Kisano Trade & Invest Limited v. Dev Lemster , 737 F.3d 869 ( 2013 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 13-1759
_____________
KISANO TRADE & INVEST LIMITED;
TRASTECO LTD; VADIM SHULMAN,
Appellants
v.
DEV LEMSTER; STEEL EQUIPMENT CORP; AKIVA
SAPIR;
SAPIR ENTITIES 1-100
______________
APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE WESTERN DISTRICT OF
PENNSYLVANIA
(D.C. Civil No. 11-cv-00852)
District Judge: Honorable Joy Flowers Conti
____________
Argued: October 8, 2013
____________
Before: FUENTES, GREENBERG and BARRY
Circuit Judges
(Opinion Filed: December 12, 2013)
____________
Bruce S. Marks, Esq. (Argued)
Thomas C. Sullivan, Esq.
Maria Temkin, Esq.
Marks & Sokolov
1835 Market Street
28th Floor
Philadelphia, PA 19103
Counsel for Appellants
Larry K. Elliott, Esq. (Argued)
David F. Russey, Esq.
Julie W. Vanneman, Esq.
Curt Vazquez, Esq.
Cohen & Grigsby
625 Liberty Avenue
Pittsburgh, PA 15222
Counsel for Appellees
____________
OPINION OF THE COURT
____________
BARRY, Circuit Judge
I. Introduction
In June of 2011, Kisano Trade & Invest Limited
(“Kisano”) and Trasteco Ltd. (“Trasteco”), two companies
owned by Vadim Shulman, filed suit in the U.S. District
Court for the Western District of Pennsylvania against Dev
Lemster and his company, Steel Equipment Corp. The
complaint alleged violations of the Racketeer Influenced
Corrupt Organizations Act (“RICO”), intentional interference
with contract, unjust enrichment, and breach of fiduciary
duty. After discovering evidence of what Shulman believed
to be fraud perpetrated by his business partner, Akiva Sapir,
an amended complaint added Shulman as a plaintiff, Sapir
and certain of his entities as defendants, and several claims of
fraud.
Between then and now, we vacated the grant of a
preliminary injunction, and the parties moved forward on
Sapir’s motions to dismiss the complaint for failure to state a
claim and on forum non conveniens grounds, the latter motion
offering Israel as an alternative forum. The motions were
referred by the District Court to the Magistrate Judge to issue
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a Report and Recommendation (the “R&R”). The R&R
recommended that the action be dismissed on forum non
conveniens grounds, reasoning that Israel would be the more
appropriate forum, and declined to reach the motion to
dismiss for failure to state a claim, leaving that to be
addressed, if appropriate, by the Israeli court. The District
Court adopted the R&R, and granted the motion to dismiss
for forum non conveniens “on the understanding that the case
may be refiled in Israel and that the defendants waived certain
statute of limitations defenses.” (A00060.) Plaintiffs now
appeal. We will affirm.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction pursuant to 28
U.S.C. § 1331 and 18 U.S.C. § 1964(c), as the underlying
claim asserts recovery under RICO. We have jurisdiction
pursuant to 28 U.S.C. § 1291. “‘[W]here the court has
considered all relevant public and private interest factors, and
where its balancing of these factors is reasonable, its decision
deserves substantial deference.’” Lony v. E.I. Du Pont de
Nemours & Co., 886 F.2d 628, 631–32 (3d Cir. 1989) (“Lony
I”) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257
(1981)) (alteration in original). Thus, “we do not perform a
de novo resolution of forum non conveniens issues,” and
instead review the District Court’s dismissal on grounds of
forum non conveniens for an abuse of discretion. Lacey v.
Cessna Aircraft Co., 862 F.2d 38, 43 (3d Cir. 1988).
III. Forum Non Conveniens
This case, at its core, involves plaintiffs’ allegations of
numerous claims of fraud—the Warren equipment “fraud,”
the Trasteco “secret deal,” the Kisano “secret deal,” the
Plama “secret deal,” the Veolia “secret deal,” and the New
York real estate “fraud.” The parties, at great length, have set
forth those facts that plaintiffs believe, on the one hand,
support those claims, and defendants believe, on the other,
defeat them. At the end of the day, however, the sole issue
before us for review is the dismissal on grounds of forum non
conveniens. We, therefore, will refer only to those facts
necessary to our analysis of that issue.
