Court Opinion

ID: 4504133
Source: CourtListenerOpinion
Date Created: 2020-02-04 01:00:23.235181+00
Date Added: 2024-06-11T13:35:18.245492
License: Public Domain

Case: 19-20354       Document: 00515295832         Page: 1     Date Filed: 02/03/2020

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                       No. 19-20354                             FILED
                                                                         February 3, 2020
                                                                           Lyle W. Cayce
RAJET AEROSERVICIOS S.A. DE C.V.,                                               Clerk

               Plaintiff - Appellant

v.

LUIS CARLOS CASTILLO CERVANTES,

               Defendant - Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:18-CV-4441

Before OWEN, Chief Judge, and BARKSDALE and DUNCAN, Circuit Judges.
PER CURIAM:*
       At issue in this diversity action is whether the district court erred by:
granting defendant-appellee’s motion to dismiss for forum non conveniens
(FNC); and sua sponte dismissing this action pursuant to Federal Rule of Civil
Procedure 12(b)(7). VACATED and REMANDED.

       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.
R. 47.5.4.
    Case: 19-20354     Document: 00515295832      Page: 2   Date Filed: 02/03/2020

                                  No. 19-20354
                                        I.
      Rajet Aeroservicios S.A. de C.V. (Rajet), owned by Luis Alfredo Rayet
Diaz (Rayet), is a Mexican charter-flight company. It filed this diversity action
against Luis Carlos Castillo Cervantes (Castillo), a dual citizen of the United
States and Mexico who resides in the Southern District of Texas, claiming,
inter alia, Castillo breached an oral contract and seeking payment of unpaid
invoices, totaling approximately $1.3 million, for flights from April 2015
through June 2016. Through the documents identified after the following
statement of facts, the parties dispute many of the underlying facts giving rise
to this action.
      Rajet, for its part, alleges it began a contractual relationship with
Castillo for charter flights as early as 2002.       Further, Rajet alleges the
relationship was between it and Castillo personally, despite Rayet’s agreeing,
on Rajet’s behalf, that it would accept payment from various of Castillo’s
companies on his behalf. According to Rajet, Castillo and Rayet ultimately
agreed, during a 2014 telephone conversation, that Rajet would undertake the
flights at issue for Castillo, which Rajet alleges included cross-border flights to
Texas. Rajet also alleges: following this conversation, although Castillo made
35 payments, through five of his companies, for the agreed-upon flights, he
failed to pay the account balance of approximately $1.3 million. Castillo,
according to Rajet, never denied the agreement existed or contended a third
party owed the debt.
      Castillo, by contrast, alleges he never personally contracted, or even
communicated, with Rajet regarding private air travel. Although Castillo
acknowledges that he was the administrator for Lucamax, a company that
ordered and paid for flights by Rajet, he alleges Lucamax was the party to any
contract with Rajet and Lucamax staff handled any communications with it.
Further, Castillo alleges: Lucamax did not order the specific flights at issue,
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which, contrary to Rajet’s allegation, all occurred in Mexico. Rather, according
to Castillo, Rajet provided them for Baltazar Manuel Hinojosa Ochoa’s
(Hinojosa) 2016 campaign for Governor of Tamaulipas, Mexico.             Castillo
alleges: Lucamax recommended Rajet to Hinojosa’s campaign, with which
Castillo was involved; and the campaign is responsible for paying Rajet’s
unpaid invoices.
      After Rajet filed its complaint in November 2018, Castillo filed: a motion
to dismiss for FNC or, alternatively, to transfer venue; and a motion to dismiss
for failure to state a claim under Rule 12(b)(6). Rajet responded to each motion,
and Castillo filed replies.
      The parties provided limited evidence regarding FNC. Rajet attached to
its complaint an unsworn declaration from Rayet, a demand letter from its
counsel to Castillo, and Spanish-language documentation showing the
transaction history between Rajet and Castillo. In support of his motion to
dismiss for FNC, Castillo provided his affidavit and an email chain comprised
of two emails, both sent by Rajet’s counsel. Rajet’s response attached only a
new, unsworn declaration from Rayet. To his reply, Castillo attached his new
affidavit, the same email chain from his motion, and a one-page letter from
Lucamax’s counsel responding to Rajet’s demand letter.
      In May 2019, the court ruled, and rendered final judgment without
prejudice, granting Castillo’s motion to dismiss for FNC, but failing to include
the required return-jurisdiction provision, and also sua sponte independently
dismissing the action pursuant to Rule 12(b)(7) for failure to join a required
party. See Memorandum and Order, Rajet Aeroservicios S.A. de C.V. v. Luis
Carlos Castillo Cervantes, No. 4:18-cv-04441 (S.D. Tex. 17 May 2019) (Order).
In doing so, the court noted its FNC ruling rendered moot Castillo’s motions to
transfer venue and to dismiss pursuant to Rule 12(b)(6).

