# Republic of Colombia v. Diageo North America Inc.

> District Court, E.D. New York · June 19, 2007 · 531 F. Supp. 2d 365

URL: https://www.frixlaw.com/law-library/cases/2392550

## Case

- **Full name:** The REPUBLIC OF COLOMBIA, Et Al., Plaintiffs, v. DIAGEO NORTH AMERICA INC., Et Al., Defendants
- **Court:** District Court, E.D. New York
- **Decided:** June 19, 2007
- **Citations:** 531 F. Supp. 2d 365; 2007 U.S. Dist. LEXIS 44366; 2007 WL 1813744
- **Precedential status:** Published
- **Opinion:** Opinion by Garaufis
- **Judges:** Garaufis
- **Cited by:** 17 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2392550

## How later opinions describe it (automated extraction)

- stating that other than the passage discussed above, "nothing in Amazonas [which relied on Canada ] supports the proposition that any time an action forces a court to consider a foreign revenue law, the action constitutes an attempt to indirectly enforce a foreign revenue law …
- finding that the revenue rule did not bar consideration of the plaintiffs' claims for lost revenues and profits resulting from the defendants' money laundering enterprise because the "court's consideration of Colombia tax laws will be limited to recognizing their applicability…
- stating that there is "no binding authority" on "the extent to which the revenue rule prohibits courts from considering the validity of or recognizing foreign tax laws" outside the context of "claims for costs resulting from enforcement of foreign tax laws"
- holding that charge of money laundering need not satisfy rule 9(b)

## Opinion text

MEMORANDUM & ORDER
GARAUFIS, District Judge.
The Republic of Colombia, Colombia’s Capital District of Bogota, and a number of Departments of the Republic of Colombia (collectively, “Plaintiffs”) bring a civil Racketeering Influenced and Corrupt Organizations Act (“RICO”) claim and common law claims against Diageo North America Inc., United Distillers Manufacturing Inc., Diageo PLC, Seagram Export Sales Company Inc., Pernod Ricard USA LLC, and Pernod-Ricard S.A. (collectively, “Defendants”). Essentially, Plaintiffs allege that Defendants are members of a RICO enterprise composed of illegal narcotics traffickers and Defendants’ distributors for the purpose of laundering the proceeds of illegal narcotics sales and illegally smuggling liquor into Colombia.
At this time, Defendants Diageo North America Inc., United Distillers Manufacturing Inc., Seagram Export Sales Company Inc., and Pernod Ricard USA LLC move for dismissal on a number of grounds.
1
First, Defendants assert that the action is barred by the revenue and penal rules. Second, Defendants move for dismissal under the doctrine of
forum non conveniens.
Third, Defendants request
*376
that this court abstain from hearing the action under the doctrine of international comity. Fourth, Defendants assert that this case is barred because it presents non-justiciable political questions. Fifth, Defendants argue that Plaintiffs’ RICO claim should be dismissed because RICO should not be applied extraterritorially to the alleged conduct, which largely occurred outside of the United States. Sixth, Defendants argue that the RICO claim should be dismissed because the Second Amended Complaint fails to plead adequately a RICO claim. Finally, the Defendants assert that Plaintiffs’ RICO claim is barred by the statute of limitations. For the reasons described below, Defendants’ motion to dismiss on the ground that the revenue rule bars the instant action is granted in part and denied in part. Defendants’ other motions are denied.
I. FACTUAL BACKGROUND
Defendants move to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). With respect to Defendants’ Rule 12(b)(6) motion, the court must accept all factual allegations in Plaintiffs’ pleadings and must draw inferences from those allegations in the light most favorable to Plaintiffs.
United States v. The Baylor Univ. Med. Ctr.,
469 F.3d 263, 267 (2d Cir.2006). With respect to Defendants’ Rule 12(b)(1) motion, the court must accept all
undisputed
factual allegations as true and draw all reasonable inferences in the light most favorable to Plaintiffs.
Robinson v. Malaysia,
269 F.3d 133 , 140 (2d Cir.2001). To the extent the parties dispute facts relevant to Defendants’ Rule 12(b)(1) motion using evidentiary submissions, the court will consider the submitted evidence and, if necessary, decide the disputed factual questions.
See id.
at 140 n. 6 (in context of motion to dismiss for lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act, district court “must” consult factual submissions “if resolution of a proffered factual issue may result in the dismissal of the complaint for want of jurisdiction”). With very few exceptions, the material facts are undisputed. Where the court makes a factual finding, it will do so explicitly. That being said, this statement of facts is not intended to be a comprehensive description of all of the factual issues relevant to this motion. Rather, this section is limited to a description of Plaintiffs’ claims. Other factual issues are discussed in detail in subsequent sections.
Plaintiffs
Plaintiffs are various Columbian national and regional governmental agencies. The Plaintiff Departments of the Republic of Colombia possess a “constitutional monopoly on the domestic manufacture and sale of liquor products.” (Second Amended Complaint (“SAC”) ¶ 1.) Some Plaintiffs manufacture and/or distill liquor and some of the Plaintiffs sell and distribute liquor in Colombia.
(Id.)
Plaintiffs “are by far the largest sellers and producers of liquor products within the Republic of Colombia.”
(Id.)
Defendants
Defendant Diageo North America is a Connecticut corporation authorized to do business in the State of New York.
(Id.
¶ 11.) Defendant United Distillers Manufacturing is a Delaware Corporation authorized to do business in the State of New York with a principal place of business in Stamford, Connecticut.
(Id.
¶ 12.) Diageo PLC is a British corporation that purchased United Distillers in 1997.
(Id.
¶ 13.) Defendant Seagram Export Sales Co., Inc. is a New York corporation.
(Id.
¶ 14.) Defendant Pernod Ricard USA, LLC is an Indiana corporation with a principal place of business in White Plains, New York.
(Id.
¶ 15.) Defendant Pernod-Ricard S.A. is a French corporation with a principal place of business in
*377
France.
(Id
¶ 16.) Defendants manufacture, distill and/or distribute liquor and other alcoholic beverages on an international scale, including such well-known brands as Tanqueray gin, Smirnoff vodka, Seagram’s 7, Guinness stout, and Baileys Original Irish Cream.
(Id
¶ 16; Declaration of Carlos Acevedo (“Acevedo Decl.”) Exh. 2 at 9.)
The Enterprise
Plaintiffs allege that all of the Defendants were part of a single RICO enterprise. (SAC ¶ 108.) Although Defendants competed with each other, “they were well aware of each other’s activities, copied each other’s strategies when they were successful, and in most cases utilized the same distributors to conduct their illegal sales.”
(Id
¶ 26.) Defendants’ “co-conspirators, in the money laundering schemes, including associated distributors, shippers, currency dealers, wholesalers, money brokers, and other participants” were also members of the enterprise.
(Id
¶ 108.)
The Second Amended Complaint alleges that Defendants knowingly entered into a money-laundering enterprise with narcotics traffickers and, at all times, controlled the enterprise. Defendants “controlled every aspect of the financial transactions involving the purchase of their liquor products.” (SAC ¶ 28.) “Defendants also controlled the exact methods and means by which they were paid for the liquor products.”
(Id)
Defendants controlled the distribution channels through which their liquor traveled.
(Id
¶ 30.) Defendants worked with their co-conspirators to create a “complex web of companies located in Aruba and Panama to disguise the true nature and origin of the criminal proceeds” that were being laundered.
(Id
¶¶ 31, 35.) “Defendants and their co-conspirators knew that the purpose and design of this system of seemingly unrelated parties to the financial transaction was to conceal, hide and/or disguise the true nature of the criminal proceeds they were accepting.”
(Id
¶ 27(d).)
Although the Second Amended Complaint consists of 180 pages and 227 paragraphs, the Plaintiffs essentially allege that Defendants are part of illegal RICO enterprise engaged in money laundering, smuggling, tax evasion, as well as wire and mail fraud.
The Scheme
The alleged scheme begins with the United States Dollars or other currency that a Colombian narcotics trafficking organization obtains from illegal drug sales.
(Id
¶ 27(c); Acevedo Decl. Exh. 6 at 13.) At least some of these moneys are deposited into bank accounts in the United States in small amounts. (SAC ¶ 27(c).) “A large percentage of the narcotics laundering process that occurs in regard to these narcotics sales occur in the Eastern District of New York. By virtue of demographics, population, and other factors, a large percentage of individuals involved in laundering these narcotics proceeds reside in and conduct their money-laundering activities in the Eastern District of New York.” (Acevedo Decl. Exh. 6, Affidavit of Alvin C. James (“James Aff.”) ¶ 12.) These cash deposits are in sufficiently small amounts so as to avoid detection by law enforcement authorities. (SAC ¶ 27(c).) A large number of individuals called “smurfs” are used to make these small bank deposits. “The key to the ‘smurf system is the use of a lot of accounts — and a lot of smurfs.”
(Id)
At this point, the Colombian narcotics organization must find a way to convert its United States Dollars into Colombian pesos without disclosing its illegal operation to law enforcement authorities. (James Aff. ¶¶ 5-6.) Because currency and banking laws preclude drug dealers from laundering their money through banks or other
*378
financial institutions, the drug traffickers and money launderers launder their unlawfully obtained funds primarily through the purchase and sale of commercial goods.
(Id.
¶ 6.)
Ultimately, the proceeds from the illegal narcotics sales are transferred to Defendants. (SAC ¶ 27.) Precisely how this occurs is far less clear. Often, multiple intermediaries are used.
(Id.
¶¶ 27(a), 29.) Defendants’ Aruban distributors often serve as intermediaries.
(Id.
¶¶ 27(f), 30.) Checks drawn from U.S. accounts in which cash proceeds from narcotics sales were deposited in small amounts appear to be paid directly to Defendants.
(See id.
¶ 27(c) (“Checks are then drawn on these accounts — which represent narcotics proceeds — and these checks are then exchanged by Colombian criminal organizations for liquor products manufactured by the Defendants.”).)
This transfer of the narcotics proceeds is one aspect of an informal currency exchange known as the Black Market Peso Exchange (“BMPE”). (JamesAff.lffl 2-7.) Plaintiffs have retained Alvin C. James, the former Senior Policy Advisor for Money Laundering of the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) and founding chairman of the Treasury Department’s BMPE working group. (James Aff. ¶ 2.) James states that, prior to his retirement in 2000, he “was the Treasury Department’s leading authority on money laundering via international trade financing.”
(Id.)
In his testimony before the Senate Caucus on International Narcotics Control, James explained the BMPE:
The Colombian narcotics trafficker has a constant need to repatriate a large part of his drug sale proceeds to Colombia in the form of Colombian pesos. He needs these pesos to operate his illicit business, attempt to avoid government intervention in his activities, and maintain his wealthy lifestyle. It is important to note that the narcotics trafficker’s situation is the opposite of the Colombian dollar/peso broker, since the trafficker has dollars in the U.S. and needs pesos in Colombia; the peso broker has pesos in Colombia and needs dollars in the U.S. The trafficker sells the dollars to the broker. The broker pays for the dollars with pesos in Colombia....
The dollar/peso broker uses two parallel bank accounts to facilitate the sale of dollars to the Colombian importer. The first was a peso account in Colombia. The second was [a] U.S. dollar account in the United States. The dollar/peso broker takes an order for U.S. dollars and receives payment in pesos in Colombia. The dollars are not delivered to the Colombian purchaser, but instead at the time of order, the purchaser instructs the dollar/peso broker to deliver the U.S. dollars to the trade goods supplier to whom he owes payment. These suppliers are often in the U.S., although they may also be in Panama or other ports of trade in Asia or Europe. The trade goods are shipped to Colombia and smuggled into the country to avoid tariffs and taxes[.]
(Acevedo Deck Exh. 2 at 20-21.)
In their brief, Plaintiffs assert that tax evasion is not a purpose of the alleged RICO enterprise.
(See
PI. FNC Opp. at 18 (“Defendants’ buyers cannot use the legitimate importation system, not because they don’t want to pay taxes, but because they cannot risk having their use of narcotics-derived funds discovered by the Colombian authorities.... In other words, Defendants’ coconspirators are not selling illegally in order to avoid taxes, they are selling illegally in order to avoid detection of their use of laundered funds derived from narcotics trafficking.”)) Plaintiffs
*379
cite only Alvin James’s Affidavit in support of this proposition. The court has carefully reviewed the James Affidavit, however, and finds that at no point does James dispute that tax evasion is a purpose or effect of the alleged enterprise.
Further, James’s testimony before United States House of Representatives Subcommittee on General Oversight and Investigations of the Committee on Banking and Financial Services and the United States Senate Caucus on International Narcotics Control, which is attached to James’s affidavit,
2
confirms that both tax evasion and money laundering are purposes and functions of the smuggling scheme alleged by Plaintiffs. James testified that Colombian importers need U.S. dollars to purchase foreign goods, and Colombian laws prevent importers from obtaining U.S. dollars legally without paying the “high Colombian tariffs and taxes.” (Acevedo Decl. Exh. 6 at 20.) James also testified that the Colombian importer “needs to obtain these [U.S.] dollars discreetly so that he can evade the duties and taxes applicable to his imports.”
