Contact Lumber Co. v. P.T. Moges Shipping Co. Ltd.

• Decision Date: 16 November 1990
• Docket Number: 89-16220,89-15775 and 89-16221,Nos. 89-15774,s. 89-15774
• Citation: 918 F.2d 1446
• Parties: CONTACT LUMBER COMPANY, a corporation; Russell Stadelman & Company, a corporation; General Hardwood Company, a corporation; Rainier Imports, Inc., a corporation; Swaner Hardwood Co., Inc., a corporation, Plaintiffs-Appellants, v. P.T. MOGES SHIPPING COMPANY, LTD., a foreign corporation, Defendant-Appellee. The PENROD COMPANY, a corporation; Conwood Products, Inc., a corporation; Greenwood Forest Products Inc., a corporation; Robert S. Osgood Inc., a corporation; Bateman Bros. Lumber Co., a corporation; Insular Lumber Sales, a corporation, Plaintiffs-Appellants, v. P.T. MOGES SHIPPING COMPANY, LTD., a foreign corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1446

918 F.2d 1446

1991 A.M.C. 678

CONTACT LUMBER COMPANY, a corporation; Russell Stadelman &

Company, a corporation; General Hardwood Company, a

corporation; Rainier Imports, Inc., a corporation; Swaner

Hardwood Co., Inc., a corporation, Plaintiffs-Appellants, v. P.T. MOGES SHIPPING COMPANY, LTD., a foreign corporation,

Defendant-Appellee.

The PENROD COMPANY, a corporation; Conwood Products, Inc.,

a corporation; Greenwood Forest Products Inc., a

corporation; Robert S. Osgood Inc., a corporation; Bateman

Bros. Lumber Co., a corporation; Insular Lumber Sales, a corporation, Plaintiffs-Appellants, v. P.T. MOGES SHIPPING COMPANY, LTD., a foreign corporation,

Defendant-Appellee.

Nos. 89-15774, 89-16220, 89-15775 and 89-16221.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 1, 1990.

Decided Nov. 16, 1990.

Ernest N. Reddick, Derby, Cook, Quinby, & Tweedt, San Francisco, Cal., for plaintiffs-appellants.

Eric Danoff, Graham & James, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before GOODWIN, Chief Judge, BROWNING and RYMER, Circuit Judges.

GOODWIN, Chief Judge:

Plaintiffs purchased negotiable bills of lading representing Philippine mahogany lumber to be delivered in Oakland, California. The lumber was damaged at sea in the hands of an intermediate carrier and plaintiffs sued the Indonesian corporation that issued the bills of lading. The district court dismissed the action on the ground of forum non conveniens. We affirm.

While proceeding between ports in the Philippines, the Philippine cargo vessel ISABELITA listed and then grounded. Her cargo of lumber products suffered significant loss and damage. Although much of the recovered cargo was in poor condition, a portion was sold in Cebu City, Philippines at public auction. The proceeds are currently in a trust account in a Manila bank in the joint names of the cargo surveyors. After purchasing the bills of lading, appellants learned of the casualty and filed suit against Moges to recover their losses.

Moges, an ocean carrier that owns and charters merchant cargo vessels, has no offices or employees in the United States, and it transacts business with U.S. entities through the use of agents.

Appellants claim to be U.S. corporations and the trial court assumed them to be U.S. entities.

Contact Lumber alleged damages in the amount of $508,141.32. The claim was brought under the United States Carriage of Goods by Sea Act ("U.S. COGSA"), 46 U.S.C.App. Sec. 1300 et seq., and Federal Rule of Civil Procedure 9(h) (governing admiralty and maritime pleadings). The bill of lading incorporates U.S. COGSA.

Moges denied liability and asserted a compulsory counterclaim for unpaid freight costs. Among other defenses, Moges filed a motion to dismiss on the ground of forum non conveniens. ¹

The Penrod Company filed a parallel action against Moges alleging damages in the amount of $701,252.36 on behalf of owners of cargo lost or damaged aboard the ISABELITA who were not named in the Contact Lumber action.

Shortly after these proceedings commenced before the district court, a number of lawsuits arising from the same casualty were filed in the Philippine courts. Moges brought an indemnity suit in Manila against Philippine Transmarine Carriers, Inc. ("PTC"), the owner and operator of the ISABELITA, seeking reimbursement for all losses arising from the grounding of the ISABELITA, including damages Moges may have to pay appellants.

PTC, in turn, has filed general average claims in Manila against the cargo owners for a share of its overall loss resulting from the casualty. The fund in the Manila bank is being held as security for these claims.

United Salvage and Towage Inc., a Philippine corporation based in Manila, has filed suit in Manila against the ISABELITA, its cargo, and the salvage proceeds for unsettled claims arising out of its salvage activities.

