The opinion of the court was delivered by: P. Kevin Castel, U.S.D.J.
Plaintiffs bring this action on their own behalf and on behalf of current or former employees of defendants Radianz Ltd. ("Radianz") and/or Radianz Americas, Inc. (collectively, the "Radianz Cos."), asserting claims relating to a stock option plan which governed the plaintiffs' rights to acquire shares in Radianz (the "Plan"). Plaintiffs contend, among other things, that the Radianz Cos. breached their obligations under the Plan, and that, in connection with a sale of the Radianz Cos. by defendants Reuters Limited, Blaxmill (Six) Limited, Reuters C LLC, and Reuters America LLC (collectively, "Reuters") to defendant British Telecommunications ("BT"), Reuters and BT manipulated the purchase price of the Radianz Cos. so as to make worthless options that had been awarded to plaintiffs under the Plan. The plaintiffs assert claims for breach of contract, breach of the duty of good faith and fair dealing, tortious interference with contractual relations, unjust enrichment and breach of fiduciary duty.
Defendants have moved to dismiss this action on the ground of forum non conveniens. They contend that virtually all of the parties, witnesses and relevant evidence are located in England. They contend that all of the events at issue in the action occurred in England, including the adoption and amendment of the Plan, and the negotiation and documentation of the sale of the Radianz Cos. by Reuters to BT. They also note that the Plan governed options to acquire shares in an English company (Radianz), and that all option holders located in the U.S. (a group that makes up only 40 percent of the putative class) were explicitly informed that the shares were not registered on any U.S. exchange. Defendants argue that, at bottom, this action relates entirely to the internal corporate governance of, and transactions between, English companies. As such, they contend that England provides an adequate, and more appropriate, forum for litigation of plaintiffs' claims.
As discussed herein, I conclude that the courts of England represent an adequate alternative forum for the resolution of this dispute and the relevant private and public interest factors weigh heavily in favor of dismissal and, accordingly, the motion is conditionally granted. Central to this lawsuit is the claim that defendants breached a stock option plan which was adopted and subsequently amended in England, and governed the rights of employees to purchase English securities. The events giving rise to the claim that the stock option plan was breached arise out of the sale of Radianz from one English company to another, which transaction was negotiated and documented in England. Approximately 40 percent of the putative class members reside in England. While another approximately 40 percent of the putative class members reside in the U.S., only 16 percent of those are residents of the state of New York. Significantly, though Radianz apparently maintained its operational headquarters in New York, the events at issue in this action have little, if any, connection to the District.
The vast majority of the key witnesses and documents are located in England. Assessment of the credibility of witnesses will be important in this case and can be best accomplished in England, where the witnesses -- particularly non-party witnesses -- will be able to testify in the presence of the fact-finder. Furthermore, English law is likely to apply to the claims in this action and no federal statutory claims are asserted.
Plaintiff Gilstrap is "a principal founder, and the former President and CEO, of Radianz," who, during his tenure as a Radianz employee, worked out of the company's "global headquarters in New York." (Cmplt. ¶ 30)*fn1 Gilstrap is currently a resident of Houston, Texas. (Cmplt. ¶ 12) Plaintiff Tataryn was employed by Radianz in London for approximately four years, and is currently a resident of Suffolk, England. (Cmplt. ¶¶ 31, 12) Both plaintiffs were participants in the Plan and allege that they continue to hold Radianz stock options. (Cmplt. ¶ 12)
Radianz, a telecommunications company which provides "extranet" services (private internet protocol services) to the financial community, was formed in May 2000 as a joint venture between Reuters and a telecommunications company called Equant, which is not a party to this case. (Cmplt. ¶ 32) Fifteen percent of the company's stock was set aside to be distributed to Radianz employees through the Plan. (Cmplt. ¶ 33) While plaintiffs allege that approximately 70 percent of the outstanding options were issued to employees who worked for Radianz in the United States (Cmplt. ¶ 34), they do not contest defendants' assertion that approximately 60 percent of the individuals who participated in the Plan are located outside the United States, with 40 percent in England.
