Sme Racks v. Sistemas Mecanicos Para Electronica

• Decision Date: 24 August 2004
• Docket Number: No. 03-12572.,03-12572.
• Citation: 382 F.3d 1097
• Parties: SME RACKS, INC., a Florida corporation, Valtec Information Systems, Inc., a Florida corporation, Plaintiffs-Appellants, Rafael A. Castro, Mr., individually, Plaintiff, v. SISTEMAS MECANICOS PARA ELECTRONICA, S.A., a Spanish company, Carmelo Garcia Aparicio., S.A., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

382 F.3d 1097

SME RACKS, INC., a Florida corporation, Valtec Information Systems, Inc., a Florida corporation, Plaintiffs-Appellants Rafael A. Castro, Mr., individually, Plaintiff, v. SISTEMAS MECANICOS PARA ELECTRONICA, S.A., a Spanish company, Carmelo Garcia Aparicio., S.A., et al., Defendants-Appellees.

No. 03-12572.

United States Court of Appeals, Eleventh Circuit.

August 24, 2004.

COPYRIGHT MATERIAL OMITTED

Rafael A. Castro, III, R. Castro & Associates, PLLC, Miami, FL, for Plaintiffs-Appellants.

Renee Joy Adwar, Miguel Angel Martin, M.A. Martin & Associates, P.A., Miami, FL, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before BLACK, BARKETT and STAHL^*, Circuit Judges.

BARKETT, Circuit Judge:

SME Racks, Inc. ("SME Racks") and Valtec Information Systems, Inc. ("Valtec"), two Florida corporations, and Rafael A. Castro ("Castro"), a Florida citizen,¹ appeal the dismissal of their suit against a Spanish corporation, Sistemas Mecanicos Para Electronica, S.A. ("Sistemas Mecanicos"), arising out of their purchase of allegedly defective goods. The question on appeal is whether the district court abused its discretion in dismissing this case on grounds of forum non conveniens.² We find that the district court abused its discretion by failing to apply the strong presumption that a United States citizen will not be ousted from the courts of this country and reverse.

BACKGROUND

Acting in his capacity as owner of Valtec, Castro attended an industry exhibition in Las Vegas, Nevada, where Sistemas Mecanicos was promoting its products. Negotiations between Castro and Sistemas Mecanicos began in Las Vegas, and Sistemas Mecanicos followed up by twice sending agents to Castro's Miami office to negotiate a business plan. Castro then went to Spain twice to further negotiate and finalize their international agreement. The contract was executed in Spain and provided that "[b]oth parties submit and refer themselves to Spanish law and to settle any disputes that may arise between them as a result of this contract."

The products were manufactured in Spain and shipped to Florida, and payment was sent. When the goods were found to be defective, Sistemas Mecanicos sent a replacement shipment. Castro claimed that this shipment also contained defective products. Castro consequently filed a diversity action in federal court alleging numerous contract and tort claims.³

Sistemas Mecanicos moved for dismissal on grounds of forum non conveniens. After determining that Spanish courts could provide an adequate and available alternative forum,⁴ the district court concluded that the private convenience factors were at or near equipoise because witnesses and evidence were located in both Florida and Spain. The district court then found that the public convenience factors, "particularly the fact that the Court will have to apply Spanish law—weigh strongly in favor of dismissal on forum non conveniens grounds." Report at 8. The district court granted Sistemas Mecanicos's motion and SME Racks filed this appeal.

STANDARD OF REVIEW

A district court's forum non conveniens determination "may be reversed only when there has been a clear abuse of discretion; where the court has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable, its decision deserves substantial deference." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). "[T]he court abuses its discretion when it fails to balance the relevant factors." La Seguridad v. Transytur Line, 707 F.2d 1304, 1308 (11th Cir. 1983). Furthermore, "where the court does not weigh the relative advantages of the respective forums but considers only the disadvantages of one, it has abused its discretion." Id. at 1307.

