UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-40995
Summary Calendar
RAYMUNDO CERRATO SOLANO
Plaintiff-Appellee
v.
GULF KING 55, INC; GULF KING SERVICES, INC; GULF KING 55 IN REM
Defendants-Appellants
____________________________________
VICTOR MANUEL URBINA
Plaintiff-Appellee
v.
GULF KING 55 INC; GULF KING SERVICES, INC; GULF KING 49, IN REM;
GULF KING 49, INC
Defendants-Appellants
____________________________________
ALFRED HODGSON DENIS
Plaintiff-Appellee
v.
GULF KING 49, INC; GULF KING SERVICES, INC; GULF KING, IN REM
Defendants-Appellants
____________________________________
LARRY HANSACK
Plaintiff-Appellee
v.
GULF KING 50, INCORPORATED; GULF KING SERVICES, INCORPORATED; GULF
KING 50, IN REM
Defendants-Appellants
_____________________________________
MILTON PASOS
Plaintiff-Appellee
v.
GULF KING 46, INC; GULF KING SERVICES, INC; GULF KING 46, IN REM
Defendants-Appellants
_____________________________________
MAURICIO WILLIS GUILLERMO
Plaintiff-Appellee
v.
GULF KING 50, INC; GULF KING SERVICES, INC; GULF KING 50 IN REM
Defendants-Appellants
_____________________________________
ROY DERIH WILLIAM GUTIERRES
Plaintiff-Appellee
v.
GULF KING 51, INC; GULF KING SERVICES, INC
Defendants-Appellants
_____________________________________
JOSE MARTINEZ YANES
Plaintiff-Appellee
v.
GULF KING 51, INC; GULF KING SERVICES, INC; GULF KING 51, IN REM
Defendants-Appellants
_____________________________________
BENIGNO JIRON MENDEZ
Plaintiff-Appellee
v.
GULF KING 43, INC; GULF KING SERVICES, INC; GULF KING 43, IN REM
Defendants-Appellants
_____________________________________
GILBERTO GAMBOA
Plaintiff-Appellee
v.
GULF KING 39, INC; GULF KING SERVICES, INC; GULF KING 39, IN REM
Defendants-Appellants
Appeals from the United States District Court
for the Southern District of Texas
June 5, 2000
Before SMITH, BARKSDALE and PARKER, Circuit Judges.
ROBERT M. PARKER, Circuit Judge:
Ten plaintiff seamen brought work-related personal injury
actions against defendant vessel owners under the Jones Act.
Defendants (collectively “Gulf King”) filed a consolidated motion
for summary judgment claiming that Nicaraguan law governs the
claims. The district court denied the motion, then certified the
choice-of-law question for consolidated interlocutory appeal. We
reverse.
FACTS AND PROCEDURAL HISTORY
In each of the ten consolidated cases, the plaintiff is a
Nicaraguan citizen and domiciliary who filed a complaint seeking
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damages for personal injuries, as well as maintenance and cure as
a consequence of alleged injuries that occurred while working as a
crew member on a Gulf King vessel. The claims arise from unrelated
injuries occurring on different dates on various vessels owned by
defendants. Each plaintiff has asserted causes of action based on
the Jones Act, 46 U.S.C. § 688 (1994) and the general maritime laws
of the United States; no plaintiff has asserted any action against
any defendant based on the laws of Nicaragua or any other country.
Each plaintiff was hired in Nicaragua to work aboard one of
the Gulf King vessels engaged in shrimping operations exclusively
in the territorial waters of Nicaragua. The plaintiffs were paid
with Nicaraguan currency, in Nicaragua for their work aboard the
vessels, and all original payroll and employment records pertaining
to their service aboard the vessels originated in Nicaragua. All
decisions concerning Plaintiffs’ employment aboard Gulf King
vessels were made in Nicaragua. The Plaintiffs’ alleged injuries
all occurred within twelve nautical miles of the Nicaraguan
shoreline.
All vessels involved in these cases have been located in
Nicaragua since 1994, and have not returned to the United States or
conducted fishing operations outside Nicaraguan territorial waters
at any time relevant to these suits. The vessels have not been
operating under general maritime principles of international
commerce, but rather were operating under license, regulations and
control of the Nicaraguan government. Although each vessel is
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documented under the laws of the United States and flies the
American flag, each vessel flies the Nicaraguan flag above the
American flag, in accordance with Nicaraguan law. Nicaraguan-
imposed regulations include the issuance of an annual license to
take fish and shrimp from Nicaraguan territorial waters, the
issuance of zarpe prior to each fishing trip restricting the scope
and duration of that trip, physical safety inspections and vessel
manning requirements, compensation and benefit obligations. The
vessels are not subject to United States Coast Guard safety
requirements or inspections.