In the spring of 2004, Reuters and Equant decided to sell their interests in Radianz and, in September 2004, accepted a bid from BT, an English company. (Cmplt. ¶¶ 39, 41) Plaintiffs contend that while the purchase price of Radianz was announced as $175 million, that figure "did not represent the true value Reuters received from the sale of Radianz," and that the "true purchase price was at least $580 million and possibly higher than $800 million." (Cmplt. ¶ 41) Prior to the consummation of the sale to BT, Reuters bought out Equant's interest in Radianz in November 2004 for approximately $150 million. (Cmplt. ¶ 50)
The Plan contained provisions whereby option holders, upon being notified of a proposed sale of the entire interest in Radianz to an entity unrelated to Reuters or Equant, could exercise their options to acquire shares in anticipation of selling those shares to the proposed buyer. The Plan also contained a provision authorizing the Radianz Board to replace Radianz options with options to purchase stock in the acquiring company. (Cmplt. ¶ 53) While the Radianz Board was vested with the power to amend the Plan, the Plan contained a provision stating that "no amendment shall be effective which would materially prejudice the interests of Option Holders in relation to Options already granted to them" unless such holders consented. (Cmplt. ¶ 52, Ex. A § 8.3.1)
In March 2005, the Radianz Board voted to amend the Plan. The Amended Plan added a "cash cancellation" provision, which enabled the Radianz Board, in the event of a proposed sale of the company, and "in its absolute discretion," to cancel all options in exchange for a cash payment to the option holders. The amount of the payment was to be determined by a formula set forth in the Amended Plan, and was based on the difference between the purchase price per share to be paid by the acquiring entity and the exercise price of the option to be canceled. If the exercise price exceeded the per share price to be paid, the Amended Plan provided that a "nominal amount" would be paid for each canceled option. (Cmplt. 54)
Based upon the stated purchase price of $175 million, the Radianz Board determined that the per share price to be paid by BT was lower than the exercise price on all existing options. Pursuant to the cash cancellation provision, Radianz canceled all options and, in April 2005, paid all option holders ten cents per share. (Cmplt. ¶ 56)
Plaintiffs filed the initial complaint in this action on September 12, 2005.
The doctrine of forum non conveniens allows a district court to "'resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute.'" Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 153 (2d Cir. 2005) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947)), cert. denied, 126 S. Ct. 2320 (May 30, 2006). District courts have broad discretion in deciding whether to dismiss an action on the ground of forum non conveniens, but should be guided by the "central notions of . the convenience of the parties and their witnesses and that justice be served." Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 81 F.3d 1224, 1227 (2d Cir. 1996).
In the Second Circuit, district courts are instructed to assess forum non conveniens motions under a three-step process. First, the court must determine the degree of deference that is properly afforded the plaintiff's choice of forum. Then, it must determine whether the alternative forum proposed by the moving party constitutes an adequate forum for the resolution of plaintiff's claims. Finally, assuming the alternative forum is found to be adequate, the court must weigh the relevant private and public interest factors and determine whether the plaintiff's chosen forum or the proposed alternative is, in fact, more convenient and appropriate. See Norex, 416 F.3d at 153 (citing Iragorri v. United Techs. Corp., 274 F.3d 65, 73-74 (2d Cir. 2001) (en banc)). "[T]here is no algorithm that assigns precise weights to the factors that inform forum non conveniens determinations. The doctrine instead is intensely practical and fact-bound. The most that may be said is that courts reach informed judgments after considering all of the pertinent circumstances." First Union Nat'l Bank v. Paribas, 135 F. Supp. 2d 443, 448 (S.D.N.Y. 2001), aff'd, 48 Fed. Appx. 801 (2d Cir. 2002).
Deference to Plaintiff's Choice of Forum
Generally, a plaintiff's choice of the forum in which to bring suit is entitled to substantial deference. The Supreme Court has instructed that, on forum non conveniens motions, "unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Gulf Oil, 330 U.S. at 508. The Second Circuit has interpreted this language as equivalent to an "assumption that the plaintiff's choice of forum will stand unless the defendant meets the burden of demonstrating" that its proposed alternative is more appropriate. Iragorri, 274 F.3d at 71; see also Aguinda v. Texaco, Inc., 303 F.3d 470, 476 (2d Cir. 2002) (defendant bears the burden on forum non motion).
The Iragorri court recognized that prior Supreme Court jurisprudence had established that a plaintiff's choice of forum is entitled to "great deference" when the plaintiff sues in his home forum, but that when a foreign plaintiff sues in a U.S. forum, his choice is entitled to less deference. Iragorri, 274 F.3d at 71 (citing Koster v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947) and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-56 (1981)). However, the Iragorri court undertook to examine a situation with which the Supreme Court had not yet dealt, "a United States resident plaintiff's suit in a U.S. district other than that in which the plaintiff resides." Iragorri, 274 F.3d at 71. As to plaintiff Gilstrap, who resides in Texas, that is the situation presented here. Even prior to Iragorri, the Second Circuit recognized that the mere fact that a plaintiff is a United States citizen did not preclude dismissal on forum non conveniens grounds. See, e.g., Scottish Air, 81 F.3d at 1232 ("although a citizen plaintiff's choice of forum deserves considerable deference, it is not automatically dispositive in determining a forum non conveniens motion") (citation omitted); First Union, 135 F. Supp. 2d at 448 (plaintiff's citizenship "ultimately may be outweighed by a sufficiently robust showing in favor of an alternative forum").
