Opinion ID: 497333
Heading Depth: 2
Heading Rank: 1

Heading: Order of March 24, 1986

Text: 17 Relying on Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976), and Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16, 103 S.Ct. 927, 937, 74 L.Ed.2d 765 (1983), Ingersoll argues that it was error for the district court to stay the proceedings simply on the basis that a parallel suit was proceeding in the Belgian courts. 18 In evaluating this argument, it is important, at the outset, to state the procedural posture of the case at the time a stay was granted with somewhat more precision than does Ingersoll. When Mr. Granger initially sought to dismiss or stay the action before the district court, the court denied Mr. Granger's motion because it recognized that it ought to exercise its jurisdiction over the subject matter concurrently with the Belgian courts. See Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C.Cir.1984) (federal trial court should usually exercise jurisdiction concurrently with foreign trial court); see also Colorado River, 424 U.S. at 818, 96 S.Ct. at 1246 (federal court has obligation to exercise concurrent jurisdiction with state court absent exceptional circumstances); Moses H. Cone Memorial Hosp., 460 U.S. at 15-16, 103 S.Ct. at 936-37 (same). It was only after the Belgian trial court had rendered its judgment that the district court decided to stay further proceedings pending the outcome of the Belgian appeal. Therefore, the precise issue before us is whether it was appropriate for the district court to stay its proceedings at this point in the parallel progression of the litigation in the United States and in Belgium. 1 19 In Colorado River and Moses H. Cone Memorial Hosp., 2 the Supreme Court enumerated the considerations that a federal district court should consider in determining whether it should exercise jurisdiction concurrently with state courts. In Moses H. Cone Memorial Hosp., 460 U.S. at 15-16, 103 S.Ct. at 936-37, describing its earlier decision in Colorado River, the Court summarized those factors as follows: 20 We declined to prescribe a hard-and-fast rule for dismissals of this type, but instead described some of the factors relevant to the decision. 21 It has been held, for example, that the court first assuming jurisdiction over property may exercise that jurisdiction to the exclusion of other courts.... In assessing the appropriateness of dismissal in the event of an exercise of concurrent jurisdiction, a federal court may also consider such factors as the inconvenience of the federal forum; the desirability of avoiding piecemeal litigation; and the order in which jurisdiction was obtained by the concurrent forums. No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise is required. Only the clearest of justifications will warrant dismissal. [Colorado River, 424 U.S.] at 818-819 [96 S.Ct. at 1246-1247] (emphasis added; citations omitted). 22 Id. Relying on the foregoing Supreme Court cases, this court recently has addressed the situation of a federal court staying its hand because of a parallel state court proceeding in Lumen Constr., Inc. v. Brant Constr. Co., 780 F.2d 691 (7th Cir.1985). The situation before us is somewhat different. Here, the alternate forum is not the tribunal of a state of the federal union to which, under our Constitution, we owe a special obligation of comity. Nevertheless, the factors enunciated in those cases, when applied with this difference in mind, can serve as a helpful guide in our evaluation. 23 When the determination of the district court is reviewed in light of the Colorado River--Moses H. Cone Memorial Hosp. factors, it is manifestly clear that the district court did not abuse its discretion in staying proceedings after the rendition of the Belgian trial court's judgment. First of all, there is no particularly strong federal interest in ensuring that this dispute be adjudicated in a federal district court or, indeed, in any American court. This case involves an employment relationship that spanned international boundaries. While the American interest can hardly be termed insubstantial, the Belgian interest also must be recognized as very significant. International judicial comity is an interest not only of Belgium but also of the United States. See Ronar, Inc. v. Wallace, 649 F.Supp. 310, 318 (S.D.N.Y.1986). We certainly cannot fault the district court--informed that the Belgian trial court had rendered a verdict which, unless overturned on appeal, would resolve the dispute--for rejecting the parochial concept that all disputes must be resolved under our laws and in our courts. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9, 92 S.Ct. 1907, 1912, 32 L.Ed.2d 513 (1972); see also Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 2457, 41 L.Ed.2d 270 (1974). 