The U.S. Court of Appeals for the Ninth Circuit reversed and remanded a district court dismissal of a trade secrets suit based on forum non conveniens, holding that the district court abused its discretion in balancing the public and private interest factors relevant to such determination. Neuralstem, Inc., v. ReNeuron, Ltd., Case No. 08-56546 (9th Cir., Feb. 9, 2010) (per curiam).
Neuralstem, a Maryland corporation, sued ReNeuron, an English corporation, in the central district of California for misappropriation of Neuralstem’s stem cell technology and breach of a joint venture agreement between the parties. The district court dismissed the action for forum non conveniens, concluding that England would be a more convenient forum for the action because most of ReNeuron’s former employees and many of the documents relevant to the action are located in England, neither of the parties resides in California and English law governed the joint venture agreement. Neuralstem appealed.
The Ninth Circuit reversed. To dismiss an action for forum non conveniens, an adequate alternative forum must exist and a balance of private and public interest factors must support dismissal. The Ninth Circuit stated that while the district court properly found England to be an adequate alternative forum, the district court abused its discretion in weighing the private and public interest factors.
The Ninth Circuit found that the district court failed to properly regard private interest factors such as Neuralstem’s U. S. residency and choice of forum. The court also stated that the district court diminished the fact that Neuralstem’s claims rely on third-party witnesses and documentary evidence located in California and other U.S. locations and failed to require ReNeuron to meet its burden of proof that the evidence and witnesses located in England were of sufficient “materiality and importance.” Moreover, the court indicated that the district court failed to consider that the majority of documentary evidence located in England is within ReNeuron’s control and could be easily transported to any forum.
The Ninth Circuit also found fault with the district court’s analysis of public interest factors. The court stated that the central issue to the case was ReNeuron’s alleged breach of the contractual agreement; the purportedly breaching conduct occurred virtually exclusively in California and elsewhere in the United States. The court reasoned that even if the “principal locus” of the case did not occur in California, the court need only find an “identifiable interest” in the controversy. California has an “identifiable interest” in preventing illegal conduct within its borders.
Accordingly, the Ninth Circuit reversed the district court’s holding that England was a more convenient forum for the action and remanded the case for further proceedings.