D&S Consulting, Inc. v. Kingdom of Saudi Arabia ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_______________________________
)
D&S CONSULTING, INC. (DSCI), )
)
Plaintiff, )
)
v. ) Civil Action No. 17-0787 (EGS)
)
KINGDOM OF SAUDI ARABIA, )
)
Defendant. )
_______________________________)
MEMORANDUM OPINION
On April 11, 2017, plaintiff D&S Consulting, Inc., (“DSCI”)
filed a complaint in the Superior Court of the District of
Columbia against defendant the Kingdom of Saudi Arabia (“KSA”)
for, inter alia, breach of contract and unjust enrichment. KSA
timely removed the action to this Court. Pending before the
Court is KSA’s motion to dismiss the complaint on the ground of
forum non conveniens. Upon careful consideration of KSA’s
motion, the response and reply thereto, the applicable law, and
for the reasons set forth below, the Court GRANTS KSA’s motion
to dismiss.
I. Background
This case arises out of a contractual dispute between DSCI
and KSA. DSCI and KSA entered into a contract that provided for
performance between August 2013 and April 2015. Compl., ECF No.
1-1 ¶ 4. The contract was entered into in Saudi Arabia. Id. ¶ 3.
DSCI performed under the contract and KSA paid DSCI on a monthly
basis. Id. ¶ 4. At the same time DSCI was performing under its
contract with KSA, DSCI was awarded another contract, the
details of which are not relevant to this case. Id. ¶ 5.
DSCI breached the other contract and was terminated for
failure to timely post a bond required by that contract. Id.
Because of that termination, DSCI became insolvent and
surrendered control of its assets to Bank of America, its
secured creditor. Id. ¶ 6. Bank of America appointed a
restructuring officer to wrap up DSCI’s affairs and resolve its
outstanding debts and receivables. Id. In reviewing its
outstanding debts, DSCI discovered two invoices for work
completed on the KSA contract that had not been previously
invoiced or collected. Id. ¶ 7. Accordingly, DSCI submitted
invoices for this work, but KSA has refused to pay. Id. ¶ 8, 9.
DSCI filed suit against KSA to, inter alia, recoup the funds it
alleges KSA owed to it.
2
Several provisions of the contract 1 between DSCI and KSA are
relevant to this motion to dismiss. The contract provides that
“its interpretation, performance and enforcement shall be
governed and construed by and in accordance with the applicable
laws of the Kingdom of Saudi Arabia.” Mot. to Dismiss, Attach.,
ECF No. 10-1 at 25. 2 Additionally, “Arabic language shall be the
approved language in interpreting and executing [the] contract.”
Id. at 45. Although the parties were permitted to use a “foreign
language in writing the contract . . . [i]n cases of discrepancy
between the Arabic text and the foreign language’s text, the
Arabic text shall supersede.” Id. The contract also provides
that “[t]he consultant and its employees shall commit to all
regulation, laws and customs prevailing in [Saudi Arabia]
1 DSCI referred to this contract, but did not attach the contract
to its Complaint. See generally Compl., ECF No. 1-1. KSA filed
both a redacted, ECF No. 10-1, and an unredacted, ECF No. 19-1,
version of the contract. The unredacted version was filed under
seal. Because the provisions at issue are not redacted, the
Court cites to the redacted version of the contract. ECF No. 10-
1. The contract was referenced in DSCI’s complaint and DSCI’s
breach of contract claim necessarily relies upon the language of
the contract; therefore, the Court considers the contract
without converting the motion to dismiss to one for summary
judgment. See Marshall v. Honeywell Tech. Solutions, Inc., 536
F. Supp. 2d 59, 65-66 (D.D.C. 2008) (“[W]here a document is
referred to in the complaint and is central to the plaintiff's
claim, such a document attached to the motion papers may be
considered without converting the motion to one for summary
judgment.”) (citation and internal quotation marks omitted).
2 When citing electronic filings throughout this opinion, the
Court cites to the ECF header page number, not the original page
number of the filed document.
3
including labor law, residence and other related laws.” Id. at
67.
