Court Opinion

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Date Created: 2015-10-13 22:27:07.574698+00
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Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

4-5-2006

Tech Dev Co Ltd v. Onischenko
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-4835

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                                                   NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT

                                     No 05-4835

                       THE TECHNOLOGY DEVELOPMENT
                              COMPANY, LTD.,

                                                   Appellant

                                             v.

                              MICHAEL ONISCHENKO

                    On Appeal from the United States District Court
                             for the District of New Jersey
                            District Court No. 05-cv-04282
                       District Judge: Hon. Mary Little Cooper

                               Argued on March 6, 2006

                 BEFORE: ROTH and GREENBERG, Circuit Judges
                      and BUCKWALTER, District Judge

                             (Opinion Filed April 5, 2006)

                                    OPINION

        *The Honorable Ronald L. Buckwalter, Senior United States District Court Judge
for the Eastern District of Pennsylvania, sitting by designation.
James B. Manning, Esquire (ARGUED)
LeBoeuf, Lamb, Greene & MacRae
125 West 55 th Street
New York, NY 10019

              Counsel for Appellant

Frederick L. Whitmer, Esquire (ARGUED)
Akiva M. Cohen, Esquire
Brown, Raysman, Millstein, Felder & Steiner LLP
900 Third Avenue
New York, NY 10022-4728

              Counsel for Appellee

ROTH, Circuit Judge:

I. Background and Procedural History

       This is an appeal from a District Court order dismissing The Technology

Development Company’s (TTDC) Complaint on the ground of forum non conveniens.

Because we believe the District Court’s analysis failed to address adequately all of the

necessary factors of the forum non conveniens test, we will vacate the order of dismissal

and remand for reconsideration based on the existing record.

       TTDC is a Bermuda corporation that, for much of the time relevant to this appeal,

maintained its principal place of business in Moscow, Russia. Its exact business purpose

is unclear; it appears that TTDC was interested in developing new technologies in the

pharmaceutical industry. From 1999 until 2005, Michael Onischenko, a member of the

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New York bar, represented TTDC and its owner and president, Thomas De Shazo. The

District Court found, and the parties appear to agree, that Onischenko is a resident of New

Jersey. De Shazo is a United States citizen with a residence in Idaho.

       In 2002, TTDC began work to develop and commercialize a product for oral

delivery of insulin and gene cell therapies. As part of its effort to develop the technology,

TTDC employed Dr. Vladimir Sabetsky. The employment agreement provided that

TTDC would set up a holding company in which Dr. Sabetsky would be a 25% owner

and to which he would assign all patents. The agreement further provided that TTDC

would contribute the money necessary for Dr. Sabetsky to develop his idea.

       In the spring of 2005, TTDC decided to leave Russia for the United States because

it believed it could strike a deal with a US pharmaceutical company on the basis of Dr.

Sabetsky’s work. De Shazo came to the United States before Onischenko and left

Onischenko in charge of TTDC’s Moscow operations. TTDC claims that around the time

it decided to move into the US market, Onischenko began to demand an equity position in

the holding company that would own the technologies. De Shazo was not interested and

asked for Onischenko’s resignation. Onischenko complied.

       The separation was not amicable. TTDC claims that when Onischenko demanded

his equity position in the holding company, he threatened to derail the project unless

TTDC agreed. After TTDC declined Onischenko’s “offer,” Onischenko purportedly

began to make good on his threat by, among other things, trying to cut off TTDC’s ability

                                              3
to obtain patents. Further, TTDC claims that Onischenko stole TTDC’s original books

and $240,000 in operating funds from the Moscow office. TTDC also avers that

Onischenko turned Dr. Sabetsky and TTDC consultants Geosta Bergvall and Dr. Stefan

Arver against it. Finally, TTDC claims that Onischenko has interfered or is interfering

with its negotiations with New Jersey drug companies.

       On September 1, 2005, TTDC filed a Complaint and request for a preliminary

injunction against Onischenko in federal court in the District of New Jersey. The

Complaint alleged breach of contract, breach of fiduciary duty, tortious interference with

contract and prospective economic advantage, and wrongful conversion. Onischenko

moved to dismiss on forum non conveniens grounds. On September 30, 2005, the District

Court heard oral argument on the motion and issued an oral decision granting it. TTDC

filed a timely notice of appeal.

