Unfavorable Change in Law

Unfavorable Change in Law

Plaintiffs often pick an American court because American law treats them better. When the defendant moves to dismiss for forum non conveniens, the plaintiff’s natural reply is that the alternative forum would apply a weaker theory of liability or award less money. How much should that reply count? Piper Aircraft Co. v. Reyno is the leading decision.¹ A small commercial aircraft that Piper manufactured in Pennsylvania crashed in Scotland and killed everyone aboard. The decedents were Scottish subjects and residents, and a Scottish air taxi service owned and operated the plane. Gaynell Reyno, a California administratrix, sued in a California state court. The case was removed to federal court, where the district judge dismissed it, finding that Scotland offered an alternative forum and that the private and public interests favored trial there. The court of appeals reversed, holding that dismissal is never appropriate when the alternative forum’s law is less favorable to the plaintiff, and the Supreme Court reversed in turn.²

The dispute is sharp because a plaintiff’s choice of forum is often a choice of law. If a plaintiff could defeat the motion by showing that the foreign court would apply a weaker theory of liability or award less money, the plaintiff’s own preference would become a veto. American law will usually look better to a plaintiff than the law of the country where the events occurred, so the motion would fail in nearly every case that most needs it: the case with no real connection to the American forum beyond the attraction of its law.

This question differs from adequacy. Adequacy screens out only the extreme case in which the foreign forum offers no remedy at all. The question here is the ordinary one, in which the foreign forum offers a real remedy that is simply worse for the plaintiff. The first subsection below states the rule and the Court’s reasons for it. The second explains why the same worry about less favorable law is resolved differently when a case is transferred within the federal system under § 1404(a).

The Piper Rule

The Supreme Court replaced the court of appeals’ automatic bar with a rule about weight. The court of appeals had reasoned that a dismissal, like a transfer between federal courts, should not change the applicable law, and it concluded that dismissal is barred whenever the alternative forum’s law is less favorable to the plaintiff.³ The Supreme Court answered: “The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry.”⁴ Each term in that sentence does work. Conclusive weight would make the difference in law a veto, the result the court of appeals reached. Substantial weight would stop short of a veto but tilt the balance so far toward the plaintiff that dismissal would seldom survive it. The Court rejected both, and its word “ordinarily” preserves a narrow exception, taken up at the end of this subsection.

The Court gave four reasons, and they reinforce one another. Precedent supplies the first. In Canada Malting Co. v. Paterson Steamships, Ltd., Canadian owners of cargo lost in a collision between two vessels in American waters sued the Canadian owners of one vessel in a federal district court, choosing an American forum largely because American liability rules favored them.⁵ The district court dismissed over the cargo owners’ objection that Canadian law was less favorable. The Supreme Court affirmed without deciding which nation’s law governed, because under any view the district court had discretion to decline a controversy that justice could resolve as well by sending the parties home.⁶ Gilbert later made convenience the central focus of the inquiry and so implicitly confirmed that an unfavorable change in law cannot by itself bar dismissal.⁷ The rule does not depend on a foreign defendant, either. The defendant in Piper was an American manufacturer, and the Court applied the same reasoning to it.⁸ A plaintiff gains nothing against this rule merely by naming an American defendant.

The second reason is that the doctrine measures convenience, and law is not a convenience factor. Gilbert’s own facts show what the inquiry weighs. The defendant, sued in New York, argued that Virginia was the proper forum because the plaintiff lived there, all the events took place there, most of the witnesses resided there, and both state and federal courts were available to the plaintiff and able to obtain jurisdiction over the defendant.⁹ None of those factors turns on which law favors which party. A rule that made the plaintiff’s preferred law decisive, or even heavy, would let a consideration unrelated to convenience override convenience itself, and dismissal might be barred even where trial in the chosen forum was plainly inconvenient.¹⁰ Gilbert contemplated dismissal where a plaintiff chose the forum solely to harass the defendant or to take advantage of favorable law, and that is precisely the situation in which the court of appeals’ rule would forbid dismissal.¹¹

Flexibility supports the same conclusion. Gilbert declined to list the circumstances that require grant or denial of dismissal. Koster refused to treat an inquiry into a foreign corporation’s internal affairs as always calling for dismissal, because it is only one factor. And Williams v. Green Bay & Western R. Co. said that each case turns on its facts.¹² A law-difference trump would be one more single-factor rule, and placing central emphasis on any one factor would drain the doctrine of the flexibility that makes it valuable.¹³

