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Cell-Phone Makers' Suit Suffers Setback

A U.S. appeals court says racketeering allegations by Motorola and Nokia are premature.

March 10, 2003|From Reuters

CHICAGO — A U.S. appeals court dismissed as premature racketeering allegations brought by the world's two largest makers of wireless telephones against the family that owns Turkey's No. 2 wireless operator.

The Uzan family, one of Turkey's wealthiest families and owners of wireless operator Telsim, still faces fraud charges filed under Illinois state law by Motorola Inc. and Finland's Nokia. However, the U.S. Court of Appeals for the 2nd Circuit in New York directed U.S. District Judge Jed Rakoff to decide whether those claims fall under his jurisdiction.

The decision raises the question as to whether Rakoff will still render a judgment that had been expected soon or dismiss the charges, resulting in them being refiled in state court.

Motorola officials said they do not expect Rakoff to dismiss the state charges and the Chicago area-based company remains committed to recovering its money.

"This doesn't alter the facts of this case. This doesn't alter the fraud in this case. This doesn't alter the result in this case. All it does for now, perhaps, is alter the relief for Motorola and Nokia on the [racketeering] count without regard to what's going to happen on the merits," a Motorola spokesman said.

In January 2002, Motorola and Nokia sued several Uzan family members, alleging they borrowed almost $3 billion from the companies with no intention of repaying the loans.

The loans dated back to 1998, when the industry routinely loaned money to customers for equipment purchases in a practice known as vendor financing.

The district court case was heard on Feb. 19 in New York but was not attended by the Uzans or their attorneys, who have argued the court does not have jurisdiction in this case.

The three-judge appeals court panel said in a unanimous decision late Friday that Rakoff had incorrectly decided Motorola and Nokia could at the present time file racketeering charges against the Uzans.

The charges could be reinstated at a later date, but not until the cell-phone makers have determined the value of the collateral they were to receive and the exact amount of damage suffered, the appeals court said.

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