UNITED STATES COURT OF APPEALS 1 2 FOR THE SECOND CIRCUIT 3 4 August Term, 2002 5 6 7 (Argued: August 5 , 2002 Decided: March 7, 2003) 8 9 Docket Nos. 02-7566, 02-9302 10 11 - - - - - - - - - - - - - - - - - - - -x 12 13 MOTOROLA CREDIT CORPORATION 14 and NOKIA CORPORATION, 15 16 Plaintiffs-Appellees , 17 18 v. 19 20 KEMAL UZAN, CEM CENGIZ UZAN, MURAT HAKAN UZAN, 21 MELAHAT UZAN, AYSEGUL AKAY, ANTONIO LUNA BETANCOURT, 22 UNIKOM ILETISM HIZMETLERI, STANDART PAZARLAMA A.S. 23 and STANDART TELEKOMUNIKASYON BILGISAYAR 24 HIZMETLERI A.S., 25 26 Defendants-Appellants
. 27 28 29 - - - - - - - - - - - - - - - - - - - -x 30 31 MOTOROLA CREDIT CORPORATION and NOKIA CORPORATION, 32 33 Plaintiffs-Counter-Defendants-Appellees , 34 35 v. 36 37 MURAT HAKAN UZAN and CEM CENGIZ UZAN, 38 39 Defendants-Counter-Claimants-Appellants , 40 41 42 KEMAL UZAN, MELAHAT UZAN, AYSEGUL AKAY, ANTONIO LUNA 43 BETANCOURT, UNIKOM ILETISM HIAMETLERI PAZARLAMA A.S., 44 STANDART PAZARLAMA A.S., STANDART TELEKOMUNIKASYON 45 BILGISAYAR HIZMETLERI A.S., 462 Defendants - Appellants , 1 2 MOTOROLA, INC., KROLL ASSOCIATES, INC., CHRISTOPHER B. 3 GALVIN, KEITH J. BANE, WALTER KEATING, ED HUGHES, 4 and ERNST KRAMER, 5 6 Counter-Defendants
. 7 - - - - - - - - - - - - - - - - - - - -x 8 9 Before: JACOBS, CABRANES, and F.I. PARKER, 10 Circuit Judges
. 11 12 13 In Docket No. 02-7566, an appeal from the May 9, 2002 14 order entered in the United States District Court for the 15 Southern District of New York (Rakoff, J. ), granting 16 Plaintiffs’ application for a preliminary injunction. 17 Remanded 

### . 18 In Docket No. 02-9302, an appeal from the September 30, 19 2002 order denying Defendants’ motion to compel arbitration 20 and to stay all proceedings pending arbitration, and 21 granting Plaintiffs’ motion to stay three arbitrations 22 pending in Switzerland. Remanded. 23 24 ROBERT F. SERIO, Gibson, Dunn & 25 Crutcher LLP, New York, New 26 York, for Defendants-Appellants 27 Kemal Uzan et al. 28 29 Kenneth M. Bialo ( R. Stan 30 Mortensen, James A. Baker, IV, 31 James R. Heavner, Jr., of 32 counsel ), Baker Botts L.L.P., 33 Washington, DC), for Defendants- 343 Appellants Kemal Uzan, Cem 1 Cengiz Uzan, Murat Hakan Uzan, 2 Melahat Uzan, and Aysegul Akay
. 3 4 HOWARD H. STAHL (Steven K. 5 Davidson, Charles G. Cole, Bruce 6 C. Bishop, Gordon M. Clay, on 7 the brief ), Steptoe & Johnson 8 LLP, Washington, DC, for 9 Plaintiff-Appellee Motorola 10 Credit Corporation
. 11 12 JASON BROWN (Michael Donofrio, 13 on the brief ), Holland & Knight 14 LLP, New York, New York, for 15 Plaintiff-Appellant Nokia 16 Corporation
. 17 18 PER CURIAM : 19 20 In Docket No. 02-7566, Defendants appeal from the May 21 9, 2002 preliminary injunction entered in the United States 22 District Court for the Southern District of New York 23 (Rakoff, J. ), in aid of Plaintiffs’ claims under the 24 Racketeer Influenced and Corrupt Organizations Act (“RICO”), 25 18 U.S.C. §§ 1961-1968, and certain Illinois state and 26 common law claims. The plaintiff corporations financed 27 cell-phone and communications networks set up in Turkey by 28 Telsim Mobil Telekomunikasyon Hizmetleri A.S. (“Telsim”), 29 and--following a series of non-payments and serious concern 30 that the loans would not be repaid--are suing persons who 31 are alleged to control Telsim and its onetime chief 324

