PAUL A. ENGELMAYER, District Judge:
On February 19, 1917, in the midst of World War I, a British ship, the SS Mantola, was torpedoed and sunk by a German U-boat in the North Atlantic. The ship and its cargo — including what is believed to be 536 bars of silver, each weighing 1,000 ounces and together worth several million dollars today — sat at the bottom of the ocean for a century. In 2011, Odyssey Marine Exploration, Inc. ("Odyssey"), an underwater exploration company, located the
In April 2017, Odyssey brought this action in rem, invoking the Court's admiralty jurisdiction, against the Mantola and its cargo. Odyssey's complaint seeks to foreclose a maritime lien — a property interest explained below — that it claims against the Mantola for the services Odyssey performed in salvaging the wreck and its cargo. Odyssey has also asserted a claim for ownership over the vessel and its cargo.
At issue here is a motion by an alternative claimant. The United Kingdom Department for Transport ("DfT") entered this case as a claimant, asserting ownership over the Mantola. DfT now moves to dismiss Odyssey's claims against the Mantola. DfT argues that this Court lacks in rem jurisdiction over that portion of the wreck's cargo — some 526 of the 536 bars of silver — that it represents was removed from the wreck at an unspecified date in the past two years by an unspecified United Kingdom entity. Further, DfT argues, the removal of the vast majority of the wreck's valuable cargo makes the wreck no longer viable to salvage, such that Odyssey can no longer plausibly assert a claim for a salvage award, and thus cannot assert a maritime lien on the Mantola.
Separately, DfT contends that Odyssey has no right to disclosure of certain information relating to the circumstances under which the 526 bars of silver, take from the wreck, came to be deposited in the United Kingdom with the British government's Receiver of Wreck. DfT argues that disclosure of such information is prohibited by foreign law, and, in any event, is beyond the scope of the present litigation and thus irrelevant under Federal Rule of Civil Procedure 26(b)(1).
For the reasons that follow, the Court denies DfT's motion to dismiss and denies, without prejudice, Odyssey's request to compel discovery as unripe.
Odyssey is an American company engaged in deep-ocean exploration, archaeological investigation, and the recovery of valuable cargo from shipwrecks around the world. Compl. ¶ 5.
On August 17, 2017, DfT entered the case as a claimant under Supplemental Rule for Admiralty and Marine Claims Restricted Appearance Rule E(8).
In 1917, the SS Mantola, a United Kingdom-flagged 8,260 gross ton passenger steamship, sank during combat in World War I. Compl. ¶ 8.
In 2011, Odyssey located the Mantola in the North Atlantic Ocean, beyond the territorial jurisdiction of any sovereign nation, at a depth of approximately 2,500 meters. Id. ¶¶ 6, 7.
The Mantola is believed to have contained 536 silver bars when it sank. Odyssey alleges that, as of the date (April 21, 2017) its Complaint was filed, these remained aboard the vessel, on the ocean floor. Id. ¶ 9. In addition, the wreck site contains vessel remains, metal objects, cargo and other loose objects. Id. ¶ 17.
In 2011, DfT and Odyssey "entered into an agreement for the salvage of the cargo, which provided that Odyssey would retain 80% of the net value of the recovered silver." Id. ¶ 10. Odyssey assumed the "risk, expense and responsibility" for the operation. Id. In September 2015, that agreement lapsed, and was not renewed. Id.
During this time, Odyssey recovered from the wreck a piece of silk cloth, id. ¶ 19, which it has turned over to this Court as the basis for in rem jurisdiction, and the ship's bell, which is currently at a conservation facility in the United Kingdom, id. ¶ 20.
Odyssey claims it has maintained "actual, continuous, and exclusive possession or constructive occupancy of the shipwreck site since it first located the Vessel to the extent this is possible" and since the expiration of the contract with DfT. Id. ¶ 15. Odyssey further maintains that it is the only company engaged in salvage operations on the vessel. Id. ¶¶ 12, 13.
Odyssey is in the process of developing a plan to continue the salvage operations of the vessel, to recover cargo and artifacts. Id. ¶¶ 16, 18. It claims that it is "ready and able" to recommence operations. Id. ¶ 14. Odyssey claims that it has invested substantial time, money and effort in its preparation for, and partial execution of, salvage operations thus far. Id. ¶ 23.
