Opinion ID: 2750493
Heading Depth: 3
Heading Rank: 1

Heading: Whether Adjudicatory Comity Requires a “True

Text: Conflict” The Supreme Court’s most recent most discussion of international comity was in Hartford Fire, 509 U.S. at 798. Hartford Fire did not explain, however, what factors we should or must consider when addressing comity; in particular, it left unclear whether a “true conflict” is a predicate to prudential abstention on the grounds of comity. The district court in the instant litigation held that, “at least in the Ninth Circuit, the application of international comity is generally limited to cases where there is a ‘true conflict’ between domestic and foreign law.” Mujica I, 381 F. Supp. 2d at 1155–56 (citing Hartford Fire, 509 U.S. at 794–95, and In re Simon, 153 F.3d at 999). And Plaintiffs argue here that “[t]he existence of a ‘true conflict’ is a threshold requirement for abstention on international comity grounds,” and that “[i]n this Court, . . . [the] rule is absolutely clear that application of the law of international comity is limited to cases in which there is in fact a true conflict between domestic and foreign law.” We do not think that Hartford Fire stands for the proposition adopted by the district court and urged by Plaintiffs. Hartford Fire involved the reach of U.S. antitrust laws, which applied extraterritorially; in that case, the question was whether a U.S. district court could exercise jurisdiction over antitrust claims filed against a group of London reinsurers. 509 U.S. at 769, 798–99. The London reinsurers argued that, based on international comity, the antitrust laws should not be read to extend to their activities, which were regulated by British law. See id. at 797–98. MUJICA V. AIRSCAN 41 The Supreme Court stated that the “only substantial question in th[e] litigation” was “whether there [wa]s in fact a true conflict between domestic and foreign law.” Id. at 798 (internal quotation marks omitted). The defendants argued that applying federal antitrust laws would conflict with British law because Britain had established its own comprehensive regulatory regime for antitrust issues and the defendants’ conduct was consistent with British law. Id. at 798–99. But the Court held that this situation did not qualify as a “true conflict,” explaining that “[n]o conflict exists, for these purposes, where a person subject to regulation by two states can comply with the laws of both.” Id. at 799. (internal quotation marks and citation omitted). And “[s]ince the London reinsurers d[id] not argue that British law require[d] them to act in some fashion prohibited by the law of the United States, or claim that their compliance with the laws of both countries [wa]s otherwise impossible, [the Court saw] no conflict with British law.” Id. (internal quotation marks omitted). In light of the lack of conflict, the Court held that there was “no need . . . to address other considerations that might inform a decision to refrain from the exercise of jurisdiction on grounds of international comity.” Id. Justice Scalia dissented from that part of the opinion and pointed out that “prescriptive comity” or “the practice of using international law to limit the extraterritorial reach of statutes” was “firmly established.” Id. at 817–18 (Scalia, J., dissenting). Since the majority did not address the “other considerations” bearing on comity, the Court’s Hartford Fire analysis “left unclear whether it was saying that the only relevant comity factor in that case was conflict with foreign law . . . or whether the Court was more broadly rejecting 42 MUJICA V. AIRSCAN balancing of comity interests in any case where there is no true conflict.” Harold Hongju Koh, Transnational Litigation in United States Courts 80 (2008). We think that Hartford Fire does not require proof of a “true conflict” as a prerequisite for invoking the doctrine of comity, at least in a case involving adjudicatory comity. See id. (concluding that since such a reading of the case “would be a much more dramatic result for the Court to have reached sub silentio, I am inclined to doubt that it meant to rule so broadly”). Since Hartford Fire, the circuits have refined the Court’s “true conflict” analysis and have generally required proof of such a conflict only in cases where prescriptive comity is at issue—that is, where a party claims that it is subject to conflicting regulatory schemes, such as antitrust laws or bankruptcy rules that apply extraterritorially.17 As the Southern District of New York has observed, “[i]n postHartford Fire cases, conflict analysis has not been rigidly invoked to preclude consideration of the full range of principles relating to international comity. Rather, conflict analysis is most often applied when comity principles intersect with issues of statutory construction.” Freund v. Republic of Fr., 592 F. Supp. 2d 540, 574 (S.D.N.Y. 2008) (citation omitted), aff’d sub nom. Freund v. Societe Nationale des Chemins de fer Francais, 391 F. App’x 939 (2d Cir. 2010) (unpublished); see also, e.g., Maxwell, 93 F.3d at 1049 (requiring a “true conflict” in a bankruptcy case). 