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p—A
JAMES G. KREISSMAN (Bar No. 206740)
jkreissman@stblaw. com
FILED
SAN MATEO COUNTY
'
STEPHEN P. BLAKE (Bar No. 260069)
sblake@stblaw. com MAY
1"
6 2018
'130 BRYAN JTN (Bar No. 278990)
bryan .jin@stblaw. com
SIMPSON THACHER & BARTLETT LLP
2475 Hanover Street
Palo Alto, California 94304
\oooqoxuuhw"n
Telephone: (650) 251- 5000
Facsimile: (650) 25 1- 5002 18— Cl\l— 01425
MOTc
Attorneys for Specially Appearing llll1ol51lzon4
Defendant Qudian Inc.
[Additional counsel located on signature page] lll||\Ill“||||\|I\||\|\H\|\\I\Il
SUPERIOR COURT OF THE STATE OF CALIFORNIA
4
COUNTY OF SAN MATEO
INGEUN SONG, Individually and on Behalf of CASE NO. 18—CIV-01425
All Others Similarly Situated,
UNLIMITED JURISDICTION
Plaintiff,
SPECIALLY APPEARING DEFENDANT
v. QUDIAN INC.’S NOTICE OF MOTION
.AND MOTION TO STAY FOR FORUM
QUDIAN INC., MIN LUO, CARL YEUNG, NON CON VENIENS; MEMORANDUM
LIANZHU LV, YI CAO, SHILEI LI, LI DU, OF POINTS AND AUTHORITIES IN
CHAO ZHU, TIANYU ZHU,‘DIANA ARIAS, SUPPORT THEREOF
MORGAN STANLEY & CO. Assigned for All Purposes to
NNNNNNNNNHHHHHr—nn—np—Ip—IH
INTERNATIONAL PLC, CREDIT SUISSE Hon. Marie S. Weiner, Dept. 2
SECURITIES (USA) LLC, CITIGROUP
GLOBAL MARKETS INC., CHINA Hearing Date: July 31, 2018
oouot-hw-N—oxoooqoxmhwto.~o
INTERNATIONAL CAPITAL Hearing Time: : 9:00 am.
CORPORATION HONG KONG SECURITIES Judge: ‘
Hon. Marie S. Weiner
LIMITED, UBS SECURITIES LLC, STIFEL, Dept: 2 .
NICOLAUS & COMPANY, INC.,.NEEDHAM
& COMPANY, LLC, and NOMURA Date Action Filed: March 21, 2018
SECURITIES INTERNATIONAL, INC., Trial Date: Not Set
Defendants. [Filed Concurrently Herewith: Declaration of
Qi Zhu; Declaration of Stephen Blake;
Request for Judicial Notice; [Proposed]
Order]
CASE NO. 18-CIV-01425
‘
QUDIAN’S MOTION To STAY FOR FORUMNON CONVENIENS
NOTICE OF MOTION AND MOTION FOR STAY
TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
Ate-3N PLEASE TAKE NOTICE that on July 31, 2018, or as soon thereafter as the matter may be
heard, in Department 2, Courtroom 2B of the Superior Court of theState of California, County of
San Mateo, located at 400 County Center, Redwood City, California 94063, specially appearing
Defendant Qudian Inc. will and hereby does' move the Court for an order staying this action on
\
\OOOQONUI
the ground offorum non conveniens.
This motion is made pursuant to sections 418.10 and 410.30 of the Code of Civil
Procedure and is-based upon this Notice of Motion and Motion, the supporting Memorandum of
10 Points and Authorities contained herein, the supporting declarations of Qi Zhu and Stephen Blake
ll submitted hereWith, the Request for Judicial Notice submitted herewith, the papers and pleadings
'12 on file with the Court, and such argument as may be presented at or prior to the hearing on this
‘1
13 motion;
14 Dated: May 16, 2018 _
SIMPSON THACHER & BARTLETT LLP
15
16 '
STEPHEN P. BLAKE (SBN 260069)
'17
Attorneys for Specially Appearing Defendant
1'8 Qudian Inc.
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425
TABLE OF CONTENTS
Page
MEMORANDUM OF POINTS AND AUTHORITIES 1
‘
FACTUAL BACKGROUND ......... ........................................................ 2
\DOO\IO\UI-hl.fil\))—Ik
'
1. ABOUT QUDIAN .................... .......................................................................................... 2
II. QUDIAN’S IPO ............................. .................................................................................... 2
‘.
'
III. THE SDNY ACTIONS .......................................................................... ........ . ................ 4
IV. THE SAN MATEO LITIGATION ............................................... 5
'
ARGUMENT ......................... ...................................................................................................... 5
V. THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM
NON CONVENIENS. .......................................................... 5
A. The Southern District of New York is a Suitable Forum ........................................ 6
B The First-Filed SDNY Actions Militate Heavily Toward a Stay ............................ 7
C. Additional Public Interest Factors Weigh Heavily in Favor of a Stay .................. 11
D The Private Interest Factors Similarly Weigh Heavily in Favor of a Stay .........\ 12
i
1. Personal Jurisdiction ... ................................................. ............................. 12
.2. Convenience of the Parties ........................................................................ 13
NNNNNNNNNHHD‘HHHHD—‘D—ih—fi
3. Location of Relevant Witnesses and Documents ...................................... 14
Plaintiff‘s Choice of Forum Is Entitled to Diminished Weight Here.
mflamtHOOWflOflM-kt-‘O
4. 14
CONCLUSION ................................................................................ 15
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425
TABLE OF AUTHORITIES
Page(s)
awn)
STATE CASES
Appalachian Ins; Co. v. Superior Ct.,
162 Cal. App. 3d 427 (1984) ............................................................................................. 15
Berg v. MTC Elecs. Techs. Co.,
61 Cal. App. 4th 349 (1998) ............................................................. ....................... 8, 10,
_
11
\OOONONUI
Caiafa Prof’1 Law Corp. v. State Farm Fire & Cas. Co.,
15 Cal. App. 4th 800 (1993) ............................................................................................ 7, 8
1
Century Indemnity Co. v. Bank ofAm,
58 Cal. App. 4th 408 (1997) ...................................................................................... 6, 8, 14
10 Cervantes v. Dickerson,
Case No. CIV534768, Order Granting Mot. to Stay for Forum Non
11 Conveniens (San Mateo Cty. Super. Ct. Feb. 29, 2016) ............................................ passim
12' Dendy v. MGM Grand Hotels, Inc.,
'
137 Cal. App. 3d 457 (1982) ............................................................................................. 14
13
Forlenzo v. Schwartz, .
