CHICAGO-#1856471-v11-FINAL Ventas Appeal Briefamlawdaily.typepad.com/Ventas Second Brief.pdf · E....

Nos. 09-6385, 09-6413

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

VENTAS, INC., Plaintiff-Appellee, Cross-Appellant

v.

HCP, INC., Defendant-Appellant, Cross-Appellee

Appeal from the United States District Court

for the Western District of Kentucky at Louisville (Case No. 3:07-cv-00238-JGH)

APPELLEE/CROSS-APPELLANT BRIEF FOR VENTAS, INC.

David J. Bradford Terri L. Mascherin Daniel J. Weiss JENNER & BLOCK LLP 353 N. Clark Street Chicago, IL 60654-3456 Tel: (312) 222-9350 Fax: (312) 527-0484

Eric L. Ison Holland N. McTyeire V GREENEBAUM DOLL & MCDONALD PLLC 3500 National City Tower 101 South Fifth Street Louisville, KY 40202 Tel: (502) 589-4200 Fax: (502) 587-3695

Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW, Suite 900Washington, DC 20001-4412 Tel: (202) 639-6000 Fax: (202) 639-6066

Attorneys for Plaintiff-Appellee, Cross-Appellant Ventas, Inc.

Case: 09-6385 Document: 006110229621 Filed: 04/12/2010 Page: 1

6CA-18/08 Page 1 of 2

UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

Disclosure of Corporate Affiliationsand Financial Interest

Sixth CircuitCase Number: Case Name:

Name of counsel:

Pursuant to 6th Cir. R. 26.1, Name of Party

makes the following disclosure:

1. Is said party a subsidiary or affiliate of a publicly owned corporation? If Yes, list below theidentity of the parent corporation or affiliate and the relationship between it and the namedparty:

2. Is there a publicly owned corporation, not a party to the appeal, that has a financial interestin the outcome? If yes, list the identity of such corporation and the nature of the financialinterest:

CERTIFICATE OF SERVICE

I certify that on _____________________________________ the foregoing document was served on allparties or their counsel of record through the CM/ECF system if they are registered users or, if they are not,by placing a true and correct copy in the United States mail, postage prepaid, to their address of record.

s/

This statement is filed twice: when the appeal is initially opened and later, in the principal briefs, immediately preceding the table of contents. See 6th Cir. R. 26.1 on page 2 of this form.


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TABLE OF CONTENTS

TABLE OF CONTENTS........................................................................................... i

TABLE OF AUTHORITIES ................................................................................... iii

REQUEST FOR ORAL ARGUMENT .....................................................................1

JURISDICTIONAL STATEMENT ..........................................................................1

STATEMENT OF CROSS-APPEAL ISSUES .........................................................1

STATEMENT OF THE CASE..................................................................................2

STATEMENT OF FACTS ........................................................................................5

A. HCP’s Assault On SSL ......................................................................5 B. Ventas Wins And HCP’s Agenda Shifts ...........................................7 C. The Market Embraces The Ventas $15 Deal .....................................9 D. HCP’s Fraud.....................................................................................11 E. The Market Effect ............................................................................15 F. HCP’s Continuing Fraud .................................................................17 G. The Lasting Effects Of The Fraud ...................................................19

RESPONSE TO HCP’S STATEMENT OF FACTS ..............................................23

SUMMARY OF ARGUMENT ...............................................................................28

RESPONSE TO HCP APPEAL ..............................................................................29

I. The Jury Reasonably Found That Ventas Proved Causation......................29

A. HCP Misstates The Standard Of Review.........................................30 B. There Was Sufficient Evidence To Find That The Press Release

Was Misleading In Its Entirety And Was Causal. ...........................31 C. The Elevated Stock Price And Professor Lys’s Testimony

Support The Verdict.........................................................................43 D. The Jury Could Reasonably Find Causation Even If The Press

Release Contained An Independent Truthful Statement. ................45

II. The Court Did Not Err In Instructing The Jury. .........................................50

A. HCP’s §768 Challenge Fails............................................................51 B. HCP Was Not Entitled To A “No Malice” Instruction. ..................54


ii

C. There Was No Error With Respect To HCP’s Breach Of Contract............................................................................................56

D. There Was No Error In The Causation Instructions. .......................59

III. Ventas’s Claims Are Not Barred By Res Judicata. ....................................60

VENTAS’S CROSS-APPEAL ................................................................................65

I. Ventas Is Entitled To A Trial On Punitive Damages..................................65

II. Ventas Is Entitled To The Full Measure Of Its Damages...........................68

A. Ventas Should Recover The Increased Cost Of The Original $15 Purchase Price In U.S. Dollars.........................................................69

B. Ventas Should Recover The Increased Purchase Price Based On The “Judgment Date.”......................................................................70

C. Ventas Should Have Been Allowed To Seek Damages Related To Its Planned Equity Raise.............................................................72

III. The District Court Incorrectly Refused To Apply Prejudgment Interest. ..75

CONCLUSION........................................................................................................75

CERTIFICATE OF COMPLIANCE.......................................................................1a

CERTIFICATE OF SERVICE ................................................................................2a

DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS ..............3a


iii

TABLE OF AUTHORITIES

Page(s) CASES

Ace v. Capital RE, 747 A.2d 95 (Del. Ch. 1999) ..............................................................................26

Adams v. Amplidyne, 2000 WL 34603180 (D.N.J. Oct. 24, 2000) .......................................................34

All Pro Maids v. Layton, 2004 WL 1878784 (Del. Ch. Aug. 10, 2004) .....................................................52

American National Petroleum v. Transcontinental Gas Pipe Line, 798 S.W.2d 274 (Tex. 1990) ..............................................................................59

Anderson v. Wade, 33 F. App’x 750 (6th Cir. 2002) .........................................................................66

Australian Gold v. Hatfield, 436 F.3d 1228 (10th Cir. 2006) ..........................................................................70

Bailey v. Lewis Farms, 171 P.3d 336 (Or. 2007) .....................................................................................73

Bailey v. North American Refractories, 95 S.W.3d 868 (Ky. App. 2001) .........................................................................31

Bio-Technology General Corp. v. Genentech, 80 F.3d 1553 (Fed. Cir. 1996) ............................................................................62

Bridgeport Music v. UMG Recordings, 585 F.3d 267 (6th Cir. 2009) ........................................................................ 50-51

Brookside Ambulance v. Walker Ambulance Service, 678 N.E.2d 248 (Ohio Ct. App. 1996)................................................................52

Brown v. Potter, 248 F. App’x 712 (6th Cir. 2007) .......................................................................61

Buell v. Mitchell, 274 F.3d 337 (6th Cir. 2001) ..............................................................................71


iv

Capital Holding v. Bailey, 873 S.W.2d 187 (Ky. 1994)................................................................................62

Cathey v. Johns-Manville Sales, 776 F.2d 1565 (6th Cir. 1985) ............................................................................68

Coles v. Granville, 448 F.3d 853 (6th Cir. 2006) ..............................................................................61

Community Mental Health Services v. Mental Health & Recovery Board, 150 F. App’x 389 (6th Cir. 2005) .......................................................................61

Competex v. Labow, 783 F.2d 333 (2d Cir. 1986) ...............................................................................71

Computer Associates International v. Altai, 126 F.3d 365 (2d Cir. 1997) ...............................................................................63

Conseco Finance Servicing Corp. v. North America Mortgage Co., 381 F.3d 821 (8th Cir. 2004) ..............................................................................61

Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768 (6th Cir. 2002) ..............................................................................31

Crestar Mortgage v. Shapiro, 1995 WL 542228 (E.D. Pa. Sept. 7, 1995) .........................................................73

Davidson v. Capuano, 792 F.2d 275 (2d Cir. 1986) ...............................................................................63

Dennis v. Thomson, 43 S.W.2d 18 (Ky. 1931)..............................................................................34, 35

Deutsch v. Shein, 597 S.W.2d 141 (Ky. 1980)................................................................................41

Die Deutsche Bank Filiale Nurnberg v. Humphrey, 272 U.S. 517 (1926)............................................................................................71

Downers Grove Volkswagen v. Wigglesworth Imports, 546 N.E.2d 33 (Ill. App. Ct. 1989) .....................................................................53

Duncan v. Theratx, 775 A.2d 1019 (Del. 2001) .................................................................................74


v

El Universal, Compania Periodistica Nacional v. Phoenician Imports, 802 S.W.2d 799 (Tex. Ct. App. 1990)................................................................71

Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)..............................................................................................71

Excel Energy v. Cannelton Sales, 246 F. App’x 953 (6th Cir. 2007) ................................................................. 51-52

Farley Transportation Co. v. Santa Fe Trail Transportation Co., 786 F.2d 1342 (9th Cir. 1985) ...................................................................... 46-47

Faulkner Drilling v. Gross, 943 S.W.2d 634 (Ky. App. 1997).......................................................................75

Ferguson v. U.S. Army, 938 F.2d 55 (6th Cir. 1991) ................................................................................46

Fishman v. Estate of Wirtz, 807 F.2d 520 (7th Cir. 1986) ..............................................................................45

Foam Supplies v. Dow Chemical, 2008 WL 3159598 (E.D. Mo. Aug. 4, 2008)......................................................59

Ford Motor v. Fulkerson, 812 S.W.2d 119 (Ky. 1991)................................................................................60

Franklin Music v. American Broadcasting Cos., 616 F.2d 528 (3d Cir. 1979) ...............................................................................53

Freeland v. Iridium World Communications, 545 F. Supp. 2d 59 (D.D.C. 2008)......................................................................40

Hale v. Life Insurance Company of North America, 795 F.2d 22 (6th Cir. 1986) ................................................................................75

Hanson v. American National Bank & Trust, 865 S.W.2d 302 (Ky. 1993)....................................................................66, 67, 68

Harbor Tug & Barge v. Belcher Towing, 733 F.2d 823 (11th Cir. 1984) ............................................................................38

Hendricks v. Office of Clermont County Sheriff, 326 F. App’x 347 (6th Cir. 2009) .......................................................................30


vi

Hicks v. Guinness, 269 U.S. 71 (1925)..............................................................................................71

Hinchman v. Moore, 312 F.3d 198 (6th Cir. 2002) ..............................................................................65

Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382 (Ky. 1985)................................................................................66

IBM Corp. v. Omnicare, 162 F. App’x 432 (6th Cir. 2006) .......................................................................65

In re Seagate Tech. II Sec. Litig., 802 F. Supp. 271 (N.D. Cal. 1992).....................................................................40

In re Topps Co. Shareholders Litigation, 926 A.2d 58 (Del. Ch. 2007) ..............................................................................26

Indiana State District Council of Laborers v. Omnicare, 583 F.3d 935 (6th Cir. 2009) ..............................................................................43

Isaksen v. Vermont Casting, 825 F.2d 1158 (7th Cir. 1987) ............................................................................47

Jones v. Lincoln Electric, 188 F.3d 709 (7th Cir. 1999) ..............................................................................56

King v. Ford Motor, 209 F.3d 886 (6th Cir 2000) ...................................................................56, 57, 60

Kentucky Legal Systems Corp. v. Dunn, 205 S.W.3d 235 (Ky. App. 2006).......................................................................71

Leigh Furniture & Carpet v. Isom, 657 P.2d 293 (Utah 1982)...................................................................................59

Littlejohn v. Rose, 768 F.2d 765 (6th Cir. 1985) ..............................................................................65

Lucas v. Monroe County, 203 F.3d 964 (6th Cir. 2000) ..............................................................................45

Madison Fund v. Charter, 427 F. Supp. 597 (S.D.N.Y. 1977) .....................................................................74


vii

Maximus v. Lockheed Information Management Systems, 493 S.E.2d 375 (Va. 1997) .................................................................................52

McMahan v. Wherehouse Entertainment, 900 F.2d 576 (2d Cir. 1990) ...............................................................................34

Miller’s Bottled Gas v. Borg-Warner, 56 F.3d 726 (6th Cir. 1995) ....................................................................65, 66, 67

Monette v. AM-7-7 Baking Co., 929 F.2d 276 (6th Cir. 1991) ..............................................................................46

Morales v. Am. Honda Motor, 151 F.3d 500 (6th Cir. 1998) ..............................................................................30

Murphy ex rel. Reliford v. EPI Corp., 2004 WL 405754 (Ky. App. Mar. 5, 2004) ........................................................73

NCAA v. Hornung, 754 S.W.2d 855 (Ky. 1988)....................................................................51, 52, 55

Newman v. Newman, 451 S.W.2d 417 (Ky. 1970)................................................................................64

North v. Walsh, 881 F.2d 1088 (D.C. Cir. 1989)..........................................................................63

Nucor v. General Electric, 812 S.W.2d 136 (Ky. 1991)................................................................................75

Oregon Steel Mills v. Coopers & Lybrand, 83 P.3d 322 (Or. 2004) .......................................................................................73

Payne v. Wood, 1995 WL 461786 (6th Cir. Aug. 2, 1995) ..........................................................70

Petrolia Corp. v. Elam, 1992 WL 31299 (6th Cir. Feb. 20, 1992) ...........................................................72

Power-Tek Solutions Services v. Techlink, 403 F.3d 353 (6th Cir. 2005) ..............................................................................65

Ryan v. City of Shawnee, 13 F.3d 345 (10th Cir. 1993) ..............................................................................63


viii

Schaffer v. Timberland, 924 F. Supp. 1298 (D.N.H. 1996).......................................................................40

Seelbach v. Cadick, 405 S.W.2d 745 (Ky. 1966)................................................................................41

Smith v. Bob Smith Chevrolet, 275 F. Supp. 2d 808 (W.D. Ky. 2003)..........................................................63, 64

Spray-Rite Service Corp. v. Monsanto Co., 684 F.2d 1226 (7th Cir. 1982) ............................................................................47

Technology for Energy v. Scandpower, 880 F.2d 875 (6th Cir. 1989) ............................................................ 29-32, 45, 46

Tompkin v. Phillip Morris USA, 362 F.3d 882 (6th Cir. 2004) ........................................................................ 54-55

Trident Investment Management v. Amoco Oil, 194 F.3d 772 (7th Cir. 1999) ..............................................................................73

TSC Industries v. Northway, 426 U.S. 438 (1976)............................................................................................49

U.S. v. Daniel, 329 F.3d 480 (6th Cir. 2003) ..............................................................................39

U.S. v. Ganier, 468 F.3d 920 (6th Cir. 2006) ..............................................................................38

UPS v. Rickert, 996 S.W.2d 464 (Ky. 1999)..........................................................................67, 68

Walther & Cie v. U.S. Fidelity & Guaranty, 397 F. Supp. 937 (M.D. Pa. 1975)......................................................................69

Watts v. K, S & H, 957 S.W.2d 233 (Ky. 1997)................................................................................61

Western Union Telephone Co. v. Ramsey, 88 S.W.2d 675 (Ky. 1935)..................................................................................73

White Sands Group v. PRS II, 2009 WL 2841114 (Ala. Sept. 4, 2009)..............................................................53


ix

Whitfield v. City of Knoxville, 756 F.2d 455 (6th Cir. 1985) ..............................................................................63

Young v. Vista Homes, 243 S.W.3d 352 (Ky. App. 2007).......................................................................66

STATUTES & OTHER AUTHORITIES

KENTUCKY REVISED STATUTE 411.184........................................................65, 66, 67

RESTATEMENT (SECOND) OF JUDGMENTS ........................................................... 62-63

RESTATEMENT (SECOND) TORTS....................................................... 48, 51-56, 70, 73

RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW..............................................71


REQUEST FOR ORAL ARGUMENT

Ventas, Inc. (“Ventas”) requests argument due to the extensive record and

number of issues raised.

