CARIAJANO v. OCCIDENTAL PETROLEUM CORP

l. Co-plaintiff Amazon Watch is a domestic corporation with its principal place of business in San Francisco, California. Although the group was incorporated in Montana in 1996, it is a registered California non-profit corporation whose main headquarters are in San Francisco. It also maintains an office in Malibu, California, within the Central District of California. Therefore, Amazon Watch is properly considered a resident of the local forum. See Boston Telecomms., 588 F.3d at 1207 (concluding that the residence of the parties factor weighed against dismissal where a non-California plaintiff sued in a California court, emphasizing that the plaintiff would stand in an even "stronger position were he a California resident"). The district court failed to factor Amazon Watch's residency into its analysis.

In the personal jurisdiction context, the Supreme Court has recently clarified that "principal place of business" refers to "the place where a corporation's officers direct, control, and coordinate the corporation's activities," and "in practice it should normally be the place where the corporation maintains its headquarters." Hertz Corp. v. Friend, ___ U.S. ___, 130 S.Ct. 1181, 1192, ___ L.Ed.2d ___ (2010).

Most of Plaintiffs' claims turn not on the physical location of the injury but on the mental state of the Occidental managers who actually made the business decisions that allegedly resulted in the injury. While the district court mentioned in passing "decisionmakers at Defendants' headquarters and witnesses with knowledge of OxyPeru's operations," it failed to consider how critical such locally-based evidence is to the litigation, especially given that it has now been a full decade since Occidental has been involved in day-to-day operations in Peru. Under these circumstances, with a local defendant, a local plaintiff, and the foreign plaintiffs willing to travel to the forum they chose, this factor weighs against dismissing the action in favor of a Peruvian forum.

b. Convenience to the Parties

The district court found it "clear [that] the cost and convenience of travel between Peru and Los Angeles supports dismissal on forum no[n] conveniens grounds" because even if all Peruvian witnesses consented to testify in California, airfare from Peru can cost more than $1,000. This reasoning, however, fails to consider the other side of the ledger. California is the home forum of Occidental and Amazon Watch; therefore, local litigation would save witnesses affiliated with those entities the time and expense of traveling to South America. Moreover, the most daunting logistical challenge to this litigation would likely be the extreme isolation of the Achuar territory and Block 1-AB. Travel between the region and Iquitos, the nearest sizable Peruvian city, can take days, presenting a serious obstacle regardless of whether trial takes place in Peru or California. Rather than clearly supporting dismissal, when all of the evidence is considered this is a neutral factor. See Boston Telecomms., 588 F.3d at 1208 (finding the convenience factor to be neutral where similar logistical considerations would apply in either forum).

c. Evidentiary Considerations

The district court placed great emphasis on the fact that "[m]any of the witnesses are located in Peru and thus are beyond the reach of compulsory process" and that "Plaintiffs do not dispute that these witnesses are beyond the reach of compulsory process in the United States." The district court, however, was focused on the wrong inquiries. "[W]e have cautioned that the focus for this private interest analysis `should not rest on the number of witnesses . . . in each locale' but rather the court `should evaluate the materiality and importance of the anticipated . . . witnesses' testimony and then determine their accessibility and convenience to the forum.'" Boston Telecomms., 588 F.3d at 1209 (quoting Lueck, 236 F.3d at 1146). Other circuits have concluded that the initial question is not whether the witnesses are beyond the reach of compulsory process, but whether it has been alleged or shown that witnesses would be unwilling to testify. See Duha v. Agrium, Inc., 448 F.3d 867, 877 (6th Cir. 2006) ("When no witness' unwillingness has been alleged or shown, a district court should not attach much weight to the compulsory process factor."); Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 47 (2d Cir. 1996). This approach is consistent with Gulf Oil, the Supreme Court case that first established the forum non conveniens factors, which spoke of the "availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses." Gulf Oil, 330 U.S. at 508, 67 S.Ct. 839.

