Court Opinion

ID: 3037190
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:55:51.293669+00
Date Added: 2024-06-11T11:10:24.751227
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

E. & J. GALLO WINERY,                      No. 05-16504
               Plaintiff-Appellant,
               v.                            D.C. No.
                                          CV-05-00101-AWI
ANDINA LICORES S.A.,
                                             OPINION
              Defendant-Appellee.
                                      
       Appeal from the United States District Court
          for the Eastern District of California
       Anthony W. Ishii, District Judge, Presiding

                  Argued and Submitted
       February 15, 2006—San Francisco, California

                    Filed May 1, 2006

  Before: J. Clifford Wallace, Michael Daly Hawkins, and
             Sidney R. Thomas, Circuit Judges.

                Opinion by Judge Wallace

                           4931
4934    E. & J. GALLO WINERY v. ANDINA LICORES S.A.

                       COUNSEL

Tod L. Gamlen, Keith L. Wurster, Baker & McKenzie LLP,
Palo Alto, California, for appellant E & J Gallo Winery.
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.       4935
Sean T. O’Rourke, Borton Petrini & Conron, Fresno, Califor-
nia, for appellee Andina Licores, S.A.

                          OPINION

WALLACE, Circuit Judge:

   E & J Gallo Winery (Gallo) appeals from the district
court’s denial of a preliminary injunction to enjoin Andina
Licores S.A. (Andina) from proceeding with litigation in
Ecuador. We have jurisdiction over this interlocutory appeal
pursuant to 28 U.S.C. § 1292(a)(1). We reverse and remand
to the district court with instructions to grant the injunction.

                               I

   Gallo, a large winery headquartered in Modesto, California,
entered into a distributorship agreement with Andina Licores
CIA LTDA, a wine and liquor distributor headquartered in
Guayaquil, Ecuador, in 1978. The distributor later changed its
structure to become a corporation and changed its name to
Andina Licores, S.A, the defendant-appellee in this appeal.

   In 1987, Gallo and Andina executed an updated distributor-
ship agreement, in which Andina was substituted for its
predecessor-in-interest. Both the 1987 Agreement and the
1978 Agreement have the same forum selection and choice-
of-law clauses in favor of California:

    This agreement is entered into under the laws of the
    State of California, U.S.A., and shall be construed
    thereunder, and any cause of action arising between
    the parties, whether under this agreement or other-
    wise, shall be brought only in a court having juris-
    diction and venue at the home office of Winery.
4936     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
   In April and May 2004, Gallo and Andina exchanged let-
ters over various disputes, including whether Gallo had deliv-
ered three shipments late and whether Andina was an
exclusive distributor of Gallo products. In July 2004, Andina
appeared before the Sixth Civil Court in Guayaquil in connec-
tion with its dispute with Gallo. Although Gallo had identified
its Ecuadorian lawyer in an April 19, 2004 letter to Andina,
and although Andina and Gallo had been in a contractual rela-
tionship for over twenty-five years, Andina represented to the
court that it did not know Gallo’s whereabouts in Ecuador.
For this reason, Andina asked the court to appoint a “cura-
dor”: a guardian to act as counsel for Gallo and to appear for
Gallo in any proceedings that Andina might file. Strangely,
Andina was allowed to choose this guardian, and Andina
selected Rita Yepez de Maher (Yepez), an attorney who
apparently had only been admitted to practice law five months
earlier. In support of its application to appoint Yepez as cura-
dor, Andina was required to provide affidavits of two people
who could swear to Yepez’s reliability and could recommend
her. Andina submitted the affidavits of a day laborer and a
student.

