Scottish Air Intern., Inc. v. British Caledonian Group, PLC

• Decision Date: 25 April 1996
• Docket Number: No. 457,D,457
• Citation: 81 F.3d 1224
• Parties: SCOTTISH AIR INTERNATIONAL, INC. and Murray Vidockler, Plaintiffs-Appellants, v. BRITISH CALEDONIAN GROUP, PLC, Adam Thomson, Dennis H. Walter, and R. Marshall Gibson, Defendants-Appellees. ocket 95-7398.
• Court: U.S. Court of Appeals — Second Circuit

Page 1224

81 F.3d 1224

SCOTTISH AIR INTERNATIONAL, INC. and Murray Vidockler, Plaintiffs-Appellants, v. BRITISH CALEDONIAN GROUP, PLC, Adam Thomson, Dennis H.

Walter, and R. Marshall Gibson, Defendants-Appellees.

No. 457, Docket 95-7398.

United States Court of Appeals,

Second Circuit.

Argued Nov. 17, 1995.

Decided April 25, 1996.

Robert M. Beckman, Washington, D.C. (David M. Kirstein, Beckman & Kirstein, Washington, D.C.; Charles A. Stillman, Stillman, Friedman & Shaw, P.C., New York City, of counsel), for Plaintiffs-Appellants.

Leonard N. Bebchick, Washington, D.C. (Robert Zicklin, Laventhall & Zicklin, New York City, of counsel), for Defendants-Appellees.

Before: CARDAMONE, MAHONEY, and WALKER, Circuit Judges.

CARDAMONE, Circuit Judge:

The diversity action before us on this appeal has wended its way through the federal court system for 11 years, having been before us twice, once in 1988 and again in 1991, and before the district court three times. It was commenced in 1985 by plaintiffs Scottish Air International, Inc. (a dissolved New York corporation) and Murray Vidockler against British Caledonian Group plc, a Scottish public limited company, and three British subjects who are among that company's former directors.

Plaintiffs appeal from a judgment entered in the United States District Court for the Southern District of New York (Kram, J.) dismissing their action on forum non conveniens grounds. Plaintiffs also appeal from the district court's order granting summary judgment to defendants with respect to plaintiffs' claim that defendants are in contempt of a district court order embodying a settlement agreement between the parties and others. In deciding where a trial should be held the central notions of the doctrine of forum non conveniens are the convenience of the parties and their witnesses and that justice be served. In affirming the district court's dismissal under that doctrine and bringing the long odyssey of this case to an end, we believe those notions have been furthered.

The facts underlying this litigation have already been detailed in Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 860 F.2d 57, 57-59 (2d Cir.1988) (Scottish Air I ), and Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 945 F.2d 53, 54 (2d Cir.1991) (Scottish Air III ). See also Scottish Air Int'l, Inc. v. British Caledonian Group, plc, 751 F.Supp. 1129, 1131-32 (S.D.N.Y.1990) (Scottish Air II ); Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 152 F.R.D. 18, 20-22 (S.D.N.Y.1993) (Scottish Air IV ); Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 867 F.Supp. 262, 263-65 (S.D.N.Y.1994) (Scottish Air V ). Although familiarity with these prior decisions is assumed, we summarize those facts necessary to explain our decision to affirm.

BACKGROUND

A. Organizing An Airline

In 1961 a group of Scottish investors, including defendants Adam Thomson and Dennis H. Walter, organized Caledonian Airways (Prestwick) Ltd. ("Caledonian Air") under the laws of Scotland. Their goal was to operate a worldwide charter airline service. The same group of Scottish investors formed a company called Airline Interests (Thomson) Ltd. ("Airline Interests") as a holding company for the shares of Caledonian Air. At the same time, a group of American investors, which included plaintiff Murray Vidockler A few years after getting this charter air service off the ground, Scottish Air's role in managing the enterprise came into dispute. In 1965 trouble arose between Scottish Air's shareholders and the principals of Caledonian Air and Airline Interests. Scottish Air brought a shareholder derivative suit in New York State Supreme Court (New York County) against Caledonian Air and several of its directors. Following the removal of the action to the United States District Court for the Southern District of New York, Scottish Air agreed to the dismissal of the action under the terms of a settlement agreement. The settlement--signed on January 28, 1966 by Vidockler as president of Scottish Air and by Thomson on behalf of Airline Interests, Caledonian Air, and its other directors--provided that Caledonian Air must appoint an individual nominated by Scottish Air to sit on Caledonian Air's board of directors for as long as the former held shares in the latter. See Scottish Air V, 867 F.Supp. at 263. The agreement was to be construed according to New York law, except that Scottish law would govern "the performance of any corporate actions required of either [Caledonian Air] or [Airline Interests]." In an order dated May 25, 1966, the district court (Bonsal, J.) incorporated the settlement agreement and ordered its implementation.

