1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-15-1994

Neely v. ClubMed

Precedential or Non-Precedential:

Docket 93-2069

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Recommended Citation

"Neely v. ClubMed" (1994). 1994 Decisions. Paper 189.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/189
 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 Nos. 93-2069 and 93-2102 

 

 EILEEN ANNE NEELY, 

 Appellant in No. 93-2069

v. 

 CLUB MED MANAGEMENT SERVICES, INC.; CLUB MED SALES, INC.; 

 CLUB MED, INC., Third-Party Plaintiffs; 

 HOLIDAY VILLAGE (ST. LUCIA), LTD. 

v. 

 JOSEPH LEMAIRE, 

 Third-Party Defendant 

 Club Med Management Services, Inc. and 

 Holiday Village (St. Lucia) Inc., 

 Appellants in No. 93-2102

 

 Appeal from the United States District Court 

 for the Eastern District of Pennsylvania 

 (D.C. Civil No. 91-cv-07416) 

 

 Argued August 8, 1994 

 Before: MANSMANN, COWEN and McKEE, 

 Circuit Judges

 (Filed November 15, l994 ) 

 

M. Kelly Tillery (argued) 

Michael V. Tinari 

Leonard, Tillery & Davison 

1515 Market Street 
18th Floor 

Philadelphia, PA 19102 

 Counsel for Eileen Anne Neely 

Bettina B. Plevan (argued) 

Proskauer, Rose, Goetz & Mendelsohn 

1585 Broadway 

New York, NY 10036 

 Counsel for Club Med Management 

 Services, Inc.; Club Med, Inc.; Holiday 

 Village (St. Lucia), Ltd. 

Louis Bell 

Marshall, Dennehey, Warner, 

 Coleman & Goggin 

1845 Walnut Street 

Philadelphia, PA 19103 

 Counsel for Club Med Management 

 Services, Inc.; Holiday Village, 

 (St. Lucia) Ltd. 

 

 OPINION OF THE COURT 

 

 

COWEN, Circuit Judge. 

 This personal injury action was filed with the United 

States District Court for the Eastern District of Pennsylvania 

under the Jones Act, 46 U.S.C. § 688, and the General Maritime 

Law of the United States. The plaintiff was a scuba diving 

instructor who received injuries from a diving accident that took 

place in the coastal waters of St. Lucia. On motion by the 

defendants,1 the district court reduced the verdict in favor of 

 

1. Defendants in this action are: Club Med Management Services, 

Inc.; Club Med Sales, Inc.; Club Med, Inc. (collectively "Club 

Med"); and Holiday Village (St. Lucia), Ltd. 
the plaintiff on the theory that the plaintiff was contributorily 

negligent. In this appeal, the plaintiff contends the district 

court improperly reduced the jury verdict. In a cross-appeal, 

the defendants challenge the order of the district court denying 

their motion to dismiss the complaint for lack of subject matter 

jurisdiction. Because we will reverse the order of the district 

court which concluded there was subject matter jurisdiction, we 

need not address plaintiff's appeal regarding the reduction of 

the jury verdict. 

I.

 A. Factual Background

 Plaintiff Eileen Neely ("Neely") applied for a position 

as a scuba diving instructor with Club Med after vacationing at 

one of their resorts. Neely traveled to New York City to 

interview with Club Med. During a subsequent telephone call to 

her home in Pennsylvania from Club Med in New York City, Neely 

was offered a position at the Club Med resort, Holiday Village 

(St. Lucia) Ltd. 

 In May of 1991, Neely began work at the Holiday Village 

as a scuba diving instructor. On May 23, 1991, the vessel Long

John, a diving boat used by Holiday Village for diving 

excursions, left the resort area for a group dive. On board the 

vessel was Neely (who was acting in her capacity as a dive 

instructor), another dive instructor, the Dive Master, the 

captain, and a number of Club Med guests. As they neared the 

dive sight, the captain slowed the forward direction of the boat, 
and put the engines in neutral. He did not shut off the engines. 

The guests were instructed to put on their diving gear and await 

the signal from the Dive Master before entering the water. 

