Opinion
Civ. 2002-4138, [2002 DSD 29]
November 21, 2002
Timothy Shattuck, Daniel Harmelink, Woods, Fuller, Shultz Smith, Sioux Falls, S.D., for Plaintiff.
Eugene Lebrun, Lynn, Jackson, Shultz Lebrun, Rapid City, S.D., for Defendant.
MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS AND MOTION TO STAY
Defendants Jestin USA and Jestin SA (collectively referred to as Jestin) move to dismiss plaintiff, IBP, Inc.'s, complaint for lack of personal jurisdiction and insufficient service of process, and under the doctrine of forum non conveniens. In the alternative, Jestin seeks an order staying the proceedings in the United States under the doctrine of international abstention.
FACTS
IBP is incorporated in Delaware and has its principal place of business in Dakota Dunes, South Dakota. Jestin USA is a Florida limited liability company and the subsidiary of Jestin SA, a French corporation. In January 2001, an agent for Jestin USA approached IBP to inquire about the purchase of beef kidneys on behalf of Jestin SA. During the next several weeks, Jestin USA and IBP negotiated a contract and exchanged numerous phone calls, faxes, e-mails, and letters.
Jestin SA faxed the purchase confirmation orders to Jestin USA, which then forwarded them to IBP on January 31, 2001. The resulting agreement required IBP to ship the kidneys FAS to Houston, Texas. In other words, IBP completed its performance upon shipping the goods to the designated port, in this case, Texas. An inspector hired by Jestin then inspected the goods. After the inspector approved the kidneys and title passed to Jestin, the kidneys were shipped to the Ivory Coast. Payment was due upon the presentation of the appropriate documents, and Jestin SA wired the payment to IBP's bank in South Dakota.
In February 2001, Jestin approved and paid for the first shipment of kidneys and transported them to the Ivory Coast. Jestin agreed to future deliveries of beef kidneys. The second and third shipments took place in March and April 2001 respectively, and the shipment and payment procedures were identical to the first order.
IBP shipped three more orders to Houston during May and June 2001. Jestin's inspector approved each shipment, and two were shipped to the Ivory Coast. After the fifth shipment, Jestin USA informed IBP that Jestin SA refused to pay for the final three shipments. Jestin SA stated that all of the shipments of kidneys were nonconforming. Although Jestin attempted to sell the beef kidneys it rejected, its attempts proved unsuccessful. Jestin then returned the goods to IBP, which sold the kidneys at a loss.
On December 4, 2001, Jestin SA filed suit in France against IBP. Jestin alleged that the goods did not conform to contract specifications. The suit filed by Jestin SA in France involves only the first three shipments for which Jestin made payment. Jestin USA is not a party to the suit. On May 10, 2002, IBP filed suit against Jestin SA and Jestin USA in South Dakota circuit court. IBP's action involves the final three shipments of kidneys for which it never received payment. Jestin SA subsequently removed the action to federal district court.
DISCUSSION A. Personal Jurisdiction
Jestin alleges that the court lacks personal jurisdiction over it, since it does not have the requisite minimum contacts with South Dakota. To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party must make a prima facie showing of jurisdiction. Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384, 1387 (8th Cir. 1991). Jurisdiction need not be proven by a preponderance of the evidence until trial or until the court holds an evidentiary hearing. Id. When the court has not held a hearing and is relying on pleadings and affidavits, the facts are considered in the light most favorable to the nonmoving party, and all factual conflicts are resolved in favor of that party. Id.
Determining whether a federal court has personal jurisdiction over a nonresident defendant usually involves a two-step analysis. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir. 1995). First, the applicable long-arm statute, here SDCL 15-7-2, must be satisfied. Id. Second, the court determines whether the exercise of jurisdiction comports with the due process clause of the Fourteenth Amendment. Id. In South Dakota, courts consolidate this analysis into a single step because the state's long-arm statute is coextensive with the due process clause. Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994).
The due process clause requires that jurisdiction over a nonresident defendant comports with traditional notions of fair play and substantial justice and that the defendant has sufficient minimum contacts with the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Contacts are sufficient if the defendant should reasonably anticipate being haled into court there. World-Wide Volkswagen Corp., 444 U.S. at 297. A defendant can reasonably anticipate being haled into the forum state's court if he purposefully avails himself of the privilege of conducting activities within the forum state and thus invokes the benefits and protections of its laws. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 SCt 2174, 2183, 85 L.Ed.2d 528 (1985); Hanson v. Denckla, 357 U.S. 235, 253, 78 SCt 1228, 1240, 2 L.Ed.2d 1283 (1958). Thus, a party will not be haled into court based on the unilateral activity of another party or third person. Burger King, 105 SCt at 2183.
