Opinion ID: 216819
Heading Depth: 1
Heading Rank: 2

Heading: discussionappeal by hcp

Text: The Court first turns to the issues that HCP raises on appeal. HCP argues that the district court erroneously: 1) concluded that Ventas' claims were not barred by res judicata; 2) instructed the jury on the elements of improper interference and but-for causation; and 3) denied HCP judgment as a matter of law on the element of causation. Because we find that these arguments lack merit, we AFFIRM the judgment below in its entirety.
We begin our analysis with HCP's argument that Ventas' claim is barred by the doctrine of res judicata. According to HCP, Ventas could haveand should haveasserted its tortious interference claims when it filed its application in the Ontario Superior Court on February 21, 2007. The district court rejected this argument, and we now AFFIRM.
The district court's application of the doctrine of res judicata is reviewed de novo. Bragg v. Flint Bd. of Educ., 570 F.3d 775, 776 (6th Cir.2009). Under Kentucky law, [4] res judicata consists of two distinct components, claim preclusion and issue preclusion. Kentucky courts generally follow the Restatement (Second) of Judgments (1982) for purposes of applying res judicata. [5] This appeal raises only claim preclusion, which, under Kentucky law, bars the litigation of entire claims that were brought or should have been brought in a prior action. Morgan v. Standard Elec. Co., Inc., 62 Fed.Appx. 110, 111 (6th Cir.2003). Under Kentucky law, for claim preclusion to bar a subsequent action: First, there must be identity of parties. Second, there must be identity of the two causes of action. Third, the action must be decided upon its merits. In short, the rule of res adjudicata does not act as a bar if there are different issues or the questions of law presented are different. Likewise, it has long been recognized that a party may not split his cause of action, therefore, if a cause of action should have been presented and the party failed to do so and the matter should again arise in another action, it will be held that the first action was res adjudicata as to all causes that should have properly been presented. Newman v. Newman, 451 S.W.2d 417, 419 (Ky.1970).
The district court concluded that res judicata is inapplicable because Ventas' claim of tortious interference was not ripe on February 21, 2007, when Ventas filed its application in the Ontario Superior Court. The district court relied upon the well-settled principle that res judicata cannot be used to cut off a cause of action before it accrues. Watts By & Through Watts, 957 S.W.2d at 237. On appeal, the parties dispute whether Ventas' claims of tortious interference were ripe on February 21, 2007. The parties and the district court, however, have overlooked the well-settled rule that an action for declaratory relief does not have preclusive effect in a subsequent litigation between the same parties. Under § 33 of the Restatement (Second) of Judgments, [a] plaintiff who wins declaratory judgment may go on to seek further relief, even in an action on the same claim which prompted the action for a declaratory judgment. This further relief may include damages which had accrued at the time the declaratory relief that could have been requested initially. Restatement (Second) of Judgment § 33, cmt. (c). The Restatement expressly permits claim splitting where, as here, the first action sought only declaratory relief. Id. (stating that a declaratory action determines only what it actually decides and does not have a claim preclusive effect on other contentions that might have been advanced.). Consistent with Kentucky's general adherence to the Restatement ( see supra note 5 (collecting cases)), Kentucky has adopted essentially the same rule [as Restatement § 33], even though Kentucky has done so without expressly referencing the Restatement. See Andrew Robinson Int'l, Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 56 (1st Cir.2008) (discussing Kentucky law). In Cooke v. Gaidry, 309 Ky. 727, 218 S.W.2d 960 (1949), for example, the Kentucky high court held that suits for declaratory judgments under state law do not fall within the general rule that a former judgment is conclusive not only of all matters actually adjudicated thereby, but in addition, as to all matters which could have been presented for adjudication in the original action. Id. at 961-62 (holding that prior declaratory judgment action on a lease did not preclude a subsequent action for damages). The rule as stated in Cooke is oft-repeated and is now well-settled Kentucky law. [6] See, e.g., Holbrook v. Shelter Ins. Co., 186 Fed.Appx. 618, 622 (6th Cir.2006); City of Paducah v. Elec. Plant Bd. of the City of Paducah, 449 S.W.2d 907, 910 (Ky.1970). It is undisputed in the instant case that the prior proceedings in Canada were declaratory in nature. (HCP Br. at 13; Ventas Br. at 62.) In fact, the Ontario Superior Court expressly stated that Ventas applie[d] for a declaration as to the parties' obligations under the various agreements. See Ventas, Inc. v. Sunrise Senior Living Real Estate Invest. Trust, 07-CL-6893 (Ont.Sup.Ct. Mar. 6, 2007). It is thus clear that the prior Ontario action does not have preclusive effect under Kentucky law, [7] and does not bar Ventas' present tort action against HCP. See Stericycle, Inc. v. City of Delavan, 120 F.3d 657, 659 (7th Cir.1997) (The effect of such a declaration ... is not to merge a claim in the judgment or to bar it.) (internal quotation marks and citation omitted). Accordingly, we AFFIRM the decision of the district court decision as a matter of Kentucky law, declining to accord preclusive effect to the prior Canadian litigation. See Angel v. Kentucky, 314 F.3d 262, 264 (6th Cir.2002) ([W]e are free to affirm the judgment on any basis supported by the record.).
