Saudi v. Northrop Grumman Corp.

• Decision Date: 26 October 2005
• Docket Number: No. 04-2444.,04-2444.
• Citation: 427 F.3d 271
• Parties: Captain Sheriff SAUDI, Plaintiff-Appellant, v. NORTHROP GRUMMAN CORPORATION; Newport News Shipbuilding, Incorporated; Keppel Group Corporation, d/b/a Keppel Offshore & Marine, Limited, d/b/a Keppel Shipyard (Pte), Ltd., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

427 F.3d 271

Captain Sheriff SAUDI, Plaintiff-Appellant, v. NORTHROP GRUMMAN CORPORATION; Newport News Shipbuilding, Incorporated; Keppel Group Corporation, d/b/a Keppel Offshore & Marine, Limited, d/b/a Keppel Shipyard (Pte), Ltd., Defendants-Appellees.

No. 04-2444.

United States Court of Appeals, Fourth Circuit.

Argued September 20, 2005.

Decided October 26, 2005.

COPYRIGHT MATERIAL OMITTED

ARGUED: Joe Alfred Izen, Jr., Bellaire, Texas, for Appellant. Roy Grant Decker, Jr., Miles & Stockbridge, McLean Virginia; John Morgan Ryan, Vendeventer Black, L.L.P., Norfolk, Virginia, for Appellees. ON BRIEF: William L. Stauffer, Jr., Miles & Stockbridge, McLean, Virginia, for Appellees Northrop Grumman Corporation and Newport News Shipbuilding, Incorporated; Katharina K. Brekke, Vandeventer Black, L.L.P., Norfolk, Virginia, for Appellee Keppel Group Corporation, dba Keppel Offshore & Marine, Limited, dba Keppel Shipyard (Pte), Ltd.

Before WILKINSON and WILLIAMS, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge WILLIAMS and Senior Judge HAMILTON joined.

WILKINSON, Circuit Judge.

Captain Sheriff Saudi brings this admiralty action seeking recovery for a personal injury on the high seas. Saudi's suit against the Keppel Group Corporation was dismissed for lack of personal jurisdiction. His suit against Newport News Shipbuilding and Drydock Company and the Northrop Grumman Corporation proceeded to a bench trial, at the conclusion of which the district court granted judgment as a matter of law to the defendants. On appeal, Captain Saudi raises a host of jurisdictional and trial management issues.

We hold that Federal Rule of Civil Procedure 4(k)(2) cannot be used to obtain personal jurisdiction over a foreign corporation where, as here, the foreign corporation's contacts with the United States fail to establish any proper basis for specific or general jurisdiction. With respect to the various trial management issues raised by Captain Saudi, we hold that far from abusing its discretion, the district court exercised commendable restraint. Litigants who fail to comply with court scheduling and discovery orders should not expect courts of appeal to save them from the consequences of their own delinquence.

I.

On May 17, 1999, Captain Sheriff Saudi was injured when a port-side hose crane affixed to the vessel S/T Marine Atlantic collapsed as it was transferring him in a basket to another ship. Captain Saudi fell approximately fifty feet into the Gulf of Mexico. He claims that he suffered injuries when the crane's mechanical arm, or jib, detached from the crane and landed on him.

In this case, Captain Saudi brings suit against Keppel, Newport News Shipbuilding, and Northrop Grumman, alleging negligence, products liability, and breach of an implied warranty of merchantability.¹ In 1979, Newport News Shipbuilding constructed the S/T Marine Atlantic and attached the crane to the vessel. Northrop Grumman is the parent company of Newport News Shipbuilding. In 1994, Keppel, a Singapore shipyard, refurbished the S/T Marine Atlantic and crane in Singapore.

The district court dismissed the suit against Keppel for lack of personal jurisdiction and in a ruling from the bench also refused to transfer venue to Texas. The suit against Newport News Shipbuilding and Northrop Grumman went to trial in October 12-13, 2004. At trial, the district court excluded two of Captain Saudi's design experts after concluding that he had violated a court order limiting his use of expert witnesses. This order had been put in place as a penalty for Captain Saudi's earlier failure to provide expert witness disclosures, as required by Federal Rule of Civil Procedure 26(a)(2)(B). At trial, the district court also denied as untimely Captain Saudi's request to subpoena two adverse witnesses. At the conclusion of the trial, it granted the defendants' motion for judgment as a matter of law on partial findings pursuant to Rule 52(c).

II.

