Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Americas
| Decision Date | 28 July 2010 |
| Docket Number | No. 04 Civ. 10014(PKL),04 Civ. 10014(PKL) |
| Citation | 727 F.Supp.2d 256 |
| Parties | ARISTOCRAT LEISURE LIMITED, Plaintiff, v. DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee, Defendant, KBC Financial Products UK Ltd., KBC Investments Hong Kong Ltd., KBC Alpha Master Fund Spc KBC Convertible Arbitrage Fund, KBC Alpha Master Fund Spc KBC Convertible Opportunities Fund, KBC Alpha Master Fund Spc KBC Multi-Strategy Arbitrage Fund, KBC Convertibles MAC 28 Limited, Melody Iam Limited, Amaranth LLC, Alexandra Global Master Fund, Ltd., UFJ International PLC, Deephaven International Convertible Trading, Ltd., Calamos Advisors LLC on Behalf of Calamos Growth and Income Fund, Calamos Global Growth and Income Fund and Certain Other Institutional Clients, CQS Convertible and Quantitative Strategies Master Fund Ltd., D.E. Shaw Investment Group, LLC, D.E. Shaw Valence International, Inc, QVT Fund LP, Lehman Brothers International (Europe), Deutsche Bank AG, London Branch, Intervening Defendants. |
| Court | U.S. District Court — Southern District of New York |
Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Mark C. Hansen, Esq., Michael K. Kellogg, Esq., Rebecca A. Beynon, Esq., Washington, D.C., for Plaintiff.
Cahill Gordon & Reindel LLP, Charles A. Gilman, Esq., New York, NY, for Defendant Deutsche Bank Trust Company Americas.
Cleary Gottlieb Steen & Hamilton LLP, Evan A. Davis, Esq., New York, NY, for Intervening Defendants, other than Deutsche Bank AG, London Branch.
Davis Polk & Wardwell LLP, James I. McClammy, Esq., New York, NY, for Intervening Defendant, Deutsche Bank AG, London Branch.
Table of ContentsBACKGROUND 262DISCUSSION 265 I. Aristocrat's Rule 50(b) Motion for Judgment as a Matter of Law and Alternative Rule 59 Motion for a New Trial .............. 265 A. Motion for Judgment as a Matter of Law .................... 265 1. Legal Standard Under Rule 50(b) ....................... 265 2. Sufficiency of the Evidence ........................... 266 B. Motion for a New Trial .................................... 270 1. Legal Standard Under Rule 59 .......................... 270 2. Advice of Counsel ..................................... 270 a. Applicable Law .................................... 271 b. Aristocrat's Arguments ............................ 271 c. Bondholders' Arguments ............................ 273 d. Analysis .......................................... 273 3. Jury Instructions ..................................... 276 a. Aristocrat's Argument ............................. 276 b. Analysis .......................................... 277 4. Special Verdict Form .................................. 281 II. Bondholders' Motion to Enter Partial Judgment Under Rule 54(b) 282 A. Final Judgment Is Appropriate ............................. 283 1. Legal Standard Under Rule 54(b) ....................... 283 2. Analysis .............................................. 284 B. Judgment Calculations ..................................... 286 1. Bondholders' Proposed Judgments Shall Be Offset By Gains On Short Positions ............................ 286 a. $16,834,376 Offset to Judgments of QVT, Lehman, and DBAGL ....................................... 287 b. $1,093,358 Offset to Judgments of Deephaven, KBC FP, and four KBC AIM funds-ARB, MAC 28, Multi, and OPPS ........................................ 292 2. Pre"judgment Interest ................................. 292 a. Pre"Judgment Interest Rate of 7.5% Applies to Principal Payments From May 31, 2006, Through the Date that Each Bondholder Signed a Receipt and Release Agreement ........................... 293 b. Pre"Judgment Interest Rate of 9% Applies to General Damages As of Each Bondholder's Conversion Date ................................. 294 3. Coupon Payments on Deposit With the Court ............. 297 4. Post"Judgment Interest ................................ 298 5. Judgments for Non"Parties ............................. 299CONCLUSION 301
Plaintiff, Aristocrat Leisure Ltd. ("Aristocrat") moves post-trial for an order granting judgment as a matter of law pursuant to Federal Rule of Civil Procedure ("Rule") 50(b) or, alternatively, for a new trial pursuant to Rule 59. Aristocrat contends that, pursuant to Rule 50(b), no reasonable jury could arrive at a verdict in favor of the intervening defendant Bondholders based on the evidence presented at trial. Alternatively, Aristocrat argues that the Court should order a new trial pursuant to Rule 59 because Bondholders improperly put at issue their counsel's legal advice without the Court finding waiver of privilege and because the jury instructions and special verdict form were erroneous and prejudicial.
