Turan v. Unvrsl Pln Invst Ltd ( 2001 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-31379
CHARLES TURAN; DEEP OCEAN RESOURCE DEVELOPERS, INC.,
Plaintiffs-Appellants,
versus
UNIVERSAL PLAN INVESTMENTS LIMITED; TYSON FOODS, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
(99-CV-1096)
January 24, 2001
Before BARKSDALE and BENAVIDES, Circuit Judges, and VELA, District
Judge.1
PER CURIAM:2
In this Louisiana diversity action, Louisiana resident Charles
Turan and his Louisiana corporation, Deep Ocean Resource Developers
(Deep Ocean), appeal the dismissal of Universal Plan Investments
Limited (Universal Investments) for lack of in personam
jurisdiction and Universal Investments’ parent, Tyson Foods, Inc.
(Tyson), for forum non conveniens. Among other things, Appellants
1
District Judge of the Southern District of Texas, sitting by
designation.
2
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
contend: the district court should have imputed to Universal
Investments (Tyson’s subsidiary) Tyson’s jurisdictional contacts
with the forum state, Louisiana; and, concerning Tyson, the
district court failed to properly balance private and public
interest factors, including not affording appropriate deference to
Appellants’ choice of forum. We AFFIRM, but REMAND for
modification of the judgment.
I.
In October 1990, Turan, a Louisiana resident, and Deep Ocean,
his Louisiana corporation, entered into an agreement with Shanghai
Fish Processing Factory (Shanghai Fish) of Shanghai, People’s
Republic of China, to create a joint venture for the processing and
marketing of fish products. In furtherance of the joint venture,
Appellants created Universal Investments and incorporated it in
Hong Kong. In March 1991, Universal Investments and Shanghai Fish
agreed to establish a joint venture corporation, Ocean Wealth Fish
Products Corporation (Ocean Wealth).
Arctic Alaska Fisheries Corporation (Arctic Alaska), a deep-
sea fishery located in Seattle, Washington, was attracted by the
marketing of Ocean Wealth’s fish-processing services. By November
1991, Arctic Alaska had acquired 80 percent ownership of the newly
formed Universal Investments, with Turan retaining the remaining 20
percent. In 1992, Tyson acquired all the shares of Arctic Alaska,
including its interest in Universal Investments.
2
According to Appellants: Tyson assumed control over Universal
Investments and the Ocean Wealth joint venture, and operated them
solely for its benefit; and in April 1997, Tyson caused Universal
Investments to issue, without notice to Appellants, approximately
24,000 shares of voting stock and approximately 6,000 shares of
non-voting stock to Tyson’s subsidiaries, reducing Turan’s former
20 percent interest in Universal Investments to less than one
percent.
Appellants claim a breach of fiduciary duties from
mismanagement and waste and/or breach of contract and quasi-
contractual obligations, and continuing tortious conduct. They
claim this caused them damages in the form of lost profits from the
Ocean Wealth joint venture, lost value in their Universal
Investments investment, and lost opportunity for profits from other
projects. These damages are allegedly the result of Appellees’
setting the price of Ocean Wealth’s fish processing so low that
Universal Investments did not receive a profit.
Based on numerous grounds, pursuant to Rule 12 of the Federal
Rules of Civil Procedure, Appellees moved to dismiss. Pursuant to
a comprehensive and well-reasoned opinion, the motion was granted
as to Universal Investments for lack of personal jurisdiction; as
to Tyson, for forum non conveniens. Turan v. Universal Plan Inv.
Ltd., 70 F. Supp. 2d 671 (E.D. La. 1999).
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II.
These bases for the dismissals are contested here. Therefore,
at issue is: whether the district court erred by dismissing
Universal Investments for lack of personal jurisdiction; and
whether it clearly abused its discretion by dismissing Tyson for
forum non conveniens.
A.
Absent any dispute as to relevant facts, the district court’s
jurisdictional ruling is reviewed de novo. Marathon Oil Co. v.
A.G. Ruhrgas, 182 F.3d 291, 294 (5th Cir. 1999). When alleged
jurisdictional facts are disputed, we resolve all conflicts in
favor of the party seeking to invoke the court’s jurisdiction.
Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th
Cir. 1993).
