UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
June 28, 2007
IN RE PARMALAT SECURITIES LITIGATION
The opinion of the court was delivered by: Lewis A. Kaplan, District Judge
This document relates to: 04 Civ. 0030
Parmalat Finanziaria S.p.A., Parmalat S.p.A., and several affiliated entities (collectively, "Old Parmalat" or the "Foreign Debtors") filed for bankruptcy in Italy in late 2003 following an historic collapse allegedly caused by a lengthy and complex fraud. As a result of the bankruptcy proceedings and a reorganization plan approved by a majority of creditors, a new entity was created to assume certain of the Foreign Debtors' assets and liabilities and act as a vehicle for the discharge of claims by unsecured creditors. That new entity, Parmalat S.p.A., referred to herein as "New Parmalat" to distinguish it from the Foreign Debtor of the same name, is sued on claims relating to the alleged fraud. It moves to dismiss the claims against it in the third amended consolidated class action complaint (the "TAC").*fn1 Dr. Enrico Bondi, the foreign representative of Old Parmalat's estate, moves for an order modifying a preliminary injunction, currently in effect pursuant to Section 304 of the Bankruptcy Code (the "Code"),*fn2 to prevent plaintiffs from suing New Parmalat in the United States.
Familiarity with the Court's prior opinions in this and related matters is assumed.*fn3
Those opinions capture the gist of plaintiffs' allegations of securities fraud and provide sufficient background for present purposes regarding the collapse of Old Parmalat and the various lawsuits that followed. Some words are necessary, however, concerning the bankruptcy proceedings both here and in Italy and the formation of New Parmalat.
I. Proceedings in Italy
Old Parmalat filed for bankruptcy in Parma, Italy, after the collapse in December 2003. In direct response, the Italian Ministry of Productive Activities issued an emergency decree on December 23, which later was ratified by the Italian Parliament, called the Marzano Law. The law amended and supplemented certain provisions of Italian bankruptcy law as applicable to large companies with substantial debt. Among other things, the Marzano Law granted new powers to the Extraordinary Administrator of a bankrupt estate -- a position analogous to that of a trustee in U.S. bankruptcy proceedings -- to propose a plan for restructuring rather than simply liquidating a bankrupt entity.*fn4
The Parma bankruptcy court (the "Parma Court") declared the Foreign Debtors insolvent and eligible for Extraordinary Administration Proceedings. It issued a stay, as authorized by Italian law, enjoining all creditor actions. The Italian government appointed Dr. Bondi as Extraordinary Administrator.*fn5
II. Proceedings in the United States
On January 5, 2004, investors in Old Parmalat filed actions in the United States alleging violations of the federal securities laws by various of Old Parmalat's officers, directors, auditors, and others.*fn6 These were consolidated before the Court into one purported class action (the "Securities Fraud Action"). Plaintiffs subsequently filed two amended consolidated class action complaints.*fn7
Dr. Bondi meanwhile filed three lawsuits in the United States against certain banks and accounting firms, alleging fraud on Old Parmalat and its investors. Two were transferred to this Court from district courts in Illinois and North Carolina (the "Recovery Actions"). The third was filed in New Jersey state court, removed, and remanded.
