ORDER AFFIRMING, AFTER RECONSIDERATION, MAGISTRATE’s MEMORANDUM & RECOMMENDATION

RAINEY, District Judge.  [*1] 

On May 11, 1991, Magistrate Frances H. Stacy delivered two documents, the first styled Memorandum & Recommendation Regarding Lloyd’s of London’s Motion to Dismiss (Docket entry # 43), the second styled Memorandum & Recommendation Regarding R.W. Sturge & Co.’s Motion to Dismiss for Lack of Jurisdiction Under Rule 12 and Forum Non Conveniens or Alternatively, Motion to Stay Proceedings Pending Arbitration. (Dkt. # 44). On September 4, 1991, the Court, “after a thorough review of the motions[,] responses of [the Defendants] and the rulings of the magistrate,” signed an order affirming the magistrate’s memoranda and recommendations. (Dkt. # 49). The Defendants subsequently moved for reconsideration of the Court’s order, filing the following documents: [FN1]

(1) [Defendant Lloyd’s of London’s] Motion for Reconsideration of the Court’s Memorandum and Order Dated September 4, 1991; Motion for New Trial; Motion for Findings of Fact and Conclusions of Law; and Motion for Interlocutory Appeal in Accordance With 28 U.S.C. § 1292(b). (Dkt. # 50).

(2) Defendant R. W. Sturge & Co., Ltd.’s Motion for Reconsideration of Court’s Memorandum and Order Dated September 4, 1991; Motion for New Trial; Motion for Findings of Facts and Conclusions of Law; and Motion for Interlocutory Appeal in Accordance With 28 U.S.C. § 1292(b). (Dkt. # 51).

(3) Lloyd’s of London’s Supplemental Motion to Dismiss and Supplemental Motion to Reconsider. (Dkt. # 54).

(4) Defendant R. W. Sturge & Co., Ltd.’s Supplemental Memorandum in Support of its Motion for Reconsideration of Court’s Memorandum and Order Dated September 4, 1991, Motion for New Trial, and Motion for Findings of Fact and Conclusions of Law. (Dkt. # 57).

(5) Lloyd’s of London’s Supplemental Motion to Reconsider. (Dkt. # 64).

(6) Lloyd’s of London’s Supplemental Motion to Dismiss. (Dkt. # 65).

(7) Defendant Lloyd’s of London’s Supplemental Motion to Reconsider. (Dkt. # 70).

(8) Defendant Lloyd’s of London’s Third Supplemental Motion to Reconsider. (Dkt. # 83).

(9) Defendant R.W. Sturge & Co., Ltd’s Second Supplemental Motion for Reconsideration of Court’s Memorandum and Order Dated September 4, 1991, Motion for New Trial, and Motion for Findings of Fact and Conclusions of Law. (Dkt. # 90).

Subsequently, Plaintiff Charles R. Leslie (“Leslie”) notified the Court of his intent to dismiss Defendant R.W. Sturge & Co. (“Sturge”) from this action voluntarily. (Dkt. nos. 85, [FN2] 86, 108). All motions filed by Sturge still pending before the Court, therefore, should be terminated as MOOT. (Dkt. nos. 51, 57, 90, 105). Before the Court are the various motions and supplemental motions to reconsider and dismiss filed by Defendant Lloyd’s of London. (“Lloyd’s”). (Dkt. nos. 50, 54, 64, 65, 70, 83). After considering the motions, [FN3] Plaintiff’s responses thereto, all replies by Lloyd’s, and the applicable law, the Court is of the opinion that Lloyd’s motion to reconsider should be GRANTED, that the memorandum and recommendation of the magistrate should be AFFIRMED upon reconsideration, that Lloyd’s motion and supplemental motions to dismiss should be DENIED, that Lloyd’s motion for interlocutory appeal should be GRANTED, and that any other motions by Lloyd’s should be DENIED.

I. ALLEGATIONS AND FACTUAL BACKGROUND

A. Insurance for long-tall risks—general background on the industry.  [*2] 

Because of developments in liability for latent, long-term risks such as asbestos exposure or environmental pollution, [FN4] the insurance industry in the last three decades has developed more than a passing interest in the subject. Other chapters in the saga of allocating responsibility for long- tail liability among insurers, insureds, brokers, reinsurers, retrocessionaires, and others include battles involving (1) the shift from occurrence-based liability coverage to claims-made [FN5] policies, [FN6] (2) the definition of “occurrence” [FN7] and the possibility of “stacking” liability policies, [FN8] (3) adoption of “sudden and accidental” pollution exclusion clauses, [FN9] and (4) the subsequent adoption in 1985 of the “absolute” pollution exclusion. [FN10] The present dispute is between what is by far the largest and most influential collection of players in the London (re)insurance market, [FN11] the Society of Lloyd’s, and an individual American retrocessional underwriter, [FN12] or “Name,” who is a member of the Society of Lloyd’s. The Plaintiff, Leslie, alleges that he discovered in the late 1980s that he was the victim of a scheme whereby “insiders” in the Society of Lloyd’s concentrated highly undesirable long-tail asbestos and pollution risks in syndicates underwritten primarily by recently recruited “outside” Names from the United States, [FN13] Canada, Australia, and elsewhere, [FN14] while the “inside” Names focused their own efforts upon more lucrative syndicates and lines of insurance.

B. Nature of the case

When ruling on a motion to dismiss for failure to state a claim, the Court is not concerned with the proof either side has offered, but solely with the plaintiff’s allegations. [FN15] All facts discussed below that are not expressly alleged by the Plaintiff are for the purpose of addressing the forum- selection, choice-of-law, comity, and forum non conveniens issues. [FN16] Because a lengthy discussion of the Plaintiff’s allegations or the Court’s prior findings would be superfluous, see Leslie v. Lloyd’s of London, No. 90-1907, 1994 U.S.Dist. LEXIS 18565 (S.D.Tex. Nov. 2, 1994) (findings of fact and conclusions of law) (Dkt. # 122), this order will provide only a brief description of the structure of Lloyd’s and the nature of Leslie’s claims against it.

The Society of Lloyd’s is a private entity created by statute, whose members underwrite insurance. [FN17] Its organization bears little similarity to the corporations that sell insurance in the United States. [FN18] But see Crum & Forster, Inc. v. Monsanto Co., 887 S.W.2d 103, 148-49 (Tex.App.— Texarkana 1994), application for writ of error filed, 38 Tex.Sup.Ct.J. 46 (Oct. 27, 1994) (No. 94-1088). Only a member of the Society of Lloyd’s, a Name, may participate in underwriting Lloyd’s policies. Only individuals, not corporations or limited partnerships, may become Names. [FN19] Names do not generally underwrite insurance alone; rather, they combine into syndicates, which collectively underwrite risks and take advantage of greater risk—spreading than individual Names could achieve alone. To become a Name, one must pledge to undertake unlimited personal liability for his or her share of any losses. Every Name also pays an initial entrance fee of £ 1900 and annual subscription fees of £ 365 to the Society of Lloyd’s in exchange for various services that are necessary for the operation of the Lloyd’s insurance market. In addition, Names pay fees and commissions to their Members’ and Managing Agents. Although Names are liable for their proportional share of the risks underwritten by the syndicates they have joined, they are not liable for the share of risks borne by other Names, or by other syndicates. Lloyd’s has historically observed a policy of several, not joint, liability for losses&#!151;“each for his own part and none for the other.” Policy premiums collected as a result of each syndicate’s underwriting activities, after losses and loss reserves, generate profits which are distributed to Names in proportion to the share of any syndicate each Name has underwritten.  [*3] 

In the usual course of events, accounting for Lloyd’s syndicates takes place in three-year cycles. An account year commences every year and each account year concludes three years later. At the end of a three-year cycle, a syndicate may still have policies with outstanding risks. Generally, the syndicate will close an account year through a process called “reinsurance to close.” The outstanding risks are then borne by the Names of the reinsuring syndicate, who accepted the reinsurance premium, while any ceding Names who closed their account year (and therefore paid a loss in the amount of the reinsurance premium) are free from the liability they have ceded and may continue to underwrite future account years of the ceding syndicate, or to resign and underwrite elsewhere. Rarely are the risks of a Lloyd’s syndicate ceded to entities outside the Society of Lloyd’s. [FN20]

Lloyd’s syndicates are not democratic. Rather, a syndicate is underwritten primarily by passive names, while an Active Underwriter will generally employ, or act as, a Managing Agent. The Managing Agent of a syndicate, subject to the supervision of the Active Underwriter, directs the syndicate’s underwriting activity. The Managing Agent for some of Leslie’s syndicates, Sturge, also happened to be Leslie’s Members’ Agent. Members’ Agents introduce new Names to Lloyd’s and assist Names in joining syndicates. As Lloyd’s states in materials filed with the Court, “[T]he underwriting member is a completely passive participant in the underwriting activity of the syndicates…. Members, as passive participants in the underwriting process, put their faith and assets behind the efforts of their members’ agents and the underwriting decisions of the active underwriter. The members, therefore, are not permitted an active role in the day-to-day business of insuring risks or handling claims.” See Dkt. # 5, at 10-11 (emphasis added).

Through the collective efforts of Names’ organizations, some comparative information has become available in recent years [FN21] concerning the periodic profits or losses generated by various Lloyd’s syndicates. However, during the 1970s and 1980s, the Lloyd’s syndicates did not employ any public disclosure or reporting practices even remotely approaching the requirements imposed upon public companies, investment advisors, or mutual funds in the United States. As a general matter, passive names such as Leslie relied almost completely upon the underwriting experience and training of syndicates’ Managing Agents, without themselves having much involvement in or knowledge of syndicate underwriting practices.

Leslie alleges that Charles Parnell, acting on behalf of the Society of Lloyd’s came to Texas and recruited him to become a Name in 1977. Parnell was a director for Sturge, both a Members’ Agent and the Managing Agent for several syndicates. [FN22] At the time Parnell contacted Leslie, Lloyd’s insiders were already well aware of the mounting potential for losses from asbestos and pollution liability insurance. [FN23] Representations made to Leslie in Texas before he joined Lloyd’s included the claims that membership in Lloyd’s was a safe and attractive investment, that Leslie’s underwriting involvement would be focused on low-risk insurance, and that his exposure was limited because after he had participated as an underwriting member in an account year of a particular syndicate for a period of three years, he would be able to resign his underwriting membership in that syndicate at any time by following the notice procedure. See Dkt. # 89, at 5-6. Leslie was also led to believe that the maximum annual loss he could ever expect from a syndicate was approximately equivalent to the long-term average of annual profits, around 10% of his undertaking, and that gains would far exceed losses in the long run, as they have for Lloyd’s Names for 300 years.  [*4] 

In 1982, the English Parliament passed the Lloyd’s Act, which altered the regulatory structure of Lloyd’s and included a provision granting Lloyd’s qualified immunity to civil liability from suits by Names in English courts. Lloyd’s Act, 1982, ch. 14 (Eng.).

Leslie alleges that several syndicates closed the 1979 accounting year in 1982, despite a letter from auditor Neville Russel, unknown to the passive names, recommending that many syndicates should not close that year because of unquantifiable liability from asbestos. Subsequently, in 1986, Leslie alleges Lloyd’s induced him to sign a new General Undertaking containing forum- selection and choice-of-law clauses. These clauses, if enforced, require claims “arising out of or related to” Leslie’s membership in Lloyd’s to be resolved in England, under English law. In March and June 1986, Sturge informed Leslie that the Lloyd’s Act and subsequent regulatory changes by the Council of Lloyd’s had “required us, in common with all Lloyd’s agents to reformalise (and in some cases may require us to modify) [FN24] all your underwriting arrangements at Lloyd’s over the next few months.” [FN25] While the letters indicated that documents Leslie would sign contained “few variations of substance,” any mention of the forum-selection and choice-of- law clauses was conspicuously absent from the notices Leslie received. Lloyd’s and its agents never undertook to explain to Leslie the intended effect of these clauses on lawsuits that Lloyd’s anticipated its American Names would soon file against it. The notices emphasized that “all Names are required to enter into [the revised General Undertaking] as a condition of continuing membership….” [FN26] Because Leslie was involved in ongoing underwriting syndicates, he further believed that Lloyd’s would call an irrevocable letter of credit that he had posted with Texas Commerce Bank if he terminated his participation as an underwriting member by failing to sign the General Undertaking. [FN27]

Not long after Leslie executed the 1986 General Undertaking, he learned he would have been better off if he had stopped underwriting. Initially, Leslie learned that several syndicates he had underwritten would not close as planned. Although four account years for syndicates he had underwritten had not closed properly at the time he signed the General Undertaking, and he had incurred some losses, [FN28] he was not at that time remotely aware of the scope of Lloyd’s problems, or of the likelihood that his liabilities on those syndicates would continue in perpetuity. In 1989, Leslie learned that he could not limit his liability for these open syndicates’ losses by resigning from them. Leslie also alleges he learned after 1986 that asbestos and pollution risks had been concentrated in syndicates underwritten by himself and other passive outside Names. [FN29] As the Court understands his allegations, these syndicates had taken on long-tail risks in the early- and mid- 1980s from profitable “inside” syndicates, and/or underwritten new long- tail risks that the “inside” syndicates did not, without collecting (re)insurance premiums sufficient to cover the risks. In short, Leslie discovered he was on the receiving end of a high-stakes game of hot-potato. [FN30] By the time he learned what had happened it was not feasible to cede the unquantifiable risk back to the insiders.  [*5]  Leslie makes three claims against Lloyd’s: [FN31] breach of fiduciary duties, deceptive acts or practices in violation of the Texas Deceptive Trade Practices—Consumer Protection Act, Tex.Bus. & Com.Code Ann. §§ 17.41-17.63 (Vernon 1987 & Supp.1995) (“DTPA”), and securities fraud, in violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and Rule 10b-5 promulgated thereunder. [FN32] Superintendent of Ins. of N.Y. v. Bankers Life & Cas. Co., 404 U.S. 6, 9-12 & n. 9, 92 S.Ct. 165, 167-69 & n. 9, 30 L.Ed.2d 128 (1971). Leslie has not pleaded a claim for sale of an unregistered security, or sale of a security by means of a false or incomplete prospectus, under section 12(1) or 12(2) of the 1933 Securities Act. 15 U.S.C. § 771; see generally Gustafson v. Alloyd Co., Inc., 513 U.S. 561, ----, 115 S.Ct. 1061, 1079-83, 131 L.Ed.2d 1, 63 U.S.L.W. 4165 (1995) (Ginsberg, J., dissenting) (addressing recent change in scope of the section 12(2) rescission remedy). Nor does he allege a civil racketeering claim under Title XI of the Organized Crime Control Act of 1970, commonly known as the Racketeer Influenced and Corrupt Organizations Act. [FN33] 18 U.S.C. § 1964(c) (“RICO”).

II. SUPPLEMENTAL MOTIONS TO DISMISS

At the outset, the Court notes that Lloyd’s has filed a series of motions potentially dispositive of Leslie’s section 10(b)/Rule 10b-5 securities fraud claim. Lloyd’s position is based upon the watershed case of Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). According to a case the Supreme Court decided on June 20, 1991, the same day as Lampf, James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991), Lampf applied retroactively to time-bar all securities fraud claims based on the implied 10b- 5 cause of action that were filed within applicable borrowed state limitations periods, but not within the newly announced uniform federal limitations period.

Lloyd’s argument that Leslie’s claim is time-barred is mistaken. The Lampf decision does not bar Leslie’s claim because Congress subsequently decided Lampf does not apply to lawsuits, such as this one, filed before Lampf was handed down. 15 U.S.C. § 78aa-1(a). Although Lloyd’s directs the Court to a multitude of cases suggesting that section 27A of the 1934 Act, 15 U.S.C. § 78aa-1, is unconstitutional, the Supreme Court recently affirmed the decision of the Fifth Circuit that section 27A(b) is not unconstitutional. Pacific Mut. Life Ins. Co. v. First Republicbank Corp., 997 F.2d 39 (5th Cir.1993), aff’d sub nom. Morgan Stanley & Co. v. Pacific Mut. Life Ins. Co., 511 U.S. 658, 114 S.Ct. 1827, 128 L.Ed.2d 654, 62 U.S.L.W. 4396 (1994) (per curiam) (evenly divided court), reh’g denied, 114 S.Ct. 2774, 129 L.Ed.2d 887, 62 U.S.L.W. 3862 (1994); but see BDO Seidman v. Simmons, 514 U.S. 1079, 115 S.Ct. 1789, 131 L.Ed.2d 718, 63 U.S.L.W. 3771 (1995) (connected case); Pacific Mut. Life Ins. Co. v. First Republicbank Corp., 53 F.3d 1409 (5th Cir.1995) (per curiam). Although the Supreme Court has subsequently held that section 27A(b) violates the separation of powers between Congress and the Judiciary insofar as it purports to require the courts to reopen judgments that have become final, Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 115 S.Ct. 1447, 1456-58, 1463, 131 L.Ed.2d 328, 63 U.S.L.W. 4243 (1995), this case has remained pending throughout the Lampf controversy and has never been dismissed on limitations grounds. The circuit courts of appeal have uniformly upheld the constitutionality of section 27A(a), which is applicable in this case. See Plaut, 514 U.S. at ----, 114 S.Ct. at 1469 n. 6 (Stevens, J., dissenting) (collecting cases).  [*6] 

Nor does section 27A(a) represent a mere codification of the uniform limitations period announced in Lampf. The term “laws applicable in the jurisdiction,” used in section 27A, refers to borrowed state limitations periods, without regard to the fact that Lampf, technically, announced not only what the law was in every jurisdiction but what the law had been previously. As Justice Scalia recognized:

But respondents’ argument confuses the question of what the law in fact was on June 19, 1991, with the distinct question of what § 27A means by its reference to what the law was. We think it entirely clear that it does not mean the law enunciated in Lampf, for two independent reasons…. [First,] if the statute referred to [Lampf,] its reference to the “laws applicable in the jurisdiction ” (emphasis added) would be quite inexplicable. Second, if the statute refers to the law enunciated in Lampf it is utterly without effect, a result to be avoided if possible.

