Opinion
CASE NO. CV 01-11015 MMM (Ex)
April 25, 2003
ORDER DENYING DEFENDANT KEPPEL SINGMARINE DOCKYARD'S MOTION TO DISMISS
This case concerns an accident that occurred on June 20, 2000, aboard the F/V Daniela while it was sailing in the Western Pacific Ocean. Anthony Peter Costa, the Daniela's Chief Engineer, was doused with hot pressurized ammonia when ammonia discharge valves explosively separated. Costa was air-lifted to a hospital; in the ensuing months, he received extensive medical treatment in Malaysia, Singapore, San Diego and Denver. Costa died some thirteen months later, on July 5, 2001. The plaintiff in this action is Pete Costa's brother, Paul Alexander Costa, who is the personal representative of his estate. Costa alleges that defendant Vilter Manufacturing Corporation improperly manufactured and designed the ammonia valves that exploded, and that defendant Keppel Singmarine Dockyard ("KSD") improperly installed the valves while servicing the Daniela at its Singapore shipyard. Costa pleads claims for negligence and strict liability under General Maritime Law, as well as a claim for wrongful death under the Death on the High Seas Act, 46 U.S.C. § 761 et seq.
Vilter filed a cross-complaint for contribution and indemnity against KSD, alleging that KSD improperly removed and reinstalled the ammonia discharge valves that Vilter manufactured. Vilter also filed a third-party complaint against the Daniela, its owner, Z No. 2 Fishing Company, and its manager, Sardinha Cileu.
On January 31, 2002, KSD filed a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. On February 25, 2002, this court granted Costa's request for jurisdictional discovery and continued the hearing on KSD's motion. After conducting discovery, Costa and Vilter filed opposition to the motion, arguing that the court may exercise both general and specific jurisdiction over KSD, or alternatively, that KSD has sufficient national contacts that it is subject to jurisdiction under Rule 4(k)(2).
I. FACTUAL BACKGROUND
A. The Underlying Complaint
Plaintiff Paul Alexander Costa, as personal representative of the Estate of Anthony Peter Costa, filed this action in Los Angeles County Superior Court on June 19, 2001. He filed a First Amended Complaint, which is the operative pleading, on November 20, 2001, and served Vilter the following day. Vilter removed the action to this court on December 20, 2001.
Costa is a citizen of the United States and a California resident, At the time of his death, Pete Costa was also a United States citizen and a resident of California. Defendant Keppel Singmarine Dockyard Pte Ltd ("KSD") is a foreign corporation incorporated under the laws of the Republic of Singapore. Defendant and cross-claimant Vilter Manufacturing Corporation is a Wisconsin corporation that maintains an office in California and is licensed to do business in the state.
See First Amended Complaint, ¶ 2.
Id., ¶ 3.
Id., ¶ 4.
Pete Costa was a United States licensed Chief Engineer who served on the U.S. flagged tuna seiner F/V Daniela. On June 20, 2000, he was fatally injured when the face plate and spindle assembly of an ammonia discharge valve explosively separated from the refrigeration system's housing valve. A large quantity of hot pressurized ammonia chloride gas spewed onto Costa, severely burning his upper torso, lungs, eyes, and groin. Decedent lost his eyesight and was ventilator-dependent for twelve and one half months. During this period, he underwent intensive and painful medical treatments. He passed away on July 5, 2001.
Id., ¶ 8.
The First Amended Complaint alleges that KSD solicits and transacts business in California and that it has the requisite minimum contacts to be subjected to jurisdiction in the state. It further alleges that KSD solicited and entered into a ship repair contract in California with the California-based owner of the Daniela. Pursuant to this contract, KSD allegedly undertook to repair and perform other work on the Daniela's ammonia freezer system. The work was performed at KSD's shipyard in Singapore between January and June 2000. Plaintiff contends that in the course of their repair work, KSD personnel improperly removed the ammonia discharge valves, and used the wrong-sized bolts to reattach the valve cover of the No. 2 ammonia valve to the valve housing. He also asserts that KSD personnel removed the No. 2 "check" or "safety" valve from the ammonia system, and reinstalled it without all of its component parts, finally, he contends that KSD failed to test and/or improperly tested the ammonia system. These acts and omissions, he alleges, caused the accident that injured his brother. Plaintiff also alleges that Vilter improperly manufactured and/or designed the ammonia valves that failed aboard the Daniela.
Id., ¶ 4.
Id., ¶ 9.
Id., ¶¶ 10, 11.
Id., ¶ 12.
B. KSD's Contacts With California
1. General Contacts With The State
KSD does not own or lease any property in California, and has no offices or facilities in the state. None of its employees, agents, officers, or directors are domiciled in California, and none of its subsidiaries operates here. KSD has not applied for any licenses in the state, does not pay taxes here, and has no California banking relationships. While KSD has been sued in California and has not challenged personal jurisdiction, it has not initiated litigation here.
Declaration of Fok Swee Yin ("Fok Decl."), 11 28, 29.
Id., ¶ 30.
Id., ¶ 39.
Id., ¶¶ 34-36.
Id., ¶ 40; Declaration of William Banning ("Banning Decl."), ¶ 3.
1. The August 1999 Visit To San Diego
a. Undisputed Facts
KSD is an established shipyard in the Western Pacific Ocean that is well-known within the tuna fishing industry. In August 1999, Fok Swee Yin, KSD's Assistant General Manager for Ship Repair, Allen Ng, also a KSD employee, and Lee Tai Kwee traveled to California. Lee was General Manager of Precision Craft (88) Pte Ltd., a company that specializes in the manufacture of aluminum hull boats. Precision Craft is not owned or operated by KSD; it is also not a subsidiary of KSD. Lee accompanied Fok and Ng to explore opportunities to buy used tuna boats that Precision Craft contemplated having KSD modify for sale to the Thailand Department of Fisheries. Lee became KSD's Deputy General Manager on January 2, 2001.
Id., ¶ 7.
The parties refer variously to Lee Tai Kwee, K.T. Lee, Mr. Lee, and Mr. Kwee. For consistency, the court will refer to Mr. Lee. Similarly, the parties refer to Fok Swee Yin variously as Fok or Yin. Again for consistency, the court will refer to Mr. Fok.
Id. 11 4, 5.
Declaration of Lee Tai Kwee ("Lee Decl."), ¶¶ 4, 5.
While in San Diego on August 9, 1999, Fok Ng, and Lee met with Paul Krampe of the United Tuna Cooperative, Italo "Itchy" Cileu of Sardinha Cileu Management (SC), and Joe Finete of CF Ltd. SC manages the Daniela for her owner, Z No. 2 Fishing Co., Inc., a Northern Marianas corporation. On August 10, 1999, Fok, Lee, and Ng had lunch with various persons in the tuna fishing industry.
Fok Decl., ¶ 15.
Id. ¶ 16.
Declaration of LeeChee Weng ("Weng Decl."), ¶ 17. Costa has moved to strike Weng's declaration in its entirety on the basis that it contradicts his deposition testimony. It also objects to paragraphs 5, 6, 9, and 10 on the basis that they lack foundation and are designed to mislead the court. As respects Costa's argument that specific paragraphs of the declaration lack foundation, Weng is Superintendent of KSD's Commercial Division and is responsible for negotiating ship repair contracts. Because his declaration concerns KSD's solicitation of and entry into contracts for vessel repair and construction, it addresses facts within his personal knowledge. As respects inconsistencies, Costa contends that Weng's statement that he has not directed anyone at KSD to travel to the United States contradicts his deposition testimony that he does not have responsibility for directing KSD employees to travel to this country. (Compare Weng. Decl., ¶ 5 with Weng 4/12/02 Depo. at 45:5-46:7.) Costa also asserts that Weng's statement that he reviewed shipyard and business records of repair contracts and quotations is contradicted by his deposition testimony that he referred only to the estimate book of repairs and bids attached to his deposition as Exhibit 8. It is not clear that this is an inconsistency, as the "estimate book" appears to be the primary record used by KSD to record its bids and contracts. Finally Costa asserts that Weng's statement that KSD was solicited in Singapore to submit a bid on the Sea Encounter should not be admitted given his refusal to answer questions on this subject during his deposition. (Compare Weng Decl., ¶ 10 with Weng 4/12/02 Depo. at 74:7-24.) As there is no indication that Costa sought to compel answers to questions regarding the Sea Encounter, the court will not exclude Weng's declaration statements concerning the subject. Regarding purported inconsistencies generally, the court resolves disputed facts in Costa's favor on this motion. Thus, to the extent Costa relies on Weng's deposition testimony, the court accepts that testimony as true. Additionally, the court accepts the independent evidence proffered by Costa regarding KSD's solicitation of work on the Sea Encounter. For all these reasons, the court denies Costa's motion to strike the declaration of Lee Chee Weng.
Fok Decl., ¶ 17.
b. Disputed Facts
1. KSD's Version
The parties dispute the purpose of the visit Fok, Lee and Ng made to San Diego, as well as the nature of the activities in which they engaged while there. Fok contends that the purpose of the visit was to conclude negotiations with Les Chikami of Western Pacific Fisheries concerning a contract to extend the hull of F/V Western Pacific. Chikami had invited KSD to submit a bid for the work and sent it a proposed specification. At the time of the visit, KSD had already inspected the vessel in Samoa, and Ng had furnished a quotation for the work to be done from Singapore. KSD did not receive a response to the quotation, and learned that a competitor was also bidding on the job. Accordingly, Fok and Ng were sent to California to see if they could secure the contract. Fok contends that he did not come to the state to solicit work from SC, CF or any other tuna vessel management company or owner, and that the visit was a departure from KSD's usual business practice.
Declaration of Les Chikami ("Chikami Decl."), ¶ 3.
Lee Decl., ¶ 6; Fok Decl., ¶ 5; Declaration of Allen Ng Eng Cheng ("Ng Decl."), 16.
Fok Decl., ¶¶ 18, 19.
Id., ¶ 13.
Negotiations with Chikami were conducted at his home in Hermosa Beach, California. They consumed many hours over a two day period. When agreement was finally reached, Chikami states that Fok said he would have the contract typed at Keppel Singmarine's office in Anaheim, California. The agreement was signed two days later at Chikami's home in Hermosa Beach.
Chikami Decl., ¶ 6; Deposition of Fok Swee Yin ("Fok Depo.") at 71:2-6.
Chikami Decl., ¶ 6.
Id. ¶ 8.
Chikami states that, after the negotiation of the contract had been concluded, Fok asked for the names of other vessel owners and managers from whom he could solicit similar business. Chikami referred Fok to Joe DeSilva and Julie Zolezzi in San Diego, and Fok said that he and Ng would visit these individuals while the contract for the Western Pacific was being prepared. Chikami asserts that when Fok returned with the contract two days later, he explained that Precision Craft wanted to buy used fishing vessels to refurbish and sell in Thailand, and asked that Chikami give him the names of owners or managers who might have vessels for sale. Based on his conversations with Fok, Chikami states it was apparent that the primary focus of Fok and Ng's trip was to solicit business from other owners interested in having their vessels jumboized.
Id. 1 7. See also Ng Decl., ¶ 10.
Id. ¶ 9.
Id.
KSD proffers evidence, however, that it was Chikami who urged that Lee travel to San Diego to explore opportunities to purchase used fishing vessels, even before Fok, Ng and Lee arrived in the United States. Lee states that Chikami sent a facsimile to KSD in Singapore on July 20, 1999, suggesting that he meet with representatives of the Tuna Fishing Association. Chikami recommended that Lee contact Paul Krampe of the United Tuna Cooperative and Dave Burney of the U.S. Tuna Foundation.
Lee Decl., ¶ 8.
On August 9, 1999, Fok, Ng and Lee met with Krampe, Cileu and Finete. Lee and Fok state that Cileu and Finete had offices in the same building as Krampe, and that they were known to Fok as a result of prior repair contracts. They contend they "briefly updated [Cileu and Finete] about [KSD's] ship repair capabilities" and "exchanged business cards." Ng states that the men "generally discussed the tuna market," and that Cileu mentioned that his vessels would be due for repair soon. He did not describe the repairs in any detail.
Lee Decl., ¶ 10; Fok Decl., ¶ 16.
Ng Decl., ¶ 12.
On August 10, 1999, Fok, Ng and Lee had lunch with various people involved in the tuna fishing industry. Fok contends the lunch was arranged by Chikami, who was in San Diego to attend a meeting of the Tuna Cooperative. Fok and Lee assert that the primary topic of conversation at the luncheon was the tuna market, although they also discussed opportunities to purchase used tuna vessels for conversion.
Lee Decl., ¶ 11; Fok Decl., ¶ 17.
In addition to these meetings, Fok, Ng and Lee visited Joe DeSilva's residence to discuss DeSilva's vessel, the F/V Sea Encounter. KSD had previously bid on work on this vessel. During the meeting, DeSilva said that he had changed the specifications for the work, relating primarily to the lengthening of the hull, and that Cileu would give KSD new drawings so that it could prepare a new bid. Fok, Lee and Ng also had dinner with John Freitas, who had solicited a bid from KSD in December 1998 for work on the F/V Carol Linda.
Ng Decl., ¶ 13.
Id. ¶ 14.
2. Costa's Evidence
KSD asserts that the declarations of Italo Cileu, John Freitas Paul Krampe and Cathy Dellenback should be stricken or given substantially reduced weight because each declarant's deposition was noticed, delayed and ultimately cancelled after Costa and Vilter secured the witness' declaration. When KSD sought to renotice the depositions, Costa and Vilter purportedly objected and thwarted KSD's efforts to cross-examine the declarants. (See Declaration of Andria Catalano ("Catalano Decl."), 11 9-12; May 2, 2002 Declaration of Paul Krampe, U 6.) Lawyers frequently prefer to obtain declarations from third-party witnesses in lieu of deposing them. Moreover, the evidence that Costa and Vilter interfered with KSD's ability to obtain depositions from the witnesses is weak at best. The court therefore declines to strike the declarations or accord them less weight. Should subsequent examination of the witnesses reveal that the statements contained in their declarations are false or materially misleading, KSD may bring this to the court's attention through an appropriate motion for reconsideration.
