Opinion ID: 788225
Heading Depth: 2
Heading Rank: 1

Heading: Proceedings Before Final Judgment

Text: 12 In their complaint filed in January 2002, Motorola and Nokia alleged violations of RICO (Counts I-IV), Illinois state law (Counts V-VII, XI), the Computer Fraud and Abuse Act, 18 U.S.C. § 1030(a)(4) (Count VIII), and the Electronic Communications Privacy Act, 18 U.S.C. §§ 2511(1)(a), 2701(a)(2) (Counts IX-X). Motorola and Nokia also asked the District Court to impose a constructive trust over the stake in Telsim improperly acquired by Standart Telekom. In March 2002, defendants moved to dismiss the complaint and to compel arbitration. Plaintiffs, in turn, sought preliminary injunctive relief including, inter alia, the attachment of certain New York properties and the deposit in the District Court's registry of the Telsim shares pledged as collateral. 13 On or about April 19, 2002, while the District Court was considering plaintiffs' request for a preliminary injunction, the defendants obtained three injunctions from Turkish courts. These injunctions purported to prohibit the transfer of Telsim stock outside Turkey. 14 On May 9, 2002, following a six-day evidentiary hearing, the District Court granted plaintiffs' motion for a preliminary injunction, which directed the defendants to deposit into the [District Court's] registry ... the shares of stock of Telsim ... held by defendant Standart [Telekom] ... and issued to Standart [Telekom] during a meeting of Telsim shareholders on April 24, 2001, comprising at least 73.5% of the shares of Telsim stock currently outstanding. The injunction also prohibited defendants from further diluting the pledged collateral. In violation of the injunction, defendants, who had claimed that the case should proceed in arbitration, did not deposit the requisite Telsim shares in the registry of the District Court. Indeed, the very day after the injunction was entered, defendants, in further contravention of the District Court's order, cancelled the voting rights of the plaintiffs' collateral. 2 15 On May 21, 2002, the District Court issued an opinion stating its reasons for entering a preliminary injunction. Motorola Credit Corp. v. Uzan, 202 F.Supp.2d 239 (S.D.N.Y.2002). In that opinion, the District Court concluded, inter alia, that the arbitration provisions of the Telsim contracts are a total irrelevancy because the individual defendants, rather than Telsim, were the real parties in interest in this action. Id. at 251. 16 On May 22, 2002, defendants appealed the District Court's preliminary injunction. The appeal was assigned docket number 02-7566 in this Court, and our Court set an expedited briefing schedule. However, proceedings in the District Court were not stayed pending resolution of the appeal, and the District Court moved the case forward at a brisk pace. On August 22, 2002, the District Court held defendants in civil contempt and imposed a $31,000 fine on them. On September 30, 2002, the District Court (1) formally denied defendants' motion to compel arbitration, having already stated that the arbitration provisions at issue were not relevant or applicable; and (2) enjoined the defendants from pursuing pending Swiss arbitrations involving Telsim and Motorola. 3 On October 15, 2002, the District Court filed a Memorandum Order setting out more fully the bases for its September 30 Order. 4 The District Court then refused to stay its proceedings pending appeal of the denial of arbitration, reasoning that none of the moving defendants is a party to the arbitrations in question and, therefore, the appeal is frivolous. See Motorola Credit Corp. v. Uzan, No. 02 CIV 666, 2002 WL 31426202, at  (S.D.N.Y. Oct.29, 2002). On October 30, 2002, defendants appealed from the District Court's September 30 Order and October 15 Memorandum Order, and their appeal was assigned docket number 02-9302 in this Court. 17 On November 27, 2002, a Turkish court issued yet another injunction, this one purporting to enjoin plaintiffs and the District Court itself from proceeding. On January 6, 2003, the District Court enjoined defendants from proceeding with the Turkish action and ordered them to take all steps necessary to dissolve the Turkish injunctions. On January 17, 2003, defendants arranged for 36 Telsim employees to obtain yet another injunction from the Turkish court purporting to stay all proceedings against the Uzans worldwide. Both the November 27, 2002 injunction and the January 17, 2003 injunction have since been lifted by Turkish courts. 18 Beginning February 10, 2003 and continuing through February 19, 2003, the District Court conducted a bench trial on the merits of plaintiffs' claims, while the appeals in docket numbers 02-7566 and 02-9302 were pending in our Court. Prior to trial, defendants issued several subpoenas and served document requests, and obtained more than 96,000 pages of documents from Motorola and Nokia. At the same time, however, defendants refused to appear for depositions, in violation of multiple court orders. Moreover, shortly before the trial began, defendants informed the District Court that, because it lacked jurisdiction over the actions ever since the notice of appeal from the September 30, 2002 order was filed, they would not appear, present evidence, or examine witnesses at trial. 19 On March 7, 2003, in Uzan I, a unanimous opinion, we consolidated the cases bearing docket numbers 02-7566 and 02-9302, and left intact the preliminary injunction entered by the District Court. See Motorola Credit Corp. v. Uzan, 322 F.3d 130, 137 (2d Cir.2003). However, we also concluded that, under First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 768 (2d Cir.1994), plaintiffs lacked statutory standing to bring their RICO claims because those claims were unripe. Uzan I, 322 F.3d at 135. In First Nationwide, our Court explained that a cause of action does not accrue under RICO until the amount of damages becomes clear and definite, First Nationwide, 27 F.3d at 768, and, furthermore, that the clear and definite amount of damages suffered by a secured creditor who is fraudulently induced to make a loan cannot be established until it is finally determined whether the collateral is insufficient to make the plaintiff whole, and if so, by how much. Id. Although we acknowledged in Uzan I that the corporate borrower (Telsim) is not a defendant in the present case, we concluded that, just as a creditor's RICO claims against a borrower would be abated to the extent that the creditor successfully foreclosed on collateral, so too would Motorola and Nokia's claims against the Uzans and the corporate defendants they control. See Uzan I, 322 F.3d at 136. Accordingly, we directed the District Court to dismiss the RICO claims for lack of statutory standing, and remanded the case to the District Court to revisit the question of whether to exercise supplemental jurisdiction over the lenders' remaining claims.