Opinion
Civil Action No. 3:01-CV-1490-D
November 14, 2001
MEMORANDUM OPINION AND ORDER
In this breach of contract action by a Canadian citizen against a Delaware corporation whose principal place of business is in Massachusetts, defendant moves to dismiss pursuant to the federal doctrine of forum non conveniens. Concluding that the public interest factors strongly demonstrate that the convenience of the court and the interests of justice would be promoted by litigating the case in Canada, the court grants the motion.
I
Plaintiff Steve Hayes ("Hayes"), a Canadian citizen, sues defendant Segue Software, Inc. ("Segue"), a Delaware corporation whose principal place of business is in Massachusetts, alleging that Segue is liable for damages for breaching two contracts. Under a letter agreement ("the employment contract"), Hayes became Segue's Canadian sales manager in Ontario, Canada. Hayes and Segue later signed a special commission plan ("the special bonus contract") designed to reward Hayes for all products sold during a two-year period in Canada under his direction as sales manager for that region.
Over the next two years, Hayes complained of Segue's failure to adhere to its obligations as he interpreted them under both contracts. Hayes alleged that Segue refused, as required by the employment contract, to provide him with proper sales support, and he complained about its arbitrary changing of the territory for which he was responsible as sales manager and its refusal to close his large sales and to pay his commissions. Concerning the special bonus contract, he complained of Segue's refusal to send him certain sales records necessary for his job and its refusal to pay him the special bonuses he alleged were due. After Segue later terminated Hayes, employment, he asserted that it had refused to pay him certain sums due him. Hayes first initiated court proceedings against Segue in Canada and then sued Segue in Texas state court for breach of the employment and special bonus contracts. Segue removed the action to this court and now moves to dismiss on the basis of forum non conveniens.
II
"Under the federal doctrine of forum non conveniens, `when an alternative forum has jurisdiction to hear [a] case, and when trial in the chosen forum would establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience, or when the 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,' even if jurisdiction and proper venue are established." Am. Dredging Co. v. Miller, 510 U.S. 443, 447-48 (1994) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981) (internal quotations omitted)). The court exercises its discretion based on consideration of private and public factors that trace their origin to Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947). "With some deference to the plaintiff's choice of forum, the private interest factors that the court must consider include [1] the relative ease of access to sources of proof; [2] availability of compulsory process for attendance of unwilling, and the costs of obtaining attendance of willing, witnesses; [3] probability of view of premises, if view would be appropriate to the action; and [4] all other practical problems that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the enforc[ea]bility of a judgment if one is obtained." Robinson v. TCI/US West Communications, Inc., 117 F.3d 900, 908 (5th Cir. 1997) (quoting In re Air Crash Disaster Near New Orleans, La., 821 F.2d 1147, 1162 (5th Cir. 1987) (en banc), vacated on other grounds sub nom. Pan Am. World Airways, Inc. v. Lopez, 490 U.S. 1032 (1989), opinion reinstated on other grounds, 883 F.2d 17 (5th Cir. 1989) (en banc)); see Am. Dredging, 510U.S. at 448.The public interest factors include (1) administrative difficulties for courts when litigation is piled up in congested centers instead of being handled at its origin; (2) the burden of jury duty imposed upon the people of a community that has no relation to the litigation; (3) in cases that touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only; (4) the local interest in having localized controversies decided at home; and (5) the appropriateness of having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself. American Dredging, 510 U.S. at 448-49. The strong presumption in favor of plaintiff's choice of forum applies with less force, and is given less deference, when the plaintiff is foreign. Piper Aircraft, 454 U.S. at 255-56; Gemini Capital Group, Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1091 (9th Cir. 1998).
This court must follow a controlling procedural framework in applying the principles of forum non conveniens so that it exercises structured discretion. Air Crash, 821 F.2d at 1165. The court first decides whether an available and adequate forum exists. Id. "A foreign forum is available when the entire case and all parties can come within the jurisdiction of that forum. A foreign forum is adequate when 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." Id. (citations omitted). If the court concludes that the foreign forum is both available and adequate, it must then address the relevant factors of private interest, giving appropriate deference to plaintiffs initial choice of forum. Id. If the court determines that the private interests do not weigh in favor of dismissal, it must then consider the public interest factors. Id.