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Although a plaintiff’s choice of forum should rarely be
disturbed, “[w]hen an alternative forum has jurisdiction to
hear the case, and when trial in the plaintiff’s chosen forum
would ‘establish . . . oppressiveness and vexation to a
defendant . . . out of all proportion to plaintiff’s convenience,’
or when the ‘chosen forum [is] inappropriate because of
considerations affecting the court’s own administrative and
legal problems,’ the court may, in the exercise of its sound
discretion, dismiss the case.” Windt v. Qwest Commc’ns
Int’l, Inc., 529 F.3d 183, 189 (3d Cir. 2008) (quoting Koster
v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 524
(1947)) (second alteration in original). We have identified
the following four factors to guide a district court’s exercise
of discretion: (1) the amount of deference to be afforded to
plaintiffs’ choice of forum; (2) the availability of an adequate
alternative forum where defendants are amenable to process
and plaintiffs’ claims are cognizable;1 (3) relevant “private
interest” factors affecting the convenience of the litigants; and
(4) relevant “public interest” factors affecting the
convenience of the forum. See id. at 189–90.
Private interests to consider include the ease of access
to sources of proof; ability to compel witness attendance if
necessary; means to view relevant premises and objects; and
any other potential obstacle impeding an otherwise easy, cost-
1
Although plaintiffs do not explicitly argue that Israel is not
an adequate alternative forum, they initially contended, as
part of their convenience analysis, that Lemster and Steel
Equipment Corp. would not be amenable to suit in Israel.
Those defendants, however, have consented to jurisdiction in
Israel. See Dahl v. United Techs. Corp., 632 F.2d 1027, 1029
(3d Cir. 1980) (affirming forum non conveniens dismissal on
condition that defendant consent to Norwegian jurisdiction).
Parenthetically, it is difficult to ignore the reality that this
case has really become Shulman versus Sapir, and that the
other parties, while they may be witnesses or be in control of
relevant evidence, have receded in importance. In any event,
because there is no serious dispute on appeal that Israel does
not present an adequate alternative forum, we will not further
address this factor.
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effective, and expeditious trial. Delta Air Lines, Inc. v.
Chimet, S.p.A., 619 F.3d 288, 296 (3d Cir. 2010) (citing Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). Public
interests include administrative difficulties arising from
increasingly overburdened courts; local interests in having the
case tried at home; desire to have the forum match the law
that is to govern the case to avoid conflict of laws problems
or difficulty in the application of foreign law; and avoiding
unfairly burdening citizens in an unrelated forum with jury
duty. Id. (citing Piper Aircraft, 454 U.S. at 241 n.6).
A. Level of Deference
We first consider whether the District Court abused its
discretion in affording plaintiffs’ choice of forum a lesser
degree of deference than would be accorded a domestic
plaintiff. “Ordinarily, a strong presumption of convenience
exists in favor of a domestic plaintiff’s chosen forum, and this
presumption may be overcome only when the balance of the
public and private interests clearly favors an alternate forum.”
Windt, 529 F.3d at 190. When a plaintiff is foreign, however,
the choice of a United States forum “deserves less deference.”
Piper Aircraft, 454 U.S. at 256; see also Sinochem Int’l Co. v.
Malaysia Int’l Shipping Corp., 549 U.S. 422, 430 (2007)
(“When the plaintiff’s choice is not its home forum, . . . the
presumption in the plaintiff’s favor applies with less force, for
the assumption that the chosen forum is appropriate is in such
cases less reasonable.” (internal quotation marks omitted)).
Among other reasons, courts are wary of the potential for
foreign plaintiffs to seek jurisdiction in the United States
because the laws may be more favorable to their claims. See
Piper Aircraft, 454 U.S. at 249 n.15 (“[D]ismissal may be
warranted where a plaintiff chooses a particular forum, not
because it is convenient, but solely in order to . . . take
advantage of favorable law.”).
