that no reasonable fact-finder could accept it, plaintiffs' motion for summary judgment on the DTC shares should be denied.
The next question is whether there is a reasonable interpretation according to which the certificate clause constitutes a specific agreement negating the UCC provision that would permit an alternative method. Without considering extrinsic evidence, I conclude that there is such an interpretation. The passages in Section 5 requiring delivery of the certificate contemplate delivery of a number of other documents as well. It is not unreasonable -- absent extrinsic evidence -- to interpret the Offeror as envisioning that physical delivery was irreplaceable in the structure of the offer. Similarly, it is not unreasonable -- absent extrinsic evidence -- to suppose that when the drafter of the offer specified "certificates," they believed that this specification succeeded in foreclosing alternatives.
For the reasons stated above, I find that reasonable persons could differ on the question of whether, in light of the certificate clauses, the provisions of the UCC permitting book-entry shares are rendered inapplicable by the language used in the Offer of Purchase.
B. Extrinsic Evidence
1. Defendant's Evidence
Defendant offers extrinsic evidence principally on two points: (1) the intent of US Steel, and (2) the custom or practice of the industry. With regard to the intent of US Steel, Defendant points out that it entered into an agreement with DTC for processing shares in the tender offer, through the book-entry method, and pursuant to the voluntary Offering Program. (App. at A0467). This agreement was entered into on November 20, 1981, one day after the initial tender offer and several days before the extension of the tender offer. This arguably provides evidence that US Steel did not intend the certificate clauses to remove the implicit UCC provisions accepting book-entry as equivalent to physical delivery. But see Report at 26 ("US Steel was unaware of DTC").
Second, defendant provides evidence of eighty tender offers in 1981 that used the Voluntary Offering Program and the book-entry method of delivery. (Aff. of Scholl at P 24). Defendant also offers evidence that, in the seventy-one of these tender offers for which defendant's counsel were able to procure copies of the offers of purchase, there was no reference to book-entry transfer or the Depositary Trust Company or the voluntary Offering Program. (Aff. of Sabella at PP 3-4). More generally, defendant offers evidence that portrays the history and status of the book-entry method in 1981, and the role of the Voluntary Offering Program (Aff. of Scholl), and thereby attempts to explain why the Offer of Purchase should be viewed as merely silent on the issue of book-entry delivery.
The evidence proffered by defendant, although not necessarily conclusive, provides significant evidence that the certificate clauses of the contract were not intended to negate the permissibility of the book-entry method, under the UCC. I therefore find that plaintiffs' motion for summary judgment with respect to the DTC shares should be denied.
2. Plaintiffs' Evidence
Plaintiffs contest defendant's assertions of fact, and also the relevance of those assertions. For example, they offer evidence that US Steel's counsel was unaware of the Depositary Trust Company. (Dep. of Hansen at 33); (Dep. of Hays at 75-76); (Dep. of Stenton at 92-93). They also offer evidence suggesting that the relevant customs of the industry are not as pervasive as defendant suggests. (Aff. of Dreizen). This evidence is also relevant to the question of whether the certificates clauses was intended to rule out the possibility of book-entry delivery. Summary judgment for defendant on the DTC shares is therefore denied.
For the reasons stated above, both parties' motions for partial summary judgment are denied. The joint pretrial order shall be submitted on or before December 7, 1992. The case shall be ready for trial on December 8, 1992. Counsel are directed to review this Court's Individual Rules regarding procedures to follow to inform the Court in advance of any commitments that conflict with trial readiness on or after December 8, 1992. Defendant's motion to bifurcate the damages and liability phases of trial is granted.
DATED: New York, New York
November 12, 1992
Kimba M. Wood
United States District Judge