Opinion
99 Civ. 2216 (JSR).
February 28, 2007
OPINION AND ORDER
By motion dated September 15, 2006, defendants moved for summary judgment dismissing plaintiffs' Complaint on the ground that plaintiffs' remaining claims in this action are precluded under the doctrine of res judicata by an award issued on May 16, 2006 in a related arbitration. For the reasons that follow, defendants' motion is granted.
Defendants also moved, in the alternative, for dismissal of the action under the doctrine of forum non conveniens. The Court need not reach this issue.
The pertinent facts, either undisputed, or, where disputed, taken most favorably to plaintiffs, are as follows. Defendant Bancolombia is the surviving entity after the merger of Banco de Columbia S.A. ("BDC") and Banco Industrial Colombiano S.A. ("BIC"), which followed BIC's acquisition of BDC. Defendants' Statement of Undisputed Facts in Support of Their Motion for Summary Judgment ("Def. St.") ¶ 1; Plaintiffs' Counter-Statement to Defendants' Rule 56.1 Statement ("Pl. St.") ¶ 1. The individual defendants were directors or officers of BIC at the time of the acquisition. Def. St. ¶ 2; Pl. St. ¶ 2. Plaintiff Bancol y Compañía S. en C. ("Bancol") was the selling shareholder of BDC. Def. St. ¶ 3; Pl. St. ¶ 3. Following the sale of Bancol's interest in BDC, Bancol was transferred, via liquidation, to the other plaintiffs, which are corporations organized under the laws of the British Virgin Islands. Def. St. ¶¶ 4-6; Pl. St. ¶¶ 4-6.
Plaintiffs' claims in the instant action all relate to defendants' alleged conduct during the negotiation and execution of the acquisition and merger agreement dated August 24, 1997, last amended on March 30, 1998 (the "Agreement"). Def. St. ¶ 8; Pl. St. ¶ 8. The Agreement provided for the acquisition of BDC by BIC through BIC's cash purchase of 51% of BDC's shares and the subsequent merger of BDC into BIC. Def. St. ¶ 9; Pl. St. ¶¶ 2, 9.
The Agreement contains an arbitration provision stating that
any disputes that might arise between the contracting parties in connection with the making, validity, interpretation, execution and termination of the within Contract, and which cannot be directly resolved by the parties themselves and for which there are no executory measures, . . . shall be submitted to an arbitration board composed of three (3) arbitrators . . . in Santafé de Bogotá, . . . [that] shall rule consonant with law.
Pl. St. ¶ 10; Def. St. ¶ 10. The Agreement also contains a choice of law clause providing that
This [A]greement shall be governed, interpreted and executed in accordance with the laws of the Republic of Colombia, except in relation to the transactions that would be made abroad, which will be governed by the laws of the respective place.
Pl. St. ¶ 11; Def. St. ¶ 11.
In spite of these arbitration provisions, plaintiffs filed the Complaint in the instant case on March 24, 1999. The Complaint alleges a scheme by defendants to fraudulently induce Bancol to enter the Agreement, to refrain from exercising its right to terminate the acquisition by BIC of BDC under the Agreement, and to accept and hold American Depositary Receipts ("ADRs") until after the disclosure that defendants had failed to capitalize BIC in the amount promised in the Agreement. Def. St. ¶ 12; Pl. St. ¶ 12. As further elaborated in the instant motion practice, the alleged scheme had three key parts:
First, plaintiffs allege that defendants manipulated the price of BIC ADRs on the New York Stock Exchange before the Agreement was signed to make it look like BIC ADRs were worth $18 per share. Def. St. ¶ 14; Pl. St. ¶ 14.
Second, plaintiffs allege that BIC repeatedly and knowingly represented falsely to Bancol and Colombian authorities that BIC would obtain at least $150 million in new equity to finance BIC's initial cash purchase of 51% of BDC's shares, which induced plaintiffs not to exercise their contractual right to unwind the acquisition, when in reality, BIC raised less than $88.4 million. Def. St. ¶¶ 15-17; Pl. St. ¶¶ 15-17.
Third, plaintiffs allege that defendants violated Colombian law and sound banking practices by using BDC's resources to acquire BDC itself and by allowing BDC to issue excessive loans to BIC affiliates. Def. St. ¶¶ 18-19; Pl. St. ¶¶ 18-19.
The Complaint further alleges, inter alia, that this fraudulent scheme violated various U.S. securities laws, including Sections 18(a) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (collectively, the "1934 Act claims").
