Thursday, January 11, 2007

7th Circuit Analyzes Forum Non Conveniens and the "Deemer Clause;" Dismisses for Lack of Subject Matter Jurisdiction

Per Intec USA, LLC v. Engle, 467 F.3d 1038 (7th Cir. Nov. 2, 2006):

Intec filed suit in North Carolina, its home state. . . . Before the court acted on the defendants' motion in North Carolina, Intec filed a new suit in Chicago[.] . . . The district court dismissed this suit on the ground of forum non conveniens. Intec's appeal principally rests on the proposition that the plaintiff's choice of forum should be respected in all but extraordinary cases. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). We doubt that this proposition has controlling force in litigation among firms all of which trade worldwide. See Kamel v. Hill-Rom Co., 108 F.3d 799, 804 (7th Cir.1997). . . . [T]he United States must be prepared to trust the judiciary of our partners, unless there are grounds to doubt the competence or honesty of the foreign judicial system. See The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). . . . Intec does not offer any reason to think that New Zealand would be a biased forum for this litigation. . . . Under Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), the federal court's task is not to made an independent decision but to predict how the Supreme Court of North Carolina would understand and apply its own law. New Zealand would try to do the same.

Before we decide just how much weight to give to the plaintiff's choice of forum, however, we must attend to subject-matter jurisdiction, for if there is none then the suit must be dismissed without regard to whether Chicago would be the most convenient forum. It is an open question whether a district court may dismiss on forum non conveniens grounds without deciding whether it has subject-matter jurisdiction. See Malaysia International Shipping Corp. v. Sinochem International Co., 436 F.3d 349 (3d Cir.2006), cert. granted, --- U.S. ----, 127 S.Ct. 36, --- L.Ed.2d ---- (2006). The majority in Sinochem concluded that jurisdictional issues always must be resolved ahead of all others. . . . Judge Stapleton replied in dissent that there are many reasons for not adjudicating--lack of subject-matter jurisdiction, lack of personal jurisdiction, lack of ripeness, abstention, and forum non conveniens, among others. He maintained that jurisdiction is vital only if the court proposes to issue a judgment on the merits. . . . [T]o avoid the need for further proceedings should the Supreme Court affirm in Sinochem, we turn to subject-matter jurisdiction. This is prudent in any event, because Intec may be tempted to try still a third federal forum (perhaps at the next trade show in Las Vegas), and if subject-matter jurisdiction is absent that maneuver must fail.

Intec has five members, all natural persons, and it alleged that all five are citizens of North Carolina. Yet one of them, John Smith, is a citizen of New Zealand. . . . [I]f Smith is treated as a citizen of New Zealand, then Intec is a citizen of both North Carolina and New Zealand. Subject-matter jurisdiction then would be lacking, first because citizens of New Zealand would be on both sides (so complete diversity, see Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435 (1806), would be missing), and second because 28 U.S.C. § 1332(a)(2) does not in any event extend to litigation in which all of the litigants are aliens. Intec rests its position on the trailing, unnumbered sentence in § 1332(a): "For the purposes of this section, section 1335, and section 1441, an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled." [This clause] could mean that a permanent-resident alien "shall be deemed a citizen [exclusively] of the State in which such alien is domiciled." Or it could mean that the alien "shall be deemed a citizen of the State in which such alien is domiciled [in addition to his foreign citizenship]." If the former, then Intec is a citizen of North Carolina only, and federal jurisdiction is proper; if the latter, then Intec has dual citizenship, and subject-matter jurisdiction is missing.

The first appellate court that addressed the issue thought that the language is "plain" and admits only of the former meaning: a permanent-resident alien is deemed to be a citizen of the state where he is domiciled, and not of his native nation. Singh v. A.G. Daimler-Benz, 9 F.3d 303 (3d Cir.1993). . . . Yet this statute is not self-contained. It does not say whether the deemed citizenship replaces, or adds to, the alien's actual citizenship[.] . . . When the meaning of this sentence in § 1332(a) came under appellate consideration a second time, the court held that the law's genesis could be considered. Because it unambiguously shows that the text's function is to add a (deemed) domestic citizenship to an alien who otherwise would come within the jurisdiction under § 1332(a)(2) or § 1332(a)(3), the court rejected Singh and held that the alien retains his national citizenship for purposes of § 1332(a). See Saadeh v. Farouki, 107 F.3d 52 (D.C.Cir.1997). . . . [H]aving selected the best reading of the text (that permanent-resident aliens have both state and foreign citizenship) a court should be willing to follow through logically. The belief behind the drafting choices made in 1988 was that dual citizenship usually would move cases to state court (as does dual corporate citizenship), but like other language it may have unanticipated effects at the fringes. See, e.g., Dodd v. United States, 545 U.S. 353, 125 S.Ct. 2478, 162 L.Ed.2d 343 (2005).

Intec loses under both our reading and the D.C. Circuit's, however. Its suit against these defendants cannot proceed in any federal court. The judgment of the district court is vacated, and the case is remanded with instructions to dismiss for lack of subject-matter jurisdiction.


At 5:16 PM, Blogger Anisul Haque said...

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