The Third District Court of Appeal issued an opinion addressing an issue of importance to many Florida litigators with international aspects to their practice: Florida litigants' entitlement to costs after a case is dismissed for forum non conveniens.

In Magdalena v. Toyota, the Third District reversed an award of costs issued to Toyota after the case was dismissed on grounds of forum non conveniens. The plaintiffs, who were citizens of Panama, had brought a products liability action in Miami-Dade Circuit Court against the Japanese auto manufacturer arising from injuries suffered in a car accident in Panama. The trial court held that a consideration of the relevant factors “strongly favors dismissal” under the forum non conveniens analysis because the car accident at issue occurred in Panama, and involved Panamanian residents driving a vehicle that could not legally be sold in the United States. Further, the trial court found that Florida was only minimally connected to the controversy: the plaintiffs received medical treatment in Miami for their injuries; the plaintiffs attorneys were located in Miami; the plaintiffs possessed property in Miami; and the defendants had registered agents in Broward County.

“These contacts,” the trial court held, “are not significant enough to warrant investment of Florida's limited judicial and juror resources, especially when the Eleventh Judicial Circuit has a very crowded docket, and this case may involve the application of foreign law.” Based on that finding and others, the trial court dismissed the suit as improperly brought in Florida and, significantly for present purposes, awarded costs to Toyota as the “prevailing party” under Florida statute Section 57.041.

On appeal in November, the Third District recognized a split of authority in Florida regarding whether the prevailing party standard applies to Section 57.041, which is Florida's statute that awards litigation costs to parties that “recover judgments.” Nonetheless, and without taking a position on that issue, the court reversed the lower court's award because “no judgment has been entered, and Toyota is not a 'prevailing party' merely because the litigation will take place in another forum.” The court reasoned that dismissal for forum non conveniens is not an adjudication on the merits, and thus “no judgment or the functional equivalent” was obtained by Toyota sufficient to support a costs award under Section 57.041.

The court similarly found that dismissal based on forum non conveniens merely resolves a “procedural issue, not a substantive issue in the case,” and that “liability has yet to be determined” on the plaintiffs' claim, which by the time the opinion was issued had already been re-filed and was pending in Panama. The court did not, however, completely foreclose Toyota's ability to recover costs, but rather reserved that determination for after a ruling on whether Toyota “is the prevailing party at the conclusion of its litigation with the plaintiffs in the case” — presumably in Panama.

The court's ruling leaves open an interesting issue, and one that could work to foster (or at least not affect) rather than deter cases with only tenuous connections to the United States from being filed in Florida. One purpose of cost-shifting statutes like Section 57.041 is to deter litigants from pursuing untenable legal positions by setting the minimum price of such pursuits as the accompanying out-of-pocket litigation costs incurred in their defense. Indeed, statutes such as this carry particular importance in Florida due to its international location and demography, and play a definitive role in preventing the State's courts from becoming a taxpayer funded “courthouse for the world.”

While the court in Magdalena held that costs are not recoverable at the moment a case is dismissed for forum non conveniens, it did not hold that the prevailing party on that issue could never recover those costs. Rather, the court appeared to recognize the self-regulating function of Section 57.041 by deferring adjudication of costs entitlement until after a determination — “at the conclusion of [he litigation” — of which party ultimately prevailed on the merits.

But even under that approach, questions remain if the court's holding preserves the deterrent effect of the cost-shifting statute on purely foreign litigation. For one, suppose the plaintiffs in Magdalena never re-filed the case, and thus no final determination was entered on the merits of the claim. Would the plaintiffs be immune from reimbursing Toyota's costs in defending the initial, improper Florida suit because, due to their own choices, there was no ultimate adjudication on the merits in a foreign proceeding?

In addition, what would happen if the unsuccessful plaintiff in a Florida action were to refile in a foreign jurisdiction that did not shift litigation costs to the non-prevailing party as part of its regular procedures? Would the successful defendant then be without recourse to recover costs unnecessarily incurred in defense of the plaintiff's prior jaunt through Florida's courts? Or, perhaps, does the Florida circuit court retain jurisdiction post-dismissal to later determine costs entitlement under Section 57.041 after the final merits determination abroad?

Answers to these questions are not found in Magdalena and will need to be developed through further proceedings following that decision's core pronouncement. These answers will, in turn, help determine the effect, if any, that Magdalena's holding may have on the use of the Florida judicial system as a “courthouse for the world.”

Allen Pegg is a partner and Zachary Lipshultz is an associate in the Miami office of Hogan Lovells. Pegg concentrates on complex litigation, arbitration and appeals. Lipshultz handles complex and other litigation matters.