07- 4553- cv

N or ex Pet r ol eum v. A ces s I ndust r i es UNITED STA TES COU RT OF AP PEALS FO R T HE SE CO ND CI RC UI T

__________ August Term, 2008 Argued: February 4, 2009 Deci ded: September 28, 2010
Do ck et N o. 07 -45 53 -cv

__________

_______________________________________________________________ NOREXPETROLE UM LIMITED, Plaintif f-Appellant , -v- ACCESS INDUSTRIES, INC ., RENOV A, INC., LEON ARD BL AVA TN IK , V IC TO R V EK SE LB ER G, AL FAGR OU P C ON SO RT IU M, CROW N FINANC E FOUND ATION, CTF HOLDING S, LTD., ALF A FINANCE H OLDINGS, S .A., CROW N LUXEMB OURG H OLDINGS, S.A.R.L., ELL IOT SPITZ, OAO TNK-BP HO LDING, SIMON K UKES, JOSE PH BAKAL EYNIK, LT EN TERPRISES L IMITED, SANDW ELL ENTERPRISES LIMITED, EAST-MOUN T PROPER TIES LIMITED, ALETAR COMPANY , INC., ASTON S TRUSTE ES, LIMITED, BP P.L.C., LO RD BRO W NE of MAD INGLEY, GILIANCAINE, SUSAN C UBBON , ROBER T DUDLE Y, SIMON ELMON T, JAMES GRAS SICK, KELLA ND, GER MAN KHA

N, ALEXEYKUZMITCHEV , OZERLABUSINESS C ORP., VALDIMIR PLOU ZHNIKOV , ROBER T SHEPPA RD, STAR PORT LLC, TNK -BP LIMITED, WATFORD LIMITED, and TNK-BP INTERNAT IONAL LTD ., De fen da nts -A

pp ellees .

_______________________________________________________________Th e H on ora ble Lo retta A . P res ka , C hie f Unit ed St ate s D istric t Ju dg e f

or t he So uth ern 1 Districtof New York, sitting by designat ion. 2 POOLER , KATZMAN

N, Ci rcu it J

ud ges , and PRESKA, Chief Distri ct Judge
. 1 Th e p lai nti ff

all eg es i nju

ry aris ing fr om

the act ivi tie s o f an inter

natio na l cr im ina l enterpri se. The distr ict courtheld that i t could not pr operly exer cise subje ct matter juri sdiction over the pla intiff’s clai ms under the Racketeer Influenc ed and Corrupt Organi zation Act, 18 U.S.C. § 1961 et seq. (“RICO”). Pursuant t o the authori ty of Morrison v. Nat’ l Austl. Bank Ltd. , 13 0 S . C t. 2 86 9 (2 01 0), we ho ld t hat (1 ) th e q

ue sti on of the jus tic iab ili ty o f t

he RI CO cla im s is properly one of whetherthe complaint adequate ly state s a claim for relief; and ( 2) because t he RICO statute lac ks a clearstatement of extraterritori al reach, pl aintiff’s clai ms are barred. Accordingly, we AFFIRM the dist rict cour t’s dismissal of the complaint, al beit on different grounds than bel ow.

__________ PETER J.W . SHERW IN (Eric H. Blinder man, on the br ief ), Proskauer Rose LLP, New York, NY. BRUCE S. MARKS (Maria Temkin, on thebr ief ), Marks & Sokolov, LLC, Philadelphia , PA. At tor ne ys f or Plain tif f-A pp ellan t. OW EN C. PELL , White & Case LLP, New York, NY. At tor ne y fo r D efe nd

an ts- Ap pe lle es . PE R C URIA M: Th e is su e b ef

ore us is whe the r a Unit ed S tat es f ed era l co urt

can pro pe rlyhe ar a

cla im under the Racket eer Influenced a nd Corrupt Organiza tion Act (“RICO”), 18 U.S.C. § 1961 et seq. , arising from allegati ons of a conspiracy which pr imarily involves forei gn actors and forei gn acts. Applying t he Supreme Court’s decision i n Morrison v. Nati onal Australi an Bank Ltd. , 130 S. Ct. 2869 (2010), we hold thatthis iss ue is proper ly consider ed as a questi on of whether theThe first amended complaint, the allega tions of which are as sumed to be true for the 2 purpo ses of

