Opposition Brief — El Cid, Ltd. v. New Jersey Zinc Co.

Supreme Court brief1985

Ask Donna

What actually matters in this document.

Text

In THE

Supreme Court of the United States

Ocrosrr Tze, 1985

TOOT

Ex Cp, Lr.,

Petitioner,

vs.

Tue New Jersey Zinc Company, Guitr & Western Inpus-

Tris, Inc., Gutr & Western International Houprne Com-

pany, Guiry & Wzstrern (Canava) Limirep, Warts, Grirris

& McOvat Liurrep, Camino Goitp Mines Limurrep, Connor

Mirra, Inc., Richarp W. Hoceianp, and Davin M. Koocuzr,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND OIRCUIT

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

JoszepH H. Exysrern

Attorney for Respondents

The New Jersey Zinc Company,

Gulf &@ Western Industries, Inc.,

Gulf @ Western International

Holding Company,

Gulf &@ Western (Canada) Limited,

Richard W. Hogeland and

David M. Koogler

845 Third Avenue

New York, New York 10022

(212) 826-5000

(455)

Questions Presented

1. Are the United States antitrust laws implicated when

a Cayman Islands corporation headquartered in Costa Rica

fails to obtain title to Bolivian gold mining concessions,

title to which is transferred to a Canadian corporation as

the result of conduct occurring in Bolivia?

2. Does the fact that a Canadian corporation, rather than

a Cayman Islands corporation, obtains title to Bolivian gold

mining concessions provide any basis for finding that there

was an injury to competition in the United States?

3. Are United States geographic market issues present

in a dispute which involves title to Bolivian gold mining

concessions where the record does not reveal that any gold

from those concessions ever reached United States markets?

4, Where the Court of Appeals, after a full review of

the record, has determined that the plaintiff did not have

the requisite intention and preparedness to enter into the

business of mining gold in Bolivia, should this Court review

that factual finding?

5. Is the determination below of applicable state choice

of law rules a matter which should be reviewed by this

Court?

List Of Parties Pursuant To Rule 28.1

1. The New Jersey Zinc Company, an unincorporated

entity, which was a component part of the G&W Natural

Resources Group, an unincorporated division of Gulf &

Western Industries, Inc. It has no subsidiaries or affiliates

other than affiliates owned, directly or indirectly, by Gulf

& Western Industries, Inc.

2. Gulf & Western Industries, Inc. has no subsidiaries

or affiliates, other than companies wholly owned by it,

directly or indirectly, except as hereinafter set forth. The

following list includes all subsidiaries and affiliates in which

the corporation’s current ownership interest, direct or in-

direct, exceeds fifty percent (50%) :

Associates National Bank

Blackjack Mines, Ltd.

Casmo Mining, Ltd.

Future General Corporation

International Overseas Film Services, Inc.

International Overseas Productions, Inc. .

Long Road Production (Partnership)

M&R Company (Partnership)

Magicam, Ince.

Madison Square Garden Soccer, Inc.

Newdon Productions (Partnership)

Prentice Hall Hispano America

S-H Disposition, Inc.

Sudbury (Joint Venture)

Trans-America Resources, Inc.

U.S. Ice Productions, Inc.

3. Gulf & Western International Holding Company,

formerly known as Gulf & Western Holding Company, is

a wholly owned subsidiary of Gulf & Western Industries,

Ine. It has no subsidiaries or affiliates other than affiliates

owned, directly or indirectly, by Gulf & Western Indus-

tries, Inc.

4. Gulf & Western (Canada), Limited, is a wholly owned

subsidiary of G&W Canada, Inc., which is wholly owned

by Gulf & Western Industries, Inc. It has no subsidiaries

or affiliates other than affiliates owned, directly or in-

directly, by Gulf & Western Industries, Inc.

TABLE OF CONTENTS

CEI EPI i ccstecccnseesdacencoovcsasnennasicnascsominoudes

List Of Parties Pursuant To Rule 28.1 .....0000.....

IE SPR II eicisceesetemnscercnniercconentapantinatinecndonains

II TO RII asiicesicrstassccieasceclinesnaitesnialigdichine ateclalidee

CORE Si Te SS Sie a

Bi, SRNL TOGO aici cisterns

es I a Bate a

Pornt I—

This Case Does Not Present Antitrust Issues

Worthy Of Review By This Court ....................

A. The Conduct Involved {In This Litigation

Had No Effect On United States Trade Or

Commerce. Accordingly, There Is No Anti-

trust Issue Which Should Be Reviewed By

yc Bo |, eNO MON NS kee em BR? cet Once

B. There Is No Reason To Review The Dis-

trict Court’s Determination With Respect

To Lack Of Injury To Competition ............

C. There Are No Geographic Market Issues

Which Warrant Review By This Court ......

D. There Is No Reason To Review This Case

On El Cid’s Claim Of Intention And Pre-

DUNN. itn eek aan

no —_ -

Point II—

This Court Should Not Review The Applica-

tion Below Of State Choice Of Law Rules ......

EO eRe ee rest oe et AND, A) Ree

APPENDIX—

Decision Of Hon. Whitman T. Knapp, Reported

ih Te I. BO vinta.

Decision Of Hon. Whitman T. Knapp, Reported

Re GSR Be BO i concen.

PAGE

27a

TaBLE or AUTHORITIES

Cases:

A.G.S. Electronics, Ltd. v. B.S.R. (U.S.A.), Ltd.,

460 F. Supp. 707 (S.D.N.Y.), aff’d, 591 F.2d 1329

0A Cllr: SPN cnn cee

A.H. Cox & Co. v. Star Machinery Co., 653 F.2d

ROOD (Bee CUP. TIED scvicestcisccniatiteeeaiaeeee

Batner v. United States, 440 U.S. 48 (1974) ..........

Bing v. Halstead, 495 F. Supp. 517 (S.D.N.Y. 1980)..

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429

UB. Geo CHRRC) nid ulilnee

Cameron v. G & H Steel Serv., Inc., 494 F. Supp.

AT2 CARAT Bes TY Sclictsstaucssccamanaeiaenaes

Carrolton Associates v. Abrams, 57 Mise.2d 617,

293 N.Y.S.2d 159 (Sup. Ct. 1968) .....0.......00.......

Church of Scientology of California, Inc. v. Green,

354 F. Supp. 800 (S.D.N.Y. 1973) .. .......................

Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698,

405 N.Y.S.2d 441 (1978) ....... saiiet adic atiseainat ie

Erie R.R. v. Tompkins, 304 U.S. 64 (1938) 0000002...

Hall v. El. DuPont De Nemours & Co., 345 F.

Sram: SOB CEA Rn Re nettenchtcsetiaeetinsintitaleiens

H.L. Moore Drug Exch. v. Eli Lilly & Co., 1978-1

CCH Trade Cases, {| 62,082 (S.D.N.Y. 1978) ........

Hodge v. United States, 368 U.S. 139 (1961) —..........

Industrial Invest. Devel. Corp. v. Mitsu & Co.,

Ltd., 594 F.2d 48 (5th Cir. 1979) and 671 F.2d

876 (5th Cir.), rehearing denied, 677 F.2d 113

(5th Cir. 1982), vacatei and remanded, 460 U.S.

1007, decision on remand, 704 F.2d 785 (5th Cir.

| CRNA REIS Mite nar tim BRE Sm SOR

PAGE

James v. Powell, 19 N.Y.2d 249, 279 N.Y.S8.2d 10

IN i i eB

Klaxon Co. v. Stentor Elec. Mfo.( Co., Inc., 313 U.S.

Oe a taciaca chi does hiahlnngiensdioniinaingtiie

Leroy v. Great Western United Corp., 443 U.S. 173

4.) BP eanee adit danicniiiasiibioaene

Loebig v. Larucci, 572 F.2d 81 (2d Cir. 1978) ........

Maltais v. United States, 439 F. Supp. 540 (N.D.

eA ER cerca WON eth Uae ee eT ONE

Mannington Mills, Inc. v. Congoleum Corp., 595

Be Bae RU IRS OD iia sresinecehemhecnictniissasines

Montreal Trading Ltd. v. Amaz, Inc., 661 F.2d

864 (10th Cir. 1981), cert. denied, 455 U.S. 1001

|_| RN AEE Ee et eee Ree MO

Nattonal Bank of Canada v. Interbank Card Ass’n.,

ek FE fe Bt RR: | Sen ama e Re eee

Neuman v. Vidal, 710 F.2d 856 (D.C. Cir. 1983) ....

Oreck Corp. v. Whirlpool Corp., 579 F.2d 126 (2d

Cir.), cert. denied, 439 U.S. 946 (1978) 000...

Pierson v. Ray, 386 U.S. 547 (1967) 2.0000...

Power East Ltd. v. Transamerica Delaval, Inc., 558

F. Supp. 47 (S.D.N.Y.), aff'd, 742 F.2d 1439

OTR SEY Cee

Propper v. Clark, 337 U.S. 472 (1949) 0.02...

Ragan v. Merchants Transfer &€ Warehouse Co.,

ig TE Wri, I NE pieces ani

Raubal v. Englehard Minerals € Chem. Corp., 364

Fe Is EAE CUT TE s TIPETED victcsinscnaaseshensntariocnaones

Rental Car of N.H., Inc. v. Westinghouse Elec.

Corp., 496 F. Supp. 373 (D. Mass. 1980) 00000...

PAGE

18-19

12,13

17,18

Rudolph v. United States, 370 U.S. 269 (1962) ........

Runyon v. McCrary, 427 U.S. 160 (1976) 000.000...

Schoenkopf v. Brown & Williamson Tobacco Corp.,

483 F. Supp. 1185 (E.D. Pa.), afd, 637 F.2d 205

CID | istrcuitinictinsisensthildtmnsentighistitincnbiitiaibiet disdain

Sitkin Smelting & Refining Co., Inc. v. FMC Corp.,

575 F.2d 440 (3d Cir.), cert. denied, 439 U.S. 866

PROD | Saisictincndicnveicsiieiaccet

SS Monrosa v. Carbon Black Export, Inc., 359 U.S.

NP RESPLEAORN, SENN HN? ANN CHROMO MTC A

System Operations, Inc. v. Scientific Games Devel.

Corp., 555 F.2d 1131 (3d Cir. 1977) oe

Timberlane Lumber Co. v. Bank of America, 549

if 8 fg: ere ee

United States v. Aluminum Co. of America, 148

wae Gop Coe Cee. Be a a a

Wolf v. Weinstein, 372 U.S. 633 NOD deiibbidnecichis

Texts:

Robertson and Kirkham’s, Jurisdiction of the Su-

preme Court of the United States (1951), See.

TED sccbciniannpinitineesiinidiinieliibia an mile alee ‘

Stern & Gressman, Supreme Court Practice ( 1971),

See. 4.14

POSER OSS S SERS H ESSE ESSE SESES ESOS ESSE SSESESSSE SS EES ESESESSESS OSES ESeeees

PAGE

12-13

No. 85-698

IN THE

Supreme Court of the United States

Octoper Term, 1985

Ex Cm, Lop.,

Petitioner,

vs.

Tue New Jersey Zinc Company, Guur & Western Inpvs-

trigs, Inc., Gur & Western INTERNATIONAL Houpine Com-

pany, Guur & Western (Canapa) Limirep, Warts, Grirris

& McOvar Limiren, Camino Gotp Mines Limrrep, Conpor

Mrnrno, Inc., Ricuarp W. Hocexanp, and Davin M. Koocter,

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

Statement Of The Case

A. General Backgruund.

Petitioner, El] Cid, Ltd. (“El Cid”), brought this action

for recovery under the antitrust laws. The complaint also

asserted pendent state law claims.

The case was extensively litigated in the District Court.

