Windt v. Qwest Communications Intern., Inc.

• Decision Date: 10 June 2008
• Docket Number: No. 06-4662.,No. 06-4808.,06-4662.,06-4808.
• Parties: Marcel WINDT; E.T. Meijer, in their Capacity as Trustees in Bankruptcy for KPNQwest N.V., et al, Appellants at 06-4662/ Cross-Appellees at 06-4808. v. QWEST COMMUNICATIONS INTERNATIONAL, INC.; John A. McMaster; Joseph P. Nacchio; Robert S. Woodruff, Appellees at 06-4662/ Cross-Appellants at 06-4808.
• Court: U.S. Court of Appeals — Third Circuit

529 F.3d 183

Marcel WINDT; E.T. Meijer, in their Capacity as Trustees in Bankruptcy for KPNQwest N.V., et al, Appellants at 06-4662/ Cross-Appellees at 06-4808. v. QWEST COMMUNICATIONS INTERNATIONAL, INC.; John A. McMaster; Joseph P. Nacchio; Robert S. Woodruff, Appellees at 06-4662/ Cross-Appellants at 06-4808.

No. 06-4662.

No. 06-4808.

United States Court of Appeals, Third Circuit.

Argued March 11, 2008.

Filed: June 10, 2008.

Richard McMillan, Jr., Clifton S. Elgarten (Argued), David L. Haga, Daniel W. Wolff, Crowell & Moring, LLP, Washington, D.C., Melvyn H. Bergstein, Walder, Hayden & Brogan, Roseland, NJ, for Appellants/Cross-Appellees.

James P. Denvir, Jonathan Sherman (Argued), Boies, Schiller & Flexner, LLP, Washington, D.C., Thomas R. Curtin, George C. Jones, Graham Curtin, A Professional Association, Morristown, NJ, for Appellee/Cross-Appellant Qwest Communications International, Inc.

Andrew T. Berry, Joseph T. Boccassini, James C. Sheil, McCarter & English, LLP, Newark, NJ, for Appellees/Cross-Appellants John A. McMaster and Robert S. Woodruff.

Herbert J. Stern, Jeffrey Speiser, Joel M. Silverstein, Stern & Kilcullen, LLC, Roseland, NJ, for Appellee/Cross-Appellant Joseph P. Nacchio.

Ira A. Finkelstein, Harnik Wilker & Finkelstein LLP, New York, NY, for Appellee/Cross-Appellant John A. McMaster.

Jeffrey Gross, Cooley Godward Kronish LLP, New York, NY, for Appellee/Cross-Appellant Robert S. Woodruff.

Before FUENTES, CHAGARES and ALDISERT, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

Marcel Windt and E.T. Meijer, in their capacity as trustees in bankruptcy for KPNQwest N.V. ("Trustees"), appeal from the dismissal of their amended complaint on forum non conveniens grounds by the United States District Court for the District of New Jersey. The Trustees asserted claims against Qwest Communications International, Inc. ("Qwest"), Joseph P. Nacchio, Robert A. McMaster and Robert S. Woodruff (collectively referred to as "Defendants") arising from the bankruptcy of a Dutch company, KPNQwest N.V. ("KPNQwest"). Specifically, we must decide whether the District Court abused its discretion in assigning the Trustees' choice of forum a low degree of deference, whether the District Court abused its discretion in balancing the public and private interest factors implicated in this case, and whether the District Court abused its discretion in determining that litigation in the Trustees' chosen forum was oppressive or vexatious to the Defendants out of all proportion to the Trustees' convenience. For the reasons that follow, we will affirm the District Court's dismissal of the Trustees' amended complaint on forum non conveniens grounds.

I.

A.

In 1999, Qwest and KPN B.V., a wholly-owned subsidiary of Dutch multimedia company Koniklijke KPN N.V., engaged in a joint venture and formed KPNQwest. KPNQwest was organized as a Dutch corporation, had its principal place of business in Hoofddorp, Netherlands, and was established to construct a European fiber optics telecommunications network. By 2002, KPNQwest was insolvent and filed for bankruptcy in a Dutch court.

As a result of the bankruptcy filing, Windt and Meijer were appointed by the Dutch bankruptcy court as trustees in bankruptcy for KPNQwest.¹ Pursuant to their official duties, the Trustees investigated the cause of KPNQwest's bankruptcy and brought this lawsuit on behalf of KPNQwest's bankruptcy estate. In June 2004, the Trustees filed a complaint in the United States District Court for the District of New Jersey. According to the complaint, the Defendants deceived KPNQwest's Supervisory Board about the financial solvency of KPNQwest in an effort to gain control of KPNQwest and manipulate its business to suit their objectives. The Trustees' complaint detailed a pattern of fraud, mismanagement and accounting improprieties that resulted in the ultimate failure of KPNQwest. Specifically, the complaint alleged one claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and one claim of mismanagement and breach of duty based upon violations of the Dutch Civil Code.