   Andina filed suit against Gallo in the Second Civil Court
of Guayaquil, Ecuador, on August 11, 2004, alleging a viola-
tion of Decree 1038-A, which was issued by the Ecuadorian
military dictatorship in 1976 and had been repealed in 1997.
The decree was intended to protect Ecuadorians who acted as
agents, distributors, or representatives of foreign companies.
Article 3 of the Decree maintained that the parties to a distri-
butorship agreement between an Ecuadorian distributor and a
foreign manufacturer could not include a unilateral right of
termination in the agreement. Additionally, the Decree stated
that any legal action brought under the law was to be heard
by a judge at the Ecuadorian company’s main residence, thus
potentially invalidating all forum selection clauses. The
Decree also provided for a “verbal summary trial,” in which
periods for discovery or response were drastically shortened
and in which there was no opportunity to examine and cross-
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.         4937
examine witnesses. In the event that a foreign manufacturer
violated Article 3, it was liable to the local distributor for
damages, which were calculated by multiplying a distributor’s
annual revenue from the agreement in the most recent fiscal
year by the number of years of the distributor relationship.
Decree 1038-A was repealed by the National Congress of
Ecuador in 1997 by Law No. 22. The preamble to Law No.
22 stated that Decree 1038-A was contrary to the treaty of the
World Trade Organization.

   Andina sued under the Decree in spite of its revocation sev-
eral years before. Invoking the Decree’s method of damage
calculation, Andina claimed $75,000,000 in damages. It also
invoked the Decree’s verbal summary trial procedures, which
required Gallo to appear and assert its defenses before Sep-
tember 9, 2004. The period to submit evidence was limited to
six business days: from September 10 to September 17, 2004.
The Ecuadorian court was not required to consider any
defense or evidence that Gallo did not submit within these
time limitations.

   The Ecuadorian court officially appointed Yepez as the
curador on September 1. Yepez mailed a letter dated Septem-
ber 3 to Gallo in California. The letter, written in Spanish,
informed Gallo of the lawsuit in Ecuador, of her appointment
as Gallo’s lawyer, and of the allegations in the complaint.
However, the letter did not include a copy of the complaint
and did not make any mention of the expedited trial proce-
dure. Gallo declares that it did not receive the letter until Sep-
tember 16.

   Without having made any other contact with Gallo, Yepez
made an appearance on behalf of Gallo on September 9.
Yepez asserted some defenses on Gallo’s behalf but did not
assert a defense based on the forum selection clause. Finally,
on September 16, Yepez called Gallo’s headquarters and
informed it of the lawsuit. Gallo called its Quito attorney,
whose name had been given to Andina in April, and eventu-
4938     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
ally retained Xavier Castro to represent it in the Guayaquil
action. Castro was unable to inform the Ecuadorian court of
the forum selection clause defense before the September 9
deadline, and he did not have time to present any evidence
before the close of evidence period.

   On October 26, Gallo filed suit in California state court,
seeking declaratory relief, injunctive relief, damages, and
punitive damages. Although Andina was required by the 1987
Agreement to appoint CT Corporation as its agent for service
of process, it had failed to do so; thus, Gallo served Andina
in Ecuador. Andina removed the case to the district court.
After various motions activity, Andina filed a motion to dis-
miss for lack of personal jurisdiction. Gallo opposed the
motion to dismiss and filed a cross-motion for a preliminary
injunction restraining Andina from pursuing the action in
Ecuador and issuance of a letter rogatory. That cross-motion
is the subject of this appeal.

   On June 24, 2005, the district court denied both motions.
The district court held that Andina had consented to jurisdic-
tion; therefore, it denied Andina’s motion to dismiss. The
court also denied Gallo’s motion for a preliminary injunction,
basing its decision largely on considerations of international
comity.

   In the meantime, a dizzying array of judgments, appeals,
and procedural motions continued in Ecuador. On August 8,
2005, the Second Civil Court dismissed the action in Ecuador,
holding that the forum selection clause was valid and that the
claim should be heard in California. Additionally, the district
court held that Andina had improperly invoked the “curador”
procedure. Andina appealed.

