August 2020 Longshore/Maritime Update (No. 255)
Notes from your Updater:
Opinions from the suit brought on behalf of the special-needs children and their families arising from the winter storm that struck the ANTHEM OF THE SEAS have been discussed in a number of Updates (May 2020, September 2020, August 2020). In the May 2020 Update we addressed the decision of Chief Magistrate Judge O’Sullivan that transcripts of interviews taken by the Bahamian Maritime Authority during its investigation (in conjunction with the United States Coast Guard and the National Transportation Safety Board) were statutorily inadmissible in the civil suit arising from the casualty. The plaintiffs filed a motion for reconsideration, but Chief Magistrate Judge O’Sullivan held that asking the court to re-analyze arguments and case law previously raised and considered was an inadequate means to support reconsideration. He therefore denied the motion on June 29, 2020.
In our July 2020 Update, we discussed Judge Moss’s decision in Matson Navigation Co. v. United States Department of Transportation, holding that the Maritime Administration violated the Administrative Procedure Act in approving the replacement of two vessels operating in the Maritime Security Program. Judge Moss permitted the parties to submit additional evidence and briefing on the question whether the court should remand the case with or without vacatur. On June 30, 2020, Judge Moss ruled that the Approval Order should be vacated and the case remanded to MARAD. No. 18-2751, 2020 U.S. DIST. LEXIS 114418 (June 30, 2020) (Moss).
On July 1, 2020, the Ninth Circuit declined to grant rehearing en banc from the decision in Cooper v. Tokyo Electric Power Co. (June 2020 Update), dismissing the suit by Navy service members who were exposed to radiation from the Fukushima Daiichi Nuclear Power Plant in Japan on grounds of international comity. The attorney for the sailors has stated that he plans to seek a writ of certiorari.
In our May 2020 Update we advised that the Fifth Circuit withdrew the opinion issued in Sanchez v. Smart Fabricators of Texas, L.L.C., No. 19-20506 (5th Cir. Mar. 11, 2020), which held that a welder, whose duties were performed on jack up rigs that were jacked up, was not a seaman as a matter of law and his exclusive remedy was pursuant to the LHWCA. The court has now set the case for oral argument (by video conference) on August 6, 2020.
On the LHWCA Front . . .
From the federal district courts:
Shipyard employee’s mesothelioma suit, removed to federal court by the shipyard, was allowed to remain in federal court after the shipyard settled with the employee; Jackson v. Avondale Industries Inc., No. 20-1005, 2020 U.S. DIST. LEXIS 113505 (E.D. La. June 29, 2020) (Fallon).
Patricia Jackson was diagnosed with mesothelioma that she contended was caused by her exposure to asbestos products while employed by Avondale from 1970 to 1977 as well as by exposure from her father’s work clothing while he was employed at Avondale from 1962 to 1976. Like other asbestos-exposure cases pending (see June 2020 Update) after the Fifth Circuit’s Latiolais en banc decision (see March 2020 Update), the case was removed by Avondale based on the Federal Officer Removal Statute. In this case, however, Jackson settled with Avondale and moved to remand the case to state court. Hopeman Brothers, an installer of wallboard for the shipyard, argued that the case should remain in federal court because the allegations against it were also removable under the Federal Officer Removal Statute. As the allegedly negligent acts of the contractor occurred while it was executing a contract calling for installing wallboard on federal vessels under specifications that were provided by the Coast Guard, the Navy, and MARAD, its conduct was connected with acts under color of federal office and Judge Fallon held that the court had jurisdiction pursuant to the Statute.
Victor Martinez, an employee of Performance Personnel, was injured at a shipyard owned by John Bludworth. Performance Personnel and Rio Marine were both contractors of John Bludworth, working pursuant to master service agreements with John Bludworth. Martinez brought suit against John Bludworth and Rio Marine, which led to two suits to sort out the indemnity and insurance issues among the parties and their insurers. The MSA between Performance and John Bludworth required Performance to defend and indemnify Bludworth, but Performance argued that the indemnity obligation did not cover liability for Bludworth’s gross negligence or willful misconduct. However, under Texas law, applicable through the MSA’s choice-of-law provision, once a party agrees to defend another, the defending party must defend all theories of liability. Therefore, Performance was required to defend Bludworth for all claims in the suit, including the gross negligence/willful misconduct allegations. Despite Performance’s obligation, Performance’s insurer, Argonaut, rejected coverage for Bludworth. Therefore, Bludworth’s insurer, Navigators, paid for the defense of Bludworth, and Bludworth sought to recover its defense costs from Argonaut. After holding that Bludworth had standing to pursue claims against Argonaut as a third-party beneficiary or under the doctrine of equitable subrogation, Chief Judge Rosenthal considered whether there was coverage under the Argonaut Marine General Liability Policy issued to Performance. The Argonaut policy excluded coverage for bodily injuries of an employee of the insured arising out of and in the course of employment by the insured. The policy afforded contractual liability coverage for insured contracts, which would include the MSA, but the policy was silent whether the employee exclusion applied to claims covered by an insured contract. In light of the broad wording of the employee exclusion and the absence of an exception to the exclusion for insured contracts, Chief Judge Rosenthal held that there was no coverage on the Argonaut policy for the indemnity claim of Bludworth. Chief Judge Rosenthal also addressed the demand by Rio Marine against Bludworth for defense and indemnity pursuant to the MSA between those parties. The MSA contained two indemnity provisions, one in favor of Bludworth and one in favor of Rio Marine. The provision in favor of Rio Marine was not grammatically sound and, by itself, difficult to interpret. However, it was a mirror image of the indemnity in favor of Bludworth where there was proper use of commas and conjunctions. Therefore, interpreting the provisions as though they had both had the same commas and conjunctions, Chief Judge Rosenthal held that Bludworth was obligated to indemnify Rio Marine for the injury to an employee of a contractor of Bludworth. Unlike the Argonaut policy, the Bludworth policy issued by Navigators did cover the contractual liability, and Chief Judge Rosenthal held that Navigators must indemnify Rio Marine.
LHWCA held not to preempt application of state workers’ compensation act’s broader exclusive remedy provision in suit arising from a land-based accident; James v. United States, No. 3:17-cv-46, 2020 U.S. DIST. LEXIS 121954 (D. Alaska July 6, 2020) (Sedwick).
Charlie Thomas James, Jr., was working as a longshore worker for Sea Star Stevedoring Co. in the Port of Anchorage, loading military vehicles to railroad cars from a vessel. He was killed when a vehicle failed to stop, allegedly because of a brake failure, and his estate/widow brought suit against the United States for negligence under the Federal Tort Claims Act. Sea Star began paying benefits under the LHWCA, but his widow submitted a claim under the Alaska Workers’ Compensation Act (concurrent jurisdiction for the land-based accident), and the parties agreed to an increase in the death benefits being paid under the LHWCA in exchange for a dismissal of the state claim. The United States asserted a defense to the negligence suit based on the exclusive remedy provision of the Alaska statute (exempting a project owner from a negligence law suit), and the widow responded that the LHWCA, which does not exempt a contractor from suit unless the contractor actually secures workers’ compensation benefits for the subcontractor’s employees) was preempted by the LHWCA. Judge Sedwick disagreed with the widow, noting that the difference in exclusive remedy provisions does not create a conflict between the statutes for purposes of preemption. He reasoned that the widow was bringing a state tort claim; the widow had no cause of action under the LHWCA itself; and nothing in the LHWCA prevented a state from enacting a compensation scheme with a broader exclusive remedy provision than the LHWCA. Judge Sedwick distinguished cases brought under the general maritime law and ruled that the exclusive remedy provision of the state act applied regardless of whether the plaintiff sought and received benefits under the state act. As the widow could not bring a maritime claim, Judge Sedwick held that her cause of action was governed by state law and was barred by its provisions.
DBA claimant could not use the Freedom of Information Act to obtain a privileged document that was reviewed in camera by the Administrative Law Judge; Talley v. United States Department of Labor, No. 19-493, 2020 U.S. DIST. LEXIS 122434 (W.D. Mo. July 13, 2020) (Smith); Campo v. United States Department of Justice, No. 19-905, 2020 U.S. DIST. LEXIS 122429 (W.D. Mo. July 13, 2020) (Smith).
These cases arise from the injury sustained by Maria Jordan while employed by DynCorp at the United States Consulate in Erbil, Iraq. Jordan, represented by her husband Jack Jordan, brought a claim under the Defense Base Act, and a dispute arose over the discoverability of an email. DynCorp declined to produce the email based on attorney-client privilege and submitted the email to the Administrative Law Judge for an in camera inspection. The judge found that the email was privileged, and Jordan unsuccessfully appealed that decision with the Supreme Court ultimately denying certiorari. Jordan then submitted a Freedom of Information request to the Department of Labor and Department of Justice, and both declined to produce the email on the ground of attorney-client privilege. Jordan then brought suit in the federal court for the District of Columbia, which held that the email was exempt from disclosure under the FOIA. Jordan’s appeal and requests for reconsideration were denied until the D.C. Court of Appeals directed the Clerk “to accept no further submissions from appellant in this closed case.” Jordan also filed actions against DynCorp and others under the Sarbanes-Oxley Act and then filed a FOIA action in the federal court in Missouri that was dismissed, with the Eighth Circuit affirming the dismissal. The opinions we review involve suits brought by Ferissa Talley and Robert Campo, represented by Maria Jordan’s husband Jack Jordan, seeking the same email under the FOIA. Judge Smith held that the email was properly exempt from disclosure based on both res judicata and the propriety of the privilege exception to production. Jack Jordan has already filed notices of appeal in both cases.
Court upheld second removal of suit by shipyard worker (also the son of a shipyard worker) for asbestos exposure based on the Federal Officer Removal Statute; Schexnayder v. Huntington Ingalls, Inc., No. 20-775, 2020 U.S. DIST. LEXIS 123044 (E.D. La. July 14, 2020) (Milazzo).
Denis Schexnayder brought this suit in Louisiana state court against Huntington Ingalls (Avondale) alleging that he contracted lung cancer as a result of exposure to asbestos while working two summers at the Avondale shipyard and from contact with asbestos-contaminated clothes of his father who worked for Avondale. Avondale removed the case, but it was remanded to state court. After the Latiolais decision from the en banc Fifth Circuit (March 2020 Update), Avondale removed the case again pursuant to the Federal Officer Removal Statute, and Judge Milazzo declined to remand the case, holding that the Fifth Circuit’s decision constituted an “order” for purposes of the removal statute (Section 1446(b)(3)). Judge Milazzo also held that Avondale did not waive its right to remove the case a second time by filing an opposition to Schexnayder’s motion for summary judgment while the case was pending in state court. She reasoned that Avondale’s participation in the litigation in state court could not waive a right that Avondale did not have at that time.
Stay was lifted in single-claimant limitation of liability action, but the federal court retained jurisdiction with respect to the LHWCA claim, the maintenance and cure claim, and exoneration; Marion Hill Associates, Inc. v. Pushak, No. 20-379, 2020 U.S. DIST. LEXIS 131274 (W.D. Pa. July 23, 2020) (Lenihan).
