Rentokil-Initial Pension Scheme v. Citigroup Inc. et al
OPINION AND ORDER. It is hereby ORDERED that the First Amended Class Action Complaint is dismissed on the grounds of forum non conveniens, on the condition that counsel for defendants Weill, Prince, Rubin, and Pandit notify the Court in writing, with in seven days of the entry of this Opinion and Order, that Weill, Prince, Rubin, and Pandit consent to jurisdiction over them by the courts of the United Kingdom. re: 24 MOTION to Dismiss the Amended Complaint filed by Citigroup Inc., Robert E. Rubin, Charles O. Prince, III, Sanford I. Weill, Vikram Pandit. (Signed by Judge Sidney H. Stein on 2/6/2014) (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE CITIGROUP INC. SECURITIES
RENTOKIL‐INITIAL PENSION SCHEME,
Individually and on Behalf of All Others
09 MD 2070 (SHS)
This document relates to:
12 Civ. 6653 (SHS)
OPINION & ORDER
CITIGROUP, INC., SANFORD I. WEILL,
CHARLES O. PRINCE, III, ROBERT E.
RUBIN, and VIKRAM PANDIT,
SIDNEY H. STEIN, U.S. District Judge.
This litigation features a United Kingdom–based plaintiff suing New
York–based defendants for alleged misrepresentations in connection with
Euro Notes promoted in England and listed on Luxembourg and
Copenhagen stock exchanges. Defendants have moved to dismiss this
action on forum non conveniens grounds; that is, defendants urge that this
action should be dismissed on the grounds that the courts of the United
Kingdom offer a more appropriate forum for the litigation of the parties’
dispute. Because the U.K. courts represent an adequate forum for this
dispute, and because the United Kingdom has a greater interest in the
dispute than does New York, the Court grants defendants’ motion to
dismiss this action.
Plaintiff Rentokil‐Initial Pension Scheme brings this putative class
action on behalf of itself and the other purchasers of 21 medium‐term Euro
Notes issued and sold by defendant Citigroup, Inc., between October 12,
2005, and February 25, 2009. Plaintiff is a United Kingdom–based
employee pension plan for a United Kingdom–based business services
firm, Rentokil Initial plc. (First Am. Class Action Compl., Dkt. No. 39, at ¶
21.) Defendant Citigroup is a financial services corporation incorporated in
Delaware with its principal place of business in New York. (Id. ¶ 22.) The
four individual defendants—Sanford I. Weill, Charles O. Prince, III, Robert
E. Rubin, and Vikram Pandit—are all former directors or officers of
Citigroup who reside in New York. (Id. ¶¶ 23‐26.)
In its First Amended Class Action Complaint (“FAC”), Rentokil
alleges that defendants intentionally misled investors by downplaying
Citigroup’s exposure to various investment risks. In particular, plaintiff
accuses Citigroup of: (1) failing to disclose the full extent of its
vulnerability to the risks of residential mortgage‐backed securities
(“RMBSs”) and of collateralized debt obligations (“CDOs”) that were
backed by RMBSs (see, e.g., FAC ¶¶ 7‐8); (2) failing to maintain adequate
loan loss reserves in light of the poor and deteriorating quality of its loan
portfolio (see, e.g., id. ¶ 8); (3) claiming to be “well‐capitalized” when, in
reality, Citigroup’s borrowing exceeded its market capitalization by
“astonishing” amounts (id. ¶ 10); (4) omitting from its balance sheet until
November 2007 assets held in structured investment vehicles (“SIVs”),
which included subprime RMBSs, CDOs, and commercial mortgage‐
backed securities (see, e.g., id. ¶ 11); (5) misrepresenting the quality of those
SIVs after disclosing them in November 2007 (see, e.g., id.); and (6) violating
disclosure rules of the U.S. Securities and Exchange Commission (“SEC”)
and Generally Accepted Accounting Principles in its financial statements
(see, e.g., id. ¶ 12).
According to the FAC, those misrepresentations were part of the
offering documents for the 21 Euro Notes underlying this action, because
Citigroup incorporated its misleading disclosures to the SEC into those
offering documents. (Id. ¶¶ 27, 57.) Citigroup issued the Euro Notes, along
with three related Base Prospectuses, in the European Economic Area. (Id.
¶ 58.) According to the FAC, the Euro Notes and offering documents were
therefore governed by the European Parliament’s “Prospectus Directive,”
which delegates regulatory oversight for securities to European Union
member states. (Id.) Under this European Parliament legislation,
Luxembourg regulators were responsible for approving the Euro Notes
and the accompanying prospectuses. (Id.) Because the United Kingdom is
a member of the European Union, it recognizes offering documents that
have been approved by a fellow European Union member state under the
Prospectus Directive. (See Thewes Decl., Dkt. No. 32, at ¶ 10; Hubble Decl.,
Dkt. No. 33, at ¶ 60.)