(Id.
at 12.) Similarly, James testified that the BMPE provides a means through which Colombian narcotics traffickers can launder the proceeds of illegal drug sales: “[0]nee the trafficker has sold the dollars located in the United States and has received his pesos in accounts in Colombia, he has effectively laundered those dollars.”
(Id.
at 21;
see also
James Aff. ¶ 6.)
One significant aspect of the BMPE is that the narcotics trafficker is willing to sell each dollar for less than a dollar because he values the service of having his dollars laundered: “[T]he narcotics trafficker sells the currency to the dollar/peso broker at a substantial discount, often amounting to as much as 30 percent.... As a result, the dollar/peso broker is now able to offer his clients, notably Colombian importers, not only a [discreet] source of U.S. dollars, but at a rate significantly less than the rate offered by the Colombian central bank.” (Acevedo Decl. Exh. 6 at 21.)
Plaintiffs allege that Defendants benefit from their RICO enterprise in three distinct ways. First, Defendants are able to charge the Colombian importers higher prices than they would be able to charge in a legal market because the importers obtain the U.S. dollars that they use to purchase the goods at a discount, i.e., the importers purchase each U.S. dollar for less than one dollar. (James Aff. ¶7.) Second, because the enterprise allows importers to obtain a very large amount of U.S. dollars at a price that is lower than the importers would pay in the absence of the enterprise, the enterprise permits importers to sell large quantities of liquor to consumers at below-market prices.
(Id.)
In doing so, Defendants increase their market share and their profits by selling a far larger quantity of liquor to Colombian consumers at reduced prices.
(Id.)
Third, Defendants assert that “because liquor demand is relatively elastic, the manufacturers are able to change demographic buying patterns, so that, for example, consumers will purchase more Johnny Walker or Lucky Strike and less rum or a domestic cigarette brand, because the Johnny Walker and the Lucky Strike are relatively cheaper than they would be if legitimately imported and sold.”
(Id.)
Although it is not entirely clear how this the third alleged benefit is materially different from the second alleged benefit, for purposes of
*380
this motion, the court accepts all three allegations as true.
Damages
Plaintiffs seek numerous categories of damages. Only a few key categories will be discussed here. First, Plaintiffs seek “the total amount of criminal proceeds laundered by the Defendants.” (SAC ¶ 104.) Second, Plaintiffs seek to recover “large amounts of money [expended] in their efforts to stop money laundering and to recoup funds that they have lost as a result of the activities of the Defendants[.]”
(Id.
¶ 105.) Third, Plaintiffs, as liquor manufacturers and distributors, seek compensation for the revenues and profits lost as a result of the Defendants’ enterprise.
(Id.
¶ 103(a).)
Alleged Relationship between Plaintiffs’ Lost Sales and Profits and Defendants’ Money Laundering and Tax Evasion
Defendants dedicate a lot of time, energy, and words to their argument that the Second Amended Complaint asserts claims for damages resulting from tax evasion and smuggling as opposed to money laundering.
(E.g.,
Def. FNC Rep. at 18-19.) I find that the Second Amended Complaint states a claim for damages resulting from both money laundering and tax evasion.
The alleged enterprise permits the Colombian importers to purchase liquor from Defendants and/or their agents with U.S. dollars that are acquired at a discounted price, i.e., because each dollar is acquired for less than one dollar. (James Aff. ¶ 6.) Some portion of this discount clearly results from the amount of the Colombian taxes that the importers are unlawfully evading through the enterprise. (Acevedo Decl. Exh. 6 at 12.) Another portion of the discount (if not the remainder of the discount) results from the fact that narcotics traffickers are willing to “sell” their U.S. dollars for less than their face value, i.e., drug dealers sell each dollar for less than one dollar. (Acevedo Decl. Exh. 6 at 20-21.) In effect, the narcotics dealers are paying, as a money laundering fee to the enterprise, the difference between the face value of the money and the price which they are paid for the money. This means that some portion of the discounted price at which the Colombian importers are purchasing the Defendants’ liquor results from tax evasion (the “tax evasion discount”) and some portion of the discounted price at which the Colombian importers are purchasing the Defendants’ liquor results exclusively from laundering the proceeds from narcotics sales (the “money-laundering discount” or the “narco-laun-dering discount”).
The Second Amended Complaint alleges that the price discount that Colombian importers pay for their goods is passed along to consumers. (SAC ¶ 103(c).) The discounted retail prices cause Colombian consumers to purchase more of Defendants’ liquor than they would otherwise purchase. This increase in consumption of Defendants’ products leads (1) to a decrease in consumption of Plaintiffs’ competing liquor and/or (2) Plaintiffs to decrease their prices so as to be able to compete with Defendants. Either way, the enterprise causes Plaintiffs to lose revenues and profits. (Id. ¶¶ 103(a), (c), (d).)
II. STANDARD OF REVIEW
A. Rule 12(b)(1) Motions
On a number of different grounds, Defendants move to dismiss the Second Amended Complaint for lack of subject-matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). “It is well ingrained in the law that subject-matter jurisdiction can be called into question
either
by challenging the sufficiency of the allegation
or
by challenging the accuracy of the jurisdictional facts alleged.”
Gwaltney of Smithfield, Ltd. v. Chesapeake Bay
*381
Found., Inc.,
484 U.S. 49, 68 , 108 S.Ct. 376 , 98 L.Ed.2d 306 (1987) (Scalia, J., concurring in part and concurring in the judgment) (citations omitted; emphasis in original). “If the defendant challenges only the legal sufficiency of the plaintiffs jurisdictional allegations, the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff.”
Robinson,
269 F.3d at 140 (internal citations and quotation marks omitted). If the parties present factual evidence that is “relevant to the jurisdictional question,” the court
may
consider such evidence.
Id.; accord Goonewardena v. New York,
475 F.Supp.2d 310 (S.D.N.Y.2007). The district court
must
consider facts outside the pleadings “if resolution of a proffered factual issue may result in the dismissal of the complaint for want of jurisdiction,”
Robinson,
269 F.3d at 141 n. 6. The party asserting subject-matter jurisdiction bears the burden of proving by a preponderance of the evidence that jurisdiction exists.
Makarova v. United States,
201 F.3d 110, 113 (2d Cir.2000);
accord Goonewardena,
475 F.Supp.2d at 310 .
The parties dispute whether Defendants’ motion to dismiss the Second Amended Complaint on the basis of the revenue rule and Defendants’ motion to dismiss Plaintiffs’ RICO claims on the ground of extraterritoriality are properly brought under Rule 12(b)(1), as opposed to Rule 12(b)(6). Plaintiffs cite
Arbaugh v. Y & H Corporation,
546 U.S. 500 , 126 S.Ct. 1235 , 163 L.Ed.2d 1097 (2006), in support of the proposition that both of these motions may be brought only under Rule 12(b)(6). In
Arbaugh ,
the Supreme Court held that whether the employer had a sufficient number of employees to satisfy the definition of “employer” under Title VII of the Civil Rights Act of 1964 was merely an element of a Title VII claim as opposed to a jurisdictional prerequisite. The
Ar-baugh
court held that “[t]he basic statutory grants of federal-court subject-matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332,” and other statutory requirements for recovery should not be treated as jurisdictional unless “the Legislature clearly states that a threshold limitation on a statute’s scope shall be jurisdictional.]”
Id.
at 514-15 , 126 S.Ct. at 1244-45 .
With respect to Defendants’ revenue rule motion, irrespective of whether the revenue and penal rules are characterized as limitations on subject-matter jurisdiction or abstention doctrines, Rule 12(b) (1) is an appropriate basis on which to make such a motion.
See United States v. Portrait of Wally,
99 Civ. 9940(MBM), 2002 WL 553532 , at *6 (S.D.N.Y. Apr. 12, 2002) (motion to dismiss on the basis of the act of state, international comity, and political question doctrines heard on a Rule 12(b)(1) motion even though “[t]hose doctrines go to justiciability rather than to jurisdiction”); 5B Wright & Miller § 1350 (“Courts have recognized a variety of other defenses that one normally would not think of as raising subject matter jurisdiction questions when considering a Rule 12(b)(1) motion, including claims that ... the subject matter is one over which the federal court should abstain from exercising jurisdiction”).
With respect to Defendants’ motion to dismiss the RICO claim on the ground of extraterritoriality, I find that the standard of review will be the same whether it is brought under Rule 12(b)(1) or Rule 12(b)(6). Although the Second Circuit treated civil RICO’s territoriality requirement as jurisdictional prior to
Arbaugh, see North South Fin. Corp. v. Al-Turki,
100 F.3d 1046 , 1050-51 (2d Cir.1996), at least one court has questioned whether
Arbaugh
requires courts to treat civil RICO’s territorial requirement as merely an element of the claim.
See Ayyash v. Bank Al-Madina,
No. 04 Civ. 9201(GEL),
*382
2006 WL 587842 , at *4 n. 2 (S.D.N.Y. Mar. 9, 2006) (“The Supreme Court’s decision in
Arbaugh
may require that the Court of Appeals review its treatment of the question of RICO’s extraterritorial effect.”). This court agrees that there is, in the least, a serious question as to whether, in the civil RICO context, the territoriality requirement can be considered jurisdictional under
Arbaugh .
In this case, there is no reason to resolve the question of whether RICO’s territoriality requirement goes to the court’s subject-matter jurisdiction. Defendants have made clear that they “do not rely upon material outside of the Complaint for” their motion to dismiss on the basis of extraterritoriality. (Def. RICO Rep. at 2.) Nor do Plaintiffs seek to introduce facts outside of the Second Amended Complaint for purposes of this motion. As a result, whether the motion on this ground is brought under Rule 12(b)(1) or Rule 12(b)(6), the court is required to treat the allegations in the Second Amended Complaint as true and to draw reasonable inferences on the basis of such allegations.
See Robinson,
269 F.3d at 140 (“If the defendant challenges only the legal sufficiency of the plaintiffs jurisdictional allegations, the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff.”) (citations and quotation marks omitted).
B. Rule 12(b)(6) Motions
With the exception of the mail and wire fraud predicate RICO acts, which are subject to a heightened pleading requirement under Federal Rule of Civil Procedure 9(b), the Second Amended Complaint is subject to the liberal pleading requirement set forth in Federal Rule of Civil Procedure 8. After briefing and oral argument on this motion were complete, the Supreme Court clarified the pleading standards under Federal Rule of Civil Procedure 8 and the standard under which Rule 12(b)(6) motions are reviewed. In
Bell Atlantic Corp. v. Twombly,
— U.S.-, -, 127 S.Ct. 1955, 1974 , 167 L.Ed.2d 929 (2007), the Court explained that plaintiffs must allege “enough facts to state a claim to relief that is plausible on its face.” If they “have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.”
Id.; see also Goldstein v. Pataki
488 F.Supp.2d 254, 286 (E.D.N.Y.2007) (Garaufis, J.) (discussing Twombly).
Since
Twombly ,
the Second Circuit has explained that
Twombly
imposes a plausibility requirement on pleadings under Rule 8, but does
not,
as a general
matter,
change the Rule 8 pleading standard:
After careful consideration of the Court’s
[Twombly
] opinion and the conflicting signals from it that we have identified, we believe the Court is not requiring a universal standard of heightened fact pleading, but is instead requiring a flexible “plausibility standard,” which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.
Iqbal v. Hasty,
490 F.3d 143, 157-58 (2d Cir.2007). In another
post-Twombly
decision, the Second Circuit confirmed that “the district
court
must accept as true all of the factual allegations set out in plaintiffs complaint, draw inferences from those allegations in the light most favorable to plaintiff, and construe the complaint liberally.”
Roth v. Jennings,
489 F.3d 499, 509-10 (2d Cir.2007).
Of course, courts in this Circuit have noted that RICO claims “ ‘must be reviewed with appreciation of the extreme sanctions it provides so that actions traditionally brought in state courts do not gain access to treble damages and attorneys fees in federal court simply because they
*383
are cast in terms of RICO violations.”’
Leung v. Law,
387 F.Supp.2d 105, 112-13 (E.D.N.Y.2005) (Garaufis, J.)
(quoting Mathon v. Marine Midland Bank, N.A.,
875 F.Supp. 986, 1001 (E.D.N.Y.1995)). In this vein, it has also been said that “courts should strive to flush out frivolous RICO allegations at any early stage of the litigation.”
Burnett v. Al Baraka Inv. & Dev. Corp. (In re Terrorist Attacks on September 11, 2001),
349 F.Supp.2d 765, 827 (S.D.N.Y.2005) (quotation marks omitted).
III. REVENUE RULE
A. Background
The Second Circuit recently explained that “[t]he revenue rule is a longstanding common law doctrine providing that courts of one sovereign will not enforce final tax judgments or unadjudicated tax claims of other sovereigns.”
Attorney General of Canada v. B.J. Reynolds Tobacco Holdings, Inc.
