NUOVO PIGNONE, SPA v. STORMAN ASIA M/V No. 01-31486.
310 F.3d 374 (2002)
NUOVO PIGNONE, SpA, Plaintiff-Appellee, v. STORMAN ASIA M/V, etc., et al., Defendants, Fagioli SpA, In Personam, Defendant-Appellant.
United States Court of Appeals, Fifth Circuit.
October 31, 2002.
John Francis Fay, Jr., William K. Terrill, II (argued), Deutsch, Kerrigan & Stiles, New Orleans, LA, for Plaintiff-Appellee.
James J. Sentner, Jr., Kimberly R. Phillips (argued), Gardere Wynne Sewell, Houston, TX, for Defendant-Appellant.
Before SMITH and BENAVIDES, Circuit Judges, and FITZWATER, District Judge.
JERRY E. SMITH, Circuit Judge:
Fagioli, S.A. ("Fagioli"), agreed to furnish a ship for the maritime transport of Nuovo Pignone, SpA's ("Nuovo Pignone's") 771,000 kilogram reactor from Italy to Louisiana. The reactor was damaged after arrival at the Port of New Orleans, and Nuovo Pignone sued. The district court found that Fagioli, an Italian company, was subject to personal jurisdiction in Louisiana and that Nuovo Pignone properly had effected service of process by mail. We affirm the assertion of personal jurisdiction but reverse the determination that article 10(a) of the Hague Convention permits service of process by mail.
Fagioli is an Italian corporation providing worldwide transportation and logistical services necessary to transport heavy-lift cargo. Nuovo Pignone, also an Italian company, contracted with Fagioli for the transport of a large EO reactor from Italy to Louisiana. Under the terms of the contract, Fagioli was responsible for selecting a vessel for the transit.
The contract required that Fagioli furnish a ship possessing specified performance capabilities. Fagioli agreed to furnish a ship that "[h]as its own shears and winches and hoisting means, including swingletrees and cables for safe, autonomous hoisting operations and/or unloading in connection with the weight of the objects to be transported...." The contract required that the ship be seaworthy, equipped with appropriate engines for navigation, and capable of entering the pre-selected port of discharge.
Fagioli entered into a secondary contract with Blau Shipping & Trading, Ltd. ("Blau Shipping"). This contract, known as a conlinebooking note, specified that the vessel M/V STORMAN ASIA ("STORMAN ASIA") would be used to transport the reactor and that Geismar or New Orleans was the port of discharge. Blau Shipping then entered into a secondary conlinebooking note with Key Largo Transportes Maritimos ("Key Largo"), the owner and operator of the STORMAN ASIA. Nuovo Pignone's Louisiana client and Key Largo were responsible for unloading the reactor at the point of destination.
The reactor was loaded on board the STORMAN ASIA in Italy and transported across the Atlantic Ocean without incident. While the reactor was being transferred to a barge at the Port of New Orleans, one of the cables of the vessel's onboard shipping crane broke, causing the reactor to fall. The reactor and the deck of the barge were damaged. Nuovo Pignone alleges that the accident resulted from Fagioli's failure to provide a vessel with a satisfactory onboard shipping crane, as required by the original contract.
Nuovo Pignone brought breach of contract and tort claims against Fagioli, Key Largo, and the STORMAN ASIA and effected
We review de novo the district court's determination that its exercise of personal jurisdiction over a non-resident defendant is proper. Wilson v. Belin, 20 F.3d 644, 647-48 (5th Cir.1994). Where, as here, the district court decides the motion to dismiss without holding an evidentiary hearing, Nuovo Pignone must make only a prima facie showing of the facts on which jurisdiction is predicated. Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir.2000). To decide whether a prima facie case exists, we must accept as true Nuovo Pignone's "uncontroverted allegations, and resolve in [its] favor all conflicts between the facts contained in the parties' affidavits and other documentation." Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 854 (5th Cir.2000) (quoting Alpine View, 205 F.3d at 215).
The Due Process Clause of the Fourteenth Amendment protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful "contacts, ties, or relations." Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In an admiralty case in which the cause of action arises out of the defendant's contact with Louisiana, a federal court may exercise personal jurisdiction over a foreign defendant if Louisiana could have acquired personal jurisdiction over the defendant on the same cause of action and the exercise of jurisdiction comports with the Due Process Clause. Adams v. Unione Mediterranea Di Sicurta, 220 F.3d 659, 667 (5th Cir.2000). These two inquiries merge into one, because Louisiana's long-arm statute permits jurisdiction coterminous with the scope of the Due Process Clause. La. R.S. 13:3201(B); Growden v. Ed Bowlin & Assocs., 733 F.2d 1149, 1150 (5th Cir.1984).