After the completion of discovery defendants moved for

summary judgment.

Initially, the District Court addressed the antitrust claim

and found that it was insufficient because of the lack of any

impact on United States trade and commerce and because

of the absence of injury to competition (JA 250-267, 551

F. Supp. 626).

Thereafter, the District Court determined that Bolivian

law governed the pendent tort claims (JA 362-394, 575 F.

Supp. 1513) and extensive evidence, including affidavits and

two days of testimony, was received as to the substantive

law of Bolivia (JA 158-159, 326-333, 397-403, 490-797, R

221). The District Court determined that the claims of

El Cid pointed to a possible violation of one provision of

Bolivian law (JA 362-394, 575 F. Supp. 1513).

El] Cid was then directed to marshall its evidence and to

demonstrate to the Court that its claims could be factually

supported (JA 482-486, 588 F. Supp. 125, R 229). El Cid

made such a submission (JA 404-448) and the defendants

submitted a response thereto (JA 449-481). The District

Court found it unnecessary to consider the responsive sub-

mission of the defendants. Instead, based solely on El Cid’s

submission, the District Court held that E] Cid had not ad-

duced sufficient facts to suow a violation of Bolivian law

(JA 482-486, 588 F’. Supp. 125).

A judgment dismissing the action was entered and the

Second Circuit unanimously affirmed. A petition for re-

hearing was denied.

B. The Facts.

There is an area on the remote eastern slopes of the

Andes Mountains in Bolivia known as the Tipuani Valley

which, since the time of the Incas, has been known to con-

tain gold deposits (JA 53).

In Bolivia, gold mining is conducted pursuant to con-

cessions granted by the Bolivian government. A group of

eight such concessions (the “Bolgol Concessions”) is at

issue here. (JA 53).

In the early 1970's, a firm of Canadian geologists, Watts,

Griffis & McOuat, Ltd. (“WGM”), and Condor Mining, Inc.,

a New York corporation (“Condor”), began to take steps

for the commercial mining of the Belgol Concessions and

a number of adjoining concessions which were either owned

or leased by Condor (JA 53-54).!

In order to carry the project forward, a Canadian public

corporation named Camino Gold Mines Limited (“Camino”)

was formed (JA 54).

Title to all of the various concessions was to be placed

in Camino. At this point in time Condor believed that it

owned title to the Bolgol Concessions, which formed one

part of the overall project. (JA 54).

Camino, WGM and Condor conducted various studies

and determined that financing of the project was beyond

their means. In 1974 they approached Gulf & Western In-

dustries, Inc. which agreed to invest by acquiring a block

of Camino’s stock. (JA 54).?

During 1974, the parties became aware that one Helmut

Gaensel, through his company, Gaensel Gold Mines, Ltd.,

(hereinafter collectively “Gaensel”) claimed ownership of

the Bolgol Concessions (JA 54).

The conflicting claims of Condor and Gaensel resulted

in litigation in Bolivia and in May 1975 a Bolivian court

ruled that Gaensel, not Condor, held title to the Bolgol

Concessions (JA 54-55).?

In the interim, and commencing in March 1974, Gaensel

had entered into a series of contracts with a Miami lawyer

The Bolgol Concessions were only one part of a larger contem-

plated project (JA 54).

2 The investment was monitored by The New Jersey Zine Com-

pany (“NJZ”’), a component part of G&W’s Natural Resources

Group. Messrs. Hogeland and Koogler were executives thereof.

The other Gulf & Western entities were passive and merely held

title to the stock or made loans to Camino as the project pro-

gressed. (JA-301-303). These defendants, along with G&W, are

collectively referred to as G&W or the Gulf & Western defendants.

El Cid’s Petition (p. 5) makes reference to a telex sent in

March 1975, some two months before Gaensel won the suit in

Bolivia, indicating that a court member “is relatively under con-

trol.” Nonetheless, Gaensel, not Condor, prevailed.

named Spaseff for sale to Spaseff of the Bolgol Concessions

(JA 55). Spaseff allegediy was acting on behalf of a

Costa Rican company named Diveo, which purportedly

assigned its rights to El Cid, a Cayman Islands entity (JA

55). Significantly, El] Cid was not even formed until July

21, 1975 (JA 59, 68). It never, of course, had engaged in

mining activities or had sold any gold.

In any event, on or about June 25, 1975 Gaensel and El

Cid, which then did not exist, entered into a contract for

sale of the Bolgol Concessions to El Cid for $925,000 (JA

55, 140-144). Pursuant to that contract, El Cid was re-

quired to make an initial $25,000 payment to Gaensel by

July 25, 1975 (JA 55, 142).

It is conceded by Petitioner that it did not have any

assets. Rather, it needed to raise funds from third parties

to pay the $25,000 down payment (JA 166) and to finance

development of the Concessions.’ Further, it appears that

neither E] Cid nor its predecessor, Divco, had available the

$20,000 filing fee required to raise the agreement to the

status of a “Public Instrument” (Gilkey e.b.t. pp. 88-90,

R 365). This step was required under Bolivian law and

the Gaensel-E] Cid Agreement was a nullity under Bolivian

law until this was done. (JA 364, 329A-329F,, 492-498, 533-

537, 759, deVries Affidavit Dec. 14, 1982, included in R 221°).

After the May 1975 decis'~ in favor of Gaensel, Mr.

James Bates, who was an executive of Camino and WGM,

went to Bolivia to attend meetings to review the situation.

G&W was not represented at those meetings. (JA 288-289,

291-292).

*The Gaensel-E] Cid contract describes El Cid as “now being

formed” (JA 140).

5 Estimates for such development ran well into seven figures

(JA 169, 308-309). El Cid’s President did not even have enough

money to pay his hotel bill in Bolivia (Gilkey e.b.t. at 401, R 367).

‘This affidavit of Prof. deVries was omitted from the Joint

Appendix prepared by plaintiff in spite of defendants’ designation

thereof for inclusion therein.

Based upon advice of Bolivian counsel for Camino, Con-

dor and WGM, it was decided to pursue further legal pro-

ceedings in Bolivia, which counsel said were available.

Additionally, Bolivian counsel advised that a Supreme

Decree of the Bolivian government would be helpful. Steps

were initiated to institute such litigation and to obtain such

a decree. (JA 292).

After those meetings, Mr. Bates returned to Canada and

advised Ira Barsky, a lawyer on the staff of NJZ, of what

had transpired. Mr. Barsky vigorously objected to the de-

cisions taken in Bolivia and indicated his strong preference

that negotiations be undertaken with Gaensel to buy his

interest in the Bolgol Concessions. (JA 292-293).

Such negotiations did take place in New York in June

1975 and an agreement was reached. Gaensel, however,

failed to appear to sign the contract. (JA 308).

In the meantime, on June 25, 1975, Gaensel had signed

the agreement with El Cid under which Ei Cid was required,

inter alia, to make a modest initial payment of $25,000 to

Gaensel on July 25, 1975 (JA 55, 140-144).’

On July 15, 1975 Gaensel signed a contract to sell the

Bolgol Concessions to Camino. That contract contained an

express provision that it was to become effective August 1,

1975, and only if prior contingent commitments of Gaensel

to sell the Bolgol Concessions to third parties did not be-

come effective. (JA 55-56, 145-153).

El Cid did not pay Gaensel the required $25,000 and the

Bolgol Concessions were sold to Camino (JA 56).

Thereafter, defendants sought to raise financing to con-

duct commercial mining activities, but their efforts were

unsuccessful. As a result, the project, including the Bolgol

Concessions, has never been mined. (JA 56). The entire

venture has resulted in substantial losses to all concerned.

7 El Cid’s total obligation was $925,000 (JA 142).

El Cid’s presentation to this Court purports to set forth

events which occurred in Bolivia between the time Gaensel

won his lawsuit in May 1975 and July 25, 1975 when El Cid

failed to pay Gaensel the required $25,000.

It shouid be noted that the conduct alleged by El Cid

resulted from meetings held in Bolivia, was based on advice

received from Bolivian counsel and occurred in Bolivia

(JA 288-294, 301-303). This conduct supposedly involved

matters such as the institution of further litigation in Boli-

via, the seeking of a Supreme Decree from the Bolivian

government and alleged threats and “dirty tricks,” all of

which took place in Bolivia.

In point of fact, the record does not support the factual

claims made by El Cid.

A major theme of El Cid’s presentation involves a com-

pany called Groves which E] Cid was seeking as a partner

in order to obtain the necessary financirg. According to El

Cid, Groves was subjected to “a campaign of intimidation

and obfuscation” (Petition p. 6), the cornerstone of which

was the filing of a further lawsuit in Bolivia after Gaensel

had won the litigation with Condor.

This claim is entirely unsupported.

Groves’ representatives were deposed and their testimony

and a review of the record (JA 449-481) makes it clear that:

Groves was unconcerned about any statements made

to it by defendants and examined the proposed project

on the merits;

During the course of that examination Groves’ inde-

pendent Bolivian and American attorneys examined

the papers with respect to the new litigation involving

the Bolgol Concessions and determined that the suit

had merit and might result in the reversion of the

Bolgol Concessions to the Bolivian Government ;°

§ El Cid did not submit the papers in that Bolivian lawsuit to

the District Court. Its own expert offered no opinion as to the

merits of that suit.

Lo Se lac nt RRA abe A aa ARR ROS tl RN Saas

It was this independent determination, along with

numerous other problems, which resulted in Groves’

decision not to proceed ; and

Groves was not committed to finance El Cid and no

agreement had been reached between Groves and El

Cid.

Similarly, El Cid’s presentation refers to some alleged

impropriety by defendants in seeking to have the Bolivian

government enact a Supreme Decree concerning the Bolgol

Concessions. However, nowhere does El Cid demonstrate

how that activity had any effect on the ultimate outcome.

Significantly, El Cid did not submit a copy of any such

proposed Supreme Decree. And, of course, there is no sug-

gestion that it was ever enacted.

El Cid refers to a Bolivian lawyer named Gottret who

was retained by one of the defendants (but not G&W)

and who allegedly discouraged Groves’ involvement with

El Cid by offering Groves an alternate mining venture.

However, there is no evidence that Dr. Gottret was acting

under instructions from the defendants. Further, Groves’

representatives testified that Dr. Gottret did not even dis-

cuss the Bolgol Concession with them and said nothing to

discourage Groves from proceeding with El Cid (JA 465-

466).

Equally absurd is the claim that E] Cid was given “bad

advice” by a Dr. Valle who was allegedly “on defendant’s

payroll.” No evidence supports this except Mr. Gilkey’s

own statements and there is nothing to link any advice

given—which we doubt—with any of the defendants. Cer-

tainly, Dr. Valle was not counsel to G&W. Further, defen-

dants’ expert testified without contradiction that even if

Dr. Valle had done all that was attributed to him, while he

might be liable to El] Cid, Bolivian law did not recognize

any claim against the defendants for having induced Dr.

Valle to give E] Cid misleading legal advice in Bolivia (JA

577-583).

El Cid’s Petition (p. 4) makes reference to “detailed

plans” for the purchase of mining equipment. Yet, the

record shows that El Cid never placed a single order for

such equipment (JA 51-52) and it did nothing more than

dream up a list of equipment (JA 74).

El Cid refers (Petition p. 5) to the anticipated testimony

of one Clinton Miller as to the feasibility of El Cid’s min-

ing plans. The only record reference to support that asser-

tion is to El Cid’s answers to Interrogatories. Those an-

swers were prepared by counsel. They do not attach or

refer to any report by Mr. Miller. Moreover, no affidavit

of Mr. Miller was submitted below.

