Opinion
CIVIL ACTION NO. 02-3702, SECTION "R" (2).
June 19, 2003.
ORDER AND REASONS
Before the Court is defendant's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) on the grounds of claim preclusion under the doctrine of res judicata and, alternatively, to dismiss under the doctrine of forum non conveniens. The Court GRANTS defendant's motion based on forum non conveniens.
I. Background
In October of 1998, Westway and an affiliated company, EDF Man Liquid Products, Ltd., sued Kovzac and others in the Royal Court of the Island of Jersey in the United Kingdom. Westway is incorporated in Delaware and has it principal place of business in Louisiana. Kovzac is a limited company formed in Jersey and has its principal place of business in Jersey. Based on allegations that a Westway employee diverted funds from Westway to Kovzac and other companies, the defendants sought an "interim injunction" to prohibit plaintiff from transferring any funds from its Jersey bank accounts. The Royal Court issued the interim injunction and ordered defendants to deposit approximately $17,000 (10,000 British pounds) into escrow as an "undertaking in damages" for the duration of the proceedings. ( See Pl.'s Ex. A, attached to Pl.'s Compl.)
On February 28, 2001, over two years later, the Royal Court lifted the injunction, finding that defendants "had failed to make a full and frank disclosure of material facts to the Court prior to the granting of the said injunctions." (pl.'s Ex. B.) The court also ordered defendants to pay court costs to plaintiffs. (See id.) In the same order, the court reimposed the injunction based on defendants' allegations that new evidence existed to justify further injunctive relief. (See id.) The court ordered defendants to increase their deposit in escrow as an undertaking in damages to approximately $72,180 (50,000 British pounds). (See id.)
In June, August, and December of 2001, the court repeatedly ordered defendants to comply with plaintiffs' discovery requests or risk having their case dismissed. (See Pl.'s Exs. C D.) On February 18, 2002, the parties executed a Consent Letter, in which the defendants agreed to withdraw their cause of action and the parties agreed to abandon pending unresolved cost orders. ( See Pl.'s Ex. E.) The Consent Letter also contained the following statement of intent and reservation of rights:
(7) This agreement is in full and final settlement of all or any claims made by [Westway and EDF] and/or Kovzac Limited and/or Clifton Resources Limited against each other within the jurisdiction of the Island of Jersey.
(8) This agreement shall not affect not only any claim whatsoever and wheresoever that Kovzac Limited considers it may have against [Westway and EDF] but also Kovzac Limited's ability to pursue such claims.
( Id.) On February 19, 2002, the court dismissed the case pursuant to the terms and conditions of the Consent Letter. ( See id.)
In April of 2003, Kovzac brought suit in this Court against Westway and EDF for wrongful injunction and wrongful seizure of Kovzac's funds, claiming damages in lost profits and future profits for the three years and four months during which Kovzac's assets were frozen. Westway moves to dismiss on the grounds of claim preclusion under the doctrine of res judicata and, alternatively, forum non conveniens. The Court rules as follows.
Kovzac then voluntarily dismissed EDF and amended its complaint to exclude EDF. (Rec. Doc. Nos. 6 8.).
II. Discussion
A. Forum Non Conveniens
The doctrine of forum non conveniens "rests upon a court's inherent power to control the parties and the cases before it and to prevent its process from becoming an instrument of abuse or injustice." In re Air Crash Disaster Near New Orleans v. Pan American World Airways, Inc., 821 F.2d 1147, 1153, 54 (5th Cir. 1987) (en banc), vacated on other grounds sub nom., Pan Am World Airways, Inc. v. Lopez, 490 U.S. 1032, 104 L.Ed.2d 400, 109 S.Ct. 1928 (1989), opinion reinstated on other grounds, 883 F.2d 17 (5th Cir. 1989) (en banc). A federal court may decline to exercise jurisdiction over a controversy, regardless of whether it has jurisdiction and venue, "where it appears that the convenience of the parties and the court and the interests of justice indicate that the action should be tried in another forum." Id. (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 250, 70 L.Ed.2d 419, 102 S.Ct. 252 (1981)).
