47 F.4th 91
2d Cir.2022Background
- Plaintiffs (U.S. and French ADS holders) sued Dangdang and related defendants over a 2016 going‑private merger that eliminated their American Depositary Shares (ADSs), alleging federal securities claims (§§10(b), 13(e), 20(a)) and common‑law claims (breach of fiduciary duty, negligent misrepresentation).
- Dangdang ADSs were governed by a Deposit Agreement whose arbitration clause provided that Federal securities claims could be arbitrated (if claimant chose) and that non‑arbitrable ADS‑related claims must be litigated in Manhattan (Forum Selection Clause).
- District Court initially dismissed on forum non conveniens; this Court vacated and remanded to consider the ADR Forum Selection Clause. On remand plaintiffs amended the complaint to add §10(b) and §20(a) claims; defendants renewed a forum non conveniens motion and alternatively moved under Rule 12(b)(6).
- The district court construed the Forum Selection Clause narrowly (tied to the ADS issuance) and held it applied to only five of 13 named defendants and only to the federal securities claims; it dismissed again on forum non conveniens and denied the Rule 12(b)(6) motion as moot.
- The Second Circuit reversed: it held the clause covers controversies “arising out of or relating to” the ADSs (including the merger), concluded all served defendants in the Buyer Group were plausibly subject to the clause, found public‑interest factors did not warrant dismissal, vacated the judgment, and remanded for consideration of the Rule 12(b)(6) motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Forum Selection Clause (what claims are covered) | Fasano: Clause covers federal securities claims and related ADS disputes; should control forum analysis. | Defs: Clause limited to disputes about the ADS issuance; merger disputes fall outside. | Held: Clause’s "arising out of or relating to" language is broad; merger‑related deprivation of ADSs falls within the clause. |
| Coverage of Non‑signatory Defendants | Fasano: Buyer‑group defendants who caused elimination of ADSs reasonably foreseen being bound; clause should apply to all served defendants. | Defs: Non‑signatories (Kewen, S&C, First Profit, Yao, Chen, etc.) had no connection to the Deposit Agreement and could not foresee being bound. | Held: Non‑signatories that were in the Buyer Group and tied to proxy materials referencing the Deposit Agreement are plausibly covered; all 10 served defendants are within the clause. |
| Weight of Public‑Interest Factors for Forum Non Conveniens | Fasano: U.S. courts have strong interest, especially over unsettled U.S. securities law questions; New York arbitration also governs common‑law claims. | Defs/District Ct: Cayman Islands has strong interest (Dangdang is Cayman corp, merger occurred there); many claims governed by Cayman law, so dismissal appropriate. | Held: District court overstated Cayman interest; common‑law claims must be arbitrated in New York and the only claims that could go to Cayman courts would be unsettled U.S. securities questions — public interest does not justify dismissal. |
| Waiver of Rule 12(b)(6) defense | Fasano: Defendants waived Rule 12(b)(6) by not raising it with their initial forum non conveniens motion. | Defs: No waiver — amended complaint was filed later; forum non conveniens motion is not a Rule 12 motion; Rule 12(g)/(h) limitations do not bar a later 12(b)(6) motion. | Held: No waiver; district court should decide defendants’ Rule 12(b)(6) motion on remand. |
Key Cases Cited
- Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (establishes forum non conveniens factors)
- M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (forum‑selection clauses presumptively enforceable absent strong cause)
- Atlantic Marine Construction Co. v. U.S. District Court, 571 U.S. 49 (contractual forum selections alter forum non conveniens analysis; public‑interest factors control)
- Martinez v. Bloomberg LP, 740 F.3d 211 (forum‑selection clause presumption and inquiry in Second Circuit)
- Roby v. Corporation of Lloyd's, 996 F.2d 1353 ("arising out of or relating to" language interpreted broadly)
- Aguas Lenders Recovery Group v. Suez, S.A., 585 F.3d 696 (standards for binding non‑signatories to forum clauses; abuse of discretion standard for FNC)
- Iragorri v. United Technologies Corp., 274 F.3d 65 (Second Circuit forum non conveniens principles)
- Magi XXI, Inc. v. Stato della Città del Vaticano, 714 F.3d 714 (non‑signatory enforcement when closely related to signatory)