Usha (India), Ltd. v. Honeywell Intern.

• Citation: 421 F.3d 129
• Decision Date: 29 August 2005
• Docket Number: Docket No. 04-2158-CV.
• Parties: USHA (INDIA), LTD., individually and on behalf of USHA Amorphous Metals, Ltd., USHA Information Systems, Ltd., individually and on behalf of USHA Amorphous Metals, Ltd., and RKKR Infotech Private, Ltd., individually and on behalf of USHA Amorphous Metals, Ltd., Plaintiffs-Appellants, v. HONEYWELL INTERNATIONAL, INC., formerly known as AlliedSignal, Inc., Hitachi Metals America, Ltd., and Hitachi Metals, Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

421 F.3d 129

USHA (INDIA), LTD., individually and on behalf of USHA Amorphous Metals, Ltd., USHA Information Systems, Ltd., individually and on behalf of USHA Amorphous Metals, Ltd., and RKKR Infotech Private, Ltd., individually and on behalf of USHA Amorphous Metals, Ltd., Plaintiffs-Appellants, v. HONEYWELL INTERNATIONAL, INC., formerly known as AlliedSignal, Inc., Hitachi Metals America, Ltd., and Hitachi Metals, Ltd., Defendants-Appellees.

Docket No. 04-2158-CV.

United States Court of Appeals, Second Circuit.

Argued: May 13, 2005.

Final Submission: June 13, 2005.

Decided: August 29, 2005.

COPYRIGHT MATERIAL OMITTED

Richard C. Ebeling, Law Office of Richard C. Ebeling, Jefferson Valley, NY, for Plaintiffs-Appellants.

Jonathan F. Putnam, Kirkland & Ellis LLP, New York, NY, for Defendants-Appellees (Shiva S. Farouki, David T. Huang, Kirkland & Ellis LLP, for Defendants-Appellees, David Leichtman, Morgan Lewis & Bockius LLP, New York, NY, for Defendant-Appellee Hitachi Metals America, Ltd., of counsel).

Before: FEINBERG, CARDAMONE, and SACK, Circuit Judges.

SACK, Circuit Judge.

The plaintiffs brought suit in the United States District Court for the Southern District of New York (Denny Chin, Judge), alleging claims arising under the laws of the Republic of India. The plaintiffs asserted that they chose to bring suit in the Southern District of New York principally because, as a result of prospective delay in India's courts, India did not provide an adequate alternative forum. The district court, after hearing expert testimony from both sides, concluded that India did provide an adequate forum, and dismissed the case on the ground of forum non conveniens.

BACKGROUND

We, as did the district court, see Usha (India), Ltd. v. Honeywell Int'l Inc., No. 03 Civ. 0494, 2004 WL 540441, at *1, 2004 U.S. Dist. LEXIS 4236, at *2 (S.D.N.Y. Mar. 17, 2004), take the facts of the underlying dispute from the amended complaint and assume them to be true for purposes of reviewing the forum non conveniens dismissal.

The Parties

The plaintiffs, Usha (India), Ltd. ("Usha India"), Usha Information Systems, Ltd. ("UIS"), and RKKR Infotech Private, Ltd. ("RKKR"), are corporations organized and existing under the laws of the Republic of India, with their principal offices in India. Usha Amorphous Metals, Ltd. ("UAML"), also an Indian corporation, is a joint venture that was created and initially owned by Usha India and defendant Honeywell International, Inc. ("Honeywell"). Usha India's holdings in UAML were transferred to UIS and then to RKKR. UIS and RKKR are therefore successors-in-interest to Usha India with respect to UAML.

Honeywell is a Delaware corporation with its principal office in New Jersey. Hitachi Metals, Ltd., is a corporation organized and existing under the laws of Japan. Hitachi Metals America, Ltd., a New York corporation with its principal office in New York, is a wholly owned subsidiary of Hitachi Metals, Ltd.

The Facts

In the late 1980s, Honeywell, which manufactured and sold amorphous metal products¹ under the name Metglas®, sought to manufacture and sell such products in the Republic of India. At that time, the laws of India forbade non-Indian companies from owning a one-hundred-percent interest in an Indian company or from otherwise establishing a direct presence in India. In 1987, Honeywell therefore agreed with Usha India to create an Indian-based joint venture, UAML, to make and sell amorphous metal products. On March 23, 1987, Usha India and Honeywell executed a Memorandum of Understanding setting forth the parties' agreement to form an Indian corporation under the Indian Companies Act of 1956. Under the resulting shareholders' agreement, Usha India would own sixty percent of the equity in UAML, and would sponsor three of the five members of its board of directors. Honeywell would own forty percent of the equity and would appoint the remaining two directors.

In 1993, the parties agreed that Honeywell would increase its equity interest in UAML to fifty percent. Honeywell thereupon purchased additional shares of UAML capital stock from Usha India for the equivalent of approximately $153,000.