In June 2004, Dr. Bondi commenced also an ancillary proceeding in the bankruptcy court for this district, seeking to bar U.S. actions against the Foreign Debtors pursuant to Section 304 of the Bankruptcy Code.*fn8 Judge Drain on July 2, 2004 granted a preliminary injunction (the "Section 304 Order").*fn9
Certain defendants in the Recovery Actions and the Securities Fraud Action, concerned that the Section 304 Order would prevent them from defending themselves adequately, moved for withdrawal of the reference of the ancillary proceeding in the bankruptcy court. The motion was granted "to the extent that the reference [was] withdrawn with respect to, and this Court will exercise exclusive jurisdiction over, whether to grant, vacate, modify, make permanent or otherwise continue, construe and enforce [the Section 304 Order] to the extent that such order affects the Securities Fraud Action or any Recovery Action pending in a federal court."*fn10 The Court modified the Section 304 Order to permit discovery against the Foreign Debtors.*fn11 It granted also subsequent motions to modify the Section 304 Order to permit the assertion of compulsory counterclaims in the Recovery Actions*fn12 and a third-party complaint by Grant Thornton International ("GTI") in the Securities Fraud Action.*fn13
III. New Parmalat and the Concordato
Pursuant to the Marzano Law, Dr. Bondi in July 2004 proposed a restructuring plan that called for the formation of a "Concordato," or "composition with (and agreement among) creditors,"*fn14 the purpose of which was to enable the continued operations of certain Foreign Debtors while at the same time creating a "'vehicle' that could be used to discharge the claims of unsecured creditors once their claims have been validated."*fn15 A majority of creditors voted in favor of the Concordato and, on October 1, 2005, the Parma Court approved it, making it effective.*fn16
Upon the approval of the Concordato, New Parmalat was created and succeeded to the assets of sixteen of the Foreign Debtors.*fn17 It assumed also "[a]ll debts" of those entities, including the obligation to discharge approved creditor claims by allocating to each eligible creditor an amount of New Parmalat stock determined in accordance with certain "recovery ratios."*fn18
The allocation of New Parmalat shares is the only means by which a creditor's claim against Old Parmalat may be satisfied.*fn19 New Parmalat thus functions essentially as a claims administrator, converting approved claims against Old Parmalat into new equity interests in New Parmalat.
Creditors entitled to receive stock include those whose claims were submitted prior to the approval of the Concordato and approved by the Parma Court as part of a list of liabilities compiled for purposes of the reorganization. Such creditors typically include those whose claims were included in Old Parmalat's pre-insolvency financial statements and accounting books, such as suppliers.*fn20 Other creditors entitled to receive New Parmalat stock under the Concordato include "eligible unsecured creditors with a title and/or cause that predates the date when individual [Foreign Debtors] were declared eligible for Extraordinary Administration Proceedings . . . whose claims were not included in the sum of liabilities but whose claims [are] later verified by a court decision that has become final and, therefore, can no longer be challenged ('Late-Filing Creditors')."*fn21
Certain plaintiffs in the Securities Fraud Action already have sought to convert claims against Old Parmalat into New Parmalat shares. Plaintiffs Cattolica Partecipazioni, S.p.A. ("Cattolica"), Capital & Finance Asset Management S.A. ("CFAM"), and Margery Louise Kronengold (collectively, the "Bondholders") submitted pre-insolvency claims in the Parma Court and received New Parmalat shares and warrants as Late-Filing Creditors.*fn22 Plaintiffs Hermes Focus Asset Management Europe, Ltd., and Hermes European Focus Funds I, II, and III (collectively, "Hermes") filed proofs of claim in the Parma Court prior to the approval of the Concordato to be included on the initial list of liabilities.*fn23 The Parma Court held that those claims would not be included on the list, as it concluded that they should have been brought against Old Parmalat's employees and auditors, not the company itself.*fn24 Hermes appealed that decision in Italy.*fn25
IV. The Third Amended Complaint
On June 1, 2006, plaintiffs sought leave to amend the consolidated class action complaint in the Securities Fraud Action to add claims against New Parmalat.*fn26 The Court granted the motion on July 21,*fn27 and plaintiffs filed the TAC on July 26.*fn28
Counts One and Two of the TAC allege violations of Section 10(b) of the Securities and Exchange Act of 1934 (the "Exchange Act")*fn29 and Rule 10b-5 thereunder.*fn30
In particular, Count One alleges that Old Parmalat's officers, directors, and auditors, in violation of Rule 10b-5(a) and (c), used fraudulent accounting, invoicing, and other business methods to "boost Parmalat's reported assets and earnings and reduce its liabilities," thus inducing plaintiffs to purchase securities at inflated prices.*fn31 Count Two alleges that the same defendants, in violation of Rule 10b-5(b), fraudulently induced plaintiffs to purchase securities by misstating the company's financial status in financial statements and other reports.*fn32 The TAC does not allege any conduct post-dating the approval of the Concordato or conduct by New Parmalat itself. Rather, it alleges that New Parmalat is liable "as the successor to Old Parmalat."*fn33
Plaintiffs have stated that in asserting the claims against New Parmalat in the United States, they seek only to liquidate their claims here. They represent that they will seek to enforce any judgment only in the Parma Court.*fn34 In other words, they seek ultimately to recover New Parmalat stock in accordance with the Concordato's recovery ratios, with those ratios to be applied to the amounts of any judgments they obtain here.
