RAYMOND P. MOORE, United States District Judge.
THIS MATTER comes before the Court on Defendant OAO Lukoil's ("Lukoil") Motion to Dismiss ("Motion") Plaintiff Archangel Diamond Corporation Liquidating Trust's ("Trust"), as successor-in-interest to Archangel Diamond Corporation ("Archangel"), Complaint pursuant to Fed. R.Civ.P. 12(b)(2), 12(b)(6), and under abstention theories. (ECF No. 29.) The Trust's action against Lukoil, a Russian corporation, arises from allegations that it joined and furthered an "illegal scheme" ("Illegal Scheme") by Arkhangelskgeoldobycha ("AGD"), a Russian corporation, to deprive Archangel, a Canadian corporation, of the benefits of a "rich" diamond discovery in Russia. The primary issues before the Court are whether this action should be dismissed for lack of personal jurisdiction and/or forum non conveniens.
The participants (AGD and Lukoil) in the alleged Illegal Scheme are Russian entities and the party injured (Archangel) was a Canadian corporation. Lukoil's conduct complained of, however, had connections not only to Russia but also to Colorado as that was where Archangel had its principal place of business and felt the effects of Lukoil's alleged conduct — the lulling of Archangel into investing more funds to potentially develop the diamond discovery and the bankruptcy of Archangel in Colorado. But, the Colorado state courts have already determined that they may not exercise specific or general personal jurisdiction over Lukoil, albeit under Colorado's long arm statute and the Fourteenth Amendment, on the claims now before this Court. And, after a careful consideration of the record and the applicable laws, the Court reaches the same conclusion as that of the Colorado state courts — that Lukoil is not subject to personal jurisdiction in Colorado — and, further, that this action should be dismissed based on forum non conveniens.
In Order to understand the claims against Lukoil, events which allegedly occurred
In 1993, Russia announced a competitive tender for the development of diamonds in the Archangelsk Region in Northern Russia. (ECF No. 1, Complaint, ¶¶ 27, 28.) Archangel's predecessor
In January 1994, Archangel and AGE agreed that additional funds would be needed and the Diamond License would be transferred to the joint venture, as subsequently memorialized in February 25, 1994 (the "1994 Memorandum") (1993 Agreement and 1994 Memorandum, collectively, "Agreement"). (Complaint, ¶ 31.) The parties incorporated Almazny Bereg ("AB") as the joint venture company. (Complaint, ¶ 32.)
In approximately May 1995, a new law permitted the transfer of the Diamond License from AGE to the joint venture. (Complaint, ¶ 35.) AGE was subsequently privatized in December 1995, and became known as AGD. (Complaint, ¶ 35.)
In approximately February 1996, a rich pipe of diamonds was discovered in the Verkhotina Area. (Complaint, ¶ 37.) This is when AGD is said to have begun its Illegal Scheme to deprive Archangel of its interest in the diamond discovery. In April 1996, AGE transferred the Diamond License to AGD, which Archangel thereafter requested be transferred to AB. (Complaint, ¶¶ 36, 37.) AGD, however, threatened to transfer the Diamond License to a new company, and not AB. (Complaint, ¶¶ 38, 39.)
In February 1997, Archangel hired a Colorado resident (Gary Davis) as Chief Financial Officer and moved its financial center from Canada to Colorado. (Complaint, ¶¶ 4, 45.) Thereafter, AGD engaged in various actions in an attempt to avoid the parties' agreement to transfer the Diamond License. Initially, in April 1997, AGD informed Archangel that the Diamond License would be transferred to the joint venture. (Complaint, ¶ 40.) In August 1997, however, AGD informed Archangel that it was withdrawing from the Agreement and selling its shares of AB. (Complaint, ¶ 41.)
By November 1997, Archangel hired another Colorado resident (Timothy Haddon) as the Chief Executive Officer and moved its principal place of business to Colorado. (Complaint, ¶¶ 4, 45.) On December 18, 1997, Archangel notified AGD that Archangel had moved its headquarters to Colorado. (Complaint, ¶ 46.) AGD confirmed the Diamond License would be transferred to AB following completion of and payment for the work program. In reliance on AGD's representations, Archangel signed the work program and agreed to invest an additional $5.2 Million in funds. (Complaint, ¶ 47.) At that time, Archangel had already contributed $4.9 Million to the project. (Complaint, ¶ 48.)
In about February 1998, Lukoil, a Russian public corporation and Russia's largest oil company, obtained control over AGD by acquiring a majority of its shares and appointing a former Lukoil executive to head AGD. Lukoil, however, assured Archangel that AGD would honor the Agreement. (Complaint, ¶¶ 4, 15, 50-53, 87.) In a March 17, 1998 memo, AGD stated to Archangel that the Agreement remained in effect. (Complaint, ¶ 91.b.) In a letter dated April 3, 1998, Lukoil implied to Archangel that it would abide by the Agreement. (Complaint, ¶ 52.) By May 1998, however, AGD (allegedly under the control of Lukoil) informed Archangel that it would not honor the Agreement and planned to transfer the Diamond License to another entity. (Complaint, ¶ 54.) Nonetheless, between May and June 1998, AGD had communications with Archangel concerning the ongoing status of the diamond project. (Complaint, ¶ 91d & e.)
By August 1998, however, pursuant to the Agreement, Archangel initiated arbitration proceedings in Stockholm ("Stockholm Arbitration") against AGD, Lukoil and others. The arbitrators decided that it had jurisdiction to hear Archangel's claim against AGD, but not Lukoil. (Complaint, ¶ 56.) In the arbitration, AGD and Archangel agreed that Russian law applied to their dispute and relations in general. (ECF No. 29-20, page (p.) 4, ¶ 132; No. 47, p. 40 n.26.)
While the arbitration was pending, AGD and Archangel resolved their dispute and entered into an agreement dated July 15, 1999 (the "1999 Agreement"). (Complaint, ¶ 57.) AGD communicated to Archangel in Colorado on many occasions between July 1999 and August 2000 concerning the diamond project. (Complaint, ¶ 91j-s.) In reliance on AGD's communications that the agreements concerning the diamond project would be performed — communications allegedly directed by Lukoil — Archangel funded its operations in the United States and Russia, and authorized (through the mail and wire) the transmission of funds to AGD to fund the diamond venture. (Complaint, ¶¶ 91, 92.)
AGD did not, however, honor the Agreement or the 1999 Agreement and did not transfer the Diamond License to the joint
By December 2002, after litigating
Archangel successfully appealed the arbitrators' decision and filed a renewed arbitration (Complaint, ¶ 69). Archangel also successfully appealed the dismissal of the Colorado state court action but only as to Lukoil. (Complaint, ¶ 70.) Subsequent to these decisions, Archangel, DeBeers, AGD, and Lukoil attempted to resolve their dispute and the matters were effectively stayed. When the parties were unable to resolve their dispute, Archangel resumed the Colorado state court action and the Stockholm Arbitration. (Complaint, ¶ 71.) Archangel, however, again ran out of funds. (Complaint, ¶ 71.)
