Rubenstein v. Ishizuka et al, No. 1:2023cv04332 - Document 35 (S.D.N.Y. 2025)
Court Description: OPINION AND ORDER re: 26 MOTION to Dismiss for Lack of Jurisdiction . filed by Koichi Ishizuka, Next Meats Holdings, Inc., White Knight Co., Ltd.. For all of the foregoing reasons, Defendants' motion to dismiss the First A mended Complaint is GRANTED under Rule 12(b)(6) for failure to state a claim on which relief can be granted. The Clerk of Court is respectfully directed to CLOSE this case. SO ORDERED. (Signed by Judge Margaret M. Garnett on 5/23/2025) (kv) Transmission to Orders and Judgments Clerk for processing.
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Rubenstein v. Ishizuka et al Doc. 35 U NI T E D S T A T E S DI S T RI C T C O U R T S O U T H E R N DI S T RI C T O F N E W Y O R K 5 / 23 / 2 0 2 5 M A R K R U B E N S T EI N, Pl ai ntiff, 2 3- C V- 0 4 3 3 2 ( M M G) - a g ai nst- O PI NI O N & O R D E R K OI C HI I S HI Z U K A, et al., D ef e n d a nts. M A R G A R E T M. G A R N E T T, U nit e d St at es Distri ct J u d g e: T his is a s h ar e h ol d er d eri v ati v e a cti o n s e e ki n g dis g or g e m e nt of all “s h ort-s wi n g ” pr ofits t h at t h e d ef e n d a nts all e g e dl y r e ali z e d i n vi ol ati o n of S e cti o n 1 6( b) of t h e S e c uriti es E x c h a n g e A ct of 1 9 3 4 ( “ E x c h a n g e A ct ”), 1 5 U. S. C. § 7 8 p( b) ( “ S e cti o n 1 6( b) ”). D ef e n d a nts h a v e m o v e d t o dis miss t h e First A m e n d e d C o m pl ai nt i n its e ntir et y. F or t h e r e as o ns s et f ort h b el o w, t h e m oti o n t o dis miss is G R A N T E D. F A C T S A N D P R O C E D U R A L HI S T O R Y Pl ai ntiff M ar k R u b e nst ei n c o m m e n c e d t h is a cti o n b y fili n g a C o m pl ai nt o n M a y 2 4, 2 0 2 3. D kt. N o. 1. O n J ul y 2 8, 2 0 2 3, h e fil e d t h e First A m e n d e d C o m pl ai nt, cl arif yi n g i nf or m ati o n a b o ut t h e i d e ntiti es of t h e d ef e n d a nts a n d a b o ut t h e e xtr at errit ori al a p pli c ati o n of S e cti o n 1 6( b) t o t his a cti o n. D kt. N o. 1 7 ( “ First A m e n d e d C o m pl ai nt ” or “ F A C ”). T h e First A m e n d e d C o m pl ai nt m a k es t h e f oll o wi n g all e g ati o ns , w hi c h ar e pr es u m e d tr u e f or p ur p os es of t his m oti o n.1 Pl ai ntiff is a r esi d e nt of R h o d e Isl a n d a n d a s h ar e h ol d er of N e xt M e ats H ol di n gs, I n c. ( “ N e xt M e ats ”). I d. ¶ 1 0. D ef e n d a nt K oi c hi Is hi z u k a is a J a p a n es e citi z e n a n d t h e C hi ef 1 T h e C o urt s h all r ef er t o t h e p arti es’ m e m or an d a of l a w i n s u p p ort of a n d i n o p p ositi o n t o D ef e n d a nts’ m oti o n t o dis miss as f oll o ws: D kt. N o. 2 6- 1 ( “ M ot. ”), D kt. N o. 2 8 ( “ O p p. ”), D kt. N o. 3 0 ( “ R e pl y ”). 1 Dockets.Justia.com E x e c uti v e Offi c er ( “ C E O ”) of N e xt M e ats. I d. ¶ 3; D kt. N o. 2 6- 3 ( Affi d a vit of K oi c hi Is hi z u k a). D ef e n d a nt W hit e K ni g ht C o., Lt d. ( “ W hit e K ni g ht ”) is a J a p a n es e e ntit y o w n e d a n d c o ntr oll e d b y D ef e n d a nt Is hi z u k a. F A C ¶ 1 3; s e e als o i d. E x. 4 ( W hit e K ni g ht S E C F or m 4 fili n g d at e d J a n. 4, 2 0 2 3). C oll e cti v el y, D ef e n d a nts ar e t h e b e n efi ci al o w n ers of m or e t h a n 1 0 % of t h e c o m m o n st o c k of N e xt M e ats, w hi c h is a n o mi n al d ef e n d a nt. 2 I d. ¶ 3. T his a cti o n w as br o u g ht f or t h e b e n efit of N e xt M e ats, w hi c h is a N e v a d a c or p or ati o n wit h its pri n ci p al offi c es i n T o k y o, J a p a n. I d. ¶ 1 1. N e xt M e ats is r e gist er e d wit h t h e U. S. S e c uriti es a n d E x c h a n g e C o m missi o n (t h e “ S E C ”); t h e c o m p a n y’s s e c uri ti es tr a d e o v er-t h e- c o u nt er ( “O T C ”) u n d er t h e st o c k s y m b ol N X M H, i n cl u di n g t hr o u g h m ar k et- m a k ers i n t his Distri ct. I d. ¶ ¶ 8, 1 4. T h e c o m p a n y m a n uf a ct ur es v e g et ari a n “ m e at ” pr o d u cts, a n d its pr o d u cts ar e s ol d i n r et ail st or es a n d r est a ur a nts i n t h e U nit e d St at es. I d. ¶ 6. As C E O, Is hi z u k a o v ers e es all of N e xt M e ats’ o p er ati o ns. I d. ¶ 7. O n M a y 2 4, 2 0 2 2, W hit e K ni g ht s ol d a t ot al of 4 6 1, 7 1 4 s h ar es of N e xt M e ats’ r estri ct e d c o m m o n st o c k t o Pi k ul C o., Lt d., a J a p a n es e c o m p a n y n ot r el at e d t o N e xt M e ats, f or $ 0. 8 5 p er s h ar e. I d. ¶ 1 8; i d. E x. 3 ( W hit e K ni g ht S E C F or m 4 fili n g d at e d J u n e 1, 2 0 2 2). O n N o v e m b er 2 2, 2 0 2 2, W hit e K ni g ht p ur c h as e d 8, 2 2 9, 4 5 1 s h ar es of N e xt M e ats’ r estri ct e d c o m m o n st o c k at a pri c e of $ 0. 0 0 1 p er s h ar e fr o m R y o S hir ai, w h o w as f or m erl y t h e C E O a n d C h air m a n of t h e B o ar d of Dir e ct ors of N e xt M e ats u ntil his r esi g n ati o n i n D e c e m b er 2 0 2 1. I d. ¶ 1 9; i d. E x. 4. Als o o n N o v e m b er 2 2, W hit e K ni g ht p ur c h as e d 1 1 2, 8 6 3, 2 8 2 s h ar es of N e xt M e ats’ r estri ct e d c o m m o n st o c k at a pr i c e of $ 0. 0 0 1 p er s h ar e fr om Hi d e y u ki S as a ki, w h o 2 A pr a cti c e h as d e v el o p e d i n S e cti o n 1 6( b) c as es w h er ei n t h e iss u er is list e d as a n o mi n al d ef e n d a nt i n or d er t o e ns ur e t h at it, as t h e s ol e b e n efi ci ar y of t h e a cti o n, is a w ar e of t h e pr o c e e di n gs. T h e iss u er is a d ef e n d a nt i n n a m e o nl y. S e e P E T E R J. R O M E O & A L A N L. D Y E , SE C TI O N 1 6 T R E A TI S E A N D R E P O R TI N G G UI D E § 9. 0 3[ 1][ a][i] ( 6t h e d. 2 0 2 4). 