682 F.3d 1043 (D.C. Cir. 2012), 11-7101, RSM Production Corp. v. Freshfields Bruckhaus Deringer U.S. LLP
|Citation:||682 F.3d 1043|
|Opinion Judge:||ROGERS, Circuit Judge:|
|Party Name:||RSM PRODUCTION CORPORATION, Appellant v. FRESHFIELDS BRUCKHAUS DERINGER U.S. LLP, et al., Appellees.|
|Attorney:||Daniel L. Abrams argued the cause for appellant. With him on the briefs was Kelly Hebron. David W. Ogden argued the cause for appellees. With him on the brief were Andrew B. Weissman, Joshua M. Salzman, and Christina Manfredi McKinley.|
|Judge Panel:||Before: ROGERS and BROWN, Circuit Judges, and RANDOLPH, Senior Circuit Judge.|
|Case Date:||June 22, 2012|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued April 10, 2012.
[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of Columbia (No. 1:10-cv-00457).
RSM Production Corporation (" RSM" ) appeals the dismissal of its complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), against the law firm Freshfields Bruckhaus Deringer U.S. LLP, and two of its partners, Jan Paulsson and Brian King (hereinafter " Freshfields" ). RSM alleged that Freshfields, through its representation of the nation of Grenada in international arbitration, conspired to violate the Racketeer Influenced and Corrupt Organizations Act (" RICO" ), 18 U.S.C. § 1962(d), in an effort to prevent RSM from obtaining an exclusive license for offshore oil and gas exploration and development in Grenada. See 18 U.S.C. § 1964(c).1 The district court ruled that RSM's lawsuit was barred under the doctrine of res judicata because of its prior lawsuit in the Southern District of New York regarding the same licensing effort. On appeal, RSM contends Freshfields was not in privity with the New York defendants and that RSM was not required to add Freshfields as a party to that litigation on pain of res judicata. Freshfields challenges those arguments and presents alternative grounds for affirmance, upon de novo review, which RSM maintains lack merit. We affirm on the alternative ground that RSM's complaint failed to state a claim of RICO conspiracy against Freshfields.2
Treating the allegations in the complaint as true, as required upon review of a motion to dismiss, see Atherton v. Dist. of Columbia Office of the Mayor, 567 F.3d 672, 677 (D.C.Cir.2009), shows the following:
- In 1996, RSM, a Texas corporation whose chief executive officer is Jack Grynberg, entered into an exclusive agreement with the nation of Grenada that " was to have resulted in an oil and natural gas hydrocarbon exploration, development and production license being issued as a matter of routine performance by Grenada to RSM." Compl. ¶ 10. The agreement provided that the license application was to be filed within ninety days of the agreement's execution, subject, as relevant, to a force majeure clause. See Agreement Between the Gov't of Grenada & RSM Prod. Corp. (" Agreement" ), arts. 3. 1, 24, Ex. A to Compl.
- A few months after the Agreement was executed, Gregory Bowen, then Deputy Prime Minister and Minster of Energy of Grenada, Compl. ¶ 5, told Grynberg that " he expected significant bribe payments from RSM and Grynberg in order for RSM and Grynberg to do business in Grenada," id. ¶ 12. RSM and Grynberg refused to pay, and Bowen thereafter " obstructed, harassed and intimidated RSM and Grynberg in their efforts to explore, develop and produce Grenada's vast oil and natural gas resources." Id.
- Also shortly after the Agreement was executed, RSM, with Grenada's consent, invoked the force majeure clause in view of ongoing boundary-water disputes between Grenada and some of its neighbors. Id. ¶ 18. Over the course of the next eight years, RSM made substantial expenditures to collect exploration data in reliance on the exclusive licensing Agreement. Id. ¶ 19. Also during this time, Lev Model formed Global Petroleum Group, a Grenadian company, in December 2003, to " acquire rights to explore, develop and produce the Grenadian offshore areas believed to contain ... vast[ ]recoverable reserves of petroleum." Id. ¶ ¶ 14, 17. Model and his company acted as agents for others to bribe Grenadian officials in order to acquire these offshore rights. Id. ¶ 17. Then, in January 2004, RSM informed Grenada " that sufficient progress had been made [in resolving the boundary disputes] to allow it to proceed and that it was in the process of revoking the force majeure. " Id. ¶ 20.
- On April 14, 2004, RSM submitted its license application to Grenada. Id. ¶ 21. Initially Grenada raised " frivolous concerns" about the lack of financial assurances. Id. ¶ 22. Earlier that year a Grenadian official, who reported to Bowen, had informed Global Petroleum's directors (including Model) " that Grenada was ‘ in a situation’ with RSM" and " not in a position to enter any agreements concerning [its] offshore petroleum assets until the ‘ situation’ with RSM was resolved." Id. ¶ 23. By letter of April 27, 2004, Bowen advised RSM that its license application was untimely, id., which RSM disputed, id. ¶ ¶ 24, 29. Bowen rejected RSM's efforts to settle the dispute amicably. Id. ¶ ¶ 25-27.
