In Re: BP Shareholder ( 2013 )

Case: 12-20019 Document: 00512115053 Page: 1 Date Filed: 01/16/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 16, 2013
No. 12-20019 Lyle W. Cayce
consolidated with Clerk
12-20018
CITY OF NEW ORLEANS EMPLOYEES’ RETIREMENT SYSTEM,
Derivatively on Behalf of BP P.L.C.,
Plaintiff - Appellant
v.
ANTHONY B. HAYWARD; IAIN C. CONN; ROBERT W. DUDLEY; BYRON
E. GROTE; ANDY G. INGLIS; CARL-HENRIC SVANBERG; ANTONY
BURGMANS; CYNTHIA B. CARROLL; WILLIAM M. CASTELL; GEORGE
DAVID; DOUGLAS J. FLINT; DEANNE S. JULIUS; H. LAMAR MCKAY;
IAN MG PROSSER; ERROLL B. DAVIS, JR.; PETER SUTHERLAND;
ROBERT A. MALONE,
Defendants - Appellees
BP P.L.C.,
Nominal Defendant - Appellee
__________________________________________________________
CITY OF NEW ORLEANS EMPLOYEES’ RETIREMENT SYSTEM,
Derivatively on Behalf of BP P.L.C.,
Plaintiff - Appellant
v.
ANTHONY HAYWARD; ANDY INGLIS; CARL-HENRIC SVANBERG; H.
LAMAR MCKAY; WILLIAM CASTELL; ANTONY BURGMANS; CYNTHIA
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CARROLL; ERROLL B. DAVIS, JR.; IAIN C. CONN; ROBERT W. DUDLEY;
BYRON E. GROTE; GEORGE DAVID; DOUGLAS J. FLINT; DEANNE S.
JULIUS; IAN MG PROSSER; PETER SUTHERLAND; ROBERT A.
MALONE,
Defendants - Appellees
BP P.L.C.,
Nominal Defendant - Appellee
Appeals from the United States District Court
for the Southern District of Texas
USDC No. 4:10-CV-3447
Before HIGGINBOTHAM, CLEMENT, and HAYNES, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant City of New Orleans Employees’ Retirement System
(“NOERS”) is the only of several original plaintiffs to appeal the district court’s
forum-non-conveniens (“FNC”) dismissal of their shareholder derivative claims
on behalf of nominal Defendant BP p.l.c. (“BP”) against individual BP officers
and directors (“Defendants”). Because the district court did not abuse its
discretion, we AFFIRM.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Plaintiffs, BP shareholders, sued under the U.K. Companies Act 2006,
alleging that the 2010 Deepwater Horizon disaster was the culmination of a
longstanding pattern of Defendants’ breaches of fiduciary duties to BP.
Plaintiffs maintained that the action was properly before a U.S. court because
“BP’s business, operations, shareholders base and, unfortunately, victims, are
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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concentrated in the U.S.”; its operations “touch virtually every state in the
nation”; its “operations in Texas and the Gulf of Mexico are the most significant
part of BP’s operations and assets in the world”; the disaster was caused in the
U.S.; eight of the seventeen Defendants are U.S. citizens; and judicial economy
would best be served by proceeding in the U.S. court due to considerations
generated by “parallel civil and criminal proceedings in [the] forum.”
Defendants moved to dismiss, in relevant part, on FNC grounds, and the
district court granted Defendants’ motion. The district court then denied
Plaintiffs’ motion to alter or amend the court’s order under Federal Rule of Civil
Procedure 59(e). NOERS timely appealed.
II. DISCUSSION
A. FNC Dismissal
“We review a district court’s dismissal on the basis of FNC for clear abuse
of discretion.” Saqui v. Pride Cent. Am., LLC, 595 F.3d 206, 211 (5th Cir. 2010).
“[S]ubstantial deference” must be afforded to the district court’s decision “where
the court has considered all relevant public and private interest factors, and
where its balancing of these factors is reasonable.” Piper Aircraft Co. v. Reyno,
454 U.S. 235, 257 (1981). We are not to substitute our “own judgment for that
of the District Court.” See id. “[O]ur duty as an appellate court in reviewing
[FNC] decisions is to review the lower court’s decisionmaking process and
conclusion and determine if it is reasonable; our duty is not to perform a de novo
analysis and make the initial determination for the district court.” In re Air
Crash Disaster Near New Orleans, La. on July 9, 1982, 821 F.2d 1147, 1167 (5th
Cir. 1987) (en banc), vacated on other grounds sub nom. Pan Am. World Airways,
Inc. v. Lopez, 490 U.S. 1032 (1989).