Specific jurisdiction exists when the defendant purposefully directs his activities at the forum and "the litigation results from alleged injuries that arise out of or relate to those activities." Id. at 2182. When the litigation involves contract obligations, "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." Id. While a single act can support jurisdiction, International Shoe Co., 66 SCt at 159, a contract with a nonresident alone does not automatically establish sufficient minimum contacts. Burger King, 105 SCt at 2185.
A contract does, however, connect prior business negotiations with future consequences, and a court must examine these factors to determine whether they establish contacts that confer jurisdiction. Id. See St. Jude Medical, Inc. v. Lifecare Int'l, Inc., 250 F.3d 587, 591 (8th Cir. 2001) ("In a contract case a court must consider the parties' prior negotiations, contemplated future consequences and actual course of dealings. The terms of the contract must be taken into account as well."). Thus, a party cannot wield "the Due Process Clause . . . as a territorial shield to avoid interstate obligations that have been voluntarily assumed" through its contract negotiations. Burger King, 105 SCt at 2183. See McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 SCt 199, 201, 2 L.Ed.2d 223 (1957) (jurisdiction properly based on a suit arising from an insurance contract that was substantially connected to the forum since it was delivered to the forum, premiums were mailed to the forum, and the insured lived in the forum).
The court analyzes five factors to determine jurisdiction: "(1) the nature and quality of the contacts with the forum state; (2) the quantity of the contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties." Austad Co. v. Pennie Edmonds, 823 F.2d 223, 225 (8th Cir. 1987). Courts should not mechanically apply this test but should consider the circumstances of each case. Id. The first three factors are of primary importance. Id.
1. Nature and Quality of the Contacts
Contacts sufficient to permit jurisdiction include the nonresident's telephone calls into the forum state, physical presence for business purposes in the forum state, or receipt of profits from commerce with the forum's residents. Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1002 (8th Cir. 1988). In addition, a contract that contemplates an ongoing relationship and requires regular communications between the parties supports a finding of jurisdiction. St. Jude Medical, Inc., 250 F.3d at 592. A court can also consider mail and telephone contacts to determine whether the defendant has "purposely availed himself of the privilege of doing business" in the forum. Wessels, Arnold Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1433 (8th Cir. 1995). Which party pursued the relationship is also relevant in ascertaining whether the nonresident purposefully connected himself to the forum. St. Jude Medical, Inc., 250 F.3d at 592. In essence, a court looks at whether the nonresident maintained a continuous, systematic business relationship with the forum state. Wessels, Arnold Henderson, 65 F.3d at 1433.
In this case, Jestin USA, on behalf of Jestin SA, sought out the relationship with IBP in January 2001. A contractual relationship arose from this contact, which encompassed six separate shipments of beef kidneys. Jestin SA sent IBP the necessary purchase orders and financial statements. During the next six months, Jestin maintained contact with IBP via faxes, e-mails, and telephone calls. Jestin SA purposefully connected itself to South Dakota through an ongoing contract for beef kidneys. Thus, the nature and quality of the contacts supports a finding of jurisdiction.
2. Quantity of Contacts
Physical presence in the state is not required for jurisdiction:
Jurisdiction . . . may not be avoided because the defendant did not physically enter the forum State. Although territorial presence frequently will enhance a potential defendant's affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor's efforts are "purposefully directed" toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.
Burger King, 105 S.Ct. at 2184 (emphasis in original). See Bell Paper Box, 22 F.3d at 820 (court still found jurisdiction despite defendant having only "slight physical contact" with the forum). Indeed, telephone contacts and commercial benefits derived from commerce with residents of a state are considered substantial contacts. Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1002 (8th Cir. 1988).
Here, although Jestin did not physically enter South Dakota, for six months it maintained regular contact with IBP, which was located in South Dakota. In January 2001, Jestin began faxing necessary documents to IBP. Over the next six months, Jestin contacted IBP through e-mails, faxes, and letters. Additionally, Jestin wired payment for the beef kidneys to IBP's bank in South Dakota. These abundant contacts support a finding of jurisdiction.
