### I N THE UNI TED STATES COURT OF APPEALS
FOR THE FI F TH CI RCUI T

No. 12-20291

JACK J. GRYNBERG; GRYNBERG PRODUCTION CORPORATION, a Texas Corporation; PRICASPIAN DEVELOPMENT CORPORATION, a Texas Corporation; GRYNBERG PRODUCTION CORPORATION, a C olorado Corporation,

Plaintiffs - Appellants,

v.

BP, P.L.C., doing b usiness as BP Corporation North A merica Inc.; BP

E X P L O R A T I O N O P E R A T I N G C O M P A N Y

, L I M I T E D ; B P A M E R I C A ; S T A T O I L A.S.A.; JOHN BROWNE,

Defendants - Appellees.

A ppeal from the United States District Court
for the Southern District of Texas
USDC No. 4:11-CV-1731

Before REAVLEY, PRADO, and ELROD, Circuit Judges.

PER CURIAM: *

This case a rises o ut of a decade-long dispute relating to the d evelopment

of an oil field in Kaz a k h s t an. P la in tiffs– A p p e lla n t s J a c k J

. G r y n b e rg a n d

se v e ra l r e la te d e n t itie s (co lle ctiv e ly re f e r r e d t o a s “P la in tiffs”) allege that the

Defendants–Appellees (collectively referred to as “D e f e n dants”) c o m m itte d U n i t e d S t a te s C o u r t o f A p p e al s

F i f t h C i rc u i t 

### F I L E D

June 7, 2013

Ly l e W . Cay ce Clerk

* Purs uant to 5 T H C I R

. R. 47. 5, the court has determ ined that this op inion s hould not
be p ublis hed and is not p reced ent excep t und er the lim ited circum s tances s et forth in 5 T H C I R

. R. 47. 5. 4. Case: 12-20291 Document: 00512266145 Page: 1 Date Filed: 06/07/2013No. 12-20291

ce rta in u n la w fu l a c ts in v io la tio n o f th e R a ck e te e r I n f l u e n c e d a n d C o rru p t

O rg a n i za tio n s A ct ( “ R IC O ”), 1 8 U .S .C

. § 1 9 6 2 et. seq

. , ca u sin g P la in tiffs in ju ry

(th e “civ i l R IC O cla i m s ”). P la in tiffs u n s u cce ssfu lly a d v a n ce d th e sa m e cla im s

in a p rio r a rb itra tio n p ro ce e d i n g

. T h e d istrict co u rt d ism isse d P la i n tiffs’ civ il

R I C O cla im s. W e A F F IR M

.

I.

In 1 9 8 9 a n d 1 9 9 0

, J a ck G ry n b e rg w a s in stru m e n ta l in b rin g in g

re p re se n ta tiv e s o f th e K a z a k h g o v e r n m e n t to g e th e r w ith v a rio u s o il a n d g a s

co m p a n ie s, in clu d i n g B P

, 1 to d iscu ss th e p o te n tia l d e v e lo p m e n t o f th e G re a te r

K a sh a g a n O il F ie ld (“G K O F ”). E v e n tu a l l y , a g ro u p o f o il c o m p a n ie s, in clu d in g

B P

, f o rm e d th e O ffsh o re K a z a k h sta n In te rn a tio n a l O p e r a tin g C o m p a n y

(“O K IO C C o n so rtiu m ”). P la in tiffs, h o w e v e r, w e re n o t m e m b e rs o f t h e O K IO C

C o n so rtiu m

. I n th e e a r ly 1 9 9 0 s, B P a n d S ta to il e n te r e d i n to a n a llia n ce u n d e r

w h ich B P re ta in e d tw o

- th ird s o f its O K IO C C o n so rtiu m in t e re st a n d S ta to il

to o k a o n e -th ird sh a re o f th e in t e re s t. In 1 9 9 7

, th e O K I O C C o n s o r tiu m

o b ta in e d K a za k h g o v e rn m e n t a p p ro v a l to d e v e lo p th e G K O F

.