Defendants promptly responded to the Complaint by filing a motion to compel arbitration under the broad arbitration clause in the contract and to stay any nonarbitrable claims (assuming there were any). Plaintiffs answered defendants' motion by arguing, first, that plaintiffs' 1934 Act claims were not arbitrable under the Agreement's arbitration clause and, second, that the arbitrators in Colombia would be unable to apply U.S. securities laws.
In a Memorandum Order dated August 11, 1999, this Court held, with respect to plaintiffs' first argument, that "this threshold issue of arbitrability as a matter of contractual interpretation is here remitted to the arbitration panel to decide, for the parties have agreed . . . to submit to arbitration, 'any disputes . . . in connection with . . . the interpretation' of the Contract." Bancol y Cia. S. En. C. v. Bancolombia S.A., 61 F. Supp. 2d 1, 2 (S.D.N.Y. 1999).
With respect to plaintiffs' second argument, this Court held that plaintiffs had not shown either that Colombian arbitrators could not apply U.S. securities law or that remedies under Colombian law would be inadequate:
Plaintiffs raise a separate objection to the arbitration of their claims under United States securities law, premised on their experts' initial assertion that, notwithstanding the Contract's choice-of-law provision, ante, Colombian courts, and therefore arbitrators, "have no authority to apply foreign substantive law," Joint Declaration of Dr. Fernando Londono Hoyos and Dr. Adolfo Salamanca Correa, dated May 19, 1999 ("Londono Decl."), ¶¶ 9, 10. On this premise, plaintiffs argue that the arbitrability of their securities law claims is prohibited by the so-called "anti-waiver" provision of the Securities Exchange Act of 1934, 15 U.S.C. § 78cc(a). . . .
Nowhere, however, do plaintiffs or their experts cite a Colombian code provision or applicable precedent reasonably supporting their underlying assertion that Colombian courts have no authority to apply foreign substantive law. By contrast, defendants' expert has referred the Court to specific Colombian code provisions that permit and, indeed, presuppose the application of foreign substantive law, see Monroy Reply Decl., ¶¶ 4-6, n. 1. Indeed, when confronted with these references, plaintiffs' expert retreated and, now conceding that Colombian courts can sometimes apply foreign law, contended that this was limited to specific circumstances expressly provided for by statute. See Supplemental Declaration of Dr. Fernando Londono Hoyos, dated June 18, 1999 ("Londono Suppl. Decl."), ¶¶ 6-11. Even this more limited assertion is, however, unsupported by meaningful citation and, in these circumstances, is entitled to little weight or credence.
Moreover, even assuming, arguendo, that the Colombian arbitration panel could not apply United States law, enforcement of the arbitration clause would still not offend the anti-waiver provision because plaintiffs have not shown the remedies under Colombian law to be inadequate. See Roby [v. Corporation of Lloyd's], 996 F.2d [1353,] 1365-66 [(2d Cir. 1993)]. While plaintiffs' experts argue that "[i]t is uncertain that plaintiffs would be able to pursue a civil fraud claim," Londono Decl. ¶ 37, they once again fail to provide meaningful particularized support for this conclusory assertion. By contrast, defendants have referred the Court to Articles 1515 and 2341 of the Colombian Civil Code, which, upon inspection, provide basic rights-of-action for fraud and "extra-contractual liability" under which the aggrieved party can recover earnings or profits that were lost because of the fraudulent act. See Marco Gerardo Monroy Cabra, dated June 2, 1999 ("Monroy Decl.") ¶¶ 14, 16, see also Monroy Reply Decl. ¶ 20, Ex. 20.Bancol, 61 F. Supp. 2d at 2-3 (footnote omitted).
Accordingly, the Court granted defendants' motion to compel arbitration and, initially, dismissed the Complaint. Id. at 3. However, the Court subsequently recognized, in a Memorandum Order dated September 28, 1999, that "the arbitrators might decline to arbitrate all or some portion of the underlying dispute and thus effectively require its return to this Court," and accordingly vacated the Final Judgment dismissing the Complaint and directed the Clerk to place the matter on the suspense calendar pending resolution of all relevant arbitration proceedings. Id.
