Cen. Nat.-Gottesman v. M.V. "Gertrude Oldendorff"

• Decision Date: 22 May 2002
• Docket Number: No. 00 Civ. 6425(RLC).,00 Civ. 6425(RLC).
• Parties: CENTRAL NATIONAL-GOTTESMAN, INC., Plaintiff v. M.V. "GERTRUDE OLDENDORFF," her engines, boilers, etc., and EO Oldendorff, Defendants.
• Court: U.S. District Court — Southern District of New York

204 F.Supp.2d 675

CENTRAL NATIONAL-GOTTESMAN, INC., Plaintiff v. M.V. "GERTRUDE OLDENDORFF," her engines, boilers, etc., and EO Oldendorff, Defendants.

No. 00 Civ. 6425(RLC).

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

May 22, 2002.

Graham, Miller, Neandross, Mullin & Roonan, LLC, New York City (Jeffrey L. Neandross, of counsel), for plaintiff.

Hill, Betts & Nash LLP, New York City (Michael J. Ryan, of counsel), for defendants.

OPINION

ROBERT L. CARTER, District Judge.

Plaintiff Central National-Gottesman, Inc. ("Gottesman") brings this admiralty action to recover for damage to a shipment of 1,735 rolls of fluting paper. Defendant EO Oldendorff ("Oldendorff") moves to dismiss the complaint for improper venue. For the reasons set forth below, the motion is denied.

BACKGROUND

On September 24, 1999, defendant Oldendorff issued a bill of lading, numbered LCLB-1, for the carriage and transportation of 1,735 rolls of fluting paper, allegedly tendered in good order and condition, aboard the vessel M.V. GERTRUDE OLDENDORFF from the port of Laem Chabang, Thailand to the port of Long Beach, California. The M.V. GERTRUDE OLDENDORFF is employed for hire in the common carriage of goods by water and, at all times pertinent to this litigation, was owned, operated, chartered, and controlled by defendant Oldendorff.¹ On October 22, 1999, the M.V. GERTRUDE OLDENDORFF arrived at the port of Long Beach, California and defendant Oldendorff discharged plaintiff's shipment of fluting paper. Upon inspection, it was discovered that the shipment had sustained serious physical and water damage. The damaged rolls were subsequently segregated and sold for salvage.

Plaintiff Gottesman as owner, shipper, consignee, and purchaser of the aforesaid shipment of 1,735 rolls of fluting paper instituted this action on its behalf and on behalf of all other interested parties to recover the sum of $600,000 for damage sustained to the shipment. On January 26, 2001, plaintiff Gottesman also commenced an action in the High Court of Justice, Queens Bench Division, London, UK, in which the registered owner of the vessel, New Resolution Shipping Corp., is named as a defendant.

DISCUSSION

When considering a motion to dismiss for improper venue pursuant to Rule 12(b)(3), F.R. Civ. P., the court has to accept facts alleged in the complaint as true and must construe all reasonable inferences in favor of the plaintiff. Dolson v. New York State Thruway Auth., No. 00 Civ. 6439, 2001 WL 363032, at *1 (S.D.N.Y. April 11, 2001) (Carter, J.); Burrell v. State Farm Fire and Cas. Co., No. 00 Civ. 5733, 2001 WL 797461, at *3 (S.D.N.Y. July 12, 2001) (Koeltl, J.). These benefits of construal aside, the plaintiff ultimately bears the burden of showing that venue is proper once it has been challenged. Imagineering, Inc. v. Lukingbeal, No. 94 Civ. 2589, 1996 WL 148431, at *2 (S.D.N.Y. Apr.2, 1996) (Carter, J.).

Defendant Oldendorff argues that venue is improper in this district because of a forum selection clause in the bill of lading calling for the adjudication of all disputes in London. (Defs.' Mem. of Law at 4-5.) Clause 3 of the bill of lading provides:

Law and Jurisdiction.

Any disputes under the Bill of Lading to be decided in London according to English Law.

(Ryan Aff. Exh. 1.) Oldendorff argues that, given its wording, the forum selection clause is mandatory, thereby barring plaintiff from bringing suit in this district. (Defs.' Mem. of Law at 4.)

Forum selection clauses, in the context of admiralty actions, are presumptively valid. Thyssen, Inc. v. M/V ALPHA JUPITER, No. 96 Civ. 8734, 1997 WL 882595, at *7 (S.D.N.Y. Aug. 15, 1997) (Koeltl, J.) (citing M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). So long as the clause is mandatory and exclusive as opposed to permissive, it will be presumed enforceable. See Leasing Service Corp. v. Patterson Enterprises, Ltd., 633 F.Supp. 282, 284 (S.D.N.Y.1986) (Walker, J.); Thyssen, 1997 WL 882595, at *7. Even assuming exclusivity, however, the presumption of validity attaching to a mandatory forum selection clause may be overcome by a clear showing that the clause is unreasonable. M/S Bremen, 407 U.S. at 15, 92 S.Ct. 1907. A clause can be unreasonable if: 1) its incorporation into the agreement was the product of fraud or overreaching; 2) the complaining party will be deprived of its day in court due to the grave inconvenience of the selected forum; 3) the chosen law is manifestly unfair so as to deprive plaintiff of a remedy; or 4) the clause is in contravention of a strong public policy of the forum state. Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1363 (2d Cir.1993).