Each Euro Note was listed on either the Luxembourg Stock Exchange
or the Copenhagen Stock Exchange. (FAC ¶ 58.) The Euro Notes were
denominated in three currencies: Euros, Pounds Sterling, and Danish
Kroner. (Id. ¶ 2.) Even after their approval in Luxembourg and recognition
in the other European Union member states, the Euro Notes were subject
to ongoing obligations embodied in the European Union’s Transparency
Directive and Market Abuse Directive, which are incorporated into U.K.
law through the U.K. Listing Rules. (Moore Decl., Dkt. No. 28, at ¶ 40(m).)
Plaintiff, allegedly induced by the misrepresentations in Citigroup’s
offering documents, invested in the medium‐term Euro Notes in 2005
through 2009. (Id. ¶¶ 21, 171.) In early 2009, according to the FAC,
investors learned of Citigroup’s financial woes. (Id. ¶¶ 16, 172.) As a
consequence, the FAC alleges, “the previously hidden risk inherent in [the
Euro Notes] began to materialize, and investors feared the possibility of
default by Citigroup.” (Id. ¶ 173.) In the same time frame, the Euro Notes
plummeted in value, losing $9 billion from an aggregate face value of $25
billion. (Id. ¶ 172; see also id. ¶¶ 15‐16.)
Rentokil filed its Class Action Complaint, which alleged solely
violations of U.K. law, in August 2012 and filed the FAC approximately
nine months later. The FAC contains the same substantive allegations as
the original Class Action Complaint, but, rather than asserting solely
violations of U.K. law, it asserts violations only of the Luxembourg Civil
Code. (See FAC ¶¶ 183, 190, 201, 211.)
Defendants have now moved to dismiss the FAC under the doctrine of
forum non conveniens. Their motion also offers two additional, alternative
theories for dismissal, namely that (1) Luxembourg law does not apply to
this dispute and (2) plaintiff’s claims are time‐barred.
A. The doctrine of forum non conveniens balances public and
The doctrine of forum non conveniens provides that a court “may
decline to exercise its jurisdiction, even though the court has jurisdiction
and venue, when it appears that the convenience of the parties and the
court and the interests of justice indicate that the action should be tried in
another forum.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 250 (1981). A
district court applies federal law in determining whether to dismiss an
action on the basis of forum non conveniens. See Blanco v. Banco Indus. De
Venezuela, S.A., 997 F.2d 974, 982 (2d Cir. 1993); cf. Am. Dredging Co. v.
Miller, 510 U.S. 443, 449 n.2 (1994).
The ultimate question of whether to dismiss for forum non conveniens
“requires great flexibility,” Scottish Air Int’l, Inc. v. British Caledonian Grp.,
PLC, 81 F.3d 1224, 1234 (2d Cir. 1996), with “each case turn[ing] on its
facts,” Piper Aircraft Co., 454 U.S. at 249. “The decision to dismiss a case on
forum non conveniens grounds lies wholly within the broad discretion of the
district court.” Iragorri v. United Techs. Corp., 274 F.3d 65, 72 (2d Cir. 2001)
(en banc); see Piper Aircraft Co., 454 U.S. at 235. Nonetheless, several
required analytical steps guide the exercise of the Court’s discretion.
In the first analytical step, the Court decides what amount of
deference is owed the plaintiff’s choice of forum. See Iragorri, 274 F.3d at
73. The Court next determines whether an adequate alternative forum
exists. Id. Third, if an adequate alternative forum exists, the Court balances
the public and private interest factors enumerated by the United States
Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947). See id. at 508‐
09; Iragorri, 274 F.3d at 73‐74.
First, as to the level of deference owed a plaintiff, “[a] domestic
petitioner’s choice of its home forum receives great deference, while a
foreign petitioner’s choice of a United States forum receives less
deference.” In re Arbitration Between Monegasque De Reassurances S.A.M. v.
Nak Naftogaz of Ukraine, 311 F.3d 488, 498 (2d Cir. 2002) (citing Iragorri, 274
F.3d at 71). Courts measure the degree of deference on a sliding scale:
[T]he greater the [petitioner’s] or the lawsuit’s bona fide
connection to the United States and to the forum of choice and
the more it appears that considerations of convenience favor the
conduct of the lawsuit in the United States, the more difficult it
will be for the defendant to gain dismissal for forum non
conveniens. . . . On the other hand, the more it appears that the
[petitioner’s] choice of a U.S. forum was motivated by forum‐
shopping reasons . . . the less deference the plaintiff’s choice
commands . . . .
