Filed: Feb. 15, 1996
Latest Update: Mar. 02, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 95-50278 KAEPA, INC., Plaintiff-Appellee, versus ACHILLES CORPORATION, Defendant-Appellant. Appeal from the United States District Court For the Western District of Texas February 14, 1996 Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges. WIENER, Circuit Judge: The primary issue presented by this appeal is whether the district court erred by enjoining Defendant-Appellant Achilles Corporation from prosecuting an action t
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 95-50278 KAEPA, INC., Plaintiff-Appellee, versus ACHILLES CORPORATION, Defendant-Appellant. Appeal from the United States District Court For the Western District of Texas February 14, 1996 Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges. WIENER, Circuit Judge: The primary issue presented by this appeal is whether the district court erred by enjoining Defendant-Appellant Achilles Corporation from prosecuting an action th..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-50278
KAEPA, INC.,
Plaintiff-Appellee,
versus
ACHILLES CORPORATION,
Defendant-Appellant.
Appeal from the United States District Court
For the Western District of Texas
February 14, 1996
Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.
WIENER, Circuit Judge:
The primary issue presented by this appeal is whether the
district court erred by enjoining Defendant-Appellant Achilles
Corporation from prosecuting an action that it filed in Japan as
plaintiff, which essentially mirrored a lawsuit previously filed by
Plaintiff-Appellee Kaepa, Inc. in state court and then being
prosecuted in federal district court by Kaepa. Given the private
nature of the dispute, the clear indications by both parties that
claims arising from their contract should be adjudicated in this
country, and the duplicative and vexatious nature of the Japanese
action, we conclude that the district court did not abuse its
discretion by barring the prosecution of the foreign litigation.
Accordingly, we affirm the grant of the antisuit injunction.
I.
FACTS AND PROCEEDINGS
This case arises out of a contractual dispute between two
sophisticated, private corporations: Kaepa, an American company
which manufactures athletic shoes; and Achilles, a Japanese
business enterprise with annual sales that approximate one billion
dollars. In April 1993, the two companies entered into a
distributorship agreement whereby Achilles obtained exclusive
rights to market Kaepa's footwear in Japan. The distributorship
agreement expressly provided that Texas law and the English
language would govern its interpretation, that it would be
enforceable in San Antonio, Texas, and that Achilles consented to
the jurisdiction of the Texas courts.1
Kaepa grew increasingly dissatisfied with Achilles's
1
The applicable language of the agreement reads:
This Agreement shall be governed by the laws of the State
of Texas, U.S.A., and shall be enforceable in San
Antonio, Texas. The English version of this Agreement
and the English language shall govern the interpretation
and meaning of all words and phrases used herein.
Distributor [Achilles] consents to jurisdiction in the
State of Texas, U.S.A.
The district court held that this clause (1) permits jurisdiction
in Texas, and (2) requires that the agreement be interpreted under
United States law and the English language. Neither party
challenges this ruling.
2
performance under the contract. Accordingly, in July of 1994,
Kaepa filed suit in Texas state court, alleging (1) fraud and
negligent misrepresentation by Achilles to induce Kaepa to enter
into the distributorship agreement, and (2) breach of contract by
Achilles. Thereafter, Achilles removed the action to federal
district court, and the parties began a laborious discovery process
which to date has resulted in the production of tens of thousands
of documents. In February 1995, after appearing in the Texas
action, removing the case to federal court, and engaging in
comprehensive discovery, Achilles brought its own action in Japan,
alleging mirror-image claims: (1) fraud by Kaepa to induce
Achilles to enter into the distributorship agreement, and (2)
breach of contract by Kaepa.
Back in Texas, Kaepa promptly filed a motion asking the
district court to enjoin Achilles from prosecuting its suit in
Japan (motion for an antisuit injunction). Achilles in turn moved
to dismiss the federal court action on the ground of forum non
conveniens. The district court denied Achilles's motion to dismiss
and granted Kaepa's motion to enjoin, ordering Achilles to refrain
from litigating the Japanese action and to file all of its
counterclaims with the district court. Achilles timely appealed
the grant of the antisuit injunction.2
2
Achilles does not challenge the denial of its motion to
dismiss.
3
II.
ANALYSIS
A. PROPRIETY OF THE ANTISUIT INJUNCTION
Achilles's primary argument is that the district court failed
to give proper deference to principles of international comity when
it granted Kaepa's motion for an antisuit injunction. We review
the decision to grant injunctive relief for abuse of discretion. 3
Under this deferential standard, findings of fact are upheld unless
clearly erroneous, whereas legal conclusions "`are subject to broad
review and will be reversed if incorrect.'"4
It is well settled among the circuit courtsSQincluding this
oneSQwhich have reviewed the grant of an antisuit injunction that
the federal courts have the power to enjoin persons subject to
their jurisdiction from prosecuting foreign suits.5 The circuits
differ, however, on the proper legal standard to employ when
3
See Western Directories, Inc. v. Southwestern Bell, 63 F.3d
1378, 1390 (5th Cir. 1995); Apple Barrel Productions, Inc. v.