Costa proffers evidence that Fok, Ng and Lee also met with John Freitas, president of the company that owns the Carol Linda, during the August 1999 visit to San Diego. Like Cileu, Freitas states that Fok called him to advise that he was traveling to San Diego to develop ship repair and jumboizing contracts. He contends Fok stated that KSD's business was slow and that he intended to offer potential customers discounts and competitive contracts. Freitas states that, during his subsequent meeting with the KSD representatives, they discussed not only the status of the United States tuna fleet, as Fok and Lee assert, but also KSD's ability to provide shipyard services for Freitas' vessel. Fok said that KSD had upgraded and expanded its facilities and that it would discount the price of shipyard services that Freitas purchased. Specifically, Fok said that KSD had given Chikami a discount on the work it was performing on F/V Western Pacific, and that he would offer Freitas a similar discount. He also gave Freitas a sales brochure. Fok asked Freitas whom he should contact in the San Diego tuna industry to solicit additional business. Fok purportedly said he had come to the California to market KSD's capabilities and services to the U.S. tuna fleet, and wanted to meet with as many owners as possible. Lee introduced himself as a representative from Keppel's California office in the Los Angeles/Orange County area.
Declaration of John J. Freitas ("Freitas Decl."), ¶ 5.
Id. ¶ 6.
Id. ¶ 1 6, 7.
Id. ¶ 8.
Id. ¶ 6.
Fok, Ng and Lee also met with Paul Krampe of the United Tuna Cooperative, to whom they gave a sale brochure, and Joe Finete, owner of F/V Diana, to discuss KSD's ship repair capabilities. Finete subsequently engaged KSD to perform work on the Diana.
Declaration of Paul Krampe ("Krampe Decl."), ¶ 1. Krampe does not specifically place the meeting in August 1999. Rather, he recalls that KSD representatives visited his office sometime before June 2000. ( Id.)
Id., ¶ 4. Defendants object to so much of Krampe's declaration as refers to the brochure on the basis that it lacks foundation and is not authenticated. Krampe has personal knowledge of the fact that KSD representatives approached him at UTC's offices and gave him a brochure. He asserts that the brochure attached as an exhibit to his declaration is similar or identical to one he received. This testimony is sufficient to authenticate the exhibit. See FED.R.EVID. 901(b)(1).
Fok Depo. at 36:4-7.
Id. at 47:3-5. Ng states that he had met Finete and Freitas in 1998 when they visited KSD's shipyard. (Ng Decl., ¶ 12.)
2. Solicitation Of Work On The Daniela
On September 16, 1999, SC sent letters to five shipyards, inviting them to bid on work to be done on the Daniela and the Sea Encounter. Cileu contends that the upcoming overhaul of the Daniela was discussed during his meeting with Fok, Ng and Lee in August 1999, and that Fok said KSD would like to bid on the project at that time. Cileu maintains, moreover, that he decided to award the repair contract to KSD as a result of KSD's solicitations, including Fok and Ng's visit to San Diego. Indeed, he states "with certainty" that Fok's August 1999 solicitation of the business was "a substantial factor" in SC's decision to send the Daniela to KSD for repairs. In response, Fok asserts that he did not "specifically discuss" the repairs needed to the Daniela's ammonia cooling or other systems while in San Diego.
Cileu Decl., ¶ 11; Weng Decl., ¶ 16.
Cileu Decl., ¶ 11. Defendants object to this portion of Cileu's declaration on the ground that it lacks foundation and that it constitutes improper opinion testimony and hearsay. As previously noted, statements regarding future shipyard contracts made by Fok and Ng during their visit to San Diego are not hearsay. Moreover, Cileu is a principal in SC, which selected the shipyard to overhaul the Daniela. (See Cileu Decl., ¶¶ 2, 11.) He thus has the requisite personal knowledge to offer an opinion as to the reason his firm awarded the repair contract to KSD. Finally, the opinion is rationally based on Cileu's perception, and helpful to the determination of a fact in issue. It is thus admissible under Rule 701. See FED.R.EVID. 701.
Id. ¶ 12.
Fok Decl., 1 20. See also Lee Decl, ¶ 14 ("I did not have any conversations with Messrs. William Sardinha or Italo Cileu while in San Diego, California concerning repairs to the ammonia cooling system or any other systems aboard F/V Daniela").
On September 21, 1999, KSD personnel inspected the Daniela while it was docked in the Philippines. SC's William Sardinha furnished a detailed specification of the work to be performed, and invited KSD to submit a bid on the job. KSD faxed a quotation to SC at its San Diego office on October 12, 1999. On November 16, 1999, SC e-mailed additional information to KSD and invited a revised bid. A second quotation was submitted on November 27, 1999. The parties also agreed that KSD would reinspect the vessel in the Philippines. This inspection took place on December 15, 1999. Sardinha was present, and at the end of the meeting, took KSD's draft quotation and incorporated it into an electronic version of the company's earlier bids that he had on his laptop computer.
Weng Decl., ¶ 18.
Id. ¶¶ 19-21.
Id. ¶ 22.
Negotiations continued via e-mail and fax between Sardinha in San Diego and KSD in Singapore. On December 29, 1999, KSD faxed Sardinha a final price quotation from Singapore. Sardinha faxed back a handwritten confirmation that the companies had reached agreement. He sent the a final version of the quotation, including work specifications, to Singapore by e-mail on December 30, 1999.
Id., ¶ 23.
All work on the Daniela was done in Singapore. Sardinha signed a detailed work order that stated the agreement would be governed by and construed in accordance with the law of Singapore. It further stated that the parties submitted to the non-exclusive jurisdiction of the Singapore courts.
3. KSD's Efforts To Secure Repair And Jumboizing Contracts On Vessels Other Than The Daniela
See id., ¶ 24.
Id. ¶¶ 24, 25, Ex B.
KSD's contract and bid records reflect that between 1995 and 2000, it performed repair or Jumboizing work on five U.S. flag vessels — the Toaimoana, Fuiono, Western Pacific, Diana and Daniela — and bid on contracts for at least four others — the Koorale, Carol Linda, Sea Encounter, and Andrea CJ.
See Exhibits to April 10, 2002-April 16, 2002 depositions, Ex. 8 at K00001-00142; Cileu Decl., ¶ 7. Cileu asserts that Fok solicited work on the Carol Linda, Proud Heritage, Legacy, Tradition, and Rafaello. This is disputed by the Superintendent of KSD's Commercial Division, Lee Chee Weng, who contends there are no records that KSD ever solicited work on the Proud Heritage or Rafaello. (See Weng Decl., ¶ 7.) The basis of Cileu's knowledge of these facts is unclear, as it could be derived either from KSD representatives or from the managers and/or owners of the vessels. If Cileu's source of information is the latter group, the testimony is inadmissible hearsay. Because he does not specify the source of his information, the court has considered only Cileu's testimony regarding KSD's solicitation of a contract to perform work on the Sea Encounter. There is independent evidence that KSD sought to work on the Carol Linda, Toaimoana and Fuiono, however, and the court considers these facts established as a result. (See Freitas Decl., ¶ 3; Declaration of Carlos M. Sanchez ("Sanchez Decl."), ¶ 2.)
As respects the contracts/bids for the Daniela and Sea Encounter, Cileu states that he recalls receiving a sales brochure from L.H. Chan, then Assistant General Manager of KSD, KSD on April 28, 1992 at his office in San Diego. In connection with KSD's bid for work to be performed on the Sea Encounter, SC, which assisted Sea Encounter's owner DeSilva, communicated from San Diego with KSD in Singapore via courier, mail, telephone and fax. It received bid documents and a proposed contract from KSD at its office in San Diego. Similarly, John Freitas, owner of the Carol Linda, states that he received a KSD brochure through the mail in San Diego, and that KSD contacted him in 1998 to discuss its shipyard and extension services on tuna seiners. Freitas states that, primarily as a result of that 1998 contact, he invited KSD to bid on the jumboization of the Carol Linda in late 1998 or early 1999. Weng states that Joe Finete, the owner of the Diana, telephoned KSD in Singapore to inquire about its services. There is evidence that Fok, Ng and Lee met with Finete in San Diego in August 1999; Finete invited KSD to submit a bid on the work shortly thereafter, on August 25, 1999.
Cileu Decl., ¶ 3
Id. ¶ 10. Ng states that KSD bid on the Sea Encounter project prior to the August 1999 visit to California. (Ng Decl., ¶ 11.)
KSD objects to so much of Freitas' declaration as states that the attached exhibit is substantially similar to the brochure he received on the basis that the testimony lacks foundation, is argumentative and conclusory, and constitutes an impermissible opinion. Freitas states that the facts set forth in his declaration are known to him personally. As president of the company that owns the Carol Linda, Freitas' responsibilities include overseeing arrangements for maintenance and repair work on the vessel. Accordingly, his statements regarding bids and contracts for maintenance work on the Carol Linda do not lack foundation. Moreover, his testimony that the brochure is substantially similar to one he received from KSD is based on personal knowledge, is not argumentative or conclusory, and constitutes a permissible lay opinion, as it is based on Freitas' perception and is helpful in resolving an issue in dispute. See FED.R.EVID. 701.
Freitas Decl., ¶ 3.
Weng Decl., ¶ 14.
Id.
Carlos M. Sanchez, former General Manager of Fleet Operations for Caribbean Fishing Company, Inc., states that Fok solicited shipyard work from him in California, and that, as a result, he contracted with KSD to overhaul and jumboize the Toaimoana and Fuiono. Sanchez contends that he was solicited by other KSD representatives as well, via telephone and mail, arid that he received sales brochures from the company, all of which contributed to his decision to engage the shipyard to perform work on the vessels. Sanchez contends that he negotiated the contracts, which generated revenue in excess of $4 million for KSD, with the company during 1998 and 1999. Ng provides a conflicting account of the circumstances surrounding CFCI's decision to engage KSD to jumboize the Toaimoana and Fuiono. He states that KSD was introduced to the project by a New Zealand consultant working for Sanchez in 1997. He states that after the consultant, John Briggs, visited KSD's shipyard in Singapore, KSD inspected the Fuiono in Singapore and submitted a bid in October 1997. Briggs allegedly introduced the Toaimoana project to KSD in January 1998. Ng states that the first time he or any other KSD representative met Sanchez was after the contracts had been let, when Sanchez traveled to Singapore during work on the vessels in 1998 or 1999.
Declaration of Carlos M. Sanchez ("Sanchez Decl."), ¶¶ 1-4. Caribbean Fishing Company ("CFCI") was formerly the owner/manager of the largest fleet of United States documented flag tuna purse seiners trading out of American Samoa. CFCI was a wholly-owned subsidiary of Star-Kist Foods, Inc. ( Id., ¶ 1.) Defendants objects to paragraphs 3 and 4 of Sanchez's declaration on the basis that they lack foundation and omit the fact that Sanchez made prior proposals to KDS. The matters to which Sanchez testifies are within his personal knowledge, as Sanchez's job responsibilities for CFCI included negotiating and contracting with shipyards for the repair of vessels owned by the company. The fact that Sanchez does not indicate that recount other facts regarding his communications with KDS and the decision to contract with it for the jumboization of the Toaimoana and Fuiono does not render his testimony inadmissible. Rather, it affects the weight and credibility of the evidence.
Id. ¶ 2.
Ng Decl., ¶ 20. Vilter has proffered the declaration of Cathy Dellanbach as evidence of KSD's further contacts with California. Dellenbach states that, while working at M/V Sea Quest, Inc., she was approached on an unknown date by representatives of Singmarine Shipyard, who had come to solicit dry-dock and jumboizing work from her father, the president of the company. As her father was not in the office, the men left two sales brochures and business cards. KSD objects to the declaration on the ground that it lacks foundation and consists of hearsay. Other evidence in the record indicates that KSD's predecessor company was Singmarine Slipway. Slipway merged with Singmarine Shipyard in the late 1980's or in the 1990's. The brochure that Dellenbach proffers is from Singmarine Shipyard, and thus may predate the merger of the companies' operations in 1987. If so, the representatives who visited M/V Sea Quest did not act on behalf of KSD's predecessor company. Because it is unclear that they were in fact representatives of KSD, the court excludes the declaration on the basis that it lacks foundation and constitutes inadmissible hearsay. See FED.R.EVID. 801(d)(2)(C), (D).
C. Keppel Corporation
1. The Conglomerate's Organizational Structure
In addition to evidence regarding KSD's solicitation of business and entry into contracts with American vessel owners or managers, the parties also proffer conflicting evidence regarding the corporate structure of Keppel Corporation, the entities it owns directly or indirectly, and KSD's role as a Keppel subsidiary. Keppel Corporation's "marine businesses" include KSD, Keppel Shipyards, Keppel FELS and Keppel Hitachi Zosen ("KHZ"). KSD is a wholly-owned subsidiary of KHZ. The companies are distinct subsidiaries that perform work on vessels of different lengths and types. KSD, for example, services vessels up to 150 meters long. Vessels longer than 150 meters are built or repaired by KHZ and Keppel Shipyard. Keppel FELS performs maintenance and construction on oil rigs. During 1999, KSD was a subsidiary of KHZ, which was, in turn, a subsidiary of Keppel Corporation.
Vilter has proffered evidence regarding Keppel Corporation's structure from a website purportedly maintained by it. (See Declaration of Kenneth F. Mattfeld In Support of Vilter's Opposition ("Mattfeld Decl."), Exs. C, D, E.) Mattfeld asserts that he personally downloaded the pages attached to his declaration from Keppel Corporation's website, ( Id. ¶¶ 4-7.) As Vilter does not proffer the testimony of a Keppel Corporation representative attesting that the information on the website was placed there by the corporation, the court declines to consider it. See Wady v. Provident Life and Accident Ins. Co. of America, ___ F. Supp.2d ___, No. Civ. 01-10818, 2002 WL 988557, * 2 (C.D.Cal. Apr. 30, 2002) ("Rule 901(a) of the Federal Rules of Evidence states that documents are sufficiently authenticated by evidence that will support a finding that they are what their proponent claims them to be. The court agrees that Gravitt cannot authenticate these documents as statements of UnumProvident"). See also United States v. Jackson, 208 F.3d 633, 638 (7th Cir. 2000) (holding that evidence taken from the Internet lacked authentication where the proponent was unable to show that the information had been posted by the organizations to which she attributed it); St. Clair v. Johnny's Oyster Shrimp, Inc., 76 F. Supp.2d 773, 775 (S.D.Tex. 1999) ("Anyone can put anything on the Internet. No web-site is monitored for accuracy and nothing contained therein is under oath or even subject to independent verification absent underlying documentation. Moreover, the Court holds no illusions that hackers can adulterate the content on any web-site from any location at any time. For these reasons, any evidence procured off the Internet is adequate for almost nothing . . .").
