Preview
1 JAMES G. KREISSMAN (Bar No. 206740)
jkreissman@stblaw.com
\
2 STEPHEN P. BLAKE (Bar No. 260069).
3
sblake@stblaw.com
BO BRYAN JlN (Bar No. 278990)
SAN
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fifiUNTY
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5
bryan ..jin@stblaw corn .s
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4 SIMPSON THACHER & BARTLETT LLP 2018
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JUN 2 _..:
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2475 Hanover Street 53
5 Palo Alto, California 94304 5
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Telephone:
Facsimile:
(650) 251-5000
(650) 251—5002
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Defendant Qudian Inc.
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Attorneys for Specially Appearing
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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10 COUNTY OF SAN MATEO
11
INGEUN SONG, Individually and on Behalf of CASE NO. 18—CIV—01425
12
All Others Similarly Situated,
CLASS ACTION '
13
Plaintiff, -
SPECIALLY APPEARING DEFENDANT
14
V./ , QUDIAN INC.’S REPLY IN SUPPORT
OF ITS MOTION TO STAY FOR 4
QUDIAN INC., MIN LUO, CARL YEUNG, FORUM NON CONVENIENS
15
LIANZHU LV, YI CAO, SHILEI L1, L1 DU, _
16 CHAO ZHU, TIANYU ZHU, DIANA ARIAS, QSSIgged Plilrpoigs It;
MORGAN STANLEY & CO. 011- era$3;n “0
- W3 ’ eP t
-10
17 INTERNATIONAL PLC, CREDIT SUISSE
Date'
SECURITIES
Hearin TBD
(USA) LLC, CITIGROUP
Hearing Timé. TBD
18 GLOBAL MARKETS INC” CHINA Judge: Hon. Gerald J.Buchwald
INTERNATIONAL CAPITAL Dept. 10
19 CORPORATION HONG KONG SECURITIES .
LIMITED UBS SECURITIES LLC, STIFEL’ Date Action Filed: March 21, 2018
20 NICOLAUS & COMPANY, INC., NEEDHAM Trial Date; Not Set
& COMPANY, LLC, and NOMURA
21 SECURITIES INTERNATIONAL, INC., [Filed Concurrently Herewith: Supplemental
Declaration of Stephen Blake]
22 Defendants.
' '
23
24
25
26
27
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 1_8-CIV-01425
TABLE OF CONTENTS
N Page(s)
INTRODUCTION ...... ....................... ................. I
.
'
ARGUMENT .................................................... 4...; ......................... ............................................
2-
I. THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM
NON CONVENIENS ................................................................................. ......................... 2
y
\DOONONUI-hw
A. The Southern District ofNevv York Is a Suitable Forum ...................... 2
B. The Private Interest Factors Weigh Heavily in Favor of 3 Stay ........ ; ..................... 5
1. Plaintiffs Choice of Forum Is Entitled to Diminished Weight Here .......... 5
‘
2. The Remaining Private Interest Factors Weigh Heavily in Favor of a
10 Stay ..............................................................................................................
6
.
11 C. The Public Interest Factors, Weigh Heavily in Favor of a Stay.............'. ...... L.......... 8
‘
12 CONCLUSION ............................................... ......... ............................. .......
.
............
10
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.
13
14
15
16
17
18
19
20
21
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23
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26
27
28
i
QUDIAN’s MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO; IS-CIV-01425
TABLE OF AUTHORITIES ,
ADJ
Am. Cemwood Corp. v. Am. Home Assurance Co.,
M Page(s)
' .
87 Cal. App. 4th 431(2001) ..........................
..........................................................
1, 2, 3, 4
.
Berg v. MTC Elecs. Techs. Co. , ~
61 Cal. App. 4th 349 (1998)............. ...................................................................................
5
Caiafa Prof]. Law Corp. v. State Farm Fire & Cas. Co., .
15 Cal. App. 4th 800 (1993) ........................................................................................
5, 8, 9
\OOO\IO\
Century Indem. Co. v. Bank ofAm., FSB,
'
58 Cal. App. 4th 408 (1997) ................................................. ................... ........................
5, 6
p
Cervantes v. Dickerson,
10 Order Granting Mot. to Stay for Forum Non Conveniens at 1, No.
CIV534768 (Cal. Super. Ct. San Mateo Cty. Feb. 29, 2016) (Weiner, J.) .............. 6, 7, 8, 9
11
Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund,
12 138 S. Ct. 1061 (2018) ........................................................................................................
9
13 .David v. Medtronic, Inc.,
237 Cal. App. 4th 734 (2015) ..............................................................................................
4
14
Farmland Irrigation. Co. v.Dopplmaier, '
15 48 Cal. 2d 208 (1957) ..........................................................................................................
5
16 Fasano v. Juoqing Li,
N0. 16 Civ. 8759 (KPF), 2017 WL 6764692 (S.D.N.Y. Dec. 29, 2017) ............................ 3
'17
Ford Motor Co. v. Ins. Co. ofN. Am.,
18 35 Cal. App. 4th 604 (1995) ................................................................................................
6
19 Global Packaging, Inc. v.Super. Ct. of Orange Cty. ,
196 Cal. App. 4th 1623 (2011) ............................................................................................
8
20
Guimei v. Gen. Elec. Co.,
21 172 Cal. App. 4th 689 (2009) ..............................................................................................
2
22 Hansen v. Owens-Corning Fiberglas Corp., .
51 Cal. A'pp. 4th 753 (1996) ................................................................................................
4
23
'
Holzman v. GuoqiangXin,
24 No.12—cv—«8405 (AJN), 2015 WL 5544357 (S. D .N. Y. Sept. 18, 2015) ............................ 3
25 In re Air Crash Disaster Near New Orleans, La., '
821 F.2d 1147 (5th Cir. 1987) .............................................................................................
2
26
' In re Nematron Corp. Sec. Litig.,
27 30 F. Supp. 2d 397 (S.D.N.Y. 1998) ...................................................................................
7
28
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425
Jota v. Texaco, Inc.,
157 F.3d 153 (2d Cir. 1998) ................................................................................................
