Douglass v. Nippon Yusen Kabushiki Kaisha

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
PartiesStephen Douglass, Individually and as personal representative of the Estate of Shingo Alexander Douglass; Dora Hernandez, Individually and as personal representative of the Estate of Noe Hernandez; Lan Huynh, Individually and as personal representative of the Estate of Ngoc Truong Huynh; Darrold Martin, Individually and as personal representative of the Estate of Xavier Alec Martin; Erin Rehm, Individually and as personal representative of the Estate of Gary Leo Rehm, Jr.; Lloyd Wayne Rigsby, Jr., Individually and as personal representative of the Estate of Dakota Kyle Rigsby; Carmen Sibayan, Individually and as personal representative of the Estate of Carlos Victor Ganzon Sibayan, Plaintiffs-Appellants, v. Nippon Yusen Kabushiki Kaisha, Defendant-Appellee, Jhon Alcide; Richard Allen-Easmon; Dustin Angle; Jesus Arguello; Valerie Arguello, Et al Plaintiffs-Appellants, v. Nippon Yusen Kabushiki Kaisha, Defendant-Appellee.
Docket Number20-30382,20-30379
Decision Date16 August 2022



The issue before the en banc court is whether a federal court may exercise personal jurisdiction over a foreign corporation for federal claims, which arise from injuries and deaths of American naval personnel in a collision in foreign waters. To succeed, the plaintiffs must show either that the foreign corporation is "at home" in the United States or that their claims arise from or relate to the foreign corporation's business activities in the United States. The district court rejected the first alternative based on substantial precedent; the plaintiffs foreswore, as they had to, reliance on the second alternative. We AFFIRM.

I. Background

Nippon Yusen Kabushiki Kaisha ("NYK"), incorporated and headquartered in Japan, is a major global logistics company that transports cargo by air and sea. For its seaside operations, NYK owns or charters a formidable fleet that includes bulk carriers, container ships (of all sizes), car transporters, tankers, cruise ships, shuttle tankers, drillships, and LNG carriers, among other vessels.[1] NYK charters more than half of the ships it uses to transport cargo.[2] The vessels call port throughout the world. Between 2017 and 2019, about seven percent of the worldwide port calls made by NYK owned or chartered vessels were in the United States, totaling about 1500 calls annually.

A natural consequence of NYK's handling shipments bound for the United States is that it occasionally litigates in American courts. Since 2010, for example, NYK has filed around thirty lawsuits in federal courts, most involving claims seeking freight charges owed under bills of lading.[3] And every so often, NYK and its ships are sued in American courts, typically for cargo damaged en route to the United States or for injuries that occurred during cargo operations in the United States.[4]

Among NYK's approximately 1700 employees, about 25 are seconded to NYK subsidiaries in the United States. Overall, NYK's business in the United States and North America makes up less than ten percent of its annual revenue.

On June 17, 2017, the ACX Crystal, a 730-foot container ship chartered by NYK,[5] collided with the destroyer USS Fitzgerald in Japanese territorial waters.[6] As the ACX Crystal's bow ripped through the Fitzgerald's hull at midship, several compartments on the Fitzgerald flooded, killing seven American sailors and injuring dozens of others. At the time of the collision, the ACX Crystal, then a Philippine-flagged vessel, was on an intra-Asia trade route. It has never called port in the United States.

Personal representatives of the seven sailors killed sued NYK in federal court, asserting wrongful death and survival claims under the Death on the High Seas Act, 46 U.S.C. § 30301 et seq. The injured sailors and their family members sued NYK separately, asserting negligence and loss of consortium claims.[7] In both cases, the plaintiffs alleged that NYK, a foreign corporation, is amenable to federal court jurisdiction under FED. R. CIV. P. 4(k)(2) based on its "substantial, systematic and continuous contacts with the United States as a whole." Neither complaint alleges that the injuries at issue arose out of or relate to NYK's contacts with the United States.

