# Petition for Writ of Certiorari — Kempe v. Ocean Drilling & Exploration Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1989
- **Citation:** 493 U.S. 918

## Text

a Supreme Court, U.S.
| FILED
-2 99/
8 9 2 9 AUG 19 1588
=e JOSEPH F. SPanini,
— x
IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

III. Under the circumstances present here, did the District
Court through the procedural mechanism of a forum non con-
veniens dismissal have the power to destroy the right to a jury
trial guaranteed by the Seventh Amendment to the United
States Constitution?

.
LIST OF PARTIES
J

The parties to the proceedings below were the petitioners
Charles W. Kempe, Jr. and Michael J. Arnold in their capacity
as Joint Liquidators of Mentor Insurance Limited and the
respondents Ocean Drilling & Exploration Company, Mentor
Holding Corporation, Pinnacle Reinsurance Company Lim-
ited, Mary Colson as sole heir and administratrix of the estate
of William L. Colson (deceased), Clovis H. Steib, Ronald W.
Herman, Odie F. Vaughn, James L. Kilpatrick, Hugh J. Kelly,
Herman S. Kelly and J. Douglas Higley. The same parties are
before this Court.

iil

TABLE OF CONTENTS

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FEDERAL STATUTE INVOLVED ............000..

STATEMENT OF THE CASE AND BASIS OF FED-
SN ICEIES ose shoes cs sccnscccercingce

REASONS FOR GRANTING THE WRIT ...........

I. This Court In An Exercise of Its Supervisory
Role Should Define the Extent of a District
Court’s Jurisdiction to Procedurally Destroy
Federal RICO Substantive Rights Through a
Forum Non Conveniens Dismissal............

A.

At Issue is the Extent of a Federal Court’s
Discretionary Power to Ignore a Congres-
a

. Forum Non Conveniens Has No Application

in the Analogous Context of the Antitrust
TLC c he Aas Ge ae bk 6.4 0.60 44s ee 00000s

Similar RICO Jurisdictional Issues Are Now
Nee a ae cece ees

The Decision Below is Apparently Inconsis-
tent with Decisions of This Court.........

PAGE

_iv

E. In the Interests of Other Litigants and the
Lower Courts, the Issue Should be Resolved

PAGE

_ SRE wa ccdee Wp eeers se achaveceetaknensss 10
II. This Court Should Decide If the Forum Doc-
trine May be Employed to Destroy a Constitu-
tional Right to a Jury Trial.................. 1]
CE, 45 ck kaa hn eek dh aree wok R hdd Ca caneeds 13
APPENDIX (Opinion and Judgment of Court of
Appeals, Order Denying Rehearing En Banc, Memo-
randum Decision of District Court, and Pertinent Por-
tions of 18 U.S.C. § 1961 et seq. (1982))......... A-1, B-1,

C-1, D-1

TABLE OF AUTHORITIES

Cases: PAGE
Agency Holding Corp. v. Malley-Duff & Assocs., 483
U.S. 143, 107 S. Ct. 2759, 97 L. Ed. 2d 121 (1987) .. 6
Baltimore & Ohio Railroad Co. v. Kepner, 314 U.S. 44,
—§ eo ee Fe OS UF, | rere y ere Te Tree 7
Beacon Theaters v. Westover, 359 U.S. 500, 79 S. Ct.
ee BS. fers rere \!
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S. Ct. 839, 91
Re Te Ter Tee eee Cee T 6, 9

H.J. Inc. v. Northwestern Bell Telephone Co., 109 S. Ct.
2893, 57 U.S.L.W. 4951 (June 26, 1989, No. 87-1252) 9, 10

In re Union Carbide Corp. Gas Plant Disaster, 634 F.
Supp. 842 (S.D.N.Y. 1986), aff’d, 809 F.2d 195 (2d
Cir.), cert. denied, 108 S. Ct. 199, 98 L. Ed. 2d 150

OE i eu be kde eH EGA OHSS ERE O64 ENA ACES SOO ees 11
Kempe v. Ocean Drilling & Exploration Co., 683 F.
Ns Fe ls SUES 6 oes. S banc eudcacidccus 2,4
Kempe v. Ocean Drilling & Exploration Co., No. 88-3763
yy Re ee a re re eee 4,5
Miles v. Illinois C.R. Co., 315 U.S. 698, 62 S. Ct. 827, 86
ee eae rr ee 7
Mitchell v. Forsyth, 472 U.S. 511, 105 S. Ct. 2806, 86 L.
se ea. ce ULE DOMES SERRE RESO OR OS 12

Nixon v. Fitzgerald, 457 U.S. 731, 102 S. Ct. 2690, 73 L.
ic n4 eas kskGncbsteoeensaaeees i2

Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S. Ct.
ey Pe es Se ee 6.0 4 8k Cd cv ceeueneus cs 11

vi

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S. Ct.
3275, 87 L. Ed. 2d 346 (1985)........ Gavecensiavs 6, 9, 10

Tafflin v. Levitt, 865 F.2d 595 (4th Cir.), cert. granted,
109 S. Ct. 2428, 104 L. Ed. 2d 985, 57 U.S.L.W. 3779

CAG hte cA chee ReRASbe SRS CeeaE KOO RR OWeE ess 8
Transunion Corp. v. PepsiCo, Inc., 811 F.2d 127 (2d Cir.

DU UNbbinw ses C0 0e UF ENON EE KOC US 4005 CER WERK OES 7
United States v. National City Lines, Inc., 334 U.S. 573,

68 S. Ct. 1169, 92 L. Bd. 1564 (1946)... . ccc ccenes 7
United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524,

Sr Rl A Me UD CRDOED cen ccccrccdersssatvesccces 10
Van Cauwenberghe v. Biard, 108 S. Ct. 1945, 100 L. Ed.

( 7 cs.) MEPMPTT eT TTTEPE Re CET TEETER eT eee 9
Constitution and Statutes: F
U.S. Constitution, Amendment VII........ She vEKews i, 11
Sisten MEER, GUNEs BER BO ce kccccnccccccccsseucs 5
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Se ss ae UD EMS ce seas cceccceresencaunns 8
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Se reaes TEED CRUE s oc ccc ccccccesensccneceee: 2
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Rules:

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Vii
PAGE

Periodicals and Publications:

Baucher, The Inconvenient Federal Forum, 60 Harv. L.
eek cece ne ashe babwus er uen se 6

RICO Legislative History:

116 Cong. Rec. 35191, 35193, 35197, 35200, 35215,
35216, 35295, 35313, 35319, 35321, 35328 (1970) .... 6

H.R. Rep. No. 1549, 91st Cong., 2d Sess. 58 (1970) ... 8

IN THE

Supreme Court of the United States

OCTOBER TERM, 198°
No.

>

CHARLES W. KEMPE, JR. and MICHAEL J. ARNOLD, in their
capacity as Joint Liquidators of Mentor Insurance Limited,

Petitioners,
—_—V.—
OCEAN DRILLING & EXPLORATION COMPANY, ef ai.,

Respondents, .
and

PINNACLE REINSURANCE COMPANY LIMITED,
Respondent.

>_>

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

Petitioners Charles W. Kempe, Jr. and Michael J. Arnold
respectfully pray that a writ of certiorari issue to review the
judgment and opinion of the United States Court of Appeals
for the Fifth Circuit, entered in the above-entitled proceeding
on June 23, 1989.

OPINIONS BELOW

The Opinion of the Court of Appeals for the Fifth Circuit,
not yet reported, is reprinted as Appendix A, infra. The unre-
ported order of the Fifth Circuit denying petitioners’ motion
for Rehearing En Banc is reprinted as Appendix B, infra. The
memorandum decision of the United States District Court for

2

the Eastern District of Louisiana (Livaudais, D.J.) is reported
at 683 F. Supp. 1064 (E.D. La. 1988). It is reprinted in Appen-
dix C, infra.’

JURISDICTION

The judgment of the United States Court of Appeals for the
Fifth Circuit was entered on June 23, 1989. (A-1). A request for
en banc review was denied on July 24, 1989. (B-1). This Court
has jurisdiction to review the issue presented herein by Writ of
Certiorari pursuant to 28 U.S.C. § 1254(1).

FEDERAL STATUTE INVOLVED

The Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1961 et seq. (1982). Pertinent portions are reprinted in
Appendix D, infra.

STATEMENT OF THE (ASE AND BASIS OF
FEDERAL JURISDICTION

In this case federal RICO claims were destroyed by a forum
non conveniens dismissal in favor of a foreign jurisdiction, the
British colony of Bermuda. Bermuda does not recognize and
will not enforce those federal claims. The Constitutional right
to have those claims, as well as the pendent claims involved,
heard by a jury was also extinguished since a jury trial as a mat-
ter of right does not exist in Bermuda.

The Petitioners, plaintiffs below, are the Court-appointed
Liquidators of Mentor Insurance Limited (‘‘Mentor’’) which is
in liquidation in Bermuda. When Mentor was an operating
company, it wrote an enormous amount of insurance business
in the United States. Although the Petitioners are aliens, the
economic interests they ultimately seek to vindicate are those of

| Citations to the paginated appendices will be styled ‘‘A ____.”’

'

a a

Mentor’s creditors, insureds and reinsureds, who are over-
whelmingly Americans located throughout the United States.
Creditors’ claims in the liquidation proceedings exceed $800
million.

The Respondents, defendants below, consist of (i) Mentor’s
corporate parents, Ocean Drilling & Exploration Company and
Mentor Holding Corporation, both Delaware Corporations
based in New Orleans, Louisiana, (ii) certain members of their
management, all Louisiana residents, and (iii) Pinnacle Rein-
surance Company Limited, a Bermuda Corporation.

The action was brought in the United States District Court
for the Eastern District of Louisiana, the residence of ten of the
eleven Respondents. Federal jurisdiction was premised on
RICO.' The Amended Complaint also asserted pendent counts
sounding in tort. A jury trial was timely demanded. The East-
ern District of Louisiana was the only court which had personal
jurisdiction over all of the Respondents and subject matter
jurisdiction over all of the claims asserted.

The Amended Complaint charged that the Respondents vio-
lated RICO by concocting in Louisiana and carrying out from
Louisiana a schemie to falsify the publicly disseminated finan-
cial statements of Mentor from 1982 through March 1985. The
method of the dissemination of those financial statements was
the use of the United States mails throughout the United States
in large part from Louisiana. As a result of the fraudulent
scheme, the bankrupt Mentor was damaged in an amount now
estimated to be $200 million, an amount which a successful
RICO judgment would have trebled.

Seventeen months after commencement of the action all
Respondents moved for forum non conveniens dismissal. This
motion was made notwithstanding the fact that New Orleans
was the home forum of all the Respondents save one. If success-
ful, they voiunteered to the District Court to submit to personal
jurisdiction in Bermuda and to appear as witnesses at trial in
Bermuda. In their briefs in support of the motion, they claimed

l Diversity was lacking because of the presence of one alien defen-
dant.

4

to need the trial testimony of certain individuals who resided in
Bermuda, and certain documents located there.

The motion was granted, Kempe v. Ocean Drilling & Explo-
ration Co., 683 F. Supp. 1064 (E.D. La. 1988), in large part
because of what the District Court perceived to be the ‘‘drain
on the court’s time and energy’’ presented by the case (id. at
1070) (C-12). According to the Opinion of the District Court,
the forum non conveniens doctrine applies across the board to
all federal actions regardless of their jurisdictional bases (id. at
1067) (C-6), and, inferentially, even if the grant of a forum
motion resulted in the destruction of the very federal claims
which created jurisdiction in the Court to begin with.

in purporting to balance the respective public interest fac-
tors, the District Court expressly refused to consider that a
granting of the motion meant the destruction of the federal
claims involved (id. at 1071) (C-13). It made no attempt to
weigh the importance or materiality of the alleged unavailable
evidence, or for that matter its actual unavailability. Rather, it
merely added up what it characterized as ‘‘hypothetical wit-
nesses’? who resided in Bermuda, and concluded that this
‘hypothetical list’? outnumbered the number of witnesses resid-
ing in Louisiana absent the Respondents themselves and their
employees. (id. at 1069) (C-10). In addition to not considering
the Respondents and their employees in the process of compar-
ing the number of ‘‘hypothetical witnesses’’ here and abroad,
the District Court ignored the large number of American wit-
nesses outside the State of Louisiana (id.) (C-10), witnesses sub-
ject to the subpoena power of the Court (18 U.S.C. § 1965(c)).
It did not find, and on this record could not find, that the bal-
ancing of the competing private and public interest factors
weighed heavily in favor of dismissal.

