March 2024 Longshore/Maritime Update (No. 298)
Notes from your Updater:
On January 25, 2024, Judge Wu of the United States District Court for the Central District of California approved a settlement of the class action brought by dock workers at the Los Angeles-Long Beach Port Complex seeking to recover for waiting time at and travel time from a dispatch hall to their work location (after Judge Wu had granted summary judgment to the employer defendants). See Andrikos v. APM Terminals Pacific, LLC, No. 19-10421, 2024 U.S. Dist. LEXIS 14768 (C.D. Cal. Jan. 25, 2024).
Our readers who are interested in the meager wages paid to adjunct professors teaching admiralty classes may want to read Chief Justice Stanfill’s opinion in Bocko v. University of Maine System, No. 22-319, 2024 Me. 9, 2024 Me. LEXIS 7 (Me. Jan. 25, 2024). Robert Bocko was employed to teach a three-hour admiralty class as an adjunct professor at the University of Maine School of Law. He received three monthly payments of $1,333.33 for teaching 26 classes (39 hours), preparing and grading the final examination, and 260 hours of preparation. The Maine Supreme Court held, however, that Bocko was exempt from the statutory provision requiring payment of penalties for failing to timely pay wages under the state law.
On February 5, 2024, the Office of Workers’ Compensation Programs of the Department of Labor, Division of Federal Employees, Longshore and Harbor Workers’ Compensation, issued Industry Notice No. 201, setting forth increased civil monetary penalties, effective January 15, 2024:
Under Section 14(g) of the LHWCA (failure to report termination of payments) from $345 to $356;
Under Section 30(e) of the LHWCA (late report of injury or death) from $28,304 to $29,221: and
Under Section 49 (discrimination against employees who bring proceedings) from $2,830 minimum/$14,149 maximum to $2922 minimum/$14,608 maximum.
On February 6, 2024, Judge Sessions of the United States District Court for the District of Vermont agreed to remand the suit brought by the state of Vermont against energy companies in state court in Vermont asserting that the defendants failed to inform consumers about the impacts of fossil fuel products on climate change. The defendants removed the case to federal court, and Judge Sessions rejected all of the bases for federal jurisdiction, including the argument that the suit arose out of operations on the outer Continental Shelf, reasoning that talking about what happens to the environment when fossil fuels are burned is too many steps removed from oil and gas operations on the OCS. See Vermont v. Exxon Mobil Corp., No. 2:21-cv-260, 2024 U.S. Dist. LEXIS 20497 (D. Vt. Feb. 6, 2024).
On February 7, 2024, Judge Conley of the United States District Court for the Western District of Wisconsin held that the insurer for the manufacturer that sold tanks for a dredge on which the paint delaminated when the dredge was exposed to water was not responsible for the claims based on breach of warranty and fraudulent misrepresentation but had to continue to defend the claims based on breach of contract, negligence, and negligent misrepresentation. See Emcasco Insurance Co. v. Northern Metal Fab., Inc., No. 22-cv-443, 2024 U.S. Dist. LEXIS 22435 (W.D. Wis. Feb. 7, 2024).
In our Updates for September 2023, October 2023, January 2024, and February 2024, we reported that after the State of Texas installed buoys on the Rio Grande River near Eagle Pass, Texas, the United States brought suit in the United States District Court for the Western District of Texas under the Rivers and Harbors Appropriation Act of 1899 against Texas and its Governor, Greg Abbott, seeking the removal of the floating barrier. On September 6, 2023, Judge Ezra granted a preliminary injunction, ordering Texas to reposition the buoys and other material comprising the floating barrier to the bank of the Rio Grande on the Texas side of the river. See United States v. Abbott, No. 1:23-cv-853 (W.D. Tex. Sept. 6, 2023). Texas filed a notice of appeal to the Fifth Circuit, and on September 7, 2023, a panel of the Fifth Circuit issued a stay of the order. See United States v. Abbott, No. 23-50632 (5th Cir. Sept. 7, 2023) (per curiam). On December 1, 2023, a divided panel of the Fifth Circuit dissolved the stay and held that the granting of the preliminary injunction was not an abuse of discretion. Writing for the majority of the panel, Judge Douglas held that the Rio Grande River satisfied the broadened definition of navigability for the Government’s regulatory power, rejecting Texas’ argument that the River is not currently capable of interstate commerce for the segment of the River involved in the controversy. Judge Douglas found sufficient evidence of the historical navigability of the River at the location where the floating barrier was installed. Judge Douglas also found sufficient evidence to support the argument of the United States that the barrier was an obstruction to the navigable capacity of the Rio Grande. Finally, Judge Douglas held that the district court had sufficiently considered and rejected Texas’ self-defense argument that it had the constitutional right to declare itself invaded and to protect itself. Judge Willett dissented from Judge Douglas’ rulings on each point. He disagreed that the “sketchy” historical accounts and “historical anecdotes” of activity on the River had any bearing on the analysis of the navigability of this segment. Thus, he addressed the alternative finding of the district judge that the segment of the Rio Grande River was currently navigable, reasoning that “reasonable improvements” could not make it susceptible of commercial use. United States v. Abbott, No. 23-50632, 2023 U.S. App. LEXIS 31841 (5th Cir. Dec. 1, 2023). On January 17, 2024, the full Fifth Circuit granted rehearing en banc, noting that the panel opinion from December 1, 2023 was vacated. See United States v. Abbott, No. 23-50632 (5th Cir. January 17, 2024) (en banc). Two days after the Fifth Circuit granted rehearing en banc, Judge Ezra held a status conference and announced that he would soon try the case. He then set the case for trial on March 19, 2024 with an expedited “draconian discovery and trial timetable,” which persuaded Judge Jones of the Fifth Circuit that “the court determined to rush to trial and, for whatever reason, to parallel this court’s en banc review.” The State of Texas filed an Emergency Motion to Stay Trial Proceedings Pending En Banc Review, and the Fifth Circuit denied the motion, concluding that mandamus was not an appropriate remedy. There were three concurring opinions and two dissenting opinions, including the dissenting opinion of Judge Oldham (with Judges Smith, Ho, Duncan, and Engelhardt), stating: “In tumultuous times, it is particularly important that our Nation’s courts provide calm, orderly, and dispassionate forums for resolving disputes. I would grant mandamus to restore that order to the district court’s proceeding.” See United States v. Abbott, No. 23-50632, 2024 U.S. App. LEXIS 3263 (5th Cir. Feb. 9, 2024) (en banc).
On February 13, 2024, the Federal Maritime Commission agreed that ocean common carrier practices that restrict motor carriers’ choice of chassis providers for port-to-port shipments violate federal law. See Intermodal Motor Carriers Conference v. OCEMA, No. 20-14 (Fed. Mar. Comm’n Feb. 13, 2024).
Opinion Intermodal Motor Carriers
In our December 2023 Update, we noted that a panel of the Fifth Circuit held that the Texas Commission on Environmental Quality acted arbitrarily and capriciously under Texas law by failing to explain why it declined to impose certain emissions limits on a new liquified natural gas plant and export terminal in Port Arthur, Texas that Port Arthur LNG plans to build, as those limits had been previously imposed on Rio Grande LNG. See Port Arthur Community Action Network v. Texas Commission on Environmental Quality, No. 22-60556, 2023 U.S. App. LEXIS 30309 (5th Cir. Nov. 14, 2023) (Graves). On February 16, 2024, the panel withdrew that order and agreed to certify this question to the Texas Supreme Court: “Does the phrase ‘has proven to be operational’ in Texas’s definition of ‘best available control technology’ codified at Section 116.10(1) of the Texas Administrative Code require an air pollution control method to be currently operating under a permit issued by the Texas Commission on Environmental Quality, or does it refer to methods that TCEQ deems to be capable of operating in the future?” See Port Arthur Community Action Network v. Texas Commission on Environmental Quality, No. 22-60556, 2024 U.S. App. LEXIS 3777 (5th Cir. Feb. 16, 2024) (per curiam).
In our August 2023 Update, we reported that a majority of a panel of the Fourth Circuit upheld the decision of the National Labor Relations Board that a contract between the International Longshoremen’s Association and the United States Maritime Alliance (an association of carriers and other employers) that earmarked all container loading and unloading work on the East and Gulf Coasts for union members) and a suit brought by the ILA against the Alliance and its members for damages when ships docked at a South Carolina terminal that used non-union lift operators did not violate the National Labor Relations Act. See South Carolina State Ports Authority v. National Labor Relations Board, No. 23-1059, 2023 U.S. App. LEXIS 19518 (4th Cir. July 28, 2023) (Diaz). The South Carolina State Ports Authority raised secondary boycott issues to the Supreme Court but, on February 20, 2024, the Supreme Court declined to grant a writ of certiorari with respect to these questions:
To increase pressure on an employer with whom it has a labor dispute (a “primary” employer), a union sometimes decides to coerce or threaten “secondary” employers to stop doing business with the primary employer. This union tactic is called a secondary boycott. In the National Labor Relations Act, Congress outlawed this “dangerous practice of unions,” which expands industrial conflicts by involving neutral employers in union disputes with primary employers. Nat’l Woodwork Mfrs. Ass’n v. NLRB, 386 U.S. 612, 627 (1967).
Here, the International Longshoremen’s Association (“ILA”) has a dispute with the South Carolina State Ports Authority (“SCSPA”) over lift-equipment jobs at the Port of Charleston’s new Leatherman Terminal. SCSPA uses state employees not represented by ILA for these jobs, as it has for decades at Charleston’s other terminals. ILA wants these jobs for its members. To get them, ILA filed a $300 million lawsuit, not against SCSPA, but against maritime carriers that called at Leatherman. In conflict with decisions of other courts of appeals and this Court, the Fourth Circuit shielded ILA’s unlawful secondary boycott behind the judicially-created “work preservation” defense, eviscerating the NLRA’s prohibition of this tactic. The questions presented are:
- Whether a union’s unlawful secondary boycott is shielded by the work-preservation defense because the targeted secondary employer could choose to take its business elsewhere and, in that way, can “control” the primary employer’s work assignments.
- Whether a union’s unlawful secondary boycott is shielded by the work-preservation defense even when no bargaining unit jobs are threatened.
See South Carolina State Ports Authority v. National Labor Relations Board, No. 23-325 (U.S. Feb. 20, 2024).
After releasing its order list on February 20, 2024 that included the denial of certiorari in the South Carolina State Ports Authority case, the Supreme Court heard oral argument on the meaning of the exemption in the Federal Arbitration Act for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The Second Circuit held that the petitioners, truck drivers who hauled baked goods to market for the conglomerate that manufactures Wonder Bread, were not exempt from arbitration because they were employed in the bakery industry and not in the transportation industry. The drivers noted that the “First and Seventh Circuits have held that this exemption applies to any member of a class of workers that is engaged in foreign or interstate commerce in the same way as seamen and railroad employees—that is, any worker ‘actively engaged’ in the interstate transportation of goods.” The petitioners contrasted that the Second and Eleventh Circuits have added an additional requirement: “The worker’s employer must also be in the ‘transportation industry.’” The question presented to the Court is: “To be exempt from the Federal Arbitration Act, must a class of workers that is actively engaged in interstate transportation also be employed by a company in the transportation industry?”
See Bissonnette v. LePage Bakeries Park St., No. 23-51.
On February 21, 2024, the Tenth Circuit declined to allow shipowner Asphalt Trader to pierce the corporate veil of charterer Taryn Capital Energy to pursue its sole member Robert Scott Beall to enforce an arbitration award from a failed petroleum shipping deal. See Asphalt Trader Ltd. v. Beall, No. 22-4084, 2024 U.S. App. LEXIS 3932 (10th Cir. Feb. 21, 2024) (Phillips).
On February 22, 2024, Elizabeth Klein, Director of the Bureau of Ocean Energy Management, announced approval of the construction and operations plan for the Empire Wind 1 and 2 facilities off the coast of Long Island, New York.
The long running dispute between ICTSI Oregon and the International Longshore and Warehouse Union over unlawful labor practices has reached a conclusion. In our December 2019 Update, we discussed the “high profile labor dispute that led to the closing of Terminal 6 of the Port of Portland to ocean-going cargo for more than a year.” We advised that a jury in federal court in Oregon found in favor of ICTSI Oregon, Inc. that the International Longshore and Warehouse Union and Local 8 engaged in unlawful labor practices causing damages in the amount of $93,635,000, with 55% attributable to ILWU and 45% attributable to Local 8. In our April 2020 Update we advised that Judge Simon ordered a remittitur to $19,061,248. See ICTSI Oregon, Inc. v. International Longshore and Warehouse Union, No. 3:12-cv-1058 (D. Ore. Mar. 5, 2020). ICTSI rejected the remittitur, and Judge Simon denied the Union’s motion for judgment as a matter of law. Both parties appealed, with the Union challenging the denial of its motion for judgment as a matter of law, and ICTSI challenging the grant of a new trial conditioned on the acceptance of the remittitur. Concluding that it lacked jurisdiction over the appeal, the Ninth Circuit held that “the parties will have to continue their litigation in the district court, at least for now.” ICTSI Oregon, Inc. v. International Longshore and Warehouse Union, Nos. 20-35818, 20-25819, 2022 U.S. App. LEXIS 1279 (9th Cir. Jan. 18, 2022) (O’Scannlain). See February 2022 Update. Facing a retrial on damages, the parties filed cross-motions for partial summary judgment. Judge Simon denied ICTSI’s motion and granted ILWU’s motion and directed the parties on what would be tried in relationship to the findings in the first trial. ICTSI Oregon, Inc. v. International Longshore and Warehouse Union, No. 3:12-cv-1058, 2022 U.S. Dist. LEXIS 205978 (D. Ore. Nov. 14, 2022). See December 2022 Update. After the Union sought bankruptcy, the parties reached a settlement by which the Union paid $20.5 million, and Bankruptcy Judge Blumenstiel agreed to dismiss the bankruptcy on February 22, 2024. See In re International Longshore and Warehouse Union, No. 3:23-bk-30662 (N. D. Cal. Bk. Feb. 22, 2024).
On February 26, 2024, the Fourth Circuit agreed with the remand of suits by the City of Annapolis and Anne Arundel County, Maryland seeking damages against energy companies under Maryland tort law and the Maryland Consumer Protection Act for use and promotion of fossil fuels while knowing, concealing, and obscuring the connection between those products and climate change, rejecting arguments that the claims arose under federal law or operations on the outer Continental Shelf. See Anne Arundel County, Maryland v. BP P.L.C., No. 22-2082, 2024 U.S. App. LEXIS 4337 (4th Cir. Feb. 26, 2024) (Heytens).
On the LHWCA Front . . .
From the federal appellate courts
Eric Jones served in the Army and was diagnosed with post-traumatic stress disorder from his time in combat. He then worked for the Georgia Ports Authority as a ship-to-shore crane operator for 24 years until his employment was terminated in February 2019. For the past three years of his employment, the stress of working under Karl Nell exacerbated Jones’ PTSD, and Jones requested leave in August 2018 under the Family and Medical Leave Act. The policy of the Port Authority required the employee to provide a signed note from the doctor indicating that it was safe for the employee to return to work. Before submitting the letter, Jones requested a transfer to the less stressful environment of the container field. The Port Authority responded that the return-to-work letter would have to list the accommodations he required. Jones submitted a letter on VA letterhead, but it was not signed. The Port Authority terminated his employment based on two deficiencies in the letter, it was not signed, and it did not indicate that the doctor was actually releasing Jones to return to work. Jones brought suit in state court in Chatham County, Georgia against the Port Authority under the Americans with Disabilities Act and Georgia law, and the Port Authority removed the case to federal court. The Port Authority filed a motion for summary judgment, contending that it terminated Jones’ employment for a legitimate, non-discriminatory purpose—failure to provide an adequate return-to-work letter. Judge Baker granted the motion, concluding that Jones failed to establish that the reason for termination was pretextual. The Eleventh Circuit noted that the court was “not concerned with whether a plaintiff’s termination was ‘prudent or fair.’” The issue was “whether unlawful discriminatory animus motivate[d] a challenged employment decision.” Jones argued that the Port Authority could have verified that the letter came from his doctor, so the reason given was pretextual. The problem with that argument was that it did not rebut the fact that the letter was unsigned or that the doctor did not recommend that Jones return to work. Agreeing with Judge Baker, the Eleventh Circuit held that Jones failed to establish a discriminatory animus and affirmed the dismissal of the suit.
David Siver died from asbestos disease that was allegedly caused by exposure to asbestos while he was employed by Kaiser Steel and Kaiser Aluminum. His widow, Ruth, brought a claim for LHWCA benefits against Kaiser, and her adult her son Marvin filed a wrongful death suit in state court on his behalf and on behalf of Ruth and her other adult son, Alton (Ruth signed a power of attorney for Marvin to act on her behalf). Trying to protect her LHWCA benefits from a Section 33(g) bar resulting from settlement of the third-party suit, Ruth executed a disclaimer of any interest in the third-party suit that was not disclosed to the defendants. At the time the suit settled, Ruth was still a party, and the release, signed by Marvin, was on behalf of the decedent’s heirs (Ruth was an heir under California law). Kaiser argued that the settlement (without the required approval from Kaiser) resulted in a bar to Ruth’s recovery under the LHWCA, and Ruth argued that, as she disclaimed recovery and did not recover, there was no bar to her LHWCA claim. After Ruth died, Marvin continued to pursue Ruth’s claim for LHWCA benefits. Administrative Law Judge Clark and the Benefits Review Board held that Ruth was a party to the settlement, both as a named party and as an heir of David under state law. Therefore, they held that Ruth’s claim was barred by Section 33(g). Marvin appealed to the Ninth Circuit, and the court found substantial evidence that Marvin was acting as Ruth’s agent in settling the case, agreeing that the BRB’s interpretation of the requirements of Section 33(g) was reasonable and that it aligned with the statute’s safeguards against double recovery. Therefore, the Ninth Circuit denied the petition for review and affirmed the decision of the BRB.
From the federal district courts
Richard D. Long suffers from mesothelioma that he claims resulted from exposure to asbestos while he worked at shipyards in Portland, Oregon. He brought this suit in the Circuit Court of Multnomah County, Oregon against suppliers of products containing asbestos. Long stipulated that he waived any claim for exposure to asbestos while he worked on Navy ships. Nonetheless, defendant Foster Wheeler removed the case to federal court based on the Federal Officer Removal Statute, arguing that the waiver was ineffective and, alternatively, that the case could be removed based on the original admiralty jurisdiction of the federal court. Long moved to remand the case to state court, and Magistrate Judge Armistead began by noting that the well-pleaded complaint rule did not apply to removal under the Federal Officer Removal Statute. The medical records and testimony of Long demonstrated that he had worked on Navy ships, and Foster Wheeler argued that Long’s asbestos injury was indivisible so that he could not waive claims resulting from some asbestos exposure while asserting claims for other asbestos exposure that contributed to the same injury. Magistrate Judge Armistead disagreed, accepting the waiver and holding that, based on the waiver, Foster Wheeler could not establish the requisite causal nexus between Long’s claims and the actions that Foster Wheeler took under a federal officer’s direction. Magistrate Judge Armistead also rejected removal based on admiralty jurisdiction, stating that the defendants needed an independent basis for federal jurisdiction such as diversity. Consequently, Magistrate Judge Armistead recommended that the case be remanded to state court.
And on the maritime front . . .
From the United States Supreme Court
Raiders Retreat Realty, a Pennsylvania company, insured its yacht RAIDERS with Great Lakes Insurance, headquartered in the United Kingdom, for $550,000. The vessel ran aground and incurred at least $300,000 in damage, but Great Lakes denied the claim on the ground that Raiders misrepresented the vessel’s fire-suppression system’s operating ability, and the policy was void from its inception. Great Lakes brought this action in admiralty in federal court in Pennsylvania, seeking a declaration that the policy was void and that it owed no coverage for the grounding, and Raiders responded with a counterclaim that included several extra-contractual liability claims based on Pennsylvania law. Great Lakes moved for judgment on the pleadings that the extra-contractual claims were not valid under New York law, which was applicable to the policy under a choice-of-law provision. Judge Robreno held that New York law applied and dismissed the extra-contractual claims. Raiders filed an interlocutory admiralty appeal under Section 1292(a)(3) and, writing for the Third Circuit, Judge Ambro held that the interlocutory appeal was proper under Section 1292(a)(3) because the dismissal of the extra-contractual claims determined the rights of the parties on those claims. He then addressed the issue whether to enforce the New York choice-of-law clause and the argument that the principles enunciated by the Supreme Court in the Bremen and Shute cases with respect to forum-selection clauses should be used in determining the validity of choice-of-law provisions in maritime contracts such as the insurance policy on the yacht (the Supreme Court held that forum-selection clauses are facially valid and should be honored unless there is a compelling and countervailing reason rendering enforcement unreasonable, such as when the enforcement would contravene a strong public policy of the forum where the suit is brought). Great Lakes argued that the construct used for forum-selection clauses was “utterly irrelevant” in connection with choice-of-law clauses, and the district court agreed, concluding that public policy of a state where the case was filed could not override the presumptive validity under maritime law of choice-of-law clauses where the chosen forum has a substantial relationship to the parties or the transaction. Judge Ambro disagreed, reasoning that the principle of generally enforcing choice-of-law provisions in marine insurance contracts “is not altogether separate” from the regime for forum-selection clauses. Holding that the framework enunciated in Bremen and Shute extended to the choice-of-law provision in the Great Lakes policy, Judge Ambro remanded the case to the district court to consider whether Pennsylvania has a strong public policy that would be thwarted by application of New York law. See October 2022 Update.