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                                      II.
      Rajet challenges the court’s dismissing the action both for FNC and sua
sponte pursuant to Rule 12(b)(7). Both challenges succeed.
                                      A.
      FNC dismissals are “committed to the sound discretion of the trial court”
and “may be reversed only when there has been a clear abuse of discretion;
where the court has considered all relevant public and private interest factors,
and where its balancing of these factors is reasonable, its decision deserves
substantial deference”. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981)
(citations omitted). We are “to review the [district] court’s decisionmaking
process and conclusion and determine if it is reasonable; our duty is not to
perform a de novo analysis and make the initial determination for the district
court”. In re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 821
F.2d 1147, 1167 (5th Cir. 1987) (en banc) (italics added and citation omitted),
vacated on other grounds sub nom. Pan Am. World Airways, Inc. v. Pampin
Lopez, 490 U.S. 1032 (1989), opinion reinstated except as to damages, 883 F.2d
17 (5th Cir. 1989) (en banc) (per curiam).
      For starters, Rajet claims the court abused its discretion by failing to
include the requisite return-jurisdiction clause in its order of dismissal. More
fundamentally, Rajet also claims the court abused its discretion by conducting
an inadequate FNC analysis that neither considered relevant evidence nor
properly applied the various elements of the FNC doctrine.            We agree
regarding both claims.
      “[FNC] dismissals and federal venue transfers are entirely distinct
schemes.” Veba-Chemie A.G. v. M/V Getafix, 711 F.2d 1243, 1246 (5th Cir.
1983).   Federal venue-transfer statutes “facilitat[e] easy change of venue
within a unified federal system”, see id. (internal quotation marks and citation
omitted), whereas “[t]he common-law doctrine of [FNC] has continuing
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application [in federal courts] only in cases where the alternative forum is
abroad . . . and perhaps in rare instances where a state or territorial court
serves litigation[] convenience best”, Sinochem Int’l Co. v. Malay. Int’l
Shipping Corp., 549 U.S. 422, 430 (2007) (third alteration in original) (internal
quotation marks and citations omitted).
      “[A] federal court sitting in a diversity action is required to apply the
federal law of [FNC] when addressing motions to dismiss a plaintiff’s case to a
foreign [i.e., non-federal] forum”. Air Crash Disaster, 821 F.2d at 1159. “The
general principle of the [federal FNC] doctrine is simply that a court may resist
imposition upon its jurisdiction even when jurisdiction is authorized.” Dickson
Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 342 (5th Cir. 1999) (internal
quotation marks and citation omitted).
      The doctrine “presupposes at least two forums where the defendant is
[amenable] to process and simply furnishes criteria for choice between them”,
and courts follow a two-step inquiry, focused on convenience, when analyzing
a motion to dismiss for FNC. See id. (citations omitted). First, and obviously,
there must be an adequate and available alternative forum. See id. (citation
omitted). “An alternative forum is adequate if 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 [a federal] court.”                    Vasquez v.
Bridgestone/Firestone, Inc., 325 F.3d 665, 671 (5th Cir. 2003) (internal
quotation marks and citation omitted). “An alternative forum is considered
available if the entire case and all parties can come within its jurisdiction.” Id.
(citation omitted).
      “[O]nce an adequate and available alternate forum is identified, several
‘private’ and ‘public’ interest factors must be balanced in order to determine if
dismissal is warranted”. Dickson, 179 F.3d at 342 (citation omitted). Private-
interest factors, relating to litigant convenience, include:
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      relative ease of access to sources of proof; availability of
      compulsory process for attendance of unwilling, and the cost of
      obtaining attendance of willing, witnesses; possibility of view of
      premises, if view would be appropriate to the action; and all other
      practical problems that make trial of a case easy, expeditious and
      inexpensive.

Piper, 454 U.S. at 241 & n.6 (citations omitted). Public-interest factors,
relating to forum convenience, include:
      administrative difficulties flowing from court congestion; the local
      interest in having localized controversies decided at home; the
      interest in having the trial of a diversity case in a forum that is at
      home with the law that must govern the action; the avoidance of
      unnecessary problems in conflict of laws, or in the application of
      foreign law; and the unfairness of burdening citizens in an
      unrelated forum with jury duty.

