Case of the Day: Bartel v. Tokyo Elec. Power. Co., 2019 U.S. Dist. LEXIS 34194 (S.D. Cal. Mar. 4, 2019)

Summary:

Plaintiffs are members of the US Navy crew of USS Ronald Reagan and their dependents, who were allegedly exposed to radiation because of the Fukushima nuclear reactor meltdown during the Tohoku earthquake of March 2011. Plaintiffs brought action against the defendants TEPCO and GE for injuries. The court had previously dismissed a related litigation without prejudice, and the plaintiffs filed a new litigation with additional plaintiff members. The defendants again moved to dismiss.

The court granted motion to dismiss. The court first found that the previous case determined the court had no personal jurisdiction over TEPCO, and issue preclusion applied to this issue as to the plaintiffs who previously sued in the earlier litigation. Then the court found no personal jurisdiction as to the remaining plaintiffs. As to GE, the court applied the conflict of laws analysis, and applied the Japanese law that granted immunity to nuclear operators in case of a natural disaster.

Takeaway:

Whenever there is a major disaster anywhere in the world, you can practically guarantee there will be a lawsuit in the United States not long thereafter. This one is particularly interesting, as it also involves the US military in Japan.

Case of the Day: Gosain v. Texplas India Private Ltd., 2019 U.S. Dist. LEXIS 18559 (S.D.N.Y. Feb. 4, 2019)

Summary:

Plaintiff commenced the original action in 1999 in New York, claiming the defendant, acting in concert with the State Bank of India, pushed the plaintiffs' company into involuntary bankruptcy and took over much of its assets in the resulting auction. The court originally dismissed the case based on lack of jurisdiction. The plaintiff appealed to the Second Circuit, which reversed and remanded. In 2011, on remand, the court dismissed the case on the grounds of forum non conveniens, with the condition that the defendant submit to Indian court's jurisdiction and comply with the court order there. The plaintiff then sued in India, obtained a judgment, but the defendant refused to comply with the judgment. The plaintiff re-opened the case in New York, then petitioned for a default judgment when the defendant failed to respond.

The magistrate judge recommended denying the default judgment based on the lack of standing. Because the plaintiff could not demonstrate an injury separate from the injury to his company (which was an Indian corporation,) the court had no subject matter jurisdiction over the matter.

Takeaway:

This claim is an adventure, and no one comes out looking good from the decision. The plaintiff relied on a tenuous argument that likely would have lost, and spent two decades litigating the matter. The court could have spotted this issue two decades ago and finished off the matter before it came to this point.

Case of the Day: Perella v. Gen. Council of the Assemblies of God, 2019 R.I. Super. LEXIS 14 (R.I. Super. Mar. 1, 2019)

Summary:

Plaintiffs were church members who were severely injured in a car crash in a mission trip to Bangladesh in 2013. Defendants wished to apply Bangladeshi law, as the Rhode Island law provided for a longer statute of limitations, broader definition of "owner" of a vehicle, and comparative negligence standard.

The court, conducting a conflict of law analysis, found as follows: (1) the injury occurred in Bangladesh; (2) although the trip was planned in Rhode Island, the conduct leading to the accident occurred in Bangladesh; (3) parties are residents of Rhode Island, and; (4) the relationship of the parties is centered in Rhode Island. Because the central issue of the case is not whether the driver (who is Bangladeshi) was negligent but whether the church may be vicariously liable, the court found Rhode Island law applied.

Takeaway:

Gotta catch'em all! A Rhode Island decision will always get a spot on this blog's Case of the Day, because it's not every day you come across a R.I. choice of law opinion. This opinion is also interesting because it cites relatively few cases, reflecting the state of R.I. case law.

