Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-15-00097/USCOURTS-ca2-15-00097-0/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 

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15‐97

Hapag‐Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

______________              

August Term, 2015

(Argued: November 17, 2015     Decided: February 24, 2016)

Docket No. 15‐97

              

HAPAG‐LLOYD AKTIENGESELLSCHAFT,

Plaintiff‐Appellee,

–v.–  

U.S. OIL TRADING LLC,

Defendant‐Appellant,

O.W. BUNKER GERMANY GMBH,

O.W. BUNKER & TRADING A/S,

O.W. BUNKER USA, INC., ING BANK, N.V.,

Defendants.

*

______________

Before:

KEARSE, STRAUB, and WESLEY, Circuit Judges.

 

* The Clerk of the Court is directed to amend the official caption

as noted above.

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page1 of 19
1

Interlocutory appeal from an injunction entered by the

United States District Court for the Southern District of New

York (Valerie E. Caproni, Judge). Plaintiff‐Appellee Hapag‐Lloyd

Aktiengesellschaft filed an action in the District Court,

interpleading a number of parties for obligations arising out of

the purchase of fuel bunkers for its ships. On December 19, 2014,

the District Court entered an interpleader injunction and, on

December 30, denied Defendant‐Appellant U.S. Oil Trading

LLC’s motion to vacate or modify the injunction. Defendant‐

Appellant now appeals on the grounds that, inter alia, the

District Court lacked subject matter jurisdiction and the

injunction is overbroad. We disagree as to jurisdiction but

conclude that the District Court did not properly conduct the

analysis with respect to the scope of the injunction. Accordingly,

we AFFIRM the District Court’s orders in part but REMAND the

case, pursuant to United States v. Jacobson, for a determination of

the proper scope of the injunction.

______________

JOHN R. KEOUGH III (Casey D. Burlage, Corey R.

Greenwald, George G. Cornell, on the brief), Clyde & Co US LLP,

New York, NY, for Defendant‐Appellant.

PETER J. GUTOWSKI (Michael Fernandez, Gina M. Venezia,

on the brief), Freehill Hogan & Mahar LLP, New York, NY, for

Plaintiff‐Appellee.

James H. Hohenstein, James H. Power, Marie E. Larsen,

Holland & Knight LLP, New York, NY, for Amici Curiae APL Co.

Pte Ltd., American President Lines, Ltd., Baere Maritime LLC, Bonny

Gas Transport Ltd., Clearlake Shipping Pte Ltd., Conti 149 Conti

Guinea, MT Cape Bird Tankschiffahrts GmbH & Co KG, Sigma

Tankers Inc, Star Tankers Inc, and UPT Pool Ltd.

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page2 of 19
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William F. Dougherty, Keith W. Heard, Michael J. Walsh,

Burke & Parsons, New York, NY, for Amici Curiae 1372 Tanker

Corporation, OSG Ship Management, Inc., SK Shipping Co., Ltd., and

SK B&T Pte. Ltd.

Andrea Pincus, Reed Smith LLP, New York, NY, for

Amicus Curiae SHV Gas Supply & Risk Management SAS.

Kerri M. D’Ambrosio, George M. Chalos, Chalos & Co.,

P.C., Oyster Bay, NY, for Amicus Curiae Exmar Shipping BVBA.

1

______________

WESLEY, Circuit Judge:

This action presents, as the District Court aptly put it,

“interesting and apparently novel questions regarding the

interplay among the United States bankruptcy law, maritime law

and the federal interpleader statutes.” UPT Pool Ltd. v. Dynamic

Oil Trading (Sing.) PTE. Ltd., Nos. 14‐CV‐9262 (VEC) et al., 2015

WL 4005527, at *1 (S.D.N.Y. July 1, 2015). It is just one of at least

twenty‐five other interpleader actions in the United States

District Court for the Southern District of New York (Valerie E.

Caproni, Judge), concerning similar issues among overlapping

parties.

Plaintiff‐Appellee Hapag‐Lloyd Aktiengesellschaft

(“Hapag‐Lloyd”), based in Hamburg, Germany, owns or

charters a fleet of shipping vessels, three of which—the M/V

Seaspan Hamburg, the M/V Santa Roberta, and the M/V Sofia

 

1 All amici curiae are referred to collectively as the “Vessel

Interests.”

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page3 of 19
3

Express—are involved in this case.2 Hapag‐Lloyd contracted with

non‐appealing Defendant O.W. Bunker Germany GmbH (“O.W.

