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noting that courts “have consistently concluded that the Montreal Convention affords subject matter jurisdiction, not personal jurisdiction”
Summary of this case from Assaf v. Port Auth. of N.Y. & N.J.Opinion
16 Civ. 9791(NRB)
04-05-2018
ROYAL & SUN ALLIANCE INSURANCE PLC, Plaintiff, v. UPS SUPPLY CHAIN SOLUTIONS, INC., Defendant. UPS SUPPLY CHAIN SOLUTIONS, INC., Third-Party Plaintiff, v. AMERIJET INTERNATIONAL, INC., and ROES 1-10, inclusive, Third-Party Defendants.
MEMORANDUM AND ORDER
Pending is third-party defendant Amerijet International, Inc.'s ("Amerijet") motion to dismiss third-party plaintiff UPS Supply Chain Solutions, Inc.'s ("UPS-SCS") impleader for lack of personal jurisdiction. In resolving this motion, we decide whether an impleader complaint for indemnification and contribution, in the context of a subrogation suit, can be considered the "situs of the injury," or the place of the "original event" causing injury, for purposes of N.Y. C.P.L.R. § 302(a)(3). Because we conclude it cannot, Amerijet's motion is granted.
Subrogation is the "substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor." New England Ins. Co. v. Healthcare Underwriters Mut. Ins. Co., 352 F.3d 599, 607 n.6 (2d Cir. 2003) (internal quotation marks omitted) (quoting Subrogation, Black's Law Dictionary (7th ed. 1999)).
BACKGROUND
I. Factual Background
In 2014, plaintiff Royal & Sun Alliance Insurance Company PLC's ("RSA") subrogor, McNeil Healthcare LLC ("McNeil"), contracted with UPS-SCS to transport two shipments of Natrosol 250 L from Antwerp, Belgium to Las Piedras, Puerto Rico by way of Miami, Florida. See Compl. ¶¶ 1, 3, 12-13. UPS-SCS, in turn, subcontracted with Amerijet to convey the first shipment from Miami to San Juan, Puerto Rico. See Dkt. No. 52 at 1. The shipments departed Antwerp on December 16, 2014, and January 22, 2015, and arrived in Las Piedras on December 30, 2014, and February 11, 2015, respectively. Compl. ¶¶ 12-13, 15-16. During the course of transportation, however, both shipments sustained damage. Id. ¶ 14.
UPS-SCS is "believed to be a Delaware corporation with its principal place of business at Alpharetta, Georgia." Id. ¶ 4. The "terms applicable" to the dispute between UPS-SCS and McNeil (and thus RSA) "provide for venue and jurisdiction in the United States District Court for the Southern District of New York." Id. ¶ 10.
Amerijet is "a certified domestic air carrier in the business of domestic and international carriage of cargo by air," and is a corporation organized under the laws of the State of Florida, with a principal place of business and headquarters in Fort Lauderdale, Florida, and a hub of flight operations at Miami International Airport. Declaration of Jeannine Lascano ("Lascano Decl.") ¶¶ 3-6, Dkt. No. 47. While Amerijet has branch offices in Jamaica, Queens and in Brooklyn, New York, "the air waybills, which were issued by [UPS-SCS] and not Amerijet, were not issued in New York, did not involve any New York entities, and the Shipment was not flown to, from[,] or through New York." Id. ¶¶ 7, 14. "No Amerijet employees in New York had any involvement with regard to the issuance of the air waybills or the Shipment itself." Id. ¶ 15.
Ms. Lascano is the "Cargo Claim Administrator" for Amerijet. Lascano Decl. ¶ 1.
II. Procedural Posture
In December 2016, RSA filed a complaint against UPS-SCS arising out of the damaged shipments. See Dkt. No. 1. In September 2017, we granted UPS-SCS leave, pursuant to Rule 14(a)(1) of the Federal Rules of Civil Procedure, to implead Amerijet. See Royal & Sun Alliance Ins. PLC v. UPS Supply Chain Sols., Inc., No. 16 Civ. 9791(NRB), 2017 WL 4418388, at *1 (S.D.N.Y. Sept. 19, 2017). UPS-SCS filed its third-party complaint against Amerijet and ROES 1-10 on October 2, 2017, seeking indemnification, contribution, and declaratory relief. See Dkt. No. 35.
