Opinion
03 Civ. 2196 (SAS)
December 17, 2003
David L. Mazaroli, Esq., New York, NY, for Plaintiff
Edward P. Flood, Esq., Kirk M.H. Lyons, Esq., Lyons, Skoufalos, Proios Flood, LLP, New York, NY, for Defendants and Third-Party Plaintiff
Eugene O'Connor, Esq., Claudia Botero Gotz, Esq., Fowler Rodriguez Chalos, Port Washington, New York, for Third-Party Defendant
OPINION AND ORDER
Hartford Fire Insurance Co. ("Hartford"), as subrogated cargo insurer of Strippit, Inc. ("Strippit"), brings this action against Mediterranean Shipping Co., S.A. ("MSC") and the vessel M/V "MSC INSA" ("MSC INSA") to recover damages for cargo shipped from Antwerp to New York. MSC asserts a third-party complaint against Hesse Noord Natie, N.V. ("HNN"), a Belgian corporation that had entered into a contract with MSC to stow cargo containers aboard MSC's vessels. HNN moves to dismiss the third-party complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3) on the grounds that: (1) this Court lacks personal jurisdiction over HNN; and (2) the forum selection clause contained in the contract between HNN and MSC mandates dismissal under the doctrine of forum non conveniens.
All parties agree that these actions are within the court's admiralty and maritime jurisdiction. For the reasons stated below, HNN's motion to dismiss for lack of personal jurisdiction is granted.
In light of this conclusion, I need not address HNN's Rule 12(b)(3) motion.
I. BACKGROUND
Hartford, a Connecticut corporation, is the subrogated cargo insurer of Strippit, a New York corporation engaged in the sale of machinery manufactured in Europe to U.S. consumers. Complaint ("Compl.") ¶ 2; Third-party Complaint ("MSC Compl.") ¶ 5. LVD is Strippit's parent company and manufactures much of the industrial machinery sold by Strippit. See 10/17/03 Affirmation of Edward P. Flood, counsel for MSC, in Support of MSC's Opposition to HNN's Motion to Dismiss ("Flood Aff."), ¶ 5. MSC is a foreign corporation engaged in business as a common carrier of marine cargo, transporting cargo to and from, among other places, the United States. MSC Compl. ¶ 3. HNN, a Belgian corporation with its principal place of business in Antwerp, is a stevedore and terminal operator engaged in receiving, loading, unloading, and stowing cargo aboard vessels engaged in international commerce. Id. ¶ 4.
On January 1, 2001, MSC and HNN entered into a contract (the "Contract") whereby HNN agreed to stow cargo containers aboard MSC's vessels pursuant to stowage information provided by MSC and shippers of cargo aboard MSC's vessels. Id. ¶ 9; 1/1/01 Terminal Operations Contract between MSC and HNN ("Contract"), Ex. B to Flood Aff., at 2. Article 8 of the Contract specifies that any disputes between the parties shall be governed exclusively by the Belgian courts.See Contract at 14.
Pursuant to the Contract, on or about March 28, 2002, LVD delivered to HNN a shipment of optical laser machinery destined for transportation to New York. MSC Compl. ¶ 13; MSC's Memorandum of Law in Opposition to Third-Party Defendant's Motion to Dismiss ("MSC Opp. Mem.") at 3. The shipment consisted of two shipping containers, neither of which fully enclosed its contents. MSC Compl. ¶ 14. The service contract between LVD and MSC specified that the shipment was to be stowed below deck, and both LVD's agent and MSC conveyed the same instruction to HNN.See MSC Opp. Mem. at 3. MSC alleges that contrary to the instruction, however, HNN stowed the shipment above deck on a flat-rack container, covered only with canvas, and the shipment was damaged by exposure to seawater en route to New York. MSC Compl. ¶ 17; MSC Opp. Mem. at 3.
Flat rack containers are basically just the floor portion of a regular shipping container.
