Fasano v. Guoqing Li

20‐3131 Fasano v. Guoqing Li 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 ‐‐‐‐‐‐ 4 August Term, 2020 5 (Argued: May 24, 2021 Decided: August 26, 2022) 6 Docket No. 20‐3131 7 _________________________________________________________ 8 JOE FASANO, ALTIMEO OPTIMUM FUND, ALTIMEO ASSET 9 MANAGEMENT, Individually and On Behalf of All Others 10 Similarly Situated, 11 Plaintiffs‐Appellants, 12 ‐ v. ‐ 13 GUOQING LI, PEGGY YU YU, DANGDANG HOLDING 14 COMPANY, LTD., E‐COMMERCE CHINA DANGDANG INC., 15 KEWEN HOLDING CO. LTD., SCIENCE & CULTURE LTD., FIRST 16 PROFIT MANAGEMENT, LTD., DANQIAN YAO, LIJUN CHEN, 17 and MIN KAN, 18 Defendants‐Appellees, 1 RUBY RONG LU, KE ZHANG, and XIAOLONG LI, 2 Defendants.* 3 _________________________________________________________ 4 Before: KEARSE, LYNCH, and CHIN, Circuit Judges. 5 Appeal from an August 2020 judgment of the United States District 6 Court for the Southern District of New York, Katherine Polk Failla, Judge, dismissing, 7 on the ground of forum non conveniens, plaintiffsʹ amended complaint alleging 8 negligent misrepresentation, breach of fiduciary duty, and violations of §§ 10(b), 9 13(e), and 20(a) of the Securities Exchange Act of 1934, and rules promulgated 10 thereunder, in connection with a 2016 ʺgoing‐privateʺ merger involving defendant E‐ 11 Commerce China Dangdang Inc. (ʺDangdangʺ) and the purchase by Dangdangʹs 12 controlling shareholders of its outstanding publicly‐traded shares, listed as American 13 Depositary Shares (ʺADSsʺ) on the New York Stock Exchange. The present dismissal 14 follows proceedings on remand from this Court, which vacated a 2017 forum‐non‐ 15 conveniens dismissal of the original complaint, for reconsideration in light of a forum 16 selection clause governing Dangdang ADSs and calling for securities law claims to 17 be litigated in a Manhattan, New York, court, see Fasano v. Yu, 921 F.3d 333 (2d Cir. * The Clerk of Court is instructed to amend the official caption to conform with the above. — 2 — 1 2019). On remand, the district court, noting that the newly filed amended complaint 2 alleged essentially the same facts as the original complaint but added two federal 3 securities claims to which it sought to link the original common‐law claims, found the 4 forum selection clause valid and enforceable against only five of the 13 defendants, 5 and applicable to only a narrow subset of plaintiffsʹ claims, to wit, their federal 6 securities claims. The court again dismissed the action on forum non conveniens 7 grounds, concluding that a forum selection clause that is applicable to so few claims 8 and defendants did not warrant retention of an action that is almost entirely between 9 foreign parties and that arose from a merger executed in a foreign jurisdiction. The 10 court denied as moot an alternative motion by defendants pursuant to Fed. R. Civ. P. 11 12(b)(6) to dismiss the amended complaint for failure to state a claim. See Fasano v. 12 Li, 482 F.Supp.3d 158 (S.D.N.Y. 2020). 13 On appeal, plaintiffs argue principally that the district court erred in 14 concluding that the forum selection clause was not applicable to all of the defendants 15 and to all of plaintiffsʹ claims and in according unwarranted weight to public‐interest 16 factors pointing toward dismissal. They also urge, if the case is reinstated, that we 17 rule that defendants had waived their right to move for a Rule 12(b)(6) dismissal of 18 the amended complaint. — 3 — 1 We conclude that the district court principally misinterpreted the scope 2 of the forum selection clause, thereby undercounting the number of defendants 3 covered by that clause; and that the court attributed undue weight to a Cayman 4 Islands interest in deciding plaintiffsʹ claims, given that the controlling contract 5 requires all common‐law claims to be submitted to arbitration in New York, and 6 given that the only claims that could be adjudicated in the Cayman Islands would be 7 United States federal securities claims as to which the law is unsettled. We reject 8 plaintiffsʹ contention that defendantsʹ right to seek dismissal of the amended 9 complaint for failure to state a claim has been waived; we vacate the judgment and 10 remand for consideration of defendantsʹ Rule 12(b)(6) motion to dismiss. 11 Vacated and remanded. 12 SAMUEL J. LIEBERMAN, New York, New York (Ben 13 Hutman, Sadis & Goldberg, New York, New York, 14 on the brief), for Plaintiffs‐Appellants. 15 SCOTT MUSOFF, New York, New York (Skadden, 16 Arps, Slate, Meagher & Flom, New York, New York, 17 on the brief), for Defendants‐Appellees. — 4 — 1 KEARSE, Circuit Judge: 2 Plaintiffs Joe Fasano, Altimeo Optimum Fund, and Altimeo Asset 3 Management, suing individually and on behalf of others similarly situated, appeal 4 from an August 2020 judgment of the United States District Court for the Southern 5 District of New York, Katherine Polk Failla, Judge, dismissing, on the ground of forum 6 non conveniens, their amended complaint against defendants E‐Commerce China 7 Dangdang Inc. (ʺDangdangʺ), its controlling shareholders, and others, alleging 8 negligent misrepresentation, breach of fiduciary duty, and violations of §§ 10(b), 9 13(e), and 20(a) of the Securities Exchange Act of 1934 (ʺExchange Actʺ) and rules 10 promulgated thereunder, in connection with Dangdangʹs 2016 ʺgoing‐privateʺ merger 11 and the purchase by its controlling shareholders of its outstanding publicly‐traded 12 shares, listed as American Depositary Shares (or ʺADSsʺ) on the New York Stock 13 Exchange (or ʺNYSEʺ). The present dismissal follows proceedings on remand from 14 this Court, which vacated a 2017 forum‐non‐conveniens dismissal of the original 15 complaint, for reconsideration in light of a forum selection clause governing 16 Dangdang ADSs and calling for United States securities law claims to be litigated in 17 a Manhattan, New York, court, see Fasano v. Yu, 921 F.3d 333 (2d Cir. 2019). On 18 remand, the district