action to recover for damage to a shipment of 1,735 rolls of
fluting paper. Defendant EO Oldendorff ("Oldendorff") moves to dismiss
the complaint for improper venue. For the reasons set forth below, the
motion is denied.
On September 24, 1999, defendant Oldendorff issued a bill of lading,
numbered LCLB-1, for the carriage and transportation of 1,735 rolls of
fluting paper, allegedly tendered in good order and condition, aboard the
vessel M.V. GERTRUDE OLDENDORFF from the port of Laem Chabang, Thailand
to the port of Long Beach, California. The M.V. GERTRUDE OLDENDORFF is
employed for hire in the common carriage of goods by water and, at all
times pertinent to this litigation, was owned, operated, chartered, and
controlled by defendant Oldendorff.*fn1 On October 22, 1999, the M.V.
GERTRUDE OLDENDORFF arrived at the port of Long Beach, California and
defendant Oldendorff discharged plaintiff's shipment of fluting paper.
Upon inspection, it was discovered that the shipment had sustained serious
physical and water damage. The damaged rolls were subsequently segregated
and sold for salvage.
Plaintiff Gottesman as owner, shipper, consignee, and purchaser of the
aforesaid shipment of 1,735 rolls of fluting paper instituted this action
on its behalf and on behalf of all other interested parties to recover
the sum of $600,000 for damage sustained to the shipment. On January 26,
2001, plaintiff Gottesman also commenced an action in the High Court of
Justice, Queens Bench Division, London, UK, in which the registered owner
of the vessel, New Resolution Shipping Corp., is named as a defendant.
When considering a motion to dismiss for improper venue pursuant to
Rule 12(b)(3), F.R.Civ.P., the court has to accept facts alleged in
the complaint as true and must construe all reasonable inferences in
favor of the plaintiff. Dolson v. New York State Thruway Auth., No. 00
Civ. 6439, 2001 WL 363032, at *1 (S.D.N.Y. April 11, 2001) (Carter, J.);
Burrell v. State Farm Fire and Cas. Co., No. 00 Civ. 5733, 2001 WL
797461, at *3 (S.D.N.Y. July 12, 2001) (Koeltl, J.). These benefits of
construal aside, the plaintiff ultimately bears the burden of showing
that venue is proper once it has been challenged. Imagineering, Inc. v.
Lukingbeal, No. 94 Civ. 2589, 1996 WL 148431, at *2 (S.D.N.Y. Apr. 2,
1996) (Carter, J.).
Defendant Oldendorff argues that venue is improper in this district
because of a forum selection clause in the bill of lading calling for the
adjudication of all disputes in London. (Defs.' Mem. of Law at 4-5.)
Clause 3 of the bill of lading provides:
Law and Jurisdiction.
Any disputes under the Bill of Lading to be decided in
London according to English Law.
(Ryan Aff. Exh. 1.) Oldendorff argues that, given its wording, the forum
selection clause is mandatory, thereby barring plaintiff from bringing
suit in this district. (Defs.' Mem. of Law at 4.)
Forum selection clauses, in the context of admiralty actions, are
presumptively valid. Thyssen, Inc. v. M/V ALPHA JUPITER, No. 96 Civ.
8734, 1997 WL 882595, at *7 (S.D.N.Y. Aug. 15, 1997) (Koeltl, J.) (citing
M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)). So long as
the clause is mandatory and exclusive as opposed to permissive, it will
be presumed enforceable. See Leasing Service Corp. v. Patterson
Enterprises, Ltd., 633 F. Supp. 282, 284 (S.D.N.Y. 1986) (Walker, J.);
Thyssen, 1997 WL 882595, at *7. Even assuming exclusivity, however, the
presumption of validity attaching to a mandatory forum selection clause
may be overcome by a clear showing that the clause is unreasonable. M/S
BREMEN, 407 U.S. at 15. A clause can be unreasonable if: 1) its
incorporation into the agreement was the product of fraud or
overreaching; 2) the complaining party will be deprived of its day in
court due to the grave inconvenience of the selected forum; 3) the chosen
law is manifestly unfair so as to deprive plaintiff of a remedy; or 4)
the clause is in contravention of a strong public policy of the forum
state. Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1363 (2d Cir. 1993).