The proponent of a forum non conveniens dismissal is not required to identify potentially unavailable witnesses in exact detail. See Piper, 454 U.S. at 258, 102 S.Ct. 252. However, here Occidental has not shown, nor does it even represent, that any witness is unwilling to testify. Instead it has produced a declaration identifying categories of witnesses it intends to call who are outside of its control. The district court failed to consider countervailing evidence in the form of five declarations from named former Occidental employees who were in Peru during the relevant time period who indicated a willingness to testify in the Central District.

As far as physical evidence and other sources of proof, the district court failed to consider during the discussion of the private interest factors Occidental's transfer of Block 1-AB to Pluspetrol. That Occidental withdrew from the site in 2000 undermines its argument that evidence found today at the physical site is much more critical to the litigation than evidence associated with Occidental's corporate headquarters, which has been in Los Angeles throughout the relevant period. Finally, the district court also failed to consider Amazon Watch in weighing these private factors. As discussed earlier, Amazon Watch's principal place of business is in California, its executives, key employees and relevant documentary evidence within its control are in California, and many of the events involving the group which form the basis for its claims occurred in the state. Therefore, when all of the evidence is properly considered, these evidentiary factors are neutral.

d. Enforceability of the Judgment

Most critically, the district court failed to give any consideration to whether a judgment against Occidental could be enforced in Peru. As Occidental correctly points out, California generally enforces foreign judgments, as long as they are issued by impartial tribunals that have afforded the litigants due process. See Cal. Civ.Proc. Code § 1716(a)-(d). However, the only other authority Occidental cites on the topic is In re B-E Holdings, Inc., 228 B.R. 414 (Bankr.E.D.Wis. 1999), a case in which the United States Bankruptcy Court for the Eastern District of Wisconsin recognized a Peruvian judgment. As Plaintiffs note, however, the case actually demonstrates the difficulty of enforcing such an award. The Peruvian case began in 1986, ended in default judgment in 1992, and the judgment remained unsatisfied through the U.S. Bankruptcy Court litigation in 1999. See id. at 416. Plaintiffs also point to the U.S. State Department's Investment Climate Statement, which deems the enforcement of Peruvian court rulings "difficult to predict." U.S. Dep't of State, 2010 Investment Climate Statement — Peru (March 2010), http://www.state.gov/e/eeb/rls/othr/ics/2010/138128.htm. And Occidental's subsequent withdrawal from the operation of Block 1-AB raises questions about what assets might be available in Peru to satisfy a judgment there. See Empresa Lineas Maritimas Argentinas, S.A. v. Schichau-Unterweser, A.G., 955 F.2d 368, 375 (5th Cir. 1992) (holding that the district court erred by finding this factor favored dismissal when the defendant did not meet its burden of establishing that it had assets in the foreign jurisdiction that could satisfy a judgment).

As discussed earlier, Occidental's own expert presented compelling evidence of disorder in the Peruvian judiciary. Because the district court did not require Occidental to agree that any Peruvian judgment could be enforced against it in the United States, or anywhere else it held assets, as a condition for dismissal, Occidental remains free to attack any Peruvian judgment on due process grounds under California's foreign judgments statute. The private factor of the enforceability of judgments thus weighs against dismissal.

3. Public Interest Factors

The public factors related to the interests of the forums include: "(1) the local interest in the lawsuit, (2) the court's familiarity with the governing law, (3) the burden on local courts and juries, (4) congestion in the court, and (5) the costs of resolving a dispute unrelated to a particular forum." Boston Telecomms., 588 F.3d at 1211 (quoting Tuazon, 433 F.3d at 1181).

a. Local Interest

The district court weighed Peru's stake in a case involving its own "lands and citizens" against California's "interest in ensuring that businesses incorporated or operating within its borders abide by the law," and concluded that this factor favored dismissal. It found that a Peruvian tribunal "would be better equipped to handle" the issues raised by the case including "environmental regulation of Peruvian territory, and the allegedly tortious conduct carried out against Peruvian citizens." This conflates a forum's interest in resolving a controversy with its ability to do so. The factors regarding familiarity with the applicable law, docket congestion, and costs and other burdens on local courts and juries are all concerned with how well-equipped a jurisdiction is to handle a case (as is the separate adequacy of the forum inquiry). The local interest factor has the different aim of determining if the forum in which the lawsuit was filed has its own identifiable interest in the litigation which can justify proceeding in spite of these burdens. See Piper, 454 U.S. at 261, 102 S.Ct. 252; Tuazon, 433 F.3d at 1182.

