Tag Archives: Nicaragua

Case of the Day: JBR, Inc. v. Cafe Don Paco, Inc.

Service by email,

The case of the day is JBR, Inc. v. Café Don Paco, Inc. (N.D. Cal. 2013). Rogers Family Coffee (“JBR”) was in the business of providing community aid for sustainable coffee farming. Café Café Don Paco, Inc. was a Texas business that imported and distributed coffee from Café Don Paco, S.A., its Nicaraguan affiliate. Roberto Bendaña and Alvaro Montealgre, both of whom lived in Nicaragua, were principals of Café Don Paco. JBR sued Bendaña and Montealgre after a dispute arose. He first sought to serve process on them at the Texas company’s registered address in San Antonio, without success. He tried also to serve Bendaña by email (without seeking leave of court first) and to serve Montealgre at a Texas home formerly owned by Montealgre and his wife. For good measure, Rogers emailed the documents to someone who worked at one of Montealgre’s “publicly listed organizations,” who said she would personally deliver them to Montealgre.

When the clerk refused to enter defaults in light of this record of attempted service, Rogers asked the court to authorize service by email under FRCP 4(f)(3). The judge correctly held that service by email was not prohibited by international agreement, as Nicaragua is not a party to the Hague Service Convention. The judge also pointed out that the Inter-American Convention is not in force between the United States and Nicaragua because Nicaragua is not a party to the Additional Protocol, although the judge might have gone on to note that even if the Convention did apply, it would not prohibit service by email, because it is non-exclusive. The judge also held that there were no due process problems, as there was “reasonable assurance,” based on past correspondence with the two, that their email addresses were valid and that the documents would reach them.

The judge went on to hold that the earlier service by email on Bendaña, without leave of court, was effective, finding that there was no prejudice to Bendaña (who had actual notice) but taht Rogers, which had been diligent, faced a statute of limitations problem. In light of the plain language of FRCP 4(f)(3) I am not sure this was within the judge’s discretion.

Case of the Day: Osorio v. Dow Chemical Co.

Recognition and Enforcement, ,

The Case of the Day, Osorio v. Dow Chemical Co. (11th Cir. 2011), is reminiscent of the Lago Agrio case. Claim for massive environmental tort in Latin America? Check. A large group of workers and peasants as plaintiffs? Check. Claims of procedural improprieties and partiality in the Latin American courts? Check. American reluctance to recognize the foreign judgment? Check. Because the Eleventh Circuit affirmed the district court’s decision in a short  per curiam opinion, I focus mostly on the district court decision.

The plaintiffs were Nicaraguans who worked on banana plantations in the 1970s and early 1980s. They alleged that they had been exposed to DBCP, a pesticide that was banned in the United States in 1977 but not banned in Nicaragua until 1993 and had been linked to sterility in factory workers. The workers sued Dow, the manufacturer of the pesticide, and Dole Food Co., which used it on its plantations until the farms were expropriated when the Sandinistas came to power in 1979.

In 2000, Nicaragua enacted a law, “Special Law 364“, to handle DBCP claims. The law provided an irrebutable presumption that exposure to DBCP caused a plaintiff’s sterility and that any company that manufactured or used DBCP knew of DBCP’s harmful effects. Each successful plaintiff would be entitled to a minimum award of $125,000, but the court was permitted to award more if it finds such an award “comparable to similar personal injury verdicts obtained by plaintiffs in foreign countries such as the United States.” The law presumed that the plaintiffs were indigent, and the Nicaraguan government paid the costs of the litigation. The defendants were required to post a $100,000 bond to participate in the lawsuit and to deposit $15 million as security against an award of damages. The defendants have three days to answer the complaint. The parties have eight days to present their evidence, and the court then has three days to issue a decision. The law eliminated, retroactively, the applicable statute of limitations and provided for immediate execution of judgment notwithstanding a pending appeal. The defendants also had the right to opt out of the statutory scheme, if they would agree to waive the defense of forum non conveniens in the United States.

