Welcome to the Hotel California? Out-of-state plaintiffs should check out and leave, says new decision

Lured by the promise of huge jury verdicts and favorable laws, out-of-state asbestos plaintiffs and their counsel have flocked to California in increasing numbers since at least 2000 to avail themselves of California courts.  To avoid having their cases forcibly returned to their home states on forum non conveniens grounds, plaintiffs have made sure to name defendants in their lawsuits subject to jurisdiction only in California.  Although such defendants are characterized as “nominal” or “sham”  by others in the litigation, cases such as American Cemwood Corp. v. American Home Assurance Co. (2001) 87 Cal.App.4th 431, 433, hold that an action cannot be dismissed for forum non conveniens unless all defendants are subject to jurisdiction in the alternate forum.  Thus, the presence of even one “sham” or “nominal” defendant is sufficient under American Cemwood to defeat a forum non conveniens motion seeking dismissal of the action.  Though Hansen v. Owens Corning Fiberglas Corp. (1996) 51 Cal.App.4th 753 still permits a stay, such a stay can be lifted upon a showing that the California-only defendant is not subject to jurisdiction in the alternate forum.  Thus, the doors of the “Hotel California” have historically been wide open to out of state litigants, with no meaningful way for a defendant to close them no matter how strongly the public and private interest factors favor transfer to another state.

While the Hotel California has not yet closed its doors, it may have finally hired a doorman.  A California appellate court has now ruled that the claims of the California-based “nominal” venue defendant could be severed and the action dismissed on forum non conveniens grounds in favor of the remaining parties. the-hotel-california

David v. Medtronic, Inc. was filed in Los Angeles County Superior Court by 37 plaintiffs, none of whom had any connection to Los Angeles.  Indeed, 36 plaintiffs lived out of state, and the only California-resident plaintiff lived far from Los Angeles County in Sacramento.  Plaintiff sued multiple Medtronic and Wyeth entities, who were sued as manufacturers and sellers of an allegedly defective medical device called Infuse.  Neither Medtronic nor Wyeth are California corporations.

The only connection to Los Angeles County was a local physician, Dr. Gary Michelson, who served as plaintiff’s nominal “venue” defendant.  Over the course of litigation defendants were, in fact, able to prove that Dr. Michelson was nominal, having had no involvement in the manufacture or marketing of the device. Medtronic then brought a “three pronged” motion seeking to (1) sever the claims of each plaintiff from each other; (2) to dismiss the claims of the 36 out-of-state plaintiffs on forum non conveniens grounds; and (3) to transfer venue of the California-resident defendant to his home county of Sacramento.  The trial court granted the motion on all three grounds; plaintiffs appealed the court’s rulings as to the first and second.

On appeal, the David court recognized that “this case squarely presents the issue of whether the existence of a nominal defendant, over whom jurisdiction cannot be established in the proposed alternative forum, can defeat a forum non conveniens motion which should otherwise be granted.”  Although David found that the trial court erred in dismissing plaintiffs’ claims against all defendants, including the resident Los Angeles physician, it held that the dismissal of claims against the non-California defendants was proper.  In doing so, the court noted that there was no dispute that Dr. Michelson was a nominal defendant, and cited various federal cases supporting the transfer of cases despite the claims of a nominal defendant, as for different cases as child abuse the use resources from sites as https://jnlawoffices.com/child-abuse could be the best option as well for this.  While the court stopped short of carving out an exception for nominal defendants, it held that it could properly sever the claim of such a nominal defendant, and dismiss the claims against the remaining non-California defendants on forum non conveniens grounds.  Thus, it affirmed the dismissals of the Medtronic and Wyeth entities.

Though not an asbestos case, David will have wide-ranging impact on asbestos litigation, in which individual cases frequently have dozens of defendants, only a handful of which may subject to jurisdiction in California.  The David decision returns rationality to a forum non conveniens analysis ripe for abuse, and potentially deprives plaintiffs of a “hook” to keep cases otherwise unconnected to the state from being tried here, thereby discouraging forum shopping.  Most importantly, it is a win for California citizens and potential jurors, who will find themselves relieved from hearing cases unconnected to the State and the communities in which they live.