 What happened next remains in dispute. Neely claims 

that she received the "O.K." signal from the Dive Master, and 

entered the water. Defendants insist that the signal was never 

given, and Neely entered the water prematurely from the stern and 

without authorization. In any event, while (unknown to the 

captain of the Long John) Neely was in the water, the captain 

shifted the engines from neutral to reverse. The churning 

propellers of the twin 350 horsepower diesel engines sucked her 

under the boat and into the ship's propellers. Seconds later, 

she reappeared on the starboard side of the boat and was rescued 

by the other dive instructor. Neely sustained multiple severe 

injuries to various parts of her body. 

 B. Procedural Background

 Plaintiff Neely is a United States citizen who resides 

in Pennsylvania. Defendant Club Med Management Services, Inc., 

is organized under the laws of New York State; Club Med Sales, 

Inc., under the laws of the State of Delaware; Club Med, Inc., 

under the laws of the Cayman Islands; and Holiday Village (St. 

Lucia), Ltd., under the laws of St. Lucia. 

 Neely filed suit in the United States District Court 

for the Eastern District of Pennsylvania under the Jones Act, 46 

U.S.C. § 688, and the General Maritime Law of the United States. 

The defendants filed a motion to dismiss for lack of subject 
matter jurisdiction, which was denied by the district court. The 

case proceeded to trial and the jury awarded the plaintiff 

$545,000.00 in damages. After factoring in the percentage of 

contributory negligence which was determined by the jury on the 

Jones Act count of the complaint, the district court entered 

judgment for the plaintiff in the amount of $229,700.00. These 

appeals followed. We have jurisdiction over the appeal and 

cross-appeal, which were taken after a final judgment was entered 

by the district court, pursuant to 28 U.S.C. § 1291 (1988). 

II.

 Defendants argue that the district court lacked subject 

matter jurisdiction over plaintiff's complaint alleging claims 

under the Jones Act and General Maritime Law. We exercise 

plenary review, and thus employ the same standard that the 

district court used to determine whether subject matter 

jurisdiction properly lies in the district court: 

 [A] court reviewing a claim to Jones Act 

coverage should determine the substantiality 

of the links to the United States and the 

links to the foreign sovereignty. This 

process is undertaken in order to discern in 

whose "domain" the paramount interest lies. 

Under certain circumstances the Jones Act may 

be far-reaching. However, when the links to 

the United States are weak and the interests 

of another sovereign are substantial, the 

Jones Act is not applicable. 

Chirinos de Alvarez v. Creole Petroleum Corp., 613 F.2d 1240, 

1246 (3d Cir. 1980)(citation omitted). As the party who invoked 

the jurisdiction of the district court, Neely bears the burden of 
proving subject matter jurisdiction when put in issue by the 

defendants and where there are disputed jurisdictional facts. 

Matute v. Procoast Navigation Ltd., 928 F.2d 627, 632 (3d Cir.), 

cert. denied, 112 S. Ct. 329 (1991). See also Trentacosta v. 

Frontier Pacific Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th 

Cir. 1987)("[t]he party invoking the federal court's jurisdiction 

has the burden of proving the actual existence of subject matter 

jurisdiction . . . ."). 

 The district court correctly found that resolution 

of the jurisdictional issue turned on the application of the 

eight factor test set forth by the Supreme Court in Lauritzen v. 

Larsen, 345 U.S. 571, 73 S. Ct. 921 (1953), and Hellenic Lines 

Ltd. v. Rhoditis, 398 U.S. 306, 90 S. Ct. 1731 (1970). Neely v. 

Club Med Sales, Inc., No. 91-7416, 1992 WL 398378, at *2-3 (E.D. 

Pa. Dec. 31, 1992). The eight factors to be considered in Jones 

Act and maritime jurisdictional disputes are the: (1) law of the 

flag; (2) shipowner's base of operations; (3) allegiance of the 

defendant shipowner; (4) inaccessibility of a foreign forum; (5) 

place of the wrongful act; (6) place of the employment contract; 

(7) allegiance or domicile of the injured party; and (8) law of 

the forum. Id. at *3. We conclude that the district court erred 

when it found that these factors indicated that the United States 

was the appropriate forum for this lawsuit. We will address each 

of these factors seriatim. 