Against this backdrop of litigation, the district court issued its consolidated Memorandum and Order granting appellee's motion to dismiss on the ground of forum non conveniens. The court's dismissal was subject to three conditions: first, that Moges consent to the jurisdiction of the Philippine court; second, that Moges waive any statute of limitations defense that would not have been available had the court retained jurisdiction; and third, that Moges issue a letter of guaranty that a Philippine judgment, if rendered, will be satisfied.

I. Forum Non Conveniens

Appellants and appellee offer competing views concerning how this litigation ought to be characterized. Appellants argue the court must focus on whether the bills of lading issued by Moges contained false information upon which U.S. purchasers of cargo relied to their detriment. They maintain that their case turns on the rights and duties set forth in the Moges bills of lading, that COGSA requires interpretation of these documents under U.S. law, and that the evidence (i.e., the bill of lading) upon which the court's decision would rest is located in the United States.

Moges, on the other hand, emphasizes that the principal issue is the assignment of fault in the listing and grounding of the ISABELITA. Because all of the evidence and parties that can best explain the casualty are located in the Philippines, Moges argues that Manila is a more appropriate forum in which to litigate this dispute.

"The forum non conveniens determination is committed to the sound discretion of the trial court. It 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, 266, 70 L.Ed.2d 419 (1981) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 511-12, 67 S.Ct. 839, 844-45, 91 L.Ed. 1055 (1947)); see also Zipfel v. Halliburton, 832 F.2d 1477, 1481-82 (9th Cir.1987), cert. denied, 486 U.S. 1054, 108 S.Ct. 2819, 100 L.Ed.2d 921 (1988).

Although this circuit has not articulated a dispositive test to govern forum non conveniens dismissal, the Gulf Oil Court suggested that both "private" and "public" factors must be analyzed in deciding whether a case should be heard in an alternative forum. This forum non conveniens analysis applies with equal force in the context of admiralty and maritime jurisdiction. As the Second Circuit observed: "[I]t is in the field of admiralty that our federal courts have applied the doctrine of forum non conveniens most flexibly and over the longest period of time." Alcoa S.S. Co., Inc. v. M/V Nordic Regent, 654 F.2d 147, 153 (2d Cir.) (en banc), cert. denied, 449 U.S. 890, 101 S.Ct. 248, 66 L.Ed.2d 116 (1981).

In a motion to dismiss on the ground of forum non conveniens, "the burden of proving an alternative forum is the defendant's and ... the remedy must be clear before the case will be dismissed." Cheng v. Boeing Co., 708 F.2d 1406, 1411 (9th Cir.), cert. denied, 464 U.S. 1017, 104 S.Ct. 549, 78 L.Ed.2d 723 (1983). Accordingly, appellee must prove the existence of an adequate alternative forum and that private and public interest factors favor dismissal. See Gulf Oil, 330 U.S. at 508-09, 67 S.Ct. at 843; Piper Aircraft, 454 U.S. at 247-52, 102 S.Ct. at 261-64. In carrying this burden, appellee must provide sufficient information to enable the district court to balance the parties' interests. If appellant, however, can demonstrate that choice of law requires retaining the case, the motion to dismiss will be denied. See Zipfel, 832 F.2d at 1486.

Courts have not agreed on whether U.S. plaintiffs are entitled to special deference in their selection of a U.S. forum. Appellants contend the district court erred in attaching little significance to their choice of forum. In support of their argument, they rely on Gulf Oil, 330 U.S. at 508, 67 S.Ct. at 843, which states: "But unless the balance [of private and public interest factors] is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed."

This Circuit has found that while a U.S. citizen has no absolute right to sue in a U.S. court, great deference is due plaintiffs because a showing of convenience by a party who has sued in his home forum will usually outweigh the inconvenience the defendant may have shown. Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1335 (9th Cir.1984), cert. denied, 471 U.S. 1066, 105 S.Ct. 2143, 85 L.Ed.2d 500 (1985).

While the courts' language suggests that a U.S. citizen's decision to sue in the domestic forum creates a presumption of deference:

[a] citizen's forum choice should not be given dispositive weight.... [I]f the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court, dismissal is proper.

Piper Aircraft, 454 U.S. at 256 n. 23, 102 S.Ct. at 266 n. 23. As this Circuit has observed: "The presence of American plaintiffs, however, is not in and of itself sufficient to bar a district court from dismissing a case on the ground of forum non conveniens." Cheng, 708 F.2d at 1411 (following Alcoa, 654 F.2d 147, 154-58). Although "a defendant must meet an almost impossible burden in order to deny a citizen access to the courts of this country," Mizokami Bros. of Ariz., Inc. v. Baychem Corp., 556 F.2d 975, 977 (9th Cir.1977), cert. denied, 434 U.S. 1035, 98 S.Ct. 770, 54 L.Ed.2d 783 (1978), the cases demonstrate that defendants frequently rise to the challenge. In fact, the Mizokami Court upheld the lower court's dismissal on the ground of forum non conveniens. In an era of increasing international commerce, parties who choose to engage in international transactions should know that when their foreign operations lead to litigation they cannot expect always to bring their foreign opponents into a...