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Woods Hole Oceanographic Institution v. ATS Specialized, Inc.

United States District Court, D. Massachusetts

February 5, 2019

WOODS HOLE OCEANOGRAPHIC INSTITUTION, Plaintiff,
v.
ATS SPECIALIZED, INC., et al., Defendants.

          REPORT AND RECOMMENDATION ON DEFENDANTS' MOTIONS TO DISMISS [DOCKET NOS. 20, 22, 27, 32, 50]

          JENNIFER C. BOAL UNITED STATES MAGISTRATE JUDGE.

         This action arises from the transportation of a submarine from Woods Hole, Massachusetts to Australia that took place under an agreement by plaintiff Woods Hole Oceanographic Institution (“Woods Hole”) to loan the submarine to the Australian National Maritime Museum (the “Museum”). During transit, the submarine caught fire in Connecticut and was allegedly damaged. Woods Hole brings claims against the Museum and against several defendants allegedly involved in the transportation of the submarine. The Museum and defendants ATS Specialized, Inc. (“ATS”), Sam Broughton Wright, Jr. (“Wright”), [1] Ridgeway International USA, Inc. (“Ridgeway”), and Guy Tombs Limited (“Guy Tombs”) have moved to dismiss the claims against them. Docket Nos. 20, 22, 27, 32, 50.[2], [3] This Court heard oral argument on January 23, 2019. For the following reasons, this Court recommends that the District Judge assigned to this case deny the Museum's motion to dismiss, grant in part and deny in part ATS's motion to dismiss, grant Wright's motion to dismiss, grant in part and deny in part Ridgeway's motion to dismiss, and grant Guy Tombs' motion to dismiss.

         I. FACTUAL BACKGROUND[4]

         A. The Parties

         1. Woods Hole

         Woods Hole is a nonprofit corporation, organized and existing under the laws of the Commonwealth of Massachusetts. Complaint ¶ 1. Woods Hole is dedicated to research and education to advance understanding of the ocean and its interaction with the Earth system, and to communicating this understanding for society's benefit. Id.

         Woods Hole has vast knowledge, experience, and proficiency exploring, diving, discovering, and operating in the deepest regions of the sea. Id. at ¶ 2. For over a half-century, Woods Hole has been building, operating, maintaining, managing, and repairing submersibles. Id.

         Woods Hole is the owner of a human occupied vehicle (“HOV”), the Deep Sea Challenger, a custom-designed and built submersible capable of reaching full-ocean depth (the “Submersible”). Id. at ¶ 3. Woods Hole alleges that, prior to the loss which is the subject matter of this case, the Submersible was valued in excess of $30 million. Id. at ¶ 7.

         2. ATS Specialized

         ATS Specialized is a corporation organized and existing under the laws of the State of Minnesota, with a principal place of business in St. Cloud, Minnesota. Id. at ¶ 9.

         3. Wright

         Wright is a resident and domiciliary of the State of South Carolina. Id. at ¶ 10. Wright was driving the truck transporting the Submersible when it caught on fire. Id. at ¶¶ 41-42.

         4. Ridgeway

         Ridgeway is a New York corporation with its principal place of business in Plattsburgh, New York. Declaration of Guy M. Tombs in Support of Co-Defendant Ridgeway International USA Inc.'s Motion to Dismiss the Complaint (Docket No. 29) (“Tombs Ridgeway Decl.”) at ¶ 3; see also Complaint at ¶ 11.

         Ridgeway specializes in arranging for the transport of cargo, particularly explosives, munitions and security classified cargo. Tombs Ridgeway Decl. at ¶ 4. Ridgeway does not have, and has never had, an office in Massachusetts. Id. at ¶ 5. Ridgeway is not registered, and has never been registered, to do business in Massachusetts. Id. at ¶ 6. It has no officers, managers or directors in Massachusetts. Id. at ¶ 8. Ridgeway has no property or bank accounts in Massachusetts. Id. at ¶¶ 11, 16, 17.

         Ridgeway has never directed advertisements specifically targeting residents of Massachusetts. Id. at ¶ 18. It does not derive any substantial revenue from goods used or consumed, or services rendered, in Massachusetts. Id. at ¶ 19.

         5. Guy Tombs

         Guy Tombs is a Canadian corporation with its principal place of business in Montreal, Quebec, Canada. Declaration of Guy M. Tombs in Support of Co-Defendant Guy Tombs Limited's Motion to Dismiss the Complaint (Docket No. 34) (“Tombs GT Decl.”) at ¶ 3; see also Complaint at ¶ 12. Guy Tombs specializes in arranging for transportation of conventional and over dimensional cargo. Tombs GT Decl. at ¶ 4.

         Guy Tombs does not have, and has never had, offices in Massachusetts. Id. at ¶ 5. It is not registered, and has never been registered, to do business in Massachusetts. Id. at ¶ 6. Guy Tombs has no property, assets or bank accounts in Massachusetts. Id. at ¶¶ 11, 16, 17.

         Guy Tombs has no employees in Massachusetts. Id. at ¶ 20. It does not direct any advertisement at Massachusetts' residents and does not derive any substantial revenue from goods used or consumed, or services rendered, in Massachusetts. Id. at ¶¶ 18-19.

         6. The Museum

         The Museum was established in 1990 by the Australian National Maritime Museum Act 1990. Declaration of Peter Rout (Docket No. 51-1) (“Rout Decl.”) at ¶ 3. By the law passed by the Australian Parliament, the Museum was established as a corporation and empowered “to act on behalf of the Commonwealth” of Australia. Id. The Museum is wholly owned by the Australian government. Id.; Docket No. 52.

         The functions of the Museum are to exhibit material included in the national maritime collection of Australia, and maritime cultural and historical material loaned to the Museum; to develop, preserve and maintain the national maritime collection of Australia; to disseminate information relating to Australian maritime history; and to conduct for and arrange for research into matters relating to Australian maritime industry. Rout Decl. at ¶ 4.

         The Museum is funded by the Australian government, operates on a not-for-profit basis, and does not make a profit. Id. at ¶ 5. All shares in the Museum are owned by the Australian government. Id.

         The Museum does not operate in Massachusetts and does not benefit from conduct that takes place in Massachusetts. Id. at ¶ 6. Besides the loan of the Submersible at issue in this case, the Museum has never borrowed any historical or cultural item from a person or entity in Massachusetts. Id. at ¶ 10. In addition, the Museum has never lent any item to any museum in Massachusetts. Id.

         The Museum does not purchase or sell any goods in Massachusetts. Id. at ¶ 12. It does not advertise or distribute any marketing materials in Massachusetts. Id. at ¶ 13.

         The Museum has no employees, offices, warehouse, manufacturing or distribution facilities, bank accounts or any other assets in Massachusetts. Id. at ¶¶ 14, 20-22.

         B. The Loan Agreement

         Beginning in September 2013, the Museum contacted Woods Hole with a request to borrow the Submersible. Declaration of Christopher Land, Esq. (Docket No. 63-1) (“Land Decl.”) at ¶ 8; Declaration of Robert S.C. Munier (Docket No. 63-2) (“Munier Decl.”) at ¶ 7; Declaration of Anthony Tarantino (Docket No. 63-3) (“Tarantino Decl.”) at ¶ 7. Over two years of detailed negotiations between the Museum and Woods Hole followed, wherein the parties negotiated the loan's terms and conditions, including but not limited to price, insurance, indemnity, choice of law, shipping terms and instructions, controls, required reports, communications, and care for the Submersible while in the Museum's care, custody, and control. Id.

         The negotiations between the Museum and Woods Hole included multiple meetings in Woods Hole, Massachusetts between the Museum and Woods Hole personnel to discuss the terms and conditions of the loan; Museum personnel inspecting the Submersible in Woods Hole, Massachusetts; extensive emails between the Museum and Woods Hole; and numerous telephone conferences between Museum and Woods Hole personnel. Land Decl. at ¶¶ 8-9, 16-44; Munier Decl. at ¶¶ 8, 16-45; Tarantino Decl. at ¶ 8; 16-45.

         Among other things, on or about May 23, 2014, the Museum's Mike Harvey traveled to Woods Hole, Massachusetts to discuss the loan of the Submersible, including costs, fees, logistics, scope, future action, and the operative timetable. Land Decl. at ¶ 22; Munier Decl. at ¶ 21; Tarantino Decl. at ¶ 21. During this meeting, Mr. Harvey indicated that the Museum had an annual budget of approximately $20 million to $25 million, with approximately $800, 000 to spend on exhibits. Id. On May 24, 2014, Mr. Harvey personally inspected the Submersible in Woods Hole, Massachusetts. Land Decl. at ¶ 23; Munier Decl. ¶ 22; Tarantino Decl. at ¶ 22.

