Neely v. ClubMed ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
11-15-1994
Neely v. ClubMed
Precedential or Non-Precedential:
Docket 93-2069
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Recommended Citation
"Neely v. ClubMed" (1994). 1994 Decisions. Paper 189.
http://digitalcommons.law.villanova.edu/thirdcircuit_1994/189
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 93-2069 and 93-2102
EILEEN ANNE NEELY,
Appellant in No. 93-2069
v.
CLUB MED MANAGEMENT SERVICES, INC.; CLUB MED SALES, INC.;
CLUB MED, INC., Third-Party Plaintiffs;
HOLIDAY VILLAGE (ST. LUCIA), LTD.
v.
JOSEPH LEMAIRE,
Third-Party Defendant
Club Med Management Services, Inc. and
Holiday Village (St. Lucia) Inc.,
Appellants in No. 93-2102
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 91-cv-07416)
Argued August 8, 1994
Before: MANSMANN, COWEN and McKEE,
Circuit Judges
(Filed November 15, l994 )
M. Kelly Tillery (argued)
Michael V. Tinari
Leonard, Tillery & Davison
1515 Market Street
18th Floor
Philadelphia, PA 19102
Counsel for Eileen Anne Neely
Bettina B. Plevan (argued)
Proskauer, Rose, Goetz & Mendelsohn
1585 Broadway
New York, NY 10036
Counsel for Club Med Management
Services, Inc.; Club Med, Inc.; Holiday
Village (St. Lucia), Ltd.
Louis Bell
Marshall, Dennehey, Warner,
Coleman & Goggin
1845 Walnut Street
Philadelphia, PA 19103
Counsel for Club Med Management
Services, Inc.; Holiday Village,
(St. Lucia) Ltd.
OPINION OF THE COURT
COWEN, Circuit Judge.
This personal injury action was filed with the United
States District Court for the Eastern District of Pennsylvania
under the Jones Act, 46 U.S.C. § 688, and the General Maritime
Law of the United States. The plaintiff was a scuba diving
instructor who received injuries from a diving accident that took
place in the coastal waters of St. Lucia. On motion by the
defendants,1 the district court reduced the verdict in favor of
1
. Defendants in this action are: Club Med Management Services,
Inc.; Club Med Sales, Inc.; Club Med, Inc. (collectively "Club
Med"); and Holiday Village (St. Lucia), Ltd.
the plaintiff on the theory that the plaintiff was contributorily
negligent. In this appeal, the plaintiff contends the district
court improperly reduced the jury verdict. In a cross-appeal,
the defendants challenge the order of the district court denying
their motion to dismiss the complaint for lack of subject matter
jurisdiction. Because we will reverse the order of the district
court which concluded there was subject matter jurisdiction, we
need not address plaintiff's appeal regarding the reduction of
the jury verdict.
I.
A. Factual Background
Plaintiff Eileen Neely ("Neely") applied for a position
as a scuba diving instructor with Club Med after vacationing at
one of their resorts. Neely traveled to New York City to
interview with Club Med. During a subsequent telephone call to
her home in Pennsylvania from Club Med in New York City, Neely
was offered a position at the Club Med resort, Holiday Village
(St. Lucia) Ltd.
In May of 1991, Neely began work at the Holiday Village
as a scuba diving instructor. On May 23, 1991, the vessel Long
John, a diving boat used by Holiday Village for diving
excursions, left the resort area for a group dive. On board the
vessel was Neely (who was acting in her capacity as a dive
instructor), another dive instructor, the Dive Master, the
captain, and a number of Club Med guests. As they neared the
dive sight, the captain slowed the forward direction of the boat,
and put the engines in neutral. He did not shut off the engines.
The guests were instructed to put on their diving gear and await
the signal from the Dive Master before entering the water.
What happened next remains in dispute. Neely claims
that she received the "O.K." signal from the Dive Master, and
entered the water. Defendants insist that the signal was never
given, and Neely entered the water prematurely from the stern and
without authorization. In any event, while (unknown to the
captain of the Long John) Neely was in the water, the captain
shifted the engines from neutral to reverse. The churning
propellers of the twin 350 horsepower diesel engines sucked her
under the boat and into the ship's propellers. Seconds later,
she reappeared on the starboard side of the boat and was rescued
by the other dive instructor. Neely sustained multiple severe
injuries to various parts of her body.