New Parmalat moves to dismiss the claims against it in the TAC. Dr. Bondi moves to modify the Section 304 Order so as to bar claims against New Parmalat.
I. Motion to Dismiss
In deciding a motion to dismiss, the Court ordinarily accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor.*fn35 Dismissal is inappropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."*fn36 Allegations of securities fraud, however, must be stated with particularity.*fn37
A. Successor Liability
New Parmalat does not argue that the TAC fails adequately to allege violations of Rule 10b-5 by Old Parmalat's employees and auditors. Nor does it argue that plaintiffs' allegations of fraud are insufficiently particular. It argues instead that New Parmalat cannot be liable "as the successor to Old Parmalat" because it did not assume Old Parmalat's liabilities.
In general, successor liability exists when (1) there has been an express or implied agreement to assume the other company's debts and obligations, (2) the transaction was fraudulent, (3) there has been a de facto merger or consolidation of the companies, or (4) the purchasing company is a mere continuation of the selling company.*fn38
Under the Concordato, New Parmalat assumed "[a]ll debts" of the sixteen participating Foreign Debtors. It undertook also to discharge those debts -- including court-verified pre-insolvency claims by unsecured creditors -- by issuing stock in accordance with the Concordato's recovery ratios.*fn39 New Parmalat therefore expressly agreed to assume Old Parmalat's liability, if any, for the fraud alleged in the TAC.
New Parmalat asserts that it "did not assume the pre-insolvency acts of the Foreign Debtors."*fn40 But the issue is not the assumption of acts. It is the assumption of liability for those acts. The doctrine of successor liability is premised on the idea that one company may be held liable for the acts of a predecessor when certain conditions are met, which is the case here.
New Parmalat suggests that it is being asked to bear more responsibility than it agreed to undertake. But it is not. Plaintiffs have stated that they seek only to liquidate their pre-insolvency claims so that they may attempt to enforce them in the Parma Court and, if successful, receive New Parmalat stock in accordance with the Concordato.*fn41 Accordingly, they seek only to hold New Parmalat to the terms of the Concordato.
B. Statute of Limitations
New Parmalat next contends that plaintiffs' claims against it are untimely.
A plaintiff must file a securities fraud claim within the earlier of "2 years after the discovery of the facts constituting the violation" or "5 years after such violation."*fn42 The parties agree that plaintiffs were aware of the facts underlying their claims at least as of December 27, 2003 when Old Parmalat was declared insolvent.*fn43 Plaintiffs first asserted their claims against New Parmalat on July 26, 2006, more than two years later. They argue that their claims are timely, however, because the statute was tolled.
A litigant seeking equitable tolling bears the burden of establishing that (1) it has pursued its rights diligently and (2) some extraordinary circumstance stood in its way.*fn44 Plaintiffs have met that burden here.