14 No. RG06287618, 2006 WL 4524484 (Cal. Super. Ct. Nov. 15, 2006) ............................. 7
'
15 Great Northern Ry. Co. v. Superior Ct.,
12 Cal. App. 3d 105 (1970) ........................................................................................ passim
16
Guimei v. Gen. Elec. Co., <
17 172 Cal. App. 4th 689 (2009) ......................................................................... ..................... 6
-
18 Gulf Oil Corp. v. Gilbert,
330 US. 501 (1947) .......................................................................................................... 10 .
19
Hansen v. Owens-Corning Fiberglass Corp.,
20 51 Cal. App. 4th 753 (1996) ................ Z ............................................................................. 14
21' Marks v. Cty. ofLos Angeles,"
No. BC228619, 2000 WL 35568348
22 (Cal. Super. Ct. Nov. 2, 2000) ........................................................................... . ................. 7
23 Nat ’1 Football League v. Fireman ’s Fund Ins. Co.,
216 Cal. App. 4th 902 (2013) .................................................................................. 8, 11, 12
24 1
Padula v. Lilarn Props. Corp.,
25 84 N.Y.2d 519 (N .Y. 1994) ............................................................................................... 11
26 Price v. Atchison, T. & S.F. Ry. Co.,
42 Cal. 2d 577 (1954) ............................................................................................ 10, '11, 14
27 I
Simmons v. Superior Court in & for Los Angeles Cty., -
28 96 Cal. App. 2d 119 (1950) ........................................................................................... 8, 11
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425
Stangvik v. Shiley, Inc. ,
54 Cal. 3d 744 (1991) ................................................................................................. passim
Taylor—Rush v. Multitech Corp, .
U) 217 Cal. App. 3d 103 (1990) ............................................................................................. 12
Thomson v. Continental Ins. Co., .
66 Cal. 2d 738 (1967) .......................................................................................................... 7
kl]
FEDERAL CASES
Airwair Int ’1, Ltd v. Cels Enters., Inc.,
No. C-13-4312 EMC, 2014 US. Dist. LEXIS 37584
\OOOQOx
(N.D. Cal. Mar. 10, 2014) .............................. 15
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Cyan Inc. v. Beaver Cty Employees Ret. Fund,
138 S. Ct. 1061 (2018) ...................................................................................................... 15
10 In re Countrywide Fin. Corp. Mortgage-Backed Sec. Litig.,
934 F. Supp. 2d 1219 (CD. Cal. 2013) ............................................................................. 12
11
In re Countrywide Fin. Corp. Mortgage-Backed Sec. Litig.,
12 No. 11-CV-7166, 2012 WL 1097244 (CD. Cal. March 9, 2012) .................................... 12
13 In re Hanger Orthopedic Grp., Inc. Sec. Litig.,
418 F. Supp. 2d 164 (E.D.N.Y. 2006) ............................................................................... 14
14
In re Nematron Corp. Sec. Litig., ‘
15 30 F. Supp. 2d 397 (S.D.N.Y. 1998) ................................................................................. 13
16 Williams v. Sears Roebuck & Co., '
No. C97-3794 FMS, 1998 WL 61307
17 (N.D. Cal. Jan. 29, 1998) ................................................................................................... 14
18 STATUTES
19 Code Civ. Proc. § 410.30 ........................................................................ 5
20 Code Civ. Proc. § 418.10 ................................................................................................................ 5
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425
MEMORANDUM OF POINTS AND AUTHORITIES
This lawsuit is against Qudian Inc. (“Qudian”), certain of its officers and directors, and
certain underwriters (collectively, “Defendants”) arising out of Qudian’s October 18, 2017 initial
public offering of stock on the New York Stock Exchange (the “IPO”). Defendants request that
\OOOQO‘lII-bWNp-A
this Court stay this action under the doctrine offorum non conveniens in favor of five ‘
substantially identical Securities Act lawsuits pending against Defendants in the United States
District Court for the Southern District of New York (the “SDNY Actions”).
The First-Filed SDN Y Actions are substantively identical and more advanced. The
_. SDNY Actions were filed in December 2017. They have been consolidated and are currently
rd o proceeding before Judge Ronnie Abrams, who has appointed representatives on behalf of the
...
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putative class and has set a schedule for upcoming litigation.
u—t
N This Court should not sanction torum shagging in circumvention of the PSLRA. Under
... (A) the process prescribed by the Private Securities Litigation Reform Act (“PSLRA”), notice of the
.
|-‘ -b SDNY Actions was provided to all Qudian shareholders, and Judge Abrams heard multiple
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U1
competing applications to appoint lead plaintiff and lead counsel on behalf of the putative class.
r—t Ox One of these movants was Plaintiff Song’s counsel here. On March 16, 2018, Judge Abrams
)—
\) appointed another plaintiff and firm as lead. Five days later, this substantially identical action
n—t OO was filed. Indeed, the Complaint here is copied almost word-for-word from the SDNY Actions in
l—‘
O almost every material respect.
