May 2024 Longshore/Maritime Update (No. 300)
Happy Anniversary
This is the 300th monthly Update and the 25th Anniversary of the beginning of the Update by Tom Langan.
Notes from your Updater:
On March 27, 2024, Judge Padin of the United States District Court for the District of New Jersey ruled that a Letter of Understanding between the International Union of Operating Engineers Local 825 and the International Longshoremen’s Association Locals 1233, 1235, and 1804-1 with respect to the hiring of Local 825 to install two container cranes at the Port Newark Container Terminal was not, by itself, a contract that would support a claim for breach of contract when the ILA Locals threatened to strike or stop work at Port Newark unless the Local 825 workers were removed from the project and ILA workers were allowed to perform Local 825’s work at the project. Judge Padin gave leave to Local 825 to file an amended complaint to identify the source of the ILA Locals’ obligations and what circumstances or provisions set forth the mutual obligations of the parties. See International Union of Operating Engineers, Local 825 v. International Longshoremen’s Association Local 1233, No. 23-cv-3689, 2024 U.S. Dist. LEXIS 55444 (D.N.J. Mar. 27, 2024).
On April 1, 2024, the Centers for Medicare & Medicaid Services issued the latest Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA) Reference Guide:
On April 3, 2024, the Appeals Court of Massachusetts affirmed the decisions of the Massachusetts Commission Against Discrimination and a superior court judge that the International Longshoremen[‘s] Association, Local 1413-1465, which ran the hiring process through which workers were selected for available positions at the Port of New Bedford, Massachusetts, discriminated against April Robar on the basis of her sex when she was passed over for work as a forklift operator in favor of men who were less qualified and, unlike Ms. Robar, lacked a mandatory qualification for the position. See International Longshoremen Association, Local 1413-1465 v. Massachusetts Commission Against Discrimination, No. 23-P-83, 104 Mass. App. Ct. 28, 2024 Mass. App. LEXIS 52 (Mass. App. Apr. 3, 2024) (Milkey).
On April 4, 2024, the Fifth Circuit rejected a challenge to the approval by the United States Maritime Administration of the license to construct and operate the Sea Port Oil Terminal off the Texas coast (it has been billed as “the largest deepwater terminal of its kind,” which could when operating at total capacity, “store and export 18% of total U.S. oil production annually”). See Citizens for Clean Air and Clean Water in Brazoria County v. U.S. Department of Transportation, No. 23-60027, 2024 U.S. App. LEXIS 8125 (5th Cir. Apr. 4, 2024) (Douglas).
On April 10, 2024, Justice Gordon of the Massachusetts Superior Court at Suffolk rejected the challenge of purchasers of property within the East Boston Designated Port Area to the boundaries of the Designated Port Area and the inclusion of their property. See 266 Border LLC v. Office of Coastal Zone Management, Nos. 2384CV00149-C, 2384CV00168-C, 2384CV00177-C, 2384CV00194-C, 2024 Mass. Super. LEXIS 32 (Mass. Super. Ct. (Suffolk) Apr. 10, 2024).
On April 11, 2024, the Fifth Circuit affirmed the denial of the claim of race-based discrimination brought by Dominic J. Ross against Ceres Gulf in connection with Ross’ work in Ceres Gulf’s maintenance shop at the Port of New Orleans. The district court had previously dismissed ILA Local No. 2036 and Ports America. See Ross v. Ceres Gulf, Inc., No. 23-30657, 2024 U.S. App. LEXIS 8800 (5th Cir. Apr. 11, 2024) (per curiam).
On April 12, 2024, the Supreme Court unanimously held that a transportation worker need not work in the transportation industry in order to fall within the exemption in Section 1 of the Federal Arbitration Act. The case involved franchisees who distributed products for Flowers Foods (such as Wonder Bread) and were engaged in delivery, advertising, promotion, and maintenance of inventory. They brought suit against Flowers, alleging underpayment under their agreements, and Flowers moved to compel arbitration under the FAA. The distributors asserted that they fell within the exemption in the FAA for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Writing for the court, Chief Justice Roberts held that a transportation worker need not work in the transportation industry to fall within the exemption. The Court remanded the case to determine whether the distributors were transportation workers and whether they were engaged in foreign or interstate commerce because they delivered baked goods only in Connecticut. See Bissonnette v. LePage Bakeries Park St. LLC, No. 23-51, 2024 U.S. LEXIS 1576 (U.S. Apr. 12, 2024).
On April 17, 2024, the Fifth Circuit affirmed the determination of Judge Hanen of the United States District Court for the Southern District of Texas (adopting the recommendation of Magistrate Judge Sheldon), rejecting the challenge of a competitor of Curtin Maritime to the decision of the Coast Guard granting a coastwise endorsement to Curtin Maritime so that its dredge DB AVALON could operate in United States waters, despite the fact that the dredge incorporated foreign-made spuds and a crane. See Diamond Services Corp. v. Curtin Maritime Corp., No. 23-20018, 2024 U.S. App. LEXIS 9318 (5th Cir. Apr. 17, 2024) (Duncan). Thanks to Michael F. Sturley, Fannie Coplin Regents Chair at the University of Texas School of Law, for bringing this decision to our attention.
