Accent Delight Int'l Ltd. v. Sotheby's

• Decision Date: 25 June 2019
• Docket Number: 18-CV-9011 (JMF)
• Citation: 394 F.Supp.3d 399
• Parties: ACCENT DELIGHT INTERNATIONAL LTD., et al., Plaintiffs, v. SOTHEBY'S, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

394 F.Supp.3d 399

ACCENT DELIGHT INTERNATIONAL LTD., et al., Plaintiffs,

v.SOTHEBY'S, et al., Defendants.

18-CV-9011 (JMF)

United States District Court, S.D. New York.

Signed June 25, 2019

Douglas Edward Lieb, Ogilvie Andrew Fraser Wilson, Zoe Antonia Salzman, Daniel Joseph Kornstein, Emery Celli Brinckerhoff & Abady, LLP, New York, NY, for Plaintiffs.

Marcus Aaron Asner, Sara Lynn Shudofsky, Mitchell Russell Stern, Arnold & Porter Kaye Scholer LLP, New York, NY, for Defendants.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

This case is a small part of a larger international saga involving Plaintiffs Accent Delight International Ltd. and Xitrans Finance Ltd. and their principal, Dmitry Rybolovlev, and Defendants Sotheby's and Sotheby's, Inc. (collectively "Sotheby's"). At the heart of the saga is Plaintiffs' claim that Yves Bouvier, an art dealer who is not a party to this case, defrauded them of approximately one billion dollars in connection with the purchase of a world-class art collection. The dispute has spawned civil and criminal litigation in at least five jurisdictions around the world — Singapore, Switzerland, France, Monaco, and the United States.

In this case, Plaintiffs allege that Sotheby's aided and abetted Bouvier's fraud and breach of fiduciary duty. They also allege that Sotheby's, which filed a lawsuit against Plaintiffs in Switzerland in November 2017, breached a contract that required Sotheby's to give Plaintiffs notice before filing suit. Sotheby's now moves, pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, to dismiss the case on forum non conveniens and international comity grounds. Sotheby's also contends that Plaintiffs fail to state a contract claim. Finally, Sotheby's seeks to keep certain materials under seal. For the reasons stated below, Sotheby's motion to dismiss is largely denied, and the request to seal is granted in part and denied in part.

BACKGROUND

The following facts — drawn primarily from the Amended Complaint and the materials referenced therein¹ — are assumed to be true for the purposes of this motion. See, e.g., Kalnit v. Eichler , 264 F.3d 131, 135 (2d Cir. 2001). Plaintiffs hired Bouvier in or about 2003 to assist them and Rybolovlev in purchasing a world-class art collection. See Docket No. 29 ("Amended Compl.") ¶¶ 13-15. Plaintiffs allege that, over the next twelve years, although Bouvier purported to act as their agent, he was also, improperly and secretly, acting as a dealer, buying the art himself and selling it to Plaintiffs at a higher price. See id. ¶¶ 17-19. The focus of this suit is Sotheby's role in these transactions. Plaintiffs allege that "Sotheby's brokered the sales to Bouvier at the discounted prices Bouvier wanted; at Bouvier's request, Sotheby's repeatedly created and modified appraisals and other documents about respective artworks designed to assist Bouvier in duping Plaintiffs into paying inflated prices; and Sotheby's concealed the evidence that Bouvier had in fact purchased the artworks at much lower prices by omitting the sales to Bouvier from the works' transaction histories." Id. ¶ 37.

This is not the first lawsuit involving these parties in this District. In March 2016, after initiating suits against Bouvier in Switzerland, Monaco, France, and Singapore, see id. ¶¶ 20-23, Plaintiffs filed an application pursuant to 28 U.S.C. § 1782 for discovery to use in the latter three of those proceedings. See In re Application of Accent Delight Int'l Ltd. , No. 16-MC-125 (JMF), 2016 WL 5818597, at *1 & n.1 (S.D.N.Y. Oct. 5, 2016) (" Accent Delight I ") (Docket No. 51), aff'd , 869 F.3d 121 (2d Cir. 2017), and 696 Fed. App'x 537 (2d Cir. 2017). Plaintiffs sought discovery from Sotheby's, which they believed — but could not know with certainty due to Bouvier's secrecy — was involved in the relevant transactions. See In re Accent Delight Int'l Ltd. , 869 F.3d 121, 125 (2d Cir. 2017). In May 2016, Sotheby's provided Plaintiffs with "certain limited discovery, primarily concerning" one of the transactions. Id. at 125-26 ; see 16-MC-125, Docket No. 34.

