The opinion of the court was delivered by: MARILYN PATEL, Chief Judge, District
Re: Hanjin's Motion to Dismiss Third-Party Complaint; Trans
Global's Motion for Summary Judgment; Trans Global's Motion for
Leave to Amend Answer and Third-Party Complaint
Plaintiffs American Home Assurance Co. and AIU Co. filed this
action in admiralty seeking to recover damages allegedly caused
by a fire aboard the vessel M/V Hanjin Pennsylvania ("the
Pennsylvania"). Defendants TGL Container Lines, Ltd. ("TGL") and
Trans Global Logistics(s) Pte Ltd. ("TGX") (collectively "Trans
Global") denied liability and filed a third-party complaint
impleading the Pennsylvania and Hanjin Shipping Co. ("Hanjin").
Now before the court is Hanjin's motion to dismiss Trans Global's
third-party complaint for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). Having considered the arguments
presented and for the reasons stated below, the court enters the
following memorandum and order.
This action seeks to establish liability for the loss of goods
at sea during a fire that occurred aboard the defendant vessel.
Plaintiffs American Home Assurance Co. and AIU Co. are subrogated
insurers of three shipments of goods that were aboard the
Pennsylvania at the time that the fire broke out. Pls.' First
Amended Compl. ¶ 8. Defendants and third-party plaintiffs TGL and
TGX are non-vessel operating common carriers ("NVOCCs") who
arranged for the transport of goods aboard the Pennsylvania on
behalf of plaintiffs' subrogors or their agents. Defs.'
Third-Party Compl. ¶ 7.*fn1 Defendant and third-party
defendant Hanjin is a South Korean Corporation that chartered the
Pennsylvania for the purpose of shipping the allegedly damaged
goods. See Zhi Decl., Exhs. A-C.
The events that gave rise to this action occurred in November
2002. At that time, Trans Global arranged with plaintiffs'
subrogors to have three shipments of clothing transported from
Shanghai, China to two destinations in Europe (Felixstowe, United
Kingdom and Rotterdam, The Netherlands). Joint Statement of
Undisputed Facts ¶ 2. While en route to Europe, a fire broke out
aboard the Pennsylvania, allegedly damaging two shipments of
men's shirts insured by plaintiffs. See Pls.' First Amended
Compl. ¶¶ 7-9 & Schedule A; Joint Case Management Conference
Statement, Attachment A at 1 (June 6, 2004).*fn2 A third
shipment was not damaged in the fire but was delivered subject to
a lien for collectible salvage and general average expense. Joint
Case Management Conference Statement, Attachment A at 1; Joint
Statement of Undisputed Facts ¶ 4.
On November 21, 2003, plaintiffs filed this action in admiralty
seeking damages against Trans Global. Plaintiffs also request
declaratory judgment that they have no liability for general
average contribution. To establish this court as a proper venue
for their action, plaintiffs rely on the "Governing Law and
Jurisdiction" clause in the bills of lading*fn3 that Trans
Global issued to their subrogors, which provides in relevant part
that "any action or other dispute [under the bills of lading] shall be brought before the California Courts unless the Carrier
otherwise agrees in writing." Resp. to Pls.' Req. for Judicial
Notice, Exh. A ¶ 21(a).
On May 7, 2004, Trans Global answered plaintiffs' complaint and
filed a third-party complaint against Haijan and the defendant
vessel, seeking indemnity, contribution, and enforcement of a
maritime lien. On August 26, 2004, Haijan filed a motion to
dismiss all claims against it pursuant to the forum selection
clause of the bills of lading issued to plaintiffs' subrogors. In
the alternative, Hanjin sought dismissal of the complaint and
third-party complaint on the ground of forum non conveniens. As
an alternative forum for this action, Hanjin has identified the
High Court of Justice, Queen's Bench Division of the Admiralty
Court in London, England, a venue in which Hanjin is currently
defending claims brought by at least seventeen cargo owners who
represent approximately seventy percent of the known cargo damage
that resulted from the fire aboard the Pennsylvania. Hoyes Decl.
¶¶ 2, 7 & Exh. C.