Shulman is an Israeli citizen, Kisano is a Cypriot
corporation, and Trasteco is a Maltese LLC. Despite their
foreign citizenship, they argue that the District Court erred by
granting lesser deference to their choice of forum because of
the “equal access” provision of a treaty between the United
States and Israel which, as relevant here, states:
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Nationals and companies of either Party shall be
accorded national treatment and most-favored-
nation treatment with respect to access to the
courts of justice and to administrative tribunals
and agencies within the territories of the other
Party, in all degrees of jurisdiction, both in
pursuit and in defense of their rights.
(A00553 (U.S.-Isr. Treaty, art. V(1)).) Plaintiffs invoke
Blanco v. Banco Industrial de Venezuela, S.A., 997 F.2d 974
(2d Cir. 1993), as essentially their sole support for the
proposition that “when a treaty with a foreign nation accords
its nationals access to our courts equivalent to that provided
American citizens, identical forum non conveniens standards
must be applied to such nationals by American courts.” Id. at
981. Acknowledging that a United States-Venezuela treaty
had an equal access provision, the Second Circuit found that
“no discount may be imposed upon the plaintiff’s initial
choice of a New York forum in this case solely because
[plaintiff] is a foreign corporation.” Id.
For several reasons, we reject plaintiffs’ invitation to
conclude that the equal access provision in the United States-
Israel treaty requires us to find that plaintiffs’ forum choice is
entitled to the identical deference courts must afford a
domestic plaintiff. First, the Second Circuit’s discussion of
the level of deference owed a foreign plaintiff who is a citizen
of a country with an “equal access” agreement with the
United States was dicta. The court dismissed the action on
forum non conveniens grounds, notwithstanding the deference
“owed,” because of the strong private and public factors
favoring a Venezuelan forum. Blanco, 997 F.2d at 981; see
In re Air Crash Near Peixoto de Azeveda, Braz., on Sept. 29,
2006, 574 F. Supp. 2d 272, 280-81 (E.D.N.Y. 2008) (finding
that Blanco’s discussion was dicta and holding that foreign
plaintiff’s forum choice subject to an identical provision is
afforded “reduced deference”).
Moreover, Blanco’s reasoning has been significantly
diminished, if not altogether rejected, by a subsequent Second
Circuit case. In that case, the court held that even if a treaty
entitled plaintiffs “to access American courts on the same
6
terms as American citizens . . . [its] case law does not support
plaintiffs’ assertion that such a treaty would require that their
choice of forum be afforded the same deference afforded to a
U.S. citizen bringing suit in his or her home forum.” Pollux
Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 73 (2d
Cir. 2003). Rather, “[p]laintiffs are only entitled, at best, to
the lesser deference afforded a U.S. citizen living abroad who
sues in a U.S. forum.” Id. The Second Circuit noted that the
touchstone inquiry regarding the level of deference owed a
plaintiff’s choice of forum is not the “citizenship or residence
of the parties,” but the convenience of the forum. Id. The
“lesser degree of deference typically afforded foreign
plaintiffs . . . . is not intended to create difficulties for foreign
plaintiffs, but is based instead on realistic doubts about the
ultimate convenience of a foreign plaintiff’s choice to litigate
in the United States.” Id.
The Second Circuit’s more recent discussion of the
issue is both more persuasive and, more importantly,
consistent with the Supreme Court’s and our Court’s forum
non conveniens case law. As the Supreme Court has
explained, the presumption in favor of a domestic plaintiff’s
choice of forum—and the reduced deference owed a foreign
plaintiff—is based on convenience:
When the home forum has been chosen, it is
reasonable to assume that this choice is
convenient. When the plaintiff is foreign,
however, this assumption is much less
reasonable. Because the central purpose of any
forum non conveniens inquiry is to ensure that
the trial is convenient, a foreign plaintiff’s
choice deserves less deference.
