Parkcentral Global Hub Ltd. v. Porsche Automobile Holdings SE
763 F.3d 198
| 2d Cir. | 2014Background
- Plaintiffs allege Porsche concealed its plan to acquire VW, causing losses in VW-based swaps by investors in the US and abroad.
- VW shares trade on foreign exchanges; the VW Law and German control dynamics are central to the dispute.
- Securities-based swap agreements linked to VW were executed/settled largely in the United States but reference foreign securities.
- Defendants’ alleged fraud occurred primarily in Germany; statements were made mainly in Germany though accessible in the US.
- The district court dismissed §10(b) claims as impermissibly extraterritorial after Morrison; appeal follows with remand for potential amendments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §10(b) applies to foreign-referenced swaps. | Pls argue swaps fall under §10(b) as securities-based instruments. | Porsche argues swaps reference foreign securities, outside §10(b). | Not applicable as pleaded; extraterritorial concerns predominate. |
| Does Morrison’s domestic-transaction rule suffice to state a domestic claim for these swaps? | Domestic transactions in swaps render §10(b) applicable. | Domestic transaction alone is not sufficient; case involves predominantly foreign conduct. | Domestic transaction is necessary but not sufficient; claims fail due to predominantly foreign nature. |
| Should Absolute Activist’s domestic-transaction test apply to these swaps? | Absolute Activist supports domesticity if liability is incurred within the US. | Test does not rescue swaps tied to foreign exchanges and foreign conduct. | Irrelevant to sustain§10(b) claims here; claims impermissibly extraterritorial. |
| Does applying §10(b) to these facts violate the presumption against extraterritoriality? | Court should extend §10(b) to protect US investors. | Such extension would cause foreign regulatory conflict and be improper. | Yes; the claims are impermissibly extraterritorial and dismissed. |
Key Cases Cited
- Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247 (2010) (presumption against extraterritoriality; domestic transactions focus)
- Absolute Activist Value Master Fund Ltd. v. Ficeto, 677 F.3d 60 (2d Cir. 2012) (domestic transaction if liability incurred or title passes in U.S.)
- Aramco v. limited, 499 U.S. 244 (1991) (presumption against extraterritoriality explained)
- Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013) (flexible, multi-factor analysis for extraterritoriality in foreign-touching cases)