United States District Court, N.D. Illinois, Eastern Division
December 13, 2005.
Intec USA LLC, Plaintiff,
Jonathan Engle, IBEX Technologies Limited, IBEX Industries Limited, IBEX Industries PTY Limited, IBEX Technologies PTY Limited, IBEX Thermal Processing Limited, IBEX DO Brazil, LTDA, and Illum Limited, Defendants.
The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Intec USA, LLC ("Intec") sues IBEX Technologies Limited, IBEX
Industries Limited, IBEX Industries PTY Limited, IBEX
Technologies PTY Limited, IBEX Thermal Processing Limited, IBEX
DO Brazil, LTDA, Illum Limited, (collectively, "IBEX entities")
and Jonathan Engle ("defendants") for tortious interference with
contract (Count I), breach of contract (Count II), unfair trade
practices (Count III), and civil conspiracy (Count IV). Intec
seeks damages and injunctive relief. Defendants move to dismiss
on the basis of forum non conveniens.
Intec is a North Carolina limited liability company based in
Durham County, North Carolina. Compl. ¶ 1. Intec is in the
business of marketing, manufacturing and installing materials
handling systems or systems that sort food products in order to
change and stabilize the products' temperatures. Intec Resp. at
p. 2. Jonathon Engle is a resident of New Zealand. Compl. at ¶ 2.
IBEX Industries Limited, IBEX Technologies Limited, and Illum
Limited are foreign companies with their principal places of
business in New Zealand. Id. at ¶¶ 4-5, 10. IBEX Industries Pty
Limited and IBEX Technologies Pty Limited are foreign companies with their
principal places of business in Australia. Id. at ¶¶ 6-7. IBEX
Thermal Processing Limited is a foreign company with its
principal place of business in the United Kingdom. Id. at ¶ 8.
IBEX Do Brazil LTDA is a foreign company with its principal place
of business in Brazil. Id. at ¶ 9. Intec alleges that Jonathan
Engle and his father, Raph Engle, own and control the IBEX
entities. Id. at ¶ 12. It further alleges that defendants
regularly do business in the United States. Id. at ¶¶ 2-10.
Raph Engle, a citizen of New Zealand, developed materials
handling technology for food products. Intec Resp. at p. 3. In
the late 1980's Raph Engle came to the United States and created
Intec Corporation. Id. In 1997, Raph Engle sold two-thirds of
his business to Tim Flynn and John Smith, resulting in Intec.
Id. The terms of the sale prohibited Raph from competing with
Intec in the materials handling industry. Id. Following the
sale, Raph Engle returned to New Zealand. In 2001, he retired
from Intec. Id.
Intec contends that while Raph Engle was an employee and
officer of Intec, he began to compete with Intec and to divert
business for his own benefit. Id. Specifically, Intec alleges
Raph Engle transferred its trade secrets, customer contacts and
technology to the IBEX entities while he was employed by Intec.
Id. It alleges Raph and Jonathan Engle created the IBEX
entities to compete with Intec. Id. Intec contends defendants
improperly use its technology and trade secrets; contact Intec
customers; disparage Intec's name; and pass off Intec technology
as their own. Id. at pp. 3-5.
In 2003, Intec initiated arbitration against Raph and Jonathon
Engle. The arbitration was settled through two agreements: an
award on agreed terms and a letter agreement. Id. at pp. 3-4.
Raph Engle signed the award on agreed terms. Id. at p. 4.
Defendants were not party to the award on agreed terms but
Jonathon Engle signed the letter agreement in New Zealand on
behalf of the IBEX entities. Id. at p. 4. Both agreements contain choice of
law provisions stating that North Carolina law governs the terms
of the agreements. The letter agreement states it "shall be
governed by and construed, interpreted, and enforced in
accordance with the laws of the State of North Carolina, without
regard to principles of conflicts of law." Compl. at Ex. 2, ¶ 6.
The agreements also contain promises by the Engles not to compete
against Intec. Id.
Intec contends defendants were aware of Raph Engle's
contractual obligations and hired him in violation of the
non-competition provisions. Compl. at ¶ 25. Intec originally
filed suit in North Carolina against defendants as well as Raph
Engle alleging claims for breach of contract, tortious
interference, and unfair trade practices. Intec Resp. at p. 6. A
magistrate judge in the North Carolina District Court recommended
dismissal of the IBEX entities and Jonathon Engle based on lack
of personal jurisdiction. Id. That suit remains pending in the
Middle District of North Carolina, Intec USA. v. Jonathon Engle,
et al., No. 05 C 2031. Intec also initiated an arbitration
against Raph Engle in North Carolina.