3. Relation of the Cause of Action to the Contacts
To satisfy due process, the nonresident's contacts must form a substantial connection to the forum state. The necessary contacts, therefore, cannot be random, fortuitous, or attenuated. Burger King, 105 S.Ct. at 2183. Litigation that arises out of or relates to the nonresident's contacts with the state satisfy this prong. Id. at 2182; St. Jude Medical, Inc., 250 F.3d at 591.
In this case, both the litigation and the contacts arose from the contract for beef kidneys. Indeed, every contact between Jestin and IBP centered on their contractual obligations. None of Jestin's contacts were random, fortuitous, or attenuated. This deliberate connection established by Jestin placed it on notice that it may be haled into a South Dakota court. A direct relationship existed between the claim and the contacts.
4. Interest of the Forum State Providing a Forum for its Residents
"A State generally has a 'manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors." Burger King, 105 SCt at 2182. The forum's interest, moreover, is heightened when the alternative forum is outside of the United States. Lehman v. Humphrey Cayman, Ltd., 713 F.2d 339, 344 (8th Cir. 1983). In these circumstances, not only does the forum state have an interest, but "the United States itself has an interest in seeing that plaintiff is provided a forum in this country." Id.
South Dakota has a strong interest in providing a forum for IBP in this case since IBP's principal place of business is in South Dakota. IBP will suffer the effect of any economic loss in South Dakota. South Dakota also has an interest in protecting its companies from actions by nonresidents. If South Dakota is unable to provide a forum, IBP would be forced to seek relief in France. Thus, not only South Dakota, but also the United States, has a manifest interest in providing a forum for this suit. Consequently, this factor weighs in favor of exercising jurisdiction over Jestin.
5. The Convenience of the Parties
Convenience of the parties is not a weighty factor in the jurisdictional analysis. Since "'modern transportation and communications have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity,' it usually will not be unfair to subject him to the burdens of litigating in another forum for disputes relating to such activity." Burger King, 105 S.Ct. at 2183 (quoting McGee, 355 U.S. at 223, 78 S.Ct. at 201). Moreover, "jurisdictional rules may not be employed in such a way as to make litigation 'so gravely difficult and inconvenient' that a party unfairly is at a 'severe disadvantage' in comparison to his opponent." Id. at 2185 (quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18, 92 S.Ct. 1907, 1917, 32 L.Ed.2d 513 (1972)).
It is clearly more convenient for IBP to litigate in South Dakota rather than France. Jestin USA, moreover, is located in Florida; thus, it is not prohibitively inconvenient for them to litigate in South Dakota. While it is less convenient for Jestin SA to litigate in the United States, modern technology and its American alter-ego, Jestin USA, can reduce some of this burden. Inconvenience does not amount to a denial of due process. McGee, 78 SCt at 201. Accordingly, this factor does not prohibit a finding of jurisdiction in this case.
Jestin relies on Bell Paper Box, Inc. v. Trans Western Polymers, Inc., 53 F.3d 920 (8th Cir. 1995) to support its claim that South Dakota lacks jurisdiction over it. Although the case presents a close question, jurisdiction over Jestin is nonetheless proper. Bell Paper Box, however, is distinguishable from the present case for several reasons. Trans Western, a California company, solicited business from Bell Paper Box, a South Dakota company, through an independent broker. Id. at 921. The court noted that "actions by Trans Western itself must have created a substantial connection with the forum." Id. at 922 (emphasis in original). The negotiations in Bell Paper Box all took place in California. Id. at 921. Indeed, only a single purchase order linked Trans Western to South Dakota. Id. at 922. The CEO of Bell Paper Box actually traveled to California. Id. at 921. The contract specified that Bell Paper ship the goods to California. Id. And finally, the court described the use of phones and mail as a "secondary or ancillary" factor that alone did not establish the necessary minimum contacts. Id. at 923.
The current case differs in several important respects. Jestin itself, not an independent agent, aggressively pursued IBP and the contract for beef kidneys. Although the negotiations took place over the phone and through e-mail, Jestin initiated these communications and directed them at IBP in South Dakota. IBP neither sent representatives nor shipped the goods to Florida. Moreover, even if the court were to classify Jestin's phone calls and e-mails as ancillary factors, the circumstances in their entirety support a conclusion that Jestin purposefully availed itself of the privilege of conducting business within South Dakota's borders. Substantially more than just a single purchase order connects Jestin to both IBP and South Dakota.