According to representations by counsel for DfT, in April 2017, at or around the time this action was commenced, 526 of the 536 bars of silver believed to be inside the wreck were salvaged — by an unnamed salvor — and delivered to a UK agency, the Receiver of Wreck. See Status Report; January 17, 2018 Letter.
On April 21, 2017, Odyssey filed this action. Dkt. 1. On April 24, 2017, Odyssey moved, ex parte, for the issuance of an in rem warrant of arrest for the Mantola and its "cargo, apparel, tackle, and appurtenances, etc." Dkt. 5; see Dkts. 6-9.
On April 25, 2017, Odyssey moved for a preliminary injunction, seeking to enjoin any interference with the vessel by any other would-be salvor. Dkts. 11-13.
On May 1, 2017, the Court held an ex parte hearing on Odyssey's motions. At
First, the Court issued a warrant of arrest for the silk cloth. Dkt. 17; see also 5/1/17 Tr. at 14 (The Court: "You are under arrest."). That order effected an arrest of the portion of the Vessel brought into the district — i.e., the silk cloth — and gave rise to the Court's "constructive possession of the Vessel itself, the site of the property, and everything that is a part thereof, wherever located and whenever removed there from, past, present or future and ... any and all items that have or will be removed from the site of the defendant res, no matter who has brought up or who will bring up such items until a further determination of ownership is made or a further order of this Court is issued." Dkt. 17 at 3. The Court's order also authorized the U.S. Marshal to surrender possession of the arrested silk cloth to Odyssey, which the Court named as substitute custodian for the cloth. Id.
Second, the Court issued a preliminary injunction. Dkt. 18. That order enjoined any third party from interfering with Odyssey's "rights to salvage the shipwreck site." Id. at 2. The Court also ordered Odyssey to give public notice of its preliminary injunction by publication in The New York Times, The Wall Street Journal, and a shipping trade publication, Lloyd's List. Id.
Third, the Court granted Odyssey's request to seal the exact coordinates of the Vessel. Dkt. 19.
On August 17, 2017, following an extension of the deadline to file such a claim, see Dkts. 29-30, DfT submitted its claim of ownership to the Mantola, Dkt. 32. On September 7, 2017, DfT filed an answer to Odyssey's complaint. Dkt. 36.
On November 14, 2017, the Court held an initial pretrial conference in this case. Following that conference, the Court issued an order staying the case until February 15, 2018, to provide the parties an opportunity, through informal disclosures and correspondence, to resolve their dispute. Dkt. 41.
On February 15, 2018, the parties submitted a joint status update to the Court. Dkt. 42. In that letter, DfT represented that, in April 2017, 526 of the 536 bars of silver from the Vessel had been salvaged by a third party and transported to the United Kingdom. Id. at 1. DfT refused, however, to disclose (to the Court or to Odyssey) who had salvaged those silver bars. Id. at 2. Odyssey requested that the Court compel DfT to do so. DfT, in turn, requested that the Court dismiss the case.
On February 16, 2018, the Court set a briefing schedule for DfT's contemplated motion to dismiss. The Court also directed the parties to address Odyssey's contemplated motion to compel disclosure from DfT. See Dkt. 43.
On March 16, 2018, DfT moved to dismiss this case in its entirety. Dkt. 44; see Dkt. 45 ("DfT Br."). On April 5, 2018, Odyssey filed its brief in opposition. Dkt. 49 ("PL Br."). On April 20, 2018, DfT filed its reply. Dkt. 50 ("DfT Reply Br.").
A claim is "properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). "Pursuant to Rule 12(b)(1), dismissal for lack of subject matter jurisdiction is appropriate if the Court determines that it lacks the constitutional or statutory power to adjudicate the case." Lleshi v. Kerry, 127 F.Supp.3d 196, 199 (S.D.N.Y. 2015); see Makarova, 201 F.3d at 113.
"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that jurisdiction exists." Giammatteo v. Newton, 452 Fed.App'x. 24, 27 (2d Cir. 2011) (citing Makarova, 201 F.3d at 113). In resolving a motion to dismiss for lack of subject matter jurisdiction, "the court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff," Nat. Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006) (internal quotation omitted), but "jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it," Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998); see also APWU v. Potter, 343 F.3d 619, 623 (2d Cir. 2003); Amidax Trading Group v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011). On such a motion, a court may consider evidence outside the pleadings, such as affidavits and exhibits. See Makarova, 201 F.3d at 113.
