Gramercy Emerging Markets Fund v. Allied Irish Banks, P.L.C. ( 2017 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
GRAMERCY EMERGING §
MARKETS FUND, BALKAN § No. 49, 2017
VENTURES LLC, AND RILA §
VENTURES LLC, § Court Below: Court of Chancery
§ of the State of Delaware
Plaintiffs Below, §
Appellants, § C.A. No. 10321–VCG
§
v. §
§
ALLIED IRISH BANKS, P.L.C., §
AND THE BULGARIAN §
AMERICAN ENTERPRISE FUND, §
§
Defendants Below, §
Appellees. §
Submitted: September 13, 2017
Decided: October 27, 2017
Before STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ, and
TRAYNOR, Justices, constituting the Court en Banc.
Upon appeal from the Court of Chancery. AFFIRMED.
Stephen B. Brauerman, Esquire, Sara E. Bussiere, Esquire, BAYARD, P.A.,
Wilmington, Delaware; Sean F. O’Shea, Esquire, (argued), Michael E. Petrella,
Esquire, Amanda L. Devereux, Esquire, Brian B. Alexander, Esquire, BOIES
SCHILLER FLEXNER LLP, New York, New York, Attorneys for Appellants,
Gramercy Emerging Markets Fund, Balkan Ventures LLC, and Rila Ventures LLC.
Kevin R. Shannon, Esquire, Christopher N. Kelly, Esquire, POTTER ANDERSON
& CORROON LLP, Wilmington, Delaware; Walter C. Carlson, Esquire, (argued),
Elizabeth Y. Austin, Esquire, SIDLEY AUSTIN LLP, Chicago, Illinois, Attorneys
for Appellee, Allied Irish Banks, P.L.C.
Kenneth J. Nachbar, Esquire, Ryan D. Stottman, Esquire, MORRIS, NICHOLS,
ARSHT & TUNNELL LLP, Wilmington, Delaware; Christopher Landau, P.C.,
KIRKLAND & ELLIS LLP, Washington, D.C.; Brian D. Sieve, P.C., Jessica L.
Staiger, Esquire, KIRKLAND & ELLIS LLP, Chicago, Illinois; Jeremy M.
Feigenbaum, Esquire, (argued), KIRKLAND & ELLIS LLP, New York, New York,
Attorneys for Appellee, Bulgarian-American Enterprise Fund.
STRINE, Chief Justice:
In this case, a Cayman Islands investment fund and two of its Delaware
subsidiaries (collectively “Gramercy”) sue a bank organized under Delaware law
with offices in Illinois and Bulgaria (Bulgarian-American Enterprise Fund, or
“Bulgarian-American”) and an Irish bank headquartered in Dublin (Allied Irish
Banks, P.L.C., or “Allied”) over claims they admit arise under Bulgarian law and
have no connection to activity that took place in Delaware. Delaware is the second
forum in which Gramercy sought to press its Bulgarian claims. Like Delaware, the
first forum was not Bulgaria, it was Illinois, where: (i) after extensive discovery and
briefing on the issue of forum non conveniens, the Circuit Court of Cook County in
Chicago granted a motion to dismiss; (ii) the Illinois Appellate Court unanimously
affirmed the Circuit Court’s dismissal; and (iii) the Illinois Supreme Court denied
Gramercy’s petition for leave to appeal.
