Citigroup Inc has won the dismissal of much of a multibillion-dollar New Jersey lawsuit over its alleged role in the 2003 collapse of Parmalat SpA, the Italian food company.
The largest U.S. bank still faces a May 5 jury trial in the case. But Tuesday’s ruling by Judge Jonathan Harris of Bergen County Superior Court could lead to a settlement of the lawsuit, which had sought more than $7 billion and is one of dozens of cases stemming from Europe’s largest bankruptcy.
Harris ruled that Parmalat Chief Executive Enrico Bondi may pursue a claim that Citigroup aided and abetted a breach of fiduciary duties by corrupt, former Parmalat insiders who stole from the company.
“There are factual disputes that swirl around this controversy; thus, a trial on Bondi’s grievances regarding insider pillage and plunder is required,” the judge wrote in a 58-page opinion.
The judge, however, threw out Parmalat claims that alleged fraud, racketeering and unjust enrichment, and a claim for punitive damages. The racketeering claim could have resulted in triple damages under state law. Harris let Citigroup pursue its own claims against Parmalat, including fraud and theft.
“The number of counts that survive to go to trial is not necessarily indicative of the size of potential liability,” said Gregory Mark, a corporate law professor at Rutgers University. He added, however: “A decision like this makes it much more likely that the case will settle.”
Citigroup, in a statement, said it was pleased with the ruling, and looked forward to “vindication on the remaining claims and on our counterclaims for the losses we suffered as a victim of Parmalat’s admitted fraud.” The New York-based bank has said it lost $700 million.
Parmalat characterized the ruling as having “narrowed Parmalat’s claims and the measure of damages.” The scope of potential remaining damages was not immediately clear.