JURISDICTIONAL STATEMENT

Ventas incorporates appellant’s (“HCP”) jurisdictional statement. Ventas

appealed on November 25, 2009 from a judgment disposing of all parties’ claims.

(RE.527.)1

STATEMENT OF CROSS-APPEAL ISSUES

Ventas appeals four rulings incorrectly limiting the damages Ventas was

permitted to seek at trial. The district court erroneously:

(a) Precluded Ventas from seeking punitive damages, despite the

jury’s finding that defendant HCP had engaged in “significantly wrongful conduct

such as fraud, deceit or coercion”;

(b) Denied Ventas full recovery for its damages in U.S. dollars, by

(i) foreclosing recovery for the increased cost in U.S. dollars of the $15 Canadian

portion of the purchase price that resulted when HCP’s misconduct delayed the

closing of the transaction at issue from April 2 to April 26, 2007, and

(ii) incorrectly using the closing date (April 26, 2007), rather than the date of the

1 “RE” refers to district court record entries; “PTX” and “DX” to trial exhibits; “Tr.” to trial transcripts (available between RE.338-469); and “App.” to the Appendix.


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judgment (September 5, 2009), to convert the $1.50 increase in purchase price

from Canadian to U.S. dollars;

(c) Precluded Ventas from seeking the increased costs of financing

its purchase notwithstanding that those increased costs were direct consequences of

HCP’s misconduct; and

(d) Refused to award prejudgment interest.

STATEMENT OF THE CASE

Ventas sued HCP under Kentucky law for tortiously interfering with

Ventas’s purchase of a Canadian company, Sunrise REIT (“Sunrise”), after Ventas

won a full and fair auction (in which HCP was a bidder) and signed a contract to

buy Sunrise at $15 per share.2

HCP’s intentional misconduct, including a fraudulent press release

announcing a purported $18 bid, prevented the transaction from closing. HCP’s

press release was itself prohibited, and failed to disclose that HCP was

contractually prohibited from making an offer. HCP failed to disclose that it

refused to be bound to its $18 “offer,” or any offer, unless it first won financial

concessions from the manager of Sunrise’s properties (“SSL”) that SSL had made

clear were unavailable. The release also made misleading statements that HCP had

2 Share prices are Canadian dollars. All other figures are U.S. dollars, unless otherwise stated.


3

made an “offer” that was “identical” and “superior” to Ventas’s unconditional

agreement, and had a “greater certainty of completion.”

The Canadian courts soon found that HCP’s public “offer” breached the

terms of the Confidentiality Agreement HCP had signed with Sunrise to participate

in the auction. But HCP’s press release, together with additional private and public

misstatements, caused Sunrise’s stock price to soar over $18, ultimately making it

infeasible to win shareholder approval for Ventas’s $15 contract. Ventas was

forced to pay $16.50/share to salvage the deal.

HCP never made an unconditional or binding offer to buy Sunrise at any

price. After a three-week trial, the jury was instructed, at HCP’s request, that it

could find for Ventas only if HCP’s “improper interference,” such as “fraudulent

misrepresentation, deceit and coercion” was the “but for” cause of Ventas’s injury.

The jury found for Ventas and awarded $101,672,807 in compensatory damages,

representing the difference between the $15 and $16.50 purchase prices, converted

to U.S. dollars using the exchange rate at closing. The district court rejected

Ventas’s request to use the exchange rate on the judgment date, and also ruled that

Ventas could not recover damages attributable to the delay in closing caused by

HCP. The court ruled as a matter of law that even though there was sufficient

evidence to establish fraud, absent proof of “oppression” or conduct which “shocks


4

the conscience,” Ventas could not pursue punitive damages under Kentucky law.

Finally, the court declined to award prejudgment interest.

The court denied HCP’s post-trial motion for judgment or a new trial,

holding “[t]he jury could easily find [HCP’s] statements were false and

misleading” and that it was “reasonable in light of the evidence” for the jury to

conclude that “the significantly wrongful conduct of [HCP], and not some other

force, caused the interference.” (RE.520, 2, 4.) HCP appealed. Ventas cross-

appealed from the rulings limiting damages and barring punitive damages and

prejudgment interest.


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STATEMENT OF FACTS

A. HCP’s Assault On SSL

Ventas and HCP were the final bidders in a confidential auction to buy

Sunrise. Before the January 14, 2007 bid deadline, Sunrise told both bidders it

would not accept any bid that was contingent on the bidder reaching an agreement

with the property manager, SSL. (Tr.2A 16:2-7, 33:20-34:9.) Sunrise “would

really have no way . . . to understand if that condition could ever be fulfilled.” (Id.

16:12-14.) Bidders could either secure a deal with SSL before bidding (as Ventas

did), or make an unconditional bid and assume the risk of future bargaining with

SSL. (Tr.2B 62:12-24.) HCP did neither.

SSL managed a different set of properties, “CNL,” purchased by HCP in

October 2006. HCP’s CEO Flaherty admitted that HCP was playing “hardball”

with SSL concerning CNL, attempting to extract concessions worth $200 million.

(Tr.5A 76:19-77:2, 79:3-5.) HCP sent legal notices terminating SSL’s

management of CNL properties. (Id. 79:16-22.) SSL’s representatives “reacted in

an emotional way.” (Id. 78:2-4.) One testified: Flaherty “was mounting pressure

as high as he could to try to get what he wanted.” (RE.484, 321:21-22.) Flaherty

told SSL that he would “win because [he] always win[s].” (Tr.5A 78:9-14.)

When HCP sought SSL’s agreement on management terms for Sunrise,

HCP’s “hardball” escalated. On January 4, HCP demanded that SSL provide it


6

with valuable future development rights. (App.194.PTX.157.) To SSL, this was a

“big bomb in the middle of the deal.” (RE.484, 222:2-13.) Development rights

were a “significant source of income for [SSL].” (Id. 222:14-16.) HCP further

demanded that SSL agree to provide accelerated accounting reports that SSL made

clear it could not provide. (Tr.5A 84:14-23.) HCP also began “linking” the

Sunrise and CNL negotiations, creating a “heads I win, tails you lose” outcome.

(RE.481, 118:14-22, 214:12-216:7, 286:16-20.)

In Flaherty’s words, the discussions “blew up.” (Tr.4B 69:12-13.) On

January 13, the day before the Sunrise bid deadline, HCP sent SSL a draft

agreement that differed materially from all prior proposals. (RE.481, 267:3-

270:7.) The draft was “actually worse” for SSL concerning development rights

than the earlier “bomb.” (Id. 271:1-272:5.) SSL’s lead negotiator was

“shocked”—the draft was “completely out of left field” and he had never seen a

party “introduce[] several new business terms into a negotiation” the day before a

deal “was supposed to be signed.” (Id. 268:15-22, 277:14-20.) He testified that

“obviously,” HCP was not “acting in good faith.” (Id. 277:19.) SSL offered to

continue negotiations, but HCP never called. (Id. 277:21-278:19; RE.484, 248:22-

249:15.)

HCP submitted no bid at the auction deadline, blaming SSL. (RE.483,

193:4-22; Tr.9B 134:21-135:3.) Flaherty testified that he was then “angry” and


7

“bitter” at SSL. (Tr.4B 130:15-131:17.) In e-mail, he agreed that SSL’s chairman

was an “A-hole,” and wrote that he “shouldn’t mind bending over.” (Tr.9B

143:10-16; App.359.PTX.1941.) Another HCP executive wanted to “throw [SSL]

out, get their ass out” of the CNL properties. (RE.483, 193:23-194:11.) Though

HCP and SSL briefly reached tentative peace on the CNL properties, they never

settled their differences in a binding agreement. (RE.481, 306:19-307:15.) HCP

later filed multiple lawsuits to remove SSL as manager. (Tr.5A 107:5-17.)

After January 14, HCP would have no further discussions with SSL

concerning the terms of a management agreement for Sunrise. (RE.481, 313:15-

21; RE.484, 287:8-16.)

B. Ventas Wins And HCP’s Agenda Shifts

On January 14, Ventas won the auction and executed a Purchase Agreement

subject to the approval of two-thirds of Sunrise’s voting shareholders.

(App.277.PTX.600.)

Before January 14, HCP had turned its attention to acquiring a different

company, “Slough.” Flaherty wrote that HCP would “pass” on Sunrise.

(App.182.PTX.487.) HCP viewed Ventas as its principal competitor for Slough.

(Tr.4B 92:24-93:14.) When Flaherty learned that Ventas had won Sunrise, he

wrote “this is perfect for us.” (App.356.PTX.747.) Although HCP claimed at trial


8

that it could afford both Sunrise and Slough, HCP’s purchase of Slough alone in

May 2007 put it on the S&P “credit watch.” (Tr.9A 74:3-10.)

Just before dropping out of the auction, Flaherty announced internally that

HCP’s new codename for Sunrise was “show me what you got, yeo mama,”

referring to Ventas’s CEO, Debra Cafaro. (Tr.4B 126:6-13; App.352.PTX.140.)

According to HCP’s banker, once Ventas’s contract was announced, HCP became

interested, at a minimum, in “causing the other side to have to pay more.” (Tr.9B

29:3-18; App.362.PTX.65.) HCP would be “okay if she [Ventas] ended up at

$17.50.” (Tr.5A 135:24-136:2; App.731.PTX.315.) HCP also knew Ventas

planned to sell $1 billion of stock to finance the Sunrise purchase (Tr.4B 139:15-

24; App.364.PTX.320), and that Ventas’s stock would fall if HCP announced a

“topping bid.” (Tr.4B 154:17-20; App.388.PTX.463.)

HCP would make Ventas “go big or go home,” Flaherty exhorted. (Id.

145:5-7; App.376.PTX.788.) On February 13, Flaherty wrote that if Ventas did

not complete the Sunrise deal, “it was hosed.” (Tr.4B 156:17-24;

App.391.PTX.26.) Ventas would be unable to “catch” HCP in market

capitalization, would miss out on joint ventures, and would be denied entry into the

S&P 500. (Tr.4B 101:18-103:21, 105:8-24; App.380.PTX.326.)

But if Ventas was “push[ed] out,” Sunrise’s stock “would have plummeted,”

according to Sunrise’s chairman, Michael Warren. (Tr.3A 78:15-17, 79:16.) In


9

that circumstance, HCP “would be the only qualified bidder and [could] come back

and trade us down pretty much at any price they want.” (Id. 63:16-20.) After

HCP’s February 14 release, Warren became concerned that HCP was only “really

trying to force Ventas out of this process.” (Id.) Judge Heyburn specifically

commented on Warren’s credibility, finding him a “particularly impressive

witness.” (RE.520, 3.)

C. The Market Embraces The Ventas $15 Deal

During the auction, Sunrise traded at about $10.50/share. (Tr.7A 62:18-25.)

Analysts consistently set a target of $10.50 to $11.00. (Id. 73:1-16.) Sunrise had

never traded at or above $15.

Market analysts uniformly commented that Ventas’s $15 contract

represented a “full price” and expected shareholder approval. (Id. 72:14-74:9;

Tr.11A 87:8-13.) Sunrise believed there was “no question” about shareholder

approval at $15. (Tr.3A 26:2-8.) The price represented a “record-breaking” 40%

to 50% premium (id. 20:8-10, 80:9-10), produced a substantial profit for every

shareholder (Tr.2A 50:25-52:10), and exceeded the upper end of Sunrise’s tax-

adjusted valuation as computed by Sunrise’s advisors. (Tr.3A 23:10-24.) No

Canadian deal with the same level of premium had ever been rejected by

shareholders. (Tr.11A 124:23-125:18; Tr.3B 65:4-18.) Nobody, including HCP,


10

contemporaneously suggested that Ventas would lose the vote. (Tr.5A 137:16-19;

Tr.3B 76:20-23.)

Prior to HCP’s announcement, institutional shareholders also favored the

$15 deal. (Tr.2B 141:25-142:16; Tr.3A 27:23-28:10.) The largest Canadian

shareholder, Caisse, testified it intended to vote in favor and its “expectation” was

“the Ventas deal at $15 would go through.” (RE.482, 102:17-103:14.) ING was

delighted with the $15 price: “pleasantly surprised,” “successful investment,” and

“news definitely good.” (App.353.PTX.290; App.360.PTX.291; RE.487, 108:7-

18, 119:2-6.) The district court summarized: “the evidence is pretty

overwhelming that these people [institutional shareholders] were going to approve

the $15.” (Tr.8B 57:3-12; see, e.g., Tr.2A 51:20-56:21, 59:3-18, 68:14-69:11;

Tr.2B 141:25-142:16; Tr.3A 20:18-21:22; Tr.6A 43:20-44:15; Tr.7A 100:6-12;

Tr.11A 85:22-86:8.)3

The stock market reaction also indicated virtually certain approval. After

the Ventas deal was announced, until HCP’s press release, Sunrise’s stock traded

consistently near $14.90, never at or above $15. (App.181.PTX.294; Tr.2A 68:14- 3 Although a Morgan Stanley (“MS”) representative testified that he could not say for certain whether MS would have supported $15, Judge Heyburn commented that the representative’s “demeanor during examinations may have permitted the jury to reasonably doubt his credibility,” and that the representative was the “least enthusiastic witness” he had ever seen. (RE.520, 6; Tr.10A 28:24-29:2.) Judge Heyburn also recognized that the institutional shareholders faced fiduciary liability if they did not vote to approve at $15. (Tr.8B 50:16-25; see also RE.486, 119:6-12.)


11

69:11.) Institutional investors testified that this pattern reflected a high expectation

of approval. (RE.482, 107:17-108:5; RE.487, 136:12-137:4.)

Ventas’s expert, Professor Lys, conducted an arbitrage risk analysis that

reflected the market expected approval (Tr.7A 70:8-19, 86:13-87:14), and a

statistical probability analysis that showed a 96% likelihood of approval based on

comparable transactions. (Id. 87:24-91:25.)

Even HCP’s expert admitted, “as of February 14th, I believed that the

market was expecting Ventas to be successful with its $15 bid.” (Tr.11A 92:1-3.)

D. HCP’s Fraud

HCP knew that it had signed a Confidentiality Agreement that, on its face,

prohibited HCP from publicly expressing interest in purchasing Sunrise, making a

post-auction bid for Sunrise, or seeking to influence the shareholder vote.

(App.187.PTX.42; Tr.5A 20:23-22:10.)

1. The press release. Nonetheless, three days before the record date for the

Ventas vote, HCP issued a prohibited press release. Sunrise had expressly asked

Flaherty not to issue the release, knowing it “would have the effect of . . . blowing

up the deal” with Ventas. (Tr.2A 76:23-78:11.) HCP’s own banker had told

Flaherty that HCP’s Confidentiality Agreement prohibited a press release.

(App.193.PTX.195.) When HCP flouted Sunrise’s request, Sunrise was

“flabbergasted” that an auction bidder would breach its confidentiality agreement


12

and “the rules of the game” and “press release” an offer. (Tr.3A 35:19-36:3,

46:21-47:2.)

The jury could find HCP’s press release (App.454.PTX.1537) was

fraudulent in multiple respects:

HCP falsely stated it had made an “offer.” HCP was not authorized to

and had not signed a binding “offer.” As Judge Heyburn held before trial, “[t]he

jury could question whether HCP actually submitted a proposal given that the

purchase agreement HCP submitted remained unsigned.” (RE.220, 12.)

