Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. Venue as Distinguished from Jurisdiction
    1. “It has long been recognized that the question of a federal court’s competence to exercise personal jurisdiction over a defendant is distinct from the question of whether venue is proper. ‘In distinguishing between the principles of jurisdiction and venue, we note that
      ‘[j]urisdiction is the power to adjudicate, while venue, which relates to the place where judicial authority may be exercised, is intended for the convenience of the litigants.’’ . . . The Supreme Court has emphasized the distinction between these concepts, writing that ‘[t]his basic difference between the court’s power and the litigant’s convenience is historic in the federal courts.’” Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1178-79 (9th Cir. 2004) (internal citations and quotations omitted).
    2. Section 1391(d) is a venue statute that provides that an alien may be sued in any district, and “has nothing whatever to do with acquiring in personam jurisdiction by service of process.” James Talcott, Inc. v. Allahabad Bank, Ltd., 444 F.2d 451, 464 n.11 (5th Cir. 1971). “Section 1391(d), as its title indicates, is a venue statute and not a statute creating personal jurisdiction in federal district courts. The effect of Sec. 1391(d) is to permit a resident plaintiff to bring an action against an alien in any district where valid service can be made upon the alien. . . . The alien corporation must, however, have sufficient minimum contacts with the forum to satisfy due process requirements.” Weinstein v. Norman M. Morris Corp., 432 F. Supp. 337, 339 (E.D. Mich. 1977) (internal citations and quotations omitted).
    3. Practice Tip: Of course, always consider jurisdiction and venue issues in initial motion practice.
    4. For more on personal jurisdiction issues, see Guide Chapter 1.
  2. Venue in actions involving non-U.S. parties.
    1. Alien and alien corporation defendants may be sued in any district. 28 U.S.C. § 1391(d).
      1. “[I]n 1948, Congress was apparently quite content to leave suits against alien defendants exempt from the venue statutes, . . . In that year, Congress codified as § 1391(d) the rule exempting suits against aliens from the federal venue statutes. . . . § 1391(d) is properly regarded, not as a venue restriction at all, but rather as a declaration of the long-established rule that suits against aliens are wholly outside the operation of all the federal venue laws, general and special.” Brunette Mach. Works, Ltd. v. Kockum Indus., Inc., 406 U.S. 706, 714 (1972).
      2. “An alien, for purposes of establishing venue, is presumed by law not to reside in any judicial district of the United States regardless of where the alien actually lives.” Williams v. U.S., 704 F.2d 1222, 1225 (11th Cir. 1983).
      3. “[A]ssuming in personam jurisdiction, venue is not defeated where valid out-of-district service can be effected upon an alien.” Oil & Gas Ventures – First 1958 Fund, Ltd. v. Kung, 250 F. Supp. 744, 750 (S.D.N.Y. 1966).
      4. “The rule that an alien can be sued in any district applies to a corporation incorporated in a foreign country just as it does to alien individuals.” Velcro Group Corp. v. Billarant, 692 F. Supp. 1443, 1449 (D.N.H. 1988).
    2. Alien Plaintiffs in Diversity Cases. Section 1391(a) provides alien plaintiffs in diversity suits with choice of venue in the district in which the defendant resides or in which the claim arose. Fleifel v. Vessa, 503 F. Supp. 129, 130 (W.D. Va. 1980).
    3. Joinder of Alien and Non-Alien Defendants. “When an alien and a non-alien are joined as defendants, venue for the entire action is proper in any district where it is correct as to the non-alien defendant.” Japan Gas Lighter Ass’n v. Ronson Corp., 257 F. Supp. 219, 225 (D.N.J. 1966).
    4. Resident Alien Contesting a Jeopardy Assessment. A resident alien may establish venue under 28 U.S.C. § 1402(a)(1) for purposes of contesting a jeopardy assessment. Williams, 704 F.2d at 1227.
    5. Patent Litigation. “Section 1391(d) applies to all federal actions against aliens, including patent infringement suits. That provision supplants both sections 1400(b) and 1404(a) as the applicable venue statute as to” alien defendants. Brunswick Corp. v. Suzuki Motor Co., 575 F. Supp. 1412, 1425 (E.D. Wis. 1983). See also Brunette, 406 U.S. at 713 (“Section 1391(d) is not derived from the general venue statutes that § 1400(b) was intended to replace. Section 1391(d) reflects, rather, the longstanding rule that suits against alien defendants are outside those statutes. Since the general venue statutes did not reach suits against alien defendants, there is no reason to suppose the new substitute in patent cases was intended to do so.”).
