Opinion
Civil Action No. 1:21-cv-01091
2021-12-29
CONFLICT KINETICS, INC., et al., Plaintiff, v. Daniel GOLDFUS and Bagira Systems, LTD., Defendants.
Milton Christopher Johns, Executive Law Partners, PLLC, Fairfax, VA, for Plaintiff. Mark Hunter Churchill, Holland & Knight LLP, Tysons Corner, VA, Tessa Beryl Tilton, Holland & Knight LLP, Tysons, VA, for Defendant Bagira Systems, LTD.
Milton Christopher Johns, Executive Law Partners, PLLC, Fairfax, VA, for Plaintiff.
Mark Hunter Churchill, Holland & Knight LLP, Tysons Corner, VA, Tessa Beryl Tilton, Holland & Knight LLP, Tysons, VA, for Defendant Bagira Systems, LTD.
ORDER
T.S. Ellis, III, United States District Judge
At issue in this misappropriation of trade secrets and tortious interference with contract diversity case is defendant Bagira Systems Ltd.’s (hereinafter "Bagira") motion to dismiss the complaint on the grounds of (i) forum non conveniens , (ii) lack of personal jurisdiction, (iii) failure to state a claim, (iv) improper venue, and (v) improper service of process. See Dkt. 6. This fully briefed motion was argued orally on December 10, 2021, and is therefore ripe for disposition.
I.
Plaintiff Conflict Kinetics (hereinafter "CK") is a Virginia-based company that provides combat training technology to various countries through its proprietary technology, called the Gunfighter Gym. Defendant Brian Goldfus is a Brigadier General in the Israeli Defense Force employed by the Israeli Ministry of Defense. Defendant Bagira is an Israeli company and a direct competitor of CK.
The complaint alleges that in June 2016, Israeli military officials met with United States Army officials in California for a demonstration of CK's technology. After these demonstrations, the Israeli military expressed an interest in purchasing CK's technology and Goldfus, acting on behalf of the Israeli military, sought additional information about CK's technology. In 2019, the Israeli military awarded CK a $1.4 million contract to provide combat training and simulation services in Israel. In 2020, CK brought its Gunfighter Gym technology to Israel and in 2021, CK provided additional demonstrations of its technology to Goldfus and other Israeli officials at a United States Marine Corps base in North Carolina and at CK's headquarters in Virginia.
After CK brought its technology to Israel, Goldfus allegedly began working with Bagira to copy CK's Gunfighter Gym product and thereby compete with CK. According to the complaint, during this time, CK participated in a variety of meetings and demonstrations throughout Israel in which CK officials discussed CK's proprietary technology with Israeli officials and Bagira employees. The complaint further alleges that during these meetings in Israel, Goldfus and Bagira employees took copious notes and studied CK's Gunfighter Gym, aiming to misappropriate CK's trade secrets. Unbeknownst to CK at that time, Bagira and Goldfus were working to copy the technology CK had brought to Israel so that Bagira could produce its own combat training technology and compete with CK.
The complaint also alleges that in the course of these meetings in Israel in 2019 and 2020, Goldfus pressured CK employees to hire Bagira employees to implement CK's technology in Israel, presumably for the purpose of providing Bagira employees further access to CK's technology. Additionally, the complaint alleges that Bagira's CEO, Yaron Mizrachi, made statements to various CK employees while those individuals were in Israel on business trips. Specifically, Mizrachi in these statements told CK employees that "CK getting a contract with [the Israeli Defense Force] without [Bagira] is not going to happen." Dkt. 1 at ¶ 35. Also alleged in the complaint is that in September 2020, while CK's CEO was visiting Israeli, Mizrachi told CK's CEO that Mizrachi could prevent CK from procuring further contracts with the Israeli military if CK were to refuse to work with Bagira. The complaint further alleges that Mizrachi's statements to CK's employees revealed non-public details of CK's contract with the Israeli military, including the contract's timelines and the names of CK employees involved in fulfilling the contract.
