Chigurupati v. Daiichi Sankyo Co., Ltd., CIV.A. 10-5495 PGS, 2011 WL 3443955 (D.N.J. Aug. 8, 2011) aff’d, 11-3429, 2012 WL 1743097 (3d Cir. May 17, 2012), stems from an alleged oral contract, formed in Hyderabad, India, and entered into by Plaintiff Dr. Jayaram Chigurupati and Defendant Daiichi Sankyo Company, Ltd. (“Defendant” or “Daiichi Sankyo”) wherein Daiichi Sankyo agreed to purchase 25% of Zenotech LLC’s (“Zenotech”) shares that are collectively owned by Plaintiffs Dr. Jayaram Chigurupati and Padmasree Chigurupati (collectively the “Plaintiffs”).
According to the allegations in the Complaint, Plaintiffs are husband and wife residing in Jupiter, Florida. Zenotech is a limited liability company incorporated in Delaware that develops and manufactures generic biopharmaceuticals and markets them to populations with unmet medical needs. Dr. Chigurupati started Zenotech in 2003 in Hyderabad, India and together with his wife, collectively owns 25% of Zenotech’s shares. Defendant Daiichi Sankyo is Japanese company formed under the laws of Japan and has its principal place of business in Tokyo, Japan.
In June of 2008, Daiichi Sankyo acquired a number of Ranbaxy Laboratories Ltd.’s shares, which owned approximately 47% of Zenotech’s shares. Shortly thereafter, Daiichi Sankyo made an “Open Offer” to the public shareholders of Zenotech to acquire a minimum of 20% of the Equity Shares of Zenotech at a price to be determined by the Securities and Exchange Board of India (“SEBI”).
The following day, Dr. Chigurupati contacted Daiichi Sankyo to discuss the interests of Zenotech’s shareholders in light of Daiichi Sankyo’s proposed acquisition of additional shares of Zenotech. Between June 2008 and July 2008, Dr. Chigurupati and Daiichi Sankyo held a series of meetings in London and in Delhi, India. In early December 2008, Daiichi Sankyo led a team to conduct a site visit of Zenotech in Hyderabad, India. Following the site visit, Dr. Chigurupati met with Daiichi Sanyko in Hyderabad, India. During this meeting, Plaintiffs allege that Daiichi Sanyko orally offered to buy Plaintiffs entire 25% stake in Zenotech at Rs. 160 per share. Dr. Chigurupati claims that he accepted the offer, which constituted an agreement between the parties. A draft agreement was presented to Dr. Chigurupati and the parties agreed to work out the remaining details following the holiday.
In January of 2009, however, Daiichi Sankyo’s legal counsel informed Dr. Chigurupati that because he had failed to submit residency information to Daiichi Sankyo, it would not proceed with the transaction. Thereafter, Daiichi Sankyo issued a public announcement for an open offer to acquire shares of Zenotech at Rs. 113.62 per share.
As a result, Dr. Chigurupati filed a complaint against Daiichi Sankyo with the SEBI for breach of an oral agreement because Daiichi Sankyo announced an offer price of Rs. 113.62 per share of Zenotech instead of the agreed upon Rs. 160 per share, contrary to the SEBI Regulations and SEBI Act of 1992. The SEBI dismissed the complaint, at which time Dr. Chigurupati appealed to the Securities Appellate Tribunal in Mumbai, India. In October of 2009, the Securities Appellate Tribunal revised Daiichi Sankyo’s offer price to Zenotech shareholders; Daiichi Sankyo subsequently filed an appeal before the Supreme Court of India, which reversed the Appellate Tribunal’s decision.
Plaintiffs then filed suit in the United States District Court for the District of New Jersey, after which Daiichi Sankyo moved to dismiss for Lack of Personal Jurisdiction or, in the alternative, under the doctrine of forum non conveniens. The District Court granted the Motion on forum non conveniens grounds.
First, the Court found India to be an adequate alternative forum for resolving the dispute at bar, in view of the extensive litigation history between both parties in India. The fact that both parties recognize that this matter requires the application of Indian law, and that a breach of contract claim is cognizable under India’s contract law, further bolsters the Court’s position. Moreover, and rather interestingly, federal courts have previously held that the courts of India provide an adequate forum to resolve civil disputes. USHA, Ltd. v. Honeywell Int’l, Inc., 421 F. 3d 129, 135 (2d Cir. 2005) (finding the New Delhi High Court to be an adequate forum to resolve a number of claims arising under the laws of India, despite the allegations that the New Delhi High Court has a backlog of cases on its docket; parties permitted to re-file case if litigation in India proved unduly lengthy). Ramakrishna v. Besser Company, 172 F. Supp. 2d 926, 931 (E.D. Mich. 2001) (finding an Indian court to be a reasonable alternate forum to adjudicate a breach of contract claim).
Next, the Court found that Plaintiffs have not alleged any activity related to the instant dispute that occurred in New Jersey to merit the Court giving the Plaintiffs’ choice of forum substantial deference. Instead, the Court held, the locus of the events relating to the dispute occurred in India, including the negotiation meetings and alleged agreement. As such, the Court gave Plaintiffs’ choice of forum a low degree of deference.
On the same facts, and specifically noting that this case involves the sale of certain shares of a company located in Hyderabad on the Indian Stock Exchange, the Court determined that the Plaintiffs have not demonstrated how New Jersey has a significant interest having the matter adjudicated in the district, given that the majority of the relevant conduct occurred in India. Moreover, the Court noted that the evidence and witnesses are likely located outside of New Jersey and in either India or Japan. The Court agreed with Defendant’s position that a trial in New Jersey would be both lengthy and expensive as the witnesses to the alleged oral agreement would be required to travel great distances in order to appear before the Court.
In sum, the Court found that (1) India is a reasonable alternative forum; (2) Plaintiffs’ choice to litigate this matter in New Jersey should be afforded little deference; and (3) a balancing of the public and private factors demonstrates that trial in New Jersey would result in oppression or vexation to Defendant which is out of proportion to the Plaintiffs’ convenience.