United States District Court,

S.D. New York.

FEDERAL INSURANCE COMPANY, as subrogee of TRansammonia, Inc., as Charterer, Petitioner,

v.

BERGESEN D.Y. ASA OSLO, as agents of the Norwegian Flag LPG/C “Hugo N” and its owner, General Gas CArrier Corporation, Limited, Respondents.

General Gas Carrier Corporation, Limited, Cross–Petitioner,

v.

Federal Insurance Company, Cross–Respondent.

 

No. 12 Civ. 3851(PAE).

Sept. 7, 2012.

 

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge.

*1 Claimant Federal Insurance Company (“Federal”), as subrogee of Transammonia, Inc., filed this petition to confirm an arbitration award pursuant to § 9 of the Federal Arbitration Act, 9 U.S.C. § 9 (“FAA” or the “Act”). Respondent Bergesen d.y. ASA, Oslo (“Bergesen”), as agent for the vessel LPG/C Hugo N and its owner, General Gas Carrier Corp., Ltd. (“GenGas”) has opposed that petition and cross-moved to vacate the arbitration award. For the reasons that follow, the petition to confirm the arbitration award is granted, and GenGas’s cross-petition to vacate is denied.

 

I. BackgroundFN1

 

FN1. The Court’s account of the underlying facts of this case is drawn from the parties’ pleadings and their submissions in support of and in opposition to the instant motion, including Federal’s Verified Petition to Confirm the Award (“Pet’r’s Br.”), GenGas’s Answer to Petition to Confirm Award and Cross–Petition to Vacate Award (“Resp’t’s Br.”) and the April 11, 2012 decision and final award of the arbitral panel, Pet’r’s Petition Ex. E (“Award”). All material facts are undisputed by the parties. Except where specifically referenced, no further citation to these sources will be made.

 

The underlying claim relates to a shipment of refrigerated anhydrous ammonia aboard a tanker ship, the Hugo N, from Saudi Arabia to the United States. The shipment was made pursuant to a purchase agreement for the sale of the ammonia from Transammonia, a Delaware corporation, to non-party PCS Sales (USA), Inc. (“PCS”). Pursuant to a June 13, 2003 Charter Party, Transammonia contracted with Bergesen, a Norwegian corporation, as agent for the owner of the Hugo N, to transport the ammonia aboard the Hugo N to Savannah, Georgia, and Geismar, Louisiana (“Charter Party”). Federal, an insurance company registered in New York and incorporated under the laws of Indiana, was Transammonia’s primary liability insurer. GenGas, a Panamanian corporation, owned and operated Bergesen.

 

The Charter Party included a clause providing for arbitration of disputes arising out of the agreement. Paragraph 24 provided:

 

Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration in the City of New York … pursuant to the laws relating to arbitration there in force, before a board of three persons, consisting of one arbitrator to be appointed by the Owner [Bergesen], one by the Charterer [Transammonia], and one by the two so chosen. The decision of any two of the three on any point or points shall be final…. Until such time as the arbitrators finally close the hearings either party shall have the right by written notice served on the arbitrators and on an officer of the other party to specify further disputes or differences under this Charter for hearing and determination. Awards made in pursuance to this clause may include costs, including a reasonable allowance for attorney’s fees, and judgment may be entered upon any award made hereunder in any Court having jurisdiction in the premises.

 

Pet’r’s Br. Ex. D ¶ 24.

 

In October 2003, following delivery of the ammonia, PCS notified Transammonia that the shipment of ammonia had been contaminated, and had resulted in damage to PCS’s equipment. Transammonia thereafter notified its primary liability insurer, Federal, of the alleged loss. On February 11, 2005, Transammonia notified the tanker ship’s owner and managing agent, Bergesen, of the alleged contamination. The parties subsequently engaged in limited settlement negotiations.

 

On July 12, 2005, Transammonia made a demand against Bergesen and GenGas for arbitration under paragraph 24 of the Charter Party. In accordance with the Charter Party, Transammonia designated its party-appointed arbitrator in the demand for arbitration; Bergesen provided its party-appointed arbitrator in the response.

 

*2 In April 2007, Transammonia and its insurers, including Federal, reached a settlement with PCS. Transammonia’s insurers agreed to pay $1.1 million to PCS to settle its claims related to the contaminated ammonia, of which Federal paid $1 million.