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim will only have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A complaint is properly dismissed where, as a matter of law, "the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Twombly, 550 U.S. at 558, 127 S.Ct. 1955. Although the court must accept as true all well-pled factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor, Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014), that tenet "is inapplicable to legal conclusions," Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
DfT seeks dismissal of Odyssey's in rem complaint against the Mantola on one principal ground: that because nearly all of the Mantola's precious cargo has been removed, Odyssey does not have — and will never have — a maritime lien on the Mantola.
Article III of the Constitution extends the judicial power of federal courts to "all Cases of admiralty and maritime Jurisdiction." U.S. Const. art. Ill, § 2, cl. 1. Since the 18
Courts sitting in admiralty apply a "jus gentium governing maritime affairs." R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 960-61 (4th Cir. 1999) (explaining the 3,000-year-old history of international development of maritime law and the United States' adoption of that body of law). That is, Article III "authorized the federal courts to draw upon and to continue the development of the substantive, common law of admiralty when exercising admiralty jurisdiction." Id. at 960 (citing The lottawanna, 88 U.S. (21 Wall). 558, 572-78, 22 S.Ct. 654 (1874)). See generally The Am. Ins. Co. v. 356 Bales of Cotton, 26 U.S. (1 Pet.) 511, 544-45, 7 S.Ct. 242 (1828) (Marshall, C.J.) ("A case in admiralty does not, in fact, arise under the Constitution or laws of the United States. These cases are as old as navigation itself; and the law, admiralty and maritime, as it has existed for ages, is applied by our Courts to the cases as they arise.").
Federal courts exercise admiralty jurisdiction over matters arising from United States territorial waters, but also "from matters on the high seas anywhere in the world." R.M.S. Titanic, 171 F.3d at 961. However:
Id.
Although the Mantola sits several thousand feet below the surface of the North Atlantic and several thousand miles from this District, this Court nevertheless may exercise in rem jurisdiction over the Vessel. That is because, although an "in rem action ... depends on the court's
This Court, exercising its admiralty jurisdiction, applies the general maritime law of salvage.
"Upon rendering salvage service, a salvor obtains a lien" — a maritime lien — "in the saved property by operation of law to secure payment of compensation and award due from the property owner." R.M.S. Titanic, 171 F.3d at 963; see The Sabine, 101 U.S. at 386. "This lien attaches to the property to the exclusion of all others, including the property's true owner. And to facilitate enforcement of the lien, the salvor enjoys a possessory interest in the property until the salvor is compensated. Because the salvor's lien is exclusive and prior to all others, so too, the salvor's possessory interest in the res is enjoyed to the exclusion of all others, including the res' true owner." R.M.S. Titanic, 171 F.3d at 963; see also 1 Thomas J. Schoenbaum, Admiralty & Mar. Law § 9-1 (5th ed.).
"Although a salvor may enforce its claim for salvage service by filing an in personam action against the owner, the salvor may also execute on the lien which attached to the ship and its cargo by filing an in rem action." R.M.S. Titanic, 171 F.3d at 963. Odyssey's action here is the latter: an in rem action to execute on its lien. "The lien can be enforced only through the institution of an in rem action, and the admiralty court exercises in rem jurisdiction only to enforce a maritime lien. Thus, the lien and the proceeding in rem are ... correlative — where one exists, the other can be taken, and not otherwise. To execute on the lien, the court may order the sale of the property, or, if a sale would yield an amount insufficient to fund an award to the salvor, the court may transfer title to the property to the salvor." R.M.S. Titanic, 171 F.3d at 963 (internal quotation, citations, and alterations omitted); see also Fed. R. Civ. P. Supp. R. C.
Applying those principles here, the Court concludes that DfT's motion to dismiss must be denied. DfT seeks dismissal of Odyssey's in rem action against the Mantola on the ground that, because most of the silver cargo has been removed from the Vessel, Odyssey does not have — and will never have — a maritime lien on the Vessel. DfT's argument straddles two interrelated issues: this Court's jurisdiction over the res and Odyssey's entitlement to a maritime lien over the res. Construed either way, however, DfT's argument falters.
