TO FILE OR NOT TO FILE: THE FORUM NON CONVENIENS DILEMMA

UNITED STATES

Maura K To file or not to file: the forum Monaghan Debevoise & Plimpton, non conveniens dilemma New York mkmonaghan@ debevoise.com Introduction non conveniens in which they are required to demonstrate that the can Over the past two decades there has been Jacob W Stahl be heard in an adequate alternative forum. a proliferation of litigation in the United While such motions are often successful, Debevoise & Plimpton, States by overseas plaintiffs who are seeking they can also be paradigmatic examples of New York redress for harm allegedly committed outside the old adage ‘be careful what you ask for [email protected] the United States. Such plaintiffs often – because you might just get it.’ In several although not always – claim high-profile cases, companies prevailed on Kristin L Bryan under the Alien Tort Statute of 1789 (ATS).1 forum non conveniens claims in the US, only Debevoise & Plimpton In response, defendants often file a forum New York [email protected] INTERNATIONAL LITIGATION NEWSLETTER MAY 2014 53 TO FILE OR NOT TO FILE: THE FORUM NON CONVENIENS DILEMMA

to be subjected to punishing verdicts overseas . Canada, for example, has a in courts that the defendants themselves judicial cap on the amount of non-pecuniary previously argued were appropriate – making damages available for personal injuries caused it difficult (if not impossible) to argue later to by negligence. Several European countries a US court that the foreign court’s damages prohibit punitive damages in most civil cases award should not be enforced because it on the basis that such awards are contrary to violated the defendant’s due process rights.2 public policy. How should a company decide whether it is preferable to litigate in the US or overseas? As Plaintiffs prefer the strategic advantages we will discuss below, answering this question of US procedural rules requires an analysis of a number of factors related to the foreign jurisdiction including: Compared to other countries, US procedural the substantive law; rules of procedure; rules better equip plaintiffs to control procedures (if any) for consolidation of litigation. The Federal Rules of Civil similar cases; and whether the foreign court Procedure permit a plaintiff in the US to take respects the rule of law and/or will be hostile depositions, seek the production of large to a US corporation. quantities of documents at a defendant’s expense, and engage in other forms of fact-finding. If a case goes to trial, plaintiffs Factors supporting use of forum non in the US also usually find that they have a conveniens motions greater input in the proceedings compared There are several valid considerations to foreign jurisdictions. This is particularly supporting use of a forum non conveniens true compared to those countries that utilise motion when a corporate defendant is inquisitorial systems of justice where judges involved in foreign mass tort litigation. For exercise a high degree of control over fact- the following reasons, US corporations finding and trials. find the following arguments appealing – particularly when they are considered without The US has no ‘loser pays’ rule comparison to the potential outcome in a foreign jurisdiction: In the US a plaintiff is ordinarily not required to pay a defendant’s legal costs if the plaintiff fails to prevail with a claim. This contrasts US tort law is perceived as more with the ‘loser pays’ system utilised in favourable to plaintiffs than foreign jurisdictions such as Canada and . jurisdictions Accordingly, commencing a lawsuit in the US Tort law in the US is generally viewed as for tort claims of questionable merit is seen more favourable to plaintiffs compared as involving less downside risk for plaintiffs to the laws of other countries. Plaintiffs compared to foreign jurisdictions which have bringing tort claims in the US may rely on a ‘loser pays’ rule. theories of strict liability and prevail on lesser standards of proof than the standards When forum non conveniens motions that would be required in foreign courts. go awry Notwithstanding this fact, in limited instances the law of foreign jurisdictions may be more Although there are often compelling reasons plaintiff-friendly than US law. In Australia, for for a corporate defendant to file a forum example, there is no certification non conveniens motion when facing a lawsuit requirement and no requirement that brought by a foreign plaintiff alleging harm common issues in a class action predominate in a foreign country, recent high profile cases over individual issues. illustrate the hazards associated with such motions when the alternative forum turns out to be inhospitable to the defendant. The Plaintiffs proceeding in US courts usually defendant can then be in the unenviable obtain higher damages awards position of arguing that an award should not Typical damages awarded in tort cases in be enforced due to due process violations the US are significantly larger than in other when the defendant itself previously argued countries. US plaintiffs may also seek punitive that the foreign forum was adequate. damages, a remedy either not available or heavily circumscribed in many foreign

