September 2022 Longshore/Maritime Update (No. 280)
Notes from your Updater:
The Department of Labor sent the following letter on August 26, 2022, to note the “reopening” of offices in Chicago and Philadelphia. This does not mean the offices will be physically reopened. The offices will be open for the assignment of cases and referral to the appropriate Administrative Law Judges and appellate courts.
Dear Insurance Carriers and Self-Insured Employers under the Longshore and Harbor Workers’ Compensation Act, and other interested parties:
Effective August 26, 2022, the Secretary, through his delegated official, the Director, OWCP, is reopening offices for the Longshore Program in Chicago, Illinois and Philadelphia, Pennsylvania. The Philadelphia location will be a sub-office of the Eastern Compensation District and the Chicago location will be a sub-office of the Southern Compensation District. This action is being taken in accordance with 20 CFR §702.102 and 33 U.S.C. § 939(b) to more efficiently administer the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) and its extensions.
As a result, the compensation districts established by the Secretary, the Eastern, Western, and Southern Districts, will have the following suboffices:
- Eastern Compensation District –Boston, Massachusetts; New York, New York; Philadelphia, Pennsylvania; and Norfolk, Virginia.
- Western Compensation District –Long Beach, California; San Francisco, California; and Seattle, Washington.
- Southern Compensation District –Jacksonville, Florida; New Orleans, Louisiana; Chicago, Illinois; and Houston, Texas.
The Secretary may transfer cases between districts and offices to evenly distribute workload.
Effective August 26, 2022, all newly created LHWCA, Outer Continental Shelf Lands Act (“OCSLA”), and Nonappropriated Fund Instrumentalities Act (“NAFIA”) claims where injuries occur within the United States will be assigned to the appropriate suboffice within the Eastern, Western, or Southern compensation district based on the place of injury. The OWCP claims examiner assigned to handle the case may, however, be located anywhere within the compensation district where the suboffice is located.
Additionally, all newly created cases will be distributed for assignment on a rotating basis among the sub-offices including Chicago and Philadelphia. The only exceptions are:
- Defense Base Act (“DBA”) cases where claimant resides in the United States: These cases will continue to be assigned to a sub-office based on where the claimant resides. See Industry Notice 122.
- DBA cases where the claimant resides outside of the United States and NAFIA cases where injury occurs outside of the United States and the claimant resides outside of the U.S.: These cases will continue to be assigned to the sub-office based on place of injury. However, consistent with 20 CFR § 704.101 and prior district office consolidations set out in prior Industry Notices (Numbers 106, 115, 174, and 175), the OWCP has determined that cases involving injuries occurring in areas formerly assigned to:
- District 1 will be assigned to the Eastern Compensation District, sub-office in Boston, Massachusetts.
- District 2 will be assigned to the Eastern Compensation District, sub-office in New York, New York.
- District 10 will be assigned to the Southern Compensation District, sub-office in Chicago, Illinois.
- Districts 14 and 15 will be assigned to the Western Compensation District, sub-office in Long Beach, California.
The list of compensation districts and their respective sub-offices will be viewable online effective August 26, 2022. All questions concerning this Industry Notice should be directed to OWCP, DFELHWC Director.
On July 29, 2022, the United States Court of Appeals for the D.C. Circuit considered the petition for review of the order of the Federal Maritime Commission, dismissing the claim of Crocus Investments against Marine Transport Logistics for allegedly overcharging for storage fees for a vessel at a New Jersey facility. The Commission changed its interpretation that a single overcharging incident violated federal law and instead held that a party is only liable for acts occurring on a normal, customary, and continuous basis. Agreeing with the retroactive application of the interpretation and the finding that there was no normal or customary practice of overcharging for storage, the court denied the petition for review. See Crocus Investments, LLC v. Federal Maritime Commission, No. 21-1199, 2022 U.S. App. LEXIS 21125 (D.C. Cir. July 29, 2022) (per curiam).
In our July 2020 and August 2020 Updates, we discussed Judge Moss’s decisions in Matson Navigation Co. v. United States Department of Transportation, holding that the Maritime Administration violated the Administrative Procedure Act in approving the replacement of two vessels operating in the Maritime Security Program. Judge Moss ruled that the Approval Order should be vacated and the case remanded to MARAD, but he granted MARAD’S motion to dismiss the suit for lack of jurisdiction. See 466 F. Supp. 3d 177 (D.D.C. May 30, 2020). On August 4, 2022, Judge Moss dismissed Matson’s suit seeking review of the Maritime Administration’s decision approving the replacement of a vessel operating under the Maritime Security Program, reasoning that the jurisdiction lay with the court of appeals to review the order. See Matson Navigation Co. v. United States Department of Transportation, No. 21-1606, 2022 U.S. Dist. LEXIS 139053 (D.D.C. Aug. 4, 2022) (Moss).
In a non-maritime case, the Fifth Circuit declined, on an 8-8 vote, to grant rehearing en banc for the panel decision declining to order arbitration for a suit by employees of a staffing company (whose contracts contained an arbitration clause) that provided pipeline inspectors for its customers. The employees brought suit against the customer, which argued that the decision on arbitrability should be made by the arbitrator. The panel held that the question whether a non-signatory (customer) could enforce the arbitration clause was for the court and that the customer could not enforce the arbitration clause. Judge Jones penned a dissent to the denial of rehearing en banc, arguing that the decision that the arbitrability issue was not delegated to the arbitrator put the Fifth Circuit out of step with at least five other circuits as well as the Supreme Court. See Newman v. Plains All American Pipeline, L.P., No. 21-50253, 2022 U.S. App. LEXIS 21798 (5th Cir. Aug. 5, 2022) (per curiam), denying rehearing en banc to 23 F.4th 393 (5th Cir. 2022) (Willett).
Chevron U.S.A. filed suit in the District of Columbia, seeking review of a position taken by the Environmental Protection Agency that two of Chevron’s platforms on the outer Continental Shelf off the California coast that Chevron is seeking to decommission may still be regulated sources under the Clean Air Act. Chevron sought review of the position taken by the EPA in the United States Court of Appeals for the D.C. Circuit, but that court held that the petition for review belonged in the Ninth Circuit (where Chevron filed a protective petition), and the petition filed in the D.C. Circuit was dismissed for improper venue. See Chevron U.S.A., Inc. v. EPA, No. 21-1140, 2022 U.S. App. LEXIS 22462 (D.C. Cir. Aug. 12, 2022) (Srinivasan).
As we noted in the April 2020 Update, a federal jury in Houston in a case tried before Judge Hughes issued a verdict in excess of $22 million in favor of the Port of Houston against the lessee of a grain elevator at the Port for leaving the leased property in poor condition. On August 17, 2022, Judge Hughes rejected the lessee’s motions for judgment as a matter of law, new trial or remittitur, concluding that there was sufficient evidence to support the verdict. He also awarded attorney fees and costs to the Port of Houston in the amounts of $1,502,966.51 and $95,869.36. See Port of Houston Authority of Harris County Texas v. Louis Dreyfus Co. Houston Export Elevator LLC, No. 4:19-cv-746, 2022 U.S. Dist. LEXIS 147369, 147371 (S.D. Tex. Aug. 17, 2022.).
We have noted the litigation over the Biden Administration’s executive order pausing new oil and gas leases on public lands and in offshore waters. Louisiana and other states challenged the executive order in the Western District of Louisiana, and Judge Doughty issued a nationwide preliminary injunction enjoining officials in the Department of Interior from implementing the pause. See Louisiana v. Biden, No. 2:21-cv-778, 2021 U.S. Dist. LEXIS 112316 (W.D. La. June 15, 2021). On August 17, 2022, the Fifth Circuit ruled that Judge Doughty’s order and accompanying memorandum lacked sufficient specificity and remanded the case for further proceedings without reaching the merits of the Government’s challenge to the injunction. Louisiana v. Biden, No. 21-30505, 2022 U.S. App. LEXIS 22872 (5th Cir. Aug. 17, 2022) (Higginbotham). The next day, Judge Doughty granted a permanent injunction enjoining the Government from implementing the pause on public lands and offshore waters as set forth in the executive order with respect to the thirteen states who were plaintiffs in the lawsuit. See Louisiana v. Biden, No. 2:21-cv-778, 2022 U.S. Dist. LEXIS 148570 (W.D. La. Aug. 18, 2022). In separate litigation, the D.C. Circuit held that the Department of Interior adequately considered the option of not leasing in connection with two proposed offshore leases, but remanded the suit for consideration of potential deficiencies in enforcement of safety and environmental regulations. See Gulf Restoration Network v. Haaland, No. 20-5179, 2022 U.S. App. LEXIS 24368 (D.C. Cir. Aug. 30, 2022) (Katsas).
The Third Circuit joined four other circuit courts in rejecting federal removal jurisdiction over climate-related claims brought in state court against numerous oil and gas companies, reasoning that the claims were too removed from oil production on the outer Continental Shelf to support federal jurisdiction under the Outer Continental Shelf Lands Act. See City of Hoboken v. Chevron Corp., Nos. 21-2728, 22-1096, 2022 U.S. App. LEXIS 22818 (3d Cir. Aug. 17, 2022) (Bibas).
On August 26, 2022, the D.C. Circuit vacated the order of the National Labor Relations Board that favored the International Association of Machinists over the International Longshore and Warehouse Union with respect to mechanic workforce at the Ben Nutter Terminal in Oakland, California. See Everport Terminal Services, Inc. v. NLRB, No. 20-1411 c/w No. 20-1412 and No. 20-1432, 2022 U.S. App. LEXIS 24017 (D.C. Cir. Aug. 26, 2022) (Rao).
On the LHWCA Front . . .
From the federal district courts:
Hugh A. Taylor claimed that he developed asbestosis during his work for Exxon and other energy and chemical companies, working with gaskets containing asbestos in their plants. He also alleged that he worked on many platforms in the Gulf of Mexico, including some that were 100 miles offshore, and the work included removal and replacement of gaskets for compressors. Taylor filed suit in Louisiana state court, and Exxon removed the case to federal court in Louisiana based on federal question jurisdiction under the Outer Continental Shelf Lands Act, citing Taylor’s testimony that he performed gasket work on platforms located 100 miles offshore. Taylor moved to remand the case to state court, and Judge Lemelle agreed with Exxon that it had provided sufficient evidence that Taylor’s work constituted an operation conducted on the outer Continental Shelf that involved exploration and production of minerals. Although Exxon argued that the allegations in Taylor’s petition indicated that his asbestos exposure was not limited to onshore work, Judge Lemelle cited Taylor’s testimony that “I wasn’t exposed to no asbestos at all offshore” and held that Exxon had not met its burden to show that Taylor’s disease arose out of or in connection with the OCS operations. Accordingly, Judge Lemelle remanded the case to the Louisiana court.
Mark Bowden was employed at the Cascade General shipyard as a sandblaster/painter. The shipyard rented a self-propelled man lift boom to complete work on a ship, and Bowden was injured when he was thrown back and forth inside the man cage at the end of the boom because of the shaking of the boom when he engaged the joystick. Bowden brought this products liability suit in Oregon state court against the manufacturer of the man lift boom, and the case was removed to the federal court in Oregon. After a four-day trial, the jury found the manufacturer liable for strict products liability, found Bowden 48% comparatively at fault, and awarded Bowden $3,353,449.19 in economic and non-economic damages. Judge Simon entered a judgment for $1,731,305.80, and the manufacturer moved for judgment as a matter of law, a new trial, or remittitur. Finding sufficient evidence to support the verdict and concluding that it was not excessive, Judge Simon denied the motion.
Gregory Ratcliff was employed by TT Barge and was assigned to clean the tank on a barge owned by Ingram Barge Co. The barge was secured to a floating work platform in the Mississippi River. He slipped and fell on caustic soda that was frozen inside the barge, and Ingram Barge brought this limitation action in federal court in Louisiana. Ratcliff filed a claim against Ingram Barge in the limitation action, and TT Barge, which was subject of a Jones Act suit brought by Ratcliff in state court, also filed a claim in the limitation action for contribution/indemnity. Ratcliff then moved the court to bifurcate the limitation and non-limitation issues so that he could try apportionment of liability and damages to a jury in his action filed in state court. Judge Jackson denied the motion, reasoning that Ratcliff could only proceed in state court prior to the court’s determination of the vessel owner’s rights to exoneration or limitation when all claimants have entered stipulations protecting the rights of the vessel owner under the Limitation Act. As TT Barge was a claimant and had not agreed to a stipulation, Judge Jackson held that bifurcating the issues of limitation and liability was inappropriate. See March 2022 Update.
Although Ratcliff did not make a claim against TT Barge in the limitation action, TT Barge raised the issue of seaman status of Ratcliff in the federal limitation action by arguing that a finding that Ratcliff was not a seaman would mean that his exclusive remedy against TT Barge was the LHWCA and, consequently, Ratcliff would have no claim for contribution or indemnity to assert in the limitation action. TT Barge argued that Ratcliff could not be a seaman because the work barges formed a permanently moored work platform and were not vessels in navigation. Judge Jackson agreed and then addressed Ratcliff’s argument that he had a substantial connection to the barges of Ingram, a customer of TT Barge. As Ratcliff worked on barges owned by many different customers and was assigned to work on the customers’ barges at random, Judge Jackson held that Ratcliff owed his allegiance to a shoreside employer and not to any specific vessel (using the Fifth Circuit’s Sanchez analysis). Ratcliff only worked on docked vessels and did not sail with them from port to port. Therefore, Ratcliff could not satisfy the connection test and was not a seaman as a matter of law. See June 2022 Update.
As Ratcliff was not a seaman, Ingram Barge moved for summary judgment on Ratcliff’s claim of vessel negligence under Section 5(b) of the LHWCA. Ratcliff only argued that Ingram Barge violated the turnover duty from Scindia. Judge Jackson noted that the duty to warn is narrow and does not include dangers that are open and obvious, that a reasonably competent stevedore should anticipate encountering, and for harmful conditions that the contractor was hired to correct. It was undisputed that TT Barge was hired to clean caustic soda from the barge and that Ratcliff was assigned to clean the caustic soda. Ratcliff only disputed that he did not know the caustic soda was frozen. However, Ratcliff testified that he was informed that his job was to clean “a caustic barge that was frozen, that was iced up.” Concluding that Ratcliff was fully aware of the condition of the barge (Judge Jackson found Ratcliff’s argument to be “nonsensical” in light of his testimony), Judge Jackson held that Ingram Barge had no duty to warn Ratcliff and granted summary judgment to Ingram Barge.
Ora Jean Adams was diagnosed with lung cancer and claimed that it resulted from take-home exposure from her husband while he worked as a pipefitter and welder on Destroyer Escorts, Coast Guard Cutters, and LASH vessels at the Avondale shipyard (from fire blankets and pipe insulation). She also claimed that she was exposed to asbestos while working as a laborer and janitor at Charity Hospital. Adams filed suit in Louisiana state court, and Avondale removed the case to federal court pursuant to the Federal Officer Removal Act. Union Carbide, which supplied raw asbestos to a number of companies, was named as a defendant. Union Carbide did not manufacture finished products with asbestos, and neither Ora Jean Adams nor her husband could identify any products containing Union Carbide asbestos to which she or he had been exposed. Union Carbide moved for summary judgment, and, as there was no evidence of exposure to asbestos attributable to Union Carbide, Judge Morgan granted the motion and dismissed Union Carbide.
From the state appellate courts:
Cynara Dolphy-Budd settled her LHWCA claim with her employer and carrier for a lump sum payment of $295,000 and a payment to be made in 2025 of $146,094. The 8(i) settlement agreement provided for the transfer of the obligation to make the future payment to American General Life Insurance Co. through a reinsurance agreement, and the terms of the structured settlement provided that the payee could not accelerate or defer the payment or receive its present value. Three years after the settlement was approved by the Department of Labor, Dolphy-Budd agreed with Genex Capital Corp. to sell the future payment for $82,776, and Genex assigned the transfer agreement to Great Plains Management Corp. Great Plains filed an application with the state district court in San Antonio, Texas, seeking to approve the agreement pursuant to the terms of the Texas Structured Settlement Protection Act (which requires that a court find the transfer is in the best interest of the payee, that the payee has either received independent professional advice on the transfer or has knowingly waived the advice in writing, and that the transfer does not contravene any applicable statute or order). American General opposed the transfer on the ground that it violated the anti-assignment provision of Section 16 of the LHWCA, but the district court approved the transfer. American General appealed to the San Antonio Court of Appeals, and Justice Rios held that American General was an interested party under the Texas statute and had the right to participate in the proceeding. Therefore, it had the right to appeal. Turning to the merits, Great Plains argued that Section 16 only forbids assignments to creditors, citing the language in Section 16: “No assignment, release or commutation of compensation or benefits due or payable under this chapter, except as provided by this chapter, shall be valid, and such compensation and benefits shall be exempt from all claims of creditors and from levy, execution, and attachment or other remedy for recovery or collection of a debt, which exemption may not be waived.” Great Plains also argued that, as the settlement had been approved by the Department of Labor, the employer and carrier were no longer the parties obligated to make the payment under the LHWCA so that no compensation benefits were due or payable under the LHWCA as described in Section 16. With respect to the first argument, Justice Rios noted that the language in Section 16 is conjunctive, forbidding assignment and exempting benefits from creditors. Thus, Justice Rios held that there are two separate prohibitions–assignments and actions from creditors. She then addressed the scope of the section’s constraint on assignments and the argument that there were no benefits due under the LHWCA. Great Plains relied on the decision of the divided Eleventh Circuit in the Sloma case that annuity payments purchased by the carrier were not payments due and payable under the LHWCA. American General relied on the Pennsylvania decision in the Dwyer case that Section 16 prohibits the assignment of any benefits owed or being paid pursuant to a claim under the LHWCA, and that future structured settlement payments were payable and derived from the settlement of claims under the LHWCA. Considering the reasoning of the Dwyer opinion to be sound, Justice Rios held that the transfer contravened the LHWCA and reversed the district court’s approval of the transfer. Finally, reasoning that American General was entitled to an award of attorney fees under the Texas statute, she remanded the case to the district court to award fees to American General.