On September 2, 2004, this court issued an order granting
Hanjin's motion to dismiss plaintiffs' complaint pursuant to a
stipulation of the parties. Order Approving Stipulation of
Dismissal at 1-2. However, Trans Global continues to oppose
Hanjin's motion to dismiss its third-party complaint. In
addition, on September 24, 2004, Trans Global filed a motion for
summary judgment that plaintiffs are bound by the forum selection
clause in Hanjin's bills of lading, thereby requiring the court
to dismiss all claims in this action for improper venue.
Plaintiffs oppose this motion, arguing, inter alia, that Trans
Global waived its right to object to improper venue by failing to
raise the issue in its motion to dismiss filed on March 15, 2004
and by failing to plead improper venue as an affirmative defense
in answering plaintiffs' complaint. See Fed.R. Civ. Pro.
12(h). In response, Trans Global moved for leave to amend its
answer and third-party complaint for the purpose of asserting
defenses based on improper venue, forum non conveniens,
impossibility of performance, and the fire exemption provision of
the Carriage of Goods at Sea Act ("COGSA"), 46 U.S.C. app. §
1304(2)(b). This court consolidated proceedings on all pending
motions and heard arguments from the parties on November 15,
2004. This order addresses the issues raised by the parties in
their briefs and at the November 15 hearing. LEGAL STANDARD
I. Motion to Enforce Forum Selection Clause
A motion to enforce a forum selection clause is treated as a
motion to dismiss for improper venue pursuant to Federal Rule of
Civil Procedure 12(b)(3). Kukje Hwajae Ins. Co., Ltd. v. M/V
Hyundai Liberty, 294 F.3d 1171, 1174 (9th Cir. 2002), vacated
on other grounds, 71 U.S.L.W. 3400, 73 U.S.L.W. 3058 (2004).
Consequently, the pleadings need not be accepted as true, and
facts outside the pleadings properly may be considered. Id.
Nonetheless, the trial court must draw all reasonable inferences
and resolve all factual conflicts in favor of the non-moving
party. Murphy v. Schneider Nat'l, Inc. 362 F.3d 1133, 1138 (9th
Cir. 2004). The enforceability of the forum selection clause is
determined according to federal law. Argueta v. Banco Mexicano,
S.A., 87 F.3d 320, 324 (9th Cir. 1999).
Under the "prevailing rule" established by the Supreme Court in
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), a forum
selection clause is presumptively valid if "venue is specified
with mandatory language." Docksider, Ltd., v. Sea Tech., Ltd.,
875 F.2d 762, 764 (9th Cir. 1989). To overcome such mandatory
language, the party seeking to avoid the chosen venue must
demonstrate that requiring litigation in the selected forum or
fora would be "`unreasonable' under the circumstances."
Fireman's Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1338
(9th Cir. 1997) (quoting The Bremen v. Zapata Off-Shore Co.,
407 U.S. 1, 10 (1972)), cert. denied, 525 U.S. 921 (1998).
Absent a strong showing to that effect, the clause will deprive
courts in other jurisdictions of venue over both in personam
and in rem claims that fall within its scope. See id. In
contrast, "[w]hen only jurisdiction is specified[,] the clause
will generally not be enforced without some further language
indicating the parties' intent to make jurisdiction exclusive."
Docksider, 875 F.2d at 764.
Under the doctrine of forum non conveniens, a district court
has discretion to dismiss an action, even if jurisdiction and
venue are properly established, when (1) a foreign country also
has jurisdiction to hear the case; and (2) either trial in the
chosen American forum would establish oppressiveness and vexation to a defendant out of all proportion
to the plaintiff's convenience, or the chosen American forum is
inappropriate because of considerations affecting the court's own
administrative and legal problems. American Dredging Co. v.
Miller, 510 U.S. 443, 447-49 & n. 2, (1994); see also Piper
Aircraft v. Reyno, 454 U.S. 235, 241 (1981). At the outset of
any forum non conveniens inquiry, the court must determine
whether an alternative forum exists. Piper Aircraft,
454 U.S. at 254 n. 22; Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143
(9th Cir. 2001). Ordinarily, this requirement will be satisfied
when the defendant is amenable to process in the foreign
jurisdiction. Piper Aircraft, 454 U.S. at 254 n. 22. However,
"where the remedy offered by the other forum is clearly
unsatisfactory, the other forum may not be an adequate
alternative, and the initial requirement may not be satisfied."
If the court concludes that there is an adequate alternative
forum to adjudicate the parties' dispute, it must then determine
whether the balance of the "private interest" and "public
interest" factors weighs in favor of dismissing the action.
