Home -> Law Blog Directory -> Litigation Blogs -> Delaware Corporate and Commercial Litigation Blog

Litigation

: Delaware Corporate and Commercial Litigation Blog

Forum Non Conveniens Test Not as Stringent When Delaware Case Not First-Filed

By Francis G.X. Pileggi

Lisa, S.A. v. Mayorga, No. 410,2009 (Del. Supr. Apr. 20, 2010), read opinion here

This Delaware Supreme Court decision affirmed the decision of the Court of Chancery which dismissed the complaint based on forum non conveniens grounds. The prior decision of the Court of Chancery is highlighted here.

Although this case has a lengthy and tortuous history, the sum and substance of the importance of this decision can be briefly summarized as follows:

1) When other pending actions in other jurisdictions are involved, the test to apply to a motion to dismiss on forum non conveniens grounds is the 'overwhelming hardship' test. See generally General Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681, 684 (Del. 1964) ( as supplemented by Parvin v. Kaufmann, 236 A.2d 425, 427 (Del. 1967)) (Listing the six factors that the Court must consider in determining whether to apply the forum non conveniens doctrine).

2) Importantly, however, when a Delaware action is not the 'first filed' action, a different standard will apply. The Supreme Court in this case ruled that: 'where the Delaware action is not the first filed, the policy that favors strong deference to a Plaintiff's initial choice of forum requires the Court freely to exercise its discretion in favor of staying or dismissing the Delaware action." (the "McWane doctrine') (emphasis in original). See McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co., 263 A.2d 281, 283 (Del. 1970). As a general rule, litigation should be confined to the forum in which it is first commenced and a Defendant should not be permitted to defeat the Plaintiff's choice of forum in a pending suit by commencing litigation involving the same cause of action in another jurisdiction of its own choosing.

Notably, at a recent seminar presented by veteran members of the Delaware Bar and a former member of the bench, the view was expressed that this case enunciates what is, in effect, a somewhat new standard--or at least it announces a distinction not previously well-known, and it also indicates a softening of the prior hard-line stance in these types of cases.

In this case, the Court reasoned that because the Delaware action was not the first filed action, the McWane doctrine applied and under that doctrine it is not necessary that the competing cases be exactly the same, but rather, it is sufficient that they be 'functionally identical' to the Delaware action and that they were filed in a jurisdictionally competent Court arising out of a 'common nucleus of operative facts. See Chadwick v. Metro Corp., 2004 WL 1874652 at *2 (Del. Aug. 12, 2004).

Also, the Court ruled that even if the prior action was no longer pending, and  despite McWane referring to a prior pending action, this Delaware case should still be dismissed, the Court reasoned, because to allow the Delaware action to proceed after the dismissal with prejudice of the prior Florida action would ignore the binding effect of Florida adjudication and also create the possibility of inconsistent and conflicting rulings, which was precisely the outcome that the doctrine of comity espoused by McWane sought to prevent. Because the Court dismissed on forum non conveniens grounds, it did not reach the issue of whether the trial court should have allowed jurisdictional discovery on personal jurisdiction issues.
 

Full post as published by Delaware Corporate and Commercial Litigation Blog on May 04, 2010 (boomark / email).