Conditional Dismissals

Conditional Dismissals

A federal court that decides a foreign court is the better forum cannot send the case there. Judges lack the power to transfer cases outside their own court systems, and § 1404 gives a district court no authority to dismiss, so the forum non conveniens doctrine fills the statutory gap and dismissal is the judge's only option.¹ A dismissal is fair to the plaintiff only if the plaintiff can pursue the case in the alternative forum, which is why the doctrine assumes that the plaintiff can refile there.² Conditions attached to the dismissal are how courts try to make that assumption true, and a court granting the motion often does so only on condition that the defendant consent to suit in the alternative forum.³

A court that finds the balance favors the defendant has three ways to grant relief. It can dismiss outright and assume that the plaintiff will sue in the more convenient forum. It can condition the dismissal on the defendant's waiver of any objection to suit there, whether to personal jurisdiction, venue, or the statute of limitations. Or it can stay the action until the plaintiff demonstrates the ability to bring suit against the defendant in the more convenient forum.⁴ None of the three sends the case abroad directly. The plaintiff reaches the foreign courthouse by refiling, so the plaintiff's real protection lies in what the court requires of the defendant before the case leaves.

Outright dismissal leaves all of the risk of the move with the plaintiff. A plaintiff who must start over can, as Atlantic Marine Construction Co. v. United States District Court recognized, “lose out completely, through the running of the statute of limitations in the forum finally deemed appropriate.” The Court found that caution unwarranted only because the plaintiff there had violated a valid forum-selection clause, so that dismissal would work no injustice.⁵ A dismissal may be unconditional, but it is frequently conditioned on the defendant's accepting process and jurisdiction in another forum.⁶

Piper Aircraft Co. v. Reyno shows the middle option at work. The district court there found an alternative forum in Scotland because Piper and Hartzell had agreed to submit to the jurisdiction of the Scottish courts and to waive any statute of limitations defense that might be available.⁷ The defendants' promises were part of what made Scotland a forum in which the plaintiff could actually sue.

A court can demand such promises because it has jurisdiction over the defendant. Imposing a condition requires the exercise of power, and jurisdiction furnishes it, so a court dismissing under the doctrine may require the defendant to stipulate to accept process in a designated other place, to waive a statute of limitations that might otherwise bar suit there, or to agree to the use there of depositions and other fruits of disclosure already taken in the initial forum.⁸ That jurisdiction reaches only the defendant. The court can condition dismissal on what the defendant does, but it cannot order the foreign court to do anything in the case.⁹ Every condition is therefore a promise or an act of the defendant, and a careful order anticipates what happens if the foreign court nevertheless declines the case.

The authorities show four typical conditions, and each closes a different gap between the American forum and the foreign one:

• The defendant submits to the foreign court's jurisdiction or accepts process there, which makes the forum available to a plaintiff who could not otherwise compel the defendant to appear.¹⁰
• The defendant waives any limitations defense that would otherwise bar suit in the foreign forum, which keeps the detour through the American court from costing the plaintiff the claim.¹¹
• The defendant makes evidence available, whether by agreeing that depositions taken here may be used abroad or by providing the records relevant to the plaintiff's claims, which offsets the proof that stays behind in the United States.¹²
• The defendant posts security equivalent to what the plaintiff already holds in the American action, which keeps the move from shrinking the plaintiff's remedy.¹³

The first condition bears most directly on availability. An alternative forum must be available at the time of dismissal, so a defendant's consent, given as the price of the order, can supply what the forum would otherwise lack.¹⁴ Courts have used the technique where the foreign forum was not available to the plaintiff as of right over the defendant's objection. A dissent in Hoffman v. Blaski collected decisions of that kind, including Canada Malting, in which dismissal was conditioned on the defendant's voluntary submission to the more convenient forum.¹⁵

The hypothetical shows why a time bar abroad does not automatically make the alternative forum inadequate and require denial of the motion. A dismissal premised on refiling would be unfair if a time bar defeated the refiled suit, and a waiver of the limitations defense is among the conditions a court can impose to prevent that result.¹⁶ The defendants in Piper offered exactly that waiver.¹⁷

Conditions do not replace the balancing of interests. The defendant must still overcome the presumption in favor of the plaintiff's chosen forum by showing that trial there would be unnecessarily burdensome, because unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.¹⁸ Conditions repair gaps in availability and adequacy. They do not turn a close case into a win for the defendant.

