OPINION
This appeal arises from a shareholder derivative action by appellant Margaret Richardson — as trustee of the H. and M. Richardson Revocable Survivor’s Trust— against the directors of Transocean Limited, a Swiss corporation. The directors successfully moved to dismiss the case in favor of proceeding in Switzerland, which they propose as a more convenient forum. On appeal, Richardson argues that the trial court abused its discretion in weighing the forum non conveniens factors. Finding no reversible error, we affirm.
Background
An American subsidiary of Transocean Limited (“Transocean”) owned and operated the seagoing drilling rig Deep Water Horizon. In April 2010, an explosion at the rig caused a fire that ultimately sank the Deep Water Horizon and precipitated a widely reported oil spill in the Gulf of Mexico.
Margaret Richardson, a resident of California, filed this lawsuit derivatively on behalf of Transocean against its directors in state district court in Harris County, Texas. She alleged that the directors’ actions in connection with the incident damaged the company by causing it to incur substantial costs, liability, and reputational harm. In her petition, Richardson alleged three causes of action: (1) breach of fiduciary duties of due care, good faith, and loyalty; (2) unjust enrichment to the detriment of Transocean; and (3) waste of corporate assets. Factually, Richardson alleged that Transocean and its subsidiaries have a documented history of safety, maintenance, and regulatory compliance issues similar to those involved in the Deep Water Horizon accident, that the Deep Water Horizon itself had a history of safety problems. She contended that the directors knew or should have known about these problems and failed to take adequate corrective action, and also that they made
Transocean’s business was founded in 1958 as a Delaware corporation headquartered in Houston. Its business was drilling for oil at sea. The company became a Cayman Islands corporation in 1999, and it then reorganized and reincorporated as a Swiss corporation in 2008, although its stock continues to trade on American exchanges. Transocean Limited is a holding company and does not itself directly conduct exploration for oil. Rather, it owns several corporate subsidiaries around the globe which manage extensive offshore drilling fleets. The American subsidiary that works in the Gulf of Mexico — Trans-ocean, Inc. — is headquartered in Houston. It employs thousands of people and operates fifteen drilling rigs in the Gulf region.
The directors moved for dismissal based on forum non conveniens, arguing that Switzerland was a more appropriate alternative forum. In particular, they stressed the difficulties the trial court would face in applying Swiss corporate law. After receiving extensive briefing and holding a hearing, the trial court dismissed Richardson’s action. She timely filed notice of appeal.
Analysis
Richardson argues that the trial court abused its discretion in weighing the forum non conveniens factors to dismiss her case. She emphasizes Transocean’s American origins, the substantial presence of its American subsidiary in Houston and the Gulf of Mexico, the American citizenship of a majority of its stockholders, the American residence of several directors, and the significant human, economic, and environmental costs to Texas and the Gulf wrought by the Deep Water Horizon accident.
“A director’s fiduciary duty runs only to the corporation, not to individual shareholders or even to a majority of the shareholders.” Somers ex rel EGL, Inc. v. Crane,
As a result of these principles, a suit by a shareholder to recover damages from corporate directors who breach their fiduciary duties ordinarily must be pursued on behalf of the corporation. See, e.g., In re Schmitz,
The Supreme Court of Texas distinguishes between a statutory and a common-law species of forum non conveniens. See Quixtar, Inc. v. Signature Mgmt. Team, LLC,
“The ‘central focus of the forum non conveniens inquiry is convenience.’ ” Quixtar,
In deciding motions to dismiss based upon forum non conveniens, Texas courts follow the analysis of the United States Supreme Court in Gulf Oil. See Quixtar,
The heart of the Gulf Oil analysis is the set of private and public interest factors that courts are instructed to weigh in exercising their discretion. The parties dispute the application of these factors to the present case. “A defendant seeking forum non conveniens dismissal ‘ordinarily bears a heavy burden in opposing the plaintiffs chosen forum.’” Quixtar,
We will reverse a trial court’s forum non conveniens determination only if the record shows a clear abuse of discretion. See Quixtar,
I. The private-interest factors
The canonical private-interest factors are: (1) relative ease of access to sources of proof; (2) availability of compulsory process for attendance of unwilling witnesses, and the cost of obtaining attendance of willing witnesses; (3) the possibility of view of premises, if view would be appropriate to the action; (4) enforceability of a judgment once obtained; and (5) all other practical problems that make trial of a case easy, expeditious, and inexpensive. Gulf Oil,
A. Accessibility of evidence and witnesses
Richardson argues that “Texas is the focal point of the litigation in terms of the defendants and evidence.” She points out that five of the directors live in Texas, three in other states of this nation, one in Canada, and three in Europe. Only one of the Europeans resides in Switzerland. Richardson suggests that travel to Switzerland would burden employees of Trans-ocean’s American subsidiary who live and work around the Gulf. Similarly, documents pertaining to drilling operations conducted in the Gulf are likely to be found near where they are generated. In summary, Richardson contends that factors one and two — the relative ease of access to sources of proof and the availability of witnesses — favor litigation in Houston. She argues that a “thorough review of whether Defendants breached their fiduciary duties to the Company requires an examination of more than just the Board meeting minutes, which are often perfunctory and generalized.” Instead, Richardson claims that “it is important to analyze what is happening in the Company’s operations, not just inside the Company’s boardroom.”
