A recent federal decision provided significant guidance on a frequently disputed issue in transnational litigation: applying the forum non conveniens doctrine. On July 1, 2020, the U.S. Court of Appeals for the Eleventh Circuit reversed a district court ruling that a Mexican court was a more convenient forum for a lawsuit brought by two U.S. and 37 non-U.S. plaintiffs. See Otto Candies LLC v. Citigroup Inc., 963 F.3d 1331, 1335 (11th Cir. 2020). The Eleventh Circuit reversed and remanded the case because the district court mistakenly gave only “reduced” deference to the domestic plaintiffs’ choice to sue in the United States, and the U.S. defendant failed to support its claims that most of the relevant documents and witnesses were located in Mexico. Id. The case, in which Quinn Emanuel represents the plaintiffs, has important implications both for plaintiffs seeking to bring cross-border disputes in the United States, and for defendants seeking to dismiss those lawsuits.
Forum non conveniens allows U.S. courts to dismiss cases in favor of having them proceed in another country’s courts. Among other considerations, U.S. courts must (1) give proper deference to plaintiffs’ choice to bring their lawsuit in the United States; (2) analyze the parties’ access to documents and witnesses (“private interest factors”); and (3) evaluate the U.S. and non-U.S. interests in the lawsuit (“public interest factors”). Id. at 1338. U.S. courts may also try mitigate the practical difficulties of forum non conveniens dismissals by making them subject to certain dismissal conditions, such as defendants’ agreement to provide documents relevant to plaintiffs’ claims. Id. at 1352. Forum non conveniens is a fact-intensive inquiry and district court decisions are subject to review under the abuse-of-discretion standard, making appellate court reversals rare.
The plaintiffs in the Otto Candies case are former creditors of Oceanografía, a now-bankrupt Mexican company that provided drilling services to Pemex, Mexico’s state-owned oil and gas company. Plaintiffs allege that Citigroup established credit facilities within its Mexican subsidiary to provide cash advances to Oceanografía, but did not adequately monitor the facilities and granted approximately $750 million in advances to Oceanografía knowing they were based on forged Pemex signatures. When the fraud was exposed in February 2014, Oceanografía declared bankruptcy and plaintiffs lost over $1.1 billion.
Deference to Forum Choice
The Eleventh Circuit held that the U.S. District Court for the Southern District of Florida committed legal error by failing to give greater deference to the choice of the two U.S. plaintiffs to file their lawsuit in the United States, as domestic plaintiffs are entitled to a “strong presumption” in favor of their forum choice that can be overcome only in “unusually extreme circumstances.” Id. at 1339-46. Instead, the district court improperly accorded less deference because the U.S. plaintiffs conducted business with a non-U.S. company (Oceanografía)—a position that neither the U.S. Supreme Court nor U.S. circuit courts have recognized. Id. at 1339-41. The appeals court declined to create such an “international commerce” exception to the strong presumption in favor of U.S. plaintiffs’ forum choice, especially where the sole defendant (Citigroup) is a U.S. company. Id. at 1340-43. In addition, the Eleventh Circuit, similar to the Ninth and D.C. Circuits, found no basis to reduce deference for the two U.S. plaintiffs because 37 non-U.S. plaintiffs were also part of the lawsuit. Id. at 1343-45 (citing Carijano v. Occidental Petrol. Corp., 643 F.3d 1216, 1228 (9th Cir. 2011); Simon v. Republic of Hungary, 911 F.3d 1172, 1183 (D.C. Cir. 2018).
The appeals court further emphasized that the non-U.S. plaintiffs’ choice to sue in the United States is also entitled to deference, albeit a “reduced” form of deference. Id. at 1345-46. It also instructed the district court on remand to consider whether allowing the U.S. plaintiffs to proceed in a U.S. court while dismissing the non-U.S. plaintiffs in favor of a Mexican court (i.e., “splitting” the lawsuit) would be inconvenient for all the parties, including Citigroup. Id. at 1345.
Private and Public Interests
The Eleventh Circuit also held that the district court committed error by (a) failing to accept as true the allegations in plaintiffs’ complaint, which state that Citigroup’s actions in the United States aided Oceanografía in completing the fraud, and instead focused on conduct in Mexico; (b) accepting Citigroup’s statement that it needed documents and witnesses in Mexico for its defense, despite already gathering evidence and having it in the United States for internal and U.S. government investigations into the fraud; and (c) placing the burden of establishing such private interest factors on plaintiffs (as opposed to Citigroup). Id. at 1346-51.
As to Citigroup’s claims of needing to access documents and witnesses in Mexico, the Eleventh Circuit held that defendants must present evidence and detailed explanations to support their arguments that a non-U.S. court would be a more convenient location for a lawsuit (e.g., submitting an affidavit describing numerous specific documents that can only be accessed abroad, and/or naming key witnesses located abroad that greatly outnumber U.S. witnesses and cannot easily travel to the United States). Id. at 1348-49 (citing, inter alia, Simon, 911 F.3d at 1186 (“Digitization, moreover, has eased the burden of transcontinental document production and has increasingly become the norm in global litigation.”)).
As to the public interest factors, the appeals court instructed the district court to compare Mexico’s interest in the litigation to the interest of the United States as a whole—rather than just the interest of a state or district—in determining where plaintiffs’ lawsuit should take place. Id. at 1351-52. As for the United States’ interests, the appeals court noted that both the U.S. Department of Justice and U.S. Securities and Exchange Commission investigated the fraud at Oceanografía, illustrating the lawsuit’s connection to the United States. Id.
Finally, the Eleventh Circuit noted several practical difficulties with the district court’s dismissal condition that Citigroup provide “reasonable” access to documents and witnesses in Mexico, without specifying the requirements of that condition. Id. at 1352-54. These difficulties include how and on what basis the court would resolve disputes regarding this condition, particularly given that a court in Mexico would have primary jurisdiction over the case. Id. at 1353-54 (citing In re Union Carbide Corp. Gas Plant Disaster, 809 F.2d 195, 205 (2d Cir. 1987)). The Eleventh Circuit thus advised the district court to consider under what specific circumstances plaintiffs could reinstate their lawsuit in the United States if the discovery condition was not satisfied.
The Eleventh Circuit’s decision reinforced that U.S. plaintiffs, are entitled to a “strong presumption” in favor of their forum choice regardless of their engagement in international commerce or the inclusion of several non-U.S. plaintiffs in their lawsuit. In addition, the decision articulated the standards defendants must meet to show convenience of a forum abroad and the need for defendants to provide more than mere assertions of a need for documents and witnesses outside the United States. Lastly, the decision noted the impractical nature of forum non conveniens dismissals that rely and are contingent on defendants purportedly providing “reasonable” access to discovery in the non-U.S. jurisdiction. In sum, plaintiffs seeking to bring cross-border disputes in the United States, and defendants seeking to dismiss those lawsuits, should carefully consider the implications of forum non conveniens, as articulated by this decision, on their lawsuit.