LOUISIANA-PACIFIC CORPORATION et al v. AKZO NOBEL COATINGS, INC. et al

Filing 59

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE JOE L. WEBSTER signed on 2/7/2014. Defendants have satisfied their burden to demonstrate that the Canadian forum is substantially more convenient. Therefore, this Court RECO MMENDS that the motion to dismiss pursuant to the doctrine of forum non conveniens (Docket Entry 26 ) be GRANTED and the action be DISMISSED, without prejudice to refilling in Canada. Further RECOMMENDING that, in the event the Court adopts this Recommendation, Defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) (Docket Entry 24 ) be DENIED AS MOOT. (Daniel, J)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CA,ROLINA
LOU

IÂN,4.-P,{.CIFI C
CORPORATION and LOUISIANAI

)
)
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S

PACIFIC CANADA LTD.,
Plaintiffs,
V

AKZO NOBE.L COATINGS, INC.,
LLC, AKZO NOBEL COATINGS,
LTD. andJOHN DOES 1-10,
Defendants.

1,:1,2CY625

MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
This matter is before the court on Defendants' motion to dismiss fot lack of personal

jurisdiction pursuant to Federal Rule

of Civil Procedure 12þ)Q) (Docket E.rtty 24) and

motion to dismiss on the gtounds of þrurz

non conueniens.

(Docket Etrtry 26.) Platntiffs have

fìled responses in opposition to the motions. (Docket Entries 32,33.) On Decembet 18,
2013, a hearing was held regarding Defendants' motions. The matter was taken under
advisement. For the following reasons, the coutt will recommend that Defendants'motion

to dismiss on the grounds of þraru

I.

non conueniensbe granted.

FACTUAL BACKGROUND

The Complaint identifies Louisiana-Paciftc Cotporation ("Louisiana-Paciftc") as a United
States-based company
employees in

with facilities in Roating River, North Carohna and having ovet

500

Notth Carolina. (Compl. fl 6, Docket Entry 4.) Louisia¡t-Paciftc CanadaLtd.

("LP Canada") is identified

as

a Canada-based entity that makes and sells ptefinished siding

and other similar products used
Coatings,

in the construction industry. Qd. n 7.) Âkzo Nobel

Inc. ("Akzo Nobel Coatings') is identified in the complaint as a

Delaware

corpotation with its principal place of business in Kentucky. (1d.1110.) Akzo Nobel ("Akzo

Nobel") is identified as a

foteþ entity; it is undisputed that it is a Canadian

with its headquattets and pdncipal place of business in Ontado.
Berthiaume,

I

(See

corpotation

Affidavit of Denis

3, Docket E.ttty 25-1,.)

This case adses out of the alleged premature fatlure of wood coating supplied by
Akzo Nobel to LP Canada. (Compl. IT 1-3; Wananty at

1.) LP

1., attached

to Berthiaume Aff., Ex.

Canada man:ufactutes and sells CanExel siding, a ptefìnished extetiot siding made

from compressed wood, fìber, resin and wax. (Compl.

II

5-8, 17-18.) Akzo Nobel began

manufactuting and suppþing coating for CanExel siding in the 1980s. In

200"1.,

after several

yeats of testing, a new custom dual resin coating ("CanExel Dual Resin M") was apptoved

by LP Canada fot use on its new hatdwood siding. The coatings supplied by Akzo Nobel

for use on CanExel siding were manufactued in Quebec, Canada. @etthiaume Aff. fl 4.)

In

2003,

LP

Canada and Akzo Nobel agreed

to a 1.5-year wartaLîty related to the

performance of the CanExel Dual Resin M coating on the hardwood CanExel siding. (Id.lt

12.) The warcanty was

entered into by the ¡wo Canadian companies and by its tetms is

govetned by the laws of Nova Scotia, Cznada. Qd.)