After its suit reached a dead-end in Illinois, Gramercy, rather than going to
Bulgaria and suing in the forum whose laws govern its claims and where its
investment in Bulgarian-American took place, then sued in Delaware. Bulgarian-
American and Allied filed a motion to dismiss, arguing Bulgaria was the appropriate
forum for the litigation. In granting Bulgarian-American and Allied’s motion and
holding that Gramercy’s suit did not merit the overwhelming hardship standard
afforded to first-filed actions under Cryo-Maid, the Court of Chancery was forced
to address confusing arguments about this Court’s forum non conveniens precedent,
in particular the relationship among this Court’s longstanding decisions in Cryo-
Maid1 and McWane,2 and a more recent decision, Lisa, S.A. v. Mayorga.3
The fact pattern in this case diverges from the scenarios we usually see facing
motions to dismiss for forum non conveniens: (1) a first-filed Delaware action with
no pending descendants, which implicates Cryo-Maid’s overwhelming hardship
standard; and (2) a Delaware action with a predecessor pending elsewhere, which
implicates McWane’s discretionary standard. Likely for this reason, the Court of
Chancery felt it had just two options for its legal analysis—Cryo-Maid or McWane—
and looked to Lisa for guidance in choosing between the two.
Bulgarian-American and Allied contended that Lisa, rather than being a very
fact-specific ruling, set forth broad principles, principles about which the parties
disagree. Although Gramercy interpreted Lisa to apply the McWane standard only
to cases in which the no longer pending first-filed case was decided on the merits,
Bulgarian-American and Allied interpreted Lisa as extending McWane to all cases
in which the first-filed case was decided, regardless of whether that decision was on
the merits. The heart of the parties’ disagreement was this: when a first-filed suit is
procedurally dismissed, is a motion to dismiss for forum non conveniens in a later-
filed Delaware suit subject to the overwhelming hardship standard?
1
Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681 (Del. 1964).
2
McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281 (Del. 1970).
3
Lisa, S.A. v. Mayorga, 993 A.2d 1042 (Del. 2010).
2
The Court of Chancery correctly held that the Delaware action was not first-
filed, and that to obtain dismissal on forum non conveniens grounds, Bulgarian-
American and Allied did not need to show overwhelming hardship. But, because
the Illinois case was no longer pending, and was not dismissed on the merits like the
first-filed action in Lisa, McWane was no longer the proper focus for the Court of
Chancery’s analysis.
The Illinois action had relevance in the forum non conveniens analysis
because it meant that analysis would not be tilted in Gramercy’s favor under the
overwhelming hardship standard. But, because the Illinois action was not dismissed
on its merits, but instead for forum non conveniens, it should not have shifted the
Court’s focus from Cryo-Maid to McWane. Between Cryo-Maid’s overwhelming
hardship standard and McWane’s discretionary standard lies an intermediate analysis
that applies to situations like Gramercy’s: a straightforward assessment of the Cryo-
Maid factors, where dismissal is appropriate if those factors weigh in favor of that
outcome.
I.
To understand how this case was presented before the Court of Chancery, it
is useful to consider the three key cases that framed the parties’ duel over
overwhelming hardship. We begin with the first, Cryo-Maid.
3
A.
In Cryo-Maid, this Court considered whether to stay a first-filed Delaware
action in favor of an action pending in Illinois. In deciding to stay the Delaware
action, this Court considered the following factors: “(1) [t]he relative ease of access
to proof; (2) the availability of compulsory process for witnesses; (3) the possibility
of the view of the permises [sic], if appropriate; . . . (4) all other practical problems
that would make the trial of the case easy, expeditious and inexpensive;” and (5)
“whether or not the controversy is dependent upon the application of Delaware law
which the courts of this State more properly should decide than those of another
jurisdiction.”4 “A sixth [factor]—the pendency or nonpendency of a similar action
in another jurisdiction—was added to the Cryo-Maid framework by subsequent
decisions.”5 Together, these factors have come to form the core of Delaware’s
traditional forum non conveniens analysis.
Typically, when Cryo-Maid is invoked, the plaintiff has chosen Delaware as
its first forum. When that is the case, for dismissal to be granted, the Cryo-Maid
factors must weigh “overwhelmingly in favor of the defendant.” 6 The “short-hand
4
Cryo-Maid, supra note 1, at 684.