Odell Allen was employed by Lykes as a freight handler and longshore worker. He claimed that he handled asbestos while employed by Lykes from 1970 to 1973 and that he brought home asbestos on his clothes and on the sheet on which he sat in his truck. His wife, Joyce Allen, was diagnosed with asbestos-related lung cancer which resulted in her death. Mr. Allen and his children brought this action against Lykes, its insurers, and others in Louisiana state court, and Lykes’ insurers moved to exclude or limit the testimony of the plaintiffs’ medical causation expert, Dr. Murray Finkelstein, and for summary judgment. The motions were denied, and the insurers filed writ applications with the Louisiana Court of Appeal. The insurers relied on Mr. Allen’s testimony in 2004 in which he could not recollect his asbestos exposure with Lykes; however, the Allens responded with Odell’s more detailed recollection in 2021 of his exposure while employed by Lykes, his carrying the asbestos home, and his widow’s exposure while laundering his clothes. While his testimony conflicted, Judge Belsome held that the conflict presented an issue of credibility but was sufficient to overcome the motion for summary judgment. With respect to medical causation, Lykes challenged the opinion of Dr. Finkelstein that Joyce’s exposure to asbestos taken home by Odell was a substantial contributing cause of her lung cancer, arguing that Dr. Finkelstein’s assumptions were unsupported by facts, including the assumption that Odell carried home asbestos in sufficient quantities to cause her lung cancer. Judge Belsome disagreed, noting that there were two components to the exposure—the direct exposure from laundering the clothing and the ongoing exposure coming from contamination in her home that could be present for ten or more years after the asbestos was brought home. Thus, the court upheld the rejection of the Daubert challenge to the opinion on medical causation.
And on the maritime front . . .
From the federal appellate courts:
Magnus Aadland developed an infection while serving as the Captain of defendant’s F/V LINDA on a scalloping trip. The vessel returned to shore, and Aadland was hospitalized for streptococcus and eventually had to have two cardiac surgeries. His treatment was paid first by his wife’s health insurance, then by COBRA, and then by Medicare. The defendant paid maintenance at the rate of $84 per day retroactive to Aadland’s discharge from the hospital, and also paid “advances” at the rate of $114 per day (including periods of subsequent hospitalization). Aadland used the advances to pay for living expenses, including medical insurance premiums. The total paid for maintenance was $175,644, and the amount paid for advances was $328,374. The defendant also reimbursed out-of-pocket medical expenses. Aadland brought this action seeking to recover for Jones Act negligence, unseaworthiness, maintenance and cure, and failure to pay maintenance and cure. A trial was held on his claims for maintenance and cure and for failure to pay maintenance and cure, and Judge Casper denied all of the claims. She concluded that Aadland had reached maximum cure as he had been discharged from occupational therapy and was only seeing his doctors every six months for checkups. She also held that Aadland was not entitled to maintenance during the period when he was initially hospitalized. There were no outstanding medical expenses that Aadland was obligated to pay, and the record did not reflect that there were any unreasonable delays in payment of maintenance. Finally, Judge Casper held that Aadland’s employer was not liable for any failure to pay maintenance and cure. See November 2020 Update.
Aadland appealed to the First Circuit, but he did not contest that his employer had satisfied its duty of maintenance. The payment of cure was complicated by the fact that Aadland used the health insurance provided by his wife’s employer to pay the cost of his treatment, and, after his wife lost her job, they were enrolled in the COBRA plan for that insurance. Aadland used a portion of the advance payments on maintenance to pay for the costs of the COBRA premiums, and his employer reimbursed him for out-of-pocket medical expenses, such as co-pays. On the eve of trial, Aadland’s employer paid the health insurer $400,000 in full satisfaction of any claim the insurer may have had for Aadland’s medical expenses. The first issue presented to the appellate court was whether the employer breached the duty of cure by failing to pay the cost of reasonably necessary medical care even though the cost of the care was paid for by private insurance. A secondary issue was presented whether he could recover the sticker price for the medical care and not the reduced amount that the health care providers accepted from the insurers. As the bills were paid by the insurers and his employer reimbursed the co-pays, the only amounts for which Aadland was out of pocket were the premiums he paid for the private insurance coverage. Citing the Gauthier opinion from the Fifth Circuit, Aadland argued that the payments from private health care providers were from a collateral source, that the reimbursements made to the insurers should not reduce the amounts owed for cure, and that he should recover the full amount of $1.2 million that was invoiced by the medical providers. Writing for the First Circuit, Chief Judge Barron noted that Judge Casper had distinguished Gauthier on the basis that Aadland had not requested cure, but the employer had conceded that the duty to provide maintenance and cure includes a duty to inform the seaman of the duty. As the employer had not notified Aadland of that duty, it could not complain that he did not request cure. Consequently, the First Circuit vacated Judge Casper’s failure to properly explain why Gauthier should not apply. Alternatively, the employer argued that the premiums for the medical insurance during the employment of Aadland’s wife were deducted from his wife’s paycheck and were not paid by Aadland (citing cases where the seaman receives financial assistance from a parent). Chief Judge Barron considered the sharing of expenses by spouses to be different than a parent gifting expenses to an adult seaman. He held that the claim for breach of the duty to provide cure had to be vacated, absent a finding that the financial relationship between Aadland and his spouse would support a finding that Aadland did not incur an expense for the cost of the premiums. Aadland’s employer also argued that it paid hundreds of thousands of dollars in advances to Aadland that he used to pay for the premiums once his wife’s employment ended. However, Chief Judge Barron answered that the evidence reflected that the payments were advances (a loan) pursuant to an agreement for repayment. Although there was no request for repayment, it was unclear whether the payments were made as a loan for which there would be no basis to allow a set off. Chief Judge Barron remanded the case to make findings bearing on whether Aadland alone purchased his insurance and emphasized that if he did alone purchase the insurance, his employer would not be entitled to set off from its cure obligation the roughly $600,000 that the medical insurer paid for Aadland’s treatment. Chief Judge Barron then addressed the question whether Aadland was entitled to recover the sticker price for his cure and followed the decision of the Fifth Circuit in Manderson, holding that the amount owed was the amount accepted by the medical providers. Chief Judge Barron left it to Judge Casper on remand to address whether and how to credit the advance payments made by the employer and the payment made by the employer to the medical insurer. This left Judge Casper’s denial of Aadland’s claims for compensatory damages for mental anguish based on the failure to pay cure and punitive damages and attorney fees for willful delay in failing to provide cure. As the appellate court reversed the decision that the employer did not breach its duty to provide cure, Chief Judge Barron remanded these claims to Judge Casper for reconsideration. Finally, Chief Judge Barron addressed the ruling by Judge Casper that Aadland had reached the point of maximum cure (reasoning that there was no evidence that Aadland had not reached maximum medical recovery). Concluding that this decision improperly shifted the burden to the seaman to disprove maximum cure, Chief Judge Barron reviewed the court’s determination de novo. Although Aadland was discharged from his occupational therapy, was seeing his doctors every six months for checkups, and Aadland admitted that the doctors were not doing anything for him to get better, Chief Judge Barron was not persuaded that the evidence sufficed to establish that Aadland’s care was palliative rather than rehabilitative. Consequently, the First Circuit reversed the finding on maximum cure.
Ryan Maunes Maglana and Francis Karl Bugayong were crew members on the cruise ship MILLENNIUM when the COVID-19 pandemic disrupted the cruise industry and lives around the world. Celebrity stopped carrying passengers but kept its crews on the vessels, including keeping Maglana and Bugayong on the vessel for 58 days after terminating their employment for cause (Maglana took an expensive bottle of scotch from the ship’s bar and shared it with Bugayong). The crew members were released and repatriated after the CDC provided guidance on disembarking them, but Maglana and Bugayong complained about the speed of the process and the conditions in which they were kept “like cattle.” They brought this suit in federal court in Florida, and the cruise line moved to compel arbitration based on the arbitration clauses in the employment agreements. Judge Martinez ordered the claims arbitrated, and the crew members appealed. The contracts required all disputes, whether in contract or tort, that were in any way connected with their service to be resolved by arbitration in the Philippines. The Eleventh Circuit initially discussed whether the court or arbitrator should decide the arbitrability of the claims. Although the delegation provision in the clauses gave the arbitrator the exclusive authority to decide arbitrability, the cruise line asked the district court to enter an order directing the seamen to proceed to arbitration. The Eleventh Circuit considered this to be the opposite position from what the cruise line argued on appeal. Thus, the appellate court held that the cruise line invited the district court to rule on arbitrability, and the cruise line could not argue on appeal that the arbitrability should have been decided by the arbitrator. The appellate court then addressed whether the arbitration clauses covered the intentional tort claims based on the cruise line’s conduct after it terminated the employment of the seamen. Reasoning that keeping the seamen on the vessel for weeks under miserable conditions was unconnected to their duties as beverage handlers (there were no passengers to serve), and that the claims were limited to actions taken after their termination, the Eleventh Circuit held that Maglana and Bugayong could avoid arbitration and pursue their tort claims in the district court.
The plaintiffs in this case were guests of the unnamed charterer of the DREAM, a 196-foot luxury yacht, on an excursion to the Bahamas. The guests brought this suit in federal court in Florida alleging that the captain of the yacht, Niel Heselton, led the guests on a dangerous journey through the open water in treacherous conditions that resulted in severe illnesses and emotional distress to the guests. The plaintiffs brought suit against the yacht owner, Dream Holdings; the owner and operator of the yacht’s website, Dynamic Yacht Management; the registered agent and contact for Dynamic, Gurmeet Ahluwalia; one of the managers of the DREAM, Nigel Burgess Inc.; and Captain Heselton. The guests asserted causes of action for negligence, false imprisonment, and intentional infliction of emotional distress. For the negligence count, the guests alleged that Ahluwalia, Dynamic, and Nigel Burgess were vicariously liable for the actions of Captain Heselton and for their failure to properly hire, train, and supervise Heselton. Judge Singhal dismissed the negligence count as a shotgun pleading (asserting two separate causes of action in a single count) and also for failure to state a claim. The guests appealed, and the Eleventh Circuit agreed with the dismissal as a shotgun pleading (noting that the complaint contained 82 paragraphs of facts before the negligence count and did not clearly connect the facts to the alleged breaches). The appellate court disagreed, however, with Judge Singhal’s conclusion that the negligence count failed to allege sufficient facts to allow the court to conclude that defendants Dynamic and Ahluwalia were vicariously liable for Heselton’s negligence (alleging facts that these defendants had control over Heselton and that his actions were taken in the scope of his employment as captain). The court of appeals agreed that the guests failed to state a vicarious liability claim against Dream Holdings and NBI and that they failed to state a claim for negligent hiring, training, and supervision against Dynamic and Ahluwalia (the plaintiffs only alleged the elements of the causes of action and legal conclusions). The guests did not file a motion for leave to amend and only requested leave to amend in a passing reference in their response to the defendants’ motion to dismiss. The Eleventh Circuit agreed that the failure to properly request leave to amend was fatal to the request for to file an amended complaint in response to the dismissal for failure to state a claim (for parties represented by counsel). However, a different rule governs the dismissal of a complaint as a shotgun pleading, and the district court was required to give the plaintiff one chance to replead before dismissing the case with prejudice on the non-merits basis. As the guests did state a claim for negligence against Heselton and for vicarious liability against Dynamic and Ahluwalia, and as those claims were dismissed as a shotgun pleading, the Eleventh Circuit remanded the case to the district court with instructions to allow the guests to amend those claims.
This litigation arises from the allision between the M/V YOCHOW and the barge OSG 243 that was moored at a dock in the Port of Houston. The YOCHOW was owned by Grande Famous Shipping, which entered into a ship management contract with Beikun Shipping and time chartered the vessel to China Navigation Co. (New York Produce Exchange form). Judge Ellison heard motions for summary judgment of several of the parties and issued rulings on them. He granted the motion of OSG, denying the claim of the YOCHOW interests that OSG’s docked barge was not properly lighted. Judge Ellison rejected the testimony of the Captain of the YOCHOW that neither he nor the compulsory pilot on the YOCHOW saw the barge, as the pilot’s testimony, video evidence, and an email from the Coast Guard Marine Safety Specialist established that the barge was illuminated prior to the incident. Judge Ellison concluded that the lack of expert testimony, coupled with the presumption of fault from The Oregon, caused there to be no genuine issue of material fact regarding the negligence of OSG. The YOCHOW interests also contested the allegations of unseaworthiness asserted against the YOCHOW, arguing that the warranty of seaworthiness only applies to claims of crew members. Citing cases in which the Fifth Circuit analyzed evidence of unseaworthiness proffered by non-seamen limitation claimants, Judge Ellison denied the YOCHOW interests’ argument. Additionally, as he was going to have to hear evidence of negligence, Judge Ellison declined to dismiss the claims of gross negligence on the part of the YOCHOW. Finally, Judge Ellison addressed the arguments of the Port of Houston, whose dock was damaged from the allision, that the YOCHOW was liable to the Port for breach of the Port’s tariff. As the YOCHOW owner and manager had not signed the berth application (containing the terms and conditions of the tariff), and as the charterer of the vessel was the party who received the services of the Port, Judge Ellison dismissed the Port’s claims for breach of contract against the YOCHOW owner and manager. See August 2020 Update. On September 15, 2020, however, Judge Ellison granted reconsideration and sustained the Port’s motion for summary judgment that the YOCHOW was subject to the Port’s tariff. The application of the Port’s tariff was raised again when OSG, owner of the docked vessel that was exonerated of fault, moved for summary judgment on the contract claims presented by the Port against OSG. The Port cited Subrule 059 that provided for liability for “Users causing damage” to Port property or facilities. As the Port presented “no evidence to indicate that the Barge served as anything other than a big metal bumper” between the YOCHOW and the dock, Judge Ellison held that Subrule 059 could not be the basis for contractual liability of OSG. The Port also cited Subrule 052(5)(a), which provided that Users are responsible for all damages or injury to Port property or facilities occurring during the occupation or use, without regard to who caused it. Judge Ellison did not apply that provision to OSG as it conflicted with Subrule 059. Additionally, the context of the Subrule and the evidence militated in favor of a narrow reading. After OSG filed its motion, the YOCHOW sought to reconsider the ruling from a year earlier that the tariff applied to the YOCHOW. Judge Ellison did not find a sufficient reason for giving the YOCHOW a “third bite at the apple,” noting that it appeared that YOCHOW had “read OSG’s Motion and regretted not making the argument.” However, if he were to consider the argument, Judge Ellison did not consider it to be sufficiently persuasive to qualify for reconsideration. See December 2021 Update.
Judge Ellison then considered the motion for summary judgment of China Navigation that it was not liable for damages to the dock. He first addressed the language of the charter and held that the charter reserved navigation to the owner. As there was no evidence that China Navigation directed the operations of the vessel or meddled in its procedures, Judge Ellison rejected the dock’s theory that China Navigation should be considered the de facto owner of the YOCHOW. Judge Ellison then considered the decisions holding that the charter’s duties do not stem solely from the charter (contract principles) but also arise from independent principles of tort law. The dock asserted that China Navigation was negligent for chartering the vessel without vetting the owner’s finances or the vessel’s safety protocols, but Judge Ellison declined to extend a duty to the time charterer to vet the owner’s financial stability or safety protocols in the traditional time charter context. See January 2022 Update.
The dock appealed, presenting questions whether the charterer exercised sufficient operational control over the vessel so that it should be considered its de facto owner and whether the time charterer should have a duty to vet a vessel owner prior to executing a time charter. With respect to the control, the dock did not argue that the time charter contractually transferred control over the vessel to the charterer. Instead, the dock argued that the charterer held itself out to the world as the owner because it was allowed to rename the vessel, paint the vessel its house colors, paint its logo on the vessel, and fly its house flag. The charterer was listed as the “Manager” in Lloyd’s Register of Ships, and the charterer directed the vessel’s captain to download its reporting software so that he could send data to the charterer. Writing for the Fifth Circuit, Judge Clement stated that the dock’s arguments were “unmoored from reality.” She noted that if the parties had wanted to shift responsibility to the charterer, they could have done so. “There’s a charter party for that—a demise charter. But they didn’t.” She found the allegations of control to be “unpersuasive” as they reflected the division of responsibility set forth in the charter party, which did not give the charterer operational control over the vessel. Judge Clement then turned to the argument that the charterer acted negligently by failing to vet the owner’s finances and safety management protocols prior to executing the time charter (asserting that diligent investigation would have discovered that the owner and manager were “woefully insufficient.” Judge Clement was “on board” with the charterer’s response that the duties of a time charterer to a third party are well defined and do not extend beyond certain “spheres” of activity—negligently conducting its activities as time charterer. Thus, the charterer could be liable for negligence even though it did not assume control of the vessel. However, time charterers are not liable, as a matter of law, for acts taken outside the spheres unless the parties agree by contract or custom. As ensuring the competence of a contractual counterparty does not fall within the traditional sphere of activity over which time charterers exercise control, and as there was no indication that the parties intended to vary the spheres of responsibility, Judge Clement held that the charterer did not owe a duty to vet the owner’s finances or safety management protocols prior to executing the time charter. [Judge Clement also held that the charterer was not responsible for discovering the owner/manager’s work/rest standards and for violating Stubb’s twelfth commandment, “sleep when you can,” citing Herman Melville, Moby Dick]. Accordingly, the Fifth Circuit affirmed the dismissal of the charterer.