court, noting that the newly filed amended complaint alleged — 5 — 1 essentially the same facts as the original complaint but added two federal securities 2 claims to which it sought to link the original common‐law claims, held that the forum 3 selection clause was valid and enforceable against only five of the 13 named 4 defendants and was applicable to only a narrow subset of plaintiffsʹ claims, to wit, 5 their federal securities claims. The court again dismissed the action for forum non 6 conveniens, concluding that a forum selection clause that is applicable to so few 7 claims and so few defendants did not warrant retention of an action that is almost 8 entirely between foreign parties and that arose from a merger executed in a foreign 9 jurisdiction. The court denied as moot an alternative motion by defendants pursuant 10 to Fed. R. Civ. P. 12(b)(6) to dismiss the amended complaint for failure to state a 11 claim. See Fasano v. Li, 482 F.Supp.3d 158 (S.D.N.Y. 2020). 12 On appeal, plaintiffs argue principally that the district court erred in 13 concluding that the forum selection clause was not applicable to all of the defendants 14 and to all of plaintiffsʹ claims, and in according unwarranted weight to public‐interest 15 factors pointing toward dismissal. They also urge us, if the case is reinstated, to rule 16 that defendants had waived their right to move for a Rule 12(b)(6) dismissal of the 17 amended complaint. — 6 — 1 For the reasons below, we conclude that the district court principally 2 misinterpreted the scope of the forum selection clause, thereby undercounting the 3 number of defendants covered by that clause; and that it attributed undue weight to 4 a Cayman Islands interest in deciding plaintiffsʹ claims, given that the controlling 5 contract requires all common‐law claims to be submitted to arbitration in New York, 6 and that the only claims that could be adjudicated in the Cayman Islands would be 7 United States federal securities claims as to which the law is unsettled. We thus 8 reverse the dismissal for forum non conveniens. 9 We reject plaintiffsʹ contention that defendantsʹ right to seek dismissal 10 of the amended complaint for failure to state a claim was waived for failure to so 11 move with their original forum‐non‐conveniens motion. We vacate the judgment and 12 remand for consideration of defendantsʹ Rule 12(b)(6) motion to dismiss. 13 I. BACKGROUND 14 The basic factual allegations of the original complaint and the amended 15 complaint, which superseded the original complaint but contains essentially the same 16 factual assertions, have been described in prior opinions of the district court and this — 7 — 1 Court, familiarity with which is assumed. See Fasano v. Li, 2017 WL 6764692 , *1‐*3 2 (S.D.N.Y Dec. 29, 2017) (ʺFasano Iʺ), vacated and remanded sub nom. Fasano v. Yu, 921 3 F.3d 333, 337 (2d Cir. 2019) (ʺFasano IIʺ); and Fasano v. Li, 482 F.Supp.3d 158 , 162‐64 4 (S.D.N.Y. 2020) (ʺFasano IIIʺ). Briefly, the amended complaint and the affidavits 5 submitted with respect to the forum‐non‐conveniens motions indicated the following. 6 A. The Parties 7 Dangdang is an e‐commerce company incorporated in the Cayman 8 Islands and headquartered in Beijing, China. ʺIt is commonly known as the 9 Amazon.com of China.ʺ (Amended Complaint (or ʺA.C.ʺ) ¶ 40). It is currently a 10 wholly‐owned subsidiary of defendant Dangdang Holding Company, Ltd. (ʺDHCʺ), 11 a company also incorporated in the Cayman Islands and headquartered in Beijing. 12 Dangdang was founded in 2000 by defendant Guoqing Li (ʺLiʺ or 13 ʺGuoqing Liʺ), who was its Chief Executive Officer and one of its controlling 14 shareholders, and his wife, defendant Peggy Yu Yu (ʺYuʺ), who was a shareholder 15 and Dangdangʹs Executive Chairwoman. The other individual defendants include 16 Danqian Yao (ʺYaoʺ), Lijun Chen (ʺChenʺ), and Min Kan (ʺKanʺ), who were officers — 8 — 1 or directors of Dangdang at the time of the going‐private merger. These individual 2 served defendants are all nationals of China. 3 Defendants Kewen Holding Co. Ltd. (ʺKewenʺ) and Science & Culture 4 Ltd. (ʺS&Cʺ) are limited companies incorporated in the British Virgin Islands; they are 5 principally investment holding vehicles controlled by Li. Li is the sole owner of 6 Kewen and a 60% owner of S&C. Defendant First Profit Management, Ltd. (ʺFirst 7 Profitʺ), incorporated in the British Virgin Islands, is principally an investment 8 holding vehicle owned by Yao. 9 The above five individuals, along with Dangdangʹs parent company 10 DHC and the three British Virgin Island entities, are alleged to have been Dangdangʹs 11 ʺControlling Groupʺ (see A.C. ¶¶ 2, 9‐19) with respect to Dangdangʹs going‐private 12 merger. Dangdang and those nine entities (collectively ʺDefendantsʺ) are the 13 defendants‐appellees on this appeal. 14 In addition to those 10 entities, plaintiffs named as defendants, but did 15 not serve, three individuals who are not appellees: Ruby Rong Lu (ʺLuʺ), Ke Zhang 16 (ʺZhangʺ), and Xiaolong Li (ʺXiaolong Liʺ). (See Part I.B. below.) 17 Plaintiffs are former owners or holders of Dangdang ADSs. Fasano is a 18 resident of New York. Plaintiffs Altimeo Optimum Fund and Altimeo Asset — 9 — 1 Management, are, respectively, a French investment fund and its French investment 2 manager. 3 B. The Events of 2016 4 Dangdang became a publicly traded company in 2010, with its shares 5 trading as ADSs on the New York Stock Exchange, covered by a Deposit Agreement 6 to which Dangdang, The Bank of New York Mellon as Depositary, and ʺall Owners 7 and Holders from time to time of American Depositary Shares issued hereunderʺ 8 were parties. (Amended Complaint Exhibit 5 (the ʺDeposit Agreementʺ).) Ownership 9 of ADSs was evidenced by American Depositary Receipts (ʺADRsʺ). 10 The initial public offering price of Dangdang shares was $16.00 per ADS 11 share. In the following years, when Dangdangʹs shares were trading at lower prices, 12 Li repeatedly stated publicly that the company should be valued in the range of $16 13 to $22 per share. 