Anti-suit injunction

• Author: International Law Group, PLLC
• Pages: 130-131

Page 130

Applied Medical Distribution, Corp. (Plaintiff) is a California corporation, and the Surgical Company BV (Defendant), is a Dutch company. The two entered into an agreement whereby Defendant would distribute Plaintiff's products in Belgium, the Netherlands, and Luxembourg. In 2006, the parties concluded a new distribution agreement (Agreement), which was to expire in December 2007. In the summer of 2007, Plaintiff informed Defendant that it would not renew the Agreement.

Defendant replied in November 2007 claiming that it would be entitled to compensation under the Belgian Act of 1961. In California federal court, Plaintiff then filed a complaint for declaratory relief and for an anti-suit injunction (ASI) in December 2007. Defendant then sued Plaintiff in a Belgian court in January 2008.

At issue here is the viability of Plaintiff's California action . Plaintiff asked the court for an ASI to prevent Defendant from seeking relief in the Belgian courts. The district court found, however, that Defendant's Belgian claims were "potentially broader" than the U.S. suit and therefore denied the ASI. Plaintiff appealed the district court's ruling. The U.S. Court of Appeals for the Ninth Circuit reverses and remands.

The Court reviews the denial of the ASI for abuse of discretion. Applying E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984 (9^th Cir. 2006), the Court points out that "a district court, in evaluating a request for an [ASI], must determine (1) 'whether or not the parties and the issues are the same, and whether or not the first action is dispositive of the action to be enjoined'; (2) whether the foreign litigation would 'frustrate a policy of the forum issuing the injunction'; and (3) 'whether the impact on comity would be tolerable.'" [Slip op. 7]

" ... Despite our general inclination to affirm when feasible on matters within a district court's discretion, we nonetheless conclude here that the district court did abuse its discretion in denying such relief. We in turn rest our decision primarily on the following two bases. First, the district court applied the wrong legal standard by requiring that the claims in the domestic and foreign action be 'identical' instead of engaging in the more functional inquiry concerning dispositiveness required by Gallo. Second, the district court relied on the clearly erroneous factual determination that Defendant's Belgian claims, other than goodwill indemnities, were available apart...