On May 2, 2002, Keppel FELS and KHZ combined to form Keppel Offshore Marine. The merged entity will include the businesses previously operated as Keppel FELS, KHZ, Keppel Shipyards, and KSD. (See Deposition of Simon Thiam Hock Soh ("Soh Depo.") at 101:20-22; 131:14-18.)
Id. at 102:3-6.
Id. at 124:14-15.; Fok Depo. at 86:11-13; 18-20.
Soh Depo. at 125:12-15,
Deposition of Ronald Lim ("Lim Depo.") at 90:14-25.
2. Keppel Marine Agencies
The parties also dispute the relationship the Keppel entities have with Keppel Marine Agency. Keppel Marine Agencies acts generally as Keppel Shipyard's U.S. agent, and forwards inquiries it receives regarding shipyard services to Shipyard. If the referral concerns a smaller vessel or if Shipyard cannot handle the contract, Shipyard, not Marine Agencies, forwards the inquiry to KSD. If KSD wishes to bid, it provides a quote to Marine Agencies to transmit to the ship owner or management company. In the event the owner or manager accepts the bid, Keppel Marine Agencies is entitled to receive a commission. While there is evidence in the record that a few vessels originally referred to Keppel Shipyard were in turn presented to KSD, there is no evidence that any of the referrals resulted in a contract or that Marine Agencies has ever received a commission from KSD.
Lim Depo. at 74:8-11; 92:25-93:2.
Id. at 74:1-15.
Id. at 76:16-19.
Id. at 77:1-7; 97:3-7.
Costa challenges KSD's attempt to distance itself from Keppel Marine Agencies. Costa cites the fact that KSD would have to pay Marine Agencies a commission if it were to bid successfully on a contract that it referred, evidence that John Bajor, President of Keppel Marine Agency, has visited KSD, and evidence that Keppel Marine Agency's Vice President, Michael Holcomb, was recently at KSD for meetings with Fok. There is also evidence that Lee met Bajor in 1995 at a house owned by Singmarine Land Corporation in Placentia. There is no evidence that the two have met since that time.
While Bajor met with Fok at KSD, the evidence indicates that they have spoken only once or twice, (See Fok Depo. at 75:20-22; 79:2-25; 88:2-3.)
Lee Depo. at 18:1-5.
3. Keppel's Land Holding Corporations
Singmarine Land Corporation is a California entity that Costa contends was established to hold properties used by Keppel Corporation's American subsidiaries. The company was originally owned by Keppel Marine Industries, and was transferred to Keppel Corporation in January 1999. Among the properties Singmarine Land Corporation owns is a house in Placentia where Lee met Keppel Marine Agencies' Bajor in 1995, and Fok, Ng and Lee stayed when they came to California in 1999. It is unclear whether this residence is also the "office in Anaheim" or Orange County that Fok and Lee allegedly referenced during their meetings in San Diego in 1999. The extent of land and properties held by Singmarine Land is unclear, although evidence indicates that its property is used primarily to house Keppel employees. Singmarine Land is neither a subsidiary of KSD nor within the family of marine-related Keppel entities.
Soh Depo. at 114: 16-19.
Soh Depo. at 115:19-23.
Lee Depo. at 15:6-10.
Costa and Vilter have submitted evidence suggesting that the corporate form of various Keppel entities is not consistently or formally maintained. They have also proffered evidence that Lim, President of Singmarine Land, took a three-day trip with Lee in 2002 to Mississippi and Houston. The address of one of Singmarine Land's principals is KSD's address.
Id. at 39:25-42:9.
Declaration of William L. Banning In Opposition to Motion to Dismiss ("Banning Decl."), Ex. H. While the evidence proffered regarding KSD's address is a website printout and hence inadmissible (see note 74, supra), correspondence in the record confirms that Gul Road is the location KSD's Singapore business office.
II DISCUSSION
A. Standard Governing Motions To Dismiss For Lack Of Personal Jurisdiction Under Rule 12(b)(2)
1. Procedural Considerations
Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the court may decide a question of personal jurisdiction on the basis of affidavits and documentary evidence submitted by the parties, or may hold an evidentiary hearing on the matter. See 5A C. Wright A. Miller, FEDERAL PRACTICE AND PROCEDURE, § 1351, at pp. 253-59 and n. 31-35 (2d ed. 1990); Rose v. Granite City Police Dept., 813 F. Supp. 319, 321 (E.D. Pa. 1993). Whichever procedure is used, plaintiff bears the burden of establishing that jurisdiction is proper. See Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995); Flynt Distributing Co. v. Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). In this case, the pleadings, declarations and documentary evidence submitted by the parties provide an adequate basis for evaluating jurisdiction. Accordingly, no evidentiary hearing is necessary.
Because the matter is being decided on the basis of affidavits and documentary evidence, Costa and Vilter need only make a prima facie showing of personal jurisdiction. See Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). All allegations in the complaint and cross-complaint must be taken as true, to the extent not controverted by KSD's affidavits, and all conflicts in the evidence must be resolved in favor of Costa and Vilter. See ATT Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) (citing WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir. 1989)). A prima facie showing by Costa and Vilter will support a finding of jurisdiction "`notwithstanding [a] contrary presentation by the moving party.'" Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).
2. Substantive Standard
Whether a federal court can exercise personal jurisdiction over a non-resident defendant turns on two independent considerations: whether an applicable state rule or statute permits service of process on the defendant, and whether the assertion of personal jurisdiction comports with constitutional due process principles. See Pacific Atlantic Trading Co. v. MIV Main Express, 758 F.2d 1325, 1327 (9th Cir. 1985).
California's long-arm statute extends jurisdiction to the limits of constitutional due process. See Gordy v. Daily News, LP., 95 F.3d 829, 831 (9th Cir. 1996); CAL. CODE. CIV. PROC. § 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States"). Consequently, when service of process is effected under California law, the two prongs of the jurisdictional analysis collapse into one — whether the exercise of jurisdiction over defendant comports with due process. See Fireman's Fund Ins. Co. v. National Bank of Cooperative, 103 F.3d 888, 893 (9th Cir. 1996); Aanestad v. Beech Aircraft Corp., 521 F.2d 1298, 1300 (9th Cir. 1974),
The Fourteenth Amendment's Due Process Clause permits courts to exercise personal jurisdiction over a defendant who has sufficient "minimum contacts" with the forum state that "maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There are two recognized bases for personal jurisdiction over nonresident defendants: (1) "general jurisdiction," which arises where the defendant's activities in the forum state are sufficiently "substantial" or "continuous and systematic" to justify the exercise of jurisdiction over it in all matters; and (2) "specific jurisdiction," which arises when a defendant's specific contacts with the forum have given rise to the claim in question. See Helicopteros Nacionales de Columbia S.A. v. Hall, 466 U.S. 408, 414-16 (1984). See Doe v. American Nat'l Red Cross, 112 F.3d 1048, 1050-51 (9th Cir. 1997); Fields, supra, 796 F.2d at 301-02.
3. There Is No Basis For Exercising General Jurisdiction Over KSD
A court has general jurisdiction over a defendant if the defendant's contacts with the forum are "substantial" or "continuous and systematic." International Shoe, supra, 326 U.S. at 316; see also Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). When properly invoked, general jurisdiction allows a federal court to hear any cause of action, even one unrelated to defendant's activities within the state. See Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445 (1952). To determine if a defendant's activities within the forum are "continuous and systematic" or "substantial," the court must examine all of its activities impacting the state. See Helicopteros, supra, 466 U.S. at 411; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980); Perkins, supra, 342 U.S. at 445-49 (1952).
Costa asserts that the court may exercise general jurisdiction over KSD because it has conducted substantial, systematic and continuous activities in California. Costa relies, in this regard, on evidence that KSD has solicited work and entered into contracts worth millions of dollars with vessels owners or managers located in California, evidence concerning the August 1999 visit of Fok, Ng and Lee, and evidence regarding the United States ties of other Keppel Corporation entities.
See Plaintiff's Memorandum of Points and Authorities in Opposition to Motion to Dismiss ("Pl.'s Opp.") at 3:13-15.
Even resolving all conflicts in the evidence in favor of Costa and Vilter, the court cannot find that KSD has engaged in substantial, systematic and continuous activities in California. First, KSD is not licensed to do business in California, it has not designated an agent for service of process in the state, it does not pay taxes or maintain bank accounts here, or it does not own property or have employees or agents domiciled in California, Evidence regarding the residence in Placentia/Anaheim indicates that it is not owned by KSD; loose statements by Fok and Lee regarding offices in Anaheim do not refute or contradict this fact. Between 1995 and 2000, KSD secured five contracts for ship repair and/or jumboization work from California residents. It bid on four others. While admittedly each of the contracts generated millions of dollars in revenue for KSD, and together they appear to represent a not significant percentage of KSD's business, this alone is not sufficient to support a finding of general jurisdiction.
Kwee Decl., ¶¶ 17, 20, 24-25; Fok Decl., 27, 30, 34-35.
See Chikami Decl., ¶ 6; Freitas Decl., ¶ 6. At the time he purportedly told Freitas that he was from Keppel's Los Angeles or Orange County office, Lee was not a KSD employee. Accordingly, the statement is hearsay when offered against KSD.
Sanchez Decl., ¶ 2 (Toaimoana, Fuiono); Freitas Decl., ¶ 3 (Carol Linda); Cileu Decl., ¶¶ 6, 8 (Daniela, Sea Encounter).
There is no direct evidence in the record regarding KSD's total inventory of shipyard work during this period. Costa extrapolates from evidence regarding the company's revenues for the period, however, that contracts for repair and/or jumboization of the Daniela, Western Pacific, Toaimoana and Fuiono accounted for 11.75% of KSD's gross receipts from shipyard work between 1995 and 2000. (See Pl.'s Opp. at 5, n. 6; Soh Depo. at 67:8-68:8, 63:23-64:10.)
The Supreme Court has upheld a finding of general jurisdiction only once, in a case involving contacts significantly more comprehensive than those presented here. See Perkins, supra, 342 U.S. at 445-49. The Ninth Circuit has also regularly declined to find general jurisdiction "even [in cases] where the [defendant's] contacts were quite extensive." Amoco Egypt Oil Co. v. Leonis Navigation Co., Inc., 1 F.3d 848, 851 (9th Cir. 1993).
Courts have routinely rejected the suggestion that generating substantial revenue from the sale of products or services to forum state residents is by itself sufficient to support the exercise of general jurisdiction. See, e.g., Dalton v. R W Marine, Inc., 897 F.2d 1359, 1362 (5th Cir. 1990) (holding that general jurisdiction did not exist despite the fact that the defendant company chartered boats to its Louisiana subsidiaries (accounting for approximately 13% of the company's revenues), engaged in advertising which reached Louisiana, and purchased vessels within the state, because these contacts were not sufficiently "systematic and continuous to constitute a general presence in the state"); LeBlanc v. Patton-Tully Transportation LLC, 138 F. Supp.2d 817, 819 (S.D. Tex. 2001) ("The Court concludes that out-of-state work performed for a Texas business, even if accounting for ten to fifteen percent of Defendant's revenue, cannot possibly give rise, by itself, to general jurisdiction in Texas over the Defendant"); L.H. Carbide Corp. v. Piece Maker Co., 852 F. Supp. 1425, 1435 (N.D. Ind. 1994) ("The facts in the present case indicate that Piece Maker has none of the pervasive contacts with the State of Indiana as the Benguet Consolidated Mining Company did with the State of Ohio in Perkins. The only presence Piece Maker has in Indiana is one salesman who periodically drives through the state to ascertain whether the four (4) or five (5) customers who reside in Indiana, and make up only eight percent (8%) of Piece Maker's total annual sales for the past year, require any products from Piece Maker. This sole contact does not rise to the level of `continuous and systematic contacts' as that test has been applied by other courts to find the existence of general personal jurisdiction"). Cf. Helicopteros, supra, 466 U.S. at 411, 417-18 (holding that the non-resident defendant's purchase of 80% of its helicopter fleet, as well as spare parts and accessories for the aircraft, at a cost of several million dollars over a seven-year period was not sufficient to support the exercise of general jurisdiction over it); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 573 (2d Cir. 1996) (noting that the defendant's "$4 million dollars in sales in Vermont between 1987 and 1993, standing alone, may not have been sufficient" to subject it general jurisdiction in the state, but holding that "its relationship with dealers selling its products and its so-called `authorized' builders, the visits to those dealers and builders by Robertson personnel, the advertising and support available to Vermont residents regarding Robertson's products, and the deliberate targeting of Vermont architectural firms as sales prospects" was, in combination with the sales, sufficient satisfy the "minimum contacts" requirement).
This is particularly true where, as here, the non-resident defendant structures its business transactions so that they are consummated outside the state and contracted work is performed outside the state. See Bearry v. Beech Aircraft Corp., 818 F.2d 370, 375-76 (5th Cir. 1987) ("[the fact] that Beech products flow into Texas [did] not create a general presence in that state" because "Beech exercised its right to structure its affairs in a manner calculated to shield it from the general jurisdiction of the courts of other states such as Texas, carefully requiring the negotiation, completion, and performance of all contracts in Kansas. Beech has not afforded itself the benefits and protections of the laws of Texas, but instead has calculatedly avoided them").
KSD does not have a registered agent for service of process in California, it does not own property in the state, or have bank accounts or employees here. It also has no sales representatives, agents or marketing personnel who reside in the state or who are here on a frequent or even routine basis. Its contacts with the state are thus insufficient to permit the exercise of general jurisdiction. See, e.g., Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir. 1990) (declining to exercise general jurisdiction where, despite the existence of other contacts in Washington, defendant "has no offices and no exclusive agents in Washington, it is not registered to do business there, and it pays no taxes there"), overruled on other grounds, 499 U.S. 585 (1991); Cubbage v. Merchent, 744 F.2d 665, 667-68 (9th Cir. 1984) (declining to exercise general jurisdiction over defendants who were not residents of or licensed by the forum state, and who did not perform services within the state). Compare Perkins, supra, 342 U.S. at 447 (corporation's president and principal shareholder conducted the defendant company's wartime business from his home in Ohio, since corporate operations were halted by the Japanese occupation of the Philippines; the president corresponded on the company's behalf, had custody of the corporate files, issued salary checks, maintained two bank accounts carrying substantial balances of company funds, held directors' meetings at his home, and supervised the rehabilitation of the company's properties in the Philippines).