HCP falsely stated it was making an offer that was “identical” to the

Ventas contract. In fact, HCP’s board only authorized an offer conditioned on

HCP first reaching an agreement with SSL (Tr.4B 32:20-34:12, 39:20-40:2; Tr.9A

62:22-63:4), a condition that HCP knew was unacceptable to Sunrise (Tr.4B 74:17-

75:12) and not present in the Ventas contract. (Id. 65:8-16.)

HCP falsely stated it was “confident” of an agreement with SSL and

that its proposal had a “greater certainty of completion.” Though HCP

nowhere disclosed that its willingness to make an “offer” was contingent on an

SSL deal, it stated it was “confident” that such a deal could be reached.

(App.455.PTX.1537.) HCP had no basis for such “confidence.” Its last

discussions with SSL about Sunrise had ended in “bitter” recriminations over

HCP’s demanded concessions. (Tr.4B 130:15-132:8.)


13

At trial, Flaherty admitted that he was not “confident” enough of an SSL

deal to ever make an unconditional offer for Sunrise. (Tr.4B 64:2-7; Tr.5A 119:5-

10; see also Tr.9A 45:13-46:6; Tr.10A 7:18-8:18.) He added that any effort to

negotiate with SSL privately “would have been suicidal” (Tr.4B 146:3-18), and

that there was “zero chance” that HCP could succeed with SSL without public

pressure. (Tr.5B 60:8-10.)4

HCP’s board member testified that HCP was still “leary” of SSL and

concerned about being “bullied” or “leveraged” by SSL; an HCP executive wrote

that HCP could not make a binding offer because it “would provide [SSL] with a

lot of leverage.” (Tr.9A 65:3-6, 46:4-6; App.731.PTX.315.) HCP’s board would

not authorize an unconditional proposal for that reason. (Tr.9A 62:11-21, 65:20-

22.) HCP also had no fairness opinion for its $18 “offer” when it issued its press

release (Tr.9B 153:17-154:5), and a later fairness opinion was expressly

conditioned on an SSL deal. (Id. 158:12-24; App.468.DX.48.)

HCP falsely stated its proposal “clearly” met the “standards for a

‘Superior Proposal.’” Flaherty admitted that HCP knew that a conditional offer

could not be declared “superior.” (Tr.4B 75:6-12; see also Tr.2A 16:2-14.)

Flaherty admitted Sunrise “was consistent at all times that they would never

4 SSL was indeed “stunned” by HCP’s press release (App.458.PTX.219), but expected that HCP had now accepted the same terms that were “baked” in the Ventas deal. (Tr.5B 88:6-18.) SSL would soon learn otherwise.


14

declare an offer superior as long as it had a condition or an out for an SSL

agreement.” (Tr.5A 124:25-125:3.)5 HCP also knew that its Confidentiality

Agreement with Sunrise, on its face, prohibited a post-auction offer.

(App.187.PTX.42; Tr.4B 80:6-25; Tr.5B 62:19-63:2.) Flaherty admitted to

knowing and not disclosing that there was a “risk” that his post-auction “bid” was

prohibited. (Tr.5B 50:23-24.)

2. HCP lies to Sunrise. HCP compounded its deception—and prevented

timely correction—by lying to Sunrise. On February 14, Flaherty emailed

Sunrise’s Chairman, Warren, a contract that was unconditional, but unsigned.

(App.393.PTX.70.) When Warren saw no signature, he expressed concern that the

“bid” was “bait and switch.” (App.456.PTX.203.) He viewed the missing

signature as “unprecedented” (Tr.3A 47:8-16; see also id. 37:22-38:8, 43:23-

44:10) and immediately planned a press release to announce that the $18

“agreement” was not signed by HCP. (Id. 53:3-18.)

When confronted about the missing signature late on February 14, Flaherty

said that HCP’s proposal was conditional, but then lied and told Sunrise’s banker

that he had signed and FedExed the unconditional purchase agreement.

(App.459.PTX.802; Tr.2A 86:21-88:10.) Flaherty knew he had sent only an

unsigned unconditional agreement because he was not authorized to make an

5 Emphasis is added unless otherwise noted.


15

unconditional offer. (Tr.4B 32:16-34:17.) Flaherty again lied on February 15,

telling Sunrise that he would fax a signed copy of that unconditional agreement.

(Tr.2A 97:3-12.)

As a direct result of Flaherty’s lie, Sunrise watered down its own press

release, issued on the morning of February 15. (Id. 93:9-19; Tr.3A 53:3-19.)

Rather than telling investors that HCP’s “offer” was not even signed and that

HCP’s proposal had a fatal SSL contingency, Sunrise stated only that it would

defer considering HCP’s proposal “until such time as it receives a confirmation

from HCP that their proposal is not conditional on it reaching an agreement with

[SSL].” (App.463.PTX.434; Tr.3A 53:3-19; Tr.2A 93:9-19, 98:2-25.)

Summarizing that evidence, the district court held that Ventas “presented

evidence, such as lying about sending a signed, unconditional offer to Sunrise

REIT and failing to ever publicly correct its press release, which would support the

conclusion that [HCP] intended to mislead the public.” (RE.520, 3.)

E. The Market Effect

While Sunrise spent February 15 “preoccup[ied]” with retrieving the FedEx

boxes (Tr.3A 57:20-58:2), Sunrise had its “largest trading day in the history of the

company.” (Id. 60:3-14.) Beginning with pre-market trading, over 30 million

shares traded at $18 and above. (App.180.PTX.449.) It was not until the last

FedEx box was opened that Sunrise learned that “Mr. Flaherty had basically lied to


16

us” and that HCP would not sign the unconditional agreement it had sent. (Tr.3A

58:9-23.)

Within 48 hours of HCP’s release, over 40 million shares—a volume

representing nearly 60% of the shares outstanding—traded at $18 or more.

(App.180.PTX.449.)

HCP crowed to Sunrise that it had installed “a brand new shareholder base.”

(Tr.4B 158:18-21; App.461.PTX.820.) Flaherty wrote “nice stock price” to SSL,

and “nice volume” to Sunrise. (Tr.4B 158:18-159:6; App.464.DX.314;

App.461.PTX.820.) Sunrise’s CEO MacLatchy responded that the “new

shareholder base” was composed of U.S. arbitrageurs, stating sarcastically: “[a]


17

warm supportive bunch of guys.” (Tr.4B 159:14-25; App.461.PTX.820.) Sunrise

believed the arbitrageurs were a “volatile group” who “certainly weren’t interested

in $15.” (Tr.3B 66:7-15.)

F. HCP’s Continuing Fraud

For weeks after February 14, HCP continued to make fraudulent statements

about the likelihood that it would reach a deal with SSL. HCP never corrected its

press release and never made an unconditional offer for Sunrise at any price.

On February 18, HCP wrote to Sunrise that it was offering a written

agreement to SSL that HCP was “highly confident that [SSL] will find . . .

acceptable.” (App.471.PTX.73.) But the February 18 proposal demanded the

development rights and accelerated accounting reports that HCP knew SSL had

rejected only weeks before in January and had refused to give Ventas. (Tr.5A

93:7-96:15; RE.481, 311:8-313:21.) Flaherty had told his board that the

development “pipeline” was a “rationale” for purchasing Sunrise and a “highlight”

of the transaction. (App.200-02.PTX.1936; Tr.5A 94:22-25; Tr.9A 68:2-9.)

HCP’s “financial analysis” of an $18 proposal rested on “certain assumptions

about what the value would be of rights to a development pipeline” from SSL.

(Tr.9A 67:21-68:9; App.468.DX.48.) An independent analyst at MS, a top Sunrise

shareholder, concluded that the “development pipeline is reasonably worth

$2.40/share” if it came with Sunrise. (App.740.DX.79.)


18

On February 20, HCP obtained a copy of the agreement that Ventas had

reached with SSL in January (Tr.5A 128:1-25; App.632-47.PTX.314), which was a

blueprint for the terms that SSL would accept. Rather than sign the same

agreement, HCP altered the Ventas/SSL deal to again insist upon the development

rights and other concessions that SSL had rejected in January (and that were not

part of the Ventas deal). (Tr.5A 93:7-96:15, 128:7-25.) In a letter to Sunrise, HCP

characterized those changes as “minor” and “materially the same” as Ventas’s

terms, repeating that it was “highly confident” that SSL would agree. (Tr.5A

128:1-25; App.647-48.PTX.314.) In reliance, Sunrise reported in a press release

that “HCP [has] indicated that they are prepared to enter into an agreement with

[SSL] on terms HCP purports are substantially similar to the agreement entered

into between Ventas and [SSL].” (App.730A.PTX.861.)

On February 28, HCP falsely represented that it was prepared to discuss its

“willingness to remove” the SSL condition from its deal. (App.733.PTX.76; Tr.3A

74:10-21, 75:7-16.) The jury could reasonably find that HCP never intended to do

so (in fact it never did so) (Tr.3A 75:17-21), because its board never authorized an

unconditional or binding offer (Tr.4B 34:20-34:12; Tr.9A 45:13-46:6) and HCP’s

financial analysis underlying the $18 proposal depended upon it extracting the

development rights from SSL. (Tr.9A 67:21-68:9; App.468.DX.48.) Sunrise

publicized the letter. (Tr.3A 74:18-75:16.)


19

On March 1, HCP publicly announced that it would keep its “offer” open

until the Sunrise shareholder vote, then scheduled for March 27, though the

Ontario court had already announced that it would rule within days. (Tr.3A 75:22-

76:23; App.736.PTX.876.)

On March 5, Flaherty personally lobbied two key institutional shareholders,

ING and MS, to vote against the Ventas deal—even though HCP’s Confidentiality

Agreement prohibited any effort to influence the vote. (Tr.5A 26:19-27:7, 32:8-

18.) Flaherty was privately concerned his remarks had gone “too far.”

(App.737.PTX.887.) HCP admitted it engaged in “conversations with unitholders

of Sunrise after February 14, 2007—that could have been understood to provide

reasons that [they] should vote against the Ventas purchase agreement.” (Tr.5A

26:10-16.)

G. The Lasting Effects Of The Fraud

HCP announced that it had “withdrawn” its purported $18 bid on March 7,

2007, after the Ontario trial court ruled that HCP had breached its Confidentiality

Agreement with Sunrise and that its $18 “bid” was not “bona fide” under the terms

of the Ventas/Sunrise contract, which the court interpreted to mean not “in good

faith; sincere, genuine.” (RE.1, Ex.E ¶37.) Shareholders began to vote starting on

March 7, but HCP continued to press an appeal that was not decided until March

23, 2007.


20

Because HCP never told investors about the improbability of an HCP/SSL

agreement on the terms HCP demanded, shareholders could reasonably (but

mistakenly) believe—and analysts reported—that HCP would “come back” with

$18 if the Ventas $15 contract was voted down. (Tr.7B 55:13-22, 90:15-24;

App.745.PTX.298.) HCP also knew that the arbitrageurs who purchased at $18

had a vested interest in creating the “impression,” even after HCP “withdrew,” that

HCP “will still be there if Ventas fails to receive approval.” (Tr.5A 34:11-35:3;

App.739.PTX.901.)

HCP’s fraud transformed the identity, expectations, and voting power of

Sunrise’s shareholder base. Prior to the unprecedented trading caused by HCP’s

announcement, over 73% of Sunrise shares were held by Canadian investors

(Tr.2B 146:23-147:7) and the record premium was particularly attractive to them.

(Tr.5B 15:16-16:14; Tr.11A 115:3-116:11.) HCP’s statements resulted in heavy

purchases by U.S. arbitrageurs. (App.461.PTX.820; Tr.2A 101:9-16.) Because

some trades from February 15 forward did not “settle” before the February 19

record date, voting rights on the Ventas deal did not transfer with the sale of all

Sunrise shares, suppressing the number of proxies cast. (Tr.2A 101:17-104:1;

Tr.7B 13:13-14:18.) This effect increased the relative voting power of the two

large U.S. institutional shareholders, ING and MS (Tr.2B 145:14-146:2), whom

Flaherty was privately lobbying. (Tr.5A 27:2-7, 32:8-11.)


21

There was also evidence that investors expected—and analysts reported—

that even after HCP’s “withdrawal” Ventas would need to increase its price to

avoid reputational injury from a lost transaction, and that HCP had likely rendered

itself liable to Ventas for tortious interference, increasing expectations that Ventas

would “bump” its price and seek recovery against HCP. (Tr.7B 18:8-12, 48:21-

49:12; Tr.11A 134:21-135:23.) Flaherty himself wrote on March 1 that Ventas

might increase its price and sue for tortious interference. (App.734.PTX.472;

Tr.5A 19:6-20:22.)

The district court summarized (RE.520, 4-5):

[Ventas] presented evidence that the misleading statements, especially the language that the deal at $18 had a great certainty of getting done, caused an entirely new unitholder base. In fact, it is undisputed that within 48 hours of [HCP’s] press release, over forty million shares [over 60% of the outstanding shares] changed hands. [Ventas] presented evidence that such a change meant the new unitholders had little to no incentive to accept a $15 bid, even after it became clear [HCP’s] bid would not be considered. The jury could reasonably decide that in the absence of this market shift, which it decided was caused by [HCP’s] significantly wrongful conduct, [Ventas’s] $15 offer would have been approved.

By April 9, enough proxies had been cast against the $15 Ventas deal to

foreclose approval. (App.742.PTX.1916; Tr.2A 113:2-114:18.) On April 11,

Ventas agreed to increase the price to $16.50 per share (Tr.4A 119:12-15; Tr.2A

115:3-5), a deal the shareholders approved on April 19, 2007. (Tr.4A 124:12-

125:1.)


22

Lys testified Ventas acted “prudently” in paying $16.50 to salvage its deal.

(Tr.7B 20:6-21:1.) Warren testified he supported $16.50 because he believed HCP

was “not real” and not sincerely interested in paying $18. (Tr.3A 81:23-82-18,

78:2-5.)


23

RESPONSE TO HCP’S STATEMENT OF FACTS

HCP has, at best, recounted only one side of the evidence on the following

points.

Sunrise was not “disappointed” with $15. (HCP 1stBr., 6.) Sunrise was

“ecstatic” and viewed the price as “pretty astronomical.” (Tr.3A 16:19-17:13.)

Not all of HCP’s fraudulent misrepresentations were corrected before

shareholders began voting. (HCP 1stBr., 3.) HCP’s misrepresentations about the

likelihood of closing the fatal SSL contingency—including its multiple expressions

of “confidence” and failure to disclose that SSL had already rejected its deal-

breaker terms—were never corrected during the vote. HCP never made any

corrective statement. (Tr.2B 98:17-99:12; Tr.3A 56:9-15.)

The institutional shareholders were misled into opposing the $15 deal.

(HCP 1stBr., 3.) As noted, there was evidence that institutional shareholders

supported the $15 deal but reversed course after HCP’s release. The institutional

shareholders testified that they did not understand from HCP’s release that HCP’s

proposal was contingent on a deal with SSL. (RE.487, 123:19-124:15; RE.486,

140:12-141:13; RE.482, 53:12-54:4.) When HCP “withdrew” its bid, each

remained unaware of the improbability that HCP could secure a deal with SSL on

the terms that HCP demanded—a concealment that reasonably led each to believe

that HCP might “come back” with an unconditional $18 bid:


24

• Caisse testified that it believed that HCP’s SSL condition had “change[d] with time” and that HCP eventually “didn’t ask for th[e] condition at the end.” (RE.482, 53:12-54:4.) This was false—HCP never dropped its SSL condition, even after its February 28 letter falsely suggesting that it might. (App.733.PTX.76.) Caisse also believed that HCP “might still be there at $18” even after its purported “withdrawal.” (RE.482, 127:8-15.)