Iragorri, 274 F.3d at 72.
Second, the party seeking dismissal for forum non conveniens must
show that an adequate alternative forum exists. See Wiwa v. Royal Dutch
Petroleum Co., 226 F.3d 88, 100 (2d Cir. 2000). An alternative forum is
adequate if the defendants are subject to service of process in that forum
and the forum permits a satisfactory remedy. See Piper Aircraft Co., 454 U.S.
at 254 n.22. The alternative forum’s substantive law is irrelevant to the
analysis except to the extent that “the remedy provided by the alternative
forum is so clearly inadequate or unsatisfactory that it is no remedy at all.”
Id. at 254. In other words, what matters is that the alternative forum
“permits litigation of the subject matter of the dispute.” Pollux Holding Ltd.
v. Chase Manhattan Bank, 329 F.3d 64, 75 (2d Cir. 2003) (citing Piper Aircraft
Co., 454 U.S. at 254 n.22).1
Third, if the available alternative forum is adequate, the Court next
proceeds to balancing the private and public interest factors. The private
interest factors set forth in Gilbert include: (1) “the relative ease of access to
sources of proof,” (2) the “availability of compulsory process for
attendance of unwilling, and the cost of obtaining attendance of willing,
witnesses,” (3) any “possibility of view of premises,” if relevant, and (4)
“all other practical problems that make trial of a case easy, expeditious and
inexpensive.” 330 U.S. at 508. The public interest factors include: (1)
“[a]dministrative difficulties” flowing from court congestion, (2) whether
trial in the current forum would result in the “burden” of “[j]ury duty . . .
imposed upon the people of a community which has no relation to the
litigation,” (3) the desire to “hold the trial in the view and reach” of the
“many persons” affected by the litigation, (4) “a local interest in having
localized controversies decided at home,” and (5) avoiding “having a court
untangle problems . . . in a law foreign to itself.” Id. at 508‐09.
It is the “‘well‐established practice in the Southern District of New
York’” to “decide the forum non conveniens motion on affidavits.”
Constellation Energy Commodities Grp., Inc. v. Transfield ER Cape Ltd., 801 F.
Even if the alternative forum has jurisdiction over the parties and permits a
satisfactory remedy, the forum may still be inadequate if it “is characterized by a
complete absence of due process.” Monegasque, 311 F.3d at 499; see RIGroup LLC v.
Trefonisco Mgmt. Ltd., 949 F. Supp. 2d 546, 553‐54 (S.D.N.Y. 2013). Courts are
generally reluctant to find a foreign forum lacking in due process, because
“considerations of comity preclude a court from adversely judging the quality of
a foreign justice system absent a showing of inadequate procedural safeguards.”
PT United Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65, 73 (2d Cir. 1998). In
this case, no party suggests that the proposed alternate forum—the courts of the
United Kindom—fails to provide due process.
Supp. 2d 211, 218 (S.D.N.Y. 2011) (quoting Alcoa S.S. Co. v. M/V Nordic
Regent, 654 F.2d 147, 149 (2d Cir. 1980) (en banc)). Thus, this motion will be
decided “based on the pleadings, affidavits and briefs of the parties.” Alcoa
S.S. Co., 654 F.2d at 149.
B. The three‐part test set forth in Iragorri reveals that the United
Kingdom is a more appropriate forum than New York.
Plaintiff’s choice of New York as a forum deserves little
Plaintiff’s tenuous relationship to the Southern District of New York
lessens the deference owed to its choice of the Southern District as the
forum for its lawsuit. See, e.g., Pollux, 329 F.3d at 71; Monegasque, 311 F.3d
at 498; Iragorri, 274 F.3d at 72.
As a foreign plaintiff, Rentokil begins with a disadvantage in the
deference analysis. After all, the law presumes that foreign plaintiffs are
entitled to less deference in their choice of a U.S. forum than are U.S.
plaintiffs. See Monegasque, 311 F.3d at 498. More specifically, plaintiff
Rentokil is a foreign citizen and is the pension plan for a firm also based
outside of the United States. (FAC ¶¶ 19, 21.) Rentokil’s investments that
form the basis for this lawsuit are securities listed on foreign stock
exchanges, governed by foreign legislation, and subject to regulation by
foreign authorities. (See FAC ¶ 58; Moore Decl. ¶ 40(m).)
