COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71414 BONITA WHYTE, ETC. : JOURNAL ENTRY : AND Plaintiff-appellee : OPINION : -vs- : : CANADA STEAMSHIP LINES : INC. : : Defendant-appellant : DATE OF ANNOUNCEMENT OF DECISION: JULY 24, 1997 CHARACTER OF PROCEEDING: Civil appeal from the Court of Common Pleas Case No. CV-295098 JUDGMENT: Reversed and judgment entered for appellant. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: For Defendant-Appellant: DENNIS O'BRYAN, ESQ. WILLIAM D. CARLE, ESQ. O'BRYAN, BAUN & COHEN 1650 East Ohio Building 401 S. Woodward Avenue, Suite 320 1717 East Ninth Street Birmingham, Michigan 48009 Cleveland, Ohio 44114-2898 CHRISTOPHER D. KUEBLER, ESQ. JULIA R. BROUHARD, ESQ. 401 S. Woodward Avenue, Suite 320 1650 East Ohio Building Birmingham, Michigan 48009 1717 East Ninth Street Cleveland, Ohio 44114-2898 -2- DYKE, J.,: Appellant, Canadian Steamship Lines, Inc., is appealing the judgment rendered upon a jury verdict in favor of Appellee, Bonita Whyte, as personal representative of the Estate of Peter Whyte. Appellant asserts that the trial court erred in applying United States law. For the following reasons, we reverse and enter judgment in favor of appellant. Canadian Steamship Lines, Inc. (CSL) is a Canadian corporation that has been in operation for 150 years. CSL owns the Canadian flagged vessel, the S.S. Halifax. Appellant employed appellee's decedent, Peter Whyte, to work aboard the Halifax. Whyte signed a contract in Canada, stating that the employment agreement was subject to Canadian law. Peter Whyte was a Canadian citizen and resident. CSL does not employee any U.S. citizens aboard its vessels. On April 6, 1993, the Halifax was en route from Nanticoke, Ontario, Canada to Duluth, Michigan to pick up a shipment of ore. The ore would be delivered to Stelco, a Canadian steel company, located in Canada. While the ship was in U.S. waters, a fire occurred, which resulted in the death of Peter Whyte. Peter Whyte's estate applied for and received Canadian workers compensation. According to an affidavit of a Canadian attorney, worker's compensation is appellee's sole remedy under Canadian law. CSL's primary business is Great Lakes dry bulk shipping. By law, CSL cannot both load and unload at U.S. ports, it must alternate between U.S. and Canadian ports. In 1992, 67.41% of the -3- trips made by CSL either loaded or unloaded at U.S. ports. In 1993, this figure was 61.9%, and was 58.7% in 1994. 25.9% of the trips made by the S.S. Halifax in 1992 involved a stop at a U.S. port. This figure was 25.8% in 1993 and 83.3% in 1994. The Halifax served no U.S. customers in 1992, and one U.S. customer in 1993 and 1994. About 3% of CSL's total calls are for U.S. customers. In answer to plaintiff's request for admission, CSL stated that it was in competition with U.S. shippers. CSL has two offices in Canada, with seventy employees. CSL has a wholly owned subsidiary located in Cleveland, Ohio, called Commercial Coal and Coke Company. The officers of Commercial Coal and Coke are also officers of CSL. Commercial Coal and Coke has one employee, Thomas Brainard. Brainard assisted in scheduling and expediting vessel traffic stopping at U.S. ports. Brainard monitored vessels and forecasted when they would arrive in port. He coordinated the arrival times with trans-shippers, such as railroads, and dock managers. Brainard stated, they see fit to have me work from a base down here where I know how and when and where to locate these people ... Brainard made recommendations to nominate a boat to a particular dock. The home office in Canada might accept or reject his recommendation. Brainard probably recommended a nomination for the S.S. Halifax on the day of the fatal accident. Captain Andre Deschenes, master of the S.S. Halifax, deposed that he received orders from Montreal, and Brainard gave him information on the status of docks -4- and cargo. Brainard also arranged for customs and immigration and prepared bills of lading. He did not solicit business, collect money on accounts, advertise, handle bank accounts, or arrange for fuel or stevedoring. He occasionally arranged for tug boat services. Commercial Coal and Coke's contract states that one of its functions was to communicate with customers. Commercial Coal and Coke had no involvement in assigning crew, or maintenance or repair of vessels. CSL