It is clear that the forum selection clause at issue here is mandatory and exclusive. For a forum selection clause to be deemed mandatory, jurisdiction and venue must be specified with mandatory or exclusive language. Thyssen, 1997 WL 882595, at *7. However, in the situation where only jurisdiction is specified, the clause will generally not be enforced without additional language indicating the intent of the parties to make jurisdiction exclusive. John Boutari & Sons, Wines & Spirits, S.A. v. Attiki Importers & Distribs. Inc., 22 F.3d 51, 52 (2d Cir.1994). "Of course if mandatory venue language is employed, the clause will be enforced" even in the absence of language making jurisdiction exclusive. Id. at 53.

The language of the forum selection clause under consideration here, "[a]ny disputes under the Bill of Lading to be decided in London according to English Law," rather than simply stating that the court in London shall have jurisdiction over all disputes, actually makes explicit that such disputes are to be resolved in that forum and nowhere else. Faced with similar facts and language, numerous courts have reached parallel conclusions. See, e.g., Thyssen, 1997 WL 882595, at *7 ("All disputes arising under and in connection with this Bill of Lading shall be determined by the court in the People's Republic of China" held enforceable); Bison Pulp & Paper Ltd. v. M/V Pergamos, No. 89 Civ. 1392, 1995 WL 880775, at *11 (S.D.N.Y. Nov.29, 1995) (Lowe, J.) ("Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principal place of business" held enforceable); AVC Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 151 (2d Cir.1984) ("All and any disputes, differences or questions arising from the present Agreement shall be decided and determined by the competent court in Utrecht" held enforceable). In fact, in the seminal case of M/S Bremen, which established standards for the enforceability of forum selection clauses in international transactions, the United States Supreme Court enforced a forum selection clause substantially similar to the one at issue here. M/S Bremen involved an admiralty dispute over the enforceability of a foreign forum selection clause in a contract involving the towing of a drilling rig from Louisiana to a point off Italy. The clause provided that "[a]ny dispute arising must be treated before the London Court of Justice." M/S Bremen, 407 U.S. at 2, 92 S.Ct. 1907. The Court held that this provision was "clearly mandatory and all-encompassing," enforceable unless revealed to be unjust and unreasonable.² Id. at 20, 92 S.Ct. 1907. Given these reasons, it necessarily follows that the forum selection clause in this case is mandatory and, therefore, enforceable, provided that it is not unreasonable and unjust.

It is on these latter grounds that plaintiff Gottesman objects to the enforcement of the forum selection clause. Enforcement of the forum selection clause, according to Gottesman, would lessen defendant Oldendorff's liability under the Carriage of Goods by Sea Act ("COGSA" or the "Act"), 46 U.S.C.App. § 1300 et seq., thereby running afoul of the Act and violating public policy. (Pl.'s Mem. of Law at 12-15.) In particular, § 1303(8) of COGSA provides:

Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, . . . or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect.

46 U.S.C.App. § 1303(8). Intrepeting § 1303(8) in Vimar Seguros y Reaseguros, S.A. v. M/V SKY REEFER, 515 U.S. 528, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995), the United States Supreme Court, after reciting the litany of abuses committed by carriers in the 19th century that the passage of COGSA was intended to curb, see SKY REEFER, 515 U.S. at 534-35, 115 S.Ct. 2322, opined, with respect to a bill of lading, that "were we persuaded that `the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party's right to pursue statutory remedies, ... we would have little hesitation in condemning the agreement as against public policy.'" Id. at 540, 115 S.Ct. 2322 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n. 19, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). Although SKY REEFER involved a foreign arbitration clause, its reasoning has been extended to forum selection clauses as well. See, e.g., Silgan Plastics Corp. v. M/V NEDLLOYD HOLLAND, No. 96 Civ. 6188, 1998 WL 193079, at *2 (S.D.N.Y. Apr.22, 1998) (Martin, J.). In fact, according to SKY REEFER, foreign arbitration clauses are, in general, simply a subset of foreign forum selection clauses. SKY REEFER, 515 U.S. at 534.

The court is persuaded that the forum selection clause at issue here essentially operates as a prospective waiver of Gottesman's right to pursue statutory remedies under COGSA. If the case were decided in London instead of this district, there is a strong likelihood that English courts would give force to an exculpatory clause in the bill of lading, insulating parties other than the shipowner from liability, in violation of COGSA.³ Clause 19 states:

Identity of Carrier.

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