However, the lawsuit is not completely devoid of connection to the
United States. Defendants are all citizens or residents of New York (FAC
¶¶ 22‐26), the FAC alleges that several material facts occurred in New
York (id. ¶¶ 27, 70), and the parties agree that “a substantial amount of
evidence related to plaintiff’s claim is located in New York” (Mem. of Law
in Support of Defs.’ Mot. to Dismiss the Am. Compl., Dkt. No. 25, filed
Apr. 15, 2013 (“Defs.’ Mem.”) at 20; see Pl.’s [Corrected] Mem. in Opp. to
Defs.’ Mot. to Dismiss, Dkt. No. 34, filed May 17, 2013 (“Pl.’s Mem.”) at
The Court will therefore defer only minimally to Rentokil’s decision to
bring its lawsuit in the Southern District of New York.
The courts of the United Kingdom constitute an adequate
forum for this dispute.
The U.K. courts offer a perfectly adequate forum in which Rentokil
may assert its claims. There appears to be no dispute that all parties here
are subject to jurisdiction in the courts of the United Kingdom and are
amenable to service there.2 Thus, the parties’ arguments concerning the
adequacy of the U.K. courts center on whether that alternative forum
“permits litigation of the subject matter of the dispute.” See Pollux, 329 F.3d
As a general matter, U.S. courts “regard the British courts as
exemplary in their fairness and commitment to the rule of law.” Wiwa, 226
F.3d at 101. Moreover, because plaintiff’s original complaint asserted
claims based exclusively on U.K. law (Class Action Compl., Dkt. No. 1, ¶¶
160, 164‐165), “there can be no doubt that England permits litigation to
resolve commercial disputes of the type presented in this case,” Pollux, 329
F.3d at 75. The United Kingdom recognizes such causes of action as deceit,
negligent misrepresentation in contract, negligent misrepresentation in
“The alternate forum will normally be adequate so long as the defendant is
amenable to process there. . . . An agreement by the defendant to submit to the
jurisdiction of the foreign forum can generally satisfy this requirement.” DiRienzo
v. Philip Svcs. Corp., 232 F.3d 49, 57 (2d Cir. 2000) (citations omitted), vacated on
other grounds, 294 F.3d 21 (2d Cir. 2002). Although Citigroup—the principal
defendant—has already specifically consented to jurisdiction in the United
Kingdom (see Defs.’ Mem. at 19), there is no affirmative statement in the record
that the individual defendants similarly consent. Counsel for the individual
defendants is directed to notify the Court in writing within seven days of the
entry of this Opinion and Order whether the individual defendants consent to
jurisdiction over them by the courts of the United Kingdom.
tort, and breach of contract—claims that are the subject matter of this
dispute. (See Moore Decl. ¶¶ 12, 22, 36.) A fair judiciary that recognizes
plaintiff’s causes of action certainly offers an adequate forum for this
The balance of interests tilts in favor of the United Kingdom
as the preferred forum for this dispute.
Having determined that Rentokil’s choice to litigate in the United
States deserves little deference and that the United Kingdom would offer
an adequate alternative, the Court now proceeds to the task of
determining whether litigation in the United Kingdom or in New York
would better serve the interests of justice and convenience. Gilbert’s
various private and public interest factors guide this analysis. See 330 U.S.
The Private Interest Factors
Access to Sources of Proof
The sources of proof in this action are distributed between New York
and the United Kingdom. According to defendants, substantial evidence is
currently in the United Kingdom: “all of plaintiff’s relevant witnesses and
documentary evidence are located in the U.K.,” and the “Citi employees
involved in the issuance of the Euro Notes are likely to be located in
England or elsewhere in Europe.” (Defs.’ Mem. at 20.) Rentokil responds
to these assertions without disputing their veracity. Instead, Rentokil
counters that the location of witnesses and documents abroad “bears little
relevance” to this analysis, both because Citigroup has already produced
documents in New York and because electronic discovery is available to
quickly transmit documents over a vast distance. (See Pl.’s Mem. at 19.)
The parties further agree that a substantial amount of other documentary
evidence is currently in New York. (See Defs.’ Mem. at 20; Pl.’s Mem. at
13.) This factor is, therefore, in equipoise: substantial evidence is located
both in the United States and the United Kingdom. In addition, all parties
concede that advances in electronic discovery diminish the weight of any
imbalance that may exist in this factor. (See Defs.’ Mem. at 21; Pl.’s Mem. at
Subpoena and Attendance of Witnesses
The ease of obtaining witness testimony is essentially even as between
New York and the United Kingdom. The relevant personnel at Rentokil
and Citigroup are located in the United Kingdom and elsewhere in
Europe. (See supra, section II.B.3.a.i.) Rentokil has expressed an interest in
calling United States–based expert witnesses. (See Pl.’s Mem. at 13.) Thus,
in a U.K. trial, any U.S. witnesses may lie outside of compulsory process or
convenient attendance, and the same is true of any U.K. witnesses in a U.S.