Next, the complaint alleges that after Bagira employees studied CK's technology in Israel, Bagira and Goldfus successfully misappropriated CK's trade secrets and thereby were able to create in Israel a replica of the Gunfighter Gym. Then, according to the complaint, in May 2021 Bagira released a commercial for its own "one of a kind" combat training technology built in Israel, which the complaint alleges closely resembled CK's intellectual property and featured CK's patented techniques. Dkt. 1 at ¶ 44. CK alleges that Bagira was able to develop the technology displayed in the commercial only because Goldfus improperly used his military position to induce CK to provide Goldfus with CK's proprietary trade secrets during meetings in Israel. CK further alleges that Goldfus and Bagira urged the Israeli military to pause its contract with CK while Bagira finished its copy-cat technology. Bagira eventually submitted its own bid to the Israeli military, undercutting the price submitted by CK, and was awarded the contract that CK had previously held.
The complaint does not identify any specific patents, nor does the complaint allege patent infringement. Importantly, the complaint could not state a claim for patent infringement, because the alleged infringement occurred in Israel, and CK's United States patents, if they exist, would have no legal effect in Israel.
In September 2021, CK filed this suit against Goldfus and Bagira. The suit alleges (i) that Goldfus breached his fiduciary duty to CK, (ii) that Bagira and Goldfus conspired to interfere with CK's contract with the Israeli military, and (iii) that Bagira and Goldfus misappropriated CK's trade secrets for their own profit in violation of the Virginia Uniform Trade Secrets Act. CK has not served either Goldfus or Bagira in this suit, although CK attempted to serve Bagira USA Ltd., a sister company of Bagira's that is based in Maryland. In November 2021, Bagira filed the motion to dismiss presently before the Court.
II.
Bagira's first argument is that dismissal is required under the doctrine of forum non conveniens , pursuant to "which a federal district court may dismiss an action on the ground that a court abroad is the more appropriate and convenient forum for adjudicating the controversy." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 425, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007). As the Fourth Circuit instructs, a district court reviewing a motion to dismiss on the basis of forum non conveniens must follow a three-prong analysis to "determine whether the alternative forum is: 1) available; 2) adequate; and 3) more convenient in light of the public and private interests involved." Jiali Tang v. Synutra Int'l, Inc. , 656 F.3d 242, 248 (4th Cir. 2011). In the course of this analysis, the party moving for transfer under forum non conveniens , in this case, Bagira, "bears a heavy burden in opposing plaintiff's chosen forum," and bears the burden of demonstrating that a foreign forum is more suitable than a domestic one. Id. at 430, 127 S.Ct. 1184. Ordinarily, a plaintiff's choice of forum is afforded deference, and where, as here, "a domestic plaintiff initiates litigation in its home forum," the plaintiff's choice of forum "is entitled ... to a heightened deference based on its status as a citizen seeking a remedy in the courts of its own country." SAS Inst., Inc. v. World Programming Ltd. , 468 F. App'x 264, 266 (4th Cir. 2012) (internal citations omitted). But each case must be examined in light of the facts alleged in the complaint, and the plaintiff's choice of forum is not conclusive; dismissal on the basis of forum non conveniens is appropriate if the three-prong analysis strongly suggests that the case should be litigated in a foreign forum.
The first prong—availability of a suitable forum—is satisfied here because the case can be litigated in Israeli courts. The availability prong of the forum non conveniens analysis "will ordinarily ‘be satisfied when the defendant is amenable to process in the other jurisdiction.’ " Jiali Tang , 656 F.3d at 248 (quoting Piper Aircraft Co. v. Reyno , 454 U.S. 235, 257, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981) ). Defendants are both amenable to service in Israel, and indeed CK does not contest the availability of Israel as a suitable forum in this case. Also worth noting in this respect is that CK has already filed a suit related to this dispute in Israeli courts. The fact that CK has initiated related litigation in Israel suggests that Israeli courts are available to litigate further claims relating to CK's dispute with defendants. See Kirch v. Liberty Media Corp. , No. 04 CIV. 667 (NRB), 2006 WL 3247363, at *5 (S.D.N.Y. Nov. 8, 2006) (holding that "the fact that plaintiffs have brought two similar actions" in German courts "is strong evidence that the German forum is hospitable to plaintiffs’ claims.") In short, the availability prong of the forum non conveniens analysis is plainly satisfied in this case.
