Attached files
file | filename |
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8-K - 8-K - HEALTHPEAK PROPERTIES, INC. | a11-13609_18k.htm |
EX-99.1 - EX-99.1 - HEALTHPEAK PROPERTIES, INC. | a11-13609_1ex99d1.htm |
Exhibit 99.2
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 1
Nos. 09-6385 & 09-6413
IN THE
United States Court of Appeals
FOR THE SIXTH CIRCUIT
VENTAS, INC.,
Plaintiff/Appellee/Cross-Appellant V.
HCP, INC.,
Defendant/Appellant/Cross-Appellee.
On Appeal from the U.S. District Court
for the Western District of Kentucky
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HCP, INC.S PETITION FOR REHEARING AND REHEARING EN BANC |
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Sheryl G. Snyder |
Jeffrey A. Lamken |
FROST BROWN TODD LLC |
Counsel of Record |
400 W. Market Street, 32nd Floor |
Michael G. Pattillo Jr. |
Louisville, Kentucky 40202 |
MOLOLAMKEN LLP |
Phone: 502.589.5400 |
600 New Hampshire Avenue, N.W. |
Facsimile: 502.589.1087 |
Washington, D.C. 20037 |
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Phone: 202.556.2000 |
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Facsimile: 202.556.2001 |
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jlamken@mololamken.com |
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Matthew C. Blickensderfer |
Clifford M. Sloan |
FROST BROWN TODD LLC |
Sheila L. Birnbaum |
2200 PNC Center |
Thomas J. Nolan |
201 East Fifth Street Cincinnati, Ohio 45202 |
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP |
Phone: 513.651.6162 |
1440 New York Avenue, N.W. |
Facsimile: 513.651.6981 |
Washington, D.C. 20005 |
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Phone: 202.371.7000 |
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Facsimile: 202.393.5760 |
Counsel for Defendant/Appellant/Cross-Appellee HCP, Inc.
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 2
TABLE OF CONTENTS
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ISSUES PRESENTED |
2 | |
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BACKGROUND |
2 | |
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I. |
HCP and Ventas Compete To Acquire Sunrise |
3 |
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II. |
Proceedings in District Court |
4 |
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III. |
The Panel Decision |
4 |
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REASONS FOR GRANTING THE PETITION |
6 | |
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I. |
The Panels Sua Sponte Holding on Res Judicata Conflicts With This Circuits Precedent and Kentucky Law |
6 |
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II. |
Using a State-Law Standard for Evidentiary Sufficiency Under Rule 50 Conflicts with Decisions of Other Circuits |
8 |
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III. |
The Panels Sua Sponte Entry of Final Partial Judgment Under Rule 54(b) and Remand for Trial Solely on Punitive Damages Creates a Circuit Conflict and Violates the Seventh Amendment |
11 |
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CONCLUSION |
15 | |
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CERTIFICATE OF COMPLIANCE |
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CERTIFICATE OF SERVICE |
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Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 3
TABLE OF AUTHORITIES
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CASES | |
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Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) |
9, 10 |
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Ariz. State Carpenters Pension Trust Fund v. Miller, 938 F.2d 1038 (9th Cir. 1991) |
12 |
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Bacon v. Honda of Am. Mfg., Inc., 205 F.R.D. 466 (S.D. Ohio 2001) |
13 |
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Burke v. Deere & Co., 6 F.3d 497 (8th Cir. 1993) |
14 |
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Carducci v. Regan, 714 F.2d 171 (D.C. Cir. 1983) |
8 |
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Cavett v. Johns-Mansville Sales Corp., 776 F.2d 1565 (6th Cir. 1985) |
15 |
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City of Paducah v. Elec. Plant Bd., 449 S.W.2d 907 (Ky. 1970) |
7 |
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Cooke v. Gaidry, 218 S.W.2d 960 (Ky. 1949) |
5, 6, 7 |
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Gasoline Prods. Co. v. Champlin Ref. Co., 283 U.S. 494 (1931) |
12, 13, 14 |
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Gen. Acquisition Corp. v. GenCorp., Inc., 23 F.3d 1022 (6th Cir. 1994) |
12 |
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Gray v. Toshiba Am. Consumer Prods., Inc., 263 F.3d 595 (6th Cir. 2001) |
9 |
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Grimm v. Leinart, 705 F.2d 179 (6th Cir. 1983) |
14 |
