Conti 11. Container Schiffahrts-GmbH & Co. v. MSC Mediterranean Shipping Co.

• Decision Date: 07 September 2022
• Docket Number: 22-1114
• Parties: CONTI 11. CONTAINER SCHIFFARTS-GMBH & CO. KG M.S. “MSC FLAMINA” v. MSC MEDITERRANEAN SHIPPING COMPANY S.A. CIVIL ACTION
• Court: U.S. District Court — Eastern District of Louisiana

CONTI 11. CONTAINER SCHIFFARTS-GMBH & CO. KG M.S. “MSC FLAMINA”
v.
MSC MEDITERRANEAN SHIPPING COMPANY S.A. CIVIL ACTION

No. 22-1114

United States District Court, E.D. Louisiana

September 7, 2022

SECTION: “J” (3)

ORDER & REASONS

CARL J. BARBIER UNITED STATES DISTRICT JUDGE

Before the Court is a Motion to Dismiss (Rec. Doc. 9) filed by Defendant, MSC Mediterranean Shipping Company S.A. (“MSC”); an opposition (Rec. Doc. 12) filed by Plaintiff, Conti 11. Container Schiffarts-GmbH & Co. KG M.S. “MSC FLAMINIA” (“Conti”); and a reply (Rec. Doc. 15) filed by MSC. Having considered the motions and legal memoranda, the record, and the applicable law, the Court finds that the motion should be denied.

FACTS AND PROCEDURAL BACKGROUND

On or about November 3, 2000, Conti, a German corporation based in Hamburg, Germany, and MSC, a Swiss corporation based in Geneva, Switzerland, executed a Charterparty in which Conti, as owner, chartered the M/V MSC FLAMINIA (“FLAMINIA”) to MSC, as charterer. At all pertinent times to this litigation, Conti was the owner of the FLAMINIA. The Charterparty required that all disputes arising out of the agreement would be submitted to arbitration in London. Over the course of the next twelve years, the FLAMINIA called at ports around the

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world, including the Port of New Orleans, carrying tens of thousands of cargo containers from one port to another.

On June 30, 2012, the FLAMINIA arrived at the New Orleans Terminal. The following day, three tanks of 80% divinylbenzene (“DVB80”) were loaded into the number four hold of the vessel. Notably, if DVB80 is not properly maintained at or below a specific temperature, it will spontaneously undergo a process called “autopolymerization,” which results in a rapid increase in temperature and the emission of flammable vapors. The material data safety sheet for DVB80 requires that it be stored at temperatures below eighty degrees Fahrenheit. Nine days before the three tanks of DVB80 were loaded onto the FLAMINIA, they were delivered to the New Orleans Terminal where they were stored outdoors. Once loaded onto the FLAMINIA, the tanks of DVB80 were stowed below deck. On July 1, 2012, the FLAMINIA departed the Port of New Orleans and, thirteen days later, on July 14, 2012, while the FLAMINIA was transiting the Atlantic Ocean, the tanks of DVB80 exploded, and a fire occurred aboard the vessel. This explosion and fire resulted in the deaths of three crewmembers, extensive damage to the cargo onboard, and over $100 million in damages to the FLAMINIA.

Litigation ensued in the Southern District of New York, including Conti's limitation action. The New York federal court trifurcated the case into separate trials on causation, liability, and damages. While the litigation progressed in New York, Conti pursued its arbitral claims against MSC in London under the Charterparty. The arbitration panel in London held that MSC had breached the November 3, 2000

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Charterparty and is liable to Conti for approximately $200 million. To date, MSC has paid about $30 million. Conti filed the instant action seeking confirmation of the arbitration award pursuant to The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the Convention”), and MSC filed the instant motion to dismiss alleging that this Court lacks personal jurisdiction over MSC.

LEGAL STANDARD

Rule 12(b)(2) of the Federal Rules of Civil Procedure permits dismissal of a suit for lack of personal jurisdiction. Where a defendant challenges personal jurisdiction, the party seeking to invoke the power of the court bears the burden of proving that jurisdiction exists. Luv N' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006). The plaintiff need not, however, establish jurisdiction by a preponderance of the evidence; a prima facie showing suffices. Id. The court must accept the plaintiff's uncontroverted allegations and resolve all conflicts between the facts contained in the parties' affidavits and other documentation in favor of jurisdiction. Id.