When the alternative forum is the court of a foreign country, "for convenience of the parties and witnesses, in the interest of justice, a district court may [dismiss] any civil action. . . ." 28 U.S.C. § 1404(a); 28 U.S.C. § 1352. The decision whether to dismiss on the basis of forum non conveniens is discretionary. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 237, 102 S.Ct. 252, 256, 70 L.Ed.2d 419 (1981). Generally, the plaintiff's forum selection receives deference, but "the presumption . . . applies with less than maximum force when the plaintiff or (as here) the real parties in interest are foreign." Id. at 236. The burden of establishing the elements of the doctrine of forum non conveniens rests on the defendant. In re Air Crash, 821 F.2d at 1164. The appropriate inquiry is a determination of whether an alternative forum is available and adequate, followed by balancing the convenience of the parties (private interests) and the ends or justice (public interests). See Air Crash, 821 F.2d at 1162-1165; see also Koster v. Am. Lumbermens Mutual Cas. Co., 330 U.S. 518, 527, 67 S.Ct. 828, 833, 91 L.Ed. 1067 (1947).
The relevant language of section 1404(a), which deals with venue, provides that a district court may transfer any civil action to any other district or division where it might have been brought. 28 U.S.C. § 1404. When the alternative forum is a foreign court, however, the district court must dismiss the action, because it has no authority to transfer the action to courts in foreign countries. 28 U.S.C. § 1352. See 15 CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 3828 (2d ed. 1986 Supp. 1999).
1. Foreign Plaintiff
Plaintiff does not dispute that it is a foreign company, because it is a Jersey citizen with its principal place of business in Jersey. Plaintiff asserts, however, that its principal, Alexander Glotov, who has signatory authority over plaintiff's bank accounts, is an American citizen and taxpayer. Plaintiff therefore argues that its choice of forum should be given more deference than if it none of its principals had American ties.
Despite plaintiff's assertions about Glotov's citizenship, its complaint states that Glotov is "of Kiev, Ukraine." (Pl.'s Amended Compl. ¶ 8.) Regardless of Glotov's true citizenship, however, the plaintiff and real party in interest here is Kovzac, not Glotov. Thus, the Court will afford plaintiff's forum selection less deference because it is a foreign party.
2. Available and Adequate Forum
The court must decide whether there is an available and adequate form in a foreign country to which all parties are amenable. See Air Crash, 821 F.2d at 1163-4 (citing Reyno, 454 U.S. at 254 n. 22); see generally CHARLES ALAN WRIGHT ARTHUR R. MILLER, supra, n. 3. "A foreign forum is available when the entire case and all parties can come within the jurisdiction of that forum." Air Crash, 821 F.2d at 1165. Generally, the "defendant's submission to the jurisdiction of an alternative forum renders that forum available for purposes of forum non conveniens analysis." Syndicate 420 at Lloyd's London v. Early Am. Ins. Co., 796 F.2d 821 (5th Cir. 1986) (citing Veba-Chemie A.G. v. M/V GETAFIX, 711 F.2d 1243, 1245 (5th Cir. 1983)). Here the underlying litigation involved the same parties, who submitted to the jurisdiction of the Royal Court of Jersey. It is clear that Kovzac is amenable to Jersey's jurisdiction because Kovzac is a citizen of Jersey with its principal place of business in Jersey. Westway states that it consents to jurisdiction in Jersey. Therefore, the Jersey courts are available to hear the claims alleged by plaintiff.
"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 they might receive in an American court." Air Crash, 821 F.2d at 1165 (internal citations omitted); see also Lloyd's London, 796 F.2d at 830. Kovzac does not argue that the Jersey legal system will treat at it unfairly, but rather that the Jersey courts do not provide remedies available under American law because Jersey "does not effectively recognize a cause of action for wrongful injunction and/or wrongful seizure." (Pl.'s Br. at 13.) Plaintiff's argument is without merit.
