In a March 30, 2011 decision by Justice Sherwood, the Court extended judicial comity to a decision by a British Columbia court dismissing a complaint by Carl Icahn against the Lions Gate Entertainment Corp. that asserted claims of shareholder oppression and breach of fiduciary duty, and dismissed the complaint brought in New York County which alleged causes of action for breach of a Standstill Agreement, tortious interference with contractual rights, tortious interference with prospective business relations, and violations of the New York Stock Exchange Rules. In dismissing the complaint, the court adhered to the longstanding policy of New York courts to give preclusive effect to foreign country judgments, especially judgments from Canadian courts where plaintiffs have substantive rights similar to those available in U.S. courts, and in this case, where the British Columbia courts maintain a statutory mechanism to address a shareholder’s claim of oppression. The court also found that the doctrine of res judicata barred Icahn from litigating in New York because (1) the Canadian decision was based on the merits (and not solely on procedural standing) which were similar to the claims raised in the New York action, (2) the Canadian action involved the same parties and series of transactions, (3) Icahn could have, but failed to raise the other claims in the Canadian action, and (4) a judgment for Icahn would effectively invalidate the British Columbia court’s judgment premised on a finding that there was no breach of the Standstill Agreement. The court specifically rejected Icahn’s argument that he could not have asserted the common law breach of contract claim in the Canadian action on the grounds that the mere procedural differences to assert the breach of contract and oppression claims did not foreclose Icahn’s ability to bring the claim; the Canadian statutes providing for oppression remedies also allowed for corporate derivative actions; there were numerous Canadian cases where claims for oppression and breach of contract were alleged; and Icahn failed to identify any Canadian procedural rule barring the claims he asserted in New York.
Icahn v Lions Gate Entertainment Corp., Sup Ct NY County, March 30, 2011, Sherwood, J, Index No. 651076/10