The Trustees' complaint named Qwest, Nacchio, McMaster and Woodruff as defendants. Qwest is a Delaware corporation with its principal place of business in Colorado. Nacchio, a New Jersey resident, previously served as Chairman and Chief Executive Officer of Qwest and as Chairman of the Supervisory Board of KPNQwest. McMaster, also a New Jersey resident, previously served as Qwest's Executive Vice President of International Business and was named by the Supervisory Board as KPNQwest's Chief Executive Officer. Woodruff, a Colorado resident, previously served as Chief Financial Officer of Qwest and was a member of KPNQwest's Supervisory Board.

On October 4, 2004, the Defendants moved to compel arbitration of the Trustees' claims. The motion was denied by a magistrate judge on June 16, 2005, and the Defendants appealed the denial to the District Court. On February 21, 2006, while the appeal to the District Court concerning the denial of the motion to compel arbitration was pending, the Defendants filed a motion to dismiss the Trustees' complaint on forum non conveniens grounds. On August 7, 2006, the District Court affirmed the magistrate judge's denial of the Defendants' motion to compel arbitration.²

On September 20, 2006, the Trustees filed an amended complaint that asserted the same essential facts and claims as their original complaint. The Defendants then notified the District Court that they would file a new motion to dismiss the amended complaint. The District Court deemed the prior motion to dismiss to be pending and, on October 17, 2006, dismissed the amended complaint on forum non conveniens grounds. The Trustees now appeal the District Court's dismissal of their amended complaint.

B.

In addition to this proceeding, other legal proceedings related to KPNQwest and the Defendants are currently pending, or were pending at the time the Trustees filed the instant complaint. Three lawsuits stemming from Qwest's relationship with KPNQwest have been filed in various U.S. state and federal courts. Taft v. Ackermans, No. 02-CV-7951 (S.D.N.Y.), was a putative securities class action lawsuit filed in the United States District Court for the Southern District of New York and settled in early 2006. Grand v. Nacchio, No. C-2002-5348 (Pima County Superior Ct.), is a securities opt-out action filed in 2002 in Arizona state court that involved the purchase of 285,000 shares of KPNQwest stock by a living trust. The trial court in Grand granted partial summary judgment in favor of the defendants. The plaintiffs voluntarily dismissed the remainder of their claims and appealed. Approximately one month after the District Court's dismissal in this case, the Arizona appellate court affirmed the trial court in part, reversed in part, and remanded the case to the trial court for further proceedings. Grand v. Nacchio, 214 Ariz. 9, 147 P.3d 763 (App.2006). Subsequent to the filing of this lawsuit, another securities opt-out action, Appaloosa Investment Ltd. P'ship I v. Qwest Commc'ns Int'l, Inc., No. 05-CV-5674 (S.D.N.Y.), was filed in the United States District Court for the Southern District of New York and is pending in that court.

Litigation and other proceedings related to KPNQwest also arose in the Netherlands following the filing of the Trustees' complaint in New Jersey. On August 23, 2005, several Dutch KPNQwest shareholders petitioned the Enterprise Chamber, a branch of the Civil Court in Amsterdam with jurisdiction over corporate mismanagement claims, to begin an inquiry into the cause of KPNQwest's bankruptcy. The Enterprise Chamber granted the request, and all of the Defendants named in this lawsuit are involved in the investigatory proceeding before the Enterprise Chamber.

Several weeks before the District Court dismissed this case, Cargill Financial sued three of the Defendants named by the Trustees and several other parties related to the formation and/or operation of KPNQwest in the Netherlands. In its complaint, Cargill Financial asserts that three of the defendants named here and others fraudulently procured credit in an attempt to avoid the bankruptcy from which this litigation arises.

Insurance litigation is also pending in the Netherlands. The insurance cases involve all of the parties to this lawsuit and concern the insurers' nullification of directors' and officers' insurance policies covering various individuals associated with KPNQwest. In these cases, the insurers allege that the directors' and officers' insurance policies were fraudulently procured through the same mismanagement alleged in this lawsuit. In addition, KPNQwest's bankruptcy proceedings are still ongoing in the Dutch courts.

II.

The District Court had jurisdiction in this case pursuant to 28 U.S.C. § 1331 and § 1367. We have jurisdiction over final orders of the District Court pursuant to 28 U.S.C. § 1291. Our review in this case, however, is limited.

"[T]he district court is accorded substantial flexibility in evaluating a forum non conveniens motion, and `[e]ach case turns on its facts.'" Van Cauwenberghe v. Biard, 486 U.S. 517, 529, 108 S.Ct. 1945, 100 L.Ed.2d 517 (1988) (citations omitted). Furthermore, "[t]he forum non conveniens determination is committed to the sound discretion of the trial court." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). This Court reviews a district court's dismissal of a complaint on forum non conveniens grounds for abuse of discretion. Id.; Lony v. E.I. Du Pont de Nemours & Co. ("Lony I"), 886 F.2d 628, 631 (3d Cir. 1989).

The district court's determination "may be reversed only when there has been a clear abuse of discretion; where the court has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable, its decision...