These cases arise from the collision between the ACX CRYSTAL, chartered by Nippon Yusen Kabushiki Kaisha (NYK Line), and the U.S. Navy destroyer USS FITZGERALD in Japanese territorial waters, killing seven sailors and injuring at least forty others. Although NYK Line’s vessels call in United States ports, the CRYSTAL had not called in the United States and was on an intra-Asia trade route. Two suits were filed against NYK Line in federal court in Louisiana on behalf of injured and deceased sailors, and Judge Africk dismissed the cases for lack of personal jurisdiction, holding that NYK Line was not subject to general jurisdiction in the United States. (See July 2020 Update). On appeal, the Fifth Circuit panel began by analyzing Fed. R. Civ. P. 4(k)(2), which provides that in cases arising under federal law, federal courts have personal jurisdiction to the constitutional limit, provided that no state could exercise jurisdiction. That rule was drafted in response to the 1987 decision of the Supreme Court in Omni Capital, in which the Court affirmed the decision of the Fifth Circuit that the district court lacked jurisdiction over the defendants in a case arising under federal law when the federal law was silent as to service of process and the state long-arm statute did not reach the defendants. Thus, litigants were unable to bring an action under federal law against a foreign defendant who was outside the reach of the state long-arm statute. The effect of the amendment to the federal rule is that state courts remain subject to the 14th Amendment Due Process Clause in determining whether defendants are subject to personal jurisdiction in state courts, and the constitutional limits of personal jurisdiction in federal courts in cases arising under federal law are limited by the Fifth Amendment’s Due Process Clause. In the latter case, the court looks to the contacts of the defendant with the United States. As maritime law is federal law for purposes of Rule 4(k)(2) [but not, ironically, for purposes of federal question jurisdiction], the Fifth Circuit noted that the Fifth Amendment’s due process inquiry was applicable to the suits against NYK Line. The plaintiffs argued that the requirements of due process under the 14th Amendment differ from those in the Fifth Amendment, and they proposed a national jurisdiction test. They argued that the court should look to a defendant’s national contacts with the inquiry whether a foreign (non-U.S.) defendant who is not amenable to jurisdiction in any state court, was doing systematic and continuous business in the United States, and whether the claim in suit was related to that business. The plaintiffs reasoned that concerns over federalism, which have been critical in recent 14th Amendment due process cases such as Daimler AG v. Bauman, are not applicable in cases brought in federal court under federal law using Fifth Amendment due process, and the Fifth Circuit panel added that a distinction between the two due process clauses was supported by the limited constitutional rights of foreign defendants. Although the judges on the Fifth Circuit panel found the plaintiffs’ arguments to be persuasive, the Fifth Circuit had previously applied Daimler’s due process analysis for general jurisdiction to a case in which jurisdiction was based on Rule 4(k)(2). Following the Fifth Circuit’s rule of orderliness, the panel was bound by the prior decision. As Judge Africk had correctly applied the Fifth Circuit’s existing application of Daimler’s due process analysis for general jurisdiction, the panel affirmed that NYK Line was not subject to personal jurisdiction in this case. However, two of the members of the panel (Judges Elrod and Willett) concurred to state that the case presented “a good vehicle” for the court to grant en banc consideration of the due process standard for personal jurisdiction in cases under Rule 4(k)(2). See June 2021 Update.
The Fifth Circuit agreed to en banc rehearing, and 12 members of the court agreed with Judge Africk that NYK Line was not amenable to the general jurisdiction of American courts despite its contacts with the United States. Writing for the majority, Judge Jones first rejected the argument that NYK Line, as a foreign corporation, had no Fifth Amendment due process rights, particularly in view of the decisions of the Supreme Court affording foreign corporations due process rights under the Fourteenth Amendment. The question was what standard governed personal jurisdiction over foreign defendants sued on federal claims in federal court under the Fifth Amendment. The plaintiffs argued that the due process inquiry under the Fifth Amendment was simply whether the defendant was doing enough systematic and continuous business in the United States that it could be subject to suit in federal court. Judge Jones reasoned that this “novel theory” eschewed the distinction between general and specific personal jurisdiction, dressing a general jurisdiction theory in specific jurisdiction garb. Instead, Judge Jones held that the Fifth Amendment due process test for personal jurisdiction required the same minimum contacts with the United States as the Fourteenth Amendment requires with a state. Although the plaintiffs argued for an admiralty exception, Judge Jones recognized that admiralty subject matter jurisdiction is broad, extending to torts on the high seas, but she found no support in the Fifth Amendment for the admiralty exception, stating that “shibboleths cannot carry the plaintiffs’ argument.” Applying the Fourteenth Amendment standard for general jurisdiction (the plaintiffs did not claim that NYK Line was subject to specific jurisdiction), Judge Jones held that the contacts would have to be so substantial and of such a nature as to render it at home in the United States. Undoubtedly, NYK Line’s contacts were substantial. However, they were only a minor portion of its worldwide contacts. Accordingly, the majority affirmed Judge Africk’s rulings that NYK was not amenable to the general jurisdiction of American courts despite its contacts with the United States.
Five judges (in three opinions authored by Judges Elrod, Higginson, and Oldham) dissented from the importation of Fourteenth Amendment standards into the Fifth Amendment due process analysis, with Judge Elrod comparing the reasoning to putting new wine into an old wineskin.
This action arises from a boating collision near the Dick Misener Bridge in Pinellas County, Florida. Jeffry Knight was operating the M/Y KNIGHT LIFE (owned by his company Mad Toyz III, LLC). The vessel collided with a pontoon boat carrying Natalie Strehling, Jacqueline Strehling, and Nadine Ruli, resulting in injuries to the Strehlings and Rusli. A few days after the accident, counsel for Rusli sent a letter to Knight notifying him of the retention of counsel and advising that the collision caused extensive physical injuries to Rusli and significant monetary damages. Seven months later, Knight and Mad Toyz filed this limitation action in federal court in Florida, posting a limitation fund of $325,000. Rusli and the Strehlings filed claims, and the Strehlings and Rusli moved to dismiss the limitation action as untimely. After Judge Scriven disagreed with Magistrate Judge Sansone and dismissed the limitation action as untimely, the Strehlings and Rusli moved for sanctions. Knight settled with the Strehlings, and Judge Scriven denied Rusli’s motion and Rusli’s arguments that Knight knew the limitation action was untimely and that Knight knowingly pursued a meritless limitation action because he knew his negligence caused the accident. Reviewing the decision denying sanctions for abuse of discretion, the Eleventh Circuit affirmed Judge Scriven’s order. Before addressing the argument on sanctions, the Eleventh Circuit noted that the shipowner’s privity or knowledge is not measured against every fact or act regarding an accident. Instead, it is measured against the specific acts of negligence or unseaworthiness that caused the accident. Although an owner normally has privity or knowledge when he is in control of and operating the vessel, his presence is not necessarily fatal to limitation if the evidence suggests that his conduct was prudent. Turning to the specific arguments for sanctions, the Eleventh Circuit noted that the notice letter referred to significant damages and injuries, but it did not quantify the damages or detail the nature of the injuries and medical treatment. Moreover, an impartial magistrate judge agreed with Knight that the notice letter had not started the running of the six-month period. Consequently, the Eleventh Circuit agreed that Knight’s position, adopted by Magistrate Judge Sansone, was not so unreasonable as to be frivolous. Whether Knight could reasonably have believed that he did not negligently cause the accident was a close call, but it presented a factual issue. Knight admitted to traveling at 30 to 35 miles an hour and looking at his gauges and GPS from between 30 and 60 seconds before the collision, but the Ruslis had not been deposed and civil charges of careless operation of boat had been dismissed with no findings of fault against Knight. Knight did explain that he looked up from his gauges and did not see any other boats, and the Eleventh Circuit could not say that Judge Scriven clearly erred in concluding that Knight could have reasonably thought that the accident was not caused by his negligence.
From the federal district and bankruptcy courts:
This opinion involves the Chapter 7 bankruptcy of Steven Keith Jenkins, who owned the vessel GAME ON. Jenkins’ friend, Billy Swick, Jr., had loaned money to Jenkins, and the trustee sought to recover payments made by Jenkins to Swick as avoidable transfers. Swick also performed work on the GAME ON for which Swick asserted a lien on the vessel for more than $400,000. The vessel was sold by the trustee for $123,200, and Bankruptcy Judge Woodward held that Swick had a secured claim of $123,200 in the bankruptcy proceeding based on the maritime lien for the repairs and maintenance on the vessel. Judge Woodard also held that Swick owed the bankruptcy estate $152,500 for the avoidable transfers. Consequently, Bankruptcy Judge Woodard set off the amounts and held that the trustee would be awarded $29,300 against Swick.
All of these cases involve opt-outs from the DEEPWATER HORIZON Medical Benefits Class Action Settlement Agreement. Gregory Scott Turner claimed that he was exposed to oil and dispersants as a resident of Mississippi and as a cleanup worker in locations along the coast of Alabama and Mississippi for a period of approximately six months. Willie Earl Cole alleged that he was exposed to oil and dispersants while cleaning beaches for approximately twelve months. Erica Ross claimed that she was exposed to oil and dispersants while cleaning beaches of Gulfport, Long Beach, Biloxi, Waveland, Deer Island, and Pascagoula, Mississippi for approximately four months. Andre Jones asserted that he was exposed to oil and dispersants while working to repair boom and as a beach cleanup worker in Jackson County and Harrison County, Mississippi for approximately five months. Brian Keller claimed that he was exposed to oil and dispersants for about three months while working as a supervisor for an onshore cleanup crew on Florida beaches. Alexander Haynes asserted that he was exposed to oil and dispersants while performing decontamination services and cleaning boats and barges for approximately five months in Pascagoula, Mississippi. Raynard Roberson claimed that he was exposed to oil and dispersants while employed as a security guard for ports and decontamination stations in Mississippi for approximately seven months. Joy Lashawn Beverly claimed that she was exposed to oil and dispersants while cleaning booms and boats in Theodore and Mobile, Alabama for approximately four months. George Leonard Coon asserted that he was exposed to oil and dispersants while employed in the Vessels of Opportunity program, recovering contaminated boom and reporting spotted oil in Gulfport, Waveland, Biloxi, Lisotta Shrine Lot, and Cat Island, Mississippi and the surrounding waters on the Mississippi coast for approximately four months. Thomas Heathington alleged that he was exposed to oil and dispersants as a beach cleanup worker, picking up oil-covered debris from sand and coastal areas on the beaches of Pascagoula and Petit Pois, Mississippi for approximately nine months. Samuel Deshun Bass claimed exposure to crude oil and dispersants while cleaning beaches and removing booms on the Mississippi and Alabama coasts for approximately six months. Christopher C. Reed alleged exposure to oil and dispersants in the course of his work on skimmer boats performing cleanup near Dauphin Island, Alabama, New Orleans, Louisiana, and Hopedale, Louisiana. Andre S. Wright claimed exposure to oil and dispersants during his work as a decontamination worker in cleanup efforts in Fort Walton Beach, Florida and Theodore, Alabama. Dennis Milsap claimed exposure to oil and dispersants while working from May 2010 to December 2011 on the beaches and islands of Mississippi as part of an onshore cleanup crew. Michael Harrison Learn alleged exposure to oil and dispersants during his time as a foreman performing cleanup work on the beaches near Biloxi, Gulfport, and Harrison County, Mississippi. John B. Pettaway claimed exposure to oil and dispersants during cleanup work in Port St. Joseph and Dauphin Island, Alabama. Cillo Cotton alleged exposure to oil and dispersants during his work as a boat captain and recovery technician engaged in cleanup work on the Gulf coast. Teresa Lynn Riddell-Hare claimed exposure to oil and dispersants while performing cleanup work at Long Beach, Gulfport, and Pass Christian, Mississippi. April Moore alleged exposure to oil and toxic chemicals while performing cleanup work on the beaches of Gulfport, Biloxi, and Long Beach, Mississippi. Ronald Shearon claimed exposure to oil and harmful chemicals while employed to put out the boom, skim oil, pick up oil and dispersant-soaked boom, pick up tarmats and tarballs, and place oil in trash bags in multiple locations on the Louisiana coast and as a resident of Louisiana. These plaintiffs presented the opinions of Dr. Jerald Cook, an occupational and environmental physician to carry their burden on causation, but Judges Barbier, Vance, Africk, and Milazzo held that Dr. Cook’s opinions were insufficient on general causation and were excluded. Consequently, without expert support, these cases were dismissed with prejudice.
Dewayne King alleged that he was exposed to oil and hazardous substances related to the spill in the vicinity of his residence in Pascagoula, Mississippi. Willie Richardson alleged that he was exposed to oil and hazardous substances related to the spill while employed as a cleanup worker. Don and Penny Poole alleged that their minor child was exposed to oil and harmful substances from the spill as a resident of Westwego, Louisiana. Keundra Hicks claimed exposure to harmful substances and chemicals in Pascagoula, Mississippi as a result of the spill and cleanup efforts. Don Street claimed that he was exposed to harmful substances and chemicals in Bay St. Louis, Gulfport, and Biloxi, Mississippi as a result of the spill and cleanup efforts. Jeffery and Josephine Maddox claimed that they suffered exposure to oil and hazardous substances around Mobile, Alabama and as a result of consuming contaminated seafood. Sherrie McKinley and two minors asserted that they were exposed to oil and harmful substances near New Orleans and in the Gulf waters of Louisiana and Mississippi. One of the minors also claimed to have been exposed while fishing with Grandma and eating contaminated fish. As these plaintiffs failed to support their claims with expert testimony, Judges Lemelle, Milazzo, and Ashe granted summary judgment for lack of evidence of causation and dismissed the suits. On August 12, 2022, Coleman filed a notice of appeal from the decision of Judge Ashe, declining to recuse himself in that case.
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 shape. 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 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 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.
Preble-Rish Haiti claimed that it was owed more than $27 million for fuel delivered to Haiti by vessel together with consequential damages, and it commenced an arbitration in New York pursuant to the arbitration clause in the contracts between the parties. However, Preble-Rish sought security for the arbitration and tried to garnish/attach funds in the possession of BB Energy, located in Houston, that were designated for payment to Haiti. BB Energy invoked sovereign immunity on behalf of debtor Haiti, and Judge Ellison held that BB Energy had standing to assert Haiti’s defense that it was immune from prejudgment attachment/garnishment. The parties argued about whether there was admiralty jurisdiction, but Judge Ellison reasoned that the jurisdiction inquiry began and ended with the Foreign Sovereign Immunities Act because it is the sole basis for jurisdiction over foreign sovereigns, such as Haiti. Turning to the immunity issues, Judge Ellison first held that the arbitration provisions in the contracts between the parties demonstrated the intent to waive sovereign immunity from suit. Judge Ellison then discussed the exception to the general rule in the FSIA that sovereigns are immune from prejudgment attachment and held that the exception was established because the property was used for a commercial activity in the United States, Haiti had agreed to provide security in the contracts, and the purpose of the attachment/garnishment was to secure satisfaction of a judgment and not to obtain jurisdiction. Therefore, Judge Ellison denied the motion to dismiss the attachment, but he stayed the proceedings pending developments in the arbitration proceeding (whether the contracts were maritime in nature). See September 2021 Update. Judge Ellison gave Preble-Rish leave to amend its complaint to include maritime tort claims and then addressed whether the tort claims were maritime. Preble-Rish asserted that Haiti had wrongfully seized the MT AQUILA L, converted her shipment of fuel oil, and failed to pay for the oil. Reasoning that the wrongs took place on navigable waters at or near the coast of Haiti and that the conversion of the cargo of fuel oil had the potential to disrupt maritime commerce, Judge Ellison concluded that the court had admiralty jurisdiction. After a hearing, Judge Ellison deferred ruling on BB Energy’s motion to dismiss in which BB Energy argued that the FSIA barred the maritime tort claims. Judge Ellison ordered BB Energy to submit to written discovery and a corporate representative deposition. See November 2021 Update.
BB Energy appealed to the Fifth Circuit and sought a stay of discovery, arguing that the district court could not permit broad discovery without first determining whether sovereign immunity barred the garnishment action. Preble-Rish moved to dismiss the appeal for lack of jurisdiction. The Fifth Circuit agreed that unlimited jurisdictional discovery is not permitted as a matter of course when FSIA immunity has been claimed and that discovery orders are not, as a general matter, immediately appealable. However, when the defendant claims immunity, an order that declines to rule on the defense is appealable, and sovereign immunity may be raised by a garnishee holding property of a foreign sovereign. It was unclear in this case whether the order on discovery was to aid in the ruling on the motion to dismiss, which would be permissible, or whether the court was proceeding to discovery without resolving the sovereign immunity defense, which would be erroneous. Giving Judge Ellison the benefit of the doubt, the Fifth Circuit denied BB Energy’s motion to stay, trusting “that the district court will allow limited discovery only as to evidence that will elucidate whether BB Energy is entitled to dismissal on sovereign immunity grounds.” See December 2021 Update). After the decision of the Fifth Circuit, BB Energy refused to comply with Preble-Rish’s discovery requests, and Preble-Rish agreed not to pursue discovery until the sovereign immunity defense was adjudicated. The parties submitted supplemental briefing and Judge Ellison then ruled on the sovereign immunity issue. BB Energy asserted that the tort claims of unjust enrichment, fraud and maritime fraud, and maritime conversion were not subject to waiver of sovereign immunity under the contract that provided for arbitration in New York and that Haitian law does not permit arbitration against governmental entities. Judge Ellison rejected the latter argument based on collateral estoppel from the ruling of the New York state court that the government of Haiti had failed to establish that the arbitration provisions were illegal under Haitian law. Giving a broad interpretation to the language of the contracts for arbitration on disputes “under this Contract,” Judge Ellison held that the arbitration provisions were not limited to contract performance and that the tort claims were subject to arbitration. Accordingly, he held that Haiti had waived sovereign immunity by agreeing to arbitrate in New York and ordered BB Energy to submit to written discovery and a corporate representative deposition. On January 24, Judge Ellison filed an order staying the discovery pending the garnishee’s interlocutory appeal to the Fifth Circuit. See Preble-Rish Haiti, S.A. v. Republic of Haiti, LLC, No. 4:21-cv-1953, 2022 U.S. Dist. LEXIS 12045 (S.D. Tex. Jan. 24, 2022) (Ellison).