Based on these facts, Gulf King moved for summary judgment and
urged the district court to apply Nicaraguan law and dismiss all
causes of action asserted by the Plaintiffs. Plaintiffs countered
with additional facts, including that the owners of the Gulf King
vessels are closely held Delaware corporations with their principal
place of business in Aransas Pass, Texas. The owners of 96% of the
stock of the corporations are United States citizens and Texas
residents. Gulf King owns forty-three (43) shrimping vessels,
thirty-four (34) of which operate exclusively in Nicaragua. The
Nicaraguan Fleet Manager and Captains answered to and were in
regular daily contact with Gulf King management in Texas. Gulf
King financed its vessels primarily through two loans: one in the
amount of $6,200,000.00 from the Small Business Administration and
one in the amount of $15,000,000.00 from the United States
Department of Commerce, National Marine Fishery Service. Because
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both loans were made by United States agencies, Plaintiffs
characterize Gulf King as “owing it all to United States
taxpayers.” Finally, 100% of the shrimp from the Nicaraguan
vessels were imported to the United States and sold to American
consumers.
ANALYSIS
We review the denial of summary judgment de novo. See Webb v.
Cardiothoracic Surgery Assocs., P.A., 139 F.3d 532, 536 (5th Cir.
1998). Summary judgment is proper if the evidence shows the
existence of no genuine issue of material fact and that the moving
party is entitled to judgment as a matter of law. FED. R. CIV. P.
56(c).
The question of whether the Jones Act and the general maritime
law of the United States apply or whether Nicaraguan law controls
these maritime injury claims is governed by the Supreme Court
trilogy of Lauritzen v. Larsen, 345 U.S. 571 (1953), Romero v.
International Terminal Operating Co., 358 U.S. 354 (1959) and
Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306 (1970). In
Lauritzen, the Supreme Court enumerated seven factors that bear on
this choice of law question: (1) the place of the wrongful act; (2)
the law of the flag; (3) the allegiance or domicile of the injured;
(4) the allegiance of the defendant shipowner; (5) the place of
contract; (6) the inaccessibility of the foreign forum; and (7) the
law of the forum. See 345 U.S. at 583-90. Lauritzen taught that
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courts should ascertain and value the enumerated points of contact
between the transaction and the governments whose competing laws
are involved. See id. at 582. Lauritzen stressed that the law of
the flag is generally of cardinal importance, see id. at 584-86,
and suggested that the last two enumerated factors should be given
very little weight. See id. at 589-91. The list of seven factors
in Lauritzen was not intended as exhaustive. See Rhoditis, 398
U.S. at 309. The “shipowner’s base of operations is another factor
of importance in determining whether the Jones Act is applicable;
and there well may be others.” Id. These eight factors have come
to be known as the “Lauritzen-Rhoditis factors.” See, e.g.,
Schexnider v. McDermott International, Inc., 817 F.2d 1159, 1161
(5th Cir. 1987). Each factor is to be weighed to determine whether
all the factors add up to the necessary substantiality of contacts
between the transaction at issue and the United States. See
Rhoditis, 398 U.S. at 309 n. 4. Moreover, each factor must be
tested in light of the underlying objective, which is to effectuate
the liberal purposes of the Jones act. See id., citing Bartholomew
v. Universe Tankships, Inc., 263 F.2d 437, 441 (2d Cir. 1959).
The district court correctly set out the eight factors gleaned from
Supreme Court precedent and made the following findings as to their
application.
The district court looked first to the law of the flag. See
Lauritzen, 345 U.S. at 583 (emphasizing the “cardinal importance”
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of the law of the flag). The district court found that the law of
the flag factor favors applying United States laws because the Gulf
King vessels in question flew the American flag. While each of the
vessels flew the Nicaraguan flag as well, Plaintiffs offered
testimony that the Nicaraguan flags served as an indication that
the vessels were authorized to fish in Nicaraguan territorial
waters, rather than a sign of Nicaraguan ownership or registration.
Second, the district court examined what it termed the “next
most crucial factor,” the base of operations factor from Rhoditis,
398 U.S. at 310. In a preliminary ruling, the district court
concluded that the overwhelming American flavor of Gulf King’s
operation favored application of American law. See Solano v. Gulf
King 55, Inc., 30 F. Supp. 2d 960, 963 (S.D. Tex. 1998). However,
on reconsideration, the district court reversed itself, noting that
the location from which a vessel’s day-to-day operations are
controlled is considered the base of operations, even where the
defendant is a wholly owned subsidiary of an American corporation.
See Fogleman v. ARAMCO, 920 F.2d 278, 284 (5th Cir. 1991).
