Reginald H. Howe v. Goldcorp Investments, Ltd.
1991 WL 191607, 946 F.2d 944 (1991)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The doctrine of forum non conveniens may be applied to dismiss a private action brought under federal securities laws, even when those laws contain special venue provisions, if the balance of private and public interest factors strongly favors trial in a foreign forum.
Facts:
- Reginald Howe, an American citizen, was a shareholder in Goldcorp, a Canadian corporation whose shares primarily trade on Canadian stock exchanges.
- In 1987, Goldcorp shareholders approved changes to its articles of incorporation, removing investment restrictions that had previously limited the company to a diversified, low-risk portfolio.
- Howe alleged that Goldcorp failed to adequately disclose that this change represented a radical shift to a higher-risk investment strategy.
- In 1989, Goldcorp undertook a takeover of two other Canadian companies, Dickenson and Kam-Kotia.
- Following these takeovers, the value of Goldcorp's shares declined dramatically.
- The corporate decisions, actions, communications, and individuals related to both the 1987 article changes and the 1989 takeovers were almost entirely located in Canada.
- Goldcorp's main contacts with the U.S. involved mailing reports to its American shareholders (who owned about one-third of its shares) and answering their inquiries.
Procedural Posture:
- Reginald Howe filed a complaint against Goldcorp and its Canadian officers, advisors, and lawyers in the United States District Court.
- Following the recommendation of a magistrate judge, the district court dismissed Howe's complaint on the grounds of forum non conveniens.
- Howe, as appellant, appealed the district court's dismissal to the United States Court of Appeals for the First Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a federal court have the legal power to dismiss a private securities law action on the grounds of forum non conveniens when the events giving rise to the claim occurred primarily in a foreign country and the defendants are foreign nationals?
Opinions:
Majority - Breyer, Chief Judge
Yes, a federal court possesses the power to invoke the forum non conveniens doctrine in a private action for violation of American anti-fraud securities statutes. The court rejected the argument, supported by the SEC as amicus, that the special venue provisions in the Securities Acts strip federal courts of their inherent power to dismiss on these grounds. Unlike the antitrust statutes examined in 'United States v. National City Lines I,' there is no legislative history suggesting Congress intended to give securities plaintiffs an absolute, indefeasible choice of forum. The court reasoned that venue statutes empower a court to hear a case, but do not compel it to do so, especially in the international context where policy concerns of comity and avoiding forum shopping are paramount. Applying the doctrine, the court found the balance of factors overwhelmingly favored Canada. The private interest factors (evidence, witnesses, compulsory process) all pointed to Canada, as the underlying conduct occurred there. The public interest factors also favored Canada, given its strong interest in adjudicating a dispute involving a Canadian corporation's duties under Canadian law. The court concluded that Canada provides an adequate alternative forum and that any differences in law were not so significant as to prevent dismissal.
Analysis:
This decision solidifies that the common law doctrine of forum non conveniens applies to private securities fraud actions, despite the existence of special venue statutes. It signals that federal courts will prioritize practical considerations of convenience and international comity over a plaintiff's statutory choice of forum in cases with overwhelmingly foreign elements. This ruling makes it more difficult for U.S. shareholders of foreign corporations to sue in U.S. courts for conduct that primarily occurs abroad, potentially requiring them to seek remedies in the corporation's home jurisdiction. The case reinforces the high bar established in 'Piper Aircraft,' where dismissal is appropriate unless the alternative forum's remedy is so inadequate as to be no remedy at all.
Unlock the full brief for Reginald H. Howe v. Goldcorp Investments, Ltd.