In the New York actions between the parties, discussed in the October 2021 Update, Preble-Rish filed an attachment action seeking to attach/garnish funds in a Citibank account in the name of a Haitian governmental agency. After discovering that the account was in the name of the central bank of Haiti, the attachment was supplemented, and the bank sought to intervene and to vacate the attachment. Preble-Rish did not argue that the bank had waived its immunity from attachment and instead argued that the bank did not hold the funds for its own account so that its immunity did not apply. However, Judge Castel held that Preble-Rish did not establish that the bank was acting solely as an intermediary facilitating a payment, noting that accounts that are used for mixed purposes are immune from attachment, even if used for commercial purposes. Consequently, Judge Castel vacated the attachment. Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 21-cv-4960, 2021 U.S. Dist. LEXIS 167927 (S.D.N.Y. Sept. 3, 2021). On October 5, 2021, Judge Castel declined to grant a stay of the court’s order vacating the attachment pending appeal to the Second Circuit, but he did grant a temporary stay so that Preble-Rish could apply for a stay to the Second Circuit. 2021 U.S. Dist. LEXIS 191986 (S.D.N.Y. Oct. 5, 2021). The Second Circuit granted a temporary stay while the case was referred to a panel for adjudication. See Preble-Rish Haiti, S.A. v. Republic of Haiti, No. 21-2469 (2d Cir. Oct. 18, 2021). In a separate proceeding in federal court in New York, Preble-Rish sought to recognize and confirm a partial final award of an international arbitration panel in its favor against the Republic of Haiti. Haiti did not appear at the hearing, and the arbitration panel issued a partial award, granting Preble-Rish $23,043,429.79 in pre-award security. Judge Castel rejected Haiti’s arguments that the award was illegal and unenforceable under Haitian law, that Haiti had not been given proper notice of the proceedings, that the arbitration panel was improper because two of the arbitrators are former partners of the firm representing Preble-Rish. Judge Castel confirmed the award and entered judgment in favor of Preble-Rish. See February 2022 Update.
Garnishee BB Energy filed an interlocutory appeal to the Fifth Circuit from Judge Ellison’s decision that Haiti had waived sovereign immunity, and the Fifth Circuit disagreed with the waiver ruling. Writing for the Fifth Circuit, Judge Graves held that “an explicit waiver must be, well, explicit.” Although the contract required Haiti to provide security in favor of Preble-Rish, Judge Graves was “confident” that the agreement fell short of the explicit waiver language that had been enforced in other cases (for example, a waiver that includes “any immunity from the jurisdiction of any court or from any execution or attachment in aid of execution prior to judgment or otherwise”). The same reasoning applied to the agreement to arbitrate as the arbitration clause did not “explicitly authorize the arbitrator to order a letter of credit as security against a possible final award.” As the district court did not have jurisdiction under the FSIA to order the writ of attachment, the Fifth Circuit vacated the writ of attachment. See August 2022 Update.
Moving back to New York, Preble-Rish sought to attach funds of Banque Nationale de Crédit (BNC) that were held in an account in the Bank of New York Mellon. BNC moved to intervene and asserted that it was a commercial bank that was wholly owned by the Republic of Haiti and entitled to sovereign immunity. Judge Castel permitted the intervention and agreed that BNC was entitled to sovereign immunity. Preble-Rish argued for an exception in the FSIA to collect on a judgment entered in the United States confirming an arbitral award against the foreign state. However, as Preble-Rish could not establish that the funds in the Mellon account belonged to the Republic of Haiti, Judge Castel vacated the attachment. Judge Castel also denied Preble-Rish’s request for discovery regarding the BNC account and its request for amendments to the opinion to correct statements of fact in the opinion that were allegedly “not accurate.”
This case and the two following cases deal with the adequacy of the allegations in federal complaints. Marilyn Patton tripped on a metal threshold that was not flush with the floor on Deck 9 of the cruise ship M/S VICTORY. She brought suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint for failure to plead sufficiently that the cruise line had actual or constructive notice of any danger from the threshold. Patton presented a photograph of the threshold and argued that it was apparent that the gap did not develop overnight. The problem was that the photograph was undated and did not establish the condition of the threshold at the time of the accident or how long the depicted condition had existed. Patton’s argument that common sense dictated that employees of the cruise line would have seen the hazard as they routinely clean the floors fared no better as she did not allege how or why the staff that cleaned the area would recognize the potential danger of the threshold. Finally, Patton cited two safety reports (from an unidentified ship and from a different vessel) that gave a general warning about thresholds and a specific warning about a particular threshold that lacked carpet and visible signage. Judge Scola rejected the argument that the different incident or general references to dangers of thresholds were sufficient to provide notice with respect to the condition of the threshold on the VICTORY. Consequently, he dismissed the case without prejudice.
Magnolia Fleet filed this limitation action in connection with property damage allegedly caused by its vessels during Hurricane Ida. Magnolia Fleet moved to dismiss claims filed in the limitation action by Valero Refining, Entergy Louisiana and Maintenance Dredging or for a more definite statement. The claims asserted that Magnolia Fleet was in control of barges that broke free from their moorings and caused damage to property of the claimants. Judge Fallon considered the pleadings to contain all the elements of a maritime negligence claim (or sufficient facts supporting the elements were easily inferable from the facts that were alleged). Although the claimants could not allege at this stage which barges allided with which property, Judge Fallon considered that to be immaterial as there were enough facts to raise a reasonable expectation that discovery would fill in the remaining details. Therefore, Judge Fallon denied the motion to dismiss or for a more definite statement.
Ernest Parfait alleged that he was injured while employed as a deckhand on the M/V ALLISON CROSBY, owned and operated by his employer, Crosby Dredging. He brought suit in federal court in Louisiana against his employer alleging that he slipped while walking up a flight of stairs in rough seas, and the defendant moved for a more definite statement and to dismiss the claims for maintenance and cure, punitive damages, and attorney fees. Parfait filed an amended complaint without the claims for maintenance and cure, punitive damages, and attorney fees, and Judge Milazzo stated that the filing of an amended complaint would ordinarily moot the motion for a more definite statement. However, the allegations of negligence and unseaworthiness remained unchanged after the amendment, so she proceeded to address the motion for a more definite statement. Judge Milazzo noted that the allegations did not identify any instance of negligence or any unseaworthy condition. Parfait did enumerate a number of alleged negligent failings and unseaworthy conditions, but it was not clear how they applied to the incident because of the lack of factual allegations. For example, Parfait complained that his employer failed to monitor the condition of the stairs to minimize the risk of harm, but he did not identify any condition of the stairs. As the complaint did not give the defendant adequate notice of the incident that caused the injury, Judge Milazzo ordered Parfait to replead to explain the who, what, when, where, why, and how of the defendant’s alleged wrongdoing and its connection to the injury.
Susan Rae and her husband, Gregory Azeltine, participated in a shore excursion in the Cayman Islands as passengers on the CELEBRITY EQUINOX. Azeltine drowned while snorkeling, and Rae brought this action in federal court in Florida against the cruise line and the operator of the excursion. The cruise line filed a motion to dismiss the negligence count because it included heightened, non-existent duties of care. The cruise line cited the decision of the Eleventh Circuit that reasonable care includes a duty to warn of known dangers beyond the point of debarkation and argued that the enumeration of breaches of duty in the complaint exceeded the duty to warn of known dangers. Noting that the Eleventh Circuit had not stated that the duty to warn was the only duty owed to a passenger after leaving the vessel, Judge Gayles declined, at this stage of the litigation, to dismiss additional duties asserted by the plaintiff. Citing the allegations in the complaint that the cruise line was co-owner of the excursion or controlled it and that the cruise line provided policies for the excursion operator to follow while operating the excursion and inspected and conducted site visits with reports of incidents, Judge Gayles found sufficient pleading of notice of a hazardous condition. Similarly, Judge Gayles considered the pleading of monitoring of the excursion during initial and annual inspections to be sufficient for notice on the claims of negligent hiring and negligent retention. Judge Gayles dismissed the count alleging that the passengers were third-party beneficiaries of the contract between the cruise line and the excursion operator as the intent to benefit a third party must be specific and clearly expressed, and the contract did not contain such specific provisions. Finally, as Azeltine died in the waters off the Cayman Islands, Judge Gayles held that the Death on the High Seas Act was applicable and he struck the claim for non-pecuniary damages. See May 2022 Update.
The excursion operator, a Cayman Islands entity, moved to dismiss the claims against it for lack of personal jurisdiction. Rae argued that the court had personal jurisdiction based on the excursion operator’s joint venture with the cruise line. She argued that there was a joint venture based on a common purpose to market, sell, and operate the excursion; jointly controlling advertisements, payment collection, and transportation; maintaining a joint proprietary interest in the customer list and marketing; and sharing profits and losses from the excursion. Judge Gayles rejected the argument, finding that the excursion operator had insufficient contacts with Florida because the alleged joint venture did not result in substantial performance in Florida (citing decisions in which marketing, promotion, advertisement, and collection in Florida were insufficient to establish personal jurisdiction). As the alleged joint venture did not involve “performance in substantial part” in Florida, Judge Gayles dismissed the excursion operator for lack of personal jurisdiction.
Reichen Kuhl purchased a 28-foot motorboat and operated it to the Bahia Mar Marina (owned by Suntex) for fueling. An explosion occurred and the burning vessel drifted into the 189-foot Feadship yacht M/Y W, owned by Seven LXXVII, which sustained damages requiring weeks in a shipyard to repair. Kuhl filed this limitation action in federal court in Florida, and Seven filed a claim in the limitation action along with a third-party claim against Suntex. As Seven was compensated by its hull insurer for the physical damage, it sought recovery for lost charter income in the claims against Kuhl and Suntex. Kuhl and Suntex then filed a motion for summary judgment, asserting that Seven was unable to establish any lost charter income as it had never had a charter of the W before the incident. David MacNeil, owner of Seven, purchased the W in 2019 as a recreational vessel, and the vessel underwent a retrofit that was completed in September 2020. On July 1, 2020, Seven entered into an agreement with Northrop & Johnson to manage charters for the W. Northrop and Johnson began marketing charters at a rate of $400,000 per week, and two offers came for charters during the Christmas and New Year’s holidays, but MacNeil turned them down because his family was using the W. Northrop & Johnson suggested reducing the charter rate to $355,000 per week, but at the time of the fire on January 17, 2021, the W had not been chartered and had no bookings. After repair on the W was completed on March 19, 2021 (the yacht was unavailable for charter for 9 weeks), it was chartered five times during the summer season, and two charters were booked for the holidays at the end of the year. The first charter began on May 22, 2021. Seven claimed a loss of between three and five weeks of charter hire at $400,000 per week, based on the testimony of its manager that there was a spike in demand for charters and inquiries about the W due to restrictions from COVID-19. Citing the active advertising of the W for charters, the subsequent charters, and the beneficial owner’s history of chartering yachts before the W, Judge Bloom held that there was sufficient evidence of loss of income to present a triable question. See May 2022 Update.
Judge Bloom then held a bench trial and issued findings and conclusions on the liability of Kuhl and Suntex. She first determined whether Kuhl was negligent or the vessel was unseaworthy, and there was disputed evidence whether Kuhl was negligent for failing to run the blowers on the vessel for four minutes or check the engine compartment bilge for gasoline vapors. As there was no evidence presented, however, with respect to the cause of the explosion and fire or that the alleged failures of Kuhl contributed to the explosion and fire, Judge Bloom did not find Kuhl liable for negligence. A year before Kuhl purchased the boat, there was an explosion and fire on the vessel. The previous owner did not tell Kuhl about the explosion and fire, but he did not believe there were any mechanical issues with the vessel when he delivered it to Kuhl, and Kuhl, who had been around boats his entire life, inspected the vessel and engine compartment on delivery and found everything to be in order. As there was no evidence as to the cause of either of the explosions, Judge Bloom held that the evidence was insufficient to support a finding that the vessel was unseaworthy. Finally, Seven argued that res ipsa loquitur applied because a seaworthy vessel does not explode and catch fire on its own. However, Judge Bloom held that Seven failed to establish that the explosion and fire was of a type that ordinarily does not occur in the absence of negligence, especially considering the cause of the fire was not determined. With respect to privity or knowledge, Judge Bloom could not conclude that Kuhl had actual or constructive knowledge of any defect that may have caused the explosion and fire. Seven also asserted a claim against the marina for gross negligence, arguing that the marina owed a non-delegable duty to ensure that fueling operations were conducted in a safe manner. Judge Bloom agreed generally that fueling operations carry risk, but she did not believe that any fueling operation constitutes a clear and present danger, particularly considering the hundreds of fueling operations that took place for years at the marina without incident. And, without evidence of a similar occurrence, Judge Bloom could not conclude that the marina had evinced a conscious disregard of the consequences of its actions. Accordingly, Judge Bloom entered judgment in favor of Kuhl and the marina.
Todd Michael Belanger was employed as an electrical and mechanical technician on the M/V AMAZON, an underwater pipelaying vessel operated by McDermott in the United Arab Emirates. He entered the crane tub on the vessel to obtain an oil sample from the gearbox of one of the large cranes, and his entry and exit was through a narrow crawl space. When he entered the crane tub, a partially-coiled air hose was leaning against the bulkhead near where Belanger’s feet were located when he was taking the sample. As he stood up after obtaining the sample, Belanger slipped on a whip check that was connected to the air hose and fell backward. Belanger brought suit against McDermott in Texas state
court under the Jones Act and general maritime law, and McDermott removed the case to federal court based on a forum-selection clause for the Southern District of Texas in Belanger’s employment contract. Judge Miller did not believe that the forum-selection clause overcame the statutory provision preventing removal of Jones Act claims and remanded the case to the state court. See December 2019 Update. McDermott moved the state court to dismiss the suit based on the forum-selection clause, and the district court dismissed the suit. Belanger then filed this action in federal court in Texas, in accordance with the forum-selection clause, and McDermott moved for summary judgment on the negligence and unseaworthiness counts on the ground that the Belanger was negligent in failing to move the air hose to allow unobstructed access to the crawl space, and that negligence was the sole cause of his accident. McDermott cited Belanger’s testimony that he was required to keep his workspace organized and uncluttered, that the air hose was located near his feet while he was working, that it could be considered a tripping hazard, and that he could have moved it out of the way prior to working. Belanger countered that the failure of McDermott to properly coil and secure the air hose caused the whip check to come unwound and create the slipping hazard that caused his injuries. Thus, there was a factual dispute as to how, when, and why the whip check became unwound and a tripping hazard. Judge Hoyt agreed that there was a triable issue both as to negligence and unseaworthiness and denied summary judgment to McDermott.
Laurel D Shipping chartered the tanker CE-NIRIIS for a voyage to discharge cargo in Hong Kong. When the vessel arrived and tendered its notice of readiness, there were quarantine issues due to crew members with COVID-19, and the owner submitted a demurrage claim (in the amount of $97,500) 35 days after completion of discharge. 136 days after the completion of discharge, the owner submitted an “amended” demurrage claim for $573,437.55. The charterer objected, and the owner brought suit in federal court in New York and sought a Rule B attachment. The charterer moved to vacate the attachment on the ground that it was present in the convenient adjacent district of Connecticut and was entitled to equitable vacatur. Although the charterer claimed that its principal place of business was in Connecticut and that its officers worked from that office, Judge Caproni held that the evidence it presented was insufficient as it did not establish who the officers were or where the significant decisions were made. Consequently, Judge Caproni declined to vacate the attachment. The charterer also moved for a partial judgment on the pleadings, citing the clause in the charter party that the charterer would be released from liability for demurrage unless a claim in writing was presented to the charterer, together with all supporting documentation, within 90 days of the completion of discharge. The charterer did not contest the timeliness of the initial claim, but it argued that the amended claim was untimely. The owner asserted that the later claim was merely an amendment and not a second claim, and that all the supporting documents were in the possession of the charterer (although they were not submitted with the original claim). Based on the unambiguous language of the charter party, Judge Caproni granted partial dismissal of the claim, reasoning that the additional amounts and documentation were not presented within 90 days.
Bully 1 and Noble Drilling (U.S.), the owner and owner pro hac vice of the GLOBETROTTER II, brought this limitation action in federal court in Louisiana after injuries were sustained on the vessel while it attempted to evade Hurricane Ida in the Gulf of Mexico. A number of workers filed suit in state court in Texas against Noble Drilling (U.S.) as well as Noble Drilling Services, Noble Corp., Noble Drilling Holding, Shell Oil Co., and Shell Offshore Inc. That case was removed to federal court in Texas, and the federal judge in that case stayed that suit after the limitation action was filed and the restraining order was issued by the limitation court. The claimants in the Texas suit then filed a motion in the limitation action for a clarification of the restraining order, requesting that the order not extend to the non-limitation petitioners (Noble Drilling Services, Noble Corp., Noble Drilling Holding, Shell Oil, and Shell Offshore). They also asked that the restraining order not extend to litigation against the captain and crew of the GLOBETROTTER II. Judge Summerhays agreed that the scope of the order is generally limited to proceedings against the owner, but he noted that the Fifth Circuit and other courts have permitted stays of parallel proceedings against non-owners when those proceedings would undermine the limitation petitioner’s right to have limitation-related proceedings tried in the limitation proceeding. In this case, there was a risk of inconsistent rulings and preclusion from the overlap of issues in the two suits, and, in light of indemnity and insurance obligations among the parties, there was a risk that the Texas litigation could impact the coverage for the limitation petitioner. Finally, the overlapping witnesses and evidence in two proceedings would frustrate judicial economy. Accordingly, Judge Summerhays declined to modify the restraining order as to the Noble entities and as to Shell, but he indicated that the claimants could renew their request if concerns raised by the limitation petitioners could be adequately addressed. As to the master and crew, the claimants had not brought any suits against them or identified which of them they wanted to sue or the grounds on which they intended to bring suit. Consequently, Judge Summerhays held that the request for modification as to the master and crew was premature.
Creative Lifting Services brought this complaint in federal court in Tennessee against Steam Logistics, asserting that it hired Steam Logistics to ship a crane from Italy to Houston, Texas. Creative Lifting argued that Steam Logistics hired a shipping agent that used insect-infested wood to support the crane during shipment, which caused the crane to be rejected at the port of Houston and returned to Italy. Steam Logistics then arranged for re-shipment to Houston, but Creative Lifting did not pay for the shipment. Creative Lifting alleged violations of the Tennessee Consumer Protection Act, misrepresentation, breach of contract provisions as set forth in the bill of lading, and negligently procuring subcontractors. Steam Logistics answered that the crane was packaged by the seller of the crane, not a contractor of Steam Logistics, and counterclaimed for the cost of the re-shipment. Steam Logistics sought judgment on the pleadings and on its counterclaim, and Judge Greer agreed that Creative Lifting’s allegation that Steam Logistics engaged in unfair and deceptive acts in failing to procure a competent shipping company was insufficient to plead a TCPA claim with sufficient particularity under the heightened pleading standard of Rule 9(b). The incorporation of the bill of lading was insufficient to plead a TCPA or misrepresentation claim when Creative Lifting did not allege which provisions constituted misrepresentations. Similarly, the allegation of failure to hire a non-negligent shipping company was insufficient to plead nonperformance amounting to a breach of contract. The negligence claim failed because Creative Lifting failed to allege that Steam Logistics owed it a duty outside the contract. Judge Greer granted Creative Lifting Services leave to amend to re-plead its causes of action. With respect to the counterclaim, Creative Lifting Services pleaded affirmative defenses that mirrored the allegations in its complaint. However, applying the law in the Sixth Circuit, Judge Greer held that affirmative defenses may be pleaded in general terms and do not require factual development. Therefore, the defenses gave sufficient notice that Steam Logistics was not entitled to judgment on the pleadings. See February 2022 Update.
