UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
CHARLES ROBERT LESLIE
LLOYD'S OF LONDON, a/k/a THE CORPORATION
OF LLOYD'S, a/k/a LLOYD'S a/k/a
THE SOCIETY OF LLOYD'S, a/k/a THE COMMITTEE OF LLOYD'S
On Appeal from the United States District Court
for the Southern District of Texas,
MOTION OF THE SECURITIES AND EXCHANGE COMMISSION
FOR LEAVE TO PARTICIPATE IN ORAL ARGUMENT AS AMICUS CURIAE
The Securities and Exchange Commission ("Commission") moves for leave to participate as amicus curiae in the oral argument in this case, which is scheduled for April 29, 1997, in support of an issue urged by plaintiff-appellee Charles Robert Leslie. The plaintiff-appellee has agreed to give the Commission five minutes out of his allotted argument time. In support of this motion, the Commission states as follows:
1. This appeal presents an important and potentially far-reaching issue under the federal securities laws; whether the antiwaiver issue under the federal securities laws; whether the antiwaiver provisions of those laws prohibit a United States court from giving effect to choice of law and forum clauses in a contract between a foreign issuer of securities and persons who were offered and sold securities in the United States, where the effect of the choice clauses would be to preclude the purchasers from obtaining relief under the federal securities laws.
2. The Commission, as the Agency principally responsible for the administration and enforcement of the federal securities laws, has a strong interest in assuring the availability of the protections of those laws to American investors. The antiwaiver provisions are essential to the enforcement of the securities laws in that they prevent persons offering and selling securities from avoiding their obligations in private actions under those laws through the simple expedient of requiring investors to waive their rights as a condition to engaging in securities transactions.
3. The Commission addressed the issue of the validity of the Lloyd's choice clauses as amicus curiae in a substantially similar case before the United States Court of Appeals for the Ninth Circuit, Richards v. Lloyd's of London, 107 F.3d 1422 (9th Cir. 1997). In Richards the Ninth Circuit agreed with the Commission's position that the choice clauses are void by virtue of the antiwaiver provisions. In earlier cases, on the other hand, four other Courts of Appeals upheld substantially identical clauses in agreements between Lloyd's and United States investors.
4. We have been advised by the plaintiff that a copy of the brief filed by the Commission in Richards has been attached as an Appendix to the plaintiff's brief filed in this case. The Commission was not aware until recently of the pendency of the appeal in this case, and thus did not have an opportunity to file a brief in this case.
5. We agree with the plaintiff that, in this case, the district court correctly refused to enforce the choice of forum and choice of law provisions entered into between the plaintiff and Lloyd's. Those provisions, taken together, require the plaintiff, who allegedly was solicited in the United States to purchase securities from Lloyd's, to bring any action against Lloyd's only in the courts of England under English law. Since the English courts, applying English law, would not entertain the plaintiff's claims under the federal securities laws, the plaintiff would effectively be deprived of his rights under the federal securities laws, in contravention of the antiwaiver provisions of those laws.
6. This issue is an important one to the enforcement of the federal securities laws. If the district court's decision is reversed, foreign promoters who are offering and selling securities in the United States could avoid private liability under the federal securities laws simply by requiring the United States investors to agree to resolve disputes in a foreign jurisdiction under foreign law, even if the remedies available under the foreign law were far less effective than those available under United States law. Such a holding would seriously impair the ability of defrauded investors to obtain compensation for their losses, and would hamper the deterrent function of the federal securities laws by discouraging private actions.
7. In light of the importance of this issue, and the conflicting decisions reached by other appeals, the Commission believes that it would be useful to the Court if the Commission were allowed time to explain its position and to respond to any questions the Court may have. The commission wishes solely to address the legal issue of the validity of the choice clauses and takes no position on any other issue in this case.
Accordingly, the Commission requests leave to participate in oral argument as amicus curiae.
RICHARD H. WALKER
JACOB H. STILLMAN
Associate General Counsel
Principal Assistant General Counsel
JOHN W. AVERY
Securities and Exchange Commission
Washington, D.C. 20549
Dated: April 11, 1997
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