• ING’s internal documents showed it believed in April that HCP was still “around,” when, in fact, HCP had no realistic ability to bid even if the Ventas deal was voted down because it could not secure a deal with SSL. (App.745.PTX.298.) After meeting with Flaherty, ING’s representative asked his staff “[c]ould Jay [Flaherty] be relying on us to force [Ventas] to pay more.” (RE.487, 146:20-22.) ING was a major holder of HCP. (Tr.5A 26:19-27:1.)

• MS testified it analyzed the Ventas contract and HCP bid in April assuming that both would obtain the valuable development rights from SSL, when, in fact, Ventas had given up those rights and HCP had no realistic probability of obtaining them. (RE.486, 112:8-15, 162:22-163:6, 165:3-8.)

Sunrise did not correct the fraud. Relying on testimony from MacLatchy,

who was on a cruise at the time, HCP asserts that Sunrise learned the truth and

enlightened the market on February 15 that HCP’s “bid” was conditional. (HCP

1stBr., 11.) To the contrary, Warren testified that HCP’s release left both Sunrise

and the market with “the clear impression this was an unconditional offer” (Tr.3A

37:1-8, 39:20-40:12, 56:24-57:3), and that, because Flaherty had lied and said he

had signed and sent an unconditional contract, Sunrise could not publicly assert

otherwise. (Tr.3A 53:3-19; see also Tr.2A 89:10-11, 93:9-19.) Sunrise told the

market only that it could not act until HCP “confirmed” that its proposal was


25

unconditional. (App.463.PTX.434.) Ventas’s expert demonstrated the “market

reacted to this deal as if it was an unconditional bona fide offer.” (Tr.7B 7:4-6.)

Analysts reported on February 15 that HCP had made an unconditional offer—

Flaherty could not recall one report that said it was conditional. (Tr.4B 78:21-

80:5; Tr.7B 11:6-21.)

Sunrise’s independent financial advisor also testified that he believed “the

press release was . . . misleading” and that HCP should have made a correction, but

never did. (Tr.2B 89:22-23, 98:24-99:2.) The district court commented during

trial that Ventas was “[m]aking a pretty good case” that HCP had “intentionally”

misled the market and that “[t]he market sure believed” HCP had made an

unconditional offer. (Tr.3A 70:8-23.)

Ventas did not interfere. HCP argues (at 12-13) that Ventas interfered

with HCP’s attempts to talk with SSL. In fact, Ventas expressly granted

permission for HCP and SSL to negotiate (Tr.6A 74:25-75:6), and HCP told

Sunrise on February 20 that no discussions between SSL and HCP were even

necessary. (App.648.PTX.314.)

HCP had no good faith basis for its conduct. HCP states that it hired

lawyers who “researched the permissibility of topping bids under U.S. and

Canadian law,” and that Flaherty “believed the topping bid was permissible,”

suggesting that HCP received legal advice to that effect. (HCP 1stBr., 8.) That is


26

a gross mischaracterization of the record. HCP was forbidden to offer evidence

suggesting that it received legal advice that its conduct was permissible because

HCP foreclosed discovery on that topic by asserting privilege. (See, e.g., Tr.2B

82:21-83:6; Tr.3B 176:1-4; Tr.7B 126:15-19.) As a consequence, the court did not

allow HCP’s witnesses to testify to their subjective understanding of the legality of

HCP’s conduct. (Tr.2B 83:4-6; Tr.3B 176:1-4; Tr.5B 82:19-23; Tr.7B 117:4-18.)

HCP does not challenge that ruling. In fact, the Canadian courts held that HCP’s

legal position was “creative” but “strained.” (RE.1 Ex.E ¶39; Tr.6A 153:19-

154:1.)6

Sunrise did not believe it could consider a public bid from HCP. (See

HCP 1stBr., 7.) Sunrise consistently maintained that HCP was forbidden from

making a public bid after the auction (Tr.2A 140:14-24; Tr.3A 46:21-47:2;

RE.485, 168:15-170:11, 184:8-185:1) and expressly asked HCP not to issue a press

release. (Tr.2A 77:23-78:11.)

HCP was not “encouraged” to make its February 14 announcement.

(HCP 1stBr., 7-8.) HCP argued “encouragement” in an effort to allocate fault to

Sunrise, but the jury allocated 100% fault to HCP. HCP misleadingly quotes

MacLatchy’s testimony about his uncommunicated subjective opinions, but 6 U.S. courts have suggested that contractual bidding restrictions are enforceable where, as here, there has been a market canvass and auction. In re Topps Co. S’holders Litig., 926 A.2d 58, 91 n.28 (Del. Ch. 2007); see also Ace v. Capital RE, 747 A.2d 95, 107 & n.36 (Del. Ch. 1999).


27

MacLatchy had no discussions with HCP after January 14, only innocuous email

banter. (Tr.5A 66:11-16, 75:3-10; App.358.PTX.756; App.363.PTX.767;

App.371.PTX.541; App.372.PTX.542; App.373.PTX.555; App.374.PTX.544.)

HCP admitted in Ontario Court that Sunrise had done “nothing” to encourage its

bid. (Tr.5A 45:20-46:10, 65:12-66:10.)


28

SUMMARY OF ARGUMENT

Ventas’s Response:

I. The jury reasonably found that HCP’s fraud caused Ventas’s injury.

The jury could reasonably find that HCP’s press release was entirely fraudulent

and never corrected, the fraud eradicated overwhelming shareholder support, and

approval of the Ventas deal was reasonably probable but for HCP’s tortious

conduct.

II. The jury instructions were substantively the instructions that HCP

requested. The only exceptions were instructions the court properly refused as

legally incorrect, confusing, and prejudicial.

III. The district court correctly rejected HCP’s res judicata defense

because Ventas’s tort claims were not ripe when Ventas filed its “application” in

Ontario on February 21, 2007, and because Ventas’s tort damages claim could not

be raised in those specialized proceedings.

Ventas’s Cross-Appeal:

I. The district court applied the wrong standard in foreclosing Ventas’s

punitive damages claim as a matter of law. Under KRS 411.184(2), which

abrogated the common law the court applied, punitive damages are recoverable

upon a showing of fraud and nothing more. Because Ventas proved fraud and met

any other arguable standard, punitive damages should have been submitted.


29

II. The district court erred by not allowing Ventas to seek damages for:

(1) the increased cost of purchasing Sunrise on April 26, 2007 as opposed to April

2, the closing date Ventas bargained for; (2) the increased purchase price based on

the exchange rate in effect on the judgment date; and (3) the increased cost of

financing the transaction attributable to HCP’s misconduct.

III. The district court should have awarded Ventas prejudgment interest.

RESPONSE TO HCP APPEAL

I. The Jury Reasonably Found That Ventas Proved Causation.

HCP challenges the sufficiency of the evidence on causation. But HCP does

not dispute that Ventas had a reasonable expectation of shareholders approving its

$15 deal before HCP’s February 14 press release or that it was HCP’s own

statements—not some external factor—that caused shareholders to turn against the

Ventas deal. Nor does HCP challenge the district court’s finding that “[t]he jury

could easily find [that HCP’s] statements were false and misleading.” (RE.520, 2.)

Despite those broad concessions, HCP argues that the jury was required to

find some segregable element of “truth” in its fraudulent press release and find that

this truth killed the $15 deal. In that way, HCP attempts to mold this case into the

facts of Technology for Energy v. Scandpower, 880 F.2d 875 (6th Cir. 1989),

which concerned the causal effects of two separate statements, one true and one

false. But the jury heard and rejected that theory. It “determined that the


30

significantly wrongful conduct of [HCP], and not some other force, caused the

interference.” (RE.520, 4.)

The evidence strongly supported that conclusion. It allowed the jury

reasonably to conclude that HCP’s press release was deceptive throughout and

contained no divisibly true statement, and that the causal effects of HCP’s fraud

continued throughout the voting period. There is no basis to disturb the jury’s

determination.

A. HCP Misstates The Standard Of Review.

HCP misstates the standard, relying (at 27) on a non-diversity case. In

diversity, the Court reviews the denial of a Rule 50(b) motion challenging

sufficiency of the evidence under the “state-law standard.” The motion should be

denied unless “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.” Morales v. Am. Honda Motor, 151 F.3d 500, 506 (6th Cir. 1998)

(Kentucky law, internal quotations deleted). “[E]very favorable inference which

may reasonably be drawn from the evidence should be accorded the party against

whom the motion is made.” Id. (internal quotations deleted).

Moreover, causation questions, even “difficult” ones, are “eminently

appropriate for finders of fact to resolve,” Hendricks v. Office of Clermont County

Sheriff, 326 F. App’x 347, 351 (6th Cir. 2009), and are properly decided by the


31

jury unless the proof is “susceptible of but one inference.” Bailey v. N. Am.

Refractories, 95 S.W.3d 868, 872 (Ky. App. 2001).

B. There Was Sufficient Evidence To Find That The Press Release Was Misleading In Its Entirety And Was Causal.

The court instructed that Ventas was required to prove “a reasonable

likelihood or probability of acquiring Sunrise REIT at $15 per unit,” that “HCP’s

improper interference prevented Ventas from acquiring Sunrise REIT” at $15, that

“HCP’s improper interference was a substantial factor in causing Ventas’s

damages,” and additionally that the jury could only award “actual damages caused

by HCP's improper interference.” (RE.442, 3, 7.) Based on HCP’s Scandpower

argument, the district court added a further instruction that the jury could rule for

Ventas only if it found that “if HCP’s improper interference had never occurred,

Ventas would have acquired Sunrise REIT at $15 per unit.” (RE.442, 4; RE.272,

16.)

Focusing only on the “Scandpower” instruction, HCP argues that a

reasonable jury could only find that there was a “truth” in its press release that

caused the deal to fail. (HCP 1stBr., 29-32.) HCP tried that case; the jury

reasonably disagreed. (Tr.12B 81:5-7, 82:12-25.) See Conwood Co. v. U.S.

Tobacco Co., 290 F.3d 768, 794 (6th Cir. 2002) (“juries are presumed to follow the

instructions given”).


32

1. HCP’s February 14 Statements Were Entirely Fraudulent.

The jury could reasonably conclude that, unlike in Scandpower, HCP made

no independently “true” statement that could be disentangled from its fraud. That

conclusion ends HCP’s causation argument at the very start.

HCP attempts to construct a “truthful” statement by arguing (at 30) that

“whatever else HCP’s press release contained, it disclosed that HCP was willing to

pay $18 per unit for Sunrise.” But the press release did not say that HCP was

“willing to pay $18.” It said that HCP offered to pay $18 on terms “otherwise

identical to the agreement between Sunrise REIT and Ventas,” that HCP was

“confident” of reaching a deal with SSL, that HCP’s proposal qualified as a

“Superior Proposal,” and that the proposal had a “greater certainty of completion”

than the Ventas transaction and would close “at least as quickly.” (App.454-

55.PTX.1537.)

As discussed above (at pp.11-14), each of those statements and the release as

a whole was materially misleading. The jury could find that HCP misrepresented

and concealed facts making HCP’s professed “willingness to pay $18” illusory, or

at a minimum, that HCP grossly overstated the probability of an $18 deal:

Rather than telling investors that its supposed “willingness to pay $18” was,

at best, contingent on securing unrealistic concessions from SSL worth as much as

$2.40/share, HCP falsely assured investors of its “confidence” and the “certainty of


33

completion.” HCP concealed that SSL already had rejected those deal-breaker

demands. (Tr.5A 93:16-94:25, 127:10-128:25.)

Rather than telling investors about the fatal SSL contingency, HCP falsely

stated that its purported offer was “identical” to the unconditional Ventas contract.

HCP’s CEO admitted at trial that he knew HCP’s proposal could not be “superior”

because of the undisclosed contingency; HCP told investors the opposite. (Id.

122:16-21, 124:25-125:3.)

Rather than telling investors that HCP was not authorized to sign an

agreement and that its “offer” and press release were prohibited by the

unambiguous terms of its Confidentiality Agreement, HCP said instead that it had

submitted an “offer” that would close “at least as quickly” as the Ventas deal.

(Tr.5B 63:1-2.)

The jury could thus reasonably find that no meaningful truth could be

isolated from HCP’s fraudulent message. The jury could find that HCP’s stated

“willingness to pay $18” on February 14 was a sham because HCP was prohibited

from bidding, had no prospect of an SSL deal, had no fairness opinion, and was

willing to pay $18, if at all, only if subsidized by hundreds of millions of dollars of

subsidies from SSL that HCP knew were unavailable.

The jury could also reasonably find that any literally “true” portion of the

press release was rendered misleading by those substantial misrepresentations and


34

omissions. As Judge Heyburn found (RE.520, 3), even if a statement in isolation is

“true as far as it goes,” it is fraud under Kentucky law if “concealment” makes

“false [a] representation of that which is disclosed[] as the whole truth.” Dennis v.

Thomson, 43 S.W.2d 18, 23 (Ky. 1931); see also McMahan v. Wherehouse Ent.,

900 F.2d 576, 579 (2d Cir. 1990) (the “central issue” is “not whether the particular

statements, taken separately, were literally true, but whether defendants’

representations, taken together and in context, would have misled a reasonable

investor”); Adams v. Amplidyne, 2000 WL 34603180, at *6 (D.N.J. Oct. 24, 2000)

(refusing to “parse the Press Release” because “while it is possible to construe

individual sentences in [the release] so they are literally true, the statements may

still be misleading when taken as a whole”).

HCP argues (at 26) “outbidding a competitor is not a tort.” But HCP lost the

auction and “outbid” nobody. HCP never made a valid or unconditional offer to

purchase Sunrise. Instead, HCP issued a completely fraudulent and prohibited

press release deceiving the market into believing it had made an $18 offer, when it

had not and would not do so.

2. HCP’s Claim Of “Truth” Rests Upon A Mischaracterization Of The District Court’s Statements.

To conjure an independently “true” statement, HCP argues (at 3, 29-30) that

Judge Heyburn ruled “as a matter of law” that HCP’s “willingness to pay $18 was

sincere.” HCP distorts the record—the court made no such finding, let alone any


35

finding that HCP made a non-actionable truthful statement in its press release. In

fact, Judge Heyburn rejected HCP’s tendered instruction “that there is no evidence

that HCP did not intend [] to pay $18 for Sunrise REIT when it made its bid on

February 14.” (RE.441, 3; RE.449.)

Having heard all the evidence, Judge Heyburn held that the jury could

reasonably find that HCP’s representation that it would pay $18, while concealing

the facts making any such “offer” illusory “constitute[d] a palpable fraud,” even if

any HCP statement was “true as far as it goes.” (RE.520, 3, quoting Dennis, 43

S.W.2d at 23-24.) HCP ignores that ruling and instead relies on two colloquies

between Ventas’s counsel and the court, but neither supports HCP.

The first colloquy came mid-trial, before the institutional investors testified,

and concerned a potential instruction on punitive damages. As discussed in

Ventas’s cross-appeal (pp.65-68, infra), the court applied the wrong legal standard,

stating, “I know you’ve got the argument of fraud and deceit,” but “to show the []

punitive behavior, you really have to show they absolutely had no intention of even

making a deal at all.” (Tr.8B 68:6-16, 74:10-12.) In that context, the court made a

comment from which HCP selectively quotes: “there’s no evidence that I know of

that the $18 bid was insincere, that . . . they couldn’t pay for it, they wouldn’t pay

for it. There’s obviously mixed evidence as to whether the conditions could be

satisfied.” (Tr.8B 70:13-19.)


