A corporation manufactures baked goods, and is a citizen of State A. The manufacturer obtains its flour from two sources. One source is a domestic supplier, X, which is a corporation and a citizen of State A. The other is a foreign supplier, Y, which is a citizen of Brazil, having been incorporated there. The manufacturer combines the flour from these two suppliers in large storage bins. It then uses the blended flour to make its products, which it sells nationwide.
One batch of the manufacturer’s cookies causes at least 20 people to become seriously ill, so the manufacturer issues a recall. Upon inspecting the cookies, the manufacturer finds that they are contaminated with insecticide. To minimize the public-relations damage, the manufacturer quickly reaches monetary settlements with the affected consumers. Later, the insecticide is traced to the flour from a specific storage bin, but the manufacturer does not use that insecticide. The manufacturer therefore concludes that one or both suppliers shipped contaminated flour.
The total cost of the recall, the settlements, and cleaning the affected storage bin is $1,500,000. Accordingly, in the state court of general jurisdiction in State A, the manufacturer sues both X and Y for breach of contract. The manufacturer seeks $1,500,000 in compensatory damages, jointly and severally. The manufacturer also seeks to recover its attorneys’ fees, under a fee-shifting provision in its contracts with X and Y.
One day after filing the suit, the manufacturer properly serves X and Y with the summons and complaint. Both X and Y file timely answers. Ninety days after service, the manufacturer settles with X. The next day, the manufacturer files a notice of dismissal as to X and serves this notice on both X and Y.
One hundred days after service, Y removes the case to the appropriate division of the U S. District Court for the District of State A. Assume that the removal notice is in the proper form, and includes the proper documentation. Y then moves to dismiss the case based on forum non conveniens. The manufacturer opposes the motion and moves to remand the case to state court.
Evidence at the hearing establishes the following facts: Y obtains its grain from three farms in Brazil. Y does not own these farms, but under an operating agreement, Y’s employees oversee the farms’ operations, including the use of insecticide. Y’s employees transport the grain from these farms to Y’s facility in Brazil, where it is ground into flour and packaged for shipment. Nothing indicates that any shipments from Y to the manufacturer have been tampered with in transit. Brazil’s national language is Portuguese, and Y’s employees speak little or no English.
A Brazilian court would apply Brazilian law to the contract. Brazilian law permits foreign plaintiffs to sue Brazilian defendants, and it permits compulsory process and compensatory damages to the same extent as U.S. law. However, Brazilian law does not recognize fee-shifting provisions in commercial contracts. In many U.S. jurisdictions, the general rule is that each party pays its own attorney’s fees, but fee-shifting provisions are enforceable.
Assume that either court system could provide any needed translation or similar services.
- How should the judge rule on the motion to remand? Explain, ignoring the issue of forum non conveniens.
- Assuming the judge does not remand the case, how should the judge rule on the motion to dismiss? Explain.