Court: Court of Appeals for the Second Circuit; September 14, 2000; Federal Appellate Court
This case involves the forum non conveniens doctrine applied to claims under the Alien Tort Claims Act (ATCA), 28 U.S.C. 1350, regarding alleged human rights abuses in Nigeria. Plaintiffs, three Nigerian émigrés and an unnamed woman for safety, allege severe human rights violations perpetrated by Nigerian authorities, with the involvement of defendants Royal Dutch Petroleum Company and Shell Transport and Trading Co. P.L.C., both major corporations based in the Netherlands and the UK, respectively. The district court dismissed the case based on forum non conveniens, finding England a suitable alternative forum and favoring it based on public and private interest factors.
Plaintiffs appeal, arguing that their choice of forum and U.S. interests in human rights claims were not properly considered. Defendants counter that the court lacked personal jurisdiction over them. The court upheld the district court's jurisdiction over the defendants but reversed the dismissal for forum non conveniens.
The plaintiffs' allegations include that they and their relatives were subject to imprisonment, torture, and killings orchestrated by the Nigerian government at the defendants' behest due to their opposition to oil exploration activities. Shell Nigeria, a subsidiary of the defendants, is accused of land appropriation without compensation and causing environmental damage. The complaint highlights the violent suppression of opposition, exemplified by the arrests and executions of Ken Saro-Wiwa and John Kpuinen, leaders of the Ogoni protest movement. Additional allegations involve illegal detentions and assaults on plaintiffs by Nigerian forces, purportedly instigated by the defendants to silence dissent against their operations in Nigeria.
Royal Dutch/Shell Group is accused of providing funding, weapons, and logistical support to the Nigerian military for attacks on villages, orchestrating some of these assaults, fabricating murder charges against activists Ken Saro-Wiwa and Kpuinen, and bribing witnesses to deliver false testimony. Jurisdictional facts indicate that neither defendant has significant direct contacts with New York, but both list shares on the New York Stock Exchange and engage in activities related to this listing, including SEC filings and employing transfer agents. They have participated in lawsuits in New York without contesting jurisdiction and have retained local counsel for many years. The defendants operate an Investor Relations Office in New York City, managed by James Grapsi, which facilitates communication between the parent companies and investors. This office, while part of Shell Oil, is funded by the defendants at an average cost of $45,000 monthly. It handles inquiries from investors, distributes information, and organizes meetings across the U.S., including in New York. The plaintiffs filed their action on November 8, 1996, later amending the complaint on April 29, 1997, seeking damages under the Alien Tort Claims Act (ATCA), RICO, international law, Nigerian law, and various state torts. The allegations against the defendants include serious human rights violations and various torts, with uncertainty regarding whether their liability arises from their actions or those of their subsidiary, Shell Nigeria.
At the filing time, two of the four plaintiffs resided outside New York. The defendants sought dismissal based on lack of personal jurisdiction, forum non conveniens, and failure to state a claim. Magistrate Judge Henry Pitman recommended dismissal for lack of jurisdiction or, alternatively, for forum non conveniens, finding the defendants’ activities in New York, including maintaining an Investor Relations Office, insufficient to establish general jurisdiction under N.Y. C.P.L.R. 301. He also determined that England was an adequate alternative forum, favoring adjudication there.
Upon plaintiffs' objections, Judge Wood ruled on September 25, 1998, that jurisdiction was established due to the Investor Relations Office but accepted the recommendation for dismissal based on forum non conveniens. The plaintiffs sought reconsideration following a related case, Jota v. Texaco, Inc., and on January 20, 1999, Judge Wood conditioned dismissal on the defendants agreeing to various terms, which they accepted.
The discussion on personal jurisdiction under the Federal Rules of Civil Procedure highlights that a court can assert jurisdiction over defendants subject to state jurisdiction, ensuring compliance with the Due Process Clause. The plaintiffs provided several theories for New York's jurisdiction, which the Magistrate Judge rejected, but the district court found the Investor Relations Office activities sufficient to establish jurisdiction. Defendants argued these activities were not attributable to them, were incidental, legally insufficient for general jurisdiction, and violated due process fairness. The court rejected all arguments, affirming that the defendants were subject to personal jurisdiction in the Southern District of New York. According to New York law, a foreign corporation is subject to general personal jurisdiction if it is "doing business" in the state.