John Pushak III was injured while working on a barge while employed by Marion Hill Associates. After he brought suit in state court in Pennsylvania against Marion Hill, his employer filed this limitation action. As the single claimant, Pushak sought to lift the stay so that he could try his case in state court. Marion Hill argued that the stipulations filed by Pushak were improper, leading to this decision by Magistrate Judge Lenihan. Pushak stipulated that Marion Hill was entitled to litigate all issues regarding limitation of liability in federal court except concerning his claim for maintenance and cure. Although Marion Hill did not contest that the maintenance and cure claim was not subject to the protection of the Limitation Act (as a personal contract), it did argue that there could be a duplication of damages between the maintenance and cure claim and the other claims brought by Pushak. As Pushak did not argue that the federal court should not have the power to reexamine the state court award for duplication of damages, Magistrate Judge Lenihan recommended that the language in the stipulations regarding maintenance and cure should be deleted. Pushak had also asserted a compensation claim under the LHWCA against Marion Hill, and Marion Hill argued that the stipulation waiving res judicata from the state court proceeding should be amended to include the LHWCA compensation claim. Reasoning that the LHWCA claim was a claim against the owner relating to the subject of the limitation action, Magistrate Judge Lenihan recommended that the stipulation regarding waiver of res judicata should include a decision or judgment in any proceeding or forum and that Pushak should stipulate to the continuing jurisdiction of the federal court over any other proceedings filed by Pushak against Marion Hill in any forum. Finally, Marion Hill objected to Pushak’s assertion in the stipulations that he did not agree that Marion Hill was entitled to litigate the issue of exoneration in the limitation action. Magistrate Judge Lenihan agreed and ruled that the stipulations should contain no definitive statement about exoneration.
From the state courts:
Failure to comply with time limit to submit claim after Virginia eliminated concurrent jurisdiction resulted in dismissal of medical providers’ claims under the Virginia Workers’ Compensation Act; Wardell Orthopaedics, P.C. v. Colonna’s Shipyard, Inc., No. 1930-19-1, 2020 Va. App. Lexis 194 (Va. App. July 14, 2020) (O’Brien); Neurosurgical Specialists, Inc. v. Huntington Ingalls, Inc., No. 76-20-1, 2020 Va. App. LEXIS 198 (Va. App. July 14, 2020) (Clements).
These cases involve claims for medical services provided to workers whose medical benefits were paid under the fee schedule for the LHWCA. The medical providers sought the amounts owed under the Virginia Workers’ Compensation Act. Both suits involved injuries that occurred prior to Virginia’s enactment of legislation in 2012 eliminating concurrent jurisdiction for its workers’ compensation law. The legislature did, however, provide a procedure and time limitation for submission of medical bills on claims arising before the elimination of concurrent jurisdiction. The medical providers did not challenge the payment within the time allotted by the Virginia legislature and argued that the retroactive application of the statute violated their due process rights under the Virginia Constitution. The appellate judges rejected that claim, however, as the substantive rights of the medical providers were preserved by the statute’s affording to them a reasonable window of opportunity to adjudicate their claims.
And on the Maritime Front . . .
From the federal appellate courts:
Rule 14(c) tender did not overcome contractual arbitration and forum-selection clauses; National Shipping Co. of Saudi Arabia v. Valero Marketing & Supply Co., No. 20-20035 (5th Cir. June 30, 2020) (Stewart).
National Shipping brought this action against Valero for supplying contaminated fuel. Valero answered and filed third-party actions against Trafigura Trading for supplying the fuel. The third party action was brought pursuant to Rule 14(c), tendering Trafigura as a direct defendant that was wholly liable for the damages sought by National Shipping against Valero. Asserting an arbitration clause in one contract and the exclusive forum-selection clause in two contracts, Trafigura moved to sever and transfer the cases subject to the forum-selection clause to the federal court in New York and to sever and dismiss the claims subject to the arbitration clause. When the district court agreed, Valero moved for clarification, arguing that the arbitration and forum-selection clauses were not applicable to the Rule 14(c) tender as the tender invoked the liability of Trafigura directly to National Shipping. The district judge ruled that the Rule 14(c) tender did not overcome the arbitration and forum-selection clauses and that Trafigura was no longer a party to the litigation. Valero then asked the court to certify that issue for an interlocutory appeal, but the district court denied the request on the ground that the decision did not determine the rights and obligations of Valero and Trafigura and merely ruled on the forum for determining those rights and obligations [not addressing the rights of National Shipping against Trafigura, which is what the Rule 14(c) action presented]. Valero then filed an interlocutory appeal pursuant to Section 1292(a)(3), arguing that the dismissal of the tender of Trafigura to National Shipping had the effect of determining the liability of Trafigura. Disagreeing with Valero, the Fifth Circuit declined to hear the appeal, repeating the district court’s statement that the opinion did not determine the rights and obligations of Valero and Trafigura and merely ruled on the forum to determine those rights and obligations [like the district court, not addressing the argument that the tendered action of National Shipping against Trafigura had been dismissed].
Passenger could not avoid the federal forum-selection clause in her ticket contract by pleading only a common-law remedy and not an admiralty claim in her federal suit; the saving-to-suitors clause did not authorize a plaintiff who filed suit in federal court to escape admiralty jurisdiction by simply labeling her claims as “at law;” DeRoy v. Carnival Corp., No. 18-12619 (11th Cir. June 30, 2020) (Rosenbaum).
Carmela DeRoy was injured on Carnival’s VALOR and sought to avoid the effect of the forum selection clause in her ticket that chose the United Stated District Court for the Southern District of Florida in Miami, “or as to those lawsuits to which the Federal Courts of the United States lack subject matter jurisdiction, before a court located in Miami-Dade County, Florida.” She brought two suits, one in state court in Miami and the other a suit in federal court in Miami at law, not in admiralty. As there was no diversity between the parties, DeRoy argued that the federal court had no jurisdiction and the case should be dismissed so she could pursue the action pending in state court. Although Judge Ungaro agreed and dismissed the federal suit, the Eleventh Circuit disagreed. Writing for the appellate court, Judge Rosenbaum noted that the plaintiff need not expressly invoke admiralty jurisdiction for the district court to exercise admiralty jurisdiction where it exists. Judge Rosenbaum stated that “the saving-to-suitors clause does not operate as a get-out-of federal-court escape.” She reasoned that the saving-to-suitors clause does not authorize a plaintiff who files suit in federal court to escape or sabotage existing admiralty jurisdiction by simply labeling her claims “at law” rather than “in admiralty.” As there was clearly admiralty jurisdiction over DeRoy’s fall on the cruise ship, the federal court had a duty to exercise that jurisdiction, even though DeRoy had not alleged that admiralty jurisdiction existed.
Suit against Citibank by shipping companies that leased vessels to a Mexican drilling company that worked in Mexico for Pemex for misrepresenting the financial stability of the drilling company was given a reprieve from dismissal on forum non conveniens grounds; Otto Candies, LLC v. Citigroup, No. 18-12663 (11th Cir. July 1, 2020) (Jordan).
Oceanografia, a now-bankrupt Mexican company that provided drilling services to Pemex, Mexico’s state-owned oil and gas company, received financing from Citigroup. Despite knowing of fraudulent documents to support the advances, Citigroup continued to advance money to Oceanografia, causing third parties, such a shipping companies, to transact business with Oceanografia (vessel leases). When these third parties lost substantial amounts on their leases, they brought suit against Citibank in federal court in Florida. Two of the plaintiffs are United States companies (including Otto Candies, a Louisiana company), and 37 companies are foreign. Arguing that the foreign plaintiffs significantly outnumbered the domestic plaintiffs, Citibank argued that diminished deference should apply to the choice of a United States forum and that the case should be dismissed on the basis of forum non conveniens. As the American plaintiffs invested in a foreign entity, the district judge discounted the deference owed to the choice of forum of the United States plaintiffs and placed them on par with their foreign counterparts. The Eleventh Circuit held that the reduced deference was erroneous and remanded the case to the district court to reevaluate the forum non conveniens factors with the requisite deference to the American plaintiffs (not an easy task with the diverse interests of the plaintiffs and the international nature of the fraudulent transaction).
Discard the evidence and get the case dismissed: summary judgment was affirmed for cruise line based on lack of notice of defect in chair that collapsed; passenger was required to show notice even on her claim of res ipsa loquitur; cruise line was not sanctioned for failing to preserve the chair that collapsed; Tesoriero v. Carnival Corp., No. 18-11638 (11th Cir. July 14, 2020) (Grant).
Irina Tesoriero was injured when the vanity chair in which she was sitting collapsed when a leg of the chair fell off. While waiting for help, her husband inspected and photographed the chair. He did not notice any obvious or observable outward defects, but it was his opinion from the appearance of the pegs after the leg became detached that the leg had been unglued and loose for a long time. A steward replaced the broken chair with a new one, and the chair was disposed of by a crew member because it could not be fixed. In her suit against the cruise line, Tesoriero argued that the cruise line had constructive notice of the condition of the chair because the stewards who cleaned the cabin inspected the furniture during the daily cabin cleaning; that the doctrine of res ipsa loquitur applied and eliminated the need to show that the cruise line had notice; and that she was entitled to an inference of notice of the condition because the disposal of the broken chair amounted to spoliation of evidence. Judge Williams agreed with the recommendations of Magistrate Judge Torres that no reasonable inspection could have discovered the dangerous condition without deconstructing the chair; that res ipsa loquitur did not apply because a collapsing chair can happen without negligence; and that the cruise line should not be sanctioned without evidence that the cruise line reasonably anticipated litigation following the accident. A majority of the appellate panel agreed with the result but with different reasoning. Judge Grant reasoned that the husband’s opinion that the pegs had been unglued and loose for a long time could only have been made after the chair came apart, and the conditions were not obvious before the collapse. This was confirmed by the photographs, which showed that the cloth-covered frame obscured the peg-and-hole assembly. Turning to the res ipsa loquitur issue, Judge Grant noted that the issue whether lack of notice is dispositive of the res ipsa claim was an open question in the Eleventh Circuit. Because notice is an integral party of the vessel’s duty, Judge Grant ruled that a passenger who relies on res ipsa loquitur bears the burden of showing that the cruise line had notice. Therefore, the lack of notice doomed the res ipsa theory as well as the negligence claim for failure to inspect/failure to warn. The majority disagreed with the ruling of the magistrate judge and district judge that the cruise line was not guilty of spoliation because it did not reasonably anticipate litigation when it disposed of the chair. Judge Grant noted that spoliation sanctions (particularly adverse inferences) cannot be imposed for negligently losing or destroying evidence and can only be imposed on a finding of bad faith. As the majority found nothing in the record demonstrating bad faith in the decision to dispose of the chair, there was no basis for an adverse inference against the cruise line. Judge Rosenbaum dissented, concluding that there was a fact question of bad faith. She noted that this was not the first case where the cruise line failed to follow its own preservation policies, citing a magistrate judge who had described the cruise line’s attitude as “‘[c]’est la vie’ (‘that’s life,’ or ‘that’s how things happen’) and . . . ‘stuff happens.’” Judge Rosenbaum commented: “No wonder Carnival has that attitude. Carnival keeps discarding material evidence, and that keeps working to its advantage. So why would it ever do anything to remedy its compliance with its own policies?”
Beneficiaries of Navy ship repairer escaped the finality trap and could appeal the dismissal of their claims, but they lost their appellate argument that they could invoke maritime law after losing under state law; Corley v. Long-Lewis, Inc., No. 18-10474, 2020 U.S. App. LEXIS 22063 (11th Cir. July 16, 2020) (Pryor).