1. Law of the Flag
 The nationality of the vessel's flag is the single most 

important factor in the Jones Act jurisdictional equation. The 

Supreme Court stated in Lauritzen that "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." 345 

U.S. at 584, 73 S. Ct. at 929. With respect to this factor, the 

district court found that "the diving vessel flies the flag of 

St. Lucia." Neely, 1992 WL 398378, at *3. Neely maintains that 

there was no evidence presented before or during trial to 

establish that the vessel Long John actually flies the flag of 

St. Lucia. However, the defendants point out that the finding of 

the district court was based on the pre-trial declaration of 

vessel owner, Joseph LeMaire, which was submitted in support of 

his successful motion to dismiss the third-party complaint 

against him. LeMaire stated that the Long John is registered in 

St. Lucia, and his sworn declaration has not been contradicted. 

 Defendants argue that registration of a vessel in a 

particular country is equivalent to "flagging" the vessel. 

Although no authority explicitly states that registration and 

flagging a vessel are one and the same, there is authority which 

indicates that "[a] ship navigating the seas may sail only under 

the flag of the nation in which it is registered . . . ." 1 

Thomas J. Schoenbaum, Admiralty and Maritime Law § 2-21, at 46 

n.1 (2d ed. 1994)(citation omitted). Thus, since the Long John

was registered in St. Lucia, it was required to fly a St. Lucian 

flag. 
 Neely argues that registration is not the same as 

flagging because a shipowner could register a vessel for a 

variety of purposes, such as obtaining a docking permit. 

However, no country may place its flag on a ship that is already 

registered in another country, except pursuant to a transfer of 

registration, id. at 46, and no proof of such transfer of 

registration has been offered by the plaintiff. The substance of 

Neely's argument concerning the law of the flag factor is that 

the shipowner was flying a flag of convenience -- the occasional 

practice of some American shipowners to sail under the flag of 

another country whose shipping laws and registry requirements are 

not as stringent as the United States. However, at no time 

during the proceedings did Neely offer any evidence to prove that 

the Long John was merely flying a flag of convenience. Nor did 

Neely offer any evidence to indicate that the registration of the 

Long John in St. Lucia was only for docking or other limited 

purposes. 

 Because the plaintiff bears the burden of proving 

subject matter jurisdiction, it would even be insufficient if she 

proved that the Long John was not flying a St. Lucian flag. The 

plaintiff still has the additional hurdle of proving that the 

vessel was flying an American flag in order for this factor to 

weigh in favor of subject matter jurisdiction in the district 

court. Since the only evidence pertaining to law of the flag 

adduced in the district court indicates that the vessel was a St. 

Lucian flagged vessel, we conclude this factor weighs heavily 
against finding subject matter jurisdiction in the district 

court. 

2. Shipowner's Base of Operations

 Neely argues that the base of operations is that of 

LeMaire, the shipowner. Evidence in the record indicates that 

LeMaire's part-time residence in the United States is Miami, 

Florida. Defendants contend that base of operations means the 

base of operations of the particular vessel, which is clearly St. 

Lucia. The district court, looking at the base of operations of 

the owner, concluded that this factor was unclear, and favors 

neither the United States nor St. Lucia as the appropriate forum 

for this dispute. 

 Even assuming arguendo that plaintiff's definition of 

base of operations, i.e. as that of the shipowner, is correct, we 

find that this factor weighs against finding subject matter 

jurisdiction in the district court. Plaintiff argues and the 

record supports the conclusion that Holiday Village chartered 

this vessel from the actual shipowner in a manner consistent with 

a bareboat or demise charter.2 A "bareboat" charter or "demise" 

charter exists whenever the: 

 vessel is chartered or "leased" to another 

who takes possession, custody and control of 

the vessel. The master is hired and paid by 

the charterer and becomes the agent and 

 

2. Appellant/Cross-Appellee's Reply/Answering Brief at 40-47. 
representative of the charterer. The 

operating expenses of the vessel, such as 

wages, fuel, subsistence, wharfage charges, 

etc., are paid by the charterer. The owner 

surrenders entire control and possession of 

the vessel and subsequent control over its 

navigation to the bareboat charterer, who 

becomes the owner pro hac vice. 

2 Martin J. Norris, The Law of Seamen § 30:14, at 372 (4th ed. 

1985). Thus, by contracting a demise charter with the actual 

shipowner, Holiday Village became the owner pro hac vice of the 

Long John. Since we look to Holiday Village (a St. Lucian 

corporation), rather than LeMaire of Miami, as the owner of the 

vessel, we hold that this factor also weighs against finding 

subject matter jurisdiction in the district court. 

