Holland v. Cardem Insurance Company

• Court: District Court, District of Columbia
• Decided: September 11, 2023
• Docket: Civil Action No. 2019-2362
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MICHAEL H. HOLLAND, et al.,

Plaintiffs,

v. Civil Action No. 19-02362 (TSC)

CARDEM INSURANCE COMPANY, LTD,

Defendant.

MEMORANDUM OPINION

Plaintiffs Michael H. Holland, Michael W. Buckner, Michael Loiacono, and Michael

McKown are the trustees of the United Mine Workers of America 1974 Pension Plan (“the

Plan”). Compl. ¶ 4, ECF No. 1. Plaintiffs have sued Defendant Cardem Insurance Company,

LTD (“Cardem”) to recover nearly $934 million in pension funds allegedly due under the

Employee Retirement Income Security Act of 1974 (“ERISA”). Id. ¶ 13. Defendant is a

Bermudan company with its principal place of business in Bermuda. Def.’s Sec. Mot. to Dismiss

at 1, ECF No. 25. Defendant was previously a subsidiary of Walter Energy, a U.S.-based

company. Id. at 4.

Defendant moved to dismiss the lawsuit for lack of personal jurisdiction. Id. at 2.

Plaintiffs opposed and moved for jurisdictional discovery. Id. The matter was then referred to

Magistrate Judge G. Michael Harvey, who wrote a Report and Recommendation (“Report I”)

concluding that Defendant is not subject to general or specific personal jurisdiction but

nevertheless recommending that this court GRANT Plaintiffs’ motion for jurisdictional

discovery. See Holland et al. v. Cardem Ins. Co., Ltd, 2020 WL 9439381 (D.D.C. June 22,

1 2020). This court adopted Magistrate Judge Harvey’s recommendation and ordered

jurisdictional discovery. 9/2/2020 Order, ECF No. 20. After the discovery was concluded,

Defendant renewed its motion to dismiss for want of personal jurisdiction, and Magistrate Judge

Harvey issued another Report and Recommendation (“Report II”) reaffirming his previous

recommendation that this court GRANT Defendant’s motion and dismiss the case. Report II,

ECF No. 28 at 2. Plaintiffs objected to Report II, Defendant responded to the objections and

Plaintiffs submitted a Reply. See Pls.’ Obj., ECF No. 32; Def.’s Resp., ECF No. 33; Pls.’ Reply,

ECF No. 34.

Having considered Report II, Plaintiffs’ objections, and Defendant’s responses, the court

will adopt Report II over Plaintiffs’ objections, and GRANT Defendant’s motion to dismiss this

case for lack of personal jurisdiction.

I. LEGAL STANDARD

“District courts must apply a de novo standard of review when considering objections to,

or adoption of, a magistrate judge’s Report and Recommendation.” Means v. District of

Columbia, 999 F. Supp. 2d 128, 132 (D.D.C. 2013). “The district judge may accept, reject, or

modify the recommended disposition; receive further evidence; or return the matter to the

magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3); see 28 U.S.C. § 636(b). There are

“two procedural limitations that affect a district court’s review: (1) an objecting party is not

permitted to present new initiatives to the district judge… and (2) an objecting party relinquishes

the opportunity to challenge the district court’s adoption of any portion of the Magistrate Judge’s

Report that an objecting party has failed to timely file an objection.” Taylor v. District of

Columbia, 205 F. Supp. 3d 75, 79 (D.D.C. 2016) (internal citation omitted).

2 Plaintiffs bear the burden of establishing that this court has personal jurisdiction over

Defendant. Crane v. New York Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990). Personal

jurisdiction may be either specific or general. BNSF Ry. Co. v. Tyrrell, 581 U.S. 402, 413

(2017). Because Plaintiffs do not object to Magistrate Judge Harvey’s conclusion that specific

personal jurisdiction does not apply here, Report II at 10, ECF No. 28, the court’s analysis is

confined to general personal jurisdiction.

“A court may assert general jurisdiction over foreign (sister-state or foreign-country)

corporations to hear any and all claims against them when their affiliations with the State are so

continuous and systematic as to render them essentially at home in the forum State.” Goodyear

Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation marks

omitted). It would be “an exceptional case” if a corporation is “at home” in a forum “other than

its formal place of incorporation and principal place of business.” Daimler AG v. Bauman, 571

U.S. 117, 139 n.19 (2014). In practice, a district court determines whether a corporation is

subject to general jurisdiction by comparing its in-forum contacts to its “activities in their

entirety, nationwide and worldwide.” Id. n.20.

II. ANALYSIS

A. Plaintiffs’ Objection #1: Report II erroneously concludes that Plaintiffs failed to evaluate the property and risk insured by Defendant and Defendant’s reinsurance contracts.

a. Reinsurance contracts

Plaintiffs claim Magistrate Judge Harvey erroneously concluded that they failed to

provide an analysis comparing Defendant’s U.S. business activities to its non-U.S. business

activities. Pls.’ Obj. at 4. According to Plaintiffs, a comparative analysis was unnecessary

because Defendant derived 100% of its operational revenue from the U.S., in the form of

3 insurance premiums it charged to Walter Energy. Id. Likewise, Plaintiffs contend that

Magistrate Judge Harvey erred in relying on the number of non-U.S. entities with which

Defendant has entered reinsurance contracts in finding that Defendant is not “at home” in the

United States. Id. at 5. Specifically, Plaintiffs argue that the court should focus solely on

Defendant’s operational revenue, which “was approximately $500,000 in net premiums it

received from the U.S.” after subtracting reinsurance premiums paid by the Defendant from the

insurance premiums it received from Walter. Id. Plaintiffs further argue that the reinsurance

proceeds Defendant receives from non-U.S. entities is not revenue because Defendant “simply

acted as a conduit for the transfer of these proceeds to Walter.” Id.

Plaintiffs’ argument is unavailing. First, Daimler requires the court to compare

Defendant’s in-forum contacts to its “activities in their entirety, nationwide and worldwide.”

571 U.S. at 139 n. 19. Plaintiffs have cited no authority requiring district courts, in determining

personal jurisdiction, to focus solely on the source of a corporation’s revenue. Plaintiffs’ focus

on revenue rather than activity is misplaced, and they failed to provide a comparative analysis of

Defendant’s activities in and outside of the United States or other information to show how

Defendant’s contacts outside the United States impacted its activities. Courts in this Circuit have

found general personal jurisdiction lacking where plaintiffs fail to provide sufficient information

to evaluate a corporation’s contacts outside of the United States. See OGI Grp. Corp. v. Oil

Projects Co. of Ministry of Oil, No. 19-CV-2619, 2020 WL 6342886, at *8 (D.D.C. Oct. 29,

2020) (rejecting a claim of general jurisdiction where the plaintiff “offered no factual allegations

or evidence of [defendant’s] activities outside the United States that would enable the court to

evaluate the significance of the company’s presence within the United States.”). And at least one

other Circuit has treated a corporation’s contractual relationships as its “contacts” with a certain

4 forum. See Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014) (concluding that a

French company’s California contacts, which include the contracts it forms with California

entities, “are minor compared to its other worldwide contacts.”). Thus, Magistrate Judge Harvey

did not err in relying on Defendant’s reinsurance contracts with non-U.S. entities, the existence

of which undercuts Plaintiffs’ argument that Defendant’s contacts are concentrated in the United

States. See Report II at 19.

b. Property and risk insured

Plaintiffs challenge Magistrate Judge Harvey’s conclusion that Defendant’s contacts are

not concentrated in the United States because it has insured properties in the United Kingdom

and Bermuda. Pls.’ Obj. at 10. They argue that they have met their burden of establishing this

court’s personal jurisdiction over Defendant because they have shown that all the property

Defendant insures is owned by Walter Energy—Defendant’s U.S.-based parent company. Id.

But multiple precedents support Magistrate Judge Harvey’s conclusion that “[t]he

location of the insured property or risk is just as relevant in the jurisdictional analysis as the

domicile of the owner of that property or risk.” ECF No. 28 at 18 (citing Adams v. Unione

Mediterranea Di Sicurta, 2001 WL 986867, at *4 (E.D. La. Aug. 27, 2001)); see also Air

Tropiques, Sprl v. Northern & Western Ins. Co. Ltd., 2014 WL 1323046, at *11 (S.D. Tex. Mar.