Plaut, 514 U.S. at ----, 115 S.Ct. at 1451-52. Therefore, the Court must eschew a too-literal application of the statutory language and apply section 27A(a) as Congress evidently meant it to apply. Id. Leslie’s securities fraud claims should not be dismissed on limitations grounds.

III. MOTION FOR REHEARING

Lloyd’s has moved for a rehearing of the previous order affirming the magistrate’s memoranda and recommendations. In its motion, Lloyd’s correctly points out that the previous order recited that it would apply a “clearly erroneous” standard of review to “the Magistrate’s actions.” While this standard of review is appropriate for the magistrate’s rulings on nondispositive matters, it is not the appropriate standard of review for dispositive motions, injunctions, and the like. [FN34] Fed.R.Civ.P. 72(b); 28 U.S.C. § 636(b)(1)(B), (C) (“A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.”). Although the Court in fact conducted a thorough, de novo review of the magistrate’s recommendations concerning the Defendants’ dispositive motions, see generally United States v. Wilson, 864 F.2d 1219, 1221-22 (5th Cir.1989) (citing Aluminum Co. of Am. v. E.P.A., 663 F.2d 502 (4th Cir.1981)), the order it signed employed standard language concerning district court review of magistrates’ routine pretrial decisions, see 42 U.S.C. § 636(b)(1)(A), and inadvertently omitted any mention of the distinction between dispositive and nondispositive motions.

Nevertheless, the Court is of the opinion that reconsideration of the magistrate’s memorandum and recommendation is in order. This is particularly so in light of opinions Lloyd’s has brought to the Court’s attention, which have elected to enforce forum-selection and choice-of-law clauses against Lloyd’s Names residing in the United States. [FN35] Lloyd’s motion for rehearing is therefore GRANTED.

IV. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM  [*7] 

Lloyd’s initial criticism of the magistrate’s memorandum and recommendation is that the magistrate “ignored the voluminous documentation, as well as affidavit testimony, provided by [the Defendants] in support of their motions to dismiss,” and “merely adopted the Plaintiff’s pleadings as true.” Dkt. # 45, at 2. Because the magistrate only recited this standard as she ruled on Lloyd’s Rule 12(b)(6) motion to dismiss for failure to state a claim, perhaps Lloyd’s can forgive the magistrate for following the law. See supra note 15; Hartford Fire Ins. Co., --- U.S. at ----, 113 S.Ct. at 2895; Albright, --- U.S. at ----, 114 S.Ct. at 810 (court accepts well-pleaded allegations as true); Lujan, 504 U.S. at ----, 112 S.Ct. at 2137; Hishon, 467 U.S. at 73, 104 S.Ct. at 2232 (claim is subject to dismissal only if it appears beyond doubt that plaintiff can prove no set of facts in support of claims that would entitle him to relief). The Court shall therefore consider de novo whether Leslie has stated a claim under Rule 10b-5 or the DTPA. A. Deceptive Trade Practices Act

Texas consumers are entitled to rely upon a novel statute that has revolutionized tort law in their state and expanded the available remedies. [FN36] “The DTPA does not represent a codification of the common law. A primary purpose of the enactment of the DTPA is to provide consumers a cause of action for deceptive trade practices without the burden of proof and numerous defenses encountered in a common law fraud or breach of warranty suit.” [FN37] Bank One, Texas, N.A. v. Taylor, 970 F.2d 16, 28 (5th Cir.1992); Eagle Properties Ltd. v. Scharbauer, 807 S.W.2d 714, 724 (Tex.1990); Alvarado v. Bolton, 749 S.W.2d 47, 48 (Tex.1988); Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex.1980) (emphasis added). Most important to this case, the DTPA does away with any common-law requirement of contractual privity. Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 352 (Tex.1987); Kennedy v. Sale, 689 S.W.2d 890, 892 (Tex.1985); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex.1983); Gupta v. Ritter Homes, Inc., 646 S.W.2d 168, 169 (Tex.1983); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540-41 (Tex.1981) (“The Act is designed to protect consumers from any deceptive trade practice made in connection with any purchase or sale of any goods or services.”); Barrett v. U.S. Brass Corp., 864 S.W.2d 606, 620-21 (Tex.App.—Houston [1st Dist.] 1993, writ granted); Knowlton v. U.S. Brass Corp., 864 S.W.2d 585, 592-94 (Tex.App.—Houston [1st Dist.] 1993, writ granted) (“To recover under the DTPA, a plaintiff must establish [1] that he is a ‘consumer,’ [2] that there were false, misleading, or deceptive acts or an unconscionable act, and [3] that the act or acts constituted the producing cause of damage.”); cf. Melody Home Mfg. Co., 741 S.W.2d at 352 (“The absence of a cash transfer is not determinative because DTPA plaintiffs establish their standing as consumers by their relationship to a transaction, not by their contractual relationship with the defendant.”).  [*8] 

The definition of “consumer” under the DTPA is quite broad: “an individual … who seeks or acquires by purchase or lease, any goods or services.” Tex.Bus. & Com.Code Ann. § 17.45(4) (Vernon 1987) (emphasis added). Lloyd’s does not contend that Leslie is a “business consumer” with personal assets of $25 million or more, or “owned or controlled by a corporation or entity” that is similarly capitalized. See id. Leslie alleges, and Lloyd’s does not contest, that he paid Lloyd’s a one-time joining fee and annual membership fees, in exchange for services. Leslie alleges that these included the services necessary to provide an operating insurance market and that Lloyd’s represented on several occasions that it provided regulatory and oversight services for its members with respect to the activities of Active Underwriters, Managing Agents, and Members’ Agents. Without question, Leslie alleges a transfer of consideration for services. Kennedy, 698 S.W.2d at 892. Moreover, the services Leslie purchased, or the absence thereof, “form the basis” of Leslie’s complaint. Knowlton, 864 S.W.2d at 592.

Leslie alleges that Lloyd’s, either directly or through the actual or apparent authority vested in Parnell and Sturge, made the following misrepresentations, among others:

(1) that an underwriting member becomes a member of Lloyd’s, not some unknown underwriting agency, and the member can rely upon all of the representations made by Lloyd’s or its various agents;

(2) that a member’s risk, despite nominally unlimited liability, is minimal because Lloyd’s tightly regulates its insurance market and oversees all risks to assure that risks are spread throughout the Lloyd’s membership, not concentrated in particular syndicates;

(3) that an underwriting member of Lloyd’s can expect to earn approximately ten percent (10%) of his or her total underwriting undertaking in profits each year.

Moreover, the allegations in the pleadings indicate that Lloyd’s knew about, but failed to disclose, both the risks associated with long-tail asbestos and pollution policies and the Lloyd’s insiders’ practice of concentrating these risks in “outside” syndicates. Leslie further alleges that these misrepresentations and nondisclosures, including representations concerning regulation and oversight services, constituted deceptive acts or practices which were the producing cause of damages to him and violated one or more of the provisions of the DTPA “laundry list,” including the following:

(2) causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of … services;

(3) causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;

(5) representing that … services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection he does not;  [*9] 

(7) representing that … services are of a particular standard, quality, or grade … if they are of another;

(12) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;

(23) the failure to disclose information concerning … services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.

Tex.Bus. & Com.Code Ann. §§ 17.46(a)(2), (3), (5), (7), (12), (23), 17.50(a)(1) (Vernon 1987 & Supp.1995). The allegations would also seem to support a claim for “an act or practice which, to a person’s detriment:

(A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or

(B) results in a gross disparity between the value received and consideration paid, in a transfer involving transfer of consideration.” Id. §§ 17.45(5), 17.50(a)(3) (definition of “unconscionable action or course of action”). A consumer’s DTPA rights, of course, may not be waived except under very limited circumstances. Id. § 17.42 (waiver enforceable only if defendant pleads and proves (1) no significant difference in bargaining position, (2) consumer is represented by legal counsel (3) in a transaction for a consideration in excess of $500,000, (4) waiver is made in an express provision, (5) in a written contract, and (6) signed by both the consumer and the consumer’s counsel). The Court has no difficulty deciding that Leslie’s allegations are sufficient to survive Rule 12(b)(6).

The DTPA 60-day demand letter requirement is never a ground for outright dismissal of a claim. Hines v. Hash, 843 S.W.2d 464, 468-69 (Tex.1993) (The purpose of the statute “is better served by abating an action filed without notice for the duration of the [60-day] statutory notice period … than by dismissing the action altogether;” “defendant must request an abatement with the filing of an answer or very soon thereafter.”). Abatement of this action to facilitate settlement will be most appropriate after the Fifth Circuit has ruled on an interlocutory appeal of this order.

B. Securities fraud

Upon de novo review of the magistrate’s recommendation, the Court is of the opinion that Leslie has stated a claim for securities fraud and done so with sufficient particularity to survive a motion to dismiss. Lloyd’s primary objection to Leslie’s securities fraud claim is not that Leslie has failed to allege either (1) misrepresentations or failures to disclose material information, (2) “[a] device, scheme or artifice to defraud,” or (3) “a[n] act, practice, or course of business which operates as a fraud or deceit,” in connection with a transaction in securities. 17 C.F.R. part 240.10b-5. Rather, Lloyd’s objects that the transactions of which Leslie complains never involved the purchase or sale of any security. See Dkt. # 5, at 51-55. Lloyd’s also argues that Leslie has failed to allege both loss and transaction causation. Reviewing Leslie’s pleadings, it is apparent they sufficiently allege both forms of causation—that Leslie would not have entered into transactions but for the fraud, and that the fraud caused damage to Leslie.  [*10] 

Although Lloyd’s appears to concede that “Leslie’s allegations tend to show that he sought and acquired his position as an underwriting member as a prerequisite to his participation in an investment,” id. at 48-49, the Court agrees with Lloyd’s that Leslie has not alleged that he purchased a security solely by purchasing a Lloyd’s Name. Leslie alleges that he purchased securities when he purchased participations in Lloyd’s syndicates, see Dkt. # 89 at 31, and that Lloyd’s represented to him that the only way to qualify for purchasing these securities was to purchase a Name. While it may be debatable whether Leslie’s overall transaction with Lloyd’s insiders constituted an “investment contract” [FN38] or other security, the Court elects to hold that a bare Name is not an “investment contract,” as that term is defined in the controlling cases. International Bhd. of Teamsters v. Daniel, 439 U.S. 551, 558, 99 S.Ct. 790, 796, 58 L.Ed.2d 808 (1979); United Housing Found., Inc. v. Forman, 421 U.S. 837, 851-52, 95 S.Ct. 2051, 2060, 44 L.Ed.2d 621 (1975); Securities & Exch. Comm’n v. W.J. Howey Co., 328 U.S. 293, 301, 66 S.Ct. 1100, 1104, 90 L.Ed.2d 1244 (1946); Securities & Exch. Comm’n v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir.1974).

While a Name, by itself, may not be a security, Leslie certainly has purchased securities in the form of participations in Lloyd’s syndicates. The Court finds instructive the position of the Securities and Exchange Commission (“SEC”) on the subject:

The staff of the Commission’s Division of Corporate Finance has had discussions with Lloyd’s concerning the applicability of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”) to the solicitation of U.S. Citizens to participate in Lloyd’s. It is the Division’s position that the solicitation of participations involves the sale of a security, with the issuer of that security being the particular Members’ Agent involved. Accordingly, such U.S. sales would be subject to all of the provisions of the Securities Act and the Exchange Act, including the anti-fraud provisions. At the time of those prior discussions, it was determined that if the Members’ Agents solicited participations in accordance with the procedures proposed by Lloyd’s counsel (an offering structure intended to comply with the Commission’s Regulation D), registration under the Securities Act would not be required. However, in light of the issues raised by Mr. Roby and others, the staff may consider … whether further action is appropriate. …. While Lloyd’s participations do more closely resemble general partnership interests than they do other securities, such as shares of common stock, they are quite unique investments…. There is no existing precedent as to whether Lloyd’s participations are securities but, as we pointed out above, the Division of Corporate Finance believes they are securities and as such are subject to the provisions of the Federal securities laws in the same manner and to the same extent as more conventional securities…. [S]ubject to certain limitations and conditions, the provisions of the Federal securities laws generally are as applicable to the sales of foreign securities (including participations in Lloyd’s) in the United States as they are to the sales of domestic securities.  [*11] 

Letter from Mary E.T. Beach, Senior Associate Director of the Division of Corporate Finance, United States Securities and Exchange Commission, to Hon. Donald J. Pease, Member, United States House of Representatives 2-3 (Aug. 5, 1991) (emphasis added), reprinted in Respondent’s Brief in Opposition at App. A, Riley v. Kingsley Underwriting Agencies, Ltd., 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (Dec. 7, 1992) (No. 92-664). The position of the Securities and Exchange Commission*—that participations in a Lloyd’s syndicate are securities—is correct. The purchase of a participation involves the investment of money—delivery of a clean irrevocable letter of credit and assumption of unlimited several liability [FN39]—in a common enterprise, Lloyd’s and/or a Lloyd’s syndicate, with profits to come solely [FN40] from the efforts of others—such as brokers at Lloyd’s and the syndicate’s Managing Agent. United Housing Found., Inc., 421 U.S. at 851-52, 95 S.Ct. at 2060; Securities & Exch. Comm’n v. W.J. Howey Co., 328 U.S. at 301, 66 S.Ct. at 1104; see also Reves v. Ernst & Young, 494 U.S. 56, 60, 110 S.Ct. 945, 949, 108 L.Ed.2d 47 (1990) (in enacting the securities laws, Congress “recognized the virtually limitless scope of human ingenuity, especially in the creation of ‘countless and variable schemes devised by those who seek [to] use … the money of others on the promise of profits.’ ”) (quoting Howey ); Landreth Timber Co. v. Landreth, 471 U.S. 681, 691, 105 S.Ct. 2297, 2304, 85 L.Ed.2d 692 (1985) (transaction may be a “security” even though it does not satisfy the Howey economic reality test); Securities & Exch. Comm’n v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir.1974) (“solely from the efforts of others” criterion “would be easy to evade” if applied too literally; “[t]he admitted salutary purposes of the Acts can only be safeguarded by a functional approach to the Howey test.”).