 

In the spring of 2009, Federal revived the arbitration as subrogee of Transammonia, seeking reimbursement, through indemnification, of its $1 million payment to PCS. Federal and Bergesen then appointed the third arbitrator in accordance with paragraph 24 of the Charter Party.

 

In its submissions to the arbitral panel, Federal alleged that GenGas had breached its contract with Transammonia when it delivered two contaminated cargos of ammonia on the Hugo N, which severely damaged PCS’s physical plant. In its submissions to the arbitral panel, it urged the arbitrators to focus on evidence that Transammonia (and, as subrogee, Federal) was entitled to indemnification from GenGas for the $1 million settlement payment paid by Transammonia to settle PCS’s claim. See Award at 33. GenGas argued that, in fact, PCS was unable to point to sufficient evidence showing that the ammonia transported on the Hugo N was the cause of the alleged damages to its plant. See id. at 34. It asserted that Federal failed to produce evidence showing that anything about the Hugo N had given rise to the presence of contaminants, that the Hugo N had actually delivered contaminated ammonia, that the delivered ammonia contained substances not usually found in industrial grade ammonia, or that the substances found in the ammonia were in amounts different than are regularly found in such ammonia. GenGas also argued that, as a matter of law, Federal’s claim was precluded on the ground that Federal was not a lawful subrogee of Transammonia and thus not entitled to indemnification by GenGas.

 

On October 24 and 25, 2011, after full briefing of the issues in dispute, the parties appeared before the panel for an arbitration hearing.

 

On April 11, 2012, the panel majority issued its final award. In a 59–page opinion, it ruled that Transammonia is entitled to recover from GenGas $1 million, plus interest at a rate of 4.2807%, on its claim for the breach of the Charter Party. The decision in support of the award reflected the position of two of the three arbitrators; the third arbitrator dissented from the judgment, and issued a dissenting opinion. The arbitrators calculated the final award to be $1,213,212.33. The arbitrators unanimously held that Transammonia was entitled to $42,250 in legal fees and costs.

 

On May 15, 2012, Federal brought this petition pursuant to the FAA to confirm the award issued by the arbitrators (Dkt.2). On July 6, 2012, GenGas submitted its opposition to the petition, and its cross-petition to vacate the Award (Dkt.4). On July 20, 2012, Federal submitted its opposition to GenGas’s cross-petition (Dkt.6). On July 30, 2012, GenGas submitted its reply in further support of its cross-petition (Dkt.8)

 

II. Legal Standard

*3 In their petition, Federal seeks confirmation of the arbitral award. In the cross-petition, GenGas seeks to vacate the award, claiming that it manifestly disregards controlling law.

 

Chapter 2 of the FAA, 9 U.S.C. §§ 201–08, which codifies the New York Convention, governs arbitration agreements that arise from a “legal relationship, whether contractual or commercial, which is considered commercial,” except when those relationships are “entirely between citizens of the United States” and are otherwise domestic in nature. 9 U.S.C. § 202. Applying § 202, the Second Circuit has held that where an agreement to arbitrate “involve[s] parties domiciled or having their principal place of business outside [the United States],” that agreement is governed by the Convention. See Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15, 19 (2d Cir.1997) (internal citation omitted). Because respondents Bergesen and GenGas are incorporated outside the United States, and the present dispute arises out of agreements to which they are parties, the New York Convention governs the petition before the Court.

 

However, where, as here, arbitration was conducted in the United States, chapter 2 and the Convention “allow a court in the country under whose law the arbitration was conducted to apply domestic arbitral law, in this case the FAA, to a motion to set aside or vacate the arbitral award.” Yusuf Ahmed Alghanim & Sons, 126 F.3d at 21; see also Halcot Navigation L.P. v. Stolt—Nielsen Transp. Grp., BV, 491 F.Supp.2d 413, 420 (S.D.N.Y.2007) (when arbitration is governed by the New York Convention, “this Court can also look to domestic arbitration law, specifically the FAA”).

 

The FAA, in turn, provides a “streamlined” process for a party seeking a “judicial decree confirming an award, an order vacating it, or an order modifying or correcting it.” Hall St. Assocs., L .L.C. v. Mattel, Inc., 552 U.S. 576, 582, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008). Section 9 provides:

 

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected….