While the Hotel California is still open, perhaps more plaintiffs will be forced to check out.

Madison County, Illinois: Open for Business to Plaintiffs From Everywhere

Madison County, Illinois, has long been a favored jurisdiction for plaintiffs to file asbestos cases, regardless of where they reside or where their exposure occurred.  This trend has accelerated over the past three years, with thousands of asbestos filings there each year.

Recently, new firms have begun filing there, encouraged by the prospects of favorable juries and favorable damages law.  For example, Madison County set a record last year with 1,678 new asbestos case filings, more than any other jurisdiction in the nation, a 42 percent increase in filings since 2010.  In the first quarter of 2014, out-of-state plaintiffs’ firms filed a majority of the new cases, a shift from 2010 when local firms held the majority.  Recently, when Judge Stephen A. Stobbs denied four forum non conveniens motions to dismiss, Madison County sent the message – loud and clear – that it is open for business and welcomes new filings from out of state.

Defendants in four different cases moved for dismissal based on forum non conveniens by arguing that Madison County was an inconvenient venue for the parties.  Beacher (Brown) v. American Biltrite Co. (Case No. 12-L-1392); Warden v. Caterpillar, Inc. (Case No. 12-L-1065); Murphy v. CBS Corp. (Case No. 12-L-1141); and Hunt (Munsey-Hunt) v. 84 Lumber Co. (Case No. 12-L-1140).  Under Illinois Supreme Court Rule 187(c)(2), a court that has jurisdiction over the parties and the subject matter involved “may nevertheless decline jurisdiction of a case when it is apparent that trial in another forum with jurisdiction over the parties would be more convenient and better serve the ends of justice.”  Berbig v. Sears Roebuck & Co. Inc., et al., 378 Ill. App. 3d 185, 188 (1st Dist. 2007) quoting Vinson v. Allstate, 144 Ill. 2d 306, 311 (1991); see Il. S. Ct. R. 187.

Each of the four motions was predicated on similar facts: (1) none of the plaintiffs lived in Illinois, let alone Madison County, and (2) none of the plaintiffs ever worked in Illinois, let alone Madison County.  While venue was proper based on the presence of a Madison County defendant, the defendants argued that Madison County was inconvenient for all the parties and the witnesses involved, and the cases should be dismissed.

Despite the obvious lack of connection to Illinois, Stobbs denied all four motions.  Stobbs insisted that for defendants to meet their burdens under the motion, they must demonstrate which court would be the appropriate court to try the cases, whether such court would have jurisdiction and venue over all parties to the case, and whether this court would be more convenient to all parties to the litigation.  Stobbs found that the defendants’ motions failed to adequately address which forum would be more convenient and how that forum would be more convenient to each and every party. The defendants argued that the standard is almost impossible to show when a plaintiff sues dozens or hundreds of defendants at a time (standard in asbestos cases), and essentially makes the forum non conveniens doctrine a dead letter in Madison County asbestos cases.

These rulings herald that Madison County is “open for business” to asbestos plaintiffs, regardless of where the operative events took place.  This is all the more concerning given that numerous out-of-state firms have recently filed in Madison County for the first time, and its asbestos docket has substantially increased over the past three years.  As the West Coast becomes less attractive to plaintiffs because of legal developments in those jurisdictions, these decisions clearly solidify Madison County’s reputation as a venue of choice for plaintiffs nationwide.

Three of the four decisions are being appealed.  In their appeals, the defendants argue that Stobbs abused his discretion in denying the forum non conveniens motions in cases that have absolutely no connection to Illinois.  The defendants maintain that these cases should be tried in the most appropriate forum, the one with the most connections to the case.

The defendants also cite staggering statistics to support their argument that sustaining Stobbs’ denials would render the forum non conveniens doctrine virtually useless in Madison County.  The defendants use the firm of Napoli, Bern, Ripka, Shkolnik, which represents these plaintiffs, as an example.  The firm’s filings rose from 343 in 2012 to 548 in 2013, making it the top asbestos filer in the county.  Napoli also files a majority of the lung cancer cases in Madison County, which is particularly concerning because lung cancer is most often caused by smoking and non-asbestos-related causes.  The defendants argue that if Madison County opens its arms to lung cancer cases from around the country, most of which will have no ties to Illinois, then those filings will “overwhelm the docket, swamp the court and crowd out court resources that would otherwise be available to actual Madison County residents.”

