In National Football League and NFL Properties LLC v. Fireman’s Fund Insurance Co. et al., No. B245619, 2013 WL 2316543 (Cal. Ct. App. May 28, 2013), the California Court of Appeal, interpreting California law, affirmed a stay -- granted on the ground of forum non conveniens -- that was sought by liability insurers in a brain-injury coverage case filed by the NFL. Id. at *23.
The NFL and NFL Properties LLC (collectively, “NFL Entities”) had filed suit in a California state court against 32 insurance companies, alleging certain of the insurers had breached their duty to defend brain-injury claims filed against it and seeking a declaration that all the insurers must indemnify it for any damages paid to claimants in the underlying tort suits. Id. at *5. All but one insurer sought a dismissal or stay of the case on the ground of forum non conveniens, and the trial court granted the motion to stay pending the outcome of parallel coverage actions involving the same parties in New York. Id. at *6.
In affirming the stay, the Court of Appeal rejected the NFL’s contention that it was a “California resident for purposes of the forum non conveniens analysis, because, as an unincorporated association of member football clubs, it resides wherever its members are located.” Id. at *9. While the NFL relied on authority from other procedural and jurisdictional contexts recognizing such a scope of residency for an unincorporated association, the court noted that no California case addressed the issue specifically in the forum non conveniens context, where equitable considerations predominate. Id. at *9-10. In answering this issue of first impression, the Court of Appeal held that “a multi-state unincorporated association is not necessarily entitled to a strong presumption of the convenience of a California forum simply because some of its members reside here.” Id. at *10. “Rather, in its forum non conveniens analysis, a trial court must evaluate the nature of the plaintiff’s organization and activities, including any principal place of business aside from those of its members.” Id. The court explained that “a business domiciled in multiple states is not entitled to the same preference as a plaintiff that resides only in California.” Id.
Because the NFL Entities "have their headquarters in New York, run their operations from there, brokered the majority of their insurance policies from there, have their important documents and key executives there[,] and have personnel involved in this coverage litigation employed there,” the Court of Appeal held that the trial court was “legally correct and well within the bounds of reason in denying NFL the status of a full-fledged California resident.” Id. at *10-11.
The Court of Appeal also concluded, after a review of California case law, that (1) a nonresident who files suit in California is entitled to “due deference under the circumstances presented, not a strong presumption, in favor of its choice of forum,” id. at *16, and (2) a party seeking a stay rather than dismissal on forum non conveniens grounds need not prove that California is a “seriously inconvenient forum.” Id. at *19.
Finally, the Court of Appeal held that the trial court had not abused its discretion in balancing the public and private factors pertinent to the forum non conveniens analysis. Id. at *20-22. The Court of Appeal reasoned that “California’s interest in a former resident’s entitlement to coverage for tort claims filed nationwide, mostly by non-California residents, is minimal.” Id. at *21. Accordingly, the California action was properly stayed pending the outcome of the New York coverage actions. Id. at *23.
This decision is important because it answers an issue of first impression and holds that the domicile of members of a multi-state unincorporated association is not entitled to a strong presumption in a forum non conveniens analysis in California. Instead, a court should give more weight to the association’s physical center of operations.
Additionally, it is important because New York and California law differ in their treatment of “long tail” liabilities. While the substantive law governing the actions is not invariably tied to the fora in which the actions are decided, venue still plays a role.
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