Great Lakes sought certiorari from the Supreme Court, and Justice Kavanaugh wrote the opinion for the unanimous Court, reversing the decision of the Third Circuit. The initial question was whether there is an established federal maritime rule regarding the enforceability of choice-of-law provisions, and he held that there is a longstanding rule that choice-of-law provisions in maritime contracts are presumptively enforceable. Raiders argued that the decision in Wilburn Boat precluded application of the maritime rule, but Justice Kavanaugh disagreed, answering that Wilburn Boat simply applied state law to the breach-of-warranty claim in that case in the absence of an established maritime rule. He added that Wilburn Boat “held only that state law applied as a gap-filler,” and there was no gap in this case in which there is a uniform maritime rule on enforceability of choice-of-law clauses. Justice Kavanaugh specifically rejected the argument that state law should apply in marine insurance cases based on a principle of “insurance exceptionalism.” Justice Kavanaugh did recognize exceptions to the enforceability of choice-of-law provisions, such as when the clause would contravene a controlling federal statute, conflict with established federal maritime policy, or when the parties can furnish no reasonable basis for the chosen jurisdiction. Raiders argued for an exception when enforcing the chosen law would contravene the public policy of the state with the greatest interest in the dispute. Justice Kavanaugh disagreed, stating that this contention was “essentially a repackaged version of its initial argument that the enforceability of the choice-of-law provisions in maritime contracts should be determined by state law.” As “no federal maritime interest favors injecting that kind of disuniformity and unpredictability into maritime commerce,” Justice Kavanaugh held that there was no exception to the presumptive enforceability of the clause.
Although Justice Thomas joined the Court’s opinion in full, he wrote a concurrence to “highlight how Wilburn Boat rests on flawed premises and, more broadly, how the decision is at odds with the fundamental precept of admiralty law.” He explained: “This Court has already retreated from Wilburn Boat’s unsound holding, limiting it to local disputes.” Justice Thomas opined that the Raiders decision “further erodes” the foundation for Wilburn Boat and that “it is not clear what, if anything, is left of Wilburn Boat’s rationale.” He concluded: “Litigants and courts should heed our instruction that general maritime law applies in maritime contract disputes unless they ‘so implicate local interests as to beckon interpretation by state law.’ Wilburn Boat reaches no further.” Thanks to Michael F. Sturley, Fannie Coplin Regents Chair at the University of Texas School of Law, for bringing this decision to our attention.
From the federal appellate courts
Conti, owner of the M/V MSC FLAMINIA, chartered the vessel to Mediterranean Shipping Co., and the vessel carried cargoes for MSC for 12 years, calling at ports around the world, including the Port of New Orleans. In 2012, the vessel called in New Orleans to load three tanks of 80% divinylbenzene. The tanks of cargo exploded thirteen days later while the vessel was transiting the Atlantic Ocean, resulting in the deaths of three members of the crew, damage to cargo on the vessel, and damage to the vessel. The charter party contained a London arbitration clause, and Conti pursued its claims against MSC in a London arbitration that resulted in an award of approximately $200 million. There was also litigation in New York, including Conti’s limitation of liability action. Conti filed a suit in federal court in New Orleans to confirm the arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), and MSC moved to dismiss the action for lack of personal jurisdiction. MSC argued that the underlying litigation was no longer relevant to the question whether the award was enforceable, but Conti argued that the issue was whether it was the beneficiary of an award resulting from the defendant’s forum activities in connection with the claim. After a thorough analysis of the language of the statute implementing the Convention, Judge Barbier concluded that in actions to compel arbitration or confirm arbitration, the court may “look through” the application to the underlying substantive controversy between the parties to determine whether it has personal jurisdiction. As the cargo that exploded was loaded and shipped in New Orleans, Judge Barbier held that Conti’s cause of action related to MSC’s contacts in Louisiana, and that there was personal jurisdiction over MSC to confirm the award. MSC also issued a letter of undertaking in which its insurer agreed to pay Conti any judgment up to $220 million issued by the Eastern District of Louisiana in exchange for Conti’s agreement not to arrest or attach MSC’s vessels or bring any proceeding for the enforcement of the arbitration award in any jurisdiction outside of the English jurisdiction other than the Eastern District of Louisiana. Concluding that the letter of undertaking demonstrated that MSC had consented to the jurisdiction of the Eastern District of Louisiana, Judge Barbier held that MSC had waived any personal jurisdictional defense it may have had to the federal court in Louisiana. See October 2022 Update. Judge Barbier confirmed the arbitration award in favor of Conti and against MSC on November 23, 2022, and MSC filed a notice of appeal to the Fifth Circuit on December 22, 2022
In the litigation brought in New York, Judge Forrest agreed to decide the issues in phases. The first phase determined the causes of the explosion. The second phase addressed liability for cargo loss and damage (the injury and death actions had been settled). The cargo (divinylbenzene or DVB-80) was manufactured by Deltech in its plant in Baton Rouge, Louisiana. The transportation was arranged through Deltech’s regular non-vessel operating common carrier, Stolt. Stolt provided three large shipping tanks (ISO containers) for the cargo and procured shipment on the FLAMINIA, owned by Conti and chartered by MSC. In the Phase I trial, Judge Forrest found that a spark ignited a cloud of vapor rising from the three tanks of DVB-80 that were stored in the hold of the vessel, and that the spark was generated by the efforts of the crew to fight what they perceived to be a fire in the hold. The cloud of vapor was the result of the DVB-80 undergoing a chemical process called auto-polymerization and reaching a thermal runaway. In Phase II, Judge Forrest found Deltech 55% at fault and Stolt 45% at fault, based on strict liability and failure to warn under the Carriage of Goods by Sea Act, and she found that Conti, MSC, and New Orleans Terminal were not liable. In particular, Judge Forrest found greater responsibility on Deltech for authorizing shipment of the DVB-80 from New Orleans in late June (increasing the chance of auto-polymerization) and for filling the ISO containers earlier than necessary for the expected embarkation date, leaving the containers sitting stagnant in the hot New Orleans sun. Judge Forrest found Stolt liable because it possessed extensive information on the heat-sensitive nature of the DVB-80 but failed to share that information with the charterer, MSC, and for its responsibility in the early loading and early transport of the chemical to New Orleans Terminal. Judge Forrest found strict liability against Deltech and Stolt pursuant to Section 4(6) of COGSA, which provides that a shipper of inflammable, explosive, or dangerous goods “shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment” when the carrier does not have knowledge of the “nature and character” of the goods. Judge Forrest imposed strict liability, finding that MSC could not have known that the DVB-80 had been exposed to the specific dangerous conditions that resulted in the explosion. Writing for majority of the Second Circuit, Judge Carney held that the notice threshold for the carrier is “relatively modest” and that notice of “the general dangerousness” of the cargo it agreed to carry can cause the strict liability theory to be unavailable. The evidence established that MSC had experience carrying DVB-80 and had received transport documents warning of the chemical’s heat sensitivity. Judge Carney held that this general knowledge surpassed the low threshold to preclude recovery for strict liability. The appellate court reached a different conclusion with respect to the claim of failure to warn based on Section 4(3) of COGSA that the shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from “any cause without the act, fault, or neglect of the shipper, his agents, or his servants.” Judge Carney explained that a shipper’s failure to adequately inform the carrier of the foreseeable dangers posed by cargo can constitute fault or negligence and give rise to a claim of negligent failure to warn. In this case, the general knowledge and experience of MSC did not save Deltech and Stolt: “But to require MSC to ‘associate the chemical properties it may know somewhere within its organization with a shipment of three discrete tanks’ would unreasonably allocate risk and burden among the parties—particularly when critical characteristics of those specific tanks were out of the ordinary.” Judge Carney added that the Master Bill of Lading Instructions (calling for above-deck temperature monitoring because of heat sensitivity) was insufficient to place MSC on reasonable notice of the dangerousness of the cargo. Turning to the issue of the finding that MSC was not at fault, Judge Carney cited the carrier’s duty under COGSA to “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.” She concluded that, absent a booking request for on-deck stowage and temperature monitoring, the stowage of the tanks below deck was reasonable and foreseeable to Stolt and Deltech. She also affirmed the findings that the crew were not negligent and that New Orleans Terminal was not at fault (no special handling instructions for the cargo were provided to the terminal, and it handled the cargo in accordance with its published practices). Finally, pursuant to the terms of the Sea Waybills, Stolt and Deltech were required to indemnify MSC and Conti for their losses arising from dangerous or hazardous goods. Therefore, Judge Carney agreed with the district court that Stolt and Deltech were required to indemnify MSC and Conti. Judge Menashi dissented from the rulings that MSC was not negligent and that MSC was entitled to full indemnity from Deltech and Stolt. See August 2023 Update.
Meanwhile, MSC sought to limit its liability in litigation in London, pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims. The admiralty judge, Andrew Baker, held that MSC was not entitled to limit its liability to Conti because Conti’s claims were not within the scope of the Convention. Speaking for the Court of Appeal, Lord Justice Males agreed that MSC was not entitled to limit its liability, and the appeal was dismissed. MSC Mediterranean Shipping Co. v. Stolt Tank Containers B.V., No. CA-2022-002293, [2023] EWCA Civ 1007 (Sept. 1, 2023). See October 2023 Update.
While the litigation was playing out in New York and London, MSC appealed to the Fifth Circuit from the confirmation of the arbitration award in favor of Conti by Judge Barbier in the United States District Court for the Eastern District of Louisiana. MSC argued that the federal court in Louisiana lacked personal jurisdiction over MSC. The Fifth Circuit agreed with Judge Barbier that, in deciding whether the court has personal jurisdiction to confirm an award under the New York Convention, the court should consider contacts related to the underlying dispute and not just contacts related to the arbitration. Writing for the Fifth Circuit, Judge Duncan disagreed that Judge Barbier should have confined his evaluation of jurisdiction to contacts related to MSC’s refusal to pay the arbitral award, stating that the “argument has been rejected by every circuit to have considered it.” Although MSC argued that the circuit decisions had been overridden by the recent decision of the Supreme Court in Badgerow, Judge Duncan distinguished that case because it involved subject matter jurisdiction, not personal jurisdiction. Judge Duncan then turned to MSC’s appeal of the decision of Judge Barbier that MSC waived its personal jurisdiction defense by its insurer’s issuance of the letter of undertaking. Unlike letters of undertaking in which the underwriters agree to appear in the suit and pay any final judgment (which waives objections to personal jurisdiction), the letter in this case was given without prejudice to any and all rights or defenses MSC may have in the proceeding. As MSC asserted a defense of lack of personal jurisdiction, Judge Duncan stated: “That should end the waiver inquiry.” Finally, MSC argued that, if it was proper to consider contacts with Louisiana beyond the arbitration dispute, Judge Barbier erred in finding personal jurisdiction based on the fact that the chemical was loaded in tanks and shipped from New Orleans. Judge Duncan noted that the contact with New Orleans was by MSC USA (and third parties) and not its parent, MSC. Conti did not show that MSC and MSC USA are not distinct corporate entities or that MSC exercised complete authority over MSC USA’s operations. The only contact involving MSC was in Antwerp, Belgium, where MSC approved the booking. As the contacts with Louisiana did not arise from MSC’s own deliberate activities and instead arose from the contacts of others that were not attributable to MSC, the Fifth Circuit reversed the confirmation award and remanded the case with instructions to dismiss the suit for lack of personal jurisdiction. On February 26, 2024, the panel denied Conti’s petition for rehearing.
Carelyn Fylling fell while boarding the HARMONY OF THE SEAS through the entranceway on Deck 5. The cruise line moved for summary judgment on the basis that it had no notice of a dangerous condition as there was no history of falls at the entranceway to the ship. However, there were signs and cones on either side of the doorway saying, “caution, watch your step.” As the Eleventh Circuit has explained that signs warning about a condition establish notice to the cruise line, Magistrate Judge Otazo-Reyes recommended that the summary judgment be denied on the defense of lack of notice. Asserting that third parties were responsible for the primary design of the entranceway, the cruise line moved for summary judgment on the passenger’s negligent design theory. However, there was evidence that the cruise line was involved in the design and approval of the design of the entranceway. Therefore, Magistrate Judge Otazo-Reyes recommended that the cruise line’s motion for summary judgment be denied with respect to negligent design. See January 2020 Update.
Judge Martinez conducted a jury trial, and the jury found negligence of Fylling (90%) and the cruise line (10%), awarding $750,000 in non-economic damages. Judge Martinez entered a judgment in favor of Fylling in the amount of $75,000, and Fylling appealed, arguing that Judge Martinez’ voir dire questioning was insufficient to reveal the biases of the prospective jurors and that the judge abused his discretion when he declined to excuse (or individually question) a juror after discovering a family connection between the juror and the cruise line. During the voir dire, Judge Martinez asked the jurors if there was any reason why they could not render a fair and impartial verdict, and one juror advised that he was an investor in the cruise line. Judge Martinez excused the juror. He did not ask a question proposed by the cruise line about whether the prospective jurors had any relatives who worked for a cruise line. Eight jurors were selected. After opening statements, Judge Martinez informed the parties that one of the jurors had told the courtroom deputy that her niece worked for the cruise line. Fylling’s attorney suggested that the juror should be excused, but Judge Martinez advised that he would wait until the end of the case to see if the juror could be excused as an alternate. After the completion of a ten-day trial, Judge Martinez informed the parties that he believed the juror was fit to deliberate as she had answered that she could be fair and impartial, observing that Fylling had used all of her peremptory challenges long before they reached this juror. The cruise line argued that the broad questions during voir dire reasonably assured the impartiality of the juror, but the Eleventh Circuit disagreed. Writing for the appellate court, Judge Lagoa reasoned that the court has the duty to develop facts fully enough so that it can make an informed judgment as to the actual bias of the juror. Thus, when the juror revealed the family connection, the court was required to develop a record that was sufficient to determine whether the juror was actually or impliedly biased. She concluded that permitting the juror to remain on the jury without questioning her further was an abuse of discretion. The appellate court also rejected the argument that the district court could reasonably expect the juror to be impartial because Fylling was not seeking a verdict large enough to put the cruise line out of business or cause the cruise line to fire the juror’s niece. Judge Lagoa responded that this speculation was not a substitute for a complete record. Consequently, the Eleventh Circuit reversed the judgment and remanded the case for a new trial.
Chadwick L. Barrington claims that he was exposed to crude oil and dispersants while performing beach cleanup work in Florida and Alabama in connection with the spill from the Macondo/DEEPWATER HORIZON blowout. He brought this opt-out claim against BP for medical conditions he attributed to exposure to the oil and dispersants, and he presented the expert report of Dr. Jerald Cook to establish causation. BP moved to exclude the opinion of Dr. Cook, and Barrington argued that Dr. Cook’s opinion should be allowed as a sanction against BP for spoliation of evidence of exposure. Judge Fallon rejected the arguments and granted summary judgment to BP for lack of evidence of causation. See April 2023 Update.
Barrington appealed to the Fifth Circuit, which noted that its decision in Prest v. BP (November 2023 Update) was “dispositive of this appeal”). The court of appeals recognized that the plaintiffs were required to show “[s]cientific knowledge of the harmful level of a chemical” to establish general causation. Barrington argued that Judge Fallon should not have “mechanically applied Fifth Circuit jurisprudence” and instead should have considered BP’s breach of its duty to protect the workers and its loss of valuable monitoring data that would support Barrington’s claim. The Fifth Circuit answered that it would actually have been error if Judge Fallon had not applied the evidentiary standard for toxic tort cases and had instead created a new standard. The appellate court also rejected the “flawed understanding of the general causation requirement” that BP’s failure to conduct biomonitoring and preserve that evidence made it impossible for Barrington to quantify his exposure as that evidence was related to specific causation and not general causation. As Barrington did not provide expert evidence to carry his burden on general causation, the Fifth Circuit affirmed the summary judgment without reaching Barrington’s argument that temporary symptoms did not require proof of general causation (Barrington did not present that argument in the district court).
In our March 2023 Update we discussed the decision of Judge Zilly from the Western District of Washington in Powers v. United States, finding a fact question that was sufficient to allow a suit to proceed against the United States based on a “worsened the situation” theory (that the Coast Guard’s decision that no boat was in distress terminated rescue efforts of other potential rescuers). Accordingly, Judge Zilly declined to dismiss the suit against the United States for the delay in rescuing the operator of a capsized boat. In our April 2023 Update we noted that Judge Williams from the District of New Jersey reached a different result in a case involving the negligence of the Coast Guard with respect to rescue efforts from a capsized vessel in In re Avena, No. 1:21-cv-515 (D.N.J. Nov. 14, 2022). The plaintiffs in the Avena action then filed an appeal to the Third Circuit.
Adrian Avena owned a commercial fishing vessel, the CONCH’RD, and used the vessel (through his company AA Commercial) to fish for conch. Avena was fishing with his deckhand, Aaron Greenberg, 12 miles off the coast of Cape May, New Jersey, in December 2020 when the CONCH’RD partially capsized, and Avena and Greenberg were thrown into the freezing waters. The Emergency Position Indicating Radio Beacon (EPIRB) was registered to a vessel owned by Avena’s father (the GOLD RUSH II), and the distress signal sent to the Coast Guard indicated that the GOLD RUSH II was in distress. The Coast Guard broadcast to boats in the area that the GOLD RUSH II was in distress, and it also called Avena’s father, who informed the Coast Guard that the EPIRB was on Avena’s vessel (although there was a dispute whether he informed the Coast Guard about the name of the vessel). After a second call, Avena’s father told the Coast Guard that the name of the vessel was the CONCH’RD, and the Coast Guard corrected its broadcast to mariners about the vessel in distress. A boat sent by Avena’s father and a Coast Guard helicopter arrived at the scene an hour and a half after the initial signal, and the boat pulled Avena from the water. However, Greenberg had drowned about 20 minutes earlier. The Coast Guard vessel arrived about thirty minutes later. Greenberg’s estate and Avena filed tort claims against the United States in federal court in New Jersey, alleging that it negligently undertook the search-and-rescue mission. They argued that the Coast Guard was negligent for failing to change the notice after the first call with Avena’s father in which he asserted that he had told the Coast Guard that the vessel in distress was the CONCH’RD, and that it was negligent in failing to deploy a helicopter that was already in the air carrying out unrelated law enforcement activities. Judge Williams granted the United States’ motion to dismiss for lack of subject matter jurisdiction, concluding that the suit fell outside the waiver of sovereign immunity in the Suits in Admiralty Act (reasoning that the plaintiffs could not maintain a negligence action against a similarly situated private person). Judge Williams held that the purported acts of negligence asserted against the Coast Guard occurred before the Coast Guard began its search-and-rescue-mission, so it did not yet have a duty to act reasonably. The plaintiffs filed an interlocutory appeal under Section 1292(a)(3), and, writing for the Third Circuit, Judge Porter began by noting that the Coast Guard “does not have an affirmative duty to undertake any rescue operations.” However, once the Coast Guard undertakes a rescue operation, it must act with reasonable care. Judge Porter explained that the actions of the Coast Guard are judged according to the “Good Samaritan” Doctrine. Thus, the Coast Guard can be liable “for any failure to exercise reasonable care if it ‘increase[d] the risk of [physical harm]’ or ‘[physical] harm [was] suffered because of [the person in need of rescue’s] reliance upon the undertaking.” In this case, the plaintiffs relied on the theory that the Coast Guard increased the risk of physical harm. Judge Porter noted that the Third Circuit had not previously addressed when a search-and-rescue mission begins, but he agreed with the Fourth Circuit decision that the issue is “fact laden and evades a rule as a matter of law.” Consequently, Judge Porter held that Judge Williams had erred in ruling on a motion to dismiss that the Coast Guard did not have a duty to act reasonably before its alleged breach. However, Judge Porter did not believe that the plaintiffs had pleaded how the Coast Guard’s failure to exercise reasonable care increased the risk of harm to Greenberg and Avena. The plaintiffs failed to show how the risk was increased over what would have occurred had the Coast Guard not engaged in the undertaking at all and not over what would have happened had the Coast Guard not been negligent. Judge Porter addressed each of the allegations. The plaintiffs argued that the Coast Guard failed to update the name of the vessel and that if the Coast Guard had not erred, fishermen working in the area would have gone to the aid of the vessel. This claim failed because the court was required to compare what would have happened if the Coast Guard had done nothing, and doing nothing would have resulted in the fisherman not looking for the CONCH’RD. Similarly, the allegation that the Coast Guard should have dispatched the closer helicopter that would have arrived at the scene sooner failed because had the Coast Guard not engaged in the undertaking, no helicopter would have arrived. Finally, Judge Porter noted that the plaintiffs sought to amend their complaint to address the increased risk of harm, but he agreed with Judge Williams that the amendment would have been futile.
