Preview
1 Christopher W. Keegan (SBN 232045)
chris.keegan@kirkland.com 1/6/2021
2 Austin Klar (SBN 292271)
austin.klar@kirkland.com
3 KIRKLAND & ELLIS LLP
555 California Street
4 San Francisco, CA 94104
Telephone: (415) 439-1400
5 Facsimile: (415) 439-1500
6 Matthew Solum (admitted pro hac vice)
matthew.solum@kirkland.com
7 Stephen V. Potenza (admitted pro hac vice)
stephen.potenza@kirkland.com
8 Joseph M. Sanderson (SBN 305256)
joseph.sanderson@kirkland.com
9 KIRKLAND & ELLIS LLP
601 Lexington Avenue
10 New York, NY 10022
Telephone: (212) 446-4800
11 Facsimile: (212) 446-4900
12 Counsel for Overseas Individual Defendants STEPHEN MURDOCH, MIKE PHILLIPS,
KEVIN LOOSEMORE, NILS BRAUCKMANN, KAREN SLATFORD, RICHARD
13 ATKINS, AMANDA BROWN, SILKE SCHEIBER, and DARREN ROOS
14 SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN MATEO
15 COMPLEX CIVIL LITIGATION
16 In re MICRO FOCUS INTERNATIONAL ) Master File No. 18CIV1549 (Consolidated with
PLC SECURITIES LITIGATION ) 18CIV1653; 18CIV1827; 18CIV2038; and
17 ) 18CIV02583)
)
18 This Document Relates to: ) CLASS ACTION
)
19 ALL ACTIONS ) DEFENDANTS STEPHEN MURDOCH,
) MIKE PHILLIPS, KEVIN LOOSEMORE,
20 ) NILS BRAUCKMANN, KAREN
) SLATFORD, RICHARD ATKINS, AMANDA
21 ) BROWN, SILKE SCHEIBER, AND
) DARREN ROOS’S NOTICE OF MOTION
22 ) AND MOTION TO DISMISS OR STAY FOR
) INCONVENIENT FORUM;
23 ) MEMORANDUM OF POINTS AND
) AUTHORITIES
24 ) [C.C.P. § 410.30]
)
25 ) Hearing Date: March 23, 2021
) Time: 2:00 p.m.
26 ) Department: 2
)
27 ) Assigned for all purposes to Hon. Marie S. Weiner
) Action filed: March 28, 2018
28 )
OVERSEAS INDIVIDUAL DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS OR STAY FOR
INCONVENIENT FORUM; MEMORANDUM OF POINTS AND AUTHORITIES
1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
2 PLEASE TAKE NOTICE that on March 23, 2021 at 2:00 p.m., or as soon thereafter as the
3 matter may be heard, in Department 2 of the above-captioned court, located at Courtroom 2E, 400
4 County Center, Redwood City, California 94063, STEPHEN MURDOCH, MIKE PHILLIPS, KEVIN
5 LOOSEMORE, NILS BRAUCKMANN, KAREN SLATFORD, RICHARD ATKINS, AMANDA
6 BROWN, SILKE SCHEIBER, and DARREN ROOS (collectively, the “Overseas Individual
7 Defendants”), by and through their undersigned counsel, will and hereby do move, pursuant to
8 California Code of Civil Procedure section 410.30(a), for an order dismissing or staying the action for
9 inconvenient forum, or for such other relief as this Court may deem just and proper.
10 This Motion is based upon this Notice of Motion, the attached Memorandum of Points and
11 Authorities, the previously-filed Declarations of Austin Klar and Graham Norton dated July 6, 2018,
12 and the exhibits attached thereto, the previously-filed Memorandum of Points and Authorities in
13 support of Defendants’ Micro Focus International PLC and Giselle Manon’s Motion to Dismiss or
14 Stay for Inconvenient Forum, the previously-filed joinders of Christopher Hsu, John Schultz, and
15 Hewlett Packard Enterprise Company thereto, and all replies and supplemental briefs in support of
16 that motion, including the supplemental brief in support of that motion being filed by those defendants
17 on January 6, 2021, the records of this Court in this action, all other matters of which the Court may
18 take judicial notice, and such further argument and evidence as may be presented to this Court at the
19 time of hearing.
20
DATED: January 6, 2021 KIRKLAND & ELLIS LLP
21
22
23 Matthew Solum (Admitted pro hac vice)
24 Counsel for Overseas Individual Defendants
STEPHEN MURDOCH, MIKE PHILLIPS,
25 KEVIN LOOSEMORE, NILS
BRAUCKMANN, KAREN SLATFORD,
26 RICHARD ATKINS, AMANDA BROWN,
SILKE SCHEIBER, and DARREN ROOS
27
28
2
DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS OR STAY FOR INCONVENIENT FORUM;
MEMORANDUM OF POINTS AND AUTHORITIES
1 TABLE OF CONTENTS
2 Page
3 INTRODUCTION..........................................................................................................................6
4 BACKGROUND ............................................................................................................................6
5 A. Factual Background. ................................................................................................6
B. Procedural Background. ...........................................................................................7
6
THE MOTION IS PURSUANT TO C.C.P. § 410.30 .................................................................8
7
ARGUMENT ..................................................................................................................................8
8
I. THE ACTION SHOULD BE DISMISSED OR STAYED BASED ON THE
9 MANDATORY FORUM-SELECTION PROVISION. .................................................8
10 A. The Forum Selection Provision Is Valid And Binding. ...........................................9
B. The Forum-Selection Provision Is Applicable. ......................................................10
11 C. The Forum-Selection Clause Applies to the Action Against the Overseas Individual
Defendants. ............................................................................................................10
12 D. The Forum-Selection Provision Is Reasonable. .....................................................12
13 CONCLUSION ............................................................................................................................13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
3
TABLE OF CONTENTS
1
TABLE OF AUTHORITIES
2
Page(s)
3
Cases
4
Adelson v. World Transp., Inc.,
5 631 F. Supp. 504 (S.D. Fla. 1986) .................................................................................................13
6 Barak v. The Quisenberry Law Firm,
135 Cal. App. 4th 654 (2006) ..........................................................................................................6
7
Batchelder v. Kawamoto,
8 147 F.3d 915 (9th Cir. 1998) ...........................................................................................................9
9 Beal Sav. Bank v. Sommer,
8 N.Y.3d 318 (2007) ......................................................................................................................11
10
Benefit Assn. Internat., Inc. v. Superior Court,
11 46 Cal. App. 4th 827 (1996) ............................................................................................................8
12 Britton v. Dallas Airmotive, Inc.,
153 Cal. App. 4th 127 (2007) ..........................................................................................................8
13
Bugna v. Fike,
14 80 Cal. App. 4th 229 (2000) ....................................................................................................11, 12
15 Cal-State Bus. Prods. & Servs., Inc. v. Ricoh,
12 Cal. App. 4th 1666 (1993) ........................................................................................................12
16
CQL Original Prods., Inc. v. Nat’l Hockey League Players’ Ass’n,
17 39 Cal. App. 4th 1347 (1995) ........................................................................................................12
18 Friedman v. World Transp., Inc.,
636 F. Supp. 685 (N.D. Ill. 1986) ..................................................................................................13
19
Golden Eagle Ins. Co. v. Foremost Ins. Co.,
20 20 Cal. App. 4th 1372 (1993) ..........................................................................................................9
21 H.A.L. NY Holdings, LLC v. Guinan,
No. 18 CIV. 2275 (ER), 2018 WL 5869648 (S.D.N.Y. Nov. 9, 2018) .........................................11
22
Handoush v. Lease Fin. Grp., LLC,
23 41 Cal. App. 5th 729 (2019) ..........................................................................................................13
24 Hirschfeld Prods. v. Mirvish,
88 N.Y.2d 1054 (1996) ..................................................................................................................12
25
Intershop Commc'ns v. Superior Court,
26 104 Cal. App. 4th 191 (2002) ..........................................................................................................8
27 Kindt v. Otis Elevator Co.,
