Chavez v. Dole Food Co.

836 F.3d 205

Tobias Bermudez Chavez, et al.,

v.Dole Food Company, Inc., et al.

Julio Abrego Abrego, et al.,

v.Dole Food Company, Inc., et al.

Alvarado Alfaro Miguel Francisco, et al.,

v.Dole Food Company, Inc., et al.

Jorge Luis Aguilar Mora, et al.,

v.Dole Food Company, Inc., et al.

Edwin Aguero Jimenez, et al.,

v.Dole Food Company, Inc., et al.

Gonzalez Araya Franklin, et al.,

v.Dole Food Company, Inc., et al.

Tobias Bermudez Chavez, et al., Appellants

No. 13–4144

United States Court of Appeals, Third Circuit.

Argued on June 24, 2014 before Merits Panel

Court Ordered Rehearing En Banc on September 22, 2015

Argued En Banc on February 17, 2016

Opinion Filed: September 2, 2016

Scott M. Hendler, Hendler Lyons Flores, 1301 West 25th Street, Suite 400, Austin, TX 78705, Jonathan S. Massey, [ARGUED], Massey & Gail LLP, 1325 G Street, N.W., Suite 500, Washington, DC 20005, Counsel for Appellants

Caitlin J. Halligan, Andrea E. Neuman [ARGUED], Gibson, Dunn & Crutcher LLP, 200 Park Avenue, 47th Floor, New York, NY 10166, William E. Thomson, III, Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, 47th Floor, Los Angeles, CA 90071, Somers S. Price, Jr., Potter,

Anderson & Corroon LLP, 1313 North Market Street, 6th Floor, Wilmington, DE 19801, Counsel for Appellees Dole Food Company, Inc., Dole Fresh Fruit, Standard Fruit Company, Standard Fruit and Steamship Company

Michael L. Brem, Schirrmeister Diaz–Arrastia Brem, LLP, 700 Milam Street, 10th Floor, Houston, TX 77002, Donald E. Reid, Morris, Nichols, Arsht & Tunnell LLP, 1201 North Market Street, P.O. Box 1347, Wilmington, DE 19899, Counsel for Appellee Dow Chemical Co.

Timothy J. Houseal, Jennifer M. Kinkus, Young Conaway Stargatt & Taylor LLP, 1000 North King Street, Rodney Square, Wilmington, DE 19801, D. Ferguson McNiel, III, Vinson & Elkins LLP, 1001 Fannin Street, Suite 2500, Houston, TX 77002, Counsel for Appellee Occidental Chemical Corp.

John C. Phillips, Jr., Phillips, Goldman, McLaughlin & Hall, P.A., 1200 North Broom Street, Wilmington, DE 19806, Counsel for Appellee AMVAC Chemical Corporation

Kelly E. Farnan, Katharine L. Mowery, Richards, Layton & Finger, P.A., 920 North King Street, One Rodney Square, Wilmington, DE 19801, Counsel for Appellee Shell Oil Co.

Steven L. Caponi [ARGUED], Blank Rome LLP, 1201 Market Street, Suite 800, Wilmington, DE 19801, R. Jack Reynolds, Samuel E. Stubbs, Pillsbury, Winthrop, Shaw & Pittman LLP, 909 Fannin Street, Suite 2000, Two Houston Center, Houston, TX 77010, Counsel for Appellees Chiquita Brands International, Inc., Chiquita Brands, L.L.C., Chiquita Fresh North America, L.L.C.

Boaz S. Morag, Cleary, Gottlieb, Steen & Hamilton LLP, One Liberty Plaza, New York, NY 10006, James W. Semple, Cooch & Taylor, 1000 West Street, 10th Floor, Wilmington, DE 19801, Counsel for Del Monte Fresh Produce N.A., Inc.

Before: McKEE, Chief Judge, AMBRO, FUENTES^* , SMITH, FISHER, CHAGARES, GREENAWAY, JR., VANASKIE, SHWARTZ, KRAUSE, and RESTREPO, Circuit Judges

OPINION OF THE COURT

FUENTES, Circuit Judge, with whom McKEE, Chief Judge, AMBRO, SMITH, FISHER, CHAGARES, GREENAWAY, JR., VANASKIE, SHWARTZ, KRAUSE, and RESTREPO, Circuit Judges, join.

The plaintiffs in these cases are foreign agricultural workers who labored on banana plantations in Central and South America from the 1960s through the 1980s. They allege that their employers and certain chemical companies knowingly exposed them to toxic pesticides over many years, and that this exposure caused adverse health consequences ranging from sterility, to birth defects, to a heightened risk of cancer. Litigation against the defendants first began in Texas state court in 1993, yet to date no court has reached the merits of the plaintiffs' claims.

