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STEMCOR USA v. HYUNDAI MERCHANT MARINE CO.

January 12, 2005.

STEMCOR USA, Plaintiff,
v.
HYUNDAI MERCHANT MARINE CO., LTD., STEVEDORES, INC., RESERVE MARINE TERMINALS, INC., and the M/V DIMITRA, her engine, boilers, tackle, etc., in rem, Defendants. HYUNDAI MERCHANT MARINE CO., LTD., Cross-claimant, v. STEVEDORES, INC. and RESERVE MARINE TERMINALS, INC., Cross-defendants.



The opinion of the court was delivered by: GEORGE DANIELS, District Judge

OPINION AND ORDER

Plaintiff Stemcor USA, Inc. ("Stemcor") sues defendants Hyundai Merchant Marine Co., Ltd. ("Hyundai"), Stevedores, Inc. ("Stevedores"), and Reserve Marine Terminals, Inc. ("Reserve") for damages arising from alleged mishandling of cargo shipped aboard the vessel M/V Dimitra ("Dimitra").*fn1 Hyundai moves to dismiss the complaint based on the forum selection clause contained in the carriage contract between Stemcor and Hyundai. Stevedores and Reserve move to dismiss the complaint for lack of personal jurisdiction. For the reasons set forth below, defendants' motions are granted.

  I.

  On June 20, 1998, Stemcor, a Delaware corporation, shipped aboard the Dimitra approximately 13,094 metric tons of hot rolled steel plates from Kemaman, Malaysia to New Orleans. (Am. Compl. ¶ 9) The Dimitra was owned, chartered, and operated by Hyundai. (Id. ¶ 7) Stemcor was the consignee or owner of this shipment of steel plates (Id. ¶ 11), which were in good order and condition before shipment from Malaysia. (Id. ¶ 10) They were shipped pursuant to Hyundai's bills of lading. (Ex. 1 to Affidavit of Elizabeth Smith ("Smith Aff.")) Once the cargo reached New Orleans on September 7, 1998, it was discharged by Stevedores, a Louisiana provider of cargo loading services for vessels in the Port of New Orleans. (Am. Compl. ¶¶ 10, 14) A portion of the cargo was then loaded by Stevedores on barges for shipment to the Chicago warehouse of Reserve, an Ohio provider of cargo loading and storage services. (Id. ¶¶ 15, 22) The cargo arrived "seriously contaminated, damaged, impaired in value, and short in quantity." (Id. ¶ 10) Stemcor commenced this action for $30,000 in damages against Hyundai and the Dimitra in rem on August 25, 1999. On January 5, 2000, Stemcor amended the complaint to include Stevedores and Reserve as defendants.

  II.

  This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1333 (maritime and admiralty jurisdiction). On a motion to dismiss for lack of personal jurisdiction, see Fed.R. Civ. P. 12(b) (2), "the plaintiff bears the burden of showing that the court has jurisdiction over the defendants." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). At the motion to dismiss stage, "all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor. . . ." A.I. Trade Fin. Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993). III.

  A. Hyundai

  Each of Hyundai's bills of lading contain the following clause:
25. Governing Law and Jurisdiction The claims arising from or in connection with or relating to this Bill of Lading shall be exclusively governed by the law of Korea except otherwise provided in this Bill of Lading. Any and all action concerning custody or carriage under this Bill of Lading whether based on breach of contract, tort or otherwise shall be brought before the Seoul Civil District Court in Korea.
(Ex. 2 to Smith Aff.) Stemcor does not dispute that these bills are the contracts of carriage for the shipments at issue. Hyundai moves to dismiss, contending that this clause requires Stemcor to bring the instant action in Korea.

  Stemcor argues first that the clause is "unreasonable" in "that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court." New Moon Shipping Co., Ltd. v. Man B&W Diesel AG, 121 F.3d 24, 33 (2d Cir. 1997) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18 (1972)). Foreign forum selection clauses are presumptively valid and "should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." Bremen, 407 U.S. at 10. In order to overcome this presumption of enforceability, a party which seeks to bring a suit in a forum other than the one designated by the forum selection clause must prove that: (1) the forum selection clause is invalid for fraud or overreaching; (2) the forum selection clause will deprive plaintiff of its day in court due to grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive plaintiff of a remedy; or (4) enforcement would contravene a strong public policy of the forum in which the action was brought. See Bremen, 407 U.S. at 15-17.

  At this stage, Stemcor must allege facts to support a prima facie showing that the clause is unreasonable under the "heav" standard of Bremen. New Moon, 121 F.3d at 28-29. However, Stemcor has made no allegation beyond reciting the grounds for "unreasonableness" set forth by the Supreme Court in Bremen. Nor does Stemcor present any disputed factual issues regarding the difficulty of litigating in a Korean court or any of the other factors in Bremen. New Moon, 121 F.3d at 29 ("A disputed fact may be resolved in a manner adverse to the plaintiff only after an evidentiary hearing."). Hence, Stemcor fails to make a prima facie showing that the forum selection clause in Hyundai's bills of lading is "unreasonable" or otherwise unenforceable.

  In what appears to be a separate argument, Stemcor contends also that under the clause, it loses the protection of Section 3(8) of the Carriage of Goods by Sea Act ("COGSA"), which governs the liability of shippers and carriers:
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, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability shall be null and void and of no effect.
46 U.S.C. App. § 1303(8).

  In Vimar Seguros v. Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528 (1995), the Supreme Court held that a foreign arbitration clause in a bill of lading was enforceable and was not prohibited by Section 3(8) of COGSA. Noting that COGSA protects the fact and extent of liability, not the means and costs of enforcing that liability, the Court concluded that "nothing suggests that [Section 3(8) of COGSA] prevents the parties from agreeing to enforce these obligations in a particular forum. . . . By its terms, [Section 3(8)] establishes certain duties and obligations, separate and apart from the mechanisms for their enforcement."). Id. at 535. Put another way, "procedural impediments that make a plaintiff's recovery in a foreign forum more difficult to achieve do not constitute the `lessening [of] liability' sufficient under Section 3(8) to invalidate a choice of law or choice of forum clause." Int'l Marine Underwriters v. M/V Kasif Kalkavan, 989 F. Supp. 498, 499 (S.D.N.Y. 1998) (quoting Sky Reefer, 515 U.S. at 534).

  Courts have applied Sky Reefer to foreign forum selection clauses as well. See, e.g., Kalkavan, 989 F. Supp. at 499 (Sky Reefer "also applies to the enforceability of foreign forum selection clauses because the Supreme Court stated `[w]e cannot endorse the reasoning or the conclusion of the [rule in Indussa Corp. v. S.S. Ranborg, 377 F.2d 200 (2d Cir. 1967),' which holds] that [a] foreign forum selection clause in [a] bill of lading violates § 1303(8) of COGSA"); Hyundai Corp. U.S.A. v. M/V An Long Jiang, No. 97-3855, 1998 WL 13835, at *1 (S.D.N.Y. Jan. 13, 1998); TradeArbed, Inc. v. M/V Agia Sofia, No. 96-4930, 1997 WL 769525 Pasztory v. Croatia Line, 918 F. Supp. 961, 966 (E.D. Va. 1996).

  Notwithstanding this precedent, Stemcor contends that the extension of Sky Reefer to foreign forum selection clauses would cause Stemcor to "lose its COGSA section 3(8) protection against Hyundai" by "lessening [Hyundai's] liability." (Id. at 7) Stemcor claims that it "would have no ...


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