The Fifth Circuit Recognizes Impact of Subsequent In Rem Action on Forum Non Conveniens Analysis

by Baker Donelson
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The ever-changing Fifth Circuit jurisprudence on forum non conveniens (FNC) may have taken another turn with the Fifth Circuit’s opinion in Cotemar S.A. De C.V. v. Hornbeck Offshore Servs., L.L.C., 13-20230, 2014 WL 2111190 (5th Cir. May 21, 2014), which vacated the United States District Court for the Southern District of Texas’ dismissal of the appellants’ maritime tort action based on the doctrine of FNC. Although finding that the district court’s balancing of the private interest and public interest factors did not constitute an abuse of the district court’s discretion, the Fifth Circuit nevertheless remanded the case on two grounds.

First, the district court was asked to clarify its order of dismissal’s return jurisdiction clause with respect to the possibility that the appellants’ access to relief may be time-barred in the appellee’s earlier chosen forum — Mexico. As the Fifth Circuit clarified in Empresa Lineas Maritimas Argentinas, S.A. v. Schichau-Unterweser, A.G., 955 F.2d 368, 371-72 (5th Cir. 1992) and recognized in Cotemar, the availability and adequacy of the alternative forum are threshold requirements for an FNC dismissal:

When considering the threshold requirements that an alternative forum must be adequate and available, district courts are obligated to ensure that plaintiffs can reinstate suits in American courts if the defendants obstruct jurisdiction in the alternative forum. Accordingly, when a district court dismisses a case on the basis of forum non conveniens, the failure to include a return jurisdiction clause . . . constitutes per se abuse of discretion.

Cotemar, 2014 WL 2111190, at *2 (internal quotations and citations omitted). Although the district court included a return jurisdiction clause, it failed to address the parties’ evidence in the record regarding the potential untimeliness of the appellants’ claims in the Mexican forum:

Where litigation in a particular forum has become time-barred, that forum is no longer an available forum for the purposes of a forum non conveniens analysis. As we observed in Veba-Chemie A.G. v. M/V Getafix, 711 F.2d 1243, 1248 (5th Cir. 1983), it would be “exceedingly harsh” to dismiss for forum non conveniens “if no other forum is available to plaintiff at the time of dismissal” due to the expiration of a time limit in a foreign jurisdiction.

Cotemar, 2014 WL 2111190, at *2. While the Fifth Circuit acknowledged that courts may disregard this consideration if the “plaintiff’s plight is of his own making,” it found that the district court erred in failing to account for the possibility of untimeliness in its return jurisdiction clause and instructed the district court to revise its return jurisdiction clause in accordance with the Fifth Circuit’s decision in Veba-Chemie — that dismissal be conditioned on the ultimate “availability” of the more convenient forum proposed by the FNC mover. The Fifth Circuit further instructed that if access to relief in the Mexican courts has become time-barred for reasons not of the appellants’ “own making,” then the Mexican courts are no longer an available forum and the lawsuit must proceed in the United States.

More interesting was the Fifth Circuit’s second basis for remand: seizure of the alliding vessel by the appellants — after the Texas district court’s FNC order of dismissal — pursuant to a warrant of arrest issued by the United States District Court for the Eastern District of Louisiana. After recognizing that “supervening changes of circumstances” — such as the arrest of a vessel in a forum different than the purportedly more convenient one proposed by the FNC mover — must be taken into account even where they materialize during the pendency of an appeal, the Fifth Circuit concluded that remand was appropriate for a determination as to whether simultaneously pursuing an in rem action in the Eastern District of Louisiana would render litigation in Mexico less convenient based on one or more of the private interest and public interest factors.

As a side note, Judge Lemmon of the United States District Court for the Eastern District of Louisiana refused to vacate the vessel arrest upon a challenge from Hornbeck that there were no reasonable grounds for the arrest and that the arrest was time-barred under the doctrine of laches. See Cotemar S.A. De Cv. v. Motor Vessel BEAUFORT, CIV.A. 14-342, 2014 WL 1330203 (E.D. La. Apr. 3, 2014). After conducting a choice of law analysis, the Court found that United States law — which provides for a lien against the vessel for damages caused by an allision — may apply, and thus reasonable grounds existed for the arrest. Further, the court refused to vacate the arrest under the doctrine of laches, because Hornbeck failed to show that any delay in the arrest of the vessel resulted in undue prejudice to Hornbeck, a prerequisite of the application of laches.

The answer remains to be seen whether the arrest of the vessel will ultimately impact the FNC analysis, but vessel owners should be cognizant of this issue during the pendency of litigation to avoid a vessel arrest that might endanger an otherwise valid FNC argument.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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