Charles Corley died from mesothelioma that he allegedly contracted from exposure to asbestos-laden products supplied by the defendants in this suit while he served in the Navy and later as a mechanic and repairman. His beneficiaries continued the suit after his death. The suit was originally brought in Alabama state court under the Alabama Wrongful Death Act and was removed to federal court. The district court granted summary judgment in favor of 17 companies that supplied products that the decedent used while serving in the Navy based on the expiration of the state statute of limitation. The plaintiffs then asked the court to reconsider that ruling and to apply the extended statute of limitations under the general maritime law, but the judge denied the request as being too late in the litigation to change the theory for recovery. The plaintiffs eventually dismissed the last two defendants in the case without prejudice after they filed bankruptcy and the plaintiffs were prevented from proceeding against them in this suit. The voluntary dismissal, however, presented an issue whether the finality trap prevented the plaintiffs from appealing as to the order on the application of maritime law. The Eleventh Circuit held that, notwithstanding the voluntary dismissals, the plaintiffs were adverse to part of the final judgment, and that was sufficient to establish appellate standing. Chief Judge Prior, who wrote the opinion in this case, concurred in the judgment to note the “widespread problems” with the finality trap and to encourage district judges to consider alternative options when deciding whether to grant a motion to dismiss without prejudice. Turning to the merits, the plaintiffs argued that they had the right to invoke maritime law at any time under Rule 9(h); however, the appellate court disagreed. Chief Judge Prior stated: “The Corleys are not entitled to a second bite at the apple.” As they did not offer a “compelling explanation to justify their delay,” the district judge did not abuse his discretion in declining to change the substantive law applied in granting summary judgment.
Waiver of appellate review in arbitration agreement did not deprive appellate court of jurisdiction to review arbitration award in favor of offshore driller; public policy exception could not be used to question the merits of an arbitration award that the oil company had to pay damages on a contract procured by bribery but ratified, as the arbitration agreement’s validity was not questioned; Vantage Deepwater Co. v. Petrobras America, Inc., No. 19-20435 (5th Cir. July 16, 2020) (Southwick).
Vantage, which operates a fleet of drilling rigs, contracted with Petrobras Venezuela for Vantage to perform offshore drilling for Petrobras for eight years. Vantage’s parent company then purchased an ultra-deepwater rig, the TITANIUM EXPLORER, for more than $948 million, and the contract performance commenced. Two years into the term of the contract, the parties executed a Third Novation and Amendment Agreement that provided for arbitration in Houston, Texas. The Third Novation also provided that the parties waived irrevocably their right to any form of appeal, to the extent that such waiver could be validly made. After a Petrobras official pleaded guilty to bribery, Petrobras terminated the contract on the ground that it was procured through bribery and corruption, making the agreement invalid. Vantage demanded arbitration pursuant to the Third Novation, and an arbitration panel (over a dissent from the Petrobras-appointed arbitrator) awarded Vantage more than $620 million. Federal judge Bennett in Houston confirmed the award (now over $733 million with interest), and Petrobras appealed to the Fifth Circuit. Judge Southwick first had to address the effect of the appellate waiver on the jurisdiction of the appellate court. Vantage argued that the agreement did not bar the district court’s review of the award, only that appellate review of the district court’s judgment was precluded, and Petrobras argued that it could not waive its right to appeal. The appellate panel was inclined to rule that a clause barring all federal review was unenforceable, but that a clause barring appellate review was enforceable. However, Judge Southwick stated that the waiver did not deprive the appellate court of jurisdiction, and “if affirming the judgment is a clearer resolution than deciding the validity of the appeal waiver, we can affirm.” On the merits, Petrobras did not seek review of whether the award violated public policy but rather whether the underlying contract violated public policy. Judge Southwick agreed that the underlying conduct, bribery, did violate public policy. However, the arbitration agreement, was external to the underlying contract, and the arbitration agreement’s validity was not disputed. The question of whether the contract was valid or voided was a question for the arbitrators, and they found that in favor of Vantage. As that question was for the arbitrators and not the court, and as there was no challenge to the validity of the arbitration agreement, the confirmation of the arbitration award was affirmed.
State workers’ compensation carrier whose policy excluded seamen could not charge premiums for the payroll of seamen-employees based on the possibility that the seamen might be reclassified; LM Insurance Co. v. Dubuque Barge & Fleeting Service Co., No. 19-1647, 2020 U.S. App. LEXIS 22638 (8th Cir. July 20, 2020) (Grasz).
Dubuque Barge and Fleeting Service (d/b/a Newt Marine Service) is an Iowa marine construction company that conducts work from a floating dredge barge and plant on the Mississippi River. LM Insurance carried the state workers’ compensation coverage for Newt Marine through the Iowa assigned risk plan, and its policy excluded injuries to the master or member of a crew of a vessel. Despite excluding seamen from its coverage, LM Insurance charged Newt Marine premiums for the coverage of its seamen employees, arguing that the seamen could be reclassified, which would make LM Insurance liable for their workers’ compensation benefits under the policy. Rejecting that argument, the Eighth Circuit held that the insurer could not charge premiums for their work based on the possibility of reclassification and could only charge for them upon actual reclassification.
Erika Roberts brought suit against Carnival for injuries she suffered in a fall on Carnival’s cruise ship VICTORY. Citing the one-year contractual time limitation for suit in Roberts’ ticket, Carnival moved to dismiss the suit, and Judge Bloom agreed and dismissed the suit. Roberts contested the propriety of the dismissal in her appeal to the Eleventh Circuit, and the Eleventh Circuit held that the motion to dismiss was not the appropriate method to challenge the timeliness of the suit. Although Roberts referred to the ticket in her complaint, she did not attach it. Therefore, Carnival attached it to its motion to dismiss, and Roberts did not contest the authenticity of the ticket. The Eleventh Circuit stated that the district court must ordinarily convert a motion to dismiss into a motion for summary judgment if it considers material outside the complaint and its attachments, but there is an exception to this rule if the complaint refers to the document and the document is central to the plaintiff’s complaint. In this case, the suit was based on negligence, and the ticket was not essential to that claim. The ticket was essential to the limitations defense, but to consider the ticket that was not attached to the complaint, the district court would have to convert the motion to dismiss to a motion for summary judgment. Additionally, even if the ticket had been incorporated into the complaint, it was not apparent from the face of the complaint (and ticket) that the suit was time-barred. There is a two-factor test for the cruise line to establish that the contractual limitation was reasonably communicated to the passenger. One factor considers the physical characteristics of the clause in the ticket, and another considers the passenger’s opportunity to become meaningfully informed of the contract terms. The second factor was beyond the scope of the complaint and ticket. It considers the subjective circumstances attending the passenger’s opportunity to review the ticket terms before embarkation. As that factor did not depend on the ticket alone, it could not be resolved from the face of the complaint (and ticket). Therefore, the dismissal was vacated and the case was remanded to the district court.
From the federal district courts:
Judge rejected argument of owner of ship that allided with a docked barge that the barge was not properly lighted when the ship’s pilot admitted that it was lighted and there was no expert testimony that it was not lighted; limitation claimants were entitled to assert unseaworthiness claims against the alliding ship; Port was not entitled to bring a claim against the ship for breach of tariff contract; Grand Famous Shipping Ltd. v. Unknown Claimants, No. 4:18-cv-4678, 2020 U.S. DIST. LEXIS 113225 (S.D. Tex. June 29, 2020) (Ellison).
This is a limitation action brought by the owner and manager of the M/V YOCHOW, which allided with the barge OSG 243 that was moored at a dock in the Port of Houston. Judge Ellison heard motions for summary judgment of several of the parties and issued rulings on them. He granted the motion of the OSG claimants, denying the claim of the YOCHOW interests that the barge was not properly lighted. Judge Ellison rejected the testimony of the Captain of the YOCHOW that neither he nor the compulsory pilot on the YOCHOW saw the barge, as the pilot’s testimony, video evidence, and an email from the Coast Guard Marine Safety Specialist established that the barge was illuminated prior to the incident. Judge Ellison concluded that the lack of expert testimony, coupled with the presumption of fault from The Oregon, caused there to be no genuine issue of material fact regarding the negligence of OSG. The YOCHOW interests also contested the allegations of unseaworthiness asserted against the YOCHOW, arguing that the warranty of seaworthiness only applies to claims of crew members. Citing cases in which the Fifth Circuit analyzed evidence of unseaworthiness proffered by non-seamen limitation claimants, Judge Ellison denied the YOCHOW interests’ argument. Additionally, as he was going to have to hear evidence of negligence, Judge Ellison declined to dismiss the claims of gross negligence on the part of the YOCHOW. Finally, Judge Ellison addressed the arguments of the Port of Houston, whose dock was damaged from the allision, that the YOCHOW was liable to the Port for breach of the Port’s tariff. As the YOCHOW owner and manager had not signed the berth application (containing the terms and conditions of the tariff), and as the charterer of the vessel was the party who received the services of the Port, Judge Ellison dismissed the Port’s claims for breach of contract against the YOCHOW owner and manager.
Ad interim stipulation that did not identify a surety to guarantee payment was insufficient to support issuance of the monition and injunction in a limitation action; In re Paradise Family, LLC, No. 8:20-cv-1452, 2020 U.S. DIST. LEXIS 114482 (M.D. Fla. June 29, 2020) (Tuite).
After passengers on the M/V JUST ADD MIST were injured in an accident near Hillsborough County, Florida, the owner and owners pro hac vice of the vessel brought this limitation action and submitted an ad interim stipulation, agreeing to submit a deposit or surety bond into the registry of the court within 15 days after entry of an order confirming the report of a commissioner to be appointed to appraise the value of the petitioners’ interest in the vessel, if a deposit or bond were requested by a claimant. Alternatively, the petitioners agreed to file a joint stipulation for value that would stand as security until the claimants demanded a bond or the court ordered one. As Supplemental Rule F requires that the owner deposit with the court a sum equal to the value of the vessel and pending freight or approved security therefore (often in the form of a letter of undertaking), Magistrate Judge Tuite held that the ad interim stipulation did not comply with the Rule. Therefore, he denied the motion to approve the ad interim stipulation and enter the monition and injunction (without prejudice).
Batterton confined Atlantic Sounding to its facts, and crew member of a dredge was not entitled to recover punitive damages from the owner and operator of a tug absent intentional wrongdoing; Ginley v. Dutra Dredging Co., No. 19-23487, 2020 U.S. DIST. LEXIS 115404 (S.D. Fla. June 29, 2020) (Martinez).
Kyle Ginley was a crew member on the dredge PAULA LEE in connection with a dredging project near Port Canaveral, Florida. The master of the tug COLONEL, which was towing a scow with dredged material, called the dredge and asked for a crew member to assist with fouled hipping straps on the scow. Ginley was injured in the process and brought this suit against his employer and the owner and operator of the COLONEL. His action against the tug interests included claims for negligence and gross negligence, and he sought punitive damages. The tug interests moved to dismiss the claims for punitive damages for gross negligence on the ground that punitive damages are not available in injury claims (except in maintenance and cure cases) absent intentional wrongdoing. Noting that there was a difference in the cases as to the extent that the Atlantic Sounding decision should be interpreted to permit recovery of punitive damages, Judge Martinez reasoned that “Batterton signaled a view that Atlantic Sounding’s rationale should be confined to its narrow facts.” Therefore, he held that, based on the Eleventh Circuit’s decision in the Amtrak case, punitive damages were not available to Ginley absent a pleading of intentional wrongdoing.
Disputed evidence on collision during overtaking resulted in sustaining of jury verdict that overtaking vessel was not at fault; Migliaccio v. Bolivar Cleaning Service, LLC, No. 18-8184, 2020 U.S. DIST. LEXIS 113515 (E.D. La. June 30, 2020) (Milazzo).
Anthony Migliaccio, Captain on the MEGAN DUPRE, was injured when his vessel collided with the CHRISTINA BELCHER, which was overtaking the MEGAN DUPRE in the Intracoastal Waterway. Migliaccio brought this action against the operator of the CHRISTINA BELCHER, and the jury returned a verdict that the operator of the CHRISTINA BELCHER was not negligent. Migliaccio moved for a new trial, citing evidence and argument that “unequivocally established fault, at least in part,” on the part of the operator of the CHRISTINA BELCHER. Citing other evidence that the overtaken vessel could have prevented the collision by maintaining its speed, Judge Milazzo was not persuaded that the great weight of the evidence was counter to the verdict, and she concluded that no manifest injustice would result from letting the verdict stand.