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Harris v. Wallace, 474 S.W.2d 878 (Ky. 1971) |
6, 7 |
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Hill v. Kemp, 478 F.3d 1236 (10th Cir. 2007) |
8 |
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Hines v. Joy Mfg. Co., 850 F.2d 1146 (6th Cir. 1988) |
15 |
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Holbrook v. Shelter Ins. Co., 186 F. Appx 618 (6th Cir. 2006) |
2, 6, 7, 8 |
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Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737 (1976) |
12 |
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Mann v. Lincoln Elec. Co., No. 1:06-CV-17288, 2010 WL 4117417 (N.D. Ohio, Oct. 15, 2010) |
13 |
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Mason v. Texaco, Inc., 741 F. Supp. 1472 (D. Kan. 1990) |
13 |
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 4
Mayer v. Gary Partners & Co., 29 F.3d 330 (7th Cir. 1994) |
9 | |
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McDonald v. Johnson & Johnson, 722 F.2d 1370 (8th Cir. 1983) |
13 | |
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Oakley v. Bridges, 429 S.W.2d 31 (Ky. 1968) |
7 | |
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Simone v. Golden Nugget Hotel & Casino, 844 F.2d 1031 (3d Cir. 1988) |
13 | |
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Slater v. KFC Corp., 621 F.2d 932 (8th Cir. 1980) |
14 | |
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Smyth Sales v. Petroleum Heat & Power Co., 141 F.2d 41 (3d Cir. 1944) |
15 | |
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Sussex Drug Prods. v. Kanasco, Ltd., 920 F.2d 1150 (3d Cir. 1990) |
12 | |
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Syufy Enters. v. Am. Multicinema, Inc., 793 F.2d 990 (9th Cir. 1986) |
11 | |
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Terry v. Tyson Farms, Inc., 604 F.3d 272 (6th Cir. 2010) |
12 | |
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United Air Lines, Inc. v. Wiener, 286 F.2d 302 (9th Cir. 1961) |
13 | |
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W. Fireproofing Co. v. W.R. Grace & Co., 896 F.2d 286 (8th Cir. 1990) |
13, 15 | |
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CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES | ||
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U.S. Const. amend. VII |
passim | |
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K.R.S. § 411.184(2) |
10 | |
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Fed. R. Civ. P. 50 |
1, 5, 8, 9 | |
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Fed. R. Civ. P. 50(a) |
10 | |
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Fed. R. Civ. P. 50(b) |
5 | |
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Fed. R. Civ. P. 54(b) |
passim | |
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6th Cir. R. 35(c) |
2 | |
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Ky. R. Civ. P. 76.37(1) |
8 | |
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 5
OTHER AUTHORITIES
Restatement (Second) of Judgments § 33 cmt. c (1980) |
5 |
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 6
The panel decision in this casewhich affirms a $101 million award for tortious interference with prospective advantage and remands for trial on punitive damages onlycreates and reinforces circuit conflicts on recurring issues of exceptional importance. HCP respectfully requests rehearing and rehearing en banc.
Ruling on grounds never briefed, the panel held that the judgment in a prior suit between the parties lacked res judicata effect. But the panel overlooked that in-circuit authority expressly rejects the theory it adopted.
In upholding the verdict and remanding for a trial on punitive damages, the panel concluded that, under this Circuits precedent, state law controls the standard for reviewing sufficiency of the evidence under Fed. R. Civ. P. 50. The panel acknowledged that those cases conflict with the better view of this Courts sister circuits, which hold that the federal standard controls. Op. 29 n.11. And because this case presented very close, challenging . . . issues of fact, RE.520 at 1, the choice of standard was importantparticularly with regard to punitive damages.
The panel also ruledsua spontethat the compensatory-damages award in this case should stand as a final partial judgment under Fed. R. Civ. P. 54(b), while punitive damages alone are tried to a new jury on remand. Op. 35-36. That conflicts with Third and Ninth Circuit decisions holding that compensatory and punitive damages are not distinct claims that can stand as separate judgments under Rule 54(b). It also contravenes the Seventh Amendment and conflicts with Third and Eighth Circuit decisions holding that a case cannot be remanded for trial solely on punitive damages where compensatory and punitive liability are related.