F e d e ra l l itig a tio n , in v o lv in g P la in tiffs’ c la im t h a t t h e y w e re e n title d to a

sh a r e o f t h e p r o ce e d s fro m t h e G K O F b a se d o n th e ir ro le in fa c ilita tin g t h e

m e e tin g s t h a t o ccu rre d in 1 9 8 9 a n d 1 9 9 0

, e n su e d b e tw e e n P la in tiffs, B P

, a n d

S ta to il. Y e a rs o f m e d ia tio n a n d n e g o tia tio n e v e n tu a lly r e su lte d in tw o v irtu a lly

id e n tica l se t tle m e n t a g re e m e n ts b e tw e e n P la i n tiffs a n d B P a n d P la in tiffs a n d

S ta to il ( th e “S e ttle m e n t A g re e m e n ts”). U n d e r th e S e ttle m e n t A g re e m e n ts, in

re le v a n t p a rt: (1 ) B P a n d S ta to il a g re e d to p a y P la i n tiffs f ifte e n p e rce n t o f n e t

p ro fits fro m th e ir G K O F in te r e sts, d e riv e d fro m e i th e r p ro d u ctio n o r sa le o f t h e

in t e re st; (2 ) th e p a rtie s a g re e d to a rb itra te a n y fu tu re d isp u t e s th a t m ig h t a rise

1 T he und erlying com p laint, as w ell as the p arties ’ brief ing, ref e r s to the three BP

e ntities —BP, P. L. C.

, BP Exp loration O perating Com p any, Ltd

. , and BP Am eri c a

— c o l l e c t i v e l y

. Becaus e their s ep arate roles in the und erlying f acts are not relevant to this ap p eal, w e a ls o ref er to each of the three entities collectively, and ind ivid ually, as “BP. ”

2 Case: 12-20291 Document: 00512266145 Page: 2 Date Filed: 06/07/2013No. 12-20291

fro m th e S e ttle m e n t A g re e m e n ts; a n d (3 ) P l ai nt i f f s r el eas ed a ll o th e r c la im s a n d

rig h ts a g a in st S t a t o i l a n d B P

. In 2 0 0 2

, B P a n d S ta to il so l d th e ir in te re sts in

th e G K O F a n d su b se q u e n tly m a d e tim e ly p a y m e n ts to P la in t i ffs b a se d o n t h e

sa le p rice o f th e ir G K O F in te re sts, n e t o f ce rta in co sts.

A

.
W i th in se v e ra l w e e k s o f B P a n d S ta to i l’s sa le o f t h e ir G K O F in te re sts,

P l a in tiffs co m m e n ce d a n a rb itra tio n p ro ce e d in g (th e “A rb itra tio n ”) a g a in st B P

a n d S ta to il c la i m in g , g e n e ra l ly

, t h a t th e y w e re n o t b e i n g p a id th e a p p ro p ria te

sh a re o f t h e a ctu a l v a l u e o f th e G K O F in te re sts so ld

. W h ile t h e A rb itra tio n w a s

o n g o in g , P la in tiffs su e d B P a n d S ta to il in th e U n i t e d S t a te s D istrict C o u rt in

th e D istrict o f C o lu m b ia

. P la in tiffs’ cla im s w e re p r e m ise d o n a n a lle g e d ly

u n la w fu l sch e m e w h e re b y B P a n d S ta to il, a lo n g w ith o t h e r m e m b e r s o f t h e

O K I O C C o n so rtiu m , p a id a $ 1 7 5 m illio n b r ib e to K a za k h o fficia ls in th e 1 9 9 0 s,

d isg u ise d a s a “sig n a tu re b o n u s,” to o b ta in th e rig h ts t o d e v e lo p th e G K O F

. B P

a n d S ta to il m o v e d to d ism iss a n d co m p e l a rb i tra tio n o n th e b a sis th a t P la in tiffs

w e re o b lig a t e d to a rb itra te th e ir c la im s b e ca u se th e y a ro se out of t he S e t tle m e n t

A g r e e m e n ts. T h e d istrict co u rt g ra n t e d th e m o tio n s to d ism i ss a n d co m p e l

a rb i tra tio n

. G r

y n b erg v

. B P P .L .C

. , 5 8 5 F

. S u p p

. 2 d 5 0

, 5 4

– 5 6 (D .D .C

. 2 0 0 8 ).