Germany”) to purchase fuel bunkers for these three ships,

among others, for the calendar year 2014.3 Pursuant to this

contract, Hapag‐Lloyd would place orders with O.W. Germany

for delivery of bunkers to the vessels and then remit payment as

invoiced.

In October 2014, Hapag‐Lloyd placed orders with O.W.

Germany for bunkers to be supplied in Tacoma, Washington, to

the three vessels in question; the fuel was actually delivered to

the vessels by U.S. Oil Trading LLC (“USOT”).4 One month later,

O.W. Germany’s parent company, O.W. Denmark, filed for

bankruptcy—followed by similar bankruptcy filings by affiliated

 

2 Hapag‐Lloyd owns the M/V Sofia Express and is the time charterer of

the M/V Seaspan Hamburg and the M/V Santa Roberta, but the nature of

its interest in each vessel is not significant to this case.

3 “Bunker fuel,” or even commonly just “bunker,” is the term for fuel

oil used to power modern vessels; it derives from the tank in which the

fuel is stored, whose name is itself a holdover term from coal bunkers

used in early steam vessels. See generally Garanti Finansal Kiralama A.S.

v. Aqua Marine & Trading Inc.. 697 F.3d 59, 62 (2d Cir. 2012); In re Sea

Bridge Marine, Inc., 412 B.R. 868, 871 n.1 (Bankr. E.D. La. 2008).

4 USOT informs us in briefing that it entered into contracts with O.W.

Bunker & Trading A/S (“O.W. Denmark”) to provide bunkers to the

vessels, the delivery of which occurred on various dates in October

2014. The vessels accepted delivery and stamped the bunker delivery

receipts. USOT then issued invoices to O.W. Denmark in the amounts

of $1,507,408.99 (M/V Seaspan Hamburg), $1,315,507.80 (M/V Sofia

Express), and $1,481,860.28 (M/V Santa Roberta). Hapag‐Lloyd alleges it

has received invoices from O.W. Germany for each of the three orders

in the amounts of $1,516,809.83 (M/V Seaspan Hamburg), $1,318,668.24

(M/V Sofia Express), and $1,495,860.94 (M/V Santa Roberta).

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page4 of 19
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entities, including some in the United States Bankruptcy Court

for the District of Connecticut.5 As a result, in this action

multiple parties assert claims to payment by Hapag‐Lloyd for

the bunkers—some sounding in contract (the O.W. Entities), and

others sounding in statutory maritime liens (the O.W. Entities

and USOT).6  

In December, the litigation frenzy began. On December

17, USOT instituted in rem actions on the basis of its asserted

maritime liens against the M/V Sofia Express in the United States

District Court for the Western District of Washington and

 

5 The affiliated entities in the bankruptcy proceedings in Connecticut

are O.W. Bunker Holding North America Inc., O.W. Bunker North

American Inc., and O.W. Bunker USA Inc. See In re O.W. Bunker

Holding N. Am. Inc. et al., No. 14‐51720 (JAM) (Bankr. D. Conn. filed

Nov. 13, 2014). None of these entities were initially named in this

action, but O.W. Bunker USA Inc. (“O.W. USA”) has since been added

as a defendant through an amended complaint. See infra note 6. We

refer to O.W. Germany, O.W. Denmark, and O.W. USA collectively as

“the O.W. Entities.”

6 The initial complaint named both Crédit Agricole S.A. and ING Bank,

N.V., as alleged assignees or creditors of various claimants. However,

the parties have shifted somewhat since USOT took its appeal. On July

14, 2015, Hapag‐Lloyd filed an amended complaint, adding O.W. USA

as a defendant and replacing Crédit Agricole S.A. with Crédit Agricole

CIB, which then executed a stipulation dismissing the case against

them. See First Am. Cmpl. for Interpleader and Declaratory J., Hapag‐

Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC et al., No. 14‐cv‐9949

(S.D.N.Y. July 14, 2015), ECF No. 84; Stipulation and Notice of

Dismissal of Crédit Agricole CIB, Hapag‐Lloyd, No. 14‐cv‐9949

(S.D.N.Y. Sept. 15, 2015), ECF No. 115. ING Bank remains a named

defendant. We have amended the caption in the instant appeal

accordingly, but the change in non‐appealing players has no

significance to our decision today.

