The Madoff Ponzi scheme had far-reaching impact. How far? At least as far as Ireland and Luxembourg, each of which produced a number of plaintiffs inTrezziova v. Kohn (2d Cir. Sep. 17, 2013). InTrezziova, investors in a number of funds (the Thema International Fund PLC , the Herald LUX Fund, and the Primeo Select Fund and Primeo Executive Funds) sued those funds (and their managing banks and investment firms) for placing money with the notorious Bernie Madoff.
While many of their countrymen were filing suit (and dealing with liquidators) in Ireland and Luxembourg, the Trezziova plaintiffs filed several class actions (which were later consolidated for pretrial purposes) in the Southern District of New York.
Two years ago, the plaintiffs moved to amend their complaints to update with new claims and new defendants. The defendants moved to dismiss. The trial court granted the motion to dismiss on three grounds: (1) SLUSA (for some claims), (2) want of prosecution (for some claims), and (3) forum non conveniens. The trial court justified the forum non conveniens dismissal because the vast majority of evidence and witnesses would be in the funds' home countries, as opposed to the United States. The plaintiffs appealed, primarily because neither Luxembourg nor Ireland has the developed and (internationally-reputed) plaintiff-friendly class action rules found in the United States.
The Second Circuit was not impressed. In its opinion, it clearly laid out the factors for analyzing forum non conveniens, but its conclusion that the trial court did not err in applying them came down to the plaintiffs' motivations:
We find that the district court did not abuse its discretion in concluding that the appellants' choice of forum was entitled to little deference. Indeed, appellants themselves acknowledged that their choice of forum was motivated at least in part by a desire to take advantage of U.S. class action procedures and rules governing attorney's fees,which bespeak forum shopping rather than genuine convenience for these foreign plaintiffs, the defendants, and witnesses.
Forum non conveniens motions are not always this clear-cut, because plaintiffs are not always as open about their forum-shopping. But defendants should remember that this tool is available to them, in domestic as well as international class actions.