District courts must engage in a two-part analysis to determine whether
to dismiss a case on FNC grounds. See Saqui, 595 F.3d at 211. First, they must
determine whether there is an available, adequate alternative forum that can
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hear the case. Id. If an alternative forum exists, courts then must “consider all
of the relevant factors of private interest, weighing in the balance the relevant
deference given the particular plaintiff’s initial choice of forum . . . . If the
district court finds that the private interests do not weigh in favor of the
dismissal, it must then consider the public interest factors.” In re Air Crash,
821 F.2d at 1165. A defendant moving for FNC dismissal must demonstrate that
the private and public interest factors “weigh heavily on the side of trial in the
foreign forum.” Id. at 1164. No single factor is to be given dispositive weight.
Syndicate 420 at Lloyd’s London v. Early Am. Ins. Co., 796 F.2d 821, 827 (5th
Cir. 1986). We review the district court’s analysis of each disputed factor.1
1. Availability
“An alternative forum is available when the entire case and all parties can
come within the jurisdiction of that forum.” Saqui, 595 F.3d at 211 (internal
quotation marks omitted). Here, to satisfy the availability requirement, the
district court conditioned FNC dismissal on Defendants either providing proof
of amenability to service of process or stipulating that they would “submit to the
jurisdiction of the English courts.” In re BP S’holder Derivative Litig., No. 4:10-
CV-3447, 2011 WL 4345209, at *6 (S.D. Tex. Sept. 15, 2011). The Defendants
filed the stipulation.
A defendant’s submission to the jurisdiction of a foreign forum sufficiently
satisfies the availability requirement. See Veba-Chemie A.G. v. M/V Getafix,
711 F.2d 1243, 1249 & n.12 (5th Cir. 1983) (“[W]e find that the conditional
dismissal, by inducing defendant’s submission to the jurisdiction of an
alternative forum, is one particularly effective manner of assuring that the
alternative forum is available.”). Accordingly, Defendants’ stipulation satisfies
the availability requirement here.
1
As the district court found the English forum to be adequate and NOERS does not
dispute this finding, we do not address adequacy.
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2. Plaintiff’s Forum Choice
As the district court recognized, there is usually a strong presumption in
favor of the plaintiff’s forum choice, which “‘should rarely be disturbed.’” In re
BP, 2011 WL 4345209, at *3 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508
(1947)). “A citizen’s forum choice should not be given dispositive weight,
however.” Piper Aircraft Co., 454 U.S. at 256 n.23. Indeed, analysis of the
plaintiff’s forum choice is intertwined with the public and private interest factors
such that “if the balance of conveniences suggests that trial in the chosen forum
would be unnecessarily burdensome for the defendant or the court, dismissal is
proper.” Id; see also In re Air Crash, 821 F.2d at 1165.
This case presents an exception to the general rule of deference, however,
because it “involves the special problems of [FNC] which inhere in derivative
actions.” Koster v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 521 (1947).
In a derivative action, “where there are hundreds of potential plaintiffs . . . the
claim of any one plaintiff that a forum is appropriate merely because it is his
home forum is considerably weakened.” Id. at 524. In derivative actions, a
plaintiff may either “have a substantial interest of his own to protect,” or he may
“be a mere phantom plaintiff with interest enough to enable him to institute the
action and little more.” Id. at 525.
Here, the district court found that Plaintiffs were phantoms as they
offered no proof of their own substantial interest in this litigation that should
afford their forum choice greater deference in this derivative action. See In re
BP, 2011 WL 4345209, at *5. Because NOERS’s failure to offer any proof of its
substantial interest in this litigation before the district court bars it from doing
so now, see LeMaire v. La. Dep’t of Transp. & Dev., 480 F.3d 383, 387 (5th Cir.
2007), we proceed to analyze the private and public interest factors.
