Alfandary v. Nikko Asset Management Co., Ltd.

Background

The plaintiffs challenged Nikko Asset Management Co., Ltd.’s (“NAM”) extinguishment of their stock acquisition rights (“SARs”). NAM moved for summary judgment, which asks the court to enter judgment without a trial when there is no genuine dispute about an important fact and the moving party is entitled to win under the law. NAM argued that the court lacked personal jurisdiction over claims brought by 11 plaintiffs who did not work for Nikko Asset Management Americas, Inc. (“NAMA”), that forum-selection clauses required some claims to be litigated in Japan, and that the SAR agreements allowed NAM to extinguish former employees’ rights before an initial public offering.

Personal Jurisdiction

The court denied NAM’s motion based on general personal jurisdiction over the 11 non-NAMA plaintiffs. General jurisdiction permits a court to hear claims that do not arise from the defendant’s forum-related activities when the defendant’s connections with the state are sufficiently substantial. The court applied the “mere department” theory, under which a parent’s contacts may be attributed to it when its subsidiary is effectively a department of the parent.

The court found that NAMA was a mere department of NAM. It relied on common ownership, NAMA’s financial dependence on NAM, NAM’s substantial control over NAMA’s directors and personnel, and NAM’s control over nearly all aspects of NAMA’s operations. Because NAMA was incorporated and principally operated in New York, the court concluded that treating NAM as subject to general jurisdiction in New York was constitutionally permissible.

The court also denied NAM’s motion based on specific personal jurisdiction over the non-NAMA plaintiffs. Because it found general personal jurisdiction, it said it did not need to decide whether specific personal jurisdiction existed. The court noted that NAM had not moved for summary judgment based on specific jurisdiction for the four NAMA plaintiffs.

Forum-Selection Clauses

NAM argued that forum-selection clauses in the plaintiffs’ SAR award notices required claims to be heard in Tokyo District Court. For Christina Alfandary, Robert Corcoran, and Jeffrey Hansen, the court denied summary judgment. Their separation agreements contained merger clauses, and the court held that those later agreements superseded conflicting provisions in the earlier award notices. The court also held that the parol evidence rule—a rule generally barring outside evidence from changing an unambiguous, integrated written agreement—prevented NAM from relying on evidence that the documents concerned different subjects.

The court separately denied summary judgment on Corcoran’s claims based on his separation agreement. It rejected NAM’s argument that Corcoran’s separation agreement released his 2009 SAR claims, finding that a material factual dispute remained concerning that issue.

For Laurie Vicari, the court granted NAM’s motion for summary judgment based on the forum clause in her award notice. Unlike the other NAMA plaintiffs, Vicari had no separation agreement with NAMA. The court found that the Tokyo forum clause therefore applied and that her claims had to be litigated in Tokyo District Court.

Breach of Contract Claims

The court denied summary judgment on the plaintiffs’ breach-of-contract claims. NAM argued that Section 2.(10)(v)(b)(x) of the SAR terms and conditions allowed it to force former employees to sell their rights before an initial public offering. The court had previously interpreted that provision as allowing the company to require a sale during the three-month period after an initial public offering, but not before the offering. The court declined to reconsider that interpretation and denied summary judgment on the contract claims.

Disposition

Judge Loretta A. Preska ordered that NAM’s motion for summary judgment was granted in part and denied in part. The grant concerns Vicari’s claims based on the Tokyo forum clause. The motion was denied as to general and specific jurisdiction over the non-NAMA plaintiffs, the forum-clause arguments concerning Alfandary, Corcoran, and Hansen, and the plaintiffs’ breach-of-contract claims. The court directed counsel to confer and report how they proposed to proceed.