Congress has expressly granted the SEC regulatory authority under the 1933 and 1934 Acts. See 15 U.S.C. §§ 77c(b), (c), 77f(d), 77i, 77s(a), 78u, 78u-2, 78w(a)(1), 78y; see also 17 C.F.R. part 230.100(b). Relevant precedent indicates the courts should grant significant deference to administrative decisions when an agency has regulatory authority over matters a court must address. See, e.g., Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984) (“The power of an administrative agency to administer a congressionally created … program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly … if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.&148;); Stinson v. United States, 508 U.S. 36, 113 S.Ct. 1913, 1919, 123 L.Ed.2d 598 (1993) (“Provided an agency’s interpretation of its own regulations does not violate the Constitution or a federal statute, it must be given ‘controlling weight unless it is plainly erroneous or inconsistent with the regulation.’ &148;) (quoting Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 1217, 89 L.Ed.2d 1700 (1945)). In this case, the position of the SEC Division of Corporate Finance that participations in Lloyd’s syndicates are regulated securities is based upon a permissible construction of the 1933 and 1934 Acts, and is not plainly erroneous or inconsistent with agency regulations. The Court holds these participations are securities as that term is defined in the 1933 and 1934 Acts.  [*12] 

The SEC also takes the position that Lloyd’s program of soliciting Names in the United States, as Lloyd’s described its activities to the SEC, is exempt from the registration requirement of the 1933 Securities Act under the SEC’s Regulation D. See 17 C.F.R. §§ 230.501-230.508. (“Reg D&148;). It bears mentioning that the Reg D “private offering&148; exemption is not to be confused with an exemption from the anti-fraud provisions of the 1933 and 1934 Acts. See Landreth Timber Co., 471 U.S. at 692 & n. 6, 105 S.Ct. at 2305 & n. 6 (quoting Louis Loss favorably for the proposition that “saying … the fraud provisions do not apply to private transactions” is “heresy”); Aedna Exploration Co. v. Sylvan, 860 F.2d 1242, 1251 & n. 42 (5th Cir.1988); 17 C.F.R. § 230.501 et seq. preliminary note 1 (“Such transactions are not exempt from the antifraud, civil liability, or other provisions of the federal securities laws. Issuers are reminded of their obligation to provide such further material information … as may be necessary to make the information required under this regulation, in light of the circumstances … not misleading.&148;). [FN41] Even though the bare sale of a Name is not an “investment contract,” and therefore Lloyd’s itself is not necessarily an “issuer&148; of securities, the Court is of the opinion that Leslie has alleged sufficient facts to support a cause of action against Lloyd’s under Rule 10b-5, which prohibits “any device, scheme, or artifice to defraud,” any material misrepresentation or failure to disclose, or “any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person … in connection with the purchase or sale of any security.&148; The cases establish beyond peradventure that Rule 10b-5 actions are not strictly limited to claims against the “issuer&148; of the securities in question. [FN42]

V. EXTRATERRITORIAL APPLICATION OF UNITED STATES LAWS

A. Securities Exchange Act of 1934

Relying primarily upon Equal Employment Opportunity Comm’n v. Arabian Am. Oil Co., 499 U.S. 244, 111 S.Ct. 1227, 113 L.Ed.2d 274, 59 U.S.L.W. 4225 (1991) (hereafter, “EEOC &148;), Lloyd’s argues that the 1934 Securities Exchange Act does not apply extraterritorially. [FN43] It is well-settled that the 1934 Act, and Rule 10b-5, apply extraterritorially to certain transactions in foreign commerce, and the Court is of the opinion that the securities laws apply extraterritorially in this case.

In EEOC, 499 U.S. at ----, 111 S.Ct. at 1229, 1236, the Supreme Court decided that Title VII of the Civil Rights Act of 1964, as amended, does not apply extraterritorially to regulate “the employment practices of United States employers who employ United States citizens abroad.” In so ruling, the Court affirmed, and arguably strengthened, the “presumption&148; against extraterritorial application of federal statutes, “unless a contrary [legislative] intent appears.&148; [FN44] Id. at 1230 (citing Foley Bros., Inc. v. Filardo, 336 U.S. 281, 284-85, 69 S.Ct. 575, 577, 93 L.Ed.2d 680 (1949)). Before the year was out, Congress clearly expressed its contrary legislative intent. See 42 U.S.C. § 2000e(f); Landgraf v. USI Film Prods.,511 U.S. 244, ---- 114 S.Ct. 1483, 1489-90, 128 L.Ed.2d 229, 62 U.S.L.W. 4255 (1994).  [*13] 

The EEOC court determined that the definition of “Commerce&148; in Title VII, which included “trade, traffic, commerce … or communication among the several states; or between a State and any place outside thereof,&148; “is ambiguous, and does not speak directly to the question presented here.&148; EEOC, 499 U.S. at ----, 111 S.Ct. at 1231 (emphasis added). In contrast, the 1934 Securities Exchange Act is not at all ambiguous: “The term interstate commerce means trade, commerce, transportation, or communication among the several states, or between a foreign country and any State, or between any State or place or ship outside thereof.” 15 U.S.C. § 78c(a)(17) (emphasis added); see also 15 U.S.C. § 78aa.

Moreover, legal developments subsequent to EEOC provide strong indications that EEOC did nothing to alter the longstanding rule that the 1934 Act may apply extraterritorially to some securities transactions. In an appeal from a Second Circuit decision involving plaintiffs who were neither United States residents nor citizens, which not only reaffirmed both traditional tests for the extraterritorial application of Rule 10b-5, but held as well that RICO may apply extraterritorially, the Supreme Court denied certiorari. Alfadda v. Fenn, 935 F.2d 475, 479-80 (2d Cir.1991) (decided June 5, 1991; EEOC was decided March 26, 1991) (“Under our decisions, two tests have emerged for determining whether a federal court has subject matter jurisdiction over a foreign plaintiff’s claim under the antifraud provisions of the securities laws [,] … the ‘conduct’ test, [and] … the ‘effects’ test.&148;), cert. denied, 502 U.S. 1004, 112 S.Ct. 638, 116 L.Ed.2d 656, 60 U.S.L.W. 3418 (1991). Second, the United States Court of Appeals for the District of Columbia Circuit held that the National Environmental Policy Act of 1969 required a federal agency to prepare an environmental impact statement in advance of implementing a waste incineration program at a base in Antarctica. Environmental Defense Fund, Inc. v. Massey, 986 F.2d 528 (D.C.Cir.1993). Third, the Supreme Court held that the Sherman Act would apply extraterritorially in a lawsuit against London reinsurers, and that international comity would not require the United States to decline to enforce the Sherman Act unless “there is in fact a true conflict between domestic and foreign law.” [FN45] Hartford Fire Ins. Co., ---- U.S. at ----, 113 S.Ct. at 2908-10; see also id. at 2917-19 (Scalia, J., dissenting) (citing EEOC ); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 582 n. 6, 106 S.Ct. 1348, 1354 n. 6, 89 L.Ed.2d 538 (1986).

If the EEOC Court’s election to re-emphasize the Foley Bros., 336 U.S. at 284-85, 69 S.Ct. at 577, presumption against extraterritoriality did not warrant the Supreme Court’s revisiting extraterritorial application of the Sherman Act [FN46] in Hartford Fire Ins. Co., --- U.S. at ----, 113 S.Ct. at 2908-10, then this Court is not aware of any reason to view EEOC as a mechanism for revisiting the multitude of post-Foley Bros. cases holding that the United States securities laws can apply extraterritorially, either to foreign defendants who have allegedly defrauded United States investors, see Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 985-87 (2d Cir.), cert. denied sub nom. Bersch v. Arthur Andersen & Co., 423 U.S. 1018, 96 S.Ct. 453, 46 L.Ed.2d 389 (1975); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1333-35 (2d Cir.1972) (involving an American corporation and a British subsidiary as plaintiffs); Schoenbaum v. Firstbrook, 405 F.2d 200, 206-08 (2d Cir.), rev’d in part on other grounds, 405 F.2d 215 (2d Cir.1968) (en banc), cert. denied sub nom. Manley v. Schoenbaum, 395 U.S. 906, 89 S.Ct. 1747, 23 L.Ed.2d 219 (1969), or in favor of foreign plaintiffs alleging fraud in a foreign securities transaction, in a 10b-5 claim based either upon conduct in the United States or upon a transaction’s substantial effect on United States securities markets. See Alfadda, 935 F.2d at 479- 80 (2d Cir.1991), cert. denied, 502 U.S. 1005, 112 S.Ct. 638 (1991); MCG, Inc. v. Great Western Energy Corp., 896 F.2d 170 (5th Cir.1990); Consolidated Gold Fields PLC v. Minorco, S.A., 871 F.2d 252 (2d Cir.), modified, 890 F.2d 569 (2d Cir.), cert. dism’d, 492 U.S. 939, 110 S.Ct. 29, 106 L.Ed.2d 639 (1989); Zoelsch v. Arthur Andersen & Co., 824 F.2d 27, 31-33 (D.C.Cir.1987) (limiting extraterritorial application of 10b-5 in favor of foreign plaintiffs to the “conduct&148; test); Bersch, 519 F.2d at 985-87. Nor would EEOC appear to require courts to revisit issues concerning the extraterritorial application of other commercial statutes. See, e.g., Steele v. Bulova Watch Co., 344 U.S. 280, 286, 73 S.Ct. 252, 97 L.Ed.2d 319 (1952) (Lanham Act). Unless and until the Supreme Court or the Fifth Circuit directs otherwise, this Court will consider itself bound by the standard announced in MCG, Inc., 896 F.2d at 173-75 (“The first predicate for extending jurisdiction involves conduct occurring in the United States that has an effect on [U.S.] securities markets or [U.S.] investors.”), and United States v. Cook, 573 F.2d 281, 283- 84 (5th Cir.), cert. denied, 439 U.S. 836, 99 S.Ct. 119, 58 L.Ed.2d 132 (1978).  [*14] 

Lloyd’s also argues that MCG requires this Court to hold that Rule 10b-5 does not apply extraterritorially in this case. Obviously, MCG does not stand for the proposition that the presumption against extraterritoriality precludes application of Rule 10b-5 to a transaction involving the offering and sale of a security in the United States to a United States investor merely because the issuer happened to be headquartered in England, see MCG, 896 F.2d at 174- -even if that security happened to be a participation in a Lloyd’s syndicate. The reason the MCG court declined to recognize Rule 10b-5 subject matter jurisdiction under the particular facts of that case was the extraordinary length to which the American plaintiffs had gone to circumvent the United States securities laws:

Our analysis begins and ends with the district court’s finding that MCG sought, through extensive machinations, to avoid the application of the federal securities laws and their attendant obligations in order to facilitate their investment in a foreign offering from which they were disqualified, doing so without the knowledge of the defendants…. The policy concerns that have resulted in the extension of subject matter jurisdiction are not implicated where, as here, the “foreign&148; purchaser seeking protection is a mere “shell&148; created to avoid the securities laws. Having gone to such lengths to structure a transaction not burdened by the securities laws, plaintiffs cannot expect to wrap themselves in their protective mantle when the deal sours.

MCG, 896 F.2d at 175. Lloyd’s has not presented the Court with any evidence that Leslie ever attempted to structure his transaction with Lloyd’s in an effort to circumvent the securities laws of the United States. It is true that Lloyd’s requires all Names to take part in a ritual ceremony in London at which certain closing documents are executed. However, this alone cannot be sufficient evidence to establish that Leslie’s transaction was wholly foreign. [FN47] To adopt such a rule would elevate mere formalism over the economic realities of today’s global financial markets. The Court is of the opinion that Lloyd’s repeated emphasis on the formal closing ceremony in London is a substantial indication that Lloyd’s, not Leslie, with full knowledge of the probable application of the United States securities laws to any sales of syndicate participations to United States Names, [FN48] attempted to circumvent the U.S. securities laws through the structure of its transactions. Further evidence of such an effort on Lloyd’s part is Lloyd’s take-it-or-leave-it offer in 1986 that Leslie either sign the revised General Undertaking or discontinue his underwriting activities.

Both the allegations and the evidence support the conclusion that Lloyd’s transaction with Leslie was predominantly a domestic securities transaction in the United States, not a wholly foreign transaction. Lloyd’s initially contacted Leslie in the United States and Parnell recruited Leslie by visiting him in Houston. Most of the alleged misrepresentations took place either in the United States or through postal or electronic communications in foreign commerce between the United States and England. Leslie signed the revised General Undertaking in the United States and returned it by mail to England. Leslie maintained a clean, irrevocable, letter of credit, which represented the extent of his undertaking at Lloyd’s, with Texas Commerce Bank in Houston.  [*15] 

Moreover, this transaction was by no means an isolated event with a negligible effect upon United States citizens and securities markets. [FN49] Cf. Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 112 S.Ct. 2160, 2167-69, 119 L.Ed.2d 394 (1992). During the late 1970s and early to mid 1980s, evidence indicates that Lloyd’s conducted a widespread and systematic campaign to recruit new Names in the United States and elsewhere. Documents published by Lloyd’s show that no fewer than 2,000 United States citizens have pledged their entire personal estates to become Lloyd’s Names in the last two decades. [FN50] Lloyd’s admits that, as of December 1990, no fewer than sixty-four of these Names resided in Texas. Dkt. # 21, at 2. The Court is of the opinion that Lloyd’s and the registered syndicates at Lloyd’s were directly involved in the distribution of securities throughout the United States, and by entering this market have elected to subject themselves to the anti-fraud and disclosure requirements of the United States securities laws. [FN51] See Leasco Data Processing Equip. Corp., 468 F.2d at 1334 n. 3. Although much of Lloyd’s business—the (re)insurance underwriting process and most of the regulatory activity Lloyd’s promised to perform—took place in England, the focus of this lawsuit is upon the actions of Lloyd’s and its agents as Lloyd’s sought access to investment capital in the United States. The securities laws “recogniz[e] the virtually limitless scope of human ingenuity, especially in the creation of ‘countless and variable schemes devised by those who seek to use the money of others on the promise of profits.’ ” Reves, 494 U.S. at 60, 110 S.Ct. at 949 (quoting Howey). Under the circumstances, the Court concludes that neither the location of Lloyd’s headquarters nor the location of Lloyd’s mandatory closing ceremony was a legal factor sufficient to entitle Lloyd’s “purposefully [to] avai[l] itself of the privilege&148; of access to United States investors and capital markets, see supra note 49 (quoting Republic of Argentina, 504 U.S. at ----, 112 S.Ct. at 2169), “on the promise of profits,&148; Reves, 494 U.S. at 60, 110 S.Ct. at 949, without fulfilling the corresponding responsibilities that our laws require.

B. Deceptive Trade Practices Act

Lloyd’s underwriters voluntarily subject themselves to the possibility of DTPA remedies for false, deceptive, or unconscionable trade practices when they sell insurance policies to Texas consumers. [FN52] Tex.Ins.Code.Ann. arts. 18.23(b), 12.21, § 16(a) (Vernon 1981 & Supp.1995); see, e.g., Hull & Co. v. Chandler, 889 S.W.2d 513 (Tex.App.—Houston [14th Dist.] 1994, writ denied); Lloyd’s of London v. Walker, 716 S.W.2d 99, 102-03 (Tex.App.— Dallas 1986, writ ref’d n.r.e.); American Ins. Cos. v. Reed, 626 S.W.2d 898 (Tex.App.—Eastland 1982, no writ); Union Indem. Ins. Co. v. Certain Underwriters at Lloyd’s, 614 F.Supp. 1015 (S.D.Tex.1985); see also Belefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 745 (Tex.1986); < i>Union Pac. Resources Co. v. Aetna Casualty & Sur. Co., 894 S.W.2d 401 (Tex.App.—Fort Worth 1994), application for writ of error filed, 38 Tex.Sup.Ct.J. 637 (May 17, 1995 (95-0473); Warrilow v. Norrell, 791 S.W.2d 515 (Tex.App.—Corpus Christi 1989, writ denied). It should hardly be surprising that the DTPA applies to transactions in interstate or foreign commerce involving the purchase of services by Texas consumers, including any “Names&148; Lloyd’s of London sells in Texas.  [*16] 

By its terms, the DTPA provides that “a consumer may maintain an action where any of the following [specified deceptive acts or practices] constitute a producing cause of actual damages,&148; Tex.Bus. & Com.Code Ann. § 17.50(a) (Vernon 1987), without limiting, in geographic terms, the range of possible defendants. See generally Dowling v. NADW Marketing, Inc., 578 S.W.2d 475, 476 (Tex.Civ.App.—Eastland 1979, writ ref’d n.r.e.) (despite contractual clause specifying Louisiana forum, reversing Texas trial court’s dismissal of DTPA action against Louisiana corporation not registered to do business in Texas). The DTPA must be “liberally construed and applied to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices….” Id. §&nbswp;17.44. Any interpretation of the DTPA that imposes geographic limitations upon the possible range of DTPA defendants would plainly violate this basic principle of construction.

Of course, a state may not regulate aspects of interstate commerce if Congress has expressly preempted such regulation. See, e.g., American Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715, 63 U.S.L.W. 4066 (1995) (Airline Deregulation Act of 1978 preempts application of the Illinois Consumer Fraud and Deceptive Business Practices Act to airline’s retroactive changes in frequent flier program). However, when the pre-emptive effect of federal enactments is not explicit, courts sustain a local regulation unless it conflicts with federal law or would frustrate the federal scheme, or unless the courts discern from the totality of the circumstances that Congress sought to occupy the field to the exclusion of the states. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747- 48, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728 (1985) (citations omitted). This Court is unaware of any federal regulation that would preempt the application of Texas consumer protection legislation to a transaction in foreign commerce involving services such as those Lloyd’s promises its Names. The Court must presume that Congress did not intend to preempt areas of traditional state regulation. Id. at 740, 105 S.Ct. at 2389 (citing Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977)).