Finally, Bell Paper Box's analysis is more akin to a determination that South Dakota lacked general jurisdiction over the defendant. The court did not address the possibility that specific jurisdiction may be appropriate if Bell Paper Box's claim directly arose from Trans Western's contact with the state. In the present case, although South Dakota may not have general jurisdiction over Jestin, specific jurisdiction is proper. In particular, the litigation ensued directly from the contract and all of Jestin's contacts with South Dakota related to the contract. Consequently, exercising jurisdiction over Jestin will not offend traditional notions of fair play and substantial justice and the court finds that IBP has made a prima facie showing of jurisdiction.
B. Service of Process
Jestin SA further claims that IBP did not effectively serve it. "Service of process refers to the formal delivery of documents that is legally sufficient to charge the defendant with notice of a pending action." Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 700, 108 SCt 2104, 2108, 100 L.Ed.2d 722 (1988). Rule 4(h)(1) of the Federal Rules of Civil Procedure delineates the service of process that applies to a foreign corporation. Fed.R.Civ.P. 4(h). Such service is proper in a judicial district of the United States according to the law of the state where the court is located. Fed.R.Civ.P. 4(h)(1), Fed.R.Civ.P. 4(e)(1). See Printed Media Services, Inc. v. Solna Web, Inc., 11 F.3d 838, 842 (8th Cir. 1993) (law of the state where district court sits governs the service of summons and complaint on a foreign corporation). Under South Dakota law, a party serving a foreign corporation should serve the summons on the "president or other head of the corporation, secretary, cashier, treasurer, a director or managing agent thereof." SDCL 15-6-4(d). Alternatively, a party can leave a copy of the summons and complaint with an officer or employee over the age of 14 at the defendant's place of business. SDCL 15-6-4(e).
"If the internal law of the forum state defines the applicable method of serving process as requiring the transmittal of documents abroad, then the Hague Service Convention applies." Volkswagenwerk, 108 SCt at 2108. The Hague Service Convention indicates that the court should appoint an international process server to serve the summons and complaint on a foreign, corporate defendant. South Dakota law invokes this provision of the Hague Convention by requiring personal service on the corporation's president or other head of the corporation, secretary, cashier, treasurer, a director, or managing agent hereof. See Sondergard v. Miles, Inc., 985 F.2d 1389, 1394 (8th Cir. 1993) (effective service of process of a foreign corporation under South Dakota law requires personal service on an appropriate agent of the corporation).
In this case, IBP initially served the summons and complaint on Jestin USA's agent in Florida. This constituted proper service on Jestin USA but not on Jestin SA. To properly serve Jestin SA, a French corporation, IBP needed an international process server. On August 15, 2002, IBP filed a motion requesting the court to appoint an international process server. The court granted this motion on August 30, 2002. According to the certificate of attestation, a representative of Jestin SA was served on September 23, 2002, in Morlaix, France.
Under Rule 4(m), plaintiff must serve defendant within 120 days after filing the complaint unless plaintiff shows good cause for an extension of time. Fed.R.Civ.P. 4(m). It appears that the international process server did serve Jestin SA prior to October 17, 2002, which is 120 days after the complaint was filed on June 19, 2002. The court, therefore, will not dismiss Jestin SA as a defendant for want of proper service.
C. Forum Non Conveniens
Jestin claims that the doctrine of forum non conveniens justifies dismissal. Generally, plaintiff's choice of forum deserves great deference. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 265-66, 102 SCt 252, 255, 70 L.Ed.2d 419 (1981). "[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Lehman v. Humphrey Cayman, Ltd., 713 F.2d 339, 341 (8th Cir. 1983). If the chosen forum, however, "establish[es] oppressiveness and vexation to a defendant out of all proportion to plaintiff's convenience," the court may properly dismiss the action for forum non conveniens. American Dredging Co. v. Miller, 510 U.S. 443, 447-48, 114 SCt 981, 985, 127 L.Ed.2d 285 (1994). Furthermore, "a real showing of convenience by a plaintiff who has sued in his home forum will normally outweigh the inconvenience the defendant may have shown." Lehman, 713 F.2d at 342 (quoting Koster v. (American) Lumbermens Mut. Cas. Co., 330 U.S. 518, 67 SCt 828, 91 L.Ed. 1067 (1947)).
In determining whether to dismiss a case for forum non conveniens, a court should consider both private interests of the litigant and public interests. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 SCt 839, 843, 91 L.Ed. 1055 (1947). The litigant's private interests include (1) residence of the parties, (2) location of key witnesses, (3) access to evidence, (4) ability to litigate in a foreign forum; and (5) expectation of the parties. Reid-Walen v. Hansen, 933 F.2d 1390, 1394-1400 (8th Cir. 1991). The public interests include the local interest in the dispute and the application of its own state law. Id. at 1400-01. The defendant bears the burden of proving these necessary elements. Id. at 1393.
