Robinson v. TCI/US West Communications Inc.

• Decision Date: 28 July 1997
• Docket Number: No. 96-50554,96-50554
• Parties: Fed. Sec. L. Rep. P 99,495 Alan ROBINSON, Plaintiff-Appellant, v. TCI/US WEST COMMUNICATIONS INC., TeleWest Communications PLC, U.S. West Inc., Telecommunications, Inc., Stephen Davidson, Gary Bryson, Kleinwort Benson Limited, and Kleinwort Benson of North America, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 900

117 F.3d 900

Fed. Sec. L. Rep. P 99,495

Alan ROBINSON, Plaintiff-Appellant, v. TCI/US WEST COMMUNICATIONS INC., TeleWest Communications PLC, U.S. West Inc., Telecommunications, Inc., Stephen Davidson, Gary Bryson, Kleinwort Benson Limited, and Kleinwort Benson of North America, Defendants-Appellees.

No. 96-50554.

United States Court of Appeals Fifth Circuit.

July 28, 1997.

Stephen M. Orr, Austin, TX, for Plaintiff-Appellant.

Glen M. Wilkerson, Davis & Wilkerson, Austin, TX, for TCI/US West Cable.

Marcy Hogan Greer, Scott M. Incerto, Rebecca E. Edgar, Fulbright & Jaworski, Austin, TX, for Telewest Communications PLC.

Glen M. Wilkerson, Davis & Wilkerson, Austin, TX, for Telecommunications Inc.

Glen M. Wilkerson, Davis & Wilkerson, Austin, TX, for US West Incorporated.

Marcy Hogan Greer, Scott M. Incerto, Rebecca E. Edgar, Fulbright & Jaworski, Austin, TX, for Stephen Davidson.

Marcy Hogan Greer, Scott M. Incerto, Rebecca E. Edgar, Fulbright & Jaworski, Austin, TX, for Gary Bryson.

Patton G. Lochridge, McGinnis, Lochridge & Kilgore, Austin, TX, John C. Sullivan, Fried, Frank, Harris, Shriver & Jacobson, New York City, for Kleinwort Benson.

Patton G. Lochridge, McGinnis, Lochridge & Kilgore, Austin, TX, John C. Sullivan, Fried, Frank, Harris, Shriver & Jacobson, New York City, for Kleinwort Benson of North America.

Appeal from the United States District Court for the Western District of Texas.

Before SMITH, BARKSDALE and BENAVIDES, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Alan Robinson appeals the dismissal of his complaint for lack of subject matter jurisdiction and, in the alternative, forum non conveniens ("f.n.c."). We reverse in part, vacate in part, and remand.

I.

In 1983, Robinson, an English citizen and resident, helped found Croydon Cable Television Limited ("CCTV"), one of the first cable franchises in England. Robinson owned only a minority interest in the company; most of CCTV's funding came from Cablevision UK Limited ("CUK"), a Florida limited partnership.

CCTV and CUK formed a partnership known as the Croydon Cable Joint Venture ("CCJV"). In 1989 CUK was sold to United Artists Cable ("UAC"), an American corporation. CUK's new owner re-registered it as a Colorado partnership and renamed it the United Artists Partnership ("UAP"). CCJV was dissolved and reformed, with UAP taking the former CUK's place in the partnership.

Robinson also owned a majority interest in the predecessor to United Artists Communications (London South) PLC ("United Artists"), the English holding company for the cable franchise licenses that CCTV and the CCJV needed to do business. Prior to the key events in this case, he sold this interest to TCI/US West Cable Communications, Inc., ("TCI/US West"), a Colorado corporation. He retained, however, a separate 3.85% interest in United Artists that, through United Artists's 25% participation in CCTV, effectively gave him his minority interest in the latter entity.

Soon after the sale of CUK to UAC, disagreements ensued between Robinson and Jim Dovey, the UAC executive in charge of the company's English cable interests. Dovey tried to persuade Robinson to trade his interest in CCTV for a non-voting interest; Robinson refused. In late 1989, Robinson brought suit in England against United Artists and three other English defendants, all of whom Robinson alleges were either directly or indirectly controlled by Tele Communications, Inc. ("TCI"), and U.S. West, Inc. ("U.S. West"), two American corporations.

The parties to the lawsuit began settlement negotiations that Robinson alleges were directed from Denver, Colorado, by TCI and U.S. West. During the negotiations, TCI and U.S. West formed TeleWest Communications PLC ("TeleWest"), an English corporation consisting of a number of English cable franchises in which the two companies had majority interests.

