It has not been a good month for Instituto Mexicano del Seguro Social (IMSS – the Mexican Social Security Institute) in U.S. appellate courts.
This recent post discussed a Sixth Circuit decision affirming the dismissal of a civil lawsuit on forum non conveniens grounds filed by IMSS against Stryker in the aftermath of the company’s FCPA enforcement action which involved, among other conduct, alleged bribery of IMSS officials.
As highlighted in this prior post, in 2017 Biomet became an FCPA repeat offender as the DOJ and SEC brought a parallel FCPA enforcement action in which the company agreed to an overall settlement amount of $30.4 million. A portion of the enforcement action involved conduct in Mexico and in the words of the DOJ: “Biomet’s subsidiaries used a customs broker whose five subagents bribed Mexican customs officials to allow Biomet to export mislabeled products to Mexico.” In the words of the SEC: “Biomet subsidiary 3i Mexico engaged Mexican Customs Broker and certain subagents to pay bribes to Mexican customs officials for the purpose of circumventing Mexican customs laws regarding importing unregistered and improperly labeled products into Mexico.”
Unlike the Stryker FCPA enforcement action, the 2017 Biomet enforcement action did not explicitly implicate IMSS. Nevertheless, in the aftermath of the Biomet enforcement action IMSS likewise brought a civil lawsuit in the U.S. against Biomet alleging that Zimmer Biomet (in 2015 Zimmer Holdings acquired Biomet) bribed Mexican government officials to sell unregistered medical products in Mexico. Specifically, in the words of this recent Seventh Circuit opinion:
“… IMSS claims Zimmer Biomet orchestrated an international bribery scheme from its Indiana headquarters to facilitate the sale of unregistered medical products. Specifically, IMSS alleges Zimmer Biomet paid around $1 million in bribes to its “Mexican agents” who acted as “bagmen” and passed those bribes along to Mexican government officials. Zimmer Biomet personnel purportedly communicated with their employees in Mexico and traveled to and from Mexico to carry out the scheme. IMSS claims, had it known the medical products were unregistered or that Zimmer Biomet was bribing government officials, it could not have purchased from Zimmer Biomet. […] IMSS brought three causes of action: two under Mexican law (breach of contract and violating the Law of Acquisitions, Leases and Services of the Public Sector) and one (fraud) for which the relief “is the same whether this claim is made pursuant to United States or Mexican law.”
Similar to the previously mentioned IMSS v. Stryker lawsuit, Zimmer Biomet moved to dismiss IMSS’s complaint pursuant to the doctrine of forum non conveniens and the trial court dismissed the complaint.
Similar to the IMSS v Stryker lawsuit, IMSS appealed arguing that the trial court misapplied the forum non conveniens doctrine and that the trial court “failed to appreciate the [United Nations Convention Against Corruption] UNCAC impact upon the forum non conveniens doctrine.”
Similar to the recent Sixth Circuit decision in the Stryker matter, the Seventh Circuit likewise affirmed dismissal of IMSS’s claims against Biomet on similar grounds.
As to forum non conveniens, the Seventh Circuit stated and concluded (certain internal citations omitted):
“IMSS claims Mexican courts are inadequate based on their unwillingness to “address the responsibility of foreign parents of Mexican agents” and less fulsome discovery procedures. Notably, IMSS does not assert a remedy is impossible in Mexican courts, merely that it is less likely. First, it would be odd to subject Zimmer Biomet to litigation in an inconvenient forum merely to increase the chances it will lose on the merits. Second, and more damning to IMSS’s argument, differences in law between forums “should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry.” A forum is not inadequate merely because its law is less favorable to the plaintiff. Indeed, two of IMSS’s causes of action arise under Mexican law and, according to IMSS’s own complaint, the remedy for the third is identical in the United States and Mexico. There is no risk IMSS will be wholly deprived of a remedy by litigating in Mexican courts.
[…]
The district court concluded the bulk of witnesses and evidence are located in Mexico. Based on IMSS’s own pleading, IMSS is an agency of the Mexican government, Biomet 3i is located in Mexico, the purported contracts were executed in Mexico between Mexican parties, “Mexican agents” carried out the alleged bribery scheme, and any injury occurred in Mexico. IMSS first claims Zimmer Biomet failed to provide evidence of the relative volume of witnesses and evidence in each forum. However, Zimmer Biomet is not required to specifically indicate what evidence would be out of reach if litigation proceeded in IMSS’s chosen forum to succeed on a forum non conveniens motion. Instead, Zimmer Biomet was only obligated to “provide enough information to enable the District Court to balance the parties’ interest.” IMSS’s own complaint arguably provided sufficient information to permit the district court to reach its conclusion, but Zimmer Biomet also offered Díaz’s testimony that “if the action is filed with the Indiana courts it would be much more complicated tha[n] if it is brought with Mexican courts” due, in part, to the location of documents and witnesses.