In considering this factor, the district court undervalued California's significant interest in providing a forum for those harmed by the actions of its corporate citizens. California courts have repeatedly recognized the state's "interest in deciding actions against resident corporations whose conduct in this state causes injury to persons in other jurisdictions." Stangvik v. Shiley Inc., 54 Cal.3d 744, 1 Cal.Rptr.2d 556, 819 P.2d 14, 21 n. 10 (1991); see also Morris v. AGFA Corp., 144 Cal.App.4th 1452, 51 Cal.Rptr.3d 301, 311 (2006) (noting that in California a "corporate defendant's state of incorporation and principal place of business is presumptively a convenient forum"); cf. Guimei v. Gen. Elec. Co., 172 Cal.App.4th 689, 91 Cal.Rptr.3d 178, 190 (2009) (finding that where defendants were not California-based corporations, the state "has little interest in keeping the litigation in this state to deter future wrongful conduct"). The district court again also failed to consider Amazon Watch. The complaint describes interactions between Amazon Watch and Occidental that took place in California and which form the basis for the Unfair Competition Law claim. There can be no question that the local interest factor weighs in favor of a California forum where a California plaintiff is suing a California defendant over conduct that took place in the state.

Therefore, although both forums have a significant interest in the litigation, the local interest factor favors neither side entirely.

There appears to be a difference of opinion about whether it is appropriate to compare the state interests, or whether this factor is solely concerned with the forum where the lawsuit was filed. Compare Tuazon, 433 F.3d at 1182 ("[W]ith this interest factor, we ask only if there is an identifiable local interest in the controversy, not whether another forum also has an interest."), and Boston Telecomms., 588 F.3d at 1212 (noting that whether a state "has more of an interest than any other jurisdiction" is not relevant), with Lueck, 236 F.3d at 1147 (balancing the interests of the foreign and domestic jurisdictions and finding the factor tipped toward dismissal because the "local interest in this lawsuit is comparatively low"). Here, under the former view, this factor would tip against dismissal, while under the latter it is neutral. However, we find that under either approach the district court erred by undervaluing California's interest in this case.

b. Judicial Considerations

The remaining factors all relate to the effects of hearing the case on the respective judicial systems. The district court did not abuse its discretion by concluding that the court congestion and burden factors are neutral because there is evidence that both Peruvian courts and the Central District have similarly crowded dockets. See Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696, 704 (9th Cir. 1995) (finding no abuse of discretion where the district court held these factors to be neutral because both forums' "judiciaries are overburdened").

The district court also properly found the choice of law factor neutral because "both parties have asserted reasonable explanations that either Peruvian or California law applies." California applies a three-part test to determine choice of law in the absence of an effective choice-of-law agreement. See Wash. Mut. Bank v. Superior Court, 24 Cal.4th 906, 103 Cal. Rptr.2d 320, 15 P.3d 1071, 1080 (2001). This "governmental interest approach" involves: (1) determining if the foreign law "materially differs" from California law; (2) and if so, next determining each respective state's interest in application of its law; (3) and finally, if the laws materially differ and both states have an interest in the litigation, selecting the law of the state whose interest would be "more impaired" if its law were not applied. Id. 103 Cal. Rptr.2d 320, 15 P.3d at 1080-81. The proponent of using foreign law has the initial burden of showing material differences. Id., 103 Cal.Rptr.2d 320, 15 P.3d at 1080.

