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Westminster Securities Corp. v. Uranium Energy Corp.

United States District Court, S.D. New York

June 19, 2017

WESTMINSTER SECURITIES CORPORATION, Plaintiffs,
v.
URANIUM ENERGY CORPORATION, Defendants.

          OPINION AND ORDER

          GABRIEL W. GORENSTEIN, United States Magistrate Judge

         Defendants have moved to withdraw their demand for a jury trial.[1] Plaintiffs oppose this motion, arguing that the demand cannot be withdrawn without their consent. See Pls. Mem. at 7, 20-21. For the following reasons, defendants' motion is granted and the demand for a jury trial is deemed withdrawn.

         I. BACKGROUND

         This action seeks to enforce warrants to purchase shares in Concentric Energy Corporation (“CEC”), a corporation that later merged into defendant Uranium Energy Corporation (“UEC”). See Amended Complaint, filed July 30, 2015 (Docket # 17) (“Am. Compl.”), ¶¶ 3, 6, 13. Plaintiffs allege that UEC was bound by the terms of the CEC warrants. Id. ¶ 12.

         Issuance of the warrants was accomplished by means of a “Securities Purchase Agreement.” See Concentric Energy Corp. Securities Purchase Agreement (attached as Ex. A to Defs. Mot.) (“SPA”). In the initial briefing, defendants provided proof that some, though not all, plaintiffs in this case signed the SPA. See Purchaser Signature Pages to Concentric Energy Corp. Securities Purchase Agreement (attached as Ex. C to Defs. Reply) (“Signature Pages”); see also O'Shea Affirmation ¶ 3. Ultimately, however, plaintiffs conceded that each plaintiff signed the SPA itself. Pls. Sur-Reply at 3 n.1. Additionally, and more to the point, plaintiffs conceded that they “transmitted their respective signature pages to CEC in connection with their purchase of CEC Debentures and Warrants.” Id. A copy of one such warrant states that “[a]ll questions concerning the . . . enforcement . . . of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.” Common Stock Purchase Warrant (attached as Ex. A to Defs. Reply) (“Warrant”), § 5(e). The “Purchase Agreement” referenced in this section is the SPA. See id. § 1. Additionally, all plaintiffs relied on one of the provisions of the SPA, section 5.9, to establish venue in New York. See Am. Compl. ¶ 5; Complaint, filed July 30, 2015 (Docket # 1 in related case 15 Civ. 6087), ¶ 7; Pls. Mem. at 7 n.5.

         The SPA contains a provision entitled “Waiver of Jury Trial, ” which provides: “In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.” SPA § 5.21.

         In their answer to the amended complaint, dated September 11, 2015, defendants demanded a jury trial. Defendants' Answer to the Amended Complaint of Plaintiff Westminster Securities Corporation, filed Sept. 11, 2015 (Docket # 22) (“Answer”), at 6. A proposed unsigned case management plan was presented to the Court by letter on September 25, 2015, which contained the statement “This case is to be tried to a jury.” “[Proposed] Civil Case Management Plan and Scheduling Order, ” filed Sept. 25, 2015 (attached as Ex. 1 to Docket # 23). The Court “so ordered” this document on October 1, 2015. Civil Case Management Plan and Scheduling Order, filed Oct. 1, 2015 (Docket # 26).

         While defendants had contemplated withdrawing their jury demand for “some time” before September 22, 2016, see Email from Michael S. Rubin, dated Sept. 22, 2016 (attached as Ex. B to Defs. Mot.), they did not seek to withdraw the jury demand until October 10, 2016, after fact discovery had closed. See Letter from Michael S. Rubin, dated October 10, 2016 (Docket # 41).

         II. DISCUSSION

         The defendants argue that the parties, through the provisions of the SPA, waived their right to a trial by jury. As a result, the defendants argue, their request for a jury trial was not “proper” under Fed.R.Civ.P. 38(d) and therefore could be withdrawn without plaintiffs' consent. See Defs. Mot. at 3-4 & nn.1-2.

         Plaintiffs appear to make three arguments. First, they argue that the jury waiver provision in the SPA does not bind them. Second, they argue that, even if the jury waiver provision in the SPA originally bound them, defendants' request for a jury trial overrode the contractual jury waiver provision. Finally, they argue that allowing defendants to now withdraw their jury demand would be inequitable. We address each argument in turn.

         A. Whether the Contractual Jury Waiver Applies

         A contractual waiver of the right to a jury trial is enforceable “if it is made knowingly, intentionally, and voluntarily.” Merrill Lynch & Co. v. Allegheny Energy, Inc., 500 F.3d 171, 188 (2d Cir. 2007) (citing Nat'l Equip. Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977)). “The burden of proving that a waiver was knowing and intentional rests with the party attempting to enforce the purported waiver.” Lehman Bros. Holdings v. Bethany Holdings Grp., 801 F.Supp.2d 224, 229 (S.D.N.Y. 2011) (internal quotation marks omitted) (quoting Sullivan v. Ajax Navigation Corp., 881 F.Supp. 906, 910 (S.D.N.Y. 1995)). Courts have considered the following factors in determining whether to enforce a jury waiver provision: “(1) the negotiability of contract terms and negotiations between the parties concerning the waiver provision; (2) the conspicuousness of the waiver provision in the contract; (3) the relative bargaining power of the parties; and (4) the business acumen of the party opposing the waiver.” Hines v. 1025 Fifth Ave., Inc., 2015 WL 765943, at *2 (S.D.N.Y. Feb. 23, 2015) (internal quotation marks omitted) (citation omitted).

         The jury-waiver provision at issue in this motion is contained in the SPA. SPA § 5.21. The CEC warrants that are the subject of this case incorporate the SPA by specific reference. See Warrant §§ 1, 5(e). The plaintiffs do not argue that they did not knowingly and voluntarily waive a jury trial when they signed the SPA or the warrants. They also do not argue that they should not be bound by any provisions governing the CEC warrants or that section 5(e) of the CEC warrants does not incorporate the SPA.[2] Instead, in their sur-reply brief, plaintiffs argue for the first time that they can escape the effect of the jury-waiver provision because there is no proof that CEC, the defendants' predecessor in interest - as opposed ...


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