Segue has the burden of establishing that the doctrine of forum non conveniens applies. Robinson, 117 F.3d at 907. Its "burden of persuasion runs to all the elements of the forum non conveniens analysis." Air Crash, 821 F.2d at 1164. The defendant must demonstrate an adequate and available forum and "must also establish that the private and public interests weigh heavily on the side of trial in the foreign forum." Id; see Alfadda v. Fenn, 159 F.3d 41, 46 (2d Cir. 1998) (holding that "dismissal usually is not appropriate unless `the balance of convenience tilts strongly in favor of trial in the foreign forum'") (quoting R. Maganlal Co. v. M. G. Chem. Co., 942 F.2d 164, 167 (2d Cir. 1991)). The court must review the motion in light of the status of the case at the time the motion was filed. Air Crash, 821 F.2d at 1166.
Segue contends this case centers on an employment dispute between a Canadian citizen and the Canadian branch of the company for which he worked; the claims at issue relate to the alleged breach of contracts negotiated, executed, and related to Hayes' employment in Ontario, Canada; and access to evidence and the necessary application of Canadian law would be more convenient in Canada. Segue posits that the case lacks the requisite nexus with the Northern District of Texas to survive the court's discretionary dismissal. Hayes responds that all relevant documents in this case are located at Segue's offices in Boston, Massachusetts; all potential relevant witnesses either reside in the United States or have addresses in care of Segue's Dallas counsel; and Texas, where Segue has a branch office, is the most appropriate and convenient forum for all parties.
III
The court first considers whether Canada is an available and adequate forum. Segue contends the forum is available because Hayes resides there and Segue has a branch office there. The case and all parties involved can thus come within the jurisdiction of the Canadian forum. Segue contends the forum is adequate because Canada's common law recognizes causes of action for breach of contract as well as an innocent party's right to sue for damages from such a breach. The parties will thus not be deprived of all remedies or treated unfairly.
Hayes does not appear to address the availability or adequacy of Canada as a forum. Instead, he asserts arguments-such as the contention that he is the only potential witness who resides in Canada and that the Canadian forum is unnecessary because of his willingness to stipulate to the application of Texas law-that relate to the private interest factors. In fact, Hayes' contention that Canadian and Texas common law are identical as they relate to his claims is evidence of agreement with the adequacy of the Canadian forum. Because Canada can exercise jurisdiction over both Hayes and Segue, and since neither will be deprived of all remedies or treated unfairly, the court holds that Canada is an available and adequate forum.
IV
The court now examines the private interest factors.A
Segue argues that the sources of proof are located primarily in Canada because Hayes was employed in Canada as Canadian sales manager, his sales were made in Canada to Canadian businesses, and the documentation of, and witnesses to, those sales are at the offices of the Canadian businesses. Hayes responds that all persons who have knowledge of relevant facts are United States residents. He further contends that Segue's business and accounting records are located in the United States.
Neither Segue nor Hayes has addressed this factor with adequate specificity. Segue makes several assertions as to the location of important documents in Canada, but it fails to specify the nature of the documents and points to no evidence that indicates where they may be found. Segue appears to rely on the assertion that Hayes bases his claims on "his employment in Canada, agreements executed in Canada, and sales made in Canada to Canadian businesses, such as NavCanada and Canada Post." D. Br. at 5. But absent necessary evidence, the court is unable to find that the relevant documents that relate to these employment arrangements and transactions are more accessible in Canada than in Texas. As Hayes points out, Segue could possess copies of these documents in its Massachusetts offices, in which case the relevance of their location to a comparison of fora between Canada and Texas is unclear and unexplored by Segue.