36

That mid-trial comment on HCP’s motives was not a finding as a matter of

law that the press release contained an independent truthful statement. To the

contrary, the court expressly recognized that it was for the jury to decide whether it

was misleading for HCP to announce an $18 “offer” when HCP knew that in

existing real-world conditions, it could not make a binding $18 offer (and never

did). (See RE.520, 3.)

The second colloquy concerned a potential instruction that HCP had not

acted “maliciously.” This issue pertained to the “competitor’s privilege,” which is

defeated by showing either that (a) the defendant’s sole motive was to injure a

competitor (which HCP incorrectly calls “malice”) or (b) that the defendant

employed “wrongful means.” (See pp.51-56, infra.) Ventas pointed out that

HCP’s instruction was improper because Ventas had never argued that HCP’s sole

motive was to injure Ventas, but rather that HCP employed wrongful means in

order either to “knock [Ventas] out [and] come back and buy this at a different

price,” or make Ventas “pay more.” (Tr.11B 33:3-35:7.)

The court responded, in the sentence HCP selectively quotes, that “there is

no evidence to suggest that they had no interest in paying and would not pay

$18 . . . [t]hat would have to come from a lack of preparation, a sham nature of the

bid, a complete inability to afford the bid at that price.” (Id. 36:22-37:7.) Ventas

responded: “$18 on what terms . . . they’ve never said they would pay $18


37

unconditionally . . . those are valuable development rights . . . [t]hey’re preserving

the ability to come back and say, you know, that SSL deal cost us more than we

thought it would.” (Id. 37:13-21.) The court then clarified: “Now, they’re not

saying on what terms and maybe it was tough negotiation. And, of course, truthful

or untruthful, the testimony of the HCP folks that they said were going to cave.

Now, a jury could certainly disbelieve that. It’s obviously somewhat self-serving

after the fact . . . .” (Id. 37:22-38:6.)

Rather than announce any definitive ruling from the bench, the court

concluded “I’ll take a look at this,” and, the next day, rejected HCP’s “malice”

instruction and permitted Ventas to argue that HCP’s statements that it would pay

$18 under existing circumstances was a fraud and sham. (Id. 40:22; RE.442;

Tr.12A 58:4-23.) After closing argument, HCP asked for a “curative instruction”

that “there is no evidence that HCP did not intend [] to pay $18 for Sunrise REIT.”

(RE.441, 3.) The court refused. (RE.449.) The court then issued a written opinion

explaining the jury instructions and made no suggestion or finding that HCP’s

press release contained an independent “truthful” statement. (RE.450.) The

court’s only ruling as a matter of law, that HCP “did not act for the sole purpose”

of harming Ventas, was consistent with Ventas’s argument that HCP announced an


38

illusory $18 price to force Ventas to pay more or kill the Ventas deal and then seek

to buy Sunrise later, for less. (RE.520, 7, emphasis in original.) 7

HCP cannot contradict the court’s definitive rulings and orders with

selective excerpts of colloquy. E.g., U.S. v. Ganier, 468 F.3d 920, 925 n.3 (6th

Cir. 2006) (citing cases; a “later written opinion supersedes [an] earlier oral

ruling”); Harbor Tug & Barge v. Belcher Towing, 733 F.2d 823, 827 n.3 (11th Cir.

1984) (“The trial judge was not bound by his off-hand remarks,” and “the

reviewing court looks to the formal findings and conclusions contained in the

written opinion”).

3. The Fraud Had A Causal Effect Throughout The Voting Period And Was Never Corrected.

The jury could also find that the effects of HCP’s fraud continued

throughout the voting period.

a. The full truth was never revealed and the institutional

shareholders were misled. The evidence showed that HCP never disclosed the

full truth of its dim prospects for reaching a deal with SSL on the terms it

demanded. Investors eventually learned of the existence of the SSL condition, but

7 Sunrise was concerned that HCP was pushing the price “up for their competitor” and “trying to force Ventas out of this process so that they . . . [could] come back . . . at any price they want.” (Tr.3A 63:16-20.) Warren testified that he never believed HCP intended to pay $18. (E.g., Tr.3A 61:20-63:20, 77:15-79:2.) The court commented “the jury might well have placed significant reliance” on the testimony of Mr. Warren, “a particularly impressive witness.” (RE.520, 3.)


39

never learned the materiality of the obstacle the condition posed. For weeks after

February 14, HCP continued to tout $18 and to suggest that the SSL condition was

all but a formality, e.g., HCP was “highly confident” of an SSL deal and HCP’s

proposal to SSL was “substantially similar” to Ventas’s deal.

(App.730A.PTX.861; see also supra pp.17-22.) Investors could reasonably, but

incorrectly, believe that HCP was on the verge of an unconditional $18 bid.

HCP contends (at 32) that “Ventas could prevail only if it proved that . . .

misrepresentations misled at least one” of the largest institutional investors, all of

whom, the jury could find, supported the Ventas deal before the fraud. As

discussed, Ventas presented precisely that proof. Caisse testified that it believed

HCP ultimately “withdr[ew] that condition” from its bid, which was false.

(RE.482, 62:2-4.) As late as March 5, HCP met privately with both MS and ING

and reinforced the false impression that HCP was “quite confident” about its

conditional bid (RE.487, 145:2-146:3), notwithstanding that HCP secretly knew an

SSL deal was improbable at best. Caisse and ING testified they believed HCP

“might still be there at $18” even after HCP publicly “withdrew” its bid on March

7 (RE.482, 127:8-11; RE.487, 161:19-162:11), reflecting that they did not

understand HCP could not pay $18 without unwinnable SSL concessions. See,

e.g., U.S. v. Daniel, 329 F.3d 480, 489 (6th Cir. 2003) (lulling communication is

part of scheme to defraud).


40

b. The effect of any partial correction was for the jury. HCP points

to partial “corrections” from third parties between February 14 and March 23. But

the jury could reasonably find that those corrections were incomplete and did not

neutralize the effect of HCP’s fraud on proxy voting that started on March 7.

Whether a subsequent disclosure is sufficient to negate the effects of a fraud

is a question for the jury, “present[ing] questions involving the nature, extent, and

ultimate market influence of the disclosed information—an inquiry that [requires]

a jury to weigh a volume of conflicting evidence and contrary inferences.”

Schaffer v. Timberland, 924 F. Supp. 1298, 1309 n.10 (D.N.H. 1996); see also

Freeland v. Iridium World Commc’n, 545 F. Supp. 2d 59, 78-79 (D.D.C. 2008).

Here, the jury could find that the partial corrections alleged by HCP were

insufficient to eliminate the effects of its fraud. For example, though investors

eventually learned that HCP was conditioning its “bid” on an SSL deal, investors

never learned that this condition was insurmountable on the terms HCP demanded.

The jury could also consider that HCP never publicly corrected its own

misstatements, muting any corrective effect. “[E]ven where information does seep

into the market from third party sources, a confirming announcement from the

company itself, or the absence thereof, may be viewed by a reasonable investor as

having significantly altered the ‘total mix’ of information made available.” In re

Seagate Tech. II Sec. Litig., 802 F. Supp. 271, 275 (N.D. Cal. 1992).


41

c. The fraud had lasting effects that could not be reversed. The jury

could also reasonably find that the claimed partial “corrections” could not undo the

consequences of the fraud, including the change in shareholder composition,

expectations, and bargaining power that HCP’s press release and private lies had

caused.8

Flaherty himself bragged that his press release installed a “new shareholder

base,” including U.S. arbitrageurs (App.461.PTX.820; Tr.4B 158:18-159:25), and

testified that he believed the Ventas $15 deal was dead as soon as investors could

sell their shares for more than $15. (Tr.4B 166:11-22; see also Tr.9B 166:2-10;

Tr.11A 136:3-10; RE.489, 262:10-19.) As HCP anticipated, the partial separation

of stock ownership and voting rights reduced voter turnout and enhanced the

bargaining power of the institutional shareholders.9

8 A tortfeasor is liable for all consequences resulting from its wrongful conduct where that conduct increased the risk of the harm that the plaintiff ultimately suffered. See e.g., Seelbach v. Cadick, 405 S.W.2d 745, 750 (Ky. 1966) (defendant responsible for events that were “reasonably foreseeable and naturally arose out of a condition . . . created by” defendant); Deutsch v. Shein, 597 S.W.2d 141, 145 (Ky. 1980) (causation “applies to the event which results in the injury, not to the injury itself . . . [t]he injury need only flow directly from the event”). 9 MS and ING had 23% of the total shares and no blocking power under an expected turnout (Tr.2A 57:13-58:16; Tr.7B 86:5-10; Tr.11A 114:16-118:18), but due to reduced turnout resulting from selling over the record date (Tr.2A 101:17-104:1; Tr.7A 99:20-100:2; Tr.7B 12:17-14:18), they cast 37% of the votes submitted on the $16.50 deal. (HCP 1stBr., 31 n.5 but see Tr.2B 145:14-146:2; Tr.7B 85:10-86:4; Tr.11A 112:7-17.)


42

After HCP’s fraud drove the price to $18, investors understood that Ventas

risked a serious “reputational loss” if the market came to doubt that it could close

its acquisitions. (Tr.4B 30:3-23; Tr.6A 156:2-16; Tr.7B 18:1-7.) Flaherty

understood that Ventas would be “hosed” if it lost the Sunrise deal.

(App.391.PTX.26.) The perception that Ventas would be forced to raise its price

was only strengthened after the Ontario court ruled on March 6 that HCP’s bid was

“not bona fide,” creating a widespread (correct) market perception that HCP was

liable for any required increase. (Tr.7B 18:8-12, 49:5-12; Tr.11A 135:10-14.)

HCP itself recognized Ventas was likely to sue for tortious interference.

(App.734.PTX.472.)

As HCP contemplated (App.362.PTX.65), the institutional shareholders and

arbitrageurs seized upon those circumstances to extract a higher price from Ventas.

(Tr.7B 18:8-12; App.744.PTX.297; App.745-46.PTX.298; RE.487, 151:19-

153:20.) Ventas’s expert, Professor Lys, explained that these circumstances—all

of which were direct and foreseeable consequences of HCP’s misconduct—exerted

an upward pressure on Sunrise’s stock price throughout the voting period. (Tr.7B

16:22-18:12.) As Judge Heyburn found, “[t]he jury could reasonably decide that in

the absence of this market shift, which it decided was caused by [HCP’s]

significantly wrongful conduct, [Ventas’s] $15 offer would have been approved.”

(RE.520, 5.)


43

C. The Elevated Stock Price And Professor Lys’s Testimony Support The Verdict.

Given that evidence, it is unsurprising that Sunrise’s stock price did not

return to $15 in the weeks following February 14. The full truth was never

revealed and the effects of the fraud were irreversible in that period.

For that reason, HCP’s attack on Lys is mistaken. Lys showed that, before

February 14, Ventas was virtually assured of closing its $15 deal (Tr.7A 70:8-19,

86:13-91:25, 100:6-12), and that, after February 14, the effects of HCP’s fraud

continued in the marketplace. (Tr.7B 14:19-20:5.) HCP challenges none of that

analysis, but instead argues (at 40-41) that Lys was required to show that Sunrise’s

stock fell in a statistically significant manner on dates when Sunrise partially

corrected HCP’s fraud. But Ventas did not sue HCP for a stock drop—the fact that

Sunrise’s stock price did not fall further supports a finding that the fraud was not

corrected nor its consequences reversed.10

For example, HCP argues (at 41) that Lys’s study showed only a small drop

in Sunrise stock on February 19, when Sunrise issued a press release stating that

HCP’s “offer” was contingent on a deal with SSL. Nothing in that release

disclosed the insurmountable nature of the contingency. Further, Lys explained

there were cross-pressures on the stock that day—the same press release stated that

10 HCP’s stock drop cases (at 38-40) are inapposite for this reason. E.g., Indiana State District Council of Laborers v. Omnicare, 583 F.3d 935, 944 (6th Cir. 2009) (stock-drop plaintiff must show statements “were revealed to be false”).


44

HCP had made a new $18 offer and that Sunrise was going to court in Ontario to

determine its obligations. Because of HCP’s ongoing fraud, investors could falsely

believe that a successful $18 deal had become more likely. (Tr.7B 93:14-94:16;

App.590.PTX.435.)

In all events, Sunrise’s stock price did fall from over $18 to about $16.50

between February 14 and March 23 (App.180.PTX.449), as investors learned that

HCP was prohibited from bidding. The jury had sufficient evidence to infer that

the stock did not fall further because the full truth was not exposed and because

HCP’s misconduct continued to have effects in the marketplace even after limited

corrections. (See supra pp.17-21.)

As Judge Heyburn found: “[Ventas] presented expert testimony that had all

the conditions of the $18 offer been made public initially, including the standstill

agreement that likely prohibited consideration of the offer, the raise in the stock

price would not have been as significant and the unitholder base would not have

changed so dramatically. If that were the case, the damage to [Ventas’s]

expectancy would likely not have occurred.” (RE.520, 4; see also Tr.7B 14:19-

18:12.)


45

D. The Jury Could Reasonably Find Causation Even If The Press Release Contained An Independent Truthful Statement.

Even assuming that a reasonable jury was required to isolate a “grain of

truth” in HCP’s press release, which it was not, the jury was not required to find

that truth was the cause of Ventas’s injury.

1. HCP Misstates Ventas’s Causation Burden.

Nothing in Scandpower or Kentucky law imposed a burden on Ventas to

prove that it was certain to obtain its expectancy in a hypothetical world in which

HCP did not act tortiously. As Judge Heyburn ruled, a tortious interference

plaintiff must show only a “reasonable likelihood or probability” of obtaining its

goal but for the interference. (RE.450, 9.) See also Scandpower, 880 F.2d at 878

(“reasonably probable”); Lucas v. Monroe County, 203 F.3d 964, 979 (6th Cir.

2000) (“reasonable likelihood or probability”); Fishman v. Estate of Wirtz, 807

F.2d 520, 547 (7th Cir. 1986) (“reasonable expectation”).

The Scandpower court was concerned that a plaintiff not receive a “windfall

in the form of damages for an economic opportunity which it would not have

obtained even if the defendant did nothing wrong.” 880 F.2d at 877. There, the

plaintiff’s expectancy was not reasonably probable because there was an

undisputed factual finding that the defendant’s unrelated and fully “truthful”

statement alone precluded the expectancy. Id. at 878. Here, a jury could find that

even if HCP’s claimed “truth” had some negligible effect segregable from the


46

effect of HCP’s tortious conduct, it remained reasonably probable that shareholders

would have approved Ventas’s deal absent HCP’s misconduct.

HCP seeks to push Scandpower beyond its moorings, to impose a burden of

identifying any “truth” and non-tortious conduct and then proving with expert

certainty that “innocent conduct” played no causal role. That reading conflicts

with both Scandpower and well-settled Kentucky law. Indeed, since Scandpower,

this Court has held in Monette v. AM-7-7 Baking Co., that even though defendants

acted “within their legal rights” part of the time, “[t]he entire sequence of events

must be viewed as a whole . . . as a single block of conduct” and the defendants’

fraud “tainted their otherwise rightful” actions. 929 F.2d 276, 282-83 (6th Cir.

1991) (Michigan law). Similarly, Kentucky common law of causation rejects a

“sole cause” requirement. See Ferguson v. U.S. Army, 938 F.2d 55, 57 (6th Cir.

1991) (Kentucky law) (error to instruct that defendant’s conduct must be “sole

cause of plaintiff’s injury”).