The Fifth Circuit affirmed. In essence, it held that a dismissal
and resulting destruction of a RICO action on forum non con-
veniens grounds is an appropriate exercise of discretion when
the plaintiff will not be deprived of ‘‘any remedy’’ in the-for-
eign forum (A-13). Here, according to the rationale of the Fifth
Circuit, since the Petitioners also had pendent claims, some or

5

all of which could be heard in Bermuda, the destruction of their
federal RICO claims would not deprive them of ‘‘any remedy’’
abroad and therefore the District Court’s exercise of its discre-
tion would not be disturbed (A-13).

The Fifth Circuit in this case also rejected the contention that
a forum non conveniens destruction of the RICO claims would
be contrary to the national RICO enforcement policies intended
by Congress when it enacted the statute by observing that those
policies were directed at members of ‘‘organized crime’’ (A-10,
A-11), a status not enjoyed by the Respondents. =

REASONS FOR GRANTING THE WRIT

I.

This Court in an Exercise of Its Supervisory Role Should Define

the Extent of a District Court’s Jurisdiction to Procedurally

Destroy Federal RICO Substantive Rights Through a Forum
Non Conveniens Dismissal

The RICO statute, and its special venue provision, grants to
the victim of the conduct it proscribes a right to seek treble
damages in federal court. The import of the Fifth Circuit’s
Opinion, however, is that regardless of what the RICO legisla-
tion and its special venue provision provide the right of a treble
damage federal cause of action may be withdrawn at the discre-
tion of a District Couft if some other foreign remedy exists
abroad. That the conduct complained of was committed in the
United States by Americans to the ultimate detriment of other
Americans in violation of American law is immaterial.

Thus, the issues this case presents go to the heart of the dis-
cretionary powers, or jurisdiction, of a District Court under
Article 3, Section 2 of the United States Constitution, and the
exercise of those powers in apparent contravention of an Act of
Congress.

6

A. At Issue is the Extent of a Federal Court’s Discretionary
Power to Ignore a Congressional Mandate

In creating a federal right to pursue a treble damage recovery
in federal court, the RICO legislation had a much broader pur-
pose than merely defining the rights and obligations of individ-
ual litigants. RICO is an effort to set forth a national policy to
deal with a national threat to the commerce of the United
States. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 498, 105
S. Ct. 3275, 3287-88, 87 L. Ed. 2d 346, 350 (1985). Private tre-
ble damage actions under the RICO statute are an integral part
of Congress’ RICO enforcement scheme. 473 U.S. at 493-94,
105 S. Ct. at 3283, 87 L. Ed. 2d at 357; Agency Holding Corp.
v. Malley-Duff & Assoc., 483 U.S. 143, 151, 107 S. Ct. 2759,
2764, 97 L. Ed. 2d 121, 130 (1987); 116 Cong. Rec. 35191,
35193, 35197, 35200, 35215, 35216, 35295, 35313, 35319,
35321, 35328 (1970).

Where a foreign court will not carry out that national policy,
a forum dismissal in favor of such a foreign forum destroys the
statutory purpose and the remedial measures created by Con-
gress to effectuate that purpose. This is the case regardless of
what remedies, if any, are available in the foreign forum.
Whether a District Court has such jurisdictional power is a
highy important federal question which should be addressed
and determined by this Court,

B. Forum Non Conveniens Has No Application in the Analo-
gous Context of the Antitrust Laws

Historically, the power to dismiss on forum non conveniens
grounds had been limited to cases in admiralty or equity where
jurisdiction in general was traditionally discretionary. See, Bau-
cher, The Inconvenient Federal Forum, 60 Harv. L. Rev. 908,
925 (1947). In Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S. Ct.
839, 91 L. Ed. 1055 (1947) (‘‘Gilbert’’), this Court approved a
dismissal on forum grounds in an action at law, Justices Black
and Rutledge dissenting on that ground. However, Gilbert was
concerned with a diversity case in which venue was based on the

general venue statute. Still to be directly addressed was whether
!

7 sons

the forum dismissal doctrine would apply to causes of action
created by federal statutes which, like RICO, contain special
venue provisions as a matter of right. Before Gilbert, this Court
had held that a forum non conveniens dismissal was inapplica-
ble to such an action. Baltimore & Ohio Raiiroad Co. v. Kep-
ner, 314 U.S. 44, 54, 62S. Ct. 6, 10, 86 L. Ed. 28, 33-34 (1941)
(‘‘A privilege of venue, granted by the legislative body which
created the right of action, cannot be frustrated for reasons of
convenience or expense’’). See also, Miles v. Illinois C.R. Co.,
315 U.S. 698, 701, 62 S. Ct. 827, 829, 86 L. Ed. 1129, 1132
(1942).?

- A year after Gilbert, in United States v. National City Lines,
Inc., 334 U.S. 573, 68 S. Ct. 1169, 92 L. Ed. 1584 (1948)
(‘‘National City Lines’’), this Court resolved that issue.
National City Lines presented the issue of whether the forum
doctrine applied to an antitrust suit which the defendants were
attempting to have transferred from the Southern District of
California to the Northern District of Illinois. The case was
decided before the enactment of 28 U.S.C. § 1404 (1982). As
such, at the time, the forum dismissal doctrine applied to cases
where the proposed transferee forum was either domestic or
foreign. In reversing the dismissal, this Court held that since the
special venue provisions of the Clayton Act were a matter of
right, the District Courts had no power to apply forum non
conveniens to such lawsuits. 334 U.S. at 596-97. As this Court
stated:

Whatever may be the scope of its previous application or
of its appropriate extension, the doctrine. . . [forum non
conveniens] . . . is not a piinciple of universal applicabil-
ity, as those decisions uniformly recognize. At least one
invariable, limiting principle may be stated. It is that
whenever Congress has vested courts with jurisdiction to

3. The only other Circuit decision to address the issue in a RICO con-
text was the Second Circuit’s opinion in Transunion Corp. v. PepsiCo,
Inc., 811 F.2d 127 (2d Cir. 1987). However, in that case, the plaintiff
apparently had failed to state a valid RICO claim. 811 F.2d at 129; 640
F. Supp. 1211, 1213-14 (S.D.N.Y. 1986).

8

hear and determine causes and has invested complaining
litigants with a right of choice among them which is incon-
sistent with the exercise by those courts of discretionary
power to defeat the choice so made, the doctrine can have
no effect. (/d.)

RICO’s special venue provisions were adopted from the anti-
trust laws. The RICO and antitrust provisions are almost identi-
cal. Compare 18 U.S.C § 1965(a)({1982) (a civil action ‘‘may be
instituted’’ in the district court of any district in which the
defendant ‘‘resides, is found, has an agent, or transacts his
affairs’) with 15 U.S.C. § 15(a) (1982) (an antitrust plaintiff
may bring suit ‘‘in any district court of the United States in the
district in which the defendant resides or is found or has an
agent. . . .’’) and 15 U.S.C. § 22 (1982) (‘‘Any suit, action, or
proceeding under the antitrust laws against a corporation may
be brought not only in the judicial district whereof it is an
inhabitant, but also in any district wherein it may be found or
transacts business’’); see H.R. Rep. No. 1549, 91st Cong., 2d
Sess. 58 (1970). Both enactments look to and rely on the federal
judicial system to carry out and effectuate their respective
national policies. Thus, if a District Court does not have the
power to dismiss antitrust claims on forum grounds, by what
right does it assume the power to dismiss RICO claims on that
procedural ground? This is particularly the case where, as here,
and unlike in National City Lines, the effect of the dismissal is
the destruction of those federal claims.

C. Similar RICO Jurisdictional Issues Are Now Before This
Court

On May 30, 1989, this Court granted certiorari in the case of
Tafflin v. Levitt, 865 F.2d 595 (4th Cir. 1989), to consider, inter
alia, whether a District Court may abstain from hearing a fed-
eral RICO case in favor of a State Court. See 109 S. Ct. 2428,
104 L. Ed. 2d 985, 57 U.S.L.W. 3779 (1989). In determining
that issue, this Court will of necessity consider the intent of
Congress concerning the role of the federal judicial system in
enforcing the policies of the RICO legislation, and whether a

9

District Court has the discretionary power to refuse to hear
such a case. These same issues are involved in this case. Indeed,
here they are more dramatically raised. In Tafflin, the dismissal
did not have the effect of the destruction of the federal claim
which the District Court in that case intended would be heard
by the State Court to which it deferred. 865 F.2d at 599-600.
Here, in sharp contrast, the discretionary dismissal terminated
those federal claims. ! ’

D. The Decision Below is Apparently Inconsistent with Deci-
sions of this Court

The decision below appears to be inconsistent with the princi-
ples of prior and subsequent decisions of this Court, in particu-
lar National City Lines, supra. Moreover, the Fifth Circuit’s
refusal here to enforce the national policies of the RICO Act, in
part, because the defendants are not members of ‘‘organized
crime’’ appears to be inconsistent with this Court’s more recent
holding in H.J. Inc. v. Northwestern Bell Telephone Co., 109
S. Ct. 2893, 2905, 57 U.S.L.W. 4951, 4955 (June 26, 1989, No.
87-1252). It is also inconsistent with prior holdings of this Court
to the same effect. See, e.g., Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 495, 499, 105 S. Ct. 3275, 3284, 3286, 87 L. Ed.
2d 346, 359, 360 (1985) (‘‘Section 1962 in turn makes it unlaw-
ful for ‘any person’—not just mobsters—to use money derived
from a pattern of racketeering activity . . .’’).

The decision below further ignores this Court’s holding in
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S. Ct. 839, 843,
91 L. Ed. 1055, 1062 (1947), that the forum doctrine is to be
employed only in the ‘‘rare’’ and ‘‘exceptional’’ case, and that
the balancing of interests must be ‘‘strongly in favor’’ of dis-
missal before a plaintiff’s choice of forum is disturbed, a fact
which neither the Fifth Circuit nor the District Court found. It
also runs afoul of this Court’s recent holding in Van Cauwen-
berghe v. Biard, 108 S. Ct. 1945, 100 L. Ed. 2d 517 (1988), that
a District Court in deciding a forum motion should ‘‘determine
whether the pieces of evidence cited by the parties are critical,
or even relevant... .’’ 108 S. Ct. at 1953, 100 L. Ed. 2d at

10

528-29. Despite the destruction of the federal RICO claims
involved, here no such attempt was made (see p. 4, supra).

E. In the Interests of Other Litigants and the Lower Courts,
the Issue Should be Resolved Now

As this Court is well aware, RICO has not exactly been
greeted by the lower courts with open arms. This negative judi-
cial reaction has manifested itself in various judge-made road
blocks on the ability to pursue RICO actions, restrictions not
intended by Congress nor contained in the statute itself. See,
e.g., H.J. Inc. v. Northwestern Bell Telephone Co., 109 S. Ct.
2893, 57 U.S.L.W. 4951 (June 26, 1989, No. 87-1252) (rejecting
multiple scheme requirement and rejecting organized crime
nexus requirement); Sedima, S.P.R.L. v. Imrex Co., 473 U.S.
479, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985) (rejecting prior
conviction requirement and rejecting racketeering injury
requirement); United States v. Turkette, 452 U.S. 576, 101 S.
Ct. 2524, 69 L. Ed. 2d 246 (1981) (rejecting legitimate enterprise
requirement).

This case represents the latest manifestation of this phenome-
non. Unless this Court resolves the issue one way or the other,
pending and future RICO cases involving some international
connection undoubtedly will be met by forum non conveniens
dismissal requests, knee jerk or otherwise. The lure of the effect
of a successful forum motion, i.e., elimination of the RICO
claim and its treble damage recovery regardless of its merit, vir-
tually guarantees such repeated use. These motions, in turn,
will be decided upon the now leading authority in the area, the
decision of the Fifth Circuit in this action, a decision which
Petitioners respectfully submit is simply incorrect.

