Appeals from the United States District Courtfor the Southern District of CaliforniaIrma E. Gonzalez, District Judge, PresidingArgued and SubmittedOctober 23, 1997--San Francisco, CaliforniaFiled February 3, 1998Before: Procter Hug, Jr., Chief Judge, Alfred T. Goodwin,Harry Pregerson, Alex Kozinski, Stephen S. Trott,Ferdinand F. Fernandez, Pamela Ann Rymer,Andrew J. Kleinfeld, Michael Daly Hawkins,A. Wallace Tashima, and Sidney R. Thomas, Circuit Judges.Opinion by Judge Goodwin; Dissent by Judge Thomas
_____________________________COUNSEL Stephen A. Kroft, McDermott, Will & Emery, Los Angeles,California; Eugene I. Goldman, Robert E. Kohn, McDermott,Will & Emery, Washington, D.C.; Arlington Ray Robbins,Michael V. Pundeff, John H. Stephens, Robbins & Keehn,San Diego, California, for the plaintiffs-appellants.Phillip K. Fife, Seal Beach, California, for plaintiff-appellantE. Pomeroy Williams.Harvey L. Pitt, Fried, Frank, Harris, Shriver & Jacobson, NewYork, New York; Dean Hansell, LeBoeuf, Lamb, Green &MacRae, Los Angeles, California; Taylor R. Briggs, Sheila H.Marshall, Mary L.B. Betts, Stephen H. Orel, LeBoeuf, Lamb,Greene & MacRae, New York, New York, for defendants-appellees The Corporation of Lloyd's, the Society of Lloyd's,and The Council of Lloyd's.Richard H. Walker, Jacob H. Stillman, Eric Summergrad,John W. Avery, Securities and Exchange Commission, Wash-ington, D.C., as amicus curiae.Eugene R. Anderson, Seth B. Schafler, Anderson Kill Olick& Oshinsky, New York, New York; Amy R. Bach, San Fran-cisco, California, for amicus curiae United Policy holders.Richard A. Brown, Leonard D. Venger, Ronald B. Turvsky,Donald R. Brown, Manatt, Phelps & Phillips, Los Angeles,California; Paul H. Falon, Manatt, Phelps & Phillips, Wash-ington, D.C., for amicus curiae California Commissioner ofInsurance.Anthony Nelson, Minister for Trade, Department of Tradeand Industry, London, England, for amicus curiae Govern-ment of the United Kingdom of Great Britain and NorthernIreland (British Government).
_____________________________OPINION GOODWIN, Circuit Judge:The primary question this case presents is whether the anti-waiver provisions of the Securities Act of 1933 and the Secur-ities Exchange Act of 1934 void choice of law and choice offorum clauses in an international transaction. The districtcourt found that they do not. The appeal has been arguedtwice. Upon reconsideration en banc, the opinion published at107 F.3d 1422 (9th Cir. 1997) is withdrawn and we affirm thedistrict court.BackgroundAppellants, all citizens or residents of the United States, aremore than 600 "Names" who entered into underwriting agree-ments. The Names sued four defendants: the Corporation ofLloyd's, the Society of Lloyd's, the Council of Lloyd's, (col-lectively, "Lloyd's") and Lloyd's of London, (the "unincorpo-rated association").Lloyd's is a market in which more than three hundredUnderwriting Agencies compete for underwriting business.Pursuant to the Lloyd's Act of 1871-1982, Lloyd's overseesand regulates the competition for underwriting business in theLloyd's market. The market does not accept premiums orinsure risks. Rather, Underwriting Agencies, or syndicates,compete for the insurance business. Each UnderwritingAgency is controlled by a Managing Agent who is responsiblefor the financial status of its agency. The Managing Agentmust attract not only underwriting business from brokers butalso the capital with which to insure the risks underwritten.The Names provide the underwriting capital. The Namesbecome Members of the Society of Lloyd's through a seriesof agreements, proof of financial means, and the deposit of anirrevocable letter of credit in favor of Lloyd's. To become aName, one must travel to England to acknowledge the atten-dant risks of participating in a syndicate and sign a GeneralUndertaking. The General Undertaking is a two page docu-ment containing choice of forum and choice of law clauses(collectively the "choice clauses"), which form the basis forthis dispute. The choice clauses read: 2.1 The rights and obligations of the parties arising out of or relating to the Member's membership of, and/or underwriting of insurance business at, Lloyd's and any other matter referred to in this Undertaking shall be governed by and con- strued in accordance with the laws of England. 