Fourth Circuit Reverses Forum Non Conveniens Dismissal, Says Iraq Might Not Be An Adequate Forum For A Defamation Lawsuit

The Fourth Circuit's ruling last Friday in Galustian v. Peter reinstated a Iraq-based defamation case which had been dismissed by the District Court on the grounds of forum non conveniens. The opinion also contains some significant points on amendments as of right under the Rules of Civil Procedure.

The lawsuit was brought in the Eastern District of Virginia by Galustian, a resident of the United Arab Emirates. Peter, the Defendant, was a resident of Virginia. Galustian contended that Peter had defamed him to a trade association of contractors working in Iraq. The statements in question were made by Peter in Iraq, where he lived and worked. Peter moved to dismiss on grounds of forum non conveniens, and the District Court granted the Motion.

The Fourth Circuit reversed. The case turned partly on whether Iraqi law provided a remedy in defamation to Galustian and whether Peter was immune from suit in Iraq, but I'll leave those esoteric points to those of you who specialize in defamation law in Iraq. Here's what business litigators might find significant in Galustian: 

The Obligation To Prove That There Is An Adequate Alternative Forum

First, a main focus of the case was whether Iraq was an "alternate, adequate, and available forum."  The Fourth Circuit said that an alternative forum is adequate when "(1) all parties can come within that forum's jurisdiction, and (2) the parties will not be deprived of all remedies or treated unfairly, even though they may not enjoy all the same benefits as they might receive in an American court."

Whether Iraq provided a remedy for defamation, and whether an additional defendant who was added to the case after the motion to dismiss was filed could be subject to suit in Iraq, were both matters the Fourth Circuit said should be considered more fully by the District Court after remand.

The Role Of Defendant's Residence On A Forum Non Conveniens Motion

Second, Peter's residence in Virginia was an important factor. The Court observed that while it was not required to give much deference to the choice of forum by a foreign plaintiff, "this lack of deference is muted . . . when the defendant is a resident and citizen of the forum he seeks to have declared inconvenient for litigation."

Peter's residence in Virginia wasn't dispositive, said the Court, but that factor needed to be examined more closely by the District Court on remand. 

Amendments As Of Right

Third, the Fourth Circuit said that reversal was appropriate because the trial judge had refused to allow Galustian to amend to add the additional defendant after the motion to dismiss had been filed. The Court stated that "it is this Circuit's policy to liberally allow amendment in keeping with the spirit of Federal Rule of Civil Procedure 15(a)."

The appellate court pointed out that the motion to amend had been made before the filing of a responsive pleading, and that Galustian therefore had an absolute right to amend his pleading. That was true even though the trial court had determined that the amendment would be futile.

On this point, Judge Gregory said "the doctrine of futility only applies when the plaintiff seeks leave of court to amend and does not have a right to amend. The plaintiff's right to amend once is absolute." That absolute right extends to amendments seeking to add parties, as Galustian's motion did.  (There's a split in Circuits on the point whether Rule 15(a) applies to amendments adding parties). The District Court's refusal to allow the amendment was an abuse of discretion.

Last, the Court reminded lawyers that Rule 15, which governs amendments to pleadings, changed on December 1, 2009. Formerly, a party could amend as of right literally up until the Court ruled on a motion to dismiss, because a motion to dismiss is not a responsive pleading. The changed rule says that amendments as of right must be made within 21 days after service of a 12(b) motion. The revised rule setting the new time limit didn't apply to Galustian's case, but the result might have been different if it had.