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RSM Production Corp. v. Fridman

February 19, 2009


The opinion of the court was delivered by: Wallach, Judge

Before: WALLACH, Judge*fn1



This case arises out of an alleged oil and natural gas exploration contract between Plaintiffs and the Government of Grenada. Under the alleged contract, Plaintiffs were to receive a license to conduct seismic exploration off the coast of Grenada. That license was never issued. Plaintiffs assert claims for tortious interference with contract, tortious interference with prospective business advantages, and civil conspiracy to commit tortious interference. Various motions are before the court. These include: motions for dismissal on the threshold grounds of lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act and lack of personal jurisdiction; a motion to strike certain allegations and exhibits from the Third Amended Complaint; and motions for dismissal on the merits, principally on the ground that Plaintiffs have failed to state a claim upon which relief can be granted. Plaintiffs have applied for default judgment with respect to the two non-appearing Defendants.

For the reasons set forth below, the motion to strike is granted in part and denied in part, Defendants' motions for dismissal are granted, and Plaintiffs' applications are denied.


A. Factual Background

1. The Parties*fn2

Plaintiff RSM Production Corporation ("RSM") is a corporation incorporated in Texas, with its business address in Colorado. (Third Amended Complaint ¶ 1.) Plaintiff Jack J. Grynberg ("Grynberg"), an oil and natural gas professional, is a resident and citizen of Colorado. (Id.) Plaintiff Grynberg Petroleum Company is a sole proprietorship (d/b/a) owned by the wife of Jack J. Grynberg; she is not represented in this action.*fn3

Defendant Gregory Bowen ("Bowen") was, at all relevant times, Deputy Prime Minister of the Government of Grenada, as well as Grenada's Minister of Energy.*fn4 (Id. ¶ 5.)

Defendant BP, p.l.c. ("BP") is an oil and energy company organized under the laws of the United Kingdom. (Id. ¶ 10.) BP does business in the United States as BP Corporation North America Inc., and maintains an investor relations office in New York. (Id.)

Defendant John Browne ("Browne") is a British resident and national. (Id. ¶ 9.) Until May 1, 2007, Browne was Group Chief Executive of BP. (Id.)

Defendant TNK-BP Limited ("TNK-BP") is a company organized in 2003 under the laws of the British Virgin Islands. (Id. ¶ 8.) TNK-BP is jointly owned by BP (50%), the Alfa Group (25%), and Access Industries together with a large Russian conglomerate (25%). (Id.)

Defendant Mikhail Fridman ("Fridman") is Chairman of the Board of Directors of TNKBP. (Id. ¶ 2.) Fridman is also Chairman of the Board of Directors of the Alfa Group Consortium and Chairman of the Board of Directors of Alfa-Bank, which has offices in New York. (Id.)

Defendant Len Blavatnik ("Blavatnik") is a member of the Board of Directors of TNKBP. (Id. ¶ 3.) Blavatnik is believed to maintain a residence and to conduct business affairs in New York through his company, Access Industries. (Id.)

Defendant Global Petroleum Group, Ltd. ("Global Petroleum") is a company founded under the laws of Grenada in 2003. (Id. ¶ 7.) Global Petroleum was founded by a group of individuals, including Defendant Lev Model and Lev Korchagin ("Korchagin").*fn5 (Id.)

Defendant Lev Model ("Model") is a Director of Global Petroleum, and he is believed to be its Chairman. (Id. ¶ 6.) Model is a resident of Brooklyn, New York. (Id.)

2. Facts Alleged in Plaintiffs' Third Amended Complaint

According to the Third Amended Complaint,*fn6 RSM and the Government of Grenada entered into an exclusive Petroleum Agreement ("Agreement") in July 1996. (Third Amended Complaint ¶ 12.) Pursuant to this Agreement, Grenada was to issue a license to RSM for "oil and natural gas exploration, development, and production." (Id.) RSM was required to apply for such a license within 90 days after execution of the Agreement, i.e., by October 1996. (See id. ¶ 35; Declaration of Layaliza K. Soloveichik in Support of Bowen's Motion to Dismiss the Third Amended Complaint Ex. 2A, Agreement between the Government of Grenada and RSM (July 4, 1996), Art. 3.1.) Instead, in a letter dated July 18, 1996, RSM provided notice to the Government of Grenada that it was invoking the force majeure clause contained in the Agreement. (Id. ¶ 29.) This letter was accepted and agreed to by Grenada. (Id.)

In September 1996, Bowen advised Grynberg that in order for RSM and Grynberg to conduct business in Grenada, they would have to furnish significant bribe payments to Bowen. (Id. ¶ 15.) After RSM and Grynberg refused to do so, "Bowen obstructed, harassed and intimidated RSM and Grynberg in their efforts to explore, develop and produce Grenada's oil and gas natural resources." (Id.)