Nor does this appear to be a case in which the “negative&148; aspect of the commerce clause, which “denies the [s]tates the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce,&148; applies. Oregon Waste Sys. v. Department of Envtl. Quality of Or., 511 U.S. 93, ----, 114 S.Ct. 1345, 1349, 128 L.Ed.2d 13 (1994); C & A Carbone, Inc. v. Town of Clarkston, N.Y., 511 U.S. 383, 383, 114 S.Ct. 1677, 1682, 128 L.Ed.2d 399 (1994). It is no “unjustifiable burden” on interstate commerce to require both Texans and non-Texans, supplying goods or services to Texas consumers, to refrain from &147;false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.” Tex.Bus. & Com.Code, § 17.44. Application of the DTPA to defendants located outside Texas or outside the United States, far from fostering discrimination against interstate and foreign commerce, promotes uniform application of consumer protection legislation. In this increasingly interdependent world, it would be small consolation indeed for Texas consumers if the DTPA provides a remedy only for Texas manufacturers’ deceptive practices and breaches of warranty, but none for the actions of manufacturers beyond Texas’s borders or on the far side of the globe. Nor should the DTPA be limited, for example, to provide certain remedies for a Houston attorney’s misbehavior while rendering services to a Houston resident, but no remedy at all to Houston residents seeking services from lawyers located in London or New York.  [*17] 

This case would be more difficult, perhaps, if the only transactions and deceptive practices described in Leslie’s pleadings occurred entirely outside this state. However, virtually all the alleged deceptive trade practices took place in Texas. The Court is of the opinion the DTPA should apply extraterritorially under the facts presented in this case.

VI. FORUM-SELECTION AND CHOICE-OF-LAW CLAUSES

In 1986, Lloyd’s required Leslie to sign a revised General Undertaking. Although Lloyd’s had apparently managed, for the previous three hundred years of its history, without any forum-selection or choice-of-law clauses in the agreements it required members to sign, the revised 1986 General Undertaking contained clauses which, if enforced, required Leslie to bring any claims he might have in England, for resolution according to English law. [FN53] It is undisputed that Lloyd’s offered Leslie, as an alternative to signing the document, the opportunity to discontinue his underwriting activity with Lloyd’s. Although other courts have elected to enforce identical clauses against other Lloyd’s Names, see note 35, supra, the Court concludes that the facts of this case are sufficiently different from previous cases that the forum-selection and choice-of-law (“FS/COL”) clauses should not be enforced against Robert Leslie. Because Leslie has not raised the issue, the Court will assume, if necessary for present purposes, that the FS/COL agreement was supported by adequate consideration. The Court will also assume, without deciding, that a contractual choice-of-law provision can have the effect of determining which jurisdiction’s legal standards apply in all disputes between the contracting parties, including disputes not based upon the contract itself.

A. Retroactivity

Unlike all prior United States cases involving Lloyd’s Names, this case presents an issue concerning the retroactive application of the Lloyd’s boilerplate FS/COL clauses. Leslie commenced his underwriting activity with Lloyd’s in 1977. He did not sign the revised General Undertaking until 1986. Arguably, a fair portion of his claim is based upon conduct and transactions that took place many years before 1986. Other allegations Leslie makes, however, clearly involve conduct by Lloyd’s or Lloyd’s agents that took place after 1986.

In contrast, the plaintiff in Riley v. Kingsley Underwriting Agencies, Ltd., No. 91-C-1411 (D.Colo. Aug. 30, 1991), aff’d, 969 F.2d 953 (10th Cir.1992), cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584, 61 U.S.L.W. 3418 (1992), signed only one General Undertaking, before beginning any underwriting activity, which “provided that the courts of England would have exclusive jurisdiction over any dispute and that the laws of England would apply.” Riley, 969 F.2d at 955. Likewise, the court in Roby v. Corporation of Lloyd’s, No. 91-Civ-7081 (MEL) (S.D.N.Y. Aug. 18, 1992), aff’d, 996 F.2d 1353, 1362 (2d Cir.1993), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333, 62 U.S.L.W. 317 (1993), pointed out that “at most five of the 109 appellants” in that case would be affected by “[a] slightly different structure [that] existed prior to 1990.&148; Roby, 996 F.2d at 1357 n. 1. It is not clear whether any of the five exceptional Roby plaintiffs was an underwriting Name under a General Undertaking that did not contain the FS/COL clauses. The Roby court’s analysis was premised upon mandatory, pre- underwriting acceptance of the FS/COL terms: “Names are required to enter directly into two agreements…. The ‘General Undertaking’ is between a Name and the Lloyd’s governing bodies and contains choice of forum (England) and choice of law (English) clauses.&148; Id. at 1357-58. In Bonny v. The Society of Lloyd’s, 784 F.Supp. 1350 (N.D.Ill. May 29, 1992), 3 F.3d 156 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d 378, 62 U.S.L.W. 3544 (1994), the plaintiffs, before underwriting, “traveled to England and executed a General Undertaking for Membership that included both forum selection and choice of law clauses.” Id., 3 F.3d at 158. One prior case, Shell v. R.W. Sturge, Ltd., 850 F.Supp. 620 (S.D.Ohio 1993), aff’d, 55 F.3d 1227 (6th Cir.1995), may have had the potential to raise this issue. See id., 850 F.Supp. at 627-28 & n. 4. However, neither the Shell court nor the magistrate judge in Shell addressed the issue. Id. at 622-23, 629-30. Recently decided cases in Texas and California were filed in 1994, too recently for retroactive application of the FS/COL clauses to be an issue. See Richards v. Lloyd’s of London, No. 94-1211-IEG (POR), 1995 WL 465687, 1995 U.S.Dist. LEXIS 6888 (S.D.Cal. Apr. 28, 1995); McDade v. NationsBank of Texas, N.A., No. H-94-3714 (S.D.Tex. June 26, 1995). Finally, Hirsch v. Oakely Vaughn Underwriting, Ltd., No. H-87-3727 (S.D.Tex., Dec. 14, 1988), aff’d, 904 F.2d 704 (5th Cir., May 31, 1990) (No. 89-2563), cert. denied, 498 U.S. 981, 111 S.Ct. 511 (1990) did not address any FS/COL issue; Hirsch was decided on forum non conveniens grounds.  [*18] 

Therefore, the Court has little guidance in determining whether the FS/COL clauses Leslie signed in 1986 would apply only to claims arising after 1986, or whether they would also apply to claims existing before 1986 that Leslie could have filed, had he known about them. The language of the forum selection clause, which covers “any dispute and/or controversy of whatsoever nature,”t; while not expressly retroactive, is broad and may indicate Lloyd’s contemplated its retroactive application. However, the choice-of-law clause is not so sweeping in its terms: 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 construed in accordance with the laws of England.

(emphasis added). Whether this clause applies retroactively to Leslie’s case is an issue subsidiary to the determination whether it is enforceable. If it must be enforced, then its interpretation necessarily depends upon English law. [FN54] On the other hand, if the clause is unenforceable, then it is unnecessary for this Court to determine whether it is retroactive. Because the Court is not necessarily required to reach and decide the retroactivity issue, it is proper for the Court to focus first on whether the FS/COL clauses are enforceable against Leslie.

B. What law governs?

Although it may seem surprising, the enforceability of the Lloyd’s FS/COL clauses is a matter of United States maritime law, and this Court considers itself so bound. Until the Sixth Circuit expressly identified, but elected not to address, this choice-of-law issue, see Shell, 55 F.3d at 1229, every federal court confronting the Lloyd’s FS/COL clauses, [FN55] Bonny, 3 F.3d at 159-60; Roby, 996 F.2d at 1363; Riley, 969 F.2d at 957-58; Shell, 850 F.Supp. at 621-22, has relied upon two admiralty cases by the United States Supreme Court in determining whether the clauses are enforceable. See Carnival Cruise Lines v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 1525, 113 L.Ed.2d 622 (1991) (forum-selection clause) (“We begin by noting the boundaries of our inquiry. First, this is a case in admiralty and federal law governs the forum-selection clause we scrutinize.”) (emphasis added); The Bremen v. Zapata Off-Shore Company, 407 U.S. 1, 10, 92 U.S. 1907, 1913, 32 L.Ed.2d 513 (1972) (forum-selection and exculpatory clauses) (&147;[C]ourts are tending to adopt a more hospitable attitude toward forum- selection clauses. This view, advanced in the well-reasoned dissenting opinion in the instant case, is that such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be “unreasonable” under the circumstances. We believe this is the correct doctrine to be followed by federal district courts sitting in admiralty.”) (emphasis added). This Court will do the same. But see O’Melveny & Myers v. Federal Deposit Ins. Corp., --- U.S. ---, ---, 114 S.Ct. 2048, 2054- 56, 129 L.Ed.2d 67, 62 U.S.L.W. 4487 (1994); Texas Indus., Inc. v. Radcliff Minerals, 451 U.S. 630, 640-43, 101 S.Ct. 2061, 2067-68, 68 L.Ed.2d 500 (1981). If this approach is in error, the Court is confident that the error will be corrected promptly, either on interlocutory appeal or on petition for writ of certiorari. The Court will review the magistrate’s recommendations de novo.

C. Analysis  [*19] 

This Court has no doubt that the courts of England can be every bit as impartial, learned and fair as federal and state courts located in Texas. See Roby, 996 F.2d at 1363; Riley, 969 F.2d at 958. Even though it may be true, at least as a sweeping generalization, that fair trials are available on either side of the Atlantic, the choice of forum in this case is by no means inconsequential; if it were, the issue would not be so hotly contested. The issue the Court must decide is whether it is required dismiss Leslie’s action so he may refile it in England. Therefore, the Court will only address the enforceability of the Lloyd’s choice-of-law clause insofar as it operates in tandem with the forum selection clause. [FN56] See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 637 & n. 19, 105 S.Ct. 3346, 3359 & n. 19, 87 L.Ed.2d 444 (1985) (“We merely note that in the event the choice-of- forum and choice-of-law clauses operated in tandem as a prospective waiver of a party’s right to pursue statutory remedies for antitrust violations, we would have little hesitation in condemning the agreement as against public policy.&148;) (citing Redel’s, Inc. v. General Elec. Co., 498 F.2d 95, 98-99 (5th Cir.1974)). The scope and effect of the Lloyd’s choice-of- law clause, as it applies to the adjudication of Leslie’s substantive rights in a United States court, is not an issue that requires immediate resolution. At this juncture, any such decision would be purely advisory.

United States admiralty law treats forum selection clauses as presumptively enforceable: [FN57]

[S]uch clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be &147;unreasonable&148; under the circumstances…. The choice of that forum was made in an arm’s length negotiation…. There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power … should be given full effect…. A contractual choice-of- forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision…. Courts have also suggested that a forum clause, even though it is freely bargained for and contravenes no important policy of the forum, may nevertheless be “unreasonable” and unenforceable if the chosen forum is seriously inconvenient for the trial of the action…. The Bremen, 407 U.S. at 11-16, 92 S.Ct. at 1913-16. Although the magistrate considered it important that the 1986 General Undertaking is an adhesion contract, that fact alone is not determinative. [FN58] Carnival Cruise Lines, 499 U.S. at ----, 111 S.Ct. at 1527 (&147;[W]e do not adopt the Court of Appeals’ determination that a nonnegotiated forum-selection clause in a form ticket contract is never enforceable simply because it is not the subject of bargaining.&148;). The Supreme Court in Carnival Cruise Lines recognized three policies supporting such clauses:  [*20] 

First, a cruise line has an interest in limiting the fora in which it could be subject to suit…. [I]t is not unlikely that a mishap on a cruise could subject a cruise line to litigation in several different fora…. Additionally, [such] a clause … has the salutary effect of dispelling any confusion about where suits arising from the contract must be brought and defended…. Finally, it stands to reason that passengers who purchase tickets containing a forum selection clause benefit in the form of reduced fares….

Id. 499 U.S. at ----, 111 S.Ct. at 1527. There is no evidence in the record that Leslie obtained any benefit in the form of reduced or refunded membership or transaction fees after executing the 1986 General Undertaking. Nor can Lloyd’s make as clear a case for an interest in limiting potential fora for lawsuits. First, Lloyd’s employs lawyers throughout the world in connection with its insurance business and litigates frequently outside England. Second, Lloyd’s has been in operation for over three hundred years, yet Lloyd’s only started using forum clauses around 1980 and only required them in 1986.

While it can be argued that few Lloyd’s Names were citizens of any country other than England prior to 1970, the fact remains that the introduction of the forum-selection clause did not coincide with Lloyd’s initial efforts to recruit Names outside England. Rather, Names started signing agreements containing the clauses around 1980, see Riley, 969 F.2d at 955, at which time Lloyd’s had already recruited heavily outside England. See supra note 50. Therefore, the clause coincides more closely with Lloyd’s efforts in Parliament to seek passage of the 1982 Lloyd’s Act. Nor does it appear Lloyd’s realized the need for uniformity in 1980 and promptly sought to have all foreign Names sign the revised General Undertaking. Rather, Lloyd’s mandated the revised General Undertaking in 1986, just as reports started to surface that American Names planned to sue Lloyd’s, and shortly before it became impossible for Lloyd’s to continue concealing the extent of its problems.

The situation of Lloyd’s Names differs from the situation of cruise line passengers in another important respect. In Carnival Cruise Lines, 499 U.S. at ----, 111 S.Ct. at 1524, the Schuttes lived in Washington and took a cruise to Mexico. Other injured passengers could have come from Nebraska, North Dakota, Asia, or Australia. Carnival did not necessarily conduct cruise operations in all of these locations. In contrast, Lloyd’s purposely came into the United States to recruit Names, and recruited Leslie in the state of his domicile. Lloyd’s Names like Leslie have a much stronger interest in litigating in their domicile state than would cruise passengers like the Schuttes, injured during a cruise in a foreign land, distant from both their own domicile and Carnival’s headquarters.

The only salutary effect of the Lloyd’s clause, therefore, is the possibility of “dispelling confusion about where suits … must be brought.” This effect must, of course, be balanced against the effect the clause might have on Names’ substantive rights. Notably, both the Roby court and the Bonny court expressed “serious concerns that Lloyd’s clauses operate as a prospective waiver of statutory remedies for securities violations.” Bonny, 3 F.3d at 160; Roby, 996 F.2d at 1363 (“We depart somewhat from the Riley court with respect to the fourth factor. We believe that there is a serious question whether United States public policy has been subverted by the Lloyd’s clauses.”). This Court finds no reason to believe this effect on Names’ substantive rights was inadvertent or accidental.

1. Fraud  [*21] 

The 1986 General Undertaking is generally understood to operate in tandem with the 1982 Lloyd’s Act to deprive Names of any common law cause of action against Lloyd’s not based upon Lloyd’s “bad faith,” and any claim based upon United States statutory rights. See Bonny, 3 F.3d at 161. The Bonny court permitted dismissal of a lawsuit in favor of an English forum only after Lloyd’s “stipulated that it would not raise th[e] [Lloyd’s Act qualified immunity] defense.” Id. at 162-63. Lloyd’s has not offered to make any such stipulation in this case. Even if the FS/COL clauses, in tandem with the Lloyd’s Act, do not in fact operate to deprive American Names of important remedies, the federal securities laws among them, substantial evidence exists that Lloyd’s did its level best to make it so. Moreover, neither Lloyd’s nor Sturge disclosed important information, available to Lloyd’s insiders, about asbestos and pollution risks and the &147;loading&148; of outside syndicates, before Lloyd’s insisted that Leslie and other Names sign the 1986 General Undertaking. Lloyd’s and Sturge never informed Leslie of the probable or intended effect of the 1986 General Undertaking on his legal rights. Rather, Sturge represented to Leslie shortly before Lloyd’s issued the document that the 1982 Lloyd’s Act had a beneficial effect on Names’ rights and regulatory protections. In a letter discussing the 1986 documents Leslie had to sign, Sturge represented that documents contained &147;few variations of substance.&148; None of the notices Leslie received even mentioned the FS/COL clauses. The presumption that a forum-selection clause is reasonable may be overcome by a strong showing that “[Leslie’s] accession to the forum clause” was obtained &#$147;by fraud or overreaching.” Carnival Cruise Lines, 499 U.S. at ----, 111 S.Ct. at 1528; The Bremen, 407 U.S. at 12, 92 S.Ct. at 1914 (“fraud, undue influence, or overweening bargaining power”). The Court concludes that Leslie’s accession to the forum selection clause was the product of fraud on the part of Lloyd’s and Sturge. Although Leslie has dropped Sturge as a defendant, that is irrelevant in determining whether this clause is enforceable.

The Fifth Circuit recently stated:

Texas law defines fraud as misrepresentation of a material fact with intention to induce action or inaction, [and] reliance on the misrepresentation by a person who, as a result of such reliance, suffers injury. A defendant’s failure to disclose a material fact is fraudulent only if the defendant has a duty to disclose that fact. A duty to speak may arise by operation of law or by agreement of the parties. In the absence of an agreement, there must be some special relationship between the parties…. The nondisclosing party must have knowledge of the facts it withheld.

