UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PAMELA DICKSON, Individually and
derivatively on behalf of Schmidt
Baking Company, Incorporated,
Plaintiff-Appellee,

v.

JOHN MORRISON; JOHN L. STEWART;
ROBERT W. FILIPPI; JOSEPH E.
STANLEY; HILARY L. KLUG; RICHARD                                    No. 98-2446
G. KOESTER; SCHMIDT BAKING
COMPANY, INCORPORATED,
Defendants,

v.

C. PETER SMITH; C. PETER SMITH,
JR.; LEONARD V. BUNCE,
Movants-Appellants.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, Chief District Judge.
(CA-98-62-JFM)

Argued: June 7, 1999

Decided: July 27, 1999

Before WILKINSON, Chief Judge, and HAMILTON
and WILLIAMS, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________
COUNSEL

ARGUED: James Earl Gray, GOODELL, DEVRIES, LEECH &
GRAY, L.L.P., Baltimore, Maryland, for Appellants. George Faulk-
ner Ritchie, IV, PIPER & MARBURY, L.L.P., Baltimore, Maryland,
for Appellee. ON BRIEF: Andrew Gendron, GOODELL, DEVRIES,
LEECH & GRAY, L.L.P., Baltimore, Maryland, for Appellants.
Michael Esher Yaggy, PIPER & MARBURY, L.L.P., Baltimore,
Maryland; Marc S. Rosen, SCANLAN, ROSEN & SHAR, L.L.C.,
Baltimore, Maryland, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

C. Peter Smith, C. Peter Smith, Jr., and Leonard V. Bunce (Appel-
lants) appeal the district court's grant of a preliminary injunction to
Pamela Dickson enjoining the issuance of new stock in Schmidt Bak-
ing Company until after a stockholder meeting could be convened.
Appellants argue that the district court lacked subject matter jurisdic-
tion over Dickson's motion for a preliminary injunction, and that even
if it possessed jurisdiction, the district court erred in granting the
motion. We conclude that the district court properly asserted jurisdic-
tion over Dickson's motion and that it did not err in granting the
motion. We therefore affirm the district court's grant of a preliminary
injunction.

I.

Pamela Dickson is a shareholder of Schmidt Baking Company
(Schmidt or the Company), a Maryland corporation engaged in the
manufacture, distribution, and sale of bread products throughout the
state of Maryland. Prior to the issuance of the stock option plan

                    2
described below, the stockholders of Schmidt were composed of three
groups: the "Bowyer shares," of which Dickson is a member; the
"Smith shares," which include C. Peter Smith, the CEO of Schmidt,
and his sister, Susan Smith House; and the "Obrecht Trust shares."
Through late 1997, the Bowyer shareholders collectively owned
40.63% of the outstanding Schmidt common stock, Smith and his sis-
ter owned 42.82% of the stock, and the Obrecht Trust shareholders
owned the remainder, approximately 16.55%. Until January 1, 1998,
Smith also controlled the Obrecht Trust shares pursuant to a Voting
Trust agreement, which gave him effective control over almost 60%
of the shares. On January 1, 1998, the Voting Trust Agreement ended,
and the Obrecht Trust shareholders reasserted control of the Obrecht
Trust shares.

During 1997, the Bowyer shareholders and Obrecht Trust share-
holders discussed selling their interest in Schmidt, which, combined,
constituted a majority of the outstanding Schmidt common stock,
after the Voting Trust expired. These shareholders informed Smith
that they were interested in selling their interests in Schmidt to a third
party and asked Smith whether he and the other Smith shareholders
also would be interested in selling their interests in the Company.
Smith responded that he was not interested in selling Schmidt gener-
ally or his minority interest particularly. In November 1997, prior to
the expiration of the Voting Trust, Schmidt's board of directors
approved a stock option plan (the Plan) that awarded to Smith and
three of Schmidt's vice-presidents, namely, John Morrison, John L.
Stewart, and Robert W. Filippi, options to purchase a total of 8,375
shares of Schmidt stock at $138 per share.1 The Plan did not offer the
Bowyer shareholders and Obrecht Trust shareholders the opportunity
to maintain their proportionate interest in Schmidt.

Smith and the three Schmidt vice-presidents all exercised the
options granted to them under the Plan and purchased the stock for
cash (the 1997 stock issuance). After the stock options were exer-
_________________________________________________________________
1 The motive of the board of directors in offering the stock options to
Smith and key management personnel he hired, who collectively had
guided Schmidt from financial ruin to financial security in the past few
years, was "to keep the well-functioning group together and to give them
greater incentive to perform well." (J.A. at 183 n.2.)

                     3
cised, Smith controlled approximately 45.6% of the outstanding
Schmidt stock, his sister owned 4.7% of the stock, and the other offi-
cers who were part of the Plan controlled 6% of the stock.2 The board
of directors did not submit the Plan to a shareholder vote prior to its
approval and only informed the shareholders of their actions in a
Memorandum dated December 12, 1997, after the stock options were
exercised.

