Opinion
No. Civ. S-06-cv-1565 DFL KJM.
May 18, 2007
Memorandum of Opinion and Order
Plaintiff International Flavors Fragrances, Inc. ("International Flavors") alleges that it suffered substantial financial loss when it had to recall or destroy products that incorporated irradiated onion powder received from defendants Van Eeghen International B.V. ("Van Eeghen") and DeFrancesco Sons, Inc. ("DeFrancesco"). Van Eeghen bought the onion powder from DeFrancesco, the manufacturer, and sold it to International Flavors. After International Flavors brought suit, DeFrancesco filed a cross claim against Van Eeghen, seeking equitable contribution and indemnification. Van Eeghen now moves to dismiss both International Flavors and DeFrancesco's claims for lack of personal jurisdiction and on the grounds of forum non conveniens. For the reasons below, the court DENIES the motion.
I.
Beginning in the 1980s, Van Eeghen signed successive contracts with International Flavors to supply onion powder to International Flavors's wholly owned subsidiary in the Netherlands, International Flavors Nederland. Both Van Eeghen and International Flavors Nederland are Dutch companies with their principal place of business in the Netherlands. International Flavors is a New York corporation with its principal place of business in New York.
This case involves contracts that International Flavors entered into with Van Eeghen from 2003-2005. These contracts specified that Van Eeghen must buy the onion powder from DeFrancesco, a California corporation that produces various food products. International Flavors alleges that these contracts also stipulated that the onion powder could not be irradiated. When Van Eeghen needed to buy onion powder for International Flavors, it would place orders with DeFrancesco via email.
Irradiation is a technique to destroy bacteria and fungi in foodstuffs. Many of International Flavors's customers, however, are in Europe and Japan, both of which have stringent requirements regarding the irradiation of food ingredients.
Since 1994, Van Eeghen had purchased food products from DeFrancesco, aside from the onion powder it sold to International Flavors. In 1994, Van Eeghen also became the exclusive distributor for DeFrancesco in continental Europe and Scandinavia for dehydrated onion and garlic products. Van Eeghen's employees visited DeFrancesco in California every 12-18 months to discuss ongoing business and to tour the facilities and fields.
In March 2005, International Flavors discovered that a batch of onion powder it received from Van Eeghen was irradiated. DeFrancesco had blended irradiated onion powder with non-irradiated onion powder because poor crop conditions led to a shortage of the latter. DeFrancesco contends that Van Eeghen's agent, Fred Hoyng, approved the inclusion of irradiated onion powder during one of his visits to DeFrancesco's California facilities. International Flavors subsequently had to recall or destroy products containing the irradiated powder.
On January 23, 2006, International Flavors filed suit against Van Eeghen and DeFrancesco in federal court in New York. On July 2006, that court transferred the action to the Eastern District of California under 28 U.S.C. § 1306(a). On October 30, 2006, DeFrancesco filed a cross claim against Van Eeghen, seeking equitable contribution and indemnification.
II.
A. Personal Jurisdiction
International Flavors and DeFrancesco allege that this court has specific personal jurisdiction over Van Eeghen.
Specific personal jurisdiction exists when: "(1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed [itself] of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable." Bancroft Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Plaintiffs carry the burden to satisfy the first two factors. Schwarzenegger, 374 F.3d at 802. If plaintiffs succeed, defendants then shoulder the burden "to present a compelling case that the exercise of jurisdiction would not be reasonable." Id.
The jurisdictional analyses under state and federal law are the same in this case because California's long-arm jurisdictional statute is coextensive with federal due process requirements.Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).
