Ford Motor Co. v. Kawasaki Kisen Kaisha Ltd.

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FORD MOTOR COMPANY, Plaintiff, v. KAWAKAKI KISEN KAISHA LTD., “K” LINE AMERICA, INC., and “K” LINE RORO BULK SHIP MANAGEMENT CO., LTD., Defendants.

No. 21-cv-10119

United States District Court, E.D. Michigan, Southern Division

August 8, 2023

OPINION AND ORDER GRANTING DEFENDANT “K” LINE RORO BULK SHIP MANAGEMENT CO., LTD.'S MOTION TO DISMISS COMPLAINT FOR LACK OF PERSONAL JURISDICTION PURSUANT TO FED. R. CIV. P. 12(B)(2) (ECF NO. 29)

Paul D. Borman United States District Judge.

Plaintiff Ford Motor Company, on its own behalf and on behalf of assignee Ford Lio Ho Motor Company, Ltd. (collectively Ford), brings this action against Defendants Kawasaki Kisen Kaisha Ltd. (K-Line), “K” Line America, Inc. (KAM), and “K” Line RoRo Bulk Ship Management Co., Ltd. (KRBS), alleging claims for breach of contract bailment, tort, and admiralty. Ford entered into a Transportation Services Main Agreement (TSA) with K-Line for the ocean transportation of certain Ford automobiles aboard roll-on roll-off car carrier ships. Ford seeks to recover amounts owed for 246 Ford Ranger pickup trucks destroyed in a marine fire aboard an ocean-going car carrier ship Ford alleges was chartered, managed, staffed, operated maintained, and documented by the three K-Line Defendants. Defendants K-Line and KAM have appeared and filed an Answer to Plaintiff Ford's First Amended Complaint.

Now before the Court is Defendant “K” Line RoRo Bulk Ship Management Co., Ltd.'s Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) (ECF No. 29). Ford filed a Response in opposition, and KRBS filed a Reply brief. (ECF Nos. 31, 35.) Following a period of Court-ordered jurisdictional discovery, the parties filed supplemental briefs. (ECF Nos. 54, 57, 58, 59.) KRBS's motion to dismiss is therefore fully briefed. The Court does not believe that oral argument will aid in its disposition of this matter; therefore, it is dispensing with oral argument pursuant to Eastern District of Michigan Local Rule 7.1(f)(2).

For the reasons that follow, the Court GRANTS Defendant KRBS's motion and DISMISSES Defendant KRBS for want of personal jurisdiction.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Relevant Facts

1. The parties

Plaintiff Ford Motor Company is a Delaware corporation with its principal place of business in Michigan. (ECF No. 16, Plaintiff's First Amended Complaint (FAC) ¶ 1.)

Ford Lio Ho Motor Company (FLH) has its principal place of business in Taiwan and was the consignee of the 246 Ford Rangers at the time of the fire loss. FLH has assigned all of its claims for the loss of the Ford Rangers to Ford Motor Company and provided notice of the assignment to K-Line Group. (Id. ¶ 2.)

Defendant Kawasaki Kisen Kaisha Ltd. (K-Line) is a Japanese corporation, and the ultimate parent corporation of a group of transportation-related companies, including Defendants “K” Line America, Inc. (KAM) and “K” Line RoRo Bulk Ship Management Co., Ltd. (KRBS). (Id. ¶ 3.)

Defendant KAM is a wholly-owned United States subsidiary of K-Line, incorporated and qualified as a for-profit corporation in the State of Michigan, and designated as the North American General Agent for K-Line. (Id. ¶ 4.) KAM supports K-Line's business operations in the ocean carrier shipping sector in America. (Id.)

Defendant KRBS is a wholly-owned subsidiary of K-Line, headquartered in Kobe, Japan, and is one of two ship management subsidiaries of K-Line. KRBS's predecessor, Taiyo Kaiun Kabushiki Kaisha (TKKK), became an affiliate of K-Line through a government-mandated consolidation of the maritime industry in Japan in 1964, and became a wholly-owned subsidiary of K-Line in 2000. TKKK changed its name to KRBS in 2018. (Id. ¶ 5) (ECF No. 29, KRBS Mot. Dismiss at p. 1, PageID.443.) KRBS manages car and dry bulk carriers chartered by K-Line, including “Roll On Roll Off” (a/k/a RoRo) vessels and a ship called the Diamond Highway, the Ship transporting the 246 Ford Rangers at the time of the ship fire. (ECF No. 16, FAC ¶ 5.)

