Foreign Employer Not Amenable to Federal Maritime Jurisdiction Based on Forum-Non-Conveniens
Initially, the district court dismissed the case based on forum-non-conveniens, but the Eleventh Circuit vacated that dismissal, claiming that the district court’s analysis was incomplete in failing to definitively identify the applicable choice of law. The appeals court remanded the case to the district court with instructions to determine the applicable choice of law according to Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306 (1970).Thus, the issue before the Eleventh Circuit was whether the district court had properly analyzed whether YLL’s contacts with the U.S. constituted a substantial base of operations that conferred the application of U.S. law as opposed to foreign law.YLL Shipping’s Contactswith the U.S.YLL Shipping is incorporated in the Bahamas, which is also the location of its principal place of business. In 1999, Vasquez signed his original employment agreement with YLL Shipping in Florida, but subsequent employment agreements with YLL Shipping were all signed in the Bahamas.Between 2005 and 2009, YLL Shipping served multiple businesses in the U.S. by transporting clients’ merchandise from Florida—where YLL Shipping rented warehouse space--to the Bahamas. YLL Shipping derived roughly 15% of its total income from these shipping operations.Four shareholders collectively owned YLL. One of the owners had a 40% interest in the company and also had U.S.-Bahamian dual citizenship. The other three shareholders each owned 20% and were citizens of the Bahamas.Finally, YLL Agency, Inc. is a Florida corporation that is also owned by the40% shareholder of YLL Shipping. YLL Agency maintains its offices and agents in Fort Lauderdale and its sole client is YLL Shipping, who pays YLL Agency for management services.The Court’s DecisionThe appeals court recognized that the district court had properly determined the applicable choice of law by using the seven factors from Lauritzen v. Larsen, 345 U.S. 571 (1953), in addition to the substantial base of operations factor from Rhoditis.First, the court found that YLL’s actual business operations in the U.S. were insubstantial.Second, the court declined to pierce the corporate veil and find YLL Agency to be the alter ego of YLL Shipping. This is because Vasquez failed to demonstrate that YLL Shipping fraudulently used the corporate form to cause Vasquez’s injury.Finally, the court cited the findings from the Lauritzen analysis:(1) place of the injury (Bahamas), (2) flag of the vessel upon which the injury occurred (Honduran), (3) location of the vessel whereinjury occurred, (Bahamas), (4) citizenship of Vasquez (Dominican), (5) citizenship of defendant, (Bahamian), (6) place of contract between Vasquez and YLL Shipping, (Bahamas), and (7) principal place of defendant’s business (Bahamas).Thus, the court concluded that the district court had not abused its discretion in finding federal maritime jurisdiction inapplicable and dismissing the case based on forum-non-conveniens.