2
Kamel v. Hill-Rom Co., Inc., '
‘
AU.)
108 F.3d 799 (7th Cir. 1997) ................................................... ............................................ 2
Madanes v. Madanes,
981 F. Supp. 241 (S.D.N.Y. 1997) .......................... 2
Murray v. A. W. Chesterton Co.,
No. A1-l3940, 2006 WL 3096213 (Cal. Ct. App. June 15, 2006) ....................................... 4
Murray v. A. W. Chesterton Co.,
\DOO\!O\
No. RG 05 241225, 2006 WL 3542521
(Cal. Super. Ct. Alameda Cty. Feb. 3, 2006) ...................................................................... 4
Nat ’1 Football League v. Fireman ’5' Fund Ins. Co., '
216 Cal. App. 4th 902 (2013) ............. ....................... ......................................................... 6
_.
10 9
Pan Am. World Airways, Inc. v. Lopez,
11 490 US. 1032 (1989) ...................................................... 2
12 PT United Can Co. v. Crown Cork & Seal Co., Inc.,
138 F.3d 65 (2d Cir. 1998) ..................................................................................................
3
13
Secs. Inv’r Prot. Corp. v. Vigman,
>
14 764 F.2d 1309 (9th Cir. 1985) .............................................................................................
6
I
15 Simmons v. Super. Ct. ofLA. Cty.,
96 Cal. App. 2d 119 (1950) .............................................................................................
5, 9
16
Stangvik v. Shiley, Inc.,
17 54 Cal. 3d 744 (1991) ..........................................................................................................
8
I
18 Thomson v. Cont ’l Ins. Co.,
66 Cal. 2d 738 (1967) ...........................................................................................
6, 10
19
Tuazon v. RJ. Reynolds Tobacco Co., _
20 433 F.3d 1163 (9th Cir. 2006) ............................. '. ...............................................................
6
.
21 Wangen v. A. W. Chesterton Co.,
Case No. BC381871 (Cal. Super. Ct. L.A. Cty. Apr. 1, 2008) ........................................... 4
22
Watson v. Merrell Dow Pharms., Inc.,
23 769 F.2d 354 (6th Cir. 1985) ...............................................................................................
2
'
24 STATUTES
‘
25 Cal. Code Civ. Pro. § 2026.010 ............................................................. .......................................... 7
26 Cal. Code Civ. Pro. § 2027.010 .......................................................................................................
7
27
28
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425
. INTRODUCTION
N In its opening brief, Qudian detailed why this action should be stayed in favor of M
virtuallv identical and first-filed lawsuits against all of the same defendants now pending in the
Southern District of New York (“SDNY”). Qudian established the suitability of SDNY as an
alternate forum for thissecurities litigation. Indeed, it is where Plaintiff’s own counsel filed a
competing lawsuit.
\OOO\IO\Ul-I>-w
Qudian likewise showed that public and private factors overwhelmingly favor
SDNY as the venue for this litigation, given that'(i) Qudian’s connections with the United States
are concentrated in New York; and (ii) principles of fairness and judicial economy counsel against
duplicative litigation over identical issues. And Qudian explained that there would likely be
10 significant personal jurisdictional challenges in California, given the state’s tenuous connection
11 (if any) to the nine defendants that Plaintiff has yet to serve.
12 In his opposition, Plaintiff simply ignores these arguments. Instead, Plaintiff suggests the
13 presence of the unserved defendants—whom flaiitiff has apparentlv not attempted to serve—
14 prevents the Court from granting the otherwise overwhélmingly warranted stay. Plaintiff bases
15 his position on an unduly expansive reading of Am Cemwood Corp. v. Am. Home Assurance Co.,
16 87 Cal. App. 4th 431(2001), which Plaintiff argues requires Qudian to prove that the unserved
17 defendants will be subject to personal jurisdiction in New York. But, Plaintiff cannot stretch
18 American. Cemwood to apply to unserved defendants over whom the Court has not obtained
19 jurisdiction. As other California appellate decisions have held, such a showing is not necessary
20 for the numerous other defendants here who are not in the case and may not even be subject to
21 jurisdiction in California. Indeed, Plaintiff’s novel interpretation would undermine American
22 Cémwood’s primary purpose—to avoid a multiplicity of lawsuits.
23 Moreover, even if the Court were to accept Plaintiff’s unjustified reading of American
24 Cemwood, the Court can and should still grant a stay under its general equitable authority to defer
25 to the five first-filed actions pending in SDNY. Plaintiff wholly fails to rebut Qudian’s showing
26 that this action results from naked forum-shopping and presents a risk of inconsistent ’
27 results, waste of resources, and duplication of effort, all circumstancesthat California courts
28 regularly find sufficient to grant a stay in favor of earlier-filed identical lawsuits in another forum.
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV—01425
ARGUMENT
'
N
I. THE COURT SHOULD STAY THIS CASE UNDER THE'
DOCTRINE OF FORUM
NON CON VENIENS.
I
A. The Southern District of New York Is a Suitable Forum.
Qudian’s opening brief demonstrated that SDNY is a suitable alternative forum, easily
offorum non conveniens.
\OOONOUI-P-UJ
satisfying the threshold requirement for a stay on the grounds See Op.
Br. at 6-7. The only prerequisites for this showing are that: (i) the court in the alternative venue
has jurisdiction and that (ii) any proceeding there will not be barred by the statute of limitations.
See id.; Guimei v. Gen. Elec. Co., 172 Cal. App. 4th 689, 696-97 (2009) (noting that alternative
10 forum is suitable unless it “provides no remedy at all”). Because all nine served defendants have
11 represented that they will submit to jurisdiction in the SDNY Actions, Op. Br. at 7, and, indeed,
12 because numerous substantially identical lawsuits (including one filed by Plaintiff’s own counsel)
13 are already pending there, this first factor is readily established.
14 Plaintiff nevertheless argues that Qudian has not established suitability because it cannot
15 show that the nine unserved defendants will be subject to jurisdiction in New York. See Opp. at
16 2:25-3:14 (quoting Am. Cemwood, 87 Cal. App. 4th at 43 8-3 9) (“‘[T]he moving party must show
17 that all other defendants .. .are subject to its jurisdiction as well’”) (Plaintiff s emphasis)).
