Firm Obtains Second Circuit Affirmance of Dismissal of $32 Million Claim Against Overseas Clients Based Upon a Reverse Takeover Transaction

On August 14, 2019, the Second Circuit Court of Appeals unanimously affirmed the judgment of Southern District of New York Judge Jed S. Rakoff who had granted a motion to dismiss filed by the Firm on behalf of its clients Phoenix Global Resources plc (“Phoenix Global”), a London-based oil and gas exploration holding company, and its Spanish subsidiary, Upstream Latinoamèrica S.L. (“ULA”). Phoenix Global and ULA were named as defendants with four affiliated oil and gas companies operating under the name “Mercuria.” The lawsuit, filed by a former executive of Mercuria, sought a $32.6 million payment for a carried interest he owned in ULA that he claimed had been triggered by a “reverse takeover” transaction in 2017, whereby, among other things, Phoenix Global directly acquired the shares of ULA’s parent company. The Firm moved to dismiss for lack of personal jurisdiction for both Phoenix Global and ULA, as neither company had jurisdictionally sufficient contacts with New York, and also moved under FRCP 12(b)(6) for Phoenix Global, challenging the validity of Plaintiff’s successor liability theory under the de facto merger doctrine. In a 32-page decision addressing all defendants’ motions, Judge Rakoff dismissed Plaintiff’s Complaint in its entirety without leave to replead. In its Summary Order, the Second Circuit affirmed Judge Rakoff's decision in all respects.

A copy of the Second Circuit's Summary Order is attached.