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Vexol v. Berry Plastics Corp.

United States Court of Appeals, Seventh Circuit

February 12, 2018

Vexol, S.A. de C.V. and Sergio Torreblanca Lopez, Plaintiffs-Appellants,
Berry Plastics Corporation, Defendant-Appellee.

          Argued January 8, 2018

         Appeal from the United States District Court for the Southern District of Indiana, Evansville Division No. 3:15-cv-55-TWP-MPB - Tanya Walton Pratt, Judge.

          Before Easterbrook and Sykes, Circuit Judges, and Bucklo, District Judge. [*]

          Bucklo, District Judge.

         This appeal challenges the district court's dismissal under Fed.R.Civ.P. 12(b)(6) of business tort claims asserted under Mexican law. We affirm.

         Vexol is a Mexican company in the business of providing plastic and shrink wrap to end users in Mexico. Torreblanca is a Mexican citizen and, we presume from context, an officer of the company. Together (collectively, "Vexol") they filed suit in the Southern District of Indiana against Berry Plastics, a Delaware corporation that allegedly does business in Mexico through its subsidiary, Pliant de Mexico, S.A. de C.V. ("Pliant").[1]

         Vexol alleges the following. Pliant manufactures and distributes a variety of plastic products, including shrink wrap it began selling to Vexol in large quantities pursuant to a series of purchase orders Pliant and Vexol executed in 2009. A business dispute arose after Vexol's customers began to complain about the quality of Pliant's shrink wrap and to return their purchases to Vexol. Vexol, in turn, sought to return the unsatisfactory product to Pliant. But instead of accepting the returns and issuing a refund in the form of a credit to Vexol's account, Pliant went on the offensive, claiming that Vexol owed it money pursuant to a fabricated "pa-gare"-that's the Mexican equivalent of a promissory note- and causing "a separate Mexican entity named Aspen Indus- trial S.A. de C.V." to enforce the pagare in the Mexican Mercantile Court. When those proceedings failed to produce either payment by Vexol or a judgment in Pliant's favor, Pliant took another tack: it filed a criminal complaint against Vexol for fraud, claiming that Vexol had unlawfully created and filed the false pagare. The criminal complaint has not been prosecuted; nevertheless, Pliant's lawyers routinely call Vexol and threaten to have Torreblanca arrested unless Vexol pays up. The goal of these threats and baseless proceedings, Vexol asserts, is to disparage Vexol and drive it out of the market so that Pliant can take its shrink wrap customers.

         Vexol filed suit in the district court in April of 2015, claiming that the foregoing conduct violates Indiana tort law and Mexico's Federal Civil Code. Exercising diversity jurisdiction under 28 U.S.C. § 1332(a)(2), the court invoked Indiana choice-of-law principles and dismissed with prejudice the Indiana law claims in Vexol's first amended complaint. The court observed that all of the alleged wrongs took place in Mexico and held that because Indiana adheres to the traditional rule of lex loci delicti, which calls for application of the law of the place of the tort, any redress for injuries caused by those wrongs must be had under Mexican law.

         The court went on to dismiss without prejudice the Mexican law claims, first because appellants failed to comply with Fed.R.Civ.P. 44.1, which requires federal litigants to give notice of their intent to rely on foreign law, and second because the first amended complaint failed to allege clearly what actions Berry-as opposed to third-parties such as Pliant and Aspen-had taken in violation of Mexican law. The court also dismissed Vexol's claims for "moral damages" and attorneys' fees based on Vexol's failure to plead the un- derlying substantive violations. The court granted Vexol fourteen days to file a second amended complaint, warning that failure to cure these defects would result in dismissal with prejudice.

         Vexol timely filed a second amended complaint (to which we'll now refer simply as "the complaint") concurrently with a Rule 44.1 motion for judicial notice. Like its predecessor, the complaint asserted two substantive claims, one for "illicit acts" in violation of Article 1910 of Mexico's Federal Civil Code, and another for fraud ("dolus") and willful misrepresentation, as well as claims for the remedies of "moral damages" and attorneys' fees. The "illicit acts" claim alleged that Berry aided and abetted Pliant in: 1) misleading Vexol into agreeing to purchase products from Pliant with the intention of stealing Vexol's customers; 2) falsely accusing Vexol of fraud; 3) threatening to have Torreblanca arrested; and 4) instigating false criminal charges and an order of arrest. The claim for dolus and willful misrepresentation alleged that defendant used "false statements and maneuvers" to induce Vexol to enter into the purchase orders with no intent to perform under them.

         Vexol's accompanying Rule 44.1 motion-supported, as such motions frequently are, by expert testimony, commentary, and case law-sought a ruling determining relevant aspects of Mexican law. With respect to "illicit acts, " Vexol argued that Mexican law does not recognize individual common law torts but has codified a single law of "wrongs, " which includes Article 1910. Translated into English, Article 1910 states:

Whoever, by acting illicitly or against the good customs and habits, causes damage to another shall be obligated to compensate him unless he can prove that the damage was caused as a result of the fault or inexcusable negligence of the victim.

Curley v. AMR Corp., 153 F.3d 5, 14 (2nd Cir. 1998), quoting Codigo Civil Federal [CCF] [Federal Civil Code], art. 1910 (Abraham Eckstein and Enrique Zepeda Trujillo Trans. 1996). Vexol's discussion of Article 1910 focused on two of its features: first, that it does not distinguish between intentional and negligent wrongdoing, but instead draws a line between "subjective, " i.e., fault-based liability and "objective, " i.e., strict liability; and second, that liability is "somewhat open-ended" to the extent it proscribes conduct that violates "good customs." Vexol then identified the elements of an "illicit acts" claim as: 1) illicit behavior by the defendant; 2) damages and losses suffered by the plaintiff; and 3) that the illicit behavior was the "sole, direct, immediate and necessary cause" of the plaintiff's damages and losses.

         To support its construction of its dolus claim, Vexol relied on an expert affidavit provided by Claus Von Wobeser in Agroindustrias Colotepec, S.A. de C.V. v. M&M/Mars, No. 2002-09539 (Tex. Dist. 2002), whose ...

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