Case of the Day: Landstar Global Logistics v. Robinson & Robinson

The case of the day is Landstar Global Logistics, Inc. v. Robinson & Robinson, Inc. (Cal. Ct. App. 2013). Landstar had won a judgment against Robinson in the Florida state courts. Landstar brought an action to recognize and enforce the Florida judgment in the San Diego County Superior Court. The court recognized the Forida judgment and issued a writ of execution.

Later, Wells Fargo Bank, N.A., sued Robinson and others in the San Diego Superior Court for payment of a defaulted loan. The court, at Wells Fargo’s request, appointed a receiver for Robinson. Wells Fargo also brought an action against Robinson in Mexico, and the Mexican court imposed a lien in Wells Fargo’s favor on real property held in trust for the benefit of Robinson.

Landstar, evidently aware that Wells Fargo had put itself at the head of the line by chasing Robinson’s assets in Mexico, asked the San Diego court to issue a letter rogatory under the Inter-American Convention requesting that the Mexican court recognize the California judgment liens and assign the right to receive the proceeds of the sale of the property in trust to Landstar, and also sought a restraining order enjoining Robinson from transferring its rights to the Mexican property. The lower court granted all of the relief sought, and Robinson appealed. The issuance of the letter rogatory (but not the restraining order) was stayed pending the appeal. It turned out that the restraining order was improper as a matter of California law (though leaving aside any California-specific issues, it seems proper to me to issue an order in personam restraining a judgment debtor from transferring its property anywhere in the world). So I don’t consider the restraining order further here. Instead, let’s focus on the question whether it was proper to issue a letter rogatory in the first place.

The court correctly concluded that the Inter-American Convention did not authorize the letter rogatory. Article 2 of the Convention provides:

This Convention shall apply to letters rogatory, issued in conjunction with proceedings in civil and commercial matters held before the appropriate judicial or other adjudicatory authority of one of the States Parties to this Convention, that have as their purpose:
a. The performance of procedural acts of a merely formal nature, such as service of process, summonses or subpoenas abroad;
b. The taking of evidence and the obtaining of information abroad, unless a reservation is made in this respect.

The court construed the phrase “procedural acts of a merely formal nature.” a “Procedural act” is a step “taken according to rules that prescribe the manner of conducting litigation or other judicial business, as opposed to rules that define parties’ substantive rights and obligations.” “Formal,” according to the court, here means “adhering to accepted forms, conventions, or regulations,” such as the “special or stipulated solemnities or formalities required for an act to become effective.” Thus the Convention extends to “customary or conventional steps that are taken to provide a person with a legally sufficient notice of a proceeding or of a document filed or issued in a proceeding, but that do not alter the person’s substantive rights or obligations.” The obvious conclusion: the Convention does not authorize a letter rogatory aimed at obtaining a substantive remedy such as an attachment or recognition of a California judgment liens.

Does this mean that the California court was forbidden to send a letter rogatory seeking such relief? I don’t know of any reason why the California court couldn’t send such a request, even if it is not authorized by the Convention. How a Mexican court would treat such a request is really a question of Mexican law, to which I don’t know the answer. If Mexico grants substantive relief on a foreign judgment without first recognizing the judgment, then it seems to me that Mexico is an outlier.

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Update: Lago Agrio Plaintiffs’ Press Conference

I listened in today on a press briefing the Lago Agrio plaintiffs’ PR team organized to discuss the state of their efforts to obtain recognition and enforcement of the Ecuadoran judgment. The briefing was expressly timed to come shortly before the beginning of Chevron’s annual meeting of shareholders on May 29. (Psst…Chevron…expect protesters!) We heard from the lawyers heading up the LAPs efforts: Juan Pablo Sáenz of Quito, Enrique Bruchou of Buenos Aires, Brendan Morrison of Toronto, 1 and Fabiano Robalinho of Rio de Janeiro.