stockholder, Rumeli Telefon Sistemleri A.S. (“Rumeli 1 Telefon”), and to have impaired collateral by diluting 2 Telsim stock and other maneuvers. Arbitrations concerning 3 the underlying financing transactions were initiated in 4 Switzerland, and have been stayed by the Southern District 5 of New York. 6 We conclude that the RICO claims based on a third7 party’s failure to pay on a debt are unripe. This ruling 8 does not strip the district court of all jurisdiction, but 9 it is likely to require reconsideration by the district 10 court of a number of issues, rulings, and orders--no doubt 11 aided by further proceedings being conducted on the merits. 12 We therefore remand for the district court to dismiss the 13 RICO claims, without prejudice to reassertion at some 14 appropriate later time, and to exercise discretion as to 15 whether to retain supplemental jurisdiction over the state 16 law claims. However, we do not vacate the preliminary 17 injunction. 18 In Docket No. 02-9302, Defendants appeal orders of the 19 district court denying their motions to compel arbitration, 20 staying three arbitrations pending in Switzerland, and 21 denying Defendants’ motion to stay all proceedings and the 225

challenged orders pending arbitration. In light of our 1 decision in 02-7566, we remand the issues in 02-9302 to the 2 district court for reconsideration. 3
Nostra sponte , we hereby consolidate these appeals. 4 5
BACKGROUND 6 Plaintiff Motorola Credit Corporation (“MCC”) is the 7 financing affiliate of Motorola, Inc., which manufactures 8 and services cellular telecommunications systems. Plaintiff 9 Nokia Corporation sells switching technology. 10 The individual Defendants are several members and one 11 close associate of the prominent Uzan family of Turkey, 12 which controls Telsim, and Rumeli Telefon. Neither Telsim 13 nor Rumeli Telefon is a party to this action. The Uzans 14 also control Defendants Unikom Iletism Hizmetleri Pazarlama 15 A.S., Standart Pazarlama A.S., and Standart Telekomunikasyon 16 Bilgisayar Hizmetleri A.S. (“Standart Telekom”). 17 In 1998, MCC entered into several overlapping 18 agreements with Telsim and Rumeli Telefon. MCC loaned 19 Telsim $360 million to purchase cellular infrastructure and 20 equipment from Motorola Ltd. (a MCC affiliate), and $200 21 million to enable Telsim to acquire a 25-year nationwide 226

cellular license. As collateral, Rumeli Telefon--which then 1 owned approximately 73.5% of Telsim--pledged 51% of Telsim’s 2 outstanding shares. In subsequent years, MCC provided 3 additional financing--eventually totaling approximately $2 4 billion--and the pledged interest was increased to 66% of 5 Telsim’s outstanding shares. 6 Each of these agreements provides that it “shall be 7 governed and interpreted in accordance with the internal 8 laws (without regard to the laws of conflicts) of 9 Switzerland,” and that any unresolved dispute “aris[ing]” 10 under the agreement shall be decided, to the exclusion of 11 the ordinary courts, by a three-person arbitration panel in 12 Switzerland in accordance with the International Arbitration 13 Rules of the Zurich Chamber of Commerce. 14 Also in 1998, Nokia entered into a smaller but similar 15 arrangement with Telsim and Rumeli Telefon. The initial 16 loan was extended by Nokia’s bank, ABN-Amro, backed by the 17 credit of Nokia. As security, Rumeli Telefon pledged 5% of 18 Telsim’s outstanding shares. In subsequent years, Nokia 19 extended additional financing to Telsim, approximately $800 20 million in all, and Rumeli Telefon increased the pledged 21 interest to 7.5% of Telsim’s outstanding shares. 221 

