BNS Obtains Dismissal of Anticipatory Lawsuit on Forum Non-Conveniens Grounds

On February 5, 2016, the Central District granted a motion to dismiss on forum non conveniens grounds, entering judgment in favor of our client. 

After being warned of pending litigation overseas, the California manufacturer our client distributed for initiated a declaratory relief action in Los Angeles Superior Court.  After removing to federal court, BNS argued that convenience favored a dismissal or a stay of the action until the now-pending British suit was adjudicated.  The Court agreed and completely dismissed the case.   

Our client – a UK-based distributor – entered into a distribution agreement with a California manufacturer for distribution of products throughout Europe.  After a dispute arose between our client and the manufacturer, our client attempted to resolve the issue but warned of litigation if the efforts failed.  In an apparent attempt to avoid litigating in England, the manufacturer filed a lawsuit in Los Angeles Superior Court for declaratory relief.  The manufacturer sought a declaration that it properly terminated the distribution agreement.   

After removing the case to the Central District, BNS moved to dismiss the lawsuit on the grounds of forum non conveniens and lack of personal jurisdiction.  Although the agreement’s forum-selection clause was only permissive, the parties agreed that English law applied.  During the period of removal and moving to dismiss, our client initiated proceedings in England for breach of contract. 

The Court agreed with BNS that England provided an adequate alternative forum and both the public and private interest factors favored dismissal.   Particularly important to the Court was the fact that separate proceedings were now pending in England.  The Court noted that these proceedings not only determined whether the termination was proper, but also whether any breach and resulting damages occurred.  The Court also found persuasive the fact that our client’s witnesses were located in Europe, the costs of bringing those witnesses to California is high, and the manufacturer consented to jurisdiction in Europe by virtue of the permissive forum-selection clause.  The Court noted: “Even considering the “greater deference [afforded] to a plaintiff’s choice of [its] home forum” the private interest factors thus strongly favor dismissal.”  The Court further agreed that the “first-to-file” rule did not apply, as Plaintiffs were warned of litigation and filed in anticipation thereto.

With respect to the public interest factors, the Court emphasized the mandatory application of English law.  Although the manufacturer argued that English law would not be “odd or uninterpretable” as compared to California law, the Court held that the evaluation did not require such a consideration.  The fact that foreign law applied strongly favored dismissal.  Coupled with the fact that English courts are less congested than California courts, the Court held the public interest factors favored dismissal.

The Court granted the motion on the grounds of forum non conveniens without reach an analysis of personal jurisdiction. The Court entered judgment pursuant to FRCP 58, dismissing and closing the case.