The court may dismiss a case on forum non conveniens grounds
when "it best serves the convenience of the parties and the ends
of justice." Kamel v. Hill-Rom Company, Inc., 108 F.3d 799, 802
(7th Cir. 1997). A forum non conveniens analysis take place in
two steps. First, an adequate forum must be available. Id.; In
re Bridgestone/Firestone, Inc., 420 F.3d 702, 704 (7th Cir.
2005). Second, the court must balance the private interests of
the litigants and the public interests of the forum to determine
the superior venue. In re Bridgestone/Firestone, Inc,
420 F.3d at 704; Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947). The
court has substantial flexibility in considering the relative
flexibility of these factors. Wilson v. Humphreys (Cayman)
Ltd., 916 F.2d 1239, 1245 (7th Cir. 1990). Dismissal is proper if the balance of conveniences suggests the
chosen forum would unnecessarily burden the defendant or the
court. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256 (1981).
A. Adequacy of alternative forum
Defendants contend New Zealand is the superior forum for this
case. An alternative forum is available if all parties are
amenable to process and are within the forum's jurisdiction.
Kamel, 108 F.3d at 803. In addition, an adequate forum mandates
the parties will not be deprived of all remedies or treated
unfairly. Id. The IBEX entities authorize Jonathon Engle to
accept service of process in New Zealand on their behalf.
Defendants Mem. at p. 6. Defendants also agree to submit to
jurisdiction in New Zealand for the purpose of this lawsuit.
Id. Accordingly, New Zealand is an available forum for this
action. Kamel, 208 F.3d at 803. An alternative forum is
inadequate only in rare circumstances where "the remedy provided
by the alternative forum is so clearly inadequate or
unsatisfactory that it is no remedy at all." Piper Aircraft Co.
v. Reyno, 454 U.S. at 254 n. 22. Defendants state that New
Zealand has a sophisticated legal system, similar to the United
States. New Zealand had repeatedly been found to be an adequate
forum. Luek v. Sundstrand Corp., 236 F.3d 1137 (9th Cir. 2001)
(adequate remedy is available in New Zealand); Ashley v. Dow
Corning Corp., 887 F. Supp. 1469, 1475 (N.D. Ala. 1995) (New
Zealand court system is an adequate alternative forum); Stonnell
v. Int'l Harvester Co., 478 N.E.2d 518 (Ill.App.Ct. 1985) (New
Zealand provides adequate remedy). New Zealand provides an
B. Private interest factors
Private interests include ease of access to proof; witness
convenience; availability of compulsory process for unwilling
witnesses; the costs associated with witness attendance; and "all other practical problems that make trial of a case easy,
efficient, and economical." Kamel, 108 F.3d 802.
Intec argues that its decision to litigate in Illinois is due
great deference because it is a U.S. based company. However, when
a plaintiff does not reside in his chosen forum, the court is
entitled to be less deferential towards his choice. Interpane
Coatings, Inc. v. Australia and New Zealand Banking Group Ltd.,
732 F. Supp. 909, 915 (N.D. Ill. 1990). Further, "given the
ever-expanding realm of international commerce, many courts have
somewhat discounted a plaintiff's United States citizenship when
that plaintiff is an American corporation with extensive foreign
business[.]" Kamel. 108 F.3d at 804. Intec does not reside in
Illinois. Therefore, Intec's choice of forum is one factor to be
The main factor in assessing the private interests is the
convenience of the witnesses. Intec is a limited liability
company located in North Carolina. Intec lists 18 witnesses, only
two are located in Illinois. While Intec argues it could not
compel its witnesses to appear in New Zealand, its remaining
sixteen witnesses are located outside Illinois and are beyond
this court's power of compulsory process. Fed.R.Civ.P.
45(b)(2), 45(c)(3); American General Assurance Co. v. Terry
Miller Pontiac-GMC Truck, Inc. No. 98 C. 7887, 1999 WL 436573,
at *2 (N.D. Ill. June 22, 1999). Thus, Intec's concern is
Defendants have not provided a witness list but contend that
witnesses with information relevant to Intec's claims will be
found in New Zealand. The IBEX entities are foreign corporations
based in New Zealand. Both Jonathon and Raph Engle are New
Zealand residents. The crux of this case involves the conduct of
New Zealand residents and the majority of alleged misconduct took
place in New Zealand. Raph Engle is employed, allegedly in
violation of the his agreement, in New Zealand by a New Zealand company. Any conspiracy to compete with
Intec would have originated in New Zealand. Further, Intec
alleges that defendants hired employees away from its New Zealand
counterpart.*fn1 A large number of witnesses with
information are likely located in New Zealand and are outside the
court's power of compulsory process. Further, transporting the
witnesses from New Zealand to Illinois would be expensive and
time-consuming. Thus, the cost and inconvenience of holding a
trial in this court would likely exceed the cost of litigating
the matter in New Zealand.