 

3. Allegiance of the Defendant Shipowner

 The district court made no definitive finding as to the 

allegiance of the defendant shipowner. The only finding of the 

district court was that, "Mr. LeMaire is neither a citizen of St. 

Lucia, [n]or the United States, but lives in Miami, Florida. He 

claims to have dual citizenship in Canada and Guadeloupe." 

Neely, 1992 WL 398378, at *3. Additionally, in his declaration, 

LeMaire stated that he currently resides in both Florida and 

Guadeloupe. On the facts of this case, the allegiance or 

domicile of the actual shipowner is not relevant, since the Long

John was the subject of a demise charter to Holiday Village. As 
we related above, Holiday Village is the owner pro hac vice of 

the vessel. The allegiance or domicile of Holiday Village is St. 

Lucia. This factor also weighs against finding subject matter 

jurisdiction in the district court, and points to St. Lucia as 

the appropriate forum. 

 Alternatively, even assuming arguendo that we look to 

LeMaire rather than Holiday Village as the defendant shipowner, 

we note that he is both a citizen and resident of Guadeloupe. 

However, he is only a resident of the United States. Therefore, 

we conclude that LeMaire owes his allegiance to Guadeloupe and 

this factor weighs against finding jurisdiction in the district 

court. 

4. Inaccessibility of a Foreign Forum

 Plaintiff puts forth the argument that St. Lucia is an 

inaccessible forum because she is in no financial position to 

travel to St. Lucia, hire St. Lucia counsel, and pursue an action 

against the defendants in the St. Lucian courts. Additionally, 

she claims that St. Lucia is an inconvenient forum. 

 Similar to Neely, in Rodriguez, the plaintiff argued 

that a foreign forum was not convenient to him because his 

physicians and medical records were in the United States and 

because he had retained American counsel who would not represent 

him in Colombia. Rodriguez v. Flota Mercante Grancolombiana, 

S.A., 703 F.2d 1069, 1075 n.3 (9th Cir.), cert. denied, 464 U.S. 

820, 104 S. Ct. 84 (1983). The Court of Appeals for the Ninth 

Circuit in rejecting the plaintiff's argument stated that: 
 Convenience of the witnesses and attorney are 

not factors cited by the Court in Lauritzen

and Rhoditis as determinators of the Jones 

Act jurisdiction. Although these factors 

"might be a persuasive argument for 

exercising a discretionary jurisdiction to 

adjudge a controversy . . . it is not 

persuasive as to the law by which it shall be 

judged." Lauritzen, 345 U.S. at 589-90, 73 

S.Ct. at 931-932. Thus, the costs and loss 

of time entailed in deposing the medical 

witnesses and sending the records and the 

American attorney to . . . [a foreign forum] 

while relevant to the issue of forum non

conveniens are not relevant factors in 

determining whether Jones Act jurisdiction is 

present. 

Rodriguez, 703 F.2d at 1075 n.3. 

 We agree with the Court of Appeals for the Ninth 

Circuit that the Supreme Court in Lauritzen did not intend the 

"inaccessibility of a foreign forum" factor to require a forum 

non conveniens analysis. The Supreme Court in Lauritzen rejected 

the argument "that justice requires adjudication under American 

law to save seamen the expense and loss of time in returning to a 

foreign forum." 345 U.S. at 589, 73 S. Ct. at 932. Lauritzen

indicates that inaccessibility of the forum and forum non 

conveniens are two separate and distinct matters. Therefore, 

discounting any claim of inconvenience by Neely in bringing this 

suit in a foreign forum, it is not clear why a forum in St. Lucia 

would be inappropriate. Neely has offered no credible evidence 

to indicate that St. Lucia will not entertain such a suit or that 

there are other barriers to her being heard in that jurisdiction. 

Since plaintiff bears the burden of proof on this issue, this 
factor weighs against finding subject matter jurisdiction in the 

district court. 

 

5. Place of the Wrongful Act

 Although this issue was disputed prior to trial, 

plaintiff now concedes that the accident took place within two 

hundred meters of the St. Lucian shoreline. This factor, 

therefore, favors jurisdiction in St. Lucia rather than the 

United States. However, Neely contends that this factor is 

accorded little weight because of the fortuity of the sailing 

vessel being in the particular place where the accident occurred. 

