Delaware Rejects Adequate Alternative Forum as an Independent Threshold Consideration for Forum Non Conveniens Applications
The Delaware Supreme Court recently issued an important decision clarifying Delaware’s forum non conveniens FNC law in Hupan v. Philip Morris USA, Consol. No. 526, 2016 (Del. 3/22/2018). Delaware FNC law has long permitted defendants otherwise subject to jurisdiction to seek dismissal of an action if defending it in Delaware would result in an “overwhelming hardship.” In Hupan, the court declined the plaintiffs invitation to adopt the rule followed by the federal courts and a majority of state courts, which requires the court to determine first, as a threshold consideration, that an available alternative forum exists. Instead, the court ruled that the availability of an alternative forum should be considered as part of the FNC analysis, but not as outcome determinative if such a forum is lacking. Although the court’s ruling allows for the possibility of an FNC dismissal even when the plaintiff lacks an alternative forum, the decision affords Delaware control over the use of its limited judicial resources and protection of its citizens from overwhelming hardship when the disputes and litigants have no meaningful contact with Delaware.
Hupan was one of the several consolidated toxic tort cases filed in Delaware on behalf of Argentinean citizens arising from injuries they suffered in Argentina. The plaintiffs were several hundred Argentinean farmers and family members who grew tobacco plants on their farms along with livestock and produce. They alleged that Philip Morris USA Inc. and Philip Morris Global Brands Inc. owned an Argentinean tobacco production company that created a brokerage to purchase tobacco from these small family-owned farms in Argentina. They also alleged that the brokerage required farmers to use the herbicide “Roundup,” which exposed plaintiffs to toxic chemicals causing damage to their person and property.
The plaintiffs filed suit in Delaware and the Philip Morris defendants moved to dismiss on several grounds including FNC. The trial court granted the defendants’ FNC motion, finding that they would face overwhelming hardship if forced to litigate in Delaware. In reaching this conclusion, the court considered and weighed Delaware’s traditional FNC factors: the relative ease of access to proof; the availability of compulsory process for witnesses; the possibility of a view of the premises; which forum’s law applies; the pendency (or not) of a similar action elsewhere; and all other practical considerations. In its analysis, the court also noted that it considered Argentina an available alternative forum.
Plaintiffs moved for reargument, but they did not challenge the overwhelming hardship finding. Instead, they argued that as a threshold requirement defendants needed to be subject to suit in the alternative Argentinean forum and, to ensure its availability, asked the court to condition the requested FNC dismissal on an order: requiring defendants to waive any defense of subject matter or personal jurisdiction, service of process, laches or statute of limitations; requiring defendants to satisfy any Argentinean judgment rendered against them; granting plaintiffs time to conduct discovery; and allowing plaintiffs to reinstate claims in Delaware if the Argentinean courts declined to hear the case. The Superior Court denied reargument, and plaintiffs appealed. The Supreme Court affirmed.
As personal jurisdiction doctrines expanded over the years plaintiffs began to file suit in courts concerning matters that had little or no connection to the filing forum. State and federal courts developed FNC as a discretionary doctrine, enabling them to exercise control over their dockets and permit resolution of disputes in a more appropriate forum. In general, state courts have been free to adopt their own FNC doctrines.
Delaware, as the place of incorporation or formation for many enterprises throughout the world, is frequently available as a forum for the litigation of contract, tort and corporate disputes. Indeed, the U.S. Supreme Court recently has narrowed the number of forums where a defendant will be subject to general personal jurisdiction to the states in which an entity was formed or has its principal place of business. The alternatives to a Delaware forum have decreased. As a result, foreign tort claimants have frequently chosen Delaware as a site to sue defendants in matters having no relationship to Delaware beyond the defendant entity’s residency there. Delaware’s discovery rules, choice of law rules, allowance of contingent fee arrangements and jury trials often make it a more attractive forum for tort claimants than the foreign jurisdiction where the injuries and operative facts occurred.
Recognizing the strain that these complex cases can place on judicial resources and mindful of concerns of international comity, Delaware has fashioned an FNC rule that does not require it to hear disputes having no connection to Delaware. Rather, the Supreme Court’s ruling in Hupan makes clear that the court wishes to preserve its discretion on a case-by-case basis to balance, among many relevant factors, the plaintiff’s potential loss of a remedy against the overwhelming hardship defendants may suffer if forced to litigate a matter here. Not surprisingly, the other state forum that has retained this minority view is the state of New York, another popular choice of forum for commercial and foreign disputes.
The Delaware Supreme Court could have sidestepped the central “threshold” issue raised on appeal. Because the lower court found Argentina to be an adequate alternative forum, the asserted error of the lower court in considering it as merely one of several factors was harmless and did not affect the outcome. The court instead opted for a pragmatic rule that prevents plaintiffs and foreign jurisdictions by their strategic choices from mandating that Delaware exercise its jurisdiction over litigants and disputes unrelated to Delaware. By preserving discretion to consider FNC applications on a case-by-case basis, Delaware courts are better positioned to balance equitably the plaintiff’s choice of forum interest with the defendants’ interest in avoiding overwhelming hardship from defending the claims in Delaware.
P. Clarkson Collins Jr. (email@example.com) is a corporate governance and fiduciary litigation partner at Morris James in WilmingtonShare