DENNIS A. REID, Plaintiff,
VINCENZO DAVIDE SINISCALCHI, GIORGIO CAPRA, ALENIA SPAZIO, ALCATEL ALENIA SPACE ITALIA SpA (f/k/a ALENIA SPAZIO) and FINMECCANICA SpA, Defendants, and USRT HOLDINGS, L.L.C. and U.S. RUSSIAN TELECOMMUNICATIONS, L.L.C., Nominal Defendants.
Submitted: June 12, 2014
David W. deBruin, Esquire of The deBruin Firm LLC, Wilmington, Delaware; Derek Y. Brandt, Esquire of Simmons Browder Gianaris Angelides & Barnerd LLC, Alton, Illinois; and Thomas I. Sheridan, III, Esquire, Andrea Bierstein, Esquire, and Paul J. Hanly, Jr., Esquire of Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP, New York, New York, Attorneys for Plaintiff.
Allen M. Terrell, Esquire, Lisa M. Morris, Esquire, and Rachel E. Horn, Esquire of Richards, Layton & Finger, P.A., Wilmington, Delaware; and Paul J. Vincenti, Esquire, John V. Vincenti, Esquire, and Elyse C. Pillitteri, Esquire of Vincenti & Vincenti, P.C., New York, New York, Attorneys for Defendants Alenia Spazio, Alcatel Alenia Space Italia, S.p.A. and Finmeccanica, S.p.A.
NOBLE, Vice Chancellor
Alenia Spazio, Alcatel Alenia Space Italia, S.p.A., and Finmeccanica, S.p.A (collectively referred to as "the Entity Defendants" or "Finmeccanica") have moved, pursuant to Court of Chancery Rule 12(b)(2) for lack of personal jurisdiction, and 6 Del. C. § 18-1002 for lack of standing, to dismiss Plaintiff Dennis A. Reid's ("Reid" or the "Plaintiff") complaint (the "Complaint"). Plaintiff alleges that the Entity Defendants participated in a conspiracy in which a co-conspirator committed an act in Delaware subject to the long-arm statute. According to Plaintiff, the co-conspirator's actions should be imputed to the Entity Defendants under the conspiracy theory of jurisdiction, establishing a basis for personal jurisdiction in Delaware.
A. Plaintiff's Substantive Allegations
On April 9, 2007, Reid filed the Complaint against the Entity Defendants, as well as Vincenzo Davide Siniscalchi ("Siniscalchi") and Giorgio Capra ("Capra"). Reid brought direct claims and derivative ones on behalf of Nominal Defendants U.S. Russian Telecommunications, L.L.C. ("USRT") and USRT Holdings, L.L.C. ("USRT Holdings"), both Delaware limited liability companies. The Complaint includes causes of action for breach of contract, breach of fiduciary duty, conversion, civil conspiracy, tortious interference, and tortious interference with business relations. Reid bases standing for his derivative claims on his 10% interest in USRT Holdings, which wholly owns USRT.
In the Complaint, Reid describes a conspiracy among the Entity Defendants, Siniscalchi, and Capra to breach a joint venture agreement between Finmeccanica and USRT. Reid alleges that the conspirators divested USRT of its share of the joint venture's proceeds, misappropriated its assets, and usurped its corporate opportunities.
By the 1990s, various Russian satellites were becoming obsolete, but Russia lacked the funds to modernize them. Because of its inability to replace the satellites with new equipment, Russia was at risk of losing commercially valuable geosynchronous orbital slots, which are assigned by an international commission. Dr. Valery Aksamentov ("Aksamentov"), a Russian space scientist living and working in the United States, learned of Russia's situation through his brother and a friend who worked at the Russian Satellite Communications Company ("RSCC"), the company that allocated and licensed Russian satellite communications frequencies. Sensing a business opportunity, Aksamentov worked with RSCC employees to push for Russian legislation that would allow commercialization of the satellite slots.
