United States District Court, S.D. New York
LFOUNDRY ROUSSET SAS, and JEAN YVES GUERRINI, Individually and on behalf of all other persons similarly situated, Plaintiffs,
ATMEL CORPORATION, ATMEL ROUSSET SAS, and LFOUNDRY GMBH, Defendants.
MEMORANDUM OPINION AND ORDER
LAURA TAYLOR SWAIN, District Judge.
In this action, plaintiffs Lfoundry Rousset SAS ("Lfoundry Rousset") and Jean Yves Guerrini ("Guerrini"; collectively, "Plaintiffs"), the latter on behalf of a putative class of fellow employees of Lfoundry Rousset, seek damages for alleged fraud committed by defendants Atmel Corporation ("Atmel"), Atmel Rousset SAS ("Atmel Rousset"), and Lfoundry GMBH (collectively, "Defendants"). Plaintiffs assert a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68; and claims for conspiracy to violate RICO; a declaration voiding certain contracts; fraud; tortious interference with contracts; and trespass to chattels. Defendants have moved (1) to dismiss the complaint on the grounds of forum non conveniens, lack of personal jurisdiction, and failure to state a claim, and (2) to strike portions of Plaintiffs' foreign law expert report. The Court has subject matter jurisdiction of this suit pursuant to 28 U.S.C. §§ 1331 and 1367.
The Court has carefully considered the parties' submissions. For the following reasons, the Court grants the motions to dismiss based on the doctrine of forum non conveniens, subject to Defendants' written confirmation that they consent to the jurisdiction of the French courts. The other asserted grounds for dismissal need not be addressed. See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 425 (2007) (courts may grant dismissal based on forum non conveniens without first addressing jurisdictional challenges). The motion to strike is denied as moot.
The following summary is drawn from Plaintiffs' Amended Complaint and motion submissions, except as otherwise indicated.
Plaintiffs allege that defendant Atmel Rousset, a French subsidiary of California-based Atmel Corporation, sought to shut down its semiconductor manufacturing unit (the "Business") in Rousset, France, in order to cut costs. (Am. Compl. ¶¶ 1-2, 12, 13, 49, Docket Entry No. 62.) However, French labor law, and collective bargaining agreements with the Business' employees, required Atmel and Atmel Rousset to pay for assistance for employees facing termination, which made closing the Business expensive. (Id. ¶¶ 49-53.) Plaintiffs, the now-bankrupt operator of the Business (Lfoundry Rousset, a French company) and one of its employees (Guerrini, a French national), allege that Defendants accordingly carried out a scheme to fraudulently convey the Business to a near-insolvent buyer in order to dispose of it without paying employee assistance. (Id. ¶¶ 2, 9-10.)
Defendant Lfoundry GMBH, a German company, purchased the Business. (Id. ¶ 3.) A Washington state-based advisory firm, Atreg, helped Atmel find the buyer. (Id. ¶¶ 3, 54.) The sale was conditioned on a "positive opinion" from a representative group of the Atmel Rousset employees, called the Works Council. (Pradal Decl., Ex. A at 1, Docket Entry No. 63-LFOUNDRY_MTD.WPD 1.) Plaintiff Guerrini was a member of the Works Council. (Chijner Decl., Ex. E, Docket Entry No. 70-7.) The Works Council hired a French consulting firm, Syndex, to advise it on the transaction. (Am. Compl. ¶ 69.) Atmel Rousset paid Syndex for this work. (Id. ¶ 69.) Plaintiffs allege that Syndex provided the Works Council with a deceptive report, incorporating misrepresentations by Atmel, about the transaction on February 17, 2010. (Id. ¶¶ 69-71.) The alleged misrepresentations included statements that Lfoundry GMBH "was a financially sound investor", that Atmel would "keep a golden share in the [Business] after its transfer to ensure that none of the [Business'] assets were transferred to Lfoundry GMBH during the first four years following the transfer" and that Atmel would enter into a supply agreement with the Business that "would provide for the purchase by Atmel of sufficient quantity [sic] of products from the [Business] to keep it afloat for at least three years at a price that would allow the [Business] to make a profitable margin of 5%". (Id. ¶ 71.) The Works Council met several times in late 2009 and early 2010 with representatives from Atmel Rousset, Lfoundry GMBH, and Syndex, who allegedly made similar misrepresentations. (Id. ¶¶ 72-81.) All of these meetings took place in France. (Chijner Decl. ¶ 12.) The Works Council approved the transaction on March 1, 2010. (Am. Compl. ¶ 81.)
