Reverse Forum Shopping

I was in Miami for the weekend speaking at a conference sponsored by the American Bar Association and the International Bar Association on the topic of mass claims in developing countries. Many lawyers in the room were defense counsel for prominent corporations subject to new claims for violations of international or foreign law. There were also plenty of plaintiff lawyers, which made for interesting discussion.

One of the issues that I discussed in my presentation was “reverse forum shopping.” Here is what appears to be happening with many of the cases. Cases are being filed in the United States against corporations because plaintiffs prefer this forum over any other in the world. The United States offers almost everything a plaintiff could dream of: contingency fees, liberal personal jurisdiction standards, no loser pay rule, broad discovery, unusual FSIA exceptions, punitive damages, class actions, international law causes of action, civil jury trials, default judgments, etc. Plaintiffs are forum shopping, and the preferred brand bears the United States moniker.

But defense counsel immediately respond with their own version of forum shopping. Call it reverse forum shopping. Filing a motion to dismiss on the basis of forum non conveniens is a potent weapon. It used to be that the game for plaintiffs was to survive summary judgment long enough to engage in discovery, even if it was only jurisdictional discovery. The access to those documents could then be used to fashion a stronger case on the merits and perhaps even lead to an early settlement. Now, however, defense counsel can immediately file for a motion to dismiss on forum non, and the Supreme Court’s recent holding in Sinochem bolsters that tactic by holding that courts can dismiss on this basis without ever reaching the issue of jurisdiction. With that ruling, defense counsel can now get an entire case dismissed and transferred to another forum without ever beginning any discovery whatsoever, even jurisdictional discovery.

Then when the case is sent to a foreign jurisdiction plaintiff lawyers must address a host of difficult issues that augur well for defendants, precisely the kind of issues that led the plaintiffs to file in the United States in the first place. These often include no punitive damages, no class action, no contingency fees, no civil jury trials, no international law causes of action, loser pays, limited discovery, etc. And even if the plaintiffs happen to be successful in this foreign forum, they still will have to return to the United States to have their judgments enforced. When they do so, defendants will switch tactics and, unlike their previous position on forum non (which sought to convince the United States court that the foreign forum was adequate), they will now try to argue under Hilton v. Guyot that the foreign forum lacks the requisite elements of fundamental due process.

With effective recourse to the defense of forum non conveniens, the future of human rights and environmental litigation in the United States may be the proliferation of mass claims in the courts of developing countries that are ill-equipped to deal with this sort of litigation.