32 Cal. App. 4th 452 (1995) ............................................................................................................6
28
4
TABLE OF AUTHORITIES
1 Laufer Grp. Int’l v. Tamarack Indus., LLC,
599 F. Supp. 2d 528 (S.D.N.Y. 2009)............................................................................................10
2
Lu v. Dryclean-U.S.A. of California, Inc.,
3 11 Cal. App. 4th 1490 (1992) ..................................................................................................11, 12
4 Nanopierce Tech., Inc. v. Southridge Capital Mgt. LLC,
2003 WL 22882137 (S.D.N.Y. 2003) ............................................................................................11
5
Olinick v. BMG Entm’t,
6 138 Cal. App. 4th 1286 (2006) ......................................................................................................10
7 Rebolledo v. Tilly’s, Inc.,
228 Cal. App. 4th 900 (2014) ........................................................................................................11
8
Richards v. Lloyd’s of London,
9 135 F.3d 1289 (9th Cir. 1998) (en banc) .......................................................................................13
10 Rodriguez de Quijas v. Shearson/American Express, Inc.,
490 U.S. 477 (1989) .......................................................................................................................13
11
Siroy v. Jobson Healthcare Info. LLC,
12 2016 N.Y. Slip Op. 50818(U) (Sup. Ct. 2016) ..............................................................................12
13 Smith, Valentino & Smith, Inc. v. Super. Ct.,
17 Cal. 3d 491 (1976) ....................................................................................................................12
14
Stoyas v. Toshiba Corp.,
15 No. 16-56058, 2018 WL 3431764 (9th Cir. July 17, 2018).............................................................9
16 Statutes
17 Cal. Civ. Proc. Code § 410.30 .....................................................................................................6, 8, 13
18 Cal. Civ. Proc. Code § 418.10 ...........................................................................................................6, 8
19 Cal. Com. Code § 8202 ..........................................................................................................................9
20 N.Y. U.C.C. § 8-202 ..............................................................................................................................9
21 Rules
22 C.R.C. § 3.1113(b) .................................................................................................................................6
23 Other Authorities
24 17 C.F.R. § 229.601(b)(4)......................................................................................................................6
25 17 C.F.R. § 239.34 .................................................................................................................................6
26 American Depository Receipts, Release Nos. 33-6984, 34-29226, 1991 WL 294145
(May 23, 1991).................................................................................................................................9
27
28
5
TABLE OF AUTHORITIES
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 INTRODUCTION
3 The Overseas Individual Defendants respectfully move to dismiss or stay for inconvenient
4 forum under C.C.P. § 410.30. The Overseas Individual Defendants’ motion is based on the same facts
5 and legal arguments as the other Defendants’ motions, and the Overseas Individual Defendants
6 expressly adopt the arguments made by Micro Focus and all other Defendants in the earlier filed
7 memoranda and declarations in support of the pending motions pursuant to C.C.P. § 418.10 to dismiss
8 or stay based upon the forum-selection clause, as well as the supplemental brief being filed today, as
9 if set forth herein. See Kindt v. Otis Elevator Co., 32 Cal. App. 4th 452, 459 (1995) (referencing
10 joinder to another party’s arguments); Barak v. The Quisenberry Law Firm, 135 Cal. App. 4th 654,
11 661 (2006) (request for affirmative relief and incorporation of codefendant’s motion papers sufficient).
12 In addition, and further to C.R.C. § 3.1113(b), the Overseas Individual Defendants (a) rely
13 upon the previously-filed declarations and exhibits upon which the other Defendants relied, and
14 (b) briefly reiterate the relevant background and legal arguments.
15 BACKGROUND
16 A. Factual Background.
17 All Plaintiffs allegedly acquired Micro Focus American Depositary Shares (“ADSs”). CCAC
18 ¶¶ 13-17, 52. They also allege that every member of the putative class, including themselves,
19 “purchased or acquired [Micro Focus] ADSs pursuant to the Company’s Merger and Registration
20 Statement[.]” CCAC ¶ 86. The terms of those ADSs, including economic and voting rights, were set
21 forth on the American Depositary Receipts and in the Deposit Agreement that was incorporated by
22 reference therein, and were also attached as an exhibit to two SEC filings: (i) a Form F-6, which
23 registers the ADSs issued by the depositary; and (ii) a Form F-4, which registers the ordinary shares
24 of Micro Focus that were deposited with the depositary. See 7/6/2018 Norton Decl. (“Norton Decl.”)
25 Ex. 1 (Form F-4, at Ex. 4.2) at 631; 7/6/2018 Klar Decl. (“Klar Decl.”) Ex. 1 (Form F-6, at Ex. (A))
26 at 15; see also 17 C.F.R. §§ 229.601(b)(4), 239.34.
27 The Deposit Agreement is governed by New York law and includes a mandatory forum-
28 selection clause that identifies New York state and federal courts as the exclusive forum for any action
6
MEMORANDUM OF POINTS AND AUTHORITIES
1 against or involving Micro Focus based upon ADSs, among other things. Norton Decl., Ex. 2 (Deposit
2 Agmt. § 7.6) at 1172. Section 7.6 of the Deposit Agreement states:
3 Holders and Beneficial Owners understand, and holding an American Depositary Share
or an interest therein, such Holders and Beneficial Owners each irrevocably agree that
4 any legal suit, action or proceeding against or involving the Company or the
Depositary, arising out of or based upon the Deposit Agreement, American Depositary
5 Shares, Receipts or the transactions contemplated hereby or thereby or by virtue of
ownership thereof, may only be instituted in a state or federal court in New York, New
6 York, and by holding an American Depositary Share or an interest therein each …
irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action
7 or proceeding.
8 Id. (emphases added). The same forum-selection language is included on the Form of American
9 Depositary Receipts that is also attached to the filed Form F-4 and Form F-6. Norton Decl. Ex. 1, at
10 700; Klar Decl. Ex. 1, at 15.
11 The Depositary for the ADSs is Deutsche Bank Trust Company Americas (“DBTCA”), which
12 has its principal office in New York, New York. Norton Decl. ¶¶ 6, 11. The ADSs trade on the New
13 York Stock Exchange (“NYSE”). Id. ¶ 8. Micro Focus, headquartered in England, has Law Debenture
14 Corporate Services in New York as its authorized representative in the United States and agent for
15 service of process, and Law Debenture’s employee Giselle Manon is located there. Id. ¶¶ 9-10; CCAC
16 ¶ 28.
17 B. Procedural Background.
18 Between March 28 and May 22, 2018, Plaintiffs filed five separate putative class action
19 complaints against the Overseas Individual Defendants, Micro Focus, and other individual
20 Defendants. The complaints asserted claims under Sections 11, 12, and 15 of the Securities Act, and
21 the Court designated the cases complex and consolidated them.1 On June 15, 2018, Plaintiffs filed a
22 single, consolidated amended complaint asserting the same Securities Act claims. CCAC ¶¶ 93-100,
23 102-04, 109-10. On July 11, 2017, Plaintiffs filed a notice of filing of international proofs of service
24 indicating that Plaintiffs had served the summonses and complaints in two of the actions on the
25 Overseas Individual Defendants in the United Kingdom pursuant to the Hague Convention and under
26 the U.K.’s Companies Act 2006. Dkt. No. 81. The Overseas Individual Defendants moved to quash
27
1
28 Plaintiffs Ribeiro and Green filed actions subsequently, both of which were consolidated for
all purposes into this action.