 

9 U.S.C. § 9.

 

“It is well established that courts must grant an [arbitrator’s] decision great deference.” Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir.2003). The confirmation of an arbitration award generally is “a summary proceeding that merely makes what is already a final arbitration award a judgment of the court.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir.2006) (quoting Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir.1984)) (internal quotation marks omitted). “Only a barely colorable justification for the outcome reached by the arbitrators” is required to confirm an award on a timely petition to confirm. Id. (internal quotation marks omitted).

 

*4 Accordingly, review of an arbitral award by a district court “is ‘severely limited’ so as not unduly to frustrate the goals of arbitration, namely to settle disputes efficiently and avoid long and expensive litigation.” Salzman v. KCD Fin., Inc., No. 11–cv–5865, 2011 WL 6778499, at *2 (S.D.N.Y. Dec.21, 2011) (quoting Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir.1997)). “A party moving to vacate an arbitration award has the burden of proof, and the showing required to avoid summary confirmation of an arbitration award is high.” D.H. Blair & Co., 462 F.3d at 110.

 

The FAA sets out the limited circumstances under which a district court may vacate an arbitral award. These include, inter alia, “where the arbitrators were guilty of misconduct … in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced,” and “where the arbitrators exceeded their powers .” 9 U.S.C. § 10(a)(3), (4). The Second Circuit has held that under § 10 of the FAA, “an arbitrator’s award may also be vacated ‘where the arbitrator’s award is in manifest disregard of the terms of the [parties’ relevant] agreement.’ “ Schwartz v. Merrill Lynch & Co., 665 F.3d 444, 452 (2d Cir.2011) (quoting Yusuf Ahmed, 126 F.3d at 23). However, “[t]he party moving the court to vacate an arbitral award ‘must clear a high hurdle,’ and bears a ‘heavy burden of showing that the award falls within a very narrow set of circumstances delineated by statute and case law.’ “ Sea Shipping Inc. v. Half Moon Shipping LLC, 848 F.Supp.2d 448, 454 (S.D.N.Y.2012) (quoting Stolt—Nielsen S.A. v. AnimalFeeds Int’l Corp., ––– U.S. ––––, ––––, 130 S.Ct. 1758, 1767, 176 L.Ed.2d 605 (2010); Wallace v. Buttar, 378 F.3d 182, 189 (2d Cir.2004)).

 

III. Discussion

GenGas argues that the majority of the arbitral panel acted in manifest disregard of the law as to each of the three alternative grounds on which it based its ruling. See Resp’t’s Br. 18–24. GenGas does not allege that it is entitled to vacatur under any of the statutory grounds under the FAA.

 

Arbitral awards should be vacated under the manifest disregard standard “only in those exceedingly rare instances where some egregious impropriety on the part of the arbitrator is apparent.” T. Co. Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir.2010) (citation omitted). To satisfy this standard, there must be “a showing that the arbitrators knew of the relevant [legal] principle, appreciated that this principle controlled the outcome of the disputed issue, and nonetheless willfully flouted the governing law by refusing to apply it.” Stolt—Nielsen S.A., 130 S.Ct. at 1768 (internal quotation marks omitted).

 

Such a review is thus “highly deferential to the arbitrators,” in large part because a more flexible standard of review would “frustrate the basic purpose of arbitration, which is to dispose of disputes quickly and avoid the expense and delay of extended court proceedings.” STMicroelectronics, N.V. v. Credit Suisse Secs. (USA) LLC, 648 F.3d 68, 78 (2d Cir.2011) (citation omitted). Pursuant to this standard, an arbitral award should not be subject to vacatur “because of a simple error in law or a failure by the arbitrators to understand or apply it.” Id. A court should only vacate an award “when a party clearly demonstrates that the panel intentionally defied the law.” Id. (emphasis added).

 

*5 Here, the issues before the arbitrators were (1) whether Bergesen breached the Charter Party, and (2) whether Federal could recover from GenGas for the amount paid to PCS to settle its claim. The majority decision found in favor of Federal on both claims.