5
1-5 DONALD J. WOLFE, JR. & MICHAEL A. PITTENGER, CORPORATE AND COMMERCIAL PRACTICE
IN THE DELAWARE COURT OF CHANCERY § 5.02 (2017). Although the addition of this factor is
formally attributed to later cases, Cryo-Maid itself discussed “the pendency of a similar action in
another jurisdiction” in making its determination to stay the Delaware action at issue in the case.
Cryo-Maid, supra note 1, at 683.
6
E.g. Kolber v. Holyoke Shares, Inc., 213 A.2d 444, 447 (Del. 1965).
4
phrase ‘overwhelming hardship’ emerged” from the post Cryo-Maid case law,
reflecting our courts’ reluctance to lightly disturb a plaintiff’s first choice of fora.7
When a case first-filed in Delaware is challenged by a motion to dismiss for forum
non conveniens, “[d]ismissa[l] on the basis of forum non conveniens [is] appropriate
only in the rare case involving undue hardship and inconvenience.”8
B.
In McWane, this Court considered whether or not to stay a later-filed
Delaware action in favor of a first-filed Alabama action. In deciding to stay the
Delaware action, this Court distinguished the forum non conveniens analysis for
first-filed Delaware actions from the forum non conveniens analysis for later-filed
Delaware actions related to an action pending in another jurisdiction. As McWane
clarified, “in view of [a] prior action pending,” Delaware courts considering a
motion to dismiss for forum non conveniens should ask whether “there are facts and
circumstances sufficient to . . . grant the stay within the range of the Court’s
discretion.”9 As this Court recently summarized:
Delaware courts considering a motion to stay or dismiss in favor of a
previously filed action have applied McWane’s three-factor test: (1) is
there a prior action pending elsewhere; (2) in a court capable of doing
prompt and complete justice; (3) involving the same parties and the
same issues? If all three criteria are met, McWane and its progeny
7
IM2 Merch. & Mfg., Inc. v. Tirex Corp., 2000 WL 1664168, at *1 (Del. Ch. Nov. 2, 2000).
8
WOLFE & PITTENGER, supra note 5, § 5.02.
9
McWane, supra note 2, at 283.
5
establish a strong preference for the litigation of a dispute in the forum
in which the first action was filed.10
When a case is not first-filed in Delaware and its predecessor remains
pending, McWane applies, and Delaware courts “typically will defer to [the] first-
filed action in another forum if that action involves substantially the same parties
and issues as the litigation pending in Delaware, and will stay the later-filed
Delaware action pending adjudication of the issues in the competing forum.”11
Although the evidentiary burden a moving party faces under Cryo-Maid’s
overwhelming hardship analysis is more demanding than what that party would face
under McWane’s discretionary analysis, the relevant considerations under the two
analyses are related. “In addition to the comity considerations articulated in
McWane, the Court of Chancery, in assessing motions to stay Delaware litigation
under the first-filed rule, frequently analyze[s] the same ‘practicality’ factors
traditionally applied under the forum non conveniens doctrine.”12 In fact, in
McWane itself, this Court recognized five of the six Cryo-Maid considerations in
deciding to stay the Delaware action in favor of the first-filed Alabama action that
was still pending.13
10
LG Elecs., Inc. v. InterDigital Commc’ns, Inc., 114 A.3d 1246, 1252 (Del. 2015) (internal
citation omitted).
11
WOLFE & PITTENGER, supra note 5, § 5.01.
12
Id.
13
McWane, supra note 2, at 283.
6
It is no coincidence that McWane discussed the Cryo-Maid factors in its
analysis of the circumstances compelling a stay in the case. “McWane does not hold
that consideration of the forum non conveniens factors is inappropriate in connection
with the analysis mandated by the first-filed rule. Instead, McWane holds that
imposing the same high burden on defendants in the first-filed context as in the
forum non conveniens context and failing to consider principles of comity in
conjunction with the first-filed analysis constitutes error.”14
McWane draws on Cryo-Maid’s factors because both tests are rooted in forum
non conveniens doctrine. “[W]hat distinguishes the application of [the forum non
conveniens] factors in the McWane [and Cryo-Maid] contexts is ‘the background
presumption against which the elements are applied.’”15 Under Cryo-Maid,
defendants must establish overwhelming hardship for Delaware courts to grant
dismissal. Under McWane, Delaware courts have greater discretion in determining
whether a stay or dismissal is proper.