18 This argument fails as a matter of law and lOgic. First, American Cemwood is inapposite. In that
19 case (and cases on which it relies), all defendants had been served and were actually participating
20 in the litigation.1 Here, the nine unserved defendants are not yet part of this lawsuit, have not
21 appeared, and have not submitted themselves to the jurisdiction of this Court. Indeed, Plaintiff has
22 apparently not even attempted to serve any of the individuals, much less offered a shred of
23
1
See, e. g., Am. Cemwood, 87 Cal. App. 4th at 43 6—3 8; Supplemental Declaration of Stephen
24 Blake (“Blake Decl.")1[ 2, Ex. A (Am. Cemwood executed summons); Madanes v. Madanes, 981
F. Supp. 241, 249, 260, 265—66 (S.D.N.Y. 1997) (all defendants had been served); Jota v. Texaco,
25 Inc, 157 F.3d 153, 159 (2d Cir. 1998) (lone defendant had appeared); Kamel v. Hill-Rom Co.,
Inc., 108 F .3d 799, 802—03 (7th Cir. 1997) (aflirming dismissal for forum non conveniens; lone'
26 defendant had appeared); Watson v. Merrell Dow Pharms., Inc, 769 F.2d 354, 357 (6th Cir. 1985)
(aflirming dismissal of corporate defendant; all defendants had appeared); see also In re Air Crash
27 Disaster Near New Orleans, La., 821 F.2d 1147, 1168-69 (5th Cir. 1987), vacated, Pan Am.
World Airways, Inc. v. Lopez, 490 US. 1032-33 (1989) (U .S. would be added as defendant and
28 was amenable to process in current forum).
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18—CIV—01425
evidence that jurisdiction could ever exist here. See Opp. at 4:3-7 (arguing only that “personal
N jurisdiction over the Defendants is not at issue”)?
Second, Plaintiff’s expansive reading of American Cemwood as encompassing the nine
unserved defendants here is simply wrong. Because the forum nonconveniens test logically
requires “at least two forums” in which a defendant is subject to jurisdiction, Am. Cemwood, 87
Cal. App. 4th at 435 (emphasis added), it cannot on its face apply to any defendant who has not
\OOOQQM-kw
yet even been served with the complaint in California itself. Qudian knows of no controlling
authority extending American Cemwood in the manner Plaintiff suggests, and courts across the
country have routinely reached the opposite result. For example, as the Southern District of New
10 York3 very recently explained in summarizing the applicable law:
11 The Court agrees with Defendants that, in determining the adequacy of an
alternative forum, the Court may only consider those parties over which it
12
currently exercises jurisdiction ... . Here, allof the Defendants that have been
13 served are amenable to service of process in the Cayman Islands. For this reason,
the alternative jurisdiction is adequate ... .
14
15 Fasano v. Juoqing Li, No. 16 Civ. 8759 (KPF), 2017 WL 6764692, at *8 (S.D.N.Y. Dec. 29,
16 2017) (emphasis added); accord, e.g, Holzman v. Guoqiang Xin, No. l2~cv—8405 (AJN), 2015
17 WL 5544357, at *8 (S.D.N.Y. Sept. 18, 2015) (rejecting argument that defendant must establish
18 jurisdiction for unserved Chinese individual defendants in alternative forum and noting that
.19
“similar difficulties” might exist in serving these defendants in any jurisdiction); see also PT
20 United Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65, 74 (2d Cir. 1998) (excluding fi'om
21 analysis defendants not subject to jurisdiction in current forum and noting that, otherwise, “a
22 plaintiff could crafiily preemptively defeat any such potential [forum non conveniens] motion”).
23 Indeed, multiple California appellate decisions have found that a forum non conveniens stay is
24 appropriate despite potential jurisdictional concerns related to one or more defendants. See, e. g.,
2
25 Jurisdiction over the moving defendants is of course not at issue, as they have moved to stay on
the grounds offorum non conveniens. That is quite different from suggesting that Plaintiff’s likely
26
inability to ever demonstrate jurisdiction over the unserved defendants is irrelevant to this motion.
3
27 The court in American Cemwood expressly noted that “federal forum non conveniens law . . . is
virtually identica ’3 to California law and relied on case law from the Southern District of New >
28 York and the Second Circuit, among other federal cases. Am. Cemwood, 87 Cal. App. 4th at 438.
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425
Hansen v. Owens-Corning Fiberglas Corp, 51 'Cal. App. 4th 753, 759 (1996) (granting stay
despite potential jurisdictional issues for some defendants in alternate forum and noting that,
j
“[g]iven the early stage for bringing a forum non conveniens motion,” it might very well be
J; unclear “whether all defendants were even subject to jurisdiction in California”); see also, e. g.,
David v. Medtronic, Inc., 237 Cal. App. 4th 734, 743-46 (2015) (holding that, where plaintiff
named a “nominal” defendantfor obvious purpose of pinning venue in California, nominal
defendant would be excluded from analysis of personal jurisdiction in alternate forum). As the
Hansen Court explained,
000'.a
“it is unreasonable to expect the moving defendant to prove all
defendants are subject to jurisdiction in a particular alternative forum,” particularly since certain
10 defendants might not even be subject to jurisdiction in California itself. Id. at 759. Moreover,
11 because the trial court had “stayed the aetion pending a determination that all defendants are
12 subject to jurisdiction in Montana,” the court could simply lift the stay if jurisdiction was not
13 ultimately established there. See id.“
14 Finally, Plaintiff’s argument should also be rejected because it would defeat the very
15 purpose of the rule announced in American Cemwood: to further “those considerations of
16 convenience, economy and justice the doctrine [offorum non conveniens] was designed to
17 bolster.” Am. Cemwood, 87 Cal. App. 4th at 439. All of the named defendants here currently
18 face five other substantially identical actions pending in the Southern District of New York, one
19 of which Plaintiff s own counsel previously brought. As discussed fiirther below, proceeding
20 with this case would ensure parallel, duplicative proceedings involving the exact same parties,
21 claims, and issues—the precise evil that the equitable doctrine offorum non conveniens and cases
22 like American Cemwood were designed to prevent.
