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IN RE ASSICURAZIONI GENERALI S.P.A. HOLOCAUST INS. LITIG.

September 25, 2002

IN RE: ASSICURAZIONI GENERALI S.P.A. HOLOCAUST INSURANCE LITIGATION THIS DISPOSITION APPLIES TO ALL ACTIONS


The opinion of the court was delivered by: Michael B. Mukasey, United States District Judge

OPINION AND ORDER

In twelve different actions currently before the court, plaintiffs sue European insurance companies that issued policies in about a dozen countries from 1920 to 1945.*fn1 It is alleged that those companies refused to pay benefits to policy beneficiaries or their surviving family members following the death of the policy holders or damage to their property during the German campaign of genocide before and during World War II, known as the Holocaust.

Assicurazioni Generali S.p.A. ("Generali"), a defendant in all actions, moves to dismiss on the grounds of forum non conveniens and contractual forum selection. Zurich Life Insurance Company and Zurich Versicherungs-Gesellschaft (collectively "Zurich"), defendants only in the Schenker action, also move to dismiss on the ground of forum non conveniens. Both Generali and Zurich argue that the balance of conveniences requires litigation in either: 1) the International Commission on Holocaust Era Insurance Claims ("ICHEIC"), a private commission set up by several European insurance companies, governmental entities, and nongovernmental organizations to resolve unpaid Holocaust-era insurance claims; or 2) the courts of the European countries for which the relevant insurance policies were issued. Generali additionally argues that applicable forum selection clauses mandate litigation of plaintiffs' claims in Europe. For the reasons set forth below, Generali's and Zurich's motions to dismiss are denied with respect to all plaintiffs.

I.

In considering a motion to dismiss on the ground of forum non conveniens, a court must first determine the level of deference to be given plaintiff's choice of forum. Iragorri v. United Techs. Corp., 274 F.3d 65, 73 (2d Cir. 2001) (en banc). Once that level is determined, the court must consider whether an adequate alternative forum exists. Id. If so, the court must weigh the relative convenience of the forums by examining the private and public interest factors set out by the Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947), Koster v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 831-32 (1947), and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n. 6 (1981). "[T]he greater the degree of deference to which the plaintiff's choice of forum is entitled, the stronger a showing of inconvenience the defendant must make to prevail in securing forum non conveniens dismissal." Iragorri, 274 F.3d at 74.

The level of deference to be afforded a plaintiff's choice of forum is a question that has been the subject of much recent jurisprudence in the Second Circuit. See DiRienzo v. Philip Servs. Corp., 294 F.3d 21 (2d Cir. 2002) ("DiRienzo II"); Iragorri, 274 F.3d at 69; DiRienzo v. Philip Servs. Corp., 232 F.3d 49 (2d Cir. 2000) ("DiRienzo I"); Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000); Guidi v. Inter-Continental Hotels Corp., 224 F.3d 142 (2d Cir. 2000). In DiRienzo I, Wiwa, and Guidi, the Circuit suggested that whenever a U.S. plaintiff files suit in a U.S. forum, that choice is to be considered the plaintiff's "home forum," and therefore entitled to great weight — even if that forum is a district other than the district in which the plaintiff resides. See DiRienzo I, 232 F.3d at 60-63; Wiwa, 226 F.3d at 101-03; Guidi, 224 F.3d at 145-48. A divided panel in DiRienzo I held this level of deference to be undiminished by the fact that the U.S. plaintiffs may be acting in a representative capacity as part of a shareholder class action, at least where the majority of the plaintiff class were American residents. See DiRienzo I, 232 F.3d at 60-62. But see DiRienzo I, 232 F.3d at 72-79 (Cabranes, J., dissenting).

In order to elucidate the principles established in those recent opinions, the Second Circuit in Iragorri v. United Technologies Corp., 274 F.3d 65 (2d Cir. 2002), sitting en banc, fashioned a "sliding scale" approach to determine the appropriate deference to be given to a plaintiff's choice of forum. Id. at 71. According to that scale, "the greater the plaintiff's or the lawsuit's bona fide connection to the United States and to the forum of choice and the more it appears that considerations of convenience favor the conduct of the lawsuit in the United States," the more deference will be accorded plaintiff's choice of a U.S. forum, and "the more difficult it will be for the defendant to gain dismissal for forum non conveniens." Id. at 72 (footnotes omitted). To help guide future analysis, the Court identified the following factors as examples of factors that militate against forum non conveniens dismissal:

the convenience of the plaintiff's residence in relation to the chosen forum, the availability of witnesses or evidence to the forum district, the defendant's amenability to suit in the forum district, the availability of appropriate legal assistance, and other reasons relating to convenience or expense.