2 w as t h e C hi ef O p er ati n g Offi c er a n d a dir e ct or of N e xt M e ats at t h e ti m e of t h e tr a ns a cti o n. I d. ¶ 1 9; i d. E x. 4. F oll o wi n g t h es e tr a ns a cti o ns, W hit e K ni g ht w a s t h e m aj orit y c o ntr olli n g s h ar e h ol d er of N e xt M e ats. I d. E x. 4. Pl ai ntiff d o es n ot all e g e t h at t h os e tr a ns a cti o ns o c c urr e d i n t h e U nit e d St at es. S e e i d. Aft er D ef e n d a nts’ F or m 4 fili n gs wit h t h e S E C i n c o n n e cti o n wit h t h os e tr a ns a cti o ns, o n J a n u ar y 4, 2 0 2 3, Pl ai ntiff’s c o u ns el m a d e a d e m a n d o n N e xt M e ats t o pr os e c ut e D ef e n d a nts u n d er S e cti o n 1 6( b) of t h e E x c h a n g e A ct. I d. ¶ 1 6; i d. E x. 1. O n F e br u ar y 2 2, 2 0 2 3, 3 D ef e n d a nts’ c o u ns el r es p o n d e d, di s p uti n g t h at t h e tr a ns a cti o ns vi ol at e d S e cti o n 1 6( b). I d. ¶ 1 6; i d. E x. 2. I n t his a cti o n, Pl ai ntiff all e g es t h at D ef e n d a nts ar e “st at ut or y i nsi d e rs ” of N e xt M e ats w h o r e ali z e d s h ort-s wi n g pr ofits of a p pr o xi m at el y $ 3 9 1, 9 9 5 fr o m t h e s al es a n d p ur c h as es d es cri b e d a b o v e i n vi ol ati o n of S e cti o n 1 6( b). I d. ¶ ¶ 3, 2 3 – 2 5. Pl ai ntiff als o all e g es t h at pr ofits ar e r e c o v er a bl e fr o m a n y a d diti o n al s al es a n d p ur c h as es or p ur c h as es a n d s al es t h at D ef e n d a nts m a d e of N e xt M e ats e q uit y s e c uri ti es or e q uit y s e c urit y e q ui v al e nts d uri n g p eri o ds n ot b arr e d b y t h e st at ut e of li mit ati o ns a n d wit hi n p eri o ds of l ess t h a n si x m o nt hs of e a c h ot h er. I d. ¶ ¶ 2 6 – 2 8. D ef e n d a nts, i n cl u di n g N e xt M e ats, h a v e m o v e d t o dis miss t h e First A m e n d e d C o m pl ai nt, ar g ui n g t h at a p pl yi n g S e cti o n 1 6( b) t o t h e all e g e d f a cts w o ul d c o nstit ut e a n i m p er missi bl e e xtr at errit ori al a p pli c ati o n of t h e st at ut e, t h at t h er e is n o b a sis f or p ers o n al j uris di cti o n, a n d t h at v e n u e is i m pr o p er. S e e D kt. N o. 2 6. O n A pril 1 6, 2 0 2 4, t h e C o urt h el d or al ar g u m e nt o n D ef e n d a nts’ m oti o n. 4 3 T h e l ett er-r es p o ns e i n di c at es t h at it is d at e d F e br u ar y 2 2, 2 0 2 2, w hi c h a p p e ars t o b e a n i n a d v ert e nt err or. 4 Cit ati o ns t o t h e tr a ns cri pt of t h e or al ar g u m e nt s h all b e “ Tr. [ pi n cit e]. ” 3 L E G A L S T A N D A R D S O F R E VI E W I. R U L E 1 2( B)( 6) M O TI O N T O DI S MI S S T h e q u esti o n of w h et h er a pl ai ntiff’s cl ai ms ar e s uffi ci e ntl y wit hi n t h e r e a c h of S e cti o n 1 6( b) is a m erits q u esti o n t h at is pr o p erl y c o nsi d er e d o n a m oti o n t o dis miss f or f ail ur e t o st at e a cl ai m u n d er R ul e 1 2( b)( 6) of t h e F e d e r al R ul es of Ci vil Pr o c e d ur e. S e e M orris o n v. N at’l A ustr ali a B a n k Lt d. , 5 6 1 U. S. 2 4 7, 2 5 4 ( 2 0 1 0). As s u c h, e v e n t h o u g h D ef e n d a nts a p p e ar t o ar g u e t h at t h e First A m e n d e d C o m pl ai nt s h o ul d b e dis miss e d o n e xtr at errit ori alit y gr o u n ds d u e t o i m pr o p er v e n u e, t his C o urt pr o p erly ass ess es t h e e xtr at errit ori alit y ar g u m e nt as o n e m a d e u n d er a m oti o n u n d er R ul e 1 2( b)( 6). S e e i d. I n or d er t o s ur vi v e s u c h a m oti o n, a c o m pl ai nt m ust pl e a d “ e n o u g h f a cts t o st at e a cl ai m t o r eli ef t h at is pla usi bl e o n its f a c e. ” B ell Atl. C or p. v. T w o m bl y , 5 5 0 U. S. 5 4 4, 5 7 0 ( 2 0 0 7). A cl ai m o nl y h as “f a ci al pl a usi bilit y w h e n t h e pl ai ntiff pl e a ds f a ct u al c o nt e nt t h at all o ws t h e c o urt t o dr a w t h e r e as o n a bl e i nf er e nc e t h at t h e d ef e n d a nt is li a bl e f or t h e mis c o n d u ct all e g e d. ” As h cr oft v. I q b al , 5 5 6 U. S. 6 6 2, 6 7 8 ( 2 0 0 9). A c o m pl ai nt is pr o p erl y dis miss e d w h er e, as a m att er of l a w, “t h e all e g ati o ns i n a c o m pl a i nt, h o w e v er tr u e, c o ul d n ot r ais e a cl ai m of e ntitl e m e nt t o r eli ef[.] ” B ell Atl. C or p. , 5 5 0 U. S. at 5 5 8. W h e n r uli n g o n a R ul e 1 2( b)( 6) m oti o n, t h e distri ct c o urt m ust a c c e pt all f a ct u al all e g ati o ns c o nt ai n e d i n t h e c o m pl ai nt as tr u e a n d dr a w all r e as o n a bl e i nf er e n c es i n f a v or of t h e pl ai ntiff. S e e, e. g. , K o c h v. C hristi e’s I nt’l, P L C , 6 9 9 F. 3 d 1 4 1, 1 4 5 ( 2 d Cir. 2 0 1 2). H o w e v er, c o urts ar e n ot r e q uir e d t o a c c e pt as tr u e l e g al c o n cl usi o ns, a n d “[t] hr e a d b ar e r e ci t als of t h e el e m e nts of a c a us e of a cti o n, s u p p ort e d b y m er el y c o n cl us or y st at e m e nts, d o n ot s uffi c e. ” As h cr oft , 5 5 6 U. S. at 6 7 8. I n ass essi n g t h e s uffi ci e n c y of t h e c o m pl ai nt, t h e c o urt m a y als o c o nsi d er d o c u m e nts i n c or p or at e d i nt o t h e c o m pl ai nt b y r ef er e n c e or att a c h e d t o t h e c o m pl ai nt as e x hi bits, or w h os e t er ms a n d eff e ct ar e r eli e d u p o n b y t h e plai ntiff i n dr afti n g t h e c o m pl ai nt. S e e Gr yl e x r el. S hir e 4 P h ar ms. Gr p. P L C v. S hir e P h ar ms. Gr p. P L C , 2 9 8 F. 3 d 1 3 6, 1 4 0 ( 2 d Cir. 2 0 0 2), c ert. d e ni e d , 5 3 7 U. S. 1 1 9 1 ( 2 0 0 3). T h e c o urt m a y als o c o nsi d er l e g all y r e q uir e d p u bli c dis cl os ur e d o c u m e nts fil e d wit h t h e S E C, a n d d o c u m e nts p oss ess e d b y or k n o w n t o t h e pl ai ntiff a n d u p o n w hi c h t h e pl ai ntiff r eli e d i n bri n gi n g t h e s uit. G ol dst ei n v. Q V T Ass o cs. G P L L C , N o. 1 0- C V- 0 2 4 8 8 ( H B), 2 0 1 0 W L 4 0 5 8 1 5 7, at * 2 ( S. D. N. Y. O ct. 1 5, 2 0 1 0) ( citi n g A T SI C o m m c’ ns v. S h a ar F u n ds, Lt d. , 4 9 3 F. 3 d 8 7, 9 8 ( 2 d Cir. 2 0 0 7) a n d I n r e M or g a n St a nl e y Te c h. F u n d S e c. Liti g., 6 4 3 F. S u p p. 2 d 3 6 6, 3 7 2 ( S. D. N. Y. 2 0 0 9), aff ’ d , 5 9 2 F. 3 d 3 4 7 ( 2 d Cir. 2 0 1 0)). F a ct s t h at a p p e ar i n a p art y’s bri ef b ut t h at w er e n ot all e g e d i n t h e c o m pl ai nt or f o u n d i n a ny d o c u m e nts pr o p erl y b ef or e t h e c o urt ar e n ot c o nsi d er e d. S e e I n r e i A nt h us C a p. H ol di n gs, I n c. S e c. Liti g. ( “i A nt h us”), N o. 2 0C V- 0 3 1 3 5 ( L A K), 2 0 2 1 W L 3 8 6 3 3 7 2, at * 5 ( S. D. N. Y. A u g. 3 0, 