14 In mid‐2015, Dangdangʹs share price had further declined, reaching $6.51 15 per ADS share on July 8, 2015, due to a Chinese Stock market crash; but the Chinese 16 Stock market rebounded by 8.1% on July 9. Taking advantage of the 12‐hour time 17 difference, with the Chinese market closing before the United States markets opened, — 10 — 1 Li and the Controlling Group exploited Dangdangʹs low stock price by making an 2 offer to Dangdang to buy out Dangdangʹs minority stockholders at $7.81 per ADS 3 share before the United States markets opened on July 9, 2015. 4 The Controlling Groupʹs offer to Dangdang was coercive because the 5 Controlling Group, which included the CEO and the Chairwoman, held 83.6% of the 6 companyʹs voting power. Dangdang appointed a special committee to evaluate the 7 offer. The members were defendants‐non‐appellees Lu, Zhang, and Xiaolong Li. 8 While the committee was ostensibly independent, its supposed impartiality was a 9 sham because, inter alia, Lu, who chaired the committee, was financially dependent 10 upon Guoqing Li, and the attorneys retained by committee were also counsel for 11 Dangdang, having been so chosen by Guoqing Li. 12 The special committee proceeded to recommend that Dangdang accept 13 the Controlling Groupʹs $7.81 per share offer for the ADSs despite there being an offer 14 from a private equity firm at $8.80 per share, and despite the fact that that firmʹs offer 15 was an all‐cash offer, while the Controlling Group was to finance its offer in part out 16 of the Dangdangʹs own available cash. The special committee also refused to insist 17 that the proposed going‐private merger be subject to approval by a majority of the — 11 — 1 minority shareholders. And it agreed to allow the Controlling Group to reduce its 2 offering price to $6.70 per share. 3 The going‐private merger closed in September 2016. 4 C. The Present Action and the Forum Selection Clause 5 Plaintiffs commenced the present putative class action in November 2016 6 to challenge the merger, asserting, inter alia, claims of breach of fiduciary duty, 7 negligent misrepresentation, and violation of § 13(e) of the Exchange Act. The 8 Dangdang ADRs contained a forum‐selection clause (ʺForum Selection Clauseʺ or 9 ʺClauseʺ), embedded in an arbitration clause which, as quoted by the district court in 10 Fasano III, provided in part as follows: 11 ʺAny controversy, claim[,] or cause of action . . . arising out 12 of or relating to . . . the American Depositary Shares . . . shall be 13 settled by arbitration . . . ; provided, further, that any such 14 controversy, claim[,] or cause of action . . . relating or based upon the 15 provisions of the Federal securities laws of the United States or the rules 16 and regulations promulgated thereunder shall be submitted to 17 arbitration . . . if, but only if, so elected by the claimant. . . . Any 18 controversy, claim[,] or cause of action . . . not subject to arbitration . . . 19 shall be litigated in the Federal and state courts in the Borough of 20 Manhattan, The City of New York.ʺ — 12 — 1 Fasano III, 482 F.Supp.3d at 163 (quoting Deposit Agreementʹs Exhibit A § 23 2 (emphases ours)). The United States District Court for the Southern District of New 3 York, in which this action was brought, is located in the Borough of Manhattan. All 4 of the defendants who have been served have nonetheless moved for dismissal of the 5 complaint on the ground of forum non conveniens. 6 In Fasano I, 2017 WL 6764692 , the district court granted the motion. On 7 appeal, this Court vacated the judgment, noting that the district court had not 8 discussed the ADRsʹ Forum Selection Clause. We remanded for the court to consider 9 the effect of that clause. See Fasano II, 921 F.3d 333 . 10 On remand, after Defendants indicated that they would continue to seek 11 dismissal for forum non conveniens, plaintiffs amended the complaint, reiterating 12 their § 13 and common‐law claims, and adding claims under § 10(b) of the Exchange 13 Act and Rule 10b‐5 promulgated thereunder against all defendants, and claims under 14 § 20(a) of the Exchange Act against Guoqing Li and Yu. The amended complaint 15 asserted that Defendants owed heightened fiduciary duties to plaintiffs and the 16 putative plaintiff class under the Sarbanes‐Oxley Act Code of Conduct and NYSE 17 Listing Standards adopted by Dangdang. (See A.C. ¶ 171.) — 13 — 1 Defendants renewed their motion to dismiss for forum non conveniens 2 and moved alternatively for dismissal under Fed. R. Civ. P. 12(b)(6) on the ground 3 that the amended complaint failed to state a claim on which relief can be granted. 4 Plaintiffs objected to that motion, contending that defendants had waived the right 5 to so move by not making the motion along with its 2017 motion to dismiss for forum 6 non conveniens. 7 D. The Decision in Fasano III 8 In Fasano III, the district court noted that the factors underlying its earlier 9 dismissal for forum non conveniens had been principally (a) that plaintiffsʹ choice of 10 forum warranted diminished deference, given that the only plaintiff resident in the 11 United States is Fasano, and that his stake in the litigation was only about 1/100 as 12 much as that of his French co‐plaintiffs; (b) that none of the defendants is a United 13 States entity; and (c) that the Cayman Islands had a strong interest in adjudicating this 14 dispute in its courts given that Dangdang is a Cayman Islands corporation, that the 15 events giving rise to the litigation took place there, that the going‐private merger was 16 between two Cayman Islands entities, and that a Cayman Islands court was already — 14 — 1 conducting a proceeding to determine the fair value of the merger. See Fasano III, 482 2 F.Supp.3d at 165 (discussing Fasano I, 2017 WL 6764692 , at *6‐*12). 