    6. Antitrust: Section 1391(d) controls in antitrust matters. See, e.g., General Aircraft Corp. v. Air Am., Inc., 482 F. Supp. 3, 11 (D.D.C. 1979) (denying motion to dismiss for improper venue because “Air Asia is an alien corporation and as such, venue is proper in this judicial district under 28 U.S.C. § 1391(d) and by analogy to the holding of the United States Supreme Court” in Brunette).
    7. Forfeiture of Property Seized Outside Any Judicial District. A civil proceeding for the forfeiture of property seized outside any judicial district may be prosecuted in any district into which the property is brought. 28 U.S.C. § 1395(c).
  3. Venue in actions against foreign states, agencies and instrumentalities under the Foreign Sovereign Immunities Act (“FSIA”). 28 U.S.C. § 1391(f). (See also Guide Chapter 9, which addresses the FSIA).
    1. Foreign states and political subdivisions
      1. Venue is always available in the U.S. District Court for the District of Columbia (28 U.S.C. § 1391(f)(4)).
      2. Venue also may be established in a district where a “substantial part of the events or omissions giving rise to the claim occurred” (§ 1391(f)(1)). “Courts have required extensive events or omissions giving rise to a claim to occur in the forum in order for venue to be appropriate under the FSIA venue provision. . . . The presence of a corporate headquarters alone in the judicial district does not render venue in that district proper [under § 1391(f)(1)].” Tifa, Ltd. v. Republic of Ghana, 692 F. Supp. 393, 405 (D.N.J. 1988).
      3. In addition, venue may be established in a district where a “substantial part of property” at issue is located. (§ 1391(f)(1)). See, e.g., Kalamazoo Spice Extraction Co. v. Provisional Mil. Gov’t of Socialist Eth., 616 F. Supp. 660, 666 (W.D. Mich. 1985) (finding venue proper in the district where “the accounts receivable, totalling nearly $2 million, that are at issue . . . are present”).
      4. For claims involving maritime liens, venue is appropriate in the district where the vessel or cargo is located (§ 1391(f)(2)).
    2. Agencies and instrumentalities
      1. Venue is appropriate where a “substantial part of the event or omissions giving rise to the claim occurred” (§ 1391(f)(1)), or a “substantial part of property” at issue is located (Id.). At least one district court has rejected the argument that section 1391(f)(1) provides for venue in any district where the plaintiff’s corporate assets and its business reputation are located. “This Court is unaware of any case law construing the meaning of ‘property that is the subject of the action.’ Falcoal’s interpretation would make venue proper in the district in which a corporation’s assets lie any time a corporation sues claiming it has been financially damaged. The more reasonable construction of the clause would make it applicable to suits involving property disputes or in rem actions, not, as here, to suits alleging financial damages to a corporation.” Falcoal, Inc. v. Turkiye Komur Isletmeleri Kurumu, 660 F. Supp. 1536, 1543 (S.D. Tex. 1987)).
      2. Venue also may be based where an agency or instrumentality is licensed to do business or is doing business (28 U.S.C. § 1391(f)(3)). Note that this venue provision does not apply to foreign states and political subdivisions. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 152 (D.C. Cir. 1994), cert. denied, 513 U.S. 1150 (1995) (holding that section 1391(f)(3) is “of doubtful coherence if extended beyond the category of commercial enterprises”).
    3. Practice Tip: Section 1391(f)(3) and 1391(f)(4) may both apply if a foreign state and its instrumentality are sued together. The Ninth Circuit has held that “[w]here. . . . both the foreign state and its instrumentality are sued in the same suit, both venue provisions are potentially available.” Altmann v. Republic of Aus., 317 F.3d 954, 972 (9th Cir. 2002).
    4. Removal.
      1. Section 1441(d) governs venue of an action against a foreign state removed from State court. It provides that “[a]ny civil action brought in a State court against a foreign state . . . may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending.”
      2. Section 1391(f) applies only to actions originally “brought” in federal court. However, “[o]nce a case is removed to federal court pursuant to . . . § 1441, section 1391 is the applicable venue provision in the event that the court to which the action has been removed decides the [sic] transfer the case to another federal district. In other words, the federal court which receives the case from state court need not satisfy the venue requirements contained in section 1391. However, should that court decide to transfer the case, the transferee court must satisfy section 1391.” Translinear, Inc. v. Republic of Haiti, 538 F. Supp. 141, 144 & n.2 (D.D.C. 1982) (internal citation omitted).
