DANIELS v. KEYSTONE SHIPPING COMPANY et al

Filing 25

OPINION. Signed by Judge Mark R. Hornak on 8/21/15. (bdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
DAVID DANIELS,
Plaintiff,
v.
KEYSTONE SHIPPING COMPANY, KEY
LAKES I, INC. and/or KEY LAKES, INC.,
Defendants.

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Civil Action No. 1:14-cv-263 Erie
Judge Mark R. Hornak

OPINION
Mark R. Hornak, United States District Judge
Pending before the Court is a motion to dismiss for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6) filed by Defendant Keystone Shipping Company
(“Keystone”) (ECF No. 7) and a motion to dismiss for lack of personal jurisdiction pursuant to
Rule 12(b)(2) filed by Defendants Key Lakes, Inc. (“KL”) and Key Lakes I, Inc. (“KLI”)
(collectively, “Key Lakes”) (ECF No. 10). For the reasons which follow, Keystone’s motion is
granted and Key Lakes’ motion is denied.
I.

BACKGROUND
The facts underlying this matter are simple, albeit sparsely detailed in the Complaint.

Plaintiff David Daniels (“Daniels”) suffered an infection while working on a ship operating on
the Great Lakes. Compl. ¶ 2. On August 24, 2014, Daniels was discharged from the ship in
Erie, Pennsylvania, to seek medical treatment. Id. ¶ 2. At the time, Daniels was employed by
Key Lakes, Inc., and the demise charterer of Daniels’ ship was Key Lakes I. Id. ¶ 3.

During his treatment and recovery, Daniels alleges that the defendants paid him
maintenance and cure “at the starvation rate of $8.00 per day.” Id. ¶ 4. Daniels contends that he
is instead entitled to maintenance at a rate commensurate with his actual living expenses. Id. ¶ 5.
II.

STANDARD FOR REVIEW
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint must allege

“enough facts to state a claim for relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “The District Court must accept the complaint’s wellpleaded facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside,
578 F.3d 203, 210 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009)).
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S. at 678. In short, a motion to dismiss should be
granted if a party does not allege facts which could, if established at trial, entitle him to relief.
See Fowler, 578 F.3d at 211.
When a defendant raises the issue of personal jurisdiction in a motion pursuant to Fed. R.
Civ. P. 12(b)(2), the burden of proving personal jurisdiction over a defendant falls on the
plaintiff. Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009). The plaintiff
may establish a prima facie case of personal jurisdiction by demonstrating, with reasonable
particularity, sufficient contacts between the moving defendant and the forum state. Id. at 330;
Mellon Bank (E.) PSFS, Nat’l Assoc. v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). A plaintiff
may demonstrate these sufficient minimum contacts via affidavits or other competent evidence.
Metcalfe, 56 F.3d at 330 (quoting Dayhoff Inc. v. J.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir.
1996)). The court must accept the plaintiff’s allegations as true and construe disputed facts in his
favor. Id.

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III.

DISCUSSION
A. Keystone’s 12(b)(6) Motion
In his Complaint, Daniels alleges in a conclusory fashion that “Key Lakes, Inc. or

Keystone in the alternative, is [his] employer . . . and Keystone is alternatively liable for
negligent administration of maintenance under Restatement 324(A).” Compl. ¶ 3. Daniels does
not provide anything else to support his claims against Keystone.
By way of background, a seaman who is injured on the job may be entitled to a form of
payment known as maintenance. Maintenance “is the payment by a shipowner to a sailor for the
sailor’s food and lodging costs incurred while he is ashore as a result of illness or accident.”
Delaware River & Bay Authority v. Kopacz, 584 F.3d 622, 624 (3d Cir. 2009) (citing Barnes v.
Andover Company, L.P., 900 F.2d 630, 631 (3d Cir. 1990)). It is well-settled that an injured
seaman must seek maintenance from either his employer or the owner or charterer of the vessel
upon which he is injured. See, e.g., Barnes, 900 F.2d at 633-34 (noting that it is the duty of the
employer/shipowner to provide maintenance and cure for any injuries incurred while a seaman is
on duty); Watson v. Oceaneering Intern., Inc., 387 F.Supp.2d 385, 388 (D. Del. 2005) (“It is well
established that a vessel and its owner are liable to a seaman on the vessel for . . . maintenance
and cure for injuries sustained on the vessel.”); Nichols v. Weeks Marine, Inc., 513 F.Supp.2d
627, 638 (E.D. La. 2007) (“The seaman’s claim for maintenance and cure lies against the
seaman’s employer . . .”). Keystone, in its motion to dismiss, contends that it is neither:
Here, Daniels was never employed by Keystone. Nor did Keystone own,
operate, or charter the subject vessel. Moreover, Keystone was not the
entity that made maintenance payments to Plaintiff. Rather, it simply
issued maintenance payments on behalf of Key Lakes I, Inc.
ECF No. 8 at 4 (internal citations omitted); Wassel Decl. ¶¶ 3-6. At an oral argument on the
pending motions held on July 7, 2015, Daniels’ counsel offered no refutation to Keystone’s
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assertions that it did not employ Daniels or own the vessel at issue, nor did he indicate that he
was aware of any unpled facts that could fill this gap1. More importantly, the Complaint is so
threadbare that its conclusory assertions are of no help. Keystone is not an appropriate defendant
with respect to Daniels’ claim for maintenance.
Alternatively, Daniels contends that Keystone is liable for negligently administrating the
maintenance payments on behalf of Key Lakes.