NO The Qroyer torum [or this litigation is the SDNY. [Qudian’s American Depositary Shares
N )—‘ (“ADSs”) are traded on the New .York Stock Exchange (“NYSE”). Most of Qudian’s IPO-related
NN activities in the United States were conducted in New York. The SDNY is therefore the
N,
W appropriate venue for these claims under both traditional forum non conveniens analysis and basic
\
N -R notions of comity.
N (II San Mateo. County has no connection to Qudian or to any ot the [acts underlying this
Na litigation. Qudian is based in China, and all of its operations, offices, and employees are located
N \l there. Qudian has no relation to San Mateo'County. Under these circumstances, a forum non
N 00 conveniens stay is proper.
. 1 _
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. l8-CIV—01425
FACTUAL BACKGROUND
I. . ABOUT QUDIAN .
Qudian is a leading provider of online small c'onsumer credit in China. Founded in 2014,
Qudian uses big data-enabled technologies, such as artificial intelligence and machine learning, to
\OOOQONU’I-hUJNv—I
identify borrowers well-positioned to receive small consumer loans. Qudian’s financial products
are offered exclusively to Chinese citizens and exclusively in Chinese currency. Declaration of
Qi Zhu (“Zhu Decl.”) 11 5. Qudian has no operations in the United States; it is a Cayman Island .
corporation, headquartered in Beijing. Id. 1111
5-6. All of Qudian’s employees are located in Asia,
and all Of the individual defendants who are either Qudian employees, directors, or ex—directors
are also located in Asia. Id 11
6. Qudian has no offices .or employees in San Mateo County or
anywhere else in California. Id. 1[ 7.
'
II. QUDIAN’S IPO
Qudian held its IPO on October 18, 2017. Id. 1] 8. The Complaint in this action alleges.
that the Registration Statement Qudian filed with the SEC in connection with the IPO was false or
misleading. Declaration of Stephen Blake (“Blake Decl.”) 11 6, Ex. A (Class Action Complaint
(“Compl.”)) 11 39.
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There are significant connections to New York relevant to this litigation. Qudian
registered and listed its ADSs on the New York Stock Exchange. Zhu Decl. 11
8. The ADSs are
deposited with Deutsche Bank Trust Company Americas, a depository bank that is based in New
OOQONM-kr—tOOOOQQm-P-WNHO
York. Id. In connection with the IPO, Qudian entered into a Deposit Agreement with Deutsche
Bank and with the holders and beneficial owners of the ADSs that contains a New York choice of .
law provision, as well as providing for exclusive jurisdiction over disputes between Qudian and
Deutsche Bank arising out of the agreement in the state and federal courts in the City of New
York. Id; see also Blake Decl. 11 12, Ex. G (Deposit Agreement) at 35, § 7.6.
'
Qudian appointed an agent for service of process in New York, Law Debenture Corporate
Services Inc., Zhu Decl. 1[ 10, which was authorized to receive service only in actions brought in
New'York state and federal courts. See Blake Dec]. 1] 8, Ex. C (Registration Statement) at 85. A
representative of Qudian, Diana Arias, signed the Registration Statement in New York on behalf
2 .
QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425
of Law Debenture Corporate Services Inc. Id; see also id. at II-8 (noting that “the duly
authorized representative in the United States of Qudian Inc. has signed this registration statement
or amendment thereto in New York, New Yor ”).
Except for two underwriters who are located purely abroad, Qudian’s underwritersl are
either headquartered in New York or conduct substantial operations there, Zhu Decl. 11 9; Blake
Decl. 1[1[ 14—19, Exs. H-M, with most of the work leading up to the IPO conducted out of the
\OOOQQUl-P-
underwriters’ Asia offices. Zhu Decl.1I 19. In connection with the IPO, Qudian entered into an
Underwriting Agreement that likewise contains a New York choice of law provision. Id. at 1] 9;
see also Blake Decl. 1] 8, Ex. C (Registration Statement), Ex. 1.1 (Underwriting Agreement) § 17.
10 The conduct alleged in the Complaint took place outside of California. None of
11 Qudian’s employees involved in the IPO (or otherwise) is located in California. Zhu Decl. 11
ll.2
12 Qudian’s auditors are based in China, id. 1[ 12, and IPO counsel for Qudian and its underwriters
'13 were located primarily in Asia. Id. 1] 13. Most of the activities leading up to the IPO thus took
14 place in either New York or Asia. Id. 11
14. Most of the individual defendants signed the
15 Registration Statement and Prospectus in Asia. Id. Similarly, most of the hard-copy and
16 electronic documents pertaining to the IPO are located in either New York or Asia, such as
'17 "records related to financial disclosures, stock and stock options, and accounting records. Id. 1[ 15.
18 Qudian maintains no relevant documentation in California. Id.3
19 The Complaint here alleges no meaningfiil ties between Qudian and California
20 whatsoever. See, e. g.
,L
Compl. 1111 7, 34-37. By contrast, the Complaint makes clear that activities
21 relating to the IPO occurred primarily in New York or Asia. See, e. g., id. 11 7 (“Defendant Qudian
22 is a financial lending company based in Beijing, China. Its ADSs sold in the IPO trade on the
23
24 1
The underwriters are Morgan Stanley & GO. International Plc; Credit Suisse Securities (USA)
LLC; Citigroup Global Markets Inc.; China International Capital Corporation Hong Kong
25 Securities Limited; UBS Securities LLC; Stifel, Nicolaus & Company, Incorporated; Needham &
Company, LLC; and Nomura Securities International, Inc.
26
2
All but one of the individual defendants are Qudian officers, directors, or ex—directors, all of
whom live and work in Asia, not California. Id. 11 18. Moreover, the lone additional individual
27 defendant, Diana Arias, works for Law Debenture Corporate Services Inc. in, and signed the
Registration Statement in, New York. . .