The third reason is practical: a substantial-weight rule would nearly erase the doctrine. Jurisdiction and venue requirements are often easily satisfied, so many plaintiffs can choose among several forums, and they ordinarily choose the one whose choice-of-law rules favor them most.¹⁴ Such a plaintiff will almost always face less favorable law in the alternative forum. If that disadvantage carried substantial weight, dismissal would rarely be proper and the doctrine would be virtually useless.¹⁵ The effect is strongest for foreign plaintiffs, because American procedure and tort law tend to attract plaintiffs more than the law of most other countries. Strict liability remains primarily an American innovation, a plaintiff can choose among fifty states with malleable choice-of-law rules, and American courts allow jury trials, contingent fees, and broader discovery than most foreign courts.¹⁶ A rule that treated those advantages as a reason to keep the case would draw still more foreign litigation into crowded American courts.¹⁷ Its logic would reach even a suit in which no party is American and nothing ties the dispute to the United States, so long as a foreign defendant doing business here could be served.¹⁸

The fourth reason is the burden of comparison. If differences in law carried substantial weight, the trial court would have to determine what law would apply in the chosen forum and in the alternative forum, compare the rights, remedies, and procedures under each, and dismiss only if the alternative forum’s law were as favorable to the plaintiff as the chosen forum’s.¹⁹ The doctrine exists in part to spare courts that exercise. Gilbert itself counted the need to untangle conflict-of-laws problems, and law foreign to the court, as a reason pointing toward dismissal.²⁰ The rule also frees a court from deciding which law governs before it rules, because choice of law is simply one public-interest factor inside the balance. The Fifth Circuit abandoned its older two-step approach in Piper’s wake.²¹

The same reasoning removes a defendant’s hoped-for law from the balance. The Court acknowledged that the manufacturers might be engaged in reverse forum shopping, moving to dismiss partly because they expect Scottish law to treat them more kindly. It reasoned that a ruling that disregards the plaintiff’s loss of favorable law necessarily disregards the defendant’s gain.²² If the defendant overcomes the presumption favoring the plaintiff by showing that trial in the chosen forum would be unnecessarily burdensome, dismissal is appropriate even though the defendant also wants better law.²³ Law enters the balance only through a public-interest factor that asks how hard the governing law is for this court to apply, and that question does not depend on which side the law favors.²⁴

The facts of Piper show how much unfavorable law the rule tolerates. Scottish law did not recognize strict liability in tort, allowed wrongful-death actions only by the decedents’ relatives, and limited those actions to loss of support and society. Reyno candidly admitted that she filed in the United States because its law on liability, capacity to sue, and damages favored her.²⁵ Those are the differences the court of appeals treated as decisive. The Supreme Court held them insufficient: the relatives might be unable to rely on strict liability and might recover a smaller award, but they faced no danger of being deprived of any remedy or treated unfairly.²⁶

Gonzalez v. Chrysler Corp. shows how harsh the rule can be. Relying on Piper, the Fifth Circuit affirmed the dismissal of a suit by a Mexican family whose three-year-old child was killed by an allegedly defective side air bag. Mexican law rejected the strict liability claim and capped damages for this kind of death at $2,500.²⁷ The parties agreed at oral argument that the case would never be filed in Mexico, so the dismissal would decide the outcome for the manufacturer, and the court still refused to treat the cap or the economics of suing there as making Mexico inadequate.²⁸ The cost to the plaintiff is real. The doctrine accepts it because the alternative is a rule under which the law a plaintiff prefers would decide where the case is tried.

The rule reaches maritime claims as well, as one would expect since Canada Malting arose in admiralty.²⁹ In Perusahaan Umum Listrik Negara Pusat v. M/V Tel Aviv, cargo owners pointed to an English rule that attributes the carrying vessel’s fault to the cargo owners. The Fifth Circuit refused to count that rule as a reason for keeping the case, because it is not nearly so grievous as “no remedy at all.”³⁰

The exception marks the point at which unfavorable law finally counts. The Court did not hold that an unfavorable change in law is never relevant. If the remedy offered by the alternative forum is “so clearly inadequate or unsatisfactory that it is no remedy at all,” the change in law may be given substantial weight, and the district court may conclude that dismissal would not be in the interests of justice.³¹ The reason follows from what dismissal does. Dismissal is justified only because it sends the plaintiff to another court, and a forum that offers nothing is not a place the plaintiff can be sent. Piper framed the same idea as adequacy: where the remedy is clearly unsatisfactory, the other forum may not be an adequate alternative, as when it does not permit litigation of the subject matter of the dispute.³² One court accordingly refused to dismiss a claim that could not be litigated in the other available venue, Canada, which offered only an administrative grievance procedure unlikely to yield any remedy.³³

In the first scene the worker complains about the size of the remedy. In the second the worker has lost the remedy altogether, and only that scene reaches the exception. The second scene is also where the adequacy requirement operates, so a careful answer keeps the two arguments apart: a weaker-law argument goes to weight in the balance, and a no-remedy argument goes to adequacy.