Moreover, even if one were to credit Costa's assertion that KSD maintains an office in Anaheim, this would not change the analysis. See, e.g., In re Rationis Enterprises, Inc. of Panama, 261 F.3d 264, 269 (2d Cir. 2001) ("While a local office may constitute a `continuous and systematic' contact sufficient to allow a court to hold that a defendant subjected itself to the general jurisdiction of the forum state, . . . the presence of such an office is not dispositive"); Glater v. Eli Lilly Co., 744 F.2d 213, 215, 217 (1st Cir. 1984) (the defendant corporation's general business contacts were too fragmentary to satisfy the constitutional standard for general jurisdiction where it advertised its pharmaceutical product in trade journals reaching the forum state and employed eight sales representatives to service physicians, pharmacies, and hospitals within the state); Congoleum Corp. v. DLW Aktiengesellschaft, 729 F.2d 1240, 1242 (9th Cir. 1984) ("[N]o court has ever held that the maintenance of even a substantial sales force within the state is a sufficient contact to assert jurisdiction in an unrelated cause of action"). As noted earlier, the totality of a defendant's contacts with the state must be assessed in determining whether the exercise of general jurisdiction is appropriate. Here, the evidence reflects a single visit to the state by KSD representatives to solicit business, the receipt by some potential customers of sales brochures over an eight-to ten-year period, and some telephone and mail solicitation from KSD'S home office in Singapore. This activity, which may have contributed to generating 11-12% of KSD's revenue over a five-year period, is not sufficient to permit the exercise of general jurisdiction, particularly given evidence that the contracts were consummated outside the state and all work performed pursuant to the contracts was done in Singapore.
Costa also asserts that the court may exercise general jurisdiction over KSD because other subsidiaries of Keppel Corporation have ties to the United States, and KSD employs one of the subsidiaries — Keppel Marine Agencies — as an agent to obtain work from U.S. vessel managers and owners. Costa cites no authority demonstrating that a parent corporation's contacts can be imputed to a subsidiary, or that one subsidiary's contacts can be imputed to another, in determining whether to exercise general jurisdiction over the subsidiary.
"[A] parent's corporation's ties to a forum do not create personal jurisdiction over the subsidiary." Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301-02 (9th Cir. 1986). See also County of Stanislaus v. Pacific Gas Elec. Co., No. CV-F-93-5866, 1995 WL 819149, * 2 (E.D. Cal. Dec. 18, 1995) ("That A S is a wholly-owned subsidiary of PG E, a California corporation that actively conducts business in this state, is irrelevant to the question of whether there is personal jurisdiction over A S. Only A S's own contacts with this forum may be considered in assessing jurisdiction").
Similarly, courts do not impute the contacts of a subsidiary into its parent to determine whether personal jurisdiction over the parent exists. See Doe v. Unocal Corp., 248 F.3d 915, 925 (9th Cir. 2001) ("The existence of a relationship between a parent company and its subsidiaries is not sufficient to establish personal jurisdiction over the parent on the basis of the subsidiaries' minimum contacts with the forum"); Naxos Resources v. Southam Inc., No. CV 96-2314, 1996 WL 662451, * 2 (C.D. Cal., Aug. 16, 1996) ("Plaintiffs instead argue that because four of Southam's subsidiaries conduct business in California, Southam should be deemed to have `continuous and systematic' contacts with California. In general, mere presence of a subsidiary in a forum state will not suffice to establish personal jurisdiction over a nonresident parent company"). Before such imputation is appropriate, there must be evidence that "`the parent and subsidiary are not really separate entities, or [that] one acts as an agent of the other.'" Doe, supra, 248 F.3d at 926 (quoting El-Fadl v. Central Bank of Jordan, 75 F.3d 668, 676 (D.C. Cir. 1996)). This requires evidence that the parent controls the subsidiary's internal affairs or daily operations. Id. See also American Telephone Telegraph Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996) ("A parent corporation's relationship with its subsidiary may confer personal jurisdiction over the parent if the subsidiary is acting as the parent company's alter ego, `so as to justify disregard of the corporate entity'").
Here, there is no evidence that would support a finding that Keppel Corporation or any of its subsidiaries controls KSD's internal daily operations. Nor is there evidence that Keppel Corporation itself has sufficient contacts with California to support the exercise of general jurisdiction over it. At best, there is evidence that certain present or former Keppel subsidiaries — Singmarine Land Corporation, MIL-I Precision and Pacific Seacraft — are incorporated or do business in the state. There is also evidence that Land Corporation owns at least one piece of property here, and that other Keppel subsidiaries have a presence in Texas and New Jersey. The only evidence linking KSD to Singmarine Land Corporation is Fok's reference to "an office in Anaheim," the fact that Fok, Ng and Lee stayed at the Placentia residence owned by Land Corporation while they were in California in 1999, and the fact that one of the directors of Land Corporation lists an address on the company's corporate filing that is KSD's address in Singapore. This is not sufficient to support a finding that either Keppel Corporation or Land Corporation controls KSD's daily operations, or that there is a basis for disregarding the companies' corporate form. Similarly, there is no evidence that KSD's business is or was linked in any fashion with the businesses of MIL-I Precision or Pacific Seacraft. MIL-I Precision, in fact, makes aircraft components for McDonnell Douglas and Boeing. While the evidence reflects that executives within the Keppel family of companies move from one business to another, this is not a basis for disregarding the corporate form. Accordingly, the court concludes that the contacts of Keppel Corporation and its subsidiaries are not relevant to the jurisdictional analysis in this case.
Land Corporation previously owned a factory in the state that was used by Pacific Seacraft. (See Soh Depo. at 115:10-13.)
There is also evidence that Lee, KSD's Deputy General Manager, traveled to Mississippi with the General Manager of Keppel Corporation to investigate an investment opportunity, (See Lee Depo. at 39:25-40:9, 41:6-12, 55:5-20.)
See Lee Depo. at 1:16-3:20.
Costa and Vilter contend that KSD has a direct relationship with Keppel Marine Agencies, and that Marine Agencies contacts with the United States are sufficient to confer personal jurisdiction over KSD. In the first place, there is little, if any, evidence that Marine Agencies has "substantial" or "continuous and systematic" contacts with California. The company is apparently based in New Jersey, and there is no evidence that it has solicited or obtained shipyard contracts from California owners and managers. Nor is there evidence that a large portion of its commission revenue is generated in the state.
Even were this not the case, the Ninth Circuit has established a high threshold that must be met before a subsidiary's contacts may be imputed to the parent corporation on an agency theory. The test "requires a showing that the subsidiary functions as the parent corporation's representative in that it performs services that are Sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation's own officials would undertake to perform substantially similar services.'" Doe, supra, 248 F.3d at 928 (quoting Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994)). Stated otherwise, the services the agent subsidiary performs must be sufficiently meaningful that its presence in the state substitutes for [the] presence of the principal." Id. at 930.
Costa and Vilter proffer no evidence that Marine Agencies operates as a surrogate for KSD in California. Rather, the evidence reflects that Marine Agencies is primarily the agent of Keppel Shipyard, and that its dealings with KSD are indirect only. As noted earlier, Marine Agencies refers potential ship repair/jumboization customers to Shipyard. If the projects involve smaller vessels that are more appropriate for KSD, Shipyard refers the business to it. While Marine Agencies stands to earn a commission if KSD contracts with the customer and performs the work, there is no evidence that it has in fact even received a commission from KSD. Thus, even if the evidence supported a finding that Marine Agencies is present in California (which it does not), there is no proof that its absence from the state would cause KSD itself to establish a presence here. See Doe, supra, 248 F.3d at 929 ("There is no evidence that in the absence of Total's California subsidiaries involved in the petrochemical and chemical operations, Total would conduct and control those operations"). For this reason, there is no basis upon which to disregard the corporate separateness of Marine Agencies and KSD. See, e.g., Naxos, supra, 1996 WL 662451 at * 3 ("the Court cannot conclude that the evidence adduced by Naxos regarding defendants' subsidiaries is sufficient to merit the extraordinary remedy of disregarding corporate separateness and imputing the presence of defendants' subsidiaries in California to defendants for general jurisdiction purposes").
Vilter argues that Marine Agencies has referred nine potential projects to KSD over an unspecified period of years. (See Vilter Memorandum of Points and Authorities in Opposition to Keppel Singmarine's Motion to Dismiss ("Vilter Opp.") at 9:10-10:3.) Vilter cites no evidence, however, that the vessels identified have California owners or managers, and the deposition references it provides do not correlate to any of the transcript pages that were lodged with the court.
The same result would follow if the court applied the general test for imputing the contacts of an agent in the state to its principal. See, e.g., Genetic Implant Systems v. Core-Vent Corp., 123 F.3d 1455, 1458-59 (Fed. Cir. 1997) (where a manufacturer appointed an exclusive distributor to sell its patented products, and the distributor maintained sales agents in Washington, the forum state, and sold a substantial amount of product there, the manufacturer purposefully availed itself of the benefits of doing business in Washington, warranting the exercise of jurisdiction over it in that forum).
In sum, whether analyzed in terms of its own contacts with the forum, the contacts of Keppel Corporation and its subsidiaries generally, or both, KSD has not engaged in sufficiently "substantial" or "continuous and systematic" activity in California to support the exercise of general jurisdiction over it in this case.
4. The Court May Exercise Specific Jurisdiction Over KSD
Before the court may exercise specific jurisdiction over a defendant, three things must be shown: (1) that the defendant did some act or consummated some transaction in California by which it purposefully availed itself of the privilege of conducting activities in the state; (2) that the claims against it arise out of such activities; and (3) that the exercise of jurisdiction is reasonable. Fireman's Fund, supra, 103 F.3d at 894; Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995).
a. Purposeful Availment
"Purposeful availment analysis examines whether the defendant's contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff." Sinatra v. National Enquirer, 854 F.2d 1191, 1195 (9th Cir. 1988). To demonstrate purposeful availment, plaintiffs must show that the defendant "engage[d] in some form of affirmative conduct allowing or promoting the transaction of business within the forum state." Gray Co. v. Firstenberg Machinery Co., 913 F.2d 758, 760 (9th Cir. 1990) (citing Shute, supra, 897 F.2d at 381). See also Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985) (This `purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts, . . . or of the `unilateral activity of another party or a third person . . ."). A defendant's contacts must be such that it should "reasonably anticipate being haled into court there." See World-Wide Volkswagen, supra, 444 U.S. at 297.
Courts distinguish between contract and tort actions in assessing whether a defendant has purposefully availed itself of the benefits of conducting activities in the forum. See Roth v. Garcia-Marquez, 942 F.2d 617, 621 (9th Cir. 1991). In tort cases, courts exercise jurisdiction over defendants who engage in an act that has an effect in the forum state, even if the act itself takes place outside state boundaries. Id.; Paccar Int'l, Inc. v. Commercial Bank of Kuwait, S.A.K., 757 F.2d 1058, 1064 (9th Cir. 1985) ("The commission of an intentional tort in a state is a purposeful act that will satisfy the first two requirements under Data Disc [, supra,
557 F.2d at 1288], A tortious act, standing alone, can satisfy all three requirements under Data Disc if the act is aimed at a resident of the state or has effects in the state").
In contrast, in a case based on contract, the fact that the defendant entered into a contract with a forum resident, standing alone, is not sufficient to establish purposeful availment. See Burger King, supra, 471 U.S. at 478; Gray, supra, 913 F.2d at 760; Sher, supra, 911 F.2d at 1362. Rather, the court must assess "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing" to determine whether it is appropriate to exercise specific jurisdiction over the defendant. Burger King, supra, 471 U.S. at 479-80. When tort claims arise from a contractual relationship between plaintiff and defendant, the Ninth Circuit applies the test utilized in assessing jurisdiction in contract cases. See Sher, supra, 911 F.2d at 1362 ("Although some of Sher's claims sound in tort, all arise out of Sher's contractual relationship with the defendants. In such a case, the mere existence of a contract with a party in the forum state does not constitute sufficient minimum contacts for jurisdiction. . . . Instead, we must look to `prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing' to determine if the defendant's contacts are `substantial' and not merely `random, fortuitous, or attenuated'").
In the instant case, the claims against KSD arise out of its performance of contractual obligations, as the company undertook to repair the Daniela only as a consequence of its entry into a contract with Z No. 2 Fishing Company. While Pete Costa was not a party to the contract, his negligence and strict liability claims flow from the obligations undertaken and duties imposed on KSD by the contract. Accordingly, it is appropriate to apply a contract analysis in assessing whether specific jurisdiction exists. See Unic Oil Compania v. International De Granos E Insumos S.A. De C.V., 92 F.3d 1194, 1996 WL 429172, * 4 (9th Cir. July 9, 1996) (Unpub. Disp.) ("Unic's claims, including those sounding in tort, are related to the letters of intent and distribution agreement concluded between Unic and the Honduran companies. Gonzales, the only defendant remaining in this appeal, was not a party to any of these documents. Yet his role involved extensive solicitation of business and several negotiations regarding the documents by telephone from Miami and on location in Honduras. . . . These contacts and developments form the basis for the tort claims alleged here"),
Burger King emphasizes that courts must use a "highly realistic" approach in evaluating minimum contacts in a contract case that "recognizes that a `contract' is `ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.' . . . It is these factors — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum." Burger King, supra, 471 U.S. at 479.
The Ninth Circuit has applied this standard in a number of decisions that provide guidance in resolving the pending dispute. In Roth, supra, 942 F.2d 617, the court considered an author's challenge to the exercise of personal jurisdiction over him in a contract dispute concerning movie rights to one of his works. A California film producer contacted the author in Mexico and expressed interest in making a film based on his book. Id. at 619. Originally, the author insisted that the film be shot in Columbia; later, he agreed it could be filmed in Brazil. Id. The court noted that the mere existence of a contract between a forum resident and a non-resident defendant does not suffice to subject the non-resident to jurisdiction. Id. at 621. Rather, it is critical to ascertain whether "the defendant's contacts [with the forum state] are attributable to `actions by the defendant himself,' or conversely to the unilateral activity of another party." Id. (emphasis original). It is only "parties who `reach out beyond one state and create continuing relationships and obligations with citizens of another state,'" the court said, who "are subject to regulation and sanctions in the other State for the consequences of their actions." Id. (quoting Burger King, supra, 471 U.S. at 473).
Applying these principles to the case before it, the court held that the fact that the film producer had solicited the author to enter into the contract weighed against subjecting the author to jurisdiction in California. Similarly it held that the author's minimal presence in the state suggested there had been no purposeful availment. Id. at 622. Calling the matter "a very close call," the court nonetheless concluded that "a final and broader issue appear[ed] to swing the first prong for [the film producer], namely the future consequences of the contract." Id. (emphasis original). It stated:
"The . . . contract concerned a film, most of the work for which would have been performed in California. Though the shooting most likely would have taken place in Brazil, all of the editing, production work, and advertising would have occurred in California. This is not an instance where the contract was a one-shot deal that was merely negotiated and signed by one party in the forum; on the contrary, most of the future of the contract would have centered on the forum. The checks that [the producer] would have sent [the author], . . . would have depended upon activities in California and the United States. In looking at the `economic reality,' . . . it seems that the contract's subject would have continuing and extensive involvement with the forum." Id.
See also Ting v. Orbit Communication Co., Ltd., 105 F.3d 666, 1997 WL 8470, * 3-4 (9th Cir. Jan. 7, 1997) (Unpub. Disp.) (holding that an employment contract between a non-resident employer and a resident employee, which allegedly required the employer to open an office in Los Angeles, contemplated a continuing relationship with the forum state, as the resident employee was to be based there). Compare Slepian v. Guerin, 172 F.3d 58, 1999 WL 109676 (9th Cir. Jan. 11, 1999) (Unpub, Disp.) (holding that an employment contract between a resident and a non-resident employer did not give rise to personal jurisdiction over the employer because the employer's accommodation of the employee's choice of residence was not coupled with other contacts directed toward the forum state, the contract was negotiated outside the state, and the employee's work was not directed at residents of the forum state but was "nationwide").
By contrast, in McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988), a California resident and his wholly owned company entered into oral and written agreements with Shell International Chemical Co., Ltd., to market and sell PB pipe grade industrial resin in South America, Africa and the Middle East. Id. at 805. Pursuant to the contract, the California plaintiffs were to be paid a commission on actual sales. Id. The parties' agreement was negotiated in England. "[C]ontract execution" occurred "by international mail," although the document was signed by the plaintiffs in California. Id. at 816. The contract made no reference to California (or the United States) as plaintiffs' place of residence or as the forum for the resolution of disputes. Id. Nor did it reference "any reliance on [plaintiffs'] facilities in California." Id. at 917. Plaintiffs alleged that "they [had] `performed 90% of [their] activities [in furtherance of the contract] in the Bay Area." Id. at 816. The court rejected this as a basis for exercising jurisdiction, noting that Shell International performed no part of the contract in California, and that plaintiffs' actions constituted "unilateral activity" only. This it found insufficient, as "a plaintiff's performance in California cannot give jurisdiction . . . over a nonresident defendant; it is [the] defendant's activity that must provide the basis for jurisdiction." Id. at 816-17 (internal quotations and parentheticals omitted).
The contract at issue here is more similar to that involved in McGlinchy than it is to the agreement in Roth. KSD was obligated to perform a discrete body of work outlined in the contract; it had no obligation to provide ongoing maintenance or services for the vessel once the repairs were complete. All work, moreover, was performed in Singapore. KSD negotiated the contract with SC from Singapore via fax and e-mail, following inspections of the vessel that occurred in the Philippines. The contract specifically stated that Singapore law would apply to resolve disputes arising thereunder.
The contract thus involved a "one-shot deal" that did not contemplate ongoing involvement with California. In GATX Capital Corp. v. Fifth Third Bank, No. C 99-3568 MJJ, 1999 WL 1244147 (N.D. Cal. Dec. 10, 1999), the court concluded that it could not exercise personal jurisdiction over a non-resident company that entered into a contract for brokerage services with a California entity. The brokerage agreement concerned the leasing of fifty barges. The California-based broker identified a lessee, and the non-resident corporation entered into a twenty-five year lease with the entity. Id. at * 1. The court found that the brokerage contract was "more like a `one-shot deal' than an ongoing relationship" despite the fact that it contemplated the provision of additional brokerage services once the initial lease expired as well as yearly tax services. Id. at * 3. The court further found that the "`future consequences' as between [the barge owner] and the [broker] were minimal." Id. at * 4. Consequently, it declined to exercise jurisdiction over the non-resident barge owner. Id. See also Van Steenwyk v. Interamerican Mgmt. Consulting Corp., 834 F. Supp. 336, 342 (E.D. Wash. 1993) (finding no personal jurisdiction where, unlike Roth, "the contract in issue . . . would not have created ongoing work in this state" as the resident plaintiff was to have performed his part of the agreement in Indonesia). Compare Walker Zanger (West Coast) Ltd. v. Stone Design, S.A., 4 F. Supp.2d 931, 939 (C.D. Cal. 1997) (concluding that it was proper to exercise personal jurisdiction over an Italian company that had shipped limestone to, and accepted payment from, a California plaintiff over a period of eight years, as this was the sort of "affirmative conduct which allows or promotes the transaction of business within the forum state").
Despite the fact that the contract contemplated that KSD's work would be performed outside the forum state, and despite the fact that KSD negotiated the contract from Singapore and provided for the application of Singapore law, there are Ninth Circuit cases suggesting that KSD's solicitation of the contract in California is sufficient to support a finding of purposeful availment. See Shute, supra, 863 F.2d at 1441 ("This circuit has held that a non-resident defendant's act of soliciting business in the forum state will generally be considered purposeful availment if that solicitation results in contract negotiations or the transaction of business"); Sinatra, supra, 854 F.2d at 1195 ("the solicitation of business in the forum state that results in business being transacted or contract negotiations will probably be considered purposeful availment"); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir. 1986) ("if the defendant directly solicits business in the forum state, the resulting transactions will probably constitute the deliberate transaction of business invoking the benefits of the forum state's laws"). See also Burger King, supra, 471 U.S. at 479-80 (holding that the court could exercise specific jurisdiction over defendant in part because he "deliberately `reach[ed] out beyond' Michigan and negotiated with a Florida corporation for the purchase of a long term contract").
Some courts have concluded that the results in these cases are best explained by the fact that there were "additional, substantial contacts with the respective forums" beyond the initial solicitation. See, e.g., Reyes v. Riggs, No. 87-4053, 1989 WL 71456, * 3 (9th Cir. June 26, 1989) (Unpub. Disp.) (discussing Shute and Decker, the court stated: "In two recent decisions we noted that the solicitation of business in the forum state will generally be considered purposeful availment if it results in contract negotiations or the transaction of business, . . . One might argue here that defendants' communications with the plaintiff resulted in a transaction of business. We conclude, however, that the present case is distinguishable from Shute and Decker, In Shute, the plaintiff advertised in local media, promoted its business through brochures sent to travel agents throughout the forum state, paid commissions to those agents for sales, and conducted promotional seminars within the state to solicit increased sales. . . . In Decker, while the contacts were not as great, the contract specified that performance was to be made in the forum state. . . . Thus, both Shute and Decker involved additional, substantial contacts with the respective forums").
In a recent, unpublished opinion, however, a Ninth Circuit panel held that a nonresident's solicitation of business involving a "one-shot" transaction constituted purposeful availment sufficient to subject the defendant to jurisdiction on a contract claim. In Asad v. Pioneer Balloon, 10 Fed. Appx. 624, 2001 WL 615269, * 2 (9th Cir. 2001) (Unpub. Disp.), the non-resident defendant mailed three advertisements to plaintiff after meeting its representatives at a trade show outside the forum state. The parties entered into a contract pursuant to which defendant agreed to deliver balloon products to plaintiff in the United Arab Emirates. No ongoing relationship was anticipated and performance of the contract occurred outside of the forum state. Id. at * 1. Citing Shute and relying on the general rule that "soliciting business in the forum state will generally suffice if it results in the contract negotiations or the transaction of business," the panel nonetheless held that defendant's action in sending three advertisements to plaintiff in the forum state demonstrated that it had purposefully availed itself of the privilege of doing business there. Id. at * 2 (citing Shute, supra, 897 F.2d at 381), See also Unic Oil, supra, 1996 WL 429172 at * 4 (holding that jurisdiction could properly be asserted over a non-resident defendant in California with respect to tort claims arising out of a contract to distribute plaintiff's lubrication products in Honduras because defendant had engaged in "extensive solicitation of business," conducted "several negotiations regarding the [contract] by telephone from Miami and on location in Honduras," and "affirmatively sought out Unic").
In the present case, it is undisputed that KSD executives came to California in August 1999. Costa has adduced evidence, which must be accepted as true for purposes of this proceeding, that prior to arriving, KSD's Fok telephoned SC's Cileu, and stated that KSD was looking for shipyard work and was prepared to offer good deals and competitive pricing. Fok purportedly asked whether Cileu was planning to dry-dock any of the vessels under SC's management and whether any of the owners Cileu knew were planning to lengthen or "jumboize" their vessels. When Fok, Ng and Lee arrived in San Diego, they solicited shipyard business from California vessel owners and managers. Among the managers they saw was Cileu. Plaintiff's evidence reflects that KSD representatives met with Cileu, and specifically solicited future business from him. Cileu states that, during the meeting, the upcoming overhaul of the Daniela was discussed, and KSD's Fok said that his company wanted to bid the job and was prepared to offer a very competitive price to secure the contract. Cileu also states that the visit was a "substantial factor" in SC's decision to award the contract to KSD. Plaintiff's evidence thus demonstrates that KSD actively solicited the contract that gives rise to the claims here at issue by traveling to California and meeting with Cileu.
Under the rule announced in Shute, Sinatra and Decker, this is sufficient to support a finding of purposeful availment. See, e.g., Whitson v. Stolpman, 174 F. Supp.2d 1131, 1133-34 (W, D. Wash. 2001) (holding that jurisdiction was properly exercised over a California lawyer in Washington where plaintiff contacted the lawyer in California regarding her case, but defendant thereafter "took steps to acquire the representation that were aimed toward Washington and designed to obtain business from Washington residents. In particular, defendant provided information about his interest and qualifications via correspondence directed to plaintiff's Seattle office . . . and traveled to Washington in a successful attempt to obtain the legal representation"); Forum Financial Group, Ltd. Liability Co. v. President and Fellows of Harvard College, 173 F. Supp.2d 72, 90 (D. Me. 2001) ("Defendants in this case allegedly purposefully sought out Forum, in Maine, because of its expertise, and they traveled to Maine and initiated contacts with Forum in Maine in order to create the business relationship, which became the subject of the Consulting Contract. Such a course of conduct shows that Defendants focused their business efforts on entities and persons in the State of Maine"); Elbeco Inc. v. Estrella de Plato Corp., 989 F. Supp. 669, 675 (E.D. Pa. 1997) ("Defendants initiated contact with Elbeco through a phone call into Pennsylvania. Additionally, defendants continued their solicitation of Elbeco through sending promotional materials and sample shirts into Pennsylvania. After the contract was entered into, there was continued contact with Pennsylvania through mail and telephone communications. Further, representatives of Estrella and Maquiladora visited Pennsylvania in connection with this contract on two separate occasions. . . . The defendants' contacts with Pennsylvania as outlined above indicate a voluntary entry into Pennsylvania sufficient for this Court to exercise specific jurisdiction").
In Omeluk v. Langsten Slip Batbyggeri A/S, 52 F.3d 267 (9th Cir. 1995), the Ninth Circuit held that the district court lacked jurisdiction over a Norwegian company that had rebuilt the fishing vessel on which plaintiff was injured. The accident itself occurred while the vessel was in the Bering Sea. The Norwegian ship rebuilder did not maintain offices, employees, property, or bank accounts in the forum state of Washington. Nor had it solicited business there. Id. at 269. It worked on the vessels it contracted to rebuild in Norway, and redelivered them to their owners there as well. The contract to refurbish the vessel on which plaintiff was injured was negotiated and signed in Norway and Denmark. Id. The ship builder's only direct connections with the forum state were its purchase, at the owner's direction, of certain electronic components for the vessel from a company in Washington and the attendance of representatives at cocktail receptions and ship christenings on four occasions in the past. Id. The Ninth Circuit held that the ship builder had not purposefully availed itself of the privilege of conducting business in Washington. Id. at 271. Had KSD not purposefully injected itself into California to solicit the repair contract on the Daniela, the result would be the same. The fact that it did so, however, warrants a different result. The Norwegian ship builder did not solicit business in Washington or the United States generally. KSD did. As the claims at issue in this case arise out of work KSD secured as a direct result of its solicitation of SC in California, there is sufficient evidence of purposeful availment to support the exercise of specific jurisdiction over KSD.
b. Whether The Claims Against KSD Arise Out Of The Contacts
Because the court has found that KSD has sufficient contacts with California to warrant exercising specific jurisdiction over it, the court must consider whether Costa's and Vilter's claims against KSD arise out of its contacts, and whether the exercise of jurisdiction over KSD would be reasonable.
A lawsuit arises out of a defendant's contacts with the forum state if there is a direct nexus between the cause of action and the defendant's activities there. See Shute, supra, 897 F.2d at 385. The Ninth Circuit has adopted a "but for" test in assessing whether an action arises out of a defendant's contacts with the forum state. See Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th Cir. 1998) ("We must determine if the plaintiff Panavision would not have been injured `but for' the defendant Toeppen's conduct directed toward Panavision in California"); American Nat'l. Red Cross, supra, 112 F.3d at 1051-52 (". . . it cannot be said that Appellant would not have sustained her injury, `but for' Donohue's alleged misconduct").