Beard,
730 F.2d 384, 386 (5th Cir. 1984).
4
Apple Barrel, 730 F.2d 384 (quoting Commonwealth Life
Insurance Co. v. Neal,
669 F.2d 300, 304 (5th Cir. 1982)).
5
See, e.g., Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349,
1352 (6th Cir. 1992); China Trade & Dev. Corp. v. M.V. Choong Yong,
837 F.2d 33, 35 (2d Cir. 1987); Laker Airways v. Sabena,
731 F.2d
909, 926 (D.C. Cir. 1984); Seattle Totems Hockey Club, Inc. v.
National Hockey League,
652 F.2d 852, 855 (9th Cir. 1981), cert.
denied,
457 U.S. 1105 (1982); In Re Unterweser Reederei Gmbh,
428
F.2d 888, 890 (5th Cir. 1970), aff'd on rehearing en banc,
446 F.2d
907 (1971), rev'd on other grounds sub nom. Bremen v. Zapata
Offshore Co.,
407 U.S. 1 (1972); Bethell v. Peace,
441 F.2d 495,
498 (5th Cir. 1971).
4
determining whether that injunctive power should be exercised.6 We
have addressed the propriety of an antisuit injunction on two prior
occasions, in In Re Unterweser Reederei Gmbh7 and Bethell v. Peace.8
Emphasizing in both cases the need to prevent vexatious or
oppressive litigation, we concluded that a district court does not
abuse its discretion by issuing an antisuit injunction when it has
determined "that allowing simultaneous prosecution of the same
action in a foreign forum thousands of miles away would result in
`inequitable hardship' and `tend to frustrate and delay the speedy
and efficient determination of the cause.'"9 The Seventh and the
6
Compare, e.g., Seattle Totems, 652 F.2d at 855-56 and
Unterweser,
428 F.2d 888 with Gau
Shan, 956 F.2d at 1355 and China
Trade, 837 F.2d at 36;
7
Unterweser, 428 F.2d 888.
8
Bethell, 441 F.2d 495.
9
Unterweser, 428 F.2d at 890, 896 (noting as well that
antisuit injunctions have been granted when foreign litigation
would (1) frustrate a policy of the forum issuing the injunction;
(2) be vexatious or oppressive; (3) threaten the issuing court's in
rem or quasi in rem jurisdiction; or (4) prejudice other equitable
considerations); see also
Bethell, 441 F.2d at 498 ("[T]he court
was within its discretion in relieving the plaintiff of expense and
vexation of having to litigate in a foreign court."). Cf. Gau
Shan, 956 F.2d at 1353 (concluding that the Fifth Circuit "rel[ies]
primarily upon considerations of vexatiousness or oppressiveness in
a race to judgment in the foreign forum as sufficient grounds for
an [antisuit] injunction") (citing
Unterweser, 428 F.2d at 896);
Seattle
Totems, 652 F.2d at 855-56 (discussing Unterweser and
Bethell).
5
Ninth Circuits have either adopted10 or "incline[d] toward"11 this
approach, but other circuits have employed a standard that elevates
principles of international comity to the virtual exclusion of
essentially all other considerations.12
Achilles urges us to give greater deference to comity and
apply the latter, more restrictive standard. We note preliminarily
that, even though the standard espoused in Unterweser and Bethell
focuses on the potentially vexatious nature of foreign litigation,
it by no means excludes the consideration of principles of comity.
We decline, however, to require a district court to genuflect
before a vague and omnipotent notion of comity every time that it
must decide whether to enjoin a foreign action.
In the instant case, for example, it simply cannot be said
10
See Seattle Totems, 652 F.2d at 855-56 (discussing Unterweser
and Bethell) (holding that it is within the district court's
discretion to grant an antisuit injunction when the adjudication of
an issue "is likely to result in unnecessary delay and substantial
inconvenience and expense to the parties and witnesses . . . [as
well as] inconsistent rulings or even a race to judgment").
11
See Philips Medical Sys. Int'l B.V. v. Bruetman, 8 F.3d 600,
605 (7th Cir. 1993); see also Allendale Mut. Ins. Co. v. Bull Data
Systems, Inc.,
10 F.3d 425, 431 (7th Cir. 1993). Cf. Sperry Rand
Corp. v. Sunbeam Corp.,
285 F.2d 542 (7th Cir. 1961).
12
See, e.g., Gau Shan, 956 F.2d at 1355; China
Trade, 837 F.2d
at 36; Laker
Airways, 731 F.2d at 927, 937. The weakness in the
foundation of the dissent's opinion is that it relies extensively
on these cases while virtually disregarding our holdings in
Unterweser and Bethell. The strict stare decisis policy of this
court prevents us from joining in the dissent's abrogation of the
holdings of two prior panels on this issue through purported
distinctions without real differences. See United States v.