3 On remand, the district court considered the effect of the ADRsʹ Forum 4 Selection Clause, noting that such a clause, if enforceable, causes the forum non 5 conveniens doctrine to undergo 6 ʺa substantial modification . . . whereby the doctrineʹs usual tilt in 7 favor of the plaintiffʹs choice of forum gives way to a presumption 8 in favor of the contractually selected forum.ʺ Martinez v. 9 Bloomberg LP, 740 F.3d 211, 218 (2d Cir. 2014) . . . . Valid forum 10 selection clauses must be given controlling weight in all but the 11 most exceptional cases, and if a forum selection clause is indeed 12 deemed valid, the only remaining inquiry is whether there are 13 public interest considerations . . . that weigh against its 14 enforcement. 15 Fasano III, 482 F.Supp.3d at 167 (other internal quotation marks omitted). 16 Nonetheless, the district court observed that this Court, in remanding, had noted that 17 the presumption that a forum selection clause is enforceable is 18 ʺnot automatic.ʺ . . . ʺInstead, a district court must consider three 19 factors . . . : whether [i] the clause was reasonably communicated 20 to the party resisting its enforcement; [ii] the clause is mandatory 21 o[r] permissive; and [iii] the claims and parties to the dispute are 22 subject to the clause.ʺ . . . The party seeking enforcement of the 23 forum selection clause bears the burden of proving that the 24 presumption of enforceability applies. 25 Id. at 167‐68 (quoting Fasano II, 921 F.3d at 335 ). And then, — 15 — 1 even if the court determines that the presumption applies, it must 2 still assess whether the presumption ʺhas been properly rebutted 3 by a sufficiently strong showing that enforcement would be 4 unreasonable or unjust, or that the clause was invalid for such 5 reasons as fraud or overreaching.ʺ 6 Fasano III, 482 F.Supp.3d at 167 (quoting Fasano II, 921 F.3d at 335 (other internal 7 quotation marks omitted).) In order to rebut the presumption of enforceability, 8 the party resisting enforcement of a forum selection clause must 9 make a sufficiently strong showing that either: [i] its 10 incorporation was the result of fraud or overreaching; [ii] the law 11 to be applied in the selected forum is fundamentally unfair; [iii] 12 enforcement contravenes a strong public policy of the forum state; 13 or [iv] trial in the selected forum will be so difficult and 14 inconvenient that the plaintiff effectively will be deprived of his 15 day in court. 16 Fasano III, 482 F.Supp.3d at 173 (internal quotation marks omitted). 17 Examining the forum selection clause in the present case, the district 18 court stated: 19 Reading the Forum Selection Clause within its context, it is 20 clear that it is only designed to cover a narrow subset of claims. 21 The Forum Selection Clause is contained within and connected to 22 the Deposit Agreementʹs arbitration provisions. (See Am. Compl., 23 Ex. 5 at 54). The Deposit Agreement broadly provides that all claims 24 arising out of or relating to the ADSs or the Deposit Agreement must be 25 settled by arbitration. (See id.) (ʺAny controversy, claim[,] or cause 26 of action brought by any party hereto against the Company 27 arising out of or relating to the Shares or other Deposited 28 Securities, the American Depositary Shares, the Receipts[,] or the — 16 — 1 Deposit Agreement . . . shall be settled by arbitration.ʺ). However, 2 further down, the Deposit Agreement provides a narrow carveout for any 3 claim ʺrelating to or based upon the provisions of the Federal securities 4 laws of the United States or the rules and regulations promulgated 5 thereunder.ʺ (Id.). For that subset of claims, arbitration is only 6 required if elected by the claimant. (See id.). And critically, it is 7 only those claims ʺnot subject to arbitrationʺ that must be litigated 8 in New York. (Id.). Therefore, a plain reading of the Deposit 9 Agreement makes clear that the Forum Selection Clause only applies to 10 those claims ʺrelating to or based uponʺ federal securities law and the 11 regulations associated with those laws. 12 Fasano III, 482 F.Supp.3d at 169 (emphases ours). 13 The court found it doubtful that plaintiffsʹ securities claim under § 13(e) 14 of the Exchange Act was cognizable in a private right of action. And it viewed the 15 amended complaintʹs new invocation of other sections of the Exchange Act or rules 16 thereunder as an ʺartful[]ʺ attempt to recast as federal securities law claims plaintiffsʹ 17 original common‐law claims of negligent misrepresentation and breach of fiduciary 18 duty, claims that would be governed by the laws of the Cayman Islands. Id. at 177. 19 In addition, the court noted that only Dangdang was a signatory to the 20 Deposit Agreement, Fasano III, 482 F.Supp.3d at 170, and found that most of its 21 codefendants are not subject to the ADRsʹ Forum Selection Clause: 22 Plaintiffs have failed to show through their pleadings that it 23 would have been foreseeable to any of the other non‐signatories 24 that they would have been bound by the Forum Selection Clause. — 17 — 1 For example, Defendants Kewen, SCI, and First Profit‐‐the 2 investment vehicles controlled by Guoqing Li and Danqian Yao‐‐ 3 have no relationship with Dangdang whatsoever. (See Am. Compl. 4 ¶¶ 13‐14, 16). It would therefore be wholly unreasonable to find that 5 [any] of the three Defendants should have foreseen being bound by a 6 Forum Selection Clause in a contract to which they had no connection, 7 merely because they participated in a merger six years after the formation 8 of the Deposit Agreement. Defendant Danqian Yao was a senior vice 9 president at Dangdang at the time the company was listed on the 10 NYSE (id. at ¶ 15), but there is otherwise no other indication that Mr. 11 Yao played a role in the listing of the ADSs or would have been aware of 12 the Deposit Agreement and its Forum Selection Clause. He, too, 13 should not be bound by the Forum Selection Clause. As for 14 Defendant Lijun Chen, he was not even an employee of Dangdang 15 when the ADSs were issued. (See id. at ¶ 17). There is therefore no 16 basis on which the Court can find that enforcement of the Forum 17 Selection Clause would have been foreseeable to Mr. Chen. 18 Finally, insofar as the Unserved Defendants are relevant to the 19 instant motion, the Amended Complaint does not offer any 20 indication that either Ruby Rong Lu, Ke Zhang, or Xiaolong Li 21 should have foreseen being bound by the Forum Selection Clause. 