II. LEGAL STANDARD
Upon motion, a court is obligated to dismiss an action against a defendant over which it has no personal jurisdiction. See Fed.R.Civ.P. 12(b)(2); see also In re Ski Train Fire in Kaprun, Austria on November 11, 2000, 230 F. Supp.2d 403, 406 (S.D.N.Y. 2002).
Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction. . . . In the instant case — where the parties have conducted extensive discovery regarding the defendant's contacts with the forum state, but no evidentiary hearing has been held — the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by the ultimate trier of facts, would suffice to establish jurisdiction over the defendant.Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir. 1995) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)) (citations omitted). Thus, in considering a motion to dismiss pursuant to Rule 12(b)(2), the court may consider materials outside of the pleadings,see Whitaker v. American Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 1985); Hsin Ten Enter. USA, Inc. v. Clark Enters., 138 F. Supp.2d 449, 452 (S.D.N.Y. 2000), but must credit-the plaintiff's averments of jurisdictional facts as true, see Met Life, 84 F.3d at 567.
III. DISCUSSION
In admiralty cases, the law of the forum state governs the personal jurisdiction analysis. See Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione Motonave Achille Lauro In Amministrazione Straordinara, 937 F.2d 44, 50 (2d Cir. 1991). Accordingly, New York law governs here. MSC argues that; this Court has personal jurisdiction over HNN under New York Civil Practice Law and Rules ("CPLR") Section 302(a)(3) (ii).
If jurisdiction under state law is not available, however, a plaintiff in an admiralty case may invoke Federal Rule of Civil Procedure 4(k)(2).See United Trading Co. S.A. v. M.V. Sakura Reefer, No. 95 Civ. 2846, 1996 WL 374154, at *4 (S.D.N.Y. July 2, 1996). MSC argues that if this Court does not have jurisdiction under CPLR Section 302(a)(3)(ii), it may nonetheless exercise personal jurisdiction over HNN under Rule 4(k)(2).
A. Personal Jurisdiction under CPLR § 302(a)(3) (ii)
CPLR Section 302(a)(3)(ii) provides:
[A] court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent commits a tortious act without the state causing injury to person or property within the state . . . if he . . . expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.Id. (McKinney 2001). One threshold issue in applying this provision to the instant case is whether the injury was caused "within the state." The Second Circuit has set forth that courts "must generally apply a situs-of-the-injury test, which asks them to locate the original event which caused the injury." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001) (citations and quotation marks omitted). The "original event occurs where the first effect of the tort . . . that ultimately produced the final economic injury is located."Id. (citation and quotation marks omitted). Hence, the "original event is . . . distinguished not only from the initial tort but from the final economic injury and the felt consequences of the tort."Id. (citation and quotation marks omitted).
This Court has held that it did not have Section 302(a)(3) (ii) jurisdiction in a closely analogous case. In that case, the plaintiff insurance company alleged that defendant's negligent ship repairs allowed seawater to flood the ship's hold and contaminate the cargo. See Atlantic Mut. Ins. Co. v. CSX Expedition, No. 00 Civ. 7668, 2002 WL 202195, at *1 (S.D.N.Y. Feb. 7, 2002). The court found that the original injury-causing event — the flooding of the hold — occurred somewhere between the ship's port of departure and its destination. See id. at *4. Although "the effects of the injury, plaintiff's having to pay [the insured's] — claim, occurred in New York, New York [was] not the situs of the injury for the purposes of Section 302." Id.
In this case, crediting MSC's allegations as true, HNN's negligent stowage of the cargo above deck, contrary to instructions, constituted the initial tort. The first effect of that tort was the seawater damage to the cargo; hence, the original event that caused the injury occurred somewhere en route from Antwerp to New York. The only effect of the tort to occur in New York was the economic injury felt by Strippit, a New York corporation, as a result of the damaged cargo. Such consequent economic injury is insufficient to make New York the situs of the injury under Section 302(a)(3)(ii). Accordingly, this Court lacks personal jurisdiction over HNN under New York law.