We now turn to HCP's argument that the district court erred as a matter of Kentucky law in its instructions to the jury. Specifically, HCP asserts that the district court improperly instructed the jury on two of the elements of tortious interference under Kentucky law, namely improper interference and but-for causation. As we explain below, we find no error in the district court's jury instructions.
We review the legal accuracy of jury instructions de novo, United States v. Blanchard, 618 F.3d 562, 571 (6th Cir. 2010), and the denial of a proposed jury instruction for abuse of discretion. See United States v. Adams, 583 F.3d 457, 468-69 (6th Cir.2009). Reversal of a judgment on the basis of an erroneous jury instruction may occur only if the instructions, viewed as a whole, were confusing, misleading, or prejudicial. United States v. Harrod, 168 F.3d 887, 892 (6th Cir.1999) (internal quotation marks and citation omitted).
Because the district court's jury instructions were based on Kentucky law, we first review the relevant state law on which the jury was instructed. Under Kentucky law, liability for tortious interference arises when a party improperly interferes with a valid expectancy of another. See Nat'l Collegiate Athletic Ass'n By and Through Bellarmine College v. Hornung, 754 S.W.2d 855, 857 (Ky.1988). In Hornung, the Kentucky Supreme Court first recognized the tort, expressly adopting §§ 766, 767 and 773 of the Restatement (Second) of Torts. Id. Section 766B sets forth the basic elements of a tortious interference claim: § 766B: Intentional Interference with Prospective Contractual Relation One who intentionally and improperly interferes with another's prospective contractual relation ... is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation. Restatement (Second) of Torts § 766B (emphasis added). Section 767 elaborates on the element of improper interference set forth in § 766B: § 767. Factors In Determining Whether Interference Is Improper In determining whether an actor's conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors: (a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor's conduct to the interference and (g) the relations between the parties. Id. § 767. Summarizing these factors, the Kentucky Supreme Court has held that improper interference under § 766B requires the plaintiff to `show malice or some significantly wrongful conduct.' Leo J. Brielmaier Co. v. Newport Hous. Auth., 173 F.3d 855 (6th Cir.1999) (table) (quoting Hornung, 754 S.W.2d at 859); Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 487 (Ky.1991) (defining unlawful means as including fraud, deceit, and coercion). In the case of a tortious interference claim between competitors, § 768 holds plaintiffs to a more exacting standard. Section 768 makes clear that competition is not an improper basis for interference, Restatement (Second) of Torts § 768, cmt. (a), and provides, in pertinent part: § 768. Competition As Proper or Improper Interference (1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor ... does not interfere improperly with the other's relation if (a) the relation concerns a matter involved in the competition between the actor and the other and (b) the actor does not employ wrongful means and (c) his action does not create or continue an unlawful restraint of trade and (d) his purpose is at least in part to advance his interest in competing with the other. Restatement (Second) of Torts § 768 (emphasis added). It is unclear whether the Kentucky Supreme Court would apply § 768, or how § 768 may otherwise impact the factors set forth in § 767.