The contract designates Saudi Arabia as the place where the
contract was to be performed. Id. at 75-76. The contract
required DSCI to keep all “books and all accounts and documents
related to this cont[r]act locally in Arabic . . . certified by
a chartered accountant licensed to work in [Saudi Arabia].” Id.
at 46. Saudi Arabian currency was the form of payment under the
contract. Id. at 23. Finally, the forum-selection clause
provides that “[t]he grievance council shall be assigned for
settlement of any disputes or claims arising from the execution
of this cont[r]act, or related to this contract, or resulting
from its dissolution.” Id. at 46. Although not defined in the
contract, the “grievance council” refers to the Board of
Grievances in Saudi Arabia, an administrative court, which has
jurisdiction over government contract claims brought against the
Kingdom of Saudi Arabia. Mot. to Dismiss, ECF No. 10 at 13.
On September 20, 2017, KSA moved to dismiss DSCI’s
complaint on the ground of forum non conveniens. DSCI filed its
opposition on November 13, 2017, and KSA filed its reply on
December 13, 2017. KSA's motion to dismiss is now ripe for
consideration by the Court.
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II. Legal Standard
Whether to dismiss a case on the ground of forum non
conveniens “is committed to the sound discretion of the trial
court.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981).
Because the doctrine applies in federal courts “only in cases
where the alternative forum is abroad,” the appropriate remedy
is dismissal rather than transfer. Sinochem Int'l Co. Ltd. v.
Malaysia Int'l Shipping Corp., 549 U.S. 422, 429 (2007)
(citation and internal quotation marks omitted); see also Atl.
Marine Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex.,
571 U.S. 49, 66 n.8 (2013) (“Unlike a § 1404(a) motion [to
transfer], a successful motion under forum non conveniens
requires dismissal of the case.”) (citation omitted).
When considering a motion to dismiss on the ground of forum
non conveniens, the Court ordinarily must first determine
whether the proposed alternative forum is adequate. Friends for
all Children, Inc. v. Lockheed Aircraft Corp., 717 F.2d 602, 607
(D.C. Cir. 1983) (citing Piper Aircraft Co., 454 U.S. at 354
n.22). If there is an adequate alternative forum, the Court then
“must balance the private interests of the litigants in keeping
the case in the District of Columbia or dismissing it in favor
of the foreign court, and the interests of the public and the
courts of this district in keeping the case here.” Irwin v.
5
World Wide Fund, Inc., 448 F. Supp. 2d 29, 32–33 (D.D.C. 2006)
(citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508–09 (1947)).
That calculus of factors changes, however, when the parties
have agreed to a mandatory forum-selection clause because a
forum-selection clause “represents the parties’ agreement as to
the most proper forum.” Atl. Marine Constr., 571 U.S. at 63
(citation omitted). When a contract contains a valid forum-
selection clause, the parties’ agreement regarding the proper
forum for resolving disputes should be “given controlling weight
in all but the most exceptional cases.” Id. (citation and
internal quotation marks omitted).
The Supreme Court has articulated a two-step analysis for
addressing a defendant's forum non conveniens motion based on a
forum-selection clause. See id. at 63–64. The first question is
validity of the forum-selection clause. See id. at 63 & n.5.
Forum-selection clauses are presumptively valid and enforceable
unless the party opposing enforcement meets a heavy burden of
proof of showing that the clause is “the product of fraud or
that its enforcement would contravene a strong public policy of
the forum in which suit is brought.” Marra v. Papandreou, 216
F.3d 1119, 1124 (D.C. Cir. 2000) (internal citation omitted).
If the forum-selection clause is valid, the second step of
the analysis is to consider whether public interest factors
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“overwhelmingly disfavor” dismissal. 3 Atl. Marine Constr., 571
U.S. at 67. Such factors include: “(1) administrative
difficulties caused by foreign litigation congesting local court
dockets; (2) local interest in having localized controversies
decided at home; (3) imposing jury duty on residents of a
jurisdiction having little relation to the case; and (4)
avoiding unnecessary problems in choice-of-law and the
application of foreign law.” Irwin, 448 F. Supp. 2d at 35
(citing Gilbert, 330 U.S. at 508–09). Public interest factors,
however, will rarely defeat a forum non conveniens motion
predicated on a valid forum-selection clause because “[i]n all
but the most unusual cases, . . . the interest of justice is
served by holding parties to their bargain.” Atl. Marine
Constr., 571 U.S. at 66 (internal quotation marks omitted). The
Court addresses each issue in turn.
