HSBC USA, Inc. v. Prosegur Paraguay

Full title: HSBC USA, INC., Plaintiff, v. PROSEGUR PARAGUAY, S.A., Defendant

Court: United States District Court, S.D. New York

Date published: Sep 30, 2004

No. 03 Civ. 3336 (LAP) (S.D.N.Y. Sep. 30, 2004)

Opinion

No. 03 Civ. 3336 (LAP).

September 30, 2004

OPINION AND ORDER

LORETTA PRESKA, District Judge

HSBC USA, Inc. ("HSBC" or "plaintiff") brings its Complaint against Prosegur Paraguay, S.A. ("Prosegur" or "defendant") for: (1) breach of contract; (2) negligence; (3) bailment; (4) breach of fiduciary duty; (5) conversion; and (6) fraud. Defendant now moves for dismissal on the grounds of forum non conveniens. For the reasons set forth below, defendant's motion to dismiss is denied.

BACKGROUND

Plaintiff HSBC is a domestic corporation formed under the laws of the state of Maryland, with its principal place of business in New York. (Complaint ("Compl.") ¶ 1.) Defendant Prosegur is a foreign corporation, existing under the laws of the Republic of Paraguay, with its principal place of business in Asunción, Paraguay. (Compl. ¶ 2.) In late 1996, Prosegur's general manager traveled to HSBC's offices in New York, New York, for the purpose of soliciting HSBC to engage Prosegur for the armored transport of currency in Paraguay. (Compl. ¶ 3.) At this meeting, HSBC and Prosegur, through their respective agents, orally negotiated the terms and conditions upon which they would conduct business. (Compl. ¶ 4.) Specifically, Prosegur would safeguard and transport currency, via armored vehicle, from banks in Paraguay to the Silvio Pettirossi International Airport ("Airport") in Asunción, Paraguay. (Compl. ¶ 4.) From 1996 through June 2000, defendant transported currency for plaintiff on several occasions without incident. (Compl. ¶ 5.) On July 18, 2000, individuals attempted to rob an HSBC shipment from Prosegur at the Airport as the shipment sat on the tarmac awaiting loading, but the robbery was aborted at the last minute. (Compl. ¶ 7.) Prosegur never informed HSBC of that event. (Compl. ¶ 7.) On August 4, 2000, HSBC and Prosegur entered into a written agreement via facsimile transmissions between New York and Paraguay, pursuant to which Prosegur was to transport seven parcels of currency from various banks in and around the city of Asunción, Paraguay, to the Airport for shipment to New York. (Compl. ¶ 8.) On August 4, 2000, as the bags were being loaded into the aircraft, a group of armed men with assault rifles drove up to the plane and stole five of the seven bags of currency, containing in excess of $11,132,000. (Compl. ¶ 14.)

Plaintiff commenced this action in the Supreme Court of the State of New York, County of New York, on February 11, 2003. Pursuant to sections 1441 and 1446 of title 28 of the United States Code, Prosegur removed the action to the United States District Court for the Southern District of New York on May 12, 2003. Defendant brought the present motion on December 5, 2003. For the foregoing reasons, defendant's motion to dismiss is denied.

DISCUSSION

I. The Standard

The doctrine of forum non conveniens permits a court, in rare instances, to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim. Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 100 (2d Cir. 2000). District courts have broad discretion when deciding whether to dismiss an action on such grounds. R. Maganlal Co. v. M.G. Chem. Co., 942 F.2d 164, 167 (2d Cir. 1991). At the outset, my analysis is predicated on a strong presumption that the plaintiff's choice of forum should be honored. Piper Aircraft v. Reyno, 454 U.S. 235, 265-66 (1981); Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (1947); Guidi v. Inter-Continental Hotels, 224 F.3d 142, 146-47 (2d Cir. 2000); Alcoa S.S. Co. v. M/V Nordic Regent, 654 F.2d 147, 162 n. 9 (2d Cir. 1998); PT United Can Co. v. Crown Cork Seal Co., 138 F.3d 65, 74 (2d Cir. 1998).

