Opinion
12-cv-8892 (SAS)
08-19-2015
IN RE M/V MSC FLAMINIA
-Appearances- For Defendant/Claimant Mediterranean Shipping Company: Edward P. Flood, Esq. Jon Werner, Esq. John R. Foster, Esq. Lyons & Flood LLP 1 Exchange Plaza 55 Broadway, Suite 1501 New York, NY 10006 (212) 594-2400 For Defendant/Claimant Deltech: Joseph J. Perrone, Esq. Timothy J. McDonnell, Esq. Matthew M. Gordon, Esq. Giuliano McDonnell & Perrone, LLP 494 Eighth Avenue, Seventh Floor New York, NY 10001 (646) 328-0120 For Defendant/Claimant Stolt: John A. V. Nicoletti, Esq. James F. Sweeney, Esq. Robert A. Novak, Esq. David S. Wenger, Esq. Nicoletti, Hornig & Sweeney Wall Street Plaza 88 Pine Street, Seventh Floor New York, NY 10005 (212) 220-3780
OPINION AND ORDER SHIRA A. SCHEINDLIN, U.S.D.J. :
I. INTRODUCTION
On July 14, 2012, an explosion and fire broke out aboard the M/V MSC Flaminia (the "Vessel"), resulting in the deaths of three crew members, injuries to several others, and extensive damage to the Vessel and its cargo. This action was initiated in December 2012, and as the complicated procedural history of this case demonstrates, an enormous number of entities and issues have been implicated by the accident. Because the instant motion to dismiss concerns just two specific crossclaims - brought by defendant/claimants Deltech Corporation, Deltech Europe, Ltd., and National Fire Insurance Co. of Pittsburgh, PA in its capacity as subrogee ("Deltech") and Stolt Tank Containers BV, Stolt Tank Containers France SAS, Stolt Nielsen USA, Inc., Stolt Tank Containers Germany GmbH, and National Union Fire Insurance Co. of Pittsburgh, PA in its capacity as subrogee ("Stolt") against defendant/claimant Mediterranean Shipping Company, S.A. ("MSC") - I will outline only those facts necessary to decide this motion.
See Complaint for Exoneration from or Limitation of Liability ¶¶ 7-10.
At the time of the accident, the Vessel was being chartered by MSC. Although the source of the explosion and fire remains unknown, the investigation has focused on three containers of divinylbenzene ("DVB") that were loaded onto the Vessel at a New Orleans, Louisiana, terminal operated by New Orleans Terminal, LLC ("NOT"). NOT had been contracted by MSC to provide exclusive stevedoring services for all MSC ships docking at that location.
See id. ¶ 7.
See Stolt's First Amended Crossclaims Against Defendant/Claimant Mediterranean Shipping Company S.A. ("Stolt's Amended Crossclaims") ¶¶ 3, 27.
See id. ¶ 40.
In May 2013, MSC asserted crossclaims against Deltech and Stolt relating to their respective roles as the manufacturer and shipper of the DVB cargoes. Subsequently, Deltech and Stolt each asserted crossclaims against MSC, including two virtually identical amended crossclaims - Deltech's Fifth Crossclaim and Stolt's Fourth Crossclaim (the "Agency Crossclaims") - concerning MSC's corporate relationship to NOT and its liability for NOT's contribution to the accident. MSC now moves to dismiss the Agency Crossclaims under Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, MSC's motion to dismiss is DENIED.
See MSC's Crossclaims Against Stolt Tank Containers B.V. and Deltech Corporation ¶¶ 9-10.
See Deltech's Amended Crossclaims Against MSC ("Deltech's Amended Crossclaims") ¶¶ 50-71; Stolt's Amended Crossclaims ¶¶ 26-45.
II. LEGAL STANDARD
A. Motion to Dismiss Under Rule 12(b)(6)
In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must "accept[] all factual allegations in the complaint as true and draw[] all reasonable inferences in the plaintiff's favor." The court evaluates the sufficiency of the complaint under the "two-pronged approach" set forth by the Supreme Court in Ashcroft v. Iqbal. Under the first prong, a court may "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." For example, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Under the second prong of Iqbal, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief." A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Plausibility requires "more than a sheer possibility that a defendant has acted unlawfully."
Grant v. County of Erie, 542 Fed. App'x 21, 23 (2d Cir. 2013).
See 556 U.S. 662, 678-79 (2009).
Id. at 679.
Id. at 678 (citation omitted).
Id. at 679.
Id. at 678 (citation omitted).
Id. (quotation marks omitted).
When deciding a motion to dismiss, "a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." A court may also consider a document that is not incorporated by reference "where the complaint 'relies heavily upon its terms and effect,' thereby rendering the document 'integral' to the complaint." Further, "[a] court presented with a motion to dismiss must examine the complaint to determine whether the allegations provide a basis for relief under any possible theory."
DiFolco v. MSNBC Cable LLC, 622 F.3d 104, 111 (2d Cir. 2010) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002)).
Id. (quoting Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006)).
Magee v. Nassau Cnty. Med. Ctr., 27 F. Supp. 2d 154, 160 (E.D.N.Y. 1998) (citing Marbury Mgmt., Inc. v. Kohn, 629 F.2d 705, 712 n.4 (2d Cir.1980)). Accord Abshier v. Sunset Recordings, No. 14 Civ. 3227, 2014 WL 4230124 at *1 (S.D.N.Y. Aug. 5, 2014) ("Because [plaintiff] fails to state a claim on any theory of relief . . . defendants' motion to dismiss is granted."). See also Avila v. Lease Fin. Grp., No. 11 Civ. 8125, 2012 WL 3165408 at *5 (S.D.N.Y. July 31, 2012) ("[I]f plaintiff has pled any plausible claim against . . . defendant[], he will be allowed to amend his complaint as to those claims.").
III. APPLICABLE LAW
A. Vicarious Liability
"It is well established that traditional vicarious liability rules ordinarily make principals or employers vicariously liable for acts of their agents . . . in the scope of their authority." To state a claim for vicarious liability, plaintiffs must allege sufficient facts to show that the principal manifested an intent to grant the agent authority, the agent agreed, and the principal "maintain[ed] control over key aspects of the undertaking."
Meyer v. Holley, 537 U.S. 280, 285 (2003).
Commercial Union Ins. Co. v. Alitalia Airlines, 347 F.3d 448, 462 (2d Cir. 2003).
In the context of a parent-subsidiary corporate structure,
the relationship of principal and agent does not obtain unless the parent has manifested its desire for the subsidiaryAlthough the principal-agent inquiry is inherently fact-specific, circumstantial evidence of such a relationship between a parent and its subsidiary may "include[] the exclusive dedication of a subsidiary to assisting the parent company, payment of the subsidiary's expenses by the parent company, and requests for approval of the parent company for important decisions by the subsidiary."
to act upon the parent's behalf, the subsidiary has consented so to act, the parent has the right to exercise control over the subsidiary with respect to matters entrusted to the subsidiary, and the parent exercises its control in a manner more direct than by voting a majority of the stock in the subsidiary or making appointments to the subsidiary's Board of Directors.
In re South African Apartheid Litig., 617 F. Supp. 2d 228, 272 (S.D.N.Y. 2009) (quoting Transamerica Leasing v. La Republica de Venezuela, 200 F.3d 843, 849 (D.C. Cir. 2000) (citing Restatement (Second) of Agency § 1 (1958))).
Id. at 272-73 (citations omitted).
B. Imputation of Knowledge
"In general, when an agent is employed to perform certain duties for his principal and acquires knowledge material to those duties, the agent's knowledge is imputed to the principal." As a result, a principal may "be charged with notice of facts that an agent knows or has reason to know."
Apollo Fuel Oil v. United States, 195 F.3d 74, 76 (2d Cir. 2009) (citing Restatement (Second) of Agency §§ 9(3), 268, 272, 275 (1958)). Accord Reino de España v. American Bureau of Shipping, 691 F.3d 461, 473-74 (2d Cir. 2012).
Restatement (Third) of Agency § 5.03 cmt. a (2006).
IV. DISCUSSION
MSC's sole argument is that the Agency Crossclaims are insufficient to support piercing NOT's corporate veil to reach MSC. Deltech and Stolt deny any interest in piercing NOT's corporate veil and contend that they instead seek to hold MSC liable for NOT's conduct under theories of vicarious liability and imputation of knowledge. MSC's argument fails for two related reasons.
As an initial matter, MSC takes an unduly restrictive view of what Rule 12(b)(6) requires. MSC suggests that because the Agency Crossclaims allege facts that overlap with the test for whether to pierce a corporation's veil, the Agency Crossclaims necessarily fail unless they assert sufficient facts regarding this theory of liability. This argument, however, misconstrues the Rule 12(b)(6) threshold - which simply requires that pleadings contain sufficient "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." In other words, to proceed beyond the motion to dismiss stage, a complaint's factual allegations need only offer "a basis for relief under any possible theory." Thus, so long as the Agency Crossclaims give rise to a plausible claim under some theory of liability, they need not contain sufficient facts to support piercing NOT's corporate veil.