F o llo w in g th e d istrict co u r t’s d ism issa l o f th e ir c la im

, P la in tiffs f ile d th e sa m e

cla im

— th e “D C B a se d R IC O C la im ”— in th e A rb itra tio n

.

In F e b ru a r y 2 0 1 0

, t h e a rb i tra to r issu e d a f in a l a w a rd (“F i n a l A w a rd ”)

th a t re so lv e d e a ch o f th e cla im s P la in tiffs a d v a n ce d in th e A rb itra tio n

. In t h e

F i n a l A w a rd

, t h e a rb i t ra to r d ism isse d P l a in tiffs’ “D C B a se d R IC O C la im ” b a se d

o n its fin d in g th a t P la in tiffs “d id n o t su ffe r a n y d a m a g e s a s a r e s u l t o f

[D e f e n d a n ts’] a lle g e d R IC O v io l a tio n s.” T h e a rb itra t o r a lso d ism isse d tw o

cla im s p r e m ise d o n a lle g a tio n s th a t B P a n d S ta to i l e n te r e d in t o s id e d e a l s to

a rtificia lly lo w e r th e sa le p rice o f th e ir GKOF i nt e re sts a n d

, co n se q u e n tly

, lo w e r

3 Case: 12-20291 Document: 00512266145 Page: 3 Date Filed: 06/07/2013No. 12-20291

P l a in tiffs’ fifte e n -p e rce n t sh a re o f th e p ro fits fro m th e s a le s. 2 T h e a rb itra to r

co n c lu d e d th a t th e re w a s n o e v id e n c e su p p o rtin g P la in t iffs’ a lle g a tio n s th a t t h e

se llin g p rice o f B P a n d S ta to i l’s G K O F in t e re sts w e re re d u ce d p u rsu a n t to sid e

d e a ls w ith th e p u rch a sin g p a rtie s.

T h e a rb itra to r a lso d ism i sse d t h e P l a i n tiffs’ a u d it cla im s , w h ich w e re

p re m i s e d o n a lle g a tio n s th a t th e p a y m e n t o f th e s ig n a tu re b o n u s sh o u ld b e

d isa llo w e d a s a l e g itim a te d e d u ctio n fro m P la in tiffs’ fifte e n -p e rce n t sh a re o f B P

a n d S ta to i l’s sa le o f th e ir G K O F in te r e sts. P la in tiffs a rg u e d th a t th e sig n a tu re

b o n u s sh o u ld n o t h a v e b e e n d e d u cte d f r o m t h e s a le s p ro ce e d s b e ca u se t h e

“p a y m e n ts w e re n o t b o n a fid e p a y m e n ts to th e K a za k h g o v e rn m e n t fo r th e rig h t

to e x p l o it th e o il a n d g a s re se rv e s in th e [G K O F ] b u t w e r e in s te a d b rib e s p a id

to K a z a k h g o v e rn m e n t o fficia ls in v io la t io n o f th e U .S

. F o re ig n C o rru p t

P r a c tice s A ct.” T h e a rb itra to r, re a so n in g t h a t i t w a s i rre le v a n t w h e th e r t h e

sig n a tu re b o n u s w a s a b rib e , d ism isse d th e a u d it cla im s a fte r co n clu d in g th a t

th e in d e p e n d e n t a u d ito rs’ d e c isio n to d e d u ct th e sig n a tu re b o n u s w a s n o t

“a rb itra ry a n d ca p ricio u s o r cle a rly e rro n e o u s.” T h e a rb i t r a to r a lso im p o se d

m o n e ta ry sa n ctio n s a g a in st th e P la in tiffs.

B

.

F o llo w in g t h e a rb it r at or ’ s i s s uanc e of t he Fi nal A w a rd

, D e fe n d a n ts m o v e d

to c o n firm th e F in a l A w a r d in th e S u p re m e C o u rt o f th e S ta te o f N e w Y o rk

.