HCP requested that the district court instruct the jury under § 768. Ventas objected, arguing that § 767 sets forth the proper legal standard. The district court noted that Kentucky law was unclear on this point, and proceeded to predict how Kentucky courts would resolve which section properly articulates the analysis for the facts at issue in this case. (R. 450 at 2); see also Bailey v. V & O Press Co., Inc., 770 F.2d 601, 604 (6th Cir.1985) (stating that federal courts should look to all relevant data when predicting a state supreme court's decision, including state appeals court rulings, restatements of the law, academic publications, and the majority rule). HCP argued below, as it does now on appeal, that the commentary to § 767 directs courts to apply § 768 in the case of a tortious interference claim between competitors. See Restatement (Second) of Torts § 767, cmt. (a). The relevant commentary states that, in cases between competitors, § 768 supplant[s] the generalization expressed in § 767. Id. The district court held as a matter of Kentucky law that the appropriate use of sections 767 and 768 is to apply section 768 as the test for whether the defendant's conduct was improper. However, section 767 can still be used to illuminate the requirements of section 768. (R. 450 at 4.) The district court accordingly instructed the jury pursuant to § 768, but used some of the factors enumerated in section 767 [as] helpful guideposts for examining the alleged wrongfulness of HCP's actions. ( Id. ) In its instructions to the jury, the district court first set forth the elements that Ventas was required to prove to prevail on its tortious interference claim: One, Ventas had a reasonable likelihood or probability of acquiring Sunrise [ ] at $15 per unit; two, HCP knew about the probable acquisition of Sunrise []; three, HCP intentionally and improperly interfered with Ventas'[] acquisition of Sunrise [ ] at $15 per unit; four, HCP's improper interference prevented Ventas from acquiring Sunrise [ ] at $15 per unit; and five, HCP's improper interference was a substantial factor in causing Ventas'[ ] damages. (Tr. 12B at 100.) The district court then turned to the issue of competition: Ventas and HCP were business competitors generally, and were competing here to acquire Sunrise [ ]. Improper interference, as referenced in element number three, has a special meaning among competitors. In these circumstances then, the only way to find in favor of Ventas is to find that HCP employedI put it in quotes because it's a defined termsignificantly wrongful means to interfere with Ventas'[] acquisition of Sunrise [ ] at $15 per unit. [8] For purposes of this instruction, significantly wrongful means includes conduct such as fraudulent misrepresentation, deceit and coercion. Among other things, you may consider the parties' conduct, motive and the circumstances of the transaction to illuminate whether HCP's conduct amounts to significantly wrongful means. To the extent you consider a party's motive in causing harm, it must be based on actual evidence of motive rather than a witness'[ ] opinion of another's motive. Now, as part of element number 3 ... Ventas must also show that HCP intended to improperly interfere with the acquisition of Sunrise []. As the word intent is used there, HCP's conduct must be intentional ... HCP's conduct was intentional if its purpose was to improperly interfere with Ventas'[] acquisition of Sunrise [ ] or if HCP knew the improper interference was certain or substantially certain to occur. ( Id. at 101-02 (paragraph breaks added).) Additionally, the district court gave the following instruction concerning the Canadian litigation between the parties: The parties to this action have previously resolved related issues in the Canadian court system. The important facts of these cases are as follows: In the week after HCP made its $18 topping bid, Sunrise [ ] sought guidance from a Canadian court in interpreting its confidentiality agreement with HCP and its purchase agreement with Ventas. In that case Sunrise [ ] and HCP generally took the position that the confidentiality agreement and the purchase agreement did not prohibit HCP's $18 bid. Ventas took the opposite position. The Canadian court found: One, HCP's confidentiality agreement precluded it from making the $18 topping bid. By making the bid, HCP breached its confidentiality agreement with Sunrise [ ]. Two, the purchase agreement between Sunrise [] and Ventas prohibited Sunrise [] from submitting HCP's bid to its unitholders. Finally, three, Sunrise['s] auction process leading to the Ventas purchase agreement was objectively reasonable and fair. ( Id. at 103.) The district court then discussed the relevance of the breach of contract: 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 the other evidence in determining whether HCP engaged in improper interference. ( Id. at 103-04.)
HCP attacks the jury instructions on four grounds: 1) that the district court improperly blended §§ 767 and 768 of the Restatement (Second) of Torts; 2) that the instructions erroneously permitted the jury to consider HCP's breach of its contract with Sunrise as improper conduct; 3) that the district court permitted the jury to consider motive without providing the proper legal standard; and 4) that the district court failed to adequately explain the element of causation. We now review each of these assignments of error, and reject each as meritless.