7
MEMORANDUM OF POINTS AND AUTHORITIES
1 service of process on July 31, 2018, Dkt. No. 89, plaintiffs John Ribeiro and Ian Green filed complaints
2 on August 1, 2018, and March 20, 2020, respectively, and after a discretionary forum non conveniens
3 stay was lifted, this Court denied the motion to quash service on December 11, 2020, and directed the
4 Overseas Individual Defendants to file an answer or other response to the Complaint (such as a demur
5 or other motion regarding the sufficiency of the pleadings) by January 6, 2021, Dkt. No. 178.
6 THE MOTION IS PURSUANT TO C.C.P. § 410.30
7 The Overseas Individual Defendants bring this motion pursuant to C.C.P § 410.30. The
8 California Code of Civil Procedure provides that a party may file an inconvenient forum motion before
9 a party generally appears, C.C.P. § 418.10, or after a party generally appears, C.C.P. § 410.30.
10 “[W]here a defendant has not appeared, section 418.10 applies and specifies the procedure for bringing
11 a forum non conveniens motion. Section 410.30 applies after a defendant has appeared.” Britton v.
12 Dallas Airmotive, Inc., 153 Cal. App. 4th 127, 134 (2007). Thus, “section 418.10 provides special
13 procedures for pre-answer forum non conveniens motions, but such motions are not precluded after a
14 defendant has appeared.” Id. at 134–35.2
15 ARGUMENT
16 I. THE ACTION SHOULD BE DISMISSED OR STAYED BASED ON THE
MANDATORY FORUM-SELECTION PROVISION.
17
California law favors enforcement of forum-selection clauses. “A forum-selection clause is
18
prima facie valid and is to be enforced unless the resisting party shows enforcement would be
19
unreasonable under the circumstances.” Benefit Assn. Internat., Inc. v. Superior Court, 46 Cal. App.
20
4th 827, 835 (1996). “[I]n cases with a contractual forum selection clause, the burden of proof is on
21
the plaintiff, the party resisting the motion.” Intershop Commc'ns v. Superior Court, 104 Cal. App. 4th
22
191, 198 (2002).
23
24
25
2
26 The Overseas Individual Defendants respectfully submit this motion at this time so that it can
be decided at the same time as the pending motions to dismiss or stay based on the forum selection
27 clause pursuant to C.C.P. § 418.10 by Micro Focus, HPE, and the other individual defendants in this
action. Counsel for the Overseas Individual Defendants discussed this motion with Lead Counsel
28 during the meet and confer on the demurrer also being filed today, and the parties agreed to a timeline
to allow the Court to consider this motion with the pending motions.
8
MEMORANDUM OF POINTS AND AUTHORITIES
1 A. The Forum Selection Provision Is Valid And Binding.
2 As the other Defendants have previously explained, the forum-selection clause here is valid
3 and binding. The terms printed on the American Depositary Receipts—including the forum-selection
4 clause—are binding on holders under both California and New York law. See Cal. Com. Code § 8202;
5 N.Y. U.C.C. § 8-202. In addition, when people accept and hold a security—which Plaintiff here did
6 by accepting and retaining American Depositary Shares—they agree to the terms of the security. See
7 Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal. App. 4th 1372, 1386 (1993) (retaining insurance
8 renewal certificate for two months was sufficient acceptance of renewal offer). The SEC has explained
9 that “ADR holders are deemed to have agreed to all terms in the deposit agreement by their acceptance
10 and holding of ADRs.” See American Depository Receipts, Release Nos. 33-6984, 34-29226, 1991
11 WL 294145 (May 23, 1991) at n.63. The “deposit agreement sets out the rights and responsibilities
12 of the issuer, the depositary and the ADR holders.” Id.; Batchelder v. Kawamoto, 147 F.3d 915, 917
13 (9th Cir. 1998) (“Batchelder purchased his ADRs pursuant to the Deposit Agreement, which expressly
14 provides that the law of Japan governs shareholder rights.”); see also Stoyas v. Toshiba Corp., No. 16-
15 56058, 2018 WL 3431764, at *5 n.8 (9th Cir. July 17, 2018) (noting that ADR holders were “deemed
16 to have agreed” to the terms of the ADR “by their acceptance and holding of ADRs”).
17 The registration statement upon which this action is based advised holders that “Your rights as
18 a Micro Focus ADS holder will be governed by, among other things, the terms of the Deposit
19 Agreement with the Depositary,” Norton Decl. Ex. 1 (Form F-4) at 31, as well as providing a copy of
20 that agreement, id. (Form F-4, Ex. 4.2) at 631, and printing terms including the forum-selection
21 provision on the receipts themselves, id. (Form F-4, Ex. 4.2 at Ex. (A)) at 700. Plaintiffs were also
22 informed that the prospectus summary of the terms does not purport to be complete and is qualified in
23 its entirety by the full text of the Deposit Agreement and the form of ADR, which you should read in
24 their entirety, and which are included as exhibits to the registration statements of which this
25 information statement/prospectus forms a part and incorporated herein by reference.” Id. at 240
26 (emphasis added).
27 The forum-selection provision here is mandatory. Plaintiffs and the members of the putative
28 class “each irrevocably agree that any legal suit, action or proceeding against or involving the
9
MEMORANDUM OF POINTS AND AUTHORITIES
1 Company . . .arising out of or based upon the Deposit Agreement, American Depositary Shares,
2 Receipts or the transactions contemplated hereby or thereby or by virtue of ownership thereof, may
3 only be instituted in a state or federal court in New York, New York.” Norton Decl. Ex. 2, § 7.6 at
4 1172 (emphasis added). Each also “irrevocably submits to the exclusive jurisdiction of such courts in
5 any such suit, action or proceeding.” Id. (emphasis added). This clause is mandatory and enforceable.
6 See, e.g., Olinick v. BMG Entm’t, 138 Cal. App. 4th 1286, 1294 (2006) (forum-selection clause
7 providing for “exclusive jurisdiction” was mandatory, as it “contains express language of exclusivity
8 of jurisdiction, specifying a mandatory location for litigation”); Laufer Grp. Int’l v. Tamarack Indus.,
9 LLC, 599 F. Supp. 2d 528, 530 (S.D.N.Y. 2009) (clause providing that “[a]ll disputes . . . may only be
10 instituted in the United States District Court for the Southern District of New York” was mandatory).
11 B. The Forum-Selection Provision Is Applicable.
12 By its plain and unambiguous language, the forum-selection clause applies to Plaintiffs’
13 Securities Act action, as it applies to “any legal suit, action or proceeding against or involving the
14 Company or the Depositary, arising out of or based upon the Deposit Agreement, American
15 Depositary Shares, Receipts or the transactions contemplated hereby or thereby or by virtue of
16 ownership thereof.” Klar Decl. at 671 (Deposit Agreement); 700 (Form of American Depositary
17 Receipt). This action is against and involves Micro Focus, and it arises out of and is based upon (at a
18 minimum) the American Depositary Shares and the issuance transaction. The action also is brought
19 by virtue of Plaintiffs’ ownership of the ADSs, as ownership is an element of their claims.
20 C. The Forum-Selection Clause Applies to the Action Against the Overseas
Individual Defendants.
21
The forum-selection provision here unambiguously extends to parties other than Micro Focus
22
itself. By its terms, it applies to “any legal suit, action or proceeding against or involving the
23
Company.” Klar Decl. at 671 (emphasis added). This action—in which Micro Focus is a defendant
24
and the Overseas Individual Defendants are being sued on the theory that they are liable for Micro
25
Focus’s actions because they signed the registration statement in their official capacity as officers or
26
directors of Micro Focus—is unequivocally one “involving” Micro Focus. By the plain terms of the
27
forum-selection provision, the Overseas Individual Defendants are entitled to invoke the forum-
28
10
MEMORANDUM OF POINTS AND AUTHORITIES
1 selection provision. At the very least, and in the alternative, Micro Focus is entitled to invoke the
2 provision as to the entire action, including its constituent claims asserted against all Defendants, and
3 Micro Focus has done so.
4 Moreover, as Messrs. Hsu and Schultz have previously noted, California law strongly supports
5 allegedly jointly liable parties’ ability to invoke exclusive forum provisions. “A range of transaction
6 participants, parties and non-parties, should benefit from and be subject to forum selection clauses.”