This case presented one of three opinions in the June 2022 Update addressing waivers of liability, and the district judge reached a different conclusion than the judges in the other two cases (Boldt and Lasky). Maureen Anne Ehart and her husband, William McMein Ehart, Jr., went on a chartered scuba/snorkeling tour to Molokini Crater off the south coast of Maui, Hawaii, on the vessel DAUNTLESS, owned by Lahaina Divers. Maureen disappeared while snorkeling and is presumed to have died. William brought this wrongful death action in federal court in Hawaii against the owner of the vessel, the captain of the vessel (Cory Dam), and scuba instructors Kaitlin Miller and Julianne Cricchio. The scuba instructors moved to dismiss the complaint on the ground that they did not owe a duty to Maureen, and William moved to strike the affirmative defenses of waiver and release that were asserted based on the document signed by the Eharts before the tour (releasing the defendants from negligence in connection with the diving/snorkeling). Applying admiralty law, Judge Mollway held that the complaint plausibly alleged that the instructors breached a duty of care with respect to planning, organizing, and conducting the tour, failing to use appropriate care in adopting, implementing, and enforcing procedures for supervising the snorkeling activities and rescue procedures, and failing to timely and effectively conduct a rescue effort. The waiver/release argument was based on the provision of the Shipowner’s Limitation of Liability Act that prohibits waivers of negligence in the transportation of passengers between ports in the United States or between a port in the United States and a foreign port. The defendants cited numerous cases, including decisions from the Eleventh Circuit, enforcing similar waivers for accidents involving recreational ocean sporting activities (reasoning that Congress was not thinking of dive boats when it enacted the provision). Judge Mollway disagreed, reasoning that there was no reason to differentiate waivers for passengers who drown while being transported to a dive spot from passengers who drown during diving after reaching the dive spot. As Maureen was transported between locations in the United States, Judge Mollway struck the waiver/release defense as violative of the Limitation Act and, therefore, did not have to decide whether a Hawaii statute also voided the release. See June 2022 Update
The defendants moved for reconsideration and, alternatively, for certification for an interlocutory appeal of the decision striking the waiver/release defense. Judge Mollway did not consider the motion to present anything new and declined reconsideration. The instructors argued that an interlocutory appeal would materially advance the litigation; however, Judge Mollway disagreed, reasoning that neither maritime law nor state law permits a waiver to shield a party from gross negligence. Thus, a trial would still be necessary for the gross negligence claim with overlapping evidence on the negligence and gross negligence. As there will be findings as to both negligence and gross negligence, if an appellate court upholds the waiver/release, the court can simply disregard that portion of the judgment on negligence. She also rejected the argument that the fact that the insurance policy was being depleted by defense costs supported an appeal, stating that the interlocutory appeal might actually increase the defense costs as further litigation could still be necessary. Accordingly, she declined to certify the order for an interlocutory appeal. See August 2022 Update.
Although Judge Mollway declined to certify the case for an interlocutory appeal, the defendants proceeded with an interlocutory appeal to the Ninth Circuit based on Section 1292(a)(3). Writing for the majority of the panel, Judge Bea held that the appellate court had jurisdiction “to review the enforceability of an affirmative defense based on the existence of a maritime contract limiting liability.” He then considered the decision of Judge Mollway interpreting the provision in the Limitation Act that prohibits limitations on liability for the owner, master, manager, or agent of “a vessel transporting passengers between ports in the United States, or between a port in the United States and a port in a foreign country.” He reasoned that the “plain meaning” of the phrase “transporting passengers between ports” requires transporting passengers from one port to another, not “transporting passengers away from and back to a single port.” The use of the word “ports” in both the domestic and foreign portions of the provision indicated that the word was not used to denote a singular port. As the DAUNTLESS did not transport passengers between two ports and instead carried them from and back to a single port, the statute did not apply (the plaintiff forfeited the argument that there was a fact issue whether the conditions for waiver under Hawaii law were satisfied because the issue was not raised in the answering brief). Consequently, Judge Bea reversed Judge Mollway’s order striking the affirmative defense of waiver/release. Judge Collins dissented, reasoning that the decision on waiver/release only eliminated the claims for negligence but leaving the plaintiff with a gross negligence claim, and allowing the appeal of would blow “a gaping hole in the final judgment rule in admiralty cases.” Judge Collins also disagreed with the majority’s interpretation of the Limitation Act, agreeing with Judge Mollway that the DAUNTLESS was transporting passengers “from Lahaina (a ‘port[] in the United States’), out into the water, and then back to Lahaina (again, a ‘port[] in the United States’).” Judge Collins did not believe that the statute requires transportation between different ports in the United States. He then considered the alternative argument from the defendants that the statute did not apply to a liability waiver for activities that did not occur on the ship, such as snorkeling or scuba diving, but declined to express an opinion on the issue. As he believed the court lacked appellate jurisdiction, he thought it was appropriate to give his opinion on the merits (statute did not apply to transportation to and from one port) in response to the majority’s holding. As the majority did not have to reach the application of the statute to recreational activities that did not occur on the vessel, Judge Collins declined to discuss an issue that the majority did not reach.
Exist, a nationwide wholesaler of apparel, sells its line of clothing to large retailers throughout the United States. It obtained a Marine Cargo Policy with Starr Indemnity that includes a Warehouse/Processing Endorsement covering goods in stores or warehouses to which the Assured extends approval. This litigation involves two shipments. One shipment involved apparel that was carried aboard the MSC ISHYKA from Pakistan, trans-shipped to the MSC SOFIA PAZ, and transported from Miami to Fort Lauderdale by truck. The goods were stolen from trailers in the outside yard of Exist’s warehouse in Fort Lauderdale. The goods were eventually recovered without sustaining any damage, but Exist rejected their return. Another shipment involved clothing shipped from India through a United Parcel Service facility in Germany that was rejected by Exist when the clothing arrived in Fort Lauderdale because the boxes had water damage. Starr Indemnity declined to pay the claims and brought this action in federal court in New York, seeking a declaratory judgment that its denials were proper. Exist moved to dismiss the suit, arguing that the suit was not appropriate for a declaratory judgment action as it was “in the form of an affirmative defense to a breach of contract action.” Judge Liman recognized that anticipatory judgments of non-liability are appropriate where they would adjudicate “claims asserting unaccrued or undefined rights or obligations arising under contractual relations.” He reasoned that where the obligation is ongoing or where the full value of a claim has not yet been accrued, a declaratory judgment action “pursues a useful forward-looking function. Both the insured and the insurer can adjust conduct going forward to limit or eliminate any future damages.” However, Judge Liman distinguished the situation where the suit “seeks solely to determine whether the insurer is liable for losses already accrued and there is no threat of future damages,” where “the action ceases to have a forward-looking function impacting intended future conduct.” He added that allowing the suit in this case would allow the insurer “to beat the insured to the courthouse in every case and invoke the general presumption in favor of the first-filed action.” In conclusion, Judge Liman believed that Starr’s action was entirely based on past acts, and it failed “to articulate the need for prospective relief.” Consequently, he dismissed the suit without prejudice.
Starr appealed to the Second Circuit, which reviewed the dismissal in the context of the “broad discretion” of the district court to decline jurisdiction in a declaratory judgment suit. The Second Circuit agreed that the district judge was entitled to conclude that the suit was “procedural fencing or a race to res judicata,” and that the suit “served no ‘useful purpose’ in that it was not necessary to ‘finalize the controversy and offer relief from uncertainty.’” The court added: “Liability for past damages can be addressed just as easily in an ordinary suit for breach of contract and, thus, an action for declaratory judgment yields no incremental benefit.” Accordingly, the Second Circuit affirmed the dismissal.
Michael Dorris, Jr., Christina Dorris, Jennifer Tressler, and twelve minors rented a 22-foot pontoon boat from Under the Bridge Watersports for pleasure cruising and tubing on the Isle of Wight Bay, a coastal bay in Maryland. Prior to boarding the vessel, the adults signed a Participant Agreement by which they released Under the Bridge for any claims arising from the activity, including negligent acts or omissions of Under the Bridge. They also signed a portion of the Agreement by which they agreed to indemnify Under the Bridge for any claims on behalf of the minors. The vessel’s capacity plate stated that it could carry 16 people or 2,270 pounds, and Under the Bridge selected the vessel based on the number of guests (15) without considering their weight. Under the Bridge’s dockhand gave the guests instructions on navigation and safety and instructed them on “trimming” the vessel in the event the vessel became lodged on a sandbar (turn off the engine, lift the propeller, push the vessel off the sandbar, and restart the engine with the propeller down). Michael Dorris sailed the vessel into Chesapeake Bay, and the vessel became lodged on a sandbar. The passengers were unable, however, to power the vessel after they freed it from the sandbar and the vessel became caught in a strong current that pushed the vessel into a bridge. The passengers went overboard, but all were eventually rescued by the Coast Guard. Under the Bridge brought this limitation action in federal court in Maryland, and the passengers brought claims in the limitation action. They claimed that the vessel became stuck on the sandbar because it was overloaded and that the owner was negligent with respect to the mechanical failure in the trim mechanism. Under the Bridge and the claimants filed motions for summary judgment, and the claimants based their arguments on the opinion of Stephen B. Mason (who handles insurance claims and performs risk inspections for major watercraft insurance carriers). Mason opined that the vessel was overloaded for normal use and that the overloading, coupled with the mechanical failure, caused the accident. He testified that the failure of the trim mechanism would have left the vessel just as much at the mercy of the current with one passenger as it would with 15 passengers and that he did not have an opinion why the trim mechanism failed (Judge Russell found it notable that the Coast Guard Report stated that the trim mechanism was found in the down position after the incident and the investigation revealed that it was fully functional). Turning to the two allegations for fault, Judge Russell held that the claimants could not successfully argue that the owner was liable for negligence based on the alleged mechanical failure because their expert testified that he did not know what caused the failure and the failure could have occurred without any negligence on the part of the owner. That conclusion then doomed the theory of negligence for overloading the vessel because the expert testified that the vessel would have been equally at the mercy of the current if there were one person or 15 on the boat. Thus, the claimants could not demonstrate that the overweight condition was the proximate cause of the incident. Judge Russell also considered the owner’s argument that the passengers were barred by the release/indemnity in the Participant Agreement. He reasoned that exculpatory clauses and indemnity agreements are enforceable under both maritime law and Maryland law and that the provisions in the Participant Agreement were unambiguous and understandable, clearly providing for the release of liability for the negligence of the owner. Although the claimants argued that the clause should be unenforceable because the owner was grossly negligent, Judge Russell held that the claimants could not satisfy the more relaxed standard for simple negligence. Finally, Judge Russell held that the indemnity provision in the Participant Agreement was valid and that the adult claimants had to indemnify Under the Bridge for its attorney fees and costs to enforce the Agreement. Accordingly, Judge Russell granted summary judgment to Under the Bridge and denied summary judgment to the passengers. See April 2023 Update.
The claimants appealed to the Fourth Circuit, raising arguments based on res ipsa loquitur, spoliation, negligence per se, and unconscionability that they did not raise in the district court. Based on a fundamental error standard, the Fourth Circuit affirmed Judge Russell’s conclusions on the liability of Under the Bridge and that the provisions of the Participant Agreement waived any claims the claimants had against Under the Bridge. The claimants challenged the award of attorney fees because the agreement provided that Under the Bridge could recover fees if it was “required to incur attorney’s fees and costs to enforce this agreement.” The claimants argued that Under the Bridge was not “required” to file the limitation action, but, writing for the Fourth Circuit, Judge Heytens disagreed. He reasoned: “Had UTB allowed the statutory six-month window to pass without initiating this litigation, it could have lost the ability to contest a challenge to the Act’s coverage or to have the matter litigated in a federal forum.” Once it filed the limitation action, the claimants filed claims seeking almost a million dollars. Under the Bridge faced significant liability and was entitled to indemnity for its fees and costs to enforce the provisions of the agreement. Thanks to David A. Skomba with Franklin & Prokopik in Baltimore, Maryland for bringing this opinion to our attention.
From the federal district courts
Cliff’s New Marina brought suit against Faith C. Archuleta in the Superior Court of Sacramento County, California, alleging violation of the terms of the rental agreement for a slip on the Sacramento River. Archuleta removed the case to federal court based on federal question, asserting that the court had admiralty jurisdiction because the action involved a floating house located on the Sacramento River such that maritime law was necessarily implicated by the complaint. Judge Calabretta disagreed, reasoning that the complaint made no reference to a boat [although the complaint attached the lease that provided for lease of the slip to the owner of the boat, specifically referencing the Aquatic 1967 37’, Registration Number 8039 EF]. As Judge Calabretta considered the complaint to only allege unlawful detainer of real property at Slip No. C-4, he held that the complaint alleged no claim under maritime law and there was no federal jurisdiction over the action. Therefore, he remanded the case to state court.
Nicholas Reed Magee was employed by Florida Marine as a deckhand on its vessel M/V JOHN PASENTINE II. He fell into the Ohio River near Catlettsburg, Kentucky while traversing a barge and dock to unload material from the barge. Magee brought suit against Florida Marine in federal court in Louisiana, and Florida Marine brought a third-party claim against McNational, asserting that McNational conducts business through several entities, including the owner of the facility in Kentucky where the injury occurred and a company in Louisiana. Florida Marine pleaded that McNational was liable to Magee and that it was required to reimburse Florida Marine for the maintenance and cure it paid to Magee. McNational moved to dismiss the third-party action for lack of personal jurisdiction, and Florida Marine responded that the Louisiana court had general jurisdiction over McNational because of the contacts with Louisiana of its subsidiaries. Thus, Florida Marine argued that the subsidiaries were alter egos of McNational. McNational owned 100% of the stock of one of the subsidiaries and indirectly owned 100% of the stock of the other, and the officers and directors of the companies are the same. The accounting systems of the entities are supervised by the same Director of Finance for McNational, and the subsidiaries have access to a consolidated line of credit. Judge Papillion considered the evidence presented and concluded that McNational had control over general policy, but the subsidiaries had control over their respective daily operations. The subsidiaries maintained a degree of corporate separation that was “more than superficial.” Accordingly, Judge Papillion did not find McNational to be an alter ego of the subsidiaries. And, as McNational did not have contacts on its own with Louisiana, Judge Papillion dismissed the third-party action against McNational for lack of personal jurisdiction (he also rejected the argument that McNational had waived its jurisdictional objection because it had failed to raise the objection in a prior, unrelated suit, noting that the failure to raise the objection did not constitute “a permanent waiver of the objection in every future matter brought against the entity in that court”).
William Austin, III, employed by a catering company to work on the dredging vessel W308 RS WEEKS, was injured while disembarking the vessel and brought this suit against his employer, Sontheimer Offshore, and the owner of the dredge, Weeks Marine, under the Jones Act and general maritime law. Austin alleged that Sontheimer had a duty to provide him with a safe place to work (a safe method of egress) and a seaworthy vessel. Sontheimer moved for summary judgment, arguing that, under Fifth Circuit authority, “the Jones Act employer must have notice and the opportunity to correct an unsafe condition on a third party’s vessel before liability attaches” and that Austin had not alleged that Sontheimer had actual or constructive notice of the alleged unsafe disembarkation conditions or an opportunity to correct them. Judge Africk agreed that Austin had not alleged notice or the opportunity to correct the condition, and he granted summary judgment on the Jones Act claim. With respect to unseaworthiness, Sontheimer did not own or operate the vessel, and Judge Africk granted summary judgment to Sontheimer.
Weeks Marine moved to exclude the opinions of Austin’s liability expert, Robert E. Borison, asserting that his opinions involve common sense matters which are not based on his expertise, that his opinions invade the province of the fact finder, and his opinions involve conclusions of law. Weeks Marine cited a decision excluding Borison’s opinions, but Judge Africk distinguished that conclusion, reasoning that Borison’s opinion that Weeks Marine violated health and safety requirements (by failing to provide safe access because of the failure to provide a ladder) was not a common-sense issue with which the court was readily familiar. Judge Africk also disagreed with the objection that the opinion was based on incomplete analysis (because Borison failed to address several facts), answering that this objection was properly addressed through cross-examination and not exclusion. Judge Africk rejected the argument that Borison’s statements that Weeks’ supervisors “failed to install, or request to install, a gangway” and that the captains should have offered certain instructions were legal conclusions, deferring that decision until trial. Finally, Judge Africk declined to strike a supplemental report provided by Borison, as the court granted Weeks an extension of time to provide a reply to the supplemental report.
Naval Logistics, d/b/a Middle Point Marina, entered into an agreement with JSO Marine, owner of a 58’ MONTERY MOTOR VESSEL, to store the vessel and to estimate the cost of repairing and refitting the vessel. JSO Marine did not approve the estimates and did not remove the vessel from the shipyard, and the shipyard brought this suit in federal court in Florida against the vessel, in rem, seeking to foreclose on a lien for necessaries and asserting claims for breach of contract and unjust enrichment. The vessel was arrested, and neither JSO Marine nor the prior owner of the vessel made a claim to the vessel. Naval Logistics moved for a default judgment and sale of the vessel, and Magistrate Judge Becerra recommended that judgment be entered on the claim for a maritime lien for the storage charges, concluding that the shipyard had established that the services were necessaries. However, Magistrate Judge Becerra held that the shipyard was not entitled to a judgment on the claims for breach of contract and unjust enrichment, stating that the shipyard had not cited any authority to support the conclusion that a claim of breach of contract or unjust enrichment could be asserted against the vessel in the absence of its owner. Nonetheless, Judge Becerra recommended that Naval Logistics be awarded the storage charges together with custodia legis expenses, that the vessel be sold, and that Naval Logistics be permitted to present a credit bid for its judgment.
Francesco DiStefano brought this action seeking to limit liability in connection with an allision involving his 39-foot recreational vessel when the vessel was making a turn from the Peconic River into James Creek. Citing the Second Circuit’s decision in In re Bensch, the claimants moved to dismiss the limitation complaint for failing to satisfy the plausibility standard for pleadings enunciated by the Supreme Court in the Twombly and Iqbal decisions. DiStefano responded that motion should be denied because the claimants had already answered the limitation complaint and because the complaint was filed prior to the Second Circuit’s application of Twombly/Iqbal to limitation complaints in Bensch. Judge Hurley disagreed and ordered DiStefano to replead the complaint. See April 2022 Update.
One of the claimants in the limitation action, the Town of Southold, filed a motion to dismiss the amended complaint, arguing that DiStefano did not allege a plausible factual scenario in which he did not have some personal responsibility for the accident. DiStefano identified two factors that caused the allision—improper maintenance of the autopilot on the vessel and/or removal or improper maintenance of navigation aids by the Town of Southold. Judge Merchant noted that as this case arose from an allision, DiStefano had to rebut the inference of negligence on his part; however, the failure of the autopilot alone, in the absence of some fault on the part of DiStefano, should not have resulted in the allision. Similarly, the failure to maintain the navigational aids did not immunize DiStefano from negligence, as a “prudent mariner must rely not completely upon the position or operation of floating aids to navigation.” Thus, DiStefano did not allege sufficient facts to overcome the inference of negligence, and Judge Merchant dismissed the amended complaint with leave to file a second amended complaint.
Edmond Tausch, IV, is the owner and operator of the 90’ motor yacht, M/Y PENSEES, which struck a submerged piling near the Corpus Christi Ship Channel and Port Aransas City Harbor. Tausch brought this suit in federal court in Texas against Derrick Construction Co. based on admiralty jurisdiction, alleging that Derrick failed to remove the obstruction as part of a project for which Derrick was hired by Port of Corpus Christi Authority (involving remains of abandoned docks on property owned and under the control of the Port Authority). In an amended complaint, Tausch added the Port Authority as a defendant, arguing that it was notified by the Coast Guard that it was required to mark the obstruction until it was removed, and that it had failed to do either. The Port Authority moved to dismiss the claims for lack of subject matter jurisdiction on the ground that it was immune from tort suits under the Texas Tort Claims Act. Tausch responded that this case involved an admiralty claim, that the regulation of submerged obstructions is regulated by federal law, and that the Port Authority waived sovereign immunity when it entered a field regulated by federal statute. Magistrate Judge Libby disagreed, noting that the implied waiver of sovereign immunity had been overturned by the Supreme Court in 1999 and adding that both the Fifth Circuit and Texas Supreme Court had recognized governmental immunity in maritime cases. The only remaining issue was whether the waiver of sovereign immunity in the Texas statute applied (waiving immunity for a government employee’s negligent operation of a motor vehicle). Although the boat might be considered a motor vehicle, the vessel was not being operated by a government employee. Accordingly, Magistrate Judge Libby recommended that the suit against the Port Authority be dismissed for lack of subject matter jurisdiction.
Tausch appealed the recommendation for dismissal to Judge Ramos, arguing first that sovereign immunity was only applicable if the Port Authority was an arm of the State and that the Magistrate Judge failed to consider the six factors to make that determination. Judge Ramos noted that Tausch had not raised that argument in its response to the motion to dismiss and that the argument was therefore waived. However, Judge Ramos noted that the Fifth Circuit had called into question prior authority granting immunity to a port authority. Judge Ramos then addressed Tausch’s argument that the state’s sovereign immunity was impliedly negated by the federal interest in uniformity of admiralty law. Although Tausch cited additional cases for the argument, Judge Ramos agreed with Magistrate Judge Libby that admiralty did not afford an exception to sovereign immunity. Consequently, she held that Tausch’s waiver of immunity argument did not apply in the event the Port Authority demonstrates that it is entitled to Eleventh Amendment immunity as an arm of the State.