   On August 10, Andina filed another lawsuit in the 29th
Civil Court to disqualify the Second Civil Court. Because of
this filing, the underlying action was temporarily removed
from the Second Civil Court pending a decision by the 29th
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.         4939
Civil Court. Two weeks later, Andina filed a motion in the
29th Civil Court to annul the Second Civil Court’s August 8
decision. This motion was denied on September 15. Five days
later, Andina filed another motion before the 29th Civil Court
to revoke the order denying the annulment motion. The court
denied this motion one week later. Undaunted, on September
29, Andina filed a motion before the 29th Civil Court to annul
two Second Civil Court rulings in favor of Gallo. These
motions are, apparently, still pending.

   On September 26, Andina filed yet another motion in the
29th Civil Court, seeking to interrogate the judge of the Sec-
ond Civil Court who had ruled in favor of Gallo, Judge Ukles
Cornejo Bustos. Eventually, on November 15, 2005, Andina
filed a complaint in the Superior Court of Justice of Guaya-
quil, asserting claims for damages against Judge Bustos. We
understand that this motion and complaint are still pending in
Ecuador.

                               II

   The district court’s denial of a preliminary injunction is
normally reviewed for an abuse of discretion. Walczak v. EPL
Prolong, Inc., 198 F.3d 725, 730 (9th Cir. 1999). However, an
anti-suit injunction presents particularly complex legal issues,
especially because of international comity concerns. Although
our overall review is for an abuse of discretion, “[t]he district
court’s interpretation of the underlying legal principles . . . is
subject to de novo review and a district court abuses its dis-
cretion when it makes an error of law.” Sw. Voter Registration
Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir. 2003)
(en banc). “We will reverse a denial of a preliminary injunc-
tion where the district court abused its discretion or based its
decision on an erroneous legal standard or on clearly errone-
ous findings of fact.” Sammartano v. First Jud. Dist. Court,
303 F.3d 959, 964 (9th Cir. 2002).
4940     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
                               A

   Courts derive the ability to enter an anti-suit injunction
from their equitable powers. Such injunctions allow the court
to restrain a party subject to its jurisdiction from proceeding
in a foreign court in circumstances that are unjust. The injunc-
tion has deep roots in English law. Traceable to at least 15th-
century England, it first appeared in the form of a writ of pro-
hibition by the common law courts to the ecclesiastical courts
to prevent their expansive jurisdictional assertions. See David
W. Raack, A History of Injunctions in England Before 1700,
61 Ind. L.J. 539, 545-56 (1986). The injunction operates in
personam: the American court enjoins the claimant, not the
foreign court.

   We last examined the standards for issuance of an anti-suit
injunction in Seattle Totems Hockey Club, Inc. v. Nat’l
Hockey League, 652 F.2d 852 (9th Cir. 1981). In Seattle
Totems, Vincent Abbey and Eldred Barnes, the owners of the
Seattle Totems Hockey Club, began a private antitrust action
against the National Hockey League and other defendants.
Northwest Sports, one of the defendants, brought suit against
Abbey and Barnes in British Columbia alleging breach of
contract. Id. at 853. The district court granted Abbey and
Barnes an anti-suit injunction restraining the Canadian pro-
ceedings. Id.

   [1] We affirmed. “A federal district court with jurisdiction
over the parties has the power to enjoin them from proceeding
with an action in the courts of a foreign country, although the
power should be used sparingly. The issue is not one of juris-
diction, but one of comity.” Id. at 855 (internal punctuation
and citations omitted). We cited the Fifth Circuit’s standard
in In re Unterweser Reederei GmBH, 428 F.2d 888, 896 (5th
Cir. 1970), aff’d on rehearing en banc, 446 F.2d 907 (1971),
rev’d on other gds. sub nom. M/S Bremen v. Zapata Off-Shore
Co., 407 U.S. 1 (1972), as instructive: “foreign litigation may
be enjoined when it would (1) frustrate a policy of the forum
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.        4941
issuing the injunction; (2) be vexatious or oppressive; (3)
threaten the issuing court’s in rem or quasi in rem jurisdic-
tion; or (4) where the proceedings prejudice other equitable
considerations.” Seattle Totems, 652 F.2d at 855; see also Tri-
ton Container Int’l Ltd. v. Di Gregorio Navegacao Ltda., 440
F.3d 1137, 1138 (9th Cir. 2006) (referring to Seattle Totems
“factors”). The language from Unterweser is disjunctive: if
any of the four elements is present, an anti-suit injunction
may be proper.