54 INTERNATIONAL BAR ASSOCIATION LEGAL PRACTICE DIVISION TO FILE OR NOT TO FILE: THE FORUM NON CONVENIENS DILEMMA

Chevron’s litigation in Ecuador sterile after DBCP exposure, but nevertheless continued to father children after their In 1993, a putative class of Ecuadorian alleged exposure, collectively recovered citizens filed a lawsuit in the US District US$21m in a lawsuit brought against Dole in Court for the Southern District of New York Nicaragua.6 against Texaco, Inc, a subsidiary of Chevron Corp, seeking billions of dollars in damages as a result of alleged environmental Considerations when filing a forum non contamination that they contended was conveniens motion caused by Texaco’s petroleum exploration Given the fact that foreign plaintiffs and drilling activities. Chevron endorsed frequently refile a lawsuit in their home Ecuador as an adequate alternative forum, jurisdiction after a forum non conveniens had the action dismissed on forum non dismissal (as happened to Chevron and conveniens, and the Second Circuit Court Dole), a corporate defendant should engage of Appeals affirmed.3 In 2003, however, a in a cost-benefit analysis that focuses upon group of Ecuadorian plaintiffs (including whether it is clearly advantageous to subject many of the original plaintiffs) brought itself to the laws and procedures of a foreign a lawsuit against Chevron and Texaco in jurisdiction before moving to dismiss a Ecuador. In 2011, the Ecuadorian court foreign lawsuit. Such a cost-benefit analysis awarded the plaintiffs damages exceeding should include not only the factors discussed US$18bn. Recently revealed above but also the following issues: indicates that the plaintiffs’ Ecuadorian secretly ghost wrote the court’s entire opinion after agreeing to pay The law of the alternative foreign forum Ecuadorian judges money from the eventual First and foremost, a defendant should recovery. examine the relevant foreign jurisdiction’s Chevron filed a civil Racketeer Influenced law before exposing itself to litigation in a and Corrupt Organizations Act (RICO) foreign forum through filing of a forum lawsuit in the Southern District of New York non conveniens motion. A defendant must in 2011 against Steven Donziger, the lead have a comprehensive understanding of the attorney for the plaintiffs in the Ecuador substantive law of the foreign jurisdiction litigation, alleging that Donziger executed implicated by a plaintiff’s lawsuit, because it a scheme to extort and defraud Chevron may be significantly different from US law. by bringing a baseless lawsuit against the Additionally, the procedural rules of company. A six-week bench trial concluded foreign courts may result in proceedings in November 2013 and the parties are that are lengthier than in the United States. awaiting a ruling from Judge Lewis Kaplan.4 For example, some foreign jurisdictions do not permit , a vehicle DBCT South American litigation that defence counsel frequently use in the US to seek dismissal of meritless cases Dibromochloropropane (DBCP) is a prior to trial. Additionally, the appellate pesticide that was used globally by companies process can take significantly longer in to grow bananas and other produce in the some jurisdictions than the US, making 1970s and 1980s. The first DBCP lawsuit was it more difficult to reach finality. Many brought in the mid-1990s when thousands foreign jurisdictions lack the equivalent of of plaintiffs from 23 countries filed personal MDL (multidistrict) litigation; absent class injury DBCP in Texas against various actions, it is difficult for a defendant to buy corporate defendants, including Dole and global peace. Dow. These actions were dismissed on forum Any assessment of the law of a foreign non conveniens grounds.5 In response jurisdiction should also include an analysis to the dismissal, in 2000 the Nicaraguan of the amount of damages that could be National Assembly passed a law to facilitate awarded against a defendant in a proceeding the filing of DBCP lawsuits against specific outside of the US. Foreign courts may defendants, including Dole and Dow. As of permit consideration of factors, such as the 2009, Nicaraguan courts have awarded over profitability of a corporate defendant, in US$2bn in damages to DBCP plaintiffs in awarding damages that US courts do not actions commenced under this law. In one permit to be included in the calculation of instance, 32 plaintiffs who claimed to be compensatory damages.