Piper Aircraft, 454 U.S. at 255-56; see also Windt, 529 F.3d
at 190-91 (quoting Piper Aircraft and affording lesser
deference to foreign plaintiffs). As the Pollux Holding court
noted, a court considering a motion to dismiss on forum non
conveniens grounds should not assign “talismanic
significance to the citizenship or residence of the parties,” but
should give less deference to a foreign plaintiff’s choice of
forum because “it would be less reasonable to assume the
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choice of forum is based on convenience.” 329 F.3d at 73
(internal quotation marks omitted); see also Lony I, 886 F.2d
at 634 (“[T]he reason for giving a foreign plaintiff’s choice
less deference is not xenophobia, but merely a reluctance to
assume that the choice is a convenient one . . . .”).
The focus of the deference inquiry in the Supreme
Court, in this Court, and in the Second Circuit is on
convenience, not on the particular significance of a party’s
residence or citizenship or a party’s ability to invoke a United
States court’s jurisdiction. That the United States and Israel
have agreed to open up their judicial gates to their respective
citizens does nothing to disturb the longstanding presumption
that a foreign plaintiff’s choice of a United States forum is
less likely to be motivated by convenience. See 14D Charles
Alan Wright et al., Federal Practice and Procedure § 3828.2
(3d ed. 2007) (“[I]n practice, federal courts generally hold
that [treaties promising equal access to courts] do not entitle
foreign plaintiffs to the same deference as United States
citizens.”). We, therefore, conclude that the equal access
provision in the United States-Israel treaty does not change
our analysis with respect to the degree of deference a district
court must afford a foreign plaintiff’s choice of forum.
Of course, foreign plaintiffs “may bolster the amount
of deference due their choice by making a strong showing of
convenience.” Windt, 529 F.3d at 190 (emphasis added). In
performing its forum non conveniens inquiry, a district court
“must assess[, and articulate,] whether the considerable
evidence of convenience has . . . overcome any reason to
refrain from extending full deference to the foreign plaintiff’s
choice.” Lony I, 886 F.2d at 634. This is not a precise
inquiry, but, generally, “the greater the plaintiff’s or the
lawsuit’s bona fide connection to the United States and to the
forum of choice and the more it appears that considerations of
convenience favor the conduct of the lawsuit in the United
States, the more difficult it will be for the defendant to gain
dismissal for forum non conveniens.” Iragorri v. United
Techs. Corp., 274 F.3d 65, 72 (2d Cir. 2001) (footnotes
omitted).
The District Court considered the evidence of
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convenience and concluded that plaintiffs’ choice of forum
merited only lesser deference. It did not abuse its discretion
in so concluding. In attempting to make a strong showing of
convenience, plaintiffs point principally to Shulman’s
dealings with Lemster and Steel Equipment Corp. in
Pennsylvania, including the Warren deal, his and
Trasteco/Kisano’s prior business dealings in the United
States, the existence of key English-speaking witnesses in the
forum, and his local attorneys’ knowledge of the case.2 The
District Court, however, concluded that Shulman and his
companies’ connections with the United States were not
particularly extensive or significant. Other than having some
business dealings in the United States, such as ownership of
real estate in New York, and minority ownership in an Ohio
Steel plant, all managed remotely, Shulman himself has had
little connection with the United States. And, although he is
correct that the wiring of money and the purchase of the
Warren plant and equipment took place in Pennsylvania, the
District Court correctly noted that the agency relationship was
formed in Israel, all negotiations for the Warren deal took
place in Israel, and most of the conduct for the claims at issue
took place in Israel.3 Moreover, the District Court did not err
2
Plaintiffs contend that it was error for the District Court to
consider Shulman’s position in a separate West Virginia case
in which he argued, in a motion to dismiss for lack of
personal jurisdiction, that he did no business there and that it
would be an unfair burden on him to personally defend claims
in a remote forum in a foreign language. While, to be sure,
the jurisdictional question in that case is different from the
question before us, the District Court was entitled to take
judicial notice of Shulman’s reasons when disputing personal
jurisdiction. If it is such a burden for him to address a lawsuit
in a neighboring United States jurisdiction in the English
language, it seriously undermines an argument that his forum
choice in this case was motivated by his convenience.