22 Although the Amended Complaint makes clear that the Unserved 23 Defendants played an active role in the Merger (see id. at ¶¶ 20‐22), it 24 offers no insight into what role, if any, they played in the issuance of the 25 ADSs, which is the relevant transaction for the Forum Selection Clause 26 . . . . Accordingly, the Court finds that the Forum Selection Clause may 27 only be enforced against the signatory‐‐Dangdang‐‐and non‐signatories 28 DHC, Guoqing Li, Peggy Yu Yu, and Min Kan. 29 Fasano III, 482 F.Supp.3d at 171‐72 (emphasis added). 30 In sum, the court found that, given that the ADRsʹ Forum Selection 31 Clause was applicable to only half of plaintiffsʹ claims and to only five of the 13 — 18 — 1 named defendants, the public interest factors relied on in Fasano I continued to favor 2 dismissal on the ground of forum non conveniens. Dismissing the action on that 3 basis, the court denied defendantsʹ Rule 12(b)(6) motion to dismiss as moot. 4 This appeal followed. 5 II. DISCUSSION 6 On appeal, plaintiffs contend principally (a) that the district court 7 disregarded the mandate of Fasano II, which they characterize as ordering the district 8 court simply to find their choice of forum controlling because of the ADRsʹ Forum 9 Selection Clause, and (b) that the court erred in, inter alia, interpreting the scope of the 10 Clause and the relationship of certain of the defendants to the matters within that 11 Clause. While we reverse the decision to dismiss for forum non conveniens, we do 12 not view the district court as having disregarded the mandate of Fasano II, which was 13 to consider ʺwhetherʺ the presumption of enforceability is applicable to the ADRsʹ 14 Forum Selection Clause, ʺwhetherʺ that Clause is applicable to the ADRsʹ non‐ 15 signatories, and ʺwhetherʺ the presumption of enforceability was rebutted as 16 ʺunreasonable, unjust, or the product of fraud or overreaching.ʺ Fasano II, 921 F.3d 19 1 at 337. We reject some of the conclusions reached by the district court after exploring 2 those questions. 3 We conclude principally, for the reasons that follow, that the district 4 court gave the forum selection clause an unwarrantedly narrow interpretation and 5 thereby undercounted the non‐signatory defendants who should be covered by the 6 ADRsʹ Forum Selection Clause; and that the court erred in weighing the public 7 interest factors by attributing undue weight to a Cayman Islands interest in deciding 8 plaintiffsʹ claims, given that the controlling contract requires all common‐law claims 9 to be submitted to arbitration in New York, and giving insufficient weight to the 10 public interest in not having unsettled questions of United States securities laws 11 resolved by a foreign court. 12 A. Forum Avoidance and Selection Principles 13 Under the principle of forum non conveniens, ʺa court may resist 14 imposition upon its jurisdiction even when jurisdiction is authorized by the letter of 15 a general venue statute.ʺ Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947). ʺ[I]t has not 16 been attempted to catalogue the circumstances which will justify or require either 17 grant or denial ofʺ a motion to dismiss for forum non conveniens; the ʺdoctrine leaves — 20 — 1 much to the discretion of the court to which plaintiff resorts.ʺ Id. at 508 . Generally, 2 the court faced with such a motion may be required to consider both the public 3 interest and the private interests of the litigants. Private interests may include such 4 factors as the relative ease of access to sources of evidence, the availability of 5 witnesses, and the enforceability of a judgment if one is obtained. The public interest 6 may include such factors as court congestion, the interest in having local forums 7 decide local disputes, avoiding the imposition of jury duty on persons within a 8 community having little relation to the litigation, and a forum courtʹs need to apply 9 unfamiliar principles of foreign law. See generally id. at 508‐09. 10 Ordinarily, ʺ[t]he decision to dismiss a case on forum non conveniens 11 grounds lies wholly within the broad discretion of the district court and may be 12 overturned only when we believe that discretion has been clearly abused.ʺ Iragorri 13 v. United Technologies Corp., 274 F.3d 65, 72 (2d Cir. 2001) (en banc) (internal quotation 14 marks omitted and emphasis omitted). The court abuses its discretion in ruling on 15 such a motion if ʺits decision (1) rests either on an error of law or on a clearly 16 erroneous finding of fact, or (2) cannot be located within the range of permissible 17 decisions, or (3) fails to consider all the relevant factors or unreasonably balances — 21 — 1 those factors.ʺ Aguas Lenders Recovery Group v. Suez, S.A., 585 F.3d 696 , 699‐700 (2d 2 Cir. 2009) (ʺAguas Lendersʺ) (internal quotation marks omitted). 3 The forum non conveniens ʺcalculus changes, however, when the partiesʹ 4 contract contains a valid forum‐selection clause, which represents the partiesʹ 5 agreement as to the most proper forum.ʺ Atlantic Marine Construction Co., Inc. v. U.S. 6 District Court for the Western District of Texas, 571 U.S. 49, 63 (2013) (ʺAtlantic Marineʺ) 7 (internal quotation marks omitted). ʺWhatever ʹinconvenienceʹ [a party] would suffer 8 by being forced to litigate in the contractual forum as it agreed to do was clearly 9 foreseeable at the time of contracting.ʺ The Bremen v. Zapata Off‐Shore Co., 407 U.S. 1 , 10 17‐18 (1972) (ʺM/S Bremenʺ). ʺThe enforcement of valid forum‐selection clauses, 11 bargained for by the parties, protects their legitimate expectations and furthers vital 12 interests of the justice system.