Iqbal, 556 U.S. at 678 (citation omitted).
Magee, 27 F. Supp. 2d at 160.
As such, MSC's motion to dismiss must be denied because the Agency Crossclaims establish a plausible entitlement to relief under the theories of vicarious liability and imputation of knowledge between MSC, as principal, and its agent, NOT. Although MSC has not disputed the sufficiency of the Agency Crossclaims for these purposes, I will briefly address these theories. Because the Agency Crossclaims meet Rule 12(b)(6)'s threshold for pleading claims of vicarious liability and imputation of knowledge, I will not decide at this juncture whether they will suffice to establish a claim of piercing NOT's corporate veil.
A. Vicarious Liability
The Agency Crossclaims are more than adequate to assert a principal-agent relationship between MSC and NOT, through which MSC may be held vicariously liable for NOT's role in the accident. In evaluating the existence of such a principal-agent relationship, courts have looked to factors such as "the exclusive dedication of a subsidiary to assisting the parent company, payment of the subsidiary's expenses by the parent company, and requests for approval of the parent company for important decisions by the subsidiary." The Agency Crossclaims allege a number of facts pertinent to these possible considerations, including that at all relevant times, MSC held a majority stake in NOT, oversaw NOT's general manager with respect to his budgeting, accounting, and purchasing duties, approved NOT operating budgets, seconded at least one MSC employee to NOT, maintained at least five MSC board members on NOT's board (which meant that a majority of NOT's board was comprised of MSC executives), secured an MSC board member as NOT's chairman, and hosted NOT board meetings at MSC offices. These facts plausibly establish, as Deltech and Stolt characterize it, a "relationship between MSC and NOT [that] extended far beyond an ordinary arrangement between a carrier and an independent terminal facility."
South African Apartheid Litig., 617 F. Supp. 2d at 272-73.
See Deltech's Amended Crossclaims ¶¶ 50-71; Stolt's Amended Crossclaims ¶¶ 26-45.
Memorandum of Law in Opposition to MSC's Motion to Dismiss at 3.
B. Imputation of Knowledge
In addition, the Agency Crossclaims satisfy Rule 12(b)(6)'s standard for imputing to MSC any knowledge about the DVB containers that NOT acquired in the course of its agency. Imputation of an agent's knowledge to its principal requires the existence of an agency relationship and that the information at issue concerned matters within the scope of the agency relationship. As discussed, the Agency Crossclaims support the existence of a principal-agent relationship between MSC and NOT. Further, the Agency Crossclaims allege that as part of its obligations to MSC, NOT provided exclusive stevedoring services for MSC at the New Orleans terminal where the DVB containers were loaded. Accordingly, knowledge that NOT gained about the nature and risks of these containers while performing its stevedoring duties plausibly may be imputed to MSC.
See Reino de España, 691 F.3d at 473-74. --------
V. CONCLUSION
For the foregoing reasons, MSC's motion to dismiss for failure to state a claim is DENIED. The Clerk of the Court is directed to close this motion [Docket No. 730].
SO ORDERED:
/s/_________
Shira A. Scheindlin
U.S.D.J.
Dated: New York, New York
August 19, 2015
-Appearances-
For Defendant/Claimant Mediterranean Shipping Company: Edward P. Flood, Esq.
Jon Werner, Esq.
John R. Foster, Esq.
Lyons & Flood LLP
1 Exchange Plaza
55 Broadway, Suite 1501
New York, NY 10006
(212) 594-2400
For Defendant/Claimant Deltech:
Joseph J. Perrone, Esq.
Timothy J. McDonnell, Esq.
Matthew M. Gordon, Esq.
Giuliano McDonnell & Perrone, LLP
494 Eighth Avenue, Seventh Floor
New York, NY 10001
(646) 328-0120
For Defendant/Claimant Stolt:
John A. V. Nicoletti, Esq. James F. Sweeney, Esq. Robert A. Novak, Esq. David S. Wenger, Esq. Nicoletti, Hornig & Sweeney Wall Street Plaza 88 Pine Street, Seventh Floor New York, NY 10005 (212) 220-3780