BGwas ser ved in compliance with the Hague Convention on the Service Abroa d of 1 Judic ia l and

Extr a -Jud ic ia l D oc ume nts in C ivi l and Comme rc ia l Matte rs . UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA
JACK J. GR YNBERG, e t al., P lai nt iffs, v. Ci vilAc ti on N o. 1: 08 -C V- 00 30 1 - (J DB ) BP P .L. C. , STA TOI LHY DR O A SA, BG GR OUP P .L.C., BG NORTH AMERICA , JOHN BROWNE, ANTHO NY HAYWARD, P ETE R SUTHERL AND, HELGE LUND, EIVIND REITEN, ROBERT WIL SON, and F RANK CH AP M AN , in div idua ls, De fend ant s.
M EM OR AN DU M OP IN ION On Novembe r 12, 2008, this Court dism issed plaintiffs' complaint ag ainst BP P.L .C., individual BP defe ndants, and Statoilhy dro ASA and grante d those defe ndants' motion to compel arbi tr ati on . T wo m ot io ns rem ain pen di ng in th is case , b ot h rel ati ng to BG Gro up , P .L .C . ("BG") -- the la st defenda

nt standing. B G, a United K ingdom c orporation, was serve d with summons and plaintiffs' complaint on J une 10, 2008. By August 4, 2008, BG ha d not answer ed or 1 otherwise r esponded to plaintiffs' complaint and the Clerk de clar ed B G in defa ult. Pl aintiffs filed a motion for def

ault judgme nt on August 7, 2008. BG f iled a motion to set aside the def ault on August 13, 2008, which also soug ht to dism iss plaintiffs' c omplaint and to compel ar bitration. BA CKGROUND The pa rties in this case have a longand complicated history that does not nee d to be-2-

rec ounted her e. The Court describe d some of this history in its earlier N ovember

12 opinion. See Memora

ndum Opinion ("Me m. Op.") at 2-3. B ut some background on an ong oing arbitration between pla intiffs and B G is neede d to resolve the pe nding motions. L ike B P and Statoil, BG enter ed into a settlement a g ree ment with plaintiffs to resolve a dispute arisingout of a business dea l in Kazakhstan that turned sour. B G' s settlement ag ree ment was e ssentially the
same a s th e oth e r d e fe nd ants ' and re qu ir e s th e pa

rt ie s to su bmi t a ll c la ims ari sin gout of bu sin e ss dealing s in Kazakhstan to arbitration. See BGSettlement Ag ree ment at § 10.04. Howe ver, one
no ta ble dif fe re nc e be tw e e n B G' s se ttl e me nt a g re e me nt a nd the oth e r s e ttl e me nt a g re e me nts preve nts a straig htforwa

rd application of the Court' s November 12 opinion to the pending motions. W here as B P and Statoil entered into arbitration ag ree ments g overne d by New Y ork law, see Mem. Op. at 3, B G enter ed into an ar bitration ag ree ment g overne d by the law of Alberta , Canada , see B G Settlement Ag ree ment at § 10.02. Pursuant to that ag ree ment, plaintiffs initiated arbitration ag ainst BG in Albe rta in Jul y 2005. Di ssatis fi e d w ithpr oc e e din g s b e fo re the Cana dia n a rb itr atio n tr ibu

na l, p la int if

fs fi le d s uit in t his Court on F e br ua ry 21 , 2 00 8. Pla int if

fs a lle g e that B G, a lon gwi th t he oth e r d e fe nd ants , violated the Rac ketee r Influenc ed and Corr upt Org anizations Act (" RI CO") , 18 U.S.C. § 1962, and var ious state laws. See Compl. at ¶¶ 57- 86. BG , believingthat such cla ims fall within the scope of the settlement agree ment (and must there fore be ar bitrated), a sked the a

rbitration tribunal to enjoin plaintiffs from pursuingtheir RI CO suit in t his Court. Throug h a ser ies of steps that need not be detailed he re, on June 11, 2008 BGobtained an injunction fr om the Court of Que en' s Be nch of A lberta - - the c ourt desig nated to super vise the ar

bitration -- whic h enjoined plaintiffs from " takingany further steps" in their

RI CO claim and e njoined them from pursuing-3-

any "issues or

matters re lated to [BG' s] bus iness or ac tiviti es in Kazakhstan . . . in any pr oc e e din g s o the r t

ha n in an A lbe rt a

arb itr atio n. " Se e B G' s Me mor and um i n Su pp or t of I ts Mo tio ns (" B G M e m." ) at E x. C- 5 at 43 2. De sp ite the inj un c tio n f ro m th e Al be rt a