In our December 2023 Update, we reported that a federal jury in California convicted Captain Jerry Boylan of violating the Seaman’s Manslaughter Statute in connection with the deaths of 33 passengers and a crew member who were trapped on the dive boat CONCEPTION in 2019 after a fire broke out on the vessel near Santa Cruz Island in the Pacific Ocean. See United States v. Boylan, No. 2:22-cr-482 (C.D. Cal.). On April 19, 2024, Judge Wu issued his tentative ruling (D.E. 421), denying Boylan’s motions for new trial, and on April 22, 2024, he adopted his tentative ruling as his final ruling.
On April 24, 2024, the First Circuit affirmed the decision of Judge Talwani of the United States District Court for the District of Massachusetts, rejecting the challenge of Nantucket residents to the construction of Vineyard Wind, a wind power project off the coast of Massachusetts in which Nantucket Residents Against Turbines claimed that federal agencies violated the Endangered Species Act by concluding that the construction likely would not jeopardize the critically endangered North Atlantic right whale and that the Bureau of Ocean Energy Management violated the National Environmental Policy Act. See Nantucket Residents against Turbines v. U.S. Bureau of Ocean Energy Management, No. 23-1501, 2024 U.S. App. LEXIS 9897 (1st Cir. Apr. 24, 2024) (Kayatta). The next day, April 25, 2024, the First Circuit rejected another objection from residents of Martha’s Vineyard and Nantucket, in this appeal challenging the National Marine Fisheries Service’s issuance of an Incidental Harassment Authorization to the project’s director that was necessary to construct the wind power project. See Allco Renewable Energy, Ltd. v. Coit, No. 23-1736, 2024 U.S. App. LEXIS 10079 (1st Cir. Apr. 25, 2024) (Kayatta).
On the LHWCA Front . . .
From the federal appellate courts
Aries Marine owned the liftboat RAM XVIII, which was sent to house workers who were working on a platform in the West Delta region of the outer Continental Shelf off the coast of Louisiana (the workers were employed by Fluid Crane and United Fire). The vessel jacked up, and a construction crew worked until the next day when the vessel began to list and sank. Aries filed a limitation action in federal court in Louisiana, and seven workers on the rig filed claims against Aries under Section 5(b) of the LHWCA. Aries moved for summary judgment that it was entitled to exoneration of liability or, alternatively, limitation of liability. Judge Africk found a fact dispute whether the captain of the liftboat performed a preload before jacking up to ensure that the leg pads for the vessel were on stable ground and would not punch through the seabed. If the preload was not performed, Judge Africk concluded that the failure would constitute negligence under the vessel’s active control, in violation of the duty enunciated by the Supreme Court in the Scindia case. Turning to the limitation issue, Judge Africk noted that with respect to seagoing vessels, the privity or knowledge of the master at or before the beginning of the voyage is imputed to the owner. Aries did not dispute that the liftboat was a seagoing vessel (the accident did occur on the outer Continental Shelf more than 12 nautical miles from the coast). Thus, to the extent there was negligence of the captain before the voyage, it would be imputed to the owner. Judge Africk also cited evidence that the owner allegedly provided an unqualified captain whom it had failed to adequately train, and he declined to grant summary judgment as to limitation of liability. The vessel owner also moved to dismiss the punitive damage claims brought against it under Section 5(b) of the LHWCA on the ground that punitive damages are only recoverable against a third-party tortfeasor by a longshore worker who is injured in state territorial waters (and for lack of evidence of willful and wanton conduct). Judge Africk noted that the Fifth Circuit has not decided the question of whether punitive damages may be recoverable under Section 5(b), and he declined to grant summary judgment on the punitive damage claim. See February 2023 Update.
Fugro USA was hired to assist in positioning the liftboat by providing GPS positioning and performing a sonar scan for debris or obstructions on the sea floor. It provided plats that showed where prior vessels had been placed in the area, but the images Fugro provided only showed the impressions left by vessels that Fugro had helped to position. Therefore, it was possible that there were holes and impressions in the area that were not reflected in the data provided by Fugro to Aries. Fugro moved for summary judgment on the negligence claims asserted against it, noting that the claimants had placed the blame for the listing of the liftboat on Aries’ captain’s failure to conduct a preload (or on the conducting of an improper preload). In response to Fugro’s motion for summary judgment, the claimants argued that Fugro owed them a duty to advise the captain that there could be additional can holes in the area, that there were dark spots on the sonar images that might be additional can holes, and to exercise stop work authority when one leg of the liftboat penetrated deeper than had been expected. Judge Africk assumed for the motion that Fugro had a duty, but he could not find causation for any of the alleged failures because, ultimately, the accident occurred because, as the claimants alleged, the captain failed to properly preload the vessel. The claimants’ expert confirmed that when the failure of the vessel occurs after the preloading, the preload was not adequate. As the preloading was not the responsibility of Fugro, Judge Africk dismissed the claims against Fugro.
Fieldwood, the owner of the platform, chartered the liftboat to provide worker housing in support of operations taking place on its platform. Fieldwood moved for summary judgment on the ground that, as the time charterer, it had no control over the vessel and assumed no liability for the negligence of the crew. Judge Africk noted that time charterers owe a “hybrid duty” arising from contract and tort to avoid negligent actions within the sphere of activity over which they exercise at least partial control. He added that a time charterer may be liable for directing the vessel to encounter natural hazards, such as dangerous weather or sea conditions. The claimants argued that Fieldwood was negligent by directing the liftboat to be positioned on the east side of the platform when it knew the conditions were hazardous and by limiting the scope of the marine surveyor (Fugro) to not include geo-technical data. As the claimants’ expert opined that it was likely that either soil samples existed for the location or that penetrations were known by Fieldwood, which, if credited, would permit a finding that Fieldwood had notice of the hazardous conditions and contributed to the failure, Judge Africk denied summary judgment to Fieldwood.
Judge Africk then considered the contracts between the parties for their indemnity obligations. Fieldwood entered into Master Service Contracts with both Fluid Crane and United Fire (employers of the claimants) by which Fluid Crane and United Fire agreed to indemnify Fieldwood for injuries to employees of Fluid Crane and United Fire. The indemnity extended to Fieldwood’s contractors (such as Fugro and Aries) if they entered into contracts with Fieldwood to extend indemnity (for injuries to their employees) to subcontractors of Fieldwood (such as Fluid Crane and United Fire). Fieldwood and Fugro entered into a Master Service Contract by which Fugro agreed to provide similar indemnity to Fieldwood and its contractors. Likewise, Fieldwood and Aries entered into a Master Service Contract by which Aries agreed to provide similar indemnity to Fieldwood and its contractors. Therefore, the contracts between Fieldwood, on the one hand, and Aries, Fugro, Fluid Crane, and United Fire contained provisions by which each party agreed to indemnify the others for injuries to its own employees. Consequently, Fluid Crane and United Fire were obligated to indemnify Fieldwood, Aries, and Fugro for the claims brought by the employees of Fluid Crane and United Fire if the indemnity provisions were valid under applicable law. The validity question required a determination of whether Louisiana law or maritime law applied. If maritime law applied, the agreements were valid. If Louisiana law applied, the indemnity was invalidated by the Louisiana Oilfield Indemnity Act. Judge Africk applied the requirement from the Fifth Circuit’s Doiron case (whether the contract provided or the parties expected that a vessel would play a substantial role in the performance of the contract) to determine whether the contracts were maritime or not. The contracts at issue were the contracts between Fieldwood and Fluid Crane and United Fire to perform work on Fieldwood’s platform. Although Aries and Fugro were involved with the role of the liftboat, that expectation was not relevant to the contracts between Fieldwood and Fluid Crane and United Fire. Judge Africk distinguished cases in which the contract documents provided for the use of a vessel. In this case, “Aries and Fugro may have expected the vessel to play a substantial role in the completion of the work, but the same cannot be said of Fluid Crane and United Fire.” Therefore, Judge Africk concluded that Louisiana law applied, and he denied indemnity from Fluid Crane and United Fire to Aries and Fugro. He did not, however, hold that the LOIA invalidated the requirement for payment of defense costs when the indemnitee was found to be free from fault. Thus, if Aries were ultimately found free from fault, it would be entitled to reimbursement of its defense costs. Judge Africk had granted summary judgment on liability in favor of Fugro, so Fugro was entitled to recover its defense costs. Fluid Crane requested that Judge Africk order the defense costs be split evenly between Fluid Crane and United Fire, despite the fact that only one of the seven claimants was an employee of United Fire. Judge Africk agreed that, under Louisiana law, the defense obligation was incapable of division. Therefore, he ordered that the defense obligation be divided in equal portions between Fluid Crane and United Fire. See March 2023 Update).
One of the workers employed by Fluid Crane, Gilberto Gomez Rozas, was an undocumented immigrant who was not authorized to work in the United States. During his deposition and in discovery, Rozas repeatedly invoked the protection against self-incrimination in the Fifth Amendment, refusing to answer questions related to his citizenship and personal history. Aries argued that his claim should be dismissed with prejudice because Rozas had perpetrated a fraud on the court (and to deter future parties from similar conduct). In the alternative, Aries sought a sanction that Rozas be precluded from recovering past and future lost earnings at United States’ wage rates. Judge Africk noted that the party invoking the Fifth Amendment cannot hope to gain an unequal advantage against the party he has chosen to sue and that the defendant should not be required to defend against a party who refuses to reveal the very information that might absolve the defendant of liability. Thus, the Fifth Circuit has enunciated a balancing test that dismissal is appropriate only when less burdensome remedies would be an ineffective means of preventing unfairness to the defendant. In this case, Rozas did not commit perjury or provide false documents, but his invocation of the Fifth Amendment during depositions and discovery impeded Aries’ ability to investigate the claim for damages. Consequently, Judge Africk decided that the lesser sanction of precluding Rozas from seeking future wage loss awards at United States’ rates was the appropriate sanction. With respect to past wage loss, Rozas testified that he had not been working, and it had been four years since he prepared tax returns. The parties did not brief the issue of extending the sanction to past wage losses, so Judge Africk did not address the issue of past wage losses at this time. See April 2023 Update.
Aries moved for reconsideration of the decision on the contractual allocations involving Aries, Fugro Marine, United Fire, and Fluid Crane that was discussed in the March 2023 Update. Aries, Fugro, United Fire, and Fluid Crane were parties to contracts with Fieldwood that contained indemnity provisions that were enforceable under the general maritime law but that were unenforceable under Louisiana law. Applying the Fifth Circuit’s Doiron test, Judge Africk held that the contracts with United Fire and Fluid Crane were not maritime because there was no evidence that United Fire and Fluid Crane expected the vessel RAM XVIII would play a substantial role in the completion of the contract. Aries asked Judge Africk to reconsider that decision, arguing that Judge Africk erred by not considering Fieldwood’s expectations as to the use of the RAM XVIII. Judge Africk agreed that the expectations of Fieldwood were relevant (as it was a party to each of the contracts), but he answered that Aries did not cite any authority that the expectations of one party could establish that the parties expected that a vessel would play a substantial role. Thus, further discussion of Fieldwood’s expectations would not have changed the court’s analysis. Aries also argued that Judge Africk had added a third prong to the Doiron test—”did the vessel in fact play a substantial role in the completion of the contract?” Judge Africk disagreed, stating that the decision was based on the expectations of the parties and not on the use of the vessel (he noted that the actual use was only relevant, according to Doiron, when the parties’ expectations were unclear). Consequently, Judge Africk denied Aries’ motion for reconsideration. See June 2023 Update.
United Fire also sought reconsideration of Judge Africk’s decision to divide the defense costs equally between United Fire and Fluid Crane despite the fact that six of the seven claimants were employees of Fluid Crane and only one was an employee of United Fire. United Fire cited an opinion from Judge Vance of the United States District Court for the Eastern District of Louisiana that, absent a clear agreement to the contrary, insurers who owe a co-equal duty to defend must share the cost equally. However, United Fire did not identify any portion of the contracts that constituted a “clear agreement” to share defense costs in an unequal proportion, so Judge Africk held that relief was not available for arguments that had been previously considered and rejected (Judge Africk was not impressed with the analogy to seven individuals who had dinner together and split the bill for the appetizer so that each paid 6/7 of the cost, reasoning that defense costs “cannot be divided amount the claimants in the same manner that an appetizer would be shared among diners”).
As Fluid Crane and United Fire were the employers of the workers who were injured when the RAM XVIII capsized in the Gulf of Mexico, their LHWCA carriers (American Longshore Mutual Association and the Louisiana Workers’ Compensation Corp.) paid benefits under the LHWCA for their injuries. ALMA and LWCC then brought subrogation claims to recover the benefits paid from the defendants. Fieldwood, Aries, and the plaintiffs moved for summary judgment, arguing that ALMA and LWCC had agreed to waive their rights of subrogation pursuant to the terms of the Master Services Contracts between Fieldwood and Fluid Crane and United Fire. Judge Africk noted that the policies provided for waiver of subrogation when required by written contract, so he considered the requirements of the underlying contracts. The waiver in the MSCs extended to the “Company Group,” which was defined to include Fieldwood and its “invitees.” ALMA and LWCC argued, however, that Aries and the plaintiffs also fell under the definition of “third Party Contractor Group,” which would render the language of the indemnity and insurance sections of the contracts superfluous because all parties and contractors/subcontractors would be members of the Company Group. Fieldwood answered that there was no prohibition against an invitee satisfying another definition in the contract and that this interpretation would not lead to circular indemnity or absurd results. Therefore, Judge Africk addressed whether Aries and the claimants were, in fact, invitees, citing Louisiana law that defines an invitee as a person who goes onto premises with the expressed or implied invitation of the occupant on business of the occupant or for their mutual advantage. Fieldwood argued that it was the occupant of the platform (one who has possessory rights in, or control over, certain property or premises) and the RAM XVII (a time charterer is an occupant of the vessel because the vessel is under the ultimate direction, control, and command of the time charterer). It also argued that Fluid Crane and United Fire were invited by Fieldwood to the platform to work by their contracts and that they, and their employees, who performed the work that benefited Fieldwood, were, therefore, invitees. Judge Africk agreed that the employees of Fluid Crane and United Fire were invitees of Fieldwood and that LWCC and ALMA were required to waive subrogation in favor of the claimants. With respect to Aries, Fieldwood argued that the RAM XVIII, owned by Aries, was invited to erect itself within the boundaries of Fieldwood’s mineral lease to assist in the platform work, so Aries qualified as an invitee. Although Aries argued that no employee of Aries ever stepped foot on the platform, it did not dispute that the vessel was attached to the platform via a walkway and that its presence benefitted Fieldwood. Having concluded that Aries and the workers were invitees so that subrogation was waived, Judge Africk considered the validity of the waiver under Louisiana state law, which he had previously held was applicable to the contracts so as to invalidate the indemnity provisions. Citing the Fontenot decision from the Louisiana Supreme Court, Judge Africk noted that a waiver of subrogation provision does not violate the Louisiana Oilfield Indemnity Act if the contract does not also require indemnity. As there was unenforceable indemnity in this case, Judge Africk held that the statute did not void the waiver of subrogation (there was no evidence of payment for a “Marcel” Endorsement that would create an exception to the LOIA). Consequently, the subrogation claims of ALMA and LWCC were dismissed. See July 2023 Update.
ALMA and LWCC filed motions for reconsideration of the granting of Fieldwood’s motion for summary judgment on their subrogation claims as LHWCA carriers. LWCC argued that, notwithstanding the waiver of subrogation, it had a claim for an offset, pursuant to Section 33(f) for the net tort recovery of plaintiff Glenn Gibson. Fieldwood did not disagree with the legal proposition asserted by LWCC, but it argued that LWCC had insufficiently raised the argument in a single paragraph in its opposition with citation to facts or legal authority, resulting in waiver of the contention. Judge Africk agreed that “LWCC’s briefing on this issue was less than clear;” however, he acknowledged that dismissal of the claim for an offset would be “legal error.” Therefore, he amended the granting of summary judgment to reflect that the order did not affect LWCC’s claim for an offset pursuant to Section 33(f). ALMA moved for reconsideration that it was not conclusively established that the vessel was attached to the platform via a walkway and that Aries did not meet the definition of an “invitee” under applicable precedent. Judge Africk, however, did not believe that the arguments were sufficient to grant reconsideration, and he denied them. Like LWCC, ALMA argued that it retained the right to claim an offset pursuant to Section 33(f). Fieldwood reiterated the argument that ALMA’s claim was waived, but, as Fieldwood did not contest the legal basis for the argument, Judge Africk granted the same relief to ALMA, that it retained the right to assert an offset against the LHWCA claim pursuant to section 33(f). See September 2023 Update.
ALMA appealed the dismissal of its intervention to the Fifth Circuit, presenting these issues:
- Whether Aries Marine is an “invitee” of Fieldwood within the definition of the “Company Group” in the applicable Master Services Contract when there is a genuine issue of material fact as to whether Aries Marine physically entered a premises controlled by Fieldwood?
- Whether the Fluid Crane Claimants qualify as “invitees” of Fieldwoodwithin the definition of “Company Group” in the applicable Master ServicesContract despite also qualifying as members of the “Contractor Group”?
- Whether the applicable Master Services Contract and ALMA insurance policy included an obligation on the part of Fluid Crane (Employer) and ALMA (Insurer) to waive subrogation in favor of Fieldwood, Aries Marine, and the Fluid Crane Claimants?
- Whether the Louisiana Oilfield Indemnity Act invalidates any purported waiver of subrogation in favor of the Fieldwood Group?
After hearing oral argument, the Fifth Circuit affirmed (without a written opinion) Judge Africk’s decision that the waiver of subrogation was not invalidated.
From the federal district courts
Rolando Lopez was employed by Quality Construction as a rigger to perform work on a Talos Energy platform that was located on the outer Continental Shelf of the Gulf of Mexico, offshore Louisiana. He ate and slept on the M/V ISABELLA ROSE, and he slipped and fell on the vessel while walking to the mess hall. Lopez brought this suit in Louisiana state court against his employer, Quality Construction, and the charterer of the ISABELLA ROSE, C&G Boats, asserting that he was a Jones Act seaman. Quality Construction removed the case to federal court in Louisiana, arguing that Lopez was covered under the LHWCA, as an extension of the Outer Continental Shelf Lands Act, and was not a seaman, and asserting that there was federal jurisdiction under the OCSLA. Lopez argued that the court did not have jurisdiction under the OCSLA because he was off duty at the time of the incident. Magistrate Judge Wilder-Doomes rejected the argument, and Judge Jackson agreed. He cited the Supreme Court’s decision in Valladolid in which the Court held that the OCSLA applied when the employee’s injury occurred as the result of extractive operations conducted on the OCS. In this case, Lopez “was engaged in offshore operations that qualify for OCSLA jurisdiction, and his injury on a vessel attached to an offshore platform occurred ‘as a result’ of those operations.” As Lopez would not have been injured but for his employment to work on the platform to which his vessel was moored, Judge Jackson agreed that the case fell within the scope of the OCSLA and removal was proper. Judge Jackson then addressed the motion of the owner of the M/V ISABELLA ROSE for summary judgment on Lopez’s Jones Act claim against the vessel owner based on the evidence that Lopez performed his work almost exclusively on fixed platforms. Lopez responded that the court should remand the case instead of ruling on the merits, but Judge Jackson granted summary judgment, dismissing the Jones Act claim, as Lopez failed to contest the substance of the argument presented by the owner.
Anthony Ditcharo asserted that he developed mesothelioma from exposure to asbestos while working for Avondale Shipyard, Union Pacific Railroad, and a host of other employers, and he brought this suit in Louisiana state court. After Ditcharo passed away, his surviving spouse and adult children were substituted as plaintiffs. Claiming that Ditcharo’s exposure with Avondale was in connection with contracts to construct and repair Navy vessels, Avondale removed the suit to federal court based on the Federal Officer Removal Statute. The beneficiaries responded that Avondale was not acting under a federal officer and that the case should be remanded to state court. Alternatively, the beneficiaries argued that the claims against Union Pacific were brought under the Federal Employers’ Liability Act, were non-removable, and should be remanded. The beneficiaries argued that the Eleventh Circuit had held that the Federal Officer Removal Statute did not permit removal by former federal officers, but Judge Fallon disagreed, noting that the Fifth Circuit had previously applied the statute in factually similar circumstances. He answered that Avondale’s contract with the Navy satisfied its burden. Judge Fallon then considered whether Avondale had raised a colorable federal defense, and he cited the evidence that the Navy required Avondale to utilize asbestos-containing materials and that it complied with Government specifications on utilizing asbestos-containing products, which has been considered sufficient by the Fifth Circuit. Thus, there was sufficient evidence for a Boyle defense, and Judge Fallon did not have to decide if Avondale raised a colorable Yearsley defense. As Avondale properly removed the case, Judge Fallon held that the court had supplemental jurisdiction over all the other related claims. He then addressed the argument that the FELA claim against Union Pacific should be remanded because FELA claims are not removable. Judge Fallon noted that Judge Barbier had held that a Jones Act claim was removable under the Federal Officer Removal Statute in Hutchins v. Anco Insulations (see July 2021 Update). Judge Barbier considered the competing considerations and held that the non-removability of Jones Act cases “must give way” to the Federal Officer Removal Statute. Applying the same analysis that Judge Barbier used in the Jones Act case, Judge Fallon held that the “Court’s supplemental jurisdiction encompasses Plaintiffs’ FELA claims, though they would otherwise be non-removable.”
Paul Hotard was allegedly exposed to asbestos while working at Avondale’s shipyard from 1969 to 1970 as a tack welder. Before he died from mesothelioma, he brought this suit against Avondale and several asbestos suppliers in state court in Orleans Parish, Louisiana. Avondale removed the case to federal court based on diversity, and Hotard’s widow substituted for Hotard after he died. In 2022, Chief Judge Brown granted the motion for summary judgment filed by/joined by Avondale and its insurers, arguing that the state-law claims against Avondale were barred by the post-1972 LHWCA, which provided the exclusive remedy against Avondale (and its insurers). After Chief Judge Brown recused herself and the Fifth Circuit issued its decision in Barrosse (see July 2023 Update), holding that the shipyard workers’ claims under Louisiana state law were not preempted by the LHWCA because his injury occurred prior to Louisiana’s 1975 workers compensation statute, some of the defendants (SeaRiver Maritime and Exxon Mobil) moved for leave to bring cross-claims and third-party claims against Avondale, Hopeman Brothers, and Liberty Mutual (insurer of Hopeman Brothers) that were denied before Barrosse. Citing the change in law, Judge Fallon granted reconsideration and permitted the filing of the claims. See November 2023 Update.
Hopeman Brothers and its insurer, Liberty Mutual, then moved for reconsideration of the order granting leave to SeaRiver to file a third-party demand against Hopeman/Liberty Mutual or, alternatively, to dismiss the claims. Hopeman Brothers argued that the claim was untimely and that the claim was barred because Hopeman Brothers had settled with the plaintiffs. Judge Fallon previously considered the timeliness of the motion when he granted leave, so he declined to reconsider that decision. Turning to the merits, SeaRiver cited the indemnity provision in a purchase order between Avondale and Hopeman Brothers and argued that Hopeman Brothers was bound to indemnify SeaRiver. Judge Fallon reasoned that, at the stage of a motion to dismiss, SeaRiver had stated a plausible case for contractual indemnity and that the settlement of the tort claims would have no bearing on the contractual claims. Therefore, Judge Fallon declined to dismiss the third-party claim against Hopeman Brothers and Liberty Mutual. See January 2024 Update.
Judge Fallon then addressed the indemnity claims that SeaRiver brought against Avondale and Hopeman Brothers. The SeaRiver claim against Avondale was based a contract that was entered into by SeaRiver’s predecessor, Humble Oil & Refining (building tankers at Avondale’s shipyard). The SeaRiver claim against Hopeman Brothers was based on a contract between Avondale and Hopeman Brothers by which Hopeman Brothers completed joiner work for the tankers (that contract contained pass-through indemnity from Hopeman Brothers to SeaRiver). Judge Fallon ruled that the indemnity provisions of the contracts were silent whether the indemnity extended to SeaRiver’s own negligence, and he held that the language was insufficient to satisfy the clear and unequivocal rule under Louisiana law. SeaRiver argued that it was entitled to indemnity for vicarious liability it may have for the acts of Avondale and Hopeman Brothers; however, Judge Fallon rejected that argument because any vicarious liability for which SeaRiver may be responsible was due to the consequences of its own actions and not those of Hopeman Brothers or Avondale. The situation was different with respect to the argument that SeaRiver was entitled to indemnity from Avondale and Hopeman Brothers for the strict liability claims against SeaRiver. However, that claim was premature because SeaRiver did not establish that its settlement was reasonable.
John Speck claimed that he developed asbestosis from exposure to asbestos while he serviced as a civilian electrician at the Mare Island Naval Shipyard in California. He brought this suit in the Superior Court of Alameda County, California against several employer defendants and product suppliers, and the successor to Todd Shipyards removed the case to federal court based on the Federal Officer Removal Statute. After Speck died, his beneficiaries continued the suit. Several defendants moved for summary judgment, and Judge Donato noted that the plaintiffs and most of the defendants briefed the issues under California law, despite the fact that the pleadings asserted that Speck was exposed to asbestos while performing maintenance on Naval vessels and on equipment destined for Naval vessels. Judge Donato reaffirmed that maritime law governed, but he added that there is not a sharp divergence in maritime law and California law with respect to product liability claims. Two shipyards (General Dynamics and Bath Iron Works) moved for summary judgment on the evidence of exposure, and Judge Donato noted that Speck worked for General Dynamics in connection with the construction of three submarines, the SEAWOLF, the THOMAS EDISON, and the FLASHER. However, Speck’s beneficiaries did not introduce evidence of exposure caused by General Dynamics other than citing the work performed by Speck and the fact that General Dynamics used asbestos in the mid-20th century. Speck saw insulators working on the ships, but he did not recall instances in which the insulation was disturbed. The situation was different with respect to Bath Iron Works, as Bath acknowledged that the insulation on its Naval destroyers in the 1940s contained asbestos, and there was evidence that Speck was exposed to insulation on the AGERHOLM in the 1960s (a snowstorm of dust from insulation that he assumed was original to the vessel because it had “seven layers of paint on it”). Turning to the product suppliers, the evidence was sufficient to create a fact question as to insulation defendant Metalclad, but it was insufficient with regard to Gould Electronics, Plastics Engineering Co., Union Carbide, Ericsson, and Rockbestos. As Judge Donato denied summary judgment for Bath and Metalclad with respect to exposure, he addressed their argument that the government contractor defense under Boyle barred the claims. Metalclad was required to provide insulation in accordance with military specifications, and its Unibestos was an approved product. But that was insufficient to make the product “military equipment” for which Metalclad could claim immunity as the evidence reflected that the insulation sold to the Navy was substantially the same as the insulation it sold commercially to non-military buyers. Similarly, the opinion of Bath’s expert on Naval contracts that strict military specifications would have applied to the contracts to purchase goods or services for the submarines was “far too general and untethered to the record” to create a triable fact question. Finally, Judge Donato rejected the perfunctory request for summary judgment on punitive damages, citing California law that “Plaintiffs may seek punitive damages from corporations in product liability cases, subject to federal constitutional limitations.”
Texas Petroleum was involved in the plugging and abandonment of its well in navigable waters in St. Mary Parish, Louisiana. Texas Petroleum hired Mark Campbell with Campbell Consulting to serve as the company man for the project. There was a loss of containment (blowout) when the blowout preventer failed, and Texas Petroleum hired Wild Well Control to assist in regaining control. There was a second blowout, and Wild Well rented a firefighting barge to assist in regaining control. Wild Well brought its employee Darrell Mora to assist, and he was on the firefighting barge when gas flowing from the well ignited and resulted in a flashover that injured Mora. Mora brought this maritime negligence suit in state court in St. Mary Parish, Louisiana against Texas Petroleum and Campbell Consulting, and Texas Petroleum removed the case to federal court. The defendants moved for summary judgment, arguing that there was no duty to protect the employee of an independent contractor from open and obvious risks with respect to defects that the independent contractor was retained to fix, based on cases under LHWCA Section 5(b). Mora argued that he was not a longshore worker and the defendants were not vessel owners or operators. The defendants countered with the decision from the Eastern District of Texas in the Alphin case in which Judge Cobb cited cases from the Fifth Circuit that were decided under Section 5(b) despite the fact that he did not consider the injured grain inspector to be covered under the LHWCA. Judge Hicks was not convinced that Section 5(b) should apply when Mora was not a longshoreman injured in stevedoring operations and when Mora was not alleging that a condition of the firefighting barge caused his injury. Instead, Mora alleged negligence of the well operator and company man with respect to control of the well. Finding fact questions to be resolved on the general maritime negligence claims, Judge Hicks denied the motion for summary judgment.
And on the maritime front . . .
From the federal appellate courts
Sikousis chartered a vessel to B-Gas Ltd. (now Bepalo LPG), which breached the agreement and resulted in an arbitration award in favor of Sikousis for $7.5 million. Bepalo declared insolvency, and Sikousis brought this action in federal court in California seeking to attach the BERICA, a vessel owned by Aframax, a company related to Bepalo/B-Gas. Judge Breyer permitted discovery so that Sikousis could try to establish an alter ego claim against Aframax, but he ultimately held that Sikousis had not elicited sufficient evidence to pierce Aframax’s corporate veil and that Sikousis could not recover against Aframax for Bepalo’s debt. He therefore vacated the attachment but stayed the order so that Sikousis could seek a stay in the Ninth Circuit. See February 2023 Update.
Sikousis appealed to the Ninth Circuit, which began by addressing the standard that applies to determine whether to continue pre-judgment attachments. Writing for the Ninth Circuit, Judge Bea noted that Supplemental Rule E(4)(f) does not provide the standard to measure the plaintiff’s burden but that district courts in the Ninth Circuit and courts in other circuits had applied a “probable cause” standard requiring plaintiffs to demonstrate that the evidence “shows a fair or reasonable probability that Plaintiffs will prevail on their alter-ego claim.” Judge Bea reasoned that the plaintiff need not prove its case at the Rule E(4)(f) stage, which a higher standard, such as a preponderance of the evidence, would require. Therefore, the plaintiff meets his burden by establishing a reasonable probability of success as to each element of the claim (less than a preponderance but more than a mere possibility). Judge Bea then turned to Judge Breyer’s decision not to pierce the corporate veil of Bepalo, and he stated that federal courts apply federal common law when examining corporate identity. Judge Breyer applied that standard, and Judge Bea agreed that the evidence of control by minority shareholders supported the decision that Sikousis failed to carry its burden to demonstrate a reasonable probability of succeeding on its theory to pierce the corporate veil. Consequently, the Ninth Circuit affirmed the granting of the motion to vacate the attachment of the BERICA.
