07-2949-cv

In Re: Parmalat Securities Litigation v.

1 UNITED STATES COURT OF APPEALS 2 3 FOR THE SECOND CIRCUIT 4 5 August Term, 2007 6 (Argued: November 29, 2007 Decided: July 22, 2008) 7 8 9 Docket No. 07-2949-cv 10 1 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 12 1 3 ENRICO BONDI, EXTRAORDINARY COMMISSIONER OF PARMALAT 1 4 FINANZIARIA S.P.A. AND PARMALAT S.P.A., A/K/A NEW PARMALAT, 1 5 AND OTHER AFFILIATED ENTITIES, IN EXTRAORDINARY ADMINISTRATION UNDER THE LAWS OF ITALY, 16 17 1 8 Appellants, 19 2 0 RENATO ESPOSITO, FONDAZIONE ITALO MONZINO, SOUTHERN ALASKA 2 1 CARPENTERS PENSION FUND, CRISTINA PONCIBO, MARGERY LOUISE 2 2 KRONENGOLD, ROBERT MCQUEEN, CUSTODIAN, INDIVIDUALLY AND ON 2 3 BEHALF OF ALL OTHERS SIMILARLY SITUATED, FERRI GIAMPOLO, 2 4 FOOD HOLDINGS LIMITED, DAIRY HOLDINGS LIMITED, G. JAMES 2 5 CLEAVER, GORDON I. MACRAE, GERALD K. SMITH, LAURA J. 2 6 STURAITIS, MONUMENTAL LIFE INSURANCE COMPANY, TRANSAMERICA 2 7 OCCIDENTAL LIFE INSURANCE COMPANY, TRANSAMERICA LIFE 2 8 INSURANCE COMPANY, AVIVA LIFE INSURANCE COMPANY, PRINCIPAL 2 9 GLOBAL INVESTORS, LLC, PRINCIPAL LIFE INSURANCE COMPANY, 3 0 SCOTTISH RE {US} INC., PARMALAT CAPITAL FINANCE LIMITED, 3 1 HARTFOLD LIFE INSURANCE COMPANY, G. PETER PAPPAS, PLAN 3 2 ADMINISTRATOR AND ERSTE SPARINVEST KAPITALANLAGEGESELLSCHAFT 3 3 M.B.H., 34 3 5 Plaintiffs, 36 3 7 - v.- 38 CAPITAL & FINANCE ASSET MANAGEMENT S.A., CATTOLICA 39 4 0 PARTECIPAZIONI S.P.A., HERMES FOCUS ASSET MANAGEMENT EUROPE 4 1 LIMITED, SOLOTRAT, SOCIETE MODERNE DES TERRASSEMENTS 4 2 PARISIENS,2 1 2 Plaintiffs-Appellees, 3 4 BONLAT FINANCING CORPORATION, CALISTO TANZI, FAUSTO TONNA, 5 COLONIALE S.P.A., CITIGROUP INC., BUCONERO, LLC, ZINNI & 6 ASSOCIATES, P.C., DELOITTE TOUCHE TOHMATSU, DELOITTE & 7 TOUCHE S.P.A., A SOCIETA PER AZIONI UNDER THE LAWS OF ITALY, 8 GRANT THORNTON S.P.A., A SOCIETA PER AZIONO UNDER THE LAWS 9 OF ITALY NOW KNOWN AS ITALAUDIT, S.P.A., NOW KNOWN AS 1 0 ITALAUDIT, S.P.A, ,, DEUTSCHE BANK AG, MORGAN STANLEY & CO., 1 1 INCORPORATED, BANK OF AMERICA CORPORATION, JAMES E. COPELAND 1 2 JR., PARMALAT FINANZIARIA S.P.A., STEFANO TANZI, LUCIANO DEL 1 3 SOLDATO, DOMENICO BARILI, FRANCESCO GIUFFREDI, GIOVANNI 1 4 TANZI, DELOITTE & TOUCHE USA, LLP., DELOITTE & TOUCHE 1 5 L.L.P., CREDIT SUISSE FIRST BOSTON, BANC OF AMERICA 1 6 SECURITIES LIMITED, BANK OF AMERICA, N.A., CITIBANK, EUREKA 1 7 SECURITISATION PLC, VIALATTEA LLC, PAVIA E ANSALDO, BANCA 1 8 NAZIONALE DEL LAVORO S.P.A., CITIBANK, N.A., MARIA 1 9 MARTELLINI, PROFESSOR, BANCA INTESA S.P.A., BANK OF AMERICA 2 0 NATIONAL TRUST & SAVINGS ASSOCIATION, BANC OF AMERICA 2 1 SECURITIES, LLC, BANK OF AMERICA INTERNATIONAL, LTD., 2 2 DELOITTE & TOUCHE TOHMATSU AUDITORES INDEPENDENT, CREDIT 2 3 SUISSE INTERNATIONAL, CREDIT SUISSE SECURITIES LIMITED, 2 4 CREDIT SUISSE, CREDIT SUISSE GROUP, GRANT THORNTON 2 5 INTERNATIONAL AND GRANT THORNTON LLP, 26 2 7 Defendants. 28 2 9 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 30 Before: JACOBS, Chief Judge, B.D. PARKER and 31 3 2 WESLEY, Circuit Judges. 33 34 App eal fr om an ord er of the Un ite d S tat es Dis tri ct 35 Cou rt for th e S out her n D ist ric t o f N ew Yor k ( Kap lan , J .), 36 den yin g t he mot ion un der 11 U. S.C . § 30 4 ( rep eal ed 200 5) by 37 a d ebt or in ban kru ptc y a bro ad to enj oin ac tio ns bro ugh t 38 aga ins t i t i n t he Uni tedSt ate s. 39 AFF IRM ED. Ju dge We sle y d iss ent s i n a se par ate op ini on.3 1 KAT HLE EN SUL LIVAN (Jo hn B. 2 Qui nn, Pe ter E. Ca lam ari , L ore n 3 Kie ve, Te rryL. Wi t, San for d I . 4 Wei sbu rst , A nge la Ngu yen , a nd 5 Wil lia m B . A dam s, on the br ief ), 6 Qui nn Ema nue l U rqu har t O liv er & 7 Hed ges , L LP, Ne w Y ork , N Y, for 8 App ell ant s. 9 10 STU ART M. GRANT (J ame s J . 11 Sab ell a, Joh n C . K air is, an d 12 Dia ne Zil ka, on th e b rie f), 13 Gra nt & E ise nho fer P. A., Ne w 14 Yor k, NY; St eve n J . T oll , L isa 15 M. Mez zet ti, Ma rk S. Wil lis , a nd 16 Jos hua S. De vor e, on the br ief , 17 Coh en, Mi lst ein , H aus fel d & 18 Tol l, P.L .L. C., Wa shi ngt on, 19 D.C .; Rob ert M. Ro sem an, An dre w 20 D. Abr amo wit z, Dan iel J. 21 Mir arc hi, an d R ach el E. Kop p o f 22 cou nse l, Spe cto r R ose man & 23 Kod rof f, PC, Ph ila del phi a, PA, for Pl ain tif f-A ppe lle es. 24 25 26 DEN NIS JA COB S, Chi ef Jud ge: 27 28 Thi s a ppe al is tak en fro m a n o rde r o f t he Uni tedSt ate s 29 Dis tri ct Cou rt for th e S out her n D ist ric t o f N ew Yor k 30 (Ka pla n, J.) , d eny ing th e m oti on by a d ebt or in for eig n 31 ban kru ptc y p roc eed ing s t o e njo in act ion s b rou ght ag ain st it 32 in the Un ite d S tat es. I n r e P arm ala t S ec. Li tig ., 493 F. 33 Sup p. 2d 723 (S .D. N.Y . 2 007 ). Th e d ebt or is the en tit y t hat 34 eme rge d f romPa rma lat ’s Ita lia n b ank rup tcypr oce edi ngs . 35 Bec aus e t he dis tri ct cou rt act ed wit hin it s s oun d 36 dis cre tio n, we aff irm .4 1 Bac kgr oun d 2 Fol low ing it s f ina nci al imp los ion in th e w ake of a 3 col oss al fra ud, Pa rma lat Fi nan zia ria , S .p. A. andse ver al of 4 its su bsi dia rie s a nd aff ili ate s ( “Ol d P arm ala t”) fi ledfo r 5 ban kru ptc y p rot ect ion un der It aly ’s new ly- cre ate d M arz ano 6 law . The ba nkr upt cy cou rt in Par ma (th e “ Par ma Cou rt” ) 7 dec lar ed OldPa rma lat in sol ven t, andIt aly ’s Min ist er of 8 Fin anc e a ppo int ed app ell ant Dr . E nri co Bon di to ser ve as 9 Ext rao rdi nar y C omm iss ion er of OldPa rma lat ’s ban kru ptc y 10 est ate , a ro le ana log ous to Ch apt er 11 Tru ste e. 11 12 A 13 Alm ost immed iat elyaf ter Ol d P arm ala t f ile d f or 14 ban kru ptc y i n I tal y, pur cha ser s o f O ld Par mal at’ s d ebt an d 15 equ ityse cur iti es (th e “ Sec uri tie s F rau d P lai nti ffs ”) fil ed 16 sec uri tie s f rau d c las s a cti on law sui ts in the Un ite d S tat es 17 (th e “ Sec uri tie s F rau d A cti ons ”) aga ins t O ld Par mal at and 18 aga ins t v ari ous ba nks an d a udi tin g f irm s t hat ha d a lle ged ly 19 par tic ipa tedin th e f rau d. Am ong th e d efe nda nts we re Gra nt 20 Tho rnt on Int ern ati ona l ( “GT I”) an d G ran t T hor nto n, LLP 21 (co lle cti vel y “ GT” ). 