Supreme Court of Appeals of

West Virginia.

 

Jennifer L. CARUSO, Plaintiff Below, Appellant,

v.

Brian N. PEARCE and P & T Trucking, Incorporated, Defendants and Third-Party Plaintiffs Below, Appellees

v.

Quality Machine Co., Inc., Garry K. Knotts, and Joyce K. Hall, Third-Party Defendants Below, Appellees.

No. 34144.

 

Submitted Feb. 25, 2009.

Decided May 4, 2009.

 

Syllabus by the Court

 

1. “[B]efore a case may be dismissed under Rule 41(b), [a plaintiff may avoid dismissal by showing good cause for the delay in prosecuting the case.] … [T]he plaintiff bears the burden of going forward with evidence as to good cause for not dismissing the action; if the plaintiff does come forward with good cause, the burden then shifts to the defendant to show substantial prejudice to it in allowing the case to proceed; if the defendant does show substantial prejudice, then the burden of production shifts to the plaintiff to establish that the proffered good cause outweighs the prejudice to the defendant…. [T]he court, in weighing the evidence of good cause and substantial prejudice, should also consider (1) the actual amount of time involved in the dormancy of the case, (2) whether the plaintiff made any inquiries to his or her counsel about the status of the case during the period of dormancy, and (3) other relevant factors bearing on good cause and substantial prejudice….” Syllabus Point 3, in part, Dimon v. Mansy, 198 W.Va. 40, 479 S.E.2d 339 (1996).

 

2. Rule 16(b) of the West Virginia Rules of Civil Procedure [1998] requires active judicial management of a case, and mandates that a trial court “shall … enter a scheduling order” establishing time frames for the joinder of parties, the amendment of pleadings, the completion of discovery, the filing of dispositive motions, and generally guiding the parties toward a prompt, fair and cost-effective resolution of the case.

 

Appeal from the Circuit Court of Kanawha County, Honorable Irene C. Berger, Judge, Civil Action No. 04-C-2728.REVERSED AND REMANDED.

Frances C. Whiteman, Esq., Whiteman Burdette, PLLC, Fairmont, WV, for the Appellant.

 

George A. Halkias, Esq., Martin & Seibert, L.C., Charleston, WV, for Appellee Joyce K. Hall.

 

Stephen F. Gandee, Esq., Robinson & McElwee PLLC, Clarksburg, WV, for Appellees Brian M. Pearce and P & T Trucking, Incorporated.

 

Teresa A. Kleeh, Esq., Steptoe & Johnson, PLLC, Charleston, WV, for Appellees Quality Machine Co., Inc. and Gary K. Knotts.

 

KETCHUM, Justice.

 

In this appeal from the Circuit Court of Kanawha County, we are asked to examine an order wherein the circuit court dismissed a case pursuant to Rule 41(b) of the West Virginia Rules of Civil Procedure for lack of activity.

 

After carefully considering the record, the briefs and the arguments of the parties, we find that the circuit court abused its discretion in dismissing the case 54 1/2 weeks after the last activity in the case. As set forth below, we reverse the circuit court’s dismissal order.

 

I.

 

Facts and Background

 

The plaintiff-below and appellant, Jennifer L. Caruso, alleges that on November 8, 2002, she was injured in an automobile accident. On October 12, 2004-through her then-attorney, Terri Tichenor-Ms. Caruso filed a lawsuit against defendants-below and appellees Brian M. Pearce and P & T Trucking, Inc., alleging that it was the defendants’ negligence which caused her injuries.

 

Defendants Pearce and P & T Trucking filed a joint answer to the plaintiff’s complaint in November 2004, and filed a third-party complaint against third-party defendants Quality Machine Company, Inc., and Garry K. Knotts. Additionally, defendants Pearce and P & T Trucking served interrogatories upon the plaintiff. The plaintiff served her answers to the interrogatories on March 8, 2005.

 

After the plaintiff answered the written discovery filed and served by appellees Pearce and P & T Trucking, the various attorneys involved in the case-including plaintiff’s counsel, Ms. Tichenor-signed an agreed order (which was entered by the circuit court on July 25, 2005) which permitted the filing of a third-party complaint by Pearce and P & T Trucking adding as a third-party defendant appellee Joyce K. Hall; that third-party complaint was not filed until October 2005. Third-party defendants and appellees Quality Machine and Mr. Knotts then filed a cross-claim against Ms. Hall, who then filed her own cross-claim against Quality Machine and Mr. Knotts. In March 2006, the various appellees began sending discovery requests to other appellees-but not to the plaintiff-appellant-and the last response by an appellee to those discovery requests was filed in the record by the circuit clerk on July 13, 2006.

 

On July 31, 2007, the Circuit Clerk of Kanawha County served a notice upon all parties that the case would be dismissed pursuant to Rule 41(b) of the West Virginia Rules of Civil Procedure because “for more than one year there has been no order or proceeding” unless the plaintiff could establish good cause for the lack of activity.

 

The pertinent text of Rule 41(b) is set forth in the discussion in Section III, infra.

 

Following a hearing, by an order signed October 12, 2007, the circuit court dismissed the instant case finding that the plaintiff and her counsel had failed to show good cause for the lack of activity in the case.

 

The plaintiff, by a new attorney, now appeals the circuit court’s order.

 

II.

 

Standard of Review

 

We review a circuit court’s order dismissing a case for inactivity pursuant to Rule 41(b) under an abuse of discretion standard. We stated in Dimon v. Mansy, 198 W.Va. 40, 46, 479 S.E.2d 339, 345 (1996):

 

Traditionally, our scope of review, even where reinstatement [of an action which is dismissed for failure to prosecute] is timely sought, is limited. It is only where there is a clear showing of an abuse of discretion that reversal is proper.

 

“Only where we are left with a firm conviction that an error has been committed may we legitimately overturn a lower court’s discretionary ruling.” Covington v. Smith, 213 W.Va. 309, 322, 582 S.E.2d 756, 769 (2003).See also, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 377, 175 S.E.2d 452, 457 (1970) (“Where the law commits a determination to a trial judge and his discretion is exercised with judicial balance, the decision should not be overruled unless the reviewing court is actuated, not by a desire to reach a different result, but by a firm conviction that an abuse of discretion has been committed.”)

 

III.

 

Discussion

 

The West Virginia Rules of Civil Procedure were designed to secure just, speedy and inexpensive determinations in every action, for all parties to the action. See W.Va. R.Civ.Pro. Rule 1. The rules:

 

… establish procedures for the orderly process of civil cases as anticipated by W.Va. Const. Art. III, § 10. They operate in aid of jurisdiction and facilitate the public’s interest in just, speedy and inexpensive determinations. They vindicate constitutional rights by providing for the administration of justice without denial or delay as required by W.Va. Const. Art. III, § 17.

 

Arlan’s Dept. Store of Huntington, Inc. v. Conaty, 162 W.Va. 893, 897-98, 253 S.E.2d 522, 525 (1979).

 

An integral part of this just, speedy and inexpensive system is the establishment of time periods within which actions must be taken, if they are to be taken at all. Rule 41(b) of the West Virginia Rules of Civil Procedure provides that a circuit court may, in its discretion, dismiss a case when there has been a lack of activity in the case for more than one year. The rule states, in pertinent part:

 

Any court in which is pending an action wherein for more than one year there has been no order or proceeding, or wherein the plaintiff is delinquent in the payment of accrued court costs, may, in its discretion, order such action to be struck from its docket; and it shall thereby be discontinued. The court may direct that such order be published in such newspaper as the court may name. The court may, on motion, reinstate on its trial docket any action dismissed under this rule, and set aside any nonsuit that may be entered by reason of the nonappearance of the plaintiff, within three terms after entry of the order of dismissal or nonsuit; but an order of reinstatement shall not be entered until the accrued costs are paid.

 

Before a court may dismiss an action under Rule 41(b), notice and an opportunity to be heard must be given to all parties of record.

 

“It is well settled that a dismissal by a circuit court under Rule 41(b) for failure to prosecute operates as an adjudication on the merits and, unless reinstated by subsequent court order, such a dismissal is with prejudice.” Dimon v. Mansy, 198 W.Va. at 45, 479 S.E.2d at 344. This Court has held that “[b]ecause of the harshness of the sanction, a dismissal with prejudice should be considered appropriate only in flagrant cases.” Id. (Emphasis added). “[W]e recognize that dismissal based on procedural grounds is a severe sanction which runs counter to the general objective of disposing cases on the merit.” Id., 198 W .Va. at 45-46, 479 S.E.2d at 344-45.