In addition to actions taken in Colorado in connection with Archangel and the Illegal Scheme involving the Diamond License, Lukoil also allegedly had other contacts in Colorado. Lukoil allegedly did business in Colorado through DSE Engineering, Inc., a Colorado corporation which has maintained an office in Colorado since February 1999, and engaged in tax fraud. (Complaint, ¶¶ 19, 75, 93.) Lukoil also allegedly funded DSE though the "Slush Fund Companies," i.e., Oldberry Investments, Ltd., Gilwood Investments, Ltd., and Lukoil Israel, Ltd. (Complaint, ¶¶ 23-25, 75.) These Slush Fund Companies were shells and Lukoil used them as conduits for the "Cash Smuggling," "False Expenses," "Buy High, Sell Low," and "Dividends" schemes. (Complaint, ¶ 25.) Such contacts, however, had nothing to do with the Illegal Scheme and caused no injury to Archangel or the Trust. (ECF No. 100, p. 118.)
As stated, on November 27, 2001, Archangel filed an action in the Denver District Court against Lukoil and AGD. (Complaint, ¶ 9; ECF No. 29-3.) The Colorado state court complaint alleged breach of contract against AGD, and tort based claims against AGD and Lukoil. (ECF No. 29-3.)
In 2002, the Colorado state trial court dismissed the action based on lack of personal jurisdiction as to AGD and Lukoil.
With no settlement, in 2009, Archangel filed bankruptcy in Colorado and the Trust acquired Archangel's assets as successor-in-interest. (Complaint, ¶¶ 5, 11, 14, 71.) The Trust's principal place of business is in Colorado and its sole trustee is a Colorado resident. (Complaint, ¶ 14.) The Colorado state court action proceedings continued in Denver, and the parties were allowed to engage in jurisdictional discovery, including taking the deposition of Dean Sillerud, president and sole shareholder of DSE. (E.g., ECF No. 47-72.) In November 2009, Archangel amended its Colorado state complaint ("First Amended Complaint") to add RICO and other claims.
In October 2011, after the Trust had been substituted as the plaintiff, the Colorado state trial court ("DDC") again dismissed the case against Lukoil for lack of personal jurisdiction, general or specific. (Complaint, ¶ 73; ECF No. 29-8.) The Trust appealed. On January 6, 2012, while the Colorado appeal was pending, the Trust filed the action before this Court under the Colorado savings statute, C.R.S. § 13-80-111. (Complaint, ¶ 12.)
On August 23, 2012, the Colorado Court of Appeals affirmed the dismissal of Archangel's (by now, through the Trust) claims against Lukoil. (ECF Nos. 61, 63.) On July 1, 2013, the Colorado Supreme Court denied the Trust's petition for writ of certiorari. (ECF No. 77.)
In the action before this Court, the Trust asserts the following claims: (1) Violation of RICO § 1962(c) (Count I); (2) Violation of RICO § 1962(d) (Count II); (3) Violation of COCCA, C.R.S. § 18-17-104(3) (Count III); (4) Violation of COCCA, C.R.S. § 18-17-104(4) (Count IV); (5) Fraud and Aiding and Abetting Fraud (Count V); (6) Intentional Interference with Contractual Relations (Count VI); and (7) Unjust Enrichment (Count VII). The Trust alleges subject matter jurisdiction based on diversity (28 U.S.C. § 1332(a)), federal question (28 U.S.C. § 1331), commerce and antitrust (28 U.S.C. § 1337(a)), and actions to prevent and restrain violations of 18 U.S.C. § 1962 (RICO) (18 U.S.C. § 1964(c)). (Complaint, ¶ 7.) The claims are substantially the same as those alleged in the First Amended Complaint before the Colorado state court. (ECF Nos. 29-6, 29-10.)
Lukoil moves to dismiss the Trust's Complaint based on four arguments. First, Lukoil alleges the Complaint should be dismissed because it violates the prohibition against "claim splitting" and under the related Colorado River Doctrine. Next, Lukoil argues it is not subject to specific or general personal jurisdiction in Colorado. Third, Lukoil contends dismissal is appropriate under the doctrine of forum non conveniens. Finally, Lukoil asserts the Trust's RICO and COCCA claims are subject to dismissal for failure to state a claim and lack of standing. The Court finds it need only address the second and third arguments.
The plaintiff bears the burden of establishing personal jurisdiction over the defendant. Melea, Ltd. v. Jawer SA, 511 F.3d 1060, 1065 (10th Cir.2007). When personal jurisdiction is challenged under Rule 12(b)(2), absent an evidentiary hearing, the plaintiff need only make a prima facie showing of facts that, if true, support personal jurisdiction over the defendant. Melea, 511 F.3d at 1065; Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir.1999). The court accepts plaintiff's allegations as true if uncontroverted by defendant's evidence, and resolves evidentiary disputes in favor of jurisdiction. Melea, 511 F.3d at 1065. "The plaintiff may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant. In order to defeat a plaintiff's prima facie showing of jurisdiction, a defendant must present a compelling case demonstrating that the presence of some other considerations would render jurisdiction unreasonable." Omni Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.1998) (internal quotation marks omitted).
The parties dispute the relevant date for assessing whether Lukoil has sufficient minimum contacts with Colorado, or the United States, as the case may be. Lukoil contends that date should be the date when Archangel originally filed its complaint in the Colorado state court — November 27, 2001. The Trust contends the date should be when its complaint was filed in this Court — January 6, 2012 — and, therefore, Lukoil's contacts with Colorado and the United States between 2001 and 2012 should also be considered. Under the facts and circumstances of this case, the Court finds the relevant date to be as of November 27, 2001.
Generally, in determining personal jurisdiction, the contacts of the defendant with the forum state are to be assessed as of the time suit was filed. See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 569-570 (2nd Cir.1996) ("In general jurisdiction cases district courts should examine a defendant's contacts with the forum state over a period of time that is reasonable under the circumstances — up to and including the date suit was filed...."); Cameron v. Group Voyagers, Inc., 308 F.Supp.2d 1232, 1240 (D.Colo. 2004) (post-suit contacts could not be used as basis for exercising general personal jurisdiction over nonresident defendant in
In this case, two actions were filed. Archangel filed before the Colorado state court in 2001 and the Trust — as successor-in-interest — filed before this Court in 2012. The Trust's Complaint, however, was filed pursuant to C.R.S. § 13-80-111, the Colorado savings statute. (Complaint, p. 3, ¶ 12.) Under that statute, if an action commenced in a Colorado court is dismissed because of lack of jurisdiction, the plaintiff may commence a new cause of action "within ninety days after the termination of the original action or within the period otherwise allowed by this article [80], whichever is later...." C.R.S. § 13-80-111(1). The action before this Court is therefore, in effect, the same action that was that filed in 2001 in the Colorado state court. Accordingly, the Court finds that the general rule applies and Lukoil's contacts with the forum as of November 27, 2001 control. In addition, the Court finds the "curable-defect doctrine" would not apply to allow the Trust to utilize contacts subsequent to the original 2001 filing to support a finding of jurisdiction. Under that doctrine, suit may be brought again where a jurisdictional defect has been cured or loses its controlling force based on changes in circumstances which occur subsequent to the prior litigation.
In a diversity action, to obtain personal jurisdiction over a nonresident defendant, two criteria must be met:
Melea, 511 F.3d at 1065 (internal quotation marks, citations and alterations omitted); Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir.2004), cert. denied, 544 U.S. 974, 125 S.Ct. 1826, 161 L.Ed.2d 723 (2005).
A two-step analysis is conducted when evaluating personal jurisdiction under the due process clause. At the first step, the Court examines "`whether the non-resident defendant has `minimum contacts' with the forum state such that he should reasonably anticipate being haled into court there.'" Melea, 511 F.3d at
"The `minimum contacts' test may be met in either of two ways. First, if a defendant has `continuous and systematic general business contacts' with the forum state, it may be subjected to the general jurisdiction of the forum state's courts." Melea, 511 F.3d at 1066 (emphasis added). Second, if a defendant "purposefully directed" its activities at the state's residents, and if the cause of action arises out of those activities, it may be subjected to the specific jurisdiction of the forum state's courts. Melea, 511 F.3d at 1066; Benton, 375 F.3d at 1076.
For specific personal jurisdiction, in the tort context, the court asks whether the nonresident defendant "purposefully directed" its activities at the forum state. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1071 (10th Cir. 2008). In contract cases, the courts "sometimes ask whether the defendant `purposefully availed' itself of the privilege of conducting activities or consummating a transaction in the forum state." Id.
Lukoil argues the Colorado state courts have already determined that Archangel did not establish specific jurisdiction over Lukoil so the Trust is precluded from relitigating all discussions of specific jurisdiction under the doctrine of collateral estoppel or issue preclusion. Specifically, Lukoil argues that the Colorado state courts already decided that the alleged fraudulent communications into Colorado as part of the Illegal Scheme were insufficient to establish a prima facie case of specific jurisdiction and in Appeal II the Colorado Supreme Court already addressed the "effects test" under Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). In response, the Trust contends the Colorado court decided specific jurisdiction under Colorado's long-arm statute and the Fourteenth Amendment, but did not address whether specific jurisdiction may exist pursuant to RICO and the Fifth Amendment.
"[I]ssue preclusion bars a party from relitigating an issue once it has suffered an adverse determination on the issue, even if the issue arises when the party is pursuing or defending against a different claim." Park Lake, 378 F.3d at 1136. Generally, issue preclusion applies if four factors are met: "(1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the
The Court's review of the record shows the Colorado state courts decided the issue of whether Archangel failed to establish a prima facie case of specific jurisdiction under Colorado's long-arm statute and the Fourteenth Amendment and, in doing so, considered Archangel's (and, now the Trust as successor-in-interest) allegations of an illegal scheme and the Calder effects test. (E.g., ECF No. 29-1, Appeal I, pp. 9-12; No. 29-2, Appeal II, pp. 9, 10, 13, 14; No. 29-8, DDC, pp. 5-7, 10, 16.) The Trust argues these determinations are no barrier to the issue it raises as this Court decides specific jurisdiction related to RICO under the Fifth Amendment, relying on Dudnikov, AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054 (10th Cir.2008), and Calder. The problem with the Trust's argument is that these cases were analyzed under the Fourteenth Amendment,
The Trust argues that Lukoil is subject to general jurisdiction under agency and alter ego theories, as Lukoil allegedly used DSE to avail itself of the privilege of doing business in Colorado. As with specific personal jurisdiction, Lukoil argues that the Trust's allegations to support general personal jurisdiction are identical to those asserted by Archangel in Colorado state court and the DDC's determination precludes the Trust from arguing general jurisdiction premised on the alleged schemes. After examining the record, the Court agrees. The arguments raised by the Trust are the same as those
In an action based on a federal question, "[i]n determining whether a federal court has personal jurisdiction over a defendant, the court must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process." Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir.2006); Peay v. Bellsouth Med. Assist. Plan, 205 F.3d 1206, 1209 (10th Cir.2000). Thus, pursuant to Rule 4(k)(1)(C), "[s]erving a summons or filing of a waiver of service establishes personal jurisdiction over a defendant ... when authorized by a federal statute." "While service of process and personal jurisdiction both must be satisfied before a suit can proceed, they are [nonetheless] distinct concepts that require separate inquiries." Peay, 205 F.3d at 1209. "`When a federal statute provides for nationwide service of process, it becomes the statutory basis for personal jurisdiction.'" Peay, 205 F.3d at 1210 (quoting Republic of Panama v. BCCI Holdings (Luxemborg) S.A., 119 F.3d 935, 942 (11th Cir.1997)). "[P]rovided that due process is satisfied, [such statute] confers jurisdiction over defendants by authorizing service of process on them." Peay, 205 F.3d at 1210; Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1229 (10th Cir.2006), cert. denied, 550 U.S. 918, 127 S.Ct. 2134, 167 L.Ed.2d 864 (2007).
In this case, 18 U.S.C. § 1965(b) gives RICO nationwide jurisdictional reach. Aztec Steel Bldg., 468 F.3d at 1229. Lukoil contends RICO does not confer jurisdiction because it does not authorize worldwide service of process. The Court agrees. The Trust's argument that the application of RICO and the Fifth Amendment confers specific personal jurisdiction in Colorado pursuant to the Calder effects test was previously addressed and rejected. To the extent the Trust's argument is also based on the proposition that jurisdiction exists under RICO's authorization for service of process, that argument is also rejected. In this case, Lukoil was served in Russia, and there is no contention that RICO authorizes worldwide service of process.
Pursuant to Rule 4(k)(2), "[f]or a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws." This Rule "serves as a federal long-arm statute, which allows a district court to exercise personal jurisdiction over a foreign defendant whose contacts with the United States, but not with the forum state, satisfy due process."
Lukoil argues the Trust fails to state a claim for RICO so there is no claim which arises under federal law on which personal jurisdiction under Rule 4(k)(2) can be based. Personal jurisdiction, however, "is an essential element of the jurisdiction of a district court, without which the court is powerless to proceed to an adjudication" of a case. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (internal quotation marks and alterations omitted); Arocho v. Lappin, 461 Fed.Appx. 714, 719 (10th Cir.2012). Once a court determines it lacks jurisdiction over a claim, it lacks jurisdiction to make any determination of the merits of the underlying claim. See Brereton v. Bountiful City Corp., 434 F.3d 1213, 1217 (10th Cir.2006) (discussing dismissal for lack of subject matter jurisdiction).
Lukoil contends the Court may first determine whether a plaintiff successfully asserts a RICO claim before considering personal jurisdiction, relying on Shell v. Am. Family Rights Ass'n, No. 09-cv-00309, 2010 WL 1348548, at *12 (D.Colo. Mar. 31, 2010), and the Trust did not argue otherwise. Shell, however, never analyzed whether or when it would be permissible for the court to decide whether a RICO claim was stated before turning to the issue of personal jurisdiction based on RICO. The Court finds that to decide a Rule 12(b)(2) based on an analysis under Rule 12(b)(6) would essentially conflate two different analysis. Instead, the Court agrees with the analysis conducted by the Eleventh Circuit in Republic of Panama:
Republic of Panama, 119 F.3d at 941 (internal quotation marks omitted). This analysis is identical to that used by the Tenth Circuit in determining whether a proceeding fails to present a colorable claim arising under federal law sufficient to invoke a court's subject matter jurisdiction based on federal question. McKenzie v. U.S. Citizenship & Immigration Servs., 761 F.3d 1149, 1156-1157 (10th Cir.2014). Accordingly, the Court finds that a determination of the merits of the Trust's claim is inappropriate before determining whether this Court has jurisdiction to decide the claim.
In this case, facially, the Trust has arguably pleaded a colorable RICO claim as to Lukoil's alleged engagement in the Illegal Scheme, see Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir.2002) (identifying four elements of a RICO claim), and the parties have not argued otherwise.
Lukoil argues the burden is on the Trust to establish that Lukoil is not subject to a court of general jurisdiction anywhere in the United States, and the Trust cannot meet its burden when: (1) it asserts that Colorado's long-arm statute confers jurisdiction; and (2) it asserts Lukoil has contacts through its agents or alter egos. In response, the Trust argues that Lukoil has already stated it is not subject to personal jurisdiction in any state, and such admission is sufficient.
In deciding this issue, the Court must first resolve who bears the burden of showing a lack of personal jurisdiction over a defendant in any state — the "negation requirement." Synthes, 563 F.3d at 1294. Neither party has directed the Court to any case from the Supreme Court or Tenth Circuit on this issue, and the Court's independent investigation revealed none. In Pandaw America, Inc. v. Pandaw Cruises India Pvt. Ltd., 842 F.Supp.2d 1303 (D.Colo.2012), however, the Honorable William J. Martinez from this district adopted the rationale from the Seventh Circuit in ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548 (7th Cir.2001). After a review of cases from other Circuits and the different methods for determining whether the negation requirement is met, see, e.g., Synthes, 563 F.3d at 1294-1295 (describing various approaches taken by different circuits), the Court agrees with the approach taken by the Seventh and some other Circuits, and by Judge Martinez.
Normally, the plaintiff bears the burden of proving personal jurisdiction over the defendant. E.g., Dudnikov, 514 F.3d at 1069. Here, if the Court were to follow the "normal" route for the negation requirement, the plaintiff would have to prove the defendant is not subject to personal jurisdiction in any of the 50 states. This burden could be onerous as it is generally the defendant who possesses this information. This burden could also present practical difficulties for the plaintiff who pleads in the alternative that the defendant is subject to suit under a state's long-arm statute. Synthes, 563 F.3d at 1294. The record in this case shows such are the circumstances here.
On the other hand, shifting the burden to the defendant "requires that the defendant concede its potential amenability to suit in federal court (by denying its amenability to suit in any state court) or submitting to jurisdiction in a particular state, an uninviting choice." Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1413 (Fed.Cir.2009). Nonetheless, Rule 4(k)(2) was added to close a loophole which existed prior to the 1993 amendments to the Federal Rules of Civil Procedure. Specifically,
Advisory Committee Notes on Fed. R.Civ.P. 4(k)(2), 146 F.R.D. 401, 571 (1993). These comments are entitled to weight in consideration of the application of the Rule. See generally Schiavone v. Fortune, 477 U.S. 21, 31, 106 S.Ct. 2379, 91 L.Ed.2d 18 (1986) ("[T]he construction given by the [Advisory] Committee is `of weight.'") (quoting Mississippi Publishing Corp. v. Murphree, 326 U.S. 438, 444, 66 S.Ct. 242, 90 L.Ed. 185 (1946)); Esposito v. United States, 368 F.3d 1271, 1275 (10th Cir.2004) ("Courts have ... looked to the Advisory Committee Notes accompanying the Rule [17(a)] to provide parameters for its application.").
Accordingly, the Court finds that:
ISI Int'l, 256 F.3d at 552.
In this case, Lukoil "maintains ... now, and it maintained in 2001, that it is not subject to jurisdiction anywhere in the United States." (ECF No. 100, pp. 30-31; see No. 101, p. 2 ("Lukoil is not `essentially at home' in Colorado or anywhere else in the United States to render it `comparable to a domestic enterprise.'") (emphasis in original).) Under the approach adopted in ISI Int'l, shifting of the burden to Lukoil shows the second requirement under Rule 4(k)(2) is met.
Lukoil's concession, however, can also be viewed as evidence that the Trust has met its burden, if the burden was its to bear. In this case, before the Court made any determination as to who bears the burden of showing Rule 4(k)(2) has been satisfied, Lukoil admitted it was not subject to any state's court of general jurisdiction. Whether such an admission is an evidentiary or a judicial one, it obviated the Trust's need to conduct discovery or litigate in 50 states to establish a fact at issue. Such admission in this context is no
Lukoil contends that the Colorado state courts' determination that it would be unconstitutionally burdensome for Lukoil to defend here bars the Trust from relitigating that issue before this Court. Lukoil argues that under Peay, for purposes of jurisdictional analysis, there is no difference between due process under the Fifth Amendment and due process under the Fourteenth Amendment. If it is unconstitutional under the Fourteenth Amendment, then it is also unconstitutional under the Fifth Amendment, so states Lukoil. The Court finds otherwise.
First, as recognized by the Advisory Committee:
Advisory Committee Notes, 146 F.R.D. at 571-572 (internal citation omitted) (emphasis added). Thus, under Rule 4(k)(2), the Court must consider national contacts with the United States, rather than contacts with the forum state. Pandaw, 842 F.Supp.2d at 1311; see Republic of Panama, 119 F.3d at 945 n. 16 (relevant forum under the Fifth Amendment is the United
Next, Peay does not sweep as broadly as Lukoil contends. While Peay recognized that the Due Process Clauses of the Fourteenth and Fifth Amendments "are virtually identical" and designed to "protect individual liberties from the same types of government infringement," Peay, 205 F.3d at 1212, the factors which the Tenth Circuit outlined in determining whether the defendant has demonstrated that its liberty interests have been infringed under the Fifth Amendment are not the same factors used in determining whether those interests are infringed under the Fourteenth Amendment. Cf. Peay, 205 F.3d at 1212 (outlining five factors for consideration under the Fifth Amendment in determining jurisdiction over a domestic corporation) with, e.g., Dudnikov, 514 F.3d at 1080 (outlining factors under the Fourteenth Amendment). Moreover, even if a defendant establishes constitutional "inconvenience," jurisdiction will still comport with due process "if the federal interest in litigating the dispute in the chosen forum outweighs the burden imposed on the defendant." Peay, 205 F.3d at 1213.
Third, under Lukoil's theory that the Due Process Clauses under the Fifth and Fourteenth Amendment are identical, if a defendant is not subject to personal jurisdiction under a state's long-arm statute as violative of the Due Process Clause under the Fourteenth Amendment, that defendant would necessarily also not be subject to jurisdiction under Rule 4(k)(2). Such a result would effectively render Rule 4(k)(2) moot in Colorado. Accordingly, the Court must conduct its own analysis to determine whether the exercise of personal jurisdiction comports with the Due Process Clause of the Fifth Amendment.
Before it reaches the Peay factors, the Court must consider the "minimum contacts" analysis to be conducted under general or specific jurisdiction. The Trust argues that a specific jurisdiction analysis is required (ECF No. 100, p. 11), but contends a "less rigorous" general jurisdiction analysis is sufficient in one response (ECF No. 47, p. 24), and then argues specific and general jurisdiction in a supplemental response (ECF No. 102). Lukoil, on the other hand, argues that it is not subject to specific jurisdiction and, therefore, the Trust must satisfy the test for general jurisdiction (ECF No. 29, p. 20). At the time Lukoil made that argument, however, the Colorado Court of Appeals had not yet issued its decision finding Lukoil was not subject to general jurisdiction. Therefore, the Court assumes that Lukoil's current position as to
Lukoil argues the traditional "continuous and systematic general business contacts" test applies, and that it is not "at home" in Colorado or anywhere else in the United States. The Trust asserts a lesser standard is required, apparently relying on Synthes' reference to the Advisory Committee's comment that "[t]he Fifth Amendment ... requires that any defendant have affiliating contacts with the United States." Synthes, 563 F.3d at 1295 (emphasis added).
The Tenth Circuit has established several factors to consider in deciding whether general jurisdiction has been established against a non-resident corporate defendant, including: "(1) whether the corporation solicits business in the state through a local office or agents; (2) whether the corporation sends agents into the state on a regular basis to solicit business; (3) the extent to which the corporation holds itself out as doing business in the forum state, through advertisements, listings or bank accounts; and (4) the volume of business conducted in the state by the corporation." Grynberg v. Ivanhoe Energy, Inc., 490 Fed.Appx. 86, 95 (10th Cir.2012), cert. denied, ___ U.S. ___, 133 S.Ct. 941, 184 L.Ed.2d 726 (2013) (quoting Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453,
In this case, the Trust relies on allegations of the contacts of Lukoil, and its alleged alter egos and agents,
The Trust argues that Lukoil established an ADR program to gain access to U.S. capital markets and contacts related to such program are sufficient to establish a prima facie case of jurisdiction. While the Court finds that Lukoil's contacts with respect to the sponsorship of ADR-1s may properly be considered to show "continuous and systematic" general business contacts, they are not, by themselves, sufficient to establish general personal jurisdiction.
ADRs are "negotiable instrument[s] issued by an American bank as a substitute for stock shares in a foreign-based corporation." Black's Law Dictionary 101 (10th ed.2014). They are "the most common method by which foreign companies secure American shareholders." Id.; see Pinker v. Roche Holdings Ltd., 292 F.3d 361, 367 (3rd Cir.2002) (ADRs are "one of the preferred methods for trading foreign securities in the United States."). "ADRs are tradeable in the same manner as any registered American security, may be listed on any of the major exchanges in the United States or traded over the counter, and are subject to the Securities Act and the Exchange Act." Pinker, 292 F.3d at 367. "ADRs may be either sponsored or unsponsored. An unsponsored ADR is established with little or no involvement of the issuer of the underlying security. A sponsored ADR, in contrast, is established with the active participation of the issuer of the underlying security. [That issuer] enters into an agreement with the depositary bank and the ADR owners. The agreement establishes the terms of the ADRs and the rights and obligations of the parties, such as the ADR holders' voting rights." Pinker, 292 F.3d at 367 (internal citations omitted).
There are a few jurisdictions which have considered when ADRs may support the exercise of personal jurisdiction over a foreign defendant. The Trust relies on Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir.2000), cert. denied, 532 U.S. 941, 121 S.Ct. 1402, 149 L.Ed.2d 345 (2001), while Lukoil relies on Pieczenik v. Cambridge Antibody Tech. Grp., 2004 WL 527045 (S.D.N.Y. Mar. 16, 2004), a case which relies on the general proposition cited in Wiwa. In Wiwa, the Second Circuit stated:
In this case, Lukoil issued sponsored ADR-1s in the United States, first in 1995 and then again in 1997. (E.g., ECF No. 29-16, p. 3, ¶ 4; No. 47-19, p. 1; No. 47-20, p. 1.) Lukoil also engaged in activities that are necessary to facilitate those listings. (E.g., ECF No. 47-27.)
In 1998, Lukoil issued a press release that it opened an office in New York. (ECF No. 47-20, p. 1.) The Trust argues that this announcement, coupled with the maintenance of an office "technically owned" by Lukoil Pan Americas LLC ("Pan Americas"), shows the continuous operation of an office sufficient to establish jurisdiction. The Court finds otherwise. First, Pan America's lease was signed in 2009, after the relevant time period. (ECF No. 47-40.) Next, Lukoil has not sufficiently shown, by allegations or otherwise, Pan America's lease of an office in 2009 constitutes a continuous operation of an office by Lukoil in New York from 1998 forward. Nonetheless, the Court agrees that Lukoil's announcement that it opened an office in New York in 1998 is a relevant factor to assess whether Lukoil's affiliations with the United States are so "continuous and systematic" to render it essentially "at home."
The Trust argues that Lukoil's business presence in the U.S. is shown by its acts in promoting gas stations as its own, and using such gas stations to "provide synergy for exporting and distributing petroleum products to the U.S. from Lukoil's
"`A holding or parent company has a separate corporate existence and is treated separately from the subsidiary in the absence of circumstances justifying disregard of the corporate entity.'" Benton, 375 F.3d at 1081 (quoting Quarles v. Fuqua Indus., Inc., 504 F.2d 1358, 1362 (10th Cir.1974)) (internal brackets omitted). In this case, a review of the papers shows Lukoil acquired Getty Petroleum Marketing Inc. (U.S.) in 2000 and it is Getty which sells petroleum products through Getty's gasoline filing stations. (E.g., ECF No. 47-6, pp. 2, 4, 6, 7; No. 47-21, p. 1.) The Trust cites to general case law regarding agents and alter egos but has not shown — by nonconclusory allegations or otherwise — that Getty was the agent or alter ego of Lukoil such that Getty's contacts can be attributed to Lukoil for the purposes of personal jurisdiction.
Lukoil's press release did indicate that "[i]n the future, [it] may seek to supply the Getty stations with our own [Lukoil] petroleum products," but, as previously discussed, Lukoil's contacts after November 27, 2001 cannot be used to support the exercise of personal jurisdiction. Similarly, to the extent the Trust is relying on Lukoil's activities in acquiring other gas stations in the United States, such as those from ConocoPhillips, those activities also occurred after November 27, 2001. (ECF No. 47-23.)
The Trust argues that Lukoil's property interest in its U.S. trademarks and its open and notorious use of such trademarks in its U.S. marketing campaigns are long standing ones which establish a prima facie case of personal jurisdiction. Lukoil did not address the impact, if any, of such interest. The Court's examination of the evidence shows that all but three of such interests were applied for after 2001, and the use of such trademarks upon which the Trust relies occurred after 2001.
The Trust also relies on Lukoil's issuance of credit cards but has not argued or shown that such activities occurred on or before November 27, 2001. The Trust's supporting documents show no date, a copyright date of 2012, or a print date of January 7, 2010. (ECF No. 47-46; No. 47-61, p. 3; No. 47-62, p. 6.) Indeed, as such documents also reflect "Getty," these cards could not have existed until sometime after Lukoil acquired Getty in 2000. (ECF No. 47-6, p. 2.)
Here, the Trust relies on Lukoil's agreement with the Export-Import Bank of the United States ("Ex-Im Bank") and Commerzbank AG (New York branch) to provide Lukoil with millions of dollar in financing, guaranteed by Ex-Im Bank. (ECF No. 47-22.) Again, the Trust's reliance is misplaced as the papers reflect the agreement was entered into September 2002, almost a year after the date in which Lukoil's contacts may be considered for purposes of the exercise of personal jurisdiction. The argument that Lukoil must have exchanged correspondence or had other contacts in the United States leading up to the consummation of this one agreement is immaterial to the analysis. Similarly, Lukoil's use of such loan proceeds thereafter — even if in the United States — is also irrelevant.
Finally, Pan Americas' office in New York and its supply of Lukoil products to the U.S. markets also do not support the exercise of personal jurisdiction over Lukoil. First, the Trust's conclusory statement that Pan Americas is Lukoil's agent, without more, is insufficient to attribute Pan Americas' contacts to support the exercise jurisdiction over Lukoil. Next, the documents reflect that Pan Americas is affiliated with Lukoil, through which Lukoil supplies its petroleum products to the United States. (ECF No. 47-25; No. 47-42.) That too, without more, is insufficient. Finally, even assuming, arguendo, Pan Americas' presence — "contacts" — in the United States may be attributed to Lukoil for jurisdictional purposes, such contacts are still insufficient as they occurred after November 27, 2001.
The Court has also considered Lukoil's relevant contacts together in the aggregate, but also finds them insufficient to constitute a prima facie showing of general personal jurisdiction based on Lukoil's national contacts with the United States, as of November 27, 2001. While such contacts support a reasonable inference that Lukoil was intending to conduct additional business in the U.S. in the future, it cannot be said that Lukoil was essentially "at home" in the United States by that date.
As previously discussed in analyzing specific jurisdiction under a state's long-arm statute, "[a] specific jurisdiction analysis involves a two-step inquiry." Benton, 375 F.3d at 1075. First, the court must consider "whether the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there," i.e., the defendant has sufficient minimum contacts. Id. (internal quotation marks omitted). Second, if the defendant's actions create sufficient minimum contacts, the court must consider "whether the exercise of personal jurisdiction over the defendant offends traditional notions of fair play
The Trust argues it has established numerous direct contacts by Lukoil itself, relying on the contacts previously discussed in addressing general jurisdiction, e.g., the ADRs and the registration of trademarks, as well as Lukoil's alleged fraudulent communications to Archangel while it was located in Colorado.
The Court finds, however, that the Trust cannot satisfy the second prong — that the plaintiff's claims result from injuries that "arise out of or relate to" those activities. All but one of the contacts relied upon have no connection with the Trust's claimed injuries — the loss of its interests in the Russian diamond mine and Diamond License, and the millions of dollars Archangel contributed to acquire and develop such interests. The one letter, standing alone, is insufficient to support the years of conduct which the Trust has placed into issue as the bases for its claims and alleged damages, most of which occurred in Russia and Canada before Archangel moved to Colorado. Accordingly, the Trust has failed to establish sufficient minimum contacts for specific jurisdiction.
Even if this Court found Lukoil made a prima facie case of general or specific personal jurisdiction based on Lukoil's national contacts, the Court would still have to examine the Peay factors to determine whether the exercise of jurisdiction would be "fair and reasonable." Peay, 205 F.3d at 1212.
In evaluating whether the defendant has met its burden, the following factors are considered:
Peay, 205 F.3d at 1212. The Tenth Circuit has emphasized "that it is only in highly unusual cases that inconvenience will rise to a level of constitutional concern," as "in this age of instant communication, ... and modern transportation, the burdens of litigating in a distant forum have lessened." Peay, 205 F.3d at 1212-1213 (internal quotation marks, brackets and citations omitted).
Lukoil essentially argues the Court can dispense with consideration of these factors because the Colorado state courts found it was constitutionally burdensome or unreasonable to exercise personal jurisdiction over Lukoil. The Colorado courts, however, did not consider the constitutional reasonableness under the Fifth Amendment.
Defendant's contacts with the place where the action was filed. Peay involved a domestic non-resident defendant, but Lukoil is a foreign defendant. Although the Court has found that it is national contacts which are controlling for purposes of determining minimum contacts, it also finds that some consideration should be made as to the contacts within the chosen forum, i.e., state. As shown by the evidence, Lukoil did have at least one direct contact with Colorado — the Trust specifically alleged that on April 3, 1998, Lukoil wrote a letter to Archangel, lulling Archangel into believing that AGD would honor the Agreement. (Complaint, p. 15, ¶¶ 52-53.) However, in light of the nature of the Illegal Scheme alleged, and the years at issue, the Court finds that this one contact does not support a finding of reasonableness.
Judicial Economy. No evidence was presented on this issue. As such, Lukoil has not shown this factor supports unreasonableness.
The dispute between Lukoil and the Trust, to which the Trust claims damages, arises from Lukoil's participation in the alleged Illegal Scheme to deprive Archangel of its interest in a Russian diamond mine and Diamond License, in breach of an Agreement made between AGD's predecessor in Russia and Archangel's predecessor in Canada. On this record, discovery will take place in Colorado, Russia, Canada, and elsewhere. (E.g., ECF No. 29-14, ¶ 15.) Nonetheless, discovery will overwhelmingly be in Russia as that is where the diamond mine is located, where the Diamond License was issued, and where Lukoil and AGD, a non-party, and their management and employees allegedly involved in the Illegal Scheme are located.
On the other hand, the Trust is located here and the Trustee is a Colorado resident. Archangel is a Canadian corporation and its management and employees involved are located in Canada and speak English. Two key witnesses, however, are in Colorado, but are no longer employed by Archangel and would not voluntarily appear for a deposition or trial. It also appears that one witness is in Australia. (ECF No. 47-66.) The Trust's and Archangel's documents are in English and would have to be translated into Russian. Further, the Trust's claims are for RICO, COCCA and based on state law. The
The Trust alleges Lukoil acquired ownership of AGD and thereafter operated and managed the Illegal Scheme designed to defraud Archangel out of its interest in the Russian joint venture and the rights thereunder, i.e., the Russian Diamond License, while lulling Archangel into investing millions of dollars into the venture. Archangel is a Canadian company, and the overwhelming bulk of the funding it provided to the diamond venture occurred before Lukoil acquired an interest in AGD, and the majority of the illegal acts alleged had no contact to Colorado. When Lukoil allegedly first reached out to lull Archangel into investing additional funds, however, Archangel had already moved its principal place of business to the United States — Colorado. Thus, the United States has some interest in resolving this case. See Goodwin v. Bruggeman-Hatch, 2014 WL 3882183, at *9 (D.Colo. August 7, 2014). This factor slightly favors a finding of reasonableness.
The Supreme Court has cautioned the courts that "[g]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." Asahi, 480 U.S. at 115, 107 S.Ct. 1026 (internal quotation marks omitted). In light of the international nature of this dispute, and after weighing the above factors, the Court finds that the burden on Lukoil of defending this case in the United States is undue and unreasonable.
The Trust has filed two motions seeking discovery to support the exercise of personal jurisdiction over Lukoil. (ECF Nos. 41, 43.) "When a defendant moves to dismiss for lack of jurisdiction, either party should be allowed discovery on the factual issues raised by that motion." Sizova v. Nat'l Inst. of Standards & Tech., 282 F.3d 1320, 1326 (10th Cir.2002) (internal quotation marks omitted). The trial court, however, has broad discretion in determining whether to permit jurisdictional discovery. Id. In this case, the Court finds that the requested discovery is unwarranted for at least three reasons.
First, the majority of the information which the Trust seeks appears to be for time periods beyond those which are relevant to the jurisdictional analysis. Next, the information is for use in establishing minimum contacts, but this Court
The Trust seeks leave to amend its Complaint to cure any pleading deficiencies in the event this Court finds the Trust's allegations insufficient as to its RICO claims. (ECF No. 100, p. 169.) As the Court did not reach the issues relating to the sufficiency of the Trust's pleading as to its RICO claims based on the alleged Illegal Scheme, and the Trust submitted no proposed pleading for the Court's consideration, this request is denied.
Even if Lukoil is subject to personal jurisdiction in the United States and may properly be haled before this Court in Colorado, Lukoil argues this case should nonetheless be dismissed based on forum non conveniens. Lukoil also argues the Court can determine this issue as a threshold matter without a jurisdictional determination, and find that dismissal is proper upon examination of the forum non conveniens factors. After careful consideration of the issue, the Court agrees.
Under the forum non conveniens doctrine, "`when trial in the chosen forum would establish oppressiveness and vexation to a defendant out of all proportion to the plaintiff's convenience, or when the chosen forum is inappropriate because of considerations affecting the court's own administrative and legal problems, the court may, in the exercise of its sound discretion, dismiss the case, even if jurisdiction and proper venue are established.'" Yavuz v. 61 MM, Ltd., 576 F.3d 1166, 1172 (10th Cir.2009) (quoting Am. Dredging Co. v. Miller, 510 U.S. 443, 447-448, 114 S.Ct. 981, 127 L.Ed.2d 285 (1994)); see Fireman's Fund Ins. Co. v. Thyssen Mining Constr. of Canada, Ltd., 703 F.3d 488, 494 (10th Cir.2012). Where the only alternative forum is a foreign country, the court should apply a two-step test to determine whether a case may be dismissed
The first issue the Court must decide is the time period for determining whether dismissal is appropriate. Neither party addressed whether the time period for evaluating the forum non conveniens factors should be 2001, 2012, or some other time. The parties' arguments rely on matters existing at the time the action was filed in the Colorado state court and thereafter, indicating the Court should do the same. This view is supported by Fireman's Fund where the Tenth Circuit determined that the trial court's dismissal under forum non conveniens was premature because there was a matter pending which would impact whether there was an adequate alternate forum available to the plaintiff. Fireman's Fund, 703 F.3d at 496.
The next issue the Court must decide is whether the moving party — here, Lukoil — has shown dismissal is warranted. E.g., Fireman's Fund, 703 F.3d at 496; see Rivendell Forest Prods., Ltd. v. Canadian Pacific Ltd., 2 F.3d 990, 993 (10th Cir. 1993). An examination of the relevant factors show Lukoil has done so.
Where the chosen forum is the plaintiff's home forum, there is a strong presumption in favor of hearing the case. See Gschwind, 161 F.3d at 606. Lukoil argues that the Trust's choice of forum — Colorado — should be given no deference because Archangel is not a U.S. citizen and because it chose to invest in a foreign country where the acts complained of occurred primarily. Lukoil's argument may
Lukoil also contends less deference should be afforded to the Trust's choice of forum as the Trust/Archangel has engaged in forum shopping. While Archangel's actions lend support to Lukoil's contention of forum shopping between a state or federal court in Colorado, there is no evidence of forum shopping as between Colorado or any other forum in the U.S. or otherwise, especially as against Lukoil. Instead, the records show that Archangel attempted to arbitrate in Sweden against AGD and Lukoil, to which Lukoil successfully argued it was not subject to that tribunal's jurisdiction. (ECF No. 47-48, p. 1; No. 29-20, p. 3, ¶¶ 13, 16.) Accordingly, substantial deference is given to the Trust's choice of forum.
Lukoil argues that Russia is an available forum as it has consented to the jurisdiction of the Russian courts and agreed not to invoke the statute of limitations defense there. The Court agrees. Gschwind, 161 F.3d at 606 ("[Defendants'] concession [to suit in the alternate forum] is generally enough to make the alternate forum available."); cf. Fireman's Fund, 703 F.3d at 488 (availability of an alternate forum unclear where plaintiff's claim may be barred by the statute of limitations in the alternate forum).
"[W]hen dismissal in favor of a foreign forum creates a danger that the plaintiffs will be deprived of any remedy or the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all," "dismissal may not be in the interests of justice." Fireman's Fund, 703 F.3d at 495 (internal quotation marks, citations, and brackets omitted). In other words, "[i]f the remedy provided by the foreign forum is `clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied.'" Fireman's Fund, 703 F.3d at 495 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n. 22, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981)) (emphasis in original). In such a case, "an inconvenient forum is the only available forum." Id. (emphasis in original). "[T]he remedy provided by the alternate forum[, however,] need not be the same as that provided by the American court." Yavuz, 576 F.3d at 1174 (internal quotation marks omitted). Thus, the foreign forum is not inadequate because it does not provide punitive damages, or provide for the same substantive claims, such as RICO. Yavuz, 576 F.3d at
To support its argument that Russia is an adequate forum, Lukoil relies on its expert witness Professor Paul B. Stephan III. In his Declaration, Professor Stephan opines that Russia's courts would have jurisdiction over the Trust's claims; Russia's courts provide significant procedural safeguards, including allowing for the discovery of evidence; Russian law permits similar relief as those sought here, including illegal interference with contract and fraud, but it is unknown whether a RICO claim may be brought; Russia's courts may award the compensatory type of damages sought by the Trust; and the Russian court system provides for appellate court review and certiorari-type reviews. (ECF No. 29-18.) Lukoil also relies on the proposition that the alternate court need not offer every specific cause of action that a plaintiff asserts or every remedy, i.e., punitive damages, and other U.S. Courts have recognized the Russian Federation as an adequate forum.
On the other hand, the Trust relies on the opinion of its litigation funder, James Passin, that no investor would provide litigation funding for this case against Lukoil if it were to be litigated in Russia because of concerns over influence and corruption in Russian courts. According to Mr. Passin, the dismissal of this case to Russia would be its "death knell" due to the Trust's financial difficulties. (ECF No. 47-67, ¶ 12.) In other words, for the Trust, Russia is not an adequate alternate forum.
The Trust cites to no authority which specifically supports the proposition that the plaintiff's inability to fund litigation in the proposed alternate forum is a factor to consider in evaluating whether there is an adequate alternate forum for purposes of forum non conveniens. However, in Omni Holdings, in the context of evaluating reasonableness under the due process clause, the Tenth Circuit indicated that in assessing whether the plaintiff may receive convenient and effective relief in another forum, the court may consider whether litigating in the other forum would be a burden "so overwhelming as to practically foreclose pursuit of the lawsuit." Omni Holdings, 149 F.3d at 1097. Further, in Rivendell, the Tenth Circuit stated that a transfer which primarily serves to merely shift the costs from defendant to plaintiff is not a permissible basis for a forum non conveniens dismissal. Rivendell, 2 F.3d at 994 n. 7. However, "[t]he shifting of costs... may be a relevant consideration in granting dismissal" "when the moving party has substantially fewer financial resources than the non-moving party." Id. Thus, this factor may be a relevant consideration. However, the Court finds that such consideration is more properly addressed as part of the private interest factors. Accordingly, the Court finds that Lukoil has shown that the Russian courts are an adequate alternative forum, in light of Lukoil's voluntary consent to the jurisdiction of such courts and forbearance in raising the statute of limitations as a defense in that forum.
If domestic law applies, the forum non conveniens doctrine is inapplicable. Rivendell, 2 F.3d at 993 n. 4. However, even if foreign law applies, "this factor alone is not sufficient to warrant dismissal when a balancing of all relevant factors shows that the plaintiff's chosen forum is appropriate." Rivendell, 2 F.3d at 994. To the extent not agreed to by the parties or otherwise already established, the court conducts a conflicts-of-law analysis to determine which law applies to the controversy. See Yavuz, 576 F.3d at 1178-1179.
First, Lukoil fails to show where in the DDC's opinion it states that Russian law should govern the Trust's dispute, and the Court's review of the opinion shows no conflicts of law analysis to reach such a conclusion. Next, Lukoil has not shown how or why Archangel's agreement or admission that Russian law applies to its dispute with AGD results in the conclusion that such law applies to its entire dispute with Lukoil. The Trust's claims against Lukoil are statutory or based in tort. Nonetheless, the papers show the validity or enforceability of the Agreement between Archangel and AGD will be at issue,
The Court must also balance the private and public interest factors as between the two alternative forums — Colorado and Russia. The private interest factors a district court must consider include: "`(1) the relative ease of access to sources of proof; (2) availability of compulsory process for compelling attendance of witnesses; (3) cost of obtaining attendance of willing non-party witnesses; (4) possibility of a view of the premises, if appropriate; and (5) all other practical problems that make trial of the case easy, expeditious and inexpensive.'" Yavuz, 576 F.3d at 1180 (quoting Gschwind, 161 F.3d at 606).
Relying on the Affidavit of Boris Zubkov, the head of Lukoil's corporate law unit, Lukoil argues that these private factors weigh in its favor. Specifically, Mr. Zubkov stated that Lukoil's management and employees are in Russia and speak primarily Russian; AGD's and Lukoil's witnesses are in Russia and other foreign countries around the world; AGD is a Lukoil subsidiary that conducts its business and maintains its documents in Russia, and whose management resides in Russia; and if this case was litigated in the U.S., Lukoil would be required to travel extensively to the U.S. and would incur great expense. Other than argument, Lukoil presented no competent evidence that any non-party witnesses could not be compelled or would not be willing to attend trial is the U.S. Nonetheless, the Trust has not argued otherwise.
Based on the allegations in the Complaint and Lukoil's Initial Rule 26(a)(1) Disclosures, it appears that most of Lukoil's witnesses are employees or management of Lukoil or its subsidiary AGD and most documents would be in their possession or control. At least two of Lukoil's witnesses are located in the United States. Other foreign witnesses' locations are undisclosed and it is unknown whether it
On the other hand, Archangel is a Canadian corporation, but its claims against Lukoil arise from communications to and from Russia and Colorado. Further, the plaintiff is the Trust and Archangel's documents are here in the U.S. (ECF No. 47-1, ¶ 94.) Nonetheless, such claims also involve extensive prior communications between Archangel and AGD to and from Russia and Canada. The Trust's documents are in English or have been translated into English, and litigating this case in Russia would require the translation of documents from English to Russian. Except for one key witness located in Australia who speaks Russian, the Trust's other key witnesses speak English. Two of the Trust's key witnesses are located in Colorado. Other key witnesses are located in New York, Canada, the United Kingdom, and Australia. Except for Mr. Krel, none of the Trust's witnesses in the West have agreed to testify in Russia. (ECF No. 47-1, ¶¶ 89-93.)
After considering all the private factors, the Court finds that moving this lawsuit to Russia would, for the most part, be simply be shifting the burden of litigation from Lukoil to the Trust. If the case was heard here, documents would need to be translated into English, Russian interpreters would be necessary, and the parties appear not to dispute that this Court would likely not be able to compel non-party witnesses to appear. If the case was heard in Russia, documents would have to be translated into Russian, English interpreters would be needed, and, again, the parties appear not to dispute that the Russian courts could not compel non-party witnesses to appear. Litigation would be more expensive for one party or the other, depending on the forum. Nonetheless, the Trust also contends that litigating in Russia would, for all practical purposes, be the "death knell" of this case as its litigation funders would be unwilling to fund a lawsuit in Russia. While a party's financial resources may be a relevant consideration, the Court is less convinced that the possible actions of present or future investors are relevant considerations.
The public interest factors include: "(1) administrative difficulties of courts with congested dockets which can be caused by cases not being filed at their place of origin; (2) the burden of jury duty on members of a community with no connection to the litigation; (3) the local interest in having localized controversies decided at home; and (4) the appropriateness of having diversity cases tried in a forum that is familiar with the governing law." Yavuz, 576 F.3d at 1180 (quoting Gschwind, 161 F.3d at 606).
Lukoil argues these factors favor a transfer. The Court agrees. First, this case will pose significant administrative difficulties to the District of Colorado in terms of time and energy in handling the many issues that will likely arise, including obtaining Russian interpreters for trial,
In summary, Russia is an available and adequate alternate forum to hear this case. If the case were heard here, foreign law would apply at least to part of the controversy between the parties. And, while the private interests weigh slightly in favor of the Trust, the public interests weigh heavily in favor of Lukoil. On this record, the Court finds that Lukoil has met its heavy burden of showing that dismissal under forum non conveniens is appropriate, in light of Lukoil's affirmative representation to this Court that it consents to the jurisdiction of the Russian courts and agrees not to raise the statute of limitations as a defense to the Trust's claims.
In light of the Court's determinations on the issues addressed, it need not decide the other issues raised by the parties.
Based on the foregoing, it is ORDERED that:
1. Defendant Lukoil's Motion to Dismiss (ECF No. 29) is hereby GRANTED based on:
2. The Trust's request for leave to amend is hereby DENIED; and