22 In Jun e 2 004 , D r. Bon di, in hi s c apa cit y a sTh oug h § 30 4 w as rep eal ed, it re mai ns app lic abl e t o 1 thi s c ase . See Pu b. L. 109 -8 (en act ing Ch apt er 15 of the Ban kru ptc y C ode an d r epe ali ng 11 U.S .C. § 304 fo r a ll anc ill arype tit ion s f ile d a fte r O cto ber 17 , 2 005 ). 5 1 Ext rao rdi nar y C omm iss ion er of the Ol d P arm ala t b ank rup tcy 2 est ate , p eti tio nedth e S out her n D ist ric t o f N ew Yor k 3 Ban kru ptc y C our t t o e njo in act ion s a gai nst th e O ld Par mal at 4 est ate wi th res pec t t o a ny pro per ty inv olv ed in its It ali an 5 ban kru ptc y p roc eed ing s p urs uan t t o § 30 4 o f t he Ban kru ptc y 6 Cod e, 11 U.S .C. § 304 (r epe ale d 2 005 ). Se cti on 304 7 per mit teda rep res ent ati ve of a f ore ign ba nkr upt cy est ate to 8 commen ce a b ank rup tcyca se in the Un ite d S tat es in ord er to 9 enj oin li tig ati on aga ins t t he for eig n d ebt or in U.S . 10 cou rts . I t i nst ruc tedco urt s t o f ash ion re lie f “ gui dedby 1 11 wha t w ill be st ass ure an ec ono mic al andex ped iti ous 12 adm ini str ati on” of th e f ore ign ba nkr upt cy est ate co nsi ste nt 13 wit h, int er ali a, “ju st tre atm ent of al l” hol der s o f c lai ms 14 aga ins t t he est ate , a nd “co mit y.” 1 1 U .S. C. § 3 04( c). T he 15 ban kru ptc y c our t e nte reda pre lim ina ry inj unc tio n s hie ldi ng 16 OldPa rma lat fr om Ame ric an law sui ts (“§ 30 4 I nju nct ion ”), 17 andth e S ecu rit ies Fr audPl ain tif fs dro ppe d O ld Par mal at as 18 a d efe nda nt. 19 Onc e t he § 3 04 Inj unc tio n w as in pla ce, Ol d P arm ala t 20 wen t o n t he off ens ive in Un ite d S tat es cou rts . Amo ng oth erSo me cre dit ors ha ve app eal ed fro m t he Ita lia n 2 ban kru ptc y c our t’s ap pro val of th e C onc ord ato . Whi le the se app eal s d o n ot del ay imp lem ent ati on of the Co nco rda to, th ey kee p t he Ita lia n b ank rup tcyca se ope n u nti l t he Ita lia n app ell ate co urt s r eso lve th e a ppe als . 6 1 ini tia tiv es, Ol d P arm ala t s uedGT fo r m alp rac tic e ( the 2 “Re cov eryAc tio ns” ). 3 All th e w hil e, OldPa rma lat ’s Ita lia n b ank rup tcy 4 pro cee din gs con tin ued . Pur sua nt to his du tie s a s 5 Ext rao rdi nar y C omm iss ion er, Dr . B ond i p rop ose d a 6 res tru ctu rin g p lan , t he “Co nco rda to, ” w hic h b eca me eff ect ive 7 upo n a ppr ova l b oth bya maj ori ty of OldPa rma lat ’s cre dit ors 8 andbyth e P arm a C our t. U nde r t he Con cor dat o, the as set s 2 9 of the 16 co mpa nie s t hat co mpo sedOl d P arm ala t w ere 10 tra nsf err ed to a n ewl y f orm ed ent ity , a ppe lla nt Par mal at, 11 S.p .A. (“ NewPa rma lat ”), of wh ich Dr . B ond i i s t he CEO . In 12 mar kedco ntr ast to ba nkr upt cy nor ms in the Un ite d S tat es, 13 NewPa rma lat as sum ed all of th e l ega l l iab ili tie s o f i ts 14 pre dec ess or com pan ies . Und er the Co nco rda to, 15 16 eli gib le uns ecu redcr edi tor s w ith a tit le 17 and /or ca use th at pre dat es the da te whe n 18 ind ivi dua l [ OldPa rma lat co mpa nie s] wer e 19 dec lar ed eli gib le for Ex tra ord ina ry 20 Adm ini str ati on Pro cee din gs, in clu din g 21 cre dit ors wh ose cl aim s w ere no t i ncl ude d 22 in the su m o f l iab ili tie s b ut who se 23 cla ims [a re] la ter ve rif iedbya cou rt7 1 dec isi on tha t h as bec ome fi nal an d, 2 the ref ore , c an no lon ger be ch all eng ed 3 (“L ate -Fi lin g C red ito rs” ) 4 5 are en tit ledto re cei ve NewPa rma lat st ock . Con cor dat o ¶ 6 7.3 b. “N ew Par mal at thu s f unc tio ns . . . as a c lai ms 7 adm ini str ato r, con ver tin g a ppr ove d [ lat e-f ile d] cla ims 8 aga ins t O ld Par mal at int o . . . e qui ty int ere sts in Ne w 9 Par mal at. ” In re Par mal at Sec . L iti g., 49 3 F . S upp . 2 d a t 10 727 . Liq uid ate d c lai ms are di sch arg ed upo n r ece ipt of Ne w 11 Par mal at equ ity . 12 Aft er NewPa rma lat ca me int o b ein g, the di str ict co urt 13 per mit tedth e S ecu rit ies Fr audPl ain tif fs to ame nd the ir 14 com pla int to jo in NewPa rma lat as a def end ant in th e 15 Sec uri tie s F rau d A cti ons “a s t he suc ces sor to Ol d P arm ala t.” 16 NewPa rma lat ap pea ledon th e m ist ake n p rem ise th at the 17 dis tri ct cou rt’ s o rde r w as tan tam oun t t o d eny ing Ne w 18 Par mal at § 3 04 pro tec tio n a gai nst di rec t s ecu rit ies fr aud 19 cla ims . But th e d ist ric t c our t e xpl ain ed tha t i t h ad not 20 yet co nsi der ed whe the r t o g ran t § 30 4 r eli ef to NewPa rma lat 21 bec aus e t he cou rt hadne ver re cei veda mot ion se eki ng tha t 22 rel ief . NewPa rma lat wi thd rewit s a ppe al andmo vedin th e 23 dis tri ct cou rt to exp andth e e xis tin g § 30 4 I nju nct ion to8 1 bar th e S ecu rit ies Fr audPl ain tif fs fro m b rin gin g d ire ct 2 cla ims ag ain st NewPa rma lat (t he “Ex pan sio n M oti on” ). 3 Whi le the Ex pan sio n M oti on was pe ndi ng, th e d ist ric t 4 cou rt gra nte d a not her mo tio n-- thi s o ne bro ugh t b y G TI and 5 Ban k o f Amer ica , N .A. --t o n arr ow the § 304 In jun cti on to 6 per mit ce rta in par tie s ( who we re def end ant s i n b oth th e 7 Rec ove ry Act ion s a nd the Se cur iti es Fra ud Act ion ) t o f ile 8 thi rd par ty con tri but ion cl aim s a gai nst Ne w P arm ala t b ase d 9 on OldPa rma lat ’s sec uri tie s f rau d ( the “N arr owi ng Ord er” ). 