Appeal Court affirms NYK defence in case of ACX Crystal/USS Fitzgerald collision

In UK Club’s Quarterly Case Review, Summer 2021, the case of Douglass v. Nippon Yusen Kabushiki Kaisha (NYK Line) (No. 20-30382) (5th Cir., April 30, 2021) Court was reviewed.

The case hinged on whether there was personal jurisdiction or the lack thereof in the case of NYK, a non-US company/

In June 2017, Nippon Yusen Kabushiki Kaisha (NYK) was involved in the operation and navigation of its chartered ship, the- ACX Crystal (IMO 9360611), which collided with Naval Destroyer USS Fitzgerald in the territorial waters of Japan.

The collision killed seven sailors and injured at least 40 others. After the incident the Douglass plaintiffs, personal representatives of the seven US sailors killed, sued NYK for wrongful death and survival claims under the Death on the High Seas Act. The injured US sailors along with family members with consortium claims, sued separately as the Alcide plaintiffs.

Both plaintiffs’ groups asserted personal jurisdiction over NYK pursuant to Fed. R. Civ. P. 4(k)(2), alleging that, despite NYK’s status as a foreign corporation, its substantial, systematic, and continuous contacts with the US should make NYK amenable to suit in federal court.

NYK moved to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12 (b)(2), and the district court granted NYK’s motions The plaintiffs appealed. Those appeals were subsequently consolidated.

The Fifth Circuit has affirmed the lower court’s dismissals for lack of personal jurisdiction.

The reasons were:

The Fifth Amendment’s due process inquiry controls in this case, and the only real question in this case was how it applied.

The personal jurisdiction in federal court analysis begins with Rule 4(k), the rule governing service of process. In regards to this matter, the Court looked at Rule 4(k)(2)

“Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.”

While, it was undisputed that NYK is not subject to any state’s jurisdiction and the case arises under federal law, being consistent with the US Constitution means that it must comport with due process.

Here, the Fifth Circuit found Plaintiffs’ argument regarding how to due process inquiry should applied persuasive, but the Court was bound by a previous Fifth Circuit opinion on this question based on the “rule of orderliness,” and found for NYK.

See Patterson v. Aker Sols., Inc., 826 F.3d 231, 233 (5th Cir. 2016); Daimler AG v. Bauman, 571 U.S. 117 (2014)

Under the applicable precedent, the Court held:

 “due process requires us to ensure that NYK Line’s contacts “with the United States . . . [are] so continuous and systematic as to render it essentially at home.” “The Supreme Court has found a sufficient basis for the exercise of general jurisdiction over a non-resident defendant in only one modern case and [the defendant’s] contacts with the United States [must] come close to the level of contacts there.”

NYK is incorporated and headquartered in Japan. Therefore, if NYK is to be subject to an exercise of general personal jurisdiction by a federal court, it must be because this is an ‘exceptional case.’

Plaintiffs asserted that NYK engages in vast amounts of shipping business in the US, but ultimately, the Court per curiam found that this did not rise to the level of an “exceptional case” and affirmed the dismissal as personal jurisdiction over NYK cannot be constitutionally established.

UK Club’s QCR said that the case was an important reminder of the limits of personal jurisdiction in the US when it came to incidents that occur outside of US territory involving foreign defendants, regardless of whether plaintiffs are US citizens. The case was also a good example of how the “rule of orderliness” could and would carry the day, even if the court found your arguments persuasive.

2008-built, Philippines-flagged, 29,060 gt ACX Crystal is owned by Olympic Steamship Co SA care of manager Sea Quest Ship Management of Manila, Philippines. ISM manager is Taiyo Sangyo Trading & Marine. It is entered with Japan Club (Tokyo Office in charge) on behalf of Olympic Steamship Co SA.

At the time of the incident in June 2017, Japan Club listed the owner as Sinbanali Shipping Inc.—summer/qcr-summer-2021—douglass/