HCP first argues that the jury instructions were erroneous because the district court blended §§ 767 and 768 instead of relying exclusively on § 768. Before considering the propriety of the district court's hybrid approach, we must consider the threshold issue of whether the district court properly looked to § 768 in the first instance. As explained below, we find no error in the district court's decision to apply § 768 as a matter of Kentucky law. Although the Kentucky Supreme Court has not considered whether to apply § 768 in cases involving competitors, the reported cases on the issue have predicted that the state high court would apply § 768. See, e.g., Brake Parts, Inc. v. Lewis, Nos. 09-132 & 10-212, 2011 WL 42973, at  (E.D.Ky. Jan. 6, 2011) (Kentucky courts would utilize the Section 768 factors as the appropriate factors for evaluating the legality of competitive conduct.); Midwest Agency Servs., Inc. v. JP Morgan Chase Bank, N.A., No. 2:09-165, 2010 WL 935450,  (E.D.Ky. Mar. 11, 2010) (citing AMC of Louisville, Inc. v. Cincinnati Milacron, Inc., No. 3:97-CV-343, 2000 WL 33975582, at -8 (W.D.Ky. Jan. 25, 2000) (relying on Section 768 in considering a tortious interference claim between competitors under Kentucky law)). We believe that these decisions make the proper prediction. Kentucky courts generally follow the Restatement (Second) of Torts, which, of course, includes Section 768, and nothing of which we are aware suggests that Kentucky courts would not apply that section under the facts of this case. Indeed, the Restatement's heightened scrutiny of claims between competitors under § 768 is consistent with Kentucky's strong interest in robust competition. [9] See, e.g., ATC Distrib. Grp., Inc. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700, 717 (6th Cir.2005) ([S]imply attempting to advance one's own legitimate economic interests at the expense of another's interests does not constitute malice.) (applying Kentucky law); Brooks v. Patterson, 234 Ky. 757, 29 S.W.2d 26, 29 (1930) (distinguishing cases where the alleged injury resulted from an outgrowth of competition in business from those where it was brought about by the exercise of either fraud or force.); accord Carvel Corp. v. Noonan, 350 F.3d 6, 18-20 (2d Cir.2003) (stating that [t]he Restatement's distinction between competitors and non-competitors is intended to strike a balance between protecting economic relationships and encouraging competitive behavior in the market.). Having determined that Kentucky law would look to § 768 in cases between competitors, we now turn to HCP's argument that the district court erred by also considering § 767. Specifically, HCP contends that it was error to instruct the jury on certain factors listed in § 767 to define significantly wrongful means within the meaning of § 768. HCP's argument relies principally on commentary to § 767, which states that § 768 supplant[s] § 767 in cases of competitors. See Restatement (Second) of Torts § 767, cmt. (a). HCP contends that the word supplant is dispositive and renders § 768 inapplicable to claims as between competitors. We disagree with HCP's myopic reading of, and unreasonable reliance on, one word in the commentary. [10] Section 768 does not define wrongful means, and in fact places no limitation whatsoever on the factors that a jury might consider to determine whether the interference of a competitor was wrongful. Without any instruction regarding the meaning of significantly wrongful conduct, the jury would have been left without any guidance. See Bucyrus-Erie Co. v. Gen. Prods. Corp., 643 F.2d 413, 418 (6th Cir.1981) (The purpose of jury instructions is to inform the jury on the law and to provide proper guidance and assistance in reaching its verdict.). In seeking guidance, the district court properly looked to § 767, as many other courts have done, to illuminate the meaning of wrongful conduct under § 768. See, e.g., Franklin Music v. Am. Broad. Cos., Inc., 616 F.2d 528, 545 (3d Cir.1979); Buztronics, 2005 WL 1865512, at ; White Sands Grp., L.L.C. v. PRS II, L.L.C., 32 So.3d 5, 18-19 (Ala.2009); Siren, Inc. v. Firstline Sec., Inc., No. 06-1109, 2006 WL 3257440, at  (D.Ariz. May 17, 2006); RTL Distrib., Inc. v. Double S Batteries, Inc., 545 N.W.2d 587, 591 (Iowa Ct.App.1996); Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190 Ill.App.3d 524, 137 Ill.Dec. 409, 546 N.E.2d 33, 37 (1989). Part of the same Restatement, § 767 immediately proceeds § 768, and both sections relate to tortious interference. Section 768 stands simply as special application of the factors determining whether an interference is improper or not, as stated in § 767. Restatement (Second) or Torts § 768, cmts. (a) (Like § 767, this Section speaks of an interference that is improper or not.) and (b). Section 768 itself refers to § 767 in its discussion of wrongful means. See Restatement (Second) of Torts § 768, cmt. (b) (The predatory means discussed in § 767, Comment c, physical violence, fraud, civil suits and criminal prosecutions, are all wrongful in the situation covered by this Section.). Moreover, § 767 specifically defines improper interference, a phrase also used in § 768, and that the Kentucky Supreme Court has interpreted to mean wrongful, the operative word under § 768. Cf. Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 76 L.Ed. 1204 (1932) (noting the natural presumption that identical words used in different parts of the same act are intended to have the same meaning.). Finally, we address HCP's policy argument that the district court's [ ] effort to `blend' § 767 with § 768 diluted the competitive protections § 768 is designed to provide. (HCP Br. at 50.) We do not agree. To the extent the district court's hybrid approach may have increased the likelihood of liability under the facts of this case, the approach did not dilute the competitive protections of § 768. Robust competition may also require regulation, and unfair competitive practices certainly do not fall within the protections of § 768. Although courts should be circumspect in adjudicating claims between competitors, wrongful and anti-competitive conduct should not be insulated from liability. Indeed, the public interest in full and fair competition is furthered by imposing liability on a market player, such as HCP, for fraudulently leveraging a public market to sabotage a competitor, as liability for such conduct will deter similar future conduct and promote economic certainty in the marketplace. Under these circumstances, we find that the district court properly resolved the interplay between §§ 767 and 768 as a matter of Kentucky law by instructing the jury pursuant to § 768 and also using certain factors listed in § 767 to explicate § 768.
