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Snofrost AB v. Hakansson

United States District Court, D. Massachusetts

December 19, 2018

SNÖFROST AB, AS THE WHOLLY OWNED SUBSIDIARY OF HOCH PARTNERS PRIVATE EQUITY INVESTORS, Plaintiff,
v.
SUSANNE HÅKANSSON Defendant.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE

         All the relevant dimensions of this case, except the residence of the defendant, are grounded outside Massachusetts, indeed outside the United States. Yet, the plaintiff, Snöfrost AB, a Swedish company, filed the complaint in this action in this court to enforce an alleged agreement negotiated in Sweden to buy shares in a Swedish company.

         In a curious inversion of the reflexive effort by most parties to obtain some perceived, if illusory, “home court” advantage, the defendant, Susanne Håkansson (the only party with Massachusetts contacts) has moved to dismiss the complaint on grounds of forum non conveniens. Ms. Håkansson argues that Snöfrost's claim should be addressed not by this court in Massachusetts, but by the Malmö District Court in the Kingdom of Sweden. For its part, the Swedish party, Snöfrost, opposes change of venue to Sweden, and says it wants to litigate in Massachusetts, despite its contention that the parties agreed to a Swedish forum for arbitration.

         Prescinding from the parties' anomalous positions regarding preferred forum, I will grant Ms. Håkansson's motion to dismiss on grounds of forum non conveniens, leaving pursuit of this dispute to Swedish legal process.

         I. BACKGROUND[1]

         The genesis of this case is the death of Ms. Håkansson's father, Bo Håkansson, a prominent Swedish businessman. At the time of his death, Mr. Håkansson owned, among other business holdings, all the shares of Farstorps Gard AB (“FGAB”).

         After her father's passing, Ms. Håkansson, a United States citizen, followed advice from various professional advisors and pursued a strategy to minimize the tax burden associated with the sale of the FGAB shares. This strategy involved several steps: first, the liquidation of the real estate assets of FGAB; second, assignment by Mr. Håkansson's other heirs of inherited FGAB shares to Ms. Håkansson resulting in her becoming the sole shareholder; and third, sale of the FGAB shares by Ms. Håkansson as an American resident, taking advantage of the step-up basis approach under the United States tax regime.

         After acquiring all of the FGAB shares on or about December 20, 2017, Ms. Håkansson and her representatives - in particular her chief advisor Mr. Thomas Sträng, a Swedish tax consultant - sought potential buyers for the shares.

         One potential buyer was Jean-Daniel Cohen, described in the complaint as “an overseas financial investor, ” represented by a Dutch tax consultant, Harry Rietveld. Beginning in January 2018, Ms. Håkansson's representatives entered into exclusive negotiations with Mr. Cohen.

         After preliminary discussions, the parties held an in-person meeting on January 15, 2018, in Malmö, Sweden. On behalf of Ms. Håkansson, Mr. Sträng and Par Toms (another Swedish tax consultant) attended the meeting. On the other side of the negotiation table were Mr. Cohen and Mr. Rietveld. At this meeting, Mr. Sträng circulated a written share purchase agreement (“SPA”), drafted by Ms. Håkansson's retained counsel. Notably, the SPA contained both a choice of law clause stating that the agreement “shall be governed by and construed in accordance with the laws of Sweden without regard to its principles of conflict of law” and an arbitration clause stating:

Any dispute, controversy or claim arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by arbitration administered by the Arbitration Institute of the Stockholm Chamber of Commerce (the “SCC”). The Rules for Expedited Arbitrations shall apply, unless the SCC in its discretion determines, taking into account the complexity of the case, the amount in dispute and other circumstances, that the Arbitration Rules shall apply. In the latter case, the SCC shall also decide whether the Arbitral Tribunal shall be composed of one or three arbitrators.

         At the January 15, 2018 meeting, the parties discussed various terms, including: the purchase price; balance sheet guarantees; a target closing date; and that a special purpose company would be formed by Mr. Cohen within the Hoch Partners Privates Private Equity Investors group to purchase the shares. That special purpose company became the plaintiff in this matter, Snöfrost. Ms. Håkansson's counsel, Johan Jacobsson, was given the task of refining the SPA to reflect the agreements reached at the meeting.

         Following the January 15, 2018 meeting, Snöfrost readied itself for closing; in doing so, it paid particular attention to ensuring that the financial terms of the sale would not violate Swedish banking laws. The parties anticipated a closing date of February 16, 2018.

         A few days prior to February 16, 2018, the parties communicated, and Mr. Sträng, on behalf of Ms. Håkansson, expressed concerns that a review of the transaction was still being conducted by Ms. Håkansson's banking institution. Snöfrost forwarded confirmation of funding from its financial institution and caused loan documents to be sent to Ms. Håkansson. Snöfrost's loan was funded on February 14, 2018.

         On February 14, Mr. Sträng called Mr. Toms and told him that Ms. Håkansson had chosen not to complete the sale. Later that day, Ms. Håkansson's counsel communicated the same message to Snöfrost's counsel.

         In a subsequent letter, Ms. Håkansson raised financing issues, alleging that these issues would not allow Ms. Håkansson to proceed with the sale on February 16, 2018. Asserting uncertainties regarding the legality of the financing of the transaction under Swedish banking law and the uncertainty of the outcome of the Bank's review, the letter formally communicated Ms. Håkansson's decision to withdraw.

         II. ANALYSIS

         The doctrine of forum non conveniens permits a court with jurisdiction (and where venue is proper) to decline to hear the case and decide the action should be addressed in another forum, based on the convenience of the parties and the court, and the interests of justice. See generally Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981).

         While Congress has enacted a statute, 28 U.S.C. § 1404(a), permitting federal courts to transfer venue between themselves for “the convenience of the parties and the witness, ” there is no such statutory mechanism for federal courts to transfer cases to foreign courts. Instead, the doctrine of forum non conveniens is used to bring “about an international transfer of a case . . . where plaintiffs may bring approximately the same action in the foreign forum, but without the unfairness and inconvenience that trying the case in this country would entail.” Howe v. Goldcorp Investments, Ltd., 946 F.2d 944, 948 (1st Cir. 1991).

         A court's forum non conveniens analysis begins with a presumption against the invocation of the doctrine. This is because “there is a strong presumption in favor of a plaintiff's forum choice.” Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 719 (1st Cir. 1996). However, a foreign plaintiff's choice of forum “deserves less deference.” Piper Aircraft Co., 454 U.S. at 255-56 (“[A] plaintiff's choice of forum is entitled to greater deference when the plaintiff has chosen the home forum. When the home forum has been chosen, it is reasonable to assume that this choice is convenient. When the plaintiff is foreign, however, this assumption is much less reasonable.”) (internal citations omitted). Because Snöfrost is a foreign entity, I start with the presumption that its choice of forum is afforded diminished deference.

         To litigate this case in Sweden, Ms. Håkansson must clear two hurdles. First, she must prove that there exists an available and adequate alternative forum. Piper Aircraft Co., 454 U.S. at 255 n.22 (1981). Second, she “must show that the compendium of factors relevant to the private and public interests implicated by the case ...


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