3
Plaintiffs’ strong reliance on the conduct underlying the
Warren plant and equipment purchase in Pennsylvania is
misplaced, as explained in the District Court’s discussion of
the private interest factors. Shulman claims that much of the
evidence of that fraud, including relevant witnesses, exists in
Pennsylvania. However, Sapir does not dispute that the
9
in crediting the unrebutted declaration of an Israeli lawyer
stating that documents in English would not have to be
translated into Hebrew in an Israeli court. Finally, the
convenience of counsel in a matter is not a relevant factor.
See Solomon v. Cont'l Am. Life Ins. Co., 472 F.2d 1043, 1047
(3d Cir. 1973).4 The District Court did not abuse its
discretion in finding that plaintiffs did not make a strong
showing of convenience and therefore affording lesser
deference to their choice of forum.
B. “Oppressiveness and Vexation”
Having concluded that the District Court did not err in
according lesser deference to plaintiffs’ choice of forum, we
turn to whether it abused its discretion when weighing the
private and public interest factors in determining if plaintiffs’
actual purchase price of the plant and equipment was
approximately $6.6 million. Rather, he argues that Shulman
knew the actual purchase price, as it was discussed during
negotiations, and the alleged additional $6.4 million received
by Sapir was consideration for separate business deals—that
there was, in other words, no misrepresentation. It appears,
therefore, that much of the evidence that exists in
Pennsylvania—such as the wires and witnesses that can
authenticate them—has been admitted by Sapir. Sapir’s
defense apparently relies on what happened during the
negotiation of the deal, in Israel.
4
Defendants also argue that plaintiffs engaged in forum
shopping to take advantage of the favorable United States
laws, particularly RICO. The District Court declined to make
a finding of forum shopping and did not consider it in its
convenience analysis. Nevertheless, it is at least worth noting
that the possibility of a treble damages award under RICO—
and the unavailability of such remedy in Israel—may have, at
least in part, motivated plaintiffs to choose a United States
forum. See Norex Petroleum Ltd. v. Access Indus., Inc., 416
F.3d 146, 155 (2d Cir. 2005) (noting possibility of forum-
shopping motives based on availability of RICO awards
despite lack of district court findings). This, of course, would
further support a presumption that plaintiffs’ forum choice
was not based on convenience.
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chosen forum would cause “oppressiveness and vexation to a
defendant . . . out of all proportion to plaintiff’s
convenience.” Koster, 330 U.S. at 524. When seeking
dismissal on grounds of forum non conveniens, a defendant
must show that the balance of public and private factors “tips
decidedly in favor of trial in the foreign forum.” Lacey v.
Cessna Aircraft Co., 932 F.2d 170, 180 (3d Cir. 1991)
(“Lacey II”).
As an initial matter, plaintiffs argue that the District
Court erred as a matter of law in failing to apply the
“oppressiveness and vexation” standard. This argument is
without merit. While the R&R did not specifically mention
those words, the Magistrate Judge’s analysis and the District
Court’s opinion adopting the R&R clearly reflect that the
appropriate standard was applied. Moreover, the District
Court, when adopting and supplementing the R&R, explicitly
acknowledged this standard when overruling plaintiffs’
objection that the Magistrate Judge “faile[ed] to apply the
‘oppressiveness and vexation’ standard.” (A00055.)
Although the District Court did not engage in a lengthy
discussion of “oppressiveness and vexation,” its thorough
analysis of the private and public interest factors and its
findings reflect a correct understanding of the standard and
permits our appellate review of the Court’s “actual
consideration and analysis.” Windt, 529 F.3d at 196 (stating
that District Court’s failure to state correct “oppressiveness
and vexation” standard was not error when it correctly
applied the standard and permitted meaningful appellate
review).
1. Private Interest Factors
Plaintiffs argue that the District Court abused its
discretion in its assessment of the private interest factors. To
reiterate, private interests include such things as ease of
access to sources of proof, ability to compel witness
attendance, and other potential obstacles to a cost-effective
and expeditious trial. Delta Air Lines, Inc., 619 F.3d at 296.
