Personal Jurisdiction. Forum Non Conveniens. Tenth Circuit holds that (1) a court can exercise personal jurisdiction over a defendant under an “agency theory,” only if the defendant’s agent commits acts in the forum state in the course of or within the scope of the agent’s employment; and (2) in order to dismiss a case on forum non conveniens grounds, when the only alternative is a foreign forum, a defendant must establish that the foreign forum provides adequate remedies to the plaintiff
Two companies formed a joint venture (“JV”) in order to work on an excavation project in Canada. One of the companies that created the JV acted as the managing partner of the JV. The JV was hired to excavate a uranium mine in Canada and Plaintiffs insured the project. While the JV was working on the excavation project, a portion of the mine collapsed and Plaintiffs filed suit for negligence against the JV and the managing partner of the JV in Canada and in New Mexico state court. Defendants removed the New Mexico lawsuit to the United States District Court for the District of New Mexico.
In the district court, Defendants filed a motion to dismiss based on lack of personal jurisdiction and improper venue, arguing that neither Defendant was a New Mexico resident. The district court held that the managing partner of the JV had sufficient contacts with the forum state to confer personal jurisdiction, but the JV did not have sufficient contacts to confer jurisdiction. Ultimately, the district court dismissed the case based on the forum non conveniens doctrine, because it determined that New Mexico was an inconvenient forum and Canada was an adequate alternative forum. Plaintiffs appealed. The Tenth Circuit affirmed the dismissal of the JV for lack of personal jurisdiction, but reversed the dismissal of Plaintiffs’ case on forum non conveniens grounds.
First, the court addressed whether it had personal jurisdiction over the JV as a defendant. The court’s task was to determine if Plaintiffs’ allegations made a prima facie showing of minimum contacts to establish general or specific jurisdiction over the JV.
Plaintiffs argued that the court could exercise personal jurisdiction over the JV because the court had general jurisdiction over the JV’s agent, the managing partner of the JV. Specifically, Plaintiffs argued that the “agency theory” allowed the court to exercise jurisdiction over the JV even though the JV did not have contacts with the forum.
The court recognized that the “agency theory” allowed it to exercise personal jurisdiction over a defendant whose agent commits acts in the course of or within the scope of the agent’s employment. However, the court held that the “agency theory” was inapplicable in the instant case because the managing partner’s actions in the forum state -- registering to do business, conducting transactions, and designating an agent for service -- were completely unrelated to the JV. The agent’s actions were not committed in the course of or within the scope of its employment as an agent of the JV, and thus did not provide a basis for the exercise of jurisdiction over the JV.
The Tenth Circuit next recognized that a trial court’s decision on a forum non conveniens motion is entitled to substantial deference. However, less deference is due when the court dismisses a case based on forum non conveniens in favor of a forum in a foreign country, which may not provide adequate remedies to a plaintiff. In order for the court to dismiss a case based on forum non conveniens, a defendant must establish that foreign law is applicable and there is an adequate alternative forum in which the defendant is amenable to process. A foreign forum is considered inadequate if the remedy provided is “clearly unsatisfactory,” which includes situations where the merits of a plaintiff’s case will not be heard in the foreign jurisdiction.
The court reversed the dismissal of Plaintiffs’ case under the forum non conveniens doctrine. Defendants satisfied the first prong of the inquiry because the parties agreed that foreign law was applicable. However, Defendants failed to satisfy the second prong because Defendants did not establish that Canada was an adequate alternative forum. At the time of the dismissal, the Canadian court was still considering Defendants’ argument that Plaintiffs’ claims were barred by the statute of limitations. Until that issue was resolved, the court could not dismiss the case based on the forum non conveniens doctrine, because there was a risk that Plaintiffs would be denied any forum.