Court Opinion

ID: 9928692
Source: CourtListenerOpinion
Date Created: 2024-01-31 21:00:59.70334+00
Date Added: 2024-06-11T09:50:11.167627
License: Public Domain

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                                           UNPUBLISHED

                              UNITED STATES COURT OF APPEALS
                                  FOR THE FOURTH CIRCUIT

                                              No. 22-2000

        CONFLICT KINETICS, INC.,

                            Plaintiff – Appellant,

                     v.

        BAGIRA SYSTEMS, LTD.; BAGIRA SYSTEMS USA, LLC,

                            Defendants – Appellees,

                     and

        DANIEL GOLDFUS; MINISTRY OF DEFENSE (ISRAEL),

                            Defendants.

        Appeal from the United States District Court for the Eastern District of Virginia, at
        Alexandria. Michael Stefan Nachmanoff, District Judge. (1:22-cv-00315-MSN-JFA)

        Argued: October 24, 2023                                   Decided: January 30, 2024

        Before KING, WYNN, and RUSHING, Circuit Judges.

        Vacated and remanded by unpublished opinion. Judge Rushing wrote the majority opinion,
        in which Judge Wynn joined. Judge King wrote a dissenting opinion.

        ARGUED: Milton C. Johns, EXECUTIVE LAW PARTNERS PLLC, Fairfax, Virginia,
        for Appellant. Mark Hunter Churchill, HOLLAND & KNIGHT LLP, Tysons, Virginia,
        for Appellees. ON BRIEF: Tessa B. Tilton, HOLLAND & KNIGHT LLP, Tysons,
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        Virginia, for Appellees.

        Unpublished opinions are not binding precedent in this circuit.

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        RUSHING, Circuit Judge:

               A federal district court dismissed Conflict Kinetics’ lawsuit against an Israeli

        company and Israeli military official for forum non conveniens. So Conflict Kinetics added

        two more defendants and filed an otherwise identical lawsuit in the same district. Citing

        the earlier judgment, the district court dismissed the second lawsuit as barred by issue

        preclusion. On appeal, Conflict Kinetics argues that issue preclusion cannot apply because

        the issue decided in the first case—forum non conveniens as regards the two original

        defendants—is different from the issue to be decided in this case—forum non conveniens

        as regards the four current defendants. We agree that the addition of a United States

        defendant distinguishes the forum issue presented here from the one previously decided.

        We therefore vacate the judgment and remand for further proceedings.

                                                      I.

               Conflict Kinetics is a Virginia corporation that designs and sells combat training

        technology. In 2021, Conflict Kinetics sued an Israeli company, Bagira Systems, Ltd.

        (Bagira Israel), and an Israeli military official, Brigadier General Daniel Goldfus, in the

        Eastern District of Virginia, alleging that they conspired to misappropriate its trade secrets.

        Bagira Israel moved to dismiss the complaint on multiple grounds, including forum non

        conveniens.

               The district court dismissed the complaint for forum non conveniens. Conflict

        Kinetics, Inc. v. Goldfus, 577 F. Supp. 3d 459, 466 (E.D. Va. 2021). Applying the

        framework established by our precedent, the district court concluded that the Israeli forum

        was available, adequate, and more convenient. See id. at 463–466. Israel was “available”

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        because Bagira Israel and General Goldfus were amenable to process there. Id. at 463.

        Israel was “adequate” because all parties were within the jurisdiction of the Israeli courts

        and because there was no reason to believe Conflict Kinetics would be deprived of all

        remedies or treated unfairly. Id. at 464. And Israel was “more convenient” given the

        private and public interests involved. See id. at 465–466. Because almost everything

        pointed toward Israel, the district court dismissed the complaint. Id. at 466.

               A few months later, Conflict Kinetics filed another lawsuit in the Eastern District of

        Virginia on the same claims. It once again sued Bagira Israel and General Goldfus. But

        this time, Conflict Kinetics added two more defendants: the Israeli Ministry of Defense

        and Bagira Systems USA, LLC (Bagira USA). Bagira USA is a Delaware corporation

        registered to do business in Delaware. The operative complaint did not add new allegations

        about Bagira USA’s involvement in the alleged misappropriation. Instead, the complaint

        imputed Bagira Israel’s alleged misdeeds to Bagira USA on the theory that Bagira USA is

        the alter ego of Bagira Israel.

               Once again, Bagira Israel moved to dismiss on numerous grounds, including forum

        non conveniens, improper venue, lack of personal jurisdiction, and failure to state a claim.

        Bagira Israel also urged that Conflict Kinetics be precluded from relitigating forum non

        conveniens, as that issue was decided against it in the prior case. 1

               Bagira USA also moved to dismiss the complaint, adopting in full the arguments
               1

        advanced by Bagira Israel.