Here the district court acknowledged that Occidental, as the foreign law proponent, presented a choice-of-law analysis that was "lacking," suggesting that it failed to meet its initial burden for the governmental interest test. However, as part of their effort to demonstrate that Peru is not an adequate alternate forum, Plaintiffs themselves argued that California law is materially different from Peruvian law. Therefore, resolving the conflict of law issue would involve a full blown analysis of the state interests and relative impairment. As the district court noted, forum non conveniens is designed so that courts can avoid such inquiries at this early stage. See Piper, 454 U.S. at 251, 102 S.Ct. 252 ("The doctrine of forum non conveniens, however, is designed in part to help courts avoid conducting complex exercises in comparative law."); Lueck, 236 F.3d at 1148 (noting that district courts need not make a choice of law determination to decide a forum non conveniens motion that does not involve a statute requiring venue in the United States).

4. Weighing the Factors

The private factors based on convenience and evidentiary concerns favor neither side, while the residence of the parties and enforceability of the judgment factors weigh against dismissal. All of the public interest factors are neutral. Taken together, the factors fail to "establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience." Piper, 454 U.S. at 241, 102 S.Ct. 252 (quoting Koster, 330 U.S. at 524, 67 S.Ct. 828); Dole Food, 303 F.3d at 1118 ("The plaintiff's choice of forum will not be disturbed unless the `private interest' and `public interest' factors strongly favor trial in the foreign country."). They also fail to outweigh the deference owed to Amazon Watch's chosen forum. Therefore, the district court abused its discretion by "striking an unreasonable balance of relevant factors." Ravelo Monegro, 211 F.3d at 511; see also Boston Telecomms., 588 F.3d at 1212 (reversing forum non conveniens dismissal because the "district court did not hold [the defendant] to his burden" of showing the foreign forum was more convenient where "[a]ll but one of the private and public interest factors were either neutral or weighed against dismissal").

C. Absence of Conditions on the Forum Non Conveniens Dismissal

Although the district court dismissed the case without prejudice to Plaintiffs' right to refile in the Central District of California in the event that Occidental does not consent to personal jurisdiction in Peru, or a Peruvian court declines to assert personal jurisdiction over Occidental, it did not place any mitigating conditions on its dismissal. Under the circumstances here, this was an abuse of discretion.

Plaintiffs requested that the district court condition its dismissal by requiring that: (1) any Peruvian judgment be satisfied; (2) Occidental waive any statute of limitations defense in Peru that would not be available in California; (3) Occidental agree to comply with United States discovery rules; and (4) Occidental translate documents from English to Spanish. District courts are not required to impose conditions on forum non conveniens dismissals, but it is an abuse of discretion to fail to do so when "there is a justifiable reason to doubt that a party will cooperate with the foreign forum." Leetsch, 260 F.3d at 1104.

Here, there is justifiable reason to suspect that Occidental will move to dismiss this lawsuit based on the Peruvian statute of limitations. And as Plaintiffs note, Occidental has agreed to waive statute of limitations defenses in the past when a forum non conveniens dismissal was conditioned on such waiver. See Kinney v. Occidental Oil Gas Corp., 109 Fed.Appx. 135, 136 (9th Cir. 2004). Therefore, it was an abuse of discretion to dismiss on the basis of forum non conveniens without requiring Occidental to waive any statute of limitations defenses that would not be available in California.

Similarly, the district court failed to consider evidence about the difficulty of enforcing Peruvian judgments and the unique obstacles posed by Occidental's withdrawal from the country and the resulting uncertainty regarding its Peruvian assets. Occidental's own expert provided evidence of corruption and turmoil in the Peruvian judiciary that could become the basis for a challenge to the enforceability of a judgment based on the procedural deficiencies of a Peruvian proceeding. When there is reason to think that enforcing a judgment in a foreign country would be problematic, courts have required assurances that a defendant will satisfy any judgment as a condition to a forum non conveniens dismissal. See Contact Lumber, 918 F.2d at 1450.