Finally, El] Cid asserts that its “back-up” partner, one

William Kilpatrick, withdrew as the result of “threats and

enticements” made by the defendants (Petition p. 7). Sig-

nificantly, when the District Court directed El Cid to

make a detailed factual showing of the conduct it relied

upon to support its claims, not one word was said about

conduct directed toward Mr. Kilpatrick.

Further, the evidence is clear that no conduct of the de-

fendants affected Mr. Kilpatrick. He had assembled

$52,000 in cash to take to Bolivia by the July 25 deadline

but did not do so solely beause Gilkey had told him that

there was no rush (Kilpatrick e.b.t. pp. 5-7, R-308). Addi-

tionally, Mr. Kilpatrick could recall only one conversation

with a representative of Gulf & Western, which had abso-

lutely no influence on him (Jd. at 8-10). |

Finally, we would note that Petitioner purports to de-

scribe the vast riches of the Tipuani Valley. Yet, the fact

remains that these deposits have been publicly known for

many years, but have never been mined successfully. The

defendants failed in their efforts to achieve commercial

production. he record is barren of any evidence to show

the existence of the vast treasure described by El Cid or

anyone’s ability to conduct successful mining operations.

aha ell

Kania

OSS R 8 phe

ie sale ae

hints ina DHE nN RAN RES

Say ed pate Wad ea Rigas . ares: wc REE

C. The Decisions Below.

The District Court addressed the antitrust and tort

claims separately.

First, the Court dealt with the antitrust claim which it

found to be insufficient as a matter of law. In dismissing

that claim, the Court stated (JA 256, 551 F. Supp. at 631):

The startling thing about the facts and arguments

submitted by plaintiff is that, despite the assertion

that plaintiff and its predecessors had previously con-

ducted “mining operations in Latin America” and that

its president had “engaged in mining for many years,”

see Memorandum in Opposition at 10, 16, there is no

suggestion that plaintiff, its president, or its predeces-

sors had ever sold an ounce of gold or any other metal

in the United States, or had made any specific plans

to do so. All that we are given on this score is the

vague and undocumented hope that, but for the con-

spiracy, many “millions of dollars and perhaps billions

in gold and/or the proceeds of gold would have flowed

from Bolivia” to the United States. No case cited by

the plaintiff—nor the totality of all of them—suggests

that the alleged frustration of such a vague hope can

be deemed to constitute a recognizable consequence

within the United States.

In dismissing the antitrust claim, the District Court

found that there was no discernible impact on United States

trade or commerce and that El Cid had totally failed to

show any adverse effect upon competition.

With respect to the pendent tort claims, the District

Court held that Bolivian law governed. After extensive

hearings on Bolivian law, that court determined that cer-

tain acts attributed to the defendants might possibly con-

stitute a violation of one provision of Bolivian law. (JA

362-394, 575 F. Supp. 1513). However, when El] Cid made

a factual presentation detailing what it could prove, the

District Court was unable to find anything to be tried. The

Court held (JA 484, 588 F. Supp. at 126):

After careful consideration of the facts set forth in

plaintiff's memorandum—looking at them against the

background of all other facts mentioned in the memo-

randum and taking no account of defendants’ memo-

randum—we cannot conclude that the words and

actions attributed to defendants are cumulatively suf-

ficient to present a jury question under our under-

standing of Dr. Rojas’ interpretation of Article 303.

In short, El Cid lost an inquest on its pendent tort

claims.°

With respect to the antitrust claim the Court of Appeals

first noted its agreement that the District Court “may well

have been correct in concluding that El Cid failed to pre-

sent any facts to show an effect on United States interstate

or foreign commerce... .” The Court of Appeals found it

unnecessary to review this matter. On its view of the

record, dismissal was appropriate because of the “lack of

any evidence of preparedness [by El Cid] to enter the

gold mining market... .” /

As to the pendent tort claims, the Court of Appeals

agreed with the District Court’s conflict of laws analysis

and its conclusion that Bolivian law controlled. It also

agreed that El Cid had failed to show any violation of

Bolivian law.

* * w

On this record, we respectfully submit that there is

nothing to review.

® FE] Cid’s Petition does not include the District Court’s opinions

on the pendent tort claims. For the convenience of the Court, they

are appended to this Brief.

cals sitstig Pan DY Sh ES His ie

Oa ee NE ee Ee ee ee Oe ne eee a

POINT I

This Case Does Not Present Antitrust Issues Worthy

Of Review By This Court.

A. The Conduct Involved In This Litigation Had No Effect On

United States Trade Or Commerce. Accordingly, There Is

No Antitrust Issue Which Should Be Reviewed By This

Court.

The major premise of the District Court’s decision, and

one as to which the Second Circuit agreed that the lower

Court “may well have been correct,” was that the activities

involved in this case do not concern or affect United States

trade or commerce.

‘Absent such an effect, there cannot be a violation of

United States antitrust laws. Hence, any review of the

other issues raised by Petitioner could result only in a

theoretical, advisory opinion.

Significantly, Petitioner does not even seek review by

this Court of this critical threshold issue.

The facts at bar unequivocally demonstrate that there

is no rational nexus between the events at bar and the

trade or commerce of the United States. Thus:

El Cid is a Cayman Islands corporation headquar-

tered in Costa Rica (JA 49, 55) ;

Neither El Cid, nor its President, nor its predeces-

sor, had ever mined any gold or made United States

sales of gold (JA 57, JA 256, 551 F. Supp. at 631);

El Cid was not authorized to conduct business here

and had no office or place of business in the United

States (JA 49, 55) ;

Camino, which ultimately obtained title to the Bolgol,

Concessions, is a Canadian entity (JA 54);

Bolivian law requires that any gold mined from the

concessions be sold to the Banco Minero, an arm of the

Bolivian government (JA 56, 158-159, 266, 526, DeVries

Affidavit December 14, 1982 included in R 221);

The record is barren of any evidence showing that

any gold mined from those concessions reached the

United States (JA 56-57, 160-161) ;

None of the defendants were engaged in the busi-

ness of mining and selling gold (JA 56-57, 160-161) ;

The conduct complained of was decided upon and

occurred in Bolivia (JA 288-292) ;

The interests of the Bolivian government are in-

volved. Its laws govern the ownership of Bolivian

gold mining concessions and its Courts are the appro-

priate place for determination of issues concerning

that ownership.

Given this factual setting, it is clear that this case in-

volves matters not cognizable by our antitrust laws.

In 1945 Judge Learned Hand cautioned:

We should not impute to Congress an intent to punish

all whom its courts can catch, for conduct which has

no consequences within the United States. (United

States v. Aluminum Co. of America, 148 F.2d 416, 443

(2d Cir. 1945).

This case is a clear illustration of the wisdom of that

caution.

A long line of cases has recognized that antitrust claims

cannot be founded upon conduct which has no impact upon

United States trade or commerce. See, e.g., National Bank

of Canada v. Interbank Card Ass’n, 666 F.2d 6 (2d Cir.

1981); Montreal Trading Ltd. v. Amaz, Inc., 661 F.2d 864

(10th Cir. 1981), cert. denied, 455 U.S. 1001 (1982) ; Mann-

ington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287 (3d

Cir. 1979); Timberlane Lumber Co. v. Bank of America,

549 F.2d 597 (9th Cir. 1976); Power East Ltd. v. Trans-

america Delaval, Inc., 558 F.Supp. 47 (S.D.N.Y.), aff'd, 742

F.2d 1489 (1983); Timberlane Lumber Co. v. Bank of

America, 574 F.Supp. 1453 (N.D. Cal. 1983); A.G.S. Elec-

tronics, Ltd. v. B.S.R. (U.S.A.), Ltd., 460 F.Supp. 707

(S.D.N.Y.), aff'd, 591 F.2d 1329 (2d Cir. 1978); Raubel v.

Engelhard Minerals Chem. Corp., 364 F.Supp. 1352 (8.D.

N.Y. 1973).

In National Bank of Canada v. Interbank Card Ass’n,

666 F.2d 6 (2d Cir. 1981), which involved a dispute over

which of the parties could issue credit cards in Canada,

the Court, in dismissing, noted (at 8):

Building upon the fundamental “effects” test outlined

by Judge Learned Hand in United States v. Aluminum

Company of America, 148 F.2d 416 (2 Cir. 1945), we

think the inquiry should be directed primarily toward

whether the challenged restraint has, or is intended

to have, any anticompetitive effect upon United States

commerce, either commerce within the United States

or export commerce from the United States. See 1

Areeda & Turner, Antitrust Law § 234b, at 255 (19787).

To us the critical factor in deciding this case is that

appellants have not shown that enforcement of the

exclusivity provision of the license agreement is at all

likely to have an anticompetitive effect upon American

commerce, either foreign or interstate.

Our jurisdiction is not supported by every conceiv-

able repercussion of the action objected to on United

States commerce. Only those injuries to United States

commerce which reflect the anticompetitive effect

either of the violation or of anticompetitive acts made

possible by the violation constitute effects sufficient to

confer jurisdiction. Cf. Brunswick Corp. v. Pueblo

Bowl-O-Mat, 429 U.S. 477, 489 (1977). While the anti-

competitive effects must be shown to outweight any

procompetitive effects in order to establish liability,

there must be at least some anticompetitive effects to

meet the threshold requirement of jurisdiction.

The record here is barren of any evidence to show a

“foreseeable threat” to United States commerce or the

“linkage, if any, between the behavior objected to and any

anticompetitive consequences to United States commerce.”

(Id. at 9).

This is not an antitrust case at all. There is nothing here

for review by this Court. Whatever may be the merits of

Petitioner’s other claims—and they have none—review is

unnecessary and inappropriate because the result below

was clearly correct. SS Monrosa v. Carbon Black Export,

Inc., 359 U.S. 180 (1959). Accord, Hodge v. United States,

368 U.S. 139 (1961).

B. There Is No Reason To Review The District Court’s Deter-

mination With Respect To Lack Of Injury | {#t-petition.

This Court’s decision in Brunswick Corp. ¢. rueblo Bowl-

O-Mat, Inc., 429 U.S. 477 (1977) makes it abundantly clear

that injury to competition, as opposed to mere injury to a

competitor, is the sine qua nom of an antitrust violation.

We fail to discern what issue as to injury to competition

could be reviewed here.

The Bolgol Concessions are government granted monop-

olies and competition cannot be affected because one com-

pany, rather than another, becomes the owner. See, e.g.,

A.H. Cox & Co. v. Star Machinery Co., 653 F.2d 1302 (9th

Cir. 1981) ; Oreck v. Whirlpool Corp., 579 F.2d 126 (2d Cir),

cert. denied, 439 U.S. 946 (1978) ; Sitkin Smelting & Refin-

ing Co., Inc. v. FMC Corp., 575 F.2d 440 (3d Cir.), cert.

denied, 439 U.S. 866 (1978).

There is no “confusion” about the application of Bruns-

wick to this case. Rather, the rule is applicable and was

properly applied by the District Court.

oe ehh i SP A ALLS BALM TIN A

Ee sn

Fo Wille Novena ais

i laa AS Re i Mn ie NN WI nga

fat keels is

C. There Are No Geographic Market Issues Which Warrant

Review By This Court.

El Cid failed “to define the relevant geographic market”

(J.5. 259, 551 F. Supp. at 632) in its presentation to the Dis- ©

trict Court. As a result, that Court found the market to

be “world-wide. (Jbid.)” Additionally, El Cid did not

supply the District Court “with any information about the

size of the international gold market... . (Jbid.)” In light

of this omission, the District Court found it difficult to

conceive how any acts involving the Bolgol Concessions

“could have any noticeable effect on the world-wide market

for gold (Ibid.)” or, we mig’* add, on the United States

market.

In its Petition here, El] Cid asserts (p. 11) that it “had

given the court considerable evidence that considering the

Tipuani Valley a discrete geographic market of effective

competition accorded with geologic and commercial real-

ities.” But if the market is the Tipuani Valley, one must

wonder why what happened in that market should be of

concern to this Court.

