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CURTIS v. BEATRICE FOODS CO.

January 4, 1980

GUSTAVO G. CURTIS and VERA CURTIS, Plaintiffs,
v.
BEATRICE FOODS COMPANY, Defendant.



The opinion of the court was delivered by: POLLACK

OPINION AND DECISION

PRELIMINARY

 Gustavo G. Curtis, the manager of Industrias Gran Colombia, S.A., an industrial company incorporated in the Republic of Colombia and located in Bogota was kidnapped on Bogota's streets by terrorists on September 28, 1976 and held for ransom demanded from his company beyond its and his capacity to pay. Defendant Beatrice Foods, the parent company of the victim's employer, voluntarily undertook to negotiate for his release from captivity and after protracted negotiations succeeded in freeing him alive on May 17, 1977 by payment of 15,500,000 pesos in ransom. *fn1"

 Beatrice is now being sued by Mr. Curtis and his wife, a television personality in Colombia, because it allegedly did not do enough or do enough well enough on his behalf. Multiple claims of over $ 200 million are asserted in the complaint. Briefly, he says that Beatrice was in fact his employer and therefore liable to him for monetary damages under provisions of the Labor Code of Colombia akin to our Workmen's Compensation laws, or alternatively, that Beatrice having volunteered to negotiate his rescue became a so-called "officious agent" under the Civil Code and liable to him for having performed the functions of that agency inadequately. Mr. Curtis claims that he suffered a "work accident" and was emotionally disabled to return to his employment in Bogota and in consequence of the absence of any opportunity for a transfer to another locality in Beatrice's organization, he should be paid what he would have earned in Bogota until retirement age 65 or at least what his salary from defendant as his "employer" would have totalled during two years following the termination of his employment. *fn2"

 Mrs. Curtis joined in her husband's suit and initially asserted separate claims against Beatrice Foods for loss and impairment of consortium during and since her husband's captivity and for alleged defamation for wrongly doubting whether the kidnapping was genuine and hiring an investigator to look into this and causing her to take a lie-detector test. However, at the close of the case she consented to dismissal of those claims. *fn3"

 The defendant, Beatrice Foods, denied legal liability to either plaintiff and claimed that its conduct was voluntary, reasonable and in good faith in freeing Mr. Curtis from his captivity and that it was not his employer or obligated to provide him with employment elsewhere.

 The parties stipulated expressly that the law of the Republic of Colombia governs the open claims. Testimony as to the foreign law was adduced by defendant through Professor Henry P. deVries, an acknowledged expert in Colombian law. The plaintiffs submitted a written statement by Colombian attorneys.

 The issues were tried to the Court at a Bench trial. Jurisdiction of the Court is grounded on diversity of citizenship.

 For the reasons indicated hereafter, neither plaintiff is entitled to prevail herein.

 The Parties

 At the time of the kidnapping, Gustavo G. Curtis was 51 years of age. He was born in New York City but had spent the major portion of his adult life, 25 years, living and working in Latin America. He was married in Venezuela in 1964 to a citizen of Venezuela and Colombia of European birth. Mr. Curtis had no residence of any kind in the United States during this lengthy period and was not a citizen of any state. He is a tall, well built man of strong will and constitution, having served in his early years in the cavalry division of the United States Army in the Philippines after basic training. He and his wife were well aware that the area in which they lived was in a state of great unrest; that Colombia had been a violent area for half a century and was at the times involved herein under martial law and that Bogota in particular was an unsafe city; that kidnappings for ransom were a form of fund raising; and according to the testimony of Mrs. Curtis were virtually day to day news.

 Nonetheless, early in 1969, Mr. Curtis left Caracas, Venezuela, to accept employment as the manager of Fabrica de Dulces Gran (Fabrica hereafter), an industrial corporation organized in Colombia and based in Bogota. Fabrica was a subsidiary of Beatrice Foods through stock ownership. Mr. Curtis and Fabrica agreed on the salary he was to receive from it together with a percentage of the profits of Fabrica's operations.

 The defendant, Beatrice Foods, is a major multinational food products enterprise organized under Delaware law with its principal place of business in Chicago, Illinois. It engages in the manufacture and distribution of food products. Prior to the events involved herein it had 76 domestic and 33 foreign wholly-owned subsidiaries and in addition controlled through more than 50% Stock ownership one domestic and 37 foreign subsidiaries. This worldwide group of companies was operated on a decentralized basis. The individual managers of each subsidiary or affiliate of Beatrice Foods were given almost complete autonomy and independence in the management and operation of their individual enterprise, subject principally only to oversight by the parent corporation of capital expenditures beyond a specified amount.

 The employment contract with Mr. Curtis

 Fabrica, as the employer, entered into a written employment agreement with Mr. Curtis, as the employee, for his services from March 1, 1969 for an indefinite time in which he agreed to "place at the service of the employer all his normal working capacity on an exclusive basis" with the express term that the employee was "Not to render either directly or indirectly employment services to other employers." The agreement further recites that "His services inherent in the position shall be performed exclusively in the city of Bogota, D.E., legal headquarters of the Company." The introductory portion of the contract summarizes the employment as follows:

 TABLE

 Although the contract stipulated that the parties would not recognize the validity of any verbal stipulations relating to this contract, which according to the writing constituted the complete and total agreement on its subject matter, it was nevertheless orally understood that Mr. Curtis would receive additional salary beyond the stated sum, which had been fixed at the maximum deductible for tax purposes under Colombian law. The "unstated" amount was to be a fixed percentage of Fabrica's earnings, and was generated by the use of "off book accounts" and the fabrication of certain invoices to customers of the company. *fn4"

 In 1971, Fabrica was consolidated with another Beatrice subsidiary located in Colombia to form Industrias Gran Colombia, S.A. ("Industrias Gran"), all of whose stock was owned by five wholly-owned subsidiaries of Beatrice Foods. Upon the consolidation, Industrias Gran succeeded to and acquired the rights and obligations of Fabrica. No new contract was made with Mr. Curtis. He became the general manager of Industrias Gran and, as such, its chief executive charged with responsibility for its regular operations and their success. It engaged in business only in Colombia; its manufacturing, sales and administrative facilities are located in Bogota, where it produces and markets snack foods, candies, chewing gum and related products. On a day-to-day basis, Mr. Curtis managed the confectionery and chewing gum division of Industrias Gran while his colleague, Emilio Grun, was responsible for the snack foods division. Apart from the submission of annual budgets and monthly financial reports to Beatrice headquarters and obtaining from it approval for individual capital expenditures in excess of $ 30,000, direction of Industries Gran was left to Messrs. Curtis and Grun and they continued to function for the most part independently from Beatrice Foods it was tantamount to being the owners of the company; they had almost that latitude of freedom. Mr. Curtis' salary arrangements with Industrias Gran remained unchanged, although he was now paid a lower percentage of profits to reflect the larger profit-pool from which his salary was drawn. The sole source of the compensation paid to Mr. Curtis, however, generated and in whatever manner paid, was Industrias Gran.

 In 1974 an additional agreement in writing was made by and between Industrias Gran and Mr. Curtis. This recited that he had been and was presently under agreement with that company as an employee; that to insure the availability to it of his services following termination of full time employment, Industrias Gran agreed that after he reached age 55 (March 10, 1980) the company would employ him in a consulting capacity for 10 years in the field of marketing, sales and planning of the company. The yearly compensation was to be paid in Colombian pesos and was to be equivalent to 1% Of his average yearly salary during the previous five years, multiplied by the number of continuous years of service in the company. However, should his employment be terminated, "for any reason whatsoever before 3.10.80", the consulting agreement was to be considered as thereby terminated as if never concluded. The agreement embodied a restrictive covenant against direct or indirect competition by Mr. Curtis with the company's business during the life of the prospective consulting agreement.

 The warning of danger

 In early July 1976, Mr. Curtis was requested by Mr. Stephen Gibson, a U.S. Embassy official, to visit the U.S. Embassy in Bogota. At the Embassy, Mr. Curtis was shown a photograph thought to be of him that had been found in the possession of an underworld figure. Mr. Gibson advised Mr. Curtis that this fact could indicate that he was a potential kidnap target.

 Although Mr. Curtis had some doubts about whether the picture was actually of him, he was naturally concerned about the situation, and sought counsel from Emilio Grun, the Industrias executive in charge of the snack foods division. Mr. Grun told Curtis that if he were in the latter's shoes, "to hell with everything, I'd just get on a plane and get out." Short of that, however, the only advice Mr. Grun could offer was that Curtis wait until Andre Job, the president of Beatrice's Latin-American operations, arrived on the visit he was scheduled to make in a few days, and apprise him of the situation.

 When Mr. Job arrived, Mr. Curtis took him to the U.S. Embassy, where Mr. Gibson again showed the picture and advised of the dangerous possibilities. After the meeting, Mr. Curtis told Job that he wanted to get out of Colombia and requested a transfer. Mr. Job told him that he didn't have authority to grant a transfer, and that it would have to be taken up with the Beatrice people in Chicago.

 During the approximately two and a half months between these events and Mr. Curtis' kidnapping on September 28, 1976, Mr. Curtis took very few, if any, substantive steps to protect himself, although, as general manager of Industrias, he had the authority to take whatever actions he thought necessary. Mr. Curtis, moreover, had had some prior training in how to deal with such situations.

 In the fall of 1975, Mr. Curtis attended a security briefing in Monaco at a meeting of the managers of Beatrice's international subsidiaries. The speaker at this meeting was David Walker of Control Risks, Ltd., a London based firm engaged in rendering advice on security matters and practiced in the expanding field of kidnap negotiations. Mr. Walker counseled the audience on the precautions that should be taken to minimize the risk of kidnapping. Among other things, he emphasized the importance of avoiding predictable patterns of behavior, as by varying the routes to and from work. After the speech, two Beatrice executives informed those present that Control Risks was available to each manager to advise him in any security matters should the need arise.

 Furthermore, in early 1976, Mr. Curtis attended a similar lecture at the U.S. Embassy in Bogota, arranged by the State Department's Office to Combat Terrorism. The audience was again informed of various precautions that could be taken to minimize the risk of kidnapping.

 Despite having the benefit of these briefings, however, Mr. Curtis, to judge from his actions, paid little heed to the advice given. The only steps Mr. Curtis took were investigatory, not precautionary in and of themselves. For instance, he asked a security firm for a quotation for bodyguards; he initiated proceedings for getting a government permit to carry weapons; he asked his office manager to get quotations on a two-way radio unit for his car and to contact "a number of organizations" with reference to "beefing up security" at the plant. From the evidence, it appears that Mr. Curtis failed to obtain any of the information indicated or to follow through on any of these measures.

 One thing that Mr. Curtis did do, however, was to continue to ask Mr. Job about a transfer. The request for a transfer was forwarded by Mr. Job to James Dutt, Beatrice's president of the International Division. Mr. Curtis was told that it was being looked into, but that there was nothing definite yet. In fact such inquiries were made by defendant and it found that no managerial opening existed within its subsidiaries.

 In August 1976, Mr. Curtis was visited by his brother, and the two went on a vacation to a resort in Colombia 200 miles outside of Bogota, and from there to the Caribbean, and from there to Miami. While in Miami Mr. Curtis contacted Mr. Job, who lived there. Mr. Curtis says he only spoke to Mr. Job on the phone, and that the answer was the same inconclusively negative one he had received theretofore. Mr. Job, on the other hand, believes that he actually saw Mr. Curtis in person at this point and told him that there were no openings available elsewhere, but his memory is somewhat hazy.

 At sometime thereafter, Mr. Job again visited Mr. Curtis in Colombia, and again told him that nothing definite had developed, although he did mention to Mr. Curtis that the threat of kidnapping was "part of what it means to be an executive." At any rate, Mr. Curtis never got a transfer, and the evidence is that no suitable opening became available elsewhere in the organization. His lawyer asked Mr. Curtis why he didn't leave Colombia and his testimony was "I'm no quitter."

 The kidnapping

 On September 28, 1976, Curtis was on his way home from work when his driver turned off the principal highway into a rather narrow street and a car coming towards them struck their car. Soon another car came behind them and blocked the street in that direction. When Curtis got out of the car to see if he could get things moving, he had a gun put to him and was forced into a car.

 With respect to the circumstances of the kidnapping, it appears that plaintiff could have taken a somewhat longer route home which would have kept him on main roads and not taken him on any narrow side streets. Plaintiff's chauffeur, moreover, was not a very skilled driver and the Curtises doubted his general intelligence and he was not trained to deal with this type of emergency.

 Plaintiff was taken by his abductors to an unknown location, lowered down a long shaft into a 4' X 8' bare cell. He stayed there until May 18, 1977, approximately eight months. He had no means of telling time, and was occasionally psychologically but not physically tortured by his captors, as by their making false promises to bring him food or water. There is no doubt that he suffered a monstrous ordeal during his captivity.

 Beatrice Foods was informed about the kidnapping within a few hours of its occurrence. No employee of Industrias was qualified to deal with such a situation none had any experience. The matter was referred to Donald Klein, Beatrice's Director of Corporate Insurance, Employee Benefits and Safety. Although Mr. Klein a former FBI agent was usually put in charge of security matters, he had not prior to the kidnapping been informed of the kidnap threat. After discussion with his superiors, Beatrice decided to be of assistance and Klein contacted Control Risks and retained that firm to undertake to deal with the situation. Mr. Klein knew Control Risks to be experienced in this field, whereas neither Industrias nor Beatrice had any experience to go on.

 From the time of its retention by Beatrice until Mr. Curtis' release, one or more of four Control Risks employees were in Bogota. These agents maintained daily logs of events that were regularly forwarded to Beatrice, along with reasoned recommendations as to the best course to follow. In every instance, Beatrice followed these recommendations.

 The initial ransom demand made by the kidnappers was for $ 5 million, was sent to the house attorney for Industrias, and stated that the kidnappers would negotiate with "the company". Industrias was unable to meet any such demand. Mrs. Curtis had no such resources available to her. However, Beatrice had some years before obtained worldwide kidnap insurance (excepting Argentina) covering the risk of extortion under threat of harm to the executives of the company and its subsidiaries. The $ 5 million demand was the same amount that had been demanded for a Sears executive who had been kidnapped in Colombia in 1975 and ultimately ransomed after 89 days for.$ 1.2 million.

 Control Risks recommended, and Beatrice agreed that no counter offer in excess of $ 100,000 should be made until the kidnappers reduced their $ 5 million demand. No reduction in the demand was forthcoming in the numerous telephone contacts with the kidnappers until February 15, 1977, some four and one half months after the kidnapping. During this period, the company's counter-offers had steadily increased from an initial counter-offer of 750,000 pesos, or roughly $ 22,500, to 3.5 million pesos, or roughly $ 100,000. Set forth in the margin is a chronology of the kidnappers' calls, the demands and the progressive offers of ransom. n.5 [Footnote Omitted]

 Mr. Curtis testified that during his captivity he told his abductors not to be thinking about any ransom bigger than two or three million pesos because it never will be paid and they could just forget about it if that's what they were thinking of. When the kidnappers laughed at this he then said maybe the absolute maximum that he could possibly visualize would be five million pesos.

 During the course of Mr. Curtis' captivity, "proof" questions were frequently asked of the kidnappers to verify that Mr. Curtis was still alive. These questions, which from their nature could only be answered by Mr. Curtis, were often not responded to for lengthy periods of time. Which is to say that, of necessity, the kidnappers controlled the frequency of contact.

 Another handicap that Beatrice and Control Risks were laboring under was the hostile attitude of the Colombian authorities toward the payment of ransom. It was made manifest to defendant's representatives and to the victim's wife that the Colombian police were more concerned about catching kidnappers than with getting the victims back alive. The authorities made it clear that, although they would not directly interfere with negotiations, they felt that the Sears ransom had been excessive and enhanced the danger of such crime and they did not want a repetition of that kind of incentive to terrorists. In fact, after the ransom was paid in this case, the military authorities arrested the people involved in the negotiations with the kidnappers and kept them in prison for over two months for having dealt with terrorists to gain Mr. Curtis' release.

 TABLE

 Because of the fear that the authorities might interfere and the more general concern about leaks, the Control Risks people advised Mrs. Curtis, who had a popular television show on Colombian television, and was very much a public figure, not to talk to anyone about what was happening. Mrs. Curtis shared ...


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