Stichting Ter Behartiging Van De Bel. v. Schreiber
| Decision Date | 03 May 2005 |
| Docket Number | Docket No. 03-9116.,Docket No. 03-9066.,Docket No. 03-9120. |
| Citation | 407 F.3d 34 |
| Parties | STICHTING TER BEHARTIGING VAN DE BELANGEN VAN OUDAANDEELHOUDERS IN HET KAPITAAL VAN SAYBOLT INTERNATIONAL B.V. (Foundation of the Shareholders' Committee Representing the Former Shareholders of Saybolt International B.V.), Plaintiff-Appellant-Cross-Appellee, v. Philippe S.E. SCHREIBER, and Walter, Conston, Alexander & Green P.C., Defendants-Third-Party-Plaintiffs-Appellees-Cross-Appellants, Dwyer & Collora, LLP, Third-Party-Defendant, Saybolt LP, f/k/a/ Saybolt, Inc. and Saybolt North America, Inc., Defendants. |
| Court | U.S. Court of Appeals — Second Circuit |
Norris D. Wolff, Kleinberg, Kaplan, Wolff & Cohen, P.C., New York, NY, for Plaintiff-Appellant-Cross-Appellee (Edward P. Grosz and Anne Katz, on the brief).
John S. Siffert, Lankler Siffert & Wohl LLP, New York, NY, for Defendant-Third-Party Plaintiff-Appellee-Cross-Appellant Philippe S.E. Schreiber (Daniel E. Reynolds and Lee Renzin, on the brief).
David N. Ellenhorn, Proskauer Rose LLP, New York, NY, for Defendant-Third-Party Plaintiff-Appellee-Cross-Appellant Walter, Conston, Alexander & Green P.C. (Tom Stein, on the brief).
Before: CALABRESI, SACK, and RAGGI, Circuit Judges.
Judge SACK concurs in the majority opinion and in a separate opinion.
We find that this case turns on two questions of New York law that are important, recurring, and undecided: 1) whether New Jersey or New York law applies to the question of whether the plaintiff's assignment of claim is valid, and 2) whether an apparent authority relationship existed between the two defendants. We therefore certify those questions to the New York Court of Appeals.
I. Background
This legal malpractice action, which has been pending in federal court for five years, returns to us after proceedings on remand to the district court (Rakoff, J.), following an appeal in which we vacated the grant of summary judgment to the Defendants-Third-Party-Plaintiffs-Appellees-Cross-Appellants Philippe S.E. Schreiber ("Schreiber") and the law firm of Walter, Conston, Alexander & Green P.C. ("Walter, Conston"). See Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. v. Schreiber, 327 F.3d 173 (2d Cir.2003) ("Stichting I"). On remand, the district court dismissed the action, deciding that, under applicable state law, which it determined to be that of New Jersey, Plaintiff-Appellant Stichting Ter Behartiging Van De Belangen Van Oudaandeelhouders in Het Kapitaal Van Saybolt International B.V. (Foundation of the Shareholders' Committee Representing the Former Shareholders of Saybolt International B.V.) ("Stichting") was not the real party in interest and so could not bring suit.1 All parties now appeal.
The events giving rise to the instant litigation are described in Stichting I, 327 F.3d at 176-79, familiarity with which is assumed. Only those facts that are necessary as background to this decision will be set forth here.
This case arises out of a 1995 transaction entered into by Saybolt International, B.V. ("Saybolt BV"), a Dutch corporation, and its New Jersey-domiciled subsidiaries, Saybolt, Inc. and its parent holding company Saybolt North America, Inc. ("Saybolt NA"), in order to acquire land in Panama.2 As Stichting I sets forth in some detail, in the course of that transaction Saybolt paid a $50,000 bribe to Panamanian officials, in violation of the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1, et seq. ("FCPA"). Saybolt, Inc. and Saybolt NA, as well as two principals of the companies, David Mead ("Mead") and Frerik Pluimers ("Pluimers") were subsequently indicted on charges in connection with violations of the FCPA. The Saybolt entities, through their guilty plea, and Mead, following trial, were convicted; Pluimers, a Dutch citizen, never appeared in the United States to answer to the charges.
Stichting alleges that Saybolt made the Panamanian bribe on the basis of negligent legal advice from Schreiber, who had been retained both as a legal advisor to the corporation and as an outside director to Saybolt NA. According to the complaint, the Saybolt decision-makers who authorized the bribe would not have done so if they had not been told by Schreiber that the transaction could be structured so as not to run afoul of the FCPA.