P l a in tiffs file d a cro ss-m o tio n a sk in g t h e c o u rt to v a ca te th e sa n ctio n s e n te re d

b y th e a rb itra to r a n d th e a rb itra to r ’s d ism i s s a l o f t h e audit c laims and the

Egypt-side-deal claim. Plaintiffs did not challenge any other aspect of the Final

Award, including the a rbitrator’s d ism issa l o f th e “D C B a se d R I C O C la im ” a n d

2 Sp ecif ically, the Plaintif

f s ’ Egyp t- sid e- d eal claim involved an allegation that BP s old
its G K O F i n t e r e s t to Total, SA ( “Total”) f or a below

- f

air- m ark et- value p rice in exchange f or

a s im ilar p rice red uction on an Egyp tian p rop erty BP p urchas ed f rom Total s hortly thereaf ter.
The N orw ay- s id e- deal claim involved an allegation that Statoil s old its G K OF interes t to Total
f or a below

- f

air- m ark et- v alue p rice in exchange f or BP’s w illingnes s to enter i n t o a g a s
contract w ith Statoil that overp aid Statoil over a p eriod of years

.

4 Case: 12-20291 Document: 00512266145 Page: 4 Date Filed: 06/07/2013No. 12-20291

N o rw a y -sid e

- d e a l cla im

. In D e ce m b e r 2 0 1 0

, th e c o u rt co n firm e d th e F in a l

A w a rd in a ll re sp e cts, w ith t h e e x ce p tio n o f re v e r sin g th e a rb itra to r’s o r d e r

im p o sin g sa n c tio n s. G ry n b erg v

. B P E x p lo ra t i o n O

p e r a tin g C o

. , In d e x N o

.

1 1 6 8 4 0 / 2 0 0 4 (N .Y

. S u p

. C t. D e c. 8

, 2 0 1 0 ), v a ca ted b y , in p a rt, a ff’d in p a rt a n d

m o d ified in p a rt , 9 3 8 N .Y .S .2 d 4 3 9 (N .Y . A p p

. D iv

. 2 0 1 2 ). P la in t iffs a p p e a le d

th e c o u rt’s d e n ia l o f th e i r m o tio n to v a ca t e t h e tw o cla im s in th e F in a l A w a rd

a n d D e fe n d a n ts cro s s-a p p e a le d o n th e sa n ctio n issu e

.

In F e b ru a r y 2 0 1 2

, th e N e w Y o rk A p p e lla te D iv isio n a ffirm e d th e lo w e r

co u r t’s ju d g m e n t , w ith th e e x ce p tio n o f re m a n d in g o n e cla im to th e a rb itra to r

fo r fu rth e r p ro ce e d in g s

. G ry n b e rg v

. B P E x p lo ra tio n O

p era tin g C o

. , 9 3 8

N .Y .S .2 d 4 3 9

, 4 4 0 ( N .Y

. A p p

. D iv

. 2 0 1 2 ). S p e cifica ll y , th e co u rt v a ca te d t h e

a rb i tra to r’s d ism issa l o f P la in tiffs’ a u d it cla im s, e x p l a in in g th a t:

T h e a rb itra to r ’s fa ilu re to d e te rm i n e th e n a tu re o f th e d isp u te d

p a y m e n t w a rra n ts th e v a ca t u r o f [th e A w a rd o n th e a u d it cla i m s]. [P la in tiffs] cla im th a t th is p a y m e n t c o n s t itu te d a b rib e

. [D e fe n d a n ts] a s se r t it w a s a b o n a fid e co st o f d o i n g b u sin e ss

. W e

re m a n d fo r t h e a r b itra to r to d e t e rm in e th e n a tu re o f th e p a y m e n t.
C o n tra r y to th e a rb itra to r’s fin d in g , d e d u ctin g a p a y m e n t in t e n d e d

to b e a b rib e to a p u b lic o fficia l is u n e n fo r ce a b le a s v i o l a t i v e o f

p u b lic p o licy

. . . .
Id

. T h e co u rt re m a n d e d th e ca se fo r t h e a rb itra t o r t o r e co n sid e r t h e a u d it

cla im s— re co n sid e r a tio n th a t re q u ire s th e a rb itra t o r to d e te r m in e w h e th e r t h e

sig n a tu re b o n u s w a s a b rib e o r a b o n a fid e tra n sa ctio n

. 3 I d

.
C

.