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page5 of 19
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against the M/V Santa Roberta and the M/V Seaspan Hamburg in

the United States District Court for the Central District of

California.7 As part of these actions, USOT obtained ex parte

arrest warrants for the vessels, which it intended to execute

when the vessels arrived in their respective ports at some point

within the next several days. However, on the same day and the

opposite coast, Hapag‐Lloyd filed its Interpleader Complaint

below and moved ex parte for an anti‐suit injunction under 28

U.S.C. § 2361. Understandably uneasy to act without notice to

the defendants, the District Court held a hearing on Hapag‐

Lloyd’s motion the following day. USOT’s counsel was present

at the hearing but informed the District Court that he had not

been authorized by USOT to appear on their behalf. The District

Court adjourned for an hour to give USOT’s counsel time to

speak with his client, but when it reconvened, USOT still did not

enter an appearance.  

The District Court then granted Hapag‐Lloyd’s motion

and enjoined the named defendants from

instituting or prosecuting any proceeding or

action anywhere, affecting the property and

res involved in this action of interpleader,

including but not limited to the arrest,

attachment or other restraint of the subject

Vessels pursuant to Supplemental

Admiralty Rule C or Rule B or other laws to

enforce claimants’ alleged maritime lien

claims arising from the bunker deliveries

until the further order of the Court.

 

7 See U.S. Oil Trading LLC v. M/V Vienna Express, No. 3:14‐cv‐05982

(W.D. Wash. filed Dec. 17, 2014); U.S. Oil Trading LLC v. M/V Santa

Roberta, No. 2:14‐cv‐09662 (C.D. Cal. filed Dec. 17, 2014).

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page6 of 19
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Order at 2, Hapag‐Lloyd, No. 14‐cv‐9949 (S.D.N.Y. Dec. 19, 2014),

ECF No. 5. The District Court then ordered Hapag‐Lloyd to post

an initial bond, with a six‐percent increase if the litigation lasted

longer than a year. Id. at 3.8 That same day, the District Court

directed the parties to submit briefs concerning the propriety of

Hapag‐Lloyd’s interpleader action. See Order at 4, Hapag‐Lloyd,

No. 14‐cv‐9949 (S.D.N.Y. Dec. 19, 2014), ECF No. 8. USOT later

appeared and filed a motion to vacate or modify the injunction,

which the District Court denied. See Order, Hapag‐Lloyd, No. 14‐

cv‐9949 (S.D.N.Y. Dec. 30, 2014), ECF No. 17.9  

USOT took its appeal, and the parties completed their

appellate briefing, before the District Court issued its written

decision on subject matter jurisdiction. See UPT Pool Ltd., 2015

WL 4005527. Although this order of the District Court is not

formally before us on appeal,10 we instructed the parties to brief

 

8 Hapag‐Lloyd posted bond in the following amounts with respect to

each vessel: $1,607,818.41 (M/V Seaspan Hamburg); $1,397,788.33 (M/V

Sofia Express); and $1,507,771.89 (M/V Santa Roberta). See Underwriter’s

Interpleader and Declaratory J. Surety Bond, Hapag‐Lloyd, No. 14‐cv‐

9949 (S.D.N.Y. Dec. 22, 2014), ECF No. 9. These amounts exceed the

costs for the fuel bunkers invoiced to the various parties. See supra note

4.

9 Accordingly, USOT’s arrest warrants in the other districts have never

been executed. One of those actions has been transferred to the

Southern District of New York, see U.S. Oil Trading, LLC v. M/V Vienna

Express, No. 14‐5982 RJB, 2015 WL 4714838, at *11 (W.D. Wash. Aug. 7,

2015), and the other has been stayed pending the resolution of this

appeal, see Order Removing Case from Active Caseload by Virtue of

Stay at 1, U.S. Oil Trading v. M/V Santa Roberta, No. CV 14‐09662‐AB

(SSx) (C.D. Cal. June 29, 2015), ECF No. 36.

10 “[E]very federal appellate court has a special obligation to ‘satisfy

itself not only of its own jurisdiction, but also that of the lower courts

in a cause under review,’ even though the parties are prepared to

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page7 of 19
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their respective positions on the District Court’s conclusions. See

Order, Hapag‐Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, No.

15‐97 (2d Cir. Oct. 26, 2015), ECF No. 135.11 With the benefit of

this supplemental briefing and oral argument, we turn to subject

matter jurisdiction and the merits.

 

concede it.” Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541

(1986) (quoting Mitchell v. Maurer, 293 U.S. 237, 244 (1934)). “‘And if

the record discloses that the lower court was without jurisdiction,’” the

appellate court has “‘jurisdiction on appeal, not of the merits but

merely for the purpose of correcting the error of the lower court in

entertaining the suit.’” Id. (quoting United States v. Corrick, 298 U.S.

435, 440 (1936)). Since we have jurisdiction over this appeal from the

injunction under 28 U.S.C. § 1292(a)(1), we must address the subject

matter jurisdiction of the District Court even though its later order

ruling on its jurisdiction is not technically before us.

11 On the same day, we granted a motion by the Vessel Interests—

interpleader plaintiffs in related proceedings before the District

Court—to participate as amici curiae. See Order, Hapag‐Lloyd, No. 15‐97

(2d Cir. Oct. 26, 2015), ECF No. 136. Amici Vessel Interests then also

filed a letter brief in response to our supplemental briefing Order. See

Mem. Br., Hapag‐Lloyd, No. 15‐97 (2d Cir. Nov. 2, 2015), ECF No. 144.

However, non‐intervenor amici curiae are not “parties” to this appeal,

cf. Wilder v. Bernstein, 965 F.2d 1196, 1203 (2d Cir. 1992) (citing Morales

v. Turman, 820 F.2d 728, 732 (5th Cir. 1987)), and therefore were neither

ordered nor entitled to participate in the supplemental briefing. Thus,

we consider only the Vessel Interests’ initial brief as amici curiae—and

not their letter brief—on this appeal.

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DISCUSSION12

The federal interpleader statute confers original

jurisdiction on federal district courts where “[t]wo or more

adverse claimants [of at least minimally] diverse citizenship”

may or do claim entitlement to “money or property of the value

of $500 or more,” or any benefit arising from an “instrument of

value or amount of $500 or more” or an “obligation written or

unwritten to the amount of $500 or more,” provided that the

plaintiff “has deposited such money or property” into the

registry of the court or “has given bond payable to the clerk of

the court in such amount and with such surety as the court or

judge may deem proper.” 28 U.S.C. § 1335(a). Where the other

requirements are met, the statute makes it irrelevant that “the

titles or claims of the conflicting claimants do not have a

 

12 If the jurisdictional issue is presented on the face of the complaint,

we accept as true all of the complaint’s material factual allegations,

along with the reasonable inferences that can be drawn from them, but

if the issue is presented on the basis of controverting evidence outside

of the complaint, we review the district court’s factual findings for

clear error and its rulings of law de novo. See, e.g., Tandon v. Captain’s

Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). “For

purposes of ruling on a motion to dismiss for want of standing, both

the trial and reviewing courts must accept as true all material

allegations of the complaint, and must construe the complaint in favor

of the complaining party.” Warth v. Seldin, 422 U.S. 490, 501 (1975); see

also Lujan v. Defenders of Wildlife, 504 U.S 555, 561 (1992) (“The party

invoking federal jurisdiction bears the burden of establishing

[standing] . . . in the same way as any other matter on which the

plaintiff bears the burden of proof, i.e., with the same manner and

degree of evidence required at the successive stages of the litigation.”).

With respect to a district court’s grant of injunctive relief pursuant to

28 U.S.C. § 2361, we review for abuse of discretion. See Nat’l Union Fire

Ins. Co. of Pittsburgh, Pa. v. Karp, 108 F.3d 17, 23 (2d Cir. 1997).

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page9 of 19
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common origin.” Id. § 1335(b). USOT contends that these

statutory requirements are not met. Its principal argument is

that, because its claims to payment arise from statutory in rem

liens against Hapag‐Lloyd’s vessels while the O.W. Entities’

claims arise from the supply contracts (and thus are correctly

characterized by USOT as being in personam in nature), its co‐

defendants are not claiming entitlement to the same money,

property, or benefit of the instrument or obligation. USOT is of

the view that its maritime liens do not arise out of the Hapag‐

Lloyd–O.W. Entities contracts but rather from the fact that USOT

“provid[ed] necessaries to a vessel on the order of the owner or a

person authorized by the owner.” See Maritime Commercial

Instruments and Liens Act, 46 U.S.C. § 31342.13 In the context of

this case, however, USOT focuses on a difference that is not

material to the availability of interpleader.

It is well established that the interpleader statute is

“remedial and to be liberally construed,” particularly to prevent

races to judgment and the unfairness of multiple and potentially

conflicting obligations. State Farm Fire & Cas. Co. v. Tashire, 386

U.S. 523, 533 (1967). Though this matter presents a novel factual

situation, we think the case before us fits squarely within the

language and purpose of the interpleader statute. Like the

District Court, we find instructive Royal School Laboratories, Inc. v.