28
3
Likewise, since the IPO, none of Qudian’s public filings, financial statements, or other SEC
filings or press releases has been prepared in California. Id 11 16.
3
QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV—01425
‘ D’.”); id. 34 (“The Company
New York Stock Exchange (‘NYSE’) under the ticker Symbol 1]
serves customers in China.” ; id. 111 35-36 (describing underlying alleged conduct occurring in
China); see also id. 1[ 37 (filing of Registration Statement and amendments thereto in New York).
In short,'non_e of Qudian’s conduct underlying plaintiff’s allegations has any connection to
California or San Mateo County. |See Zhu Decl. 1111 17, 20.
\OOOQONUI-tt—I
III. THE SDNY ACTIONS
Between December 12 and December 19, 2017, five putative securities class actions were
filed against Qudian, its underwriters, and certain of its directors and officers in the SDNY
Actions.4 Blake Decl. 12. The SDNY Actions—brought on behalf of a putative class of persons
who suffered damages as a result of their purchase of Qudian’s ADSs “pursuant and/or traceable
to” the Company’s IPO—allege violations of Sections 11 and 15 of the’United States Securities
Act of 1933 in connection with the Company’s disclosure of business and regulatory risks in its
IPO filings. See, e.g., Blake Decl. 11 9, Ex. D (Foat Compl. 111 44-58).
All five cases, were assigned to Judge Ronnie Abrams, who, on January 8, 2018, set a
schedule for the lead plaintiff proceeding under the PSLRA. Blake Decl. 11 3. Six plaintiffs
moved for lead plaintiff appointment, including one represented by the Rosen Law Firm, counsel
NNNNNNNNNt—Ii—Ip—et—I—Ir—tr—Ar—Ir—IH
for plaintiff in this case. Id. The Rosen Law Firm failed to win the appointment. Id. On March
I
muamtHooooqoxm-h-wwt—o
16, 2018, Judge Abrams selected a lead plaintiff and appointed a different firm as lead counsel,
formally consolidating the SDNY Actions under the master caption In re Qudian Inc. Securities
Litigation, Master File No. 1:17-cv-0974l-RA (S.D.N.Y.). Id.
On March 26, 2018, the court entered a scheduling order providing the lead plaintiff until
May 18, 2018 to file its consolidated amended Complaint. Id; see also Blake Decl. 1[ 10, Ex. E
(NY Dkt. ECF 81.) Although a consolidated amended complaint thus has yet to be filed there, the
allegations in the Four Complaint generally typify those in the SDNY Actions, id. 11 2, and will be
referred to for convenience herein.
4
The SDNY Actions were captioned Ramnath v. Qudian Inc. et al., Civil Action No. 1:17-cv-
09741-RA; Maia v. Mn Luo et al., Civil Action No. 1:17-cv-09796-RA; Foat v. Qudian Inc. et
al., Civil Action No. 1:17-cv-09875-RA (hereinafter “Foat Complaint”); Zolotukhin v. Qudian
Inc. et al., Civil Action No. 1.:17-cv-09894-RA; and Perez v. Qudian Inc. et al., Civil'Action No.
' '
1:17-cv-09903-RA, respectively. Blake Decl. 11 2. .
.
4
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QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425
_
p—l
IV. THE SAN MATEO LITIGATION .
i
Five days afier losing its bid for lead counsel appointment in the SDNY Actions, the
Rosen Law Firm filed this action on behalf of Plaintiff Ingeun Song. Blake Decl. 11 6, Ex. A
(Compl.).5 Song named eighteen defendants: Qudian, its underwriters, and nine individuals,
including Qudian’s directors, ex—directors, one non-director officer of the company, and Diana
of process in New York.~ M 7-25.
\DOOQQUI-fiUJN
Arias, an employee of Qudian’s U.S. agent for service See id.
Qudian and certain underwriters, including Credit Suisse Securities (USA) LLC; Citigroup Global
Markets Inc.; China International Capital Corporation Hong Kong Securities Limited; UBS
Securities LLC; Stifel, Nicolaus & Company, Incorporated; Needham & Company, LLC; and
i—I
Nomura Securities International, Inc., have been served in this action. Blake Decl. 11 5. To
,_. Defendants’ knowledge, the only other defendant to have been served, Ms. Arias, was served in
New York. Id.
l—l.D—‘
In all material respects, Song’s allegations either deviate fromthose in the Foat Complaint
._.
by only the smallest cosmetic discrepancies or have been copied and pasted in their entirety.
r—t
Compare Compl. 1m 39-54 with Four Compl. 1111
24-38; see also Blake Decl. 1[ 11, Ex. F (redline).
v—I
The chart attached as Appendix A herewith sets forth the near-identity of the substantive
r—-
allegations in the instant case and the representative Foat Complaint.
w—- ARGUMENT
OOQQMAWNHOWOONGM-PWNF—‘o
THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM
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V.
NON CONVENIENS.
N
N A case brought in California state court should be stayed When “in the interest of
N substantial justice an action should be heard in a forum outside this state.” Code Civ.
N Proc. §§ 410.30(a), 418.10(a)(2); Stangvik v. Shiley, Inc., 54 Cal. 3d 744, 751 (1991) (holding that
N a forum non eonveniens motion should be granted if “the action may be more appropriately and
N justly tried elsewhere”).
N
N
5
A third putative securities class action has also now been filed in-New York County Supreme
Court, asserting the same claims under the Securities Act, seeking relief on behalf of the same
N alleged class, and making substantially identical factual allegations, against most of the same
defendants. Blake Decl. 1] 7, Ex. B. Qudian is also moving to dismiss or stay that action.