ʺ Atlantic Marine, 571 U.S. at 63 (internal quotation 13 marks omitted). Thus, ʺwhere parties . . . agree in advance on a forum that is 14 exclusive of all others, the choice of forum is accorded the M/S Bremen presumption 15 of enforceability.ʺ Aguas Lenders, 585 F.3d at 700 . That presumption may be rebutted 16 only if the objecting party ʺclearly show[s] thatʺ the clauseʹs ʺenforcement would be 17 unreasonable and unjust, or that the clause was invalid for such reasons as fraud or 18 overreaching.ʺ M/S Bremen, 407 U.S. at 15 . — 22 — 1 In the face of a presumptively valid forum selection clause, a showing 2 of mere inconvenience to parties or witnesses is not sufficient; indeed, the court 3 should consider arguments about ʺpublic‐interest factors only,ʺ for ʺ[w]hen parties 4 agree to a forum‐selection clause, they waive the right to challenge the preselected forum as 5 inconvenient or less convenient for themselves or their witnesses, or for their pursuit of 6 the litigation.ʺ Atlantic Marine, 571 U.S. at 64 (emphasis added). 7 The district court here found that ʺthere is no dispute between the parties 8 as to whether the Forum Selection Clause at issue in this action either was 9 unreasonably communicated or is mandatory.ʺ Fasano III, 482 F.Supp.3d at 172‐73. 10 Thus, the only question as to its presumptive validity was the extent to which the 11 Clause covered the claims and the parties. 12 B. The ADRsʹ Forum Selection Clause 13 The forum selection clause at issue in this action, which is part of the 14 arbitration clause set out in the Deposit Agreement for the ADRs evidencing 15 Dangdang ADSs, provides in pertinent part as follows: 16 (a) Any controversy, claim or cause of action brought by any 17 party hereto against the Company arising out of or relating to the 18 Shares or other Deposited Securities, the American Depositary — 23 — 1 Shares, the Receipts or the Deposit Agreement, or the breach 2 thereof shall be settled by arbitration in accordance with the 3 International Arbitration rules of the American Arbitration 4 Association . . . ; provided, however, . . . that any such controversy, 5 claim or cause of action . . . relating to or based upon the provisions of 6 the Federal securities laws of the United States or the rules and 7 regulations promulgated thereunder shall be submitted to 8 arbitration . . . if, but only if, so elected by the claimant. 9 The place of the arbitration shall be the City of New York, State 10 of New York . . . . 11 (b) Any controversy, claim or cause of action arising out of or 12 relating to . . . the American Depositary Shares . . . not subject to 13 arbitration . . . shall be litigated in the Federal and state courts in the 14 Borough of Manhattan, The City of New York. 15 (Deposit Agreementʹs Exhibit A § 23 (emphases added).) 16 1. Covered Claims 17 As quoted above, in connection with any asserted violations of federal 18 securities statutes or regulations (ʺFederal Securities Claimsʺ), the arbitration clause‐‐ 19 instead of repeating the ʺarising out of or relating toʺ phrases or the ʺAmerican 20 Depositary Sharesʺ frame of reference‐‐simply refers retrospectively to ʺany such 21 controversy, claim or cause of action.ʺ Thus, in both respects the scope of the 22 arbitration clause also defines the scope of the Federal Securities Claims that are to — 24 — 1 be arbitrated‐‐or that a claimant may instead choose to pursue by litigation in 2 Manhattan. Accordingly, Federal Securities Claims come within the ADRsʹ Forum 3 Selection Clause if they present controversies, claims, or causes of action arising out 4 of, or relating to, the Dangdang ADSs. 5 The district court, however, in assessing which of plaintiffsʹ claims are 6 covered by the Clause, stated that ʺthe relevant transaction for the Forum Selection 7 Clauseʺ is ʺthe issuance of the ADSs.ʺ Fasano III, 482 F.Supp.3d at 172 (emphasis 8 added). We have two fundamental difficulties with this view. 9 First, the Clauseʹs frame‐of‐reference language does not mention the 10 ʺissuance ofʺ Dangdangʹs ADSs; it refers to the ADSs themselves and thus covers 11 Federal Securities Claims arising out of or relating to any aspect or treatment of the 12 American Depositary Shares. The phrases ʺarising out of or relating toʺ are ʺbroad 13 languageʺ of expansive (albeit not unlimited) reach. Roby v. Corporation of Lloydʹs, 996 14 F.2d 1353 , 1359 (2d Cir. 1993) (ʺRobyʺ). Indeed, Defendants themselves state that the 15 Dangdang ADRsʹ ʺarbitration clause . . . deserves a broad reading.ʺ (Defendantsʹ brief 16 on appeal at 20 n.7.) 17 Second, while plaintiffsʹ amended complaint (like their original 18 complaint) asserts a claim under § 13 of the Exchange Act, a statute that requires — 25 — 1 periodic reporting by securities issuers, see 15 U.S.C. § 78m(a), plaintiffs assert claims 2 under subsection (e), which is titled ʺPurchase of securities by issuer,ʺ id. § 78m(e) 3 (emphasis added). That subsection does not govern actions with regard to shares at 4 the time of their issuance. And indeed, plaintiffs complain not about the issuance of 5 Dangdangʹs American Depositary Shares but rather about the ADSsʹ confiscation. 