Parker, No. 94-10557, slip op. 1367, 1370 (5th Cir. Jan. 3, 1996)
("`[O]ne panel may not overrule the decisionSQright or wrongSQof a
prior panel, absent en banc reconsideration or a superseding
contrary decision of the Supreme Court'") (quoting In re Dyke, 943
F.2d 1435, 1442 (5th Cir. 1991)).
6
that the grant of the antisuit injunction actually threatens
relations between the United States and Japan. First, no public
international issue is implicated by the case: Achilles is a
private party engaged in a contractual dispute with another private
party. Second, the dispute has been long and firmly ensconced
within the confines of the United States judicial system: Achilles
consented to jurisdiction in Texas; stipulated that Texas law and
the English language would govern any dispute; appeared in an
action brought in Texas; removed that action to a federal court in
Texas; engaged in extensive discovery pursuant to the directives of
the federal court; and only then, with the federal action moving
steadily toward trial, brought identical claims in Japan. Under
these circumstances, we cannot conclude that the district court's
grant of an antisuit injunction in any way trampled on notions of
comity.
On the contrary, the facts detailed above strongly support the
conclusion that the prosecution of the Japanese action would entail
"an absurd duplication of effort"13 and would result in unwarranted
inconvenience, expense, and vexation. Achilles's belated ploy of
filing as putative plaintiff in Japan the very same claims against
Kaepa that Kaepa had filed as plaintiff against Achilles smacks of
cynicism, harassment, and delay. Accordingly, we hold that the
district court did not abuse its discretion by granting Kaepa's
13
Allendale, 10 F.3d at 430-31.
7
motion for an antisuit injunction.14
B. RULE 65 REQUIREMENTS
Achilles also argues that the district court erred by failing
to meet several requirements of Federal Rule of Civil Procedure 65
before issuing the antisuit injunction. Rule 65(a)(1) provides
that "[n]o preliminary injunction shall be issued without notice to
the adverse party." We have interpreted the notice requirement of
Rule 65(a)(1) to mean that "where factual disputes are presented,
the parties must be given a fair opportunity and a meaningful
hearing to present their differing versions of those facts before
a preliminary injunction may be granted."15 If no factual dispute
is involved, however, no oral hearing is required; under such
14
The parties also debated the applicability of Federal Rule
of Civil Procedure 13(a) to claims brought in foreign courts. Rule
13(a) governs compulsory counterclaims and provides in relevant
part: "A pleading shall state as a counterclaim any claim which at
the time of serving the pleading the pleader has against any
opposing party, if it arises out of the transaction or occurrence
that is the subject matter of the opposing party's claim . . . ."
FED. R. CIV. P. 13(A).
Achilles concedes that under Rule 13, the Japanese action
constitutes a compulsory counterclaim. Nonetheless, Achilles
argues that Rule 13 does not apply to claims brought in foreign
courts and thus cannot be relied on as a basis for prohibiting the
prosecution of the Japanese action. As we have decided on other
grounds that the district court properly exercised its authority in
enjoining the Japanese action, we need not address whether Rule 13
governs foreign suits. We note, however, that our holding today is
consistent with the purpose of Rule 13, which is to "`prevent
multiplicity of actions and to achieve resolution in a single suit
of all disputes arising out of common matters.'" Seattle Totems,
652 F.2d at 854 (quoting Southern Construction Co. v. Pickard,
371
U.S. 57 (1962)).
15
Commerce Park at DFW Freeport v. Mardian Construction Co.,
729 F.2d 334, 342 (5th Cir. 1984) (discussing Marshall Durbin
Farms, Inc. v. National Farmers Organization, Inc.,
446 F.2d 353
(5th Cir. 1971)).
8
circumstances the parties need only be given "ample opportunity to
present their respective views of the legal issues involved."16 In
the instant case, the district court did not rely on any disputed
facts in determining whether it could properly grant an antisuit
injunction. Moreover, both parties presented comprehensive
memoranda in support of their positions on the issue. Accordingly,
the district court did not violate Rule 65(a)(1) by failing to
conduct an oral hearing before granting the antisuit injunction.
Achilles also argues that the district court violated Rule
65(c) by not requiring Kaepa to post a bond. Rule 65(c) provides
that "[n]o . . . preliminary injunction shall issue except upon the
giving of security by the applicant, in such sum as the court deems
proper . . . ."17 In holding that the amount of security required
pursuant to Rule 65(c) "is a matter for the discretion of the trial
court,"18 we have ruled that the court "may elect to require no
security at all."19 Thus, the district court did not violate Rule
16
Commerce Park, 729 F.2d at 341; see also Federal Savings and
Loan Insurance Corp. v. Dixon,
835 F.2d 554, 558 (5th Cir. 1987).
Cf. Jones v. Newton,
775 F.2d 1316, 1318 (noting that an oral
hearing on motions is typically not required in this circuit);
Security and Exchange Commission v. First Financial Group of Texas,
Inc.,
659 F.2d 660, 669 (5th Cir. 1981).
17
FED. R. CIV. P. 65(c).
