MTS Logistics, Inc. v. Innovative Commodities Grp., LLC

• Citation: 442 F.Supp.3d 738
• Decision Date: 26 February 2020
• Docket Number: 19 Civ. 4216 (PAE)
• Parties: MTS LOGISTICS, INC., Plaintiff, v. INNOVATIVE COMMODITIES GROUP, LLC, Defendant.
• Court: U.S. District Court — Southern District of New York

442 F.Supp.3d 738

MTS LOGISTICS, INC., Plaintiff,

v.INNOVATIVE COMMODITIES GROUP, LLC, Defendant.

19 Civ. 4216 (PAE)

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

Signed February 26, 2020

Gareth Winston Stewart, Gareth W. Stewart, Esq., New York, NY, for Plaintiff.

Martin F. Casey, Casey & Barnett, LLC, New York, NY, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Plaintiff MTS Logistics, Inc. ("MTS"), brings this action against defendant Innovative Commodities Group, LLC ("Innovative"), for damages MTS allegedly incurred in connection with the overseas shipping of plastic scrap on behalf of Innovative. MTS alleges that Innovative has breached MTS's bill of lading, bringing the case within the Court's admiralty jurisdiction. As to personal jurisdiction over Innovative, MTS relies on a forum selection clause in the bill of lading. Before the Court is Innovative's motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). For the following reasons, the Court grants that motion.

I. Background

A. Factual Background¹

1. The Parties

MTS is a New York transportation corporation with its principal place of business in New York. Compl. ¶¶ 3–4. Specifically, it is a non-vessel operating common carrier ("NVOCC") that provides cargo haulage and other import and export services. Id. NVOCCs contract with merchants or cargo owners who want to ship their goods, agreeing to transport those goods overseas via ship, and generally issuing that merchant a bill of lading that governs the voyage. See id. ¶ 3 n.2. The NVOCC, however, does not own or operate the ship that will transport such goods. Id. ; see also 46 U.S.C. § 40102(17)(A). Instead, the NVOCC purchases space on the ship of an ocean common carrier—who physically transports the goods—and the carrier then issues the NVOCC its own bill of lading when the goods are loaded onto the ship. Compl. ¶ 3 n.2; see also 46 U.S.C. §§ 40102(17)(B), (18) (explaining that NVOCC is a "shipper in its relationship with an ocean common carrier," which is the "vessel-operating common carrier").

Innovative is a Texas corporation engaged in recycling and waste management with its principal place of business in Texas. Compl. ¶ 4. The Complaint nowhere alleges that Innovative does business in New York.

2. The Shipments

In 2017, MTS began providing its shipping services to Innovative. Id. ¶ 5. At that time, MTS forwarded Innovative a credit application form, which Innovative chose not to execute. Salazar Decl. ¶ 9; see also id. , Ex. A ("Credit App."). The parties conducted business without that form. See id. Ultimately, MTS helped to ship approximately eight overseas shipments of Innovative cargo before the shipment at issue in this suit. Compl. ¶ 5.

In May 2018, Innovative enlisted MTS to ship seven sealed containers of plastic scrap from Houston and Jacksonville to Thailand. Id. ¶ 6. MTS secured the Mediterranean Shipping Company (USA) Inc. ("MSC") as the ocean carrier that would transport Innovative's cargo from the United States to Thailand. See id. ¶ 9. Beginning in late May 2018, after enlisting MSC as the carrier, MTS issued a series of booking confirmations to Innovative, each of which identified MSC as the "shipping line." See id. ¶¶ 9–10; see also Salazar Decl., Ex. B ("Booking Confirmation"). MTS tracked Innovative's orders using the following booking confirmation numbers: No. 038VH1158185, see Booking Confirmation at 3 (shipment to Laem Chabang, Thailand); No. 038VH1158192, see id. at 5 (shipment to Pat Bangkok, Thailand); and No. 038VH1158181, see id. at 2 (shipment to Laem Chabang, Thailand). See Compl. ¶ 11. On June 9, 2018, after the goods were in transit, MTS issued the first of a series of invoices to Innovative for freight charges related to these shipments. See Salazar Decl. ¶ 13; id. , Ex. C ("Invoices"). MTS charged Innovative $11,000 for the freight services, which Innovative has not paid. Compl. ¶ 31.

On or about June 25, 2018, as the MSC ship was on its way to Thailand, the Thai port authority issued a written notice of "suspension of discharging plastics ... until further notice." Id. ¶ 21. MTS contacted Innovative about the notice and asked for instructions, including an alternative recipient or destination for the cargo. Id. ¶ 22. Innovative did not provide an alternative recipient or destination, instead instructing MSC that the cargo should be delivered to its original destination. Id. ¶ 23. Because of the suspension notice, MSC eventually offloaded the cargo in Singapore. See id. ¶¶ 23–24. Although Innovative was notified of the cargo's arrival in Singapore, it refused to accept or retrieve the cargo. Id. ¶ 25. As a result, MSC incurred local import charges and expenses associated with the storage and ultimate destruction of the cargo. Id. ¶¶ 26–27. MSC assessed claims against MTS for demurrage and detention charges,² totaling $27,327. See id. ¶¶ 27, 33–35.

