Saba Capital Master Fund, LTD. v. ASA Gold and Precious Metals, Ltd.

Background

Saba Capital Management, L.P. and Saba Capital Master Fund, Ltd. challenged shareholder rights plans adopted by ASA Gold and Precious Metals, Ltd., a closed-end investment company registered under the Investment Company Act of 1940. The plaintiffs alleged that the plans, commonly called poison pills, violated Section 18(d) of that Act.

In its March 28, 2025 summary-judgment order, the court ruled for the plaintiffs. It found that ASA’s December 2023 rights plan, through continuous extensions and replacement plans adopted while the earlier plan remained in effect, never actually expired and therefore violated the Act’s 120-day limit. The court rescinded the then-operative plan, ordered judgment for the plaintiffs, and closed the case. The court expressly did not decide whether successive rights plans adopted after an earlier plan expired would also violate the 120-day requirement.

On March 31, 2025, ASA adopted another poison pill. Saba then filed the motion addressed in this opinion. Saba characterized it as a motion to enforce the prior order, but the court understood it as requesting sanctions for an alleged violation of that order. In the alternative, Saba moved under Federal Rule of Civil Procedure 59(e) to alter or amend the judgment and rescind the March 2025 plan.

Whether ASA Violated the Prior Order

The court denied Saba’s request for sanctions or enforcement. To hold a party in contempt, the court explained, the alleged violation must be shown by clear and convincing evidence, among other requirements. The court found that Saba could not make that showing.

The earlier order addressed a rights plan adopted while a predecessor plan was still pending, which unlawfully extended the December 2023 plan. Because the court had rescinded the then-operative plan, the March 31, 2025 poison pill did not directly extend the December 2023 plan. It was adopted after the predecessor had been ended and therefore involved different facts from those considered in the earlier order.

The court also declined to interpret the earlier order as barring ASA from adopting any future poison pill concerning Saba. Doing so would require the court to decide the separate question—left open in the earlier order—whether nearly identical successive plans adopted after a prior plan expired violate the Investment Company Act. The court therefore did not conclude that ASA violated the earlier order or judgment.

Rule 59(e) Motion

The court also denied Saba’s alternative request to amend the judgment under Rule 59(e). That rule permits a judgment to be altered or amended only in limited circumstances, including an intervening change in controlling law, newly available evidence, or the need to correct a clear error or prevent obvious injustice.

The court rejected the new-evidence basis because the March 2025 poison pill and related facts came into existence after the original judgment. Evidence arising after judgment could not be used to change that judgment under the circumstances presented.

The court also found no clear error or obvious injustice requiring amendment. Although the earlier order recognized that the Investment Company Act would presumably not allow a closed-end investment company to remain subject to rights plans indefinitely, that ruling concerned plans adopted during the life of a predecessor plan and used to extend the original plan beyond 120 days. The court had not decided whether plans adopted after expiration of the prior plan would violate the Act, and it declined to decide that question through a Rule 59(e) motion based on new facts.

Disposition

The court denied Plaintiffs’ motion. It did not order sanctions, did not enforce the earlier judgment to require rescission of the March 31, 2025 poison pill, and declined to amend the prior judgment. The Clerk was directed to terminate the motion, and the case remains closed.