During oral argument, counsel for CK explained that the suit CK previously filed in Israel was an administrative action requesting information related to the Israeli military's contract bidding process and that CK obtained a favorable resolution of that suit.
The second prong of the forum non conveniens analysis—adequacy of the foreign forum—is also plainly satisfied in this case. In this respect, the Fourth Circuit has held that a "foreign forum is adequate when ‘(1) all parties can come within that forum's jurisdiction, and (2) the parties will not be deprived of all remedies or treated unfairly, even though they may not enjoy the same benefits as they might receive in an American court.’ " Jiali Tang , 656 F.3d at 249 (quoting Fid. Bank PLC v. N. Fox Shipping N.V. , 242 F. App'x 84, 90 (4th Cir. 2007) ).
Both conditions for adequacy of the Israeli forum are met in this case. There is no dispute that all parties to this case are within the jurisdiction of Israeli courts. The defendants are both Israeli and plaintiff has already filed suit in Israel. There is also no reason to believe that plaintiff will be deprived of all remedies or treated unfairly in Israeli courts. As the Fourth Circuit has made clear, "[a]n inadequate forum based on substantive law arises where the alternative forum does not permit litigation of the subject matter of the dispute." Compania Naviera Joanna SA v. Koninklijke Boskalis Westminster NV , 569 F.3d 189, 205 (4th Cir. 2009) (internal quotations omitted). Even assuming that CK has a cause of action for misappropriation of trade secrets under Virginia law, Bagira has noted that Israel also protects trade secrets under its commercial torts laws and argues that a similar cause of action is available to CK in Israeli courts. See Dkt. 16 at 2. Although CK argues that Israel might not have an identical trade secrets regime to the United States or Virginia, this argument misses the mark, as the Fourth Circuit has made clear that "a difference in the law in the two forums—even where the amount of potential recovery is drastically different—is not sufficient to bar application of the forum non conveniens doctrine." Compania Naviera , 569 F.3d at 202. CK's arguments that Israeli courts might offer only a different or more limited remedy is therefore insufficient to challenge the adequacy of Israeli courts to serve as a forum for this controversy.
Although CK disputed the adequacy of Israeli courts in its briefing on the motion to dismiss, see Dkt. 12, counsel for CK in the course of oral argument conceded that Israeli courts were an adequate forum to litigate this dispute. Quite apart from this concession, it is plain that Israeli courts provide an adequate forum for CK to seek redress for its claims and CK has provided no persuasive facts or reasons to conclude otherwise.
As a further challenge to the adequacy of Israeli courts, CK contends that "it is possible, if not probable, that Conflict Kinetics would suffer some prejudice by bringing this suit in an Israeli court" because the suit might be viewed as seeking to "impugn the character of a full-time [Israeli] Brigadier General." These unsupported allegations of impartiality do not rise to the level of demonstrating a substantial risk of unfair treatment in Israel. Courts have uniformly held that "anecdotal evidence of corruption and delay provides [an] insufficient basis" for concluding that a foreign court is an inadequate forum. Tuazon v. R.J. Reynolds Tobacco Co. , 433 F.3d 1163, 1179 (9th Cir. 2006) ; see also In re Arbitration between Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukraine , 311 F.3d 488, 499 (2d Cir. 2002) (holding that general allegations of corruptions in Ukrainian courts were insufficient to support a finding that those courts were an inadequate forum). CK offers no evidence of any substantial risk of prejudice. Notably, CK has already filed an action in Israel, demonstrating some amount of belief by CK that Israeli courts are capable of adjudicating this dispute fairly. Accordingly, there is no doubt whatsoever that Israeli courts are an adequate forum to litigate this dispute and the second prong of the forum non conveniens analysis is satisfied.
