Forum Non Conveniens

• Author: International Law Group

Orion Tire Corp., a California corporation, and China Tire Holdings Ltd. (CTHL), a Bermuda corporation with headquarters in Hong Kong, sought to enter into a joint venture with the Chinese government to manufacture automobile tires in China. The Chinese government later awarded the contract to Goodyear Tire and Rubber. CTHL and Orion sued Goodyear Tire and Rubber Company in a California federal court, invoking RICO and claiming trade libel. The District Court determined that California law governed Orion's claims and Chinese law governed the RICO claim. It dismissed the claim for failure to state a claim under that law and based on the doctrine of forum non conveniens.

On plaintiffs' appeals, the U.S. Court of Appeals for the Ninth Circuit reverses with regard to the state law trade libel/defamation, the intentional interference with prospective economic advantage causes of action and the RICO claim. It also vacates and remands with regards to the forum non conveniens dismissal.

The Court agrees with CTHL's contention that the district court erred with respect to the RICO claim. It therefore vacates the dismissal and remands with instructions (1) to allow CTHL to amend its RICO claim, and (2) to determine whether the claim, as amended, supports the application of RICO under the relevant case law.

The Court concedes that the District Court properly assessed whether California or Chinese law governed the dispute. With regard to a federal statute, however, the court holds that the threshold question is legislative jurisdiction, that is, whether "Congress intended the statute in question to apply to conduct occurring outside of the United States. This is a question of statutory interpretation, not a question of choice of law. The district court therefore erred in dismissing CTHL's RICO claim with prejudice, without making the appropriate statutory inquiry." [Slip op. 8]

Goodyear, however, argued that, even after proper statutory analysis, the Court should affirm the dismissal of the RICO claim because any amendment would be futile. The Court is not persuaded...