Oct. 27, 2004 — The half-billion dollar lawsuit filed against Innovative Communication Corporation, by its lender, the Rural Telephone Finance Cooperative, has been moved out of the federal courts in Virginia to U.S. District Court in the Virgin Islands.
The change of venue came at the request of ICC, on the order of Claude Hilton, chief judge of the U.S. District Court for the Eastern District of Virigina, Alexandria Division. The decision was silent as to whether the case would go to the St. Croix or the St. Thomas court.
RTFC had argued in its original brief that its lending agreements with ICC had been broken by ICC on a number of occasions, notably the floating of some $80 million worth of preferred stock for Innovative Telephone Company, formerly Vitelco. It stated, further, that because of these contractual breaches the court should order repayment apparently rapid repayment of the $530 million that RTFC said it was owed.
(See "Cooperative Sues ICC and Says It Owes $530 million").
ICC replied that RTFC was unreasonably trying to restrict ICC's access to capital markets, and that it was not in breach of the loan arrangements. Further, ICC cited a 1989 agreement between ICC, RTFC, and the territorial Public Services Commission, that it said made legitimate the financial maneuvers criticized by RTFC.
(See "ICC Cites '89 Agreement in Lender Lawsuit Response").
Subsequently RTFC filed yet another suit over ICC's financial actions, this time including the members of the board of directors as well as the corporation, but the second suit was filed with the district court on St. Thomas. (See "ICC Hit with Additional Lawsuit").
Judge Hilton, in his brief order transferring the case to the islands, said "the Plaintiff… also filed a related matter in the Virgin Islands. The majority of the witnesses reside in the Virgin Islands, making it easier to compel live testimony and reduce the cost of obtaining that testimony. The Virgin Islands is the more convenient forum as one of the parties and the majority of the witnesses reside there."
Legal observers noted two inevitable consequences of the transfer: 1) the ultimate decision will come later rather than sooner, and 2) if there is an appeal, which is likely in a major case where the filings suggest that feelings run high, it would go to the Third Circuit Court of Appeals in Philadelphia rather than to the Fourth Circuit in Richmond.
On the first point, any transfer of a case slows the action and wipes out the existing schedule of pre-trial conferences and trial dates, according to legal analysts. Thus the final pre-trial conference, until recently scheduled for Alexandria on Nov. 18, will presumably take place in the Virgin Islands at a later date. Further, the Eastern District of Virginia is well known in legal circles for its "rocket docket" in which the judges, for many years, have consistently pushed along cases in a rapid decision-making process. Other federal courts do not have this reputation.
The change in appeals courts, which may have no ultimate substantive significance, relates to the fact that Virgin Islands district courts are, by law, in the Third Circuit, and Virginia's federal courts, are in the Fourth Circuit.
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