The Army Corps of Engineers leased Rayland Marina on the Ohio River to Rick and Rachelle Dement. That lease provided that the Dements could operate the marina only for public recreational purposes. Shelly & Sands, which operates property next to the marina, has received commercial deliveries that block the entrance to the marina, allegedly interfering with the Dements’ relationship with their customers and with the Corps of Engineers. Shelly & Sands brought this action in federal court in Ohio against the Dements and the Army Corps of Engineers, alleging breach of contract and public and private nuisance. The Dements counterclaimed against Shelly & Sands, claiming interference with access to and quiet enjoyment of the Dements’ riparian rights and tortious interference with business relationships. The parties moved to dismiss some of the claims, and Judge Watson began by determining that the court had admiralty jurisdiction over some of the claims brought by Shelly & Sands, and that there was supplemental jurisdiction over the remaining claims. The Dements and the Corps moved to dismiss the claims for breach of contract and for declaratory relief, and Judge Watson held that the contract, for the operation of a marina, a fixed structure, was not a maritime contract. Therefore, he applied Ohio law to the contract. Under Ohio law, private citizens do not have the right to enforce government contracts on their own behalf unless a different intent is clearly manifested in the contract. As there was no such intent manifested in the lease, Judge Watson held that Shelly & Sands could not bring an action for breach of contract (or for declaratory judgment that there was a breach of contract) against the Corps or the Dements. Turning to the counterclaim, the Dements complained that delivery boats to Shelly & Sands obstructed access to the Ohio River from the Dements’ marina. However, the Dements admitted that they allowed the delivery boats to be there, so Judge Watson dismissed that claim. For their claim that the actions of Shelly & Sands obstructed the relationships between the Dements and their current and future customers and the Corps, the Dements only alleged that their relationships were “strained.” That was insufficient to support a claim for tortious interference, but the allegation of damage to the relationship with former customers was enough to survive the motion to dismiss.
Abdulataef Ali was employed as an able-bodied seaman on the M/V MARJORIE C, operated by Pasha Hawaii Holdings. He and another seaman, Bernadino Eda, were assigned the monthly pilot ladder inspection/maintenance. Ali climbed a few rungs up a ladder and was attempting to pull a hose off the air motor hose barb with one hand while he held onto the air motor with his other hand. Ada was holding the ladder. Ali was struggling because the hose was jammed, and he lost his balance and fell. None of the equipment broke or failed, and the ladder did not collapse or fall. Ali eventually underwent an arthroscopy on his right knee for a medial meniscal tear. Ali brought this suit against Pasha Hawaii in federal court in California under the Jones Act and general maritime law, and the case was tried to Judge Gilliam. Judge Gilliam found that Ali had been taught how to do this work by the bosun and had performed the job more than 10 times before the accident. It was not unreasonable or negligent to ask an experienced seaman to perform the task, particularly with the assistance of another experienced seaman. Therefore, there was no negligence on the part of Pasha Hawaii. As for the claim of unseaworthiness, there was no problem with the equipment, and Ali was provided assistance. Ali complained that the air hoses on the starboard pilot station were stiffer and more difficult to remove, but that did not mean that they were not reasonably fit for their intended purpose. Therefore, Judge Gilliam did not find that the vessel was unseaworthy. Pasha Hawaii paid maintenance and cure through December 7, 2022, as well as payments of $20,000 between January 2020 and August 2020. That left the issue of when and if Ali had reached maximum cure. There was a significant difference in the testimony of the doctors treating Ali and the medical examiner engaged by his employer. Based on the testimony of Dr. Piers Barry, the employer’s expert (who found no orthopedic explanation why Ali continued to report pain in his knee), Judge Gilliam concluded that Ali reached maximum cure no later than January 17, 2022. Therefore, he held that Ali was not entitled to maintenance and cure (although he declined the employer’s request to reimburse the additional payments of $20,000).
Pan Ocean is a global shipping company that has a long-standing business relationship with World Fuel Services, reflected in a master contract that incorporates the General Terms and Conditions of World Fuel Services. Pan Ocean purchased 500 metric tons of bunkers from World Fuel for the AFRICAN WREN, which Pan Ocean chartered from MUR Shipping. BP Pte. Singapore delivered the fuel to the vessel in Singapore, and Veritas Petroleum tested a sample of the fuel and determined that the fuel exceeded the water and sodium specifications set forth in the purchase contract. Pan Ocean believed that the bunkers could be safely treated and consumed, but MUR Shipping insisted that the vessel be de-bunkered and arranged for the de-bunkering, resulting in damages of $490,573.53. Pan Ocean then brought this suit against World Fuel Services in federal court in Florida, alleging breach of contract. World Fuel Services filed a motion for summary judgment, citing the provision in the Terms and Conditions for delivery of nonconforming fuel. That limitation clause provided that World Fuel Services’ liability for off-specification fuel that cannot be consumed was limited to replacement of the nonconforming product and that if the buyer removed the product without the consent of the seller, the costs of removal fell on the buyer. Pan Ocean argued that the provision was unenforceable, and Chief Judge Altonaga responded that the provision was clear and unequivocal and that it did not attempt to absolve the supplier of all liability, reasoning that the cost of replacement provided a sufficient deterrence to negligence. Although Pan Ocean made a “half-hearted” argument that the parties had unequal bargaining power because the fuel suppliers refused to negotiate their terms, even with large shipping companies, Chief Judge Altonaga found no overreaching and held that the limitations were enforceable. Chief Judge Altonaga then addressed the issue whether the fuel could not be consumed by the vessel. Pan Ocean argued that the phrase encompassed a vessel’s refusal to consume the fuel for any reason, but World Fuel responded that “cannot” means “unable” and not “unwilling.” World Fuel argued that the court should apply an objective standard for “consumable,” but it did not articulate that standard. Chief Judge Altonaga considered the phrase to be ambiguous, requiring a determination of the intent of the parties that may involve examining extrinsic evidence. While not foreclosing other interpretations, Chief Judge Altonaga agreed that damage to a vessel’s machinery was consistent with the phrase, “cannot be consumed.” World Fuel argued that the fuel was consumable with appropriate treatment, pointing to the emails that Pan Ocean sent to MUR Shipping stating that the fuel was safe after treatment. However, the admissibility of the emails was challenged, and there were fact disputes whether there was a risk of damage to the machinery. Therefore, Chief Judge Altonaga held that summary judgment was proper in limiting the damages in accordance with the Terms and Conditions but that a trial was necessary to determine what damages were available under the Terms and Conditions.
This suit arises from a collision in Miami, Florida, near Venetian Causeway and San Marco Island involving a 2002 Midnight Express speed boat and a personal watercraft. The collision resulted in injuries to Escobar Soto and the death of her husband, Matthew Travi, who were on the personal watercraft. Soto brought this suit in federal court in Florida, on her behalf and on behalf of Travi, against the speed boat, in rem, and against MILA Auto Sales and David Salmeron, in personam, the owner and captain of the speed boat. The claims against MILA and Salmeron included counts for negligence and counts for negligence per se. The defendants moved to dismiss the counts for negligence per se, arguing that negligence per se is not an independent cause of action from the common-law negligence counts that the plaintiff alleged. Judge Scola noted that it is common practice for judges to allow negligence per se claims to be brought at the same time as a general or broader negligence claim is asserted. After reviewing the cases cited by the defendants, Judge Scola added that the courts have not adopted a bright-line rule. Finally, Judge Scola did not find that the claims were duplicative or redundant, although he agreed that the complaint was “far from clear as to the distinct contours” of the two sets of claims. Consequently, Judge Scola was not convinced that the “negligence per se claims should be dismissed just because they are so styled.”
Sunkist Growers and Fruit Growers Supply ship oranges all over the world. In early 2022, they changed the fungicide they applied to the oranges because the new fungicide has increased effectiveness against mold. However, the former fungicide allowed the oranges to sustain lower temperatures for longer periods without suffering “rind pitting.” As a result, a significant portion of the oranges that were shipped with the new fungicide arrived with rind pitting. Sunkist Growers and Fruit Growers Supply filed a claim under their marine cargo insurance policy with AGCS, which denied the claim. The shippers then brought this suit against AGCS in federal court in California, and the parties filed cross-motions for summary judgment. AGCS argued that the loss was caused at the time the fungicide was applied and was outside the policy’s “warehouse to warehouse” coverage window. It also argued that the policy’s deductible applied separately to each of the 57 damaged shipments. Although AGCS argued that the proximate cause of the loss was the non-application of the prior fungicide, Judge Blumenfeld was unpersuaded. He reasoned that the proximate cause of the rind pitting was the refrigeration of the oranges, which took place during the voyages (within the policy coverage), adding that the oranges were only non-saleable after the damage that occurred during the refrigeration. Judge Blumenthal also disagreed with the argument that a loss that is caused by an event that takes place before attachment of the coverage is not covered under the marine insurance policy. He answered that the policy applies to damage during transit from any external cause, and the language did not limit the coverage to causes occurring during transit. Judge Blumenfeld then addressed the argument that the loss was not a fortuitous result of the chilling because rind pitting is scientifically known to result from shipping the fruit at 37 to 41 degrees Fahrenheit, and the decision to ship the oranges at that temperature was intentional. Judge Blumenfeld disagreed, stating that the shippers had shipped oranges at that temperature without problem, and that it was not foreseeable that damage would occur as a result of the change in the fungicide. Accordingly, he held that the loss was fortuitous. Finally, AGCS argued that the policy’s $500,000 deductible should apply on a per-voyage basis to the 57 shipments. The policy provided that the deductible would apply to “Each claim for loss or damage (regardless of number) arising from a covered event or arising during a single voyage or conveyance.” It defined an “event” as “a single accident or occurrence or a series or sequence of accidents or occurrences arising from the same cause.” Judge Blumenfeld held that the cause of the rind pitting on the 57 voyages (the temperature), satisfied the definition of “same” in the phrase “same cause.” He reasoned: “The decision to set the temperature on each ship was not the result of 57 separate considerations; the temperature was set according to the standard shipping temperature of 37-41 degrees Fahrenheit for all oranges shipped.” It seemed “plain” to Judge Blumenfeld that “a series or sequence of accidents or occurrences arising from the same cause” was applicable in this case. Therefore, he held that there was one deductible of $500,000.
Joe Bynum, a passenger on the CARNIVAL MAGIC, claims that he slipped and fell on a large puddle of what appeared to be water located about five feet outside the dining room entrance on the ship. He brought this suit against the cruise line in federal court in Florida, and the cruise line answered and asserted affirmative defenses. Bynum moved to strike several of the affirmative defenses, and Judge Altman addressed the defenses in turn. The first affirmative defense pleaded that the negligence of Bynum was the sole and proximate cause of his injuries and that his right to recovery should be barred or reduced. Judge Altman noted that this defense combined two concepts. To the extent that the defense challenged proximate cause, it was not a proper affirmative defense because proximate cause is an element of the plaintiff’s negligence cause of action. However, to the extent that the cruise line was asserting that Bynum was comparatively at fault, the pleading was a valid affirmative defense. Therefore, Judge Altman allowed the cruise line to amend this defense to clarify that it was based on comparative negligence, not proximate cause. The second defense pleaded that the plaintiff’s action was limited or controlled by the terms and conditions in the ticket/contract for passage. Citing the treatment given to this pleading by Judge Scola, Judge Altman held that the defense functions as a denial of the passenger’s claims through reference to the contract terms. Therefore, the remedy is to treat it as a specific denial and to address lack of evidence to support the defense with a motion for summary judgment. The Fourth and Tenth affirmative defenses objected to the entitlement of the passenger to recover medical bills that were billed but written off or not paid. Judge Altman held that the cruise line was entitled to have the jury decide the reasonable amount of the medical bills, but it would have to replead to remove the portion of the pleading that the passenger is not entitled to recover damages that have been written off or waived. Judge Altman agreed that the defenses that the passenger’s injuries were caused by the conduct of third parties and that the injuries were not the result of the incident at issue were not proper affirmative defenses and would be treated as specific denials. Finally, Judge Altman held that the pleading that the condition that injured the passenger was open and obvious was a valid affirmative defense and would not be stricken.
St. Clair Marine Salvage brought this suit against Cass Hawkins and his 34-foot Thompson boat, Tatanisha Reed and her 41-foot Chris Craft boat, and Thomas Patterson and his 1994 30-foot Bayliner boat, seeking to recover for salvage services provided to the vessels during storms on Lake St. Clair near the Grosse Pointe Yacht Club. St. Clair asserted that it entered into similar Salvage Agreements with Hawkins, Reed, and Patterson, and the agreements contained arbitration agreements. St. Clair sought arrest of the vessels and requested that the defendants be compelled to arbitrate. After ordering the issuance of warrants for arrest of the vessels, Judge Levy addressed the question of whether to compel arbitration. She noted that the Salvage Agreements attached to the amended complaint were not signed by Hawkins and Patterson (although the defendants initialed the paragraph which set forth the price for the salvage). Hawkins conceded that he entered into an agreement with St. Clair, but he argued that the agreement was procedurally and substantively unconscionable. However, Judge Levy noted that the arbitration provision in the agreement with Hawkins delegated the unconscionability issues to the arbitrator. Accordingly, she compelled arbitration of the claims against Hawkins. Patterson did not respond to the motion to compel arbitration, but it was clear that he claimed that he did not enter into an agreement with St. Clair. Concluding that St. Clair had not carried its burden to establish that there was an agreement with Patterson to arbitrate, Judge Levy declined to compel arbitration against Patterson.
Joseph Settembrino, owner of Blue Seas Fresh Fish, purchased the 1982 34-foot Crusader, CAPTAIN EASY, in March 2020 for $45,000 without any pre-purchase survey. Repairs were conducted on the vessel by Blue Seas, which then listed the vessel for resale at $44,000. The vessel did not sell, and Blue Seas lowered the price every month. While the vessel was still up on the dock undergoing repairs, Blue Seas applied for insurance with Great American in March 2022, claiming that the market value of the vessel was $80,000. That application also claimed that Blue Seas had gross annual receipts of $250,000 even though its receipts were in the vicinity of $100,000 to $120,000. Blue Seas also claimed that there was no pre-existing damage to the vessel, even though the vessel had undergone and was undergoing numerous repairs. Great American issued a commercial marine insurance policy with hull coverage in the amount of $80,000, effective March 17, 2022; on March 28, 2022, Blue Seas made its first premium payment; and on March 29, 2022, Blue Seas reported to Great American that the vessel apparently sank the night before at a dock in Pompano Beach, Florida. Blue Seas could not explain how the vessel sank, and Great American’s investigation revealed that the vessel sank because of an intentional act by Blue Seas. Great American denied the claim and brought this action in federal court in Florida seeking a declaratory judgment that there was no coverage because the incident was not caused by an external cause, because of the wear and tear and deterioration exclusions, because of the breach of the seaworthiness warranty, for material misrepresentations in the application process, and because of the intentional or willful acts exclusion. Blue Seas answered and filed a counterclaim, seeking to recover for breach of contract and breach of implied contract. Great American moved for summary judgment, arguing that the material misrepresentations in the application process voided the policy. Blue Seas did not respond, and Judge Ruiz reviewed all of the evidentiary materials to determine if summary judgment was appropriate. He noted that uberrimae fidei is the controlling law in the Eleventh Circuit, and he held that any of the misrepresentations would have been sufficient to void the policy. Accordingly, he held that Great American was entitled to summary judgment that it had no obligations under the policy. As the policy was void, Judge Ruiz’s ruling disposed of the counterclaim as well.
David Davidow and Sheryl De Mers purchased a 2022 Ravenark Bootlegger fishing boat from Travis Brandt, his boat-building venture Zalnatrav, Inc, and the sole proprietorship Ravenark. The buyers wanted upgrades, including larger engines, and executed additional contracts. Eventually, the buyers paid $208,444 and Brandt advised that all invoices had been paid and the vessel was released to the buyers. However, Brandt later advised that he was unable to complete the construction due to lack of funds and that he needed $200,000 in funding. He sent additional invoices to the purchasers, and he never delivered the vessel, which was located at the Maxi-Space facility in University Place, Washington. Brandt even admitted that he entered into a contract to sell the boat to a third-party in order to recoup what he considered “his loss.” The purchasers brought this suit in federal court in Washington against Brandt, Zalnatrav, and Ravenark, and Brandt filed articles of dissolution with the Washington Secretary of State to dissolve Zalnatrav. Zalnatrav and Ravenark did not answer, and Brandt filed a counterclaim for fraud, breach of contract, and malicious prosecution. The purchasers and Brandt moved for summary judgment on the purchasers’ claims and on Brandt’s counterclaim, and Judge Jones began by discussing the purchasers’ argument that the Court should pierce the corporate veil of Zalnatrav on the ground that Brandt abused the corporate entity by commingling and spending funds for his own expenses. Concluding that Brandt had dissolved Zalnatrav in an “apparent attempt to evade Plaintiffs’ claims,” Judge Jones agreed to disregard the corporate form of Zalnatrav. Judge Jones then addressed the claim for breach of contract and found that the buyers had fully paid for the vessel and that there was no reason why the buyers should have to pay beyond the amount they contracted to pay. Therefore, Judge Jones granted summary judgment to the buyers on their claim for breach of contract. With respect to the purchasers’ claim for fraud, Judge Jones found that Brandt spent nearly all of the money paid by the purchasers on himself, for his pilot’s license, meals, dental and vision care, plane tickets, gasoline, tolls, rideshare trips, and advertising. Nonetheless, Brandt represented to the buyers that he was “plugging away” at this “beautiful boat 24/7” while asking for more funds to complete the vessel. When Brandt sent additional invoices, he did not plan to use the funds for the invoiced services and believed that he had the contractual right to send invoices beyond the agreed-upon purchase price. Consequently, Judge Jones granted summary judgment to the buyers on their fraud claim. As Brandt maintained possession of the boat even though the buyers had paid the full price for the construction, Judge Jones concluded that summary judgment should be granted to the buyers on their claim for conversion, and he imposed a constructive trust on the vessel, the engines, and all other items purchased with the funds paid by the purchasers. Judge Jones also found that Brandt had committed unfair and deceptive practices in violation of the Washington Consumer Protection Act. Finally, Judge Jones granted summary judgment to the purchasers on all of the counts presented in Brandt’s counterclaim.
HDR Marine entered into a charter with the National Oceanic and Atmospheric Administration involving a vessel used to deploy and recover oceanographic equipment in the Bering and Chukchi Seas off the west coast of Alaska. The United States terminated the contract, and HDR Marine and the United States engaged in settlement negotiations leading to HDR Marine providing the United States with a Final Settlement Proposal. The United States responded with its Final Determination Letter, and HDR Marine brought this suit against the United States in federal court in Alaska, seeking to recover for wrongful termination of the charter. The United States moved to dismiss the suit for lack of jurisdiction on the ground that HDR Marine did not submit a valid, certified claim to the contracting officer. HDR Marine responded that its settlement proposals had ripened into a claim under the Contract Disputes Act. Judge Kindred recognized that the express demand by HDR Marine could constitute a claim; however, he responded that the communications from HDR Marine did not contain the four certifications required by the statute (the claim is made in good faith, the supporting data are accurate and complete, the amount requested accurately reflects the contract adjustment for which the US is liable, and the certifier is authorized to certify the claim on behalf of the contractor). Although HDR Marine made the required certifications after litigation ensued, Judge Kindred held that the late certification did not exhaust the administrative remedies required as a prerequisite to suit. Accordingly, he dismissed the complaint.
Astonbluwaves applied for insurance with Clear Spring Property and Casualty for its 2010 85-foot Aicon vessel. It answered “no” to the question whether any named operator had been convicted of a criminal offense; it answered with a null symbol to the question whether the proposed operator (Captain Jason Wessel) had any violations/suspensions (including auto) in the past five years; and it answered “no” to the question whether Captain Wessel had ever been convicted of a criminal offense. Astonbluwaves also completed a supplemental operator form with the same answers, and the form contained the admonition, “NAMED OPERATOR POLICY ONLY.” Clear Spring issued the policy, and, after Astonbluwaves filed a claim arising from a fire on the vessel, Clear Spring discovered that Captain Wessel had been convicted twice for driving under the influence of alcohol and that he had been issued citations for speeding and driving with a suspended license. Clear Spring denied the claim and brought this lawsuit in federal court in Florida, seeking a declaratory judgment that it was not obligated under the policy based on uberrimae fidei (Astonbluwaves filed a counterclaim for breach of contract, breach of the duty of uberrimae fidei, declaratory judgment, and breach of the duty of good faith and fair dealing). The policy contained a choice-of-law clause that the policy would be governed by entrenched principles of admiralty law and New York law where there is no such well-established rule. Magistrate Judge Sanchez agreed that uberrimae fidei was entrenched maritime law, but he held that the doctrine was also part of New York law. Applying the doctrine, Magistrate Judge Sanchez addressed whether Astonbluwaves made misrepresentations and whether the misrepresentations were material. The undisputed evidence established that Astonbluwaves had misrepresented Captain Wessel’s criminal history and driving record. The testimony of Clear Spring’s marine yacht underwriting agency established the materiality, as the underwriter testified that the disclosure would likely have resulted in a declination of insurance or a declination of a policy allowing Wessel to serve as an operator. If further investigation resulted in issuance of a policy, it would have been at a higher premium. The underwriting manual further supported the materiality. As the evidence established that the misrepresentations could have influenced and likely affected the decision to issue the policy, they were material and Clear Spring was entitled to have the Policy declared void ab initio pursuant to the doctrine of uberrimae fidei. Therefore, Magistrate Judge Sanchez recommended that summary judgment be granted to Clear Spring on its claim for a declaratory judgment and on the counterclaim brought by Astonbluwaves.
