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KINGDOM 5-KR-41 LTD. v. STAR CRUISES PLC.

March 9, 2004.

KINGDOM 5-KR-41, LTD., Plaintiff, -v- STAR CRUISES PLC, et al., Defendants; MARKETING SYSTEMS INTERNATIONAL, LTD., BWI, Plaintiff, -v- STAR CRUISES, et al., Defendants


The opinion of the court was delivered by: DENISE COTE, District Judge

OPINION AND ORDER

This Opinion grants a motion to dismiss a claim for unjust enrichment as barred by the Securities Litigation Uniform Standards Act of 1998, Pub.L. No. 105-353, 112 Stat. 3227 ("SLUSA"). Kingdom 5-KR-41, Ltd. ("Kingdom"), a Cayman Islands Page 2 corporation, commenced an action on April 6, 2001, against Star Cruises PLC, a Bermuda corporation, and its wholly owned subsidiary, Arrasas Ltd.*fn1 (collectively with Star, "Star"), as well as the Bank of New York ("BNY"), a New York corporation, for damages arising out of Star's acquisition of all of the outstanding shares of NCL Holding ASA ("NCL"), a Norwegian corporation.*fn2 On August 16, 2001, Marketing Systems International, BWI ("MSI"), a Cayman Islands corporation, filed this class action complaint against Star and BNY for violations arising from the same set of facts as those pleaded by Kingdom. Its causes of action track those pleaded by Kingdom, and MSI's case was accepted as related to Kingdom's.*fn3

  Star now moves for a judgment on the pleadings dismissing MSI's sole claim against it, a claim for unjust enrichment, as preempted by SLUSA. For the reasons stated below, the motion is granted.*fn4 Page 3

 Background

  In its original complaint, Kingdom alleged violations of the federal securities laws and unjust enrichment against Star, and breach of contract against BNY. In a March 20, 2002 Opinion, Judge Schwartz dismissed all of Kingdom's claims except for its unjust enrichment claim against Star, and the breach of contract claim against BNY. Kingdom 5-KR-41, Ltd, v. Star Cruises PL, No. 01 Civ. 2940 (ACS), 2002 WL 432390 (S.D.N.Y. Mar. 20, 2002) (the "March Opinion"). Kingdom's securities law claims, filed pursuant to Sections 14e and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(e), 78t(a), were dismissed based on Kingdom's (1) failure properly to plead that Star acted with the requisite scienter in making the alleged misrepresentations contained in Star's SEC filings in connection with its tender offer, and (2) failure to plead that it relied on statements made by Star after the tender offer period. Id. at *8-9.

  The parties had stipulated that the March Opinion would apply with equal force to MSI's purported class action. The Court retained jurisdiction over the state law claim against BNY based on the diversity of the parties, and exercised supplemental jurisdiction over the remaining state law claim against Star.

  The facts of this case are more comprehensively described in this Court's February 26, 2004 Opinion, which granted BNY's motion to dismiss Kingdom's amended claims for negligence and breach of fiduciary duty. Kingdom 5-KR-41, Ltd, v. Star Cruises PLC, No. 01 Civ. 2940 (DLC), 2004 WL 359138 (S.D.N.Y. Feb. 26, Page 4 2004). Familiarity with that Opinion is assumed. Only a brief recitation of the facts relevant to this motion will be included here.

  On July 9, 1999, NCL and BNY entered into a Deposit Agreement that created American Depositary Shares ("ADSs") of NCL.*fn5 MSI was a holder of NCL's ADSs. On January 13, 2000, Star commenced a tender offer to purchase all of the outstanding shares of NCL. In connection with the tender offer, Star filed a Schedule 14D-1 with the Securities and Exchange Commission ("SEC"). The offer was for 35 Norwegian Kroner ("NOK") per share and expired on February 10, 2000.

  The Schedule 14D-1 stated that Star's intent was to acquire all of the outstanding shares of NCL.*fn6 The Schedule 14D-1 stated Page 5 that three Star affiliates intended to transfer their shares to Star, and, provided Star held more than 90% of the outstanding shares following the tender offer, it intended to effect a compulsory acquisition pursuant to Norwegian law "as promptly as practicable" after the tender offer period ended. The Schedule 14D-1 also indicated that Star expected to offer the remaining shareholders a price "equal to" the offer price, but cautioned in bold letters that such a price was not guaranteed. MSI declined to tender its ADSs during the tender offer period.

  In a February 16, 2000 press release ("the Press Release"), Star confirmed that it had successfully acquired more than 90% of NCL's shares and intended to commence the compulsory acquisition of the remaining NCL shares. In a June press release, however, Star claimed that it could not commence the acquisition because 10.9% of NCL shares were still held by its three affiliates.

  On November 29, Star acquired the necessary NCL shares from its affiliates, and commenced the compulsory acquisition on November 30. The share price offered in the compulsory acquisition was the then-market price of 13 NOK per share.

  BNY, which was the Depositary for NCL's ADSs, received notice of the compulsory acquisition and the right to contest the offer price on or about November 30. Pursuant to the terms of the compulsory acquisition offer, shareholders had approximately two months to contest the 13 NOK compulsory offer price and Page 6 initiate a valuation proceeding under Norwegian law. On December 4, 2000, approximately four days after the compulsory offer, BNY accepted the 13 NOK per share price on behalf of all of the ADSs in its possession.

  In its class action complaint, MSI claims that Star was unjustly enriched by acquiring NCL securities in the compulsory acquisition for 13 NOK per share instead of the 35 NOK per share it paid in the tender offer. MSI's complaint alleges that Star's Schedule 14D-1 "contained material misrepresentations and omissions of material facts" regarding the timing of Star's acquisition of its affiliates' shares and the initiation of the compulsory acquisition that were made "with the intention that [MSI] and the Class would rely thereon." It further alleges that Star "had actual knowledge of the materially false and misleading statements and material omissions" set forth in the Schedule 14D-1 and Press Release "and intended to deceive or in the alternative acted with reckless disregard for the truth" when they made the misrepresentations. If Star "had not ...


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