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3. Private Interest Factors
In conducting an FNC analysis, the private interest factors that a district
court must consider are:
the relative ease of access to sources of proof; availability of
compulsory process for attendance of unwilling, and the cost of
obtaining attendance of willing, witnesses; possibility of view of
premises, if view would be appropriate to the action; and all other
practical problems that make trial of a case easy, expeditious and
inexpensive.
Gulf Oil, 330 U.S. at 508.2 Overall, the district court found that these factors
weighed slightly in favor of dismissal.
a. Relative Ease of Access to Sources of Proof
“[I]n the derivative action it is more likely that only the corporation’s
books, records and transactions will be important and only the defendant will be
affected by the choice of the place of production of records.” Koster, 330 U.S. at
526. On that basis, the district court found that this factor “favors England as
the appropriate forum.” In re BP, 2011 WL 4345209, at *6. The court reasoned
that “the majority of the relevant documents . . . are likely to be located . . . in
London,” and that “BP’s Board of Directors meets in England and . . . the records
of their discussions and decisions are maintained there.” Id. at *8. While the
court acknowledged that some documents would be found in the Eastern District
of Louisiana, it found those documents to be of “questionable relevance” and
“unlikely to outnumber” the relevant documents that could be found in England.
Id.
NOERS counters that the district court should have assigned greater
weight than it did to modern technological advancements that would ease
discovery burdens. NOERS also contends that “[w]here relevant and material
2
Like the district court, we consider only the first two private interest factors because
a view of the premises is irrelevant here and the discussion of “other practical problems” is
subsumed with in the other factors addressed.
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documents and witnesses are located in more than one country, the location does
not weigh in favor of either party and this private factor is neutral.” We
disagree.
As the district court observed, NOERS cited no cases that “suggest that
[technological] innovations render [the issue of the burdens associated with
transnational discovery] inconsequential to the [FNC] analysis.” In re BP, 2011
WL 4345209, at *8. Indeed, though advancements in technology may very well
facilitate access to sources of proof, they have by no means completely eliminated
the factor as a consideration. Cf. In re Volkswagen of Am., Inc., 545 F.3d 304,
316 (5th Cir. 2008) (en banc) (finding in § 1404 transfer of venue case that,
though “access to some sources of proof presents a lesser inconvenience now than
it might have absent recent developments, [this fact] does not render [the ease
of access] factor superfluous”). Thus, we conclude that the district court did not
abuse its discretion in determining that an English forum would provide the
greatest ease of access to sources of proof. The court could reasonably find that
most records relevant to this derivative lawsuit are located there, thereby best
facilitating discovery in that forum. See In re Air Crash, 821 F.2d at 1167.
b. Availability of Compulsory Process/Cost of Securing Witnesses
Based on the individual defendants’ location and citizenship, the district
court found that most witnesses would be subject to compulsory process in
England and that the cost of securing them in the United States would be
significant. In re BP, 2011 WL 4345209, at *9-10. Nevertheless, the court
determined that this factor weighed “only slightly in favor of England,” as “[a]
large minority of the individual defendants is American.” Id. at *10. NOERS
claims this factor should be a “neutral” because witnesses can be found “around
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the globe.” Like in the ease-of-access context, that does not demonstrate that the
district court abused its discretion.3
We conclude that the district court did not abuse its discretion in
determining that this factor weighed slightly in favor of dismissal. See
Syndicate 420, 796 F.2d at 831 (private interest factors strongly favor dismissal
where “[m]ost of [the] witnesses are British, many may prove unwilling to travel
to Louisiana to testify, . . . an American federal court is without power to compel
them to do so . . . . [, and] the cost of obtaining [their] attendance . . . would
certainly be considerable, and could prove to be prohibitive.”). Accordingly, we
conclude that the district court appropriately proceeded to a public interest
factor analysis.
4. Public Interest Factors
The public interest factors that a district court must consider in an FNC
analysis are:
the administrative difficulties flowing from court congestion; the
local interest in having localized controversies decided at home; the
interest in having the trial of a diversity case in a forum that is at
home with the law that must govern the action; the avoidance of
unnecessary problems in conflict of laws, or in the application of
foreign law; and the unfairness of burdening citizens in an
unrelated forum with jury duty.