31, 2014) (noting, in a post-Daimler case, that the location of the insured property and the

client’s citizenship are both relevant to jurisdictional analysis). As Plaintiffs did not address the

location of the insured property in their analysis, this court agrees with Magistrate Judge Harvey

that they did not meet their burden of showing that Defendant’s insured property and risk are

concentrated in the United States.

5 B. Plaintiffs’ Objection #2: Report II erroneously concludes that Defendant’s loan to Walter Energy and Walter Energy’s control of Defendant are insufficient to support general personal jurisdiction.

a. Walter Energy’s control of Defendant

Plaintiffs dispute Magistrate Judge Harvey’s conclusion that the evidence “do[es] not

show nearly the level of ‘control’ Plaintiffs claim Walter Energy wielded over Cardem.” Pls.’

Obj. at 7 (quoting Report II at 23). Specifically, Plaintiffs cite statements and emails by Walter

Energy’s officers to demonstrate that “Walter Energy directed Cardem’s financial transactions

purely for the benefit of Walter Energy.” Id. at 8.

But even if Walter Energy’s contacts with the United States could be attributed to

Defendant based on Walter Energy’s control over Defendant’s operations, these contacts would

be insufficient for the court to exercise general jurisdictional over Defendant. The Supreme

Court has rejected the “agency” test for general personal jurisdiction as unconstitutionally

overbroad. See Daimler, 571 U.S. at 118, 136; see also Ranza v. Nike, Inc., 793 F.3d 1059,

1070-72 (9th Cir. 2015) (“The existence of a parent-subsidiary relationship is insufficient, on its

own, to justify imputing one entity’s contacts with a forum state to another for the purpose of

establishing personal jurisdiction.”). Thus, under the heightened standard for general personal

jurisdiction after Daimler, Walter Energy’s control over Defendant is not, without more, a

sufficient basis to establish personal jurisdiction over Defendant.

b. Defendant’s loan to Walter Energy

Magistrate Judge Harvey compared Defendant’s loan to Walter Energy to insufficient

U.S. contacts other foreign companies had with the U.S. and likewise found the loan could not

establish general jurisdiction. Report II at 36. Plaintiffs claim this comparison was an error.

Pls.’ Obj. at 9-10.

6 In Daimler, for example, the Supreme Court declined to assert general jurisdiction over a

German company even though its U.S.-based subsidiary’s sales totaled $4.6 billion and

accounted for 2.4% of the company’s sales worldwide. 571 U.S. at 148. Here, Magistrate Judge

Harvey found that the value of Defendant’s loan “pale[d] in comparison” to Daimler. Report II

at 36. This type of comparison by analogy is common in law generally and in discussions

regarding general jurisdiction. See e.g., Guaranteed Rate, Inc. v. Conn, 264 F. Supp. 3d 909,

916 (N.D. Ill. 2017) (“If the maintenance of 2,000 miles of railroad track and employment of

more than 2,000 workers in the forum state cannot establish general jurisdiction as the Supreme

Court held in BNSF Railway, then the business allegedly conducted by [defendant] in this case

cannot either.”)

Plaintiffs argue that because the approximately $13 million loan is equivalent to 92% of

the value of Defendant’s total assets, it was “integral to [Defendant’s] operations” and therefore

establishes that Defendant’s contacts are concentrated in the United States. Id. at 7, 10. It is true

that in-forum loans are “relevant to whether [a party’s] contacts are ‘continuous and systemic.’”

DGG Group LLC v. Lockhart Fine Foods, LLC, 2021 WL 308946, at *4 (W. D. Tex. Jan. 29,

2021), report and recommendation adopted, 2021 WL 4047402 (W.D. Tex. Mar. 2, 2021).

Nevertheless, Plaintiffs have not cited, nor has this court located, any precedent in which in-

forum loans are dispositive of jurisdictional issues, so Defendant’s loan to its U.S.-based parent

company does not, in and of itself, establish Defendant is “at home” in the United States. BNSF

Ry. Co., 581 U.S. at 414.