As the Illinois Court of Appeals decides whether to overturn Stobbs’ decisions, Madison County will remain “open for business” for plaintiffs all around the country.  Regardless of whether those plaintiffs have stepped foot inside the state, worked for an Illinois company, or  come close to a product manufactured by an Illinois business, for now, they are welcomed with open arms in Madison County.

Forum Non Conveniens: Be Careful What You Ask For

In defending a United States defendant in an action involving a foreign accident and foreign claimants, it is almost a knee jerk reaction to file a motion to dismiss on forum non conveniens grounds. In a thought provoking article, “Be Careful What You Ask For – the Forum Non Conveniens Dilemma,” Cozen O’Connor lawyersRichard Dunn and Raquel Fernandez bring this practice into question. Mr. Dunn and Ms. Fernandez urge a different standard for analyzing whether to file the motion. The question that should be asked is whether it is beneficial for the U.S. defendant company to be subject to the laws and procedures in the foreign jurisdiction.

Thus, it is critical to understand the foreign jurisdiction’s law before your client is stuck there in litigation. A few of the considerations to think about include:

(1) Can your client get out of the case on summary judgment? Many foreign jurisdictions do not provide for summary judgment. Therefore, all matters before a court must be tried to conclusion, which may potentially lengthen and increase the cost of proceedings;

(2) How much time will your client have to prepare its case? Some foreign jurisdictions allow a short time for defendant to mount its defense, which may be an important consideration in a complex product liability case where it is necessary to hire and prepare appropriate experts. Moreover, the documentary evidence that supports your client’s case has to be translated into the foreign jurisdiction’s official language; 

(3) Will discovery be allowed? In some foreign jurisdictions, there is nothing akin to the discovery procedures that benefit parties in the United States;

(4) Will expert testimony be allowed? Often, the foreign court will place great emphasis on the government accident investigation report rather than on the expert evidence. In some jurisdictions, your client’s liability may be determined by the government authorities charged with investigating the accident, although they may not be competent;

(5) What is the role of the judge? Is the court the sole trier of fact?;

(6) Are there multiple claimants? You should determine whether all of the claimants involved in the incident can be consolidated before the same tribunal. If each claimant is able to file suit in his or her own locale, the client may need to defend numerous actions before numerous judges in different locations; and

(7) What are the attitudes towards the United States and American businesses in the foreign jurisdiction?

Anti-American bias and corruption figured prominently in Chevron’s environmental litigation in Ecuador. In the early 1990’s, Ecuadorian claimants filed suit in the United States alleging that Texaco’s operations polluted the rain forests and rivers in Ecuador, resulting in environmental and personal injury damages. The lawsuit was dismissed in 2002 on forum non conveniens grounds and the case was refiled in Ecuador the following year. In February 2011, an Ecuadorian court entered an $18,000,000,000 judgment against Chevron (which had earlier acquired Texaco).

Scott A. Edelman, a partner at Gibson Dunn in Los Angeles, made a compelling presentation at a recent IADC meeting concerning serious irregularities and a lack of impartiality in the conduct of that case. Chevron alleges that the plaintiffs’ lawyers are guilty of fraud and misconduct and have filed a civil lawsuit under RICO in New York federal court against the trial lawyers and consultants involved. Chevron’s suit alleges that these attorneys and consultants used the Ecuador lawsuit to threaten Chevron, mislead U.S. government officials, and harass and intimidate Chevron employees, to extort a financial settlement from the Company. Chevron further alleges that plaintiffs built their case through fabricated evidence and a campaign to incite public outrage.

It is likely that the pervasive fraud that permeated the Ecuador litigation would not have occurred in a U.S. federal court. As a result of Chevron’s experience, a U.S. defendant would have to think twice about filing a forum non conveniens motion if there was any likelihood that the case would end up in Ecuador or somewhere similar.