1. Diligent Pursuit of Rights
On January 5, 2004, only days after Old Parmalat was declared insolvent, Plaintiffs filed the initial complaint alleging essentially the same fraud as in the TAC. They named as a defendant, among others, Foreign Debtor Coloniale S.p.A. ("Coloniale"), the majority owner of Parmalat Finanziaria S.p.A.*fn45 On March 5, 2004, they filed the first amended complaint, again naming Coloniale.*fn46 The bankruptcy court issued the Section 304 Order in July 2004, thus prohibiting claims against the Foreign Debtors in the United States. As a result, plaintiffs did not name any Foreign Debtors in the second amended complaint, which they filed on August 22, 2005.*fn47
New Parmalat was formed on October 1, 2005, and assumed Old Parmalat's liabilities. This made it possible for plaintiffs again to pursue their claims, as New Parmalat was not protected by the Section 304 Order. On June 1, 2006, plaintiffs sought leave to amend the complaint to add claims against New Parmalat. The motion was granted on July 21, and plaintiffs filed the TAC five days later.
The Court is persuaded that plaintiffs were sufficiently diligent in pursuing their claims to merit equitable tolling. Plaintiffs diligently sought relief against Old Parmalat shortly after becoming aware of its potential wrongdoing and continued to assert their claims in a subsequent amended complaint. They did not name the Foreign Debtors in the second amended complaint, but they were foreclosed from doing so by the Section 304 Order. While plaintiffs perhaps were not paragons of conscientiousness in waiting as long as they did after New Parmalat's formation to file the motion for leave to amend, the delay was not so substantial as to preclude equitable tolling.*fn48
This especially is so considering plaintiffs' otherwise diligent attempts to pursue their claims prior to the issuance of the Section 304 Order, their continued assertion during the eight-month interval of claims against others allegedly involved in the fraud, and their expeditious filing of the TAC after the motion to amend was granted.
2. Extraordinary Circumstances
"[W]henever some paramount authority [such as a court order] prevents a person from exercising his legal remedy, the statute is tolled for that period during which he has been so thwarted."*fn49 Plaintiffs were enjoined from seeking relief in the United States against Old Parmalat as of July 2, 2004 when Judge Drain issued the Section 304 Order. Moreover, they already were prevented from seeking relief in Italy by the stay issued by the Parma Court.*fn50 Plaintiffs therefore had no means of enforcing their rights against Old Parmalat, either in Italy or the United States, as of July 2, 2004. Accordingly, the statute was tolled at that point, about six months after the limitations period began to run.*fn51
On October 1, 2005, the Parma Court approved the Concordato. New Parmalat was created and assumed the liabilities of the Foreign Debtors, thus opening a new avenue to relief. Plaintiffs filed the TAC approximately ten months later. Hence, about sixteen months of the limitations period had elapsed on July 26, 2006 when the TAC was filed. This action was filed well within the two year limit.
New Parmalat argues that the statute was not tolled "as to claims against [it]" because the Section 304 Order applied only to the Foreign Debtors, not New Parmalat, which is a "separate and distinct entity."*fn52 But the argument overlooks the basic principle that "an assignee steps into the assignor's shoes and acquires whatever rights the latter had."*fn53 Regardless of the fact that it was not protected by the Section 304 Order, New Parmalat assumed liability on claims for which the statute of limitations previously had been tolled. Accordingly, plaintiffs' claims against New Parmalat are not time barred.
C. Claim Preclusion
Finally, New Parmalat argues that claims by the Bondholders and Hermes are barred by the doctrine of res judicata, often referred to as claim preclusion. Those plaintiffs, it asserts, already had their claims adjudicated in the Parma Court and therefore are precluded from bringing them here.