Id. On the other hand, the Court stated that forum non conveniens dismissal will be most appropriate where:

plaintiff's choice of a U.S. forum was motivated by forum-shopping reasons — such as attempts to win a tactical advantage resulting from local laws that favor the plaintiff's case, the habitual generosity of juries in the United States or in the forum district, the plaintiff's popularity or the defendant's unpopularity in the region, or the inconvenience and expense to the defendant resulting from litigation in that forum.

Id.

In the actions currently before the court, three distinct plaintiff groups are present. See supra note 1. The first plaintiff group consists of the plaintiffs in the Cornell and Schenker class actions, who filed their class-action complaints in this court in the first instance. of the named Cornell plaintiffs, two live in New York, one lives in Texas, and one lives in California. (Cornell Second Am. Compl.) of the named Schenker plaintiffs, two are residents of New Jersey, two are residents of Florida, and one is a resident of California. (Schenker Corrected Am. Compl.) Both the Cornell and Schenker class action complaints were recently amended to exclude all claims against German Corporations in accordance with the German Foundation settlement between the German and American governments. See infra p. 11-12 & n. 6. Prior to those amendments, 22 of the 39 named plaintiffs in the Cornell and Schenker actions were residents of New York. (Cornell Am. Compl.; Winters Compl.)

It does not appear that the Cornell and Schenker plaintiffs have brought suit in this forum merely to inconvenience defendants. Although the parties have not presented evidence as to where else Generali and Winterthur might be subject to suit, plaintiffs, having chosen a U.S. forum, have chosen a convenient one. Generali itself concedes as much, stating in its motion before the MDL panel to consolidate the present actions in this district: "New York is the most convenient forum to litigate the issues in the United States, as it is the home of Generali's United States Branch, Generali's counsel, and several of the firms representing plaintiffs." (Swift Decl. Ex. E (Generali Mot. for Transfer of 8/11/00 at 6)) The fact that defendants currently do extensive business in New York and in this country belies any argument that defendants would be litigating in an unduly hostile or unfamiliar environment. Given plaintiffs' legitimate reasons for bringing suit in this forum, and given defendants' representations to the MDL panel, plaintiffs' choice of forum is entitled to strong deference under the Circuit's sliding-scale approach in Iragorri. See DiRienzo II, 294 F.3d at 28-29. Such deference is due notwithstanding the fact that plaintiffs are acting in a representative capacity. Id.*fn2

The second plaintiff group present in this action consists of the Brauns, Mandil, Weiss, David, Szekeres, Lightner, and Sladek plaintiffs and the named and unnamed plaintiffs in the Haberfeld and Smetana class actions — all of whom originally filed their lawsuits in their home forums, but whose cases have since been transferred to this district after Generali's successful motion before the MDL panel.*fn3 These plaintiffs are not only U.S. residents who seek a U.S. forum, but they are also U.S. residents who originally sought to litigate in their home district within the United States.*fn4 According to Koster, a resident's choice to sue in his or her home forum is generally entitled to great deference. See Koster, 330 U.S. at 524; Iragorri, 274 F.3d at 71. Such deference is not diminished because defendant has forced plaintiffs to litigate in a different forum by effecting a transfer before the MDL panel. See DiRienzo II, 294 F.3d at 28-29 (noting the importance of defendants' motions before the MDL panel in the Iragorri analysis); In re Cinar Corp. Sec. Litig., 186 F. Supp.2d 279, 296 (E.D.N.Y. 2002) (same). This deference is not diminished by the class-action status of the Smetana and Haberfeld actions. See DiRienzo II, 294 F.3d at 28-29.

