PT United Can Co. Ltd. v. Crown Cork & Seal Co., Inc.
| Decision Date | 25 February 1998 |
| Docket Number | Docket No. 97-7252 |
| Citation | 138 F.3d 65 |
| Parties | RICO Bus.Disp.Guide 9442 PT UNITED CAN COMPANY LTD., Plaintiff-Appellant, v. CROWN CORK & SEAL COMPANY, INC., f/k/a Continental Can Company; Richard Krzyzanowski; John W. Conway, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
Leo F. McGinity, Jr. (Rieger & Walsh, LLP, Northport, NY), for Plaintiff-Appellant.
James E. Tolan, (Nancy Prahofer, and J. Kevin Fee, Dechert Price & Rhoads, New York City, on the brief), for Defendants-Appellees.
Before: JACOBS and LEVAL, Circuit Judges, and RESTANI *, Judge.
Appellant PT United Can Company Ltd. ("UCC") appeals from a judgment entered in the United States District Court for the Southern District of New York, (Koeltl, J.), dismissing claims against individual defendants Richard Krzyzanowski and John W. Conway for lack of personal jurisdiction and dismissing claims against Crown Cork & Seal Company, Inc. ("Crown"), on forum non conveniens grounds. UCC appeals as of right, pursuant to Fed. R.App. P. 3 and 4(a), as the district court's judgment terminated this action against all defendants. We affirm the judgment of the district court as to all defendants.
This appeal arises out of a dispute between UCC and UCC minority shareholder Crown. UCC is an Indonesian corporation with dominant market share in the South Asian metal packaging industry. UCC stock is held by UCC President R.Z. Shang, Davlyn Steel Co., Toyo Seikan Kaishah, Ltd. ("Toyo"), a Japanese corporation, and by Crown, a Pennsylvania corporation. Crown's minority interest in UCC was originally held by Continental Can Corporation, subsequently referred to as Continental Can International Corporation, ("CCIC") and was transferred to Crown when Crown acquired CCIC in 1990. Individual defendant Richard Krzyzanowski is General Counsel to Crown and a citizen of New Jersey. Former CCIC President, defendant John W. Conway, is Executive Vice President of Crown and a citizen of Pennsylvania.
In February 1977, UCC, CCIC, and Toyo executed a Memorandum Agreement ("Shareholders' Agreement") in Tokyo, setting forth mutual covenants regarding UCC stock ownership and transfer. The Shareholders' Agreement provided UCC a right of first refusal, at a price based on UCC's net worth, in the event that CCIC wished to sell, transfer, or otherwise dispose of its interest in UCC. The Shareholders' Agreement also guaranteed appraisal rights in the event that CCIC should consider its equity position in UCC adversely affected by various changes. Again, in this case, the repurchase price would be based on UCC's net worth. The Shareholders' Agreement was silent as to choice of law and venue.
In 1990, UCC issued a promissory note ("Note") to CCIC, specifying New York law for its construction and enforcement. This Note is not in dispute here. 1 A licensing agreement between UCC and CCIC also provided for construction in accordance with New York law and for arbitration of disputes in New York under the rules of the American Arbitration Association. Defendant John W. Conway was CCIC President at the time the licensing agreement was executed. After Crown acquired CCIC in 1991, Conway was made Executive Vice President of Crown. In December 1995, Crown offered to sell back its UCC shares for US$6 million. UCC's 1994 year-end net worth was negative, so UCC expected an unfunded (i.e.gratuitous) transfer of Crown's UCC shares, which Crown refused to do.
On April 24, 1996, UCC filed the action underlying this appeal in New York State Supreme Court, New York County. On May 16, 1996, all defendants removed the action to the United States District Court for the Southern District of New York on the basis of diversity jurisdiction. In district court, UCC alleged that Crown had used the position of UCC shareholder and co-venturer it had inherited from CCIC to obtain access to sensitive UCC financial and operations data. UCC further alleged that Crown, Conway, and Krzyzanowski used this position to engage in wrongful conduct, including extortion, mail and wire fraud, egregious trade disparagement, unfair competition, tort, and violation of 18 U.S.C. §§ 1951-1952. UCC also claimed that Crown's offer to sell back its UCC shares was irrevocable according to the terms of the Shareholders' Agreement. UCC therefore alleged breach of contract by Crown for failing to enact an unfunded transfer of its UCC shares. 2 In sum, UCC asserted four common law claims including breach of contract and breach of fiduciary duty against Crown alone and eight Racketeer Influenced and Corrupt Organizations Act ("RICO") claims, 18 U.S.C. § 1961 et seq., against all defendants.