   However, Seattle Totems did not adopt the Unterweser
analysis as anything other than instructive. While we referred
to two Fifth Circuit cases, it is unclear how much of their
analysis we adopted. We considered the “policies and cases”
referred to in our opinion, but affirmed the district court’s
holding based on “equitable balance.” Seattle Totems, 652
F.2d at 856. Significantly, Seattle Totems left many questions
unanswered, as it does not elucidate a precise framework for
courts to apply when deciding whether to issue an anti-suit
injunction. For example, it is silent as to the interplay between
the traditional preliminary injunction test and the anti-suit
injunction test, and as to the weight to be given to interna-
tional comity. We now turn to these issues.

                               B

   [2] “The purpose of a preliminary injunction is to preserve
rights pending resolution of the merits of the case by the
trial.” Big Country Foods, Inc. v. Bd. of Educ., 868 F.2d 1085,
1087 (9th Cir. 1989). A preliminary injunction is appropriate
“where plaintiffs demonstrate either: (1) a likelihood of suc-
cess on the merits and the possibility of irreparable injury; or
(2) that serious questions going to the merits were raised and
the balance of hardships tips sharply in their favor.” Shelley,
344 F.3d at 917 (internal quotation marks and citations omit-
ted). “The irreducible minimum . . . is that the moving party
demonstrate a fair chance of success on the merits or ques-
tions serious enough to require litigation. No chance of suc-
4942     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
cess at all will not suffice.” Sports Form, Inc. v. United Press
Int’l, Inc., 686 F.2d 750, 753 (9th Cir. 1982) (internal punctu-
ation and citations omitted). The degree to which this test is
applicable to anti-suit injunctions is unclear, and Seattle
Totems makes no mention of it. Indeed, Seattle Totems may
actually have involved a permanent injunction, although it is
not clear from the opinion.

   [3] The suitability of an anti-suit injunction involves differ-
ent considerations from the suitability of other preliminary
injunctions. An anti-suit injunction, by its nature, will involve
detailed analysis of international comity. Often, as here, the
injunction will be defensive in nature. Gallo has requested the
preliminary injunction because of Andina’s potentially preju-
dicial, vexatious and oppressive proceedings in Ecuador. But
should Gallo also need to prove a likelihood of success on the
merits of the breach of contract claim in order to receive an
anti-suit injunction? That is, does our usual test for a prelimi-
nary injunction apply, or is a modified analysis required for
anti-suit injunctions? While our cases are not clear on this
issue, we conclude that the more appropriate approach is that
enunciated by the Fifth Circuit: “To the extent the traditional
preliminary injunction test is appropriate, . . . we only need
address whether [the injunction seeker] showed a significant
likelihood of success on the merits. The merits in this case,
however, are . . . about . . . whether [the injunction seeker] has
demonstrated that the factors specific to an antisuit injunction
weigh in favor of granting that injunction here.” Karaha
Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 335 F.3d 357, 364 n.19 (5th Cir. 2003).

   [4] Thus, we hold that Gallo need not meet our usual test
of a likelihood of success on the merits of the underlying
claim to obtain an anti-suit injunction against Andina to halt
the Ecuadorian proceedings. Rather, Gallo need only demon-
strate that the factors specific to an anti-suit injunction weigh
in favor of granting the injunction. For purposes of this action,
we may rely on any of the Unterweser factors if it applies to
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.        4943
the case and if the impact on comity is tolerable. This test, we
conclude, is consistent with Seattle Totems.