1. Purposeful Availment
In light of Van Eeghen's alleged contacts and course of activity with DeFrancesco, Van Eeghen purposefully availed itself of the privilege of conducting business in California. Under its contract with International Flavors, Van Eeghen agreed to buy its onion powder from DeFrancesco. Moreover, after signing the agreements, Van Eeghen instigated the purchases of onion powder from DeFrancesco by reaching out to DeFrancesco via email to place orders. Further, Van Eeghen employees visited DeFrancesco in California every 12 to 18 months "to discuss ongoing business." (Van Eeghen Dec. ¶ 7.) From 2003 to 2005, Van Eeghen's employees made two such visits. (Van Eeghen Dec. II ¶ 2.) DeFrancesco claims that Van Eeghen toured and inspected its fields and facilities, and, at least on one occasion, the parties discussed matters concerning the production of onion powder for International Flavors. (DeFrancesco Dec. ¶¶ 6, 7.) Indeed, one of the central factual disputes concerns a conversation that occurred in California between agents of Van Eeghen and DeFrancesco. According to DeFrancesco, Van Eeghen's agent, Fred Hoyng, approved supplying International Flavors with irradiated onion powder during his visit. (DeFrancesco ¶ 7.) Although Van Eeghen takes a different view of what was discussed, it does not deny that Hoyng was present to view DeFrancesco's operations. In resolving this motion, the court must view the facts in the light most favorable to the plaintiff and will assume that the issue of irradiated onion powder was discussed. Schwarzenegger, 374 F.3d at 800. The combination of Van Eeghen's California directed activities, particularly its employee's alleged consent to DeFrancesco's use of irradiated onion powder on a trip to DeFrancesco's California operation, constitutes purposeful availment.
2. Arises Out of Forum Activities
For the same reasons, this dispute arises from Van Eeghen's forum-related activities.
3. Reasonableness
Finally, Van Eeghen has failed to present a compelling case as to why it would be unreasonable for the court to exercise specific jurisdiction in this case.
Courts must balance seven factors when deciding the reasonableness of exercising jurisdiction over a nonresident defendant: "1) the extent of the defendant's purposeful interjection into the forum state's affairs; 2) the burden on the defendant; 3) conflicts of law between the forum and defendant's home jurisdiction; 4) the forum's interest in adjudicating the dispute; 5) the most efficient judicial resolution of the dispute; 6) the plaintiff's interest in convenient and effective relief; and 7) the existence of an alternative forum." Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).
The first factor weighs in favor of DeFrancesco. Van Eeghen's forum-related activities allegedly include the permission to use irradiated onion powder that is the core of this dispute It is quite obvious that "what was said in California by Hyong" will be at the center of any trial.
The second factor weighs in favor of Van Eeghen. Van Eeghen, a Dutch company, likely would experience some hardships if required to defend this case in California. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 114 (1987) ("The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders."); see also FDIC v. British-American Ins. Co., 828 F.2d 1439, 1444 (9th Cir. 1987) (finding that "[when] the defendant `has done little to reach out to the forum state,' the burden of defending itself in a foreign forum militates against exercising jurisdiction") (citation omitted). It does not have a California office. And most of its witnesses allegedly are in the Netherlands and would require translators.
The conflicts-of-law factor weighs in favor of International Flavors and DeFrancesco. The contracts provide that New Jersey law will apply. See FDIC, 828 F.2d at 1444 (considering choice of law provision when weighing the conflicts of law factor).
The fourth factor, the forum state's interests, weighs in favor of International Flavors and DeFrancesco. DeFrancesco is a California corporation with its principal place of business in California. While "private commercial matters" do not raise significant state interests, see Mattel, Inc. v. Greiner Hausser GMBH, 354 F.3d 857, 868 (9th Cir. 2003), DeFrancesco also pleads a tort claim — negligent representation — against Van Eeghen. See Sinatra v. National Enquirer, 854 F.2d 1191, 1200 (9th Cir. 1988) (noting that California has a strong interest in providing a means of redress for residents who are tortiously injured).
In its reply, Van Eeghen argues that DeFrancesco is out-of-business and that California does not have any interest in resolving this dispute because "the only interested party relative to DeFrancesco would be its insurance carrier." Because this argument was tendered for the first time in the reply brief, the court is not in a position to evaluate it. Even if true, the forum state may still have an interest in protecting the insurance carrier, if any, or the former owners.
The fifth factor is neutral. Courts look to the location of the evidence and witnesses when considering "the most efficient judicial resolution of the dispute." Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998). While most of Van Eeghen's witnesses are abroad, most of International Flavors and DeFrancesco's witnesses are in the United States.