18
Corrigan Dispatch Company v. Casa Guzman, 569 F.2d 300, 303
(5th Cir. 1978); see also City of Atlanta v. Metropolitan Atlanta
Rapid Transit Authority,
636 F.2d 1084, 1094 (5th Cir. Unit B Feb.
1981). But see Continuum Company, Inc. v. Incepts, Inc.,
873 F.2d
801, 803 (5th Cir.), reconsidered on other grounds,
883 F.2d 333
(5th Cir. 1989).
19
Corrigan Dispatch, 569 F.2d at 303.
9
65(c) by failing to compel Kaepa to post a bond.20
III.
CONCLUSION
For the foregoing reasons, the district court's grant of
Kaepa's motion to enjoin the litigation of Achilles's action in
Japan is
AFFIRMED.
EMILIO M. GARZA, Circuit Judge, dissenting:
International comity represents a principle of paramount
importance in our world of ever increasing economic
interdependence. Admitting that "comity" may be a somewhat elusive
concept21 does not mean that we can blithely ignore its cautionary
dictate.22 Unless we proceed in each instance with respect for the
20
Moreover, under the instant factsSQthe party enjoined being
the party that created any risk of damages for delay or duplication
by filing the second, mirror-image suit in Japan after
contractually consenting to the jurisdiction and substantive law of
TexasSQthe district court cannot be said to have abused its
discretion: The injunction can only work to avoid damages, not
cause them.
21
As one commentator has observed:
Comity has been defined variously as the basis of international law,
a rule of international law, a synonym for private international
law, a rule of choice of law, courtesy, politeness, convenience or
goodwill between sovereigns, a moral necessity, expediency,
reciprocity or considerations of high international politics
concerned with maintaining amicable and workable relationships
between nations.
Joel R. Paul, Comity in International Law, 32 Harv. Int'l L.J. 1, 1-2 (1991)
(footnotes omitted).
22
See Hilton v. Guyot, 159 U.S. 113,
16 S. Ct. 139,
40 L. Ed.
95 (1894), in which the Supreme Court stated:
"Comity," in the legal sense, is neither a matter of absolute
obligation, on the one hand, nor of mere courtesy and good will,
upon the other. But it is the recognition which one nation allows
within its territory to the legislative, executive, or judicial acts
-10-
independent jurisdiction of a sovereign nation's courts, we risk
provoking retaliation in turn, with detrimental consequences that
may reverberate far beyond the particular dispute and its private
litigants. Amicable relations among sovereign nations and their
judicial systems depend on our recognition, as federal courts, that
we share the international arena with co-equal judicial bodies, and
that we therefore act to deprive a foreign court of jurisdiction
only in the most extreme circumstances. Because I feel that the
majority's opinion does not grant the principle of international
comity the weight it deserves, I must respectfully dissent.
I
A
I do not quarrel with the well established principle, relied
on by the majority, that our courts have the power to control the
conduct of persons subject to their jurisdiction, even to the
extent of enjoining them from prosecuting in a foreign
jurisdiction. I write to emphasize, however, that under concurrent
jurisdiction, "parallel proceedings on the same in personam claim
should ordinarily be allowed to proceed simultaneously, at least
until a judgment is reached in one which can be pled as res
judicata in the other." Laker Airways Ltd. v. Sabena, Belgian
World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984).23 The filing
of another nation, having due regard both to international duty and
convenience, and to the rights of its own citizens or of other
persons who are under protection of its laws.
159 U.S. at 163-64, 16 S. Ct. at 143.
23
See also Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456,
466,
59 S. Ct. 275, 280,
83 L. Ed. 285 (1939) ("[I]t is settled that where the
judgment sought is strictly in personam, both the state court and the federal
of a second parallel action in another jurisdiction does not
necessarily conflict with or prevent the first court from
exercising its legitimate concurrent jurisdiction. Id. at 926. In
the ordinary case, both forums should be free to proceed to a
judgment, unhindered by the concurrent exercise of jurisdiction in
another court.24
The issuance of an antisuit injunction runs directly counter
to this principle of tolerating parallel proceedings. An antisuit
injunction "conveys the message . . . that the issuing court has so
little confidence in the foreign court's ability to adjudicate a
given dispute fairly and efficiently that it is unwilling even to
allow the possibility." Gau Shan Co. v. Bankers Trust Co., 956
F.2d 1349, 1355 (6th Cir. 1992). It makes no difference that in
formal terms the injunction is only addressed to the parties. The
court, having concurrent jurisdiction, may proceed with the litigation at least
until judgment is obtained in one of them which may be set up as res judicata in
the other.").
24
The Supreme Court in Kline v. Burke Const. Co., 260 U.S. 226, 43 S.
Ct. 79,
67 L. Ed. 226 (1922), had the following to say about concurrent
jurisdiction:
[A] controversy over a mere question of personal liability does not
involve the possession or control of a thing, and an action brought
to enforce such a liability does not tend to impair or defeat the
jurisdiction of the court in which a prior action for the same cause
is pending. Each court is free to proceed in its own way and its
own time, without reference to the proceedings in the other court.
