Hyundai Mipo Dockyard Co. v. AEP/Borden Indus.

• Decision Date: 01 August 2000
• Docket Number: THIRD-PARTY-DEFENDANT-APPELLANT,Docket No. 00-7935,THIRD-PARTY-PLAINTIFFS-APPELLEES
• Citation: 261 F.3d 264
• Parties: (2nd Cir. 2001) IN THE MATTER OF THE COMPLAINT OF: RATIONIS ENTERPRISES, INC. OF PANAMA, AS OWNER, AND MEDITERRANEAN SHIPPING CO., S.A. OF GENEVA, AS BAREBOAT CHARTERER OF THE M/V MSC CARLA FOR EXONERATION FROM OR LIMITATION OF LIABILITY. HYUNDAI MIPO DOCKYARD CO., LTD.,, v. AEP/BORDEN INDUSTRIES; ANGELO BROTHERS, CO.; CUMMINS ENGINE COMPANY, INC.,
• Court: U.S. Court of Appeals — Second Circuit

Page 264

261 F.3d 264 (2nd Cir. 2001)

IN THE MATTER OF THE COMPLAINT OF: RATIONIS ENTERPRISES, INC. OF PANAMA, AS OWNER, AND MEDITERRANEAN SHIPPING CO., S.A. OF GENEVA, AS BAREBOAT CHARTERER OF THE M/V MSC CARLA FOR EXONERATION FROM OR LIMITATION OF LIABILITY.

HYUNDAI MIPO DOCKYARD CO., LTD., THIRD-PARTY-DEFENDANT-APPELLANT, v. AEP/BORDEN INDUSTRIES; ANGELO BROTHERS, CO.; CUMMINS ENGINE COMPANY, INC., THIRD-PARTY-PLAINTIFFS-APPELLEES.

Docket No. 00-7935

August Term, 2000

UNITED STATES COURT OF APPEALS, SECOND CIRCUIT

Argued: February 27, 2001

Decided August 3, 2001

Appeal from an order of the United States District Court for the Southern District of New York (Richard Owen, Judge) enjoining appellant from prosecuting a declaratory judgment action in Korea. Appellant argues, inter alia, that the injunction should be vacated on the merits, the district court should have held a hearing prior to issuing the injunction, and the district court lacked personal jurisdiction over it. Because we are unable to determine whether appellant forfeited its jurisdictional defense and because we further find that the district court did not properly establish the existence of personal jurisdiction over appellant, we vacate the injunction and remand.

Raymond J. Burke, Jr., Burke & Parsons (Christopher H. Dillon and Chan W. Sung, of counsel), New York, New York, for Third-Party- Defendant-Appellant.

Edward C. Radzik, Donovan Parry McDermott & Radzik (William E. Ecenbarger, Jr., of counsel), New York, New York, for Third-Party- Plaintiffs-Appellees.

Before: Winter, Straub, and Pooler, Circuit Judges.

Winter, Circuit Judge

Hyundai Mipo Dockyard Co., Ltd. ("HMD"), a Korean shipyard, appeals from Judge Owen's order enjoining it from proceeding with a declaratory judgment action in Korea. See In re Complaint of Rationis Enters., Inc., No. 97 CV 9052, 2000 WL 1015918 (S.D.N.Y. July 24, 2000). HMD argues that: (i) the district court gave undue weight to improper factors when it decided to issue the antisuit injunction; (ii) the court erred by refusing to conduct a pre-injunction evidentiary hearing; and (iii) the evidence was insufficient to establish personal jurisdiction over HMD.¹ Appellees, three American cargo companies, dispute these contentions and argue further that HMD forfeited the jurisdictional defense both by not timely asserting it and by engaging in pre-trial activity, including discovery.

We cannot determine from the record whether HMD forfeited its defense of lack of personal jurisdiction. We further conclude that, if the defense was not forfeited, a pre-injunction evidentiary hearing was required because essential facts related to whether the court had personal jurisdiction over HMD were in dispute. We therefore vacate the injunction and remand for an evidentiary hearing on the forfeiture issue and, if appropriate, the merits of HMD's jurisdictional defense. Because the jurisdictional issues must be resolved first, we do not decide whether the issuance of an antisuit injunction was proper.

BACKGROUND

The facts are set out in detail in the district court's various opinions in this matter, see, e.g., Rationis, 2000 WL 1015918, at *1; Schreiber Foods Int'l, Inc. v. Intercargo Napoli S.R.L., No. 98 CV 5954, 1999 WL 33469 (S.D.N.Y. Jan. 26, 1999), vacated by Mediterranean Shipping Co. S.A. Geneva v. POL-Atl., 229 F.3d 397 (2d Cir. 2000); In re Complaint of Rationis Enters., Inc., No. 97 CV 9052, 1999 WL 6364 (S.D.N.Y. Jan. 7, 1999), as well as in our previously published decision on a related claim, see Mediterranean Shipping Co., 229 F.3d at 397, familiarity with which are assumed. We therefore summarize only the facts relevant to the present appeal.