7 Lu v. Dryclean-U.S.A. of California, Inc., 11 Cal. App. 4th 1490, 1494 (1992) (internal brackets
8 omitted). A defendant that is “closely related to the contractual relationship” may enforce the forum-
9 selection provision if either “(1) it agreed to be bound by the terms of the purchase agreement, (2) the
10 contracting parties intended [defendant] to benefit from the purchase agreement, or (3) there was
11 sufficient evidence of a defined and intertwining business relationship with a contracting party.”
12 Bugna v. Fike, 80 Cal. App. 4th 229, 233 (2000). At a minimum, the second and third alternatives
13 apply here.
14 First, the provision’s reference to actions “involving” Micro Focus is a clear textual indication
15 that the parties intended that the provision does not apply only where the action is against Micro Focus.
16 The “involving” part of “against or involving” would be superfluous if only actions against Micro
17 Focus itself were covered. See Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324 (2007) (“A reading of
18 the contract should not render any portion meaningless.”); Rebolledo v. Tilly’s, Inc., 228 Cal. App. 4th
19 900, 923 (2014) (“[I]t is well settled contracts are construed to avoid rendering terms surplusage.”
20 (internal quotation marks omitted)). In addition, itis well-established that parties such as agents,
21 officers, and directors need not be formal third-party beneficiaries to invoke a forum-selection
22 provision. See, e.g., H.A.L. NY Holdings, LLC v. Guinan, No. 18 CIV. 2275 (ER), 2018 WL 5869648,
23 at *4 (S.D.N.Y. Nov. 9, 2018) (“Courts have regularly found that non-signatory corporate executives
24 and officers are ‘closely related’ to a signatory company such that enforcement of a forum selection
25 clause in an agreement made by the company was foreseeable.”); Nanopierce Tech., Inc. v. Southridge
26 Capital Mgt. LLC, 2003 WL 22882137, at *5 (S.D.N.Y. 2003) (“While it may be true that third-party
27 beneficiaries to a contract would, by definition, satisfy the closely related and foreseeability
28 requirements, a third-party beneficiary status is not required”).
11
MEMORANDUM OF POINTS AND AUTHORITIES
1 Second, the Overseas Individual Defendants are being sued as directors and officers of Micro
2 Focus who signed the registration statement on which Plaintiffs base their claims. In Bugna, the Court
3 of Appeal held that “the deal makers who negotiated, evaluated and otherwise put together the very
4 SCN transactions that appellants now attack” were entitled to enforce a forum-selection provision. 80
5 Cal. App. 4th at 235. Similarly, the Lu court held that corporate affiliates could enforce a forum-
6 selection provision where a plaintiff alleged that they were jointly liable with their subsidiary. 11 Cal.
7 App. 4th at 1494. New York courts have similarly held. See Hirschfeld Prods. v. Mirvish, 88 N.Y.2d
8 1054, 1056 (1996) (explaining that federal courts “have consistently afforded agents the benefit of
9 arbitration agreements entered into by their principals to the extent that the alleged misconduct relates
10 to their behavior as officers or directors or in their capacities as agents of the corporation” and that the
11 rule “is necessary not only to prevent circumvention of arbitration agreements but also to effectuate
12 the intent of the signatory parties to protect individuals acting on behalf of the principal in furtherance
13 of the agreement”); Siroy v. Jobson Healthcare Info. LLC, 2016 N.Y. Slip Op. 50818(U) (Sup. Ct.
14 2016) (applying Hirschfeld to forum-selection provision).
15 D. The Forum-Selection Provision Is Reasonable.
16 The provision is reasonable. In fact, Plaintiffs must carry the “heavy burden” to “demonstrate
17 that enforcement of the clause would be unreasonable under the circumstances of the case.” Lu, 11
18 Cal. App. 4th at 1493; see CQL Original Prods., Inc. v. Nat’l Hockey League Players’ Ass’n, 39 Cal.
19 App. 4th 1347, 1354 (1995). This requires Plaintiffs to show that “the forum selected would be
20 unavailable or unable to accomplish substantial justice.” Smith, Valentino & Smith, Inc. v. Super. Ct.,
21 17 Cal. 3d 491, 494 (1976). They cannot do so.
22 First, New York is a reasonable choice of forum because it is where the ADSs trade, Norton
23 Decl. ¶ 8, where the Depositary is located, id. ¶ 11, where the agent for service and Authorized
24 Representative in the United States is located, id. ¶ 9, and where Micro Focus’s U.S. advisors on the
25 transaction were, id. ¶ 12; Norton Decl. Ex. 1; Klar Decl. Ex. 1. New York’s experience with securities
26 disputes is also a proper basis to select it. See Cal-State Bus. Prods. & Servs., Inc. v. Ricoh, 12 Cal.
27 App. 4th 1666, 1682 (1993) (reasonable to choose New York courts, “which would have (at least
28 institutionally) a great deal of expertise in commercial litigation”).
12
MEMORANDUM OF POINTS AND AUTHORITIES
1 Second, the anti-waiver provision of the Securities Act, 15 U.S.C. § 77n, does not bar waiver
2 of procedural provisions including the statute’s broad venue provisions” and “the grant of concurrent
3 jurisdiction in the state and federal courts without the possibility of removal.” Rodriguez de Quijas v.
4 Shearson/American Express, Inc., 490 U.S. 477, 482 (1989). The U.S. Supreme Court has held that
5 “[t]here is no sound basis for construing the prohibition in [section 77n] on waiving ‘compliance with
6 any provision’ of the Securities Act to apply to these procedural provisions.” Id. Courts have routinely
7 enforced forum-selection provisions in Securities Act cases. See Richards v. Lloyd’s of London, 135
8 F.3d 1289, 1292-96 (9th Cir. 1998) (en banc); Adelson v. World Transp., Inc., 631 F. Supp. 504, 507
9 (S.D. Fla. 1986); Friedman v. World Transp., Inc., 636 F. Supp. 685, 692 (N.D. Ill. 1986).
10 Third, New York courts are available and can provide substantial justice. All Defendants have,
11 by joining motions to dismiss or stay for inconvenient forum, stipulated that New York has personal
12 jurisdiction over them and that they will not invoke any statute of limitations or repose defense that
13 would not be available to them if this case proceeded in this Court. To the extent the Court determines
14 that Plaintiffs have any unwaivable California right to a jury trial that applies in this action and that
15 the jury waiver provision in the Deposit Agreement is otherwise not severable—and it should not for
16 the reasons set forth in the supplemental brief filed today by Micro Focus and other defendants on this
17 issue—then the Overseas Individual Defendants like Micro Focus and the other Defendants would
18 stipulate that the Overseas Individual Defendants will not enforce the jury trial waiver provision in an
19 action filed by Plaintiffs in a New York forum as required under the Deposit Agreement. See
20 Handoush v. Lease Fin. Grp., LLC, 41 Cal. App. 5th 729, 736 (2019) (stipulation sufficient way to
21 meet burden of showing alternate forum will protect unwaivable California rights).