Whenever a judgment is rendered in one of the courts and pleaded in
the other, the effect of that judgment is to be determined by the
application of the principles of res adjudicata by the court in
which the action is still pending in the orderly exercise of its
jurisdiction, as it would determine any other question of fact or
law arising in the progress of the case. The rule, therefore, has
become generally established that where the action first brought is
in personam and seeks only a personal judgment, another action for
the same cause in another jurisdiction is not precluded.
260 U.S. at 230, 43 S. Ct. at 81.
-12-
antisuit injunction operates to restrict the foreign court's
ability to exercise its jurisdiction as effectively as if it were
addressed to the foreign court itself. Laker Airways, 731 F.2d at
927; Donovan v. City of Dallas,
377 U.S. 408, 413,
84 S. Ct. 1579,
1582-83,
12 L. Ed. 2d 409 (1964). Enjoining the parties from
litigating in a foreign court will necessarily compromise the
principles of comity, and may lead to undesirable consequences.
For example, the foreign court may react by issuing a similar
injunction, thereby preventing any party from obtaining a remedy.
Laker
Airways, 731 F.2d at 927. The foreign court may also be less
inclined to enforce a judgment by our courts. The refusal to
enforce a foreign judgment, however, is less offensive than acting
to prevent the foreign court from hearing the matter in the first
place.
Id. at 931.
Antisuit injunctions intended to carve out exclusive
jurisdiction may also have unintended, widespread effects on
international commerce. Without "an atmosphere of cooperation and
reciprocity between nations," the ability to predict future
consequences of international transactions will inevitably suffer.
Id. To operate effectively and efficiently, international markets
require a degree of predictability which can only be harmed by
antisuit injunctions and the resulting breakdown of cooperation and
reciprocity between courts of different nations.
Id. The attempt
to exercise exclusive jurisdiction over international economic
affairs is essentially an intrusion into the realm of international
-13-
economic policy that should appropriately be left to our
legislature and the treaty making process.25 As the court in Laker
Airways stated, "Absent an explicit directive from Congress, this
court has neither the authority nor the institutional resources to
weigh the policy and political factors that must be evaluated when
resolving competing claims of jurisdiction. In contrast,
diplomatic and executive channels are, by definition, designed to
exchange, negotiate, and reconcile the problems which accompany the
realization of national interests within the sphere of
international association." Laker Airways, 731 F.2d at 955.
The majority appears to require an affirmative showing that
the granting of an antisuit injunction in this case would
immediately and concretely affect adversely the relations between
the United States and Japan. Unless there is evidence that this
antisuit injunction would "actually threaten" the relations between
the two countries, the majority is comfortable to assume otherwise.
Cf. Allendale Mut. Ins. Co. v. Bull Data Systems, Inc., 10 F.3d
425, 431-33 (7th Cir. 1993) (requiring evidence of concrete harm to
the foreign relations of the United States). Some courts have gone
25
As the Sixth Circuit in Gau Shan Co. recognized:
The days of American hegemony over international economic affairs
have long since passed. The United States cannot today impose its
economic will on the rest of the world and expect meek compliance,
if indeed it ever could. The modern era is one of world economic
interdependence, and economic interdependence requires cooperation
and comity between nations.
Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1354 (6th Cir. 1992). See
generally Thomas E. Burke, Case Note, Gau Shan Co. v. Bankers Trust Co.: What
Should Be the Role of International Comity in the Issuance of Antisuit
Injunctions?, 18 N.C. J. Int'l L. & Com. Reg. 475 (1993).
-14-
so far as to suggest that we might expect, for example, a
representative of the foreign nation to convey their country's
concern regarding the issuance of an antisuit injunction in that
case. See, e.g., id. at 431; Philips Medical Sys. Int'l B.V. v.
Bruetman,
8 F.3d 600, 605 (7th Cir. 1993). Insisting on evidence
of immediate and concrete harm, in the form of a diplomatic protest
or otherwise, is both unrealistic and shortsighted. As with most
transnational relations, the potential harm to international comity
caused by the issuance of a specific antisuit injunction will be as
difficult to predict, as it will be to remedy. It is precisely
this troubling uncertainty, and the recognition that our courts are
ill equipped to weigh these types of international policy
considerations, that cautions us to make the respectful deference
underlying international comity the rule rather than the exception.
B
In holding that the district court in this case did not abuse
its discretion by enjoining Achilles, a Japanese corporation, from
proceeding with its lawsuit filed in the sovereign nation of Japan,
the majority appears to rely primarily on the duplicative nature of
the Japanese suit and the resulting "unwarranted inconvenience,
expense, and vexation."26 The inconvenience, expense and vexation,
26
Cf. In re Unterweser Reederei, Gmbh, 428 F.2d 888, 890, 896 (5th Cir.