A series of byzantine procedural developments eventually led the plaintiffs out of Texas and into Louisiana, where they filed several diversity-based suits in federal district court raising tort claims against the defendants under Louisiana law. The defendants moved to dismiss those claims on timeliness grounds, and the plaintiffs, fearing that the Louisiana District Court would grant those motions, filed nearly identical suits in the District of Delaware raising analogous tort claims under Delaware law. Because the timeliness rules of Louisiana and Delaware are different, the plaintiffs hoped that, even if the Louisiana District Court concluded that their claims were time-barred under Louisiana law, the Delaware District Court would reach the opposite conclusion under Delaware law. These developments eventually gave rise to three procedural questions we now confront in this appeal.

Our initial inquiry concerns proper application of “the first-filed rule.” That rule is a comity-based doctrine stating that, when duplicative lawsuits are filed successively in two different federal courts, the court where the action was filed first has priority. In some cases, “first-filed” courts have relied on the rule to enjoin litigation in other jurisdictions. In other cases, “second-filed” courts have cited the rule to defer consideration of a matter until proceedings have concluded elsewhere. Application of the rule is discretionary.¹ If a second-filed court decides to invoke the rule, it also has the discretion to decide whether to stay, transfer, or dismiss the case before it. Here, the Delaware District Court chose to apply the first-filed rule and then, rather than staying or transferring the plaintiffs' claims, it dismissed those claims with prejudice .² That decision effectively terminated the plaintiffs' cases. On appeal, the plaintiffs contend that these dismissals were an abuse of discretion.

The second issue relates to personal jurisdiction. One of the defendants, Chiquita Brands International, moved for dismissal on the ground that the Delaware District Court lacked personal jurisdiction over it. The plaintiffs argued that personal jurisdiction was present, but, in the event that the Delaware District Court disagreed, they asked it to transfer their claims against Chiquita Brands International to New Jersey, where that defendant is incorporated, rather than dismiss them outright. The Delaware District Court held that it lacked personal jurisdiction and refused to transfer the claims, believing that its decision to dismiss all other defendants under the first-filed rule merited a similar dismissal as to Chiquita Brands International. The plaintiffs contest that ruling on appeal.

Our third inquiry relates to the doctrine of res judicata. While the defendants' motions to dismiss under the first-filed rule were pending in Delaware, the Louisiana District Court dismissed the plaintiffs' claims on timeliness grounds. Certain defendants in the Delaware suits, reacting to this development, moved to dismiss the plaintiffs' Delaware claims on the ground that the Louisiana dismissals ought to bar re-litigation of related claims in another forum. The Delaware District Court declined to reach the issue in view of its application of the first-filed rule, but the issue nonetheless confronts our Court today given the present posture of these cases.

Our resolution of this appeal is therefore threefold. First, we conclude that the Delaware District Court abused its discretion under the first-filed rule by dismissing the plaintiffs' claims with prejudice. Second, we conclude that the Delaware District Court erred by refusing to transfer the plaintiffs' claims against Chiquita Brands International to another forum. And third, we conclude that the timeliness dismissals entered by the Louisiana District Court do not create a res judicata bar to the plaintiffs' Delaware suits. As these cases come to us today, there is a serious possibility that no court will ever reach the merits of the plaintiffs' claims. More than twenty years after this litigation began, we think that outcome is untenable—both as a matter of basic fairness and pursuant to the legal principles that govern this procedurally complex appeal.³

Accordingly, we will vacate the Delaware District Court's dismissals and remand these cases for further proceedings.

I. Background

These cases arise from the use of the pesticide dibromochloropropane (DBCP) on banana farms in several countries, including Panama, Ecuador, and Costa Rica. The plaintiffs allege that they were exposed to DBCP beginning in the 1960s and ending sometime in the 1980s, and that their exposure to DBCP has caused them to suffer from a number of serious health problems. The plaintiffs have been seeking redress for those injuries in various courts around the country and, indeed, around the world for over twenty years.

The full history of these cases has been well chronicled elsewhere, and we will not duplicate those efforts here.⁴ Still, because the complexity of this litigation's procedural history bears on our substantive analysis, we provide a brief summary of that history below.

A. Procedural History in the Texas Courts

This litigation began in 1993 with the filing of a class action in Texas state court.⁵ The defendants quickly adopted a three-step strategy for defeating the plaintiffs' claims. First, they impleaded various foreign entities under the Foreign Sovereign Immunities Act.⁶ This, in turn, provided a hook for federal jurisdiction.⁷ Second, the defendants removed the case to the United States District Court for the Southern District of Texas. Third, the defendants asked the Texas District Court to dismiss the plaintiffs' class action on the ground of forum non conveniens .⁸

This strategy was successful, at least for a time. In 1995, the Texas District Court granted the defendants' request for a forum non conveniens dismissal, thereby sending the plaintiffs back to their home countries to try to litigate their claims there.⁹ It also denied all other pending motions as moot, including the plaintiffs' pending motion for class certification.¹⁰ Even so, the Texas District Court stated that the plaintiffs could return to federal court if their home countries refused...