Affiliated FM Ins. Co. v. Kuehne + Nagel, Inc.

• Decision Date: 16 July 2018
• Docket Number: 17-CV-336 (JPO)
• Citation: 328 F.Supp.3d 329
• Parties: AFFILIATED FM INSURANCE COMPANY, et al., Plaintiffs, v. KUEHNE + NAGEL, INC., et al., Defendants. and Kuehne Nagel, Inc., Third-Party Plaintiff, v. BNSF Railway Company, et al., Third-Party Defendants.
• Court: U.S. District Court — Southern District of New York

328 F.Supp.3d 329

AFFILIATED FM INSURANCE COMPANY, et al., Plaintiffs,

v.KUEHNE + NAGEL, INC., et al., Defendants.andKuehne Nagel, Inc., Third-Party Plaintiff,

v.BNSF Railway Company, et al., Third-Party Defendants.

17-CV-336 (JPO)

United States District Court, S.D. New York.

Signed July 16, 2018

Nathan Thomas Williams, Kennedy Lillis Schmidt & English, New York, NY, for Plaintiffs.

Troy Hillel Geisser, Spector Rubin, P.A., Miami, FL, for Defendants.

Timothy L. Frey, Keenan Cohen & Merrick, PC, Ardmore, PA, Peter Donald Garone, Kelly, Rode & Kelly, Mineola, NY, Gary Michael Fellner, Porzio, Bromberg & Newman, P.C., New York, NY, for Third-Party Defendants.

Andrew Robert Spector, Spector Rubin, P.A., Miami, FL

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

In November 2015, a container of audio equipment left Tokyo, Japan, bound for Memphis, Tennessee. The container crossed the ocean and arrived in Los Angeles, California without incident. But the equipment suffered damage during its transcontinental journey, when the train carrying the container derailed in southwestern Missouri. The cargo owners and their insurer sued the shipper, and the shipper then sued the subcontractors responsible for the container's overland transportation.

The subcontractors move to dismiss the Amended Third-Party Complaint (the "Complaint") for, among other reasons, lack of personal jurisdiction. For the reasons that follow, the motion is granted.

I. Background

The following facts are taken from the Complaint and are assumed true for purposes of this motion.

As is common in intermodal, intercontinental shipping, this case involves a series of contracts and subcontracts. The foundational document is Sea Waybill number BANQTY02217950 (the "Sea Waybill"), issued by Kuehne + Nagel, Inc. ("K+N") to American Music and Sound, LLC for the transportation of a container of audio equipment from Tokyo, Japan to Memphis, Tennessee, via the Port of Los Angeles, California. (Dkt. No. 46 ("Compl.") ¶ 17; Dkt. No. 49-2 at 7.) After issuing this bill of lading, K+N then subcontracted AZ/CFS West, Inc. ("AZ") to provide "transportation logistics services" for the overland leg of the ship's journey. (Compl. ¶¶ 11, 24.) AZ, in turn, arranged for rail transportation by BNSF Railway Company ("BNSF"). (Compl. ¶¶ 4, 24.)

The cargo container departed Tokyo aboard the vessel Mol Experience in November 2015. (Compl. ¶ 17; Dkt. No. 49-2 at 7.) After safely arriving in Los Angeles, the container was transferred to a train bound for Memphis. (Compl. ¶¶ 17–18, 22.) But the train encountered flooding along Shoal Creek in Newton County, Missouri, causing the train to derail. (Compl. ¶ 22.) American Music and Sound, LLC and its insurer Affiliated FM Insurance Company (collectively, "Plaintiffs") allege that the audio equipment suffered both water and crushing damage as a result. (Compl. ¶ 17.)

Invoking federal maritime jurisdiction, Plaintiffs filed suit against K+N and the Mol Experience in January 2017 (Dkt. No. 1), and K+N, in turn, filed a third-party complaint against AZ and BNSF (collectively, "Third-Party Defendants"). (Dkt. No. 26.) K+N asserts claims for breach of contract, negligence, and indemnification against Third-Party Defendants. (Compl. ¶¶ 28–40.) K+N also has made a tender pursuant to Federal Rule of Civil Procedure 14(c), alleging that Third-Party Defendants are liable to K+N for some or all of its liability to Plaintiffs or, alternatively, that they are liable to Plaintiffs directly. (Compl. ¶¶ 41–42.) Third-Party Defendants move to dismiss on a variety of grounds, including for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).

II. Legal Standard

"[T]he plaintiff bears the burden of establishing personal jurisdiction over the defendant." MacDermid, Inc. v. Deiter , 702 F.3d 725, 727 (2d Cir. 2012) (quoting Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co., Kommanditgesellschaft v. Navimpex Centrala Navala , 989 F.2d 572, 580 (2d Cir. 1993) ). "Where, as here, a district court in adjudicating a [ Rule 12(b)(2) ] motion ... ‘relies on the pleadings and affidavits, and chooses not to conduct a full-blown evidentiary hearing, plaintiffs need only make a prima facie showing of personal jurisdiction.’ " S. New England Tel. Co. v. Glob. NAPs Inc. , 624 F.3d 123, 138 (2d Cir. 2010) (quoting Porina v. Marward Shipping Co. , 521 F.3d 122, 126 (2d Cir. 2008) ).