In deciding whether personal jurisdiction is consistent with the Due Process Clause, a three-prong test is applied: (1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).
A defendant establishes minimum contacts with a state if "the defendant's conduct and connection with the forum state are such that [they] should reasonably anticipate being haled into court there." Burger King, 471 U.S. at 474, 105 S.Ct. 2174 (quoting World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). There must be some act whereby the defendant "purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Id. at 475, 105 S.Ct. 2174. A nonresident "may permissibly structure his primary conduct so as to avoid being haled into court in a particular state." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 580. Even where a defendant has no physical presence in the forum state, a single purposeful contact is sufficient to confer personal jurisdiction if the cause of action arises from the contact. McGee v. Int'l Life Ins. Co., 355 U.S. 220, 222, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).
We agree with the district court that Fagioli's agreement to supply a vessel equipped to allow for safe discharge of the reactor in Louisiana constituted a sufficient forum-related contact to confer personal jurisdiction. By agreeing to secure a vessel with a satisfactory onboard loading crane that it knew would be used to unload cargo in Louisiana, Fagioli reasonably should have anticipated that its failure to meet its contractual obligations might subject it to suit there. Fagioli cannot now claim that its contact with Louisiana was merely fortuitous, random, or attenuated after it entered into a contract specifying that state as the point of destination.
Fagioli argues that the district court misconstrued its contractual obligations, which it asserts did not require it to perform any part of the agreement in Louisiana.
Fagioli's argument that the district court misconstrued its contractual obligations is unavailing. Although Nuovo Pignone's client and Key Largo were responsible for unloading the reactor, Fagioli was the party that agreed to provide a satisfactory onboard crane and ultimately to transport the reactor to Louisiana. Because we are required to accept Nuovo Pignone's allegation that a defective onboard crane was the cause of damage to the reactor and barge, Fagioli cannot avoid personal jurisdiction by speculating as to whether another party was actually responsible for the accident. That question is left for a trial on the merits.
In a broader sense, Fagioli should not be permitted to escape personal jurisdiction by intertwining itself in a multi-layered contractual arrangement.
We have applied the stream-of-commerce principle to permit the assertion of personal jurisdiction over nonresident defendants that send a defective product into a forum.
The stream-of-commerce principle is applied to companies that, like Fagioli, "purposefully serve markets broader than the states in which [their] initial or direct sales are made." Petroleum Helicopters, Inc. v. Avco Corp., 804 F.2d 1367, 1370 (5th Cir.1987) (en banc). Still, this court has been reluctant to extend the stream-of-commerce principle outside the context of products liability cases. Alpine View, 205 F.3d at 216.
Where we have been presented with the opportunity to extend the principle to other areas such as contract or copyright, we have found the defendant's delivery of products into the stream-of-commerce to be unrelated to the cause of action.
Nevertheless, in Gulf Consolidated, 898 F.2d at 1073-74, we applied the stream-of-commerce principle in a breach of warranty action. The defendant was a Greek distributor that sent, to a Texas purchaser, defective oilfield casings that later were incorporated into pipe. Id. at 1072-74. In finding that the defendant should have foreseen the possibility of being haled into a Texas court, we observed that "[a]lthough the transaction ... took place in Greece, the defendant sold the pipe in anticipation that it would be shipped to Texas aboard a ship it chartered." Id. at 1074. We found that Texas had an interest in providing a forum for the litigation where "the product was intended for use in Texas, [and] where the defect surfaced in Texas." Id.
Application of the stream-of-commerce principle is warranted here. The onboard shipping crane, like the casings in Gulf Consolidated, is alleged to have caused damage in the home forum. Like defendants in products liability cases that utilize the stream-of-commerce principle, Fagioli did not contract with a citizen of the home forum, but rather with third party intermediaries who brought the crane to Louisiana. Fagioli should have considered the possible devastation that its choice of a defective onboard crane might cause in Louisiana. In this sense, the same public policy concerns that justify use of the stream-of-commerce principle in the products liability context are present here.