5
QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. l8-CIV-01425
Where, as here, the plaintiff is 'a California resident, see Compl. 1[ 6, a stay rather than
dismissal is the appropriate remedy. Because a stay allows the Court to retain jurisdiction over the
”
matter, the Court has “considerably wider discretion to grant a stay in this action:
“Because the dismissal of an action results in California’s loss of jurisdiction over
the matter, it has long been the rule . . . that an action brought by a California
Preview
p—A JAMES G. KREISSMAN (Bar No. 206740) jkreissman@stblaw. com FILED SAN MATEO COUNTY ' STEPHEN P. BLAKE (Bar No. 260069) sblake@stblaw. com MAY 1" 6 2018 '130 BRYAN JTN (Bar No. 278990) bryan .jin@stblaw. com SIMPSON THACHER & BARTLETT LLP 2475 Hanover Street Palo Alto, California 94304 \oooqoxuuhw"n Telephone: (650) 251- 5000 Facsimile: (650) 25 1- 5002 18— Cl\l— 01425 MOTc Attorneys for Specially Appearing llll1ol51lzon4 Defendant Qudian Inc. [Additional counsel located on signature page] lll||\Ill“||||\|I\||\|\H\|\\I\Il SUPERIOR COURT OF THE STATE OF CALIFORNIA 4 COUNTY OF SAN MATEO INGEUN SONG, Individually and on Behalf of CASE NO. 18—CIV-01425 All Others Similarly Situated, UNLIMITED JURISDICTION Plaintiff, SPECIALLY APPEARING DEFENDANT v. QUDIAN INC.’S NOTICE OF MOTION .AND MOTION TO STAY FOR FORUM QUDIAN INC., MIN LUO, CARL YEUNG, NON CON VENIENS; MEMORANDUM LIANZHU LV, YI CAO, SHILEI LI, LI DU, OF POINTS AND AUTHORITIES IN CHAO ZHU, TIANYU ZHU,‘DIANA ARIAS, SUPPORT THEREOF MORGAN STANLEY & CO. Assigned for All Purposes to NNNNNNNNNHHHHHr—nn—np—Ip—IH INTERNATIONAL PLC, CREDIT SUISSE Hon. Marie S. Weiner, Dept. 2 SECURITIES (USA) LLC, CITIGROUP GLOBAL MARKETS INC., CHINA Hearing Date: July 31, 2018 oouot-hw-N—oxoooqoxmhwto.~o INTERNATIONAL CAPITAL Hearing Time: : 9:00 am. CORPORATION HONG KONG SECURITIES Judge: ‘ Hon. Marie S. Weiner LIMITED, UBS SECURITIES LLC, STIFEL, Dept: 2 . NICOLAUS & COMPANY, INC.,.NEEDHAM & COMPANY, LLC, and NOMURA Date Action Filed: March 21, 2018 SECURITIES INTERNATIONAL, INC., Trial Date: Not Set Defendants. [Filed Concurrently Herewith: Declaration of Qi Zhu; Declaration of Stephen Blake; Request for Judicial Notice; [Proposed] Order] CASE NO. 18-CIV-01425 ‘ QUDIAN’S MOTION To STAY FOR FORUMNON CONVENIENS NOTICE OF MOTION AND MOTION FOR STAY TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD: Ate-3N PLEASE TAKE NOTICE that on July 31, 2018, or as soon thereafter as the matter may be heard, in Department 2, Courtroom 2B of the Superior Court of theState of California, County of San Mateo, located at 400 County Center, Redwood City, California 94063, specially appearing Defendant Qudian Inc. will and hereby does' move the Court for an order staying this action on \ \OOOQONUI the ground offorum non conveniens. This motion is made pursuant to sections 418.10 and 410.30 of the Code of Civil Procedure and is-based upon this Notice of Motion and Motion, the supporting Memorandum of 10 Points and Authorities contained herein, the supporting declarations of Qi Zhu and Stephen Blake ll submitted hereWith, the Request for Judicial Notice submitted herewith, the papers and pleadings '12 on file with the Court, and such argument as may be presented at or prior to the hearing on this ‘1 13 motion; 14 Dated: May 16, 2018 _ SIMPSON THACHER & BARTLETT LLP 15 16 ' STEPHEN P. BLAKE (SBN 260069) '17 Attorneys for Specially Appearing Defendant 1'8 Qudian Inc. 19 20 21 22 23 24 25 26 27 28 1 QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425 TABLE OF CONTENTS Page MEMORANDUM OF POINTS AND AUTHORITIES 1 ‘ FACTUAL BACKGROUND ......... ........................................................ 2 \DOO\IO\UI-hl.fil\))—Ik ' 1. ABOUT QUDIAN .................... .......................................................................................... 2 II. QUDIAN’S IPO ............................. .................................................................................... 2 ‘. ' III. THE SDNY ACTIONS .......................................................................... ........ . ................ 4 IV. THE SAN MATEO LITIGATION ............................................... 5 ' ARGUMENT ......................... ...................................................................................................... 5 V. THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM NON CONVENIENS. .......................................................... 5 A. The Southern District of New York is a Suitable Forum ........................................ 6 B The First-Filed SDNY Actions Militate Heavily Toward a Stay ............................ 7 C. Additional Public Interest Factors Weigh Heavily in Favor of a Stay .................. 11 D The Private Interest Factors Similarly Weigh Heavily in Favor of a Stay .........\ 12 i 1. Personal Jurisdiction ... ................................................. ............................. 12 .2. Convenience of the Parties ........................................................................ 13 NNNNNNNNNHHD‘HHHHD—‘D—ih—fi 3. Location of Relevant Witnesses and Documents ...................................... 14 Plaintiff‘s Choice of Forum Is Entitled to Diminished Weight Here. mflamtHOOWflOflM-kt-‘O 4. 14 CONCLUSION ................................................................................ 15 i QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425 TABLE OF AUTHORITIES Page(s) awn) STATE CASES Appalachian Ins; Co. v. Superior Ct., 162 Cal. App. 3d 427 (1984) ............................................................................................. 15 Berg v. MTC Elecs. Techs. Co., 61 Cal. App. 4th 349 (1998) ............................................................. ....................... 8, 10, _ 11 \OOONONUI Caiafa Prof’1 Law Corp. v. State Farm Fire & Cas. Co., 15 Cal. App. 4th 800 (1993) ............................................................................................ 