(hereinafter,
“Canada”),
268 F.3d 103, 109 (2d Cir.2001). The revenue rule was originally created by eighteenth-century English courts as what amounted to a subsidy for British trade: English courts refused to enforce foreign customs laws that would have had the effect of interfering with or diminishing British trade.
Id.
at 110 . More recently, federal courts have found that the revenue rule should continue to be applied to serve separation of powers and sovereignty concerns.
Id.
at 109-115 . Courts continue to refer to Judge Learned Hand’s explanation of the rationale for the revenue rule:
[A] court will not recognize those [liabilities] arising in a foreign state, if they run counter to the ‘settled public policy’ of its own. Thus a scrutiny of the liability is necessarily always in reserve, and the possibility that it will be found not to accord with the policy of the domestic state.... To pass upon the provisions for the public order of another state is, or at any rate should be, beyond the powers of a court; it involves the relations between the states themselves, with which courts are incompetent to deal, and which are intrusted to other authorities. It may commit the domestic state to a position which would seriously embarrass its neighbor. Revenue laws fall within the same reasoning; they affect a state in matters as vital to its existence as its criminal laws. No court ought to undertake an inquiry which it cannot prosecute without determining whether those laws are consonant with its own notions of what is proper.
Moore v. Mitchell,
30 F.2d 600, 604 (2d Cir.1929) (L. Hand, J., concurring).
Both this court and the Second Circuit recently addressed the revenue rule in the
European Community
cases.
See European Community v. Japan Tobacco, Inc.
(hereinafter,
“Amazonas”),
186 F.Supp.2d 231, 243 (E.D.N.Y.2002) (Garaufis, J.),
aff'd in part and rev’d in part sub nom., European Community v. RJR Nabisco, Inc.
(hereinafter,
“European Community I”),
355 F.3d 123 (2d Cir.2004),
cert. granted, judgment vacated and remanded,
544 U.S. 1012 , 125 S.Ct. 1968 , 161 L.Ed.2d 845 (2005),
on reconsideration following remand,
424 F.3d 175 (2d Cir.2005) (hereinafter,
“European Community II”), cert. denied,
546 U.S. 1092 , 126 S.Ct. 1045 , 163 L.Ed.2d 858 (2006).
“The revenue rule is implicated whenever the substance of the claim is, either
directly or indirectly,
one for tax revenues, such that the whole object of the suit is to collect tax for a foreign revenue, and that this will be the sole result of a decision in favour of the plaintiff.”
European Community I,
355 F.3d at 131 (emphasis added; internal citations and quotation marks omitted). “What matters is not the form of the action, but the substance of the claim.”
Canada,
268 F.3d at 130 .
*384
1. Direct Enforcement
“A suit directly seeks to enforce foreign tax laws when a judgment in favor of the plaintiffs would require the defendants to reimburse them for lost tax revenues.”
European Community I,
355 F.3d at 131 . Defendants argue that “the Revenue Rule bars Plaintiffs’ claims regardless of whether these Colombian sovereign government entities sue for sovereign or commercial losses resulting from sovereign revenue law issues.” (Def. FNC Rep. at 28.) In other words, Defendants are arguing that the instant claims for lost sales and profits are barred by the revenue rule because Plaintiffs are directly seeking compensation for lost revenues. Plaintiffs argue that the revenue rule bars only claims that a sovereign brings in its sovereign capacity and does not preclude claims by a sovereign in its commercial capacity. (PI. FNC Opp. at 28-33.)
Plaintiffs cite
Banco Frances e Brasileiro S.A. v. Doe,
36 N.Y.2d 592 , 370 N.Y.S.2d 534 , 331 N.E.2d 502 (1975) in support of this proposition. In
Banco Frances,
a private Brazilian bank brought a fraud claim against individuals, alleging that the individuals submitted false currency-exchange applications to the bank in violation of Brazilian currency regulations, thereby causing the bank to improperly exchange Brazilian cruzeiros into travelers checks in United States dollars. The Court of Appeals distinguished
Banco Do Brasil v. AC. Israel Commodity Co.,
12 N.Y.2d 371 , 239 N.Y.S.2d 872 , 190 N.E.2d 235 (1963), and found that the revenue rule did not bar the plaintiffs claims for a variety of reasons, including as follows:
The
[Banco Do Brasil
] case relied upon by the Appellate Division is quite distinguishable. There the Government of Brazil, through Banco do Brasil, a government bank, sought redress for violations of its currency exchange regulations incident to a fraudulent coffee export transaction. Here, the plaintiff is a private bank seeking rescission of the fraudulent currency exchange transactions and damages. [][N]o case has come to our attention where a private tort remedy arising from foreign currency regulations has been denied by the forum as an application of the revenue law rule and we decline so to extend the Banco do Brasil rationale. Thus, in the instant case we find no basis for reliance upon the revenue law rule to deny a forum for suit.
Banco Frances,
36 N.Y.2d at 598-99 , 370 N.Y.S.2d 534 , 331 N.E.2d at 506-07 . Without question, at least portions of the
Banco Frances
decision are no longer good law in federal courts. Above all else, the
Banco Frances
court’s conclusion that the revenue rule is not “analytically justifiable” is clearly inconsistent with the Supreme Court’s decision in
Pasquantino v. United States,
544 U.S. 349 , 125 S.Ct. 1766 , 161 L.Ed.2d 619 (2005), and the Second Circuit’s decisions in
Canada
and the
European Community
cases. That being said,
Banco Frances
does support the proposition that a commercial actor may bring a private tort claim even though the claim involves a foreign revenue law.
Defendants rely on
Banco Do Brasil,
12 N.Y.2d at 377 , 239 N.Y.S.2d 872 , 190 N.E.2d at 237 , and
Ludlow v. Van Rensselaer,
1 Johns. 94 (N.Y.1806). These cases are inapposite.
Banco Do Brasil
is inap-posite because, as the
Banco Frances
court observed, the plaintiff-sovereign was clearly suing in its sovereign capacity as opposed to its capacity as a commercial actor.
Banco Do Brasil,
12 N.Y.2d at 377 , 239 N.Y.S.2d 872 , 190 N.E.2d at 237 (holding that the action by Brazil for damages caused by defendant’s evasion of foreign currency exchange laws was barred by revenue rule).
Ludlow
is a very old and curious decision. In
Ludlow ,
a breach of contract action between two private par
*385
ties, the court held that the revenue rule barred the court from considering a defense based on a French stamp tax law.
Ludlow
seems to stand for the proposition that, where a claim constitutes a justiciable cause of action to which there exists a potentially meritorious defense based on a foreign tax law that the revenue rule precludes the courts from considering, the court should hear the action and ignore the defense. In this way,
Ludlow
appears to be inconsistent with those Second Circuit cases that state that the revenue rule precludes a court from hearing a claim that would require the court to consider the validity of a foreign tax law. In
European Community I,
the Second Circuit explained that foreign tax laws “embody the political and social judgments of the sovereign and its people” and that:
judicial examination and enforcement of foreign tax laws at the behest of foreign nations may conflict with the other branches’ policy choices with respect to cooperation in tax enforcement, and create the risk that the judiciary will be drawn into issues and disputes of foreign relations policy that are assigned to— and better handled by — the political branches of government.
European Community I,
355 F.3d at 131 (internal quotation marks omitted).
The Second Circuit’s
Canada
decision strongly supports the conclusion that a claim constitutes proscribed direct enforcement of a revenue law only when the sovereign is seeking damages it sustained in its capacity as sovereign. In considering which types of damages are barred by the revenue rule,
Canada
recognized a distinction between damages that a government suffers in its sovereign capacity and damages that a government suffers as a commercial actor.
See Canada,
268 F.3d at 132 . Thus, Canada could not recover law enforcement costs that the defendants’ unlawful acts caused Canada to incur in part because they were a cost that Canada had incurred in its capacity as a sovereign:
Law enforcement costs incurred to secure taxes for the sovereign are qualitatively different from the damages suffered by a private individual; they fall within the class of acts that are
“jure imperii, ”
that is, that are expressions of a foreign sovereign’s will or are carried out by virtue of that sovereign authority. United States courts have traditionally been reluctant to enforce foreign laws that a re
“jure imperii.
”
Id.
at 132 (internal citation omitted). The Second Circuit continued to explain that costs that are
jure imperii
are distinct from those that are
jure gestionis:
“An example of a private,
‘jure gestionis’
act is operating a business.”
Id.
at 132 n. 41.
This distinction between a sovereign suing in its sovereign capacity as opposed to in its capacity as a private actor is consistent with Canada’s reading of the purpose of the revenue rule. In
Canada,
the Second Circuit explained that suits involving a foreign sovereign’s revenue laws are problematic because they raise public policy concerns that go to the heart of sovereignty:
Tax laws embody a sovereign’s political will. They create property rights and affect each individual’s relationship to his or her sovereign. They mirror the moral and social sensibilities of a society. Sales taxes, for example, may enforce political and moral judgments about certain products. Import and export taxes may reflect a country’s ideological leanings and the political goals of its commercial relationships with other nations.
Id.
at 111 . Under this reasoning, tax laws are problematic not because they raise revenue for the government and the government may use such revenues for a controversial purpose, but because the laws, in and of themselves, embody policy choices
*386
that are infused with moral and political judgments. As a result, Canada’s reading of the revenue rule strongly supports the proposition that the rule is not triggered by every foreign law that causes a foreign sovereign to generate revenue; rather, the rule is targeted to those revenue-generating statutes that involve moral and political judgments.
3
A sovereign’s commercial activities do not involve the kind of moral and political judgments that the tax or revenue laws typically involve. A sovereign engages in commercial activity for the same reason a private individual or corporation participates in such activity — to turn a profit. A sovereign’s decision to drill for oil, manufacture airplanes, or provide postal services is not infused with the kinds of moral and political judgments necessarily involved in taxing cigarettes or providing a tax credit for higher education spending.
To read the revenue rule to prohibit sovereigns from
bringing
damages claims irrespective of the nature of the damages claim would have extremely troubling consequences. As Plaintiffs urged at oral argument, if the revenue rule prohibits sovereigns from bringing all claims for damages, then the Venezuelan government could not bring a claim arising out of a contract dispute with an American corporation concerning Venezuela’s oil business. (Feb. 2, 2007 Oral Argument Transcript at 40.) If the United Kingdom had such a revenue rule, the United States Postal Service could not bring a contract claim in the United Kingdom against a British corporation that it had retained to deliver American mail in the U.K. Such an interpretation of the revenue rule would (1) make it very difficult for sovereigns to participate in commercial activities and (2) provide strong disincentives for foreign sovereigns to do business with United States corporations. Such a reading of the revenue rule would cause these problems while achieving absolutely no public policy purpose: prohibiting sovereigns from bringing claims arising out of purely commercial activities would in no way serve the separation of powers or extraterritoriality concerns that currently motivate federal courts to recognize the revenue rule.
Further, if the revenue rule barred suits by foreign sovereigns suing in their commercial capacity, foreign sovereigns would find themselves at a unique disadvantage in federal courts. Under the Foreign Sovereign Immunities Act (“FSIA”), a foreign sovereign is subject to jurisdiction in federal courts with respect to actions arising out of a commercial activity carried on by the foreign state, provided that there is some connection between the commercial activity and the United States.
See Republic of Argentina v. Weltover. Inc.,
504 U.S. 607, 611 , 112 S.Ct. 2160, 2164 , 119 L.Ed.2d 394 (1992). Thus, under Defendants’ reading of the revenue rule, a private plaintiff could sue a foreign sovereign in United States courts for claims arising out of commercial activity but the foreign sovereign could not bring a counterclaim arising out of that same course of conduct. Such an outcome would be manifestly unjust.
Because (1) claims by a foreign sovereign for damages sustained in its capacity as a commercial actor do not raise the same policy concerns as claims brought by a foreign sovereign in its sovereign capaci
*387
ty and (2) foreign sovereigns are subject to suit in the federal courts for claims arising out of commercial actions, I conclude that claims brought by a foreign sovereign in a commercial capacity do not constitute the kind of direct enforcement of a foreign revenue law that is barred by the revenue rule. Of course, such a claim may require a court to rule upon the validity of a foreign revenue law. In those circumstances, such a claim could still constitute indirect enforcement of a foreign revenue law that is barred by the revenue rule.
2. Indirect Enforcement
The reality is that “[ijndirect enforcement is ... easier to describe than to defíne[.]”
Pasquantino,
544 U.S. at 368 , 125 S.Ct. at 1778-79 (internal quotation marks omitted). The parties vigorously contest precisely what constitutes indirect enforcement of a revenue law. Defendants argue that any claim that would require the court to have to consider, apply or otherwise pass on a foreign tax law is barred by the revenue rule.
(E.g.,
Def. FNC Rep. at 7-8.) Plaintiffs argue that the revenue rule bars only claims that seek to collect unpaid foreign taxes. (PI. FNC Opp. at 25.) According to Plaintiffs, whether a claim requires a court to rule on the validity of a foreign tax law is irrelevant.
(Id.)
