Citigroup Inc. will stand trial after all for its alleged role in the collapse of Parmalat SpA.
New Jersey state Judge Jonathan Harris, of Bergen County Superior Court, ruled on Tuesday that a jury trial should begin on May 5. However, he did dismiss some of the claims raised by Parmalat CEO Enrico Bondi, according to Reuters, which also said that Citigroup’s counterclaims must be resolved at trial.
The Italian dairy giant, which filed for Europe’s largest bankruptcy in 2003, sued Citigroup for $10 billion. Parmalat alleged that the bank had helped former management hide debt and inflate results, the wire service noted, pointing out that much of the litigation has been handled in Italy and a Manhattan federal court.
Part of the case goes to the heart of whether third parties can be held liable for another company’s wrongdoing.
In May 2007, New Jersey’s Supreme Court rejected Citigroup’s motion to dismiss the lawsuit, upholding an earlier ruling by Bergen County Judge Harris. Back then, he had turned aside the bank’s argument that Parmalat had brought the lawsuit in the wrong forum.
Citigroup argued that New Jersey was not equipped to deal with the case, did not have key witnesses and documents, and should not be forced to interpret Italian law.
“Citigroup has done nothing wrong, and we look forward to being vindicated,” bank spokesman Daniel Noonan told Reuters at the time. Indeed, later in 2004, Citigroup asserted in a court filing in Parma, Italy, that Bondi “has presented no credible evidence that substantiates his allegations of wrongdoing” and that his lawsuit “relied on a collection of fundamental misrepresentations, misunderstandings and factual errors.”
In August 2005, a federal judge pared the scope of the lawsuit, which asserted that the bank helped Parmalat commit a massive financial fraud. Judge Lewis Kaplan of U.S. district court in Manhattan, dismissed 10 of the 12 claims made by the Italian conglomerate, allowing only claims of conspiracy and breach of fiduciary duty to stand. The judge did permit Parmalat to replead one of the charges.
Last July, Bank of America was ordered to stand trial for alleged bid-rigging by some of its employees related to Parmalat’s collapse.
In early January Bank of America, Citigroup, and Pavia e Ansaldo filed letters saying claims that they had engaged in deception and scheming should be dropped in light of the January landmark decision in Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc., according to The Securities Class Action Clearinghouse.