Piper Aircraft Co., 454 U.S. at 241 n.6 (internal quotation marks omitted). The
district court found that the public interest factors weighed heavily in favor of
dismissal.
a. Administrative Difficulties
Administrative considerations consist of a “court’s interest in controlling
a crowded docket.” Baumgart v. Fairchild Aircraft Corp., 981 F.2d 824, 828 (5th
3
For the first time on appeal, NOERS also asserts that “not all seventeen individual
Defendants may be of equal importance.” Whatever the merit of this contention, it is waived
because NOERS did not raise it in the district court. See LeMaire, 480 F.3d at 387.
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Cir. 1993). Difficulties arise “when litigation is piled up in congested centers
instead of being handled at its origin.” Gulf Oil, 330 U.S. at 508. The Supreme
Court has recognized that derivative actions may be particularly burdensome on
a court’s administration, as that type of lawsuit “brings to the court more than
an ordinary task of adjudication; it brings a task of administration.” Koster, 330
U.S. at 526.
The district court reasonably found this factor favored dismissal, observing
that “dismissing this derivative suit, which constitutes one-third of the Court’s
MDL cases, would undoubtedly relieve a substantial burden on the Court’s
already ample caseload.” In re BP, 2011 WL 4345209, at *11. Further, the court
found that this case, rather than involving a great deal of overlap in the
discovery with the other pending MDL cases, would be burdensome in that it
would “generate separate pre-trial motions and . . . trials” as a result of the
“distinct legal issues and parties” involved in each of the cases. Id.4 We discern
no abuse of discretion in this analysis.
b. Local Interest
“The Supreme Court has recognized that ‘[t]here is a local interest in
having localized controversies decided at home.’” In re BP, 2011 WL 4345209, at
*11 (alteration in original) (quoting Gulf Oil, 330 U.S at 508-09). The district
court found that this factor weighed in favor of dismissal because the instant
lawsuit is intended to compensate the British company BP for its financial and
reputational harms, rather than to redress the impact of the Deepwater Horizon
incident in the United States. Id. at *12. Because this is a derivative action and
Plaintiffs sued on behalf of the British company BP for breaches of fiduciary
4
NOERS responds by raising two arguments for the first time on appeal: (1) that
technological advancements eliminate any difficulties on the court’s docket, and (2) that a
court’s voluntary acceptance of cases from an MDL panel should preclude it from avoiding
adjudication based on administrative difficulties. These arguments are waived and we do not
address them. See LeMaire, 480 F.3d at 387.
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duties, the court’s conclusion that England has the greater local interest was not
an abuse of discretion. See Koster, 330 U.S. at 526 (location of derivative action
most likely relevant only to defendant).
c. Interest in Having Trial at Home With the Governing
Law/Conflict-of-Law Problems
The foreign law factors in the FNC analysis recognize “the interest in
having the trial of a diversity case in a forum that is at home with the law that
must govern the action” and the importance of avoiding “unnecessary problems
in conflict of laws, or in the application of foreign law.” Saqui, 595 F.3d at 214.
Standing alone, the fact that a lawsuit might require a U.S. court to apply
foreign law is insufficient to justify FNC dismissal. See Schexnider v. McDermott
Int’l, Inc., 817 F.2d 1159, 1163 (5th Cir. 1987). “The doctrine of [FNC], however,
is designed in part to help courts avoid conducting complex exercises in
comparative law.” Piper Aircraft Co., 454 U.S. at 251.
The district court did not abuse its discretion in analyzing the two foreign
law public interest factors together and concluding that they “weigh heavily in
favor of England as the more convenient forum.”5 See In re BP, 2011 WL
4345209, at *12-14. The court explained that the specific English statute that
would be applied, the U.K. Companies Act, was enacted recently, thereby leaving
the U.S. court with little jurisprudence that would direct it in how to apply the
statute properly. Id. at *13. On this basis, the district court could reasonably
find that adjudicating the case would lead to “unnecessary problems in . . . the
application of foreign law.” See Saqui, 595 F.3d at 214.
d. Unfairness of Burdening Citizens with Jury Duty
5
For the first time on appeal, NOERS insists that “U.S. oil industry safety standards
for deepwater exploration and drilling activities in the Gulf are equally as relevant to resolving
this derivative action as is the U.K. statute.” Again, we do not consider this waived argument.
See LeMaire, 480 F.3d at 387.