A federal court ordinarily applies federal law to determine the preclusive effect on a federal claim of a foreign country judgment.*fn54 Claim preclusion "bars relitigation of a claim where the prior claim (1) resulted in a final judgment on the merits (2) by a court of competent jurisdiction and (3) the subsequent claim asserts the same cause of action (4) between the same parties or their privies."*fn55 The burden of demonstrating that these elements are met "lies with the party arguing that claim preclusion bars the present action."*fn56
a. The Bondholders
The parties do not dispute that the Parma Court's resolution of claims brought by the Bondholders resulted in a final judgment on the merits between the same parties. There appears to be disagreement, however, as to whether the Parma Court had jurisdiction to adjudicate the Bondholders' fraud claims against New Parmalat. New Parmalat's Italian law expert stated in his declaration that, so long as the appeal from the decree approving the Concordato remains pending, the Parma Court has exclusive jurisdiction over creditor claims against New Parmalat.*fn57 Plaintiffs' expert, on the other hand, asserted that "after the approval of the [C]oncordato, the bankruptcy judge and the bankruptcy court do not have jurisdiction over the controversies that may arise among the debtor and one or more creditors and over controversies concerning the existence, the amount and priority of credits that must be verified with an ordinary civil action."*fn58 The Court need not resolve the dispute, however, as New Parmalat has failed to meet its burden of showing that the claims brought by the Bondholders in the Parma Court were the same as those asserted here.
The proofs of claim that the Bondholders submitted to the Parma Court identified only the type, face value, interest rate, and guarantor of each note the Bondholders owned.*fn59 The letters New Parmalat subsequently sent to the Bondholders indicated that the Bondholders received New Parmalat stock in exchange for those notes.*fn60 This suggests that the Bondholders' claims were purely contractual in nature and that the Bondholders converted their notes into New Parmalat stock according to the Concordato's recovery ratios. Here, by contrast, the Bondholders seek to recover damages allegedly caused by Old Parmalat's fraud -- that is, the losses they suffered due to the decline in value of their securities as a result of the alleged fraud.
For example, the record indicates that Cattolica purchased €5 million worth of Old Parmalat bonds before the collapse. The company subsequently converted its bonds into New Parmalat stock, which it then sold for approximately €3.5 to 4 million.*fn61 Similarly, CFAM purchased approximately €940,000 worth of Old Parmalat bonds. It converted these bonds into to New Parmalat stock, which it sold for about half the amount of its initial investment.*fn62 Cattolica and CFAM therefore may have suffered losses of as much as €1 to 1.5 million and €470,000 respectively, some of which may have been caused by Old Parmalat's alleged fraud.*fn63 It is these losses that the Bondholders seek to recoup by asserting the claims in the TAC. New Parmalat has offered no evidence that the Bondholders asserted a claim for such losses in the Parma Court, or that the court ever passed on the issue of Old Parmalat's alleged fraud.
New Parmalat nevertheless argues that the Bondholders' fraud claims are precluded because they could have been brought in the Parma Court when the Bondholders converted their bonds into New Parmalat stock. It cites the proposition that "when a final judgment has been entered on the merits of a case, it is a finality . . . not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose."*fn64 According to New Parmalat, the Bondholders' claims for fraud could have been brought in the Parma Court because they are based on the same alleged conduct and the same bonds. This is unpersuasive.
In the Second Circuit, "[a] first judgment will generally have preclusive effect only where the transaction or connected series of transactions at issue in both suits is the same, that is where the same evidence is needed to support both claims, and where the facts essential to the second were present in the first."*fn65
The critical evidence needed to support the Bondholders' securities fraud claims is that Old Parmalat committed fraud and that the Bondholders suffered damages as a result when they sold at a loss the New Parmalat stock they received under the Concordato. But this evidence would have been irrelevant to prove the claims submitted to the Parma Court. The operative facts underlying those claims were that the Bondholders held valid Old Parmalat notes with money due and owing. The Bondholders were entitled to collect on their claims in the Parma Court regardless of whether they were defrauded.
New Parmalat suggests that allegations of Old Parmalat's fraud did underlie the claims submitted to the Parma Court because those claims would not have arisen had Old Parmalat not collapsed and because the Bondholders now contend that the collapse was caused by fraud. The relevant transaction underlying the claims in the Parma Court, however, was Old Parmalat's failure to pay money due and owing on the Bondholders' notes. This failure may in turn have been caused by Old Parmalat's collapse. But the reason for the failure to pay the Bondholders was not at issue in the prior proceedings. Accordingly, while Bondholders' prior claims perhaps could be traced to Old Parmalat's collapse, those claims were not based on allegations of fraud.
