Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991)

Author: Justice Scalia

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Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991)

JUSTICE SCALIA, concurring in part and concurring in the judgment.


As I understand the Court’s opinion, the statement "In the opinion of the Directors, this is a high value for the shares" would produce liability if in fact it was not a high value and the directors knew that. It would not produce liability if, in fact, it was not a high value but the directors honestly believed otherwise. The statement "The directors voted to accept the proposal because they believe it offers a high value" would not produce liability if, in fact, the directors’ genuine motive was quite different -- except that it would produce liability if the proposal, in fact, did not offer a high value, and the directors knew that.

I agree with all of this. However, not every sentence that has the word "opinion" in it, or that refers to motivation for directors’ actions, leads us into this psychic thicket. Sometimes such a sentence actually represents facts as facts, rather than opinions -- and, in that event, no more need be done than apply the normal rules for § 14(a) liability. I think that is the situation here. In my view, the statement at issue in this case is most fairly read as affirming separately both the fact of the directors’ opinion and the accuracy of the facts upon which the opinion was assertedly based. It reads as follows:

The Plan of Merger has been approved by the Board of Directors because it provides an opportunity for the Bank’s public shareholders to achieve a high value for their shares.

App. to Pet. for Cert. 53a. Had it read "because, in their estimation, it provides an opportunity, etc.," it would have set forth nothing but an opinion. As written, however, it asserts both that the board of directors acted for a particular reason, and that that reason is correct. This interpretation is made clear by what immediately follows:

The price to be paid is about 30% higher than the [last traded price immediately before announcement of the proposal]. . . . [T]he $42 per share that will be paid to public holders of the common stock represents a premium of approximately 26% over the book value. . . . [T]he bank earned $24,767,000 in the year ended December 31, 1986. . . .

Id. at 53a-54a. These are all facts that support -- and that are obviously introduced for the purpose of supporting -- the factual truth of the "because" clause, i.e., that the proposal gives shareholders a "high value."

If the present case were to proceed, therefore, I think the normal § 14(a) principles governing misrepresentation of fact would apply.


I recognize that the Court’s disallowance (in Part II-B-2) of an action for misrepresentation of belief is entirely contrary to the modern law of torts, as authorities cited by the Court make plain. See Vulcan Metals Co. v. Simmons Mfg. Co., 248 F. 853, 856 (CA2 1918); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 109 (5th ed.1984), cited ante at 1094. I have no problem with departing from modern tort law in this regard, because I think the federal cause of action at issue here was never enacted by Congress, see Thompson v. Thompson, 484 U.S. 174, 190-192 (1988) (SCALIA, J., concurring in judgment), and hence, the more narrow we make it (within the bounds of rationality), the more faithful we are to our task.

* * * *

I concur in the judgment of the Court, and join all of its opinion except Part II.

* In the District Court, petitioners asked for jury instructions requiring respondent Sandberg to prove causation as an element of her cause of action. App. 83, 92. The District Court gave an instruction close in substance to those requested:

The fourth element under Count I that Ms. Sandberg must establish is that the conduct of the defendants proximately caused the damage to the plaintiff. In order for an act or omission to be considered a proximate cause of damage, it must be a substantial factor in causing the damage, and the damage must either have been a direct result or a reasonably probable consequence of the act or omission.

In order to satisfy this element, the plaintiff need not prove that the defendants’ conduct was the only cause of the plaintiff’s damage. It is sufficient if you find that the actions of the defendants were a substantial and significant contributing cause to the damage which the plaintiff asserts she suffered.

Id. at 424.

The District Court also gave a jury instruction on reliance, i.e., did Sandberg actually read the proxy statement and rely upon the misstatements or omissions. Here, the District Court gave Sandberg’s proposed Instruction No. 29, which indicated that it was not necessary for Sandberg to "establish a separate showing of reliance by her on the material misstatement or omissions if any in the proxy statement." Id. at 426. The instruction continued, in a manner the Court finds problematic, to provide:

If you find that there are omissions or misstatements in the proxy statement, and that these omissions or misstatements are material, a shareholder such as Ms. Sandberg has made a sufficient showing of a causal relation between the violation and the injury for which she seeks redress if she proves that the proxy solicitation itself, rather than the particular defect in the solicitation material, was an essential link in the accomplishment of the transaction.

If you find that it was necessary for the bank to solicit proxies from minority shareholders in order to proceed with the merger, you may find that the proxy solicitation was an essential link in the accomplishment of the transaction.

. . . you are instructed it is no defense that the votes of the minority stockholders were not needed to approve the transaction.

Id. at 426-427. Petitioners objected to the "essential link" jury instruction upon the ground that it decided the question left open in footnote 7 of Mills v. Electric Auto-Lite Co., 396 U.S. 375, 385 (1970), App. 435.


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Chicago: Scalia, "Scalia, J., Concurring," Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991) in 501 U.S. 1083 501 U.S. 1109–501 U.S. 1110. Original Sources, accessed April 1, 2023,

MLA: Scalia. "Scalia, J., Concurring." Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991), in 501 U.S. 1083, pp. 501 U.S. 1109–501 U.S. 1110. Original Sources. 1 Apr. 2023.

Harvard: Scalia, 'Scalia, J., Concurring' in Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991). cited in 1991, 501 U.S. 1083, pp.501 U.S. 1109–501 U.S. 1110. Original Sources, retrieved 1 April 2023, from