trial. The United Kingdom–based witnesses are the most obviously
relevant fact witnesses (i.e., the relevant agents of the parties), whereas
plaintiff’s preferred experts are the only United States–based witnesses in
whose testimony any party has expressed an interest. Thus, if this factor
tilts toward either forum, it tilts slightly in favor of the United Kingdom.
iii. Possibility of View of the Premises
This factor is not relevant to this financial litigation.
iv. Other Practical Problems
The broad, residual private interest factor of “all other practical
problems that make trial of a case easy, expeditious and inexpensive,” as
set forth in Gilbert, 330 U.S. at 508, also does not militate strongly for one
forum or another. Plaintiff contends that the related litigations in the
Southern District of New York make this District a more convenient forum
for this litigation. (See Pl.’s Mem. at 16, 20‐21.) The related actions to which
Rentokil refers involve different plaintiffs, are based on different
investment instruments, and have no consolidated proceedings with this
action. In fact, the specific related actions cited by Rentokil—namely, In re
Citigroup Inc. Bond Litig., No. 08 Civ. 9522 (SHS); In re Citigroup Inc.
Securities Litig., No. 07 Civ. 9901 (SHS); and Int’l Fund Mgmt. S.A., et al. v.
Citigroup Inc., et al., No. 09 Civ. 8755 (SHS)—are no longer pending before
this Court. The Court therefore sees no efficiency to be gained by the
various litigations sharing a forum. Ultimately, the United Kingdom and
New York are roughly equal in practical convenience for the parties,
because each forum is in close proximity to substantial documents and
The Public Interest Factors
The first public interest factor—the effect of court congestion upon the
litigation—similarly does not support either forum. Neither party
contends that the U.K. courts are congested. As for the Southern District of
New York, although this District is historically busy, there is no reason to
believe that court congestion would slow the pace of this litigation. Cf.
Administrative Office of the U.S. Courts, “United States District Courts—
National Judicial Caseload Profile,” Sept. 2013 (indicating that the median
time from filing to disposition of a civil case is 8.3 months). Moreover,
given the U.S. Senate’s confirmation of six new judges to the Southern
District bench in the past year, it is once again true that “the recent filling
of all judicial vacancies and the resulting full complement of judges for the
District makes this [congestion] concern of little or no present
significance.” Guidi v. Inter‐Cont’l Hotels Corp., 224 F.3d 142, 146 n.5 (2d Cir.
2000); see U.S. Senate Committee on the Judiciary, “Judicial Nominations
and Confirmations: 113th Congress,” available at
visited Feb. 4, 2014). The prospect of court congestion therefore does not
affect this analysis.
Jury Duty, Public Trial, and the Local Interest
Several public interest factors rely on an understanding of which
location has a greater interest in the dispute. New York’s interest in this
dispute is limited to the fact that defendants reside here. The United
Kingdom’s interest is far greater. Plaintiff is located in the United
Kingdom. (FAC ¶ 19.) Additionally, the United Kingdom is a member of
the European Union, whose European Parliament and European Council
enacted the “Prospectus Directive” that govern the relevant securities in
this case. (See Thewes Decl. ¶¶ 8‐10; Hubble Decl. ¶¶ 9, 60.) Moreover, the
Citigroup employees involved with the issuance of these securities
apparently reside in the United Kingdom or Europe. See supra, section
II.B.3.a.i. Certain of the Euro Notes at issue in this dispute were
denominated in Pounds Sterling (and none in U.S. Dollars) (FAC ¶ 2),
further illustrating that the center of the litigation’s gravity is decidedly in
the United Kingdom, and not in the United States.
Given New York’s minimal interest in this litigation, it would be
unfair to impose jury duty upon residents whose community has little
stake in the outcome. Litigation in New York would also place any trial
outside the view and reach of those U.K. residents who are affected by this
dispute either through their relationship to plaintiff, through their
relationship to Rentokil Initial plc, or as constituents of the European
legislative and administrative entities that regulate the securities at issue.
In addition, more generally, the United Kingdom’s interest in having
“localized controversies decided at home,” see Gilbert, 330 U.S. at 508‐09,
supports that forum as preferable in this case.
iii. Issues of Foreign Law
The final public interest consideration is the avoidance of U.S. courts
determining issues of foreign law. This factor militates squarely against
further litigation in New York. Although the parties disagree as to what
law applies in this case, no party believes that U.S. law applies. Whether
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