Daniels relies on Section 324A of the

Restatement (Second) of Torts which provides as follows:
One who undertakes . . . to render services to another which he should
recognize as necessary for the protection of a third person or his things,
is subject to liability to the third person for physical harm resulting from
his failure to exercise reasonable care to protect his undertaking . . .
Restatement (Second) of Torts § 324A. However, courts have widely held that an action for
negligence based on Section 324A is limited to instances where the plaintiff suffers some sort of
resulting physical harm, rather than mere economic loss. See, e.g., Sound of Market St., Inc. v.
Continental Bank Int’l, 819 F.2d 384, 392 (3d Cir. 1987) (rejecting a Section 324A claim based
on negligence in the processing of a line-of-credit letter because the harm was entirely economic
and noting that “we have found no Pennsylvania case that has imposed liability in the absence of
. . . physical injury.”) (collecting cases). Here, Daniels does not allege that any physical harm
resulting from the allegedly insufficient payments, but seeks only “maintenance at a rate
commensurate with is [sic] living expenses.” Compl. ¶ 5. Consequently, he cannot sustain a
Section 324A claim, and Keystone’s motion to dismiss must be granted.
B. Key Lakes’ 12(b)(2) Motion
A district court may exercise personal jurisdiction over a non-resident defendant in
accordance with the law of the state where the district court sits. Fed. R. Civ. Pro. 4(e); Abel v.
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Of course, Plaintiff could have also amended his Complaint as a matter of right when he saw the Motion to
Dismiss. Fed. R. Civ. P. 15(a). He did not.

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Kirbaran, 267 F. App'x 106, 108 (3d Cir. 2008.); Eurofins Pharma U.S. Holdings v. BioAlliance
Pharma S.A., 623 F.3d 147, 155 (3d Cir. 2010). As Pennsylvania's long-arm statute is
coextensive with the United States Constitution, the limits set by Due Process Clause of the
Fourteenth Amendment govern the jurisdictional inquiry here. 42 Pa. Con. Stat. § 5322(b); Time
Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 63 (3d Cir. 1984). The Due Process
Clause requires that sufficient minimum contacts exist between the non-resident defendant and
the plaintiff's chosen forum for personal jurisdiction to be proper. Time Share, 735 F.2d at 63.
“Minimum contacts must have a basis in ‘some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum state, thus invoking the benefits
and protections of its laws.’” Remick v. Manfredy, 238 F.3d 248, 255 (3rd Cir. 2001) (quoting
Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987)).
Personal jurisdiction exists in two forms: specific and general. Abel, 267 F. App'x at 108.
“Specific jurisdiction” applies where the defendant purposefully directed certain of its activities
at the forum state, and the cause of action arises out of those same activities. Id.; O'Conner v.
Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 317 (3d Cir. 2007). If these two requirements are
met, the district court then considers whether the exercise of specific jurisdiction comports with
notions of fair play and substantial justice. O'Conner, 496 F.3d at 317.

The broader

jurisdictional predicate - general jurisdiction - is proper where the defendant maintains
continuous and systematic contacts with the forum, making the exercise of that state’s judicial
power over the defendant proper. Metcalfe, 566 F.3d at 344; Abel, 267 F. App'x at 108.
In the instant case, Daniels focuses almost entirely on attempting to establish specific
personal jurisdiction. That inquiry has three parts. First, the defendant must have “purposefully
directed [its] activities” at the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)

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(quotation marks omitted).

