The World in U.S. Courts: Summer and Fall 2016 - Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA)
June.29.2016
PATs Aircraft, a US company, sued Vedder Munich, a German corporation, for breach of contract and warranty. The contract arose out of contacts in both countries. Representatives of the two companies met in Germany to discuss the possibility of Vedder manufacturing aircraft cabinets for PATS. At PATS’ invitation, Vedder’s managing director, Mr. Held, traveled to Delaware to negotiate terms of the contract and view PATS’ facilities. After subsequent email and phone exchanges, the parties executed an agreement in their respective countries. Vedder later performed some of the manufacturing work in Delaware. It shipped several products and materials to PATS from Germany, and also sent personnel to Delaware who remained there for extended periods of time to assist and oversee the work. Mr. Held made two additional trips to Delaware to assess the project’s progress and negotiate issues relating to compliance with the FAA’s flammability requirements. Vedder moved to dismiss PATS’ complaint for lack of personal jurisdiction, international comity, and grounds based on forum non conveniens.
The District Court declined to dismiss PATS’ complaint, holding that specific personal jurisdiction extended over Vedder. The Court first examined Delaware’s long-arm statute, noting that a nonresident’s single act of business or transaction in Delaware established jurisdiction. The Court determined that Vedder’s conduct in sending goods, materials, and employees to Delaware to perform the agreement, combined with the voluminous correspondence between the parties, was sufficient to satisfy Delaware’s long-arm statute. The Court also found that the exercise of personal jurisdiction over Vedder comports with Due Process Clause of the US Constitution. According to the Court, Vedder’s course of dealing demonstrated that Vedder “purposefully availed” itself of the privilege of acting in the forum state.
The Court also did not dismiss PATS’ complaint on grounds of international comity. International comity is not a rule of law, but a demonstration of “due regard both to international duty and convenience.” The Court concluded that to dismiss or stay the US action based on comity would be premature, because related litigation was taking place in Germany that sought different remedies and that had not yet been decided.
Finally, the Court declined to exercise its discretion to dismiss the case on forum non conveniens grounds. According to the Court, Vedder failed to overcome the great deference afforded to the choice of a US forum by a US company. The Court recognized that an adequate alternative forum exists in Germany, noting that remedies available in Germany were not clearly unsatisfactory. Nevertheless, it found that both the private and public interest factors did not warrant dismissal of the US proceedings. Specifically, the Court determined that Vedder failed to demonstrate that Germany is the more convenient forum given that the cause of action involves a contractual dispute. It also concluded that because Germany and Delaware have equal interest in litigating the action, public considerations do not favor one jurisdiction over the other.
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