Antitrust Law Daily Wrap Up, RICO—3d Cir.: Dismissal of Israeli plaintiff’s RICO claims on forum non conveniens grounds affirmed, (Dec 13, 2013)

By Edward L. Puzzo, J.D.

A federal district court’s dismissal, on forum non conveniens grounds, of RICO and other claims brought by Israeli plaintiffs against Israeli defendants was not an abuse of discretion and must be affirmed, the Third Circuit U.S. Court of Appeals in Philadelphia has ruled (Kisano Trade & Invest Limited v. Lemster, December 12, 2013, Barry, M.).

Plaintiff Vadim Shulman, an Israeli citizen, and his companies Kisano Trade & Invest, a Cypriot company, and Trasteco, a Maltese company, brought suit in a federal district court against Dev Lemster, also a resident of Israel, and his company, Steel Equipment Corp, alleging RICO (Racketeer Influenced Corrupt Organizations Act) violations, as well as intentional interference with contract, unjust enrichment, and breaches of fiduciary duty. Defendants moved to dismiss on forum non conveniens grounds, offering Israel as an alternative forum, and the lower court agreed.

The appellate court identified the following factors in evaluating the lower court’s exercise of discretion in dismissals on forum non conveniens grounds: the amount of deference to be afforded to plaintiffs’ choice of forum; the availability of an adequate alternative forum where defendants are amenable to process and plaintiffs’ claims are cognizable; relevant “private interest” factors affecting the convenience of the litigants; and relevant “public interest” factors affecting the convenience of the forum.

Deference to plaintiffs’ choice of forum. The appellate court first addressed whether the lower court abused its discretion in giving plaintiffs’ choice of forum less deference than it would have given a domestic plaintiff. The court stated that a foreign plaintiff is not entitled to the same level of deference to the presumption of convenience that exists in favor of a domestic plaintiff’s chosen forum. Dismissal may be warranted where a plaintiff chooses a particular forum, not because it is convenient, but solely in order to take advantage of favorable law. The court noted in dicta that it was at least worth noting that the possibility of a treble damage award under RICO, unavailable in Israeli courts, may have motivated plaintiffs to choose a United States forum.

Further, the court stated, even if a treaty, such as one between the United States and Israel cited by plaintiffs, entitled foreign plaintiffs to access American courts on the same terms as American citizens, that does not mean that the foreign plaintiff’s choice of forum must be afforded the same deference afforded to a U.S. citizen bringing suit in his home forum. Since the central purpose of any forum non conveniens inquiry is to ensure that the trial is convenient, the assumption given to a domestic plaintiff that the trial location is convenient for that party is less logical when the plaintiff is foreign, and thus entitled to less deference, ruled the court. The appellate court concluded that an equal access provision in the United States-Israel treaty does not change the analysis with respect to the degree of deference a district court must afford a foreign plaintiff’s choice of forum.

Private and public interest factors affecting convenience. As to the factors of the availability of an adequate alternative forum, and consideration of private and public interest factors, the court concluded that the location of the parties, their witnesses, and the availability of evidence all favored resolution of the dispute in Israel, where defendants have already agreed to submit to jurisdiction. Plaintiff Shulman and defendant Sapir met in Israel, and discussed and negotiated the coal and steel transactions which are the subject of the dispute there, the court noted. Other than the actual wire payments and plaintiff’s law firm, there appeared to be no other connection to Pennsylvania, and little else to the United States. Thus, the appellate court ruled, the district court did not abuse its discretion in concluding that private and public interest factors also weighed in favor of dismissal on forum non conveniens grounds.

The case is Civil Action No. 13-1759.

Attorneys: Bruce S. Marks, Thomas C. Sullivan and Maria Temkin (Marks & Sokolov) for Kisano Trade & Invest Limited, Trasteco Ltd, and Vadim Shulman. Larry K. Elliott, David F. Russey, Julie W. Vanneman, and Curt Vazquez (Cohen & Grigsby) for Dev Lemster, Steel Equipment Corp. and Akiva Sapir.

Companies: Kisano Trade & Invest Limited; Trasteco Ltd; Steel Equipment Corp.

Cases: RICO DelawareNews NewJerseyNews PennsylvaniaNews