                               C

   [5] In applying this test, we believe the first step in deter-
mining whether an anti-suit injunction is appropriate is to
determine “whether or not the parties and the issues are the
same, and whether or not the first action is dispositive of the
action to be enjoined.” See Sun World, Inc. v. Lizarazu Oli-
varria, 804 F. Supp. 1264, 1267 (E.D. Cal. 1992) (citations
omitted) (inferring such a test from the discussion in Seattle
Totems); see also Paramedics Electromedicina Comercial,
LTDA v. GE Medical Sys. Info. Techs., Inc., 369 F.3d 645,
652 (2d Cir. 2004) (using this test); Quaak v. Klynveld Peat
Marwick Goerdeler Bedrijfsrevisoren, 361 F.3d 11, 18 (1st
Cir. 2004) (same); George A. Bermann, The Use of Anti-Suit
Injunctions in International Litigation, 28 Colum. J. Trans-
nat’l L. 589, 626 (1990) (stating that courts “will not consider
issuing anti-suit injunctions” in the absence of “parallel local
and foreign actions between the same parties over the same
claim”).

   [6] The district court concluded that the claims were not the
same because the California and Ecuador cases arose from
different acts. This conclusion was in error. In the Ecuadorian
court, Andina sued for breach of contract. In the district court,
Gallo sought, among other things, a declaration that Gallo did
not breach the distributorship agreement. Therefore, all the
issues before the court in the Ecuador action are before the
court in the California action.

   Andina contends that the claims are not the same because
enjoining the Ecuador action would deprive it of its right to
pursue its claims under Ecuadorian law. Not so. First, it is not
clear that Andina has claims under Ecuadorian law, as the
contract contains a choice-of-law clause in favor of Califor-
nia. Second, to the degree that Ecuadorian law does apply,
4944     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
federal courts are capable of applying it to Andina’s claims.
See Fed. R. Civ. P. 44.1; see also Republic of the Philippines
v. Marcos, 862 F.2d 1355, 1361 (9th Cir. 1988) (en banc)
(holding that “questions of foreign law are not beyond the
capacity of our courts”).

  [7] We conclude that the parties and claims are the same.

                               D

   [8] Turning to another aspect we thought instructive in
Seattle Totems, “foreign litigation may be enjoined when it
would . . . frustrate a policy of the forum issuing the injunc-
tion.” Seattle Totems, 652 F.2d at 855, see also In re Unter-
weser Reederei GmBH, 428 F.2d at 896. Gallo contends that
an anti-suit injunction is necessary to preserve the United
States policy encouraging enforcement of forum selection
clauses. Although the district court held that the forum selec-
tion clause was valid and enforceable, it also held that the pol-
icy of enforcement was not “so compelling as to justify the
encroachment of one court on the jurisdiction of the other.”

   Forum selection clauses gained widespread acceptance as a
result of the Supreme Court decision in M/S Bremen, which
was the Court’s review of In re Unterweser. There, the parties
had entered into an agreement to tow a drilling rig from Loui-
siana to Italy. 407 U.S. at 3. The contract had a forum selec-
tion clause in favor of London. After the rig was heavily
damaged in the Gulf of Mexico, Zapata brought suit in Flor-
ida. Unterweser simultaneously brought suit in London, as
was mandated by the contract. Id. at 4. The district court in
Florida refused to enforce the forum selection clause and
entered a preliminary injunction barring Unterweser from pur-
suing the London litigation. Id. at 5. The Fifth Circuit
affirmed. The Supreme Court reversed, holding that the forum
selection clause should have been enforced:

    There are compelling reasons why a freely negoti-
    ated private international agreement, unaffected by
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.          4945
    fraud, undue influence, or overweening bargaining
    power, such as that involved here, should be given
    full effect. . . . Manifestly much uncertainty and pos-
    sibly great inconvenience to both parties could arise
    if a suit could be maintained in any jurisdiction in
    which an accident might occur or if jurisdiction were
    left to any place where the Bremen . . . might happen
    to be found. The elimination of all such uncertainties
    by agreeing in advance on a forum acceptable to
    both parties is an indispensable element in interna-
    tional trade, commerce, and contracting.