In a November 2017 letter motion, Amerijet sought leave to move to dismiss the third-party complaint on two grounds: lack of personal jurisdiction, and timeliness under its contracts of carriage with UPS-SCS. See Dkt. No. 41. During a December 7, 2017 telephone conference, we directed Amerijet and UPS-SCS to submit letter briefs on the issues of whether this Court could exercise personal jurisdiction over Amerijet, and whether the third-party complaint was timely under the applicable contracts of carriage, as well as the Montreal Convention.
The Montreal Convention, the successor to the Warsaw Convention, is an international treaty governing international air carrier liability. Weiss v. El Al Israel Airlines, 433 F. Supp. 2d 361, 364 (S.D.N.Y. 2006), aff'd, 309 F. App'x 483 (2d Cir. 2009). It was created to limit airline accident liability while protecting the rights of passengers and shippers utilizing international air cargo. Id.
During a February 28, 2018 telephone conference, we informed the parties of our considered opinion that personal jurisdiction does not exist over Amerijet, thus mooting the timeliness issue. Counsel for UPS-SCS requested that we issue a formal Memorandum and Order. This opinion is in response to that request.
DISCUSSION
On a motion to dismiss for lack of personal jurisdiction, the third-party plaintiff "bears the burden of demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit." Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010) (citing In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003) (per curiam)). At the pleading stage—and prior to discovery—a third-party plaintiff need only make a prima facie showing that jurisdiction exists. Dorchester Fin. Sec. Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84-85 (2d Cir. 2013). Where, as here, the court considers only pleadings and affidavits, the prima facie showing "must include an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction" over the third-party defendant. In re Terrorist Attacks on September 11, 2001, 714 F.3d 659, 673 (2d Cir. 2013) (quoting Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010)).
A federal district court may exercise personal jurisdiction over a foreign defendant only if (1) the defendant is subject to jurisdiction under the laws of the forum state, here, New York, and (2) the exercise of personal jurisdiction comports with the Due Process Clause of the United States Constitution. See Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224 (2d Cir. 2014).
I. New York Law
UPS-SCS asserts that personal jurisdiction is proper over Amerijet pursuant to New York's long arm statute, N.Y. C.P.L.R. § 302(a)(3)(i). "Courts within New York have interpreted this provision as requiring four elements: (1) that the defendant committed a tortious act outside New York; (2) that the cause of action arises from that act; (3) that the act caused injury to a person or property in New York; and (4) that the defendant regularly does or solicits business, or engages in any other persistent course of conduct in the state." Hui Ye v. Gold Scollar Moshan PLLC, No. 14 Civ. 7683(JFK), 2015 WL 6619579, at *2 (S.D.N.Y. Oct. 30, 2015) (citing Virgin Enters. Ltd. v. Virgin Eyes LAC, No. 08 CV 8564(LAP), 2009 WL 3241529, at *5 (S.D.N.Y. Sept. 30, 2009)). Only the third requirement, whether the act caused injury in New York, is at issue here.
"[T]he situs of injury for purposes of asserting long arm jurisdiction is the place where the underlying, original event occurred which caused the injury." M & M Packaging, Inc. v. Kole, 298 F. App'x 39, 42 (2d Cir. 2008) (quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 209 (2d Cir. 2001)). This "original event" is "generally distinguished" from "the final economic injury and the felt consequences of the tort." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 791 (2d Cir. 1999) (citing Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683 (2d Dep't 1987)). In other words, "[t]he situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are felt by the plaintiff." M & M Packaging, 298 F. App'x at 42 (quoting Whitaker, 462 F.3d at 209).
"When . . . a [defendant / third-party plaintiff] files a third-party action seeking indemnification, the relevant 'injury' for the purpose of § 302(a)(3) is the one complained of in the primary action." UTC Fire & Sec. Ams. Corp. v. NCS Power, Inc., 844 F. Supp. 2d 366, 373 n.5 (S.D.N.Y. 2012); see Gould v. Moran Towing Corp., No. 12-CV-5046 (JO), 2014 WL 1343130, at *3 (E.D.N.Y. Apr. 3, 2014); Kohn v. Unique Truckers, Riggers & Millwrights, Inc., No. 98-CV-3484, 1998 WL 661517, at *2 (E.D.N.Y. July 29, 1998); Chunky Corp. v. Blumenthal Bros. Chocolate Co., 299 F. Supp. 110, 114 (S.D.N.Y. 1969).
Therefore, the "original event" for the purposes of both RSA's action against UPS-SCS, as well as UPS-SCS's impleader against Amerijet, is the damage to the Natrosol 250 L shipment en route to Puerto Rico. While it is not clear precisely where the situs of this injury occurred, it was somewhere between Miami and San Juan. It is clear that it did not occur in New York. Thus, N.Y. C.P.L.R. § 302(a)(3)'s requirement of an in-state injury is not satisfied.