2.2 Each party hereto irrevocably agrees that the courts of England shall have exclusive jurisdic- tion to settle any dispute and/or controversy of whatsoever nature arising out of or relating to the Member's membership of, and/or under- writing of insurance business at, Lloyd's . . . .By becoming a Member, the Names obtain the right to par-ticipate in the Lloyd's Underwriting Agencies. The Names,however, do not deal directly with Lloyd's or with the Man-aging Agents. Instead, the Names are represented by Mem-bers' Agents who, pursuant to agreement, stand in a fiduciaryrelationship with their Names. Upon becoming a Name, anindividual selects the syndicates in which he wishes to partici-pate. In making this decision, the individual must rely to agreat extent on the advice of his Members' Agent. The Namesgenerally join more than one underwriting agency in order tospread their risks across different types of insurance. When aName undertakes an underwriting obligation, that Name isresponsible only for his share of an agency's losses; however,his liability is unlimited for that share.In this case, the risk of heavy losses has materialized andthe Names now seek shelter under United States securitieslaws and the Racketeer Influenced and Corrupt OrganizationsAct ("RICO"), 18 U.S.C. S 1961 et seq. The Names claim thatLloyd's actively sought the investment of United States resi-dents to fill an urgent need to build up capital. According tothe Names, Lloyd's concealed information regarding the pos-sible consequences of the risks undertaken and deliberatelyand disproportionately exposed the Names to massive liabili-ties for which sufficient underwriting capital or reinsurancewas unavailable.This appeal does not address the merits of the underlyingclaims. It addresses only the Names' contention that their dis-putes with Lloyd's should be litigated in the United Statesdespite contract clauses binding the parties to proceed inEngland under English law. It also addresses whether defaultshould have been entered against the unincorporated associa-tion.Standard of ReviewWe review the district court's decision to enforce thechoice clauses for abuse of discretion. Argueta v. Banco Mex-icano, S.A., 87 F.3d 320, 323 (9th Cir. 1996). As we arereviewing a Rule 12(b)(3) motion decision, we need notaccept the pleadings as true. Id. at 324.Whether the securities laws void the choice clauses is aquestion of law that we review de novo. Pinal Creek Groupv. Newmont Mining Corp., 118 F.3d 1298, 1300 (9th Cir.1997).DiscussionThe Names make three arguments for repudiating thechoice clauses. They contend (1) that the antiwaiver provi-sions of the federal securities laws void such clauses, (2) thatthe choice clauses are invalid because they offend the strongpublic policy of preserving an investor's remedies under fed-eral and state securities law and RICO and (3) that the choiceclauses were obtained by fraud. We will address each of thesein turn.I[1] We analyze the validity of the choice clause under TheBremen v. Zapata Off-Shore Co.,
407 U.S. 1
(1972), wherethe Supreme Court stated that courts should enforce choice oflaw and choice of forum clauses in cases of "freely negotiatedprivate international agreement[s]." Bremen,
407 U.S. at 12
-13.1AThe Names dispute the application of Bremen to this case.They contend that Bremen does not apply to cases where Con-gress has spoken directly to the immediate issue -- as theyclaim the antiwaiver provisions do here.The Securities Act of 1933 (the " '33 Act") provides that: Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.15 U.S.C. S 77n. The 1934 Securities Exchange Act (the " '34Act") contains a substantially similar provision. 15 U.S.C.S 78cc(a). The Names seize on these provisions and claim thatthey void the choice clauses in their agreement with Lloyd's.Certainly the antiwaiver provisions are worded broadlyenough to reach this case. They cover "any condition, stipula-tion, or provision binding any person acquiring any securityto waive compliance with any provision of this subchapter. . . ." Indeed, this language is broad enough to reach any offeror sale of anything that could be alleged to be a security, nomatter where the transaction occurs.[2] Nevertheless, this attempt to distinguish Bremen fails.In Bremen itself, the Supreme Court contemplated that aforum selection clause may conflict with relevant statutes.Bremen,
407 U.S. at 15
("A contractual choice-of-forumclause should be held unenforceable if enforcement wouldcontravene a strong public policy of the forum in which suitis brought, whether declared by statute or by judicialdecision.") (emphasis added).Moreover, in Scherk v. Alberto-Culver Co.,
417 U.S. 506
(1974), the Supreme Court explicitly relied on Bremen in acase involving a securities transaction.2 Echoing the languageof Bremen, the Court found that "[a] contractual provisionspecifying in advance the forum in which disputes shall be lit-igated and the law to be applied is . . . an almost indispensableprecondition to achievement of the orderliness and predict-ability essential to any international business transaction." Id.at 516. See Bremen,