 

After receiving written notice from a circuit clerk or a trial court that a case might be dismissed by the court for lack of activity under Rule 41(b), a plaintiff may avoid dismissal if the plaintiff shows “good cause” for the delay in prosecuting a suit, and the defendant fails to show “substantial prejudice” caused by the delay. This Court stated in Syllabus Point 3, in part, of Dimon v. Mansy, supra, that:

 

[T]he plaintiff bears the burden of going forward with evidence as to good cause for not dismissing the action; if the plaintiff does come forward with good cause, the burden then shifts to the defendant to show substantial prejudice to it in allowing the case to proceed; if the defendant does show substantial prejudice, then the burden of production shifts to the plaintiff to establish that the proffered good cause outweighs the prejudice to the defendant…. [T]he court, in weighing the evidence of good cause and substantial prejudice, should also consider (1) the actual amount of time involved in the dormancy of the case, (2) whether the plaintiff made any inquiries to his or her counsel about the status of the case during the period of dormancy, and (3) other relevant factors bearing on good cause and substantial prejudice.

 

In this case, the actual amount of time involved in the dormancy of the case is scarcely more than one year. The current counsel for the plaintiff concedes that the delay in prosecution was partly caused by the plaintiff’s former attorney’s failure to vigorously pursue the case. Yet, the plaintiff argues that the circuit court abused its discretion when it failed to find good cause for the delay in prosecuting her action. The crux of the plaintiff’s argument on appeal is that good cause for the delay can be, in part, traced to the circuit court’s failure to enter a scheduling order, as is required by Rule 16(b) of the Rules of Civil Procedure [1998].

 

Rule 16 of the West Virginia Rules of Civil Procedure“is the principal source of the powers and tools that … courts are to use to achieve the fundamental purpose articulated by Rule 1 of the … Rules of Civil Procedure: securing ‘the just, speedy, and inexpensive determination of every action and proceeding.’ “ James Wm. Moore, 3 Moore’s Federal Practice, 3d Edition§ 16.03 (2007). Rule 16 promotes a concept of active judicial management of cases, with the participation of the parties and their counsel, to “reach a swift, inexpensive and just resolution of litigation.” Id. The focus of Rule 16 is “to familiarize the litigants and the court with the issues actually involved in a lawsuit so that the parties can accurately appraise their cases,” “remove extraneous disputes from the case” and “expedite the determination of the merits, thereby saving time and expense for the litigants and easing the burden on the courts by facilitating the handling of congested dockets.” Charles Alan Wright, et al., Federal Practice and Procedure: Civil 2d § 1522.

 

To achieve these goals, Rule 16(b) mandates that a trial court “shall … enter a scheduling order” establishing time frames for the joinder of parties, the amendment of pleadings, the completion of discovery, the filing of dispositive motions, and generally guiding the parties toward a resolution of the case. See State ex rel. Pritt v. Vickers, 214 W.Va. 221, 226, 588 S.E .2d 210, 215 (2003) (“Under Rule 16(b), it is mandatory that trial courts enter a scheduling order that limits the time to join parties, amend pleadings, file and hear motions, and complete discovery.”); Elliott v. Schoolcraft, 213 W.Va. 69, 73 n. 5, 576 S.E.2d 796, 800 n. 5 (2002) (per curiam ) (noting that “the circuit court should have entered a scheduling order before considering the motions for summary judgment.”). Put succinctly, “[u]nder Rule 16(b) trial courts must enter a scheduling order[.]” Franklin D. Cleckley, et al., Litigation Handbook on West Virginia Rules of Civil Procedure § 16(b), at 438 (3d Edition, 2008).

 

Rule 16(b) states (with emphasis added):

 

(b) Scheduling and Planning. Except in categories of actions exempted by the Supreme Court of Appeals, the judge shall, after consulting with the attorneys for the parties and any unrepresented parties, by a scheduling conference, telephone, mail or other suitable means, enter a scheduling order that limits the time:

 

(1) To join other parties and to amend the pleadings;

 

(2) To file and hear motions; and

 

(3) To complete discovery.

 

The scheduling order also may include:

 

(4) The date or dates for conferences before trial, a final pretrial conference, and trial; and

 

(5) Any other matters appropriate in the circumstances of the case.

 

A schedule shall not be modified except by leave of the judge.

 

“The purpose of a scheduling order is to encourage careful pretrial management and to assist the trial court in gaining and maintaining control over the direction of the litigation.”Id. As one treatise states:

 

Rule 16 is explicitly intended to encourage active judicial management of the case development process and of trial in most civil actions. Judges must fix deadlines for completing the major pretrial tasks, and judges are encouraged to actively participate in designing case-specific plans for positioning litigation as efficiently as possible for disposition by settlement, motion, or trial.

 

James Wm. Moore, 3 Moore’s Federal Practice, 3d Edition § 16.02 (2007). While Rule 16(b) does not specify a time period in which a scheduling order must be entered, “trial courts should strive to have a scheduling order entered within one to two months after the defendant has filed an answer.”Franklin D. Cleckley, et al., Litigation Handbook on West Virginia Rules of Civil Procedure § 16(b), at 439 (3d. Edition, 2008).

 

It should be noted, however, that:

 

A failure by a judge to issue a scheduling order as required by Rule 16 generally is not deemed by appellate courts sufficient grounds, by itself, for any significant relief. Because it is probable that these failures are more often due to oversight than to deliberate decision … counsel should take the initiative to propose a scheduling order, or request a scheduling or case management conference, whenever a judge has failed to act in accordance with the Rule’s mandates.

 

James Wm. Moore, 3 Moore’s Federal Practice, 3d Edition§ 16.10(2007)

 

“By fixing time limits, the court’s scheduling order serves to stimulate litigants to narrow the areas of inquiry and advocacy to those they believe are truly relevant and material. Id. The absence of a Rule 16(b) scheduling order “can result in lack of focus, inefficiency, and delays in disposition.”James Wm. Moore, 3 Moore’s Federal Practice, 3d Edition § 16.10.

 

We therefore hold that Rule 16(b) requires active judicial management of a case, and mandates that a trial court “shall … enter a scheduling order” establishing time frames for the joinder of parties, the amendment of pleadings, the completion of discovery, the filing of dispositive motions, and generally guiding the parties toward a prompt, fair and cost-effective resolution of the case.

 

Notwithstanding that Rule 16(b) is mandatory, the circuit court in this case failed to enter a scheduling order. In the absence of a court-imposed scheduling order setting a deadline for the completion of discovery, the plaintiff asserts that it was easy for the attorneys to overlook the fact that the written discovery phase of the case had been completed. The plaintiff argues that this lawsuit is not a simple automobile accident case, but is replete with cross- and third-party claims, and numerous discovery requests among all of the parties. The former counsel for the plaintiff, Ms. Tichenor, asserted that she mistakenly believed that some discovery responses were still pending among the various appellees, and did not realize that written discovery had meandered to a conclusion in mid-July 2006. It was not until the circuit clerk served notice at the end of July 2007-saying the circuit court intended to dismiss the case for inactivity-that the plaintiff’s counsel attempted to move the case forward. The plaintiff contends that, had the circuit court entered a scheduling order, she would then have diligently abided by that order and moved her case toward trial.

 

After carefully reviewing the record presently before us, we are left firmly with the conviction that an error has been committed. We are not convinced that the inactivity in the instant case was so egregious as to necessitate the harsh sanction of dismissal. Because dismissing an action for failure to prosecute is such a harsh sanction, dismissal with prejudice is appropriate only in “flagrant” cases. Dimon v. Mansy, 198 W.Va. at 45, 479 S.E.2d at 344.

 

“[A] court’s authority to issue dismissals as a sanction must be limited by the circumstances and necessity giving rise to its exercise.”Dimon, 198 W.Va. at45, 479 S.E.2d at 344. “The sanction of dismissal with prejudice for the lack of prosecution is most severe to the private litigant and could, if used excessively, disserve the dignitary purpose for which it is invoked. It remains constant in our jurisprudence that the dignity of a court derives from the respect accorded its judgment.”Id.

 

In this case, although the plaintiff’s former counsel was less than diligent, the outright dismissal of the plaintiff’s action carries serious implications and-because the lack of activity was scarcely more than one year-was unwarranted. Further, we are persuaded that in the absence of a scheduling order entered by the circuit court, it is not beyond reason that a complex case such as this could easily be detoured from reaching a final resolution.