On January 9, 1998, Dickson filed a verified complaint and request
for injunctive relief in the United States District Court for the District
of Maryland against Schmidt, Schmidt's board of directors (C. Peter
Smith, C. Peter Smith, Jr., and Leonard V. Bunce), the three Schmidt
vice-presidents, and three other members of Schmidt's Executive
Committee (Joseph E. Stanley, Hilary L. Klug, and Richard G.
Koester) (collectively Defendants). Jurisdiction was premised on
diversity pursuant to 28 U.S.C.A. § 1332, and the complaint stated
claims under Maryland law. On January 23, 1998, Dickson filed an
amended complaint and request for injunctive relief. The amended
complaint alleged that Defendants instituted a stock option plan for
Smith, Filippi, Morrison, and Stewart without the approval of a two-
thirds vote of the shareholders, and that the plan was solely designed
to entrench the officers and directors of Schmidt in the management
of the Company and to prevent other shareholders from lawfully pur-
suing a sale of their controlling interest in the Company. In Count
One, Dickson sought relief on her own behalf from Defendants for a
violation of her preemptive rights on the ground that she, and all other
shareholders in Schmidt, were entitled to purchase newly issued stock
by the Company in order to maintain their percentages of ownership
in the Company. In Counts Two and Three, Dickson sought relief
derivatively on behalf of Schmidt from the individual Defendants for
breach of the duty of loyalty and breach of the duty of care for, inter
alia, approving the stock option plan.
_________________________________________________________________

2 According to Appellants' calculations, Stewart, Filippi, and Morrison
collectively owned 4.78% of Schmidt's stock after exercising their stock
options. Whether the correct number is 6% or 4.78% is of no import
because combined, Smith and the three vice-presidents owned over 50%
of the stock.

                    4
Dickson moved for partial summary judgment on Count One (pre-
emptive rights) of her amended complaint. Defendants cross-moved
for partial summary judgment on Count One. After holding a hearing
on the motions on July 2, 1998, the district court issued an Order
dated August 20, 1998 (the August 20 Order) with an accompanying
opinion granting Dickson's motion for partial summary judgment and
denying Defendants' cross-motion for summary judgment. The
August 20 Order declared the 1997 stock issuance to be in violation
of Dickson's preemptive rights because it failed to offer her the
opportunity to maintain her proportionate interest and voting power
in Schmidt. The August 20 Order also rescinded the actions of the
board of directors that resulted in the issuance of said stock to Smith,
Morrison, Stewart, and Filippi.

In response to the district court's August 20 Order, on August 24,
1998, Appellants, acting as the board of directors, sent out a "Preemp-
tive Rights Notice" (the Notice) to all existing stockholders of the
Company informing them of their right to purchase a proportional
interest in the latest issuance of 19,175 shares of the Company's stock
at $235 per share within two weeks of the notice (the 1998 stock
issuance).3 The Notice stated that failure to accept the offer would be
deemed to be an irrevocable waiver of the right to purchase such
shares. The Notice further recited that the remaining unpurchased
shares of Schmidt stock would be distributed to certain unnamed
employees of the Company "who have been instrumental in returning
the Corporation to its current status as a healthy, profitable business
from its recent position of near insolvency where its accountants
questioned the Corporation's future as a going concern." (J.A. at
1067.) Dickson filed a motion for a temporary restraining order and
preliminary injunction against Schmidt and Appellants to prohibit the
issuance of any new shares in Schmidt until after a shareholder meet-
ing was convened to consider the current composition of Schmidt's
board of directors, or, in the alternative, to extend the time in which
Schmidt's shareholders had to exercise their preemptive rights by two
months.
_________________________________________________________________

3 The 19,175 shares of common stock were authorized but unissued
shares.

                    5
The district court held a hearing on Dickson's motion on Septem-
ber 2, 1998. At the conclusion of the hearing, the district court orally
granted Dickson's motion for a preliminary injunction and prohibited
Schmidt and Appellants from issuing new shares in Schmidt until
after a shareholder meeting. The district court memorialized its ruling
in an Order dated September 16, 1998 (the September 16 Order). On
September 22, 1998, Appellants noted a timely appeal of the Septem-
ber 16 Order to this Court.4

II.

Appellants first argue that the district court lacked subject matter
jurisdiction over Dickson's motion for a preliminary injunction to
enjoin the 1998 stock issuance because other Schmidt shareholders
were necessary and indispensable parties to the action under Rule 19
of the Federal Rules of Civil Procedure and the presence of those
shareholders would have destroyed diversity, the basis of the district
court's jurisdiction. Dickson counters that any error by a district court
in failing to join necessary and indispensable parties is not a jurisdic-
tional defect and cannot divest the district court of subject matter
jurisdiction over the parties properly before it, i.e., Dickson and
Appellants. A district court's assertion of jurisdiction is a legal deter-
mination that this Court reviews de novo. See Yarnevic v. Brink's,
Inc., 102 F.3d 753, 754 (4th Cir. 1996).

