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Windt v. Qwest Communications International

March 27, 2008


The opinion of the court was delivered by: Garrett E. Brown, Jr., Chief Judge



Typographical corrections entered have no bearing on the holding and dicta contained herein

This matter is before the Court on Defendants' motions to dismiss Plaintiffs' complaint (hereinafter "Complaint") on the grounds of forum non conveniens.*fn2

The procedural history of the case, while lengthy, appears to have little bearing on the issue at bar. Therefore, it shall suffice to note that the Complaint (seeking a jury trial and alleging numerous claims related to securities fraud, breaches of fiduciary duty and various forms of intentional misrepresentation) was filed on June 29, 2004, see Docket Entry No. 1, and this Court issued an order dated June 17, 2005, refusing to compel arbitration and stay the instant proceedings. See Docket Entry No. 46. Following this decision, Plaintiffs sought discovery, see Docket Entries No. 53, 59, 75-76, and limited discovery was conducted. On February 21, 2006, Defendant Qwest Communications International, Inc. (hereinafter "Qwest") filed the instant motion (hereinafter "Motion"), see Docket Entry No. 66, and on April 13, 2006, the remaining Defendants filed their joint statement in support of Qwest's Motion to dismiss Plaintiffs' Complaint. See Docket Entry No. 68. Plaintiffs filed their opposition to Qwest's Motion (hereinafter "Opposition") on April 18, 2006, see Docket Entry No. 69, and Qwest filed its reply (hereinafter "Reply") on May 10, 2006. See Docket Entry No. 71.

The matter was transferred to the undersigned on August 7, 2006. This Court has reviewed all documents filed and submitted, and has decided the pending motions without oral arguments pursuant to Rule 78 of Civil Procedure. For the following reasons, Defendants' motions to dismiss will be granted.


Plaintiffs are Dutch attorneys acting as bankruptcy trustees after being appointed by a Dutch court to represent the estate of (a) KPNQwest N.V. (hereinafter "KPNQwest," a Dutch corporation established as a joint-venture between Koninklijke KPN N.V., a telecommunication company having its seat in Hoofddorp, Netherlands, and Qwest, a Delaware-incorporated entity having its principal place of business in Denver, Colorado), and (b) KPNQwest's wholly-owned Netherlands-based and European subsidiaries.*fn3 See Compl. ¶¶ 1, 3, 20-22.

Plaintiffs brought this action against four identified Defendants, namely, Qwest, two former KPNQwest's directors and KPNQwest's former CEO.*fn4 See id. ¶¶ 22-25. In their Complaint, Plaintiffs alleged that KPNQwest was injured by "fraud, deceit, corporate mismanagement and other misconduct of Defendant[s]," id. ¶ 1, and clarified that (a) "Defendants' fraud and mismanagement result[ed] in KPNQwest's resulting increasing insolvency and bankruptcy," id. at 67-96, and (b) KPNQwest's injuries were amplified by Defendants' "fraud and looting."*fn5 Id. at 97-103. Plaintiffs based their choice of venue on the domicile of two Defendants, that is, KPNQwest's former CEO and one of the directors, and asserted that the United States was the proper forum because: (1) "[s]ignificant U.S. interests are at stake in this dispute [since] much of the . . . alleged [wrongdoing] occurred in the United States"; (2) four KPNQwest Board meetings took place somewhere in the U.S.; and (3) while being at unidentified locations somewhere in the U.S., Defendants participated in five conference calls of non-U.S. KPNQwest's Board's meetings. See id. ¶¶ 23, 25, 28.

In response to Plaintiffs' Complaint, Defendants' Motion asserts that (1) one group of Plaintiffs' allegations is, effectively, a Racketeer Influenced and Corrupt Organizations ("RICO") claim "expressly barred by the Private Securities Litigation Reform Act of 1995 ('PSLRA')," 18 U.S.C. § 1964 (c), Mot., Mem. at 1, and (2) all other claims are

Dutch law claim[s that belong in] the Netherlands, where KPNQwest was organized and headquartered[,] and where a Dutch court oversees its bankruptcy . . . . The events preceding KPNQwest's bankruptcy are already the subject of a separate litigation, an arbitration, and an investigatory proceeding that are all pending in the Netherlands.

Mot., Mem. at 2. Defendants further state that, regardless of whether or not the RICO claim is deemed viable,*fn6 Defendants are entitled to dismissal on the grounds of forum non conveniens since: (1) "this case is about the demise of a Dutch company that did business in the Netherlands, not in New Jersey," id. at 10; (2) "the majority of the relevant documents and witnesses are in the Netherlands," id.; (3) "the Netherlands [has interest in] resolution of the issues relating to the causes of KPNQwest's bankruptcy, [and] certain Dutch KPNQwest['s] shareholders have [already] initiated proceedings [against the Defendants named in this action, as well as against numerous Dutch parties, like KPNQwest's accountants, auditors, controlling banks and KPNQwest's Dutch officers and directors] before . . . a commercial [division of the] court in the Netherlands [on the basis of] allegations of corporate mismanagement," the very claim set forth in the case at bar, id. at 10-11 (citing Decl. of Maarten Das ¶ 9 (hereinafter "Das Decl."));*fn7 and (4) Plaintiffs, Dutch attorneys, have no interest in pursing their claims in New Jersey. See id. at 11.