Il.

This Court Should Decide if the Forum Doctrine May be
Employed to Destroy a Constitutional Right to a Jury Trial

The Seventh Amendment to the United States Constitution
provides in unambiguous terms:

**In suits at common law, where the value in controversy
shall exceed twenty dollars, the right of trial by jury shall
be preserved... .’’ (emphasis added) /

This Constitutional mandate has been implemented by Rule
38(a) of the Federal Rules of Civil Procedure which provides
that the Seventh Amendment right to a jury trial ‘‘shall be pre-
served to the parties inviolate.’’ As this Court held in Beacon
Theaters v. Westover, 359 U.S. 500, 508, 79 S. Ct. 948, 955, 3
L. Ed. 2d 988, 996 (1959), a District Court cannot through a
purported exercise of discretion destroy that right. Where that
right is at stake, discretion must yield.

To the extent, if any, the District Court had any discretionary
power to dismiss this case, that discretionary power should have
yielded to the plaintiff’s right to a jury trial. This is not a case
with only a tangential connection to the United States. This case
involved violations of federal law based on conduct committed
in the United States by Americans to the ultimate detriment of
Americans.

No doubt because historically the doctrine of forum non con-
veniens was applicable in cases in equity where no right of a
jury trial existed (see p. 6, supra), this basic Constitutional issue
has never been addressed by this Court, nor to our knowledge
by any of the Circuit Courts of Appeal, albeit various’ Courts
have observed that a lack of a jury trial in a foreign forum does
not render that forum unfair for purposes of a forum non con-
veniens analysis. See, e.g., Piper Aircraft Co. v. Reyno, 454
U.S. 235, 252 n.18, 102 S. Ct. 252, 264 n.18, 70 L. Ed. 2d 419,
433 n.18 (1981); In re Union Carbide Corp. Gas Plant Disaster,
634 F. Supp. 842, 851 (S.D.N.Y. 1986), aff’d, 809 F.2d 195 (2d
Cir.), cert. denied, 108 S. Ct. 199, 98 L. Ed. 2d 150 (1987).

12

While the issue was not raised below, because of its Constitu-
tional importance and its pure legal nature the issue should nev-
ertheless be considered by this Court. See Mitchell v. Forsyth,
472 U.S. 511, 530, 105 S. Ct. 2806, 2817, 86 L. Ed. 2d 411, 427-
28 (1985); Nixon v. Fitzgerald, 457 U.S. 731, 743 n.23, 102 S.
Ct. 2690, 2698 n.23, 73 L. Ed. 2d 349, 359 n.23 (1982).

13

CONCLUSION

This case raises important federal jurisdictional and proce-
dural issues warranting an exercise of this Court’s federal judi-
cial supervisory role. It presents in sharp focus the issue of the
extent of a District Court’s procedural powers under the Con-
stitution to destroy federal substantive rights created by Con-
gress, as well as the Constitutional right to a jury trial. Lastly,
in a number of respects the decision of the Fifth Circuit appears
to be contrary to principles set forth in the decisions of this
Court referred to above.

For all of these reasons, this Court should issue a Writ of
Certiorari to the Court of Appeals for the Fifth Circuit to
review the questions presented.

Dated: August 18, 1989

Respectfully submitted,

Michael J. Murphy
Counsel of Record
LORD DAy & LORD, BARRETT SMITH
26 Broadway
New York, New York 10004
(212) 422-8180

Laurie E. Foster
Jonathan Glasser

Of Counsel

APPENDICES

A-1l
Appendix A

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT

—
No. 88-3763
June 23, 1989
—

Charles W. KEMPE, Jr. and Michael J. Arnold, in Their Capac-
ity as Joint Liquidators of Mentor Insurance Limited,

Plaintiffs-Appellants-
Cross-A ppellees,

—_—V.—
OCEAN DRILLING & EXPLORATION COMPANY, et al.,
Defendants-A ppellees,

—and—

Pinnacle Reinsurance Company, Limited,

Defendant-Appelice-
Cross-A ppellant.

+>

Joint liquidators appointed to wind up the affairs of an insol-
vent insurer in Bermuda brought suit against the insurer’s par-
ent corporation and a reinsurer. The United States District
Court for the Eastern District of Louisiana, Marcel Livaudais,
Jr., J., 683 F.Supp. 1064, granted a motion to dismiss on forum
nonconveniens grounds. Appeal and cross appeal were taken.
The Court of Appeals, Aldisert, Circuit Judge, sitting by desig-
nation, held that: (1) the fact that a Racketeer Influenced and
Corrupt Organizations Act claim would not be recognized in
Bermuda did not prevent the application of the forum non con-
veniens doctrine; (2) courts in Bermuda would provide an ade-

A-2

quate remedy, even without the RICO claim; and (3) the private
interest factors involving the litigants and public interest factors
favored resolution of the dispute in Bermuda, rather than in
Louisiana.

Affirmed.
—

Appeals from the United States District Court for the Eastern
District of Louisiana.

>

Before ALDISERT*, REAVLEY and HIGGINBOTHAM, Circuit
Judges.

+

ALDISERT, Circuit Judge.

The major question for decision is whether a count alleging a
violation of the Racketeer Influenced and Corrupt Organiza-
tions Act, 18 U.S.C. §§ 1961-1968, (RICO) immunizes a civil
complaint from the doctrine of forum non conveniens. Should
we decide there is no immunity, we are then required to deter-
mine whether the district court abused its discretion in conclud-
ing that Bermuda was the proper forum for this case after
analyzing the private interest factors affecting the litigants’ con-
venience and the public interest factors affecting the forum’s
convenience as set forth in Gulf Oil Corp. v. Gilbert, 330 U.S.
501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) and re-affirmed in
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 70
L.Ed.2d 419 (1981). We conclude that the civil RICO complaint
at issue here is not immune from the application of the doctrine
and that the district court did not abuse its discretion in apply-
ing the doctrine.

I.

Charles W. Kempe, Jr., and Michael J. Arnold, plaintiffs
below, prosecute this appeal as joint liquidators appointed by

* Circuit Judge of the Third Circuit, sitting by designation.

ee ee

a es

A-3

the Bermuda Supreme Court to wind up the affairs of bankrupt
Mentor Insurance Limited (Mentor), a company organized by
special act of the Bermuda Parliament and located throughout
its existence in Bermuda. Kempe is a Bermudian and a principal
partner in one of Bermuda’s largest accounting firms. Amold is
an accountant-liquidator, resident in England. Mentor’s parent
organization is Mentor Holding Corporation (MHC) which, in
turn, is owned by Ocean Drilling & Exploration Co. (ODE-
CO). MHC is a Delaware corporation with its principal place of
business in New Orleans, Louisiana. ODECO is also a Dela-
ware corporation with its principal place of business in New
Orleans. Pinnacle Reinsurance Co., Ltd., is a reinsurance cor-
poration having contractual relations with insurance company
clients, including Mentor. Pinnacle is organized under the laws
of Bermuda and has its principal place of business in Bermuda.

Mentor was formed in Bermuda by ODECO as a captive
insurer to insure ODECO’s oil drilling rigs. Mentor’s business
later expanded to insurance areas unrelated to ODECO or the
oil business. By the 1980’s, over 90% of Mentor’s business was
unrelated to ODECO.

In 1982, 1983, and 1984, Mentor entered into reinsurance
agreements with Pinnacle. Reinsurance typically allows an
insurance writing company to assign its risk to a reinsurance
company in whole or in part. This has the effect of reducing its
reportable loss reserves, tnereby increasing its reported net
worth. Once insurance risks are assumed by the reinsurer, the
reinsured need not report these risks as liabilities on its balance
sheet. However, certain accounting standards must be met in
order for there to be a bona fide transfer of risk.

The liquidators allege that Mentor’s agreements with Pinna-
cle, its reinsurance company, did not meet these standards.
They contend that for each of the years in question, a secret side
letter agreement provided that, notwithstanding the ostensible
reinsurance agreement, Pinnacle’s obligations would be limited
to one fixed amount, unrelated to actual insurance losses, and
payable only at the end of ten years. These secret side agree-
ments, the liquidators allege, turned the agreements into financ-
ing arrangements ineligible to justify the balance sheet relief
that Mentor claimed. The liquidators also allege that Mentor’s

A-4

financial statements were intentionally falsified by ODECO and
its management from at least 1982 to March 1985. They con-
tend that the financial reports materially overstated Mentor’s
financial health and concealed its dire financial condition by,
inter alia, failing to disclose and properly account for the true
nature of purported reinsurance agreements between Mentor
and Pinnacle.

Although ODECO asserts that it did not discover these agree-
ments until 1985, the liquidators allege that ODECO was a
party to them all along. In its defense, ODECO contends that
there was no falsification, that it relied on the work of Mentor’s
Bermudian accountants and auditors, and that the agreements
were in accordance with generally accepted accounting princi-
ples in Bermuda.

Mentor went into involuntary liquidation in June 1985. The
majority of Mentor’s creditors are in the United States. On
March 3, 1986, the liquidators brought this action in federal
district court against: ODECO, MHC, Pinnacle, and eight indi-
vidual officer/directors of Mentor and/or MHC and ODECO.
The complaint alleged violations of federal mail and wire fraud
statutes comprising elements of RICO violations. In addition,
plaintiffs asserted pendent state law claims for breach of fiduci-
ary duty, fraudulent trading, and negligent misrepresentation.
The merits of these arguments are not before us. The nature of
appellants contentions, however, is relevant to the issue of the
degree of relief available in Bermuda courts.

In granting appellees’ motion to dismiss the complaint on the
grounds of forum non conveniens, the district court found that
Bermuda was an available and adequate forum, and that both
private and public interest factors favored litigation in Ber-
muda. 683 F.Supp. 1064. Defendant Pinnacle had filed a
motion to dismiss for lack of in personam jurisdiction over Pin-
nacle. The district court denied Pinnacle’s motion and its
motion for reconsideration. The liquidator plaintiffs appeal the
court’s dismissal of the case on forum non conveniens grounds.
Defendant Pinnacle cross-appeals the court’s denial of its
motion to dismiss for lack of personal jurisdiction. In the view
we take of this case, Pinnacle’s cross-appeal is moot.

A-5

II.

Jurisdiction was proper in the trial court based on 28 U.S.C.
§§ 1331 & 1332. Jurisdiction on appeal is proper based on 28
U.S.C. § 1291. Appeal was timely filed under Rule 4(a),
Fed.R.App.P.

The trial court’s decision on the application of the forum non
conveniens doctrine may be reversed only where there has been
a clear abuse of discretion. Piper Aircraft v. Reyno, 454 U.S.
235, 257, 102 S.Ct. 252, 266, 70 L.Ed.2d 419 (1981); In re Air
Crash Disaster Near New Orleans, Louisiana on July 9, 1982,
821 F.2d 1147 (Sth Cir.1987), vacated and remanded on other
grounds sub nom. Pan American World Airways, Inc. v.
tepeey ..... V.3. , 109 S.Ct. 1928, 104 L.Ed.2d 400
(1989).

Ill.

Our analysis begins with the: balancing test set forth in Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055
(1947), and its companion case, Koster v. Lumbermens Mutual
Casualty Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947).
Although ‘‘a plaintiff’s choice of forum should rarely be dis-
turbed,’’ Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 102
S.Ct. 252, 258, 70 L.Ed.2d 419 (1981), a federal court may
resist imposition upon its jurisdiction even when jurisdiction is
authorized by the letter of a general venue statute. Gulf Oil, 330
U.S. at 507, 67 S.Ct. at 842. When an alternative forum has
jurisdiction to hear the case, and when trial in the plaintiff’s
chosen forum would ‘‘establish . . . oppressiveness and vexa-
tion toa defendant. . . out of all proportion to plaintiff’s con-
venience,’” or when the ‘‘chosen forum [is] inappropriate
because of considerations affecting the court’s own administra-
tive and legal problems,’’ the court may, in the exercise of its
sound discretion, dismiss the case. Koster, 330 U.S. at 524, 67
S.Ct. at 832. To guide trial court discretion, the Court has sug-
gested a balancing of ‘‘private in est factors’’ affecting the
convenience of the litigants, anu ‘‘public interest factors’’

A-6

affecting the convenience of the forum. See Gulf Oil, 330 U.S.
at 508-09, 67 S.Ct. at 843.