In Iragorri, the Second Circuit described a "sliding scale" approach to deference, whereby "the greater the plaintiff's or the lawsuit's bona fide connection to the United States and to the forum of choice and the more it appears that considerations of convenience favor the conduct of the lawsuit in the United States, the more difficult it will be for the defendant to gain dismissal for forum non conveniens." Iragorri, 274 F.3d at 72 (footnotes omitted); see also Cromer Fin. Ltd. v. Berger, 158 F. Supp. 2d 347, 353 (S.D.N.Y. 2001) ("It is well settled that every plaintiff's selection of forum receives deference, although the degree of deference increases as the plaintiff's ties to the forum increase.") (internal quotation marks and citation omitted).
The Iragorri court identified certain factors that support denial of a forum non conveniens motion, including the convenience of the forum as related to plaintiff's residence, availability of witnesses and evidence, whether defendants are amenable to suit in the chosen forum, the availability of legal assistance, and "other reasons relating to convenience or expense." Iragorri, 274 F.3d at 72. On the other hand, the court held that a plaintiff's choice of forum should be afforded less deference the more it appears as though the choice was motivated by forum-shopping, for example, to take advantage of more favorable laws and/or a jury pool renowned for returning verdicts favorable to plaintiffs, or to inconvenience the defendant. Id. Courts are instructed to "consider a plaintiff's likely motivations in light of all the relevant indications." Id. at 73.
Here, the courthouse in the Southern District of New York is likely more convenient to plaintiff Gilstrap, a resident of Houston, than would be a Court located somewhere in England. Nonstop flights between Houston and New York are frequent and of relatively short duration, whereas there appear to be at most four daily nonstop flights in each direction between Houston and London, with most other flights connecting through an East Coast city. Litigation in New York would also likely prove less expensive for Gilstrap than litigation in England. The only other named plaintiff in this action, Tataryn, resides in Suffolk, England. No credible claim can be made on his behalf that litigation in an English court would be less convenient.
Plaintiffs' choice of forum is also entitled to less deference where, as here, they are suing in a representative capacity. See DiRienzo v. Philip Servs. Corp., 294 F.3d 21, 28 (2d Cir.), cert. denied, 537 U.S. 1028 (2002); In re Ski Train Fire in Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 376, 388 (S.D.N.Y. 2002); Koster, 330 U.S. at 523-24. Though the fact that a plaintiff sues as a representative of a putative class does not mean that his choice of forum is deprived of all deference, plaintiffs in such cases generally "have only a small direct interest in a large controversy in which there are many potential plaintiffs, usually in many potential jurisdictions." DeYoung v. Beddome, 707 F. Supp. 132, 138 (S.D.N.Y. 1989). Approximately sixty percent of the putative class members reside outside the U.S., with a majority of those residing in England, the proposed alternative forum. It is worth noting, however, that according to counsel's representations at oral argument, plaintiff Gilstrap himself is the holder of approximately 20 percent of all outstanding options. Thus, he has more than a "small direct interest" in the outcome of the litigation.
The choice of a U.S. forum by plaintiff Tataryn, a resident of England who purports to represent a subclass of non-residents, is presumptively entitled to "considerably less" deference. Cromer Fin. Ltd. v. Berger, 158 F. Supp. 2d 347, 355, (S.D.N.Y. 2001); see also Strategic Value Master Fund, Ltd. v. Cargill Fin. Servs. Corp., 421 F. Supp. 2d 741, 754 (S.D.N.Y. 2006). However, as with resident plaintiffs, the more "legitimate reasons" a foreign plaintiff has for bringing suit in a U.S. court, the more deference his choice is due. See Bigio v. Coca-Cola Co., 448 F.3d 176, 179 (2d Cir. 2006). Beyond the availability of contingent fees and class actions, and a desire to join with Gilstrap, little or nothing is provided as to Tataryn's reasons for suing in New York rather than in his home forum, England. His choice is entitled to some, but slight, deference.