employed ship's agents at Duluth and Chicago. A ship's agent takes care of the needs of the vessel when the ship comes into port, including ordering tugs, customs and immigration, and taking crew members to and from the airport. The agent also informs the dock of the estimated arrival time of the ship. For U.S. ports other than Duluth and Chicago, the agent functions are performed by Brainard. Brainard performed other duties not typically performed by a ship's agent, such as making recommendations on nominating ships and coordinating the traffic. Appellant hired a U.S. citizen to investigate the fire, and a U.S. attorney to investigate the casualty. Appellee brought this suit under the Jones Act and U.S. maritime law. Appellant moved to dismiss, arguing that U.S. law does not apply. This motion was denied. Appellant's sole assignment of error states: THE TRIAL COURT ERRED TO THE PREJUDICE OF APPELLANT IN DETERMINING THAT UNITED STATES LAW INSTEAD OF CANADIAN LAW APPLIED TO THE FACTS OF THIS CASE. THAT ERROR IS APPARENT IN THE FOLLOWING ACTIONS OF THE COURT: A) THE -5- DENIAL OF APPELLANT'S MOTION TO DISMISS (R. 25); B) THE DENIAL OF APPELLANT'S RENEWED MOTIONS TO DISMISS (TR. VOL. 4, P. 956); C) ALLOWING THE JURY TO HEAR THE CASE AND THEN RENDER A VERDICT AGAINST APPELLANT (R. 102); AND D) ENTERING JUDGMENT BASED UPON U.S. LAW AGAINST APPELLANT (R. 103, 108). The trial court's choice of law is subject to a de novo standard of review. Sosa v. M/V Lago Izabal (C.A. 5 1984), 736 F.2d 1028. In deciding whether to apply American or foreign law, the court must examine the seven factors set out in Lauritzen v. Larsen (1953), 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 and the eighth factor set forth in Hellenic Lines Ltd. v. Rhoditis (1970), 398 U.S. 306, 90 S.Ct. 1731, 26 L.Ed.2d 252. See also Romero v. International Terminal Operating Co. (1959), 358 U.S. 354, 79 S.Ct. 468, 3 L.Ed.2d 368, (holding that the Lauritzen test applies to general maritime law cases, as well as Jones Act cases.) The seven factors are: (1) place of the wrong, (2) law of the flag, (3) domicile of the injured seaman, (4) allegiance of the shipowner, (5) place of the contract, (6) accessibility of the foreign forum, and (7) law of the forum. Lauritzen, supra. The eighth factor is whether the defendant had a substantial base of operations in the United States. Rhoditis, supra. The court should also consider any other relevant factors. Id. These factors should not be applied mechanically. Id. The significance of any of the factors must be considered in light of the national interest in asserting jurisdiction. Id. In this case, the place of the wrongful act occurred at least partially in the United States. The vessel was permitted to be in -6- unsafe condition while traversing American waters. The place of the wrongful act is typically afforded little weight, because the location of a vessel may be purely fortuitous. See Lauritzen, supra. The S.S. Halifax was flagged in Canada. The law of the flag is traditionally entitled to great weight. Lauritzen, supra. The following factors are afforded some weight: The domicile of the plaintiff and the defendant was Canada. The choice of law in the employment contract was Canadian law. A remedy was available in Canada via workers compensation. Id. The fact that the employment contract was signed in Canada is afforded little weight. Id. The law of the forum has little weight in this case, because the defendant was unwillingly brought into a U.S. court. Rhoditis, supra. In this case, the only Lauritzen factor in favor of applying U.S. law is the place of the wrongful act, and that factor is not entitled to great weight. In Rhoditis, the place of injury was also the only Lauritzen factor in favor of applying U.S. law, but the Supreme Court found that U.S. law applied because the defendant maintained a substantial base of operations in the United States. A substantial U.S. base of operations exists when the defendant conducts extensive business operations in the United States. See Rhoditis. In Rhoditis, extensive business operations existed when the shipping operations were entirely managed in the U.S. and all income was derived from cargo originating or terminating in the United States. Id. Additionally, the company -7- was 95% owned by a U.S. resident alien. The Supreme Court felt that exemption