407 U.S. at 13
-14 ("[A]greeing inadvance on a forum acceptable to both parties is an indispens-able element in international trade, commerce, andcontracting."). This passage should leave little doubt as to theapplicability of Bremen to the case at hand. 3Indeed, were we to find that Bremen did not apply, thereach of United States securities laws would be unbounded.The Names simply prove too much when they assert that"Bremen's judicially-created policy analysis under federalcommon law is not controlling when Congress has expressedits will in a statute." This assertion, if true, expands the reachof federal securities law to any and all such transactions, nomatter how remote from the United States. We agree with theFifth Circuit that "we must tread cautiously before expandingthe operation of U.S. securities law in the international arena."Haynsworth v. The Corporation, 121 F.3d 956, 966 (5th Cir.1997).BHaving determined that Bremen governs international con-tracts specifying forum and applicable law, we turn to thequestion whether the contract between Lloyd's and the Namesis international. Not surprisingly, the Names contend thatthese were purely domestic securities sales. They claim thatLloyd's solicited the Names in the United States and that thetrip the Names made to England was a mere ritual withoutlegal significance.[3] We disagree. The Names signed a contract with Englishentities to participate in an English insurance market and flewto England to consummate the transaction. That the Namesreceived solicitations in the United States does not somehowerase these facts. Moreover, Lloyd's insistence that individu-als travel to England to become a Name does not strike us asmere ritual. Lloyd's likely requires this precisely so that thosewho choose to be the Names understand that English law gov-erns the transaction. Entering into the Lloyd's market in themanner described is plainly an international transaction.II[4] We now apply Bremen to this case. Bremen emphasizedthat "in the light of present-day commercial realities andexpanding international trade we conclude that the forumclause should control absent a strong showing that it shouldbe set aside." Bremen,
407 U.S. at 15
. The Court reasonedthat "[t]he elimination of all [ ] uncertainties [regarding theforum] by agreeing in advance . . . is an indispensable elementin international trade, commerce, and contracting. " Id. at 13-14. Thus, "absent some compelling and countervailing reason[a forum selection clause] should be honored by the partiesand enforced by the courts." Id. at 12. The party seeking toavoid the forum selection clause bears "a heavy burden ofproof." Id. at 17.[5] The Supreme Court has identified three grounds forrepudiating a forum selection clause: first, if the inclusion ofthe clause in the agreement was the product of fraud or over-reaching; second, if the party wishing to repudiate the clausewould effectively be deprived of his day in court were theclause enforced; and third, "if enforcement would contravenea strong public policy of the forum in which suit is brought."Id. at 12-13, 15, 18. The Names contend that the first andthird grounds apply in this case.AThe Names' strongest argument for escaping their agree-ment to litigate their claims in England is that the choiceclauses contravene a strong public policy embodied in federaland state securities law and RICO. See Bonny v. Society ofLloyd's, 3 F.3d 156, 160-61 (7th Cir. 1993) (expressing"serious concerns" that the choice clauses offend public pol-icy but ultimately ruling in Lloyd's favor), cert. denied, 510U.S. 1113 (1994); Roby v. Corporation of Lloyd's, 996 F.2d1353, 1364-66 (2nd Cir.) (substantially the same), cert.denied,
510 U.S. 945
(1993).We follow our six sister circuits that have ruled to enforcethe choice clauses. See Haynsworth, 121 F.3d 956; Allen v.Lloyd's of London, 94 F.3d 923 (4th Cir. 1996); Shell v. R.W.Sturge, Ltd., 55 F.3d 1227 (6th Cir. 1995); Bonny, 3 F.3d 156;Roby, 996 F.2d 1353; and Riley v. Kingsley UnderwritingAgencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied, 506U.S. 1021 (1992). We do so because we apply Scherk andbecause English law provides the Names with sufficient pro-tection.In Scherk, the Supreme Court was confronted with a con-tract that specified that all disputes would be resolved in arbi-tration before the International Chamber of Commerce inParis, France. Scherk,
417 U.S. at 508
. The arbitrator was toapply the law of the state of Illinois. Id. The Court enforcedthe forum selection clause despite then hostile precedent.4 Id.at 520-21. See Wilko v. Swan,
346 U.S. 427
(1953), overruledby Rodriguez de Quijas v. Shearson/American Express, Inc.,
490 U.S. 477, 485