Robert E. Tuite, a passenger on the CARNIVAL SUNSHINE, tripped and fell on a metal fastener bar separating carpet from tile in the Lido Deck Marketplace of deck 9 of the ship. He brought this suit against the cruise line in federal court in Florida for failure to warn, negligent maintenance, and for general negligence. The cruise line moved for summary judgment, claiming that there was no evidence that the cruise line had notice that the threshold was dangerous. The cruise line argued that the carpet, tiling, and threshold had been in the same configuration and condition for at least three years before the incident and that no one else had tripped on that threshold or any similar threshold in that area of the ship. Tuite countered that his wife had witnessed a passenger trip at the threshold the day before Tuite’s accident, but she was unsure if it was the threshold or if he bumped into a child. A traveling companion testified that he had tripped at the threshold the day before the accident, but he did not fall and did not tell anyone about it. A security officer for the vessel and the ship’s physician who examined Tuite testified that there are many fall-related injuries on the Lido Deck, but this was the first fall involving the metal strip. Judge Scola did not consider the testimony of the passengers and crew to establish that the prior incidents were substantially similar to Tuite’s fall. The only incident that could be determined to result from the same threshold resulted in no injury and no report to the cruise line. Judge Scola concluded that attributing notice to Carnival, based on an incident of which it had no knowledge and which didn’t even cause any harm, would make little sense.” Tuite also argued that notice could be found because the threshold violated safety standards and had been in that condition for a lengthy period of time. Judge Scola answered that the danger had to exist for a sufficient time to invite corrective measures. However, in order to invite corrective measures, the hazard had to be reasonably detectable, and Judge Scola did not consider the hazardous nature of the threshold and its noncompliance with safety codes cited by Tuite’s expert to be reasonably detectable. Photographs of the threshold did not demonstrate an unacceptable slope, and it was only use of “an implement called a ‘contour gauge’” by Tuite’s expert by which he graphically mapped the floor profile that reflected the slope. Judge Scola disagreed with the argument that mere existence of a condition that did not comply with industry safety standards for a lengthy period was sufficient to establish notice. Instead, he required that the carrier should have known of the noncompliance—that there be something about the hazard that should have prompted the cruise line to recognize and correct it. Consequently, Judge Scola granted summary judgment and dismissed Tuite’s claims.
Dan-Bunkering brought this action against Ichor Oil in federal court in Texas in connection with the sale of fuel. Dan-Bunkering claimed that it agreed to buy 110,000 barrels of bunkers from Ichor Oil and prepaid $500,000, but that Ichor Oil pocketed the money and did not deliver the fuel. Dan-Bunkering sought to attach/garnish assets owned by Ichor Oil that were held by B&G Futures, attempting to serve the writ on B&G’s registered agent. When the process server was unable to locate the registered agent at the address on file with the Texas Secretary of State, Dan-Bunkering served the writ on the Secretary of State. B&G did not answer, and the court entered a default judgment. Dan Bunkering then obtained post-judgment writs for B&G accounts, and B&G moved to vacate the default judgment for lack of proper service. Judge Scholer noted that Texas law requires the record to affirmatively show that the plaintiff used reasonable diligence to serve the registered agent before undertaking substitute service on the Secretary of State. However, Dan-Bunkering did not file proof of its diligence until responding to the motion to vacate the default. As the record did not affirmatively demonstrate proper service at the time the default was entered, Judge Scholer held that the court lacked jurisdiction, set aside the default, and dissolved the writs on B&G’s accounts. See October 2021 Update.
B&G then argued that Dan-Bunkering’s counsel engaged in bad faith and sanctionable conduct and requested sanctions against counsel. B&G presented numerous complaints, including the presentation of “sham affidavits.” For example, Dan-Bunkering originally submitted the affidavit of an employee that it was owed at least $350,000 for 110,000 barrels of oil, but it later submitted an affidavit stating that the $350,000 “was made for approximately 7,500 barrels of oil. Magistrate Judge Rutherford agreed that B&G was “understandably frustrated at having to defend itself against [Dan-Bunkering’s] baseless claims;” however, the attorney relied on facts from his client, and Magistrate Judge Rutherford did not believe that his conduct warranted sanctions. Therefore, she denied the motion for sanctions.
Manuel J. Samalot-Martinez, a passenger on the NORWEGIAN DAWN, claims that he tripped and fell on unattended cleaning buckets just outside his cabin on the ship. Samalot-Martinez, a citizen of Puerto Rico, brought this suit in federal court in Puerto Rico against the cruise line, and the cruise line moved to transfer the suit to the federal court in Florida in accordance with the forum-selection clause in the Guest Ticket Contract under which Samalot-Martinez sailed on the NORWEGIAN DAWN. Samalot-Martinez filed an Informative Motion Regarding Consent to Transfer Venue in response in which he did not challenge the validity of the forum-selection clause, but Judge Arias-Marxuach evaluated the enforceability of the clause before ordering its enforcement. He found that the clause was mandatory, that it was reasonably communicated, and that there were “no fundamental fairness concerns tantamount to stripping plaintiff of his day in Court.” Therefore, he transferred the suit to the Southern District of Florida.
Leroy M. Lincoln was a passenger on the NORWEGIAN ENCORE when the ship called at Great Stirrup Cay, Bahamas, an island owned and maintained by the cruise line. While he was ashore on January 15, 2022, Lincoln engaged in the overwater swing located in the waterside area of the Main Beach. He slid off the swing’s slippery seat and fell into the submerged rock projection beneath the overwater swing, resulting in his injuries. The Claims Department for the cruise line received a letter of representation from Lincoln’s attorney, dated January 31, 2022, and the cruise line alleged that it responded to the letter on February 8, 2022. Lincoln filed a suit against the cruise line in state court in Miami-Dade County, Florida on January 10, 2023, five days before the expiration of the one-year contractual limitation period in the ticket contract, and then he filed this suit in federal court in Florida on February 9, 2023, while the action was still pending in state court. The cruise line moved to dismiss the state suit based on improper venue, and it moved it dismiss the federal suit as untimely. As the forum-selection and limitation provisions of the ticket contract are enforceable, Judge Martinez considered whether equitable tolling was appropriate. He reasoned that Lincoln did not “sleep on his rights when he filed his technically defective, but otherwise timely, complaint in state court. And the cruise line had notice that Lincoln was pursuing his claim before the limitation period expired. Therefore, Judge Martinez held that the suit was not barred, but he did dismiss the suit without prejudice because Lincoln’s pleading of notice was “far too conclusory to survive dismissal.”
Matthew Williams claimed exposure to oil and dispersants while performing oil spill response work in Mississippi after the Macondo/DEEPWATER HORIZON blowout. He brought this Back-End Litigation Option suit, and BP moved to exclude Williams’ proposed expert witnesses and for summary judgment based on failure to establish causation. Judge Guirola agreed that the opinions of Dr. Michael Freeman and Dr. James J.J. Clark should be stricken. Judge Guirola held that Dr. Freeman had not identified any reliable statistically significant association between oil spill response work and the chronic sinusitis from which Williams suffered. And, even if he had identified an association, he failed to explain how the guidelines for inferring causation from an association apply to the available evidence, providing only “vague, conclusory statements regarding the factors of specificity, temporality, plausibility, and coherence.” Therefore, Judge Guirola held that Dr. Freeman’s opinions on general causation did not satisfy the standards of Fed. R. Evid. 702 (he also held that Dr. Freeman’s opinion on specific causation was unreliable and inadmissible). Judge Guirola then addressed the opinions of Dr. Clark, which appeared to have been prepared for someone else because he mentioned a claimant with a different name in his discussion. Judge Guirola cautioned: “While typographical errors are understandable, one must beware of ‘cut and paste.’” Nonetheless, Judge Guirola found the opinions to be unreliable and inadmissible, and he excluded them. In the absence of expert evidence, Judge Guirola granted summary judgment to BP and dismissed the BELO suit with prejudice.
Shaunise Anderson and Charles Carter brought opt-out maritime negligence suits against BP for exposure to oil and toxic chemicals during their involvement in cleanup or recovery work after the Macondo/DEEPWATER HORIZON spill. They sought to establish causation with the opinions of Dr. Gerald Cook, but Judge Vance excluded the opinions and granted summary judgment to BP. Anderson and Carter moved for reconsideration on the grounds that Dr. Cook’s testimony should have been admitted because BP had a duty to protect the cleanup workers and violated that duty by failing to conduct biomonitoring (which is why, according to the workers, there is inadequate data to support causation), because the GuLF study provides a state-of-the-art (and therefore reliable) basis to support Dr. Cook’s opinions, and because Dr. Cook’s opinions were supported by the affidavit of Dr. Linda Birnbaum. Judge Vance noted that she and the other judges in the Eastern District of Louisiana had rejected the same arguments, and she declined to grant reconsideration.
This case involves the entry of a default judgment in a suit in federal court in New York to collect freight, demurrage, detention, storage, and other charges. After entering the default, Judge Moses referred the action to Magistrate Judge Tarnofsky to determine the amount of damages and attorney fees. The plaintiff sought fees based on hourly rates ranging from $150 to $600, with an average hourly rate of $395.83. Magistrate Judge Tarnofsky reviewed decision in other cases, including cases approving rates of $515 and $430 for attorneys with over five decades of experience, $450 for a partner with 36 years of experience, and $410 for an attorney whose experience was not provided. No information was provided on the experience of the attorneys in this case, and the hourly rates of three of the attorneys were more than $515, which Magistrate Judge Tarnofsky believed was higher than is typical for maritime cases. However, as the average rate was within the range approved in other cases, she recommended adopting the proposed rates.
Patricia Foley, a passenger on the cruise ship CARNIVAL SUNSHINE, tripped and fell on an uneven or raised threshold or transition strip between a carpeted surface and a tile surface as she exited an elevator on the Lido Deck of the vessel. She brought this suit in federal court in Florida against the cruise line with counts for negligent maintenance, negligent failure to correct, and negligent failure to warn. The cruise line moved to dismiss the complaint for failing to properly plead notice, asserting that any condition was open and obvious, and that the complaint was a comingled, shotgun pleading. Judge Bloom agreed that the pleading that the cruise line should have known of the danger because of its condition and because it had existed in a high-traffic area of the ship was too conclusory to provide notice. Foley also relied on five incidents in which passengers tripped over uneven or raised thresholds on the SUNSHINE or a sister ship, but the cruise line claimed the incidents were not substantially similar or were too remote in time. Judge Bloom answered that Foley did not rely on prior incidents involving the same raised threshold on which Foley fell; however, the prior incidents “plausibly allege Defendant’s constructive notice ‘of the propensity for trip and falls on raised thresholds or transition strips onboard the M/S Sunshine[.]’” Although the cruise line noted differences to distinguish each of the incidents, Judge Bloom cited the guidance from the Eleventh Circuit that the “‘substantial similarity’ doctrine does not require identical circumstances and allows for some play in the joints depending on the scenario presented and the desired use of the evidence.” Judge Bloom then considered the argument that the complaint was an impermissible shotgun pleading because it commingled a claim for negligent design within the three counts for negligence, negligent maintenance, and negligent failure to correct. Judge Bloom did agree that the bare assertion that the cruise line approved of the designs was conclusory and should be dismissed to the extent that Foley was trying to assert a claim for negligent design. However, its incorporation into the three counts did not transform those counts into a shotgun pleading. Finally, the negligent maintenance count asserted that the cruise line breached its duty to maintain the area by failing to adequately train its crew to maintain the floor free of tripping hazards. The cruise line argued that this was an improper commingling of claims for negligent maintenance and negligent training. Judge Bloom disagreed, concluding that the allegation that the cruise line failed to properly train its employees to maintain the floor “logically falls under a failure to maintain or inspect.” Therefore, she declined to dismiss the count.
Chloyde Pelton claims that he developed mesothelioma from exposure to asbestos-containing products while serving as a pipefitter and shipfitter on the USS LYMAN K SWENSON, the USS PRITCHETT, and the USS FRONTIER. Pelton and his wife brought this suit against suppliers of products containing asbestos in the Circuit Court of Cook County, Illinois, and John Crane Inc. removed the action to federal court based on the Federal Officer Removal Statute. John Crane moved for summary judgment, and Judge Blakey held that Pelton had produced sufficient circumstantial evidence of the amount of asbestos to which Pelton was exposed, the duration of the exposure, and that the exposure was attributable to John Crane’s products. Therefore, he declined to dismiss the negligence claim for lack of causation. John Crane argued that the claim for strict liability should be dismissed because Pelton did not satisfy the risk/utility test (the risk of the products outweighs their utility). As the courts have not adopted the Third Restatement of Torts with its risk/utility test for maritime cases (having adopted the Second Restatement formula), Judge Blakey held that he did not have to engage in that analysis (alternatively, Judge Blakey held that the evidence demonstrated a jury question on this issue). Similarly, he rejected the argument that Pelton had to establish a reasonable alternative design. Judge Blakey did agree with John Crane that the count alleging willful and wanton conduct should be dismissed because it is not a cognizable cause of action under the general maritime law, but that did not preclude Pelton from seeking punitive damages as punitive damages are a type of relief, not a separate cause of action. Judge Blakey then addressed whether Pelton was entitled to seek punitive damages in his suit against John Crane. He noted that a seaman cannot recover punitive damages in his claim for negligence under the Jones Act or in his unseaworthiness claim under the general maritime law as set forth by the Supreme Court in Batterton. Departing from the holding of the Fifth Circuit in Scarborough v. Clemco Industries [and the recent ruling in Pritt v. John Crane, November 2023 Update, holding that “Miles forecloses the award of punitive damages in wrongful death claims brought pursuant to general maritime law”], Judge Blakey reasoned that the Jones Act does not apply to the seaman’s claims against third parties and, consequently, provides no basis to depart from the decision of the Supreme Court in Atlantic Sounding, allowing punitive damages in maintenance and cure cases. Therefore, he held that Pelton could pursue punitive damages at trial. Thanks to Matthew Ammerman of Houston, Texas for bringing this decision to our attention.
Goyard is a luxury leather goods company with a storefront on the Upper East Side of New York City. It suffered a break-in and loss of $684,855 in merchandise during the rioting following the death of George Floyd. Goyard, which insured its marine cargo with Navigators on a marine cargo policy, made a claim on the policy, and Navigators denied the claim on the ground that the policy did not extend to retail storage losses caused by riots, citing the “paramount” Strikes, Riots, and Civil Commotion warranty. That warranty cannot be modified or superseded unless the provision refers to the risks excluded by the warranty and expressly assumes the risks. The marine cargo policy did contain a SR&CC Endorsement that covered three categories of risks: 1) strikers, locked out workmen, or persons taking part in labor disturbances or riots, or civil commotions; 2) vandalism, sabotage, or malicious acts; and 3) acts carried out for political, terroristic, or ideological purposes, conditioned upon the property being in the ordinary course of transit. Another endorsement (Endorsement 4: Storage Coverage Endorsement) provided coverage for goods while detained in locations approved by the Assurer “subject to terms and as hereinafter provided.” A subsection of that endorsement excluded risks excluded by the SR&CC warranty. Navigators did not contest that the SR&CC Endorsement applied or that the claim arose out of a riot or civil commotion within the second category of risk in the Endorsement. Therefore, the goods did not have to be in transit as is required in the third category of risk in the Endorsement. However, Navigators argued that the Storage Coverage Endorsement excluded coverage for the theft during the riot because that Endorsement, which extended the coverage to the location where the theft occurred, excluded the risks in the SR&CC warranty (including riots and civil commotions). Judge Hellerstein did not agree. He construed the Storage Coverage Endorsement to exclude risks in the SR&CC warranty only to the extent that an endorsement did not bring the risks back into coverage. As the SR&CC Endorsement brought riots back into coverage, Judge Hellerstein did not consider the exclusion of risks in the Storage Coverage Endorsement to overturn the extension of coverage in the SR&CC Endorsement. Applying New York law in accordance with the policy provision choosing New York law in the absence of maritime law, Judge Hellerstein held that Goyard was not entitled to attorney fees or punitive damages even though the insurer lost the controversy on coverage.
Polaris, Inc, a company whose principal place of business is in Medina, Minnesota, imported jackets, pants, shoes, and helmets from Vietnam, South Korea, and China for ultimate delivery to customers in Ohio. Polaris contracted with Expeditors, a non-vessel owing common carrier, to transport the goods in containers to Seattle and Tacoma, Washington, and Expeditors was the freight forwarder for the transportation of the goods from Washington to Ohio. Expeditors hired a truck carrier, Max Trans, to carry the goods to Ohio, but Max Trans subcontracted the carriage to Delta Logistics, which erroneously believed the goods were to be transported by rail (despite the specific request for transport by truck). The goods were taken to BNSF’s rail yard and put on a train that derailed in North Dakota, destroying the goods. Starr Indemnity, which insured the goods, brought this suit as subrogee for Polaris, against BNSF and Max Trans with claims for negligence and breach of federal statute. The defendants moved to dismiss the common law claims, arguing that the Carmack Amendment and the Carriage of Goods by Sea Act preempted the common-law claims. Judge Lin agreed that the Carmack Amendment applied (even though Starr Indemnity argued that the Carmack Amendment did not apply because the transportation by BNSF was by mistake), and she dismissed the common-law claims against BNSF and Max Trans (she did not have to decide whether COGSA applied). The defendants also moved to dismiss the claims on the merits because Starr Indemnity did not plead the condition of the goods at any stage of the transportation (prior to the derailment). Judge Lin found this to be a curable defect and dismissed the claims with leave to amend. Finally, BNSF argued that Starr Indemnity did not allege that it satisfied “claim submission requirements” prior to suit, but it did not submit a bill of lading with any notice requirement.
Riccardo Ciolino worked as a commercial fisherman from 1988 to 1995. He then worked as a seaman for three companies on merchant vessels from February 1996 to January 1997. From April 1997 to September 2011, Ciolino was employed as an able seaman or bosun on several vessels owned by Keystone. From October 2011 to July 2017, Ciolino was employed a seaman on vessels not owned by Keystone. During his employment for Keystone, Ciolino worked on the S.S. CHILBAR from January 2002 to February 2005. He claims that he was exposed to asbestos in his personal living quarters and in many of the locations on the vessel where he worked. Ciolino has suffered from chronic Benign Asbestos Pleural Effusion since 2019, which is caused by exposure to asbestos. Ciolino brought this suit against Keystone in federal court in Massachusetts under the Jones Act (negligence) and general maritime law (unseaworthiness and maintenance and cure), and Keystone moved for summary judgment on the claims for negligence and unseaworthiness. Keystone argued that Ciolino could not establish causation because the only basis for his allegation that there was asbestos on the CHILBAR came from statements from employees on the vessel who allegedly warned him about the presence of asbestos and instructed him not to disturb pipes and ceiling panels. As the statements were allegedly made by employees of Keystone, Judge Casper considered them in response to the motion for summary judgment. Ciolino also introduced Navigation and Vessel Circulars published by the Coast Guard that stated that ships that were constructed between 1940 and 1975 used substantial amounts of asbestos for insulation and fire protection. This was supplemented by the reports of Ciolino’s treating physicians that his Benign Asbestos Pleural Effusion was caused by asbestos exposure. Judge Casper considered the evidence sufficient to deny summary judgment on the Jones Act count. Turning to the unseaworthiness count, Judge Casper noted that Ciolino had to prove that the unseaworthy condition was a “direct and substantial cause of his injury.” Ciolino asserted that the asbestos in the crew quarters and passageways was disturbed from the vibration of the vessel during operation of the engine and during rough weather when the vessel would rock in the sea. He testified that he was tasked with sweeping asbestos dust in the crew quarters and that he spent a significant amount of time welding in the engine compartment. Judge Casper found this to be sufficient to satisfy his burden to show that asbestos on the CHILBAR was a direct and substantial cause of the injury, and she denied the motion for summary judgment on the unseaworthiness count.