In the present case, Costa alleges that his brother was killed as a result of KSD's negligent repair of the Daniela. Vilter's indemnity cross-claim similarly arises out of KSD's repair of the vessel. Costa has adduced evidence that SC would not have entered into the contract with KSD but for KSD's solicitation of it, most specifically, Fok's visit to San Diego. To paraphrase the court in Shute, supra, KSD's "solicitation of business in [California]" was "forum-related activit[y] that put the parties within `tortious striking distance' of one another." Shute, supra, 897 F.2d 386. But for such activity, KSD would not have been awarded the repair contract, and the decedent allegedly would not have been injured. Accordingly, the court finds that the second requirement for the exercise of specific jurisdiction has been met.
Cileu Decl., ¶ 12.
c. Whether Exercising Jurisdiction Over Defendants Is Reasonable
The final prong of the jurisdictional test examines whether it is reasonable to subject the defendant to suit in the forum state. Reasonableness is assessed by weighing the following factors: (1) the extent of the defendant's purposeful injection into the forum; (2) the defendant's burden in litigating in the forum; (3) the extent of conflict with the sovereignty of the defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum. Ziegler, supra, 64 F.3d at 474. See also World-Wide Volkswagen, supra, 444 U.S. at 292.
1. Extent Of KSD'S Purposeful Interjection
If a non-resident defendant has purposefully availed itself of the benefits of conducting activities in the forum state, it is "presumptively not unreasonable" to subject it to litigation in that forum. See Burger King, supra, 471 U.S. at 476-77 ("[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable").
Here, the court has found that KSD purposefully availed itself of the benefits of conducting activities in California. Fok and Ng actively solicited business on KSD's behalf from California residents, and specifically solicited a contract for repair work on the Daniela from SC. See Sinatra, supra, 854 F.2d at 1199 ("The factor of purposeful interjection is analogous to the purposeful direction analysis discussed above. . . . Because we have determined that the Clinic purposefully directed its activities toward California residents, we cannot conclude that it did not deliberately avail itself of the benefits of California laws . . .").
The fact that the court has made this finding, however, does not obviate the need to consider the degree of defendants' intrusion into the state. "`Even if there is sufficient "interjection" into [California] to satisfy the [purposeful availment prong], the degree of interjection is a factor to be weighed in assessing the overall reasonableness of jurisdiction under the [reasonableness prong].'" Ziegler v. Indian River County, 64 F.3d 470, 475 (9th Cir. 1995) (quoting Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1488 (9th Cir. 1993) (brackets original), and Insurance Company of North America v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir. 1981)). See also Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1114-15 (9th Cir. 2002) ("There may be circumstances under which the level of purposeful injection into the forum supports a finding of purposeful availment yet still weighs against the reasonableness of jurisdiction . . ."); Panavision, supra, 141 F.3d at 1323 (quoting Core-Vent); nMotion, Inc. v. Environmental Tectonics Corp., 196 F. Supp.2d 1051, 1060 (D. Or. 2001) ("While [the purposeful interjection] factor weighs in favor of exercising jurisdiction, the contacts at issue are not `considerable' or widespread. This factor, therefore, does not tilt heavily toward a finding of reasonableness"). KSD's contacts with the forum, while sufficient for due process purposes, are not significant or substantial. Thus, while the first factor favors exercising jurisdiction over KSD on Costa and Vilter's claims, it does so only slightly.
2. KSD'S Burden In Litigating In This Forum
Turning to the second factor, the court must "examine the burden on the defendant in light of the corresponding burden on the plaintiff." Sinatra, supra, 854 F.2d at 1199, While it would no doubt be less burdensome for KSD to litigate this matter in Singapore, it would be more convenient for plaintiff and Vilter to prosecute their claims here. See Nissan Motor Co., Ltd. v. Nissan Computer Corp., 89 F. Supp.2d 1154, 1161 (C.D. Cal. 2000). KSD contends that Costa has significant resources because he received $7 million in settlement from the Daniela's owner. This may be true. The fact remains, however, that in terms of relative resources, KSD, a company that has annual gross revenues of tens of millions of dollars, retains the edge.
KSD contends that it would be unduly burdensome for it to litigate the case in the United States because it is a foreign company. In Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 114 (1987), the Supreme Court stated that "[t]he unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders." Courts have interpreted this statement as a direction that plaintiffs must satisfy a more stringent reasonableness test when the defendant is a foreign national or company. See, e.g., Walker Zanger, supra, 4 F. Supp.2d at 940 ("Because Stone Design is a foreign national, the reasonableness standard is somewhat more stringent"); Technology Development Associates v. Victor Company of Japan, Ltd., C-93-1336 MHP ARB, 1993 WL 266651, * 8 (N.D. Cal. July 14, 1993) ("Litigation involving a nonresident defendant from a foreign nation creates a higher jurisdictional barrier for a finding that personal jurisdiction is reasonable"). Nonetheless, "modern advances in communication and transportation have significantly reduced the burden of litigating in another country." Sinatra, supra, 854 F.2d at 1199 ("The Supreme Court recently reiterated its concern with the burdens of defending a suit in a foreign country. . . . However, modern advances in communications and transportation have significantly reduced the burden of litigating in another country").
Here, KSD will face significant burdens if it is required to litigate this action in California. This is particularly true since many of the acts that give rise to the claim occurred in Singapore, documents regarding the claim are located there, and many of its knowledgeable witnesses are located there as well. See Amoco, supra, 1 F.3d at 852 ("`The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.' . . . The burden on Leonis of defending the suit in Washington is considerable. Leonis' base of operations is in Manila. The company presently has no connections with Washington, nor does it have an agent or office anywhere else in the United States. . . . Potential witnesses and evidence are not located in Washington"); Congoleum, supra, 729 F.2d at 1243 ("It would not comport with fair play and substantial justice to assert jurisdiction over a West German corporation in the distant forum of California on a claim that arises out of activities in Europe, where the corporation had no contact with California other than a developing sales market"); Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 399 (9th Cir. 1981) (holding that "[although] modern transportation had indeed reduced some of the burden of litigation in a faraway forum," the Canadian defendant organizations "nonetheless face[d] a significantly greater burden defending [an] action in California than in [Canada]," particularly where the alleged acts giving rise to the claim occurred in Canada and most of the discovery would be centered in Canada"); Callaway Golf Corp. v. Royal Canadian Golf Ass'n., 125 F. Supp.2d 1194, 1206 (C.D. Cal. 2000) ("Here, the defendant's burden of litigating in California is likewise great. The members of the Rules Committee, likely witnesses in this case, are all located in Canada, as are other employee witnesses to defendant's conduct at issue. . . . [D]efendant here employs no agents in California and has no offices or license to conduct business in California"). This factor thus favors a finding that exercising jurisdiction in this case is not reasonable.
3. The Extent Of Conflict With The Sovereignty Of The Defendant's State
The third factor requires that the court evaluate the extent of any conflict with the sovereignty of defendant's state. It too is more significant in the international context. See Pacific Atlantic Trading Co., supra, 758 F.2d at 1330 (noting that "when the nonresident defendant is from a foreign nation, rather than another state in our federal system, the sovereignty barrier is higher, undermining the reasonableness of personal jurisdiction"); Rocke, supra, 660 F.2d at 399 (same); Cruz, supra, 649 F.2d at 1272 ("We do not minimize the sovereignty of the states within our federal system when we conclude that foreign nations present a higher sovereignty barrier than that between two states within our union. This is only a recognition of what is obvious").
Defendant has adduced evidence that the Singapore government owns a 32% interest in KSD indirectly through a Singapore private holding company. Citing Cruz, it argues that this militates against a finding that the exercise of jurisdiction is reasonable. See Cruz, supra, 649 F.2d at 1272 ("[a] second factor bearing on the seriousness of the affront to sovereignty in the present case is the fact that the shipyard belongs to an agency of a foreign sovereign. . . . We . . . conclude that [the] sovereign status of a defendant militates against the reasonableness of jurisdiction at least in cases arising before the passage of the . . . FSIA"). In Cruz, the defendant was owned and operated by the Mexican Navy, and adjudication of plaintiff s claim would have required compelling the testimony of members of the Navy. Id. at 1269, 1272. KSD, by contrast, is a private company in which the Singapore government has only a partial, indirect interest. Its connection with a foreign government is thus substantially more attenuated than that of the defendant in Cruz. Moreover, it has not asserted FSIA immunity as a defense, and there is no indication that any government witnesses will be required to testify. For these reasons, the court finds Cruz somewhat inapposite. Nonetheless, because KSD is a foreign national, and because the Singapore government has an ownership interest in it, this factor weighs slightly against a finding that exercising jurisdiction would be reasonable in this case. See Ballard, supra, 65 F.3d at 1501 ("Although we reject Royal's invitation to decline jurisdiction on the basis of `international comity,' we nevertheless agree with Royal and the district court that an exercise of jurisdiction would implicate Austria's sovereignty interest"); Amoco, supra, 1 F.3d at 852 (holding that the potential for conflict with the sovereignty of defendant's state weighed against a finding of reasonableness because of "[t]he international context of th[e] case"); Callaway Golf Corp., supra, 125 F. Supp.2d at 1206 ("The fact that defendant is `unquestionably [a] resident [ ] of Canada . . . tends to undermine the reasonableness of personal jurisdiction in this case,' particularly because defendant has a corporate charter by the Canadian government to administer Canadian rules of men's amateur golf in Canada," quoting Rocke, supra, 660 F.2d at 399).
Declaration of Lum Chee Kong ("Kong Decl."), ¶ 10.
4. The Forum State's Interest In Adjudicating The Dispute
Turning to the next factor, KSD contends that California does not have an interest in this case because Pete Costa's last residence was Panama, and the accident occurred while the Daniela was sailing in the Western Pacific Ocean. The Daniela was a U.S. flagged vessel, however, and the plaintiff in the action is a California resident administering a California estate. See Cruz, supra, 649 F.2d at 1272 ("Alaska has an interest in the protection of its non-resident fishing fleet from negligent foreign repairs"). Cf. Panavision, supra, 141 F.3d at 1323 ("`California maintains a strong interest in providing an effective means of redress for its residents tortiously injured,'" quoting Gordy v. Daily News, L.P., 95 F.3d 829, 836 (9th Cir. 1996)). Consideration of the forum state's interest thus weighs slightly in favor of exercising jurisdiction.
Costa disputes that the decedent's last residence was Panama, noting that he lived in California (presumably because he was being treated by California physicians) following the accident. (Pl.'s Supp. Opp. at 14:2-5.)
5. The Most Efficient Judicial Resolution Of The Controversy
Whether California or Singapore will provide a more efficient and effective forum for the resolution of the claims is hotly contested by the parties. This factor typically focuses on the location of the evidence and witnesses. See Panavision, supra, 141 F.3d at 1323.
In its moving papers, KSD asserted in conclusory fashion that the majority of witnesses are located in Singapore. In its reply, KSD contended that twenty-four of its employees, all of whom reside in Singapore, had relevant information regarding the action. It further stated that the vessel owner appointed five Singapore investigators to examine the Daniela following the accident, and that the decedent received medical care in Singapore immediately following the accident as well.
Declaration of Andria L. Catalano ("Catalano Decl."), ¶ 10.
Declaration of Simon Soh Thiam Hock ("Soh Decl."). ¶ 7.
Id. ¶¶ 8, 9.
Following oral argument, both Costa and KSD proffered additional evidence regarding the location of witnesses in supplemental briefing requested by the court. Costa asserts that the majority of witnesses — i.e., crewmen aboard the Daniela when the accident occurred, doctors who treated Pete Costa prior to his death, members of the Costa family, representatives of the vessel owner and manager, the Chief Engineer involved in the vessel overhaul, and those who serviced and maintained the Daniela over the last ten years — reside in California, Hawaii, or American Samoa. A list of crewmen submitted indicates that many are Filipino, Portuguese, and Croatian nationals; Costa's evidence, moreover, suggests that the crew is hired and discharged primarily in American Samoa, and that the vessel rarely, if ever, makes port in Singapore. Other evidence indicates that the valves that are the subject of the lawsuit are presently in the custody and control of the vessel owner, Z No. 2 Fishing Company.
While KSD objects to the court's consideration of Costa's evidence in this regard, the court notes that KSD's original showing on this issue was minimal, and that it did not specifically identify any witnesses until it filed its reply. It is therefore appropriate to consider the additional evidence proffered by Costa on the subject. The court likewise considers the amplification of KSD's evidence in its supplemental brief.
Plaintiff's Supplemental Memorandum In Opposition to Defendant's Motion to Dismiss ("Pl.'s Supp. Opp"), Ex. 2, Declaration of William L. Banning ("Banning Decl."), ¶¶ 11, 14, 16, 20.
Costa contends that KSD will need to bring at most two or three witnesses from Singapore to the United States for trial. He bases this contention on the testimony of George Copitas, who has served for thirty years as a licensed Chief Engineer on U.S. flagged tuna seiners, and who has participated in valve overhauls performed by KSD on other vessels. Based on his experience with other projects, Copitas asserts that the only KSD witnesses with relevant information regarding the valve overhaul will be the foreman or superintendent of the repair yard. KSD, by contrast, contends that there are more than twenty witnesses with relevant knowledge located in Singapore, including KSD employees involved in negotiating the repair contract, in purchasing and project management, in producing repair parts, and in the repair work itself. It notes further that some of the work was subcontracted to other companies, and that certain of these companies' employees — located in Singapore — may have information relevant to the suit. Citing Cruz, it asserts that the real issue in this case is liability rather than damages, and that in cases "involving complex factual questions about a major repair that required several weeks to complete and in which the repaired object probably cannot economically be recovered for inspection, the site of the repair will usually be the source of most of the witnesses, documents, and physical evidence on which the case will turn." Cruz, supra, 649 F.2d at 1273. What may "usually" be the case does not control the outcome here, where the record reveals that some witnesses who participated in the repair work are located in Singapore, but others are located elsewhere — e.g., in Hawaii or on vessels in the South Pacific — and where it also reflects that the valves themselves are in the custody and under the control of the vessel owner, a California-based company. While documents pertinent to KSD's performance of the contract will be found in Singapore, there will be little burden in transporting these to California. Moreover, contrary to KSD's assumption, it is not clear, at this stage of the litigation, that witnesses and documents reflecting performance of the contract will be more central to a determination of liability than the testimony of those aboard the vessel when the explosion occurred. Stated otherwise, while it will be important to ascertain the nature of the work performed on the valve during the vessel overhaul, and the identity of those who supervised and performed that work, it will also be important to determine how the valve malfunctioned aboard the vessel, if it did, so as to determine whether any of the repair work actually caused the explosion that injured the decedent. Given the fact that the Daniela's crew will likely be found on vessels throughout the South Pacific, that the majority of the decedent's physicians are located in the United States, and that Chief Engineer Yoke, who allegedly supervised the repair work, resides in Hawaii, the court concludes that witnesses and evidence are most probably dispersed in a variety of locations, and that neither California nor Singapore is a significantly more efficient forum than the other in this regard. See Dole Food Co., supra, 303 F.3d at 1116 ("There are some witnesses in Europe and some in California, so neither forum has a clear efficiency advantage with respect to witnesses").