Factors pertaining to the private interests of the litigants
include the ‘‘relative [e]ase of access to sources of proof; avail-
ability of compulsory process for attendance of unwilling, and
thé cost of obtaining attendance of willing, witnesses; possibil-
ity of view of premises, if view would be appropriate to the
action; and all other practical problems that make trial of a case
easy, expeditious and inexpensive.’’ Jd. at 508, 67 S.Ct. at 843.
Public interest factors bearing on the question include adminis-
trative difficulties flowing from court congestion, the ‘‘local
interest in having localized controversies decided at home,’’ the
interest in ‘‘having the trial of a diversity case in a forum that is
at home with the state law that must govern the case,’’ the
avoidance of unnecessary problems in conflict of laws, or in the
application of foreign law, and the unfairness of burdening citi-
zens in an unrelated forum with jury duty. Jd. at 508-09, 67
S.Ct. at 843.-

The teachings of Gulf Oil and Koster were reaffirmed in

- Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 70
L.Ed.2d 419 (1981). But Reyno added still another dimension
to the test. We emphasize this dimension now because it is
extremely important in light of the major argument posed by
the appellants here. Reyno specifically held that plaintiffs may
not defend a motion to dismiss on the ground of forum non
conveniens merely by showing that the substantive law that
would be applied in the alternative forum is less favorable to the
plaintiffs than that of the chosen forum. Jd. at 247, 102 S.Ct. at
261. In Reyno, the Court ruled that the possibility of an unfa-
vorable change in the law is merely a factor to be considered,
but that ordinarily this factor should not be given conclusive or
even substantial weight in the forum inquiry. Jd. The Court
carefully explained that giving such a consideration inordinate
weight ‘‘is not only inconsistent with the purpose of the forum
non conveniens doctrine, but also poses substantial practical
problems.’’ Jd. at 251, 102 S.Ct. at 263.

In Reyno, a small commercial aircraft crashed in the Scottish
highlands. The plaintiffs sued the aircraft manufacturer and the
company that made the propellers in a United States federal dis-

A-7

trict court claiming negligence and strict liability. The district
court dismissed the complaint on the basis of forum non conve-
niens after utilizing the Gulf Oil balancing test and determining
that Scotland was the proper forum. The Court of Appeals for
the Third Circuit reversed and improperly held that such a dis-
missal was inappropriate where the law in the alternative forum
was less favorable to the plaintiff’s claim. Reversing that ruling,
the Supreme Court noted that the Third Circuit’s decision was
contrary to ‘‘every Federal Court of Appeals that ha[d] consid-
ered this question after [Gulf Oil v.] Gilbert.’ Id. at 250, 102
S.Ct. at 263.

The court was careful to indicate that in certain cases—where
the alternative forum could not provide any remedy
whatsoever—the unfavorable change in the law could be given
substantial weight:

We do not hold that the possibility of an unfavorable
change in law should never be a relevant consideration in a
forum non conveniens inquiry. Of course, if the remedy
provided by the alternative forum is so clearly inadequate
or unsatisfactory that it is no remedy at all, the unfavor-
able change in law may be given substantial weight; the
district court may conclude that dismissal would not be in
the interests of justice. In these cases, however, the reme-
dies that would be provided by the Scottish courts do not
fall within this category. Although the relatives of the
decedents may not be able to rely on a strict liability the-
ory, and although their potential damages award may be
smaller, there is no danger that they will be deprived of
any remedy or treated unfairly.

Id. at 254-255, 102 S.Ct. at 265-266 (footnotes omitted).

This court has found a similar exception to the general rule to
be appropriate in cases involving alleged violations of United
States antitrust laws. In Jndustrial Development Corp. v. Mit-
sui & Co., 671 F.2d 876 (Sth Cir. 1982), vacated and remanded
on other grounds, 460 U.S. 1007, 103 S.Ct. 1244, 75 L.Ed.2d
475 (1983), we held that a complaint seeking relief solely under
the federal antitrust laws, sections 1 and 2 of the Sherman Act,
could not be dismissed under the doctrine of forum non conve-

A-8

niens. We stated there that to determine Indonesia to be the
proper forum for that case wouid, in effect, ‘‘deprive[ ] [plain-
tiffs] of any remedy.’’ Reyno, 454 U.S. at 255, 102 S.Ct. at 265.

[W]e have little doubt that the Indonesian courts would
quite properly refuse to entertain plaintiffs’ Sherman Act
claim. A dismissal for forum non conveniens, then, would
be the functional equivalent of a decision that defendants’
acts are beyond the reach of the Sherman Act.

Mitsui, 671 F.2d at 891.

The crucial point succinctly stated in Mitsui was later ampli-
fied in Laker Airways Ltd. v. Pan American World Airways,
568 F.Supp. 811, 818 (D.D.C.1983):

Antitrust cases are unlike litigation involving contracts,
torts, or other matters recognized in some form in every
nation. A plaintiff who seeks relief by means of one of
these types of actions may appropriately be sent to the
courts of another nation where presumably he will be
granted, at least approximately, what he is due. But the
antitrust laws of the United States embody a specific con-
gressional purpose to encourage the bringing of private
claims in the American courts in order that the national
policy against monopoly may be vindicated. To relegate a
plaintiff to the courts of a nation which does not recognize
these antitrust principles would be to defeat this congres-
sional direction by means of 2 wholly inappropriate proce-
dural device.

The foregoing relevant legal precepts having been stated, we
now turn to the appellants’ specific contentions before us.

IV.

It seems to be conceded that Bermuda would not recognize a
civil RICO claim. From this basic premise, appellants argue
that dismissal in favor of Bermuda would deprive them of a pri-
vate suit which was conceived by Congress as part of a national
scheme of enforcement to protect United States commerce. See

A-9

Mitsui, 671 F.2d at 891 n. 20 (distinguishing civil obligations
owed by one party to another in a tort case from private anti-
trust suit ‘‘conceived as part of the scheme of enforcement of
statutes enacted to protect United States commerce.’’) Appel-
lants argue that to apply the doctrine of forum non conveniens
to a RICO action would frustrate Congress’ intent to give
RICO plaintiffs a right of access to a federal forum to seek
redress.

To add sinew to this theory, appellants submit an argument
in the form of the familiar categorical syllogism. Such an argu-
ment consists of comparing two terms—the minor with the
major—by means of a middle term, to reach a conclusion. The
major premise here is that, under the law of this Circuit, federal
antitrust claims are immune from the doctrine of forum non
conveniens. The minor premise is that RICO claims are, by
analogy, the same as antitrust claims. Therefore, appellants
conclude, RICO claims should also be immune.

Before us, as in the district court, the appeilees challenge the
factual basis of the minor premise, thereby vitiating the conclu-
sion urged upon us by the liquidators.

A.

To support their minor premise contention, appellants make
detailed reference to RICO’s legislative history. They note Con-
gress’ intent that ‘‘those who have been wronged by organized

crime should at least be given access to a legal remedy. . . . It
is the intent of this body . . . to see that innocent parties. . .
have a right to obtain proper redress. .. .’’ Shearson/

American Express, Inc. v. McMahon, 482 U.S. 220, 241, 107
S.Ct. 2332, 2345, 96 L.Ed.2d 185 (1987) (citing legislative his-
tory of RICO treble-damages provision). Appellants further
contend that the RICO ver.ue provision, 18 U.S.C. § 1965(a),
was intended to be the same as, that in the Clayton Act. Br. for
appellants at 28 (citing H.Rep.No. 1549, 91st Cong., 2d Sess.
58 (1970)), U.S. Code Cong. & Admin.News 1970, 4007.
From these excerpts of legislative history, the appellants then
apply the method of analogy. They argue that, as in the case of

A-10

the federal antitrust statutes, RICO is an effort to set forth a
national policy to dea] with a national threat to the commerce
of the United States, and that private suits under the RICO stat-
ute are an integral part of Congress’ RICO enforcement
scheme. Agency Holding Corp. v. Malley-Duff & Assoc., 483
U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987); Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87
L.Ed.2d 346 (1985). Appellants further contend that the treble
damages provision of RICO, in addition to being remedial, was
meant to be a deterrent and penalty. See Sedima, 473 U.S. at
498-99, 105 S.Ct. at 3285-86. From that they ask us to draw the
conclusion that relegating a private RICO plaintiff to a foreign
court, im addition to eliminating the remedy, negates the pen-
alty and deterrent imposed by Congress and frustrates the over-
all national enforcement scheme of RICO legislation. Finally,
to drive home their point, they suggest that these are exactly the
results this Court sought to avoid in Mitsui by rejecting applica-
tion of the forum non conveniens doctrine in the antitrust con-
text.

B.

Appellees respond, noting that the Supreme Court’s recent
analysis in Shearson/American Express, exposes some of the
weaknesses of this argument. There the Court compared RICO
violations with antitrust violations, but emphasized that
RICO’s drafters sought to provide vigorous incentives for
plaintiffs to pursue RICO claims that would advance ‘‘society’s
Sight against organized crime,’’ Id., 482 U.S. at 241, 107 S.Ct.
at 2345 (emphasis added). The Court noted, however, that:

. . in fact RICO actions are seldom asserted ‘‘against
the archetypal, intimidating mobster.’’. . . (‘‘[O]nly 9%
of all civil RICO cases have involved allegations of crimi-
nal activity normally associated with professional crimi-
nals’). . . . The private attorney general role for the
typical RICO piaintiff is simply less plausible than it is for
the typical antitrust plaintiff. . . .

Id., at 242, 107 S.Ct. at 2345 (citations omitted).

| | |

A-ll

Moreover, the only other Court of Appeals to consider
immunizing RICO cases from the forum non conveniens doc-
trine has met the appellants’ argument head on and rejected it.
In Transunion Corp. v. Pepsi Co., Inc., 811 F.2d 127, 130 (2d
Cir. 1987) (per curiam), the court noted:

A review of the legislative history of RICO, however,
discloses no mandate that the doctrine of forum non con-
veniens should not apply. . . .

We are satisfied that appellants’ legislative history argument
proves too much. It has not persuaded us that Congress
intended that forum non conveniens would not apply to civil
RICO actions. Our independent review of the legislative history
does not disclose that Congress intended directly or by fair
inference to suggest that RICO would be ‘.. nune from the doc-
trine’s operation. In rejecting this conten ‘ion as the basis of our
decision, we reach the same result as the Court of Appeals for
the Second Circuit, albeit for reasons somewhat at odds with
theirs. In Transunion, the appellants had argued that RICO’s
broad venue provision mirrored that in the Clayton Act. They
then pointed to the Supreme Court’s opinion in United States v.
National City. Lines, Inc., 334 U.S. 573, 68 S.Ct. 1169, 92
L.Ed. 1584 (1948) (National City Lines I), holding that the spe-
cial venue provision in the Clayton Act deprived a court of dis-
cretion to dismiss a Sherman Act suit on forum non conveniens
grounds. The Second Circuit rejected appellants’ argument,
stating that National City Lines was effectively overruled by the
codification of the forum non conveniens doctrine in 28 U.S.C.
section 1404. We think that statement sweeps too broadly.

Section 1404 authorizes the transfer of a case from one fed-
eral district court to another federal district court; it cannot
apply in cases where the forum non conveniens doctrine is used
to dismiss a case that must then be brought in a foreign court of
law. Therefore, section 1404 only overruled the holding of
National City Lines I to the extent that it applied to cases that
could be transferred from one federal district court to another.