Two requirements must be met before a district court can
exercise personal jurisdiction over a nonresident defendant: that
defendant must be amenable to service of process under the forum
state’s long-arm statute; and the assertion of personal
jurisdiction must be consistent with the Due Process Clause of the
Fourteenth Amendment. E.g., Dickson Marine Inc. v. Panalpina,
Inc., 179 F.3d 331, 336 (5th Cir. 1999). Because Louisiana’s long-
arm statute extends to the limits of due process, we need only
decide whether subjecting Universal Investments to suit in
Louisiana would offend due process. Id.
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It will not be offended if the nonresident has “certain
minimum contacts with [the forum state] such that the maintenance
of the suit does not offend ‘traditional notions of fair play and
substantial justice’”. International Shoe Co. v. Washington, 326
U.S. 310, 316 (1945) (emphasis added) (quoting Milliken v. Meyer,
311 U.S. 457, 463 (1940)). The nonresident’s contacts with the
forum state should be such that it “reasonably should anticipate
being haled into court there”. Marathon Oil Co., 182 F.3d at 295
(quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286
(1980)). The “minimum contacts” requirement is satisfied if the
contacts give rise to either “specific” or “general” personal
jurisdiction. Id. Neither basis is present in this case.
1.
“Specific” jurisdiction exists when a nonresident corporation
“has purposefully directed its activities at the forum state and
the litigation results from alleged injuries that arise out of or
relate to those activities”. Kelly v. Syria Shell Petroleum Dev.
B.V., 213 F.3d 841, 854 (5th Cir.) (citation omitted; emphasis in
original), cert. denied, 121 S. Ct. 426 (2000). Appellants
maintain specific jurisdiction exists for Universal Investments
because of its business meetings in Louisiana and its telephone,
mail, and facsimile communications with Appellants during and after
its formation.
5
Business meetings in the forum state and related
communications, however, are not sufficient to establish the
requisite “minimum contacts” unless Appellants’ claims arose from
those activities. See Marathon Oil Co., 182 F.3d at 295.
Appellants’ claims did not so arise; instead, they arose out of the
alleged wrongful acts committed by Appellees in Universal
Investments’ office in Seattle, Washington. Universal Investments’
contacts with Louisiana rested on nothing more than the mere
fortuity that Appellants happened to be residents there. See
Patterson v. Dietze, Inc., 764 F.2d 1145, 1147 (5th Cir. 1985).
Further, Universal Investments could not reasonably anticipate
being sued in Louisiana as a result of attending business meetings
there, as well as sending various communications to Appellants,
because those contacts concerned its business in Hong Kong. See
Marathon Oil Co., 182 F.3d at 295. Universal Investments has never
done business in Louisiana.
2.
“General” jurisdiction exists if a nonresident’s contacts with
the forum state are “continuous, systematic, and substantial”. Id.
a.
Appellants offer no evidence that Universal Investments had
any contact with Louisiana other than those discussed above.
Needless to say, they do not constitute the requisite “continuous”
and “systematic” contacts. See id.
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b.
Apparently, because of the lack of such contacts, Appellants
maintain that, for general jurisdiction, Tyson’s substantial
contacts with Louisiana should be imputed to Universal Investments,
its subsidiary. They rely primarily upon Hargrave v. Fibreboard
Corp., 710 F.2d 1154 (5th Cir. 1983).
Hargrave delineated the factors that must be considered in
determining whether a parent can be held amenable to personal
jurisdiction because of the acts of its subsidiary. Dickson
Marine, 179 F.3d at 338. Generally, what is required is evidence
that the parent asserts such control over its subsidiary that the
subsidiary is, in reality, the parent’s agent or alter ego. Id.
The Hargrave factors include:
(1) amount of stock owned by the parent of the
subsidiary; (2) did the two corporations have
separate headquarters; (3) did they have
common officers and directors; (4) did they
observe corporate formalities; (5) did they
maintain separate accounting systems; (6) did
the parent exercise complete authority over
general policy; (7) did the subsidiary
exercise complete authority over daily
operations.