I. Doctrine of Forum Non Conveniens

Forum non conveniens is Latin for "inconvenient forum." The common law doctrine of forum non conveniens arose from the doctrine of forum non competens developed in Scotland in the early 19th century as a discretionary device designed to allow trial courts to decline to exercise jurisdiction when it appeared that the convenience of the parties and the interests of justice would be better served if another court heard the action. Similarly, the modern doctrine of forum non conveniens is a common law principle that gives courts the discretion to decline exercising jurisdiction over certain cases where the underlying principles of justice and convenience favor dismissal. In 1947, the United States Supreme Court announced the factors to be considered in applying the doctrine of forum non conveniens in Gulf Oil Corp. v. Gilbert, 330 U.S. 501. In 1981, the Court further explained the doctrine in Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981).

The Piper decision responded to the world's legal and economic developments. See id. at 244-49. The Court in Piper addressed foreign forum shoppers by giving little deference to their decision to litigate in the United States and redefined the doctrine as a balancing test. See id. at 249-50. Basically, the Piper Court utilized a two-prong analysis: (1) whether an adequate alternate forum was available; and (2) if so, whether the balancing of the private and public convenience factors weighed heavily in favor of litigation in the alternate forum.*fn8 See Piper, 454 U.S. at 247-52. The defendant, as the moving party, bears the burden of proof on both these matters. See id. at 258 ("Of course, defendants must provide enough information to enable the District Court to balance the parties' interests"). Once the defendant has satisfied the threshold requirement by illustrating that an adequate alternate forum is available, the courts should balance convenience interests. See id. at 247-52. When considering this second prong, the courts utilize the balancing test introduced in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), which was later reaffirmed in Piper. See Piper, 454 U.S. at 248-52, 255-56. In a nutshell, the courts weigh the potential burden of litigation on the parties and on the chosen forum against dismissal. See id. at 255. The Court in Gilbert categorized the convenience factors pertaining to the parties as private interests and those relating to the forum as public interests.*fn9 See id. at 241 n.6 (discussing the Gilbert decision). If an adequate alternate forum is available and these private and public interests favor dismissal, the court will grant the motion for dismissal under the doctrine of forum non conveniens. See id. at 241.

The courts, however, do not conduct their analysis in a vacuum. They conduct their balancing in light of the degree of deference the plaintiff's choice of forum deserves. The court's deference for the plaintiff plays a significant role in defining the weight of the defendant's burden in satisfying the second prong. See id.

Generally, courts view the plaintiff's choice of forum with great deference. See id. at 255. Where a plaintiff sues in plaintiff's home forum, it is presumed that the plaintiff chose the forum for the sake of convenience. See id. at 255-56. The defendant may rebut this presumption, however, and a court may exercise its discretion to dismiss the case where: (1) an alternative forum with jurisdiction over the case exists; and (2) to litigate in the plaintiff's chosen forum would result in "oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience," or where the court's "administrative and legal" concerns make the chosen forum inappropriate. See id. at 241 (quoting Koster, 330 U.S. at 524). Alternatively, since the deference for the plaintiff's choice of forum is grounded in considerations of convenience, the defendant may overcome this presumption in favor of the plaintiff's choice by showing that a balancing of the private and public interest factors "clearly points towards trial in the alternative forum." See id. at 255.

Conversely, in accordance with the doctrine of forum non conveniens and its objective to "ensure that the trial is convenient, a foreign plaintiff's choice [of forum] deserves less deference [than that of an American plaintiff]." Piper, 454 U.S. at 256. It is rational to assume that U.S. plaintiffs choose their home forum for the sake of convenience, but that is not the case when a foreign plaintiff chooses an American jurisdiction. See id. To the contrary, such suits are counterintuitive in terms of convenience. Consequently, courts are suspicious that a foreign plaintiff's decision to bring suit in the United States is motivated by a search for a jurisdiction with laws that would be the most favorable for the claim. See Swift & Co. Packers v. Compania Colombiana del Caribe, S.A., 339 U.S. 684, 697 (1950) ("Suit by a United States citizen against a foreign respondent brings into force considerations very different from those in suits between foreigners"). Indeed, the Court in Piper rephrased its earlier holding in Gilbert to explicitly address plaintiffs "shopping" for a forum.*fn10 See Piper, 454 U.S. at 249 n.15 & 252 n.19. It stated that dismissal under forum non conveniens may be "warranted where a plaintiff chooses a particular forum[] not because it is convenient, but solely in order to harass the defendant or take advantage of favorable law." Id. at 249 n.15. To illustrate, the Court in Piper noted that an appointed representative of a foreign estate is presumed to take advantage of the American courts if the action is filed in U.S. mainly because of the legal standards available here.*fn11 See id. at 239-40 & n.3, 242.