Pl.'s Supp. Opp., Ex. 1, Declaration of George Copitas ("Copitas Decl."), ¶ 3.
Id.
Defendant's Supplemental Brief ("Def.'s Supp. Brief') at 1, n. 1. It is unclear how many of these individuals have knowledge specific to the work done on ammonia refrigeration valve, as the scope of the contract was significantly broader, and involved the entire vessel.
KSD asserts that it "did not perform any work on the failed valve," and that "[a]ll work in th[e] area of the ammonia refrigeration system was undertaken by the crew [of the Daniela] under the supervision of Mr. Costa's supervisor, Jonathan Yoke." (Defendant's Memorandum of Points and Authorities in Support of Motion to Dismiss for Lack of Jurisdiction over the Person of Defendant ("Def.'s Mem.") at 11:11-13. See also Weng Decl., ¶¶ 26, 27.)
KSD asserts that the valves are currently in Singapore because of an ongoing arbitration between it and Z No. 2 Fishing Company. (See Supp. Brief at 2:20-25.) The record contains no information regarding the estimated length of the arbitration proceedings, and there appears to be no dispute that Z No. 2 Fishing Company retains dominion over the valves and could return them to the United States should it choose to do so.
In its supplemental brief, KSD asserts that the efficiency factor favors Singapore because the contract between it and the vessel owner is governed by Singapore law, and thus that country's law will provide the applicable standard of care. While KSD is correct that the contract contains a Singapore choice of law provision, this does not automatically necessitate a finding that the efficiency factor favors dismissal. First, KSD proffers no authority for the proposition that the contract provision it cites controls choice of law in a tort action brought pursuant to an American maritime statute. Assuming the contract requires that Singapore law be applied to determine the applicable standard of care, however, there is substantial question as to whether that country's law would be significantly different from the American rules of decision the court would otherwise apply. KSD has submitted the declaration of a Singapore solicitor, R. Srivathsan, who states that the country is a common law jurisdiction "patterned on the English model," which provides a remedy for injuries "caused by the negligence of a defendant." To the extent this is true, the applicable standard of care will be governed, not by any country's law, but by the relevant customs and practices of shipbuilding and repair industry. For this reason, the court cannot find, on the present record, that choice of law issues make Singapore a more efficient forum. See Id. ("The choice-of-law analysis . . . at this stage . . . cannot be said to favor either party").
SeeWeng Decl., Ex. B.
Declaration of R. Srivathsan ("Srivathsan Decl."), ¶¶ 2, 5.
In arguing that Singapore constitutes an adequate available forum, KSD in fact appears to concede that the negligence standards will be similar.
For their part, Costa and Vilter argue that efficiency demands that the action be tried in this jurisdiction, because any other outcome will result in duplicative litigation with the risk of potentially inconsistent judgments. Whether or not exercising jurisdiction will permit resolution of all claims against all parties in a single forum is a factor courts take into consideration in assessing whether the reasonableness test is met. See, e.g., nMotion, supra, 196 F. Supp.2d at 1061-62 ("nMotion has brought claims in this Court against ETC-PZL and its parent corporation, ETC-USA. ETC-USA has not challenged this Court's jurisdiction. Thus, the dismissal of ETC-PZL could require nMotion to litigate two separate actions, one against ETC-USA in Oregon and a separate action against ETC-PZL in another forum. Both actions necessarily would involve proof that ETC-PZL worked on the integration of Pro Pilot into the existing GAT 2 software with the assistance of ETC-Interactive in Oregon. Separate actions would substantially inconvenience nMotion and could result in inconsistent and ineffective outcomes, especially regarding nMotion's request for an order enjoining both Defendants from future use of the Pro Pilot program. Thus, this factor as well weighs in favor of exercising jurisdiction over ETC-PZL"); Washington State University Foundation v. Oswald, No. Civ. 99-907, 2000 WL 251661, * 3 (D. Or. Jan. 3, 2000) (exercising personal jurisdiction where the forum state "appeare[d] to be the only jurisdiction in which the parties may totally resolve this action"); Gutierrez v. Givens, 1 F. Supp.2d 1077, 1083 (S. D, Cal. 1998) (holding that the exercise of jurisdiction was reasonable because ".,. judicial efficiency is best served by the consolidation of Plaintiffs* causes of action in this single suit. Plaintiffs allege that if their suit against Colonial is dismissed for lack of personal jurisdiction or improper venue, they will continue to maintain this suit in California and would file a second class action against Colonial in the Middle District of Florida"); United Kingdom Mutual Steamship Assurance Association [Bermuda] Limited v. Continental Maritime of San Francisco, Inc., No. C-91-2798 RFP, 1992 WL 486937, * 6 (N.D. Cal. Aug. 31, 1992) (". . . the most effective and convenient resolution of this issue is likely to occur through the litigation of all the related claims in a single action. If VPSI is dismissed from this action, Continental will be required to initiate a second, largely duplicative action in Canada to seek indemnification from VPSP); Abuan v. General Electric Co., 735 F. Supp. 1479, 1483 (D. Guam 1990) (concluding that the exercise of jurisdiction over the foreign manufacturer of PCB's in a class action suit brought by 189 named plaintiffs was reasonable, inter alia, because "[t]he most efficient judicial resolution of the suit commands that it be consolidated; severing Monsanto for litigation in a distant forum portends duplication and piecemeal adjudication, an inefficient result"). Cf. Core-Vent, supra, 11 F.3d at 1489 ("The fact that the lawsuit will continue in California with other parties tips the efficiency factor in Core-Vent's favor").
Certain of these cases analyze the prospect of duplicative litigation and inconsistent results in considering plaintiff's interest in convenient and effective relief. See, e.g., nMotion, supra, 196 F. Supp.2d at 1062; United Kingdom Mutual Steamship Assurance Ass'n., supra, 1992 WL 486937 at * 6. In the present case, it is appropriate to consider the question in analyzing whether efficient judicial resolution of the dispute indicates that the exercise of jurisdiction is reasonable because Vilter, which did not initiate this proceeding and filed a third-party complaint against KSD only after it was itself sued, will be disadvantaged if KSD does not remain a defendant in this litigation. Under these circumstances, the issue is not simply one of plaintiff's convenience, but one of ensuring the effectiveness and efficiency of the judicial proceeding in which Vilter has been named as a party.
Costa and Vilter contend that, whether or not KSD is a party to this suit, the issue of its negligence will have to be adjudicated to determine Vilter's proportionate share of fault. See McDermott, Inc. v. AmClyde and River Don Castings, Inc., 511 U.S. 202, 217 (1994). They argue that if KSD's motion to dismiss is granted, they will have to try the issues inter se in the United States, and then try them a second time against KSD in Singapore, with the possibility of inconsistent results. KSD responds that Vilter may submit to jurisdiction voluntarily in Singapore, and avoid this problem. Reasonableness, however, must be evaluated without regard to a co-defendant/counterclaimant's willingness to submit voluntarily to jurisdiction in a distant foreign land. Without such a stipulation, it appears clear that Costa could not join all defendants in a single action in Singapore. Compare OMI Holdings, Inc. v. Royal Ins. Co. of America, 149 F.3d 1086, 1097 (10th Cir. 1998) (stating that one "factor in [the] reasonableness inquiry [is] whether . . . jurisdiction is necessary to prevent piecemeal litigation," and holding that because "a Canadian forum was apparently available in which Plaintiff could join all Defendants in one location . . . litigating the dispute in Kansas would not be more efficient than in Canada"). More fundamentally, it is entirely unclear that Costa would forego his action against Vilter in the United States, since he represents that the law is significantly more favorable here than it is in Singapore. Thus, dismissing KSD will most likely give rise to parallel actions — one in California and one in Singapore — regarding essentially the same issues. As a consequence, efficient judicial resolution favors a finding that exercising jurisdiction over KSD in this action is reasonable.
6. The Importance Of The Forum To Plaintiff's Interest In Convenient And Effective Relief
The importance of this forum to plaintiff's interest in convenient and effective relief similarly favors exercising jurisdiction. Given the distances involved, and the time demands of litigating in Singapore, California is clearly a more convenient forum from Costa's point of view. Additionally, Costa is able to sue Vilter is this forum; unless Vilter were to consent voluntarily to suit in Singapore, it does not appear that Costa could obtain jurisdiction over it there. Because the Central District of California is closer to Costa's home than Singapore, and because exercising jurisdiction over KSD in this action will permit resolution of his claims in a single action, this factor weighs in favor of exercising jurisdiction in this case.
7. The Existence Of An Alternative Forum
Costa asserts that this factor may be considered only if the court determines, on the basis of the remaining factors, that the exercise of jurisdiction would be unreasonable. See Sinatra, supra, 854 F.2d at 1201 (". . . [w]hether another reasonable forum exists becomes an issue only when the forum state is shown to be unreasonable," quoting Corporate Inv. Business Brokers v. Melcher, 824 F.2d 786, 791 (9th Cir. 1987)). The plaintiff in Dole Food Co. made a similar argument. See Dole Food Co., supra, 303 F.3d at 1116, While acknowledging the statement in Sinatra, the Dole court nonetheless appeared to balance the factor along with the remaining considerations in determining that the exercise of jurisdiction was reasonable. See Id. at 1116-17. Moreover, myriad Ninth Circuit cases treat the availability of an alternative forum as one of multiple factors to be assessed. See, e.g., Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1126 (9th Cir. 2002); Panavision, supra, 141 F.3d at 1324; Ziegler, supra, 64 F.3d at 476; Amoco, supra, 1 F.3d at 853. Accordingly, the court will consider the availability of an alternative forum as one of multiple relevant factors in determining whether it would be reasonable to exercise jurisdiction over KSD in this case.
The final factor in assessing the reasonableness of exercising jurisdiction is the availability of an alternate forum. Costa and Vilter bear the burden of demonstrating that Singapore does not constitute an adequate forum. Pacific Atlantic Trading Co., supra, 758 F.2d at 1331. KSD asserts that Singapore is an adequate alternate forum because it is an English-law jurisdiction that recognizes causes of action similar to those alleged in this case. At oral argument, Costa disputed this, asserting that Singapore law would not allow any recovery against KSD. As part of his supplemental filing, he has proffered the declaration of a Singapore solicitor, Prem Gurbani, who asserts that, under Singapore law, the settlement Costa received from the vessel owner in prior litigation will be offset against any award he may obtain from KSD. Given the size of the settlement, and of his potential recovery against KSD, Costa contends that the offset will effectively preclude him from recovering against KSD if he is required to sue in Singapore.
Costa contends that the burden lies with KSD. (See Pl.'s Supp. Opp. at 10, n. 4.) Multiple Ninth Circuit and district court cases hold that plaintiff bears the burden of establishing that no alternate forum is available. See, e.g., Core-Vent, supra, 11 F.3d at 1490 ("The plaintiff bears the burden of proving the unavailability of an alternative forum"); Paccar International, Inc. v. Commercial Bank of Kuwait, S.A.K., 757 F.2d 1058, 1066 (9th Cir. 1985) (placing the burden of proof with respect to demonstrating the existence of an alternative forum on plaintiff); Miracle v, N. Y.P. Holdings, Inc., 87 F. Supp.2d 1060, 1070 (D. Haw. 2000) ("The plaintiff bears the burden of proving the unavailability of an alternative forum"); Technology Development Associates v. Victor Company of Japan, Ltd., No. C-93-1336, 1993 WL 266651, * 9 (N.D. Cal. July 14, 1993) (same). But see Ballard, supra, 65 F.3d at 1502 (stating that defendant "erroneously assum[ed] that the burden is on [plaintiff] to prove the lack of an alternate forum"). The Ninth Circuit recently noted the "split" in its case law on this subject, but declined to resolve the question. See Dole Food Co., supra, 303 F.3d at 1116-17 ("Our case law appears to be split on this issue, but we need not resolve the split in this case"). For the reasons stated infra, even if the burden lies with Costa, the court concludes he has met it in this case.
Srivathsan Decl, ¶¶ 2, 3.
Declaration of Prem K, Gurbani ("Gurbani Decl."), ¶ 8.
After this evidence was submitted, KSD sent a letter to the court, objecting to the submission of Gurbani's declaration and asking that it be stricken. Sending a letter, of course, violated the Local Rules. See CA CD L.R. 83-2.11. Nonetheless, the court has considered the objections, and concluded that, under the circumstances of this case, it should consider the declaration. The parties' initial briefing focused primarily on purposeful availment, and the court specifically invited further briefing on the adequacy of the Singapore forum. The court also notes KSD's assertion that its Singapore law expert disputes certain of Gurbani's conclusions.
Gurbani asserts, inter alia, that Singapore's "one action rule" may preclude Costa from suing KSD altogether. ( Id., ¶ 9 ("Under Section 20(5) of the Singapore Civil Law Act (Cap 43) not more than one action shall lie for or in respect of the same subject matter of complaint. As the Z Action was brought Plaintiff Paul Costa, Personal Representative for the estate of Chief Costa . . . against the shipowner in the United States and the action was concluded with a dismissal [with] prejudice, a similar action based on death caused by the wrongful act, neglect or default would constitute a second action in respect of the same subject matter")). This is hotly disputed by KSD. (See Letter from Andria Catalano at 1-2.) Given its view of the setoff issue, the court need not resolve this conflict, and assumes for purposes of its analysis that Costa will be able to sue KSD in Singapore despite the fact that he earlier filed an action against the vessel owner.
