U.S. Plaintiffs Lose Venue Battle in International Dispute

A U.S. plaintiff’s choice of forum will not always win out in a dispute over activity occurring abroad. The U.S. District Court for the Northern District of Illinois kicked a lawsuit to the U.S. District Court for the Western District of Arkansas at the defendants’ request, despite the fact that one of the plaintiffs was an Illinois citizen suing over a robbery in Argentina.

Pointing to the fact that three other plaintiffs were from Arkansas and had received medical treatment in Arkansas for injuries sustained during the robbery, the court held that convenience factors favored the Arkansas district court as a forum. In other words, ABA Litigation Section leaders observe that the court can sometimes overrule a plaintiff’s own assessment of his or her best interests.

A Honeymoon Goes Terribly Wrong

Esposito v. AIRBNB Action, LLC spun out of a robbery that occurred while a newly married couple was vacationing with relatives in Argentina. The five plaintiffs in the case included Britton Esposito and Christian Fresno, who had recently married in Buenos Aires. While Fresno is a citizen of Argentina, Esposito maintains a domicile in Illinois, where she lives for three months of the year when she is not attending medical school in Argentina. Fresno and Esposito were celebrating with Esposito’s sister, brother-in-law, and niece at a rental house that Esposito’s sister had booked from her home in Arkansas.

At midnight on the night of their arrival, four men broke into the house with guns and knives and bound and gagged the adult plaintiffs. They stole cash and jewelry before leaving the house.

The family sued the rental company and house owners in an Illinois federal court asserting a variety of tort and contractual claims. The rental company responded by moving to send the case to arbitration based on the arbitration clause in the rental agreement or to transfer the case to Arkansas under 28 U.S.C. § 1404(a). The statute permits transfer of venue to any other district court where the case might have been brought originally for the convenience of the parties and in the interest of justice.

Convenience Factors Under Statute Favor Arkansas Traveler

The court’s laconic order granted the defendants’ motion to transfer, finding that both the convenience of the parties and the interest of justice favored Arkansas. The court dodged the question of whether venue was ever appropriate in Illinois by finding that the rental company defendant “forfeited, if not waived, any argument that venue does not lie in this District” by moving to transfer the case without objecting to personal jurisdiction. Venue is proper against a corporate defendant anywhere that personal jurisdiction exists over the corporation.

In discussing the convenience factors, the court emphasized that “the [Northern District of Illinois] is not the situs of any material event in this case, with the sole exception of some medical treatment that Britton received after the robbery.” The court also pointed out that three of the plaintiffs resided in Arkansas, making that state a convenient location for them, and that they received some medical treatment there.

Likewise, in discussing the interest of justice factors, the court found Arkansas clearly the better venue—the docket in Arkansas moved faster than Illinois, and the plaintiffs were unable to identify any significant differences between the two states’ substantive law that could affect the outcome of the dispute. Finally, the court concluded that the Western District of Arkansas’s community has a greater stake in the litigation since a majority of the plaintiffs were from Arkansas and received medical treatment there.

Reflecting on the Decision

“What is ironic here is that the movant, Airbnb, and the court disagree with the plaintiffs’ own assessment of what is best for them,” observes Marc J. Zucker, Philadelphia, PA, cochair of the Litigation Section’s Commercial & Business Litigation Committee. The court ruled, in essence, that since three of the five plaintiffs reside in Arkansas, an Arkansas venue would be more convenient and more economical for the plaintiffs, even though they clearly viewed their best interests differently when choosing to file suit in Illinois,” Zucker adds.

Although none of the defendants appear to have made a forum non conveniens motion, the court stressed the importance of Argentina to this dispute. “Underlying this fact pattern is a recognition that the place with the closest connection to the dispute is Argentina, where the criminal conduct occurred and the injuries were sustained,” Zucker explains. “Neither Arkansas nor Illinois had a particularly close nexus with the facts. That gave the court additional latitude in its ruling.”

Plaintiffs Ordered to Arbitration After Losing Venue Dispute

The Esposito court largely glossed over the rental company’s alternative motion to send the case to arbitration—although the court noted that the issue could be raised in Arkansas. Indeed, following transfer, the Arkansas court granted the motion to compel arbitration of the claims against the rental company and stayed the proceedings as to those claims.

“The court’s order shows that an arbitration clause may not always spare the parties the burdens of litigating the appropriate venue in international disputes that find their way into federal court in the United States,” explains Henry L. Parr Jr., Greenville, SC, cochair of the Section’s International Litigation & Dispute Resolution Committee.

“Here the district court, when faced with a motion to compel arbitration and, in the alternative, to transfer venue, transferred the case without prejudice to the motion to compel arbitration,” Parr states. “Thus, the parties had to bear the expense of dealing with the venue issue, even if their motion to compel arbitration is subsequently granted.”