With the matter on the suspense calendar in this Court, the stage was set for proceedings in Colombia. After extensive preliminaries related principally to the selection of the panel of arbitrators, plaintiffs filed their arbitration demand on April 24, 2004, and on October 12, 2004 filed an amended demand (the "Demand"). Declaration of Luis Eduardo Nieto dated October 12, 2006 ("Nieto Decl."), at ¶ 7; Def. St. ¶ 23; Pl. St. ¶ 23. The Demand alleges essentially the same misconduct alleged in the Complaint in this Court: the ADR manipulation, the failure to raise $150 million in capital, and the operations in violation of law and sound banking practices. Def. St. ¶¶ 28-45; Pl. St. ¶¶ 28-45. The Demand sets forth these allegations in one set of "principal claims" and five sets of "alternative claims." Def. St. ¶ 41; Pl. St. ¶ 41.
Plaintiffs note throughout their 56.1 statement that Colombian law distinguishes between "claims," which plaintiffs allege are akin to prayers for relief under American practice, and "grounds," which plaintiffs allege are the laws that entitle plaintiffs to relief.
The fifth set of "alternative claims" — which is the one relevant to the instant dispute — sets forth a general cause of action for fraud, asserting that "the Respondent Bank is liable for the DAMAGES caused to Claimants by reason of the intentional maneuvers and fraudulent machinations, prior, concurrent, and subsequent, committed by the Respondent Bank on occasion of the agreement entered on August 24, 1997." Def. St. ¶ 44; Pl. St. ¶ 44.
After setting out the principal claims and the alternative claims, the Demand sets forth the legal bases, or grounds, that plaintiffs assert entitle them to relief on the claims. Def. St. ¶ 46; Pl. St. ¶ 46. The Demand specifies the U.S. securities laws referenced in plaintiffs' Complaint in the instant action as one of the legal bases for relief on the fifth set of alternative claims. Def. St. ¶ 46; Pl. St. ¶ 46. Plaintiffs also submitted to the panel, with the Demand, an affidavit attaching copies of the text of each of the U.S. statutes and rules cited. Def. St. ¶ 47; Pl. St. ¶ 47.
Following extensive discovery, the panel held hearings between November 2004 and May 2006. Def. St. ¶¶ 50-51; Pl. St. ¶¶ 50-51. The panel issued a 315-page Award dated May 16, 2006. Def. St. ¶ 52; Pl. St. ¶ 52. For purposes of this motion, plaintiffs have agreed to rely on defendants' translation of the Award. Pl. St. ¶ 3 n. 2.
In the Award, after an extensive presentation of the facts underlying the dispute, the tribunal "concluded that the Arbitration Clause permitted the general resolution of the arbitral dispute" and found that "the Tribunal is competent to hear and resolve the claims." Declaration of Jorge Suescun Melo dated September 12, 2006 ("Suescun Decl."), Ex. 9 ("Award") at 128; Def. St. ¶ 53; Pl. St. ¶ 53. Neither party objected to the tribunal's competence to hear and decide all of plaintiffs' claims. Def. St. ¶ 54; Pl. St. ¶ 54. On the merits, the tribunal decided all of the claims listed in the Demand. Award at 274-277; Def. St. ¶ 55; Pl. St. ¶ 55. The tribunal rejected all claims against the individual defendants and all but a single breach of contract claim against Bancolombia. Def. St. ¶¶ 56-57; Pl. St. ¶¶ 56-57.
In particular, the tribunal rejected the three contentions plaintiffs make in the Complaint here. First, the tribunal found that Bancolombia had not manipulated the price of ADRs on the New York Stock Exchange. Def. St. ¶ 58; Pl. St. ¶ 58. Second, the tribunal found that the failure to raise $150 million in new equity was neither a breach of any express undertaking of the parties' Agreement nor fraudulent or willful misconduct. Def. St. ¶ 61; Pl. St. ¶ 61. Third, the tribunal found that defendants did not engage in transactions or conduct in violation of Colombian law and sound banking practices. Def. St. ¶ 60; Pl. St. ¶ 60. The tribunal did, however, find a breach of certain "secondary duties of conduct" and awarded some $17 million on this claim. Def. St. ¶¶ 65-66; Pl. St. ¶¶ 65-66.
With respect to plaintiffs' fifth set of alternative claims — the claims for which plaintiffs asserted the U.S. securities laws as one possible ground for relief — the tribunal stated:
With respect to a breach of duty of conduct by reason of willful misconduct, or that the lesser capitalization resulted from BIC's premeditation, the Tribunal does not consider it thus. Indeed, the capitalization offered by BIC's legal representative to the Banking Superintendancy for fifty million US Dollars is far from being a premeditated act or willful misconduct.
Award at 213-14; Def. St. ¶ 67; Pl. St. ¶ 67.