Rule 19 sets forth a two-step inquiry for a district court to under-
take in determining whether a person should be joined in an action.
First, the district court must determine whether a person is "neces-
sary" to the action under Rule 19(a).5 If the court determines that the
_________________________________________________________________
4 Schmidt noted a timely appeal of the September 16 Order on October
2, 1998. Schmidt's appeal was then consolidated with the appeal of
Appellants. At the shareholder meeting ordered by the district court, four
new individuals (including Dickson) were elected to Schmidt's board of
directors, which had been increased to five members. The new board
voted to dismiss Schmidt's appeal. Schmidt dismissed its appeal on or
after December 10, 1998.
5 Rule 19(a) provides, in pertinent part, as follows:

          A person who is subject to service of process and whose joinder
          will not deprive the court of jurisdiction over the subject matter

                     6
person is "necessary," it must then determine if the person is "indis-
pensable" to the action under Rule 19(b).6 Where joinder of necessary
and indispensable persons would destroy complete diversity, and
diversity is the only basis for subject matter jurisdiction, the action
must be dismissed. See Schlumberger Indus. v. National Sur. Corp.,
36 F.3d 1274, 1288 (4th Cir. 1994). Thus, if other Schmidt sharehold-
ers were necessary and indispensable persons to Dickson's motion for
a preliminary injunction, and the joinder of those shareholders would
destroy complete diversity, Dickson's motion must be dismissed for
want of jurisdiction.7 In determining whether to dismiss Dickson's
_________________________________________________________________
           of the action shall be joined as a party in the action if (1) in the
           person's absence complete relief cannot be accorded among
           those already parties, or (2) the person claims an interest relating
           to the subject of the action and is so situated that the disposition
           of the action in the person's absence may (i) as a practical matter
           impair or impede the person's ability to protect that interest or
           (ii) leave any of the persons already parties subject to a substan-
           tial risk of incurring double, multiple, or otherwise inconsistent
           obligations by reason of the claimed interest.

Fed. R. Civ. P. 19(a).
6 Rule 19(b) provides as follows:

          If a person as described in subdivision (a)(1)-(2) hereof cannot
          be made a party, the court shall determine whether in equity and
          good conscience the action should proceed among the parties
          before it, or should be dismissed, the absent person being thus
          regarded as indispensable. The factors to be considered by the
          court include: first, to what extent a judgment rendered in the
          person's absence might be prejudicial to the person or those
          already parties; second, the extent to which, by protective provi-
          sions in the judgment, by the shaping of relief, or other mea-
          sures, the prejudice can be lessened or avoided; third, whether a
          judgment rendered in the person's absence will be adequate;
          fourth, whether the plaintiff will have an adequate remedy if the
          action is dismissed for nonjoinder.

Fed. R. Civ. P. 19(b).
7 Dickson relies on Koehler v. Dodwell, 152 F.3d 304 (4th Cir. 1998),
for the proposition that a court's mistaken decision to proceed in the
absence of an interested person does not deprive the court of the power
to adjudicate as between the parties already before it. Id. at 309 n.7. To

                     7
motion, we proceed pragmatically, "examin[ing] the facts of the par-
ticular controversy to determine the potential for prejudice to all par-
ties." Teamsters Local Union No. 171 v. Keal Driveaway Co., 173
F.3d 915, 918 (4th Cir. 1999).

Our preliminary inquiry is whether the absent Schmidt sharehold-
ers were "necessary" to Dickson's motion for a preliminary injunc-
tion. A person is "necessary" to an action if (1) in the person's
absence complete relief cannot be accorded among those already par-
ties, or (2) the disposition of the action in the person's absence would
as a practical matter impair or impede the person's ability to protect
an interest relating to the subject matter of the action or leave any of
the persons already parties subject to the risk of incurring double,
multiple, or otherwise inconsistent obligations by reason of the
claimed interest. See Fed. R. Civ. P. 19(a). In this case, Appellants
argue that Schmidt shareholders were necessary because the injunc-
tive relief ordered by the district court impaired or impeded the ability
of the absent shareholders to protect their interests by enjoining the
issuance of new stock to them. Citing Schlumberger, Appellants also
argue that the district court's injunction exposed them to a substantial
risk of incurring inconsistent obligations because the district court's
determinations would not be binding upon a state court considering
similar issues in parallel litigation involving absent shareholders, who
could initiate an action seeking identical, similar, or opposite relief
sought by Dickson.
_________________________________________________________________

the extent that Schlumberger is not consistent with Koehler,
Schlumberger controls because it was decided first. See Industrial Turn-
around Corp. v. NLRB, 115 F.3d 248, 254 (4th Cir. 1997) ("A decision
of a panel of this court becomes the law of the circuit and is binding on
other panels unless it is overruled by a subsequent en banc opinion of
this court or a superseding contrary decision of the Supreme Court."
(internal quotation marks omitted)). Moreover, the proposition relied
upon by Dickson was dicta not necessary to the holding in Koehler. See
Koehler, 152 F.3d at 309 n.7. Recently, in Teamsters Local Union No.
171 v. Keal Driveaway Co., 173 F.3d 915 (4th Cir. 1999), we reaffirmed
the principle enunciated in Schlumberger-- that if a party that is neces-
sary and indispensable under Rule 19 cannot be joined in a suit, the suit
should be dismissed. See id. at 917-18.