7, 8 1 Century Indemnity Co. v. Bank ofAm, 58 Cal. App. 4th 408 (1997) ...................................................................................... 6, 8, 14 10 Cervantes v. Dickerson, Case No. CIV534768, Order Granting Mot. to Stay for Forum Non 11 Conveniens (San Mateo Cty. Super. Ct. Feb. 29, 2016) ............................................ passim 12' Dendy v. MGM Grand Hotels, Inc., ' 137 Cal. App. 3d 457 (1982) ............................................................................................. 14 13 Forlenzo v. Schwartz, . 14 No. RG06287618, 2006 WL 4524484 (Cal. Super. Ct. Nov. 15, 2006) ............................. 7 ' 15 Great Northern Ry. Co. v. Superior Ct., 12 Cal. App. 3d 105 (1970) ........................................................................................ passim 16 Guimei v. Gen. Elec. Co., < 17 172 Cal. App. 4th 689 (2009) ......................................................................... ..................... 6 - 18 Gulf Oil Corp. v. Gilbert, 330 US. 501 (1947) .......................................................................................................... 10 . 19 Hansen v. Owens-Corning Fiberglass Corp., 20 51 Cal. App. 4th 753 (1996) ................ Z ............................................................................. 14 21' Marks v. Cty. ofLos Angeles," No. BC228619, 2000 WL 35568348 22 (Cal. Super. Ct. Nov. 2, 2000) ........................................................................... . ................. 7 23 Nat ’1 Football League v. Fireman ’s Fund Ins. Co., 216 Cal. App. 4th 902 (2013) .................................................................................. 8, 11, 12 24 1 Padula v. Lilarn Props. Corp., 25 84 N.Y.2d 519 (N .Y. 1994) ............................................................................................... 11 26 Price v. Atchison, T. & S.F. Ry. Co., 42 Cal. 2d 577 (1954) ............................................................................................ 10, '11, 14 27 I Simmons v. Superior Court in & for Los Angeles Cty., - 28 96 Cal. App. 2d 119 (1950) ........................................................................................... 8, 11 i QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425 Stangvik v. Shiley, Inc. , 54 Cal. 3d 744 (1991) ................................................................................................. passim Taylor—Rush v. Multitech Corp, . U) 217 Cal. App. 3d 103 (1990) ............................................................................................. 12 Thomson v. Continental Ins. Co., . 66 Cal. 2d 738 (1967) .......................................................................................................... 7 kl] FEDERAL CASES Airwair Int ’1, Ltd v. Cels Enters., Inc., No. C-13-4312 EMC, 2014 US. Dist. LEXIS 37584 \OOOQOx (N.D. Cal. Mar. 10, 2014) .............................. 15 ’ Cyan Inc. v. Beaver Cty Employees Ret. Fund, 138 S. Ct. 1061 (2018) ...................................................................................................... 15 10 In re Countrywide Fin. Corp. Mortgage-Backed Sec. Litig., 934 F. Supp. 2d 1219 (CD. Cal. 2013) ............................................................................. 12 11 In re Countrywide Fin. Corp. Mortgage-Backed Sec. Litig., 12 No. 11-CV-7166, 2012 WL 1097244 (CD. Cal. March 9, 2012) .................................... 12 13 In re Hanger Orthopedic Grp., Inc. Sec. Litig., 418 F. Supp. 2d 164 (E.D.N.Y. 2006) ............................................................................... 14 14 In re Nematron Corp. Sec. Litig., ‘ 15 30 F. Supp. 2d 397 (S.D.N.Y. 1998) ................................................................................. 13 16 Williams v. Sears Roebuck & Co., ' No. C97-3794 FMS, 1998 WL 61307 17 (N.D. Cal. Jan. 29, 1998) ................................................................................................... 14 18 STATUTES 19 Code Civ. Proc. § 410.30 ........................................................................ 5 20 Code Civ. Proc. § 418.10 ................................................................................................................ 5 21 22 23 24 25 26 27 28 ii QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425 MEMORANDUM OF POINTS AND AUTHORITIES This lawsuit is against Qudian Inc. (“Qudian”), certain of its officers and directors, and certain underwriters (collectively, “Defendants”) arising out of Qudian’s October 18, 2017 initial public offering of stock on the New York Stock Exchange (the “IPO”). Defendants request that \OOOQO‘lII-bWNp-A this Court stay this action under the doctrine offorum non conveniens in favor of five ‘ substantially identical Securities Act lawsuits pending against Defendants in the United States District Court for the Southern District of New York (the “SDNY Actions”). The First-Filed SDN Y Actions are substantively identical and more advanced. The _. SDNY Actions were filed in December 2017. They have been consolidated and are currently rd o proceeding before Judge Ronnie Abrams, who has appointed representatives on behalf of the ... r— putative class and has set a schedule for upcoming litigation. u—t N This Court should not sanction torum shagging in circumvention of the PSLRA. Under ... (A) the process prescribed by the Private Securities Litigation Reform Act (“PSLRA”), notice of the . |-‘ -b SDNY Actions was provided to all Qudian shareholders, and Judge Abrams heard multiple r— U1 competing applications to appoint lead plaintiff and lead counsel on behalf of the putative class. r—t Ox One of these movants was Plaintiff Song’s counsel here. On March 16, 2018, Judge Abrams )— \) appointed another plaintiff and firm as lead. Five days later, this substantially identical action n—t OO was filed. Indeed, the Complaint here is copied almost word-for-word from the SDNY Actions in l—‘ O almost every material respect. NO The Qroyer torum [or this litigation is the SDNY. [Qudian’s American Depositary Shares N )—‘ (“ADSs”) are traded on the New .York Stock Exchange (“NYSE”). Most of Qudian’s IPO-related NN activities in the United States were conducted in New York. The SDNY is therefore the N, W appropriate venue for these claims under both traditional forum non conveniens analysis and basic \ N -R notions of comity. N (II San Mateo. County has no connection to Qudian or to any ot the [acts underlying this Na litigation. Qudian is based in China, and all of its operations, offices, and employees are located N \l there. Qudian has no relation to San Mateo'County. Under these circumstances, a forum non N 00 conveniens stay is proper. . 