'
23
24
4
California trial courts have held the same. See, e. g.,Wangen v. A. W. Chesterton Co., Case No.
25 BC381871, at *2 (Cal. Super. Ct. L.A. Cty. Apr. 1, 2008) (summarized in Wangen v. Gardner
Denver, Inc., No. B208347, 2009 WL 225999, at *3 (Cal. Ct. App. Feb. 2, 2009) (unpublished))
26 (ignoring defendants who “have not appeared in this action” in determining those “amenable to
service in” alternate forum); Murray v. A. W. Chesterton Co., No. RG 05 241225, 2006 WL
27 3542521, at *1 (Cal. Super. Ct. Alameda Cty. Feb..3, 2006) (same; granting stay where “at least
the majority of the defendants in this case are amenable” to the alternate fora); Murray v. A. W.
28 Chesterton Co., No. A113940, 2006 WL 3096213, at *4-5 (Cal. Ct. App. June 15, 2006) (history).
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QUDIAN’S REPLY ISO MOTION TO STAY FOR FOR UMNON CONVENIENS CASE NO. 18-CIV—01425
.
Thus, ,even if the Court: were to adopt Plaintiff’s reading of American Cemwood, the Court
V
N should nonetheless stay this action under its broad equitable powersto defer to the earlier-filed
.SDNY Actions that involve the same claims, issues, and parties, as well as many additional
defendants net named here. See, e. g.,Caiafa Prof’l. LawCorp. v. State Farm Fire & Cas. Co., 15
Cal. App. 4th‘800 (1993) (cited in Qudian’s opening brief at 7: 19-82). As explained in Caiafa, a
stay under the courtis broadl‘discretionary poWers may be not only-appropriate, but required to
VOOOQQU‘AUJ
avoid duplicative proceedings in light of factors including “the importance of discouraging
multiple litigation designed solely to harass an adverse party, 3, “ avoiding unseemly conflicts with
the courts of other jurisdictions,” and “whether the rights of the parties‘can best be determined by
10 the court of the other jurisdiction because of the nature of the subject matter, the availability of
11’ witnesses, or the stage to which the proceedings in the other court haVe already advanced.” Id. at
12‘ 804 (quoting Farmland Irrigation. Co. v. Dopplmaier, 48 Cal. 2d 208, 215 (1957)) (internal
13 quotation marks omitted); accord, e.g., Berg v. MTC Elecs. Techs. Co., 61 Cal. App. 4th 349, 356,
14 1363 (1998) (stayingsecurities action in favor of NY federal case based on “the burdens and
15 inefficiencies that wouldrbe imposed” and “the potential for conflicting rulings”); Simmons v.
16 Super. Ct. ofL.A. Cm, 96 Cal. App. 2d 119, 125 (1950) (granting stay in order "‘to avoid a
17 multiplicity of suits and prevent vexatious litigation, conflicting judgments, [and] confusion”).
18 Such circumstances are clearly present here, as explained below.
19 B. The Private Interest Factors Weigh Heavily in Favor of a Stay.
'
20 1. Plaintiffs Choice of Forum Is Entitled to Diminished Weight Here.
'21 Qudian’s opening brief showed that Plaintiff’s choice of forum is entitled‘to significantly
22 less weight on this motion to stay, where, unlike on a motion to dismiss, choice of venue is just
23 “one of many factors which the court may consider.” Op. Br. at 429-12 (citing Century Indem. Co.
24 v. Bank ofAm., FSB, 58 Cal. App. '4th 408, 412-13 (1997)); see also Order Granting Mot. to Stay
25. for Forum Non Conveniens‘at 1, Cervantes'v. Dickerson, No. CIV534768 (Cal. Super. Ct. San
26 Mateo Cty. Feb. 29, 2016) (Weiner, J.) (“Cervantes”) (granting stay even though, “plaintiff, a ‘
27 California resident, selected this forum”); That is particularly true where Plaintiff lacks any
28 connection to this county, and the action results entirely fromthe admitted forum-shopping of
.
‘_5_
QUDiAN’s REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425
Plaintiff’s counsel. See generally Op. Br. at 14-15.5 Plaintiff doesnot suggest otherwise, see
N Opp. at 4:24-5:21, instead arguing that his choice of forum nonetheless “strongly” militates
.
against granting Qudian’s motion, particularly because he is a residentof California. Opp. at
4:26-5:16. But Plaintiff relies on inapposite case law addressing motions to dismiss, see, e.g.,
TuaZon v. RJ. Reynolds Tobacco: Co., 433 F.3d 1163,1180 (9th Cir. 2006) (applying federal
standard on motion to dismiss), and that actually support Qudian’s position.
cookies—mam
See, e. g., Century
Indem., 58 Cal. App. 4th at 411-12 (“Because the dismissal of an action results in Califomia’s loss
ofjurisdiction over the matter, it has long been the rule . . . that an action brought by- a California
resident may not be dismissed on grounds of forum non conveniens except in extraordinary
10 circumstances”; but noting that “strong presumption” against dismissal is inapplicable to a motion
11 to stay and affirming stay) (emphasis added).6
w
’12
2. The Remaining Private Interest Factors Weigh Heavily in Favor of a Stay.
13 Qudian’s opening brief established that each of the other private factors courts typically
14 consider on motions such as this one favor venue in SDNY. See Op. Br. at 12-14; Nat ’l F00tball
15 League v. Fireman ’s Fund Ins. Ca, 216 Cal. App. 4th 902, 917 (2013) (noting that relevant
16 private factors are those that “make trial and the enforceability of the ensuing judgment ~
17 expeditious and relatively inexpensive” and include considerations. such as the convenience of the
.