The record is devoid of evidence to show how anything

that happened in the Tipuani Valley in Bolivia impacted

upon an American competitor, or upon trade with the

United States, or upon interests protected by our antitrust

laws. To define the market as the Tipuani Valley is sense-

less. That is the source of supply. The only market that

could conceivably be relevant to a case of this kind is the

importation of gold into the United States. However, this

case does not involve that market. There is no showing

here as to how that market was affected or as to how ‘there

was any antitrust injury suffered in that market.’°

Who may or may not have been compeiing in Bolivia is

totally irrelevant to antitrust issues which might be of

*° El Cid’s ever shifting analysis of the nature of the mining

“competition” in Bolivia is highlighted in the oral argument before

the District Court (R 238) and in our Supplemental Reply Memo-

randum submitted there (R 219).

concern to this Court. Even assuming, arguendo, and con-

trary to fact, that defendants somehow monopolized the

business of mining gold from the Bolgol Concessions, or

from the Tipuani Valley, that certainly does not implicate

the antitrust laws of the United States.

Nowhere does the record show how United States in-

terests, trade or commerce were affected in any manner—

no less in some way protected by the antitrust laws.

El Cid’s Petition (pp. 9-10) refers to, and grossly mis-

describes, Industrial Invest. Devel. Corp. v. Mitsui & Co.,

Ltd., 594 F.2d 48 (5th Cir. 1979) and 671 F.2d 876 (5th

Cir.), rehearing denied, 677 F.2d 113 (5th Cir. 1982), va-

cated and remanded, 460 U.S. 1007, decision on remand, 704

F.2d 785 (5th Cir. 1983).

In Mitsui, a United States plaintiff asserted that it had

been foreclosed from obtaining Indonesian timber for im-

portation by the acts of the defendants. The United States

plaintiff was able to proffer signed agreements showing the

actual existence of a business venture. And, the defendants

were actually engaged in importing timber at the time of

the acts alleged in the complaint.

Here, El Cid is a foreign entity, which had no firm agree-

ments and none of the defendants had ever imported an

ounce of gold.

In Mitsui, the District Court had granted defendants’

motion for summary judgment prior to any discovery being

conducted. In reversing (671 F.2d 876), the Fifth Cirenit

suggested nothing more than that the plaintiff should have

an opportunity to develop its case by pretrial discovery so

that the motion could be decided on a full record. Here, El

Cid has had every opportunity to develop its case and has

failed to do so.

Insofar as the effect on United States commerce is con-

cerned, the Mitsui Court noted (Id. at 883):

The competition between two American importers to

obtain a source of supply on foreign territory affects

the commerce of the United States.

Here, of course, neither El Cid nor Camino is an Amer-

ican importer.

In Mitsui, the Court, in denying the preliminary motion,

added (Id. at 884):

Here an American corporation with an interest in

protection of its import business has allegedly con-

spired to eliminate a potential American competitor

in both the business of purchasing logs in Indonesia

and the business of importing lumber and lumber prod-

ucts into the United States.

Mitsui is a far cry from the case at bar.

Certainly, definitional issues concerning the geographic

market present no reason to review this case.

D. There Is No Reason To Review This Case On El Cid’s Claim

Of Intention And Preparedness.

It is difficult to imagine an issue less appropriate for

review by this Court than El Cid’s claim of intention and

preparedness. The District Court found that all El Cid

had was a “vague and undocumented hope.” The Court of

Appeals noted El Cid’s “inability to raise even a token

down payment... .” There is not a scintilla of evidence

to support E] Cid’s claim on this score. At best, El Cid

asks this Court to review factual findings by the courts

below, a practice not engaged in by this Court. Rudolph

v. United States, 370 U.S. 269 (1962); Stern & Gressman,

Supreme Court Practice (1971), Sec. 4.14; Robertson and

Kirkham’s, Jurisdiction of the Supreme Court of the United

States (1951), See. 333.

Moreover, the only case cited by El] Cid on this point,

Neuman vy. Vidal, 710 F.2d 856 (D.C. Cir. 1983), involved

a situation far different than the one at bar.

In Neuman, the plaintiff submitted affidavits from in-

vestors indicating an intention to invest in the plaintiff's

business. No such affidavits were presented here. Further,

the plaintiff and its president had a long and demonstrable

track record in the business involved. In contradistinction,

here we have “the startling thing ... that... there is no

suggestion that plaintiff, its president, or its predecessors

had ever sold an ounce of gold or any other metal in the

United States, or had made any specific plans to do so (JA

256, 551 F.Supp. at 631).”

And, of course, Neuman involved direct competition be-

tween American entities, in the United States, for Amer-

ican business.

POINT II

This Court Should Not Review The Application Below

Of State Choice Of Rules.

E] Cid’s final request here is that this Court review the

determination below that the pendent tort claims are gov-

erned by Bolivian law.

The acts which El Cid alleges as the basis of its tort

claims occurred in Bolivia. The lawsuit which El Cid

claims was improperly filed involved Bolivian real prop-

erty, arose out of decisions made in Bolivia by Bolivian

counsel who were interpreting Bolivian law and, of course,

was filed in Bolivia. The seeking of a Supreme Decree of

the Bolivian government was likewise decided upon and

carried out in Bolivia. The conduct allegedly directed at

Groves and El Cid occurred in Bolivia. The gold mining

concessions which are involved here are located in Bolivia,

and Bolivian law governs the sale thereof. Contacts with

other jurisdictions were minimal and disparate.

The conflict of law rules of the forum state govern choice

of law issues as to diversity or pendent causes of action.

Evie R.R. v. Tompkins, 304 U.S. 64 (1938); Klaxon Co. v.

Stentor Elec. Mfg. Co., Inc., 313 U.S. 487 (1941) : Loebig v.

Larucei, 572 ¥.2d 81 (2d Cir. 1978); System Operations,

Inc. v. Scientific Games Devel. Corp., 555 F.2d 1131 (3d

Cir. 1977); Schoenkopf v. Brown & Williamson Tobacco

Corp., 483 F.Supp. 1185 (E.D. Pa.), aff’d, 637 F.2d 205

(1980); Rental Car of N.H., Inc. v. Westinghouse Elec.

Corp., 496 F.Supp. 373 (D. Mass. 1980); H.L. Moore Drug

Each. v. Eli Lilly & Co., 1978-1 CCH Trade Cases, {| 62,082

(S.D.N.Y. 1978) ; Maltats v. United States, 439 F.Supp. 540

(N.D.N.Y. 1977); Hall v. E. I. DuPont De Nemours & Co.,

345 F.Supp. 353 (E.D.N.Y. 1972).

Here, of course, that law was the law of New York.

In finding that New York law looked to Bolivian law for

the substantive rules concerning El Cid’s claims, the courts

below merely followed well established New York case law.

Cousms v. Instrument Flyers, Inc., 44 N.Y.2d 698, 405

N.Y.S8.2d 441 (1978); James v. Powell, 19 N.Y.2d 249, 279

N.Y.S.2d 10 (1967); Carrolton Associates v. Abrams, 57

Mise.2d 617, 293 N.Y.S.2d 159 (Sup. Ct. 1968); Bing v.

Halstead, 495 F.Supp. 517 (S.D.N.Y. 1980); Cameron v.

G & H Street Serv. Inc., 494 F.Supp. 171 (E.D.N.Y. 1980) ;

Church of Scientology of California, Inc. v. Green, 354 F.

Supp. 800 (S.D.N.Y. 1973).

Accordingly, it is clear that it was correct to apply New

York law to this case and that New York law called for the

application of Bolivian law.”

11 At page 15 of its Petition El Cid’s counsel grossly misdescribes

Judge Knapp’s opinion when he lists the various New York and

Bolivian contacts and states that they weré so “summarized” by

Judge Knapp. Judge Knapp’s opinion does contain the summary

of factors quoted by counsel, but it is preceded by the statement

that (JA 367, 575 F. Supp. at 1515) :

According to the plaintiff’s allegations, their relationship to

the alleged activities of the various defendants may be grouped

thus:

12 Petitioner does not contend that the courts below erred in

finding that El] Cid had no viable claim under Bolivian law.

Further, this is a state law issue which is particularly

inappropriate for review by this Court. As was noted in

Batner v. United States, 440 U.S. 48, 57-58 (1974) :

In this Court, the parties have argued the state-law

questions at great length, each stressing different as-

pects of the record. We decline to review the state-law

question. The federal judges who deal regularly with

questions of state law in their respective districts and

circuits are in a better position than we to determine

how local courts would dispose of comparable issues.

(Footnote Omitted).

In Wolf v. Weinstein, 372 U.S. 633 (1963) this Court dis-

missed the grant of a writ as improvident because “the

controversy over the stock interests primarily implicates

Pennsylvania law and presents no federal questions of sub-

stance.” Id. at 636. Accord, Leroy v. Great Western United

Corp., 443 U.S. 173, at 181 n. 11 (1979); Runyon v. Mc-

Crary, 427 U.S. 160 at 181-182 (1976); Pierson v. Ray, 386

U.S. 547, at 558 n. 12 (1967) ; Ragan v. Merchants Transfer

& Warehouse Co., Inc., 337 U.S. 530 at 534 (1949) ; Propper

v. Clark, 337 U.S. 472, 486-487 (1949).

There is no basis for review of the state law determina-

tion below.

CONCLUSION

It is respectfully submitted that the Petition for a Writ

of Certiorari should be denied.

Respectfully submitted,

JosepH H. Ernsrern

Attorney for Respondents

The New Jersey Zinc Company,

Gulf & Western Industries, Inc.,

Gulf &@ Western International

Holding Company,

Gulf d Western (Canada) Limited,

Richard W. Hogeland and

David M. Koogler*

845 Third Avenue

New York, New York 10022

(212) 826-5000

Kasset, NeuwirtH & GeicEr

Of Counsel

November 15, 1985

* The remaining Respondents join in this brief and authorize its

submission on their behalves.

APPENDIX

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

UNITED STATES DISTRICT COURT

S.D. New York

No. 76 Civ. 1388 (WK).

Ex Cin, Lrp.,

Plaintiff,

Vv.

The New Jersey Zinc Company, Gulf & Western Indus-

tries, Inc., Gulf & Western International Holding Com-

pany, Gulf & Western (Canada) Limited, Watts, Griffis &

McOuat, Limited, Camino Gold Mines Limited, Condor

Mining, Inc., Richard W. Hogeland and David M. Koogler,

Defendants.

Dec. 15, 1983.

Plaintiff brought action alleging that defendants inter-

fered with its contractual, precontractual and business re-

lationships. On defendants’ motion for summary judgment,

the District Court, Knapp, J., held that: (1) Bolivian law

governed, because plaintiff’s alleged injury may have been

materially caused by various activities which plaintiff al-

leged that defendants pursued in Bolivia and the subject

of the action, i.e., the mining concessions, was located in

Bolivia; plaintiff’s allegation that defendants’ New York

activities spawned the alleged conspiracy established no

more than a significant relationship with a plot which in

and of itself was nonactionable, and the New York citizen-

ship of two defendants did not add significantly to that

jurisdiction’s side of the choice of law scale, and (2) com-

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

plaint was sufficient to warrant a hearing to determine if

particular statements allegedly made by defendant were

sufficient to permit plaintiff to invoke protection of ap-

plicable Bolivian penal statute governing attacks against

freedom to work.

Order accordingly.

Malcolm H. Bell, Norwalk, Conn., for plaintiff.