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 7
ISSUES PRESENTED
1. Whetheras held in Holbrook v. Shelter Ins. Co., 186 F. Appx 618 (6th Cir. 2006), but contrary to the decision hereKentucky gives declaratory judgments res judicata effect, with an exception only for subsequent actions for specific relief based on the [prior] judgment that do not requir[e] additional proof.1
2. Whether, in diversity cases, a state-law standard for sufficiency of the evidence governs (as this Circuit holds), or whether that procedural issue is controlled by federal law, as most if not all of [this Courts] sister circuits have held.
3. Whether, contrary to rulings of other circuits, a compensatory-damages award is a separate claim that can be entered as a final partial judgment under Fed. R. Civ. P. 54(b), while punitive damages alone are tried to a new jury despite the Seventh Amendment and despite the fact that the compensatory and punitive liability issues are interwoven.
BACKGROUND
This is the latest lawsuit arising out of competition between Ventas and HCP to acquire Sunrise Senior Living Real Estate Investment Trust (Sunrise), a Cana-dian company. The extensive facts are fully presented in the parties briefs; only the most essential are set forth here.
1 This issue is for panel rehearing only. See 6th Cir. R. 35(c).
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 8
I. HCP and Ventas Compete To Acquire Sunrise
HCP and Ventas engaged in a competitive bidding process to acquire Sunrise. Although HCP submitted higher bids, it later withdrew, citing its inability to reach a necessary agreement with Sunrises property manager, SSL. Ventas reached agreement with SSL and made an offer for Sunrise of $15 per share. Sunrise accepted Ventass offer contingent on approval by its shareholders.
A month later, HCP issued a press release announcing an $18 bid for Sunrise. The next day, Sunrises price rose from just under $15 to near $18. Tr.7B at 5. Ventas claimed HCPs press release was misleading because it did not state that HCPs bid was conditioned on reaching a deal with SSL, or that a standstill agreement between HCP and Sunrise purportedly barred HCPs new bid. RE.520 at 2-3; see Tr.12A at 17-24.
Sunrise sued Ventas in Canada, seeking an order that HCP could negotiate with SSL. RE.177-65 at HCP5325. Ventas countersued Sunrise and HCP, seeking a ruling that (a) HCPs bid was barred by its standstill agreement with Sunrise and (b) Sunrise must enforce that agreement. RE.175-13 at HCP5346. Ventas believed it had other claims against HCP, Sealed.App.67 (2/23/07 e-mail from Ventas CEO), including tortious interference, Sealed.App.69 (2/26/07 e-mail to Ventas CEO), but did not assert them. Instead, Ventas strategically waited to bring its tortious interference claim in [a] more favorable jurisdiction. Sealed.App.68 (notes of 2/24/07 call with Ventas advisors).
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 9
The Canadian court ruled that HCPs bid was barred by its standstill agreement and that Sunrise was required to enforce it, but only until the shareholder vote on Ventass offer. HCP promptly withdrew its bid. Tr.5A at 32-33. To avoid shareholder rejection of its offer, III.App.742, Ventas raised its bid to $16.50, V. App.1327. That offer was approved. V.App.1339-40.
II. Proceedings in District Court
Ventas then sued HCP in federal court, alleging that HCP had tortiously interfered with its expectancy that Sunrise shareholders would approve its $15 offer. The court rejected HCPs res judicata defense. RE.220 at 20. But it held there was insufficient evidence to submit punitive damages to the jury. Tr.11A at 175. The court also found there was no evidence . . . that the $18 bid was insincere. Tr.8B at 70; RE.450 at 6 n.5. The jury returned a $101 million verdict in compensatory damages (the difference between $16.50 and $15 per share times the number of Sunrise shares). The court denied post-trial motions and both sides appealed.
III. The Panel Decision
A panel of this Court affirmed in part and reversed in part.
A. The panel rejected HCPs res judicata defense without addressing any of the parties arguments on that issue. Instead, the panel announced that the parties
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 10
(and the district court) had overlooked the well-settled rule that an action for declaratory relief does not have preclusive effect in a subsequent litigation between the same parties. Op. 14 (citing Restatement (Second) of Judgments § 33 cmt. c). Kentucky, the panel asserted, embraced that view in Cooke v. Gaidry, 218 S.W.2d 960 (Ky. 1949). Because Ventass Canadian suit was declaratory in nature, the panel declin[ed] to accord [it] preclusive effect. Op. 15.