1970) (affirming issuance of antisuit injunction where "allowing simultaneous
prosecution of the same action in a foreign forum thousands of miles away would
result in 'inequitable hardship' and 'tend to frustrate and delay the speedy and
efficient determination of the cause'"), rev'd on other grounds sub nom. M/S
Bremen v. Zapata Off-Shore Co.,
407 U.S. 1,
92 S. Ct. 1907,
32 L. Ed. 2d 513
(1972); Seattle Totems Hockey Club v. National Hockey League,
652 F.2d 852, 856
(9th Cir. 1981) (affirming antisuit injunction where adjudication in two separate
-15-
however, are factors likely to be present whenever there is an
exercise of concurrent jurisdiction by a foreign court. Sea
Containers Ltd. v. Stena AB, 890 F.2d 1205, 1213-14 (D.C. Cir.
1989). The majority's standard can be understood to hold,
therefore, that "a duplication of the parties and issues, alone, is
sufficient to justify a foreign antisuit injunction." Gau Shan
Co., 956 F.2d at 1353; see also Laker
Airways, 731 F.2d at 928
(concluding that this rationale "is prima facie inconsistent with
the rule permitting parallel proceedings in concurrent in personam
actions"). Under this standard, concurrent jurisdiction involving
a foreign tribunal will rarely, if ever, withstand the request for
an antisuit injunction.
By focusing on the potential hardship to Kaepa of having to
litigate in two forums,27 the majority applies an analysis that is
actions was "likely to result in unnecessary delay and substantial inconvenience
and expense to the parties and witnesses," and "could result in inconsistent
rulings or even a race to judgment"), cert. denied, 457 U.S. 1105,
102 S. Ct.
2902,
73 L. Ed. 2d 1313 (1982).
27
I also believe the majority errs by relying on two other factors in
this case. The majority reasons that the "clear indications by both parties that
claims arising from their contract should be adjudicated in this country" lends
support to the conclusion that the district court did not abuse its discretion
by enjoining the foreign litigation. The majority reaches this conclusion even
though the district court found that the jurisdictional language in the parties'
agreement was permissive of Texas jurisdiction, rather than exclusive. The
majority also appears to overlook the fact that this dispute involves experienced
and sophisticated businessmen who were perfectly capable of negotiating an
exclusive forum clause had they desired one. See Bremen v. Zapata, 407 U.S. 1,
12-13,
92 S. Ct. 1907, 1914,
32 L. Ed. 2d 513 (1972) ("There are compelling
reasons why a freely negotiated private international agreement, unaffected by
fraud, undue influence, or overweening bargaining power, such as that involved
here, should be given effect."). Therefore, if anything, the district court's
action))in reserving exclusive jurisdiction over this suit))runs directly counter
to the parties' intentions, as evinced by their freely negotiated contract. Cf.
id. ("The expansion of American business and industry will hardly be encouraged
if, notwithstanding solemn contracts, we insist on a parochial concept that all
disputes must be resolved under our laws and in our courts."). I am also not
persuaded by the majority's reliance on the inference that Achilles' actions, by
-16-
more appropriately brought to bear in the context of a motion to
dismiss for forum non conveniens.28 See Laker Airways, 731 F.2d at
928. Considerations that are appropriate in deciding whether to
decline jurisdiction are not as persuasive when deciding whether to
deprive another court of jurisdiction. "The policies of avoiding
hardships to the parties and promoting the economies of
consolidation litigation 'do not outweigh the important principles
of comity that compel deference and mutual respect for concurrent
foreign proceedings. Thus, the better rule is that duplication of
parties and issues alone is not sufficient to justify issuance of
an antisuit injunction.'" Gau Shan
Co., 956 F.2d at 1355 (quoting
Laker
Airways, 731 F.2d at 928); see also China Trade & Dev. Corp.
v. M.V. Choong Yong,
837 F.2d 33, 36 (2nd Cir. 1987; Compagnie des
Bauxites de Guinea v. Insurance Co. of N. Am.,
651 F.2d 877, 887
(3d Cir. 1981), aff'd on other grounds sub nom. Insurance Corp. of
Ireland, Ltd. v. Compagnie des Bauxite de Guinee,
456 U.S. 694,
102
S. Ct. 2099,
72 L. Ed. 2d 492 (1982). A dismissal on grounds of
forum non conveniens by either court in this case would satisfy the
filing their action in Japan some seven or eight months after they were sued in
Texas, "smacks of cynicism, harassment, and delay." See China Trade & Dev. Corp.
v. M.V. Choong Yong,
837 F.2d 33, 34-35 (2nd Cir. 1987) (vacating injunction even
though second suit was filed almost two-and-a-half years after initial suit);
Compagnie des Bauxites de Guinea v. Insurance Co. of N. Am.,
651 F.2d 877, 880,
887 (3d Cir. 1981) (vacating injunction even though second suit was filed almost
four years later). I do not believe that Achilles' impure motives, if any,
should outweigh the important interests of international comity at issue in this
case. Cf. Donovan v. City of Dallas,
377 U.S. 408, 415,
84 S. Ct. 1579, 1583,
12 L. Ed. 2d 409 (1964) (Harlan, J., dissenting) (disagreeing with the majority's
holding that the state court was without power to enjoin federal court
proceedings even though the suit was found to be vexatious and harassing).