When deciding a motion to dismiss on the basis of forum non conveniens, I engage in a two-part analysis. First, I determine if the defendant seeking dismissal has established that an adequate alternative forum is available. Realuyo v. Diaz, No. 98 Civ. 7684, 2000 WL 307407, at *7 (S.D.N.Y. Mar. 23, 2000) (citing Gulf Oil, 330 U.S. at 506-7). It is not enough that the defendant is subject to jurisdiction there. See R. Maganlal, 942 F.2d at 167 (citing Piper, 454 U.S. at 254 n. 22);Rasoulzadeh v. Associated Press, 574 F. Supp. 854, 861 (S.D.N.Y. 1983). In addition, the foreign forum cannot be one in which "the plaintiff [is] highly unlikely to obtain basic justice[.]" Rasoulzadeh, 574 F. Supp. at 861 (internal quotation omitted).

Once the defendant demonstrates that an adequate forum exists, I weigh the private and public interests the Supreme Court set forth in Gulf Oil Corp. v. Gilbert. 330 U.S. at 508-9. To prevail, the defendant must demonstrate that the balance of all of these factors tilts strongly towards the foreign forum.Piper, 454 U.S. at 255; PT United, 138 F.3d at 74; R. Maganlal, 942 F.2d at 167. The private interest factors I consider in determining whether dismissal is warranted are: (1) relative ease of access to sources of proof; (2) availability of compulsory process to secure the attendance of unwilling witnesses; (3) cost of obtaining the attendance of witnesses; (4) possibility of viewing the premises, if relevant to the action; and (5) all other practical problems that make trial of a case easy, expeditious, and inexpensive. Gulf Oil, 330 U.S. at 508-9;PT United, 138 F.3d at 73. The public interest factors I weigh are: (1) court administrative difficulties;¹ (2) burdens on the jury pool; (3) the interest of forums in having local disputes decided at home; and (4) the appropriateness of trying a case in a forum familiar with the governing law of the case.Gilbert, 330 U.S. at 508-9; PT United, 138 F.3d at 74; R. Maganlal, 942 F.2d at 167.

1 Although the congestion of courts is a public interest factor the Supreme Court established in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947), the Court of Appeals made clear that this consideration is not relevant within the Second Circuit as long as all judicial vacancies are filled, resulting in a "full complement of judges for the District". See Guidi, 224 F.3d at 147 n. 5. Because there is presently one vacancy (for which there is a nominee) out of the twenty-seven authorized district judge positions in this district, this factor is not relevant.

II. Application

Plaintiff HSBC is a United States corporation, (Compl. ¶ 1), and is therefore entitled to significant deference in its choice to sue in its home forum. See Piper, 454 U.S. at 255; Pollux Holding Ltd. v. Chase Manhattan Bank, 329 F.3d 64, 70-71 (2d Cir. 2003). Although HSBC is engaged in business in foreign countries, the contract at issue had its genesis in New York only after Prosegur's agent traveled to New York to solicit a contract from HSBC. Consequently, the instant case is distinguishable from those holding that corporations soliciting international business cannot expect to bring their foreign opponents into a U.S. court when every reasonable consideration leads to the conclusion that the litigation should occur elsewhere. Cf. Carey v. Bayerische Hypo-Und Vereinsbank AG, 370 F.3d 234, 237, 238 (2d Cir. 2004) (internal citations omitted); Reid-Walan v. Hansen, 933 F.2d 1390, 1395 (8th Cir. 1991). Thus, Prosegur bears a heavy burden on this motion.

Despite the fact that Prosegur has agreed to accept service of process and waive all procedural defenses it may have in Paraguay, (Massarioli Decl. ¶¶ 2-3),² I am not convinced that Paraguay is an adequate alternative forum.

2 Reference is to the Declaration of Carlos Massarioli dated September 3, 2003.

HSBC disputes the adequacy of Paraguay as a forum for two reasons: (1) it believes it has a legitimate fear for the safety of its agents and witnesses; and (2) it believes it will not receive basic justice in Paraguay. In a forum non conveniens analysis, "the ultimate inquiry is where trial will best serve the convenience of the parties and the ends of justice."Guidi, 224 F.3d at 147 (citing Koster v. Am. Lumbermens Mut. Cas. Co., 330 U.S. 518, 527 (1947)).

