875 F. Supp. 2d 297
S.D.N.Y.2012Background
- ISR founded to acquire EMX Inc., Wave, and SensArray; Bridge Offering and private subscription led to Recurrent and Einwohner purchasing ISR stock; execution of Subscription Agreement included a New York forum clause and consent to Southern District of New York jurisdiction; after cashflow problems, EMX Group, EMX-I, and EMX-II were formed to acquire ISR’s opportunities; EMX Group/EMX-I/EMX-II acquired ISR’s assets for no consideration creating successive de facto mergers; plaintiffs allege fiduciary breaches, misappropriation of corporate opportunity, and fraudulent conveyance; action filed January 31, 2012 seeking contract remedies, fiduciary relief, and restitution; defendants move to dismiss for lack of personal jurisdiction or to transfer/avoid forum, or for forum non conveniens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether EMX-II is ISR’s successor-in-interest and bound by the Subscription Agreement’s forum clause. | EMX-II is a de facto merger successor to ISR, EMX Group, and EMX-I; bound by clause. | EMX-II is not bound as a non-signatory or as a separate contracting party. | EMX-II is ISR’s successor-in-interest and bound by the forum clause. |
| Whether Arion is bound by the Subscription Agreement’s forum clause as a closely related/non-signatory. | Arion, as ISR officer and key participant, is closely related to ISR’s New York financing efforts and bound. | Arion is not a signatory and not sufficiently related to bind by clause. | Arion is bound by the forum clause under closely related doctrine. |
| Whether the action should be transferred under 1404(a) or dismissed for forum non conveniens in light of the forum clause. | New York remains proper forum; transfer not warranted; clause favors NY law and familiarity. | Consider Florida as alternative forum; transfer or dismissal appropriate. | Keep case in New York; transfer and forum non conveniens motions denied. |
Key Cases Cited
- Stewart Org. v. Ricoh Corp., 487 U.S. 22 (1988) (forum selection clause scope and transfer analysis guidance)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum clause enforcement standard; grave inconvenience exception)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d Cir.2006) (personal jurisdiction through forum clause analysis)
- Packer v. TDI Sys., Inc., 959 F. Supp. 192 (S.D.N.Y.1997) (utility of forum selection clause in transfer decisions)
- National Service Indus., Inc. v. United States, 460 F.3d 201 (2d Cir.2006) (ties to forum for contract and related disputes)
- Aguas Lenders Recovery Group v. Suez, S.A., 585 F.3d 696 (2d Cir.2009) (forum clause enforceability and related doctrines)