 

Although the appellees have now suggested that they would be prejudiced by the one-year delay, we cannot reasonably find that such prejudice is so great as to outweigh the harm the plaintiff would suffer if the dismissal of her case were to stand.

 

When dismissing a case under Rule 41(b), in order to preserve the integrity of the judicial process, Dimon v. Mansy, supra, makes clear that various interests must be weighed including the interest in judicial efficiency, the rights of plaintiffs to have their day in court, any prejudice that might be suffered by defendants, and the value of deciding cases on their merits. Considering all of these factors, including the absence of a mandatory scheduling order from the circuit court, this Court finds that, in this case, the plaintiff’s interest in moving forward with her claim outweighs concerns of judicial efficiency and any prejudice that the defendants and third-party defendants may have suffered. We therefore conclude that the circuit court abused its discretion in dismissing this civil action.

 

IV.

 

Conclusion

 

Accordingly, the circuit court’s October 12, 2007 order dismissing the plaintiff’s case for lack of activity is reversed, and the case is remanded for further proceedings.

 

Reversed and Remanded.

 

Chief Justice BENJAMIN disqualified.

Judge JOHN W. HATCHER, JR., sitting by temporary assignment.

Justice DAVIS and Justice McHUGH dissent and reserve the right to file dissenting opinions.

Justice WORKMAN concurs and reserves the right to file a concurring opinion.

DAVIS J., dissenting, joined by Justice McHUGH.

In this proceeding, the trial court dismissed the plaintiff’s case under Rule 41(b) of the West Virginia Rules of Civil Procedure. The majority opinion has reversed the trial court’s ruling because it found that the plaintiff had established good cause for not dismissing the case. For the reasons set out below, I dissent.

 

After the Plaintiff Filed the Complaint, She Did Nothing in the Case for Almost Three Years

 

The record in this case revealed that the plaintiff filed this action against the defendants on October 12, 2004. In November 2004 and October 2005, the defendants filed third-party complaints against third-party defendants. Subsequent to the filing of the third-party complaints, discovery took place in the case that involved only the third-party plaintiffs and the third-party defendants. The last circuit court discovery filing between the third-party plaintiffs and the third-party defendants occurred in July of 2006.

 

The record is clear in showing that between the date of the filing of the complaint, October 12, 2004, and the dates the third-party complaints were filed, November 22, 2004, and October 13, 2005, the plaintiff did not have any activity in the case.

 

The discovery between the third-party plaintiffs and the third-party defendants took place even though a scheduling order had not been entered by the trial court.

 

On July 31, 2007, the trial court issued a notice of dismissal of the plaintiff’s case under Rule 41(b). The trial court did this because, from the date that the plaintiff filed her action, October 12, 2004, to the date that the trial court issued its notice of dismissal, July 31, 2007, the plaintiff failed to take any affirmative action in the case despite the fact that the third-party litigants had vigorously conducted discovery against each other.

 

It has been correctly observed that

 

[t]here are four grounds for dismissal of a plaintiff’s action under Rule 41(b): (1) failure of the plaintiff to prosecute, (2) failure of the plaintiff to comply with the rules or any order of court, (3) inactivity for more than one year, and (4) the plaintiff is delinquent in the payment of accrued court costs.

 

Hoover v. Moran, 222 W. Va. 112, —- n. 11, 662 S.E.2d 711, 719-20 n. 11 (2008) (internal quotations and citation omitted). The trial court dismissed the action for (1) failure to prosecute and (2) inactivity for more than one year.The order dismissing the action held “that counsel failed to establish good cause as to why the case had not been prosecuted by the Plaintiff during its pendency and, specifically, failed to establish good cause why the case had not been prosecuted during the one year immediately preceding the filing of the Notice of Dismissal.”

 

This Court has recognized that,

 

[t]o some extent [,] “failure to prosecute” and “inactivity for more than one year” overlap. The distinction between the two grounds for dismissal lies in the fact that “failure to prosecute” is broader than “inactivity for more than one year.”While the former may include the conduct of the latter, the latter does not embrace all of the types of conduct that may come under the former.

 

Hoover v. Moran, 222 W. Va. 112, —- n11, 662 S.E.2d 711, 719-20 n. 11 (2008) (internal quotations and citation omitted). It has been further noted by federal courts that

 

[f]ailure to prosecute is not defined in Rule 41(b). It can evidence itself either in an action lying dormant with no significant activity to move it or in a pattern of dilatory tactics. The latter may consist, for example, of groundless motions, repeated requests for continuances or persistent late filings of court ordered papers. Such conduct may warrant dismissal after merely a matter of months, or may stretch out over a period of years.

 

Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 42-43 (2nd Cir.1982) (citations omitted).

 

The majority opinion erroneously focused exclusively upon the “inactivity for more than one year” basis for dismissal. To some extent, if this case merely involved the “inactivity for more than one year” ground for dismissal, I might have been inclined to agree with the resolution reached by the majority opinion. However, this case also concerned a failure to prosecute, which is a much broader ground for dismissing a case. The trial court’s order specifically found that “no discovery was initiated by the Plaintiff since the Complaint was filed in October 2004[.]” In other words, this is not a case where a plaintiff had begun discovery and subsequent thereto, neglected the case for over a year. Rather, the plaintiff in this case filed her complaint then simply did nothing while her case languished in the trial court for nearly three years.

 

To properly evaluate the trial court’s order, the majority opinion had to look at both grounds for dismissal under Rule 41(b). The “inactivity for more than one year” ground for dismissal was based upon the last filings by the third-party litigants. This basis for dismissal was lenient in that it allowed the plaintiff to bootstrap onto the activity that was taking place between the third-party litigants. However, under the “failure to prosecute” basis for dismissal, the trial court was in fact looking at all of the activity that had occurred in the case from the date the complaint was filed to the date the Rule 41(b) dismissal notice was issued. During this much broader time frame, the plaintiff did nothing in the case.

 

Justice Cleckley made clear in Dimon v. Mansy, 198 W. Va. 40, 479 S.E.2d 339 (1996), that, to prevent a Rule 41(b) dismissal, “the plaintiff bears the burden of going forward with evidence as to good cause for not dismissing the action; if the plaintiff does come forward with good cause, the burden then shifts to the defendant to show substantial prejudice to it in allowing the case to proceed[.]” Dimon, 198 W. Va. at 50, 479 S.E.2d at 349. In the instant case, the trial court found that the plaintiff had failed to establish “good cause” for failing to prosecute the case and for inactivity for more than one year. The majority opinion concluded that the absence of a scheduling order, which did not preclude the third-party litigants from vigorously engaging in discovery, constituted good cause for the inactivity for more than one year. However, this tortured result because the plaintiff also failed to prosecute her case after the complaint was filed, i .e., the plaintiff did nothing but file a complaint and thereafter sleep on her rights for almost three years. See Safouane v. Fleck, 226 Fed. Appx. 753 (9th Cir.2007) (Rule 41(b) dismissal, even though scheduling order was not entered, in case pending in district court for almost five years without being prosecuted); Bielinski v. Casual Corner Group, Inc., No. 99 Civ. 693(TPG), 2002 WL 2012622 (S.D.N.Y. Aug. 30, 2002) (same; case pending over three years). A longstanding legal maxim adhered to by this Court is that “[t]he law aids those who are diligent, not those who sleep upon their rights.” Dimon, 198 W. Va. at 48, 479 S.E.2d at 347 (internal quotations and citation omitted).“We have explained this principle of law to mean that when attorneys are careless, and [do] not attend to their interests in court …, they must suffer the consequences of their folly.” Law v. Monongahela Power Co., 210 W. Va. 549, 561, 558 S.E.2d 349, 361 (2001) (Davis, J., dissenting) (internal quotations and citation omitted).

 

See note 5, infra.

 

The majority opinion’s reliance on the lack of a scheduling order as an impediment to the plaintiff’s ability to engage in discovery is misplaced. Parties are not prohibited from initiating discovery without a scheduling order.The West Virginia Rules of Civil Procedure expressly authorize specific discovery, after the commencement of an action, without the intervention of a trial court. It is provided under Rule 30(a) that, “[a]fter the commencement of the action, any party may take the testimony of any person, including a party, by deposition upon oral examination.”Under Rule 31(a), “[a] party may take the testimony of any person, including a party, by deposition upon written questions without leave of court[.]” Rule 33(a) states that, “[w]ithout leave of court …, any party may serve upon any other party written interrogatories[.]” Finally, “[a] plaintiff may, without leave of court, serve a Rule 34(a) discovery request (production of documents) upon any defendant together with service of the summons and complaint or after service of process.”Franklin D. Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., Litigation Handbook on West Virginia Rules of Civil Procedure § 34(b), at 833 (3d ed.2008).See also Orduna v. Texas Comm’n on Alcohol & Drug Abuse, 220 Fed. Appx. 249, 250 (5th Cir.2007) (affirming Rule 41(b) dismissal where, after filing complaint, plaintiff took no action in case for four and a half years).