(1989).[6] The Court's treatment of Wilko leaves little doubt thatthe choice clauses in this case are enforceable. In Wilko, theSupreme Court ruled that "the right to select the judicialforum is the kind of `provision' that cannot be waived underS 14 of the Securities Act." Wilko,
346 U.S. at 435
. In Scherk,the Court had before it a case where both the District Courtand the Seventh Circuit found a forum selection clause invalidon the strength of Wilko. Scherk,
417 U.S. at 510
.In distinguishing Wilko, the Supreme Court stated that therewere "significant and, we find, crucial differences betweenthe agreement involved in Wilko and the one signed by theparties here." Scherk,
417 U.S. at 515
. The first and primarydifference that the Court relied upon was that "Alberto-Culver's contract . . . was a truly international agreement." Id.The Court reasoned that such a contract needs, as "an almostindispensable precondition," a "provision specifying inadvance the forum in which disputes shall be litigated and thelaw to be applied." Id. at 516 (emphasis added).[7] Moreover, the Supreme Court has explained that, in thecontext of an international agreement, there is "no basis for ajudgment that only United States laws and United Statescourts should determine this controversy in the face of a sol-emn agreement between the parties that such controversies beresolved elsewhere." Id. at 517 n.11. To require that" `American standards of fairness' must . .. govern the con-troversy demeans the standards of justice elsewhere in theworld, and unnecessarily exalts the primacy of United Stateslaw over the laws of other countries." Id. These passages from Scherk, we think, resolve the questionwhether public policy reasons allow the Names to escape their"solemn agreement" to adjudicate their claims in Englandunder English law. Scherk involved a securities transaction.Id. at 514 n.8. The Court rejected Wilko's holding that theantiwaiver provision of the '34 Act prohibited choice clauses.Id. at 515-16. It also recognized that enforcing the forumselection clause would, in some cases, have the same effect aschoosing foreign law to apply. Id. at 516, 517 n.11. Yet theCourt did not hesitate to enforce the forum selection clauses.It believed that to rule otherwise would "reflect a `parochialconcept that all disputes must be resolved under our laws andin our courts.' " Id. at 519 (quoting Bremen,
407 U.S. at 9
).As the Supreme Court has explained, " `[w]e cannot havetrade and commerce in world markets and international watersexclusively on our terms, governed by our laws, and resolvedin our courts.' " Id. (quoting Bremen,
407 U.S. at 9
).Relying on Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 634
(1985), the Names arguethat federal and state securities laws are of "fundamentalimportance to American democratic capitalism." They claimthat enforcement of the choice clauses will deprive them ofimportant remedies provided by our securities laws. TheSupreme Court disapproved of such an outcome, the Namescontend, when it stated that "in the event the choice-of-forumand choice-of-law clauses operated in tandem as a prospectivewaiver of a party's right to pursue statutory remedies for anti-trust violations, we would have little hesitation in condemningthe agreement as against public policy." Id. at 637 n.19.Without question this case would be easier to decide if thisfootnote in Mitsubishi had not been inserted. Nevertheless, wedo not believe dictum in a footnote regarding antitrust lawoutweighs the extended discussion and holding in Scherk onthe validity of clauses specifying the forum and applicablelaw. The Supreme Court repeatedly recognized in Scherk thatparties to an international securities transaction may chooselaw other than that of the United States, Scherk, 417 at 516,517 n.11, 519 n.13, yet it never suggested that this affectedthe validity of a forum selection clause. See also Bremen, 407U.S. at 13 n.15 (recognizing that a forum selection clause alsoacts to select applicable law); Milanovich v. Costa Crociere,S.p.A., 954 F.2d 763, 767 n.7 (D.C. Cir. 1992) ("The Bremeninvolved a choice-of-forum clause, but the Supreme Courtrecognized that enforcing the provision would have the effectof subjecting the contract to foreign law."). 5B[8] Of course, were English law so deficient that the Nameswould be deprived of any reasonable recourse, we would haveto subject the choice clauses to another level of scrutiny. SeeCarnival Cruise Lines, Inc. v. Shute,
499 U.S. 585