On May 1, 2017, this Court exercised jurisdiction over the entirety of the Mantola and its cargo. As explained above, that exercise of jurisdiction was — and is — based on the property brought into the District by Odyssey, a silk cloth salvaged from the vessel. See Dkts. 17 & 18; see also 5/1/17 Tr. at 17. Therefore, the Court has constructive in rem jurisdiction over the wreck and everything on it. Defendants concede that the Court has constructive in rem jurisdiction over the wreck site, DfT Reply Br. at 2, but claim that the Court never exercised jurisdiction over the 526 silver bars because they, assertedly, were removed from the site before the Court issued its injunction on May 1, 2017, id. at 5.
At this stage in the litigation, however, DfT's representations are insufficient to defeat this Court's jurisdiction. To be sure, "a defendant is permitted to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the Pleading." Carter v. HealthPort Techs., LLC, 822 F.3d 47, 57 (2d Cir. 2016). "In opposition to such a motion," plaintiffs must "come forward
DfT's 12(b)(1) motion is unaccompanied by any evidence whatsoever. DfT has not attached any affidavit — from fact witnesses or even from counsel — to its motion. To the extent DfT's motion embeds factual representations tending to call the Court's jurisdiction into question, those representations are of scant value. DfT has not averred who salvaged the bars of silver, from where they were salvaged, or when they were recovered from the Mantola. See January 17, 2018 Letter. On the contrary, DfT refuses to disclose the name of the purported salvor; believes the date on which the bars were found — as represented to it by this anonymous salvor — is incorrect and accordingly represents that it has no "information on [the] actual recovery date"; and does not provide any basis for its conclusion that the bars were salvaged from the Mantola, rather than some other wrecked vessel. See id. at 2. Further, it appears from DfT's representations that the limited information it does have is secondhand: to the extent DfT represents that the 526 recovered bars of silver come from the Mantola, it is representing what an unknown salvor told an unknown official at the UK Receiver of Wreck. See id. Such representations are inadequate to support a fact-based Rule 12(b)(1) motion (as the Court — generously — construes DfT's motion).
Based again on the assertion that 526 of the 536 silver bars aboard the Mantola have been removed to the United Kingdom, DfT contends that Odyssey does not have, and will never have, a maritime lien on the Mantola because it has not performed, and realistically will never perform, any salvage services giving rise to such a lien. The Court agrees with Odyssey, however, that Odyssey's actions to date already give rise to a plausible claim for a salvage award, and thus a plausible claim for a maritime lien. That the bulk of the Mantola's valuable cargo may have been removed may — depending on the circumstances — ultimately prove relevant to the value of the res on which Odyssey may have a lien. It does not, however, pretermit, at the pleading stage, Odyssey's claim.
As noted above, a plaintiff claiming an award for salvage "must demonstrate (1) that he has rendered aid to a distressed ship or its cargo in navigable waters; (2) that the service was voluntarily rendered without any preexisting obligation arising from contract or otherwise to the distressed ship or property; and (3) that the service was useful by effecting salvage of the ship or its cargo, in whole or in part." R.M.S. Titanic, 171 F.3d at 963. A salvor with a valid claim for salvage automatically acquires "a lien upon the property saved, which enables them to maintain a suit in rem against the ship or cargo, or both where both are saved in whole or in part." The Sabine, 101 U.S. at 386. This lien is a "limited possessory interest in the salved property," R.M.S. Titanic, Inc. v. The Wrecked & Abandoned Vessel, 435 F.3d 521, 532 (4th Cir. 2006), and comes "[u]pon rendering salvage service," R.M.S. Titanic, 171 F.3d at 963. The maritime lien usually entitles the salvor to recoup its expenses and an additional salvage
As pled, Odyssey has stated a valid claim for salvage — and thus for a maritime lien — under these standards. First, a shipwreck is an instance of maritime peril, clearly within the bounds of a salvage award. See, e.g., The Sabine, 101 U.S. at 384 (maritime peril includes "actual peril or loss, as in cases of shipwreck, derelict, or recapture").