                     8
We do not find these arguments to be persuasive. Appellants' first
argument fundamentally misunderstands the purpose of the 1998
stock issuance, which by the terms of the Notice was not to allow
existing shareholders of Schmidt to purchase additional shares of
Schmidt common stock, but to allow Schmidt shareholders to exercise
their preemptive rights. Under the doctrine of preemptive rights,
"when additional stock is issued, those already having shares, are held
to have the first right to buy the new stock in proportion to their hold-
ings." Ross Transp., Inc. v. Crothers, 45 A.2d 267, 270 (Md. 1946).
Rather than impeding or impairing the ability of absent shareholders
to protect their proportionate interests in Schmidt, Dickson's motion
allowed the absent shareholders to maintain their interests without
expending resources to do so because their rights are preserved by
Dickson's motion. The interests of the absent shareholders, therefore,
did not require the joinder of these shareholders in Dickson's motion.

Appellants' second argument fails because the district court's grant
of a preliminary injunction in the absence of other Schmidt sharehold-
ers did not present a practical possibility of "whipsaw" that this Court
feared in Schlumberger. In Schlumberger , the party that sought join-
der under Rule 19 was a corporation involved in two ongoing declara-
tory judgment suits, one in federal district court and one in state court,
with its insurance companies to determine the responsibilities of the
insurance companies for the costs incurred by the corporation in
cleaning up its contaminated property. See 36 F.3d at 1277. We con-
cluded that if the district court were to proceed with fewer than all of
the corporation's insurers as parties, the corporation could be "whip-
sawed" by inconsistent judgments and receive less than full coverage.
See id. at 1286-87. In this case, not only were there no other suits
pending against Schmidt and its officers by Schmidt shareholders,
there was nothing before the district court that suggested a "substan-
tial likelihood" of such suits. See Coastal Modular Corp v. Lamina-
tors, Inc., 635 F.2d 1102, 1108 (4th Cir. 1980) (affirming trial court's
denial of joinder of the Navy as a party under Rule 19(a) where the
defendant "could only theorize the possibility that the Navy would
institute suit against it"). Because the Rule 19 inquiry is a "practical
one" that is committed to "the sound discretion of the trial court," id.,
mere speculation that the absent shareholders could initiate suits
resulting in Appellants facing inconsistent obligations did not require
joinder of these shareholders in Dickson's motion.

                     9
In sum, because the absent Schmidt shareholders were not "neces-
sary" parties under Rule 19(a) to Dickson's motion for a preliminary
injunction, they were not required to be joined in Dickson's motion,
and, therefore, could not destroy diversity between Dickson and
Appellants. The district court, therefore, correctly asserted subject
matter jurisdiction over Dickson's motion.

III.

Appellants next argue that the district court erred in granting Dick-
son's motion for a preliminary injunction enjoining the 1998 stock
issuance. First, Appellants argue that the district court failed to follow
the proper legal standard for granting injunctive relief. Next, Appel-
lants argue that the district court's order of injunctive relief was based
upon its August 20 Order granting partial summary judgment to Dick-
son, which was erroneous as a matter of law. We address these argu-
ments in turn, reviewing the district court's grant of a preliminary
injunction for abuse of discretion, see Planned Parenthood of the
Blue Ridge v. Camblos, 155 F.3d 352, 359 (4th Cir. 1998) (en banc),
cert. denied, 119 S. Ct. 1031 (1999), and its underlying findings of
fact for clear error, see Gilliam v. Foster, 61 F.3d 1070, 1078 n.5 (4th
Cir. 1995) (en banc). We reverse factual findings under the abuse of
discretion standard "only if [we] on the entire evidence [are] left with
the definite and firm conviction that a mistake has been committed."
Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 358 (4th Cir.
1991) (internal quotation marks omitted).

The standard for granting a preliminary injunction in this Circuit
is the balancing-of-hardship analysis set forth in Blackwelder Furni-
ture Co. v. Seilig Mfg. Co., 550 F.2d 189 (4th Cir. 1977). In making
this analysis, a district court must consider the following four factors:

          (1) the likelihood of irreparable harm to the plaintiff if the
          preliminary injunction is denied,

          (2) the likelihood of harm to the defendant if the requested
          relief is granted,

          (3) the likelihood that the plaintiff will succeed on the mer-
          its, and

                     10
          (4) the public interest.

