GRAMERCY EMERGING MARKETS FUND, BALKAN VENTURES LLC, AND RILA VENTURES LLC, Plaintiffs Below, Appellants,
ALLIED IRISH BANKS, P.L.C., AND THE BULGARIAN AMERICAN ENTERPRISE FUND, Defendants Below, Appellees.
Submitted: September 13, 2017
Below: Court of Chancery of the State of Delaware C.A. No.
appeal from the Court of Chancery. AFFIRMED.
Stephen B. Brauerman, Esquire, Sara E. Bussiere, Esquire,
BAYARD, P.A., Wilmington, Delaware; Sean F. O'Shea,
Esquire, (argued), Michael E. Petrella, Esquire, Amanda L.
Devereux, Esquire, Brian B. Alexander, Esquire, BOIES
SCHILLER FLEXNER LLP, New York, New York, Attorneys for
Appellants, Gramercy Emerging Markets Fund, Balkan Ventures
LLC, and Rilsa Ventures LLC.
R. Shannon, Esquire, Christopher N. Kelly, Esquire, POTTER
ANDERSON & CORROON LLP, Wilmington, Delaware; Walter C.
Carlson, Esquire, (argued), Elizabeth Y. Austin, Esquire,
SIDLEY AUSTIN LLP, Chicago, Illinois, Attorneys for Appellee,
Allied Irish Banks, P.L.C.
Kenneth J. Nachbar, Esquire, Ryan D. Stottman, Esquire,
MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington,
Delaware; Christopher Landau, P.C.,
KIRKLAND & ELLIS LLP, Washington, D.C.; Brian D. Sieve,
P.C., Jessica L. Staiger, Esquire, KIRKLAND & ELLIS LLP,
Chicago, Illinois; Jeremy M. Feigenbaum, Esquire, (argued),
KIRKLAND & ELLIS LLP, New York, New York, Attorneys for
Appellee, Bulgarian-American Enterprise Fund.
STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ, and TRAYNOR,
Justices, constituting the Court en Banc.
STRINE, CHIEF JUSTICE
case, a Cayman Islands investment fund and two of its
Delaware subsidiaries (collectively "Gramercy") sue
a bank organized under Delaware law with offices in Illinois
and Bulgaria (Bulgarian-American Enterprise Fund, or
"Bulgarian-American") and an Irish bank
headquartered in Dublin (Allied Irish Banks, P.L.C., or
"Allied") over claims they admit arise under
Bulgarian law and have no connection to activity that took
place in Delaware. Delaware is the second forum in which
Gramercy sought to press its Bulgarian claims. Like Delaware,
the first forum was not Bulgaria, it was Illinois, where: (i)
after extensive discovery and briefing on the issue of
forum non conveniens, the Circuit Court of Cook
County in Chicago granted a motion to dismiss; (ii) the
Illinois Appellate Court unanimously affirmed the Circuit
Court's dismissal; and (iii) the Illinois Supreme Court
denied Gramercy's petition for leave to appeal.
its suit reached a dead-end in Illinois, Gramercy, rather
than going to Bulgaria and suing in the forum whose laws
govern its claims and where its investment in
Bulgarian-American took place, then sued in Delaware.
Bulgarian-American and Allied filed a motion to dismiss,
arguing Bulgaria was the appropriate forum for the
litigation. In granting Bulgarian-American and Allied's
motion and holding that Gramercy's suit did not merit the
overwhelming hardship standard afforded to first-filed
actions under Cryo-Maid, the Court of Chancery was
forced to address confusing arguments about this Court's
forum non conveniens precedent, in particular the
relationship among this Court's longstanding decisions in
Cryo-Maid and McWane,  and a more recent
decision, Lisa, S.A. v. Mayorga.
fact pattern in this case diverges from the scenarios we
usually see facing motions to dismiss for forum non
conveniens: (1) a first-filed Delaware action with no
pending descendants, which implicates
Cryo-Maid's overwhelming hardship standard; and
(2) a Delaware action with a predecessor pending elsewhere,
which implicates McWane's discretionary
standard. Likely for this reason, the Court of Chancery felt
it had just two options for its legal
analysis-Cryo-Maid or McWane- and looked to
Lisa for guidance in choosing between the two.
and Allied contended that Lisa, rather than being a
very fact-specific ruling, set forth broad principles,
principles about which the parties disagree. Although
Gramercy interpreted Lisa to apply the
McWane standard only to cases in which the no longer
pending first-filed case was decided on the merits,
Bulgarian-American and Allied interpreted Lisa as
extending McWane to all cases in which the
first-filed case was decided, regardless of whether that
decision was on the merits. The heart of the parties'
disagreement was this: when a first-filed suit is
procedurally dismissed, is a motion to dismiss for forum
non conveniens in a later-filed Delaware suit subject to
the overwhelming hardship standard?
Court of Chancery correctly held that the Delaware action was
not first-filed, and that to obtain dismissal on forum
non conveniens grounds, Bulgarian-American and Allied
did not need to show overwhelming hardship. But, because the
Illinois case was no longer pending, and was not dismissed on
the merits like the first-filed action in Lisa,
McWane was no longer the proper focus for the Court
of Chancery's analysis.