24 Moreover, considerations of judicial economy, especially the need to avoid piecemeal litigation, strongly favored staying the district court proceedings. The Belgian suit, which had begun before the American action was filed, see Moses H. Cone Memorial Hosp., 460 U.S. at 15, 103 S.Ct. at 936, had been brought to a conclusion in the trial court. Absent reversal on appeal, that judgment would adjudicate the rights of the parties. At that point, unless there was a barrier to the recognition of that judgment in the United States, and, as we discuss below, there was little chance of that contingency, there would be no need for further proceedings in the district court. Avoiding such duplication of effort and the possibility of piecemeal litigation is hardly an abuse of discretion. Attention to such pragmatic concerns, Ronar, 649 F.Supp. at 318, is precisely the sort of careful balancing of factors, Moses H. Cone Memorial Hosp., 460 U.S. at 16, 103 S.Ct. at 937, that must be undertaken in such a situation. 25 Moreover, it is not insignificant--indeed, it is very significant--that the district court's action in this case was a decidedly measured one. The court did not dismiss the action; it simply stayed further proceedings until the Belgian appeals were concluded. This approach protects the substantial rights of the parties while permitting the district court to manage its time effectively. See Lumen Constr., Inc., 780 F.2d at 698. Such a common sense approach is clearly within the sound discretion of the trial court. See Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 165-66, 81 L.Ed. 153 (1936); see also Hunt v. Liberty Lobby, Inc., 707 F.2d 1493, 1498 (D.C.Cir.1983).
26 We now turn to Ingersoll's contention that the district court erred in its determination that the Belgian judgment was entitled to recognition and enforcement. As the district court recognized, and as the parties agree, this question must be resolved under Illinois law. Hunt v. BP Exploration Co. (Libya) Ltd., 492 F.Supp. 885, 892 (N.D.Tex.1980). The district court also recognized, and the parties agree, that this issue is governed by the Uniform Act as enacted by Illinois. Ill.Rev.Stat. ch. 110, paras. 12-618 to -626. 27
28 First of all, we believe that there is no serious question as to whether the Belgian judgment meets the basic requirements of the Uniform Act. It is a judgment which grants or denies recovery of a sum of money. Ill.Rev.Stat. ch. 110, para. 12-620. It was presented to the district court after the completion of all appellate review in Belgium and therefore was final and conclusive and enforceable where rendered.... Ill.Rev.Stat. ch. 110, para. 12-619. There is also no doubt about the Belgian court's jurisdiction. Ingersoll concedes that the court had personal jurisdiction over it. See Ill.Rev.Stat. ch. 110, para. 12-621(a)(2). Nor is there a serious contention 3 over whether the Belgian court had subject matter jurisdiction. See Ill.Rev.Stat. ch. 110, para. 12-621(a)(3). In fact, it would be hard to imagine how the Belgian courts would not have subject matter jurisdiction over the employment dispute between the parties. This case involves an employee who lived and performed his employment duties in Belgium for a Belgian company. 29 Ingersoll's contention that the judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law, Ill.Rev.Stat. ch. 110, para. 12-621(a)(1), is also without merit. In this regard, Ingersoll submits: 30 The Belgian court was a relatively inadequate forum. The documents were all in English. The distance for witnesses was great. The Belgian courts, as Granger conceded, do not usually take oral testimony or allow cross-examination. Ingersoll could not compel Granger, a party, to give live testimony. It was important in this case to demonstrate through live testimony that the parties intended to rely exclusively on Illinois law and to provide benefits to Granger exclusively based on Illinois law and the agreement between the parties. 31 Appellant's Br. at 23. Ingersoll also states: 32 The Belgian Labor Court does not allow cross-examination of a party or a party's witnesses if that party does not put himself or his witnesses before the tribunal to testify. The Belgian Labor Court does not allow live testimony to be taken absent the issuance of letters rogatory. Since Granger did not present himself in front of the Belgian Labor Court, Ingersoll was denied the ability to cross-examine Granger and impeach his credibility or refute his testimony. Ingersoll was also unable to gather and present evidence through live testimony other than by requesting and receiving letters rogatory. 