Kassel, Hoffman, Neuwirth & Geiger by Joseph Ein-

stein, Kimmelman, Sexter & Sobel by Arthur Sobel, Sat-

terlee & Stephens by Henry J. Formon, Jr., Aranow,

Brodsky, Bohlinger, Benetar & Einhorn by Susan Belkins,

New York City, for defendants.

MemoranpuM & ORDER

Knapp, District Judge.

Plaintiff El Cid, Ltd. (“El Cid”) has claimed in its

amended complaint that the various defendants, acting in

concert,’ engaged in illegal activities in connection with

the purchase of the rights to mine the Bolgol mining con-

cessions (“the Bolgol’’) in Bolivia’s gold-rich Tipuani Val-

1The defendants assert that each of them played a different role

in the transactions which form the background for this action.

However, since we assume for the purposes of this motion the truth

of plaintiff’s allegations that all defendants acted in concert, we

will refer to them collectively and not distinguish which defendant

performed which actions, except where necessary for the sake of

clarity. We will similarly not distinguish among their arguments

in opposition to plaintiff’s allegations, although we realize that

should we reach the merits of this action, certain of the defendants

would rely upon their alleged nonparticipation in certain events

rather than upon the purported legality of those events, which is

the only issue we here find it necessary to discuss.

. £ oh oh jseiee pag OS re

SA SE AT It Ro re

“t

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

ley. Plaintiff alleged, first, that defendants’ actions vio-

lated the Sherman and Wilson Tariff Acts (15 U.S.C. §1,

15 U.S.C. § 8); second, that defendants interfered with its

contractual, precontractual, and business relationships with

respect to its own attempts to purchase the right to, and

mine, the Bolgol; and third, that defendants engaged in a

common-law conspiracy to deprive it of these rights.

In our prior decision, published at 551 F.Supp. 626, we

granted summary judgment to defendants on plaintiff’s

first cause of action. This decision, however, was provi-

sional, and dismissal of the antitrust claim was stayed

pending defendants’ motions to dismiss the remaining

claims.’ These motions are now before us.°

BacKGROUND

Some of the facts relevant to this motion are set forth

in our prior published opinion. Familiarity with them is

presumed, and we shall not repeat them here. However,

for the instant motion we set forth, in addition, the fol-

lowing facts and contentions.

In March of 1974 plaintiff's predecessors contracted with

one Helmut Gaensel and Gaensel Gold Mines & Co., Ltd.

(“Gaensel’’), a claimant to the Bolgol, to purchase Gaensel’s

rights if and when his claims to them, then contested in

litigation in Bolivia by one of the defendants, should be

vindicated. This contract was entered into in Florida. In

* Although the remaining claims are before us only on principles

of pendent jurisdiction, the long pendency of this action persuaded

and persuades us that it would be inequitable to dismiss them solely

because we have found plaintiff's one federal cause of action to be

without merit. |

§ This constitutes our second opinion on these motions, and should

be considered as amending and superseding our first (unpublished )

opinion, dated July 8, 1983.

—

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

May 1975 Gaensel’s claim was vindicated in the Bolivian

courts. In June 1975 Gaensel and plaintiff entered into a

second, superseding agreement for the sale of the rights

to the Bolgol. Neither this superseding agreement nor the

first contract was subjected to the notarization and regis-

tration required by Article 171 of the Bolivian Mining

Code to make it an escritura publica, or a public writing,

legally enforceable under Bolivian law. In July 1975

Gaensel contracted to sell these same rights to defendants,

which sale was conditioned on plaintiff’s failure to satisfy

certain of its payment obligations under the June 1975

agreement. Plaintiff did so fail, and the transaction be-

tween defendants and Gaensel was completed and the con-

tract between them duly made an escritura publica.

Plaintiff asserts that, in their efforts to gain the Bolgol

concession, defendants met and conspired in New York to

take any means possible to deprive plaintiff of its contract

with Gaensel. In furtherance of this plan, according to

plaintiff, the defendants attempted to exert improper in-

fluence over the Bolivian judge before whom the Gaensel

litigation was pending; met with Gaensel while his con-

tract with plaintiff was still pending; drove away plain-

tiff’s intended source of financing for its projected mining

ventures; engaged in baseless and harassing litigation in

Bolivia; sought legislation in Bolivia, in the “orm of a

Supreme Decree, to the effect that title to th J-olgol was

theirs; and suborned Bolivian attorneys, who gave plain-

tiff faulty legal advice, thereby causing it to refrain from

raising its contract with Gaensel to a judicially enforceable

escritura publica.

Defendants admit that they pursued litigation and legis-

lation in Bolivia. However, they deny the existence of any

conspiracy to deprive plaintiff of its rights, and further

deny that any illegal action whatsoever was taken at any

stage of the proceedings.

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

In the instant motion, defendants contend that the law

applicable to plaintiff's tort claims is that of Bolivia,

which, they assert, does not recognize the torts alleged

by plaintiff and further does not provide for criminal or

civil sanctions for any of the actions which plaintiff at-

tributes to them. We find that defendants are correct in

their first assumption, and hold that plaintiff’s allegations

must be governed by the substantive law of Bolivia. Both

plaintiff and defendants have relied upon the testimony of

experts in the law of that country: plaintiff upon Dr.

Fernando Rojas Hernandez, a Bolivian attorney; defen-

dants on Professor Henry DeVries of Columbia University.

By the law of this case, as set forth in our unpublished

Memorandum and Order of July 8, 1983, we have limited

our consideration of that law to those statutes relied upon

by Dr. Rojas in his affidavits on this motion.‘ We conclude

that the facts alleged by plaintiff—drawing all inferences

in its favor—would be sufficient to establish a valid cause

of action under one such statute. We accordingly deny

defendants’ motion for summary judgment and set the

case down for trial solely to determine the disputed ma-

terial issues of fact raised by defendants’ denials of plain-

tiff’s allegations as to this single statute.

Choice of Law

In choice-of-law questions where federal jurisdiction is

based on diversity or pendent jurisdiction, a federal court

must be guided by the rules of the jurisdiction in which

it sits. Klaxwon Co. v. Stentor Elec. Mfg. Co., Inc. (1941)

‘In that decision, we scheduled a hearing at which plaintiff's

expert might testify, if he so chose, on his interpretation of Bolivian

law, with the proviso that any such testimony would be “confined

to [his] exple a of the assertions contained in his affidavits

now on file... . . new material will be considered.’”’ Memorandum

and Order at 22. This hearing was held on September 12, 1983.

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Hall v. El.

DuPont deNemours & Co. (K.D.N.Y.1972) 345 F.Supp. 353;

Maltais v. United States (N.D.N.Y.1977) 439 F.Supp. 540.

The New York courts—whose law thus governs—apply to

tort actions the law of the jurisdiction with the “most sig-

nificant relationship” with the subject matter of the al-

leged tort. Nader v. General Motors Corp. (1970) 25 N.Y.

2d 560, 307 N.Y.S.2d 647, 255 N.E.2d 765; Church of Scien-

tology of California, Inc. v. Green (S.D.N.Y.1973) 354 F.

Supp. 800. We turn, therefore, to the relationships to the

alleged torts of the various jurisdictions which figure in

this action.

We note at the outset that although the continent-and

globe-spanning domiciles and activities of the parties in

the action before us have touched many jurisdictions, only

three—Bolivia, New York and Costa Rica—are asserted

to have any significant connection to the events before us

for choice of law purposes. According to plaintiff’s allega-

tions, their relationship to the alleged activities of the

various defendants may be grouped as follows:

New York

conspiracy meetings held; birthplace and seat of con-

trol of the conspiracy

negotiations between defendants and Gaensel

citizenship of two defendants (Gulf & Western and

Condor Mining, Inc.)

source of financing for defendants’ intended mining

activities

Bolivia

conspiracy meetings held

improper and harassing litigation entered into

undue influence on judge attempted

legislation sought

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

lawyers suborned

real property situated

transfer of real property occurred

Costa Rica

location of plaintiff when it suffered injury

contract of June 25, 1975 signed by plaintiff and

Gaensel

Defendants contend, and we agree, that the above allega-

tions demonstrate that Bolivia has numerous and signif-

icant contacts with the torts alleged. According to these

allegations, practically all the “overt acts” performed by

defendants in furtherance of their illicit goals occurred in

that country. Not all of these activities, according to plain-

tiff, were successful—the alleged attempted use of undue

influence on Bolivian judges, for example, did not prevent

Gaensel from gaining title to the Bolgol in the original

suit. We find that they were, nonetheless, important to

defendants’ efforts to gain control of the Bolgol; and, in

addition, that the very existence and quantity of these

activities indicate the strength of the link between Bolivia

and the defendants’ alleged tortious conduct.

It has been held with respect to common-law conspiracy

that “[t]he liability is in tort, but the conspiracy is not a

tort. The injury flowing from the conspiracy is the tort.”

Albert Levine Associates v. Bertom & Cotti (S.D.N.Y.

1970) 314 F.Supp. 169, 171. We find that plaintiff’s al-

leged injury may well have been materially caused by the

various activities which it alleges defendants pursued in

Bolivia. For example, plaintiff asserts that it failed to

raise its contract with Gaensel to a judicially enforceable

escritura publica on the recommendation of Bolivian coun-

sel who were paid by defendants. Similarly, the Bolivian

litigative and legislative actions taken or sought by defen-

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

dants, whether successful or not, are alleged to have given

defendants the time required to proceed with their machina-

tions and to gain the Bolgol for themselves.

We reject plaintiff’s contention that these actions, “though

reprehensible in execution, were not primary to the con-

spiracy’s success.” Plaintiff’s Answering Affirmation at 3.

We further reject its suggestion that this success was

achieved through defendants’ negotiating with Gaensel in

New York, conferring and contracting with him in Miami,

and driving off the principal source of plaintiff’s antic-

ipated funding “as initiated . . . from the Pennsylvania

offices of G & W, Inc.” Id. While some of these actions

may indeed have had an effect on defendants’ success in

obtaining the Bolgol, we are unconvinced that they were

the “main steps by which the conspiracy succeeded.” id.

The injury claimed by plaintiff—the deprivation of the

right to mine the Bolgol—occurred principally as a result

of defendants’ obtaining .his right in its place. The driv-

ing off of the primary source of plaintiff’s funds, while

perhaps detrimental to plaintiff’s chances of acquiring the

mining concessions, does not strike us as being of the same

decisive or damaging nature. Defendants’ negotiations

with Gaensel in New York, since they did directly affect

defence’ ats’ ability to acquire the Bolgol, pose a more

serious issue. However, as discussed below, we do not

find that this single activity is more crucial to defendants’

success than the various actions which occurred in Bolivia.

Finally, while the signing of the contract between Gaensel

and defendants in Miami was certainly important to de-

fendants’ success—and plaintiff’s failure—in obtaining the

Bolgol, we note that this was the only event to occur in

that jurisdiction; and that plaintiff apparently has not

considered it significant enough to warrant a contention

that\ the substantive laws of Florida should control.

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

In sum, we find plaintiff’s assertion that the actions

taken in Bolivia were comparatively unimportant to be

wholly against the weight of the evidence before us. In-

sofar as we understand plaintiff to suggest that any activi-

ties which occurred in Bolivia are, as a matter of course,

entitled to lesser consideration because no party to this

action is a domiciliary or citizen of that country, we can

say only that we have been referred to no authority for

this contention, and find it untenable.

Further supporting defendants’ assertion that Bolivian

law is controlling is the fact that the subject of this action

—the golden egg itself—is real property located in Bolivia.

It is well settled that where rights to real property are in

issue, the law of the situs of the property control. Carol-

ton Associates v. Abrams (Sup.Ct.N.Y.Cty.1968), 57 Misc.