HCP’s “disaggregation” cases (at 29) support the verdict here. Those cases

upheld causation findings and liability verdicts even where only part of the injury

was caused by wrongful conduct, and applied disaggregation principles only to the

calculation of damages under antitrust law or statutory schemes. For example, in

Farley Transportation Co. v. Santa Fe Trail Transportation Co., the court found

plaintiff had proved causation where an antitrust violation was a “cause of some of


47

its injury.” 786 F.2d 1342, 1352 (9th Cir. 1985); see also Isaksen v. Vermont

Casting, 825 F.2d 1158, 1165 (7th Cir. 1987) (same). Even in the antitrust context,

courts do not require mathematical damages disaggregation where it is

“impracticable.” Spray-Rite Serv. Corp. v. Monsanto Co., 684 F.2d 1226, 1243

(7th Cir. 1982).

Here, HCP makes no damages argument. The court instructed that the jury

could “only award damages that fairly and reasonably compensate Ventas for the

actual damages caused by HCP’s improper interference.” (RE.442, 7; Tr.12B

105:25-106:2.) The jury had ample basis to attribute all of Ventas’s increased

purchase price damages to HCP’s misconduct. Recognizing the high bar to

overturning a properly-instructed jury’s damages award, HCP chose not to

challenge the sufficiency of the evidence supporting the damages award either

below or on appeal. (See RE.493; RE.475.) HCP thus provides no basis to disturb

the jury’s causation verdict and has waived any challenge to its damages award.

E.g., Conseco Fin. Serv. Corp. v. N. Am. Mortgage Co., 381 F.3d 821, 822 (8th

Cir. 2004) (Rule 50 motions directed at causation insufficient to preserve damages

argument.)


48

2. The Jury Could Reasonably Find That Ventas Would Have Closed its $15 Deal In HCP’s Hypothetical “But For” World.

Even accepting HCP’s description of Ventas’s burden, the jury had ample

basis to find causation.

HCP cannot prescribe the conclusions a jury would draw if required to

imagine a hypothetical world where HCP had not engaged in a scheme to defraud.

As the Restatement explains:

If the question is whether the plaintiff would have succeeded in attaining a prospective business transaction in the absence of defendant’s interference, the court may, in determining whether the proof meets the requirement of reasonable certainty, give due weight to the fact that the question was “made hypothetical by the very wrong” of the defendant.

RESTATEMENT (SECOND) TORTS §774A cmt. c (“RESTATEMENT”). Even accepting

HCP’s view of the law, it would be for the jury to hypothesize a fully fraud-free

series of events and then determine whether Ventas would have had a reasonable

expectation of approval in those circumstances. Here, the jury could fairly

conclude that if HCP only spoke the full truth, Ventas would have had a reasonable

expectation of approval.

HCP argues (at 30) that the jury was required to imagine a hypothetical

world in which HCP “truthfully” said only that “we are interested in paying $18

for Sunrise.” But a reasonable jury could find such a statement, standing alone,


49

would not have been truthful. The jury could reasonably find that a fully truthful

press release would have stated:

HCP has signed a Confidentiality Agreement as part of a full and fair auction process that prohibits it from making this press release or from publicly expressing an interest in purchasing Sunrise. HCP nonetheless announces that it may be interested in purchasing Sunrise for $18 per share if, and only if, HCP first reaches a written agreement with SSL. Sunrise has told HCP that it will not accept a proposal, like this one, conditioned on an agreement with SSL. An agreement between HCP and SSL on the terms necessary for HCP to offer $18 is improbable. When HCP last discussed these terms with SSL a month ago, SSL so emphatically rejected them that HCP dropped out of the auction. HCP has not signed any purchase agreement and is not authorized to sign an unconditional agreement. Sunrise is contractually prohibited from accepting an offer from HCP.

Jurors could assess that hypothetical statement for themselves and

appropriately find that reasonable investors would have judged HCP’s stated

“interest” to be immaterial when compared to the unconditional, signed, binding

Ventas $15 contract that offered a 40% price premium. The “delicate assessments

of the inferences a ‘reasonable shareholder’ would draw from a given set of facts”

are “peculiarly ones for the trier of fact.” TSC Indus. v. Northway, 426 U.S. 438,

450 (1976).

In fact, the jury could reasonably find that, on February 14, 2007, HCP itself

did not believe that a fully truthful press release would suffice to kill the Ventas

agreement, and for that reason issued a fraudulent one. Significantly, the jury also

could reasonably find that, in a hypothetical world in which HCP did not scheme to


50

defraud, HCP would have had no reason even to issue a prohibited press release

(the only means by which it claims the market would have learned the “truth”

about its purported interest) or to impermissibly lobby shareholders.11

HCP received an instruction based on Scandpower and argued that Ventas’s

injury was caused by a purely truthful statement. The jury found that HCP’s

improper interference was the “but for” cause of Ventas’s injury. Drawing every

reasonable inference in favor of Ventas, there is no basis to conclude that the jury

was compelled to find that if HCP “had done nothing wrong,” the Ventas deal

would have been rejected anyway.

II. The Court Did Not Err In Instructing The Jury.

As the district court found, the jury instructions “represented the substance

of the instructions that [HCP] requested.” (RE.520, 7.)

Standard of review. “Reversal of a jury verdict based on incorrect jury

instructions is warranted only when the instructions, viewed as a whole, are

confusing, misleading, and prejudicial.” Bridgeport Music v. UMG Recordings,

585 F.3d 267, 273-74 (6th Cir. 2009) (internal quotations omitted). The refusal to

give a particular instruction is reviewed for abuse of discretion. Id.

11 Evidence showed that sincere bidders first approach management privately with offers (Tr.3A 35:19-36:3; Tr.3B 11:6-16), as Sunrise REIT asked HCP to do when HCP called on February 14. (Tr.2A 76:23-77:16.)


51

A. HCP’s §768 Challenge Fails.

To prove its case, Ventas was required to show that HCP’s interference was

“improper” or “wrongful.” RESTATEMENT §766B; NCAA v. Hornung, 754 S.W.2d

855, 857 (Ky. 1988). The Restatement does not define a standard for “improper”

interference, but instead sets forth in §767 a list of non-exhaustive factors for the

jury to balance on a case-by-case basis. Kentucky has adopted §767. Id. Ventas

sought a §767 instruction.

HCP argued that the district court should look instead to Restatement §768.

That section addresses the “competitor’s privilege” and provides that interference

is not actionable if: (i) the interference “concerns a matter involved in the

competition between [the parties];” and (ii) the defendant “does not employ

wrongful means;” and (iii) the defendant’s “purpose is at least in part to advance

his interest in competing with the [plaintiff].” RESTATEMENT §768. “Wrongful

means” is defined in §768 to include “fraud” and other “predatory means.” Id.

cmt. e.

There was substantial reason to reject HCP’s §768 instruction. Kentucky

has not adopted §768. (RE.450, 2.) Courts applying Kentucky law have looked to

§767 in cases involving competitors. See Excel Energy v. Cannelton Sales, 246 F.

App’x 953, 966-68 (6th Cir. 2007) (§767 in Kentucky case between “competing


52

suppliers”).12 Moreover, before the relevant conduct occurred, HCP voluntarily

agreed not to bid or make a public announcement after the auction. HCP was not,

therefore, entitled as a matter of law to the greater leeway afforded a competitor

under §768. See, e.g., All Pro Maids v. Layton, 2004 WL 1878784, at *7 (Del. Ch.

Aug. 10, 2004); Brookside Ambulance v. Walker Ambulance Serv., 678 N.E.2d

248, 253 (Ohio Ct. App. 1996).

HCP nonetheless persuaded the district court to apply §768. Having found

that HCP acted “at least in part to advance [its] interest in compet[ing]” (RE.450, 6

n.5), the court instructed the jury that “the only way to find in favor of Ventas is to

find that HCP employed ‘significantly wrongful means’ to interfere with Ventas’s

acquisition of Sunrise REIT.” (RE.442, 4.) The court defined “significantly

wrongful means,” derived from §768 and Kentucky law, as “conduct such as

fraudulent misrepresentation, deceit and coercion.” (Id.) Thus, far from the

balancing approach of §767, the district court expressly held Ventas to proving

§768’s elevated standard.

HCP nevertheless argues (at 48) that the district court improperly “blended”

§767 with §768. HCP attacks the court’s instruction that: “Among other things,

12 Even if Kentucky were to adopt §768, it likely would apply it as an affirmative defense, not as a replacement for §767. E.g., Hornung, 754 S.W.2d at 860 (applying §773 privilege as an affirmative defense); Maximus v. Lockheed Info. Mgmt. Sys., 493 S.E.2d 375, 379 (Va. 1997) (§768 is affirmative defense). The district court, however, required Ventas to carry the burden on §768.


53

you may consider the parties’ conduct, motive, and the circumstances of the

transaction to illuminate whether HCP’s conduct amounts to ‘significantly

wrongful means.’” (RE.442, 4.) HCP argues that those matters are “generalized

§767 factors” that may not be considered under §768. HCP is wrong.

Sections 767 and 768 do not purport to establish mutually exclusive

categories of relevant evidence. The protection that §768 affords a competitor is

an elevated standard for actionable interference, not a limitation of the facts a jury

may consider in determining whether that standard has been met. Courts have

therefore recognized that the facts and circumstances of interference may be

relevant to both §767 and §768. E.g., Franklin Music v. Am. Broad. Cos., 616 F.2d

528, 545 (3d Cir. 1979) (“such conduct is evidence of an improper motive under

sections 767(b) and 767(c) and evidence of the resort to wrongful means under

section 768(1)(b)”); White Sands Group v. PRS II, 2009 WL 2841114, at *11 (Ala.

Sept. 4, 2009) (§768 is a “special application” of §767 in which §767 factors are

considered); Downers Grove Volkswagen v. Wigglesworth Imports, 546 N.E.2d 33,

37 (Ill. App. Ct. 1989) (§767 factors considered to find “wrongful conduct” under

§768). It would be absurd, for example, to instruct the jury that it must decide

whether HCP used “wrongful means” under §768 without considering HCP’s

“conduct” or the “circumstances of the transaction,” merely because those facts

would also be relevant under §767.


54

Similarly, it was not error to tell the jury that, in determining whether HCP

used such wrongful means as “fraud, deceit or coercion,” it could consider HCP’s

motives. HCP itself asked the court to instruct that “significantly wrongful means”

requires proof that “HCP intended to deceive” the public. (RE.272, 13.) And part

of the instructions that HCP does not challenge told the jury it could find for

Ventas only if it found that “HCP intended to improperly interfere.” (RE.442, 4.)

HCP also testified and argued that it had no motive to deceive. (Tr.9B 84:8-13,

117:25-118:17; Tr.12B 6:24-7:1.)

In sum, the court required Ventas to satisfy §768, and mentioned only

matters also covered by §767 that are relevant to applying §768. HCP has no valid

complaint.

B. HCP Was Not Entitled To A “No Malice” Instruction.

HCP also argues (at 54-58) that the court should have instructed that HCP

did not act “maliciously” because it found that HCP acted, in part, to advance its

own competitive interests. The court’s refusal to give HCP’s instruction was

correct.

First, HCP’s proposed instruction on “malice” contained incorrect

statements of the law, reason alone to reject it. Tompkin v. Phillip Morris USA,

362 F.3d 882, 901 (6th Cir. 2004). Under Kentucky law, interference is tortious if

the defendant acts with: (i) “malice” or (ii) “significantly wrongful conduct.”


55

Hornung, 754 S.W.2d at 859. “Malice” means “without justification” and

expressly does not require “ill will.” Id. HCP’s proposed instructions said the

opposite:

To prove malice, Ventas must show that HCP was motivated solely by spite, ill will or a desire to do injury to Ventas, and not at least in part to advance its interest in acquiring Sunrise REIT. If you find that HCP acted at least in part to acquire Sunrise REIT, you should find for HCP, even if you find that HCP also wanted to harm Ventas.

(RE.272, 12.)

Second, HCP’s proposed instruction was legally incorrect because it

required the jury to “find for HCP” without regard to whether HCP committed

“significantly wrongful conduct.” As Judge Heyburn explained, HCP

“misunderstands the effect of the Court’s ruling. Simply because [HCP’s] sole

purpose was not to harm [Ventas] does not mean that [HCP’s] motives were

irrelevant. Rather, it could have been part of [HCP’s] intent to cause harm” and

such an intent “makes it more likely [HCP’s] conduct was significantly wrongful.”

(RE.520, 8, emphasis in original.)

Third, instructing the jury that HCP had not acted “maliciously” would have

been confusing and highly prejudicial to Ventas. It would have suggested that

Ventas had failed to prove an element of its case, when Ventas never argued that

HCP acted solely out of spite or solely to injure Ventas, and proceeded only under


56

the “wrongful means” prong of §768.13 Moreover, the district court did instruct

that HCP and Ventas “were competing here to acquire Sunrise” and that, because

the parties were “competitors,” the “only way to find in favor of Ventas is to find

that HCP employed ‘significantly wrongful means.’” (RE.442, 3-4.) To instruct

further on a theory that was “not in the case” (RE.520, 7), would have been

inconsistent with Kentucky’s “bare bones” approach to instructions. E.g., King v.

Ford Motor, 209 F.3d 886, 897 (6th Cir. 2000).

C. There Was No Error With Respect To HCP’s Breach Of Contract.

HCP also argues (at 54) that the court should have instructed that HCP’s

breaches of its Confidentiality Agreement did not establish tort liability. The court

gave that instruction:

HCP did breach its confidentiality agreement by submitting the February 14 topping bid. This fact alone is not sufficient to establish tortious interference. However, it may be considered along with other evidence, in determining whether HCP engaged in improper interference.

13 For example, Ventas’s counsel explained in closing: “Whatever the reasons for acting, what they did was significantly wrongful. They acted through wrongful means. It doesn’t matter what their purpose was . . . The question is how did they go about doing what they did.” (Tr.12A 7:20-8:5.) Ventas argued that HCP’s announcement that it was “prepared to pay $18 on February 14 was a sham and a fraud on the market,” but did not contend that HCP acted solely to hurt Ventas. Rather, Ventas argued that HCP was “positioning to knock out [the Ventas] deal and then come back at . . . a lower price.” (Id. 57:24-64:8.) The court held Ventas’s argument was “within the bounds” of appropriate argument based on the evidence. (RE.449.) That decision, reviewed for abuse of discretion, Jones v. Lincoln Elec., 188 F.3d 709, 732 (7th Cir. 1999), was correct.


57

(RE.442, 5.)

HCP quibbles that the court should have said instead that the contract breach

“is not sufficient to establish wrongful conduct.” But the instructions as a whole

fairly informed the jury that it must find “significantly wrongful conduct” such as

“fraud, deceit or coercion,” and that breach of contract did not suffice. Consistent

with the Kentucky approach, counsel for both parties filled in any necessary detail

at closing:

Ventas: His Honor will tell you that the fact that they violated their contract in and of itself doesn’t make their conduct tortious or independently significantly wrongful, but that it is a fact that you may consider in deciding whether what they did was significantly wrongful. (Tr.12A 25:20-25.)

HCP: As the judge will instruct you, its not about whether we have breached a contract. You have to find something more. You have to find fraud, deceit, coercion or something similarly egregious or substantially wrongful. (Tr.12B 83:1-5.)

See King, 209 F.3d at 897 (Kentucky jury instruction practice “confine[s] the

judge’s function to the bare essentials and let[s] counsel see to it that the jury

clearly understands what the instructions mean”).