 

I wholeheartedly agree with the majority opinion’s recognition that a trial court has a mandatory duty to enter a scheduling order. Indeed, I have previously commented that:

 

[u]nder Rule 16(b), it is mandatory that trial courts enter a scheduling order that limits the time to join parties, amend pleadings, file and hear motions, and complete discovery. See Elliott v. Schoolcraft, 213 W. Va. 69, 73 n. 5, 576 S.E.2d 796, 800 n. 5 (2002) (per curiam) (reversing summary judgment in part because the trial court did not enter a scheduling order in the case).

 

State ex rel. Pritt v. Vickers, 214 W. Va. 221, 226, 588 S.E .2d 210, 215 (2003) (footnote omitted). However, insofar as trial judges have heavy caseloads, it is understandable that a trial judge might, on a rare occasion, fail to timely enter a scheduling order in a case. When such an oversight occurs, a plaintiff should not allow almost three years to pass without alerting the trial judge that a scheduling order has not been entered.

 

This fact is obvious because, as earlier noted, the third-party litigants in this case actively engaged in discovery in the absence of a scheduling order.

 

In view of the freely available discovery tools under our rules, it is simply wrong for the majority opinion to disturb the trial court’s Rule 41(b) dismissal order. The plaintiff in this case had almost three years to invoke our discovery rules, and she failed to do so. This conduct justified the trial court’s dismissal for failure to prosecute. “There could hardly be a clearer case of failure to prosecute.” M & H Cosmetics, Inc. v. Alfin Fragrances, Inc., 102 F.R.D. 265, 267 (E.D.N.Y.1984).See also Salmon v. City of Stuart, 194 F.2d 1004 (5th Cir.1952) (upholding Rule 41(b) dismissal upon finding that “following the filing of this … suit, no action was taken in it by the plaintiffs for one year and three months”).

 

In the final analysis, “Rule 41(b) protects the integrity of a court’s docket by giving courts discretion to dismiss actions that are not being actively pursued.”Cleckley, et al., Litigation Handbook § 41(b), at 934. The trial court adhered to the standards of Rule 41(b) and did not abuse its discretion in dismissing this case. The majority opinion’s “new and intolerable standard will make it impossible for … judges to control their dockets …, because litigants will be able to indefinitely … extend litigation by simply saying ‘I was busy doing something else.’ “ Plummer v. Workers Compensation Div., 209 W. Va. 710, 718, 551 S.E.2d 46, 54 (2001) (Davis, J., dissenting). “The standard [the majority opinion] adopts here encourages dilatory behavior rather than diligence[.]” Gaither v. City Hosp ., Inc., 199 W. Va. 706, 717, 487 S.E.2d 901, 912 (1997) (Maynard, J., dissenting). Consequently, my respect for the rule of law precludes me from joining the majority opinion.

 

In view of the foregoing, Justice McHugh and I respectfully dissent.

WORKMAN, J., concurring.

I concur with the majority that the Plaintiff’s inactivity in this case was not sufficiently lengthy or egregious to warrant dismissal. However, I cannot concur with the majority’s conclusion that the lower court was partly responsible for the delay in this case because it had not yet entered a scheduling order.

 

The most recent compilation of Circuit Court County filings demonstrates that in calendar year 2008 there were 6,354 cases filed in the Kanawha County Circuit Court. Of that total, the circuit judge handling this matter had 917 of the cases filed assigned to her. West Virginia Rule of Civil Procedure 16 provides that “the judge shall, after consulting with the attorneys for the parties and any unrepresented parties, by a scheduling conference, telephone, mail or other suitable means, enter a scheduling order to limits the time [.]”Id.The current rule does not place any time limit for entering a scheduling order upon the circuit court, nor does it place the burden of setting a scheduling conference solely upon the circuit court. Our law, however, does place the burden upon the plaintiff to prosecute his or case.W. Va. R. Civ. P. 41(b). There is no evidence in this case that either party moved the Court either to set a scheduling conference or enter a scheduling order.

 

Consequently, given our current Rules of Civil Procedure, I believe that the majority opinion unfairly transfers part of the responsibility for the delay here from the lawyer to the court. For that reason, I write separately so as to make clear that the delays here were the fault of counsel, not the lower court.

 

W.Va.,2009.

Caruso v. Pearce

— S.E.2d —-, 2009 WL 1361937 (W.Va.)

 

END OF DOCUMENT

United States District Court,

E.D. Pennsylvania.

CARL SCHROETER GMBH & KO., KG., et al., Plaintiffs,

v.

CRAWFORD & COMPANY, Defendant.

Civil Action No. 09-946.

 

May 19, 2009.

 

MEMORANDUM

 

SCHILLER, District Judge.

 

Plaintiffs are German corporations that sued Defendant Crawford & Company (“Crawford”), an American insurance company, in the Philadelphia Court of Common Pleas. They assert negligence and breach of implied contract claims based upon Defendant’s allegedly faulty inspection of apple shipments in Venezuela.Defendant removed the Complaint to this Court on March 5, 2008.

 

Plaintiffs are Carl Schroeter GmbH & KO, KG; Allianz Global Corporate & Specialty GmbH; Victoria Versicherung, AG; Zurich Versicherung AG; Helvetia Versicherungen; AXA Versicherungs AG; SIGNAL IDUNA Allgemeine VAG; UNIQA Versicherungen AG; WUBA VAG; Gothaer Allgemeine VAG; Deutsche Rhederei Versicherungs-AG; F. Laeisz Versicherung AG; Gaede & Glauerdt Assecuradeur GmbH & Co.; Kravag-Logistic VersicherungsAktiengesellshcaft; DBV Winterthur Versicherung AG; NIKOLAI Assecuranz GmbH; Mund & Fester; and Schwarzmeer und Ostsee Versicherungs-Aktiengesellschaft SOVAG.

 

Currently before the Court is Defendant’s motion to dismiss for failure to join an indispensable party or, in the alternative, pursuant to the doctrine of forum non conveniens.Crawford asserts that its wholly-owned Venezuelan subsidiary, Crawford Venezuela Adjustadores de Perdidas CA (“Crawford Venezuela”) is an indispensable party to this case because Crawford Venezuela, not Crawford, conducted the inspections. Defendant also asserts that the doctrine of forum non conveniens mandates dismissal because Venezuela provides an adequate alternative forum for this dispute and the relevant interests weigh in favor of trial there. For the following reasons, unless Plaintiffs amend their Complaint to assert an alter-ego and/or agency theory of liability against Crawford, Plaintiffs’ Complaint shall be dismissed for failure to join Crawford Venezuela. Defendant’s motion to dismiss pursuant to the doctrine of forum non conveniens is denied.

 

I. BACKGROUND

 

Crawford is a Georgia corporation with its principal place of business in Atlanta, Georgia. (Compl. ¶ 23; Notice of Removal ¶ 6.) Crawford Venezuela, a Venezuelan company, is a wholly-owned subsidiary of Crawford & Company International, Inc., which, in turn, is a wholly-owned subsidiary of Crawford. (Powers Decl. ¶¶ 3-4; Def.’s Mot. to Dismiss [hereinafter Def.’s Mot.] Ex. D [Certifica].) The core dispute stems from two shipments of apples.

 

On or about September 1, 2005, Copefrut, S.A., shipped eight forty-foot containers of refrigerated apples to Valenfrut from Puerto de Valparaiso, Chile to Puerto de La Guaira, Venezuela. (Compl. ¶ 25; Def.’s Mot. Ex. B [Jan. 16, 2006 Final Report] at 2 .) When Valenfrut received the merchandise on September 29, 2005 in Venezuela, it reported that the cargo had been damaged. (See Def .’s Mot. Ex. B at 1.) Accordingly, Grudemann & Wilde Versicherungsmakler retained Crawford Venezuela, presumably on Plaintiffs’ behalf, to inspect the damaged cargo. (Id. at 3.) Crawford Venezuela contacted Valenfrut to schedule an inspection, which was conducted on October 3, 2005. (Id.)

