Hellenic Lines Limited v. Rhoditis

Decision Date03 July 1969
Docket NumberNo. 25699.,25699.
PartiesHELLENIC LINES LIMITED and Universal Cargo Carriers, Inc., Appellants, v. Zacharias RHODITIS, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

George F. Wood, Pillans, Reams, Tappan, Wood & Roberts, Mobile, Ala., for appellants.

Joseph B. Stahl, New Orleans, La., Ross Diamond, Jr., Diamond, Lattof & Favre, Mobile, Ala., for appellee.

Before GOLDBERG and AINSWORTH, Circuit Judges, and SPEARS, District Judge.

Rehearing Denied and Rehearing En Banc Denied July 3, 1969.

GOLDBERG, Circuit Judge:

Sixteen years after Lauritzen v. Larsen1 we must fish in somewhat turgid waters for its spawn in order to determine the applicability of the Jones Act.2 The question presented is whether or not the Jones Act applies so as to allow recovery to a Greek seaman who was injured in a United States port on a Greek-flag vessel owned and controlled by United States domiciliaries. We hold that the Jones Act applies and affirm the judgment of the district court.3

Zacharias Rhoditis, an illiterate Greek seaman, was injured aboard the S. S. HELLENIC HERO while the ship was docking at the Port of New Orleans. Seeking compensation for his injury, Zacharias brought suit under the Jones Act against the appellants, Universal Cargo Carriers, Inc., and Hellenic Lines, Ltd.4

The HELLENIC HERO, which flies the Greek ensign and is registered in the port of Piraeus, Greece, has multi-nation ties, but its ownership is essentially American. Technically, the ship is owned by a Panamanian corporation which in turn is owned by a Greek corporation. However, ninety-five per cent of the stock of the Greek corporation is owned by two residents of the United States, and the corporation has its principal office in New York. Universal Cargo Carriers, the Panamanian corporation, is solely a holding company with no operational responsibilities in connection with the HERO. The real ownership and operational responsibilities are vested in Hellenic Lines, a corporation organized and existing under the laws of Greece. Hellenic is managed from a base in New York,5 and is owned almost entirely by Pericles Callimanopoulos and his son.

Pericles, although a Greek citizen, has resided in the United States since 1945. With a home in Greenwich, Connecticut, and an office in New York City, Pericles performed his duties as managing director of the corporation from the United States. Under Pericles' direction, the HERO engaged in regularly scheduled runs between various gulf ports of the United States and ports in the Middle East. The entire income of the HERO was from cargo either originating or terminating in United States ports.

Zacharias signed on the HERO in Heraclion, Greece. His contract of employment provides that Greek law and the Greek Collective Bargaining Agreement shall apply as between the employer and the crew, and that all claims arising out of the contract of employment shall be adjudicated exclusively by the Greek courts.

In the court below Universal and Hellenic directed their defense so that it was primarily a challenge to the court's jurisdiction over the subject matter. The district court held that it had jurisdiction and explained its result as follows:

"Following the law announced in Lauritzen vs. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254, it would seem to us that the contacts in this case with this country are quite substantial. The Libelant was injured in the Port of New Orleans, Louisiana, aboard a vessel regularly engaged in a scheduled trade to and from the United States Gulf ports; the vessel and its controlling corporations are owned by a resident of the United States, having enjoyed his residence in this country in excess of twenty (20) years, and the operation was clearly managed, controlled and operated from this country. Under these facts, I hold that this Court has jurisdiction and that the Jones Act is applicable. cases cited." 273 F.Supp. at 249-250.

The court then found that Zacharias' injury was the proximate result of the appellants' negligence and awarded damages in the amount of $6,000.

The sole issue raised by this appeal is whether the facts at bar warrant the application of the Jones Act, which is the basis of the district court's assertion of jurisdiction. Both parties rely on the primogenial case of Lauritzen v. Larsen, 1953, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254, for what it says and for what it does not say. In Lauritzen the question was whether one Larsen, a Danish seaman negligently injured on board a ship of the Danish flag in Havana harbor, had a cause of action under the Jones Act. Larsen, while temporarily in New York, had joined the crew of this ship owned by a Danish citizen. He had signed ship's articles providing that the rights of crew members would be governed by Danish law and by the employer's contract with the Danish Seamen's Union. In holding that the Jones Act did not apply, the Supreme Court listed seven factors to be considered in answering the question of applicability: (1) the place of the wrongful act; (2) the law of the flag; (3) the allegiance or domicile of the injured seaman; (4) allegiance of the defendant shipowner; (5) the place where the contract of employment was made; (6) the inaccessibility of a foreign forum; and (7) the law of the forum.