Id. (internal quotation marks and citations omitted).
      “[T]here is ordinarily a strong presumption in favor of the plaintiff’s
choice of forum, which may be overcome only when the private and public
interest factors clearly point towards trial in the alternative forum”. Id. at 255.
This presumption, however, is weaker with, as in this instance, a foreign
plaintiff. Id. at 256 (citations omitted). In any event, “no one private or public
interest factor should be given conclusive weight”, and “dismissal for [FNC] is
the exception rather than the rule”. Air Crash Disaster, 821 F.2d at 1163, 1164
n.26 (citation omitted).
      The moving defendant bears the burden on all elements of the FNC
inquiry. Id. at 1164 (citations omitted). In this regard, “we require a defendant
to put forth unequivocal, substantiated evidence presented by affidavit
testimony”. Baris v. Sulpicio Lines, Inc., 932 F.2d 1540, 1550 n.14 (5th Cir.
1991) (citation omitted). Along that line, “a moving defendant need not submit
overly detailed affidavits to carry its burden, but it must provide enough
information to enable the district court to balance the parties[’] interests”. Air

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                                  No. 19-20354
Crash Disaster, 821 F.2d at 1164–65 (internal quotation marks and citation
omitted). And, “[a]lthough the level of detail required is dependent on the facts
of each particular case, the defendant must at least allege detailed facts in its
motion for dismissal which, if not controverted, are sufficient to support [an
FNC] dismissal”. Raytheon Eng’rs & Constructors, Inc. v. H L H & Assocs. Inc.,
No. 97-20187, 1998 WL 224531, at *4 (5th Cir. 17 Apr. 1998) (per curiam)
(citations omitted).
                                         1.
      In general, a return-jurisdiction clause in a dismissal for FNC “permit[s]
parties to return to the dismissing court should the lawsuit become impossible
in the foreign forum”. Vasquez, 325 F.3d at 675. All FNC dismissals must
include such a clause. See id. (“The failure to include a return[-]jurisdiction
clause in an [FNC] dismissal constitutes a per se abuse of discretion.” (internal
quotation marks and citation omitted)); Robinson v. TCI/US W. Commc’ns
Inc., 117 F.3d 900, 908 (5th Cir. 1997) (“[T]he failure to include a return[-]
jurisdiction clause is a fatal error”. (citing Baris, 932 F.2d at 1551)).
      This is because, as our court has repeatedly made clear, “courts must
take measures, as part of their dismissals in [FNC] cases, to ensure that
defendants will not attempt to evade the jurisdiction of the foreign courts”.
Baris, 932 F.2d at 1551. Notably, “[s]uch measures often include agreements
between the parties to litigate in another forum, to submit to service of process
in that jurisdiction, to waive the assertion of any limitations defenses, to agree
to discovery, and to agree to the enforceability of the foreign judgment”. Id.
(citations omitted).     A return-jurisdiction clause assists in preventing
defendants from circumventing these measures and ensures plaintiffs have the
opportunity to proceed with the action in one of the forums.
      Because, as the parties agree, the court did not include a return-
jurisdiction clause, “[a]t a minimum, . . . the district court’s ruling on [FNC]
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must be vacated and remanded for the implementation of [that] clause”.
Robinson, 117 F.3d at 908.
                                       2.
      The scope of our remand, however, must go further. This is because a
court also abuses its discretion in ruling on a motion to dismiss for FNC “when
it summarily denies or grants a motion to dismiss without either written or
oral explanation” or “fails to address and balance the relevant principles and
factors of the doctrine”. Air Crash Disaster, 821 F.2d at 1166–67 (citations
omitted). Similarly, a court abuses its discretion by not holding a moving
defendant to his burden on all elements of the FNC analysis. See Raytheon,
1998 WL 224531, at *4 (citation omitted). A district court’s findings and
conclusions, therefore, “must be complete, detailed, and explicit”; and it must
identify and explain its resolution of any conflicts in the evidence. CTF Cent.
Corp. v. Inter-Cont’l Hotels Corp., No. 94-20841, 1995 WL 725353, at *7 (5th
Cir. 13 Nov. 1995) (per curiam) (pursuant to Fifth Circuit Rule 47.5.4:
precedential, even though unpublished, because issued before 1 January 1996).
      As Rajet conceded at oral argument here, the court properly articulated
the FNC legal framework. But its analysis under that framework, quoted in
full as follows, stated only:
            The evidence shows that at least two forums are available to
      the plaintiff as it relates to the defendant -- Mexico and Texas. The
      evidence is also disputed that the Mexican forum is adequate for
      resolution of the parties’ disputes, and that the parties will not be
      deprived of all remedies or otherwise be treated unfairly. Alpine
      View Co., 205 F.3d at 221. [Alpine View Co. v. Atlas Copco AB, 205
      F.3d 208, 221 (5th Cir. 2000).] Moreover, there is no evidence that
      Texas has an interest equal to or greater than that enjoyed by
      Mexico.
            Finally, the defendant has established that private and
      public interest[s] favor Mexico. Specifically, Mexico has a primary
      interest in the resolution of this dispute because all witnesses and
      documents are in Mexico, or subject to process there and, the
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                                 No. 19-20354
      witnesses[’] testimony and the documentary evidence generally
      will require translations and/or interpretations that would
      unnecessarily extend the time and expense associated with a trial
      in Texas.