B. Procedural Background
Plaintiff Neely is a United States citizen who resides
in Pennsylvania. Defendant Club Med Management Services, Inc.,
is organized under the laws of New York State; Club Med Sales,
Inc., under the laws of the State of Delaware; Club Med, Inc.,
under the laws of the Cayman Islands; and Holiday Village (St.
Lucia), Ltd., under the laws of St. Lucia.
Neely filed suit in the United States District Court
for the Eastern District of Pennsylvania under the Jones Act, 46
U.S.C. § 688, and the General Maritime Law of the United States.
The defendants filed a motion to dismiss for lack of subject
matter jurisdiction, which was denied by the district court. The
case proceeded to trial and the jury awarded the plaintiff
$545,000.00 in damages. After factoring in the percentage of
contributory negligence which was determined by the jury on the
Jones Act count of the complaint, the district court entered
judgment for the plaintiff in the amount of $229,700.00. These
appeals followed. We have jurisdiction over the appeal and
cross-appeal, which were taken after a final judgment was entered
by the district court, pursuant to 28 U.S.C. § 1291 (1988).
II.
Defendants argue that the district court lacked subject
matter jurisdiction over plaintiff's complaint alleging claims
under the Jones Act and General Maritime Law. We exercise
plenary review, and thus employ the same standard that the
district court used to determine whether subject matter
jurisdiction properly lies in the district court:
[A] court reviewing a claim to Jones Act
coverage should determine the substantiality
of the links to the United States and the
links to the foreign sovereignty. This
process is undertaken in order to discern in
whose "domain" the paramount interest lies.
Under certain circumstances the Jones Act may
be far-reaching. However, when the links to
the United States are weak and the interests
of another sovereign are substantial, the
Jones Act is not applicable.
Chirinos de Alvarez v. Creole Petroleum Corp., 613 F.2d 1240,
1246 (3d Cir. 1980)(citation omitted). As the party who invoked
the jurisdiction of the district court, Neely bears the burden of
proving subject matter jurisdiction when put in issue by the
defendants and where there are disputed jurisdictional facts.
Matute v. Procoast Navigation Ltd., 928 F.2d 627, 632 (3d Cir.),
cert. denied, 112 S. Ct. 329 (1991). See also Trentacosta v.
Frontier Pacific Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th
Cir. 1987)("[t]he party invoking the federal court's jurisdiction
has the burden of proving the actual existence of subject matter
jurisdiction . . . .").
The district court correctly found that resolution
of the jurisdictional issue turned on the application of the
eight factor test set forth by the Supreme Court in Lauritzen v.
Larsen, 345 U.S. 571, 73 S. Ct. 921 (1953), and Hellenic Lines
Ltd. v. Rhoditis, 398 U.S. 306, 90 S. Ct. 1731 (1970). Neely v.
Club Med Sales, Inc., No. 91-7416, 1992 WL 398378, at *2-3 (E.D.
Pa. Dec. 31, 1992). The eight factors to be considered in Jones
Act and maritime jurisdictional disputes are the: (1) law of the
flag; (2) shipowner's base of operations; (3) allegiance of the
defendant shipowner; (4) inaccessibility of a foreign forum; (5)
place of the wrongful act; (6) place of the employment contract;
(7) allegiance or domicile of the injured party; and (8) law of
the forum. Id. at *3. We conclude that the district court erred
when it found that these factors indicated that the United States
was the appropriate forum for this lawsuit. We will address each
of these factors seriatim.
1. Law of the Flag
The nationality of the vessel's flag is the single most
important factor in the Jones Act jurisdictional equation. The
Supreme Court stated in Lauritzen that "the most venerable and
universal rule of maritime law relevant to our problem is that
which gives cardinal importance to the law of the flag." 345
U.S. at 584, 73 S. Ct. at 929. With respect to this factor, the
district court found that "the diving vessel flies the flag of
St. Lucia." Neely, 1992 WL 398378, at *3. Neely maintains that
there was no evidence presented before or during trial to
establish that the vessel Long John actually flies the flag of
St. Lucia. However, the defendants point out that the finding of
the district court was based on the pre-trial declaration of
vessel owner, Joseph LeMaire, which was submitted in support of
his successful motion to dismiss the third-party complaint
against him. LeMaire stated that the Long John is registered in
St. Lucia, and his sworn declaration has not been contradicted.
Defendants argue that registration of a vessel in a
particular country is equivalent to "flagging" the vessel.
Although no authority explicitly states that registration and
flagging a vessel are one and the same, there is authority which
indicates that "[a] ship navigating the seas may sail only under
the flag of the nation in which it is registered . . . ." 1
Thomas J. Schoenbaum, Admiralty and Maritime Law § 2-21, at 46
n.1 (2d ed. 1994)(citation omitted). Thus, since the Long John
was registered in St. Lucia, it was required to fly a St. Lucian
flag.
Neely argues that registration is not the same as
flagging because a shipowner could register a vessel for a
variety of purposes, such as obtaining a docking permit.
However, no country may place its flag on a ship that is already
registered in another country, except pursuant to a transfer of
registration, id. at 46, and no proof of such transfer of
registration has been offered by the plaintiff. The substance of
Neely's argument concerning the law of the flag factor is that
the shipowner was flying a flag of convenience -- the occasional
practice of some American shipowners to sail under the flag of
another country whose shipping laws and registry requirements are
not as stringent as the United States. However, at no time
during the proceedings did Neely offer any evidence to prove that
the Long John was merely flying a flag of convenience. Nor did
Neely offer any evidence to indicate that the registration of the
Long John in St. Lucia was only for docking or other limited
purposes.
Because the plaintiff bears the burden of proving
subject matter jurisdiction, it would even be insufficient if she
proved that the Long John was not flying a St. Lucian flag. The
plaintiff still has the additional hurdle of proving that the
vessel was flying an American flag in order for this factor to
weigh in favor of subject matter jurisdiction in the district
court. Since the only evidence pertaining to law of the flag
adduced in the district court indicates that the vessel was a St.
Lucian flagged vessel, we conclude this factor weighs heavily
against finding subject matter jurisdiction in the district
court.
2. Shipowner's Base of Operations
Neely argues that the base of operations is that of
LeMaire, the shipowner. Evidence in the record indicates that
LeMaire's part-time residence in the United States is Miami,
Florida. Defendants contend that base of operations means the
base of operations of the particular vessel, which is clearly St.
Lucia. The district court, looking at the base of operations of
the owner, concluded that this factor was unclear, and favors
neither the United States nor St. Lucia as the appropriate forum
for this dispute.
Even assuming arguendo that plaintiff's definition of
base of operations, i.e. as that of the shipowner, is correct, we
find that this factor weighs against finding subject matter
jurisdiction in the district court. Plaintiff argues and the
record supports the conclusion that Holiday Village chartered
this vessel from the actual shipowner in a manner consistent with
a bareboat or demise charter.2 A "bareboat" charter or "demise"
charter exists whenever the:
vessel is chartered or "leased" to another
who takes possession, custody and control of
the vessel. The master is hired and paid by
the charterer and becomes the agent and
2
. Appellant/Cross-Appellee's Reply/Answering Brief at 40-47.
representative of the charterer. The
operating expenses of the vessel, such as
wages, fuel, subsistence, wharfage charges,
etc., are paid by the charterer. The owner
surrenders entire control and possession of
the vessel and subsequent control over its
navigation to the bareboat charterer, who
becomes the owner pro hac vice.
2 Martin J. Norris, The Law of Seamen § 30:14, at 372 (4th ed.
1985). Thus, by contracting a demise charter with the actual
shipowner, Holiday Village became the owner pro hac vice of the
Long John. Since we look to Holiday Village (a St. Lucian
corporation), rather than LeMaire of Miami, as the owner of the
vessel, we hold that this factor also weighs against finding
subject matter jurisdiction in the district court.