2d 617, 293 N.Y.S.2d 159. Although this action sounds in

tort, and neither party seeks to have the rights to the

Bolgol determined here, we think that this well-established

choice of law rule is, while not determinative (as defen-

dants imply) at least important to our consideration. Of

similar significance is the undisputed fact that the mining

of gold in Bolivia, and all rights and activities connected

with it, are strictly regulated by the Bolivian government.

We reject plaintiff’s contention that New York’s connec-

tions to this action outweigh those of Bolivia.’ Plaintiff

5 Plaintiff urges the novel proposition that, as between New York

and Bolivian law (as the latter is interpreted by defendants) there

ean be no conflict. Plaintiff, pointing to defendants’ contention

that there exists no Bolivian law forbidding any of their alleged

conduct, argues that while a law may conflict with another law, it

cannot conflict with the absence of a law. Plaintiff cites in support

of his attractively simple suggestion several wholly inapposite cases

which in actuality hold that no conflict exists where the law of one

jurisdiction reflects a governmental policy or interest, while the law

of another reflects none. It is thus accurate, under these cases, to

(footnote continued on following page)

10a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

relies heavily on the allegation that defendants’ New York

activities spawned the alleged conspiracy. This, however,

establishes no more than a significant relationship with a

plot which in and of itself is non-actionable. Albert Levine

Associates, supra. Despite plaintiff’s allegations that

“G & W, Inc. controlled, financed and directed [the con-

spiracy] from New York,” Plaintiff's Memorandum of Law

in Opposition at 1, the fact remains that plaintiff has failed

to demonstrate a close connection between New York and

“the injury flowing from the conspiracy,” Albert Levine

Associates, supra, 314 F.Supp. at 171. Plaintiff has pro-

vided no evidence that meetings held in New York were

crucial while those held in Bolivia were not; nor any evi-

dence as to how the alleged control from New York was

exerted, or what actions were taken in exerting it. In fact,

the sole concrete activity which plaintiff sets in New York

is the series of negotiations between defendants and

Gaensel during which the defendants allegedly laid the

groundwork for seducing Gaensel into abandoning his com-

mitment to plaintiff—a process consummated not in New

York but in Miami. These meetings, while important to

defendants’ success in gaining the Bolgol, constitute but

one action and do not convince us that New York bears the

necessary connection to the events alleged.

Similarly, with respect to plaintiff’s allegations of in-

terference with business, contractual and precontractual

relations, we reject plaintiff’s contention that the tortious

conduct centered around New York. This position flies in

the face of reason in light of the fact that New York was

(footnote continued from previous page)

say that the absence of a policy cannot conflict with a policy. How-

ever, plaintiff does not argue that Bolivia’s purported lack of regu-

lation demonstrates the absence of a policy, and we do not address

that issue.

lla

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

the locale of so few of the activities which allegedly so

interfered, or led to such interference. We do not by this

finding minimize the importance of plaintiff’s allegations

that the defendants lured Gaensel into breaking his con-

tract with plaintiff and entering improperly into a contract

with them. However, the fact that this allegedly occurred

in New York simply does not establish that New York,

above all other jurisdictions, was the primary location of

defendants’ activities or the torts or injuries to which

they allegedly ied.

Nor does the New York citizenship of two defendants

add significantly to that jurisdiction’s side of the choice of

law scale. Plaintiff attempts to bolster its position by

making much of the roles of these two defendants in the

alleged conspiracy. According to plaintiff, defendant Gulf

& Western masterminded and controlled the entire con-

spiracy from its seat in New York,’ while defendant Con-

dor Mining, Inc. was active in the conspiracy and, as the

company which actually contracted with Gaensel for the

Bolgol, brought defendants’ schemes to fruition. However,

the New York citizenship of these entities, in and of itself,

does not create a sufficiently significant contact for choice-

of-law purposes. Certainly New York may express an in-

terest, cognizable for choice of law inquiries, in regulating

the conduct of its citizens. However, plaintiff has failed to

adduce any authority for the proposition that in a sjtua-

* Plaintiff's Statement Pursuant to Rule 3(g) at 2-3. Gulf &

Western, contrary to this assertion, claims that the Bolgol affair

“was a small investment, handled independently by [defendant

New Jersey Zine] through its executives in Bethlehem, Pennsy]l-

vania, and one with which G & W in New York had no real con-

tract.” Affidavit of David N. Judelson at 3. Watts, Griffith & Me-

Ouat, the entity which actually acquired title to the Bolgol, has

responded to plaintiff’s allegations by pointing out that it is a

Canadian corporation with its principal (and only) place of busi-

ness in Toronto, Ontario.

12a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

tion such as that before us “New York has an interest in

policing the conduct of its residents within the state to see

that they don’t harm people outside the state who are not

New Yorkers.” Tr. of February 18 at 34.

Plaintiff relies principally on Intercontinental Planning,

Ltd. v. Daystrom, Inc. (1969) 24 N.Y.2d 372, 300 N.Y.S.2d

817, 248 N.E.2d 576. This reliance is misplaced. In Day-

strom the New York Court of Appeals found that New

York had a public policy of protecting its “position as an

international clearing house and marke. place” which gave

it an interest in policing contracts entered into by New

York brokers and their agents whose services were ren-

dered in New York. This provides no support for plain-

tiff’s far-reaching contention that New York has a para-

mount interest in applying its law whenever a business

entity there situated commits a tort anywhere against

anyone.

Plaintiff is similarly unaided by its quasi-interest anal-

ysis contention that if, as defendants assert, Bolivian law

does not prohibit the actions ‘allegedly taken by them, this

is an “unfair or anachronistic” policy which should not be

tolerated by a New York court. Whatever the state of

Bolivia’s law, it does not establish a “foreign immunity”

like that rejected in Haehl v. Village of Port Chester (S.D.

N.Y.1978) 463 F.Supp. 845, 849, on which plaintiff relies.

Further, plaintiff has not demonstrated to us that such a

state of law is in fact “anachronistic” or, indeed, that it

is “unfair” to any group whose membership includes any-

one other than plaintiff itself.

The remaining cases on which plaintiff relies are simi-

larly unavailing. Some (like Daystrom and Haehl) con-

cern specific situations or categories of actions—into which

this action does not fit—in which New York has articulated

an express public policy; while the others exhibit “a signif-

13a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

icant relationship” between New York and the subject of

the action quite apart from the parties’ citizenship.’ We

are, however, aware of no case in which New York has

expressed the sort of interest hypothesized here by plain-

tiff based solely on the New York citizenship of one or

more defendants, in the absence of any substantial connec-

tions between New York and the tort itself. Nor can we

discern such a connection from the fact that defendants

obtained from New York sources some or all of the money

to finance their Bolivian activities. The fact that this financ-

ing was helpful to those activities does not necessarily

mean that it is important, for choice of law purposes, in

the context of the other activities above discussed; and

we cannot in fact say that the location of the source of

defendants’ financing is nearly as important a “contact”

as the various activities which plaintiff ascribes to Bolivia.

Plaintiff argues, as an alternative choice-of-law theory,

that even if Bolivia has the most significant relationship

to the torts alleged, the law of Costa Rica is to be preferred

7 Rudin v. Dow Jones & Co. (S.D.N.Y. 1981) 510 F.Supp. 210

(defendant’s activities upon which the action focused were centered

in New York) ; Kristinus v. H. Stern. Com, E. Ind., S.A. (S.D.N-Y.

1979) 463 F.Supp. 1263 (contract to be performed in New York) ;

Pan American World Airways, Inc. v. Boeing Company (S.D.N.Y.

1980) 500 F.Supp. 656 (plaintiff incorporated and headquartered

in New York; relevant conduct occurred in New York) ; O’Keeffe

v. Bry (S.D.N.Y. 1978) 456 F.Supp. 822 (“a substantial part, if

not all” of New York defendant agent’s conduct occurred in New

York): Thorn v. New York City Department of Social Services

(S.D.N.Y. 1981) 523 F.Supp. 1193 (plaintiff seized in Pennsyl-

vania, held in New York for six months) ; Chila v. Owens (S.D.N-Y.

1972) 348 F.Supp. 1207 (host-guest liability) ; Johnson v. Hertz

Corp. (S.D.N.Y. 1970) 315 F.Supp. 302 (New York statutes “ex-

press a policy aimed at protecting innocent victims of New York

vehicle registrants”); Kunstsammlungen zu Weimar vy. Elicofon

(E.D.N.Y. 1981) 536 F.Supp. 829, aff'd (2d Cir. 1982) 678 F.2a

1150 (transfer of personal property governed by location of prop-

erty in New York).

l4a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

because the plaintiff was located there when it suffered in-

jury. This fact of location, plaintiff argues, makes Costa

Rica the locus delicti® Plaintiff’s position essentially boils

down to an assertion that in a choice ef law determination

the jurisdiction in which the plaintiff is located at the time

of injury is to be given especial weight, solely because the

plaintiff was located there. The cases cited by the plain-

tiff for this proposition, however, do not demonstrate so

narrow a focus. While these cases have indeed applied the

laws of the jurisdictions in which the plaintiffs were located,

those jurisdictions were, in addition, the sites of other

events or circumstances crucial to the causes of action

themselves. Hargrave v. Oki Nursery, Inc. (2d Cir.1980)

636 F.2d 897, reh. den., 646 F.2d 716 (injury occurred, for

jurisdictional purposes, in the state where plaintiffs were

doing business, defendants made misrepresentations about

merchandise, and the merchandise was shipped); Vanity

Fair Mills, Inc. v. T. Eaton Co. (2d Cir.1956) 234 F.2d 633

(location of allegedly frauduient activity; passing off of a

product occurs where consimers mistakenly buy wrong

product); Albert Levine Associates v. Bertoni & Cotti,

supra, 314 F.Supp. 169 (officer of foreign defendant came

to New York, conspired in New York with New York de-

fendant to refuse to sell to plaintiff, transmitted this deci-

sion to plaintiff in New York) ; Bing v. Halstead (S.D.N.Y.

1980) 495 F.Supp. 517 (plaintiff alleged emotional distress

caused by letter which she received and read in country

where domiciled).

8 We note that this theory was not seriously presented prior to

oral argument. Despite the appearance of a reference to Costa

Rican law in one of plaintiff’s many briefs, counsel for plaintiff

several times assured us that this was purely illustrative and not

indicative of any legal contentions. However, we reject defendants’

claims of prejudice from the timing of plaintiff’s current assertions.

in light of the ample opportunity provided to all parties to present

supplemental arguments.

lda

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

The authority marshaled by plaintiff thus does not con-

tradict the formulation upon which we continue to rely:

“that in the sphere of commercial torts, the situs of the

injury is ‘the place where the critical events associated with

the dispute took place’.” MIJE Associates v. Halliburton

Services (S.D.N.Y.1982) 552 F.Supp. 418, 419, quoting

Spectacular Promotions, Inc. v. WING (E.D.N.Y.1967) 272

F.Supp. 734, 737.° In the instant case the country in which

plaintiff was located had no connection to the tort or any

of the actions complained of. Nothing of any import hap-

pened in Costa Rica: no meetings were held, no financing

sought, no allegedly illegal acts taken. The fact that

Costa Rica was the location of the signing of the June 25,

1975 contract between plaintiff and Gaensel seems to us

irrelevant. The action before us is not one to enforce or

take any action with respect to this contract, but rather

is based on the allegedly tortious activities of persons not

parties to that contract. These persons and activities, as

we have said, all lacked any connection to Costa Rica or

any events which there transpired. Plaintiff has presented

us with no case, and we know of none, in which residence

or location alone has been found to establish the controlling

jurisdiction for choice of law purposes. We therefore re-

ject its contention that the law of Costa Rica applies to the

action before us.

