Viking Global Equities and Glenhill Capital LP, et al. v. Porsche Automobil Holding SE, Index Nos. 650435/11, 650678/11 (Sup. Ct. N.Y. Cty. 2012), are related actions by global hedge funds who allegedly lost money in short positions when Porsche allegedly made misstatements involving its intention to attempt a takeover of Volkswagon. The case is of interest to international litigation practitioners because its federal predecessor action was dismissed for want of proper jurisdiction under the federal securites laws and the Supreme Court’s Morrison decision (see our discussion here). The federal case is on appeal.
The defendants principal argument on this motion was forum non coneniens. Is that a motion that has a better chance in the state court than in federal court? The Second Circuit recently reiterated that it would dismiss on FNC grounds even if the non-U.S. jurisdiction had significantly different substantive law (see our discussion here)
Applying law on forum non conveniens similar to the established federal law on the subject, the State Court began by enumerating the points of “factual nexus” between the two actions, the burden on New York sours, the potential hardship to the defendant of litigating here, the availability of an alternative forum, and the residency of the parties. Said the court, “the plaintiff’s choice of forum is afforded great weight and should not be disturbed unless the balance strongly favors the jurisdiction in which the defendant seeks to litigate the claims”. All plaintiffs here had principal places of business in New York. The Court denied the FNC motion, not finding any compellng to tranfer it.
The Court turned next to whether the fraud allegations were legally sufficient — here, even though “a sophisticated plaintiff enjoys access to critical information” and hence a different legal standard might be applied to them, the Court found nonetheless that the plaintiffs did not have enough information, finding that “the question of what consititues reasonable reliance is fact-intensive”. The Court denied the motion to dismiss the fraud claim.
The Court also found that the cause of action for unjust enrichment was sufficiently pled and so did not dismiss any part of the plaintiffs’ claims. All that was needed, said the court, was that other party was enriched, at plaintiff’s expense, and that it is against equity and good conscience to permit the other party to retain what is sought to be recoved.