On May 25, 2006, the parties submitted post-Award requests to the tribunal. Def. St. ¶ 68; Pl. St. ¶ 58. Plaintiffs specifically requested, inter alia, that the tribunal supplement the Award to address "applicable rules under the so called Securities Exchange Act of 1934 and the Code of the United States of America, under the aforementioned sections, referred to in the petition, unless the Tribunal has concluded that the foreign law was not proven or having been proved it is not within the scope of the arbitral jurisdiction." Suescun Decl. Ex. 11 at 5; Def. St. ¶¶ 69-70; Pl. St. ¶¶ 69-70. The tribunal rejected plaintiffs' request, stating that "all the claims were studied and decided upon with maximum care and discipline by the Tribunal. This is reflected not only in the methodical form in which the claims in the complaint were presented, but also in the detailed analysis of them, which led to the detailed ruling on such claims." Suescun Decl. Ex. 11 at 5; Def. St. ¶ 71; Pl. St. ¶ 71.
In June 2006, Bancolombia petitioned a Colombian court to annul the award of damages against the bank. Def. St. ¶ 72; Pl. St. ¶ 72. If granted, the petition would allow the court to correct only the damages award against the bank. Def. St. ¶ 74; Pl. St. ¶ 74. Under Colombian law, arbitral awards are enforceable and entitled to res judicata effect during the pendency of an annulment proceeding. Def. St. ¶ 75; Pl. St. ¶ 75.
Turning to the instant motion, defendants argue that the Court should grant summary judgment dismissing plaintiffs' Complaint because the Award precludes plaintiffs' remaining claims in this action. "[S]ummary judgment is appropriate where there exists no genuine issue of material fact and, based on the undisputed facts, the moving party is entitled to judgment as a matter of law." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Although the Court must "draw all inferences and resolv[e] all ambiguities in favor of the party opposing the motion . . . [, t]he non-moving party may not rely on conclusory allegations or unsubstantiated speculation." Id. Accord, e.g., Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 42 (2d Cir. 1986). Instead, "the non-movant must produce specific facts indicating" that a genuine factual issue exists. Wright v. Coughlin, 132 F.3d 133, 137 (2d Cir. 1998).
"To prove that a claim is precluded under th[e] doctrine" of res judicata, "'a party must show that (1) the previous action involved an adjudication on the merits; (2) the previous action involved the [parties] or those in privity with them; [and] (3) the claims asserted in the subsequent action were, or could have been, raised in the prior action.'" Pike v. Freeman, 266 F.3d 78, 91 (2d Cir. 2001) (quoting Monahan v. New York City Dep't of Corr., 214 F.3d 275, 284-85 (2d Cir. 2000)); see Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981) ("A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.").
In their motion papers here, plaintiffs initially argued that "Defendants Bear The Burden Of Demonstrating That The Issues On Which They Seek Preclusion Were Actually Decided By The Panel." Plaintiffs' Memorandum in Opposition to Defendants' Motion for Summary Judgment ("Pl. Opp'n Mem.") at 17. But, as plaintiffs later conceded at oral argument, see transcript, November 27, 2006 ("Tr."), at 3-4, that is the standard that applies under the doctrine of collateral estoppel, not res judicata. See Clarke v. Frank, 960 F.2d 1146, 1150 (2d Cir. 1992). By contrast, res judicata bars the re-litigation, not only of claims that were "actually decided" in a prior action, but also of those claims that "were or could have been raised" in the prior action.Federated Dep't Stores, 452 U.S. at 398. Thus, defendants need not demonstrate that the tribunal "actually decided" plaintiffs' claims under U.S. securities law to prevail on the instant motion; defendants need only demonstrate that the claims at issue "were or could have been raised" in the arbitration.
"It is well settled that this doctrine [of res judicata] serves to bar certain claims in federal court based on the binding effect of past determinations in arbitral proceedings." Pike, 266 F.3d at 90; see also 18B Wright, Miller Cooper, Federal Practice and Procedure: Jurisdiction 2d § 4475.1, at 509 (2002). Although, in certain circumstances, "the preclusive effect of the prior arbitration award ha[s] to be decided in [a] later arbitration," Nat'l Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 136, 133 (2d Cir. 1996), in the instant matter, in letter briefs dated December 4, 2006, both plaintiffs and defendants waived any right they may have had pursuant toNational Union to submit to arbitration the question of the preclusive effect of the Award.
