United States District Court, S.D. California
November 22, 2005.
REFRESCOS UNION, S.A., a Mexican Corporation, Plaintiff,
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
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.
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
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
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
This standard controls the enforceability of forum selection
clauses in both international and domestic agreements. Id. at
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
IT IS SO ORDERED.
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