And although Hayes states unequivocally that all documents relevant to the case are located in Boston, see P. App. 5, he also fails to identify any particular documents or weigh their importance, or to state the basis of his alleged knowledge of this fact. Although documents or witness affidavits specifically detailing all or most anticipated evidence are not required for a defendant to succeed on a motion to dismiss based on forum non conveniens, see Piper Aircraft, 454 U.S. at 258, "defendants must provide enough information to enable the District Court to balance the parties' interests." Id Here, neither side has provided sufficient information relating to the location of documentary evidence for the court adequately to weigh the interests of the parties. Because Segue has the burden on this motion, see Robinson, 117 F.3d at 907; Air Crash, 821 F.2d at 1164-65, the court concludes that the first private interest factor favors litigating the case in Texas.
Segue has adduced evidence that the following persons may be defense witnesses: Hayes (who resides in Stittsville, Ontario); Gary Stickel ("Stickel") (Segue's Vice President of Human Relations); Douglas Zaccaro ("Zaccaro") (Segue's Chief Financial Officer); and Alex Levi ("Levi") (Segue's Vice President of Sales at the time of Hayes' employment). See D. App. 20. Except for Hayes, Segue lists the addresses of these potential witnesses as in care of the Dallas office of Akin, Gump, Strauss, Hauer Feld, L.L.P. ("Akin Gump"), Segue's Dallas counsel. Id Segue has adduced evidence that the following persons may be plaintiffs witnesses: Hayes; Segue's Corporate Representative and Custodian of Records ("Segue's corporate representative") (whose address is in care of Akin Gump); Ed Jackowiak ("Jackowiak") (Hayes' former supervisor at Segue who resides in Waltham, Massachusetts); Ron Fischer ("Fischer") (a person with specific knowledge of Hayes' termination who resides in Austin, Texas); and W.D, Masterson, Esquire ("Masterson") (Hayes' legal fees expert who resides in Dallas, Texas). Id at 3-5. Masterson's status as a potential witness is irrelevant to this dismissal motion because his testimony relates to attorney's fees, which is handled by motion and affidavits if Hayes prevails. Of the other seven potential witnesses, one resides in Canada, one in Massachusetts, and one in Texas, and four are listed as having Dallas addresses in care of Akin Gump.
The materiality and importance of each anticipated witness' testimony, rather than the number of witnesses residing in each location, is most important under forum non conveniens doctrine. Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1335 (9th Cir. 1984). Both parties maintain that Hayes has general knowledge of the facts of the case. Considering, however, that he is a resident of Ontario, Canada who chose to sue in Dallas, Texas, both Canada and Texas have equal access to him as a material witness, and his residence does not weigh in favor of either side. Stickel knows about the circumstances surrounding Segue's hiring and termination of Hayes. D. App. 20. Zaccaro has knowledge of Segue's commission arrangement with Hayes. Id Levi knows about Hayes' sales and Segue's overall sales policies and practices. Id Segue's corporate representative has knowledge of proper accounting procedures in the particular sales field and can authenticate Segue's relevant business records. Id at 3. Jackowiak knows about the alleged arbitrary practices of Segue toward sales managers such as Hayes, and Fischer has knowledge of the specifics surrounding Hayes' termination. Id at 3-4. On this evidence, each of the six anticipated witnesses appears to have knowledge that is material and important to one or more elements of Hayes' case. Of these six, Jackowiak resides in Massachusetts and Fischer resides in Texas. There is no evidence as to the residence of the other four.
Hayes posits that because Segue lists the addresses of its anticipated corporate officer witnesses as in care of Akin Gump, the court should assume they reside in Dallas for purposes of determining how accessible they are to this forum. But as Segue points out, the Dallas address is listed for attorney-client privilege reasons, so that any communication between Hayes and Segue's officers occurs through Akin Gump. There is no evidence, and it is improbable, that these witnesses reside in Dallas. And Segue has failed to adduce evidence of where they reside. Because Segue has the burden on this motion, this deficiency requires that, in determining the relative ease of access to sources of proof as between Canada and Texas, the court exclude from consideration anticipated witnesses whose states of residence have not been established. Given that these are material and important witnesses relevant to the ease of access determination, Segue has failed to meet its burden, and this factor favors litigating the case in Texas.
