Fortis Corporate Ins. v. Viken Ship Management

• Citation: 450 F.3d 214
• Decision Date: 08 June 2006
• Docket Number: No. 05-3792.,05-3792.
• Parties: FORTIS CORPORATE INSURANCE, Plaintiff-Appellant, v. VIKEN SHIP MANAGEMENT, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 214

450 F.3d 214

FORTIS CORPORATE INSURANCE, Plaintiff-Appellant, v. VIKEN SHIP MANAGEMENT, et al., Defendants-Appellees.

No. 05-3792.

United States Court of Appeals, Sixth Circuit.

Argued: March 7, 2006.

Decided and Filed: June 8, 2006.

ARGUED:

David T. Maloof, Maloof, Browne & Eagan, Rye, New York, for Appellant. Henry E. Billingsley, II, Tucker, Ellis & West, Cleveland, Ohio, for Appellee.

ON BRIEF:

David T. Maloof, Maloof, Browne & Eagan, Rye, New York, for Appellant. Henry E. Billingsley, II, Tucker, Ellis & West, Cleveland, Ohio, for Appellee.

Before: SUTTON and GRIFFIN, Circuit Judges; OBERDORFER, District Judge.^*

OPINION

OBERDORFER, District Judge.

In this maritime shipping case, we consider whether the district court properly ruled that it lacked personal jurisdiction over defendants-appellants Viken Lakers A/S and Viken Ship Management A/S ("VSM"). These two Norwegian companies own and manage a fleet of ocean-going cargo vessels. In 1998, defendants entered a Time Charter Agreement with FedNav International (a Canadian company). The agreement chartered to FedNav a fleet of vessels, including the M/V Inviken, for a period of several years¹ to transport cargo on an as-needed basis. Fed-Nav subchartered the M/V Inviken to Metallia LLC (a U.S. company) to carry a specific cargo of steel coils from Szczecin, Poland to Toledo, Ohio. En route seawater entered the cargo hold of the M/V Inviken, causing severe rust damage to the coils. Plaintiff-Appellant Fortis Corporate Insurance, a Belgian company, is a surrogate insurance underwriter of Metallia. Fortis paid $375,000 to resolve Metallia's insurance claim.

On February 2, 2004, Fortis sued defendants in the U.S. District Court for the Northern District of Ohio, which district includes Toledo, for damages allegedly caused by negligence and breach of bailment obligations.² In their answer, defendants maintained that the district court lacked personal jurisdiction over them. However, the court allowed Fortis to conduct discovery to demonstrate, if it could, that jurisdiction existed.

On October 15, 2004, defendants moved for summary judgment dismissing the suit on the theory that the federal court in Toledo lacked personal jurisdiction over defendants. On March 16, 2005, the district court granted this motion. See Fortis Corporate Ins. v. M/V Inviken, et al., 2005 WL 646092 (N.D.Ohio Mar.16, 2005). The court then granted Fortis' motion for voluntary dismissal of its amended complaint. On May 17, 2005, the district court entered an Order of Final Judgment. On June 6, 2005, Fortis filed its timely Notice of Appeal.

On appeal we review de novo the district court's dismissal of the case for lack of personal jurisdiction, see Southerland v. Wofford, 894 F.2d 408 (6th Cir.1990), and we reverse.

I. Facts

The undisputed evidence generates the following undisputed facts:

A. FedNav

Third party FedNav, based in Montreal, Canada, is a well-known steel commodity carrier in the Great Lakes region. According to a declaration by Donald Frost, a marine transportation consultant:

It is a matter of widespread general knowledge within the maritime chartering industry that Fednav['s] primary business is the carriage of international cargoes to and from the Great Lakes, including numerous United States ports, via the St. Lawrence Seaway. Fednav is also known for calling especially at Great Lake ports that receive steel cargoes, such as the port of Toledo, Ohio. In fact, according to the Fednav website, a link to which is contained on the website of Defendant Viken Ship Management, Fednav International Ltd. is the largest international user of the St. Lawrence Seaway system. The St. Lawrence Seaway is, of course, the only direct access to the Great Lakes by ship.

Frost Decl. ¶¶ 5-6 (JA 158). Defendants did not offer any evidence in rebuttal.

B. The Viken Defendants

Undisputed facts confirm Frost's declaration; defendants' vessels called at U.S. ports (including Toledo) frequently:

• According to a listing of port calls, defendants' vessels called at U.S. ports 172 times between January 1999 and March 2004, or nearly three times a month. Two-thirds of these calls (114) were at U.S. Great Lake ports, and 29 of these calls were at Ohio. See Frost Decl. ¶¶ 10-11 (JA 159-160); see also JA 247-276 (listing of all port calls for Viken Laker vessels, January 1999 — March 2004).