In light of the new congressional mandate regarding trans-
fers, the Supreme Court allowed the same case to be transferred

A-12

to another district court on later petition. United States v.
National City Lines, Inc., 337 U.S. 78, 69 S.Ct. 955, 93 L.Ed.
1226 (1949) (National City Lines II). In that later case, the
Court did not indicate what result it would reach in a case where
application of the forum non conveniens doctrine would lead to
dismissal of a Sherman Act case in favor of a foreign forum.
Such a situation is not covered by section 1404, which preserves
the action, albeit in a different federal venue. Thus, to the
extent that the Second Circuit relied on section 1404’s overrul-
ing of National City Lines I to dismiss its own RICO case in
favor of a forum in the Philippines, this court has not accepted
its reasoning. In Mitsui, speaking through Judge Reavley, we
said:

Defendants argue that the Supreme Court ‘‘effectively
nullified’’ its holding in National City Lines by its second
decision in that case, [National City Lines IT|. Shortly
after the Court’s first decision, Congress, in an unrelated
move, enac’:d 28 U.S.C. § 1404(a), which authorizes the
district courts to ‘‘transfer any civil action to any other
district or division’’ ‘‘[f]or the convenience of parties and
witnesses.’’ In National City Lines II, the Court, relying
on the legislative history and the broad term ‘‘any civil
action,’’ concluded that the transfer statute applied to
antitrust actions. 337 U.S. at 80-84, 69 S.Ct. at 956-58.
The Court in no way questioned its earlier holding con-
cerning the effect of [the venue provision of the Clayton
Act] on common law forum non conveniens. Since defen-
dants can point to no statute authorizing dismissal of an
action on forum non conveniens grounds, National City
Lines IT, does not help them in any way.

671 F.2d at 890-91 n. 18. Having said this, we proceeded to
deny dismissal on a very narrow and discrete ground—the
impossibility of plaintiffs obtaining any remedy at all for their
antitrust-based claims in Indonesia. We would not dismiss the
case under forum non conveniens becaus? such action would
have been ‘‘the functional equivalent of a decision that defen-
dants’ acts are beyond the reach of the Sherman Act.’’ Jd. at
891.

Accordingly, we must now turn to what we believe to be the
critical issue in this case: Without the RICO claim, will the
plaintiffs ‘‘be deprived of any remedy”’ on the basis of the fac-
tual predicate of their complaint? The important inquiry here is
whether the facts more resemble the products liability facts of
Reyno or the antitrust facts of Mitsui. If they come within the
rule of Reyno, appellants attempt to prove RICO immunity
must fail; if they come within the rule of Mitsui, they will pre-
vail.

To ask this question is to answer it. The district court specifi-
cally found that even without the RICO count, Bermuda per-
mits litigation in its courts of the fraud, negligent
misrepresentation, breach of fiduciary duty, and piercing the
corporate veil counts of the liquidators’ complaint. Bermuda
courts are totally competent to adjudge the claims that defen-
dants falsified Mentor’s financial statements, that the state-
ments materially overstated Mentor’s financial health and
concealed its dire financial condition, and that they failed to
disclose and properly account for the true nature of the pur-
ported reinsurance agreements between Mentor and
Pinnacle }.

Moreover, the district court found that the Bermuda trial
courts have the power to “‘see to it that defendants make good
whatever harm they did.’’ Dist. ct. opin. at 1071. Accordingly,
we conclude that ‘‘although [the liquidators’] potential damage
award may be smaller, there is no danger they will be deprived
of any remedy or treated unfairly.’’ Reyno, 454 U.S. at 255,
102 S.Ct. at 265. This case is a far cry from Mitsui, where the
complaint was solely bottomed on Sections 1 and 2 of the Sher-
man Act. In that case, dismissal in favor of a forum in Indone-
sia would have been the functional ecuivalent of denying the
plaintiffs any remedy whatsoever.

We conclude, therefore, that the material facts here more
closely resemble the facts in Reyno and should be subject to the
same analysis employed there.

A-14
V.

We are satisfied that the district court correctly utilized the
forum non conveniens analysis set out by the Supreme Court in
Gulf Oil Corp. v. Gilbert and Piper v. Reyno, and by this court
in In re Air Crash Disaster Near New Orleans, Louisiana, 821
F.2d 1147 (Sth Cir.1987), vacated and remanded on other
grounds sub nom. Pan American World Airways, Inc. v.
EOORs icin Se , 109 S.Ct. 1928, 104 L.Ed.2d 400
(1989). This analysis requires a district court to first decide
whether an available and adequate forum exists. ‘‘A foreign
forum is available when the entire case and all parties can come
within the jurisdiction of that forum. . . . A foreign forum is
adequate when the parties will not be deprived of all remedies
or treated unfairly . . . even though they may not enjoy the
same benefits as they might receive in an American court.” Air
Crash Disaster, 821 F.2d at 1165. If the court decides that the
foreign forum is both available and adequate, it must then con-
sider the parties’ private interests, allowing for the relevant def-
erence given the plaintiff’s choice of foruin, and factors of the
public interest, such as burdens upon the court, public interest
in the dispute, and questions of foreign law. Jd. at 1165-66. The
court should consider the specific factors set forth in part II of
this opinion and enumerated in Gulf Oil and Koster.

The district court correctly determined that Bermuda is both
an available and adequate forum. Although the RICO cause of
action is not available in Bermuda, a forum is inadequate only
where it would afford a plaintiff no remedy at all. Air Crash
Disaster, 821 F.2d at 1165. The district court found that plain-
tiffs would be able to bring all their other causes of action
before the courts in Bermuda. The court then carefully exam-
ined the private interests of the litigants. All defendants have
agreed to stipulate to jurisdiction in Bermuda. Mentor is a Ber-
muda corporation heavily regulated by Bermuda law. The
agreements at issue were between Mentor and Pinnacle, also a
Bermuda company with offices located only in Bermuda. The
agreements provide that disputes are to be arbitrated in Ber-
muda, and provide for the application of the laws of Bermuda
to the agreements.

A-15

Both plaintiffs and defendants have identified numerous
individuals and corporations residing in Bermuda whose testi-
mony at trial will be significant. The district court pointed out
that plaintiffs have identified as potential witnesses only three
non-party individuals within the Louisiana court’s subpoena
power. The court also made dismissal subject to a six-month
stay to permit discovery in the United States.

Finally, plaintiffs in this case are a Bermudian and an
Englishman, representing a Bermuda corporation. Both this
court and the Supreme Court have recognized that a foreign
plaintiff’s choice of an American forum deserves less deference
than an American citizen’s selection of his home forum. Revno,
454 U.S. at 255-56, 102 S.Ct. at 265-66; Air Crash Disaster, 821
F.2d at 1164.

The district court also analyzed the public interest factors
here, including the ‘‘drain on the court’s time and energy which
trial in New Orleans will entail.’’ Dist. ct. opin. at 1070. With
regard to the local interest in having localized controversies
resolved-at home, the court explained that Bermuda is an inter-
national insurance center and has a strong interest in regulating
its industry so as to retain credibility abroad. Jd. at 1070. In
contrast, the defendants’ residence in Louisiana does not repre-
sent any broader interests of the state in this action. Jd. at 1071.
Finally, the court found that trial of this matter will entail the
application of Bermudian law to at least two of the causes of
action. Jd. at 1072.

We conclude that the district court did not abuse its discre-
tion in deciding that both private interest factors affecting the
convenience of the litigants and the public interest factors
affecting the convenience of the forum favor resolution of this
lawsuit in Bermuda rather than in Louisiana.

VI.

We have considered all other contentions raised by the appel-
lants. The judgment of the district court is

AFFIRMED.

= B-1
Appendix B

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

—

No. 88-3763

—

CHARLES W. KEMPE, JR. and MICHAEL J. ARNOLD, in Their
Capacity as Joint Liquidators of Mentor Insurance Limited,

Plaintiffs-Appellants
Cross-A ppellees,
versus

OCEAN DRILLING & EXPLORATION COMPANY, ET AL.,

Defendants-A ppellees,
and

PINNACLE REINSURANCE COMPANY, LIMITED,

Defendant-Appellee
Cross-A ppellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF LOUISIANA

+

ON SUGGESTION FOR REHEARING EN BANC

(Opinion June 23; 5 Cir., 1989, _._ = ~F.2d ___)
(July 24, 1989)

oe

B-2

Before
ALDISERT*, REAVLEY and HIGGINBOTHAM,
Circuit Judges.

—

PER CURIAM:

(~) Treating the suggestion for rehearing en banc as a petition
for panel rehearing, it is ordered that the petition for panel
rehearing is DENIED. No member of the panel nor Judge in reg-
ular active service of this Court having requested that the Court
be polled on rehearing en banc (Federal Rules of Appellate Pro-
cedure and Local Rule 35), the suggestion for Rehearing En
Banc is DENIED.~

( ) Treating the suggestion for rehearing en banc as a petition
for panel rehearing, the petition for panel rehearing is DENIED.
The judges in regular active service of this Court having been
polled at the request of one of said judges and a majority of
said judges not having voted in favor of it (Federal Rules of
Appellate Procedure and Local Rule 35), the suggestion for
Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

THOMAS M. REAVLEY
United States Circuit Judge

CLERK’S NOTE:
SEE FRAP AND LOCAL
RULES 41 FOR STAY OF
THE MANDATE

* Circuit Judge of the Third Circuit, sitting by designation.

C-1

—

Appendix C

UNITED STATES DISTRICT COURT
E.D. LOUISIANA

+

Nos. 86-0352, 86-0891, 86-3535
April 15, 1988

i

CHARLES W. KEMPE, JrR., et al.,
ws

OCEAN DRILLING & EXPLORATION COMPANY, et al.

a

In action involving insurer in involuntary liquidation in Ber-
muda, its parent and its alleged alter ego, the District Court,
Livaudais, J., on defendants’ motion to dismiss on ground of
forum non conveniens, held that Bermuda was a more conven-
ient forum.

Motion granted.

*

Phelps, Dunbar, Marks, Claverie & Sims, Harry S. Rosen-
berg & James P. Reid, Harry S. Redmon, Jr. T.A., Richard N.
Dicharry, New Orleans, La.; Davis, Polk & Wardwell, Paul R.
Koepff, New York City, of counsel, David M. Spector, Ronald
A. Jacks, Steven R. Gilford, James K. Meguerian, Bettina
Getz, Mayer, Brown & Platt, Chicago, Ill., for Ocean Drilling
& Exploration Co., and Murphy Oil Corp. Mentor Holding
Co., Robert J. Sweeney, Hugh J. Kelly, James L. Kilpatrick
and Tucker H. Couvillon, in No. 86-0352.

McGlinchey, Stafford, Mintz, Cellini, & Lang, Dermot S.
McGlinchey, T.A., B. Franklin Martin, II], Maureen O’Con-

C-2

nor Sullivan, New Orleans, La., for National Union Fire Ins.
Co. of Pittsburgh Pa., in No. 86-0352.

Lemle, Kelleher, Kohimeyer, Dennery, Hunley, Moss & Fri-
lot, George A. Frilot, III, Roger A. Stetter, New Orleans, La.,
for William L. Colson, Ronald W. Herman, Clovis H. Steib,
Odie F. Vaughan, in No. 86-0352.

Breazeale, Sachse & Wilson, Gordon A. Pugh, T.A., Claude
F. Reynaud, Jr., Baton Rouge, La., for J. Douglas Higley, in
No. 86-0352.

Montgomery, Barnett, Brown, Read, Hammond & Mintz,
Stanley McDermott, III, New Orleans, La., Lord, Day & Lord,
Michael J. Murphy, T.A., Laurie E. Foster, New York City,
for plaintiffs, in No. 86-0891.

Phelps Dunbar Marks Claverie & Sims, Harry A. Rosenberg,
T.A., & Harry S. Redmon, New Orleans, La., for Ocean Drill-
ing & Exploration Co., Mentor Holding Corp., William L.
Colson, Clovis H. Steib, Ronald W. Herman, Odie F.
Vaughan, James L. Kilpatrick, Hugh J. Kelly, Herman S. Kel-
ley, in No. 86-0891.

Sessions, Fishman, Rosenson, Boisfontaine, Nathan &
Winn, Robert E. Barkley, Jr., T.A., New Orleans, La., for Pin-
nacle Reinsurance Co., in No. 86-0891.

Breazeale, Sachse & Wilson, Murphy J. Foster, III, Gordon
A. Pugh, T.A., Baton Rouge, La., for J. Douglas Higley, in
No. 86-0891.

Isham, Lincoln & Beale, Ronald A. Jacks, David M. Spector,
Steven R. Gilford/Paul W. Schroeder, Mayer, Brown & Platt,
Chicago, Ill., for Ocean Drilling & Exploration Co., Mentor
Holding Corp., Hugh J. Kelly, James L. Kilpatrick, in No. 86-
0891.

