Jena A. Sold, Inappropriate Forum or Inappropriate Law? a Choice-of-law Solution to the Jurisdictional Standoff Between the United States and Latin America

• Publication year: 2011

INAPPROPRIATE FORUM OR INAPPROPRIATE LAW?

A CHOICE-OF-LAW SOLUTION TO THE JURISDICTIONAL STANDOFF BETWEEN THE UNITED STATES AND LATIN

AMERICA

ABSTRACT

Numerous substantive and procedural advantages make the U.S. court system a uniquely attractive forum to plaintiffs worldwide. As a result, U.S. courts increasingly rely on forum non conveniens (FNC), a common law doctrine permitting a court to dismiss a case to another more convenient forum that is also available for the litigation. When the foreign plaintiffs hail from Latin America, however, their home forums are often unavailable following an FNC dismissal due to the Latin American courts’ interpretation of their own preemptive system of jurisdiction. To make this clear and prevent U.S. courts from dismissing for FNC, numerous Latin American countries recently have enacted “blocking statutes,” explicating that a Latin American court cannot exercise jurisdiction over a case dismissed abroad under the FNC doctrine. Many U.S. courts refuse to accept the outcome this legislation seems to dictate and, through incorrect FNC analysis, continue to dismiss these cases to Latin America, where they will not be heard.

This Comment argues that the refusal of U.S. courts to accept jurisdiction over these cases reflects their discomfort with the reinterpretation of traditional civil law concepts embodied in the Latin American legislation, with outcome-determinative results. Since numerous commentators have failed to recognize this, instead characterizing the blocking statutes as mere reiterations of longstanding civil law principles, no proposed solution has adequately accommodated the courts’ concerns alongside those of the plaintiffs. An ideal strategy will both effectively manage a court’s forum shopping concerns and ensure a plaintiff his day in court. Thus, rather than unreservedly accept jurisdiction over cases better heard elsewhere, or manipulate the FNC doctrine to exclude these cases and deny plaintiffs any relief, the solution should target the source of the problem: advantageous tort law in the United States, which draws plaintiffs to file cases here that are only tangentially related to the forum. For this reason, choice-of-law legislation is the best course of action. Mandatory application of foreign law to these

disputes effectively dissuades foreign plaintiffs from forum shopping in the United States without denying them a forum in which to litigate.

INTRODUCTION 1439

1. “COMPETING” JURISDICTIONAL DOCTRINES 1444

   1. Forum Non Conveniens 1445

      1. Origins and Overview of FNC in the United States 1445

      2. Modern Analysis of FNC 1447

         1. The Threshold Inquiry: Availability of an Adequate Alternative Forum 1447

         2. The Public and Private Interest Factors of Gilbert: A Balancing of Conveniences 1449

      3. Policy Considerations of FNC 1451

   2. Latin American Preemptive Legislation 1453

      1. Civil Law Preemptive Jurisdiction 1454

      2. Latin American Blocking Statutes 1455

2. FNC MOTIONS TO LATIN AMERICAN COUNTRIES WITH BLOCKING STATUTES: AN EXPLANATION OF U.S. COURTS’ ANALYSES 1457

   1. Actual and Ideal Treatment by U.S. Courts of FNC Dismissals to Latin America 1458

   2. How Blocking Statutes Alter Traditional Civil Law Rules of Preemptive Jurisdiction in Latin America: An Explanation of

      U.S. Courts’ Behavior 1461

      1. Latin American Blocking Statutes: Civil Law Jurisdiction Reinterpreted 1462

      2. Implications of the Reinterpretations Embodied in the

      Blocking Statutes 1466

3. POTENTIAL AND IDEAL U.S. RESPONSES TO LATIN AMERICAN PREEMPTIVE LEGISLATION 1467

   1. Further Manipulation of FNC to Permit Dismissals Despite Latin American Blocking Statutes 1468

   2. Choice-of-Law Legislation to Target the Source of the

      Problem 1471

      1. Appropriateness of Application of Foreign Law 1472

      2. Desirability of Application of Foreign Law 1475

CONCLUSION 1476

INTRODUCTION

And so the plaintiffs . . . argue that the United States has a greater interest in the litigation than Argentina because the defendants are American companies, while the defendants argue that Argentina has a greater interest than the United States because the plaintiffs are Argentines. The reality is that neither country appears to have any interest in having the litigation tried in its courts . . . .

—Judge Richard Posner1

In our global economy, routine business endeavors affect a variety of people and places, as does the fallout when something goes wrong. Inevitably, the question of which court will address the ensuing litigation is increasingly difficult as the numbers of affected persons and forums grow. Each party has an interest in litigating in a particular court; each court has a particular interest in adjudicating—or not adjudicating, as the case may be. Recent international developments in the context of disputes between Latin American plaintiffs and

U.S. defendants have further complicated this determination. The following

case is illustrative.

