Personal Jurisdiction Over a Foreign Ship Manager: A Claim-By-Claim Analysis

May 16, 2019

Douglas P. Matthews of King & Jurgens

Offshore Winds Blog

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Carmona v. Leo Ship Mgmt, Inc.; No. 18-20248, 2019 WL 2067296* (5th Cir. May 10, 2019).

NOTE: This post was co-authored by William L. Pardue, a Loyola University New Orleans College of Law student who is spending part of his summer working at King & Jurgens. 

This Fifth Circuit decision addressing a court’s personal jurisdiction over a foreign company proceeds from the U.S. District Court for the Southern District of Texas. In 2014, Jose Carmona, a longshoreman, was injured when a bundle of pipes he was rigging for discharge from the hold of a vessel broke free and fell, injuring his ankle and lower leg. Carmona sued the ship’s manager, Leon Ship Management (“LSM”), in state court in Houston pursuant to 33 USC 905(b) of the Longshore and Harbor Workers’ Compensation Act, alleging that LSM breached its duty to: (1) properly stow the pipes; (2) minimize hazards associated with falling pipes; (3) take precautions to protect workers; (4) provide a safe work environment; (5) turn over the vessel in a safe condition for discharging cargo; (6) warn of hidden dangers; and (7) intervene. LSM was a Philippine company with no business presence in Texas. It had contracted with the ship’s ownership interests to provide crew in addition to other necessities.

Following removal, the district court subsequently dismissed the case for lack of personal jurisdiction. The Fifth Circuit reversed and remanded, in part, holding that (i) defendant purposely availed itself of the benefits and protections of Texas, and (ii) the defendant’s failure to minimize cargo hazards or take safety precautions to protect workers also arose from defendant’s contacts with Texas. The court, however, affirmed the lower court’s decision dismissing the claim involving improper stowage as this activity did not occur in Texas and was performed by a different company.

The specific issue in this case was whether, notwithstanding the occurrence of an accident in the forum state, the alleged act of the foreign defendant resulted from a purposefulness of the defendant’s presence in the forum. In other words, should jurisdiction be established by the defendant’s mere presence in the forum or should there be an accepted purpose for the defendant’s presence. The court noted that, although tortious conduct within a forum ensures the existence of contacts, it does not always guarantee that such contacts were deliberate.

Here, LSM purposely availed itself of the benefits and protections availed by the State of Texas when its employees voluntarily entered the jurisdiction aboard the vessel. The court further noted that, although LSM did not have any control over the vessel’s itinerary, nor control over the vessel’s course under the ship management agreement, it nonetheless was required to share relevant information regarding the ship’s schedule and port information with the owner of the vessel. Since LSM knew about the planned route to Texas to deliver cargo, it purposely directed its activities at the forum state. Furthermore, LSM’s employee was alleged to have inspected the cargo before discharge operations began. Accordingly, the court found that LSM purposely availed itself to the state’s benefits and protections, because it reasonably should have anticipated being “hauled into court for torts committed there.”

With regard to the issue of specific jurisdiction, the court noted that “[a] plaintiff bringing multiple claims that arise out of different forum contacts of the defendant (as is the case here) must establish specific jurisdiction of each claim.” The parties do not dispute that a third party stowed the pipes outside the United States. Thus, the claim that the pipes were improperly stowed resulting in the tort does not stem from LSM’s activities in Texas. As such, the Fifth Circuit affirmed this holding and remanded the case to the district court to determine whether the exercise of personal jurisdiction with regard to the other claims of Carmona met with “traditional notions of fair play and substantial justice,” that had yet to be addressed.