Trustees of the Northwest Laundry and Dry Cleaners Health & Welfare Trust Fund v. Burzynski, 27 F.3d 153, 157 (5th Cir.), reh’g denied, 38 F.3d 571 (5th Cir.1994), cert. denied, 513 U.S. 1155, 115 S.Ct. 1110, 130 L.Ed.2d 1075, 63 U.S.L.W. 3625 (1995). The evidence is sufficient to support a finding that, at the time Leslie signed the revised General Undertaking, Lloyd’s and Sturge both had a duty to disclose material facts to Leslie, either by agreement or a due to a special relationship. Lloyd’s and Sturge engaged in misrepresentations, misleading partial disclosures, and nondisclosures of material facts in conjunction with Lloyd’s announcement that Leslie was required to sign the 1986 General Undertaking. Moreover, Lloyd’s directed Sturge and other Members’ Agents to instruct Members, such as Leslie, that their failure to sign the 1986 General Undertaking would result in termination of their underwriting memberships. At Lloyd’s behest, Sturge so informed Leslie on two occasions. If any reasonable outside Name had known what insiders at Lloyd’s knew in the summer of 1986, that Name most certainly would have preferred to terminate or suspend his or her underwriting activity with Lloyd’s. Nevertheless, Leslie signed the General Undertaking, as Lloyd’s intended, in reliance upon representations and reassurances by Lloyd’s and its agent, Sturge. Leslie has suffered injury because the 1986 General Undertaking, if enforced, limits his substantive rights to sue for deceptive trade practices and securities fraud.  [*22] 

Leslie’s reliance on Lloyd’s representations was not reasonable.

Leslie was a graduate of the University of Texas Law School and a sophisticated businessman. A cursory reading of the 1986 General Undertaking would have revealed that it contained the FS/COL clauses. Leslie certainly was capable of investigating the provisions of the Lloyd’s Act. However, Texas law does not require proof that Leslie’s reliance on representations and nondisclosures by Lloyd’s and Sturge was reasonable. Martin v. MBank El Paso, N.A., 947 F.2d 1278, 1281 (5th Cir.1991); Koral Indus. v. Security-Connecticut Life Ins. Co., 802 S.W.2d 650, 651 (Tex.1990) (per curiam) (&147;Failure to use due diligence to suspect or discover someone’s fraud will not act to bar the defense of fraud to the contract.&148;). Therefore, Lloyd’s and Sturge obtained Leslie’s accession to the forum selection clause by fraud.

2. Overreaching Even if the forum selection clause was not obtained by fraud, it was the product of overreaching. The plaintiffs in Carnival Cruise Lines, 499 U.S. at ----, 111 S.Ct. at 1528 (emphasis added) “were given notice of the forum provision and, therefore, presumably retained the option of rejecting the contract with impunity.” Likewise, every other Lloyd’s Name who has sued in the United States signed a General Undertaking containing the FS/COL clauses “in an arm’s length negotiation,” The Bremen, 407 U.S. at 12, 92 S.Ct. at 1914, because they signed before becoming Names—not when they had already been Names for nearly a decade.

Lloyd’s was the named beneficiary of a clean, irrevocable letter of credit Leslie had posted with Texas Commerce Bank, with a face amount exceeding $100,000. Lloyd’s clearly instructed Leslie that the 1986 General Undertaking was a take-it-or-leave-it offer: He had the choice of signing it or terminating his underwriting membership. Leslie’s accession to the 1986 General Undertaking was certainly not an &147;arm’s length&148; transaction which Leslie had the option of rejecting with impunity.

3. Public policy

Other courts examining the public policy issue have reasoned that the waiver effect of the 1986 General Undertaking does not violate United States public policy because United States Names can sue in England for common-law fraud, relief under the Misrepresentation Act, or for breach of contractual duties. However, the 1986 General Undertaking violates public policy in this case because it effectively waives Leslie’s rights under the Texas Deceptive Trade Practices—Consumer Protection Act. Moreover, this Court would argue that Riley, Roby, Bonny, and Shell are wrongly reasoned. Because the General Undertaking operates as both a prospective waiver of the United States securities laws and a waiver of unknown securities fraud claims, it violates public policy.

The Roby and Bonny courts reasoned that English law provides remedies that are good enough to serve the goal of deterring fraud and misleading nondisclosures in securities transactions, even though United States securities fraud remedies are unavailable in England. However, the Rule 10b-5 remedy is significantly more powerful, and reaches a broader range of manipulative or deceptive devices “in connection with the purchase or sale of a security,” than common-law fraud—including, for example, &147;churning,&148; “scalping,” and trading on pre-publication knowledge of the contents of newspaper reports. See supra note 42. It is not at all apparent that common- law remedies alone are equivalent to Rule 10b-5 for the purpose of addressing the &147;loading&148; of insurance syndicates; nor is it evident that English law provides a fully adequate remedy. Congress has expressly legislated against waivers involving securities fraud remedies. 15 U.S.C. §§ 77n, 78cc. “In dealing with federal securities, the general rule is that unknown or subsequently maturing causes of action may not be waived.” Petro-Ventures, Inc. v. Takessian, 967 F.2d 1337, 1340-42 (5th Cir.1992) (emphasis added).  [*23] 

Notwithstanding the provisions of the securities laws expressly voiding any private agreement waiving compliance with provisions of the laws, settlements of claims arising from acts which are violations of the securities laws are not void as a matter of law, at least where such settlement agreements do not themselves continue the precise conduct which violates the laws. But judicial hostility toward waivers of statutory rights requires that the right to private suit extended by the securities laws for alleged violations be scrupulously preserved against unintentional or involuntary relinquishment…. Waiver by subsequent conduct that does not take the form of a settlement, is against the policy of the securities laws.

MBank Fort Worth, N.A. v. Trans Meridian, Inc., 820 F.2d 716, 725-26 (5th Cir.) (emphasis added) (quoting Murtagh v. University Computing Co., 490 F.2d 810 (5th Cir.1974), cert. denied, 419 U.S. 835 (1974)), reh’g denied, 826 F.2d 391 (5th Cir.1987). The public policy against waivers of securities law remedies is not satisfied merely by the availability of some remotely similar common law or statutory misrepresentation remedy; subject to limited exceptions, such as voluntary settlements, the 1933 and 1934 Acts require that all such waivers are void.

Even if public policy is satisfied by the availability of a common law “bad faith” or fraud remedy for securities violations, the 1986 General Undertaking violates public policy because it operates as a waiver of Leslie’s DTPA rights. “The DTPA does not represent a codification of the common law. A primary purpose of the DTPA is to provide consumers a cause of action for deceptive trade practices without the burden of proof and numerous defenses encountered in a common law fraud or breach of warranty suit.” Bank One, Texas, N.A., 970 F.2d at 28; Eagle Properties Ltd., 807 S.W.2d at 724; Alvarado, 749 S.W.2d at 48; Smith, 611 S.W.2d at 616 (emphasis added). A waiver of Leslie’s DTPA rights may not be enforced unless Lloyd’s pleads and proves (1) Leslie was not in a significantly disparate bargaining position, (2) Leslie was represented by legal counsel, (3) the transaction involved consideration in excess of $500,000, (4) the waver was made in an express provision, (5) in a written contract, and (6) signed by both Leslie and Leslie’s counsel. Tex.Bus. & Com.Code Ann. § 17.42 (Vernon 1987 & Supp.1995). Anything less is &147;contrary to public policy and is unenforceable and void.&148; Id. Therefore, the Court is not required to enforce the forum selection clause in Lloyd’s 1986 General Undertaking as it applies to Robert Leslie.

VII. COMITY

Lloyd’s argues that principles of international comity “require this Court to stay its hand to require Leslie to resolve this dispute in England.” Dkt. # 5, at 19-21. Reviewing the magistrate’s recommendation de novo, the Court is of the opinion that international comity neither requires it to refrain from exercising personal jurisdiction over Lloyd’s nor requires it to refrain from exercising subject-matter jurisdiction under the 1934 Securities Exchange Act and the DTPA. The magistrate’s recommendation should therefore be affirmed.  [*24] 

Concerning personal jurisdiction, Lloyd’s interest in having disputes concerning its transactions with American Names resolved in English courts is apparent—but the Court cannot fathom what interest English courts might have in adjudicating claims concerning an English defendant’s activities in the United States. Aside from a rather peculiar internal structure, Lloyd’s is no different from any other English business entity and should reasonably anticipate subjecting itself to personal jurisdiction in foreign courts when it does business abroad. Even if Lloyd’s U.S. transactions had been conducted by the English sovereign, there would still in all probability be a basis for personal jurisdiction under the principle of restrictive sovereign immunity. See Republic of Argentina, 504 U.S. at ----, 112 S.Ct. at 2167-69. Surely English business entities are not entitled to treatment more favorable than their own sovereign. Thus, comity provides no basis for this Court to decline to exercise personal jurisdiction.

Concerning subject matter jurisdiction, the Court finds instructive the recent discussion in Hartford Fire Ins. Co., 509 U.S. 764, 113 S.Ct. 2891:

Finally, we take up the question whether certain claims against the London reinsurers should have been dismissed as improper applications of the Sherman Act to foreign conduct…. At the outset, we note that the District Court undoubtedly had jurisdiction of these Sherman Act claims, as the London reinsurers apparently concede…. According to the London reinsurers, the District Court should have declined to exercise such [subject-matter] jurisdiction under the principle of international comity. The Court of Appeals agreed that courts should look to that principle…. This availed the London reinsurers nothing, however….

When it enacted the Foreign Trade Antitrust Improvements Act of 1982 … Congress expressed no view on the question whether a court with Sherman Act jurisdiction should ever decline to exercise such jurisdiction on grounds of international comity…. We need not decide that question here, however, for even assuming that in a proper case a court may decline to exercise Sherman Act jurisdiction over foreign conduct … international comity would not counsel against exercising jurisdiction here.

The only substantial question is whether “there is in fact a true conflict between domestic and foreign law.” … The London reinsurers contend that applying the Act to their conduct would conflict significantly with British law, and the British Government, appearing before us as amicus curiae concurs. They assert that … the conduct alleged here was perfectly consistent with British law and policy. But this is not to state a conflict. &147;[T]he fact that conduct is lawful in the state in which it took place will not, of itself, bar application of the United States antitrust laws,&148; even where the foreign state has a strong policy to permit or encourage such conduct…. Since the London reinsurers do not argue the British law requires them to act in some fashion prohibited by the law of the United States … or claim that their compliance with the laws of both countries is otherwise impossible, we see no conflict with British law.  [*25] 

Id., 509 U.S. at ----, 113 S.Ct. at 2909-11 (emphasis added).

[FN59] English law, by permitting Lloyd’s to self-regulate, may or may not permit Lloyd’s to engage in manipulative or deceptive practices and nondisclosures in its dealings with Names. However, the Court is unaware of any provision of English law which requires Lloyd’s and its Members’ Agents to do so. Nor does it appear that permission for Lloyd’s to engage in deceptive business practices and securities fraud, if Lloyd’s in fact has such permission, furthers any legitimate interest or policy of the English government. Indeed, the analysis in Bonny, 3 F.3d at 159-62, and Roby, 996 F.2d at 1363-1366, indicates that English law treats fraudulent and deceptive business practices with disfavor. Thus, enforcement by United States courts of the United States securities and consumer protection laws against English defendants doing business with United States citizens in the United States, far from generating an irreconcilable conflict with the requirements and prohibitions of English law, tends to promote the underlying policies reflected in English law, as well as United States policies and interests. Lloyd’s compliance with both English and American law, in its transactions with United States Names, is by no means &147;impossible,&148; see Hartford, at ----, 113 S.Ct. at 2911, and certainly does not create a &147;true conflict,&148; id. at -- --, 113 S.Ct. at 2910, such that international comity would require this court to decline to exercise subject matter jurisdiction under the 1934 Act and the DTPA.

VIII. FORUM NON CONVENIENS

Finally, Lloyd’s contends that Houston is an inconvenient forum for this litigation, compared with London. After considering the relevant factors, the magistrate concluded that Leslie’s action should not be dismissed on forum non conveniens grounds.

[A] plaintiff’s choice of forum should rarely be disturbed. However, when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would &147;establish … oppressiveness and vexation to a defendant … out of all proportion to the plaintiff’s convenience,&148; or when the &147;chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems,” the court may, in the exercise of its sound discretion, dismiss the case.

Piper Aircraft Co. v. Reyno, 454 U.S. 235, 242, 102 S.Ct. 252, 258, 70 L.Ed.2d 419 (1981) (quoting from Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524, 67 S.Ct. 828, 843, 91 L.Ed.2d 1067 (1947)); cf. id. at 249, 102 S.Ct. at 262 (“Similarly in Koster, the Court rejected the contention that where a trial would involve inquiry into the internal affairs of a foreign corporation, dismissal was always appropriate.&148;); see also Tex.Civ.Prac. & Rem.Code Ann. § 71.051(b) (Vernon Supp.1995). In this case, unlike Piper Aircraft Co., the plaintiff is a United States citizen, who resides in the state and district of the court in which he filed suit.

Piper Aircraft Co., 454 U.S. at 255-56, 102 S.Ct. at 266; see also Tex.Civ.Prac. & Rem.Code Ann. § 71.051(f)(1), (2) (Vernon Supp.1995). [FN60] Therefore, the Court is precluded from weakening the presumption in Leslie’s favor.  [*26] 

The forum non conveniens determination is committed to the sound discretion of the trial court. It may be reversed only when there has been a clear abuse of discretion; where the court has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable, its decision deserves substantial deference. Piper Aircraft Co., 454 U.S. at 257, 102 S.Ct. at 266. The standard of review that applies when a trial court reviews the determinations of a magistrate is unclear; out of an abundance of caution, however, the Court shall review the magistrate’s ruling de novo. Dkt. # 43, at 15-17. The magistrate considered: (1) the applicable law, (2) sources of proof, (3) access to witnesses, (4) relative ease to the parties of conducting litigation in a foreign country, (5) potential conflict of laws problems, (6) likelihood that the defendant’s misconduct in the United States will be repeated, and (7) access to a forum providing full and complete redress of wrongs.

The Court is of the opinion that the magistrate’s reasoning was largely correct, and adopts as its own all but one of her findings. It is not true that a United States court trying this case can avoid difficult issues concerning choice-of-law and the substantive standards of English law. However, an English court would necessarily face difficult problems involving comity, choice-of-law, and the potential application of complex and unfamiliar United States statutes—problems it could only avoid by ignoring altogether both United States law and the legal rights of a United States citizen to the extent his rights depend upon the securities and consumer protection statutes. Moreover, a court sitting in the United States should not be overwhelmed by the possibility of referring to English common law, or even to the English statutes likely to apply in the present dispute. The relevant factor is “the avoidance of unnecessary problems in the conflict of laws,” see Piper Aircraft Co., 454 U.S. at 241 n. 6, 102 S.Ct. at 258 n. 6, and the Court is of the opinion that such problems, if any, necessarily arise in this case, and cannot in fairness be avoided simply by dismissing this action in favor of an English forum. This Court is willing, and duty bound, to address and resolve such issues as they arise. Considering the totality of circumstances, this ground is not sufficient to warrant denying Leslie access to his chosen forum.

A more difficult administrative problem the magistrate did not address is Leslie’s ability to collect a judgment in the event he prevails with his claim in a United States court. England and the United States are not parties to any treaty providing for the reciprocal enforcement of judgments. However, it would appear that Lloyd’s does a considerable volume of business in the United States, see supra note 52, and that Lloyd’s maintains accounts in the United States. Continued unimpeded access to the income stream from United States premiums would appear to be an asset of significant value to Lloyd’s. Because the judgments of the United States District Courts are entitled to full faith and credit throughout the United States, U.S. Const., art. 4, § 1; 28 U.S.C. § 1738; In re Humphreys, 880 S.W.2d 402, 405 (Tex.), cert. denied, 513 U.S. 964, 115 S.Ct. 427, 130 L.Ed.2d 340 (1994); see also Migra v. Warden City Sch. Dist. Bd. of Ed., 465 U.S. 75, 80-82, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984); Daniels v. Equitable Life Assurance Soc’y of the U.S., 35 F.3d 210, 213 (5th Cir.1994) (discussing 28 U.S.C. § 1738 in context of issue preclusive effect of state court judgments in federal court), the Court anticipates Leslie could collect any judgment in his favor without intervention from English courts.  [*27] 

One final factor the Court must consider is the length of time this action has been pending in Houston, Texas. The Court has already conducted extensive evidentiary hearings and developed considerable familiarity with both the legal issues and the facts in this case. While dismissal would probably serve the administrative convenience of an individual judge, it would promote neither justice nor the collective administrative efficiency of English and American judicial systems. Nor would it advance the combined interest of the litigants in prompt and fair resolution of their dispute. Forcing the parties to start again in England, and transferring the burden of this litigation to the docket of some judge in England, would seem counterproductive from the standpoint of the public and private factors listed in Piper.

After weighing the public and private factors listed above, and all remaining factors listed in Piper Aircraft Co., 454 U.S. at 241 n. 6, 102 S.Ct. at 258 n. 6, the Court in its discretion declines to dismiss this litigation on forum non conveniens grounds.

IX. INTERLOCUTORY APPEAL

In the event this Court affirms the magistrate’s recommendations on rehearing, Lloyd’s has requested interlocutory review by the Fifth Circuit. 28 U.S.C. § 1292(b). This order involves several controlling questions of law. Because the Second, Seventh, and Tenth Circuits have either approached or resolved one or more of these issues differently, it would appear there exists a substantial ground for difference of opinion. The Court is of the opinion that an immediate appeal will materially advance the ultimate termination of this litigation—if it remains in the United States, by narrowing and clarifying crucial legal issues, some of which are issues of first impression. The Court therefore deems it appropriate to certify this order for appeal under the authority of 28 U.S.C. § 1292(b). Lloyd’s motion for new trial and its motion for findings of fact and conclusions of law are not appropriate at this juncture and should be DENIED.

X. CONCLUSION

For the reasons stated above, Lloyd’s motion to reconsider (Dkt. # 50, et seq.) is GRANTED; the memorandum and recommendation of the magistrate (Dkt. # 43), upon reconsideration, is hereby AFFIRMED; Lloyd’s motion and supplemental motions to dismiss (Dkt. nos. 54, 65, et seq.) are hereby DENIED; Lloyd’s motion for interlocutory appeal (Dkt. # 50) is GRANTED; and any other motions by Lloyd’s, including Lloyd’s motion for new trial and Lloyd’s motion for findings of fact and conclusions of law (Dkt. # 50), are DENIED. It is so ORDERED.

FN1. This list of documents does not include any Lloyd’s or Sturge documents filed in response to opposition documents that Plaintiff Robert Leslie filed. Cf. Syndicate 420 at Lloyd’s of London v. Early Am. Ins. Co., 796 F.2d 821, 826 (5th Cir.1986) (“Much as Eurystheus imposed the twelve labors upon Hercules, so the E & O Underwriters imposed upon the Court below the Herculean task of resolving a number of exceedingly complex issues in their motions to dismiss.”).

FN2. The stipulation to dismiss claims against Sturge arising from two Outhwaite syndicates was filed pursuant to the settlement agreement in Stockwell v. R.H.W. Outhwaite (Underwriting Agencies) Limited, Nos. 89-2729, 91-1501 (Q.B.Comm’l Ct. filed Dec. 18, 1989) (Eng.). Leslie subsequently dismissed all claims against Sturge, apparently for reasons of litigation strategy.

FN3. Some of the Lloyd’s documents adopt Sturge’s arguments by reference. Therefore, the Court will address, as necessary, any arguments adopted by reference.

FN4. See, e.g., In re Joint E. & S. Dist. Asbestos Litig., 982 F.2d 721 (2nd Cir.1992), modified on reh’g sub nom. In re Findley, 993 F.2d 7 (2nd Cir.1993) (Johns-Manville bankruptcy); Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034 (D.C.Cir.1981) (developing &147;tripple trigger&148; analysis of insurance coverage for continuing occurrences), cert. denied, 455 U.S. 1007, 102 S.Ct. 1644, 71 L.Ed.2d 875 (1982); 42 U.S.C. § 9607 (establishing widespread joint & several liability, with right of contribution, for &147;Superfund&148; response costs).

FN5. In contrast with a “claims-made” policy, an “occurrence” policy provides &147;long-tail&148; coverage. A claims-made policy covers only claims made during the policy period for occurrences within a coverage period extending back to a recited retroactive date. See American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 843 & nn. 3-4 (Tex.1994) (hereafter, &147;APIE &148;). While an “occurrence” policyholder need only buy one insurance policy to be covered for occurrences within a particular year, a &147;claims-made&148; policyholder ordinarily must purchase subsequent policies from year to year, or a separate “long-tail” policy, in order to obtain extended coverage. Hartford Fire Ins. Co. v. California, 509 U.S. ----, ----, 113 S.Ct. 2891, 2896, 125 L.Ed.2d 612, 61 U.S.L.W. 4885 (1993).

FN6. The United States Supreme Court in Hartford Fire Ins. Co. v. California, 509 U.S. ----, ----, 113 S.Ct. 2891, 2911-17, 125 L.Ed.2d 612, 61 U.S.L.W. 4885 (1993) (Insurance Antitrust Litigation), held that allegations by the attorneys general of nineteen states “that the defendants … conspired in violation of § 1 of the Sherman Act to restrict the terms of coverage of commercial general liability (CGL) insurance available in the United States” from occurrence to claims-made policies, and to impose other changes in available policy terms, see id., 509 U.S. at ----, 113 S.Ct. at 2895-96, 2897-99 (“As a consequence [of encouragement from American insurance companies], many London-based underwriters, syndicates, brokers, and reinsurance companies informed [the Insurance Services Office, Inc.] of their intention to withhold reinsurance … until ISO incorporated all four desired changes … into the ISO CGL forms.”), stated a claim that fell within the § 3(b) “boycott or coercion” exception to the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1013, which otherwise exempts &147;the business of insurance&148; from the antitrust laws. However, the Court’s holding was limited to the extent that the only allegations supporting the &147;boycott&148; claim were allegations that &147;primary insurers who wrote on disfavored forms would be refused all reinsurance, even as to risks written on other forms,&148; or of similar threats by reinsurers. Id. 509 U.S. at ----, 113 S.Ct. at 2916-17 (emphasis in original); cf. St. Paul Fire & Marine Ins. Co. v. Berry, 438 U.S. 531, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978) (agreement by insurers to force change from &147;occurrence&148; to &147;claims-made&148; policies constituted a &147;boycott&148;). The Supreme Court also rejected the London reinsurers’ argument that the District Court should have &147;declined to exercise … jurisdiction over them under the principle of international comity.&148; Hartford Fire Ins. Co., 509 U.S. at ----, 113 S.Ct. at 2908- 11. The Insurance Antitrust Litigation has subsequently settled.

FN7. See Chemstar, Inc. v. Liberty Mut. Ins. Co., 41 F.3d 429, 433-35 (9th Cir.1994) (California law), petition for cert. filed, 63 U.S.L.W. 3598 (U.S. Feb. 2, 1994) (No. 94-1337); Society of the Roman Catholic Church of the Diocese of Lafayette and Lake Charles v. Interstate Fire & Casualty Co., 26 F.3d 1359, 1363-67 (5th Cir.) (Louisiana law), reh’g, en banc, denied, 29 F.3d 626 (5th Cir.1994); Air Prods. & Chems., Inc. v. Hartford Accident & Indem. Co., 25 F.3d 177, 180-82 (3d Cir.1994); Maryland Casualty Co. v. W.R. Grace & Co., 23 F.3d 617, 624-28 (2d Cir.) (New York law), cert. denied, 513 U.S. 1052, 115 S.Ct. 655, 130 L.Ed.2d 559, 63 U.S.L.W. 3438 (1994); Eljer Mfg., Inc. v. Liberty Mut. Ins. Co., 972 F.2d 805, 812 (7th Cir.1992), cert. denied, 507 U.S. 1005, 113 S.Ct. 1646, 123 L.Ed.2d 267, 61 U.S.L.W. 3667 (1993); Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034 (D.C.Cir.1981), cert. denied, 455 U.S. 1007, 102 S.Ct. 1644, 71 L.Ed.2d 875 (1982); Commonwealth Lloyd’s Ins. Co. v. Cullen/Frost Bank of Dallas, 889 S.W.2d 266 (Tex.1994) (per curiam); APIE, 876 S.W.2d at 853 n. 20 (collecting cases); Northern States Power Co. v. Fidelity & Casualty Co. of N.Y., 523 N.W.2d 657, 661-64 (Minn.1994); Sentinel Ins. Co. v. First Ins. Co. of Haw., 76 Haw. 277, 875 P.2d 894, modified, 76 Haw. 453, 879 P.2d 558 (1994); J.H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 506-07 (Pa.1993); Continental Casualty Co. v. Rapid-American Corp., 80 N.Y.2d 640, 650-52, 609 N.E.2d 506, 510-12, 593 N.Y.S.2d 966 (N.Y.1993); United States Gypsum Co. v. Admiral Ins. Co., 643 N.E.2d 1226, 1252-1257 (Ill.App.Ct.1994); St. Paul Fire & Marine Ins. Co. v. McCormack & Baxter Creosoting Co., 126 Or.App. 689, 870 P.2d 260 (Or.Ct.App.), modified, 128 Or.App. 234, 875 P.2d 537 (Or.Ct.App.1994); Armstrong World Indus. v. Aetna Casualty & Sur. Co., 30 Cal.App.4th 1117, 1167-1204, 26 Cal.Rptr.2d 35, 49-74, 62 U.S.L.W. 2372 (Cal.Ct.App.1993), review granted, 866 P.2d 1311, 27 Cal.Rptr.2d 488 (Cal.1994); Montrose Chem. Corp. of Cal. v. Admiral Ins. Co., 30 Cal.App.4th 1474, 1513-22, 5 Cal.Rptr.2d 358 (Cal.Ct.App.1992), review granted, 862 P.2d 661, 24 Cal.Rptr.2d 661 (Cal.1992).

FN8. Compare Keene Corp., 667 F.2d at 1049-50, and APIE, 876 S.W.2d at 852-55 (majority rule), with Cole v. Celotex Corp., 599 So.2d 1058 (La.1992) (minority rule).

FN9. See Morton Int’l, Inc. v. General Accident Ins. Co. of Am., 134 N.J. 1, 28-80, 629 A.2d 831, 847-76 (1992), cert. denied, 512 U.S. 1245, 114 S.Ct. 2764, 129 L.Ed.2d 878, 62 U.S.L.W. 3861 (1994) (&147;If applied as written, although interpretative questions undoubtedly would require resolution, the [‘sudden and accidental’] clause sharply and dramatically would restrict the coverage that previously had been provided under CGL policies for property damage caused by accidental pollution…. We are fully satisfied that if given literal effect, the standard clause’s widespread inclusion in CGL policies would limit coverage for pollution damage to so great an extent that the industry’s representation of the standard clause’s effect, in its presentation to New Jersey and other state insurance regulatory agencies, would have been grossly misleading. Proffered to regulators merely as a clarification of existing coverage … the industry’s understatement of the clause’s actual effect on coverage for pollution damage is both apparent and unjustifiable…. Had full disclosure been made, we would not hesitate to enforce the pollution- exclusion clause as written, resolving nuances inherent in the meaning of &147;sudden&148; on a case-by-case basis. Not only did the insurance industry fail to disclose the intended effect of this significant exclusionary clause, it knowingly misstated its intended effect in the industry’s submission of the clause to state Departments of Insurance. Having profited form that nondisclosure by maintaining pre-existing rates for substantially-reduced coverage, the industry should be required to bear the burden of its omission….&148;); see also Union Pac. Resources Co. v. Aetna Casualty & Sur. Co., 894 S.W.2d 401 (Tex.App.—Fort Worth 1994), application for writ of error filed, 38 Tex.Sup.Ct.J. 637 (May 17, 1995) (95-0473).

FN10. See Hartford Fire Ins. Co. v. California, 509 U.S. at ----, 113 S.Ct. at 2896, 2899; National Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 38 Tex.Sup.Ct.J. 332, 1995 WL 92215, 1995 Tex. LEXIS 17 (Tex. Mar. 2, 1995) (D-4353) (unanimous opinion), motion for rehearing filed April 3, 1995.

FN11. In a 1992 report prepared with assistance from McKinsey & Co., Lloyd’s reports, &147;Lloyd’s underwriters underwrite just over half [53%] of all London market business, but more importantly lead more than two thirds [66%] of this business.&148; LLOYD’s OF LONDON, LLOYD’s: A ROUTE FORWARD 46 & Ex. 23 (1992). Based on net reinsurance premiums, Lloyd’s reports it was the third-largest reinsurer in the world in 1990; the second-largest if inter-syndicate reinsurance is included. Id. at 48 Ex. 25. In 1989, 31,329 individuals worldwide were Names, or members of the Society of Lloyd’s, engaged in active underwriting, up from 6,020 in 1971. See id. at 26 Ex. 6.; LLOYD’s OF LONDON, 1993 ANNUAL REPORT AND ACCOUNTS 47. In 1993, Lloyd’s reported 32,015 total active and inactive Names, down from 34,218 in 1989; the number of active names in 1993 was 19,537, down from 32,433 in 1988. LLOYD’s OF LONDON, A GUIDE TO CORPORATE MEMBERSHIP App. 1, at 47 (1993).

FN12. See ROBERT H. JERRY, II, UNDERSTANDING INSURANCE LAW 683-84 (Matthew Bender ed. 1987) (explaining the terms &147;primary insurer,&148; &147;ceding insurer,&148; &147;reinsurance,&148; &147;retrocession,&148; and &147;retrocessionaire&148;).

FN13. Notably, what the Supreme Court called &147;domestic [American] retrocessional reinsurers&148; were not among the defendants from whom the attorneys general sought relief in Hartford Fire Ins. Co., 509 U.S. at ----, 113 S.Ct. at 2899 & n. 5.

FN14. See Steve Boggan, Foreigners fared worst in Lloyd’s losses, THE INDEPENDENT, Apr. 27, 1992, at A2; Julian Barnes, The Deficit Millionaires, THE NEW YORKER, Sept. 20, 1993 at 74, 84 (noting statistical correlation between geographic distance from 1 Lime Street and losses in Lloyd’s syndicates).

FN15. A complaint is subject to dismissal if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Lujan v. Defenders of Wildlife, 504 U.S. 555, ----, 112 S.Ct. 2130, 2137, 119 L.Ed.2d 351 (1992); Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984). The Court must accept all well-pleaded allegations as true, Hartford Fire Ins. Co. v. California, 509 U.S. 764, 113 S.Ct. 2891, 2895, 125 L.Ed.2d 612 (1993); Albright v. Oliver, 510 U.S. 266, 114 S.Ct. 807, 810, 127 L.Ed.2d 114 (1992), and view them in the light most favorable to the plaintiff. Shultea v. Wood, 27 F.3d 1112, 1115 (5th Cir.1994), modified on reh’g en banc, 47 F.3d 1427 (5th Cir.1995) (en banc).

FN16. The parties have subsequently submitted affidavits and live proof in the course of this proceeding. Rule 12(b) does provide, “[i]f, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim … matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as a motion for summary judgment….” Fed.R.Civ.P. 12(b). However, the Court currently has before it a motion to reconsider an order adopting a magistrate’s recommendation to deny the Defendants’ 12(b)(6) motions. It would be extraordinarily awkward, to say the least, at this juncture to convert the motion to reconsider into a motion for summary judgment. Moreover, the Court is of the opinion that the Plaintiff would be entitled to further discovery before the Court could appropriately rule on a motion for summary judgment. Fed.R.Civ.P. 56(f). Therefore, the Court shall confine its 12(b)(6) analysis to the Plaintiff’s allegations in the various pleadings filed in this consolidated action, without deciding whether the Plaintiff has introduced legally sufficient evidence to support the allegations.

FN17. See generally Edinburgh Assurance Co. v. R.L. Burns Corp. 479 F.Supp. 138, 144-46 (C.D.Cal.1979) (describing the customary practices of the Lloyd’s insurance market).

The Court considers unpersuasive any characterization of Lloyd’s as roughly similar to the New York Stock Exchange (&147;NYSE&148;), because this analogy ignores dramatic differences between the two institutions. See contra Bonny v. Society of Lloyd’s, 3 F.3d 156, 158 n. 2 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d 378, 62 U.S.L.W. 3544 (1994); Roby v. Corporation of Lloyd’s, 996 F.2d 1353, 1357 (2d Cir.1993), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333, 62 U.S.L.W. 317 (1993). First, Lloyd’s has greater similarity to a private club than it does to a public stock exchange. Virtually anyone in the world may buy and sell securities listed on the NYSE, except, for example, certain nationals of foreign states subject to sanctions under the International Emergency Economic Powers Act or the Trading With The Enemy Act. In contrast, the opportunity to participate in Lloyd’s underwriting syndicates is strictly limited to approximately 30,000 individuals who have applied for and qualified as “Names.” More importantly, business conducted on the NYSE, whether by United States citizens or by foreign nationals, is subject to comprehensive regulation by an independent government agency with extensive enforcement authority. In contrast, the government of England has elected not to regulate the Lloyd’s insurance market. See Lloyd’s Act, 1982 (Eng.). Except to the extent Lloyd’s or its syndicates issue or sell securities, insurance, and services abroad, the Lloyd’s insurance market, at least in theory, is largely self-regulating.

FN18. Applying Texas law to a &147;Lloyd’s plan&148; organization, which &147;is not a corporation but is controlled by its own underwriters and maintains its own directors, officers, bylaws, books and records, and assets and liabilities,&148; the Crum & Forster court held for purposes of &147;disregarding the corporate fiction,&148; that &147;such organizations have a legal status that it much more in the nature of corporate entities and should be regarded as insurance corporations.” Crum & Forster, Inc., 887 S.W.2d at 149.

FN19. This statement is only true for the time period in which Leslie participated in underwriting at Lloyd’s. Lloyd’s 1993 Annual Report states, “The business plan, published in April 1993, set out a programme of profound change for all sectors of the Society. In essence, the plan promoted three significant structural changes: strong central direction of the market; a widening of the capital base to include corporate membership; and reinsuring the 1985 and prior liabilities of members into a new vehicle, NewCo.” LLOYD’s OF LONDON, 1993 ANNUAL REPORT AND ACCOUNTS 7-8 (emphasis added) (NewCo is now called Equitas). In the last year, Lloyd’s has started admitting corporate (i.e. limited liability) members.

FN20. However, Lloyd’s has created a limited-liability corporate entity within Lloyd’s, Equitas, to reinsure pre-1986 pollution and asbestos policies. While the entity was under consideration, it was called NewCo. In the Lloyd’s 1993 Annual Report, Chairman Peter Rowland states: We set ourselves to creating, by the end of 1995, the largest reinsurance/run-off company the world has ever seen…. I am very confident that NewCo will succeed in offering Names an exit route from Lloyd’s in respect of their pre-1986 liabilities.

LLOYD’s OF LONDON, 1993 ANNUAL REPORT AND ACCOUNTS at 8-9.

FN21. At the time Leslie applied, Lloyd’s did not even publish a list of underwriting agents: Whilst a list of Underwriting Agents is not published, the Membership Department at Lloyd’s can confirm to potential candidates whether a specific person, firm or company is on the list of agents. Glossary of Terms, in NOTES FOR APPLICANTS FOR UNDERWRITING MEMBERSHIP ISSUED BY THE COMMITTEE OF LLOYD’s.

FN22. As mentioned above, Names are generally introduced to Lloyd’s through Members’ Agents.

FN23. Insiders at Lloyd’s had been cognizant of asbestos risks at least as early as 1969, see Dkt. # 122, at 11, yet did not disclose the Cromer Report to outside Names until October 1986, after Leslie had executed the General Undertaking containing the contested forum selection clause. Incidentally, about this time, entities participating in the American insurance industry were actively misrepresenting the intended effect of “sudden and accidental” pollution-exclusion clauses to insurance regulators. Morton Int’l, Inc., 134 N.J. at 32-43, 629 A.2d at 849-55.

FN24. The Court has not discovered in the Lloyd’s Act any requirement that claims by or against Names related to their membership in the Society of Lloyd’s must be brought in English courts, solely under English law.

FN25. Letter from Peter Rawlins, Managing Director, R.W. Sturge & Co., to Charles Leslie 1 (Mar. 10, 1986).

FN26. Letter from K.J. Leonard, R.W. Sturge & Co., to Charles Leslie 2 (June 23, 1986); see also Letter from Peter Rawlins, Managing Director, R.W. Sturge & Co., to Charles Leslie 4 (Mar. 10, 1986) “[T]he Council [of Lloyd’s] approved modifications in the terms of [the revised Premiums Trust Deed and General Undertaking] and all Names are now required to accede to them in their revised form as a condition of their continuing underwriting membership….”

FN27. Cf. Letter from Peter Rawlins, Managing Director, R.W. Sturge & Co., to Charles Leslie 3 (Mar. 10, 1986) (“The Council of Lloyd’s has advised agents … that all names will be required to come into line with the current requirements for means and deposits….”).

FN28. See Dkt. # 89, at 16. Leslie’s pleadings also indicate that most of his syndicates and account years continued to pay profits up to the time he signed the General Undertaking. In other papers Leslie has filed with the Court, Leslie claims that appropriate underwriting and accounting practices would have required these syndicates to accumulate significantly greater reserves to cover future losses, rather than paying temporary “profits” which would be called back later as losses on open or reopened accounting years. See Dkt. # 117, at 20, 35.

FN29. See Dkt. # 81, at 23; Dkt. # 89, at 15, 27.

FN30. The four apparent options available to a Name in the position Leslie alleges he was in were: (1) paying the losses and, in the event of insolvency, declaring bankruptcy, (2) if possible, buying reinsurance from “insiders” or existing Lloyd’s syndicates, for a premium equal to or greater than the discounted present value of expected future losses, (3) recruiting new “outsiders” with sufficient capacity to reinsure his risks, and reinsuring to them, or (4) if possible, reinsuring to NewCo/Equitas (i.e. paying a similar premium as would be paid to “insiders,” or treating policyholders as “outsiders,” as the case may be).

FN31. The Court has not at this time granted Leslie’s motion for leave to file his second amended complaint.

FN32. It shall unlawful for any person, directly or indirectly …

(1) to employ any device, scheme, or artifice to defraud, or

(2) to make any untrue statement of material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances … not misleading, or (3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.

17 C.F.R. part 240.10b-5 (emphasis added). Section 10(b) applies not only to “any security registered on a national securities exchange,” but also to “any security not so registered.” 15 U.S.C. § 78j(b). The scope of Rule 10b-5 does not exceed the scope of Rule 10(b), and a violation must involve some form of manipulative or deceptive device or contrivance. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 473-74, 97 S.Ct. 1292, 1301, 51 L.Ed.2d 480 (1977).

FN33. See generally Alfadda v. Fenn, 935 F.2d 475, 479-80 (2d Cir.1991), cert. denied, 502 U.S. 1005, 112 S.Ct. 638 (1991); United States v. Noriega, 746 F.Supp. 1506, 1516-19 (S.D.Fla.1990) (“Section 1962(c) makes it unlawful for ‘any person associated with any enterprise engaged in, or the activities of which affect, interstate, or foreign commerce, to conduct or participate … in the conduct of such enterprise’s affairs through a pattern of racketeering activity …” 18 U.S.C. § 1962(c) (emphasis added)…. These prohibitions are on their face all-inclusive…. Indeed, if any statute reaches far and wide, it is RICO.”); Kristen Neller, Note, Extraterritorial Application of RICO: Protecting U.S. Markets in a Global Economy, 14 MICH.J.INT’L L. 357, 377-82 (1993); Jonathan Turley, “When in Rome:” Multinational Misconduct and the Presumption Against Extraterritoriality, 84 Nw.U.L.Rev. 598, 601 (1990).

FN34. The magistrate’s recommendation concerning Sturge’s motion for referral to arbitration was subject to de novo review by this Court and would have been reviewed under the same standard by the court of appeals. In re Hornbeck Offshore Corp., 981 F.2d 752, 754 (5th Cir.1993); Neal v. Hardee’s Food Sys., Inc., 918 F.2d 34, 37 (5th Cir.1990). Of course, the Court is not required to reconsider the magistrate’s recommendation not to refer this matter to arbitration because Sturge is no longer a party to this lawsuit.

FN35. The Court is therefore cognizant of the following decisions: Hirsch v. Oakely Vaughn Underwriting, Ltd., C.A. No. H-87-3727 (S.D.Tex. Dec. 14, 1988) (decided on forum non conveniens grounds; does not address any forum- selection or choice-of law issue), aff’d, 904 F.2d 704 (5th Cir. May 31, 1990) (No. 89-2563), cert. denied, 498 U.S. 981, 111 S.Ct. 511, 112 L.Ed.2d 523 (1990); Riley v. Kingsley Underwriting Agencies, Ltd., No. 91-C-1411 (D.Colo. Aug. 30, 1991), aff’d, 969 F.2d 953 (10th Cir.1992), cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992); Bonny v. The Society of Lloyd’s, 784 F.Supp. 1350 (N.D.Ill. May 29, 1992), aff’d, 3 F.3d 156 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d 378, 62 U.S.L.W. 3544 (1994); Roby v. Corporation of Lloyd’s, No. 91-Civ-7081 (MEL) (S.D.N.Y. Aug. 18, 1992), aff’d, 996 F.2d 1353, 1362 (2d Cir.1993), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333, 62 U.S.L.W. 317 (1993); Shell v. R.W. Sturge, Ltd., 850 F.Supp. 620 (S.D.Ohio 1993), aff’d, 55 F.3d 1227 (6th Cir.1995); Richards v. Lloyd’s of London, C.A. No. 94-1211-IEG (POR), 1995 WL 465687, 1995 U.S.Dist. LEXIS 6888 (S.D.Cal. Apr. 28, 1995); McDade v. NationsBank of Texas, N.A., C.A. No. H-94-3714 (S.D.Tex. June 26, 1995). Lloyd’s also cites Ash v. Corporation of Lloyd’s, Nos. C12100 & C9113 (Ont.Ct.App. July 28, 1992) (Can.). The Court is also aware of reports that some Names have litigated these issues successfully in other jurisdictions, such as Australia and Canada. See Steve Boggan, Foreigners fared worst in Lloyd’s losses, THE INDEPENDENT, Apr. 27, 1992, at A2.

FN36. See, e.g., Sorokolit v. Rhodes, 889 S.W.2d 239, 241-42 (Tex.1994) (recognizing claims against a physician for breast augmentation surgery, based upon knowing misrepresentation and breach of an express warranty, while leaving open the issue of an “implied warranty to perform [medical] services in a good and workmanlike manner.”); Archibald v. Act III Arabians, 755 S.W.2d 84, 86 (Tex.1988) (converting negligence claim into a treble-damages-and-attorneys’-fees DTPA claim by recognizing an “implied warranty of good and workmanlike performance that applies to horse training services”); Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 131-37 (Tex.1987) (insurance law); Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 354 (Tex.1987) (holding “that an implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner is available to consumers suing under the DTPA”); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706-08 (Tex.1983) (lender liability for wrongful foreclosure); Gupta v. Ritter Homes, Inc., 646 S.W.2d 168, 169 (Tex.1983) (liability for builders); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539-41 (Tex.1981); Segura v. Abbott Labs., Inc., 873 S.W.2d 399 (Tex.App.—Austin 1994) (recognizing a DTPA cause of action by indirect purchasers for cartel behavior, which federal antitrust laws will not permit after Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977)), writ granted, 38 Tex.Sup.Ct.J. 49-50 (Nov. 3, 1994) (94-0514); Rickey v. Houston Health Club, Inc., 863 S.W.2d 148 (Tex.App.— Texarkana, 1993) (recognizing a warranty or misrepresentation cause of action under the DTPA for a slip-and- fall injury in a health club), writ denied, 888 S.W.2d 812 (Tex.1994); Berry Property Management Co. v. Bliskey, 850 S.W.2d 644 (Tex.App.—Corpus Christi 1993, writ dism’d) (DTPA claim against apartment manager by rape victim); Prudential Ins. Co. of Am. v. Jefferson Assoc., 839 S.W.2d 866 (Tex.App.— Austin 1992), rev’d, 38 Tex.Sup.Ct.J. 366 (Mar. 16, 1995) (D-3906).

FN37. The principles applicable to construing the DTPA place primary emphasis on the intent of the legislature, “keeping in view ‘the old law, the evil, and the remedy.’” Pennington v. Singleton, 606 S.W.2d 682, 686 (Tex.1980) (citing Woods v. Littleton, 554 S.W.2d 662 (Tex.1977)).

FN38. The test for an “investment contract” is whether the scheme involves an investment of money in a common enterprise with profits to come primarily from the efforts of others. Securities & Exch. Comm’n v. W.J. Howey Co., 328 U.S. 293, 301, 66 S.Ct. 1100, 1104, 90 L.Ed.2d 1244 (1946); Securities & Exch. Comm’n v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir.1974). “Th[e] [Howey/Forman ] test is to be applied in light of ‘the substance—the economic realities of the transaction—rather than the names that may have been employed by the parties.’ ” International Bhd. of Teamsters v. Daniel, 439 U.S. 551, 558, 99 S.Ct. 790, 796, 58 L.Ed.2d 808 (1979). The Howey economic reality test was designed to determine whether a particular investment is an “investment contract,” not whether it fits within any of the examples listed in the statutory definition of “security.” Landreth Timber Co. v. Landreth, 471 U.S. 681, 691, 105 S.Ct. 2297, 2304, 85 L.Ed.2d 692 (1985) (emphasis in original).

FN39. As a Name increases the number of syndicates he or she underwrites or increases his or her share of the underwriting business of a particular syndicate, Lloyd’s requires the Name to increase the face value of the clean, irrevocable letter of credit.

FN40. Passive Names “are not permitted an active role in the day-to-day business of insuring risks or handling claims.” See Dkt. # 5, at 10-11 (emphasis added).

FN41. But see Respondent’s Brief in Opposition at 1-2, Riley v. Kingsley Underwriting Agencies, Ltd., 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (Dec. 7, 1992) (No. 92-664) (confusing the Reg D registration exemption with an exemption from the anti-fraud provisions of the 1933 and 1934 Acts):

Petitioner errs in suggesting that the decision below deprives him of a right available to him under the U.S. securities laws. When the [SEC] in 1987 and 1988 reviewed the whole issue of offering membership in Lloyd’s to United States persons, it concluded that if the Members’ Agents solicited participation in Lloyd’s in compliance with … the Commission’s Regulation D, registration under the Securities Act was not required.

Id. (emphasis in original). While this action has been pending, the Supreme Court handed down Gustafson, 513 U.S. 561, 115 S.Ct. 1061, which holds that the rescission anti-fraud remedy provided in section 12(2) of the 1933 Act applies only to initial offerings of securities to the public, and not to secondary or private transactions in securities. However, Leslie has never relied upon section 12(2), and Gustafson contains no indication whatsoever that the 10b-5 remedy would or should ever be subject to similar limitations.

FN42. See Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S 299, 315- 19, 105 S.Ct. 2622, 2631-33, 86 L.Ed.2d 215 (1985) (recognizing cause of action by “tippee” against securities broker “tipper” who supplies tippee with purported inside information later discovered to be false); Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 150-54, 92 S.Ct. 1456, 1470-72, 31 L.Ed.2d 741 (1972) (recognizing claim for trader’s failure to disclose material information about market conditions); Securities & Exch. Comm’n v. Capital Gains Research Bureau, 375 U.S. 180, 186, 84 S.Ct. 275, 280, 11 L.Ed.2d 237 (1963) (providing cause of action for “scalping” practices of investment adviser); Jolley v. Welch, 904 F.2d 988, 993 (5th Cir.1990) (discussing the “churning” cause of action), cert. denied, 498 U.S. 1050, 111 S.Ct. 762, 112 L.Ed.2d 781 (1981); Laird v. Integrated Resources, Inc., 897 F.2d 826, 838 (5th Cir.1990) (recognizing that 10b-5 “churning” violation may constitute a RICO predicate offense); United States v. Winans, 612 F.Supp. 827, 838-48 (S.D.N.Y.1985), aff’d sub nom. United States v. Carpenter, 791 F.2d 1024, 1028-34 (2d Cir.1986) (affirming conviction of Wall Street Journal “Heard on the Street” columnist for trading on column contents in advance of publication), aff’d, 484 U.S. 19, 24, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987) (equally divided court); Miley v. Oppenheimer & Co., 637 F.2d 318, 324-25 (5th Cir. Unit A 1981) (recognizing 10b-5 “churning” cause of action, which “occurs when a securities broker enters into transactions and manages a client’s account for the purpose of generating commissions and in disregard of his client’s interests”); Mihara v. Dean Witter & Co., Inc., 619 F.2d 814 (9th Cir.1980); Zweig v. Hearst Corp., 594 F.2d 1261 (9th Cir.1979) (recognizing 10b-5 cause of action against financial columnist for failure to disclose conflict of interest); see also Basic, Inc. v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) (approving “fraud on the market” presumption of reliance on material misrepresentations); Dirks v. Securities & Exch. Comm֜n, 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983) (qualifying Chiarella with requirement of personal gain motivation); Chiarella v. United States, 445 U.S. 222, 226-30, 100 S.Ct. 1108, 1113-15, 63 L.Ed.2d 348 (1980) (in a 10b-5 action against a “markup man” in a financial printing operation, holding that failure to disclose material information “may constitute a manipulative or deceptive device” if the jury is properly instructed on whether the party charged with the failure to disclose, such as “an insider [or] a fiduciary,” is “under a duty to disclose it”); id. 445 U.S. at 230 n. 12, 100 S.Ct. at 1116 n. 12 (distinguishing Shapiro v. Merrill, Lynch, Pierce, Fenner & Smith, 495 F.2d 228, 237-38 (2d Cir.1974)); Securities & Exch. Comm’n v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir.1968), cert. denied, 404 U.S. 1005, 92 S.Ct. 561, 30 L.Ed.2d 558 (1972).

FN43. Lloyd’s does not argue that section 27 of the 1934 Act, 15 U.S.C. § 78aa, does not authorize service of process upon it. Cf. Omni Capital Int’l v. Rudolf, Wolf & Co. 484 U.S. 97, 105-07, 108 S.Ct. 410, 98 L.Ed.2d 415 (1987) (addressing service of process under § 22 of the Commodity Exchange Act). Unlike § 22 of the Commodity Exchange Act, § 27 of the Securities Exchange Act of 1934 “authorizes service of process ‘wherever the defendant may be found.’ ” Securities & Exch. Comm’n v. Unifund SAL, 910 F.2d 1028, 1033-34 (2d Cir.) (quoting 15 U.S.C. § 78aa), reh’g denied, 917 F.2d 98 (2d Cir.1990).

FN44. This approach has not gone without comment. See GARY B. BORN & DAVID WESTIN, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS: COMMENTARY AND MATERIALS 585-90 (2d ed. 1992); Scott A. Burns, The Application of U.S. Antitrust Law to Foreign Conduct: Has Hartford Fire Extinguished Considerations of International Comity, 15 U.PA.J.INT’L BUS.L. 221, 249-52 (1994); David L. Shapiro, Continuity and Change in Statutory Interpretation, 67 N.Y.U.L.REV. 921, 959 & n. 195 (1992); Russell J. Weintraub, The Extraterritorial Application of Antitrust and Securities Laws: An Inquiry into the Utility of a “Choice-of-Law” Approach, 70 TEX.L.REV. 1799, 1822 (1992) (Weintraub argues in favor of rejecting a “choice-” or “conflict-of- law” approach to international securities and antitrust cases, and adopting instead a rebuttable presumption that the relevant statutes apply extraterritorially).

FN45. Incidentally, the English Parliament in 1980 passed The Protection of Trading Interests Act, 1980, ch. 11 (Eng.), which was primarily responsive to extraterritorial application of the Sherman Act by the United States. This legislation includes a “clawback” provision creating a cause of action in England for recovery as damages any monies awarded in a foreign jurisdiction (i.e. the United States), and actually collected, in excess of compensatory damages (i.e. Sherman Act treble damages). Of course, this statute does not indicate there is any “true conflict” between the requirements of English law and the prohibitions contained in United States antitrust, racketeering, or consumer protection laws. However, the Protection of Trading Interests Act is an indication that English and American policies differ considerably insofar as the remedies each country provides for wrongdoing.

FN46. Like Rule 10b-5 violations, Sherman Act violations by foreign defendants with a direct and substantial effect on United States commerce have long been held actionable in United States courts, despite the presumption stated in Foley Bros. Matsushita Elec. Indus. Co., 475 U.S. 582-83, 106 S.Ct. at 1351-54; Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 704, 82 S.Ct. 1404, 1413, 8 L.Ed.2d 777 (1962); Timberlane Lumber Co. v. Bank of Am., 749 F.2d 1378, 1386 (9th Cir.1984), cert. denied, 472 U.S. 1032, 105 S.Ct. 3514, 643 L.Ed.2d 87 (1985); Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 921-26 (D.C.Cir.1984); see also United States v. Aluminum Co. of Am., 148 F.2d 416 (1945); cf. Steele v. Bulova Watch Co., 344 U.S. 280, 288, 73 S.Ct. 252, 256, 97 L.Ed.2d 319 (1952) (Lanham Act) (cited in EEOC, 111 S.Ct. at 1232-1233). Congress recently attempted to clarify the standard for extraterritorial application of the Sherman Act when it passed the Foreign Antitrust Improvements Act. 15 U.S.C. § 6a (“Section 1 to 7 of this title shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless … such conduct has a direct, substantial, and reasonably foreseeable effect [on interstate commerce, import commerce, or export commerce by United States exporter.]”).

FN47. Lloyd’s might have more success making this argument if the facts in this case were more similar to the facts in Hirsch v. Oakely Vaughn Underwriting, Ltd., No. H-87-3727 (S.D.Tex., Dec. 14, 1988), aff’d, 904 F.2d 704 (5th Cir., May 31, 1990) (No. 89-2563), cert. denied, 498 U.S. 981, 111 S.Ct. 511 (1990). The plaintiff in Hirsch initially contacted his underwriter through his English cousin and conducted the bulk of the transaction in England. The only meeting in Houston, the trial court said, was “to discuss a matter unrelated to this case.” Slip op. at 3. The trial court concluded it was “unable to find substantial contacts with this Defendant” in the United States. Id.

FN48. See Letter from Mary E.T. Beach, Senior Associate Director of the Division of Corporate Finance, United States Securities and Exchange Commission, to Hon. Donald J. Pease, Member, United States House of Representatives 2-3 (Aug. 5, 1991) (emphasis added), reprinted in Respondent’s Brief in Opposition at App.A, Riley v. Kingsley Underwriting Agencies, Ltd., 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (Dec. 7, 1992) (No. 92-664).

FN49. The Supreme Court in Republic of Argentina v. Weltover, Inc.??, 504 U.S. 607, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992), held that a foreign sovereign was not immune from a suit brought in United States courts, solely by non-U.S. plaintiffs, for breach of contract, involving Argentina’s unilateral restructuring of some debt securities it had issued in foreign markets. The Court not only held that issuing such debt was “commercial activity,” as that term is used in the Foreign Sovereign Immunities Act of 1976 (“FSIA”), but that the Argentine government’s breach of contract with foreign investors had a “direct effect” in the United States. Id., 504 U.S. at ----, 112 S.Ct. at 2168-69. In determining that the restructuring had a “direct effect,” the Court looked to the Due Process Clause of the Fifth Amendment and the International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed.2d 95 (1945) “minimum contacts” requirements for personal jurisdiction, but “only as an aid in interpreting the direct effect requirement of the [FSIA].” Republic of Argentina, 504 U.S. at ----, 112 S.Ct. 2169 & n. 2. “By issuing negotiable debt instruments denominated in U.S. dollars and payable in New York,” the Court held, “Argentina purposefully availed itself of the privilege of conducting [commercial] activities within the United States.” Id. at 2169 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985)), and by virtue of this activity, Argentina was subject to being haled into a federal court in the United States. Id.; see also Burger King Corp., 471 U.S. at 473, 105 S.Ct. at 2182 (“[W]e have emphasized that parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other state for the consequences of their activities.”); Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 482-83, 103 S.Ct. 1962, 1965-66, 76 L.Ed.2d 81 (1983) (action against foreign government by foreign plaintiff, based upon Nigeria’s unilateral amendment of an unconfirmed letter of credit it had established with a United States bank, is not beyond the Article III power of federal courts).

FN50. The 1992 report of the Lloyd’s Task Force, LLOYD’s OF LONDON, LLOYD’s: A ROUTE FORWARD 26, at Ex. 6 (1992), reports that United States Names in 1991 constituted 7.7% of the total membership base of Lloyds, or roughly 2044 out of 26,539 Names. United States Names in 1981 accounted for 6.6% of the membership base, or roughly 1263 out of 19,137 Names. In contrast, Names anywhere outside the United Kingdom in 1971 accounted for only one percent of the total membership base, or roughly sixty out of 6,020 total names.

FN51. MCG provides a fine example of how an issuer of securities in a foreign market can avoid the application of the United States securities laws: As reflected in the prospectus prepared by Brown, the Great Western Shares, as foreign securities, were not registered with the Securities and Exchange Commission. Accordingly, they had to be offered exclusively to investors who were neither citizens, residents, nationals, nor chartered residents of the United States. MCG, 896 F.2d at 172.

FN52. Lloyd’s conducts a considerable portion of its underwriting business with United States customers. A 1992 report by Lloyds indicates that, excluding inter-syndicate reinsurance, the United States market accounted for thirty-two percent (32%) of Lloyd’s underwriting business in 1990. LLOYD’s OF LONDON, LLOYD’s: A ROUTE FORWARD 49 & Ex. 28 (1992). Only the U.K. market, which accounted for 36% of Lloyd’s overall business in 1990, is more important to Lloyd’s. Id. In 1989, the U.S. market was the source of twenty- eight percent (28%) of Lloyd’s direct insurance premiums, but accounted for over thirty-eight percent (38.3%) of Lloyd’s reinsurance premiums excluding inter-syndicate reinsurance—more than the 31.3% share of reinsurance premiums associated with the U.K. market. Id. at 185 & Ex. 96.

FN53. The forum-selection/choice-of-law (“FS/COL”) clauses, in substance, are the 1986 General Undertaking. The remainder of the revised General Undertaking consists of (1) an agreement “to comply with the provisions of [the] Lloyds Acts,” subordinate legislation, and decisions of designated Lloyd’s officials, (2) a clause continuing the FS/COL clauses in effect “notwithstanding that the member ceases, for any reason, to be a Member of … Lloyd’s,” and (3) a savings clause, in the event “any term of this Undertaking shall to any extent be invalid or unenforceable.”

FN54. The further possibility remains that “the laws of England,” as the term is used in the General Undertaking, include English choice-of-law principles. These choice-of-law principles could potentially refer back to United States or Texas law as governing interpretation of the General Undertaking in this case, a phenomenon known as “renvoi.” See Nailen v. Ford Motor Co., 873 F.2d 94, 96-97 & n. 1 (5th Cir.1989); Shexnider v. McDermott Int’l, Inc., 688 F.Supp. 234, 238-39 (W.D.La.1988), aff’d, 868 F.2d 717, 718-19 (5th Cir.), cert. denied, 493 U.S. 851, 110 S.Ct. 150, 107 L.Ed.2d 108 (1989); Larry Kramer, Return of the Renvoi, 66 N.Y.U.L.Rev. 979 (1991); see also Larry Kramer, Rethinking Choice of Law, 90 Colum.L.Rev. 277 (1990); cf. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) (practice of federal diversity courts to look to the choice-of-law rules of the state in which they sit, and from there to the law of another jurisdiction, resembles a form of renvoi called “transmission”). Of course, the tricky question of what law provides the substantive rule of decision concerning the retroactivity issue is largely irrelevant if the substantive rule is the same in both England and the United States. See Kramer, Return of the Renvoi, 66 N.Y.U.L.Rev. at 1012 (“First, the court must determine whether there is in fact a conflict of laws, since the mere fact that the parties disagree about the principle of law does not mean that these laws actually conflict.”). However, the Court need not answer these questions unless the forum-selection clause is enforceable against Leslie.

FN55. Perhaps these courts all decided, sub silentio, that the enforceability of such clauses is and should be a matter of federal common law—something proposed in academic circles for some time. Cf. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28-29, 108 S.Ct. 2239, 2243, 101 L.Ed.2d 22 (1988) (cited in Carnival Cruise Lines, Inc., 499 U.S. at 589, 111 S.Ct. at 1522); Caldas & Sons, Inc. v. Willingham, 17 F.3d 123, 127 & n. 3 (5th Cir.1994) (recognizing, but not deciding, this question); Kevlin Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 15 (5th Cir.1995) (per curiam) (not addressing this question). However, none of them said so expressly or dealt with any Erie or Klaxon problems this might create. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Klaxon, 313 U.S. 487, 61 S.Ct. 1020; 28 U.S.C. § 1652 (“The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in the courts of the United States, in cases where they apply.”); see also Lampf, 501 U.S. at 355, 111 S.Ct. at 2778 (citing 28 U.S.C. § 1652). The other cases cited by the Bonny, Roby, Riley, and Shell courts, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), and Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974), involve the enforceability of arbitration agreements under authority of the Federal Arbitration Act, 9 U.S.C. § 1, see Scherk, 417 U.S. at 510, 94 S.Ct. at 2453 (the Act “revers[ed] centuries of judicial hostility to arbitration agreements”), an issue this case no longer presents. See also Mastrobuono v. Shearson Lehman Hutton, Inc., ---- U.S. ----, ----, 115 S.Ct. 1212, 1215-16, 1219, 131 L.Ed.2d 76, 63 U.S.L.W. 4195 (1995); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. ----, ----, ----, 115 S.Ct. 834, 838-39, 843, 130 L.Ed.2d 753, 63 U.S.L.W. 4079 (1995). Of course, the Scherk exception to the rule in Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed.2d 168 (1953), is no longer of any moment because Wilko has been squarely overruled. Rodriguez de Quijas v. Shearson/American Express, 490 U.S. 477, 484, 109 S.Ct. 1917, 1921, 104 L.Ed.2d 526 (1989). Moreover, one commentator has argued:

A final issue not adequately addressed by the Seventh Circuit in Bonny is the possibility that the solicitation of the plaintiffs in the United States to invest in Lloyd’s would constitute sufficient contacts to overcome the presumptive validity of the forum selection and choice-of-law clauses. The majority in Scherk v. Alberto-Culver Co. conceded that there may be some situations where the foreign contacts are so insignificant or attenuated that the principles of Wilko should still apply. This concession was in response to the dissent’s concern in Scherk that the majority’s analysis could result in American investors being forced to arbitrate their claims in a foreign country despite the fact that material misrepresentations inducing them to invest in a foreign corporation were made in the United States; a fact pattern very similar to Bonny.

Jennifer M. Eck, Note, Turning Back the Clock: A Judicial Return to Caveat Emptor for U.S. Investors in Foreign Markets, 19 N.C.J.Int’l L. & Comm.Reg. 313 (1994) (footnotes omitted).

FN56. Both parties and all U.S. courts that have examined the matter appear to agree that enforcement of the Lloyd’s forum-selection clause will operate “in tandem” with the Lloyd’s choice-of-law clause to render any 10b-5, section 12(2), or RICO cause of action unenforceable in England. See Bonny, 3 F.3d at 160-61; Roby, 996 F.2d at 1364-65; Riley, 969 F.2d at 958; Shell, 850 F.Supp. at 622-23; see also Jennifer M. Eck, Note, Turning Back the Clock: A Judicial Return to Caveat Emptor for U.S. Investors in Foreign Markets, 19 N.C.J.Int’l L. & Comm.Reg. 313 (1994) (criticizing Bonny v. Society of Lloyd’s) (“[T]he Seventh Circuit still failed … adequately [to] address the issue of whether plaintiffs were prospectively waiving their Securities Act remedies because the court’s analysis ignored the fact that remedies available in England are not substantially similar to U.S. statutory remedies.”). The possibility is intriguing that English courts might recognize that “[m]odern approaches assume that … legislative jurisdictions of different states overlap,” and conclude that it is not inconsistent with English law to enforce rights based upon certain United States statutes, see Larry Kramer, Return of the Renvol, 66 N.Y.U.L.Rev. 979, 990, 991 (“The traditional theory purports to find a complete scheme for determining the parties’ rights in the principle of territoriality…. But the territorial principle does not resolve cases that involve transactions or occurrences connected to several states, because applying the law of any (and none) of these states is consistent with its premise.”); see also Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 921-26 (D.C.Cir.1984) (discussing overlapping bases for national legislative jurisdiction), or even that English courts might conclude that choice-of- law or comity principles require them, in appropriate cases, to enforce legal rights grounded upon United States statutes so long as those statutory rights are not inconsistent with English public policy. < i>Cf. K.D.F. v. Rex, 878 S.W.2d 589, 593-96 (Tex.1994) (discussing principles of comity concerning the enforcement of another sovereign’s laws in the interstate context). However, Riley, Roby, Bonny, and Shell reinforce the conclusion that enforcement of the FS/COL clauses necessarily precludes Leslie’s enforcement in England of any right arising under the 1934 Securities Exchange Act or the DTPA.

FN57. English law, apparently, is not far different. See The Bremen, 407 U.S. at 11 n. 12, 92 S.Ct. at 1914 n. 12; Ted. L. Stein, Jurisprudence and Jurists’ Prudence: The Iranian-Forum Clause Decisions of the Iran-U.S. Claims Tribunal, 78 AM.J.INT’L.L. 1, 21-22 (1984) (comparing United States and English law). In Texas, courts are not “bound by forum selection clauses if the interests of … public policy strongly favor jurisdiction in a forum other than the one consented to in the contract,” particularly when a claim arises under the DTPA. See Greenwood v. Tillamook Country Smoker, 857 S.W.2d 654, 656 (Tex.App.—Houston [1st Dist.] 1993), no writ); Pozero v. Alfa Travel, Inc., 856 S.W.2d 243, 244-45 (Tex.App.—San Antonio 1993, no writ); Dowling v. NADW Marketing, Inc., 578 S.W.2d 475, 476 (Tex.Civ.App.—Eastland 1979, writ ref’d n.r.e.); see also DeSantis v. Wackenhut Corp.First Commerce Realty Investors v. K-F Land Co., 617 S.W.2d 806, 807- 08 (Tex.Civ.App.—Houston [14th Dist.] 1981, writ ref’d n.r.e.).

FN58. Lloyd’s of course objects that the 1986 General Undertaking is not an adhesion contract. As a standard-form contract without negotiable terms, drafted by Lloyd’s, and offered to Leslie on a take-it-or-leave-it basis, the revised General Undertaking is by definition an adhesion contract. See Carnival Cruise Lines, 499 U.S. at ----, 111 S.Ct. at 1527; id. at ----, 111 S.Ct. at 1530-31 (Stevens, J., dissenting).

FN59. As mentioned above, see supra note 45, the English Parliament has passed a specific act to counter extraterritorial application of the Sherman Act, including a “clawback” provision to counter treble damage awards. The Supreme Court in Hartford Fire Ins. Co. nevertheless held that international comity would not require United States courts to refrain from exercising Sherman Act jurisdiction. Lloyd’s has not directed the Court’s attention to any comparable English legislation intended to counter application of United States securities and consumer protection laws to English businesses conducting transactions in the United States.

FN60. The Texas forum non conveniens statute applies only to personal injury or death actions filed in state court after September 1, 1993. Therefore, it is not controlling in this case.