In late January 1999, Grynberg made a presentation to the General Counsel of the British Petroleum Exploration Company ("BPX"), a wholly-owned exploration, development and production subsidiary of BP; at the time of Grynberg's presentation, Browne was the Chief Executive Officer of BPX. (Id. ¶ 14.) The purpose of the presentation was to invite BPX to join RSM in its exploration, development and production project in offshore Grenada. (Id.) Grynberg provided the General Counsel of BPX with "extremely valuable confidential, exclusive, geologic, geophysical and economic information of the vast oil and natural gas potential of offshore Grenada," with the understanding that he would take this information to London and share it with Browne; the General Counsel later stated that he did share this information with Browne. (Id.)

In August 2003, TNK-BP was formed. (Id. ¶¶ 17, 28.) Following the formation of TNKBP, the Global Petroleum Group was formed in December 2003. (Id. ¶ 25.) Within months after the formation of the Global Petroleum Group, "Grenada took active steps to get out of its exclusive contract with RSM." (Id. ¶ 29.)

On January 12, 2004, RSM wrote to the Prime Minister of Grenada to inform him that RSM was in the process of revoking the force majeure. (Id. ¶ 31.) On April 14, 2004, RSM submitted an application for an "oil and natural gas exploration license" to Grenada. (Id. ¶ 32.) After an exchange of letters between Grynberg and various Ministers within the Government of Grenada (see id. ¶¶ 32-33), Bowen advised RSM of his position that RSM had not timely filed its license application by letter dated April 27, 2004 (id. ¶ 34). RSM then filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes ("ICSID") on August 31, 2004, alleging that Grenada breached its contract with RSM.*fn7 (Id. ¶ 40.)

In 2005 and early 2006, Grynberg was contacted by Michael Melnicke ("Melnicke"), a New York business person who is an "Ambassador-At-Large" for the Government of Grenada, appointed to that position by Grenada's Prime Minister, Keith Mitchell. (Id. ¶ 45.) Melnicke also serves with Blavatnik as a Director of the American Jewish Congress. (Id.) Melnicke offered to assist in resolving the dispute between RSM and Grenada. (Id. ¶ 49.) As compensation for his offered assistance, Melnicke asked for certain royalties based on the amount of oil and natural gas produced pursuant to the Agreement between RSM and Grenada. (Id.) Between 2005 and early 2006, Melnicke proffered several versions of a proposed contract memorializing those terms, but RSM refused to sign any of the drafts. (Id.) During the course of these negotiations, Melnicke "revealed" to Grynberg that Blavatnik and Fridman had bribed Bowen so that their group could develop the petroleum reserves believed to exist off the shore of Grenada. (Id. ¶ 50.) Melnicke "further revealed" that Blavatnik and Fridman had also promised to furnish bribes to Grenadian government officials in the future, and had also promised to finance Grenada's legal defense in the ICSID arbitration. (Id.)

In June and July of 2007, certain official documentation was made public by the Government of Grenada; these documents showed that Global Petroleum had invested more than $4 million into Grenada's legal defense before the ICSID tribunal. (Id. ¶ 53.) On June 21, 2007, Bowen testified in the ICSID arbitration that Global Petroleum "is affiliated with a company that is 'one of the biggest . . . seismic scientific investment compan[ies] and that they did work in the US and the UK and China.'" (Id. ¶ 52.)

B. Relevant Procedural Background

Plaintiffs' original Complaint, filed on November 1, 2006, stated causes of action for tortious interference with contract and tortious interference with prospective business advantages against Bowen, Fridman, Blavatnik, and Korchagin. Since the filing of the original Complaint, Plaintiffs have amended the Complaint on three occasions. The First Amended Complaint was filed on August 24, 2007, at the direction of the court; the amendments to the Complaint reflected the court's dismissal of Plaintiffs' claims for tortious interference claims against Bowen. After the court granted Plaintiffs' Motion to Add Parties, filed pursuant to Fed. R. Civ. P. 21, Plaintiffs filed the Second Amended Complaint on October 3, 2007, adding Model, Global Petroleum, BP, Browne, and TNK-BP as Defendants. Plaintiffs filed a Third Amended Complaint on February 25, 2008, after receiving the court's permission to add a civil conspiracy claim against Bowen.


A . Subject-Matter Jurisdiction Under The Foreign Sovereign Immunities

Act A defendant which moves for dismissal of a complaint for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act ("FSIA") "must present a 'prima facie case that it is a foreign sovereign.'" In Re Terrorist Attacks on September 11, 2001, 538 F.3d 71, 80 (2d Cir. 2008) (quoting Virtual Countries, Inc. v. Republic of S. Afr., 300 F.3d 230, 241 (2d Cir. 2002)). Once the defendant establishes this prima facie case, the burden shifts to the plaintiff to demonstrate that one of the exceptions articulated in the FSIA applies. Id. Nevertheless, the defendant retains the "ultimate burden of persuasion." Id. (quotations omitted).