18 parties and the location of relevant Witnesses and documents). As Qudian demonstrated, any
19
5
2o Indeed, the entirety of Plaintiff’s support for the purported connection between Mr. Song and
California is a pair of boilerplate statements in his declaration that “I am a resident, taxpayer, and
Preview
1 JAMES G. KREISSMAN (Bar No. 206740) jkreissman@stblaw.com \ 2 STEPHEN P. BLAKE (Bar No. 260069). 3 sblake@stblaw.com BO BRYAN JlN (Bar No. 278990) SAN FMum I L ' E E fifiUNTY ._,__ 5 bryan ..jin@stblaw corn .s § - 4 SIMPSON THACHER & BARTLETT LLP 2018 § JUN 2 _..: ‘ 2475 Hanover Street 53 5 Palo Alto, California 94304 5 $‘ 6 Telephone: Facsimile: (650) 251-5000 (650) 251—5002 3? S g {35‘ § 7 Defendant Qudian Inc. , Attorneys for Specially Appearing a E at 3E g Em '- E s9:h §§ 9 . SUPERIOR COURT OF THE STATE OF CALIFORNIA \>_ ¥ " ' 10 COUNTY OF SAN MATEO 11 INGEUN SONG, Individually and on Behalf of CASE NO. 18—CIV—01425 12 All Others Similarly Situated, CLASS ACTION ' 13 Plaintiff, - SPECIALLY APPEARING DEFENDANT 14 V./ , QUDIAN INC.’S REPLY IN SUPPORT OF ITS MOTION TO STAY FOR 4 QUDIAN INC., MIN LUO, CARL YEUNG, FORUM NON CONVENIENS 15 LIANZHU LV, YI CAO, SHILEI L1, L1 DU, _ 16 CHAO ZHU, TIANYU ZHU, DIANA ARIAS, QSSIgged Plilrpoigs It; MORGAN STANLEY & CO. 011- era$3;n “0 - W3 ’ eP t -10 17 INTERNATIONAL PLC, CREDIT SUISSE Date' SECURITIES Hearin TBD (USA) LLC, CITIGROUP Hearing Timé. TBD 18 GLOBAL MARKETS INC” CHINA Judge: Hon. Gerald J.Buchwald INTERNATIONAL CAPITAL Dept. 10 19 CORPORATION HONG KONG SECURITIES . LIMITED UBS SECURITIES LLC, STIFEL’ Date Action Filed: March 21, 2018 20 NICOLAUS & COMPANY, INC., NEEDHAM Trial Date; Not Set & COMPANY, LLC, and NOMURA 21 SECURITIES INTERNATIONAL, INC., [Filed Concurrently Herewith: Supplemental Declaration of Stephen Blake] 22 Defendants. ' ' 23 24 25 26 27 28 QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 1_8-CIV-01425 TABLE OF CONTENTS N Page(s) INTRODUCTION ...... ....................... ................. I . ' ARGUMENT .................................................... 4...; ......................... ............................................ 2- I. THE COURT SHOULD STAY THIS CASE UNDER THE DOCTRINE OF FORUM NON CONVENIENS ................................................................................. ......................... 2 y \DOONONUI-hw A. The Southern District ofNevv York Is a Suitable Forum ...................... 2 B. The Private Interest Factors Weigh Heavily in Favor of 3 Stay ........ ; ..................... 5 1. Plaintiffs Choice of Forum Is Entitled to Diminished Weight Here .......... 5 ‘ 2. The Remaining Private Interest Factors Weigh Heavily in Favor of a 10 Stay .............................................................................................................. 6 . 11 C. The Public Interest Factors, Weigh Heavily in Favor of a Stay.............'. ...... L.......... 8 ‘ 12 CONCLUSION ............................................... ......... ............................. ....... . ............ 10 . . 13 14 15 16 17 18 19 20 21 '22 23 24 25' 26 27 28 i QUDIAN’s MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO; IS-CIV-01425 TABLE OF AUTHORITIES , ADJ Am. Cemwood Corp. v. Am. Home Assurance Co., M Page(s) ' . 87 Cal. App. 4th 431(2001) .......................... .......................................................... 1, 2, 3, 4 . Berg v. MTC Elecs. Techs. Co. , ~ 61 Cal. App. 4th 349 (1998)............. ................................................................................... 5 Caiafa Prof]. Law Corp. v. State Farm Fire & Cas. Co., . 15 Cal. App. 4th 800 (1993) ........................................................................................ 5, 8, 9 \OOO\IO\ Century Indem. Co. v. Bank ofAm., FSB, ' 58 Cal. App. 4th 408 (1997) ................................................. ................... ........................ 5, 6 p Cervantes v. Dickerson, 10 Order Granting Mot. to Stay for Forum Non Conveniens at 1, No. CIV534768 (Cal. Super. Ct. San Mateo Cty. Feb. 29, 2016) (Weiner, J.) .............. 6, 7, 8, 9 11 Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 12 138 S. Ct. 1061 (2018) ........................................................................................................ 9 13 .David v. Medtronic, Inc., 237 Cal. App. 4th 734 (2015) .............................................................................................. 4 14 Farmland Irrigation. Co. v.Dopplmaier, ' 15 48 Cal. 2d 208 (1957) .......................................................................................................... 5 16 Fasano v. Juoqing Li, N0. 16 Civ. 8759 (KPF), 2017 WL 6764692 (S.D.N.Y. Dec. 29, 2017) ............................ 3 '17 Ford Motor Co. v. Ins. Co. ofN. Am., 18 35 Cal. App. 4th 604 (1995) ................................................................................................ 6 19 Global Packaging, Inc. v.Super. Ct. of Orange Cty. , 196 Cal. App. 4th 1623 (2011) ............................................................................................ 8 20 Guimei v. Gen. Elec. Co., 21 172 Cal. App. 4th 689 (2009) .............................................................................................. 2 22 Hansen v. Owens-Corning Fiberglas Corp., . 51 Cal. A'pp. 4th 753 (1996) ................................................................................................ 4 23 ' Holzman v. GuoqiangXin, 24 No.12—cv—«8405 (AJN), 2015 WL 5544357 (S. D .N. Y. Sept. 18, 2015) ............................ 3 25 In re Air Crash Disaster Near New Orleans, La., ' 821 F.2d 1147 (5th Cir. 1987) ............................................................................................. 2 26 ' In re Nematron Corp. Sec. Litig., 27 30 F. Supp. 2d 397 (S.D.N.Y. 1998) ................................................................................... 7 28 -i— _ QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425 Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir. 1998) ................................................................................................ 