, 595(1991) ("It bears emphasis that forum-selection clauses con-tained in form passage contracts are subject to judicial scru-tiny for fundamental fairness."). In this case, however, thereis no such danger. See Haynsworth, 121 F.3d at 969 ("Englishlaw provides a variety of protections for fraud and misrepre-sentations in securities transactions."). Cf. British MidlandAirways Ltd. v. International Travel, Inc., 497 F.2d 869, 871(9th Cir. 1974) (This court is "hardly in a position to call theQueen's Bench a kangaroo court.").[9] We disagree with the dramatic assertion that "[t]heavailable English remedies are not adequate substitutes for thefirm shields and finely honed swords provided by Americansecurities law." Richards v. Lloyd's of London, 107 F.3d1422, 1430 (9th Cir. 1997). The Names have recourse againstboth the Member and Managing Agents for fraud, breach offiduciary duty, or negligent misrepresentation. Indeed,English courts have already awarded substantial judgments tosome of the other Names. See Arubuthnott v. Fagan andFeltrim Underwritings Agencies Ltd., 3 Re LR 145 (H.L.1994); Deeny v. Gooda Walker Ltd., Queen's Bench Division(Commercial Court), The Times 7 October 1994.6[10] While it is true that the Lloyd's Act immunizesLloyd's from many actions possible under our securities laws,Lloyd's is not immune from the consequences of actions com-mitted in bad faith, including fraud. Lloyd's Act of 1982, Ch.14(3)(e)(i). The Names contend that entities using the Lloyd'strade name willfully and fraudulently concealed massive longtail liabilities in order to induce them to join syndicates. If so,we have been cited to no authority that Lloyd's partial immu-nity would bar recovery.C[11] The addition of RICO claims does not alter our con-clusion. This court has already held that the loss of RICOclaims does not suffice to bar dismissal for forum non conve-niens. Lockman Found. v. Evangelical Alliance Mission, 930F.2d 764, 768-79 (9th Cir. 1991). We agree with our sistercircuit that has considered this issue and extend the logic ofLockman to this case. Roby, 996 F.2d at 1366.D[12] The Names also argue that the choice clauses were theproduct of fraud. They claim that at the time of signing theGeneral Undertaking, Lloyd's knew that the Names wereeffectively sacrificing valid claims under U.S. law by signingthe choice clauses and concealed this fact from the Names.Had the Names known this fact, they contend, they neverwould have agreed to the choice clauses. The Names neverallege, however, that Lloyd's misled them as to the legaleffect of the choice clauses. Nor do they allege that Lloyd'sfraudulently inserted the clauses without their knowledge.Accordingly, we view the allegations made by the Names asgoing only to the contract as a whole, with no allegations asto the inclusion of the choice clauses themselves.[13] Absent such allegations, these claims of fraud fail. TheSupreme Court has noted that simply alleging that one wasduped into signing the contract is not enough. Scherk, 417U.S. at 519 n.14 (The fraud exception in Bremen "does notmean that any time a dispute arising out of a transaction isbased upon an allegation of fraud . . . the clause isunenforceable."). For a party to escape a forum selectionclause on the grounds of fraud, it must show that "theinclusion of that clause in the contract was the product offraud or coercion." Id. (citing Prima Paint Corp. v. Flood &Conklin Mfg. Co.,
388 U.S. 395
(1967)) (emphasis in origi-nal). See also Prima Paint,
388 U.S. at 404
("[T]he statutorylanguage [of the United States Arbitration Act ] does not per-mit the federal court to consider claims of fraud in the induce-ment of the contract generally.").EThe Names object that Moseley v. Electronic & MissileFacilities, Inc.,
374 U.S. 167
(1963), requires the districtcourt to adjudicate the claims of fraud before dismissal. InMoseley, the Supreme Court found that "it seems clear thatthe issue of fraud should first be adjudicated before the rightsof the parties under the [contracts] can be determined." Id. at171. Taken out of context, this statement would seem to sup-port the Names' position.[14] When viewed in context, however, it becomes clearthat this statement in fact provides no aid to the Names. TheSupreme Court required an initial adjudication of the fraudclaim after noting that "no request has been made here for theenforcement of the arbitration agreement included within the[contracts.]" Id. at 170. It was only "[w]ith the pleadings inthis posture" that the Supreme Court required a trial on thefraud claims. Id. at 171. Here Lloyd's has clearly and vigor-ously called for the enforcement of the choice clauses.Accordingly, Moseley does not apply to the instant case andthe Names are not entitled to a trial on their claims of fraud.IIIBecause we decide that the district court correctly ruled toenforce the choice clauses, the request to enter default againstthe unincorporated association is moot.AFFIRMED.