                contributed equity capital to Caledonian Air through the vehicle of a newly-formed New York corporation, of which Vidockler was the principal shareholder, called Scottish Air International, Inc.  ("Scottish Air").   As a result, the shares in Caledonian Air, the operator of the charter service, were controlled by the American investors via Scottish Air and by the Scottish investors via Airline Interests
                

Four years later, Airline Interests acquired British United Airways Ltd., a regular-service airline. In an October 9, 1970 letter to Caledonian Air shareholders, Thomson explained that the acquisition was to be accompanied by a corporate restructuring to avoid unfavorable tax consequences for the holders of Airline Interests shares. Under the reorganization, Caledonian Air shareholders--including Scottish Air--relinquished their Caledonian Air shares in exchange for shares in Airline Interests. Thus, Scottish Air continued to have a stake in the charter and regular-service airline businesses, but no longer directly controlled any of the shares in Caledonian Air; all of the stock it held was now Airline Interests stock. Vidockler held a seat on Caledonian Air's board of directors until the 1970 reorganization. In addition, although the 1966 settlement agreement did not guarantee Vidockler or any Scottish Air designee a seat on the board of directors of the holding company, Vidockler also held a seat on the Airline Interests board until 1985.

In 1984 Airline Interests was renamed Caledonian Aviation Group plc ("Caledonian Aviation"). The board of Caledonian Aviation passed a resolution mandating retirement of its directors at age 65. Vidockler was informed that he would not be nominated for another term. Vidockler--then age 65--refused to step down voluntarily. The shareholders of Caledonian Aviation ousted him in 1986. While this election was pending, Vidockler and Scottish Air instituted the instant lawsuit in the Southern District of New York, seeking a declaration that Caledonian Aviation was in contempt of Judge Bonsal's May 25, 1966 order and that Scottish Air was entitled to a representative on Caledonian Aviation's board. Plaintiffs also sought damages for breach of the settlement agreement.

Lengthy legal proceedings ensued, following which plaintiffs' original counsel withdrew from the case. In 1986 Caledonian Aviation once again changed its name, this time to British Caledonian Group plc ("British Caledonian"). Plaintiffs subsequently filed an amended complaint alleging that defendants had breached other agreements in addition to the 1966 settlement agreement. The amended complaint included new allegations: that the parties had agreed in 1966 that Scottish Air would be represented on the Airline Interests board as well as the board of Caledonian Air, the latter of which, of course, was provided in the settlement agreement; that the parties agreed in 1970, at the time of the corporate restructuring, that Scottish Air's right to a seat on the board of Caledonian Air would thereafter

apply to the board of Airline Interests, which is now named British Caledonian; and that the individual defendants had conspired to oust Vidockler from British Caledonian's board.

B. History of Prior Proceedings

On April 15, 1988 the district court (Edelstein, J.) ordered the dismissal of plaintiffs' action under the doctrine of forum non conveniens. On appeal we remanded the case to the district court, reasoning that it had failed to consider plaintiffs' contempt and breach-of-contract causes of action and instead had focused exclusively on plaintiffs' claim for injunctive relief. See Scottish Air I, 860 F.2d at 59-60. We noted in particular that British Airways had recently acquired British Caledonian by acquiring the stock of the individual Scottish defendants and others, a development which, according to the plaintiffs, had rendered their claim for injunctive relief moot. Id. at 58.

On remand, Judge Edelstein denied plaintiffs' motions to amend their complaint and to join British Airways as a necessary party. Scottish Air II, 751 F.Supp. at 1134. He granted summary judgment dismissing the contempt claim and again dismissed the remaining claims on forum non conveniens grounds. Id. at 1134-36. With respect to the latter issue, the district court emphasized the following factors: virtually all the potential witnesses and the documents requested by plaintiffs were located in Great Britain; relief entitling Vidockler to a seat on British Caledonian's board would be unenforceable because it sits in Great Britain; any money judgment would be enforceable only in that country because of the location of defendants' assets; New York (unlike Great Britain) had little interest in the litigation, and British law would apply to the critical issues in the case. Id. at 1135-36.

When plaintiffs appealed, we once again were forced to remand because the district court had not given plaintiffs the notice required before granting summary judgment to defendants under Fed.R.Civ.P. 56(c). See Scottish Air III, 945 F.2d at 55. Judgment was reserved on the contempt and forum non conveniens rulings. On remand, the case was reassigned to U.S. District Judge Kram. Defendants moved for summary judgment with respect to the...