Jersey law expressly recognizes a party's claim for damages for a wrongful injunction. In Hughes v. Clewley, 2 Lloyd's Rep. 667 (Jersey Royal Ct. 1996), the Royal Court periodically renewed the plaintiff's injunction to prohibit the defendant from transferring the plaintiff's ship over the course of four years. About two months after the injunction was finally discharged, defendant asked for "an inquiry into damages" on the grounds that plaintiff had failed to disclose information relevant to the propriety of the injunction. The court held,
Where an interim or interlocutory injunction is granted, but is subsequently discharged, the defendant may well have suffered damage by reason of having had to comply with the injunction in the meantime. He may then seek to enforce the undertaking as to damages which the plaintiff will have been required to give at the earlier hearing.
In order to enforce the undertaking, the damage sustained must be assessed by means of an inquiry as to damages, generally taken before a master . . .
It is clear that — if an undertaking in damages has been given or can be implied — it may at a stage in the proceedings be appropriate to determine whether the party giving the undertaking should be ordered to pay damages. The Court might order such an assessment to be carried out by the Greffier or it might reserve the assessment to itself.Hughes, 2 Lloyd's Rep. at 668. Clearly, then, under Jersey law, a defendant may seek damages for a wrongful injunction, which the court or the greffier (the court recordkeeper) calculates in relation to the undertaking in damages previously given by the plaintiff. In fact, even if the plaintiff does not give an undertaking in damages, as happened in Hughes, the Royal Court held that damages for wrongful injunction may be awarded:
We see no reason why that principle should not apply to any wrongful invocation of the Court's process. . . . we have a discretion, irrespective of whether or not an undertaking or cross-undertaking in damages has been given, to consider whether there has been a wrongfull [sic] act which ought to be visited with damages.Id. Based on Hughes, plaintiff's argument that Jersey is not an adequate forum because it does not recognize a cause of action for wrongful injunction and wrongful seizure fails.
Whether Jersey's remedy for wrongful injunction and wrongful seizure is identical to or as appealing as Louisiana's is not the relevant inquiry in the Court's analysis of the adequacy of Jersey as an alternative forum. See, e.g., PT United Can Co. Ltd. v. Crown Cork Seal Co., 138 F.3d 65, 73-74 (2d Cir. 1998) (citing Reyno, 454 U.S. at 250) ("A forum is not inadequate even if the foreign justice system differs from that of the United States. . . . The availability of an adequate alternate forum does not depend on the existence of the identical cause of action in the other forum."); Empresa Lineas Maritimas Argentinas, S.A. v. Schichau-Unterweser, A.G., 955 F.2d 368, 371 (5th Cir. 1992) ("absent unfairness, differences in the law of the alternate forum are not a substantial factor to consider"). In sum, there is simply no showing here that differences in controlling law would amount to an unfairness to plaintiff. See Vaz Borralho v. Keydril Co., 696 F.2d 379, 390 (5th Cir. 1983), overruled on other grounds by Air Crash, 821 F.2d 1147 (holding that it is presumed that the substantive law of a foreign forum is adequate, absence any showing to the contrary); see also Anastasiadis v. S.S. Little John, 346 F.2d 281 (5th Cir. 1965) (holding that dismissal was proper absent any showing that Greek laws would be unjust if applied and enforced). The Court therefore finds that Jersey is an available and adequate alternative forum for this action.
3. Private and Public Interests of the Litigants
The private and public interests relevant to the forum non conveniens analysis are as follows:
The private interests to be considered are the relative ease of access to sources of proof; the availability of compulsory process for attendance of unwilling, and the costs of obtaining attendance of the willing, witnesses; probability of view of premises. . . .; and all other practical problems that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the enforcibility [sic] of a judgment if one is obtained.
The public interest factors include the administrative difficulties flowing from court congestion; the local interest in having localized controversies resolved at home . . . the avoidance of unnecessary problems in conflicts of law, or in application of foreign law; and the unfairness of burdening citizens in an unrelated forum with jury duty.Air Crash, 821 F.2d at 1162-3 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-9, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947), overruled on other grounds by 28 U.S.C. § 1404). The Fifth Circuit has stated that "convenience is the ultimate consideration for a district court in balancing private and public interest factors," and "when a plaintiff chooses a foreign forum for its claims, courts are reluctant to assume that convenience motivated that choice." Empresa, 955 F.2d at 372. This is especially true when, as here, a "plaintiff's convenience [is] shown to be slight or nonexistent." Koster, 330 U.S. at 524, 67 S.Ct. at 832.
The first private interest factor, the relative ease of access to sources of proof, weighs in favor of Jersey, because the litigation and the injunction giving rise to plaintiff's current lawsuit took place in Jersey. The court records and the judge who issued and oversaw the injunction are located in Jersey.
The second private interest factor, witness availability and attendance, also favors Jersey as a forum. Except for Westway, the parties to the underlying litigation are not U.S. citizens. Kovzac and its former co-defendant, Clifton Resources Limited, are Jersey companies and EDF, Westway's former co-plaintiff, is a British corporation. The various banks that were subject to the Royal Court's freeze order are located in Jersey. One of Kovzac's principals, Oleg Dolotiy, is named in plaintiff's complaint as a Ukrainian citizen. ( See Pl.'s Amended Compl. ¶ 9.) As noted earlier, Kovzac's other principal, Alexander Glotov, is also named in plaintiff's complaint as a Ukrainian citizen, although plaintiff asserts that Glotov is a naturalized American citizen. Taken together, it is clear that witness availability favors Jersey, not Louisiana. It would be more time-consuming, costly, and difficult to bring any of these witnesses to Louisiana than to Jersey. Although it may also be costly to produce some witnesses for trial in Jersey, that many of the witnesses are Jersey and British citizens weighs in favor of selecting Jersey as a forum.
Despite defendant's creative arguments, the third private interest factor, probability of viewing the premises, is not applicable in this case because there was no accident or physical event that requires inspection. To the contrary, the underlying event was legal action taken in the Royal Court of Jersey, which does not give rise to a necessity to view any premises.
As to the fourth private interest factor, the parties do not argue that there will be a problem of enforcing a judgment in either Louisiana or Jersey.
Overall, the Court finds that the private interest factors weigh in favor of Jersey.
As to the public interest factors, although the Court finds that retention of jurisdiction may not be burdensome to this jurisdiction, the Court does not find that there is any public interest in having this litigation in this district. The lengthy underlying litigation in Jersey brought by Westway, a Louisiana corporation, has settled. Further, Kovzac is not a Louisiana company. The only connection between Kovzac's litigation and this district is that the defendant, Westway, is a Louisiana corporation. Kovzac's activities that allegedly damaged Westway, and the resultant injunction against Kovzac, occurred in Jersey. Thus, the impact on business and other concerns in this district are minor when compared to the interest in Jersey. This case simply does not involve a controversy local to this forum, which this forum has an interest in resolving.
In addition, the determination of whether Westway's injunction against Kovzac was improper will concern witnesses and evidence located in Jersey and other countries such as Ukraine. Finally, the funds at issue in the underlying injunction, which forms the basis for this lawsuit, were in Jersey bank accounts.
The Jersey court will apply its own law. The Jersey court is in a much better position to evaluate the damages, if any, owed to Kovzac because of Westway's conduct. Thus, Jersey, not the Eastern District of Louisiana, has a stronger connection with this case.
III. CONCLUSION
For the foregoing reasons, the Court finds that Jersey is an available and adequate forum and that the balance of the private and public interest factors weighs in favor of dismissal. The Court therefore GRANTS defendant's motion to dismiss under the doctrine of forum non conveniens.