Idea Transcript
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION LANE McNAMARA, et al.,
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Plaintiffs, v. BRE-X MINERALS LTD., et al., Defendants.
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No. 5-97-CV-159 (Jury)
PLAINTIFFS’ RESPONSE TO THE AMENDED MOTION OF DEFENDANT HUGH C. LYONS TO DISMISS ON THE BASIS OF FORUM NON CONVENIENS AND INTERNATIONAL COMITY Plaintiffs respectfully respond to the motion of defendant Hugh C. Lyons to dismiss Plaintiffs’ Fourth Amended Complaint on the basis of forum non conveniens and international comity (Dkt. # 776). As a tag-along to earlier motions filed by co-defendant Nesbitt Burns (Dkt. ## 79, 515), defendant Lyons’ motion to dismiss makes no arguments not already before the Court. As a result, the motion may be disposed of in its entirety by reference to plaintiffs’ previous submissions on these issues (Dkt. ## 76, 115, 514, 527), which plaintiffs incorporate herein. In addition, plaintiffs wish to bring to the Court’s attention several recent developments, all of which counsel in favor of denial of defendants’ motions. Developments in Canadian Shareholder Actions Involving Insider Defendants Although Lyons adopts defendants’ earlier argument that “there are comparable and more comprehensive suits pending in Canada” (Mot. at 2), he omits to advise the Court that his involvement in shareholder class claims in Canada has ended. On April 4, 2002, an order was
entered in Carom v. Bre-X Minerals Ltd., the largest and most actively prosecuted class action currently being litigated on behalf of defrauded Canadian Bre-X investors, dismissing investor claims against Lyons, as well as against insider defendants Rolando Francisco, Paul Kavanagh, and John Thorpe. A copy of the Canadian court’s order is attached as Exhibit A. Of the three remaining Bre-X investor actions pending in Canada, two are brought in provinces (Alberta and New Brunswick) where class action proceedings are unavailable and a third is brought in province (British Columbia) where class actions are restricted to residents of that province. Indeed, recognizing deficiencies in stock fraud law and class action practice in their respective provinces, counsel in each of these actions advised this Court in 1997 of their strong desire to prosecute the claims of their Canadian clients in U.S. courts. (Dkt. #76 Exhs. 5-7) No Canadian action, including the Carom Action, purports to prosecute the claims of U.S. purchasers. The dismissal of Messrs. Lyons, Francisco, Kavanagh, and Thorpe from the Carom shareholder class action confirms that this Court is the only forum where the claims of U.S. investors will be heard on a comprehensive basis. Moreover, given the inadequacies of Canadian law, including the absence of the fraud-on-the-market doctrine (See Dkt. ## 76 at 59-63; 115 at 37-40; 527 at 10-12), Canadian courts do not represent a comparable forum for investor claims. Since Canadian courts are neither “available” nor “adequate” within the meaning of the required forum non conveniens analysis, dismissal is clearly unwarranted. In re Air Crash, 821 F.2d 1147, 1165 (5th Cir. 1987), vacated on other grounds, 490 U.S. 1032 (1989).
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Developments in Canadian Actions Involving J.P. Morgan and Kilborn In a related development, J.P. Morgan and certain Kilborn Defendants (including Kilborn Engineering Pacific Ltd. and P.T. Kilborn Pakar Rekayasa) recently settled claims asserted against them in pending Canadian litigation arising from the Bre-X fraud. Both J.P. Morgan and the Kilborn Defendants resolved claims asserted against them in two actions: a derivative action brought by Deloitte & Touche, as Trustee of the Bre-X Estate, and a stock fraud action, known as Chow v. Bre-X Minerals Ltd., brought by a group of Alberta residents who purchased Bre-X and/or Bresea common stock. The terms of J.P. Morgan’s settlements are set forth in attached Exhibit B, and the terms of the Kilborn Defendants’ settlements are set forth in attached Exhibit C. Remaining Canadian litigation involving J.P. Morgan and the Kilborn Defendants is legally insignificant. Both are defendants in the British Columbia class action brought on behalf of Bre-X investors who are residents of that province, and the Kilborn Defendants are also defendants in the New Brunswick action brought on behalf of certain individual Bre-X investors. As noted above, however, plaintiffs counsel in both cases have previously urged this Court to exercise jurisdiction over the claims of plaintiffs in those actions, due to the inadequacies of Canadian law. In addition, a claim for contribution has been asserted against the Kilborn Defendants in the Carom Action by the Walsh defendants, but investor claims against the Kilborn Defendants have previously been dismissed. The fact that the bulk of all Canadian litigation against J.P. Morgan and the Kilborn Defendants has been concluded confirms that the U.S. is a more comprehensive forum for the -3-
adjudication of investor claims. These developments also underscore that, given that few of the defendants in this action are subject to any Canadian class action for their role in the scandal, their appeal to international comity is not grounded in respect for Canadian courts, but rather is an attempt to escape liability altogether, if dismissed from U.S. courts. Conclusion For the reasons set forth above, and in plaintiffs’ previous submissions on these issues (Dkt. ## 76, 115, 514, 527), plaintiffs respectfully request that defendants Lyons’ motion to dismiss on the grounds of forum non conveniens and international comity be denied.