C.
In Lisa, this Court considered whether a later-filed Delaware action whose
predecessors were no longer pending still triggered McWane’s discretionary
analysis. Lisa was an unusual case because the Delaware action was the fourth
14
WOLFE & PITTENGER, supra note 5, § 5.01.
15
Id. (citing Apple Computer, Inc. v. Exponential Tech., Inc., 1999 Del. Ch. LEXIS 9, at *51 (Jan.
21, 1999).
7
action filed by Lisa, S.A., which had previously filed two actions in the Florida state
courts, and one in the Florida federal courts.16
The Court of Chancery previously stayed Lisa’s Delaware action pending the
resolution of the 1998 Florida Action, the first of its three predecessors in Florida.17
This made sense because Lisa’s Delaware action was brought to ensure that it could
obtain relief in the 1998 Florida Action: the Delaware suit involved a challenge to
corporate actions that Lisa contended unfairly threatened its standing to gain relief
in that action.18
The 1998 Florida Action was later dismissed with prejudice and the other two
Florida actions were dismissed for forum non conveniens.19 And the Florida Third
District Court of Appeal affirmed the 1998 Florida Action’s dismissal.20
It was only after all three of the Florida actions were dismissed that the Court
of Chancery dismissed the Delaware case on, among other grounds, “forum non
conveniens.”21 In so doing, the Court of Chancery assessed the Cryo-Maid factors,
16
Lisa, S.A. v. Mayorga, 2009 WL 1846308, at *3 (Del. Ch. June 22, 2009), aff’d, 993 A.2d 1042
(Del. 2010).
17
“[T]he Court of Chancery stayed the Delaware action in favor of the then-pending first-filed
1998 Florida Action, and held the motion to dismiss [for forum non conveniens] in abeyance
pending the outcome of Lisa’s appeal in that Florida action.” Lisa, supra note 3, at 1045.
18
Id.
19
Id. at 1045, 1048.
20
Id. at 1046.
21
Lisa, S.A. v. Mayorga, 2009 WL 1846308, at *1 (Del. Ch. June 22, 2009), aff’d, 993 A.2d 1042
(Del. 2010). “The Vice Chancellor held that Delaware courts had no personal jurisdiction over
any defendants other than the Delaware corporate defendants. The [Court of Chancery] dismissed
the defendants over which it lacked jurisdiction, and denied Lisa’s request for jurisdictional
discovery. As for the Delaware corporate defendants, the Vice Chancellor dismissed Counts III
8
and held that Lisa had “met [the] heavy burden” of demonstrating “overwhelming
hardship and inconvenience.”22
Lisa appealed the Court of Chancery’s: (1) denial of “jurisdictional discovery
before dismissing the claims against the [non-Delaware corporate] defendants for
lack of personal jurisdiction;” and (2) dismissal of Lisa’s fraud and unjust
enrichment claims against the Delaware corporate defendants for forum non
conveniens to this Court.23 As to the claims dismissed for forum non conveniens,
Lisa argued on appeal that the Court of Chancery failed to apply the overwhelming
hardship standard and instead “merely balanced the hardship to the defendants from
being required to litigate in Delaware against the hardship to Lisa from having to
litigate in the defendants’ proposed forum—Guatemala.”24
This Court affirmed the Court of Chancery’s forum non conveniens dismissal,
and rejected Lisa’s argument that the Court of Chancery failed to give sufficient
weight to the overwhelming hardship overlay of Cryo-Maid by determining that: (1)
Lisa was not entitled to the benefit of the overwhelming hardship gloss on Cryo-
and V of the complaint for failure to state a claim upon which relief can be granted, and dismissed
the remaining Counts (conspiracy to defraud and unjust enrichment) on forum non conveniens
grounds.” Lisa, supra note 3, at 1045–46.