As for discovery, the district court overemphasized Peruvian geography and lost sight of the importance of California-based witnesses and evidence to resolving the claims alleged in the complaint. Plaintiffs argue that without a condition requiring Occidental to cooperate with discovery requests pursuant to the Federal Rules of Civil Procedure, they might be denied access to important domestic evidence once the case is in a Peruvian court. Where a plaintiff would "have greater access to sources of proof relevant to" its claims if trial were held in the original forum, "district courts might dismiss subject to the condition that defendant corporations agree to provide the records relevant to the plaintiff's claims." Piper, 454 U.S. at 257, 258 n. 25, 102 S.Ct. 252; see also Satz v. McDonnell Douglas Corp., 244 F.3d 1279, 1283 (11th Cir. 2001) (holding the district court did not abuse its discretion when it conditioned dismissal on the defendant "agreeing to conduct all discovery in accordance with the Federal Rules of Civil Procedure, and voluntarily producing documents and witnesses within the United States"); Stewart v. Dow Chemical Co., 865 F.2d 103, 107 (6th Cir. 1989) (finding no abuse of discretion where the trial judge conditioned dismissal on the defendant allowing "discovery of any evidence which would be discoverable under the Federal Rules of Civil Procedure, and to make witnesses under its control available to the [foreign] court").

Once again the parties offered dueling expert affidavits as to the sufficiency of Peruvian discovery procedures to ensure that California-based evidence can be obtained and witnesses procured should this case proceed in Peru. While a thorough analysis might reasonably conclude that Peru offers discovery rules that would satisfy Plaintiffs' concerns, the district court erred by rejecting this condition without addressing those legitimate concerns at all. However, the district court did not err by declining to condition the dismissal on Occidental's agreeing to translate all documents into Spanish, as Plaintiffs failed to produce sufficient evidence to show justifiable reason to doubt that such translations would otherwise be available.

IV. CONCLUSION

Where a district court "has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable, its decision deserves substantial deference." Boston Telecomms., 588 F.3d at 1206 (citations and internal quotation marks omitted). However, when it fails to hold a party to its "burden of making a clear showing of facts which establish such oppression and vexation of a defendant as to be out of proportion to plaintiff's convenience," id. at 1212 (quoting Ravelo Monegro, 211 F.3d at 514), or when it "fail[s] to consider relevant private and public interest factors and misconstrue[s] others," Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1337 (9th Cir. 1984), then it abuses its discretion.

Here the district court erroneously relieved Occidental of its burden of showing that Peru is an adequate alternative forum. It accepted a flawed stipulation to Peruvian jurisdiction and overlooked strong evidence, including evidence from Occidental's own expert, calling into question the ability of the Peruvian courts to satisfactorily handle this case. The district court failed to consider all relevant private and public interest factors, entirely overlooking the enforceability of judgments factor, which weighs heavily against dismissal. It correctly assumed that Amazon Watch was a proper domestic plaintiff, but erroneously afforded reduced deference to its chosen forum and ignored the group entirely in the analysis of numerous factors. These errors led the district court to misconstrue factors that are neutral or weigh against dismissal, and to strike an unreasonable balance between the factors and the deference due a domestic plaintiff's chosen forum. Finally, the district court abused its discretion by failing to impose conditions on its dismissal that were warranted by facts in the record showing justifiable reasons to doubt Occidental's full cooperation in the foreign forum.

Occidental had a substantial burden to persuade the district court to invoke the "exceptional tool" of forum non conveniens and deny Plaintiffs access to a U.S. court. See Ravelo Monegro, 211 F.3d at 514. Occidental failed to meet that burden, and a proper balance of all the relevant factors at this stage of proceedings clearly demonstrates that this lawsuit should proceed in the Central District of California. We therefore reverse the district court's dismissal on the basis of forum non conveniens. We need not reach Plaintiffs' argument that the district court abused its discretion in denying discovery before ruling on Occidental's motion. We remand this case to the district court to consider the question of Amazon Watch's standing, and for further proceedings consistent with this opinion.

REVERSED AND REMANDED.