1 _ ’ QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. l8-CIV—01425 FACTUAL BACKGROUND I. . ABOUT QUDIAN . Qudian is a leading provider of online small c'onsumer credit in China. Founded in 2014, Qudian uses big data-enabled technologies, such as artificial intelligence and machine learning, to \OOOQONU’I-hUJNv—I identify borrowers well-positioned to receive small consumer loans. Qudian’s financial products are offered exclusively to Chinese citizens and exclusively in Chinese currency. Declaration of Qi Zhu (“Zhu Decl.”) 11 5. Qudian has no operations in the United States; it is a Cayman Island . corporation, headquartered in Beijing. Id. 1111 5-6. All of Qudian’s employees are located in Asia, and all Of the individual defendants who are either Qudian employees, directors, or ex—directors are also located in Asia. Id 11 6. Qudian has no offices .or employees in San Mateo County or anywhere else in California. Id. 1[ 7. ' II. QUDIAN’S IPO Qudian held its IPO on October 18, 2017. Id. 1] 8. The Complaint in this action alleges. that the Registration Statement Qudian filed with the SEC in connection with the IPO was false or misleading. Declaration of Stephen Blake (“Blake Decl.”) 11 6, Ex. A (Class Action Complaint (“Compl.”)) 11 39. NNNNNNNNNr—It—tr—tn—ny—AHy—Iy—tp—ti—n There are significant connections to New York relevant to this litigation. Qudian registered and listed its ADSs on the New York Stock Exchange. Zhu Decl. 11 8. The ADSs are deposited with Deutsche Bank Trust Company Americas, a depository bank that is based in New OOQONM-kr—tOOOOQQm-P-WNHO York. Id. In connection with the IPO, Qudian entered into a Deposit Agreement with Deutsche Bank and with the holders and beneficial owners of the ADSs that contains a New York choice of . law provision, as well as providing for exclusive jurisdiction over disputes between Qudian and Deutsche Bank arising out of the agreement in the state and federal courts in the City of New York. Id; see also Blake Decl. 11 12, Ex. G (Deposit Agreement) at 35, § 7.6. ' Qudian appointed an agent for service of process in New York, Law Debenture Corporate Services Inc., Zhu Decl. 1[ 10, which was authorized to receive service only in actions brought in New'York state and federal courts. See Blake Dec]. 1] 8, Ex. C (Registration Statement) at 85. A representative of Qudian, Diana Arias, signed the Registration Statement in New York on behalf 2 . QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425 of Law Debenture Corporate Services Inc. Id; see also id. at II-8 (noting that “the duly authorized representative in the United States of Qudian Inc. has signed this registration statement or amendment thereto in New York, New Yor ”). Except for two underwriters who are located purely abroad, Qudian’s underwritersl are either headquartered in New York or conduct substantial operations there, Zhu Decl. 11 9; Blake Decl. 1[1[ 14—19, Exs. H-M, with most of the work leading up to the IPO conducted out of the \OOOQQUl-P- underwriters’ Asia offices. Zhu Decl.1I 19. In connection with the IPO, Qudian entered into an Underwriting Agreement that likewise contains a New York choice of law provision. Id. at 1] 9; see also Blake Decl. 1] 8, Ex. C (Registration Statement), Ex. 1.1 (Underwriting Agreement) § 17. 10 The conduct alleged in the Complaint took place outside of California. None of 11 Qudian’s employees involved in the IPO (or otherwise) is located in California. Zhu Decl. 11 ll.2 12 Qudian’s auditors are based in China, id. 1[ 12, and IPO counsel for Qudian and its underwriters '13 were located primarily in Asia. Id. 1] 13. Most of the activities leading up to the IPO thus took 14 place in either New York or Asia. Id. 11 14. Most of the individual defendants signed the 15 Registration Statement and Prospectus in Asia. Id. Similarly, most of the hard-copy and 16 electronic documents pertaining to the IPO are located in either New York or Asia, such as '17 "records related to financial disclosures, stock and stock options, and accounting records. Id. 1[ 15. 18 Qudian maintains no relevant documentation in California. Id.3 19 The Complaint here alleges no meaningfiil ties between Qudian and California 20 whatsoever. See, e. g. ,L Compl. 1111 7, 34-37. By contrast, the Complaint makes clear that activities 21 relating to the IPO occurred primarily in New York or Asia. See, e. g., id. 11 7 (“Defendant Qudian 22 is a financial lending company based in Beijing, China. Its ADSs sold in the IPO trade on the 23 24 1 The underwriters are Morgan Stanley & GO. International Plc; Credit Suisse Securities (USA) LLC; Citigroup Global Markets Inc.; China International Capital Corporation Hong Kong 25 Securities Limited; UBS Securities LLC; Stifel, Nicolaus & Company, Incorporated; Needham & Company, LLC; and Nomura Securities International, Inc. 26 2 All but one of the individual defendants are Qudian officers, directors, or ex—directors, all of whom live and work in Asia, not California. Id. 11 18. Moreover, the lone additional individual 27 defendant, Diana Arias, works for Law Debenture Corporate Services Inc. in, and signed the Registration Statement in, New York. . . 