What is clear is that the revenue rule bars claims for costs resulting from enforcement of foreign tax laws because such claims seek indirectly to enforce the laws.
See European Community II,
424 F.3d at 179 ;
Canada,
268 F.3d at 132 . However, much as other aspects of the revenue rule presented in this case, no binding authority has clarified the extent to which the revenue rule prohibits courts from considering the validity of or recognizing foreign tax laws. The
Canada
and the
European Community
courts did not have occasion to determine whether a federal cause of action that is substantively unrelated to foreign tax laws but requires the federal court to recognize and apply foreign tax laws is the kind of indirect enforcement that runs afoul of the revenue rule. There is language in
Canada
that could be read to mean that a federal court may not hear any claim that requires the court to recognize and apply a foreign tax law:
Additional considerations reinforce our determination that Canada’s claim for law enforcement costs must be dismissed. To proceed with the law enforcement costs claim, we would have to examine the tax laws at issue in order to assess the causation aspect of this claim. For example, we would have to assess whether the law enforcement costs were in fact spent on achieving the cessation of cigarette smuggling. So doing, we would have to examine whether, when and to what extent the smuggling existed, which would require a determination that tax laws were applicable to defendants. These inquiries could draw the courts into troubled waters.
Id.
at 133;
see also Amazonas,
186 F.Supp.2d at 237 (quoting some of this same language).
The Attorney General of Canada specifically argued that “the revenue rule may prohibit the enforcement of Canadian tax laws, but not their recognition in order to calculate damages.”
Id.
at 133. In support of this proposition, the Attorney General of Canada cited
In re State of Norway’s Application (Nos. 1 and 2),
[1990] A.C. 723, 724 (H.L.) and
Regazzoni v. K.C. Sethia (1944) Ltd.,
[1956] 2 Q.B. 490, 515-16 (C.A.),
aff'd
[1957] 3 All. E.R. 287 (H.L.). The Second Circuit explained that:
In both of these cases, the court permitted recognition but not enforcement of foreign revenue laws. However, in neither
Norway
nor
EC. Sethia
was the
*388
British court called upon to allow damages that would serve as a substitute for previously unpaid taxes to be paid in the United Kingdom to a foreign sovereign.
Canada,
268 F.3d at 133-34 . In concluding that
Norway
and
K.C. Sethia
were distinguishable, the Second Circuit did not reject the distinction between recognition and enforcement of a foreign tax law. Further, in
Pasquantino ,
the Supreme Court suggested that a distinction was to be made between recognition of a foreign tax law and enforcement, stating “[indirect enforcement is ... easier to describe than to define, and it is sometimes difficult to draw the line between an issue involving mere[ ]
recognition of
a foreign law and indirect
enforcement
of it.”
Pasquantino,
544 U.S. at 368 , 125 S.Ct. at 1778-79 (emphasis added and internal quotation marks omitted).
In the
European Community
cases, this court stated that “any action in which the court ‘will have to pass on[ ] the validity of [foreign] revenue laws and their applicability [to the claims at bar]’ constitutes ‘enforcing [foreign] revenue laws,’ and thereby triggers the revenue rule.”
Amazonas,
186 F.Supp.2d at 235 . That passage quoted a portion of the Second Circuit’s decision in
Canada,
268 F.3d at 108 , that, in turn, quoted the district court’s decision in
Canada, Attorney General of Canada v. RJ Reynolds Tobacco Holdings, Inc.,
103 F.Supp.2d 134, 143 (N.D.N.Y.2000). As the claims in the
European Community
cases were essentially identical to the claims in
Canada,
in
Amazonas,
I did not confront the issue I confront here: whether a claim that requires a court to recognize, apply, or consider the validity of a foreign tax law is barred by the revenue rule. Further, I did not dismiss the
Ama-zonas
plaintiffs’ money laundering claims on the basis of the revenue rule. In
Ama-zonas,
I found only that the smuggling claims were barred by the revenue rule.
Amazonas,
186 F.Supp.2d at 236 (“In this [revenue rule] section of the opinion, the court will consider the RICO claims pursuant to smuggling grounds. The court will consider the claims in light of the money laundering grounds at Part IV of this opinion.”). Other than the
dicta
relied upon by Defendants, nothing in
Amazonas
supports the proposition that any time an action forces a court to consider a foreign revenue law, the action constitutes an attempt to indirectly enforce a foreign revenue law that is proscribed by the revenue rule.
As I am now explicitly confronted with this issue, this is my first opportunity to clarify the extent to which consideration of a foreign revenue law violates the revenue rule. There is a continuum along which a claim will require a court to consider or “pass on” a foreign tax law. At the least problematic end of the continuum is the mere recognition of a foreign tax law. At the next point along the continuum, a court must apply such a foreign law. Next, a claim might require a court to rule on the validity of a foreign tax law. Finally, a claim might require a court to explicitly enforce a foreign revenue law. The Second Circuit cases make clear that the revenue rule clearly bars explicit enforcement. However, I find that whether lesser forms of consideration of a foreign revenue law— recognition, application, and determination of validity — are permissible depends on the extent to which the consideration of the foreign revenue law raises separation of powers and sovereignty concerns.
I recognize that the Second Circuit cases and the language in this court’s
Amazonas
decision make clear that ruling upon the validity of a foreign law will raise significant policy concerns in many, if not all, cases. As Judge Learned Hand explained, “[n]o court ought to undertake an inquiry which it cannot prosecute without determining whether those laws are conso
*389
nant with its own notions of what is proper.”
Moore,
30 F.2d at 604 (L.Hand, J., concurring). In the typical case where a court will have to rule on the validity of a foreign tax law, the court will have to determine whether the law is consistent with its own public policy. The revenue rule bars such a determination in most, if not all, circumstances.
See Canada,
268 F.3d at 113 (“Addressing the public policy concerns raised by the imposition of such foreign taxes could embroil United States courts in delicate issues in which they have little expertise or capacity”);
see also CI-NAR Corp. Securities Litig.,
186 F.Supp.2d 279 , 293 n. 9 (E.D.N.Y.2002) (revenue rule “mandates that courts refrain from adjudicating cases where they will have to pass upon the validity of the revenue laws of foreign nations”; holding that the revenue rule did not apply where “[t]he Court would not be commenting on the validity of the Canadian incentive scheme, but rather deciding whether the defendants’ admitted abuse of that scheme defrauded American investors.”)
This approach to the revenue rule — allowing a federal court to assess the policy implications of considering, applying, and determining the validity of a foreign revenue law before determining whether a claim that triggers such consideration is barred by the revenue rule — is most consistent with the Second Circuit’s recent revenue law jurisprudence. The
Canada
court explicitly held that determining whether the revenue rule barred a claim required both an analysis of the facts of the case and the policy concerns behind the revenue rule:
We do not suggest that the revenue rule always bars United States courts from furthering the tax policies of foreign sovereigns .... These concerns about sovereignty and [extraterritoriality] are therefore not absolute, and are not implicated in every case involving foreign tax laws. However, as explained below [ ], the particular facts of this case— most notably, the fact that a foreign sovereign plaintiff is directly seeking to enforce its tax laws, and that our government has negotiated and signed a treaty with this sovereign providing for limited extraterritorial tax enforcement assistance but stopping well short of the assistance requested here — lead us to be wary in this instance of becoming the enforcer of foreign tax policy.
Canada,
268 F.3d at 113 .
Similarly, in the
European Community
cases, the Second Circuit reaffirmed that determining whether a claim involves proscribed indirect enforcement of a revenue law requires an analysis of the facts of the case and policy concerns behind the revenue rule. In
European Community I,
the court’s very definition of indirect enforcement incorporated the policy concerns motivating the revenue rule: “[IJndirect enforcement occurs when a foreign state seeks a remedy that would give extraterritorial effect to its tax laws; for instance, a suit seeking damages based on law enforcement costs is an attempt to shift the cost of enforcing the tax laws onto the defendants, and would therefore require the court indirectly to enforce the tax laws.”
European Community 1,
355 F.3d at 131 . The Second Circuit continued to explain that “[t]he revenue rule is therefore not absolute. Even if the substance of the claim invokes foreign tax laws, the revenue rule will not be triggered where the sovereignty and extraterritoriality concerns that inform the rule’s application are not present.”
Id.
at 131-32 . Similarly, the
European Community
court explained that the argument that the revenue rule is discretionary “is also foreclosed by
Canada,
which clearly establishes that, once the sovereignty and separation of powers concerns that inform the rule are implicated by the substance of a plaintiffs claims, the court may not hear those claims absent
*390
evidence that the rule has been abrogated.”
European Community I, 355
F.3d at 138. In re-evaluating the Circuit’s revenue rule jurisprudence in the wake of
Pasquantino ,
the Second Circuit continued to hold that the scope of the revenue rule would be informed by the dual policy concerns motivating the rule:
We stressed in our
[Canada
] opinion that the revenue rule is designed to address two concerns: first, that policy complications and embarrassment may follow when one nation’s courts analyze the validity of another nation’s tax laws; and second, that the executive branch, not the judicial branch, should decide when our nation will aid others in enforcing their tax laws. These twin concerns for sovereignty and separation of powers are important to the revenue rule analysis, because they imply certain exceptions to the rule.
European Community II,
424 F.3d at 180 (citation omitted).
This is consistent with the Eleventh Circuit’s approach to the revenue rule, in that the Eleventh Circuit also considers the policy implications of a claim in determining whether it is barred by the revenue rule.
See Republic of Honduras v. Philip Morris Cos.,
341 F.3d 1253, 1257 (11th Cir.2003) (“The Republics’ complaints make clear that their tax laws embody anti-smoking policies directed at protecting their citizens from the health hazards of smoking, both by attempting to discourage smoking by raising the price of cigarettes and by providing revenue for anti-smoking programs....
Because the tax laws underlying the Republics’ RICO claims embody specific policy choices,
we hold that the revenue rule applies to these claims and prevents us from considering them.”) (emphasis added).
As a result, determining whether a claim for damages that requires a court to recognize, apply, or rule on the validity of a foreign sovereign’s tax laws constitutes the kind of indirect enforcement that is proscribed by the revenue rule requires both an analysis of the facts of the case and the policy concerns motivating the revenue rule.
B. Analysis
Although Defendants do not characterize them as such, Defendants have two central arguments as to why the revenue rule bars the instant claims. First, Defendants argue that the instant claims are an effort to directly enforce the Colombian revenue law providing that the Colombian government shall have a monopoly on certain liquor manufacturing and distribution businesses by awarding Plaintiffs revenues to which they are allegedly entitled under the monopoly law. Second, Defendants argue that the instant claims constitute impermissible indirect enforcement of Colombian revenue laws because they require the court to “pass on” Colombian revenue laws. Each of these arguments will be considered in turn.
1. Direct Enforcement
Colombian law provides that the Colombian government shall have a monopoly on certain liquor manufacturing and distribution businesses. Defendants argue that the instant claims are an effort to directly enforce this law by awarding Plaintiffs revenues to which they are allegedly entitled under the monopoly law. As discussed above, determining whether the instant claims constitute proscribed direct enforcement of a revenue law depends on whether Plaintiffs are suing in their sovereign capacity or in a purely commercial capacity. Defendants argue that Plaintiffs are suing in their sovereign capacity because they engage in the following sovereign acts: “(1) monopolizing the entire liquor industry; (2) collecting revenues to be placed in the government coffers for the general health and welfare of the Colombian peo-
*391
pie; (3) collecting a ‘consumption’ tax on liquor that is given to the Departments [of the Colombian Government]; and (4) enacting and charging discriminatory taxes.” (Def. FNC Rep. at 29.) Defendants point to the fact that Colombia’s Constitution requires that revenues generated by government monopolies must be used for the public welfare and that “[rjevenues obtained through the exercise of liquor monopolies shall be used preferably for health care services and education.” (Declaration of Mauricio A. Plazas Vega (“Plazas Decl.”) ¶¶ 11-12
(quoting
the Colombia Constitution).) Defendants are partially correct.
Two categories of claims are clearly barred. First, to the extent Plaintiffs are stating claims for damages resulting from lost liquor taxes, such claims are barred by the revenue rule and are dismissed.
See European Community I,
355 F.3d at 132 (RICO claims seeking lost taxes are barred by revenue rule);
Canada,
268 F.3d at 131 (same). In this case, lost liquor taxes include both the consumption taxes charged on imported liquor and the so-called “monopoly participations.”
4
Second, to the extent Plaintiffs are seeking damages that they suffered in their sovereign capacity, such claims are also barred by the revenue rule. A sovereign suffers harms in its sovereign capacity when its injury concerns activity undertaken by the government “by virtue of [its] sovereign authority.”
Canada,
268 F.3d at 132 (holding that revenue rule barred plaintiffs’ claim for law enforcement costs because such costs were suffered by plaintiffs in their sovereign capacities).
The Second Amended Complaint is extremely lengthy and identifies countless forms of injury. On pages 31 and 32 of their Reply Brief, Defendants have identified eighteen allegations of injury that they believe are objectionable.