Thus, "[t]he named plaintiffs' lack of bona fide connections to this District indicates that their choice of forum should be accorded less deference than that due a resident plaintiff seeking redress." In re Royal Group Techs. Sec. Litig., 2005 WL 3105341 at *2 (S.D.N.Y. Nov. 21, 2005) (citation omitted); see also Saab v. Citibank, N.A., 2001 WL 1382577 at * 3 (S.D.N.Y. Nov. 7, 2001) ("The general rule is that deference increases as the plaintiff's ties to the forum increase.") (internal quotation marks and citation omitted), aff'd, 50 Fed. Appx. 467 (2d Cir. 2002).
Moreover, unlike plaintiffs in DiRienzo, plaintiffs here are not seeking to enforce the U.S. securities laws. See DiRienzo, 294 F.3d at 28; Cromer Fin., 158 F. Supp. 2d at 356 (denying forum non motion in part because "United States courts have an interest in enforcing United States securities laws") (citation omitted). The options distributed under the Plan granted holders the right to purchase shares of an English company, and were not traded on any U.S. exchange. Though plaintiffs claim that Radianz "sought out" U.S. citizens for employment and enticed them to work for the company by offering participation in the Plan, such allegations do not entitle plaintiffs' choice of this forum to the same degree of deference afforded in DiRienzo, where the court found that defendants had "sought out business opportunities in this country by registering stock on American exchanges, filing statements with the SEC and conducting the bulk of its [sic] business in the United States." DiRienzo, 294 F.3d at 28. The court in DiRienzo was also properly skeptical of defendants' contention that the Southern District of New York was an inconvenient forum in that case because defendants had moved to consolidate all related cases as a Multidistrict litigation in this very District and, in granting that motion, the Judicial Panel on Multidistrict Litigation had found that such consolidation would be conducive to the convenience of parties and witnesses. Id. at 28-29; see also In re Assicurazioni Generali S.P.A. Holocaust Ins. Litig., 228 F. Supp. 2d 348, 352 (S.D.N.Y. 2002) (plaintiffs' choice entitled to great deference where defendant conceded convenience of forum by moving for MDL consolidation); In re Cinar Corp. Sec. Litig., 186 F. Supp. 2d 279, 296 (E.D.N.Y. 2002) (same).
Plaintiffs claim that their choice of forum should be entitled to greater deference because Radianz maintained its headquarters here in New York and because Reuters and BT maintain offices and do business here as well. However, even if New York were considered the "home forum" of some of the defendants, "a plaintiff's choice to initiate suit in the defendant's home forum . . . only merits heightened deference to the extent that the plaintiff and the case possess bona fide connections to, and convenience factors favor, that forum." Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 74 (2d Cir. 2003), cert. denied, 540 U.S. 1149 (2004). "[W]here the circumstances indicate that the parties and events bear no bona fide connection to the United States, or that in relation to the core operative facts in dispute they at best may have only marginal links to the plaintiff's selected forum, that choice of venue is not entitled to special deference . . . ." Corporacion Tim, S.A. v. Schumacher, 418 F. Supp. 2d 529, 534 (S.D.N.Y. 2006) (citations omitted), appeal docketed, No. 06-1485 (2d Cir. Apr. 7, 2006).
The proposed class framed in the complaint is a worldwide class. I recognize that plaintiffs' choice of forum is entitled to some deference because plaintiff Gilstrap, a U.S. resident, seeks to represent a subclass of the overall class, consisting of only U.S. residents. But citizenship and/or residence of plaintiffs cannot be dispositive of the inquiry on a forum non conveniens motion. See Iragorri, 274 F.3d at 74 ("neither the plaintiff's citizenship nor residence, nor the degree of deference given to her choice of forum, necessarily controls the outcome") (citation omitted). This is, at least in part, because "there is little sense to allowing a U.S. citizen to haul a group of foreign defendants into a U.S. court on transactions having little or nothing to do with this country where there is an available foreign forum significantly better suited to handling the litigation in a prompt, efficient and effective manner." First Union, 135 F. Supp. 2d at 448.
As regards the availability of witnesses and evidence, plaintiffs claim that a New York forum is appropriate since Radianz maintains its headquarters in New York, since there are approximately 400 United States citizens who are members of the putative class, and since "the witnesses most knowledgeable about the value of Radianz, and thus liability and damages," are located within this District. (Pl. Br. at 13-14) Defendants, on the other hand, contend that the majority of relevant witnesses and documentary evidence are located in England. The parties have identified ...