HCP next argues that the district court erred by allowing the jury to consider HCP's breach of its Standstill Agreement with Sunrise as wrongful conduct sufficient to establish improper interference. HCP's objection focuses on the following instruction given by the district court: 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 the other evidence in determining whether HCP engaged in improper interference. (Tr. 12B at 103-04.) Instead of this instruction, HCP had requested an instruction that its breach of the Standstill Agreement with Sunrise does not constitute wrongful means for purposes of Ventas' [ ] claim. HCP argues that the district court's instruction was erroneous because a breach of contract with a third party is not sufficient to satisfy the requirement of improper interference. See, e.g., Windsor Sec., Inc. v. Hartford Life Ins. Co., 986 F.2d 655, 664 (3d Cir.1993). HCP's argument fails as a matter of fact, and as a matter of law. First, HCP's argument rests on a misreading of the record: the district court did not permit the jury to consider HCP's breach of the Standstill Agreement with Sunrise as sufficient to establish significantly wrongful conduct. The jury instructions explicitly defined significantly wrongful means to include fraudulent misrepresentation, deceit and coercion, and stated that breach of the Standstill Agreement alone is not sufficient to establish tortious interference. (Tr. 12B at 103-04.) Second, the district court did not commit legal error by permitting the jury to consider HCP's breach of its contract with Sunrise along with the other evidence in determining whether HCP engaged in improper interference. ( Id. at 104.) Although the relevance of a breach of contract with a third party in a tortious interference action has not been examined by many courts, other courts have similarly held that such a breach is evidence of improper interference. See, e.g., Kapunakea Partners v. Equilon Enters. LLC, 679 F.Supp.2d 1203, 1217 (D.Haw. 2009); Foam Supplies, Inc. v. Dow Chem. Co., No. 4:05CV1772, 2008 WL 3159598, at  (E.D.Mo. Aug. 4, 2008); Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 306 (Utah 1982); Island Air, Inc. v. LaBar, 18 Wash.App. 129, 566 P.2d 972, 980 (1977). HCP cites no case that holds a breach of contract with a third party is completely irrelevant. As the district court observed, to ignore HCP's breach of its contract with Sunrise would create an artificial reality within the case. (R. 520 at 9.) HCP's breach of its Standstill Agreement with Sunrise illuminates the anti-competitive activities in which HCP engaged and is central to an understanding of Ventas' allegations of fraud and deception. As Ventas argued at trial, HCP misled the market by making public statements that were contrary to its obligations under the Standstill Agreement without disclosing the existence of the agreement or other relevant information. See, e.g., Hornung, 754 S.W.2d at 859 ([M]alice may be inferred in an interference action by proof of lack of justification.). Accordingly, because the jury instruction regarding the relevance of HCP's breach the Standstill Agreement was an accurate and clear statement of the law, HCP's argument is without merit.
HCP next argues that the district court erred by allowing the jury to consider HCP's motive without also advis[ing] the jury ... that the defendant's motive is not a sufficient basis for liability unless the defendant acted solely to inflict harm. (HCP Br. at 56 (emphasis omitted).) As described above, the district court instructed the jury, in pertinent part, as follows: Among other things, you may consider the parties' conduct, motive and the circumstances of the transaction to illuminate whether HCP's conduct amounts to significantly wrongful means. (Tr.12B at 101-02.) HCP contends that the district court should have instructed the jury that HCP did not act solely to injure Ventas. HCP asserts that the jury was left free to punish HCP [because HCP] may have been motivated not merely to acquire Sunrise, but also in part to disadvantage Ventas. (HCP Rep. at 33-34.) This, according to HCP, would not amount to improper interference because a defendant does not engage in improper interference if his purpose is at least in part to advance his interest in competing with the other. Restatement (Second) of Torts § 768(1)(d). We find HCP's argument unavailing. The district court did not instruct the jury that it may find improper interference on the basis of motive alone. Nor do the jury instructions reasonably suggest that the jury was permitted to do so. Instead, the district court instructed the jury that the only way to find in favor of Ventas is to find that HCP employedI put it in quotes because it's a defined term`significantly wrongful means' to interfere with Ventas' [ ] acquisition of Sunrise [ ] at $15 per unit. (Tr. 12B at 101.) The district court defined significantly wrongful means to include fraudulent misrepresentation, deceit and coercion. It was only after defining significantly wrongful means that the district court instructed the jury that HCP's motive may be relevant in determining whether it engaged in the type of conduct necessary to create liability. See, e.g., United Parcel Serv. Co. v. Rickert, 996 S.W.2d 464, 468 (Ky.1999) (noting that intent is relevant to fraud under Kentucky law). Nothing in the district court's jury instructions suggested that any degree of motive, without more, would be sufficient to establish improper interference. Accordingly, because the jury instructions regarding the relevance of HCP's motive were an accurate and clear statement of the law, HCP is not entitled to relief on the basis of this instruction.