It is clear that the forum selection clause at issue here is mandatory
and exclusive. For a forum selection clause to be deemed mandatory,
jurisdiction and venue must be specified with mandatory or exclusive
language. Thyssen, 1997 WL 882595, at *7 However, in the situation where
only jurisdiction is specified, the clause will generally not be enforced
without additional language indicating the intent of the parties to make
jurisdiction exclusive. John Boutari & Sons, Wines & Spirits, S.A. v.
Attiki Importers & Distribs. Inc., 22 F.3d 51, 52 (2d Cir. 1994). "Of
course if mandatory venue language is employed, the clause will be
enforced" even in the absence of language making jurisdiction exclusive.
Id. at 53.
The language of the forum selection clause under consideration here,
"[a]ny disputes under the Bill of Lading to be decided in London
according to English Law," rather than simply stating that the court in
London shall have jurisdiction over all disputes, actually makes explicit
that such disputes are to be resolved in that forum and nowhere else.
Faced with similar facts and language, numerous courts have reached
parallel conclusions. See, e.g., Thyssen, 1997 WL 882595, at *7 ("All
disputes arising under and in connection with this Bill of Lading shall
be determined by the court in the People's Republic of China" held
enforceable); Bison Pulp & Paper Ltd. v. M/V PERGAMOS, No. 89 Civ. 1392,
1995 WL 880775, at *11 (S.D.N.Y. Nov. 29, 1995) (Lowe, J.) ("Any dispute
arising under this Bill of Lading shall be decided in the country where
the carrier has his principal place of business" held enforceable); AVC
Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 151 (2d Cir. 1984)
("All and any disputes, differences or questions arising from the present
Agreement shall be decided and determined by the competent court in
Utrecht" held enforceable). In fact, in the seminal case of M/S BREMEN,
which established standards for the enforceability of forum selection
clauses in international transactions, the United States Supreme Court
enforced a forum selection clause substantially similar to the one at
issue here. M/S BREMEN involved an admiralty dispute over the
enforceability of a foreign forum selection clause in a contract
involving the towing of a drilling rig from Louisiana to a point off
Italy. The clause provided that "[a]ny dispute arising must be treated
before the London Court of Justice." M/S BREMEN, 407 U.S. at 2. The Court
held that this provision was "clearly mandatory and all-encompassing,"
enforceable unless revealed to be unjust and unreasonable.*fn2 Id. at
20. Given these reasons, it necessarily follows that the forum selection
clause in this case is mandatory and, therefore, enforceable, provided
that it is not unreasonable and unjust.
It is on these latter grounds that plaintiff Gottesman objects to the
enforcement of the forum selection clause. Enforcement of the forum
selection clause, according to Gottesman, would lessen defendant
Oldendorff's liability under the Carriage of Goods by Sea Act ("COGSA" or
the "Act"), 46 U.S.C. App. § 1300 et seq., thereby running afoul of
the Act and violating public policy. (Pl.'s Mem. of Law at 12-15.) In
particular, § 1303(8) of COGSA provides:
Any clause, covenant, or agreement in a contract of
carriage relieving the carrier or the ship from
liability for loss or damage to or in connection with
the goods, . . . or lessening such liability otherwise
than as provided in this chapter, shall be null and
void and of no effect.
46 U.S.C. App. § 1303(8). Intrepeting § 1303(8) in Vimar Seguros
y Reaseguros, S.A. v. M/V SKY REEFER, 515 U.S. 528 (1995), the United
States Supreme Court, after reciting the litany of abuses committed by
carriers in the 19th century that the passage of COGSA was intended to
curb, see SKY REEFER, 515 U.S. at 534-35, opined, with respect to a bill
of lading, that "were we persuaded that `the choice-of-forum and
choice-of-law clauses operated in tandem as a prospective waiver of a
party's right to pursue statutory remedies, . . . we would have little
hesitation in condemning the agreement as against public policy.'" Id. at
540 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 637 n. 19 (1985)). Although SKY REEFER involved a foreign
arbitration clause, its reasoning has been extended to forum selection
clauses as well. See, e.g., Silgian Plastics Corp. v. M/V NEDLLOYD
HOLLAND, No. 96 Civ. 6188, 1998 WL 193079, at *2 (S.D.N.Y. Apr. 22, 1998)
(Martin, J.). In fact, according to SKY REEFER, foreign arbitration
clauses are, in general, simply a subset of foreign forum selection
clauses. SKY REEFER, 515 U.S. at 534.