Plaintiffs assert, based on Wolf v. Gruntal Co., Inc., 45 F.3d 524 (1st Cir. 1995) and Clark v. Bear Stearns Co., Inc., 966 F.2d 1318 (9th Cir. 1992), that res judicata does not apply in cases involving federal securities law claims based on conduct that was addressed in a prior arbitration. Pl. Opp'n Mem. at 21. But in Wolf and Clark, the arbitration clauses at issue expressly reserved from arbitration claims under the federal securities laws. Wolf, 45 F.3d at 528-30; Clark, 966 F.2d at 1321 n. 2. Thus, the federal securities law claims in these cases could not have been raised in the arbitrations involved and this prerequisite for applying the doctrine of res judicata was accordingly not met. In the instant case, however, the arbitration clause does not reserve federal securities law claims from arbitration. See Pl. St. ¶ 10; Def. St. ¶ 10. Accordingly,Wolf and Clark are irrelevant to the instant motion.
Thus, the task of determining whether the Award is entitled to preclusive effect falls to this Court. The parties do not dispute that the Award constituted an adjudication on the merits or that the instant case involves the same parties as the arbitration; the dispute is over whether plaintiffs' securities fraud claims "were or could have been raised" in the arbitration. Federated Dep't Stores, 452 U.S. at 398.
Defendants argue that the undisputed facts show that plaintiffs' 1934 Act claims not only could have been raised, but were, in fact, raised in the arbitration. To start, plaintiffs admit that they "tendered [their] 1934 Act Claims to the Panel," Pl. Opp'n Mem. at 21, as a legal basis for relief on plaintiffs' fifth set of alternative claims, see Suescun Decl. Ex. 4 at 2. Further, the undisputed facts show (a) that the panel found itself "competent to hear and resolve the claims," Award at 128; Def. St. ¶ 53; Pl. St. ¶ 53, (b) that neither party objected to the tribunal's competence to hear and decide all of plaintiffs' claims, Def. St. ¶ 54; Pl. St. ¶ 54, (c) that the tribunal did decide all of the claims listed in plaintiffs' demand, including the fifth set of alternative claims for which plaintiffs asserted the 1934 Act as a basis for relief, Def. St. ¶ 55; Pl. St. ¶ 55, and (d) that the tribunal rejected all claims against the individual defendants and all but a single breach of contract claim against Bancolombia, Def. St. ¶¶ 56-57; Pl. St. ¶¶ 56-57.
As noted above, the undisputed facts also show that in a post-Award motion for "complementation," plaintiffs specifically requested, inter alia, that the tribunal supplement the Award to address "applicable rules under the so called Securities Exchange Act of 1934 and the Code of the United States of America, under the aforementioned sections, referred to in the petition, unless the Tribunal has concluded that the foreign law was not proven or having been proved it is not within the scope of the arbitral jurisdiction." Suescun Decl. Ex. 11 at 5; Def. St. ¶¶ 69-70; Pl. St. ¶¶ 69-70. As also noted, the tribunal rejected plaintiffs' request because "all the claims were studied and decided upon with maximum care and discipline by the Tribunal. This is reflected not only in the methodical form in which the claims in the complaint were presented, but also in the detailed analysis of them, which led to the detailed ruling on such claims." Suescun Decl. Ex. 11 at 5; Def. St. ¶ 71; Pl. St. ¶ 71.
While this response, on its face, suggests that the panel clearly believed that it had already resolved the 1934 Act claims on their legal and factual merits, plaintiffs argue that the fact that the panel "said they dealt with all claims" does not mean that the panel dealt with all "grounds" plaintiffs asserted as a basis for relief, including the Securities Exchange Act, because "under Col[o]mbian law, . . . there is a sharp distinction" between claims and grounds. Tr. at 12 (emphasis added). But the panel's rejection of plaintiffs' fifth set of alternative "claims" necessarily entailed a finding that plaintiffs were not entitled to relief under any of the "grounds" offered, including the relevant provisions of the 1934 Act, which, as noted, plaintiffs had previously brought to the panel's attention.
Plaintiffs dispute this conclusion and argue that "[t]he Panelmay have found that the 1934 Act Claims were not arbitrable," in which case the Award would not preclude the assertion of those claims here. Pl. Opp'n Mem. at 22 (emphasis added). But, quite aside from the fact that this represents a strained reading of the panel's straightforward response, "mere conjecture or speculation by the party resisting summary judgment does not provide a basis upon which to deny" the motion, Argus, 801 F.2d at 42, and plaintiffs offer no more than that. Plaintiffs conjure up two scenarios in which the tribunal may have found it lacked jurisdiction, but neither is supported by any evidence.