2 Kamel v. Hill-Rom Co., Inc., ' ‘ AU.) 108 F.3d 799 (7th Cir. 1997) ................................................... ............................................ 2 Madanes v. Madanes, 981 F. Supp. 241 (S.D.N.Y. 1997) .......................... 2 Murray v. A. W. Chesterton Co., No. A1-l3940, 2006 WL 3096213 (Cal. Ct. App. June 15, 2006) ....................................... 4 Murray v. A. W. Chesterton Co., \DOO\!O\ No. RG 05 241225, 2006 WL 3542521 (Cal. Super. Ct. Alameda Cty. Feb. 3, 2006) ...................................................................... 4 Nat ’1 Football League v. Fireman ’5' Fund Ins. Co., ' 216 Cal. App. 4th 902 (2013) ............. ....................... ......................................................... 6 _. 10 9 Pan Am. World Airways, Inc. v. Lopez, 11 490 US. 1032 (1989) ...................................................... 2 12 PT United Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65 (2d Cir. 1998) .................................................................................................. 3 13 Secs. Inv’r Prot. Corp. v. Vigman, > 14 764 F.2d 1309 (9th Cir. 1985) ............................................................................................. 6 I 15 Simmons v. Super. Ct. ofLA. Cty., 96 Cal. App. 2d 119 (1950) ............................................................................................. 5, 9 16 Stangvik v. Shiley, Inc., 17 54 Cal. 3d 744 (1991) .......................................................................................................... 8 I 18 Thomson v. Cont ’l Ins. Co., 66 Cal. 2d 738 (1967) ........................................................................................... 6, 10 19 Tuazon v. RJ. Reynolds Tobacco Co., _ 20 433 F.3d 1163 (9th Cir. 2006) ............................. '. ............................................................... 6 . 21 Wangen v. A. W. Chesterton Co., Case No. BC381871 (Cal. Super. Ct. L.A. Cty. Apr. 1, 2008) ........................................... 4 22 Watson v. Merrell Dow Pharms., Inc., 23 769 F.2d 354 (6th Cir. 1985) ............................................................................................... 2 ' 24 STATUTES ‘ 25 Cal. Code Civ. Pro. § 2026.010 ............................................................. .......................................... 7 26 Cal. Code Civ. Pro. § 2027.010 ....................................................................................................... 7 27 28 -2- QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV-01425 . INTRODUCTION N In its opening brief, Qudian detailed why this action should be stayed in favor of M virtuallv identical and first-filed lawsuits against all of the same defendants now pending in the Southern District of New York (“SDNY”). Qudian established the suitability of SDNY as an alternate forum for thissecurities litigation. Indeed, it is where Plaintiff’s own counsel filed a competing lawsuit. \OOO\IO\Ul-I>-w Qudian likewise showed that public and private factors overwhelmingly favor SDNY as the venue for this litigation, given that'(i) Qudian’s connections with the United States are concentrated in New York; and (ii) principles of fairness and judicial economy counsel against duplicative litigation over identical issues. And Qudian explained that there would likely be 10 significant personal jurisdictional challenges in California, given the state’s tenuous connection 11 (if any) to the nine defendants that Plaintiff has yet to serve. 12 In his opposition, Plaintiff simply ignores these arguments. Instead, Plaintiff suggests the 13 presence of the unserved defendants—whom flaiitiff has apparentlv not attempted to serve— 14 prevents the Court from granting the otherwise overwhélmingly warranted stay. Plaintiff bases 15 his position on an unduly expansive reading of Am Cemwood Corp. v. Am. Home Assurance Co., 16 87 Cal. App. 4th 431(2001), which Plaintiff argues requires Qudian to prove that the unserved 17 defendants will be subject to personal jurisdiction in New York. But, Plaintiff cannot stretch 18 American. Cemwood to apply to unserved defendants over whom the Court has not obtained 19 jurisdiction. As other California appellate decisions have held, such a showing is not necessary 20 for the numerous other defendants here who are not in the case and may not even be subject to 21 jurisdiction in California. Indeed, Plaintiff’s novel interpretation would undermine American 22 Cémwood’s primary purpose—to avoid a multiplicity of lawsuits. 23 Moreover, even if the Court were to accept Plaintiff’s unjustified reading of American 24 Cemwood, the Court can and should still grant a stay under its general equitable authority to defer 25 to the five first-filed actions pending in SDNY. Plaintiff wholly fails to rebut Qudian’s showing 26 that this action results from naked forum-shopping and presents a risk of inconsistent ’ 27 results, waste of resources, and duplication of effort, all circumstancesthat California courts 28 regularly find sufficient to grant a stay in favor of earlier-filed identical lawsuits in another forum. -1- QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE NO. 18-CIV—01425 ARGUMENT ' N I. THE COURT SHOULD STAY THIS CASE UNDER THE' DOCTRINE OF FORUM NON CON VENIENS. I A. The Southern District of New York Is a Suitable Forum. Qudian’s opening brief demonstrated that SDNY is a suitable alternative forum, easily offorum non conveniens. \OOONOUI-P-UJ satisfying the threshold requirement for a stay on the grounds See Op. Br. at 6-7. The only prerequisites for this showing are that: (i) the court in the alternative venue has jurisdiction and that (ii) any proceeding there will not be barred by the statute of limitations. See id.; Guimei v. Gen. Elec. Co., 172 Cal. App. 4th 689, 696-97 (2009) (noting that alternative 10 forum is suitable unless it “provides no remedy at all”). Because all nine served defendants have 11 represented that they will submit to jurisdiction in the SDNY Actions, Op. Br. at 7, and, indeed, 12 because numerous substantially identical lawsuits (including one filed by Plaintiff’s own counsel) 13 are already pending there, this first factor is readily established. 