the pre sent di scu ssi on , w ill be cit ed byparag rap h num

be r. 3 co m pla int states a cl aim

fo r w hic h a

Un ite d S tat es f

ed era l co urt

can pro vid e re lie f, no t as a question of whether t he court posse sses subjec t matter juris diction t o hear the cl aim. Morrison als o h old s th at a

bs ent an expre ss i nte nti on

byCo ng res s o f e xtr ate rri tor ial ef fe ct, a st atute a

pp lie s only domestically. Id. at 2 87 7-7 8. As RI CO “is sil ent as to anyex trater rit ori al a pp lic ati on ,” No rth So uth Fi na nc e C

or p. v. Al-T ur ki , 100 F.3d 1046, 1051 (2d Cir. 1996), we affirm the distri ct court’ s dismissal of plainti ff’s com plaint, al beit on different gr ounds. FACTS Ac co rdi ng to t

he fi rst am en de d c om

pla int , whic h is the op erativ e co m pla int on thi s appeal, thi s case invol ves “a massive racket eering sche me to take over a substant ial port ion of the Ru ssi anoil ind

us try .” (¶ 1 ) Sp eci fi cal ly, pla int if f N ore x P etr ole um

Li m ite d (“No rex ”) 2 all eg es t hat de fe nd ants c on sp ire d to tak e “c ontro l of Yu grane ft , a

Ru ssi anoil co m

pany , il leg all y ob tai nin g m

uc h o f N ore x’s owne rsh ip o f Yug ran ef t an d re du cin g it

fr om the co ntr oll ingm ajo rity sh are ho lde r to a p ow erl ess m ino rity s hareh old er. ” (¶ 1) N ore x a lle ge s th at, as a res ult , it “h as los t th e v ast

po rti on of its int ere st i n, an d th ere fo re c ontro l of , Yug ran ef

t, whic h h as an e sti m ate d
va lue in e xc ess of

$5 00 m ill ion , and

ha s n ot b een

pa id m ill ion s o f d oll ars in d ivi de nd s. ” (¶ 11 ) So m ewhat in

the m anne r of

on e o f t he gre at R

us sian n ov els of

the nin ete enth c entur

y, the fi rst amended com

plaint i s heavily l aden with chara cters and i ncident, la id out more fully in the previous opini ons in this c ase, familiarity with whic h is presumed. Se e N or ex P etrole um Lt

d. v. Ac ces s In du s. , In c. , 3 04 F. Su pp . 2 d 5 70 (S .D .N .Y . 2 00 4) ( “N or ex I ” ); No rex

Pe tro leu m L td. v. Access Indus., I

nc ., 416 F.3d 146 (2d Cir. 2005), cer t. d en ied, 5 47 U. S. 11 75 (20 06 ); No rex4

Pe tro leu m L td. v. Ac ces s In du s. Inc

. , 5 40 F. Su pp . 2 d 4 38 (S .D .N .Y . 2 00 7) ( “N or ex I I” )

. In sum, Norex alleges thatthe defendants par ticipat ed in a widespre ad rackete ering and
m on eylau

nd eri ng sch em e w iththe go al o f s eiz ing co ntr ol o ve r m os t of the Ru ssi anoil ind

us try through the use of Russian oil companies includi ng Tyum en Oil Company (“TNK”) and Yugraneft. ( ¶¶ 1, 4.) Norex further all eges that de fendants comm itted numerous acts i n the United States in furtherance of its scheme that consti tute rac keteeri ng within the meaning of RI CO , in clu din g m ail an d w ire fr au d, m on eylaund eri ng , H ob bs Ac t vi olatio ns , T rav el A ct vio lat ion s an d b rib ery . ( ¶ ¶ 26 1-3 21 .) N ore x a lle ge s th at a s a r esu lt o f t his sch em e, its m ajo rity
owne rsh ip s tak e in

