Fasano v. PEGGY YU YU
921 F.3d 333
2d Cir.
2019

Background

  • Plaintiffs (Altimeo entities and an investor) sued on behalf of a putative class, alleging a going‑private merger of E‑Commerce China Dangdang, Inc. paid minority ADS holders below‑market consideration.
  • Defendants include Dangdang and its controlling shareholders, directors, executives, and affiliates.
  • The district court granted defendants’ motion to dismiss on forum non conveniens grounds, finding the Cayman Islands an adequate alternative forum, and did not address a forum selection clause in the ADS receipts.
  • The ADS receipts contain a mandatory forum selection clause designating New York state and federal courts in Manhattan for specified disputes.
  • Plaintiffs argued below that the forum selection clause modifies the forum non conveniens analysis and should control; the district court nonetheless applied the traditional forum non conveniens test without considering the clause.
  • The Second Circuit vacated and remanded, holding the district court abused its discretion by failing to consider the forum selection clause and directing the district court to determine (1) whether the clause’s presumption of enforceability applies, (2) whether it covers non‑signatories, and (3) whether it has been rebutted.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether district court erred by not treating ADS forum clause as modifying forum non conveniens analysis The clause is mandatory and should displace deference to plaintiff’s forum choice; district court must apply presumption of enforceability District court may apply traditional forum non conveniens analysis; defendants also argued plaintiffs waived reliance on clause Court: District court erred by ignoring the forum selection clause; remand required to apply presumption analysis
Whether plaintiffs waived reliance on forum selection clause Plaintiffs timely raised the clause in opposition to dismissal Defendants contended plaintiffs failed to preserve the argument below Held: No waiver; issue was raised and preserved for appeal
Whether forum selection clause binds non‑signatories (scope) Clause may bind successors/third‑party beneficiaries and applicable non‑signatories under relevant tests Defendants argue clause does not cover key defendants/claims Held: Scope not resolved on appeal; remanded for district court to assess applicability to non‑signatories
Whether presumption of enforceability can be rebutted Plaintiffs contend enforcement would be unreasonable/unjust only if strong showing of fraud, overreaching, or unreasonableness Defendants rely on clause’s validity and move to dismiss to alternative forum Held: District court must evaluate rebuttal evidence on remand; appellate court did not resolve substantive enforceability

Key Cases Cited

  • Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (standard of review for forum non conveniens dismissal)
  • Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146 (2d Cir. 2005) (three‑part forum non conveniens framework)
  • Asoma Corp. v. SK Shipping Co., 467 F.3d 817 (2d Cir. 2006) (review standards for factual findings and legal conclusions)
  • Aguas Lenders Recovery Grp. v. Suez, S.A., 585 F.3d 696 (2d Cir. 2009) (forum selection clauses can bind successors/third‑party beneficiaries and modify forum non conveniens analysis)
  • Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64 (2d Cir. 2003) (factors for abuse of discretion review)
  • M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (1972) (forum selection clauses prima facie valid and enforceable)
  • Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714 (2d Cir. 2013) (three‑factor test for presumption of enforceability)
  • Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (consider whether claims/parties fall within forum clause)
  • Carey v. Bayerische Hypo‑Und Vereinsbank AG, 370 F.3d 234 (2d Cir. 2004) (forum non conveniens as discretionary device)
  • Starkey v. G Adventures, Inc., 796 F.3d 193 (2d Cir. 2015) (forum selection clause’s role in forum non conveniens analysis)
  • United States v. Harrell, 268 F.3d 141 (2d Cir. 2001) (issue preservation doctrine)
  • United States v. Gomez, 877 F.3d 76 (2d Cir. 2017) (appellate courts generally do not address issues not passed upon below)
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