6 The district court recognized that plaintiffs were complaining about the 7 going‐private merger; but because it viewed only the ʺissuance of the ADSs . . . [a]s the 8 relevant transaction for the Forum Selection Clause,ʺ Fasano III, 482 F.Supp.3d at 172 9 (emphasis added), it erroneously found that ʺthe Forum Selection Clause bears no 10 direct connection to the Merger,ʺ id. at 172 n.7. Claims and controversies concerning 11 Defendantsʹ actions forcing holders of ADSs to sell or lose their ADSs plainly relate 12 to the ADSs. 13 We also note that the amended complaint adds claims invoking §§ 10 14 and 20 of the Exchange Act and rules thereunder. The focus of those provisions, 15 whether or not they are apposite here, is not limited to securitiesʹ issuance. Whether 16 or not any of plaintiffsʹ Federal Securities Claims states a cause of action‐‐indeed, this 17 Court has not determined whether an implied right of action is even available under 18 § 13(e)‐‐the amended complaint alleging the unlawful, fraudulent, or unfair — 26 — 1 deprivation of plaintiffsʹ ADSs plainly presents controversies whose substance falls 2 well within the ADRsʹ Forum Selection Clause frame of reference and are, in the 3 words of Roby, 996 F.2d at 1361, ʺundoubtedly related toʺ Dangdangʹs ADSs. 4 2. Covered Parties 5 The district courtʹs unduly narrow focus on the Dangdang ADSsʹ 6 issuance also infected its conclusion as to what parties the Forum Selection Clause 7 covers. It stated that the five served defendants other than ʺthe signatory‐‐Dangdang‐ 8 ‐and non‐signatories DHC, Guoqing Li, Peggy Yu Yu, and Min Kanʺ could not be 9 covered by the Clause because there was no indication that they had any connection 10 with the 2010 issuance or listing of the ADSs and thus could not have ʺforeseen being 11 bound by [the] Forum Selection Clause in a contract to which they had no connection, 12 merely because they participated in a merger six years after the formation of the 13 Deposit Agreement.ʺ Fasano III, 482 F.Supp.3d at 172 (emphases added). But because 14 the complaint makes no claim about the issuance of the ADSs, there was no relevant 15 issue as to what might have been foreseen in connection with the ʺformation of the 16 Deposit Agreement.ʺ — 27 — 1 The more pertinent question is whether these defendants could 2 plausibly, in this suit, claim to have been blind‐sided by the Deposit Agreementʹs 3 Forum Selection Clause after participating in the going‐private merger. The record 4 strongly suggests these defendantsʹ awareness of the contents of the Deposit 5 Agreement as the minority ADS holders were being informed that they were being 6 forced to sell or lose their ADSs. 7 The entities in question‐‐the five served defendants that the district court 8 found not covered by the ADRsʹ Forum Selection Clause‐‐were Yao, Chen, Kewen, 9 S&C, and First Profit. All of them were among the entities identified in the Dangdang 10 proxy materials as the going‐private‐mergerʹs ʺBuyer Group.ʺ And those proxy 11 materials stated multiple times that various aspects of the planʹs effect on the ADSs 12 were ʺSUBJECT TO THE TERMS AND CONDITIONS OF APPLICABLE LAW AND 13 THE ADS DEPOSIT AGREEMENT.ʺ (See, e.g., A.350, 361, 438 (capitalization in 14 original; emphases added); see also id. 345, 346, 435). 15 The district court properly recognized that an entity need not have been 16 a signatory to the contract to be covered by a forum selection clause. See Fasano III, 17 482 F.Supp.3d at 170. ʺ[T]he fact a party is a non‐signatory to an agreement is 18 insufficient, standing alone, to preclude enforcement of a forum selection clause.ʺ — 28 — 1 Aguas Lenders, 585 F.3d at 701 . To date, this Court has declined to adopt a standard 2 governing precisely ʺwhen a signatory may enforce a forum selection clause against 3 a non‐signatory.ʺ Magi XXI, Inc. v. Stato della Città del Vaticano, 714 F.3d 714 , 723 n.10 4 (2d Cir. 2013) (ʺMagi XXIʺ). Nonetheless, we have permitted non‐signatories to an 5 agreement to be bound by, and to enforce, forum selection clauses where, under the 6 circumstances, the non‐signatories enjoyed a sufficiently close nexus to the dispute 7 or to another signatory such that it was foreseeable that they would be bound. Aguas 8 Lenders, 585 F.3d at 701 (citing Hugel v. Corp. of Lloydʹs, 999 F.2d 206, 209 (7th Cir. 9 1993)); see also Magi XXI, 714 F.3d at 723 (holding that a non‐signatory may enforce a 10 forum selection clause against a signatory where the non‐signatory is ʺclosely relatedʺ 11 to a signatory). In Aguas Lenders, we identified several circumstances that could 12 trigger such a result, citing, inter alia, 13 Marano Enters. of Kansas v. Z‐Teca Rests., L.P., 254 F.3d 753 , 757‐58 14 (8th Cir.2001) (holding non‐signatories were bound by forum 15 selection clause because non‐signatories were ʺclosely relatedʺ to the 16 signatory or had acquiesced to clause by voluntarily bringing suit 17 with signatories); Lipcon v. Underwriters at Lloydʹs, London, 148 F.3d 18 1285, 1299 (11th Cir.1998) (holding non‐signatories bound to 19 forum selection clause on grounds that the non‐signatories, who 20 had provided letters of credit to signatories, had interests in the 21 litigation that were ʺdirectly related to, if not predicated uponʺ 22 those of the signatories (citation omitted)); . . . Bonny v. Socʹy of 23 Lloydʹs, 3 F.3d 156 , 162‐63 (7th Cir.1993) (subjecting non‐ — 29 — 1 contracting defendants to forum selection clause because integrally 2 related to contracting defendants such that suit should be kept in a 3 single forum). 4 Aguas Lenders, 585 F.3d at 701 (emphases ours). 5 In the present case, Kewen, S&C, and First Profit fit neatly into the above 6 parade of nonsignatories bound by a forum selection clause; they were investment 7 vehicles involved in the going‐private merger. And Kewen and S&C, respectively, 8 were wholly owned and 60% owned by Li, Dangdangʹs largest stockholder. 9 But little more need be said about any of the served Defendantsʹ 10 connection to the subject matter of this action, and the propriety of finding the ADRsʹ 11 Forum Selection Clause applicable to them, than that they were in the ʺBuyer Groupʺ 12 that caused plaintiffsʹ ADSs to be eliminated, and that it was repeatedly stated that 13 they would do so ʺSUBJECT TO THE TERMS AND CONDITIONS OF . . . THE ADS 14 DEPOSIT AGREEMENTʺ‐‐the contract that contains the Forum Selection Clause. 15 Plainly, then, it was reasonably foreseeable to any member of the ʺBuyer Groupʺ that 16 they would be subject to the underlying deposit agreement, and therefore its Forum 17 Selection Clause. 