B. The panel then rejected HCPs claim that Ventas had presented insufficient evidence that HCPs allegedly tortious conductand not other factorswas responsible for the share-price movements that caused Ventass $15 bid to fail. Op. 28-35. In doing so, the Court applied the Kentucky rather than the federal standard for sufficiency of the evidence. Circuit precedent, the panel observed, requires that in diversity cases, where the Rule 50(b) motion is based on a challenge to the sufficiency of the evidence, a state-law standard of review applies. Id. at 28. Acknowledging that other circuits require use of a federal standard, and that those circuits have the better view, the panel suggested that the en banc Court might in the future reconsider the issue. Id. at 29 n.11.
C. Finallyagain applying the state-law sufficiency standardthe panel sustained Ventass cross-appeal, holding that the district court erred in refusing to submit punitive damages to the jury. Op. 36. The panel also ruled (without any briefing by the parties) that the compensatory award shall constitute a final partial judgment under Fed. R. Civ. P. 54(b), and that only punitive damages would be tried to a new jury on remand. Op. 35-36, 52-53.
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 11
REASONS FOR GRANTING THE PETITION
I. The Panels Sua Sponte Holding on Res Judicata Conflicts With This Circuits Precedent and Kentucky Law
Disregarding the parties arguments in favor of a theory Ventas never raised, the panel held that res judicata did not bar Ventass suit. Invoking Cooke v. Gaidry, 218 S.W.2d 960 (Ky. 1949), the panel held that prior declaratory judgment actions are never preclusive under Kentucky law. Op. 14.
But this Court has already rejected that reading of Cooke. In Holbrook v. Shelter Insurance Co., 186 F. Appx 618 (6th Cir. 2006) (Boggs, C.J., Gibbons & Griffin, JJ.), the plaintifflike the panel hereasserted that under Cooke, declaratory judgment actions are excepted from the general res judicata rule. Id. at 622. The Court rejected that argument, holding that Cookes exception to res judicata has since been construed to refer merely to subsequent actions for specific relief based on the judgment. Id. (citing Harris v. Wallace, 474 S.W.2d 878, 881 (Ky. 1971)) (emphasis added). It applies, the Court explained, only to a particular type of subsequent action brought solely in reliance on the declaration; such an action cannot require[] additional proof or additional liability determinations. Id. (emphasis added). Because the plaintiffs later claim required additional proof, the Court held it was barred by res judicata. Id.
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 12
That limit flows from Cooke itself. Cooke applied a Kentucky statute providing that [f]urther relief, based on a declaratory judgment, order or decree, may be granted whenever necessary or proper. 218 S.W.2d at 962 (emphasis added). It did not generally exempt declaratory judgments from res judicata or adopt the broad Restatement rule invoked by the panel. Kentucky courts have cited Cooke chiefly in holding that declaratory actions are res judicata, because any exception extends only to later efforts to secure further relief based on the judgment. Harris, 474 S.W.2d at 881; Oakley v. Bridges, 429 S.W.2d 31, 32 (Ky. 1968).2
While citing Cooke and Holbrook, the panel decision never addressed that limit on the exception it invoked. It never explained how this case could be considered an action to secure further relief based on the [declaratory] judgment. City of Paducah v. Elec. Plant Bd., 449 S.W.2d 907, 910 (Ky. 1970). Ventass claim here was not made solely in reliance on the declaration of the Canadian court. Holbrook, 186 F. Appx at 622 (emphasis added). Its nine-figure monetary claim required it to prove (among other things) significantly wrongful conduct such as fraud, coercion, or duress, and that its $15 bid would have been accepted absent that conduct. See Op. 22. It thus require[d] precisely the additional proof and liability determinations that Holbrook rejects. 186 F. Appx at 622.
2 When the panel raised the issue at argument, HCP cited Holbrook, advising that, in Kentucky, you can bring successive suits . . . only if youre suing on the judgment. So if theres additional evidence you need, anything else you need to bring to court other than the judgment, you cant bring a later suit. Oral Arg. 10:40.