The sixth factor, burden on plaintiffs, cuts in favor of International Flavors and DeFrancesco. DeFrancesco is a California resident. See Roth 942 F.2d at 624 ("[N]o doctorate in astrophysics is required to deduce that trying a case where one lives is almost always a plaintiff's preference.") And just as it would be expensive and burdensome for Van Eeghen to defend the case in California, it would be expensive and burdensome for DeFrancesco to pursue its claims against Van Eeghen in the Netherlands.
Finally, the seventh factor, availability of an alternative forum, weighs in favor of Van Eeghen. "The plaintiff bears the burden of proving the availability of an alternative forum." Core Vent Corp. v. Nobel Indus. AB., 11 F.3d 1482, 1490 (9th Cir. 1993). Because DeFrancesco and International Flavors present no evidence that the Netherlands is unsuitable as an alternative forum, they have failed to carry this burden here.
In sum, Van Eeghen has shown that only two of the seven factors cut strongly in favor of Van Eeghen. Therefore, the court finds that Van Eeghen has failed to present a compelling case that the exercise of jurisdiction would be unreasonable. See Roth, 942 F.2d at 625.
B. Forum Non Conveniens
"A party moving in the trial court to dismiss on ground of forum non conveniens has the burden of showing: `(1) the existence of an adequate alternative forum, and (2) that the balance of private and public factors favor dismissal.'" Ceramic Corp. of America v. Inka Maritime Corp., 1 F.3d 948, 949 (9th Cir. 1993) (citation omitted). "This showing must overcome the `great deference . . . due plaintiffs because a showing of convenience by a party who has sued in his home forum will usually outweigh the inconvenience the defendant may have shown."Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 767 (9th Cir. 1991).
The Netherlands is an adequate alternative forum. Van Eeghen is willing to submit to the jurisdiction of a Dutch court. See Lockman, 930 F.2d at 768 (noting that an alternative forum is presumptively adequate if defendants are willing to submit to its jurisdiction). And neither International Flavors nor DeFrancesco have shown that a Dutch court cannot provide an adequate or satisfactory remedy. Id.
A balancing of the relevant private and public factors, however, does not strongly favor Van Eeghen. "Private factors include: ease of access to sources of proof; compulsory process to obtain the attendance of hostile witnesses, and the cost of transporting friendly witnesses; and other problems that interfere with an expeditious trial." Contact Lumber Co. v. P.T. Moges Shipping Co., 918 F.2d 1446, 1451 (9th Cir. 1990). "Public interest factors encompass court congestion, the local interest in resolving the controversy, and the preference of having a forum apply a law with which it is familiar." Id. at 1452.
As discussed above, the first two private factors are neutral. While Van Eeghen's witnesses are in the Netherlands, DeFrancesco and International Flavors's witnesses are in the United Statess. Moreover, neither party has identified any hostile witnesses.
The third private factor also is neutral. Van Eeghen has filed suit against both DeFrancesco and International Flavors in the Netherlands. While it would be more expeditious to try all related cases in one forum, see id., that forum can be either California or the Netherlands.
Van Eeghen argues that it does not make sense for the cases to proceed here because International Flavors and DeFrancesco would not be able to enforce this court's judgments in the Netherlands. However, DeFrancesco and International Flavors may seek to enforce such judgments elsewhere, either in the United States or in other countries where Van Eeghen possesses assets or conducts business.
As to the public factors, although courts in this district are congested, California has an interest in resolving this dispute. Furthermore, it is unclear whether the law of the Netherlands, New Jersey, or California applies in this case. Therefore, the court cannot determine which forum would likely be more familiar with the applicable law. However, the choice of law provision in the contracts provides for New Jersey law which this court can more readily determine than a court in the Netherlands.
Because a balancing of the relevant private and public factors does not strongly favor Van Eeghen, the court declines to dismiss this action on the grounds of forum non conveniens.
III.
For the reasons above, the court DENIES Van Eeghen's motion to dismiss.IT IS SO ORDERED.