Finally, HCP argues that the district court failed to adequately instruct the jury on the element of but-for causation. HCP requested the following jury instruction: If you are satisfied from the evidence that other factors, including truthful information in HCP's offer and press release, would have been sufficient to cause Sunrise['s] unitholders not to accept Ventas'[] $15 offer, then you will find for HCP[.] (R. 430 at 4 (emphasis added).) The district court declined to give the proposed instruction, and instead instructed the jury as follows: Now, in element 4, to find that HCP prevented Ventas from acquiring Sunrise [] at $15 a unit, you must determine that but for HCP's improper interference, Ventas would have acquired Sunrise [] at $15 per unit. This but-for test means that if HCP's improper interference had never occurred, Ventas would have acquired Sunrise [ ] at $15 a unit. (Tr.12B at 102-03.) HCP argues that the district court's instruction was erroneous because it did not require the jury to separate the effect of the allegedly false representations from that of truthful statements. (HCP Br. at 59.) We are unpersuaded by HCP's argument. Consistent with HCP's request during trial, the district court instructed the jury that in order to recover, Ventas must show that HCP's improper interference, if any, was the but-for cause of Ventas' injury. This is an accurate statement of Kentucky law. The district court previously instructed the jury with regard to improper interference, and it was properly left to the jury to determine whether any of HCP's conduct amounted to improper interference, and whether any such improper interference was the but-for cause of Ventas' injury. Although the district court did not specifically enumerate truthful information as a relevant consideration, as HCP requested, it was not an abuse of discretion for the district court to decline to give this specific instruction. The instruction as given was clear and accurate, and enumerating one factor that may favor HCP, without enumerating others that may favor Ventas, could have unduly prejudiced Ventas by suggesting to the jury that the press release indeed contained independently truthful information. Accordingly, the district court did not err in its instructions regarding the element of causation.
We next turn to the sufficiency of the evidence. HCP contends that the district court erred in denying its motion for judgment as a matter of law on the element of causation under Rule 50(b) of the Federal Rules of Civil Procedure. For the reasons discussed below, we find that the jury verdict on the element of causation was supported by sufficient evidence.
Our case law establishes that in diversity cases, where the Rule 50(b) motion is based on a challenge to the sufficiency of the evidence, a state-law standard of review applies. [11] Hartford Fin. Servs. Grp., Inc. v. Cleveland Pub. Library, 168 Fed.Appx. 26, 30-31 (6th Cir. 2006); see also In re Brown, 342 F.3d 620, 626 (6th Cir.2003) (citing Morales v. Am. Honda Motor Co., Inc., 151 F.3d 500, 506 (6th Cir.1998)). Under Kentucky law, a motion for a directed verdict ... should be granted only if there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable minds could differ. In deciding such a question, every favorable inference which may reasonably be drawn from the evidence should be accorded the party against whom the motion is made. Morales, 151 F.3d at 506 (internal quotation marks and citations omitted).
HCP argues that Ventas presented insufficient evidence of but-for causation, which required Ventas to prove that, but for HCP's improper interference, Ventas would have acquired Sunrise [ ] at $15 per unit. (Tr. 12B at 102-03 (jury instruction).) According to HCP, Ventas failed to prove causation in two principal ways: first, Ventas did not separate the impact of any misrepresentations by HCP from that of any truthful disclosures by HCP; and second, HCP corrected any misrepresentations in the market prior to the unitholder vote on Ventas' offer. We address each argument in turn.