_____________________________THOMAS, Circuit Judge, with whom Judge Pregerson andJudge Hawkins join, dissenting.The majority espouses a reasonable foreign policy, but onewhich emanates from the wrong branch of government. Con-gress has already explicitly resolved the question at hand. Inthe Securities Act of 1933 and the Securities Exchange Act of1934 (the "Acts"), Congress expressly provided that investorscannot contractually agree to disregard United States securi-ties law. Thus, in applying the "reasonableness " policy-weighing approach of M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1
(1972), the majority displaces Congress' specificstatutory directive. Furthermore, even assuming that theBremen analysis applies here, the circumstances surroundingthis dispute compel the conclusion that enforcement of thechoice clauses would be unreasonable. Accordingly, I respect-fully dissent.I.Unlike the conflict the Bremen Court envisioned betweenstatutes and forum selection clauses, the Acts do not merelydeclare "a strong public policy" against the waiver of compli-ance with United States securities laws. Rather, the Actsexplicitly and unconditionally prohibit such a waiver. Thelanguage of the Securites Act of 1933 is clear and unambigu-ous: Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.15 U.S.C. S 77n. The Securities Exchange Act of 1934 con-tains a similar restriction. See 15 U.S.C.S 78cc(a).Absent these antiwaiver provisions, courts could appropri-ately examine choice-of-forum clauses in investment con-tracts under a Bremen analysis to determine whether theyviolated the strong public policy of the United States asembodied in our securities law. However, the Acts' anti-waiver provisions decisively alter this inquiry. With adoptionof those sections, Congress announced a per se rule thatAmerican laws cannot be ignored in this context. Courtsshould not employ amorphous public policy to emasculateplain statutory language. "Under our constitutional frame-work, federal courts do not sit as councils of revision, empow-ered to rewrite legislation in accord with their ownconceptions of prudent public policy." United States v. Ruth-erford,
442 U.S. 544, 555
(1979). Rather, "[o]nly when a lit-eral construction of a statute yields results so manifestlyunreasonable that they could not fairly be attributed to con-gressional design will an exception to statutory language bejudicially implied." Id. Because Congress quite reasonablyintended that our securities laws be enforced even when asalesperson managed to obtain an investor's waiver, we "haveno license to depart from the plain language" of the Acts. Id.The majority turns this analysis inside out, by holding thatunderlying antiwaiver public policy eviscerates specific anti-waiver statutory provisions. Disregarding this express prohi-bition to assess whether enforcement of the choice clausescontravenes the underlying policy against waiver is akin tooverlooking the plain language of a statute to consider its leg-islative history, a clearly disfavored method of statutory inter-pretation. See Connecticut Nat'l Bank v. Germain, 503 U.S.249, 253-54 (1992) ("We have stated time and again thatcourts must presume that a legislature says in a statute whatit means and means in a statute what it says there. . . . Whenthe words of a statute are unambiguous, then, this first canonis also the last: judicial inquiry is complete. . . . It would bedangerous in the extreme to infer . . . that a case for which thewords of an instrument expressly provide, shall be exemptedfrom its operation.") (citations and internal quotation marksomitted). As the majority concedes, the explicit language ofthe Acts bars the waiver that the choice clauses would effectu-ate here. Thus, the "unadorned words" of the Acts' antiwaiverprovisions should not be limited by the antiwaiver public pol-icy they impliedly express, see Germain,
503 U.S. at 254
.The majority's fears notwithstanding, it is unnecessary todisplace Congress' reasoned judgment in order to contract the"boundless" reach of United States securities laws. First,because plaintiffs alleging securities fraud will at some pointhave to establish that the disputed transactions involved"securities," as defined under United States law, plaintiffscannot gain unfettered access to the protection of the securi-ties laws simply by alleging that they have purchased securi-ties. Second, the plaintiffs here do not seek to invoke theActs' substantive remedies in the context of transactions thatenjoy only an incidental nexus with the United States. Lloyd'srecruited the plaintiffs, residents of the United States, in theUnited States, often using United States brokerage firms andrecruiters, and availed itself of the United States mails to dis-seminate information about becoming a Name. In short,Lloyd's purposefully devoted considerable time and resourcesto recruiting American investors through specifically Ameri-can media. To penalize the plaintiffs in this case based upona hypothetical scenario that differs dramatically from the cir-cumstances at issue here would work an unjust deprivation ofthe plaintiffs' rights under the Acts.The majority argues that the Supreme Court's reliance onBremen in Scherk v. Alberto-Culver Co.,
417 U.S. 506