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[A]ppellate courts do not sit as self-directed boards of legal inquiry and research, but essentially as arbiters of legal questions presented and argued by the parties before them. Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983) (Scalia, J.). That adversarial process exists to avoid error that may result absent briefing from the parties. Hill v. Kemp, 478 F.3d 1236, 1251 (10th Cir. 2007). Just such an error occurred here. The panel relied on an incorrect theory that neither party urged. And it cited Holbrook as support for the broad exception that Hol-brook and Kentucky cases specifically reject. If there is doubt on this point of Kentucky law, moreover, the proper course would be to certify the issue to the Kentucky Supreme Court. See Ky. R. Civ. P. 76.37(1) . Rehearing is warranted.
II. |
Using a State-Law Standard for Evidentiary Sufficiency Under Rule 50 Conflicts with Decisions of Other Circuits |
A. Following circuit precedent, the panel applied the state-law standard for reviewing sufficiency of the evidence when deciding, under Fed. R. Civ. P. 50, (1) whether to sustain liability, Op. 28, and (2) whether punitive damages should have been submitted to the jury, Op. 36. That conflicts with most if not all of [this Courts] sister circuits, which apply the federal sufficiency standard in diversity cases. Op. 28 n.11 (citing 1st, 2d, 5th, 8th, 9th, and 10th Circuit cases).3
3 In general, Kentucky law permits entry of judgment as a matter of law only if there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable minds could differ .... [E]very favorable inference which may reasonably be drawn from the evidence
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That conflict justifies en banc reviewparticularly given the panels recognition that this Courts sister circuits have the better view. Op. 29 n.11. Although a federal court sitting in diversity applies the substantive law of the forum state, the federal court ordinarily applies its own rules of procedure to adjudicate the dispute. Id. The standard for when the court should decide an issue as a matter of law rather than submit it to the jury is a procedural questionit affects the respective roles of judge and juryand must be governed by federal law. Mayer v. Gary Partners & Co., 29 F.3d 330, 332-35 (7th Cir. 1994). This Circuits contrary precedent, moreover, disregards the Supreme Courts teaching that the Rule 50 standard mirrors the summary judgment standard, where a federal standard plainly applies. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The panel suggested that perhaps this Circuits en banc Court will in the future reconsider the issue. Op. 29 n.11. That moment should be now.
B. The standard for evidentiary sufficiency has profound consequences here. The district court characterized the factual issues as very close, challenging, and difficult. RE.520 at 1, 4.4 In such close case[s], the choice of stan-
should be accorded the party against whom the motion is made. Op. 29. The federal standard asks whether, viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact for the jury. Gray v. Toshiba Am. Consumer Prods., Inc., 263 F.3d 595, 598 (6th Cir. 2001).
4 See also RE.220 at 8, 11 (finding sufficiency a difficult question, and that Ven-tas faces quite serious challenges in showing . . . that HCPs motives or actions
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dard potentially matters. Mayer, 29 F.3d at 333. The district court that saw the entire trial repeatedly found there was no evidence . . . that the $18 bid was insincere. Tr.8B at 70.5 But the panel, applying the state-law standard, saw the evidence as casting doubt on the genuineness of [HCPs] offer. Op. 31.
The difference in standards is particularly important for punitive damages, which require clear and convincing proof at trial. K.R.S. § 411.184(2) . The federal standard requires courts ruling on evidentiary sufficiency to incorporate the substantive evidentiary standard of proof that would apply at the trial, asking whether a reasonable factfinder could conclude . . . that [plaintiff] had shown [the predicates] with convincing clarity. Anderson, 477 U.S. at 252 (emphasis added). But Ventas urged that, in applying the Kentucky sufficiency standard, the court should not take into account the clear-and-convincing standard in ruling on a Rule 50(a) motion. Ventas 4th Br. 7. And in holding that Ventas presented sufficient evidence for punitive damages, the panel recited the same Kentucky standard it used to assess issues governed by the preponderance standardi.e., whether there is a complete absence of proof . . . or [whether] no disputed issue of fact exists up-
were improper); RE.520 at 1 (reasonable people could have examined the evidence and come to different conclusions).
5 See also Tr.11B at 36 (no evidence to suggest that [HCP] had no interest in paying and would not pay [$]18); Tr.8B at 67 (court did not see any actual evidence that HCP had no real interest in paying $18); id. at 72-73 (I havent seen a bit of evidence . . . HCP could not have paid [$18], and would not have paid it.).