Tyler Chaves is the owner of a 2005 23-foot Pro-Line Vessel which was rented to Lindsey Faith Partridge through the online website GetMyBoat.com. Chaves delivered the boat to Partridge and launched it off his trailer. Partridge and her boyfriend Jacob Smith brought with them a six-pack of Whiteclaw hard seltzer beverages, an unspecified number of beers, and pre-rolled Delta-8 THC marijuana joints. Before the accident, the couple had consumed at least one drink each but had not smoked any marijuana. Partridge was operating the boat in the Atlantic Ocean just off the Boca Raton Inlet, and when the couple reached the open ocean, Smith began navigating the boat. They encountered heavy seas and decided to return to calmer waters, but the impact of a wave caused the boat to roll. Partridge was ejected from the vessel and was struck by its propeller, causing her fatal injuries. The incident occurred approximately 100 to 150 yards from shore. Chaves filed this limitation action in federal court in Florida, and Donald Partridge, administrator of Partridge’s estate, filed a claim. Get My Boat, Inc. also filed a claim, and Partridge filed a cross-claim against Get My Boat. Partridge moved for summary judgment on exoneration and limitation, asserting that the vessel was unseaworthy when delivered to Partridge because it did not have a lanyard/link for the federally mandated engine cut-off switch. The boat was equipped with the switch, but Chaves did not provide a cut-off-switch lanyard to Partridge, nor did he tell her that his boat had the switch because he had not read the manual, was unaware of the switch, and thought it was a bottle opener. Patridge argued that Chaves violated the Florida Livery Statute and a federal statute regarding engine cut-off switches that were intended to prevent the harm that Partridge suffered. Magistrate Judge Matthewman agreed that Chaves, who has a boating license from New Jersey, had violated the Florida statute requiring that he complete a boater safety course approved by the state of Florida and the provision requiring the display of boating safety information. He agreed that Partridge had provided evidence to create a fact question whether Chaves had violated the federal statute involving installation, use, and education for cut-off switches. Magistrate Judge Matthewman then considered the application of THE PENNSYLVANIA Rule. He noted that the Rule has been applied in the context of the violation of navigational rules that were intended to prevent collisions, but he did not believe that its justification applied to the situation in this case in which there was no collision or allision, stating that it would be unfair to apply the Rule. Although Magistrate Judge Matthewman found negligence per se from the violations of the state statutes, he believed that there were fact questions on proximate cause. Therefore, he declined to grant summary judgment to Partridge on the negligence per se claim. Magistrate Judge Matthewman agreed with Partridge that the vessel was unseaworthy because it did not have a lanyard/link for the federally mandated engine cut-off switch; however, he denied summary judgment because there were fact issues on the broader issue whether the federal statute was violated, whether the vessel was reasonably fit for its intended use, and whether Chaves had privity or knowledge of the conditions of unseaworthiness. In his motion for summary judgment, Chaves argued that the Livery Statute did not apply to him, that he could not possibly have known that the statute applied to him, and that he should not be held to the “impossible standards of conduct” in the statute. Noting that he had previously ruled that Chaves violated the statute, Magistrate Judge Matthewman held that Chaves had not met his burden of establishing, for summary judgment, that the statute did not apply to him. For the same reasons addressed in the ruling on the Partridge motion, Magistrate Judge Matthewman declined to grant summary judgment on exoneration and limitation. Magistrate Judge Matthewman did agree with Chaves that the Estate (Patridge was under 25, unmarried, and had no children) was not entitled to loss of net prospective accumulations under the Florida Wrongful Death Act. Finally, Get My Boat moved for summary judgment, presenting the issue whether a website can be liable for a vessel owner’s acts as a livery either by statute or under the general maritime law, and whether Patridge had a duty to indemnify Get My Boat. Get My Boat argued that the Communications Decency Act gave it federal immunity for any cause of action originating with a third-party user of its online service. Partridge argued that Get My Boat’s participation in the rental made it liable for damages as a livery because it wrote the contract, collected and dispersed the money for the rental, and acted as arbitrator for disputes. Magistrate Judge Matthewman disagreed, citing the reasoning from the Eleventh Circuit that the purpose of statutory immunity is to avoid the chilling effect that would result from the specter of tort liability on service providers for the postings of third parties. Consequently, Magistrate Judge Matthewman granted summary judgment to Get My Boat on the claims for negligence and negligence per se asserted by Partridge. Magistrate Judge Matthewman then addressed the argument that Get My Boat was liable as a livery under Florida law and concluded that just because the Florida statute applied to Chaves did not mean that it also applied to Get My Boat. Although a broader definition of livery was incorporated into the statute after the accident that might include an online service such as Get My Boat, Magistrate Judge Matthewman did not believe that the statute in effect at the time of the accident was broad enough to include this defendant. Therefore, he granted summary judgment to Get My Boat on the application of the Florida Livery Statute. Magistrate Judge Matthewman then addressed the issue whether Get My Boat was entitled to contractual indemnity from Patridge based on the provisions of the Terms of Use Agreement entered into by Lindsey Partridge (in light of the summary judgment on liability, this only involved the costs of defense incurred by Get My Boat). Magistrate Judge Matthewman noted that both California (whose law was applicable by the Terms of Use Agreement) and Florida uphold clickwrap agreements by which a computer user agrees to terms by clicking on a dialog box on the screen as occurred with the Terms of Use Agreement in this case. Partridge argued that there were three separate provisions for the release that were buried in 25 pages and that they should not be enforced because they were ambiguous and conflicting. Magistrate Judge Matthewman did not reach the issue and encouraged the parties to confer and try to reach a resolution. Patridge then moved for reconsideration of Magistrate Judge Matthewman’s declining to apply THE PENNSYLVANIA Rule. He cited the 1980 decision of the Fifth Circuit in Reyes v. Vantage Steamship, in which Judge Brown applied THE PENNSYLVANIA Rule in a non-collision case. As the decision was issued before the Eleventh Circuit split from the Fifth Circuit, the decision was binding in the Eleventh Circuit. Magistrate Judge Matthewman noted that he did not have to consider the decision as it was not previously cited and was not an intervening change in the law. However, he found the case distinguishable because it involved an employer/shipowner that operated a “floating dram shop,” an intoxicated Jones Act seaman who jumped overboard, and the obligation to rescue under the general maritime law. Reyes turned on the violation of the Coast Guard regulation that required the ship to have a rocket powered line throwing appliance. As this case did not involve the heightened causation of a Jones Act case or the duty to rescue, Magistrate Judge Matthewman found no reason to extend THE PENNSYLVANIA Rule when the Eleventh Circuit had not cited Reyes to expand the doctrine.
John Stephenson and Wendy Lea were using a 16-foot skiff (owned by Lovango Island Holdings d/b/a Lovango Resort and Beach Club) to navigate from Lovango Cay to Cruz Bay, St. John. They claim that they were unaware that the skiff was not equipped with navigation lights (or that they were inoperable) as they returned when it was fully dark. As they approached the first channel marker, they collided with the M/V SALTY HOOKER, which was owned and operated by Akiba Pickering. Stephenson and Lea brought this suit in federal court in the Virgin Islands against Lovango and Pickering, asserting that Lovango was liable for providing the skiff without working navigation lights. They asserted three claims, failure to maintain, failure to warn, and unseaworthiness. Lovango moved to dismiss the counts asserted against it and, for the negligence claims, Judge Molloy noted that the complaint did not allege that the SALTY HOOKER collided with the skiff because it was unaware of the presence of the skiff or failed to detect its presence because of the absence of navigation lights. Therefore, he dismissed the negligence counts without prejudice. For the unseaworthiness claim, Judge Molloy held that the warranty extends to a seaman, but the complaint did not allege that either plaintiff was an employee or a seaman. Therefore, he dismissed the unseaworthiness claim with prejudice. Lovango also moved to dismiss the count for common-law negligence that did not distinguish between the defendants. Although the count asserted that Lovango knew or should have known that the plaintiffs would operate the skiff at night, it was devoid of allegations to support that conclusion, and Judge Molloy dismissed the count as to Lovango without prejudice. Finally, Lovango moved to strike the plaintiffs’ demand for a jury trial. The plaintiffs’ complaint asserted that the court had jurisdiction over this admiralty action pursuant to 28 U.S.C. Section 1333 and Rule 9(h). It also provided that the court had jurisdiction pursuant to diversity, and it named the vessel as a defendant. Judge Molloy noted that Lovango was a limited liability partnership and not a corporation. Therefore, the plaintiffs were required to plead the citizenship of each partner in order to establish diversity. As the plaintiffs did not try to make that showing, and as they specifically referred to Rule 9(h), Judge Molloy concluded that the plaintiffs had elected to proceed without a jury and struck the jury demand.
Joseph Sebring’s company, Archon Hat 80, owned the 75-foot yacht JUDESEA, which was worth $1.1 million. The yacht was captained by Jay Franklin until he fell ill in early 2021. Sebring then replaced him with Captain Jim Dale. On September 11, 2021, Sebring and friends were on the yacht, sailing in Lake Erie off the coast of Middle Bass Island, with Captain Dale at the helm. Both engines failed, and the vessel drifted toward shore. Captain Dale could not restart the engines, so he dropped anchor, but the anchor did not stop the drift because the yacht was floating above a rock ledge. The yacht crashed into a jetty and began to sink. Boater’s Emergency Services removed the vessel and moved it to a haul-out facility. The invoice for the operation was $491,577.69. In 2017, Sebring purchased a yacht policy with ACE American Insurance Co. that he renewed every year through 2021. The policy contained a Captain’s Warranty stating that it was a condition of the policy that the vessel, “while being navigated, is under the care, custody, and control of the captain shown above” (naming Captain Jay Franklin). As Franklin was not aboard the vessel and did not have care, custody, and control of the vessel at the time of the loss, ACE American denied the claim. Boater’s Emergency Services brought this suit against Archon Hat, Sebring, and ACE American in federal court in Ohio, and ACE and Sebring filed “dueling” motions for summary judgment with respect to coverage under the policy. Judge Zouhary began with a discussion of the applicable law. The policy contained a choice-of-law provision for maritime law, or in its absence, the law of the state appearing for the insured’s address in the policy (Ohio). ACE American argued that maritime law applied, and that violation of the Captain’s Warranty voided coverage under maritime law based on the Sixth Circuit’s Ciconett opinion from 1950. That was five years before the Supreme Court’s Wilburn Boat decision that did not overrule Ciconett but which “cited the case disapprovingly.” Thus, Judge Zouhary interpreted the policy in accordance with Ohio Law. Sebring argued that the Captain’s Warranty applied while the yacht was being navigated and that the vessel was adrift and was not being navigated at the time of the loss. Judge Zouhary disagreed and held that the warranty unambiguously applied from the time the vessel left the dock to the moment it allided with the jetty. He reasoned that Sebring’s argument would lead to the absurd result that the vessel was being navigated until the engines failed and that, if the captain restarted the engines, the warranty would instantaneously be reinstated. Judge Zouhary did consider extrinsic evidence in the event the language was considered ambiguous, noting the testimony of Sebring’s expert that trying to hold a position is part of navigation. Judge Zouhary reasoned that the actions taken after the engines failed were to maintain position to avoid drifting to shore. Thus, he believed the extrinsic evidence supported ACE American’s interpretation of the policy. The final issue was whether the violation of the warranty voided the policy. He noted that maritime cases generally require strict compliance with warranties, even if compliance with the warranty would not have avoided the loss. Applying Ohio law, he considered the requirement for the captain to be a “warranty” under Ohio law and not merely a “representation.” As such, under Ohio law, the breach allowed ACE American to void coverage under the policy, and Judge Zouhary granted summary judgment to ACE American that the failure to comply with the warranty voided coverage.
Matthew Papania served as the Second Officer on the USNS SISLER, a cargo ship owned by the United States and operated by Patriot Contract Services. While he was ashore at a bar in Diego Garcia, an island in the Indian Ocean with a joint United States/United Kingdom military base, Papania was involved in an altercation with an off-duty British officer and other British nationals. Papania suffered a swollen left eye and facial lacerations. He was transported to the Health Clinic, operated under the command of the United States Naval Hospital in Yokosuka, Japan, where he was treated by two Navy doctors and released the next morning to return to the SISLER. He had not been released to duty, but he told the captain that he could stand his watch and he did so. The next day the captain received the report from the clinic that Papania was not fit for duty for seven days, and Papania returned to the clinic the next day after the vessel returned to port. The doctor deemed Papania fit for duty for three days, and when Papania returned to the doctor eleven days later, he complained that he still had blurry vision in his left eye when looking up and sharp pain if he moved his eye too quickly. He was released as fit for duty and saw a specialist when he returned to the United States a few weeks later. The specialist diagnosed an orbital floor fracture, and Papania underwent surgery, but he still had a small amount of double vision that could have been prevented with an earlier surgery. Papania brought this suit against the United States pursuant to the Jones Act and the Suits in Admiralty Act (bringing claims for negligence, unseaworthiness, and maintenance and cure), and the United States moved for summary judgment, arguing that the claims for failing to order medical evacuation, failure to properly staff the vessel, and failure to properly train and staff the crew were barred by the discretionary function exception to the waiver of sovereign immunity. Judge Walker agreed that the decision on evacuation involved an element of judgment that is insulated from the waiver of sovereign immunity. Similarly, decisions on staffing and training are discretionary. Therefore, the negligence and unseaworthiness claims based on these theories were dismissed. Papania also argued in his response that the United States was negligent for failing to discharge him to see a specialist, delaying his medical treatment, and requiring him to work despite his need for follow-up care. However, he did not plead these theories in his complaint or seek leave for an amendment, and Judge Walker declined to allow Papania to assert these theories as a basis for a malpractice claim when they were not pleaded (he also found that these claims against the vessel were not supported by the facts). Finally, Judge Walker addressed the claim for maintenance and cure, which includes payment for reasonable and necessary medical expenses and providing reasonable and necessary medical care. As there were no outstanding bills and as Papania did not establish that the United States did not provide him with reasonable medical care, Judge Walker dismissed the claim for maintenance and cure.
Three Fifty Markets sold and delivered bunkers to the vessel M/V ARGOS M at the request of AUM Scrap and Metals Trading, alleged to be the charterer of the vessel. AUM Scrap failed to pay for the bunkers, and Three Fifty brought suit against the vessel in federal court in New Orleans, resulting in the arrest of the vessel. Shortly thereafter, PMG Holding, another bunker supplier, filed suit against the vessel in federal court in New Orleans, resulting in another warrant for arrest of the vessel. Three Fifty and PMG Holding moved for interlocutory sale of the vessel after no claim was made, the crew had not been paid, and the costs to supply the arrested vessel were growing. The next claim was filed by ArcelorMittal, whose cargo of steel was aboard the vessel pursuant to a charter of the vessel to transport the steel to Costa Rica. Argos Bulkers finally filed a statement of interest in the vessel, challenging the maritime lien claims of Three Fifty and PMG Holding, and Three Fifty and PMG Holding filed motions for summary judgment seeking enforcement of their lien claims. Judge Fallon found fact questions on the issue of whether the fuel supplied by Three Fifty was purchased by an authorized agent of the vessel, and he denied summary judgment to Three Fifty. In that opinion, Judge Fallon addressed PMG Holding’s motion. PMG Holding argued that it sold the bunkers to AUM Scrap. When Argos Bunkers alleged that the charterer of the vessel was Shimsupa, PMG Holdings claimed that AUM Scrap was the agent of Shimsupa and that PMG Holdings sold the bunkers with the understanding that AUM Scrap had the authority to bind the vessel. Argos argued that although the master accepted delivery of the bunkers and the fuel was consumed by the vessel, no one with actual or apparent authority to bind the vessel purchased the bunkers. The parties did not dispute whether an individual with actual authority purchased the bunkers, and the dispute focused on whether an entity had apparent authority to bind the vessel. PMG Holdings argued that both the charterer (Shimsupa) and its agent (AUM Scrap) had apparent authority because they are majority owned and controlled by the same person and because it is recognized in the industry that AUM Scrap acts as an agent for Shimsupa. Unlike Three Fifty, PMG Holdings produced documents reflecting that the vessel was aware of the bunker sale. Argos responded that Shimsupa was responsible for purchasing the bunkers, but that the bunkers were purchased by AUM Scrap, as reflected in the documents for the sale that listed AUM Scrap as the charterer. Although Judge Fallon found that necessaries were procured for the vessel, there were broken links in the chain of apparent authority. He also found that there were fact issues with respect to the damages. Accordingly, he declined to grant summary judgment to PMG Holdings. See January 2024 Update.
It was then the vessel’s turn to file a motion for summary judgment, arguing that the no-lien clauses in the charter with Shimsupa prevented Three Fifty from executing a lien on the vessel. The validity of the lien turned on whether it was reasonable for Three Fifty to believe that AUM Scrap had apparent authority to make the purchase of bunkers on behalf of the vessel. This was the same issue on which Judge Fallon found a fact question on the prior motion for summary judgment, and it continued to present a fact question that precluded summary judgment: “once it’s a question of reasonable[ness], that’s always a question of fact.” Judge Fallon did stress “that germane to resolving whether AUM—or any other entity authorized by the Vessel—made the fuel bunker purchase involves taking a closer look at the past practices between the parties, the customs in the industry, as well as the nature and extent of the charter and its agents’ authority.”
In our December 2023 Update we discussed Judge Fallon’s finding after a bench trial that LaShip was not liable for damage caused to the JOSHUA CHOUEST (owned by Reel Pipe) when a vessel that was moored at the LaShip docking facility in Houma, Louisiana became unmoored during Hurricane Ida and struck the JOSHUA CHOUEST. This suit involves damage to docks at Gulf Island Shipyards and two vessels under construction when the BETTY CHOUEST broke away from its moorings at LaShip during Hurricane Ida and was swept down the Houma Navigation Canal to the Gulf Island Shipyards. Gulf Island alleged that it was the BETTY CHOUEST that caused the WILD HORSE and WAR HORSE to become unmoored. LaShip filed a counterclaim against Gulf Island Shipyards, alleging that the BETTY CHOUEST did not contact the WILD HORSE or WAR HORSE before they broke free, and that the WILD HORSE was improperly moored and struck the BETTY CHOUEST after it broke free. Therefore, LaShip sought recovery from Gulf Island Shipyards for damages that LaShip may have to pay. Judge Fallon found that both LaShip and Gulf Island Shipyards were at fault for failing to properly moor the BETTY CHOUEST and the WILD HORSE. He found that the BETTY CHOUEST did not come into contact with the WAR HORSE or WILD HORSE while they were docked but that it did come into contact with the WILD HORSE after that vessel broke free. Judge Fallon apportioned fault to LaShip (35%) and Gulf Island Shipyards (65%) and found the damages to the WILD HORSE and BETTY CHOUEST that were apportioned accordingly.
Daniel Ellington is the owner of a Sun Sport Cruiser that was being operated on Lake Pleasant, Arizona. His son, Chris Ellington, went out on the lake with his wife, their two minor children, and six other guests that included Tehanah Smith and her four minor children. The guests were taking turns riding on an inner tube that was being towed by the Sun Sport. During or after the last ride, Smith jumped off the rear of the boat while the motor was running, and her leg was struck by the propellers, resulting in her death. Daniel Ellington brought this limitation action in federal court in Arizona, and the minor children of Tehanah Smith filed a late claim (after defaults had been entered) that was allowed by Judge Brnovich. The claimants moved to dismiss the complaint for lack of subject matter jurisdiction because Lake Pleasant does not satisfy the definition for navigable waters. They asserted that the lake is wholly intrastate and does not connect to other states or countries and that it has never been used for commercial shipping (only recreation). Ellington argued that the lake was formed by damming the Agua Fria River, an intrastate intermittent stream that occasionally flows into the Gila River. He acknowledged that no boat could make it from Lake Pleasant to the navigable Colorado River, but he argued that the water could be made navigable (citing cases involving the commerce clause and not admiralty jurisdiction). Applying the test for admiralty jurisdiction, Judge Brnovich concluded that, in its present state, Lake Pleasant was not navigable. Therefore, she held that there was no subject matter jurisdiction and dismissed the limitation action.
Heritage Oaks 2013 is the owner of a 1998 63-foot Sunseeker motor vessel, the DIAMOND D II. After the conclusion of a charter, the vessel was moored at Safe Harbor New Port Cove Marina on navigable waters in Riviera Beach, Florida. Passenger Linda Moore disembarked from the vessel and was injured on the pier because of a change in elevation on the pier. Heritage Oaks filed this action in federal court in Florida seeking limitation of liability, and Moore filed a motion to dismiss the limitation action for lack of admiralty jurisdiction. Heritage Oaks argued that the Admiralty Extension Act provided jurisdiction, citing the Eight Circuit “booze cruise” case (Duluth Superior Excursions v. Makela). The wrong in that case, however, occurred when the ship allowed a passenger to leave the ship in a heavily intoxicated condition. In this case, the injury was not tied to any activity on the vessel. Heritage Oaks also cited the Florida cases that admiralty jurisdiction is satisfied in areas near a vessel that are with in the exclusive control of cruise ships; however, there was no evidence that the dock in this case was under the exclusive control of the vessel. Concluding that all activities in connection with the vessel and land had concluded, and that the pier was not under the control of the vessel, Judge Rosenberg held that there was no admiralty jurisdiction and dismissed the complaint.
Derrick Swain was a passenger on the CARNIVAL ECSTASY. He was injured in an altercation with other passengers while Swain was waiting in line for food at a cafeteria on the ship. Swain asserts that a security guard was nearby and failed to intervene. He also claims that the altercation was loud enough to draw the attention of other crew members and security guards. Swain brought this action against the cruise line in federal court in Florida, alleging direct and vicarious liability against the cruise line. The cruise line moved to dismiss the claim that the cruise line failed to monitor its ship’s video cameras as well as the count for vicarious liability. Judge Scola noted that the claim that the cruise line failed to monitor the video cameras was a subset of allegations in the direct negligence count. As there were other viable claims in the count, Judge Scola declined to deal piecemeal with the allegations in a motion to dismiss, without passing on the viability of the theory. For the vicarious liability claim, the cruise line argued that Swain only made a single reference to a security officer in the area without specifying which crew members in particular were negligent. The cruise line argued that Swain was “simply trying to circumvent the oftentimes onerous notice requirement in these kinds of cases” and that he “slapped a vicarious-liability-claim disguise on what is really, underneath, a direct-negligence claim.” Judge Scola disagreed, reading the complaint to set forth allegations implicating the negligence of cruise line employees. He added that the argument that the complaint did not specify which crew members were negligent did “not make it out of the gate,” as the complaint specified at least one employee in particular, which “alone is enough.”
John LaRocco took back-to-back cruises on the EXPLORER OF THE SEAS. The first cruise lasted six days, and LaRocco was on the pool deck of the vessel on at least five occasions, walking barefoot on the pool deck. On the first day of the second cruise, LaRocco lounged by the pool between 12 p.m. and 2 p.m. and then decided to walk barefoot to the pool, which was 12 to 15 feet away. He did not immediately notice that the deck was hot because he has diabetic neuropathy, which causes some loss of sensation in his feet. When he felt the heat, he hurried to the pool and jumped in. He was ordered out of the pool because he had jumped in, and he walked back to his chair barefoot. The next day he sought medical attention and was diagnosed with second-degree burns on the bottom of his feet. LaRocco brought this suit against the cruise line in federal court in Florida alleging direct and vicarious liability for negligence (allowing the deck to build up excessive heart and by forcing him to get out of the pool and walk back across the hot deck) and for failure to warn him about the dangerous condition of the deck. The cruise line moved for summary judgment, and Magistrate Judge Reid began with the argument that LaRocco did not establish that the cruise line was on notice of the risk-creating condition. The cruise line disclosed 25 incidents with similar deck material in which passengers reported burns, blistering, or discomfort to the soles of their feet after walking on the pool deck. The cruise line argued that the incidents were not substantially similar because none of the passengers in those incidents suffered from neuropathy, but Magistrate Judge Reid disagreed as the incidents reflected that the cruise line was on notice of the hot deck but took no steps to warn the passengers. The cruise line also argued that the danger was open and obvious, and Magistrate Judge Reid agreed that the risk of walking on a hot pool deck is “generally” open and obvious, but there was an issue in this case whether the particular flooring material was unreasonably hot. Therefore, she recommended that summary judgment be denied on both arguments.
Caribbean Solar entered into a contract with Evolution Caribbean to arrange for the transport of two containers bearing solar panels from Fresno, California to San Juan, Puerto Rico. The containers were delivered for trucking to Jacksonville, but they never made it to Florida for the ocean part of the transportation. Caribbean Solar brought suit in the Court of First Instance in San Juan, Puerto Rico against Evolution Logistics and PhreightLGX, seeking to recover for breach of the contract of carriage (solely under Puerto Rico law), and the defendants removed the case to federal court in Puerto Rico, claiming that the case arose under the Harter Act, which is a statute regulating commerce for which the federal courts have original jurisdiction (28 U.S.C. Section 1337). The defendants cited the Fifth Circuit’s Uncle Ben’s case in which removal was upheld based on the Carriage of Goods by Sea Act. Judge Arias-Marxuach reasoned that the Harter Act did not apply to inland carriage unless the parties extended its terms in the bill of lading, but the “Defendants did not spill any ink to shed light on whether such an extension occurred.” Accordingly, the defendants did nothing to overcome the allegations in the complaint that were based on Puerto Rico law. Judge Arias-Marxuach further rejected application of the removal analysis articulated by the Fifth Circuit in Uncle Ben’s with respect to COGSA, as the Fifth Circuit in Uncle Ben’s did not address the Harter Act, and the “Defendants made no attempt to explain how the Harter Act would ‘completely preempt’ Plaintiff’s claims.” He therefore remanded the case, noting that the defendants had not invoked admiralty jurisdiction for their removal so that the court did not have to address the effect of the Saving-to-Suitors Clause.
Anders Coletti, a passenger on the CARNIVAL LIBERTY, slipped and fell on a wet, slippery, substance on the deck while walking on the tiled floor from the Lido Deck to an interior area on Deck 9 of the vessel. He brought this suit against the cruise line in federal court in Florida, asserting six counts of negligence, three counts of direct liability and three counts of vicarious liability. The cruise line moved to dismiss the three counts of vicarious liability, arguing that the were pleaded “in an attempt to circumvent notice.” Judge Bloom was “unpersuaded” that counts for negligent maintenance, negligent failure to correct, and negligent failure to warn may only be alleged as claims for direct liability based on the decisions of the Eleventh Circuit, and she then considered the sufficiency of the allegations of vicarious liability. As the allegations sufficiently identified the negligent employees and their negligent actions so as to plausibly allege vicarious liability, Judge Bloom denied the motion to dismiss.
Furie Operating Alaska owned and operated a natural gas extraction platform in Cook Inlet, Alaska. In order to transport workers and supplies to and from the platform, Furie entered into a time charter with CISPRI Services to charter vessels as needed. Furie obtained a charterer’s legal liability policy with Syndicates 1183, 1036, and 2007 of Lloyd’s, and it obtained primary and umbrella energy commercial liability policies with Gemini Insurance. The coverage disputes in this litigation arose when a chartered vessel, PERSEVERANCE, was being secured to the mooring apparatus located on the platform (that included a wire rope sling). The rope parted, striking a deckhand on the PERSEVERANCE who was employed by CISPRI. CISPRI paid benefits to the injured crew member and eventually settled his injury claim. CISPRI then brought claims against Furie, seeking indemnity or contribution against Furie based on liability for failing to provide a safe berth and for the negligence of Furie in the design and operation of the mooring system. The claims were resolved in arbitration with findings that the platform was not a vessel; the vessel captain was negligent; Furie was negligent for installing an ad hoc solution rather than a designed/engineered connection to the padeye, which risked an undesirable bending force in the wire rope sling, using the mooring apparatus that it should have known was unsafe to hold the vessel; installing a mooring apparatus without a margin of safety for expected vessel movement during mooring; and failing to know the circumstances for safe use of the mooring apparatus and, therefore, failing to guide the platform employees when not to use the mooring apparatus. Furie was not found to have breached the safe berth warranty because the safety of the mooring apparatus was not the same as the location being unsafe, and the platform was not a “berth.” The arbitrator apportioned the fault as 65% to Furie and 35% to CISPRI. The court confirmed an award of $8.2 million against Furie, and the coverage litigation ensued with this action by the Lloyd’s Syndicates in federal court in Alaska. Gemini tendered the full amount of its primary policy, so the issue was whether there was coverage for the arbitration award under the umbrella general liability policy and the charterer’s legal liability policy [similar issues were decided by admiralty expert, Judge John R. Brown of the Fifth Circuit, with respect to a mooring/anchoring device, in Terra Resources v. Lake Charles Dredging, but that case was not cited in the opinion]. Judge Kindred first addressed the coverage under the charterer’s policy. The Syndicates argued that the charterer’s policy covers Furie’s liability for the injury to the extent it arose out of operations and activities carried on by or ordinarily at the risk and responsibility of the charterer; but Gemini argued that the policy covered any injury to a crew member aboard a chartered vessel, regardless of the accident’s relationship to the insured’s activities as charterer. Agreeing with the Syndicates, Judge Kindred held that designing and operating the mooring apparatus on the platform was a risk that Furie assumed as the platform owner (not as charterer) and that it was, accordingly, not covered under the charterer’s policy. The next question was whether the watercraft exclusion in the umbrella policy excluded coverage–whether the injuries arose out of Furie’s use of the watercraft PERSEVERANCE. Judge Kindred incorporated the same analysis as he used with respect to the charterer’s policy to determine that Furie was not liable for exercising control over the vessel or directing the vessel to the mooring apparatus. Its liability arose from its negligent design and use of the mooring apparatus. Therefore, the watercraft exclusion did not apply and there was coverage under the umbrella policy. Accordingly, Judge Kindred held that the charterer’s legal liability policy issued by the Lloyd’s Syndicates did not provide coverage to Furie and that the Energy Commercial Umbrella Liability Policy issued by Gemini did provide coverage to Furie. See May 2023 Update.
The Lloyd’s Syndicates then sought attorney fees from Gemini, and Judge Kindred noted that Alaska follows the English Rule that the prevailing party in a civil case recovers a portion of its fees from the losing party. Gemini argued that Alaska law did not apply because the court’s subject matter jurisdiction was based on the federal Declaratory Judgment Act and admiralty jurisdiction. Judge Kindred noted, however, that Gemini’s cross-claims were based on diversity. Gemini also asserted that the Charterer’s policy contained a choice-of-law provision for New York law. The Syndicates responded that New York law applied to the interpretation of the policy, but not to the right to recover attorney fees. Following the rule of dépeçage, Judge Kindred evaluated the choice of law for attorney fees without regard to the other issues in the case. He reasoned that attorney fees are substantive for Erie purposes but not for choice of law. Thus, he looked to Alaska law, which considers its rule on attorney fees to be procedural. Consequently, Judge Kindred held that the Alaska rule on attorney fees applied in this case even though New York law governed the substantive issues. He found the Syndicates’ requests to be reasonable, and he awarded $43,952.40 in fees.
On a family vacation, Tammy Fisher chartered the vessel TRIPLE NET and its tender from Seychelles Ltd. Fisher invited Sandra Caldwell and Nacy Newbold to accompany her on the vessel. The vessel was captained by Hayden Smith, and Robert Muller was a crew member. After a trip to Key Biscayne on the tender, Muller was piloting the tender back to the TRIPLE NET with Fisher, Caldwell, and Newbold. The tender slammed into the wake of a large yacht, and Caldwell and Newbold were thrown into the air and landed on the deck. Caldwell and Newbold filed this suit in federal court in Florida against Seychelles and Fisher, in personam, and the TRIPLE NET and it tender, in rem. Seychelles argued that the complaint should be dismissed because it bareboat chartered the vessels, and that the vessels should be dismissed because they are not within the district. Although the Recreational Bareboat Charter Agreement provided that it was a demise charter in which Fisher accepted full possession, command, and navigation of the vessels and would provide the crew and operating costs, the plaintiffs argued that the agreement was not really a bareboat charter because Seychelles agreed to insure Fisher as an additional insured under Seychelles’ insurance and that Fisher would not be liable for damage to the vessel or third party unless she or her guests acted in a way to void or limit coverage under the insurance. Magistrate Judge Augustin-Birch disagreed, noting that insurance provisions do not change the primary consideration of which party has control and possession of the vessel. Although the plaintiffs pleaded that Seychelles employed and controlled the crew, the allegations were not plausible because they contracted the charter. With respect to the failure to allege that the in rem defendants were present within the district, the plaintiffs asked for leave to amend their complaint so that they could arrest the vessels. Therefore, Magistrate Judge Augustin-Birch recommended that the dismissal of the in rem defendants be without prejudice. Finally, Seychelles moved to dismiss the cross-claim for common-law indemnity and contribution filed by Fisher against Seychelles. Fisher made the same argument for her indemnity and contribution claims that the plaintiffs made against Seychelles—that Seychelles was responsible for the acts of the crew, and for the same reason that Magistrate Judge Augustin-Birch gave in rejecting the plaintiffs’ claim, she also denied the indemnity and contribution claims as not plausible in light of the clear language of the charter.
Kholkar Vishveshwar Ganpat, a resident of India, signed a Seafarer’s Mumbai Employment Agreement in India with an Indian subsidiary of Eastern Pacific Singapore that provided for benefits in the event of his disability. Ganpat claimed that he contracted malaria while serving as a crewmember of the M/V STARGATE on a voyage from Gabon to Brazil and brought this suit in federal court in Louisiana against Eastern Pacific under the Jones Act and general maritime law. The thrust of the suit was that the crew failed to stock up on anti-malaria medicine when the vessel stopped at Savannah before heading to Africa. The suit included a claim for benefits under the employment agreement that provided for the application of Liberian law. Ganpat served Captain Owen Bona on the M/V BANDA SEA while the ship lay at anchor in the Mississippi River just below New Orleans, asserting that Captain Bona was a managing agent of Eastern Pacific. Eastern Pacific objected to the service, arguing that Captain Bona was an employee of Ventnor Navigation, not Eastern Pacific. Ganpat responded that Eastern Pacific was the manager of the STARGATE and that Captain Bona was a borrowed servant or managing agent of Eastern Pacific. As there was no evidence that Captain Bona was employed by Eastern Pacific, the question presented was whether he could be considered a managing agent of Eastern Pacific. However, the evidence established that Captain Bona was not involved in any aspect of Eastern Pacific’s business that related to the vessel on which the cause of action arose. Judge Morgan declined to conclude that service could be made on a foreign corporation that was not transacting business in Louisiana through a non-employee captain of a vessel on which the accident did not occur who had no control over any operations of the defendant in the forum state. See February 2020 Update. Judge Morgan gave Ganpat several extensions to serve Eastern Pacific properly. Finally, more than a year later, Ganpat filed a proof of service, an affidavit from a process server in Singapore who stated that he handed the summons and complaint to Eastern Pacific’s receptionist, who signed and affixed the company stamp to the summons. Eastern Pacific challenged the sufficiency of the service, and Judge Morgan held that the service complied with Rule 4(f)(2)(A) in that it was accomplished by a method prescribed by the laws of Singapore for service in that country in its courts of general jurisdiction. See September 2021 Update.
After service was accomplished, Judge Morgan addressed Eastern Pacific’s argument that the case should be dismissed on the basis of forum non conveniens because Ganpat is a resident and citizen of the Republic of India, Eastern Pacific is a Singapore company with its principal place of business in Singapore, Ganpat experienced symptoms of malaria while the vessel was on the high seas sailing from Gabon to Brazil, he was hospitalized and treated for malaria in Brazil, and he was repatriated to India where complications arose. Judge Morgan assumed there was an adequate alternative forum available in India, but she held that Eastern Pacific did not meet its burden of proof with respect to the private interest factors or the public interest factors. Judge Morgan noted, with respect to the private interest factors, that the witnesses were spread across the world. Although many of the crew reside in India, there were others in Romania, Ukraine, Bulgaria, the Philippines, Russia, and Turkey. There were medical witnesses from Brazil and India as well as witnesses with respect to the provisioning of the ship in Savannah before it sailed to Africa. There were also possible witnesses from Liberia, where the owner of the vessel and employer of Ganpat were located. Similarly, with respect to the public interest factors, Judge Morgan found no clear “home” for the dispute involving multiple international contacts. Factoring into the analysis the dilatoriness of Eastern Pacific’s filing of the motion (the longer the case was pending in the United States, the less the defendant could claim inconvenience in the United States), Judge Morgan could not conclude that Eastern Pacific had met the heavy burden of demonstrating that the public and private interest factors weighed in favor of dismissal, and she denied the motion to dismiss. The facts were not developed sufficiently for Judge Morgan to decide whether Indian law applied in the context of Eastern Pacific’s motion to dismiss the suit for failure to state a claim under Indian law (there were disputes about which entities owned and employed Ganpat). Accordingly, Judge Morgan held that a determination of the applicable law was premature. See February 2022 Update.
While Ganpat was trying to serve Eastern Pacific, Eastern Pacific and its Indian subsidiary filed suit against Ganpat in South Goa, India (March 2, 2020), seeking an injunction restraining vexatious and oppressive foreign legal proceedings, i.e., the suit in federal court in Louisiana. On March 7, 2020, the court in South Goa, India issued an order temporarily restraining Ganpat from prosecuting the action in the United States, concluding that the parties and the ends of justice would be better served if trial on liability and damages in relation to the Mumbai Employment Agreement were in India. Almost a year and a half after being restrained from pursuing his suit in Louisiana, Ganpat filed a motion in the Louisiana proceeding seeking to enjoin the Indian litigation that had restrained the prosecution of the American litigation. Noting that Eastern Pacific’s counsel had withdrawn its objections to personal jurisdiction in a telephone status conference on April 18, 2019 (although the complaint was not properly served until later), Judge Morgan held that the court in Louisiana had jurisdiction over the defendant and that its suit in India constituted vexatious and oppressive litigation. She also held that the need to prevent the litigation in India and to protect the jurisdiction of the American court outweighed the need to defer to principles of international comity. Consequently, she enjoined Eastern Pacific from litigating the Indian suit, ordered it to dismiss the Indian suit, and extended the injunction to its Indian subsidiary as it was acting in “active concert” with Eastern Pacific. Eastern Pacific filed a notice of appeal the next day. See May 2022 Update.
Judge Morgan then addressed the choice of law applicable to the claims brought by Ganpat based on the eight factors enunciated by the Supreme Court in Lauritzen and Rhoditis. As the illness arose at sea, Judge Morgan concluded that the factor for the place of the wrongful act did not weigh in favor of applying the laws of the United States, India, Singapore, Gabon, or Liberia. Although the factor for the law of the flag (Liberia) is ordinarily “accorded great significance,” Judge Morgan dismissed it as having no specific application as the vessel owner was not a party. Judge Morgan also gave little significance to the factor for the allegiance or domicile of the injured worker (India) because Ganpat’s work took him beyond the territorial boundaries of his domicile. With respect to the allegiance of the shipowner, who was not a party, Judge Morgan took into consideration the defendant’s organization in Singapore. The place where the contract was executed was Mumbai, India, by Ganpat and an Indian company acting on behalf of a Liberian company. The agreement provided that it would be interpreted in accordance with the laws of the state of the flag of the ship on which Ganpat was employed (Liberia). As the employer was not a defendant, Judge Morgan held that the place of the contract was of no particular application, even though Ganpat brought a claim for benefits under the agreement. Judge Morgan previously assumed that India was an accessible forum (for the factor on the inaccessibility of the foreign forum), but she held that this factor was only applicable for the forum non conveniens issue and not with respect to the determination of applicable law. As the suit was brought in the United States, Judge Morgan found that the factor of the law of the forum favored application of American law. Finally, Judge Morgan held that the shipowner’s base of operations was not a factor because the shipowner was not a defendant. In summary, Judge Morgan found three relevant factors, the Indian allegiance of the seaman, the Singapore allegiance of the defendant, and the United States forum for the litigation. Reasoning that the Lauritzen/Rhoditis factors are not exclusive, Judge Morgan considered Ganpat’s allegation that the vessel was not properly provisioned when it left Savannah and that vessels managed by the defendant made hundreds of visits to ports in the United States and held that United States law should apply to the claims brought under the Jones Act and general maritime law. Judge Morgan then addressed the applicable law for the claim for contractual benefits. The Seafarer Employment Agreement incorporated a Collective Bargaining Agreement between Eastern Pacific and the International Transport Workers Federation. Judge Morgan considered the CBA to be a maritime contract and noted that it did not contain a provision for choice of law. Therefore, she held that her previous Lauritzen/Rhoditis analysis applied so that United States law applied to the claim for benefits under the contract that was entered into by the Indian seaman in India. In an amended complaint, Ganpat added a claim for malicious prosecution against Eastern Pacific arising out of the lawsuit it filed against Ganpat in India. As that alleged tort took place in India and not on navigable waters, Judge Morgan held that Indian law applied to this claim. After concluding her decision on the applicable law, Judge Morgan ruled that the decision involved a controlling question of law that would materially affect the outcome of the case. Therefore, she certified her order for interlocutory appeal pursuant to Section 1292(b) and stayed the case pending resolution of the appeal. See December 2022 Update.
Judge Morgan’s order, enjoining Eastern Pacific from litigating the Indian suit, discussed in the May 2022 Update, was upheld by a majority of a panel of the Fifth Circuit, concluding that Judge Morgan was within her discretion in concluding that the vexatiousness of the Indian litigation outweighed concerns for comity. Writing for the majority, Judge Ho found that the time Ganpat spent in jail for violating the Indian injunction (and the possibility of being sent back to jail) and the threat of seizure of his property were sufficient to satisfy the hardship factor considered for an injunction against foreign litigation as vexatious. Judge Ho also found the second factor (the foreign suit’s ability to frustrate and delay the speedy and efficient determination of the cause) was satisfied because the Indian court sought to prevent Ganpat from proceeding with his first-filed suit in the United States. As the Indian litigation imposed “a hardship on Ganpat while frustrating the American litigation,” Judge Ho did not have to consider the third vexatiousness factor (“the extent to which the foreign suit is duplicitous of the litigation in the United States”), but he agreed with Judge Morgan that the suit was duplicative. Judge Ho also agreed with Judge Morgan that comity concerns were minimal, reasoning that no public international issue was implicated in this case and adding that the case had been ensconced in the American judicial system because Eastern Pacific had consented to American jurisdiction and appeared in the case. Finally, Judge Ho disagreed with the dissenting opinion that international anti-suit injunction precedents in the Fifth Circuit require a showing of irreparable injury. Judge Jones dissented, relating the “tortured procedural history” of the litigation, which she described as an attempt by Ganpat “to compel domestic jurisdiction over a suit with highly tenuous domestic connections.” She reviewed the appellate decisions considering anti-suit injunctions and found this case to be similar to those in which the appellate court vacated anti-suit injunctions. As all of the parties are foreign, the only connections to the United States were the location of Ganpat’s attorney and the allegation that the foreign ship manager failed to supply the vessel with enough anti-malaria medication while the vessel was briefly in port in Savannah. Judge Jones also criticized the limited discussion about the dissimilarity of the parties in the Indian and American cases, emphasizing that the duplicative factor related to vexatiousness is about legal, not factual, similarity. And, with respect to comity, Judge Jones found the majority’s emphasis on public international relations to be “well outside the norm,” noting that it was two years after the Indian injunction that Judge Morgan issued the injunction in the American litigation that is the subject of this appeal. She added: “Had Ganpat instead litigated on the merits in the Indian court, this case might have been concluded already.” Judge Jones concluded that there were legal and factual errors underpinning the injunction, that it was an abuse of discretion to bind the Indian company that was not a party to the action in the United States, and that the terms of the injunction were not narrowly tailored and were abusive. See June 2023 Update.
After the affirmance by the Fifth Circuit of the injunction against litigation in India and while the parties await the decision of another panel of the Fifth Circuit on the choice of law, Judge Morgan considered Ganpat’s motion for contempt and request for attorney fees based on Ganpat’s representation that there had been numerous hearings set in the Indian action. Judge Morgan reasoned that the defendant apparently believed that the court order “does not apply to its attempts to have the Indian court rule that the dismissal of the Indian Action was without prejudice.” Judge Morgan held a hearing and counsel for Eastern Pacific represented that it would not proceed with any lawsuit against Ganpat in India. Judge Morgan reiterated that Eastern Pacific was enjoined from proceeding in the Indian Action and warned that any further violation of the court’s order would “result in the Defendant being ruled into this Court to show why it should not be held in contempt and subjected to sanctions, including attorneys’ fees.”
Byron Chemaly claims that he injured his shoulder while serving as a seaman on the yacht FOUNTAINHEAD while it was off the coast of Sag Harbor, New York. He alleges that he did not receive medical treatment until the yacht returned to Florida and that he was repatriated to his home country of South Africa without his personal effects. He brought this suit in the Circuit Court of Miami-Dade County, Florida against Eddie Lampert, beneficial owner of the FOUNTAINHEAD, Fountainhead Marine and R. Operations, purported owners of the vessel, Grant Gold and Camper & Nicholson, who allegedly managed and operated the vessel, and the vessel’s insurer, XL Catlin. He brought claims under the Jones Act and general maritime law for unseaworthiness (Fountainhead, Operations, and Lampert), against all of the defendants for failure to pay maintenance and cure and failure to treat, for negligence against Camper & Nicholson, for conversion against all of the defendants, and for breach of the insurance contract against Camper & Nicholson and Catlin. The defendants except Catlin, which had not been served, removed the case to federal court in Florida, asserting that Chemaly signed a Seafarer’s Employment Agreement providing for arbitration in the Cayman Island, giving the federal court jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). The defendants also asserted that the case was removable based on the federal court’s original admiralty jurisdiction. After holding that the court had personal jurisdiction over the defendants, Judge Bloom addressed the court’s removal jurisdiction. She noted that if the arbitration clause was applicable to the claims, then the court had subject matter jurisdiction in order to compel arbitration. She noted, in the alternative, that the court may have removal jurisdiction of the claims that did not fall under the New York Convention based on the original jurisdiction of the federal court over admiralty cases; however, the Jones Act claim could not be removed on the basis of admiralty jurisdiction unless it was shown to have been fraudulently pleaded. Thus, the Jones Act claims not covered by the New York Convention would have to be remanded to state court. Judge Bloom then addressed the arbitration clause in the contract between Chemaly and Operations. It included “any dispute arising out of the agreement.” The defendants argued that all of the claims arose out of the agreement, and Judge Bloom agreed that the claims for Jones Act negligence, maintenance and cure, and failure to treat against Operations arose out of the agreement, but she disagreed with respect to the unseaworthiness claim, reasoning that the agreement was silent about Operations’ (or any other defendants’) duty to create a fit or safe environment. Therefore, she held that the unseaworthiness claim was not subject to arbitration. Similarly, in the absence of language in the agreement about return of personal effects, Judge Bloom held that the conversion claim against the defendants was not subject to arbitration. Judge Bloom then considered whether the non-signatories to the agreement could compel arbitration under the doctrine of equitable estoppel, and she held that federal law would apply to determine whether equitable estoppel applied. As the claims against Lampert and Fountainhead arose out of substantially interdependent and concerted conduct with signatory Operations, Judge Bloom held that the claims that were arbitrable as to Operations were also arbitrable as to Lampert and Fountainhead. However, she declined to hold that non-signatories Gold, Camper, or Catlin could arbitrate any claims. Based on her analysis of the claims subject to arbitration, Judge Bloom was left with determining whether to remand the claims against the non-signatories that were not subject to arbitration under the equitable estoppel doctrine. That was easy for the Jones Act claims, which are not removable except when arbitrable under the New York Convention. For the other claims, Judge Bloom reasoned that the defendants, as the removing parties, had the burden to demonstrate that federal jurisdiction existed, and they have no basis for federal jurisdiction over those claims. Therefore, she remanded the claims to state court that were not subject to arbitration. Thanks to Matthew Ammerman of Houston, Texas for bringing this decision to our attention.
Northrim Bank entered into a note and preferred ship mortgage on the GLACIER BAY, owned and operated by Pearl Bay Seafoods, whose home port is Seattle, Washington and which is operated in Washington waters. Pearl Bay is a limited liability company owned by Joseph Martushev, Iasoph Martushev, and others. After a default on the loan, the bank brought this suit in federal court in Washington against Pearl Bay and the Martushevs, and the Martushevs responded that they are Canadian citizens who own no property in Washington and should not be subject to personal jurisdiction in Washington. Judge Martinez noted, however, that the mortgage provided that the bank could exercise all rights and remedies under the law of any state where the vessel may be found. The mortgage also provided that the governing law would be maritime law or Washington law in the event there is no applicable maritime law. Judge Martinez added that the Martushevs were also subject to both general and specific personal jurisdiction in Washington as they are the owners and managers of Pearl Bay, which operates the GLACIER BAY in Washington waters out of Seattle (they also have a logging company operating out of Seattle and Tacoma). The Martushevs also argued that the note provided for jurisdiction in the federal court that includes the lender’s location (Alaska). However, the bank was seeking to enforce the mortgage, which was governed in the alternative by Washington law where the vessel is located and has its home port. Therefore, Judge Martinez denied the motion to dismiss, and he held that venue was proper, reasoning that venue was proper because the property that is the subject of the action, the vessel, is located in Washington. Finally, Judge Martinez considered the Martushevs’ motion to transfer the case to Alaska based on forum non conveniens. Although there were some factors in favor of Alaska, he held that the factors in favor of Washington weighed strongly against transfer, and he denied the request.
From the state courts
This litigation arises from a triangular structure of entities to operate the 98.5-foot commercial fishing boat, SEA WARRIOR, near the Olympic Peninsula in the state of Washington. The entities were formed by David Christenson, Daniel Wiggins, and Justin Smith (through his company Azimuth Holdings). The bareboat charter on the vessel contained a purchase agreement for the vessel that was exercised, and Azimuth and Christenson sold their ownership interests in the venture to Wiggins in a Purchase and Sale Agreement. However, the vessel sustained substantial damage when Christenson failed to winterize the vessel, and either Azimuth or Christenson removed electrical equipment from the vessel. The parties brought actions against each other in the Chancery Court of Wyoming, and Judge Sharpe worked his way through the complicated set of transactions to hold that “a close reading” of the Purchase and Sale Agreement did not disclose any promise that could have been breached with respect to winterizing the vessel or removing equipment. Accordingly, he held that Wiggins was not entitled to relief under the PSA.
Skanska was engaged by the Florida Department of Transportation to rebuild the Pensacola Bay Bridge. During Hurricane Sally in September 2020, several barges used in the construction broke free and caused damage to the bridge and other property. Numerous businesses and property owners brought suits in state courts and brought claims in the limitation proceedings brought by Skanska with respect to its barges. Several of the claimants moved to dismiss Skanska’s limitation action for lack of maritime jurisdiction and, alternatively, on the merits—asserting that Skanska could not establish that it was entitled to limitation of liability. Skanska moved to dismiss the claims of numerous businesses that sought to recover for economic loss resulting from the bridge being out of service (citing the Robins Dry Dock economic loss rule), as the businesses had not suffered any physical damage. The claimants conceded that the first prong of the admiralty jurisdiction test (locality) was met because the damage was caused by barges on navigable waters during the bridge construction. The claimants also did not take issue with the first part of the connection test that there was a potential to disrupt maritime commerce. The claimants argued that the general activity giving rise to the incident was not substantially related to traditional maritime activity, describing the activity as constructing a bridge. Judge Collier was persuaded by the Supreme Court’s characterization in Grubart (damage to buildings in downtown Chicago from work in the Chicago River driving pilings around a pier supporting a bridge). Judge Collier described the work performed by Skanska as “bridge construction and repair performed from vessels on a navigable waterway,” and he did not require that the work must result in an improvement to maritime activity. Finally, although the claimants asserted that the barges did not constitute vessels, they did so to argue that Skanska did not present a viable limitation action, not to argue that the court lacked admiralty jurisdiction over the damage to the bridge on navigable waters. Consequently, Judge Collier denied the motion to dismiss for lack of admiralty jurisdiction. Judge Collier then addressed the claimants’ motion to dismiss the complaint on the ground that Skanska could not establish that it was entitled to exoneration or limitation from liability. This argument included the contention that the barges were used as construction platforms and not vessels. Skanska countered that the barges were used for transportation purposes to and from the worksite and around the bridge area during the construction. Citing the decision of the Supreme Court in Stewart v. Dutra, Judge Collier noted that the primary use of the barges need not be for transportation, and that the barge could lose its status as a vessel only if it were rendered incapable of transportation. He rejected the argument that the barges failed to qualify as vessels and found fact questions for trial as to the negligence and privity of Skanska. Judge Collier then addressed Skanska’s motion to dismiss the economic loss claims. Viewing the issue as relating to damages and not liability, he invoked the limitation procedure that the court would hear the liability and limitation issues first. If Skanska did not succeed on its limitation argument, then Judge Collier held that the resolution of the damages, including the application of the economic loss rule, would be addressed by the court tasked with determining damages under the saving-to-suitors clause. See August 2021 Update.
The claimants sought production of electronic discovery from Skanska, including production of cell phone data, but cell phone data was deleted or lost for five of the 13 custodians of cell phone data. The custodians had received a written litigation hold notice, but Magistrate Judge Cannon concluded that Skanska did not take reasonable steps to preserve the cell phone data for these custodians, allowing employees to delete text messages, not requiring cell phone data to be backed up, and not suspending its routine document destruction policies. Although some of the deleted messages were produced from other custodians, Magistrate Judge Cannon did not find that offering the deposition of the custodians was sufficient to remedy the loss of the data. Concluding that the spoliation constituted bad faith (lack of effort to collect the data until seven months after the litigation hold), Magistrate Judge Cannon held that the evidence was presumed to be prejudicial. Magistrate Judge Cannon did not find that dismissal of Skanska’s limitation actions was appropriate, but she did conclude that adverse inferences were justified, including an inference that the information in the cell phone data was favorable to the claimants. Finally, Magistrate Judge Cannon declined to issue a monetary sanction in the amount of the limitation funds (over $7 million) and instead held that the claimants were entitled to fees and costs incurred in prosecuting the motion for sanctions. Judge Collier agreed with the decision. See September 2021 Update.
Judge Collier held a bench trial of the liability and limitation issues in October 2021 and issued his decision on December 29, 2021. Judge Collier first began by reversing the burden of proof under THE LOUISIANA Rule (when a moving ship strikes and damages a stationary object, the moving ship is presumed to be at fault). He then found that Skanska’s preparations for the hurricane were inadequate and that Skanska did not overcome the presumption. Similarly, he rejected Skanska’s claims that the hurricane was a vis major, which human skill and caution could not have prevented based on his finding that Skanska did not take reasonable precautions for the storm. Turning to limitation, Judge Collier found that Skanska’s negligence sprang from executive decision-making that established privity or knowledge. Consequently, he dismissed the limitation proceedings and dissolved the injunction that had stayed the many suits filed in state court. See February 2022 Update.
Skanska appealed to the Eleventh Circuit, arguing that Judge Collier violated the Limitation Act by failing to adjudicate the merits of the economic loss claims before deciding whether there was privity or knowledge. After giving a lengthy history of the statute, the Supplemental Rule enacted by the Supreme Court to provide the practice used in limitation cases, and the relationship between the statute and the Saving-to-Suitors Clause, Judge Grant addressed the argument that Judge Collier should have decided whether Skanska owed a duty to the economic loss claimants before denying limitation for those claims. Although there is typically a two-part procedure by which the court determines the acts of negligence or conditions of unseaworthiness and then decides whether there is privity or knowledge with respect to those acts/conditions, Judge Grant held that the procedure is not mandatory when it is impossible under any set of circumstances for the vessel owner to demonstrate the absence of privity or knowledge. When limitation is no longer an issue, “the basis for exoneration vanishes.” Therefore, Judge Grant concluded that “whenever the court finds that the vessel owner cannot establish a lack of privity or knowledge, it is appropriate to dismiss the petition to protect the claimants’ rights under the saving to suitors clause—even if that means forgoing (in part or in entirety) a decision on the vessel owner’s liability.” Judge Grant added that the language in Supplemental Rule F that the owner “may demand exoneration from as well as limitation of liability” merely preserved the right to contest liability while seeking limitation and did not “create a freestanding right to exoneration from liability in circumstances where limitation of liability is not an issue.” Accordingly, the Eleventh Circuit held that Judge Collier did not abuse his discretion in dismissing the limitation actions without determining whether there was liability for the economic loss claims. Skanska also challenged evidentiary rulings as well as the finding that Skanska did not exercise reasonable care (based on the application of THE LOUISIANA Rule), and these issues were easily rejected by Judge Grant. Turning to the finding of spoliation, the Eleventh Circuit agreed that the “intent to deprive” standard in Rule 37(e)(2) is the same as the bad faith standard used in other spoliation contexts. Judge Grant found the issue of whether sanctions should be issued to be “a close question,” reasoning that there was no direct evidence of bad faith and it was plausible that Skanska was “‘just’ grossly negligent.” However, the issue was whether there was clear error in the finding of bad faith, and Judge Grant responded that “Skanska’s utter failure to implement even the most basic data-protection safeguards” was “so egregious that an inference of bad faith is easy to make.” In response to Skanska’s argument that “much of the evidence was destroyed through ‘routine document destruction policies,” Judge Grant stated that “a hands-off implementation of an ordinary corporate destruction policy is not a silver bullet.” Finally, Skanska argued that a finding of bad faith based on circumstantial evidence requires an “affirmative act,” but Judge Grant disagreed, as Rule 37 provides for sanctions “when electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it . . . .” See September 2023 Update. After the affirmance by the Eleventh Circuit, the claimants sought a total of $230,855.54 in costs, and Magistrate Judge Cannon awarded the claimants $100,476.37.
Once the concursus of claims from the limitation action was dissolved, the first property damage case to go to trial in Florida state court resulted in a verdict on November 15, 2023 of $1.689 million to Deluna Oyster Co., owner of an oyster farm, which claimed that its crop of 800,000 oysters was destroyed by two of the Skanska barges that broke away. The jury found that Skanska owed $446,016 in property damage and $1,244,761 in lost revenue. See December 2023 Update. The Circuit Court of the First Judicial Circuit for Escambia County, Florida then addressed the economic loss claims of businesses who suffered losses from the closure of the bridge and commuters who claim that they suffered additional expenses. Skanska moved to dismiss the claims that did not involve any physical injury or property damage suffered by the claimant, including claims for negligence, intentional misconduct, gross negligence, private nuisance, and private claims for public nuisance. The judges reasoned that maritime law applied under the Admiralty Extension Act, and that state common law could not supplant maritime law. The judges then considered the applicable principles of general maritime law and noted that the economic loss rule enunciated in Robins Dry Dock had been broadened by the federal appellate courts to require physical damage to a proprietary interest for the recovery of economic losses from an unintentional maritime tort. Following the broadened interpretation, the court held that the unintentional tort claims were barred. The judges then noted that the claimants had not pleaded intentional torts, pleading that Skanska had actual knowledge of the high probability of damage and exhibited a reckless, conscious disregard for the claimants’ well-being. The judges did not believe that this allegation was sufficient, and likewise dismissed the spoliation claim that Skanska lost, misplaced, or destroyed evidence, as neither state nor federal law provides an independent cause of action arising from spoliation of evidence. The court gave the claimants the opportunity to plead a claim for intentional misconduct.
Kenneth G. Engerrand
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Quote:
The Complaint filed in the United States District Court for the Central District of California in Dillihunt v. National Medical Enterprises Inc., 2:24-cv-00361 (C.D. Cal. Jan. 11, 2024) (Doc. 1), expresses opinions that “the general public are still legally tied through Maritime Admiralty Law,” and that “[t]hrough this ancient legal construct we can be easily controlled and duped.” The “only way out” is to “remove yourself from the admiralty law that holds you in custody.” The following is a detailed explanation from which these nuggets were extracted:
Step 1a. Understanding Cestui Que Vie Act 1666
Existence of Life
Cestui Que Vie
London 1666, during the black plague and great fires of London, Parliament
enacted an act behind closed doors, called Cestui Que Vie Act 1666.
The act being debated was to subrogate the rights of men and women, meaning all men and women were declared dead, lost at sea/beyond the sea. (back then operating in Admiralty law, the law of the sea, so lost at sea).
The state (London) took custody of everybody and their property into a trust. The state became the trustee/husband holding all titles to the people and property, until a living man comes back to reclaim those titles, he can also claim damages.
When CAPITAL letters are used anywhere in a name this always refers to a legal entity/fiction, Company or Corporation no exceptions. e.g. John DOE or Doe: JANE
- CEST TUI QUE TRUST: (pronounced setakay) common term in New Zealand and Australia
2) STRAWMAN: common term in United States of America or Canada
These are the legal entity/fiction created and owned by the Government whom created it. It is like owning a share in the Stock Market, you may own a share…but it is still a share of the Stock.
Legally, we are considered to be a fiction, a concept or idea expressed as a name, a symbol. That legal person has no consciousness; it is a juristic person, ENS LEGIS, a name/word written on a piece of paper. This traces back to 1666, London is an Independent City State, just like Vatican is an Independent City State, just like Washington DC is an Independent City State.
The Crown is an unincorporated association. Why unincorporated? It’s private. The temple bar is in London, every lawyer called to the “bar” swears allegiance to the temple bar. You can’t get called without swearing this allegiance.
Our only way out is to reclaim your dead entity (strawman) that the Crown created, become the executor and then collapse the called Cestui Que Vie trust and forgive yourself of your debts and then remove yourself from the admiralty law that holds you in custody.
When London burned, the subrogation of men’s and women’s rights occurred. The responsible act passed… CQV act 1666 meant all men and women of UK were declared dead and lost beyond the seas. The state took everybody and everybody’s property into trust. The state takes control until a living man or woman comes back and claims their titles by proving they are alive and claims for damages can be made.
This is why you always need representation when involved in legal matters, because you’re dead.
The legal fiction is a construct on paper, an estate in trust. When you get a bill or summons from court it is always in capital letters, similar to tomb stones in grave yards. Capital letters signify death. They are writing to the dead legal fiction. A legal fiction was created when someone informed the government that there was a new vessel in town, based upon your birth.
Birth Certificates are issued to us by the Doc. just as ships are given berth Certificates at the Dock. It’s about commerce. We come from our mothers waters. Your mother has a birth canal just like a ship. The ship moves by the sea current just as we are able to move by the currency.
All this information relates to how the general public are still legally tied through Maritime Admiralty Law. Through this ancient legal construct we can be easily controlled and duped. Learning about your legal fiction helps you to unlock yourself. Otherwise you are just an empty vessel floating on the sea of commerce. Parents are tricked into registering the birth of their babies.
In about 1837 the Births, Deaths and Marriages act was formed in UK and the post of registrar general was established. His job was to collect all the data from the churches which held the records of birth.
Regis – from Queen or Crown. All people are seen to be in custody of,” The Crown”. This allows people to function in commerce and to accept the benefits provided by state. We have to understand who we are as men and women and how we can relate in the system. The City of London is a centre for markets, where merchants work. Then there is Mercantile Law. It comes from Admiralty Law. Look at the symbols in your City Courts that relate to Admiralty.
So where you have commerce and money, you also have “justice” and “injury”. You need to understand the bankruptcy before you can understand the judiciary. We have accepted the claim to accept the summons, yet ONLY the dead can be summoned. There is an obligation to accept any liability which has been created. We are operating in Admiralty. A not guilty plea, or ANY plea admits jurisdiction. The strawman, aka legal fiction is always guilty. Barristers and solicitors make a living out of creating controversy. By creating a controversy you become liable for the case.
Honour and dishonour. To remain in honour you have to accept a claim and settle (discharge) it. Then you add conditions, ie. “I accept on proof of claim and proof of loss”. This gives the liability back to them. The legal fiction is always guilty. Only in the High Court, can the real man or woman appear. Games are played on courts, hence the name ‘court’. It is a game with actors (acting on acts). It has to be treated as a game and just business. Court room dramas are misinformation.
In the public, we are operating in bankruptcy and you receive benefits. It takes a lot of time, effort and study to understand and use these tools. You have to be prepared to go fully through the process, get the right tool out of your toolbox at the right time.
People need to learn how to act as a creation of God rather than a creation of Man.
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© Kenneth G. Engerrand, February 29, 2024; redistribution permitted with proper attribution.
