Appeals Court Revives Financier's Suit Against Citigroup In a blow to Citigroup, a federal appeals court on Friday ordered a new trial in the legal battle between the bank and the British financier Guy Hands over the buyout of the music company EMI. The United States Court of Appeals for the Second Circuit in Manhattan vacated a 2011 jury verdict clearing Citigroup of any wrongdoing over its role in the sale of EMI to Mr. Hands's private equity firm, Terra Firma Capital Partners. It ruled that improper jury instructions from the trial court judge related to English law relevant to the case mandated a reversal. Mr. Hands had accused the bank of defrauding him during its handling of an auction of EMI. He said that a Citigroup investment banker lied to him that there was another bidder for EMI, which tricked him into paying $6.8 billion for EMI at the market peak in August 2007. After the financial crisis struck and the music industry tanked, Mr. Hands lost billions on the investment. He sued Citigroup in federal court, seeking $8 billion in damages. The bank said it had done nothing wrong, as accused Mr. Hands of having buyer's remorse. After a three-week trial in 2010, the jury awarded him nothing. Citigroup, which had also provided Mr. Hands with billions of dollars of loans to pay for EMI, took ownership of the company and sold it off in pieces. Universal Music Group, a division of Vivendi, bought EMI's recorded-music business, and a Sony-led group acquired EMI's publishing assets. With EMI seized from Terra Firma and in the hands of new owners, the revived dispute now becomes merely a fight over money. Should Citigroup and Mr. Hands fail to reach a financial settlement, the case will again go to trial before Judge Jed S. Rakoff, who presided over the original case. A spokesman for Citigroup, Danielle Romero-Apsilos, said that that's where the parties were heading. "We are confident we will again prevail at trial as Citi's conduct in the EMI transaction was entirely proper," Ms. Romero-Apsilos said. The original verdict made clear that Terra Firma's baseless accusations of fraud were simply an attempt to gain leverage in debt restructuring negotiations. The reversal of a jury's verdict in a civil dispute is rare, and the federal appeals court said is was loath to overturn the case. "We are particularly reluctant to overturn a jury verdict when, as here, it appears that both parties have had a fair bite at the proverbial apple," wrote Judge John M. Walker, who wrote the opinion for a unanimous three-judge panel. The principal actors on both sides provided their version of events, exceptional trial lawyers marshaled and clarified the evidence, and a gifted judge presented the issue to the jury for its evaluation. Despite the praise for Judge Rakoff, the court said that he erred in his description of English law related to fraudulent misrepresentation, which applied to the case. Judge Rakoff incorrectly told the jury that Terra Firma had the burden of proof in showing that it relied on Citigroup supposed misrepresentations, when according to English law, the burden fell upon Citigroup to prove that it did not lie. "We continue to believe that we have a strong claim, and with the jury instructions now resolved in our favor, we expect to prevail in any subsequent trial," Terra Firma said through its spokesman, Jonathan Doorley. The decision is a resounding victory for Mr. Hands's star lawyer, David Boies of Boies, Schiller & Flexner, who argued the appeal. If the case gets tried again, Mr. Boies will likely find himself in a rematch against Citigroup's lawyer, Theodore V. Wells Jr., and his colleagues at Paul Weiss Rifkind Wharton & Garrison. In a concurring opinion, Judge Raymond Lohier noted that federal appeals courts were being asked to determine and apply foreign law in a growing number of international disputes. He suggested a new formalized process for a federal appeals court to ask courts of a foreign country to clarify foreign law, just as they frequently ask state tribunals to weigh in on difficult state-law issues. "This case illustrates the trend," Judge Lohier said. We will encounter more and more cases involving unsettled questions of foreign law that implicate important policy preferences of a foreign nation.