Plaintiff has presented ample evidence that litigating in Paraguay could endanger the safety of plaintiff's agents and potential witnesses. (Pl. Opp. Brief p. 11.)³ To wit, R. Matthew Bagdanovich, an HSBC investigator, was repeatedly followed and found listening devices that had been hidden in his hotel room. (Bagdanovich Decl. ¶ 14.)⁴ He was later chased by a vehicle whose occupants had their weapons drawn and aimed at Mr. Bagdanovich. (Bagdanovich Decl. ¶ 14.) During the course of his investigation, Mr. Bagdanovich learned that five people connected with the robbery or the investigation have been murdered or have died under suspicious circumstances, including the lead prosecutor in the robbery investigation and the police chief in charge of the investigation. (Bagdanovich Decl. ¶ 10.) Additionally, union leaders of Paraguay's National Civil Aviation Office reportedly complained that their workers investigating the robbery were targets of an intimidation scheme run by an Air Force Major. (Bagdanovich Decl. ¶ 12.) Of considerable significance is the fact that Hanan Ofer, the HSBC representative who entered into the oral contract at issue and who also witnessed the robbery, fears that his safety would be in jeopardy if the action were litigated in Paraguay. (Ofer Decl. ¶ 4.)⁵

3 Reference is to Plaintiff HSBC's Memorandum of Law in Opposition to Defendant's Motion to Dismiss dated February 9, 2004.

4 Reference is to the Declaration of R. Matthew Bagdanovich dated February 6, 2004.

5 Reference is to the Declaration of Hanan Ofer dated January 29, 2004.

In addition to the violence that has already been directed at individual witnesses, HSBC would likely be unable to obtain basic justice in Paraguay. HSBC claims that a former high-level Paraguayan government official was involved in planning the robbery and that the robbery was undertaken to fund the once-dominant political party in Paraguay. (Bagdanovich Decl. ¶ 7, 8.) The robbery was allegedly "coordinated and supported by a network of current and ex-governmental, military and police officials." (Bagdanovich Decl. ¶ 9.) These are more than generalized allegations of corruption. Cf. Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 982 (2d Cir. 1993);Mercier v. Sheraton Int'l, Inc., 981 F.2d 1345, 1351 (1st Cir. 1992). Moreover, "[i]n 2003, Paraguay was ranked the fourth most corrupt country in the world (behind Bangladesh, Nigeria, and Haiti)." (Bederman Decl. ¶ 12.)⁶ A State Department report issued in February 2000 noted that denials of fair trials are common in Paraguay and the courts are often pressured by politicians and other persons whose interests are at stake. (Bederman Decl. ¶ 15.) Even the former Attorney-General of Paraguay has remarked that "there is a `mafia' that controls the judiciary." (Bederman Decl. ¶ 29.) Notably, Prosegur has done little to rebut HSBC's charges.⁷

6 Reference is to the Declaration of David J. Bederman dated March 8, 2004.

7 Prosegur's rebuttal consists entirely of noting that the exhibits to the declarations submitted by HSBC in support of its Memorandum of Law in Opposition to Defendant's Motion to Dismiss are primarily newspaper articles and that "notwithstanding his own investigation, the news reports appear to form the entire basis of Mr. Bagdanovich's contentions. . . ." (Prosegur's Brief in Further Support of Motion to Dismiss p. 7.) In addition, Prosegur's declarations do not respond to the specific allegations of violence and corruption contained in the Bagdanovich Declaration.

The violence that has already been directed at investigators of the robbery that provoked this litigation, together with the uncontested allegations of governmental involvement in the robbery compel a finding that Prosegur has not carried its burden of showing that Paraguay is an adequate forum. Guidi, 224 F.3d at 147 (holding that the substantial safety risk and emotional burden plaintiffs would bear if required to travel to foreign forum supports keeping the case in their chosen forum). Nevertheless, I now consider the private and public interest factors established in Gulf Oil Corp. v. Gilbert.

A. Private Interest Factors

The parties' relative ease of access to sources of proof neither favors nor disfavors dismissal. Both HSBC and Prosegur claim to have relevant documents in New York and Paraguay, respectively. Not surprisingly, most of HSBC's documents are written in English, and most of Prosegur's documents are written in Spanish. (See Servidio Decl. ¶ 6.)⁸ The costs of translating and shipping such documents will befall either HSBC or Prosegur. Courts generally refuse to dismiss cases where the cost burden would simply shift from one party to the other. See, e.g., TeeVee Toons, Inc. v. Gerhard Schubert GMBH, No. 00 Civ. 5189, 2002 WL 498627, at *8 (S.D.N.Y. Mar. 29, 2002). Thus, I find that ease of access to documentary sources of proof is a neutral factor that benefits neither plaintiff's nor defendant's argument.