There were two main messages. The first was: the LAPs are in it to win it and are going to proceed with their current actions, and with actions in a total of 30 states, to obtain “every last penny” due under the Ecuadoran judgment. The second was that Chevron has been misleading its shareholders about the risks Chevron faces. Apparently a new letter is on its way to the SEC from unhappy Chevron shareholders complaining about the company’s disclsoures to investors.

Let me pause on the second message for a moment. I’ve previously reported on earlier variations on the theme. But I have to say I don’t get it. Nothing we are hearing from the LAPs is new or previously unreported and unavailable to the public. Yet no shareholders have sued Chevron for securities fraud as far as I know, and Chevron’s share price seems to be doing okay. Assuming that the LAPs are right and that Chevron’s disclosures regarding its litigation risk understate the true risk to the company, isn’t there enough information publicly known about the case to allow the market to make its own judgments?

There were a couple of questions from the folks listening in on the call. One reporter asked how the recognition and enforcement cases were being funded. Mr. Saenz didn’t really answer the question: he said that the LAPs are in “constant negotiations” with litigation funders, but he didn’t identify any funders and didn’t really say whether they had funding. Given the Burford Capital situation and the motion of the US lawyers to withdraw from the US litigation on account of nonpayment of fees, I think whether the LAPs do have third-party funding is a real question.

I also chimed in with a question. I wanted to nail down what Mr. Bruchou and Mr. Robalinho were saying about the laws of Argentina and Brazil, respectively. From both of them, I heard that there is no possibility of challenging the Ecuadoran judgment on grounds that the Ecuadoran judiciary was systematically inadequate. I pressed on this point: is it really the case that neither Argentina nor Brazil would allow a systematic challenge like this in any circumstances? The answer I got was that an Argentine or Brazilian court would never, in any circumstances, refuse to recognize a judgment on such grounds because it would require their courts to sit in judgment on the courts of another sovereign state. (That’s not a quote, but that was the gist of the message).

Can this really be right? If Chevron proved that judges in Ecuador threw darts at a board to determine how to rule in a case, would Brazil and Argentina really feel obligated to recognize the judgment? You can come up with your own hypotheticals, too: would Brazil really recognize a judgment from the courts of a state that did not permit witnesses to testify unless they were members of the forum state’s official church? Would Argentina really recognize a judgment from the courts of a state that used trial by ordeal? I just think this can’t be right. But if it is right, then I think Chevron ought to worry about its future in Argentina and Brazil.

A couple of pieces of actual news from the conference: The appeal of the LAP’s defeat in Canada is likely to be heard in September of this year. The LAPs are going to have some “very exciting news” about their efforts to attach Chevron’s intangible property in Ecuador in the near future.

Notes:

  1. Morrison is not actually the lead Canadian lawyer; he works with Alan Lenczner.
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Case of the Day: Moore v. Lowe’s Companies

The case of the day is Moore v. Lowe’s Companies (W.D. Ky. 2013). David Alexander Moore claimed that he was injured when he used a table saw that was manufactured by Rexon Industrial Corp. Rexon was a Taiwanese firm. Moore first tried to serve Rexon by service on the Kentucky Secretary of State. The Secretary of State forwarded the summmons and complaint to Rexon by sending it via certified mail to Power Tool Specialists, Inc., a Massachusetts corporation with its office in South Carolina. According to Moore, PTS was Rexon’s subsidiary. Rexon moved to dismiss for insufficient service of process.

The judge denied the motion. The facts were somewhat noteworthy because it was particularly clear that PTS and Rexon were sufficiently intertwined to make the outcome of the case pretty clear. For one thing, two other courts, in two different cases, had found PTS was an agent of Rexon for service of process. For another thing, Rexon itself, in testimony, had admitted that it did business in the US as PTS.

The judge treated the question as one of federal law, only turning to Kentucky law at the end of the opinion, to amplify his decision. I have previously opined that federal law does indeed govern, though as I have noted, there is not an enormous amount of federal common law on the question of agency.

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