Forum Non Conveniens in Jeopardy

Posted on September 10, 2012 03:04 by Carlos J. Ruiz

I. Introduction

On December 7, 2011, the French high court, the Cour de Cassation, ruled that a United States District Court could not use the doctrine of forum non conveniens under Article 33 of the 1999 Montreal Convention (Convention for the Unification of Certain Rules for International Carriage by Air, May 28, 1999) to dismiss and "transfer" to Martinique - a French possession in the Caribbean - suits brought in the United States by the 152 victims of the crash of a Colombian air carrier over Venezuelan territory. The French court ruled that the plaintiff, and only the plaintiff, has the choice of deciding which jurisdiction will decide the dispute without the possibility that an internal rule of procedure of another state (in this instance the United States) might contradict his choice.

The case was originally filed in the United States District Court for the Southern District of Florida and was dismissed on the grounds that forum non conveniens is an available procedural tool under Article 33, and that the doctrine favored litigation in Martinique, where all of the 152 crash victims resided or were citizens. That decision was affirmed by the Eleventh Circuit Court of Appeals and certiorari was denied by the U.S. Supreme Court. Following the French high court ruling this past December, the plaintiffs filed a motion, pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure, requesting that the U.S. District Court vacate its order dismissing the case. The plaintiffs' motion was timely opposed by the defendants on March 30, 2012. These motions are currently pending before Judge Ursala Ungaro, the same U.S. District Court Judge who heard and dismissed the prior cases. As this issue of Skywritings was ready for publication, Judge Ursula Ungaro issued an order denying the plaintiff's motion to vacate the previous order dismissing the case. Judge Ungaro rejected the Cour de Cassation's interpretation of the forum non conveniens doctrine under Montreal Article 33.

II. Prior History Of The Case

On August 16, 2005, West Caribbean Airways, a Colombian flag carrier that did not fly to or otherwise do business in the United States, crashed over Venezuela during a charter flight returning to Martinique from Panama City, Panama. All on board the aircraft were killed. Within weeks, suit was brought on behalf of all the passenger victims in Miami in the United States District Court for the Southern District of Florida. West Caribbean Airways and Jacques Cimetier, d/b/a Newvac Corporation, a Florida corporation, were named as defendants. Newvac was named and sued as a "contracting carrier" under new Article 39 of the 1999 Montreal Convention, as Newvac (and its owner, Jacques Cimetier) had entered a charter contract with West Caribbean Airways to provide the aircraft and crew to carry the Martinique passengers on the charter trip.

West Caribbean, for its part, moved to dismiss, arguing that the court had no jurisdiction over it, since it did no business in, and was not licensed to operate to or from, the United States. The court deferred ruling on that motion, mainly because Cimetier and Newvac moved to dismiss the case on the grounds of forum non conveniens. The two defendants argued that the plaintiffs should be required to file suit in Martinique, since it was an available and adequate forum, and West Caribbean Airways was subject to, and, indeed, would consent to jurisdiction there.

III. The Issues and the Relevant Treaty Provisions

The two main issues facing the court were: (1) whether forum non conveniens was an available procedural tool under Article 33(4) of the 1999 Montreal Convention and, if so, (2) whether it was appropriate to dismiss the suit on this basis. Because the issue of whether forum non conveniens could be used as a procedural tool under Article 33(4) was one of first impression in any U.S. court, defense counsel asked the court to invite the U.S. Government to participate in the case and present its views on that critically important issue. The court did so, and the U.S. Department of Justice submitted to the court a Statement of Interest that outlined in detail the legislative history (travaux preparatoire) of the negotiations at Montreal and concluded that forum non conveniens was clearly intended to be available to courts to use as an available procedural tool under Article 33(4). The Department of Justice later submitted an equally detailed Amicus Curiae brief to the U.S. Court of Appeals for the Eleventh Circuit, reviewing again the legislative history of Article 33(4) and reiterating the same conclusion.

In relevant part for the issues at hand, Article 33 of the Montreal Convention provides as follows:

(1) An action for damages must be brought, at the option of the plaintiff, in the territory of one of the States Parties, either before the court of the domicile of the carrier or of its principal place of business, or where it has a place of business through which the contract has been made or before the court at the place of destination.

(2) In respect of damage resulting from the death or injury of a passenger, an action may be brought before one of the courts mentioned in paragraph 1 of this Article, or in the territory of a State Party in which at the time of the accident the passenger has his or her principal and permanent residence and to or from which the carrier operates services for the carriage of passengers by air, either on its own aircraft or on another carrier's aircraft pursuant to a commercial agreement, and in which that carrier conducts its business of carriage of passengers by air from premises leased or owned by the carrier itself or by another carrier with which it has a commercial agreement.

(4) Questions of procedure shall be governed by the law of the court seized of the case.

IV. Analysis

According to the foregoing text, the United States is an available forum for the plaintiffs under Article 33(1) because Newvac was domiciled and had its principal place of business in the state of Florida. However, Martinique, France is and was also an available forum both under Article 33(1) - because Martinique was the place of destination, as well as under Article 33(2) - because Martinique was likewise the State where all the passengers had their "principal and permanent residence" at the time of the accident. In other words, both the United States and France were very clearly available forums under Articles 33(1) and 33(2) of Montreal. Once the plaintiffs opted to sue in the United States, however, the defendants, Newvac and Cimetier, moved for dismissal on the grounds of forum non conveniens under Article 33(4). They did so for at least two significant reasons: first, neither Newvac nor Cimetier carried insurance to cover such a tragedy while West Caribbean Airways did and had voluntarily consented to subject itself to jurisdiction in Martinique; and second, because it is always far easier and more just for a domiciliary forum to determine proper and appropriate damage compensation for its domiciliaries than for a foreign court (such as a U.S. court would be in these circumstances).

Under the well-established Supreme Court precedent in Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981), a party seeking dismissal on forum non conveniens grounds must demonstrate: (1) that an adequate alternative forum is available; (2) that relevant public and private interests weigh in favor of dismissal, and; (3) that the plaintiff can reinstate his suit in the alternative forum without undue inconvenience or prejudice. The defendants in this instance further argued that, because forum non conveniens is a question of procedure, it was in fact an available procedural tool under Article 33(4) and was specifically intended by the framers of the 1999 Montreal Convention to be available as such a tool in U.S. and other courts that employed the forum non doctrine. On the other hand, the plaintiffs argued that the court could not defeat the plaintiffs' choice of forum, as afforded by Montreal Article 33(1), through the application of a procedural rule of domestic law and, accordingly, forum non conveniens should not be deemed to be an available tool under Montreal Article 33(4).

V. Court Decisions

In an extensive Preliminary Order that analyzed in detail the legislative history of the 1999 Montreal Convention, the U.S. District Court (Judge Ursala Ungaro) concluded, as had the DOJ in its Statement of Interest, that forum non conveniens is – and was intended by the drafters of the 1999 Montreal Convention to be - an available procedural tool under Article 33(4). Two months later the court granted the defendants' motion to dismiss on the grounds of forum non conveniens, on the basis that the balance of interests favored litigation in Martinique, and the Martinique courts were adequate and available as the forum for the action. Following plaintiffs' appeal of this decision, the Eleventh Circuit Court of Appeals affirmed the decision, and the U.S. Supreme Court denied plaintiffs' petition for certiorari.

Meanwhile the plaintiffs had brought an action before the lower court in Martinique seeking a decision from that court that it would not defer to the U.S. District Court's forum non conveniens dismissal, and would, accordingly, not accept nor allow the settlement of the cases in the Martinique courts. It is important also to note at this point that the plaintiffs' action in the French lower court did not primarily seek compensation; rather, they sought primarily to defeat French jurisdiction and thus, in fact and in effect, to deprive themselves of French jurisdiction over their cases. The grounds in support of plaintiffs' argument were that, as the 152 plaintiffs had chosen to sue in a U.S. court, that choice, under and in accordance with Article 33(1), must be treated for all practical purposes as inviolate and could not be defeated by a defendant's motion to dismiss based on forum non conveniens. Moreover, the plaintiffs likewise argued that, as they had initially chosen to file suit in the United States pursuant to Article 33(1), the French court simply lacked jurisdiction.

In a lengthy and detailed decision, a three-judge lower court in Martinique rejected this argument, ruling, as did Judge Ungaro, that under Article 33(4), forum non conveniens was in fact an available tool for use by and in U. S. courts, and that the U.S. District Court's dismissal was a proper and legitimate exercise of its authority. This ruling was subsequently affirmed by a French Cour d'Appel. But following a later appeal by the plaintiffs, the French high court –the Cour de Cassation – failed to even cite much less discuss Judge Ungaro's decision or that of the U.S. Court of Appeals (or even the decisions of the three judge lower court in Martinique or the Cour d'Appel affirmance of that decision), held simply that U.S. courts could not properly employ the doctrine of forum non conveniens under Article 33(4) in this case. The court ruled that the U.S. court could not use a domestic rule of procedure to defeat plaintiffs' choice of a forum under Montreal Article 33(1) and, because the plaintiffs chose the United States as their forum, that choice was inviolate, and the French courts lacked jurisdiction over the matter. Accordingly, the Court ruled that France was not an available forum, and the case must be returned to the U.S. court where suit should once again proceed against the "contracting carrier" - Newvac Corporation. Significantly, there was no mention by the Cour de Cassation how the case could proceed when, as was well known, neither Newvac nor Cimetier carried any insurance covering aviation crashes.

VI. The Conflict

There is thus a clear conflict between the decisions of the French high court and the U.S. Eleventh Circuit Court of Appeals. To be sure, and for the sake of argument, one might suggest that the results of both courts are not necessarily wrong nor in conflict, as the U.S. courts were applying their law (including the forum non doctrine) while the Cour de Cassation was applying French law that does not use nor even acknowledge the forum non doctrine. But such an explanation would require two serious analytical stretches: first, that Judge Ungaro's decision and the decision of the three judge court in Martinique be ignored in their entirety (as the Cour de Cassation apparently did); and second, and more importantly, that one must likewise ignore the fact that whatever conflict might exist is one that stems not from the interpretation only of French or U.S. domestic law, but rather from the interpretation of an international treaty and that the failure of the Cour de Cassation to even mention - much less carefully examine - the travaux preparatoire of the 1999 Montreal Convention cannot but be viewed as an example of very high level judicial irresponsibility. For if the Cour de Cassation had examined that travaux preparatoire, it would surely and certainly have seen and understood that the delegates to the Montreal 1999 Convention, in adopting Article 33(4) as they did, knew and full well understood that United States courts would be using the forum non conveniens doctrine under and in accordance with that Article to do precisely what the U.S. District Court and the U.S. Court of Appeals did in the West Caribbean case.

VII. Next Steps 

Now, a decision of the highest importance for the future of the forum non conveniens doctrine awaits in the United States District Court for the Southern District of Florida. In the plaintiffs' motion to vacate the U.S. court order dismissing the case on forum non conveniens grounds, the plaintiffs argue that: (1) since the French high court ruled that Martinique/France is not an available forum, the threshold requirement for a forum non conveniens dismissal – i.e., the availability of an adequate alternative forum - is not met; and (2) that the U.S. court must now reopen the proceedings and go forward with the case, as otherwise the plaintiffs would be left without a remedy at all. In response, the defendants opposed the plaintiffs' motion to vacate arguing that, but for plaintiffs' own actions seeking to deprive themselves of jurisdiction, France was an available forum under Montreal Article 33 and, therefore, any harmed suffered now by the plaintiffs was self inflicted. The defendants also argued that the plaintiffs did not seek redress for their injuries in the French courts, rather, they devoted their principal resources to making France an unavailable forum thus leaving the French court with little choice. In other words, the dismissal on forum non conveniens grounds can and should still be sustained because France could still be considered, and become, an available forum, if and should plaintiffs reverse their course and agree to allow it.

Nor can the importance of this conflict be underestimated. If the decision of the French high court is not in some manner modified or overturned, or if the plaintiffs' course of action is somehow condoned by allowing them to reopen the proceedings in the U.S. District Court, it is very likely that future plaintiffs may well follow the same strategies and that other nations may follow the French position and, in so doing, work very seriously to diminish the importance of Article 33(4) and the use of forum non conveniens by U.S. courts in future 1999 Montreal Convention cases. However, it is doubtful whether U.S. courts or the U.S. Government, in the face of the clear legislative history of Article 33(4), would readily or even reluctantly accede to such a unilateral and unjustifiable interpretation of Article 33(4). Instead, they may just be willing to let plaintiffs, who brought this problem upon themselves, seek to work it out by themselves by for example returning to the French courts and requesting reconsideration and the award of compensation. Alternatively, it may well be that, should the French judicial system not be willing to allow reconsideration, then the plaintiffs' lawyers - who engineered and brought about this most unfortunate and perhaps insoluble conflict, thus depriving their own clients of compensation by any court - can be subject to a malpractice action by those same clients seeking much the same compensation as they would have received but for their lawyers' machinations.

Allan I. Mendelsohn is a former U.S. Deputy Assistant Secretary of State (2000 – 2001) who chaired the U.S. Delegation that led to the world's first multilateral open skies passenger and cargo agreement. He also worked on the 1963 Tokyo Convention on hijacking, on amendments to the liability provisions of the Warsaw Convention, on the 1966 Montreal Intercarrier Agreement, and on the 1968 Visby amendments to the Hague Rules. Allan is a professor of International Transportation Law at the Georgetown University Law Center and practices law as of-counsel with the firm of Cozen O'Connor in Washington, D.C. He was also counsel for Newvac and Jacques Cimetier when the litigation was first in the U. S. District Court and the U.S. Court of Appeals.

Carlos J. Ruiz is a professor of Aviation Law at the University of Puerto Rico School of Law and member of the Aviation Practice Group at Fiddler Gonzalez & Rodriguez, in San Juan, Puerto Rico, which he joined after serving as a Trial Attorney with the U.S. Department of Justice in Washington, D.C. Carlos is also an FAA licensed Aircraft Technician (A&P) and holds an Aviation Maintenance Science degree from Embry Riddle Aeronautical University, a J.D. from the University of Puerto Rico School of Law, and an LL.M. from Georgetown University Law Center with a Certificate in National Security Law.

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Apple, Samsung and Possible Sanctions

Posted on August 9, 2012 02:33 by Stacy Moon

Apple recently asked a judge hearing a patent infringement case to sanction attorneys for Samsung after those attorneys issued a press release with a link to documents that had been ruled inadmissible.  The actual quote from the press release was apparently, “"fundamental fairness requires that the jury decide the case based on all the evidence.”  Essentially, Samsung’s attorneys decided to try the case in the media, as well as in the courtroom.  Apple took the position that the press release was an attempt to influence the jury.  The attorneys for Samsung argued it was simply a press release.  The Judge has indicated additional investigation may take place after the trial, but that he would not allow “theatrics” or “sideshows” (his words, not mine) to interfere with the trial.

Trial publicity is an issue that crosses various legal disciplines.  It affects criminal and civil cases alike.  In Alabama, a lawyer is not permitted to make “an extrajudicial statement that a reasonable person would expect to be disseminated . . . if . . . it will have a substantial likelihood of materially prejudicing an adjudicative proceeding.”  Ala. R. Prof. Cond. 3.6.  Unfortunately, the vast majority of that rule deals with publicity around a criminal case, not a civil case.

Most clients carefully control the amount and type of publicity regarding a case, recognizing that the publicity can be a two-edge sword.  In many cases, clients do not want any public statements regarding the case.  In my opinion (and my personal opinion only), it is therefore unlikely that Samsung did not approve the press release.  The question is what purpose did it serve?  If it was a backdoor attempt to get the jurors to view the inadmissible documents, the press release and link was clearly improper, and (I would argue) potentially demonstrated contempt for the rules of evidence, and Samsung’s counsel should have refused.  If it was an attempt to put public pressure on the judge to reconsider his ruling on the admissibility of the documents, it failed miserably, and has potentially adversely affected the judge’s opinion of counsel.  Save such an attempt for the appeal.  Now, at trial, if it is a close call, the judge is unlikely to give Samsung’s attorneys the benefit of any doubt.  If it was for neither purpose, it seems like a somewhat pointless exercise (akin to a temper tantrum), which has now brought the attorneys’ credibility and professionalism into question in the middle of a high-profile trial.

All attorneys should ask themselves whether the risk of damaging their credibility in front of a trial judge in such a matter is really in the best interest of their clients.  Additionally, all firms should ensure that they have a clear policy in place, including designating one attorney to respond to press requests for a statement or release regarding a case.  That person should be required to carefully analyze the pros and cons of making any statement to the press before doing so.

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The International Trade Commission ("ITC") is an increasingly popular forum for patent and trademark litigation, with a record number of 70 unfair competition cases filed in 2011 alone. There are currently 73 cases pending in the ITC, and the statutory vehicle for this growing litigation is 19 U.S.C. § 1337, which prohibits "unfair methods of competition and unfair acts in the importation of articles. . . in the United States." (U.S. ITC, FY 2011 Press Release: Highlights: USITC Sees Record Number of Intellectual Property Infringement Cases Filed at U.S. ITC, Pending 337 Investigations, at OpenView (both visited Feb. 28, 2012).

Given the forum's growing popularity, attorneys representing commercial clients should have a basic understanding of this forum, its procedural particularities and its advantages. For patent and trademark holders faced with unfair competition from abroad, it may be a desirable alternative to federal district court. On the other side, businesses who import their products may find themselves brought before the ITC in a section 337 case, and they may turn to their general commercial litigators for advice about litigating in this forum.

Basic Overview of the ITC

After a complaint is filed with the ITC, the Commission decides whether to institute an investigation. The notice of the investigation is published in the Federal Register, which starts the clock ticking for the named respondents to file their response. The case will be assigned to one of six Administrative Law Judges ("ALJ") who will set his procedural schedule for case milestones.

Each ALJ also has his own Ground Rules, which supplement the procedural regulations set forth in 19 C.F.R. § 210. These regulations are similar, although by no means identical, to the Federal Rules of Civil Procedure. The ALJ also will issue a standard protective order governing confidential information. Attorneys for parties entering an appearance in an ITC case must agree to abide by the protective order, and confidential business information designations are treated very seriously.

The ITC's jurisdiction is directed at the imported goods at issue in the case, and is, therefore, in rem rather than in personam. Limited remedies are available in the ITC. Its primary mechanism of enforcement is the issuance of exclusion orders, either general or specific in nature. A general exclusion order bars any infringing products from entry into the United States, regardless of its source. A limited exclusion order bars importation of infringing products by a named respondent to the investigation. Exclusion orders are enforced by the U.S. Customs & Border Patrol. The ITC also can issue cease and desist orders enjoining the distribution or sale of imported, infringing products already in U.S. warehouses of an infringing party. Cease and desist orders are enforced by the ITC.

After trial, the ALJ issues an Initial Determination, which is then presented to the Commission. If the Commission declines to rule on the Initial Determination, it becomes final. The Commission also can issue its own ruling or can remand the case for further consideration. Appeal from the Commission is directly to the Federal Circuit.

Procedural Considerations

Litigation in the ITC is governed by ITC regulation and specific rules set forth by the ALJ. Because these regulations differ from the federal rules, they should be carefully reviewed. The ALJ's Ground Rules also can be very specific, and litigants should adhere closely to them. Beyond this different procedural framework, several other key differences from typical federal court IP cases are worth understanding at the outset.

  • The Office of Unfair Import Investigations: The United States is a party to active ITC investigations, and its interests are represented by the Office of Unfair Import Investigations ("OUII"). Until mid-2011, each case brought before the ITC was automatically staffed with an OUII attorney. This is no longer true with new cases. Instead, the OUII staffs cases in which its specific expertise is required. Whether representing a complainant or a respondent in an ITC action, if your case is staffed with an OUII attorney, consider yourself lucky. The OUII brings a wealth of experience with the forum and can help you navigate its particularities.
  • The Domestic Industry Requirement: To bring a case in the ITC, a complainant must demonstrate that "an industry in the United States, relating to the articles protected by the patent . . . exists or is in the process of being established." (19 U.S.C. § 1337(a)(2)). There are two prongs of the domestic industry requirement: the technical prong and the economic prong. (In the Matter of Certain Display Controllers and Products Containing Same, Inv. No. 337-TA-491/481, 2005 WL 996252, Commission Op. (Feb. 4, 2005)). To establish the technical prong (in a patent case), the complainant must demonstrate that at least one of its products practice the patent in suit. Id. To establish the economic prong, the complainant must show that it has made a significant investment in plant or equipment in the United States, a significant employment of U.S. labor or capital, or a substantial investment in exploitation of the patent, such as by engineering, research and development or licensing. (19 U.S.C. § 1337(a)(3)). The domestic industry requirement is in constant refinement as ALJs and the Commission issue new interpretative rulings that provide further guidance about the interplay of the factors and the level of proof necessary to show a domestic industry.
  • Parallel Federal Court Proceedings: Where parallel proceedings exist before the ITC and a federal district court, a respondent in the ITC proceeding may seek a stay of the federal district court action until the determination of the ITC becomes final. (28 U.S.C. § 1659(a)). A stay under this statutory provision is mandatory. A final decision by the ITC may be persuasive authority to a federal district court; however, it is not binding. Thus, parties to parallel ITC and federal court litigation may potentially litigate the same intellectual property dispute twice. Practically, however, even if a federal court judge does not defer to the ITC's findings, the ITC proceeding likely will simplify or narrow the federal case. The parties already will have conducted relevant discovery, honed their positions, and filed expert reports.

Key Advantages of Litigating in the ITC

Should you counsel your client to file a complaint in the ITC rather than in federal court? There are a few commonly cited advantages to the ITC.

  • Speed: For better or worse, your client will have an answer from the ITC in well under two years. Once a complaint is filed and an investigation initiated by the Commission, the ALJ will set a procedural schedule for the case. The typical target date for completion of the investigation is approximately 16-18 months. Last year, the average time from institution to a finding of violation or no violation was 13.7 months. (U.S. ITC, FY 2011 Press Release: Highlights: USITC Sees Record Number of Intellectual Property Infringement Cases Filed, at (visited Feb. 28, 2012)). Trial is typically scheduled within the same calendar year that the case is filed. The discovery period is usually around six months. By regulation, the time period for responding to discovery requests is 10 days, as is the time for answering most motions. (See, e.g., 19 C.F.R. §§ 210.15(c), 210.30(b)(2)).
  • Experience: From the Commission members to the ALJs to the OUII staff, the ITC personnel have a wealth of experience with intellectual property matters. While the federal courts are certainly accustomed to intellectual property disputes, these legal challenges are the ITC's focus and specialty. For very complicated technology, complex patents, or multi-party disputes, this sophistication may be extremely beneficial. The ITC also offers free mediation sessions, staffed by experienced intellectual property mediators. If the parties choose to engage in mediation, dispute resolution also will be enhanced by the level of experience of the forum.
  • Streamlining: The ITC has eliminated some of the inconveniences or uncertainties associated with litigation in the federal court system. For example, the ITC has nationwide service authority, facilitating service of subpoenas for testimony at depositions and trial. The evidence for trial is presented largely by written testimony submitted in advance, significantly streamlining the actual in-court hearing. The hearing itself is before an ALJ, eliminating the uncertainties associated with a jury trial. Especially for foreign litigants unaccustomed to U.S. trial procedure, this can be an advantage.

Practical Tips for Surviving an ITC Investigation

How should you advise a client considering an ITC complaint or finding itself brought before the ITC as a respondent? How should you prepare yourself? Below are some basic tips for surviving in this forum.

  • Staff the case early, and stay organized. Depending on the amount of early discovery, an ITC case may begin deceptively slowly. Trust that it will speed up very soon. When it does, you will need an informed team staffed at all levels of experience. Assemble that team early and begin taking the organizational steps necessary to ensure that the team is communicating well and often.
  • Make sure the client goes into ITC litigation with eyes wide open. It is not enough to simply tell the client that an ITC investigation will be finished in just over a year. For many clients, especially if your primary point of contact is a business person (rather than general counsel), this still will seem like a long time. Unless educated early, the client will not be able to anticipate and fully understand the rigors of litigation at this pace. Make sure you have the full commitment of all leadership who will be necessary for you to do your job. Make sure that any employees with relevant information are briefed about the tight deadlines for production of discovery. Give your client realistic estimates of costs. As the case gets moving, you will have some large bills, and you will thank yourself for preparing the client in advance.
  • Take a proactive approachA common pitfall for any busy litigator is to allow the procedural schedule to drive your case strategy, e.g., taking depositions the week before the discovery period ends, or thinking about summary judgment once the deadline begins approaching. This is simply not an option in the ITC. Treat the procedural schedule like it is sacrosanct, and try to stay several steps ahead of its deadlines. You also need to strategize early with your client about the desired result, keeping that in sharp focus as you tend to the details of litigation.
  • Don't pay short shrift to the domestic industry requirement. Because the domestic industry is a threshold issue the complainant has to prove, it is a natural area for attack by respondents. As the complainant, make sure you support your complaint with robust evidence of your domestic industry and that you have gathered the supportive evidence on the front end. You will be asked to support your client's domestic industry in discovery, and early preparation will avoid scrambling for documentation on a tight timeframe. As a respondent, make sure you are asking for detailed support of the domestic industry. Look behind the company representative's statements to identify any potential vulnerabilities and weaknesses in documentation.
  • Spend the time to find a strong expert. Expert witnesses are crucial to most intellectual property cases, and the ITC is no exception. However, Markman hearings are not automatic in the ITC, so you may find yourself making your expert arguments largely through reports and other paper filings. A strong expert will only make that process easier on you.
  • Try to enjoy it. ITC investigations are rigorous and, at their busiest time, will take center stage in your life. But for intellectual property litigators, they can be a very rewarding and enriching career experience.

Eileen Hintz Rumfelt is an associate at Miller & Martin PLLC in the firm's Atlanta, Georgia, office. She focuses her practice on business litigation, including intellectual property litigation, and white collar crime. She is a member of the DRI Young laywers Steering Committee and currently serves as the Chair of the Young Lawyers Publication Subcommittee.

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The Supreme Court heard oral argument on February 28, 2012 in Kiobel v. Royal Dutch Petroleum Co., a case raising the controversial issue of corporate liability for alleged violations of international law.

Kiobel is a putative class action in which the plaintiffs, current and former residents of Nigeria, allege that three oil companies aided and abetted the Nigerian government in committing human rights violations in connection with oil exploration activities in Nigeria.  Plaintiffs invoked the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350, as the jurisdictional basis for their U.S. lawsuit against foreign companies for alleged human rights abuses occurring in Africa.  The ATS, although passed by the first Congress in 1789, was first utilized in 1980 by an alien plaintiff seeking a civil remedy for alleged human rights abuses.  The ATS provides as follows: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”    

The Second Circuit dismissed the plaintiffs’ suit, holding that the district court lacked jurisdiction over plaintiffs’ claims against corporations.  The court started with the uncontroversial proposition that the ATS is a jurisdictional statute and does not create any cause of action.  Citing an earlier Supreme Court ATS case, Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), the Second Circuit stated that it must look to “customary international law to determine both whether certain conduct leads to ATS liability and whether the scope of liability under the ATS extends to the defendant being sued.”  After an extensive review of international law, the court could not identify a single instance in which a corporation had ever been subject to any form of liability under the customary international law of human rights.  Thus, the court concluded that imposing liability on corporations for violations of customary international law had not attained a “discernible”, much less the required “universal”, level of acceptance among the nations of the world in their relations with each other.  Therefore, the court held that it lacked subject matter jurisdiction over the plaintiffs’ claims against the oil companies and dismissed the complaint.       

The Supreme Court docket has been extremely active since plaintiffs’ petition was granted in October 2011.  In addition to denying defendant Shell’s conditional cross-petition for writ of certiorari, the Court has seen over 35 amici briefs filed in Kiobel, including a brief by the United States government in support of petitioners-plaintiffs and briefs by the governments of Germany, Great Britain, and the Netherlands in support of respondents. 

The outside interest generated by Kiobel underscores the important ramifications of the Court’s decision on corporate liability, both for U.S. companies with foreign operations, as well as foreign and multinational firms.  But the outcome of the case pivots on a relatively narrow slate of legal issues.  In their merits brief, the petitioners first take the position that the Second Circuit incorrectly characterized the issue of corporate civil liability as an issue of subject matter jurisdiction.  Petitioners go on to argue that under the ATS, analysis of customary international law is necessary to determine whether a particular act constitutes a violation of a substantive international law norm, but that domestic law (which undoubtedly recognizes corporate civil liability) supplies the remedy.  The respondents of course disagree, pointing to the above-quoted excerpt from Sosa as clearly establishing that international law must recognize corporate liability before ATS liability can be imposed. 

From the outset of petitioners’ oral argument, it was apparent that the Court was concerned about the notion of U.S. courts imposing civil liability on foreign companies for foreign conduct.   Counsel for petitioners, Paul Hoffman, uttered two sentences before Justice Kennedy interjected with two statements he challenged Mr. Hoffman to rebut: (1) “International law does not recognize corporate responsibility for the alleged offenses here,” and (2) “No other nation in the world permits its court to exercise universal civil jurisdiction over alleged extraterritorial human rights abuses to which the nation has no connection”.  Justice Alito followed in the same vein shortly thereafter with the observation that “there’s no particular connection between the events here and the United States,” which fed into his later questioning “what business” a case like this one has in the courts of the United States.   Justice Roberts appeared equally concerned about U.S. courts adjudicating the instant dispute, and he questioned whether the Kiobel suit itself contravened international law insofar as it could not have been brought in any other nation.

While the Court kept Mr. Hoffman occupied with the issue of the extraterritorial scope of the ATS, Deputy Solicitor General Edwin S. Kneedler, arguing for the United States, was permitted to address several other arguments in support of petitioners’ position.  Nevertheless, the argument turned back toward broader policy issues, as Justice Kennedy posed a hypothetical to illustrate what he perceived to be the United States’ position:

Suppose an American corporation commits human trafficking with U.S. citizens in the United States. Under your view, the U.S. corporation could be sued in any country in the world, and it would -- and that would have no international consequences. We don't look to the international consequences at all. That's -- that's the view of the Government of the United States, as I understand.

Kathleen M. Sullivan, although peppered with wide-ranging questions from an active bench, was able to consistently return focus to respondents’ position that corporate liability was simply not recognized by customary international law.   Respondents’ argument was summarized succinctly by Ms. Sullivan toward the end of her oral argument:

[T]he ATS has language that says the tort must be committed in violation of the law of nations. So although, Justice Ginsburg, it doesn't specify who may be the defendants, it does point us to the law of nations to figure out what the law of nations thinks about who may be the defendants, and the law of nations is uniform. It rejects corporate liability. It rejects corporate liability.

Counsel for respondents finished her argument by clarifying that respondents did not seek a rule of “corporate impunity”, noting that corporate officers could be liable for human rights violations and that there were other avenues for suits redressing human rights violations, such as under state law or the domestic laws of nations.   

In rebuttal, Mr. Hoffman argued that “international law places no restriction on the way domestic jurisdictions enforce international law”.  However, despite his effort to focus the Court’s attention on domestic law as supplying the remedy for a violation of international law, he found himself answering the same line of questioning that began the argument – why should the courts of the United States entertain a “suit by an . . . alien against another alien for conduct that takes place overseas”?  This fundamental question emerged as perhaps the primary theme of the oral argument.  Whether the justices received a satisfactory answer will likely determine the outcome of the case. Keep an eye on the DRI Court Reporter for a summary of the Court’s decision when it is released.

The entire oral argument transcript can be downloaded from the Supreme Court website here.

Joshua D. Shaw practices law at Turner Padget Graham & Laney P.A. in Columbia, South Carolina.  

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The U.S. Supreme Court in Shute v. Carnival Cruise Lines, 499 U.S. 585 (1991) held the Shutes, who were injured on a Carnival Cruise ship in waters off Mexico, must file suit in Florida pursuant to the forum selection provision printed on the back of their ticket.   The Shutes filed suit in their home state of Washington.  The cruise ship departed from California.  Shute is still one of the most far reaching holdings enforcing adhesion-like forum selection provisions.  The Shutes also had a strong argument that they lacked notice of the forum selection/choice of law provisions.  

In the recent running aground of the Italian Costa Concordia operated by Costa Crocier, which is controlled by Carnival, the ship departed near Rome.  Approximately 120 United States citizens were on board and two may still be missing.  With respect to notice of the forum selection and choice of law provisions, information is much easier to obtain now than it was when Shute was decided.  For example, Carnival now posts its ticket contract online.  Carnival’s contract includes a mandatory arbitration provision as well as a forum selection clause, limits on liability, and restricted statute of limitations periods.   Costa Crocier also posts their ticket contract online.  The Costa contract includes forum selection, arbitration and choice of law provisions at Section 2.    

For claims involving personal injury or death, the Costa contract includes a forum selection clause for Broward County, Florida for cruises that depart from, visit or return to a U.S. port.  In contrast, U.S. port related economic loss claims are subject to an arbitration provision.  Under the Costa contract, any cruise that does not depart from, visit or return to a U.S. port, all claims must be filed in Genoa, Italy, and Italian law applies.  The Costa contract also includes a jury waiver provision.  

When a district court applies a forum selection provision, it usually does so via 28 U.S.C. § 1404, whereas a state court would dismiss the case.  Italy is not a district to which a federal case can be transferred, so dismissal is likely remedy if court enforces forum selection provisions for U.S. citizen cases filed in their home state, or even in Florida.  See e.g., Albemarle Corp. v. Astrazeneca U.K, Ltd., 628 F.3d 643, 651 (4th Cir. 2010) (applying English law / federal common law to enforce forum selection clause via dismissal).  Albemarle also suggests that Costa Concordia related claims filed in the U.S. would still be analyzed under the four factor “unreasonableness” test set forth in M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972) (holding forum selection clause may be found unreasonable if “(1) [its] formation was induced by fraud or over-reaching; (2) the complaining party ‘will for all practical purposes be deprived of his day in court’ because of the grave inconvenience or un-fairness of the selected forum; (3) the fundamental unfairness of the chosen law may deprive the plaintiff of a remedy; or (4) [its] enforcement would contravene a strong public policy of the forum state.”).     

Here, proponents of avoiding Costa Crocier’s forum selection clause and choice of Italian law may argue factors two, three and four.  An analysis of Italian law related to factor three is beyond the scope of this blog post!
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Welcome one and all to something that will undoubtedly change both history and the world as we know it: the first installment of what will hopefully be a regular publication which we have decided to call From the “What the…?”File.  Basically, I’ll be picking up on out-of-the-mainstream stuff which any of us could have lived without knowing, but it will at least be stuff that is both interesting and has a bit of a twist.  At least in theory, anyway.  So, without further ado, here goes the collector’s item first issue.  I can confidentially say that that when you’re done, you too will be saying “What the…?”

European Copyright – The Write Stuff?

OK, not many of us care about Euro Copyright issues – I fully admit that.  But this is actually kind of interesting (even if it is Euro-centric).  It seems that way back in 2006, a Hollywood-funded, Netherlands-based anti-piracy group (known as ‘BREIN’, and please don’t ask me what it stands for) asked a musician to compose music for an anti-piracy video. The video in question was to be shown at a local film festival, and under these strict conditions the composer accepted the job.

However, the anti-piracy ad was recycled for various other purposes apparently without the composer’s permission. When the composer bought a Harry Potter DVD early 2007 (presumably a licensed one), he noticed that the campaign video with his music was on it. According to the composer And this was no isolated incident. He is now claiming that his work has been used on tens of millions of Dutch DVDs, without him receiving any compensation for it. The total claimed lost revenue is roughly a million Euros (which is about $1.3 mil US). 

But wait -- there’s more.  You’d think that the guy would have received some collection support from local rights societies.  You’d think.  But soon after he discovered the unauthorized distribution and after contacting a local music royalty collection agency not only did he not receive any royalties, one of their Board members offered to help ONLY if the composer assigned all his rights to the organization AND gave the guy a third of what was collected.   Ultimately the board member resigned and the anti-piracy group denied it was their fault in the first place.  But what’s more shocking – that anti-pirates are pirates themselves, or that there is corruption in the music industry? Hmmm – tough question.

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Fraud From Foreign Courts Imported to US

Posted on August 15, 2011 08:41 by Barry Zalma

The United States court system is fair to all who seek redress even if they are not citizens of the United States. People from across the world have been allowed to sue multi-national corporations who do business in the United States to affirm a foreign judgment that could not be collected in the country where the judgment was entered.

Because countries in South America and other areas of the world do not have the same stringent rules of evidence and judicial morality than those in the U.S. courts, suits in the U.S. to enforce foreign judgments and claims of injuries are rife with fraud.

For example, In July 2009, the Second Appellate Division of the Court of Appeal of California remanded the Tellez case to the Superior Court, with an order for the plaintiffs to show cause why that case should not also be dismissed. After several hearings, trial Judge Chaney dismissed the Tellez case in July 2010, noting that the case was rife with blatant fraud, witness tampering, and active manipulation. Judge Chaney also found that the Nicaraguan court system is, at best, fragile in its ability to present consistent rule of law and outcomes and that while many Nicaraguans live in relative poverty and with limited economic opportunity, the lawsuit was not the appropriate vehicle to rectify this situation.

If you are interested in a detailed analysis of the problem read Think Globally, Sue Locally: Trends and Out-of-Court Tactics in Transnational Tort Actions by Jonathan C. Drimmer and Sarah R. Lamoree available at which covers in at least 72 pages the issues raised in detail.

The report by Mr. Drimmer and Ms. Lamoree is disturbing and makes clear that at least some of these cases are so rife with fraud that some lawyers have been disciplined for misrepresentations made to the court. Evidence of fraud and witness tampering is rampant and the only people who profit from these actions are the lawyers for the plaintiffs and the lawyers for the defendants.

© 2011, Barry Zalma. Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Zalma on Diminution in Value Damages,” “Arson for Profit,” “Insurance Fraud,” “Zalma on California Claims Regulations,” “Murder and Insurance Fraud Don’t Mix” and others that are available at on his website.  Mr. Zalma can be contacted via his website,or via email at or you can access his free “Zalma on Insurance Fraud” newsletter. You can also access Mr. Zalma’s Martindale-Hubbell profile on


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Categories: International Law

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Keep on Truckin' -- South of the Border

Posted on July 12, 2011 03:29 by John Anderson

A deal signed last Wednesday, July 6, between the United States and Mexico will allow Mexican trucks and drivers to enter deep into the United States as originally envisioned under the North American Free Trade Agreement (NAFTA) 17 years ago.  In return, Mexico will lift tariffs imposed in 2009 on approximately $2.3 billion in U.S. goods.  Whereas Mexican trucks and drivers were, until recently, limited to carrying loads originating in Mexico to U.S. destinations within 25 miles of the border. Under the new agreement they will be permitted to carry loads to their final destinations in the U.S, wherever they may be dependent on safety inspections, driver reviews, electronic vehicle monitoring and other administrative restrictions.

How will this affect the American trucking carriers, U.S. insurers and those of us who represent them in litigation?

Some of our trucking clients feel that the effects will be minimal.  They believe that the multitude of administrative requirements will dissuade Mexican carriers from seizing the new opportunity, and that Department of Transportation (DOT) inspectors at the border will be particularly thorough in their screening efforts.  Other U.S. carriers feel that the effects may be slow in coming about, but that they will come about, with certainty.  Carriers of this mindset point out that Mexican businesses understand the opportunities available in the U.S. well.  They believe that their Mexican counterpoints will take pains to learn the regulations and adapt quickly.

Cost will be a factor, of course.  The costs of U.S. regulatory compliance will unquestionably be significant for Mexican carriers.  Many of our clients believe that Mexican wages will keep Mexican carriers competitive however, and doubt that costs will outweigh potential profits.  The biggest disincentive for Mexican carriers may very well prove to be the costs and burdens of American litigation. 

Most Mexican companies are unfamiliar with the American personal injury and wrongful death damages.  Under Mexican law, these sorts of damages are commonly controlled by statute, and are significantly limited.  Likewise, there are no punitive damages available in accident cases under Mexican jurisprudence.  Unless they have been previously directly involved in it, American litigation will be an eye-opening experience for most Mexican businesses.

Assuming that Mexican carriers will begin to venture further and further into the United States, and taking as granted that accidents involving Mexican drivers and trucks will take place as traffic increases, it will be the role of insurers and the trucking defense bar to acclimate Mexican companies to the nuances of American litigation.  This presents a responsibility, but also an opportunity.  Our firm, for instance, is considering participating in programs designed to inform Mexican carriers about the critical details of the DOT regulations and Texas accident and cargo litigation.  We see increased Mexican truck traffic is inevitable, and believe that the more smoothly the transition is made, the better for all.  As business continues to become ever-increasingly global, we believe that this new U.S./Mexico trucking deal will ultimately prevent new opportunities for both sides of the border, including carriers, insurers, and all other involved parties.

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Categories: International Law | Trucking Law

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Owners of confidential, proprietary and trade secretinformation face a constant battle to maintain control of these valuableassets. A non-disclosure agreement (NDA) protects confidential information. Itis an agreement not to share particular information with others or use it forany purpose beyond the scope of the agreement.

These agreements are also contracts, so they generally require consideration.But in this instance they may be entered into at the time the information isshared. As more confidential information is shared, the agreement can beaugmented.

NDAs are not limited by the status of the parties and therefore can coverconsultants, independent contractors, or even other business entities such ascustomers, suppliers, and joint venturers. They can be self-propagating,requiring parties to get a similar or identical agreements from others beforesharing the protected information.

The enforcement of a NDA is limited by the type of information it purports toprotect. It is not possible to prevent disclosure of information that isalready in the public domain. On the other side of the spectrum, trade secretsmay be strictly protected. The information to be protected should be identifiedwith particularity in the contract and often includes customer lists, marketingor business plans and strategies, proprietary processes, technology, andbusiness methods.

An NDA must be reasonable in scope, and in at least one state perpetual NDAs isdisfavored. Global Link Logistics, Inc. v. Briles, No. A08A1871, (Ga. App. Feb.18, 2009). There, the Court of Appeals held that the non-disclosure provisionwas unenforceable because it purported to cover Briles’s “observations” and wastherefore overly broad. The provision also lacked a time limit, as required byGeorgia law.

Still, NDAs are powerful contracts. They may be used to stop an employee fromcompeting in other countries. For example, Pacesetter Inc. v. Nervicon Co. al., case number BC424443, in the Superior Court of the State of Californiafor the County of Los Angeles. Here, a unit of St. Jude Medical Inc. won apreliminary injunction against a former employee who allegedly stole tradesecrets in order to set up a rival medical device company in China. Apreliminary injunction will issue against the former employee and his newcompany, Nervicon Co. Ltd., pending service of process through the HagueConvention.

Valid NDAs also provide a defense against allegations of "public use"in patent infrigement cases. Motionless Keyboard v. Microsoft (Fed. Cir. 2007).Prior to the patent’s critical date, the invention of the patent was disclosedto several persons under a NDA that also expired prior to the critical date.These disclosures, according to the CAFC were not “public” as required by thefederal patent statute because they originally occurred under a NDA.

Additional resources:

Prepared by Messrs. Peter Strand, esq. and Monty Hamilton, esq. These are theauthors' opinions and not the opinions of Shook, Hardy, and Bacon LLP.

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Categories: International Law

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The products liability litigation arena has recently seen an influx of overseas production processes litigation. Last year’s massive recalls on products such as children’s toys and pet food are just a two examples of the growing trend. Insurance defense practitioners are beginning to realize the impact of such litigation and that massive and expensive product liability claims based on overseas production are a new reality.

A recent decision, Ace American Inc. Co. v. RC2 Corp., 568 F. Supp. 2d 946 (N.D. Ill. 2008), focuses on insurance coverage in these circumstances, addresses issues that products practitioners need to know, and holds that an insurer has a duty to defend its insured in suits arising out of product recalls of products made outside of the United States if included in the coverage territory. In RC2 Corp., a federal district court judge for the Northern District of Illinois, applying Illinois law, held that an insurer has a duty to defend its insured, a toymaker, in suits arising out of the product recalls. The policyholder was sued by parents of children in the United States, alleging various theories of exposure and harm from toys contaminated with lead paint that were made in China, but sold in the United States. The insurer issued four successive liability insurance policies to the policyholder, the maker of the toys. Each of the policies stated that "the 'occurrence' must take place in the 'coverage territory.'" The coverage territory provision included "all of the world outside of the United States." After the policyholder sought coverage for these underlying actions, the insurer denied that it had a duty to defend or indemnify the insured because, inter alia, of the coverage territory of the policies.

In addressing the coverage territory issues, the court stated that what constituted the relevant "occurrence" for purposes of a coverage territory provision was a matter of first impression under Illinois law. The court rejected the insurer's argument that coverage was barred because the harm for which the underlying plaintiffs sought redress took place in the United States. The court reasoned that "[t]he language of the [policies] refers to Harm that is "caused by an 'occurrence'" and that "here the occurrence is separately identified as being the cause of the Harm" and that the "Harm is not itself part of the occurrence." The court further reasoned that "[t]he language is written in the positive" so that:

For there to be coverage, the occurrence must take place in the coverage territory. It is not required that the Harm take place in the coverage territory but only during the Policy Period. In this situation, the occurrence took place in the coverage territory of China. By contrast, if the provision had been written in the negative, the result could be different. If there had been an exclusion providing that there is no coverage for Harm that took place inside the United States, then the case would fall under such exclusion.

Though the court found against the insurer in this case, the court did direct litigators and insurers as to how to prevent such a costly occurrence from reoccurring. For insurers of overseas product manufacturers to prevent similar coverage disputes from being brought in the future, insurers should include exclusions in their policies providing that there is no coverage for harm, bodily injury, and/or damages that occur inside the United States. In this case, such simple language may have prevented costly litigation and saved millions of dollars.

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