Eleventh Circuit Reverses Forum Non Conveniens Dismissal

In Otto Candies, LLC v. Citigroup, Inc., 2020 WL 3550680 (11th Cir. July 1, 2020), the Eleventh Circuit reversed the forum non conveniens dismissal of a complaint brought by two U.S. plaintiffs, and 37 foreign plaintiffs, against U.S.-based Citigroup.

The plaintiffs, asserting RICO, fraud, and other state-law claims, alleged that they had contracted with or invested in a Mexican company, Oceanografia S.A. de C.V., on the basis of fraudulent cash advances made to Oceanografia by a Citigroup subsidiary.  The plaintiffs claimed that the advances were overseen by a Citigroup division based in New York, that some of the relevant misrepresentations were made in the United States and/or in e-mails located on servers in the United States, and that Citigroup and Oceanografia communicated using Citigroup’s servers located in the United States.  They also claimed that Citigroup’s internal review of the Oceanografia relationship was led by a Miami-based employee, and that Citigroup had publicly admitted that it had terminated employees “inside and outside” of Mexico because of the employees’ involvement in a fraudulent scheme.

Citigroup moved to dismiss the complaint under Rules 9(b) and 12(b)(6), and also on forum non conveniens grounds.  In support of its argument that the dispute should be resolved in Mexico rather than in U.S. court, Citigroup argued that all of the witnesses and evidence germane to the plaintiffs’ claims were located in Mexico.  The plaintiffs moved for limited discovery on those questions; Citigroup opposed the motion for discovery, and the district court denied it.  After plaintiffs amended their complaint, the district court granted Citigroup’s second motion to dismiss on forum non conveniens grounds.

The Eleventh Circuit, in an opinion written by Judge Jordan and joined by Judge Newsom and by Chief Judge James Randal Hall visiting from the Southern District of Georgia, reversed.  “Because the plaintiff’s forum choice ‘should rarely be disturbed,’” the court began, “a forum non conveniens dismissal is subject to three conditions.”  First, there must be “an adequate and available alternative forum.”  Second, “the balance of the relative private and public interests must weigh in favor of dismissal.”  Finally, the plaintiff must be able to reinstate the case in the other forum without undue inconvenience or delay.

The district court erred in applying the second condition—evaluation of the relevant private and public interests.  A domestic plaintiff’s choice of forum is presumed to be sufficiently convenient, and it is up to the defendant “to prove vexation and oppressiveness that are out of all proportion to the plaintiff’s convenience.”  And even a foreign plaintiff is entitled to a presumption in favor of its chosen forum, albeit a less forceful one.

The district court did not apply those presumptions, however, reasoning instead that the plaintiffs, having done business with a Mexican company, “could not ‘feign surprise at potentially having to litigate a resulting dispute in Mexico.’”  This was error:  “investment in a foreign entity or country alone is not enough to dilute the threshold presumption that an American citizen has chosen the most convenient forum.”  Even as to the foreign plaintiffs, Citigroup’s failure to present any evidence to contradict the plaintiffs’ allegations relevant to the convenience inquiry was fatal to its motion.

The district court also erred in its analysis of the relevant public interests.  The district court determined that Mexico had a “substantial interest” in having the case resolved in Mexico, despite the fact that the only named defendant was a U.S. entity.  But that analysis “failed to consider the sovereign interests of the United States.”  Citigroup—the sole defendant—is based in the U.S.; two of the plaintiffs are U.S. entities, and “a sovereign has a very strong interest when its citizens are allegedly victims and the injury occurs on home soil.”

Posted by Valerie Sanders.

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