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September 2016

San Diego Team Wins Complete Dismissal on Jurisdictional and Inconvenient Forum Grounds on Behalf of Two Mexico Based Agricultural Companies

On September 1, the Southern District of California granted a motion brought by Gordon & Rees litigators, partner Benjamin Morton and senior counsel Holly Heffner, on jurisdiction and forum non convenience grounds, dismissing the plaintiff’s complaint in its entirety.

The plaintiff, a California corporation and exclusive distributor of agricultural produce grown in Mexico by a Mexican company (“Company A”), brought a lawsuit against the defendants, two Mexican corporations, that provide seed and fertilizer to Mexican growers. The lawsuit asserted six causes of action based on the alleged breach of defendants’ verbal agreement to forgo collection on a debt in excess of $3.1 million owed by Company A to various suppliers including the defendants, in exchange for the defendants’ continued business with Company A while the plaintiff made payments on the company's debt from proceeds from selling the company’s produce. The facts surrounding this alleged agreement were in dispute, but ultimately the defendants initiated a collection action against the company in Mexico.

In opposition to the defendants’ motion, the plaintiff argued that the court could properly exercise general and specific jurisdiction over the defendants because: (1) a number of their representatives reside or are domiciled in California; (2) the plaintiff generated over $5 million in the defendants’ revenue from sales in California; and (3) the defendants’ representatives allegedly attended up to 18 meetings with the plaintiff in California. It was during one of these meetings that the parties allegedly entered into the verbal agreement that gave rise to the plaintiff’s claims.

The Honorable Gonzalo P. Curiel disagreed, and issued a 25-page ruling, adopting the arguments in the defendants’ motion. Gordon & Rees’s attorneys argued that the court lacked general jurisdiction because the defendants were not “at home” in California, each being incorporated in Mexico, without any offices, employees, property, or agent for service of process in California, and neither had applied for a California business license or marketed its products to Californians. The defense also argued that personal jurisdiction was unreasonable in this case because the pending litigation in Mexico addressed the underlying debt between Company A and the defendants upon which the alleged verbal agreement was based. Although the plaintiff was not a party to the Mexico litigation, it could be if it intends to pursue its claims against the defendants, a fact that also supported dismissal on forum non conveniens grounds.

The plaintiff now has two options: stay in California without redress, or travel to Mexico and seek to join in the collection action.

Holly L.K. Heffner