Id. at 12-14 (footnotes omitted). The Court continued: “[I]n
the light of present-day commercial realities and expanding
international trade we conclude that the forum clause should
control absent a strong showing that it should be set aside.”
Id. at 15.

   [9] The Supreme Court reaffirmed its commitment to the
enforcement of forum selection clauses in Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585 (1991). “[A] clause estab-
lishing ex ante the forum for dispute resolution has the salu-
tary effect of dispelling any confusion about where suits
arising from the contract must be brought and defended . . . .”
Id. at 593-94. It is therefore clear that the Supreme Court has
established a strong policy in favor of the enforcement of
forum selection clauses.

  [10] Forum selection clauses are increasingly used in inter-
national business. When included in freely negotiated com-
mercial contracts, they enhance certainty, allow parties to
choose the regulation of their contract, and enable transaction
costs to be reflected accurately in the transaction price. See
Carnival Cruise Lines, 499 U.S. at 593-94 (detailing eco-
nomic advantages of forum selection clauses). We have also
repeatedly stressed the importance of forum selection clauses
and have held that they “should be enforced absent strong rea-
sons to set them aside.” Northrop Corp. v. Triad Int’l Mktg,
4946     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
S.A., 811 F.2d 1265, 1270 (9th Cir. 1987). Without an anti-
suit injunction in this case, the forum selection clause effec-
tively becomes a nullity. The potential implications for inter-
national commerce are considerable.

   In England, anti-suit injunctions are routinely granted in
cases of violation of a forum selection clause. While the
English decisions do not bind us, we may view them as
instructive in cases involving equity jurisdiction.

    Substantially . . . the equity jurisdiction of the federal
    courts is the jurisdiction in equity exercised by the
    High Court of Chancery in England at the time of the
    adoption of the Constitution and the enactment of the
    original Judiciary Act, 1789. The substantive prereq-
    uisites for obtaining an equitable remedy as well as
    the general availability of injunctive relief are not
    altered by Rule 65 and depend on traditional princi-
    ples of equity jurisdiction.

Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund,
Inc., 527 U.S. 308, 318-19 (1999) (internal quotation marks,
punctuation, and citations omitted).

   In Donohue v. Armco Inc., [2002] 1 Lloyd’s Rep. 425, 432-
33 (H.L.), the House of Lords granted an anti-suit injunction
where parties filed suit in New York in contravention of a
forum selection clause in favor of England. “[T]he general
rule is clear: where parties have bound themselves by an
exclusive jurisdiction clause effect should ordinarily be given
to that obligation in the absence of strong reasons for depart-
ing from it.” Id. at 433. Similarly, in Continental Bank v.
Aeakos Compania Noviera SA, [1994] 1 Lloyd’s Rep. 505,
512 (Eng. C.A.), the English Court of Appeal upheld an anti-
suit injunction:

    In our view the decisive matter is that the bank
    applied for the injunction to restrain the defendants’
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.             4947
    clear breach of contract. In the circumstances, a
    claim for damages for breach of contract would be
    a relatively ineffective remedy . . . . [T]his is the par-
    adigm case for the grant of an injunction restraining
    a party from acting in breach of an exclusive juris-
    diction agreement.

Id. The court also stated that the continuation of foreign pro-
ceedings “amounts to vexatious and oppressive conduct on
the part of the defendants.” Id.

   [11] While apparently no other circuit court has decided on
the propriety of an anti-suit injunction where proceedings
breach a forum selection clause, the Second Circuit has
affirmed an anti-suit injunction where foreign proceedings
breached an arbitration clause. See Paramedics, 369 F.3d at
653-55. The Supreme Court has observed that arbitration
clauses, like forum selection and choice of law clauses, can
specify “in advance the forum in which disputes shall be liti-
gated and the law to be applied” and that this function is “in-
dispensable” to the “achievement of the orderliness and
predictability essential to any business transaction.” Scherk v.
Alberto-Culver Co., 417 U.S. 506, 516 (1974). Protecting
contractual devices that provide such indispensable, essential
functions within international trade justifies the imposition of
an anti-suit injunction.

   We have great difficulty with the district court’s solution
that Gallo’s proper remedy to enforce the forum selection
clause was to “petition to the court where the action was
brought for change of venue.” This proposal was both errone-
ous and perplexing, as it is a legal impossibility to transfer
venue from an Ecuadorian court to a California court.

   [12] In summary, Andina has not given any reason to set
aside the forum selection clause. An anti-suit injunction is the
only way Gallo can effectively enforce the forum selection
clause. In addition, Andina’s potentially fraudulent conduct
4948     E. & J. GALLO WINERY v. ANDINA LICORES S.A.
and procedural machinations in Ecuador tilt the balance even
further in favor of granting the injunction. We hold that
Andina’s pursuit of litigation in Ecuador, in violation of the
forum selection clause, frustrates a policy of the United States
courts and may well be vexatious and oppressive.

                                E

   [13] This clear line of reasoning did not persuade the dis-
trict court to enter a preliminary anti-suit injunction. Why?
Because the district court concluded it was trumped by the
doctrine of comity. Comity is “the recognition which one
nation allows within its territory to the legislative, executive
or judicial acts 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 the protection
of its laws.” Hilton v. Guyot, 159 U.S. 113, 164 (1895). It “is
neither a matter of absolute obligation, on the one hand, nor
of mere courtesy and good will, upon the other.” Id. at 163-
64.

   Although Andina’s pursuit of litigation in Ecuador frus-
trates a policy of the United States, we still need to decide
whether the impact on comity would be tolerable. The district
court held that comity barred the anti-suit injunction and that
“the principle of comity looms larger in this case than in the
Fifth and Ninth Circuit cases that have place[d] relatively lit-
tle emphasis on the principle.” Since we have not held that the
Seattle Totems factors are anything other than illustrative, it
is appropriate for courts within the Ninth Circuit to weigh
other factors that bear on the issue of comity. However, nei-
ther the district court nor a panel of this court is at liberty to
— as the district court’s holding seems to imply it did — use
the laudable principles within the doctrine of comity to defy
the holdings of our court.

   The district court emphasized in its analysis that Andina
filed its litigation first and Gallo filed its action “several
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.          4949
months later.” The district court’s factual finding was clearly
erroneous. The evidence indicates that Gallo filed suit fewer
than six weeks after becoming apprised of the Ecuadorian liti-
gation.

    [14] That Andina filed first, however, makes no difference
as to the propriety of an anti-suit injunction. In a situation like
this one, where private parties have previously agreed to liti-
gate their disputes in a certain forum, one party’s filing first
in a different forum would not implicate comity at all. No
public international issue is raised in this case. There is no
indication that the government of Ecuador is involved in the
litigation. Andina is a private party in a contractual dispute
with Gallo, another private party. The case before us deals
with enforcing a contract and giving effect to substantive
rights. This in no way breaches norms of comity. Under the
reasoning of the district court, any party seeking to evade the
enforcement of an otherwise-valid forum selection clause
need only rush to another forum and file suit. Not only would
this approach vitiate United States policy favoring the
enforcement of forum selection clauses, but it could also have
serious deleterious effects for international comity.

   We also are puzzled by the district court’s holding that “the
Ecuadorian court is more competent to decide the key issue;
that is, whether the provisions of Decree No. 1038-A apply or
not.” As stated above, the contract clearly contains a Califor-
nia choice-of-law clause; thus, the validity of the forum selec-
tion clause should be decided by California law, as the law of
the contract, rather than by Ecuadorian law. Cf. Batchelder v.
Kawamoto, 147 F.3d 915, 919-920 (9th Cir. 1998). Addition-
ally, to the degree Ecuadorian law is applicable, the district
court is capable of applying it. See Fed. R. Civ. P. 44(1).

  One of the seminal cases on anti-suit injunctions, Laker
Airways Ltd. v. Sabena Belgian World Airlines, 731 F.2d 909
(D.C. Cir. 1984), provides a detailed analysis of comity.
Laker filed an antitrust action in the United States against sev-
4950      E. & J. GALLO WINERY v. ANDINA LICORES S.A.
eral defendants, including domestic, British, and other foreign
airlines. The defendants filed suit in the United Kingdom
seeking an anti-suit injunction barring Laker from proceeding
with its action in the United States. Meanwhile, the district
court granted Laker an injunction barring the defendants from
proceeding in the United Kingdom. The D.C. Circuit upheld
the importance of comity, stating that “comity serves our
international system like the mortar which cements together
a brick house.” Id. at 937. However, the D.C. Circuit affirmed
the district court:

      “Comity” summarizes in a brief word a complex and
      elusive concept—the degree of deference that a
      domestic forum must pay to the act of a foreign gov-
      ernment not otherwise binding on the forum. . . .
      However, there are limitations to the application of
      comity. When the foreign act is inherently inconsis-
      tent with the policies underlying comity, domestic
      recognition could tend either to legitimize the aber-
      ration or to encourage retaliation, undercutting the
      realization of the goals served by comity. No nation
      is under an unremitting obligation to enforce foreign
      interests which are fundamentally prejudicial to
      those of the domestic forum. Thus, from the earliest
      times, authorities have recognized that the obligation
      of comity expires when the strong public policies of
      the forum are vitiated by the foreign act.

Id.

   There may be different views among circuits as to the rela-
tive importance to be given to comity in deciding whether to
file an anti-suit injunction. Compare Quaak, 361 F.3d at 17
(“We deem international comity an important integer in the
decisional calculus”), and Laker Airways, 731 F.2d at 927
(anti-suit injunctions should be granted “only in the most
compelling circumstances”), with Kaepa, Inc. v. Achilles
Corp., 76 F.3d 624, 627 (5th Cir. 1996) (“We decline . . . to
         E. & J. GALLO WINERY v. ANDINA LICORES S.A.          4951
require a district court to genuflect before a vague and omnip-
otent notion of comity every time that it must decide whether
to enjoin a foreign action”).

   [15] We express no opinion on these possible differences.
We believe that, in this case, an anti-suit injunction would be
appropriate under any test. See Quaak, 361 F.3d at 20
(“Where, as here, a party institutes a foreign action in a bla-
tant attempt to evade the rightful authority of the forum court,
the need for an antisuit injunction crests”); Laker Airways,
731 F.2d at 927 (courts “have a duty to protect their legiti-
mately conferred jurisdiction to the extent necessary to pro-
vide full justice to litigants. Thus, when the action of a litigant
in another forum threatens to paralyze the jurisdiction of the
court, the court may consider the effectiveness and propriety
of issuing an [anti-suit] injunction”).

                               III

   [16] Andina has involved Gallo in messy, protracted, and
potentially fraudulent litigation in Ecuador in direct contra-
vention of a valid and enforceable forum selection clause.
This is a paradigmatic case for a preliminary anti-suit injunc-
tion. The district court erroneously applied the law and, there-
fore, abused its discretion in denying the requested injunction.
We reverse and remand to the district court with instructions
to enter a preliminary injunction barring Andina from pro-
ceeding with litigation in Ecuador.

   In lieu of issuing the mandate forthwith, we will consider
Andina’s conduct between the filing date of this opinion and
the date the preliminary injunction is entered in determining
whether to impose sanctions under our inherent authority. See
Chambers v. NASCO, Inc., 501 U.S. 32, 44-46, 50 (1991).

  REVERSED.