B. Personal Jurisdiction under Rule 4(k)(2)
Rule 4(k)(2) allows this Court to exercise personal jurisdiction over a defendant on condition: (1) that plaintiff's cause of action arise [s] under the federal law; (2) that the defendant is not subject to the jurisdiction of the courts of general jurisdiction of any one State; and (3) that the defendant's total contacts with the United Stakes as a whole are sufficient to confer the court with personal jurisdiction without offending due process." Aerogroup Int'l, Inc. v. Marlboro Footworks, Ltd., 956 F. Supp. 427, 434 (S.D.N.Y. 1996). With regard to the third prong of this test, the Second Circuit has formulated a two-step inquiry: (1) whether the defendant has had sufficient minimum contacts with the United States as a whole, and (2) if so, whether the exercise of jurisdiction is reasonable.See id. at 438-39 (quoting Met Life, 84 F.3d at 567). Further, as to the minimum contacts inquiry, the court must consider whether the defendant: "(1) transact [s] business in the United States, (2) do[es] an act in the United States, or (3) ha[s] an effect in the United States by an act done elsewhere." Eskofot A/S v. E.I. Du Pont de Nemours Co., 872 F. Supp. 81, 87 (S.D.N.Y. 1995) (citingLeasco Data Processing Corp. v. Maxwell, 468 F.2d 1326, 1340 (2d Cir. 1972)).
HNN concedes that this action arises under federal law and that it is not subject to the jurisdiction of the courts of general jurisdiction of any one state. See HNN's Reply Memorandum of Law in Support of Third-Party Defendant's Motion to Dismiss the Complaint ("HNN Rep. Mem.") at 7. Hence, the critical issue is whether HNN has had sufficient contacts with the United States to justify personal jurisdiction.
MSC contends that HNN satisfies the minimum contacts inquiry because it has caused an effect in the United States through an act performed elsewhere. See MSC Opp. Mem. at 13-14. Specifically, MSC argues that HNN handles a sufficient volume of traffic to and from the United States on MSC vessels to support jurisdiction for claims arising out of such handling. See id. at 14.
MSC's argument is not persuasive. This Court has held that for jurisdiction to be sustained under the third prong of the minimum contacts inquiry, the defendant's actions elsewhere must have a broad effect in the United States. See Mutualidad Seguros del Institute Nacional de Industria v. M.V. Luber, No. 95 Civ. 10988, 1998 WL 1108936, at *3 (S.D.N.Y. Sept. 25, 1998). In Mutualidad Seguros, steel products carried aboard the defendant's ship were damaged en route from Spain to Georgia and Texas. See id. at *1. The court held that "the thwarted delivery of a single shipment of steel" did not constitute the kind of effect that justifies the exercise of jurisdiction. See id. at *3. In contrast, in United States v. International Brotherhood of Teamsters, the court found personal jurisdiction under the third prong because a Canadian corporation's refusal to comply with a union's election rules caused an effect in the United States by hindering the election officer's ability to supervise the election process; compromising the democratic character of the election; and potentially interfering with the eradication of organized crime from the union. See 945 F. Supp. 609, 621 (S.D.N.Y. 1996). Similarly, inEskofot A/S, the court held that it had personal jurisdiction under the third prong because the plaintiff's allegations showed that the defendants' actions would have the effect of giving them a monopoly over certain printing equipment and materials in the United States.See 872 F. Supp. at 87-88.
MSC has not shown that HNN's stevedoring activities in Belgium caused any effects in the United States of the same magnitude as those inInternational Brotherhood of Teamsters or Eskofot A/S. Instead, the only effect of HNN's actions that MSC has alleged is the damage to the cargo in the instant case. As the court inMutualidad Seguros established, this single incident is insufficient to support personal jurisdiction under Rule 4(k)(2).
Because I find that HNN does not have the requisite minimum contacts, I do not reach the reasonableness step of the jurisdictional inquiry.
IV. CONCLUSION
For the reasons set forth above, third-party defendant's motion to dismiss is granted. The Clerk is directed to close this motion. A conference is scheduled for January 13, 2004, at 10:30 a.m.
SO ORDERED.