On March 14, 2014, the US District Court for the District of Colorado issued an Order Granting Defendants' Motion to Dismiss in Chipotle Mexican Grill v. John Chevedden, James McRitchie and Myra Young, dismissing Chipotle's action for declaratory judgment against Chevedden and the other defendants for a lack of subject matter jurisdiction.

Plaintiff Chipotle sought a declaration that the shareholder proposal submitted by the defendants for inclusion in Chipotle's proxy statement for its upcoming stockholders' meeting violated the Securities Exchange Act of 1934 and therefore could be excluded from the proxy statement. In their motion to dismiss, the defendants argued that the plaintiff lacked standing to sue because it could not show any injury in fact and, therefore, the case should be dismissed for lack of jurisdiction. This action is one in a line of recent cases brought by public company plaintiffs challenging shareholder proposals submitted by Chevedden and other shareholders acting in concert with him.

In its Order, the Court recognized the persuasive value of EMC Corp. v. Chevedden, No. 14-cv-10233-MWL (Mass. March 7, 2014) and Omnicom Group Inc. v. Chevedden, No. 14 Civ. 0386 (S.D.N.Y. March 11, 2014), two recent federal district court rulings in favor of Chevedden in similar actions brought against him. Referring to the reasoning of the EMC and Omnicom decisions, the Court found that here too the proposed injuries cited by Chipotle were too speculative to establish standing to bring its action for declaratory judgment. Finding that the plaintiff did not have standing, the Court ruled that it lacked jurisdiction to hear the matter.

Though not necessary to its conclusion, the Court also observed that the plaintiff could not show that its requested relief (a declaration with respect to the defendants) would redress proposed future injuries resulting from an enforcement action by the SEC, a third party over whom the Court had no jurisdiction.

For a discussion of the EMC and Omnicom cases, see Legal Update, Chevedden Reverses Losing Streak in Shareholder Proposal Cases. For a discussion of a recent federal court decision granting a motion to exclude a shareholder proposal submitted by Chevedden, see Legal Update, Express Scripts v. Chevedden: Missouri District Court Excludes Shareholder Proposal on Basis of Material Misstatements.

For information on shareholder proposals under Rule 14a-8, see Practice Note, How to Handle Shareholder Proposals and Rule 14a-8 Shareholder Proposal Process Flowchart.