The district court then listed three other factors that
favored application of Nicaraguan law: (1) Plaintiffs are
Nicaraguan citizens who maintain their residences in that country;
(2) the place of the employment contracts was Nicaragua; and (3)
the alleged wrongs occurred in the territorial waters of Nicaragua.
Weighing in opposite those considerations, the district court found
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that the allegiance of defendants to the United States favored
application of American law. Finally, the district court found
that the two remaining factors – the accessibility of Nicaragua as
a forum and the law of the forum – were not relevant to the
determination.
The factors governing choice of law appeared closely divided
to the district court, with the two factors traditionally
considered the most important – choice of flag and base of
operations – each favoring opposite conclusions. The district
court then found itself bound to consider the national interests to
be served by the choice of American law, citing Schexnider, 817
F.2d at 1161. The district court rejected Gulf King’s argument
that American interests would be served by the application of
Nicaraguan law, which would reduce costs whenever one of their
employees is injured on the job, thus making an American
corporation more competitive in the international marketplace.
Instead, the district court noted that Gulf King realizes
substantial savings due to the low wages paid to the Nicaraguan
seamen they employ and that Gulf King has a duty to provide for its
employee’s welfare. The district court therefore found that “[i]t
is certainly within the national interest that the United States
government, which has propped up Defendants with . . . loans, not
be perceived as officially or implicitly sanctioning the [ruthless
exploitation of other countries’ labor pools].”
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On appeal, Gulf King challenges the district court’s
application of the Lauritzen-Rhoditis factors. The Supreme Court
developed the factors in cases involving vessels engaged in
commercial or maritime activities that traveled the high seas,
passing through territorial waters of more than one nation. The
weight accorded the choice of law factors in the context of those
cases was dictated by the international nature of the vessels’
regular activities, the fortuity of the location of the plaintiffs’
alleged accident or injury and the need to establish a uniform,
consistent law onboard a ship that traveled through waters of more
than one sovereign nation. See Phillips v. Amoco Trinidad Oil Co.,
632 F.2d 82, 87 (9th Cir. 1980). Accordingly, in the context of
those cases, the Supreme Court gave substantial weight to the law
of the flag and the allegiance of the defendant ship owner. See
id. Subsequently, the Fifth Circuit has applied the Lauritzen-
Rhoditis factors to cases where neither the seaman nor the vessel
was engaged in traditional, blue-water maritime activities crossing
through waters of competing nations. See Chiazor v. Transworld
Drilling Co., 648 F.2d 1015, 1019 (5th Cir. 1981), overruled on
other grounds, In re Air Crash Disaster, 821 F.2d 1147, 1163 n. 25
(5th Cir. 1987). In Chiazor, the plaintiff brought suit to
recover damages resulting from an accident which occurred on a
submersible drilling rig off the Nigerian coast. See id. at 1016.
Given the permanent location of the rig, we determined that “such
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factors as place of wrongful act, allegiance or domicile of the
injured and place of contract, which may be less substantial in the
shipping context, tend to take on added significance under the
present circumstances.” Id. at 1019. In sifting through the
factors and determining how to weigh them in a case involving a
fixed drilling platform, we relied on the Ninth Circuit opinion in
Phillips v. Amoco Trinidad Oil Co., 632 F.2d 82 (9th Cir. 1980).
Like Chiazor, Phillips concerned an action for damages for personal
injuries occurring on a drilling platform in Trinidad’s territorial
waters. See id. at 83-84. Phillips held that the law of the flag
should not be accorded controlling weight and the allegiance of the
defendant shipowner had diminished importance, while the place of
the wrongful act, the allegiance and domicile of the plaintiff
workers and the place of contract should be given greater weight.
See id. at 87.
We conclude that the facts of this case are more analogous to
an injury occurring on a fixed drilling platform than on a vessel
in traditional maritime commerce. For that reason, we find that
the district court erred in the weight it accorded the Lauritzen-
Rhoditis factors in this case. When we discount the law of the
flag and allegiance of the defendants factors which favor
application of United States law, and accord more weight to the
Plaintiffs’ citizenship and residence, the place of the employment
contracts and the place of injury, all of which were in Nicaragua,
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it is clear that the calculus ultimately dictates application of
Nicaraguan law. We note, further, that the district court’s
assumption that the application of United States law would allow
the Plaintiffs a more generous recovery, while almost certainly
correct, was not a valid consideration in its choice-of-law
analysis. “The fact that the law of another forum may be more or
less favorable to a plaintiff, however, does not determine choice
of law.” Fogleman, 920 F.2d at 284.
CONCLUSION
For the foregoing reasons, we reverse the district court’s
choice of law determination and remand this case for further
proceedings consistent with this opinion.
REVERSED and REMANDED.
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