Lemle, Kelleher, Kohlmeyer, Dennery, Hunley, Moss & Fri-
lot, George A. Frilot, III, Roger A. Stetter, Eades L. Hogue,
New Orleans, La., for Odie F. Vaughan, William L. Colson,
Herman S. Kelley, Ronald W. Herman, Clovis H. Steib, in No.
86-0891.

D’Amato & Lynch, Timothy Butler, New York City,
McGlinchey, Stafford, Mintz, Cellini & Lang, Dermot S.
McGlinchey, T.A., B. Franklin Martin, II], Maureen O’Con-

C-3

nor Sullivan, Anthony Rollo, New Orleans, La., for plaintiff in
No. 86-3535.

Davis, Polk & Wardwell, New York City, for Murphy Oil
Corp., Ocean Drilling & Exploration Co., Defendant Class
Consisting of the Board of Directors Ocean Drilling & Explora-
tion Co. and Mentor Ins. Ltd. (Bermuda), in No. 86-3535.

Phelps, Dunbar, Marks, Claverie & Sims, Harry A. Rosen-
berg, T.A., Harry S. Redmon, Jr., New Orleans, La., for Mur-
phy Oil Corp., Ocean Drilling & Exploration Co., Mentor
Holding Corp., Robert J. Sweeney, Hugh J. Kelly, James J.
Kilpatrick, Tucker H. Couvillon, in No. 86-3535.

J

MEMORANDUM OPINION AND ORDER

LIVAUDAIS, District Judge:

The voluminous record in this case is the result of a veri-
table deluge of filings, a hurricane of paperwork. .. .

Tucker v. Summers, 784 F.2d 654, 655 (Sth Cir. 1986)

Compared to these storms, death is but a qualm, Hell
somewhat lightsome, and the Bermudas calm.

John Donne, ‘‘The Storm’’

This matter is before the Court by way of four separate
motions: (1) the motion of defendants Ocean Drilling & Explo-
ration Company (‘‘ODECO’’), Mentor Holding Company
(‘‘MHC’’), Hugh J. Kelly and James L. Kilpatrick for a decla-
ration of applicable law; (2) the same defendants’ motion to
dismiss the complaint for failure to state a claim; (3) the motion
of all defendants to dismiss on the ground of forum non con-
veniens; and (4) the motion of defendant Pinnacle Reinsurance
Company, Ltd. (‘‘Pinnacle’’), made in the alternative to the
forum non conveniens motion, to certify for appeal the Court’s
previous order denying Pinnacle’s motion 19 dismiss for lack of
personal jurisdiction. Record Documents (‘‘R.D.’’) 127, 153.
These motions were argued on various dates, and all were taken
under submission on November 6, 1987. R.D. 224. For the rea-

C-4

sons that follow, we grant the third, and dismiss the first, sec-
ond, and fourth as moot.

Mentor is an insurance company incorporated under the laws
of Bermuda. It is totally owned by MHC, which is in turn a sub-
sidiary of ODECO. Mentor became the subject of an involun-
tary liquidation proceeding in Bermuda on June 6, 1985. The
complaint herein alleges that ODECO was the alter ego of Men-
tor and so controlled its affairs that it should be responsible for
Mentor’s entire net deficiency. The complaint further alleges
that Mentor’s financial statements for fiscal years 1982 and
1983 were false because they incorrectly reported two reinsur-
ance transactions between Mentor and Pinnacle (another Ber-
muda insurance company). As aileged in the complaint, those
financial reports materially overstated Mentor’s financial con-
dition.

It is the contention of the defendants that Bermuda is a more
convenient forum for the adjudication of the instant lawsuit.
Fortunately, district courts have been furnished abundant guid-
ance in resolving forum non conveniens motions, particularly
by Jn re Air Crash Disaster Near New Orleans, La., 821 F.2d
1147 (Sth Cir.1987) (en banc), petition for cert. filed, (U.S.
November 6, 1987) (No. 87-750) (‘‘Air Crash’’), which formu-
lated ‘‘the controlling procedure by which a district court
should apply the. . . principles of forum non conveniens.’’ Id.
at 1165.

Air Crash sets out a series of factors which the district court
should weigh in determining whether a proposed forum is avail-
able and adequate, and, if so, whether the private interests of
the litigants or public interests favor trial in the foreign forum.
While final determination of the convenience ve/ non of a par-
ticular forum is entrusted to the trial! court’s discretion, Air
Crash requires ‘‘an exercise in structured discretion’’ by careful
adherence to a step-by-step analysis and with the district court
setting out ‘‘its decision making process clearly and in sufficient
detail to permit [the Court of Appeals] adequately to review it,
either by giving written reasons or by dictating the reasons for
its decision into the record with the same degree of explicit-
ness.”’ Jd. at 1165; 1166 n. 32.

C-5

As already noted, we must first decide whether the proposed
alternate forum, Bermuda. is available and adequate. ‘‘A
forum is available when the entire case and all the parties can
come within the jurisdiction of that forum.”’ Jd. at 1165. It is
unquestioned that the plaintiffs, appointed by a Bermuda court
to wind up the affairs of Mentor, are subject to jurisdiction in
Bermuda. The Court further finds that all defendants in this
action have agreed to submit to jurisdiction in Bermuda and to
waive any defenses of laches or prescription. R.D. 217 at 2.

Plaintiffs contend, however that Bermuda is not an available
forum because National Union Fire Insurance Company of
Pittsburgh, Pa. (‘‘National Union’’) has not agreed to submit
to Bermuda jurisdiction.| We observe that National Union is
not a party to this litigation, but rather to Ocean Driiling &
Exploration Co., et al. v. National Union Fire Ins. Co. of Pitts-
burgh, Pa., et al., C.A. 86-352 and National Union Fire Ins.
Co. of Pittsburgh, Pa. v. Murphy Oil Corp., et al., C.A. 86-
3535, which two cases have been consolidated with the instant
matter for discovery purposes only, the Court having expressly
rejected a motion for consolidation for trial as well. Ocean
Drilling & Exploration Co., et al. v. National Union, C.A. 86-
352, R.D. 51. Moreover, National Union has agreed to a stay of
the aforementioned proceedings pending resolution of this liti-
gation in Bermuda, R.D. 217 at 2-3, the outcome of which
could assertedly moot the two National Union cases. Accord-
ingly, we find that Bermuda is an available forum. Cf. Syndi-
cate 420 at Lloyd’s London v. Early Am. Ins., 796 F.2d 821,
830 (Sth Cir. 1986) (‘‘the defendant’s submission to the jurisdic-
tion of an alternative forum renders that forum available for
purposes of forum non conveniens analysis.’’)

A forum is adequate ‘‘when the parties will not be deprived
of all remedies or treated unfairly . . . even though they may

1 Plaintiffs also appear to contend that Bermuda is not an ‘‘available’’
forum because (a) their RICO causes of action will vanish in Bermuda and
(b) because defendants contend that the complaint otherwise fails under Ber-
muda law to state any cause of action. Plaintiffs believe, therefore, that ‘‘the
entire case’’ Air Crash, 821 F.2d at 1165, cannot come before a Bermuda
court. We regard these arguments as an attack upon the adequacy of the
forum, and therefore treat them under that rubric.

C6

not enjoy the same benefits as they might receive in an Ameri-
can court.’’ Air Crash, 821 F.2d at 1165. Plaintiffs’ first
amended complaint advances as theories of recovery RICO,
common law fraud, negligent misrepresentation, piercing the
corporate veil, and breach of fiduciary duty. R.D. 139.

Plaintiffs contend Bermuda is an inadequate forum because:
(1) their RICO claim cannot be heard in Bermuda (indeed,
plaintiffs go so far as to claim that the doctrine of forum non
conveniens is not applicable to RICO suits); (2) the complaint is
otherwise read by the defendants as failing to state a claim
under Bermuda law; and (3) plaintiffs would be prejudiced
because Bermuda court rules provide more restrictive discovery
than that available in the United States.

We find these arguments unpersuasive. First, the Fifth Cir-
cuit has recently held that ‘‘The [forum non conveniens] princi-
ples enunciated in [Piper Aircraft Co. v.] Reyno, [454 U.S. 235,
102 S.Ct. 252, 70 L.Ed.2d 419 (1981)] apply in a// cases regard-
less of their jurisdictional bases or subject matter.’ Air Crash,
821 F.2d at 1163 (original emphasis). This language, together
with the Second Circuit’s express ruling in Transunion Corp. v.
PepsiCo, Inc., 811 F.2d 127 (2d Cir. 1987) that RICO suits are
subject to forum non conveniens dismissal, strongly indicates
that Industrial Investment Development Corp. v. Mitsui & Co.,
671 F.2d 876 (Sth Cir. 1982), which held the doctrine of forum
non conveniens categorically inapplicable to antitrust actions,
and upon which decision plaintiffs heavily rely, ought at best be
confined to its facts.

Second, neither the unavailability of RICO nor any alleged
deficiencies in the complaint are sufficient to render Bermuda
an inadequate forum. A fofum is inadequate only where it
would afford a plaintiff no remedy at all, Air Crash, 821 F.2d
at 1165, as where the forum does not ‘‘permit litigation of the
subject matter of the dispute.’’ Reyno, 454 U.S. at 252 n. 22,
102 S.Ct. at 265 n. 22. There is no doubt that Bermuda ‘‘per-
mits litigation’’ of the subject matter of the non-RICO counts
of the complaints herein, namely common law fraud, negligent
misrepresentation, breach of fiduciary duty, and piercing the
corporate veil. Therefore, for the purposes of forum non con-

cr

veniens analysis, plaintiffs will not be deprived of ‘‘all reme-
dies’’ by trial in Bermuda.

Third, Bermuda’s allegedly more restrictive discovery prac-
tices will impose no greater burden on plaintiffs than they will
on defendants, so plaintiffs cannot complain of being treated
unfairly, and, in any case, unless Bermuda discovery is so
unfair as to constitute a complete denial of due process, it
should receive little if any consideration in forum non conve-
niens analysis. See, Reyno, 454 U.S. at 252 &n. 18, 102 S.Ct. at
264 & n. 18. Finally, any possible prejudice to plaintiffs will be
all but eliminated by making dismissal subject to a six month
stay to allow the parties to complete discovery im the United
States before proceeding to Bermuda. Cf. Coakes v. Arabian
American Oil Co., 831 F.2d 572, 573-4 (Sth Cir.1987) (forum
non conveniens dismissal approved where conditioned on 120
day stay to afford plaintiffs compulsory process and protection
of district court to.depose U.S. witnesses).

We therefore conclude that Bermuda is an available and ade-
quate forum, and we turn to a consideration of the private
interests of the parties. Air Crash, 821 F.2d at 1162.

First, as to the relative ease of access to sources of proof,
defendants contend that the great bulk of documentary evi-
dence is in Bermuda. That evidence assertedly comprises: rec-
ords of Mentor; records in the Bermuda office of Arthur Young
& Company pertaining to Walton Insurance Company, Belve-
dere Insurance Company, Ltd., 1.C. Industries Insurance Com-
pany, Ltd.; and the records of Tate and Lyle Reinsurance
Company, Ltd. Such evidence is necessary, contend defen-
dants, to show the propriety of the accounting treatment
accorded the reinsurance agreements between Pinnacle and
Mentor, which have been attacked by the plaintiffs herein.
Although it appears that defendants already have access to
Mentor’s records (as well as to records pertaining to Mentor
from Pete Marwick & Mitchell in Bermuda), yet we find that
the defendants’ professed need for documents from Bermuda
third parties tips this factor in favor of trial in Bermuda.