 

GenGas seeks to vacate the arbitral award, claiming that it manifestly disregards controlling law because (1) the Carriage of Goods by Sea Act, 42 U.S.C. §§ 30701 et seq. (“COGSA”) does not provide a claim for indemnity for a third party’s tort damages; and (2) there was insufficient evidence in the record to support a finding that Federal established a prima facie claim of loss or damage under COGSA.

 

As to the first point, GenGas has not demonstrated that the arbitrators’ application of COGSA manifestly disregarded controlling law. Although the arbitral panel did not reach a unanimous decision with respect to whether Federal has adduced sufficient evidence to establish a prima facie case of a loss or damage under COGSA, it was unanimous in applying COGSA to both issues in dispute. The dissenting opinion made no reference whatsoever to any erroneous application of law by the majority; it took issue only with the majority’s assessment of the record evidence. Additionally, GenGas’s assertion that the arbitral panel intentionally and deliberately failed to follow governing legal authority in In re M/V DG Harmony, 436 F.Supp.2d 660 (S.D.N.Y.2006), is unpersuasive; the majority in fact considered In re M/V DG Harmony, and determined that it did not apply to the underlying facts because PCS’s claim did sound exclusively in tort. PCS’s claim, which catalyzed Transammonia’s settlement payment, arose also out of the Charter Party and the Bill of Lading. Accordingly, there is no indication that the arbitrators “intentionally defied” or “willfully flouted the governing law.”   STMicroelectronics, 648 F.3d at 78; Stolt -Nielsen, 130 S.Ct. at 1768.

 

GenGas’s alternative argument—that it is entitled to vacatur because the majority erred in finding sufficient evidence to support a prima facie case—fails to reveal a manifest disregard of the law. GenGas argues that the majority erred in finding that Federal sufficiently established a prima facie case for loss or damage under COGSA, i.e., that Federal had shown both that (1) the cargo was delivered in good order and condition to the ocean carrier’s custody, and (2) the cargo was discharged in a damaged condition, and that GenGas failed to rebut this prima facie case with contrary evidence. But, this claim does not establish manifest disregard of the law. Properly construed, GenGas contends that the arbitrators in the majority disregarded facts or misapplied the evidence. Disregard of facts or evidence is not a basis for vacatur. See Stolt—Nielsen S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85, 91 (2d Cir.2008), rev’d on other grounds, ––– U.S. ––––, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) (“We do not, however, ‘recognize manifest disregard of the evidence as proper ground for vacating an arbitrator’s award.’ ”) (quoting Wallace, 378 F.3d at 193).

 

*6 Even if the Court found that this argument could be properly be considered under the manifest disregard standard, it would fail. In reaching its decisions, the arbitral panel considered the submissions of the parties, reports submitted by four experts (Bobby Latham and Steven Savage in support of Federal’s position; David Jones and David Werdung in support of GenGas’s position), two consecutive days of expert testimony, and the testimony of a fact witness with firsthand knowledge of the damage at the PCS plant. See id. at 11–24. The 59–page majority opinion was uncommonly detailed, and also well-reasoned, weighing the evidence presented by the witnesses as against the governing law. The dissenting opinion, which accepts the governing legal standard, merely disagrees, in good faith, with the majority’s assessment of the weight of the evidence. Such a difference of opinion does not establish manifest disregard of the law.

 

In sum, GenGas has not come close to demonstrating that the decision and award by the majority of the arbitration panel should be vacated under the manifest disregard standard. Petitioners have met their burden of demonstrating that there is no genuine issue of material fact precluding summary judgment as to all portions of the Award. The arbitrators’ decision provides significantly more analysis than “a barely colorable justification for the outcome reached.”   D.H. Blair & Co., 462 F.3d at 110. Accordingly, GenGas’s petition to vacate the award must be denied.

 

CONCLUSION

For the reasons stated herein, the petition to confirm the arbitration award is granted, and the cross-petition to vacate the award is denied. The petitioner’s motion to strike is dismissed as moot. Petitioner is directed to submit to the Court a proposed order of judgment by September 21,2012.

 

The Clerk of Court is directed to terminate the motion at docket number 11.

SO ORDERED.

United States District Court,

C.D. California.

NIPPONKOA INSURANCE COMPANY, LTD.

v.

CEVA LOGISTICS U.S. INC. et. al.

 

No. CV 12–5801–CAS (AGRx).

Sept. 10, 2012.

 

Daryl Parker, David Maloof, for Plaintiffs.

 

Katherine Nichols, for Defendants.

 

Proceedings: PLAINTIFF’S MOTION TO AMEND COMPLAINT (Docket # 59, filed July 30, 2012)

 

DEFENDANTS’ MOTION TO DISMISS FOR FORUM NON CONVENIENS (Docket # 54, filed July 19, 2012)

CHRISTINA A. SNYDER, Judge.

*1 Catherine Jeang, Deputy Clerk.

 

Laura Elias, Court Reporter / Recorder.

 

I. INTRODUCTION

Plaintiff filed this case in December 2011 in the United States District Court for the Southern District of New York, and filed an amended complaint on March 23, 2012 pursuant to a stipulation by the parties. Plaintiff’s amended complaint alleges four claims for relief: (1) breach of contract, (2) breach of contract to procure insurance, (3) breach of bailment obligations, and (4) negligence. The case was transferred to this Court on July 2, 2012.

 

Defendants moved to dismiss this case on grounds of forum non conveniens on July 17, 2012. Plaintiff filed a motion to amend its first amended complaint on July 30, 2012, and filed an opposition to defendant’s motion to dismiss the case on July 31, 2012. Defendants filed a reply to plaintiff’s opposition on August 20, 2012, and filed a response to plaintiff’s motion to amend its complaint on August 6, 2012, stating that they did not oppose the motion to amend. The Court held a hearing on September 10, 2012. After considering the parties’ arguments, the Court finds and concludes as follows.

 

II. BACKGROUND

Plaintiff is a Japanese corporation that provides Toshiba insurance against loss and damage to cargo. First Amended Complaint (“FAC”) ¶¶ 2, 19. Since April 2003, Toshiba American Information Systems (“TAIS”) has contracted with defendant CEVA for door-to-door delivery of TAIS’ products. FAC ¶ 8; Lowe Decl. ¶ 3. The transportation agreement (“Transportation Agreement”) that governed the relationship between TAIS and CEVA contains, among other things, the following jurisdiction and governing law clause:

 

This Agreement shall be governed by and interpreted in accordance with the laws of the State of California, excluding California’s conflict of law provisions that direct application of another jurisdiction’s laws. The parties expressly consent to the jurisdiction of the federal and state courts located in Orange County, California in the event of any litigation relating to this agreement.

 

Lowe Decl. Ex. 1 at 9. This agreement was expanded to include ocean shipments from the Far East to Mexico. Lowe Decl. ¶ 5. Additionally, plaintiff alleges that this agreement requires CEVA to procure cargo insurance payable directly to TAIS and its underwriter. FAC ¶ 9c.

 

The instant lawsuit arises out of a shipment of TAIS’ laptop computers that CEVA delivered from Shanghai to Mexico City. FAC ¶ 11. The computers were shipped from Shanghai to Manzillo, Mexico by vessel, and from Manzillo to Mexico City by train. FAC ¶ 12. After the computers arrived in Mexico City by train, they were shipped to their final destination by truck. Id. Unfortunately, the computers were stolen en route and were never delivered. Id.

 

According to defendants, plaintiff hired a surveyor, RTS International S de RL de CV (“RTS”), to investigate the theft. RTS issued a report stating that although the laptop shipment had a security escort, the shipment was hijacked at gunpoint by unknown assailants. Nichols Decl. Ex. 1 at 7. The report also states that Mexican police investigated the hijacking, but notes that “in Mexico, third parties are not allowed to verify or request information about events where they are not the affected parties.” Id. at 7o8.

 

III. LEGAL STANDARD

 

A. LEAVE TO AMEND

 

*2 As a preliminary matter, the Court must decide whether Federal Rule of Civil Procedure 15(a) or 16(b) applies. Generally, a court grants a motion for leave to amend pleadings pursuant to the permissive standard of Rule 15(a). Martinez v. Newport Beach City, 125 F.3d 777, 785 (9th Cir.1997). However, once the district court enters a scheduling order establishing a deadline for amending pleadings, Rule 16(b) applies.   Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir.2000). This is because once the scheduling order is in place, the court must modify the scheduling order to permit an amendment. W. Schwarzer, A. Tashima & M. Wagstaffe, Federal Civil Procedure Before Trial (2006) § 8:405.1 (citing Johnson v. Mammoth Recreations, Inc., 975 F.2d at 609). Since no scheduling order has been set by the Court, Rule 15 applies.