1. Private Factors a. Residence of the Parties
"[T]he home forum for the plaintiff is any federal district in the United States, not the particular district where the plaintiff lives." Reid-Walen, 933 F.2d at 1394. Indeed, citizens should rarely be denied access to United States courts. Id. (citing Koster, 67 SCt 828). The expansion of international commerce, however, may make dismissal for forum non conveniens appropriate "when every reasonable consideration leads to the conclusion that the site of the litigation should be elsewhere." Id. at 1395. This typically applies to plaintiffs doing business abroad since a defendant who engages in international business opens himself to suit in the United States. "In incorporating in this country and locating here . . . they have in effect signified their willingness to be sued in American courts." Lehman, 713 F.2d at 346.
In the present case, both IBP and Jestin USA are located in the United States. While IBP knew that the sale of beef kidneys involved international commerce, Jestin SA was aware of its involvement with an American corporation. Indeed, it conducted the sale through its American alter-ego, Jestin USA. The negotiations for the contract, the preparation of the kidneys, the transportation, and inspection all took place in the United States. Once the kidneys reached Houston, Texas, IBP had fulfilled its obligation. Thus, it is more accurate to classify Jestin SA as conducting business in the United States than to state that IBP engaged in business abroad. Accordingly, this factor favors IBP and supports the conclusion that the United States is the appropriate forum.
b. Location of Key Witnesses
A court must consider the materiality and importance of the witnesses' anticipated testimony before determining their accessibility and convenience to the forum. Reid-Walen, 933 F.2d at 1396. Defendant bears the burden of providing this information. Id. In this case, IBP named as important witnesses its representatives in South Dakota, the former Jestin USA employee who negotiated the contract, and the Houston-based agency that inspected the meat. Jestin SA identifies Jestin employees located in London and those who inspected the kidneys in the Ivory Coast as relevant witnesses. Jestin SA, however, does not describe the testimony of these expected witnesses.
This case involves witnesses across the United States, in Africa, and in Europe. This litigation will inconvenience numerous witnesses regardless of where it proceeds. See Reid-Walen, 933 F.2d at 1397 (in a case involving the United States and Jamaica, witnesses would have to travel or testify by deposition no matter where the trial occurred). Furthermore, Jestin SA has the burden of demonstrating the importance of witnesses' testimony and the added convenience of litigating in France. Jestin SA has not satisfied this burden because it has neither stated the materiality of the proposed testimony nor established that more witnesses exist outside of the United States. Additionally, Jestin SA did not delineate any significantly greater problems in procuring the testimony of non-American witnesses in an American proceeding than procuring the testimony of non-French witnesses in a French proceeding. See id. (defendants failed to support their claim that a forum in the United States would greatly inconvenience the Jamaican witnesses).
Thus, this factor does not support a dismissal for forum non conveniens. Since witnesses are located all over the globe, IBP's choice of forum in South Dakota is neither harassment nor oppressive to the defendants. Moreover, Jestin SA failed to establish exceptional circumstances as to why this court should dismiss the action. See Lehman, 713 F.2d at 343 (court held that the location of defendant's witnesses in the Cayman islands was not an exceptional circumstance justifying dismissal for forum non conveniens). Accordingly, Jestin has not proved that this factor favors a dismissal of the action.
c. Access to Evidence
IBP asserts that the majority of evidence is located in the United States because the relevant acts took place in the United States: contract negotiations, mailing of the purchase orders and other communications between the parties, shipment, and inspection of the kidneys. Jestin SA contends that few of the relevant acts occurred in South Dakota, thereby making it an inappropriate forum. Jestin SA also argues that a substantial amount of documents are located in France, many of which were submitted to the French court.
Both parties should have substantial access to the evidence. Because this is a suit on a contract, documents make up the majority of the relevant evidence, and both parties likely have copies of these documents. Furthermore, any documents not available to one party are easily transported to the forum. Accordingly, access to the evidence neither supports nor undermines dismissal in this case.
d. Ability to Litigate in Foreign Forum
"[C]ourts must be sensitive to the practical problems likely to be encountered by plaintiffs in litigating their claim, especially when the alternative forum is in a foreign country." Reid-Walen, 933 F.2d at 1398. Corporate plaintiffs engaged in international business lessen the likelihood of these practical problems, however. Id. Furthermore, courts should promote the resolution of all claims in a single lawsuit. Piper Aircraft, 102 SCt at 268.
Jestin SA previously filed suit against IBP in France regarding the first three shipments of beef kidneys. IBP retained counsel and filed a responsive pleading in France. This action indicates that IBP has the ability to litigate in France. IBP argues that the French litigation is incomplete because the action in the United States involves the final three shipments of kidneys for which IBP never received payment. Jestin SA responds that although IBP could have filed a counterclaim in the French litigation, it did not, and this strategic move should preclude IBP from arguing that the French litigation will provide incomplete relief. These facts indicate that IBP has the ability to litigate in France. Consequently, this factor favors Jestin SA's motion.
e. Expectation of the Parties
Parties who conduct large, multinational business operations can expect suit where such transactions occur. Reid-Walen, 933 F.2d at 1400. Both IBP and Jestin SA conduct international business. Jestin SA, however, has a subsidiary company located in Florida, Jestin USA. Furthermore, Jestin SA used Jestin USA to solicit IBP's business and to negotiate the contract. Under the terms of the contract, shipment, payment, and inspection all occurred in the United States. Although IBP knew of the French parent company, none of the dealings with Jestin USA directly involved the French company. Accordingly, IBP could naturally presume and Jestin SA could fully expect suit in the United States. This factor, therefore, favors IBP and a forum in South Dakota. After weighing all the private factors, the court finds that these factors weigh in favor of IBP.
2. Public Factors a. Interest of the Forum in the Dispute
The United States has an interest in providing a local forum for its residents, particularly when the alternative forum is outside the United States. Lehman, 713 F.2d at 344. See also Reid-Walen, 933 F.2d at 1400 (home forum has an interest in resolving disputes involving their citizens). In this case, the alternative forum is France. While France does have a significant connection to Jestin SA, the United States has an equally significant connection to IBP. As a result, this factor does not favor either France or the United States as the appropriate forum. Cf. de Melo v. Lederle Labs., 801 F.2d 1058, 1064 (8th Cir. 1986) (where Brazilian plaintiff sued companies from New York and New Jersey for an incident that occurred in Brazil, court ruled that Minnesota had no interest in the litigation).
b. Application of Substantive Law
The fact that a court may have to apply foreign law neither disposes of the forum non conveniens issue nor outweighs the relevant private interests. Reid-Walen, 933 F.2d at 1401. IBP contends that either South Dakota or Florida law will apply to the present controversy. Jestin SA asserts that it is not clear whether either of these states' law applies or whether French law should control. Since the contract did not contain a choice of law clause, this court cannot determine what substantive law applies at this stage of the litigation. Consequently, this factor does not support either IBP or Jestin SA.
The moving party bears the burden of proof on a motion to dismiss based on forum non conveniens. A plaintiff's choice of forum should only be disturbed if the balance strongly favors the defendant. Lehman, 713 F.2d at 341. Here, Jestin SA has not established that the balance is strongly in its favor. Thus, this court must defer to plaintiff's choice of forum, South Dakota, and deny Jestin's motion to dismiss for forum non conveniens.
D. Staying the Action in the United States
Jestin contends that the court should stay the proceedings in the United States pending resolution of the French litigation. Federal courts have a "virtually unflagging obligation . . . to exercise the jurisdiction given them." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 SCt 1236, 1246, 47 L.Ed.2d 483 (1976). Only exceptional circumstances justify abdicating this strict duty. Id. at 813. "A stay is as much a refusal to exercise federal jurisdiction as a dismissal." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 28, 103 SCt 927, 943, 74 L.Ed.2d 765 (1983). Every court has inherent power to stay proceedings, incidental to the ability to "control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." Landis v. North American Co., 299 U.S. 248, 254-55, 57 SCt 163, 166, 81 L.Ed. 153 (1936).
A stay presumes that the parallel proceeding will adequately determine the issues between the parties. Moses H. Cone, 103 SCt at 943. "If there is any substantial doubt as to [the adequacy of the parallel proceedings,] it would be a serious abuse of discretion to grant the stay or dismissal at all." Id. Thus, a court must clearly justify the surrender of its jurisdiction. Colorado River, 96 SCt at 1247, AAR Int'l, Inc. v. Nimelias Enters. S.A., 250 F.3d 510, 518 (7th Cir. 2001).
Generally, parallel proceedings on the same in personam claim can proceed simultaneously. E.g., Gau Shan Co. Ltd. v. Bankers Trust Co., 956 F.2d 1349, 1352 (6th Cir. 1992), Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926 (D.C. Cir. 1984). A federal court, however, can dismiss or stay a proceeding in deference to a concurrent state proceeding. Boushel v. Toro Co., 985 F.2d 406, 409 (8th Cir. 1993), Colorado River, 96 SCt at 1246. Although concurrent federal and state proceedings differ from concurrent foreign and domestic suits, the same general principles and interests of international comity apply. AAR Int'l, 250 F.3d at 518, Neuchatel Swiss Gen. Ins. Co. v. Lufthansa Airlines, 925 F.2d 1193, 1195 (9th Cir. 1991) ("We reject the notion that a federal court owes greater deference to foreign courts than to our own state courts.").
"While courts regularly permit parallel proceedings in an American court and a foreign court," Turner Entertainment Co. v. Degeto Film, 25 F.3d 1512, 1521 (11th Cir. 1994), such proceedings must indeed be parallel. AAR Int'l, 250 F.3d at 518. Thus, when determining whether to grant a stay, a court should consider (1) the similarity between the two actions, (2) the degree of progress already made in the first action, (3) the adequacy and appropriateness of the foreign forum, (4) international comity, and (5) judicial economy. Boushel, 985 F.2d at 410 n. 2. No one factor is dispositive; thus courts must carefully consider "both the obligation to exercise jurisdiction and the combination of factors counseling against that exercise." Colorado River, 424 U.S. at 818-19.
1. Similarity Between the Two Actions
"Suits are parallel if substantially the same parties are litigating substantially the same issues simultaneously in two fora." AAR Int'l, 250 F.3d at 518. The suits need not be identical; the relevant inquiry is whether it is substantially likely "that the foreign litigation will dispose of all claims presented in the federal case." Id. This analysis prevents duplicative litigation. Colorado River, 96 SCt at 1246.
In this case, the present lawsuits involve identical parties: IBP, Jestin SA, and Jestin USA. Although Jestin SA contends that it is not a party to the United States litigation due to improper service, IBP has taken the necessary steps to correct this problem. The suits are also on the same contract; however, the issues are not identical. In France, Jestin SA sued IBP on the first three shipments of beef kidneys. In the United States, IBP sued Jestin USA and Jestin SA on the final three shipments for which IBP did not receive payment. As a result, the two lawsuits contain crucial variations, and the foreign litigation cannot completely dispose of the claims. See AAR Int'l, 250 F.3d at 519-20 (court determined two actions were not similar since the federal suit contained more claims than those before the foreign court). Accordingly, this factor weighs against a stay.
2. Degree of Progress Already Made in the Foreign Action
Jestin SA filed the French lawsuit on December 4, 2001; IBP instituted the United States proceeding five months later on May 10, 2002. Thus, although the chronological filing of the actions favors a stay, this is not dispositive. See Turner, 25 F.3d at 1522 (court noted that "none of the cases regarding concurrent international give priority solely on the basis of first-filing"). Despite its five-month head start, the French litigation has not progressed significantly beyond the American proceeding. In the French action, IBP has filed responsive pleadings challenging the French court's jurisdiction and moved to dismiss the claims. In the American action, Jestin SA had the case removed to federal court, challenged the court's jurisdiction, and moved for dismissal. Because both lawsuits are in the preliminary stages, this factor does not favor a stay. See Neuchatel Swiss, 925 F.2d at 1195 ("Even if the litigants had made somewhat more progress in Geneva than in the district court . . . the mere fact that parallel proceedings may be further along does not make a case 'exceptional' for the purpose of invoking the Colorado River exception to the general rule that federal courts must exercise their jurisdiction concurrently with courts of other jurisdictions.").
3. The Adequacy and Appropriateness of the Foreign Forum
A federal court must ensure that its decision whether or not to stay a proceeding does not prejudice the party opposing the stay. Turner, 25 F.3d at 1522. Courts should also consider the convenience of the foreign forum under this factor. Colorado River, 96 SCt at 1247. A federal court should resolve any doubts about the adequacy of the foreign proceeding in favor of exercising jurisdiction. AAR Int'l, 250 F.3d at 520.
Here, IBP describes the French forum as inadequate since it cannot grant complete relief. Jestin SA counters by arguing that any inadequacy in relief is due to IBP's failure to include any counterclaims against them in the French lawsuit. IBP's responsive pleadings primarily challenge jurisdiction and move for dismissal. Furthermore, Jestin SA has not provided evidence that compulsory counterclaims in France operate as they do in United States courts. Thus, it is unclear whether IBP could have raised these claims in France. See AAR Int'l, 250 F.3d at 522 (defendant failed to demonstrate that plaintiff could effectively plead counterclaims and obtain complete relief in foreign forum, thus foreign forum could not provide complete relief and was inadequate). Accordingly, the court finds that Jestin SA has failed to demonstrate that France can adequately hear or decide all of the issues between IBP and Jestin SA.
In addition, France is not a more convenient forum. First, witnesses for this action are located in the United States, France, the Ivory Coast, and London; therefore, both forums will inconvenience a number of witnesses. Second, since negotiations and the exchange of documents occurred in the United States, documents are presumably written in English. The United States forum would therefore eliminate any need for translation. Third, inspections of the beef kidneys occurred in the United States and the Ivory Coast. A proceeding in France would not simplify the presentation of evidence related to these inspections. Fourth, the suit concerns a garden variety contract claim rather than a complex issue of French law. Finally, the majority of the contract performance occurred in the United States. Accordingly, the United States provides a more convenient forum. Cf. Turner, 25 F.3d at 1522 (German forum more convenient since most witnesses and experts were European and contract performance took place in Germany).
Finally, Jestin SA has not alleged that any prejudice would result from proceeding in the United States. "[T]he suppliant for a stay must make out a clear case of hardship or inequity in being required to go forward, if there is even a fair possibility that the stay for which he prays will work damage to some one else. Only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both." Landis, 57 SCt at 166. Jestin SA maintains that French courts will provide due process and not prejudice IBP's interests. This statement equally applies to requiring Jestin SA to litigate in the United States. Jestin SA clearly has a presence in the United States and conducts business here. Jestin SA has also retained counsel in the United States and filed several motions in United States courts. Furthermore, Jestin SA has not cited any prejudicial procedural differences. Nothing indicates that Jestin SA will not receive a fair and just result in American courts. This factor does not favor granting a stay.
4. International Comity
The strengths of the American and French interests are relevant to the consideration of international comity. Turner, 25 F.3d at 1521. Indeed, comity
is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.
Id. at 1519 (quoting Hilton v. Guyot, 159 U.S. 113, 16 SCt 139, 40 LEd 95 (1895)). Once a foreign court enters judgment, international comity strongly favors deference to that decision. Id. at 1521. See Abdullah Sayid Rajab Al-Rifai Sons v. McDonnell Douglas Foreign Sales Corp., 988 F. Supp. 1285, 1293 (E.D.Mo. 1997) (international comity applies only after the foreign court issues a final judgment).
In this case, the United States has a strong interest in allowing the litigation to proceed. Both IBP and Jestin USA are American corporations. The lawsuit also involves a contract negotiated and performed in the United States. Furthermore, American commercial law governs the contract. While France does have an interest since Jestin SA is a French corporation, its interest does not override that of the United States. See Turner, 25 F.3d at 1521 (Germany had a greater interest in the action since contract performance took place in Germany, choice of law and forum clauses designated German courts and law, and the central issue of the case required knowledge of European broadcasting technology and markets and European law). Moreover, since France has not yet entered a decision on the matter, comity does not require deference. Therefore, international comity does not require a stay in this proceeding.
5. Judicial Economy
Judicial economy relates to "the efficient use of scarce judicial resources." Turner, 25 F.3d at 1522. It involves "considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation . . . and the desirability of avoiding piecemeal litigation." Colorado River, 96 SCt at 1246-47. At first blush, staying the American proceeding appears to promote judicial economy. A stay, however, would not dismiss the lawsuit in the United States; rather, it would merely delay it until the completion of the French proceedings. Indeed, since the American lawsuit contains additional issues, the French action could not completely dispose of the litigation. IBP and Jestin would, therefore, eventually adjudicate their claims in the United States. Thus, staying the action will not necessarily promote judicial efficiency. See Abdullah, 988 F. Supp. at 1293 (since the foreign proceeding may not resolve all of the claims, judicial efficiency did not favor a stay).
Jestin has not demonstrated exceptional circumstances justifying a stay. Indeed, the actions are not parallel, the French action has not significantly progressed beyond the American suit, litigating in France will provide neither adequate relief nor a more convenient forum, Jestin is not prejudiced by proceeding in the United States, and neither international comity nor judicial economy requires a stay. As a result, this court has the duty to retain jurisdiction.
Accordingly, it is hereby
ORDERED that defendants' motion to dismiss or in the alternative to stay the action (Docket 6) is denied.