In evaluating this element, the touchstone is whether “the

defendant’s conduct and connection with the forum State are such that he should reasonably
anticipate being haled into court there.” Id. at 474 (quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)). Second, the litigation must “arise out of or relate to” at
least one of those activities. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 (1984); Grimes v. Vitalink Commc'ns Corp., 17 F.3d 1553, 1559 (3d Cir. 1994). And finally,
if the prior two requirements are met, a court may consider whether the exercise of jurisdiction
otherwise “comport[s] with ‘fair play and substantial justice.’” Burger King, 471 U.S. at 476
(quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
In seeking dismissal, the Key Lakes defendants offer a host of evidence in support of
their contention that neither entity purposefully directed its activities at the State of
Pennsylvania. For example, both Key Lakes, Inc. and Key Lakes I are incorporated in Delaware
and have their principal places of business in Duluth, Minnesota. KL Peterson Decl. ¶ 3; KLI
Peterson Decl. ¶ 3.2 Neither entity has ever had any offices, facilities, staff, sales persons,
agents, employees, or real or personal property in Pennsylvania. KL Peterson Decl. ¶¶ 9, 12-16,
21; KLI Peterson Decl. ¶ 10, 12-14, 17-18. Neither has ever been licensed or registered to
conduct business in Pennsylvania, and neither sells goods, pays taxes, or maintains a telephone
listing in Pennsylvania. KL Peterson Decl. ¶¶ 8, 11, 19-20; KLI Peterson Decl. ¶¶ 11, 16, 21-22.
Moreover, neither entity engages in a substantial amount of business in Pennsylvanian waters.
KLI’s trade occurs primarily in Minnesota, Ohio, Illinois, Indiana, Michigan, and Canadian
waters. KL Peterson Decl. ¶ 7. Deliveries to Pennsylvania ports represented less than 0.15% of
KLI’s cargo deliveries in the time period immediately following Daniels’ illness. Id. ¶¶ 6, 8.
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William Peterson, the general manager of Key Lakes, Inc., has submitted an affidavit on behalf of both KL and
KLI. The Court will refer to these documents as “KL Peterson Decl.” and “KLI Peterson Decl.” throughout this
opinion.

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On the other hand, KL and KLI concede that their corporate officers and directors are all
located in Pennsylvania, as well as their banking accounts. KL Peterson Decl. ¶¶ 7, 18; KLI
Peterson Decl. ¶¶ 9, 20. At the time of Daniels’ infection, the ship was delivering cargo to Erie,
Pennsylvania, and Key Lakes eventually discharged Daniels from the vessel to seek medical
treatment from a hospital located at that Pennsylvania port. Compl. ¶¶ 1-2; KLI Peterson Decl. ¶
8. Moreover, all material KL and KLI contact with Plaintiff since that date has been directed by
them from Pennsylvania. Such contacts have been consequential in the specific context of this
case, including the letter terminating his employment, a letter accompanying his benefits
payments, and a letter asserting Key Lakes’ position with respect to Daniels’ ongoing medical
treatment. O’Brien Decl. Ex. A, B, C. Indeed, a recent communication from Key Lakes to
Daniels reveals that Key Lakes’ claims department for handling the benefits at issue here is
located in Bala Cynwyd, Pennsylvania. O’Brien Supp. Decl. Ex. A. Thus, there is a sufficient
basis to conclude that Key Lakes purposefully directed its activities at Pennsylvania, that this
litigation arises out of or directly relates to those activities, and exercising jurisdiction over it in
Pennsylvania comports with fair play and substantial justice.
In light of the foregoing, the Court concludes that Daniels has presented sufficient
evidence to demonstrate with reasonable particularity that Key Lakes has the requisite minimum
contacts with Pennsylvania, particularly at this nascent stage in the proceedings. Key Lakes’
motion to dismiss will be denied, but without prejudice to revisit the issue at the summary
judgment stage, if warranted.3
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As an alternative to outright dismissal, Key Lakes requested that this action be transferred to the United States
District Court for the District of Minnesota pursuant to 28 U.S.C. § 1406(a). That request is framed as an alternative
to dismissal in the event that personal jurisdiction is found lacking, rather than as an independent motion for change
of venue pursuant to 28 U.S.C. § 1404(a). If it were the latter, Key Lakes provides the Court with no legal or factual
basis to order such a transfer. See Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995). Given the Court’s
conclusion that personal jurisdiction is appropriate in this district, and the lack of any presented basis for transfer,
Key Lakes’ alternative request for transfer is denied.

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IV.

CONCLUSION
For the foregoing reasons, Keystone’s motion to dismiss for failure to state a claim is

granted. Key Lakes’ motion to dismiss for lack of personal jurisdiction is denied without
prejudice.
An appropriate order will issue.

s/ Mark R. Hornak
Mark R. Hornak
United States District Judge
Dated: August 21st, 2015
cc:

All counsel of record

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