Order at 4.   (In the light of the court’s FNC ruling, it may have meant
undisputed, not disputed, in the above sentence in the first quoted paragraph:
“The evidence is also disputed that the Mexican forum is adequate for
resolution of the parties’ disputes, and that the parties will not be deprived of
all remedies or otherwise be treated unfairly.” (Emphasis added.))
      Regarding the court’s threshold finding that Mexico is an available
alternative forum, it did not describe the “evidence” it used to reach this
conclusion. And, regarding Mexico’s availability vel non as a forum, it did not
address the parties’ dispute over the effect of Castillo’s federal-court-imposed
restrictions on his traveling outside the Southern District of Texas (from a
separate and ongoing criminal matter). The court similarly did not identify
the “evidence” it relied on in making its threshold adequacy finding.
      Moreover, of the numerous private-interest and public-interest factors
that require balancing as part of the FNC inquiry, the court’s opinion briefly
considered only two.     Those two factors—practical concerns surrounding
translations and/or interpretations and the location and availability of
documents and witnesses—relate to private interests and are mentioned in a
single, conclusory sentence.
      Therefore, the court’s order did not “address and balance the relevant
principles and factors of the [FNC] doctrine” with the level of detail our
precedent demands. See CTF Cent. Corp., 1995 WL 725353, at *7; Air Crash
Disaster, 821 F.2d at 1166–67 (citations omitted).        It also did not resolve
conflicts in the above-described evidence provided by the parties, particularly
where evidence cuts against its conclusions, see CTF Cent. Corp., 1995 WL
725353, at *7, which is vital where, as here, the parties provided conflicting
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factual accounts. The court, therefore, abused its discretion on this issue. We
vacate the dismissal on this FNC basis and remand to district court for further
proceedings consistent with this opinion.
      In doing so, and “[a]s is standard in such situations, we ‘intimate no view
as to what ultimate decision the court should make on the [FNC] issue’”. Royal
Ten Cate USA, Inc. v. TT Inv’rs, Ltd., 562 F. App’x 187, 191 (5th Cir. 2014) (per
curiam) (quoting Baris, 932 F.2d at 1552). Moreover, “[t]he district court is
reminded: with regard to disputed issues of fact in a motion to dismiss for
[FNC], the moving party retains the burden of proof regarding all issues”, CTF
Cent. Corp., 1995 WL 725353, at *9 (citations omitted); and the court may take
additional evidence from the parties in making its new FNC determination,
see, e.g., Royal Ten Cate, 562 F. App’x at 191; Baris, 932 F.2d at 1552. And,
because we review FNC dismissals for clear abuse of discretion, not de novo,
the district court is also reminded it must provide on remand thorough findings
of fact and conclusions of law in making its new FNC decision. See, e.g.,
Forsythe v. Saudi Arabian Airlines Corp., 885 F.2d 285, 290 (5th Cir. 1989)
(per curiam). Finally, should the court reach the same conclusion on remand,
it is again reminded to include a return-jurisdiction clause in its new order of
dismissal. See, e.g., Vasquez, 325 F.3d at 675 (citation omitted).
                                       B.
      Dismissals pursuant to Rule 12(b)(7) (failure to join a required party) are
also reviewed for abuse of discretion. HS Res., Inc. v. Wingate, 327 F.3d 432,
438–39 (5th Cir. 2003) (citation omitted). A ruling “based on an erroneous view
of the law” constitutes such an abuse of discretion. Hood ex rel. Miss. v. City
of Memphis, 570 F.3d 625, 628 (5th Cir. 2009) (citation omitted).
      Rajet contends the court abused its discretion in sua sponte dismissing
the action pursuant to Rule 12(b)(7) because it misapplied Rule 19 and

