The opinion of the court was delivered by: Cedarbaum, District Judge.
This is an action for breach of two contracts between Johnny Fassi, LJN
Italy and LJN Toys, Ltd. ("LJN Toys"). Defendants have moved to dismiss
the entire complaint on the ground of forum non conveniens or, in the
alternative, to stay this action pending the resolution of related
litigation in Italy.
Plaintiffs Johnny Fassi, Soly Fassi, and Mimi Fassi are brothers and
Italian citizens. Plaintiffs Zerga, s.r.l. ("Zerga") and ALN, s.r.l.
("ALN") are Italian corporations owned by the Fassi family. Defendant LJN
Toys is a New York corporation with its principal place of business in
New Jersey. LJN Toys was the 80% owner of LJN Italy during the period
relevant to this action. Defendant MCA, Inc. ("MCA") was the parent
corporation of LJN Toys at that time. MCA is a Delaware corporation with
its principal place of business in California.
Until 1987, Johnny Fassi and other members of the Fassi family owned
the Italian company AL-ES, s.r.l. ("AL-ES"), which was in the business of
selling toys. In March of 1987, the Fassis agreed to sell AL-ES to LJN
Italy, the Italian subsidiary of defendant LJN Toys.
The sale agreement also provided for various transactions between other
Fassi family companies and subsidiaries of LJN Toys. Specifically, Zerga
subscribed to 20% of the shares of LJN Italy, and ALN subscribed to 20%
of the shares of Superest, a company owned by LJN Toys' Hong Kong
From March 1987 through most of 1988, Johnny Fassi was employed as
general manager of AL-ES and of LJN Italy. Disputes arose between Fassi
and LJN Toys, however, and Fassi's employment as manager ended in
December of 1988.
At the beginning of 1989, Johnny Fassi and LJN Italy attempted to
resolve their disputes. This attempt yielded two contracts, both dated
February 1, 1989. One, the "Employment Agreement," set out the terms on
which Johnny Fassi would return as manager of LJN Italy and AL-ES.
Section 8 of the Employment Agreement stated that it was to be governed
by Italian law and that "the Courts of Italy shall be competent" for
disputes arising under it.
The other agreement, the "Umbrella Agreement," addressed various other
issues between the Fassi family and its companies, and LJN Italy. The
Umbrella Agreement provided, among other things, that LJN Italy would
repay outstanding loans made by the Fassis and Zerga to LJN Italy and
AL-ES; that LJN Toys would buy out Zerga's 20% interest in LJN Italy; and
that LJN Toys, through its Hong Kong subsidiary, would close and
liquidate Superest as soon as practicable and repay ALN's 20% investment
in it. The Umbrella Agreement also provided that Zerga would receive 20%
of any American insurance proceeds recovered by LJN Toys or MCA for a
1988 warehouse fire in Italy. Section 21 of the Umbrella Agreement, the
basis for four of plaintiff's claims against LJN Toys, provides as
LJN Toys Ltd, undertakes to maintain their controlling
interest in and not to liquidate nor to cease
operations o[f] LJN Italy and/or AL-ES as long as
their obligations toward Johnny, Soly and Mimi Fassi
under this Agreement and the Employment Agreement are
not fully performed.
The signatories to the two agreements are Johnny Fassi, LJN Italy and LJN
The parties differ as to the events surrounding the operation of AL-ES
and LJN Italy during 1989, but they do not dispute that AL-ES was placed
in liquidation on November 28, 1989 and that LJN Italy was placed in
liquidation on December 20, 1989.
B. The Italian Litigation
Subsequently, AL-ES filed for bankruptcy in the Bankruptcy Court of
Milan. Because AL-ES is now in bankruptcy, all claims against it,
including the Fassis' claim for repayment of loans, must be brought in
the Milan Bankruptcy Court. The Fassis' action in the Labor Court for
salary and benefits, including the claim against ...