A corporation is considered to be "doing business" and thus subject to personal jurisdiction in New York if it engages in activities there with a degree of permanence and continuity, as established by case law. A plaintiff must demonstrate that the defendant has conducted continuous, substantial activities in New York. Jurisdiction can arise not only from the corporation's direct activities but also from those performed by an agent within the state. New York law permits jurisdiction over foreign corporations when they utilize a New York representative to perform significant services on their behalf, beyond mere solicitation. The relationship does not require a formal agency agreement or direct control by the corporation. However, the agent must primarily serve the corporation and not provide similar services to others. In the case discussed, both Grapsi and the Investor Relations Office were found to be agents of the defendants because they dedicated their efforts solely to the defendants' business, and their expenses were fully funded by the defendants. Despite the defendants' claims that the Investor Relations Office's services were not critical, the significant financial investment made by the defendants in maintaining these services indicated their importance, particularly given the companies' need to engage effectively with investors.
Defendants argue that if they were to independently provide Investor Relations services, it would not necessarily occur in New York. However, this argument is deemed weak as the most logical location for such services, particularly for U.S. capital market investors, is New York, recognized as the capital of these markets. The establishment of the Investor Relations Office by Shell Oil in New York City is perceived as a strategic decision to best serve its interests, regardless of who operates it. Jurisdictional principles emphasize that a defendant must purposefully engage in activities within the forum state to invoke its legal protections. Relevant case law, including Burger King Corp. v. Rudzewicz and Hanson v. Denckla, reinforces this idea. The defendants' stance is inconsistent with agency jurisdiction precedents, such as Frummer and Gelfand, where foreign entities chose to establish offices in Manhattan to access the local market, suggesting a similar motivation for their own Investor Relations Office in New York. Additionally, while defendants claim that their office's activities are merely incidental to their New York Stock Exchange listing, precedent allows foreign corporations significant leeway in listing securities without triggering jurisdiction for unrelated activities.
Defendants incorrectly interpret existing case law by asserting that all contacts associated with stock exchange listings lack jurisdictional significance. While activities necessary for maintaining a stock exchange listing do not independently establish jurisdiction, they can be important when considered alongside other factors. Historical cases indicate that mere stock listings and related arrangements do not suffice for jurisdiction if they are the only contacts. However, the activities conducted by the defendants' Investor Relations Office extend beyond these incidental actions, involving investor inquiries and meetings, demonstrating a proactive engagement with the New York capital markets rather than mere legal compliance. This office's presence in New York is driven by the strategic importance of the financial hub rather than proximity to the exchange itself. Consequently, the relevant caselaw supports the notion that a company is not considered "doing business" in New York based solely on ancillary stock listing activities. The Investor Relations Office's operations exceed the minimal activities previously deemed insufficient for establishing jurisdiction. Additionally, the defendants' claim that these activities are quantitatively inadequate to confer jurisdiction is unsubstantiated; the necessary threshold for general jurisdiction requires showing continuous and systematic business contacts, which the defendants' actions fulfill. The court finds that these activities represent a consistent and significant presence in New York, meeting the due process requirements for jurisdiction.
Defendants contest the claim that Grapsi engaged in 'solicitation,' asserting that he did not offer to buy or sell stock. However, Judge Wood clarifies that 'solicitation' in this jurisdictional context does not necessitate an offer but rather examines whether the defendant acted to encourage others to spend money in a way that benefits them. The activities of the Investor Relations Office, deemed as 'solicitation' by Judge Wood, align with established precedent, but jurisdiction can be established without this characterization since these activities also satisfy the 'doing business' standard.
The court has traditionally evaluated jurisdiction based on factors such as the presence of an office, bank accounts, phone listings, public relations activities, and the presence of personnel in the state. The Investor Relations Office meets all these criteria, establishing a significant physical presence in New York dedicated to the defendants' interests. The presence of employees engaged in business activities is particularly critical for jurisdiction under CPLR 301.
The defendants also argue that exercising jurisdiction would violate due process fairness requirements. The court disagrees, stating that personal jurisdiction requires both state law authorization for service and compliance with due process. The due process analysis involves assessing whether there are 'minimum contacts' with the state and whether asserting jurisdiction aligns with 'traditional notions of fair play and substantial justice.' The defendants possess substantial contacts with New York, and once a plaintiff shows minimum contacts, the burden shifts to the defendant to demonstrate that jurisdiction is unreasonable, which they have not done.