If we were to weigh the seven immortal pillars of Lauritzen by merely counting contacts, the score would be three for Jones Act coverage, four against.6 The immortal seven, however, are not to be so mechanistically applied. Lauritzen did not create a contact counting test.

Rather the Supreme Court intended the applicability question to be answered by "ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved," and "from weighing of the significance of one or more connecting factors between the shipping transaction regulated and the national interest served by the assertion of authority." 345 U.S. at 582, 73 S.Ct. at 928, 97 L.Ed. at 1267. "Hence it must be said that in a particular case something between minimal and preponderant contacts is necessary if the Jones Act is to be applied. * * * The test is that `substantial' contacts are necessary. And while * * * one contact such as the fact that the vessel flies the American flag may alone be sufficient, this is no more than to say that in such a case the contact is so obviously substantial as to render unnecessary a further probing into the facts." Bartholomew v. Universe Tankships, Inc., 2 Cir. 1959, 263 F. 2d 437, 440, cert. denied, 359 U.S. 1000, 79 S.Ct. 1138, 3 L.Ed.2d 1030. Likewise, the seven talismen are neither exclusive nor immutable.7

The Supreme Court clearly indicated that the immortal seven were not to be given equal weight and that their significance might vary from case to case. The Supreme Court ascribed little significance to the place of contract, to the inaccessibility of a foreign forum, and to the law of the forum. We shall do likewise. Moreover, in this case we find the domicile of the injured seaman to be unimportant. The factor said to be of "cardinal importance" is the law of the flag. "The weight given to the ensign overbears most other connecting events in determining applicable law," and "it must prevail unless some heavy counterweight appears." emphasis added. 345 U.S. at 584-586, 73 S.Ct. at 930, 97 L.Ed. at 1269. In this case we find that heavy counterweight: the HELLENIC HERO was for all commercial purposes owned and operated by a United States domiciliary.8

The HERO's flag is more symbolic than real as is evidenced by the fact that its operation and ownership ties are American, not Greek. Under these circumstances it is fair to say that the HERO's flag is not due the same weight which Lauritzen gave to a more sturdy flag. Courts need not elevate symbols over reality. We therefore pierce the corporate veil and conclude that the HERO's flag is merely one of convenience.

Lauritzen itself recognized that courts are not bound by flags of convenience:

"It is common knowledge that in recent years a practice has grown, particularly among American shipowners, to avoid stringent shipping laws by seeking foreign registration eagerly offered by some countries. Confronted with such operations, our courts on occasion have pressed beyond the formalities of more or less nominal foreign registration to enforce against American shipowners the obligations which our law places upon them." 345 U.S. at 587, 73 S.Ct. at 931, 97 L.Ed. at 1270.

Our course through the corporate veil also has strong support in post Lauritzen cases:

"Although appellant contends otherwise, the practice in this type of case of looking through the façade of foreign registration and incorporation to the American ownership behind it is now well established. cases cited. This is essential unless the purposes of the Jones Act are to be frustrated by American shipowners intent upon evading their obligations under the law by the simple expedient of incorporating in a foreign country and registering their vessels under a foreign flag. See Lauritzen, 345 U.S. at 587, 73 S.Ct. at 930 97 L.Ed. at 1270. In the case now before us appellant has taken the trouble to insert an additional nominal foreign corporation between the flag and the true beneficial ownership of the vessel. But we have little difficulty in brushing all this aside when considering the applicability vel non of the Jones Act. Complicating the mechanics of evasive schemes cannot serve to make them more effective. What we now do is not to disregard the corporate entity to impose liability on the stockholders, but rather to consider a foreign corporation as if it were an American corporation pursuant to the liberal policies of a regulatory act. cases cited." Bartholomew v. Universe Tankships, supra, 263 F.2d at 442.

See also Southern Cross Steamship Co. v....

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