A federal court has ruled that a $97million judgment issued against Dole Food Co. and Dow Chemical in a Nicaraguan court cannot be enforced in the U.S. courts.  See Osorio v. Dole Food Co., No. 1:07-22693 (S.D. Fla.).

Plaintiffs in this case had alleged that 150 banana farmers had suffered a number of injuries because of exposure to pesticides. Specifically,the workers on Dole’s banana plantations in Nicaragua between 1970 and 1982 claimed they were harmed by their exposure to the chemical compound dibromochloropropane (DBCP) which has been linked to sterility, according to plaintiffs. The Nicaraguan Legislature enacted a statute in 2000 specifically to handle DBCP claims there.  More than 10,000 plaintiffs have filed approximately 200 DBCP lawsuits in Nicaragua, most of which are still pending. Already, however, Nicaraguan courts have handed down over $2 billion in judgments to these plaintiffs. A few Nicaraguan plaintiffs have brought DBCP suits in the United States, with the California state courts, for example, concluding that the DBCP claims before it were the direct result of a widespread conspiracy to commit fraud by attorneys in Nicaragua, Nicaraguan doctors and judges (including the Nicaraguan trial judge who issued the judgment in this case), and some of the plaintiffs themselves.

Here, pursuant to this new law, the trial court awarded $97.4 million to compensate the plaintiffs for the alleged DBCP-induced infertility and psychological effects, about $647,000 per plaintiff.

The U.S. District Court for the Southern District of Florida held that defendants had “clearly established” their entitlement to nonrecognition of the award.  States are not required to recognize judgments rendered in foreign countries under the Full Faith and Credit Clause of the Constitution of the United States. U.S. CONST. art. IV, § 1; Guinness PLC v. Ward, 955 F.2d 875, 883 (4th Cir. 1992). In the absence of a treaty, the effect given to a foreign judgment has historically been governed by the more flexible doctrine of comity, which, though often couched in the language of mutual respect and obligation, is most accurately described as a matter of grace. See, e.g., Hilton v. Guyot, 159 U.S. 113, 166 (1895).

Here, the district court found: (1) the Nicaraguan trial court lacked personal and/or subject matter jurisdiction under the Special Law 364; (2) the judgment was rendered under a system which does not provide procedures compatible with due process of law; (3) enforcing the judgment would violate Florida public policy; and (4) the judgment was rendered under a judicial system that lacks impartial tribunals.

A few highlights: the federal court noted that the Nicaraguan attorney general had found that this Special Law violates the country’s constitution because, among other things, it assumed that the plaintiffs will automatically prevail and does not even contemplate the possibility that DBCP defendants might succeed in defeating the plaintiffs’ claims.  While the Nicaraguan Supreme Court later upheld the law, it is clear that absent the presumption of causation, there was no evidence before the Nicaraguan trial court sufficient to determine that DBCP exposure caused the plaintiffs’ injuries.  And the irrefutable presumption of causation resulted in findings that were incompatible with medical and scientific facts. The majority of the plaintiffs were awarded damages even though they allegedly suffered exclusively from conditions not scientifically linked to DBCP exposure. About one-fifth of the prevailing plaintiffs had fathered children in the years since their last alleged exposure to the chemical — undercutting the infertility claim in a somewhat conclusive way.

In every year from 1999 through 2008, the Country Reports prepared by the State Department have concluded that Nicaragua lacks an effective civil law system.  In 2002, the year this case was filed in Nicaragua, the State Department found that  “Judges’ political sympathies, acceptance of bribes, or influence from political leaders reportedly often influenced judicial actions and findings.”   The Special Law was upheld as constitutional by the Nicaraguan Supreme Court because it allowed a defendant to opt-out of jurisdiction there if the defendant agreed to jurisdiction in the U.S.  Here, the defendants consented to jurisdiction in the United States and waived their defenses under the forum non conveniens doctrine. Their initial pleadings contested the foreign trial court’s jurisdiction and attempted to exercise their opt-out rights.  Yet, in December 2004, 14 months after the Nicaraguan Supreme Court issued its opinion clarifying that Special Law 364 was constitutional because it permitted defendants to opt out of Nicaragua’s jurisdiction, the trial court denied Dole and Dow’s jurisdictional challenges.

In sum, Special Law 364 contained numerous unique provisions that apply only to a narrow class of defendants, and operate to their distinct disadvantage in a pronounced discriminatory fashion. The court also found that Special Law 364’s disparate treatment of defendants is fatally unfair and discriminatory, fails to provide the minimum level of due process to which all foreign defendants are entitled, and is, therefore, incompatible with the requirements of due process under Florida law.