28 3 Likewise, since the IPO, none of Qudian’s public filings, financial statements, or other SEC filings or press releases has been prepared in California. Id 11 16. 3 QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV—01425 ‘ D’.”); id. 34 (“The Company New York Stock Exchange (‘NYSE’) under the ticker Symbol 1] serves customers in China.” ; id. 111 35-36 (describing underlying alleged conduct occurring in China); see also id. 1[ 37 (filing of Registration Statement and amendments thereto in New York). In short,'non_e of Qudian’s conduct underlying plaintiff’s allegations has any connection to California or San Mateo County. |See Zhu Decl. 1111 17, 20. \OOOQONUI-tt—I III. THE SDNY ACTIONS Between December 12 and December 19, 2017, five putative securities class actions were filed against Qudian, its underwriters, and certain of its directors and officers in the SDNY Actions.4 Blake Decl. 12. The SDNY Actions—brought on behalf of a putative class of persons who suffered damages as a result of their purchase of Qudian’s ADSs “pursuant and/or traceable to” the Company’s IPO—allege violations of Sections 11 and 15 of the’United States Securities Act of 1933 in connection with the Company’s disclosure of business and regulatory risks in its IPO filings. See, e.g., Blake Decl. 11 9, Ex. D (Foat Compl. 111 44-58). All five cases, were assigned to Judge Ronnie Abrams, who, on January 8, 2018, set a schedule for the lead plaintiff proceeding under the PSLRA. Blake Decl. 11 3. Six plaintiffs moved for lead plaintiff appointment, including one represented by the Rosen Law Firm, counsel NNNNNNNNNt—Ii—Ip—et—I—Ir—tr—Ar—Ir—IH for plaintiff in this case. Id. The Rosen Law Firm failed to win the appointment. Id. On March I muamtHooooqoxm-h-wwt—o 16, 2018, Judge Abrams selected a lead plaintiff and appointed a different firm as lead counsel, formally consolidating the SDNY Actions under the master caption In re Qudian Inc. Securities Litigation, Master File No. 1:17-cv-0974l-RA (S.D.N.Y.). Id. On March 26, 2018, the court entered a scheduling order providing the lead plaintiff until May 18, 2018 to file its consolidated amended Complaint. Id; see also Blake Decl. 1[ 10, Ex. E (NY Dkt. ECF 81.) Although a consolidated amended complaint thus has yet to be filed there, the allegations in the Four Complaint generally typify those in the SDNY Actions, id. 11 2, and will be referred to for convenience herein. 4 The SDNY Actions were captioned Ramnath v. Qudian Inc. et al., Civil Action No. 1:17-cv- 09741-RA; Maia v. Mn Luo et al., Civil Action No. 1:17-cv-09796-RA; Foat v. Qudian Inc. et al., Civil Action No. 1:17-cv-09875-RA (hereinafter “Foat Complaint”); Zolotukhin v. Qudian Inc. et al., Civil Action No. 1.:17-cv-09894-RA; and Perez v. Qudian Inc. et al., Civil'Action No. ' ' 1:17-cv-09903-RA, respectively. Blake Decl. 11 2. . . 4 ‘ QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425 _ p—l IV. THE SAN MATEO LITIGATION . i Five days afier losing its bid for lead counsel appointment in the SDNY Actions, the Rosen Law Firm filed this action on behalf of Plaintiff Ingeun Song. Blake Decl. 11 6, Ex. A (Compl.).5 Song named eighteen defendants: Qudian, its underwriters, and nine individuals, including Qudian’s directors, ex—directors, one non-director officer of the company, and Diana of process in New York.~ M 7-25. \DOOQQUI-fiUJN Arias, an employee of Qudian’s U.S. agent for service See id. Qudian and certain underwriters, including Credit Suisse Securities (USA) LLC; Citigroup Global Markets Inc.; China International Capital Corporation Hong Kong Securities Limited; UBS Securities LLC; Stifel, Nicolaus & Company, Incorporated; Needham & Company, LLC; and i—I Nomura Securities International, Inc., have been served in this action. Blake Decl. 11 5. To ,_. Defendants’ knowledge, the only other defendant to have been served, Ms. Arias, was served in New York. Id. l—l.D—‘ In all material respects, Song’s allegations either deviate fromthose in the Foat Complaint ._. by only the smallest cosmetic discrepancies or have been copied and pasted in their entirety. r—t Compare Compl. 1m 39-54 with Four Compl. 1111 24-38; see also Blake Decl. 1[ 11, Ex. F (redline). v—I The chart attached as Appendix A herewith sets forth the near-identity of the substantive r—- allegations in the instant case and the representative Foat Complaint. w—- ARGUMENT OOQQMAWNHOWOONGM-PWNF—‘o THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM r—t V. NON CONVENIENS. N N A case brought in California state court should be stayed When “in the interest of N substantial justice an action should be heard in a forum outside this state.” Code Civ. N Proc. §§ 410.30(a), 418.10(a)(2); Stangvik v. Shiley, Inc., 54 Cal. 3d 744, 751 (1991) (holding that N a forum non eonveniens motion should be granted if “the action may be more appropriately and N justly tried elsewhere”). N N 5 A third putative securities class action has also now been filed in-New York County Supreme Court, asserting the same claims under the Securities Act, seeking relief on behalf of the same N alleged class, and making substantially identical factual allegations, against most of the same defendants. Blake Decl. 1] 7, Ex. B. Qudian is also moving to dismiss or stay that action. 5 QUDIAN’S MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. l8-CIV-01425 Where, as here, the plaintiff is 'a California resident, see Compl. 1[ 6, a stay rather than dismissal is the appropriate remedy. Because a stay allows the Court to retain jurisdiction over the ” matter, the Court has “considerably wider discretion to grant a stay in this action: “Because the dismissal of an action results in California’s loss of jurisdiction over the matter, it has long been the rule . . . that an action brought by a California