Bolivian Law

We turn now to defendants’ contention that plaintiff’s

allegations against them, even if true, do not state = cause

® Significantly, the court in Bing, supra, turned to the question

of the lex loci delicti only after determining that, other than the

locus delicti no other jurisdiction “has a compelling interest in

applying its own law,” 495 F.Supp. at 520. In the instant action,

on the other hand, as we have noted, one jurisdiction—Bolivia—

does indeed have such an interest.

l6a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

of action under Bolivian law. In that connection, we note

that under Federal Rule of Civil Procedure 44.1 any de-

termination we might make as to Bolivian law would be

“treated as a ruling on a question of law.” Such a determi-

uation may thus be made in a motion for summary judg-

ment, despite the existence of material disputes between

the parties.

Defendants contend that the acts of which plaintiff ac-

cuses them do not set forth a cause of action under any

Bolivian statute.’® Dr. Rojas, plaintiff's expert on Bolivian

law asserts in his affidavits that an action might indeed

be maintained in a Bolivian court under any of the follow-

ing four such statutes:

Civil Code

Article 966. Any man who causes injury to another

is obligated to compensate him for it.

Article 967. Everyone is liable not only for the inj-ry

caused by his act, but also for that caused by his negli-

gence or imprudence. ;

Penal Code

Article 303. (Attacks against the freedom to work)

Whoever impedes, obstructs or restricts the freedom to

work, to exercise a profession or office, commerce or

industry, incurs prison of one to three years.

1° Defendant makes much of the fact that Bolivian law does not

recognize the precise torts alleged in the Complaint: namely’, inter-

ference with contractual, precontractual or business relations or

common-law conspiracy. We find this to be of no moment. At the

time plaintiff framed “ts pleading, it did not expect that the law

of Bolivia would be applied to its allegations. We therefore con-

sider sufficient the existence of any cause of action, whether or not

equivalent to those named in the Complaint, provided of course

that it is based upon the factual allegations included in the com-

plaint.

17a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

Article 87. (Civil Liahility)

Any person liable for a penal offense is also liable

civilly and is obligated to compensate for the economic

and moral injury caused by the delict."

Penal Code Article 87 does not, of course, provide an inde-

pendent cause of action. We therefore need consider only

Civil Code Articles 966-967 and Penal Code Article 303.

With respect to Articles 966 and 967, Professor DeVries,

defendants’ expert, testified that

these articles are, in effect, an appendage to the Penal

Code. What they in effect create is vicarious liability

. . . or liability for what they call acts or damages

caused by things, but the substantive duty must be

found in the penal law [which] embraces many of the

situations which we call personal injury tort.

Tr. of March 1 at 10. Subsequent to this testimony, Dr.

Rojas testified that liability under a separate penal statute

is not a prerequisite for liability under Articles 966 and

11 These quotations are agreed to be accurate translations from

the Spanish, which reads as follows:

Art. 966. Todo hombre que causa a otro algun dajio esta obli-

gado a repararlo.

Art. 697. Todos son responsables no solo del dao causado por

su hecho, sino tambien del que causado por su hecho, sino

tambien del que ocasiona su negligencia o imprudencia.

Art. 303.—(Atentados contra la libertad de trabajo)

El que impidiere, obstaculizare o restringiere la libertad de

trabajo, profesién u oficio, comercio o industrial, incurrira en

reclusion de uno a tres afios.

Art. 87.—(Responsabilidad Civil)

Toda persona responsable penal mente, lo es tambien civil-

mente y esta obligada a la reparacién de los dafios materiales

y morales causados por el delito.

lta

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

967. Tr. of September 12 at 145. Professor DeVries chose

not to rebut this statement, nor did he contradict our as-

sumption, stated on the record, that his meaning was prob-

ably rather that a violation of some other statute, penal or

civil, had to be found before Articles 966 and 967 would

be applicable. Tr. of September 12 at 148, 152, 154, 155,

156. Dr. Rojas agreed that these Articles would not come

into play unless and until there had been some determina-

tion that the party against whom they were to be invoked

had committed some wrongful or illega. ovt. Tr. of Sep-

tember 12 at 152. Dr. Rojas, however, insisted that a

Bolivian court might invoke these Articles without point-

ing to another specific statute which a defendant had vio-

lated. He cites in support of this position the Bolivian.

commentator Raul Romero Sandoval :”

the illegal civil acts are not listed in the Civil Code nor

have they their own name. They are as numerous and

unforeseeable as the diverse circumstances that life

itself causes and creates. Therefore, there shall be

an illegal civil act every ‘time that a person suffers

damage caused by the fault of another person."

12 Dr. Rojas testified, and Professor DeVries did not dispute,

that the writings of various authors learned in legal subjects

occupy much the same place in Bolivian law, and have much

the same influence with Bolivian courts, as may be ascribed to case

law and precedent in our legal system. Tr. of September 12 at

144, 157, 210-211.

18 Pero los hechos ilicitos civiles no estan catalogados en el

Cédigo civil ni tienen un nombre propio: son tan numerosos

e imprevisibles como las diversas circunstancias que la vida

mima provoca y crea; de ahi que habra ilicito civil toda vez

que una persona sufra dafo a causa de la culpa de otra

persona.

Raul Romero Sandoval, Derecho Civil (Los Amigos del Libro, La

Paz, Bolivia, 1983) p. 402. The English translation, provided by

Dr. Rojas, was not contested by Professor DeVries.

19a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

This, however, merely begs the question, for when is a

person legally at “fault?” The treatise-writer Montellano

states:

Fault is the non-performance of a preexisting obliga-

tion which gives rise to reparation when it causes in-

jury to another. ... When an act is not expressly pro-

hibited by law, it cannot be illicit, a necessary condition

for it to be a fault."*

This latter sentence is similar to Article 32 of the Bolivian

Constitution. “No one shall be obliged to do what the

Constitution and laws do not mandate, or not to do what

they do not prohibit.” ** And, according to Romero:

[When the pre-existing obligation is created by con-

tract, the fault is contractual; if that pre-existing obli-

gation has been established by statute, the fault is

delictual or quasi-delictual.... Fault, in addition, can

consist in an act or an omission."*

14 Capitulo II “La Falta”

1. Falta es el incumplimiento de una obligacién preexistente,

que da origen a la reparacién cuando causa un dafo a otro.

~ * * * *

Cuando un hecho no esta expresamente prohibido por la ley,

no puede ser ilicito, condicién necesaria para constituir

falta...

Julian V Montellano, 7J Las Obligaciones en el Derecho Divil

Boliviano (2d ed. 1930). Translation by Professor DeVries.

18 Art. 32. Nadie sera obligado a hacer lo que la Constitucion y

las leyes no manden, ni a privarse de lo que ellas no prohiban.

English translation by Professor DeVries.

6 Cuando !a obligacién preexistente es nacida de un contrato,

la culpa es contractual; si esa obligacién preexistente ha sido es-

tablecida por la ley, la culpa es delictual o cuasidelictual.

La culpa, ademas, puede consistir en una aeccién o en una omisién.

Romero, op. cit., pp. 405-406. English translation by Professor

DeVries (Tr. of September 12, at 216-218).

20a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

We thus begin with the proposition that there must be

one of these types of legally cognizable “fault” on the part

of the defendant before an injury will be compensable under

Articles 966 and 967. What sort of “fault” is alleged here?

Dr. Rojas contends that plaintiff suffered an injury cog-

nizable under Articles 966 and 967 because defendants

caused Gaensel to sell to them “the mining concessions

which were already committed to be formalized as a trans-

fer in favor of” plaintiff. First Rojas Affidavit at 4. Dr.

Rojas asserted that the contract between plaintiff and Gaen-

sel, although not judicially enforceable, was valid as a

private contract under which plaintiff could force Gaensel

to complete the formalities to raise it to an escritura

publica, and which Gaensel had no right to terminate with-

out judicia! approval despite plaintiff’s failure to comply

with an express condition precedent. Tr. of September 12

at 197-202, 204-206. This would appear to be an argument

of “contractual fault.” However, any such fault, accord-

ing to Dr. Rojas’ logic and his exposition of Bolivian law,

must be laid at the feet of Gaensel. According to plaintiff’s

contentions, it was he who took the improper or illegal

steps of failing to formalize and repudiating the contract.

¢ is not explained how the purported rights and obligations

of the parties to the Gaensel-E] Cid contract give the latter

a cause of action in contractual fault against the defen-

dants, who had no pre-existing obligation created by the

contract.

Nor, it would appear, did defendants have any pre-exist-

ing obligation to plaintiff under Bolivian law. Dr. Rojas

does not contend that any Bolivian statute prohibits de-

fendants’ winning of the Gaensel contract in the circum-

stances as alleged by plaintiff, nor has he relied in his

affidavits on any statute prohibiting the actions which

plaintiff alleges defendants took in furtherance of this

21a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

end.’ In short, Dr. Rojas has not provided any coherent

explanation of specifically why or how a Bolivian court

would find defendants to be at fault so as to invoke Articles

966 and 967. As we understand his position, he contends

that plaintiff was injured by defendants’ actions, and that

among those injury-dealing actions were the deprivations

of rights which had either vested in plaintiff or would there

vest after Gaensel performed certain suspensive conditions.

Even if we assume the truth of these statements, however,

we do not see that they are sufficient to establish liability

under Articles 966 and 967. Dr. Rojas appears to interpret

the “at fault” requirement to mean simply that a party is

liable where it is responsible for causing economic loss to

another, whether or not there is any duty on it to refrain

from causing such loss. Giving deference to the fact that

Dr. Rojas is a practition r of law in Bolivia, while Profes-

sor DeVries is not, we cannot see any basis for this inter-

pretation, either in the writings of the treatises or from our

own common sense. Articles 966 and 967 are perfectly com-

prehensible as compensatory statutes, which of course

would come into play when—and only when—a party had

been found to have breached some particular duty placed

upon him. This interpretation is fully consistent with the

treatises quoted above, and we adopt it. Under this reason-

ing, plaintiff has failed to demonstrate that defendants’

alleged actions would be cognizable under Articles 966 and

967.

We thus turn to Article 303. We note, first, that the

language of this section does not specify what actions might

17Dr, Rojas did discuss, during his testimony before us on Sep-

tember 12, 1983, several articles of Bolivian law which he asserted

prohibited various of the defendants’ alleged actions. Under the

law of this ease, however, as described in n. 4, supra, these statutes

are not properly before us.

22a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

be considered “attacks on the freedom to work.” However,

the context of the Title and Chapter of the Penal Code in

which it is found is illuminating. So far as we have been

informed, Title X, Chapter 4 of the Penal Code of Bolivia

begins with Article 303 and continues with the following

four Articles:

Art. 304.—(Monopoly of labor)

Whoever exercises any kind of monopoly of a licit ac-

tivity of labor, commerce or industry, will be sanc-

tioned by prison of one to three years and fine of thirty

to sixty days.

Art. 305.—(Wrongful conduct)

The public official who wrongfully permits the commis-

sion of the delicts provided for in the previous two

articles will be sanctioned by prison of three months

to two years.

Art. 306.—(Violence or threats by workers and em-

ployees) ‘

The worker or employee who uses violence or threats

to compel another or others to participate in a strike

or boycott, incurs prison of three months to two years.

Art. 307.—(Coercion by aiaadiide independent con-

tractor or employee)

The employer, independent contractor or employee

who, by himself or through a third party, coerces an-

other or others to take part in a lock-out, become a

member of a determined labor or employer organiza-

tion, or to leave it, will incur in the sanction of the

previous article.

