May 2023 Longshore/Maritime Update (No. 288)
Notes from your Updater:
The Update has reported the remand of climate change suits that were removed by energy companies on a number of grounds (including the federal jurisdiction granted under the Outer Continental Shelf Lands Act for cases involving controversies arising out of or in connection with any operation conducted on the outer Continental Shelf that involves exploration, development, or production of the minerals from the outer Continental Shelf). In our November 2022 Update, for example, we discussed Judge Alsup’s remand of complaints filed against energy companies by the cities of San Francisco and Oakland in California state court that were removed to federal court (the complaints alleged that the energy companies produced and promoted fossil fuel products as safe for the environment while concealing that their products would accelerate global warming, eventually flooding parts of those cities). Judge Alsup noted the substantial portion of the energy companies’ production that has arisen from the outer Continental Shelf and reasoned that if he “were writing on a clean slate, these allegations in the complaint would seem to sustain removal jurisdiction” based on the Outer Continental Shelf Lands Act. However, as the Ninth Circuit rejected federal jurisdiction with similar allegations in the San Mateo and Honolulu cases, Judge Alsup remanded the cases to the state courts. See City of Oakland v. BP P.L.C., Nos. C 17-06011, C 17-06012, 2022 U.S. Dist. LEXIS 193512 (N.D. Cal. Oct. 24, 2022). On March 23, 2023, the Eighth Circuit remanded the suit filed by Minnesota against fossil fuel producers (based on common-law fraud and violation of Minnesota’s consumer protection statutes), rejecting a nexus between the energy companies’ activities on the OCS and the claims asserted by Minnesota (“Even if they hadn’t conducted operations on the OCS, the Energy Companies still would have marketed and sold fossil fuels in Minnesota—because the OCS is just one of the many sites the companies produce fossil fuels from.”). Minnesota v. American Petroleum Institute, Nos. 21-1752, 21-8005, 2023 U.S. App. LEXIS 7178 (8th Cir. Mar. 23, 2023) (Kobes). On April 24, 2023, the United States Supreme Court declined to hear the petitions seeking certiorari in several climate-change suits (that included claims for federal removal jurisdiction based on the OCSLA). See BP P.L.C. v. Mayor and City Council of Baltimore, No. 22-361, Chevron Corp. v. San Mateo County, California, No. 22-495, Sunoco LP v. Honolulu, Hawaii, No. 22-523, Shell Oil Products Co. v. Rhode Island, No. 22-524, Suncor Energy, Inc. v. Board of Commissioners of Boulder County, No. 21-1550.
We have noted in several Updates the litigation under the Helms-Burton Act (Cuban Liberty and Democratic Solidarity Act) under which plaintiffs seek compensation from defendants who profited from using property in Cuba that the plaintiffs owned before the Cuban revolution. For example, we reported that the Eleventh Circuit held that Dr. Javier Garcia-Bengochea had standing to assert claims against cruise lines (Royal Caribbean and Carnival) under the Act in connection with the confiscation of property in Cuba by the Cuban government that was then used by the cruise lines (but the appellate court affirmed that Dr. Garcia-Bengochea failed to satisfy the requirements of the Act to permit recovery). See Garcia-Bengochea v. Carnival Corp., No. 20-12960, 2022 U.S. App. LEXIS 32448 (11th Cir. Nov. 23, 2022) (per curiam). On March 27, 2023, Judge Gayles of the Southern District of Florida held that claimants under the Act need not have been United States nationals at the time of confiscation in order to bring their suit against several Crowley Maritime entities that transport freight between the United States and foreign ports, including the Port of Mariel in Mariel Bay, Cuba (alleging that the defendants trafficked in confiscated property in violation of the Act). See Fernandez v. Crowley Holdings, Inc. No. 21-cv-20433, 2023 U.S. Dist. LEXIS 51902 (S.D. Fla. Mar. 27, 2023).
In our January 2023 Update we reported that Magistrate Judge Westmore of the Northern District of California held that the biological opinion regarding the Coast Guard’s codification of Traffic Separation Schemes near the Port of Los Angeles/Long Beach, the Santa Barbara Channel, and the Port of San Francisco violated the Endangered Species Act and that the Coast Guard’s reliance on the opinion was arbitrary and capricious. See Center for Biological Diversity v. NOAA Fisheries, No. 4:21-cv-345, 2022 U.S. Dist. LEXIS 220920 (N.D. Cal. Dec. 7, 2022). On March 31, 2023, Judge Hanes of the Eastern District of Virginia held that the Maritime Administration violated the Endangered Species Act by failing to conduct a Section 7 consultation on its issuance of the 2018 James River Project grant (expanding marine highway routes for container shuttle service among four terminals in the Hampton Roads area) in order to determine whether the project is likely to jeopardize the continued existence of Atlantic sturgeon populations in the James River. See Center for Biological Diversity v. United States Maritime Administration, No. 4:21-cv-132, 2023 U.S. Dist. LEXIS 57232 (E.D. Va. Mar. 31, 2023).
In our June 2022 Update we reported on the claim for mental depression brought by Raoul Galan, Jr. Galan was not a clean-up worker for the DEEPWATER HORIZON/Macondo oil spill, and he did not live in one of the coastal zones covered by the Medical Benefits Class Action Settlement Agreement. However, he is a managing member of a company that owns property in Zone A, whose natural persons may bring claims under the Agreement. Galan argued that he should be included in the settlement class because he suffers from mental depression. The claims administrator for the settlement denied the claim, and Judge Barbier of the Eastern District of Louisiana affirmed the denial. The Fifth Circuit agreed with Galan that mental depression has no geographic boundaries, but the court held that his claim did not fit the plain meaning of the class membership for the medical settlement agreement. Reasoning that Judge Barbier correctly upheld the decision of the administrator, the Fifth Circuit affirmed the denial of the claim. See LMPC0402457 v. BP Exploration & Production, Inc., No. 20-30502, 2022 U.S. App. LEXIS 12076 (5th Cir. May 4, 2022) (per curiam). After losing in the Fifth Circuit, Galan claims that he submitted two notices of appeal to the Supreme Court by mail in August 2022, but the clerk for the Supreme Court denied receipt. Galan eventually called the clerk and was informed that his appeals were not received and that he needed to file a motion to direct the clerk to file a petition for a writ of certiorari out of time. Galan filed motions on behalf of LMPCo402475 and himself, and, on April 3, 2023, the Supreme Court declined to grant Galan’s motions to direct the Clerk to file his petitions for writ of certiorari out of time. LMPCo402457 v. BP Exploration & Production, Inc., No. 22-M-91; Galan v. Petit, No. 22-M-92.
In our November 2022 Update, we noted that the Eleventh Circuit agreed to grant rehearing en banc from its panel decision in Corporacion AIC, SA v. Hidroectrica Santa Rita S.A., 34 F.4th 1290 (11th Cir. 2022), to decide whether the court had the authority to vacate an arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) on the ground that the arbitral panel exceeded its powers—a ground set forth in the Federal Arbitration Act (the panel held that the grounds for vacatur were limited to those set out in Article V of the New York Convention, which did not include that the arbitral panel exceeded its powers). Writing for the unanimous en banc court, Judge Jordan held that “in a New York Convention case where the arbitration is seated in the United States, or where United States law governs the conduct of the arbitration, Chapter 1 of the FAA provides the grounds for vacatur of an arbitral award.” Corporacion AIC, SA v. Hidroectrica Santa Rita S.A., No. 20-13039, 2023 U.S. App. LEXIS 8887 (11th Cir. Apr. 13, 2023).
On April 14, 2023, the Fifth Circuit held that the Sabine River Authority, State of Louisiana, is not an “arm of the state” and was not entitled to sovereign immunity under the Eleventh Amendment (in connection with property damage caused by the release of water from the Toledo Bend spillway gates into the Sabine River). See Bonin v. Sabine River Authority, State of Louisiana, No. 20-40138 c/w No. 22-40433, 2023 U.S. App. LEXIS 9018 (5th Cir. Apr. 14, 2023) (Dennis).
On April 18, 2023, the United States Supreme Court unanimously held that New Jersey could unilaterally withdraw from the Waterfront Commission Compact with New York that created the bistate agency known as the Waterfront Commission of New York Harbor (to which the states delegated their sovereign authority to conduct regulatory and law-enforcement activities at the Port). See New York v. New Jersey, No. 156 (original proceeding), 2023 U.S. LEXIS 1663 (U.S. Apr. 18, 2023) (Kavanaugh).
As we await the decision of the Supreme Court in Sackett v. Environmental Protection Agency, No. 21-454 (argued on the first Monday in October), presenting the Supreme Court with the opportunity to revisit its decision in Rapanos on the scope of jurisdiction under the Clean Water Act, the Biden Administration promulgated a new definition for Waters of the United States that was disapproved by a joint resolution of Congress (227-198 in the House and 53-43 in the Senate). On April 6, 2023, President Biden vetoed the resolution, and the House was unable to override the veto on April 18, 2023.
Continuing on the WOTUS front . . . we reported in our April 2023 Update that, on March 19, 2023, Judge Brown of the Southern District of Texas issued a preliminary injunction blocking the Biden Administration’s revised definition (that would have taken effect on March 20, 2023) of the Waters of the United States within the Clean Water Act (noting that the Supreme Court heard oral argument this term in the Sackett case involving the proper test to determine the extent of Waters of the United States). The injunction applies in the states of Texas and Idaho, but Judge Brown declined to grant a nationwide injunction. See Texas v. United States EPA, No. 3:23-cv-17, 2023 U.S. Dist. LEXIS 45797 (S.D. Tex. Mar. 19, 2023). On April 12, 2023, Judge Hovland of the District of North Dakota issued a preliminary injunction blocking the implementation of the Rule in 24 states. See West Virginia v. U.S. EPA, No. 3:23-cv-32 (D.N.D. Apr. 12, 2023). The Sixth Circuit also issued an administrative stay of enforcement of the rule during the briefing and consideration for motions seeking an injunction filed by the Commonwealth of Kentucky and several private-sector organizations. See Kentucky v. United States Environmental Protection Agency, Nos. 23-5343/5345 (6th Cir. Apr. 20, 2023) (per curiam).
On the LHWCA Front . . .
From the United States Supreme Court
Federal district courts have jurisdiction to hear challenges to the constitutionality of administrative actions against them that are heard by administrative law judges (who are alleged to be insufficiently accountable to the President); Axon Enterprise, Inc. v. FTC, No. 21-86 c/w No. 21-1239, 2023 U.S. LEXIS 1500 (U.S. Apr. 14, 2023) (Kagan).
In our June 2022 Update, we noted that the courts continue to struggle with the application of the decision of the Supreme Court in Lucia v. SEC on the constitutionality of the appointment of administrative law judges. The United States Supreme Court granted a writ of certiorari to decide the question of whether a federal district court has jurisdiction to hear a suit in which the respondent in an ongoing SEC administrative proceeding seeks to enjoin that proceeding, based on an alleged constitutional defect in the statutory provisions that govern the removal of the administrative law judge who will conduct the proceeding. See Securities and Exchange Commission v. Cochran, No. 21-1239 (the Court had previously granted a writ of certiorari in Axon Enterprise, Inc. v. Federal Trade Commission, No. 21-86, to decide whether the courts had jurisdiction over constitutional challenges to the authority of the Administrative Law Judges in cases involving the Federal Trade Commission.
Two days after the Supreme Court granted the writ in Cochran, the Fifth Circuit handed down its decision in Jarkesy v. Securities and Exchange Commission, No. 20-61007, 2022 U.S. App. LEXIS 13460 (5th Cir. May 18, 2022), holding that the statutory removal restrictions for SEC administrative law judges are unconstitutional because the ALJs are sufficiently insulated from removal that the President cannot take care that the laws are faithfully executed. Accordingly, the Fifth Circuit held that the SEC proceedings were unconstitutional in that case because the respondents in the enforcement action were deprived of their Seventh Amendment right to a civil jury and because Congress unconstitutionally delegated legislative power to the SEC by failing to give the SEC an intelligible principle by which to exercise the delegated power (although the court held that the statutory removal restrictions for SEC ALJs are unconstitutional, the court did not address whether vacating the decision below would be appropriate based on that defect alone). Judge Davis disagreed that the layers of removal protection for SEC ALJs were unconstitutional and with the holding that the removal restrictions interfered with the President’s ability to take care that the laws be faithfully executed. The SEC sought rehearing en banc, and, on October 21, 2022, the full Fifth Circuit declined to grant rehearing en banc by a vote of 10 to 6 (with Judge Haynes writing a dissent from the denial of the petition for rehearing en banc). See Jarkesy v. Securities and Exchange Commission, No. 20-61007, 2022 U.S. App. LEXIS 29433 (5th Cir. Oct. 21, 2022). Jarkesy filed a petition for a writ of certiorari on April 10, 2023.
On April 14, 2023, the Supreme Court issued its decision in Axon Enterprise (consolidated with Cochran). Cochran and Axon Enterprise, who were respondents in enforcement actions instituted against them by the Securities and Exchange Commission and the Federal Trade Commission, each filed suit in federal district court challenging the constitutionality of the agency actions against them. They argued that the administrative law judges were insufficiently accountable to the President, in violation of principles of separation of powers. The question presented to the Supreme Court in these cases was not whether the administrative law judges for the agencies were constitutionally authorized to hear the administrative proceedings. The question was whether the federal district courts had the authority to hear the constitutional challenge in a separate suit. The Supreme Court unanimously agreed that the federal courts did have such jurisdiction. Writing for the Court, Justice Kagan cited the Court’s prior decision in Carr v. Saul, stating that “‘agency adjudications are generally ill suited to address structural constitutional challenges’—like those maintained here.” Consequently, Article III courts have jurisdiction to hear challenges to the constitutionality of the structure of the administrative adjudicatory process in federal agencies, including the argument that administrative law judges were insufficiently accountable to the President.
From the federal district courts
After dismissing asbestos-exposure claims of shipyard worker against shipyard that were the basis for removal under the Federal Officer Removal Act, the judge declined to remand the remaining claims; Ragusa v. Louisiana Guaranty Insurance Association, No. 21-1971, 2023 U.S. Dist. LEXIS 51215 (E.D. La. Mar. 27, 2023) (Barbier).
Frank P. Ragusa, Jr. claimed that he was exposed to asbestos while working at Avondale’s Westwego Yard in Louisiana as a tacker in the construction of barges and as a crane operator on the deck of a Zapata rig in the Mississippi River. He was diagnosed with mesothelioma and brought this suit in Louisiana state court, asserting claims under Louisiana law for negligence and intentional tort against Avondale and other defendants. Avondale removed the action to federal court and moved for summary judgment based on the exclusivity of the compensation remedy under the LHWCA. Travelers, an insurer for executive officers of Avondale, also moved for summary judgment on the same ground. Judge Barbier initially addressed whether the LHWCA was applicable, which involved two steps. He first held that the LHWCA, after it was amended in 1972 to extend ashore, was applicable to the exposure, even though some of the exposure pre-dated the 1972 Amendments, because the LHWCA bases the date of injury in an occupational exposure case on manifestation (Ragusa’s date of injury was, consequently, in 2021 when he was diagnosed with mesothelioma). Judge Barbier then considered the situs and status requirements for coverage under the LHWCA, as amended, and held that Ragusa’s work as a tacker (building barges) and as a crane operator (on the deck of a ship) satisfied the situs and status tests so as to be covered under the LHWCA. Judge Barbier next considered Ragusa’s argument that the LHWCA did not preempt the state tort claims, citing the “twilight zone” of concurrent jurisdiction between state and federal compensation statutes. Reasoning that the concurrent jurisdiction did not extend to state tort claims against a worker’s employer, Judge Barbier held the state tort claims were preempted by the LHWCA. Although he agreed with Avondale that the LHWCA did not include an exception for intentional torts, Judge Barbier also held that the facts of the case were insufficient to support an intentional claim, stating, “assuming that Avondale was aware that there was a major risk, or even a probability that Ragusa would contract mesothelioma, Ragusa has failed to bring sufficient evidence whereby a reasonable jury could conclude that Ragusa’s contracting mesothelioma was inevitable.” As the tort immunity in the LHWCA extends to co-employees (and their liability insurer under the Louisiana Direct Action Statute), Judge Barbier also granted summary judgment to Travelers. See April 2023 Update.