Milestones: APL Co. Pte v. UK Aerosols Ltd., 582 F.3d 947 (9th Cir. 2009)

Summary:

A California company purchased containers of hair products from UK Aerosols, a British which requested a Singaporean shipper APL Co. to transport the products from Turkey to California. Upon arrival, the shipper noticed the container leaked in a hazardous manner, and spent approximately $700,000 in the clean up. The shipper then sued UK Aerosols for breaching the indemnification obligation under the bill of lading. The district court held in APL's favor, rejecting the argument from the defendant that the bill of lading violated the Carriage of Goods by Sea Act (COGSA). The shipper then filed a motion for attorneys' fees, which was also provided for in the bill of lading. The district court rejected this motion, holding COGSA governed the dispute over attorneys' fees and did not provide for attorneys' fees. The district court also alternately denied the motion for attorneys' fees on the grounds that the plaintiff did not give adequate notice under Federal Rules of Civil Procedure 44.1, which requires a notice of planned reliance to a foreign law. Both parties appealed.

The Ninth Circuit first affirmed the district court's opinion on the merits: because UK Aerosols is not a "shipper," COGSA does not apply to it, and at any rate the bill of lading does not violate COGSA. The court then reversed the district court on the Rule 44.1 point, because the Singaporean law did not become an issue until the attorneys' fees became an issue. The court also reversed the district court and held Singaporean law, and not COGSA, was the correct choice of law, because the bill of lading provided Singaporean law governs any issue not "dealt with" in the bill of lading.

Takeaway:

Choice of law thrillsville! This case gives a nice guide as to how to draft your choice of law provision to avoid any ambiguity--which triggers the choice of law analysis in the first place. Like an integration clause, include a provision that says "any issue not dealt with in this agreement is governed by [JURISDICTION] law." The point on Rule 44.1 is highly notable as well.

Milestone: Lee v. Melanson, 2007-Ohio-1784 (Ohio Ct. App. 2007)

Summary:

The appellant filed for a divorce and child support in the state court of Ohio in 2005, claiming she had married the appellee in South Korea in 2001. The appellee moved for a summary judgment, arguing because there was no marriage in South Korea, there can be no divorce. The lower court granted the summary judgment.

The appellate court affirmed. Finding that Ohio law determines the validity of a marriage based on lex loci contractus, the appellate court analyzed Korean Civil Code art. 812 and found no valid marriage existed between the parties.

Takeaway:

No matter how many times I read choice-of-law cases, I will never get over the fact that a state court in Ohio is making a decision by opining whether the parties properly followed a foreign statute. This is even truer when we are talking about a contract for marriage. Here, we have a U.S. citizen infant born to a U.S. citizen father--and we are going to determine the child's welfare based on Ohio court's interpretation of Korean law?

Case of the Day: SMP Ltd. v. SunEdison, Inc. (In re SunEdison, Inc.), 2017 Bankr. LEXIS 3555 (Bankr. S.D.N.Y. Oct. 13, 2017)

Summary:

Plaintiff SMP Ltd. is a Korean corporation that was established as a joint venture between SunEdison's Singapore affiliate and Samsung Fine Chemicals. In connection with the joint venture, SunEdison and SMP entered into a supply and licensing agreement whereby SunEdison granted license to SMP to use certain technology. In April 2016, SunEdison filed for bankruptcy in the Southern District of New York. SMP shut down nearly simultaneously, and entered into bankruptcy in Korea. As a part of the New York bankruptcy, SunEdison sought to terminate the agreement; SMP objected, arguing the executory contract remains valid during bankruptcy under Korean law.

The court first noted the parties chose New York law as the governing law. The court also rejected SMP's comity-based argument, noting it would mean "giv[ing] extraterritorial effect to all of the Korean insolvency law."

Takeaway:

Along with international family law cases, cross-border insolvency cases are a pet favorite of mine. Look at all the complex private international law principles at play here, for a fact pattern that is rather common in international business. Ultimately, however, the parties' choice of law remains supreme, and Samsung perhaps should have considered whether Korean law would have been more advantageous for its joint venture in case of an insolvency event.