• During this same period, the Laker vessels spent a total of 62 days at Ohio ports. See Frost Decl. ¶ 13 (JA 160). The Charter Agreement provides that the rate to charter a vessel is $9,000 per day minimum. See JA 108 (Charter Agreement). As a result defendants earned a total of at least $558,000 for the number of days spent in Ohio ports during this period.

• Similarly, defendants' vessels spent 572 days in U.S. ports. At a rate of at least $9,000 per day, defendants earned at least $5,148,100 for time spent in U.S. ports. See Frost Decl. ¶ 13 (JA 160).

• The VSM website, in describing its contingency plans for any environmental disasters, states that it makes "[f]requent calls to the USA and Canada, including the Great Lakes[.]"

C. The Charter Agreement

The Charter Agreement between the Viken defendants and FedNav could fairly be characterized as anticipating issues and problems that would arise during the time of the charter — not simply for the shipment at issue in this case.

The Agreement contains several references to the United States and Toledo specifically, including the following description of the M/V Inviken:

• The "[v]essel is fully equipped with the necessary gear and equipment required for transitting St. Lawrence Seaway, the Welland Canal and Great Lakes." JA 97. The Welland Canal runs between Lake Ontario and Lake Erie.

• "When the vessel trades within the waters of the Great Lakes, her fresh water, stores, lubricating oil and constant not to exceed 350 metric tons[,] and Master to endeavour to reduce fresh water whilst trading in the Great Lakes." Id.

• "Owners confirm that the vessel is suitable for Toledo." Id.

• FedNav, as the charterers, had "the option to crop and replace mast in order to safely trade to Toledo." Id. at 106.

In addition:

• The Charter Agreement contains three other references to the Great Lakes region. See id. at 99-100.

• Fednav is located in Montreal. The Charter Agreement only specifies two ports: one in Montreal, and the other in Toledo.

• Critically, employees of the defendants concede that the vessels were rigged in order to travel to the Great Lakes.³

II. Specific Jurisdiction

The question of personal jurisdiction in this case is guided by Fed.R.Civ.P. 4(k)(2), which provides:

If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons... is also effective, with respect to the 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.

To establish personal jurisdiction, a plaintiff must show that (1) the defendant had "`minimum contacts' with the forum state such that defendant should `reasonably anticipate being haled into court there,'" and (2) "`the exercise of jurisdiction comport[s] with traditional notions of fair play and substantial[ ]justice.'"<sup>4</sup> The "`constitutional touchstone' of personal jurisdiction `remains whether the defendant purposefully established minimum contacts in the forum state.'"<sup>5</sup> "In the Sixth Circuit, `the emphasis in the purposeful availment inquiry is whether the defendant has engaged in some overt actions connecting the defendant with the forum state.'"⁶

The minimum contacts prong is satisfied either through specific or general jurisdiction. Specific jurisdiction "subjects the defendant to `suit in the forum state only on claims that arise out of or relate to a defendant's contacts with the forum.'"⁷ General jurisdiction is established "when a defendant has continuous and systematic contacts with the forum state sufficient to justify the state's exercise of judicial power with respect to any and all claims."⁸ Because specific personal jurisdiction exists in this case based on defendants' contacts with Ohio, we do not address the requirements for general jurisdiction and the "national contacts" test.

A. Purposeful Availment

1. Asahi

The Supreme Court in Asahi Metal Indus. Co. v. Superior Court of Calif., 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) analyzed the purposeful availment test in detail. Asahi was a Japanese company that manufactured tire valves, which it sold to a Taiwanese manufacturer of tire tubes. Plaintiff was injured when the tire of his motorcycle equipped with an Asahi valve burst. He sued Asahi in California. The Court ruled that the district court lacked personal jurisdiction over Asahi, although no opinion commanded the support of a majority of the Court.

Justice O'Connor's plurality opinion held that the "placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum state, for example, designing the product for the market in the forum state..." Id. at 112, 107 S.Ct. 1026. This formulation came to be known as "stream of commerce plus." In concluding that the district court lacked jurisdiction, the plurality opinion concluded that there was no evidence that Asahi "designed its product in anticipation of sales in California." Id. at 113, 107 S.Ct. 1026 (citation omitted).

As an example of purposeful design that presumably would meet the "stream of commerce plus" test, Justice O'Connor's opinion cited Rockwell Int'l Corp. v. Costruzioni Aeronautiche Giovanni Agusta, 553 F.Supp. 328 (E.D.Pa.1982); see Asahi, 480 U.S. at 113, 107 S.Ct. 1026. In that case, an Augusta A-109 helicopter crashed over...