Richardson’s argument, that although Transocean is a Swiss corporation, its subsidiary has many employees on the ground in Texas and vessels on the waters of the Gulf, raises a valid consideration. The United States Supreme Court propounded in Roster v.(Am.) Lumbermens Mut. Cas. Co.,
[T]he ultimate inquiry is where trial will best serve the convenience of the parties and the ends of justice. Under modem conditions corporations often obtain their charters from states where they no more than maintain an agent to comply with local requirements, while every other activity is conducted far from the chartering state. Place of corporate domicile in such circumstances might be entitled to little consideration under the doctrine of forum non conveniens, which resists formalization and looks to the realities that make for doing justice.
Nonetheless, Richardson’s reliance upon the availability of documents and witnesses is not congruent with the liatpre of her actual claims. The petition sought relief based upon allegations that the directors knew or should have known about safety problems with the Deep Water Horizon, failed to take appropriate action, and made related false statements. Though Richardson deprecdtfes the importance bf “Board meeting minutes” to her claim, it is ultimately the actions and knowledge of the directors that were placed in issue by her lawsuit. With the exception of appel-lee Steven Newman, whb as Ti’ansocean’s CEO frequently visits oil rigs and personally traveled to the Gulf in response to the Deep Water Horizon accideht, Richardson has not shown why there would be more evidence of the directors’ activities and knowledge in Houston thart in Switzerland. For example, Richardson does not contend that the directors met in Houston or that, with the exception of Newmant they actively supervised the American subsidiary’s Houston headquarters and its physical operations in the Gulf of Mexico,
Indeed, the directors presented evidence that their work for Transocean predominantly took place in Switzerland. Specifically, they attached to their motion to dismiss the affidavit of Transocean’s corporate secretary and associate general counsel, who works in Zug, Switzerland. He affirmed that Transocéan has its corporate headquarters in Switzerland and does not maintain an office in the United States. Based on company records, the secretary listed the varied international residences of the directors. He also averred that meetings bf the board and its committees are “geherally” held iri Switzerland, where the records of such meetings are maintained. Because Richardson’s claim concerned the internal governance of Transocean, the trial court reasonably could have concluded that any evidence available in Switzerland as to what the directors knew, said, and did about the alleged safety problems was more significant than any direct evidence of the problems themselves that one would expect to find near the physical operations in the Gulf.
With respect to attendance at court by the directors themselves, Richardson argued: “Litigating in Switzerland would require eleven witnesses to travel to Switzerland, while litigating in Texas would require only seven witnesses to travel to Texas; critically, three of those seven would be traveling from nearby in the United States, and one would be traveling from Canada. In comparison, litigating in Switzerland would require international travel for eleven witnesses.”