22 CONCLUSION
23 For all of the reasons set forth above and set forth in the memoranda submitted by Micro Focus
24 and joinders of other defendants in support of their motion based on the forum-selection clause, this
25 Court should dismiss or stay the action pursuant to C.C.P. § 410.30(a).
26
27
28
13
MEMORANDUM OF POINTS AND AUTHORITIES
1
Dated: January 6, 2021 KIRKLAND & ELLIS LLP
2
3
By:
4 Matthew Solum (Admitted pro hac vice)
Stephen V. Potenza (Admitted pro hac vice)
5 Joseph M. Sanderson (SBN 305256)
KIRKLAND & ELLIS LLP
6 601 Lexington Avenue
New York, NY 10022
7 Telephone: (212) 446-4800
Facsimile: (212) 446-49
Preview
1 Christopher W. Keegan (SBN 232045) chris.keegan@kirkland.com 1/6/2021 2 Austin Klar (SBN 292271) austin.klar@kirkland.com 3 KIRKLAND & ELLIS LLP 555 California Street 4 San Francisco, CA 94104 Telephone: (415) 439-1400 5 Facsimile: (415) 439-1500 6 Matthew Solum (admitted pro hac vice) matthew.solum@kirkland.com 7 Stephen V. Potenza (admitted pro hac vice) stephen.potenza@kirkland.com 8 Joseph M. Sanderson (SBN 305256) joseph.sanderson@kirkland.com 9 KIRKLAND & ELLIS LLP 601 Lexington Avenue 10 New York, NY 10022 Telephone: (212) 446-4800 11 Facsimile: (212) 446-4900 12 Counsel for Overseas Individual Defendants STEPHEN MURDOCH, MIKE PHILLIPS, KEVIN LOOSEMORE, NILS BRAUCKMANN, KAREN SLATFORD, RICHARD 13 ATKINS, AMANDA BROWN, SILKE SCHEIBER, and DARREN ROOS 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN MATEO 15 COMPLEX CIVIL LITIGATION 16 In re MICRO FOCUS INTERNATIONAL ) Master File No. 18CIV1549 (Consolidated with PLC SECURITIES LITIGATION ) 18CIV1653; 18CIV1827; 18CIV2038; and 17 ) 18CIV02583) ) 18 This Document Relates to: ) CLASS ACTION ) 19 ALL ACTIONS ) DEFENDANTS STEPHEN MURDOCH, ) MIKE PHILLIPS, KEVIN LOOSEMORE, 20 ) NILS BRAUCKMANN, KAREN ) SLATFORD, RICHARD ATKINS, AMANDA 21 ) BROWN, SILKE SCHEIBER, AND ) DARREN ROOS’S NOTICE OF MOTION 22 ) AND MOTION TO DISMISS OR STAY FOR ) INCONVENIENT FORUM; 23 ) MEMORANDUM OF POINTS AND ) AUTHORITIES 24 ) [C.C.P. § 410.30] ) 25 ) Hearing Date: March 23, 2021 ) Time: 2:00 p.m. 26 ) Department: 2 ) 27 ) Assigned for all purposes to Hon. Marie S. Weiner ) Action filed: March 28, 2018 28 ) OVERSEAS INDIVIDUAL DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS OR STAY FOR INCONVENIENT FORUM; MEMORANDUM OF POINTS AND AUTHORITIES 1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on March 23, 2021 at 2:00 p.m., or as soon thereafter as the 3 matter may be heard, in Department 2 of the above-captioned court, located at Courtroom 2E, 400 4 County Center, Redwood City, California 94063, STEPHEN MURDOCH, MIKE PHILLIPS, KEVIN 5 LOOSEMORE, NILS BRAUCKMANN, KAREN SLATFORD, RICHARD ATKINS, AMANDA 6 BROWN, SILKE SCHEIBER, and DARREN ROOS (collectively, the “Overseas Individual 7 Defendants”), by and through their undersigned counsel, will and hereby do move, pursuant to 8 California Code of Civil Procedure section 410.30(a), for an order dismissing or staying the action for 9 inconvenient forum, or for such other relief as this Court may deem just and proper. 10 This Motion is based upon this Notice of Motion, the attached Memorandum of Points and 11 Authorities, the previously-filed Declarations of Austin Klar and Graham Norton dated July 6, 2018, 12 and the exhibits attached thereto, the previously-filed Memorandum of Points and Authorities in 13 support of Defendants’ Micro Focus International PLC and Giselle Manon’s Motion to Dismiss or 14 Stay for Inconvenient Forum, the previously-filed joinders of Christopher Hsu, John Schultz, and 15 Hewlett Packard Enterprise Company thereto, and all replies and supplemental briefs in support of 16 that motion, including the supplemental brief in support of that motion being filed by those defendants 17 on January 6, 2021, the records of this Court in this action, all other matters of which the Court may 18 take judicial notice, and such further argument and evidence as may be presented to this Court at the 19 time of hearing. 20 DATED: January 6, 2021 KIRKLAND & ELLIS LLP 21 22 23 Matthew Solum (Admitted pro hac vice) 24 Counsel for Overseas Individual Defendants STEPHEN MURDOCH, MIKE PHILLIPS, 25 KEVIN LOOSEMORE, NILS BRAUCKMANN, KAREN SLATFORD, 26 RICHARD ATKINS, AMANDA BROWN, SILKE SCHEIBER, and DARREN ROOS 27 28 2 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO DISMISS OR STAY FOR INCONVENIENT FORUM; MEMORANDUM OF POINTS AND AUTHORITIES 1 TABLE OF CONTENTS 2 Page 3 INTRODUCTION..........................................................................................................................6 4 BACKGROUND ............................................................................................................................6 5 A. Factual Background. ................................................................................................6 B. Procedural Background. ...........................................................................................7 6 THE MOTION IS PURSUANT TO C.C.P. § 410.30 .................................................................8 7 ARGUMENT ..................................................................................................................................8 8 I. THE ACTION SHOULD BE DISMISSED OR STAYED BASED ON THE 9 MANDATORY FORUM-SELECTION PROVISION. .................................................8 10 A. The Forum Selection Provision Is Valid And Binding. ...........................................9 B. The Forum-Selection Provision Is Applicable. ......................................................10 11 C. The Forum-Selection Clause Applies to the Action Against the Overseas Individual Defendants. ............................................................................................................10 12 D. The Forum-Selection Provision Is Reasonable. .....................................................12 13 CONCLUSION ............................................................................................................................13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 TABLE OF CONTENTS 1 TABLE OF AUTHORITIES 2 Page(s) 3 Cases 4 Adelson v. World Transp., Inc., 5 631 F. Supp. 504 (S.D. Fla. 1986) .................................................................................................13 6 Barak v. The Quisenberry Law Firm, 135 Cal. App. 4th 654 (2006) ..........................................................................................................6 7 Batchelder v. Kawamoto, 8 147 F.3d 915 (9th Cir. 1998) ...........................................................................................................9 9 Beal Sav. Bank v. Sommer, 8 N.Y.3d 318 (2007) ......................................................................................................................11 10 Benefit Assn. Internat., Inc. v. Superior Court, 11 46 Cal. App. 4th 827 (1996) ............................................................................................................8 12 Britton v. Dallas Airmotive, Inc., 153 Cal. App. 4th 127 (2007) ..........................................................................................................8 13 Bugna v. Fike, 14 80 Cal. App. 4th 229 (2000) ....................................................................................................11, 12 15 Cal-State Bus. Prods. & Servs., Inc. v. Ricoh, 12 Cal. App. 4th 1666 (1993) ........................................................................................................12 16 CQL Original Prods., Inc. v. Nat’l Hockey League Players’ Ass’n, 17 39 Cal. App. 4th 1347 (1995) ........................................................................................................12 18 Friedman v. World Transp., Inc., 636 F. Supp. 685 (N.D. Ill. 1986) ..................................................................................................13 19 Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 20 Cal. App. 4th 1372 (1993) ..........................................................................................................9 21 H.A.L. NY Holdings, LLC v. Guinan, No. 18 CIV. 2275 (ER), 2018 WL 5869648 (S.D.N.Y. Nov. 9, 2018) .........................................11 22 Handoush v. Lease Fin. Grp., LLC, 23 41 Cal. App. 