Kaepa, Inc. v. Achilles Corp.
| Decision Date | 14 February 1996 |
| Docket Number | No. 95-50278,95-50278 |
| Citation | 76 F.3d 624 |
| Parties | , 34 Fed.R.Serv.3d 660 KAEPA, INC., Plaintiff-Appellee, v. ACHILLES CORPORATION, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Seagal V. Wheatley, John Frank Onion, III, Wheatley & Onion, San Antonio, TX, for Plaintiff-Appellee.
Retta A. Miller, Gordon M. Shapiro, Jackson & Walker, Dallas, TX, for Defendant-Appellant.
Appeal from the United States District Court for the Western District of Texas.
Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.
The primary issue presented by this appeal is whether the district court erred by enjoining Defendant-Appellant Achilles Corporation from prosecuting an action that it filed in Japan as plaintiff, which essentially mirrored a lawsuit previously filed by Plaintiff-Appellee Kaepa, Inc. in state court and then being prosecuted in federal district court by Kaepa. Given the private nature of the dispute, the clear indications by both parties that claims arising from their contract should be adjudicated in this country, and the duplicative and vexatious nature of the Japanese action, we conclude that the district court did not abuse its discretion by barring the prosecution of the foreign litigation. Accordingly, we affirm the grant of the antisuit injunction.
This case arises out of a contractual dispute between two sophisticated, private corporations: Kaepa, an American company which manufactures athletic shoes; and Achilles, a Japanese business enterprise with annual sales that approximate one billion dollars. In April 1993, the two companies entered into a distributorship agreement whereby Achilles obtained exclusive rights to market Kaepa's footwear in Japan. The distributorship agreement expressly provided that Texas law and the English language would govern its interpretation, that it would be enforceable in San Antonio, Texas, and Kaepa grew increasingly dissatisfied with Achilles's performance under the contract. Accordingly, in July of 1994, Kaepa filed suit in Texas state court, alleging (1) fraud and negligent misrepresentation by Achilles to induce Kaepa to enter into the distributorship agreement, and (2) breach of contract by Achilles. Thereafter, Achilles removed the action to federal district court, and the parties began a laborious discovery process which to date has resulted in the production of tens of thousands of documents. In February 1995, after appearing in the Texas action, removing the case to federal court, and engaging in comprehensive discovery, Achilles brought its own action in Japan, alleging mirror-image claims: (1) fraud by Kaepa to induce Achilles to enter into the distributorship agreement, and (2) breach of contract by Kaepa.
that Achilles consented to the jurisdiction of the Texas courts. 1
Back in Texas, Kaepa promptly filed a motion asking the district court to enjoin Achilles from prosecuting its suit in Japan (motion for an antisuit injunction). Achilles in turn moved to dismiss the federal court action on the ground of forum non conveniens. The district court denied Achilles's motion to dismiss and granted Kaepa's motion to enjoin, ordering Achilles to refrain from litigating the Japanese action and to file all of its counterclaims with the district court. Achilles timely appealed the grant of the antisuit injunction. 2
Achilles's primary argument is that the district court failed to give proper deference to principles of international comity when it granted Kaepa's motion for an antisuit injunction. We review the decision to grant injunctive relief for abuse of discretion. 3 Under this deferential standard, findings of fact are upheld unless clearly erroneous, whereas legal conclusions " 'are subject to broad review and will be reversed if incorrect.' " 4
It is well settled among the circuit courts--including this one--which have reviewed the grant of an antisuit injunction that the federal courts have the power to enjoin persons subject to their jurisdiction from prosecuting foreign suits. 5 The circuits differ, however, on the proper legal standard to employ when determining whether that injunctive power should be exercised. 6 We have addressed the propriety of an antisuit injunction on two prior occasions, in In re Achilles urges us to give greater deference to comity and apply the latter, more restrictive standard. We note preliminarily that, even though the standard espoused in Unterweser and Bethell focuses on the potentially vexatious nature of foreign litigation, it by no means excludes the consideration of principles of comity. We decline, however, to require a district court to genuflect before a vague and omnipotent notion of comity every time that it must decide whether to enjoin a foreign action.
Unterweser Reederei Gmbh 7 and Bethell v. Peace. 8 Emphasizing in both cases the need to prevent vexatious or oppressive litigation, we concluded that a district court does not abuse its discretion by issuing an antisuit injunction when it has determined "that allowing simultaneous prosecution of the same action in a foreign forum thousands of miles away would result in 'inequitable hardship' and 'tend to frustrate and delay the speedy and efficient determination of the cause.' " 9 The Seventh and the Ninth Circuits have either adopted 10 or "incline[d] toward" 11 this approach, but other circuits have employed a standard that elevates principles of international comity to the virtual exclusion of essentially all other considerations. 12
In the instant case, for example, it simply cannot be said that the grant of the antisuit injunction actually threatens relations between the United States and Japan. First, no public international issue is implicated by the case: Achilles is a private party engaged in a contractual dispute with another private party. Second, the dispute has been long and firmly ensconced within the confines of the United States judicial system: Achilles consented to jurisdiction in Texas; stipulated that Texas law and the English language would govern any dispute; appeared in an action brought in Texas; removed that action to a federal court in Texas; engaged in extensive discovery pursuant to the directives of the federal court; and only then, with the federal action moving steadily toward trial, brought identical claims in Japan. Under these circumstances, we cannot conclude that the district court's grant of an antisuit injunction in any way trampled on notions of comity.
Achilles also argues that the district court erred by failing to meet several requirements of Federal Rule of Civil Procedure 65 before issuing the antisuit injunction. Rule 65(a)(1) provides that "[n]o preliminary injunction shall be issued without notice to the adverse party." We have interpreted the notice requirement of Rule 65(a)(1) to mean that "where factual disputes are presented, the parties must be given a fair opportunity and a meaningful hearing to present their differing versions of those facts before a preliminary injunction may be granted." 15 If no factual dispute is involved, however, no oral hearing is required; under such circumstances the parties need only be given "ample opportunity to present their respective views of the legal issues involved." 16 In the instant case, the district court did not rely on any disputed facts in determining whether it could properly grant an antisuit injunction. Moreover, both parties presented comprehensive memoranda in support of their positions on the issue. Accordingly, the district court did not violate Rule 65(a)(1) by failing to conduct an oral hearing before granting the antisuit injunction.
Achilles also argues that the district court violated Rule 65(c) by not requiring Kaepa to post a bond. Rule 65(c) provides that "[n]o ... preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper...." 17 In holding that the amount of security required pursuant to Rule 65(c) "is a matter for the discretion of the trial court," 18 we have ruled that the court "may elect to require no security at all." 19 Thus, the district court did not violate Rule 65(c) by failing to compel Kaepa to post a bond. 20
International comity represents a principle of paramount importance in our world of ever increasing economic interdependence. Admitting that "comity" may be a somewhat elusive concept 1 does not mean that we can blithely ignore its cautionary dictate. 2 Unless we proceed in each instance with respect for the independent jurisdiction of a sovereign nation's courts, we risk provoking retaliation in turn, with detrimental consequences that may reverberate far beyond the particular dispute and its private litigants. Amicable relations among sovereign nations and their judicial systems depend on our recognition, as federal courts, that we share the international arena with co-equal judicial bodies, and that we therefore act to deprive a foreign court of jurisdiction only in the most extreme circumstances. Because I feel that the...
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