Ir

2007,

LP

Canada began

CanExel siding, which

it

to teceive an incteasing number of claims related to its

atttibuted to the Akzo Nobel coating. LP Canada advised Akzo

Nobel of the claims in 2008, and the companies wotked togethet to investigate the causes of
the inctease

in claims. Plaintiffs contend that they suffered injuries due to the ptemature
2

failing of the CanExel Dual Resin M coating as applied to LP Canada's CanExel siding in
Canada. On July 5, 2012, LP Canada, together with its United States affthate LouisianaPacific, filed this lawsuit in this district, asserting claims for (1) fraudulent inducement; (2)
bteach of express wananLy) (3) bteach of implied w^tra'nty of metchantability; (4) breach

of

implied w^n^nLy of fìtness for a paricular putpose; (5) bteach of contrâct; (6) declat^tory
judgment; and (7) violation of the North Carohna Unfait and Deceptive Trade Practices ,\ct

(UDTP¡,).

II.

DISCUSSION
Defendants have filed two motions, one a motion to dismiss pursuant

to Federal

Rule of Civil Procedure 12þ) Q) for lack of personal jurisdiction, and the second a motion to

dismiss pursuant

to the doctrine of þran

non conueniens. While Defendants have raised

jurisdictional issues in their Rule 12þ)(2) motion, the coutt will fìrst address ther forum
conueniens

motion. "r\ disffict court . . .

dismissal, bypassing questions

of

may dispose

non

of an action by a forurz non tvnueniens

personal judsdiction, when considetations of

convenience, fafuness, and judicial ecoflomy so warrant." Sinocltem Int'/ Co. u. Ma/a1sia Iat'/
S hþping

Corþ., 549 U.S. 422, 432 Q007).

A. Forzm Non Conueniens Genenlly

A paty seeking to dismiss a case fot þran

non conuenieur must show

that "the

alternative fotum is available to the plaintiff, that the altetnaive forum is adequate, and that

the alternative forum is mote convenient in light of the public and pnvate intetests
involved."

DiFrederico u. Marriolt Int'|., 1nc.,71,4 F.3d

796,799 (4th Cir. 201,3). In analyzing

such a claim, the Court must consider every m^terial factor and hold defendants to their

)

butden of petsuasion on all elements of the analysis. Galøstian u. Peter,591 F.3d 724,731.
(4th Cir. 201,0). The movingpatq, therefore, bears the burden of showing that an adequate
alternaive fotum exists. 1/.

B. Plaintiffs Choice of Fotum
Ordinarily a sttong favorable ptesumption is applied to a plainttf?s choice of forum.
"fU]nless the balance is stongly in favor of the defendant, the plaintiffs choice of forum
should rarely be distutbed." Galf Oil Corp. u. Gilbert,330 U.S. 501, 508 (1947). Flowevet,
whete the teal panies in interest are foreign corporations, the choice of a foteign forum is

not entitled to heightened deference.

See

Sinochem 549 U.S.

^t

430 ('lWhen the plaintiffs

choice is not its home forum, howevet, the ptesumption in the plaintiffs favor applies with
less

force. ."; Pþer Airraft

Co. u. Re1no,454 U.S. 235, 255-56, 261 (1981);

lYireless, Inc. u. paahomm, Inc.,7'1.

see also

CTE

F. Supp. 2d51,7,519 @,.D. Ya. 1,999) (noting that "when

a

plaintiff chooses a foreign forum and the cause of action bears little ot no relation to that
forum, the plaintifPs chosen venue is not entitled to such substantial weight.") (intemal
quotation omitted). 'Vlhere "the plaintiff has not chosen to bdng the case

in his home

country, the coutt need give little defetence to the plaintiffls choice of forum." Calastian,
591 F.3d

at732. One exception would be in a case where dismissal tnderforam non conueniens

may cause a pla:nlJ:ff

to "lose out completely, through the running of the statute of

limitations in the fotum fìnally deemed appropriate." In re Volkswagen of Am., Inc., 545 F.3d
304,3"1.3, n. 8 (5th

Cir.2008) (quoting Norwood

u.

Kirkpatrick,349 U.S. 29,31. (1955).