The Fifth Circuit's decision in Perusahaan Umum Listrik Negara Pusat v. M/V Tel Aviv shows conditions doing structural work. The plaintiffs there had brought an in rem collision action in the Southern District of Texas, and the court affirmed a dismissal in favor of the London court only because the dismissal was conditional: “This result is permitted only by the conditional nature of the dismissal.”¹⁹

The in rem character of the action explains why. A plaintiff who has seized a vessel holds security that is hard to replace, because a vessel ordinarily can be seized in rem only once. Dismissal without conditions could leave the plaintiff unable to reach the vessel again, and even a foreign forum with jurisdiction over the defendant might offer a remedy stripped of its security. An unconditional dismissal would have deprived the plaintiffs of the value of the in rem action, and in some instances permanently.²⁰

The conditions cured both problems. The defendant had to submit to the jurisdiction of the London court and post security equivalent to the security on file in the Southern District. If it had not done both within sixty days of the effective date of the decision, the dismissal would be vacated on the plaintiffs' petition and the parties would proceed to trial in the Southern District. The court said these conditions satisfied it that the plaintiffs would find the London court an adequate and available alternative forum.²¹

The order also covers the one event the court could not control. The Fifth Circuit conceded that England might lack a substantial public interest in a collision on the high seas, left it to the London court to manifest any public interest by accepting jurisdiction, and expected that court to accept. If London declined for some unforeseen reason, the terms of the conditional dismissal would let the plaintiffs proceed to trial in the Southern District.²² A federal court cannot command a foreign tribunal to hear a case, so it writes the return path into its own order. A condition that told the foreign court what to do would exceed the American court's power. A condition that restores the plaintiff's American forum if the foreign court refuses stays within it.

The Piper and Tel Aviv orders repair different gaps. In Piper the defendants' promises made Scotland a reachable forum and removed a possible time bar. In Tel Aviv submission to the London court was not enough, because the plaintiffs also stood to lose the security that an in rem action provides, and equivalent security posted in the alternative forum answered that harm. The Supreme Court had voiced the same concern in Swift & Co. Packers v. Compania Colombiana del Caribe, where it found it improper under the circumstances to send a United States citizen to a foreign court without assurance that the respondents would appear there and that security would be given equal to what attachment in the district court had provided. It pointed to Canada Malting as showing the district court's power to give that assurance.²³

A stay is a gentler variant that pauses the American case instead of ending it. A court may stay the action pending the plaintiff's demonstrated ability to sue in the more convenient forum.²⁴ In Tel Aviv the Fifth Circuit, without specifically approving the technique, suggested that a stay pending the defendant's satisfaction of specific conditions may accomplish the same goals as a conditional dismissal while placing less of a burden on the plaintiff to reinstitute the proceeding if the defendant defaults. Approving the conditional dismissal itself respected the Supreme Court's advice that courts must “retain flexibility” in fashioning these dismissals.²⁵ The difference follows from what each form does to the pending case. After a conditional dismissal the case is over, so a default requires the plaintiff to petition to vacate the dismissal and revive it, as the sixty-day provision in Tel Aviv contemplated.²⁶ A stay leaves the case on the docket, so a default calls only for lifting the stay.

The power to impose conditions raised a question in Sinochem International Co. v. Malaysia International Shipping Corp. The court of appeals there feared that a court that had not first established its own jurisdiction could not condition dismissal on the defendant's waiver of limitations defenses or of objections to the foreign forum's jurisdiction, and so could not shield the plaintiff if the foreign tribunal refused the suit. The Supreme Court saw no genuine risk on those facts, because proceedings were already under way in China and that court's jurisdiction had been raised, determined, and affirmed on appeal. It left open whether a court conditioning dismissal in this way must first determine its own authority to adjudicate the case.²⁷ The next section takes up the general rule that lets a court dismiss for forum non conveniens before resolving its own jurisdiction.

State courts rely on the same device for a related reason. A state judge can transfer a case only within the state, so when a case filed in a proper venue belongs in another state or country, dismissal is the judge's only option.²⁸ Conditions such as the defendant's agreement to accept service in the more convenient forum let the court reach a practical result close to the transfer it cannot order.²⁹ The section on state court practice returns to these dismissals.