Affiliated FM Ins. Co. v. Kuehne + Nagel, Inc.
328 F. Supp. 3d 329
S.D. Ill.2018Background
- Kuehne + Nagel, Inc. (K+N) issued a Sea Waybill covering carriage of a container from Tokyo to Memphis via Los Angeles; K+N subcontracted overland logistics to AZ/CFS West, Inc. (AZ), which arranged rail carriage by BNSF.
- After safe ocean transit, the train derailed in Missouri; cargo owners and insurer sued K+N in the S.D.N.Y. under maritime jurisdiction; K+N filed a third-party complaint against AZ and BNSF for breach of contract, negligence, and indemnification and made a Rule 14(c) tender.
- Third-Party Defendants moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2); K+N relied on the Sea Waybill’s forum selection clause and Himalaya clause to assert jurisdiction.
- The Sea Waybill names the Southern District of New York as exclusive forum and contains a Himalaya clause extending benefits to unspecified subcontractors but does not name AZ or BNSF.
- The court evaluated (1) enforceability of the forum clause against non-signatory subcontractors and (2) whether New York’s long-arm statute (CPLR §302) or constitutional due process support jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Sea Waybill forum-selection clause binds non-signatory subcontractors (AZ, BNSF) | Forum clause and Himalaya clause make subcontractors parties/consenting, so they waived jurisdiction objections | Subcontractors never agreed to be bound; Himalaya grants benefits but does not impose burdens or create agency by contract | Clause unenforceable against AZ and BNSF; K+N cannot rely on it to establish jurisdiction |
| Whether the "closely related" doctrine binds subcontractors to forum clause | K+N: non-signatories closely related to signatory such that enforcement was foreseeable | Third-Party Defs: doctrine inapplicable where contractor seeks to bind its own subcontractor (Scenario Three); they had opportunity to contract separately | Court declines to extend "closely related" test to signatory contractor v. its subcontractor; not applied here |
| Whether subcontractors as third-party beneficiaries can be bound by the forum clause | K+N: Himalaya clause makes AZ and BNSF intended beneficiaries and thus subject to forum clause | Defs: being intended beneficiaries permits claiming benefits but does not bind them to burdens absent acceptance or agency | Being intended beneficiaries does not bind them; no acceptance or agency demonstrated |
| Whether New York has general or specific jurisdiction over AZ and BNSF | K+N: jurisdiction exists (general or §302(a)(3)) because K+N is a NY corporation and litigation occurs in S.D.N.Y. | Defs: not "essentially at home" in NY; injury occurred in Missouri and any NY effects are remote | No general jurisdiction; §302(a)(3) fails — injury in NY is too indirect/remote; constitutional due process concerns also preclude jurisdiction |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (forum-selection clauses in maritime contracts are prima facie valid)
- Kirby, Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (maritime contracts govern through inland legs; interpret by contract terms)
- Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89 (through bills cover ocean and inland portions)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (Second Circuit test for enforceability of forum-selection clauses)
- Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714 ("closely related" test allowing non-signatory enforcement in certain contexts)
- Aguas Lenders Recovery Grp., LLC v. Suez, S.A., 585 F.3d 696 (non-signatory status alone does not preclude enforcement)
- Daimler AG v. Bauman, 571 U.S. 117 (standard for general jurisdiction — "essentially at home")
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (minimum contacts and due process framework for specific jurisdiction)
- Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317 (plaintiff domicile/incorporation alone insufficient to establish NY injury for long-arm jurisdiction)
- Penguin Group (USA) Inc. v. Am. Buddha, 16 N.Y.3d 295 (distinguishing direct injury in NY for intangible harms from remote economic effects)