  4. The Warsaw Convention on international air travel governs only the countries in which actions can be brought. Warsaw Convention for the Unification of Certain Rules Relating to International Transportation by Air, art. 28(1); 49 Stat. 3000, 3020. Article 28(1) does not establish which venues are appropriate within those countries.

    1. Article 28(1) provides that “[a]n action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination.”
    2. Local venue rules apply to determine in which court within the country a suit will be heard. See, e.g., Hill v. United Airlines, 550 F. Supp. 1048, 1052-1054 (D. Kan. 1982)
  5. Forum Selection Clauses
    1. Is the forum selection clause mandatory (i.e., “all disputes shall be litigated” in a designated court) or permissive (i.e., “the parties accept the jurisdiction of” a designated court)? If permissive, the clause does not prohibit litigation elsewhere.  See, e.g., Yavuz v. 61 MM, Ltd, 465 F.3d 418, 427 (10th Cir. 2006).
    2. Is the forum selection clause enforceable?
      1. Admiralty:
        1. Forum clause should control absent strong showing that it should be set aside. Such clauses are prima facie valid and should be enforced unless enforcement is shown to be unreasonable or unjust, the clause is shown to be invalid based on fraud or overreaching, or if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision. Inconvenience is not a ground for refusing to enforce unless trial in the contractual forum will be so gravely difficult and inconvenient that the party will for all practical purposes be deprived of his day in court. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).
        2. Forum selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness. Carnival Cruise Lines v. Shute, 499 U.S. 585, 595 (1991).
      2. Diversity and federal question cases:
        1. When a party moves to transfer, section 1404(a) controls a request to give effect to a parties’ contractual choice of venue. “A motion to transfer under § 1404(a) thus calls on the district court to weigh in the balance a number of case-specific factors. The presence of a forum-selection clause . . . will be a significant factor that figures centrally in the district court’s calculus. . . . The flexible and individualized analysis Congress prescribed in § 1404(a) thus encompasses consideration of the parties’ private expression of their venue preferences.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29-30 (1988).
        2. But NOTE: Outside the context of a motion to transfer under section 1404(a), the Circuits are split as to whether federal or state law applies to forum selection clauses in the diversity context. See Preferred Capital, Inc. v. Sarasota Kennel Club, Inc., 489 F.3d 303, (6th Cir. 2007) (recognizing the split and holding that state law controls the interpretation of a forum selection clause when the clause is raised as the sole basis for personal jurisdiction over the defendant); Lambert v. Kysar, 983 F.2d 1110, 1117 n.10 (1st Cir. 1993) (noting that “[t]he Supreme Court has yet to provide a definitive resolution of the Erie issue, . . . The Second, Ninth and Eleventh Circuits essentially treat forum clauses as procedural, and apply federal common law to determine their validity in diversity cases. . . . The Third and Eighth Circuits, and Justice Scalia . . . , seem to view forum selection clauses as substantive, and would apply state law to determine their validity in the diversity context”) (internal citations omitted); Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 512 n.2 (9th Cir. 1988) (“the Supreme Court’s decision in Stewart . . . does not fully resolve this problem. In Stewart, the Court decided that federal law applies to a motion to transfer venue under 28 U.S.C. § 1404(a) when venue is designated in a contractual forum selection clause. . . . The Court stated that because there was a federal statute . . . directly on point, the district court was required to apply federal law. . . . Our case involves a motion to dismiss, rather than to transfer venue, and because there is no federal rule directly on point the Stewart analysis is inapplicable”) (internal citations omitted).
        3. Practice Tip: The jurisprudence in lower courts is inconsistent and does not apply the distinction in approach as between admiralty (M/S Bremen) and non-admiralty (Stewart). Lower courts often apply M/S Bremen in diversity and federal question cases.
          • See, e.g., Manetti-Farrow, Inc., 858 F.2d at 512 (“[a]lthough The Bremen was an admiralty case, its standard has been widely applied to forum selection clauses in general”).
