December 15, 2020 Top Story

Court Errs by Reducing Deference to Americans' Forum Choice

Investing abroad does not reduce presumption in favor of domestic plaintiffs

By William H. Newman

A domestic plaintiff is generally entitled to a presumption in favor of its chosen forum, and a trial court’s deference to that choice cannot be reduced solely because the dispute involves foreign investments, according to one federal appellate court. ABA Section of Litigation leaders believe the decision is unlikely to dissuade businesses from transacting with Americans.

The case stemmed from a conflict after an American bank loaned money to a Mexican company

The case stemmed from a conflict after an American bank loaned money to a Mexican company

iStockphoto by Getty Images

District Court Had Reduced Deference Due to Foreign Investment

Citigroup, an American bank, provided cash advances, as well as trust and advisory services to Oceanografia S.A. de C.V. (Oceanografia), a Mexican oil drilling company. After Mexican bank regulators discovered that Citigroup’s cash advance program violated various Mexican laws, they criminally charged Citigroup employees for their role in the scheme. Thirty-nine plaintiffs, two of which were American, then sued Citigroup in Otto Candies, LLC v. Citigroup, Inc., alleging that they invested in or contracted with Oceanografia in reliance on Citigroup’s misrepresentations of Oceanografia’s financial condition.

Citigroup moved to dismiss the plaintiffs’ complaint on the ground of forum non conveniens, which allows courts to dismiss a case with proper jurisdiction and venue if another forum would be more appropriate. An American plaintiff’s chosen forum is typically presumed to be proper, while a foreign plaintiff receives “reduced deference” to its forum choice.

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