II. Jurisdiction and Standard of Review

       The District Court exercised diversity jurisdiction under 28 U.S.C. § 1332. We

have appellate jurisdiction pursuant to 28 U.S.C. § 1291.

       We review a decision to dismiss on forum non conveniens grounds for abuse of

discretion. Lony v. E.I. Du Pont de Nemours & Co., 886 F.2d 628, 631-32 (3d Cir. 1989)

(Lony I). “[W]here 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). Despite

                                              4
this standard, “dismissal for forum non conveniens is the exception rather than the rule.”

Lacey v. Cessna Aircraft Co., 862 F.2d 38, 46 (3d Cir. 1988) (Lacey I) (quoting In re Air

Crash Disaster Near New Orleans, Louisiana on July 9, 1982, 821 F.2d 1147, 1164 n.26

(5th Cir. 1987)). A district court abuses its discretion “when it fails to consider

adequately and to determine the amount of deference due the foreign plaintiff’s choice of

forum or when it clearly errs in weighing the factors to be considered.” Lony I, 886 F.2d

at 632 (citations omitted). Finally, the defendant bears the burden of persuasion as to the

elements of the forum non conveniens analysis. Lony I, 886 F.2d at 632 (citing Lacey I,

862 F.2d at 43).

III. Analysis

       In Lacey I, we set forth the general standard for dismissal in forum non conveniens

cases: “A district court may . . . dismiss a case ‘when an alternative forum has

jurisdiction to hear the case, and when trial in the chosen forum would ‘establish . . .

oppressiveness and vexation to a defendant . . . out of all proportion to the plaintiff’s

convenience . . . .’’” 862 F.2d at 43 (quoting Piper Aircraft, 454 U.S. at 241 (quoting

Koster v. Am. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947))). In ruling on a

motion to dismiss based on forum non conveniens, a district court must address four

issues: (1) the availability of an alternative forum; (2) the amount of deference to be

accorded to the plaintiff’s choice of forum; (3) the private interest factors; and (4) the

public interest factors. Lony I, 886 F.2d at 633. In addition to considering these four

                                              5
factors, Piper Aircraft “requires that the district court consider the availability of an

adequate alternative forum and the amount of deference to be accorded the plaintiff’s

choice of forum before it weighs the private and public interest factors. . . .” Lacey I, 862

F.2d at 45.

A. The Availability of an Alternative Forum

       The Supreme Court has noted that this requirement is usually satisfied where the

defendant is “‘amenable to process’ in the other jurisdiction.” Piper Aircraft, 454 U.S. at

254 n.22 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506-07 (1947)). Where,

however, the alternative jurisdiction cannot provide a satisfactory remedy, dismissal on

forum non conveniens grounds is improper. Id. at 254.

       Inadequacy of the alternative forum is rarely a barrier to forum non conveniens

dismissal. Id. at 254 n.22. Nonetheless, we believe the District Court should have done

more than simply conclude that Russia provides an adequate forum without any

discussion whatsoever of the remedies available in Russia or any citation to cases

supporting the view that the Russian courts are adequate to handle disputes of this nature.

Lacey I, 862 F.2d at 44 (reversing forum non conveniens dismissal where the district court

did not adequately address, inter alia, the adequacy of British Columbia as an alternative

forum); Lony I, 886 F.2d at 633 (expressing skepticism about a district court’s decision to

look to the plaintiff to show the inadequacy of the alternative forum but declining to find

reversible error where the defendant put forward “some evidence” on adequacy and

                                               6
plaintiff did not specifically challenge the adequacy finding on appeal).

       The District Court did no more than make a conclusory statement that “well

established” case law demonstrated the adequacy of the Russian courts for commercial

and tort law cases.1 It may well be that a proper analysis will reveal that Russia is an

adequate alternative forum, but where a plaintiff protests the alternative jurisdiction’s

adequacy both before the District Court and on appeal, the attack is not patently specious,

and the defendant offers minimal evidence in support of adequacy, dismissal without a

reasonably detailed discussion is an abuse of discretion.

