Bragar Eagel & Squire, P.C., New York (Melissa A. Fortunato of counsel), for appellant.

Skadden, Arps, Slate, Meagher & Flom LLP, New York (Scott D. Musoff of counsel), for SmileDirectClub, Inc. and others, respondents.

Sullivan & Cromwell LLP, New York (Sharon L. Nelles of counsel), for J.P. Morgan Securities LLC and others, respondents.

Order, Supreme Court, New York County (Andrea Masley, J.), entered on or about May 25, 2021, which granted defendants' motions to dismiss the complaint, unanimously affirmed, with costs.

On June 19, 2020, plaintiff brought this securities class action on behalf of all persons and entities who acquired Class A common stock of defendant SmileDirectClub, Inc. (SDC) in accordance with the offering documents issued in connection with SDC's initial public offering on September 12, 2019. The complaint alleged violations of sections 11, 12 (a) (2), and 15 of the Securities Act of 1933 (15 USC §§ 77k, 77l, 77o). There are four consolidated Securities Act actions against SDC pending in Tennessee state court and three consolidated Securities Act actions against it pending in Tennessee federal court (collectively, the Tennessee actions). Plaintiff herein first brought a Securities Act action against SDC in Michigan state court, but the Michigan court dismissed that complaint in accordance with Michigan's prior pending action rule (Mich Ct Rule 2.116 [C] [6]) and forum non conveniens.

Supreme Court properly dismissed this action under CPLR 3211 (a) (4) (see Whitney v Whitney, 57 NY2d 731, 732 [1982]). Plaintiff in this action and plaintiffs in the Tennessee actions assert substantially similar causes of action and seek substantially similar relief. Moreover, there is substantial identity of the parties in the two actions. Although plaintiff in this action is not a party to the Tennessee actions, he is a potential member of the class in those actions. Furthermore, there are 19 overlapping defendants between this action and the Tennessee actions, and only two different defendants in this action (see Brook v Zuckerman, 155 AD3d 415, 415-416 [1st Dept 2017]; White Light Prods. v On The Scene Prods., 231 AD2d 90, 93-94 [1st Dept 1997]).

In addition, Supreme Court providently exercised its discretion in determining that dismissal, rather than a stay, was the appropriate action. After the instant appeal was fully briefed, the Tennessee Court of Appeals modified the trial court's order in the Tennessee state litigation. In its decision the Tennessee Court of Appeals held that the class plaintiffs in the Tennessee state litigation do not have standing to bring claims under section 12 (a) (2) of the Securities Act of 1934 (15 USC § 77l). Plaintiff argues that the instant case, in which he alleges such standing, should accordingly be stayed and not dismissed. However, there is already a pending putative class action in New York County asserting a section 12 (a) (2) claim (Sasso v Katzman, Sup Ct, NY County, index No. 657557/2019). That action is stayed. Plaintiffs in the consolidated federal class action pending in Tennessee also assert a claim under 12 (a) (2) (Franchi v Smile Direct Club, Inc., MD Tenn, No. 19-CV-00962). Accordingly, section 12 (a) (2) claims remain in other cases that preexist this one, should such claims maintain their viability upon the termination of the Tennessee state litigation[*2].

Plaintiff also argues that he would be entitled to greater damages in this action than in the Tennessee actions because the stock price had dropped by the time he filed this complaint. That argument fails, as federal courts have tried to prevent the practice of "date shopping" for Securities Act § 11 damages by directing that damages are to be calculated as of the date of filing of the first action (see e.g. Beecher v Able, 435 F Supp 397, 402 [SD NY 1975]; see also Alpern v UtiliCorp United, Inc., 84 F3d 1525, 1542 [8th Cir 1996]). To stay this action and allow plaintiff to calculate damages as of its filing date would create an opportunity for that very practice.

Alternatively, Supreme Court providently exercised its discretion in dismissing the complaint on forum non conveniens grounds (see Trimarco v Edwards, 183 AD3d 402, 403 [1st Dept 2020]). The issue of forum non conveniens was fully litigated in Michigan and decided in favor of dismissing the complaint to allow for litigation to proceed in Tennessee (see Peters v UBS AG, 588 Fed Appx 57, 57 [2d Cir 2014]). Plaintiff also failed to preserve his argument that dismissal on forum non conveniens grounds was improper under CPLR 327 (b) and General Obligations Law §§ 5-1401 and 5-1402, as the argument was never made to the trial court and the record does not contain the underwriting agreement upon which the argument relies (see Ta-Chotani v Doubleclick, Inc., 276 AD2d 313, 313 [1st Dept 2000]). Concur—Renwick, J.P., Kapnick, Gesmer, Moulton, Shulman, JJ.