(1974),should control here. However, the majority overlooks the cru-cial differences between the instant dispute and the factsunderlying Scherk. Scherk involved a contract that containedan agreement to arbitrate any disputes arising out of the con-tract in Paris, France. This contract specified that"[t]he lawsof the State of Illinois, U.S.A. shall apply to and govern thisagreement, its interpretation and performance." Scherk, 417U.S. at 508. In contrast, the choice clauses here not onlyselect the forum -- the courts of England -- but mandate thatEnglish law shall govern any controversy. Thus, the reasoningand conclusions of Scherk should not extend to this case. Tothe extent that the Scherk Court approved a hypotheticalchoice-of-law clause that prescribed the application of foreignlaw, such approval was dicta and cannot bind the parties here.Furthermore, the Lloyd's underwriting agreements had sub-stantial connections with the United States, in contrast withthe sparse contacts between the United States and the contractin Scherk. In Scherk, an American company made an initialcontact with Scherk, a German citizen, in Germany, pursuednegotiations with Scherk in both Europe and the UnitedStates, and finally executed a contract in Vienna, Austria, pro-viding for the transfer of the ownership of Scherk's enter-prises. The closing of this transaction occurred in Geneva,Switzerland. In comparison, the sole component of Lloyd'scampaign to recruit American Names that took place inEngland was the committee meeting that new Names attendedin London. Otherwise, every aspect of the solicitationoccurred in the United States. To characterize this extensiveand multifaceted recruitment campaign as the mere receipt of"solicitations," as does the majority, is to understate theimpact of Lloyd's activities in the United States.The Scherk majority itself recognized that a contract with"insignificant or attenuated" contacts with foreign countriesmight well prompt a refusal to enforce a forum selectionclause, let alone a clause choosing foreign law. Scherk, 417U.S. at 517 n.11. The Court observed: "Judicial response tosuch situations can and should await future litigation in con-crete cases." Id. The instant case offers just such a concreteopportunity to assess the enforceability of the choice clausesindependently of the Scherk methodology and holding -- anopportunity this court should use to effectuate Congress'explicit statutory directive.Unfortunately, the majority has chosen to contravene anunequivocal Congressional mandate, founded on an interpre-tation of underlying public policy. However reasonable thatpolicy, it cannot supplant clear, unambiguous statutory lan-guage.II.In addition to violating the Acts' express antiwaiver provi-sions, the choice clauses are unenforceable because they are" `unreasonable' under the circumstances. " Bremen, 407 U.S.at 10. Initially, the Supreme Court has twice stated that thetype of clauses at issue here are invalid when they prospec-tively disable parties from pursuing statutory remedies. SeeMitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614
, 637 n.19 (1985), quoted in Vimar Seguros yReaseguros, S.A. v. M/V Sky Reefer,
515 U.S. 528
, 540(1995). Indeed, in Vimar, the Court went so far as to declarethat "[t]he relevant question" was "whether the substantivelaw to be applied [would] reduce the carrier's obligations tothe cargo owner below what [the Carriage of Goods by SeaAct] requires." Vimar,
515 U.S. at 539
. In other words, theCourt implicitly rejected the argument that a forum selectionclause must be enforced even if some of the claims that couldhave been brought in the forum of the lawsuit must be for-feited.As applied here, the logic of Mitsubishi and Vimar militatesagainst enforcing the choice clauses. Not only do the choiceclauses preclude the plaintiffs from seeking the substantiveremedies the Acts offer, but the protections they provideunder English law are markedly inferior to the Acts'. Forinstance, English law recognizes no remedy for the failure toregister securities as required by section 12(1) of the Securi-ties Act of 1933. Nor is there any English remedy againstLloyd's for negligent misrepresentation as provided by sec-tion 12(2) of the Securities Act of 1933, because the 1982Lloyd's Act expressly immunizes Lloyd's from any claim for"negligence or other tort" unless bad faith was involved.1Third, no "controlling person" liability exists in England,whereas section 15 of the Securities Act of 1933 and section20(a) of the 1934 Securities Exchange Act impose such liabil-ity. Thus, the choice clauses should not be enforced, becausethey afford a level of protection far lower than the remediesthe Acts provide.The stark differences between American and English secur-ities laws in turn reveal additional public policy reasons forinvalidating the choice clauses. Enforcing the choice clausesgravely disadvantages American businesses, because foreignbusinesses, like Lloyd's, can recruit investors without expend-ing the time and money involved in fulfilling the requirementsof the Acts -- a burden that American businesses cannotlegally evade. Invalidating the choice clauses therefore elimi-nates any artificial advantage that Lloyd's may have enjoyedin competing in the American insurance market. In addition,the Acts furnish a necessary regulatory check upon an other-wise virtually autonomous organization. As the British gov-ernment itself concedes, Lloyd's is a self-governing bodycharged with regulatory functions. Hence, a refusal to enforcethe choice clauses would not reflect a lack of deference toEnglish law and courts, but would simply arise from the real-ization that externally imposed restraints may sometimes beappropriate to control the behavior of a self-regulating organi-zation.The majority rejects the applicability of Mitsubishi andVimar to the choice clauses on two bases. First, the majorityassails footnote 19 in Mitsubishi as mere dictum which cannot"outweig[h] the extended discussion and holding in Scherk onthe validity of clauses specifying the forum and applicablelaw." Second, the majority objects to the extension of Vimarto the instant case, because Vimar involved the Carriage ofGoods by Sea Act ("COGSA"), a statute attempting to ensureuniformity in international transactions.This reasoning stands on tenuous ground. Initially, whilefootnote 19 in Mitsubishi was not incorporated into theCourt's actual holding, the Court left no doubt about its posi-tion on this issue by reiterating it in the entirely different set-ting of Vimar. Hence, the Court implicitly indicated that itsconcerns about a potential deprivation of