In M a y 2 0 1 1 , P la in tiffs file d th e in sta n t co m p la in t in th e D istrict C o u rt

fo r th e S o u th e rn D istrict o f T e x a s n a m in g B P

, S ta to il, B ro w n e , a n d S u th e rla n d

a s d e fe n d a n ts. T h e co m p la in t se e k s m o n e ta r y re lie f u n d e r 1 8 U

. S

. C

. § 1 9 6 4 (c)

b a se d u p o n a lle g a tio n s th a t: ( 1 ) B P a n d S ta to il p ro cu re d th e ir G K O F in te re sts

b y p a y in g b rib e s to th e K a za k h g o v e r n m e n t ; a n d ( 2 ) B P a n d S ta to il e n te re d in to

3 The current status of the aud it claim on rem and is unclear f rom the record

.

5 Case: 12-20291 Document: 00512266145 Page: 5 Date Filed: 06/07/2013No. 12-20291

sid e d e a l s c o n n e cte d w ith th e ir sa le o f th e ir G K O F in t e re sts in a n a tte m p t to

d e cre a se th e a m o u n ts o w e d to P la in tiffs u n d e r th e S e ttle m e n t A g r e e m e n ts.

T h e s e a lle g a tio n s a r e b a se d o n th e sa m e le g a l a n d fa ctu a l t h e o rie s u n d e rly in g

th e “D C B a se d R IC O C la im ,” th e E g y p t-sid e -d e a l cla im

, a n d th e N o rw a y -sid e

d e a l cla im th a t P la i n t iffs a d v a n ce d in th e A rb itra t io n

.
S e p a ra t e m o tio n s to d ism iss w e re f i l e d b y B P

, S ta to il, B ro w n e , a n d

S u th e rla n d

. T h e d istrict co u rt co n v e rte d B P ’s m o tio n to d ism iss in to a m o tio n

fo r su m m a r y ju d g m e n t a n d g r a n te d e a ch o f th e m o tio n s. S p e cifica lly

, t h e

d istrict co u rt h e ld th a t res ju d ica ta b a rre d P la i n tiffs’ civ il R IC O cla im s a g a in s t

B P a n d S ta t o il. T h e d istrict co u rt a lso co n clu d e d t h a t e v e n if r e s ju d ica ta d id

n o t b a r th e cla im s a g a in st S ta to il, th e n P la in tiffs m u st su b m it th e ir cla im s to

a rb i tra tio n

. S e p a ra te ly

, th e d istrict c o u rt d ism isse d P la in t iffs’ co m p la in t a s to

B r o w n e a n d S u th e rla n d

, co n clu d in g th a t g e n e ra l p e r so n a l ju risd ictio n d id n o t

e x i s t o v e r e ith e r d e fe n d a n t. P la in tiffs tim e ly a p p e a le d th e d istrict co u rt’s o r d e r

d ism issin g th e i r cla im s a g a in st B P

, S ta to il, a n d B ro w n e

.

I I.

W e re v ie w a d i strict co u rt’s g ra n t o f s u m m a ry ju d g m e n t d e n o v o

.

A m erisu re In s. C o

. v

. N a v i g a to rs In s. C o

. , 6 1 1 F .3 d 2 9 9

, 3 0 4 (5 th C ir. 2 0 1 0 )

(citin g F o rd M o t o r C o

. v

. T

ex

. D ep ’t o f T

ra n sp

. , 2 6 4 F .3 d 4 9 3

, 4 9 8 (5 t h C ir.

2 0 0 1 )). “S u m m a ry ju d g m e n t is p ro p e r w h e n ‘th e p le a d in g s, th e d isco v e ry a n d

d isclo su r e m a te ria ls o n file

, a n d a n y a ffid a v its sh o w th a t th e re is n o g e n u in e

issu e a s to a n y m a te ria l fa ct a n d th a t th e m o v a n t is e n title d to ju d g m e n t a s a

m a tte r o f la w .’” Id

. (q u o tin g F e d

. R

. C iv

. P

. 5 6 (c)). “T h e res ju d ica t a e ffe ct o f a

p r i o r ju d g m e n t is a q u e stio n o f la w th a t w e re v ie w d e n o v o .” D a v is v

. D a l l a s

A rea R a p id T ra n sit

, 3 8 3 F .3 d 3 0 9

, 3 1 3 ( 5 th C ir. 2 0 0 4 ) ( citin g P r o cto r & G a m b le

C o . v

. A m w a

y C o rp

. , 2 4 2 F

. 3 d 5 3 9 , 5 4 6 (5 th C ir. 2 0 0 1 )).