 

Rule 15 provides that after a responsive pleading has been filed, “a party may amend its pleading only with the opposing party’s written consent or the court’s leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a).

 

Where leave to amend is required, the decision whether to grant leave to amend “is entrusted to the sound discretion of the trial court.” Jordan v. County of Los Angeles, 669 F.2d 1311, 1324 (9th Cir.1982), vacated on other grounds, 459 U.S. 810 (1982). “Five factors are taken into account to assess the propriety of a motion for leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint.” Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir.2004) (citing Nunes v. Ashcroft, 348 F.3d 815, 818 (9th Cir.2003)). “Some courts have stressed prejudice to the opposing party as the key factor.” Texaco v. Ponsoldt, 939 F.2d 794, 798 (9th Cir.1991). However, “[u]ndue delay is a valid reason for denying leave to amend.” Id. (internal quotation marks and citation omitted); but see Bowles v. Reade, 198 F.3d 752, 758 (9th Cir.1999) (“Undue delay by itself, however, is insufficient to justify denying a motion to amend.”). Further, “the liberality of Rule 15(a) does not mean that amendment will be allowed regardless of the diligence of the moving party. Where the party seeking amendment knows or should know of the facts upon which the proposed amendment is based but fails to include them in the original complaint, the motion to amend may be denied.” Jordan, 669 F.3d at 1324. “Late amendments to assert new theories are not reviewed favorably when the facts and the theory have been known to the party seeking amendment since the inception of the cause of action.” Kaplan, 49 F.3d at 1370 (internal quotation marks and citation omitted). Delay can contribute to a finding of prejudice, for “expense, delay, and wear and tear on individuals and companies count toward prejudice.” Id. (internal quotation marks and citation omitted).

 

B. FORUM NON CONVENIENS

*3 This Court has discretion to decline to exercise jurisdiction in a case where litigation in a foreign forum would be more convenient for the parties. See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (1947). The Supreme Court has characterized the forum non conveniens doctrine as “a supervening venue provision, permitting displacement of the ordinary rules of venue when, in light of certain conditions, the trial court thinks that jurisdiction ought to be declined.” Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 429 (2007).

 

“The forum non conveniens determination is committed to the sound discretion of the trial court.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981). A defendant invoking forum non conveniens ordinarily bears a heavy burden in opposing the plaintiff’s chosen forum. “A party moving to dismiss based on forum non conveniens bears the burden of showing (1) that there is an adequate alternative forum, and (2) that the balance of private and public interest factors favors dismissal.” Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1118 (9th Cir.2002) (citing Lueck v. Sundstrand Corp., 236 F.3d 1137, 1142–43 (9th Cir.2001)). “The foreign court’s jurisdiction over the case and competency to decide the legal questions involved will also be considered.”   Leetsch v. Freedman, 260 F.3d 1100, 1103 (9th Cir .2001). “The plaintiff’s choice of forum will not be disturbed unless the ‘private interest’ and ‘public interest’ factors strongly favor trial in the foreign country.” Id. When the plaintiff’s choice is not its home forum, however, the presumption in the plaintiff’s favor “applies with less force,” for the assumption that the chosen forum is appropriate is in such cases “less reasonable.” Piper Aircraft Co., 454 U.S., at 255–256.

 

The Ninth Circuit has recognized that “the standard to be applied to a motion for dismissal on the ground of forum non conveniens is whether … defendants have made a clear showing of facts which … establish such oppression and vexation of a defendant as to be out of proportion to plaintiff’s convenience, which may be shown to be slight or nonexistent.” Id. (quoting Cheng v. Boeing Co., 708 F.2d 1406, 1410 (9th Cir.1983)) (internal brackets omitted). Nevertheless, “[fJorum non conveniens is ‘an exceptional tool to be employed sparingly, not a … doctrine that compels plaintiffs to choose the optimal forum for their claim.’ “ Dole at 1118 (quoting Ravelo Monegro v. Rosa, 211 F.3d 509, 514 (9th Cir.2000)).