In Chandler v. Multidata Systems International Corp.,2 the Panamanian plaintiffs3 included twenty-eight cancer patients overexposed to radiation during therapy at an oncology institute in Panama City, Panama.4 On October 17, 2001, they filed suit in St. Louis County, Missouri,5 one corporate- defendant’s domicile.6 Alleging that the defendants’ computer-operated treatment system erroneously calculated the dosages required for treatment, the injured parties (or representatives of the decedents) sought damages based on wrongful death and negligence.7

1 Abad v. Bayer Corp., 563 F.3d 663, 668 (7th Cir. 2009). The Argentine plaintiffs in Abad were more than six hundred hemophiliacs infected with the AIDS virus from a clotting factor manufactured by the defendant-corporation in the United States. Id. at 668–69. The court subsequently dismissed the plaintiffs’ claims to Argentina, id. at 672–73, a civil law country that may refuse jurisdiction based on its interpretation of its own law. Id. at 666.

2 163 S.W.3d 537 (Mo. Ct. App. 2005).

1. Two plaintiffs were actually U.S. citizens living in Panama, and two were U.S. residents. However, the court did not treat this distinction as relevant. Id. at 541 n.1.

2. Id. at 541.

3. Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 606 (5th Cir. 2008).

4. Chandler, 163 S.W.3d at 541. The defendant was a Delaware corporation with its principal place of business in St. Louis County, Missouri. Id.

7 Id. at 541–42.

The defendants immediately moved to dismiss for forum non conveniens (FNC),8 arguing that Panama was available as a more convenient forum in which to litigate the dispute.9 In response, the plaintiffs contested Panama’s availability; since they had properly filed first in the United States, the Panamanian court would not hear a dispute if dismissed for FNC.10 Thus, FNC

dismissal was improper.11 Each side presented expert testimony in support of its position.12

With the above case still pending, one plaintiff filed a petition in the San Miguelito Judicial District Court of Panama against the defendants.13 The court dismissed for lack of jurisdiction:

Since the Panamanian Judicial Code follows the doctrine of “pre- emptive jurisdiction,” once the [plaintiff] chose to file the complaint in the domicile of one of the defendants . . . , this Court of Justice and the Panamanian Court cannot and will never have jurisdiction over

the defendants or over the subject matter of this case.14

The plaintiffs presented this language to the Missouri court as further proof that Panama was unavailable for subsequent litigation.15 Rejecting this argument,16 the court granted the defendants’ FNC motion, but explicitly permitted the plaintiffs to refile in Missouri should Panama refuse

1. Forum non conveniens, a common law doctrine, permits a court to decline jurisdiction over a case when another forum is substantially more convenient for the proceedings. See infra Part.I.A.

2. Chandler, 163 S.W.3d at 542. In particular, the defendants argued that the plaintiffs lived and were

   injured in Panama, and most of the evidence and witnesses were there. Johnston, 523 F.3d at 606.

3. Chandler, 163 S.W.3d at 544.

4. In a majority of courts, an FNC dismissal depends on finding that another forum exists for litigation of the dispute. See infra Part I.B.

5. See Chandler, 163 S.W.3d at 542–45.

6. Josefina Escalante v. Multidata Sys. Int’l, Corp., Court Order No. 1922-03 (Pan. 1st Ct. J. Civ. Cir. Apr. 30, 2003) [hereinafter Josefina Escalante], excerpt available at http://www.iaba.org/LLinks_forum

   _non_Panama.htm.

7. Id. The Panamanian appellate court affirmed this decision; the Supreme Court of Panama subsequently denied the defendant’s appeal for annulment. Henry Saint Dahl, Forum Non Conveniens in Panama, INTER-AM. BAR ASS’N, http://www.iaba.org/LLinks_forum_non_Panama.htm (last visited May 30,

   2011). Because the U.S. case was ongoing at this time, the Panamanian court may have rested its decision on lites pendencia (lis alibi pendens), a civil law doctrine that precludes a plaintiff from suing a party against whom another suit is pending for the same incident. See PETER HAY, RUSSELL WEINTRAUB & PATRICK J. BORCHERS, CONFLICT OF LAWS: CASES AND MATERIALS 207 (13th ed. 2009); see also infra note 119.

   However, the decision’s overly broad language suggests that the court would have reached the same outcome had the U.S. case already been dismissed. See Josefina Escalante, supra note 13.

8. Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 606 (5th Cir. 2008).

9. Presumably, the court instead accepted the defendants’ argument that the plaintiffs intentionally filed the case in the wrong Panamanian venue (i.e., not the venue where the injuries occurred). See id.

   
   

   jurisdiction.17 In order to refile, the court noted, a Panamanian court of competent jurisdiction and venue must deny jurisdiction, even after learning of the defendants’ willingness to submit.18 On appeal, the Missouri Court of Appeals affirmed: the trial court did not abuse its discretion in finding Panama

   available because the plaintiffs failed to demonstrate any sections in Panama’s Judicial or Civil Code prohibiting their refiling in Latin America.19

   
   

   Finally, on May 26, 2006...