Once Russia passed the legislation, Aksamentov developed his plan to secure state-of-the-art technology for new satellites, find Western investors to finance the development and launching of the new satellites, allocate some of the satellite transponders to Russia, and market the rest to commercial customers. Aksamentov envisioned the project's revenues being shared among Russia, the investors, and his group. Along with some colleagues, Aksamentov formed USRT to pursue his plan. Aksamentov's personal connections allowed USRT to develop strong relationships with RSCC and other Russian entities.
The satellite project drew early interest from the Italian government, and representatives of USRT met with Italian delegates in October 1997. Italy informally appointed Capra, an Italian Navy officer, advisor to the Italian Ministry of Defense, and board member of the Italian Space Agency, to serve as a liaison between USRT and Italy.
On November 26, 1997, Capra informed Aksamentov and RSCC that Italy was "committed to the joint venture with USRT." On December 5, Italy reconfirmed its "firm and full commitment . . . to provide full financing as a joint-venture partner of USRT . . . ." A month later, Italy brought Finmeccanica, an Italian state-controlled entity, into the project to obtain financing. Due to his role as a government representative, Capra "had a lot of relations" with Finmeccanica's management. Capra introduced USRT to Finmeccanica on December 11, 1997, and later that month, Finmeccanica agreed to be USRT's joint venture partner for the satellite project.
USRT and Finmeccanica scheduled a meeting with the Russians for January 12, 1998. Before the meeting, USRT told Finmeccanica that the parties must prepare "all documentation required to reconfirm our commitment to the joint program." On December 31, 1997, Capra sent Finmeccanica a draft letter with an attached note explaining, "the words have been carefully chosen, with a view to avoiding an effective commitment." Days later, Finmeccanica sent USRT a letter acknowledging, "consequent to our meeting on December 18, 1997, and pursuant to your letter dated December 26, 1997, we hereby confirm our attendance at the meetings in Moscow scheduled for January 12, 1998, as your joint venture partner."
Despite Finmeccanica's written confirmation of the joint venture, Aksamentov informed Capra that USRT and Finmeccanica needed to execute a formal joint venture agreement before meeting with the Russians. Capra forwarded Aksamentov's letter to Finmeccanica and expressed his belief that it was necessary to satisfy USRT's requests at that time.
Subsequently, on January 12, 1998, USRT and Finmeccanica signed their first of several memoranda of agreement ("MOA"). The parties agreed to "jointly elaborate a business plan of the [satellite project]" and to "negotiate in good faith." The agreement identified USRT as "a company incorporated under the laws of Delaware." Before the MOA was signed, Finmeccanica had questioned Aksamentov as to why USRT was necessary to the satellite project. Finmeccanica also expressed interest in dealing with the Russians directly. However, Aksamentov convinced Finmeccanica that USRT's relationship with RSCC, the Russian entity in control of the orbital slots, was very valuable. USRT had already entered into a joint venture arrangement with RSCC and RSCC wanted to work with USRT.
Once the MOA was signed, Finmeccanica and USRT attended meetings in Moscow. After these meetings, on January 19, 1998, Siniscalchi forwarded questions from the Italian government to USRT. The questions sought information regarding USRT's structure, business, and relationship to the Russian government. The final question was: "What is the commercial value of what USRT brings to the joint venture?" USRT responded to these questions by sending information about the satellite project to Capra, and that information was subsequently used to prepare a financing submission to the Italian government.
On January 23, Finmeccanica sent USRT a letter indicating its understanding that although it was "more than willing to become USRT [sic] partner in [the satellite business], " a joint venture would not actually be formed until several conditions precedent were met. This sentiment appeared to hedge against Finmeccanica's earlier acknowledgements that it and USRT were already joint venture partners.