Dickson Marine, 179 F.3d at 339 (citing Hargrave, 710 F.2d at
1160). Although Hargrave analyzed the elements necessary to
subject a parent to personal jurisdiction because of the activities
of its subsidiary, “the same legal principles apply” when
jurisdiction is sought over the subsidiary because of the
7
activities of its parent. Walker v. Newgent, 583 F.2d 163, 167
(5th Cir. 1978) (based on agency relationship between parent and
its subsidiary, parent’s contacts with forum state may be imputed
to subsidiary), cert. denied, 441 U.S. 906 (1979).
Courts presume the institutional independence of related
corporations when determining if one’s contacts with a forum state
can be the basis for a related corporation’s contacts. Dickson
Marine, 179 F.3d at 338. This presumption may only be overcome by
clear evidence, with the “burden ... on the proponent of the
agency/alter ego theory”. Id.
Appellants have not shown, by the requisite clear evidence,
such a relationship between Tyson and Universal Investments. Tyson
owns a substantial amount of Universal Investments’ stock, and,
thus, exercises authority over its general policy and daily
operations. However, the corporations have different corporate
headquarters. Further, Appellants have not shown: that Tyson and
Universal Investments share common officers or directors; that they
have failed to observe corporate formalities; or that they do not
maintain separate accounting systems.
B.
Pursuant to the doctrine of forum non conveniens, a federal
district court can decline to exercise jurisdiction “where it
appears that the convenience of the parties and the court and the
interests of justice indicate that the action should be tried in
8
another forum”. In re Air Crash Disaster Near New Orleans, La.,
821 F.2d 1147, 1153-54 (5th Cir. 1987) (en banc) (citations
omitted), vacated on other grounds sub nom. Pan Am. World Airways,
Inc. v. Lopez, 490 U.S. 1032 (1989). No single private or public
interest factor is given conclusive weight; instead, and not
surprisingly, the central focus of the inquiry is convenience.
Dickson Marine, 179 F.3d at 342.
A dismissal for forum non conveniens may not be reversed
unless there has been a clear abuse of discretion. Piper Aircraft
Co. v. Reyno, 454 U.S. 235, 257 (1981). We review the district
court’s decision-making process and conclusion and determine if it
is reasonable. In re Air Crash Disaster, 821 F.2d at 1167.
Restated, we cannot perform a de novo analysis and make the initial
determination for the district court. Id.
1.
Before applying the doctrine, the district court must first
determine whether an available and adequate foreign forum exists.
Id. at 1165. For Hong Kong, the district court found: Hong Kong
is available, because Appellees consented to the service of process
and to the jurisdiction of a Hong Kong court; and, Hong Kong is
adequate, because Appellants can pursue relief for their claimed
injuries under Hong Kong law. Turan, 70 F. Supp. 2d at 676-77.
Appellants do not contest these findings.
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2.
If, as in this case, the district court makes a positive
available-and-adequate-foreign-forum finding, it should then
consider the following private interest factors, weighing in the
balance the relevant deference given the plaintiff’s initial choice
of forum:
the relative ease of access to sources of
proof; availability of compulsory process for
attendance of unwilling, and the costs of
obtaining attendance of willing, witnesses;
probability of view of premises, if view would
be appropriate to the action; and all other
practical problems that make trial of a case
easy, expeditious and inexpensive. There may
also be questions as to the enforc[ea]bility
of a judgment if one is obtained.
In re Air Crash Disaster, 821 F.2d at 1162. When analyzing the
private interest factors, the court must also consider whether the
motion to dismiss was timely filed. Id. at 1165.
Citing Dickson Marine, the district court concluded that the
balancing of private interest factors favored dismissal because
Hong Kong was a more convenient forum than Louisiana and was the
focal point of the litigation. Turan, 70 F. Supp. 2d at 677. It
found: Hong Kong is the focal point, because Appellants’
allegations, like those in Dickson Marine, necessitate examining
witnesses, documents, and records relating to Universal
Investments’ Chinese operations; Appellants’ choice of forum does
not outweigh the unnecessary burdens of trying Appellees in
10
Louisiana for activities focused in Hong Kong; Appellants can
enforce a judgment against Universal Investments in Hong Kong; and,
Appellees timely moved to dismiss. Id.