17 See generally Christen Broecker, The Clash of Obligations: Exercising Extraterritorial Jurisdiction in Conformance with Transitional Justice, 31 Loy. L.A. Int’l & Comp. L. Rev. 405, 454–56 (2009) (describing how some jurisdictions require a true conflict before triggering comity). MUJICA V. AIRSCAN 43 By contrast, the courts have not required proof of a true conflict—although they have considered such a conflict relevant—when considering adjudicatory comity. Instead, the courts have considered a range of factors when deciding whether to abstain from exercising jurisdiction due to a past or potential judicial proceeding elsewhere. See, e.g., Ungaro-Benages, 379 F.3d at 1238 (determining that a true conflict was not required and examining “the strength of our government’s interests in using the Foundation [established to hear claims from victims of the Nazis], the strength of the German government’s interests, and the adequacy of the Foundation as an alternative forum”); Bigio v. Coca-Cola Co., 448 F.3d 176, 178 (2d Cir. 2006) (“[T]he only issue of international comity properly raised here is whether adjudication of this case by a United States court would offend ‘amicable working relationships’ with Egypt.” (citations omitted)); JP Morgan Chase Bank, 412 F.3d at 424 (deference to foreign adjudicatory proceedings “is appropriate so long as the foreign proceedings are procedurally fair and . . . do not contravene the laws or public policy of the United States”); Int’l Nutrition Co. v. Horphag Research Ltd., 257 F.3d 1324, 1329 (Fed. Cir. 2001) (“As a general rule, comity may be granted where it is shown that the foreign court is a court of competent jurisdiction, and that the laws and public policy of the forum state and the rights of its residents will not be violated.” (quotation marks and internal citation omitted)); Freund, 592 F. Supp. 2d at 574 (“[T]he existence of a true conflict does not bar the Court from applying the doctrine and considering other legitimate concerns implicated by United States courts exercising jurisdiction over a foreign sovereign.”). But see S. African Apartheid Litig., 617 F. Supp. 2d at 283 (holding true conflict analysis required in ATS suit against corporations that conducted business in apartheid South Africa). 44 MUJICA V. AIRSCAN Our own decision in In re Simon—a prescriptive comity case—is consistent with this pattern. There, we considered whether a bankruptcy court could sanction a foreign creditor for pursuing collection of a foreign debt that had been discharged in bankruptcy. 153 F.3d at 994. Although the creditor (HSBC) was based in Hong Kong, it had participated in the bankruptcy proceeding in the United States. Id. We began our analysis with a discussion of the extraterritorial application of U.S. law. Id. at 995. We concluded that “Congress intended extraterritorial application of the Bankruptcy Code as it applies to property of the estate.” Id. at 996. We then turned to whether we were “require[d]” by comity to vacate the bankruptcy court’s injunction. Id. at 997. We noted that “[i]nternational comity in transnational insolvency proceedings must be considered in the context of bankruptcy theory.” Id. at 998. We then explained that the Bankruptcy Code “provides for a flexible approach to international insolvencies” in which there is general “deference to the country where the primary insolvency proceeding is located.” Id. The “sole, plenary insolvency proceeding” involving the debtor had been in the United States. Id. at 999. Because there were no “competing bankruptcy proceedings,”18 and because HSBC (which was 18 The dissent seizes upon this language to argue that In re Simon was “not merely a prescriptive comity case,” but also an adjudicative-comity case. We are unconvinced. The Simon court emphasized the lack of “conflicting bankruptcy proceedings” in that case not because the court was conducting an adjudicative comity analysis but because that fact proved that HSBC