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Finally, the district court considered the fact that “[j]ury duty is a burden
that ought not to be imposed upon the people of a community which has no
relation to the litigation.” Gulf Oil, 330 U.S. at 508-09. The court found that
this factor weighed in favor of dismissal since resolution of the instant claims
“would require a jury to delve deeply into whether a group of current and former
BP officers and directors, headquartered in England, properly governed an
English corporation. The jury would further have to decide the facts with
reference to standards set forth by the U.K. Parliament.” In re BP, 2011 WL
4345209, at *14. The district court also concluded that “it would be unfair to
burden the citizens of Louisiana with [a] lawsuit” that is relevant only to BP’s
internal governance in England and not to the personal injuries that resulted
from the Deepwater Horizon incident. Id. The district court acted within its
discretion in finding that it would be unduly burdensome to require a U.S. jury
to hear such a case.
In sum, the district court appropriately exercised its discretion in
assessing the relevant private and public interest factors and finding that they
weighed in favor of dismissal.
B. Failure to Consider Additional Conditions on Dismissal
The district court conditioned its FNC dismissal upon “[d]efendants either
(1) proffering adequate proof that they are, in fact, amenable to process in
England, or (2) submitting a stipulation that they will submit to the jurisdiction
of the appropriate English court.” In re BP, 2011 WL 4345209, at *16. NOERS
urges that our precedent requires a district court to consider, sua sponte, certain
additional enumerated measures before granting FNC dismissal. See Baris v.
Sulpicio Lines, Inc., 932 F.2d 1540, 1551 (5th Cir. 1991).
We require that district courts “take measures, as part of their dismissals
in [FNC] cases, to ensure that defendants will not attempt to evade the
jurisdiction of the foreign courts.” Id. These measures “often include
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agreements between the parties to litigate in another forum, to submit to service
of process in that jurisdiction, to waive the assertion of any limitations defenses,
to agree to discovery, and to agree to the enforceability of the foreign judgment.”
Id. (emphasis added). The district court has “discretion to determine the
conditions of dismissal or to determine that the dismissal should be
unconditional under the circumstances, . . . [but it must] ensure that plaintiffs
can reinstate suits in American courts if the defendants obstruct jurisdiction in
the alternative forum.” Id. (internal citations omitted); see also Robinson v.
TCI/US W. Commc’ns Inc., 117 F.3d 900, 908 (5th Cir. 1997).
Here, Defendants stipulated to English jurisdiction, and the district court
provided for Plaintiffs’ ability to reinstate suit in the U.S. forum “if the courts of
England refuse to accept jurisdiction.” In re BP, 2011 WL 4345209, at *16.
Because ensuring return jurisdiction to American courts is the only formal
requirement in this circuit, see Baris, 932 F.2d at 1551, we conclude that the
district court did not abuse its discretion in applying only these conditions to the
FNC dismissal.
C. Denial of Rule 59(e) Motion
Following the district court’s order granting FNC dismissal, Plaintiffs
moved to alter or amend the order under Rule 59(e) by seeking to add five
conditions to the dismissal. The district court denied the motion.
“[A] district court has considerable discretion in deciding whether to
reopen a case under Rule 59(e).” Edward H. Bohlin Co. v. Banning Co., 6 F.3d
350, 355 (5th Cir. 1993). Still, the discretion is not limitless, and “[t]he court
must strike the proper balance between two competing imperatives: (1) finality,
and (2) the need to render just decisions on the basis of all the facts.” Id. We
review the district court’s denial of a Rule 59(e) motion for abuse of discretion.
Schiller v. Physicians Res. Grp. Inc., 342 F.3d 563, 566 (5th Cir. 2003).
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“[A] motion to alter or amend the judgment under Rule 59(e) must clearly
establish either a manifest error of law or fact or must present newly discovered
evidence and cannot be used to raise arguments which could, and should, have
been made before the judgment issued.” Rosenzweig v. Azurix Corp., 332 F.3d
854, 863 (5th Cir. 2003) (internal quotation marks omitted). It also may be
appropriate “when there has been an intervening change in the controlling law.”
Schiller, 342 F.3d at 567. As NOERS did not offer any justification for the use
of this extraordinary remedy, the district court’s refusal to grant the motion was
not an abuse of discretion.
Because the district court did not abuse its discretion in the challenged
rulings, we AFFIRM.
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