Case of the Day: Aozora Bank, Ltd. v. J.P. Morgan Secs. LLC, 2017 N.Y. Misc. LEXIS 2686 (N.Y. Sup. Ct. June 29, 2017)

Summary:

Plaintiff, a Japanese bank, alleged that it was defrauded by Bear Stearns & Co. when it invested $20 million in collateralized debt obligation (CDO). (Named defendants are successors to Bear Stearns.) Previously, the trial court dismissed the case for failure to state a claim, but the appellate court reversed. In the remanded action, the defendant claimed that the action was time-barred.

The court found that the Japanese statute of limitations applied, as the cause of action accrued in Japan. The court also found that the three-year statute of limitations runs upon acquiring "actual knowledge of its damages and the identity of the perpetrator." Finding that there were insufficient facts to make the determination of actual knowledge, the court ordered an expedited discovery as to this point.

Takeaway:

No matter how many times I read a choice-of-law case, I will not be able to completely get over the fact that the U.S. law calls upon U.S. judges to determine the question arising under foreign law. It might make sense one a judge of one U.S. state weighs in on the law of another U.S. state, but laws of a foreign country?

Case of the Day: Mesa Power Group, LLC v. Gov't of Canada, 2017 U.S. Dist. LEXIS 92037 (D.D.C. June 15, 2017)

Summary:

Plaintiff sued in the D.C. federal court to vacate the arbitration award rendered under NAFTA, alleging the arbitrators exceeded their power. In the underlying arbitration, plaintiff procured a renewable energy contract with the Canadian government. Shortly thereafter, the Canadian government awarded a different renewable energy contract to a consortium of two Korean companies. Plaintiff (i.e. the claimant) alleged to the arbitral panel that its original contract was an exclusive. The panel found for Canada, and awarded Canada the cost and fees.

The D.D.C. rejected the motion. As a threshold matter, the court rejected Canada's argument that the Eleventh Circuit law must apply because the seat of arbitration was in Miami. Under the Eleventh Circuit law, vacating an arbitral award pursuant to Federal Arbitration Act is not available to a foreign arbitral award. The court, however, found that a federal circuit (and district courts thereunder) must follow its own interpretation of the federal statute. Then the court denied the plaintiff's motion.

Takeaway:

The connection to Asia is a bit thin in this case, but the law is highly interesting. Here, we have a situation that looks like conflict of laws, but actually is not. As a practical matter, two federal circuits may have differing case law. But as a matter of federal jurisprudence, there is only one federal law, and no such thing as a conflict within the federal law. So in case of a circuit split, the plaintiff can shop around for the favorable law as much as it wants! Although the plaintiff in this case lost even under the more lenient standards, this is a way to leverage the circuit split in a way that may not be possible in a true conflict of laws situation.

Academic Corner: Judge Gorsuch, and Who's Afraid of Foreign Laws?

Like many attorneys, I have been keeping tabs on the nomination hearing for Judge Neil Gorsuch to the U.S. Supreme Court. While much of the legal world's commentary on Judge Gorsuch's jurisprudence has focused on originalism versus constructivism, it was this headline that piqued my interest as an international litigator: "Gorsuch: 'As a general matter,' court shouldn't look to foreign or international law."

The hang-ups that conservatives have over U.S. courts looking to foreign law or international law never made sense to me. The crudest expression of that hang-up, such as the ill-advised "Sharia law ban" that Oklahoma passed (and the Tenth Circuit overturned,) can be nothing else but arising from total ignorance of American law's long tradition of having U.S. courts apply or consult foreign or international law. Off the top of my head, there are at least four situations in which U.S. courts apply or consult foreign or international law.

1.  Treaty Interpretation.  When a U.S. court interprets an international treaty which applies to the United States, the court does not use domestic law to interpret the treaty's terms of art. The court--shock of shocks!--consults the prevailing interpretation in the international law to make that determination.

2.  Choice of Law Clause in a Contract.  Parties can always voluntarily agree to have a foreign law be the governing law to interpret their contract. If the contract is being disputed in a U.S. court, the court does not ignore the party's agreement and apply the U.S. law; it applies the foreign law specified in the contract.