2. The contracts: Time Charter Agreement, SMA, and TSA

a. The 2013 Time Charter Agreement

In September 2013, K-Line time chartered a ship known as the Diamond Highway from Diamond Car Carriers, S.A. (Diamond), a Panamanian company, to transfer cargo for K-Line. (ECF No. 29-1, Declaration of Koji Himeda (Himeda Decl.) ¶ 19, PageID.477.) (ECF No. 19-3, Time Charter Agreement.) KRBS explains that under a time charter, the vessel owner, in this case Diamond, charters the vessel to the charterer, here K-Line, for a set period of time, and the charterer uses the vessel to carry the cargo of its customers and directs the vessel to sail to specified ports to load and deliver cargo. (ECF No. 29, KRBS Mot. Dismiss at PageID.446-47.) While the vessel's owner generally employs the crew and manages and operates the chartered vessel, many vessel owners hire professional ship managers to manage and operate the vessel. (Id.)

b. The 2013 Ship Management Agreement (SMA)

K-Line and Diamond agreed that KRBS would manage the Diamond Highway, and Diamond and KRBS entered into a Ship Management Agreement (SMA) in September 2013, under which KRBS would manage the Diamond Highway. (ECF No. 29-1, Himeda Decl. ¶ 19, PageID.477) (ECF No. 29-3, SMA.)^[1]KRBS negotiated and entered the SMA directly with Diamond. (ECF No. 29-1, Himeda Decl. ¶ 19, PageID.477.)

The SMA delegated the operational and management responsibilities of the Ship, including safety obligations, from Diamond to KRBS. (ECF No. 29-3, SMA ¶ 4, PageID.484.) The SMA required KRBS to provide competent personnel to supervise the maintenance of the Ship, and to ensure that the crew were “fully experienced in handling and operating this size and type of vessel,” and that the crew received appropriate training. (Id. ¶¶ 4-5, PageID.484-85.) Defendant KRBS asserts that its operational responsibilities include maintaining Documents of Compliance and developing the Safety Management System for each vessel it manages. (ECF No. 29, KRBS Mot. Dismiss at PageID.445.) The SMA contains a forum selection clause that requires Tokyo arbitration for any disputes. (ECF No. 54-2, Declaration of Sohachi Takimoto (Takimoto Decl.) ¶ 7, PageID.1430.) The SMA also contains an integration clause providing that the agreement “constitutes the entire agreement between the parties” and that any modification must be in writing. (ECF No. 29-3, SMA ¶ 25, PageID.497.)

c. The 2019 Transportation Services Main Agreement (TSA)

Effective January 1, 2019, Plaintiff Ford entered into a Transportation Services Main Agreement (TSA) with Defendant K-Line. (ECF No. 19-2, TSA.) Defendant KAM executed the TSA on K-Line's behalf, and the TSA identified KAM as the party to be served with any notice of claims or breach. (Id.) (ECF No. 16, FAC ¶ 4.)

The TSA sets general terms and conditions between K-Line and Ford for the transportation of Ford vehicles on K-Line owned or chartered vessels. (ECF No. 192, TSA T&C ¶ 1, PageID.281.) The TSA provides that the “Carrier [K-Line] shall provide to Shipper [Ford] all services necessary to accomplish the transportation of unboxed passenger and commercial automotive vehicles by ocean vessel” to their intended destination. (Id.) The TSA contains a broad integration clause providing that the TSA, with all of its exhibits and attachments, “constitutes the entire understanding of the parties in connection with its subject matter....” (Id. ¶ 13, PageID.282-83.)

The TSA expressly incorporates several exhibits, including Ford's Global Terms and Conditions for Non-Production Goods and Services. (Id. at PageID.280, 285-99.) The TSA, in the Global Terms and Conditions, contains a forum selection clause providing:

(d) Litigation.....In any litigation, the parties agree that the litigation will be filed only in the courts of the country in which the Buyer has its principal place of business, regardless of where the Seller may be located or the Supplies may have been designed, manufactured, sold or delivered..

(e) Principal Place of Business in the U.S. If the principal place of business of the Buyer is in the United States, each party will, in any litigation brought under Section 26(d):

(i) irrevocably submit to the exclusive jurisdiction of: (1) the United States District Court for the Eastern District of Michigan, Southern Division in Detroit, as to any claim or proceeding over which it may have jurisdiction; or, (2) the Circuit Court for the County of Oakland, Michigan (6th Circuit - Pontiac) as to all other claims or proceedings;

(ii) Expressly waive any objection to venue or jurisdiction, including an objection based on the inconvenience of the forum; and

(iii) Not seek or accept any award of punitive, exemplary or multiple damages other than a right to recover them under the indemnification provisions in Section 12.

(ECF No. 19-2, TSA, ¶ 26(d), (e), PageID.297.)

Ford further points out that the TSA also expressly incorporates K-Line's Bill of Lading. (Id. at PageID.280, 309-60.) That Bill of Lading provides, in relevant part:

Neither the Carrier nor any corporation owned by subsidiary to or associated or affiliated with the Carrier shall be liable to answer for or make good any loss or damage to the goods occurring at any time and even through before loading on or after discharge from the ship by reason or by means of any fire whatsoever unless such fire shall be caused by the design, neglect, fault or privity of its directors or managers.

(Id. PageID.360.)^[2]

3. Transportation and destruction of 246 Ford Ranger pickup trucks aboard the Diamond Highway in June 2019

In June 2019, K-Line accepted from Ford 246 Ford Ranger pickup trucks for transport from Thailand to Taiwan, pursuant to the parties' TSA. (ECF No. 16, FAC...