3 DSCI’s arguments focus on the difficulties in litigating this
case in Saudi Arabia. See, e.g., Pl.’s Supp. Opp’n, ECF No. 15.
This Court, however, may not take into account these private
interest factors when there is a valid forum-selection clause.
Atl. Marine Constr., 571 U.S. at 64 (a party waives the right to
challenge a contractually agreed upon forum as inconvenient
because any inconvenience “was clearly foreseeable at the time
of contracting.”) (citation and internal quotation marks
omitted).
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III. Discussion
A. The forum-selection clause is mandatory
In opposing the motion to dismiss, DSCI does not contend
that the forum-selection clause is invalid or unenforceable, but
rather argues that: (1) the forum-selection clause is
permissive and therefore it is not prohibited from bringing its
claims in this Court; and (2) the Board of Grievances is not an
adequate forum to resolve this dispute. Pl.’s Opp’n, ECF No. 13
at 1–5.
As stated above, the forum-selection clause provides:
“[t]he grievance council shall be assigned for settlement of any
disputes or claims arising from the execution of this
cont[r]act, or related to this contract, or resulting from its
dissolution.” Mot. to Dismiss, Attach., ECF No. 10-1 at 46. DSCI
argues that the provision is permissive, rather than mandatory,
because it does not contain language that excludes all other
forums. Pl.’s Opp’n, ECF No. 13 at 1–3. For this proposition,
DSCI relies on Stone & Webster, Inc. v. Georgia Power Co., 779
F.3d 614 (D.C. Cir. 2015). In Stone, the Court of Appeals for
the District of Columbia Circuit (“D.C. Circuit”) affirmed the
district court’s dismissal of a suit in favor of a complaint
filed in the federal district court for the Southern District of
Georgia. Id. at 615. The forum-selection clause in that case
stated: “[The parties] agree to the non-exclusive jurisdiction
8
of the United States District Court for the District of Columbia
for any legal proceedings.” Id. at 615–16. Accordingly, the D.C.
Circuit found no error in the district court’s finding that the
forum-selection clause was permissive or in the district court’s
dismissal of the District of Columbia action.
The forum-selection clause in DSCI’s contract with KSA,
however, is distinguishable from the provision at issue in
Stone. Specifically, the provision in Stone explicitly stated
that the United States District Court for the District of
Columbia would be the “non-exclusive jurisdiction” for any
disputes. Stone, 779 F.3d at 615–16. In contrast, the forum-
selection clause here provides that the “grievance council shall
be assigned for settlement of any disputes or claims arising
from the execution of this [contract].” Mot. to Dismiss,
Attach., ECF No. 10-1 at 46. (emphasis added). In Stone, the
parties made it clear that the District of Columbia was one, but
not the only, option. Stone, 779 F.3d at 615-616. Here, there is
no comparable language in the forum-selection clause to support
DSCI’s claim that the Board of Grievances would have non-
exclusive jurisdiction over contract-related claims.
DSCI’s argument that the forum-selection clause in the
contract is permissible because it does not explicitly exclude
other forums also fails because there is no such requirement in
this Circuit. In Marra v. Papandreou, the D.C. Circuit
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characterized as mandatory a nearly identical forum-selection
clause and dismissed the case in favor of adjudication in
Greece. 216 F.3d 1119, 1120–21 (D.C. Cir. 2000). The clause at
issue in Marra stated, any “dispute or disagreement . . .
arising from the application of this license, the interpretation
or performance of its terms . . . and in general any matter that
may occur concerning a license, shall be settled by the Greek
courts.” Id. Notably, the D.C. Circuit did not require that the
contractual language designate Greece as the exclusive forum.