The second private interest factor is the availability of com-
pulsory process for the attendance of unwilling witnesses and
the cost of obtaining the attendance of willing witnesses. Ini-

~

_—

C-8

tially, we acknowledge that the moving defendants bear a bur-
den of persuasion ruaning to all elements of the forum non
conveniens analysis and must provide enough information to
enable the court to balance the parties’ interests. Air Crash, 821
F.2d at 1164-65. Nevertheless, it is not necessary for defendants
to give ‘‘a detailed development of [their] entire case,’’ id. at
1165 n. 28; it is not necessary that affidavits support the
motion, Camejo v. Ocean Drilling & Exploration, 838 F.2d
1374, 1379-80 (Sth Cir.1988); and, according to the circum-
stances of the case, it is not even necessary to identify the wit-
nesses defendants plan to use (let alone prove that they are
unwilling to attend trial in plaintiffs’ selected forum), Reyno,
454 U.S. at 258, 102 S.Ct. at 267. We therefore reject plaintiffs’
repeated assertion that the defendants’ motion must fail
because they ‘‘have not proffered a single affidavit demonstrat-
ing either the materiality of [defendants’ proposed] witnesses or
their unwillingness to come to New Orieans to testify.’’ R.D.
214 at 39. Rather, it is the Bermuda residence of large numbers
of witnesses, including those whom defendants and plaintiffs
desire to use, which makes Bermuda the more convenient
forum, as will appear more fully from the following analysis.

Defendants have identified numerous individuals and corpo-
rations, all residents of Bermuda, whose live testimony at trial
is claimed to be important to defendants’ case. These are
Robert Steinhoff and Kenneth O’Neill, auditors of Mentor at
Peat, Marwick & Mitchell’s Bermuda office (defendants expect
to use other Peat Bermuda personnel as well), R.D. Spurling,
Bermuda counsel to Walton Insurance Company, whose testi-
mony is sought concerning the propriety of the accounting
treatment accorded the reincurance agreement between Walton
and Pinnacle, an agreement defendants contend is virtually
identical to the one between Mentor and Pinnacle; representa-
tives of Arthur Young & Company in Bermuda, who conducted
the audits of Walton Insurance Company (plaintiffs, though
partners in Arthur Young in Bermuda, apparently did not con-
duct those audits, and hence cannot testify about them before
this or any other court); John Kemp, Bryan Martin and Allen
Dunkle of Finance and Risk Services, Ltd., who assisted the
management of Mentor’s run off and whose testimony will be

C-9

sought concerning the issues of damages and Mentor’s net defi-
ciencies; James Pearman and John Boden, formerly resident
directors of Mentor, whose testimony is sought by defendants
because plaintiffs support an important facet of their case—
viz., that Mentor was eniirely controlled by ODECO from New
Orleans—by reference to two letters from these individuals;
Angus Hyslop, Mentor’s former controller, whose testimony is
sought concerning Mentor’s true financial picture and corpo-
rate independence ve/ non from ODECO (we note that although
Mr. Hyslop, in the National Union suits, is a member of the
defendant class of all officers and directors of Mentor, yet
those suits are not, contrary to plaintiffs’ assertion, consoli-
dated with this action for trial, Ocean Drilling & Exploration
Co., et al. v. National Union, C.A. 86-352, R.D. 51); and vari-
ous Bermuda government officials, including Mentor’s official
receiver, the Bermuda Minister of Finance, and officers of
insurance trade associations, whose testimony will be sought
concerning the ordinary relations between captive Bermuda
insurance companies and their corporate parents (although
plaintiffs contend such witnesses may claim official immunity
and refuse to testify, it appears that such a privilege can and
might be waived, R.D. 219 supporting affidavit of Michael
Melo at 10). Additionally, it should be noted that plaintiffs
desire to call as witnesses at trial representatives of Heddington
Insurance in Bermuda.

Counterbalancing these Bermuda witnesses, plaintiffs have
identified as potential witnesses three non-party individuals
within this court’s trial subpoena power: J. Gordon Reisch,
James Browning, and William Hoffman, all residents of New
Orleans and all employed at pertinent times by Peat, Marwick
& Mitchell in New Orleans. Additionally, plaintiffs seek to use
the testimony of Stephen Cosse, ODECO’s general counsel,
other unidentified employees of ODECO, and defendant
Douglas Higley. However, defendants Higley and ODECO
have agreed to submit to Bermuda jurisdiction, and ODECO
has further agreed to produce not only Mr. Cosse but any of its
employees for trial testimony in Bermuda.

C-10

Plaintiffs have also named a great number of witnesses whose
testimony they seek, but witnesses who are beyond the trial sub-
poena power of this court. These witnesses are: personnel from
Peat, Marwick & Mitchell’s U.S. offices, including James
Faber (New York), Daniel Howell (resident of Arizona and
New Jersey), and Richard Hirschman (New York); Herman
Schwinde, former president of Mentor (New York); John
Swift, Mentor’s in-house actuary (Ohio); Mentor’s and ODE-
CO’s various New York bankers; representatives of Murphy Oil
Corporation in Arkansas; Michael Quinones, Mentor’s under-
writer (Connecticut); members of the law firm of Wilson,
Elsen, Edelman and Dicker, which issued an opinion letter con-
cerning the Pinnacle reinsurance agreement (New York); repre-
sentatives of National Union, a Pennsylvania corporation with
its principal place of business in New York City; and represent-
atives of American Re. & Metropolitan Re., American insur-
ance companies allegedly involved, like Heddington Insurance
in Bermuda, as ‘‘fronts for the reinsurance by Mentor of risks
underwritten by Mentor Insurance Company (U.K.), Ltd., for
which relevant witnesses . . . will be found in the United
States,’’ R.D. 214 at 38, although plaintiffs do not specify
where.

We hold that the foregoing hypothetical ‘‘witness lists’’
establish that considerably more live trial testimony will be
available in Bermuda than in New Orleans, where it appears
that relatively few witnesses reside. The parties will still be able
to depose the large number of witnesses residing elsewhere in
the United States, since the Court will subject its order of dis-
missal] to a six month stay to allow discovery. (Plaintiffs assure
us that ‘‘once this motion faucet is turned off, the parties could
complete discovery in six months,’’ R.D. 214 at 53.) See Coakes
v. Arabian American Oil Co., 831 F.2d at 573-74. As the over-
whelming number of these witnesses reside in and around New
York, we further hold that Bermuda is closer and more conven-
ient forum than New Orleans, should any of them be willing to
testify at trial. This last holding resolves in favor of trial in Ber-
muda the third private interest factor, which is ‘‘all other prac-
tical problems that make trial of a case easy, expeditious and
inexpensive.’’ Air Crash, 821 F.2d at 1162.

C-11

We conclude that the fourth private interest factor, the pos-
siblity of view of the premises, is not relevant to this action.

The fifth private interest factor is the enforceability of a
judgment if one is obtained. The U.S. defendants have stipu-
lated that any final judgment obtained by plaintiffs in Bermuda
shall be accorded full faith and credit ‘‘in any United States
District Court in which plaintiffs seek to enforce said judg-
ment.’’ R.D. 217 at 2. We therefore find that a judgment will be
enforceable against these defendants whether plaintiffs procure
it in this forum or in Bermuda.

The last private interest factor is the timeliness of the motion.
Although plaintiffs deal with this factor as if it were a threshold
issue and a potential bar to the instant motion, the Fifth Circuit
in Air Crash expressly indicates that timeliness should be con-
sidered as but one of the private interest factors. Air Crash, 821
F.2d at 1165 & n. 30. Plaintiffs regard the instant motion as
untimely because the motion was not made until a year and a
half after suit was filed even though the defendants all the while
purportedly knew of the factors they now claim support the
motion. Plaintiffs contend that this untimeliness caused them-
selves and the court to incur costs and inconveniences, largely
as a result of this motion’s being urged after, rather than
before, defendant Higley’s motion to disqualify counsel, Pin-
nacle’s motion to dismiss for lack of personal jurisdicti:»i
(which were previously ruled upon, R.D. 78, R.D. 127 and
R.D. 153) and the motions to dismiss for failure to state a
claim, for a declaration of applicable lav, and to certify (whic*,
are disposed of herein). We find, however, that in light of the
magnitude and complexity of this case, the delay of a year and
half for filing the motion does not demonstrate that defendants
were dilatory, particularly since defendants’ work on their
motion for declaration of applicable law provided important
information for the choice of law and foreign law issues that
must be considered among public interest factors in their forum
non conveniens motion. We also note that this case has not
reached the discovery stage, and we infer that dismissal at this
juncture will not prejudice the parties’ ability to prepare for
trial. We therefore conclude that the private interest factors
together weigh in favor of trial in Bermuda.

C-12

‘*As no one set of factors is conclusive, we also address the
factors of public interest.’’ Gonzalez v. Naviera Neptuno A.A..,
832 F.2d 876, 879 (Sth Cir.1987). First, with respect to adminis-
’ trative difficulties flowing from court congestion, we find that
the record already amassed and the proceedings already con-
ducted grimly foreshadow the drain on the court’s time and
energy which trial in New Orleans will entail. Moreover, agree-
ment to stay the two related National Union suits pending reso-
jution of this case in Bermuda will remove a not inconsiderable
burden from this court’s docket, which relief, according to the
outcome in Bermuda, may be more than temporary. R.D. 217.

The second public interest factor is the local interest in having
localized controversies resolved at home. The alleged injury
herein occurred to a Bermuda corporation whose affairs are
being wound up under the laws of Bermuda, with any recovery
going to the estate in receivership. It further appears that Ber-
muda has the third largest reinsurance market in the world; the
regulation of insurance reflects Bermuda’s interest in maintain-
ing its credibility as an international insurance center. R.D. 195
Exhibit 3B at 3-8. More particularly, these regulations required
of Mentor annual audits, and the propriety of these audits as
reflected in Mentor’s financial statements for the fiscal years
1982 and 1983 is at the very heart of this lawsuit. We find that it
follows ineluctably that with respect to the accounting practices
challenged by plaintiffs in this suit, Bermuda has an interest
dwarfing any this forum might have (which largely consists in
the Louisiana residence of most of the defendants). Bermuda
expressed its particular interest in this case in 1985, when, at the
urging of the Bermuda Underwriters Association, the Govern-
ment intervened to thwart ODECO’s attempt to remove Men-
tor’s records from Bermuda to Louisiana. R.D. 195 at 18 &
Exhibit 9.

Nevertheless, plaintiffs, for several reasons, believe Louisi-
ana has an interest in this litigation which would warrant retain-
ing jurisdiction. First, plaintiffs argue that in rejecting
Pinnacle’s earlier motions to dismiss for lack of personal juris-
diction, the Court has already found this forum to have an
interest in this litigation. Plaintiffs rely on the following lan-
guage from the Court’s opinion: ‘‘where most of the defen-

C-13

dants are residents of Louisiana, and where plaintiffs’ RICO
causes of action constitute a strong interest in having the suit
entertained in this forum.’’ R.D. 153 at 5.

Plaintiffs have miscontrued this language, which was explic-
itly an application of Asahi Metal Industry Co., Ltd. v. Supe-
rior Court of California, Etc., U.S. , 107 S.Ct. 1026,
94 L.Ed.2d 92 (1987) which set this test to determine whether
the exercise of personal jurisdiction in a particular case passed
constitutional muster: ‘‘A court must consider the burden on
the defendant, the interests of the forum state, and the plain-
tiff’s interest in obtaining relief.’’ Jd. 107 S.Ct. at 1034. Thus,
properly understood, we observed: ‘‘Most of the defendants are
residents of Louisiana [who at that time had not yet consented
to suit in Bermuda], and. . . plaintiffs’ RICO causes of action
constitute a strong interest [on the part of the plaintiffs in
obtaining relief] in having the suit entertained in this forum.”’
Although we were (and are) prepared to recognize that the Lou-
isiana residence of most of the defendants constitutes a Louisi-
ana interest in the exercise of jurisdiction, we cannot say that
the residence of the defendants is nearly enough to make Loui-
siana the more convenient forum. Cf. Reyno, 454-U.S. at 250,
102 S.Ct. at 263 (‘‘Jurisdiction and venue requirements are
often easily satisfied.’’) Of course, as noted above, we expressly
refuse to consider plaintiffs’ RICO causes of action as interests
of the forum for the purposes of forum non conveniens analy-
sis.

Second, according to piaintiffs, numerous fraudulent acts
occurred in Louisiana, including review and approval of drafts
of the Pinnacle agreement and side letters; and plaintiffs find in
Mentor’s 1983 financial statement, which was distributed from
New Orleans, an additional basis for Louisiana interest. We
observe that although Louisiana may have a generalized interest
in discouraging fraud, and even a more particularized interest
In discouraging fraud by Louisiana residents, ‘‘the incremental
deterrence that would be gained if this trial would be held in a
[Louisiana] court is likely to be insignificant. The [Louisiana]
intezest in this [issue] is simply not sufficient to justify the enor-
mous commitment of judicial time and resources that would
inevitably be required should the case be tried here.’’ Reyno,

C-14

454 U.S. at 260-61, 102 S.Ct. at 268. If the defendants have per-
petrated the fraudulent and negligent acts averred by the com-
plaint, we are confident that a Bermuda trial court will see to it
that defendants make good whatever harm they did, contrary to
plaintiffs repeated representations that defendants will go
unpunished if they are not tried here.

Third, plaintiffs claim to represent the interest of Mentor’s
creditors, many of whom are assertedly located in Louisiana,
although plaintiffs do not say how many, or what percentage of
all creditors. In any case, we find this alleged Louisiana interest
to be oblique and speculative, whereas Bermuda’s interests in
Mentor’s recovery are direct and concrete.

Fourth, according to plaintiffs, Louisiana has a regulatory
interest in this litigation because Mentor was subject to and
complied with various Louisiana laws and regulations when
Mentor wrote ‘‘Excess and Surplus’’ insurance in Louisiana.
However, whatever regulatory interests Louisiana may once
have had in Mentor is scarcely reflected in this litigation, which
arises out of no Louisiana risk insured by Mentor and involves
no claims by Louisiana insureds against Mentor. Moreover, as
defendants note, “he proposition that Louisiana has a ‘‘regula-
tory interest’’ in this litigation cannot be squared with the fact
that the Louisiana Insurance Department has closed its file on
Mentor. R.D. 194, Exhibit 13.

We therefore conclude that the second public interest factor,
having localized controversies resolved at home, favors trial in
Bermuda.

The last public interest factor is the avoidance of unnecessary
problems in conflicts of law, or in the application of foreign
law. As a general rule, ‘‘a choice of law analysis is only tangen-
tially relevant to. . . forum non conveniens analysis and. . .
a court need not perform a choice of law analysis before its
forum non conveniens analysis.’’ Camejo v. Ocean Drilling &
Exploration, 838 F.2d 1374, 1378 (Sth Cir. 1988). Indeed, rul-
ing on the pending choice of law motion would involve the
court in those very labors that the doctrine of forum non conve-
niens has repeatedly been recognized as meant to prevent.

Nevertheless, without fully disposing of defendants’ choice
of law motion, we find that trial of this matter will entail the

C-15

application of Bermuda law, at least to two of plaintiffs’ causes
of action.

As a preliminary matter, it is necessary to acknowledge the
court’s obligation to apply the choice of law principles of the
forum state, Louisiana, which has adopted the interests analysis
principles of the Restatement (Second) Conflict of Laws (1971)
(‘‘Restatement’’). Jagers v. Royal Indemnity Co., 276 So.2d
309 (La. 1973). There appears to be little doubt that a Louisiana
court would apply Bermuda law io Counts VI and VII of the
amended complaint, R.D. 139 (and we therefore find it unnec-
essary, for forum non conveniens analysis, to discuss the com-
plaint’s other counts). Count VI prays that Mentor’s corporate
existence be discarded and that ODECO be held liable for all of
Mentor’s net deficiency. R.D. 139 at 28-33. The Restatement at
section 307 provides that: ‘‘[t]he local law of the state of incor-
poration will be applied to determine the existence and extent of
a shareholder’s liability to the corporation for assessments or
contributions into its creditors for corporate debts.’’ This prin-
ciple is reiterated elsewhere: ‘‘Jnsofar as this protection is
accorded them in the state of incorporation, a state will usually
recognize the immunity of the shareholders of a foreign corpo-
ration from being sued as individuals on matters arising out of
the acts or omissions of the corporation and from having their
individual property made responsible for the obligations of the
corporation.’’ Restatement section 297, Comment (c) (empha-
sis added).

As plaintiffs insist, these rules contemplate the application of
interest analysis to piercing the corporate veil claims; neverthe-
less, for reasons stated elsewhere in this opinion, we find that
Bermuda’s interests in this litigation outweigh those of Louisi-
ana and compel application of Bermuda law to Count VI.
Moreover, it is not disputed herein that Mentor was incorpo-
rated in Bermuda, that its principal place of business was in
Bermuda, that it maintained offices and a staff in Bermuda,
and that its records were (and thanks to the intervention of Ber-
muda itself, are still) located in Bermuda. A Louisiana court
has applied the laws of the state of incorporation in similar cir-
cumstances. See, QuicKick, Inc. v. QuicKick International, 304
So.2d 402 (La.App. Ist Cir.1974) cert. denied, 305 So.2d 123

C-16

(La. 1974). The cases cited by plaintiffs to support the applica-
tion of Louisiana law involved corporations whose only contact
with the foreign state was ‘‘the naked fact of the corporation.”’
E.g., Mansfield Hardwood Lumber Co. v. Johnson, 268 F.2d
317 (Sth Cir.1959).

Count VII alleges breach of fiduciary duty by directors and
officers of Mentor, to which cause of action the principles of
the Restatement compels application of Bermuda law:

The local law of the state of incorporation will be applied
to determine the existence and extent of a director’s or
officer’s liability to the corporation, its creditors and
shareholders, except where, with respect to the particular
issue, some other state has a more significant relationship

. . to the parties and the transactidn, in which event the
local law of the other state will be applied. Restatement,
section 309.

it is certain that this section applies to Count VII: ‘‘Liability
will typically be imposed upon directors under the rule of this
‘section for such matters as the fraudulent or negligent mis-
management of the corporation’s affairs. . . .’’ Jd. Comment
(A). Moreover, the Restatement elsewhere confirms that courts
usually apply the laws of the state of incorporation in a suit
involving the ‘‘internal affairs of a corporation,’’ ‘‘internal
affairs’’ being defined as ‘‘the relations inter sese of the corpo-
ration, its stockholders, directors, officers, or agents.’’ Jd. sec-
tion 313 Comments (A), (E).

It has also been expressly held that a Louisiana court would
apply the laws of the state of incorporation to any cause of
action requiring a determination of ‘‘the relations inter sese of
the corporation’’ except ‘‘where the only contact point with the
incorporating state is the naked fact of incorporation, and
where ail the other contact points . . . are found in another
jurisdiction.’ Glazer v. Glazer, 374 F.2d 390, 407 (Sth
Cir.1967) (quoting Monsfield Hardwood Lumber Co. v. John-
son, 268 F.2d at 321) (emphasis added). Such an exception does
not apply to Mentor, as far from ‘‘a// the other contact points’”’
are in Louisiana.

C-17

We therefore conclude that trial of this matter in Louisiana
will involve problems not only with conflicts of laws but also
with the application of Bermuda law.

We further conclude that the public interest factors as well as
thé private interest factors favor trial of this matter in Ber-
muda.

Accordingly, Ir Is ORDERED that the motion of defendants
for dismissal on the ground of forum non conveniens is hereby
GRANTED, subject to the following conditions:

(1) That this order of dismissal is subject to a stay of six
months, until October 14, 1988, to allow the parties to
complete discovery in this country;

(2) That defendants file in the record herein not later than
May 16, 1988 a stipulation that they will submit to the
jurisdiction of the courts of Bermuda in response to any
suit reasserting the plaintiffs’ claims as set forth in the
first amended complaint herein;

(3) That defendants file in the record herein not later than
May 16, 1988 a stipulation that in response to the plain-
tiffs’ claims as reasserted in the Bermuda courts they
waive all defenses based upon laches, any statute of limi-
tation or other timeliness defense, provided only that the
plaintiffs’ claims have been reasserted in Bermuda not
later than October 14, 1989;

(4) That all defendants file in the record herein not later than
May 16, 1988 a stipulation that in the event plaintiffs
should obtain a final judgment against defendants in the
courts of Bermuda which becomes subject to execution,
defendants agree that full faith and credit shall be
accorded said judgment in any United States District
Court in which plaintiffs seek to enforce said judgment:

(5) That defendants file in the record herein not later than
May 16, 1988 a stipulation that each defendant will give
evidence at trial and produce documents in its possession,
custody and control in accordance with the rules of the
Supreme Court of Bermuda, 1952, or as they may subse-
quently be amended, as if each defendant were a resident

C-18

of Bermuda and the documents (and, in the case of cor-
porate defendants, employees) were located in Bermuda,

(6) That defendants file not later than October 14, 1988 a
stipulation of dismissal, without prejudice, of all cross
claims, which cross claims may be refiled in the courts of
Bermuda; and that defendant ODECO files a stipulation
of dismissal, without prejudice, of ODECO’s counter
claims against plaintiffs, which counter claims may be
refiled in the courts of Bermuda.

(7) That National Union Fire Insurance Company of Pitts-

' burgh, Pa. and all defendants who have appeared in Civil
Actions 86-352 and 86-3535, file in the records of those
proceedings not later than May 16, 1988 a joint stipula-
tion that all matters therein pending shall be stayed by
agreement until such time as (a) the courts of Bermuda
have rendered final judgment on the claims reasserted by
plaintiffs herein or (b) said claims have otherwise been
concluded.

Moreover, the Court being of the opinion that this order
granting the motion for dismissal on the basis of forum non
conveniens involves a controlling question of law as to which
there is substantial ground for difference of opinion and that an
immediate appeal from this order granting the motion for dis-
missal may materially advance the ultimate termination of the
litigation, see Air Crash, 821 F.2d at 1167 n. 34, accordingly, IT
Is ORDERED that the foregoing order is hereby CERTIFIED FOR
APPEAL pursuant to 28 U.S.C. § 1292(b).

IT Is FURTHER ORDERED that the motion of defendants for a
declaration of applicable law, the motion of defendants to dis-
miss for failure to state a claim, and the alternative motion of
Pinnacle to certify the Court’s previous denial of Pinnacle’s -
motion to dismiss for lack of personal jurisdiction, are all
hereby DISMISSED AS MOOT.

! nq . '

D-1
Appendix D

18 U.S.C. § 1964. Civil remedies

(a) The district courts of the United States shall have juris-
diction to prevent and restrain violations of section 1962 of this
chapter by issuing appropriate orders, including, but not lim-
~ ited to: ordering any person to divest himself of any interest,
direct or indirect, in any enterprise; imposing reasonable
restrictions on the future activities or investments of any per-
son, including, but not limited to, prohibiting any person from
engaging in the same type of endeavor as the enterprise engaged
in, the activities of which affect interstate or foreign commerce;
or ordering dissolution or reorganization of any enterprise,
making due provision for the rights of innocent persons.

(b) The Attorney General may institute proceedings under
this section. In any action brought by the United States under
this section, the court shall proceed as soon as practicable to the
hearing and determination thereof.

(c) Any person injured in his business or property by reason
of a violation of section 1962 of this chapter may sue therefor in ©
any appropriate United States district court and shall recover
threefold the damages he sustains and the cost of the suit,
including a reasonable attorney’s fee.

(d) A final judgment or decree rendered in favor of the
United States in any criminal proceeding brought by the United
States under this chapter shall estop the defendant from deny-
ing the essential allegations of the criminal offense in any subse-
quent civil proceeding brought by the United States.

18 U.S.C. § 1965. Venue and process

(a) Any civil action or proceeding under this chapter against
any person may be instituted in the district court of the United
States for any district in which such person resides, is found,
has an agent, or transacts his affairs.

(b) In any action under section 1964 of this chapter in any
district court of the United States in which it is shown that the
ends of justice require that other parties residing in any other

D-2

district be brought before the court, the court may cause such
parties to be summoned, and process for that purpose may be
served in any judicial district of the United States by the mar-
shal thereof.

(c) In any civil or criminal action or proceeding instituted by
the United States under this chapter in the district court of the
United States for any judicial district, subpoenas issued by such
court to compel the attendance of witnesses may be served in
any other judicial district, except that in any civil action or pro-
ceeding no such subpoena shall be issued for service upor any
individual who resides in another district at a place more than
one hundred miles from the place at which such court is held
without approval given by a judge of such court upon a show-
ing of good cause.

(d) All other process in any action or proceeding under this
chapter may be served on any person in any. judicial district in
which such person resides, is found, has an agent, or transacts
his affairs.

‘

- , ee i a ns ae a it a en a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_0184%3A1. Public record. Not legal advice.