 

Gian Luca De Leonardis, Crawford Venezuela’s Managing Director, and Ivan Jose Gil Plaza, a Loss Adjuster for Crawford Venzuela, prepared a final report containing their assessment of the loss. (Def.’s Mot. Ex. B.) The report, dated January 16, 2006, indicated that it was sent to Grudemann & Wilde Versicherungsmakler in Caracas, Venezuela. (Id. at 1.) The report concluded that the ship carrying the apples suffered a power supply failure that increased the temperature inside the containers holding the apples, causing them to rot. (Id. at 7.) The report assessed the damage at $168,256.05.(Id. at 8, 10.)

 

Copefrut made a second shipment of apples to Valenfrut on September 25, 2005. (Compl. ¶ 26; Def.’s Mot. at Ex. C [Mar. 2, 2006 Final Report].) As with the first shipment, the apples were reportedly damaged when they arrived in Venezuela. (Compl. ¶ 27; Def.’s Mot. Ex. C at 3.) Valenfrut contacted Crawford Venezuela to report the loss, and Crawford Venezuela inspected the merchandise. (Def.’s Mot. Ex. C at 3.) A March 20, 2006 final report prepared by De Leonardis and Plaza of Crawford Venezuela reported that, again, the loss was caused by a power supply failure on the vessel transporting the apples.(Id. at 8.) The report, which was sent to Grudemann & Wilde Versicherungsmakler in Caracas, assessed the total loss at $199,902.34. (Id. at 1, 8, 12.)

 

Plaintiffs, all of whom are identified by the Complaint as underwriters of the insurance policy covering Copefrut’s maritime fruit shipments, initiated this action to recover the monies they paid as a result of Crawford Venezuela’s allegedly negligent inspections.(Compl.¶¶ 1-22.) According to the Complaint, Crawford Venezuela acted negligently by: (1) failing to properly identify the apples; (2) treating each shipment as one consignment rather than surveying each container within the shipments; (3) failing to photograph the shipments; (4) condemning the shipments as total losses due to damage from a power failure in the vessels when no such failure occurred; (5) concluding that the apples were all in the same condition when temperature recordings suggested otherwise; (6) improperly advising Valenfrut as to the available insurance coverage; (7) failing to place the shipping line on notice of the loss or damage, so as to permit Plaintiffs to pursue a subrogation claim against the shipping line; (8) failing to timely notify the consignor of the loss; (9) failing to invite the steamship company to conduct a joint survey of the damage; and (10) failing to preserve Plaintiffs’ subrogation rights. (Id. ¶¶ 30, 39.)As a result of Crawford Venezuela’s alleged negligence, Plaintiffs were required to pay $370,647.78-the value of the total loss, per Crawford Venezuela’s reports, plus costs. (Id. ¶¶ 32, 41.)

 

Plaintiff Carl Schroeter GmbH & KO, KG is described as the “lead underwriter. (Compl.¶ 1.)

 

II. DISCUSSION

 

A. Failure to Join an Indispensable Party

 

Crawford asserts that Crawford Venezuela is both a necessary and indispensable party to this litigation because the Complaint is premised on Crawford Venezuela’s acts, but Crawford is not liable for its subsidiary’s actions. Thus, according to Crawford, this Court cannot afford Plaintiffs any relief in Crawford Venezuela’s absence, rendering Crawford Venezuela a necessary party. However, Crawford claims that Crawford Venezuela cannot be joined because this Court lacks personal jurisdiction over Crawford Venezuela and joinder would destroy diversity and, thus, dismissal is required.Plaintiffs respond that Crawford maybe held liable for its subsidiary’s actions based on an alter ego or agency theory. Since both theories necessitate factual inquiries, Plaintiffs assert that dismissal is inappropriate at this time and that discovery should be permitted on the relationship between Crawford and Crawford Venezuela.

 

Diversity jurisdiction does not exist over lawsuits between aliens on one side and aliens and citizens on the other. See Dresser Indus., Inc. v. Underwriters at Lloyd’s ofLondon, 106 F.3d 494, 498-99 (3d Cir.1997) (applying complete diversity rule to such cases “makes sense”); see also United Nimba Citizens Council v. Gayetay, Civ. A. No. 07-3389, 2007 WL 2892004, at(E.D.Pa. Oct. 2, 2007).

 

Federal Rule of Civil Procedure 19 governs when an absent party must be joined to a lawsuit. Rule 19(a)(1) requires an absentee to be joined, rendering him a “necessary” party, when:

 

(A) in that person’s absence, the court cannot accord complete relief among existing parties; or

 

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may:

 

(i) as a practical matter impair or impede the person’s ability to protect the interest; or

 

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

 

FED.R.CIV.P. 19(a)(1); see Gen. Refractories Co. v. FirstStateIns. Co., 500 F.3d 306, 312 (3d Cir.2007).

 

If joinder is not feasible because, for instance, the court lacks personal jurisdiction over the absent party or joinder would eviscerate subject matter jurisdiction, “the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.”FED. R. CIV. P. 19(b). A court should consider the following factors in making this assessment: (1) whether judgment rendered in the person’s absence “might prejudice [the absentee] or the existing parties;” (2) the extent to which the court could lessen any such prejudice; (3) “whether a judgment rendered in the person’s absence would be adequate;” and (4) “whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.”Id. A court making a Rule 19 determination may consider evidence outside the pleadings. Jurimex Kommerz Transit G.M.B.H. v. Case Corp., 201 F.R.D. 337,340 (D.Del.2001), af’d, 65 F. App’x 803 (3d Cir.2003).

 

In Jurimex Kommerz Transit G.M.B.H. v. Case Corp., Jurimex, a foreign corporation, asserted contract and tort claims against Case Corporation, alleging that Case failed to compensate Jurimex for acting as Case’s local liaison to facilitate the sale of agricultural equipment to a Kazakh buyer. Case moved to dismiss for failure to join Case’s foreign subsidiaries-Case France and Case Europe-because Jurimex primarily interacted with those subsidiaries with respect to the transaction forming the basis of the complaint and joinder would have destroyed diversity jurisdiction.

 

The district court concluded that Case had “submitted sufficient evidence to infer that most of Plaintiffs’ interactions and negotiations regarding the Transaction were with the Subsidiaries and not with Defendant.”Id. at 340.Accordingly, the absent subsidiaries were indispensable because “when a plaintiff seeks to hold a parent company liable for the conduct of the parent’s subsidiary, the subsidiary is a necessary and indispensable party under Rule 19.”Id. (citing Polanco v. H.B. Fuller Co., 941 F.Supp. 1512, 1520-22 (D.Minn.1996)). The court held that dismissal was appropriate irrespective of Jurimex’s argument that Case was vicariously liable for its subsidiaries’ actions under a principal-agent theory because Jurimex had failed to allege any principal-agent relationship in its complaint, which only referred to Case generically and did not acknowledge the subsidiaries at all. Id. at 341 n. 4; Jurimex, 65 F. App’x at 804. Jurimex subsequently moved to amend its complaint to plead agency and joint tortfeasor theories, however, the court denied the motion as futile. Jurimex, 65 F. App’x at 807.

 

On appeal, the Third Circuit affirmed the dismissal of Jurimex’s complaint, but reversed the denial of Jurimex’s motion to amend. The Third Circuit first concluded that the district court “properly applied a Rule 19 analysis and dismissed the complaint” and “properly denied discovery on the agency theory at that time because there was nothing in the complaint to which the theory could relate.” Id. at 804.However, the court reversed the denial of the motion to amend because the district court summarily rejected Jurimex’s allegations of Case’s control over its subsidiaries as conclusory. At the complaint stage of the litigation, Jurimex should have been permitted to amend its complaint because it was entitled to “bring a claim against Case as the parent corporation without joining the subsidiaries if Jurimex prove[d] there [was] an agency relationship between Case and its subsidiaries.” Id. at 808.