3.  Obligation Created Under a Foreign Law.  Parties may create an obligation in a foreign jurisdiction, then later litigate that obligation in a U.S. court. When the creation of the obligation occurs outside of the United States, the U.S. does not pretend that U.S. law applies in determining the validity of the obligation. Tech Sonic, Inc v. Sonics & Materials, Inc., 2016 U.S. Dist. LEXIS 94979 (D. Conn. July 20, 2016) is an example from this blog. In Tech Sonic, a South Korean company assigned its right to sue a U.S. company to another Korean company. The court dismissed, because the assignment was not proper under Korean law. 

4.  Conflict of Laws Analysis.  If a U.S. court determines that the events under consideration have the closest relations with a foreign forum, the court will apply foreign laws. For example in Vietnam Land v. Tran, 2016 U.S. Dist. LEXIS 36160 (S.D. Tex. Feb. 18, 2016), the Texas court used Vietnamese law to determine the breach of contract and fraud claims based on events that occurred in Vietnam--even though the defendant was a U.S. citizen living in Texas. 

I am sure others can come up with more examples, but these are very common scenarios with long history within the U.S. law. One can even look as far back to the medieval English Court of Chancery and find that the equity court would apply lex mercatoria--the contemporary version of the international law--when a dispute involves a person who is not a subject of the English crown.

Of course, Judge Gorsuch is no dummy. He is clearly aware of the situations in which U.S. law looks to foreign law or international law. In his hearing, Judge Gorsuch said it would be proper to look at a foreign law or international law in treaty interpretation or certain types of contract law cases. But he also said: "as a general matter . . . I would say it's improper to look abroad when interpreting the Constitution--as a general matter."

Oh? I am curious to hear what Judge Gorsuch thinks about the Supreme Court's jurisprudence on personal jurisdiction and federalism choice of law--two areas of the constitutional law based primarily on international law. Pennoyer v. Neff, the Supreme Court precedent that forms the basis of personal jurisdiction in relation to the Due Process Clause, is based primarily on the writings of Joseph Story, who in turn imported his theory from the prevailing international law of his time, most notably as explained by Dutch jurist Ulrich Huber. Same is true with federalism choice of law. When the laws of the different states within the United States may apply to the single case, the process of choosing the applicable law is based on international law, which again dates back to Huber's theory on comity expounded by Joseph Story. 

At the time of Joseph Story, the jurists of the Untied States were very much aware that they were using the international law to interpret the Constitution, not the U.S. law or even the English law. In the briefs for the U.S. Supreme Court in the 19th century, one can commonly spot citations to European legal scholars such as Huber, Emer de Vattel or Paulus Voet, to interpret the Constitution. Would Judge Gorsuch think these were all wrong? Given the long history of relying on international law to give meaning to the Constitution, one would think the proper originalist position is to insist on continuing to look at the international law in constitutional jurisprudence.

Case of the Day: DiFederico v. Marriott Int'l, Inc., 2017 U.S.App.LEXIS 1864 (4th Cir. Feb. 2, 2017)

Summary:

A terrorist in Islamabad, Pakistan killed the plaintiff decedent while he was staying at a Marriott hotel, which was a franchisee of the defendant Marriott International. District Court first found that Pakistani law, the lex loci delicti, was identical with Maryland law, and used Maryland law, which allows for liability for franchisors when the franchise agreement contains an express agency relationship or the franchisors committed the injury-causing act by controlling the instrumentalities of injury. Pursuant to this law, the District Court granted summary judgment against the plaintiff.

The Circuit Court affirmed. The court found that defendant did not control the hotel's security beyond requiring certain standards, and therefore did not control the instrumentalities that led to the plaintiff's death.

Takeaway:

The buried lede of this case is the court applying Maryland law under the theory that it is the same as the Pakistani law. While this is the prevailing standard for the choice of law, I always found this to be somewhat strange.

Also relevant is how the franchisor-franchisee scheme allocates liability. Presumably, the hotel in Islamabad is not a very fruitful defendant. But the U.S. franchisor is able to shield itself from liability in this manner.