Rum Creek Coal, 926 F.2d at 359. The two most important factors for
the district court to consider are the possible irreparable harm to the
plaintiff if injunctive relief is not granted and the harm to the defen-
dant if injunctive relief is granted. See id. The district court must first
find that the plaintiff has made a "clear showing" of irreparable harm
that is "`neither remote nor speculative, but actual and imminent.'"
Direx Israel, Ltd. v. Breakthrough Medical Corp., 952 F.2d 802, 812
(4th Cir. 1991) (quoting Tucker Anthony Realty Corp. v. Schlesinger,
888 F.2d 969, 975 (2d Cir. 1989)). Once the court has made this find-
ing, it may proceed to balance this harm against the harm to the
defendant if the preliminary injunction is granted. See id. The district
court then determines the likelihood of success on the merits on a
sliding scale as follows:

          If, after balancing those two factors, the balance tips decid-
          edly in favor of the plaintiff, a preliminary injunction will
          be granted if the plaintiff has raised questions going to the
          merits so serious, substantial, difficult and doubtful, as to
          make them fair ground for litigation and thus for more delib-
          erate investigation. As the balance tips away from the plain-
          tiff, a stronger showing on the merits is required.

Rum Creek Coal, 926 F.2d at 359 (internal quotation marks and cita-
tions omitted).

A.

First, Appellants argue that the district court abused its discretion
by failing to follow the proper legal standard for granting injunctive
relief. In particular, Appellants argue that the district court failed to
find that Dickson had made a "clear showing" of irreparable harm that
was "neither remote nor speculative, but actual and imminent."
(Appellants' Br. at 24 (internal quotation marks omitted).) Appel-
lants' argument requires us to examine the district court's analysis of
the "irreparable harm" prong of the Blackwelder test.

In granting Dickson's motion for a preliminary injunction, the dis-
trict court conducted the following analysis:

                     11
           I find under the Blackwelder standards that the plaintiff
          here would suffer great harm by being required to purchase
          this stock under this recent notice by September 8th. She
          really does not have time to assess whether to do it. If she
          needs financing, as one presumably may have to, she may
          have difficulty finding it in that period of time. .. . I don't
          think any of this would have happened but for the issuance
          that I found to be improper in the first instance. This harm
          is simply one that she should not have to suffer. Also, I find
          specifically that the notice is unreasonably short.

           Secondly, I find no legally cognizable harm to the corpo-
          ration. What has happened is because of actions that I have
          found to have been improper by the issuance of the stock
          and not respecting the preemptive rights of the plaintiff and
          other similarly-situated shareholders.

           I think the plaintiff, on the success of the merits on the
          underlying issue, clearly wins. In terms of the particular
          issue here, I think she should win, if for no other reason, for
          the unreasonableness of the notice. This has not been a fair
          playing field. . . .

           Finally, I find -- ironically, this is usually a throw-in fac-
          tor. Basically, you find the public interest supports the per-
          son who you otherwise think is right on the other factors.
          Here, it is the public interest which I find to be the over-
          whelming one. That would include essentially protecting the
          integrity of my order and appropriate review of it.

(J.A. at 267-69.) With regard to the factor of irreparable harm, the dis-
trict court found that Dickson would suffer "great harm" if a prelimi-
nary injunction did not issue because the deadline in the Notice did
not give her sufficient time to decide whether to purchase the stock
or, had she made the decision to purchase, to obtain the necessary
documents to get financing to do so. In light of the district court's dis-
cussion of the immediate and "great" harm Dickson would suffer, we
do not believe that its failure to use the talismanic words "clear show-
ing of irreparable harm that was neither remote nor speculative, but
actual and imminent" renders its analysis defective. We therefore

                     12
reject Appellants' argument that the district court applied the incor-
rect standard for granting injunctive relief.

In the alternative, Appellants argue that the district court's factual
finding of irreparable harm was not supported by the evidence. In an
affidavit submitted with her motion, Dickson stated the following:

           [I]t will not be possible for me to act reasonably upon [the
          preemptive rights] offer due to the narrow time frame
          involved.

           I will be completely unable to assemble what I presume
          I will need to assemble to approach a bank with a loan appli-
          cation in order to meet a September 8, 1998 deadline. Fur-
          ther, because the banks in North Carolina cannot be
          reasonably expected to know anything about the Company,
          as it does not do business in North Carolina, I would likely
          have to travel to Maryland to arrange for emergency financ-
          ing.

           I have not been provided with the recent financial state-
          ments of Schmidt Baking Company, and I therefore do not
          have the necessary information available to make a loan
          application in any event.

           ....

           It is my view that the proposed stock sale, if permitted in
          the manner proposed by the Company, will cause me and
          the other outside shareholders . . . irreparable harm.