 

Jurimex controls the outcome of this case. Here, foreign plaintiffs are suing an American corporate defendant, seeking to hold that defendant liable for its foreign subsidiary’s conduct. Many courts have concluded that when a defendant is sued solely in connection with its subsidiary’s conduct, the subsidiary is a necessary and indispensable party. See, e.g., Freeman v. Nw. Acceptance Corp., 754 F.2d 553, 559 (5th Cir.1985) (joinder of subsidiary required when “[subsidiary] was more than an active participant in the conversion alleged by the [plaintiffs]; it was the primary participant”); Enza, Inc. v. We the People, Inc., 838 F.Supp. 975, 978 (E.D.Pa.1993) (entity was indispensable party when “all of the actions of fraud alleged in the complaint occurred on behalf of, or in the name of [the entity]”); Japan Petroleum Co. (Nigeria) v. Ashland Oil, Inc., 456 F.Supp. 831, 847 (D.Del.1978) (dismissing contract action for failure to join indispensable subsidiary after discovery revealed lack of agency relationship between subsidiary and defendant-parent).But see, e .g., Pyramid Sec. Ltd. v. IB Resolution, Inc., 924 F.2d 1114, 1121 (D.C.Cir.1991) (rejecting Freeman rule since it is not tied to the language of Rule 19 and runs contrary to the principle that agents are generally not indispensable parties to suits against principal); In re Rio Piedras Explosion Litig., 179 F.R.D. 59, 63 (D.P.R.1998) (Rule 19“would have no logical meaning ifjoint tortfeasors perceived as primary participants, as opposed to others, could, because of such participation, attain a Rule 19(a) status that the rule otherwise denies them.”).Jurimex, although unpublished, persuades this Court that the Third Circuit would adopt this approach. Plaintiffs’ desire to hold Crawford liable for the acts and omissions of Crawford Venezuela renders Crawford Venezuela a necessary party to this action. See, e. g., Jurimex, 201 F.R.D. at 340. Since Crawford, as a corporate grandparent, is not liable for its subsidiary’s actions absent an agency or alter ego relationship, this Court cannot award complete relief to Plaintiffs in Crawford Venezuela’s absence. See Japan Petroleum, 456 F.Supp. at 836 (“Since no judgment could be rendered against [subsidiary] in its absence, no relief could be granted to the plaintiff without the joinder of [subsidiary].”); see also United States v. Bestfoods, 524 U.S. 51, 61 (1998) (recognizing the “general principle of corporate law” that “a parent corporation … is not liable for the acts of its subsidiaries”).

 

However, Crawford Venezuela cannot be joined to this action because joinder would destroy diversity jurisdiction and this Court lacks personal jurisdiction over Crawford. (Def.’s Br. at 9; Pls.’ Br. at 2.) Therefore, the Court must consider the factors articulated in Rule 19(b). These factors favor dismissal. Proceeding without Crawford Venezuela would prejudice Plaintiffs because this Court would be incapable of awarding them any relief. Jurimex, 201 F.R.D. at 341 (noting, in dismissing for failure to join defendant’s foreign subsidiaries, that “a judgment in Plaintiffs’ favor maybe ‘hollow’ because the proper defendant was never joined”). Also, Crawford Venezuela would be prejudiced because it would be deprived of the ability to defend its conduct. See Polanco, 941 F.Supp. at 1523 (absent subsidiary “[would] be prejudiced without the opportunity to participate, and the Court cannot fashion any protection against this prejudice”); Gay v. Avco Fin. Servs., Inc., 769 F.Supp. 51, 57 (D.P.R.1991) (action against parent based on subsidiary’s conduct should not proceed without “some form of direct representation” for the subsidiaries). Furthermore, Plaintiffs could presumably proceed against Crawford Venezuela in Venezuela to recover for any losses caused by its negligence.

 

Although Crawford could be liable for Crawford Venezuela’s actions if Crawford Venezuela were, in fact, an alter ego or agent of Crawford, Plaintiffs have not alleged any such relationship in their Complaint. The Complaint makes no mention of any subsidiary relationship and asserts instead that Crawford does business as Crawford Venezuela, CA. (Compl.¶ 23.) Accordingly, nothing in the Complaint provides a basis for discovery on the existence of an alter-ego or agency relationship, rendering discovery inappropriate at this time. See Jurimex, 65 F. App’x at 804. However, the Court will permit Plaintiffs to amend their Complaint to assert such theories. Should Plaintiffs file an amended complaint, limited discovery would be required to determine whether this action could fairly proceed without Crawford Venezuela. See Ethypharm S.A. France v. Bentley Pharm., Inc., 388 F.Supp.2d 426, 432 (D.Del.2005) (denying motion to dismiss “without prejudice to renew if, as discovery proceeds, it becomes evident that defendant cannot be liable either as a joint tortfeasor or under the agency test”).

 

B. Forum Non Conveniens

 

The doctrine of forum non conveniens grants a district court discretion to dismiss an action when an alternative forum is available to hear the plaintiff’s claim and the plaintiff’s chosen forum is oppressive and vexatious to the defendant. “[A] district court must first determine whether an adequate alternative forum can entertain the case.” Windt v. Qwest Comm. Int’l, Inc., 529 F.3d 183, 189-90 (3d Cir.2008) (footnote omitted); see also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 n. 22 (1981).“If such a forum exists, the district court must then determine the appropriate amount of deference to be given the plaintiff’s choice of forum.” Windt, 529 F.3d at 190.

 

Next, the court must weigh the relevant public and private interests to determine whether, on balance, they indicate “oppression or vexation to the defendant out of all proportion to the plaintiff’s convenience” such that dismissal is warranted. Id. at 189-90 (footnote omitted). Relevant private interests include: (1) the relative ease of access to sources of proof; (2) availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining the attendance of willing witnesses; (3) the possibility of viewing the premises, if appropriate; and (4) all other practical problems that make trial of the case easy, expeditious and inexpensive. Id. at 189 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947)). The relevant public interests have been identified as: (1) administrative difficulties due to court congestion; (2) the local interest in having local controversies decided at home; (3) the interest in having the trial of a diversity case in a forum that is familiar with the state law that governs the case; (4) the avoidance of unnecessary problems in conflict of laws or in the application of foreign law; and (5) the unfairness of burdening citizens in an unrelated forum with jury duty. Id. (quoting Gilbert, 330 U .S. at 508-09). The defendant must establish that these “private and public interest factors weigh heavily on the side of dismissal” in order to prevail on a forum non conveniens motion. Lacey v. Cessna Aircraft Co., 862 F.2d 38, 44 (3d Cir.1988)(Lacey I ).

 

A defendant who files a motion to dismiss pursuant to the doctrine of forum non conveniens must “provide enough information to enable the district court to balance the parties’ interests.”Id. at 39.The defendant bears the burden of persuasion as to all elements of the forum non conveniens analysis. Id. at 43-44.“The Third Circuit has made clear that dismissal for forum non conveniens is the ‘exception rather than the rule.’ “ In re Corel Corp. Inc. Sec. Litig., 147 F.Supp.2d363, 365 (E.D.Pa.2001) (quoting Lony v. E.I. Du Pont deNemours & Co., 935 F.2d 604,609 (3d Cir.1991)(Lony II ) (additional internal quotations omitted)).

 

1. Existence of an adequate alternative forum

 

In general, the existence of an alternative forum is usually established “when the defendant is ‘amenable to process’ in the other jurisdiction.” Piper Aircraft, 454 U.S. at 255 n. 22 (quoting Gilbert, 330 U.S. at 506-07). If, however, the subject matter of the litigation is not cognizable in the alternative forum or the remedy is otherwise clearly unsatisfactory, that forum will be considered inadequate for purposes of forum non conveniens. Lacey v. Cessna Aircraft Co., 932 F.2d 170,180 (3d Cir.1991)(Lacey II ). Although a less favorable substantive law in the alternative forum should “not be given conclusive or even substantial weight in the forum non conveniens inquiry,” the alternative forum must at least have jurisdiction to hear the case for forum non conveniens to apply. Piper Aircraft, 454 U.S. at 241, 247. Indeed, “a district court cannot dismiss on forum non conveniens grounds if that decision would render a plaintiff unable to pursue his or her action elsewhere.” Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1225 (3d Cir.1995).

 

Crawford asserts that, because it is willing to submit to jurisdiction in Venezuela, Venezuela is an adequate alternative forum for purposes of the forum non conveniens inquiry. Crawford provides no additional information nor argument regarding Venezuela’s adequacy or availability as a potential forum for this dispute. Plaintiffs do not specifically address whether Venezuela is an adequate alternative forum, instead generally arguing that their choice of forum should be entitled to deference.

