The opinion of the court was delivered by: Edelstein, District Judge:
Plaintiffs have brought this diversity action claiming that
defendants have breached an agreement to seat a nominee of
plaintiff Scottish Air International, Inc. ("SAI") on the board
of directors of defendant British Caledonian Group, plc
("BCG"). There are two sets of events relevant to this dispute.
The first involves a shareholders' derivative action filed by
Murray Vidockler and SAI, also the plaintiffs in the instant
action, against Caledonian Airways (Prestwick), Ltd. ("CAP") in
the Southern District of New York in 1965. The second involves
plaintiff Murray Vidockler's removal from the board of
directors of BCG in 1985.
BCG was incorporated in Scotland in 1960 and has maintained
its only business office in Great Britain. BCG is a holding
company which exercises general supervision over the diverse
businesses of a number of separate and independently managed
operating subsidiary corporations. The three individual
defendants, Adam Thomson, Dennis H. Walter, and Marshall
Gibson, are all domiciliaries, residents, and citizens of Great
Britain. They are three of eleven directors of defendant BCG
and collectively only own 2.2% of the outstanding shares of
CAP, is a Scottish corporation and was formed at the same
time as BCG.*fn1 BCG was CAP's majority shareholder and all of
BCG's directors were also directors of CAP. CAP was one of
BCG's operating subsidiary corporations.
In 1961, BCG, through CAP, sought to initiate airline
operations in Britain with service to the United States. BCG
obtained a large portion of its capital for this venture from
SAI, a New York corporation, and its majority stockholder
Murray Vidockler, a New York citizen. SAI was the only United
States shareholder of CAP.
In July 1965, SAI initiated a shareholder derivative suit
against CAP and several members of CAP's board of directors
alleging improper use of corporate funds and improper issuance
of shares. That case, Scottish International, Inc. v. Thomson,
65 Civ. 1782 (S.D.N.Y. filed July 7, 1965), was before Judge
Dudley Bonsal. In January 1966, the parties entered into a
settlement agreement (the "settlement agreement") that was
approved and so ordered by Judge Bonsal. The settlement
agreement was signed by SAI, CAP, and the individual defendants
in the instant action who are directors of both CAP and BCG. A
key element of the settlement agreement provided that CAP
appoint an individual nominated by SAI to CAP's board of
directors. In the instant action, plaintiffs also claim that
SAI was given a similar right on BCG's board of directors.
Vidockler was the representative designated by SAI for this
purpose, and was consistently elected to the boards of
directors of both CAP and BCG between 1966 and 1985.
In December of 1987, British Airways ("BA") made a successful
tender offer for the shares of BCG. In January of 1988, both
plaintiffs tendered their BCG shares to BA. BCG continues to be
a holding company which possesses assets and has a substantial
net worth. BCG's principal asset is Caledonian Airways,
formerly British Airtours ("CA"), a wholly owned subsidiary
which now conducts a worldwide charter service. On April 15,
1988, the instant action was dismissed by this Court on the
grounds of forum non conveniens. On October 31, 1988, the
Second Circuit Court of Appeals reversed and remanded this
Court's April 15, 1988 order for failure to consider the
plaintiffs' claims for contempt and damages. 860 F.2d 57.
Plaintiffs then moved pursuant to Federal Rule of Civil
Procedure 19(a)(1) to add BA as an indispensable party and
pursuant to Federal Rule of Civil Procedure 15(a) and (d) to
amend and supplement their complaint in order to add claims
that they were not allowed to trade their shares of BCG for
shares of BA during BA's tender offer for BCG, but were instead
forced to take cash.
1. Federal Rule of Civil Procedure 19(a)
Federal Rule of Civil Procedure 19(a) provides that a person
who is subject to service of process and whose joinder will not
deprive the court of subject matter jurisdiction shall be
joined as a party to the action if "in the person's absence
complete relief cannot be accorded among those already
parties." Fed.R.Civ.P. 19(a)(1). The term "complete relief"
refers only to complete relief between the parties "and not as
between a party and the absent party whose joinder is sought."
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