As the doctrine stands now, the threshold requirement in any forum non conveniens dismissal is still the availability of an adequate alternative forum. See id. at 254 n.22. Two conditions must be satisfied to meet this adequacy requirement: (1) the defendant must be amenable to process in the alternative forum, and (2) the subject matter of the lawsuit must be cognizable in the alternative forum in order to provide the plaintiff with a redress. See id.; Lacey v. Cessna Aircraft Co., 862 F.2d 38, 44 (3d Cir. 1988); Kultur Int'l Films v. Covent Garden Pioneer, FSP., 860 F. Supp. 1055, 1063 (D.N.J. 1994). In "rare circumstances" where the remedy available in the other jurisdiction is "clearly unsatisfactory," the threshold requirement will not be met, and the court will find dismissal improper. See Piper, 454 U.S. at 254; compare Tom McNamara, International Forum Selection and Forum Non Conveniens, 34 Int'l Law. 558, 560-61 (2000) (providing the list of the 13 foreign forums that U.S. courts have consistently deemed as adequate alternate forums in 1999: Canada, Cayman Islands, Columbia, France, Germany, Greece, Hong Kong, Liechtenstein, Netherlands, Pakistan, Peru, Switzerland, and the United Kingdom). Hence, while the foreign forums completely prohibiting any meaningful "litigation of the subject matter" disputed cannot qualify as adequate alternatives, Piper, 454 U.S. at 254 n.22, the unavailability of a certain theory for recovery or the possibility of lesser damages cannot render the alternate forum inadequate.*fn12 See id. at 255. For example, the Court in Piper held that the alternate forum was not inadequate where there was "no danger that [plaintiffs would] be deprived of any remedy or treated unfairly." Id. In sum, the first prong of the forum non conveniens doctrine does not obligate the courts to "conduct[] complex exercises in comparative law." Id. at 251. In fact, the Piper Court favored dismissal where the court would have to engage in "untangling problems in conflict of laws, and in law foreign to itself."*fn13 See id.

The second prong is currently summarized as the sum of two multi-element inquiries. The public interests to be considered include: (1) having local disputes settled locally; (2) avoiding problems of applying foreign law; and (3) avoiding burdening jurors with cases that have no impact on their community. The private interests embrace: (1) ease of access to evidence; (2) the cost for willing witnesses to attend trial; (3) the availability of compulsory process; and (4) other factors that might shorten trial or make it less expensive. See Capital Currency Exch. v. National Westminster Bank PLC, 155 F.3d 603, 609 (2d Cir. 1999) (citing Piper, 454 U.S. at 241; Gilbert, 330 U.S. at 508); Hoffman v. Goberman, 420 F.2d 423 (3d Cir. 1970); see also Dole Food Co. v. Watts, 303 F.3d 1104, 1119 (9th Cir. 2002). The inquiry conducted by the court must be detailed and fact-specific, since forum non conveniens remains an exceptional tool to be employed sparingly. See Tech. Dev. Co. v. Onischenko, 174 Fed. Appx. 117, 121 (3d Cir. 2006).

II. Application of the Doctrine to the Case at Bar


Prior to examining the forum non conveniens factors expressly set forth in Piper and Glibert, this Court should approximate the degree of deference due to Plaintiffs' choice of forum. "Where . . . the plaintiff is foreign, the amount of deference is potentially less because a court cannot assume that the forum was chosen based on convenience factors." Onischenko, 174 Fed. Appx. at 120-21 (citing Piper, 454 U.S. at 255-56). However, Piper is "not an invitation to accord a foreign plaintiff's selection of an American forum no deference," Lacey v. Cessna Aircraft Co., 862 F.2d 38, 45-46 (3d Cir. 1988) (internal quotation omitted), and "where a foreign plaintiff has made a strong showing of convenience, . . . the district court must indicate how far that showing goes toward putting the foreign plaintiff on the same footing as a domestic plaintiff." Lony v. E. I. Du Pont de Nemours & Co., 886 F.2d 628, 634 (3d Cir. 1989).

In the case at bar, there appears to be no dispute that Plaintiffs, Dutch attorneys appointed by a Dutch court to act as bankruptcy trustees for a Netherlands-based entity, are indeed foreign plaintiffs that have neither personal nor business contacts with United States or the State of New Jersey.*fn14 Such lack of contacts, while indeed an important factor, does not, however, mean that this Court cannot accord significant weight to Plaintiffs' forum selection, since a foreign plaintiff without a connection to the forum, while not entitled to the same deference as a domestic plaintiff who chooses his home jurisdiction, does not automatically receive the lowest level of deference. See Onischenko, 174 Fed. Appx. at 122 (citing Lacey v. Cessna Aircraft Co., 932 F.2d 170 (3d Cir. 1991), Lony, 886 F.2d 628, and Norex Petroleum, Ltd. v. ...

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