### See infranote 5. 7

Each of these agreements provides that it “shall be 1 governed by, and shall be construed in accordance with Swiss 2 law,” and that all disputes “relating to” the agreement 3 shall be resolved by a three-member arbitration panel in 4 Switzerland in accordance with the International Arbitration 5 Rules of the Zurich Chamber of Commerce. 6 Of these colossal loans from MCC and Nokia, Telsim has 7 repaid approximately $200 million since 1998, and only $5 8 million since mid-2000. 9 A special shareholders meeting of Telsim was convened 10 on April 24, 2001. MCC and Nokia contend that it was 11 convened for the purpose of devaluing the pledges of Telsim 12 shares. Defendants contend that the purpose was to protect 13 against a feared loss of control over Telsim. In any event, 14 the shareholders at the meeting tripled the number of 15 outstanding Telsim shares. Although current shareholders 16 were afforded preemption rights to purchase the newly issued 17 shares, Rumeli Telefon (the largest shareholder) waived 18 these rights, and they were transferred to Defendant 19 Standart Telekom (another Uzan-controlled company), which 20 exercised them. Partly as a result of this transfer, 1 218

Standart Telekom raised its stake in Telsim from 0.32% to 1 66.48%, while Rumeli Telefon’s holding (all of which was 2 pledged to MCC and Nokia) was reduced to 24.54%--severely 3 diluting the value of Plaintiffs’ collateral. 4 Plaintiffs presented additional evidence of the 5 Defendants’ maneuvers. For example, the Defendants 6 attempted to alter the voting rights of Telsim’s outstanding 7 shares in a way that would have reduced the voting power of 8 the pledged shares and thereby further impaired the 9 collateral. Defendants also allegedly caused false criminal 10 charges to be initiated in Turkey against MCC and Nokia 11 executives, on the claimed grounds that the executives had 12 made “explicit and armed threats” against the Uzans to kill, 13 blackmail, and abduct them, and offered to drop the charges 14 if Plaintiffs deferred payment on the outstanding loans. 15 Defendants also diverted revenue and assets away from 16 Telsim. 17 Plaintiffs contend that the Defendants’ activities 18 throughout this period were intended to thwart Plaintiffs’ 19 ability to foreclose on the loans and exercise their rights 20 with respect to the pledged interest. 21 Before this lawsuit was filed, ABN-Amro began an 222 

### The three Swis s arbitrationsthat the dist rict court

stayed are between and amongentities thatare party to contractual arbitration agre ements, but that are not all present in thi s lawsuit. 9 arbitration against Telsim in Switzerland. In this 1 arbitration, Telsim attempted to reschedule its repayments 2 based on a theory of “economic force majeure.” Shortly 3 after this lawsuit was filed, Telsim began an arbitration 4 proceeding in Switzerland against MCC in which Telsim also 5 invoked “economic force majeure” in an effort to reschedule 6 its repayments. On June 7, 2002, Rumeli Telefon commenced 7 two arbitrations against the Plaintiffs in Switzerland, 8 seeking damages and Plaintiffs’ compelled consent to the 9 deposit of the pledged Telsim shares with the arbitral 10
forum. 

### On October 15, 2002, the dis trict court is sued an 11 

### opinion granti ng Plaintiffs’ motion to stay the Swiss 12 

### arbitrations i nitiated by Te lsim and Rumel i Telefon. That 13 

### stay is among the rulings challenged on the appeal in Do cket 14 

### No. 02-9302, and subject to remand
. 2 15 In the complaint in the Southern District of New York, 16 both Plaintiffs alleged violations of RICO (Counts I-IV), 17 and sought the imposition of a constructive trust or 18 equitable lien (Count XII). In addition, MCC alleged 1910

Illinois state and common law claims (Counts V-VII, XI), and 1 violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 2 1030(a)(4) (Count VIII), and the Electronic Communications 3 Privacy Act, 18 U.S.C. §§ 2511(1)(a), 2701(a)(2) (Counts IX4 X). 5 On May 9, 2002, following a six-day evidentiary 6 hearing, the district court granted the Plaintiffs’ motion 7 for a preliminary injunction, which ( inter alia ) directs the 8 Defendants “to deposit into the [district court’s] registry 9 . . . the shares of stock of Telsim . . . held by defendant 10 Standart [Telekom] . . . and issued to Standart [Telekom] 11 during a meeting of Telsim shareholders on April 24, 2001, 12 comprising at least 73.5% of the shares of Telsim stock 13 currently outstanding.” On May 21, 2002, the district court 14 stated its reasons for that order. Motorola Credit Corp. v. 15
Uzan , 202 F. Supp. 2d 239 (S.D.N.Y. 2002). The district 16 court concluded (insofar as the opinion bears on this 17 appeal) that (1) injunctive relief is available to a private 18 plaintiff bringing a civil action under RICO; (2) Plaintiffs 19 demonstrated a sufficient likelihood of success on the 20 merits of their RICO claims; (3) Plaintiffs had standing to 21 bring their RICO claims against Defendants regardless of 2211