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               The district court dismissed the complaint with prejudice on issue preclusion

        grounds. Comparing the previous litigation with the current case, the district court

        concluded that the forum non conveniens issues in the two proceedings were the same. In

        particular, the court reasoned that the addition of Bagira USA and the Ministry of Defense

        did not materially alter the forum analysis, so the prior determination should be given

        preclusive effect. The district court declined to reach Bagira Israel’s other bases for

        dismissal.

                                                      II.

               We review a district court’s application of issue preclusion de novo. Hately v.

        Watts, 917 F.3d 770, 777 (4th Cir. 2019). On appeal, the parties dispute only one

        requirement for issue preclusion: whether the prior judgment resolved the same issue

        presented by this case. See Lane v. Bayview Loan Servicing, LLC, 831 S.E.2d 709, 714

        (Va. 2019); cf. Collins v. Pond Creek Mining Co., 468 F.3d 213, 217 (4th Cir. 2006). 2 The

        defendants, as the parties asserting defensive issue preclusion here, bear the burden to

        prove that the same issue was determined in the prior action. See Hately, 917 F.3d at 778.

               2
                 Throughout these proceedings, the parties have relied on the federal standard for
        issue preclusion. See Collins, 468 F.3d at 217. Federal common law governs the preclusive
        effect of a judgment by a federal district court exercising diversity jurisdiction, but federal
        common law directs us to apply the issue preclusion law of the State where the district
        court sits, unless doing so is incompatible with federal interests. See Hately, 917 F.3d at
        777 (citing Semtek Int’l v. Lockheed Martin Corp., 531 U.S. 497, 508–509 (2001)). The
        parties have not identified any reason why Virginia preclusion law is incompatible with
        federal interests, so Virginia law applies. See id. (“[W]e discern no reason why Virginia
        preclusion law is incompatible with federal interests.”). Because the parties dispute only
        sameness—which is part of the federal and Virginia preclusion standards—we address only
        that requirement, without discussing the other elements of Virginia issue preclusion. See,
        e.g., Weinberger v. Tucker, 510 F.3d 486, 491 (4th Cir. 2007).
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               The issue resolved in the previous litigation was forum non conveniens. Dismissal

        for forum non conveniens requires the district court to determine whether the alternative

        forum is available, adequate, and more convenient. See Tang v. Synutra Int’l, Inc., 656

        F.3d 242, 248 (4th Cir. 2011). Availability is ordinarily “satisfied when the defendant[s]

        [are] amenable to process in the other jurisdiction.” Id. at 249 (internal quotation marks

        omitted). “A foreign forum is adequate when (1) all parties can come within that forum’s

        jurisdiction, and (2) the parties will not be deprived of all remedies or treated unfairly, even

        though they may not enjoy the same benefits as they might receive in an American court.”

        Id. (internal quotation marks omitted). If the alternative forum is available and adequate,

        then the court considers convenience “in light of the public and private interests involved.”

        Id. at 248.

               As our articulation of these principles suggests, “the alternate forum must be

        available [and adequate] as to all defendants.” Galustian v. Peter, 591 F.3d 724, 731 (4th

        Cir. 2010). The addition of a new defendant may warrant a fresh forum analysis because

        it can change the availability, adequacy, and convenience determinations underlying the

        previous resolution. Cf. id. (finding dismissal premature when no evidence had been

        proffered regarding the availability of the foreign forum as to a newly added defendant).

        If the presence of a new defendant raises the same factual issues already decided, however,

        then issue preclusion would apply.

               The issue here is not the same as the one previously decided, at least as regards

        Bagira USA. In the first proceeding, the district court found the Israeli forum available

        and adequate, in part, because both defendants—Bagira Israel and General Goldfus—were

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        indisputably amenable to process in and within the jurisdiction of the Israeli courts.

        Conflict Kinetics, 577 F. Supp. 3d at 463–465. In the second proceeding, Conflict Kinetics

        added the Ministry of Defense and Bagira USA as defendants. While the Ministry of

        Defense may raise the same forum issues as the original defendants, Bagira USA does not. 3

               The district court in the first proceeding did not consider Bagira USA in its forum

        non conveniens analysis, and the availability and adequacy of the Israeli forum for Bagira

        USA presents different factual issues than those decided in the prior case. As an initial

        matter, Conflict Kinetics did not reference Bagira USA in its original complaint. Although

        Conflict Kinetics mentioned Bagira USA when opposing Bagira Israel’s original motion

        to dismiss for lack of personal jurisdiction, the fact that the district court in the first

        proceeding was aware of Bagira USA is not enough. The court did not consider Bagira

        USA at all in its forum analysis, much less decide the availability and adequacy of the