33 Id. at 36. In response to this argument, the district court wrote: 34 Ingersoll also intimates that it did not receive a full and fair opportunity to present its claims in Belgium and that the Belgium court denied it the right of cross examination. All of this appears to be an attempt by Ingersoll to show that it was not afforded due process in the Belgian action. 35 In response, Granger submits the affidavit of Edward Hayward, an experienced attorney familiar with the process afforded litigants in the courts of Belgium. Mr. Hayward points out that the Belgian Judicial Code granted Ingersoll the right to call witnesses as well as the right to take testimony outside of Belgim [sic] through letters rogatory. Ingersoll does not dispute the accuracy of Mr. Hayward's statements. Ingersoll never petitioned the Belgian court to hear live testimony and it never requested issuance of letters rogatory to take testimony outside of Belgium. Granger also points out that, like Ingersoll, he chose to call no witnesses. Thus, given that there were no witnesses, due at least in part to Ingersoll's own tactical decision, Ingersoll cannot point to the lack of cross-examination as a violation of due process. 36 Also, contrary to Ingersoll's speculation about the Belgian courts' predisposition to apply Belgian law, this court has been shown nothing to indicate that the Belgian court system provided Ingersoll with anything less than a full and fair opportunity to present its claims. Had this court acted first and applied Illinois law, Granger could hardly have advanced a similar due process claim to the Belgian courts. A forum court's decision that the forum's substantive law should govern a given dispute should not alone serve to negate the apparent fairness of the forum's court system. This court is unwilling to hold that Ingersoll was denied due process based solely on its unfounded speculation concerning bias of the Belgian courts. 37 Ingersoll Milling Mach. Co., 631 F.Supp. at 317 (citation omitted). 38 In assessing this contention, we begin by noting that the Uniform Act does not require that the procedures employed by the foreign tribunal be identical to those employed in American courts. The statute simply requires that the procedures be compatible with the requirements of due process of law. Ill.Rev.Stat. ch. 110, para. 12-621(a)(1) (emphasis supplied). The drafters of the Uniform Act made it clear that a mere difference in the procedural system is not a sufficient basis for nonrecognition. A case of serious injustice must be involved. Unif. Foreign Money-Judgments Recognition Act Sec. 4 comment, 13 U.L.A. 268 (1986). 4 The district court found that the procedures afforded Ingersoll by the Belgian judicial system were fundamentally fair and did not produce an injustice. That determination meets the standard of the Act. The similarity or dissimilarity of the Belgian procedures to our own is not the issue; the issue is only the basic fairness of the foreign procedures. Because Ingersoll has raised no meritorious challenges (as provided in Ill.Rev.Stat. ch. 110, para. 12-621(a)) to the conclusiveness of the Belgian judgment, we agree with the district court that that judgment was conclusive, and enforceable, and thus met the basic requirements for recognition and enforcement under the Uniform Act. 39
40 Ingersoll next argues that, even if the Belgian judgment is entitled to recognition, the district court should have exercised its discretion under paragraph 12-621(b) to deny such recognition. Paragraph 12-621(b) provides: 41 A foreign judgment need not be recognized if 42 (1) the defendant in the proceedings in the foreign court did not receive notice of the proceedings in sufficient time to enable him or her to defend; 43 (2) the judgment was obtained by fraud; 44 (3) the cause of action on which the judgment is based is repugnant to the policy of this State; 45 (4) the judgment conflicts with another final and conclusive judgment; 46 (5) the proceeding in the foreign court was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court; or 47 (6) in the case of jurisdiction based only on personal service, the foreign court was a seriously inconvenient forum for the trial of the action. 48 Ill.Rev.Stat. ch. 110, para. 12-621(b). 49 Ingersoll argues that Mr. Granger's cause of action on which his Belgian judgment is based is repugnant to the public policy of Illinois, Ill.Rev.Stat. ch. 110, para. 12-621(b)(3), that the proceeding in Belgium was contrary to an agreement between the parties under which the dispute in question was to be settled otherwise than by proceedings in that court, Ill.Rev.Stat. ch. 110, para. 12-621(b)(5), and that the Belgian court was a seriously inconvenient forum for the trial of the action, Ill.Rev.Stat. ch. 110, para. 12-621(b)(6). 