Town of Waterman, 358 F.2d 813 (2d Cir. 1966). There, we upheld

an interpleader complaint by the Town, naming a supplier of

equipment and furniture to the Town and the assignee of the

general contractor who purchased but did not pay for the

materials. Id. at 815. The supplier’s equitable unjust enrichment

claims against the Town arose from materialman claims while

 

13 For the purposes of § 31342, bunkers are “necessaries.” 1 THOMAS J.

SCHOENBAUM, ADMIRALTY & MARITIME LAW § 9‐3 (5th ed. 2014) (citing

Gulf Oil Trading Co. v. M/V Caribe Mar, 757 F.2d 743 (5th Cir. 1985)).

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page10 of 19
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the general contractor’s assignee asserted claims against the

Town for payment for the equipment arising from a contract.

Judge Friendly, writing for the court, explained that “nothing

could be more palpably unjust than to permit two recoveries

against [the interpleader plaintiff] for the same enrichment.” Id.

14

We conclude that the claims alleged in this action concern the

same enrichment to Hapag‐Lloyd—i.e., the value of the bunkers,

payment for which is the entitlement claimed by all parties15—

and are thus likewise “inextricably interrelated.” Id. Although

the claims may have different legal origins, we have previously

held that there is no requirement that interpleader claims arise

“out of a common source of right or entitlement.” Ashton v.

Josephine Bay Paul & C. Michael Paul Found., Inc., 918 F.2d 1065,

1069 (2d Cir. 1990); see also 28 U.S.C. § 1335(b).

 

14 Concern over double recovery was similarly addressed in a non‐

interpleader case cited by both parties, Central Hudson Gas & Electric

Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359 (2d Cir. 1995). In that

case, we concluded in rem and in personam claims were distinct, and

thus, a judgment in an in rem action was not a res judicata bar to a

subsequent in personam action—in part because plaintiff “did not seek

duplicative or additional damages” and instead in essence sought

merely to treat the vessel operator as jointly liable with the vessel

itself. Id. at 367. It is also worth noting that the considerations

underlying whether a claim is precluded by res judicata—a judicial

doctrine—are distinct from the considerations underlying the federal

interpleader statutes, and thus Central Hudson’s analysis is of limited

value in this case.

15 The amounts alleged to be owed differ slightly between each

claimant, because the contractual prices in the interlocking chain seem

to incorporate some level of profit. See supra note 4. This is not fatal to

an interpleader claim; the statute expressly applies to “titles or claims

of the conflicting claimants” that “are not identical.” 28 U.S.C.

§ 1335(b).

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The interconnection of the claims is evident. To recover

under a maritime lien, USOT must demonstrate that it provided

necessaries “on the order of the owner or a person authorized by

the owner.” 46 U.S.C. § 31342(a); see also id. § 31341 (listing

persons “presumed to have authority to procure necessaries for

a vessel”). We have no reason at this time to test USOT’s

assertion that an O.W. entity had the authority the lien statute

requires, but it is difficult to see how USOT could prove

authorization without reference to the chain of contractual

relationships beginning with Hapag‐Lloyd and passing through

the O.W. Entities to itself. This chain of contracts is, of course,

also the source of at least some of the claims by the O.W.

Entities—others of which are competing in rem liens asserted

under the same statutory entitlement claimed by USOT.16  

USOT attempts to distinguish the entitlements by arguing

that a payment by Hapag‐Lloyd to O.W. Germany under its

contracts would not discharge the maritime lien held by USOT.

Indeed, that may be true.17 But an interpleader action does not

 

16 See Verified Answer, Interpleader Claims, and Countercls. of O.W.

Bunker Ger. GmbH at 14, ¶ 83, Hapag‐Lloyd, No. 14‐cv‐9949 (S.D.N.Y.

July 17, 2015), ECF No. 93; Answer, Countercls. and Cross‐Claim of

ING Bank N.V. to the First Am. Cmpl. for Interpleader and

Declaratory J. at 11–12, ¶¶ 6–13, Hapag‐Lloyd, No. 14‐cv‐9949 (S.D.N.Y.

July 28, 2015), ECF No. 98.