10 The Na rro win g O rde r c ont ain ed a s pec ial fe atu re: to th e 11 ext ent th at anyju dgm ent in fa vor of GT I, Ban k o f Amer ica , 12 or anyot her th irdpa rtypl ain tif f, exc eed s w hat th e t hir d 13 par ty pla int iff ow es NewPa rma lat , e nfo rce men t o f t he 14 con tri but ion cl aim s w ill be al low ed onl y i n I tal y. In ot her 15 wor ds, wh ile th e t hir d p art y p lai nti ffs ca n u se Ame ric an 16 jud gme nts to se t o ff the ir lia bil ityto Ne w P arm ala t, the y 17 mayco lle ct no mon ey fro m N ew Par mal at unl ess an d u nti l t he 18 Ita lia n c our ts cho ose to en for ce the Am eri can co urt ’s 19 jud gme nt. N ew Par mal at app eal ed, an d w e e ven tua lly 20 aff irm ed. S ee In re Par mal at Sec . L iti g., 24 0 F .Ap p’x 91 6 21 (2dCi r. 200 7). 229 1 B 2 Whi le the ap pea l f romth e N arr owi ng Ord er was pe ndi ng 3 in thi s C our t, the di str ict co urt de nie d N ew Par mal at’ s 4 Exp ans ion Mo tio n, a d eci sio n w hic h e ffe cti vel y l et the 5 Sec uri tie s F rau d P lai nti ffs br ing di rec t ( in add iti on to 6 con tri but ion ) c lai ms aga ins t N ew Par mal at. I n r e P arm ala t 7 Sec . L iti g., 49 3 F . S upp . 2 d 7 23 (“E xpa nsi on Den ial Or der ”). 8 Thi s i s t he ord er nowon ap pea l. 9 In exp lai nin g t he Exp ans ion De nia l O rde r, the di str ict 10 cou rt ref err ed to its Na rro win g O rde r ( the n o n a ppe al, an d 11 lat er aff irm ed, se e i nfr a), an d t he fiv e c ons ide rat ion s t hat 12 dro ve its de cis ion th ere : ( 1) tha t e con omi cal an d 13 exp edi tio us adm ini str ati on of the Ol d P arm ala t e sta te wou ld 14 bes t b e s erv ed by liq uid ati ng lia bil ityin th e U nit ed 15 Sta tes , w her e r ele van t f act s w ere al rea dy bei ng lit iga tedin 16 the Se cur iti es Fra ud Lit iga tio n; (2) th at com itywo uldbe 17 ser vedbe cau se, wh ile pl ain tif fs wou ld be all owe d t o 18 liq uid ate th eir cl aim s i n t he Uni tedSt ate s, the y w oul d b e 19 enf orc ed onl y i n I tal y, if at all ; ( 3) tha t t he Nar row ing 20 ord er doe s n ot unf air ly adv ant age GT be cau se its 21 con tri but ion cl aimwi ll be per mit tedin so me for um in any10 1 eve nt- -if no t i n t he Uni tedSt ate s, the n i n I tal y; (4) th at 2 Dr. Bo ndi ’s equ ita ble cl aimto § 304 pr ote cti on is wea ken ed 3 by his af fir mat ive Re cov eryAc tio ns aga ins t P arm ala t’s 4 aud ito rs andba nks in th e Amer ica n c our ts rat her th an in 5 Ita ly; an d ( 5) tha t s ett lem ent wo uldbe fa cil ita tedby 6 hav ing al l p ote nti all y l iab le par tie s b efo re the di str ict 7 cou rt. 8 In den yin g t he Exp ans ion Mo tio n, Jud ge Kap lan wr ote 9 tha t “ [t] he sam e c ons ide rat ion s w eig h a gai nst Se cti on 304 10 rel ief he re. ” In re Par mal at Sec . L iti g., 49 3 F . S upp . 2 d 11 at 739 . Spe cif ica lly , J udg e K apl an rea son ed: si nce th e 12 Nar row ing Or der pe rmi tte d G TI’ s c ont rib uti on cla ims ag ain st 13 NewPa rma lat , N ew Par mal at was al rea dy bef ore th e c our t t o 14 lit iga te its fa ult fo r t he sec uri tie s f rau d; as to com ity , 15 the It ali an cou rts wo uldbe nef it fro m a n Amer ica n c our t’s 16 det erm ina tio n o f N ew Par mal at’ s l iab ili ty und er Ame ric an 17 sec uri tie s l aw (an is sue th e p art ies we re alr ead y 18 lit iga tin g), an d “ pla int iff s s eekto li qui dat e t hei r c lai ms 19 in the Un ite d S tat es, bu t w oul d s eekto en for ce anyju dgm ent 20 onl y i n I tal y”; Dr . B ond i’s cl aimto eq uit abl e r eli ef was no 21 str ong er tha n i t w as at the ti me of the Na rro win g O rde r; and 22 den yin g § 30 4 r eli ef wou ld fac ili tat e s ett lem ent . Id. T he11 1 dis tri ct cou rt con clu ded : “ whi le den yin g S ect ion 30 4 r eli ef 2 und oub ted ly wou ld imp ose so me exp ens e o n N ew Par mal at, th e 3 Cou rt is per sua dedth at the be nef its in ef fic ien cy and 4 exp edi tio usn ess ou twe igh th e c ost s.” I d. 5 In sum , w hen § 304 mo tio n p rac tic e c onc lud ed, Ne w 6 Par mal at was su bje ct bot h t o c ont rib uti on cla ims an d t o 7 dir ect cl aim s f or sec uri tie s f rau d i n t he dis tri ct cou rt. 8 Sho rtl y a fte r t he dis tri ct cou rt den iedNe w P arm ala t’s 9 Exp ans ion Mo tio n, we aff irm ed the Na rro win g O rde r. In re 10 Par mal at Sec . L iti g., 24 0 F .Ap p’x 91 6. We em pha siz ed tha t 11 “th e d ist ric t c our t’s de cis ion to le ave th e e nfo rce men t ( or 12 not ) o f a ny jud gme nt aga ins t p lai nti ff- app ell ant to th e 13 Ita lia n c our ts was a suf fic ien t m eas ure of de fer enc e a nd 14 com ity .” Id . a t 9 19. 15 16 Dis cus sio n 17 We rev iewth e E xpa nsi on Den ial Or der fo r a bus e o f 18 dis cre tio n, see id . a t 9 18; ac cor d B ankof Ne w Y orkv. Tr eco 19 (In re Tr eco ), 240 F. 3d 148 , 1 55 (2dCi r. 200 1), mi ndf ul 20 tha t c our ts enj oy “br oadla tit ude in fa shi oni ng an 21 app rop ria te rem edy ” u nde r § 30 4, Kor eag , C ont rol e e t12 1 Rev isi on S.A . v . R efc o F /X Ass ocs ., Inc . ( In re Kor eag , 2 Con tro le et Rev isi on, S. A.) , 9 61 F.2 d 3 41, 34 8 ( 2d Cir . 3 199 2). 