For the purpose of RSA's complaint, the "original event" could have occurred anywhere between Antwerp and Las Piedras; Amerijet, however, was only responsible for carrying the cargo from Miami to San Juan. See Dkt. No. 52 at 1.
UPS-SCS, however, argues that it has suffered an in-state injury because it "does not seek compensation for damage sustained to the Natrosol cargo (during its transmit from Miami to Puerto Rico) but rather seeks indemnification and contribution from Amerijet, as an actual carrier, for compensation it may be required to pay to RSA as the contract carrier as a result of the underlying New York litigation." Dkt. No. 52 at 3. Put somewhat differently, according to UPS-SCS, the relevant injury is the prospective judgment that could be entered against UPS-SCS by a court sitting in New York, for which it would seek indemnification and contribution. That argument is borderline frivolous. Taken to its logical conclusion, UPS-SCS's interpretation of N.Y. C.P.L.R. § 302(a)(3) would render the injury requirement a nullity in the impleader context as it would always be satisfied if such prospective liability were sufficient. See 3 Moore's Federal Practice § 14.03[1] (Matthew Bender 3d ed.). We reject a reading of Section 302(a)(3) that is so plainly inconsistent with the basic rules of statutory interpretation. See United States v. Roberts, 442 F.3d 128, 131 (2d Cir. 2006).
Finally, in a footnote, UPS-SCS suggests that "an argument can be made" that the Montreal Convention "can be interpreted to establish personal jurisdiction over Amerijet," and "reserves its argument . . . for subsequent briefing should it be required." Dkt. No. 52 at 2 n.2. As an initial matter, "there is no basis in law for a party to reserve issues that it could have argued but did not. On the contrary, counsel's failure to timely raise and fully address an issue ordinarily forfeits a party's right to have that issue decided by the court." Corsair Special Situations Fund, L.P. v. Engineered Framing Sys. Inc., No. 3:11-CV-1980 (JCH), 2013 WL 6773570, at *4 n.4 (D. Conn. Dec. 19, 2013), aff'd sub nom. Corsair Special Situations Fund, L.P. v. Nat'l Res., 595 F. App'x 40 (2d Cir. 2014). Regardless, courts have consistently concluded that the Montreal Convention affords subject matter jurisdiction, not personal jurisdiction. See, e.g., Tucker v. British Airways PLC, No. 2:16-cv-00618 RAJ, 2017 WL 6389302, at *3 (W.D. Wash. Dec. 14, 2017) ("[T]he Montreal Convention establishes subject matter jurisdiction; it does not confer personal jurisdiction."); Cordice v. LIAT Airlines, No. 14-cv-2924 (RRM)(LB), 2015 WL 5579868, at *1 n.2 (E.D.N.Y. Sept. 22, 2015) ("[T]he Court need not conduct an exhaustive analysis under [the Montreal] Convention to determine subject matter jurisdiction as plaintiff's claims fail for lack of personal jurisdiction."); Weinberg v. Grand Circle Travel, LCC, 891 F. Supp. 2d 228, 237-38 (D. Mass. 2012) ("Even if plaintiffs establish subject matter jurisdiction under the Montreal Convention, the court still has to address the issue of personal jurisdiction.").
For the same reason, we decline UPS-SCS's request for additional briefing regarding a potential venue transfer pursuant to 28 U.S.C. §§ 1404(a), 1406(a), and/or 1631, as well as "whether the parties should engage in the common-law practice of voucher." Dkt. No. 52 at 5 n.6.
II. Due Process
As exercising jurisdiction over Amerijet would be inconsistent with New York State's personal jurisdiction rules, we need not, and do not, consider whether jurisdiction would comport with due process. See Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242 (2d Cir. 2007) (a court conducts the due process analysis "if, but only if," it has concluded that jurisdiction is appropriate under New York law).
We note that a construction of New York's long-arm statute as UPS-SCS suggests might well raise due process concerns.
CONCLUSION
For the foregoing reasons, Amerijet's motion to dismiss is granted. The remaining parties are directed to file a discovery status update within seven calendar days of this Memorandum and Order. The Clerk of the Court is respectfully directed to terminate docket number 41 and to terminate Amerijet as a party to this action. Dated: New York, New York
April 5, 2018
/s/_________
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE