Global Oil Tools, Inc. v. Expeditors International of Washington, Inc. et alREPLY to Response to MotionE.D. La.February 27, 2019- 1 - PD.25447554.2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA GLOBAL OIL TOOLS, INC. VERSUS EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., ET AL. CIVIL ACTION NO. 16-cv-16372 SECTION “M” HONORABLE BARRY W. ASHE MAGISTRATE JUDGE (1) HONORABLE JANIS VAN MEERVELD REPLY MEMORANDUM OF HAPAG-LLOYD (AMERICA), LLC IN SUPPORT OF MOTION TO DISMISS CROSSCLAIMS OF EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND ANDREA MERZARIO, S.A., AND, ALTERNATIVELY, FOR PARTIAL SUMMARY JUDGMENT TO LIMIT RECOVERABLE DAMAGES MAY IT PLEASE THE COURT: I. INTRODUCTION In opposing the motion to dismiss, Expeditors does not dispute that the forum selection clause at issue is mandatory, presumptively valid by virtue of long-established Supreme Court precedent and reasonable, thus conceding these points to Hapag-Lloyd. Expeditors contends the Court should nevertheless decline to enforce the clause, notwithstanding that this would require the Court to, in effect, ignore contrary legal precedent and the clear contractual intent of the parties. Expeditors rests its argument almost entirely on the contention Hapag-Lloyd has waived the right to seek a dismissal. In urging this extraordinary departure from established law, however, Expeditors is unable to cite the Court to even a single case in which a court declined to enforce a forum selection clause on the grounds of waiver. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 1 of 9 - 2 - PD.25447554.2 We respectfully submit this Court should not be the first to break this new ground as urged by Expeditors but should instead follow the long line of decisions which support granting the relief Hapag-Lloyd requests. II. HAPAG-LLOYD HAS NOT WAIVED THE RIGHT TO ENFORCE THE FORUM SELECTION CLAUSE While Expeditors cites precedents that stand for the general proposition that forum selection clauses can be waived under certain circumstances, in the only case cited by Expeditors in which a court actually analyzed the issue, the court held there was no waiver.1 Waiver requires evidence of actual intent on the part of Hapag-Lloyd to relinquish the right to enforce the forum selection clause (obviously lacking here since Hapag-Lloyd has moved for dismissal) or evidence that Hapag-Lloyd “substantially” invoked the judicial process to the prejudice of its contractual counter-party. Expeditors has failed to meet either of these heightened standards and failed to meet the “heavy burden of proof” required to thwart enforcement of a valid forum selection clause. Martin v. Scenic Tours USA Inc., 2018 U.S. Dist. LEXIS 213506, at *25 (E.D. La. Dec. 19, 2018) (holding party resisting enforcement of forum selection clause, such as Expeditors, bears a “heavy burden of proof”). Addressing whether a forum selection clause had been waived, another section of this Court recently noted there is “a ‘strong public policy’ in favor of enforcing forum selection clauses, and as such, waiver of a forum selection clause ‘should not be found lightly.’” Id. at *23-24 (citing Wachovia Bank Nat’l Ass’n v. EnCap Golf Holdings, LLC, 690 F. Supp. 2d 311, 327 (S.D.N.Y. 2010) (internal citations omitted)). Hapag-Lloyd never relinquished and never intended to relinquish the right to enforce the forum selection clause. To the contrary, Hapag-Lloyd specifically raised and preserved the 1 SGIC Strategic Glob. Inv. Capital, Inc. v. Burger King Eur. GmbH, 839 F.3d 422 (5th Cir. 2016). Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 2 of 9 - 3 - PD.25447554.2 forum selection clause defense in its answer to Expeditors’ crossclaim. See Rec. Doc. 32, p. 2 of 4, Sixth Defense. Another district court has found this to be significant and has held that a party did not waive the right to enforce a forum selection clause when it raised the defense in its answer. Indus. Print Techs. LLC v. Canon U.S.A., Inc., 2014 U.S. Dist. LEXIS 175842, at *12 (E.D. Tex. Dec. 19, 2014). This, the court held, put the parties and the court on notice of the defendant’s intent to seek enforcement of the clause. Id. Expeditors’ statement that Hapag-Lloyd has been in this litigation for almost two years is somewhat misleading. The issue is not how long Hapag-Lloyd has been in the case but when did Expeditors assert its crossclaim and what has gone on in the litigation since then. Hapag-Lloyd answered Expeditors’ crossclaim on May 30, 2017 [Rec. Doc. 32] and did not file its final pleading, an answer to Merzario’s crossclaim, until November 1, 2017 [Rec. Doc. 53]. In December of 2017, the Court continued a scheduling conference for over a month into January of 2018. [Rec. Doc. 73]. Just eight months later, in August of 2018, the matter was continued by Judge Vance for six months due to an illness on the part of plaintiff’s counsel. [Rec. Doc. 125]. Prior to that order, no depositions were taken, and, in fact, none have been taken to date. During that six month period, nothing substantive happened in the case, and it would have been inappropriate if not impossible under the circumstances for Hapag-Lloyd to file the motion, or any other motion for that matter. In addition, counsel for Expeditors filed two separate “Notices of Unavailability,” informing the parties that counsel was unavailable between June 1, 2018 and July 9, 2018 [Rec. Doc. 117] and between December 2, 2018 and December 31, 2018 [Rec. Doc. 148]. Expeditors’ counsel therefore requested that no motions be filed or set for hearing during those times. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 3 of 9 - 4 - PD.25447554.2 In sum, Hapag-Lloyd has been a cross-defendant as to Expeditors for only one and one- half years, but for many of those 18 months the case was either being held in abeyance and/or Expeditors’ counsel requested the parties not to take any action. During the time Hapag-Lloyd has been a party, neither it nor Expeditors nor any other party has participated in any significant discovery or otherwise “substantially invoke[d] the judicial process [in derogation of the forum selection clause”]. Hapag-Lloyd propounded in a single pleading a total of four (4) requests for production to Expeditors. That is the only discovery Hapag-Lloyd has propounded to Expeditors. Expeditors has not propounded any discovery at all to Hapag-Lloyd. Moreover, there have been no depositions at all taken of any witness by any party. Under these circumstances, Hapag-Lloyd cannot be found to have substantially invoked the judicial process or to have acted so inconsistently with the intent to enforce the forum selection clause that the Court would be justified in finding Hapag-Lloyd waived its contractual right to insist on litigation of its dispute with Expeditors in the courts of Hamburg, Germany. Finally, Expeditors implies that Hapag-Lloyd was somehow required to bring this motion to dismiss at the same time as its previous motion for summary judgment against Global. There is no such requirement in the Federal Rules, as is demonstrated by Expeditors’ inability to cite any supporting legal authority. And it was only prudent for Hapag-Lloyd to await the Court’s ruling on its summary judgment motion since, had that motion failed, Hapag-Lloyd might have made the decision to forego the forum selection defense and defend both the Global and the Expeditors’ claim in this jurisdiction. Expeditors has utterly failed to meet the high burden of demonstrating Hapag-Lloyd waived its contractual forum selection rights. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 4 of 9 - 5 - PD.25447554.2 III. IT IS NOT UNREASONABLE OR UNJUST TO ENFORCE THE FORUM SELECTION CLAUSE Without explication, Expeditors states in conclusory fashion that it has been prejudiced by Hapag-Lloyd’s failure to bring this motion to dismiss earlier. Because Expeditors fails to say just how it has been prejudiced, Hapag-Lloyd can only note again that virtually no discovery has taken place. Consequently, it is not the case that Expeditors has had to incur a great deal of litigation expense in this jurisdiction which will now go to waste if it must bring its claim in Germany. An even more fundamental point, however, and one which Expeditors fails to acknowledge, is that even if Hapag-Lloyd had brought its motion earlier, Expeditors would have incurred exactly the same costs because it would have had to continue its defense in this Court of the claim by Global.2 This obvious fact, coupled with the equally obvious fact Expeditors has incurred de minimis costs in responding to Hapag-Lloyd’s very limited discovery, also shows that the timing of this motion has not caused Expeditors to incur any costs that it would not have otherwise incurred. In other words, there has been no prejudice to Expeditors of any sort. Expeditors also claims that dismissal would be unfair because there is the possibility of inconsistent judgments and/or because there may be a time bar defense that could be asserted by Hapag-Lloyd later in a German court. The Fifth Circuit has already addressed these arguments and found them to be without merit. In Trafigura Beheer B.V. v. M/T PROBO ELK, 266 F. App’x 309, 312 (5th Cir. 2007), a party seeking to avoid enforcement of the forum selection clause argued that dismissal was unfair because the claim may have become time barred in 2 Rather than prejudice, it is worth noting that, if anything, Expeditors has benefitted from Hapag-Lloyd’s limited participation in this litigation. For example, Expeditors joined in Hapag-Lloyd’s successful opposition to Global Oil’s Application for Injunctive Relief [Rec. Doc. 83]. Expeditors also recently adopted Hapag-Lloyd’s Motion to Strike Global’s Experts. [Rec. Doc. 173]. The lack of litigation activity between Hapag-Lloyd and Expeditors as well as these two joinders by Expeditors in Hapag-Lloyd’s motions demonstrate the complete lack of prejudice to Expeditors. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 5 of 9 - 6 - PD.25447554.2 London, the contractually agreed forum. The Fifth Circuit dismissed the argument because the party failed to meet its burden to prove application of foreign law would be fatal to its claim. Id. at 312. It is not sufficient, the Court noted, simply to suggest that there may be a time-bar defense in the foreign forum. Id. Rather, the party asserting such an argument must formally prove it is real and not illusory. Id. The Fifth Circuit also held that the party seeking to avoid enforcement of the forum selection clause could not benefit from creating its own statute of limitations predicament by failing timely to file its claim in the contractually specified forum. See Trafigura Beheer B.V. v. M/T PROBO ELK, 266 F. App’x 309, 312 n.4 (5th Cir. 2007) (citing New Moon Shipping Co. v. Man B&W Diesel AG, 121 F.3d 24, 32 (2d Cir. 