Even if the court were to weigh the ease of access factor as it relates to the two remaining witnesses whose residences are clear from the record, it would conclude that the factor favors litigating the case in Texas. Jackowiak and Fischer appear to be of roughly equal importance to Hayes' case. Fischer resides in Texas, and Jackowiak resides in Massachusetts, not Canada. Because Segue has failed to adduce evidence that (1) Fischer's testimony is less material or important to Hayes' case and thus merits less weight in the comparison with Jackowiak, and/or (2) the Canadian forum's closer proximity to Jackowiak outweighs its greater distance from Fischer, it has failed to meet its burden under this factor.
B
The court next turns to the availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining attendance of willing witnesses. As to unwilling witnesses, Segue argues that none of the anticipated witnesses that Hayes identifies is within subpoena range of the court, since only one of them is a Texas resident and even he is outside the subpoena range of the Northern District. Hayes argues that no anticipated witnesses are within subpoena range of the Canadian court. As to willing witnesses, Segue asserts that most are Canadian residents and thus can appear before Canadian courts at little expense. Hayes contends there are no anticipated witnesses who reside in Canada, and since all witnesses are United States residents, litigation in the Canadian forum would require the expensive and involved procedure of service of process under international conventions relating to such matters.The inability to compel the attendance of unwilling witnesses favors neither forum. If trial is conducted in Canada, Hayes would be able to obtain access to his own testimony, both as to the facts of his case and as his own expert on Canadian business matters. Segue's officers would testify voluntarily. Other witnesses would provide deposition testimony, since (1) as United States residents, Jackowiak (it is unclear from the record whether he remains an officer of Segue) and Fischer would be outside Canadian subpoena range, and (2) Segue has pointed to no Canadian witnesses. If trial is conducted in Texas, Hayes would testify voluntarily. Segue's officers would be compelled to testify because the court's subpoena power is limited only over persons who are neither parties nor officers of parties. See Fed.R.Civ.P. 45(b)(2), (c)(3)(A)(ii), and (c)(3)(B)(iii). Under Rule 45(c)(3)(A)(ii), Fischer, although a Texas resident, would not have to testify, given that Austin lies more than one hundred miles outside the Northern District of Texas. He, Jackowiak, and any other witnesses, including any whom Segue might identify in Canada pursuant to Rule 28(b), would provide deposition testimony. The same witnesses would thus be compelled to testify in Texas as would be compelled or would do so willingly in Canada.
Had Segue identified Canadian witnesses, this analysis would be different. But absent some evidence, the court cannot weigh in its decisionmaking Segue's generalized assertion that most witnesses are in Canada because the events at issue took place in Canada. This is especially so given that Segue's list of anticipated witnesses includes none with a Canadian address. See D. App. at 20.
Segue has failed to demonstrate that the cost of obtaining the testimony of willing witnesses would be lower if the case were tried in Canada. In fact, it has not even identified which witnesses are the willing ones. Moreover, there is no indication where four of the seven relevant anticipated witnesses reside. This factor favors Hayes' position on those bases alone. See Piper Aircraft, 454 U.S. at 258 (holding that moving defendant must provide enough information to enable district court to balance parties' interests); Bans v. Sulpicio Lines, Inc., 932 F.2d 1540, 1549-50 (5th Cir. 1991) (same). But even if the court assumes that all witnesses are willing, Hayes has agreed to travel to Dallas, and Segue has made no showing that the combined cost of Fischer's traveling from Austin to Canada, Segue's officers' and Jackowiak's traveling from Massachusetts to Canada, and Hayes' serving process on United States residents under the procedures of international conventions would be significantly less than the cost of Segue's officers' and Jackowiak's traveling from Massachusetts to Texas. Absent an indication of Canadian witnesses, a speculative analysis of their travel to Texas is inappropriate. See supra note 2. With no specific record evidence as to the complex comparison of costs involved, the court holds that Segue has failed to meet its burden of establishing that obtaining willing testimony in the Canadian forum would be less expensive for the parties than doing so in the Texas forum. This factor therefore favors litigating the case in Texas.
C
Because the factor that considers probability of view of the premises is not relevant to this case, the court need not consider it.