5th 729 (2019) ..........................................................................................................13 24 Hirschfeld Prods. v. Mirvish, 88 N.Y.2d 1054 (1996) ..................................................................................................................12 25 Intershop Commc'ns v. Superior Court, 26 104 Cal. App. 4th 191 (2002) ..........................................................................................................8 27 Kindt v. Otis Elevator Co., 32 Cal. App. 4th 452 (1995) ............................................................................................................6 28 4 TABLE OF AUTHORITIES 1 Laufer Grp. Int’l v. Tamarack Indus., LLC, 599 F. Supp. 2d 528 (S.D.N.Y. 2009)............................................................................................10 2 Lu v. Dryclean-U.S.A. of California, Inc., 3 11 Cal. App. 4th 1490 (1992) ..................................................................................................11, 12 4 Nanopierce Tech., Inc. v. Southridge Capital Mgt. LLC, 2003 WL 22882137 (S.D.N.Y. 2003) ............................................................................................11 5 Olinick v. BMG Entm’t, 6 138 Cal. App. 4th 1286 (2006) ......................................................................................................10 7 Rebolledo v. Tilly’s, Inc., 228 Cal. App. 4th 900 (2014) ........................................................................................................11 8 Richards v. Lloyd’s of London, 9 135 F.3d 1289 (9th Cir. 1998) (en banc) .......................................................................................13 10 Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989) .......................................................................................................................13 11 Siroy v. Jobson Healthcare Info. LLC, 12 2016 N.Y. Slip Op. 50818(U) (Sup. Ct. 2016) ..............................................................................12 13 Smith, Valentino & Smith, Inc. v. Super. Ct., 17 Cal. 3d 491 (1976) ....................................................................................................................12 14 Stoyas v. Toshiba Corp., 15 No. 16-56058, 2018 WL 3431764 (9th Cir. July 17, 2018).............................................................9 16 Statutes 17 Cal. Civ. Proc. Code § 410.30 .....................................................................................................6, 8, 13 18 Cal. Civ. Proc. Code § 418.10 ...........................................................................................................6, 8 19 Cal. Com. Code § 8202 ..........................................................................................................................9 20 N.Y. U.C.C. § 8-202 ..............................................................................................................................9 21 Rules 22 C.R.C. § 3.1113(b) .................................................................................................................................6 23 Other Authorities 24 17 C.F.R. § 229.601(b)(4)......................................................................................................................6 25 17 C.F.R. § 239.34 .................................................................................................................................6 26 American Depository Receipts, Release Nos. 33-6984, 34-29226, 1991 WL 294145 (May 23, 1991).................................................................................................................................9 27 28 5 TABLE OF AUTHORITIES 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 The Overseas Individual Defendants respectfully move to dismiss or stay for inconvenient 4 forum under C.C.P. § 410.30. The Overseas Individual Defendants’ motion is based on the same facts 5 and legal arguments as the other Defendants’ motions, and the Overseas Individual Defendants 6 expressly adopt the arguments made by Micro Focus and all other Defendants in the earlier filed 7 memoranda and declarations in support of the pending motions pursuant to C.C.P. § 418.10 to dismiss 8 or stay based upon the forum-selection clause, as well as the supplemental brief being filed today, as 9 if set forth herein. See Kindt v. Otis Elevator Co., 32 Cal. App. 4th 452, 459 (1995) (referencing 10 joinder to another party’s arguments); Barak v. The Quisenberry Law Firm, 135 Cal. App. 4th 654, 11 661 (2006) (request for affirmative relief and incorporation of codefendant’s motion papers sufficient). 12 In addition, and further to C.R.C. § 3.1113(b), the Overseas Individual Defendants (a) rely 13 upon the previously-filed declarations and exhibits upon which the other Defendants relied, and 14 (b) briefly reiterate the relevant background and legal arguments. 15 BACKGROUND 16 A. Factual Background. 17 All Plaintiffs allegedly acquired Micro Focus American Depositary Shares (“ADSs”). CCAC 18 ¶¶ 13-17, 52. They also allege that every member of the putative class, including themselves, 19 “purchased or acquired [Micro Focus] ADSs pursuant to the Company’s Merger and Registration 20 Statement[.]” CCAC ¶ 86. The terms of those ADSs, including economic and voting rights, were set 21 forth on the American Depositary Receipts and in the Deposit Agreement that was incorporated by 22 reference therein, and were also attached as an exhibit to two SEC filings: (i) a Form F-6, which 23 registers the ADSs issued by the depositary; and (ii) a Form F-4, which registers the ordinary shares 24 of Micro Focus that were deposited with the depositary. See 7/6/2018 Norton Decl. (“Norton Decl.”) 25 Ex. 1 (Form F-4, at Ex. 4.2) at 631; 7/6/2018 Klar Decl. (“Klar Decl.”) Ex. 1 (Form F-6, at Ex. (A)) 26 at 15; see also 17 C.F.R. §§ 229.601(b)(4), 239.34. 27 The Deposit Agreement is governed by New York law and includes a mandatory forum- 28 selection clause that identifies New York state and federal courts as the exclusive forum for any action 6 MEMORANDUM OF POINTS AND AUTHORITIES 1 against or involving Micro Focus based upon ADSs, among other things. Norton Decl., Ex. 2 (Deposit 2 Agmt. § 7.6) at 1172. Section 7.6 of the Deposit Agreement states: 3 Holders and Beneficial Owners understand, and holding an American Depositary Share or an interest therein, such Holders and Beneficial Owners each irrevocably agree that 4 any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon the Deposit Agreement, American Depositary 5 Shares, Receipts or the transactions contemplated hereby or thereby or by virtue of ownership thereof, may only be instituted in a state or federal court in New York, New 6 York, and by holding an American Depositary Share or an interest therein each … irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action 7 or proceeding. 8 Id. (emphases added). The same forum-selection language is included on the Form of American 9 Depositary Receipts that is also attached to the filed Form F-4 and Form F-6. Norton Decl. Ex. 1, at 10 700; Klar Decl. Ex. 1, at 15. 11 The Depositary for the ADSs is Deutsche Bank Trust Company Americas (“DBTCA”), which 12 has its principal office in New York, New York. Norton Decl. ¶¶ 6, 11. The ADSs trade on the New 13 York Stock Exchange (“NYSE”). Id. ¶ 8. Micro Focus, headquartered in England, has Law Debenture 14 Corporate Services in New York as its authorized representative in the United States and agent for 15 service of process, and Law Debenture’s employee Giselle Manon is located there. Id. ¶¶ 9-10; CCAC 16 ¶ 28. 17 B. Procedural Background. 18 Between March 28 and May 22, 2018, Plaintiffs filed five separate putative class action 19 complaints against the Overseas Individual Defendants, Micro Focus, and other individual 20 Defendants. The complaints asserted claims under Sections 11, 12, and 15 of the Securities Act, and 21 the Court designated the cases complex and consolidated them.1 On June 15, 2018, Plaintiffs filed a 22 single, consolidated amended complaint asserting the same Securities Act claims. CCAC ¶¶ 93-100, 23 102-04, 109-10. On July 11, 2017, Plaintiffs filed a notice of filing of international proofs of service 24 indicating that Plaintiffs had served the summonses and complaints in two of the actions on the 25 Overseas Individual Defendants in the United Kingdom pursuant to the Hague Convention and under 26 the U.K.’s Companies Act 2006. Dkt. No. 81. The Overseas Individual Defendants moved to quash 27 1 28 Plaintiffs Ribeiro and Green filed actions subsequently, both of which were consolidated for all purposes into this action. 