1997)(HN6 “[C]onsideration of a statute of limitations would create a large loophole for the party seeking to avoid enforcement of the forum selection clause. That party could simply postpone its cause of action until the statute of limitations has run in the chosen forum and then file its action in a more convenient forum.”) and Union Steel Am. Co. v. M/V SANKO SPRUCE, 14 F. Supp. 2d 682, 696 (D.N.J. 1998) (stating that unreasonableness “does not hinge on whether a clause is unreasonable in light of present circumstances created by plaintiff's failure to file in the correct forum”)). Here, Expeditors filed suit in a forum other than the Courts of Hamburg, Germany, which is the contractually specified forum, and therefore cannot complain of any statute of limitations predicament it created itself by filing the crossclaim in the wrong forum.3 Expeditors also argues, again without supporting authority, that the Court should decline to enforce the forum selection clause because there could potentially be inconsistent judgments if 3 To avoid any possible inference that Hapag-Lloyd has ulterior motives in bringing this motion when it did and not earlier, we are authorized on behalf of Hapag-Lloyd to say that it will not raise a time bar defense in any action Expeditors may bring in a court of proper jurisdiction in Germany so long as such a claim is brought, if at all, within six months of either a settlement or entry of a final judgment in this case. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 6 of 9 - 7 - PD.25447554.2 it had to assert its claim in Germany and because to dismiss Hapag-Lloyd would result in a waste of judicial resources. These arguments have also been rejected previously. In Royal SMIT Transformers BV v. HC BEA-LUNA M/V, 2017 U.S. Dist. LEXIS 29506, (E.D. La. Mar. 2, 2017), the plaintiff sued four defendants. The plaintiff and one defendant were bound by an enforceable forum selection clause which did not apply to the other three defendants. Id. at *3. The one defendant moved to transfer venue pursuant to the forum selection clause, but the plaintiff and the other three defendants opposed the motion, arguing it would be inconvenient and inefficient to sever the claims against the single defendant to proceed in a different forum. Id. at *4-5. Judge Africk of this District rejected the argument, severed the case against the one defendant and transferred it to the contractually agreed forum. Id. at *16-17. The Court held that only in “extraordinary circumstances” should a valid forum selection clause not be given effect and that the enforceability of a forum selection clause should not normally turn on the presence of other parties in the litigation. Id. Further, the court held that if judicial economy trumped the forum selection clause in that case, then it was difficult for the Court to see why it would not do so in every case. Id. at *16.4 IV. THE MOTION MUST ALSO BE GRANTED AS TO MERZARIO Merzario has not responded to Hapag-Lloyd’s motion and on that basis Hapag-Lloyd is entitled to dismissal of Merzario’s claim. 4 Also see In re Rolls Royce Corp., 775 F.3d 671, 679 (5th Cir. 2014). Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 7 of 9 - 8 - PD.25447554.2 V. CONCLUSION Expeditors implicitly concedes the forum selection clause is valid and mandatory but seeks to avoid enforcement on the grounds Hapag-Lloyd waived the right to assert the venue defense. The argument does not withstand scrutiny. A forum selection clause is presumptively valid and should be enforced in all but extraordinary circumstances, as many courts have held. The burden of proving waiver is a heavy one, and it rests solely with Expeditors. In this case, there has been very minimal discovery and no depositions at all by any party so Expeditors cannot credibly argue that Hapag-Lloyd participated in the litigation to such a degree that it waived its right to compel that its dispute with Expeditors be litigated in the forum to which they agreed. In any case, Expeditors would have incurred precisely the same costs as it has to this point, even if Hapag-Lloyd had brought this motion before now, because it would have remained a defendant as to Global. We respectfully submit that the law is clear, that this is not a close question and the crossclaims of Expeditors and Merzario should be dismissed. Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 8 of 9 - 9 - PD.25447554.2 Respectfully submitted, this the 26th day of February, 2019. PHELPS DUNBAR LLP BY: s/ Michael Held Gary A. Hemphill, LA Bar #6768 Michael Held, LA Bar #37466 365 Canal Street • Suite 2000 New Orleans, Louisiana 70130-6534 Telephone: (504) 566-1311 Telecopier: (504) 568-9130 Email: gary.hemphill@phelps.com michael.held@phelps.com ATTORNEYS FOR DEFENDANT, HAPAG-LLOYD (AMERICA), LLC CERTIFICATE OF SERVICE This is to certify that a copy of the foregoing was filed on this 26th day of February, 2019, with the Clerk of Court by using the ECF system, which will send notice of electronic filing to all participating counsel of record; and I hereby certify that I have sent via UPS and transmitted electronically the document to the following non-ECF participants: Andrea Merzario, S.A. Via Livioi 24 CH 6830 Chiasso SWITZERLAND Attn: Mr. Davide Borella Operational Department 0041 91 696 1001 dborella@andreamerzario.com s/ Michael Held MICHAEL HELD Case 2:16-cv-16372-BWA-JVM Document 191 Filed 02/27/19 Page 9 of 9