Creative Lifting Services filed an amended complaint with claims for violations of the TCPA, negligent misrepresentation, breach of contract (bill of lading), and negligent procurement of subcontractors for the packing of the crane. Steam Logistics moved to dismiss the claims, and Judge Greer held that the allegations in the amended complaint with respect misrepresentation under the TCPA were sufficient to satisfy the heightened pleading standard in Rule 9, alleging specific misrepresentations made to Creative Lifting Services through Steam Logistics’ website. Creative Lifting Services replaced its claim for intentional misrepresentation to negligent misrepresentation, and used the same misrepresentations that it used in the TCPA claim; however, it failed to plead the essential element of how or why Steam Logistics failed to use reasonable care in communicating the misrepresentations on its website to Creative Lifting Services. Although Judge Greer noted that this was the fifth claim of five that Creative Lifting Services failed to adequately plead, he declined to dismiss the claim and gave Creative Lifting Services one more chance to replead it. As to the claim for breach of contract, Judge Greer noted that, once again, Creative Lifting Services simply alleged that Steam Logistics breached the bill of lading by failing to exercise due care by failing to mitigate the damage of the infestation and failing to ensure that a certified packing company was used to pack the crane. The complaint did not state which contractual provisions in the bill of lading were breached, and, as Judge Greer had already given Creative Lifting Services the chance to address this deficiency, he dismissed the claim for breach of contract. Judge Greer then turned to the negligence claim and noted that the complaint claimed that Steam Logistics, as carrier, owed a duty to exercise due care pursuant to the bill of lading. Judge Greer stated that he could dismiss the complaint on that ground alone as the pleading simply recast a contract claim in the language of tort. However, Creative Lifting Services argued that it had pleaded a source of legal duty outside of the contractual relationship because the duty of care is established under the Carriage of Goods by Sea Act (although the complaint did not mention COGSA). Judge Greer noted that if the action were governed by COGSA, the state causes of action for negligence and breach of contract would be barred. Nonetheless, considering the plain language in the complaint, which did not allege a non-contractual legal duty, Judge Greer dismissed the negligence claim.
The plaintiffs, owners of a dock in Brooklyn, New York, brought this action in federal court in New York against the purported owners of the pleasure craft SCHAMONCHI, for failing to pay monies owed for dockage pursuant to a license agreement between predecessors of the parties. The dock owners requested that the vessel be attached in accordance with Rule B, but the writ expired before it was served. The dock owners sought an extension to serve the writ, but Clear Blue Waters Project intervened and asserted that it was the owner of the vessel. As Clear Blue was present in the district and was the owner, it argued that a Rule B attachment was not available. The plaintiffs then sought to amend their complaint and to arrest the vessel under Rule C to enforce a maritime lien for necessaries (dockage). Clear Blue moved to dismiss the amended complaint on the grounds of Colorado River abstention as that there was a parallel state court case. However, after the motion to dismiss, the dock owners dismissed that case, and Magistrate Judge Levy recommended that the motion to dismiss based on abstention be denied. Magistrate Judge Levy then addressed the amended complaint that pleaded a quasi-in-rem claim pursuant to Rule C (which governs in rem claims). The amended complaint, captioned as “Amended Verified Complaint for Maritime Attachment” did not allege the existence of a maritime lien and did not allege that necessaries were provided on the order of the owner (the complaint also sought recovery of amounts that are not necessaries). Accordingly, Magistrate Judge Levy recommended that the plaintiffs be given leave to amend the complaint to properly assert an in rem claim. See December 2021 Update.
After the amended complaint was filed and Clear Blue filed a counterclaim for constructive eviction and negligence that resulted in property damage to the vessel, the dock owners moved to dismiss the counterclaim based on a release/waiver in the license agreement for dockage of the vessel and sought a warrant for the arrest of the vessel. The license agreement expired in 2018, but the vessel remained docked on a month-to-month basis. The agreement provided that its provisions would survive the expiration of the agreement until surrender of the premises. However, the agreement was entered into by predecessors of both parties. The vessel owner, on behalf of itself and its successors, agreed to discharge the dock owner and its officers, employees, agents, and representatives of any liability arising from the vessel owner’s use of the premises. However, assuming that the agreement applied to the current owner (as successor), its release only applied to the previous dock owner and its officers, employees, agents, and representatives and did not state that it applied to its successor. Therefore, Magistrate Judge Levy did not find the release to be applicable. The dock owner also cited the provision in the license agreement that prohibited the licensee from filing a counterclaim in any provision brought by the licensor; however, Magistrate Judge Levy held that, as the counterclaim was compulsory under Rule 13(a), the waiver was inoperative in federal court to bar the counterclaim. Additionally, Magistrate Judge Levy did not believe that the counterclaim should be dismissed for failure to join an indispensable party (a cement company that stored concrete blocks on adjacent property that allegedly caused damage to the dock and vessel) as the cement company would merely be a permissive party. As the vessel remained at the dock without payment of dockage fees, Magistrate Judge Levy reasoned that the dock owner had made out a prima facie case of a maritime lien and recommended that a warrant for arrest of the vessel should be issued. However, as the warrant had not yet been issued, Magistrate Levy considered it to be premature to order an interlocutory sale.
Dontrelle Davis allegedly injured his left knee, left shoulder, cervical spine, and lumbar spine while working as a deckhand on the M/V CARIBOU, owned by Adriatic Marine. Adriatic Marine filed a limitation action in federal court in Louisiana, and Davis filed a claim in the limitation action. Adriatic Marine filed a motion for summary judgment on Davis’ claim for maintenance and cure, asserting a McCorpen willful concealment defense based on Davis’ prior motor vehicle accidents in which he injured his cervical spine, knee, lumbar spine, and shoulder as Davis failed to disclose those conditions during his pre-employment physical. Davis only contested the materiality element of the defense in response to the motion for summary judgment. Judge Barbier began by noting that Adriatic Marine asked questions about Davis’ prior medical conditions, and Davis did not dispute that the questions were reasonably related to his ability to do the job. Consequently, Judge Barbier reasoned that the fact that the questions were asked made the answers material for the willful concealment defense. The question was whether Adriatic Marine still would have hired Davis regardless of the medical conditions and whether disclosure would have prevented him from being present on the vessel at the time of the incident. Davis argued that he passed the pre-employment physical and was cleared for his heavy-duty responsibilities. However, the Vice President for Adriatic Marine in charge of hiring testified that even though Davis passed his physical, he would not have hired him if he had disclosed all of his preexisting medical conditions. Judge Barbier reviewed the cases on the materiality element and noted that testimony that the seaman may have been referred for further medical review created a fact question; however, the testimony that the seaman would not have been hired carried Adriatic Marine’s burden. “This single word” made the difference between denial of summary judgment and the dismissal of the maintenance and cure claim that was ordered by Judge Barbier.
This opinion arises from the eruption of the White Island volcano in New Zealand during a shore excursion on a cruise on the Royal Caribbean vessel, OVATION OF THE SEAS (jurisdictional issues involving the excursion operator and pleadings against the cruise line in a separate suit were discussed in the September 2021 and December 2021 Updates). Passengers Ivy Reed and Paul Reed, who were injured during the excursion, brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint. Reaching the same conclusion as the judges in other cases arising from the volcanic eruption, Judge Ruiz held that the Reeds sufficiently pleaded a claim for failure to warn of the danger of the volcanic eruption, rejecting arguments that the risk of eruption was open and obvious, that the allegations were insufficient that the cruise line knew or should have known about the eruption, and that the cruise line did not have a duty to warn about the danger of the eruption because it was an Act of God. Judge Ruiz held that the Reeds sufficiently pleaded a case of vicarious liability for the acts of the excursion based on apparent agency (a reasonable person could believe that the excursion was authorized to act for the benefit of the cruise line). Judge Ruiz recognized that general promises as to safety are insufficient for a negligent misrepresentation claim; however, he held that the Reeds sufficiently alleged that the cruise line omitted significant information about the risk of eruption so that the information provided was materially misleading. Although there was little in the complaint to establish that the cruise line knew or should have known of the unfitness of the excursion operator for the claim of negligent selection, Judge Ruiz held that the Reeds sufficiently alleged that a thorough investigation by the cruise line would have revealed the unfitness of the operator. Judge Ruiz did dismiss the claims for loss of consortium, reasoning that the claims were not cognizable under the general maritime law.
Dr. Frank Opaskar and South Shore Marine were negotiating the purchase of a new boat with the trade-in of Dr. Opaskar’s 33-foot vessel. Dr. Opaskar set out in the vessel across Lake Erie with Christopher Kedas, a salesman for South Shore, and Christopher’s son. The boat’s engine exhaust malfunctioned during the trip, and all three passengers on the boat were found dead on the vessel, probably from carbon monoxide poisoning. There was a dispute whether ownership of the vessel had transferred, and limitation actions were filed by South Shore Marine and Dr. Opaskar’s widow. A separate Rule D action was brought to litigate ownership of the vessel between Dr. Opaskar and South Shore Marine. Three motions to dismiss were filed in the limitation actions, challenging whether the petitioners adequately pleaded ownership of the vessel as both limitation actions denied that the petitioner was the owner of the vessel and claimed the right to exoneration/limitation in the alternative in the event the petitioner was found to be the owner. Judge Gwin held that the constitutional injuries alleged by the petitioners were actual and concrete. The petitioners were subject of suits that had to be defended, and those suits gave the petitioners standing to seek exoneration/limitation. As to whether the pleadings satisfied the Iqbal/Twombly standard for lack of privity or knowledge, Judge Gwin held that, although sparse, the allegations were sufficient. See May 2022 Update.
Four claims were filed in the South Shore limitation action, and a default order was entered at the end of the period to file claims. Just over a month later, Chagrin River Marine filed a motion to reopen the time to file claims and to set aside the default. Chagrin River, a defendant in state-court suits, desired to present a contribution claim against South Shore Marine. As Chagrin River had not received actual notice of the limitation action (despite being named as an interested party), and as the addition of one claim would not result in prejudice or delay after four claims had been filed, Judge Gwin held that Chagrin River had met the “low bar” to file a late claim. Although South Shore Marine argued that Chagrin River had forfeited its right to file a claim in the limitation action by failing to sue South Shore Marine in state court, Judge Gwin found no authority to support that argument and set aside the default. See June 2022 Update.
After ruling that the limitation actions were appropriate, Judge Gwin asked the parties for briefing whether the limitation actions should be stayed in light of the fact that the issue of ownership of the vessel was being litigated in the Rule D action. After weighing the economy of time and effort and the competing interests, Judge Gwin exercised his discretion to stay both limitation suits so that the Rule D action could determine the ownership of the vessel. Thus, the stay of litigation from the limitation actions remained in place, except for the Rule D action.
The M/V GH STORM CAT finished loading grain and payload shifting operations at the Zen-Noh grain terminal in Convent, Louisiana, and its crew member was operating the ship’s crane to lift a tractor from a cargo hold onto the dock. A stevedore employee connected the tractor to the crane but testified that he did not act as signalman for the lift. The crew member operating the crane testified that the stevedore employee signaled that he could begin the lift but then the worker disappeared. The crane operator continued the lift without a signalman out of concerns for safety if he stopped the lift, but the tip of the crane pierced the sidewall of the terminal’s conveyor gallery. The terminal did not lose any grain product as a result of the incident, but the loaders were rendered unavailable for several days. The terminal arrested the STORM CAT in a suit for damages, and the owners of the STORM CAT filed a limitation action (both suits in federal court in Louisiana). The terminal sought to recover for maritime tort and contract claims, seeking damages of $460,957 for property damage, $16,778,853 for “extra expenses,” and $2,773,038 for “business interruption.” The terminal’s tariff provided that the vessel and owner were liable for the cost of restoration, replacement, and repair for damage to terminal property caused by the user and for loss of revenue to the terminal caused thereby. The tariff also provided that the terminal had all remedies available under maritime law for charges, damages, liquidated damages, and indemnities, and it also contained a provision that a vessel that failed to vacate a berth within one hour of completion of loading was subject to a charge of $7,500 for each hour that the vessel remained in berth. The owners of the STORM CAT moved for partial summary judgment on the damages sought by the terminal, arguing that the damages claimed were suffered in the capacity as a commodities trader rather than as a terminal operator and were not encompassed within the tariff or under the general maritime law. The extra expenses consisted of $11,472,105 in replacement grain purchases required to fulfill its contracts because it could not load grain due to the accident, $244,737 in barge movement costs, and $5,061,921 in incremental demurrage (barges and other vessels could not be released from the terminal within the allotted contract time). The business interruption costs consisted of $1,340,376 in replacement soybean purchases to fulfill a swap contract and $1,432,662 in lost elevator income. The vessel owners agreed that the lost elevator income was recoverable under the tariff, but they contested the remaining $18 million, arguing that the expenses did not fit within the ordinary definition of loss of revenue as they included items such as trading losses associated with grain transactions. Citing the provision in the tariff that the terminal was entitled to loss of revenue, the vessel owners noted that the terminal actually lost no revenue by its efforts to cover its obligations and the additional costs reflected loss of profit, not loss of revenue. Judge Ashe rejected the limitation on recovery to loss of revenue as the tariff also preserved the terminal’s ordinary remedies available for maritime claims, including the right to recover mitigation expenses to avoid a loss of revenue. Judge Ashe also rejected the vessel’s argument that the liquidated damages provision for failure to vacate the berth could serve as a limitation on damages because the vessel only remained at the berth on the command of the terminal during the extrication of the tip of the crane from the conveyor gallery, and the tariff provision was, therefore, not applicable to be used as a limit on recovery. The final question was whether the damages sought by the terminal were foreseeable so as to be recoverable under the general maritime law. Judge Ashe noted that it is not the size of the damages that must be foreseeable but the general sort of damages. He found it to be entirely foreseeable that a company would engage in mitigation efforts to maintain its contractual obligations to other customers. The vessel owners also argued that the specific mitigation expenses were not foreseeable because the terminal did not lose any grain product and had $585 million in grain ready or nearly ready to be loaded. Thus, the decision to buy grain at extremely disadvantageous prices rather than wait a few days until the grain on hand could be loaded was not foreseeable. Judge Ashe held that this argument was relevant to the reasonableness of the mitigation effort, but not to whether they were foreseeable. Consequently, Judge Ashe denied the vessel owner’s motion for partial summary judgment.
Charles Moran, a seaman assigned to the tug SIGNET PURITAN, reported for his 28-day hitch on the vessel on September 29, 2021, but was informed that the vessel was not departing due to poor weather. He was given permission to get a haircut and pick up groceries for the crew, but he broke his ankle in the parking lot of the hair salon and could not perform his duties for his hitch. He was fired on October 13, 2021 after an investigation of an unrelated incident. On December 21, 2021, Moran brought this action in Texas state court against his employer, Signet Maritime, seeking maintenance and cure and punitive damages for willful failure to pay maintenance and cure. Although his employer is a Texas company, it snap removed the case to federal court based on diversity, arguing that the forum defendant rule did not prevent removal because it had not been served and that the bar to removal of a Jones Act case did not prevent removal of the suit seeking maintenance and cure. Signet Maritime then moved for summary judgment on the claim for punitive damages for willful failure to pay maintenance and cure, arguing that it did not know that Moran was seeking payment for his medical care. Moran responded that he needed medical care for the broken ankle, he told the captain about his injury when it occurred, and that he has not been provided with treatment from Signet Maritime. Finding no support for an inference that Signet Maritime exhibited callousness and indifference to Moran’s injury, Chief Judge Rosenthal held that Moran could not recover punitive damages. On August 29, 2022, Chief Judge Rosenthal denied Moran’s motion for reconsideration, reasoning that Moran gave no indication that he would seek maintenance and cure until after Signet had terminated his employment and just a few days before the filing of this lawsuit and adding that punitive damages were not available for the claim for wrongful discharge. Thanks to Matthew Ammerman of Houston, Texas for bringing this case to our attention.
Patrick Hebert was picked up by the crew boat MS KRISTIE from the High Island 500 platform in rough, but not abnormal, seas. It was dark, and the vessel was struck by a rogue wave that the captain estimated was 16 to 18 feet. Hebert was injured and brought this suit in federal court in Louisiana against the owner of the KRISTIE. The owner moved for summary judgment on Hebert’s claim for punitive damages, arguing that there was no evidence that it was guilty of wanton, willful, or outrageous conduct. Judge Drell agreed that there was no factual basis to support a claim that the owner or its employees acted in a wanton or willful manner and granted summary judgment on the punitive damage claim.
Louis Joseph Tenwinkle is the owner of a Professional Vessel Recovery Vessel. He claims that Harbor Master Curtis Havel, and employee of the local governmental agency, the Richardsons Bay Regional Agency, which maintains the navigable waters and shoreline of Richardson Bay, California, boarded the vessel without a warrant and designated the vessel as marine debris. He asserted that Havel towed the vessel to a debris dock where the vessel was damaged. Tenwinkle brought this suit in federal court in California against the Agency, Havel, and others, under Section 1983 for violations of the Fourth and Fifth Amendments and for violation of California statutes. He also sought injunctive relief. The defendants moved to dismiss the claims, and Judge White agreed that, as pleaded, the claims were filed a day after the running of the two-year statute of limitation for federal claims. However, he allowed Tenwinkle to replead his claims to show that tolling might extend the period to file suit. Although Tenwinkle alleged a litany of past acts, he sought prospective injunctive relief. Judge White gave him leave to plead a sufficient likelihood that he would again be wronged in a similar way so as to support injunctive relief. The state claims were not filed within six months after rejection of the claims and were untimely under California law; however, Judge White gave Tenwinkle leave to plead facts supporting tolling of those claims.