Put another way, the Bondholders seek redress in this Court for an injury that was not remedied in Parma and to collect entirely different debts -- the debts they allegedly are owed as defrauded purchasers of bonds who suffered losses on their investments as opposed to the debts they were owed as holders of bonds with money due and owing. In cases where a party sues on a contract and subsequently sues for fraud in connection with the contract, courts have held that claim preclusion generally applies when the plaintiff seeks in the latter action to collect the same damages or remedy the same injury as in the former.*fn66 That is not the case here.
This is not to say that claim preclusion never applies when the subsequent claim is based on related facts and seeks redress for an injury different than that asserted on the prior claim. The Second Circuit's test requires a court to examine whether the same transaction underlay both claims, and a single transaction of course could give rise to two distinct injuries. The point, however, is that whether the injury alleged in the subsequent action is different from that alleged in the prior action can be probative of whether the actions arose out of different transactions, that is, whether the evidence required to prove one differs from the evidence required to prove the other.*fn67
In the last analysis, the Court is persuaded that the claims submitted by the Bondholders to the Parma Court arose out of different transactions than the claims alleged in the TAC. Evidence of fraudulent activity or any other cause of Old Parmalat's collapse was not at issue in Parma. Nor were the damages allegedly caused by Old Parmalat's fraud. These issues, however, are the center of the dispute here. Accordingly, the Bondholders' claims are not precluded.
The claims brought by Hermes are another matter. "Hermes claimed damages resulting from its purchases of Parmalat's shares at prices inflated by [Old Parmalat's alleged] fraud."*fn68 It plainly seeks the same damages here. Nevertheless, its claims are not precluded, as the Parma Court did not issue a final decision on the merits.
Hermes submitted its claims to the Parma Court prior to the approval of the Concordato, seeking to have them included on the list of Old Parmalat's liabilities. The Parma Court excluded the claims, holding that they should have been asserted against Old Parmalat's employees and auditors.*fn69 According to the declaration of Italian bankruptcy lawyer and law professor Daniela Zavattarelli, the Parma Court's decision was made as part of a "summary, administrative proceeding" that was not "based on any discovery."*fn70
"Under Italian law, this summary procedure is considered a mere administrative proceeding, which may be reversed by the court following the challenge to the prior summary ruling and following a full review of the evidence and legal argument. In fact, the subsequent proceeding involves the introduction of new evidence (including testimony not presented in the summary proceeding), along with additional briefing and argument. The summary order of the Parma court has, in fact, been challenged by Hermes and this challenge triggered the beginning of an actual civil litigation."*fn71
Courts long have held that the pendency of an appeal ordinarily does not suspend the preclusive effect of an otherwise final judgment.*fn72 But there is an exception for situations in which the appeal actually involves a trial de novo.*fn73 According to Zavattarelli, Hermes' appeal triggered full scale civil litigation and all of its attendant procedure. On appeal, Hermes will be able to take discovery, put on evidence, and make legal arguments anew.*fn74 Hence, it cannot be said that the Parma Court's decision to exclude Hermes' claims from the list of Old Parmalat's liabilities was a final adjudication on the merits.
This may mean, of course, that Hermes will end up litigating its claims simultaneously in this Court and in Italy. But this does not merit dismissal. A district court in appropriate circumstances may dismiss an action if it finds, in its discretion, that adjudication in the United States would interfere with pending litigation in a foreign court.*fn75 But New Parmalat does not move to dismiss Hermes' claims on that ground. Moreover, parallel U.S. and foreign proceedings "in the same in personam claim should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other."*fn76 "The mere existence of parallel foreign proceedings does not negate the district courts' 'virtually unflagging obligation . . . to exercise the jurisdiction given them."*fn77 As neither this Court nor the Parma Court yet has rendered a final decision on Hermes' claims, dismissal is inappropriate.