 

IV. ANALYSIS

 

A. PLAINTIFF’S MOTION FOR LEAVE TO AMEND SHOULD BE GRANTED

 

Plaintiff seeks to amend its complaint to dismiss claims for breach of bailment and negligence, leaving only its claims for breach of contract and breach of contract to procure insurance. Since defendants will not suffer prejudice from plaintiff dismissing these claims and because defendants do not oppose the motion, the Court grants plaintiff leave to amend its complaint.

 

B. DEFENDANTS’ MOTION TO DISMISS FOR FORUM NON CONVENIENS SHOULD BE DENIED BECAUSE MEXICO IS NOT AN ADEQUATE ALTERNATIVE FORUM AND PLAINTIFF IS POTENTIALLY TIME–BARRED UNDER MEXICAN LAW

*4 To meet its burden of showing that Mexico is an adequate forum, defendant points to other decisions that have found that Mexico to be an adequate alternative forum. See, e.g., In re Ford Motor Co., 591 F.3d 406, 412 (5th Cir.2009) (“We have held in numerous cases that Mexico is an available forum for tort suits against a defendant that is willing to submit to jurisdiction there.”). In response, plaintiff argues that Mexico is not an adequate forum because the claims may be time-barred in Mexico, and a Mexican court would decline jurisdiction over this case.

 

1. Mexico is Not an Adequate Alternative Forum Because the Unrebutted Testimony of Plaintiff’s Expert Opines that Mexican Courts would Decline Jurisdiction over this Case

Plaintiff relies on its expert, Arturo Arista, an attorney, for the conclusion that a Mexican court would decline jurisdiction over this case. Arista is a partner in the law firm Garza Tello & Asociados, a Mexican law firm that practices transportation and insurance law, and has specialized in transportation litigation in Mexican courts for eighteen years. Ptf.’s Ex. 3, Arista Decl., ¶¶ 1–2. According to Arista, “if the transportation agreement … is applicable, a Mexican Court would reject jurisdiction over the case.” Id. at ¶ 6. Arista sets out two reasons why a Mexican court would deny jurisdiction.

 

First, Arista states that a Mexican court could reject jurisdiction where there is an express agreement as to jurisdiction. According to Arista, because the parties have agreed, as is set forth in clause 16 of the Transportation Agreement, that “[t]he parties expressly consent to the jurisdiction of the federal and state courts located in Orange County, California in the event of any litigation relating to this Agreement,” under Articles 1090 FN1, 1092 FN2, and 1093 FN3 of the Mexican Commercial Code, such agreement would normally deprive Mexican courts of jurisdiction. Id ¶ 7. Arista notes that this conclusion is not certain, however, because the Transportation Agreement does not contain a clear renouncement or waiver of jurisdiction in Mexico, and under Mexican case law this fact could lead a court to conclude that the Transportation Agreement does not meet Article 1093’s requirements for express agreements on jurisdiction.

 

FN1. “Article 1090. All suits/complaints must be filed before the competent judge.” Arista Decl. ¶ 7.

 

FN2. “Article 1092. The competent judge will be that agreed between the parties, whether expressly or tacitly.” Arista Decl. ¶ 7.

 

FN3. “Article 1093. There is an express submission to jurisdiction when the parties renounce clearly and categorically to the jurisdiction that could correspond to them by matter of law and, for the purposes of litigation, they consent to submit to the jurisdiction of the courts of their domicile, of the place where either of the obligations must be fulfilled or the courts of the place were the object in matter could be located.” Arista Decl. ¶ 7.

 

Second, Arista states that a Mexican court would reject jurisdiction even if it found there was no express agreement. According to Arista, Articles 1104 FN4, 1105 FN5, and 1106 FN6 of the Mexican Commercial Code apply when there is no express agreement regarding jurisdiction. Id. Mr. Arista concludes that a Mexican court would reject jurisdiction based on Article 1104(I). Id. ¶ 7b.

 

FN4. “Article 1104. Unless otherwise provided in article 1093, notwithstanding thc nature of the commercial proceedings, the following shall be preferred over any other judge:

 

I. The judge located in the place that was designated by the debtor as the place to be judicially claimed to pay.

 

II. The place agreed in the contract for the fulfillment of the obligation.” Arista Decl. ¶ 7.

 

FN5. “Article 1105. If there was no express agreement as per article 1093 above, the competent judge will be that located in the domicile of the defendant. notwithstanding the nature of the legal action that is exercised.” Arista Decl. ¶ 7.