7 MEMORANDUM OF POINTS AND AUTHORITIES 1 service of process on July 31, 2018, Dkt. No. 89, plaintiffs John Ribeiro and Ian Green filed complaints 2 on August 1, 2018, and March 20, 2020, respectively, and after a discretionary forum non conveniens 3 stay was lifted, this Court denied the motion to quash service on December 11, 2020, and directed the 4 Overseas Individual Defendants to file an answer or other response to the Complaint (such as a demur 5 or other motion regarding the sufficiency of the pleadings) by January 6, 2021, Dkt. No. 178. 6 THE MOTION IS PURSUANT TO C.C.P. § 410.30 7 The Overseas Individual Defendants bring this motion pursuant to C.C.P § 410.30. The 8 California Code of Civil Procedure provides that a party may file an inconvenient forum motion before 9 a party generally appears, C.C.P. § 418.10, or after a party generally appears, C.C.P. § 410.30. 10 “[W]here a defendant has not appeared, section 418.10 applies and specifies the procedure for bringing 11 a forum non conveniens motion. Section 410.30 applies after a defendant has appeared.” Britton v. 12 Dallas Airmotive, Inc., 153 Cal. App. 4th 127, 134 (2007). Thus, “section 418.10 provides special 13 procedures for pre-answer forum non conveniens motions, but such motions are not precluded after a 14 defendant has appeared.” Id. at 134–35.2 15 ARGUMENT 16 I. THE ACTION SHOULD BE DISMISSED OR STAYED BASED ON THE MANDATORY FORUM-SELECTION PROVISION. 17 California law favors enforcement of forum-selection clauses. “A forum-selection clause is 18 prima facie valid and is to be enforced unless the resisting party shows enforcement would be 19 unreasonable under the circumstances.” Benefit Assn. Internat., Inc. v. Superior Court, 46 Cal. App. 20 4th 827, 835 (1996). “[I]n cases with a contractual forum selection clause, the burden of proof is on 21 the plaintiff, the party resisting the motion.” Intershop Commc'ns v. Superior Court, 104 Cal. App. 4th 22 191, 198 (2002). 23 24 25 2 26 The Overseas Individual Defendants respectfully submit this motion at this time so that it can be decided at the same time as the pending motions to dismiss or stay based on the forum selection 27 clause pursuant to C.C.P. § 418.10 by Micro Focus, HPE, and the other individual defendants in this action. Counsel for the Overseas Individual Defendants discussed this motion with Lead Counsel 28 during the meet and confer on the demurrer also being filed today, and the parties agreed to a timeline to allow the Court to consider this motion with the pending motions. 8 MEMORANDUM OF POINTS AND AUTHORITIES 1 A. The Forum Selection Provision Is Valid And Binding. 2 As the other Defendants have previously explained, the forum-selection clause here is valid 3 and binding. The terms printed on the American Depositary Receipts—including the forum-selection 4 clause—are binding on holders under both California and New York law. See Cal. Com. Code § 8202; 5 N.Y. U.C.C. § 8-202. In addition, when people accept and hold a security—which Plaintiff here did 6 by accepting and retaining American Depositary Shares—they agree to the terms of the security. See 7 Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal. App. 4th 1372, 1386 (1993) (retaining insurance 8 renewal certificate for two months was sufficient acceptance of renewal offer). The SEC has explained 9 that “ADR holders are deemed to have agreed to all terms in the deposit agreement by their acceptance 10 and holding of ADRs.” See American Depository Receipts, Release Nos. 33-6984, 34-29226, 1991 11 WL 294145 (May 23, 1991) at n.63. The “deposit agreement sets out the rights and responsibilities 12 of the issuer, the depositary and the ADR holders.” Id.; Batchelder v. Kawamoto, 147 F.3d 915, 917 13 (9th Cir. 1998) (“Batchelder purchased his ADRs pursuant to the Deposit Agreement, which expressly 14 provides that the law of Japan governs shareholder rights.”); see also Stoyas v. Toshiba Corp., No. 16- 15 56058, 2018 WL 3431764, at *5 n.8 (9th Cir. July 17, 2018) (noting that ADR holders were “deemed 16 to have agreed” to the terms of the ADR “by their acceptance and holding of ADRs”). 17 The registration statement upon which this action is based advised holders that “Your rights as 18 a Micro Focus ADS holder will be governed by, among other things, the terms of the Deposit 19 Agreement with the Depositary,” Norton Decl. Ex. 1 (Form F-4) at 31, as well as providing a copy of 20 that agreement, id. (Form F-4, Ex. 4.2) at 631, and printing terms including the forum-selection 21 provision on the receipts themselves, id. (Form F-4, Ex. 4.2 at Ex. (A)) at 700. Plaintiffs were also 22 informed that the prospectus summary of the terms does not purport to be complete and is qualified in 23 its entirety by the full text of the Deposit Agreement and the form of ADR, which you should read in 24 their entirety, and which are included as exhibits to the registration statements of which this 25 information statement/prospectus forms a part and incorporated herein by reference.” Id. at 240 26 (emphasis added). 27 The forum-selection provision here is mandatory. Plaintiffs and the members of the putative 28 class “each irrevocably agree that any legal suit, action or proceeding against or involving the 9 MEMORANDUM OF POINTS AND AUTHORITIES 1 Company . . .arising out of or based upon the Deposit Agreement, American Depositary Shares, 2 Receipts or the transactions contemplated hereby or thereby or by virtue of ownership thereof, may 3 only be instituted in a state or federal court in New York, New York.” Norton Decl. Ex. 2, § 7.6 at 4 1172 (emphasis added). Each also “irrevocably submits to the exclusive jurisdiction of such courts in 5 any such suit, action or proceeding.” Id. (emphasis added). This clause is mandatory and enforceable. 6 See, e.g., Olinick v. BMG Entm’t, 138 Cal. App. 4th 1286, 1294 (2006) (forum-selection clause 7 providing for “exclusive jurisdiction” was mandatory, as it “contains express language of exclusivity 8 of jurisdiction, specifying a mandatory location for litigation”); Laufer Grp. Int’l v. Tamarack Indus., 9 LLC, 599 F. Supp. 2d 528, 530 (S.D.N.Y. 2009) (clause providing that “[a]ll disputes . . . may only be 10 instituted in the United States District Court for the Southern District of New York” was mandatory). 11 B. The Forum-Selection Provision Is Applicable. 12 By its plain and unambiguous language, the forum-selection clause applies to Plaintiffs’ 13 Securities Act action, as it applies to “any legal suit, action or proceeding against or involving the 14 Company or the Depositary, arising out of or based upon the Deposit Agreement, American 15 Depositary Shares, Receipts or the transactions contemplated hereby or thereby or by virtue of 16 ownership thereof.” Klar Decl. at 671 (Deposit Agreement); 700 (Form of American Depositary 17 Receipt). This action is against and involves Micro Focus, and it arises out of and is based upon (at a 18 minimum) the American Depositary Shares and the issuance transaction. The action also is brought 19 by virtue of Plaintiffs’ ownership of the ADSs, as ownership is an element of their claims. 20 C. The Forum-Selection Clause Applies to the Action Against the Overseas Individual Defendants. 21 The forum-selection provision here unambiguously extends to parties other than Micro Focus 22 itself. By its terms, it applies to “any legal suit, action or proceeding against or involving the 23 Company.” Klar Decl. at 671 (emphasis added). This action—in which Micro Focus is a defendant 24 and the Overseas Individual Defendants are being sued on the theory that they are liable for Micro 25 Focus’s actions because they signed the registration statement in their official capacity as officers or 26 directors of Micro Focus—is unequivocally one “involving” Micro Focus. By the plain terms of the 27 forum-selection provision, the Overseas Individual Defendants are entitled to invoke the forum- 28 10 MEMORANDUM OF POINTS AND AUTHORITIES 1 selection provision. At the very least, and in the alternative, Micro Focus is entitled to invoke the 2 provision as to the entire action, including its constituent claims asserted against all Defendants, and 3 Micro Focus has done so. 4 Moreover, as Messrs. Hsu and Schultz have previously noted, California law strongly supports 5 allegedly jointly liable parties’ ability to invoke exclusive forum provisions. “A range of transaction 6 participants, parties and non-parties, should benefit from and be subject to forum selection clauses.” 7 Lu v. Dryclean-U.S.A. of California, Inc., 11 Cal. App. 4th 1490, 1494 (1992) (internal brackets 8 omitted). A defendant that is “closely related to the contractual relationship” may enforce the forum- 9 selection provision if either “(1) it agreed to be bound by the terms of the purchase agreement, (2) the 10 contracting parties intended [defendant] to benefit from the purchase agreement, or (3) there was 11 sufficient evidence of a defined and intertwining business relationship with a contracting party.” 12 Bugna v. Fike, 80 Cal. App. 4th 229, 233 (2000). At a minimum, the second and third alternatives 13 apply here. 14 First, the provision’s reference to actions “involving” Micro Focus is a clear textual indication 15 that the parties intended that the provision does not apply only where the action is against Micro Focus. 16 The “involving” part of “against or involving” would be superfluous if only actions against Micro 17 Focus itself were covered. See Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 324 (2007) (“A reading of 18 the contract should not render any portion meaningless.”); Rebolledo v. Tilly’s, Inc., 228 Cal. App. 4th 19 900, 923 (2014) (“[I]t is well settled contracts are construed to avoid rendering terms surplusage.” 20 (internal quotation marks omitted)). In addition, itis well-established that parties such as agents, 21 officers, and directors need not be formal third-party beneficiaries to invoke a forum-selection 22 provision. See, e.g., H.A.L. NY Holdings, LLC v. Guinan, No. 18 CIV. 2275 (ER), 2018 WL 5869648, 23 at *4 (S.D.N.Y. Nov. 9, 2018) (“Courts have regularly found that non-signatory corporate executives 24 and officers are ‘closely related’ to a signatory company such that enforcement of a forum selection 25 clause in an agreement made by the company was foreseeable.”); Nanopierce Tech., Inc. v. Southridge 26 Capital Mgt. LLC, 2003 WL 22882137, at *5 (S.D.N.Y. 2003) (“While it may be true that third-party 27 beneficiaries to a contract would, by definition, satisfy the closely related and foreseeability 28 requirements, a third-party beneficiary status is not required”). 11 MEMORANDUM OF POINTS AND AUTHORITIES 1 Second, the Overseas Individual Defendants are being sued as directors and officers of Micro 2 Focus who signed the registration statement on which Plaintiffs base their claims. In Bugna, the Court 3 of Appeal held that “the deal makers who negotiated, evaluated and otherwise put together the very 4 SCN transactions that appellants now attack” were entitled to enforce a forum-selection provision. 80 5 Cal. App. 4th at 235. Similarly, the Lu court held that corporate affiliates could enforce a forum- 6 selection provision where a plaintiff alleged that they were jointly liable with their subsidiary. 11 Cal. 7 App. 4th at 1494. New York courts have similarly held. See Hirschfeld Prods. v. Mirvish, 88 N.Y.2d 8 1054, 1056 (1996) (explaining that federal courts “have consistently afforded agents the benefit of 9 arbitration agreements entered into by their principals to the extent that the alleged misconduct relates 10 to their behavior as officers or directors or in their capacities as agents of the corporation” and that the 11 rule “is necessary not only to prevent circumvention of arbitration agreements but also to effectuate 12 the intent of the signatory parties to protect individuals acting on behalf of the principal in furtherance 13 of the agreement”); Siroy v. Jobson Healthcare Info. LLC, 2016 N.Y. Slip Op. 50818(U) (Sup. Ct. 14 2016) (applying Hirschfeld to forum-selection provision). 15 D. The Forum-Selection Provision Is Reasonable. 16 The provision is reasonable. In fact, Plaintiffs must carry the “heavy burden” to “demonstrate 17 that enforcement of the clause would be unreasonable under the circumstances of the case.” Lu, 11 18 Cal. App. 4th at 1493; see CQL Original Prods., Inc. v. Nat’l Hockey League Players’ Ass’n, 39 Cal. 19 App. 4th 1347, 1354 (1995). This requires Plaintiffs to show that “the forum selected would be 20 unavailable or unable to accomplish substantial justice.” Smith, Valentino & Smith, Inc. v. Super. Ct., 21 17 Cal. 3d 491, 494 (1976). They cannot do so. 22 First, New York is a reasonable choice of forum because it is where the ADSs trade, Norton 23 Decl. ¶ 8, where the Depositary is located, id. ¶ 11, where the agent for service and Authorized 24 Representative in the United States is located, id. ¶ 9, and where Micro Focus’s U.S. advisors on the 25 transaction were, id. ¶ 12; Norton Decl. Ex. 1; Klar Decl. Ex. 1. New York’s experience with securities 26 disputes is also a proper basis to select it. See Cal-State Bus. Prods. & Servs., Inc. v. Ricoh, 12 Cal. 27 App. 4th 1666, 1682 (1993) (reasonable to choose New York courts, “which would have (at least 28 institutionally) a great deal of expertise in commercial litigation”). 12 MEMORANDUM OF POINTS AND AUTHORITIES 1 Second, the anti-waiver provision of the Securities Act, 15 U.S.C. § 77n, does not bar waiver 2 of procedural provisions including the statute’s broad venue provisions” and “the grant of concurrent 3 jurisdiction in the state and federal courts without the possibility of removal.” Rodriguez de Quijas v. 4 Shearson/American Express, Inc., 490 U.S. 477, 482 (1989). The U.S. Supreme Court has held that 5 “[t]here is no sound basis for construing the prohibition in [section 77n] on waiving ‘compliance with 6 any provision’ of the Securities Act to apply to these procedural provisions.” Id. Courts have routinely 7 enforced forum-selection provisions in Securities Act cases. See Richards v. Lloyd’s of London, 135 8 F.3d 1289, 1292-96 (9th Cir. 1998) (en banc); Adelson v. World Transp., Inc., 631 F. Supp. 504, 507 9 (S.D. Fla. 1986); Friedman v. World Transp., Inc., 636 F. Supp. 685, 692 (N.D. Ill. 1986). 10 Third, New York courts are available and can provide substantial justice. All Defendants have, 11 by joining motions to dismiss or stay for inconvenient forum, stipulated that New York has personal 12 jurisdiction over them and that they will not invoke any statute of limitations or repose defense that 13 would not be available to them if this case proceeded in this Court. To the extent the Court determines 14 that Plaintiffs have any unwaivable California right to a jury trial that applies in this action and that 15 the jury waiver provision in the Deposit Agreement is otherwise not severable—and it should not for 16 the reasons set forth in the supplemental brief filed today by Micro Focus and other defendants on this 17 issue—then the Overseas Individual Defendants like Micro Focus and the other Defendants would 18 stipulate that the Overseas Individual Defendants will not enforce the jury trial waiver provision in an 19 action filed by Plaintiffs in a New York forum as required under the Deposit Agreement. See 20 Handoush v. Lease Fin. Grp., LLC, 41 Cal. App. 5th 729, 736 (2019) (stipulation sufficient way to 21 meet burden of showing alternate forum will protect unwaivable California rights). 22 CONCLUSION 23 For all of the reasons set forth above and set forth in the memoranda submitted by Micro Focus 24 and joinders of other defendants in support of their motion based on the forum-selection clause, this 25 Court should dismiss or stay the action pursuant to C.C.P. § 410.30(a). 26 27 28 13 MEMORANDUM OF POINTS AND AUTHORITIES 1 Dated: January 6, 2021 KIRKLAND & ELLIS LLP 2 3 By: 4 Matthew Solum (Admitted pro hac vice) Stephen V. Potenza (Admitted pro hac vice) 5 Joseph M. Sanderson (SBN 305256) KIRKLAND & ELLIS LLP 6 601 Lexington Avenue New York, NY 10022 7 Telephone: (212) 446-4800 Facsimile: (212) 446-49