The opinion of the court was delivered by: SCHEINDLIN
SHIRA A. SCHEINDLIN, U.S.D.J.:
Plaintiff Interbrew S.A. ("Interbrew") brings this action for violations of § 10(b) of the 1934 Securities Exchange Act and Rule 10b-5 promulgated thereunder. Plaintiff also asserts pendant state law claims for common law fraud and negligent misrepresentation. Subject matter jurisdiction is premised upon a federal question, 28 U.S.C. § 1331, and principles of supplemental jurisdiction, 28 U.S.C. § 1367(a).
Interbrew seeks damages resulting from allegedly fraudulent misrepresentations by EdperBrascan's corporate predecessor, Brascan Limited ("Brascan"), regarding its obligation to purchase for cash, or its equivalent, certain securities held by John Labatt Limited ("Labatt"). Interbrew alleges that these misrepresentations, upon which it relied to its detriment, caused it to purchase and hold Labatt shares at an artificially inflated price.
Defendant EdperBrascan moves to dismiss the Complaint pursuant to Fed. R. Civ. P. 9(b), 12(b)(1), 12(b)(2) and 12(b)(6), claiming that the Complaint fails to state a claim upon which relief can be granted, fails to plead fraud with particularity, and that this Court lacks subject matter jurisdiction over the case and personal jurisdiction over the Defendant. In the alternative, Defendant seeks to stay or dismiss this action in deference to related litigation pending in Canada or to dismiss the action on the ground of forum non conveniens.
I. Standards Under Rule 12(b)
Before a court can consider a forum non conveniens motion, it must first determine whether it has jurisdiction over the case and the parties. See Monsanto International Sales Co., Inc. v. Hanjin Container Lines, Ltd., 1991 U.S. Dist. LEXIS 14189, 88 Civ. 1673, 1991 WL 210951, at *1 (S.D.N.Y. Oct. 8, 1991); Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 91 L. Ed. 1055, 67 S. Ct. 839 (1947).
Defendant urges that because it made a "facial" challenge to subject matter jurisdiction pursuant to Rule 12(b)(1) -- contesting only "the sufficiency of the jurisdictional facts alleged, not the facts themselves," Poodry, v. Tonawanda Band of Seneca Indians, 85 F.3d 874, 887 n.15 (2d Cir. 1996) -- the Court should not look beyond the Complaint to consider the affidavits submitted by Plaintiff. See Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). The rule in this circuit does not appear to be so firm. See, e.g., Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997) ("Even if Ace challenges only the sufficiency of Transatlantic's complaint, we are entitled at any time sua sponte to delve into the issue of whether there is a factual basis to support the District Court's exercise of subject matter jurisdiction. . . In so doing, the case law does not limit our right to refer to any material in the record" (citations omitted)). Nevertheless, because Defendant has made a facial attack against this Complaint, and the Court is considering the attack in that manner, Plaintiff "is afforded safeguards similar to those provided in opposing a Rule 12(b)(6) motion -- the Court must consider the allegations of the complaint to be true." U.S. v. Suffolk Construction Co., Inc., 1996 U.S. Dist. LEXIS 9756, *4, 95 Civ. 9363, 1996 WL 391875, at * 1 (S.D.N.Y. July 12, 1996) (quoting Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)).
Defendant EdperBrascan is a corporation organized under the laws of Ontario, Canada, formed through the combination of Brascan and The Edper Group Limited on or about August 1, 1997. Its voting shares are traded on the American Stock Exchange, the Toronto Stock Exchange and elsewhere.
Plaintiff Interbrew is a soci t anonyme organized under the laws of Belgium, with its headquarters in Brussels, Belgium. Interbrew makes and sells beer and other products. Through a wholly owned subsidiary, Interbrew owns 100% of the shares of Labatt Brewing Company Ltd. (a corporate successor to Labatt, a corporation organized under the laws of Canada). In addition, Interbrew indirectly owns 78% of the shares of Labatt USA L.L.C., based in Norwalk, Connecticut, and 78% of the shares of Latrobe Brewing Company L.L.C., based in Latrobe, Pennsylvania.
From approximately 1980 until March 8, 1993, Brascan owned roughly 38% of the outstanding common shares of Labatt, with the remainder owned by public shareholders. Due to this substantial investment and the presence of various Brascan directors and officers on the Labatt Board of Directors, Brascan exercised effective control of Labatt during this time. See Complaint ("Cmplt.") at P 12.
During the years of Brascan's control of Labatt, Brascan caused Labatt to make investments of approximately (Cdn) $ 300 million in Epsim Investments Limited ("Epsim") and Mico Investments Ltd. ("Mico"), other entities also controlled by Brascan. See Cmplt. at PP 3, 13, 14. The securities of these companies were not traded on any established market nor were they freely resalable. Thus, Labatt's investments in these companies would be virtually worthless to Labatt without some mechanism by which it could convert these investments into cash or freely-traded, marketable securities. See id.
In February 1993, Brascan announced its intention to sell its 38% stake in Labatt. In connection with that sale, Brascan officials represented to the Labatt Board of Directors that Labatt's investments in Epsim and Mico would be liquidated at book value and that, if any of the investments remained unsold at the end of five years (i.e. by the end of March, 1998), Brascan would purchase them for cash or market-traded securities which could be quickly converted into cash. See Cmplt. at PP 3, 15. Brascan repeated the substance of these representations in its prospectus, through which it registered its shares of Labatt and sold them to the public on March 8, 1993. See Cmplt. at P 16.
These representation took other forms as well. On March 9, 1993, the day after Brascan's shares had been sold, Brascan confirmed its commitment to monetize the investments by signing an agreement with Labatt ("the Agreement") which would facilitate the monetization of the Epsim and Mico investments at book value. See Cmplt. at PP 17, 18. Subsequently, on March 11, 1993, Labatt's Board of Directors, including those members who were also Brascan Directors, unanimously approved Labatt's financial statements, which classified the Epsim and Mico investments as long-term assets at their full book value. See Cmplt. at PP 4, 19. On August 10, 1993, Labatt filed its Annual Report for the fiscal year ending April 30, 1993, containing the financial statements based in turn on the Agreement signed with Brascan, with the U.S. Securities and Exchange ...