Case of the Day: Hemlock Semiconductor Pte. Ltd v. Jinglong Indus. & Comm. Group Co., Ltd., 2017 N.Y. Misc. LEXIS 348 (N.Y. Sup. Ct. Jan. 31, 2017)

Summary:

A Singaporean corporation sued a Chinese corporation in New York state court based on the choice of forum and choice of law clauses in their contract. The defendant Chinese corporation challenged the New York General Obligation Law s.5-1401, to the extent that the law compels a party with no connection to New York to be haled into New York courts. In doing so, according to the defendant, the law violates the Commerce Clause and the Due Process Clause of the U.S. Constitution.

The court rejected the argument.

Takeaway:

Here was what I would call a "necessary lawsuit"--a Hail Mary attempt that will fail 99 times out of 100, but a necessary one just to dispel any lingering doubt about the constitutionality of a legal device that is so commonly used without thought. Hey, the law school case book must be filled with something, right?

Milestones: Al Good v. Nippon Yusen Kaisha, 2013 U.S. Dist. LEXIS 82839 (E.D. Cal. June 12, 2013)

Summary:

Plaintiff vineyard contracted with the defendant shipper, a Japanese corporation, to ship grapes to Vietnam. Majority of the grapes arrived late and damaged, according to the plaintiff. Defendant argued that the forum selection clause dictates that the case should be heard before the District Court of Tokyo, Japan.

The court found that the forum selection clause was enforceable. The court found that the defendant did not waive the clause by the alleged failure to follow the Japanese Code of Civil Procedure.

Takeaway:

This case also goes through all the grounds for potentially superseding a forum selection clause, resolving all of them in favor of the defendant. The lesson here is simple: a well-drafted forum selection is nearly impossible to overcome.

Case of the Day: Shanghai Comm. Bank Ltd. v. Chang, 2016 Wash. App. LEXIS 2154 (Wash. App. Ct. Sept. 12, 2016)

Summary:

Plaintiff bank held a judgment against defendant Chang from the court in Hong Kong. Plaintiff then sought to enforce the Hong Kong judgment in the state of Washington, where the defendant resided with his wife. Crucially, the bank sought to enforce the judgment on the marital property, although Washington law prohibits such enforcement if the obligation was created prior to marriage.

The court found that if a spouse incurred a debt outside of the state, Washington law uses a conflict of laws analysis to determine the enforceability of the debt. The court found that the debt is more appropriately governed by Hong Kong law, and held that the bank may execute upon marital property pursuant to Hong Kong law.

Takeaway:

Time again for this blog's pet favorite, transnational family law! Here we have a highly interesting situation. Conflict of laws rule usually appears when the court attempts to choose the law that would determine the merits of the case. Here, the court applies the conflict of laws rule on the execution stage of the case, after the merit phase is over.

Case of the Day: Vietnam Land v. Tran, 2016 U.S. Dist. LEXIS 36160 (S.D. Tex. Feb. 18, 2016)

Summary:

Plaintiff is a Vietnamese corporation. Defendant is the corporation's former president and a Texas resident. Defendant filed a third party complaint against a Vietnamese citizen. There was a choice of law dispute as to whether the court should apply Vietnamese law or Texas law. Applying the most significant relationship test, the court found that Vietnamese law should apply. Then court decided a number of dispositive motions (motion to dismiss and motion for summary judgment) based on Federal Rules of Civil Procedure.

Takeaway:

Choice of law is always at least a little bit surreal. Do we seriously believe that a Texas court can properly apply Vietnamese law? And just how much Vietnamese law is the court applying, when the court decides mostly based on the Federal Rules?

Case of the Day: Rahaman v. J.C. Penney Corp., 2016 Del. Super. LEXIS 258 (Del. Super. Ct. May 4, 2016)

Summary:

The case stems from the 2013 collapse of a garment factory building in Bangladesh, in which more than 1,000 people were killed. The defendants were U.S.-based clothing companies, who were allegedly negligent in maintaining the safety of the factory.