SunTrust Banks’ repossession and sale of the JUST BE returns to the Update (June 2020 Update). Judge Pechman previously concluded that the mortgagee could not demonstrate in a summary proceeding that the sale of the vessel was commercially reasonable because there were fact questions related to the broker hired to handle the sale (the broker was not licensed, and there was evidence that the broker had not appropriately advertised the yacht). After trial, Judge Pechman held that the mortgagee did not violate state law by hiring a broker who did not possess a vessel dealer license. She also found that the sale was commercially reasonable and in accordance with well-established practices in the luxury yacht industry and entered judgment in favor of the mortgagee based on the proceeds from the sale.
Court declined to vacate attachment of the defendant’s property as the defendant was not subject to service in the district; D’Amico Dry d.a.c. v. McInnis Cement Inc., No. 20-cv-3731, 2020 U.S. DIST. LEXIS 114749 (S.D.N.Y. June 30, 2020) (Caproni).
McInnis Cement is a Canadian entity that manufactures and ships cement along the Eastern Seaboard of North America (distributing cement to its customers in the United States through a wholly-owned United States subsidiary). The sale to the subsidiary occurred in Canada, and the United States subsidiary imported the cement into the United States. D’Amico Dry d.a.c. entered into a charter party with McInnis Cement to ship cement on a regular basis from Canada to ports in the United States. After McInnis Cement declared force majeure due to the COVID-19 pandemic and suspended shipments, D’Amico demanded arbitration and brought this action to attach property of McInnis Cement in New York to satisfy an arbitral award. McInnis moved to vacate the attachment on the ground that it was not subject to service within the Southern District of New York. Judge Caproni first noted that McInnis Cement was unquestionably subject to specific personal jurisdiction in the district in connection with the shipment of products into New York. However, service could not be effected on the United States subsidiary of McInnis Cement as it was not a managing or general agent with sufficient authority to accept service for its parent company, and sufficient authority to accept service did not arise from the fact that the United States subsidiary helped negotiate the charter party. As McInnis Cement could not be served in the district, it was not “found” within the district and the attachment was vacated.
Fact questions on negligence and unseaworthiness prevented summary judgment despite deemed admissions of negligence and unseaworthiness; Rec Marine Logistics, LLC v. Richard, No. 19-11149, 2020 U.S. DIST. LEXIS 114911 (E.D. La. July 1, 2020) (Africk).
REC Marine’s discovery problems continued in connection with the injury suffered by DeQuincy Richard while serving as a deckhand on the M/V DUSTIN DANOS. Richard’s employer, REC Marine, brought this declaratory judgment action, arguing that it did not owe maintenance and cure to Richard because he did not suffer an injury on the vessel. In our April 2020 Update we discussed the sanction awarded against REC Marine and its counsel for violating discovery orders and for conduct during the 30(b)(6) deposition of the employer. After REC Marine failed to respond to Richard’s requests for admissions, Magistrate Judge Douglas ordered the admissions admitted, including admissions that the defendant was negligent and the vessel was unseaworthy. Richard then moved for summary judgment on his counterclaims of negligence and unseaworthiness. Judge Africk denied the motion, reasoning that requests for admissions are properly used for facts and not pure legal conclusions. Therefore, he reviewed the evidence that presented and found a dispute in material facts that prevented the granting of summary judgment.
Suit by Alabama seaman, employed by Alabama company, for injury on vessel located in Alabama, did not belong in a Louisiana federal court; Woodruff v. Three Mile Drydock & Repair, LLC, No. 19-13446, 2020 U.S. DIST. LEXIS 114910 (E.D. La. July 1, 2020) (Milazzo).
Billy Woodruff, a resident of Mobile, Alabama, was employed by Three Mile Drydock, an Alabama company with its principal place of business in Mobile. He slipped and fell on the deck of the M/V GREGORY P. FRAZIER, owned by an Alabama company with its principal place of business in Mobile, while the vessel was located in Mobile. Woodruff then brought this suit in federal court in New Orleans, and the employer and vessel owner moved to dismiss the suit for lack of personal jurisdiction or alternatively to transfer the case to the federal court in Mobile. Instead of dismissing the case, Judge Milazzo reviewed the factors for a transfer pursuant to Section 1404(a) and held that the case should be transferred to the federal court in Mobile. However, as Woodruff had indicated that he would prefer dismissal over transfer (so that he could re-file the case in an Alabama court of his choosing), Judge Milazzo ordered that Woodruff could file a motion to voluntarily dismiss the action, and he filed a motion to dismiss without prejudice the next day.
Court bifurcated trial on liability and privity or knowledge from damages in a limitation action; In re Alexis Marine, L.L.C., No. 18-10526, 2020 U.S. DIST. LEXIS 114898 (E.D. La. July 1, 2020) (Guidry).
After a fire broke out in the engine room of the M/V UNCLE ROBERT as it was navigating in the Mississippi River, the vessel lost power and allided with a moored barge unloading cargo. The owner of the UNCLE ROBERT brought this limitation proceeding, and several claimants filed claims. The claimants sought a jury trial on their maritime claims, but Judge Guidry set the case for a non-jury trial and bifurcated the issues. He agreed to try the issues of liability and privity or knowledge of acts of negligence or unseaworthiness in the non-jury trial. Then, after the court resolved those issues, the need for a trial on damages might be eliminated, and the claimants’ request for a jury trial could be addressed with respect to damages.
Suit to enforce a foreign judgment involving the sale of a vessel did not arise from a maritime contract, did not fall within the admiralty jurisdiction, and could not be removed to federal court based on the court’s original admiralty jurisdiction; Eclipse Liquidity, Inc. v. Geden Holdings Ltd., No. 20-1847, 2020 U.S. DIST. LEXIS 114960 (E.D. Pa. July 1, 2020) (Schiller).
Eclipse brought this suit in state court in Pennsylvania against Geden as a judgment creditor based on a judgment obtained in London for Geden’s failure to purchase a vessel. Geden removed the case to federal court based on the court’s original admiralty jurisdiction, and Judge Schiller noted that the court had original jurisdiction over cases of admiralty or maritime jurisdiction, and that included disputes over maritime contracts. However, the contract for the purchase and sale of a vessel is not a maritime contract and does not fall within the court’s admiralty jurisdiction. Therefore, stating that “the ship has sailed,” Judge Schiller remanded the case.
Seaman’s interrogatory answers in Jones Act case that he was exposed to asbestos in deepwater drilling operations were sufficient to allow removal of case based on OCSLA jurisdiction; Hsieh v. Apache Deepwater, LLC, No. 19-408, 2020 U.S. DIST. LEXIS 117044 (M.D. La. July 2, 2020) (Jackson).
Asserting that he had been exposed to asbestos while working for Schlumberger on jack up rigs and submersible barges, David Hsieh brought suit in Louisiana state court against Schlumberger under the Jones Act and against several drilling and energy companies under the general maritime law. After Hsieh answered interrogatories in which he described his exposure as arising from “deepwater drilling operations,” Apache Deepwater removed the case based on the jurisdiction of the Outer Continental Shelf Lands Act. Hsieh moved to remand on the ground that the OCSLA jurisdiction was not applicable and that his Jones Act claim barred removal, and Judge Jackson denied the motion, ruling that the case met the requirements for jurisdiction under the OCSLA, that the removal was timely because it was within 30 days of the “other paper” from which the defendant could ascertain that the case was removable, and that the non-removable Jones Act claim could be remanded to state court while the court exercised jurisdiction over the remaining claims. Hsieh then sought reconsideration of the ruling that OCSLA jurisdiction had been properly established, arguing that specific information of the locations on the outer Continental Shelf was not established by the defendant and that it was insufficient to support jurisdiction based solely on Hsieh’s sworn answers that he was exposed from “deepwater drilling operations.” Although recognizing that the court had not previously found OCSLA jurisdiction where specific information regarding the location was lacking, Judge Jackson concluded that Apache Deepwater had provided sufficient information to prove the location of the exposure was on the outer Continental Shelf from the seaman’s answers, and the lack of an affidavit from Apache Deepwater attesting to the location did not change the previous ruling.
Package limitation for damage to cargo of glass was limited either to 7 containers or 28 IDP crates; AGCS Marine Insurance Co. v. Expeditors International Ocean, Inc., No. 18-614, 2020 U.S. DIST. LEXIS 118282 (W.D. Wash. July 6, 2020) (Robart).
Corning contracted with Expeditors to ship 8,880 pieces of flat glass from Busan, South Korea, to Shanghai, China. Expeditors delivered seven containers to Corning, which loaded the glass onto 28 IDB crates (a specific type of crate used for shipping glass) and then loaded the crates into the seven containers. The cargo was damaged in Shanghai when a container was dropped on top of Corning’s containers. Corning’s insurer, AGCS paid Corning $790,645.43 for the damage and then brought this suit against Expeditors. The Sea Waybill described the “Nos. of Packages” as “7 CTNR (28 CRT).” It listed the “Description of Packages and Goods” as “28 Crate (8,880 PCS) of Flat Glass.” The Sea Waybill contained a limitation of liability (when COGSA did not apply) of $500 per Shipping Unit. It also contained a general definition of “Shipping Unit” as “each physical unit or piece of cargo not shipped in a package” The limitation of liability also included a specific definition of the terms “Package or Shipping Unit” for the limit of liability that provided: “Where a Container is used to consolidate Goods and such Container is Stuffed by the Carrier, the number of packages or Shipping Units stated on the face of the Sea Waybill in the box provided shall be deemed the number of packages or Shipping Units for the purpose of any limit of liability per package or Shipping Unit . . . . Except as aforesaid the Container shall be considered the package or Shipping Unit.” Judge Robart agreed that the latter definition provided the applicable definition because it was a more specific definition—applying to the limitation of liability. However, he found that the definition was ambiguous in its reference to “Container” because the Container could refer either to the seven ocean shipping containers provided by Expeditors or to the 28 IDP crates that Corning used to ship the glass. Therefore, Expeditors’ liability was limited either to $3,500 or $14,000.
Maritime law held to require notice in vicarious liability claim, but passenger squeaked by in establishing notice; res ipsa loquitur held not to be available for injury to passenger when a stowed bunk bed fell on his head; Ewing v. Carnival Corp., No. 19-20264, 2020 U.S. DIST. LEXIS 118849 (S.D. Fla. July 7, 2020) (Goodman).
The subjects of notice and res ipsa loquitur return to this month’s Update (see Tesoriero v. Carnival Corp. above). Eric Ewing was sitting on the lower bed of his room on the CARNIVAL ECSTASY when the upper stowed bunk bed deployed, striking him on the top of the head. In the summary judgment motions and responses, Ewing asserted a claim of active negligence of the cruise line for failing to lock the bunk or to check that the bunk was locked prior to the passenger’s injury. He claimed that the cruise line was vicariously liable for that negligence and that it was not necessary that he prove that the cruise line was on notice of the dangerous condition. He also brought a claim of res ipsa loquitur. Based on the decision of the Eleventh Circuit in Everett v. Carnival Cruise Lines, Magistrate Judge Goodman held that there is no exception to the notice requirement for “a created-by-defendant or active-negligence-by-employee or vicarious-liability theory.” Thus, regardless of how Ewing pleaded his negligence case, he still had to establish actual or constructive notice of the condition by the cruise line. As the cruise line had a procedure to check bunk beds and make sure that the locking mechanism was activated, it was aware of the danger created by upper bunk beds. Combined with the fact that the ship’s carpenter had previously repaired the locks on two upper bunk beds, there was “adequate (although barely) evidence to withstand summary judgment” on the notice issue. Magistrate Judge Goodman did reject the claim of res ipsa loquitur as Ewing could not establish that the accident does not ordinarily occur in the absence of negligence (screws which loosen over time could have caused the bed to fall).