4 Sub sec tio n ( c) of § 3 04 req uir ed tha t, 5 6 In det erm ini ng whe the r t o g ran t 7 [in jun cti ve] re lie f . . . , th e c our t 8 sha ll be gui dedbywh at wil l b est as sur e 9 an eco nom ica l a nd exp edi tio us 10 adm ini str ati on of suc h e sta te, co nsi ste nt 11 wit h-- 12 13 (1) ju st tre atm ent of al l h old ers of 14 cla ims ag ain st or int ere sts in su ch 15 est ate ; 16 17 (2) pr ote cti on of cla im hol der s i n 18 the Un ite d S tat es aga ins t p rej udi ce and 19 inc onv eni enc e i n t he pro ces sin g o f c lai ms 20 in suc h f ore ign pr oce edi ng; 21 22 (3) pr eve nti on of pre fer ent ial or 23 fra udu len t d isp osi tio ns of pro per ty of 24 suc h e sta te; 25 26 (4) di str ibu tio n o f p roc eed s o f s uch 27 est ate su bst ant ial ly in acc ord anc e w ith 28 the or der pr esc rib ed by thi s t itl e; 29 30 (5) co mit y; and 31 32 (6) if ap pro pri ate , t he pro vis ion of 33 an opp ort uni ty for a fre sh sta rt for th e 34 ind ivi dua l t hat su ch for eig n p roc eed ing 35 con cer ns. 36 37 11 U.S .C. § 304 (c) (r epe ale d 2 005 ). Ne w P arm ala t c ont end s 38 tha t t he Exp ans ion De nia l O rde r v iol ate d § 30 4’s in str uct ion13 1 to ass ure an ec ono mic al andex ped iti ous admin ist rat ion of 2 the fo rei gn est ate , a nd tha t i t w as inc ons ist ent wi th bot h 3 “ju st tre atm ent ” o f a ll cla imh old ers an d “ com ity ”. 4 5 I 6 We can not sa y c ate gor ica llyth at all owi ng the Am eri can 7 Sec uri tie s F rau d L iti gat ion to pr oce ed bef ore Ju dge Ka pla n 8 “wi ll bes t a ssu re an eco nom ica l a nd exp edi tio us 9 adm ini str ati on of” th e O ld Par mal at ban kru ptc y e sta te. I t 10 dep end s. On on e h and , Amer ica n l iti gat ion co sts ca n b e 11 exo rbi tan t; on the ot her , i t m ay cos t N ew Par mal at les s t o 12 lit iga te the Se cur iti es Fra ud Lit iga tio n h ere an d n ow, gi ven 13 the ri sk tha t t he Sec uri tie s F rau d P lai nti ffs wi ll bri ng 14 the ir Ame ric an cla ims in th e P arm a C our t. Th e g ove rni ng law 15 is tha t o f t he Uni tedSt ate s, andth e f rau ds all ege d w ere 16 con duc tedin En gli sh. I f t he Sec uri tie s F rau d A cti on wer e 17 to be lit iga tedin It alyso me tim e i n t he fut ure , t he Par ma 18 Cou rt wou ld con fro nt a f ore ign le gal an d r egu lat orysc hem e 19 to whi ch (we ar e i nfo rme d) the re is no Ita lia n a nal og, a 20 lar ge num ber of do cum ent s i n a fo rei gn lan gua ge, an d ( no 21 dou bt) co nfl ict ing ex per t a ffi dav its on wh at Ame ric an14 1 sec uri tie s l aw req uir es. A ll tha t s aid , w e c ann ot saywi th 2 ass ura nce th at, if ex clu dedfr om Ame ric an cou rts , t he 3 Sec uri tie s F rau d P lai nti ffs wo uldpr oce ed in Ita ly at all . 4 So the re are go od rea son s o n e ith er sid e o f t he 5 pro pos iti on tha t g ran tin g t he Exp ans ion Mo tio n w oul d “ bes t 6 ass ure an ec ono mic al andex ped iti ous admin ist rat ion of ” t he 7 OldPa rma lat es tat e. Th e q ues tio n i s w het her th e d ist ric t 8 cou rt abu sedit s d isc ret ion in de nyi ng the Ex pan sio n M oti on. 9 Of cou rse , i f w e b eli eve d t hat th e P arm a C our t w oul d 10 vie w t he dis tri ct cou rt as lac kin g j uri sdi cti on (an d t hat 11 the Pa rma Co urt wo uldtr eat an y Amer ica n j udg men t a s a 12 nul lit y), th en we wou ld rev ers e. (U nde r t hat ci rcu mst anc e, 13 we ass ume th e d ist ric t c our t w oul d n ot hav e e nte redit s 14 ord er in the fi rst pl ace .) Bu t, to our kn owl edg e, the Pa rma 15 Cou rt has ma de no sta tem ent re gar din g t he dis tri ct cou rt’ s 16 jur isd ict ion to li qui dat e t he Sec uri tie s F rau d A cti ons . 17 18 II 19 NewPa rma lat co nte nds th at the Ex pan sio n D eni al Ord er 20 is inc ons ist ent wi th “ju st tre atm ent ” o f a ll cla imh old ers , 21 11 U.S .C. § 304 (c) (1) , a nd “co mit y,” id . § 30 4(c )(5 ).15 1 NewPa rma lat em pha siz es tha t i ts sha reh old ers ar e a ll 2 cla imh old ers , a nd arg ues th at the Ex pan sio n D eni al Ord er 3 thu s t rea ts oth er cla imh old ers un jus tlybyim pos ing 4 lit iga tio n c ost s o n N ew Par mal at wit hou t a ny pot ent ial 5 ben efi t. Bu t t he det rim ent is th e s ame as th at suf fer ed by 6 sha reh old ers in an y c omp anyth at is mad e t he def end ant of a 7 leg iti mat e l aws uit . Andit wo ulddo no in jus tic e t o o the r 8 cla imh old ers if th e S ecu rit ies Fr audPl ain tif fs win a 9 jud gme nt, wh ich --a t t he dir ect ion of th e P arm a C our t-- 10 res ult s i n i ssu anc e o f N ew Par mal at sto ck. T rue , i ssu anc e 11 of sto ck to the Se cur iti es Fra ud Pla int iff s w oul d d ilu te New 12 Par mal at’ s e qui ty, th us red uci ng the va lue of ex ist ing sh are 13 hol din gs; bu t t her e i s n o c ogn iza ble in jus tic e t o o ne 14 cla imh old er in the sa tis fac tio n o f c lai ms pro per ly pre sen ted 15 by ano the r. 16 App ell ant s a rgu e ( as the y d id whe n a ppe ali ng the 17 Nar row ing Or der ) t hat de nyi ng the Ex pan sio n M oti on vio lat es 18 § 3 04’ s p oli cy of “co mit y.” O n N ew Par mal at’ s a ppe al fro m 19 the Na rro win g O rde r, we con sid ere d t he nat ure of Pa rma lat ’s 20 Ita lia n b ank rup tcypr oce edi ngs an d t he Con cor dat o, andwe 21 con clu dedth at “to le ave th e e nfo rce men t ( or not ) o f a ny 22 jud gme nt aga ins t p lai nti ff- app ell ant to th e I tal ian co urt s16 1 was a suf fic ien t m eas ure of de fer enc e a nd com ity .” In re 2 Par mal at Sec . L iti g., 24 0 F .Ap p’x at 91 9. Si nce th e 3 Exp ans ion De nia l O rde r m ake s c lea r t hat th e c our ts of Ita ly 4 wil l d eci de whe the r o r n ot to enf orc e a ny jud gme nt tha t t he 5 Sec uri tie s F rau d P lai nti ffs wi n i n t hei r d ire ct sui ts 6 aga ins t N ew Par mal at, we ad her e t o t he vie w t hat 7 int ern ati ona l c omi ty is res pec ted . 