When a mass tort happens anywhere in the world, enterprising plaintiffs’ lawyers will try to figure out some angle that will enable them to file suit in the U.S. against somebody, anybody, who is tangentially connected to the tort. We all know why: American courts and especially American juries are known for their generosity. Lord Denning, reportedly the most celebrated English judge of the 20th century, colorfully put it best: “As a moth is drawn to the light, so is a litigant drawn to the United States. If he can only get his case into their courts, he stands to win a fortune.” Smith Kline & French Laboratories, Ltd. v. Block [1983] 2 All E.R. 74 (C.A. 1982) (Denning, M.R.).

So it is natural that someone tried to bring cases here concerning the melamine contamination of infant formula and milk products in China, which reportedly affected thousands of infants in China. Their angle was an American holding company with Chinese subsidiaries that made contaminated milk products. Plaintiffs’ counsel found about 100 Chinese citizens and residents and filed suit in federal district court in Maryland, the holding company’s principal place of business.

Just as inevitable as the filing of the lawsuit in the U.S. was the defendants’ response: they moved to dismiss the case on forum non conveniens grounds, arguing that the cases did not belong in the U.S. and should be litigated in China. The court granted that motion in a very interesting decision filed last week. Tang v. Synutra International, Inc., No. DKC 09-0088 (D. Md. March 29, 2010).

The usual private and public interest factors that are part of the forum non conveniens analysis pointed strongly to China as the place where these cases should be heard. China is where all the witnesses and evidence are located; all relevant evidence would have to be translated from Chinese into English; Chinese law would apply; and the plaintiffs themselves live in China. These factors showed that the District of Maryland was clearly a non conveniens place to hear this lawsuit and favored dismissal, the court concluded. Id. at 30-33.Plaintiffs’ counsel appears to have done little to contest the private and public interest factors; instead, plaintiffs challenged the adequacy of the Chinese courts to hear their claims. The forum non conveniens doctrine requires that the other country provide an adequate forum to hear the plaintiffs’ claims for compensation, and plaintiffs’ counsel fought hard to show that China’s courts would not hear their cases. They provided affidavits from Chinese lawyers with stories of how some Chinese lawyers were pressured to withdraw from melamine cases. Id. at 16. The expert also cited anecdotal evidence, in part based on newspaper reports, that some cases filed in China have sat without court action for months, as the courts allegedly have placed some cases perpetually in limbo. Id. at 19.

But we’ve been in U.S. courts like that, which we won’t name since we might have to go back there. No one would seriously say that those courts don’t provide an adequate forum, just a painfully slow remedial process that resembles (forgive us) Chinese water torture – which actually was never used by the Chinese, according to Wikipedia.

Defendants responded with an affidavit from their Chinese law expert, who said that plaintiffs could recover compensatory damages (but not punitive damages) in Chinese courts. The expert rebutted plaintiffs’ claims that court delays in ruling on melamine cases showed that the Chinese courts were singling out melamine cases for shabby treatment, as the delays cited by plaintiffs were not uncommon in non-melamine cases. The defense expert also cited reports that about 100 plaintiffs had filed suits in Chinese courts and a public announcement by the Supreme People’s Court of China that the Chinese courts were ready to accept melamine cases. Slip op. at 15, 20.

The court found in these competing affidavits an agreement by the parties that China has a legal process in place for handling claims. Id. at 21. The court concluded that the defendants’ evidence “established a justifiable belief” that China was an adequate forum, a belief supported by decisions of other U.S. courts holding that China provides an adequate alternative forum. Id. at 21-22. The court reasoned that plaintiffs’ true contention, based on limited evidence, was that “corruption in the Chinese judiciary would systematically deny them access to a legal remedy there.” Id. at 24. The court agreed with other courts that have been “reluctant to cast such aspersions on foreign judicial systems absent a substantial showing of a lack of procedural safeguards.” Id.

The court’s reluctance to find a foreign court system corrupt was undoubtedly a sound judgment. It would be a very serious step with potential impact on U.S. foreign policy for a U.S. court to declare that the courts of another country are so corrupt that a citizen of that country lacks an adequate remedy in the country’s courts. And certainly no U.S. court should reach such a grave conclusion based only on a handful of anecdotes and newspaper articles.

What the court did next will be particularly interesting to forum non conveniens aficionados like us, if you will excuse this mash-up of Latin and Spanish. The court said that even if Chinese courts were not available to plaintiffs, they had another available remedy: they could participate in a compensation program established by the Chinese government (in conjunction with the Chinese Dairy Industry Association) and administered by China Life Insurance Company. This program gave affected families a lump sum payment and compensation for medical expenses. About 95% of the families of injured children had accepted this remedy. Id. at 2-3, 25-27.

The court’s decision that this compensation system provided a relevant remedy is unusual. Courts evaluating the adequacy of a foreign forum usually consider only the adequacy of the country’s courts to provide a remedy to the plaintiffs. But the whole idea of adequacy in the FNC analysis is that the plaintiff must have access to an adequate remedy in his or her home country. As long as the plaintiff can obtain the remedy, it should not matter that the remedy is provided by a court, a government agency, or something else. The Tang opinion cited a couple of other cases in which courts have found that a non-court compensation system provided an adequate alternative. Id. at 26-27.

The Tang plaintiffs said that the Chinese compensation program was not an adequate alternative to a U.S. court because it had not been established by the Chinese legislature or judiciary. The court found that it was an available remedy “even if the compensation program does not qualify as a ‘legislative,’ ‘judicial,’ or ‘administrative’ remedy.” Id. at 28. And the court found the remedy was adequate even though it provided a lump sum payment of $4,400 and compensation for medical expenses, which “pales in comparison to the hundreds of millions of dollars in compensatory and punitive damages they seek here.” Id. at 29. The court followed decisions of many other courts that a foreign forum’s remedy should not be found inadequate simply because the amount available in the foreign system was less than the “fortune” (to use Lord Denning’s word) available in the U.S. Id.

The court made one last decision that will thrill forum non conveniens aficionados: it refused to make its dismissal conditional. In recent years, some courts have made their FNC dismissals conditioned on the foreign court’s accepting jurisdiction when the dismissed U.S. plaintiffs try to re-file their cases in the foreign court. Conditional dismissals can cause all kinds of mischief. With a conditional dismissal in their back pocket, some plaintiffs will try to present their cases to foreign courts in a way that will cause the foreign courts to dismiss the case for lack of jurisdiction, putting the plaintiffs back in the U.S.A. And the conditional dismissal may make foreign courts reluctant to accept a re-filed case, as some foreign courts will not exercise jurisdiction over a matter if another court still has jurisdiction over the matter – and the conditional dismissal would be seen by some courts as a retention of jurisdiction. The Tang court avoided these complications and refused to make its dismissal conditional “because the alternative compensation plan is undisputedly available to Plaintiffs.” Id. at 34.

We reported last week that the Seventh Circuit had affirmed a forum non conveniens dismissal in favor of litigation in the Republic of China, also known as Taiwan. The Tang decision shows that the People’s Republic of China also provides an adequate forum.

For sending us this interesting decision, a tip of the hat to Sara Gourley of Sidley Austin LLP, who won this case with the assistance of Sidley’s Jim Arden.