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REFRESCOS UNION, S.A. v. COCA COLA COMPANY

United States District Court, S.D. California


November 22, 2005.

REFRESCOS UNION, S.A., a Mexican Corporation, Plaintiff,
v.
THE COCA COLA COMPANY, a Delaware corporation; EMBOTELLADORA ARCA, S.A. DE C.V., a Mexican Corporation, and DOES 1 through 100, inclusive, Defendants.

The opinion of the court was delivered by: BARRY MOSKOWITZ, District Judge

ORDER GRANTING MOTION TO DISMISS FOR FORUM NON CONVENIENS AND IMPROPER VENUE
Defendant, the Coca Cola Company, Inc. ("Coca-Cola"), moves to dismiss for improper venue and forum non conveniens pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure. In the alternative, Defendant moves to dismiss Plaintiff's complaint for failure to state a claim under Rule 12(b)(6). Plaintiff Refrescos Union ("Refrescos") opposes. For the reasons explained below, the Court GRANTS Defendant's motion to dismiss for improper venue and forum non conveniens. The Court has considered and overrules Plaintiff's objections. No discovery is needed on this motion.

I. BACKGROUND

  Plaintiff Refrescos has had a 54-year relationship with Coca-Cola. Coca-Cola licenced to Refrescos the right to bottle and distribute Coca-Cola products in Mexico. Specifically, the companies made a contract authorizing Refrescos to distribute Coca-Cola products in "[t]he [C]ity of Meoqui and surrounding area, in the State of Chihuahua, Mexico." (Arrocha Declaration, Ex. A at 30.) Plaintiff's plant is located in Mexico. The license contract was written in Spanish and includes the following forum selection clause:

For the interpretation and application of this Contract, the parties subject themselves to the jurisdiction and venue of the courts of the Federal District, renouncing any other venue, present or future that could correspond to them by reason of their domiciles. (Id. at 27.)*fn1
  Pursuant to its own terms, the contract expired on January 1, 1997. (Id. at 18.) Following this date, the parties extended the contract several times while Refrescos attempted to sell its business. The last extension ended on January 31, 2004. (Id. at 72.) On March 3, 2004, Refrescos sued Coca-Cola in Mexico to have the license agreement reinstated through the year 2008, and to prevent the Mexican authorities from prosecuting it for using Coca-Cola's Mexican trademarks without permission. (Def's. Mot. to Dismiss at 3.) The Mexican litigation is now before a judge for final adjudication. (Id. at 4.)

  On January 31, 2005, Refrescos filed the instant action contending that Coca-Cola and co-defendant Embotelladora Arca ("Embottelladora"), a Mexican corporation, worked together to "coerce Plaintiff into selling its bottling operations to Defendant [Embotelladora] at an artificially low and unfair price." (PI's. Opp. to Def's. Mot. Dismiss at 3.) Refrescos alleges eight causes of action against Coca-Cola: (1) breach of the implied covenant of good faith and fair dealing; (2) fraud; (3) conspiracy to defraud; (4) violation of the California Business and Professions Code § 17200 — the Unfair Business Practices Act; (5) a civil RICO claim; (6) a claim for unjust enrichment; (7) negligent interference with prospective economic relations; and (8) intentional interference with prospective economic relations.

  II. DISCUSSION

  A. Forum Selection Clause Forum selection clauses "should be respected as the expressed intent of the parties." Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 280 (9th Cir. 1984) (citing Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-19 (1974)). They are prima facie valid and are enforceable unless the party challenging enforcement shows the clause is unreasonable under the circumstances. R.A. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996) (citing Bremen, 407 U.S. at 10). Argueta explained that:

A forum selection clause is unreasonable if (1) its incorporation into the contract was the result of fraud, undue influence, or overweening bargaining power; (2) the selected forum is so `gravely difficult and inconvenient' that the complaining party will "for all practical purposes be deprived of its day in court;" or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought. Id. (internal citations omitted).
This standard controls the enforceability of forum selection clauses in both international and domestic agreements. Id. at 324.

  Plaintiff advances several arguments in an attempt to overcome the strong presumption of validity of the forum selection clause. First, Plaintiff disputes the meaning of the contract's language, claiming that "Federal District," the English translation of "Distrito Federal," does not specify a specific venue. Presumably Plaintiff interprets the term to include the Federal District for the Southern District of California. The Court understands the language, in context, to refer to the Federal District of Mexico at Mexico City.

  Plaintiff also argues that the instant forum selection clause is unreasonable because Plaintiff is pursuing causes of action which are not available under Mexican law. Plaintiff submits that litigating the claims at issue in Mexico would be virtually impossible because its causes of action are not available there. However, Mexico has a general illicit behavior statute under which the subject matter of this dispute could be tried. See Abogados v. AT&T, Inc., 223 F.3d 932, 935-36 (9th Cir. 2000) (acknowledging that while Mexican law does not recognize a specific cause of action for tortious interference with economic relations, it instead regulates such conduct under its general illicit behavior statute). Plaintiff does not provide reasons why it could not pursue this action under that statute, nor does it present arguments as to the second or third prongs of the Argueta reasonableness test. Thus, this Court concludes that enforcement of the forum selection clause is not unreasonable.

  Additionally, Plaintiff argues that the clause does not apply to the claims at issue because they are not contract claims. One of Plaintiff's claims — the breach of the implied covenant of good faith and fair dealing — is, in fact, a contract claim. While Plaintiff's other claims are not contract claims, the forum selection clause nevertheless applies because these claims relate to the rights and duties in the contract. See, e.g., Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514 (9th Cir. 1988) (holding that the forum selection clause governed breach of implied covenant of good faith and fair dealing claims as well as various tort claims); Argueta, 87 F.3d at 324 (applying forum selection clause to RICO claims and tortious interference with prospective economic relations claims); Lifeco Servs. Corp. v. Superior Court, 222 Cal.App. 3d 331, 337 (1990) (holding that the forum selection clause governed an unjust enrichment claim); Net2Phone, Inc. v. Superior Court, 109 Cal.App. 4th 583, 590 (2003) (holding that the forum selection clause required dismissal of a § 17200 claim against a non-resident defendant). Therefore, the Court finds that the forum selection clause establishing Mexican courts as the proper and exclusive venue is enforceable.

  B. FORUM NON CONVENIENS

  Even if the forum selection clause were unenforceable or did not apply in whole or in part, this action should be dismissed on forum non conveniens grounds. The common law doctrine of forum non conveniens governs jurisdictional choice between the United States and a foreign country. See Cheng v. Boeing, 708 F.2d 1406, 1409 (9th Cir. 1983) (citing Paper Operations Consultants Int'l., Ltd. v. SS Hong Kong Amber, 513 F.2d 667, 670 (9th Cir. 1975)). "A district court has discretion to decline to exercise jurisdiction in a case where litigation in a foreign forum would be more convenient for the parties." Lueck v. Sunstrand, 236 F.3d 1137, 1142 (9th Cir. 2001) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (1947)). In a motion to dismiss for forum non conveniens, the defendant must prove (1) the existence of an adequate alternative forum, and (2) that the balance of certain private and public interest factors favors dismissal. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253-54 (1981); Gulf Oil, 330 U.S. at 511-12. "The defendant bears the burden of proving the existence of an adequate alternative forum." Cheng, 708 F.2d at 1411. The Supreme Court has held that when a plaintiff chooses the home forum for litigation, it is reasonable to assume that the forum is convenient; however, when a plaintiff is foreign, this assumption is much less reasonable. Id. (citing Piper Aircraft, 454 U.S. at 256). Therefore, "a foreign plaintiff's choice deserves less deference." Id.

  1. Adequate Alternative Forum

  "At the outset of any forum non conveniens inquiry, the court must determine whether there exists an alternative forum." Piper Aircraft, 454 U.S. at 254, n. 22. Here we know that an alternative forum exists because the parties are currently engaged in litigation in Mexico. (Def's. Mot. to Dismiss at 3.)

  Defendant next must show that the available alternative forum is adequate. For the alternative forum to be adequate, it must provide the plaintiff with some remedy for his wrong. Leuck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir. 2001). Dismissal is not appropriate "where the alternative forum does not permit litigation of the subject matter of the dispute . . . [such that] the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all." Piper Aircraft, 454 U.S. at 254 n. 22. Here, as discussed previously, Mexico provides a remedy: its general illicit behavior statute. See Abogados v. AT&T. Inc., 223 F.3d at 935-36.

  Nevertheless, Refrescos argues that Mexico is an inadequate forum because none of the causes of action it alleges against Coca-Cola in this suit are available there. In a forum non conveniens inquiry, the court need not ask whether the lawsuit could be brought in the alternative forum, but only whether the alternative forum offers a remedy for the plaintiff's losses. Leuck, 236 F.3d at 1143. Therefore, the fact that Refrescos cannot bring the same causes of action against Coca-Cola in Mexico does not preclude dismissal for forum non conveniens. See Piper Aircraft, 454 U.S. at 249-51 (holding that "the possibility of an unfavorable change in the law" is not given substantial weight in a forum non conveniens inquiry); Lockman Foundation v. Evangelical Alliance Mission, 930 F.2d 764, 768-69 (9th Cir. 1991) (stating that dismissal for forum non conveniens may be appropriate even if certain claims are not available to plaintiff in the alternative forum). Because Mexico permits the litigation of the subject matter of this dispute, this Court finds that it is an adequate alternative forum.