14 Plaintiff nevertheless argues that Qudian has not established suitability because it cannot 15 show that the nine unserved defendants will be subject to jurisdiction in New York. See Opp. at 16 2:25-3:14 (quoting Am. Cemwood, 87 Cal. App. 4th at 43 8-3 9) (“‘[T]he moving party must show 17 that all other defendants .. .are subject to its jurisdiction as well’”) (Plaintiff s emphasis)). 18 This argument fails as a matter of law and lOgic. First, American Cemwood is inapposite. In that 19 case (and cases on which it relies), all defendants had been served and were actually participating 20 in the litigation.1 Here, the nine unserved defendants are not yet part of this lawsuit, have not 21 appeared, and have not submitted themselves to the jurisdiction of this Court. Indeed, Plaintiff has 22 apparently not even attempted to serve any of the individuals, much less offered a shred of 23 1 See, e. g., Am. Cemwood, 87 Cal. App. 4th at 43 6—3 8; Supplemental Declaration of Stephen 24 Blake (“Blake Decl.")1[ 2, Ex. A (Am. Cemwood executed summons); Madanes v. Madanes, 981 F. Supp. 241, 249, 260, 265—66 (S.D.N.Y. 1997) (all defendants had been served); Jota v. Texaco, 25 Inc, 157 F.3d 153, 159 (2d Cir. 1998) (lone defendant had appeared); Kamel v. Hill-Rom Co., Inc., 108 F .3d 799, 802—03 (7th Cir. 1997) (aflirming dismissal for forum non conveniens; lone' 26 defendant had appeared); Watson v. Merrell Dow Pharms., Inc, 769 F.2d 354, 357 (6th Cir. 1985) (aflirming dismissal of corporate defendant; all defendants had appeared); see also In re Air Crash 27 Disaster Near New Orleans, La., 821 F.2d 1147, 1168-69 (5th Cir. 1987), vacated, Pan Am. World Airways, Inc. v. Lopez, 490 US. 1032-33 (1989) (U .S. would be added as defendant and 28 was amenable to process in current forum). -2- QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18—CIV—01425 evidence that jurisdiction could ever exist here. See Opp. at 4:3-7 (arguing only that “personal N jurisdiction over the Defendants is not at issue”)? Second, Plaintiff’s expansive reading of American Cemwood as encompassing the nine unserved defendants here is simply wrong. Because the forum nonconveniens test logically requires “at least two forums” in which a defendant is subject to jurisdiction, Am. Cemwood, 87 Cal. App. 4th at 435 (emphasis added), it cannot on its face apply to any defendant who has not \OOOQQM-kw yet even been served with the complaint in California itself. Qudian knows of no controlling authority extending American Cemwood in the manner Plaintiff suggests, and courts across the country have routinely reached the opposite result. For example, as the Southern District of New 10 York3 very recently explained in summarizing the applicable law: 11 The Court agrees with Defendants that, in determining the adequacy of an alternative forum, the Court may only consider those parties over which it 12 currently exercises jurisdiction ... . Here, allof the Defendants that have been 13 served are amenable to service of process in the Cayman Islands. For this reason, the alternative jurisdiction is adequate ... . 14 15 Fasano v. Juoqing Li, No. 16 Civ. 8759 (KPF), 2017 WL 6764692, at *8 (S.D.N.Y. Dec. 29, 16 2017) (emphasis added); accord, e.g, Holzman v. Guoqiang Xin, No. l2~cv—8405 (AJN), 2015 17 WL 5544357, at *8 (S.D.N.Y. Sept. 18, 2015) (rejecting argument that defendant must establish 18 jurisdiction for unserved Chinese individual defendants in alternative forum and noting that .19 “similar difficulties” might exist in serving these defendants in any jurisdiction); see also PT 20 United Can Co. v. Crown Cork & Seal Co., Inc., 138 F.3d 65, 74 (2d Cir. 1998) (excluding fi'om 21 analysis defendants not subject to jurisdiction in current forum and noting that, otherwise, “a 22 plaintiff could crafiily preemptively defeat any such potential [forum non conveniens] motion”). 23 Indeed, multiple California appellate decisions have found that a forum non conveniens stay is 24 appropriate despite potential jurisdictional concerns related to one or more defendants. See, e. g., 2 25 Jurisdiction over the moving defendants is of course not at issue, as they have moved to stay on the grounds offorum non conveniens. That is quite different from suggesting that Plaintiff’s likely 26 inability to ever demonstrate jurisdiction over the unserved defendants is irrelevant to this motion. 3 27 The court in American Cemwood expressly noted that “federal forum non conveniens law . . . is virtually identica ’3 to California law and relied on case law from the Southern District of New > 28 York and the Second Circuit, among other federal cases. Am. Cemwood, 87 Cal. App. 4th at 438. -3- . QUDIAN’S REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425 Hansen v. Owens-Corning Fiberglas Corp, 51 'Cal. App. 4th 753, 759 (1996) (granting stay despite potential jurisdictional issues for some defendants in alternate forum and noting that, j “[g]iven the early stage for bringing a forum non conveniens motion,” it might very well be J; unclear “whether all defendants were even subject to jurisdiction in California”); see also, e. g., David v. Medtronic, Inc., 237 Cal. App. 4th 734, 743-46 (2015) (holding that, where plaintiff named a “nominal” defendantfor obvious purpose of pinning venue in California, nominal defendant would be excluded from analysis of personal jurisdiction in alternate forum). As the Hansen Court explained, 000'.a “it is unreasonable to expect the moving defendant to prove all defendants are subject to jurisdiction in a particular alternative forum,” particularly since certain 10 defendants might not even be subject to jurisdiction in California itself. Id. at 759. Moreover, 11 because the trial court had “stayed the aetion pending a determination that all defendants are 12 subject to jurisdiction in Montana,” the court could simply lift the stay if jurisdiction was not 13 ultimately established there. See id.