After the denial of claims against Avondale, Ragusa moved to remand the suit, arguing that the court lacked subject matter jurisdiction because his claims against Avondale pursuant to the LHWCA formed the sole basis for federal jurisdiction. Judge Barbier cited the principle that the federal court has the discretion to continue to exercise supplemental jurisdiction over the remaining claims in this situation, but he noted the general rule that when the federal claims are dismissed before trial, the court should dismiss the pendent state claims. In this case, the suit had been pending in federal court for several years, and the court had expended significant judicial resources on deciding multiple dispositive motions. The case was set for trial in a few weeks, and it would not serve Ragusa’s best interests to delay the trial with a remand. Therefore, Judge Barbier exercised his discretion to decline to remand the case to state court.
Employer/carrier, which paid compensation after the Department of Labor issued orders declaring the employer in default and after the claimant filed suit in federal court, did not owe attorney fees to the claimant for bringing the federal action (rejecting the catalyst theory for recovery of attorney fees); Berry v. Air Force Central Welfare Fund, No. 2:21-cv-1977, 2023 U.S. Dist. LEXIS 51346 (D. Nev. Mar. 27, 2023) (Mahan).
Catherine A. Berry was employed by a nonappropriated fund instrumentality of the United States at Nellis Air Force Base in Nevada. She received an award for periodic payments of disability under the LHWCA, as extended by the Nonappropriated Fund Instrumentalities Act, pursuant to a compensation order issued by Administrative Law Judge Gee. The employer and carrier did not make payments in accordance with the order, and Berry requested a default order from the Department of Labor. District Director Bruininks issued a Supplemental Compensation Order on February 26, 2021, declaring the employer and carrier in default in the amount of $58,817.50 plus a 20% penalty, for a total of $70,581. When payments were not made after the supplemental order, District Director Bruininks issued another Supplemental Compensation Order on July 19, 2021, declaring the employer and carrier in default for a total of $88,105.01. The employer and carrier did not pay after the second default order, and Berry filed this suit in federal court in Nevada against the employer and carrier, seeking the amount of the default (plus the penalty) and attorney fees for the prosecution of the enforcement action. After the suit was filed, the employer and carrier paid the amounts due under the default orders and moved to dismiss the case as moot. Berry responded with a motion for attorney fees under Section 28 of the LHWCA, advancing the “catalyst theory” that “because attorneys filing this case in court resulted in defendants paying her the disability award, her claim was successfully prosecuted by attorneys as it served as a catalyst for obtaining plaintiff’s desired outcome.” The motion was referred to Magistrate Judge Weksler, who held that the catalyst theory was not a permissible basis for an award of attorney fees “even if the filing of the federal case instigated defendants’ payment.” Judge Mahan agreed, reasoning that no proceeding in the federal court gave Berry a legal right that she did not already have. She established the liability of the employer and carrier in prior proceedings, so the purpose of the fee-shifting provision in the LHWCA was not applicable. Accordingly, Judge Mahan denied the motion for attorney fees and entered judgment for the employer and carrier. Berry filed her notice of appeal to the Ninth Circuit on April 13, 2023 (case number 23-15551).
Claimant has remedies under the LHWCA for failure to pay a compensation order under both Section 18 and Section 21, and the remedy under Section 21 is not subject to the one-year limitation in Section 18; the 20% penalty for failure to timely pay a compensation order is due without calculation by the district director; Rice v. Bituminous Casualty Corp. No. 6:21-cv-173, 2023 U.S. Dist. LEXIS 62124 (E.D. Kent. Mar. 31, 2023) (Wier).
This case arises from a claim under the Black Lung Benefits Act, but it involves remedies set forth within the LHWCA. Marlin Rice brought his claim, and it was denied by the district director. Rice was persistent. He filed three modifications before the district director held that he established the elements for a new claim (not a modification), but Administrative Law Judge Johnson denied the claim. The Benefits Review Board reversed the denial, holding that the claim should be treated as a request for modification. On remand, ALJ Johnson reaffirmed his denial of benefits. After Rice’s fourth request for modification was denied, ALJ Solomon awarded him benefits for total disability, awarding benefits back to August 2006. The district director issued a computation of benefits that were owed, but the employer declined to make any payments and appealed the award to the BRB. After the BRB and Sixth Circuit affirmed the award, the district director calculated the amount of benefits and interest. The employer then paid the compensation but declined to pay interest or the 20% penalty for the failure to timely pay the compensation order. Rice then brought this suit in federal court in Kentucky, seeking to recover interest and penalties, basing his action on Section 921(d) (after all his diligence, Rice died after filing this suit, and his widow substituted for him as the representative of his estate). The employer and claimant filed cross-motions for summary judgment, and the employer argued that the court lacked jurisdiction under Section 921(d) and that the claim was time-barred under Section 18. With respect to jurisdiction, Judge Wier first noted that Section 21(d) applies to a compensation order that has become final. Judge Wier noted the difference between effectiveness and finality. The employer was required to start making payments when the order became effective and the district director computed benefits. The order became final when the Sixth Circuit issued its mandate on the final appeal. Consequently, as the order was final, the district court had jurisdiction over the suit under Section 21(d). Judge Wier added that the appeal did not thwart the payment obligation. The payment of interest was mandatory, and the 20% penalty was “automatic and self-executing.” The suit was, accordingly, properly before the court to enforce those embedded and unfulfilled aspects of the order. Judge Wier also rejected the argument that the suit was not timely under the one-year limitation in Section 18. He explained that Sections 18 and 21 serve different purposes. Section 18 permits the claimant to enforce an effective (but not final) award, and Section 21 permits the claimant to enforce an award that has become final. He noted that Rice could have sought redress under Section 18 within a year of ALJ Solomon’s effective order, but that did not prevent him from seeking to enforce the order under Section 21 once the order was final after the appeal to the Sixth Circuit. The employer argued that the penalty was not due because the order did not contain a specific calculation of the amount owed. However, the district director did make the specific calculation, and the 20% penalty automatically attached to the explicit figures that were clearly communicated. In addition to the interest on the award that was owed for late payment, Judge Wier held that Rice was entitled to interest on the penalty.
Judge stayed asbestos-exposure direct action by granddaughter against insurer of executive officers of shipyard because of prior coverage litigation in another court; Giarratano v. Huntington Ingalls Inc., No. 22-88, 2023 U.S. Dist. LEXIS 60592 (E.D. La. Apr. 6, 2023) (Vitter).
Kelly Giarratano claims that she was exposed to asbestos while living with her grandfather, Hughie Verdoodt, a long-time employee of Avondale Shipyards (1942 to 1982), and that the exposure (she lived with her grandfather beginning with her birth in 1962) caused her to develop lung cancer. She also claimed exposure to asbestos during attendance at “family day” events at Avondale. Giarratano brought this action in Louisiana state court against Avondale and others, and the case was removed to federal court based on the Federal Officer Removal Statute. In an amended complaint Giarratano brought a direct-action claim against Pennsylvania Insurance Co., alleging it was liable as an insurer for several executive officers of Avondale (and that it was also an insurer of one of the retail suppliers of asbestos). Pennsylvania Insurance then moved to stay the claims against it under the first-to-file rule because there was litigation in federal court in Massachusetts concerning the liability of Pennsylvania Insurance for the policies at issue in the Louisiana litigation. Giarratano opposed the motion, arguing that there was only one party common to both cases, and that she had a statutory right to bring a direct action under Louisiana law with a right to a jury that would be violated if the decision on coverage was issued by the court in Massachusetts. Judge Vitter reasoned that the first-to-file rule does not require the cases be identical and that the court with the later-filed suit may stay the action if there is “substantial overlap” between the cases. After reviewing the record and orders in the Massachusetts litigation, Judge Vitter held that the claims in the Massachusetts case have a direct bearing on Giarratano’s ability to recover against Pennsylvania Insurance in the Louisiana suit. Judge Vitter also rejected the argument that there was no substantial overlap (there were 21 parties in the Louisiana suit with only one common party to the Massachusetts suit) because Pennsylvania Insurance was only seeking to stay the claims against it and not the claims against the other 20 parties in the Louisiana action (“The Court looks only to the issues presented in Giarratano’s claims against [Pennsylvania Insurance] because it is only those claims that [Pennsylvania Insurance] seeks to stay.”). Judge Vitter also disagreed that staying the action would violate Giarratano’s rights to have a jury determine coverage. The issue in the Massachusetts litigation was which insurer is responsible for paying the claims that are owed under old policies for an insurer that no longer exists. That will be decided in the Massachusetts litigation. Once that issue is decided, Giarratano will be able to have a jury determine the liability under the old policies. Therefore, Judge Vitter stayed the claims against Pennsylvania Insurance.
From the state appellate courts
Securing coverage under the LHWCA was all that was necessary for the employer to assert a bar under the LHWCA to a claim for common-law contribution/indemnity, and it did not matter that the LHWCA claim was controverted and that medical benefits were paid “under Jones Act;” Marvinney v. Australian Spirit L.L.C., Index No. 151377/2019, 2023 NY Slip Op. 23085, 2023 N.Y. Misc. LEXIS 1391 (N.Y. Sup. Richmond Cty. Mar. 30, 2023) (DiDomenico).
Michael Marvinney was employed by Reynolds Shipyard, which operates a shipyard adjacent to the waters of New York Harbor. Marvinney was operating a crane to assist Brady Marine in the repair of the vessel AUSTRALIAN SPIRIT, owned by Australian Spirit, L.L.C. The repair required that an old anchor chain on the vessel be replaced with a new one that was being loaded by Marvinney onto a barge owned by Reynolds. The personnel operating the barge and directing Marvinney were employed by Brady Marine. During the process, the crane tipped over, and Marvinney was injured when he jumped out of the cab of the crane. Reynolds Shipyard, which maintained coverage under the LHWCA with the New York State Insurance Fund, voluntarily paid Marvinney his full salary for eight months until Marvinney filed a claim for benefits under the LHWCA (his medical benefits were paid by Reynolds Shipyard’s insurer “under Jones Act”). Marvinney and his wife filed this suit in state court in New York against the vessel owner and Brady Marine, and Brady Marine brought a third-party action seeking common law contribution/indemnity against Reynolds Shipyard. Reynolds Shipyard moved to dismiss the third-party action based on the exclusive remedy provision in the LHWCA (Section 5(a)), but Brady Marine argued that there was a fact question whether Marvinney was covered by the Jones Act and not subject to the exclusive remedy provision in the LHWCA. Brady Marine argued that the medical benefits were paid under the Jones Act, but Judge DiDomenico agreed with Reynolds Shipyard that a worker can receive benefits under both the LHWCA and as a seaman until a final determination of coverage is made. Judge DiDomenico noted that she had previously held that Marvinney was covered under the LHWCA in granting summary judgment to the vessel owner, concluding that the vessel owner did not breach any of the duties under Section 5(b). As that finding was now the law of the case, Brady Marine argued that the exclusive remedy provision was not applicable because Marvinney never “actually received” benefits under the LHWCA (the exclusive remedy applies to employers who secure payment of compensation payable under the LHWCA). Judge DiDomenico held that the LHWCA only requires the employer to secure coverage and not to actually make payments to the covered employee in order for statutory immunity to attach. And it did not matter that Brady Marine controverted the LHWCA claim on the basis of “jurisdiction . . . all meds paid by Assured’s Insurance under Jones Act” as the judge found that Marvinney was covered under the LHWCA. As the “securing of a LHWCA policy” was “all that was required for Reynolds to receive exclusive statutory immunity,” Judge DiDomenico dismissed the contribution/indemnity claims against Reynolds Shipyard.
And on the maritime front . . .
From the federal appellate courts
Fifth Circuit explained that a suit seeking to recover for salvage, which was brought under the federal court’s admiralty jurisdiction, was a civil action to which the two-year statute of limitations (for civil actions seeking to recover for salvage services) was applicable; Bynum v. Ingram Barge Co., No. 22-20372, 2023 U.S. App. LEXIS 7708 (5th Cir. Mar. 31, 2023) (per curiam).
Captain Bret Bynum brought this suit in 2021 seeking to recover for his actions taken in 2017 to salvage two barges that broke free from a fleet in Greens Bayou and drifted into the Houston Ship Channel. Captain Bynum claimed that he likely saved the vessels from sustaining damage and also stopped them from colliding with a laden oil tanker, which could have caused a spill and damage to the environment. Captain Bynum claimed that he was entitled to a portion of the value of the vessels and their cargo. The barge owners moved to dismiss the suit, brought four years after the salvage, citing the federal statute, 46 U.S.C. Section 80107(c), which provides: “A civil action to recover remuneration for giving aid or salvage services must be brought within 2 years after the date the aid or salvage services were given . . . .” Captain Bynum argued that the statutory limitation did not apply because his suit was an action in admiralty, not a “civil action” within the statutory limitation. Judge Hittner disagreed and held that the claim was barred. Captain Bynum appealed to the Fifth Circuit and reiterated his argument that he brought an admiralty action for salvage, not a civil action for salvage. The Fifth Circuit answered that Captain Bynum was confusing jurisdiction with action, noting that admiralty is a type of jurisdiction; however, there is only one form of action –the civil action. This case was properly characterized as “a civil action in admiralty jurisdiction.” Turning to the statute, the Fifth Circuit held that the law applies to all civil actions to recover remuneration for salvage services. Thus, its application did not depend on the type of jurisdiction that was invoked by the salvor. As the civil action brought by Captain Bynum in admiralty was not filed within two years of the salvage service, the Fifth Circuit held that it was time-barred.
Marine cargo insurance policy did not cover hurricane damage to plants in greenhouses or in fields; Certain Underwriters at Lloyds of London v. Pero Family Farm Food Co., No. 20-12711, 2023 U.S. App. LEXIS 8451 (11th Cir. Apr. 10, 2023) (per curiam).
Pero Family Foods grows peppers and beans and then prepares and packages them for sale by retailers or wholesalers. Pero plants seeds in fields it owns or leases in Florida, but it also sends seeds to a third-party plant grower, Trans Gro, which grows the seedlings until they are mature enough to be transported to Pero’s fields for planting in the ground. Once its vegetables are harvested, Pero transports them to its cooled storage facility in Delray Beach, Florida, where it cleans, packages, and stores the vegetables. When Hurricane Irma struck South Florida in September 2017, Pero suffered damage to vegetables stored in the coolers at its packing house, seedlings that were growing in the Trans Gro greenhouses, plants that were growing in Pero’s fields, and plastic coverings over the plants in Pero’s fields. Pero purchased a Marine Cargo Insurance Policy with Lloyds in order to insure domestic shipments of beans and peppers on vehicles moving from field to packing house and seeds stored on location. Pero filed a claim on the policy, and Lloyds accepted coverage and paid for the loss of the vegetables in the coolers, but it denied coverage for damage to the seedlings growing in Trans Gro’s greenhouse, the plantings in Pero’s fields, and the plastic coverings on Pero’s fields. Lloyds brought this suit in federal court in Florida, seeking a declaration that the policy did not cover damage to the seedlings, plantings, or plastic coverings, and Judge Ruiz agreed with Magistrate Judge Reinhart’s recommendation that summary judgment be granted in favor of Lloyds. Pero appealed to the Eleventh Circuit, which agreed with the district court that the policy’s plain language required a finding that objects must be moved in trade and commerce in order to be covered. Stating that the policy covered goods only when they “were in transit or, by extension, ‘in store’ as ‘stock’ at a ‘location’ during the transit process,” the Eleventh Circuit held that the policy did not cover the damage to the seedlings, plantings, and plastic coverings.