Illinois action had relevance in the forum non
conveniens analysis because it meant that analysis would
not be tilted in Gramercy's favor under the overwhelming
hardship standard. But, because the Illinois action was not
dismissed on its merits, but instead for forum non
conveniens, it should not have shifted the Court's
focus from Cryo-Maid to McWane. Between
Cryo-Maid's overwhelming hardship standard and
McWane's discretionary standard lies an
intermediate analysis that applies to situations like
Gramercy's: a straightforward assessment of the
Cryo-Maid factors, where dismissal is appropriate if
those factors weigh in favor of that outcome.
understand how this case was presented before the Court of
Chancery, it is useful to consider the three key cases that
framed the parties' duel over overwhelming hardship. We
begin with the first, Cryo-Maid.
Cryo-Maid, this Court considered whether to stay a
first-filed Delaware action in favor of an action pending in
Illinois. In deciding to stay the Delaware action, this Court
considered the following factors: "(1) [t]he relative
ease of access to proof; (2) the availability of compulsory
process for witnesses; (3) the possibility of the view of the
permises [sic], if appropriate; . . . (4) all other practical
problems that would make the trial of the case easy,
expeditious and inexpensive;" and (5) "whether or
not the controversy is dependent upon the application of
Delaware law which the courts of this State more properly
should decide than those of another
jurisdiction." "A sixth [factor]-the pendency or
nonpendency of a similar action in another jurisdiction-was
added to the Cryo-Maid framework by subsequent
decisions." Together, these factors have come to form
the core of Delaware's traditional forum non
when Cryo-Maid is invoked, the plaintiff has chosen
Delaware as its first forum. When that is the case, for
dismissal to be granted, the Cryo-Maid factors must
weigh "overwhelmingly in favor of the
defendant." The "short-hand phrase
'overwhelming hardship' emerged" from the post
Cryo-Maid case law, reflecting our courts'
reluctance to lightly disturb a plaintiff's first choice
of fora.When a case first-filed in Delaware is
challenged by a motion to dismiss for forum non
conveniens, "[d]ismissa[l] on the basis of
forum non conveniens [is] appropriate only in the
rare case involving undue hardship and
McWane, this Court considered whether or not to stay
a later-filed Delaware action in favor of a first-filed
Alabama action. In deciding to stay the Delaware action, this
Court distinguished the forum non conveniens
analysis for first-filed Delaware actions from the forum
non conveniens analysis for later-filed Delaware actions
related to an action pending in another jurisdiction. As
McWane clarified, "in view of [a] prior action
pending, " Delaware courts considering a motion to
dismiss for forum non conveniens should ask whether
"there are facts and circumstances sufficient to . . .
grant the stay within the range of the Court's
discretion." As this Court recently summarized:
Delaware courts considering a motion to stay or dismiss in
favor of a previously filed action have applied
McWane's three-factor test: (1) is there a prior
action pending elsewhere; (2) in a court capable of doing
prompt and complete justice; (3) involving the same parties
and the same issues? If all three criteria are met,
McWane and its progeny establish a strong preference
for the litigation of a dispute in the forum in which the
first action was filed.
case is not first-filed in Delaware and its predecessor
remains pending, McWane applies, and Delaware courts
"typically will defer to [the] first-filed action in
another forum if that action involves substantially the same
parties and issues as the litigation pending in Delaware, and
will stay the later-filed Delaware action pending
adjudication of the issues in the competing
the evidentiary burden a moving party faces under
Cryo-Maid's overwhelming hardship analysis is
more demanding than what that party would face under
McWane's discretionary analysis, the relevant
considerations under the two analyses are related. "In
addition to the comity considerations articulated in
McWane, the Court of Chancery, in assessing motions
to stay Delaware litigation under the first-filed rule,
frequently analyze[s] the same 'practicality' factors
traditionally applied under the forum non conveniens
doctrine." In fact, in McWane itself, this
Court recognized five of the six Cryo-Maid
considerations in deciding to stay the Delaware action in
favor of the first-filed Alabama action that was still
no coincidence that McWane discussed the
Cryo-Maid factors in its analysis of the
circumstances compelling a stay in the case.
"McWane does not hold that consideration of the
forum non conveniens factors is inappropriate in
connection with the analysis mandated by the first-filed
rule. Instead, McWane holds that imposing the same
high burden on defendants in the first-filed context as in
the forum non conveniens context and failing to
consider principles of comity in conjunction with the
first-filed analysis constitutes error."
draws on Cryo-Maid's factors because both tests
are rooted in forum non conveniens doctrine.
"[W]hat distinguishes the application of [the forum
non conveniens] factors in the McWane [and
Cryo-Maid] contexts is 'the background
presumption against which the elements are
applied.'" Under Cryo-Maid, defendants
must establish overwhelming hardship for Delaware courts to
grant dismissal. Under McWane, Delaware courts have
greater discretion in determining whether a stay or dismissal
Lisa, this Court considered whether a later-filed
Delaware action whose predecessors were no longer pending
still triggered McWane's discretionary analysis.
Lisa was an unusual case because the Delaware action
was the fourth action filed by Lisa, S.A., which had
previously filed two actions in the Florida state courts, and
one in the Florida federal courts.
Court of Chancery previously stayed Lisa's Delaware
action pending the resolution of the 1998 Florida Action, the
first of its three predecessors in Florida.This made
sense because Lisa's Delaware action was brought to
ensure that it could obtain relief in the 1998 Florida
Action: the Delaware suit involved a challenge to ...