Yu grane ft

an d o f c ert ain

qu antit ies of

oil ow ed to i t by Yu grane ft

an d o the r Ru ssi anoil entit ies wa s st ole n f rom it thro ug h a

ser ies of un law fu l ac tio ns that in clu de d b rib ery of Ru ssi ango ve rnm ental of fi cia ls and

co rru pt R us sian b ankru

ptc y p roc eed ing s. No rex ’s i nit ial co m

pla int in t his act ion wa s f ile d in Fe bru ary 20 02 . T he de fe nd ants subsequently moved for dismissal of the complaint on grounds of forum non conveniens, a motion the distric t court gr anted. No rex I , 3 04 F. Su

pp . 2 d at 58 1. No rexap pe ale d, an d th is Court vacated t he distri ct court’ s ruling. See Norex Petrole um , 416 F.3d at 154-56. On rem an d, the de fe nd ants f ile d a joi nt m oti on

to d ism iss fo r la ck

of su bje ct m att er jurisdi ction on the gr ounds that Norex coul d not properl y raise a RICO clai m “because the pri nc ipa l ac tio ns an d e ve nts un de rly ing[i ts] cla im oc curre d o uts ide of

the Un ite d S tat es. ” N

or ex II , 5 40 F. Su

pp . 2 d at 44 0. No rexarg ue d th at RIC O’ s ex trater rit ori al r eac h w as p rop erl y
co ns ide red

un de r F ed . R . C iv. P. 12 (b) (6) fo r f ail ure to s tat e a c lai m . R ely ing on our de cis ion

in No rth So uth Fi na nc e C

or p. v. Al-T ur ki , 1 00 F. 3d

10 46 (2d Ci r. 1 99 6), the dis tri ct c ourt h eld that existing Sec ond Circuit pr ecedent cl early tr eated the e xtraterritori al reach of RICO as a questi on5

of subject matter juri sdiction. No rex II, 54 0 F . S up p. 2d

at 4 41 . It the n g ranted

de fe nd ants’ motion to dismiss. This appeal followed. On June 24 , 2 01 0, wh ile thi s ca se w as s ub jud ice be fo re this Co urt , th e S up rem e C ourt issued Morrison v. Nati onal Australi an Bank , 130 S. Ct. 2869 (2010). Morrison reject ed the “co nd uc t an d e ff

ect ” te st trad iti on all y u sed bythe Se co nd

Ci rcu it and

oth er c ourts to d ete rm ine a statut e’s ex trater

rit ori al a pp lic ati on

in f av or o f a bri gh t-l ine rul e: a

bs ent a c lear C on gre ssi on al expression of a st atute’s extrate rritor ial appli cation, a st atute la cks extrat errit orial r each. Id. at 2877. The parties submitted supplemental briefing dis cussing Mor ris on ’s ap pli cat ion

to t he cas e at hand, and we find additi onal oral a rgument is not necessary. AN AL YS IS W e re vie w d e n ov o th e d istric t co urt ’s di sm iss al o f N ore x’s co m pla int fo r la ck of su bje ct matter jurisdi ction. See Capital Ventur es Int’l v. Republic of Arg. , 5 52 F. 3d 28 9, 29 3 (2 d C ir. 2009). In Morrison , the Supreme Court considered whet her the Secur ities a nd Exchange Act of 19 34 § 1 0(b ) pr ov ide d a

cau se o f a cti on

to f ore ign pla int if fs su ing fo rei gn

an d A m eri can defendants in court s of the United State s. Morrison , 130 S. Ct. at 2876-77. First , Morrison de ter m ine d th at the qu est ion

of a st atute’ s ex trater

rit ori al r eac h is pro pe rlyan aly zed as a m eri ts question purs uant to Fed. R. Civ. P. 12(b)(6) , not as a quest ion of subject matter jur isdicti on raised by Fed. R. Civ. P. 12(b)( 1). Id. Ac co rdi ng ly, we fi nd the dis tri ct c ourt e rre d in dismissing Norex’s firstamended com plaint for la ck of subject matter jur isdicti on. Rather, the analysis of RICO’s extr aterri torial reach must be conducted underthe auspice s of Fed. R. Civ. P. 12 (b) (6)
.6