The third and last plaintiff group present in this action consists solely of plaintiff Tabaksman, a British citizen living in Britain who filed suit in New York State Supreme Court. His case was subsequently removed to this district. Tabaksman's asserted justification for bringing his suit in New York is that his claim is "substantially the same as those asserted in the putative class action also pending in this Court." (Tabaksman Mem. at 1) He claims that "[i]f the Court denies the motions to dismiss the other Generali cases, there will be no additional burden to Generali in defending against Tabaksman's claim in this Court." (Id. at 4) However, the fact that other related actions are pending in a given district court in the United States is not a factor in the forum non conveniens analysis used to determine the appropriate level of deference in Iragorri. Tabaksman does not live in the United States, he is not a U.S. citizen, and if he testifies as a witness, it will be inconvenient for him to travel here from Britain. In short, he has no bona fide connection to the forum. His decision to file his own individual lawsuit in this district is therefore entitled to little deference.

The court thus accords great deference to all plaintiffs' choices of forum, except for plaintiff Tabaksman. As for those plaintiffs entitled to strong deference, defendants must make a strong showing of inconvenience in order to prevail. See Iragorri, 274 F.3d at 74-75.

A. Forum Non Conveniens Dismissal in Favor of ICHEIC

Both Generali and Zurich first argue that this court should dismiss plaintiffs' claims on the g round of forum non conveniens in favor of the International Commission on Holocaust Era Insurance Claims ("ICHEIC"). Because ICHEIC is not an adequate alternative forum for the litigation of plaintiffs' claims, defendants' forum non conveniens motions are denied with respect to ICHEIC.

1. Background

It is anticipated that the ICHEIC claims and valuation process will ultimately be used to process not only claims against its current member companies, but also claims against various German insurers in connection with the July 17, 2000 executive agreement between the United States and the Federal Republic of Germany creating the Foundation for Remembrance, Responsibility and the Future ("the German Foundation"). (Velie Rep. Decl. of 1/8/02 Ex. F at 8-9) In that agreement, the German government and representatives of German industry agreed to fund the German Foundation in the amount of DM 10 billion (roughly $5 billion) in exchange for "legal closure" with respect to all Holocaust-related claims, including insurance claims, against German companies in the United States legal system.*fn6 (Velie Decl. Exs. G, U; Velie Rep. Decl. Ex. F at 8-9) The agreement calls for the German Foundation to allocate up to DM 650 million (roughly $325 million) to ICHEIC for the resolution of unpaid insurance claims against German companies, and states that all insurance payments are to be made in accordance with ICHEIC's claims and valuation procedures. (Id.) The German Foundation has not yet delivered the promised funding because the Foundation and ICHEIC are currently at loggerheads over various administrative matters. (Weiss Mem. Ex. Q; Swift Decl. Exs. B, C).

ICHEIC, defendants point out, offers several advantages to plaintiffs that make it preferable to litigation in the U.S. courts. First, ICHEIC uses a currency formula that values all relevant currencies at the exchange rate in effect at the end of 1938, before hyperinflation destroyed many European currencies. (Velie Decl. ¶ 5, Ex. B) In addition, ICHEIC's procedural rules incorporate relaxed standards of proof, which make it easier for plaintiffs to introduce evidence relating to insurance policies that were issued many years ago. (Velie Decl. ¶ 4, Ex. Z) Furthermore, the member insurance companies of ICHEIC have waived many of their legal defenses to plaintiffs' claims, eliminating many of the obstacles that plaintiffs would face in ordinary litigation. (Velie Rep. Decl. of 1/8/02 Ex. P at 2; Generali Mem. of 5/25/01 at 3, 27) Finally, ICHEIC features a global advertising and outreach program and toll-free telephone numbers with assistance available in numerous languages. (Velie Decl. ¶ 4, Ex. S; Velie Rep. Decl. of 1/8/02 Exs. S, U) The independence of ICHEIC is ensured through an independent auditing process and a right to appeal the Commission's ruling to an independent arbitrator or panel of arbitrators. (Velie Decl. ¶ 6, Ex. T)

2. ICHEIC is Not an Adequate Alternative Forum

In order to establish that an alternative forum is adequate, defendants ordinarily must demonstrate only that the they are amenable to service of process in that forum. See Piper Aircraft, 454 U.S. at 255 n. 22; Aguidna v. Texaco, Inc., No. 01-7756L, 01-7758C, 2002 WL 1880105, at *5 (2d Cir. Aug. 16, 2002); Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 981 (2d Cir. 1993). In this case, it is not disputed that Generali and Zurich are subject to service of process in ICHEIC; in fact, ICHEIC was expressly created in order to provide a forum in which insurance claims could be brought against its member insurance companies. Nonetheless, "[i]n rare circumstances . . . where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative." Piper Aircraft, 454 U.S. at 255 n. 22, quoted in Aguinda, 2002 WL 1880105, at *5. This case involves such "rare circumstances." Defendants have moved to dismiss in favor of a private, nongovernmental forum that they both created and control, the continued viability of which is uncertain. Because of these shortcomings, ICHEIC cannot be considered an adequate alternative forum.

In a more traditional forum non conveniens motion, the court would be asked to dismiss in favor of another nation's courts and would have to determine whether that nation's courts provide an adequate alternative forum. In such cases, American courts have understandably been quite reluctant to declare another forum inadequate. See, e.g., PT United Can Co. Ltd. v. Crown Cork & Seal Co., 138 F.3d 65, 73 (2d Cir. 1998). ("[C]onsiderations of comity preclude a court from adversely judging the quality of a foreign justice system absent a showing of inadequate procedural safeguards, so such a finding is rare." (citation omitted)); Blanco, 997 F.2d at 981 ("[W]e have repeatedly emphasized that `[i]t is not the business of our courts to assume the responsibility for supervising the integrity of the judicial system of another sovereign nation.'" (quoting Chesley v. Union Carbide Corp., 927 F.2d 60, 66 (2d Cir. 1991) (citation omitted) (internal quotation marks omitted))).

Such deference to the legal processes of foreign nations extends even to nonjudicial forums that are part of the administrative apparatus of sovereign states. For example, two Courts in this Circuit have dismissed actions in favor of nonjudicial liquidation proceedings in foreign countries on the basis of comity. See Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240 (2d Cir. 1999); Allstate Life Ins. Co. v. Linter Group, Ltd., 994 F.2d 996 (2d Cir. 1993). In addition, at least two U.S. Courts, in dismissing an action on the ground of forum non conveniens, have determined that New Zealand's administrative accident compensation system constitutes an adequate alternative forum. See Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143-45 (9th Cir. 2001); In re Silicone Gel Brest Implants Products Liability Litig., 887 F. Supp. 1469, 1475-76 (N.D. Ala. 1995) Similarly, another Court has ruled, in deciding a forum non conveniens motion, that Saudi Arabia's quasi-judicial Legal Medical Commission constituted an adequate alternative forum for plaintiffs' medical negligence claims. See Jeha v. Arabian Am. Oil Co., 751 F. Supp. 122, 125-26 (S.D. Tex. 1990). Apparently, medical malpractice claims in Saudi Arabia are "regularly handled" by that commission, and the commission is chaired by a judge appointed by the Minister of Justice. Id. at 125.

However, ICHEIC — an ad-hoc, nonjudicial, private international claims tribunal — is not entitled to the same deference as the courts or an administrative arm of a foreign sovereign nation. No comity concerns are implicated by a rigorous analysis of ICHEIC's adequacy; in fact, greater scrutiny of ICHEIC is warranted because the commission, as a nongovernmental entity, comes with fewer indicia of reliability than the courts of a sovereign nation. That several United States state insurance commissioners and the State of Israel are founding members of ICHEIC, and that the insurance departments of several states have endorsed ICHEIC (Generali Rep. Mem. of 1/9/02 at 10-11), does not make ICHEIC a "governmental" forum. To the contrary, ICHEIC — in its own publications — describes itself as a private, non-profit entity organized as an Association . . . under the Swiss Civil Code (Velie Rep. Decl. of 1/8/02 Ex. F at 1) (emphasis added)). A private, nonprofit association is not entitled to the deference that is accorded a public adjudicative or administrative organ of a sovereign state.

Because of it private status, it is not clear that a nongovernmental forum such as ICHEIC can ever constitute an adequate alternative forum for the purposes of forum non conveniens. When a plaintiff brings a claim before a governmental body, that plaintiff has chosen to litigate his or her claim in a public forum rather than before a private arbitrator or private international commission. I am skeptical that the doctrine of forum non conveniens can be used to undo that decision. The doctrine of forum non conveniens is appropriately used as a tool to force plaintiffs to litigate in a more convenient public forum, but it cannot be used to throw a plaintiff out of court and into a private dispute-resolution mechanism. Although a defendant may properly move to compel arbitration based on a contract, or to dismiss in favor of an international commission pursuant to a statute or executive agreement,*fn7 it is a radical departure from usual forum non conveniens analysis to suggest that a defendant could move to compel plaintiffs' appearance before ...


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