Opinion
Civ. No. Y-98-4092.
August 1999.
Marland Hamilton Whitman, Jr., Esquire, Baltimore, Maryland; Stephen Galati, Esquire, Philadelphia, Pennsylvania; and Dante Mattioni, Esquire, Philadelphia, Pennsylvania, counsel for Plaintiff.
Narol J. Glover, Esquire, Baltimore, Maryland and James W. Constable, Esquire, Baltimore, Maryland, Counsel for Defendant Consolidated Rail Corporation.
Narol J. Glover, Esquire, Baltimore, Maryland and James W. Constable, Esquire, Baltimore, Maryland, Counsel for Defendant Burlington Northern Santa Fe Corporation.
William J. Murphy, Esquire, Baltimore, Maryland and John J. Connolly, Esquire, Baltimore, Maryland, counsel for Defendant SCS Refrigerated Services.
MEMORANDUM OPINION
Plaintiff Long John Silver's, Inc. ("Silver's") has brought suit against defendant SCS Refrigerated Services ("SCS"), a Washington-state corporation in the business of storing frozen and refrigerated food products in bulk quantities, and two railroad companies, defendants Consolidated Rail Corporation ("Conrail") and Burlington Northern Santa Fe Corporation ("Burlington Northern"). Plaintiff also named 100 John Doe defendants. Defendant SCS Refrigerated Services moves to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
I.
On or about July 3, 1997, Silver's decided to transport 3,030 cases of frozen pollock from SCS's refrigerated warehouse in Seattle, Washington to a warehouse in Salisbury, Maryland. The fish was transported across the country in refrigerated rail cars by Burlington Northern and Conrail, and possibly by other carriers. Silver's alleges that the fish arrived in Maryland in spoiled condition and that the damage was caused by too high a temperature in transport. Silver's asserts four claims against all defendants, each seeking $88,944.99 in damages.
II.
When a nonresident defendant challenges personal jurisdiction under Rule 12(b)(2), the plaintiff bears the burden "to prove the existence of a ground for jurisdiction by a preponderance of the evidence." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). If the Court rules without holding a hearing, the Court "must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction." Id.
The Supreme Court has ruled that the defendant must have minimum contacts with the forum jurisdiction sufficient to ensure that compelling the defendant to appear in and defend an action in a distant forum would accord with traditional notions of fair play and substantial justice. See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The defendant's contacts must be purposeful because "traditional notions of fair play and substantial justice are offended by requiring a non-resident to defend itself in a forum where the non-resident never purposefully availed itself of the privilege of conducting activities within the forum, thus never invoking the benefits and protections of its laws." In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997) (citing Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
The Maryland Long Arm Statute provides that a court may exercise personal jurisdiction where the defendant transacts any business or performs any character of work or service in the State or the person or an agent contracts to supply goods, food, services, or manufactured products in the State. See Md. Code Ann., Md. Cts. Jud. Pro., § 6-103(b)(1-2). Conrail and Northern Burlington argue that these provisions permit personal jurisdiction over SCS. A nonresident who has never entered the State "`may be deemed to have `transacted business' in the State . . . as long as his or her actions culminate in `purposeful activity' within the State.'" Jason Pharmaceuticals v. Jianas Bros., 94 Md. App. 425, 617 A.2d 1125 (1993) (quoting Sleph v. Radtke, 76 Md. App. 418, 427, 545 A.2d 111 (1988)).
Conrail and Burlington Northern argue that SCS purposefully availed itself of the benefits of Maryland when it contracted to ship the fish to Maryland, via its bill of lading. The bill of lading set forth the terms and conditions of the shipment and it specified Maryland as the shipping destination. The co-defendants further argue that SCS intended to derive substantial financial benefit from its shipment.
III.
In Chung v. Nana Devel. Corp., 783 F.2d 1124 (4th Cir. 1986), the Fourth Circuit held that the district court improperly exercised personal jurisdiction over the defendant. The Fourth Circuit ruled that the defendant's knowledge that the product would be delivered to a Virginia resident was not sufficient to establish a constitutional basis for jurisdiction, in light of the fact that the plaintiff initiated the contact and the defendant otherwise conducted no business in Virginia. SCS was not the shipper of the goods, and it did not assume responsibility for the shipment. SCS derived its revenue from storing the fish, not from shipping it. It is insufficient that SCS knew that the fish would be shipped to Maryland. See id. at 1128 ("It is immaterial, in this context, that [defendant] knew of the ultimate destination of the shipment. . . .").