2 0 2 1). II. R U L E 1 2( B)( 2) A N D 1 2( B)( 3) M O TI O N S T O DI S MI S S O n a m oti o n t o dis miss f or l a c k of p ers o n al j uris di cti o n u n d er R ul e 1 2( b)( 2) of t h e F e d er al R ul es of Ci vil Pr o c e d ur e, a pl ai ntiff m ust “ m a k e a pri m a f a ci e s h o wi n g t h at j uris di cti o n e xists. ” Li c ci e x r el. Li c ci v. L e b a n es e C a n a di a n B a n k, S A L , 6 7 3 F. 3 d 5 0, 5 9 ( 2 d Cir. 2 0 1 2) (i nt er n al r ef er e n c es o mitt e d). T his s h o wi n g m ust i n cl u d e a n “ a v er m e nt of f a cts t h at, if cr e dit e d b y t h e ulti m at e tri er of f a ct, w o ul d s uffi c e t o est a blis h j uri s di cti o n o v er t h e d ef e n d a nt. ” I d. (i nt er n al r ef er e n c es o mitt e d). T h e pl ai ntiff’s a v erm e nt of j uris di cti o n al f a cts is cr e dit e d as tr u e. S e e I n r e M a g n eti c A u di ot a p e A ntitr ust Liti g. , 3 3 4 F. 3 d 2 0 4, 2 0 6 ( 2 d Cir. 2 0 0 3). T h e st a n d ar d f or a m oti o n t o di s miss f or i m pr o p er v e n u e is t h e s a m e as t h e st a n d ar d f or a 1 2( b)( 2) m oti o n. S e e G ulf I ns. C o. v. Gl as br e n n er , 4 1 7 F. 3 d 3 5 3, 3 5 5 ( 2 d Cir. 2 0 0 5). T h e pl ai ntiff b e ars t h e b ur d e n of s h o wi n g t h at v e n u e is pr o p er. S e e Av al o n H ol di n gs C or p. v. G e ntil e , N os. 1 8- C V- 0 7 2 9 1 ( V S B), 1 8- C V- 0 8 8 9 6 ( V S B), 2 0 1 9 W L 4 6 4 0 2 0 6, at * 3 ( S. D. N. Y. S e pt. 2 4, 2 0 1 9). 5 DI S C U S SI O N S e cti o n 1 6( b) of t h e E x c h a n g e A ct is a strict li a bilit y st at ut e t h at r e q uir es st at ut or y “i nsi d ers ” of a n iss u er — offi c ers, dir e ct ors, or c ert ai n b e n efi ci al o w n ers —t o dis g or g e s h ort-s wi n g pr ofits r e g ar dl ess of t h ei r i nt e nt w h e n tr a di n g. Cr e dit S uiss e S e c. ( U S A) L L C v. Si m m o n ds , 5 6 6 U. S. 2 2 1, 2 2 3 ( 2 0 1 2). U n d er t h e st at ut e, s h ort-s wi n g pr ofit s ar e pr ofits d eri v e d b y a n i nsi d er fr o m t h e p ur c h as e a n d s al e, or s al e a n d p ur c h as e, of t h e iss u er’s s e c uriti es wit hi n a n y si x- m o nt h p eri o d. I d. T h e st at ut e st at es, i n r el e v a nt p art: F or t h e p ur p os e of pr e v e nti n g t h e u nf air us e of i nf or m ati o n w h i c h m a y h a v e b e e n o bt ai n e d b y [ a c or p or at e i nsi d er] b y r e as o n of his r el ati o ns hi p t o t h e iss u er, a n y pr ofit r e ali z e d b y hi m fr o m a n y p ur c h as e a n d s al e, or a n y s al e a n d p ur c h as e, of a n y e q uit y s e c urit y of s u c h iss u er . . . w it hi n a n y p eri o d of l ess t h a n si x m o nt hs . . . s h all i n ur e t o a n d b e r e c o v er a bl e b y t h e iss u er, irr es p e cti v e of a n y i nt e nti o n o n t h e p art of [t h e i nsi d er]. 1 5 U. S. C. § 7 8 p( b). T h e st at ut e is i nt e n d e d t o pr e v e nt c or p or at e i nsi d ers “fr o m e n g a gi n g i n s p e c ul ati v e tr a ns a cti o ns o n t h e b asis of i nf or mati o n n ot a v ail a bl e t o ot h ers. ” D o n o g h u e v. B ull d o g I n vs. G e n. P’s hi p , 6 9 6 F. 3 d 1 7 0, 1 7 3 – 7 4 ( 2 d Cir. 2 0 1 2) (i nter n al r ef er e n c es o mitt e d). I. E X T R A T E R RI T O RI A L A P P LI C A TI O N D ef e n d a nt ar g u es t h at a p pl yi n g S e cti o n 1 6( b) t o t h e tr a ns a cti o ns at iss u e w o ul d b e i m p er missi bl y e xtr at errit ori al. S e e M ot. at 5 – 7; R e pl y 3 – 7. T h e C o urt a gr e es. U nl ess C o n gr ess h as cl e arl y e x pr ess e d a n affir m ati v e i nt e nti o n t h at a st at ut e h as e xtr at errit ori al eff e ct, c o urts m u st pr es u m e t h at t h e st at ut e is pri m aril y c o n c er n e d wit h d o m esti c c o n diti o ns. M orris o n , 5 6 1 U. S. at 2 5 5. N o c o urt h as ex pr essl y h el d w h et h er S e cti o n 1 6( b) a p pli es e xtr at errit ori all y. S e e R u b e nst ei n v. C os m os H ol di n gs, I n c. ( “C os m os ”), N o. 1 9- C V0 6 9 7 6 ( K P F), 2 0 2 0 W L 3 8 9 3 3 4 7, at * 1 0 ( S. D. N. Y. J ul y 1 0, 2 0 2 0). H o w e v er, c o urts i n t his Distri ct h a v e l o o k e d t o M orris o n i n i nt er pr eti n g t h e pr es u m pti o n a gai nst e xtr at errit ori alit y wit h 6 r es p e ct t o ot h er s e cti o ns of t h e E xc h a n g e A ct, i n cl u di n g S e cti o n 1 6( b). S e e , e. g., i d. at * 1 0 – 1 1; C a n o o I n c. v. D D Gl o b. H ol di n gs, Lt d. ( “C a n o o ”), N o. 2 2- C V- 0 3 7 4 7 ( M K V), 2 0 2 3 W L 6 1 6 2 2 9 6, at * 4 – 6 ( S. D. N. Y. S e pt. 2 1, 2 0 2 3). In M orris o n , i n w hi c h t h e S u pr e m e C o urt ap pli e d t h e pr es u m pti o n a g ai nst e xtr at errit ori alit y t o S e cti o n 1 0( b) of t h e E x c h a n g e A ct, t h e C o urt s et o ut a “tr a ns a cti o n al t est, ” h ol di n g t h at t h e E x c h a n g e A ct a p pli es o nl y w h er e “t h e p ur c h as e or s al e is m a d e i n t h e U nit e d St at es ” or w h er e t h e tr a ns a cti o n i n v ol v es “ a s e c urit y list e d o n a d o m esti c e x c h a n g e. ” M orris o n , 5 6 1 U. S. at 2 6 9 – 7 0. T his t est r e q uir e s t h at at l e ast o n e pr o n g b e s a tisfi e d: eit h er t h e cl ai m is “ pr e di c at e d o n a p ur c h as e or s al e of a s e c urit y list e d o n a d o m esti c e x c h a n g e or o n a d o m esti c p ur c h as e or s al e of a n ot h er s e c urit y. ” P ar k c e ntr al Gl o b. H u b Lt d. v. P ors c h e A ut o. H ol di n gs S E , 7 6 3 F. 3 d 1 9 8, 2 0 0 – 0 1 ( 2 d Cir. 2 0 1 4) ( e m p h asis a d d e d); s e e als o C os m os, 2 0 2 0 W L 3 8 9 3 3 4 7, at * 1 0. H er e, Pl ai ntiff all e g es t h at “[ a]t all r el e v a nt ti m es, t h e c o m m o n st o c k of N e xt M e ats tr a d e d o v er-t h e- c o u nt er u n d er st o c k s y m b ol N X M H, o n e x c h a n g es or t hr o u g h m ar k et- m a k ers l o c at e d wit hi n t his Distri ct. ” F A C ¶ 8. D ef e n d ants ar g u e t h at b e c a us e N e xt M e ats is tr a d e d O T C a n d n ot o n a d o m esti c e x c h a n g e, t h e iss u er’s s e c uriti es ar e n ot tr a d e d o n a d o m esti c e x c h a n g e f or t h e p ur p os es of M orris o n ’s first