plaintiffs' access tostatutory remedies were limited to neither the antitrust nor theCOGSA context. Moreover, as explained above, to the extentthat the Scherk Court speculated about the enforceability of acontractual provision selecting foreign law, such a discussionwas dictum. As such, it warrants no greater deference thanfootnote 19 of Mitsubishi.Finally, the majority errs in characterizing the Acts aspurely domestic, as opposed to the internationally-orientedCOGSA. Congress intended the Securities Act of 1933 tobring the United States into line with the protections othernations gave the security-buying public, by protecting Ameri-can investors against fraud and misrepresentation in the saleof securities in interstate and foreign commerce alike. In fact,Congress observed that the necessity for such legislation arosefrom "the fact that billions of dollars [had ] been invested inpractically worthless securities, both foreign and domestic,including those of foreign governments, by the Americanpublic through incomplete, careless, or false representations."The consequence, Congress concluded, was "dire nationaldistress." S. Rep. No. 47, at 2 (1933). Not only does this legis-lative history establish the international, as well as domestic,perspective of the Securities Act of 1933, but it drives homethe necessity for invalidating the choice clauses here. Allega-tions of Lloyd's "incomplete, careless, or false representa-tions" about the plaintiffs' participation in the English insur-ance market are precisely the issue in this case. Most impor-tantly, given the hundreds of millions of dollars that AmericanNames have invested in Lloyd's underwriting agreements, the"dire national distress" that originally prompted Congress toadopt securities regulation legislation may well make anunwanted reappearance.III.Increasing access to international capital markets is a laud-able goal, but one need not trample on United States securitieslaws to achieve it. Indeed, securitization of insurance risk isincreasing, with some public offerings involving Lloyd'sexposures. However, these insurance risk-backed securitizedinvestments are marketed in conformance with securities law,with full disclosure to the investor. Indeed, the facts allegedin this case make a powerful argument for vigorous applica-tion of American securities laws. A company, whether foreignor domestic, should not be able to mislead American investorswith impunity into assuming unlimited liability for knownlosses with no possibility of financial gain.When Congress voided waiver clauses, it meant what itsaid. The antiwaiver provisions of the Acts, whether as clearstatutory directives or as embodiments of public policy, ren-der the choice clauses unenforceable. The district court's dis-missal of the plaintiffs' claims under the Acts should bereversed. Hence, I respectfully dissent.
___________________________FOOTNOTES 1 While the contract in Bremen did not contain a choice of law clause,the Supreme Court explicitly recognized that the forum selection clausealso acted as a choice of law clause. Id. at 13 n.15 ("[W]hile the contracthere did not specifically provide that the substantive law of Englandshould be applied, it is the general rule in English courts that the partiesare assumed, absent a contrary indication, to have designated the forumwith the view that it should apply its own law. . . . It is therefore reason-able to conclude that the forum clause was also an effort to obtain cer-tainty as to the applicable substantive law.").2 In Scherk the Supreme Court assumed without so ruling that the trans-action involved securities. Scherk,
417 U.S. at 514
n.8. Because it is notaltogether clear whether the investments here were securities, we tooassume without deciding that the Names invested in securities.3 The Names also cite Stewart Organization, Inc. v. Ricoh Corp., 487U.S. 22 (1988) in support of their position. Stewart does not aid theNames. It is true that Stewart held that before engaging in a Bremenanalysis, "the first question [is] whether[28 U.S.C.] S 1404(a) itself con-trols respondent's request to give effect to the parties' contractual choiceof venue." Stewart,
487 U.S. at 29
. That case, however, involved a federalcourt sitting in diversity confronted with a purely domestic transaction.Thus it does not address this situation.4 The Court recognized that an agreement to arbitrate "is, in effect, aspecialized kind of forum-selection clause." Scherk,
417 U.S. at 519
.5 The Names also point to Vimar Seguros y Reaseguros, S.A. v. M/V SkyReefer,
515 U.S. 528
(1995), as support for their position. In Vimar, theSupreme Court expressed concern that a forum selection clause combinedwith a choice of law clause would deprive a party of remedies under theCarriage of Goods by Sea Act ("COGSA"), 46 U.S.C. S 1300 et seq. Id.at 539. The Court's reasoning in Vimar, however, does not extend to theinstant case as Vimar involved COGSA, a statute designed to addressinternational transactions. Id. at 537 ("COGSA is the culmination of amultilateral effort to establish uniform ocean bills of lading to govern therights and liabilities of carriers and shippers inter se in internationaltrade.") (internal quotations and citation omitted).6 The Names complain that the Member and Managing Agents are insol-vent. If so, this is truly unfortunate. It does not, however, affect our analy-sis of the adequacy of English law.1 While the plaintiffs may sue Members' and Managing Agents, who arenot exempt from the 1982 Lloyd's Act, the Members' and ManagingAgents are insolvent. The majority regards this insolvency, if true, as"truly unfortunate," but deems it irrelevant to the "analysis of the ade-quacy of English law." See supra note 6. However, it is equally reasonableto find English law all the more inadequate to address the plaintiffs' griev-ances, because the insolvency of one class of potential defendants so mate-rially damages the plaintiffs' chances for recovery.