R es ju d ica ta

, o r cla im p re clu sio n , “b a rs th e litig a tio n o f cla im s th a t e ith e r

h a v e b e e n litig a t e d o r sh o u ld h a v e b e e n ra ise d in a n e a rlie r su it.” T est M a sters

6 Case: 12-20291 Document: 00512266145 Page: 6 Date Filed: 06/07/2013No. 12-20291

E d u c. S erv s., In c. v

. S in g h

, 4 2 8 F .3 d 5 5 9

, 5 7 1 (5 th C ir. 2 0 0 5 ) (cita tio n o m itte d ).

R es ju d ica t a , b y p r e v e n tin g la te r su its fro m c o l la te ra lly a t ta ck in g a p rio r

ju d g m e n t b y a co u rt of c ompe te n t ju risd ictio n , “in su re s t h e fin a lity o f ju d g m e n t s

a n d th e re b y co n se rv e s ju d icia l re so u rce s a n d p ro te cts litig a n ts fro m m u ltip l e

la w su i ts.” O r eck D irect, L L C v

. D y so n , In c. , 5 6 0 F .3 d 3 9 8

, 4 0 1 (5 th C ir. 2 0 0 9 )

(q u o tin g U

n ited S t a tes v

. S h a n b a u m , 1 0 F .3 d 3 0 5

, 3 1 0 (5 th C ir. 1 9 9 4 )). F o u r

e le m e n ts m u st b e s a tisfie d fo r res ju d ica ta to b a r a cla im : (1 ) th e p a rtie s in t h e

su b se q u e n t a c tio n a re id e n tica l to

, o r in p riv ity w ith

, th e p a rti e s in th e p rio r

a ctio n ; (2 ) th e p rio r ju d g m e n t w a s re n d e re d b y a c o u rt o f c o m p e te n t ju risd ictio n ;

(3 ) th e p r io r a ctio n co n clu d e d w ith a fin a l ju d g m e n t o n th e m e rits; a n d (4 ) t h e

sa m e cla im o r ca u s e o f a c tio n is in v o lv e d in b o th ca se s. S in g h

, 4 2 8 F .3 d a t 5 7 1

(cita tio n o m i tte d ).

In th e p re se n t c a se , th e first a n d fin a l e le m e n ts o f res ju d i ca ta a re n o t in

d isp u te

. 4 T h e p a rtie s d isp u te

, h o w e v e r, w h e th e r th e se co n d a n d th ird e le m e n t s

o f res ju d ica ta a re sa tisfie d

. W h ile it is u n d isp u te d th a t th e a rb itra to r h a d t h e

p o w e r u n d e r th e S e ttle m e n t A g r e e m e n ts to r e n d e r a fin a l ju d g m e n t o n t h e

m e rits o f P la in tiffs’ civ il R IC O cla im s, P la in tiffs c o n te n d th a t th e a rb itra to r

m ista k e n ly b e lie v e d th a t it la ck e d p o w e r to d e ci d e o n e o f th e e le m e n ts o f t h e

“D C B a se d R IC O C la im ” a n d

, th e re fo re , d i d n o t e x e rcise ju risd ictio n o v e r th a t

cla im

. 5 B a se d o n o u r re v i e w o f th e e n tire ty o f th e re co rd , w e d i sa g re e

.

4 The f irs t elem ent is s atis f

ied becaus e the Plaintif f s , BP, and Statoil w ere p arties to
the Arbitration and Brow ne, as C h i e f Executive O f f icer of one of the BP entities d uring the

und erlying events

, is in p rivity w ith BP. See H enry v. Fa rm er Ci ty Sta te B a nk

, 808 F. 2d 1228,

1235 n. 6 ( 7th Cir. 1986) ( hold ing that d irectors

, of ficers

, and em p loyees of a com pany are in

p rivity with the com pany f or purp os es of res judi ca ta )

. The f ourth elem ent is s atis f ied becaus e each of the claim s ad vanced in the p res ent cas e are id entical to claim s involved in the
Arbitration.