The burden of traveling to Switzerland should not be overstated in light of the diiectors’ duty and demonstrated willingness to travel there regularly for Trans-ocean business. Moreover, should some witnesses or defendants prove unwilling to attend proceedings in Houston, the extent of a Texas court’s jurisdiction and the territorial limits to the effective power of its orders could ultimately prove to be greater geographic obstacles than the inconveniences of travel. See generally CSR Ltd. v. Link,
In their motion to dismiss, the directors argued that discovery under Texas procedures directed toward evidence in Switzerland would be complicated by provisions of Swiss law forbidding the exercise of governmental functions on behalf of foreign governments on Swiss soil. The directors relied on an opinion by' Peter Forstmoser, a Swiss law professor, who recounted past instances when Americans conducting discovery were targeted by Swiss law enforcement. In her brief, Richardson responds to these concerns obliquely, arguing that if discovery in Switzerland “were as impossible as Defendant’s expert suggested [then] no case could ever be litigated in the United States that required the application of Swiss law and discovery of Swiss documents.” However, the trial court could have reasonably considered legal barriers to conducting discovery in Switzerland in weighing the Gulf Oil factors -without treating those barriers as categorical bars to a suit involving discovery in Switzerland.
B. Enforceability of a Texas judgment
Richardson argues that the fourth private-interest factor, enforceability of a potential judgment, supports litigating her case in Texas. She repeats her argument that a Texas court would have jurisdiction over all of the directors because of Trans-ocean’s contacts with Texas. She further contends that Newman owns property in Texas and emphasizes the Texas residence of five of the directors. Finally, she identifies statutes and prior cases attesting to the enforceability of a Texas judgment in the states and countries where the other directors reside.
As we previously explained, Richardson’s assumption that all of the directors would be subject to the jurisdiction of Texas courts based simply on the contacts of Transocean with the state is flawed. See, e.g., Siskind,
C. Balance of private-interest factors
In order for Richardson to prevail in this appeal, she must show that the trial court abused its discretion and failed to strike a reasonable balance when it weighed the Gulf Oil factors. See Quixtar,
For the reasons that we have discussed, we are not persuaded that the trial court abused its discretion in weighing the private-interest factors. While certain facts — such as the American residence of several defendants and the extensive operations of Transocean’s American subsidiary in Texas and the Gulf — may weigh in favor of a Texas forum, the trial court reasonably could have concluded based on other facts presented to it — most notably that this case concerns acts of corporate governance by the board of directors of a Swiss corporation that holds its meetings in Switzerland — that the balance of the
II. The public-interest factors
The public-interest factors are: (1) administrative difficulties for courts when litigation is piled up in congested centers instead of being handled at its origin; (2) the burden of jury duty that ought not to be imposed upon the people of a community with no relation to the litigation; (3) local interest in having localized controversies decided at home; and (4) avoiding conflicts-of-law issues. Gulf Oil,
A. Local interest and difficulty of administration
Richardson contends that the first, second, and third public-interest factors — administrative difficulties for courts, the burden of jury duty, and the local interest in having localized controversies decided at home — weigh heavily in favor of litigation in Texas. She emphasizes that the Deep Water Horizon accident claimed the lives of eleven Americans, including two Texans, and that Transocean’s American subsidiary employs many people at its Houston headquarters. She also maintains that more than half of Transocean’s stock is owned by Americans.
Richardson’s argument that the Deep Water Horizon accident harmed Texas and Texans is misplaced. Richardson is neither bringing a claim for Texans who suffered personal injuries as a result of the oil spill nor is she representing the interests of the Houston employees of Transocean’s subsidiary. Rather, she is bringing a claim in which she purports to represent the interests of Transocean and its shareholders. The torts of which she complains are breaches of fiduciary duties owed to the company by the directors. Contrary to Richardson’s assertions, Texas and the potential jurors of Harris County have no special interest in enforcing fiduciary duties owed to a foreign corporation by its directors. See Edgar v. MITE Corp.,
Richardson argues that our decision should follow that of the Second Circuit in DiRienzo v. Philip Services Corp.,
DiRiénzo, however, is readily distinguishable from the case before us. Whereas Richardson has launched a shareholder derivative suit, the plaintiffs in DiRienzo brought personal, non-derivative claims for violations of American securities laws. Id. at 24-25. The Second Circuit relied heavily on the fact that the plaintiffs were seeking to enforce American securities laws in a judicial district where those securities were traded on a public exchange. See id. at 31-33, In contrast, Richardson is seeking to vindicate the interests of Transocean iiself under Swiss corporate law; she is not seeking recovery under American securities laws or bringing suit in a district hosting an exchange where Transocean’s stock is publicly traded.
The United States Supreme Court has acknowledged the significant administrative burdens that accompany shareholder derivative suits and the relevance of those burdens to deciding questions of forum non conveniens. The Roster Court wrote:
To entertain such an action places the forum in a position of responsibility toward the whole class whicli the plaintiff assumes to represent. To prevent collusive settlements and abuses, the Court must approve dismissal or compromise ánd often must give notice to the other potential plaintiffs, in this case to the other members and policy holders in whose behalf plaintiff sues and who have a right to be heard on the propriety of settlement. It also takes on the troublesome business of fixing allowances to counsel and accountants for the plaintiff payable out of the defendant corporation’s recovery against other defendants. Thus, such a litigation brings to the court more than an ordinary task of adjudication; it brings a task of administration; and what forum is appropriate for such a task may require consideration of its relation to the whole group of meinbers and stockholders whom plaintiff volunteers to represent as well as to the nominal plaintiff himself.
B. Conflicts-of-law issues
Richardson agrees with the directors that Swiss law would apply to her case. See Tex. Bus. ORGS.Code Ann. § 21.562(a). She argues that it is nevertheless within the trial court’s capability to ascertain Swiss law in this case and that conflicts of law cannot, standing alone, dictate dismissal.
We agree that the need to apply foreign law alone cannot mandate dismiss
As Professor Forstmoser explained, Switzerland is a civil-law jurisdiction with a code-based jurisprudence. Since it is a trilingual nation, every law is written in French, German, and Italian. The evidence presented to the trial court indicated that each language is considered authoritative, and a “careful interpretation of Swiss law may sometimes require consideration of the text in the three languages which may well differ in details.” As in other civil-law nations, difficult questions of law are often decided by reference to scholarly articles. Past decisions of tribunals, while not without influence, lack the controlling force they possess in Texas. See generally Doerr v. Mobil Oil Corp.,
The professor identified a number of uncertainties in pertinent sectors of Swiss corporate law. While Switzerland recognizes shareholder derivative claims, there are few past decisions involving companies in good standing. Rather, most litigation has involved claims by creditors against insolvent or failing organizations. The professor was aware of only “a handful” of cases against publicly traded companies.
Professor Forstmoser recognized that directors of a Swiss company have a duty of care that may encompass Richardson’s safety claims but cautioned that there have been no prior decisions construing the duty in the context of physical, operational safety. Instead, past claims have dealt with mismanagement of financial risks, such as failing to report overindebtedness to a judge.
Acknowledging that Richardson pleaded a diminution in Transocean’s market value, the professor opined that, with some exceptions, damages generally cannot be recovered in a Swiss derivative suit for mere reductions in share price. Forstmoser also explained that Richardson’s generalized accusations about the behavior of the directors as a group would be inadequate under Swiss law. Before a Swiss director may be held liable, a causal connection between his acts or omissions and foreseeable harms suffered by the corporation must be established.
The professor’s opinion also describes a doctrine in Swiss corporate law, the dec-harge, which allows the shareholders at a general meeting to release the directors from personal liability for actions in the previous year. In order for the release to cover specific conduct, the relevant facts must have been disclosed or widely known among the public. Shareholders who do not approve are afforded six months to file their claims. The record suggests there are close questions of Swiss law involved in determining which facts are considered disclosed or publicly known. The record does not disclose whether the shareholders of Transocean granted decharge during the relevant period.
C. Balance of public-interest factors
We conclude that the appellate record does not show that the trial court abused its discretion in weighing the public-interest factors. Given that Richardson’s suit concerns the internal affairs of a Swiss corporation, that she failed to show that the company’s stockholders have a particular connection with Texas, the administrative difficulties of managing a shareholder derivative suit, and the challenges of applying Swiss law in a complex, unsettled area, the trial court could have reasonably concluded that the public interest factors favored litigation in Switzerland. As was the case when it weighed the private interest factors, the trial court owed less deference to the choice of forum of a nonresident plaintiff bringing a shareholder derivative claim.
Conclusion
We affirm the judgment of the trial court.