NYK moved to dismiss the suits for lack of personal jurisdiction under FED. R. CIV. P. 12(b)(2). The district court obliged, issuing identical opinions. Relying on Patterson v. Aker Solutions Inc., 826 F.3d 231 (5th Cir. 2016), the district court held that the Fifth Amendment due process test for personal jurisdiction governs this admiralty dispute and mirrors the Fourteenth Amendment test. Applying the Fourteenth Amendment standard, the district court concluded that NYK did not have sufficient contacts with the United States to justify the court's exercising personal jurisdiction over it.

On appeal, the cases were consolidated. The panel affirmed the judgment but suggested it would have reached a different result if not bound by Patterson. Concurring, Judges Elrod and Willett opined that "our interpretation of Fourteenth Amendment due process is shaped by federalism concerns that are irrelevant to the Fifth Amendment context," and Patterson imposed an "unnecessary limitation" on Rule 4(k)(2). In their view, Patterson "unwittingly limited Rule 4(k)(2) by collapsing the Fifth Amendment and Fourteenth Amendment due process analyses."

This court granted plaintiffs' petition for rehearing en banc to consider whether NYK is subject to jurisdiction in these cases.

II. Standard of Review

This court's review of a Rule 12(b)(2) dismissal for lack of personal jurisdiction is de novo. Patterson, 826 F.3d at 233 (citing Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002)).

III. Discussion

The Fifth Amendment due process standard governs the personal jurisdiction inquiry in this lawsuit raising federal claims in federal court. The en banc dispute centers on whether the Fifth Amendment standard mirrors the "minimum contacts" and "fair play and substantial justice" principles underlying the Fourteenth Amendment personal jurisdiction inquiry. Two issues, considered in turn, logically precede that debate. First, we reject the plaintiffs' passing argument that NYK, as a foreign corporation, lacks Fifth Amendment due process rights altogether and therefore cannot object to a federal court's assertion of personal jurisdiction over it. Second, we expose the faulty premise underlying the plaintiffs' contention that applying Fourteenth Amendment personal jurisdiction standards in Fifth Amendment cases would render Rule 4(k)(2) a nullity.[8]

A. Foreign corporations litigating in federal court may challenge the court's personal jurisdiction under the Fifth Amendment Due Process Clause.

The plaintiffs oddly contend that NYK, as a foreign corporation, has no Fifth Amendment due process rights at all. In support, they cite cases addressing whether constitutional rights extend to foreign persons acting abroad. See Agency for Int'l Dev. v. All. for Open Soc'y Int'l, Inc., 140 S.Ct. 2082, 2088 (2020) (holding that foreign subsidiaries of United States companies do not have First Amendment rights); United States v. Verdugo-Urquidez, 494 U.S. 259, 274-75, 110 S.Ct. 1056, 1065-66 (1990) (rejecting contention that DEA's search of a residence in Mexico violated non-citizen's Fourth Amendment rights).[9] Here, however, NYK invokes its constitutional due process rights in the course of litigation in the United States. Therefore, any constitutional violation can occur only in the United States. Cf. Verdugo-Urquidez, 494 U.S. at 264, 110 S.Ct. at 1060 (differentiating Fifth and Fourth Amendment violations and concluding that unlike an "unreasonable search and seizure," a violation of the privilege against self-incrimination "occurs only at trial"). The cases the plaintiffs rely on are thus inapposite.

Further, the plaintiffs' argument is irreconcilable with the countless cases where courts, including the Supreme Court, have afforded foreign corporations due-process-based personal-jurisdiction protections under the Fourteenth Amendment. See, e.g., Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S.Ct. 2846 (2011); J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 131 S.Ct. 2780 (2011); Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S. 102, 107 S.Ct. 1026 (1987). Thus, NYK can object to a federal court's unwarranted exercise of personal jurisdiction to the same extent as a United States citizen.

B. Rule 4(k) is a procedural rule governing the territorial limits of service.

Federal Rule of Civil Procedure 4(k)(2) states that, "[f]or a claim that arises under federal law, serving a summons . . . establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws."

Throughout their briefing, the plaintiffs present Rule 4(k)(2) as the substantive source of personal jurisdiction over NYK and contend that adopting the Fourteenth Amendment standard would render Rule 4(k)(2) a nullity. That rule-centric view obscures the purely constitutional nature of the personal jurisdiction question at issue here. Rule...

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