of Texpan had been legally attached in the port of Philadelphia. It was understood by the parties that the dismissal of Texaco, Inc. as a defendant would not give rise to any inference, other than the agreement of the parties that no further action would be pursued against Texaco, Inc.
We have previously noted that plaintiff claims jurisdiction under the admiralty law of the United States, as modified by the Jones Act, and the Death on the High Seas Act. Plaintiff avers that the fatal illness of Theodore Reyes was caused by the unsanitary conditions aboard the Texaco Kenya; specifically, she pinpoints an alleged lack of safeguards to protect crew members who are employed in the work of cleaning the tanks of the vessel; she contends, therefore, that these conditions rendered the vessel unseaworthy, and the defendant negligent; of greater significance, however, is the argument pressed most strenuously by plaintiff that unseaworthiness and negligence are established by the lack of proper medical treatment rendered to plaintiff's decedent, after he was taken ill.
Defendant has not only denied liability with respect to the merits of plaintiff's complaint, but has maintained throughout this tortuous litigation that the predominance of contacts with Panama precludes the application of United States law to this action. See Lauritzen v. Larsen, 345 U.S. 571, 97 L. Ed. 1254, 73 S. Ct. 921 (1953). Defendant asserts that there is not, and cannot be any basis upon which to justify the choice of the law of the United States as controlling in this litigation. Rather, the defendant argues the law of Panama is the proper choice. The bases for those contentions are as follows: (1) the accident (illness), occurred either on the high seas, or in a foreign port; (2) the decedent seaman was a Panamanian national who signed a contract of employment in Panama; (3) the shipowner-defendant is a Panamanian corporation; and (4) suit has already been instituted and resolved in the courts of Panama.
In response to this argument, plaintiff points to Texpan's status as a wholly-owned subsidiary of Texaco, Inc., an American corporation. Relying principally upon the decision of the Supreme Court in Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 26 L. Ed. 2d 252, 90 S. Ct. 1731, rehearing denied 400 U.S. 856, 27 L. Ed. 2d 94, 91 S. Ct. 23 (1970), plaintiff asserts that Texaco, Inc. should not be permitted to hide behind the cloak of a foreign subsidiary, and thereby escape its obligations under the maritime law of this country. The base of operations of Texpan, plaintiff avers, is in New York City, and this substantial contact with the United States is sufficient to dictate the application of United States law, and thus confer jurisdiction on this court.
The nature of the contacts with Panama, and in particular the nature of the relationship between Texpan and Texaco, Inc., were fully and exhaustively developed during discovery. We note that the decision of the Supreme Court of Justice of Panama was pronounced on June 6, 1973, subsequent to the filing of the complaint in this action. Based upon that decision, defendant argues that the issues before us have already been judicially resolved, and that the doctrine of comity dictates our recognition of the foreign judgment, with the concomitant result that this action be dismissed.
In light of the full development during discovery of the issues relative to: (1) the recognition to be accorded the Panamanian judgment, and (2) the proper choice of controlling law, we invited the parties to submit the matter as a case stated for determination of the issue of jurisdiction; it is now before us on that basis.
Thus, we direct our attention to consideration of the choice of law, the controlling and dispositive issue; one which may be decided on the record before us.
III. CHOICE OF CONTROLLING LAW
A. Lauritzen v. Larsen -- the first six factors
A decision with respect to the matter of choice of law requires an analysis of Lauritzen v. Larsen, 345 U.S. 571, 97 L. Ed. 1254, 73 S. Ct. 921 (1953). In that case, the Supreme Court enumerated seven factors to be considered in determining which nation's law should be applied in a maritime tort claim.
In examining the seven factors mandated by the Lauritzen decision, we will defer consideration of the fourth factor, the allegiance of the shipowner, until last, since that point is the primary one upon which plaintiff relies in contending that United States law should be applied. The remaining six factors are as follows:
(1) Place of the Wrongful Act -- this factor is given little weight by the Court; in the instant case, it is of no significance, since the injury occurred either on the high seas, or in a port of Honduras or Costa Rica, and thus cannot assist us in determining whether Panamanian or United States law should be applied.