        Israeli forum as to Bagira USA. And those questions present new factual issues different

        from those decided in the first case. Bagira USA is a Delaware corporation registered to

        do business in Delaware. No party asserts that this Delaware corporation poses the same

        forum non conveniens issues as an Israeli company or an Israeli military official. Indeed,

               3
                  The Ministry of Defense was referenced in the original complaint, even though it
        was not a named defendant. The original complaint accused the Ministry of Defense of
        leaking information and protecting the conspirators; it also alleged that General Goldfus
        acted as an employee and agent of the Ministry of Defense. We think it plausible that the
        forum issues pertaining to the Ministry of Defense are materially the same as those
        pertaining to General Goldfus, an Israeli military official alleged to have been a Ministry
        agent. Furthermore, the district court, in assessing the availability and adequacy of the
        Israeli forum as to the original parties, stressed that Conflict Kinetics had successfully sued
        the Ministry of Defense in Israeli court. See Conflict Kinetics, 577 F. Supp. 3d at 463–465.
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        the defendants do not answer Conflict Kinetics’ assertion that Bagira USA is neither

        amenable to process in Israel nor subject to the jurisdiction of its courts. Those issues were

        not resolved in the prior case and so must be considered by the district court in this case in

        the first instance.

               The defendants primarily contend that Bagira USA is irrelevant to the claims in this

        case and that Conflict Kinetics should not be allowed to circumvent the previous forum

        non conveniens ruling by adding irrelevant parties or inadequate claims. According to

        Bagira Israel, Bagira USA is a former affiliate that has been inactive for years. As the

        defendants see it, the complaint’s allegations against Bagira USA are insufficient because

        the complaint does not accuse Bagira USA of any conduct relevant to the pleaded claims

        and its alter ego allegations are purely conclusory.

               We share the defendants’ concern about parties attempting to circumvent and

        relitigate a district court’s previous judgment. But issue preclusion is not the device for

        disposing of insufficient allegations. District courts have other tools to manage that

        problem, such as dismissal for failure to state a claim. See, e.g., Scot. Air Int’l, Inc. v. Brit.

        Caledonian Grp., PLC, 81 F.3d 1224, 1234–1235 (2d Cir. 1996) (“[A] district court may

        dismiss part of a lawsuit [for forum non conveniens] while deciding the merits of other

        issues” because “a contrary rule would reduce the flexibility of the doctrine and would

        allow litigants to skew the [forum non conveniens] analysis by joining claims that lack

        merit.”); Su v. M/V S. Aster, 978 F.2d 462, 467, 472 (9th Cir. 1992) (affirming judgment

        dismissing some claims under Rule 12(b)(6) and the others under forum non conveniens).

        Recognizing this, the defendants ask us to undertake the Rule 12(b)(6) analysis on appeal.

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        We decline the invitation. In view of the numerous alternative bases for dismissal

        articulated by the defendants, we remand for the district court to decide those questions in

        the first instance.

                                                    III.

               For the foregoing reasons, the judgment of the district court is

                                                                    VACATED AND REMANDED.

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        KING, Circuit Judge, dissenting:

               I disagree with my good friends and fellow panelists and would affirm Judge

        Nachmanoff’s September 2022 order dismissing Conflict Kinetics, Inc.’s second lawsuit

        with prejudice. As recited by the majority opinion, Conflict Kinetics filed its first lawsuit

        in the Eastern District of Virginia against an Israeli company, Bagira Systems, Ltd.

        (“Bagira Israel”), and an Israeli military official. The first lawsuit was dismissed by Judge

        Ellis on December 29, 2021, applying the doctrine of forum non conveniens, with Israel

        being a more convenient forum.

               Conflict Kinetics failed to timely appeal the dismissal of its first lawsuit. Rather,

        nearly three months later, on March 22, 2022, Conflict Kinetics initiated its second lawsuit

        in the same court, the Eastern District of Virginia. Its second lawsuit alleged the very same

        claims that Judge Ellis had dismissed, but added as new defendants the Israeli Ministry of

        Defense and Bagira Systems USA, LLC — a Delaware corporation (“Bagira USA”). The

        second lawsuit made no new allegations regarding Bagira USA, but simply sought to

        impute Bagira Israel’s conduct entirely onto Bagira USA. Judge Nachmanoff dismissed

        Conflict Kinetics’ second lawsuit in September 2022 on the basis of collateral estoppel and

        issue preclusion. See J.A. 197-201. This appeal was then noticed.

               In these circumstances, I am satisfied that Judge Nachmanoff ruled correctly in

        dismissing Conflict Kinetics’ second lawsuit. The issue of forum non conveniens had been

        already decided and resolved against Conflict Kinetics by Judge Ellis.

               I respectfully dissent.

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