Peregrine Myanmar Ltd. v. Segal
| Decision Date | 28 June 1996 |
| Docket Number | No. 1668,D,1668 |
| Citation | 89 F.3d 41 |
| Parties | PEREGRINE MYANMAR LTD. and Peregrine Capital Myanmar Ltd., Plaintiffs-Appellees, v. Miriam Marshall SEGAL, Defendant-Appellant. ocket 96-7030. |
| Court | U.S. Court of Appeals — Second Circuit |
Russell E. Brooks, Milbank, Tweed, Hadley & McCloy, New York City (Eugene F. Farabaugh, New York City, on the brief), for Plaintiffs-Appellees.
Bruce S. Kramer, Borod & Kramer, Memphis, TN (Joseph M. Koury, Memphis, TN on the brief), for Defendant-Appellant.
Before FEINBERG, JACOBS and CABRANES, Circuit Judges.
Two companies based in Myanmar (formerly Burma) sued Miriam Marshall Segal, a former officer and director of both companies, for breach of contract, breach of fiduciary duty, unfair competition, and "tortious interference with prospective economic advantage." They asked for damages and an injunction. After a one-day hearing, the district court granted a permanent injunction enjoining Segal from, among other things, interfering with the plaintiffs' business interests in Myanmar, and ordering her to publicize that (as the district court found) she no longer had a stake in the plaintiffs' business interests.
Segal makes three arguments on appeal: (i) her forum non conveniens motion should have been granted, because most of the critical evidence and witnesses are in the Far East; (ii) her motion to dismiss under Rule 12(b)(7) should have been granted, because the Myanmar Ministry of Fisheries is an indispensable, but non-joinable, party; and (iii) the injunction is overbroad, vague, and a violation of her First Amendment rights. We affirm the district court on the first two grounds. As to the injunction, we uphold nine of its eleven paragraphs, vacate the other two as vague and overbroad, and remand to the district court so that it may determine whether one of these two paragraphs should and can be recast.
Miriam Marshall Segal, American citizen and New York City resident, developed substantial contacts with government officials and business leaders in Myanmar over a 20-year period. At various times, she has owned several companies that do business in Myanmar, including MMA International Holdings (MMAI), incorporated in the British Virgin Islands, and its subsidiary MMA Financo Fisheries Co. Ltd. (MMAFFCL), incorporated in Hong Kong. In 1990, MMAFFCL entered into a joint venture agreement with the Myanmar Ministry of Livestock Breeding and Fisheries (the Ministry) to catch and export fish from Myanmar's coastal waters. The agreement creates a new entity called Myanmar American Fisheries Company (MAFCO), half owned by the Ministry (designated "party A") and half owned by MMAFFCL ("party B"). The agreement places restrictions on the ability of both partners to transfer their interests in MAFCO.
In June 1994, Peregrine Myanmar Limited (PML), an investment company with operations in Myanmar and Hong Kong, entered into a share acquisition agreement with MMAI, Segal's holding company, to buy MMAFFCL, the subsidiary. The agreement was made "subject to [PML] receiving evidence satisfactory to it that the sale and purchase of the Shares provided for herein will not affect adversely the validity and enforceability of the joint venture agreement ... relating to [MAFCO]...." PML presumably received such evidence, since it took no steps to cancel the sale of the shares. Incident to the sale of MMAFFCL, Segal was given a ten percent ownership stake in PML.
One month after the sale of MMAFFCL, PML entered into a three-year employment agreement with Segal in which she was made Executive Chairman of MAFCO, PML, and Peregrine Capital Myanmar (PCM). (PML and PCM share the same parent company and generally operate as partners in their Myanmar investment activities.) Her primary responsibility was to "maintain[ ] and build[ ] relationships at the senior levels of the Myanmar Government Ministries and business community." The agreement stressed that Segal had "the responsibility of closely coordinating with the Managing Director PCM to ensure that projects she init[i]ates are properly structured and closely coordinated with the investors' objectives." The agreement barred Segal from using or sharing confidential information related to PML, PCM, MMAFFCL, or MAFCO that she might acquire as Executive Chairman of the various companies for her own benefit or the benefit of any other person. PML was given the right to terminate Segal "for cause or some fundamental dispute between [her] and [PML's] major shareholder which cannot be reconciled."
