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Vandegrift Forwarding Co. v. Hartford Fire Insurance Co.

March 31, 2009


The opinion of the court was delivered by: Townes, United States District Judge


Vandegrift Forwarding Company ("Vandegrift") is a freight forwarder and customs broker that acts on behalf of shippers to facilitate the successful importation of commercial goods into the United States. This action concerns customs bonds obtained by Vandegrift from Hartford Fire Insurance Company ("Hartford") on behalf of twenty-six shippers. The bonds were issued by James Gorman Insurance, Inc. ("Gorman"), as attorney in fact for Hartford. Following a change in customs law that rendered the bonds ineffectual, Vandegrift brought this diversity action, 28 U.S.C. § 1332, against Hartford and Gorman seeking repayment of premiums and a declaratory judgment regarding premiums that have not yet been paid. The defendants move to dismiss on the grounds that Vandegrift cannot establish diversity jurisdiction, lacks Article III standing, and is not a real party in interest under Federal Rule of Civil Procedure 17(a).


When a United States producer files an anti-dumping petition, the International Trade Administration undertakes an investigation and initiates a process that could result in the imposition of anti-dumping duties. Under the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994), "new shippers" - exporters or producers that did not export a particular good during the investigation period - may obtain an individual dumping margin and antidumping duty rate. 19 U.S.C. § 1675(a)(2)(B)(i); 19 C.F.R. § 351.214(a). Until recently, the shippers were permitted to post a bond instead of a cash deposit during the pendency of the new shipper review to cover potential anti-dumping duties. 19 U.S.C. § 1675(a)(2)(B)(iii); 19 C.F.R. § 351.214(e).

Pursuant to a broad power of attorney granted by the shippers, Vandegrift executed on behalf of the shippers a series of customs bonds underwritten by Hartford. In exchange for premium payments, Hartford agreed to serve as surety for any anti-dumping duties owed by the shippers. On August 17, 2006, however, Congress enacted the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780, which suspended new shippers' option of posting a bond for the period from April 1, 2006, until June 30, 2009. 19 U.S.C. § 1675 note. The new legislation was retroactive and covered a period for which the shippers had already purchased bonds. According to Vandegrift, its clients paid premiums totaling $839,548 for bonds that were rendered ineffective by the new legislation (Compl. ¶ 10) and owe more than $1,000,000 in premiums for the bonds (Compl. ¶ 11). On behalf of the shippers, Vandegrift now seeks repayment of the premiums and a declaratory judgment regarding the premiums that have not yet been paid. The defendants move to dismiss.


Challenges to Article III standing and diversity jurisdiction are properly brought under Rule 12(b)(1). See Alliance for Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 89 n.6 (2d Cir. 2006) (Article III standing). "When jurisdiction is challenged, the plaintiff 'bears the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists,' and the district court may examine evidence outside of the pleadings to make this determination." Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008) (citations omitted) (quoting APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003)). "[J]urisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Id. (quoting Potter, 343 F.3d at 623) (internal quotation marks omitted).

A real-party-in-interest defense can be raised through a motion to dismiss under Rule 12(b)(6). Whelan v. Abell, 953 F.2d 663, 672 (D.C. Cir. 1992); 6A Wright, Miller & Kane, Federal Practice and Procedure § 1554 (2008); see also Tagare v. NYNEX Network Sys. Co., 921 F. Supp. 1146, 1149 (S.D.N.Y. 1996). When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true the factual allegations in the complaint and draws all inferences in favor of the plaintiff. Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006) (quoting Karedes v. Ackerley Group, Inc., 423 F.3d 107, 113 (2d Cir. 2005)). A plaintiff must provide "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1960 (2007). The Court employs a "flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157--58 (2d Cir. 2007). When materials outside of the pleadings are presented to the Court, the motion should be treated as a motion for summary judgment. Fed. R. Civ. P. 12(d). Conversion to a motion for summary judgment is not required, however, when the complaint relies on the extraneous documents and the documents are integral to the complaint. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 1991).


The discussion is divided in two parts. First, Vandegrift lacks Article III standing because it has not established an injury in fact. Second, Vandegrift is not a real party in interest under Rule 17(a). In light of Vandegrift's failure to establish Article III standing, this Court need not reach the question whether Vandegrift has established diversity jurisdiction.

A. Vandegrift Lacks Article III Standing Because It Has Not Established an Injury in Fact

Standing under Article III of the Constitution consists of three elements: "(1) injury-in-fact, which is a 'concrete and particularized' harm to a 'legally protected interest'; (2) causation in the form of a 'fairly traceable' connection between the asserted injury-in-fact and the alleged actions of the defendant; and (3) redressability, or a non-speculative likelihood that the injury can be remedied by the requested relief." W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100, 106--07 (2d Cir. 2008) (emphases omitted) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560--61 (1992)). "These requirements ensure that a plaintiff has a sufficiently personal stake in the outcome of the suit so that the parties are adverse." Id. at 107 (citing Baker v. Carr, 369 U.S. 186, 204 (1962)). "As a general rule, the 'injury-in-fact' requirement means that a plaintiff must have personally suffered an injury." Id. (citing Lujan, 504 U.S. at 560 n.1; Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 472 (1982); Baker, 369 U.S. at 204).

Vandegrift has not alleged a concrete injury sufficient to plead an injury in fact. The shippers, not Vandegrift, were the parties harmed by the defendants' failure to return the premium payments. Vandegrift has not been assigned any interest in the claim for the return of premium payments, and Vandegrift concedes that it is bound to transmit any repayment to the shippers. (Pl. Memo. at 6). Likewise, Vandegrift has not alleged an injury in fact stemming from the defendants' attempts to collect premiums that have not yet been paid. In its complaint, Vandegrift alleges that any attempt to collect such premiums from the shippers "will interfere with Vandegrift's business relationships and runs the risk that Vandegrift will suffer injury and damage in its relationships with its customers." (Compl. at ¶ 27). Vandegrift elaborates that "[t]he damage Vandegrift will suffer, because of the nature of its business, would be very difficult, if not impossible to quantify." (Compl. at ¶ 28). This allegation is insufficient because an injury in fact must be "concrete and particularized . . . and [ ] actual or imminent, not conjectural or hypothetical." Coal. of Watershed Towns v. EPA, 552 F.3d 216, 217 (2d Cir. 2008) (omission and alteration in original) (quoting Lujan, 504 U.S. at 560) (internal quotation marks omitted). Vandegrift does not give any suggestion how its business relationships would be harmed. It is highly speculative that Vandegrift would be blamed for defendants' collection efforts, given that Vandegrift obtained the bonds at a time when their use was explicitly authorized by federal law. Vandegrift's allegations are conjectural, insufficiently concrete, and vague. See Friends of Hamilton Grange v. Salazar, 2009 WL 650262, *14 (S.D.N.Y. Mar. 12, 2009) (vague allegations insufficient); Jones v. Stancik, 2004 WL 2287779, *5 (E.D.N.Y. Oct. 4, 2004) (same).

Vandegrift advances several unpersuasive arguments in favor of Article III standing. First, Vandegrift argues that its status as attorney in fact for the shippers enables it to bring this action in its own name. Even assuming, however, that Vandegrift's power of attorney contemplates the capacity to bring a judicial action,*fn1 the power of attorney does not confer Article III standing. "[A] mere power-of-attorney - i.e., an instrument that authorizes the grantee to act as an agent or an attorney-in-fact for the grantor - does not confer standing to sue in the holder's own right because a power-of-attorney does not transfer an ownership ...

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