5 Plaintif

f s are correct that a d is m is s al of a claim f or lack of s ubject- m atter j uris d iction

d o e s not p reclud e a s econd action on the sam e claim becaus e s uch a d is m is s al is not a f inal jud gm ent on the m erits

. N i l sen v

. Ci ty of M

oss Poi nt, M

i ss. , 674 F. 2d 379, 382 ( 5th Cir. 1982) ( citation om itted )

. Even if the dis m is s al f or lack of s ubject- m atter juris d iction w as erroneous becaus e juris d iction exis ted in the initial action, the d is m is s al d oes not p reclud e a s econd

7 Case: 12-20291 Document: 00512266145 Page: 7 Date Filed: 06/07/2013No. 12-20291

T o su cce s sfu lly a d v a n ce a cla im u n d e r ci v i l R I C O

, a p la in tiff m u s t

d e m o n stra te : (1 ) th a t th e d e fe n d a n t v io l a te d 1 8 U .S .C

. § 1 9 6 2

, a sta tu to ry

p ro v isio n th a t co n ta in s R IC O ’s p ro h i b ite d a ctiv itie s; a n d (2 ) th a t t h e “R IC O

p re d i c a t e o f

fe n se n o t o n ly w a s a b u t fo r ca u s e o f h is in ju ry , b u t w a s t h e

p ro x im a te ca u se a s w e ll.” H em i G rp

. , L L C v

. C ity o f N e w Y o rk

, 1 3 0 S

. C t. 9 8 3

,

9 8 9 (2 0 1 0 ) (in te rn a l q u o ta tio n m a rk s o m itte d ). A p la in tiff a d v a n ci n g a cla im

u n d e r civ il R IC O is n o t r e q u ire d to e sta b lish th a t th e d e fe n d a n t w a s o r w ill b e

crim in a lly co n v icte d u n d e r R IC O

. S ee S ed im a , S .P .R .L

. v

. Im rex C o ., In c. , 4 7 3

U .S

. 4 7 9

, 4 8 8

– 8 9 (1 9 8 5 ) (e x p la in in g th a t th e u se o f th e t e rm “v i o l a tio n ” in 1 8

U .S

. C

. § 1 9 6 2 “d o e s n o t im p ly a crim in a l co n v ictio n ” b u t i n ste a d “re fe r s o n ly to

a fa ilu re to a d h e r e to le g a l r e q u ire m e n ts”). In s t e a d

, a p la in tiff is o n ly re q u ire d

to e sta b lish th a t th e d e fe n d a n t’s a ctiv itie s a re u n l a w fu l u n d e r 1 8 U .S .C

. § 1 9 6 2

.
S e e id

. a t 4 8 9 ( “S e ctio n 1 9 6 2 r e n d e rs ce rta in co n d u ct ‘u n la w f u l’; § 1 9 6 3 a n d

§ 1 9 6 4 im p o s e co n se q u e n ce s, crim in a l a n d civ il, fo r ‘v io l a tio n s’ o f § 1 9 6 2 .”).

T h e a rb itra to r d ism isse d P la in t iffs’ “D C B a se d R IC O C la im ” b a s e d o n its

fin d in g th a t P la in tiffs d id n o t su ffe r a n i n ju ry a s a re su lt o f D e fe n d a n ts’ a lle g e d

R I C O v io la tio n s. T h e a r b itra to r d id n o t d e cid e w h e th e r th e D e fe n d a n ts’ a ctio n s

co n s titu te d a v i o la tio n o f § 1 9 6 2

. In a d d i tio n to d iscu s sin g th e P l a in tiffs’ fa ilu re

to p ro v e d a m a g e s, t h e a rb i tra to r’s d iscu ssio n o f P la i n tiffs’ “D C B a s e d R IC O

C l a i m ” a lso in clu d e d th e fo llo w in g sta te m e n t: “A lth o u g h u n d e r th e b ro a d

a rb i tra tio n p r ovi s i o ns c ont ai ned i n t h e Set t le m e n t A g r e e m e n ts th e u n d e rsig n e d

h a s th e a u th o rity to d e cid e civ il R IC O cla i m s , n e i th e r a n a r b itra to r n o r a n

in d e p e n d e n t a u d i to r h a s th e power or a ut hor i t y t o dec i de w h e th e r [ D e fe n d a n ts],

e ith e r d ire ctly o r in d ire c tly

, co m m itte d a crim e .” W h ile th is sta te m e n t

action. S ee 18A Charles Alan Wright et al.

, Fed e ral Practice and Proced ure § 4436 ( 2d ed

. 2002) (“The bas ic rule that d is m is s al for lack of s ubject- m atter j uris d iction d oes not p reclud e

a s econd action” “ap p lies even though the f irs t court m ay have been w rong in determ ining that

it lack ed juris d iction”)

. N evertheles s , f or the reas ons d is cus s ed i nf ra , thes e princip les are not

ap p licable here.

8 Case: 12-20291 Document: 00512266145 Page: 8 Date Filed: 06/07/2013No. 12-20291

d e m o n stra te s th a t th e a rb itra to r b e lie v e d th a t it co u l d n o t d e cid e w h e th e r

D e fe n d a n ts w e re g u ilty o f c o m m ittin g a crim e , it d o e s n o t su g g e st th a t t h e

a rb i tra to r m ista k e n ly b e lie v e d th a t it co u ld n o t d e cid e w h e th e r D e fe n d a n ts’

a ctio n s co n stitu te d a v io la tio n o f 1 8 U .S .C

. § 1 9 6 2

, su b j e c t i n g t h e m to civ il

co n s e q u e n ce s u n d e r 1 8 U

. S .C

. § 1 9 6 4

. W e co n clu d e th a t th e a rb itra to r

e x e rcise d ju risd ictio n o v e r th e P la in tiffs’ “D C B a se d R IC O C la im ” a n d re n d e re d

a fin a l ju d g m e n t o n th e m e rits.

A c co rd in g ly

, res j u d ic a ta b a rs P la i n tiffs’ c iv i l R I C O c la im s a g a in s t

D e fe n d a n ts. B e c a u s e w e m a y a ffirm s o le ly o n t h e b a sis o f res ju d i ca ta

, w e d o

n o t a d d re ss th e o th e r g ro u n d s th a t m a y h a v e su p p o rte d th e d ism i s s a l o f

P l a in tiffs’ cla im s a g a in st D e fe n d a n ts. 6

III.

F o r th e fo re g o in g re a so n s , w e A F F IR M th e d istrict co u rt’s d i sm issa l o f

P l a in tiffs’ civ il R IC O cla im s.

6 We note, how ever, that even if w e conclud ed that r e s judi ca ta w ere not ap p licable here, w e w ould rem and Plaintif fs ’ civil RICO claim s to arbitration. Each of the claim s aris e f rom the Settlem ent A greem ents and

, theref ore, are required to be s ubm itted to arbitration. See, e. g. , M

i t subi shi M

otors C orp

. v

. Sol er Chrysl er–Pl ym outh, I

nc. , 473 U

. S. 614, 628 ( 1985) ( “H aving m ad e the bargain to arbitrate, the p arty s hould be held to it

. . . . ”)

. We dis agree w ith
Plaintif f s ’ contention that a rbitrating their “D C Bas ed RICO Claim ” p roved to be an im p os s ibility. Plaintif fs w ere f ully aw are of their right to ap p eal the arbitrator’s d is m is s al of

their “D C Bas ed RICO Claim ” in N ew Y ork s t a t e c o u r t

. I n f act, P laintif

f s s ucces s f

ully
obtained a N ew York Ap p ellate D ivis ion ord er vacating the arbitrator’s d is m is s al of their aud it
claim s ; becaus e of this ord er, the arbitrator w as required

, on rem and

, to d eterm ine w hether
the signature bonus w as a bribe or a bona f id e trans action. Plainti f f s ’ “s trategic” d ecis ion

d eclining to challenge the d is m is s al of their “D C Bas ed RICO Claim ” in the N ew Y ork s tate

court ap p eal d oes not op en the d oor to relitigate that claim in this f orum

.

9 Case: 12-20291 Document: 00512266145 Page: 9 Date Filed: 06/07/2013