The U.S. Fifth Circuit Court of Appeals recently published an opinion, Carmona v. Leo Ship Management, Inc., addressing the proper jurisdiction of a lawsuit involving the alleged negligence of a ship management company based in the Philippines and a longshoreman injured in Texas. The Plaintiff had asserted negligence under the general maritime law and Section 905(b) of the Longshore and Harbor Workers’ Compensation Act (LHWCA).
Carmona v. Leo Ship Management, Inc. Background
Leo Ship Management, Inc. (LSM), a corporation in the Philippines, entered into a contract to manage the M/V Komatsushima Star by supplying and supervising the ship’s crew. LSM did not have ownership of the vessel and could not control where it travelled, what it carried, or for whom it worked, but the ship’s owner was required to notify LSM of the ship’s itinerary and ports of call.
The vessel owner notified LSM that the ship would be docking in Texas to discharge pipes, which had been loaded by a third party outside the United States. When the ship docked in Texas, the Plaintiff, a longshoreman, boarded the vessel and was rigging a bundle of pipes in the hold when they fell and injured his leg.
plaintiff asserts negligence Under General Maritime Law and Section 905(b) of the LHWCA
The longshoreman sued LSM in a Texas court, asserting negligence under the general maritime law and Section 905(b) of the LHWCA. He alleged several counts of negligence against LSM, including breach of the Scindia duties. LSM ultimately removed the case to federal court and filed a Motion to Dismiss for lack of personal jurisdiction.
Notably, LSM had no employees or property in Texas and did not solicit business in the State. The District Court granted the Motion and dismissed the case, finding LSM did not purposely avail itself of the benefits and protections of Texas, as it lacked control over the ship’s port of call. In other words, LSM’s contact with Texas was “merely fortuitous”. The Plaintiff appealed.
fifth circuit evaluates Texas’ specific jurisdiction over foreign ship management company
The Fifth Circuit performed a thorough evaluation of Texas’ specific jurisdiction over LSM, finding the issue hinged on whether LSM had purposely availed itself of the benefits and protections of Texas such that it should have reasonably anticipated being sued in a Texas court. It was undisputed LSM made necessary contact with Texas when the ship carrying its crew docked in a Texas port. The question for the Court was whether LSM’s presence in Texas was “purposeful” or deliberate since it did not control the ship’s itinerary.
The Court held that because 1) LSM’s contract with the ship owner contemplated that the ship would travel to destinations around the world, 2) that LSM received notice of the ship’s itinerary, and 3) that LSM could have terminated the contract, it deliberately chose to keep its crew aboard the ship bound for Texas. LSM therefore purposely availed itself of Texas jurisdiction and reasonably should have anticipated being sued in Texas. The Fifth Circuit reversed the District Court’s dismissal, finding Texas had personal jurisdiction over the majority of Plaintiff’s claims of negligence.