A federal court must satisfy two requirements to exercise personal jurisdiction over a nonresident defendant. Pervasive Software Inc. v. Lexware GmbH & Co. Kg, 688 F.3d 214, 220 (5th Cir. 2012). First, the forum state's long-arm statute must confer personal jurisdiction. Id. Second, the exercise of jurisdiction must not exceed the boundaries of the Due Process Clause of the Fourteenth Amendment. Id. (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999)). The limits of the Louisiana long-arm statute are coextensive with constitutional due process limits. Jackson v. Tanfoglio Giuseppe, SRL, 615 F.3d 579, 584 (5th Cir. 2010) (citing Walk

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Haydel & Assocs. v. Coastal Power Prod. Co., 517 F.3d 235, 242-43 (5th Cir. 2008)). Therefore, the inquiry is whether jurisdiction comports with federal constitutional guarantees. Id.

The Due Process Clause of the Fourteenth Amendment guarantees that no federal court may assume jurisdiction in personam of a non-resident defendant unless the defendant has certain “minimum contacts” with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Sufficient minimum contacts will give rise to either specific, “case-linked” jurisdiction or general, “allpurpose” jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).

Specific jurisdiction is confined to adjudication of “issues deriving from, or connected with, the very controversy that establishes jurisdiction.” Id. In order to establish specific jurisdiction, a plaintiff must show that “(1) there are sufficient (i.e., not ‘random fortuitous or attenuated') pre-litigation connections between the nonresident defendant and the forum; (2) the connection has been purposefully established by the defendant; and (3) the plaintiff's cause of action arises out of or is related to the defendant's forum contacts.” Pervasive Software, 688 F.3d at 221; accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76 (1985). The defendant can then defeat the exercise of specific jurisdiction by showing that it would be unreasonable. Burger King, 471 U.S. at 476-77; Pervasive Software, 688 F.3d at 22122.

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DISCUSSION

MSC argues that this Court lacks specific personal jurisdiction over it in this arbitration award confirmation action.^[1] (Rec. Doc. 9-1, at 11). MSC contends that the relevant underlying litigation in the personal jurisdiction analysis is not MSC's breach of the Charterparty but, rather, the issue of where foreign arbitral awards are enforceable under the Convention. (Id. at 12). MSC relies upon the Supreme Court's reasoning in Vaden v. Discover Bank, 556 U.S. 49 (2009) and Badgerow v. Walters, 142 S.Ct. 1310 (2022) to assert that once an arbitration award has been issued, the original underlying claims are no longer operative in an enforcement action. (Id. at 13). In opposition, Conti argues that MSC's reliance on the above cases is misplaced because those decisions regarded subject matter jurisdiction over actions to compel and confirm domestic arbitration awards. (Rec. Doc. 12, at 16). Here, Conti contends, the relevant inquiry is how the court should regard personal jurisdiction over actions to confirm foreign arbitration awards. (Id. at 17). The proper personal jurisdiction inquiry in this case, Conti asserts, “is whether the beneficiary of an award can show he or she sustained an injury caused by the defendant's forum activities in connection with the claim that led to the arbitration as opposed to an injury caused by the defendant's forum activities in connection with the arbitration proceeding itself.” (Id. at 12) (quoting Compania de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269, 1287 (10th Cir. 2020)).

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I. Personal Jurisdiction under the Federal Arbitration Act

A confirmation action under the Convention “is a summary proceeding in nature, which is not intended to involve complex factual determinations, other than a determination of the limited statutory conditions for confirmation or grounds for refusal to confirm.” Zeiler v. Deitsch, 500 F.3d 157, 169 (2d Cir. 2007); accord Argentine Republic v. Nat'l Grid PLC, 637 F.3d 365, 369 (D.C. Cir. 2011). This more limited focus means that “[t]he party opposing enforcement of an arbitral award has the burden to prove that one of the seven defenses under the New York Convention applies.” Zeiler, 500 F.3d at 164; see also CEEG (Shanghai) Solar Sci. & Tech. Co. v. LUMOS LLC, 829 F.3d 1201, 1206 (10th Cir. 2016) (“As the party opposing enforcement of the arbitral award, LUMOS bears the burden of proving that one of the defenses applies.”). In consideration of these substantive and procedural features of an action to confirm an arbitration award, the Tenth Circuit found that

[Th]e proper jurisdictional inquiry is whether the beneficiary of an award can show he or she sustained an injury caused by the defendant's forum activities in connection with the claim that led to the arbitration, as opposed to an injury caused by the defendant's forum activities in connection with the arbitration proceeding itself.

Compania de Inversiones Mercantiles, 970 F.3d at 1287. The Tenth Circuit found “that contacts relating to the underlying claim (i.e., the formation and alleged violation of the 2005 Shareholder Agreement) are pertinent.” Id. at 1285. The Due Process Clause emphasizes that “a court may exercise specific personal jurisdiction only if ‘the litigation results from alleged injuries' that arise out of or relate to activities by the defendant which were purposefully directed at the forum. Id. at 1286

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(quoting Burger King, 471 U.S. at 723-73). The guidance of the Due Process clause, the Tenth Circuit reasoned, makes more sense in...