INTERNATIONAL LITIGATION NEWSLETTER MAY 2014 55 TO FILE OR NOT TO FILE: THE FORUM NON CONVENIENS DILEMMA

Fact-finding issues in the foreign Limitation on class actions and the jurisdiction consolidation of similar claims in the foreign jurisdiction Second, the amount of time required to conduct and the mounting of a Fourth, for cases involving many potential defence in foreign courts can also diverge plaintiffs, a corporate defendant may from the norm in the US. In complex cases, be surprised to discover that many a defendant could find itself significantly foreign jurisdictions do not allow for the disadvantaged by a foreign forum with consolidation of claims as is done in the US quick discovery turnaround times, a with multidistrict litigation and class actions. problem compounded by a defendant’s Because each plaintiff may have to file suit lack of familiarity of the foreign law. in his/her locale, a defendant may be faced Moreover, the discovery afforded to with the unsavoury prospect of defending defendants in foreign jurisdictions tends to similar actions before multiple tribunals. be significantly less generous than those of This increases a defendant’s litigation US courts. For example, in some instances, costs, reduces efficiency, and also exposes a depositions (if they are allowed) can only defendant to the possibility of inconsistent be conducted by judges, rather than the judgments. parties’ attorneys. Foreign jurisdictions can also take Conclusion dramatically different approaches in regards to the taking of expert testimony. There is no Although a corporate defendant may guarantee that a corporate defendant will be be drawn to the appeal of a forum non able to present the testimony of its experts conveniens motion to dismiss actions brought when mounting a defence. If the foreign by foreign plaintiffs for conduct occurring court permits expert testimony, it may permit outside the US, the progression of Chevron’s a plaintiff to introduce evidence that is not litigation in Ecuador and DBCP litigation supported by reliable scientific data and in Nicaragua suggest that companies need would not be admissible in US courts. to undertake a nuanced assessment. Forum non conveniens motions implicate a host of complicated issues early in litigation, Judicial impartiality and the availability of particularly that a defendant must commit a jury trial in the foreign forum to the adequacy of an alternative forum. Third, as Chevron learned, a corporate Prudence therefore dictates that a defendant defendant in foreign courts can also face a should carefully balance the possibility of a great deal of risk over the ultimate arbitrator large tort award in the US versus the risks of of the case. Jury trials in civil litigation are not litigating in a foreign forum. common in foreign jurisdictions, in contrast to the US. Moreover, a corporate defendant Notes 1 28 USC. 1350. may find that foreign plaintiffs have a ‘home 2 See, eg, Aguinda v Texaco, Inc., 142 F Supp 2d 534, 539 court’ advantage where they reside. Courts in (SDNY 2001) (agreeing with Texaco that Ecuador was an some jurisdictions – particularly those without adequate alternative forum). 3 Aguinda v Texaco, Inc., 142 F Supp 2d 534, 554 (SDNY independent – may be highly 2001); Aguinda v Texaco, Inc., 303 F 3d 470, 480 (2d Cir influenced by local plaintiffs and their lawyers 2002). and/or hostile to US corporations. A defendant 4 Chevron Corp. v Donziger et al., No 1:11-cv-00691-LAK- must also consider that over the potentially JCF (SDNY). 5 Delgado v Shell Oil Co., 890 F Supp 1324, 1362 (SD Tex lengthy trajectory of overseas litigation, 1995) (finding that foreign jurisdictions provided there may be geopolitical developments that adequate remedies for foreign plaintiffs). significantly alter the likelihood that the 6 Osorio et al. v Dole Food Co., et al., 665 F Supp 2d 1307, defendant will be able to prevail. 1319-20 (SD Fla 2009).

56 INTERNATIONAL BAR ASSOCIATION LEGAL PRACTICE DIVISION