442 F.Supp.3d 738
S.D.N.Y.2020Background
- Plaintiff MTS Logistics (a New York NVOCC) arranged shipment of seven sealed containers of plastic scrap for defendant Innovative Commodities (Texas) from U.S. ports to Thailand; MSC was the ocean carrier.
- Thai port authority suspended discharge of plastics while cargo was en route; MSC offloaded the cargo in Singapore, where Innovative refused to accept it; MSC incurred local import, storage, and destruction expenses and assessed $27,327 in demurrage/detention against MTS.
- MTS invoiced Innovative $11,000 for freight (unpaid) and sought reimbursement for charges and attorneys’ fees under its House Bill of Lading (MTS HB/L), which contains an exclusive-venue forum selection clause naming SDNY.
- MTS never delivered or communicated its House Bill terms to Innovative during nine transactions; booking confirmations and invoices did not reference the House HB/L.
- MSC’s Master Bill of Lading (MSC MB/L) (downstream carrier) also contains an SDNY forum clause; MTS argues Innovative is bound either by MTS’s House HB/L or by MSC’s Master B/L.
- Innovative moved to dismiss for lack of personal jurisdiction; the Court considered whether forum-selection clauses supply jurisdiction and, failing that, whether New York general or specific jurisdiction exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Are MTS’s House HB/L forum-selection terms reasonably communicated to Innovative? | MTS: prior dealings, website posting, and industry practice gave Innovative notice or constructive notice of MTS HB/L. | Innovative: MTS never provided or referenced the HB/L; therefore the clause was not reasonably communicated. | Held: Not reasonably communicated; clause unenforceable against Innovative. |
| 2) Can MTS invoke MSC’s Master B/L forum clause against Innovative in suit between MTS and Innovative? | MTS: Innovative is identified/on the Master B/L or is a third-party beneficiary, so MSC’s clause applies. | Innovative: MTS cannot co-opt downstream carrier’s terms to create jurisdiction in suit between intermediary and shipper. | Held: MTS may not rely on MSC Master B/L; clause does not govern claims/parties here. |
| 3) Is Innovative subject to general jurisdiction in New York? | MTS: (implicitly) forum-selection failure leaves traditional jurisdiction options. | Innovative: Incorporated and principal place of business in Texas; no continuous/systematic New York contacts. | Held: No general jurisdiction; not essentially at home in NY. |
| 4) Is there specific jurisdiction under CPLR §302? | MTS: claims arise from dispute with New York corporation MTS; prior transactions. | Innovative: No purposeful availment of New York; claims are contract breaches, not torts causing NY injury. | Held: No specific jurisdiction under §302(a)(1) or (3); breach-of-contract does not supply long-arm basis. |
Key Cases Cited
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses are prima facie valid)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (federal law governs forum-selection clauses in admiralty)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (three-part test for enforceability: communicated, mandatory, covers suit)
- Silvestri v. Italia Societa Per Azioni Di Navigazione, 388 F.2d 11 (2d Cir. 1968) (reasonable-communication standard: carrier must do all it reasonably could to warn of terms)
- Franco Vago Int’l, Inc. v. Am. Int’l Grp. Eur. S.A. (It.), 756 F. Supp. 2d 369 (S.D.N.Y. 2010) (upstream intermediary cannot co-opt downstream carrier’s bill to govern its dispute with shipper)
- Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004) (NVOCCs and intermediaries can bind shippers to VOCC terms in certain contexts)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires affiliations rendering defendant essentially at home)