Flowserve US Inc. v. ITT Corp., No. 3:14-CV-1706-M (N.D. Tex. Dec. 22, 2014) [click for opinion]
Plaintiff manufactures and services flow-control systems for oil and gas companies. Defendants ITT Corp. ("ITT") and Gould Pumps Inc. ("GPI"), a wholly owned subsidiary of ITT, are competitors of Plaintiff. Plaintiff and Defendants are incorporated in the U.S. and have their principal places of business in various U.S. states, but they also conduct significant business activities in Russia.
Plaintiff accused Defendants of numerous wrongs, including tampering with its operations, stealing confidential information, and interfering with prospective contractual relations. First, Plaintiff alleged that Defendants interfered with Plaintiff's attempts to contract with Neftegazholding to offer aftermarket services for pipeline pumps that Plaintiff sold to a Russian oil corporation. According to Plaintiff, its two representatives negotiating the deal approved a shorter-than-expected contract with Neftegazholding, resigned their positions, and joined ITT to later acquire that same contract for their new employer.
After the resignations, Plaintiff claimed that one of its Moscow-based employees unlawfully copied Plaintiff's confidential product drawings from its server in Michigan, and then resigned to join ITT. Eight of Plaintiff's Russian employees also resigned and joined ITT or Neftegazholding after acquiring the same confidential and proprietary information in their training. Plaintiff asked for the product drawings to be returned and for ITT to stop using Plaintiff's confidential information, but ITT refused.
Plaintiff filed suit in the U.S. District Court for the Northern District of Texas, Dallas Division, bringing claims for, inter alia, copyright infringement, conversion, and tortious interference with contractual relations. Defendants filed a motion to dismiss on forum non conveniensgrounds, claiming that Russia was a more suitable forum for the dispute.
The court ultimately granted Defendants' motion. It began by looking to the forum non conveniens test as articulated by the U.S. Supreme Court. Courts must first decide whether an adequate alternative forum exists (indicated by the existence of personal jurisdiction over the defendant and adequate remedies for the plaintiff). Then, the court must decide whether private and public interest factors favor dismissal. The most important inquiry is determining "where trial will best serve the convenience of the parties and the interests of justice."
Applying the law to the facts at hand, the court held that Russia was an available forum. Personal jurisdiction over Defendants existed according to Russia's Arbitrazh Procedural Code. And, even though a Russian court may not provide the same benefits as an American court, Plaintiff did not conclusively show that it could not obtain a proper remedy or basic justice under Russia's judicial system.
The court then found that the private interest factors favored dismissal. The five private interest factors are (1) ease of access to sources of proof; (2) availability of compulsory process for unwilling witnesses; (3) cost of securing attendance of willing witnesses; (4) ability to view the premises; and (5) other practical factors. Most of the relevant witnesses and documents were located in Russia and it would be burdensome for nonparties to produce evidence in the U.S. Further, most of the witnesses spoke Russian and the documents were written in Russian. Thus, the private interest factors indicated that Russia was a more appropriate forum.
A court can decline to analyze the public interest factors if the private interest factors weigh for dismissal, but, here, the public interest factors added support to the court's decision. The public interest factors are (1) the administrative difficulties from court congestion; (2) the local interest in having localized controversies resolved at home; (3) the interest in having the trial in a forum that is familiar with the law governing the action; (4) the avoidance of unnecessary problems in conflicts of law, or in application of foreign law; and (5) the unfairness of burdening citizens in an unrelated forum with jury duty.
The administrative burdens of U.S. litigation would have been high since some of the evidence was in the hands of Russians who were nonparties to the dispute. And, even though all parties were headquartered in the U.S., Russia had a greater interest in the dispute since the actors, property, and harm were primarily connected to Russia.
After considering the facts and appropriate legal standards, Defendants' motion to dismiss on forum non conveniens grounds was granted.
Adam Pascarella of the New York office contributed to this summary.