18 We thus conclude that all 10 of the served defendants are covered by the 19 ADRsʹ Forum Selection Clause. — 30 — 1 3. The Public Interest 2 The district court concluded that despite Defendantsʹ inability to rebut 3 the presumptive enforceability of the ADRsʹ Forum Selection Clause, see Fasano III, 4 482 F.Supp.3d at 173, this action should be dismissed for forum non conveniens based 5 on public interest factors, see id. at 173‐77. The court relied principally on its findings 6 that only five of 13 defendants are covered by the Clause, and that only plaintiffsʹ 7 Federal Securities Claims are covered, with their common‐law claims being governed 8 by Cayman Islands law; on the courtʹs reluctance ʺto bifurcate the instant action 9 between those claims and parties that are covered by the Forum Selection Clause and 10 those that are not,ʺ id. at 173; and on the ʺCayman Islands[ʹ] . . . interest in having this 11 localized controversy decided at home,ʺ id. at 176. None of these rationales can bear 12 the weight placed on them. 13 First, the courtʹs erroneous interpretation of the ADRsʹ Forum Selection 14 Clause led it to err in finding that half of the served defendants are not covered by the 15 Clause. As discussed in the preceding section, all of the served defendants other than 16 Dangdang were in the Buyer Group for the going‐private merger that eliminated 17 plaintiffsʹ Dangdang ADSs and are covered by the Clause. The three unserved 18 defendants, who may or may not be covered by the Clause (the district court stated — 31 — 1 that according to the amended complaint they ʺclear[ly] . . . played an active role in 2 the Merger,ʺ Fasano III, 482 F.Supp.3d at 172), are not necessary parties; their status 3 is not a basis for dismissing this action for forum non conveniens. 4 Second, the courtʹs reliance on the fact that only half of plaintiffsʹ claims 5 are covered by the ADRsʹ Forum Selection Clause seems to have envisioned that a 6 forum‐non‐conveniens dismissal could avoid ʺbifurcationʺ of the case. But the 7 avoidance of bifurcation is not possible if plaintiffs insist on their rights under the 8 Deposit Agreement to have their Federal Securities Claims litigated in court, because 9 all of their other claims must, according to that Agreement, be submitted to 10 arbitration. 11 Third, although plaintiffsʹ common‐law claims such as breach of 12 fiduciary duty are likely governed by Cayman Islands law given Dangdangʹs 13 incorporation in the Cayman Islands, the district courtʹs forum‐non‐conveniens 14 dismissal cannot serve the Cayman Islandsʹ interest in having those claims ʺdecided 15 at homeʺ because those claims are required to be submitted to arbitration, and the 16 Deposit Agreement provides that the ʺplace of the arbitration shall be The City of 17 New York, State of New York.ʺ (Deposit Agreementʹs Exhibit A § 23.) — 32 — 1 Finally, because plaintiffsʹ common‐law claims can be pursued only in 2 a New York arbitration, after a forum‐non‐conveniens dismissal the only claims to be 3 determined in the Cayman Islands would be plaintiffsʹ Federal Securities Claims. We 4 cannot see any genuine interest of the Cayman Islands in adjudicating United States 5 Federal Securities Claims. In contrast, the United States has a vital interest in having 6 its own courts decide whether to imply a private right of action under § 13(e) of the 7 Exchange Act. 8 In sum, the public interest factors cannot justify a forum‐non‐conveniens 9 dismissal. 10 C. Plaintiffsʹ Request To Preclude a Rule 12(b)(6) Motion 11 The district court, after concluding that a dismissal for forum non 12 conveniens was appropriate, denied as moot Defendantsʹ alternative motion under 13 Rule 12(b)(6) to dismiss the amended complaint for failure to state a claim. The 14 district court may now address that motion. 15 We reject plaintiffsʹ contention that, under Rule 12 of the Federal Rules 16 of Civil Procedure, Defendantsʹ waived the right to make such a motion because they 17 did not combine it with their ʺinitial forum non conveniens motionʺ on ʺMarch 15, 2017ʺ — 33 — 1 (Plaintiffsʹ brief on appeal at 49). In support of that contention, plaintiffs assert that 2 a forum‐non‐conveniens motion is one under Rule 12(b)(3) to dismiss for ʺimproper 3 venueʺ; that Rule 12(g)(2) states that ʺa party that makes a motion under this rule 4 must not make another motion under this rule raising a defense or objection that was 5 available to the party but omitted from its earlier motionʺ; and that the district court 6 should not have allowed Defendants to file a Rule 12(b)(6) motion with their second 7 forum‐non‐conveniens motion. (Plaintiffsʹ brief on appeal at 49‐50.) This contention 8 does not warrant extended discussion. 9 First, plaintiffs filed their amended complaint in 2019. A motion to 10 dismiss the amended complaint obviously was not ʺavailableʺ to Defendants in 2017. 11 Second, a forum‐non‐conveniens motion is not ʺa motion underʺ Rule 12. 12 Rule 12(b)(3) deals with improper venue. But ʺa forum non conveniens motion does 13 not rest on an assertion that venue is improper‐‐the concern of a motion under 14 Rule 12(b)(3)‐‐but instead asks the court to relinquish the action in favor of another 15 court.ʺ 5C Wright & Miller, Federal Practice and Procedure § 1386 (3d ed. 2022). 16 Third, the Rule 12 defenses that are waived by a failure to assert them 17 early are only those ʺlisted in Rule 12(b)(2)‐(5).ʺ Fed. R. Civ. P. 12(h)(1). Rule 12 itself — 34 — 1 provides that a Rule 12(b)(6) defense of ʺ[f]ailure to state a claim upon which relief 2 can be granted . . . may be raised . . . at trial.ʺ Id. Rule 12(h)(2)(C). 3 CONCLUSION 4 We have considered all of Defendantsʹ arguments in support of the 5 judgment and plaintiffsʹ arguments for precluding Defendants from pursuing a 6 motion to dismiss under Rule 12(b)(6), and have found them to be without merit. The 7 judgment is vacated and the matter is remanded for the district court to consider 8 Defendantsʹ motion to dismiss for failure to state a claim. — 35 —