Hete, Defendants have agteed to waive any statute
negating one

of limitations defense,

thus

of the primary reasorìs for giving deference to a plaintiffls choice of forum.
4

Additionally, a review of the record indicates that the rcal paries in intetest hete are two
Canadian cotpotations,

LP

Canada and

.,\þo Nobel. Thetefote, in weighing the televant

factors, the Coutt gives "little deference" to Plaintiffs' choice of

Noth

Carohna as a fotum

fot this suit.

C. Applicatton of Forzm Non

Conaeniens

1,. Available Fotum
Defendants here argue thatCanadais an avallable alternative forum. A

foteþ forum

is "avatlable" "when the defendant is 'amenable to process' in the othet judsdiction." Pþer
Aircraft,454 U.S. at 255 n. 22 (quo:.jlng Gi/bert,330 U.S. at 506-07). In this case, at least one

plaintiff and one defendant are Ca¡adian corporations. Additionally, Defendants have
agreed

to submit to

service

of ptocess in Ca¡ada and to waive any statute of limitations

defense that might arise as a result

of te-filing in a Canadtan court. Thetefote,

Canada is

available as a potential forum.

2. Adequacy

"r\

foreign forum is adequate when '(1) all patties can come within that fotum's

jurisdiction, and Q) the patties will not be depdved of all remedies or treated unfairly, even
though they may not enioy the same benefìts as they might teceive in an American colrrt."
Jiali Tang

u. Slnatra Irut'l,

lnc.,656 F'.3d 242, 248 (4th Cit. 201,1) (quoting Fid. Ban,ë PLC

u.

N.

Fox Shþping N.V., 242 F. Âpp'* 84, 90 (4th Cir. 2007) (unpublished)) (internal quotation
matks omitted.) Flere, where nvo of the paties to the lawsuit are Canadian cotporations,
these patties can come within the judsdiction

of the

Canadian

coutts. As noted

Defendants have agreed to submit to submit to service of ptocess in Canada.

5

above,

lØhen a foreign fotum has jurisdiction, it is inadequate only "[i]n tare circumstances
. . . whete the remedy offeted by the other forum is cleatly unsatisfactory."

U.S. at 254 n.

PþerAirnaft,454

22. Plaintiffs contend that Canadtan courts ate inadequate

because they

ptovide diffetent dghts, remedies and procedures than Notth Carolina courts. This
argument has been tejected by coutts throughout this country.
SureTech Cornpletions

(USA) Inc., Civi, Action No. H-13-0492,

(S.D. Tex. June 10, 2013); DTEX,

I I C u. BBVA

Bancomer,

See, e.!., Lngau

201.3

WL

Int'l Inc. u.

3005592, at *3-4

5.A.,508 F.3d 785, 797 (5th Cu.

2001). .{dequacy does not require that the alternative fotum provide identical relief, eithet
substantive or procedural, as an r{.merican court.

See, e.g.,

Civil Action No. 2:1.3cv1,8, 201.3 WL 6705188,

x2 (8.D. Va. Dec.

Coutt has noted that a dismissal onþran

the law applicable

non conuenieøs grounds

u. Passcouery Co.,

1.9, 20'1,3).

"^uy

Ltd.,

The Supteme

be granted even though

in the altetnative fotum is less favorable to the plaintiffs chance of

recoverry." Pþer Aircraft,454 U.S. at 250;
Bosþ.alis Westminster

^t

ElcomSoft,Ltd.

see

also Cornpania Nauiera Joanna

SA

u. Koninkl/ke

N.V.,569 F'.3d 189,202-04 (4th Clr. 2009). "An inadequate forum based

on substantive law arises 'whete the altetnative forum does not permit litigation of the
subject llnatter of the dispute."' Compania Nauiera,569 F.3d at 205 (quoting Pþer Aircraft, 454
U.S. at 254 n.22).

Plaintiff argues that "Canadian courts would not be adequate fot adjudicating LP's

Notth

Carohna claims because LP would

not have the benefit of cdtical aspects of the

American legal system þecause] there is generally no dght to a civil
English fee-shifting applies, and discovery is limited." (Pl.'s Br. at

þry

1."1.,

:r.ial

in Canada,

Docket F,ntry

32.)