8 Thi s a ppe al is dis tin gui sha ble fa ctu all y f romNe w 9 Par mal at’ s a ppe al of the Na rro win g O rde r, but th e 10 dif fer enc es do not co mpe l a di ffe ren t r esu lt on com ity 11 gro und s. Th e N arr owi ng Ord er all owe d t he def end ant s i n D r. 12 Bon di’ s R eco ver y A cti on to ass ert co unt erc lai ms, an d t hus to 13 set of f a ny jud gme nt Dr. Bo ndi mi ght wi n a gai nst th em, 14 whe rea s t he Exp ans ion De nia l O rde r o pen s N ew Par mal at to 15 sui t b y p art ies un con nec tedto th e R eco ver y A cti ons . In 16 bot h c ase s, how eve r, the or der s a re con sis ten t w ith co mit y 17 bec aus e n o t hir d p art y p lai nti ff wou ld be per mit tedto 18 col lec t o n a n Amer ica n j udg men t w ith out th e I tal ian co urt s’ 19 app rov al. 20 Fin all y, the di str ict co urt ’s ord er doe s n ot vio lat e 21 the di cta te of Ita lia n b ank rup tcyla w t hat th e b ank rup tcy 22 cou rt has ex clu siv e j uri sdi cti on to sat isf y c red ito rs’ 23 cla ims . The Se cur iti es Fra ud Pla int iff s a re not ye t17 1 cre dit ors of Ne w P arm ala t. On ly if the Se cur iti es Fra ud 2 Pla int iff s p rev ail in di str ict co urt wi ll the y b eco me 3 jud gme nt cre dit ors of Ne w P arm ala t; and , a s c red ito rs, th ey 4 wil l b e r equ ire d t o s ubm it the ir cla ims to th e I tal ian 5 cou rts fo r e nfo rce men t. 6 7 III 8 NewPa rma lat co mpl ain s t hat th e d ist ric t c our t 9 con sid ere d t wo fac tor s n ot pro per ly a p art of th e § 30 4 10 ana lys is: se ttl eme nt pot ent ial an d D r. Bon di’ s o ffe nsi ve 11 lit iga tio n i n t he Uni tedSt ate s. 12 We are na tur all y i ncl ine d a gai nst ju dic ial de cis ion s 13 cal cul ate d t o f orc e a de fen dan t t o s ett le. S ee, e. g., In re 14 Vis a C hec k/M ast erM one y A nti tru st Lit ig. , 2 80 F.3 d 1 24, 14 8 15 (2dCi r. 200 1) (Ja cob s, J., di sse nti ng) . But it is ha rd to 16 dis put e t he dis tri ct cou rt’ s i dea th at con sol ida tin g 17 Ame ric an sec uri tie s c lai ms bef ore a sin gle co urt wo uldma ke 18 it eas ier fo r t he par tie s t o s ett le the ir dif fer enc es 19 wit hou t a ju dic ial de ter min ati on of lia bil ity . See In re 20 Par mal at Sec . L iti g., 49 3 F . S upp . 2 d a t 7 39 (Ex pan sio n 21 Den ial Or der ). Th is mayor ma y n ot be tru e. In dee d, it is 22 unc lea r w het her th e C onc ord ato wo uldal lowfo r a ny suc h 23 set tle men t a t a ll. B ut, in an y e ven t, sin ce it is oft en18 1 tho ugh t t hat se ttl eme nt is mor e e con omi cal an d e xpe dit iou s 2 tha n l iti gat ion , t he dis tri ct cou rt act ed wit hin th e b oun ds 3 of its di scr eti on in con sid eri ng lik eli hoo d o f s ett lem ent . 4 Fin all y, we see no thi ng imp rop er abo ut wei ghi ng Dr. 5 Bon di’ s o ffe nsi ve lit iga tio n i n t he Uni tedSt ate s: it is 6 inc rem ent all y h ard er for Dr . B ond i t o c ont endth at it is a 7 har dsh ip for hi m t o b e w her e h e h as cho sen to co me. 8 9 IV 10 In dis sen t, Jud ge Wes leyst ate s t hat it is im pru den t t o 11 iss ue thi s o pin ion no w b eca use (i n t he par tie s’ wor ds) “t he 12 par tie s d o n ot bel iev e t hat a dis pos iti on of the ap pea l a t 13 thi s t ime wo uldad van ce the in ter est s o f e ith er par ty, ” a nd 14 bec aus e ( in Jud ge Wes ley ’s wor ds) “t he rel eva nce of th is 15 Cou rt’ s r eso lut ion of th e a ppe al is ent ire ly dep end ent up on 16 the ou tco me of the se ttl eme nt app rov al pro ces s i n t he 17 Sou the rn Dis tri ct. ” We res pec tfu llydi sag ree fo r t he 18 fol low ing re aso ns: 19 Fir st, th e p art ies br oug ht thi s c ont rov ers y b efo re us, 20 andth ey hav e n ot mov ed to wit hdr aw it. A s t he par tie s 21 adv ise , t his ca se is not mo ot- -th oug h n o d oub t i t m ay bec ome 22 moo t i f l eft un dec ide d l ong en oug h. 23 Sec ond , w e e xpe ct tha t o ur opi nio n w ill be of us e t o 24 the pa rti es- -as we ll as oth er per son s a nd ent itl es: (1 ) t he19 1 dis tri ct jud ge maywa nt to con sid er whe the r t he cas e i s 2 pro per ly bef ore hi m a s h e d eci des wh eth er to app rov e t he 3 pro pos ed set tle men t, see Fe d. R. Civ . P . 2 3(e ); (2) th e 4 Ita lia n c our ts- -to wh ich we ow e a du ty of com ityun aff ect ed 5 by the st ate d d esi res of th e p art ies , a nd whi ch wou ld dec ide 6 whe the r t o e nfo rce th e r esu lti ng jud gme nt- -ma y w ish to kn ow 7 whe the r t he cas e ( andse ttl eme nt) wa s p rop erl y b efo re the 8 dis tri ct cou rt; an d ( 3) the cl ass me mbe rs, wh o m ust de cid e 9 whe the r t o o bje ct to the pr opo sedse ttl eme nt, se e F ed. R. 10 Civ . P . 2 3(e )(5 ), or pos sib ly opt ou t o f i t, maywa nt to 11 kno w w het her an Am eri can co urt co uldhe ar the ir cas e i n t he 12 eve nt the y r eje ct the se ttl eme nt. 13 14 15 Con clu sio n 16 We can not sa y w ith ce rta int y w hat ef fec t t he Exp ans ion 17 Den ial Or der ma y h ave on th e e con omyan d e xpe dit iou sne ss 18 wit h w hic h t he OldPa rma lat es tat e w ill be admin ist ere d. 19 But we ca nno t c onc lud e t hat th e d ist ric t c our t a bus ed its 20 dis cre tio n o n t hat sc ore . Andou r r evi ew of the re cor d 21 sat isf ies us th at Jud ge Kap lan di d n ot act in con sis ten tly 22 wit h a ny of the si x c ons ide rat ion s m and ate d b y § 30 4(c ). 23 NewPa rma lat ’s rem ain ing ar gum ent s a re mer itl ess . The or der 24 of the di str ict co urt is th ere for e a ffi rme d.Counsel for Plaintiff-Appe llees “request[ed] that th[ e] letter be f iled under se al and not 1 be madeavailableto the public,” but no motion to file under seal was grante d by the Court and theiss ue , at th is s tag e , is a pp arently moo t. The May 1 letter infor