22
Lisa, S.A. v. Mayorga, 2009 WL 1846308, at *8 (Del. Ch. June 22, 2009), aff’d, 993 A.2d 1042
(Del. 2010) (internal citation omitted).
23
Lisa, supra note 3, at 1046, 1049. Lisa did not appeal the dismissal of Counts III and V: the
claims against the Delaware corporate defendants dismissed for failure to state a claim. Id. at 1046
n. 8.
24
Id. at 1046.
9
Maid; (2) McWane applied; and (3) dismissal in favor of the resolution reached in
the prior suits was proper.25 In affirming, this Court reasoned:
Lisa’s claim [that the Court of Chancery incorrectly applied the
overwhelming hardship test] is without merit, because the
“overwhelming hardship” standard does not apply to Delaware
actions—like this one—that were not “first filed.” . . .
The 1998 Florida Action was what propped up this Delaware action.
Its dismissal caused that prop to collapse and warranted the dismissal
of the Delaware action under McWane. That the 1998 Florida Action
is no longer pending does not change the outcome, even though
language in McWane speaks in terms of a “prior action pending in
another jurisdiction.” To allow Lisa to proceed with this Delaware
action after the dismissal with prejudice of the predicate Florida action,
would ignore the binding effect of the Florida adjudication, and create
the possibility of inconsistent and conflicting rulings. That is precisely
the outcome McWane’s doctrine of comity seeks to prevent. . . .
We therefore affirm the Court of Chancery’s dismissal of Lisa’s action,
on forum non conveniens grounds, under McWane. 26
Lisa’s outcome rested on two premises: one case specific and one not. As to
the larger premise, Lisa appropriately held that Lisa’s prior Florida actions left Lisa
unable to call on the aid of the overwhelming hardship gloss on Cryo-Maid. The
more case specific premise is the one moving from that conclusion to applying
McWane. The rationale for that in Lisa was arguably due to the unique nature of the
interplay between the 1998 Florida Action and the Delaware action. By Lisa’s own
admission, the purpose of its Delaware action was to facilitate its recovery in the
25
Id. at 1047.
26
Id. at 1047–48.
10
1998 Florida Action.27 And, because that suit’s dismissal had been affirmed on
appeal in Florida, the “prop” under the Delaware action had “collapse[d] and
warranted the dismissal of the Delaware action under McWane.”28 This Court also
made clear that McWane is a form of forum non conveniens analysis by stating that,
because “dismissal of this entire case was appropriate on forum non conveniens
grounds,” we would not reach the plaintiff’s other arguments.29
The outcome in Lisa made sense, given the proliferation of suits filed by Lisa
and its failure in those prior suits. But, to the extent that Lisa purported to create a
larger, non-case specific rule, it, in our view, stands solely for the proposition that
when a plaintiff has previously brought its claims in another forum, that decision has
the effect of denying that plaintiff the ability to call on the overwhelming hardship
standard in addressing a forum non conveniens motion. If the prior lawsuit is no
longer pending, absent an unusual situation such as Lisa’s where the Delaware action
was solely brought to facilitate recovery in the prior action, McWane falls out of the
calculus. The fact that the prior action was dismissed may, of course, have great
27
“On November 22, 2006, Lisa filed this action in the Court of Chancery. Lisa claims that after
it commenced its 1998 Florida Action, Mayorga and other members of the Gutierrez Mayorga and
Bosch Gutierrez families, fraudulently reorganized the Campero Group specifically to eliminate
or diminish Lisa’s ability to obtain relief in the 1998 Florida Action—namely, to recover damages
or be reinstated as a stockholder of the Campero Group. Lisa claims that the defendants caused
the Campero Group to transfer the U.S. rights to the Pollo Campero franchise to Campero USA
(through Campero Panama and Campero Delaware) for no consideration, all as part of a continuing
scheme and conspiracy to defraud Lisa.” Id. at 1045.