50 The language of subparagraph (b) is not mandatory, but rather optional. In other words, even if Ingersoll's arguments with respect to the provisions of subparagraph (b) were valid, the statute does not require the district court to deny recognition of the judgment; it simply provides that it may deny recognition of that judgment. Here, the district court characterized Ingersoll's argument as merely an improper attempt to relitigate the merits of this case. Ingersoll Milling Mach. Co., 631 F.Supp. at 318. Given the extended history of this dispute, combined with the fairness afforded the litigants in the Belgium courts, this court would not be inclined to deny enforcement of the judgment even if one of the six conditions of paragraph 12-621(b) were present here. Id. On this record, we see no reason to disagree with the district court. Certainly, the court's decision cannot be characterized as an abuse of discretion. Nevertheless, for the sake of completeness, we shall address briefly Ingersoll's principal arguments. 51 (1) Public Policy--Ingersoll argues that the Belgian judgment is contrary to the public policy of Illinois. It contends that Illinois has a strong public policy favoring freedom of contract. Moreover, it argues that the state has extensively regulated employment relationships, and that, therefore, employment relationships entered into in that state should be subjected to Illinois regulation. We find Ingersoll's arguments to be unpersuasive. The Belgian court did nothing to abrogate the employment contract. It merely held that, because this employment relationship involved an employer doing business in Belgium through a Belgian resident for seven years, the relationship was subject to regulation by Belgium. 52 (2) Parties' Choice of Law--Ingersoll argues that the Belgian judgment contravenes the parties' agreement to be bound by the law of Illinois. We agree with the district court that paragraph 12-621(b)(5) is a choice of forum, rather than a choice of law, provision. The fact that the parties chose to subject the relationship to Illinois law would not prevent the enforcement of a judgment of a Belgian court in litigation involving that relationship. Paragraph 12-621(b)(5) addresses the situation where the parties agree that any litigation pertaining to the contract will be carried out in a particular forum. Thus, for Ingersoll's arguments to have any merit, the agreement between Mr. Granger and Ingersoll would have had to provide that any suit regarding the employment relationship be brought in the courts of Illinois. However, the contract has no such provision. 53 (3) Inconvenient Forum--Ingersoll argues that, under paragraph 12-621(b)(6), Belgium was a seriously inconvenient forum for the trial of this action. In the process of making this argument, Ingersoll quotes the official comment from the Uniform Laws Annotated and states that jurisdiction over Ingersoll in Belgium was based on personal service of process. Appellant's Br. at 35. The comment to the Uniform Act states: 54 The last ground for non-recognition under subsection (b) authorizes a court to refuse recognition and enforcement of a judgment rendered in a foreign country on the basis only of personal service when it believes the original action should have been dismissed by the court in the foreign country on grounds of forum non conveniens. 55 Unif. Foreign Money-Judgments Recognition Act Sec. 4 comment, 13 U.L.A. 268-69 (1986). However, the Belgian court's jurisdiction was not based solely upon personal service. As the Belgian Labour Court of Appeal noted: 56 In light of [the] fact that the appellant Companies and INGERSOLL Inc. are managed by a nucleus of identical persons, the economic and financial overlapping of said Companies, their economic cohesion (since the organization and activities of subsidiaries must work toward an identical purpose: the American Company's development) all lead to the conclusion that they mey [sic] considered to be one and the enterprise for which the respondent did not cease to work from 1971 to 1977 in Belgium: the several members of said enterprise, which includes the appellant Companies, shared authority over the respondent. Hence, from 1971 until 1977, both appellant Companies were joint employers of the respondent, who pursued the fulfillment of a single contract. This situation notably explains the fact that part of the respondent's salary was paid by the Belgian Company (notably his monthly salary, even though it was paid by the American Company), while another part was paid by the American Company (fringe benefits including life insurance, retirement plans, etc.). 