Flowever, as noted by another court, "[t]hat Plaintiffs recovery may be less in Canada than

6

it

would hope to recover hete does not rendet the Canadian court inadequate. Similatly, the
absence

of a right to ttial by i"ty does not render the Canadian court inadequate."

L,ogan

Int'l

Inc. u. / 556t11 Alberta Ltd., 929 F. Supp. 2d 625, 633 (S.D. Tex. 201.2) (intemal citation
omitted).

Defendants have presented affidavits of two Canadian lawyets indicating that Nova
Scotia and Quebec courts would have jurisdiction ovet these claims and would ptovide an
avallable and adequate fotum

for Plaintiffs to litigate their claims against Defendants. (See

Def.'s Reply, Exs. 4,5,.,\ff. of John P. Merdck, Docket Entty 42-4 and.,\ff. of Robert E.
Chatbonneau, Docket Entry 42-5). Moteover, Canadian law would likely apply
claims even

if they ate litigated in this country.

to

these

Undet the tetms of the w^rr^nty agteed

upon by the patties, any legal issues atising ftom the 'waLn^nÍy

^re

to be governed by the laws

of the Ptovince of Nova Scotia, Canada. By theit agreement to the teffis of this wàffanty,

LP

Canada acknowledged that Canadtan law ptovides adequate temedies and darnages

fot

claims adsing under thewananty. Moreover, the possibility that Canadtan law might differ

ftom the law applied in this forum is no basis fot find.ing Canadato be an inadequate fotum.
As the Supteme Court noted in Pþer Aiwaf| "if conclusive ot substantial weight wete given

to the possibility of a

change

in law, theþram

non conueniens

doctine would become vittually

useless" because the forum selected by a plaintiff will almost always be one in which the law
is mote advantageous than that

of

any alternative forums. PþerAirnaft,454 U.S. at250

Defendants have ptesented evidence that a Canadian forum allows Plaintiffs tedress

fot its claims.

Because Plaintiffs

"will not be depdved of all remedies" in

Canada, and

because "all patties can come within [Canada's] judsdiction," this Coutt finds that Canada is

7

both an avallable and an adequate alternative forum. Tang 656 F.3d at 248 (alteratton
ptovided) (quoting Fid. Bank PLC, 242 tr. App'" at 90 (unpublished) (intetnal quotations
marks omitted)).

3. Convenience

a. ltgal standard
The Court must next determine which forum is best suited for the litigation between
these parties. Because Canada "is both available and adequàte," the Coutt "must weigh the

public and private interest factors" televant to determining convenience. Tang 656 F'.3d at
249

b.

Pablic Factors

The public factors to be considered by the coutt
difficulties flowing ftom coutt congestion;"

are: (1) "the administtative

Ø "the local intetest in having locahzed

controversies decided at home;" (3) "the interest in having the ttial

of a diversity

case

in

a

forum that is at home with the law that must goverri the act)on;" (4) "the avoidance of
unrìecessary problems

unfairness

in conflict of laws, or in the application of foteign law;" and (5) "the

of butdening citizens in an unrelated forum with jury drty." Pþer Aircraft, 454

U.S. at 241 n.6 (quoting Gilbert,330 U.S.

^t

509 (intetnal quotation matks omitted)).

lØith tegard to the fìrst factor, thete is no evidence in the tecord as to docket
conditions in Canada compared to North Carohna. Therefore, this factot is neutral.
\ùØith tespect

to the second and third factors, the real parties in intetest in this matter

arc Canadian companies. ,{s a result, "home" for the purposes of this analysis ís Canada,
which clearly has a strong interest in adjudicating this dispute involving the manufactute, sale

8

and distdbution
Resin

M

of

allegedly defective products thtoughout Canada. The CanExel Dual

coating was marìufactured and sold

company. (Berthiaume Aff.

11

in

Canada

by Akzo Nobel, a Canadian

11.) The coating was then shipped from Quebec to Nova

Scotia, whete LP Canada's plant was located. Qd.) The CanExel siding was manufactuted
and the coating was applied in Canada by LP Canada.

(Id.)

Thete is no allegaton that any

North Carohna consumers wete injuted by the CanExel Dual Resin M coating.
Plaintiffs contend that,\kzo Nobel Coatings, the U.S.-based entity with facilities in

High Point,

Noth

Carohna, was involved

CanExel Dual Resin

in the development, research and testing of

M coating at its Noth Carolina faclhty. These

based on the affidavits of

the

allegations arc largely

Bill Camp, a former employee of LP Ca¡ada and David Ritter,

a

current Louisiana Pacific employee who tesides in Tennessee. (Docket Entty 34,35.) These
affidavits make many assettions about the intetnal workings of .,{.kzo Nobel which appear to

not be based on petsonal knowledge and are conclusory in natute. On the othet hand, the
affìdavits

of

Akzo Nobel employees and offìcers appear

process responsible for formulation of CanExel Dual Resin

of the Noth

Carohna facility

to more

accurately reflect the

M and the limited involvement

in its development.l North Catolina's minimal interest in

adjudicating this dispute which only tangentially involves this state is cleatly oulweighed by
the interests of Canada.

See

Tang 656 F'.3d at 252;

NLA

Diagnostics

Ll,C a. Theta Tecb. Ltd.,

No. 3:12CV00087, 2012 WL 3202274, *5 CX/.D.N.C. Aug. 3, 201.2). This factot

t

clearly

Fo, example, in his affidavit, Akzo Nobel's General Manager in Quebec acknowledges that Akzo
Nobel requested and considered data and advice from its U.S. affiliate which had othet dual tesin
coatìng systems. @erthiaume Aff. '1T 10.) Likewise, Akzo Nobel acknowledges that the coating was
applied to test fences at the High Point, Noth Czroltna facility of Akzo Nobel Coatings.
@erthiaume Supp. Âff. T 9, Docket Ertry 41-3.) Flowever, accotding to Berthiaume, "the number
of test fences in Quebec and Nova Scotia is significantly gteater than in Noth Caroltna." (Id.)
9

favors tdal

in Canada. Moreover,

w^rna;rtty as

as

outlined above, LP Canada and Akzo Nobel agreed to

a

to the coating's performance when applied to the siding, and the two companies

agreed that Nova Scotia law would apply.

Fourth, while not controlling, as noted, ttial in this district would necessadly involve
application of foteign law, as the parties agteed that Nova Scotia law would be controlling.

This concetn would obviously not be present in Canada.
"1.:09CY92,2009

ìøL

See, e.g.,

Il/olf u. Ztp.ca,lør., No.

1628887, at *3 (N4.D.N.C. June L0, 2009) ('-,\lthough this does not rule

out headng the case in North Carohna, the coutt would be applying

foreþ

laws in a dispute

involving the financial problems of a Canadtan baseball team. This mattet is best handled by
the courts in Ottawa. Accotdingly, the court will tecommend dismissal of the action on

-fo**

non cvnueniezr

Finally, the

gtounds."). This factor, therefore, favors dismissal.

fìfth factor, "the

unfairness of burdening citizens

in an unrelated fotum

with jury duty," weighs in favor of dismissal. This is, at its heart, a dispute between two
Canadia¡ companies tegarding activities that took place pdmadly

in

Canada. Jurots in this

district would have little or no relationship with this case. Thus, this factot also favors
dismissal.

c. Priuate Factors

The pdvate factors that the Court must considet for determining whether to dismiss

a case for forurn
"avallablltty

non conaenieør

of compulsory

include (1) "the relative ease of access to sources of ptoof; Q)

process

for attendance of unwilling, and the cost of obtaining

attendance of willing, witnesses;" (3) "the possibility of view of ptemises,

if view would be

appropriate to the action;" and (4) any "othet ptacttcal problems" that must be addtessed in

10

order to "make trial of a case easy, expeditious, and inexpensive." PþerAircraft,454 U.S. at
241,

n.6 (quoting Gilbert,330 U.S. at 509) (intemal quotation omitted).
The pdvate factors in this case favor dismissal. As noted by Defendants, because the

coating was developed, manufactured, and sold tn Canada, it appears that the vast maiotrtt¡

of relevant documents are maintained it Canada. (Berthiaume Âff.

11

20

)

Additionally,

a

significant riumber, indeed, a majoirty, of the witnesses identified by the paties at this eatly
stage are residents

of Canada. Plaintiffs

whom they identi$' as residing in

have identifìed 36 potential witnesses, only five

Noth

Caroltna.2 (Âff. of Shawn M. Raitet

of

fl 7, Docket

Entry 36.) Most telling, however, is that Plaintiffs' list fails to include neaÃy all the Canadian
residents identified

in their own Complaint and afftdavits submitted in

response

to

these

motions. Defendants, on the other hand, have identifted 2l individuals with involvement in,
and first-hand knowledge of, the mattets alleged in the Complaint. This list includes all
individuals named or identified

in Plaintiffs' Complaint.

(See

Berthiaume

Aff. J[fl 15-19;

Berthiaume Supp. Âff. TI 11, Docket Entries 27-1, and 42-1,.)

Plaintiffs challenge Defendants' claims that the documents and physical evidence in
this case are located in Canada. Howevet, Plaintiffs' arguments ate conclusory and genetally

not supported by the documents they cite. Moreover, as conceded by Plaintiffs, ctitical
documents (and witnesses) are located in both North Carcltna and Catada, and can easily be
accessed

in eithet fotum. (SeePl. Mem.

at'1,4-1,5,

Docket tr'ntry 32.)

Oth.t than identi!'ing the five witnesses who Plaintiffs contend teside in Noth Carolina,Raitet
simply lists names of other witnesses, with no substantive narcatfve as to who these witnesses are or
where they reside. S.aiter Aff. T 8.) The Court notes âs well that,\kzo Nobel avets that only three
of the five witnesses identified by LouisianaPactÍtc as Notth Caroltna tesidents do in fact live in
North Caroltna. (Aff. of Forest Flemingfl 11, Docket Entry 42-2;Berrhiaume Supp. r\ff.1[ 19,
Docket Entty 42-1.)

'

11

As for the availability of compulsory process, the majotity of the essential witnesses
live in Canada and most are no longer employed by the patties. These witnesses would be
outside this Court's compulsolT process, but

it

appears that most are Canadian tesidents. As

avened by CanadtzLî attoÍneys, the courts of Nova Scotia and Quebec have procedutes by

which they can compel a witness from anothet province to appear in its court to ptovide live
testìmony. (N4etdck Aff.

I

27; Charbonneau Aff.

I

1125-26.)

The cost of compelling attendance, moreover, weighs in favor

of ttial in

Canada.

While travel to North Caroltna from Canada would most likely cost the same as travel ftom
Canada

to Noth Catohna, it appears that there are significantly more witnesses in Canada

than in North Carohna.
Regarding the third factor, neither side has indicated that a ptemises view is necessary

in this case. Finally,

as

to other "practcal ptoblems" which would make tnal of this case

expeditious and less expensive, this Coutt finds that judicial economy favots trylng this case

in Canada,where most of the witnesses and cdtical documents are, and whete the undetþing
dispute in this matter truly took place.

The pdvate and public interest factors indicate that the Canadtan fotum is
substantially more convenient alternative. As a result, dismissal

a

of this lawsuit in favor of

refiling in Canada is apptoptiate.

III.

CONCLUSION

Defendants have satisfied their butden to demonsttate that the Canadian forum is
substantially mote convenient. Therefore, this Coutt RECOMMENDS that the motion to
dismiss pursuant to the doctrine of þrum non conueniezr (Docket Entry 26) be GRANTED

1,2

aîd the action be DISMISSED, without ptejudice to tefi,ling in Canada. IT

FURTHER RECOMMENDED that, in the event the Coutt adopts
Recommendation, Defendants' motion
@ocket E.rtry 24)be

to

dismiss pursuant

L
Sterer Irf¡gi stntc Judge

13

this

to Fed. R. Civ. P. 1'2þ)Q)

DENIED AS MOOT.

Durham, North Catohna
February 7,20'1.4

IS