8 Reference is to the Declaration of Juan Carlos Servidio dated August 29, 2003.

Given the relatively even disbursement of witnesses in both New York and Paraguay, the cost of witnesses traveling is not a factor favoring either plaintiff or defendant. Just as this Court lacks the authority to compel Paraguayan citizens unwilling to serve as witnesses for Prosegur to testify in New York, several of HSBC's witnesses have indicated that they will not return to Paraguay to testify, and Prosegur has not demonstrated that Paraguay has any more power than this Court to compel foreign citizens to testify against their will. Moreover, "[t]he party seeking the transfer must clearly specify the key witnesses to be called and must make a general statement of what their testimony will cover" to avoid a judicial determination of which forum is most convenient based merely on which party can present a longer list of possible witnesses. Jenkins v. Wilson Freight Forwarding Co., 104 F. Supp. 422, 424 (S.D.N.Y. 1952). Prosegur has provided a witness list containing only names and either job titles or roles in the robbery. (Servidio Decl. ¶ 3.) Defendant has not established that these witnesses can provide testimony relevant to the claims in this case. As such, I find that Prosegur has not demonstrated that the location of several witnesses in Paraguay strongly favors dismissal.

Prosegur contends that "proceeding with the case in New York will preclude Prosegur from bringing appropriate third-party actions against others in Paraguay with respect to the armed robbery." (Pros. Motion to Dismiss p. 11.)⁹ This argument has failed before in this Circuit. See TeeVee Toons, 2002 WL 498627, at *9. Nothing prevents Prosegur from initiating an action in Paraguay in reliance on a judicial determination in New York. See Nat'l Union Fire Ins. Co. of Pittsburgh v. BP Amoco, P.L.C., No. 03 Civ. 0200, 2003 WL 21180421, at *8 (S.D.N.Y. May 20, 2003) (noting that courts have accorded little weight to the efficiency that might be gained by having all related litigation in a single forum) (citing Overseas Programming Cos. v. Cinematographische Commerz-Anstalt, 684 F.2d 232, 235 (2d Cir. 1982); MasterCard Int'l Inc. v. Argencard Sociedad Anomina, No. 01 Civ. 3027, 2002 WL 432379, at *8 (S.D.N.Y. Mar. 20, 2002).

9 Reference is to Defendant Prosegur Paraguay's Memorandum of Law in Support of its Motion to Dismiss on Forum Non Conveniens Grounds dated December 5, 2003.

Accordingly, I find that the private interest factors militate against dismissing the action. I turn now to the public interest factors.

B. Public Interest Factors

The first two factors are the congestion of the court and the burden on the jury pool. Prosegur has not cited any administrative difficulties in this court or burdens on the jury pool that make this case different and distinct from other cases in which courts have refused to dismiss on grounds of forum non conveniens. See, e.g., Guidi, 224 F.3d 142; Rasoulzadeh, 574 F. Supp. 854; Ingram Micro, Inc. v. Airoute Cargo Express, Inc., No. 99 Civ. 12480, 2001 WL 282696 (S.D.N.Y. Mar. 22, 2001).

The next factor is the local interest in deciding localized disputes at home. An American corporation's home forum is deemed to be any United States court. Guidi, 224 F.3d at 146. Local juries have a particularly strong interest in resolving HSBC's action for fraud; such an allegation is typically afforded great weight by district courts. See, e.g., Herbstein v. Bruetman, 743 F. Supp. 184, 189 (S.D.N.Y. 1990). In addition, the contract that was allegedly breached was formed in New York. As such, "New York has a clear interest in seeing the dispute adjudicated here." Realuyo, 2000 WL 307407, at *25.

The final factor is the appropriateness of trying a case in a forum familiar with the governing law of the case. Even if Prosegur is correct and Paraguay law "may very possibly" apply to some of the claims, this is not a sufficient reason to dismiss. See Boosey Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 492 (2d Cir. 1998).

Accordingly, I find that the public interest factors do not favor dismissing the action.

CONCLUSION

Because defendant Prosegur has not demonstrated that Paraguay is an adequate alternative forum and because all of the Gulf Oil Corp. v. Gilbert factors weigh against dismissal, defendant's motion to dismiss is denied.

Counsel shall appear for a scheduling conference on Monday, October 18, 2004, at 9:00 a.m.

SO ORDERED.