28
Id. at 1048.
29
Lisa, supra note 3, at 1048–49.
11
relevance. But that is because principles of preclusion and stare decisis might dictate
dismissal.
II.
The fact pattern in this case, where a later-filed Delaware action is challenged
by a motion to dismiss for forum non conveniens after a first-filed action in Illinois
was already dismissed for forum non conveniens, is rare. As has been discussed,
motions to dismiss for forum non conveniens usually arise from either: (1) a first-
filed Delaware action with no pending descendants; or (2) a Delaware action with a
predecessor pending elsewhere. Like in Lisa, the facts in this case do not mirror one
of the two usual forum non conveniens scenarios. That is why the parties, and the
Court of Chancery, naturally looked to Lisa for clarification.
Gramercy pressed the position below that it was entitled to the deference given
to a first-filed action and that therefore the Court of Chancery should analyze the
Cryo-Maid factors under the overwhelming hardship standard.30 In response to this
argument—which was the central focus of the parties’ briefing—Bulgarian-
American and Allied argued that under this Court’s decision in Lisa, it was entitled
30
E.g., Appellant’s Opening Br. 14 (“The lower court erroneously held that one reason for the
overwhelming hardship standard is deference to a plaintiff’s choice of forum, and that only
litigants that make Delaware their first choice are entitled deference. . . . However, Plaintiffs did
indeed ‘choose’ Delaware to resolve their dispute. The fact that they chose Delaware second does
not render it any less of a choice. Nor does Delaware law support the proposition that a plaintiff’s
second choice of forum following a purely procedural dismissal in another is entitled to less
deference than its original choice.”).
12
to dismissal under McWane, and in the alternative, under a straightforward forum
non conveniens analysis.31 Neither party gave much thought to a possible
intermediate position: that despite Cryo-Maid’s overwhelming hardship overlay
being inappropriate in this case, Cryo-Maid still provided a more appropriate
framework for the Court of Chancery’s analysis than McWane.
The Court of Chancery engaged in a thorough analysis of the competing
arguments presented to it. In doing so, it recognized the reality that both Cryo-Maid
and McWane were forum non conveniens standards, labeling McWane and Cryo-
Maid as “mirror-image analyses bent on serving the same beneficial interests,”32 and
quoting Lisa’s assertion that “the two doctrines of overwhelming hardship and
McWane . . . operate consistently and in tandem to discourage forum shopping and
promote the orderly administration of justice by recognizing the value of confining
litigation to one jurisdiction, whenever that is both possible and practical.”33
31
E.g., Appellee Allied’s Answering Br. 16 (“This action is not Plaintiffs’ ‘first-filed.’ Plaintiffs
filed this case in Delaware only after their claims were dismissed in Plaintiffs’ first forum (Illinois).
Therefore, under the plain language of this Court’s decision in Lisa, the ‘strong deference’ that
Delaware courts afford to a plaintiff’s initial choice of forum is not warranted, and the
‘overwhelming hardship’ standard does not apply.”) (internal citations omitted); Id. at 36 (“Had
the Vice Chancellor conducted a Cryo-Maid analysis, it would have demonstrated that Defendants
have amply shown that litigating this case in Delaware will cause them ‘overwhelming
hardship.’”) (internal citation omitted).
32
Gramercy Emerging Markets Fund v. Allied Irish Banks, P.L.C., 2016 WL 7494898, at *8
(“[T]he factors that weigh so strongly in favor of a first-filed Delaware plaintiff under Cryo-
Maid—the respect for a plaintiff’s choice of forum, to avoid forum-shopping and inconsistent
judicial decisions—cut just as strongly against the Delaware second filer. A McWane analysis
directs the court to examine whether actions arise from the same facts, and whether the first forum
can provide justice; if so, the court may freely exercise its discretion to stay or dismiss.”).