Indeed, in Lauritzen, the Supreme Court stated that, "[t]he test 

of location of the wrongful act or omission, however sufficient 

for torts ashore, is of limited application to shipboard torts, 

because of the varieties of legal authority over waters she may 

navigate." Lauritzen, 345 U.S. at 583, 73 S. Ct. at 929. 

 Normally, the place of accident might well be 

fortuitous. Here, however, the vessel was chartered by Holiday 

Village to be used specifically by diving parties in and around 

St. Lucia. St. Lucia has set its territorial waters at a breath 

of 12 nautical miles. 6B Benedict on Admiralty Doc. 10-3A, at 

10-62, 10-62.2 (Frank L. Wiswall, Jr., ed., 6th ed. 1994). 

Rarely if ever during its demise charter did the Long John leave 

the territorial waters of St. Lucia. It is true that the vessel 

had the capability of traveling vast distances, and even 

worldwide. However, when analyzing whether the location of the 

accident in St. Lucian waters was fortuitous, it becomes clear 
that if the vessel never left the territorial waters, then an 

accident in St. Lucian waters was not simply fortuitous. In 

fact, anyone sailing aboard the Long John, whether as crew or 

otherwise, would reasonably conclude (as occurred in this case), 

that any accident would occur in the territorial waters of St. 

Lucia. This factor weighs against finding subject matter 

jurisdiction in the district court and points instead to St. 

Lucia as the proper forum. 

6. Place of Employment Contract 

 The district court made a factual finding that the oral 

employment contract entered into between Club Med and Neely, by 

virtue of a phone call from Club Med's offices in New York to 

Neely's residence in Pennsylvania, was situated in Pennsylvania. 

Neely, 1992 WL 398378, at *4. Defendants do not challenge the 

district court's finding as clearly erroneous, but instead argue 

that the factor should be given diminished weight since the 

employment services were to be performed outside the United 

States. The Supreme Court in Lauritzen has explained that, 

"[t]he place of contracting in this instance, as is usual to such 

contracts, was fortuitous . . . . We do not think the place of 

contract is a substantial influence in the choice between 

competing laws to govern a maritime tort." Lauritzen, 345 U.S. 

at 588-89, 73 S. Ct. at 931-32. Thus, although this factor 

points to subject matter jurisdiction in the district court, it 

will be accorded little weight in our analysis. 
7. Allegiance or Domicile of the Injured Party

 Plaintiff Neely is a United States citizen who lived 

permanently in Pennsylvania until she was hired by Club Med. She 

returned immediately to the United States for medical attention 

and rehabilitation after the accident. Thus, this factor favors 

jurisdiction in the United States. 

8. Law of the Forum

 The district court found that this factor did not weigh 

in favor of either the United States or St. Lucia. Neely, 1992 

WL 398378, at *4. Neither party contends on appeal that this 

factor strongly supports one jurisdiction over another, and we 

cannot say as a matter of law that the district court committed 

error. As such, we conclude that this factor is neutral and does 

not point to either the district court or to some other court as 

the proper forum for this dispute. 

 

 III. Conclusion

 Based on the totality of these eight factors, we 

conclude that the district court erred in exercising subject 

matter jurisdiction in this suit. Plaintiff Neely has failed to 

prove that substantial links with the United States exist: (1) 

the law of the flag, the most important factor, does not point to 

the United States, but rather to St. Lucia; (2) the shipowner's 

base of operations because of the demise charter clearly 

indicates that St. Lucia is the appropriate forum; (3) the 
allegiance of the defendant shipowner points to St. Lucia; (4) 

there is no indication that a St. Lucian court is inaccessible to 

the plaintiff; and (5) the wrongful act occurred in St. Lucian 

territorial waters. The only factors that weigh in favor of 

jurisdiction in a United States court are: (1) the plaintiff is a 

citizen of the United States; and (2) the place of the employment 

contract was the United States. However, the latter factor 

receives less weight because of the fortuity of the place of 

contracting. The law of the forum is a neutral factor. 

 After carefully balancing these factors, we conclude 

that subject matter jurisdiction does not exist in the district 

court to entertain this lawsuit. We will remand this case to the 

district court with directions to dismiss this action for lack of 

subject matter jurisdiction. Each party is to bear its own costs 

on the appeal and the cross-appeal.