In evaluating a Rule 12(b)(2) motion, a court must "construe the pleadings and affidavits in the light most favorable to plaintiffs, resolving all doubts in their favor." Porina , 521 F.3d at 126. "Nevertheless, [the plaintiff] must make allegations establishing jurisdiction with some ‘factual specificity’ and cannot establish jurisdiction through conclusory assertions alone." Cont'l Indus. Grp., Inc. v. Equate Petrochemical Co. , 586 F. App'x 768, 769 (2d Cir. 2014) (quoting Jazini v. Nissan Motor Co. , 148 F.3d 181, 185 (2d Cir. 1998) ).

"Personal jurisdiction of a federal court over a non-resident defendant is governed by the law of the state in which the court sits—subject, of course, to certain constitutional limitations of due process." Kronisch v. United States , 150 F.3d 112, 130 (2d Cir. 1998) (quoting Robinson v. Overseas Military Sales Corp. , 21 F.3d 502, 510 (2d Cir. 1994) ). "In assessing whether personal jurisdiction is authorized, ‘the court must look first to the long-arm statute of the forum state, in this instance New York.’ " Whitaker v. Am. Telecasting, Inc. , 261 F.3d 196, 208 (2d Cir. 2001) (quoting Bensusan Rest. Corp. v. King , 126 F.3d 25, 27 (2d Cir. 1997) ). "If, but only if, [the] answer is in the affirmative, [the court] must then determine whether asserting jurisdiction under that provision would be compatible with requirements of due process established under the Fourteenth Amendment to the United States Constitution." Best Van Lines, Inc. v. Walker , 490 F.3d 239, 242 (2d Cir. 2007).

III. Discussion

K+N posits two separate grounds for finding personal jurisdiction over Third-Party Defendants: (1) a forum selection clause in the Sea Waybill, and (2) statutory authority. The Court addresses each in turn.

A. The Sea Waybill's Forum Selection Clause

1. The Terms of the Sea Waybill

K+N's first argument in favor of personal jurisdiction hinges on a contractual document called a "sea waybill."¹ A sea waybill, which is a type of "bill of lading,"² fulfills three primary functions: It "records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage." Norfolk S. Ry. Co. v. Kirby , 543 U.S. 14, 18–19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). Many waybills, including the one at issue in this case, are "through bills" that "cover[ ] both the ocean and inland portions of the transport in a single document." Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp. , 561 U.S. 89, 94, 130 S.Ct. 2433, 177 L.Ed.2d 424 (2010).

Even though it contemplates some overland transportation, the Sea Waybill is a maritime contract, and federal law governs its interpretation. See Kirby , 543 U.S. at 22–24, 125 S.Ct. 385 (holding that a contract is a maritime contract when its "primary objective is to accomplish the transportation of goods by sea ... to the United States," even when it "call[s] for some performance on land"). Under the federal rule, "contracts for carriage of goods by sea must be construed like any other contracts: by their terms and consistent with the intent of the parties." Id. at 31, 125 S.Ct. 385.

The Sea Waybill contains two clauses that are relevant to K+N's assertion of personal jurisdiction. The first is a forum selection clause giving this Court exclusive jurisdiction over disputes arising under the Sea Waybill. Paragraph 21.1 states:

For US Carriage, this sea waybill is governed by United States law and the United States Federal Court of the Southern District of New York has exclusive jurisdiction to hear all disputes hereunder.

(Dkt. No. 49-3 ¶ 21.1.) The second is a so-called Himalaya Clause, a type of contractual provision commonly used by shippers to "extend[ ] contractual protections that would otherwise apply only to the entity issuing the bill of lading to the subcontractors of the issuing entity as well." Royal & Sun All. Ins., PLC v. Ocean World Lines, Inc. , 612 F.3d 138, 142 (2d Cir. 2010). The relevant portion of the Sea Waybill's Himalaya Clause states:

Without prejudice to the other provisions in this Clause ..., every Sub-Contractor shall have the benefit of all provisions herein benefiting the Carrier including clause 21 ..., the jurisdiction and law clause, as if this sea waybill ... were expressly for its benefit[,] and in entering into this contract the Carrier, to the extent of these provisions, does so not only on his own behalf but also as agent or trustee for such Sub-Contractor and such Sub-Contractor shall to this extent be or be deemed to be parties to this contract.

(Dkt. No. 49-3 ¶ 5.3.)

The Sea Waybill defines "Sub-Contractors" to include "any independent contractors, servants or agents employed by the Carrier ... and any direct or indirect sub-contractors, servants, or agents thereof, whether in direct contractual privity with the Carrier or not." (Dkt. No. 49-3 ¶ 1.) Although AZ and BNSF fall within the Sea Waybill's definition of "Sub-Contractors," they are not identified by name; indeed, neither AZ nor BNSF appears anywhere on the Sea Waybill.

2. The Enforceability of the Sea Waybill's Forum Selection Clause

K+N argues that the Sea Waybill's forum selection clause binds Third-Party Defendants and that, as a result, AZ and BNSF have consented to personal jurisdiction in the Southern District of New York. (Dkt. No. 57 at 8.) The latter half of this proposition is true: If AZ and BNSF are indeed parties to the forum selection clause, then they have waived any objection to personal jurisdiction. See D.H. Blair & Co. v. Gottdiener ,...