Thomas Stemmle claimed that he became ill on April 30, 2011 while serving as a seaman on the M/V MESABI MINER, owned by Interlake Steamship Co. (he was diagnosed with cardiomyopathy, underwent two heart surgeries, and was awaiting a heart transplant). He brought suit in New York state court against Interlake, seeking maintenance and cure and compensatory and punitive damages for failure to pay maintenance and cure. Interlake removed the case to federal court, and Judge Spatt denied Stemmle’s motion to remand. The parties reached a settlement, and Interlake agreed to pay premiums for a health insurance policy until Stemmle reached maximum cure. Stemmle, who is 36, underwent transplant surgery in December 2019, and he has been on anti-rejection and immunologic suppressive therapies since then. He has not been hospitalized since the transplant, and he moved to Las Vegas where he is an engineer at the Cosmopolitan Hotel and Casino. His doctors opined that he will need lifelong medication, maintenance, tests, and examinations, and, if he does not receive that care, his condition will likely decline to the point were the results could be fatal. Interlake moved for a declaratory judgment that Stemmle had reached maximum cure, and Magistrate Judge Shields held that he had. His condition was stable, and she considered his ongoing treatment necessary to prevent relapse as opposed to being curative. Stemmle was continuing to improve his stamina and his activities, but the fact that he was getting better did not mean that there was curative treatment available for him. Having received a new heart, there was no further cure.
Angelina Torrents, a passenger on the CARNIVAL GLORY, fractured her leg when she missed the last step of a staircase as she disembarked the vessel in Puerto Rico. She brought this suit against the cruise line in federal court in Florida, alleging that the cruise line was negligent because the crew directed her to use a staircase (designed to be used by the crew) that was not maintained in a safe condition for passengers and that the cruise line failed to warn her of the dangerousness of the staircase. The cruise line moved for summary judgment, and Judge Scola considered Torrents’ allegations (that she was directed to use the staircase intended for the crew and that the cruise line failed to maintain the steep staircase for passenger use) to be claims for negligent mode of operation. As claims for negligent mode of operation are not recognized in federal admiralty law, Judge Scola granted summary judgment on these theories. Although Torrents argued that she was bringing a claim for negligent maintenance (failure to upkeep the stairway in a proper state for passenger use), her arguments focused on the design of the stairs (steepness and tread size), not their upkeep. As she denied that she was presenting a claim for negligent design, Judge Scola granted summary judgment to the cruise line on this theory. With respect to the claim for failure to warn, the cruise line argued that the condition of the stairs (high stair risers and excessively high handrails) was open and obvious. Concluding that the issue whether the risk of danger would be appreciated by a reasonable person presented a question of fact, Judge Scola declined to grant summary judgment on the cruise line’s open and obvious argument. He also held that there was sufficient notice to the cruise line of the risk-creating condition. He did not find notice from incidents on other vessels as the incidents were not substantially similar. However, the cruise line had placed warning signs on other occasions when passengers used this staircase, and those signs were not placed above stairways in the passenger areas.
Travis Perry is a lobster fisherman who works from his own fishing vessels from his father’s wharf in Harrington, Maine. He commissioned construction of the ISLA & GRAYSON in 2017 (named for his children), using a business loan of $500,000 and $475,000 of his own funds. He had continuing mechanical problems with the vessel, calling the vessel “junk” and sending a text that he would “burn Her in the morning.” He ordered a cheaper replacement vessel and tried to sell the ISLA AND GRAYSON, but it did not sell even when he dropped the price to $700,000. After Perry performed some “uninspired” repair work, the vessel was consumed by fire, and Perry presented a claim to the vessel’s hull insurer, Hanover. Hanover’s investigator noted the poor handiwork (considering it to evince an intent to burn the boat as it was out of keeping with Perry’s general fastidiousness. He found cloth rags, a solidified mass of resin containing red dye in the hue used to dye marine diesel fuel, and traces of petroleum products in the debris and noted that the mass of resin did not appear in photographs of the location taken the day before the fire. Hanover theorized that the resin and fuel were poured into the hull in an effort to catalyze the fire, and it denied the claim. Perry brought this suit against Hanover in federal court in Maine in admiralty, and the case was tried to Judge Walker. Judge Walker found Perry to be credible and, although he was eager to replace the vessel, he did not intentionally set the fire or request his crew member to do so. Judge Walker found that the diesel contamination and its red colorant could have come from a leak from the nearby fuel line during the fire. Although he ruled in favor of Perry on the contract claim, Judge Walker also found in favor of Hanover on Perry’s claim for bad faith, concluding that Hanover did not appear to have engaged in motivated reasoning in its investigation or to have breached professional norms of fire investigation (finding that it conducted a good faith investigation and treated Perry fairly).
Michael Williams was injured in a workplace injury in Pennsylvania in 2014. He brought suits in federal court in Louisiana against his employer, Hyperion, under the Jones Act and general maritime law, and against Inflection and U.S. Well Services. The action against Inflection and U.S. Well was transferred to Pennsylvania, and U.S. Well brought a third-party complaint against Hyperion in that suit. Williams entered into a settlement with Hyperion in the Louisiana suit, and the release included a provision requiring Williams to indemnify and hold harmless the released parties (Hyperion and its insurers) from any loss or damage arising out of or connected with the accident. The release extended to any other claims against the parties related to the incident, whether under any insurance policy or whether sounding in tort, contract, equity, or admiralty. Hyperion filed a third-party claim against its insurer, Navigators, in the Pennsylvania litigation, seeking defense and indemnity from the claims of U.S. Well Services and arguing in the game of musical chairs that Navigators was the last party standing. Navigators refused to be the last party standing, however, and filed a cross-claim against Williams based on the language of the release. This presented the question whether Williams was required to defend and indemnify Navigators for the claims brought by Hyperion, for the claims brought by U.S. Well, for the claims brought by Williams. Finding the indemnification language in the release to be broad enough to encompass the circular claim, Chief Judge Brann granted summary judgment to Navigators that Williams was obligated to defend and indemnify Navigators. Chief Judge Brann recognized that this outcome seemed “almost comically perverse,” but it exemplified the “potential perils of including broad indemnification provisions in settlement agreements.”
Brian Zacharias brought this action against Alanna C. Kitzman and Andrew J. Kitzman in Florida state court for negligently crashing a boat into a tree and harming their child. In the amended complaint, Zacharias alleged two causes of action under state law but cited violation of federal navigational rules. The defendants then removed the case under the federal question jurisdiction, asserting that the complaint alleged they were liable under a higher standard of care based on the violation of the federal navigational rules. As the plaintiffs did not assert a federal private right of action from the violations, Judge Corrigan analyzed whether federal jurisdiction of the state causes of action was warranted because the federal issue was substantial and capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Judge Corrigan reasoned that it might be important to the parties whether the defendants violated the federal navigational rules, but the question was not important generally to the federal system. Noting that state courts are regularly required to apply principles of federal maritime law, Judge Corrigan declined to find federal question jurisdiction and remanded the case to state court.
BP Exploration engaged Global Fabrications and/or Lawson Environmental to assist in the cleanup of the spill from the Macondo blowout, and Global Fabrications chartered the supply vessel ODYSSEA ATLAS from Odyssea Marine to collect oiled boom and bags from other vessels. Torrey Barlow alleged that he worked aboard the vessel from May to September 2010 and was exposed to oil and chemicals used in the cleanup. He brought this suit in federal court in Louisiana against Odyssea Marine, Lawson, and Global Fabrications under the Jones Act and general maritime law, and the defendants moved for summary judgment on Barlow’s status as a seaman, the seaworthiness of the vessel, causation for his claims, and derivative immunity. Judge Fallon held that Barlow was a seaman as he contributed to the mission of the vessel to collect oiled boom and bags, he spent over four months in service of the vessel (in excess of 30% of his employment), and he satisfied the elements enunciated by the Fifth Circuit in Sanchez for the nature element of the connection test for seaman status. Judge Fallon found that Barlow owed an allegiance to the vessel because he sailed with the vessel, he cleaned the vessel, he ate and slept on the vessel, and his job was essential to the completion of the vessel’s mission. He concluded that his work was entirely sea-based and involved sea-based activity as it occurred in the Gulf of Mexico approximately one to two hours from Venice, Louisiana. He did not perform discrete tasks and sailed with the vessel to different locations. As to the seaworthiness of the vessel, Judge Fallon noted that there was a strong smell from the crude oil and the vessel was covered with dispersant. Barlow complained that he was not provided with protective gear, and Judge Fallon held that the warranty of seaworthiness was a non-delegable duty of the owner, so there was a fact question whether Odyssea Marine was liable for unseaworthiness. As Barlow complained of symptoms and was diagnosed with medical conditions shortly after his exposure on the vessel, Judge Fallon held that there was a fact question whether Barlow suffered injury while serving on the vessel. Finally, the defendants argued that they were entitled to derivative immunity from the Clean Water Act for rendering assistance under the direction and control of the federal government consistent with the National Contingency Plan. However, the defendants did not provide evidence of acts taken under the direction and control of the government, and Judge Fallon declined to hold that the claims were barred by derivative immunity.
Shallow Water Equipment chartered the spud barge GRANT from TK Boat Rentals and then subchartered the barge to Pontchartrain Partners to work for the Army Corps of Engineers. Shallow Water claimed that the barge sustained damage and that Pontchartrain returned the barge in a damaged condition. TK and Shallow Water brought this suit against Pontchartrain in federal court in Louisiana, with TK seeking to recover for constructive loss of the barge, unpaid charter hire, and consequential damages from the return of the vessel in a damaged condition, and with Shallow Water seeking damages for unpaid charter hire. Pontchartrain moved for summary judgment, which required that Judge Fallon address the contractual relationship among the parties. The arrangement began as a handshake deal for a bareboat charter from TK to Shallow Water to Pontchartrain. After the charter began, there was a written agreement. As the testimony was conflicting about whether the written or oral charter was applicable, Judge Fallon evaluated whether there was a difference as to whether consequential damages could be recovered under either agreement. Assuming the oral charter party governed, Judge Fallon held that the maritime law permits recovery for lost charter hire when the vessel is returned in a damaged condition. As to the written charter party, Pontchartrain cited the provision that all damage must be repaired or a repair charge would be added to the rental invoice and argued that its liability was limited to the repair charges. Judge Fallon disagreed, noting that the language did not address consequential damages or loss of use. Accordingly, he held that Pontchartrain was not immune from the claim for consequential damages regardless of whether the oral or written charter party was applicable. Pontchartrain also argued that TK, as owner, had no claims directly against it, as subcharterer, as TK was not a party to the subcharter and there was no privity between them. However, Judge Fallon answered that TK asserted a maritime tort claim based on negligence against Pontchartrain. Thus, if TK established the negligence of Pontchartrain, TK would be allowed to recover lost hire resulting from the physical damage to the barge.
The 51-foot Sea Ray boat owned by Thomas and Diane Rieck caught fire and sank while the vessel was docked at the Halifax Harbor Marina in Daytona Beach, Florida. The Riecks brought this limitation action in federal court in Florida, asserting that potential claimants included the owner of the vessels MY MISSY, DOLCE VITA, and ICEMAN in addition to the Marina. Magistrate Judge Kidd initially declined to approve security and issue the Monition because the complaint did not “clearly state” who provided written notice of the claim or the date/manner in which notice was provided. In response, the Riecks stated that they received notice from the insurer for the DOLCE VITA by the provision of information on the vessel to the Riecks’ insurer. As the Riecks did not state whether they had received written notice of a claim, Magistrate Judge Kidd held that they had not shown that they had statutory standing to bring a limitation action and, again, declined to approve security and issuance of the monition. See August 2022 Update.
The Riecks moved for reconsideration and cited case law supporting the argument that lack of written notice of a claim does not bar initiation of a limitation action. The Riecks pleaded that they had exercised due diligence to make the vessel seaworthy and were properly trained and experienced in the operation of the vessel. They provided security for the post-casualty value of the vessel ($0). Consequently, Magistrate Judge Kidd approved the security and directed issuance of the monition.
Kimberly Hostert, a passenger on the M/S HORIZON, claimed that she was injured when she slipped and fell on a wet, foreign substance on the exterior portion of Deck 11 on her way to a “Dive-in” movie. She brought this suit in federal court in Florida against the cruise line, asserting claims for negligent maintenance, failure to warn, and vicarious liability. The cruise line moved to dismiss the claims, and Judge Graham agreed that the claims for negligent maintenance and failure to warn were insufficient because only conclusory allegations were presented for the notice to the vessel of the dangerous condition. The counts alleged that the defendant should have been aware of the danger due to the length of time the condition had been present or because of the recurring nature of the condition. However, Judge Graham held that there were no facts alleged to support the allegations. For the vicarious liability count, Hostert alleged that the slippery condition was created by a crewmember inadequately cleaning and drying the area, leaving it wet. Although the cruise line argued that Hostert was merely recasting her negligent maintenance and failure to warn claims, Judge Graham took the pleading as stated and held that Hostert was not required to plead notice for the third count. Consequently, he dismissed the first two counts without prejudice and denied the motion to dismiss the third count.
On January 19, 2019, Bonvillian’s vessel, M/V MISS APRIL, allided with the M/V MISS SADIE ELIZABETH, a crew boat docked in the Mississippi River near Port Sulphur, Louisiana. A crew member on the MISS SADIE ELIZABETH, Junior Joseph Pellegrin, Jr., brought suit in Louisiana state court against Bonvillian on August 23, 2019, and Bonvillian filed this limitation action in Louisiana federal court on December 16, 2019. The crewmember and the owner of the MISS SADIE ELIZABETH filed claims in the limitation action and moved to dismiss the suit for lack of subject matter jurisdiction, arguing that the limitation action was filed more than six months after written notice of a claim. The claimants cited the Fifth Circuit’s decision, In re Eckstein Marine Service L.L.C., in which the court held that the argument that the limitation action was not timely filed challenged the court’s subject matter jurisdiction. Following Eckstein, Judge Vitter dismissed the limitation action for lack of jurisdiction, and Bonvillian argued on appeal that the intervening decision of the Supreme Court in United States v. Kwai Fun Wong (considering time limitations in the Federal Tort Claims Act to be non-jurisdictional) required that the Fifth Circuit reconsider its decision in Eckstein about the time limitation in the Limitation Act. Giving respect to the prior decision and the Fifth Circuit’s Rule of Orderliness (one panel cannot overturn another panel’s decision absent an intervening change in the law), Judge Engelhardt held that “the Eckstein rule clearly runs afoul of Kwai Fun Wong and its family of Supreme Court cases, and this panel is behooved to adjust our Circuit’s stance accordingly.” Consequently, he held that the time limitation in the Limitation Act “is a mere claim-processing rule which has no bearing on a district court’s subject matter jurisdiction” and remanded the case to the district court (noting that the factual grounds with respect to the timeliness were hotly contested and that, because the court remanded on pure legal grounds, the panel refrained from discussing the factual disputes). See January 2022 Update.
Pellegrin and his wife filed a claim in the limitation action, and they sought punitive damages and loss of consortium. Bonvillian Marine moved for partial summary judgment that punitive damages and other non-pecuniary damages were not recoverable by the Pellegrins. Judge Vitter first determined that Pellegrin was a seaman (he was captain of the SADIE ELIZABETH). Then, applying the Fifth Circuit’s Scarborough decision, Judge Vitter held that the Pellegrins’ claims against non-employer Bonvillian Marine for non-pecuniary damages (including punitive damages) were not permissible in a maritime negligence action, and she dismissed the claims.
Opinion Shell Summary Judgment
Jeremy Earnest, Brandon Dupre, and other workers on Shell Oil’s Auger tension-leg platform located on the outer Continental Shelf in the Gulf of Mexico off the Louisiana coast were injured or killed while Shell was conducting a quarterly test of the lifeboats on the platform. A lifeboat containing the workers was lowered into the ocean, disconnected, and operated in the Gulf. The lifeboat was then reconnected and hoisted back to the platform but fell to the ocean. Suits were brought in Louisiana state court against Palfinger Marine, alleging it was responsible as the owner and manufacturer of the control release cables and release handle to the hooks for the lifeboat. Some of the suits named Shell as a defendant under Section 5(b) of the LHWCA. The defendants removed the suits to federal court in Louisiana, and Shell moved for summary judgment, arguing that the claim under Section 5(b) was only available for a maritime tort and that maritime law did not apply to the incident. Before addressing the issue of admiralty jurisdiction, Judge Summerhays concluded that the incident occurred on an OCSLA situs, that the workers’ employment furthered mineral development on the OCS, and that the accident would not have occurred but for their employment on the platform. Therefore, the OCSLA provided jurisdiction over the accident. Judge Summerhays then addressed whether admiralty law applied and held that, although the accident involved a lifeboat that fell to the ocean, the accident was inextricably linked to the operation of the platform. It was a test of the hook, cable, and davit system on the platform in which the platform equipment failed. Judge Summerhays disagreed with two district court decisions holding that maritime law applied to accidents involving lifeboats, reasoning that the lifeboats were not used in connection with traditional maritime activities. As he held there was no maritime jurisdiction over the claim against Shell, Judge Summerhays dismissed the Section 5(b) claim. See April 2022 Update (Dupre v. Palfinger).
After Judge Summerhays ruled that maritime law did not apply to the accident and that Louisiana law applied as surrogate federal law pursuant to the OCSLA, Palfinger moved to dismiss the claims for punitive damages that were asserted under the general maritime law. Judge Summerhays reiterated that the OCSLA applied as the lifeboat was physically connected to the platform and was being lifted toward its berth on the platform at the time of the accident. As he had held that Louisiana law applied, and as the plaintiffs set forth no provision of Louisiana law that would allow punitive damages, Judge Summerhays dismissed the claims for punitive damages.