The final prong of the forum non conveniens analysis requires consideration of private and public interests. As the Fourth Circuit instructs, a defendant moving for dismissal must show that "relevant public and private interests strongly favor a specific, adequate, and available alternative forum." Jiali Tang , 656 F.3d at 246. The pertinent private interests include "relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses ... and all other practical problems that make trial of a case easy, expeditious and inexpensive." Piper Aircraft , 454 U.S. at 241 n.6, 102 S.Ct. 252. Here, the private interests strongly favor dismissal on forum non conveniens grounds. This is so because the majority of the actionable conduct alleged in the complaint occurred in Israel, not the United States. Although CK has alleged that Goldfus observed CK's technology in the United States on a few occasions, the complaint does not allege that these mere observations gave rise to the misappropriate of CK's trade secrets. Instead, a fair reading of the complaint makes clear that the misappropriation of CK's trade secrets took place during a series of detailed demonstrations and meetings CK conducted in Israel, not the United States. The trial of this case would therefore require substantial evidence and many witnesses based in Israel, and the trial would be far more practical in Israel than the United States. For example, most of the potential witnesses are Bagira employees and Israeli military officials, all of whom are located in Israel. Other sources of evidence, such as Bagira's alleged copycat technology and documents related to the Israeli military's contract award process, are also in Israel and would more easily be accessed there. Although trial will likely require a review of CK's proprietary technology, CK has already brought that technology to Israel. Thus, the trial of this case would be more "easy, expeditious, and inexpensive," in Israel than in the Eastern District of Virginia. Piper Aircraft , 454 U.S. at 241 n.6, 102 S.Ct. 252
The public interests also weigh in favor of dismissal on forum non conveniens grounds. As the Supreme Court has explained, the public interests in a forum non conveniens motion include
(1) Administrative difficulties flowing from court congestion; (2) local interest in having localized controversies decided at home; and (3) the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action; (4) the avoidance of unnecessary problems in conflict of laws or in application of foreign law; (5) and the unfairness of burdening citizens in an unrelated forum with jury duty.
Piper Aircraft , 454 U.S. at 241, n. 6, 102 S.Ct. 252.
These public interest factors, applied to the facts of this case, clearly point to the conclusion that dismissal is required. As summarized above, this dispute is centered on misappropriation of trade secrets which occurred in Israel and involves an attempt to interfere with CK's contract with the Israeli military, which was to be performed in Israel. Thus, there is little local interest in having this case decided in the Eastern District of Virginia, while there is substantial local interest in having this case decided in Israel. It is also likely that Israeli law, and not United States law, will apply to many of the claims in this case. The Fourth Circuit has explained that efforts to apply foreign law "administratively tax the court system" and the likely presence of substantial foreign law issues in this case weighs in favor of dismissal. Compania Naviera , 569 F.3d at 201. Finally, the unfairness of burdening Virginia jurors with jury duly over a largely Israeli conflict weighs in favor of dismissing the case on forum non conveniens grounds.
Notably, the parties did not engage in extensive analysis of the choice of law issues that this case might present. Given that the complaint suggests that the misappropriation of trade secrets and interference with contract occurred in Israel, it is likely that Israeli law, and not Virginia law, may apply to CK's claims.
III.
For the foregoing reasons, Bagira's motion to dismiss the case on the basis of forum non conveniens is granted and the case is dismissed without prejudice. It is therefore unnecessary to address the additional grounds for dismissal raised in Bagira's motion to dismiss.
Accordingly,
It is hereby ORDERED that Bagira's motion to dismiss (Dkt. 6) is GRANTED and the complaint is DISMISSED WITHOUT PREJUDICE .