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on which reasonable minds could differ. Op. 36. Precisely because the fact issues were very close, challenging, and difficult even under the preponderance standard, the district court properly ruled as a matter of law that Ventas had not met the clear and convincing evidence threshold incorporated into the federal standard. See Tr.11A at 175-76. En banc review is warranted.6
III. The Panels Sua Sponte Entry of Final Partial Judgment Under Rule 54(b) and Remand for Trial Solely on Punitive Damages Creates a Circuit Conflict and Violates the Seventh Amendment
Rather than vacate the judgment and remand for further proceedings, the panelwithout briefing by the partiesdeclared that the compensatory award shall constitute a final partial judgment pursuant to Rule 54(b) while punitive damages are tried to a new jury. Op. 35, 52-53. That sua sponte declaration creates a circuit conflict on Rule 54(b)s scope and violates the Seventh Amendment.
A. Rule 54(b) provides that, [w]hen an action presents more than one claim for relief . . . the court may direct entry of a final judgment as to one or more, but fewer than all, claims . . . only if the court expressly determines that there is no just reason for delay. Fed. R. Civ. P. 54(b). The Third and Ninth Circuits have held that compensatory and punitive damages cannot be entered as separate final judgments under Rule 54(b) because they are not separate claims; they
6 At the very least, the proper standard could control the punitive-damages theories Ventas can assert on remand. See, e.g., Syufy Enters. v. Am. Multicinema, Inc., 793 F.2d 990, 992 (9th Cir. 1986) (theories on which plaintiff presents insufficient evidence should not be submitted to jury).
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are requests for different relief on a single claim. [A] count for punitive damages, although of a different order than compensatory damages, does not constitute a separate claim under Rule 54(b). Sussex Drug Prods. v. Kanasco, Ltd., 920 F.2d 1150, 1155 (3d Cir. 1990); accord Ariz. State Carpenters Pension Trust Fund v. Miller, 938 F.2d 1038, 1040 (9th Cir. 1991). The panels sua sponte entry of Rule 54(b) final judgment on compensatory damages conflicts with those decisions.7
In general, this Court do[es] not create conflicts among the circuits without strong cause. Terry v. Tyson Farms, Inc., 604 F.3d 272, 278 (6th Cir. 2010) (quotation marks omitted). Here, the panels Rule 54(b) ruling was sua sponte. It was also error. [W]hen a plaintiff is suing to vindicate one legal right and alleges several elements of damages, only one claim is presented and [Rule 54(b)] does not apply. Gen. Acquisition, 23 F.3d at 1028 (quotation marks omitted); Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 744 n.4 (1976). That is the case here.
B. Rule 54(b) cannot be invoked to permit Ventas to collect a compensa- tory award, despite reversal of an otherwise unitary district-court final judgment, because it violates the Seventh Amendment. [A]t common law there was no prac-tice of setting aside a verdict in part. Gasoline Prods. Co. v. Champlin Ref. Co.,
7 The panel also overlooked that Rule 54(b) requires the court to expressly determine[] that there is no just reason for delay in entering final judgment, Fed. R. Civ. P. 54(b) (emphasis added), and to explain its conclusion, Gen. Acquisition Corp. v. GenCorp., Inc., 23 F.3d 1022, 1026 (6th Cir. 1994). No such express determination or rationale was given here. If Ventass election to seek additional damages postpones the entry of final judgment, that is Ventass choice.
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283 U.S. 494, 497 (1931). In Gasoline Products, the Supreme Court recognized an exception to that historical rule, but warned that a partial new trial . . . may not properly be resorted to under the Seventh Amendment unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice. Id. at 500 (emphasis added). Applying that rule to the facts before it, the Court held that the question of damages was so interwoven with that of liability that it could not be submitted to the [second] jury independently . . . without confusion and uncertainty. Id.