Bisso did not invalidate reciprocal damage clauses in a BIMCO Towhire form with respect to negligence but did not bar a gross negligence claim; Cashman Equipment Corp. v. American Marine Corp., No. 19-cv-10009, 2020 U.S. DIST. LEXIS 119290 (D. Mass. July 7, 2020) (Zobel).
Cashman Equipment hired American Marine, a tug operator, to tow its barge from Florida to Virginia and ultimately to Puerto Rico. The tow was damaged by Winter Storm Grayson, resulting in damage to the barge, and Cashman Equipment brought this suit seeking to recover from the towing company based on negligence and gross negligence. The parties contracted for the towage with a BIMCO Towhire 2008 form, which contained reciprocal provisions for the allocation of fault, such that each party was responsible for damage to its property, regardless of the negligence of the other party. American Marine moved for summary judgment based on the exculpatory provision of the contract, and Cashman Equipment responded that the exculpatory clause was invalid under Bisso v. Inland Waterways Corp. Following the decision of the Fifth Circuit in International Shipbreaking Ltd. v. Smith, Judge Zobel distinguished Bisso on the ground that the reciprocal provisions did not exonerate the tug owner from all liability—it retained significant exposure for damage to its tug, damage to third parties, and injuries to its crew. Therefore, he dismissed the negligence allegations in the complaint. However, as Judge Zobel held that the parties could not contract out of gross negligence, he declined to dismiss the gross negligence claim and held that it was sufficiently pleaded (compare Kenneth G. Engerrand, Indemnity for Gross Negligence in Maritime Oilfield Contracts, 10 Loyola Mar. L.J. 319 (2012)).
Cargo claimant was permitted to amend its complaint to replace its claim of breach of fiduciary relationship with a negligence claim and to use substitute service on the carrier’s United States counsel after attempts to serve the carrier in Germany under the Hague Convention failed; Rang Dong Joint Stock Co. v. J.F. Hillebrand USA, Inc., No. 2:18-cv-3195, 2020 U.S. DIST. LEXIS 120027 (E.D. Cal. July 7, 2020) (Mueller).
The suit involving a shipment of three containers of wine to Vietnam returns to the Update (August 2019 Update). Napa Valley’s Rang Dong Winery contracted with J.F. Hillebrand to ship the containers, and the containers were carried by Blue Eagle, a German carrier, which delivered the wine to a different terminal than expected by the winery, causing a delay and damage from the heat. Hillebrand moved to dismiss the winery’s claim of breach of fiduciary relationship, and Rang Dong sought leave to amend its complaint to substitute a negligence claim. Even though the time had passed to amend the complaint, Chief Judge Mueller concluded that Rang Dong had shown good cause and allowed the amendment. Rang Dong also asked for leave to serve Blue Eagle through its American counsel. As Rang Dong had twice tried, unsuccessfully, to serve Blue Eagle through the Hague Convention, Chief Judge Mueller held that the service on the carrier’s counsel in the United States was reasonably calculated to apprise the carrier of the suit and was therefore appropriate.
This is a Back-End Litigation Option case asserting personal injuries for exposure to oil and dispersants during spill response work after the DEEPWATER HORIZON/Macondo blowout. In accordance with the Medical Settlement Agreement, workers are required to establish that their medical conditions were caused by exposure to oil and dispersants during their clean-up efforts. The courts have ruled that the workers must present expert opinions to carry their burden of proof. As Michael McCoy failed to produce an expert report, Judge Ashe dismissed his suit.
Conclusory allegations of the absence of privity or knowledge are insufficient for the complaint for limitation of liability and must be repleaded; In re Garcia, No. 20-21859, 2020 U.S. DIST. LEXIS 121603 (S.D. Fla. July 9, 2020) (Altonaga).
Claiming that someone started his yacht while it was docked at the Casablanca Restaurant on the Miami River, causing it to crash into another vessel, Jose Garcia filed this action seeking exoneration/limitation of liability. Injury and property damage claimants filed claims in the limitation action and moved to dismiss the complaint for failing to plead sufficient facts to establish the right to exoneration/limitation. Garcia argued that his allegations that someone stole the vessel without his knowledge and that he did not cause or contribute in any way to the damages and injuries were sufficient, but Judge Altonaga disagreed. His allegations were consistent with several possibilities of how the operator could have gained control of the vessel, including scenarios in which he was at fault (such as leaving the engines running or leaving the key where it could be found). Judge Altonaga also rejected Garcia’s argument that she was improperly placing the initial burden on Garcia to establish the negligent acts or unseaworthiness to which he had to establish a lack of privity. Therefore, Garcia was required to replead his complaint. However, Judge Altonaga rejected the argument from the claimants that the affidavit of value of the vessel was insufficient at the motion-to-dismiss stage.
Concessionaire on cruise ship was held to be strictly liable for the actions of its employees in an alleged sexual assault on a 15-year old passenger; however, the allegation that the cruise line was aware that foreign-born employees have a potential propensity to rape was insufficient to establish notice to the concessionaire for the claim of negligent monitoring and supervision; Doe v. Carnival Corp., No. 1:20-cv-20737, 2020 U.S. DIST. LEXIS 122236 (S.D. Fla. July 10, 2020) (Ungaro).
Dufry Cruise Services leased space on the CARNIVAL VALOR to run a sundries shop. The plaintiff in this case brought this suit to recover for the rape of her 15-year old daughter by an employee of Dufry. The plaintiff pleaded that Dufry was an onboard agent of the cruise line, a common carrier, and should be treated like a common carrier and held to be strictly liable for crew member assaults on passengers during the cruise. Judge Ungaro agreed, reasoning that Dufry had undertaken the relationship of a common carrier as it, like the cruise line, had around-the-clock access to passengers of the cruise line. The allegations of negligent monitoring and supervision did not establish constructive notice of the unfitness of the employee, and the plaintiff could not make up for that lack of notice by alleging that the cruise line had knowledge that its foreign-born employees had a potential propensity to rape. The plaintiff’s attorney requested to copy-and-paste allegations of the cruise line’s training failures so as to be applicable to the concessionaire, but Judge Ungaro had already dismissed those allegations against Carnival and held that such an amendment would be futile.
Court in limitation action bifurcated issues of liability and privity from damages; Odfjell Chemical Tankers AS v. Herrera, No. 3:20-cv-12, 2020 U.S. DIST. LEXIS 121136 (S.D. Tex. July 10, 2020) (Edison).
Three crew members were killed and one was injured from a collision in the Galveston Ship Channel between a fishing boat and chemical tanker. Both vessel owners sought limitation of liability, and the plaintiffs sought to bifurcate the actions so that non-limitation issues could be tried in state court to a jury. Seeking to balance the right of the vessel owners to have their limitation issues tried non-jury in a federal admiralty court and the rights of the claimants to pursue their claims under the Saving-to-Suitors Clause, Magistrate Judge Edison ruled that the federal court would hold a non-jury trial to determine whether either vessel owner was negligent or whether its vessel was unseaworthy, and, if so, whether privity or knowledge existed. If limitation was ultimately unsuccessful, Magistrate Judge Edison held that the limitation injunction would be denied and the plaintiffs would be permitted to proceed in state court.
Improper calendaring was not a sufficient excuse for the late filing of claims in a limitation proceeding; Plaquemine Point Shipyard, LLC v. Kirby Inland Marine, LP, No. 19-11913, 2020 U.S. DIST. LEXIS 122296 (E.D. La. July 13, 2020) (Lemelle).
After the tug M/V LEVITICUS, allided with a dock owned by Plaquemine Point Shipyard, the tug’s owner filed a limitation proceeding in federal court in New Orleans and gave notice to potential claimants, including several workers on the dock who were injured in the allision and had brought suit in Texas state court. After several claims were filed within the deadline set by the court, Judge Lemelle entered an order defaulting those who had not filed claims. Nearly a month later, the day before the scheduling conference, the injured workers who had filed suit in Texas moved for leave to file untimely complaints in the limitation action. They cited as an excuse the failure of their counsel to properly calendar the deadline to file the complaints. Judge Lemelle analyzed the three factors for determining when it is appropriate to allow an untimely claim, whether the proceeding is pending and undetermined, whether allowing the claim will adversely affect the rights of the parties, and the reason for the late filing of the complaint. For the first two factors, the complaints were filed before the initial scheduling conference; however, Kirby had already entered into settlements for nearly a third of the settlement fund. The fact that the proceeding was partially determined weighed against the movants with respect to these factors. As to the third factor, Judge Lemelle described the reason for the late filing as “non-descriptive and unpersuasive” and “not truly a reason at all.” Finding no authority from the Fifth Circuit that allows a late filing based solely on attorney error, Judge Lemelle denied the motion.
Company that managed the waterway where a vessel grounded was permitted to bring a third-party action for contribution and indemnity against the estate of the operator of the vessel; Theut v. Aramark Corp., No. 1802593, 2020 U.S. DIST. LEXIS 122352 (D. Ariz. July 13, 2020) (Tuchi).
The grounding of a vessel in Lake Powell that caused injuries to several passengers resulted in several suits, including this action against Aramark based on its maintenance and management of the water where the accident occurred. After discovery reflected that the operator of the vessel may have been negligent because he was under the influence of alcohol, speeding, and maneuvering the boat outside the marked channel when the boat hit an underwater obstruction, Aramark contended that it was entitled to seek contribution or indemnity against the estate. Judge Tuchi agreed as the period for discovery was not complete and the case was not scheduled for trial. Additionally, Judge Tuchi rejected the estate’s claim that the indemnity claim was based on a “legally suspect theory,” noting that the Ninth Circuit had recognized that a passively negligent party in admiralty can recover indemnity from a party that is guilty of primary negligence.
Passengers could not recover for fear of contracting COVID-19 while on quarantined ship; Weissberger v. Princes Cruise Lines, Ltd., No. 2:20-cv-2267 c/w Nos. 2:20-cv-2328, 2:20-cv-2361, 2:20-cv-2414, 2:20-cv-2430, 2:20-cv-2531, 2:20-cv-2727, 2:20-cv-2753, 2:20-cv-2860, 2:20-cv-2865, 2:20-cv-3314, 2:20-cv-3868, 2:20-cv-2267, 2:20-cv-3960, 2:20-cv-4250, 2:20-cv-4663, 2020 U.S. DIST. LEXIS 123743 (C.D. Cal. July 14, 2020) (Klausner).
This case arises from a COVID-19 outbreak on the GRAND PRINCESS during a cruise from San Francisco to Hawaii in February 2020. The same day that the ship docked in Oakland, Ronald and Eva Weissberger, still on the ship, brought this suit against Princess Cruises based on negligence and gross negligence. They did not test positive for the virus, but they sought to recover emotional distress based on fear of contracting the virus while quarantined on the ship. Other passengers on the cruise who suffered emotional distress from fear of contracting the virus also brought suit, and their cases were consolidated. Construing the claims as being premised on negligent infliction of emotional distress, Judge Klausner noted that the Supreme Court allowed recovery for two types of injuries, plaintiffs who have sustained a physical impact from the defendant’s negligent conduct, and plaintiffs who were placed in an immediate risk of physical harm by that conduct. The passengers did not seek to recover for a physical impact and based their claims on the prong that they had been placed in an immediate risk of physical harm. They contended that, although they had not contracted the disease, they only needed to show that they experienced a “near miss.” Judge Klausner diagreed and held that the passengers could not recover for negligent infliction of emotional distress based solely on their proximity to individuals with COVID-19 and their resulting fear of contracting the virus. Noting the millions of confirmed cases of the virus, Judge Klausner reasoned that the rule proposed by the passengers “would lead to a flood of trivial suits, and open the door to unlimited and unpredictable liability.” This was at odds with the Supreme Court’s holding that case-by-case adjudications of negligence “are not an adequate guard against unlimited and unpredictable liability.” Holding that it would be futile to allow an amendment to the pleadings, Judge Klausner dismissed the cases with prejudice.
Federal court remanded suit that was removed under the Suits in Admiralty Act because the defendant argued that the suit could not be maintained under the statute; Gale-Ebanks v. Chesapeake Crewing, LLC, No. 20-22685, 2020 U.S. DIST. LEXIS 123387 (S.D. Fla. July 14, 2020) (Scola).
Stephen Gale-Ebanks brought this suit in state court in Miami under the Jones Act and general maritime law with respect to his heart condition that developed while serving on Chesapeake’s vessel. Chesapeake removed the case to federal court claiming that the seaman’s exclusive remedy was under the Suits in Admiralty Act against the United States and that the suit was time barred under that statute. Judge Scola noted that the action was not a suit against the United States, however, and that Chesapeake argued that the limitation in the Suits in Admiralty Act was a jurisdictional limitation. He therefore ruled that the removal was improper as Chesapeake contended that the court lacked jurisdiction over this case under the terms of the statute that it used to invoke the court’s jurisdiction (Judge Scola added that Chesapeake could not create federal jurisdiction by means of a potential defense to the claim). Concluding that there was no federal jurisdiction, Judge Scola remanded the case to the state court.
Complaint of passengers and beneficiaries of deceased passenger sufficiently alleged misrepresentation, apparent agency, and negligent infliction of emotional distress with respect to injuries and death on a cruise excursion, but the complaint had to be repleaded because it included allegations of heightened duties in the negligence allegations and insufficient facts for the claim of negligent selection and retention; the plaintiffs could not assert a joint venture between the cruise line and the excursion operator when a joint venture was abrogated in the contract between the parties; Woodley v. Royal Caribbean Cruises, Ltd., No. 1:20-cv-20692, 2020 U.S. DIST. LEXIS 124324 (S.D. Fla. July 14, 2020) (Moore).
Passengers on the ADVENTURE OF THE SEAS purchased from the cruise operator admission to a sailing excursion on a catamaran that ended when the catamaran was anchored in deep water offshore from the beach. The passengers were provided foam noodles to help them swim to the beach, but because of the wind and sea conditions, the passengers struggled to get to the beach and feared for their safety. One of the passengers was unable to swim back and drowned. The passengers and beneficiaries of the decedent brought this action against the cruise line and the operator of the excursion, and the cruise line moved to dismiss the complaint. Recognizing that the duty of care to a cruise passenger for injuries suffered off the vessel does not extend beyond the duty to warn, Chief Judge Moore dismissed the negligence allegations because they included assertions of a heightened standard of care, such as failing to provide the excursion with proper equipment and personnel, failing to select reasonably safe shore excursions to sponsor, and failing to promote and sell reasonably safe shore excursions. Chief Judge Moore also noted that the allegations of notice of the risk-creating condition was insufficiently alleged. Chief Judge Moore also distinguished the requirements for claims of negligent selection and retention from the requirements of a claim for duty to warn. The allegation that the cruise line conducted inspections of the excursion’s operations is insufficient for a claim of negligent retention. The conclusory allegations were insufficient to establish that claim and had to be repleaded. Chief Judge Moore did find that the pleading was sufficient to state a claim of negligent misrepresentation based on representations in the brochure for the excursion and oral representations allegedly made by a representative of the cruise line, and he allowed the claim of apparent agency (and vicarious liability of the cruise line) to proceed despite the provision in the contract between the cruise line and the excursion operator and in the brochure and ticket for the excursion that the excursion operator was an independent contractor. However, Chief Judge Moore dismissed the theory of joint venture based on the explicit disclaimer of a joint venture in the contract between the cruise line and excursion operator. Finally, Chief Judge Moore held that the passengers’ claims of negligent infliction of emotional distress were sufficiently alleged as the passengers were in the zone of danger (swimming through the same dangerous conditions and fearing for their own safety) and because they allegedly suffered physical manifestations caused by their emotional distress.
Vessel owner was allowed to pursue his boat owner’s insurer for damage to the vessel from an allision while under control of the shipyard when the damage was not discovered for more than two years and to assert a claim for bad faith and punitive damages; Cherewick v. State Farm Fire & Casualty, No. 3:20-cv-693, 2020 U.S. DIST. LEXIS 123614 (S.D. Cal. July 14, 2020) (Benitez).
Randolph Cherewick took his 27-foot Boston Whaler to Oceanside Marine Center for inspection and repair of three Honda outboard engines in July 2015. In November 2015 Cherewick was advised that the vessel had “bumped” into a dock, causing minor damage and that Oceanside would repair the damage at its own cost. The vessel suffered additional damage in February 2016 while in the custody of Oceanside, and a representative of Cherewick met with Oceanside to discuss the generator, which appeared to be installed backward or improperly. Cherewick had the vessel removed from Oceanside and placed in dry storage in June 2016. Cherewick did not inspect the vessel until September 2018, when he discovered mismatched paint and poorly fitted fiberglass used to repair the damage. He also discovered spider-cracking of the hull and damage to the heavy-duty rubber side board strakes. Cherewick submitted a claim in October 2018 to State Farm, which issued the boat owner’s policy for the vessel for the damage sustained by the vessel in the custody of Oceanside. State Farm denied the claim, and Cherewick brought this action seeking to recover on the policy and for bad faith. State Farm moved to dismiss the complaint based on several policy provisions, and Judge Benitez denied all of State Farm’s arguments. First, State Farm asserted that Cherewick violated the policy’s requirement that a suit must be brought within 12 months of the inception of the loss. Applying the discovery rule, however, Judge Benitez held that Cherewick plausibly alleged that he was not on notice of appreciable damage prior to September 2018 and that there was a question of fact on whether he had exercised reasonable diligence. Judge Benitez also rejected State Farm’s assertion that the claim fell within the exceptions for loss caused by “servicing” of the boat, from contractor’s negligent work, and from wear, tear, and mechanical breakdown, holding that the direct cause was the allision during the sea trial. Judge Benitez also rejected application of the neglect exclusion as the insured did not have knowledge of a readily identifiable and imminent peril endangering the vessel. Having rejected all of the defenses asserted by State Farm, Judge Benitez held that Cherewick sufficiently alleged a claim of unreasonable delay in withholding policy benefits and a breach of the duty of good faith and fair dealing. Allowing Cherewick to rely on conclusory averments of malice and fraudulent intent, Judge Benitez held that the complaint sufficiently pleaded a case for punitive damages.
Crewmember of tug could not maintain negligence or unseaworthiness actions against the owner of a barge that had bareboat chartered the barge to another party; Mullen v. Daigle Towing Service, L.L.C., No. 19-11954, 2020 U.S. DIST. LEXIS 124711 (E.D. La. July 15, 2020) (Feldman).
Mark Mullen was employed by Daigle Towing as a deckhand on its tug M/V MISS LAURIE. Claiming that he slipped and fell on the deck of a rock barge in tow of the MISS LAURIE, Mullen brought this suit against Daigle Towing under the Jones Act. He later amended his complaint to add negligence and unseaworthiness claims against Lafarge as owner of the barge and then amended his complaint again to name American Commercial Barge Line as the owner of the barge. Asserting that it had bareboat chartered the barge to American Commercial Barge Line, Lafarge moved for summary judgment on the negligence and unseaworthiness claims brought against it. As Lafarge had ceded control of the barge more than two years before the accident in the bareboat charter, Lafarge had no duty to maintain equipment on the barge, and Judge Feldman granted summary judgment on the negligence claim. With respect to the unseaworthiness claim, a seaman may not maintain an unseaworthiness claim against a vessel to which he is not a seaman. As Mullen was not a crew member of the rock barge, Judge Feldman granted summary judgment on the unseaworthiness claim against Lafarge.
Judge held that expert testimony was not necessary to establish the negligence of a helicopter pilot for careless operation of the helicopter while landing on an offshore platform, causing a scaffolding to dislodge and strike a worker; White v. Dynamic Industries, Inc., No. 19-9310, 2020 U.S. DIST. LEXIS 124712 (E.D. La. July 15, 2020) (Feldman).
Dwight White was working as a rigger on a platform offshore Louisiana when the downdraft from a helicopter that was landing on the platform’s helideck caused a scaffolding to dislodge and strike White. White brought this suit against the installer of the scaffold and against the operator of the helicopter, asserting that the operator of the helicopter was liable for negligent training of its pilot and vicariously liable for the pilot’s careless operation of the helicopter. When White did not designate an expert to testify about the standard of care for the helicopter pilot, the operator moved for summary judgment, arguing that expert testimony was necessary to establish the standard of care. Judge Feldman disagreed. Although recognizing that expert testimony is generally necessary to prove the duty owed by a pilot, he noted that there are exceptions when the pilot’s testimony is sufficient to establish the duty or when the actions violated company policies. In this case, the pilot testified to the helicopter company’s procedures and the procedure he follows when he lands helicopters on offshore platforms. He testified that if he saw an obstruction near the helideck, it would raise a red flag and he would radio someone. As a barricade was clamped to handrails about ten feet from the helideck, Judge Feldman concluded that a jury could find that the pilot violated policies or proper procedure when he landed despite the presence of the barricade.
Pursuant to the Environmental Protection Agency’s plan for the disposal of dredging material for navigational channels and port facilities that was researched and drafted by the Army Corps of Engineers, the EPA designated an open-water site in Eastern Long Island Sound for disposal as the sediment would not drift from the site and contaminate nearby areas and would have minimal environmental impact on water quality and habitat compared to other areas. The decision was challenged by governmental entities and groups, presenting Judge Korman with the question whether the EPA followed the decision-making processes of the Marine Protection, Research, and Sanctuaries Act and the Coastal Zone Management Act. Without endorsing the practice of open-water disposal or discouraging the EPA from pursuing more environmentally sustainable alternatives, Judge Korman concluded that the EPA based its findings on substantial evidence and followed the agency’s obligations under the statutes. Therefore, he upheld the decision of the EPA.
Cruise line defendant in suit for death of young passenger who fell from her grandfather’s arms could not apportion fault to the grandfather who was not a party to the suit; Wiegand v. Royal Caribbean Cruises, No. 19-cv-25100, 2020 U.S. DIST. LEXIS 129634 (S.D. Fla. July 20, 2020) (Graham).
An 18-month old passenger on the defendant’s cruise ship died when she fell from the arms of her grandfather, Salvatore Anello, through an open window and to the dock below. Her parents brought this suit against the cruise line, which asserted a number of affirmative defenses in its answer related to the fault of Anello, who was not a party to the suit. The parents moved to strike the defenses, resulting in this decision from Judge Graham. The cruise line sought to invoke the procedure available under Florida comparative negligence principles (also applicable in other states such as Texas) by which liability can be apportioned to non-parties. Noting that the Eleventh Circuit has held that it is erroneous to apportion fault between a party and a non-party in a maritime action [aside from cases where a tortfeasor has settled], Judge Graham struck the defense, holding that under principles of joint and several liability, the plaintiffs can obtain a judgment for the full amount of liability against any joint tortfeasor without regard to the percentage of fault. In contrast, Judge Graham agreed that superseding cause is applicable in admiralty cases to exculpate a defendant from liability, and the plaintiff’s assumption of risk is applicable in conjunction with the doctrine of comparative negligence. Applying those principles to the affirmative defenses asserted, Judge Graham held that the argument that the plaintiffs negligently entrusted the care of their daughter to Anello and should therefore share in his responsibility by comparative negligence should be stricken as an attempt to apportion fault to Anello, a non-party. However, the pleading that Anello’s actions constituted a superseding cause that terminated the causal relationship between the cruise line’s alleged negligence and the passenger’s death would, if successful, exculpate the defendant from liability and was not stricken. As the allegation that the parents and Anello assumed the risk of a dangerous condition has to be applied in conjunction with the comparative fault defense, Judge Graham struck that defense as it could have attributed some of the comparative fault of Anello to the parents and because it sought to completely bar recovery rather than apportion it by percentage fault.