3. The Bills of Lading

Bills of ladings are generally issued by carriers, including NVOCCs like MTS and ocean carriers like MSC. Bills of lading "record[ ] that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage." Norfolk S. Ry. Co. v. Kirby , 543 U.S. 14, 18–19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). In short, they are, "essentially, contracts." Id. at 18, 125 S.Ct. 385.

a. MTS House Bill of Lading

The MTS bill of lading ("MTS House Bill of Lading," "House Bill of Lading," or "House Bill") is publicly available on its website. See Compl. ¶ 8 (citing and incorporating MTS Terms and Conditions , MTS Logistics, http://www.mts-logistics.com/terms-and-conditions (last visited Feb. 24, 2020) ("MTS HB/L")). Under the MTS House Bill of Lading, MTS is defined as the "Carrier," and Innovative falls within the definition of "Merchant."³ Compl. ¶ 12; MTS HB/L § 1(b), (f). The Bill instructs that MTS is an NVOCC that will, as an agent of the Merchant, contract with "an actual ocean carrier"—here, MSC—to perform the high-seas leg of the shipment pursuant to House Bill of Lading. Compl. ¶ 14; MTS HB/L § 3(a).

The MTS House Bill of Lading contains a variety of substantive provisions. It provides that the Merchant is liable to MTS for all "undertakings and responsibilities of the Merchant under this Bill of Lading, including the payment of all Charges due[.]" Compl. ¶ 15; MTS HB/L § 3(d). Further, it states that the Merchant is a third-party beneficiary to the "ocean-carrier's bill of lading"—i.e. , the MSC bill of lading discussed below—and is bound by the terms of that bill. Compl. ¶ 16; MTS HB/L §§ 3(b), 5(e). The MTS House Bill also provides that MTS will comply with notices, orders, and directives of governments and port authorities, that such compliance is not an "unreasonable deviation" from the bill of lading, and that the Merchant is liable for any costs or expenses arising from such an event. Compl. ¶¶ 17–18; MTS HB/L § 14(b), (d).

Relevant here, the MTS House Bill of Lading also contains a forum selection clause, stating that any dispute between MTS and the Merchant arising under the House Bill "shall be venued exclusively in the United States District Court for the Southern District of New York or the New York State Supreme Court, County of New York." See Compl. ¶ 20; MTS HB/L § 21(a). That same provision further states that the Merchant waives any objection to venue and personal jurisdiction. MTS HB/L § 21(a). Last, it provides that the prevailing party in any dispute is entitled to reimbursement of its attorneys' fees and costs from the losing party. Compl. ¶ 20; MTS HB/L § 21(c).

Innovative claims—and MTS does not appear to dispute—that MTS never communicated the terms of its House Bill of Lading to Innovative prior to this suit.⁴ Salazar Decl. ¶ 14. In addition, neither the booking confirmation nor the invoices issued by MTS to Innovative reference the MTS House Bill. Id. ¶¶ 10, 13; see also Booking Confirmation; Invoices. The unexecuted credit application form, while not referencing the MTS House Bill of Lading, does state that a customer who seeks such credit agrees to various terms—including that disputes under that agreement will be brought "in a court of competent jurisdiction in the State of New York, County of New York"—"[i]n consideration for the extension of credit through the issuance and release of Bills of lading by MTS Logistics, Inc." Credit App. at 1.

b. MSC Master Bill of Lading

MSC issued its bill of lading ("MSC Master Bill of Lading," "MSC Master Bill," or "Master Bill") to MTS.⁵ See Compl. ¶¶ 7, 11, 28. Under the Master Bill, MTS was liable to MSC for any detention or demurrage charges incurred when transporting Innovative's cargo. See id. ¶ 28. The terms and conditions listed on MSC's website include a forum selection clause, designating the Southern District of New York as the exclusive forum for disputes. See Dkt. 18 ("Pl. Mem.") at 13 (citing MSC United States Terms and Conditions , Mediterranean Shipping Company (USA) Inc., https://www.msc.com/usa/contract-of-carriage/agency-terms-conditions (last visited Feb. 24, 2020) ("MSC MB/L")).⁶ Innovative claims that the terms of the MSC Master Bill of Lading were not provided to it until after the cargo was shipped. Salazar Decl. ¶ 10. MTS disputes this, and the Court draws the inference, in MTS's favor, that MTS sent the Master Bill of Lading to Innovative before the shipment commenced.⁷ See Pl. Mem. at 13.

B. This Action

On May 9, 2019, MTS filed its Complaint, commencing this action under the terms of its House Bill of Lading for payment for freight charges, reimbursement for demurrage and detention charges it received from MSC, and attorneys' fees from Innovative. Compl. ¶¶ 30–39. On June 19, 2019, Innovative filed its answer. Dkt. 11. On June 20, 2019, the Court scheduled an initial pretrial conference for July 22, 2019. Dkt. 12. On July 22, 2019, the Court held that conference, stayed discovery,...