The court is persuaded that the forum selection clause at issue here
essentially operates as a prospective waiver of Gottesman's right to
pursue statutory remedies under COGSA. If the case were decided in London
instead of this district, there is a strong likelihood that English
courts would give force to an exculpatory clause in the bill of lading,
insulating parties other than the shipowner from liability, in violation
of COGSA.*fn3 Clause 19 states:
Identity of Carrier.
The Contract evidenced by this Bill of Lading is between
the Merchant and the Owner of the vessel named herein (or
substitute) and it is therefore agreed that said Shipowner
only shall be liable for any damage or loss due to any
breach or non-performance of any obligation arising out of
the contract of carriage, whether or not relating to the
vessel's seaworthiness. If, despite the foregoing, it is
adjudged that any other is the Carrier and/or bailes [sic]
of the goods shipped hereunder, all limitations of and
exonerations from liability provided for by law or by this
Bill of Lading shall be available to such other.
It is further understood and agreed that as the Line
Company or Agents who has [sic] executed this Bill of
Lading for and on behalf of the Master is not a
principal in the transaction, said Line Company or
Agents shall not be under any liability arising out of
this contract of carriage, nor as Carrier nor bailee
of the goods.
(Ryan Aff. Exh. 1.)
Recovery under COGSA is predicated on a plaintiff's ability to prove a
breach of the contract of carriage against a "carrier" of the cargo. See
46 U.S.C. App. § 1302. In deciding which parties to a suit qualify as
a carrier within the meaning of § 1302, courts in this district to
consider the issue have construed the term expansively to include all
owners and charterers participating in the carriage of goods. For
example, in Joo Seng Hong Kong Co., Ltd. v. S.S. UNIBULKFIR,
483 F. Supp. 43 (S.D.N.Y. 1979) (Sand, J.), the court noted that more
than one party is often found liable to a cargo interest pursuant to a
COGSA bill of lading, thus "there can be more than one COGSA carrier of a
given shipment," and that "the courts have not hesitated to impose
liability on charterers or owners who are non-signatories to a bill of
lading and who cannot in any real sense of the word be said to have
issued the bill." Joo Seng, 483 F. Supp. at 46 (citing Gans S.S. Line v.
Wilhelmsen, 275 F. 254 (2d Cir. 1921)). Furthermore, the Joo Seng court
found strong statutory support for a broad construction of the term
"carrier" under COGSA. The court wrote:
[T]here is strong statutory support for treating,
except in exceptional situations, all owners and
charterers involved in the carriage of the goods at
issue as COGSA carriers who are potentially liable to
cargo interests under the bill of lading. . . . The
[COGSA] statute seems to have been deliberately drawn
so as not to limit the term to a party to the bill of
lading or contract of carriage.
Joo Seng, 483 F. Supp. at 46. Since the Joo Seng decision, "several
courts in this District have interpreted the definition of `carrier' to
include parties who did not issue a bill of lading." In re Daewoo Int'l
(America) Corp., No. 01 Civ. 8205, 2001 WL 1537687, at *6 (S.D.N.Y. Dec.
3, 2001) (Preska, J.) (citing Metallia U.S.A. LLC v. M/V KAPITONAS
STULPINAS, No. 98 Civ. 3497, 1998 WL 1039103 (S.D.N.Y. Dec. 16, 1998)
(Peck, M.J.); Duferco Steel, Inc. v. M/V FESTIVITY, No. 97 Civ. 7898,
1998 WL 474197 (S.D.N.Y. Aug. 13, 1998) (Stein, J.); RMS Int'l Shipping
v. Stemcor USA, Inc., No. 90 Civ. 4918, 1991 WL 136035 (S.D.N Y Jul. 18,
1991) (McKenna, J.); Thyssen Steel Caribbean, Inc. v. Palma Armadora,
S.A., No. 81 Civ. 6066, 1983 WL 674 (S.D.N.Y. May 19, 1983) (Sweet,
J.)). In re Daewoo further refined Joo Seng's holding by noting that "[a]
charterer who is not a signatory to the bill of lading could be liable as
a carrier if the charterer was involved in some way with the issuance of
the bill of lading or the loading of cargo and the plaintiff makes a