On January 25, Capra wrote to Finmeccanica, exclaiming, "I'm convinced that any unilateral action by [Finmeccanica] not agreed upon with the Russians and the Americans might seriously harm the program and presumably cancel it!"Within a week of Capra's warning, Finmeccanica's representatives met unilaterally with the Russians to discuss the satellite business. This meeting occurred while other representatives of Finmeccanica met with USRT's representatives in Texas to sign a revised MOA, reconfirming their commitment to the joint venture. The new MOA acknowledged "that USRT may be reorganized as a new Delaware entity based on further discussions."
Throughout early 1998, Finmeccanica continued communicating unilaterally with the Russian entities to which USRT had introduced it. Finmeccanica sought to "develop a long term cooperation program" with the Russians with "the first short term opportunity of such nature . . . represented by the . . . Gorizont Satellite Replacement Program." The Gorizont Program was the satellite project in which USRT had an interest.
During the spring of 1998, RSCC transferred control of the Russian satellite slots to another Russian company, InSpace. On April 1, InSpace invited USRT, through Aksamentov, along with its "industrial partner [Finmeccanica], " to Russia in order to discuss the satellite project. On April 6, USRT and InSpace entered into a nondisclosure agreement, which provided, "Each party agrees that it will not circumvent the other party and attempt to do, or actually do, business with the contacts and sources of the other party unless otherwise agreed in writing by the parties."
On April 7, Finmeccanica suggested that it might deal directly with InSpace. However, Aksamentov informed it of the non-circumvent provision in USRT and InSpace's agreement. The next day, Finmeccanica, USRT, and InSpace, formed a joint venture to exploit the satellite slots. InSpace was to receive forty percent of the project's revenues, with Finmeccanica and USRT splitting the rest.
After this three-way agreement was signed, USRT informed Finmeccanica that until the two executed a new bilateral MOA, "all meetings with the appropriate Russian parties [would] be indefinitely postponed." Capra reiterated to Finmeccanica that without a new MOA, "the Moscow meetings planned for May 11 to 16 might be jeopardized." In response, the parties signed a new MOA on May 12, 1998, providing in part that "any action towards third parties shall be previously agreed upon between the parties and neither [party] shall undertake any action which could adversely affect the implementation of their joint business."This MOA remained in effect until Finmeccanica eventually canceled it on December 20, 1999.
Throughout the summer and fall of 1998, Finmeccanica was unable to obtain the financing required for the satellite project, and late that year, Capra and Siniscalchi supposedly told USRT that the Italian government would only approve the deal if USRT were entirely Italian-owned. On August 30, 1998, Siniscalchi informed USRT that "there is going to be no deal . . . unless control of USRT is also fully transferred."
Then, on September 13, Siniscalchi wrote to Aksamentov informing him that "[e]ffective immediately . . . Capra and . . . Siniscalchi withdraw and cancel any proposal to purchase 100% of USRT." However, days later, Capra wrote to USRT's lawyer regarding the "[a]cquisition of 100% of the membership interests in USRT."
At Capra's request, Siniscalchi formed USRT Holdings in Delaware on October 6, 1998, with Capra initially the company's sole member. USRT Holdings purchased all membership interests in USRT (the "Acquisition") in exchange for $300 million in revenue participation rights that would have been valuable if USRT had been able to consummate the joint venture project. At USRT, Capra became the chief executive officer, Siniscalchi the chief operating officer, Jon L. Reed ("Reed") the president, and Reid the chief financial officer. The day after USRT Holdings's formation in Delaware, Capra granted Reed and Reid each the right, valid for five years, to demand five percent membership interests in USRT Holdings. After the Acquisition, Siniscalchi sent both USRT's and USRT Holdings's business records to Capra in Italy.
Within days of the Acquisition, USRT's lawyer sent Finmeccanica a letter voicing a concern that an upcoming meeting between Finmeccanica and the Russians that excluded USRT violated the May 12 MOA. Finmeccanica dismissed USRT's concerns and confirmed its intention to meet unilaterally with the Russians. Within ...