Appellants maintain that Tyson did not meet its burden of
production. Overly detailed affidavits are not required; what is
required is “enough information to enable the District Court to
balance the parties’ interests”. Reyno, 454 U.S. at 258; In re Air
Crash Disaster, 821 F.2d at 1164-65. Obviously, the detail
required depends on the facts of each case. In re Air Crash
Disaster, 821 F.2d at 1165 n.28.
Appellants note that Appellees did not submit affidavits; but,
they did cite to Appellants’. Along this line, Appellants assert
that Tyson has not identified specific witnesses in Hong Kong.
However, the Supreme Court has excused such detail in cases where
crucial witnesses are difficult to identify or interview. See
Reyno, 454 U.S. at 258; In re Air Crash Disaster, 821 F.2d at 1164-
65 & n.28. Based upon the record (specifically, Appellants’
complaint and affidavits), the district court had enough
information to decide the forum non conveniens issue.
Appellants’ contention that the district court did not
properly weigh the requisite private interest factors is without
merit. Hong Kong is the focal point of this litigation, because it
involves the internal governance of a Hong Kong corporation,
Universal Investments. See Dickson Marine, 179 F.3d at 343; see
11
also Koster v. (American) Lumbermens Mut. Cas. Co., 330 U.S. 518,
527 (1947) (although no rule requires dismissal upon mere showing
that trial will involve issues relating to internal affairs of
foreign corporation, it is factor which may “show convenience of
parties or witnesses, the appropriateness of trial in a forum
familiar with the law of the corporation’s domicile, and the
enforceability of the remedy if one be granted”).
Moreover, Appellants seek damages in the form of lost profits
from the Ocean Wealth joint venture and lost opportunity for
profits from other joint projects with the Chinese government.
This requires examining witnesses and evidentiary materials related
to Universal Investments’ Chinese operations. For example, and as
noted, Appellants allege that Appellees, among other things,
surreptitiously diluted Appellants’ interest in Universal
Investments and manipulated the price for fish processing charged
by the Ocean Wealth joint venture. The propriety of Chinese fish
processing prices must necessarily be proved, at least in part, by
Chinese witnesses.
Appellants protest that many key witnesses and documents are
located either in Louisiana or elsewhere in the United States.
However, this essentially concerns the quantum of Appellees’ proof
rather than its substance, “a basis on which we are highly
reluctant to find an abuse of discretion”. Robinson v. TCI/US West
Communications Inc., 117 F.3d 900, 909 (5th Cir. 1997). Further,
12
nothing in the record suggests this case should be tried in
Louisiana (as opposed to the State of Washington, where the alleged
wrongdoing occurred). Id. at 908-09.
Appellants also contend that the district court failed to give
sufficient deference to their choice of forum. That choice is
entitled to greater deference when, as here, the plaintiff has sued
in his home forum. Reyno, 454 U.S. at 249. Thus, “[i]n any
balancing of conveniences, a real showing of convenience by a
plaintiff who has sued in his home forum will normally outweigh the
inconvenience the defendant may have shown”. Id. at 256 n.23
(quoting Koster, 330 U.S. at 524). However, “[a] citizen’s forum
choice should not be given dispositive weight”. Id. (emphasis
added). Although a resident plaintiff deserves more deference than
a foreign plaintiff, “dismissal should not be automatically barred
when a plaintiff has filed suit in his home forum”. Id. (emphasis
added). Instead, “if the balance of conveniences suggests that
trial in the chosen forum would be unnecessarily burdensome for the
defendant or the court, dismissal is proper”. Id.
The district court gave Appellants’ forum-choice the deference
Reyno demands: “Although Louisiana plaintiffs initially selected a
Louisiana forum ..., their choice of forum does not outweigh the
unnecessary burdens of trying non-resident defendants in Louisiana
for activities focused in Hong Kong”. Turan, 70 F. Supp. 2d at 677
(emphasis added). Further, Appellants made no “real showing of
13
convenience”. The district court found that, even if some of the
witnesses and evidentiary materials were not easily accessible in
Hong Kong, Appellants did not assert that the majority of witnesses
and documents were in Louisiana. Id. Also, because Louisiana does
not have personal jurisdiction over the other named defendant,
Universal Investments (pursuant to our earlier holding), it clearly
is not a convenient forum. See Calavo Growers of Calif. v.