pr o n g. M ot. at 6. D ef e n d a nts als o ar g u e t h at t h e p arti es t o t h e tr a ns a cti o ns at iss u e i n c urr e d irr ev o c a bl e li a bilit y i n J a p a n, s o t h e tr a ns a cti o ns di d n ot “ o c c ur ” i n t h e U nit e d St at es u n d er M orris o n ’s s e c o n d pr o n g. I d. at 5 – 7; R e pl y at 3 – 7. A. M orris o n ’s Fi rst P r o n g: “ D o m esti c E x c h a n g e ” Pl ai ntiff all e g es i n t h e F A C t h at N e xt M e ats w as, at all r el e v a nt ti m es, “tr a d e d o v er-t h ec o u nt er u n d er st o c k s y m b ol N X M H, o n e x c h a n g es or t hr o u g h m ar k et- m a k ers l o c at e d wit hi n t his Distri ct, ” F A C ¶ 8, a n d t h at N e xt M e ats’ c o m m o n st o c k “is lis t e d o n a d o m esti c s e c uriti es e x c h a n g e, ” i d. ¶ 9. H o w e v er, i n t h eir bri efs i n s u p p ort of t h eir m oti o n t o dis miss, D ef e n d a nts 7 ass ert t h at N e xt M e ats is q u ot e d o n t h e Pi n k S h e ets (i. e., t h e O T C m ar k et) a n d its s e c uriti es ar e n ot tr a d e d o n a n y e x c h a n g e. M ot. at 6; R e pl y at 4 – 5. Pl ai ntiff d o es n ot dis p ut e t h es e f a cts, b ut ar g u es t h at s e c uriti es tr a di n g o nl y O T C i n t h e U n it e d St at es ar e tr a d e d o n “ a d o m esti c e x c h a n g e ” f or t h e p ur p os es of M orris o n ’s first pr o n g. S e e O p p. at 1 3 – 1 5. Alt h o u g h f a cts ar g u e d o nl y i n t h e p arti es’ bri e fs ar e n ot pr o p erl y b ef or e t h e C o urt o n a R ul e 1 2( b)( 6) m oti o n, t his C o urt m a y c o nsi d er N e xt M e ats’ 2 0 2 3 F o r m S- 1 fil e d wit h t h e S E C, s e e N e xt M e ats H ol di n gs, I n c., C urr e nt R e p ort ( F or m S- 1) ( M a y 2 4, 2 0 2 3) ( “ N e xt M e ats F or m S- 1 ”), w hi c h m a k es cl e ar t h at “[t] h e c o m m o n st o c k of N e xt M e ats H ol di n gs, I n c. is q u ot e d o n t h e O T C M ar k ets Gr o u p I n c.’s Pi n k ® O p e n M ar k et . . . u n d er t h e s y m b ol N X M H. ” See G ol dst ei n , 2 0 1 0 W L 4 0 5 8 1 5 7, at * 2 ( o n a m oti o n t o dis miss, c o urts m a y c o nsi d er l e g all y r e q uir e d p u bli c dis cl os ur e d o c u m e nts fil e d wit h t h e S E C). T his p u bli c fili n g c o ntr a di cts t h e all e g ati o ns i n t h e First A m e n d e d C o m pl ai nt t h at N e xt M e ats s e c uriti es tr a d e or ar e list e d o n d o m esti c s e c uriti es e x c h a n g es, a n d i n d e e d Pl ai nt iff a p p e ars t o a b a n d o n t h os e all e g ati o ns i n his o p p ositi o n bri ef. As s u c h, t his C o urt will c o nsi d er t h at N e xt M e ats’ s e c uriti es ar e tr a d e d O T C. B y d efi niti o n, s e c uriti es t h at tr a d e O T C ar e n ot tr a d e d o n a s e c uriti es e x c h a n g e. S e e I n r e P etr o br as S e c. Liti g., 1 5 0 F. S u p p. 3 d 3 3 7, 3 4 0 ( S. D. N. Y. 2 0 1 5) ( citi n g B L D I C TI O N A R Y A C K ’S L A W 1 2 7 9 ( 1 0t h e d. 2 0 1 4)). F or o v er a d e c a d e, c o urts i n t h e S e c o n d Cir c uit h a v e c o nsist e ntl y f o u n d t h at t h e O T C m ar k et is n o t a d o m esti c e x c h a n g e f or t h e p ur p os es of M orris o n ’s first pr o n g. S e e, e. g., I n re P etr o br as S e c., 8 6 2 F. 3 d 2 5 0, 2 6 2 ( 2 d Cir. 2 0 1 7) ( d e bt s e c uriti es t h at w er e tra d e d O T C d o n ot s atisf y M orris o n ’s first pr o n g, b e c a us e t h e y “ d o n ot tr a d e o n a d o m esti c e x c h a n g e ”); i A nt h us, 2 0 2 1 W L 3 8 6 3 3 7 2, at * 2 – 3 ( C a na di a n c or p or ati o n wit h s h ar es list e d o n t h e C a n a di a n St o c k E x c h a n g e a n d tr a d e d O T C i n t h e U nit e d St at es di d n ot tr a d e o n a “ d o m esti c e x c h a n g e ” wit hi n t h e m e a ni n g of t h e E x c h a n g e A ct a n d its i m pl e m e nti n g 8 r e g ul ati o ns); I n r e P os ei d o n C o n c e pts S e c. Liti g., N o. 1 3- C V- 0 1 2 1 3 ( D L C), 2 0 1 6 W L 3 0 1 7 3 9 5, at * 1 2 ( S. D. N. Y. M a y 2 4, 2 0 1 6) ( “ T h e T hir d Cir c uit h as h el d t h at O T C m a r k ets ar e n ot d o m esti c s e c uriti es e x c h a n g es u n d er M orris o n . . . . T h e T hir d Cir c uit’s lo gi c is c o m p elli n g, as O T C Pi n k S h e ets is a q u ot ati o n s er vi c e t h at c ert ai n br o k er- d e al ers us e t o p ost off ers t o s ell a n d t o b u y s e c uriti es n ot list e d o n a n ati o n al e x c h a n g e, a n d is n ot its elf a n e x c h a n g e. ”) (i nt er n al r ef er e n c es o mitt e d) ( citi n g U nit e d St at es v. G e or gi o u , 7 7 7 F. 3 d 1 2 5, 1 3 5 ( 3 d Cir. 2 0 1 5) a n d S. E. C. v. B o o c k , N o. 0 9- C V- 0 8 2 6 1 ( D L C), 2 0 1 1 W L 3 7 9 2 8 1 9, at * 1 8 ( S. D. N. Y. A u g. 2 5, 2 0 1 1)); I n r e S a n ofiAv e ntis S e c. Liti g. , 2 9 3 F. R. D. 4 4 9, 4 5 7 ( S. D. N. Y. 2 0 1 3) ( w h er e t h e iss u er’s s h ar es w er e tr a d e d o n a E ur o p e a n e x c h a n g e a n d s o m eti m es tr a d e d i n O T C tr a ns a cti o ns i n t h e U nit e d St at es, t h e s h ar es w er e n ot tr a d e d o n a d o m esti c e x c h a n g e); s e e als o St o y as v. T os hi b a C or p. , 8 9 6 F. 3 d 9 3 3, 9 4 5 – 4 7 ( 9t h Cir. 2 0 1 8) ( h ol di n g t h at t h e O T C s e c uriti es m ar k et i n q u esti o n w as n ot a n e x c h a n g e a n d t h us c o ul d n ot b e cl assifi e d as a “ d o m esti c e x c h a n g e ” u n d er M orris o n ’s first pr o n g). 5 As s u c h, M orris o n ’s first pr o n g is n ot s atisfi e d h er e b e c a us e N e xt M e ats is o nl y q u ot e d or tr a d e d O T C, a n d is n ot list e d or tr a d e d o n a n y d o m esti c e x c h a n g e. S e e N e xt M e ats F or m S- 1. B. M orris o n ’s S e c o n d P r o n g: D o m esti c Tr a ns a cti o n Alt h o u g h t h e first pr o n g of M orris o n is n ot s atisfi e d h er e, S e cti o n 1 6( b) m a y still a p pl y e xtr at errit ori all y if M orris o n ’s s e c o n d pr o n g — d o m esti c tr a ns a cti o ns i n s e c uriti es n ot tr a d e d o n a d o m esti c e x c h a n g e —is m et. T h e n at ur al n e xt q u esti o n is: h o w d o y o u d et er mi n e w h er e a tr a ns a cti o n “t a k es pl a c e ” if t h e tr a ns a cti o n m a y r e q uir e m ulti pl e st e ps t o b e c o m e fi n al ? 