Defendants have failed to demonstrate a compelling reason to avoid jurisdiction in New York, despite being foreign corporations and the events not occurring in the state. Their substantial global business presence, resources, and previous litigation experience in the U.S. mitigate any claimed inconvenience of litigating in New York City, a major world capital with ample facilities. Thus, exercising jurisdiction over them does not violate the Due Process Clause.
Regarding the forum non conveniens dismissal, the district court has discretion, but this is contingent on using the correct legal standards. The court did not adequately consider the plaintiffs' choice of forum and the importance of providing a venue for claims of international law violations. The framework established by the Supreme Court in 1947 allows for dismissal only if an adequate alternative forum exists and if factors strongly favor the foreign forum. The defendants carry the burden to prove both points, and the plaintiffs' choice of forum should generally remain undisturbed. On appeal, plaintiffs challenge the district court's findings on both the existence of an adequate alternative forum and the balance of relevant factors.
The adequacy of a British forum is contested based on three English law doctrines: double actionability, transmissibility, and the act of state doctrine, which may impede a British court from addressing the dispute. The double actionability doctrine permits tort claims in England only if they are actionable under both English law and the law of the act's jurisdiction, with limited exceptions. The transmissibility doctrine determines whether a decedent’s claims pass to survivors based on the decedent's home nation law. The act of state doctrine restricts courts from considering claims related to official foreign government actions due to comity. The defendants have agreed not to invoke double actionability or transmissibility against the plaintiffs’ claims in a British court but have not made similar assurances regarding the act of state doctrine. The implications of this undertaking are ambiguous, as the doctrine's application may be independent of party invocation due to its foundations in international comity. It is suggested that British courts may apply their own law to determine the viability of the claims, regardless of the defendants' positions. The defendants assert that the adequacy of a forum pertains to its quality and commitment to the rule of law, rather than differences in legal standards affecting trial outcomes. Despite these considerations, the court finds the British courts to be fair and assumes no British law barriers exist against addressing the merits. However, the order of dismissal is reversed, as the defendants have not shown that factors favoring the British forum outweigh the considerations for maintaining jurisdiction, which include the U.S. plaintiff's choice of forum, U.S. interests in human rights claims, and the relative weakness of reasons for favoring a British forum. The plaintiff's choice of forum carries substantial deference, with a strong presumption against disturbing it unless compelling factors for the alternative forum are presented.
Plaintiffs' choice of forum receives deference, with forum non conveniens dismissals permitted only when considerations strongly favor a foreign forum. This deference increases with plaintiffs' ties to the chosen forum, as domestic plaintiffs are afforded more respect than foreign ones. A significant demonstration of convenience by a plaintiff in their home forum typically outweighs any inconvenience claimed by a defendant. Recent case law has overturned dismissals in scenarios where U.S. citizens were involved, emphasizing that defendants must demonstrate substantial inconvenience and that no compelling public interest necessitates a foreign forum. Courts must evaluate the hardship dismissal causes to resident plaintiffs by applying the Gilbert factors pragmatically. Although U.S. residence is a relevant factor, it should not solely dictate the decision; rather, it highlights the likelihood of inconvenience for the plaintiff if required to litigate abroad. The legal framework mandates equal justice for all litigants while recognizing that the convenience comparison should factor in each party’s residence. Over the past two decades, case law has established that greater deference is warranted for U.S. forum selections by U.S. resident plaintiffs in forum non conveniens motions.
The in-banc decision in Alcoa, 654 F.2d 147, clarifies that courts should not assign excessive importance to the citizenship or residence of parties in forum non conveniens analyses. The decision emphasizes the need to apply Gilbert factors regardless of whether the plaintiff is a U.S. citizen or resident. It acknowledges that a plaintiff's U.S. citizenship and residence should be considered favorably in retaining jurisdiction unless the defendant can demonstrate that the inconvenience caused to them is disproportionate to the plaintiff's convenience.
In this case, the district court mistakenly weighed against the plaintiffs because none resided in the Southern District of New York, failing to account for the advantage of a U.S. forum for two plaintiffs who were U.S. residents. It is clarified that a U.S. resident's benefit in suing in a U.S. forum is not limited to their specific district, particularly when the defendant may not be subject to suit there.
The court should evaluate the potential hardship to a U.S. resident plaintiff when considering a forum non conveniens dismissal. Historical cases indicate that less deference is given to foreign plaintiffs, particularly those who are not U.S. residents. The district court's failure to recognize the significance of two plaintiffs being U.S. residents constituted an incorrect application of legal standards. The excerpt also touches on the application of the forum non conveniens doctrine to cases under the Alien Tort Claims Act (ATCA) and the Torture Victim Protection Act (TVPA).
In 1991, U.S. policy emphasized the need for a forum to address international human rights violations, influencing the application of the Gilbert factors in legal cases. The Alien Tort Claims Act (ATCA), enacted in 1789, originally did not define legal rights but granted U.S. district courts original jurisdiction for civil actions by aliens regarding torts that violate international law or U.S. treaties (28 U.S.C. § 1350). For nearly 200 years, the ATCA was rarely invoked, with only a few cases establishing jurisdiction, such as *Filartiga v. Pena-Irala*. Recently, however, the ATCA has seen increased usage, with notable cases including *Abebe-Jira v. Negewo* and *Kadic v. Karadzic*, which addressed allegations of torture and other human rights abuses.
Significant rulings have clarified the ATCA's scope, particularly in *Filartiga*, where the court determined that official torture violates international human rights norms and constitutes a violation of U.S. law if the perpetrator is within the U.S. jurisdiction. In *Kadic*, the court extended the ATCA's reach to private conduct under state authority or recognized international norms. The Torture Victim Prevention Act (TVPA), enacted in 1991, affirmed court jurisdiction over torture claims by aliens and broadened the statute to include U.S. citizens, establishing that violations of international human rights law, particularly torture, are violations of U.S. law. The TVPA explicitly recognizes that international law is part of U.S. law, reinforcing the principles set forth in the 1789 Act.
The Torture Victim Protection Act (TVPA) aims to codify the precedent set by Filartiga, address separation of powers concerns, and extend remedies to U.S. citizens. It indicates a policy favoring U.S. District Courts' receptivity to suits alleging violations of international law. Key changes in statutory language reflect this intent: shifting focus from court jurisdiction to substantive rights and redefining claims from torts to rights for damages under U.S. law. This evolution acknowledges the U.S. interest in combating torture by foreign governments. In Jota v. Texaco, the court recognized the importance of providing a federal forum for aliens suing domestic entities for international law violations, indicating that dismissing such claims on forum non conveniens grounds could hinder congressional intent. Dismissals require plaintiffs to navigate new legal systems, often complicating their pursuit of justice, especially for torture victims who may face danger returning to their home countries. Such litigation is fraught with challenges, including inhospitable courts and the potential for government embarrassment. The TVPA underscores that torture under foreign laws is a matter of U.S. concern, asserting that violations of international law also breach domestic law. Legislative history highlights the need for a remedy forum for victims of human rights abuses, emphasizing the inadequacy of mere universal condemnation without legal recourse.
Congress, through the Torture Victim Prevention Act (TVPA), has established a U.S. legal policy that favors adjudicating torture claims in U.S. courts. The courts should not dismiss these cases based solely on the doctrine of forum non conveniens without a thorough examination of the relevant factors. The TVPA indicates that jurisdiction under the Alien Tort Claims Act (ATCA) should be exercised unless the defendant can convincingly demonstrate that a foreign forum is significantly more appropriate.
In analyzing the forum non conveniens factors in this case, the district court erred by considering the plaintiffs' lack of residence in the Southern District of New York while overlooking that two plaintiffs reside in the U.S. Additionally, the court failed to acknowledge the U.S. interest in providing a forum for torture claims, as expressed in the TVPA. The Magistrate Judge did not adequately consider the substantial burden that dismissal would impose on the financially disadvantaged plaintiffs, while the inconvenience to the defendants was minimal.
Generally, district court decisions on forum non conveniens are afforded deference unless an incorrect legal standard is applied. In this instance, the district court's failure to apply the correct legal standards necessitates a reassessment of its decision. The considerations favoring retention, including the U.S. residence of two plaintiffs and the TVPA's policy, are significant. If the defendants had presented compelling reasons for dismissing the case in favor of a British forum, the court would either remand for reevaluation or uphold the dismissal. However, the defendants have only provided minimal justification for an English forum, which does not demonstrate a clear advantage over the U.S. courts, unlike cases where a foreign forum is evidently more suitable.
The court addressed a motion to dismiss a case on the basis of forum non conveniens, which sought to transfer the litigation to Scotland, the site of a plane crash. Key points include:
1. The case does not involve significant physical evidence that would complicate transportation.
2. The inconvenience of a trial in New York is not substantially greater for nonparty witnesses than in England.
3. Defendants argued that the costs of transporting documents and witnesses to New York were burdensome; however, they failed to demonstrate that these costs were excessive given their substantial resources.