28
On the doctrine of forum non conveniens, see Piper Aircraft Co. V.
Reyno, 454 U.S. 235, 258-61,
102 S. Ct. 252, 267-68,
70 L. Ed. 2d 419 (1981).
-17-
majority's concern with avoiding hardship to the parties, without
harming the interests of international comity.29 The district court
is not in a position, however, to make the forum non conveniens
determination on behalf of the Japanese court. In light of the
important interests of international comity, the decision by a
United States court to deprive a foreign court of jurisdiction must
be supported by far weightier factors than would otherwise justify
that court's decision to decline its own jurisdiction on form non
conveniens grounds.
C
Accordingly, I believe that the standard followed by the
Second, Sixth, and D.C. Circuits more satisfactorily respects the
principle of concurrent jurisdiction and safeguards the important
interests of international comity. Under this stricter standard,
a district court should look to only two factors in determining
whether to issue an antisuit injunction: (1) whether the foreign
action threatens the jurisdiction of the district court; and (2)
whether the foreign action was an attempt to evade important public
policies of the district court.30 Gau Shan Co., 956 F.2d at 1355;
29
On the issue of forum non conveniens, I note that this case involves
a dispute between an American company and a Japanese company over an exclusive
distributorship agreement covering the Japanese shoe market. Many of the third-
party witnesses are located in Japan. Moreover, the district court found that
Japan would be "an adequate forum" for both parties, and rejected Kaepa's
argument that a Japanese court would not treat Kaepa with the same impartiality
that would be shown to Achilles in an American court.
30
I note that we are required to apply a similarly strict standard in
tolerance of concurrent state court proceedings. See 28 U.S.C. § 2283 ("A court
of the United States may not grant an injunction to stay proceedings in a State
court except as expressly authorized by Act of Congress, or where necessary in
aid of its jurisdiction, or to protect or effectuate its judgments.") (emphasis
-18-
China Trade, 837 F.2d at 36; Laker
Airways, 731 F.2d at 927.
Neither of these factors are present in this case.
"Courts have a duty to protect their legitimately conferred
jurisdiction to the extent necessary to provide full justice to
litigants." Laker Airways, 731 F.2d at 927. Where the concurrent
proceeding effectively threatens to paralyze the jurisdiction of
the court, or where the foreign court is attempting to carve out
exclusive jurisdiction over the action, an antisuit injunction may
legitimately be necessary to protect the court's jurisdiction. In
those rare cases where the foreign action is interdictory rather
than parallel, the issuance of an antisuit injunction is primarily
a defensive action not inconsistent with the principles of
international comity. The court in Laker Airways affirmed the
issuance of an antisuit injunction where the foreign action "was
instituted by the foreign defendants for the sole purpose of
terminating the United States claim."
Id. at 915. In fact, the
British Court of Appeals had enjoined the plaintiff from pursuing
its claims against British defendants in a United States court
under United States law.
Id. Significantly, the United States
district court in Laker Airways also made clear that its injunction
added). Section 2283 "does not allow a federal court to enjoin state proceedings
to protect a judgment that the federal court may make in the future but has not
yet made." Laker Airways Ltd. v. Sabena, Belgian World Airlines,
731 F.2d 909,
929 n.59 (D.C. Cir. 1984) (internal quotation marks omitted). In addition, FED.
R. CIV. P. 13(a) had been held inapplicable in this context, and accordingly, "a
federal court is barred by § 2283 from enjoining a party from proceeding in state
court on a claim that should have been pleaded as a compulsory counterclaim in
a prior federal suit." Seattle Totems Hockey Club v. National Hockey League,
652
F.2d 852, 855 n.5 (9th Cir. 1981). This rule of restraint and respect regarding
state court proceeding should apply with even greater force in the context of
foreign tribunals.
-19-
was intended solely to protect its jurisdiction by preventing the
defendants from taking any action before a foreign court or
governmental authority that would interfere with the litigation
pending before the district court. Id. at 919. The injunction was
not intended to prevent all concurrent proceedings in foreign
courts, only those which directly threatened the district court's
jurisdiction. There is no evidence in this case that Achilles'
action in Japan in any way threatens the district court's exercise
of its concurrent jurisdiction. While the Japanese action may
eventually proceed to a judgment which can be pled as res judicata
in the district court, no attempt has been made to carve out
exclusive jurisdiction on behalf of the foreign tribunal.31
As an example of where a court may need to act in order to
protect its jurisdiction, a long-standing exception to the rule
tolerating concurrent jurisdiction has been recognized for
proceedings in rem or quasi in rem. China Trade, 837 F.2d at 36.32
Because the second action may pose an inherent threat to the
court's basis for jurisdiction, an antisuit injunction may be
appropriate in an in rem or quasi in rem proceeding.
Id. "Where
jurisdiction is based on the presence of property within the
31
See Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1354 (6th Cir.
1992) (concluding that the possibility that a foreign ruling might result in the
voluntary dismissal of the suit was merely a threat to the plaintiff's interest
in prosecuting its suit, and was not a threat to the jurisdiction of the United
States court).
32
See also Donovan, 377 U.S. at 412, 84 S. Ct. at 1582 (citing Princess
Lida of Thurn and Taxis v. Thompson,
305 U.S. 456,
59 S. Ct. 275,
83 L. Ed. 285
(1939)).
-20-
court's jurisdictional boundaries, a concurrent proceeding in a
foreign jurisdiction poses the danger that the foreign court will
order the transfer of the property out of the jurisdictional
boundaries of the first court, thus depriving it of jurisdiction
over the matter. This concern of course is not present in this in
personam proceeding." Gau Shan Co., 956 F.2d at 1358. Likewise,
this concern is not present in the current in personam proceeding,
the focus of which is a distribution agreement. I note that In re
Unterweser Reederei, Gmbh, relied on by the majority, was an in rem
proceeding, justifying the more permissive standard applied to the
issuance of an antisuit injunction in that case.33
Under the second factor of the stricter standard, an antisuit
injunction may also be appropriate where a party seeks to evade
important policies of the forum by bringing suit in a foreign
33
The other Fifth Circuit precedent relied on by the majority is
equally distinguishable and does not control the outcome in this case. See
Bethell v. Peace, 441 F.2d 495 (5th Cir. 1971). The panel in Bethel reviewed an
antisuit injunction that was issued only after a judgment had been entered upon
a motion for summary
judgment. 441 F.2d at 496. In affirming the issuance of
the injunction, the Fifth Circuit panel also relied on "the power of a court of
equity of one state to restrain its own citizens from prosecuting actions in a
sister state when such actions serve to vex, harass, or oppress an opponent."
Id. at 498. The panel did not discuss the interests of international comity.
The majority purports not to be persuaded by the distinctions I identify
in Bethel and Unterweser. They are, however, distinctions that make all the
difference under the appropriate standard for evaluating antisuit injunctions.
The issuance of an antisuit injunction after judgment or in an in rem proceeding
falls under a well-recognized exception to the otherwise strict standard
articulated by the Second, Sixth and D.C. Circuits. See China Trade, 837 F.2d
at 36 (recognizing long-standing exception to usual rule tolerating concurrent
proceedings for proceeding in rem or quasi in rem); Laker
Airways, 731 F.2d at
928 (concluding that "a court may freely protect the integrity of its judgments
by preventing their evasion through vexatious or oppressive relitigation," and
citing Bethel for this proposition). Given the procedural posture in Bethel and
Unterweser, the permissive "standard" applied in these cases is entirely
consistent with the strict standard I am proposing today. Therefore, contrary
to what the majority asserts, adopting the strict standard for evaluating the
issuance of antisuit injunctions in the Fifth Circuit would not require us to
overrule any prior decision by this Court.
-21-
court. Gau Shan Co., 956 F.2d at 1357. "While an injunction may
be appropriate when a party attempts to evade compliance with a
statute of the forum that effectuates important public policies, an
injunction is not appropriate merely to prevent a party from
seeking 'slight advantages in the substantive or procedural law to
be applied in a foreign court.'" China
Trade, 837 F.2d at 37
(quoting Laker
Airways, 731 F.2d at 931, n.73).34 The policy
favoring the resolution in a single lawsuit of all disputes arising
out of a common matter does not, as noted earlier, outweigh the
important interests of international comity. Rather, the principle
enunciated under the second factor is "similar to the rule that a
foreign judgment not entitled to full faith and credit under the
Constitution will not be enforced within the United States when
contrary to the crucial public policies of the forum in which
enforcement is requested." Laker
Airways, 731 F.2d at 931. Under
this principle, a court is not required to give effect to a
judgment that does violence the forum's own fundamental interests.
Id. Since the issuance of an antisuit injunction is a much greater
and more direct interference with a foreign country's judicial
process than is the refusal to enforce a judgment, it follows that
an antisuit injunction should only be issued in the most extreme
circumstances. Although the majority questions the purity of
34
See also Laker Airways, 731 F.2d at 931 n.73 ("An impermissible
evasion is much more likely to be found when the party attempts to elude
compliance with a statute of specific applicability upon which the party seeking
an injunction may have relied and which is designed to effectuate important state
policies.").
-22-
Achilles's motives in filing suit in Japan, there is no evidence
that Achilles is attempting to evade any important policy of the
United States forum.
II
Because neither factor supports the issuance of an antisuit
injunction in this case, I believe the district court abused its
discretion by enjoining Achilles from prosecuting an action filed
in Japan. Accordingly, I respectfully dissent.
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