Prime Mover Capital Partners L.P. v. Elixir Gaming Technologies, Inc.
2011 U.S. Dist. LEXIS 1533
| S.D.N.Y. | 2011Background
- Plaintiffs, U.S. hedge funds, purchased EGT shares in 2006 and early 2007, some via private placements under a Securities Purchase Agreement (SPA) and a December 2007 Warrant Purchase Agreement (WPA).
- EGL entered into the SPA with EGT's predecessor (VendingData) around June 12, 2007; EGL could obtain equity and warrants in exchange for placing electronic gaming machines in Asia, with EGT expanding its board and nominating EGL-designated directors.
- EGL ultimately owned about 75 percent of EGT, creating a connection between EGL/Melco and EGT.
- Melco International Development Limited and Lawrence Ho, Hong Kong residents, are alleged to indirectly control EGL; Ho was a director of EGL and chairman/major shareholder of Melco, but not an officer of EGT.
- Plaintiffs allege that EGT made false and misleading statements in press releases, calls, road shows, and SEC filings between June 13, 2007 and August 13, 2008, inflating EGT stock.
- The court grants Melco and Ho’s motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2); discovery had not occurred, and plaintiffs failed to show that Melco/Ho had sufficient U.S. contacts or that their actions caused an injury in the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over Melco and Ho. | Ho/Melco had direct, foreseeable effects in the U.S. and controlled EGL, which held EGT stock. | Plaintiffs have no injury in the U.S. from Melco/Ho’s actions; no forum-related contacts with the U.S. | No personal jurisdiction over Melco and Ho. |
Key Cases Cited
- Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194 (2d Cir. 1990) (prima facie jurisdiction standard for Rule 12(b)(2) without discovery)
- Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181 (2d Cir. 1998) (two-step approach to personal jurisdiction with prima facie showing)
- Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120 (2d Cir. 2002) (minimum contacts and reasonableness in due process analysis)
- Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560 (2d Cir. 1996) (framework for due process personal jurisdiction including minimum contacts and reasonableness)
- Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) (establishes general approach to personal jurisdiction limits)
- U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135 (2d Cir. 2001) (minimum contacts and reasonableness considerations for jurisdiction)