In the first conjecture, plaintiffs speculate that the tribunal may have found that Colombian law forbade the tribunal from applying U.S. law. Nothing in the panel's own words remotely hints at this possibility. Rather, in support, plaintiffs have presented the same expert declarations this Court reviewed in 1999. See Nieto Decl. ¶ 53 (citing Londono Decl. Londono Suppl. Decl.). But in its prior decision in this matter, this Court found that these same declarations were "unsupported by meaningful citation and . . . entitled to little weight or credence." Bancol, 61 F. Supp. 2d at 2-3. "By contrast," this Court found, "defendants' expert ha[d] referred the Court to specific Colombian code provisions that permit and, indeed, presuppose the application of foreign substantive law." Id. at 3. Thus, there is no reason to believe that the tribunal, in violation of Colombian law, would have concluded that they were precluded from applying U.S. securities laws relating to fraud.
In their other conjecture, plaintiffs argue that the tribunal may have found under Colombian law that "tort-type claims such as the 1934 Act Claims do not 'arise with regard to the contract' because they do not relate to performance or breach of the contract itself and were therefore not arbitrable under Colombian law." Pl. Opp'n Mem. at 22. Again, nothing in the panel's response remotely hints at this possibility. Moreover, plaintiffs' own expert — the only authority plaintiffs cite in support of this second conjecture — admits that "there are arguments available under Colombian law pointing to the opposite conclusion." Nieto Decl. ¶ 52. In these circumstances, plaintiffs' "mere conjecture [and] speculation" that the panel may have found it lacked jurisdiction is inadequate to defeat defendants' motion for summary judgment. Argus, 801 F.2d at 42.
Plaintiffs further argue that even if the panel found the securities fraud claims arbitrable, the panel applied an inappropriately high standard of scienter when the panel rejected plaintiffs' fifth set of alternative claims because plaintiffs had not shown a "positive intention of causing damage to another." Award at 235. Plaintiffs argue that this standard is higher than the "recklessness" standard permitted under U.S. securities fraud civil case law, and that the panel's application of this standard therefore "does not vindicate American public interests in applying laws to regulate publicly-traded securities in a manner that provides a potent means of deterring the exploitation of American investors." Pl. Opp'n Mem. at 26 (internal quotation marks omitted). But the panel's language simply mirrors the language plaintiffs themselves used in their Demand, which alleged "intentional maneuvers and fraudulent machinations," rather than recklessness. Nieto Decl. ¶ 42.
Plaintiffs are also wrong to suggest that the standard used by the panel "contrasts sharply" with that available under the 1934 Act. Pl. Opp'n Mem. at 25-26. It is well established that "[t]he requisite state of mind in a Rule 10b-5 action is an intent to deceive, manipulate or defraud." Ganino v. Citizens Utils. Co., 228 F.3d 154, 168 (2d Cir. 2000) (internal quotation marks omitted). While it is true that in certain circumstances "recklessness suffices to plead scienter under . . . Rule 10b-5,"Novak v. Kasaks, 216 F.3d 300, 308 (2d Cir. 2000), "recklessness" in such a context refers to "conduct which is highly unreasonable and which represents an extreme departure from the standards of ordinary care . . . to the extent that the danger was either known to the defendant or so obvious that the defendant must have been aware of it." Rolf v. Blyth, Eastman Dillon Co., Inc., 570 F.2d 38, 47 (2d Cir. 1978) (internal quotation marks omitted). Such "recklessness" does not "contrast sharply" with any standard articulated by the panel. Nor does it comport with any theory of plaintiffs' 1934 Act claims set forth in plaintiffs' own Demand. Further still, the facts actually found by the panel in rejecting plaintiffs' Demand are entirely inconsistent with any claim of recklessness.
Finally, even assuming, arguendo, that the panel applied a higher scienter standard than the 1934 Act requires, this Court previously found that "enforcement of the arbitration clause would still not offend the anti-waiver provision [of the 1934 Act] because plaintiffs have not shown the remedies under Colombian law to be inadequate." Bancol, 61 F. Supp. 2d at 3 (citing Roby, 996 F.2d at 1365-66). Plaintiffs have not "produce[d] specific facts indicating" that a different conclusion should be reached here. Wright, 132 F.3d at 137.
The Court has considered plaintiffs' other arguments but finds them without merit. Accordingly, for the foregoing reasons, summary judgment is granted to defendants dismissing plaintiffs' Complaint in its entirety, with prejudice. The Clerk is directed to close document 51 and to enter judgment in defendants' favor.
SO ORDERED.