4. The additional costs and inconveniences to the defendants of litigating in New York are counterbalanced by the burdens on the plaintiffs, who have limited resources.
5. Defendants claimed that England has a public interest in the case, citing Shell Transport as a British corporation and Nigeria's Commonwealth membership at the time. However, the court noted that U.S. courts have a vested interest in cases involving its residents, and the involvement of a Dutch defendant complicates the defendants' argument.
6. The defendants did not meet their burden to establish that the Gilbert factors favor a foreign trial.
7. Factors against dismissal include: deference to the plaintiffs' choice of forum, the significant burden on plaintiffs if required to restart litigation in England, a policy favoring U.S. courts in such cases, and the TVPA's support for adjudicating claims of international torture violations.
8. The court concluded that these factors outweighed the defendants' arguments for dismissal and remanded the case to the district court for further proceedings, specifically for consideration of the defendants' separate motion to dismiss under Rule 12(b)(6) for failure to state a claim.
The judgment of the district court dismissing the case for forum non conveniens is reversed, and the case is remanded for further proceedings. The court assumes the truth of the allegations without commenting on their validity. Royal Dutch shares are traded on the New York Stock Exchange, while Shell Transport shares are available in the U.S. through American Depository Receipts (ADRs). Jurisdiction over the defendants is affirmed based on the activities of the Investor Relations Office, and other jurisdictional issues raised by the plaintiffs are not addressed. The excerpt references legal doctrines, including double actionability and transmissibility, citing cases such as Phillips v. Eyre and Luthor v. Sagor. It notes the recent House of Lords decision regarding Augusto Pinochet and discusses the public interest factors in forum non conveniens, indicating that these could justify dismissal even in the absence of "oppressiveness and vexation." The original purposes of the Alien Tort Claims Act (ATCA) are highlighted, with emphasis on its intent to ensure claims involving aliens against U.S. citizens or incidents in the U.S. are litigated in federal rather than state courts to avoid mishandling and potential international incidents.
Some scholars propose that the original intent of the Act may have been limited to addressing torts by vessel crews during wartime actions against enemy-supporting ships. However, the text of the Act encompasses claims related to international human rights abuses occurring abroad. The circuit court affirmed this interpretation in Filartiga, which remains the leading case on the Alien Tort Claims Act (ATCA). Congress later supported this interpretation through the Torture Victim Protection Act. The court has consistently maintained that claims such as "extra judicial killing," defined as deliberate killings lacking judicial authorization, fall under the Act's scope. The term "torture" is used here to include both torture and extrajudicial killing unless context dictates otherwise.
Plaintiffs assert that U.S. policy interests necessitate adjudicating human rights abuse claims according to international law standards. While they argue that the ATCA implies these principles, federal courts have not conclusively addressed the choice-of-law issue regarding whether international law or state tort laws govern substantive claims under the ATCA. Case law shows differing approaches, with some courts applying international law while others consider the tort laws of the forum or the location of the events. However, the current decision on forum non conveniens does not require resolving this choice-of-law question. The Magistrate Judge highlighted that plaintiffs lack sufficient financial resources, which would significantly hinder their ability to pursue litigation in England.
The plaintiffs' lack of resources is deemed a "neutral factor" since they did not demonstrate that trying the case in New York would be less expensive than in England. However, substantial evidence indicates that a trial in New York would indeed be less costly and burdensome for the plaintiffs. They have secured pro bono legal representation in the U.S., with no assurance of similar support in England without significant costs. Additionally, two plaintiffs resided in the U.S. at the time the action commenced, and relocating to England for the litigation would impose significant challenges. The plaintiffs and their attorneys have already invested considerable resources in the U.S. legal process, and requiring them to duplicate these efforts in England would greatly increase their burden. It is argued that the Magistrate Judge should have placed more emphasis on the difficulties faced by the financially constrained plaintiffs rather than predominantly focusing on the defendants' convenience. Other factors favoring the retention of jurisdiction outweigh the defendants’ dismissal request. The defendants also suggested that the Netherlands could serve as a more convenient alternative forum, but since the district court did not rule on this, remanding for consideration is unnecessary; a dismissal in favor of the Netherlands would present similar disadvantages as dismissing in favor of England.