On June 18, 1996, all defendants moved the district court to dismiss all of UCC's claims on forum non conveniens grounds. Individual defendants Conway and Krzyzanowski also moved the court to dismiss claims against them, pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(3), for lack of personal jurisdiction and improper venue. For the limited purpose of their motion to dismiss, the defendants conceded the allegations in UCC's complaint. By order of November 27, 1996, the district court asked the parties to respond, in writing, to six specific queries. 3 By opinion and order dated January 27, 1997, the district court granted the motion of Krzyzanowski and Conway for dismissal of the claims against them, without prejudice, based on lack of personal jurisdiction. The district court also granted Crown's motion to dismiss on forum non conveniens grounds, on the condition that Crown submit to suit in Indonesia. In view of the disposition of their jurisdictional motion, the individual defendants did not figure in the district court's analysis of the forum non conveniens factors. Nor did the district court rule on the individual defendants' motion to dismiss for improper venue.
The standard of review on appeal differs as to the two issues raised. The first issue is whether the district court erred in dismissing the claims against the individual defendants for lack of personal jurisdiction. A district court's dismissal on jurisdictional grounds is reviewed by this court de novo, because the district court relied solely upon pleadings and affidavits, see CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364-65 (2d Cir.1986), and because UCC's appeal is limited to a question of law, see Findley v. Falise This court's appellate review of the forum non conveniens issue is more circumscribed. The district court's decision to dismiss the claims against Crown on this ground was a matter of judicial discretion. Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 46 (2d Cir.1996). Appellate review of this decision is "extremely limited." Id. A district court's decision should be reversed only upon a showing of a clear abuse of discretion. Id.
(In re Joint Eastern & Southern District Asbestos Litigation ), 78 F.3d 764, 775 (2d Cir.1996), the meaning of 18 U.S.C. § 1965 (1994).
DISCUSSION
The district court dismissed UCC's claims against individual defendants Conway and Krzyzanowski, based on its reading of 18 U.S.C. § 1965. UCC challenges this reading on appeal. Section 1965 provides, in relevant part,
(a) Any civil action or proceeding under this chapter against any person may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs.
(b) In any action under section 1964 of this chapter in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof.
(c) In any civil or criminal action or proceeding instituted by the United States under this chapter in the district court of the United States for any judicial district, subpenas issued by such court to compel the attendance of witnesses may be served in any other judicial district....
(d) All other process in any action or proceeding under this chapter may be served on any person in any judicial district in which such person resides, is found, has an agent, or transacts his affairs.
18 U.S.C. § 1965 (1994) (emphasis added).
Relying on the interpretation of the statute in Butcher's Union Local No. 498 v. SDC Investment, Inc., 788 F.2d 535, 538-39 (9th Cir.1986), the district court held that § 1965(b), and not § 1965(d), governs the exercise of personal jurisdiction under RICO. 4 Section 1965(b) would apply, permitting nationwide service of process, so as to give the court jurisdiction over the individual defendants, only if the ends of justice required, which would be unlikely given that all three defendants were subject to suit in Pennsylvania. UCC challenges this interpretation on appeal, arguing for a narrow reading of Butcher's Union, in which § 1965(d) was not addressed directly, and arguing further that the correct reading of § 1965 is that subsection (d) is a jurisdiction provision and subsection (b) a venue provision. Following briefing in this appeal, another circuit court stated in conclusory terms that § 1965(d) provides for nationwide service of process. Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 942 (11th Cir.1997)(§ 1965(d) provides nationwide jurisdiction over RICO defendants). Thus, there is now an apparent conflict in circuits on this issue, which is one of first impression here.
The parties agree with the district court that § 1965 must be read to give effect to all its sections in a way that renders a coherent whole, but they present competing, unified interpretations. UCC argues that § 1965(d) provides for nationwide service of process in all RICO cases, and that § 1965(b) provides for service...
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