7 C. Plaintiffs’ Objection #3: Report II incorrectly concludes that the sum of Defendant’s contacts with the United States does not meet the post-Daimler standard for general personal jurisdiction.

Plaintiffs argue that the court should exercise personal jurisdiction over Defendant

because it “systematically and continuously subjected itself to U.S. law and U.S. court

jurisdiction, elected to be treated as a U.S. taxpayer, derived all of its revenue from the U.S., paid

all of its profits into the U.S., held a U.S. loan as its principal asset, and remained under the

control of U.S.-based officers and directors.” Pls.’ Obj. at 12. This argument is unpersuasive.

Some of the factors Plaintiffs cite are irrelevant to jurisdictional analysis, and the weight of the

relevant factors is not sufficient to render this case an “exceptional” one in which general

personal jurisdiction is warranted.

As noted above, the fact that an entity is controlled by a U.S.-based parent company does

not establish personal jurisdiction. See supra at 6. Moreover, Magistrate Judge Harvey also

found that Defendant’s U.S. taxpayer status and the forum-selection clauses in its commercial

contracts were not germane to the jurisdictional analysis. Report II at 29, 35. This court agrees

and adopts these conclusions. Plaintiffs have waived their right to challenge these conclusions

because they did not raise a specific objection to Magistrate Judge Harvey’s characterization of

Defendant’s taxpayer status and forum-selection clauses. See Taylor, 205 F. Supp. 3d at 79.

Although Defendant held a U.S. loan as a principal asset and derived its revenue and

profits from business in the United States, these factors are balanced by the fact that Defendant is

based in and incorporated in Bermuda, entered into foreign reinsurance contracts, and insured

British and Bermudan property. See supra at 2-4. Plaintiffs did not consider these

countervailing factors, and therefore did not meet their burden to compare Defendant’s in-forum

contacts with its “activities in their entirety, nationwide and worldwide.” Daimler, 571 U.S. at

8 139 n. 20. Thus, Magistrate Judge Harvey did not err in finding that “it is impossible to

conclude that Defendant is ‘essentially at home’ in the United States.” Report II at 35.

D. Plaintiffs’ Objection #4: Defendant’s significant business in the U.S. warrants exercising personal jurisdiction in this case, even if Defendant is not “at home” in the U.S.

Lastly, Plaintiffs urge this court to adopt a less rigorous standard of personal jurisdiction

because Defendant is a foreign corporation. They contend that the more rigorous standard is

grounded in the Fourteenth Amendment, which is inapplicable here, and cite the Fifth Circuit’s

“national” jurisdiction test which “applies only to state courts and to federal courts sitting in

diversity.” Pls.’ Obj. at 13. Plaintiffs argue that the court should adopt the “national”

jurisdiction test which arises out of the Fifth Amendment and allows a foreign defendant to be

sued “in federal district court on a federal-law claim when the defendant conducts continuous

and systematic business in the U.S… and the claim is reasonably related to that business.” Id.

But as Plaintiffs themselves acknowledge, the D.C. Circuit rejected the “national”

jurisdiction test in Livnat v. Palestinian Authority, 851 F.3d 45, 55 (D.C. Cir. 2017) (declining to

“devise new standards for [personal jurisdiction claims arising under the Fifth Amendment] that

are less stringent than those under the Fourteenth Amendment”). Pls.’ Obj. at 16. Undaunted,

Plaintiffs argue that Atchley v. AstraZeneca UK Ltd., 22 F.4th 204 (D.C. Cir. 2022), weakens

Livnat’s authority. Pls.’ Obj. at 16. The court cannot agree. Atchley restates Livnat’s holding

that “the Fifth and Fourteenth Amendment Due Process inquiries are generally analogous,”

except for “the scope of the forum and potential federalism considerations” which are not

relevant to this case. Atchley, 22 F.4th at 232. Since Livnat continues to be binding Circuit

precedent, this court rejects Plaintiffs’ objection and declines to adopt a less rigorous standard

for general personal jurisdiction.

9 III. CONCLUSION

For the reasons stated above, the court will GRANT Defendant’s Second Motion to

Dismiss for lack of personal jurisdiction, ECF No. 25.

Date: September 11, 2023

Tanya S. Chutkan TANYA S. CHUTKAN United States District Judge