33
Id. (quoting Lisa, supra note 3, at 1047) (internal citation omitted).
13
The Court of Chancery then evaluated differences of opinion between the
parties about the applicability of the overwhelming hardship standard. In rejecting
Gramercy’s argument, and deciding not only that the overwhelming hardship
standard did not apply, but also that McWane, rather than Cryo-Maid, applied even
though Gramercy’s Illinois action was no longer pending, the Court of Chancery
was heavily influenced by this Court’s decision in Lisa:
Under McWane, a subsequent Delaware action would have been subject
to dismissal in favor of an identical first-filed pending action in Illinois;
under Lisa, the fact that the pending action has been resolved does not
necessarily change this result. The Illinois trial and appellate courts,
after discovery and on consideration of the positions of the parties,
determined that Bulgaria provides an adequate forum and is the
appropriate forum for any litigation. I find, based on the record before
me, that dismissal under the McWane analysis is appropriate.34
With some understandable justification, the Court of Chancery seemed to
have viewed Lisa as creating a binary choice between Cryo-Maid with an
overwhelming hardship standard tilted heavily in favor of the plaintiff and McWane
with a discretionary analysis tilted toward dismissal or a stay. But, we believe that
rigid dichotomy is not dictated by prior precedent and risks confusing principles of
forum non conveniens with principles such as claim preclusion. To that point,
although Gramercy’s Delaware action was not first-filed, and thus the party moving
to dismiss for forum non conveniens did not have to show overwhelming hardship
34
Id. at *11.
14
to obtain that dismissal, Delaware’s forum non conveniens standards do not
necessarily present a rigid choice between: (1) the McWane standard that applies to
later-filed actions facing a motion to dismiss for forum non conveniens, which are
not subject to the overwhelming hardship standard; and (2) the presumption of
overwhelming hardship under Cryo-Maid applied to first-filed cases. Instead, there
is an intermediate option: one that still applies Cryo-Maid straightforwardly when a
plaintiff has not chosen Delaware first, but gives the trial court the discretion to
determine whether Delaware is an appropriate forum after a reasoned assessment of
the Cryo-Maid factors.
This case does not have the factual particularities that led to this Court’s
application of McWane in Lisa. Unlike in Lisa, where the prior pending action was
dismissed with prejudice, Gramercy’s Illinois case was dismissed procedurally.
And, also unlike in Lisa, Gramercy’s Delaware action was not brought specifically
to facilitate recovery in a no longer pending predecessor suit that was largely
dismissed on the merits. The Delaware action here was instead brought because
Gramercy could not get a hearing on its claim in Illinois.
Because Gramercy filed in Illinois first, the Cryo-Maid analysis here is not
tilted in Gramercy’s favor under the overwhelming hardship standard. But
McWane’s discretionary standard tilted in favor of the defendant also does not apply,
15
because the first-filed Illinois action was dismissed on forum non conveniens
grounds and without prejudice.
The Illinois action might, of course, also have had relevance if its rulings gave
rise to issue or claim preclusion, or because its consideration of similar issues
(including issues related to forum non conveniens) was persuasive. But, because the
Court of Chancery was not asked to apply principles of preclusion, but instead to
consider whether Delaware was an inconvenient forum, the proper question before
the Court of Chancery was whether or not the Cryo-Maid factors weighed in favor
of dismissal.
III.
Here, though, we need not disturb the thoughtful outcome rendered by the
Court of Chancery. Its invocation of McWane was not central to its ultimate
determination, except in the sense that it did not apply Cryo-Maid’s overwhelming
hardship overlay to its forum non conveniens analysis. In the course of its close
analysis of Bulgarian-American and Allied’s motion to dismiss, the Court of
Chancery considered the relevant Cryo-Maid factors, and its decision to dismiss,
although focused more on McWane than Cryo-Maid, substantively involved a
thorough and well-reasoned forum non conveniens analysis.