3. Allegiance of the Defendant Shipowner
The district court made no definitive finding as to the
allegiance of the defendant shipowner. The only finding of the
district court was that, "Mr. LeMaire is neither a citizen of St.
Lucia, [n]or the United States, but lives in Miami, Florida. He
claims to have dual citizenship in Canada and Guadeloupe."
Neely, 1992 WL 398378, at *3. Additionally, in his declaration,
LeMaire stated that he currently resides in both Florida and
Guadeloupe. On the facts of this case, the allegiance or
domicile of the actual shipowner is not relevant, since the Long
John was the subject of a demise charter to Holiday Village. As
we related above, Holiday Village is the owner pro hac vice of
the vessel. The allegiance or domicile of Holiday Village is St.
Lucia. This factor also weighs against finding subject matter
jurisdiction in the district court, and points to St. Lucia as
the appropriate forum.
Alternatively, even assuming arguendo that we look to
LeMaire rather than Holiday Village as the defendant shipowner,
we note that he is both a citizen and resident of Guadeloupe.
However, he is only a resident of the United States. Therefore,
we conclude that LeMaire owes his allegiance to Guadeloupe and
this factor weighs against finding jurisdiction in the district
court.
4. Inaccessibility of a Foreign Forum
Plaintiff puts forth the argument that St. Lucia is an
inaccessible forum because she is in no financial position to
travel to St. Lucia, hire St. Lucia counsel, and pursue an action
against the defendants in the St. Lucian courts. Additionally,
she claims that St. Lucia is an inconvenient forum.
Similar to Neely, in Rodriguez, the plaintiff argued
that a foreign forum was not convenient to him because his
physicians and medical records were in the United States and
because he had retained American counsel who would not represent
him in Colombia. Rodriguez v. Flota Mercante Grancolombiana,
S.A., 703 F.2d 1069, 1075 n.3 (9th Cir.), cert. denied, 464 U.S.
820, 104 S. Ct. 84 (1983). The Court of Appeals for the Ninth
Circuit in rejecting the plaintiff's argument stated that:
Convenience of the witnesses and attorney are
not factors cited by the Court in Lauritzen
and Rhoditis as determinators of the Jones
Act jurisdiction. Although these factors
"might be a persuasive argument for
exercising a discretionary jurisdiction to
adjudge a controversy . . . it is not
persuasive as to the law by which it shall be
judged." Lauritzen, 345 U.S. at 589-90, 73
S.Ct. at 931-932. Thus, the costs and loss
of time entailed in deposing the medical
witnesses and sending the records and the
American attorney to . . . [a foreign forum]
while relevant to the issue of forum non
conveniens are not relevant factors in
determining whether Jones Act jurisdiction is
present.
Rodriguez, 703 F.2d at 1075 n.3.
We agree with the Court of Appeals for the Ninth
Circuit that the Supreme Court in Lauritzen did not intend the
"inaccessibility of a foreign forum" factor to require a forum
non conveniens analysis. The Supreme Court in Lauritzen rejected
the argument "that justice requires adjudication under American
law to save seamen the expense and loss of time in returning to a
foreign forum." 345 U.S. at 589, 73 S. Ct. at 932. Lauritzen
indicates that inaccessibility of the forum and forum non
conveniens are two separate and distinct matters. Therefore,
discounting any claim of inconvenience by Neely in bringing this
suit in a foreign forum, it is not clear why a forum in St. Lucia
would be inappropriate. Neely has offered no credible evidence
to indicate that St. Lucia will not entertain such a suit or that
there are other barriers to her being heard in that jurisdiction.
Since plaintiff bears the burden of proof on this issue, this
factor weighs against finding subject matter jurisdiction in the
district court.
5. Place of the Wrongful Act
Although this issue was disputed prior to trial,
plaintiff now concedes that the accident took place within two
hundred meters of the St. Lucian shoreline. This factor,
therefore, favors jurisdiction in St. Lucia rather than the
United States. However, Neely contends that this factor is
accorded little weight because of the fortuity of the sailing
vessel being in the particular place where the accident occurred.
Indeed, in Lauritzen, the Supreme Court stated that, "[t]he test
of location of the wrongful act or omission, however sufficient
for torts ashore, is of limited application to shipboard torts,
because of the varieties of legal authority over waters she may
navigate." Lauritzen, 345 U.S. at 583, 73 S. Ct. at 929.
Normally, the place of accident might well be
fortuitous. Here, however, the vessel was chartered by Holiday
Village to be used specifically by diving parties in and around
St. Lucia. St. Lucia has set its territorial waters at a breath
of 12 nautical miles. 6B Benedict on Admiralty Doc. 10-3A, at
10-62, 10-62.2 (Frank L. Wiswall, Jr., ed., 6th ed. 1994).
Rarely if ever during its demise charter did the Long John leave
the territorial waters of St. Lucia. It is true that the vessel
had the capability of traveling vast distances, and even
worldwide. However, when analyzing whether the location of the
accident in St. Lucian waters was fortuitous, it becomes clear
that if the vessel never left the territorial waters, then an
accident in St. Lucian waters was not simply fortuitous. In
fact, anyone sailing aboard the Long John, whether as crew or
otherwise, would reasonably conclude (as occurred in this case),
that any accident would occur in the territorial waters of St.
Lucia. This factor weighs against finding subject matter
jurisdiction in the district court and points instead to St.
Lucia as the proper forum.
6. Place of Employment Contract
The district court made a factual finding that the oral
employment contract entered into between Club Med and Neely, by
virtue of a phone call from Club Med's offices in New York to
Neely's residence in Pennsylvania, was situated in Pennsylvania.
Neely, 1992 WL 398378, at *4. Defendants do not challenge the
district court's finding as clearly erroneous, but instead argue
that the factor should be given diminished weight since the
employment services were to be performed outside the United
States. The Supreme Court in Lauritzen has explained that,
"[t]he place of contracting in this instance, as is usual to such
contracts, was fortuitous . . . . We do not think the place of
contract is a substantial influence in the choice between
competing laws to govern a maritime tort." Lauritzen, 345 U.S.
at 588-89, 73 S. Ct. at 931-32. Thus, although this factor
points to subject matter jurisdiction in the district court, it
will be accorded little weight in our analysis.
7. Allegiance or Domicile of the Injured Party
Plaintiff Neely is a United States citizen who lived
permanently in Pennsylvania until she was hired by Club Med. She
returned immediately to the United States for medical attention
and rehabilitation after the accident. Thus, this factor favors
jurisdiction in the United States.
8. Law of the Forum
The district court found that this factor did not weigh
in favor of either the United States or St. Lucia. Neely, 1992
WL 398378, at *4. Neither party contends on appeal that this
factor strongly supports one jurisdiction over another, and we
cannot say as a matter of law that the district court committed
error. As such, we conclude that this factor is neutral and does
not point to either the district court or to some other court as
the proper forum for this dispute.
III. Conclusion
Based on the totality of these eight factors, we
conclude that the district court erred in exercising subject
matter jurisdiction in this suit. Plaintiff Neely has failed to
prove that substantial links with the United States exist: (1)
the law of the flag, the most important factor, does not point to
the United States, but rather to St. Lucia; (2) the shipowner's
base of operations because of the demise charter clearly
indicates that St. Lucia is the appropriate forum; (3) the
allegiance of the defendant shipowner points to St. Lucia; (4)
there is no indication that a St. Lucian court is inaccessible to
the plaintiff; and (5) the wrongful act occurred in St. Lucian
territorial waters. The only factors that weigh in favor of
jurisdiction in a United States court are: (1) the plaintiff is a
citizen of the United States; and (2) the place of the employment
contract was the United States. However, the latter factor
receives less weight because of the fortuity of the place of
contracting. The law of the forum is a neutral factor.
After carefully balancing these factors, we conclude
that subject matter jurisdiction does not exist in the district
court to entertain this lawsuit. We will remand this case to the
district court with directions to dismiss this action for lack of
subject matter jurisdiction. Each party is to bear its own costs
on the appeal and the cross-appeal.