Maritime Update: Jurisdictional Discovery Permitted in Admiralty Attachment Action
On May 3, 2020, the United States District Court for the Eastern District of Louisiana in E.N. Bisso & Son, Inc. v. M/V Donna J. Bouchard, et al, allowed a plaintiff in a consolidated admiralty attachment action to conduct jurisdictional discovery to support its alter ego theory of recovery against Bouchard Transportation Company, Inc. ("Bouchard Transportation"). This ruling is significant, because Bouchard Transportation did not own the attached vessels or the vessels to which maritime services were provided.
Boland Marine & Industrial, LLC ("Boland"), a ship repair company, provided services to the following vessels: M/V LINDA LEE BOUCHARD; BARGE B. NO. 230; M/V DANIELLE E. BOUCHARD; BARGE B. 245; BARGE B. NO. 270; M/V BOUCHARD GIRLS; BARGE B. NO. 295; and the M/V GEORGE BETZ. The nominal owners of these vessels are, respectively: Tug Linda Lee Corp.; Barge B. No. 205 Corp.; Tug Ralph E. Bouchard Corp.; B. No. 230 Corp.; Tug Danielle M. Bouchard Corp.; B. No. 245 Corp.; B. No. 270 Corp.; Tug Bouchard Girls Corp., B. No. 295 Corp.; and Tug J. George Betz Corp. Boland was not paid for its services.
Boland initiated an admiralty action in the United States Court for the Eastern District of Louisiana to attach the M/V DONNA J. BOUCHARD and Barge B. No. 272 pursuant to Rule B of the Supplemental Rules of Admiralty or Maritime Claims and Asset Forfeiture. Boland's claim was based on an alter ego theory of recovery seeking to pierce the corporate veil between the defendant-parent company, Bouchard Transportation, and its nominal subsidiary vessel owning companies.
On March 25, 2020, Boland filed a motion for leave to conduct jurisdictional discovery to support its alter ego theory of recovery under Rule B. Defendants maintained Boland's attachment was meritless and sought to have the attachment vacated, because the Court lacked jurisdiction to adjudicate the Rule B claims.
The issue was whether a Rule B claimant is entitled to discover facts supporting its assertion that the Court has jurisdiction over its Rule B claims since the parent company is the alter ego of the owners of the vessels that were attached and the owners of the vessels to which maritime services were provided.
A Rule B maritime attachment is authorized when a plaintiff has a valid admiralty claim against defendants. The Court explained that when one party articulates an alter ego claim (personal liability of a corporation's shareholders for debts and obligations of the corporation) and another attacks the claim as being insufficient, the extent of a court's admiralty jurisdiction is placed at issue.
Discovery should rarely be restricted if relevant evidence lies in another's files. When there is a factual question regarding a district court's jurisdiction, the district court must give plaintiff an opportunity to secure and present evidence relevant to the existence of jurisdiction.
Boland's complaint was sufficient to trigger the right to discovery. Since the Court's jurisdiction was at issue, the pro-discovery mandate in Rules 1 and 26 of Federal Rules of Civil Procedure required granting Boland's motion.
D. Why is This Important?
- Maritime attachment can be used to enforce a foreign judgment or secure a plaintiff's claim.
- An important aspect of federal court admiralty practice is the ability to obtain jurisdiction over a defendant who cannot be found in the district by attaching its property.
- Post-filing jurisdictional discovery may be an avenue for a plaintiff to secure evidence needed to support factual allegations of alter ego.