 

The Court, however, has become aware of the possibility that Venezuela would not have jurisdiction over this dispute in the wake of a forum non conveniens dismissal. As explained by one commentator:

 

Several countries in Latin America, including … Venezuela, have enacted legislation that extinguishes the jurisdiction of their courts with respect to any tort claim first filed against a foreign defendant in a foreign court but later dismissed on grounds of forum non conveniens. The precise effect of these blocking statutes is unclear, however, because they typically indicate that jurisdiction may be restored if the resident plaintiff dismisses his foreign lawsuit and files a new action in the national court ‘in a completely free and spontaneous way.’Some U.S. courts have concluded that language means an alternative forum is not available when the plaintiff was forced out of a U.S. court due to a forum non conveniens dismissal. Other courts have interpreted that language to mean the alternative forum is available, despite the plaintiff’s unwillingness to commence suit in that forum.

 

WALTER W. HEISER,Forum Non Conveniens and Retaliatory Legislation: The Impact on the Available Alternative Forum Inquiry and on the Desirability of Forum Non Conveniens as a Defense Tactic, 56 U. Kan. L.Rev. 609, 623 (2008) (footnotes omitted).

 

In In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, the court denied the defendants’ motions for forum non conveniens dismissal based on a finding that Venezuela was not an available forum for the parties’ dispute. 190 F.Supp.2d 1125 (S.D.Ind.2002), mandamus denied, 344 F.3d 648 (7th Cir.2003). In support of their motions, the defendants submitted affidavits of experts in Venezuelan law, who opined that the Venezuelan plaintiffs could file suit in Venezuela. The plaintiffs countered with their own expert affidavits, which indicated that Venezuelan courts would lack jurisdiction. The relevant Venezuelan statute permitted jurisdiction if, among other things, the parties submitted to the jurisdiction of Venezuelan courts. According to the plaintiffs’ expert, however, that provision was not satisfied because the plaintiffs’ initiation of suit in the United States indicated an unwillingness to submit to Venezuelan jurisdiction. Thus, the plaintiffs’ expert opined that the defendants’ willingness to submit to process in Venezuela was, on its own, incapable of establishing jurisdiction.

 

The court concluded that the plaintiffs’ experts’ opinions were more valid than those of the defendants’ expert, who had not published any articles on the subject of Venezuelan law, lacked expertise in the subject, and relied on an abrogated statute to support his contrary interpretations. Since the plaintiffs’ expert provided a reasonable interpretation of the relevant Venezuelan statute, “[e]nough of a question [was] raised … that Defendants, with their unreliable expert testimony, fail[ed] to meet their burden of persuasion that Venezuelan courts are an available alternative forum.” Id. at 1132 (footnote omitted).

 

In contrast, the court in Morales v. Ford Motor Co. expressly disagreed with the Bridgestone/Firestone court’s conclusion that Venezuela was an unavailable forum. Pursuant to forum non conveniens, the court dismissed the Venezuelan plaintiffs’ product liability action against an American car manufacturer, which stemmed from an accident in Venezuela. 313 F.Supp.2d 672 (S.D.Tex.2004). The Morales court considered an affidavit from the plaintiffs’ expert who opined that Venezuelan courts would not exercise jurisdiction because Plaintiffs initiation of litigation in the United States invalidated the possibility of jurisdiction pursuant to Venezuelan law. The court rejected this interpretation, however, because defendants were willing to submit to the jurisdiction of Venezuelan courts, and concluded that Venezuela was an available and adequate alternative forum. Id. at 676;see also Rivas v. Ford Motor Co., Civ. A. No. 02-676, 2004 WL 1247018 (M.D.Fla. Apr. 19, 2004) (holding that Venezuela was available forum because it would possess jurisdiction over negligence action).

 

Obviously, if Venezuelan law precludes jurisdiction over Plaintiffs’ claims, Venezuela is not an adequate alternative forum in which Plaintiffs could litigate this dispute. See Bhatnagar, 52 F.3d at 1225 (“[I]t is only when some other forum that would also have jurisdiction is better suited to adjudicate the controversy that a district court may exercise its discretion and dismiss the case.”); see alsoRAJEEV MUTTREJA, Note, How to Fix the Inconsistent Application of Forum Non Conveniens to Latin American Jurisdiction-And Why Consistency May not be Enough, 83 N .Y.U. L.Rev. 1607, 1609 (2008) (noting that [“forum non conveniens ] dismissal seems doctrinally impossible when the alternative forum has rules of preemptive jurisdiction that make it unavailable”). Unfortunately, in this case, the record is bereft of expert evidence on this issue. Furthermore, neither case discussed above arose from allegedly negligent inspection of merchandise in Venezuela, which may or may not alter the jurisdictional analysis.

 

The Court cannot determine the proper application of Venezuelan law to this case given the dearth of evidence or argument on the subject, and it is reluctant to assume that Venezuela would exercise jurisdiction over this dispute if Plaintiffs refiled there after a forum non conveniens dismissal. Crawford has failed to meet its burden on this prong of the analysis. See Lacey I, 862 F.2d at 44-45 (reversing forum non conveniens dismissal when defendant failed to provide any evidence in support of allegations, including allegation that British Columbia was an adequate forum); see also Lony v. E.I. Du Pont de Nemours & Co., 886 F.2d 628, 633 (3d Cir.1989)(Lony I ) (a defendant must provide at least “some evidence” that alternative forum is adequate); Tech. Dev. Co. v. Onischenko, 536 F.Supp.2d 511, 519-20 (D.N.J.2007) (defendant failed to submit sufficient proof to establish Russia was adequate forum). Thus, dismissal on forum non conveniens grounds is inappropriate because Crawford failed to meet its burden of establishing that Venezuela provides an adequate alternative forum. Even assuming, however, that Venezuela is an adequate alternative forum, forum non conveneins dismissal would still be inappropriate.

 

2. Deference afforded to Plaintiffs’ choice offorum

 

Although a foreign plaintiff’s choice of forum deserves less deference than an American citizen’s selection of his home forum, a foreign plaintiff’s selection is still entitled to some weight, especially when he or she is forced to choose between two inconvenient fora. Piper Aircraft, 454 U.S. at 255-56; Lacey I, 862 F.2d at 46 (“Piper’ s language about according less deference to a foreign plaintiff’s forum choice is not an invitation to accord a foreign plaintiff’s selection of an American forum no deference since dismissal for forum non conveniens is the exception rather than the rule.”) (internal quotations omitted).“Because the reason for giving a foreign plaintiff’s choice less deference is not xenophobia, but merely a reluctance to assume that the choice is a convenient one, that reluctance can readily be overcome by a strong showing of convenience.” Lony I, 886 F.2d at 635.

 

Although Plaintiffs are foreign, the Court recognizes that they were required to choose between two inconvenient fora-the United States and Venezuela. That the United States is just as inconvenient as Venezuela from Plaintiffs’ perspective mitigates against any concern that this forum was chosen to oppress or harass Crawford. To the contrary, Crawford is an American company that does business in Pennsylvania. Thus, this Court cannot conclude that trial in the United States would be wholly inconvenient. Furthermore, some evidence pertaining to Plaintiffs’ agency or alter-ego theory would likely be located in the United States, albeit most likely at Crawford’s headquarters in Georgia. However, that Plaintiffs picked a forum within the United States-Pennsylvania-with no apparent relation to the instant dispute and in which no source of proof is located decreases the amount of deference to which they are entitled. Compare Lony I, 886 F.2d at 634 (more deference warranted to foreign plaintiff’s choice of forum when several sources of proof located in forum and because forum was home to defendant’s headquarters).

 

Ultimately, since Plaintiffs were required to choose between the United States and Venezuela, neither of which are their home forum, and since Crawford is an American company doing business in Pennsylvania, the Court will afford Plaintiffs’ choice of forum considerable deference. See Delta Airlines, Inc. v. ChimetS.P.A., Civ. A. No. 07-2898,2008 WL 5336720, at(E.D.Pa. Dec. 19, 2008) (affording “considerable deference” to Italian plaintiff’s selection of Pennsylvania, even though defendant was Delaware corporation with a principal place of business in Georgia, because the United States was defendant’s home forum). Plaintiffs’ choice of forum will not be disturbed unless Crawford establishes, by a fair preponderance of evidence, that dismissal is warranted. See Lacey II, 932 F.2d at 179;see also Lony II, 935 F.2d at 609.

 

3. Private interests

 

The private factors do not outweigh Plaintiffs’ choice of forum. Access to proof and availability of witnesses are the key factors the Court must consider in this case, since a view of the premises is unnecessary and neither party has identified any practical problems that would impede trial here. “In examining the relative ease of access to sources of proof, and the availability of witnesses, the district court must scrutinize the substance of the dispute between the parties to evaluate what proof is required, and determine whether the pieces of evidence cited by the parties are critical, or even relevant to, the plaintiff’s cause of action and to any potential defenses to the action.” Lacey I, 862 F .2d at 46 (internal quotations omitted).

 

Neither party has identified with any particularity the key witnesses to be called at trial nor the key evidence needed to prove their claims or defenses. Crawford’s failure to file even an affidavit in support of its motion raises a question as to whether it could meet its burden of proof. Compare Piper Aircraft, 454 U .S. at 258 (affidavits describing evidentiary problems that would exist if trial were held in the United States satisfied burden of proof; the affidavit identified the witnesses defendant would call, many of whom were foreign) with Lacey I, 862 F.2d at 40 (reversing dismissal pursuant to forum non conveniens because defendants, who did not support their motion with any affidavits, did not submit sufficient information to inform the court’s analysis). The Court need not decide this issue, however, because Crawford’s arguments do not persuade this Court that the private and public factors mandate dismissal.

 

Crawford asserts that Plaintiffs’ case will depend on communications between their representatives (who are located in Germany) and representatives of Crawford Venezuela (who are located in Venezuela), and paperwork associated with the two inspections (which is located at Crawford Venezuela’s offices in Venezuela). Furthermore, Crawford asserts that the parties’ experts “will likely hail from Venezuela.” (Def.’s Br. at 14.) Plaintiffs counter that the private factors do not outweigh their choice of forum because all of the relevant documents are within Defendant’s control and the key witnesses will be the parties’ experts, who are not yet identified.

 

Notably, despite Crawford’s arguments that evidence is located in Venezuela, Crawford does not argue that the relevant documents and witnesses are outside its control or that it would have difficulty accessing these sources of proof. Since the relevant documents are located at Crawford Venezuela’s offices, Crawford, as the parent company, should easily be able to produce those documents. Indeed, Crawford Venezuela’s final reports of the two inspections, which will likely be key documents in this litigation, are already before the Court in connection with the instant motion, and, conveniently, are written in English. (Def.’s Mot. Ex. B & Ex. C.) Likewise, as the parent company of Crawford Venezuela, Crawford should be able to produce employees of Crawford Venezuela to testify at trial if necessary. Although transport of these witnesses to the United States would presumably impose additional costs on Crawford, there is no evidence that any such costs would be “oppressive” and thus, Plaintiffs’ choice of forum is not outweighed.

 

Also, as Plaintiffs point out, this case will be won or lost on the basis of expert testimony pertaining to the relevant standards of care and industry customs. There is no evidence that retaining an expert would impose “oppressive” costs, even if Defendant feels compelled to hire an expert located in Venezuela. Furthermore, documents pertaining to any agency or alter-ego relationship between Crawford and Crawford Venezuela and witnesses with knowledge of any such relationships may very well be located in the United States in addition to Venezuela.

 

Although many documents and witnesses relevant to this litigation are located in Venezuela, there is no indication that the parties will encounter problems accessing the evidence needed to establish their claims or defenses. The mere fact that this action is based on inspections that took place in Venezuela or that witnesses are located there is insufficient to establish oppression or vexatiousness for purposes of the relevant private interests. Ultimately, trial in the United States would not pose any access problems and, without a showing of inconvenience, the private interests provide no basis for disturbing Plaintiffs’ choice of forum. Compare Lacey II, 932 F.2d at 183-86 (defendant’s lack of control over key evidence was determinative in court’s conclusion that trial in British Columbia would not provide plaintiff sufficient access to evidence).

 

4. Public interests

 

Although the public interests favor dismissal, they do not outweigh the deference owed to Plaintiff’s forum selection. “In evaluating the public interest factors the district court must consider the locus of the alleged culpable conduct … and the connection of that conduct to plaintiff’s chosen forum.” Lacey I, 862 F.2d at 48 (internal quotations omitted). Pennsylvania’s only connection with this dispute is that Crawford does business in Pennsylvania. Pennsylvania has little interest in Crawford’s subsidiary’s dealings in Venezuela with German Plaintiffs. Furthermore, the conduct at issue-inspections of two shipments of damaged apples-occurred in Venezuela and has no connection to Pennsylvania. In contrast, Venezuela has a significant interest in ensuring that companies operating within its borders, such as Crawford Venezuela, operate appropriately when performing services. Venezuela thus has a more significant interest in this dispute than Pennsylvania.

 

However, the United States, as a country, has an interest in ensuring that American businesses are held responsible, when appropriate, for their conduct abroad. See Windt, 529 F.3d at 193 (recognizing that “the United States has an interest in redressing wrongful conduct engaged in by a U.S. corporation”). Thus, if an American entity was using a foreign subsidiary as an alter-ego or agent, as Plaintiffs contend in their response Crawford did here, the United States would have an interest in holding that company responsible for its agent’s actions in accordance with the law. Although Venezuela’s interest in this dispute is greater than the United States’s interest since the inspections were conducted by a Venezuelan company in Venezuela, the interest of this country in redressing harms caused by American corporations abroad cannot be ignored.

 

Whether the interest in having the trial of a diversity case in a forum that is familiar with the state law governing the case and the avoidance of unnecessary problems in the application of foreign law weigh in favor of dismissal depends on the law that applies to this case. Since this is a diversity case, the Court is required to apply the choice of law rules of the forum in which it sits, Pennsylvania. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Pennsylvania’s choice of law rules require a court to determine whether a conflict exists between Pennsylvania’s laws and the laws of the other forum, here, Venezuela. Hammersmith v. TIGIns. Co., 480 F.3d 220, 230 (3d Cir.2007). If a “true conflict” exists, meaning that both jurisdictions’ governmental interests would be impaired by the application of the others’ laws, the court must determine which jurisdiction has the most significant interest in the application of its law based on the jurisdictions’ contacts with the dispute and the governmental interests implicated by those contacts. Id. at 231.

 

Although this Court will not engage in a conflicts analysis at this time, if a conflict exists between Venezuelan and Pennsylvania law, Venezuela law would likely apply because this case concerns the conduct of a Venezuelan company in Venezuela and, as discussed above, Venezuela has more of an interest in this lawsuit than Pennsylvania. The possibility of applying foreign law to this case weighs in favor of dismissal.

 

Neither party has submitted any evidence regarding the “court congestion” public interest factor and the Court will not speculate on the level of congestion in Venezuelan courts. However, since this Court is fully capable of managing the instant lawsuit on its docket without delay, this factor weighs in favor of retaining jurisdiction.

 

Overall, the public factors favor dismissal, however, without any contribution from the private factors, they do not overcome the deference owed to Plaintiffs’ choice of forum. See Onischenko, 536 F.Supp.2d at 522 (denying motion to dismiss on forum non conveniens grounds even though Russian law might apply). Although the trial of a Venezuelan-based dispute in Pennsylvania would be slightly inconvenient, particularly if this Court were required to apply Venezuelan law, the Court cannot conclude that it would be sufficiently oppressive or vexatious to warrant dismissal. See Lacey II, 932 F.2d at 180 (“If, when added together, the relevant private and public interest factors are in equipoise, or even if they lean only slightly toward dismissal, the motion to dismiss must be denied.”).

 

III. CONCLUSION

 

The doctrine of forum non conveniens does not mandate dismissal of this action. However, since Crawford Venezuela’s acts and omissions form the basis of Plaintiffs’ claims and joinder is not feasible, Crawford Venezuela is an indispensable party to this lawsuit against its corporate grandparent. Plaintiffs should, however, be entitled to amend their Complaint to plead agency and alter-ego theories against Crawford. If Plaintiffs fail to amend their Complaint, this action will be dismissed for failure to join an indispensable party. An appropriate Order will be docketed with this Memorandum.

 

ORDER

 

AND NOW, this 19th day of May, 2009, upon consideration of Defendant’s Motion to Dismiss (Document No. 4) and Plaintiffs’ response thereto and for the reasons set forth in this Court’s May 19, 2009 Memorandum, it is hereby ORDERED that:

 

1. Plaintiffs may file an Amended Complaint by June 8, 2009.If Plaintiffs fail to file an Amended Complaint by that date, their Complaint shall be dismissed for failure to join an indispensable party.

 

2. Defendant’s motion to dismiss pursuant to the doctrine of forum non conveniens is DENIED.

 

E.D.Pa.,2009.

Carl Schroeter GmbH & KO., KG. v. Crawford & Co.

Slip Copy, 2009 WL 1408100 (E.D.Pa.)

 

END OF DOCUMENT