D
The court next evaluates all practical considerations of efficiency and expense. Segue contends this factor weighs in favor of a Canadian forum because Canadian common law will apply to Hayes' claims. Hayes responds that he is willing to stipulate to the application of Texas law in this court. He also argues that Segue's contention is irrelevant because Canadian and Texas common law are identical as to breach of contract.
Courts usually treat the choice of law issue as a public interest factor, but it is the only relevant practical consideration that Segue addresses in its briefing on private interest factors, and the court's familiarity with Canadian law does impact the parties', as well as the court's, considerations of efficiency and expense. The court therefore considers the issue under both the private and public interest inquiries.
Hayes also argues that the fact that a previous, similar case against Segue was tried in the Northern District of Texas weighs in favor of a Texas forum for his case. But as Segue points out, that case involved a Texas plaintiff and a contract governed by Texas rather than Canadian law. This argument is therefore irrelevant to a forum non conveniens analysis in this case.
The fact that Canadian law applies to this dispute is significant. "While this factor alone is not sufficient to warrant dismissal when a balancing of all relevant factors shows that the plaintiffs chosen forum is appropriate, many forum non conveniens decisions have held that the need to apply foreign law favors dismissal." Tjontveit v. Den Norske Bank ASA, 997 F. Supp. 799, 810 (S.D. Tex. 1998). See Piper Aircraft, 454 U.S. at 260, n. 29. Because the court is unfamiliar with Canadian law, it is reasonable to conclude that the parties would have to expend more time and resources trying the case here. This factor weighs in favor of litigating the case in Canada.
Hayes' arguments as to the choice of law issue are unconvincing. First, Segue correctly points out that choice of law is a matter governed by public law unless the parties entered into an ex ante private law contract to have potential disputes governed by a particular state's or country's laws. Hayes cannot simply stipulate ex post to his willingness to allow Texas law to apply in order to avoid dismissal. When the parties to a contract have not chosen the law that is to govern their agreement, the rights and duties of the parties are determined by the local law of the state or country that has the most significant relationship to the transaction and the parties. Tjontveit, 997 F. Supp. at 810. Because the contracts at issue were signed in Canada and govern business relations between the parties that took place in Canada, and since there is no evidence on the present record of a relationship, much less a significant one, between Texas and the transaction and parties involved, Canadian common law will likely apply to Hayes' claims.
Hayes' contention that Canadian and Texas common law are identical is incorrect. While it is true that both the United States and Canada have common law systems, the content of their laws differs. If Canadian common law controls in a case, as it appears to here, then the court hearing the case must be familiar with and apply that law in the manner in which Canadian courts would do so. Because the process of familiarizing this court with foreign law would cost the parties time and resources, this factor favors dismissal on forum non conveniens grounds.
E
Considering the private interest factors together, Segue has failed to show that they favor dismissal.
V
When the private interest factors do not weigh in favor of dismissal, the court must consider the public interest factors. Robinson, 117 F.3d at 908; see Baris, 932 F.2d at 1550-51 (holding that if private interest factors weigh in favor of dismissal, no further inquiry need be made). "[E]ven when the private conveniences of the litigants are nearly in balance, a trial court has discretion to grant forum non conveniens dismissal upon finding that retention of jurisdiction would be unduly burdensome to the community, that there is little or no public interest in the dispute or that foreign law will predominate if jurisdiction is retained." Air Crash, 821 F.2d at 1165-66 (quoting Pain v. United Techs. Corp., 637 F.2d 775, 792 (D.C. Cir. 1980)).
A
The court first considers administrative difficulties arising from congested courts. Segue does not directly address this issue in the briefing, and there is no indication in the record that this court is more congested than is the Canadian court that would hear this case. See Capital Currency Exch., N.V. v. Nat'l Westminster Bank PLC, 155 F.3d 603, 611 (2d Cir. 1998) (holding that this factor favored neither British nor American forum where there was no indication in record that British courts are more or less congested than American courts). Because Segue has the burden of showing that this factor favors dismissal, the court holds it supports litigating the case in Texas.