5 Pl ai ntiff cit es C os m os a n d C a n o o t o s u p p ort his c o nt e nti o n t h at t h e i n cl usi o n of N e xt M e ats’ s e c uriti es o n t h e d o m esti c O T C m ar k et s atisfi es M orris o n ’s first pr o n g. O p p. at 1 3 – 1 5. C os m os d o es n ot s u p p ort t his c o nt e nti o n. I n t h at c as e, t h e d ef e n d a nts h a d n ot ar g u e d t h at t h e pl ai ntiff f ail e d t o a d e q u at el y all e g e t h at t h e s e c uriti es w er e tr a d e d o n a d o m esti c e x c h a n g e; t h e c o urt “ d e cli n e[ d] t o m a k e ar g u m e nts f or dis miss al t h at [t h e d ef e n d a nts] c h os e n ot t o pr es e nt. ” 2 0 2 0 W L 3 8 9 3 3 4 7, at * 1 1. C a n o o i n v ol v e d s e c uriti es list e d o n t h e N A S D A Q a n d t h us h as n o b e ari n g o n t h e q u esti o n of w h et h er O T C tr a di n g is o n a “ d o m esti c e x c h a n g e. ” 2 0 2 3 W L 6 1 6 2 2 9 6, at * 4 – 5. Pl ai ntiff a d mitt e d at or al ar g u m e nt t h at Pl ai ntiff is n ot a w ar e of a n y ot h er a ut h orit y fr o m t his Cir c uit t h at h ol ds t h at O T C m ar k ets ar e d o m esti c e x c h a n g es u n d er M orris o n . Tr. 1 0 – 1 2. N or is t h e C o urt. 9 T h e S e c o n d Cir c uit h as h el d t h at a tr a ns a cti o n is “ d o m esti c ” u n d er M orris o n if ( 1) t h e p arti es i n c urr e d “irr e v o c a bl e li a bilit y ” i n t h e U n it e d St at es — “t h at is, t h at t h e p ur c h as er i n c urr e d irr e v o c a bl e li a bilit y wit hi n t h e U nit e d St at es t o t a k e a n d p a y f or a s e c urit y, or t h at t h e s ell er i n c urr e d irr e v o c a bl e li a bilit y wit hi n t h e U nit e d St at es t o d eli v er a s e c urit y ” — or ( 2) titl e w as tr a nsf err e d i n t h e U nit e d St at es. A bs ol ut e A cti vist Val u e M ast er F u n d Lt d. v. Fi c et o, 6 7 7 F. 3 d 6 0, 6 8 – 6 9 ( 2 d Cir. 2 0 1 2). I n d et er mi ni n g w h et h er a s e c uriti es tr a ns a cti o n is d o m esti c u n d er t his t est, c o urts d o n ot l o o k t o t h e i d e ntit y of t h e p arti es, t h e t y p e of s e c urit y at iss u e, or w h et h er t h e d ef e n d a nt e n g a g e d i n c o n d u c t i n t h e U nit e d St at es. I d. at 6 9. R at h er, c o urts l o o k t o w h et h er t h e pl ai ntiff all e g e d s p e cifi c “f a cts c o n c er ni n g t h e f or m ati o n of t h e c o ntr a cts, t h e pl a c e m e nt of p ur c h as e or d ers, t h e p assi n g of titl e, or t h e e x c h a n g e of m o n e y[.] ” I d. at 7 0. Wit h o ut s u c h f a cts, “t h e m er e ass erti o n t h at tr a ns a c ti o ns ‘t o o k pl a c e i n t h e U nit e d St at es’ is i ns uffi ci e nt t o a d e q u at el y pl e a d t h e e xist e n c e of d o m esti c tr a ns a cti o ns. ” I d. D ef e n d a nts f o c us m ostl y o n t h e irr e v o c a bl e li a bilit y t est i n t h ei r bri efi n g p a p ers, s e e M ot. at 5 – 7, R e pl y at 3 – 7, w h er e as Pl ai ntiff f o c us es o n t h e tr a nsf er of titl e, O p p. at 3 – 4, 1 5 – 1 7, b ut t h e s e c o n d pr o n g of M orris o n is s atisfi e d if eit h er t est is m et. S e e A bs ol ut e A cti vist , 6 7 7 F. 3 d at 6 8 – 6 9; Gi u nt a v. Di n g m a n , 8 9 3 F. 3 d 7 3, 7 9 ( 2 d Cir. 2 0 1 8). 1. I r r e v o c a bl e Li a bilit y T h e E x c h a n g e A ct pr o vi d es t h at “ u nl ess t h e c o nt e xt ot h er wis e r e q uir es, ” t h e t er ms “ b u y ” a n d “ p ur c h as e ” b ot h “i n cl u d e a n y c o ntr a ct t o b u y, p ur c h as e, or ot h er wis e a c q uir e. ” 1 5 U. S. C. § 7 8 c( a)( 1 3). G e n er all y s p e a ki n g, “ a st o c k is p u r c h as e d wit hi n t h e m e a ni n g of S e cti o n 1 6( b) w h e n t h e i n v est or b e c o m es irr e v o c a bl y c o m mitt e d t o t h e tr a ns a ct i o n a n d, i n a d diti o n, n o l o n g er h as c o ntr ol o v er t h e tr a ns a cti o n i n a n y w a y t h at c o ul d b e t u r n e d t o s p e c ul ati v e a d v a nt a g e b y t h e i n v est or. ” C os m os , 2 0 2 0 W L 3 8 9 3 3 4 7, at * 6 (i nt er n al r ef er e n c es o mitt e d); s e e als o Pr a g er v. S yl v estri , 4 4 9 F. S u p p. 4 2 5, 4 3 2 – 3 3 ( S. D. N. Y. 1 9 7 8) ( d efe n d a nt “ p ur c h as e d ” st o c k w h e n h e 10 t e n d er e d t h e f ull c o nsi d er ati o n f or t h e st o c k b e c aus e d ef e n d a nt’s p ur c h as e b e c a m e “irr e v o c a bl e, ” e v e n t h o u g h t h e n u m b er of s h ar es d u e t o hi m w as at t h e ti m e u n k n o w n a n d e v e n t h o u g h t h e d ef e n d a nt di d n ot r e c ei v e t h e st o c k u ntil a l at er d at e); Willi a ms v. Bi n a n c e , 9 6 F. 4t h 1 2 9, 1 3 6 ( 2 d Cir. 2 0 2 4) (Irr e v o c a bl e li a bilit y “ a tt a c h es w h e n t h e p arti es t o t he tr a ns a cti o n ar e c o m mitt e d t o o n e a n ot h er, or w h e n i n t h e cl assi c c o ntr a ct u al s e ns e, t h er e w as a m e eti n g of t h e mi n ds of t h e p arti es. ” (i nt er n al r ef e r e n c es o mitt e d)). I n d et er mi ni n g w h et h er irr e v o c a bl e li a bilit y w as i n c urr e d i n t h e U nit e d St at es, c o urts l o o k t o t h e “t er ms, ti mi n g, a n d pl a c e of t h e p arti es’ c o ntr a cti n g a n d li a biliti es t h er e u n d er. ” Gi u nt a , 8 9 3 F. 3 d at 7 9 (i nt er n al r ef er e n c es o mitt e d). Te c h ni c aliti es of st o c k tr a nsf ers al o n e ar e “ of n o i m p ort f or S e cti o n 1 6( b) p ur p os es. ” C os m os , 2 0 2 0 W L 3 8 9 3 3 4 7, at * 6 ( citi n g Pr a g er , 4 4 9 F. S u p p. at 4 3 3); s e e als o F or e m ost- M c K ess o n, I n c. v. Pr o vi d e nt S e c. C o. , 4 2 3 U. S. 2 3 2, 2 5 4 n. 2 8 ( “[ T] h e cr u ci al p oi nt i n t h e a c q uisiti o n of s e c uriti es is n ot t h e t e ch ni c al ‘ p ur c h as e,’ b ut r at h er t h e d e cisi o n t o m a k e a n a c q uisiti o n. ”). Pl ai ntiff h as n ot all e g e d a n y f a cts i n t h e First A m e n d e d C o m pl ai nt s u p p orti n g a pl a usi bl e i nf er e n c e t h at D ef e n d a nts i n c urr e d irr e v o c a bl e li a bilit y i n t h e U nit e d St at es. N or di d Pl ai ntiff m a k e a n y ar g u m e nts i n its bri efi n g t o t h e eff e ct t h at irr e v o c a bl e li a bilit y w as i n c urr e d d o m esti c all y. It a p p e ars u n dis p ut e d t h at all c o ntr a ct u al st e ps f or t h e tr a ns a c ti o ns at iss u e, a n d t h us t h e p oi nt of irr e v o c a bl e li a bilit y, t o o k pl a c e i n J a p a n. A c c or di n gl y, Pl ai ntiff c a n n ot s atisf y M orris o n ’s s e c o n d pr o n g u n d er t his t est. 2. Tr a nsf e r of Titl e “[ A] s al e of s e c uriti es c a n [ als o] b e u n d erst o o d t o t a k e pl a c e at t h e l o c ati o n i n w hi c h titl e is tr a nsf err e d. ” A bs ol ut e A cti vist , 6 7 7 F. 3 d at 6 8 ( citi n g B L A C K ’S L A W D I C TI O N A R Y 1 4 5 4 ( 9t h e d. 2 0 0 9) a n d U. C. C. § 2- 1 0 6( 1)). I n Q u ail Cr uis e S hi p M a n a g e m e nt Lt d. v. A g e n ci a d e Vi a g e ns C V C T ur Li mit a d a , t h e El e v e nt h Cir c uit f o u n d t h at t h e pl ai ntiff pl a usi bl y all e g e d t h at tr a nsf er of 11 titl e of t h e st o c ks at iss u e o c c urr e d i n t h e U nit e d St at es w h e n t h e p arti es s u b mitt e d st o c k tr a nsf er d o c u m e nts i n t h e U nit e d St at es; i n t h at c as e, t h e o p er ati v e s h ar e p ur c h as e a gr e e m e nt r e q uir e d st o c k tr a nsf er d o c u m e nts t o b e d eli v er e d t o a n of fi c e i n Fl ori d a, a n d it w as n ot u ntil t his d o m esti c cl osi n g t h at titl e t o t h e s h ar es w as d e e m e d tr a nsf err e d u n d er t h e c o ntr a ct. 6 4 5 F. 3 d 1 3 0 7, 1 3 1 0 – 1 1 ( 1 1t h Cir. 2 0 1 1). T h e m er e d eli v er y of s h ar e c ertifi c at es, h o w e v er, d o es n ot n e c ess ar il y m ar k t h e m o m e nt or l o c us of t h e tr a nsf er of titl e. I n C os m os , t h e c o urt f o u n d t h at t h e p ur c h as er h a d p ur c h as e d st o c k at t h e ti m e s h e h a d e x e c ut e d a p ur c h as e a gr e e m e nt a n d p ai d f or t h e st o c k; “[t] h er e w as n ot hi n g els e [t h e p ur c h as er] n e e d e d t o d o t o c o m pl et e t h e p ur c h as e ” b e c a us e “s h e h a d l ost t h e p o w er t o r ef us e t h e p ur c h as e d st o c ks a n d d e m a n d r e p a y m e nt, ” a n d “[ a] n y c o n diti o n r el ati n g t o d eli v er y of t h e s h ar es di d n ot aff e ct [ h er] ri g hts a n d o bli g at i o ns[.] ” 2 0 2 0 W L 3 8 9 3 3 4 7, at * 6; s e e als o D o n o g h u e v. L o c al. c o m C or p. , N o. 0 7- C V- 0 8 5 5 0 ( L B S), 2 0 0 9 W L 2 6 0 7 9 7, at * 3 ( S. D. N. Y. F e b. 3, 2 0 0 9) ( “[ O] w n ers hi p of a s e c urit y d o es n o t t ur n o n t h e p oss essi o n of a s h ar e c ertifi c at e b e c a us e t h e iss u a n c e of a s h ar e c erti fi c at e is m er el y a n i n di ci u m of o w n ers hi p. . . . [ P]ri vil e g es a n d ri g hts of o w n ers hi p ar e g ai n e d o n c e t h e f ull c o nsi d er a ti o n h as b e e n t e n d er e d f or t h e s e c urit y. ”) (i nt er n al cit ati o ns o mitt e d), aff ’ d s u b n o m. , D o n o g h u e v. H e arst C o m m c’ ns, I n c., 3 5 5 F. A p p’ x 5 2 0 ( 2 d Cir. 2 0 0 9). H er e, t h e First A m e n d e d C o m pl ai nt is d e v oi d of a n y f a cts r e g ar di n g t h e l o c ati o n of t h e tr a nsf er of titl e. R at h er, t h e s ol e f a ct t h at c o ul d pl a usi bl y s u p p ort a fi n di n g of a d o m esti c tr a ns a cti o n is t h at N e xt M e ats’ tr a nsf er a g e nt h as a m aili n g a d dr ess i n N e w J ers e y. A c c or di n g t o D ef e n d a nts’ F or m 4 fili n gs wit h r es p e ct t o t h e r el e v a nt p ur c h ases of N e xt M e ats’ st o c k, t h e tr a nsf er of s h ar es w as “r e c or d e d b y t h e Iss u er’s tr a nsf er a g e nt o n D e c e m b er 1 6, 2 0 2 2. ” S e e F A C E x. 4. I n his o p p ositi o n bri ef, Pl ai ntiff als o p oi n t e d t o t h e N e xt M e ats F or m S- 1 a n d n ot e d t h at 12 N e xt M e ats’ tr a nsf er a g e nt is Ol d e M o n m o ut h St o c k Tr a nsf er C o., I n c., w hi c h h as a m aili n g a d dr ess i n N e w J ers e y. S e e O p p. at 1 6. As s u c h, Pl ai ntiff arg u e d t h at tr a nsf er of titl e t o D ef e n d a nts i n c o n n e cti o n wit h t h e r el e v a nt p ur c h as es o c c urr e d i n t h e U nit e d St at es. S e e i d. A tr a nsf er a g e nt is a n e ntit y, s u c h as a b a n k or tr ust c o m p a n y, us e d b y c o m p a ni es t o “ k e e p tr a c k of t h e i n di vi d u als a n d e ntiti es t h at o w n t h eir st o c ks a n d b o n ds. ” Tr a nsf er A g e nts , IN V E S T O R .G O V , w w w.i n v est or. g o v/i ntr o d u ctio n-i n v esti n g/i n v esti n g- b a si cs/ gl oss ar y/tr a nsf er- a g e nts (l ast visit e d M a y 2 3, 2 0 2 5). Tr a nsf er a g e nts k e e p r e c or ds of w h o o w ns t h e c o m p a n y’s st o c ks a n d b o n ds a n d m a y iss u e c ertifi c at es t o r efl e ct c h a n g es i n o w n ers hi p. I d. H o w e v er, tr a nsf er a g e nts ar e s cri v e n ers, a n d Pl ai ntiff h as off er e d n o ar g u m e nt t h at n ot ati o n i n t h e r e c or ds e q u at es t o tr a nsf er of titl e. 6 T h e m er e r e c or di n g of t h e tr a ns acti o n b y t h e iss u er’s tr a nsf er a g e nt i n t h e U nit e d St at es is a t e c h ni c alit y t h at is i ns uffi ci e nt t o s atisf y M orris o n ’s s e c o n d pr o n g. S e e C os m os , 2 0 2 0 W L 3 8 9 3 3 4 7, at * 6. Pl ai ntiff pl e a ds n o f a cts t o s u g g est a U. S. l o c ati o n f or a n y of t h e ot h er i d e ntifi a bl e st e ps i n t h e r el e v a nt tr a ns acti o ns, w h et h er c o ntr a ct n e g oti ati o ns, e ntr y i nt o a gr e e m e nts r el at e d t o t h e tr a ns a cti o ns, f ulfill m e nt of o bli g ati o ns n e c ess ar y t o t h e p ur c h as e or s al e, or tr a nsf er of f u n ds. I n d e e d, it a p p e ars u n dis p ut e d t h at all of t h es e e v e nts t o o k pl a c e i n J a p a n. T h e m er e f a ct t h at t h e s u bs e q u e nt r e c or di n g of t h e p ur c h as e m a y h a v e o c c urr e d i n t h e U nit e d St at es 7 d o es n ot d et er mi n e t h e l o c ati o n of t h e tr a nsf er of titl e. S e e i d. M u c h li k e t h e iss u a n c e of a s h ar e c ertifi c at e, re c or di n g i n t h e b o o ks a n d r e c or ds is m er el y i n di ci a of o w n ers hi p, n ot t h e a c q uisiti o n of o w n ers hi p its elf. S e e D o n o g h u e , 2 0 0 9 W L 2 6 0 7 9 7, at * 3. 