In April 2014, Burger King Europe sued on a guaranty to recover allegedly unpaid franchise fees (the “Personal Guarantee Litigation”). In September 2014, that guarantor and the franchise owners sued Burger King Europe for tortious interference and a declaratory judgment (the “Franchise Agreement Litigation”). Burger King asserted the defense of forum non conveniens, in favor of Germany, as specified in the parties’ agreement. Acknowledging some confusion about the applicable legal standard for waiver, the Fifth Circuit agreed with the district court that the filing of the Personal Guarantee Litigation did not waive Burger King’s ability to assert forum non conveniens in the later case against it. That said, the Court found an abuse of discretion in denying the plaintiffs’ leave to amend to add new defendants and new tort claims, noting that the motion was timely and not obviously moot. SGIC Strategic Global Investment Capital, Inc. v. Burger King Europe GMBH, No. 15-10943 (Oct. 10, 2016).
A former employee of a defense contractor sued for unpaid benefits; the forum selection clause said: “This Contract shall be governed by and interpreted exclusively under the laws of Kuwait and all disputes between the Parties shall be resolved exclusively in Kuwait.” Noting a potential threshold issue as to whether federal or Texas law governs the “validity” of a forum selection clause (while federal law clearly governs their “enforceability”), the Fifth Circuit found it enforceable under either standard. Kuwait – where the work was done – had a stronger interest in application of its laws than Texas, and the most relevant law was a statute of repose rather than limitation, which “operates as ‘a substantive definition of, rather than a procedural limitation on, rights.'” Barnett v. Dyncorp Int’l LLC, No. 15-10757 (July 26, 2016).
A 1404(a) dispute was affirmed in Empire Indemity Ins. Co. v. N-S Corp., where “almost all non-party witnesses and all sources of proof needed to determine whether damages were covered by Empire’s policy are in, or around, Texas, and subject to the district court’s compulsory subpoena power.” No. 13-40426 (June 12, 2014, unpublished). On the merits, an aggrieved car wash operator sued its parts supplier and won a verdict for over $3 million. Several months later, the parts supplier and its primary carrier settled with the plaintiff, all parties mutually released all claims against each other, and the parts supplier assigned its claims against its excess carrier to the plaintiff. The excess carrier won summary judgment and the Fifth Circuit affirmed: “Following a release, the releasor cannot sue the releasee’s insurer ‘because the release precludes the prerequisite determination of [releasee’s liablity.'” (quoting Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138 (Tex. 1997)).
Two boats collided. The district court dismissed the resulting tort litigation in favor of Mexico on forum non conveniens grounds. Cotemar S.A. de C.V. v. Hornbeck Offshore Services, No. 13-20230 (May 21, 2014, unpublished). After that dismissal, the plaintiff seized the offending vessel in Louisiana (still there at the time of this writing). The Fifth Circuit reversed and remanded for further analysis. The first point dealt with a potential time bar in the Mexican system. “If access to relief in the Mexican courts has become time-barred for reasons not of Appellants’ ‘own making,’ then the Mexican courts are no
longer an available alternative forum.” (citing Veba-Chemie AG v. M/V Getafix, 711 F.2d 1243, 1248 n.10 (5th Cir. 1983)). Second, the “supervening change of circumstances” arising from the vessel seizure may affect the balancing of private and public factors, because a transfer to Mexico would now likely result in duplicative proceedings.
The district court granted a dismissal in favor of New Zealand, on forum non conveniens grounds, in Royal Ten Cate USA, inc. v. TT Investors, Ltd. No. 13-50106 (March 25, 2014, unpublished). The Fifth Circuit remanded for further consideration of what it saw as a key private-interest factor — “whether two key witnesses who reside in Texas would be amenable to process in New Zealand.” The witnesses in question were former party employees living in Texas, and the parties disputed whether those individuals’ employment contracts obligated them to cooperate with litigation after their employment. Their importance was heightened because they were particularly significant to one side, while the other side did not appear to have comparable problems with its likely witnesses. The Court did not express an opinion about the proper result on remand, and noted that “[t]he decision regarding whether or not to take additional evidence is one that we leave to the sound discretion of the district court.”
Indusoft sued in the Southern District of Texas alleging theft of intellectual property. Two defendants moved to dismiss on the grounds of forum non conveniens (under Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), not 1404(a)). The Court affirmed dismissal, finding no error in (1) presuming that Brazil was an adequate alternate forum, (2) concluding that certain electronic data was more likely to be preserved in Brazil, (3) discounting the importance of one witness for whom compulsory process would not be available in Brazil, and (4) analyzing the interplay between the Texas case and related litigation in Brazil. Indusoft, Inc. v. Taccolini, No. 13-50042 (March 19, 2014, unpublished). The Court reversed dismissal of the other defendants’ counterclaims, finding that it was erroneous to do so sua sponte (citing Lozano v. Ocwen Federal Bank, 489 F.3d 636, 643 (5th Cir. 2007)).
The Supreme Court has granted certiorari in the case of In re Atlantic Marine Construction, 701 F.3d 736 (5th Cir. 2012), which declined to grant mandamus relief to enforce a forum selection clause. The questions for review indicate that the Court plans to resolve a circuit split about the standard for enforcement of a forum selection clause, when the forum of suit would otherwise be proper under the federal venue statutes. One view uses the test for “improper venue,” while another analyzes the issue under a 1404(a) convenience framework.
The defendant in Innovation First Int’l v. Zuru Inc. removed a trade secret case about a toy robotic fish and then obtained dismissal on forum non conveniens grounds. No. 12-10511 (Feb. 19, 2013, unpublished). The Fifth Circuit found no abuse of discretion in the district court’s conclusions that the design and production of the fish took place in China and that the bulk of witnesses and evidence were in China, and affirmed based on the analogous case of Dickson Marine v. Panalpina, Inc., 179 F.3d 331 (5th Cir. 1999). A revised opinion slightly changed the Court’s analysis of the deference due to the plaintiff’s choice of forum.
City of New Orleans Employees’ Retirement System v. Hayward affirmed the dismissal, on forum non conveniens grounds, of putative shareholder derivative suits against BP arising from the Deepwater Horizon disaster. No. 12-20019 (Jan. 16, 2013, unpublished). Among other factors discussed, the Fifth Circuit noted and gave weight to the points that: (1) plaintiffs were “phantoms” for FNC purposes because of their attenuated interests in the case, (2) technological advances did not make geographical issues irrelevant in an FNC analysis [key witnesses and documents being located in the UK rather than Louisiana], (3) the UK had a substantial interest in applying its own, relatively new Companies Act, and (4) the BP derivative cases comprised one-third of the U.S. court’s MDL docket.