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                                  No. 19-20354
improperly determined unnamed Mexican parties were indispensable to this
action. We agree.
      In a diversity action, joinder is a question of federal law. Provident
Tradesmens Bank & Tr. Co. v. Patterson, 390 U.S. 102, 125 n.22 (1968)
(citation omitted). Rule 12(b)(7) permits dismissal of an action for “failure to
join a party under Rule 19”, see Fed. R. Civ. P. 12(b)(7), with Rule 19’s detailing
the requirements for required-party joinder, see Fed. R. Civ. P. 19.
      Rule 19 “requires a two-step inquiry” that “is a highly-practical, fact-
based endeavor”. Hood, 570 F.3d at 628 (citation omitted). “First a court must
determine whether a party should be added under the requirements of [Rule]
19(a); then the court must determine [under Rule 19(b)] whether litigation can
be properly pursued without the absent party . . . .” August v. Boyd Gaming
Corp., 135 F. App’x 731, 732 (5th Cir. 2005) (citation omitted). “If the absent
party should be joined under [R]ule 19(a), but the suit cannot proceed without
that party under the requirements of [R]ule 19(b), the case must be dismissed.”
Id. And, although a party may move for a Rule 12(b)(7) dismissal, “[a] court
with proper jurisdiction may also consider sua sponte the absence of a required
person and dismiss for failure to join”. Republic of Phil. v. Pimentel, 553 U.S.
851, 861 (2008) (citations omitted).
      For its sua sponte dismissal pursuant to Rule 12(b)(7), the court
identified the relevant law but stated, without further explanation: “The Court
has performed an appraisal of the facts and concludes that a necessary party
to the resolution of this dispute is absent. The plaintiff has not presented any
evidence, beyond its pleadings, that renders doubtful the Court’s appraisal”.
Order at 6. The court did not then identify the indispensable party or parties,
but it had stated earlier in its order that “individual Mexican citizens,
includ[ing] L[u]camax, are indispensable parties over which the Court lacks
jurisdiction”. Id. at 2.
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      Such conclusory analysis is insufficient to justify a Rule 12(b)(7)
dismissal. See, e.g., Santiago v. Honeywell Int’l, Inc., 768 F. App’x 1000, 1007
(11th Cir. 2019) (per curiam) (noting a court “abused its discretion by not
undertaking a complete Rule 19 analysis” and by not otherwise “adequately
explain[ing] why [an entity] was an indispensable party”). This is particularly
true given that the court ruled on the issue sua sponte and without affording
the parties the opportunity to address it.
      But even assuming arguendo the court’s ruling contains sufficient
analysis showing how its consideration of the various elements of Rule 19
justified its Rule 12(b)(7) dismissal, the court’s application of Rule 19 cannot
be correct. This is because Rule 19 relates to the specific action at bar. See,
e.g., Fed. R. Civ. P. 19(b) (emphasis added) (“If a person who is required to be
joined if feasible cannot be joined, the court must determine whether, in equity
and good conscience, the action should proceed among the existing parties or
should be dismissed.”). This action is between Rajet and Castillo over, inter
alia, a claimed breach of contract. It goes without saying that Rule 19 is not
the proper mechanism for reviewing whether that claimed contract existed or
Castillo was a party to it. Rather, the rule is designed to evaluate whether a
non-party either impedes the court’s ability to “accord complete relief among
existing parties” or has, among additional requirements, “claim[ed] an interest
relating to the subject of the action”—the only two tests for determining
whether a person is a required party under Rule 19(a). See Fed. R. Civ. P.
19(a)(1)(A)–(B).
      That is not the case here: the court can otherwise afford Rajet relief, and
no non-party has claimed any “interest relating to the subject of the action”—
the claimed contract between Rajet and Castillo.           See Fed. R. Civ. P.
19(a)(1)(B). The court’s sua sponte Rule 12(b)(7) dismissal, therefore, was an
abuse of discretion.
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                                   III.
     For the foregoing reasons, the dismissals pursuant to FNC and Rule
12(b)(7) are VACATED; and this action is REMANDED to district court for
further proceedings—including the FNC issues—consistent with this opinion.

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