(2) Law of the Flag -- "Perhaps the most venerable and universal rule of maritime law relevant to our problem is that which gives cardinal importance to the law of the flag." Lauritzen, supra at 584. In the instant case, the Texaco Kenya flew the flag of Liberia, and thus that country's law should be applied, "unless some heavy counterweight appears." Lauritzen, supra at 586. See also Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 308, 26 L. Ed. 2d 252, 90 S. Ct. 1731 (1970).
In this case, the "heavy counterweight" appears in the form of a "flag of convenience." The Lauritzen court clearly stated that vessel registration of this nature was not entitled to the same conclusive effect as that of a "legitimate" flag state. Lauritzen, supra, at 587. In Kontos v. S.S. Sophie C., 236 F. Supp. 664, 670 (E.D. Pa. 1964), Judge Luongo, of this Court, confronted with a situation similar to that before us, stated:
The vessel here is of Liberian registry and flies the Liberian flag. That is the sum and substance of its contact with Liberia. The flag is one of convenience. . . . Applying the factors reviewed in Lauritzen, the law of the flag, in this case a flag of convenience, must give way to the "heavy counterweight" of the preponderating contacts with Greek law.
See also Bartholomew v. Universe Tankships, Inc., 263 F.2d 437, (2d Cir.) cert. denied 359 U.S. 1000, 3 L. Ed. 2d 1030, 79 S. Ct. 1138 (1959); Southern Cross Steamship Co. v. Firipis, 285 F.2d 651 (4th Cir. 1960).
As in Kontos, supra, the significance of Liberian registry is outweighed by the predominant contacts with another country; in this case, the Republic of Panama. We therefore conclude that the law of Liberia should not be applied in this case.
(3) Allegiance or domicile of the injured -- in the context of the matter before us, this factor weighs heavily in favor of the application of Panamanian law, for not only was Theodore Reyes a domiciliary of Panama, but it is extremely significant that an action was brought in the courts of Panama by his representatives, one of whom is the plaintiff in this action. Plaintiff administratrix, who is also a citizen and resident of Panama, therefore has been afforded the complete rights under Panamanian judicial process. As stated in Lauritzen, "each nation has a legitimate interest that its nationals and permanent inhabitants be not maimed or disabled from self-support." 345 U.S. at 586. (emphasis supplied). The Republic of Panama has served this interest by opening its courts to the plaintiff.
(4) Place of contract -- this factor is given very little weight in Lauritzen, in that the place of contract of a seaman is often fortuitous. Again, however, this factor will be given more than passing consideration, because Theodore Reyes agreed to Panamanian "Conditions of Employment", which, inter alia, guaranteed a forum in Panama for any dispute arising out of employment, including personal injury. We reemphasize that plaintiff has had the benefit of that forum, and of the fruits of that contract.
(5) Inaccessibility of foreign forum -- it is manifest that this factor provides no basis for the application of the law of the United States. Plaintiff, as a domiciliary of Panama, who has already sued in that country on this claim, clearly has had full access to the foreign forum. This is not a case in which plaintiff will be without a remedy, if Jones Act jurisdiction is denied.
(6) Law of the forum -- this factor is of very little significance. Lauritzen establishes that the law of the forum does not become a factor in the choice of law process simply because jurisdiction has been obtained. 345 U.S. at 590-92; see also Pandazopoulos v. Universal Cruise Line, Inc., 365 F. Supp. 208 (S.D.N.Y. 1973).
B. Lauritzen v. Larsen -- the seventh factor.
(7) Allegiance of the defendant shipowner. These preceding six considerations evidence absolutely no contacts with the United States which are, or could be sufficient to justify the application of the maritime law of this country; the Panamanian element in this case appears overwhelming.