(J.A. at 1063-64.) Based upon this affidavit, the district court found
that the Preemptive Rights Notice did not provide Dickson with suffi-
cient time to study the offer and to act upon it and that the deadline
set in the notice was unreasonably short. Contrary to Appellants'
assertion, Dickson did state that she would need to go to a bank to
obtain financing and that the September 8 deadline would not give her
sufficient time to assemble a loan application. Furthermore, we are
not persuaded by Appellants' unsupported assertion that Dickson's

                     13
alleged harm was not irreparable because she could receive money
damages for the Company's refusal to issue stock to her. Failure to
respond to the Notice by the designated date would have resulted in
the permanent loss by Dickson and similarly situated shareholders of
their proportionate ownership interest in the Company. Finally, we do
not agree with Appellants that the district court abused its discretion
in finding that the less-than-two-weeks response time provided by the
Notice was unreasonably short.8Compare Bennett v. Baum, 133 N.W.
439, 444-45 (Neb. 1911) (holding that five-days notice did not give
existing shareholders reasonable opportunity to subscribe and pay for
their proportional share of stock), with Van Slyke v. Norris, 198 N.W.
409, 412 (Minn. 1924) (holding that forty-days notice gave share-
holder reasonable opportunity to subscribe and pay for his propor-
tional share of stock). Because on this evidence we are not "left with
the definite and firm conviction that a mistake has been committed,"
Rum Creek Coal, 926 F.2d at 358 (internal quotation marks omitted),
we reject Appellants' argument that the district court's factual finding
of irreparable harm was not supported by the evidence.

B.

Next, Appellants argue that the district court abused its discretion
in granting injunctive relief by relying upon its erroneous August 20
Order granting partial summary judgment to Dickson. Appellants'
argument requires us to examine the district court's analysis of the
"likelihood of success on the merits" prong of the Blackwelder test.9
_________________________________________________________________
8 Although the Notice was dated August 24, 1998, Dickson stated in
her affidavit that as of the signing of the affidavit (August 26, 1998), she
had not yet received such a notice.
9 The August 20 Order is not properly before us on appeal. Although
the district court granted Appellants' motion for certification to file an
interlocutory appeal of the August 20 Order, this Court denied Appel-
lants' petition for permission to appeal pursuant to 28 U.S.C.A.
§ 1292(b) (West 1993). Insofar as the district court granted Dickson a
preliminary injunction to protect her claim of preemptive rights, how-
ever, we must review the August 20 Order. Our review focuses on
whether the district court abused its discretion in determining the "likeli-
hood of success on the merits" prong of the Blackwelder test. In other
words, we must determine whether the district court abused its discretion
in deciding that Dickson is likely to prevail on the merits of her preemp-
tive rights claim when it comes up for review.

                    14
Because the district court clearly found that the balance of harms
tipped decidedly in favor of Dickson, to receive a preliminary injunc-
tion she only needed to raise "questions going to the merits so serious,
substantial, difficult and doubtful, as to make them fair ground for lit-
igation and thus for more deliberate investigation." Rum Creek Coal,
926 F.2d at 359 (internal quotation marks omitted). Our task, there-
fore, is to determine whether Dickson has made such a threshold
showing.

Appellants posit two arguments that Dickson was not entitled to
preemptive rights in the 1997 stock issuance. First, Appellants argue
that Schmidt's charter, which empowered the board of directors to
issue the remaining shares of the corporation, negated Dickson's pre-
emptive rights by implication. Second, Appellants argue that the 1997
stock issuance was not subject to the two-thirds approval exception
to preemptive rights, codified in former § 2-205(a)(7) of the Corpora-
tions & Associations Article of the Maryland Code. Instead, Appel-
lants argue, the 1997 stock issuance was subject to the "impracticabil-
ity" exception to preemptive rights, codified in former § 2-205(a)(8)
because providing a right of first purchase to all shareholders of the
Company would defeat the purpose for which the stock was offered,
which was to reward key management personnel. We address these
arguments in turn.

1.

First, Appellants argue that Dickson was not entitled to preemptive
rights in the 1997 stock issuance because Article Seven of Schmidt's
charter negated Dickson's preemptive rights by implication. Section
2-105(a)(10) of the Corporations and Associations Article of the
Maryland Code states: "A corporation may provide by its charter . . .
[f]or any definition, limitation, or denial of the preemptive rights of
stockholders to acquire additional stock in the corporation." Md. Code
Ann., Corps. & Ass'ns § 2-105(a)(10) (Michie 1993).10 Article Seven
of Schmidt's charter states: "The said board of directors of this corpo-
_________________________________________________________________
10 This section, and other statutes cited in this opinion, were amended
as part of the 1995 statutory changes. The amendments do not apply to
preemptive rights in existence before October 1, 1995, however, so all
references are to the old sections.

                    15
ration is . . . empowered to authorize the issuance from time to time
of the remaining shares of the common stock of this corporation with-
out par value for such consideration as the said board may [deem]
advisable." (J.A. at 457.) Citing a law review article by a corporations
expert, see V. Morawetz, The Preemptive Right of Shareholders, 42
Harv. L. Rev. 186 (1928), and a 139-year-old case from Indiana, see
Ohio Ins. Co. v. Nunnemacher, 15 Ind. 294 (1860), Appellants argue
that the language of Article Seven suffices to satisfy § 2-105(a)(10)
and negate Dickson's preemptive rights by implication. Appellants
provide this Court with no controlling authority that states that a
Maryland corporate charter may negate preemptive rights by implica-
tion and our review of the relevant case law has turned up no Mary-
land cases on point. Under these circumstances, our task is to
determine whether Dickson has raised questions concerning whether
a corporation's charter may negate a shareholder's preemptive rights
by implication "so serious, substantial, difficult and doubtful, as to
make them fair ground for litigation and thus for more deliberate
investigation."11 Rum Creek Coal, 926 F.3d at 359 (internal quotation
marks omitted).