The parties go through lengthy discussions of the
witnesses, their countries of residence, their preferred
11
languages, and the facts to which each may testify. We need
not scrutinize all of these materials to perform our function of
appellate review, nor was it necessary for the District Court to
have done so. See id. at 299-300 (“The Supreme Court has
rejected the suggestion that defendants seeking forum non
conveniens dismissal must submit affidavits identifying the
witnesses they would call and the testimony these would
provide if the trial were held in the alternative forum,
explaining that such detail is not necessary. Rather, the
defendant must provide enough information to enable the
District Court to balance the parties’ interests.” (internal
citations and quotation marks omitted)).
It suffices to say that Shulman identifies several
witnesses located in the United States with knowledge of the
various deals, while Sapir identifies nearly twenty witnesses
located abroad, the majority of whom live in Israel, the
country of residence of both Sapir and Shulman. Sapir
contends that Shulman’s witnesses in the United States will
testify to facts not in dispute, such as the purchase price of the
Warren plant and equipment and the fact that $500,000 was
never paid to one Bob Stump in connection with this
purchase. Rather, Sapir’s defense is that Shulman knew the
actual purchase price and that the witnesses with information
regarding the actual negotiation of the disputed deals are
located in Israel or live closer to Israel. Shulman also argues,
without any authority, that there are roughly 18,700 pages of
documents in English that would need to be translated into
Hebrew in an Israeli forum. As noted above, Sapir provided
the declaration of an Israeli lawyer, asserting that documents
in English need not be translated because Israel courts are
typically proficient in English.5
5
Plaintiffs also object to the District Court’s consideration of
defendant Sapir’s medical issues. Sapir submitted a
declaration stating that he suffers from antiphospholipid
syndrome which prevents him from flying long distances and
that traveling to the United States would cause severe health
risks. The District Court, however, with the competing
affidavits of doctors from both sides, declined to conclusively
resolve the issue and instead based its decision on other
private interests. We do not address it further.
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The location of the parties, their witnesses, and the
availability of evidence favor resolution in Israel. The
District Court did not abuse its discretion in concluding that
the private interest factors weighed in favor of dismissal.
2. Public Interest Factors
Plaintiffs also argue that the District Court erred in
weighing the public interest factors because it applied the
wrong standard, citing Lacey II for the proposition that absent
a showing that the private interest factors impose
oppressiveness or vexation, a defendant must show the public
interest factors weigh heavily in favor of dismissal. Plaintiffs
misstate the relevant test: To prevail on a forum non
conveniens motion, “the movant must show that the balance
of these [private and public interest] factors tips decidedly in
favor of trial in the foreign forum.” Lacey II, 932 F.2d at 180
(emphasis added).
Plaintiffs contend that there is no congestion in the
chosen district, that there is a strong federal interest in
plaintiffs’ choice of forum, that a United States jury has a
strong interest in the case, that Pennsylvania law will apply,
that the locus of the culpable conduct occurred in
Pennsylvania, and that the District Court has already invested
substantial resources in the case.
As the District Court noted, however, Shulman and
Sapir met in Israel, discussed and negotiated the purchase of
the Warren plant and equipment in Israel, discussed the coal
deals in Israel, and most interactions with each other took
place in Israel, Monaco or the Ukraine, not in Pennsylvania
(or even in the United States). Other than the actual wire
payments and Shulman’s law firm, there appears to be no
other connection to Pennsylvania, and little else to the United
States. The District Court further concluded that there had
been no apparent progress made in the case. As to the other
factors, the District Court found the choice-of-law issue
potentially complicated and did not address it. See id. at 187
n.14 (“[I]n resolving a forum non conveniens motion, the
district court is not required to predict what law the foreign
court would apply.”). It also correctly noted that not every
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public interest factor need weigh in favor of dismissal.
Accordingly, the District Court did not abuse its
discretion in finding that public interest factors weighed in
favor of dismissal.
IV. Conclusion
The order of the District Court dismissing the action
on forum non conveniens grounds will be affirmed.
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