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KBR v John Chevedden

KBR v John Chevedden

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Published by: loren_steffy on Jan 20, 2011
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12/13/2013

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[N
THEUNITED
STA.TES
DISTRICT
COURTFOR
THE
SOUTHERN
DISTRICT
OF
TEXAS
HOUSTON DTVISION
KBR,INC.,
v.
JOHN
CHEVEDDEN
Plaintiff
Defendant.
Plaintifl
s
OriginalComplaint
Plaintiff
KBR,
Inc.
("KBR")files this
complaint
for
declaratory
judgment
against
defendant
John
Chevedden("Chevedden").I.
Parties
1.
Plaintiff
KBR is
aDelaware corporation,
with
its
principal
office
and
principal
placeof
business
in Houston,
Texas.
2.
Defendant
Chevedden
is
an
individual
residing
in
Redondo Beach,
California
and
may be
served
with
processand
a copy
of
this
complaint
at
2215NelsonAvenue,
No.
205,
RedondoBeach,
CA
9027
8.
II.
Jurisdiction
and
Venue
3.
ThisCourt
has
federal
question
jurisdiction
over
this
matter under
28
U.S.C.$1331,
and has
diversity
jurisdiction
over this matter under28U.S.C.
$1332.
ThisCourt
also
has
jurisdiction
over
this
matter under$27
of
the
SecuritiesExchange
Act
of
1934,15
U.S.C.
$78aabecause
the act
or
transaction about
which
defendant
has
complainedmaybeenforced
in
this district,
and becauseCheveddenhas transacted business
in
this district
with
respect
to
the
matters at issue
in this lawsuit.
$$
$
Civil
Action:
$$$1396626v1/012369
Case 4:11-cv-00196 Document 1 Filed in TXSD on 01/14/11 Page 1 of 9
 
4:-
There
is
an
aetual
eontroversy
between-KBRand
ehevedden,
Chevedden
has
requested
the
inclusion
of
a
proposal
in
KBR's
proxy
statement
for its
annualmeeting
of
stockholders
even
though
Cheveddenhas
failedtoprovide
the
required
proof
of
ownershipthat
is
a
necessary
(but
notitself
sufficient)
requirement
for
theinclusion
of
a
proposal
in
KBR's
proxy
materials.This
actioninvolves
amounts
in
excess
of
the
minimum
jurisdictional
requirements
of this
Court.
5.
Personal
jurisdiction
andvenueare
proper
in
this
district
because
Chevedden
directly
and
intentionally
has
transactedbusiness
in
thisdistrict
that
goes
to
the
heart
of
thematters
at issue
here.
Chevedden
sent
KBR
a
letter in this
district
seeking
to
influence
how
KBR
conducts
business
underthe
guise
of
what
Chevedden
callsa"elect
each
director
annually"proposal
in
KBR's
proxy
materials, and
for
consideration
at
KBR's
next
annual
shareholder
meeting
in
May
2011,
which
will
be
held
in
this
district.
Cheveddenhas
sought
to
influence the
manner
in
which
KBR
conducts
its
business
in
this
district,
even though
he
has
failed
todemonstratethat he
is
a
record
holder
of
KBR
stock.
A
substantial
part
of
the
events
giving
rise
to,
andat issue
in, thislawsuit
occurred
in
this
district.
ru.
Facts
6.
On
November
22,2010,
Cheveddensubmitted
a
proposal
for
inclusion
in KBR's
upcoming
proxy
statement
purportedly
in
reliance
on
Rule
14a-8
under
the
Securities
Exchange
Act
of
1934,17
CFR
240.14a-8.In
his November
22,2010
coverletter
attaching
his
proposal,Chevedden
says
"This
proposal
is
submitted
for
the
next annual
shareholder
meeting."
KBR's
next
annual
shareholder
meeting
is
scheduled
for May
2011
in Houston,
Texas.
1396626v1/012369
Case 4:11-cv-00196 Document 1 Filed in TXSD on 01/14/11 Page 2 of 9
 
7.
Theproposal
requests
that
KBR
"take
the
steps
necessary
to
rcorganizetheBoard
of
Directors
into
one
class
with
each
director
subject
to
election
each
year
and
to
complete this
transition
within
one-year."
8.
According
to
official
SEC
records,
Cheveddenappears
to
bethe
single
mostpersistentproponent
or
proxy
ofpurported
shareholderproposals
in
history.
SinceDecember
9,
1994
when
Chevedden
submitted
his first
proposal,
proposals
for which
Cheveddenhas
been
proponent
orproxy
havebeen
the
subject
of
over 950
SEC
staffno-action
letters,
eclipsing
the
next
most
frequently
mentioned
shareholder
proponent,
the
AFL-CIO
ReserveFunds.
g.
ln
the
past
ten
proxy
seasons,
Chevedden'sproposalsaccounted
for
over
Il.2%
(879
out
of
7,837)
of
all
proposalsconsidered
by
the
SEC
staff
in
no-action
letters.
Even thatstunningten
year percentage
is
low
compared
to
recent
years.
Chevedden'sproposals
accounted
for
over
23.8%
(45out
of
189)
of all
SEC
staffno-action
letters
in
the2010
proxy
season,
over
17f%
(148
out
of
831)
of
all
no-actionletters
in
the
2009
proxy
season,
and
over
13.8%
(102
out
of
737)
ofall no-action
letters
in
the2008
proxy
season.
Chevedden'sProposal
Improperly OmitsProof
of
StockOwnership
10.
In
his
November
22,2010
coverletter tohisproposal,Chevedden
says
that
"Rule
14a-8
requirements
are
intended
to
bemet
including
continuous
ownershipof
the
required
stock
value
until
afterthe date
of
therespective shareholder
meeting
and
presentation
of
theproposal
at
the
annual
meeting."
Chevedden
did
not,
however,
include
the
requisite
proof
of
his
ownershipof
KBR
stock
as
required
by
Rule
l4a-8.
11.
Rather,Cheveddenattached
a letter
dated
November
22,2010
from
RAM
Trust
Services
("RTS")
that,
in its
entirety,
states:
"RamTrust
Services
is
a Maine
charterednon-
depositorytrust
company.
Through
us,
Mr.
John
Cheveddenhas
continuouslyheldno
less than
1396626v1/012369
Case 4:11-cv-00196 Document 1 Filed in TXSD on 01/14/11 Page 3 of 9

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