Schreiber was, at all times relevant to this action, an attorney licensed in New York who was affiliated in an of-counsel capacity with the New York law firm of Walter, Conston, Alexander & Green P.C. ("Walter, Conston") and who also maintained a private practice out of his home in Connecticut. For a number of years prior to entering into an of-counsel relationship with Walter, Conston, Schreiber had been a partner with the firm. In 1988, Schreiber relinquished his partnership and he and Walter, Conston entered into an agreement ("the Of-Counsel Agreement") that specified the terms upon which he would remain affiliated with the firm. The Of-Counsel Agreement stated that Schreiber could maintain an independent practice in Fairfield, Connecticut involving "handling business negotiations on behalf of, rendering general business advice and doing some legal work of a specific nature for" personal business clients. It also authorized Schreiber to "use the title `of counsel'... as it directly relates to ... [his] client development activity on behalf of [him]self."
From May 1988 to December 1998 Schreiber's of-counsel affiliation with Walter, Conston was publicized by the firm in several ways, including firm letterhead and firm listings in legal directories. Schreiber also, in his personal practice, advertised his affiliation with Walter, Conston, in various ways, including by stating on his letterhead, fax sheets, and invoices that he was of counsel to the firm. During all times relevant to this action Schreiber maintained bar membership solely in the state of New York, and publicly listed Walter, Conston as the location of his only legal practice.
Schreiber began working for Saybolt NA and Saybolt, Inc. in October 1994. Prior to being hired, Schreiber met with Mead, who at the time was an officer of Saybolt, Inc., Saybolt NA and Saybolt BV. At that time, Schreiber gave Mead a copy of Schreiber's "Summary of Background and Services" ("Summary of Services"), which stated, inter alia, that Schreiber "practice[d] independently and also serve[d] as counsel to the law firm of Walter, Conston, Alexander & Green." It set forth Schreiber's fees, which, according to the summary of services, were charged for specific services on an hourly basis "at a substantial discount from those charged by Walter, Conston for [his] services," resulting "in considerable savings for [his] clients." The summary of services was printed on Schreiber's personal letterhead, which bore both Schreiber's Connecticut address and a description of Schreiber's of-counsel affiliation with Walter, Conston. In addition to giving the summary of services to Saybolt personnel, Schreiber also expressly mentioned his affiliation with Walter, Conston in the course of interviews with Mead and others.
Walter, Conston apparently was unaware of Schreiber's specific affiliation with Saybolt; the firm did not open a file or assign a client number for any Saybolt work, and Saybolt never made any payment for Schreiber's work to Walter, Conston or at the Walter, Conston rate. Schreiber did, however, utilize the Walter, Conston offices for Saybolt work. He held meetings with Saybolt representatives at Walter, Conston on at least three occasions, and occasionally received communications from Saybolt at Walter, Conston. ut it does not appear from the record that any of these contacts with the Walter, Conston offices related specifically to the Panamanian transaction that gave rise to this litigation.
During the mid-1990s Saybolt became interested in acquiring land to build a new office and laboratory facility in Panama. Upon investigating this prospect, Saybolt was informed that in order to obtain the land it would be expected to pay a $50,000 bribe to certain Panamanian officials.
The interest in acquiring property in Panama, and the fact of the requested bribe, were discussed at a November 9, 1995 meeting of the Board of Directors of Saybolt NA. The meeting took place at the Saybolt offices in New Jersey and was attended by, among others, Schreiber, Mead, Pluimers, who was at that time President and Chief Executive Officer of Saybolt BV, and Steven Dunlop ("Dunlop"), an employee of Saybolt, Inc. Several days later, Schreiber, Dunlop, and others attended another meeting at the New Jersey office, at which the Panamanian transaction was discussed. The record indicates that at one of the two November meetings, Schreiber stated to those present that the payment of a bribe by a United States company would violate the FCPA.
According to Stichting, however, in the weeks that followed the November meetings Schreiber advised Saybolt officials in a manner that caused the company, in reliance on Schreiber's expertise, to deliver the illegal bribe. In particular, Stichting alleges that Schreiber knew that Saybolt believed that the bribe would not violate the FCPA if the bribe was channeled through the Dutch parent corporation and, despite being consulted by Saybolt regarding such a transaction, did not provide competent legal advice to deter the company from proceeding with it. Schreiber discussed the transaction by telephone with Saybolt employees Mead and Dunlop in December 1995. The record indicates that during each of these calls Schreiber was located at his office in Connecticut, and Mead and Dunlop were located either in New Jersey or, on one occasion, in...
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