          • See Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 3d § 3803.1 and cases cited therein (2007 Thomson/West):

            “[t]he procedure required by Stewart for evaluating forum selection clauses differs sharply from that required in M/S Bremen and Carnival Cruise. The combined rule of these cases is that a federal court sitting in admiralty jurisdiction should apply a forum selection clause if it is ‘reasonable,’ but a federal court sitting in diversity or federal question jurisdiction should take the clause into account only as one element in the balancing test required by Section 1404(a), provided only that the clause does not mandate a state forum. This distinction in the procedure followed in admiralty and non-admiralty cases is no doubt curious, especially given that the rule governing the transfer of venue in admiralty cases is closely modeled on Section 1404(a), which controls in diversity and federal question cases. The most likely explanation for the Supreme Court’s bifurcated approach to forum selection clause analysis is that the Erie doctrine, which is central to the reasoning of Stewart, has no application in admiralty law, which contains its own body of substantive federal common law. And yet, the distinction is even more confusing because the Court in Carnival Cruise does not highlight the significance of admiralty jurisdiction to its analysis and the Court never has explained the underlying rationale for its bifurcated approach.

            Not surprisingly, given this confusion surrounding forum-selection clause analysis, many lower federal courts have failed to distinguish between the approach taken in Carnival Cruise and that taken in Stewart. There thus has developed a general jurisprudence that has not been responsive to the differences between these approaches. . . . [I]t is not uncommon for many courts not to draw various distinctions between forum selection clauses that should be enforced and those that should not be enforced.”

        4. There also exists a Circuit split as to whether a valid forum selection clause mandating venue in another federal district can render venue improper in the original district even if the venue statutes otherwise permit the filing of the case in that district. See, e.g., Kerobo v. Sw. Clean Fuels Corp., 285 F.3d 531, 534-535 (6th Cir. 2002) (recognizing that “the circuits are not in agreement about whether a claim that an action is filed in a forum other than that designated in a contract’s forum selection clause may be raised in a Rule 12(b)(3) motion. See, e.g., Lipcon v. Underwriters at Lloyd’s, 148 F.3d 1285, 1290 (11th Cir. 1998) (holding that a motion to dismiss based on a forum-selection clause in international agreement should be brought pursuant to Rule 12(b)(3) rather than Rule 12(b)(1) because the forum-selection clause is unrelated to the basis for federal jurisdiction); Lambert v. Kysar, 983 F.2d 1110, 1112 (1st Cir. 1993) (noting in removed action that the procedural vehicle for urging dismissal under a forum-selection clause is properly Rule 12(b)(6) rather than Rule 12(b)(3). In essence, this difference of opinion centers around whether the parties’ contractual designation of forum can render the venue dictated by statute ‘improper’”).
        5. Practice Tip: Courts applying federal law have found that, when a valid forum selection clause mandates venue in a foreign court, dismissal is proper, if the clause is reasonable under M/S Bremen. See, e.g., Manetti-Farrow, Inc., 858 F.2d at 510, 515 (affirming district court dismissal of complaint based on forum selection clause requiring litigation of dispute in Florence, Italy).
        6. Denial of a motion to dismiss based on forum selection clause is interlocutory and nonappealable. Lauro Lines s.r.l. v. Chasser, 490 U.S. 495, 497-498 (1989).
  6. Challenging Improper Venue (28 U.S.C. § 1406(a))
    1. “The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.”
    2. “A defendant over whom personal jurisdiction exists but for whom venue is improper may move for dismissal or transfer for improper venue under 28 U.S.C. § 1406(a).” Action Embroidery Corp., 368 F.3d at 1181.
  7. Convenience Transfers (28 U.S.C. § 1404(a))
    1. “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought”
    2. “A defendant for whom venue is proper but inconvenient may move for a change of venue under 28 U.S.C. § 1404(a).” Action Embroidery Corp., 368 F.3d at 1181.
    3. Test for determining whether to grant the transfer
      1. Determine whether the plaintiff could have commenced the case in the proposed transferee forum;
      2. balancing test, weighing the private interest factors affecting the convenience of the litigants and the public interest factors affecting the convenience of the forum (borrowed from forum non conveniens, see discussion below in Section II.A.).
    4. See also discussion above in Section I.E.2.ii.(a) of treatment by Supreme Court of forum selection clauses in motions to transfer under Section 1404(a).
    5. A foreign resident’s choice of a U.S. forum should receive less consideration than a plaintiff suing in his or her home forum. “[T]he amount of deference given to [their] forum choice will depend on the locus of the operative facts.” Walker v. Jon Renau Collection, Inc., 423 F. Supp. 2d 115, 118 (S.D.N.Y. 2005).
    6. Practice Tip: When evaluating a motion for forum non conveniens, consider the residency of the plaintiff.
    7. Aliens -- section 1391(d) supplants 1404(a) as the applicable venue statute. Brunswick Corp., 575 F.Supp. at 1425.

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