Generali Belgium, 632 F.2d 963, 966 (2d Cir. 1980), cert. denied,
449 U.S. 1084 (1981).
Finally, Appellants assert that the district court failed to
find Hong Kong law offered either a mechanism for compelling non-
Chinese residents to testify, or that there is a procedural device
for perpetuating such testimony for trial-use. However, the
district court was only required to analyze relevant private
interest factors. In re Air Crash Disaster, 821 F.2d at 1164.
Because the non-Chinese witnesses identified by Appellants are
affiliated either with them or with Appellees, and the court
ordered Appellees to stipulate to litigating, receiving service of
process, and participating in discovery, all within the
jurisdiction of Hong Kong, it was not required to make such a
finding. See Turan, 70 F. Supp. 2d at 678.
3.
If, as here, the private interest factors weigh in favor of
dismissal, no further inquiry is required. In re Air Crash
14
Disaster, 821 F.2d at 1165. On the other hand, if the district
court concludes that the private interest factors do not weigh in
favor of dismissal, it must consider the following public interest
factors:
the administrative difficulties flowing from
court congestion; the local interest in having
localized controversies resolved at home; the
interest in having the trial of a diversity
case in a forum that is familiar with the law
that must govern the action; the avoidance of
unnecessary problems in conflicts of law, or
in application of foreign law; and the
unfairness of burdening citizens in an
unrelated forum with jury duty.
Id. at 1162-63.
Although, as discussed, the district court found the balance
of private interest factors favored dismissal, it did consider the
public interest factors. Turan, 70 F. Supp. 2d at 678. It
concluded they, too, favored dismissal because “litigation in the
Eastern District of Louisiana would prove unduly burdensome on the
community and further no community interest”. Id. (emphasis
added).
This conclusion was not unreasonable. Hong Kong law applies
to at least some of Appellants’ claims. See Duckworth Woods Tire
Serv., Inc. v. Johnson, 557 So. 2d 311, 313 (La. Ct. App. 1990)
(“We agree that it was not proper for the trial court to apply
Louisiana corporate law to the internal activities of an out-of-
state corporation which itself had no connection with Louisiana.”
15
(emphasis added)). The need to apply foreign law favors dismissal.
Reyno, 454 U.S. at 260. Further, Louisiana does not have an
interest in the litigation other than Appellants’ Louisiana
residency. See Dickson Marine, 179 F.3d at 343 (dismissing case
for forum non conveniens despite plaintiffs’ Louisiana residency).
In sum, the district court did not clearly abuse its
discretion by dismissing Tyson on the basis of forum non
conveniens. See In re Air Crash Disaster, 821 F.2d at 1165-66
(“[E]ven when the private conveniences of the litigants are nearly
in balance, a trial court has discretion to grant forum non
conveniens dismissal upon finding that retention of jurisdiction
would be unduly burdensome to the community, that there is little
or no public interest in the dispute or that foreign law will
predominate if jurisdiction is retained.” (quoting Pain v. United
Techs. Corp., 637 F.2d 775, 792 (D.C. Cir. 1980), cert. denied, 454
U.S. 1128 (1981))).
4.
If the district court concludes the action should be dismissed
in favor of trial in a foreign forum, it must ensure: the
plaintiff can reinstate his action in the alternative forum without
undue inconvenience or prejudice; and, if the defendant obstructs
such reinstatement, the plaintiff can return to the American forum.
Id. at 1166. The district court did so: “The Court ... reserves
the right of the plaintiffs to return to this forum if the
16
defendants prevent them from reinstating their claims in Hong Kong
or if the plaintiffs suffer undue inconvenience or prejudice in
doing so.” Turan, 70 F. Supp. 2d at 678. In addition, the
district court conditioned the dismissal on Appellees’ consent to
“litigate, submit to service of process, engage in discovery, and
consent to the enforceability of a judgment, all within the
jurisdiction of Hong Kong”. Id.
The judgment, however, does not include these conditions and
contingencies. In the alternative, Appellants request its
modification of the judgment to incorporate them. We agree that it
should be so modified.
III.
For the foregoing reasons, the dismissals of the two
defendants are AFFIRMED, with this matter to be REMANDED to the
district court for modification of the judgment.
AFFIRMED as to dismissals;
REMANDED for modification of judgment
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