We next turn briefly to whether Nuovo Pignone's claims arise out of Fagioli's
Once a plaintiff establishes minimum contacts between the defendant and the forum state, the burden of proof shifts to the defendant to show that the assertion of jurisdiction is unfair and unreasonable. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 215 (5th Cir.1999). The defendant must make a "compelling case." Burger King, 471 U.S. at 477, 105 S.Ct. 2174. In determining whether the exercise of jurisdiction is fair and reasonable, we look to (1) the burden on the nonresident defendant; (2) the interests of the forum state; (3) the plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in the most efficient resolution of controversies; and (5) the shared interests of the several states in furthering fundamental social policies. Felch v. Transportes Lar-Mex SA De CV, 92 F.3d 320, 324 (5th Cir.1996). Fagioli argues only that subjecting it to suit in Louisiana would be overly burdensome and that Louisiana lacks interest in hearing the suit.
In Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 115, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), the Court noted that "[g]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." The Court was concerned with the "unique burdens placed upon one who must defend oneself in a foreign legal system." Id. at 114, 107 S.Ct. 1026. Fagioli does not present any reason why subjecting it to suit in Louisiana would be overly burdensome. In fact, Fagioli presents itself as a specialist in "worldwide transport and logistics" that maintains offices in the United States.
As for Louisiana's interest in adjudicating a dispute between two Italian companies, the district court correctly concluded that "Louisiana has an interest in redressing the injury based on the failure of the equipment in unloading the reactor in New Orleans."
Nuovo Pignone effected service of process by sending a copy of the complaint by Federal Express mail to Fagioli's president in Milan, Italy. Fagioli argues that service by mail violates FED.R.CIV.P. 4(f)(1), which permits service of process on a foreign corporation "by any internationally agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention." The Hague Convention is a multinational treaty formed in 1965 for the purpose of creating an "appropriate means to ensure that judicial and extrajudicial documents to be served abroad shall be brought to the notice of the addressee in sufficient time."
The Hague Convention sets forth permissible methods of effecting service. Articles 2 through 7 require each signatory nation to establish a "Central Authority" to act as an agent to receive request of service, arrange for service of documents, and return proofs of service. Article 8 permits the use of diplomatic agents to serve foreign defendants. Article 9 permits diplomatic agents to forward documents to designated authorities in receiving nations who, in turn, effect service on the proper parties.
The parties disagree over the interpretation of article 10(a), which states in context:
Nuovo Pignone contends that article 10(a) permits service of process by mail. Fagioli argues that the subsection refers only to the transmission of legal documents following service, pointing to the fact that nowhere else in the Hague Convention is the word "send" used to refer to service of process; rather, the drafters use the words "serve," "service," and "to effect service" in other sections, including subparts (b) and (c) of article 10.
The parties' differing positions reflect a circuit split over an issue this court has yet to address. Those courts that have concluded that article 10(a) permits service of foreign parties by mail have looked to the broad purpose of the Hague Convention— facilitating service abroad—and concluded that article 10(a) would be "superfluous unless it was related to the sending of such documents for the purpose of service."
Other courts have held that the word "send" in article 10(a) is not the equivalent of service of process.
We adopt the reasoning of courts that have decided that the Hague Convention does not permit service by mail. In doing so, we rely on the canons of statutory interpretation rather than the fickle presumption that the drafters' use of the word "send" was a mere oversight. "Absent a clearly expressed legislative intention to the contrary," a statute's language "must ordinarily be regarded as conclusive." Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980). And because the drafters purposely elected to use forms of the word "service" throughout the Hague Convention, while confining use of the word "send" to article 10(a), we will not presume that the drafters intended to give the same meaning to "send" that they intended to give to "service."
Nuovo Pignone's contention that the broad purpose of the Hague Convention is furthered if article 10(a) is interpreted to allow service by mail is problematic. As noted, the purpose of the Hague Convention is not only to simplify the service of process, but to ensure that plaintiffs deliver notice to foreign addressees in sufficient time to defend the allegation. Indeed, FED.R.CIV.P. 4(f)(1) presumes that the Hague Convention provides methods of service "reasonably calculated to give notice."
We are not confident, nor should the drafters have been confident in 1967, that mail service in the more than forty signatories is sufficient to ensure this goal.
Finally, we note that other provisions of the Hague Convention describe more reliable methods of effecting service. Service of process through a central authority under articles 2 through 7 and service
We conclude that article 10(a) does not permit parties to effect service of process on foreign defendants by mail. On remand, Nuovo Pignone should be permitted a reasonable time to effect service properly. Jim Fox Enter., Inc. v. Air France, 664 F.2d 63, 65 (5th Cir. Dec.1981).
For the reasons we have explained, the district court's assertion of personal jurisdiction over Fagioli is AFFIRMED, and its determination that service of process by mail is permissible under the Hague Convention is REVERSED. This matter is REMANDED for further proceedings.
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