Plaintiff, however, contends that the significance of the American contact with respect to the final factor to be considered under Lauritzen -- that of the allegiance of the shipowner -- mandates the choice of the law of the United States as controlling in this dispute. Plaintiff notes that the Lauritzen concept of shipowner's allegiance was expanded by the Supreme Court in Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 26 L. Ed. 2d 252, 90 S. Ct. 1731 (1970), and argues that Rhoditis mandates that the shipowner's base of operations be given close scrutiny by the court in connection with a decision as to the choice of law question. On this theory, she avers that Texpan's base of operations is not in Panama, as claimed by defendant; rather, it is in New York City, the principal place of business of the corporate parent. Plaintiff claims that when the "facade" of foreign incorporation is pierced to reach Texaco, Inc., this resulting substantial contact with the United States requires us to apply the laws of this country. Resolution of this issue requires us in the first instance, to analyze closely the facts and rationale of Rhoditis.
In Hellenic Lines Ltd. v. Rhoditis, supra, a Greek seaman brought suit under the Jones Act for injuries received aboard ship in the port of New Orleans; the seaman, Rhoditis, was a citizen of Greece, and had registered and enlisted as a seaman in that country; the contract of employment provided that disputes arising out of employment were to be adjudicated under Greek law in that country's courts.
The defendant shipowner was a Greek corporation, but its largest office was in New York City; moreover, more than 95% of the company's stock was owned by a Greek citizen who had been an American domiciliary for over twenty years, and who managed the company's affairs from his command post in New York. Based upon these facts, the Court held that the district court had properly applied the Jones Act to that matter, rather than the law of Greece.
The Court emphasized that the Lauritzen test is not to be applied by a mechanical counting of contacts; " the significance of one or more factors must be considered in light of the national interest served by the assertion of Jones Act jurisdiction." 398 U.S. at 309. (emphasis supplied). The Court further stated that the list of factors in Lauritzen was not meant to be "exhaustive", and that the shipowner's base of operations was, specifically, another point to be considered.
In Rhoditis, the Court concluded that this base of operations, despite the facade of foreign incorporation, was clearly in the United States:
We see no reason whatsoever to give the Jones Act a strained construction so that this alien owner, engaged in an extensive business operation in this country, may have an advantage over citizens engaged in the same business by allowing him to escape the obligations and responsibility of a Jones Act "employer ". The flag, the nationality of the seaman, the fact that his employment contract was Greek, and that he might be compensated there are in the totality of the circumstances of this case minor weights in the scales compared with the substantial and continuing contacts that this alien owner has with this country. Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 310, 26 L. Ed. 2d 252, 90 S. Ct. 1731.
Plaintiff in the instant case strenuously asserts that Rhoditis must control the resolution of the choice of law problem before us. She points out that Rhoditis involved 95% ownership of the foreign corporation by an American domiciliary, whereas the facts before us show 100% ownership of the stock of Texpan by Texaco, Inc. Despite this attempt by Texaco, Inc. to escape its obligations under American law, plaintiff contends, we must find that Texpan's contacts with this country are predominant, and having so found, we must follow the Rhoditis holding and apply the law of the United States.
We reject such casuistic reasoning under the facts before us. Plaintiff's contention fails for two reasons. First, plaintiff has already brought suit in Panama ; this crucially distinguishes the case from Rhoditis. We do not read Rhoditis to hold that once foreign incorporation, albeit American parent ownership, is shown, that, ipso facto, Jones Act jurisdiction must be found. Such an interpretation would, in fact, produce precisely the mechanical application of the Lauritzen standards which was expressly disavowed by the Court in Rhoditis.10 We must, in the "totality of the circumstances", consider the proper weight to be given to each of the Lauritzen factors. As we have already stated, the factors of domicile of the injured seaman, place of contract, and inaccessibility of foreign forum must be given more than ordinary significance in the present case; they are not "minor weights"; rather they provide the affirmative basis for application of the law of Panama.