In its first argument, HCP contends that Ventas was required to prove that significantly wrongful conductalleged misrepresentations, not truthful disclosurescaused its injury, and that Ventas failed to carry this burden. (HCP Br. at 27-28.) Put another way, HCP asserts that Ventas failed to offer any proof that would allow the jury to separate the impact of any misrepresentations from that of any truthful statements. This is significant, HCP argues, because its February 14, 2007 press release contained the truthful statement that HCP was willing to pay $18.00 per unit for Sunrise. HCP asserts that the unitholders rejected Ventas' initial offer for the obvious reason that HCP was willing to pay more. ( Id. at 27.) Investor reliance on such a truthful statement, HCP continues, is insufficient to support the verdict because it cannot amount to improper interference. ( Id. at 27-28 (citing Restatement (Second) of Torts § 772(a) & cmt. (b)).) HCP relies on this Court's decision in Technology for Energy Corp. v. Scandpower, 880 F.2d 875 (6th Cir.1989). In Scandpower, we held that the presence of a truthful statement that accompanied a false statement defeated the element of causation in that case because the truthful statement alone was sufficient to `doom' [the] bid. Id. at 878. HCP argues that this case is analogous to Scandpower as no Sunrise unitholder testified that its vote was affected by any alleged misrepresentation. (HCP Br. at 31.) We find HCP's argument unavailing. HCP's argument rests on the faulty factual premise that HCP was willing to pay $18 per unit of Sunrise, and that this stated willingness was independently truthful. ( See id. at 30.) Indeed, the jury could reasonably have found that HCP made no such statement, and that even if it did, the statement was not independently truthful. The jury could reasonably have found that HCP never stated that it was willing to pay $18.00 per unit. HCP's February 14, 2007 press release merely stated that HCP had submitted a proposal to acquire the assets of [Sunrise] in a transaction that values each [ ] unit at Cdn$18. (App. at 454-55.) The press release then described the proposed transaction as containing an acquisition agreement that ... is otherwise identical to the agreement between Sunrise [ ] and Ventas. It further stated that HCP was confident that it would reach a deal with SSL and that its proposed acquisition of Sunrise had a greater certainty of completion than the Ventas transaction. The press release only references the offer of $18.00 per unit as part of an overall transaction. Even if the jury found that HCP had stated its willingness to pay $18.00 per unit, the jury reasonably could have also found that such a statement was not truthful. HCP never made an unencumbered assertion that it was willing to pay $18.00 per unit, and the jury could reasonably have found that HCP's announcement of its proposed transaction was contaminated by fraud, misrepresentations, and concealment. See Dennis v. Thomson, 240 Ky. 727, 43 S.W.2d 18, 23 (1931) ([C]ausing a false impression constitutes a palpable fraud, even though the statement is true as far as it goes, since such concealment is in fact a false representation of that which is disclosed, as the whole truth.). HCP failed to disclose in its February 14, 2007 press release that its offer was conditioned on reaching an agreement with SSL. HCP also failed to disclose that HCP and SSL had previously failed to reach an agreement during the auction process; that HCP and SSL otherwise had a tense relationship that could frustrate future attempts to negotiate an agreement; and that HCP was a party to a Standstill Agreement with Sunrise that may have prohibited HCP from making an offer for Sunrise in the first place. Rather than disclosing these details, HCP misled the market by announcing that the terms of its proposed acquisition of Sunrise were identical to the transaction entered into by Ventas, and the proposed acquisition itself had greater certainty of completion. Moreover, HCP's conduct at the time of its purported offer casts further doubt on the genuineness of its offer. HCP never sent Sunrise a signed, unconditional offer. The purchase agreement that HCP sent to Sunrise made no mention of a condition. Sunrise described HCP's omission of a signature as unprecedented (Tr.3A at 47) and tantamount to a bait and switch. (App. at 456.) When confronted about the missing signature, HCP CEO Flaherty falsely stated to Sunrise's banker that he had sent a signed agreement via Federal Express. Flaherty subsequently admitted, however, that he did not do this and in fact was not authorized by HCP to make an unconditional bid. (Tr.4B at 32-34.) Ventas also presented evidence that HCP stated it was moving on to other things in January of 2007 after it was unable to reach an agreement with SSL, and in fact, on February 21, 2007, made a $3.1 billion proposal to buy another company, referred to as Slough. (Tr.2A at 39; Tr.4B at 96.)
HCP next argues that the subsequent disclosures of truthful information about its offer broke the chain of causation as a matter of law. Specifically, HCP asserts that any misrepresentations contained in its February 14, 2007 press release were corrected prior to the unitholder vote on the Ventas deal. HCP cites the testimony of certain unitholders to suggest that unitholders were aware of the conditional nature of the offer shortly after HCP's February 14, 2007 press release. ( See, e.g., HCP Br. at 34-35 (citing, inter alia, R. 486 at 188-89 (Morgan Stanley).)) To the extent that any confusion lingered in the market, HCP notes that the condition was explicitly referenced in a February 19, 2007 press release by Sunrise, and a February 22, 2007 press release by Ventas. (App. at 590, 1228-29.) The proxy statements sent to unitholders on or about March 6, 2007 also discussed the existence of the condition. ( Id. at 1240-54.) HCP relies heavily on the market price of Sunrise during the relevant period. After HCP publicly announced its bid, the market price of Sunrise increased from approximately $15.00 per unit to $18.00 per unit, and remained at that approximate price until the unitholders rejected the Ventas deal. HCP notes that Ventas' expert admitted that he failed to find any statistically significant