17 USOT’s maritime lien certainly would be extinguished if USOT

received payment from O.W. Denmark pursuant to its invoices. See

Mullane v. Chambers, 438 F.3d 132, 138 (1st Cir. 2006) (after repayment,

“any maritime lien had been extinguished by satisfaction”); see also

World Fuel Servs., Inc. v. Magdalena Green M/V, 464 F. App’x 339, 341

(5th Cir. 2012) (per curiam) (same). In such a case, USOT could not

recover both through its contract with O.W. Denmark and through its

lien on Hapag‐Lloyd’s vessels, thereby further demonstrating that the

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page12 of 19
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abrogate USOT’s right to be paid (if it has one); it merely

requires USOT to litigate its claim in the context of the same

proceeding as competing claimants, so that the District Court

can minimize or eliminate the risk of double payment to the

extent the governing law permits.18 Adjudication of Hapag‐

Lloyd’s obligation to pay for the fuel bunkers involves

inextricably intertwined claims, and interpleader jurisdiction is

proper under the broad and remedial nature of § 1335.19

 

entitlements arising from the maritime lien and the interlocking

contracts are inextricable.

18 The various relationships in this case may, for example, require the

District Court to untangle complicated questions of subrogation and

set‐offs among the parties as it determines payment obligations. See

Pearlman v. Reliance Ins. Co., 371 U.S. 132, 136–37, 136 n.12 (1962)

(discussing the doctrine of subrogation); Am. Fid. Co. v. Nat’l City Bank

of Evansville, 266 F.2d 910, 914 (D.C. Cir. 1959) (discussing equitable

liens as a form of subrogation in the context of material suppliers).

Because of the complexity of the questions presented by these

competing claims, the District Court’s interpleader jurisdiction over

the parties and attendant issues meets the goals of efficiency and

fairness motivating the statute.

19 USOT’s second argument as to interpleader jurisdiction—that the

amount of the bond is insufficient under § 1335—patently fails. While

USOT’s arguments focus exclusively on the statutory clause that refers

to deposit of the money or amount of obligation itself, it ignores that

the statute alternatively permits posting of a bond “in such amount and

with such surety as the court or judge may deem proper.” 28 U.S.C.

§ 1335; see also Aetna Cas. & Sur. Co. v. B.B.B. Constr. Corp., 173 F.2d 307,

309 (2d Cir. 1949) (noting that the interpleader statute was expressly

amended to contain the bond as an alternative to payment of a

deposit). The District Court clearly made a determination that the

amount posted was sufficient, and we see no abuse of discretion in its

conclusion. See also supra note 8.

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USOT also challenges the sufficiency of the District

Court’s in rem jurisdiction.20 However, USOT’s arguments fail

here as well. It relies on cases in which the person possessing the

in rem claim initiates the proceeding without the vessel owner’s

consent, which would necessitate the court obtaining jurisdiction

over the res. See In re Millenium Seacarriers, Inc., 419 F.3d 83, 94

(2d Cir. 2005) (Sotomayor, J.); Dluhos v. Floating & Abandoned

Vessel, 162 F.3d 63, 68–69 (2d Cir. 1998). USOT’s argument—that

both parties’ consent is necessary in cases where the party

initiating suit is the owner of the res that the lienholder seeks to

arrest—relies on cases holding that where a lienholder brings a

claim, both parties’ consent is “sufficient” for a court to exercise

in rem jurisdiction without seizure of the res. E.g., Panaconti

Shipping Co. v. M/V Ypapanti, 865 F.2d 705, 707–08 (5th Cir. 1989).  

That is not inconsistent, however, with other cases indicating

that only the owner’s consent is necessary. In rem jurisdiction is

“‘a customary elliptical way of referring to jurisdiction over the

interests of persons in a thing.’” Shaffer v. Heitner, 433 U.S. 186,

207 (1977) (quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS

§ 56, intro. note (1971)). To obtain jurisdiction over that interest,

a court must either seize the res or obtain the consent of the

owner or other person asserting a right of possession. This

principle is demonstrated by the many cases in which in rem

 

20 Hapag‐Lloyd argues that USOT conflates subject matter and in rem

jurisdiction, which are distinct. See Mattel, Inc. v. Barbie‐Club.com, 310

F.3d 293, 298 (2d Cir. 2002) (Sotomayor, J.) (distinguishing between

subject matter jurisdiction and in rem jurisdiction). While it is true that

some elements of the arguments overlap, USOT in fact makes two

arguments: first, the amount of the bond is insufficient under § 1335 to

confer subject matter jurisdiction—which we addressed supra note

19—and second, even if it is sufficient under § 1335, it is insufficient to

constitute a substitute res for the vessels themselves, which we address

here.