Why Transfer Differs

In Piper the court of appeals rested its ruling partly on an analogy to transfers under § 1404(a), and the Supreme Court rejected the analogy because transfers and dismissals differ.³⁶ The analogy came from Van Dusen v. Barrack, which ruled that a § 1404(a) transfer should not change the applicable law, so that the transferee court applies the law the transferor court would have applied.³⁷ The court of appeals carried that principle over to dismissals and concluded that an unfavorable change in law barred dismissal. Whether the carry-over was sound depends on why the transfer rule exists and what keeps it in place.

Van Dusen arose on a defendant’s motion, and the plaintiff’s motion came later in Ferens v. John Deere Co.³⁸ An individual injured in Pennsylvania sued in Mississippi to obtain a longer limitations period and then moved to transfer the case back to Pennsylvania. The Mississippi federal court would have applied Mississippi’s period, because Mississippi deems limitations procedural for choice-of-law purposes, so that period traveled with the case.³⁹ The Court held that the transferor’s law applies whichever party makes the § 1404(a) motion, so the plaintiff kept the longer period while trying the case at home.⁴⁰ Two reasons support that result. If the transferee’s law applied after a plaintiff’s motion, no plaintiff would move unless the benefit of convenience outweighed the loss of favorable law, and inconvenient trials would simply continue. That would sacrifice the witnesses and the interest of justice, which § 1404(a) protects along with the movant.⁴¹ And a rule keyed to the moving party would leave unclear which law governs when both sides move or the court acts on its own.⁴²

Piper then explained why the transfer rule stops at the edge of the statute. Van Dusen construed § 1404(a) and never discussed the common-law doctrine. Congress had drafted the statute in accordance with forum non conveniens but intended a revision rather than a codification, giving district courts more discretion to transfer than they had to dismiss.⁴³ The statute was designed as a “federal housekeeping measure,” allowing easy change of venue within a unified federal system, and the Court feared that if a change in venue carried a change in law, forum-shopping parties would take unfair advantage of the relaxed standards for transfer.⁴⁴ Transfer can be obtained on a lesser showing of inconvenience than dismissal requires.⁴⁵ A defendant who could win better law merely by moving would therefore have a reason to seek transfer for the law’s sake, and judges would have to police motive on every motion. Holding the law constant removes that payoff, which is the sense of the principle that a defendant should not “get a change of law as a bonus for a change of venue.”⁴⁶

The second half of the explanation concerns who can be bound. Transfer statutes reach only courts within the same system, so a defendant who wants a foreign court, or another state’s courts, must move to dismiss.⁴⁷ All federal courts are branches of one system and must entertain cases transferred from other branches under § 1404(a).⁴⁸ The Supreme Court can therefore require a transferee court to apply the transferor’s law, but it has no power to compel a Scottish court to do anything.⁴⁹ On a motion like the one in Piper, the Court’s only options were to permit trial in an inconvenient forum or to dismiss, knowing that the foreign court might apply less favorable law.⁵⁰

Dismissal also ends the case. The case starts over in the second court, which treats it as an original action, applies its own procedure and conflicts rules, and reaches whatever substantive law those rules select. A transfer keeps the same case alive, and one of the opinions in Ferens observed that transfer involves no risk of a limitations bar to refiling.⁵¹ The practical point from the previous subsection completes the account. Plaintiffs ordinarily choose the forum whose choice-of-law rules favor them most, so a rule that kept their law attached to a dismissed case would make dismissal rarely proper.⁵²

The two decisions line up on one variable: whether the court receiving the case sits inside the same system. In Ferens the Mississippi filing carried Mississippi’s limitations period into a Pennsylvania courtroom, because a transferee court is bound to apply what the transferor would have applied.⁵³ In Piper the plaintiff’s advantage in strict liability stayed behind when the case went to Scotland, because the relatives faced no danger of being deprived of any remedy or treated unfairly, and the unfavorable change in law did not bar dismissal.⁵⁴ A plaintiff whose case is transferred keeps the law of the original forum. A plaintiff whose case is dismissed in favor of a foreign court, or of another state’s courts, starts over under the second court’s law. An exam stem that asks which law the next court will apply is therefore asking first whether the next court sits inside the same system. The later treatment of forum-selection clauses returns to transfer under § 1404(a).