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VII. MITIGATION AND THE ABILITY "TO COVER"
  A. Both the Conversion Loss and the Breach of Contract Measures of Damages Presume Ability to Mitigate or "Cover"
    1. Both the conversion loss and the breach of contract measures of damages presume that the plaintiff has the ability to mitigate or "cover" damages by protecting prospective profit by entering the market to purchase the lost shares.
  B. The Critical Difference Under the Two Theories is the Date on Which Cover is Relevant
    1. Under the conversion loss measure of damages, the time in which to mitigate is extended to a "reasonable time" into the future.
    2. Under the breach of contract measure of damages, the ability to cover is fixed at the date of breach, which effectively prevents the plaintiff from recovering any prospective profit from the defendant.
  C. Neither Theory Requires the Plaintiff to Actually Reenter the Market
    1. Forcing a plaintiff to actually cover would cost the plaintiff much more if the market price is greater than the exercise price of an option and in the case of a conversion, the plaintiff's capital in the converted stock is unavailable to the plaintiff.
    2. Forcing a plaintiff to reenter the market could also increase the plaintiff's damages when the stock rises dramatically after conversion but then enters a prolonged downward spiral. See e.g., Schultz, supra, 716 F.2d at 140.
  D. Mitigation in Claims Based Upon Forced Early Exercise of Options
    1. Employment-related stock option claims often include a claim for damages arising from the forced early exercise of vested options, which is often required under the terms of stock option agreements in the event of termination of employment.
      a. Defendants sometimes argue, without much apparent success, that under these circumstances, the former employee should hold the stock, rather than sell it, to mitigate damages.

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