was in no danger of being exposed to two conflicting bankruptcy schemes—a prescriptive-comity concern. The dissent’s argument on this point also ignores our post-Simon cases—cases that are inconsistent with the dissent’s reading of Simon. See infra at 45–46. MUJICA V. AIRSCAN 45 seeking to apply comity to avoid sanctions from the US bankruptcy court) had participated in the US bankruptcy proceeding and had enjoyed its benefits, we held that, under the circumstances, international comity did “not dictate a result contrary to that reached by the district and bankruptcy courts. Rather, it [wa]s consistent with the general principles of international comity which is limited to cases in which ‘there is in fact a true conflict between domestic and foreign law.’” Id. (quoting Hartford Fire, 509 U.S. at 798 (quotation marks and citation omitted)). Simply put, we do not interpret In re Simon—which referenced the concept of a “true conflict” in passing and in the specialized context of a bankruptcy statute that applied extraterritorially—to require proof of “true conflict” as an irreducible minimum for abstention in all comity cases. Our other post-Hartford Fire cases also suggest that proof of “true conflict” is not a prerequisite to comity. In those cases we took account of whether there was a conflict between American and foreign law. Even when we did not find a conflict, we did not end our inquiry but moved on to consider other factors. For example, in Metro Industries, Inc. v. Sammi Corp., 82 F.3d 839, 846–47 (9th Cir. 1996), we found no conflict between American and Korean law, but considered other factors to determine the reach of the Sherman Act. We looked to seven factors we had previously set out in Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 614 (9th Cir. 1976) (“Timberlane I”), for what we called “a jurisdictional rule of reason.” Id. at 613. One of the Timberlane I factors was a conflict between foreign and domestic law. We noted that Hartford Fire overruled our holding in Timberlane Lumber Co. v. Bank of Am., 749 F.2d 1378 (9th Cir. 1984) (“Timberlane II”), as to what “would 46 MUJICA V. AIRSCAN amount to conflict of law,” but determined that Hartford Fire “did not question the propriety of the jurisdictional rule of reason or the seven comity factors set forth in Timberlane I.” Metro Indus., 82 F.3d at 846 n.5. Similarly, in In re Grand Jury Proceedings, 40 F.3d 959, 964–65 (9th Cir. 1994), we presumed that there was a difference between a grand jury witness’s rights under American law and his rights under Austrian law regarding the privacy of his Austrian bank accounts. That conflict, however was not the “true conflict” described by the Court in Hartford Fire. The laws of Austria and the United States did not require the witness to commit inconsistent acts; rather, he had greater privacy rights under Austrian law than American law, but it would not violate Austrian law for him to waive those rights in response to an order from a U.S. court. Id. at 966. Thus, the witness could “comply with the laws of both.” Hartford Fire, 509 U.S. at 799 (quotation marks and citation omitted). Had we believed that proof of a “true conflict” was required, that fact would have ended our inquiry. It did not. Instead, we decided that “[i]n considering international comity, we balance the competing interests of Austria and the United States . . . to determine whether the purported illegality of the order under Austrian law precludes its enforcement.” In re Grand Jury Proceedings, 40 F.3d at 965. As our decisions in In re Simon, Metro Industries, and In re Grand Jury Proceedings demonstrate, we have not read Hartford Fire as imposing a rigid new set of requirements for finding comity. At least in cases considering adjudicatory comity, we will consider whether there is a conflict between American and foreign law as one factor in, rather than a prerequisite to, the application of comity. MUJICA V. AIRSCAN 47 Accordingly, the district court erred when it required the existence of a true conflict when it analyzed the application of international comity. And, since the district court did not identify the correct legal rule, “we must conclude it abused its discretion.” Hinkson, 585 F.3d at 1262; see also, e.g., Perry v. Brown, 667 F.3d 1078, 1084 (9th Cir. 2012). Having determined that a true conflict is not always required for the application of adjudicatory comity and that the district court abused its discretion in concluding otherwise, we proceed to consider the proper framework for analyzing comity.