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Dated: April __, 2002
____________________________ Damon Young State Bar No. 22176700 John M. Pickett Young, Pickett & Lee 4122 Texas Boulevard Texarkana, Texas 75504 (903) 794-1303
Respectfully submitted,
__________________________ R. Paul Yetter State Bar No. 22154200 Autry W. Ross Yetter & Warden, LLP 600 Travis, Suite 3800 Houston, Texas 77002 (713) 238-2000
Attorney-in-Charge for Plaintiffs ___________________________ H. Lee Godfrey State Bar No. 0805400 Charles R. Eskridge, III State Bar No. 06666350 James T. Southwick State Bar No. 24001521 Susman Godfrey LLP 1000 Louisiana, Suite 5100 Houston, Texas 77002 (713) 651-9366
Charles Edward Miller State Bar No. 14062000 A. Paul Miller State Bar No. 14056060 Miller, James, Miller & Horsnby 1012 Olive Texarkana, Texas 75501 (903) 794-2711
Lead Counsel for Plaintiffs Of Counsel: Michael C. Spencer U. Seth Ottensoser Milberg Weiss Bershad Hynes & Lerach LLP One Pennsylvania Plaza New York, New York 10119 (212) 594-5300 Steven J. Toll Murray T. S. Lewis Matthew J. Ide Cohen Milstein Hausfeld & Toll, P.L.L.C. 110 New York Avenue, N.W. West Tower, Suite 500 Washington, D.C. 20005
Mark C. Gardy James S. Notis Abbey Gardy, LLP 212 East 39th Street New York, New York 10016 (212) 889-3700
Jeffrey G. Smith Adam Gonnelli Wolf Haldenstein Adler Freeman & Herz, LLP 270 Madison Avenue New York, New York 10016 (212) 545-4600
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(202) 408-4600 Certificate of Service I hereby certify that on this ___ day of April, 2002, a copy of the foregoing was served on the following lead counsel for defendants by facsimile, hand-delivery, or overnight mail: Linda L. Addison Fulbright & Jaworski, L.L.P. 1301 McKinney, Suite 5100 Houston, Texas 77010-3095 Counsel for Defendant Bresea Resources Ltd.
John R. Mercy Mercy, Carter, Tidwell & Elliott, L.L.P. 1730 Galleria Oaks Dr. Texarkana, Texas 75503 Counsel for Defendant John B. Felderhof
D. Stuart Meiklejohn Sullivan & Cromwell 125 Broad Street New York, New York 10004 Counsel for Defendant Rolando C. Francisco
Gary D. Grimes Grimes & Craytor 8 Woodmont Crossing St. Texarkana, Texas 75503 Counsel for Defendant Hugh C. Lyons
Johnny P. Arnold 1405 College Dr. Texarkana, Texas 75503-3533 Counsel for Defendant Paul Kavanagh
Lawrence J. Portnoy Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Counsel for Defendant J.P. Morgan Securities, Inc.
David J. Beck Beck, Redden & Secrest, L.L.P. 1221 McKinney, Suite 4500 Houston, Texas 77010-2010 Counsel for Defendants Kilborn Engineering Pacific Ltd. and P.T. Kilborn Pakar Rekayasa
Daniel R. Murdock Winston & Strawn 200 Park Avenue New York, New York 10166-4193 Counsel for Defendant Nesbitt Burns Inc.
Mark D. Wegener Howrey, Simon, Arnold & White 1229 Pennsylvania Ave. NW Washington, DC, 20004 Counsel for Barrick Gold Corporation
__________________________________ Damon Young
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