Barclays: Reshoring Claims Exported by Morrison (Part 2)
The following article was originally published in the American Bar Association’s Litigation Section on Nov. 4, 2025 and has been reprinted in two parts. Part 1 examines what Merritt v. Barclays means for keeping related claims together, while Part 2 unpacks the court’s views on the adequacy of alternative foreign venues.
In Merritt v. Barclays PLC, 2025 U.S. Dist. LEXIS 120796 (C.D. Cal. July 10, 2025), the court asserted supplemental authority over United Kingdom (U.K.) securities law claims after first considering the adequacy of the alternative foreign venue.
Most non-U.S. courts are poor venues for shareholder suits. While it’s beyond the scope of this article to delineate the shortcomings of each, it’s fair to say that class counsel has a proverbial treasure trove of examples on which to base arguments for their inadequacy. For example, in 2020, China amended its securities law to strengthen investor protections; however, the government controls class action prosecutions, and we have not seen any since 2021, when $385 million was returned to investors of Kangmei Pharmaceutical Co., Ltd.
Japan is another country with seemingly favorable securities laws. However, courts have recently hamstrung recoveries by requiring shareholders to identify which shares on a company’s registry are beneficially owned by them, a difficult task because most shares are held in street name by local custodians who frequently won’t cooperate.
With limited exceptions, European countries have also proven poor venues for investors. Proceedings involve seemingly endless hearings on preliminary procedural or standing matters that do little or nothing to advance the merits of claims. Courts frequently don’t order companies to produce relevant information, limiting what investors can prove. In Germany, courts seem to favor corporate interests and have saddled claimants with obstacles around case formation. They have also shown great willingness to dismiss claims based on technical failures that have nothing to do with the merits and cannot be fixed by plaintiffs due to an inability to amend pleadings after limitations periods expire
Forum Non Conveniens—Private Factors
The Barclays court gave most weight to the private factors. The post-Morrison experience offers additional support for them.
Forum Convenience for Litigants
As in Barclays, the issuers in U.S. ADR class actions are all international companies familiar with the U.S. federal court system. In the post-Morrison world, overseas institutional investors are also increasingly comfortable with U.S. class actions. They regularly file proof-of-claim forms in settlements. Many have served as lead plaintiffs or opted out to pursue direct suits. For years, the U.S. plaintiff bar has been active overseas, encouraging foreign investors to join U.S. litigations in both federal and state courts.
Claim Splitting Is Unfair to Similarly Situated Investors
In Barclays, the court noted that separating claims was less efficient for the parties because the defendant company would still need to litigate in the U.S. even if foreign law claims were dismissed. The post-Morrison experience confirms the inefficiency and unfairness of splitting up claims.
Consider the plight of Fiat Chrysler investors following the 2015 emissions scandals. That year, the company was sued for securities fraud in a U.S. class action limited to investors who purchased the company’s common stock on the U.S. exchange or U.S. alternative trading systems. Claims for shares purchased on Italy’s national stock exchange in Milan were excluded from the class and the $110 million U.S. settlement that followed.
In 2021, Stellantis NV (a Dutch entity) was formed through a merger between the French PSA Group and Fiat Chrysler. In 2024, a Dutch foundation was launched for investors who bought Fiat shares on the Milan exchange seeking compensation for claims arising from the same underlying scandal. On July 23, 2025, the Dutch court declared the foundation inadmissible, essentially ending the case before it started.
Class Action Settlement Releases Can Prejudice Claimants
The Barclays court noted that many class members with foreign law claims are domiciled or located in the U.S. Splitting claims may force them to forgo compensation in one forum to preserve their claims in another. After public revelations of corporate wrongdoing, U.S. securities class actions almost always precede non-U.S. recovery efforts based on the same underlying events. Given the faster pace of U.S. legal proceedings, U.S. class actions may even be resolved, by dismissal or settlement, before the non-U.S. recovery efforts get under way. The release language in U.S. settlements can hamper the ability of investors with both U.S. and non-U.S. claims to initiate or continue pursuing things outside the U.S
For example, in 2022, the U.S. securities class action against Nissan Motor Co., Ltd., settled for $36 million. The broad release language in that case forced eligible claimants who already had claims based on the same alleged fraud pending in the Japanese courts to choose between taking the U.S. settlement money or continuing their suits in Japan. They had to estimate potential recoveries in each and choose one or the other, either way preventing them from fully recovering for their losses. Claimants would not face these challenges if U.S. courts kept all investor claims together.
U.S. Courts Provide Access to Sources of Proof
The Barclays court noted that defendant companies would still need to produce discovery in the U.S., even if claims were split. In other words, even if the parties, witnesses, and sources of proof were based outside the U.S., that information would still need to be produced in the U.S.
Under a federal statute, 28 U.S.C. § 1783, U.S. federal courts can order the testimony of witnesses and the production of documents in the U.S. to assist foreign proceedings. In securities
fraud cases, most information necessary to prove claims exists within the defendant companies. Outside the U.S., parties cannot compel the production of relevant information.
As a result, in non-U.S. recovery efforts, plaintiffs often use section 1783 to obtain discovery in the U.S., including records from parallel U.S. securities class actions. In other words, without discovery powers, not only are investors with foreign claims in overseas venues handicapped in their access to sources of proof, making those venues inadequate, but also they must come back to U.S. federal courts and related ADR class actions for the relevant documents. This is not efficient.
Forum Non Conveniens—Public Factors
Given the strength of private factors, the Barclays court gave short shrift to public factors. We will do the same. Post-Morrison, we’ve seen little indication that foreign courts are territorial about resolving securities disputes or that they think they alone should be handling them. Quite the opposite. The massive number of claimants has consistently overwhelmed their judicial systems. Again, in most countries, claimants must sue directly.
In Danske, for example, Danish courts had to suspend new filings for some time to restructure their docket system to manage the massive claim volumes. In Germany, thousands of Volkswagen claimants effectively broke the KapMug system, requiring a statutory overhaul in 2018.
Conclusion
The Barclays decision provides a blueprint for reshoring claims exported by Morrison. Fifteen years of experience with non-U.S. recovery efforts provides a solid basis for extending the court’s reasoning further. Considering the respective court burdens, congestion, and the cost of resolving claims, and weighing fairness to all parties, the claims of all shareholders harmed by the same company’s wrongdoing are best kept together in the U.S. court system.
Michael Lange is SVP, Worldwide Litigation at FRT, headquartered in Medford, Massachusetts.
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