Court , plaintiffs have filed numerous a ffidavits and motions in this case see king to hold B G in defa ult. Upon ea ch filing , BGsoug ht -- and obta ined -- a holding f rom the Alber

ta Court that plaintiffs
we re in c onte mpt

of that c ourt ' s o rd e rs . STA ND ARD When consideringa motion to compel arbitration, "the a ppropriate standard of

revie w for the dis tr ic t c ourt

is the same sta

nd ard us e d in re so lvi ngsumma

ry jud g me nt m oti on s" purs ua nt t o Fe dera l Rule of Civil Procedur e 56(c ). B rown v. Dor sey & Whitney , L L P, 267 F.Supp.2d 61, 67 (D
. D. C
. 2 0 0 3 ) ( i n t ern al q u o t at i o nm ark s o m i t t ed ); s ee al s o P ar -Kn i tM i l l s , In c. v . S t o ck b ri d ge Fa brics Co., 636 F.2d 51, 54 & n.9 (3d Cir. 1980). Thus, the motion should be g rante d when the pleading s and evide nce de monstrate that " there is no ge nuine issue as to any materia l fac t and that the moving pa

rty is entitled to a judgme nt as a matter of law." Fe d. R. Civ. P . 56(c) . The movant bear s the burden of demonstratingthe abse nce of a g enuine dispute of material fa ct. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant may support its mot ion by "ide ntifying those portions of ' the pleading s, depositions, answers to interr og atories, a nd admissions on file, toge ther with the a ffidavits, if any ,' which it believes de monstrate the a bsence of a g enuine issue of

materia l fac t." I d. (quotingFe d. R. Civ. P . 56(c) ).

A N A LY S IS The fir st issue is whether to set aside the def ault enter ed by

the Clerk ag ainst BG. A court may set aside a

n entry of def ault for " g ood cause ." F ed. R. Civ. P. 55(c). Thre e fa ctors-4-

guide cour

ts in determining whether g ood cause exis ts: "whe ther (1) the def ault was willful, (2) a set-aside would prejudice plaintiff, and ( 3) the a lleg ed def ense w as meritorious." See Ke eg el v. Key West & Caribbe an Tra ding Co., 627 F .2d 372, 373 (D.C. Cir. 1980). " [S ]t rongpolicies favor resolution of disputes on their mer its." Jackson v. Be ech, 636 F .2d 831, 836 (D.C. Cir. 19 80 ). D efau ltis on ly

neces sary

whe n a p art y

is "ess ent ial ly

un res po ns iv e." I d. (qu ot in g H.F. L ivermore Corp. v. Aktieng esellscha ft Gebr uder L oepfe , 432 F.2d 689, 691 ( D.C. Cir. 1970)). Henc e, " [o] n a motion for re lief fr om the entry of a de fault or a

defa ult judgment, all doubts are resolved in f

avor of the par ty seekingrelief

." I d. B a se d o n th e his tor

y of the Cana dia

n a rb itr atio n r e c ounte d a

bo ve , B G h a s ma de an ampl e g ood cause showingto set aside the Clerk' s entry of def ault. Courts ex amine the c ircumstance s of t he d efau ltto det erm in e wh eth er i t w as w il lf ul . S ee Keegel , 6 27 F.2 d at37 4. Here, BG
rea sonably

assumed that plaintiffs would not (r epeatedly ) violate the A lberta Court' s order s enjoining the m from prosec uting the c ase be fore this Court. Good faith relianc e that anothe r pa rt y wi ll n ot s e e k e ntr

y of de fa ult de mon str ate s th at de fa

ult wa s n ot w ill fu l. I d. No r w ou ld setting a side defa

ult prejudice pla intiffs. As discussed below, pla intiffs should have submitted this claim to arbitration under the settlement agree ment, and henc e should not have be en bef ore thi s Co ur t in the fi rs t pl a c e . F ina lly , B G' s d e fe ns e is m e ri tor iou s f or the same re a so n - - p la int if fs ' claim should be ar

bitrated, not litigated in court. Th e se c on d is su e , th e n, is whe the r t o d ism iss pla int if fs ' c omp la int