Generally, an alternative forum is considered inadequate if the plaintiff would be deprived of all remedies there. See, e.g., Baumgart v. Fairchild Aircraft Corp., 981 F.2d 824, 835 (5th Cir. 1993); Reid-Walen v. Hansen, 933 F.2d 1390, 1393 n. 2 (8th Cir. 1991). Cf. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 (1981) ("Of course, if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, the unfavorable change in law may be given substantial weight; the district court may conclude that dismissal would not be in the interests of justice"). Here, Costa could bring negligence claims in Singapore based on the events alleged in the complaint. While Costa asserts he would not be able to recover certain types of damages that he could seek under United States law, this alone does not render Singapore an inadequate forum. See Leon v. Million Air, Inc., 251 F.3d 1305, 1310 (11th Cir. 2001) ("The fact that punitive damages would be unavailable in Ecuador was of no moment because the "potential for a smaller damage award is not a basis for the denial' of a forum non convenient motion; the remedy provided by the Ecuadorian courts would not be "`so clearly inadequate or unsatisfactory that it is no remedy at air"'"); Lockman Foundation v. Evangelical Alliance Mission, 930 F.2d 764, 768-69 (9th Cir. 1991) ("Even if the RICO and Lanham Act claims were unavailable in Japan, that would not furnish a sufficient reason to preclude dismissal. The `possibility of an unfavorable change in the law' is not to be given conclusive or substantial weight in a forum non conveniens inquiry, quoting Piper Aircraft, supra, 454 U.S. at 249-51); De Melo v. Lederle Laboratories, 801 F.2d 1058, 1061 (8th Cir. 1986) (" De Melo contends that the unavailability under Brazilian law of punitive damages and recovery for pain and suffering suggests that any recovery she may obtain in Brazil will be grossly inadequate to compensate her for her injuries and deter future misconduct by multinational corporations like the defendant. . . . [T]he Supreme Court explicitly held in Piper Aircraft that, ordinarily, the fact that the alternative forum's substantive law is decidedly less favorable to the plaintiff should not be given substantial weight in forum non conveniens determinations. . . . [U]nder Brazilian law, de Melo may recover lost wages, indirect losses, and twice the amount of her medical expenses. These damages, whatever they amount to in this case, are not so paltry as to render the available remedy illusory"); Varnelo v. Eastwind Transport, Ltd., No. 02Civ.2084(KMW)(AJP), 2003 WL 230741, * 17 (S.D.N.Y. Feb. 3, 2003) ("Under well-settled case law, however, lower recovery in Russia would not render that forum inadequate. The fact that `the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the present forum . . . should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry'").
While this definition has developed in the forum non conveniens context, it is applicable by analogy here.
See Gurbani Decl., ¶ 10.
It is only where the alternative forum does not recognize a cause of action for the injuries plaintiff alleges, or where the remedy afforded is so inadequate that it constitutes "no remedy at air that courts find the forum to be inadequate. See Piper Aircraft, supra, 454 U.S. at 254 (". . . if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, the unfavorable change in law may be given substantial weight; the district court may conclude that dismissal would not be in the interests of justice"); Leetsch v. Freedman, 260 F.3d 1100, 1103 (9th Cir. 2001) ("The existence of an adequate alternative forum depends upon whether or not an alternative forum is `so clearly inadequate or unsatisfactory that it is no remedy at all'"); Lueck v. Sunstrand Corp., 236 F.3d 1137, 1143-45 (9th Cir. 2001) ("The foreign forum must provide the plaintiff with some remedy for his wrong in order for the alternative forum to be adequate. . . . [I]t is only in `rare circumstances . . . where the remedy provided by the alternative forum . . . is so clearly inadequate or unsatisfactory, that it is no remedy at all,' that this requirement is not met. . . . Although New Zealand law does not permit Plaintiffs to maintain this exact suit, New Zealand, through its no-fault accident compensation scheme, has provided and continues to provide a remedy for Plaintiffs' losses. Plaintiffs have not shown that this type of administrative remedy is so inadequate that it is tantamount to no remedy at all"); Mattel, Inc. v. MCA Records, Inc., 28 F. Supp.2d 1120, 1129 (C.D. Cal. 1998) (concluding there was no available alternative forum where Sweden and Denmark did not recognize a cause of action comparable to plaintiff's trademark claim); Seltzer Sister Bottling Co., Inc. v. Source Perrier, S.A., No. C-90-1468, 1991 WL 279273, * 9 (N.D. Cal. May 1, 1991) (exercising jurisdiction over French corporation in part because "a mechanism for class relief for the type of injuries asserted . . . may not be available in France," and consequently "plaintiffs [did] not necessarily have a choice of forum"). Compare Core-Vent, supra, 11 F.3d at 1490 (dismissing antitrust and libel claims for lack of personal jurisdiction where "the maintenance of a suit in Sweden may be costly and inconvenient for [plaintiff], but [plaintiff] has not shown that its libel claims cannot be effectively remedied there").
The question is whether the prospect that the amount of Costa's settlement with the vessel owner will be offset against any damages KSD might otherwise be required to pay affords him "no remedy at all" in Singapore. Courts typically take defenses that can be raised to defeat recovery into account in assessing whether an alternate forum is adequate. See, e.g., Bank of Credit and Commerce International (Overseas) Ltd. v. State Bank of Pakistan, 273 F.3d 241, 246 (2d Cir. 2001) ("An alternative forum is generally adequate if: `(1) the defendants are subject to service of process there; and (2) the forum permits "litigation of the subject matter of the dispute.'" . . . It follows that an adequate forum does not exist if a statute of limitations bars the bringing of the case in that forum"); Miracle, supra, 87 F. Supp.2d at 1071 ("The plaintiff bears the burden of proving the unavailability of an alternative forum. . . . Here, Plaintiff has met that burden. As discussed above, Plaintiff has demonstrated that under New York law Plaintiff would be precluded by a one-year statute of limitations from bringing the action. Defendants do not argue with Plaintiff's assertion that she would be barred by the statute of limitations. Due to the fact that Plaintiff would be barred from bringing this action in New York, this factor weighs in Plaintiff's favor"); Crimson Semiconductor, Inc. v. Electronum, 629 F. Supp. 903, 909 (S.D.N. Y. 1986) ("The statute of limitations bar in Romania does not go to the merits of plaintiff's claim, or to the quantum of damages, but to the very existence of the claim in the foreign forum. Thus, this is one of the `rare circumstances' in which the foreign forum is `clearly unsatisfactory'").
KSD argues that any offset defense it may be able to assert in Singapore is a direct result of the litigation strategy Costa chose to employ, not the inadequacy of Singapore's legal rules or procedures. This type of argument can often be made with respect to a plaintiff who delays filing an action until the statute of limitations has run in an alternative forum. Nonetheless, most courts focus solely on the availability of a remedy, not on the parties' respective fault, and conclude that the alternative forum is not adequate. Here, the parties do not appear to dispute that Costa may avoid an offset by filing separate actions under American maritime law as he has done. The fact that, by contrast, he cannot avoid an offset in Singapore, and that this will effectively preclude his ability to recover damages from KSD, renders Singapore an inadequate forum. Cf. Nemariam v. Federal Democratic Republic of Ethiopia, 315 F.3d 390, 394-95 (D.C. Cir. 2003) (holding that a commission formed to arbitrate all claims for loss or damage arising out of a border war between Eritrea and Ethiopia was not an adequate alternative forum given "the Commission's inability to make an award directly to Nemariam, and the possibility that Eritrea could set off [plaintiff's] claims or even an award in her favor against claims made by or an award in favor of Ethiopia," and noting that "[w]hile a more limited recovery than is available in the plaintiff's forum of choice does not automatically make the alternative forum inadequate, we fail to see how an alternative forum in which the plaintiff can recover nothing for a valid claim may also be deemed adequate. In other words, it would be peculiar indeed to dismiss Nemariam's claim in the United States District Court — a forum in which, assuming the court has jurisdiction, she is certain to be awarded full relief if she wins on the merits of her claim — in favor of a forum in which she has no certainty of getting any relief for a meritorious claim").
Additionally, as noted previously, it does not appear that Costa could compel Vilter to appear and defend in Singapore. In and of itself, this may render Singapore an inadequate forum. See Dole Food Co., supra, 303 F.3d at 1118 ("Only Watts has agreed to submit to personal jurisdiction in The Netherlands. Thus, even assuming that there is no valid statute of limitations defense, it is unclear whether there is an alternative forum in The Netherlands, for it is unclear that Boenneken could be compelled to appear in a court there," citing Lueck, supra, 236 F.3d at 1143 (holding that an alternative forum was available because all defendants indicated they would accept service of process in New Zealand), and Alpine View Co. Ltd. v. Atlas Copco, 205 F.3d 208, 221 (5th Cir. 2000) ("A foreign forum is available when the entire case and all parties can come within the jurisdiction of that forum" (emphasis added by the Dole court)).
Accordingly, the court concludes that Singapore does not constitute an adequate alternative forum under the circumstances of this case, and that this factor favors a finding that it is reasonable to exercise jurisdiction over KSD in California.
8. Balancing The Factors
Looking at the reasonableness factors in combination, the extent of KSD's purposeful availment favors a finding that it is reasonable to exercise jurisdiction in this case, but only slightly, as Costa's showing regarding KSD's contacts with the jurisdiction, while sufficient to satisfy due process, is not substantial. The burden that will be imposed on KSD if it is forced to litigate in this forum weighs against a finding of reasonableness, as does the extent of conflict with the sovereignty of its state. By contrast, it is clearly in plaintiff's interest to litigate the case here, and California has some interest in having the dispute adjudicated here, although not as strong an interest as is typically present in suits brought by residents of the state. Before considering the most efficient judicial resolution of the controversy and the adequacy of the alternative forum, therefore, it appears that two factors strongly favor KSD, one strongly favors Costa, and two tip slightly in his direction. The factors favoring plaintiff are those that typically weigh in favor of a plaintiff litigating in his home forum.
During oral argument and in its supplemental brief, Vilter chastised the court for engaging in what it characterized as box-score analysis. (See Vilter's Supplemental Opposition to Motion to Dismiss ("Vilter's Supp. Opp.") at 3:7-14.) To the contrary, the court has attempted to analyze and weigh the various considerations as they relate to the facts of this case, and to assign to them the importance they deserve. Unfortunately, it is often difficult to discuss the factors and explain the manner in which they are being weighed without noting in some fashion the number that favor one party versus the other. See, e.g., Dole Food Co., supra, 303 F.3d at 1117 ("In this case, only two of the seven factors — burden on defendants and sovereignty conflicts — favor Watts and Boenneken"); Ziegler, supra, 64 F.3d at 474 ("In sum, factors 3 and 7 (Florida's sovereignty interests and available alternative forum) favor defendants. Ziegler has a slight edge on factors 2 and 6 (respective burdens and convenience and effectiveness of relief), and factors 4 and 5 (California's interest and efficiency) decisively favor him. Defendants' interjection into California was significant; therefore, factor 1 weighs in favor of Ziegler").
When efficient judicial resolution and adequacy of the alternative forum are added to the calculus, however, the result comes into clearer focus. Both of these factors strongly favor Costa, and tip the balance sharply in his favor. Because Costa's showing of purposeful availment was not overly strong, the quantum of evidence required to demonstrate that it is reasonable to exercise jurisdiction increases. See, e.g., Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994) ("The conclusion that we draw from this line of reasoning is that appellant has made only the most marginal of showings that Alioto purposefully availed himself of an opportunity to act in Massachusetts. And the weakness of this showing assumes decretory significance when we step back and evaluate the fairness of asserting jurisdiction in the totality of the circumstances"); Core-Vent, supra, 11 F.3d at 1488 (" In Burger King, 471 U.S. at 476, . . . the Court stated that the minimum contacts must be evaluated `in light of the reasonableness factors, suggesting that the minimum contacts and reasonableness factors occupy a sliding scale"); Cruz, supra, 649 F.2d at 1271 ("The smaller the element of purposeful interjection, the less is jurisdiction to be anticipated and the less reasonable is its exercise"); Washington State University Foundation, supra, 2000 WL 251661 at * 3 (". . . the Ninth Circuit indicated that this three-part test is to be applied flexibly. For example, a strong showing of reasonableness lessens the required showing of minimum contacts"). Even raising the bar in this fashion, however, the lack of an adequate alternative forum, and the fact that both Costa and Vilter would likely be forced to litigate in two fora rather than one to secure complete relief demonstrate that the requisite showing has been made.
This is particularly true when one considers that a defendant in KSD's position must present a "compelling case" as to why the exercise of jurisdiction would be unreasonable. See Dole Food Co., supra, 303 F.3d at 1117 ("A number of our cases emphasize the heavy burden on both domestic and foreign defendants in proving a `compelling case' of unreasonableness to defeat jurisdiction"); Panavision, supra, 141 F.3d at 1324 ("[Defendant] failed to present a compelling case that district court's exercise of jurisdiction in California would be unreasonable"); Ballard, supra, 65 F.3d at 1502 ("In fine, Royal has not carried its heavy burden of presenting a `compelling case' against jurisdiction"); Caruth v. International Psychoanalytical Ass'n., 59 F.3d 126, 129 (9th Cir. 1995) ("[G]iven the closeness of the factors, we conclude that [defendant] has not presented a `compelling case' that exercising jurisdiction over it would be unreasonable"); Roth, supra, 942 F.2d at 621-22 ("Once purposeful availment has been established, the forum's exercise of jurisdiction is presumptively reasonable. To rebut that presumption, a defendant must present a compelling case that the exercise of jurisdiction would, in fact, be unreasonable"). Here, given the fact that a majority of the factors favor the retention of jurisdiction, the fact that there is no adequate alternative forum, and the fact that dismissal will leave the parties to litigate their dispute piecemeal, the court concludes that KSD has not presented a compelling case as to why the exercise of jurisdiction would be unreasonable. This is particularly true since the factors that favor KSD are those that "are likely to favor foreign defendants every time personal jurisdiction in the United States is considered." Dole Food Co., supra, 303 F.3d at 1117. KSD's motion is, accordingly, denied.
Because the court has found that KSD has sufficient minimum contacts with California to support the exercise of specific jurisdiction in this case, and because it has further concluded that the exercise of such jurisdiction is reasonable, it need not address the argument made by Costa and Vilter that KSD is subject to jurisdiction under Rule 4(k)(2) of the Federal Rules of Civil Procedure.