In June 1995, one year after entering into the employment contract, PML learned that Segal had been scheming to create losses for MAFCO that would devalue the company and (she hoped) induce PML to market its interest in MAFCO at an artificially low price. 1 In detailed discussions with Mitsui (a large Japanese company) and with government officials in Myanmar, Segal had apparently arranged for Mitsui to buy PML's interest in MAFCO if PML indeed decided to sell its MAFCO interest. Segal had also indicated to her contacts in the Myanmar government that they should help Mitsui and should disfavor PML and PCM (together "Peregrine" or "the plaintiffs").
The plaintiffs learned about Segal's scheme by accident. Segal instructed her personal secretary in New York (hired and paid by PML's parent company) to fax a memorandum outlining the plot to Mitsui's Hong Kong office. Instead, she mistakenly faxed it to the Hong Kong office of the plaintiffs' parent company. Officers from the parent company hurried to New York, searched the secretary's computer (with the secretary's consent), and retrieved other memoranda written by Segal that documented her scheme. After learning of Segal's intrigue, PML fired her for cause on July 10, 1995. The plaintiffs claim that Segal then began a campaign to undermine their ability to run MAFCO by telling MAFCO employees (i) that she was still in control of the privately-controlled half of MAFCO, (ii) that they should only obey instructions from her, (iii) that they should ignore purchase orders and other instructions from PML, and (iv) that Myanmar government officials would prosecute any PML or PCM employee who entered MAFCO facilities. For instance, days after Segal's termination, Hector Lwin, PCM's Executive Director and an American citizen, was expelled from Myanmar for travelling in the country without carrying his passport. (He apparently had left his passport in his office in another part of the country.) One month earlier, Segal had recommended that General Maung Maung expel Lwin, and suggested a passport violation as a likely pretext. 2
At this point, PML understandably became concerned that Myanmar government officials might challenge or deny PML's 50% interest (through MMAFFCL, the "party B" signatory) in the MAFCO joint venture. On August 3, PML wrote to the Ministry of Fisheries "setting out the circumstances that led to the change in ownership" in MMAFFCL. On September 12, the Ministry responded, stating merely that a party to the joint venture agreement that "wanted to transfer its share" must comply with the transferability limitations set out in the joint venture agreement. The Ministry stated that it had called a meeting of the MAFCO Board of Directors to discuss the matter and to take any "necessary action." Significantly, the Ministry's letter acknowledged MMAFFCL's status as party B to the joint venture.
Two weeks later, on September 27, PML and PCM brought this suit against Segal in the Southern District of New York. The complaint has five counts, four of which allege substantive claims against Segal: (i) breach of her employment contract by "soliciting and acting on behalf of competitors of plaintiffs" and "deliberately attempt[ing] to damage plaintiffs' business opportunities in Myanmar so that plaintiffs' competitors could profit thereby"; (ii) breach of her fiduciary duty to PML and PCM as an officer and director of those companies; (iii) "common law unfair competition"; and (iv) "tortious interference with prospective economic advantage" by "interfering in the business relationship existing between [Peregrine] and MAFCO ... for the sole purpose of harming [Peregrine and its] interest in MAFCO." The fifth count repeats the allegations that make up the four substantive claims and alleges that the plaintiffs are "entitled to a permanent injunction to restrain the conduct complained about in this complaint." The complaint seeks compensatory and punitive damages of at least $20 million, and a preliminary and permanent injunction that would enjoin Segal from interfering with plaintiffs' business interests in Myanmar in specified ways.
On the day the complaint was filed, the district court issued a temporary restraining order barring Segal from taking the specified actions listed in the complaint, and scheduled a hearing on the issue of whether the restraining order should be converted into a preliminary injunction. At the hearing, on October 11, the court explained that the preliminary injunction hearing would also constitute a hearing or trial on the merits of whether to grant a permanent injunction. The day after the hearing, the court extended the duration of the restraining order indefinitely. 3
Segal then moved to dismiss the plaintiffs' complaint on two of the grounds at issue here (forum non conveniens and failure to join an indispensable party), and on the ground that the court lacked subject matter jurisdiction because she was domiciled in Yangon, Myanmar, not at her apartment on Central Park West in Manhattan. 4 On December 5, the district court issued an opinion denying her motion on all three grounds. On December 7, the court granted final judgment to the plaintiffs on Count 5 of their complaint (demanding injunctive relief) and issued a permanent injunction that incorporated the terms of the restraining order and added...
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