By the fall of 1993, the state of affairs was this: Robinson owned a 3.85% interest in United Artists. United Artists was a 25% participant in CCTV, which by this time had changed its name to the London South Joint Venture ("LSJV"). The majority of United Artists's stock was held by TCI, U.S. West, or companies controlled by the two (such as TCI/US West, which Robinson alleges was "the mere shell company or 'designee' of United Artists"). Robinson was a thorn in the side of TCI and U.S. West, or at least of the entities they controlled. They wanted him out and were in the process of negotiating what it would cost.

Robinson alleges that in April 1993, he spoke on the phone with Gary Bryson, a U.S. West executive in Denver. Bryson told Robinson that U.S. West wanted to settle the English lawsuit and that, to that end, Robinson should negotiate with his subordinate Stephen Davidson, TeleWest's new finance director. Robinson alleges that his negotiations with Davidson proceeded with the understanding that Davidson was acting on Bryson's authority. He claims, for example, that Davidson frequently indicated that he needed approval on certain matters from Denver. Robinson also claims that in September 1993, Davidson phoned him from Denver and requested that documents be faxed to him at that location.

After lengthy negotiations, Robinson and Davidson reached a settlement. According to Robinson, the agreement was that he would sell TCI/US West his United Artists shares in exchange for two payments, one to occur at the time the shares were signed over and one to occur later. The immediate payment was to give Robinson pounds sterling790,360 in cash. The second payment was to occur within thirty days of the first of three triggering events: (1) the listing of United Artists (or any direct or indirect holding company) on the International Stock Exchange in London or any other stock exchange; (2) the sale of a controlling interest in United Artists; or (3) the passage of December 31, 1999. Robinson maintains that the interest he retained in this second payment was a security within the meaning of U.S. securities laws.

If the triggering event turned out to be the first of these, a merchant bank would be required to do a valuation of the LSJV, and Robinson would be paid according to a specified formula based on the valuation. Robinson alleges that his primary concern during the negotiations was that he be paid the full value of his interest. To that end, he says, he liked this scheme, because Davidson told him the valuation used for computing his payment would be the same one used in preparation for the stock offering. Thus, because it would be in TCI/US West's (and, therefore, in TCI and U.S. West's) interest to get a high valuation, he would be protected from an artificially low estimate.

Robinson got his pounds sterling790,360 as promised. In November 1994, TeleWest purchased the assets of TCI/US West, including United Artists and the LSJV. The next day, TeleWest stock was offered for sale on both the London Stock Exchange and the NASDAQ. The stock was marketed throughout the United States.

In preparation for its initial public offering, TeleWest requested a valuation from Kleinwort Benson ("KB"), an English merchant bank, and Kleinwort Benson of North America ("KBNA"), its American counterpart. For purposes of its representations to the public, KB valued the company at $540,000,000. Robinson alleges that under the formula in the settlement agreement, this valuation would have made his retained interest worth $9,000,000.

Unfortunately for Robinson, however, TeleWest instructed KB to prepare a second and separate valuation for purposes of determining the value of his stock under the settlement agreement. According to Robinson, the letter instructing KB to prepare this second valuation was drafted by, and faxed from, U.S. West's legal department. From there, he claims, it went to TeleWest, which in turn sent the letter to KB on TCI/US West's letterhead. KB conducted the second valuation, which when plugged into the formula resulted in a value of zero for Robinson's stock.

In December 1995, Robinson filed suit in federal court, alleging two rule 10b-5 causes of action, ¹ RICO claims, and various state law claims. His first rule 10b-5 claim is that the defendants made an untrue statement of a material fact in connection with Robinson's sale of his stock to them, in violation of rule 10b-5(2); the second is that the defendants employed a device, scheme, or artifice to defraud him in connection with the sale of his securities, in violation of rule 10b-5(1).

The defendants filed motions to dismiss based on lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, and f.n.c. Robinson requested leave to conduct discovery on the jurisdictional issues, which the district court denied. On June 12, 1996, the court dismissed the case for lack of subject matter jurisdiction and, in the alternative, for f.n.c.

II.

Robinson contends that the dismissal for lack of subject matter jurisdiction was erroneous for four independent reasons: (1) The district court ignored Robinson's allegations that TeleWest and the other English defendants were controlled by American entities such as TCI, U.S. West, and Bryson; (2) the letter instructing KB to perform a second valuation of the LSJV was written by, and sent from, the legal department of U.S. West, an American corporation; (3) the defendants' scheme utilized the NASDAQ, an American stock exchange, to defraud him; and (4) the district court reached its conclusion on subject matter jurisdiction without allowing Robinson discovery, notwithstanding the fact that it resolved factual disputes raised by the parties' conflicting affidavits. As we find the second of these arguments dispositive, we need not consider the others.

A.

In general, we review a dismissal for lack of subject matter jurisdiction de novo, using the same standard as applied by the district court. ² Dismissal is proper only when "it appears certain that the plaintiffs cannot prove any...