6 O n e c o ul d i m a gi n e, si mil ar t o t h at i n Q u ail Cr uis e S hi p , a c o ntr a ct u al pr o visi o n e x pr essl y c o n diti o ni n g a s al e o n t h e r e c or di n g of s u c h i n t h e b o o ks of t h e c o m p a n y’s tr a nsf er a g e nt. S u c h a pr o visi o n w o ul d p ot e nti all y b e ar o n t h e a n al ysis of w h er e t h e s al e “t o o k pl a c e ” or w h er e tr a nsf er of titl e w as eff e ct u at e d. B ut n o s u c h pr o visi o n is all e g e d h er e. 7 M or e o v er, t h e o nl y f a ct pl e d o n t h e l o c ati o n of r e c or di n g is t h at t h e tr a nsf er a g e nt’s m aili n g a d dr ess is i n N e w J ers e y. 13 Pl ai ntiff s u g g est e d d uri n g or al ar g u m e nt t h at t h e r e c or di n g o f t h e tr a ns a cti o n is n e e d e d t o cl os e t h e tr a ns a cti o n ( b ut off er e d n o e vi d e n c e or cit ati o n t o s u p p ort t his) a n d t h at t h e r e c or di n g b y t h e tr a nsf er a g e nt is e vi d e n c e t h at t h e tr a ns a cti o n o c c urr e d. S e e Tr. 1 5 – 1 6. E v e n if t his w er e all tr u e, a d mi nistr ati v e t e c h ni c aliti es, or st e ps t h at c o ul d s er v e as i n dici a of o w n ers hi p, d o n ot c o nstit ut e t h e tr a ns a cti o n its elf. I n d e e d, Pl ai n tiff c o n c e d e d t h at t h e r e c or di n g b y t h e tr a nsf er a g e nt d o es n ot g o v er n w h e n t h e tr a ns a cti o n o c c urr e d. I d. 1 7. N ot a bl y, i n t h e c o nt e xt of irr e v o c a bl e li a bilit y, t h e S e c o n d Cir c uit h as disti n g uis h e d b et w e e n a cts n e e d e d t o c arr y o ut a tr a ns a cti o n a n d t h e tr a ns a cti o n its elf. L o gi n o vs k a y a v. B atr at c h e n k o , 7 6 4 F. 3 d 2 6 6, 2 7 4 – 7 5 ( 2 d Cir. 2 0 1 4). I n I n r e P etr o br as S e c uriti es Liti g ati o n, a c o urt i n t his Distri ct ass ess e d t h at h ol di n g i n t h e c o nt e xt of t h e tr a nsfer of titl e t o d e bt s e c uriti es. 1 5 0 F. S u p p. 3 d at 3 4 1 – 4 2. T h e pl ai ntif fs i n t h at c as e h a d all e g e d t h at titl e tr a nsf err e d i n t h e U nit e d St at es b e c a us e t h eir p ur c h as es of d e bt s e c uriti es s ettl e d t hr o u g h t h e D e p osit or y Tr ust C o m p a n y ( “ D T C ”) i n N e w Yor k. I d. at 3 4 1. T h e D T C f a cilit at e d t h e s ettl e m e nt of tr a ns a cti o ns b et w e e n p arti ci p a nts t hr o u g h el e c tr o ni c b o o k e ntr y c h a n g es t o t h e a c c o u nts of its p arti ci p a nts. I d. at 3 4 2. T h e D T C h el d l e g al titl e t o t h e s e c uriti e s, b ut t h e i n v est ors h e l d b e n efi ci al titl e. I d. T h e pl ai ntiffs ar g u e d t h at w h e n t h e D T C a dj usts its b o o ks t o s ettl e a n i n v est or’s tr a d e, t his is t h e e q ui v al e nt of t h e tr a nsf er of titl e. I d. T h e c o urt a c k n o wl e d g e d t h at “ gl o b al fi n a n ci al m ar k ets c o ul d n ot pr o p erl y f u n cti o n wit h o ut t h e D T C or si mil ar d e p osit or y i nstit uti o ns a n d t h at t h e c h ai n r e a cti o n of t h e a dj ust m e nts t o b o o k e ntri es s et off b y a s e c uriti es tr a ns a cti o n is n e c ess ar y t o c o m pl et e a p ur c h as e. ” I d. H o w e v er, t h e c o urt n ot e d t h at e v e n ass u mi n g t h e D T C’s b o o k k e e pi n g aff e cts a c h a n g e i n b e n efi ci al o w n ers hi p i n N e w Yor k, “t h e S e c o n d Cir c uit h as . . . i n di c at e d t h at d o m esti c a cti o ns n e e d e d t o c arr y o ut tr a ns a cti o ns, a n d n ot t h e tr a ns a cti o ns t h e ms el v es, ar e i ns uffi ci e nt t o s atisf y M orris o n . T h e m e c h a ni cs of D T C s ettl e m e nt ar e a cti o ns n e e d e d t o c arr y 14 o ut tr a ns a cti o ns, b ut t h e y i n v ol v e n eit h er t h e s u bst a nti v e i n di ci a of a c o ntr a ct u al c o m mit m e nt n e c ess ar y t o s atisf y A bs ol ut e A cti vist ’s first pr o n g n or t h e f or m al w ei g ht of a tr a nsf er of titl e n e c ess ar y f or its s e c o n d. ” I d. (i nt er n al r ef er e n c es o mitt e d) ( citi n g L o gi n o vs k a y a , 7 6 4 F. 3 d at 2 7 5). “[ T] h e e ntir e t hr ust of M orris o n a n d its pr o g e n y w o ul d b e r en d er e d n u g at or y if all D T Cs ettl e d tr a ns a cti o ns n e c ess aril y f ell u n d er t h e r e a c h of t h e f e d er al s e c uriti es l a ws. T h e l a ws w o ul d r e a c h m ost tr a ns a cti o ns, n ot b e c a us e t h e y o c c urr e d o n a d o m esti c e x c h a n g e b ut b e c a us e t h e y s ettl e d t hr o u g h t h e D T C. T his r es ult c a n n ot b e s q u ar e d wit h t h e pl ai n l a n g u a g e a n d c ar ef ul r e as o ni n g of M orris o n a n d A bs ol ut e A cti vist . ” I d. I n t his c as e, e v e n if t h e r e c or di n g of t h e tr a ns a cti o ns b y t h e tr a nsf er a g e nt w er e n e c ess ar y t o eff e ct u at e t h e tr a ns a cti o n at iss u e — w hi c h is n ot at all cl e ar — d o m esti c r e c or di n gs of tr a ns a cti o ns ar e n ot t h e ms el v es tr a ns a cti o ns a n d ar e t h us i ns uffi ci e nt t o s atisf y M orris o n . Pl ai ntiff a p p e ar e d t o m a k e t h e p oli c y ar g u m e nt d uri n g or al ar g u m e nt t h at t h e cl ai ms ar e n ot i m p er missi bl y e xtr at errit ori al b e c a us e of t h e g e n er al pr es e n c e of N e xt M e ats’ pr o d u cts i n U. S. m ar k ets a n d t h e r e gistr ati o n of N e xt M e ats as a N e v a d a c or p or ati o n, ar g ui n g t h at t h e st o c k tr a ns a cti o ns at iss u e th us t o u c h u p o n U. S. i nstr u m e nt aliti es a n d e ntiti es i n s o m e w a y. Tr. 1 5 – 1 8. W h at e v er t h e p ers u asi v e n ess of s u c h a p oli c y ar g u m e nt m a y b e, t his C o urt n e e d n ot e n g a g e wit h t his ar g u m e nt b e c a us e t h e l a w i n t his Cir c uit l o o ks t o t h e l o c ati o n of irr e v o c a bl e li a bilit y or of t h e tr a nsf er of titl e i n ass essi n g M orris o n ’s s e c o n d pr o n g i n c o n n e cti o n wit h e nf or c e m e nt of t h e s e c uriti es l a ws. I n s h ort, Pl ai ntiff d o es n ot pl a usi bl y all e g e t h at t h e tr a nsf er of titl e o c c urr e d i n t h e U nit e d St at es, a n d t h us Pl ai ntiff h as f ail e d t o s atisf y e it h er pr o n g u n d er M orris o n ’s t est f or e xtr at errit ori al a p pli c a ti o n. T h e m oti o n t o dis miss is gr a nt e d f or f ail ur e t o st at e a cl ai m u p o n w hi c h r eli ef c a n b e gr a nt e d. 15 II. P E R S O N A L J U RI S DI C TI O N B e c a us e Pl ai ntiff h as f ail e d t o st at e a cl ai m a n d t h e F A C will b e dis miss e d o n t h at b asis, t his C o urt n e e d n ot a d dr ess at l e n gt h t h e m oti o n t o dis miss f or l a c k of p ers o n al j uris di cti o n a n d v e n u e. H o w e v er, t h e C o urt h as pr o p erl y a d dr ess e d t h e 1 2( b)( 6) m oti o n b e c a us e Pl ai ntiff h as est a blis h e d t h e C o urt h as p ers o n al j u ris di cti o n o v er b ot h D ef e n d a nts. T h e E x c h a n g e A ct p er mits t h e e x er cis e of p ers o n al j uris di cti o n t o t h e li mits of t h e D u e Pr o c ess Cl a us e of t h e Fift h A m e n d m e nt. S. E. C. v. U nif u n d S A L , 9 1 0 F. 2 d 1 0 2 8, 1 0 3 3 ( 2 d Cir. 1 9 9 0). T h e D u e Pr o c ess t est h as t w o c o m p o n e nts: ( 1) t h e d ef e n d a nt m ust h a v e s uffi ci e nt mi ni m u m c o nt a cts wit h t h e f or u m t o m erit j uris di cti o n; a n d ( 2) d ef e n d a nt m ust r e as o n a bl y b e e x p e ct e d t o d ef e n d a cl ai m i n t h e f or u m. S e e D o n o g h u e v. Di c ut, I n c. , N o. 0 1- C V- 1 0 1 9 4 ( N R B), 2 0 0 2 W L 1 7 2 8 5 3 9, at * 1 ( S. D. N. Y. J ul y 2 4, 2 0 0 2). As D ef e n d a nt c o n c e d e d at or al ar g u m e nt, t h e r el e v a nt f or u m f or t his i n q uir y is t h e e ntir e U nit e d St at es. S e e Tr. 6 – 7. Pl ai ntiff h as m et his pri m a f a ci e b ur d e n of d e m o nstr ati n g p e rs o n al j uris di cti o n. N e xt M e ats is a U. S. c or p or ati o n a n d, as D ef e n d a nt s c o n c e d e d at or al arg u m e nt, t h e c o m p a n y’s pr o d u cts ar e a v ail a bl e i n r et ail l o c ati o ns i n t h e U nit e d St at es. F A C ¶ 6; s e e Tr. 7 – 8. As D ef e n d a nts f urt h er c o n c e d e d at or al ar g u m e nt, N e xt M e ats’ s e c u riti es ar e r e gist er e d wit h t h e S E C a n d tr a d e d O T C i n t h e U nit e d St at es, a n d it is g e n er all y s u bj e ct t o S E C r e g ul ati o ns a n d h as r o uti n el y m a d e r e q uir e d S E C fili n gs. F A C ¶ ¶ 8, 1 4; s e e Tr. 7. D ef e n d a nt Is hi z u k a is a n e x e c uti v e of N e xt M e ats, a n d t h e D ef e n d a nts ar e c or p or at e i nsi d ers w h o tr a d e d i n t h e c o m p a n y’s s e c uriti es. F A C ¶ 3. M or e o v er, s o m e of N e xt M e ats’ s e c uriti es ar e o w n e d b y U. S. s h ar e h ol d ers, i n cl u di n g Pl ai ntiff. I d. ¶ 1 0. T h us, alt h o u g h t h e tr a ns a cti o ns at iss u e di d n ot o c c ur i n t h e U nit e d St at es a n d w er e pri v at e tr a ns a cti o ns, Pl ai ntiff h as s h o w n t h at t h e tr a ns a cti o ns c a n r e as o n a bl y b e e x p e ct e d t o 16 i m p a ct U. S. s h ar e h ol d ers a n d t h at D ef e n d a nts h a v e s uffi ci e nt mi ni m u m c o nt a cts wit h t h e U nit e d St at es t o f all wit hi n t h e li mits of d u e pr o c ess. S e e Di c ut , 2 0 0 2 W L 1 7 2 8 5 3 9, at * 2 (f or ei g n d ef e n d a nt w h o c o n d u ct e d tr a ns a cti o ns t hr o u g h C a n a di a n br o k er a g e h o us es w as s u bj e ct t o p ers o n al j uris di cti o n i n t h e U nit e d St at es b e c a us e t h e iss u er w as a U. S. c o m p a n y, t h e d ef e n d a nt w as a dir e ct or of t h e iss u er, t h e iss u er’s s e c uriti es w er e r e gist er e d wit h t h e S E C a n d tr a d e d O T C, a n d s o m e of its s e c uriti es w er e o w n e d b y U. S. citi z e ns, i n cl u di n g t h e pl ai ntiff); C a n o o, 2 0 2 3 W L 6 1 6 2 2 9 6, at * 3 ( wit h r es p e ct t o pri v at e tr a ns a c ti o ns c o n d u ct e d o v ers e as, t h e d ef e n d a nt h a d s uffi ci e nt mi ni m u m c o nt a cts wi t h t h e U nit e d St at es b e c a us e t h e iss u er w as a U. S.- b as e d c o m p a n y wit h s h ar es tr a d e d o n t h e N A S D A Q, s o t h e all e g e d c o n d u ct “ c o ul d r e as o n a bl y h a v e b e e n e x p e ct e d t o h a v e a d v ers e eff e cts o n U nit e d St at es s h ar e h ol d ers of [t h e c o m p a n y] ”). N or h a v e D ef e n d a nts m et t h eir b ur d e n of s h o wi n g t h at t h e C o urt’s e x er cis e of p ers o n al j uris di cti o n o v er t h e m w o ul d b e u nr e as o n a bl e. S e e Di c ut , 2 0 0 2 W L 1 7 2 8 5 3 9, at * 2. T h e r e as o n a bl e n ess i n q uir y is “l ar g el y a c a d e mi c ” i n t his c as e, w h er e “str o n g f ed er al i nt er ests ” i n a c as e br o u g ht u n d er t h e E x c h a n g e A ct o ut w ei g hs ot h er b ur d e ns. S e e D o n o g h u e v. G h a uri , N o. 1 4- C V- 0 6 3 8 3 ( P A C), 2 0 1 5 W L 3 9 1 9 1 2 0, at * 4 ( S. D. N. Y . J u n e 2 5, 2 0 1 5) (i nt er n al r ef er e n c es o mitt e d). D ef e n d a nts h a v e f ail e d t o c o n vi n ci n gl y arti c ul at e t h at t h e e x er cis e of p ers o n al j uris di cti o n h er e w o ul d b e u nr e as o na bl e. Si mil arl y, Pl ai ntiffs h a v e a d e q u at el y pl e d t h at N e xt M e ats “tr a ns a cts b usi n ess ” i n N e w Yor k, a n d t h us v e n u e li es h er e u n d er t h e E x c h a n g e A ct. 1 5 U. S. C. § 7 8 a a( a); s e e F A C ¶ ¶ 6, 8, 1 0, 1 4. * * * 17 C O N C L U SI O N F or all of t h e f or e g oi n g r e as o ns, D ef e n d a nt s’ m oti o n t o dis miss t h e First A m e n d e d C o m pl ai nt is G R A N T E D u n d er R ul e 1 2( b)( 6) f or f ail ur e t o st at e a cl ai m o n w hi c h r eli ef c a n b e gr a nt e d. T h e Cl er k of C o urt is r es p e ctf ull y dir e ct e d t o C L O S E t his c as e. D at e d: M a y 2 3, 2 0 2 5 N e w Yor k, N e w Yor k S O O R D E R E D. M A R G A R E T M. G A R N E T T U nit e d St at es Distri ct J u d g e 18
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