Rather than r emand to the distric t court - and in keeping wit h the spiri t of Morrison - we accept the invitat ion of the parti es in thei r supplemental brie fing to consider t he question of whether dismissal is appropriat e under Fed. R. Civ. P. 12(b)(6) without first r emanding. Id. at 2877. Morrison wh ole he art ed ly e m bra ces ap pli cat ion

of the pre sum

pti on ag ain st
ex trater rit ori ali ty, fi nd ingthat “unle ss t he re i s th e af

fi rm ati ve int entio n o f t

he Co ng res s cl ear ly
expre sse d to giv e a s tat

ute ex trater

rit ori al e ff

ect , w e m us t pr esum e it

is p rim ari ly c on cer

ne d w ith do m est ic c on dit ion s. ” Id. at 2 87 7-7 8 (i nte rna l qu otatio ns an d c itatio n o m itt ed ). T he Morrison Court rejec ted various tests devi sed over the ye ars to divi ne a statut e’s extr aterri torial applicat ion in f av or o f a bri gh t li ne rul e: “ [w ]h ena st atute g ive s n o c lear in dic ati on of anex trater

rit ori al ap pli cat ion , it

ha s n on e. ” Id . at 2878. Our C ourt’ s p rec ed ent ho lds that “RIC O i s si lent as to anyex trater rit ori al ap pli cat ion .” Al-T

ur ki , 1 00 F. 3d

at 1 05 1. Whil e N ore x urge s u s to co ns ide r th is s tat em ent di cta , we canno t do so . T he fi nd ingthat R IC O i s si lent as to i ts e xtr ate rri tor ial ap pli cat ion is a ke y ho ldi ng of

the op ini on , b eca

us e it is o nly up on fi nd ingRI CO sil ent as to i ts e xtr ate rri tor ial ap pli cat ion

that th e Al-T

ur kico urt tur ne d to its no w- ab rog ate d ana lys is o f RIC O’ s ex trater rit ori al applicat ion under the c onduct and effects test
. Id. Ev enif we we re t o re vis it Al-T

ur ki , N ore x’s arg um ents are u nava ili ng . F irs t, N ore x arg ue s th at RIC O § 19 62 (a) -(d ) ap pli es t o “ any e nte rpr ise wh ich is e ng ag ed

in, or t hat ac tiv iti es of wh ich af fe ct, int ers tat e o r f

ore ign co mm erc e. ” (¶

¶ 32 2-3 81 ) Morrison fo rec los es t hat arg um en t, n oti ng that “w e h av e re pe ate dly he ld t hat ev enstatut es t

hat co nta in b roa d lang ua ge in their defini tions of comm erce do not appl y abroad.” 130 S. Ct. at 2882. Morrison sim ilarly7

fo rec los es N ore x’s arg um ent th at b eca us e a n um be r of RI CO ’s p red icate a cts po sse ss an extrate rritor ial rea ch, RICO itself possesses an extrat errit orial r each. Id. at 2 88 2-8 3 (n oti ng that wh ile Se cti on

30 (b) of the Ex ch an ge Ac t, 1 5 U .S .C . § 78 dd (b) , c anbe int erp ret ed to a pp ly abroad, “the pr esumption against extr aterri torial ity operat es to limit thatprovision t o its ter ms”). Finally, cont rary to Norex’ s claims, simply alleging thatsome dom estic conduc t occurre d cannot
su pp ort a cl aim of do m est ic a

pp lic ati on . “ [I ]t

is a rar e ca se o f p roh ibi ted

ex trater rit ori al ap pli cat ion

that la ck s all

co nta ct w iththe ter

rit ory of the Un ite d S tat es. ” Id. at 2 88 4 (e m ph asi s in t he ori gin al) . T he sli m

co nta cts wi th t

he Un ite d S tat es a lle ge d b y N ore x are i ns uf fi cie nt t o support extr aterri torial applicat ion of the RICO statute. We have considere d the remainder of No rex ’s c lai m s an d f

ind the m wi tho ut m eri t.

CO NC LU SI ON W e AFFIRM the dis tri ct c ourt’ s d ism iss al o f t his act ion , a lbe it o n d if

fe rent gr ound s th an below.