HCP argues (at 51-54) it was inappropriate for the jury even to consider

HCP’s breaches in deciding whether the evidence established “significantly

wrongful conduct.” But as the district court explained, to ignore HCP’s breaches

would “create an artificial reality within the case.” (RE.520, 9.) HCP sought to


58

characterize all of its conduct as “old-fashioned competition.” But HCP’s

breaches, which were adjudicated in Ontario and binding as a matter of collateral

estoppel, demonstrated that HCP had flouted every rule of a competitive auction

process that the Ontario courts found was reasonably designed to maximize

shareholder value. (RE.1 Ex.F ¶¶55-56; see also RE.154, 8; RE.442, 5.) The

breaches were directly relevant to HCP’s fraud and deception. For example,

HCP’s representation that its “offer” was “identical” to the Ventas deal and had a

“greater certainty of completion” was false, among other reasons, because HCP’s

“offer” was contractually prohibited.

HCP also put its contract breaches at issue by arguing that: (i) HCP acted in

good faith (Tr.12B 82:25 (“We had a good faith basis for proceeding”)); and (ii)

HCP did not breach the Confidentiality Agreement (id. 15:14-19 (“It wasn’t a

prohibited bid . . . No one in America thought this bid was going to be stopped”);

Tr.1B 95:11-13 (“there was nothing that would prevent us from doing this.

Nothing in the agreements, nothing—that was our state of mind and that was what

we believed”)).

HCP’s selective quotations from Ventas’s closing argument (at 52) are

misleading. (Tr.12A 6:24-76:21.) Ventas generally referenced HCP’s contractual

breaches while arguing that HCP deceived the market by claiming it had made an

offer with “greater certainty of completion.” (E.g., Tr.12A 13:20-14:4, 48:15-


59

49:1.) HCP does not challenge the district court’s determination that the verdict

was not infected by any improper argument. (RE.520, 8 n.3.)

HCP also suggests (at 53-54) that it is unprecedented to consider a breach of

contract as part of the facts and circumstances establishing wrongful conduct, but

many cases, discussed by Judge Heyburn, say otherwise. (See RE.520, 9.) See

also Foam Supplies v. Dow Chem., 2008 WL 3159598, at *7 (E.D. Mo. Aug. 4,

2008) (a “breach of contract can constitute a wrongful means”); Am. Nat’l

Petroleum v. Transcon. Gas Pipe Line, 798 S.W.2d 274, 279 (Tex. 1990).

HCP’s authorities (at 51) are not to the contrary. HCP has never cited a case

holding that a defendant’s contract breach is irrelevant. (RE.520, 9.) That Ventas

was not a party to HCP’s Confidentiality Agreement further supports the jury

instruction because there was no risk that the jury would overcompensate Ventas

with both tort and contract damages. See Leigh Furniture & Carpet v. Isom, 657

P.2d 293, 309 (Utah 1982) (rule that breach of contract alone does not establish

wrongful conduct exists to prevent overcompensation for contract damages).

D. There Was No Error In The Causation Instructions.

Finally, HCP argues (at 58) that the court abused its discretion by not

instructing the jury that it should consider “truthful information in HCP’s offer and

press release” as part of the “but for” causation instruction. As noted, the court


60

gave HCP its “but for” instruction, in a form substantially similar to HCP’s draft.

(Compare RE.442, 4 with RE.272, 16.)

HCP’s later formulation of that instruction was inappropriate because it

prejudged whether there was any independent “truthful information” in HCP’s

release and whether HCP ever made an “offer”—both questions for the jury. (See

pp.31-38, supra.) See also Ford Motor v. Fulkerson, 812 S.W.2d 119, 124 (Ky.

1991) (“A trial court is well advised to leave consideration of these evidentiary

factors to the arguments of counsel rather than attempting to frame them up in the

instructions on the ultimate questions”). Moreover, there was evidence that HCP’s

tortious conduct extended beyond the press release and it would have been

inappropriate to so limit the jury’s focus. (Supra, pp.38-42.) The court’s

instruction was consistent with Kentucky’s “bare bones” approach, King, 209 F.3d

at 897, and allowed HCP’s counsel to argue extensively about the alleged effect of

the “truth.” (E.g., Tr.12B 82:14-16 (“whatever it was that caused this unit price to

go up, could have been the truthful information about HCP being interested in

buying it”).)

III. Ventas’s Claims Are Not Barred By Res Judicata.

After extensive briefing and submissions on Ontario law (RE.28; RE.191;

RE.501), the district court correctly rejected HCP’s res judicata defense. (RE.34;

RE.220; RE.520.) Those decisions should be affirmed.


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First, as the district court correctly held, res judicata does not bar Ventas’s

tort claims because those claims were not ripe on February 21, 2007, when Ventas

filed a responsive “application” in the Ontario Superior Court seeking a judicial

interpretation of its rights under its Purchase Agreement. (RE.34, 5; RE.220, 21;

RE.520, 5.) Res judicata “does not apply to claims in a subsequent suit that were

not ripe at the time the first suit was filed.” Brown v. Potter, 248 F. App’x 712,

713 (6th Cir. 2007); Watts v. K, S & H, 957 S.W.2d 233, 237 (Ky. 1997) (same).

On February 21, 2007, Ventas had not yet been injured—voting had not yet begun

on Ventas’s $15 agreement. E.g., Coles v. Granville, 448 F.3d 853, 866 (6th Cir.

2006) (“[plaintiff] has not yet been denied compensation and therefore has no

injury necessary to make his case ripe”); Cmty. Mental Health Serv. v. Mental

Health & Recovery Bd., 150 F. App’x 389, 394 (6th Cir. 2005) (“Because the

possibility of future injury is speculative and the form of the injury is unknown, the

claim is not ripe”). In fact, at trial, HCP successfully argued for a favorable

currency exchange rate (see pp.70-71), because Ventas’s injury did not “occur until

[April] 26th,” when Ventas paid an increased purchase price. (Tr.7A 41:9-13.)

Justice John Morden, a former Associate Chief Justice of Ontario, explained

that if Ventas had attempted to assert its tort claim against HCP in Ontario on

February 21, 2007, the claim would have been dismissed as premature. (RE.193,

Ex.41 ¶¶9, 34-38.)


62

HCP’s argument that its February 14 press release was the cause of Ventas’s

(eventual) damages misapprehends the difference between causation and injury.

For example, in Capital Holding v. Bailey, 873 S.W.2d 187, 192-93 (Ky. 1994),

while the same asbestos exposure was the cause of both an emotional distress and

physical injury claim, the physical injury had not manifested at the time of the first

lawsuit, which sought recovery only for emotional distress. The Kentucky

Supreme Court held that a physical injury claim was not then ripe and would not

be barred by res judicata in a later lawsuit. Id. at 193-94, 197-98. Similarly, even

though HCP’s conduct beginning on February 14 was (along with later conduct)

the cause of Ventas’s injury, Ventas had not suffered the injury before February

21.14

Second, HCP’s res judicata defense fails because Ventas could not have

brought a tort claim in the Ontario application proceedings. As Justice Morden

averred, under Ontario law, an “application” is a specialized proceeding designed

to provide expeditious judicial determination of limited issues, including the

interpretation of contracts; it cannot be used to adjudicate tort claims involving

material disputed facts. (RE.28, Ex. 6 ¶¶11-18; RE.193, Ex.41 ¶¶12, 15, 22.)

14 The materials that HCP cites (at 59) to “prove” ripeness actually post-date February 21. HCP’s res judicata cases (at 62) do not concern ripeness. HCP’s other cases (at 62-63) concern the statute of limitations and hold only that a claim accrues upon injury, consistent with the court’s ruling here.


63

Claim preclusion does not apply if the claim could not have been raised in

the initial proceeding due to procedural, jurisdictional or other limitations. E.g.,

RESTATEMENT (SECOND) OF JUDGMENTS §26(1)(c) & cmt. c (no preclusion where

formal barriers against full presentation of claim in first action); Smith v. Bob

Smith Chevrolet, 275 F. Supp. 2d 808, 813 (W.D. Ky. 2003) (preclusion applies

only to claims that were “or could have been raised”). When a plaintiff reasonably

seeks expeditious relief in a specially designed proceeding which by procedural or

other rule does not permit recovery of damages, claim preclusion does not bar the

plaintiff from bringing a subsequent lawsuit “seeking damages” in another forum

even if the two actions “undoubtedly are based on the same cause of action.”

Davidson v. Capuano, 792 F.2d 275, 278-80 (2d Cir. 1986); Whitfield v. City of

Knoxville, 756 F.2d 455, 459-60 (6th Cir. 1985) (no claim preclusion where

plaintiff needed expeditious relief and could not afford delay in bringing all claims

in first suit); Bio-Tech. Gen. Corp. v. Genentech, 80 F.3d 1553, 1563 (Fed. Cir.

1996) (same).15 Under Ontario law, participation in the application proceeding

would not preclude Ventas from asserting its damage claim in a subsequent

lawsuit. (RE.193, Ex.41 ¶¶11-17, 22-23.)

15 See also Computer Assoc. Int’l v. Altai, 126 F.3d 365, 370 (2d Cir. 1997) (“Res judicata will not apply where the initial forum did not have the power to award the full measure of relief sought in the later litigation”); Ryan v. City of Shawnee, 13 F.3d 345, 348 (10th Cir. 1993) (same); North v. Walsh, 881 F.2d 1088, 1095 (D.C. Cir. 1989) (same).


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Third, res judicata does not bar Ventas’s tort claim because, under Kentucky

law, even if a subsequent claim depends on some common facts as the earlier claim

and could have been raised in the first litigation, res judicata “does not act as a bar

if there are different issues or the questions of law presented are different.”

Newman v. Newman, 451 S.W.2d 417, 419 (Ky. 1970); Smith, 275 F. Supp. 2d at

814 (even if a plaintiff “could have filed both claims in the original suit, the law

[does] not require doing so where the facts and legal claims [are] distinct”). As in

Smith, the prior litigation was a contract dispute that focused on the validity and

construction of HCP’s Confidentiality Agreement and the Ventas/Sunrise Purchase

Agreement, while this lawsuit is a tort action focusing on facts and law not at issue

in the Ontario proceedings, including significant wrongful conduct occurring after

February 21. Res judicata does not apply.


65

VENTAS’S CROSS-APPEAL

Standards of Review. The Court reviews de novo the district court’s grant of

judgment as a matter of law, Miller’s Bottled Gas v. Borg-Warner, 56 F.3d 726,

733 (6th Cir. 1995); determinations that the evidence was insufficient to create an

issue of fact for the jury, Littlejohn v. Rose, 768 F.2d 765, 770 (6th Cir. 1985);

choice-of-law determinations, Power-Tek Solutions Servs. v. Techlink, 403 F.3d

353, 357 (6th Cir. 2005); orders granting summary judgment, Hinchman v. Moore,

312 F.3d 198, 201 (6th Cir. 2002); and denials of prejudgment interest based on a

conclusion of law, IBM Corp. v. Omnicare, 162 F. App’x 432, 438-39 (6th Cir.

2006).

I. Ventas Is Entitled To A Trial On Punitive Damages.

The district court committed reversible error in granting HCP’s motion for

judgment as a matter of law on Ventas’s punitive damages claim. (Tr.11A 175:8-

176:6.) Instead of applying the current Kentucky statute, which authorizes

punitive damages when fraud is proven, the district court was misled by HCP’s

arguments to apply Kentucky’s long-ago-preempted common law.

Since 1988, punitive damages in Kentucky have been governed by KRS

411.184, which authorizes punitive damages upon proof by clear and convincing

evidence that the defendant from whom such damages are sought acted toward the

plaintiff “with oppression, fraud or malice.” Consistent with its plain language,


66

this statute has been interpreted as authorizing punitive damages in any fraud case

that is properly submitted to a jury. Hanson v. Am. Nat’l Bank & Trust, 865

S.W.2d 302, 310 (Ky. 1993) (superseded on other grounds) (“Once the jury had

found that the Bank intentionally misrepresented and deceived Hanson, an

instruction on punitive damages should have been given”); see also Anderson v.

Wade, 33 F. App’x 750, 759 (6th Cir. 2002) (upholding punitive damage award

under Kentucky law based on fraud).

Prior to 1988, the Kentucky common law standard for submitting punitive

damages to the jury required proof that the defendant’s conduct was “outrageous,

because of the defendant’s evil motive or his reckless indifference to the rights of

others.” See Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382, 389 (Ky.

1985). That standard was applied in all cases, including fraud. See Miller’s

Bottled Gas, 56 F.3d at 733 (applying Kentucky law to fraud occurring before

1988).

The enactment of KRS 411.184(2) changed that law. The statute “abrogated

the common law in Kentucky regarding punitive damages and eased the standard a

plaintiff must meet to have the issue of punitive damages submitted to a jury.” Id.

For most intentional torts not involving fraud, a plaintiff must still prove something

more than a tort—i.e., oppression or malice. See Young v. Vista Homes, 243

S.W.3d 352, 366-67 (Ky. App. 2007). But in cases where fraud is proven, because


67

fraud is one of the statutory bases for punitive damages, nothing more than proof

of the tort is required. See Hanson, 865 S.W.2d at 310; UPS v. Rickert, 996

S.W.2d 464, 470 (Ky. 1999).

HCP incorrectly argued below for the old Kentucky common law standard

requiring conduct offending reasonable sensibilities. (RE.230, 4-5.) HCP argued

“you need shocking of the conscience.” (Tr.8B 88:17-19, 89:20-29.) HCP cited

Judge Heyburn’s decision in Miller’s Bottled Gas as a correct statement of law,

without mentioning that this Court held, on appeal, that the standard applied by

Judge Heyburn had been superseded by KRS 411.184(2). (RE.230-1, 4-5.)

The court accepted HCP’s erroneous argument, commenting: “I know

you’ve got the argument of fraud and deceit, but I think . . . that the conduct has to

be something beyond that to support punitive damages.” (Tr.8B 68:7-11.) The

court later added: “You have to have something beyond the tortious act to create

the punitive damage. At least in Kentucky . . . the conduct has to be something

that . . . offends the sensibilities of normal people.” (Id. 80:21-81:4.) The court’s

ultimate ruling reflected the superseded Kentucky standard: there “would be no

punitive damage instruction based on my belief that there is insufficient evidence

to establish oppression and the kind of fraud and malice required of punitive

damages, which in my opinion is something more than what is required for the

tort.” (Tr.11A 175:8-18.)


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Once the court found sufficient evidence of fraud to submit that issue to the

jury, however, it was error not to submit punitive damages. Hanson, 865 S.W.2d

at 310; UPS, 996 S.W.2d at 470. Even if “oppression” or “malice” was required,

the evidence was sufficient.

This Court should remand for a new trial on punitive damages at which all

evidence relevant to punitive damages may be considered. See Cathey v. Johns-

Manville Sales, 776 F.2d 1565, 1581 (6th Cir. 1985) (instructing district court to

reconsider evidentiary rulings on remand for punitive damage trial).16

II. Ventas Is Entitled To The Full Measure Of Its Damages.

The district court erroneously refused to permit Ventas to seek damages for

three key elements of its injury: (1) Ventas’s increased cost in U.S. dollars of the

$15 component of the purchase price on April 26, 2007 as compared to the April 2,

2007 contracted-for closing date; (2) the actual cost in U.S. dollars on the date of

judgment of the $1.50 purchase price increase; and (3) the loss suffered by Ventas

because HCP’s improper interference delayed Ventas’s planned equity raise to

finance the acquisition.

16 As an example, evidence excluded at trial that Flaherty destroyed emails and changed his laptop and the company’s computer server on the day of the Ontario court ruling would be relevant to punitive damages. (RE.229.)