of the defendant from the Jones Act would result in an unfair competitive advantage over U.S. citizens engaged in the same business. In this case, the trial court apparently found that there was a U.S. base of operation. The facts of this case are not as clear cut as Rhoditis. CSL derives some, but not all of its income from cargo originating or terminating in the U.S. CSL had two offices in Canada, and one office in the U.S., performing various functions. CSL is Canadian owned, but had a wholly owned subsidiary in the U.S. We must determine whether, given these facts, the trial court's finding that a substantial base of operations existed was clearly erroneous, requiring reversal. Fisher v. Agios (C.A. 5 1980), 628 F.2d 308 (overruled on other grounds in In re Air Crash Disaster near New Orleans (C.A. 5 1987), 821 F.2d 1147, 1163), Villar v. Crowley Maritime Corp. (C.A. 1985), 782 F.2d 1478. Also, we must consider whether the base of operations factor was significant enough to override the law of the flag, and other Lauritzen factors. As held in Rhoditis, if a high percentage of the ship's voyages involve a stop at a U.S. port, and all the ship's business is managed out of the U.S., then there is a substantial U.S. base of operations. See Rhoditis, supra, Sosa v. M/V Lago Izabal (C.A. 5 1984), 736 F.2d 1028, Hernandez v. Naviera Mercante, C.A. (E.D.La. 1989), 716 F.Supp. 939, Fisher, supra, Szumlicz v. Norwegian America Line, Inc. (C.A. 11 1983), 698 F.2d 1192. -8- Frequent calls on U.S. ports are usually not sufficient without significant management activities in the U.S. Guitierrez v. Diana Investment Corp. (C.A. 6 1991), 946 F.2d 455, Walters v. Prince of FundyCruises, Ltd. (D.Me. 1991), 781 F. Supp. 811, see Lauritzen, supra. Significant management activities does not mean that all management of the ship takes place in the U.S.. Significant management activities exist if a U.S. agent plays a significant role in the management of the vessel's affairs. Mattes v. National Hellenic Am. Line, S.A. (S.D.N.Y. 1977), 427 F.Supp. 619, Karvelis v. Constellation Lines S.A. (S.D.N.Y. 1985), 608 F. Supp. 966. U.S. law applies if a New York agent solicited cargo; collected revenues; handled bank accounts; handled stevedoring, fueling, tugboating, berthing and traffic matters; without any supervision or control by the foreign corporation. Karvelis, supra. U.S. agents played a significant role if the agents collected revenue, handled bank accounts, paid some of the ship's expenses, had discretion over reservation and accounting procedures, purchased provisions, sold tickets, advertised, and acted as the port agent or husband . Mattes, supra. A U.S. agent played a significant role if the agent collected revenue, paid expenses, booked cargo and passengers, and had discretion to fix rates, allocate tonnage and space sailings. Antypas v. CIA. Maritima San Basilio, S.A. (C.A. 2 1976), 541 F.2d 307. In all of these cases, the U.S. agent not only performed certain tasks, but had some discretion or decision making authority. -9- In the following cases, the court found significant management activity lacking, at least partly due to the lack of decision making authority of the U.S. agent. If an agent negotiated cargo, obtained supplies and arranged charters, but did not make decisions regarding the crew or the vessel, there was not a U.S. base of operations. Volyrakis v. M/V Isabelle (C.A.5 1982), 668 F.2d 863. Selling cruise tickets, collecting revenue, advertising and purchasing provisions for the ship do not constitute substantial business operations, if no management decisions are made in the U.S. Kukias v. Chandris Lines, Inc. (C.A. 1 1988), 839 F.2d 860, Sigilas v. Lido Maritime, Inc. (C.A. 11 1985), 776 F.2d 1512. If the agent merely acts as a ship's agent , husband or broker, there is not a base of operations. Diaz v. Humboldt (C.A.5 1984), 722 F.2d 1216, Rodriguez v. Flota Mercante Grancolombiana (C.A.9 1983), 703 F.2d 1069. A ship's agent or husband takes care of the shore side business of the ship and has no part in the management or navigation of the vessel. Cosmopolitan Shipping Co. v. McAllister (1949), 337 U.S. 783,69 S.Ct. 1317, 93 L.Ed 1692. In this case, the U.S. subsidiary performed more functions than a mere agent or broker. The functions performed by Consolidated were not extensive or substantial, however. Additionally, the