Piper Aircraft, 454 U.S. at 241; Lueck, 236 F.3d at 1142.
Relevant private interests include: (1) the relative ease of
access to sources of proof; (2) the availability of compulsory
process for unwilling witnesses; (3) the comparative cost of
obtaining willing witnesses; (4) the possibility of a view of any
affected premises; (5) the ability to enforce any judgment
eventually obtained; (6) and "all other practical problems that
make trial of a case easy, expeditious and inexpensive." Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947); see also
Ravelo Monegro v. Rosa, 211 F.3d 509, 512 (9th Cir. 2000),
cert. denied, 531 U.S. 1112 (2001). Public interest factors
include: (1) court congestion; (2) the unfairness of burdening
citizens in an unrelated forum with jury duty; (3) the interest
in having localized controversies decided at home; (4) the
interest in trying the case in a forum familiar with the
applicable law; and (5) the interest in avoiding unnecessary
conflicts of laws. Gilbert, 330 U.S. at 508-09; Rosa,
211 F.3d at 512. The defendant bears the burden of showing that, in
light of these factors, "exceptional circumstances" warrant
dismissal on forum non conveniens grounds. Sarei v. Rio Tinto
PLC, 221 F. Supp. 2d 1116, 1164-65 (C.D. Cal. 2002). Ultimately,
this determination is committed to the "sound discretion" of the
district court. Lueck, 236 F.3d at 1143. DISCUSSION
I. Hanjin's Motion to Dismiss Third-Party Complaint
The court first addresses Hanjin's motion to dismiss Trans
Global's third-party complaint. Hanjin's motion to dismiss relies
on the forum selection clause found in three bills of lading
issued to plaintiffs' subrogors as evidence of the contracts for
the carriage of goods aboard the Pennsylvania. Paragraph 3(a) of
each bill of lading provides:
(a) Disputes arising under the Bills of Lading shall
be determined at the option of the Merchant by the
courts and in accordance with the law (including
choice of law) at (i) the Carrier's principal place
of business (being Seoul, Korea, except for actions
under U.S. COGSA, where the Carrier's principal place
of business also includes Long Beach, California); or
(ii) the place of receipt of the Goods by the
Carrier, or the port of discharge.
Zhi Decl., Exh. A at 2 ¶ 3(a). On its face, the clause specifies
four possible venues for litigating disputes that arise under a
particular bill of lading: (1) the place where Hanjin received
the goods for shipment; (2) the place where the goods were
delivered to Hanjin; (3) South Korea; and (4) if the dispute
arises under the COGSA, 46 U.S.C. app. § 1300 et seq., Long
Beach, California. Because none of these locations falls within
the Northern District of California, Hanjin argues that the plain
meaning of the bills of lading requires the court to dismiss the
third-party complaint for improper venue. In opposing Hanjin's
motion, Trans Global asserts that the forum selection clause in
the bills of lading is unenforceable. Alternatively, Trans Global
argues that even if the forum selection clause is enforceable in
general, it should not be enforced here because Hanjin failed to
provide it with adequate notice of the provision. Trans Global
also asserts that venue is proper in this district under the
theory of ancillary venue. Finally, Trans Global argues that even
if venue in this district is improper, the court may transfer the
action to Long Beach, California pursuant to 28 U.S.C. § 1404.
The court addresses each of these arguments below. A. Enforceability of Forum Selection Clause
In considering the enforceability of the forum selection clause
in Hanjin's bills of lading, the court must first determine
whether the clause is "permissive" or "mandatory." As discussed
above, a contractual forum selection clause is presumptively
enforceable if the clause specifies venue with mandatory language
rather than merely designating a jurisdiction in which actions to
enforce the terms of contract may be brought. Bremen,
407 U.S. at 10; Docksider, 875 F.2d at 764. Here, paragraph 3(a) of the
bills of lading expressly identifies the venues in which the
shipper may bring an action "arising under" the bills of lading:
namely, the place of receipt of the goods, the place of
discharge, and Hanjin's principal place or places of business.
Zhi Decl., Exh. A at 2 ¶ 3(a). The exclusive nature of these
venues is emphasized by paragraph 3(b), which provides that "[n]o
proceedings may be brought before other tribunals by the Merchant
unless the Merchant and Carrier have agreed in advance in writing
in both the choice of another tribunal and the ...