Maryland courts have followed Chung for the proposition that "the contacts considered are `those actually generated by the defendant.'" Poole Kent Co. v. Equilease Assocs., 71 Md. App. 9, 17, 523 A.2d 1018, 1023 (1987) (quoting Chung, 783 F.2d at 1127)). SCS is today and was in 1997 a public refrigeration storage company based in Algona, Washington. SCS owns and operates three large-scale refrigerated warehouses, all of which are in the State of Washington. SCS has no warehouses, equipment, employees, or operations in the State of Maryland. SCS directs essentially no advertising, solicitation, or marketing at customers in the State of Maryland. SCS has derived no revenue from Maryland customers during the preceding nine year and is not registered to do business in Maryland. Communications regarding the shipment occurred between SCS in Seattle and Silver's in Kentucky. Payment was made from Kentucky and SCS had no business contacts with anyone in Maryland with respect to the shipment.
Silver's argues that the bill of lading was issued by SCS, alone sufficient involvement for the Court to exercise personal jurisdiction. The bill of lading constitutes the contract between the shipper and the carrier. See Nippon Fire Marine Ins. Co. v. M.V. Tourcoing, 979 F. Supp. 206, 210 (S.D.N.Y. 1997), aff'd 167 F.3d 99 (2d Cir. 1999). Silver's cites a number of admiralty or maritime cases finding personal jurisdiction based in part on the bill of lading. However, in all the cases cited, the defendants' ships actually entered the state. In contrast, SCS never had a vessel in Maryland. Only Conrail and Burlington did. SCS did not even ship the product to Maryland in the ordinary sense; it simply followed Silver's instructions to designate an address in Maryland on the bill of lading and released the product to a rail carrier for delivery.
The Eleventh Circuit has explicitly held that the destination on the bill of lading was insufficient to establish personal jurisdiction. See Francosteel Corp. v. M/V Charm, 19 F.3d 624, 628-29 (11th Cir. 1994). The Eleventh Circuit noted that the focus should be on the parties' contacts with the forum through prior negotiations, future consequences, and actual course of dealing. See id. at 628. SCS conducted its dealings with Silver's in Kentucky, not Maryland. See also Asarco, Inc. v. Glenara, Ltd. 912 F.2d 784, 786-87 (5th Cir. 1990) (Louisiana court had no personal jurisdiction even though bill of lading indicated Louisiana as destination).
Applying the Virginia Long Arm Statute, the Fourth Circuit held that a Washington corporation that derived $37,000.00 from a business deal in Virginia amounted to substantial revenue and thereby subjected it to jurisdiction in Virginia. See Ajax Realty Corp. v. J.F. Zook, Inc., 493 F.2d 818 (4th Cir. 1972). The codefendants argue that SCS purposefully and knowingly shipped goods into the State of Maryland with the intent of deriving revenue from that shipment, thereby availing itself of the laws of Maryland. However, this provision of both the Virginia and Maryland Long Arm Statutes requires the defendant to have caused tortious conduct. Conrail and Burlington do not mention this requirement and hence, have failed to proffer any basis for finding tortious conduct.
Conrail argues it has not had the opportunity to discover the information that would rebut SCS's contention. The Court's Order of March 18, 1999 permits additional discovery through September 15, 1999. The defendants request that before the Court decides the Motion to Dismiss that the Court allow the remaining discovery to proceed. However, the Court finds the parties have had sufficient time to find evidence pertaining to the existence of personal jurisdiction and have failed to do so.
IV.
Conrail and Burlington Northern filed a cross-claim against SCS for any amount of judgment which may be rendered against Conrail and Burlington Northern together with the costs of their defense, including attorneys fees; or in the alternative, a judgment for contribution or indemnity against SCS. Conrail and Burlington argue that if they are held liable to the plaintiff for the loss alleged, such loss occurred solely as a result of the negligence and breach of contractual obligations by SCS without any negligence or want of care on the part of Conrail or Burlington. Because SCS is no longer a part of this action in this Court, the cross-claim is moot and therefore denied.
V.
Based on the foregoing analysis, Defendant SCS's Motion to Dismiss is hereby granted and Defendant Conrail and Burlington Northern's Cross-Motion is hereby denied.
ORDER
In accordance with the attached Memorandum, it is this day of August 1999, by the United States District Court for the District of Maryland, ORDERED:
1. That Defendant SCS's Motion to Dismiss BE, and the same IS, hereby GRANTED; and
2. That Defendant Conrail and Burlington Northern's Cross-Claim BE, and the same IS, hereby DENIED; and
3. That copies of this Memorandum and Order be mailed to counsel for the parties.