subsidiary had no decision making authority. The facts of this case are more analogous to the cases where the court found there was no substantial U.S. base of operation. Appellee argues that day to day operations were handled in Cleveland. It has been stated, usually in cases involving oil -10- platforms, that a base of operation exists where day to day operations are conducted, although corporate headquarters are located elsewhere. See Fogelman v.Aramco (C.A. 5 1991), 920 F.2d 278, Diaz v. Humboldt (C.A. 5 1984), 772 F.2d 1216. The day to day operation test is not well suit to a ship, whose day to day operations take place on the ship. See Fogelman, Warn v. M/Y Maridome (March 31, 1997), S.D. Cal. No. CIV. 96-1800-B(RBB), unreported. Appellee also asserts that CSL is the alter ego of Consolidated. If the U.S. agent is the alter ego of the foreign shipping corporation, there is a stronger case for finding a U.S. base of operations. See Karvelis, supra. The fact that the U.S. subsidiary is an alter ego does not mandate finding a U.S. base of operations, if the functions of the subsidiary are minimal. Karvelis, Volyrakis, supra. Appellee argues that appellant admitted it directly competes with U.S. shippers, and Rhoditis found that companies with a U.S. base competing with U.S. shippers should not have an unfair advantage by not applying the Jones Act. As stated above, CSL did not have a substantial U.S. base of operations. Every ship that loads or unloads cargo in the U.S. is competing with U.S. shipping, but the case law does not hold that all of these ships are subject to U.S. law. Additionally, although the amount of stops in U.S. ports was significant in this case, all the trips made by CSL did not involve stops at U.S. ports, as in Rhoditis and other cases. The fact that -11- not every voyage involved a U.S. port presents a weaker case in favor of finding a substantial base of operation. Also, the S.S. Halifax loaded or unloaded at U.S. ports only about 26% of its trips in 1992 and 1993 and the accident happened in 1993. Even if shipping operations are run out of the United States, and some ships in the fleet frequently stop in U.S. ports, U.S. law does not apply if the ship upon which the injury occurred seldom stops in the U.S.. Pereira v. Utah Transport, Inc. (C.A.9 1984), 764 F.2d 686. The operational contacts must be with both the ship and the owner. Sosa, supra. Although 26% can not be characterized as seldom, the S.S. Halifax had notably less contact with the United States than the ships in Rhoditis and other cases. The frequency of contact of the fleet, rather than the ship may be more relevant. For example, the S.S. Halifax had 83% of its voyages stop at U.S. ports in 1994. Whether a certain ship is assigned more U.S. voyages may be purely fortuitous. In any case, it is noted that the S.S. Halifax and the CSL fleet had less visits to the U.S. than the ships in Rhoditis and other cases. In conclusion, CSL did not have a substantial base of operations in the United States. The activities conducted by Commercial were not extensive and involved no decision making. The trips made to U.S. ports were not as great as in Rhoditis. Even if a ship frequently stops at U.S. ports, this is not sufficient to find a U.S. base of operations without significant management activities in the U.S. See Lauritzen, Gutierrez, Walters, supra. The trial court's finding of fact that a U.S. base of operations -12- existed was clearly erroneous. Most of the other Lauritzen factors are in favor of Canadian law and these factors certainly outweigh the fact that the injury took place in the U.S. and any facts tending to show a U.S. base of operations. Canadian law should have been applied to this controversy. The trial court erred in applying United States law. Appellant's assignment of error is sustained. The decision of the trial court is reversed and judgment is entered in favor of appellant. -13- This cause is reversed to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellants recover of said appellees their costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. DAVID T. MATIA, P.J., AND ROCCO, J., CONCUR ANN DYKE JUDGE N.B. This entry is an announcement of the court's decision. See App. R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App. R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .