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Lloyd's Loses Battle to Stop US Trial
May 3, 1998
by Sarah Ryle
An attempt by Lloyd's of London to prevent a fraud trial going ahead in the United States has failed.
In January, three American Lloyd's Names won the right from Californian courts to sue the insurance market for allegedly misleading them into joining in the Eighties.
But Lloyd's took the case to the US Federal Court in Los Angeles and appealed to have it dismissed.
Now that appeal has failed. Judge Steve Wilson rejected Lloyd's argument on Friday. He passed it back to the state court.
This is a serious defeat for Lloyd's. It means that Names will be able to gain access to documents never before aired in court.
They will be able to order deposition from key Lloyd's figures. The Observer understands they will include the current chairman Max Taylor and former senior figures including ex-chairman Sir David Rowland.
The US Rules on ‘discovery' –access to documents- are more wide-ranging than those in the UK. One source said that Friday's verdict was ‘good news for all Names'.
UK Names have repeatedly failed in their attempts to bring allegations of deception and fraud before English courts. They maintain that market professionals, including those sitting on Lloyd's governing council, knew that Lloyd's was facing large losses, yet still encouraged new investors to join.
Hundred of Names refused to settle debts claimed by Lloyd's and lost a High Court fight. They are appealing.
The Californian case is due to begin in a year's time. Lloyd's had argued that it should be dismissed on the grounds that the southern district Federal Court of California ruled in February that a similar action should be tried in the UK.
Lloyd's reported last week that the US Supreme Court had declined to hear two cases brought by Names seeking the right to sue the market in the US.
They were denied leave to appeal following a further decision in Lloyd's favour by the Fifth Circuit Court of Appeals in New Orleans last August.
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