Mayaguez S.A. v. Citigroup Inc.
- Paul Gardephe
- 1:16-cv-06788
- U.S. District Court · Southern District of New York
- 21
In Mayagüez v. Citibank, Judge Gardephe held Colombian law governs the remaining claims, granted Mayagüez’s motion, and dismissed its New York negligent-misrepresentation claim.
Mayagüez’s remaining negligence and bad-faith claims proceed under Colombian law, while its alternative negligent-misrepresentation claim under New York law was dismissed. Citibank, N.A. must defend the claims proceeding to trial under Colombian law.
What happened
In Mayagüez S.A. v. Citibank, N.A., Mayagüez asked the court to bar arguments and evidence about New York law before trial. Mayagüez argued that Colombian law governed its claims arising from currency-hedging transactions, while Citibank argued that New York law applied.
The court reviewed where the parties’ relationship and conduct were centered, including the fact that most communications occurred in Colombia through Citibank Colombia employees. It also considered Colombia’s interest in regulating conduct by banks operating there and concluded that Colombia had the most significant relationship to the dispute under both federal and New York approaches to choosing the governing law.
The court granted Mayagüez’s motion to exclude references to New York law and held that Colombian law governs the claims proceeding to trial. Judge Paul G. Gardephe also dismissed Mayagüez’s alternative negligent-misrepresentation claim under New York law; the court did not decide whether Citibank had waived its argument for applying New York law.
The detailed version
- Mayaguez S.A. v. Citigroup Inc. · No. 1:16-cv-06788
- Paul Gardephe
- Aug. 21, 2022
Background
Mayagüez is a Colombian company that produces and sells refined sugar and ethanol. Citibank, N.A. is a U.S.-based national banking association with its principal place of business in New York, and Citibank Colombia is its affiliate operating in Colombia.
Mayagüez’s claims arose from currency-hedging transactions involving Citibank and Citibank Colombia. Most meetings and communications concerning those transactions occurred in Colombia, and Mayagüez primarily dealt with Citibank Colombia employees. Mayagüez alleged that the defendants made misleading representations and failed to disclose material information about the risks of the transactions. Mayagüez paid $44.1 million to unwind the third currency trade, while reserving its rights.
After earlier rulings, the claims remaining for trial were Mayagüez’s negligence and bad-faith claims under Colombian law and an alternative negligent-misrepresentation claim under New York law. The court had previously granted summary judgment to Mayagüez insofar as it sought to hold Citibank, N.A. responsible for Citibank Colombia’s actions, and had granted Citigroup’s motion for summary judgment on all of Mayagüez’s claims against it.
The motion
Mayagüez moved in limine, meaning it asked the court before trial to exclude specified arguments, testimony, or evidence. It sought to exclude anything concerning New York law, arguing that Colombian law governed the remaining claims. Citibank opposed the motion and argued that New York law applied. Citibank also argued that the federal common-law rules for choosing applicable law governed because the case was brought under the Edge Act.
Choice-of-law analysis
The court said the law was unsettled on whether federal common-law choice-of-law rules or New York’s choice-of-law rules applied in an Edge Act case. Rather than resolve that question, the court analyzed the dispute under both approaches because it concluded that both produced the same result.
Under the federal approach, the court applied the law of the jurisdiction with the greatest interest in the litigation and considered the Restatement (Second) of Conflict of Laws. The court found that Colombia had the most significant relationship to the dispute. The court emphasized that:
- Mayagüez’s principal place of business was in Colombia; - the vast majority of the relevant communications occurred in Colombia; - Citibank Colombia employees made and transmitted the relevant presentations and analysis to Mayagüez in Colombia; - Mayagüez suffered its financial losses in Colombia; - the relationship concerning the currency trades was centered in Colombia; and - Colombia had a substantial interest in regulating alleged misconduct by financial institutions operating there.
The court rejected Citibank’s argument that the relationship was centered in New York. The court acknowledged evidence that Citibank, N.A. controlled or approved aspects of the transactions, but concluded that Citibank Colombia managed the relationship with Mayagüez and played the more important role in facilitating the transactions.
The court also rejected Citibank’s reliance on the New York choice-of-law provision in the swap agreement. In an earlier ruling, the court had concluded that the provision did not cover Mayagüez’s tort and other non-contractual claims.
Under New York’s approach, the court determined that the parties agreed there was an actual conflict between New York and Colombian law. Because the remaining claims involved conduct-regulating tort rules, New York generally applies the law of the place where the injury occurred. The court concluded that the injury occurred in Colombia because Mayagüez was based there and suffered its financial losses there. The court also said its full interest analysis showed that Colombia had far more contacts with the litigation than New York.
Disposition
The court concluded that Colombian law governs the claims proceeding to trial. It granted Mayagüez’s motion in limine to exclude references to New York law and dismissed Mayagüez’s claim for negligent misrepresentation under New York law. Because the court reached this conclusion, it did not decide Mayagüez’s separate argument that Citibank had waived its right to argue that New York law applied. The clerk was directed to terminate the motion.
Read the full 21-page opinion on CourtListener, the free public archive maintained by the Free Law Project.