Ninth Circuit Issues Revised Forum Non Conveniens Ruling
On June 1 the Ninth Circuit granted a motion for panel rehearing and issued a new opinion in Carijano v. Occidental Petroleum Corp., No. 08-56187 (9th Cir. June 1, 2011) that unduly restricts a district court's authority in granting forum non conveniens dismissal and provides a roadmap for foreign plaintiffs to defeat forum non conveniens motions.
In Carijano, 25 members of a tribe indigenous to the Peruvian rainforest sued the defendant for its former Peruvian subsidiary's 30 years of allegedly polluting the rainforest and water supplies with the discharge of toxic oil byproducts. These plaintiffs sued in California state court in 2007, asserting claims for strict liability, negligence, battery, medical monitoring, wrongful death, fraud, misrepresentation, public and private nuisance, trespass, and intentional infliction of emotional distress, as well as a violation of California's Unfair Competition Law.
After the defendant removed the case to federal court and evinced its intention to move for forum non conveniens dismissal, plaintiffs amended their complaint to add as a plaintiff a U.S. advocacy group, Amazon Watch, that had been assisting plaintiffs for some time.
Defendant moved for forum non conveniens dismissal and, not surprisingly, the district court granted the motion. The alleged pollution and contamination was in Peru. It allegedly was discharged by what was a Peruvian company. The alleged victims all were exposed in Peru, treated in Peru, and live in Peru.
The district court had looked at the Piper Aircraft factors and held that the private and public interest factors favored dismissal in favor of Peru. It considered expert evidence to conclude that Peru would provide an adequate alternative forum. The Ninth Circuit did not disagree with this conclusion.
It did, however, take the district court to task for discounting the domestic status of Amazon Watch. The district court concluded that this plaintiff's choice of forum was entitled to reduced deference because the main subject of the suit was compensation of Peruvian residents like the 25 original plaintiffs to the suit. The Ninth Circuit held that the district court committed reversible error by not giving substantial deference to Amazon Watch's status as an American citizen. The clear import of the Carijano opinion is that if you are a foreign national that wants to avoid forum non conveniens dismissal, add a U.S. advocacy group to your lawsuit as a plaintiff.
Notably, the defendant had strong arguments that Amazon Watch had no direct injury and thus lacked Article III standing and standing under California's Unfair Competition Law to bring a suit at all. The Ninth Circuit twisted the holding in a case in which the argument for forum non conveniens dismissal was so strong that the Supreme Court held that the issue could be decided before even reaching Article III jurisdiction. See Slip op. at 7136 (citing Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422 (2007). It used this holding to presume that Amazon Watch properly had standing and thus concluded that its choice of forum as a domestic plaintiff was entitled to full Piper deference, i.e., "a strong presumption that its choice of forum was convenient." This was so even though Amazon Watch was added as an afterthought upon removal and was accompanied by 25 foreign nationals asserting personal injuries from conduct arising on foreign soil by a foreign subsidiary.
The Ninth Circuit panel also concluded that it did not matter that a US court could not compel the attendance of witnesses from Peru because by filing the lawsuit, the plaintiffs had evinced a willingness to travel to New York. It chided the defendant for not being able to identify individuals who would not travel to the U.S. This, despite the fact that all of the injuries allegedly occurred in Peru, were treated in Peru, and allegedly were the result of the activities of former employees of a subsidiary in Peru. At the pleading stage, it is simply unreasonable to require a defendant to identify individuals who have expressed an unwillingness to travel when all of the sources of proof reside in another country.
The Ninth Circuit panel held that California had an interest in "providing a forum for those harmed by the actions of its corporate citizens" that was at least as strong as Peru's interest in compensating the physical injuries of its residents. Slip op. at 7145-46. That seems highly improbable. Certainly the interest of a domestic defendant's state of residence is not given the same weight in conflicts of law interest analysis as that of a state where a plaintiff was injured. And this analysis ignores the corporate formalities between the defendant and its former Peruvian subsidiary.
One other problem with the court's analysis is its consideration of the statute of limitations issue. Slip op. at 7149. The court held that the defendant's clear intention to use the statute of limitations as a defense in Peru makes Peru an inadequate forum. The statute of limitations, of course, is part of the foreign nation's sovereign law. And while it may be reasonable for a court considering a forum non conveniens motion to condition dismissal on the defendant agreeing to tolling during the pendency of the U.S. action, it is manifestly unreasonable to require a defendant to agree to foregoing the statute of limitations defense altogether where the claim expired years before it was ever filed in the United States. This is particularly true when one considers that a U.S. court applying foreign law would itself be bound to apply the foreign state's statute of limitations.
The panel's opinion on rehearing indicates that the parties are free to file new petitions for panel rehearing and rehearing en banc. Here's hoping an en banc panel of the Ninth Circuit will reverse some of the damage to forum non conveniens law that was done by the Carijano opinion.