“ 14 Finally, Plaintiff’s argument should also be rejected because it would defeat the very 15 purpose of the rule announced in American Cemwood: to further “those considerations of 16 convenience, economy and justice the doctrine [offorum non conveniens] was designed to 17 bolster.” Am. Cemwood, 87 Cal. App. 4th at 439. All of the named defendants here currently 18 face five other substantially identical actions pending in the Southern District of New York, one 19 of which Plaintiff s own counsel previously brought. As discussed fiirther below, proceeding 20 with this case would ensure parallel, duplicative proceedings involving the exact same parties, 21 claims, and issues—the precise evil that the equitable doctrine offorum non conveniens and cases 22 like American Cemwood were designed to prevent. ' 23 24 4 California trial courts have held the same. See, e. g.,Wangen v. A. W. Chesterton Co., Case No. 25 BC381871, at *2 (Cal. Super. Ct. L.A. Cty. Apr. 1, 2008) (summarized in Wangen v. Gardner Denver, Inc., No. B208347, 2009 WL 225999, at *3 (Cal. Ct. App. Feb. 2, 2009) (unpublished)) 26 (ignoring defendants who “have not appeared in this action” in determining those “amenable to service in” alternate forum); Murray v. A. W. Chesterton Co., No. RG 05 241225, 2006 WL 27 3542521, at *1 (Cal. Super. Ct. Alameda Cty. Feb..3, 2006) (same; granting stay where “at least the majority of the defendants in this case are amenable” to the alternate fora); Murray v. A. W. 28 Chesterton Co., No. A113940, 2006 WL 3096213, at *4-5 (Cal. Ct. App. June 15, 2006) (history). -4- QUDIAN’S REPLY ISO MOTION TO STAY FOR FOR UMNON CONVENIENS CASE NO. 18-CIV—01425 . Thus, ,even if the Court: were to adopt Plaintiff’s reading of American Cemwood, the Court V N should nonetheless stay this action under its broad equitable powersto defer to the earlier-filed .SDNY Actions that involve the same claims, issues, and parties, as well as many additional defendants net named here. See, e. g.,Caiafa Prof’l. LawCorp. v. State Farm Fire & Cas. Co., 15 Cal. App. 4th‘800 (1993) (cited in Qudian’s opening brief at 7: 19-82). As explained in Caiafa, a stay under the courtis broadl‘discretionary poWers may be not only-appropriate, but required to VOOOQQU‘AUJ avoid duplicative proceedings in light of factors including “the importance of discouraging multiple litigation designed solely to harass an adverse party, 3, “ avoiding unseemly conflicts with the courts of other jurisdictions,” and “whether the rights of the parties‘can best be determined by 10 the court of the other jurisdiction because of the nature of the subject matter, the availability of 11’ witnesses, or the stage to which the proceedings in the other court haVe already advanced.” Id. at 12‘ 804 (quoting Farmland Irrigation. Co. v. Dopplmaier, 48 Cal. 2d 208, 215 (1957)) (internal 13 quotation marks omitted); accord, e.g., Berg v. MTC Elecs. Techs. Co., 61 Cal. App. 4th 349, 356, 14 1363 (1998) (stayingsecurities action in favor of NY federal case based on “the burdens and 15 inefficiencies that wouldrbe imposed” and “the potential for conflicting rulings”); Simmons v. 16 Super. Ct. ofL.A. Cm, 96 Cal. App. 2d 119, 125 (1950) (granting stay in order "‘to avoid a 17 multiplicity of suits and prevent vexatious litigation, conflicting judgments, [and] confusion”). 18 Such circumstances are clearly present here, as explained below. 19 B. The Private Interest Factors Weigh Heavily in Favor of a Stay. ' 20 1. Plaintiffs Choice of Forum Is Entitled to Diminished Weight Here. '21 Qudian’s opening brief showed that Plaintiff’s choice of forum is entitled‘to significantly 22 less weight on this motion to stay, where, unlike on a motion to dismiss, choice of venue is just 23 “one of many factors which the court may consider.” Op. Br. at 429-12 (citing Century Indem. Co. 24 v. Bank ofAm., FSB, 58 Cal. App. '4th 408, 412-13 (1997)); see also Order Granting Mot. to Stay 25. for Forum Non Conveniens‘at 1, Cervantes'v. Dickerson, No. CIV534768 (Cal. Super. Ct. San 26 Mateo Cty. Feb. 29, 2016) (Weiner, J.) (“Cervantes”) (granting stay even though, “plaintiff, a ‘ 27 California resident, selected this forum”); That is particularly true where Plaintiff lacks any 28 connection to this county, and the action results entirely fromthe admitted forum-shopping of . ‘_5_ QUDiAN’s REPLY ISO MOTION TO STAY FOR FORUMNON CONVENIENS CASE No. 18-CIV-01425 Plaintiff’s counsel. See generally Op. Br. at 14-15.5 Plaintiff doesnot suggest otherwise, see N Opp. at 4:24-5:21, instead arguing that his choice of forum nonetheless “strongly” militates . against granting Qudian’s motion, particularly because he is a residentof California. Opp. at 4:26-5:16. But Plaintiff relies on inapposite case law addressing motions to dismiss, see, e.g., TuaZon v. RJ. Reynolds Tobacco: Co., 433 F.3d 1163,1180 (9th Cir. 2006) (applying federal standard on motion to dismiss), and that actually support Qudian’s position. cookies—mam See, e. g., Century Indem., 58 Cal. App. 4th at 411-12 (“Because the dismissal of an action results in Califomia’s loss ofjurisdiction over the matter, it has long been the rule . . . that an action brought by- a California resident may not be dismissed on grounds of forum non conveniens except in extraordinary 10 circumstances”; but noting that “strong presumption” against dismissal is inapplicable to a motion 11 to stay and affirming stay) (emphasis added).6 w ’12 2. The Remaining Private Interest Factors Weigh Heavily in Favor of a Stay. 13 Qudian’s opening brief established that each of the other private factors courts typically 14 consider on motions such as this one favor venue in SDNY. See Op. Br. at 12-14; Nat ’l F00tball 15 League v. Fireman ’s Fund Ins. Ca, 216 Cal. App. 4th 902, 917 (2013) (noting that relevant 16 private factors are those that “make trial and the enforceability of the ensuing judgment ~ 17 expeditious and relatively inexpensive” and include considerations. such as the convenience of the . 18 parties and the location of relevant Witnesses and documents). As Qudian demonstrated, any 19 5 2o Indeed, the entirety of Plaintiff’s support for the purported connection between Mr. Song and California is a pair of boilerplate statements in his declaration that “I am a resident, taxpayer, and