FAIRFAX FINANCIAL HOLDINGS LIMITED, ET AL. VS. S.A.C.
CAPITAL MANAGEMENT, L.L.C., ET AL.
A-0963-12T1
Plaintiff Fairfax Financial Holdings, a Canadian corporation, and plaintiff Crum & Forster Holdings Corp., a New Jersey corporation, commenced this action claiming that defendants – New York-based hedge funds, analysts, and others involved in the New York financial market – conspired in violation of racketeering laws to disparage plaintiffs so as to drive down their stock values. Some defendants profited from the alleged enterprise's actions by "shorting" plaintiffs' stock and some defendants profited in other indirect ways. After considerable discovery, including the production of millions of pages of documents and the conducting of approximately 150 depositions, all plaintiffs' RICO and common law claims were dismissed by way of summary judgment.
In affirming in part and reversing in part, the court held,
among other things: (1) the RICO claims were properly dismissed
because New Jersey choice-of-law rules mandated the application
of New York law, which, unlike New Jersey law, does not
recognize a private civil RICO cause of action; (2) New Jersey's
six-year statute of limitations applied to plaintiffs'
disparagement claim rather than a shorter New York limitations
period; (3) New York substantive law applied to plaintiffs'
disparagement and tortious interference with prospective
economic advantage claims and required that plaintiffs
demonstrate special damages, which required their identification
of lost customers; (4) plaintiffs' identification of 180 lost
customers was sufficient to meet New York's special-damages
requirement but their expert's attempt to quantify the portion
of the market lost to plaintiffs as a result of the alleged
disparagement did not meet New York's special-damages standard;
and (5) two groups of New York defendants were properly
dismissed on personal jurisdiction grounds because, among other
things, plaintiffs presented insufficient evidence to support
its theory – on the assumption such a theory is cognizable – of
conspiracy-based jurisdiction.