We believe that Dickson has made such a threshold showing. First,
Dickson's argument is supported by the firm grounding of preemptive
rights in Maryland law. In Maryland, the common law provided for
preemptive rights as a general rule. See Real-Estate Trust Co. v. Bird,
_________________________________________________________________
11 We are not persuaded by Appellants' argument that we should accept
the implied negation theory because Dickson failed to "present any rea-
son" why Ohio Ins. Co. v. Nunnemacher, 15 Ind. 294 (1860), which held
that a charter provision similar to Article Seven of Schmidt's charter
negated preemptive rights, "would not be followed in Maryland."
(Appellants' Reply Br. at 14.) In determining whether a plaintiff has
"raised questions going to the merits so serious, substantial, difficult and
doubtful, as to make them fair ground for litigation and thus for more
deliberate investigation," we are not limited to relevant authority from
other jurisdictions. Rather, we may rely on, inter alia, canons of con-
struction, restatements of the law, treatises, recent pronouncements of
general rules of policies by the state's highest court, well-considered
dicta, and decisions of the state's trial courts. Cf. Liberty Mut. Ins. Co.
v. Triangle Indus., 957 F.2d 1153, 1156 (4th Cir. 1992) (listing factors
for a federal court to take into account when predicting how a state's
highest court would rule on a particular issue).

                    16
44 A. 1048, 1049-50 (Md. 1899). These rights existed independently
of the charter. See Thom v. Baltimore Trust Co. , 148 A. 234, 235 (Md.
1930). Because § 2-205(a) of the Corporations Article of the Mary-
land Code carved out specific exceptions from the common-law pre-
emptive rights rule, it must be construed strictly, see Hardy v. State,
482 A.2d 474, 478 (Md. 1984) ("Maryland courts adhere to the policy
that statutes are not to be construed to alter the common-law by impli-
cation."), and other exceptions should not be inserted by judicial fiat,
see Pennsylvania Nat'l Mut. Casualty Ins. Co. v. Gartelman, 416
A.2d 734, 737 (Md. 1980) ("Where a statute expressly provides for
certain exclusions, others should not be inserted.").

Second, Dickson's argument that Maryland law would not provide
for negation of preemptive rights by implication is not inconsistent
with the plain meaning of § 2-105(a)(10), which states: "A corpora-
tion may provide by its charter . . . [f]or any definition, limitation, or
denial of the preemptive rights of stockholders to acquire additional
stock in the corporation." Md. Code Ann., Corps. & Ass'ns § 2-
105(a)(10) (emphasis added). The plain meaning of"provide" is "to
make a proviso or stipulation." Webster's Third New Int'l Dictionary
1827 (1986). In turn, the plain meaning of "proviso" is "an article or
clause . . . that introduces a condition, qualification, or limitation
. . . .," id., and the plain meaning of"stipulation" is "a condition,
requirement, or item specified in a contract, treaty, deed, will, or law,"
id. at 2245. We believe that the clear import of§ 2-105(a)(10) is to
allow a corporation in its charter expressly to deny or limit preemp-
tive rights, which are provided for in the common law. Article Seven
of Schmidt's charter, however, makes no mention of a denial or limi-
tation of preemptive rights. In fact, as the district court noted in the
August 20 Order, the power Article Seven granted to the board of
directors to issue the remaining shares of the common stock "could
comfortably co-exist with, and be subject to, the independent
common-law requirement that the board honor the preemptive rights
of existing shareholders when exercising its authority to issue stock."
(J.A. at 187.)

Based upon these considerations, we conclude that the district court
did not abuse its discretion in deciding the "likelihood of success on
the merits" prong of the Blackwelder test in Dickson's favor on the

                     17
issue of whether Article Seven of Schmidt's charter negates preemp-
tive rights by implication.

2.

Next, Appellants argue that Dickson was not entitled to preemptive
rights in the 1997 stock issuance, because it falls under the "impracti-
cability" exception to preemptive rights, formerly codified in § 2-
205(a) of the Corporations and Associations Article of the Maryland
Code. That section provides in relevant part:

          Unless the charter provides otherwise, a stockholder does
          not have any preemptive rights with respect to:

          ....

          (7) Stock, including treasury stock, issued to an
          officer or other employee of the corporation or its
          subsidiary on terms and conditions approved by
          the stockholders by the affirmative vote of two
          thirds of all the votes entitled to be cast on the
          matter; and

          (8) Any other issuance of shares if the applicability
          of preemptive rights is impracticable.