According to Judge Reynaldo Garza of the Fifth Circuit, “the two happiest days of a yacht owner’s life are the day he buys it and the day he sells it.” That does not address the difficulty that may arise in buying the yacht in the first place. Robert Coughlan and Aileen Coughlan brought this suit against the parties with which they contracted for the construction of a yacht, asserting that they were entitled to almost $200,000. That contract is not a maritime contract, and the decision was based on New York law under diversity citizenship. Ultimately, the Coughlans were unsuccessful in establishing their claims of fraud, conversion, unjust enrichment, and breach of contract.
Pro se cargo owner could not bring claims on behalf of the party named on the bill of lading, and his claims were dismissed on the merits; Ebomwonyi v. Sea Shipping Line, No. 19-cv-11243, 2020 U.S. DIST. LEXIS 128376 (S.D.N.Y July 21, 2020) (Furman).
Omoruyi Ebomwonyi entered into a contract with Sea Shipping, a non-vessel operating common carrier, to carry four vehicles from Texas to Nigeria. He asserted that there was a delay in transportation that caused him to have to travel to Nigeria to retrieve his goods and pay for demurrage. He brought this suit pro se in federal court in Texas against Sea Shipping and Maersk Lines on his behalf and on behalf of Owolabi Olowookere. After the case was transferred to New York based on a forum selection clause in the house bill of lading, Sea Shipping and Maersk moved to dismiss the complaint. Judge Furman first held that the claims of Olowookere, the party named as the shipper on the bill of lading, had to be dismissed because Ebomwonyi, pro se, could not represent Olowookere. Judge Furman next dismissed Ebomwonyi’s claims against Maersk, the carrier, as they were time barred. Ebomwonyi brought three claims against Sea Shipping, a claim for delay, a claim for storage costs, and a claim of breach of contract that Sea Shipping had agreed to pay for storage costs. Judge Furman held that these claims failed as the Arrival Notice showed that the cargo actually arrived early and as the bill of lading provided that Sea Shipping was permitted to arrange for storage at the risk and expense of the merchant. Although Judge Furman held that an amended pleading would be futile with respect to the substantive defects in the complaint, he did allow Ebomwonyi to file an amended complaint with respect to the breach of contract claim against Sea Shipping.
Jeffrey Helser, an employee of J.F. Brennan, was injured while helping to prepare a John Deere excavator for use as a dredge. Although the incident occurred while the excavator was on land near the Fox River in Green Bay, Wisconsin, and Brennan denied that the excavator was an appurtenance of a vessel, Brennan brought this limitation action after being advised that Helser was going to file a complaint pursuant to the Jones Act. Brennan then asserted that the excavator and a floating work platform consisting of 11 sectional Flexifloat barges constituted the vessel for limitation of liability. Helser filed a claim in the limitation action, and Brennan filed a third-party complaint against Brooks Tractor, alleging that Brooks was liable for the injury. Brooks filed an answer to the complaint and a cross-claim against Brennan, and Helser moved to dissolve the limitation stay, supported by stipulations from Helser and Brooks. Pierce Manufacturing then sought leave to file a late claim in the limitation proceeding, which Helser opposed. Noting that the Seventh Circuit does not require a showing of good cause for late claimants, Judge Griesbach held that Pierce had provided an explanation as to why the claim was filed after the deadline and that was sufficient to allow the claim. As the Pierce claim was now allowed in the limitation action, the stipulations from Helser and Brooks were insufficient to lift the stay.
Attachment was held to be insufficient without a plausible allegation that the garnishee’s debt was located in the district; Harbor Pilots of NY NJ, LLC v. Bouchard Transportation Co., No. 20-2137, 2020 U.S. DIST. LEXIS 128834 (D. Md. July 22, 2020) (Gallagher).
Harbor Pilots sought to collect from Bouchard Transportation for pilot services to Bouchard’s tugs and ocean-going petroleum barges. This action was brought in Delaware to attach/garnish debts owed by Apex to Bouchard for services rendered by Bouchard to Apex. Judge Gallagher declined to issue the writ of attachment and garnishment, without prejudice. Although the pleading requirements of Supplemental Rule B “are said to be easily met,” Judge Gallagher noted that the Second Circuit now requires “a minimal specificity of factual allegations identifying the defendant’s property to be attached.” In this case, Harbor Pilots cited invoices that plausibly established the debt; however, the issue was the location of the debt, as the garnishee needed to hold the debt in the state in which the garnishee was subject to jurisdiction. As the invoices were directed to an address in St. Louis, Missouri, Judge Gallagher held that they were insufficient to establish that Apex held the debts in Maryland.
Federal court lacked admiralty jurisdiction over an injury on a seaplane that crashed into a mountain; Davis v. Blue Aircraft, LLC, No. 3:20-cv-80, 2020 U.S. DIST. LEXIS 130102 (D. Alaska July 23, 2020) (Holland).
Jack Davis was on board a seaplane on a flight from Steamboat Bay on Noyes Island Alaska, headed for Ketchikan Harbor Seaplane Base. The seaplane took off from the water in poor weather, and the conditions worsened. Eventually, the plane crashed into a mountain on Prince of Wales Island. Davis brought this suit based on diversity and admiralty jurisdiction, and the operator of the seaplane moved to dismiss the admiralty claims based on lack of admiralty tort jurisdiction. Davis argued that the Admiralty Extension Act supported admiralty jurisdiction because the suit involved an injury caused by a vessel on navigable waters where the injury was consummated on land. He asserted that the fault occurred in decisions made over the water that resulted in the seaplane crashing on the land. Judge Holland did not have to decide whether the seaplane was a vessel as he held that the locality requirement for a maritime tort was not satisfied, reasoning that the injuries were not caused by the seaplane while it was on or over navigable waters. The allegations of fault over the water were based on decisions of the pilot and did establish that the injuries were caused by the vessel itself while it was on or over navigable water. As the locality test was not satisfied, Judge Holland did not have to address whether the nexus test from Executive Jet was met.
Seaman’s statement that he did not notice a net draped over the railing on a ferry precluded summary judgment that the condition was open and obvious when he was injured stepping over the railing and his foot became caught in the net; Anderson v. HMS Ferries, Inc., No. 19-13467, 2020 U.S. DIST. LEXIS 130143 (E.D. La. July 23, 2020) (Milazzo).
Germaine Anderson worked as a deckhand on the ferry M/V JEAN RIBAULT. A net extends across the bow when the ferry is in motion, but the net is stored to one side of the entryway when the ferry is docked. The crew was trained to store the net on a hook, but at the time of Anderson’s accident the net was draped across the railing in front of the mooring area of the ferry. Anderson’s supervisor was painting the mooring area and asked Anderson to sweep nearby to prevent dust from getting into the wet paint. To get to the area to be swept, Anderson had to step over the rail because the open passageway to the area was blocked by the painting. Anderson did not notice the net as he stepped over the railing and fell when his foot caught on the net. Anderson brought this action against the ferry owner/operator under the Jones Act and general maritime law, and the defendant moved for summary judgment on the grounds that the condition of the ferry was not unsafe and that there was no duty to warn of the open and obvious danger of the net. Judge Milazzo denied the motion, answering that a jury could reasonably find that the net was improperly stowed and that the seaman’s testimony that he did not notice the net when stepping over the rail was sufficient to preclude a finding that the hazard was open and obvious.
NVOCC held responsible for demurrage and detention charges resulting from lengthy customs hold despite force majeure clause; CMA CGM S.A. v. Leader International Express Corp., No. 2:19-cv-357 (E.D. Va. July 23, 2020) (Jackson).
Leader, a non-vessel operating common carrier, contracted with CMA, a vessel operating common carrier, to ship containers. That contract provided that Leader was responsible for detention and demurrage, but it was also subject to a broad force majeure clause that included acts of state, embargo or other disruption or interference with trade, act of the Prince, and other unforeseen events beyond the control of the parties. Leader had a contract with Perfectus Aluminum to ship containers, and Leader used CMA as one of the carriers to ship Perfectus’s containers. As part of a criminal investigation of Perfectus, the United States Customs and Border Protection held and detained 103 containers that Leader had booked for shipment with CMA. When Leader refused to pay demurrage, detention, and fees for the unshipped containers, CMA brought this suit against Leader. Leader asserted frustration, impossibility, and force majeure as defenses, but Judge Jackson rejected all of the defenses and awarded judgment against Leader for breach of contract. Judge Jackson first held that the defenses of frustration and impossibility were not applicable as they were based on risks that were assumed by the contract. Turning to the force majeure clause, its breadth was limited by a provision that expenses were for the account of the shipper in the event the carrier was prevented by U.S. Customs or other government entity from unloading cargo. As that provision reflected that the risk of customs delays was assumed by Leader, Judge Jackson held that the force majeure clause was inapplicable.
Dive system technicians hired by subcontractor were entitled to bring maritime wage claims against the contractor providing promotion and brokering work for a vessel; Allen v. Uncle John Holdings, LLC, No. 17-222, 2020 U.S. DIST. LEXIS 131268 (S.D. Ala. July 24, 2020) (DuBose).
James Larsen purchased the M/V UNCLE JOHN, a semi-submersible dive platform at a bankruptcy auction and then transferred his interest in the vessel to Uncle John Holdings in which he had no ownership interest. Larsen’s company Momentum entered into a contract with Uncle John Holdings to promote and broker a charter party or sale of the vessel and to obtain work or services for the vessel. Momentum then entered into a Consultant Agreement with William Bishop for repair to the saturation dive system and for marketing of the vessel. Bishop arranged for saturation dive system technicians to work on the vessel and submitted invoices for their work, but their invoices were not paid. Bishop and the technicians then brought this action against Momentum seeking to recover for their necessary maritime services for the vessel. Concluding that Momentum failed to perform under the terms of the agreement with Bishop, Chief Judge DuBose granted judgment to Bishop and the technicians against Momentum for breach of contract.
Written notice of claim and request to notify insurer that did not contain information reflecting the possibility that the claim might exceed the value of the vessel was held insufficient to trigger the six-month period to file a limitation action; In re Brava Cruz, L.L.C., No. 1:20-cv-16, 2020 U.S. DIST. LEXIS 132051 (S.D. Tex. July 27, 2020) (Rodriguez).