B
The court next evaluates the burden of jury duty. Texas jurors do not have a strong interest in resolving a dispute between a Canadian citizen and a Massachusetts-based corporation over contracts signed, and sales that occurred in, Canada, particularly on the basis of Canadian law. See infra at § V(E). In fact, the only connection between this case and the Texas forum is that Segue has a branch office in Dallas. There is no indication, however, that the branch office had anything to do with Hayes' employment or his case. "Jury duty is a burden that ought not to be imposed upon the people of a community [that] has no relation to the litigation." Gulf Oil, 330 U.S. at 508-09; see Robinson, 117 F.3d at 908. Hayes' lawsuit does not even contain the "little" public interest that Air Crash deems insufficient for strong juror interest. See Air Crash, 821 F.2d at 1166. This factor strongly favors litigating the case in Canada.
C
The court next addresses the local interest in having localized controversies decided at home. There is a strong connection between the case and Canada because Hayes is a Canadian citizen who resides there, was working for Segue's Canadian branch as Canadian sales manager, entered into the two relevant contracts with Segue in Canada, and made the sales that relate to this dispute to Canadian companies. The only connection to Texas is Segue's branch office here, but, given the fact that neither side points to witnesses or documents at the Dallas branch office, it appears to have nothing to do with this case. This factor therefore strongly favors litigating the case in Canada.
D
Because this case does not touch the affairs of many persons, requiring that the trial be held in their view and reach, the court does not address this public interest factor.
E
The court finally considers the avoidance of unnecessary problems in conflicts of law and the application of foreign law. There is not a conflict of law issue, but Segue argues that the public interest in having a case tried in a forum that is familiar with the law governing the action — here, Canadian law — is especially compelling in diversity cases. Hayes' responses that he will stipulate to the application of Texas law and that, in any event, Texas common law and Canadian common law as to breach of contract claims are identical, are unconvincing. See supra § IV(D).
The court holds that this factor favors litigating the case in Canada. Canadian courts are better able to understand and apply their own laws than are Texas courts, even when remedies under the two sets of law are comparable, as Hayes argues they are in a breach of contract case. While access to electronic legal databases as well as the similarity of the Canadian legal system to the United States system reduce the burden of applying Canadian law in a Texas forum, that burden is still significantly greater than the one faced by a Canadian court applying its own law. The need to consider foreign law points toward dismissal. Piper Aircraft, 454 U.S. at 260 n. 29 (citing decisions holding that need to apply foreign law, although not conclusive, favors dismissal).
VI
Having considered both the private and public interest factors, the court holds that Segue has made the strong showing necessary to justify dismissing this case based on forum non conveniens because the balance of convenience tilts strongly in favor of litigating the case in Canada. Canada is an available and adequate forum. The private interest factors, due in large part to the inability of Segue to meet its burden of proof, indicate no clear sense of which forum would be more convenient for the parties. The public interest factors, however, strongly favor trial in Canada. Although there is no evidence of a relatively greater administrative burden in the Northern District of Texas than in Canada, there is strong evidence that the nexus of the case is in Canada. This lawsuit involves a Canadian plaintiff allegedly wronged under contracts signed in Canada and dealing with sales made in Canada to Canadian businesses. The alleged wrongdoer is a corporation whose Canadian branch employed the plaintiff. Canadian law applies to the dispute. Aside from the existence of a branch office of the corporation in Dallas, there is no connection between the case and the Texas forum. The court therefore declines to exercise jurisdiction.
VII
Because the court has decided in favor of dismissal, it must include a return jurisdiction clause in its dismissal order, in order to ensure that the "plaintiff can reinstate his suit in the alternative forum without undue inconvenience or prejudice and that if the defendant obstructs such reinstatement in the alternative forum that the plaintiff may return to the American forum." Air Crash, 821 F.2d at 1166; see Baris, 932 F.2d at 1551-52. Today's judgment of dismissal is conditioned on Segue's not contesting on the basis either of jurisdiction or limitations Hayes' choice of an appropriate Canadian forum. See Baris, 932 F.2d at 1551 (holding that district court may determine the conditions of dismissal). Hayes may move this court to reinstate this action in the event Segue seeks to evade the jurisdiction of the Canadian courts or to interpose a limitations defense.