Although the Court of Chancery’s analysis focused on McWane, its decision
still relied on facts relevant to the Cryo-Maid factors: “I need not reach the question
16
of whether litigation in Delaware would create an overwhelming hardship for the
Defendants . . . [but] the following considerations would inform such an analysis, as
they inform my decision here under McWane and Lisa.” 35
The Court of Chancery recognized facts relating to the Cryo-Maid factors in
its forum non conveniens analysis. It just did so without weighing those factors
against Cryo-Maid’s overwhelming hardship standard. For example, the Court of
Chancery addressed the relative ease of access to proof in noting that
“[u]ndoubtedly, trial here would require translation of some documents written via
the Cyrillic, not Latin, alphabet.”36 Likewise, the Court of Chancery considered the
availability of compulsory process:
[A]s the Illinois court noted, the record indicates that a number of the
witnesses necessary to the Defendants are in Europe, including in
Bulgaria, and there would be some burden securing their testimony.
Obtaining the live testimony of some witnesses would require overseas
travel on their part, and would raise questions of the availability of
compulsory attendance.37
And the Court of Chancery also addressed whether the controversy here was
dependent on the application of Delaware law by highlighting that:
Plaintiffs’ claims in the present action hinge on whether Bulgarian law
was violated. I note that Bulgarian regulators, despite having been on
notice and responding to Plaintiffs’ concerns, did not find such a
violation of the Bulgarian POSA existed. The Plaintiffs ask,
nonetheless, that I interpret Bulgarian securities law in light of the
35
Gramercy, supra note 32, at *12.
36
Id.
37
Id.
17
instant fact pattern, a matter which, according to the record, poses
certain questions of first judicial impression. They then ask that I apply
that law, find that a violation of Bulgaria’s mandatory tender offer rule
occurred, and that such violation provides a basis for the causes of
actions currently pled in Delaware. This presents questions presumably
of keen interest to Bulgaria, but not Delaware. At bottom, the relief
sought would require that I find the regulators of Bulgaria failed to
enforce their law, or applied their law incorrectly. . . .
While it is obvious that the Plaintiffs desire to litigate this matter in an
American forum, the fact is that the Plaintiffs bought stock in a
Bulgarian company regulated by Bulgarian law, and are trying to
vindicate a right under that law. A foreign judge blundering in to
vindicate such rights under the circumstances present here seems
problematic. A decision by this Court could have serious, unintended
consequences on the development of Bulgarian law and on conditions
for investment of capital in that country.38
We therefore affirm the Court of Chancery’s decision that Gramercy’s claims,
which involve important and unsettled issues of Bulgarian securities law arising out
of an investment in a Bulgarian bank, should not proceed in Delaware.
Further, we clarify the spectrum of standards under which motions for forum
non conveniens are considered in Delaware. When a case is first-filed, Delaware
courts award dismissal only when the defendant has established overwhelming
hardship, thus tilting the analysis in the plaintiff’s favor.39 When a case is later-filed,
and its predecessors remain pending, McWane’s “strong preference for the litigation
38
Id.
39
E.g., WOLFE & PITTENGER, supra note 5, § 5.02 (“The onerous burden upon a party seeking
dismissal on the basis of forum non conveniens is justified by the fact that dismissal results in the
ultimate defeat of plaintiffs’ choice of forum.”).
18
of a dispute in the forum in which the first action relating to such dispute is filed”
applies and the analysis is tilted in favor of the defendant.40 But when a case is later-
filed and its predecessors are no longer pending, the analysis is not tilted in favor of
the plaintiff or the defendant. In that situation, Delaware trial judges exercise their
discretion and award dismissal when the Cryo-Maid factors weigh in favor of that
outcome.
40
Id. at § 5.01.
19