23a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

Prison of three months to three years will be imposed

when arms have been used.”®

Each of the quoted Articles addresses a situation in which

some sort of superior power or violence is exercised by one

person or entity over another. Although the situation as

we described it at the beginning of this Opinion appears

to us closer to a business competition situation in which

one party happened to possess more experience and know-

how in getting things done, plaintiff has alleged that de-

fendants’ success with Gaensel, and its failure, was in fact

due not to defendants’ savvy but to their threats. Specif-

ically, plaintiff has alleged-—and defendants have vehe-

mently denied—that Gaensel abandoned his contract with

plaintiff and signed with defendants because defendants as-

sured him that they would “tie him up in endless litigation”

should he choose otherwise. We have been informed by

18 Art. 304.—(Monopolio de trabajo)

El que ejercitare cualquier tipo de monopolio de una actividad

licita de trabajo, comercio o industria, sera sancionado con reclu-

sién de uno a tres afios y multa de treinta a sesenta dias.

Art. 305.—(Conducta culposa)

El funcionario piblico que culposamente permitiere la comisién

de los delitos previstos en los dos articulos anteriores, sera san-

cionado con reclusién de tres meses a dos afios.

Art. 306.—(Violencias 0 amenazas, por obreros y empleados)

El] obrero o empleado que ejerciere violencias o se valiere de

amenazas para compeler o otro u otros a tomar parte en una

huelga o boicot, incurrira en reclusién de tres meses a dos afios.

Art. 3076.—(Coacciones por patron, empresario o empleado)

Incurriré en la sancién del articulo anterior el patrén, empresario

para tomar parte en un lockout, ingresar a una determinada so-

ciedad obrera o patronal, o abandonarla.

Se impondra reclusion de tres meses a tres afios, cuando se hubiere

hecho uso de armas.

24a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

Dr. Rojas that the use of threats to prevent an individual

person or company from working does fall under the ambit

of Section 303, Tr. of September 12 at 175; and we have,

further, been assured that a Bolivian court would view a

promise of endless litigation as a threat cognizable under

this section. Tr. of September 12 at 163, 175.'°

Defendants’ counsel cross-examined Dr. Rojas at some

length as to precisely what might constitute a threat cog-

nizable under Section 303, the end result of which was a

determination that there appears to be no explicit defini-

tion of that term in the Bolivian legal corpus. Tr. of Sep-

tember 12 at 209. Further cross-examination yielded the

admission that threats of a single lawsuit might not be

sufficient to bring a defendant’s conduct under Section 303,

or any other section of Title X, Chapter 4, Tr. of September

12 at 207, 211-212; and that there might be similarly be no

cause of action where two competitors each threatened to

sue a third party should he contract with the other, with

the result that neither got the desired contract and each

sued the other for this failure. Tr. of September 12 at 220-

222. All of this, however, convinces us only that there is no

19 Neither party has contended that the status of defendants’

alleged statements as “threats,” or their cognizability under Article

303, is in any way affected by the legal status of the private con-

tract between plaintiff and Gaensel. We concur with this tacit

agreement: plaintiff’s claim is simply that, by making certain

statements to a third party, defendants pevented plaintiff from

pursuing its line of work, without regard to the status of any

contractual arrangements for that work. Indeed, from the hypo-

theticals discussed by Dr. Rojas during his testimony, we assume

that plaintiff might have made the identical claim had its dealings

with Gaensel been interrupted even at the stage of preliminary

discussions. Tr. of September 12 at 163-166. We therefore need

not consider defendants’ contention that the contract between E]

Cid and Gaensel, not having been raised to an escritura publica,

was a nullity under Bolivian law and therefore gave plaintiff no

rights which defendants could have violated.

25a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

bright line as to what is and what is not a threat which

obstructs the freedom of work.

As to whether the alleged conduct of defendants in this

case does meet the raark, Dr. Rojas answered unequivocally

in the affirmative, while defendants have contented them-

selves with Professor DeVries’ statement that

[a] mining concession is a state-granted monopoly

under Bolivian law, and the fact that one party rather

than another owns a particular concession could not

conceivably be deemed to be a restraint of commerce

or industry in violation of Article 303, or violative of

any other provision of Chapter 4.

_ Affidavit in Response to Plaintiff’s Submission with Respect

to Bolivian Law at 9. This, however, misses the point.

Plaintiff asserts that its own ability to work or engage in

commerce was restrained by defendants, not merely that

they restrained the mining industry as a whole. As such,

the monopolistic aspects of mining in Bolivia would seem

to be irrelevant. Professor DeVries does not explicitly

quarrel with Dr. Rojas’ conclusion that Article 303 can

indeed encompass such private injury; and, since we con-

sider his above-quoted statement to be a misunderstanding

of plaintiff’s assertion rather than a categorical denial that

such a private right exists, we accept Dr. Rojas’ interpreta-

tion as uncontroverted.

Dr. Rojas has asserted that it would be a question for

a Bolivian court whether certain words constitute a threat,

Tr. cf September 12 at 167. We thus find ourselves in the

position of a Bolivian judge confronted with the question

of whether or not the particular statements allegedly made

by defendants were sufficient to permit plaintiff to invoke

the protection of Article 303. We are satisfied that no such

judge would wish to decide that question on the meagre

26a

Decision of Hon. Whitman T. Knapp,

Reported at 575 F.Supp. 1513

record before us, but would wish to hear evidence from

which he could determine exactly what, if any, threats had

actually been made. We therefore direct that such a hear-

ing be had. Since plaintiff has not alleged any other con-

duct which might state a cause of action under Article 303,

the hearing will be strictly limited to this question, the

resolution of which should allow us to determine both

whether plaintiff has stated a cause of action and, if so,

whether it will prevail upon it.

Defendants’ motion for summary judgment is denied.

The Court will contact the parties to establish a date for

a hearing on the question of what threats, if any, were

made by defendants to plaintiff relative to this action.

So ORDERED.

20'W reserve until after this hearing our decision as to whether

we shall reconsider our provisional grant of summary judgment

on plaintiff’s first, or antitrust, cause of action.

27a

Decision of Hon. Whitman T. Knapp,

Reported at 588 F.Supp. 125

UNITED STATES DISTRICT COURT

S.D. New Yorx

No. 76 Civ. 1388 (WK).

Ex Ci, Ltp.,

Plaintiff,

The New Jersey Zinc Company, Gulf & Western Indus-

tries, Inc., Gulf & Western International Holding Com-

pany, Gulf & Western (Canada) Limited, Watts, Griffis &

McOuat, Limited, Camino Gold Mines Limited, Condor

Mining, Inc., Richard W. Hogeland and David M. Koogler,

Defendants.

July 30, 1984.

Plaintiff brought action alleging that defendants inter-

fered with its contractual, precontractual and business re-

lationships. On defendants’ motion for summary judgment,

the District Court directed that evidentiary hearing be had.

Defendants subsequently filed memorandum arguing that

evidence cited by plaintiff was insufficient to create jury

question. The District Court, Whitman Knapp, J., held

that statements allegedly made by defendants to third party

which subsequently abandoned its intention to enter into

joint venture with plaintiff were insufficient to permit plain-

tiff to invoke protection of applicable Bolivian penal statute

governing attacks against freedom to work.

Motion granted.

28a

Decision of Hon. Whitman T. Knapp,

Reported at 588 F.Supp. 125

Malcolm H. Bell, Norwalk, Conn., for plaintiff.

Kassel, Hoffman, Neuwirth & Geiger, by Joseph Ein-

stein; Kimmelman, Sexter & Sobel by Arthur Sobel; Satter-

lee & Stephens by Henry J. Formon, Jr., New York City,

for defendants.

Memorandum & ORDER

Wuirman Knapp, District Judge.

At the conclusion of our Opinion of December 15, 1983,

575 F.Supp. 1513, 1524, we observed:

Dr. Rojas has asserted that it would be a question for

a Bolivian court whether certain words constitute a

threat. Tr. of September 12 at 167. We thus find our-

selves in the position of a Bolivian judge confronted

with the question of whether or not the particular state-

ments allegedly. made by defendants were sufficient to

permit plaintiff to invoke the protection of Article 303.

We are satisfied that no such judge would wish to

decide that question on the meagre record before us,

but would wish to hear evidence from which he could

determine exactly what, if any, threats had actually

been made. We therefcre direct that such a hearing

be had.

The purpose of such a hearing would, of course, be to de-

termine whether plaintiff—on the basis of already com-

pleted discovery—could present facts sufficient to raise a

jury question whether or not defendants had taken action

which a Bolivian court would recognize as constituting a

threat under Article 303 and, if so, whether or not there

was causal connection between such threat and plaintiff’s

inability to acquire the gold-mining concession it was seek-

ing.

29a

Decision of Hon. Whitman T. Knapp,

Reported ct 588 F.Supp. 125

Since then, several things have occurred: Defendants

made a motion for reargument contending that we had mis-

apprehended Dr. Rojas’ testimony, and that the conduct

ascribed to them could not as a matter of law have risen

to a violation of Article 303; plaintiff filed a memorandum

which, among other things, set forth the evidence it con-

tended created a jury question as to whether or not threats

made by defendants against S.J. Groves and Sons

(“Groves”) caused Groves to abandon its intention to enter

into a joint venture with plaintiff,’ and responded to defen-

dants’ motion for reargument; and defendants filed a memo-

randum arguing that the evidence cited by plaintiff was

insufficient to create a jury question ever under our—erro-

neous according to them—view of Bolivian law.

We conclude that defendants’ last mentioned contention

is correct. It therefore becomes unnecessary for us to con-

sider their motion for reargument.

After careful consideration of the facts set forth in plain-

tiff’s memorandum—looking at them against the back-

ground of all other facts mentioned in the memorandum

and taking no account of defendants’ memorandum—we

cannot conclude that the words and actions attributed to

defendants are cumulatively sufficient to present a jury

question under our understanding of Dr. Rojas’ interpreta-

1 Plaintiff’s memorandum centains 13 pages of history, a six-page

section entitled “Threats Against Gaensel,” a ten-page section en-

titled “Threats Against Groves,” and a nine-page section entitled

“Threats Against E] Cid.” We directed defendants to answer only

the Groves section of plaintiff's memorandum. Any threats to El

Cid (plaintiff) would be irrelevant because there never has been

a claim that plaintiff was deterred by, or otherwise failed to achieve

its objective because of, any of defendants’ alleged threats. Simi-

larly, any threats against Gaensel—the previous owner of the gold-

mining concessions—would be irrelevant, since he conecededly en-

tered into a contract with plaintiff from which he was released

solely because of plaintiff's inability to obtain financing from

Groves.

30a

Decision of Hon. Whitman T. Knapp,

Reported at 588 F.Supp. 125

tion of Article 303. Stripped of the innuendo supplied by

plaintiff, it only appears that defendants were very anxious

to get the goldmining concession for themselves (which, of

course, meant that they wanted to prevent plaintiff from

getting it); that they were prepared to engage in exten-

sive litigation to achieve this purpose; that they did in fact

institute a law suit, which Groves’ attorney found “suffi-

ciently [colorable] to tie up the property for a while”

(Plaintiff's Memorandum, p. 23) ; and that defendants kept

Groves advised of their intentions in this regard. As we

observed in our December 15th Opinion, there is “no bright

line as to what is and what is not a threat” under Article

303, 575 F.Supp. at 1523. However, we are satisfied that,

wherever that line may be, plaintiff has not presented a

jury question as to whether or not it has been crossed.

Defendants’ memorandum also contends that any

“threats” which might be established cannot have caused

plaintiffs inability to consummate its proposed financing

deal with Groves and its consequent inability to acquire

the gold-mining concession, becatse Groves’ decision not to

invest was based on its own evaluation of investment pos-

sibilities, wholly unaffected by defendants’ conduct (threat-

ening or otherwise). In view of our foregoing conclusion,

we need not pass on this contention.

In summary: Defendants’ motion for summary judg-

ment is granted; their motion for reargument is denied as

moot.

Let the Clerk enter judgment dismissing the complaint.

So OrprEReED.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.