Thereafter, the partners decided to expand operations in India. Usha India agreed to contribute real estate in exchange for more UAML shares, while Honeywell agreed to contribute technology in exchange for the same number of new shares. This agreement was memorialized in a "Technology Transfer Agreement" executed in February 1994. The plaintiffs allege that the transfer agreement was a "sham" and that Honeywell's actual intention was to destroy UAML. Am. Compl. ¶ 33. They further assert that "[w]hile weakening UAML, and stalemating the Usha-sponsored Directors from taking remedial action, Honeywell was secretly implementing a plan to create a wholly owned subsidiary in India, the purpose of which was to arrogate UAML's business for itself." Id. ¶ 35.

In 1995, the foreign investment laws of India were changed to permit foreign entities to own one-hundred-percent interests in Indian companies. In April 1996, Honeywell applied for and was granted permission to establish an Indian corporation, Honeywell India Private Ltd. ("Honeywell India"), as its wholly owned subsidiary. In 1998, Honeywell India applied for approval to manufacture amorphous metal products in India. The plaintiffs contend that "[t]hus, in late 1998, through a lengthy and secretive conspiracy with its nominated UAML Directors, Honeywell had all the pieces in place to destroy UAML in favor of its wholly owned competitive enterprise." Am. Compl. ¶ 48. The plaintiffs further assert that Honeywell then tried to incapacitate UAML by competing with it and disabling it through unfair practices and deceit. Id. ¶¶ 48-60.

In May 2003, the President of Honeywell's Amorphous Metals Division, who was also a UAML director, informed the UAML board that Honeywell had agreed to sell its Metglas business to Hitachi Metals, Ltd., but planned to retain its stake in UAML. Hitachi Metals, Ltd., announced that its United States subsidiary, Hitachi Metals America, Ltd., would acquire the Metglas business. The plaintiffs assert that "the Hitachi transaction involve[d] the sale of assets which Honeywell misappropriated from UAML over the years . . . including . . . technology, equipment, unique manufacturing processes and other trade secrets, personnel, and business opportunities." Id. ¶ 64.

On the basis of these allegations, the plaintiffs filed suit in the United States District Court for the Southern District of New York asserting a variety of claims against Honeywell and the two Hitachi entities. These claims all arise under the laws of India. See Usha (India), Ltd., 2004 WL 540441, at * 1, 2004 U.S. Dist. LEXIS 4236, at *1. The defendants moved to dismiss on the ground of forum non conveniens, and, on March 17, 2004, the district court granted the motion.

This appeal followed.

DISCUSSION

I. Jurisdiction

We note as a preliminary matter that the parties assert that the district court had jurisdiction over this action pursuant to 28 U.S.C. § 1332, which provides for diversity jurisdiction for disputes between, inter alia, "citizens of a State and citizens or subjects of a foreign state," id. § 1332(a)(2). "[W]e are obliged to satisfy ourselves that jurisdiction exists." Mentor Ins. Co. (U.K.) Ltd. v. Brannkasse, 996 F.2d 506, 512 (2d Cir.1993); see also Travelers Ins. Co. v. Carpenter, 411 F.3d 323, 328 (2d Cir.2005).

In their amended complaint, the plaintiffs named as defendants in addition to Honeywell, Hitachi Metals America, Ltd., and Hitachi Metals, Ltd. As noted, the plaintiffs are all Indian corporations; defendants Hitachi Metals America, Ltd., and Honeywell are New York and Delaware corporations, respectively. But Hitachi Metals, Ltd., is a Japanese corporation, and the presence of foreign citizens — the plaintiffs and Hitachi Metals, Ltd. — on both sides of the dispute might well destroy diversity jurisdiction with respect to this action. See Universal Licensing Corp. v. Paola del Lungo S.p.A., 293 F.3d 579, 581 (2d Cir.2002) ("[D]iversity is lacking . . . where the only parties are foreign entities, or where on one side there are citizens and aliens and on the opposite side there are only aliens."); Mentor Ins. Co., 996 F.2d at 512 ("[A]lignment of alien corporations as both plaintiffs and defendants defeats the allegation of diversity jurisdiction. . . .").

Hitachi Metals, Ltd., was never served with process, however. Under the Federal Rules of Civil Procedure,

If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.

Fed.R.Civ.P. 4(m). Although Rule 4(m) creates an exception for "service in a foreign country pursuant to subdivision (f)," which sets forth procedures for such service, see Rule 4(f), this exception does not apply if, as here, the plaintiff did not attempt to serve the defendant in the foreign country. See Mentor Ins. Co., 996 F.2d at 512; Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir.1985). The plaintiffs concede, and the defendants do not contest, that the plaintiffs did not attempt service on Hitachi Metals, Ltd. "Had the district court addressed the issue, it would have been required to dismiss the action as to" Hitachi Metals, Ltd. Mentor Ins. Co., 996 F.2d at 512. We therefore now dismiss the action as to Hitachi Metals, Ltd., pursuant to Rule 4(m). See id. The requirements of diversity jurisdiction are therefore satisfied. Id.

II. Forum Non Conveniens

Having dismissed Hitachi Metals, Ltd., as a defendant, w...