Id. at 1124; see also Glycobiosciences, Inc. v. Innocutis
Holdings, LLC, 189 F. Supp. 3d 61, 71 (D.D.C 2016) (rejecting
the argument that a forum-selection clause should contain magic
words like “exclusive,” “solely,” or “only” for the clause to be
mandatory). The D.C. Circuit concluded that because of the broad
language in the clause, it was clear that the clause required
the plaintiff to file her suit in Greece. Marra, 216 F.3d at
1124. The same result follows in this case since the forum-
selection clause is just as broad as the clause at issue in
Marra. See Mot. to Dismiss, Attach., ECF No. 10-1 at 46.
(stating the grievance council shall be assigned “any disputes
or claims” arising from, related to, or resulting from, the
execution or dissolution of the contract).
DSCI’s argument that a forum-selection clause is permissive
because it only says that disputes “shall be assigned” to the
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grievance council without designating the council as the sole
forum is undermined, if not totally foreclosed, by Supreme Court
precedent. See M/S Breman v. Zapata Off-Shore Co., 407 U.S. 1(1972). In Breman, the Supreme Court held that a forum-selection
clause which stated “[any] dispute arising must be treated
before the London Court of Justice” was “clearly mandatory and
all-encompassing.” Id. at 20. The same holds true in this case:
because the forum-selection clause is broad and “all-
encompassing,” and clearly assigns the grievance council as the
settler of “any disputes or claims arising from the execution of
[the contract],” it is clearly mandatory. DSCI’s arguments to
the contrary are unpersuasive. 4
4 Although the parties address whether the Board of Grievances is
an adequate forum, the Court need not reach this issue because
the forum-selection clause is mandatory. See Atl. Marine
Constr., 571 U.S. at 64. (“As a consequence [of a mandatory
forum-selection clause], a district court may consider arguments
about public-interest factors only.”) (emphasis added). In
Atlantic Marine Construction, the Supreme Court analyzed a
forum-selection clause in the context of a motion to transfer,
however, the Court made it clear that “the same standards should
apply to motions to dismiss for forum non conveniens in cases
involving valid forum-selection clauses pointing to . . .
foreign forums.” Id. at 66 n.8; see also Billard v. Angrick, 220
F. Supp. 3d 132, 137 (D.D.C. 2016) (Howell, C.J.) (explaining
forum non conveniens analysis based on forum-selection clause).
The Court notes that if it could reach the issue, the Court
would find that the Board would meet the adequacy standard.
Saudi Arabia is an adequate alternative forum because DSCI and
Saudi Arabia are amenable to process and clearly within the
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B. The public interest factors favor dismissal
Once a court determines a forum-selection clause is valid
and enforceable, the second step in the inquiry is to determine
whether the public interest factors warrant dismissal. Atl.
Marine Constr., 571 U.S. at 67. The public interest factors
considered in a forum non conveniens analysis include: “(1)
administrative difficulties caused by foreign litigation
congesting local court dockets; (2) local interest in having
localized controversies decided at home; (3) imposing jury duty
on residents of a jurisdiction having little relation to the
case; and (4) avoiding unnecessary problems in choice-of-law and
the application of foreign law.” Irwin v. World Wide Fund, Inc.,
448 F. Supp. 2d 29, 35 (D.D.C. 2006) (citing Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 508–09 (1947)). Public interest factors,
however, will rarely defeat a forum non conveniens motion
predicated on a valid forum-selection clause because “[i]n all
but the most unusual cases, . . . the interest of justice is
served by holding parties to their bargain.” Atl. Marine
Constr., 571 U.S. at 66. (internal quotation marks omitted).
DSCI fails to address any of the public interest factors,
see generally Pl.’s Opp’n, ECF No. 13 at 1–5, let alone meet the
Grievance Board’s jurisdiction. See Irwin, 448 F. Supp. 2d at 33(explaining test for adequate alternative forum).