whether they pursued remedies against Telsim; (4) MCC was 1 independently entitled to injunctive relief under the 2 Illinois state and common law claims; and (5) the 3 arbitration provisions in the various agreements did not 4 divest the court of jurisdiction. Defendants now appeal. 5 6
DISCUSSION 7 This case raises a host of unusual questions, and the 8 answers have enormous consequences to the parties and non9 parties alike. Today, however, we focus on a single issue 10 that was incorrectly decided by the district court, and that 11 may have impact on many issues confided to the discretion of 12 the district court. 13 “We review a district court’s decision to grant . . . a 14 preliminary injunction for abuse of discretion.” Int’l Bhd. 15 of Teamsters v. Local Union No. 810 , 19 F.3d 786, 789 (2d 16 Cir. 1994). “Abuse of discretion usually consists of 17 clearly erroneous findings of fact or the application of an 18 incorrect legal standard.” Id. To obtain a preliminary 19 injunction, a plaintiff must show “a threat of irreparable 20 injury and either (1) a probability of success on the merits 21 or (2) sufficiently serious questions going to the merits of 223 

### It is said that a plaintiff who seeks a “mandatory”

injunction, rather than a “p rohibitory” in junction, must demonstrate a “clear” or “substantial” likelihood of success. Beal v. Stern , 184 F.3d 117 , 122-23 (2d C ir. 1999). The di strict court expressed doubt s that MCC and Nokia were see king mandatory injunctive re lief (not often an easy distincti on to draw), but concluded that the height ened standard would

be satisfied if triggered.

12 the claims to make them a fair ground of litigation, and a 1 balance of hardships tipping decidedly in favor of the 2 moving party.” Time Warner Cable v. Bloomberg L.P. , 118 3 F.3d 917, 923 (2d Cir. 1997). 3 4 The district court determined that Plaintiffs “are 5 substantially likely to succeed on their RICO claim under 6 Count III.” Motorola , 202 F. Supp. 2d at 248. Necessary to 7 this determination was the court’s conclusion that 8 Plaintiffs had standing to bring their RICO claims and to 9 seek injunctive relief based on those claims. We conclude 10 that, under First Nationwide Bank v. Gelt Funding Corp. , 27 11 F.3d 763, 768 (2d Cir. 1994), the Plaintiffs lack statutory 12 standing under RICO because their claims are unripe. 13 Although the district court determined that MCC is also 14 entitled to the preliminary injunction based on its Illinois 15 state and common law claims, the dismissal of the RICO 16 claims has potential bearing on the district court’s 17 exercise of supplemental jurisdiction over the non-federal 1813

claims. We therefore remand for the district court to 1 decide, under 28 U.S.C. § 1367(c), whether it will retain 2 jurisdiction over the state law claims. 3 Under RICO, “[a]ny person injured in his business or 4 property by reason of a violation of section 1962 of this 5 chapter may sue therefor in any appropriate United States 6 district court.” 18 U.S.C. § 1964(c). To satisfy RICO’s 7 standing requirements, a plaintiff must demonstrate, “(1) a 8 violation of section 1962; (2) injury to business or 9 property; and (3) causation of the injury by the violation.” 10 Hecht v. Commerce Clearing House, Inc. , 897 F.2d 21, 23 (2d 11 Cir. 1990). In First Nationwide , this Court considered a 12 bank’s RICO claim arising out of fraudulently induced loans. 13 We held that “to the extent [the bank’s] complaint is 14 predicated on loans that have not been foreclosed, its 15 claims are not ripe for adjudication because it is uncertain 16 whether [the bank] will sustain any injury cognizable under 17 RICO.” First Nationwide , 27 F.3d at 767. 18 Our holding in First Nationwide rested on the general 19 principle that “a cause of action does not accrue under RICO 20 until the amount of damages becomes clear and definite.” 21 Id. at 768. The “clear and definite” amount of damages 22 suffered by a secured creditor who is fraudulently induced 2314

to make a loan and seeks to recover the value of the loan 1 itself, “cannot be established until it is finally 2 determined whether the collateral is insufficient 3 to make the plaintiff whole, and if so, by how much.” Id. 4 That is because the RICO damages are netted against recovery 5 obtained from collateral and other sources: 6 Because the fraud defendant is not liable for all 7 losses that may occur, but only for those actually 8 suffered, only after the lender has exhausted the 9 bargained-for remedies available to it can the 10 lender assert that it was damaged by the fraud, 11 and then only to the extent of the deficiency. 12 13 Id. In short, “a plaintiff who claims that a debt is 14 uncollectible because of the defendant’s conduct can only 15 pursue the RICO treble damages remedy after his contractual 16 rights to payment have been frustrated.” Id. We therefore 17 concluded that until the secured creditor foreclosed on the 18 loans, the creditor’s claims were not ripe for suit. Id. at 19 769. 20 It is undisputed that Plaintiffs have not foreclosed on 21 the loans at issue here, and that arbitrations are pending 22 in Switzerland that concern the same underlying 23 transactions. The district court undertook to distinguish 24 First Nationwide in the following terms: 25
In First Nationwide , . . . the plaintiff 26 sought to bring a RICO claim against the very 2715 borrower on whose collateral the plaintiff had 1 not yet fully foreclosed and as to whom 2 ordinary collection proceedings were far from 3 completed. Here, by contrast, the borrower 4 (Telsim) is not a party at all, and the named 5 defendants, who are accused, inter alia , of 6 fraudulently inducing the plaintiffs to extend 7 the $2.7 billion in loans and of diverting it 8 to their benefit, are independently liable for 9 this known and certain sum, regardless of 10 whether plaintiffs pursue their alternative 11 remedies against Telsim or not. 12 13 Motorola , 202 F. Supp. 2d at 249. 14 We think that this distinction is invalid. True, the 15 borrower (Telsim) is not a party here, and this is not a 16 contract action. It is likewise true that the present 17 claims are alleged under a wholly distinct theory (fraud) 18 that would render Defendants liable independently of Telsim. 19 But the RICO damages sought are in respect of a loss that 20 would be abated to the extent that: Plaintiffs realize value 21 on the collateral; Plaintiffs recover in the Swiss 22 arbitrations; or the size of the debt on the underlying 23 contracts, or the obligation to pay it, is affected by any 24 ruling on Telsim’s defenses in the Swiss arbitration that is 25 binding and enforceable. These contingencies, and other 26 conceivable contingencies, remain. “[T]he fraud defendant 27 is not liable for all losses that may occur , but only for 28 those actually suffered .” First Nationwide , 27 F.3d at 768 2916

(emphases added). Therefore, “the loss” suffered on past1 due loans as to which Plaintiffs have “not finally 2 foreclosed cannot yet be determined. Only when 3 [Plaintiffs’] actual loss becomes clear and definite will 4 the claims be ripe for suit. Until that time, [Plaintiffs] 5 lack[] standing under RICO to assert claims as to those 6 loans.” Id. at 769. 7 The district court’s reliance on GICC Capital Corp. v. 8 Technology Finance Group, Inc. , 30 F.3d 289 (2d Cir. 1994), 9 and In re Merrill Lynch Partnerships Litigation , 154 F.3d 56 10 (2d Cir. 1998), is misplaced. The plaintiff in each case 11 was unsecured, so there was no collateral on which to 12 foreclose, or any other contractual remedy. As we stated in 13 In re Merrill Lynch : 14 First Nationwide [is] inapplicable in this 15 case. [It] hold[s] that when a creditor 16 alleges he has been defrauded RICO injury is 17 speculative when contractual or other legal 18 remedies remain which hold out a real 19 possibility that the debt, and therefore the 20 injury, may be eliminated or significantly 21 reduced. The RICO claim is, thus, not ripe 22 until those remedies are exhausted and the 23 damages are clear. . . . As investors have no 24 contractual or other legal remedies which 25 could assuage the injury [in this case], the 26 amount of damages was “clear and definite,” and the injury was ripe, at the time of 27 investment. 28 29 In re Merrill Lynch , 154 F.3d at 59. Moreover, the issue in 3017

GICC Capital was whether the plaintiff had established 1 proximate cause so as to satisfy RICO standing, 30 F.3d at 2 292, and the discussion of RICO injury in In re Merrill 3 Lynchpertained to a statute-of-limitations issue, 154 F.3d 4 at 58-59. In any event, neither case impairs the rule 5 enunciated in First Nationwide
. 6 It may be that the arbitration is a forlorn hope for 7 MCC and Nokia, and that, in any event, the collateral will 8 yield little of value. But the arbitration does not cease 9 to be a possible influence (negotiated by contract) on the 10 amount of loss simply because the district court has stayed 11 it. Certainly, the district court cannot in that way force 12 the RICO claim to ripen. 13 Because Plaintiffs lack RICO standing to assert claims 14 based on a Telsim’s failure to pay on a debt, those claims 15 must be dismissed, without prejudice to reassertion at some 16 appropriate later time. This dismissal also implicates the 17 district court’s subject matter jurisdiction. In Lerner v. 18 Fleet Bank, N.A. , 318 F.3d 113 (2d Cir. 2003), we recently 19 explained that a plaintiff’s “lack of statutory standing 20 [under RICO] does not divest the district court of original 21 jurisdiction.” Id. at 103. Thus, although the plaintiffs’ 22 RICO claims in that case were properly dismissed, “[t]he 2318

district court had original jurisdiction to support the 1 exercise of supplemental jurisdiction over the . . . 2 plaintiffs’ state-law claims.” Id. We then vacated the 3 district court’s dismissal of the plaintiffs’ state law 4 claims for lack of jurisdiction, and remanded for a 5 determination of whether to exercise supplemental 6 jurisdiction. 7 We recognize that the district court has already 8 exercised supplemental jurisdiction over MCC’s state law 9 claims, and referenced those claims as additional support 10 for the injunction. However, the dismissal of the RICO 11 claims alters things in a way that justifies reconsideration 12 of the injunction, the sufficiency of grounds for issuance 13 as well as the terms of an injunction, if issued. Among 14 other considerations, the sole remaining federal claims are 15 minor compared to the now-dismissed RICO claims, both in 16 terms of scope and in terms of relief. 17 In light of this changed landscape, we remand this case 18 to the district court for it to decide whether to retain 19 supplemental jurisdiction over the state law claims pursuant 20 to 28 U.S.C. § 1367(c). Given the district court’s 21 conclusion (which we do not now address) that, with respect 22 to MCC, the state law claims provide an independent basis 234 

### Nokia did not join in allegi ng all of MCC’ s state law

causes of acti on. However, Nokia’s allegation of a Constructive T rust/EquitableLien cause ofaction (it is unclear whethe r that claim i s based on Ill inois or New York law) might provide an alternative basis fo r upholding the preliminary in junction in ai d of Nokia. See, e.g. , Hurst v. Papierz , 306 N.E.2d 5 32, 537-38 (Il l. App. Ct. 19 73); Rolnick v. Rol nick , 230 N.Y.S.2d 789, 791 (N.Y . Sup. Ct. 1962). We int imate no view as to the viab ility of the constructive t rust or any other claim. Itis for the district courtto determine, in the first instance, whether Nokia’s remain ing claims provide a suffici ent basis to support the preliminary injunction. There fore, we also remand, but donot vacate, the portion of the preliminary injunction sought by Nokia. 19 for the preliminary injunction, we do not vacate the 1 preliminary injunction; but our ruling is without prejudice 2 to any ruling we may make on any relief (or denial of 3 relief) that results from ongoing additional proceedings. 4 4 While the mandate of this Court leaves the injunction 5 intact, the issuance of the mandate naturally ends the 6 November 27, 2002 Order of this Court staying the imposition 7 and accrual of fines against the Defendants for non8 compliance. However, the schedule of fines established by 9 the district court has long passed, and the district court 10 may (if it determines that the injunction should continue) 11 establish a new, prospective schedule for enforcing 12 compliance. 13 We note, however, that there appears to be a problem 145

