806 F. Supp. 2d 712
S.D.N.Y.2011Background
- Plaintiffs are Argentine foreign nationals who invested in Plaza Investments Intl Ltd, which deposited 100% of its assets with BMIS before Madoff’s fraud was exposed.
- Notz Stucki Bermuda allegedly controlled Plaza’s decision making and delegated investment management to Notz Stucki & Cie, while Notz Stucki Bermuda served as Plaza’s investment manager and oversaw BMIS-related service providers.
- UBS Luxembourg acted as Plaza’s custodian; Plaza’s offering documents advertised UBS Luxembourg’s custodial role.
- DiPascali, BMIS’s CFO, pled guilty to multiple counts related to Madoff’s scheme and is judgment-proof, complicating any recovery against him.
- Plaintiffs assert fraud, misrepresentation, negligence, fiduciary breach, contract, and unjust enrichment, primarily targeting international conduct outside the United States.
- The court granted severance of the claims against DiPascali and dismissed the Foreign Defendants on forum non conveniens grounds, deciding not to reach other arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Severance of DiPascali | DiPascali is integral to plaintiffs’ claims; severance would hinder efficient resolution. | DiPascali is nominal, judgment-proof, and severance promotes efficiency and forum non conveniens goals. | DiPascali’s claims severed. |
| Forum non conveniens dismissal of Notz Stucki Bermuda, Notz Stucki & Cie, and UBS Luxembourg | New York is an appropriate forum; discovery and witnesses are manageable in New York. | Switzerland is a clearly adequate and significantly more convenient forum; private/public interests favor Switzerland; CAFA issues are addressed by severance. | Forum non conveniens dismissal granted; claims against Foreign Defendants dismissed. |
Key Cases Cited
- Wyndham Assocs. v. Bintliff, 398 F.2d 614 (2d Cir. 1968) (severance and transfer can advance administration of justice)
- Basile v. Walt Disney Co., 717 F. Supp. 2d 381 (S.D.N.Y. 2010) (severing to facilitate transfer of venue)
- Guidi v. Inter-Continental Hotels Corp., 224 F.3d 142 (2d Cir. 2000) (related actions may be immaterial to forum non conveniens)
- In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 214 F.R.D. 152 (S.D.N.Y. 2003) (severance when appropriate for judicial efficiency)
- Iragorri v. United Techs. Corp., 274 F.3d 65 (2d Cir. 2001) (three-step Iragorri framework for forum non conveniens)
- Blockbuster, Inc. v. Galeno, 472 F.3d 53 (2d Cir. 2006) (CAFA jurisdiction and timing considerations; post-removal events)
- DiRienzo v. Philip Servs. Corp., 294 F.3d 21 (2d Cir. 2002) (public/private factor balancing in forum non conveniens; foreign law considerations)