Pala Assets Holdings Ltd. v Rolta, LLC

205 AD3d ?

Rolta, LLC, Pala Assets Holdings Ltd. v

205 AD3d ?

2022 NY Slip Op 03054

Pala Assets Holdings Ltd. v Rolta, LLC205 AD3d ?

Pala Assets Holdings Ltd. v Rolta, LLC

[—– NYS3d —–]

[*3]

Pala Assets Holdings Ltd., Plaintiff, and Pinpoint Multi-Strategy Master Fund, Formerly Known as Pinpoint Multi-Strategy Fund, et al., Respondents, v Rolta, LLC, et al., Defendants, and Rolta India Ltd. et al., Appellants. Preetha Pulusani, Nonparty Appellant. Thompson Hine LLP, New York (Emily J. Mathieu of counsel), for appellants. Kobre & Kim LLP, New York (Leif T. Simonson of counsel), for respondents. HEADNOTES Contempt Civil Contempt Nonparty Assistance in Disobeying Turnover Order Contempt Civil Contempt Fine Order, Supreme Court, New York County (Andrea Masley, J.), entered December 21, 2021, which granted plaintiffs' motion for contempt and held nonparty Preetha Pulusani in civil contempt, fined her $1.13 million, held defendants-appellants (defendants) jointly and severally liable for the fine, and directed defendants to produce communications involving Pulusani and nonparty Kamal K. Singh, unanimously modified, on the law, to strike the parts of the order holding defendants jointly and severally liable and requiring production of the communications, and otherwise affirmed, without costs. The record establishes by clear and convincing evidence that Pulusani assisted defendant parent company Rolta India Limited (Rolta India) in disobeying the court's October 20, 2020 turnover order, which related to enforcement of a September 2, 2020 judgment against defendants (El-Dehdan v El-Dehdan, 26 NY3d 19, 29 [2015]; Tener v Cremer, 89 AD3d 75, 78 [1st Dept 2011]). The record demonstrates that Pulusani, former President of International Operations, supervised several of the Rolta India subsidiaries, was an employee of Rolta India, and at a minimum, coordinated and facilitated the US litigation that was designed to disobey the court's turnover order. In that regard, Pulusani submitted affidavits in that litigation and signed bankruptcy petitions—which were later dismissed by the Bankruptcy Court for lack of good faith—on behalf of all the subsidiary defendants to evade compliance with the turnover order. The court's fine was proper and factored Pulusani's assistance to Rolta India in disobeying the turnover order (see Judiciary Law §§ 753, 773; Riverside Capital Advisers, Inc. v First Secured Capital Corp., 57 AD3d 870, 871 [2d Dept 2008], lv dismissed 12 NY3d 842 [2009]; Corpuel v Galasso, 240 AD2d 531, 532 [2d Dept 1997], lv dismissed 91 NY2d 922 [1998]). Having acknowledged the loss of approximately $200 million in judgments, the court properly adopted plaintiffs' proposal of $10,000 per day as a reasonable fine, and it fined Pulusani only from the November 23, 2020 deadline for compliance with the turnover order, until her resignation on March 16, 2021 (see e.g. Ardent Harmony Fund Inc. v Barrick, 2019 NY Slip Op 34007[U] [Sup Ct, Nassau County 2019]). Pulusani waived any challenge to personal jurisdiction. Pulusani was the only party that the court found to be in contempt. Although the court stated that Rolta India also disobeyed the order, it did not make a finding of contempt as to Rolta India. The other defendants, subsidiaries of Rolta India, were not named in plaintiffs' contempt motion, because at the time, those defendants were protected by the automatic stay due to the bankruptcy filings. Nevertheless, they are entitled to due process before being fined and held in contempt and should not have been held jointly and severally liable for the fine. The court ordered the production of certain withheld documents that were possibly related to [*4]Pulusani's defense that she relied on the advice of counsel. As the court has already found Pulusani to be in contempt, any need for communications between Pulusani and Singh from September 2, 2020 to March 16, 2021, including attorney-client privileged communications, is moot, and their disclosure should not have been ordered. Concur—Gische, J.P., Kern, Oing, González, Scarpulla, JJ.