Bondholders move post-trial for an order directing the Clerk of Court to enter partial judgment pursuant to Rule 54(b) on Bondholders' counterclaims for counter-declaratory relief with respect to the meaning of the Indenture and for breach of contract. Aristocrat opposes Bondholders' motion for entry of partial judgment on the grounds that the Court should enter final, rather than partial, judgment and that Bondholders' proposed judgments conflict with the law and overstate damages by approximately $60 million.
The defendant Trustee moves post-trial asking the Court to declare Aristocrat in breach of its obligations under the Indenture to deliver shares to five non-party bondholders and to issue final judgments in favor of each non-party bondholder on the same terms as other similarly situated Bondholders.
For the reasons set forth below, Aristocrat's motion for judgment as a matter of law pursuant to Rule 50(b) is DENIED. Aristocrat's alternative motion for a new trial pursuant to Rule 59 also is DENIED. Bondholders' motion for entry of partial judgment pursuant to Rule 54(b) is DENIED. Bondholders' claims for violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and for breach of the implied covenant of good faith and fair dealing are DISMISSED WITHOUT PREJUDICE. The Trustee's motion to enter final judgment for five Non-Party Bondholders is DENIED, pending the exchange of limited discovery described herein. The Court directs the parties to submit joint revised proposed final judgments consistent with this Opinion and Order. Upon receipt of the parties' joint revised proposed final judgments, the Court shall enter final judgment.
The Court makes the following determinations with respect to the calculation of the Bondholders' judgments: (1) Aristocrat is entitled to an offset for gains realized by DBAGL, Lehman, and QVT upon closing their short positions; (2) Aristocrat is entitled to an offset for interim trading gains realized by Deephaven, KBC FP, and four of the five KBC AIM funds (ARB, MAC 28, Multi, and OPPS); (3) a pre-judgment interest rate of 7.5% per year applies to the principal payments Aristocrat made to Bondholders under the Receipt and Release Agreements for the period from May 31, 2006, 2006 WL 1493132, through the date each Bondholder signed a Receipt and Release Agreement; (4) for all Bondholders, whether fully hedged, partially hedged, or unhedged, a pre-judgment interest rate of 9% on general damages shall accrue from each Bondholder's conversion date; (5) Aristocrat is not entitled to an offset for bond interest coupon payments that Aristocrat paid to the Trustee, who paid them into the Court; and (6) post-judgment interest shall be set by the Court pursuantto 28 U.S.C. § 1961(a) upon entry of final judgment.
The Court assumes familiarity with the facts and allegations as stated in the Court's many prior decisions in this action.1 Plaintiff Aristocrat, a global gaming machine supplier, is incorporated in Australia, with headquarters in Sydney. (Compl. ¶ 4.) Defendant Deutsche Bank Trust Company Americas ("Trustee"), incorporated in New York with a principal place of business in New York City, defends this action on behalf of all convertible bondholders and is an affiliate of one of the lead underwriters and managers of the bond offer at issue. ( Id. ¶ 5; see also Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Ams., No. 04 Civ. 10014, 2006 WL 1493132, at *1, 2006 U.S. Dist. LEXIS 34709, at *3 (Leisure, J.).
This case arises out of Aristocrat's issuance of US$130,000,000 of 5% convertible bonds, due May 2006, to qualified institutional buyers. Aristocrat filed this suit as a declaratory action on December 20, 2004, alleging that but for a scrivener's error, Aristocrat would have been able to redeem the bonds on November 22, 2004, its notice and call would have been effective on December 20, 2004, and Aristocrat would have terminated the...
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