a g a ins t B G a

nd to
c omp e l arb itr atio n. Th e Court did so a s to the oth e r d e fe nd ants -- B P, i nd ivi du a l B P de fe nd ants , and Statoil -- in its November 12 or der. The differ ence betwee n those defe ndants and B G, howeve r, is that arbitration with BG is takingplace in Alberta, Cana da under Alberta law. SeeSee, e.g ., Richards v. L loy d' s of L ondon, 135 F.3d 1289, 1295 ( 9th Cir. 1998) 2 (" Wit hout question this case would be e asier to de cide if this footnote in Mitsubishi had not been inserted. Ne verthe less, we do not believe dictum in a footnote re g ardingantitrust law outweig hs the extended discussion and holding in Scherk on the va lidity of cla uses spec ifying the forum and applicable law." ); Hay

nsworth v. The Corpor ation, 121 F.3d 956, 968 ( 5th Cir. 1997) (" We do not rea d Mitsubis hi so broadly . Setting aside the fa ct that it is dictum, t he quoted state ment, by its own terms, is lim ited to the antitrust context, as is M itsubishi more g ener ally .") ; Ril ey v. King sley Under writingAg encie s, L td., 969 F.2d 953, 957 (10th Cir. 1992) ( "[Plaintiff] relies on an isolated sente nce in a

footnote in Mitsubishi . . . [but ] [ o]n t hese f acts, we do not rea d Mitsubis hi as restric tively as plaintiff whe n Mitsubis hi is viewed ag ainst the bac kdrop of Supreme Court dec isions in t he ar ea." ). -5- B G Se ttl e me nt A g re e me nt at § 1 0. 02 . Pl a int if fs argue that th is d if

fe re nc e is c ru c ia l and

that it defe ats BG ' s motion t o compel ar bitration. Plainti ffs re ly

in larg e par

t on a footnote fr om M i t s u b i s h i M o t o r s C o r

p . v . S o l e r

C h r y s l e r - P l y m o u th , In c . , 4 7 3 U
. S
. 6 1 4 , 6 3 7 n . 1 9 ( 1 9 8 5 )
. In dic tum , th e Mit su

bis hi C ourt

wr ote that: [I ]n th e e ve nt t

he c ho ic e -o f- fo rum and

c ho ic e -o f- law c la

us e s o pe rate d in tandem as a

prospec tive waiver

of a pa rty ' s rig ht to pursue statutory re me die s f

or anti tr us t vi olatio ns , w e wo uld

have little he sit atio n in c o n d e m n i n gth e a g r e e m e n ta s a g a i n s tp u b l i c p o l i c y. I d. Plaintiffs contend that g rantingBG ' s motion t o compel would oper ate a s a wa iver of plaintiffs' rig ht to pursue its statutory RI CO suit and would theref ore be ag ainst public policy
. Plaintiffs' Me morandum in Opposition to BG' s Motion at 3. The Mitsubishi footnote notwithst anding , courts that have addre ssed the ar gument pla int if fs ra ise he re have no ne the le ss e nf or c e d a g re e me nts to a

rb itr ate . Ind e e d, many

c ourt s confr onted with the Mitsubishi footnote have found it inapplicable. When decidingthe 2 enfor cea bility of a f oreign forum sele ction clause , courts instead f ocus on two fa ctors: is the arbitration ag ree ment related to a business dea l that is int ernational in chara cter ? And ca n the plaintiff vindicate a lleg ed misdeeds unde r the law s of the chose n forum? See Scher k v. Alberto-Plaintiffs here do not a lleg e that B G fra udulently induced them into selec ting Albe rta a s 3 the forum f

or their a rbitration. -6- Culver Co., 417 U.S. 506, 516-19 (1974). Th e bu sin e ss d e a l th at pl a int if fs and B G a g re e d to arb itr ate is p la inl y int e rn atio na l in char acte r. Plaintiffs are U.S. citiz ens, B G is a B ritish company , the forum c hosen is in Canada, and the business de al involved ene rg y exploration in Kazakhstan. Ag ree ment in advanc e " on a forum ac cepta

ble to both parties is an indispensable element in international trade, c ommerce , and c ontr a c tin g ." Th e B re me n v . Z a pata Of f- Sho re Co. , 4 07 U. S. 1 , 1 3- 14 (1 97 2) . " [F ]orumselec tion clauses ' should be g iven full eff ect' when ' a fr eely

neg otiated private international ag ree ment [i s] unaffec ted by fra ud.' " Sche rk, 417 U.S. at 519 n.14 (quotingThe B reme n, 407 U.S. at 13). The ne ed for cer tainty in international business dea ls thus counsels strongly in favor 3 of compe lling ar

