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Cruise Connections Charter Management 1, Lp, et al v. Attorney General of Canada

February 15, 2011

CRUISE CONNECTIONS CHARTER MANAGEMENT 1, LP, ET AL., PLAINTIFFS,
v.
ATTORNEY GENERAL OF CANADA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

Instructed by the D.C. Circuit that the district court has jurisdiction over this case under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602-11,*fn1 the Court turns to the Government of Canada's motion to dismiss on the ground of forum non conveniens and to dismiss the second count of the Complaint. The motion will be granted in part and denied in part. Plaintiffs are U.S. corporations entitled to litigate their claims in U.S. courts, even if the law of British Columbia, Canada, will control the analysis. Thus, the motion to dismiss on the ground of forum non conveniens will be denied. Plaintiffs have, however, failed to state a claim under the North Carolina Unfair and Deceptive Trade Practices Act ("N.C. Trade Practices Act"), N.C. Gen. Stat. § 75-1 et seq., and thus the motion to dismiss that claim (Count II of the Complaint) will be granted.

I. FACTS

Vancouver, Canada, hosted the 2010 Olympic Winter Games in a very security-conscious world. As early as 2008, the Royal Canadian Mounted Police (RCMP), Canada's national police force, contracted with Cruise Connections Charter Management 1, LP, and Cruise Connections Charter Management GP, Inc. (collectively "Cruise Connections"), to provide three cruise ships to dock in Vancouver during the Games in order to house Mounties who would serve as security staff. Cruise Connections and RCMP entered into a Project Services Agreement dated July 16, 2008. The Agreement was negotiated and executed by Kelly Meikle, Manager Contracting Services, and Michael Day, Regional Director Contracting, as "Authorized Representatives of the Government of Canada, RCMP." See Compl. [Dkt. #1], Ex. 1 (Project Services Agreement) at 1. It specified that "the Contract must be interpreted and governed, and the relations between the parties determined, by the laws in force in British Columbia." Id., Ex. 1 (Project Services Agreement) § 9.

Pursuant to this Project Services Agreement, Cruise Connections subcontracted with Holland America and Royal Caribbean to provide the ships. In return, the RCMP agreed to pay Cruise Connections a little more than $54 million (Canadian). The Charter Party Agreements between Cruise Connections and the cruise lines were worth approximately $39 million (U.S.) for the three ships.

Exactly what happened next is not entirely clear, since the district and circuit opinions vary slightly. On a motion to dismiss, however, a court must accept the facts proffered by a plaintiff, and this Court does so here. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (on a motion to dismiss, a court must treat the complaint's factual allegations as true). Before the Charter Party Agreements could be executed, the cruise lines wanted assurances that they would not be obligated to pay income and payroll taxes in Canada. Cruise Connections explains this issue:

In the aftermath of Hurricane Katrina, Carnival Cruise Line placed cruise ships in Gulf Coast ports to house government workers and others who were assisting with reconstruction efforts or who were displaced by the storm. The United States government thereafter assessed Carnival with millions of dollars of taxes. The cruise lines are not typically taxed in this manner because they are registered under foreign flags and dock in harbors for very limited time periods in order to avoid such tax liability. Thus, having seen Carnival assessed with substantial taxes following Katrina, the cruise lines were particularly concerned about being taxed by the Canadian government when they docked their ships for several weeks in Vancouver Harbor.

See Pls.' Opp'n [Dkt. # 25] at 6 n.4 (citing Kelly Aff. ¶ 7 [Dkt. # 12-2]).

RCMP representatives assured Cruise Connections that the tax issue already was addressed and stipulated in the Project Services Agreement between the RCMP and Cruise Connections. However, when Cruise Connections asked for such assurances on RCMP letterhead, rather than by email, the game changed.

According to Cruise Connections, RCMP abruptly re-assigned its two procurement officials based in British Columbia, Kelly Meikle and Michael Day, and replaced them with Normande Morin, RCMP's Director, Strategic Procurement, Assets and Procurement Branch based in Ottawa. Ms. Morin thereafter insisted that the RCMP would not be responsible for any taxes, which Cruise Connections asserts were clearly RCMP's responsibility under the Project Services Agreement and all previous representations by the Canadian contracting officers. Cruise Connections further alleges that because RCMP repudiated its obligation to pay the taxes, the cruise lines delayed final execution of the Charter Party Agreements. On November 17, 2008, Ms. Morin wrote to Cruise Connections and terminated the Project Services Agreement because the cruise lines had not timely executed the Charter Party Agreements.

Less than two weeks later, the RCMP solicited bids for a new contract and stated in the solicitation that it would only contract directly with cruise lines and would not deal with brokers such as Cruise Connections. The November 28, 2008 Request for Proposal stipulated: "No Cruise Line Broker shall appear on the final contract. Only the official Cruise Line Company name and signature shall appear on the final contract. Payments will be made out to the same. No 3rd party (broker) contract shall exist." Pls.' Opp'n, Ex. 2 (RCMP Nov. 28, 2008 Request for Proposal) at 33. RCMP also made clear that it would not pay any Canadian government taxes imposed by reason of the charter.

Cruise Connections sues the Attorney General of Canada, RCMP, and Her Majesty the Queen in Right of Canada (collectively, the "Government of Canada"),*fn2 alleging breach of contract and unfair trade practices. Relying on the FSIA, Cruise Connections filed its suit in the District of Columbia. The Government of Canada persuaded the district court to dismiss on the premise that this is a Canadian dispute without direct effect in the United States. See Cruise Connections Charter Mgmt. 1, LP v. Attorney Gen. of Canada, 634 F. Supp. 2d 86, 89 (D.D.C. 2009). This holding was reversed on appeal. 600 F.3d at 665 ("Because RCMP terminated the contract, revenues that would otherwise have been generated in the United States were 'not forthcoming.'" (citation omitted)). The Government of Canada now renews its motion to dismiss on the ground of forum non conveniens and to dismiss Count II of the Complaint. Neither of these points was addressed previously in the district court or in the Circuit.*fn3

II. LEGAL STANDARDS

A. Motion to Dismiss on the Ground of Forum Non Conveniens

The Government of Canada moves to dismiss on the ground of forum non conveniens. Pursuant to Federal Rule of Civil Procedure 12(b)(3), upon motion a case may be dismissed for improper venue. See Hunter v. Johanns, 517 F. Supp. 2d 340, 343 (D.D.C. 2007); Fed. R. Civ. P. 12(b)(3). "In considering a Rule 12(b)(3) motion, the court accepts the plaintiff's well-pled factual allegations regarding venue as true, draws all reasonable inferences from those allegations in the plaintiff's favor, ...


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