptcy disclosure
statement to its creditors needed updating.2

Moreover, the proxy materials clearly reveal that GE was
interested in both RCPI and Rockefeller Center. The record
shows that GE was part of the Zell Group. Therefore, if
anyone would be aware of the possible sale of part of
Rockefeller Center to GE, it would be GE. However, the Zell
Group did not make a bid higher than the $8.00-$8.75 per
share bid made by the Investor Group. As such, the District
Court properly concluded that "no reasonable shareholder
_________________________________________________________________

2. We can consider the full text of the Bankruptcy proceeding in deciding
the motion to dismiss because the plaintiffs have relied on various
excerpts from the proceeding in their complaint.

                               28
would consider the potential sale of part of Rockefeller
Center to be important in deciding how to vote." Charal
Investment Co., Civ. A. No. 96-543-RRM, at 17.

Additionally, the shareholders have not alleged that the
refinancing agreements with Goldman Sachs were either
fraudulent or illegitimate in any manner. Therefore, I do not
believe that remanding the case to provide the parties an
"opportunity to frame their arguments in light of. . .
Advanta" is the most efficient, or even a necessary course.
I would affirm.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               29
