Judge rejects bid to revive fraud case against James River
A New York federal judge has refused to revive a securities-fraud lawsuit brought by Fleming Intermediate Holdings against Bermudian-based James River Group Holdings, ruling that the claims remain “predominantly foreign” despite Fleming’s argument that it was misled in a United States courtroom.
In an order issued on Tuesday, Judge Jennifer Rochon denied Fleming’s motion for reconsideration, leaving in place her July decision that dismissed the case on the grounds that the dispute falls outside the reach of American securities law.
The case stems from Fleming’s 2024 agreement to buy JRG Re, a Bermudian reinsurer wholly owned by James River, under a nearly $300 million stock purchase agreement governed by Bermuda law. Fleming, a Cayman Islands company, later said it discovered irregularities in JRG Re’s financial and regulatory filings and accused James River of breaching the agreement. James River then obtained a New York state court order forcing Fleming to complete the closing, a move Fleming claims was based on misrepresentations.
After the transaction closed, Fleming sued in federal court, alleging that James River violated Section 10(b) of the United States Securities Exchange Act by making false statements about JRG Re’s compliance with Bermuda’s Insurance Act, its dealings with the Bermuda Monetary Authority and a $139 million transfer from the reinsurer.
Judge Rochon dismissed the suit in July, finding that even though some negotiations and financing involved the United States, the heart of the dispute concerned foreign parties, a private offshore transaction and alleged misconduct governed by Bermuda’s regulatory regime.
Fleming returned to court arguing that the judge had not given enough weight to James River’s alleged misstatements to the New York state judge who compelled closing. It also claimed that the court should not have weighed foreign and domestic factors at the motion-to-dismiss stage.
Judge Rochon rejected both points. She ruled that Fleming had not raised its objections in an earlier briefing and, even if it had, Second Circuit precedent allows courts to weigh the foreign and domestic elements of a transaction when deciding whether US law applies. She also held that the alleged deception of a US state judge did not change the fact that resolving the claims would still require determining whether JRG Re violated Bermuda law, keeping the dispute squarely in foreign territory.
“The underlying transaction involved a private agreement governing the purchase of a foreign company whose shares are not listed on a US exchange, a foreign seller and a foreign buyer,” she wrote, adding that the claims could not be decided without assessing Bermudian law and regulatory requirements.
The ruling means the dismissal stands, and Fleming’s federal claims will not proceed.
• For the full opinion and order, see Related Media