Based in part on the "new facts" Plaintiffs learned "about Sotheby's conduct" from the § 1782 discovery, Plaintiffs prepared to file suit against Sotheby's in the United Kingdom. See In re Accent Delight Int'l Ltd. , No. 16-MC-125 (JMF), 2017 WL 6568059, at *2 (S.D.N.Y. Dec. 22, 2017) (" Accent Delight II ") (Docket No. 128). In connection with those plans, on October 27, 2017, Plaintiffs sought leave from this Court — in a letter filed on the public docket, see Docket No. 42 ("Asner Decl.") Ex. C ("Oct. 2017 Ltr.") (originally filed at 16-MC-125, Docket No. 101) — to use the § 1782 discovery in that U.K. proceeding. See Accent Delight II , 2017 WL 6568059, at *2. But before Plaintiffs filed a U.K. suit, on November 17, 2017, Sotheby's filed a "Notice of Conciliation" against Plaintiffs and others in a Swiss court. See Asner Decl. Ex. D ("Notice of Conciliation"), at 1. Sotheby's sought a declaration from the Swiss court that Sotheby's "ha[d] no liability or debt of any sort" to Plaintiffs. Id. at 3. Sotheby's did not provide Plaintiffs with advance notice of the Swiss lawsuit, see Amended Compl. ¶ 226, and, to date, have not served Plaintiffs with the substantive case-initiating document, called the Statement of Claim. See Docket No. 53 ("Giroud Decl.") ¶ 7. Blocked by the Swiss suit and the Lugano Convention from filing suit in the U.K., see Amended Compl. ¶ 224,² Plaintiffs filed this suit in the Southern District of New York on October 2, 2018, see Docket No. 1.

Sotheby's Swiss civil suit is important to the pending motion to dismiss for two reasons. First, Sotheby's primary argument is that this Court must dismiss or stay the suit out of deference to the Swiss suit — and the success of that argument depends largely on the circumstances of the Swiss suit. See Docket No. 39; Docket No. 44 ("MTD Mem."), at 11-32. Second, three of Plaintiffs' claims are based on Sotheby's failure to provide Plaintiffs with advance notice of the Swiss suit. In December 2016, the parties signed a Tolling Agreement that required each party to provide fourteen days' notice before filing related litigation. See Amended Compl. ¶ 222; Asner Decl. Ex. E ("Tolling Agreement").³ Plaintiffs allege that Sotheby's breached the Tolling Agreement by filing the Swiss suit without giving them the required fourteen days' notice. See Amended Compl. ¶¶ 220-234. As discussed below, Sotheby's contends that the Tolling Agreement had been terminated when the Swiss suit was filed. See MTD Mem. 33-39.

MOTION TO DISMISS

Sotheby's moves to dismiss in whole or in part on three grounds. First and second, it contends that the suit should be dismissed on forum non conveniens or international comity grounds in light of the Swiss litigation. And third, it asserts that Plaintiffs fail to state a contract claim because the Tolling Agreement had been terminated. The Court will address each in turn.

A. Forum Non Conveniens

The forum non conveniens doctrine is "a discretionary device that permits a court in rare instances to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim." Carey v. Bayerische Hypo-Und Vereinsbank AG , 370 F.3d 234, 237 (2d Cir. 2004) (internal quotation marks omitted). Three steps guide the Court's exercise of discretion over a forum non conveniens claim:

At step one, a court determines the degree of deference properly accorded the plaintiff's choice of forum. At step two, it considers whether the alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute. Finally, at step three, a court balances the private and public interests implicated in the choice of forum.

Norex Petroleum Ltd. , 416 F.3d at 153 (citations omitted). The " ‘central purpose’ " of the inquiry is " ‘to ensure that the trial is convenient.’ " Id. at 154 (quoting Piper Aircraft Co. v. Reyno , 454 U.S. 235, 256, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981) ). Ultimately, an action should be dismissed on the grounds of forum non conveniens "only if the chosen forum is shown to be genuinely inconvenient and the selected forum significantly preferable." Iragorri v. United Techs. Corp. , 274 F.3d 65, 74-75 (2d Cir. 2001) (en banc). The burden here is on Sotheby's to demonstrate that dismissal is warranted. That is because, although the burden is first on Plaintiffs to make a prima facie showing that venue is proper, see, e.g., Gulf Ins. Co. v. Glasbrenner , 417 F.3d 353, 355 (2d Cir. 2005), there is no dispute that Plaintiffs have made such a showing. Thus, to prevail, Sotheby's must establish that the three steps weigh in favor of dismissal. See Bank of Credit & Commerce Int'l (Overseas) Ltd. v. State Bank of Pakistan , 273 F.3d 241, 246 (2d Cir. 2001) ("The defendant bears the burden of proof on all elements" in the forum non conveniens analysis).

Turning to the merits, at step one, "[a]ny review of a forum non conveniens motion starts with a strong presumption in favor of the plaintiff's choice of forum." Norex Petroleum , 416 F.3d at 154 (internal quotation mark omitted). But "the degree of deference given to a plaintiff's forum choice can vary with the circumstances," with reduced deference afforded to a choice motivated less "by genuine convenience" and more by "forum shopping." Id. at 154-55 (alteration and internal quotation marks omitted). Factors "relevant to determining whether a forum choice was likely motivated by genuine convenience" are "[1] the convenience of the plaintiff's residence in relation to the chosen forum, [2] the availability of witnesses or evidence to the forum district, [3] the defendant's amenability to suit in the forum district, [4] the availability of appropriate legal assistance, and [5] other reasons relating to convenience or expense." Id. (internal quotation marks omitted). By contrast, factors relevant to determining whether a forum choice was...