B. Amount of Deference Due Plaintiff’s Choice of Forum

       Ordinarily, a court is required to give a plaintiff’s choice of forum significant

deference. Piper Aircraft, 454 U.S. at 255. Where, however, the plaintiff is foreign, the

amount of deference is potentially less because a court cannot assume that the forum was

chosen based on convenience factors. Id. at 255-56. We have stressed that Piper Aircraft

is “‘not an invitation to accord a foreign plaintiff’s selection of an American forum no

       1
        Before the District Court, Onischenko relied on Miller v. Boston Scientific Corp.,
380 F. Supp. 2d 443, 449-450 (D.N.J. 2005), in support of his contention that TTDC was
required to dispute the adequacy of the Russian courts, and, having failed to do so, TTDC
cannot now seek to establish reversible error. Assuming that Miller states the proper
standard (and we take no position on that issue), Onishenko’s argument is still
troublesome because TTDC did challenge Onischenko’s failure to “establish that Russian
courts have jurisdiction . . ., will provide satisfactory remedies, or that they even
recognize TTDC’s claims . . . .” We leave to the District Court in the first instance the
task of resolving whether, in light of TTDC’s challenge to the adequacy of the Russian
court system, Onischenko had to do more than merely state that he was amenable to suit
in Russia and cite a single case to the effect that Russian courts are not corrupt.

                                              7
deference since dismissal for forum non conveniens is the exception rather than the

rule.’” Lacey I, 862 F.2d at 45-46 (quoting In re Air Crash, 821 F.2d at 1164 n.26)

(emphasis in Lacey I). Accordingly, “[w]here a foreign plaintiff has made a strong

showing of convenience, . . . the district court must indicate how far that showing goes

toward putting the foreign plaintiff on the same footing as a domestic plaintiff.” Lony I,

886 F.2d at 634; Iragorri v. United Techs. Corp., 274 F.3d 65, 71-72 (2d Cir. 2001)

(noting that the more it appears that a foreign plaintiff’s choice of forum was dictated by

reasons the law deems legitimate, the more deference it should receive); Norex Petroleum

Ltd. v. Access Indus. Inc., 416 F.3d 146, 154 (2d Cir. 2005) (same).

       We believe the District Court committed an abuse of discretion by failing to set

forth how much deference it owed TTDC’s choice of forum. After stating that it was

required to determine how much deference to give TTDC’s choice of forum in its opening

recitation of the forum non conveniens standard, the only portion of its oral decision

arguably addressing the issue was its language, a number of transcript pages later, that

“[t]he plaintiff has no contact with New Jersey. The plaintiff is a Bermuda limited

liability company with its principal place of business in Moscow and the location of

residence of its principal, Mr. De Shazo, most recently Idaho.” Given that these

statements were made in the section of the decision in which the District Court was

discussing the private and public interest factors, it is not clear whether the District Court

was even thinking about deference issues at all.

                                              8
         Onischenko asks this Court to conclude that those two sentences indicate that the

District Court decided not to afford TTDC any more deference than a typical foreign

plaintiff is afforded under Piper Aircraft. Onischenko attempts to draw support for this

argument from Lacey v. Cessna Aircraft Co., 932 F.2d 170, 179 (3d Cir. 1991) (Lacey II),

in which we noted that a district court does not have to “mark on a continuum” the exact

amount of deference it is affording a foreign plaintiff’s forum selection. Lacey II upheld

a forum non conveniens dismissal where the district court addressed the issue of

deference, noted that it was impossible to quantify, and further provided that it was

requiring that the defendants establish a strong preponderance in favor of dismissal. Id.

On the basis of the district court’s treatment, we were able to say that the district court

demonstrated that it accorded the plaintiff’s forum selection “not insignificant weight . . .

.” Id.

         Onischenko also directs our attention to the portion of Lacey II in which we

discussed a district court’s statement that “[b]ecause plaintiff is a foreign national with no

connection to the forum, his choice is not entitled to the same degree of deference

accorded a resident or citizen who chooses his home forum.” Id. at n.6 (alteration in

Lacey II). He asserts that our endorsement of this language stands for the proposition

that a district court’s statement that a foreign plaintiff has no connection to the forum is

equivalent to a statement that the plaintiff has not made the required showing of

convenience to overcome the negative presumption that attaches to a foreign plaintiff’s

                                               9
forum choice.