med us only

of the prospect

of imminent settlement – i.e. , “that 2 the par ties [were] on the verg e of reac hing a settlement in this matter (subject to cour t approval)” – but the agreement was, shortly there after, executed a

nd made public. See“Parmalat Settles U.S. Shareholder

Suit,” N.Y. Times, May

3, 2008, available at

http://www.ny

times.com (visited July 21, 2008) (se arc h for a

rticle title); se eals o Pr e ss Re le a se , Pa rm a lat, S e ttl e me nt w ith“ c la ss”

20 1 W ES L EY , Circuit Judge , d i s s enti n g: 2 This appeal has cha ng ed dra matically (post-oral argument) as a consequence of

an 3 executed settlement agreement now awaiting approval in the Southern District of New York. 4 Be causethis int ervening event has materially chang ed the nature of a

n appeal that is presently

on 5 the verg e of resolution, the majority ’s af firmanc e strikes me a s imprudent. Were it up to me, I 6 would have vote d to stay the appe al, while re taining our jurisdiction to revisit it , should the 7 promise of final settlement not bear f ruit. Even if I

thought the ma

jority ’s discussion of the 8 merits prudent, however, I would not think itcorrect. I there forerespe ctfully

dissent. 9 I. 10 Counsel for Plaintiff-Appe llants informed the Court, by letter dated May

1, 2008, of the 11 possibili ty

of an imminent settlement betwe en the pa rties and, in light of that possibili ty , stated 12 that “the pa

rties jointly

reque st that the Court refrain from issuingany decision on this appeal at 13 this ti me.” L etter of Counsel for Plaintiff-Appe llees of Ma y 1, 2008. The letter

went on to say 1 14 that “[i] f the settlement is approved, the a ppeal will be withdra

wn.” Id. Assu

bs e qu e ntly 15 reve a le d in

thepu bli c pre ss, these ttl e me nt agre e me nt w a s u lti mate ly e xec ute d, and

no w a waits 16 thec on firm atio n o f t hedis tric t c ourt . 2(May

2, 2008). The order of this Court “direc ted [the parties] to subm it a letter to the Court . . . 3 advisingus as to whether , in view of the reporte d settlement of the underlying litig ation: (1) the issue on appeal has been mooted; and, (2) a dispositi on of the a

ppeal would a dvancethe pre sent interests of e ither par

ty .” In re Parmalat Sec . Liti g. , No. 07-2949, (2d Cir. Ma y 5, 2008). 21 1 The public a nnouncement of a prospe ctive settlement prompted this Court to solicit the 2 views of the pa

rties on the impact of

that agreement upon the instant appeal. By letter dated 3 3 May

12, 2008 (and a ssertedly

joined in by

Def endant- Appellants), c ounsel for Plaintiff-A ppellees 4 stated that “[t] he par ties do not believe that the a ppeal, at this j uncture , has been mooted by 5 rea son of the execution of the se ttlement agreement.” L etter of Counsel for Plaintiff-Appe llees 6 of May

12, 2008. It continued: “I f the settlement is approved with finality , the appe al will be 7 moot, but if the settlement is not approved, it will not become ef fec tive and the a

ppeal would not 8 be moot.” Id. F inally, th ele tter s tate d th at 9 [t]hepa

rtie s d o n ot b e lie vethat a dispo sition

of thea pp e a l at th is timewo uld 10 advanc e the interests of either party . Be causethe settlement is not conditioned on 11 there su lt o f t hea pp e a l, t hedis po sition

of thea pp e a l w illno t perm it e ith e r p art y to 12 wi thd

ra w f ro m or re qu e st m odif

ic atio n o f t

hese ttl e me nt. 13 14 Id. 15 In short, the re levanc e of this Court’s re solution of the appeal is entirely dependent upon 16 theoutc omeof

these ttl e me nt a

pp ro val proc e ss in th eSouthern Di stric t. 17 II. 18 In it s o pinion be low , th edis tric t c ourt

c onte mpl ate d th epo ssibil ity of se ttl e me nt in 19 conductingits § 304(c) a nalysis, concludingthat “havingthe claims ag ainst New Par malat bef ore 20 this Court along with the other s alleg ed in the [third amended c omplaint] will aid the proce ss of22 1 possibly

settling this dispute.” In re Parmalat Sec . Liti g. , 493 F. Supp. 2d 723, 739 (S.D.N.Y. 2 2007). De fenda

nt-Appellants argued that the district cour t’s weighing of

the possibility

of 3 settlement in its § 304(c) analy sis constitut ed “le g al er ror a nd an abuseof discre tion.” 4 Appellants’ B r. 41. 5 Therewas merit, in my view, to New