Judge Summerhays then addressed the choice of law for the contract between Shell and Palfinger for the maintenance of the lifeboats, as the contract contained a provision for Shell to indemnify Palfinger for death or injury of Shell employees. Palfinger argued that the contract was governed by maritime law under which the indemnity was valid. Shell argued that the contract was governed by Louisiana law under which the indemnity was invalid. Judge Summerhays analyzed two en banc decisions of the Fifth Circuit to reach his decision on the applicable law, Grand Isle Shipyard v. Seacor Marine and In re Larry Doiron, Inc. The court in Grand Isle rejected tort analysis to determine the law applicable to a contract and instead used a focus-of-the-contract test. Thus, a claim would arise on an OCSLA situs if a majority of the performance under the contract was to be performed on an OCSLA situs, such as the tension-leg platform, and it was immaterial that the location of the accident was on navigable waters. As the majority of the work under the Shell-Palfinger maintenance agreement was to occur on the Auger platform, an OCS situs, Judge Summerhays then addressed the question whether maritime law applied to the contract in accordance with the Fifth Circuit’s test to determine the applicable law for OCS situses, applying the test from the Doiron case. As the contract involved services to facilitate the drilling or production of oil and gas on navigable waters, the question became whether the contract provided or the parties expected that a vessel would play a substantial role in the completion of the contract. Reasoning that the work (inspecting components of the lifeboats and the davits and cables) occurred on the platform and did not require a vessel, Judge Summerhays held that maritime law did not apply to the contract. Palfinger finally argued that the contract was inherently and historically maritime as it involved lifeboats. However, even assuming that he could consider an argument that differed from the analysis required by Doiron, Judge Summerhays answered that just because lifeboats were involved did not make the contract maritime as the lifeboats were functioning as safety equipment supporting oil and gas exploration on a platform and not functioning as maritime vessels in maritime commerce. Turning to application of the Louisiana Oilfield Indemnity Act, Judge Summerhays held that the contract pertained to a well as the services were necessary to sustain the manpower for the platform to produce oil and gas from wells. Therefore, the LOIA applied and voided the indemnity. Finally, Palfinger sought to apply Texas law pursuant to the choice-of-law provision in the contract, but Judge Summerhays applied the long-standing rule in the Fifth Circuit that the choice of state law in the OCSLA is mandatory and contractual provisions cannot alter it. Consequently, he dismissed the indemnity claim against Shell (Palfinger’s tort indemnity claim also failed under Louisiana law).
Shell moved for summary judgment on Earnest’s claims that it was negligent in maintaining and inspecting the hook and cable system for the lifeboat, and Judge Summerhays agreed that Shell had no liability under the general maritime law or LHWCA as state law applied. However, he found sufficient evidence of a triable issue under state law whether Shell was informed of the defective cable, and he denied summary judgment to Shell.
When Hurricane Harvey made landfall near Corpus Christi, Texas as a Category 4 hurricane, the drillship DPDS1 was docked with two tug boats helping keep the drillship in place. Nonetheless, the drillship broke free from its moorings, propelling the two tugs (ENTERPRISE and ARCTURUS) into adjacent semisubmersible rigs, damaging the rigs, sinking one tug, and damaging the other. The drillship grounded in the ship channel, and the tug CONSTELLATION was assigned to assist the drillship. Later, when the hurricane came back ashore, the drillship refloated and allided with a research pier. The owners of the drillship and tugs brought limitation actions, and claims and counterclaims were filed in the limitation action. A question arose in the limitation action brought by Paragon whether it could bring the limitation action with respect to the drillship DPDS1. Before the storm, Paragon had moved the DPDS1 to Port Arthur, Texas, removing two of its thrusters before the voyage. The drillship was cold stacked with no maintenance and no running equipment, and it deteriorated accordingly. When the dock in Port Arthur was no longer available, the DPDS1 was towed to the Gulf Copper dock near Corpus Christi in May 2017. Paragon was unable to find a buyer for the drillship, and it appeared likely that the drillship would have to be scrapped. Nonetheless, the drillship remained fully outfitted with cranes, winches, electrical generators, and navigational lights, and a two-person maintenance crew stayed aboard to secure the craft and monitor its equipment. As Hurricane Harvey approached Corpus Christi in 2017, Paragon sought to tow the drillship offshore and obtained certification of its seaworthiness from a surveyor. However, the DPDS1 was at the dock when the Hurricane struck. The DPDS1 remained afloat after the storm and was towed back to the Gulf Copper dock and then to Brownsville, Texas, where it was scrapped. Paragon filed a motion for partial summary judgment that the DPDS1 was a vessel for purposes of the Shipowners’ Limitation of Liability Act. Judge Rodriguez agreed with Paragon, reasoning that the craft was capable of carrying things or people over water and that a reasonable observer would conclude that it was a vessel based on its physical characteristics and activities. Although the claimants in the limitation action cited Paragon’s intent to scrap the vessel, Judge Rodriguez noted the recent Fifth Circuit decision in Southern Recycling (see January 2021 Update), in which the owner transported a barge to a shipyard to be scrapped. The barge lost status as a vessel when the contractor cut gaping holes in the bow that prevented the barge from transporting people or property. As the DPDS1 still appeared to a reasonable observer to be capable of serving as a vessel, Judge Rodriguez held that it was a vessel subject to limitation of liability. See March 2021 Update.
Judge Rodriguez held a bench trial and noted that there were two discrete events for which liability had to be apportioned, the initial breakaway of the drillship and the damages incurred from that breakaway, and the subsequent refloating and allision with the research pier. Judge Rodriguez held that Paragon was solely at fault for the initial breakaway and the damages resulting from that breakaway; however, he allocated fault for the refloating and damage to the research pier at 50% for Paragon and 50% for Signet, owner of the CONSTELLATION. Signet and Paragon disputed whether a master charter agreement or Signet’s tariff provided for the allocation of responsibility between the parties. There was a dispute in the testimony whether the hiring of the tugs was pursuant to the master charter agreement, and Judge Rodriguez resolved the dispute by concluding that Signet did not agree that the master charter agreement would govern the work. As to the tariff, Judge Rodriguez found an oral agreement that Signet would work under the terms of the tariff, and he agreed that the oral agreement was valid under the general maritime law. Paragon raised defenses to application of the tariff, including that the tariff did not cover services to vessels that are aground or in distress. However, Judge Rodriguez held that a party may waive a provision in a contract intended for that party’s benefit and that Signet did that in this case. Paragon also argued that the tariff could not govern because it was a contract of duress or of adhesion, but Judge Rodriguez did not find either defense applicable, and he also concluded that Paragon’s conduct had ratified the agreement to work under the tariff. Accordingly, liability between Paragon and Signet was allocated in accordance with the provisions of the tariff. See May 2022 Update.
Judge Rodriguez then issued a lengthy opinion, reiterating his findings of fault, denying limitation for Paragon because its managing agents had privity with the design of the mooring system and Paragon’s decision regarding evacuation, assessing damages, and applying the tariff to the damages. Signet sought damages for the constructive total loss of the ENTERPRISE, and Judge Rodriguez awarded $1,735,607.78 for wreck removal, $41,412.17 for surveyor expenses, and $3,600,000 for the damage to the vessel (fair market value before the accident minus salvage value). Judge Rodriguez denied recovery for loss of charter hire under the established rule that the owner is not compensated for loss of use in the case of a total loss. With respect to the ARCTURUS, which was not a constructive total loss, Judge Rodriguez awarded $1,517,311.08 in repair costs, $37,055.74 in salvage expenses, and $54,225.74 in surveyor fees. Judge Rodriguez rejected Signet’s claim for profits from lost charter hire, reasoning that the evidence supported the conclusion that any profits would have been significantly lower and may have been fully elusive in the dampened market after Hurricane Harvey. Under the tariff, Judge Rodriguez held that Signet was entitled to contractual indemnity from Paragon for damage to the Noble semisubmersible rigs and awarded judgment to Signet for its $875,000 settlement for the Noble rigs. As the tariff provided for indemnity proportionate to fault, as Signet and Paragon both settled with the University of Texas for the damage to its research pier, and as the parties agreed that their settlements did not reflect liability beyond 50% of the damage to the pier, Judge Rodriguez held that neither party was responsible to indemnify the other with respect to the damage claim presented by the University of Texas. Although Signet requested pre-judgment interest at an initial rate of 5% to 6% and a rate of 17.5% after mid-2019, Judge Rodriguez considered that rate to be excessive and awarded pre-judgment interest at 4%.
Omegra Shipping, time charterer of the M/V FORTUNE IRIS, contracted with World Fuel Services to provide bunkers to the vessel, memorialized in a contract that incorporated the WFS Marine Group General Terms and Conditions. World Fuel arranged for Sentek Marine to supply and deliver the bunkers to the vessel in Singapore, and, in accordance with the terms, samples were taken of the bunkers and delivered the receiving vessel, the bunker tanker, the bunker surveyor, and the testing laboratory. The sample tested by the supplier was on-spec, but other samples were off-spec. The vessel owner refused to consume the bunkers, and the vessel was de-bunkered (results were also off-spec). As it was liable to the vessel owner for the expenses incurred in de-bunkering, consuming alternative sources of fuel, and for the loss of use of the vessel, the charterer brought this suit against the bunker supplier in federal court in Florida. The supplier argued that the charterer could not bring a claim for breach of contract because the sample it tested conclusively determined the quality of the bunkers in accordance with the Terms. However, the conclusive determination was subject to an exception for fraud or manifest error. The charterer alleged that it was apparent that the supplier sample came from a different source than the bunkers supplied to the vessel, and Judge Lenard concluded that the charterer had sufficiently pleaded fraud and, consequently, breach of contract. She dismissed the negligence claim based on the economic loss rule from Robins Dry Dock as the charterer did not allege any physical injury to the charterer’s property and as there was no material difference between the contract and negligence claims (as enunciated in East River). Judge Lenard also held that the charterer adequately pleaded a separate claim for fraud (but for the allegedly false sample, the charterer would have de-bunkered sooner and losses would have been minimized), but she held that the charterer failed to sufficiently allege the heightened reckless, conscious breach requirement for a gross negligence claim and dismissed that count without prejudice. As to damages, the Terms provided that the supplier was not liable for indirect, special, incidental, exemplary, punitive, or consequential damages, including delays, lost profits, and business interruption. The supplier argued that the damages alleged by the time charterer were barred by this provision, but Judge Lenard held that some of the damages claimed were direct damages, and it was premature to dismiss other damages when it had not yet been determined whether there may have been gross negligence that might render the limitation unenforceable.
Opinion Negligence, Warning, Strict Liability
This case arises from injuries suffered during an explosion when the plaintiffs were changing out the batteries on a 2014 Sea Fox Commander fishing boat in Louisiana waters [one of the plaintiffs subsequently died from mixed drug intoxication]. The plaintiffs brought this suit in federal court in Louisiana against Sea Fox, which designed and manufactured the vessel, and Yamaha, which sold the engines and water/fuel separating filters (Yamaha asserted that the filters were designed, manufactured, and tested by Dometic Corp./Sierra International). The complaint sought punitive damages. In our December 2021 Update, we discussed Judge Cain’s decision applying Louisiana law for the remedies for the survival action and Arkansas law to the remedies for the wrongful death action. In a subsequent opinion, Judge Cain addressed Yamaha’s argument that its actions/omissions did not rise to the level of egregious misconduct required to sustain a claim for punitive damages. The plaintiffs argued that the filters were defective because the cannister that contains the filtering device used materials that rust or corrode when submerged in water, that the filters were located in an area that allowed them to be submerged in water, and that users were not warned that there is a risk that fuel and fuel vapors can be released in the event the filters rust to the point that their integrity is compromised. The plaintiffs argued that Yamaha knew that if the filters were to rust they would corrode and leak fuel and that Yamaha was reckless because it failed to perform design failure analysis on the filters to prevent the corrosion. Yamaha responded that it had sold 1.8 million filters between 2005 and 2020 and only received 4 claims related to corrosion with no claims for injury or death. Yamaha also argued that it could not be held liable for punitive damages for the design, testing, and manufacture of the filters by Dometic/Sierra. However, the plaintiffs demonstrated that Yamaha had played a significant role in the specification and creation of the filters, including removal of the corrosion testing requirement from the final set of specifications. There were also disputes whether testing for corrosion and/or rust was performed and whether the box in which the filters were contained warned of the danger of rust or corrosion. Accordingly, Judge Cain found sufficient evidence to allow the claim for punitive damages to be determined by the fact finder. See March 2022 Update.
Sea Fox also moved for summary judgment on the punitive damage claim, and it fared no better than Yamaha. Sea Fox argued that it complied with all standards and regulations and that its conduct fell short of conduct that constituted gross negligence or callous/reckless disregard for the rights of others. The plaintiffs cited several actions or inactions in manufacturing the vessel that they argued could constitute a pattern of negligence that, taken together, established a reckless or callous disregard for the rights of others (failure to have a build-plan for the boat, failure to have drawings which purportedly matched the manufacture of the boat and placement of the filters, failure to install the filters in the location shown on an inspection report of a similar vessel, installing the filters in a highly corrosive environment, and failure to have warnings of fire and explosion due to fuel leakage). Judge Cain considered the cumulative effect of these negligent acts sufficient to collectively constitute gross negligence. See May 2022 Update.
The parties then moved to strike expert opinions, but Judge Cain declined the motions. The plaintiffs challenged metallurgical engineer failure analysist Gary Fowler with respect to the results of Fourier Transform Infrared Spectroscopy testing and sea spray testing on the grounds that the tests were unreliable and the opinions flowing from them would not assist the jury. The plaintiffs argued that Fowler had not personally conducted the Fourier test; however, their own metallurgical expert relied on a chemist to conduct similar testing for the plaintiffs. The plaintiffs made the same objection to the sea spray testing, but their expert did not criticize the testing when given the opportunity to do so. Judge Cain found that the test was highly relevant and helpful to the fact finder for its demonstration that the Yamaha filter experienced only superficial deterioration (that was unlikely to impact the structure of the canister), and held that questions on the supervision of the experiment were “fodder for cross-examination.” The defendants moved to strike the opinions of forensic economist Randy Rice on the loss of earnings resulting from the death of Jeremy Eades because the opinions did not account for Eades’ personal consumption, the historical support his mother and children received from him, the ages of the children to majority, and the life expectancy of his mother. However, Rice was only offered to testify as to the total lost earnings of Eades, so his failure to account for the objections of the defendants did not affect the admissibility of his testimony and could be addressed by the defendants’ economist. Yamaha and Sea Fox moved to strike the testimony of Dr. William Vigilante, an expert on ergonomics/human factors, on the adequacy of warnings, but Judge Cain held that his reports and methods were sufficiently reliable to allow him to testify about the adequacy of the warnings and the foreseeability of misuse. The defendants objected to the characterization of Dr. Darrell Henderson, a plastic surgeon who treated the burn wounds of Gonzalez, Outlaw-Knight, and Eades, as a treating physician because he was hired after the accident, but Judge Cain denied the motion, and he also allowed Dr. Henderson to testify about the plaintiffs’ need for psychological treatment, the need for pulmonary consults, counseling needs, and complications of wounds and obstacles to return to the plaintiffs’ occupations, such as heat exposure and physical strain. Judge Cain rejected the argument that the life-care plan of Ruth Rimmer or the opinions of vocational rehabilitation expert Joyce Beckwith and economist John Theriot were insufficiently based on supporting medical evidence. As the defendants’ motion to exclude evidence of domestic violence or disciplinary actions related to Dennis Kleinpeter was unopposed by the plaintiffs, Judge Cain precluded mention at trial of claims of domestic violence or disciplinary actions relating to Kleinpeter, although Judge Cain declined to grant the defendants’ motion to exclude internet reviews of Dr. Richard R. Roniger as being too premature for the court to determine if the objection was warranted. Finally, as it was unopposed, Judge Cain ruled that the defendants could not argue that Gonzalez was at fault for dumping out gasoline from the water/fuel separator, but he declined to rule in a motion in limine that the defendants’ experts could not testify that Gonzalez was at fault for continuing to work on the boat after he smelled gasoline and that the defendants could not argue to the jury on the application of joint and several liability. See June 2022 Update.
Yamaha moved for summary judgment on the claims for strict liability, negligence, and failure to warn, arguing that the product warnings instructed that the user should check for leaks in the filters after every installation and engine start-up, but no such check was made. Judge Cain declined to grant summary judgment on this defense, however, concluding that the warnings failed to convey the risk of explosion should the instructions not be followed. Similarly, Judge Cain did not consider the danger to be open and obvious, and he declined to grant summary judgment on the failure to warn claim. Finally, Judge Cain declined to conclude as a matter of law that the plaintiffs were negligent or that there was no causation with respect to the product liability claims.
Billy D. Olivier was employed by Weatherford as an Operator/Roustabout to perform work in connection with the plugging and abandonment of Exxon Mobil’s Lena Platform. He claimed that his foot slid and his heel popped into an unmarked and uncovered hole in a skidbeam that was used as a walkway on the platform. He brought this suit against Exxon Mobil in federal court in Louisiana for negligence under Louisiana law (the law applicable under the Outer Continental Shelf Lands Act for the platform located on the outer Continental Shelf off the Louisiana coast). As the contract between Exxon Mobil and Weatherford provided that Weatherford was an independent contractor, Exxon Mobil filed a motion for summary judgment that it was not liable for the acts of the independent contractor, Weatherford. However, Chief Judge Dick reasoned that the independent contractor defense did not prevent direct liability claims against the platform owner for premises/custodial liability. Finding sufficient evidence to establish a fact question on the direct liability claims, Chief Judge Dick denied summary judgment to Exxon Mobil. Citing the opinion of Exxon Mobil’s retained medical expert, Olivier moved for summary judgment on medical causation. Based on the myriad cases holding that the question of medical causation should be decided by the jury (along with the evidence of Olivier’s treatment before the accident), Chief Judge Dick declined to grant summary judgment on medical causation. See July 2022 Update.
Olivier then filed a motion in limine, seeking a number of pre-trial evidentiary rulings. Of interest to the Update, he moved to exclude all references to entitlement to LHWCA benefits. Although Exxon responded that it did not intend to reference Olivier’s LHWCA benefits or claims, Chief Judge Dick ordered Exxon to redact all references to workers’ compensation claims/benefits in its exhibits.
Jerode Garner was injured on the M/V MARY JANE, which transported rocks in connection with the construction of breakwater jetties to protect Grand Isle, Louisiana. The captain of the vessel was a W-2 employee of Z.E. Services, and his salary and benefits were provided by that company. However, he was assigned to work on the vessel, owned by Pontchartrain Partners, pursuant to an agreement that the captain called a rent-a-captain arrangement. Garner brought this suit in federal court in Louisiana against both Z.E. Services and Pontchartrain Partners, and Z.E. Services moved for summary judgment on the basis that the captain was a borrowed servant of Pontchartrain Partners so that Pontchartrain Partners, and not Z.E. Services, was liable for the acts/omissions of the captain. Judge Lemmon considered the borrowed servant factors from the Fifth Circuit’s Ruiz case and held that Pontchartrain Partners exercised control over the captain’s work, that the work being performed was for Pontchartrain Partners, that there was an agreement under which the services were to be administered and approved by Pontchartrain Partners, that the captain agreed to the work arrangement requiring him to report to Pontchartrain Partners, that the captain’s employment was not terminated with Z.E. Services but he had little communication with Z.E. Services during the work, that the vessel and lodging were provided by Pontchartrain Partners, that the captain had worked for Pontchartrain Partners for three months, that Pontchartrain Partners had the right to terminate the captain’s work at the jobsite, and that Pontchartrain Partners ultimately paid for the captain’s services. As the factors supported borrowed servant status with Pontchartrain Partners, Judge Lemmon granted summary judgment to Z.E. Services. See July 2020 Update.
Pontchartrain Partners filed a notice for an interlocutory admiralty appeal under Section 1292(a)(3) and sought a stay of the matter pending resolution of the interlocutory appeal. Pontchartrain Partners argued that it was only required to show a substantial case on the merits in order to obtain the stay because it presented a serious legal question, but Judge Lemmon disagreed and held that it had to make a strong showing of a likelihood of success on the merits. She rejected the contention that the appeal presented a serious legal question, reasoning that her opinion involved a straightforward application of the Ruiz factors, resulting in the borrowed employee finding. Therefore, she declined to grant the stay.
Suits and limitation actions were filed after a collision on the Mississippi River in Plaquemines Parish, Louisiana. The M/V LA BELLE, a push boat owned by Caillou Island Towing, and the M/V HELEN, a towing vessel owned by Central Gulf Towing, were towing a 500-foot dredge pipe down the River when the dredge pipe collided with the DAVID G. SEHRT, a towing vessel owned by Ingram Barge that was pushing 18 empty barges up the River. Cecil Brashear, a seaman employed by Caillou Island on the LA BELLE, was injured, and there was damage to the vessels and dredge pipe. The vessel owners filed limitation actions, and asserted claims against each other; the owner of the dredge pipe filed a claim in the Ingram Barge limitation action; and Brashear filed suit in state court and then filed claims in the limitation actions. Brashear filed a motion to bifurcate the issues of exoneration and limitation from the issue of damages (the damages trial would include the allocation of fault), and Central Gulf and Ingram Barge responded that bifurcation could lead to inconsistent judgments, it would waste judicial resources, it was premature before an adjudication of limitation, and it did not contain stipulations from all claimants. Judge Fallon reasoned that the best way to economize and expedite the proceedings and to preserve the right of Brashear to seek a jury trial in state court on damages was to bifurcate the case to allow a trial on liability, limitation, and apportionment of fault. Despite Brashear’s objection, the first trial would include the allocation of fault as the alternate was inefficient. Judge Fallon rejected the argument that the claimants would have to file stipulations (required to lift the stay) as Brashear was not seeking to proceed in state court simultaneously with the limitation proceeding. The owners’ rights to limitation would be protected by trying limitation first and then freeing Brashear to seek damages in state court only if limitation were denied. See May 2022 Update.
Caillou Island Towing moved for summary judgment on Brashear’s claims of maintenance and cure, unseaworthiness, and negligence in connection with the injuries he allegedly sustained when he was violently knocked around in his bunk. Caillou Island Towing presented the report of its medical examiner, concluding that Brashear’s claimed injuries pre-existed the collision, and argued that the reports of Brashear’s post-collision treating physicians should be disregarded because Brashear allegedly concealed from his treating physicians reports of his pre-collision conditions. As the reports of the treating physicians were prepared without this “crucial information,” Caillou Island Towing argued that they were “moot” and that Brashear had no evidence of medical causation with respect to the collision. Judge Fallon did not consider it to be the province of the court to weigh the evidence on a motion for summary judgment (Judge Fallon also considered the motion to be premature before any expert depositions were taken). Accordingly, he denied the motion for summary judgment. See August 2022 Update.
Caillou Island Towing also responded to Brashear’s claims by asserting a counterclaim for fraud, including fraudulent concealment of his pre-collision treatment (treatment that occurred after his hiring) during the medical visits after the collision for conditions that Brashear claimed were the result of the collision. Brashear moved for summary judgment, arguing that a Jones Act employer cannot assert a claim for affirmative recovery against the seaman in a personal injury case. Judge Fallon noted that the Fifth Circuit held in Boudreaux v. Transocean that Jones Act employers could not call upon McCorpen to recoup from the seaman maintenance and cure payments that had already been paid to the seaman. The court held that the payments could only be used as an offset against the seaman’s damage award, not as an independent basis for affirmative recovery. Caillou Island Towing argued that McCorpen and Boudreaux only applied to fraud during the hiring process and that the fraud asserted by Caillou Island Towing occurred when Brashear concealed the medical treatment that he received after he was hired. However, Judge Fallon answered that it did not matter whether a McCorpen defense was applicable in this case. He reasoned that if Brashear did fabricate his claim that he was injured in service of the vessel, he would not be entitled to recover under the Jones Act and all he would have recovered is past maintenance and cure. That is the same result that would occur if McCorpen and Boudreaux applied. Caillou Island Towing would not have to pay any damage award and would be in no worse position than a Jones Act employer that can only offset past maintenance and cure payments from a damage award to a seaman. Although Caillou Island Towing contended that a different rule should apply to the fraud it asserted because McCorpen does not require that level of mens rea, Judge Fallon answered that the Fifth Circuit had stated that the requisite quantum of proof for a McCorpen defense is the same as in fraud claims. Caillou Island Towing also argued that the court should apply its decision in Withhart v. Otto Candies that the Jones Act did not bar an employer from suing its seaman-employee for property damage under a negligence theory. Judge Fallon recognized the tension between the precedents, but he noted that the property claim had been well-recognized in both FELA and Jones Act cases, and the extension to injury claims was without precedent. He was reluctant to open the floodgates of litigation to disgruntled vessel owners who take umbrage over being sued by their crew members. Finally, Judge Fallon reasoned that permitting the counterclaim would discourage seamen from pursuing their rights under the Jones Act and general maritime law, which would diminish the economic incentive of employers to encourage safe conditions on their vessels. Consequently, Judge Fallon declined the request for the court to exercise its extraordinary power to create a new right of action. Judge Fallon reached a different conclusion with respect to the fraud claim asserted by Central Gulf Towing, the owner of the HELEN. Central Gulf Towing brought counterclaims for fraud, intentional misrepresentation, and malicious prosecution. Judge Fallon agreed that the claims for fraud and intentional misrepresentation were not pleaded sufficiently for the heightened pleading standard in Rule 9, but he granted leave to Central Gulf Towing to replead them. As to the malicious prosecution claim, it was premature as long as Brashear’s injury claim was still proceeding.
Christopher Frederick claimed to have contracted COVID-19 on the offshore platform Thunder Horse that is owned and operated by BP Exploration. He brought this suit in federal court in Texas against BP Exploration, arguing that it failed to put in place precautions to protect the workers on the platform. BP Exploration moved for summary judgment on the ground that Frederick did not establish the standard of care, that BP Exploration did not breach the applicable standard of care, and that any breach did not cause his injury. Concluding that Frederick had not presented any evidence creating a fact issue on duty, breach, or causation, Magistrate Judge Edison recommended that the case be dismissed.
Michael Sims claimed that he contracted COVID-19 while serving as a crew member on the M/V ADDI BELLE. He brought this suit against his employer in federal court in Kentucky under the Jones Act and general maritime law, and the defendant asserted an affirmative defense under Alabama and Kentucky statutes affording immunity or limitations on liability for claims for injury or death arising from or related to COVID-19. Sims moved to strike the affirmative defense on the ground that application of the state statutes would destroy the uniformity of application of the Jones Act, and the employer answered that state law may supplement maritime law when there is no existing maritime rule which governs the plaintiff’s basis of liability. Judge Russell agreed with both parties that the Jones Act supersedes application of state law, but that state law may supplement maritime law if it does not directly contradict it. As the issue was raised at the stage of a motion to dismiss (where there is a disfavor of striking pleadings) and in light of the novelty of the COVID-19 pandemic and lack of precedent on the issue, Judge Russell declined to strike the defense at this time.
This case arises from a casualty on the Mississippi River in which the tanker AMERICAN LIBERTY lost power and allided with the cargo ship AFRICAN GRIFFON and two barges (injuring workers on one of the barges). The barges then broke loose and ultimately allided with Archer Daniels Midland’s elevator grain facility and vessels that were located at and near the ADM facility. The tanker was assisted by two tugs and by a pilot. The owners of three of the vessels filed limitation actions, and injury and property damage claims were filed in the limitation actions. Judge Fallon issued four decisions on the merits on May 14, 2021. Marathon Petroleum, time charterer of the AMERICAN LIBERTY, moved for summary judgment that, as the time charterer, it had no responsibility for the navigation of the vessel. Judge Fallon denied the motion as Marathon was time charterer, owner of the dock from which the vessel had just departed, and owner of the destination dock in Tampa, Florida. There were questions of fact on the role Marathon may have played in the departure of the vessel from the dock at nighttime in high river stages and on Marathon’s authority over the crew and to collect penalties for increased fuel consumption and late departures/arrivals. The owner and operator of the AMERICAN LIBERTY sought to dismiss the unseaworthiness claims of injured workers who were not crew members on the AMERICAN LIBERTY. As the non-crew do not have unseaworthiness claims, Judge Fallon dismissed those claims and held that the workers must prove negligence. The owners of the two Bisso tugs that were assisting the AMERICAN LIBERTY as it departed the dock sought summary judgment based on the testimony of the federally licensed pilot on the AMERICAN LIBERTY, who testified that the tugs complied with all of his orders. However, Judge Fallon ruled that the pilot’s testimony was insufficient to establish as a matter of law that the tugs had satisfied their duty of care, although he cautioned that the claimants faced a “significant hurdle” in proving independent negligence on the tugs. Finally, Judge Fallon addressed claims involving the crane barge DON D, which was tied off to another vessel and broke free when the vessels were struck by the AMERICAN LIBERTY. Associated Terminals, which claimed to be the operator of the crane barge, sought summary judgment on the claims of its crew, who argued that the operator of the crane barge failed to train the crew on how to safely evacuate the vessel, failed to provide the crew with a reasonably safe means to evacuate the vessel, and failed to position the crane in such a way that the crew could see inbound traffic, in violation of the Inland Navigational Rules. Judge Fallon held that there were fact questions on these theories that required a trial to resolve. However, Judge Fallon did grant summary judgment to the operator of the crane barge for property damage to the ADM facility as there was no evidence that the negligence of the operator caused the allision or the vessel to break free. Judge Fallon also denied the claimants’ motion for summary judgment (seeking to dismiss the limitation action brought by the operator of the crane barge for lack of status as owner pro hac vice) as Judge Fallon ruled that Associated presented sufficient evidence of its exclusive control over the vessel. (See June 2021 Update). Judge Fallon bifurcated the case into two phases. The first phase included liability, limitation, and allocation of fault. That trial was held in May, and Judge Fallon issued his findings of fact and conclusions of law on June 25, 2021. A second trial will address damages. As the AMERICAN LIBERTY was a moving vessel, Judge Fallon applied the presumption of fault set forth in THE OREGON Rule. He also applied the presumption of causation from THE PENNSYLVANIA Rule for violation of Coast Guard regulations. However, Judge Fallon found, independent of the presumptions, that the captain and crew of the tanker were negligent, causing the allisions. As the failures attributable to the tanker began with the shoreside management of the owner and operator, Judge Fallon held that the tanker was not entitled to limitation of liability. In contrast, Judge Fallon held that there was no evidence that the assisting tugs failed to obey all orders or were otherwise negligent, and he exonerated them from liability. After the trial, the injured workers on the crane barge that was struck by the tanker filed stipulations seeking to try the liability of the crane barge in a state suit under the saving-to-suitors clause. However, the workers were not the only party to file a claim against the crane barge, and Judge Fallon denied their motion to lift the stay in the limitation action filed by the crane barge as being too late and not involving all claimants. As the workers failed to introduce evidence of the fault of the crane barge, Judge Fallon exonerated the crane barge. The tanker brought a third-party complaint against its pilot for gross negligence and argued that his gross negligence was not attributable to the vessel or its owner and operator. Judge Fallon held, however, that the pilot’s actions did not rise to the level of gross negligence and, because the pilot’s actions were informed by the failures of the captain and the crew, the pilot’s actions and inactions would be attributed to the tanker in rem and to its owner and operator in personam. Although Judge Fallon had held that there was enough evidence to permit a trial against Marathon, as time charterer of the tanker, for its role in the departure of the vessel, Judge Fallon held that the evidence at trial did not establish that Marathon exceeded the bounds of a traditional time charterer and he therefore held that Marathon was not a fault. Finally, Judge Fallon held that, as Marathon was not found at fault, it was entitled to indemnity from the owner of the tanker pursuant to the terms of the charter party. See July 2021 Update.
On May 20, 2022, the Fifth Circuit affirmed Judge Fallon’s findings on both liability and limitation, concluding that there was no clear error in his “well-reasoned” opinion. See June 2022 Update. With the liability issues in the rear-view mirror, Judge Fallon is now proceeding to the trial on damages. ADM submitted a report by its agricultural commodities economist, and the AMERICAN LIBERTY interests responded with the expert report in the same field. ADM then submitted a second report that it styled as a rebuttal report, and the AMERICAN LIBERTY interests objected that it was not a rebuttal report and should be stricken. Judge Fallon disagreed, noting that the rebuttal report purported to rebut the methodology and conclusions on the economic damages sustained by ADM. It also addressed the critiques in the AMERICAN LIBERTY expert report of the ADM report. Judge Fallon declined to grant leave to the AMERICAN LIBERTY interests to submit a sur-rebuttal report, finding no support in the rules for a sur-rebuttal report and reasoning that there had to be an end to the rebuttals.
Timothy M. Murray, a professional sea pilot, died after falling from a pilot ladder on the side of the EAGLE TURIN seven miles from shore. His widow brought this suit in federal court in New York, alleging causes of action under state law and maritime law (based on diversity) as well as under admiralty jurisdiction and the Death on the High Seas Act. The vessel defendants moved to dismiss the complaint, which led Judge Reif to address the question whether the claim was subject to DOHSA or whether it occurred in New York waters. After setting forth a comprehensive history of DOHSA and its amendments, Judge Reif concluded that DOHSA’s application begins at 3 miles and that DOHSA applied to this suit. He also rejected the argument that DOHSA did not apply because New York claimed territorial waters up to 12 miles. As DOHSA preempted the state and maritime claims alleged by the plaintiff, Judge Reif concluded that the pleadings would have to be repleaded to assert claims under DOHSA and for the in rem claim against the vessel. Finally, as the proper pleadings were for the in rem and DOHSA claims, Judge Reif struck the plaintiff’s jury demand. [The author of this detailed analysis of maritime law and statute is sitting by designation from the United States Court of International Trade].
From the state courts . . .
Diogenes Carpio served as second officer on the cruise ship NORWEGIAN BREAKAWAY. While working on the vessel in navigable waters around Bermuda, he was assigned to participate in lifeboat/rescue drills. He entered a rescue boat on Deck 7 of the vessel, and a wire on the davit supporting the boat snapped, causing the boat to fall to the water, killing Carpio. Carpio’s widow brought this suit in Florida state court against the German manufacturer and seller of the davit, Davit DE, and its United States subsidiary, Davit US. Carpio’s complaint asserted claims for strict liability and breach of warranty against Davit DE, which manufactured and sold the davit to the cruise line and which provided after-sales support that included annual and periodic inspections of the davit. Davit DE moved to dismiss the suit for lack of personal jurisdiction, and the district court denied the motion. Davit DE appealed, and Judge Bokor, writing for the court of appeal, first considered whether there was general jurisdiction. As Carpio failed to allege that Davit DE engaged in business activities in Florida, and as the presence of its subsidiary in Florida was insufficient to subject it to general jurisdiction, Judge Bokor held that the court lacked general jurisdiction over Davit DE. As to specific jurisdiction, the davit was manufactured in Germany, and its maintenance and inspection occurred in New York and at sea. Caprio argued that her husband was a third-party beneficiary of an inspection contract entered into between Davit DE and the cruise line in Florida. However, Judge Bokor answered that the connexity to Florida must relate to a tort that allegedly occurred in Florida. As the manufacture, inspection, and accident did not occur in Florida, the court lacked specific jurisdiction, and the denial of the motion to dismiss was reversed.
Kenneth G. Engerrand
President, Brown Sims, P.C.
Houston
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Tenth Floor
Houston, TX 77027
O 713.629.1580
New Orleans
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39th Floor
New Orleans, LA 70163
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Gulfport
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Miami
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O 305.274.5507
Quote:
A Perfect Storm
The skies unrest when the government tests performance-based solicitations,
A wary dredger would fare far better if it worked with fewer hesitations,
Fighting the elements, with debris and sediments, onward the task did drag,
Before they knew it, the fish window, they blew it, so up they raised the white flag,
Motions were filed, allegations compiled, but material facts are disputed,
To trial we go so the parties may show if this perfect storm has concluded.
Judge Ryan T. Holte, Marine Industrial Construction, LLC v. United States, 158 Fed. Cl. 158, (Ct. Fed. Cl. 2022) (as a tribute to Judge Loren A. Smith and his maritime poem published in Neal & Co. v. United States).
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© Kenneth G. Engerrand, July 29, 2022; redistribution permitted with proper attribution.