Case 15-97, Document 163-1, 02/24/2016, 1711686, Page14 of 19
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jurisdiction has been held waived without seizure when the

owner appears without contesting jurisdiction. See, e.g., United

States v. Republic Marine, Inc., 829 F.2d 1399, 1402 (7th Cir. 1987);

Cactus Pipe & Supply Co. v. M/V Montmartre, 756 F.2d 1103, 1107–

08 (5th Cir. 1985); cf. Continental Grain Co. v. The FBL‐585, 364

U.S. 19, 22–27 (1960) (construing the owner’s consent as

sufficient for venue transfer of both in personam and in rem

claims). By initiating an interpleader concerning certain in rem

claims and posting adequate security for those claims, Hapag‐

Lloyd consented to the District Court’s jurisdiction over its

interests, which is sufficient to confer jurisdiction. See Cactus

Pipe, 756 F.2d at 1107; Reed v. Steamship Yaka, 307 F.2d 203, 204

(3d Cir. 1962), rev’d on other grounds, 373 U.S 410 (1963).21

Next, USOT contends that the interpleader injunction

issued in this case is in violation of the requirements of 28 U.S.C.

§ 2361.22 USOT argues that § 2361 does not expressly authorize

 

21 Similarly, USOT’s argument that the bond is insufficient as a

substitute res is unavailing. First, as we have just explained, no res is

necessary when the owner consents; second, USOT’s cited sources deal

with the method by which a vessel’s owner can free it from seizure

through posting a bond and thus have no applicability in a case where

seizure neither occurred nor is required.  

22 USOT also argues that service was not by U.S. Marshal and thus

ineffective. Service of process is a question of “practice and procedure”

governed by the Federal Rules of Civil Procedure; statutory

requirements to the contrary were voided by the Rules Enabling Act.

See Henderson v. United States, 517 U.S. 654, 656 (1996); Aisner v. Penn.

Mut. Life Ins. Co., 53 F.3d 1282, 1995 WL 295968, at *2 (5th Cir. 1995)

(per curiam) (unpublished) (“Rule 4 of the Federal Rules of Civil

Procedure supersedes § 2361 to the extent that § 2361 conflicts with the

1983 revisions to Rule 4, which allow any adult non‐party to complete

service in the district in which a claimant resides.”); see also Fed. R. Civ.

P. 22(b) (“An action under [28 U.S.C. §§ 1335, 1397, and 2361] must be

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an interpleader injunction to extend to foreign suits. While the

statute itself has no extraterritorial reach, federal courts have

long possessed the inherent power to restrain the parties before

them from engaging in suits in foreign jurisdictions. See China

Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir.

1987). This Circuit has articulated a test for when such

injunctions are warranted: First, an anti‐foreign‐suit injunction

may be imposed only if the parties are the same and resolution

of the case before the enjoining court is dispositive of the action

to be enjoined; if this threshold is met, the District Court must

then examine five factors:

(1) frustration of a policy in the enjoining

forum; (2) the foreign action would be

vexatious; (3) a threat to the issuing court’s

in rem or quasi in rem jurisdiction; (4) the

proceedings in the other forum prejudice

 

conducted under these rules.”). As USOT has not argued service was

defective under Federal Rule of Civil Procedure 4, we treat service as

sufficient. See Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998).

USOT makes an additional argument that the injunction was improper

because it prevented USOT from executing arrest orders obtained in

other federal courts. That USOT had obtained arrest orders prior to

entry of the injunction is of no significance—interpleader injunctions

clearly may restrain claimants “from instituting or prosecuting” actions

in another jurisdiction. 28 U.S.C. § 2361 (emphasis added). In any

event, USOT’s arrest actions were not “first filed” because they were

apparently filed later on the same day that Hapag‐Lloyd filed its

interpleader complaint. Moreover, some courts have found

inapplicable the first‐filed rule where filings were made on the same

day, regardless of their order. E.g., Ontel Prods., Inc. v. Project Strategies

Corp., 899 F. Supp. 1144, 1150, 1153 (S.D.N.Y. 1995). But see, e.g., Alden

Corp. v. Eazypower Corp., 294 F. Supp. 2d 233, 235 n.2 (D. Conn. 2003).

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other equitable considerations; or (5)

adjudication of the same issues in separate

actions would result in delay,

inconvenience, expense, inconsistency, or a

race to judgment.

Id. at 35–36 (internal quotation marks omitted); accord Ibeto

Petrochemical Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 64 (2d Cir.

2007). Our review of the record does not reveal any such analysis

by the District Court of the factors, which leaves us without a

sufficient record of the District Court’s exercise of its discretion.