### It appears tous that, prio r to the shareholders

meeting on Apr il 24, 2001, Rumeli Telefon owned approximately 73.5% of the outstanding Tel sim stock. At that meeting, the total avai lable shares o f Telsim stock were tripled, and Rumeli Tel efon was givenpreemptive ri ghts that would have allowed it t o maintain its73.5% ownersh ip of Telsim. Be cause Rumeli T elefon decline d to exercise those rights ( it transferred them to Standart Telekom), its stake in Telsim dropped from 73.5% of all outstanding shares to 24.5% of al l outstanding shares. There fore, Rumeli Telefon gave S tandart Telekom preemptive r ights that all owed Standart Telekom to acquire 49% of the out standing share s of Telsim (the di fference betwe en the 73.5% t o which Rumeliwas entitled and the 24.5% it ended up with). 20 with a term of the present injunction. The injunction 1 directs the Defendants “to deposit into the [district 2 court’s] registry . . . the shares of stock of Telsim . . . 3 held by defendant Standart [Telekom] . . . and issued to 4 Standart [Telekom] during a meeting of Telsim shareholders 5 on April 24, 2001, comprising at least 73.5% of the shares 6 of Telsim stock currently outstanding.” It would be 7 impossible for Standart Telekom to comply with this order 8 because, as far as the record shows, Standart Telekom only 9 has 66.48% of the currently outstanding Telsim stock. 10 Moreover, of the Telsim stock Standart Telekom does own, 11 only a portion of it (49% of the currently outstanding 12 shares 5 ) is traceable to Rumeli Telefon’s preemptive rights 13 and, correspondingly, to the stock pledged to the 14 Plaintiffs. The rest of Standart Telekom’s Telsim stock was 1521

either owned by Standart Telekom prior to the April 24, 2001 1 meeting, or acquired by exercising the preemptive rights of 2 Telsim stockholders other than Rumeli Telefon. 3 The preliminary injunction cannot directly reach the 4 Telsim stock still owned by Rumeli Telefon because Rumeli 5 Telefon is not a party to this litigation. Moreover, so far 6 as we can tell from the record, Rumeli Telefon still owns 7 24.5% of the currently outstanding Telsim stock. Those 8 shares remain subject to the pledge and potentially subject 9 to foreclosure by the Plaintiffs. Additionally, the 10 district court’s opinion does not explain the basis for 11 including within the ambit of the preliminary injunction the 12 Telsim shares owned by Standart Telekom that are not 13 traceable to the Rumeli Telefon preemptive rights. To the 14 extent Standart Telekom acquired these shares by exercising 15 the preemptive rights of Uzan-controlled companies other 16 than Rumeli Telefon, it might be appropriate--although we 17 express no view on the viability of this position--for the 18 preliminary injunction to include those shares if, for 19 example, it could be shown that Standart Telekom’s 20 acquisition of those shares was part of the fraud. As yet 21 no findings suggest that there has been any such showing. 22 Therefore, although we leave the preliminary injunction in 2322

place, we caution that this is an issue to be addressed if, 1 on remand, the court decides to keep the preliminary 2 injunction in place. 3 We intimate no opinion on any other issues raised in 4 this appeal. The parties may make appropriate motions 5 following the district court’s decisions on remand. 6
7
CONCLUSION 8 For the foregoing reasons, we remand in 02-7566 for the 9 district court to dismiss, without prejudice, Plaintiffs’ 10 RICO claims based on Telsim’s failure to pay on its debt, 11 and to decide whether to retain supplemental jurisdiction 12 over the state law claims. In light of this disposition, we 13 remand for reconsideration all issues raised on the appeal 14 in 02-9302. The court may conduct any proceedings not 15 inconsistent with this opinion. In light of these holdings, 16 we deny, as moot, the following motions pending in 02-9302: 17 1) Plaintiffs’ motion to dismiss the appeal; 2) Defendants’ 18 motion for a stay of all proceedings in the district court 19 pending appeal; and 3) Defendants’ motion for an expedited 20 appeal. Each party will bear its own costs of this appeal. 21 

### The mandate shall issue forthwith. 22