69

A. Ventas Should Recover The Increased Cost Of The Original $15 Purchase Price In U.S. Dollars.

Ventas contracted to acquire Sunrise on April 2, 2007 for $15 share, a total

of C$1,137,712,410 ($15 times 75,847,494 units), plus assumption of Sunrise’s

debt. (App.283.PTX.600.) HCP’s interference forced Ventas to delay the closing

to April 26. (Tr.2A 114:11-115:11; Tr.4A 111:23-117:10; Tr.4B 30:3-31:10.) By

April 26, 2007, the value of the U.S. dollar declined against the Canadian dollar,

from .89366 to .86565. (RE.193, Ex.A to Ex.30 ¶144; also at App.131.) The

C$1,137,712,410 price cost $31,867,325 more in U.S. dollars on April 26 than on

April 2. (Id.)

The court barred Ventas from seeking compensation for that increased cost,

reasoning that Ventas did not have “an expectancy that could be proven to acquire

the company on a specific date” and that “the risk of currency changes is a risk

everybody faced.” (Tr.7A 28:8-11, 50:15-17.) That ruling was erroneous as a

matter of law.

First, Ventas bargained for the contract right to close “on April 2, 2007.”

(App.284.PTX.600.) At minimum, it was a fact issue for the jury whether Ventas

had an expectation of closing on April 2.

Second, a decline in currency value is a direct and foreseeable consequence

of a delay in contractual performance and is compensable. See, e.g., Walther &

Cie v. U.S. Fid. & Guar., 397 F. Supp. 937, 945 (M.D. Pa. 1975) (decline in


70

currency exchange rate was “reasonably foreseeable”). As a general rule, a

tortfeasor should bear the risk of fluctuations in market prices during a period of

delay caused by its wrongful conduct. Payne v. Wood, 1995 WL 461786, at *7

(6th Cir. Aug. 2, 1995) (“allocating the risk of market fluctuation to the breaching

party”). Moreover, the increased currency cost was part of Ventas’s reasonable

costs to mitigate its loss by extending the shareholder vote on approval of the deal

at $16.50. RESTATEMENT §919 (victim of tort “is entitled to recover for . . . harm

suffered in a reasonable effort to avert further harm”); Australian Gold v. Hatfield,

436 F.3d 1228, 1237-38 (10th Cir. 2006) (damages awarded to tortious

interference plaintiff for cost of mitigating injury).

Because the amount of the increased cost between April 2 and April 26 was

not disputed (RE.321, 1), this Court should direct the district court to increase the

judgment by US$31,867,325, or remand for resolution of any issues of fact.

B. Ventas Should Recover The Increased Purchase Price Based On The “Judgment Date.”

The district court also erred in computing the U.S. dollar cost of the

additional purchase price Ventas paid (C$1.50 times 75,847,494 units) based on

the exchange rate in effect on the date of payment. (Tr.7A 51:4-52:13; Tr.7B 21:6-

24.) Based on the exchange rate on the date of judgment, those damages should

have been US$105,961,983, or US$4,289,176 more than awarded. (RE.474-2,

¶¶3-5.)


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The district court erroneously relied on Hicks v. Guinness, 269 U.S. 71

(1925), and Die Deutsche Bank Filiale Nurnberg v. Humphrey, 272 U.S. 517

(1926), to apply the exchange rate on the date of payment. (RE.379.) Those

decisions predated Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Several courts

have held that, after Erie, state law governs the appropriate currency rate in

diversity cases. See, e.g., Competex v. Labow, 783 F.2d 333, 334 (2d Cir. 1986)

(district court was “compelled to apply New York law”); El Universal, Compania

Periodistica Nacional v. Phoenician Imports, 802 S.W.2d 799, 802 n.2 (Tex. Ct.

App. 1990) (collecting post-Erie federal cases applying state law on currency

rates).

Because no Kentucky case deals squarely with this issue, Kentucky courts

would apply the Restatement.17 The RESTATEMENT (THIRD) OF FOREIGN

RELATIONS LAW §823 provides that “if the foreign currency has appreciated since

the injury or breach, judgment should be given at the rate of exchange applicable

on the date of judgment or the date of payment.” Id. §823 cmt. c.

This Court should apply Kentucky law and increase the damage award by

US$4,289,176 or remand for the district court to do so.

17 Ky. Legal Sys. Corp. v. Dunn, 205 S.W.3d 235, 237 (Ky. App. 2006); see also Buell v. Mitchell, 274 F.3d 337, 372 (6th Cir. 2001) (relying on RESTATEMENT).


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C. Ventas Should Have Been Allowed To Seek Damages Related To Its Planned Equity Raise.

HCP’s deceptive press release forced Ventas to delay, from February 22 to

May 18, 2007, its planned sale of equity to finance the acquisition.

(App.750.RE.193, Ex.65 ¶12; RE.193, Ex.A to Ex.30 ¶152; also at App.133.) As

a result, Ventas incurred substantially higher financing costs as its stock value

declined. (RE.193, Ex.A to Ex.30 ¶¶151-53; also at App.133.)

The district court granted summary judgment against these damages. The

court found sufficient evidence that HCP’s conduct caused Ventas to delay its

equity offering. (RE.220, 15.) Nonetheless, the court found insufficient evidence

that: (i) Ventas “intended to issue the shares in February,” and (2) “HCP’s acts

[were] a substantial factor in bringing about the harm.” (Id.) The court stated that

the evidence “does not suggest that HCP knew of any actual plan by Ventas[] to

issue equity in this transaction. Nor does any evidence suggest HCP would know

the timing on that issuance.” (Id.)

There was, however, sufficient evidence to raise disputed issues of material

fact regarding causation and foreseeability. “[D]isputes over proximate causality

are uniquely within the province of the jury.” Petrolia Corp. v. Elam, 1992 WL

31299, at *2 (6th Cir. Feb. 20, 1992).

Under Kentucky law, a tortfeasor is liable for all damages that “flow from

the wrongful act” even if “the particular consequences may not have been


73

contemplated.” Murphy ex rel. Reliford v. EPI Corp., 2004 WL 405754, at *4 (Ky.

App. Mar. 5, 2004) (citing W. Union Tel. Co. v. Ramsey, 88 S.W.2d 675, 677 (Ky.

1935)).18 A tortfeasor is also liable for all consequences resulting from its

wrongful conduct where that conduct increased the risk of the harm that the

plaintiff ultimately suffered. (See p.41.)

Courts have held defendants liable for decline in the value of plaintiff’s

property resulting from delay due to a defendant’s tortious conduct. See, e.g.,

Trident Inv. Mgmt. v. Amoco Oil, 194 F.3d 772, 779 (7th Cir. 1999) (defendant

liable for decline in market value of property where “defendant’s wrongful act

impedes [market] exit, and exit can occur only later when prices are lower”);

Crestar Mortgage v. Shapiro, 1995 WL 542228, at *3 (E.D. Pa. Sept. 7, 1995)

(defendant liable for decline in property value due to delay); see also

RESTATEMENT §442A, ill. 1 (railroad that negligently delays shipment is liable for

injury to product caused by cold weather during delay).

Ventas presented ample evidence that it planned to raise equity in late

February 2007 to finance the acquisition. That included an affidavit from its CEO,

18 HCP relied below on Oregon Steel Mills v. Coopers & Lybrand, 83 P.3d 322 (Or. 2004), but a subsequent decision limited that case to its facts. In Bailey v. Lewis Farms, 171 P.3d 336, 344 (Or. 2007), the same court cautioned that Oregon Steel should not be cited as “an apparent rule of law” on the foreseeability of harm caused by a market decline.


74

a presentation to Ventas’s Board, and contemporaneous communications with

Standard & Poor’s in January 2007 that it intended to use an equity raise to fund at

least $1 billion of the acquisition. (App.748-50, 844-46, 870.RE.193, Ex.65 ¶¶4-6,

9, Ex.C.)19 Ventas also showed it informed Sunrise that it was “hell bent” on

proceeding with the equity raise, and it accelerated the release of its earnings and

filing of its Form 10-K to February 21 for that purpose. (App.750, 877-80.RE.193,

Ex.65 ¶¶10-11, Exs.D-E.)

There was also ample evidence of foreseeability. On January 18, 2007,

HCP’s investment bankers sent HCP an analysis showing that Ventas would

finance the acquisition through $1.059 billion of “New Common Equity Issued.”

(App.366.RE.193, Ex.104, also at PTX.772.) At trial, Mr. Flaherty testified he

expected Ventas’s stock price would go down upon HCP’s issuance of the Feb. 14

press release. (Tr.4B 154:9-20.)

This Court should affirm the jury award, but remand for a further trial at

which Ventas may prove its damages from the increased cost of financing the

transaction.

19 Even if the precise date for the sale was not certain, that would not defeat Ventas’s claim. See Madison Fund v. Charter, 427 F. Supp. 597, 608 (S.D.N.Y. 1977) (awarding damages for decline in stock price though “there can be no certainty” when Madison would have sold if it had been free to do so); Duncan v. Theratx, 775 A.2d 1019, 1022 (Del. 2001) (same ruling).


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III. The District Court Incorrectly Refused To Apply Prejudgment Interest.

The district court erred in refusing to award prejudgment interest. Under

Kentucky law, prejudgment interest must be awarded as a matter of right when

damages are “liquidated.” Nucor v. GE, 812 S.W.2d 136, 141 (Ky. 1991).

Damages that are readily calculable from contract provisions are

“liquidated” for purposes of prejudgment interest. Faulkner Drilling v. Gross, 943

S.W.2d 634, 638 (Ky. App. 1997) (amounts paid under fraudulently induced

contract was “liquidated” because Kentucky requires only “some certainty as to the

amounts”); see also Hale v. Life Ins. Co. N. Am., 795 F.2d 22, 25 (6th Cir. 1986)

(claim liquidated under Kentucky law where amount of coverage was defined by

contract but insurer disputed liability).

Accordingly, this Court should direct the district court to amend the

judgment to add prejudgment interest on the appropriate purchase price damages.

CONCLUSION

This Court should affirm the judgment for Ventas, but remand for a trial on

punitive damages and damages resulting from the delay in financing Ventas’s

purchase. This Court should also increase the damage award by $32,867,325 and

$4,289,176 to account correctly for exchange rates or direct the district court to do

so, and should direct the district court to award prejudgment interest on the

appropriate purchase price damages.


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April 12, 2010 Respectfully Submitted, By: /s/ David J. Bradford Counsel for Ventas, Inc. David J. Bradford Terri L. Mascherin Daniel J. Weiss JENNER & BLOCK LLP 353 N. Clark Street Chicago, IL 60654-3456 Tel: (312) 222-9350 Fax: (312) 527-0484

Eric L. Ison Holland N. McTyeire V GREENEBAUM DOLL & MCDONALD PLLC 3500 National City Tower 101 South Fifth Street Louisville, KY 40202 Tel: (502) 589-4200 Fax: (502) 587-3695

Paul M. Smith JENNER & BLOCK LLP 1099 New York Avenue, NW Suite 900 Washington, DC 20001-4412 Tel: (202) 639-6000 Fax: (202) 639-6066


1a

CERTIFICATE OF COMPLIANCE

I certify that this brief complies with the type-volume limitation of Fed. R.

App. P. 28.1(e)(2)(B) because it contains 16,496 words, excluding the parts of the

brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief also complies with

Fed. R. App. P. 32(a)(5) because it has been prepared in a proportionally spaced

typeface using Times New Roman 14-point font.

Dated: April 12, 2010

s/ David J. Bradford Counsel for Ventas, Inc.


2a

CERTIFICATE OF SERVICE

I hereby certify that, on the 12th day of April, 2010, I electronically filed the

foregoing by using the CM/ECF system, which will send a notice of electronic

filing to ECF registered participants.

s/ David J. Bradford Counsel for Ventas, Inc.


3a

DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS

Document Description Record Entry No. May 3, 2007 Complaint .......................................................................................RE.1 August 6, 2007 Ventas Response to HCP’s Motion to Dismiss........................RE.28 December 19, 2007 Memorandum Opinion and Order

Regarding HCP’s Motion to Dismiss ......................................................RE.34 March 25, 2009 Memorandum Opinion and Order

Regarding Motion for Judgment on the Pleadings................................RE.154 June 8, 2009 Ventas Opposition to HCP’s Motion

for Summary Judgment .........................................................................RE.191 June 8, 2009 Ventas Response to HCP’s Statement of Facts

and Statement of Additional Facts .......................................................RE.193 July 16, 2009 Memorandum Opinion Sustaining in Part

and Denying in Part the Parties’ Motions for Summary Judgment.......RE.220 August 4, 2009 Ventas Motion

for Jury Instruction Regarding HCP’s Spoliation of Evidence .............RE.229 August 8, 2009 HCP Motion in Limine to Preclude

Evidence or Argument on Punitive Damages .......................................RE.230 August 11, 2009 HCP Proposed Jury Instructions ..........................................RE.272 August 16, 2009 HCP Response to Ventas’s

Statement of Special Damages ..............................................................RE.321 August 27, 2009 Memorandum Opinion and Order

Setting Exchange Rate for Determining Damages................................RE.379 September 4, 2009 HCP Objections to Improper Summation Argument

and Request for Corrective Instruction..................................................RE.441


4a

September 3, 2009 Final Jury Instructions ......................................................RE.442 September 4, 2009 Order Denying HCP’s Motion

for Curative Instructions........................................................................RE.449 September 4, 2009 Memorandum Opinion re Jury Instruction .......................RE.450 September 22, 2009 Affidavit of Thomas Z. Lys in Support

of Ventas Rule 59(e) Motion (Exhibit 1) ..............................................RE.474

September 22, 2009 HCP Motion for Judgment as a Matter of Law or For a New Trial............................RE.475

October 13, 2009 Ventas Response to HCP’s Motion

for Judgment as a Matter of Law or For a New Trial............................RE.501 November 17, 2009 Memorandum Opinion Denying HCP’s Motion

for Judgment as a Matter of Law or for a New Trial ............................RE.520 November 25, 2009 Ventas Notice of Appeal .................................................RE.527 Trial Transcripts:

Volume 1B.............................................................................................RE.360 Volume 2A.............................................................................................RE.338 Volume 2B.............................................................................................RE.361 Volume 3A.............................................................................................RE.339 Volume 3B.............................................................................................RE.340 Volume 4A.............................................................................................RE.362 Volume 4B.............................................................................................RE.456 Volume 5A.............................................................................................RE.374 Volume 5B.............................................................................................RE.458


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Volume 6A.............................................................................................RE.457 Volume 7A.............................................................................................RE.386 Volume 7B.............................................................................................RE.464 Volume 8B.............................................................................................RE.399 Volume 9A.............................................................................................RE.466 Volume 9B.............................................................................................RE.444 Volume 10A...........................................................................................RE.467 Volume 11A...........................................................................................RE.446 Volume 11B...........................................................................................RE.468 Volume 12A...........................................................................................RE.469 Volume 12B...........................................................................................RE.447 Testimony of Christopher John Feeney (deposition excerpts played at trial) ......................................................RE.481 Testimony of Guy Lamontagne (deposition excerpts played at trial) ......................................................RE.482 Testimony of Thomas D. Kirby (deposition excerpts played at trial) ......................................................RE.483 Testimony of Thomas Newell (deposition excerpts played at trial) ......................................................RE.484 Testimony of Douglas MacLatchy (deposition excerpts played at trial) ......................................................RE.485 Testimony of Theodore Bigman (deposition excerpts played at trial) ......................................................RE.486


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Testimony of Joseph Smith (deposition excerpts played at trial) ......................................................RE.487


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