Second, on the facts pled, Odyssey has undertaken voluntary salvage operations. See Compl. ¶ 13; see also The John Shaw, 5 F. Cas. 1193, 1195 (C.C.D.N.H. 1859) ("Nothing short of a contract to pay a given sum for the service to be rendered, or a binding engagement to pay at all events, whether successful or unsuccessful in the enterprise, will operate as a bar to a meritorious salvage claim."). On the facts pled, Odyssey was "under no official or legal duty to render the assistance," rendering its actions voluntary. LaPlante v. Sun Coast Marine Servs., Inc., 279 F.Supp.2d 678, 688 (D.S.C. 2003). Indeed, DfT has not argued that Odyssey is ineligible for a salvage award due to lack of voluntariness.
Third, Odyssey has successfully recovered a piece of silk cloth and the ship's bell from the wreck of the vessel. Compl. ¶¶ 19-20. Odyssey has also "engaged in extensive exploration, recovery and survey operations on the Vessel," and has "voluntarily and successfully obtained video and photographic images of the Vessel and has begun documentation of the site." Compl. ¶ 13; see also R.M.S. Titanic, Inc., 171 F.3d at 963. Odyssey has thus rendered "useful" service to the Mantola. Even assuming, arguendo, that the 526 silver bars were legally removed from the vessel by the unidentified U.K. entity — and the undeveloped record in this case makes it impossible for the Court yet to so find — Odyssey's salvage efforts in the early stages of salvage may have made that extraction possible. See Compl. ¶ 13 (Odyssey has "engaged in extensive exploration, recovery and survey operations on the Vessel"); Nadle v. M/V Tequila, 377 F.Supp. 414, 417 (S.D.N.Y. 1974) ("It is not required ... that the property be saved solely by the efforts of the person seeking the award or that his efforts resulted in complete success. It is sufficient if his efforts contributed in some way to the ultimate success."); Hener, 525 F.Supp. at 357. Odyssey has thus plausibly pled facts sufficient to show, at the least, that it has salvaged the silk cloth and the bell. Beyond that, Odyssey's pleadings are consistent with the finding — as discovery may or may not establish — that its efforts meaningfully contributed to the salvage of the other material (e.g., the 526 silver bars) from the wreck.
For avoidance of doubt, this decision denying DfT's motion to dismiss does not resolve Odyssey's ultimate entitlement to a salvage award or a maritime lien. Nor does it resolve with finality this Court's jurisdiction, which the Court has an independent duty to ascertain throughout the pendency of this litigation. In the event discovery yields evidence calling its jurisdiction into question, the Court will welcome a renewed motion to dismiss for lack of jurisdiction.
The final issue presented involves discovery regarding the alleged salvage of the 526 bars of silver. Odyssey seeks to compel DfT to disclose information relating to the removal of the silver bars as proffered in the February joint status report submitted to the Court. See Status Report. There, DfT represented that "526 of the 536 bars of silver known to have been aboard the SS MANTOLA had been salvaged by another party and delivered to the UK Receiver of Wreck (RoW)." Id. Odyssey seeks information regarding the identity of this purported salvor. DfT resists this discovery request. It argues that this information is not relevant to the current proceeding. See DfT Br. at 8-9.
This dispute is not yet ripe for this Court's review for the simple reason that discovery has not yet begun; the Court has not even entered a case management plan providing for fact discovery. The parties had proposed a plan that contemplated delaying all fact discovery until after Odyssey had completed salvage operations. See Dkt. 40-1. Declining to implement that plan, the Court instead stayed this case for 90 days to give the parties an opportunity to engage in informal discovery that might resolve the matter. See Dkt. 41. That process failed, see Status Report, and this motion resulted. With formal discovery having not yet commenced, the Court has not had occasion to resolve a hypothetical discovery dispute.
The Court does, however, offer this guidance. The Federal Rules of Civil Procedure allow
Accordingly, the parties are directed to submit, by one week from the issuance of this decision, a proposed case management plan for the remaining litigation of this case, which plan is specifically to include a plan for discovery. The parties are also to submit a joint letter, of no more than three single-spaced pages, setting forth their expectations as to how this case will now proceed.
For the reasons given above, the Court denies DfT's motion to dismiss Odyssey's in rem complaint. The Clerk of Court is respectfully directed to terminate the motion pending at Dkt. 44. As set forth above, the parties are directed to submit, one week from today, a case management plan and joint letter.
SO ORDERED.
