Anti-Suit Injunction

• Author: International Law Group
• Pages: 82-84

Page 82

In 1978, E.& J. Gallo Winery (Gallo) (plaintiff), a large California winery, entered into an exclusive distributorship agreement with the predecessor of Andina Licores S.A. (defendant) (an Ecuadorian company). In 1987, plaintiff and defendant signed an updated agreement. Both the original and the updated agreement provided that California would be the forum for any litigation.

Despite many years of cooperation, the relationship took a bizarre turn in 2004 over allegedly late shipments and exclusivity. Defendant filed a proceeding before the Sixth Civil Court in Guayaquil, claiming to know nothing about plaintiff's whereabouts. As a result, defendant asked the court to appoint a guardian (curador) selected by defendant to represent plaintiff. As if that were not strange enough, defendant's choice of a curador for plaintiff was Rita Yepez, a recently admitted attorney, whose legal qualifications were certified by a day laborer and a student.

Defendant then filed suit against plaintiff in the Second Civil Court of Guayaquil, alleging a violation of Decree 1038-A. That Decree limited discovery to six business days (September 10 to September 17, 2004). Issued during the Ecuadorian military dictatorship in 1976, a later regime repealed it in 1997 as contrary to World Trade Organization rules. The curador notified plaintiff of this proceeding by mail, but plaintiff apparently did not get that letter until September 16, 2004. Plaintiff then retained an attorney who turned out to be ineffectual (a) in informing the court about the California forum selection clause, and (b) in introducing additional evidence.

In October 2004, plaintiff brought its own action against defendant in California state court. Defendant removed that action to federal court, and moved to dismiss for lack of personal jurisdiction. Plaintiff then sought a preliminary injunction to prevent defendant from pursuing its action in Ecuador (which is the issue here). Meanwhile, "a dizzying array or (sic) judgments, appeals, and procedural motions continued in Ecuador." [Slip op. 4]

The district court denied plaintiff's request for the preliminary injunction, largely on international comity considerations, and plaintiff appealed. The U.S. Court of Appeals for the Ninth Circuit reverses and remands with instructions to grant the preliminary injunction.

The Court points out that it had last examined the standard for granting an "anti-suit injunction" in Seattle Totems Hockey...