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OTTO Candies LLC v. Critigroup Inc.

United States District Court, S.D. Florida

June 15, 2018

OTTO CANDIES, LLC, et al., Plaintiffs,
CITIGROUP, INC., Defendant.

          AMENDED ORDER [1]


THIS CAUSE comes before the Court on Defendant Citigroup, Inc.'s, Motion to Dismiss the Amended Complaint (the “Motion”) [ECF No. 80]. The Court held a hearing on the Motion on November 29, 2017. The Court has carefully considered the Amended Complaint (“Complaint”), the record, and the applicable law and is otherwise fully advised. For the reasons that follow, the Motion is granted.

         I. BACKGROUND

         This action involves a purported fraudulent scheme carried out by Citigroup, Inc. (“Citigroup” or “Defendant”), and other alleged conspirators who have not been sued in this action. The bulk of the fraudulent acts in this purported scheme occurred in Mexico. The majority of the key players in the fraudulent scheme are based in, and engaged in business in, Mexico.

         A. The Parties

         Defendant Citigroup is a U.S.-based banking and financial institution incorporated in Delaware with its principal place of business in New York, New York. Plaintiffs[2]are a diverse group of entities including shipping companies, investment funds, and a bank, located all over the world including in the United States, Mexico, the Caribbean, South America, Europe, and the Middle East. Plaintiffs bring this action as vendors, creditors, and bondholders of Oceanografía S.A. de C.V. (“OSA”), a now bankrupt Mexican oil and gas services company. Petróleos Mexicanos S.A. de C.V. (“Pemex”) is Mexico's state-owned oil and gas company and, at one time, one of the largest customers of OSA's offshore drilling services. Banco Nacional de México (“Citibanamex” or “Banamex”) is Citigroup's wholly-owned Mexican subsidiary. Plaintiffs bring this action to recover the losses sustained from their investments and business dealings with OSA.

         B. The Alleged Cash Advance Scheme

         According to the Complaint, Citigroup, through its Mexican subsidiary Citibanamex, established a credit facility for OSA and provided it with hundreds of millions of dollars in cash advances. OSA allegedly used the cash advances to fund its ongoing projects with Pemex. Citigroup charged OSA substantial interest on every cash advance. In addition, Citigroup entered into an agreement whereby it was guaranteed repayment of the cash advances directly from Pemex. Because repayment was guaranteed by Pemex, i.e., the Mexican government, Plaintiffs allege that Citigroup, through or in conjunction with Citibanamex, repeatedly increased OSA's cash advance limit in order to earn millions in risk-free profit.

         Plaintiffs assert that because of the payment guarantee with Pemex, Citigroup advanced amounts to OSA that Citigroup knew greatly exceeded any amount OSA could earn under its service contracts with Pemex. Plaintiffs allege that Citigroup's continued cash injections into OSA resulted in OSA's financials appearing more “rosy” to outside investors, such as Plaintiffs. In addition, Plaintiffs allege Citigroup made false representations regarding the financial health of OSA in order to deceive Plaintiffs into believing that OSA was a financially attractive company for investment. Citigroup's misrepresentations allegedly lured Plaintiffs into extending credit and making investments in OSA, which in turn allowed OSA to continue to seek cash advances from Citigroup, which in turn allowed Citigroup to collect its risk-free profit.

         In the Complaint, Plaintiffs assert the following claims against Citigroup: Violation of RICO, 18 U.S.C. §1962(c); Conspiracy to Violate RICO, 18 U.S.C. §1962(d); Common Law Fraud; Aiding and Abetting Fraud; Conspiracy to Commit Fraud; Common Law Fraud (only by Plaintiffs Rabobank and Blue Marine); and Breach of Fiduciary Duty (only by Plaintiffs Rabobank and Blue Marine).

         Citigroup has moved to dismiss this action on forum non conveniens grounds, contending that Mexico is the more appropriate forum. Alternatively, Citigroup seeks dismissal of each count under Federal Rules of Civil Procedure 9(b) and 12(b)(6) for failure to state a claim.


         A. Legal Standard

         “Under the doctrine of forum non conveniens, a district court has the inherent power to decline to exercise jurisdiction even when venue is proper, ” Jiangsu Hongyuan Pharm. Co. v. DI Glob. Logistics, Inc., 159 F.Supp.3d 1316, 1322 (S.D. Fla. 2016) (citation omitted), appeal dismissed, No. 16-10781 (11th Cir. May 9, 2016), “on the ground that a court abroad is the more appropriate and convenient forum for adjudicating the controversy, ” Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 425 (2007). To obtain dismissal for forum non conveniens, the moving party must demonstrate that (1) an adequate alternative forum is available; (2) the relevant private interest factors favor the alternative forum, weighing in the balance a strong presumption against disturbing a plaintiff's initial forum choice; (3) if the balance of private interests is at or near equipoise, the relevant public interest factors favor the alternative forum; and (4) the plaintiff can reinstate its suit in the alternative forum without undue inconvenience or prejudice. Aldana v. Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283, 1288 (11th Cir. 2009).

         Although a court may consider matters outside the pleadings in ruling on a motion to dismiss based on forum non conveniens, if it rules on the motion without an evidentiary hearing, it must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff. See Jiangsu, 159 F.Supp.3d at 1322.

         B. Discussion

         1. Adequacy and Availability of the Alternative Forum

         The first factor in the forum non conveniens analysis involves two inquiries, each of which “warrant[s] separate consideration.” Leon v. Millon Air, Inc., 251 F.3d 1305, 1311 (11th Cir. 2001). The Court must determine whether the alternative forum is “adequate” and whether the alternative forum is “available.” Aldana, 578 F.3d at 1290.

         a. ...

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