All or substantially all of the negotiations regarding the transaction took place in France. (Chijner Decl. ¶ 8.) The transaction closed by means of a Stock Purchase Agreement ("SPA") on March 4, 2010 in France. (Id. ¶ 7.) Lfoundry GMBH purchased the Business for one euro. (Pradal Decl., Ex. A at 2.) The SPA included a New York choice of law clause provision, as well as a clause requiring mediation in New York of disputes arising out of the SPA. ( Id., Ex. A at 32.) Plaintiff Lfoundry Rousset SAS, a French subsidiary of Lfoundry GMBH, operated the Business after the sale. (Am. Compl. ¶ 2.)
Atmel Rousset and Lfoundry GMBH also entered into several agreements ancillary to the SPA. (Id. ¶ 97.) They executed a four-year supply agreement ("Supply Agreement") in France on June 23, 2010. (Chijner Decl. ¶ 10., Ex. B at 35.) The Supply Agreement required Atmel Rousset to purchase semiconductors from Lfoundry Rousset each year. ( Id., Ex. B at 11.) Plaintiffs allege that, despite promises from Atmel Chief Operating Officer Walt Lifsey (who signed the Supply Agreement on behalf of Atmel Rousset) that Lfoundry Rousset would profit, the Supply Agreement obligated Lfoundry Rousset to sell at a loss to Atmel Rousset. (Am. Compl. ¶¶ 98-100.) Atmel and Lfoundry GMBH representatives met in New York two years later, in December 2012, to discuss the future of the Supply Agreement. (Id. ¶ 123.) Despite the talks, the Supply Agreement ended on June 30, 2013. (Id. ¶ 124.)
Atmel Rousset and Lfoundry GMBH also entered into an Escrow Agreement on October 22, 2010. (Id. ¶ 118.) JP Morgan Chase served as the escrow agent for the account, which was set up in New York. (Id.) Plaintiffs allege that, "[w]hile officially set up to guarantee [certain benefits for the workers] to be implemented by Lfoundry Rousset following the transfer, the escrow funds was [sic] used to pay for Lfoundry GMBH's participation in the [illegal] enterprise." (Id. ¶ 119.) Both the Supply Agreement and the Escrow Agreement included New York choice of law and forum selection clauses. (Id. ¶¶ 96-97, 118.)
On June 26, 2013, Lfoundry Rousset declared bankruptcy, and the next day a French court placed it into receivership. (Id. ¶¶ 10, 125.)
Several legal proceedings arising out of the sale of the Business have been initiated in France. Lfoundry Rousset's court-appointed receivers and creditors' representatives attempted, unsuccessfully, to extend Lfoundry Rousset's insolvency proceeding to reach the assets of Atmel Rousset. (Chijner Decl. ¶ 22.) Lfoundry Rousset also filed a fraud case against Atmel in a French court on September 16, 2013, but later requested that the court dismiss the case without prejudice, which the court did on October 6, 2014. (Id. ¶ 23.) Finally, there are currently pending in a French court five hundred individual labor actions by former Lfoundry Rousset employees against Atmel Rousset and Lfoundry GMBH seeking to hold those entities liable for worker assistance benefits. (Lacovara Decl., Ex. A at 3-4, Docket Entry No. 69-1.)
Plaintiffs have stated in interrogatory responses that they filed suit in the United States because no other jurisdiction could provide them with a "RICO claim or equivalent" or the class action mechanism. ( Id., Ex. A at 6-7, Ex. B at 8-9.) Also in interrogatory responses, Plaintiffs identified nine potential witnesses in this case, two located in New York, one in France, one in Germany, four in California, and one in Washington. ( Id., Ex. A at 7-8, Ex. B at 11-12.) Defendants identified eighteen ...