In considering such a motion, the "district court 'retains considerable latitude in devising the procedures it will follow to ferret out the facts pertinent to jurisdiction.'" APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003) (quoting Phoenix Consulting, Inc. v. Republic of Angl., 216 F.3d 36, 40 (D.C. Cir. 2000)). This discretion includes "the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits." LeBlanc v. Cleveland, 198 F.3d 353, 356 (2d Cir. 1999); see also Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir. 2000).

B. Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), the plaintiff bears the burden of making a prima facie showing that jurisdiction exists. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir. 2007). A plaintiff can make this showing through affidavits and other supporting materials. Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001). "[A]ll allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." A. I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79--80 (2d Cir. 1993). Nevertheless, conclusory allegations lacking factual specificity do not satisfy this burden. Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184--85 (2d Cir. 1998).

C. Motion To Strike

On a motion to strike allegations from the pleadings pursuant to Fed. R. Civ. P. 12(f), "[t]he court may strike . . . any redundant, immaterial, impertinent, or scandalous matter." "[M]otions to strike are viewed with disfavor and infrequently granted." In re Merrill Lynch & Co., Research Reports Sec. Litig., 218 F.R.D. 76, 78 (S.D.N.Y. 2003). As a general proposition, "the courts should not tamper with the pleadings unless there is a strong reason for doing so." GI Holdings, Inc. v. Baron & Budd, 238 F. Supp. 2d 521, 555 (S.D.N.Y. 2002) (quoting Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir.1976)).

D. Failure To State A Claim

When deciding the sufficiency of a complaint that is subject to a Fed. R. Civ. P. 12(b)(6) motion to dismiss, the court must "accept as true all of the factual allegations contained in the complaint" and "draw all reasonable inferences in plaintiff's favor." Hunt v. Enzo Biochem, Inc., 530 F. Supp. 2d 580, 591 (S.D.N.Y. 2008) (citations omitted). Notwithstanding these favorable inferences, the claim may still fail as a matter of law, if it fails to meet the "plausibility" standard articulated in Bell Atlantic Corp. v. Twombly, 50 U.S. 544, 127 S.Ct. 1955, 1970, 167 L.Ed. 2d 929 (2007). Hunt, 530 F. Supp. 2d at 591. While the complaint "need not provide 'detailed factual allegations,'" id. (quoting Twombly, 127 S.Ct. at 1964), it must "amplify a claim with some factual allegations . . . to render the claim plausible," Iqbal v. Hasty, 490 F.3d 143, 157--58 (2d Cir. 2007); see also Twombly, 127 S.Ct. at 1977 n.3 ("Rule 8(a) 'contemplate[s] the statement of circumstances, occurrences, and events in support of the claim presented' and does not authorized a pleader's 'bare averment that he wants relief and is entitled to it.'") (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure: Civil 3d § 1202, at 94-- 95 (3d ed. 2004)). Thus, the complaint must provide "the grounds upon which [the plaintiff's] claim rests through factual allegations sufficient 'to raise a right to relief beyond a speculative level.'" ATSI Commc'ns v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 127 S.Ct. at 1965).

When assessing the legal sufficiency of a complaint, "a court need not accord 'legal conclusions, deductions or opinions couched as factual allegations . . . a presumption of truthfulness.'" Hunt, 530 F. Supp. 2d at 591 (quoting In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007)). Indeed, "[c]onclusory allegations or legal conclusions masquerading as facts will not suffice to defeat a motion to dismiss." Kirch v. Liberty Media Corp., 449 F.3d 388, 398 (2d Cir. 2006) (quoting Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002)); see also Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed. 2d 209 (1986) ("Although for the purposes of [a] motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation."); De Jesus v. Sears Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996) (holding that a complaint consisting of merely conclusory allegations unsupported by factual assertions cannot meet the liberal requirements of Fed. R. Civ. P. 12(b)(6)); Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1092 (2d Cir. 1995) ("[C]onclusory allegations of the legal status of a defendant's acts need not be accepted as true for purposes of ruling on a motion to dismiss.").


The Third Amended Complaint must be dismissed against Bowen for lack of subject-matter jurisdiction under the FSIA because Bowen is a foreign sovereign entitled to the protection of the FSIA and Plaintiffs have not demonstrated that any of the exceptions to immunity apply.*fn8 The FSIA "provides the sole basis of obtaining jurisdiction over a foreign state in a federal court." In Re Terrorist Attacks on September 11, 2001, 538 F.3d 71, 80 (2d Cir. 2008) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439, 109 S.Ct. 683, 102 L.Ed. 2d 818 (1989)). Pursuant to the FSIA, federal courts cannot exercise subject-matter jurisdiction over a claim against a foreign state unless one of the specified exceptions contained in the statute applies. 28 U.S.C. ยง 1604 (foreign states are "immune from the jurisdiction of the courts of the United States ...

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