On November 24, 1997, the M/V MSC Carla, a ship carrying more than 1600 shipping containers, broke in half en route from France to the United States. Half of the vessel sank, along with its cargo. HMD had elongated the Carla in 1984 by installing a mid-body insert. When the Carla split, it did so near one of the seams joining the original hull with HMD's insert.

On December 9, 1997, the ship's owner filed a petition under the Limitation of Shipowners' Liability Act, 46 App. U.S.C. §§ 181 et seq., in the Southern District of New York. That Act provides a procedure in the exercise of admiralty jurisdiction that allows a single federal court to determine all relevant issues related to liability and limits the shipowner's liability to the salvage value of the vessel plus the value of freight then pending, should exoneration be denied.

HMD was brought into this action in January 1998, when the approximately 1000 cargo claimants in the limitation proceeding put the shipyard on notice that they intended to hold it jointly and severally responsible for the casualty. HMD responded by seeking a declaratory judgment of non-liability from the Ulsan District Court of Korea in June 1998. In the Korean action, HMD served only three of the 1000 cargo claimants, namely, the three appellees in this appeal. The three cargo claimants served were apparently selected because they are essentially the first three alphabetically.

In September 1998, various cargo claimants began serving third-party complaints on HMD, at HMD's New Jersey office. In November 1999, appellees -- the three cargo claimants sued by HMD in Korea -- moved in the Southern District to enjoin HMD's Korean action against them.

The district court granted the injunction. The grounds primarily relied on were that: (i) the "unusual size and complexity" of the case made it preferable that all claims be settled "in one action to the extent possible," Rationis, 2000 WL 1015918, at *2 (internal quotation marks omitted), and (ii) the fact that HMD brought its Korean action against only three of the 1000 cargo claimants might create difficult problems of collateral estoppel unless the court "enjoin[ed] the risk of them occurring," id.

The district court also found no merit in HMD's claim that the court lacked personal jurisdiction over it. The court found that

HMD with its sales office in Englewood Cliffs, New Jersey, as observed, right across the Hudson River from New York City, and a New York (Manhattan) telephone listing in the White Pages, has been served in this proceeding, filed an answer, and participated in the case, has not moved to dismiss for lack of personal jurisdiction, and has availed itself of the United States at large.

Id. at *3. It therefore held that personal jurisdiction had been properly established because HMD had sufficient contacts in the "bulge area." See Fed. R. Civ. P. 4(k) ("Service of a summons... is effective to establish jurisdiction over the person of a defendant... who is a party joined under Rule 14 or Rule 19 and is served at a place within a judicial district of the United States and not more than 100 miles from the place from which the summons issues...."); Salamon v. Motor Vessel Poling Bros. No. 11, Inc., No. 87 CV 3369, 1989 WL 65517, at *1 (E.D.N.Y. June 6, 1989) ("The circuit courts have uniformly concluded that if a party delineated in Rule 4[k] has minimum contacts with the bulge area, the district court in the forum state gains personal jurisdiction over him through service of process pursuant to Rule 4."). The district court also noted that HMD had participated in discovery in the United States. See Rationis, 2000 WL 1015918, at *3 n.4.

This appeal followed. HMD contends that the injunction should not have been issued in light of China Trade & Development Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987). We held there that, in cases like the present one involving requests for an antisuit injunction, courts should give more consideration to "whether the foreign action threatens the jurisdiction of the enjoining forum" and "whether strong public policies of the enjoining forum are threatened by the foreign action" than to other factors, such as procedural convenience, considered by the district court in HMD's case. HMD also argues, inter alia, that the district court should have held a pre-injunction evidentiary hearing.

DISCUSSION

"The requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998) (internal quotation marks and brackets omitted); see Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (1999) (holding, as between subject-matter and personal jurisdiction, "there is no unyielding jurisdictional hierarchy"). We therefore turn first to HMD's claim that the district court lacked personal jurisdiction over it. See Fid. Partners, Inc. v. First Trust Co., 142 F.3d 560, 565 (2d Cir. 1998) (recognizing Supreme Court's rejection of approach whereby courts assume jurisdiction to decide merits in favor of party challenging jurisdiction); see also Marra v. Papandreou, 216 F.3d 1119, 1122 (D.C. Cir. 2000) (holding personal jurisdiction is threshold determination that must precede merits).

a) Forfeiture of Objections to the Exercise of Personal Jurisdiction

The cargo claimants contend that HMD has forfeited its lack of personal jurisdiction defense.² See Ruhrgas, 526 U.S. at 583 ("[S]ubject-matter jurisdiction... is non-waivable... while restrictions on a court's jurisdiction over the person are waivable...."). Specifically, appellees argue that HMD missed the deadline imposed by a magistrate judge's scheduling order for filing motions to dismiss. However, the scheduling order is ambiguous. In May 1999, lawyers representing the largest cargo interests submitted a proposed scheduling order to the magistrate judge that required that "[a]ny motions to dismiss... based on jurisdictional or forum issues should be filed by September 1, 1999." The magistrate judge's order adopted the cargo interests' proposed schedule in part, subject to "the modifications indicated below." In re...