Thursday, September 22, 2005

Foreign Purchasers Sent Packing

So you are a foreigner who purchased securities of Bayer AG on a foreign exchange, but you want to sue here, in the Good Ole' US of A. Everyone together now, Home, to a new and a shiny place... Well, never mind all of that, because not even Neil Diamond himself can save you now, because Judge William H. Pauley III (S.D.N.Y.) has spoken. True, he did say he will "retain the claims of domestic purchasers.” However, that doesn't help you, “because United States investors held an exceptionally small percentage,” (eight percent to be exact), “of the total number of shares," and so "Plaintiffs cannot demonstrate a substantial or significant effect upon United States citizens to support jurisdiction over the Foreign Purchasers.”

Therefore, “the magnitude of Bayer AG's conduct abroad and the overwhelming number of Foreign Purchasers affected thereby militate against a finding that Congress would have wished the precious resources of the United States courts and law enforcement agencies to be devoted here.” “With respect to the Foreign Purchasers, fraud there might have been, and the Foreign Purchasers may very well have been damaged by its perpetration,” “but the dispute here presented is rightfully resolved in the court of another land.”

But hey, all is not lost right? Since most of the shares are “being held in Germany and in over 130 other countries,” those investors should have no problem getting a class certified in their respective civil law jurisdictions. Better book now for your trip to Leverkusen.

You can read In re Bayer AG, issued September 14, 2005, at 2005 U.S. Dist. LEXIS 19908.

Nugget: “Based on the above, this Court concludes that resting jurisdiction on this eight percent United States investment raises concerns that a 'very small tail may be wagging an elephant' of Foreign Purchasers.”

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