Abelardo Torres claimed that he injured his finger on November 1, 2018, while working as a crew member on the shrimp boat BRAVA CRUZ. His counsel delivered a letter on December 27, 2018, to the companies that owned the vessel and employed him, advising them of his representation of Torres in his claim against them and requesting that they forward the letter to their insurer. There was a telephone call between counsel for Torres and the vessel interests in January 2019, and counsel for Torres claimed that the vessel’s attorney acknowledged that the claim would likely exceed the value of the shrimp boat. Eight months later, on August 1, 2019, Torres’ counsel sent a demand letter detailing the facts of the case, providing an itemized list of medical expenses of $220,407.90, and proposing to settle the case for $1,750,000. Torres filed a Jones Act suit in state court against the vessel interests on October 11, 2019, and the vessel interests filed this limitation action in January 2020, more than a year after the first letter, but less than six months after the demand in August 2019. Torres moved to dismiss the limitation action for lack of jurisdiction, asserting that it was filed more than six months after the initial correspondence on December 27, 2018. Judge Rodriguez reviewed the decisions from the Fifth Circuit and identified that, to trigger the running of the six-month period to file the limitation action, the written communication must have provided a reasonable possibility that a claim exists and a reasonable possibility that the claim exceeds the value of the vessel. There was no doubt that the letter gave notice of the existence of a claim. However, Judge Rodriguez found that the letter was silent as to the nature of the injury and damages. He reasoned that the law requires more than notification of the claim or there would be no reason for the inquiry whether there was a reasonable possibility that the claim exceeds the value of the vessel. Torres argued that the court should consider evidence outside of the initial letter, arguing that the vessel interests were aware of the extent of Torres’ injuries. Torres cited pictures and hospital records, but he had not provided them to the vessel interests, and Judge Rodriguez declined to consider evidence that had not been provided. Judge Rodriguez also declined to consider the version of the telephone call between counsel that was related by Torres’ counsel, stating that an “alleged verbal statement cannot cure deficiencies in a written notice.” Judge Rodriguez cautioned that “any party could deliver a generic form letter about a potential ‘lawsuit’ and then claim that the recipient verbally acknowledged that it understood that the claim could exceed the value of the vessel.” Concluding that the limitation action was timely, Judge Rodriguez denied Torres’ motion to dismiss.
Suit to clear title to vessel and for failure to deliver the vessel free of liens did not fall within the admiralty jurisdiction of the federal court; Ghiazza v. Anchorage Marina, Inc., No. 19-2792, 2020 U.S. DIST. LEXIS 132596 (S.D.N.Y. July 27, 2020) (Karas).
Jeffrey Ghiazza performed renovations on his parents’ mobile home, and his parents transferred title to their boat, LUCKY FOUR, to Jeffrey as partial payment. After his parents died, Jeffrey’s brother Lawrence Ghiazza was named executor of their estate. Meanwhile, the LUCKY FOUR remained stored at Anchorage Marina, which asserted a lien against the vessel for storage costs. Jeffrey, representing himself pro se, brought this suit in federal court against Lawrence and Anchorage Marina, asserting claims under New York law to clear title to the vessel, for Anchorage’s asserting a defective lien, and for Lawrence’s failing to deliver the vessel to Jeffrey free of the lien. Jeffrey acknowledged that the parties were citizens of New York (no diversity), but he claimed that there was federal jurisdiction because the LUCKY FOUR is under the jurisdiction of the United States Coast Guard and Homeland Security. The defendants moved to dismiss the action, claiming that mere registration of a vessel with the Coast Guard does not establish maritime jurisdiction, particularly when the vessel has been stored on land for an extended period. Judge Karas noted that the claims did not involve a vessel on navigable waters and, even if they did, they did not involve conduct on the water. Therefore, Judge Karas dismissed the suit for lack of subject matter jurisdiction.
District court finally lifted the stay in a single-claimant limitation action after being ordered to do so by the Ninth Circuit; In re Williams Sports Rentals, Inc., No. 2:17-cv-653, 2020 U.S. DIST. LEXIS 133753 (E.D. Cal. July 28, 2020) (Mendez).
The death of Raeshon Willis in a jet-ski accident returns to the Update (June 2019, November 2019, December 2019). Williams Sports Rentals filed this limitation action, and Willis’ beneficiaries sought to lift the limitation stay. Judge Mendez declined to lift the stay, and the Ninth Circuit ordered Judge Mendez to reconsider his analysis. Instead of lifting the stay, however, Judge Mendez ruled that the owner of the jet ski should be exonerated and dismissed the case. The Ninth Circuit then ordered Judge Mendez to lift the stay, and Judge Mendez considered that order to be “unequivocal.” Although agreeing to lift the stay, Judge Mendez did address whether trial of the limitation question should proceed in federal court or await trial of the liability issue in the state court (based on efficient use of judicial resources). As the Sacramento federal courthouse is closed to the public until further notice, Judge Mendez held that the limitation action should be stayed until the completion of the suit in state court.
Carrier was entitled to recover minimum shipping requirement under Service Contract with shipper, but shipper’s action on individual shipments was time-barred by COGSA; Shelter Forest International Acquisition, Inc. v. COSCO Shipping (USA) Inc., No. 3:19-cv-1259, 2020 U.S. DIST. LEXIS 133532 (D. Ore. July 28, 2020) (Russo).
Shelter Forest, which imports and distributes lumber, plywood, and other building materials, entered into a Service Contract with COSCO, which operates a fleet of container ships that transport cargo internationally. The Service Contract contained a minimum quantity provision that required Shelter Forest to ship 5,000 Twenty-Foot Equivalent Containers during a one-year period. Disputes arose between the parties, including two shipments in which cargoes were damaged and delayed. Shelter Forest stopped shipping cargo with COSCO and brought this action in Oregon state court, asserting state common-law claims for negligence, conversion, breach of contract, and misrepresentation along with a statutory claim under the Oregon Unfair Trade Practices Act. COSCO removed the case to federal court and asserted counterclaims, including a claim for breach of the Service Contract. Without having to decide whether federal or state law applied to the Service Contract, Magistrate Judge Russo held that the Contract was not ambiguous and its minimum requirement was enforceable, rejecting Shelter Forest’s arguments based on breach of contract, force majeure, supervening impossibility, and commercial frustration. Concluding that the Carriage of Goods by Sea Act governed the individual shipments (and not state law), Magistrate Judge Russo held that Shelter Forest’s claims against COSCO were time-barred.
Terms of City’s agreement to lift and transport vessel were not unconscionable; question remained whether the release from liability in the agreement applied to the allegations against the City, but the waiver of subrogation limited any recovery by the boat owner to his insurance deductible; Anderson v. City of Seward, No. 3:18-cv-289 (D. Alaska July 28, 2020) (Sedwick).
In order to reconfigure his commercial fishing boat, F/V SERENITY, Darrin Anderson had to move the vessel from Seward Harbor to a repair facility located inland. Anderson entered into an agreement with the City of Seward to lift the vessel from the water and transport it to the repair facility. The two-page agreement was a form prepared by the City that included a disclaimer of any responsibility for the placement or positioning of the lifting slings and that contained a waiver of subrogation for any loss paid by his insurers. The City dropped two slings into the water and lifted the vessel, but the weight of the vessel was not evenly distributed between the slings, and Anderson repositioned the straps. The parties disputed whether Anderson asked the lift operators whether they were going to tie the straps together, and the vessel was driven to the repair facility without the straps being tied together. As the lift vessel was turning to enter the repair facility, the front lifting sling slipped and the vessel fell, causing $80,000 in damage to the vessel. Anderson’s insurer paid for the repairs except for the deductible of $4,000. Anderson brought this suit, asserting that the City was negligent in failing to tie the straps together. Citing the provision in the agreement, the City argued that it was not responsible for the positioning of the lifting straps, which included the decision whether the straps should be tied together. Anderson argued that the clause was unenforceable as it arose from a contract of adhesion. Noting that the Ninth Circuit does not invalidate contracts of adhesion without determining that the provisions at issue are unconscionable, Judge Sedwick reasoned that the provision was not unconscionable because vessel owners expected such a provision and because Anderson agreed that the provision made sense (the City does not know the structure or layout of the underside of the vessel). Although Judge Sedwick held that the provision was enforceable, he found its application in this case presented a disputed issue. The terms only covered placement and positioning of the straps, and it was unclear whether that language was intended to cover securing of the straps after positioning. Judge Sedwick did hold that Anderson’s recovery was limited to $4,000 pursuant to the agreement to waive subrogation. There was no evidence of overreaching by the City or that the waiver was oppressive or unreasonable when applied to Anderson.
Proper method to assert a forum-selection clause, even when raised in a claim brought under Rule 14(c), was a motion to transfer pursuant to Section 1404(a) and not a motion to dismiss under Rule 12(b)(3), 12(b)(6), or 12(f); Supreme Rice, L.L.C. v. Turn Services, L.L.C., No. 20-1212, 2020 U.S. DIST. LEXIS 133851 (E.D. La. July 29, 2020) (Ashe).
Supreme Rice contracted with the Department of Agriculture to provide milled rice for a shipment to Conakry, Guinea. Supreme Rice agreed to deliver the rice to an ocean-going vessel in Myrtle Grove, Louisiana, and Supreme Rice contracted with SCF Marine to provide hopper barges to transport the rice to Myrtle Grove. The contract between Supreme Rice and SCF Marine contained a forum-selection clause for the federal court in St. Louis. SCF Marine delivered the barges to the control of Turn Services for delivery to the ocean-going vessel. During a survey conducted before the loading of the ocean-going vessel, contamination was discovered in the rice, and Supreme Rice brought this admiralty action against Turn in federal court in New Orleans. Turn responded by filing a third-party action against SCF Marine, seeking indemnity and contribution (pursuant to Rule 14(a)) and tendering SCF Marine to Supreme Rice as a direct defendant pursuant to the admiralty third-party practice of Rule 14(c). Citing the forum-selection clause in the agreement between SCF Marine and Supreme Rice, SCF Marine moved to dismiss the Rule 14(c) tender pursuant to Rule 12(b)(3), 12(b)(6), and 12(b)(f). SCF Marine argued that Rule 14(c) could not provide a claim for a plaintiff that the plaintiff could not have properly asserted itself. Citing the decision of the Supreme Court in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas, Judge Ashe held that the proper method to enforce a forum-selection clause is a motion to transfer under Section 1404(a), not a motion to dismiss under Rule 12(b) or 12(f). As SCF Marine did not file a 1404(a) motion and present argument on the factors involved in a transfer of a case, Judge Ashe did not have to address the argument that the forum-selection clause should not be enforced in this case (on the ground that SCF Marine would not be prejudiced by proceeding on the 14(c) tender as it would still have to litigate the 14(a) contribution and indemnity claims in the federal action in New Orleans).
From the state courts:
This case involves a $25 million settlement of Scot Vandenberg’s suit against the manufacturer of a yacht on which he fell and suffered injuries that rendered him a quadriplegic. The settlement was agreed to while the jury was deliberating and after the jury had submitted a question on whether it could find fault with a settling party without finding fault of the manufacturer. The settlement was set aside, Vandenberg discharged his first attorney, and the settlement was later reinstated. The first attorney sought to recover his fee, but the circuit court and appellate court held that the lawyer was not entitled to a fee, concluding that the firm had repeatedly breached its duty to Vandenberg throughout the attorney-client relationship. The appellate court did hold, however, that the firm could recover expenses.
Thanks to Monica Markovich for her help in preparing this Update.
Kenneth G. Engerrand
Brown Sims, P.C.
1177 West Loop South
Houston, TX 77027
600 Jefferson Street
Lafayette, LA 70501
1100 Poydras Street
New Orleans, LA 70163
2304 19th Street
Gulfport, MS 39501
4000 Ponce De Leon Blvd
Coral Gables, FL 33146
In this case there is some evidence of CITGO’s efforts to address the inadequacies of its wastewater storage tanks. By finding nothing more than simple negligence, the district court discounted the seriousness of CITGO’s multi-year wait before it began taking the corrective measures required at this plant. In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place.
Kenneth G. Engerrand, Cases and Materials, Admiralty Environmental and Insurance Claims (4th ed. 2020) (quoting United States v. Citgo Petroleum Corp., 723 F.3d 547 (5th Cir. 2013) (Southwick)).
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