Lit Alerts—September 2019
Forum-Selection: Ninth Circuit Holds Idaho Policy Against Forum-Selection Clauses Invalidates Contract Provision
In Gemini Technologies, Inc. v. Smith & Wesson Corp., the Ninth Circuit held that a clause specifying Delaware as the forum for any disputes between the contracting parties was invalid based on an Idaho statute. Idaho Code § 29-110(1) states that it is against the public policy of Idaho for a contract to restrict a party's ability to enforce its rights in Idaho tribunals. An Idaho-based company filed the case in the US District Court for the District of Idaho against diverse defendants. The district court held that the forum-selection clause applied and required the case to be heard in a Delaware court. The Ninth Circuit disagreed and reversed, holding that the Idaho law overrode the traditional policy in favor of enforcing forum-selection clauses.
The Ninth Circuit rejected the defendants' argument that the Supreme Court's decision in Atlantic Marine Constr. Co. dictated that the court enforce the forum-selection clause. In particular, the Ninth Circuit held that the Supreme Court's earlier decision in M/S Bremen v. Zapata Off-Shore Co. required enforcement of the Idaho statute because Bremen holds a forum-selection clause is unenforceable if it is against the "strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision." Because the Idaho statute establishes a strong public policy of the forum against enforcing the forum-selection clause, the clause could not be enforced and the case had to remain in Idaho.
White Collar: Second Circuit Declines to Extend McDonnell "Official Act" Standard to FCPA Cases
In United States v. Ng Lap Seng, No. 18-1725-ct (Aug. 9, 2019), the Second Circuit ruled that the high bar set by McDonnell v. United States, 136 S. Ct. 2355 (2016), for certain domestic bribery cases does not apply in cases involving foreign bribery.
McDonnell involved an appeal from a conviction under the Hobbes Act, which criminalizes, inter alia, public corruption. The Supreme Court carefully examined the definition of bribery in the context of public corruption in the United States and "adopt[ed] a more bounded interpretation of 'official act' . . . [u]nder [which] setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an 'official act.'"
United States v. Ng arose from a 2017 conviction of developer Ng Lap Seng on bribery charges stemming from a scheme to bribe United Nations officials with more than $1 million in exchange for their support in using Ng's Macau real estate as the site for an annual UN conference. Ng was convicted of violating the Foreign Corrupt Practices Act (FCPA), which is focused on bribery of foreign officials, as well as violating an anti-corruption law focused on protecting federal funding (commonly known as "Section 666").
On appeal, Ng argued that McDonnell also applies to the FCPA and Section 666 and, as a result, he could not be guilty of violating the FCPA and Section 666 unless the bribes were given in exchange for substantial "official acts" from the UN officials. Ng contended the convictions could not stand because the bribes were paid in exchange for the officials' commitment to use Ng's Macau real estate development, which did not constitute official acts.
The Second Circuit rejected Ng's argument, relying on textual differences among the bribery statutes. The court held that "the McDonnell 'official act' standard, derived from the quo component of bribery as defined by § 201(a)(3), does not necessarily delimit the quo components of other bribery statutes, such as [Section] 666 or the FCPA." This decision makes clear that, at least within the Second Circuit, the heightened standard regarding an "official act," as set forth in McDonnell, does not extend to all bribery cases, particularly those that do not involve the bribery of US officials.
© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.