The Nicaraguan Attorney General opined that the law was unconstitutional on several grounds, but the Nicaraguan Supreme Court gave an advisory opinion upholding the constitutionality of the law, relying on two basic arguments: (1) a principle of Nicaragua law that requires the courts to “level the playing field” by giving procedural advantages to the peasant plaintiffs; and (2) the defendants’ right to opt out, if they would agree to be sued in the United States.

The Nicaraguans sued in a trial court in Chinandega, Nicaragua. Dow and Dole refused to make the deposits required by the Nicaraguan statute and waived their defenses under the forum non conveniens doctrine to trial in the United States. In short, they tried to opt out of the statute. On the basis of their opt-out, they challenged the Nicaraguan court’s jurisdiction. But the Nicaraguan court interpreted the statute to mean that the defendants could opt out only if they first paid the required deposit. The defendants appealed that ruling, but the appeal remained pending for years and was still undecided by the time the case reached the Eleventh Circuit.

In the Nicaraguan litigation, the plaintiffs provided sperm samples and diagnoses from doctors indicating that they were sterile. The defendants sought to examine the plaintiffs, and it offered birth certificates allegedly showing that many of the plaintiffs had fathered children after their last exposure to the pesticide, but the court found the evidence inadmissible. The Nicaraguan court awarded $97 million in damages. Dole and Dow appealed, and the appeal was pending at the time the case came before the U.S. courts.

The plaintiffs sought recognition and enforcement of the U.S. decision in the Miami-Dade County (Florida) Circuit Court under the Florida Uniform Foreign Money Judgments Recognition Act, and Dole and Dow removed the case to the U.S. District Court in Miami. The defendants argued that the Nicaraguan court lacked personal and subject-matter jurisdiction, that the Nicaraguan court’s procedures did not provide due process of law, that enforcement of the judgment would be contrary to Florida public policy, and that the Nicaraguan tribunal was not impartial.

The District Court accepted the defendants’ jurisdictional arguments. Ordinarily, the judge wrote, he would defer to a foreign court’s interpretation of its own jurisdiction under its own law. But here, the Nicaraguan trial court refused to allow the defendants to opt out of the Nicaraguan proceeding even though, according to the Nicaraguan Supreme Court, it was precisely the opt-out option that rendered Special Law 364 constitutional. Moreover, the judge, reasonably in my view, construed Special Law 364 as a kind of reverse blocking statute—a statute that would make litigation in Nicaragua so unpalatable to an American court that it would not find the Nicaraguan courts to be an available and convenient forum for forum non conveniens purposes.

The District Court also found that the irrebutable presumption of causation violated international norms of due process, particularly because the presumption flew in the face of the medical evidence. Here, I think the judge was on less solid ground. It’s true that irrebuttable presumptions are disfavored, but as the court recognized, even in American law irrebuttable presumptions are not categorically forbidden: the court cited the example of the Black Lung Benefits Act, which provided:

If a miner is suffering or suffered from a chronic dust disease of the lung which (A) when diagnosed by chest roentgenogram, yields one or more large opacities (greater than one centimeter in diameter) and would be classified in category A, B, or C in the International Classification of Radiographs of the Pneumoconioses by the International Labor Organization, (B) when diagnosed by biopsy or autopsy, yields massive lesions in the lung, or (C) when diagnosis is made by other means, would be a condition which could reasonably be expected to yield results described in clause (A) or (B) if diagnosis had been made in the manner prescribed in clause (A) or (B), then there shall be an irrebuttable presumption that he is totally disabled due to pneumoconiosis or that his death was due to pneumoconiosis, or that at the time of his death he was totally disabled by pneumoconiosis, as the case may be.

The court distinguished Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976), the case approving the irrebuttable presumption, on the grounds that Usery had a cap on damages while Special Law 364 had a floor on damages, which hardly seems persuasive. The court also noted that no one disputed that the miners’ condition was caused by coal dust, but again, the distinction seems weak, since if no one disputed the cause of the injury then no presumption would be needed. It’s not clear to me that the irrebuttable presumption here is inconsistent with international norms of due process, even if it would be inconsistent with American notions of due process, which itself is not certain.

In prior DBCP cases, Nicaraguan plaintiffs had sought recognition and enforcement of judgments in the United States. In the Mejia case, ro example, the Los Angeles County Superior Court refused to recognize a Nicaraguan DBCP judgment on the grounds that the claims “were the direct result of a widespread conspiracy to commit fraud by attorneys in Nicaragua and the United States, Nicaraguan doctors and judges (including the Nicaraguan trial judge …) and the plaintiffs themselves.”  In this case, the judge similarly found that Nicaragua did not have an impartial judiciary, though because the Eleventh Circuit ultimately did not reach that issue, I don’t address the court’s reasoning here other than to say that it seems fairly persuasive. Even the plaintiff’s expert was unwilling really to vouch for the integrity of the Nicaraguan judiciary.

In the case of the day, the Eleventh Circuit summarily affirmed the district court, except that it did not reach the question of the impartiality of the Nicaraguan courts. In this the Eleventh Circuit was probably wise, since if recognition should be denied on other grounds, comity considerations suggest the courts should not needlessly decide questions relating to the quality of justice in other countries.

The plaintiffs have petitioned for a rehearing en banc. In addition to attacking the panel’s conclusions head-on, they also assert, as they had previously, that the outcome of the case is inconsistent with the Treaty of Friendship, Commerce, and Navigation between the United States and Nicaragua, and that refusing recognition and enforcement of the judgment threatens the enforceability of U.S. judgments in Nicaragua. On the second point, I suspect the plaintiffs are correct, though if a judgment is not eligible for recognition under the Florida statute, it’s difficult to see why the point is relevant. The first point is problematic because, at least as far as I can gather from the current edition of Treaties In Force, the treaty does not appear to be in force according to the State Department. The plaintiffs note an executive order during the Reagan administration supposedly terminating the treaty but say that that order was rescinded by an executive order during the George H.W. Bush administration. It seems to me that whether the treaty is or is not in force is a political question, and the plaintiffs are therefore unlikely to succeed in this argument. And in any event, even if the treaty were in force, it seems difficult to suggest that the treaty could require a Florida court to recognize and enforce the judgment. The treaty contains the following provisions, which the plaintiffs cited:

 Nationals of either Party shall be accorded national treatment in the application of laws and regulations within the territories of the other Party that establish a pecuniary compensation, or other benefit or service, on account of disease, injury or death arising out of and in the course of employment or due to the nature of employment

* * *

 Nationals and companies of either Party shall be accorded national treatment and most-favored-nation treatment with respect to access to the courts of justice and to administrative tribunals and agencies within the territories of either Party, in all degrees of jurisdiction, both in pursuit and in defense of their rights.

* * *

1. The term “national treatment” means treatment accorded within the territories of a Party upon terms no less favorable than the treatment accorded therein, in like situations, to nationals, companies, products, vessels or other objects, as the case may be, of such Party.

2. The term “most-favored-nation treatment” means treatment accorded within the territories of a Party upon terms no less favorable than the treatment accorded therein, in like situations, to nationals, companies, products, vessels or other objects, as the case may be, of any third country.

The plaintiffs claim that under Choi v. Kim, 50 F.3d 244 (3d Cir. 1995), and Vagenas v. Continental Gin Co., 988 F.2d 104 (11th Cir. 1993) , required the Florida court to treat the Nicaragua judgment as the judgment of a sister state, given the language of the treaty, but it seems to me that the cases are not on point. Choi expressly noted that a judgment need not be recognized and enforced if the court in the sister state (or the foreign country) lacked personal or subject-matter jurisdiction, 50 F.3d at 248. These are precisely the grounds on which the Eleventh Circuit refused to recognize the Nicaragua judgment. Vagenas merely held that a state court had to apply the same statute of limitations to complaints on a foreign judgment as it applied to complaints on a judgment of a sister state where a treaty contained a “national treatment” clause.