See Gasperini v. Ctr. for Humanities, Inc., 149 F.3d 137, 142, 144 (2d

Cir. 1998).  

However, if we were merely to vacate and remand on this

ground, Hapag‐Lloyd would remain free to seek an anti‐foreign

suit injunction under China Trade, and the order granting or

denying that injunction would then be immediately appealable

under 28 U.S.C. § 1292(a)(1). In the interests of judicial economy

and orderly resolution of the matter, therefore, we think it more

prudent to order a limited remand pursuant to our Circuit’s

practice under United States v. Jacobson, 15 F.3d 19, 22 (2d Cir.

1994). The remand permits the District Court to make its

determinations under the correct standard and return its

determinations to us for consideration without the need for

reassignment to a new panel and full briefing.  

Accordingly, we remand to the District Court with

instructions to enter an order, within ninety days of the issuance

of our mandate, that eliminates or retains the foreign scope of

the injunction, with specific determinations applying the China

Trade test. If the District Court retains the scope of the injunction,

either party may restore jurisdiction to this panel by filing a

letter with the Clerk of this Court within thirty days after entry

of such order; if the District Court eliminates the foreign scope of

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the injunction and Hapag‐Lloyd wishes to challenge that

decision, it will be required to file a notice of appeal in order to

do so. See generally Jennings v. Stephens, 135 S. Ct. 793, 798 (2015)

(“[A]n appellee who does not cross‐appeal may not attack the

decree with a view . . . to enlarging his own rights

thereunder . . . .” (internal quotation marks omitted)). In either

event, briefing of the issue may be by letter, not to exceed ten

double‐spaced pages, setting forth the grounds for claiming

error in the District Court’s decision and attaching a copy of the

order. Upon the filing of such a letter, the opposing party may

file a response of the same maximum length within fourteen

days. Oral argument will be scheduled at the panel’s discretion.

If neither party files an initial letter—or notice of appeal, if

required—the order entered by the District Court on remand

will not be reviewed.

Finally, USOT challenges the District Court’s exercise of

personal jurisdiction over it as well as interpleader venue.

However, we conclude that USOT has waived these issues,

excluding them from appellate review in this case. The instances

to which USOT points as asserting its personal jurisdiction

arguments to the District Court are cursory, often one‐sentence

statements, which we have long held are generally insufficient to

preserve an issue for appeal. See Wal‐Mart Stores, Inc. v. Visa

U.S.A., Inc., 396 F.3d 96, 124 n.29 (2d Cir. 2005) (holding that

under established law of the Circuit, a one‐sentence challenge to

a fee award was not sufficient to preserve the issue for appeal).

Similarly, USOT’s purported “objections” to venue at the District

Court are minimal. Though one colloquy at a hearing could

possibly be interpreted to raise the question of venue, we note

from Hapag‐Lloyd’s supplemental briefing and our own review

of the District Court docket that the deadline for motions to

dismiss on the basis of personal jurisdiction and venue passed

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without any submission from USOT. Thus, we decline to decide

these issues for the first—and apparently only—time on appeal.23

CONCLUSION

We have considered USOT’s remaining arguments and

find them to be without merit. Accordingly, we AFFIRM in part

the District Court’s orders of December 19 and 30, 2014, but

REMAND the case to the District Court with instructions to

enter an order, within ninety days of the issuance of our

mandate, that eliminates or retains the foreign scope of its

injunction according to specific conclusions under the China

Trade test. Either party may seek review of such order by filing a

letter or notice of appeal, as prescribed above. In the interests of

judicial economy, any such reinstated appeal will be assigned to

this panel. The mandate shall issue forthwith.

 

23 USOT argues that, even if its arguments were forfeited, we should

consider them to avoid “manifest injustice.” Magi XXI, Inc. v. Stato della

Città del Vaticano, 714 F.3d 714, 724 (2d Cir. 2013) (internal quotation

marks omitted). As we stated above, USOT had the opportunity to

submit briefing on these issues to the District Court and chose not to

do so. Such a decision bespeaks more waiver than forfeiture, see

Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 61–62 (2d Cir. 1999), which

eliminates our discretion to reach the issue, see Wood v. Milyard, 132 S.

Ct. 1826, 1832 (2012). Even assuming we possessed the discretion, we

generally exercise it when presented with “a question of law” for

which “there is no need for additional factfinding.” Magi XXI, 714 F.3d

at 724 (internal quotation marks omitted). Given the lack of

development of the factual record below, we are not persuaded this

case would present an appropriate vehicle to exercise our discretion in

any event.

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