IMSS claims—based on Zimmer Biomet’s cooperation with the 2017 SEC and DOJ investigations—the relevant evidence is already located in Indiana. First, given the breadth of IMSS’s pleading and absence of detailed allegations, it is unclear to what degree the events subject to the 2017 investigations overlap with those in IMSS’s complaint. Second, the 2017 DOJ deferred prosecution agreement notes Zimmer Biomet made its own employees available for interviews. There is no indication it included other evidence relevant to the present suit, such as the alleged contracts or interviews with IMSS employees or the “Mexican agents” purportedly acting as “bag men.” Third, the district court expressly considered the materials from the 2017 investigations and nonetheless determined they were “fewer in number and secondary in relevance” to evidence in Mexico. IMSS points to nothing which would allow us to disturb this sound conclusion.
Nor did, as IMSS suggests, the district court ignore relevant evidence or arguments in reaching its decision. Indeed, the district court specifically referenced the evidence of other government investigations into Zimmer Biomet’s global activities but found them less numerous and relevant than evidence located in Mexico. Merely because the district court disagreed about the weight and value of IMSS’s evidence does not mean the court ignored it. The district court also expressly considered, and rejected, IMSS’s argument about the comparative ease of obtaining evidence in the United States and Mexico. The district court acknowledged Pérez’s opinion about discovery but correctly noted discrepancies in discovery procedures are immaterial to the forum non conveniens analysis.
Instead, the district court judged the hardship of transporting witness from Mexico to the United States, particularly in light of then-active COVID-19 travel restrictions, the more significant burden.
Finally, IMSS claims Zimmer Biomet engaged in impermissible forum shopping by seeking dismissal under forum non conveniens. First, by definition, all defendants seeking dismissal under forum non conveniens in hopes of landing in a more convenient (and arguably more favorable) forum are engaged in forum shopping. The forum non conveniens analysis focuses on which of the two available forums is objectively more convenient, not parties’ subjective motivations for seeking a particular forum. Second, the possibility of reverse forum shopping by the defendant “ordinarily should not enter into a trial court’s analysis of the private interests.”
[…]
IMSS raises an underdeveloped argument that, in weighing the public interest factors, the district court ignored Mexico’s “express policy statement” favoring venue in the United States. First, it is not clear why, in a forum non conveniens analysis focused on convenience, IMSS’s policy preference is relevant. Second, we do not accept IMSS’s venue decision as an expression of Mexico’s policy preference. IMSS is one agency of the Mexican government. Without some support, it seems a stretch to claim IMSS is fully aware of, or empowered to speak to, the nuanced policy interest in the administration of the Mexican legal system, a national interest in addressing corruption, or the foreign relations among nations. IMSS points to nothing indicating its decision where to file a particular lawsuit is the product of the balance of Mexico’s national interests as a whole.
[…]
The district court neither ignored nor improperly balanced the relevant public and private interest factors. Consequently, its decision enjoys substantial deference. The district court did not abuse its discretion in applying the forum non conveniens analysis.”
As to UNCAC, the Seventh Circuit stated and concluded (certain internal citations omitted):
“IMSS claims the UNCAC alters the forum non conveniens analysis, but not all international treaties constitute binding federal law. Treaties are “equivalent to an act of the legislature,” and thus self-executing, when they “operate[] of [themselves] without the aid of any legislative provision.” Treaties which are not self-executing “‘can only be enforced pursuant to legislation to carry them into effect.’” The Supreme Court has “long recognized” this distinction.
Although the UNCAC comprises an international commitment, it is not domestic law unless Congress enacted implementing legislation or “the [UNCAC] itself conveys an intention that it be ‘self-executing’ and is ratified on these terms.” Neither are the case.
The United States ratified the UNCAC subject to the following declaration:
[T]he provisions of the [UNCAC] (with the exception of Articles 44 and 46) are non-self-executing. UNCAC Declarations and Reservations; S. Exec. 109-18 at 10.
Apart from provisions irrelevant to the present suit, the UNCAC is expressly non-self-executing. Nor did Congress pass legislation implementing the UNCAC. The UNCAC is not binding federal law. This alone dooms IMSS’s argument under the treaty.”
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