From the federal district courts
Reasoning that an accident that occurs in the territorial waters of a foreign country does not fall within a federal court’s admiralty jurisdiction, the judge allowed discovery to determine the location of the accident; Campbell v. Uptowner Inns, Inc., No. 3:22-cv-417, 2023 U.S. Dist. LEXIS 50448 (S.D. W. Va. Mar. 24, 2023) (Chambers).
Steven Campbell was injured during a diving excursion on a boat operated by a resort in Roatan, Honduras. He brought suit against the resort in federal court in West Virginia, and the resort argued that the court did not have admiralty jurisdiction over the case because the accident occurred in the territorial waters of Honduras (citing a case from a district judge in Virginia that cited the decision of the Supreme Court in Victory Carriers that maritime jurisdiction applies to navigable waters of the United States and the high seas). As there was a dispute about whether the accident occurred in Honduras waters, and as Judge Chambers believed “the location of the accident will determine if jurisdiction exists under 28 U.S.C. § 1333,” the judge allowed a brief period of discovery to determine the location of the accident.
Judge dismissed seaman’s claims under state law seeking to recover for termination of his employment on a voyage but did not dismiss his claim for wages under federal law; Kane v. Matson Navigation Co., No. 22-cv-4583, 2023 U.S. Dist. LEXIS 65411 (N.D. Cal. Mar. 26, 2023) (Orrick).
Mark Kane was hired from the union hall in Hawaii and flew to Los Angeles where he signed shipping articles to work for Matson Navigation on the KAIMANA HILA for 105 days from September 13, 2021, to December 26, 2021 (including the return to Long Beach, California). On December 6, 2021, the captain of the vessel issued a letter warning Kane that he had violated workplace policy and then read the letter to Kane in front of four shipmates. According to Kane, the captain confined Kane to his quarters and discharged him the next day in Guam without giving him the opportunity to address the deficiencies in the warning letter. Kane contended that the letter came in retaliation for his reporting that another seaman harassed and bullied him, and Kane brought this suit in federal court in California seeking to recover under the California Fair Employment and Housing Act, for breach of contract and the implied covenant of good faith and fair dealing (based on the letter of warning), for unearned wages, for intentional infliction of emotional distress, and for defamation. Matson Navigation moved to dismiss all the claims except for the allegations of intentional infliction of emotional distress and defamation. As none of the claims that are the basis for the suit occurred in California, Judge Orrick held that the claim under the California Fair Employment and Housing Act (which did not have extra-territorial effect) would be dismissed. He dismissed the claim for breach of contract/bad faith as the letter of warning was not a contract under maritime or state law and did not contain any bargained-for promise by either Matson or Kane. Although Matson argued that the claim for wages under 46 U.S.C. § 10318 (a month’s wages unless he was fired for neglect of duty, incompetency, or injury) was subject to the exclusive remedy of Section 10313(c) (seaman fired before a month’s wages have been earned), Judge Orrick did not believe that the latter provision provided the exclusive remedy for a claim under Section 10318. He also rejected Matson’s argument that the Labor Management Relations Act displaced the remedy asserted under the Seamen’s Wage Act. Therefore, he declined to dismiss the wage claim (noting that additional argument or discovery might prove the claim to be futile).
Judges granted summary judgment on opt-out claims from the DEEPWATER HORIZON/Macondo spill for lack of evidence on causation and declined to admit insufficient expert opinions on causation as a sanction for BP’s failure to collect dermal or biometric data on those who were exposed to the oil and chemicals after the spill; Mackles v. BP Exploration & Production, Inc., No. 17-4003, 2023 U.S. Dist. LEXIS 51207 (E.D. La. Mar. 27, 2023) (Vance); Blackwell v. BP Exploration & Production, Inc., No. 17-3490, 2023 U.S. Dist. LEXIS 54675 (E.D. La. Mar. 30, 2023) (Vance); Matthis v. BP Exploration & Production, Inc., No. 17-3550, 2023 U.S. Dist. LEXIS 56045 (E.D. La. Mar. 31, 2023) (Vance); Duke v. BP Exploration & Production, Inc., No. 16-13873, 2023 U.S. Dist. LEXIS 56047 (E.D. La. Mar. 31, 2023) (Guidry); Curbelo v. BP Exploration & Production, Inc., No. 17-3690, 2023 U.S. Dist. LEXIS 56052 (E.D. La. Mar. 31, 2023); Packer v. BP Exploration & Production, Inc., No., 17-4077, 2023 U.S. Dist. LEXIS 56055 (E.D. La. Mar. 31, 2023) (Vance); Pettway v. BP Exploration & Production, Inc., No. 17-4481, 2023 U.S. Dist. LEXIS 58814 (E.D. La. Apr. 4, 2023) (Fallon); Williams v. BP Exploration & Production, Inc., No. 17-4307, 2023 U.S. Dist. LEXIS 58815 (E.D. La. Apr. 4, 2023) (Fallon).
Shane L. Mackles asserted exposure to oil and dispersants from the Macondo/DEEPWATER HORIZON spill as a cleanup worker at Hopedale and Shell Beach, Louisiana. Cherrae Addi Blackwell claimed exposure as a cleanup worker at Pascagoula and Biloxi, Mississippi. Shawna Elisie Matthis alleged exposure as a cleanup worker at Jackson County, Biloxi, and Bay St. Louis, Mississippi. Ivan Perez Curbelo claimed exposure while working at the decontamination stations in Pascagoula, Mississippi, and Theodore, Alabama. Patrick Packer alleged exposure from cleanup work at the borders of Alabama and Florida waters “under bridge” as well as on the beach in Alabama. Delrick Pettway asserted exposure in cleanup work from “Dolphin Island to Bayou Latre.” Holly Williams claimed exposure in cleanup work at Grand Isle, Louisiana. These plaintiffs presented the expert report of Dr. Cook to support the general causation requirement for their claims. BP moved to exclude Dr. Cook’s opinions, and the plaintiffs asked the court to allow Dr. Cook’s expert testimony as a sanction for BP’s alleged spoliation of evidence of the plaintiffs’ exposure. Judges Fallon and Vance agreed that Dr. Cook’s opinions should be excluded and that the spoliation contention did not change that result. They noted that spoliation is a sanction for the destruction of evidence, but the plaintiffs argued in these cases that BP should have gathered data. Without a duty to collect the data (and as no such evidence existed), there could be no spoliation. Additionally, the admission of a deficient expert report would not be the cure even if there were spoliation. Finally, the plaintiffs noted that some judges had denied summary judgment to BP for symptoms that were transient or temporary. Judges Fallon and Vance responded that the summary judgment motions in those cases were premised on specific causation, and that Dr. Cook’s opinions on general causation were not challenged in those cases. In these cases, however, BP argued that Dr. Cook’s opinions were insufficient on general causation and specific causation. As evidence of general causation was required, regardless of whether the condition was transient or temporary, and as there was no expert evidence of general causation, Judges Fallon and Vance granted summary judgment to BP and dismissed these actions with prejudice.
Tiffany Duke claimed she suffered from a recurrence of her pre-existing porphyria cutanea tarda from exposure to toxic hydrocarbons while living in Orange Beach, Alabama. She relied on the expert opinions of Kathleen Burns, Ph.D. (an expert in toxicology and epidemiology), as to general causation, who issued a report evaluating a potential relationship between exposure to crude oil-contaminated air and other media and the exacerbation of Duke’s PCT. Duke submitted disclosures that she would offer an opinion as to specific causation from her former treating physician, Michael Meshad, that Duke suffered a recurrence of PCT as a result of her proximity to hydrocarbons from the Macondo spill. BP asked the court to exclude the testimony of Drs. Burns and Meshad and to dismiss Duke’s claim for lack of evidence of causation. Judge Guidry noted that Duke submitted two letters from Dr. Meshad that did not directly relate her PCT recurrence to hydrocarbon exposure and instead stated that the recurrence “coincided” with the exposure to hydrocarbons. The disclosures (and letters), however, did not cite the chemicals involved, the levels or frequency of exposure, the information relied on to reach his opinion on specific causation, or address other possible causes. Accordingly, Judge Guidry ruled that Dr. Meshad would not be allowed to testify as an expert on specific causation. With respect to the opinion of Dr. Burns, Duke claimed an exception to the requirement that the expert was required to identify a level of exposure to hydrocarbons that would exacerbate or cause Duke’s condition because Duke suffers from a recurrence of a pre-existing illness as opposed to a newly developed condition. Judge Guidry found no authority for that proposition and declined to allow Duke to circumvent the requirement. Judge Guidry also rejected the argument that a statement in the Medical Benefits Class Action Settlement Agreement that contact with oil or dispersants causes certain acute and chronic conditions if there were exposure to sufficient amounts for a sufficient amount of time operated as a stipulation to general causation, reasoning that Dr. Burns’ report did not establish the harmful level of exposure to cause Duke’s health condition to recur. In the absence of expert testimony on general and specific causation, Judge Guidry dismissed Duke’s claims with prejudice.
Stipulating to the amount of security to release a vessel does not preclude the vessel owner from later moving to reduce the amount of the security; financial gobbledygook without substance did not support the amount of security, which was reduced by the magistrate judge; Maersk Tankers MR K/S v. M/T SWIFT WINCHESTER, No. 3:22-cv-390, 2023 U.S. Dist. LEXIS 51260 (S.D. Tex. Mar. 27, 2023) (Edison).
On September 8, 2022, the M/T SWIFT WINCHESTER, owned by Winchester Shipping, was detained by the Coast Guard in Port Arthur, Texas. Winchester committed the vessel to a commercial tanker trading pool in accordance with the Maersk Tankers Pool Agreement, and Maersk chartered the vessel to PMI Trading for the transport of petroleum products from Port Arthur to Mexico. Winchester’s P&I Club, the Swedish Club, appointed a law firm to serve as local correspondents for non-MARPOL issues related to the detention of the SWIFT WINCHESTER. A lawyer for the firm attended on the vessel while it was detained, helped the master to ensure that deficiencies were corrected and inspected by the class surveyor, sent a detailed report to the Club about matters occurring on the vessel, provided legal advice to Winchester, and made recommendations. Winchester then retained “new counsel,” and the first firm (appointed by the Club) coordinated with the new firm to assist as instructed. On November 8, 2022, the attorney for the first firm instituted this action in federal court against the SWIFT WINCHESTER on behalf of Maersk Tankers, alleging that the vessel was significantly delayed and/or failed to depart the United States due to pollution violations and the related investigation by the Coast Guard and the Department of Justice and that PMI Trading had placed Maersk on notice of claims arising from delay to the cargo caused by the alleged violations of the vessel. Ten days later Winchester moved to disqualify the first firm (and attorney) from its representation of Maersk against Winchester. The firm argued that P&I Clubs do not function as traditional insurance companies and that the long-standing principles of Texas law (from the Tilley case) on the “tripartite relationship among an insurer, defense counsel, and insured” do not apply to them. Magistrate Judge Edison distinguished the authority cited by the firm, noting that the case stood for the proposition that “the lawyers provided to the vessel owner by its P&I Club were just that—lawyers for the vessel owner.” Accordingly, Magistrate Judge Edison stated that “the fact remains that [the firm] was Winchester’s counsel for the short duration that it assisted Winchester during the Vessel’s detention, and it owes Winchester unqualified loyalty.” Although Judge Edison believed that “the turkey seems cooked,” he addressed the remaining arguments presented by the firm. The firm argued that the attorney-client privilege only attaches to communications for legal advice or services and not business or technical advice or management decisions. The firm’s billing records refuted that argument, however, with entries that included coordinating defense of member, assisting in the company response to the Coast Guard inspection and investigation, planning for the continued defense of the allegations and responding to them, assisting with recommendations to the Club and member and responding to the Coast Guard, and coordinating with criminal defense counsel and conferring about recommendations to the criminal defense counsel. “To appreciate just how far [the firm] is reaching with its contention that it had no attorney-client relationship with Winchester,” Magistrate Judge Edison noted that the Swedish Club identifies two local correspondents for the Houston area in its list of correspondents. The website for the other firm contains a disclaimer that the providing of legal services constitutes an attorney-client relationship. However, the website for the firm hired in this case contains no such disclaimer. Thus, “the best support [the firm] can muster for why it did not establish an attorney-client relationship with Winchester is to point to a disclaimer from the website of” the other local correspondent. Magistrate Judge Edison considered that difference to work against the argument made by the firm. Accordingly, Magistrate Judge Edison concluded that Winchester established an attorney-client relationship with the firm during the vessel’s detention in September 2022 in Port Arthur. Finally, Magistrate Judge Edison concluded that the subject matter of the present litigation and the prior representation by the firm were substantially related, resulting in “an irrebuttable presumption ‘that relevant confidential information was disclosed during the former period of representation’” (stating that this case was “a textbook example of ‘substantial relation’”). Therefore, Magistrate Judge Edison disqualified the firm and attorney from representing Maersk in this litigation, but he did not strike the pleadings submitted by the firm as counsel for Maersk. See March 2023 Update.
Maersk’s claim, when it arrested the vessel, was in the approximate amount of $6,855,000, and, with a sale of the vessel pending, Winchester moved for an order approving substitute security of $7,355,000, which was approved by Magistrate Judge Edison. The damage figure was based on a claim made against Maersk by PMI Trading, which chartered the vessel from Maersk. PMI Trading then filed an intervention seeking to attach the funds in the security pursuant to Rule B based on the same demand that it made to Maersk in the estimate of $6,855,000. Winchester then moved to reduce the security, arguing that the amount claimed included demurrage charges unrelated to the charter of the vessel and that more than $769,516.67 of the claimed damages were unexplained. PMI and Maersk first argued in response that the court should not consider the request because Winchester agreed to the amount of the substitute security when the vessel was released. They also argued that there were questions on the foreseeability of the consequential damages. Magistrate Judge Edison easily rejected the first argument, reasoning that a contrary result would run afoul of the plain language of Supplemental Rule E, which permits parties to move to reduce security after previously stipulating to the amount. The harder question was how much security should be required—what is the likely recovery in the arbitration? As PMI Trading was “unabashed in its failure to give a basic accounting,” Magistrate Judge Edison had no problem rejecting the claim for $769,516.67. As to the claim for $4.4 million in losses due to market changes, PMI’s attorney asserted that the losses were based on commercial strategies by PMI Trading to “hedge its position on the volume.” He added that the “delays had a direct effect on the P&L of this strategy,” and that calculating the damages was “underway” but would take some time. Magistrate Judge Edison recognized that PMI Trading was not required to “prove its damages with exactitude.” However, he stated: “This financial gobbledygook is a hand-wave that obscures a scarcity of substance.” He added: “I am not asking for a lot here. I just need something—anything, really—to indicate that these claims are not frivolous.” Similarly, Magistrate Judge Edison rejected the claim of $1.3 million for lost profits due to the vessel’s delay as there was no “explanation as to why these lost profits should have been foreseeable to Winchester at the time the charter party was executed.” Although Magistrate Judge Edison was concerned that PMI Trading’s demurrage claim in the amount of $330,000 suffered from the same problems as the other claims, he noted that Winchester did not contest the claim in its Motion to Reduce Security, so he did not reduce the amount of $330,000 for alleged demurrage damages. Finally, Magistrate Judge Edison declined to allow security for $332,500 for freight because a claim for freight was not included in the complaint. Consequently, Magistrate Judge Edison reduced the security to $330,000.
Judge ordered arbitration of foreign seaman’s claim against cruise line despite the arbitration provision not specifying that the arbitration would take place in a country that is a signatory to the New York Convention; Cosgun v. Seabourn Cruise Line Ltd. Inc., No. 21-cv-61378, 2023 U.S. Dist. LEXIS 53068 (S.D. Fla. Mar. 28, 2023) (Altman).
Seabourn Cruise Line hired Bulent Cosgun, a citizen of Turkey, to work as a waiter on its cruise ship M/V SEABOURN ODYSSEY. He signed a Seafarer’s Employment Contract that incorporated the terms and conditions of the Collective Bargaining Agreement between the cruise line and the Norwegian Seaman’s Union. The Collective Bargaining Agreement contained an arbitration provision for any disputes, including injury claims, to be arbitrated pursuant to the United Nations Conventions [sic] on the Recognition and Enforcement of Foreign Arbitral Awards “in such place as is agreed upon by the Unions, Owners/Company and Seafarer.” Cosgun slipped and fell on a flooded deck (in water leaking from a broken water line) and brought suit against the cruise line in state court in Broward County, Florida under the Jones Act and general maritime law. The cruise line removed the case to federal court based on the New York Convention and moved to compel arbitration. The court initially denied the request, requesting that the parties address the issue of whether the agreement needed to specify that arbitration would take place in a signatory nation under the Convention. After further briefing, Judge Altman noted that dicta in several published Eleventh Circuit decisions included a jurisdictional prerequisite that the arbitration clause specify that the arbitration will be conducted in the territory of a signatory nation. This presented a conundrum to Judge Altman—whether to apply the dicta or disregard it in favor of the unambiguous language of the New York Convention and the Federal Arbitration Act that only required three prerequisites—an agreement in writing, that governed a commercial dispute, and that included at least one party who is not a citizen of the United States. After a comprehensive review of the provisions of the New York Convention, the FAA, and the cases interpreting them, Judge Altman concluded that neither the New York Convention nor the FAA requires that the arbitration agreement specify the arbitral forum as a prerequisite to the jurisdiction of the court to compel arbitration. Concluding that the seamen’s exception in the FAA did not apply to the implementing legislation for the New York Convention, Judge Altman addressed Cosgun’s argument that the arbitration agreement was null and void and unenforceable under the Jones Act with respect to seamen, who are the wards of the admiralty court. Holding that a party to an arbitration agreement can only raise a public-policy defense at the award-confirmation stage, Judge Altman ordered the parties to submit to arbitration in the Southern District of Florida.
Cargo damage suit against company that arranged for the transportation was untimely under COGSA, and the claim for failure to obtain insurance failed for lack of evidence of an obligation to insure the cargo; package limitation defense by the carrier foundered on the different versions of the bill of lading submitted by the carrier; Gulf Island Shipyards, LLC v. Mediterranean Shipping Co. (USA), Inc., No. 1:22-cv-1018, 2023 U.S. Dist. LEXIS 54313 (S.D.N.Y. Mar. 29, 2023) (Vyskocil).
Gulf Island Shipyards contracted with Wärtsilä Defense to purchase a propeller shaft to be used for a construction project for the U.S. Navy. Wärtsilä Defense contracted with Martin Bencher to arrange for the shipping of the cargo from Trieste, Italy to New Orleans, Louisiana, and Martin Bencher issued a Combined Transport Bill of Lading for the shipment (naming Wärtsilä Defense as the shipper and Gulf Island as the consignee). Martin Bencher then contracted with Mediterranean Shipping Co. (a vessel operating common carrier) to transport the propeller shaft. MSC issued a Sea Waybill for the shipment, identifying Martin Bencher (Scandinavia) as the shipper and Martin Bencher USA as the consignee. The shaft was damaged when it was dropped during its discharge from the vessel in New Orleans, and Gulf Island initiated this suit against MSC in federal court in Louisiana based on the Carriage of Goods by Sea Act, alternatively the Harter Act, and, alternatively, negligence/bailment. MSC moved to transfer the case to New York based on the forum-selection clause in the Sea Waybill, and Judge Lemmon transferred the case. Gulf Island added Martin Bencher as a defendant for the same causes of action and added a claim for breach of contract that Martin Bencher failed to obtain insurance on the cargo. Martin Bencher moved for summary judgment on the COGSA/Harter/negligence claims based on the one-year statute of limitations in COGSA, and Gulf Island responded that it was too early to determine what law applied to the claims. As the complaint alleged that the damage occurred while the shaft was being discharged from the vessel, however, Judge Vyskocil held that COGSA, not the Harter Act, applied, and that COGSA preempted the state negligence/bailment claim to the extent it would have a longer statute of limitations than COGSA. As the amended complaint naming Martin Bencher was filed more than a year after the discharge, Judge Vyskocil held that the COGSA claim was time-barred unless the amended complaint related back to the filing of the original complaint (Gulf Island did not claim there was a mistake in the parties’ identity that would allow a relation back). Similarly, the amended complaint did not allege grounds for applying equitable estoppel for the negligence claim. As to the claim against Martin Bencher for breach of contract for failing to procure required insurance, Judge Vyskocil found the allegations failed to identify any provision containing the requirement and that the pleading was entirely conclusory. Therefore, she dismissed that claim without prejudice. MSC moved for partial summary judgment that its liability was limited by COGSA’s package limitation to $1,500, as the Sea Waybill identified three packages. Gulf Island invoked the “fair opportunity” doctrine (that it did not have the opportunity to declare a higher value, citing the Waybill that was attached to MSC’s motion for summary judgment. In its reply, MSC attached a version of the Waybill which presented the opportunity to declare a higher value, and Judge Vyskocil noted that it appeared to be fatal to Gulf Island’s argument. In light of the different versions of the Waybill that were submitted, however, Judge Vyskocil found a fact dispute that would have to be resolved and that precluded summary judgment.
Magistrate Judge denied Daubert challenge to expert opinions of a former cruise ship captain (based on his observations of a CCTV video and trigonometry calculations) with respect to the speed and angle of roll of a lifeboat that crashed into a floating dock during a return from shore leave, injuring a passenger; Ruggeri v. NCL (Bahamas) Ltd., No. 20-cv-21961, 2023 U.S. Dist. LEXIS 57926 (S.D. Fla. Mar. 29, 2023) (Otazo-Reyes).
Vivian Ruggeri claims that she was injured while on a lifeboat operated by Norwegian Cruise Line that crashed into a floating dock as she returned to the vessel EPIC after a shore excursion. She brought this action against the cruise line in federal court in Florida, and the cruise line moved to exclude the opinions in the rebuttal report of her expert, Captain Hendrik J. Keijer, regarding the vessel’s speed and angle of roll. The cruise line argued that Captain Keijer’s methodology was unreliable and that his opinions were unhelpful to the trier of fact (a bench trial in this case). The cruise line contended that Captain Keijer relied solely on his observations of a CCTV video and did not articulate a rate of error for his speed calculations, and that his use of trigonometry to determine the vessel’s angles of roll from the CCTV footage was not reliable methodology. Additionally, the cruise line argued that Captain Keijer erroneously used the tangent function on non-right triangles. Captain Keijer corrected some errors, and Magistrate Judge Otazo-Reyes began with the foundation that Captain Keijer testified as a former cruise ship captain with decades of sailing experience who often relied on CCTV footage and applied trigonometry to calculate the movement of other vessels. Based on that experience, she held that the methodology was sufficiently reliable to allow the opinions, subject to cross-examination and presentation of contrary evidence. As to the issue of the helpfulness of the testimony, Magistrate Judge Otazo-Reyes noted that there was no danger of a jury being unduly influenced by the expert opinions, and she added that the judge would presumably be competent to disregard anything he should not have heard or to discount it for practical and sensible reasons., Therefore, she denied the Daubert challenge to the opinions of Captain Keijer.
Tug whose barges broke free after allision with bridge and impeded traffic below the bridge was not liable for damages when another tug allided with the bridge; Starr Indemnity & Liability Co. v. American River Transportation Co., No. 21-394, 2023 U.S. Dist. LEXIS 54662 (E.D. La. Mar. 30, 2023) (Guidry).
The litigation arises from two allisions with the Helena Bridge, which spans the Mississippi River between Arkansas and Mississippi. The tug DAN MACMILLAN was proceeding southbound on the River when one of the barges in its tow allided with the starboard side pier of the Mississippi span of the Bridge (nearest the east bank of the River). During the efforts to stop one of the barges from sinking in the main channel of the River, 19 barges broke free below the bridge, and the Coast Guard closed the section of the River below the Bridge. The captain of the DAN MACMILLAN contacted the other vessels in the area and told the captain of the southbound tug HAROLD B. DODD to stop above the bridge. The captain of the HAROLD B. DODD was able to hold the tug and its barges on the left descending bank of the river, despite the high river conditions and difficult placement. The DAN MACMILLAN gathered its barges, and the Coast Guard re-opened the river below the Bridge. The HAROLD B. DODD then proceeded downriver and attempted to traverse the center span of the Bridge; however, the tug allided with the left descending pier of the center span, suffering significant damage and scattering its barges. Starr Indemnity, an insurer for the HAROLD B. DODD, paid damages for the HAROLD B. DODD and brought this subrogation action in federal court in Louisiana against the DAN MACMILLAN and its owner, and the liability of the vessels was tried to Judge Guidry. Starr argued that the DAN MACMILLAN was negligent in two ways: with respect to its efforts to save the sinking tug that resulted in the breakaway and for the communications with the captain of the HAROLD B. DODD. Judge Guidry noted that Starr did not genuinely argue that the negligence prior to the first allision was the proximate cause of its damages, and he held that the DAN MACMILLAN did not owe a duty to the HAROLD B. DODD at that time and that there was no causal connection between the two allisions (the superseding cause doctrine would cut any connection between the events in light of the holding up by the HAROLD B. DODD). With respect to the maneuver (a “top around”) to prevent the barge from sinking in the main channel and to get the barge as close to the bank as possible to keep it from blocking the navigable channel, Judge Guidry found that the actions were reasonable for the safety of his ship and crew and to minimize the chance of harm to others. Additionally, Judge Guidry found that the maneuver was not a substantial factor in bringing about the second allision for the same reason that he did not find a causal connection from the initial allision. Starr’s second argument was that the communication to the captain of the HAROLD B. DODD to stop above the Bridge negligently caused the HAROLD B. DODD to stop in a dangerous position on the River. Although the communication from the captain of the DAN MACMILLAN was that the HAROLD B. DODD should stop at the Jimmy Hawkens Light (a landmark on the right descending bank above the Bridge), the captain of the HAROLD B. DODD did not believe he could stop on that side and instead managed to stop on the left descending bank across from the Jimmy Hawkens Light. Based on testimony from other captains, Judge Guidry found that the HAROLD B. DODD would have been in a better position to cross under the Bridge if he had stopped at the Jimmy Hawkens Light as there was slack water on the right descending bank. By stopping on the opposite side, the HAROLD B. DODD was poorly positioned to traverse the center span of the bridge. Nonetheless, Judge Guidry concluded that the decision to warn the HAROLD B. DODD was the right thing to do and that the suggestion to stop at the Jimmy Hawkens Light was prudent. In contrast, Judge Guidry found that the decision of the captain of the HAROLD B. DODD to stop on the left descending bank was imprudent and a superseding cause of the allision because it placed the vessel in a difficult section of the River that made it harder to steer under the Bridge. Judge Guidry also rejected an extremis defense, noting that the captain of the HAROLD B. DODD had time after stopping the tug to take actions to prevent the second allision and was not in an emergency situation. Therefore, Judge Guidry held that the DAN MACMILLAN was not negligent in regard to the HAROLD B. DODD and that the fault for the second allision was that of the HAROLD B. DODD.
Clinical pharmacologist/toxicologist was permitted to testify about the blood alcohol concentration of an injured passenger based on his calculation of that concentration without a blood test, but he was not allowed to testify that the passenger’s consumption of alcohol caused or contributed to her fall; Chappell v. Carnival Corp., No. 21-cv-23787, 2023 U.S. Dist. LEXIS 55455 (S.D. Fla. Mar. 30, 2023) (Damian).
Angelique Chappell was a passenger on the cruise ship CARNIVAL HORIZON. She claims that she was injured when she slipped and fell on a wet, foreign, or transitory substance on the metal nosing of a step on a staircase on the vessel. She brought this suit against the cruise line in federal court in Florida, and the cruise line designated a clinical pharmacologist and toxicologist, Dr. Daniel Buffington, as an expert with respect to Chappell’s estimated blood alcohol concentration and the impacts on her faculties at the time of her accident. Chappell moved to strike the testimony and opinions of Dr. Buffington as unreliable because they were based on unsupported assumptions and an unreliable methodology. Dr. Buffington relied on Chappell’s deposition testimony, the pleadings, shipboard and hospital medical records, and receipts from Chappell’s drink purchases. He calculated her blood alcohol concentration based on the Widmark Equation (the standard methodology for blood alcohol testing in forensic science) using the percentages of alcohol in a beverage, the individual’s weight, the number of hours since the first drink, and a distribution factor to account for total body water. He opined that her estimated blood alcohol concentration was consistent with signs and symptoms associated with diminished attention, judgment, and self-control; sensory-motor impairment; impaired perceptions; and reduced sensory response (in accordance with the peer-reviewed Dubowski Table that is used to illustrate the progressive stages of alcohol influence on human performance). Although Chappell argued that there were no blood tests to determine the precise blood alcohol concentration, Magistrate Judge Damian held that, in the absence of those tests, the methodologies used by Dr. Buffington were sufficiently reliable. However, Magistrate Judge Damian agreed with Chappell that the opinion that Chappell’s alcohol consumption caused or contributed to her fall was an improper legal conclusion regarding causation that invaded the province of the jury and was not helpful. Therefore, Dr. Buffington was precluded from testifying that the alcohol consumption or its effects caused or contributed to the fall.
Although the judge rejected the “every exposure” theory and held that the asbestos-exposure plaintiff would have to prove that the specific products of each defendant were a substantial factor in causing the plaintiff’s illness, the judge did not exclude the opinions of the plaintiff’s experts even though they did not detail the proximity, frequency, or regularity of exposure to a specific product because the opinions would still be helpful to the fact finder; Boyle government-contractor defense did not apply in maritime claims; Elorreaga v. Rockwell Automation, Inc., No. 21-cv-5696, 2023 U.S. Dist. LEXIS 55468, 57669 (N.D. Cal. Mar. 30, 31, 2023) (Gilliam).
Roberto Elorreaga died from mesothelioma that he claimed was from exposure to asbestos while serving in the Navy on the USS RUPERTUS (machinist mate) and USS COWELL (fireman’s apprentice and electrician’s mate), and he and his wife (his beneficiaries were added after his death) brought suit in California state court against suppliers of asbestos products. The case was removed to federal court based on the Federal Officer Removal Statute, and defendant General Electric filed a motion to dismiss the claims for punitive damages and loss of consortium. The plaintiffs argued that punitive damages should be permitted based on the decision of the Supreme Court in Atlantic Sounding. Following the framework enunciated in Batterton, however, Judge Gilliam found no evidence that punitive damages were historically available in the claims asserted in this case, and he dismissed the punitive damage claims. As to the claim for loss of consortium, Judge Gilliam did not believe that Atlantic Sounding provided a basis for the court to decline to apply the existing rule in the Ninth Circuit from Smith v. Trinidad that loss of consortium damages are not available under the Jones Act or general maritime law, particularly in light of Batterton. Judge Gilliam did not, on a motion to dismiss, believe that it was appropriate to dismiss the claims brought under California law as it was not yet known for certain whether Elorreaga may have been exposed to asbestos while working on the land at a shipyard. See August 2022 Update.
As the plaintiffs had to prove that the specific products of the product defendants were a substantial factor in causing Elorreaga’s illness (under maritime law or state law), the defendants sought to exclude the testimony of several of the plaintiffs’ experts on the basis that their opinions addressed “every exposure” or “cumulative dose” causation. They argued that none of the experts provided opinions about the amount or duration of Ellorreaga’s exposure attributable to their specific products. Judge Gilliam agreed that the Ninth Circuit had rejected the “every exposure” theory under the general maritime law (it undermined the substantial factor test and would permit imposition of liability on the manufacturer of any product containing asbestos to which the worker had the briefest of encounters). Consequently, he examined the expert opinions to determine whether they were based on the “every exposure theory.” Although none of the experts detailed the proximity, frequency, or regularity of exposure to a specific product, Judge Gilliam declined to exclude the opinions, reasoning that they were still helpful to the fact finder and noting that the plaintiffs would still have to introduce evidence from which the fact finder could infer that each product was a substantial factor in causing Elorreaga’s mesothelioma. However, to the extent an expert attempted to offer an “every exposure” opinion, Judge Gilliam advised that the testimony would be excluded.
The plaintiffs and some of the defendants filed cross-motions for summary judgment on the government-contractor defense from the Supreme Court’s Boyle case (the defendants argued that they simply complied with Navy specifications when supplying the products containing asbestos). The plaintiffs argued that the Boyle defense was based on preemption concerns with respect to state law claims that are not involved in a case brought under federal maritime law. Although the defendants cited cases in which the courts considered the government-contractor defense in the context of federal claims, Judge Gilliam answered that the courts simply applied Boyle without any analysis of the Supreme Court’s concerns about preemption. Therefore, Judge Gilliam granted partial summary judgment to the plaintiffs that the defense did not apply in this case because the claims were premised on federal maritime law (the defendants did not raise a Yearsley defense). Finally, several product defendants moved for summary judgment that the plaintiffs did not provide sufficient evidence of exposure to asbestos from their products and that any exposure was a substantial contributing factor. Judge Gilliam found fact questions on the exposure and that the evidence on the substantial factor issue was “not especially strong, but sufficient to avoid summary judgment.
Investment Management Agreement to provide investment management services for ship finance transactions was not a maritime contract; YS GM Marfin II LLC v. Four Wood Capital Advisors, LLC, No. 20-cv-3320, 2023 U.S. Dist. LEXIS 55782 (S.D.N.Y. Mar. 30, 2023) (Gardephe).
This is a suit in federal court in New York, brought under the court’s admiralty jurisdiction, asserting claims for fraud, aiding and abetting fraud, breach of fiduciary duty, negligent misrepresentation, negligence, and conversion. The suit was premised on an Investment Management Agreement under which the defendants were engaged “to provide investment management services with respect to ship finance transactions, loans or leases.” According to the amended complaint, the principal objective of the Agreement “relates to maritime commerce, specifically the origination and financing of vessels to be acquired overseas, transported on navigable and international waterways, and ultimately sold for vessel deconstruction.” The defendants moved to dismiss the suit, asserting that the Agreement was not a maritime contract because it did not involve vessel operation. They argued that the Agreement was “several steps remote from” a contract to purchase a vessel, which is not a maritime contract. Judge Gardephe agreed, reasoning that the objective of the Agreement was investment management and not maritime commerce, stating: “no party is a ‘shipping business,’ and no party’s identity ‘aligns with the substance of [any]agreement’ that is ‘distinctly briny.’” Concluding that the contract was not maritime, Judge Gardephe held that the court lacked admiralty and subject matter jurisdiction.
Damage to barge in a lock on the Tennessee-Tombigbee Waterway was solely caused by the vessel’s crew in mishandling the tug and barges, and the United States, operator of the lock, was not liable; Savage Services Corp. v. United States, No. 20-137, 2023 U.S. Dist. LEXIS 57064 (S.D. Ala. Mar. 30, 2023) (Moorer).
This case initially presented the legal question of first impression: Does the Oil Pollution Act of 1990 displace the federal government’s waiver of sovereign immunity in the Suits in Admiralty Act when the negligence of the United States is alleged to have caused an oil spill from a vessel? The spill occurred when the M/V SAVAGE VOYAGER, which was pushing two tank barges containing oil on the Tennessee-Tombigbee Waterway in Mississippi, entered the Jamie Whitten Lock, a boat lift operated by the U.S. Army Corps of Engineers. The owner of the tug alleged that the lock master began de-watering the lock chamber without notice before the tug and tow were in the correct position, resulting in damage to one of the barges and a release of oil into the water. The owners performed the required cleanup/removal under OPA and brought this suit against the United States under the Suits in Admiralty Act, seeking to recover the cleanup/removal costs plus damage to the barge, loss of use, and lost cargo, based on the negligence of the United States under the general maritime law. Although the United States admittedly waived sovereign immunity in the SAA to the extent a private citizen would be liable, the United States argued that the waiver in the SAA was displaced by the comprehensive scheme enacted for cleanup/removal costs in OPA, which does not provide for liability for the United States. District Judge Steele dismissed the claim for reimbursement of cleanup/removal costs (but not the claim for damage to the vessel/loss of use/loss of cargo), and the owner appealed to the Eleventh Circuit. Writing for the appellate court, Judge Altman (district judge from the Southern District of Florida sitting by designation), affirmed the decision of Judge Steele. Judge Altman noted the difference between the provision of the Clean Water Act (which affords a complete defense to the vessel in the event the spill is caused solely by the negligence of the United States), and OPA, which affords a complete defense to the vessel in the event the spill is caused solely by an act or omission of a third party. OPA also creates a contribution action against “any other person who is liable or potentially liable under this Act or another law.” A “person” is defined in OPA as “an individual, corporation, partnership, association, State, municipality, commission, or political subdivision of a State, or any interstate body.” After reviewing OPA in detail, Judge Altman concluded that OPA did not create a cause of action against the United States, noting that the definition of “person” did not include the United States and noting the omission of the fault of the United States in the defenses available to the Responsible Party. Judge Altman then considered the effect of the comprehensive provisions of OPA on the waiver of immunity in the Suits in Admiralty Act and the liability of the United States for negligence under the general maritime law. Finding the language of OPA to be unambiguous that the owner had no right of recovery against the United States, he concluded that OPA displaced the waiver of sovereign immunity and maritime remedy in the SAA. Thus, the owner had no right of recovery for the cleanup/removal costs but could proceed on its claims for damage to the barge and cargo. See March 2022 Update.
Back in the district court, the owner moved for summary judgment on its property damage claim, seeking a ruling that the negligence of the United States was the sole cause of the accident. The owner submitted the testimony of the lock operator and argued that his commencement of the de-watering while the tug and tow were not in correct position was the sole cause of the accident. Judge Steele assumed, without deciding, that this failure was negligent. However, the motion sought to establish that it was the sole negligence. Reasoning that the “universe of ways in which a party may be negligent is vast,” and that the owner had failed to “identify all the myriad ways in which they might have performed negligently,” Judge Steele declined the owner’s motion. After noting that it seemed reasonable that the owner had a duty of reasonable care to properly position the tow to avoid its becoming caught on the miter in the event of a normal 1- to 2-foot surge and noting the experience of the tug’s pilot who had transited the lock at least 250 times, Judge Steele concluded that there was a fact question whether the vessel owner was negligent. See October 2022 Update.
The United States designated Michael Berry as an expert to opine on the operating of the locks and the responsibilities of the United States as a lock operator. Savage Services objected that Berry was an inland water towboat mariner and did not have the qualifications to testify about operating a lock. The case was transferred to Judge Moorer, who disagreed and found Berry’s experience to be sufficient from work on towboats as a deckhand and Captain and from transiting locks hundreds of times, including transiting the lock in this case both as a pilot and as a deckhand. Savage also argued that Berry’s methodology, arriving at his opinion by making inferences from a process of elimination, was unreliable. Judge Moorer disagreed, answering that an expert may use his knowledge, experience, and training to make inferences. Finally, Judge Moorer noted that there was no risk of confusing the jury because the trial would be to the bench. See February 2023 Update. Judge Moorer did grant partial summary judgment to the United States on its counterclaim seeking reimbursement of $151,657.78 in costs associated with monitoring the spill cleanup based on the prior ruling that the United States cannot be held liable for removal costs.
After the conclusion of the bench trial, Judge Moorer issued his findings of fact and conclusions of law, finding in favor of the United States that the accident was caused solely by the tug’s crew’s mishandling of the tug and barges. The tug owner argued that, under the last clear chance doctrine, it was the duty of the lock operator to ensure that the vessels were properly positioned in the lock chamber prior to lockage. However, Judge Moorer noted that it could also be said that the last person who could have avoided the accident was the pilot who was at the controls for the tug. Judge Moorer also rejected the argument that the lock operator (to the exclusion of the crew of the tug) had the full authority of the lock and the duty to ensure that the rules and regulations related to the movement and mooring of vessels were followed (stating that “the pilot, tankerman, and deckhand of M/V SAVAGE VOYAGER did not tender their duties by entering the lock chamber, nor did they leave their responsibilities at the miter gate”). Judge Moorer then reasoned that it did not matter whether the tug/tow was moving of its own power or was drifting from wind or current as there were presumptions for the striking of the stationary object under THE OREGON or THE LOUISIANA. Concluding that the vessels were in the correct position when the lock operator began dewatering, that the lock was operating normally, and that the barge was under the control of the tug’s crew at the time of the incident, Judge Moorer held that the United States was not negligent.
Judge denied request to dismiss limitation action filed by owner of barges comprising a “Wash Dock” on the ground that they were not vessels prior to discovery being conducted; In re American Commercial Barge Line, LLC, No. 22-502, 2023 U.S. Dist. LEXIS 56042 (E.D. La. Mar. 31, 2023) (Vitter).
American Commercial Barge Lines is the owner and operator of several barges that comprise a “Wash Dock” (that is 1,714 feet in length) in Convent, Louisiana. When Hurricane Ida struck Louisiana in August 2021, the barges broke free from their moorings and came into contact with other vessels and property on the Mississippi River. ACBL filed this limitation action in federal court in Louisiana, seeking to limit its liability to the value of the barges, and several seamen on a vessel that was struck by one of the barges moved to dismiss the limitation action (alternatively they moved for summary judgment) on the ground that the barges were not vessels. The seamen cited the limitation complaint that asserted that the Wash Dock was made from a number of spar barges that are permanently moored to fixed dolphins so that other barges may be moored to them. There were no allegations in the complaint that the barges were ever used for any other purpose or that they had carried cargo or people. They also cited the survey attached to the complaint that the barges were used as a cleaning and repair facility and that one barge contained a modular office building, a skid-mounted generator, and multiple overhead wires to bring electricity to the barge. The seamen cited public records that, since 1999, the Wash Dock was secured to land with permanent anchors, dolphins, and shore wires. Judge Vitter easily rejected the motion to dismiss as the limitation action sufficiently pleaded the right to limit liability. In connection with the motion for summary judgment, the seamen cited Judge Vance’s opinion in Badeaux v. Eymard Bros. (see January 2022 Update), holding that a barge that was attached to the river with iron spuds and whose ability to move was merely incidental was not a vessel. ACBL disputed the ability of the barges to be detached and to move and argued that there had been “zero discovery or analysis at this early stage of the physical characteristics” of the barges. Noting that Judge Vance’s decision came after full discovery and a bench trial, Judge Vitter held that summary judgment was premature and not warranted at this stage of the proceedings.
Company that supplied crane operator who suffered a stroke on an offshore rig did not owe indemnity under agreements providing for indemnity arising from or related to the services provided in the contracts; crane operator who was employed for 23 hitches working on vessels owned by two companies was not a seaman with respect to the four hitches he worked for the second company; Cole v. Oceaneering International, Inc., No. 21-1348, 2023 U.S. Dist. LEXIS 56054, 72450 (E.D. La. Mar. 31, 2023, Apr. 26, 2023) (Vitter).
Darryl Cole alleges that he was working as a crane operator for Oceaneering on its vessel, the M/V OCEAN PATRIOT. He was supplied to Oceaneering by Huisman North America pursuant to a Purchase Order by which Huisman was to supply a crane operator to Oceaneering. Cole began feeling dizzy, light-headed, and nauseated; he vomited; he felt pain and numbness from his neck to his eyes; and he became delusional and fell in and out of consciousness. He was eventually evacuated from the vessel by helicopter and was determined to have suffered a stroke. He brought this suit against Oceaneering in federal court in Louisiana under the Jones Act, general maritime law, and state law, and he added Huisman as a defendant in an amended complaint, seeking maintenance and cure. Oceaneering brought a claim for indemnity against Huisman pursuant to the terms of the Purchase Order, and Huisman argued that the terms of the Purchase Order were preempted by a prior Mutual Indemnity and Waiver Agreement that provided for indemnity only for an injury or illness that arises out of or is incident to the services provided by Huisman (crane operations). Claiming that Cole’s stroke did not arise out of or related to the crane operations, Huisman argued that it did not owe indemnity to Oceaneering. Oceaneering countered that the Purchase Order provided that its terms superseded all agreements and, alternatively, that Coles’ stroke arose out of or related to the services provided by Huisman because it occurred while Cole was on the vessel to perform the services. Judge Vitter did not have to decide which document governed as they contained the same limiting language in their indemnity agreements—that the injury or illness arise out of or as a result of the services provided by Huisman. She then concluded that Cole’s stroke did not arise out of the services. Judge Vitter recognized that the Fifth Circuit interprets the term “arising under” broadly, but she did not find any evidence suggesting that a stroke is an activity reasonably incident to or anticipated by the provision of crane operation services. She rejected the argument that the Fifth Circuit’s Fontenot case only requires the worker’s presence on the vessel for an injury to arise under a contract, holding that there had to be a causal connection between the stroke and the services provided by Huisman (also rejecting the argument that Huisman could not “avoid its contractual responsibilities simply because [Cole] was not performing the specific services contemplated by the Purchase Order at the moment of injury”). Consequently, Judge Vitter granted summary judgment to Huisman on Oceaneering’s indemnity claim.
Oceaneering filed a motion for summary judgment that Cole was not a seaman, seeking a dismissal of his seamen’s claims against Oceaneering. Cole was employed by Huisman as a crane operator from November 2017 until February 2021, working 23 hitches. His first 19 hitches were for Hornbeck Offshore Services, and his last four hitches were for Oceaneering on the OCEAN PATRIOT. Cole claims that he spent 100% of his time working on vessels during his employment by Huisman; however, Oceaneering countered that only 48 days of that time were spent on the vessel owned by Oceaneering, and 462 days were spent working for Hornbeck. Oceaneering argued that Cole did not satisfy the duration element of the connection test for seaman status because he spent less than 10% of his employment with Huisman working on the Oceaneering vessel (48 days out of 510 days). Cole responded that he spent 100% of his time with Huisman (and Oceaneering) working on vessels. Judge Vitter turned to the en banc decision of the Fifth Circuit in Sanchez, noting that the worker would have to spend at least 30% of his total employment aboard the vessels owned by his Jones Act employer in order to satisfy the duration element. Although Cole argued that he satisfied the 30% rule-of-thumb for the duration element because he spent 100% of his working time on the OCEAN PATRIOT in service of the vessel, Judge Vitter answered that Cole’s argument failed to address the holding in Sanchez that the court had to consider the substantiality of the duration in terms of his entire employment with Huisman. As his work on the OCEAN PATRIOT was less than 10% of that time, he was not a seaman, and Judge Vitter dismissed the seaman’s claim against Oceaneering. Thanks to Matthew Ammerman of Houston, Texas for bringing this decision to our attention.
Judge ordered arbitration under state statute of seaman’s claim for overtime under the Fair Labor Standards Act even though the agreement provided for application of the Federal Arbitration Act; Rodgers-Rouzier v. American Queen Steamboat Operating Co., No. 4:20-cv-4, 2023 U.S. Dist. LEXIS 56135 (S.D. Ind. Mar. 31, 2023) (Barker).
Mary Rodgers-Rouzier was employed as a bartender on cruise boats operating on various rivers in the United States, including the Mississippi, Tennessee, and Ohio Rivers. She worked six-week tours on a vessel, followed by two weeks off. During the six-week tours, she worked seven days a week, averaging twelve hours of work per day. She was paid a daily rate as well as a percentage of a service fee charged to the guests. She was not paid overtime and brought this action in federal court in Indiana, alleging that her employers violated the Fair Labor Standards Act by failing to pay her overtime. The defendants moved to stay the litigation pending arbitration, in accordance with an arbitration provision in her employment agreement that provided that it was governed by the Federal Arbitration Act. Rodgers-Rouzier opposed the arbitration on the ground that she was a seaman and that arbitration agreements in seamen’s employment contracts are not enforceable under the FAA. Judge Barker denied the motion, and the defendants later filed a renewed motion to stay, this time arguing that the arbitration agreement should be enforced under Indiana law. After Judge Barker rejected arguments that the motion was untimely and that the defendants had waived their right to seek arbitration under state law, Judge Barker considered the argument that the clause was unenforceable under Indiana law because it provided that it would be governed by the FAA. Judge Barker reasoned that the fact that the FAA does not apply only means that its enforcement mechanisms are not available, not that the agreement cannot be enforced through another vehicle, such as state law. And this is true even when the clause states that the FAA applies and mentions no other law. Thus, the question was what state law to apply to determine whether to enforce the arbitration provision. Applying Indiana law, Judge Barker held that the agreement was enforceable, and she ordered Rodgers-Rouzier to arbitrate her claims.
Cruise line that was a non-signatory to the seaman’s employment contract was entitled to enforce an arbitration clause in the contract; Cunningham v. Celebrity Cruises, Inc. No. 22-cv-23621, 2023 U.S. Dist. LEXIS 56937 (S.D. Fla. Mar. 31, 2023) (Seitz).
Elio Eliseo Hodgson Cunningham, a Nicaraguan citizen, signed a one-page employment contract with Sea Chefs Cruises to work as an assistant housekeeper. That document provided that Cunningham agreed to be bound by the terms and conditions of a collective bargaining agreement. The collective bargaining agreement specified that the responsible company for the agreement was Celebrity Cruises, and it contained an arbitration agreement for all claims relating to Cunningham’s service, whether against the vessel or its owner or operator. Cunningham joined the crew of the MEIN SCHIFF 2, owned by Celebrity Cruises, and claims that he suffered health problems from being forced to overexert himself in sauna-like conditions because of reduced staff from the COVID pandemic and that he was prescribed and administered dangerous medications. He brought this action against Celebrity Cruises in federal court in Florida, seeking to recover for the unseaworthiness of the vessel, and Celebrity moved to dismiss the complaint and to compel arbitration. Cunningham objected on the grounds that Celebrity was not a signatory to the employment contract and that the arbitration provision did not cover the claims he asserted. Judge Seitz first held that Celebrity could enforce the arbitration clause, applying Florida law to the interpretation of the agreement. She noted that, under Florida law, a party cannot take advantage of contract provisions to impose liability while seeking to avoid another contract provision. In this case, Cunningham asserted in his complaint that Celebrity was the entity that undertook the duties under the contract, so Judge Seitz held that Cunningham could not avoid the arbitration clause. Additionally, Judge Seitz concluded that Celebrity was specifically identified in the documents as the responsible party, so the clause encompassed Celebrity even though it was not a signatory. Judge Seitz then addressed the argument that the claim for prescribing and administering dangerous medications did not relate to Cunningham’s service to the company and was not covered by the arbitration clause. Judge Seitz answered that his argument “loses its sea legs” when you read the entire complaint, which listed sixteen ways in which the vessel was unseaworthy, which included working in poor conditions and medical treatment that resulted in his collapse while he performed his duties on the vessel. She concluded that his claim clearly related to his service to Celebrity and fell under the arbitration clause.
Platform owner’s liability for injury to crew member of chartered vessel was not covered under the charterer’s legal liability policy and was covered under the umbrella general liability policy (as the watercraft exclusion did not apply); Syndicates 1183, 1036, and 2007, Certain Underwriters at Lloyd’s, London v. Furie Operating Alaska, LLC, No. 3:21-cv-252, 2023 U.S. Dist. LEXIS 57544 (D. Alaska Mar. 31, 2023) (Kindred).
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; installed 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.
Vessel owner and railroad were both found at fault for allision between vessel and railroad swing bridge; Norfolk Southern Railway Co. v. M/V SAGINAW IMO 517876, No. 3:21-cv-874, 2023 U.S. Dist. LEXIS 57549 (N.D. Ohio Mar. 31, 2023) (Zouhary).
This case involves an allision between the M/V SAGINAW and the fender system of a railroad swing bridge, owned by Norfolk Southern Railway, over the Maumee River that runs from northeastern Indiana and flows into Lake Erie in northeastern Ohio. The railroad brought this suit against the vessel and its owner in federal court in Ohio, and Judge Zouhary held a bench trial to address the liability for the stipulated damages of $444,146.28 for the repair of the fender system. The vessel was at the dock, loaded with grain, and did not want to depart the dock until the swing bridge was open, as the captain knew that the bridge was often delayed in opening and he was cautious because of elevated current conditions. He radioed the bridge operator that he had an arrival time of 30 minutes and would not depart the dock until the bridge was actually open. The bridge operator contacted his dispatcher who advised that the vessel could come through after an approaching train, and the bridge operator estimated that the train and vessel would arrive at about the same time (which would allow the bridge to be opened in time for the vessel to pass). The bridge operator instructed the captain to “go ahead and do your thing.” The captain testified that he did not know of the passing of the train until he “got a visual on the bridge” which was still closed. He maneuvered until he saw the bridge was fully opened, but he had lost some alignment with the bridge due to the fast current. The vessel missed the channel and struck the west downriver side of the fender system. Judge Zouhary noted that there is a presumption of fault when a moving vessel allides with a stationary object under THE OREGON Rule. However, he added that some courts have rejected the presumption when a bridge owner is in violation of a statutory rule or regulation intended to prevent allisions. The vessel owner argued that the railroad was negligent per se under THE PENNSYLVANIA Rule for violating the rule that requires the bridge to open promptly and fully for vessels when a request is made. Judge Zouhary found that the vessel satisfied the elements of THE PENNSYLVANIA Rule because the captain advised that he would be approaching the bridge in 30 minutes and the bridge was not opened upon his arrival. Judge Zouhary also found fault on the part of the vessel, noting that the initial communication between the captain and bridge operator was vague, and the captain did not verify that the bridge was open before he left the dock. There was also a dispute about whether the captain could have taken a different course of action to avoid the collision, particularly in light of the captain’s awareness that the high current made proceeding downriver more challenging than usual. Consequently, Judge Zouhary found the vessel 25% at fault and awarded the railroad a quarter of its damages.
Judge did not find the vessel owner’s and managers’ conduct to be sufficiently outrageous to warrant punitive damages in allision with platform; Cox Operating, LLC v. ATINA M/V, Nos. 20-2845, 20-2871, 2023 U.S. Dist. LEXIS 57837 (E.D. La. Apr. 3, 2023) (Milazzo).
After the M/V ATINA allided with Cox Operating’s offshore platform, Cox Operating arrested the vessel and named the vessel’s master as a defendant in the suit in federal court in New Orleans. The owner, bareboat charterer, and managers of the vessel then filed a limitation action in the same court, and the two suits were consolidated. The order in the limitation action stayed all claims against the vessel, her officers, and crew, and Cox Operating asked the court to modify the stay so that it could pursue its claim against the master of the vessel in the first suit. The vessel defendants responded that Judge Milazzo should use her inherent power over her docket to continue the stay against the master, arguing that it was a waste of time and effort to allow the claim to proceed against the master because he was not a party to the vessel’s P&I insurance and recovery against him was unlikely. Reasoning that the language of the statute was plain that the limitation act does not affect the liability of the master, Judge Milazzo declined to extend the stay to the master and ordered that Cox Operating could proceed with the claim against the master. See January 2022 Update.
The parties filed cross-motions for summary judgment with respect to the punitive damage claims, which arose in the aftermath of the replacement of the captain of the boat (Edin) who began acting erratically and sending threatening messages while he was at the helm of the vessel in the Mississippi River. The managers established an emergency response team at their office in Turkey and arranged for a captain (Er) to board the vessel. Captain Er recommended replacing Captain Edin, but Captain Er could not sail with the vessel because of his visa status. The managers hired Captain Hurmuzlu to take over as captain, and he was flown from Turkey to Louisiana (more than 24 hours before boarding the vessel at the Southwest Pass Anchorage). He had not slept in 52 hours when he took the helm, and the handover by the Chief Officer to Captain Hurmuzlu violated the manager’s safety manual. After dropping off the pilot, the vessel anchored near Cox’s platform, but a dispatcher with the Associated Branch Pilots of New Orleans requested that the vessel relocate because the Association liked to keep a 4-mile buffer zone around the sea buoy. It was during the relocation that the ATINA allided with the platform. The managers argued that the accident was a result of a mistake by the second officer who mistook the platform for a vessel, and there was confusion on the vessel whether the platform was moving (and its speed and direction). Cox argued that there was evidence of conduct that was sufficiently outrageous to award punitive damages because the managers did not want to wait for proper training, rest, and handover of captains in order to avoid putting the vessel off hire and losing money, allowing a sleep-deprived captain to take the helm of the vessel in the middle of the river at night. Cox argued that fatigue caused Captain Hurmuzlu to lose situational awareness and to mistake the platform for a vessel. The managers responded that there was no evidence of motivation by money or that any fatigue played a role in the allision. Rather, it was a mistake by the second officer that caused the allision. Judge Milazzo noted that the managers had reacted swiftly to a difficult situation, that there was no evidence that they were aware of any fatigue of Captain Hurmuzlu, and that they knew that he would be assisted by a river pilot, a second officer, and a chief officer in navigating to the anchorage location. Therefore, Judge Milazzo dismissed the punitive damage claims.
Passenger had to plead constructive notice on direct liability theory regardless of whether the cruise line created the hazardous condition; passenger failed to properly plead the elements of negligence of the crew member for her vicarious liability claim; passenger did sufficiently plead agency/respondeat superior for her claims of inadequate medical care; Isom v. Carnival Corp., No. 22-cv-22950, 2023 U.S. Dist. LEXIS 59927 (S.D. Fla. Apr. 4, 2023) (Reid).
Ilona Isom, a passenger on the CARNIVAL MARDI GRAS, went to the Lido Marketplace dining room on the ship for breakfast, noting that the crew members were wiping down and sanitizing the tables. She ran her hand across the tabletop when she sat down and then placed her hands on her lap. She felt a burning sensation on her right thigh, and red welts appeared on both of her thighs. She sought medical treatment at the ship’s medical center and was given cortisone cream by what she described as a “trial run paramedic,” and her condition did not improve. She was treated by a dermatologist after the cruise, but her right thigh is permanently scarred. Isom brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint. The cruise line objected to the first count, the direct liability of Carnival with respect to the dangerous condition, on the ground that there was insufficient pleading of actual or constructive notice of the hazard created by the cleaning products. Isom argued that notice was not necessary because the cruise line created the condition, but Magistrate Judge Reid disagreed, and recommended that Isom be required to plead actual or constructive notice of the hazard created by the cleaning products. This could not be established by conclusory allegations of the risk of chemical burns from cleaning products because no similar incidents were alleged (as Isom’s reaction occurred quickly after the cleaning of the tables, there was also insufficient time for corrective measures). Magistrate Judge Reid also held that the pleading of a vicarious liability claim for the hazardous condition was insufficient. In order to plead vicarious liability, Isom still had to plead the elements of a negligence claim with respect to the crew member—as the tortfeasor. However, the vicarious liability account was phrased in terms of the cruise line owing a duty and breaching the duty and did not allege the wrongdoing of the crew member. Magistrate Judge Reid did recommend dismissal of the counts alleging agency and respondeat superior for the medical treatment. Isom claimed that the cruise line was negligent (through the medical staff) because her injuries were not properly assessed and that the prescribed cortisone cream was contraindicated for her injury. Magistrate Judge Reid considered Isom’s allegations with respect to employing and paying the staff, owning and operating the medical center, and representing to passengers and immigration authorities that the medical staff were crew members to be sufficient pleading of actual agency (Judge Reid also considered the allegations of the cruise line’s advertising–that the medical staff worked in medical centers owned and operated by the cruise line, that the staff wore uniforms with the cruise line name and logo, and that the staff were introduced to passengers as crew–were sufficient to plead apparent agency).
Limitation stay was not lifted without stipulations from parties seeking indemnity and contribution; In re Bisso Towboat Co., Nos. 22-3479, 22-4115, 2023 U.S. Dist. LEXIS 60590 (E.D. La. Apr. 5, 2023) (Africk).
Robert Robertson brought suit against Bisso Towboat and Bisso & Son in Louisiana state court, seeking to recover for occupational asbestos exposure while serving as a seaman on vessels owned and operated by those companies. Bisso Towboat filed a complaint in federal court for limitation of liability for the vessel BARON, and Bisso & Son filed a claim seeking contribution or indemnity in the limitation action. Bisso & Son then filed a limitation proceeding, and Bisso Towing filed a claim in that limitation action. Robertson filed claims in the limitation actions and then moved to stay the consolidated limitation actions pending the resolution of his state court claims. He filed the usual stipulations, but neither Bisso entity filed stipulations. As the Fifth Circuit requires stipulations from all of the claimants, including those seeking contribution and indemnity, Judge Africk declined to lift the stay so that Robertson could proceed with his suit in state court. Finally, Judge Africk noted that judges have the inherent power to control their dockets, including staying limitation proceedings. However, the court will not grant the stay if it concludes that the owner’s right to limitation will not be adequately protected. Concluding that there was insufficient protection for the owners’ rights, Judge Africk declined to stay the consolidated limitation actions.
Judge excluded opinions of seaman’s expert on human factors and ergonomics but did not grant summary judgment on the seaman’s negligence and unseaworthiness claims; seaman reached maximum cure despite recommended care that would improve his function but would not correct his underlying condition, and his maintenance and cure claim was dismissed; Thibodeaux v. Gulf Coast Tugs, Inc., No. 22-1205, 2023 U.S. Dist. LEXIS 60583 (E.D. La. Apr. 6, 2023) (Ashe).
Nolan J. Thibodeaux was employed as a seaman on Gulf Coast Tugs’ vessel, ELIANA M. GONDRAN. While standing on the vessel’s deck, he leaned over the bulwark to pull a Styrofoam ice chest (weighing between 50 and 60 pounds) from the adjacent dock and felt a pain in his leg. Gulf Coast moved to exclude the opinions of Thibodeaux’s expert in human factors and ergonomics, Kenneth Ronald Laughery, Jr., Ph.D., asserting that his opinions would not assist the fact finder because lifting objects is within the understanding and experience of the average juror and the opinions were based on erroneous information, irrelevant guidelines, and inapplicable standards. Thibodeaux responded that Dr. Laughery’s opinions were not within the common knowledge of jurors because they were based on ergonomics, human factors, and standards that apply to maritime employers. He also argued that Dr. Laughery would testify about proper training on lifting and that Thibodeaux should have had help in lifting an object weighing about 60 pounds. Although Dr. Laughery offered a number of opinions about lifting, training, responsibility with respect to lifting of certain weights, and unsafe work practices, Judge Ashe cited the opinions in similar cases confirming that lifting and carrying a common object (such as an ice chest) is a task within the experience of a lay juror for which expert evidence is not relevant. As Dr. Laughery offered nothing that would assist the fact finder, the motion to exclude his opinions was granted. Judge Ashe then addressed the motions for summary judgment filed by Gulf Coast on the negligence and unseaworthiness claims. Gulf Coast argued that there was no evidence to support the negligence theories that Gulf Coast failed to adequately train him or to provide a reasonably safe place to work. Gulf Coast claimed that Thibodeaux was a well-trained and experienced seaman who did not need specialized training. Judge Ashe disagreed, reasoning that lifting an ice chest under ordinary circumstances might be routine, but, in this case, the seaman was asked to move a chest weighing between 50 and 60 pounds to a vessel while leaning over the bulwark and without assistance. Thus, Judge Ashe found fact questions whether Gulf Coast should have provided training or guidance on the specific lifting maneuver or whether assistance should have been provided. Judge Ashe also declined to dismiss the unseaworthiness count, finding that there was a fact question about whether the vessel was unseaworthy for not having a gangway that would have allowed two workers to carry the ice chest onto the vessel. Finally, Judge Ashe considered Gulf Coast’s motion to dismiss the maintenance and cure claim on the ground that Thibodeaux had reached maximum cure based on the opinion of the doctor who performed two surgeries on Thibodeaux’s leg and ankle. Thibodeaux argued that he did not have satisfactory results from the surgeries and cited the opinion of another doctor, Dr. Tod Aust, who opined that there was a greater than 50% chance that Thibodeaux’s condition would be improved with a spinal cord stimulator or intrathecal pump. Thibodeaux argued that the stimulator and pump are curative treatments because they would improve his function and prospect for employment, but Judge Ashe disagreed, stating that “pain relief is not the proper measure” to determine maximum cure. As the treatment would not correct any underlying condition or structural deficit, it was palliative, and Thibodeaux’s maintenance and cure claim was dismissed.
Judge denied late amendment to add a Rule B attachment to provide in personam jurisdiction against foreign defendant; Blow v. Carnival Corp., No. 22-22587, 2023 U.S. Dist. LEXIS 61804 (S.D. Fla. Apr. 7, 2023) (Scola).
Tamika Blow and other passengers on the CARNIVAL PANORAMA purchased tickets for an excursion in Mexico that included snorkeling and swimming in the ocean. Donna Faye Nelson drowned, and Blow and others brought claims on behalf of Nelson and themselves in federal court in Florida against the cruise line and Vallarta Adventures, a Mexican company that operated the excursion. The court entered a scheduling order, and Vallarta Adventures responded to the complaint with a motion to dismiss for lack of personal jurisdiction. After the deadline to file amended pleadings had passed, the plaintiffs moved to amend their complaint to assert an attachment claim against Vallarta Adventures pursuant to Supplemental Rule B (in order to obtain personal jurisdiction against Vallarta Adventures). The plaintiffs alleged that the affidavit in support of the motion to dismiss demonstrated that Vallarta Adventures may not be present within the district, which would trigger the right to seek an attachment. As the time for amendments under the scheduling order had passed, the request was governed by Rule 16, which required the plaintiffs to demonstrate good cause. Judge Scola did not find good cause, however, reasoning that the plaintiffs knew from their original filings that Vallarta Adventures was not present within the district and did not need the affidavit to learn that fact. Judge Scola pointed out that the plaintiffs had to serve Vallarta Adventures in Mexico, outside the district. As the plaintiffs did not act diligently in asserting their claim under Rule B, Judge Scola denied the plaintiffs’ request and ordered them to respond to the motion to dismiss the complaint.
Judge evaluated qualifications and opinions of experts with respect to breakaway of barges; In re Borghese Lane, LLC, Nos. 2:18-cv-533, 18-510, 18-178, 18-913, 18-902, 18-1647, 18-317, 2023 U.S. Dist. LEXIS 62686, 62687, 62688 (W.D. Pa. Apr. 6, 2023) (Horan).
This litigation arises from a multiple-barge breakaway that originated at Jack’s Run Fleet at approximately Mile 4 on the Ohio River and continued downriver to the Emsworth Lock and Dam. Several barge owners filed lawsuits from the incident, and the defendants included Borghese, which owned the CORI WIELAND and bareboat chartered the JAMES GARRETT (which were on fleet watch at the time of the breakaway). Borghese filed a limitation action in federal court in Pennsylvania. After the parties submitted expert reports, Judge Horan addressed challenges to the expert opinions (and experiments). Borghese tendered the opinion of Richard J. Mancini, a certified consulting meteorologist, to discuss the decisions of the president of Borghese in the lead up to the breakaway and as to the cause of the movement of the subject vessels. The barge owners objected and requested that the court limit Mancini’s testimony to opinions sounding in meteorology, and Judge Horan agreed, striking Mancini’s opinions about the effect of the forecasts on Borghese and the actions taken. One of the claimants engaged Bartley J. Eckhardt, a forensic engineer, to determine whether a broken U-bolt that was found at the fleeting area contributed to the incident. Eckhardt reported the results from an experiment he performed in which he attempted to determine if rings (fabricated by his company’s laboratory) would warp or “potato chip” when placed under tension and appear similar to the condition of the mooring ring at the fleeting area. Borghese objected that the experiment’s comparison to the conditions of the breakaway was crude, informal, and inherently unreliable because it did not sufficiently replicate the conditions involved in the breakaway. Concluding that the experiment “misses the mark of a fair comparison in several regards,” Judge Horan excluded the results of the experiment. Borghese proffered Thomas P. O’Donnell and Joseph M. Turek, who investigated the breakaway, to provide an opinion on the cause of the breakaway. O’Donnell and Turek blamed the failure of the U-bolt on physical and metallurgical conditions that were affected by lack of maintenance. One of the parties objected on the ground that the opinions were unreliable because they failed to analyze alternative causes, particularly whether the breakaway was initiated by the breaking of the U-bolt or by the parting of a wire rope. Judge Horan did not, however, find the criticism to be a basis to decline to admit the testimony. The opinions were grounded in physical evidence. The fact that there were differences in the testimony and opinions went to the credibility of the opinions, not their admissibility. Borghese also proffered David J. Bizzak to opine whether the actions of Borghese in maintaining the fleet were a cause of the breakaway and to reconstruct the manner in which the breakaway occurred. Bizzak stated that shoaling due to sediment deposits prevented Borghese from narrowing the fleet and that the increased load on the fleet from the rising river level and dense ice flow caused the breakaway. He added that the failure of the anchor D-ring occurred because of decreased strength of the material due to cold temperatures and notches in the ring from years of use. The objection to his opinions was that Bizzak was not qualified to render opinions in maritime matters and metallurgy and that he did not provide a reliable method with respect to the force exerted on the fleet. Borghese responded that Bizzak did not need maritime experience to discuss forces that acted on the fleet, but Judge Horan reasoned that, as Bizzak was not an expert in structural engineering, civil engineering, maritime construction, meteorology, metallurgy, or the fleeting of barges, his opinions on ice formation, river conditions, metallurgy, and fleet management would not be admitted. See April 2023 Update.
Borghese objected to the expert opinion of David J. Martyn, who was hired to evaluate the safety of the fleeting area mooring configuration, arguing that Martyn was unqualified to provide expert testimony on fleet management issues and that his opinions were unreliable. As to his qualifications, Borghese argued that Martyn’s experience as a Coast Guard inspector, investigator, and compliance officer did not qualify him to opine about barge fleeting operations and how barges should or should not be moved from a fleet. Judge Horan disagreed, however, concluding that his familiarity with commercial vessels included barges and inland towing vessels, and that was sufficient to allow him to testify about fleet management. Borghese also objected that his report lacked any scientific theories, calculations, or explanation in support of his conclusions. Judge Horan found the argument to be misplaced as his opinions did not require any particular theory or calculation and were based on his practical experience and education. Therefore, she declined to exclude his opinions. Judge Horan next considered the objections to Borghese’s expert, William J. Stewart, who was hired to opine on the actions of Borghese and the crews of the CORI WEILAND and JAMES GARRETT (the failure of the D-ring was the cause of the breakaway; the fleet would have remained secure had it not failed; and Borghese did not cause the breakaway). Although Stewart had 50 years’ experience as a towboat captain, the objection was that he was not experienced in barge fleeting management. Judge Horan agreed and held that his training and experience did not provide him with sufficient expertise to offer opinions on fleet management, including determining the size, width, or configuration of fleets in the circumstances of the impending breakaway or regarding the cause or causes for the breakaway. Borghese objected to the opinions of Gregory B. Weeter, a marine surveyor with more than forty years’ experience that included marine structures and fleeting areas, to determine the suitability and safety of structures. He opined that the cells used to moor the barges were suitable if proper mooring practices had been undertaken by Borghese and there was no violation of industry standards in not dredging areas at the downriver end of the fleeting area. Judge Horan agreed that Mr. Weeter was qualified to opine on the mooring conditions, noting that he had avoided opinions on engineering and metallurgy and had not opined that the condition of the cells did not result in any failure nor the breakaway. With respect to the industry standards for dredging, Judge Horan noted the absence of a formal industry standard, but the testimony was based on his experience in the industry, and Judge Horan declined to strike the opinion.
Judge consolidated two limitation actions even though the owner in one of the cases settled with the estate for the single death claim; In re Towboat One, Inc., No. 22-81516, 2023 U.S. Dist. LEXIS 61626 (S.D. Fla. Apr. 7, 2023) (Matthewman).
Christopher McDermott was the owner and operator of the M/V FRICKA, a 23-foot Sea Ray vessel that was operating in the Atlantic Ocean just south of the Palm Beach Inlet. The vessel swamped in rough seas, and McDermott issued a May Day call to which several vessels responded. One vessel was the Sea Ray yacht, M/Y COUNTRY BOY. Another vessel that responded was the salvage/rescue vessel UNIT 4, owned by Towboat One. Robert Dykes, owner of the COUNTRY BOY entered the water to rescue two women from the FRICKA, and he was killed when he was pinned between the COUNTRY BOY and UNIT 4. Towboat One filed a limitation action in federal court in Florida, and a claim was made by Dykes’ estate in the suit. Towboat One filed a third-party complaint in that action against Christopher J. Fox, captain of the COUNTRY BOY. McDermott filed a motion for an extension of time to file a claim in the UNIT 4 limitation action, which was granted. McDermott also filed a limitation action with respect to the FRICKA, and McDermott arrested the COUNTRY BOY via a third-party complaint against the estate of Dykes and Captain Fox. McDermott then reached a settlement with the Dykes estate and dismissed the third-party complaint against the COUNTRY BOY, Estate of Dykes, and Captain Fox. Towboat One filed a claim for contribution in the McDermott limitation action. Towboat One then moved for a consolidation of the two limitation actions, and McDermott objected on the ground that he had settled with the Estate of Dykes, the sole claimant against Towboat One, and that Towboat One did not have any contribution claim against McDermott under the maritime law. Towboat One conceded that it did not have any claim against McDermott, but it argued that all of the tortfeasors needed to be consolidated into the same legal proceeding so that the court could properly apportion liability among Towboat One, McDermott, Captain Fox, and Dykes. Citing a case stating that the “Eleventh Circuit has held that it is erroneous to apportion fault between a party and a non-party in a federal maritime action, because determinations of liability and causation should be settled ‘between two live opponents,’ rather than by a plaintiff and a defendant, in the absence of the non-party to whom liability is being apportioned,” Magistrate Judge Matthewman recommended that the cases be consolidated even though McDermott had reached a settlement in his limitation action.
Judicial Panel on Multidistrict Litigation centralized litigation from the crash into the Java Sea of Flight 182 (removed to federal court based on admiralty and diversity) without ruling on the motions to remand; In re Air Crash into the Java Sea on January 9, 2021, MDL No. 3072, 2023 U.S. Dist. LEXIS 62788 (MDL Apr. 7, 2023) (Caldwell).
The litigation involving the crash of Sriwijaya Air Flight 182 into the Java Sea on January 9, 2021, returns to the Update. Irfansyah Riyanto, personal representative of the heirs of passengers who died in the crash, brought a suit against Boeing in state court in Cook County, Illinois. Boeing removed the case to federal court based on admiralty and diversity jurisdiction, and Riyanto moved to remand the case to state court. Citing the majority view, Judge Dow held that admiralty claims are not removable absent another basis of jurisdiction. Boeing cited the diversity between Riyanto and Boeing and argued that the forum defendant rule (Boeing’s principal place of business is in Illinois) was a procedural rule and was not jurisdictional—therefore, there was an independent basis for federal jurisdiction. Judge Dow disagreed, considering each basis for jurisdiction separately. As the case could not be removed on the basis of diversity because of the forum defendant rule, Judge Dow did not believe that diversity could serve as a basis to avoid the perceived non-removability from the saving-to-suitors clause [failing to address the admonition of the Supreme Court: “It is not a remedy in the common-law courts which is saved, but a common-law remedy.”]. See December 2022 Update.
There were still 21 suits pending in the Northern District of Illinois and the Eastern District of Virginia. Boeing moved the Judicial Panel on Multidistrict Litigation to centralize the litigation in the Northern District of Illinois, but the plaintiffs in four Illinois suits and the eleven Virginia actions opposed centralization and requested a stay of a ruling on the centralization until after motions to remand to state court were decided. The plaintiffs argued that there were motions to remand in 20 of the 21 actions and that the remand question was resolved by Judge Dow’s decision in the Riyanto case. The plaintiffs argued that the Panel lacked authority to rule on the motions for centralization until the remand motions were decided, but Chief Judge Caldwell cited the principle that the Panel was not empowered to decide questions going to the jurisdiction or the merits of the case, which included issues related to the motions to remand. Thus, cases have been centralized over the objection that motions for remand were pending. In response to the argument that the remand issue had already been resolved for the litigation, Boeing argued that it had moved its headquarters from Illinois to Virginia in 2022, which presented a significant factual change that altered the jurisdictional analysis. Chief Judge Caldwell noted the disagreement among the Illinois and Virginia plaintiffs as to the location of Boeing’s principal place of business and reasoned that the remand issue had not been resolved for all of the actions and that the litigation would benefit by the resolution of this issue by one court. Finally, Chief Judge Caldwell addressed the plaintiffs’ request that the centralization decision be stayed until the transferor courts decided the remand motions, and she held that the cases involved common questions of fact and that centralization would serve the convenience of the parties and witnesses. Accordingly, the MDL panel held that the cases would be centralized before Judge Hilton in the Eastern District of Virginia.
Charter party’s “minimum hire” throughout the life of the charter was not ambiguous and did not permit the owner to withdraw the vessel when the charterer would not agree to increase the hire; Olympic Tug & Barge, Inc. v. Lovel Briere LLC, No. 22-cv-1530, 2023 U.S. Dist. LEXIS 62626 (W.D. Wash. Apr. 10, 2023) (Robart).
Harley Franco was the Chief Executive Officer and Chairman of the Board of Harley Marine Services and a number of related and successor companies. Harley Marine obtained vessels for its marine transportation services by constructing new vessels and acquiring existing vessels. Mr. Franco often took on the business risk for the acquisition by using his personal credit to construct or acquire a vessel and then chartering the vessel to Harley Marine at a favorable rate for Harley Marine but at a rate that would cover his expenses and provide a reasonable rate of return. Mr. Franco formed Lovel Briere to acquire the barge LOVEL BRIERE in 2013, and the agreement between Lovel Briere and Harley Marine subsidiary Olympic Tug provided for a charter for a term of 87 months for a minimum monthly payment of $75,000 per month. Mr. Franco claims that it was agreed that the rate would be increased from time to time to cover his costs and provide a reasonable return and that it was understood that Mr. Franco would remain the CEO and majority owner of Harley Marine. After the Chief Financial Officer of Harley Marine died, the Chief Operating Officer asked Mr. Franco to extend the term of the charter for ten years, and Mr. Franco agreed to the extension without an increase in the monthly charter rate with the understanding that he would remain the CEO and majority owner of Harley Marine for the extended term. Shortly after the extension was signed, the board of Harley Marine voted to terminate Mr. Franco as CEO of Harley Marine, and Mr. Franco notified Olympic Tug that the charter hire would increase to $150,000 per month based on an increase in financing costs and the market rate. Olympic Tug filed suit in federal court in Washington seeking a declaration that the agreement was valid and binding and that the rate could not be increased during the ten-year term. Finding the language of the agreement to be unambiguous, Judge Robart granted a preliminary injunction that the owner (Lovel Briere) could not declare the charterer in default for not paying the increase in hire and could not arrest the vessel based on such a breach. Judge Robart declined to consider the evidence about the mindset of Mr. Franco at the time of the execution of the agreement as the language of the agreement was unambiguous. He also found that the evidence from Mr. Franco was insufficient at this early stage in the proceedings to establish a defense under Washington law of frustration of purpose or fraudulent inducement. See March 2023 Update.
Lovel Briere filed a counterclaim against Olympic Tug, and Olympic Tug moved to dismiss the causes alleged in the counterclaim. Lovel Briere brought a claim for breach of contract, seeking damages because Olympic Tug retained possession of the vessel while paying charter hire at the rate of $75,000 instead of the market rate of $150,000. Olympic Tug responded that the court had previously rejected that claim in its granting the preliminary injunction, concluding that the agreement was unambiguous when it provided for a “minimum” hire of $75,000. As there was no language in the agreement that granted Lovel Briere the right to an increase in the amount of hire through the life of the agreement, Judge Robart did not believe he should reconsider his prior reasoning, and he dismissed the claim for breach of contract (he similarly dismissed the claim for breach of a duty of good faith and fair dealing). Lovel Briere also argued that it was entitled to a reformation of the agreement for mutual mistake. Lovel Briere argued that there was a mutual mistake because the parties intended that the term “minimum” be included to reflect that the amount would be subject to upward adjustments if the financing expenses, bank fees, and other charges increased and because the parties assumed that Franco would remain CEO of Harley Marine and in a position to negotiate increases in the rate of the charter hire. Judge Robart ruled, however, that mutual mistake applies to facts in existence at the time the contract is made, not future predictions and assumptions. In response to Lovel Briere’s claim for conversion of the vessel, Olympic Tug asserted the independent duty doctrine that an injury is remediable in tort if it traces to breach of a tort duty that is independent of the terms of the contract. Finding that the possession of the vessel arose solely from the agreement, Judge Robart held that the conversion claim was barred by the independent duty doctrine. Judge Robart did not dismiss the claim that the agreement was voidable or unenforceable on the ground that Olympic Tug induced Lovel Briere to enter into the agreement through fraud or misrepresentation (based on the allegation that Olympic knowingly and falsely represented to Franco that the amendment was necessary for Harley Marine to issue bonds when, in fact, it was being used to bid for a government contract).
Judge upheld venue-selection clause signed at the time the seaman was employed and transferred his Jones Act suit to the designated venue; Mikel Bee v. Campbell Transportation Co., No. 2:22-cv-2894 (E.D. La. Apr. 10, 2023) (Africk).
Mikel Bee, a resident of Alabama, was injured while working as a tankerman and deckhand for the M/V DUKE, a towing vessel that is owned and operated by Campbell Transportation. He was injured while the vessel was operating in the Mississippi River near New Orleans, and he brought this suit in federal court in Louisiana against Campbell Transportation under the Jones Act and general maritime law. Campbell Transportation moved to transfer the suit to the Western District of Louisiana based on a mandatory venue-selection agreement in a contract that Bee signed at the time of his employment. Bee argued that forum-selection clauses are unenforceable in FELA cases (based on the provisions of the FELA and the cases interpreting the FELA), and he recognized that the Fifth Circuit has held that the FELA provisions do not apply in Jones Act cases. However, Bee argued that there was a distinction between “forum” and “venue” (claiming that “forum” refers to a court” and “venue” refers to the territory of the court that has jurisdiction). Bee asserted that the clause in this case was both a forum-selection clause and a venue-selection clause, and that it should be unenforceable in this Jones Act case because it was not just a venue-selection clause. However, Judge Africk did not find support in the case law for the distinction, citing cases that have enforced forum-selection clauses that restricted a Jones Act plaintiff to filing the suit in the designated district and prohibiting the seaman from filing the suit in state court. Bee also argued that the clause was part of a contract of adhesion that resulted from Campbell Transportation’s overwhelming bargaining power. However, Judge Africk concluded that the courts regularly reject this argument in similar contexts, and he held that the clause was not invalid due to the parties’ unequal bargaining power. Bee next argued that the clause lacked consideration, comparing it to post-injury agreements that were based on an exchange of the forum-selection clause for post-injury benefits. However, Campbell Transportation pointed out that the offer letter noted that Bee’s employment was contingent on his successful execution of documents, including the venue-selection agreement. Therefore, Judge Africk concluded that Bee received benefits in the form of employment wages and benefits in consideration for signing the contract with the venue-selection clause (he also rejected the argument that Louisiana public policy prohibited forum-selection clauses in employment clauses as the Louisiana public policy did not overcome the federal policy in favor of forum-selection clauses). As no public interest factors outweighed the interest in enforcing the clause, Judge Africk transferred the case to the Western District of Pennsylvania (where Campbell Transportation is based) in accordance with the clause. Thanks to Georges M. Legrand of Mouledoux, Bland, Legrand & Brackett in New Orleans for bringing this case to our attention.
Judge awarded damages for breach of agreements to charter/purchase a vessel when the damage issues were not addressed in the response to the motion for summary judgment; Busch Marine Group, Inc. v. Calumet River Fleeting, Inc., No. 20-cv-11427, 2023 U.S. Dist. LEXIS 65071 (E.D. Mich. Apr. 13, 2023) (Parker).
Busch Marine, which operates and rents barges and tugboats, owned the barge STC 2004, which was docked at Busch Marine’s dock on the Saginaw River in Carrollton, Michigan. Calumet River Fleeting provides cargo transportation and responded to an advertisement for the sale of the barge. Calumet’s president inspected the barge at the dock and noted that there was water in most of the tanks. Gregory Busch, the owner of Busch Marine, told him that the barge had been damaged and that Busch Marine had to replace two-thirds of the hull in 2013. Calumet’s president could not inspect the underside of the barge in the water, but he agreed that from his experience he could look at the barge and
“pretty much know” its condition. Busch and Calumet entered into a contract by which Calumet agreed to purchase the barge for $575,000 on an “as is, where is” basis. There were some problems with the documentation for the sale as Gregory’s deceased parents had a mortgage lien on the barge, and Gregory only signed a satisfaction of the mortgage with respect to his mother. However, before the Coast Guard advised of the documentation issue, Calumet advised that it would not purchase the barge because it had not received the documentation for the sale. As Calumet needed a barge, Busch and Calumet entered into a bareboat charter for the barge on an “as is” basis with no representations of seaworthiness, and the agreement provided that Calumet would return the barge to Busch Marine’s dock at the conclusion of the charter. The barge began taking on water after delivery to Calumet, and the crew patched holes in the hull and proceeded to a dry dock in Escanaba, Michigan where a different barge was to be picked up to complete the job. Busch Marine did not authorize work on the barge at that dry dock, and the barge remained at the dry dock. Busch Marine brought this action in federal court in Michigan against Calumet for breach of the agreement to purchase the barge and the charter party, and Calumet filed a counterclaim for fraudulent misrepresentation. Both parties moved for summary judgment, and Judge Parker noted that there was no time set forth for Bush to deliver the documentation for the purchase. Busch had complied with the obligation to provide documentation before Calumet repudiated the agreement, and, if there was a defect in documentation, it could easily have been cured had Busch been given the opportunity to do so. Judge Parker then addressed Calumet’s fraudulent misrepresentation claim and held that Calumet failed to show that Busch made materially false representations prior to the execution of the purchase agreement. As such, Busch established entitlement to summary judgment on the claim for breach of the purchase agreement. Turning to the claim for breach of the charter party, Judge Parker noted that the agreement required the return of the barge to the Busch Marine dock in Carrollton, not a drydock in Escanaba. Calumet argued that the doctrine of impossibility of performance or frustration of purpose applied because the barge was not seaworthy without repairs and Calumet was not responsible for repairs from ordinary wear and tear. Judge Parker rejected Calumet’s argument, however, because Calumet towed the barge over 1000 miles to Duluth and then to Escanaba instead of less than 250 miles to Busch Marine’s dock in Carrollton. As it was not impossible to return the barge as specified in the charter party, Judge Parker granted summary judgment that Calumet had breached the charter party. Judge Parker did grant summary judgment to Calumet on Busch Marine’s tort claims for conversion and negligence as they arose from duties in the charter party. See September 2022 Update.
Having concluded that Calumet breached the sales contract and charter agreement, Judge Parker considered Busch’s claim for damages from the breaches. Busch argued that Calumet waived objections to the amounts sought because it did not respond to the damage arguments, but Judge Parker stated that he would still have to determine whether Busch had carried its burden to establish the damages. As the purchase price of the barge was $575,000 and Calumet had paid a deposit of $50,000, Judge Parker awarded Busch $525,000 plus $25,000 for hire in accordance with the provision in the charter that hire would be $25,000 in the event the sale of the barge was not completed. Judge Parker denied any award for the cost of retrieving the barge because it would be at odds with an award of damages based on the breach of the sales contract (the barge would have belonged to Calumet). Calumet did object to the amount of attorney fees requested by Busch, arguing that the fees should be reduced on account of the dismissal of Busch’s alternative theories of recovery. Judge Parker disagreed, stating that litigants may, in good faith, assert alternative legal grounds, and the rejection of some theories is not a basis for reducing the fee when success is achieved on the significant issues.
Asbestos-exposure case was removable by ship repairer, even though the Navy seaman limited his claim against the shipyard to negligent exposure and declined to bring a strict liability claim; Ollerton v. National Steel & Shipbuilding Co., No. 23-cv-1267, 2023 U.S. Dist. LEXIS 66038 (C.D. Cal. Apr. 14, 2023) (Fitzgerald).
William Ollerton brought this action in California state court against National Steel and Shipbuilding Co. and a number of product suppliers alleging that he was exposed to asbestos during his service as a machinist mate in the Navy while serving on the USS DULUTH that was undergoing repairs at National Steel’s shipyard in California. The allegations against National Steel were carefully limited to negligent exposure to asbestos dust, and National Steel was excluded from Ollerton’s strict liability claims. National Steel removed the case to federal court based on the Federal Officer Removal Statute, and Ollerton moved to remand, asserting the legal defense that National Steel could not establish a federal contractor defense under Boyle, because that defense is limited to claims against defendants who design and manufacture military equipment, or under Yearsley because that defense is limited to property damage resulting from public works projects. He asserted a factual defense that the evidence did not establish that National Steel’s conduct was the result of the Navy’s reasonably precise specifications under Boyle or that the Navy exercised significant control over National Steel’s actions under Yearsley. Judge Fitzgerald disagreed and held that all of the elements for removal under the Federal Officer Removal Statute were satisfied, reasoning that, although the allegations were vague, the defendant established that the Navy exerted and directed detailed control over the inspection, installation, and repair of its vessels such as the DULUTH (which included the protocols to protect and warn workers about asbestos). Therefore, he denied the motion to remand.
From the state appellate courts
Defendant insurer did not owe a duty to plaintiff insurer when the vessel was abandoned in a foreign port and the defendant insurer canceled coverage, leaving the plaintiff insurer holding the bag for claims; Great Lakes Insurance SE v. American Steamship Owners Mutual Protection and Indemnity Association Inc., Index No. 157295/21, 2023 NY Slip Op. 01742, 2023 N.Y. App. Div. LEXIS 1756 (N.Y. Sup. App. Div. 1st Dept. Mar. 30, 2023) (per curiam).
The American Club insured the M/V ADAMASTOS, registered to Adamastos Shipping, an entity allegedly owned and controlled by George and Efstathios Gourdomichalis, who were also officers in Phoenix Shipping and Trading, which managed and operated the vessel. Great Lakes brought this suit in New York state court, alleging that Great Lakes also issued policies insuring the vessel and that the American Club, Shipowners Claims Bureau, Adamastos Shipping, Phoenix Shipping, and George and Efstathios Gourdomichalis negligently failed to comply with the requirements of a terminal in Brazil where the vessel was to be loaded (requiring that the vessel be detained in Brazil). Great Lakes also alleged that the defendants conspired to abandon the vessel in Brazil so that the defendants could avoid millions of dollars in claims resulting from the failure of the vessel to complete the voyage. Great Lakes also argued that the defendants then wrongfully terminated the vessel’s coverage with the American Club, leaving Great Lakes with the liability for all claims. As the American Club transferred the handling of the matter to its New York office, and as communications among the defendants about the matter were with the New York office, the appellate court held that the allegations were sufficient to establish personal jurisdiction over the defendants in New York. The court also held that Great Lakes stated a cause of action for negligence against the Gourdomichalis defendants by alleging that they had a duty to ensure that the vessel was seaworthy and breached that duty, and the claim was timely because the three-year statute of limitations was equitably tolled because of the allegation that the defendants concealed the scheme and failed to notify Great Lakes of the incident. However, the appellate court held that Great Lakes did not state a negligence cause of action against the American Club and Shipowners Claims Bureau, finding no duty under the insurance contract (although the lower court permitted Great Lakes to replead its claims based on fraud).
Kenneth G. Engerrand
President, Brown Sims, P.C.
1177 West Loop South
Houston, TX 77027
365 Canal Street
New Orleans, LA 70130
1110 Cowan Road
Suite B #214
Gulfport, MS 39507
4000 Ponce De Leon Blvd
Coral Gables, FL 33146
Claims are weighed, not counted. So stacking several claims that cover the same dispute does not tip the scale.
Stephanos Bibas, Circuit Judge, United States Circuit Court for the Third Circuit, sitting by designation. Stokes v. Markel American Insurance Co., No. 1:19-cv-2014, 2023 U.S. Dist. LEXIS 38516 (D. Del. Mar. 8, 2023).
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© Kenneth G. Engerrand, April 27, 2023; redistribution permitted with proper attribution.