bitration. Th at pl a int if

fs may se e k r e dr e ss f

or the wr on g s B G a lle g e dly c omm itt e d f

ur the r c ouns e ls in favor of

compellingarbitration. As a threshold matter, the Canadian a rbitration tribunal has alre ady deter mined that plaintiffs' RI CO claims are arbitra ble under the par ties' settlement ag ree ment. See B G Mem. Ex. C -5 ¶¶ 24-25. That a g ree ment incorporated the Model L aw of the U. N. Commis sio n o n Inte rn atio na l T ra de L aw ( " UN CI TRA L " ). B G Se ttl e me nt A g re e me nt § 10.04(a) . L ike Amer ican Ar bitration Association Rule R-8(a) , UNCI TRALarticle 16(1) provides that the a

rbitration pane l may

rule on its own jurisdiction in the first instance. Just as incorpora tion of the AAA r

ules provided " clea

r and unmistakable evidenc e" that the par ties intended the a

rbitrator, not a

court, to dete rmine ar

bitrability , see Me m. Op. at 7-9, incor poration of the UN CI TRALrules demonstrates that the par ties intended the a

rbitrator to de termine-7-

whether plaintiffs' RI CO claims can be arbitrated. See Wal-Mar t Stores, Inc. v. PT Multipolar Cor p. , N o. 98 -1 69 52 , 2 00 7 WL 10 79 62 5 at *2 (9 th C ir . N ov . 3 0, 19 99 ); se e g e ne ra lly Al an Sc ott Rau, The Ar

bitrability Question I tself, 10 A M . R EV . I NT ' L A RB . 287, 369 n.230 (1999) ( citing
case s). Com

pe lli ngarb itr atio n is the c or re c t r e su lt e ve n if

pla int if fs c ann ot p ur su e the ir

c la ims under the RI CO statute itself. U.S. public policy is not thwarted so longas the wr ong s alleg ed by the par ty resistingarbitration may

be vindicate d under the laws of the f oreign forum sele cted. See Scher k, 417 U.S. at 517, 519. There is "no ba sis for a judg ment that only United States laws and United States c ourts should determine this controve rsy in the fac e of a

solemn ag ree ment betwee n the par

ties that such controve rsies be r esolved e lsewher e." I d. at 517. To hold that the
c omp la ine d- of

wr on g s c ou ld o nly

be pr op e rl y

a dd re sse d in the Un ite d St ate s w ou ld " re fl e c t a

' paroc hial conce pt that all disputes mustbe re solved under our laws and in our c ourts.' " I d. at 519 (quotingThe B reme n, 407 U.S. at 9). He re , th e laws of

Al be rt a , Ca

na da a llo w p la int if

fs to p ur su e the ir

c la ims . Pl a int if

fs ' RI CO
a lle g atio ns bo il d own to c la ims fo r c on sp ir a c y , f ra ud , b ri be ry , a

nd the ft . Co ur

ts h ave ro uti ne ly h el d th atth e w ro n gs R I C O s ee k s t o p re v en tca nb e v i n d i cat edi nar b i tra t i o n s ap p l yi n g fo re i gn law. See Richa

rds, 135 F.3d a

t 1296; Roby

v. Corp. of L loy d' s, 996 F.2d 1353, 1366 (2d Cir. 1 9 9 3 ) ; c f
. D e Sh a zo v . N ati o n s E n e r g y Co
. , Ci v . A
. N o . H
- 0 5
- 3 2 7 7 , 2 0 0 7 WL 9 5 1 5 6 8 ( S. D
. T e x. Mar. 27, 2007) (holdingthat a plaintiff' s claim of " fra ud, a fr audulent sche me under RI CO, conspirac y , and bre ach of fiduciar y duties" w as " substantially the same" as a c laim under Albe rta, Cana da law a lle g ing" fr a

ud , a n o pp re ssi ve sc he me , c on sp ir a c y , a nd br e a c h o f f

idu c iary dutie s" fo r t he purp os e s o f c oll ate ra l e sto pp e l) . H e nc e , p la int if fs ' c la ims are arb itr a

ble e ve n if

the RI CO-8-

statut e its e lf

is n ot t he ve hic le fo r t

ho se c la ims
. CONCLUSI ON For the fore g oing r easons, the Court se ts aside the Clerk' s entry of def ault ag ainst BG a

nd holds that the arbitrator is the proper entity to decide whether

plaintiffs' claims are arbitra ble. Acc ording ly , BG ' s motion t o compel ar bitration will be g rante d and plaintiffs' complaint will be dismiss ed without prejudice . A sepa rate Orde r has be en issued on this date. SO ORDERED.

/ s / J OHN D. B ATES Un i t edS t at es Di s tri ctJ u d ge Dated: F ebrua

ry 9, 2009