Parmalat’s position. After all, the possibility

of 6 se ttl e me nt a

pp e ars no wh e reamon gthesix e nume ra te d f a c tor s th at c ourt s w e redire c te d to 7 consider under § 304(c ). Ve nturingbeyond the spec ific considerations codified under § 304(c ) 8 may

well haveconstituted an abuseof discre tion. 9 Presumably , the district court thought that its consideration of the possibility of 10 settlement was releva nt to § 304(c)’ s instruction that, “[i] n deter mining whe ther to grant re lief . . 11 . the cour

t shall be guided by

what will best assurean ec onomical and e xpeditious administration 12 of such e state, consistent with” the § 304( c) f actor s. 11 U.S.C. § 304(c). B ut it is at best uncle ar 13 whether

the pre ssure upon New Parmalat to settle a suit arguably not properly

before the district 14 court in the fir st place w ould have he lped or hindered the e state. 15 In any

event, this is now “water under the bridg e,” f or New Parmalat has executed the 16 settlement agreement with Plainti ff- Appellee s, and see ks the district court’s a pproval of that 17 a gre e me nt. As a re su lt, New Pa

rm a lat’ s o bje c tio ns to t

hedis tric t c ourt ’s jurisdic tio n o ver t his 18 parallel proce eding , and to the district cour t’s consideration of the possibili ty of settlement, take 19 on

a quitedif ferent h ue . Even if

it w a s im prop e r f or thedis tric t c ourt

to c on sid e r t

hepo ssibil ity 20 of settlement in its § 304(c) a nalysis prior to the settlement agreement, New Par malat is now hard 21 presse d to maintain its former objec tions. After all, the decision to settle is one that NewNew Par malat argues that B ondi’s offensive litigation in his rec overy suits and New 4 Parmalat’s de fensive litig ation herearedifferent in yet another respe ct – in the way

they are treated by Italian law. Under Italian law, sa y s New Par

malat, “a ny court (Italian or foreign) outside the Italian B ankruptc y Court that liquidates or enforces c laims ag ainst the estate w ill be deeme d by

the Italian B ankruptc y

Court to be actingwithout jurisdiction, m akingits actions void.” Appellants’ Reply Br . 12. In contra st, they

argue, Italian law provides an e x ception for “set-of f” actions – perha

ps including thecompulsory counterclaims presse d by Gra nt Thornton 23 1 Parmalat willing ly undertook. 2 At the same time, the pa rties’ ambivalenceconcerningthe prospec t of our now issuingan 3 op ini on

c ouns e ls c a

uti on , in my view, re g ardingthesc op eof our interv e nti on . Thu s, wereIin 4 the majority , Iwould have he ld the appeal to revisit it i n the event that the settlement does not 5 materializ e. I

think it unwis e for

this Court t o addre ss the merits of the dispute when the par ties 6 a pp e ar t o b ee min e ntly

(a nd imm inently

) c a pa bleof re so lvingit the mse lve s. 7 III . 8 Even in the a bsenceof a pending resolution of this case, I could not concur

in the 9 ma

jority ’s dis c us sio n o f t

heme ri ts. F ir st, thema

jority a c c epts a s tr

uePlaintif

f- Appe lla nts ’ 10 argument t

hat “New Pa

rm a lat a ssume d all o f t

hele g a l liabili ties of its prede cessor companies,” 11 Ma

j. at 6, a view that – d e sp itebe ingc ontrov ert e d b y New Pa rm a lat – i s a

qu e sti on be st l e ft to 12 the Parma Court. Cf. In reArtim m, S. r. l. , 278 B.R. 832, 837 (B ankr. C.D. Cal. 2002). Sec ond, 13 the majority

overlooks – as did the district c ourt below – a cruc ial distinction between Dr

. 14 Bondi’s posturein the Recove ry Actions that he initiated in Americ an cour ts, and the direc t 15 se c uriti e s a c tio ns fi le d ag a ins t B on di a nd New Pa rm a lat, whic h h edid

no t. B on di’ s p ure ly 16 de fens iveinv olv e me nt in th elatter p ro c e e din g s is un likehis of fens iveini tiatio n o f re c ov e ry su its 17 on

behalf of Ol d Pa rm a lat. Th ird, thema

jority pre sume s th at th eItalia

n c ourt s w illbepo orly 4ag ainst Bondi in re sponse to Bondi’s Rec overy Action – where the c laims ag ainst the estate a re brought by

a third-pa

rty plaintiff creditor in responseto the debtor’s of fensive suit. The exception would arguably not apply to the instant suit, however, where Plaintiffs’ c laims are orig inal, rathe r than c ounterc laims to Bondi’s Recovery Action. Section 304(c) (2) require s consideration of the “prote ction of claim holders in the 5 Un i t edS t at es aga i n s tp re

j u d i ce an d

i n co nv en i en ce i nth e p ro ce s s i n g o f c l ai m s i ns u chfo re i gn proce eding .” 11 U.S.C. § 304(c) (2). Plaintiffs do not contest that “Italian bankr uptcy law co mp o rt s wi thU. S

. n o t i o n s o f f un d am ent al fa i rn es s as i tp ro v i d es fo r n o t i ce , cl ai m s p ro ce s s i n g, and distribution sim ilar to that provided f or under U.S. law.” Adinolfi v. Empire Marble & Granite, Inc. (

In re Rosac ometta, S.r.l), 336 B .R. 557, 565 (Ba nkr. S.D. Fla . 2005). F urthermore, “th e m er e f

ac tth at[ a c re d i t o r] wo u l d h av e t o p urs u e h i s cl ai maga i n s t[ a d eb t o r] i na f o re i gn proce edingis not sufficie nt prejudiceto deny relief .” Sc him me lpenn inck

v . B yrn e( In re Schimme lpenninck

), 183 F .3d 347, 364 (5th Cir. 1999). Section 304(c )(2) supports injunctive relief

. Section 304(c) (3) require s consideration of the “prevention of pre ferential or fra udulent dispositi ons of prope rty

of such e state.” 11 U .S.C. § 304(c)(3) . Plaintiffs do not contest that “Italian insolvency

law prosc ribes both pre ferential and f raudulent transfers.” In re Rosac ometta, S.r.l , 336 B.R. at 565. Sec tion 304(c)( 3) supports injunctive re lief. Section 304(c) (4) instructs the c ourt contemplating§ 304 relief to consider whe ther the fo re ign b ank

ru ptc y proc e e din gwi ll und e rt ake“ dis tributio n o f p ro c e e ds of su c h e state substantially

in acc ordanc e with the order pre scribed by this ti tle.” 11 U.S.C. § 304(c) (4). Plaintif fs do no t c onte st that “ thedis tributio n o f a sse ts u nd e r Italia

n la w i s su bs tanti a lly

in acc ordanc e with the order pre scribed under United States law.” In reArtim m, S. r. l. , 278 B.R. at 843. Section 304(c) (4) supports injunctive re lief. 24 1 equipped to handleAmeric an securities fra ud claims, but – like the district court bef ore it – does 2 not weigh this fact ag ainst a number of other factors re levant to Italian law under § 304(c )(2) , (3), 3 and (4) , all of which c ounsel in favor of issuing a