  2. Balancing of Private and Public Interests

  Ordinarily, the court should not disturb a plaintiff's choice of forum unless the private and public interest factors strongly favor trial in a foreign country. Lueck, 236 F.3d at 1145. However, the Ninth Circuit has held that the showing required for dismissal is reduced in a case involving a foreign plaintiff's choice of forum. Id. (citing Gemini Capital Group, Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1091 (9th Cir. 1998). "if the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court, dismissal is proper." Piper Aircraft, 454 U.S. at 255 n. 23.

  a. Private Interests

  The court considers the following private interest factors: (1) the residence of the parties and the witnesses; (2) the forum's convenience to the litigants; (3) access to physical evidence and other sources of proof; (4) whether unwilling witnesses can be compelled to testify; (5) the enforceability of the judgment; and (6) "all other practical problems that make trial of a case easy, expeditious, and inexpensive." Gulf Oil, 330 U.S. at 508.

  The Court finds that these factors weigh against maintenance of this action in this court. This case concerns private commercial activity inside Mexico. Refrescos is a Mexican corporation, which had an agreement with Coca-Cola under which it bottled and distributed Coca-Cola products in Mexico. Co-defendant Embotelladora is also a Mexican corporation. Defendant Coca-Cola is a Delaware corporation being sued for alleged wrongdoing occurring in Mexico. All of the relevant documents and witnesses are in Mexico and are subject to process there. Indeed, the original license contract and the extension contracts were written in Spanish, expressly governed by Mexican law, and executed in Mexico.

  Plaintiff's only argument against the relative inconvenience of this forum is that Plaintiff has elected to proceed in this forum, and has no chance of proceeding on any of its alleged claims in the courts of Mexico. Thus, to the extent that the causes of action alleged by Refrescos do not exist in Mexico, that forum is less convenient for plaintiff. However, this is not sufficient to show that an action should not be dismissed for forum non conveniens. See Piper Aircraft, 454 U.S. at 249-51. Because every other private interest factor points to Mexico as the more convenient forum, the Court holds that the private interest factors weigh in favor of the Mexican forum.

  b. Public Interests

  The public interest factors also weigh against maintenance of this action in this forum. The following public interest factors should be considered: (1) local interest of the lawsuit; (2) the court's familiarity with governing law; (3) burden on local courts and juries; (4) congestion in the court; and (5) the costs of resolving a dispute unrelated to this forum. Piper Aircraft, 454 U.S. at 259-61.

  Again, this case is wholly unrelated to this forum. Plaintiff is a Mexican corporation doing business in Mexico. Defendant Embotelladora is also Mexican corporation doing business in Mexico. Defendant Coca-Cola is a Delaware corporation which, for purposes of this action, is doing business in Mexico. All of the tortious activity alleged by Plaintiff is said to have taken place in Mexico. The contract creating the relationship between Coca-Cola and Refrescos creates rights and obligations between the companies in Mexico. The only remote tie to this forum is the fact that Defendant Coca-Cola's products are sold and distributed here. Coca-Cola's extensive and ubiquitous sales and distribution network, however, have nothing to do with the instant action. Finally, the citizens of California have no interest in this litigation, and thus should not be forced the bear the burden of it. See, e.g., Lueck, 236 F.3d at 1147 (finding that "because the local interest in this lawsuit is comparatively low . . . [local citizens] should not be forced to bear the burden" of the dispute).

  C. Defendant Embottelladora Arca

  In its complaint, Plaintiff alleges that Coca-Cola "schemed and conspired with [co]defendant Embottelladora Arca, S.A. de C.V. to coerce Plaintiff into selling its bottling operations to Embottelladora Arca, S.A. de C.V. at an artificially low and unfair price." Compl. at 7, ¶ 23. Plaintiff alleges five causes of action against Embottelladora: (1) conspiracy to defraud; (2) violation of the California Business and Professions Code § 17200; (3) a civil RICO claim; (4) unjust enrichment; and (5) intentional interference with contractual relations. Embottelladora has not yet been served. However, the Court finds that the forum non conveniens analysis applied to Defendant Coca-Cola and that the facts surrounding this action similarly apply to Defendant Embotelladora. Accordingly, the Court dismisses the action against Embottelladora without prejudice.

  III. CONCLUSION AND ORDER

  For these reasons, the Court GRANTS Defendant's motion to dismiss on the basis of forum non conveniens. The Court DISMISSES Plaintiff's action against all Defendants without prejudice.*fn2

  IT IS SO ORDERED.

20051122

© 1992-2005 VersusLaw Inc.



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