II. Motion to Modify the Section 304 Order
Section 304 of the Bankruptcy Code*fn78 provides, in relevant part, that a representative of a foreign debtor may petition a bankruptcy court to "enjoin the commencement or continuation of any action against a debtor with respect to property involved in [a] foreign proceeding."*fn79 The statute provides that, in deciding whether to grant Section 304 relief, "the court shall be guided by what will best assure an economical and expeditious administration of such estate, consistent with" six factors,*fn80 including, inter alia, the "just treatment of all holders of claims against or interests in such estate"*fn81 and "comity."*fn82
The Court previously modified the Section 304 Order to allow GTI to file a third-party complaint in the Securities Fraud Action against Old Parmalat for contribution. It based its decision principally on the following considerations:
* "[T]he interests of judicial economy and the policy of doing whatever would 'best assure an economical and expeditious administration of [the foreign] estate' both would be served by liquidation of Parmalat's liability, if any," in the United States where the relevant facts already were being litigated as part of the Securities Fraud Action.*fn83
But the Court need not reach the issue. As will become clear, even assuming that New Parmalat is entitled to relief under Section 304(a) and (b), the Court is persuaded that relief is not warranted under Section 304(c).
* "[T]he interests of comity would be served fully by the fact that the enforceability of any contribution judgment would be reserved entirely to the Italian courts," as GTI sought only to liquidate its claim in the United States and enforce it in Italy.*fn84
* "[T]he 'just treatment of all holders of claims against or interests in [the foreign] estate' . . . would be served . . . for much the same reason. Unless [GTI] were permitted to assert the contribution claim in the Securities Fraud Action, it would, should it be found liable there, be compelled to relitigate much of the case in the Italian courts in order to establish its claim for contribution."*fn85
* Dr. Bondi's claim to Section 304 relief was weakened by the fact that he "resorted eagerly to litigation in the United States by bringing the Recovery Actions. . . . [H]is equitable claim to the protection of the U.S. courts would have been stronger had he elected to pursue all of his claims in Italy, the jurisdiction in which the bankruptcies are pending, rather than resorting to U.S. litigation when it suits him and seeking protection of the U.S. courts against his involvement where it does not."*fn86
* "[T]he process of settling the entire controversy, in all of its permutations, would be facilitated by having all potentially liable parties, including the Foreign Debtors, before the Court."*fn87
The same considerations weigh against Section 304 relief here. It would be economical and efficient to liquidate New Parmalat's liability, if any, as part of the Securities Fraud Action. As a result of GTI's third-party complaint, New Parmalat already is before the Court to litigate the issue of its relative fault in the fraud alleged in the TAC. The Italian courts therefore would benefit from having New Parmalat's liability determined alongside that of other alleged perpetrators of the fraud, "as opposed to being confronted . . . with the need . . . to relitigate the Securities Fraud Action in Italy for the purpose of determining . . . [New Parmalat's fault] under the complex and, to Italian courts, unfamiliar federal securities laws."*fn88
Moreover, the interests of comity and the just treatment of claim holders would be served by allowing the claims to go forward, as plaintiffs seek to liquidate their claims in the United States, but would seek to enforce any judgment only in Italy. It will "be up to the Italian courts to decide whether a . . . judgment [against New Parmalat] should be recognized at all and, if so, its consequences in the bankruptcy proceedings involving the Foreign Debtors."*fn89
Finally, Dr. Bondi's claim to equitable relief is no stronger than before. And having the claims against New Parmalat before this Court along with the others alleged in the TAC will aid the process of possibly settling this dispute. Accordingly, while denying Section 304 relief undoubtedly would impose some expense on New Pamalat, the Court is persuaded that the benefits in efficiency and expeditiousness outweigh the costs.*fn90
The motions to dismiss the TAC as to New Parmalat [04 MD 1653, docket item 771] and modify the Section 304 Order [04 Civ. 0030, docket item 620] are denied in all respects. The foregoing constitute the Court's findings of fact with respect to the latter motion and its conclusions of law.