In the latest turn in the long-running dispute between Chevron and Ecuadorian residents alleging environmental damages, the Second Circuit affirmed the district court’s judgment finding bribery, fraud, and coercion in the procurement of the judgment and enjoining the plaintiff’s lawyer and two representative plaintiffs from seeking to enforce the judgment in the U.S. courts and imposing a constructive trust on any recovery made by those individuals on the judgment anywhere in the world. See Chevron Corp. v. Donziger, Nos. 14-0826, 14-0832, 2016 U.S. App. LEXIS 14532 (2d Cir. Aug. 8, 2016).
Stepping back from the particulars of the Chevron-Ecuador dispute, including the somewhat incredible facts constituting the fraud and the legal considerations of whether notions of international comity or U.S. recognition law can somehow permit recognition of a fraudulent foreign judgment—they cannot—let us consider some of the matters that should be considered at the outset of an international mass toxic tort action.
In the first scenario, a domestic entity is sued in the United States by foreign plaintiffs for injuries occurring abroad, as a result of activities of the entity or its affiliates abroad or via a product exported to the foreign country. Another example of this scenario is an action brought against Goodyear alleging occupational exposure to toxins at a French facility operated by one of Goodyear’s subsidiaries (plaintiffs argued for jurisdiction over the parent based on, inter alia, the parent’s adoption and implementation of company-wide safety standards). It might seem preferable to litigate in the United States as one’s home forum; but, on the other hand, the foreign forum might be more favorable due to the lack of a class action mechanism and the prospect of generally lesser damages awards assessed by the court rather than a jury. Thus, the domestic party might seek dismissal on forum non conveniensgrounds, as Goodyear successfully did in its recent case. Solari v. Goodyear Tire & Rubber Co., No. 15-4242, 2016 U.S. App. LEXIS 12164 (6th Cir. June 29, 2016), aff’g No. 5:14 CV 1000, 2015 U.S. Dist. LEXIS 140400 (N.D. Ohio Oct. 15, 2015). (Notably, the Chevron-Ecuador dispute was originally filed in the United States but was dismissed on forum non conveniensgrounds.)
Before deciding to pursue a path to litigating in the foreign forum as a result of a forum non conveniensmotion, it should be recognized that doing so presents a number of challenges for U.S. lawyers:
Discovery is likely to be severely limited, especially in a civil law jurisdiction.
Expert practice will be very different:
There will be no Daubert-like challenges to the adversary’s expert opinions.
Local, academic experts will be preferred over U.S. experts with lengthy testimonial experience.
The foreign court will place reliance on peer-reviewed literature.
The foreign court might rely on its own court-appointed experts.
Causation standards might not be definitive and not fit the usual general/specific causation paradigm.
While class actions might not be permitted, a case might be comprised of “representative plaintiffs” and constitute a “test case,” effectively the same result of a U.S. bellwether case.
Evidentiary rules will be lax.
There will be a tension between adhering to local practice (including not heavily relying on U.S. law and principles) and making the requisite record for a U.S. challenge to recognition of a potential judgment on due process grounds.
Thus, the calculus and strategic weighing of pros and cons is not so simple.
In a second scenario, a U.S. entity is sued in the foreign jurisdiction, in which case one is likely to hear from the client that (1) there cannot be jurisdiction and (2) we do not want to get railroaded in the foreign court. Again, the weighing of pros and cons is not so straightforward as determining whether there is a strong jurisdictional argument such that an ensuing judgment would not be enforceable under U.S. recognition laws (generally, that the exercise of jurisdiction by the foreign court is incompatible with U.S. standards). Even with a strong jurisdictional challenge to U.S. recognition, the procedural path to doing so will likely require taking a default judgment in the foreign court, due to the provision in article 5 of the uniform recognition law that a jurisdiction challenge is not available if the defendant appears in the foreign court for any reason other than challenging jurisdiction (in many foreign jurisdictions, a standalone motion to dismiss for lack of jurisdiction is not procedurally available). So, to preserve the U.S. challenge, a default would need to be taken, and the plaintiff might not even seek U.S. recognition, but pursue recognition elsewhere. Moreover, if the plaintiff’s case is a prelude to other similar cases, the default judgment would then be used to support those other plaintiffs. A default judgment might also produce bad publicity for the client.
So, part of the initial consideration of the appearance or default issue is an assessment of the factors mentioned above and formulation of a plan to overcome such challenges in the foreign forum, leading to a successful defense. Even in the event that the defense is unsuccessful, there are appeals in the foreign jurisdiction and a potential challenge to U.S. recognition and enforcement of such judgment, all of which might be a far more preferable path than taking a default.
As the foregoing should reflect for younger lawyers, strategic decisions have many layers and generally cannot be resolved by one issue, such as whether the forum non conveniens or personal jurisdiction arguments implicated by the scenarios noted above are strong. Rather, even from the outset, we need to play out the scenarios and determine overall our best recommendation for the client.
Keywords: litigation, mass torts, international, recognition, enforcement, foreign judgment, forum non conveniens