The court also considers access to sources of proof. The record
does not reflect any physical evidence likely to be introduced
that is located in Illinois. Intec alleges defendants conspired
to pass off Intec's technology as their own, stole trade secrets,
designs and customer contacts. Defendants are based in New
Zealand. Therefore, the potential customers were most likely
contacted from New Zealand and all records regarding trade
secrets, technology, and customer lists will primarily be in New
Zealand. This factor favors dismissal.
Intec seeks injunctive relief. Specifically, Intec asks the
court to permanently enjoin defendants from unfair trade
practices and from employing Raph Engle in any capacity. If
injunctive relief is granted, enforcement would be in New
Zealand. This factor also favors dismissal. Law Bulletin
Publishing Corp. v. LRP Publications, Inc. et al.,
992 F. Supp. 1014 (N.D. Ill. 1998) (location of enforcement better forum to
monitor injunctive relief because "closer to the action")
C. Public interest factors In balancing the public interest factors, a court should
consider: (1) its own docket congestion; (2) the local interest
in resolving the controversy; and (3) the preference for a forum
applying familiar law. Piper, 454 U.S. at 241 n. 6. Public
interest factors compel dismissal where the court would be
required to "untangle problems in conflict of laws, and in law
foreign to itself." Gulf Oil Corp. v. Gilbert, 330 U.S. at 509.
Illinois law does not apply to any of the claims because none
of the relevant transactions or events occurred in Illinois. The
contract claims are governed by North Carolina law in accordance
with the choice of law provision. However, an agreement to
construe the terms of a contract under North Carolina law is not
an agreement that all claims between parties, including tort
claims, should be decided under North Carolina law. Gleich v.
Tastefully Simple, Inc., et al., No. 05 C 1415, 2005 WL 3299187,
at *8 (N.D. Ill. Dec. 2, 2005). Under the Restatement (Second) of
Conflicts of Laws, the law of the jurisdiction with "the most
significant contacts" governs the tort claims. Hinc v.
Lime-O-Sol Co., 382 F.3d 716, 719 (7th Cir. 2004); Interpane
Coatings, Inc., 732 F. Supp. at 916.
In evaluating tort claims, the following factors are relevant:
(1) the domicile, place of incorporation and place of business of
the parties; (2) the place where the tortious conduct occurred;
(3) the place where the relationship of the parties is centered;
and (4) the place where the injury occurred. The parties are
domiciled in North Carolina, New Zealand, Australia, Great
Britain and Brazil. The relationship between the parties is
centered in both North Carolina and New Zealand. Any confusing or
misleading statements regarding Intec's technology originated in
New Zealand. The competing business that Raph and Jonathon Engle
allegedly established is primarily located in New Zealand.
Further, the property that the Engles allegedly misappropriated
is located in New Zealand. The alleged injury occurred in North
Carolina. Importantly, nothing occurred in Illinois. Under the conflicts of law analysis, both New Zealand and North Carolina
have significant contacts with the tort-based claims. Because the
majority of alleged misconduct took place in New Zealand, New
Zealand law likely applies to the tort-based claims. Labuda v.
Schmidt, No. 04 C 1281, 2005 WL 2290247, at *5 n. 2 (N.D. Ill.
Sept. 19, 2005) (place where tort occurs is generally most
significant contact) (citing Kaczmarek v. Allied Chemical
Corp., 836 F.2d 1055, 1058 (7th Cir. 1987)); Systems America,
Inc. v. Providential Bancorp, Ltd., No. 05 C 2161, 2005 WL
2008926, at *6 (N.D. Ill. Aug. 19, 2005) (misappropriation of
technology and customer lists occurred at defendants' principal
place of business). To ensure a correct application of New
Zealand law, this court should not "delve into the tenets of an
unfamiliar legal system." Kamel, 108 F.3d at 805. This factor
While Illinois has no interest in this litigation, New Zealand
has a strong interest. This case involves the conduct of New
Zealand residents and the majority of the alleged misconduct took
place in New Zealand. New Zealand has a strong interest in
regulating purported misconduct committed by its residents and in
policing the activities of its corporations. Pyrenee,
984 F. Supp. at 1167. Thus, the public interest factors weigh heavily in
favor of resolution of this case in New Zealand.
For the foregoing reasons, the motion to dismiss on forum non
conveniens grounds is granted.
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