 

FN6. “Article 1106. If the defendant has several domiciles, the competent judge will be that chosen by the plaintiff.” Arista Decl. ¶ 7.

 

In response, defendants claim that Arista only concluded that Mexican courts may decline jurisdiction, and in fact concedes that a Mexican court could take jurisdiction over the case because “the place of the fulfillment of the agreement” was Mexico. This is an inaccurate characterization of Arista’s testimony. Arista unequivocally concludes “it is my opinion that a Mexican Court would be obliged to dismiss a case relating to the Transportation Agreement since other jurisdictions are preferred over Mexico as per the Mexican procedural commercial provisions.” Ptf.’s Ex. 3, Arista Decl., ¶ 7. Additionally, while Arista recognizes that Article 1104 paragraph II of the Mexican Commercial Code provides that in some cases the preferred jurisdiction for hearing a case is “the place of fulfillment of the agreement,” he concludes that this rule would not apply to this case because “the prior rules exclude Mexican courts from jurisdiction to hear this case.” Id. ¶ 7(c).

 

*5 Accordingly, plaintiff’s expert testimony that Mexican courts would decline jurisdiction over this case is unrebutted.FN7 Although defendants cite other cases where courts have found Mexico to be an adequate forum, courts “make the determination of adequacy on a case by case basis, with the party moving for dismissal bearing the burden of proof.” Leetsch v. Freedman, 260 F.3d at 1103. Here, the defendant has not rebutted evidence that Mexican courts would not take jurisdiction over this case. Defendants’ motion to dismiss for forum non conveniens is therefore denied. See Gutierrez v. Advanced Medical Optics, Inc., 640 F.3d 1025, 1031 (9th Cir.2011) (finding that it would be an abuse of discretion to dismiss a case for forum non conveniens if Mexican courts declined to take jurisdiction over plaintiffs’ case through no fault of the plaintiffs).

 

FN7. Though defendants state in their briefing that they would submit to the jurisdictions of Mexican courts, defendants do not offer evidence that this fact alone would allow a Mexican court to take jurisdiction over the case.

 

2. Dismissal is Inappropriate Because Plaintiff Could Face Time–Bar Defenses in Mexico that Would Not Apply in California.

Plaintiff also argues that a newly filed suit in Mexico could be time-barred. Specifically, plaintiff argues that defendants may assert that plaintiff’s claims are time barred by reason of a nine month time-to-sue clause set forth in defendants’ bill of lading. Although plaintiff disputes that this claimed statutory bar would apply because the ocean bill of lading operated as a receipt and not a contract, plaintiff notes that since the shipment arrived in Mexico in April 2011, there is a possibility that defendants would assert this defense in Mexico.

 

Defendant does not address this argument in its reply, and has not given the Court any assurance that it would not pursue a defense based on statute of limitations if this action were dismissed and re-filed in Mexico. “The danger that the statute of limitations might serve to bar an action is one of the primary reasons for the limitation on the court’s discretion with respect to the application of the doctrine of forum non conveniens.” Carijano v. Occidental Petroleum Corp., 643 F.3d 1216, 1235 (9th Cir.2011). The Ninth Circuit has held that it is an abuse of discretion to dismiss a case on the basis of forum non conveniens without requiring the defendant to waive statute of limitations defenses that could not be asserted in the transferor forum. Id. Accordingly, defendant’s failure to waive time bar defenses that cannot be asserted in California provides another basis to deny its motion to dismiss on the grounds of forum non conveniens.FN8

 

FN8. Since the Court finds that defendant has failed to meet its burden of showing that Mexico is an adequate, alternative forum in this case, there is no need to consider whether the seven private factors and five public factors weigh in favor of dismissal. See, e.g., Piper Aircraft v. Reyno, 454 U.S. 235, 254 fn. 22 (“At the outset of any forum non conveniens inquiry, the court must determine whether there exists an alternative forum.”). In any event, defendant has failed to make a showing that these factors weigh in favor of dismissal.

 

V. CONCLUSION

Plaintiff’s motion to amend the first amended complaint is hereby GRANTED. Defendant’s motion to dismiss the case on the grounds of forum non conveniens is hereby DENIED.

 

IT IS SO ORDERED.