5
At this
*392
time, the court will address only those eighteen alleged injuries. The court agrees that at least sixteen of the eighteen forms of injury are injuries that Plaintiffs could suffer only in their sovereign capacity and, as a result, are barred by the revenue rule. However, two of the eighteen identified forms of injury are not necessarily barred by the revenue rule: (1) “adverse economic impact” of the Colombian “underground economy;”
and (2)
harm resulting from Defendants’ failure to properly label goods. Each of these two types of injury will be considered in turn.
First, the “adverse economic impact” of the Colombian “underground economy” is simply too general and vague a term to encompass only injury that is barred by the revenue rule. For instance, Plaintiffs’ lost sales and profits resulting from Defendants’ money laundering are presumably included within the “adverse economic impact” of the Colombian “underground economy.” Although the claim for such “adverse economic impact” does not run afoul of the revenue rule, this allegation, read independently, is too vague to withstand Federal Rule of Civil Procedure 8’s liberal pleading requirements and, thus, is dismissed. Specific allegations of injury that fall within the category of “adverse economic impact” survive, however. For instance, Plaintiffs have pled a claim for lost sales and profits, which is an injury Plaintiffs suffer in a commercial as opposed to a sovereign capacity.
Second, harm resulting from Defendants’ failure to properly label their goods is arguably a harm that Plaintiffs suffer in a commercial capacity. Although Plaintiffs may bring the improper labeling claim in a purely commercial capacity, such a claim may still be barred by the revenue and/or penal rules if it requires the court to enforce Colombian labeling laws. In any event, at this time, the court will dismiss on revenue rule grounds only the sixteen harms that are clearly suffered by Plaintiffs in their sovereign capacities.
However, Plaintiffs’ claims for lost revenues and profits seek redress for a harm that Plaintiffs allegedly suffered in a commercial—as opposed to sovereign—capacity and, as a result, do not constitute the kind of direct enforcement of foreign revenue laws that runs afoul of the revenue rule. Manufacturing and/or selling liquor is not “within the class of acts that are
‘jure imperii,
’ that is, that are expressions of a foreign’s sovereign’s will or are carried out by virtue of that sovereign authority.”
Canada,
268 F.3d at 132 . Sales of liquor in a national or international market can be made by a government agency authorized to sell liquor by the government’s constitution, a private entity that is authorized by a law permitting (or the absence of a law prohibiting) any private individual to sell liquor, a private entity that was granted corporate status by the sovereign, or a private entity that was specially licensed by the sovereign to sell liquor. Although the regulation of liquor distributing and sale is clearly a sovereign act, a sovereign’s participation in a liquor manufacturing and distribution market is a purely commercial act. The fact that the sovereign may have decided to enter the liquor business itself as opposed to allowing or licensing others to enter the business in no way transforms the sale of liquor into a sovereign act.
The fact that Colombian law appears to provide that Plaintiffs’ profits from the liquor business are to be used for
*393
the health and welfare of Colombian citizens in no way changes this conclusion. (Plazas Decl. ¶¶ 11-12.) How the profits of a business are used is irrelevant in determining whether the act is an inherently sovereign act or an inherently commercial act. For purposes of the revenue rule, the sale of liquor to the general public is not one of the
jure imperii
of which the Second Circuit spoke in
Canada.
As a result, an action seeking to recover lost revenues and profits Plaintiffs suffered in their commercial capacity as participants in the liquor manufacturing and distributing businesses does not seek the kind of direct enforcement of a foreign revenue law that is prohibited by the revenue rule.
6
2. Indirect Enforcement
Whether Plaintiffs’ claim for lost revenues and profits constitutes the kind of indirect enforcement proscribed by the revenue rule is a close question. Neither
Canada
nor the
European Community
cases confronted the precise question presented by the instant claims: whether the revenue rule bars a civil RICO claim brought by a party other than the United States for damages resulting from an enterprise’s money laundering when the enterprise is simultaneously engaged in money laundering and tax evasion, both of which caused the plaintiffs alleged damages.
As a preliminary matter, nothing about the instant claims requires the court to pass on the validity of the Colombian laws authorizing the government to manufacture and sell liquor. Defendants repeatedly argue that, in order to rule on Plaintiffs’ claims for lost revenues and profits, “this Court would have to
examine
Colombia’s revenue laws, including its constitutional authorization of a revenue-raising liquor monopoly to further Colombia’s public policy[J” (Def. FNC Mem. at 52-54 (emphasis added).) Defendants do
not
argue that adjudicating the instant case will require the court
to rule on the validity of
the rules authorizing the Colombian liquor monopolies. Defendants have not articulated any claim, argument or defense raised by or in response to the Second Amended Complaint that would require the court to consider the validity of laws authorizing Plaintiffs’ involvement in the liquor business. This conclusion is further supported by the fact that, although Defendants have brought numerous actions in Colombia challenging various aspects of Colombia’s liquor laws, none or virtually none of these Colombian actions challenge the legality of Plaintiffs’ monopolies. As discussed in
*394
greater detail in Section VI(B), the court has carefully reviewed (1) the Declaration of Juan Rafael Bravo Arteaga, which describes these Colombian actions, and (2) the description of these cases contained in Defendants’ briefs (Def. FNC Mem. at 19-22). Based on the substantial materials submitted by Defendants concerning the Columbian cases, it is clear that nothing about the instant claims will require this court to consider the validity of Colombian laws authorizing Plaintiffs to manufacture and sell liquor.
7
Further, it is of no moment that Colombian law appears to provide that Plaintiffs’ profits from the liquor business are to be used for the health and welfare of Colombian citizens. (Plazas Decl. ¶¶ 11-12.) How Plaintiffs decide to spend the proceeds from a judgment or settlement in this case is no more relevant to the adjudication of this case than how a private plaintiff intends to spend the proceeds from a judgment or settlement would be to a civil case. Whether a plaintiff will use an award to open a factory that illegally employs child labor or will donate the award to a university to found a children’s hospital has no bearing on whether the plaintiffs claims have merit.
As discussed above, Plaintiffs’ claims for lost revenues result from two different aspects of the alleged enterprise: Defendants can charge lower prices, and in doing so increase sales and profits, because they benefit from a(l) tax evasion discount and (2) narco-laundering discount. Permitting Plaintiffs to bring a claim for lost revenues and/or profits for that portion of their losses which results from the alleged enterprise’s tax evasion would permit Plaintiffs to bring an indirect claim for lost tax revenues; however, Plaintiffs’ claim for that portion of their lost revenues and/or profits resulting from the alleged enterprise’s money laundering does not constitute an indirect claim for lost tax revenues.
(a) Damages Resulting from Tax Evasion
Plaintiffs’ claims for lost revenues and profits resulting from the alleged enterprise’s tax evasion clearly constitute indirect enforcement of Colombian tax laws and, as a result, are barred by the revenue rule. These claims are nothing more than an attempt to use a United States tort claim to seek compensation for harms suffered as a result of the evasion of a foreign sovereign’s tax laws. There is no question that hearing these claims would give extraterritorial effect to Colombian liquor tax laws. As the Second Circuit explained in
European Community I,
“indirect enforcement occurs when a foreign state seeks a remedy that would give extraterritorial effect to its tax laws; for instance, a suit seeking damages based on law enforce
*395
ment costs is an attempt to shift the cost of enforcing the tax laws onto the defendants, and would therefore require the court indirectly to enforce the tax laws.”
European Community I,
355 F.3d at 123 .
Permitting Plaintiffs to recover the portion of their lost revenues and/or profits resulting from Defendants’ tax evasion is particularly problematic in this case because it would draw this court into a dispute that is currently the subject of heated litigation in Colombia, namely, whether the Colombian taxes on liquor are legal. Defendants argue that if Plaintiffs’ claims are allowed to proceed, Defendants will assert that the Colombian taxes on liquor are illegal and, as a result, Defendants’ scheme to evade them does not give rise to a RICO claim. (Def. FNC Mem. at 19-22, 47.) Plaintiffs have not challenged Defendants’ assertion that a determination that the Colombian taxes on liquor are illegal would not serve as at least a partial defense to Plaintiffs’ claims for lost revenues and/or profits. Although Plaintiffs have not explicitly briefed the issue, this court is aware of no reason why the illegality of the liquor taxes would not be a meritorious defense to the tax evasion portion of Plaintiffs’ claims: Plaintiffs would not be entitled to recover damages for lost revenues and profits resulting from Defendants’ evasion of liquor taxes that were illegal in the first place.
Cf. United States v. Pierce,
224 F.3d 158, 166-68 (2d Cir.2000) (reversing wire fraud ■ conviction for scheme to defraud the Canadian government of taxes to which it was entitled where prosecution failed to introduce any evidence that Canadian government was actually entitled to the taxes at issue).
(b) Damages Resulting from the Laundering of Proceeds of Narcotics Sales
In contrast to Plaintiffs’ claims for lost revenues and profits resulting from the enterprise’s smuggling and tax evasion, the revenue rule does not bar Plaintiffs’ claims for lost revenues and profits resulting from the enterprise’s money laundering. First, the
European Community
cases and
Canada
do not bar such claims. Those cases addressed only tort claims by foreign governments that would have had the effect of compensating the foreign governments for taxes that should have been paid and the related costs of collecting such taxes.
European Community I,
355 F.3d at 132 (“Because plaintiffs’ claims arise exclusively from tax-related losses and costs, adjudicating these claims would implicate the concerns discussed in
Canada,
requiring the court to evaluate the policies behind the relevant foreign tax laws, interpret their provisions, and enforce them by awarding damages.”);
Canada,
268 F.3d at 131-32 . In both cases, the Second Circuit held that such claims were barred by the revenue rule.
European Community I,
355 F.3d at 132 ;
Canada,
268 F.3d at 131-32 .
Because (1) Plaintiffs are seeking damages to their liquor manufacturing and distribution businesses resulting from Defendants’ enterprise, (2) Defendants’ enterprise causes Plaintiffs’ damages by (a) evading taxes and (b) laundering proceeds from illegal narcotics sales, and (3) Plaintiffs are entitled to recover damages resulting only from the money laundering aspect of Defendants’ enterprise, the Plaintiffs’ claims will require the factfinder to distinguish which of Plaintiffs’ lost revenues and profits result from narcotics laundering and which result from tax evasion. As a result, the factfinder will be forced to recognize the existence of Colombian tax laws and, to some extent, evaluate the effects that evasion of such taxes had and are having on both Plaintiffs’ and Defendants’ liquor revenues and profits.
*396
The pure narcoties-laundering claim will not, however, require the court to pass on the validity of the Colombian tax laws. At this time, there are actions pending in Colombia in which the Diageo companies have alleged that some or all of the Colombian taxes on liquor are invalid. (Def. FNC Mem. at 19-22.) The illegality or invalidity of the tax laws will not serve as a defense to the pure narcoties-laundering claim because it would be irrelevant to determining Plaintiffs’ lost revenues and profits resulting from Defendants’ narcotics-laundering enterprise. This court’s consideration of Colombian tax laws will be limited to recognizing their applicability and determining their economic effect. The fact that the parties dispute the legality of the tax laws is irrelevant; the only question this court will have to answer is which taxes were actually levied (legally or illegally) during the relevant period.
Admittedly, in the event the instant claims were to reach trial, Defendants may very well introduce factual evidence that Plaintiffs’ failure to enforce their own tax laws (e.g., through
de facto
validation of the
Sanandresitos
— local Colombian markets in which smuggled goods are sold) led to the development of the BMPE and the alleged smuggling enterprise. (Def. FNC Mem. at 25.) In effect, Defendants are suggesting that they should not be liable for engaging in money laundering; instead, Plaintiffs should be liable for Defendants’ money laundering because Plaintiffs should have stopped Defendants from engaging in such misconduct. The fact that Plaintiffs’ acts and omissions led to the alleged enterprise, even if true, is in no way a defense to claims relating to Defendants’ decision to join that enterprise by laundering narcotics revenues. That Plaintiffs could have done a better job of enforcing their tax and other laws in no way means that Defendants are somehow less liable for money laundering. Thus, although Plaintiffs’ claim for lost revenues and profits resulting from Defendants’ narcotics laundering requires the court to recognize the existence of Colombian tax laws and analyze their effects, it does not require the court to consider the validity of such laws.
8
In this case, the mere recognition of Colombian tax laws and their economic effects does not trigger the revenue rule. As discussed above,
Canada
and the
European Community
cases leave open the possibility that a court could consider a tort claim that requires it to recognize a foreign tax law without running afoul of the revenue rule. The recognition and consideration of Colombian revenue laws required by Plaintiffs’ claims for lost revenues and profits resulting from the narco-laundering discount simply do not raise sufficient policy concerns to warrant application of the revenue rule.
As a preliminary matter, the policy and political problems resulting from the mere recognition of a foreign tax law and its effects are far smaller in magnitude than those in the core revenue rule case in which the court must rule on the validity of the foreign law. Long ago, Judge Learned Hand explained that “a court will not recognize those [liabilities] arising in a foreign state, if they run counter to the ‘settled public policy’ of its own.... No court ought to undertake an inquiry which
*397
it cannot prosecute without determining whether those laws are consonant with its own notions of what is proper.”
Moore,
30 F.2d at 604 (L.Hand, J., concurring). More recently, in the
European Community
cases, the Second Circuit explained that “policy complications and embarrassment may follow when one nation’s courts analyze the
validity
of another nation’s tax laws.”
European Community II,
424 F.3d at 180 (emphasis added). In hearing the pure narcotics-laundering claim, this court will not be required to make any value-laden judgment as to whether Colombia’s tax laws are consistent with American public policies.
Instead, those claims will require the factfinder to measure certain effects of Colombia’s tax laws. In distinguishing which of Plaintiffs’ lost sales result from Defendants’ evasion of Colombian taxes and which of Plaintiffs’ lost sales result from Defendants’ narco-laundering scheme, the factfinder will most likely make certain judgments as to the effect that Colombian liquor taxes have on overall liquor consumption in Colombia, Plaintiffs’ liquor sales and, possibly, Defendants’ liquor sales. These are determinations that can in many contexts, including perhaps this context, be very sensitive to both Colombia and the United States.
See Canada,
268 F.3d at 113 (discussing this sensitivity and noting that taxes on tobacco could be entirely consistent with New York public policy but entirely inconsistent with the public policy of a tobacco-growing state). The court is not aware of the extent to which liquor taxes are or will become a political issue in Colombia. Nor does this court know whether the Executive or Legislative branches of the United States government have an interest in Colombia’s liquor taxation laws.
9
It is entirely possible that one of these branches has taken a position with respect to the economic effects of the Colombian liquor scheme and the factfinder in this case may very well reach a determination that is inconsistent with that position.
However, the policy concerns presented by this recognition and consideration of the Colombian tax laws and their effects are not sufficient to warrant applying the revenue rule in this case. There are federal causes of action that, even if brought by a private party, would require a federal court or jury to make the same analyses of the effects of Colombian liquor taxes that may very well need to be made in this case. For instance, if a liquor manufacturer brought an antitrust claim against another manufacturer alleging that the defendant had monopolized an international liquor market that included Colombia, the federal court would have to reach conclusions about the nature of Colombian liquor sales, including elasticity of demand, effects of Colombian taxes, and the extent of evasion of Colombian taxes. The fact that the factfinder in this case may have to make certain determinations as to the economic effects of Colombia’s taxes simply does not create policy concerns of sufficient magnitude to justify applying the revenue rule in this case.
Further, applying the revenue rule in this case would raise extremely troubling policy implications for RICO and other federal efforts to stop illegal narcotics trafficking. If Defendants’ enterprise was involved exclusively in laundering the pro
*398
ceeds of narcotics sales, the instant claims would not trigger the policy concerns associated with recognizing and considering Colombian liquor tax laws, which will probably be necessary in order to distinguish which of Plaintiffs’ lost sales resulted from tax evasion and which resulted from narco-laundering. However, the alleged enterprise is engaged in both tax evasion and money laundering. Defendants are, in effect, asserting as follows: if our enterprise paid the taxes that it owed and was exclusively engaged in the laundering of proceeds of narcotics sales, Plaintiffs’ claims would not indirectly enforce a foreign revenue law; however, because the enterprise was engaged in tax evasion and money laundering, claims concerning the enterprise are barred by the revenue rule. Defendants go so far as to argue that “[mjoney laundering — like transportation, storage, corruption of border guards and false customs documents— is merely a logistical component of smuggling contraband into Colombia.” (Def. FNC Rep. at 19.) To deny Plaintiffs an opportunity to bring claims for damages resulting from the enterprise’s money laundering merely because the enterprise is also engaged in tax evasion creates an obvious perverse incentive and moral hazard: individuals engaged in a money-laundering enterprise could shield their conduct from civil RICO claims by expanding their enterprise to include evading a foreign sovereign’s taxes.
10
In the final analysis, nothing about Plaintiffs’ claims for lost revenues and profits will in any way lead this court to “indirectly enforce” Colombia’s tax or revenue laws. As discussed in detail above, the Second Amended Complaint alleges that Plaintiffs have lost sales as a result of Defendants’ money laundering and tax evasion scheme. In this action, Plaintiffs will only be able to recover for lost sales resulting from Defendants’ money laundering. Presumably, one of the primary factual issues in this case will be the extent to which Plaintiffs can prove that their lost sales were caused by Defendants’ money laundering as opposed to some other cause. As a result, Plaintiffs will have every incentive to show that Defendants (1) are engaged in little or no tax evasion, and/or (2) tax evasion has little or no effect on Plaintiffs’ sales. In contrast, Defendants will have every incentive to show
*399
that tax evasion in Colombia is rampant and that the tax evasion is the primary if not exclusive cause of Plaintiffs’ lost sales. As the nature of this action requires Plaintiffs to attempt to disprove the existence and effects of Defendants’ tax evasion, the argument that Plaintiffs are using this action to “indirectly enforce” Colombian tax law fails.
In short, Plaintiffs’ claims for taxes and other damages suffered in Plaintiffs’ sovereign capacity is dismissed as barred by the revenue rule. Plaintiffs’ claims for damages suffered in Plaintiffs’ commercial capacity resulting from Defendants’ tax evasion are also barred by the revenue rule. Plaintiffs claims for damages suffered in a commercial capacity resulting from Defendants’ money laundering are not barred by the revenue rule.
11
IV. PENAL LAW RULE
A. Background
The penal law rule is very similar to the revenue rule. It provides that federal courts do not possess jurisdiction over an action to enforce the penal laws of a sovereign state: “By the law of England and of the United States the penal laws of a country do not reach beyond its own territory except when extended by express treaty or statute to offenses committed abroad by its own citizens; and they must be administered in its own courts only, and cannot be enforced by the courts of another country.”
Wisconsin v. Pelican Ins. Co. of New Orleans,
127 U.S. 265, 289-90 , 8 S.Ct. 1370, 1374 , 32 L.Ed. 239 (1888).
Defendants argue that the revenue and penal law rules are parallel and that the penal law rule prevents this court from hearing actions that directly or indirectly enforce a foreign sovereign’s penal laws to the same extent that the revenue rule prevents this court from hearing actions to enforce a foreign sovereign’s revenue laws. (Def. FNC Rep. at 35-45.) Defendants are correct.
The policy concerns underlying the penal law rule are the same as those that drive the revenue rule. As Judge Learned Hand explained in
Moore v. Mitchell,
“[t]o pass upon the provisions for the public order of another state ... involves the relations between the states themselves, with which courts are incompetent to deal, and which are intrusted to other authorities.”
Moore,
30 F.2d at 604 (L.Hand, J., concurring). Judge Hand went on to write that “[r]evenue laws fall within the same reasoning!.]”
Id.
More recently, the Supreme Court stated that, “[s]ince the late 19th and early 20th century, courts have treated the common-law revenue rule as a corollary of the rule that, as Chief Justice Marshall put it, ‘[t]he Courts of no country execute the penal laws of another.’ ” Pas
quantino,
544 U.S. at 360-61 , 125 S.Ct. at 1774
(quoting The Antelope,
23 U.S. 66 , 10 Wheat. 66, 123 , 6 L.Ed. 268 (1825)). In fact, “[t]he basis for inferring the revenue rule from the rule against foreign penal enforcement was an analogy between foreign revenue laws and penal laws.”
Pasquantino,
544 U.S. at 361 , 125 S.Ct. at 1775 .
Because there are even fewer recent cases discussing the penal law rule than there are discussing the revenue rule, the exact scope of the penal law rule is far from clear. The Supreme Court has held
*400
that the rule can apply to laws that are civil:
The rule that the courts of no country execute the penal laws of another applies, not only to prosecutions and sentences for crimes and misdemeanors, but to all suits in favor of the state for the recovery of pecuniary penalties for any violation of statutes for the protection of its revenue, or other municipal laws, and to all judgments for such penalties.
Wisconsin,
127 U.S. at 290 , 8 S.Ct. at 1374 . Nothing about the penal law rule, however, prohibits foreign sovereigns from bringing a civil cause of action that is not penal in nature: “A foreign sovereign, as well as any other foreign person, who has a demand of a civil nature against any person here, may prosecute it in our courts.”
Id.
(internal quotation marks omitted). Long ago, the Supreme Court announced the standard for determining whether an action is one for violation of a “civil” wrong as opposed to one to enforce a “penal” law:
The test whether a law is penal, in the strict and primary sense, is whether the wrong sought to be redressed is a wrong to the public or a wrong to the individual, according to the familiar classification of Blackstone: [“JWrongs are divisible into two sorts or species: private wrongs and public wrongs. The former are an infringement or privation of the private or civil rights belonging to individuals, considered as individuals and are thereupon frequently termed ‘civil injuries;’ the latter are a breach and violation of public rights and duties, which affect the whole community, considered as a community, and are distinguished by the harsher appellation of ‘crimes and misdemeanors’.[”] 3 Bl. Comm. 2.
Huntington v. Attrill,
146 U.S. 657, 668-69 , 13 S.Ct. 224, 228 , 36 L.Ed. 1123 (1892).
See also Banco Nacional de Cuba v. Sab-batino,
376 U.S. 398 , 413 n. 15, 84 S.Ct. 923, 933 , 11 L.Ed.2d 804 (1964) (“As appears from the cases cited, a penal law for the purposes of this doctrine is one which seeks to redress a public rather than a private wrong.”). In light of the shared origins and purposes of the revenue and penal law rules, I read this distinction between “private” and “public” wrongs to be entirely coterminous with the distinction between harms that are
jure gestionis
and
jure imperii.
B. Analysis
The parties vigorously contest the extent to which the instant claims are barred by the penal law rule. Just as in the context of the revenue rule, the penal law rule bars claims for damages that Plaintiffs suffer in their sovereign capacity, but permits claims for damages that Plaintiffs suffer in a commercial capacity.
Plaintiffs’ alleged lost revenue and profit is a harm that Plaintiffs suffer in their private capacity as commercial actors and, as a result, claims based on that harm are not barred by the penal law rule. Such claims are for damages suffered by Plaintiffs’ liquor businesses. Defendants cite
Oklahoma ex rel. West v. Gulf, Colorado, & Santa Fe Railway Co.,
220 U.S. 290 , 31 S.Ct. 437 , 55 L.Ed. 469 (1911), for the proposition that a sovereign’s civil claim for violation of a variety of liquor laws— including violation of a state-owned liquor monopoly — is barred by the penal law rule.
Oklahoma
is inapposite. In
Oklahoma,
the State of Oklahoma brought suit to enjoin corporations from violating a variety of Oklahoma state liquor laws by importing liquor into the state.
Id.,
at 291-95 , 31 S.Ct. at 438-440 . One of the laws that the defendants were accused of violating was a law that granted the State of Oklahoma a monopoly over liquor sales.
Id.,
at 297 , 31 S.Ct. at 439-40 . The court concluded that the action was barred by the penal law rule: “The present suit,
*401
although in form one of a civil nature is, in its essential character, one to enforce by injunction regulations prescribed by a state for violations of one of its penal statutes, and is therefore one of which this court cannot take original cognizance at the instance of the state.”
Id.
at 800, 31 S.Ct. at 441 . The instant claim for lost revenues and profits is distinguishable because such claims are for damages suffered by Plaintiffs in their commercial capacities by Defendants’ money-laundering enterprise, whereas the plaintiff in
Oklahoma
was suing in its sovereign capacity to enforce Oklahoma’s liquor laws.
With respect to their penal law rule motion, Defendants make a number of arguments that, understandably, are similar or identical to arguments they made in the context of the revenue rule motion. These arguments fail for the same reasons described in the discussion of the revenue rule motion. First, nothing about Plaintiffs’ RICO or other claims requires this court to pass on the validity of Colombian penal laws. Second, Defendants’ argument that Plaintiffs “are seeking to enforce a public right granted to the Departments under the Colombian Constitution, which permits the Departments to sell liquor as no private entity can, for the public benefit” (Def. FNC Rep. at 44) also fails. Plaintiffs, in their commercial capacity, bring federal and state civil tort claims. This suit does not involve the laws authorizing the Colombian liquor monopoly any more than does a suit by a specially licensed liquor retailer involve the laws that authorized the retailer to sell liquor. Third, nothing about Plaintiffs’ claims for lost revenues and profits constitutes an impermissible effort to indirectly enforce Colombia’s penal laws. The fact that Defendants’ conduct that allegedly violates federal and state law may also violate Colombian law is of no consequence: the mere fact that a defendant’s conduct happens to violate the laws of some foreign
sovereign (in addition to U.S. law) is no defense to a federal civil claim. Any other rule would create the perverse incentives to violate foreign laws.