DISCUSSION

In considering a motion for dismissal on grounds of forum non conveniens,

the trial judge must consider all relevant factors of private interest, weighing in the balance a strong presumption against disturbing plaintiffs' initial forum choice. If the trial judge finds this balance of private interests to be in equipoise or near equipoise, he must then determine whether or not factors of public interest tip the balance in favor of a trial in a foreign forum.⁵

Id. at 1307.

The Supreme Court set out in detail in Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947), factors to be considered in balancing the private and public interests. The Court explained:

An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of the premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the enforceability of a judgment if one is obtained. The court will weigh relative advantages and obstacles to fair trial. It is often said that the plaintiff may not, by choice of an inconvenient forum, "vex," "harass," or "oppress" the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy. But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.

Factors of public interest also have a place in applying the doctrine. Administrative difficulties follow for courts when litigation is piled up in congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation. In cases which touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only. There is a local interest in having localized controversies decided at home. There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself.

330 U.S. at 508-09, 67 S.Ct. 839 (emphasis added).

A. Private Interest Factors

As the Gilbert Court made clear, with regard to the weighing of the private interests, the plaintiffs' choice of forum should rarely be disturbed "unless the balance is strongly in favor of the defendant." Id. at 508, 67 S.Ct. 839. This presumption in favor of the plaintiffs' initial forum choice in balancing the private interests is at its strongest when the plaintiffs are citizens, residents, or corporations of this country. Leon v. Millon Air, Inc., 251 F.3d 1305, 1311 (11th Cir.2001) ("[B]alancing private interests requires determining the convenience of the parties, affording domestic plaintiffs `a strong presumption' that their forum choice is sufficiently convenient, and a weaker presumption applying in cases brought by foreign plaintiffs.").

While the Supreme Court has been clear that "dismissal should not be automatically barred when a [domestic] plaintiff has filed suit in his home forum," Piper Aircraft Co. 454 U.S. at 255 n. 23, 102 S.Ct. 252 (emphasis added),⁶ in this Circuit we have long mandated that district courts "`require positive evidence of unusually extreme circumstances, and should be thoroughly convinced that material injustice is manifest before exercising any such discretion as may exist to deny a United States citizen access to the courts of this country.'" La Seguridad, 707 F.2d at 1308 n. 7 (quoting Burt v. Isthmus Dev. Co., 218 F.2d 353, 357 (5th Cir.1955)⁷); see also Lehman v. Humphrey Cayman, Ltd., 713 F.2d 339, 342 (8th Cir.1983) (requiring same standard); Founding Church of Scientology v. Verlag, 536 F.2d 429, 435 (D.C.Cir.1976) (same).

While the district court referenced the presumption in favor of plaintiffs' choice of forum in the introductory portion of its discussion, the district court failed to articulate the relevant standards and failed to apply any presumption in its analysis. First, the district court failed to recognize our rule that "positive evidence of unusually extreme circumstances" must be present and that the court must be "thoroughly convinced that material injustice is manifest" before ousting a domestic plaintiff from this country's courts. La Seguridad, 707 F.2d at 1308 n. 7. The district court's reference to the presumption in favor of the plaintiffs' choice of forum also fails to make clear that this presumption is to be applied specifically when weighing the private interests. Id. at 1307.

Second, even if we were to assume that the district court correctly understood the proper legal standard, the district court never mentions the presumption in favor of the plaintiffs or incorporates the presumption into its calculus once it actually engages in weighing the private interests. Indeed, the Report makes clear that the district court entirely failed to consider the presumption in favor of the plaintiffs' choice of forum in its analysis at all.

After establishing that an adequate and available forum existed in Spanish courts, the district court opinion turned to balancing the private interest factors. In determining that the private convenience factors were at or near equipoise, the district court focused only on factors related to the practical problems that make "trial of a case easy, expeditious, and inexpensive," such as where the evidence and witnesses are located. Applying these factors, both fora were found to be equally inconvenient. In full, this portion of the Report reads as follows (for ease of reference, we have numbered the paragraphs):

[1] Relevant private...