         The parties executed an Inward Loan Agreement for the Loan of Objects from the Woods Hole Oceanographic Institution (WHOI) to the Australian National Maritime Museum (ANMM) dated June 30, 2015 (the “Loan Agreement”). Docket No. 63-4. The Loan Agreement was subsequently amended by a Variation Agreement, which forms part of the Loan Agreement. Rout Decl. at ¶ 7; Munier Decl. at ¶ 45; Tarantino Decl. at ¶ 45.

         Pursuant to the Loan Agreement, for a payment of $30, 000, Woods Hole agreed to loan the Submersible to the Museum from June 30, 2015 to June 1, 2020, although Woods Hole agreed to consider extending the date of the loan for “an undetermined period of time.” Docket No. 63-4 at 4, 22. The Museum was responsible for collecting from and returning the Submersible from Woods Hole, Massachusetts. Id. at 3-4.

         The Loan Agreement also provided that, while in its possession or control, the Museum would “take care of the [Submersible] in accordance with the professional standards appropriate, ” and would “not do or permit anything which may endanger the safety of the [Submersible] or the preservation of its quality, or which may cause any damage or deterioration to the [Submersible].” Id. at 6. In addition, the Museum agreed to insure the Submersible “against all risks and ‘wall to wall' from the time the Submersible is in the Museum's possession or control.” Id. at 8. The parties agreed to indemnify each other against all “actions, claims, suits, demands, liabilities, losses, damages and costs (including all legal costs on a solicitor-client basis) directly or indirectly arising out of, relating to or any way connected with any breach of [the Loan Agreement] by it or of any of its promises and warranties in [the Loan Agreement].” Id. at 11.

         The parties agreed that the Loan Agreement would be governed by the law of Massachusetts. Docket No. 63-4 at 23. If any disputes arose between the parties, they were to make “reasonable efforts to resolve the dispute by good faith negotiation.” Id. at 12. If mediation was not successful, either party could refer the matter to arbitration under the Rules of Arbitration of the International Chamber of Commerce. Id. at 22. Such arbitration was to be conducted in London, unless otherwise agreed by the parties. Id.

         C. Transport And Damage To The Submersible

         The Museum engaged Ridgeway to manage the pickup and transport of the Submersible to Australia. Rout Decl. at ¶ 29; Munier Decl. at ¶ 56; Tarantino Decl. at ¶ 55. On or about March 7, 2015, Peter Rout, Assistant Manager of Operations for the Museum, signed a Power of Attorney Designation as Export Forwarding Agent and Acknowledgement of Terms and Conditions” (the “Power of Attorney”). Rout Decl. at ¶ 32; Tarantino Decl. at ¶ 56; Tombs Ridgeway Decl. at ¶ 26. Pursuant to the Power of Attorney, the Museum appointed Ridgeway, its officers, employees, and/or agents to act on its behalf “as a true and lawful agent” of the Museum. Docket No. 51-4 at 2.

         The Museum itself arranged for sea carriage for the Submersible with Wallenius Willhemsen Logistics (“Wallenius”), which was to commence in Baltimore, Maryland. Tombs Ridgeway Decl. at ¶ 22. On behalf of the Museum, Ridgeway arranged with ATS[5] for the carriage of the Submersible from Massachusetts to Baltimore.[6] Id. at ¶ 28. Ridgeway also asked Guy Tombs to arrange for cargo insurance to cover the Submersible's transportation from Woods Hole to Australia. Id. at ¶ 30. Guy Tombs contacted Assurances Fort Insurance in Montreal, which in turn, arranged for a cargo policy, policy # 50T 0845 (the “Cargo Policy”), from Eagle Underwriting Group Inc. (“Eagle”).[7] Tombs GT Decl. at ¶ 23. Ridgeway charged the Museum for the cost of the Cargo Policy. Tombs Ridgeway Decl. at ¶ 30.

         On or about July 22, 2015, Ridgeway issued a Truck Bill of Lading, terms prepaid (the “Ridgeway Truck Bill of Lading”). Complaint at ¶ 32; see also Tombs Ridgeway Decl. at ¶ 28. The Ridgeway Truck Bill of Lading indicated a pick up date of July 22, 2015 and a delivery date of July 23, 2015. Complaint at ¶ 32. It also indicated that the Submersible was to be delivered to Baltimore, Maryland. Id. The Ridgeway Truck Bill of Lading contained no terms, conditions, or provisions concerning limitation of liability or choice of law. Id. Prior to the loss which is the subject matter of the Complaint, Ridgeway did not issue any other document purporting to govern, control, reflect, or memorialize the contract of carriage. Id.

         On or about July 22, 2015, ATS took possession of the Submersible, which was in good order and condition, and loaded it onto its truck for transport from Woods Hole, Massachusetts to Baltimore, Maryland. Complaint at ¶ 37; see also Tombs Ridgeway Decl. at ¶ 31. Ridgeway maintains that none of its employees had any direct involvement in the loading or the transportation of the Submersible. Tombs Ridgeway Decl. at ¶ 31. Ridgeway also maintains that none of its employees were present when the Submersible was loaded on the truck or during the transport of the Submersible. Id. Ridgeway appointed an independent surveyor who inspected the Cargo before it was loaded at Woods Hole's facilities. Id.

         Approximately one hour after departing Woods Hole, Massachusetts, en route to Baltimore, Maryland, the truck transporting the Submersible experienced a single tire blow out while driving northbound on Interstate 495 near Middleborough, Massachusetts. Complaint at ¶ 38. Following the tire blow out, Service Tire Truck Center, Inc. (“STTC”) inspected, serviced and repaired the truck. Id. at ¶ 39. Woods Hole alleges that STTC “implicitly or explicitly certified and declared that the Truck was safe and appropriate for the transport” of the Submersible. Id.

         After STTC replaced the truck's damaged tire, the truck proceeded to a TravelCenters facility in Greenwich, Rhode Island, where Wright and the truck spent the night. Id. at ¶ 41. On or about July 23, 2015, after departing the TravelCenters facility in Greenwich, Rhode Island, en route to Baltimore, the truck caught fire, burning the Submersible, and causing it massive damage. Id. at ¶ 42. Woods Hole alleges that the defendant carriers did not make delivery or return of the Submersible in like good order and condition as when shipped to, delivered to, or received by them, but made delivery of the Submersible in damaged condition. Id. at ¶ 44.

         D. The Connecticut Action

         On May 17, 2017, Anderson filed a complaint for declaratory judgment in the United States District Court for the District of Connecticut. Anderson Trucking Servs., Inc. v. Eagle Underwriting Group, Inc., et al., No. 3:17-cv-00817 (D. Conn.) (the “Connecticut Action”). Anderson named Woods Hole, the Museum, Ridgeway, and Eagle as defendants in the Connecticut Action. Anderson sought a declaration that it is not liable for any damage incurred by the Submersible; or in the event it is found liable for such damage, its liability is limited.

         On August 23, 2018, Senior District Judge Charles S. Haight, Jr. dismissed the claims against Woods Hole, Ridgeway, and Eagle for lack of personal jurisdiction. Judge Haight denied the Museum's motion to dismiss without prejudice to renewal and allowed Anderson to conduct jurisdictional discovery. Judge Haight also questioned whether the Connecticut Action should proceed, or whether, in the interests of justice, it should be dismissed or transferred given the parallel action pending in this Court. Subsequently, Judge Haight directed the parties to file a notice as to the disposition of the motions to dismiss pending before this Court and whether Anderson still intended to pursue its claims against the Museum in the Connecticut Action.[8]

         E. The Complaint

         The Complaint contains seventeen counts. Among other things, [9] Woods Hole brings Carmack Amendment, breach of bailment obligations, negligence, and unfair and deceptive practices claims against ATS, Ridgeway, and Guy Tombs. Complaint at ¶¶ 62-140. It also brings claims for breach of contract against Guy Tombs. Id. at ¶¶ 141-146. As to the Museum, Woods Hole has brought claims for breach of contract and breach of bailment obligations. Id. at ¶¶ 147-163. Finally, Woods Hole brings claims for negligence and breach of bailment against Wright. Id. at ¶¶ 164-175.

         F. The Motions To Dismiss

         Defendants ATS, Wright, Ridgeway, Guy Tombs, and the Museum have moved to dismiss the claims against them. Docket Nos. 20, 22, 27, 32, and 50. Defendants ATS and Wright argue that Woods Hole's state law claims are preempted by the Carmack Amendment. Docket No. 21 at 6-11. ATS also argues that Woods Hole's claim for unfair and deceptive practices is preempted by the Interstate Commerce Commission Termination Act and the Federal Aviation Administration Authorization Act. Docket No. 21 at 12-15.

         Rigdeway and Guy Tombs argue that the Court lacks personal jurisdiction over them. Docket No. 30 at 6-12; Docket No. 33 at 4-12. In the alternative, they argue that the Complaint fails to state a claim against them. Docket No. 30 at 12-14; Docket No. 33 at 13-17. They also argue that the Cargo Policy Underwriters are indispensable parties and, to the extent that they cannot be joined in this action, the Complaint should be dismissed pursuant to Rule 19(b) of the Federal Rules of Civil Procedure. Docket No. 30 at 15-16; Docket No. 33 at 17-18.

         Finally, the Museum argues that it is immune from suit under the Foreign Sovereign Immunities Act. Docket No. 51 at 12-18. It also argues that the allegations against it are factually wrong, id. at 18-20, and that it is not subject to personal jurisdiction by the Court. Id. at 20-25.

         Woods Hole has filed oppositions to all of the motions to dismiss. Docket Nos. 42, 44, and 63. ATS has also filed an opposition to Ridgeway's and the Museum's motions to dismiss.[10]Docket Nos. 41, 79. Ridgeway, Guy Tombs, and the Museum have filed replies in support of their motions to dismiss. Docket Nos. 48, 65, 86. II. ANALYSIS “[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject-matter jurisdiction) and the parties (personal jurisdiction).” Sinochem Int'l Co., Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007). Therefore, the Court first addresses the jurisdictional issues.

         A. The Museum's Motion To Dismiss Based On The FSIA

         The Museum argues that it is immune from suit under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1604 (the “FSIA”) and, therefore, the Court lacks subject-matter jurisdiction over it. Docket No. 51 at 12-18. The FSIA “provides the sole basis for obtaining jurisdiction over a foreign state in federal court.” Univ. Trading & Inv. Co., Inc. v. Bureau for Representing Ukrainian Interests in Int'l and Foreign Courts, 727 F.3d 10, 16 (1st Cir. 2013) (quoting Argentine Republic v. Amerada Hess Shipping Co., 488 U.S. 428, 439 (1989)). It establishes a presumption of foreign sovereign immunity from the jurisdiction of the courts of the United States unless one of its enumerated exceptions to immunity applies. Id. (citations omitted). In the absence of such an exception, the district court lacks both subject-matter and personal jurisdiction over a suit against a foreign sovereign. Id. (citations omitted).

         The First Circuit has not directly addressed the burdens of the parties with respect to a FSIA action. Id. at 17. However, most circuits have adopted a burden-shifting framework. See Univ. Trading & Inv. Co. v. Bureau for Representing Ukrainian Interests in Int'l and Foreign Courts, 898 F.Supp.2d 301, 309 (D. Mass. 2012) (citing cases). Under that framework, “the defendant must present a prima facie case that it is a foreign sovereign; the plaintiffs then have the burden of production of offering evidence showing that, under exceptions to the FSIA, immunity should not be granted; and finally, the ultimate burden of persuasion remains with the alleged foreign sovereign to show that none of the pertinent exceptions applies.” Id. (quoting Virtual Countries, Inc. v. Republic of S. Africa, 300 F.3d 230, 241 (2nd Cir. 2002) (emphasis in original; internal quotation marks omitted). This Court will follow that framework here.

         In considering a motion to dismiss on FSIA grounds, the “district court ‘retains considerable latitude in devising the procedures it will follow to ferret out the facts pertinent to jurisdiction.'” Freund v. Republic of France, 592 F.Supp.2d 540, 553 (S.D.N.Y. 2008) (quoting APWU v. Potter, 343 F.3d 619, 627 (2nd Cir. 2003)). “This discretion includes the ability to resolve disputed jurisdictional fact issues by reference to evidence outside the pleadings, such as affidavits.” Id. (citations and internal quotations marks omitted). “[C]onsistent with foreign sovereign immunity's basic objective, namely, to free a foreign sovereign from suit, the court should normally resolve those factual disputes and reach a decision about immunity as near to the outset of the case as is reasonably possible.” Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co., 137 S.Ct. 1312, 1317 (2017) (citing Verliden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 493-494 (1983)).

         1. Whether The Museum Is A Foreign State

         The FSIA applies only to “foreign states.” 28 U.S.C. § 1604. The term “foreign state” is defined to include “a political subdivision of a foreign state or an agency or instrumentality of a foreign state.” 28 U.S.C. § 1603(a). Woods Hole argues that the Museum has not met its burden to prove that ...


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