       Contrary to Onischenko’s claims, Lacey II does not support the District Court’s

approach in this case. Initially, the District Court in Lacey II went much further in

addressing the deference issue than does the District Court here. Indeed, it takes a

generous reading of the decision here even to conclude that the deference issue was

addressed at all. Moreover, Lacey II states that a foreign plaintiff with no connection to

the chosen forum is entitled to less deference than a domestic plaintiff who chooses his

home forum. 932 F.2d at 170 n.6. However, simply because a foreign plaintiff without a

connection to the forum is not entitled to the same deference as a domestic plaintiff who

chooses his home jurisdiction, it does not follow automatically that such a plaintiff

receives only the lowest level of deference. The best reading of Lony I and Lacey II is

that where, as here, there is some evidence of convenience (even if it is not in the form of

the foreign plaintiff’s direct contacts to the forum), the proper approach is to “decide just

how much less deference is due this plaintiff’s choice of forum . . . ” than a domestic

plaintiff’s choice of forum. 886 F.2d at 634; Norex Petroleum, 416 F.3d at 155-56

(vacating a dismissal based on forum non conveniens where the district court failed to

determine how much deference it was according a foreign plaintiff’s forum choice despite

the plaintiff’s demonstration of convenience-based decision making).

       In this case, TTDC sued Onischenko in Onischenko’s home jurisdiction largely

because it was the only place TTDC felt confident it could obtain jurisdiction. Moreover,

                                             10
with TTDC moving its business operations from Russia to the United States, New Jersey

appears to be more convenient for TTDC and its United States resident principal. See

Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 103 (2d Cir. 2000) (holding that a

district court erred in failing to take plaintiff’s status as a United States citizen into

account because “[t]he benefit for a U.S. resident plaintiff of suing in a U.S. forum is not

limited to suits in the very district where the plaintiff resides . . . .”).

       Our view of the importance of the deference determination is underscored by the

unusual scenario presented in this case. Most forum non conveniens cases involve a

defendant, sued far from home, arguing against being forced to litigate in a remote forum.

Lony v. E.I. Du Pont de Nemours & Co., 935 F.2d 604, 608 (3d Cir. 1991) (Lony II).

Here, by contrast, Onischenko was sued in his own forum and is arguing that it would be

more convenient for him to defend himself thousands of miles away. In Lony I, we

implied that a foreign plaintiff’s decision to sue a defendant in the defendant’s home

forum was itself a factor suggesting that the foreign plaintiff’s decision was based on

convenience rather than some ulterior motive. 886 F.2d at 634; Norex Petroleum, 416

F.3d at 155-56. Even granting that much of the conduct involved in this litigation

occurred while the parties were in Russia, the fact that TTDC chose to sue Onischenko in

the only place it thought it could obtain jurisdiction is evidence that its choice of forum

was based on convenience factors. This, plus that the fact TTDC was wrapping up its

Russian business and beginning the transition to the United States, shows that the District

                                                 11
Court’s treatment of this issue was too superficial. Therefore, dismissing without a more

detailed inquiry into the proper level of deference to be accorded to TTDC’s forum

selection constituted an abuse of discretion.

C. Private and Public Interest Factors

       We are concerned that the District Court may not have applied the proper standard

to weighing the private and public interest factors. As stated above, Onischenko bears the

burden of establishing that litigation in New Jersey would be oppressive and vexatious to

him. Piper Aircraft, 454 U.S. at 241. In Lony I, we took exception to a district court’s

suggestion that dismissal was appropriate where the balance of private factors was at

equipoise or tipped toward dismissal. 886 F.2d at 635. Here, it is unclear whether the

District Court concluded that litigation in New Jersey was vexatious and oppressive to

Onischenko out of all proportion to TTDC’s convenience, or whether, all things being

equal, Russia was a better forum. The former is a basis for dismissal; the latter is not.

The District Court concluded its private interest analysis by stating that “I think I have

given a sufficient recitation to show that there are no private factors and certainly no

interest of this forum factors that favor retaining jurisdiction in this forum.” The problem

is that dismissal is not appropriate just because the private and public factors do not favor

retaining jurisdiction. See Lony I, 886 F.2d at 635.

       On remand, we hope the District Court should carefully consider and address the

private and public interest factors. We make no forecast whether or not a proper analysis

                                                12
will lead to the conclusion that the private and public interest factors weigh strongly

against litigation in New Jersey.

IV. Conclusion

       The District Court abused its discretion by failing to address properly the Supreme

Court’s and this Court’s forum non conveniens jurisprudence. In view of TTDC’s

opposition to the alternate forum, the District Court did not sufficiently discuss or

determine its adequacy. Nor did the District Court address the issue of the proper level of

deference to be afforded TTDC’s forum selection. We are also concerned that the

District Court may not have applied the proper standard in weighing the private and

public interest factors. Therefore, we will vacate the order of dismissal and remand this

case for reconsideration based on the record as it currently stands.

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