The court found that Bangladeshi statute of limitations applied based on Delaware choice of law rules, and that the one-year limitation period under the Bangladeshi law had expired. The court also found that because the plaintiffs were not the defendants' employees, the defendants owed no duty of care. 

Takeaway:

You have to marvel at the U.S. plaintiffs' lawyers, who must have contacted the people in Bangladesh (!!) as soon as this disaster occurred and found an angle to bring suit in the United States.

Case of the Day: Hussain v. Hussain, 2016 Ohio App. LEXIS 2045 (Ohio App. Ct. 12th Dist. May 31, 2016)

Summary:

Wife filed for divorce in 2014. In response, the husband claims they were never married because the marriage, which took place in India in 1992, was not valid. Husband claimed that the marriage was "merely ceremonial" under Muslim and Indian law, and because the original Indian marriage certificate was not validly signed and the marriage was not properly registered. Trial court held that there was a valid marriage, and the husband appealed.

The appellate court affirmed. The court found that husband did not give adequate notice to apply foreign law, and at any rate did not find the husband's claim of foreign law credible.

Takeaway:

Here we have this blog's favorite--(relatively) small cases with complex private international law questions! What seems to be a simple divorce matter ends up implicating a tricky choice-of-law rules, and the husband in this case gets tripped up by the difficult procedure. 

Also notable is the footnote 1 of the court's opinion. Apparently the court attempted video conference with the husband's legal expert in India, but much of the testimony was unintelligible due to poor internet connection. Practical hazard of transnational litigation.

Case of the Day: Stoyas v. Toshiba Corp., 2016 U.S. Dist. LEXIS 67581 (C.D. Cal. May 20, 2016)

Summary:

Plaintiffs are investors in defendant Toshiba who claim Toshiba's false accounting report caused loss. Plaintiffs alleged a claim both under U.S. law and Japanese law. The court found that plaintiffs failed to state a claim under Securities and Exchange Act of 1934, and dismissed the Japanese law claim based on comity and interest-balancing analysis.

Takeaway:

This is a fairly standard securities class action case, with one interesting twist--plaintiffs pleaded a cause of action under Japanese law, likely because they knew their Exchange Act claims were not strong. The tactic was enterprising, but I believe the court reached the correct result; the risk of having conflicting judgments with the Japanese courts (which were already handling a securities litigation with Toshiba involving the same fact pattern) was too great.

Milestones: FR 8 Singapore Pte. Ltd. v. Albacore Mar., Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010)

Summary:

Plaintiff is a Singaporean corporation. Defendant Albacore Maritime, Inc. ("Albacore") is a Marshall Islands corporation, which is in turn owned by Prime Marine Corp. ("Prime"), also a Marshall Islands corporation. Albacore contracted to purchase a ship from plaintiff, and reneged on the contract due to the financial crisis of 2008-09. The contract had a clause that it "shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London". Plaintiff began arbitration against Albacore, and sought to compel Prime into arbitration based on the allegation of veil-piercing between Prime and Albacore.

The court first found that it had subject matter jurisdiction under Section 4 of the Federal Arbitration Act, notwithstanding the fact that two foreign parties are involved. (Section 4 provides: "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28 . . . , for an order directing that such arbitration proceed in the manner provided for in such agreement.") 

The court then had to make a choice-of-law determination to decide the law to apply on plaintiff's veil-piercing claim. After noting that "[w]here the choice of law in a Convention case is between the law specified by the choice-of-law clause and federal common law, Second Circuit precedent has been less than crystal clear[,]" the court found that the law specified in the forum selection clause (i.e. English law) controls. The court then ordered the parties to further brief on the veil-piercing implications under English law.

Takeaway:

This is about as complicated as an arbitration-related case can get. First significant point is the extraordinary jurisdiction under Section 4 of the FAA, which essentially opens up the U.S. court to any arbitration dispute anywhere in the world with any parties--an indicator of just how pro-arbitration U.S. law is. Another significant point is the choice-of-law jurisprudence, which is always a complicated puzzle when a choice-of-law clause is litigated in a forum that does not use the law designated by the clause.