Defendants are correct, however, that the Second Amended Complaint appears to identify certain types of damages claims that constitute an attempt to directly enforce Colombian penal laws. Above all else, Plaintiffs appear to state that they are seeking to enforce the Colombian law providing that the Colombian government may seize instrumentalities of crime: “Under the laws of the Republic of Colombia, the Republic of Colombia and the Departments of the Republic of Colombia possess title in, or have a right to, any property used in the commission of a crime conducted within their borders, including money and goods, including illegal liquor products.” (SAC ¶ 103(g).) This claim is an attempt to directly enforce a Colombian law that constitutes a penal law within the meaning of the penal law rule and, as a result, is dismissed. As this court has already determined that the revenue rule bars most of the other categories of damages that Defendants assert violate the penal law rule, there is no reason to address them again in the context of the penal law rule.
(See, e.g.,
Def FNC Rep. at 43 (Colombian government’s expenditures to prevent money laundering, law enforcement costs, damages other than lost revenues are profits that result from violation of Colombia’s borders).) Defendants’ motion to dismiss the Second Amended Complaint on the ground that it is barred by the penal law rule is granted in part and denied in part, to the same extent as their motion based on the revenue rule.
V.
FORUM NON CONVENIENS
A. Background
“The principle of
forum non conveniens
is simply that a court may
*402
resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute.”
Gulf Oil Corp. v. Gilbert,
330 U.S. 501, 507 , 67 S.Ct. 839, 842 , 91 L.Ed. 1055 (1947). The decision as to whether to dismiss a case on
forum non conveniens
grounds is trusted to the sound discretion of the trial court.
Iragorri v. United Techs, Corp.,
274 F.3d 65 , 72 (2d Cir.2001). The Second Circuit has explained that district courts should follow a three-step process when exercising this discretion:
At step one, a court determines the degree of deference properly accorded the plaintiffs choice of forum. At step two, it considers whether the alternative forum proposed by the defendants is adequate to adjudicate the parties’ dispute. Finally, at step three, a court balances the private and public interests implicated in the choice of forum.
Norex Petroleum Ltd. v. Access Indus., Inc.,
416 F.3d 146 , 153 (2d Cir.2005) (internal citations omitted).
Step one requires the court to determine what degree of deference should be afforded to the plaintiffs choice of forum.
Iragorri,
274 F.3d at 71. When a plaintiff selects her home as a forum, the plaintiff should be given “great deference,” but when a foreign resident selects a United States forum, the plaintiff is entitled to “less deference.”
Id.
In order to determine how much deference a plaintiff should be accorded, the court must determine the extent to which the plaintiffs choice of forum was based on legitimate convenience concerns and to what extent the choice constitutes mere forum shopping:
The more it appears that a domestic or foreign plaintiffs choice of forum has been dictated by reasons that the law recognizes as valid, the greater the deference that will be given to the plaintiffs forum choice. Stated differently, the greater the plaintiffs or the lawsuit’s bona fide connection to the United States and to the forum of choice and the more it appears that considerations of convenience favor the conduct of the lawsuit in the United States, the more difficult it will be for the defendant to gain dismissal for
forum non conve-niens.
Thus, factors that argue against
forum non conveniens
dismissal include the convenience of the plaintiffs residence in relation to the chosen forum, the availability of witnesses or evidence to the forum district, the defendant’s amenability to suit in the forum district, the availability of appropriate legal assistance, and other reasons relating to convenience or expense. On the other hand, the more it appears that the plaintiffs choice of a U.S. forum was motivated by forum-shopping reasons — such as attempts to win a tactical advantage resulting form local laws that favor the plaintiffs case, the habitual generosity of juries in the United States or in the forum district, the plaintiffs popularity or the defendant’s unpopularity in the region, or the inconvenience and expense to the defendant resulting from litigation in that forum — the less deference the plaintiffs choice commands and, consequently, the easier it becomes for the defendant to succeed on a
forum non conveniens
motion by showing that convenience would be better served by litigating in another country’s courts.
Iragorri,
274 F.3d at 71-72 (footnote omitted).
At step two, the plaintiff bears the burden of establishing that an adequate alternative forum exists.
Norex,
416 F.3d at 157. “ ‘An alternative forum is adequate if the defendants are amendable to service of process there, and if it permits litigation of the subject matter of the dispute.’ ”
Id. (quoting Pollux Holding
*403
Ltd. v. Chase Manhattan Bank,
329 F.3d 64, 75 (2d Cir.2003)).
In the event the court determines that an adequate alternative forum exists, the court proceeds to step three, which requires the court to balance two sets of factors to determine which forum is best suited to adjudicate the case.
Iragorri,
274 F.3d at 73. The first set of factors are the “private interest” factors, which are designed to assess which forum is most convenient for the parties: “‘the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious, and inexpensive.’ ”
Id.
at 73-74
(quoting Gilbert,
330 U.S. at 508 , 67 S.Ct. 839 ). In making this private interest analysis,
[T]he court should focus on the precise issues that are likely to be actually tried.... In a suit alleging negligence, for example, the court might reach different results depending on whether the alleged negligence lay in the conduct of actors at the scene of the accident, or in the design or manufacture of equipment at a plant distant from the scene of the accident.
Id.
at 74. During this third step, the court must also consider the following public interest factors:
Administrative difficulties follow for courts when litigation is piled up in congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation. In cases which touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only. There is a local interest in having localized controversies decided at home. There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself.
Id. (quoting Gilbert,
330 U.S. at 508-09 , 67 S.Ct. 839 ).
B. Analysis
Both parties’ submissions on the
forum non conveniens
issue appear far more like treatises exhaustively prepared for the purpose of cataloguing every conceivable
forum non conveniens
argument than like focused “briefs” designed to cut to the heart of the the
forum non conve-niens
issue. As a result, I will not take the time to identify each of the arguments made by the parties. Instead, I note that the court has reviewed the briefs very carefully and will address the most relevant arguments presented. Although it is a close question, I conclude that the instant case should not be dismissed under the doctrine of
forum non conveniens.
My analysis follows the three-step approach the Second Circuit announced in
Iragorri.
1. Deference to Plaintiffs’ Choice of Forum
Plaintiffs argue that their choice of the instant forum is entitled to a “strong presumption of correctness” (PL FNC Opp. at 52 (internal quotation marks omitted)), while the Defendants argue that Plaintiffs’ choice of forum should be “accorded little deference” (Def. FNC Mem. at 58). The answer lies somewhere in between. After considering all of the factors described in the Second Circuit’s decision in
Iragorri,
the court finds three factors are most influential in this case and, thus, warrant further discussion here.
*404
First, the parties agree that Plaintiffs are foreign entities. Plaintiffs do not argue that their liquor businesses have any connection to the United States. This factor weighs in favor of attaching little deference to their choice of forum.
See Base Metal Trading SA v. Russian Aluminum,
253 F.Supp.2d 681, 693-98 (S.D.N.Y.2003),
aff'd.
98 Fed.Appx. 47 (2d Cir.2004) (plaintiffs’ choice of U.S. forum is entitled to “little deference” where seven of ten plaintiffs were foreign, three plaintiffs that were U.S. citizens were shell corporations, the conduct at issue did not occur in the United States, and, with one exception, forum selection clauses in relevant contracts choose foreign fora, confirming that the United States was not a convenient forum for the parties).
Second, the four Defendants that are seeking dismissal on the ground of
forum non conveniens
are United States corporations with offices near this courthouse. As described in greater detail above, Plaintiffs allege that Defendants masterminded a money-laundering enterprise from offices a few miles from the Brooklyn Bridge. While it is possible that Plaintiffs could have brought claims against a number of other entities that are alleged to be a part of the enterprise (e.g., Defendants’ distributors or drug dealers whose revenues are being laundered), Plaintiffs have decided— as is their right to do — to seek compensation exclusively from Defendants. In order to most efficiently gather evidence against Defendants, it would make sense to bring a claim in a United States forum that is geographically proximate to Defendants’ witnesses and documents. While it certainly would be possible to obtain at least some evidence from Defendants by bringing suit in Colombia, Plaintiffs may have reasonably concluded that the easiest way to obtain evidence from American Defendants is to retain American lawyers to seek discovery from them in an American court.
A significant amount of evidence essential to Plaintiffs’ case that may be located in Colombia. This includes evidence describing (1) the effects of Defendants’ money laundering on the Colombian liquor market and (2) Plaintiffs’ injuries. However, Plaintiffs may have reasonably concluded that they are already in possession of many if not all of the documents in the latter category and therefore do not require discovery to obtain them. With respect to documents concerning the effects of Defendants’ money laundering, Plaintiffs may intend to rely upon documents already in their possession and/or documents to be obtained from Defendants in discovery. As a result, this factor suggests that Plaintiffs selected the instant forum because it was convenient, as opposed to purely for the sake of forum shopping.
12
See Pollux,
329 F.3d at 74
*405
(“[A] plaintiffs choice to initiate suit in the defendant’s home forum — as opposed to any other where the defendant is also amenable to suit — only merits heightened deference to the extent that the plaintiff and the case possess bona fide connections to, and convenience factors favor, that forum.”).
Third, the fact that RICO permits successful Plaintiffs to recover treble damages suggests that Plaintiffs may have selected this forum purely for tactical reasons.
See Norex,
416 F.3d at 155 (“[W]e recognize that the possibility of a RICO treble damages award might have made the choice of a United States forum attractive to [plaintiff] regardless of convenience.”)
After considering all of the
Imgorri
factors, I find that this case falls somewhere in between those cases where courts accord “little deference” to the plaintiffs choice of forum and those in which courts accord “substantial deference.”
Compare Pollux,
329 F.3d at 71-72 (foreign plaintiff with only minimal connections to U.S. forum entitled to “lesser degree of deference”)
with Norex,
416 F.3d at 155 (where “it appeared] doubtful from the record that [plaintiff] could have perfected jurisdiction over all defendants in either of its presumptively convenient home forums” and much evidence was located in New York forum, plaintiffs choice of forum was entitled to significant deference). As a result, this court will accord reasonable, but not substantial, deference to Plaintiffs’ choice of forum.
See Giaguaro S.p.A v. Amiglio,
257 F.Supp.2d 529, 535-37 (E.D.N.Y.2003) (foreign plaintiffs’ choice of New York forum “entitled to some weight” where defendant was New York resident and defendant alleged to have committed fraud and breach of contract in New York).
2. Adequate Alternative Forum
Plaintiffs’ only argument that Colombia is not an adequate alternative forum is that Defendants have failed to adduce evidence that Colombia courts could and would entertain claims against the French and United Kingdom Defendants, Pernod-Ricard S.A. and Diageo PLC. (PI. FNC Opp. at 48.) Plaintiffs’ argument appears to go to both the subject-matter and personal jurisdiction of the Colombian courts.
As a preliminary matter, the court notes that, where Colombian courts have subject-matter jurisdiction over a matter and personal jurisdiction over the parties to a dispute, the Colombian courts have the procedures required to constitute an adequate alternative forum.
See, e.g., In re Bridgestone/Firestone, Inc. Tires Prods. Liab. Litig.,
190 F.Supp.2d 1125, 1134 (S.D.Ind.2002);
Iragorri v. United Techs. Corp.,
46 F.Supp.2d 159, 162-63 (D.Conn.1999),
vacated on other grounds,
274 F.3d 65 (2d Cir.2001).
The parties have submitted conflicting evidence as to whether Colombian courts possess subject matter jurisdiction over this matter. Plaintiffs’ expert, Rafael Nie-to Navia, who has been a judge on various international courts (including those of Rwanda and the former Yugoslavia) and a professor of international public law, states, “I believe that Colombian judges do not have jurisdiction to hear this case.” (Acevedo Decl. Exh. 7 (“Nieto Deck”) ¶ 9.) This appears to be because “Colombian law does not apply extraterritorially. The general rule is that Colombian judges do not have jurisdiction over events that occur abroad[.]”
(Id.)
Plaintiffs’ other expert, Alfonso Miranda Londoño, who teaches, studies, and practices competition law in Colombia, testified that Colombian courts do have subject matter jurisdiction over the instant matter: Colombian courts “would surely take cog
*406
nizance of the case, since some of the effects of the conduct[] described took place in Colombian territory.” (Acevedo Deck Exh. 8 (“Miranda Deck”) ¶ 11.) This conclusion is consistent with both Miranda’s and Defendants’ expert’s description of the scope of Colombian courts’ subject matter jurisdiction. Miranda testified that “[iff the act of unfair competition has been carried out abroad, the judge of the place in which the act produced its effect shall also have jurisdiction.”
(Id.
¶ 10(b)(iv).)
Defendants’ expert is Jorge Santos Bal-lesteros, a professor of law who has practiced law in Colombia and served as a Justice and the President of the Colombian Supreme Court Civil Division. (Declaration of Jorge Santos Ballesteros (“Santos Deck”) ¶ 1.) According to Santos, Colombian courts possess “jurisdiction over a defendant in situations, such as those described in the [instant] Complaint, in which the defendant is alleged to have engaged or assisted in wrongdoing that caused injury in Colombia. This is true even if the defendant’s actions took place outside of Colombia and had effects in Colombia.”
(Id.
¶ 21.)