Under Gasoline Products, the Eighth Circuit has conclude[d] [that] the question of punitive damages is not sufficiently distinct from the question of liability for fraud and tortious interference to permit a new trial on the issue of punitive damages alone. W. Fireproofing Co. v. W.R. Grace & Co., 896 F.2d 286, 293-94 (8th Cir. 1990). It hason rehearingcorrected a panel decision that had affirmed [a] fraud count but granted a new trial on the punitive damages awarded under the fraud recovery because the issue of punitive damages was so interwoven with the substantive merits of the fraud count. McDonald v. Johnson & Johnson, 722 F.2d 1370, 1388 (8th Cir. 1983). Case after case on this issue is in accord.8
8 See, e.g., Simone v. Golden Nugget Hotel & Casino, 844 F.2d 1031, 1041 (3d Cir. 1988); United Air Lines, Inc. v. Wiener, 286 F.2d 302, 306 (9th Cir. 1961); Mann v. Lincoln Elec. Co., No. 1:06-CV-17288, 2010 WL 4117417, at *8 (N.D. Ohio, Oct. 15, 2010); Bacon v. Honda of Am. Mfg., Inc., 205 F.R.D. 466, 489 (S.D. Ohio 2001); Mason v. Texaco, Inc., 741 F. Supp. 1472, 1493 (D. Kan. 1990).
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 19
Likewise here, because any award of punitive damages must turn on an assessment of [HCPs] conduct, the issues of damages and liability in this case are so interwoven as to require a new trial on both. Slater v. KFC Corp., 621 F.2d 932, 938 (8th Cir. 1980). Indeed, in ruling that there was a triable issue on punitive damages, the panel largely cross-referenced its earlier analysis of the conduct that it found sufficient to sustain compensatory liability. See Op. 28-34, 39.
Moreover, punitive damages can be awarded only for the conduct from which the claim arose. Burke v. Deere & Co., 6 F.3d 497, 511 (8th Cir. 1993). Because the first jury returned only a general verdict, a second jury could not be instructed which (if any) statements the first jury found to be knowingly false and to have caused injury, or what else (such as motive) made HCPs conduct sufficiently wrongful to constitute tortious interference. The second jury thus could not decide whether the conduct on which the first jury premised liability warrants punitive damagesnor limit punitive damages to that conduct. Id. at 513. That is precisely the risk of confusion and uncertainty that the Seventh Amendment will not tolerate. Gasoline Prods., 283 U.S. at 500. The panel opinions sua sponte expansion of Rule 54(b) to separate compensatory and punitive liability cannot be reconciled with the original and long-settled understanding of the Seventh Amendment.
This Court has permitted punitive damages to be tried separately only when the finding of liability and the award of compensatory damages are in no way in-
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 20
termingled with punitive damages. Grimm v. Leinart, 705 F.2d 179, 183 (6th Cir. 1983). By contrast, where the punitive damages determination is linked to complex liability determinations, this Court has remanded for a plenary retrial. See Cavett v. Johns-Mansville Sales Corp., 776 F.2d 1565, 1581 (6th Cir. 1985). A paramount consideration at all times in the administration of justice is a fair and impartial trial to all litigants. Considerations of economy of time, money and convenience of witnesses must yield thereto. Hines v. Joy Mfg. Co., 850 F.2d 1146, 1152 (6th Cir. 1988) (quotation marks omitted). In this case, punitive damages cannot be tried fairly without concurrently trying liability. Accordingly, the Seventh Amendment mandates that Ventas can have the entire judgment . . . vacated and the case . . . remanded to the district court for a new trial on all issues, or it can forgo punitive damages. W. Fireproofing Co., 896 F.2d at 294 (emphasis added); see also Smyth Sales v. Petroleum Heat & Power Co., 141 F.2d 41, 45 (3d Cir. 1944). Because the panels sua sponte invocation of Rule 54(b) cannot be reconciled with the law of other circuits and the Seventh Amendment, rehearing en banc is warranted.
CONCLUSION
Rehearing and rehearing en banc should be granted.
May 31, 2011 |
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Respectfully submitted. |
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 21
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Sheryl G. Snyder |
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Jeffrey A. Lamken |
FROST BROWN TODD LLC |
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Counsel of Record |
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Counsel for Defendant/Appellant/Cross-Appellee HCP, Inc.
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 22
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Jeffrey A. Lamken |
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Counsel for HCP, Inc. |
Case: 09-6385 Document: 006110971642 Filed: 05/31/2011 Page: 23
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/s/ Jeffrey A. Lamken |
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Jeffrey A. Lamken |
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Counsel for HCP, Inc. |