We first address Captain Saudi's claims pertaining to Keppel. The district court's determination that it lacked personal jurisdiction over Keppel is reviewed de novo, but factual findings supporting a jurisdictional decision are reviewed for clear error. New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir.2005). The district court's denial of Captain Saudi's motion to transfer venue is reviewed for abuse of discretion. See Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1200 (4th Cir.1993); Coté v. Wadel, 796 F.2d 981, 985 (7th Cir.1986).

A.

Captain Saudi contends that the district court erred in concluding that it lacked personal jurisdiction over Keppel. Saudi's only asserted basis for jurisdiction is Federal Rule of Civil Procedure 4(k)(2). Rule 4(k)(2) is in essence a federal long-arm statute. United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 40 (1st Cir.1999). It provides:

If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.

In order to obtain jurisdiction under Rule 4(k)(2), therefore, three requirements must be met. Base Metal Trading, Ltd. v. OJSC "Novokuznetsky Aluminum Factory", 283 F.3d 208, 215 (4th Cir.2002). First, the suit must arise under federal law. Fed.R.Civ.P. 4(k)(2). Second, the defendant must not be subject to personal jurisdiction in any state. Id.; Base Metal Trading, 283 F.3d at 215. Third, the defendant must have contacts with the United States "consistent with the Constitution and laws of the United States." Fed.R.Civ.P. 4(k)(2).

We conclude that Keppel is not subject to jurisdiction under Rule 4(k)(2) because Captain Saudi has clearly not satisfied the third part of this test. New Wellington Fin. Corp., 416 F.3d at 294 (plaintiff bears the burden of proving personal jurisdiction by a preponderance of the evidence). In the context of 4(k)(2), the requirement that Keppel's contacts be "consistent with the Constitution and laws of the United States" is founded upon the Due Process Clause of the Fifth Amendment. See Mwani v. bin Laden, 417 F.3d 1, 11 (D.C.Cir.2005). This Clause ensures that a defendant has fair warning before it is subjected to the coercive power of a court. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (discussing the Due Process Clause of the Fourteenth Amendment). Thus, while Rule 4(k)(2) is designed to facilitate obtaining jurisdiction over foreign defendants, it does not operate to relax the requirement that the defendant's contacts with the forum be constitutionally sufficient.

Captain Saudi argues that Keppel is subject to both specific and general jurisdiction. A court may exercise specific jurisdiction "[w]hen the cause of action arises out of the defendant's contacts with the forum." Base Metal Trading, 283 F.3d at 213. General jurisdiction is available if Keppel's contacts with the United States are "`continuous and systematic.'" Id. (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)).

Captain Saudi alleges jurisdictional contacts with New Jersey and Texas. First, he maintains that Marine Transport Lines (MTL), a New Jersey corporation, and its Chief Engineer, Richard Farman, oversaw the refurbishment of the S/T Marine Atlantic in Keppel's Singapore shipyard in 1994. Specifically, he contends that Mr. Farman supervised the refurbishment from New Jersey, that MTL representatives directly observed Keppel's work in Singapore, and that MTL personnel handled the payment for Keppel's services on behalf of the ship's owner. Captain Saudi also contends that Keppel and MTL were involved in a joint venture. Second, he notes that Keppel owns a subsidiary shipyard in Brownsville, Texas.

It is clear that the district court did not have specific jurisdiction over Keppel. To the extent that Keppel has purposefully availed itself of the United States with its New Jersey and Texas contacts, it is certainly not the case that "the plaintiff['s] claims arise out of those activities directed at the [United States]." New Wellington Fin. Corp., 416 F.3d at 295. Captain Saudi's cause of action arises from Keppel's alleged misconduct either in Singapore or on the high seas. Captain Saudi identifies no tortious conduct by Keppel in New Jersey and these New Jersey contacts therefore do not "provide the basis for the suit." Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 397 (4th Cir.2003). Nor does Keppel's Texas shipyard provide any foundation for specific jurisdiction. Captain Saudi has provided no evidence that this shipyard had anything to do with his injuries or the reconstruction of the S/T Marine Atlantic.

The district court also lacked general jurisdiction because on the record before it Keppel's contacts with the United States are not "continuous and systematic." "[T]he threshold level of minimum contacts sufficient to confer general jurisdiction is significantly higher than for specific jurisdiction." ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 715 (4th Cir.2002) (internal quotation marks omitted). Captain Saudi provides virtually no evidence that Keppel maintains a continuous presence in the United States, and instead offers only isolated contacts with Texas and New Jersey. Contrary to Captain Saudi's assertions, there is nothing to suggest that Keppel and MTL were part of a joint venture. MTL hired Keppel to reconstruct the vessel, and MTL monitored Keppel's work. Surely evidence of a single, short-term contractual relationship does not rise to the level of "continuous and systematic" cont...