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heavy burden of “showing that public-interest factors
overwhelmingly disfavor” dismissal in this case. Atl. Marine
Constr., 571 U.S. at 67. KSA, on the other hand, argues that
each factor favors dismissal. KSA argues that litigating the
suit in the District of Columbia would cause substantial
administrative difficulties because: (1) the vast majority of
the witnesses are in Saudi Arabia; (2) the documents are in
Arabic and kept in Saudi Arabia; and (3) Saudi Arabian law
governs the contract. Mot. to Dismiss, ECF No. 10 at 21–23.
Furthermore, according to KSA, Saudi Arabia has the predominant
interest in litigating this dispute in its local court whereas,
DSCI, a New Jersey corporation, has no connection to the
District of Columbia forum. Id. Finally, KSA argues that
applying Saudi Arabian law would significantly burden the Court,
which would need to apply the law of a fundamentally different
legal system, receive extensive translation of documents and
witness testimony from a foreign language, and would need to
take evidence from experts about the meaning and application of
the foreign law. Id.
Because DSCI has failed to address the public interest
factors, it has failed to meet its burden of showing that the
factors “overwhelmingly disfavor dismissal.” See Atl. Marine
Constr., 571 U.S. at 66; see also Billard v. Angrick, 220 F.
Supp. 3d 132, 143 (D.D.C. 2016) (“[P]laintiff’s silence on the
13
public interest factors is patently insufficient to satisfy
[the] burden of showing that, on balance, the public interest
factors ‘overwhelmingly disfavor’ dismissal.”) (emphasis in
original) (citing Atl. Marine Const., 571 U.S. at 66). DSCI has
failed to meet its burden to show that this is the “unusual
case” in which the forum-selection clause should not control.
See Atl. Marine Constr., 571 U.S. at 64. Accordingly, this case
is dismissed pursuant to the doctrine of forum non conveniens.
IV. The Court Need Not Reach the Issue of Subject-Matter
Jurisdiction
KSA, in a footnote, states that should this motion be
denied, it anticipates filing a motion to dismiss for lack of
subject-matter jurisdiction. Mot. to Dismiss, ECF No. 10 at 9
n.1. Although a federal court usually first addresses whether it
has subject-matter jurisdiction, there are circumstances in
which a district court appropriately first addresses a
dispositive non-merits inquiry. Ruhrgas AG v. Marathon Oil Co.,
526 U.S. 574, 584–85 (1999). One such circumstance is when a
court decides the case on “a non-merits ground for dismissal”
such as forum non conveniens. Sinochem Int’l. Co. Ltd. v.
Malaysia Int’l. Shipping Corp., 549 U.S. 422, 432 (2007). “A
district court therefore may dispose of an action by a forum non
conveniens dismissal, bypassing questions of subject-matter and
14
personal jurisdiction, when considerations of convenience,
fairness, and judicial economy so warrant.” Id.KSA has urged the Court to consider the issue of forum non
conveniens first, given that that this issue could dispose of
the case. Def.’s Reply, ECF No. 14 at 6–7. For the reasons
explained above, the Court agrees. Although there are questions
about whether the Court has subject-matter jurisdiction over
this action under the Foreign Sovereign Immunities Act, 28
U.S.C. § 1604, the Court has first considered defendant's forum
non conveniens issue following the principle that “there is no
unyielding jurisdictional hierarchy.” Second Amendment
Foundation v. U.S. Conference of Mayors, 274 F.3d 521, 523 (D.C.
Cir. 2001) (quoting Ruhrgas, 526 U.S. at 578). The Court's
conclusion that the case should be dismissed under the doctrine
of forum non conveniens moots defendant's suggestion that the
Court also lacks subject-matter jurisdiction, and the Court need
not reach the latter issue. See Roz Trading Ltd. v. Zeromax
Group, Inc., 517 F. Supp. 2d 377, 389–90 (D.D.C. 2007) (stating
dismissal on personal jurisdiction grounds mooted defendant’s
argument regarding subject-matter jurisdiction).
V. CONCLUSION
For the foregoing reasons, KSA's motion to dismiss is
GRANTED. An appropriate Order accompanies this Memorandum
Opinion.
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SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
August 21, 2018
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