n injunction. 5 4 F ourt

h, a lth ou gh th ema

jority is c or re c t to no tethat any

awa rd in P laintif

f- Appe lla nts ’ 5 favor

would ultimately

need to beapprove d by

the Parma Court, New Parmalat points outthat 6 jus t de fendinga g a ins t Plaintif fs ’ c laims here , a sid efrom a ny po te nti a l c os ts o f enf

orc e me nt inIndeed, oneinitial publi c report indicated that, pursuant to the pendingsettlement 6 agreement, Parmalat agree d to issue 10.5 mill ion shares, the n valued at $36.8 mill ion, to satisfy the class members’ c laims. Pa rm ala t Se ttles S ha re ho lder La wsu it , N.Y. L . J . May 5, 2008. The full cost incurre d by

the estatedid not include such transactional costs as, for example, notifying the member s of the cla ss of the settlement, an e xpense then estimated to be a s much as $1.55 milli on. Id.

We n e e d n ot s pe c ulate , h ow e ver, on there a so ns that Pa

rm a lat ha s it se lf

of fere d f or its 7 de c isi on to ac c ept t

hese ttl e me nt: “ Parm a lat be lie ve s th at th is s e ttl e me nt i s in thebe st intere sts of its shareholders to avoid the distrac tion and expense of fur ther litigation, and diminis hes uncer tainty in the value of

its stock.” Press Release , Parmalat, Settlement with “c lass” (Ma y 2, 2008). That unc ertainty

was, in par

t, the result of Plaintiffs’ alleg ations of “the loss of billions of do lla rs by inv e sto rs ,”(Third Am. C omp l. ¶ 4) fo rm inga

c la ss who se“ e xac t number . . . [wa s] unknown to Plaintiffs at th[ e] tim e” of the filingof the c omplaint, but which Plainti ffs e stimated to number in the “thousands”( id. ¶ 1139). 25 1 Parma, would impose its own set of c osts, just ifying de ferenceon comity grounds. Without

6 2 kn ow ingtheinn e r t ho ughts of

New Pa rm a lat and

its c ouns e l, w emay

sp e c ulatea s to thero lethi s 3 concern may

have pla yed in its decision to settle with Pl aintiffs. But whe ther it would have 7 4 been proper

for suc h pressure s to impi ng e upon New Parmalat’s decisionmaking(by virtue of the 5 district court’s de nial of New Parmalat’s reque sted § 304(c) relief ) is quite another

matter. 6 This Court, as well as Congress – through its adoption of the Private Securities L itigation 7 Re fo rm

Ac t of 19 95 (“ PSLRA ” ) –

ha s ta ken n oteof

thepre ssu

re s u po n c or po ratede fend ants to 8 settle securities fraud “ strike suits” when those se ttlements are driven, not by the merits of 9 plaintiffs’ claims, but by defendants’ fe ars of

potentially

astronomical attorneys’ fe es arising 10 from lengthy

discovery

. See, e .g. , Lentell v. Me rrill L ynch & Co., Inc. , 396 F.3d 161, 171 ( 2d 11 Cir . 2 00 5) (Ja c ob s, J.) (no tin g“ thec on gre ssi on a l inte nt o f t hePSLRA‘t o d e te r s trikesu its 12 wh e re in opp or

tunistic privateplaintif

fs fi lese c uriti e s f

ra ud c laims of du bio us me ri t in

order t o 13 exact larg e settlement re coveries.’” ( quotingNovak v . Kasaks , 216 F.3d 300, 306 ( 2d Cir. 2000));The district cour t cannot be f

aulted in this reg ard, f

or the amicus submissi on was not 8 be fo rethat c ourt . 26 1 Cal. Pub. Employee s’ Ret. Sy s. v. W orldCom, Inc. , 3 68 F .3 d 8 6, 98 (2 d Cir. 20 04 ) ( “ Th ePSLRA 2 was intende d to curtail ‘strike suits’– i.e. , meritless class a ctions alleg ing f raud in the sale of 3 securities. See H.R. Conf. Rep. No. 105-803 (1998) .”). Se eals o Lander v. Hartford Lif e & 4 Annuity Ins. Co. , 251 F.3d 101, 107 ( 2d Cir. 2001) (same ). 5 Finally , while the views of the Italian Ministry

of Economic D evelopment ( as made 6 availableto us in an amicus submission) are unque stionably rele vant to the consideration of 7 comity

under § 304( c)( 5), c

f. Bigio v. Coca-Cola Co. , 448 F.3d 176, 178 ( 2d Cir. 2006) 8 (re vers ing , in

a no n- § 3 04 su it, thedis tric t c ourt ’s dis mis sal of plaintif fs ’ s uit on c omi ty gro un ds , 9 noting that, “ [t ]hroughout the longpendenc y of this lawsuit, the Government of Egy pt has never 10 raised theslightest objec tion to adjudication of the instant controversy by United States courts” ), 11 those views are never ac knowledg ed by the majority . Despite its absenc e from the majority ’s 12 opinion (as well as f rom the re cord be low ), the amicus brief achieve s added importanc e in light 8 13 of the Ministry ’s role in both administeringthe Marzano L aw a nd in approvingBondi’s 14 reorg anization plan. 15 IV. 16 Th is C ourt ’s do c ke t is awa shwi th p re ssingmatters vyingfo r o ur attenti on . Thema

jority 17 ha s c ho se n to a llo c atea lre a dy stre sse d ju dic ial r e so urc e s to an is su ethat is no t si mil arly e xig e nt, 18 and despite theparties’ express reque st that we hold our fire . It is arguable, I suppose, that the 19 executed settlement agreement now awaiting approval conf irms the wisdom of the district court’s27 1 de c isi on . B ut s uc h a n in ferenc ewo uld

ov e rl oo k th efac t – w e ll k no wn by tho sewh o p rac tic ein 2 thi s f

ie ld – that se ttl e me nts areof

te n s tr uc k, no t be c a

us eof thepers ua siv e ne ss o f p laintif fs ’ 3 c laims , b ut b e c a

us ethea ltern ativ e(o r even th epo ssibil ity of thea ltern ativ e ) i s to o c os tly to 4 contemplate. 5 Whether these sa me conc erns a

nimated New

Parmalat’s se ttlement decision is not 6 something w e ca

n know for c ertain, but what is clear is that the ends of settlement, alone, ca nnot 7 justify

the means employed by

the district court be low. The statute at issue does not speak to the 8 dis tric t c ourt ’s inh e rent p ow e r t o h e ar t his c a se . It la

y s o ut a ruleof judic ial di sc re tio n th at mu st 9 be mea sured by

restraint. In my

view, the district cour

t erre d as a matter of law

in addinga factor 10 t o i t s c o m i ty

e qu at i o nwh i l eo v e rl o o ki n gi mp o rt anta d d i t i o n a lf a c t o r s r e qu i r e d

b y th es t atut e . In 11 issuing its majority opinion, this Court compounds the error done – by addingto its j urisprudenc e 12 wh e n n e ith e r n e c e ssi ty no r e ff ic ie nc y is s e rv e d b y

it. Ithere fo rere sp e c tf

ully dis se nt.