57 Because the contract in which the employee continuously fulfilled was the same, there can be no doubt that the parties had intended to bring their contractual relations before [the] State of Illinois jurisdiction. However, in view of the fact tha[t] the contract was fulfilled in Belgium from 1971 until 1977, the Belgian police and security laws applicable by vitue [sic] of Article 3 of the Civil Code, must therefore be taken into consideration; legal provisions dealing with work contracts which protect workers and which are compulsory ... make up such laws.... 58 Appellant's App., Tab 11 at 11. Ingersoll voluntarily conducted business in Belgium. The obligation to submit to the jurisdiction of that nation's courts with respect to a labor dispute involving an employee stationed there on a long-term assignment can hardly be termed seriously inconvenient.(4) Right to Hearing--Finally, Ingersoll also argues that it was entitled to a hearing on its claims under paragraph 12-621(b). See Appellant's Br. at 24-26 (citing Drexel Burnham Lambert Group, Inc. v. Galadari, 777 F.2d 877 (2d Cir.1985), and Hennessy v. Marshall, 682 S.W.2d 340, 344-45 (Tex.App.1984)). We disagree. First, we note that the statute contains no such requirement. Second, the two cases upon which Ingersoll relies are clearly distinguishable. In both of those cases, the party challenging recognition raised issues that could not be resolved without some type of hearing. Here, Ingersoll has raised, in rather summary fashion, conclusory reasons why the Belgian judgment should not be recognized. Mr. Granger has rebutted Ingersoll's contentions with submissions from an attorney experienced in Belgian law. Rather than answering Mr. Granger's rebuttal, Ingersoll continues to rely on the same conclusory arguments. In view of Ingersoll's failure to raise more specific challenges to the recognition of the Belgian judgment, we cannot say that it was entitled to a hearing on its claims. 59
60 As noted earlier, after Mr. Granger sought enforcement of the Belgian judgment, Ingersoll sought to add Count IV to its complaint. Count IV demanded the return of payments that are not normally made to foreign employees by Ingersoll but that were nonetheless advanced to Mr. Granger. The district court denied Ingersoll's motion because it found no reason why this claim could not have been brought in the Belgian action. Ingersoll contends that this denial was improper. Mr. Granger contends that, because this claim could have been raised in the Belgian action, it should be barred under the doctrine of res judicata. 5 61 As stated in the Uniform Act, [t]he foreign judgment is enforceable in the same manner as the judgment of a sister state which is entitled to full faith and credit. Ill.Rev.Stat. ch. 110, para. 12-620. As such, the recognized judgment will bar an action on the same claim in the second forum under the doctrine of res judicata. The doctrine of res judicata is designed to prevent parties from relitigating issues that have already been decided. United States Secretary of Labor v. Cerro Copper Prod. Co., 795 F.2d 25, 26 (7th Cir.1986) (per curiam). Res judicata applies when there is (1) a final judgment on the merits in an earlier action; (2) an identity of the cause of action in both the earlier and the later suit; and (3) an identity of parties or their privies in the two suits. Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir.1982). Moreover, [u]nder res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980) (emphasis supplied); see also Sea-Land Serv., Inc. v. Gaudet, 414 U.S. 573, 578-89, 94 S.Ct. 806, 811-17, 39 L.Ed.2d 9 (1974); Krison v. Nehls, 767 F.2d 344, 348 (7th Cir.1985). As the district court stated: 62 Over one year later [after Mr. Granger filed his suit in Belgium], on August 2, 1979, Ingersoll filed this action. Count I sought a declaratory judgment that Granger was not entitled to any termination benefits. Count II sought recovery of certain expenses Ingersoll had advanced Granger during the course of his employment. Thus, the substance of Ingersoll's Illinois suit mirrored that of Granger's Belgian suit. 63 Ingersoll Milling Mach. Co., 631 F.Supp. at 315 (footnote omitted). 64 Our reading of the record leads to the same conclusion. It appears from the opinions of the Belgian courts that the same claims were involved in the two suits. 6 Furthermore, given the nature of the claims raised by Ingersoll in the Belgian action, we find no reason why the claims sought to be added in Count IV could not have been raised in the Belgian action. Thus, all the requirements of res judicata have been met. As a result, the district court properly denied Ingersoll's motion to add Count IV to its complaint. 7