The bulk of the evidence clearly supports the conclusion that Colombian courts possess subject matter jurisdiction over the instant dispute. Only Nieto’s testimony contradicts this conclusion. I do not credit Nieto’s testimony on this point because (1) Nieto specializes in public international law as opposed to the private tort law at issue in this case and (2) Nieto’s testimony on this point fails to address the doctrine that Colombian courts will hear tort claims that cause injuries in Colombia. As a result, I conclude that Colombian courts possess subject-matter jurisdiction over the instant dispute.
Plaintiffs also argue that Colombian courts do not possess personal jurisdiction over Pernod-Ricard S.A. and Diageo PLC. These two Defendants have indicated that they will consent to the jurisdiction of the Colombian courts if this case is dismissed under the doctrine of
forum non conve-niens.
(Def. FNC Rep. at 55 n. 42 (“Should this Court determine that the
forum non conveniens
dismissal depends on the Foreign Defendants consenting to jurisdiction in Colombia, they also are prepared to so consent.”).) This willingness to consent disposes of the personal jurisdiction issue.
See Norex,
416 F.3d at 157 (“In urging Russia as an adequate alternative forum for [plaintiffs] claims, defendants satisfied the [amenable-to-service-of-process-in-Russia] prong of [the
forum non conveniens
] test by representing that they would all submit to the jurisdiction of Russian courts in any comparable action field against them by plaintiff.”);
Jota v. Texaco Inc.,
157 F.3d 153, 159 (2d Cir.1998) (reversing dismissal for
forum non conveniens
where defendant was not amenable to suit in alternative forum and remanding for,
inter alia,
determination as to whether defendant would consent to suit in alternative forum);
Skelton Fibres Ltd. v. Canas,
No. 96 Civ. 6031(DLC), 1997 WL 97835 , at *4 (S.D.N.Y. Mar. 6, 1997) (“The first prong of the
forum non conveniens
test is satisfied as defendants represented to this Court ... that the American defendants consent to the jurisdiction of the Spanish courts.”).
As the Colombian courts possess subject matter over the matter and the British and French Defendants have consented to the Colombian courts exercising personal jurisdiction over them, the Colombian courts constitute an adequate alternative forum.
3. Interest-Balancing
It would be a gross understatement to say that the parties have “over-briefed” the interest balancing issue. Although the court has carefully considered each and every of the seemingly countless argu
*407
ments included in both parties’ briefs, the court will address only those factors that are the most significant. First, the private interest factors will be considered. A discussion of the public interest factors will follow.
(a) Private-Interest Factors
(I) Location and Convenience of Evidence and Witnesses
This factor favors neither the instant forum nor the Colombian forum. There are two significant categories of evidence that are present in the United States. First, Plaintiffs allege that Defendants masterminded a money-laundering enterprise from offices within a few miles of this courthouse. Plaintiffs allege that Defendants “controlled” the money-laundering enterprise at issue in this case. (SAC ¶¶2, 28-30.) Further, Plaintiffs continue to allege that “[m]any of the activities of the Defendants that are the subject matter of this complaint, including management decisions and direction of the schemes, are conducted by the Defendants in the United States and, more particularly, from the Defendants’ offices in the State and City of New York.”
(Id.
¶ 100.) The Second Amended Complaint contains numerous specific allegations of money laundering.
(E.g.,
¶¶ 27(c), 32, 37.) This suggests that Plaintiffs already possess significant evidence that money laundering occurred. As a result, the most important aspect of discovery in this case will be an examination of whether and, if so, in what ways and to what extent, Defendants were involved in the money laundering. As Defendants are alleged to have managed the money-laundering enterprise from the United States, this category of evidence will most likely be found in the United States.
Defendants argue that the evidence that is in Defendants’ possession in the United States would be just as accessible to Plaintiffs if this case is heard in Colombia as if it is heard in the United States because the Colombian court will have the power to order the Defendants to turn over any evidence in their possession to which Plaintiffs are entitled, irrespective of where it is located. (Def. FNC Rep. at 66-67.) Defendants argue that “[w]hat is most relevant for the
forum non conve-niens
analysis is the location of evidence in the hands of
non-parties
who may
not
be subject to the jurisdiction of the court that ultimately hears this case.”
(Id.
at 67 (emphasis in original).) To some extent, this may be true. However, the fact that evidence in Defendants’ possession is already located here suggests that it may be cheaper and more expeditious to litigate the dispute here.
Second, Plaintiffs allege that the initial stages of the money laundering occurred in the United States. (James Aff. ¶ 12.) Also, Plaintiffs have stated that at least some of the narcotics traffickers who are alleged to be involved in the enterprise currently reside in the United States. (PI. FNC Opp. at 65 (“[T]o the extent that the Defendants actually believe that they may call some of the narcotics traffickers and money launderers as witnesses in this case, it happens that now most of them reside in the United States as guests of the United States government.”).) As a result, at least some evidence of money laundering is also likely to be located here.
Similarly, there are two categories of evidence that are likely to be located in Colombia. First, the overwhelming majority of evidence of how Defendants’ enterprise affected Colombian liquor market(s) and injured Plaintiffs is likely to be in Colombia. This is an extremely significant body of evidence. Adjudicating Plaintiffs’ claims in this court will require distinguishing the extent to which Plaintiffs’ sales were reduced by (1) money laundering, (2) tax evasion, and/or (3) other eco
*408
nomic factors, such as consumer preferences and elasticity of demand. Although it is possible that Defendants possess such evidence in their United States facilities
{e.g.,
Acevedo Decl. Exhs. 2-5), the bulk of this evidence is most likely found in Colombia.
Second, it appears that a significant amount of the money laundering process occurred in Colombia and, as a result, documents concerning and witnesses to those stages of the money laundering process will be located in Colombia. (Acevedo Decl. Exh. 6 at 13.)
In addition to evidence in Colombia and the United States, the Second Amended Complaint states that Defendants’ enterprise conducted much of their activities in Aruba.
{E.g.,
SAC ¶¶ 27(f), 30.) As a result, it appears that there will be a substantial amount of evidence and number of witnesses located in the Caribbean. Similarly, two of the Defendants are located in Europe, and, irrespective of whether the court finds that it possesses personal jurisdiction over these European Defendants, some evidence and witnesses will presumably be located there. There is no reason to believe the instant forum or a Colombian forum is more accessible to these Caribbean and European witnesses and evidence.
Finally, I note that Defendants assert that numerous additional categories of evidence are located in Colombia. (Def. FNC Rep. at 62-65.) Although I will not address each category individually, it is sufficient to state that those categories that I have not mentioned are either irrelevant or of far less relevance to the instant claims than the categories that have been discussed herein.
13
Overall, the evidence in this case is scattered across the United States, Colombia, the Caribbean, and Europe. As a result, Colombia and the instant forum are equally accessible and convenient to the evidence in this case.
See Maritima Aragua, S.A. v. MIT TRADE RESOLVE,
823 F.Supp. 143, 147 (S.D.N.Y.1993) (“[T]he evidence and witnesses to be produced by the U.S. corporations, combined with the possibility of evidence to be produced from Germany, England, or Greece prevent the convenience of witnesses and the location of the evidence from being [particularly] determinative of the appropriate forum”).
(ii) Compulsion of Attendance of Unwilling Witnesses
Defendants argue that key non-party witnesses are located in Colombia and that Colombia does not have any procedural device for compelling the testimony of a witness to a case pending in this court. (Def. FNC Mem. at 78-81.) Defendants note that, pursuant to 28 U.S.C. § 1782 , United States courts can compel third-party witnesses to a proceeding before a Colombian court. (Def. FNC Mem. at 78 n. 41.) For the most part, Defendants appear to already be in possession of evidence concerning the Colombian liquor market and the related tax evasion. Further, Plaintiffs undoubtedly possess a significant amount of evidence on the same subject. This court is, of course, capable of requiring Plaintiffs to produce employees located in Colombia for depositions
*409
and/or trials. This eliminates any concern that adjudicating the dispute in the instant forum will prevent Defendants from obtaining evidence that Plaintiffs’ revenue and profits losses are the result of their own inefficiency and mismanagement as opposed to Defendants’ money laundering.
The one significant category of third-party witnesses to whom Defendants may not have access in this forum is money launderers located in Colombia. Such individuals could conceivably provide evidence that Defendants were not involved in those individuals’ money laundering. Two factors diminish the significance of this shortcoming of the American tribunal. First, even if this action were tried in Colombia and the money launderers could be compelled to testify, the money launderers are unlikely to provide truthful testimony concerning their money laundering. Second, the Second Amended Complaint clearly alleges a transnational money-laundering enterprise. Thus, money launderers located in the United States, the Caribbean, or Colombia could provide evidence that Defendants were involved in the laundering. The fact that money launderers in Colombia were not familiar with Defendants or believed Defendants were not involved in the laundering is far from dispos-itive. In the final analysis, this factor slightly favors dismissal.
(Hi) Joinder of Additional Parties
Defendants argue that there are several categories of third-party plaintiffs that Defendants will be able to implead in Colombia but not in this court, including Defendants’ distributors and importers, Defendants’ “criminal customers,” and Colombian and Venezuelan individuals and entities involved in money laundering. (Def. FNC Rep. at 74.) Plaintiffs argue that Defendants’ vague argument on this ground is largely theoretical because “[tjhere is no chance that either in Colombia or the United States, the liquor companies are going to implead into this case their criminal coconspirators, the distributors, narcotics traffickers, and money launderers. To do so would only prove the Plaintiffs’ case of the close collaboration between these Defendants and those criminal groups.” (PL FNC Opp. at 66-67.) Plaintiffs are largely correct.
There can be no question that this is a highly significant factor. Had Defendants identified specific third-parties that they wish to implead, this would weigh heavily in favor of dismissal under the doctrine of
forum non conveniens.
However, Defendants do not appear to be sincere in their assertion that there are essential third-parties in Colombia. Defendants have not identified a single such third party despite the fact that they are almost certainly familiar with the identities of the individuals and/or entities that compose their distribution chain. Further, Defendants have not requested an opportunity to conduct discovery to identify potential third parties against whom they wish to bring suit. In light of the vagueness of Plaintiffs’ argument concerning impleading third parties, I will accord this factor significantly less weight than I ordinarily would.
14
See Massaquoi v. Virgin Atl. Airways,
945
*410
F.Supp. 58, 63 (S.D.N.Y.1996) (“While the inability to implead a third party is a factor that weighs in defendant’s favor, it is not conclusive and courts have refused to dismiss actions on such grounds.”);
see also Murray v. British Broad. Corp.,
81 F.3d 287 , 293 n. 2 (2d Cir.1996) (dismissal on
forum non conveniens
grounds appropriate even though joinder of third-party may be “impede[d]” where third-party “is not essential to the adjudication of the core issues.”).
(iv) View of Premises
There is no question that the Colombian forum would have a better perspective on the alleged enterprise’s effects on Plaintiffs and the Colombian liquor market. The instant forum has a better perspective on Defendants’ United States conduct and the early stages of the money laundering process, which allegedly largely occurred here. This factor is not particularly significant in this case, however, because in a money laundering case, there is little if any benefit to conducting a physical inspection of any of the stages of the money laundering.
Cf. In re Union Carbide Corp. Gas Plant Disaster at Bhopal, India,
634 F.Supp. 842, 860 (S.D.N.Y.1986) (finding that a physical inspection of an industrial plant in which a serious accident had occurred “would probably not be of utmost importance”). Overall, this factor is neutral.
(b) Public Interest Factors
Again, the parties dedicate many pages to this issue and the court has carefully considered each of their arguments carefully. The relevant factors are addressed below.
(I) Colombia’s and the United States’ Interest in the Dispute
“There is a local interest in having localized controversies decided at home.”
Gilbert,
330 U.S. at 509 , 67 S.Ct. at 843 . Of course, claims arising out of the alleged international money-laundering enterprise are not “localized controversies.” Both Colombia and the United States have an interest in the controversy because the parties are Colombian and American.
See Capital Currency Exch., N.V. v. Nat’l Westminster Bank PLC,
155 F.3d 603 , 611 (2d Cir.1998) (United States had an interest in a case to which a New York corporation was a party, and the United Kingdom had an interest in the case because it involved two English banks).
Defendants are correct that Colombia has a far greater interest than the United States in the Colombian liquor market. Further, the fact that this action requires the court to consider the effects (albeit not the validity) of the Colombian liquor taxation system potentially raises politically sensitive issues in which Colombian courts are more interested than United States courts. Although Defendants are correct that Plaintiffs have alleged significant harm to Colombian society as a whole (Def. FNC Rep. at 82-83), as discussed above, this court will entertain only claims concerning Plaintiffs’ injuries as liquor manufacturers and distributors.
The instant forum has a far greater interest than Colombia in determining whether United States corporations are engaged in the laundering of proceeds from illegal narcotics sales that are occurring in the United States.
15
See Alfadda v.
*?
Fenn,
159 F.3d 41, 47 (2d Cir.1998) (United States has an interest in applying RICO and securities laws to international financial transactions; this is one factor that should be considered in
Gilbert
analysis). Congress’s enactment of a private RICO cause of action predicated on international money launder

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2392550. Public record. Not legal advice.