Thus, even in the face of domestic ownership of an allegedly "sham" foreign corporation, a proper consideration of all relevant factors in context dictates that the law of Panama be applied.
The second basis for rejection of plaintiff's argument is the utter failure to demonstrate that Texpan's incorporation in Panama is a "facade" to enable Texaco, Inc. to avoid its obligations under the maritime law of the United States. It is, of course, an accepted fact that American shipowners frequently seek to avoid the stringent shipping laws of this country through the mechanism of incorporation in countries with less restrictive regulations. Lauritzen v. Larsen, 345 U.S. at 587. For example, in Pavlou v. Ocean Traders Marine Corp., 211 F. Supp. 320 (S.D. N.Y. 1962), the shipowner corporation, while organized under the laws of Liberia, maintained no office in that country; based upon that fact, the court pierced the corporate veil; since there was a United States base of operations, it concluded there was jurisdiction under the Jones Act. See also Pandazopoulos v. Universal Cruise Line, Inc., 365 F. Supp. 208 (S.D. N.Y. 1973); Bobolakis v. Compania Panamena Maritima San Gerassimo, 168 F. Supp. 236 (S.D. N.Y. 1958).
Piercing a corporate veil cannot be equated to the exotics of Salome's dance; we cannot cast veils aside at will. Simply because an American corporation owns the stock of a foreign corporation, it does not follow inexorably, or, indeed, even arguably, that the foreign corporation is a "facade" formed to enable the domestic corporation to escape its obligations under the laws of the United States. The record in the instant case, one based on a case stated, demonstrates that Texpan is a Panamanian corporation which maintains offices in Panama City; it pays taxes to the Republic of Panama; it is engaged not only in the business of international shipping, but also in the business of sales and distribution of petroleum products throughout the Republic of Panama; Texpan maintains an active bank account in Panama which is used in the usual and ordinary course of business of that company; while the President of Texpan is a United States citizen, none of the members of the Board of Directors of Texpan is a director of Texaco, Inc.; moreover, the day-to-day administration of affairs is managed from Texpan's office in Panama City.
In support of its allegation that Texpan is a mere facade, plaintiff stresses the deposition testimony of the President of Texpan, Robert Chandler, which evidences a less-than-thorough knowledge of the shipping operations of Texpan, specifically with respect to the ownership, registration, and manning of Texpan vessels.
We do not believe, however, that Mr. Chandler's inability to answer specific questions regarding the registration of particular Texpan vessels forms a sufficient basis upon which to pierce the corporate veil of Texpan, when balanced against the significant and continuing business operations and contacts maintained by Texpan as a separate and independent corporate entity, despite its ownership by Texaco, Inc.;
thus, we find that the defendant's base of operations is in Panama and that it is a separate viable entity. With this determination, all potential contact with the United States in this litigation vanishes, and no basis exists upon which to justify the application of the laws of the United States. The law of Panama must and does control in this case.
IV. FORUM NON CONVENIENS
Despite our determination that the law of Panama should be applied in this action, and our recognition that a "final" judgment has been rendered in the courts of that country, we do not have in the record before us proof of the law of Panama with respect to the doctrine of res judicata ; therefore, although this action arises out of the same incident which was the basis of the suit in Panama, namely, the death of Theodore Reyes, we will not dismiss this action under the doctrine of res judicata ; the parties have not supplied us with the information necessary to make such a determination. Fed.R.Civ.P. 44.1.
However, we will dismiss the action under the doctrine of forum non conveniens. This precept "presupposes at least two forums in which the defendant is amenable to process." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 91 L. Ed. 1055, 67 S. Ct. 839 (1947). The standards to be applied in determining the applicability of the doctrine were summarized by the Court in Gulf Oil, supra :
Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining willing, witnesses; . . . and all other practical problems that make trial of a case easy, expeditious and inexpensive. . . . The court will weigh relative advantages and obstacles to fair trial. . . . But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed. Id. at 508.