The opinion of the court was delivered by: Charles S. Haight, Senior District Judge
MEMORANDUM OPINION AND ORDER
Defendant United Bank of Kuwait PLC ("UBK" or "the Bank") has filed a motion for reconsideration of the Court's Memorandum Opinion and Order dated November 27, 2006 ("the November 27 Opinion"). The November 27 Opinion, familiarity with which is assumed, is reported at 2006 WL 3421744 (S.D.N.Y. Nov. 27, 2006). In the November 27 Opinion, the Court denied UBK's motion to dismiss for plaintiff RLS Associates, LLC's ("RLS") failure to post a bond to secure costs and attorneys' fees. The Court found that the English Rule on attorneys' fees applied to this case and that UBK was entitled to a bond under Local Rule 54.2, but that the bond amount required of RLS should be reduced from $469,500 to $75,000.*fn1 In addition, the Court directed UBK to post a bond in the amount of $75,000.
Pursuant to Local Rule 6.3, the Bank now moves for reconsideration of the November 27 Opinion insofar as it reduced the bond required of RLS to $75,000. For the reasons below, the Bank's motion for reconsideration is denied.
The November 27 Opinion revisited several issues that had been addressed and answered in prior Opinions; the Court explained that "the Chancellor in Equity should never shrink from changing a prior ruling if the fairness of the proceeding is enhanced thereby." 2006 WL 3421744, at *2 n.3 (S.D.N.Y. Nov. 27, 2006). However, the Bank indicates that it relied on prior decisions of the Court to its detriment. In particular, UBK contends that it did not address whether the bond amount should be reduced based on the merits of the case because prior Opinions had indicated that the Bank's entitlement to a bond was settled, and that the issue at hand was the plaintiff's financial ability to post security for costs. There is some force to this procedural grievance. Accordingly, the Court will relax the strictures that usually limit motions for reconsideration, see, e.g., Koehler v. Bank of Bermuda Ltd., 2005 WL 1924746, at *1 (S.D.N.Y. Aug. 10, 2005), and will carefully review the arguments raised by the Bank in its motion for reconsideration.
The November 27 Opinion reduced the bond amount required of RLS to $75,000 in light of equitable considerations, including RLS's "legitimate interest in obtaining its day in court on a claim whose potential merit has been attested to, at least in part, by the Second Circuit." 2006 WL 3421744, at *14 (S.D.N.Y. Nov. 27, 2006). The Bank argues that this reduction was mistaken for several reasons. First, the Bank argues that the Second Circuit decision did not address the merits of the underlying claim because it did not analyze the Bank's prejudice defense. The Bank contends that "[t]he decision to remand the case for trial means there are unresolved issues of fact - and nothing more." Def. Mem. in Supp. of Mot. for Recons. ("Def. Mem.") at 4. Second, the Bank cites documentary evidence before the Court that supports the Bank's prejudice defense. RLS's right to post-termination commissions was conditioned on RLS refraining from actions that the Bank reasonably believed were prejudicial to its interests. The Bank describes harms that it allegedly suffered as the result of critical statements made by Richard Swomley. Third, the Bank argues that directing both parties to post a $75,000 bond did not put the parties on equal footing because "the Bank will only be able to collect $75,000 in fees, or about fifteen cents on the dollar, if it is successful" while "RLS . . . will be able to collect a hundred cents on the dollar if it prevails." Def. Mem. at 7. The Bank contends that "[b]y reallocating the risk of litigation, the Court has effectively rewritten the contract of the parties." Id.
A. District Court's Discretion Over Bond Amount
At the outset, I note that the district court enjoys considerable discretion in setting a bond amount under Rule 54.2. The text of the rule states that "[t]he court, on motion or on its own initiative, may order any party to file an original bond for costs or additional security for costs in such an amount . . . as it may designate." S.D.N.Y. Local Civ. R. 54.2 (emphasis added). Based on this text, the bond amount presumably may not exceed the potential costs and fees in the case. In addition, under Selletti v. Carey, 173 F.3d 104 (2d Cir. 1999), the court should not impose a bond that a party is unable to pay, thereby depriving the party of its day in court. Subject to these upper-bound limitations, the amount of the bond lies within the district court's discretion, informed by both legal and equitable considerations.
In particular, if a district court determines that a cost bond is appropriate under Rule 54.2, the court is not required to set the bond amount at the full amount of costs and fees at stake. Rather, the court is entitled to set the bond at an intermediate amount, as justified by the circumstances. See, e.g., Selletti v. Carey, 173 F.3d 104, 111 n.9 (2d Cir. 1999) ("if a court sets [a bond] amount that proves to exceed the party's ability to pay, the court retains the option of accepting partial . . . payment"); Bressler v. Liebman, 1997 WL 466553 (S.D.N.Y. Aug. 14, 1997) (setting bond amount at $50,000 under Local Rule 54.2, where defendant estimated $100,000 in costs and attorneys' fees); Mann v. Levy, 776 F. Supp. 808 (S.D.N.Y. 1991) (setting cost bond at $10,000 under Local Rule 39, the predecessor of Local Rule 54.2, where defendants indicated costs of at least $20,000); Beverly Hills Design Studio (N.Y.) Inc. v. Morris, 126 F.R.D. 33 (S.D.N.Y. 1989) (setting bond amount at $20,000 under Local Rule 39 where defendant estimated $100,000 in costs and attorneys' fees). In the case at bar, there is ample justification for the Court to reduce the bond amount from the full amount of costs and fees.
B. Factors Affecting Bond Amount
In the November 27 Opinion, the Court recognized that "the Bank has a legitimate interest in recovering costs and fees if it prevails in the litigation." 2006 WL 3421744, at *14 (S.D.N.Y. Nov. 27, 2006). The Bank has estimated the full amount of costs and fees it could recover under English law as $469,500, a calculation supported by credible English experts.*fn2 But competing equitable factors justify a significantly lower bond amount.
The potential merit of RLS's claim justifies a reduced bond amount. The Second Circuit opinion in this case, reported at 380 F.3d 704 (2d Cir. 2004), establishes that RLS has a potentially meritorious claim. The opinion did much more than simply find the presence of unresolved questions of fact, as the Bank contends. Rather, the Second Circuit also made legal findings in RLS's favor when it: (1) concluded that the November Amendment, which established the post-termination commissions, was supported by adequate consideration, (2) concluded that the November Amendment did not impose obligations on the Asset Managers without their consent, and (3) suggested that November Amendment probably did not require the signatures of the Asset Managers. Id. at 707-13. In these respects, RLS's claim "has already been significantly tested in the appellate fire." 2006 WL 3421744, at *15 (S.D.N.Y. Nov. 27, 2006). The Bank correctly observes that the Second Circuit opinion did not address the Bank's prejudice defense, which this Court previously determined was ...