drop in the price of Sunrise after HCP disclosed that its bid was conditional. Because the alleged corrective disclosures had no effect on the stock price, HCP contends that any alleged misrepresentations either did not mislead or `were immaterial as a matter of law.' (HCP Br. at 42 (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1425 (3d Cir.1997).)) We again find HCP's argument unavailing. The purported corrective disclosuresnone of which were made by HCP directlydo not disprove causation as a matter of law. The jury could reasonably have found that any purported corrections were incomplete and did not neutralize the effect of HCP's fraud on proxy voting that started on March 7. (Ventas Br. at 40.) This would explain why the market price of Sunrise did not fall significantly after the market learned of the existence of the condition, and therefore why HCP's argument fails to show a break in the chain of causation. We note the many reasons that doom HCP's argument on appeal. First, the public never learned of the difficulties that HCP would likely face in reaching an agreement with SSL and thus in satisfying the condition. Although investors may have come to know of the existence of the conditional nature of HCP's offer, investors never learned the details of the troubled relationship between HCP and SSL, or that HCP's insistence on certain development rights threatened to prevent a deal from materializing as quickly as HCP suggested that it would, if a deal materialized at all. Even if the jury were to credit HCP's argument that it was SSL, not HCP, that caused the breakdown of the original negotiations, the difficult relationship between the parties, regardless of the cause of the difficulty, could likely frustrate future negotiations. Moreover, to the extent the public learned of the existence of the condition, the jury could reasonably have found that HCP falsely suggested to the market that it would remove the condition. On February 28, 2007, for instance, Flaherty suggested, in a letter to Sunrise that was made public, that HCP might be willing to remove the closing condition (App. at 733.) But Flaherty admitted at trial that he did not make an unconditional offer because he was not sufficiently confident that HCP would reach a deal with SSL, and in fact was not authorized to make a binding offer. ( See, e.g., Tr. 4A at 75.) Second, Ventas presented evidence that, in the aftermath of HCP's wrongful conduct, investors recognized that Ventas would be forced to raise its bid to complete the transaction so as to avoid injury to its reputation. ( See, e.g., id. at 101-03, 112; Tr.7B at 18.) This would suggest that the effects of HCP's wrongful conduct lingered in the market because investors sought to capitalize on its effects on Ventas' original offer. Third, the on-going litigation in Canada was not resolved until approximately two weeks after voting on the Ventas deal had begun. This timeline may have suggested to unitholders that the HCP deal was viable. Because HCP disclosed neither the difficulties it would likely encounter in reaching an agreement with SSL, nor any other factual barrier to the agreement, the pendency of the Canadian proceedings may explain why Sunrise's unit price did not fall. Finally, HCP's initial misleading statements changed the unitholder composition of Sunrise, which made approval of Ventas' $15.00 per unit offer highly unlikely. In the 48 hours after HCP announced its offer, over 40 million units of Sunrise changed hands, representing the largest day in the trading history of Sunrise. The evidence suggests that these new unitholders were largely arbitragers from the United States and had little incentive to accept Ventas' $15.00 bid, even after HCP withdrew its offer. As the district court observed, [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'] $15 offer would have been approved. (R. 520 at 5.) HCP asserts those new unitholders could not have affected the outcome of the vote because the four largest unitholders by themselves cast more than sufficient votes to defeat Ventas'[] offer. (HCP Br. at 45-46 (emphasis omitted).) But Ventas presented evidence that its initial offer of $15.00 was a good price to the unitholders and was recognized as such by the market and certain institutional unitholders. ( See, e.g., R. 482 at 102-03 (testimony of representative from Caisse, the largest Canadian unitholder, that he would have initially recommended approval); Tr.7A at 87-95 (testimony of Ventas' expert, opining that the Ventas offer had a 95% expectation of approval).) To the extent HCP cites competing testimony, the jury was not compelled to credit this speculative testimony, particularly in light of Ventas' evidence suggesting the opposite. Moreover, Ventas presented evidence that the institutional investors never learned of the obstacles that might prevent the condition from being realized, namely the difficult relationship between HCP and SSL. Such knowledge alone could have caused the unitholders to doubt the viability of the HCP offer and thus vote in favor of the Ventas deal. Institutional investors, for instance, testified that they believed a deal with HCP might still be viable even after HCP withdrew its bid. ( See, e.g., Tr.3A at 78.) In light of the totality of the evidence presented at trial, the jury arrived at a reasonable conclusion regarding the element of causation. The jury had sufficient evidence to find that HCP's improper interference caused injury to Ventas. Accordingly, we find that Ventas presented sufficient evidence to support a jury finding of causation, and AFFIRM the decision of the district court on that basis.
For the reasons set forth above, we AFFIRM the judgment of the district court in the amount of $101,672,807.00 in favor of Ventas. Although the case shall be remanded, as discussed below, we find no reason to disturb the final judgment previously entered on the original jury verdict. Accordingly, the judgment as previously entered by the district court shall constitute a final partial judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. See Fed. R.Civ.P. 54(b) ([T]he court may direct entry of a final judgment as to one or more, but fewer than all, claims ... if the court expressly determines that there is no just reason for delay.).