- On or about August 31, 2004, RSM invoked Article 26 of the Agreement by filing a request for arbitration with the International Centre for the Settlement of Investment Disputes (" the ICSID" ). Id. ¶ 29. Grenada engaged Freshfields as its arbitration counsel. Id. ¶ 13. Global Petroleum and Model (and affiliated entities) paid the legal costs of Grenada's arbitration, which amounted to millions of dollars. Id. ¶ ¶ 44-46. In 2009, an ICSID panel ruled that RSM's license submission had been untimely, and RSM appealed. Id. ¶ 29.3
Meanwhile, on October 31, 2006, RSM sued Global Petroleum, Model, Bowen, and others (including BP, p.l.c. and TNK-BP Ltd., but not Freshfields) in the Southern District of New York, alleging tortious interference with contract and with prospective business advantages and civil conspiracy to commit tortious interference. While that case was pending, and just prior to national elections in July 2008, Grenada granted the exploration and development license to Global Petroleum. Id. ¶ 49. The New York complaint was dismissed in 2009, pursuant to Federal Rule of Civil Procedure 12(b)(2) and (6), and the dismissal was affirmed on appeal. RSM Prod. Corp. v. Fridman, 643 F.Supp.2d 382, 390 (S.D.N.Y.2009), aff'd, 387 Fed.Appx. 72, 75 (2d Cir.2010) (unpublished).
Prior to the affirmance, RSM filed the current complaint against Freshfields on March 17, 2010, alleging it was part of a conspiracy to bribe Grenadian officials and deny RSM its offshore licensing rights. Specifically, Freshfields " knowingly agreed to perform services of a kind which have facilitated the activities of those who are operating the Enterprise ... in an illegal manner." Compl. ¶ 56. The Enterprise consisted of Global Petroleum, Model, Bowen, and others who were associated " for the common purpose of enriching Bowen and other high-level Grenadian officials" by " obtaining rights to receive an exclusive [offshore] exploration license" in Grenada, and " defeat[ing] RSM's claim to the very same, exclusive exploration license." Id. ¶ 57. The conspiracy had a secondary aim of " conceal[ing] the scheme, since it was and is necessary to avoid detection in order to secure and later retain the license." Id. Freshfields, in turn, " by knowingly participating in and benefi[t]ting from the legal fees arising out of the conspiracy, ... participated in and benefitted from a racketeering enterprise." Id. ¶ 62. RSM sought damages in excess of $500 million, costs, attorney's fees, and threefold damages.
Freshfields moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6), on four independent grounds: res judicata; immunity under the ICSID Convention, arts. 21, 22, opened for signature Mar. 18, 1965, 17 U.S.T. 1270, T.I.A. S. No. 6090 (entered into force Oct. 14, 1966); statute of limitations; and, failure to allege facts sufficient to state a RICO claim. The district court dismissed the complaint as barred by res judicata in view of the New York lawsuit. RSM Prod. Corp. v. Freshfields Bruckhaus Deringer U.S. LLP, 800 F.Supp.2d 182, 194 (D.D.C.2011). RSM appeals, and our review of the dismissal is de novo, see Jones v. Horne, 634 F.3d 588, 595 (D.C.Cir.2011); Atherton, 567 F.3d at 681; Ibrahim v. Dist. of Columbia, 463 F.3d 3, 7 (D.C.Cir.2006).
18 U.S.C. § 1962(d) provides that it is " unlawful for any person to conspire" to violate a substantive RICO provision.
See Compl. ¶ 56. To state a § 1962(d) conspiracy, the complaint must allege that (1) two or more people agreed to commit a subsection (c) 4 offense, and (2) a defendant agreed to further that endeavor. See Salinas v. United States, 522 U.S. 52, 65, 118 S.Ct. 469, 139 L.Ed.2d 352 (1997). A defendant need not agree to be the one to commit the predicate acts. See id. at 65-66, 118 S.Ct. 469 (citing ALI MODEL PENAL CODE). Nor must a defendant " participate in the operation or management of [the] enterprise in order to be liable for conspiracy." United States v. Wilson, 605 F.3d 985, 1019 (D.C.Cir.2010). " [I]t suffices that [the defendant] adopt the goal of furthering or facilitating the criminal endeavor." Salinas, 522 U.S. at 65, 118 S.Ct. 469; see also Brouwer v. Raffensperger, Hughes & Co., 199 F.3d 961, 967 (7th Cir.2000). Salinas is illustrative. That case involved a scheme in which a federal prisoner housed in a county jail paid the sheriff a fixed monthly rate ($6,000) and a per visit fee ($1,000) for " contact visits" in which he was left alone with certain women. 522 U.S. at 55, 118 S.Ct. 469. When the sheriff was unavailable, Salinas, " the chief deputy responsible for managing the jail and supervising custody of the prisoners," arranged for the " contact visits" to continue; in return he received " a pair of designer watches and a pickup...
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