Md. Code Ann., Corps. & Ass'ns § 2-205(a) (Michie 1993). Appel-
lants argue that the 1997 stock issuance is not subject to Paragraph
(7) because the charter vested the board of directors with the sole dis-
cretion to issue shares, and nothing in the by-laws or certificate of
incorporation authorized shareholders to vote on the issuance of
stock. Instead, Appellants argue, Paragraph (8) applies because apply-
ing preemptive rights would defeat the purpose of the issuance --
rewarding key management personnel -- and thus would be "imprac-
ticable." Once again, we must determine whether Dickson has raised
questions concerning the applicability of § 2-205(a) to the 1997 stock
issuance "so serious, substantial, difficult and doubtful, as to make
them fair ground for litigation and thus for more deliberate investiga-
tion." Rum Creek Coal, 926 F.3d at 359 (internal quotation marks
omitted).

Dickson makes a good argument that § 2-205(a)(7) applies and
does not strip preemptive rights from the 1997 stock issuance. By its

                    18
plain terms, § 2-205(a)(7) applies to an issuance of stock to corporate
officers and only strips preemptive rights from such an issuance if the
issuance is "on terms and conditions approved by the stockholders on
the affirmative vote of two thirds of all the votes entitled to be cast
on the matter." In this case, the 1997 stock issuance to Smith and the
three Schmidt vice-presidents was issued without the approval of a
two-thirds vote of the stockholders. As a result, the 1997 stock issu-
ance was not "on terms and conditions approved by the stockholders
by the affirmative vote of two thirds of all the votes entitled to be cast
on the matter," and could not be issued without preemptive rights
under the exception in § 2-205(a)(7).

Furthermore, we reject Appellants' contention that the 1997 stock
issuance may still be issued without preemptive rights under the "im-
practicability" exception in § 2-205(a)(8) even if Appellants cannot
avail themselves of the exception in § 2-205(a)(7). Section 2-
205(a)(8) provides that a stockholder does not have preemptive rights
in "[a]ny other issuance of shares if the applicability of preemptive
rights is impracticable." Md. Code Ann., Corps. & Ass'ns § 2-
205(a)(8) (emphasis added). The plain meaning of"other" is "not the
same: different." Webster's Third New Int'l Dictionary 1598. We
believe that § 2-205(a)(8) unambiguously applies only to stock issu-
ances not specifically listed in exceptions (1) through (7). An issuance
of stock to "an officer or other employee of the corporation," such as
the 1997 stock issuance, is already covered by the exception in § 2-
205(a)(7). Interpreting § 2-205(a)(8) to cover an issuance of stock to
an officer or other employee of the corporation thus contravenes the
plain language of the statute. Moreover, such an interpretation would
allow a corporation's board of directors to circumvent the two-thirds
approval requirement of § 2-205(a)(7) upon a simple showing that
application of preemptive rights is "impracticable" and would invite
abuse and self-dealing by corporation insiders. For these reasons, we
conclude that § 2-205(a)(8) does not apply to the 1997 stock issuance.12
_________________________________________________________________

12 Even if we concluded that § 2-205(a)(8) covered an issuance of stock
to an officer or other employee of the corporation, we doubt that this
exception would apply in this case. Although the Court of Special
Appeals of Maryland has defined "impracticability" as where "the exer-
cise of preemptive rights . . . would . . . defeat the objective of the issu-
ance," Valerino v. Little, 490 A.2d 756, 761 (Md. Ct. Spec. App. 1985),

                     19
Based upon these considerations, we conclude that the district court
did not abuse its discretion in deciding the "likelihood of success on
the merits" prong of the Blackwelder test in Dickson's favor on the
issue of whether the 1997 stock issuance falls within one of the codi-
fied exceptions to the preemptive rights rule.

C.

In sum, the district court applied the correct legal standard in find-
ing that Dickson had demonstrated irreparable harm warranting
injunctive relief and such a finding was supported by the evidence.
Moreover, the district court did not abuse its discretion in deciding
that Dickson had a likelihood of success on the merits. The district
court, therefore, did not abuse its discretion in granting Dickson's
motion for a preliminary injunction enjoining the 1998 stock issuance.

IV.

In sum, we conclude that the district court correctly asserted sub-
ject matter jurisdiction over Dickson's motion for a preliminary
injunction enjoining the 1998 stock issuance and did not abuse its dis-
cretion in granting the motion. We therefore affirm the district court's
grant of a preliminary injunction.

AFFIRMED
_________________________________________________________________
courts applying Maryland law have cabined the impracticability excep-
tion to situations where recognizing preemptive rights would interfere
with the continued operation of the corporation and/or the corporation's
ability to raise necessary capital, see id. (holding that impracticability
existed if purpose of issuance was to break deadlock among shareholders
and save corporation from dissolution); Poole v. Miller, 128 A.2d 607,
615 (Md. 1957) (holding that impracticability existed where exercise of
preemptive rights would hamper building association's raising of new
capital); Todd v. Maryland Casualty Co., 155 F.2d 29, 39 (7th Cir. 1946)
(holding that impracticability existed where exercise of preemptive rights
would prevent insurance company from raising the amount of money
needed for financial rehabilitation).

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