Andre Denhario Wilson, a United States citizen, suffered an injury while working as a crew member of the CARNIVAL MAGIC. His claim against Carnival (a Panamanian corporation) was arbitrated under Panamanian law in accordance with his employment agreement, but the arbitrator found the claim to be time-barred under the one-year statute of limitations of Panamanian law. Arguing that the contract contained a three-year period, Wilson brought suit in federal court in Florida seeking to vacate the decision of the arbitrator and to recover under the Jones Act and general maritime law. Wilson argued that the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) was applicable pursuant to the Federal Arbitration Act, and that the New York Convention permitted the vacatur action. The cruise line argued that the Federal Arbitration Act adopted the Panama Convention (Inter-American Convention on International Commercial Arbitration) in this case as the parties’ home countries (United States and Panama) had both ratified the Panama Convention, and the Panama Convention did not authorize a vacatur proceeding in a secondary jurisdiction (where the decision was not made). Judge Scola held that the federal court in the United States was sitting in a secondary jurisdiction under the Panama Convention and lacked subject matter jurisdiction over the claim seeking to vacate the foreign arbitral award. As the court was not authorized to vacate the award, and as the Jones Act and general maritime claims were subject to arbitration, he dismissed the case with prejudice. See January 2023 Update.
Wilson appealed to the Eleventh Circuit, arguing that the district court had jurisdiction to vacate the award and that dismissing the case denied him equal protection of the right of access to the courts. Citing authority in the Eleventh Circuit based on the “substantively identical” enforcement and recognition provisions in the New York Convention (the Convention on Recognition and Enforcement of Foreign Arbitral Awards), the Eleventh Circuit held that the United States courts did not have primary jurisdiction (the country which is the legal seat of the arbitration or whose law governs the conduct of the arbitration). Therefore, they could not vacate the award. The court added that its holding did not deny Wilson equal protection because he voluntarily entered into an arbitration agreement to resolve his claims before an arbitral forum that limited his access to the courts.
This case arises from the closure by the Army Corps of Engineers of key locks on the Ohio River in 2017 because of low water levels and mechanical breakdowns. Century Aluminum, which relies on river barges to provide alumina ore for smelting into aluminum at its plants in Hawesville and Sebree, Kentucky, had to secure other means of transportation for the alumina ore (its plants require a continuous feed of alumina to maintain the chemical reaction or the molten metal will freeze in its pots). Century Aluminum claimed additional costs for trucking and rail transportation and because it had to purchase lower-grade alumina as a hedge. Century Aluminum sought recovery from the underwriters of its maritime cargo insurance policy for the additional expenses, and Lloyd’s agreed to pay $975,000 for extra transportation costs ($1 million coverage for extra transportation expenses), but it declined to pay for other expenses (over $4 million). Century Aluminum brought this suit in federal court in Kentucky against Lloyd’s, asserting claims for breach of contract as well as extracontractual remedies under Kentucky law. The parties consented to resolution of the case by Magistrate Judge Brennenstuhl, who granted summary judgment to Lloyd’s that the policy did not cover the expenses sought by Century Aluminum. Century Aluminum appealed to the Sixth Circuit, citing four provisions of the maritime cargo policy. The All Risks Clause provides coverage against “all risks of physical loss of or damage to the subject-matter insured from any external cause.” The policy did not define “physical loss,” and, writing for the Sixth Circuit, Judge Sutton looked to Kentucky law (applicable under the policy), which provides that the phrase means that an owner has been “tangibly deprived of the property,” such as by theft, or that the property “has been tangibly destroyed,” such as by fire. As the alumina did not suffer physical loss or damage, and as the delay did not threaten to deprive Century Aluminum of its ownership or control of the alumina, Judge Sutton did not believe that the loss fell within the coverage, reasoning: “All of the alumina arrived at Century’s facilities no worse for the wear.” He added that the policy addressed the intangible claim under the Extra Expense Section and that there is coverage available under a Trade Disruption Policy.” Judge Sutton then considered the Risks Covered Clause, which covers arrests, restraints, and detainments of governments and all other like perils, losses or misfortunes that come to the detriment or damage of the goods. He held that the loss did not cover the situation because the United States did not take control of the barges or impound the alumina, and it did not restrain Century Aluminum from using other means to deliver the ore. Judge Sutton stated: “The barges never found themselves trapped within the locks, unable to escape.” And he did not find the other like perils language to be applicable, because the perils did not result in damage to the goods. The Shipping Expenses Clause covers “reasonable direct charges incidental to shipping” when “the subject matter insured is not delivered to the destination contemplated due to circumstances beyond the control of the Insured.” Judge Sutton noted that it covers the risk of a failed delivery, not the risk of a delayed delivery, rejecting the argument that the policy used the phrase “not delivered” as opposed to “never delivered.” Judge Sutton also concluded that the Sue and Labor Clause did not afford coverage. Lloyd’s agreed to reimburse the expenditures to reduce potential loss in the case of actual or imminent loss, damage, cost or expense. Judge Sutton reasoned that the clause promises to reimburse Century Aluminum for mitigating exposure under the policy but not for reducing losses that fall outside the policy. Century Aluminum argued that the expenses prevented damage to its equipment, but Judge Sutton answered that the protection had to be for the aluminum as the risk covered under the policy is for physical loss or damage “to the subject matter insured.” As the policy did not afford coverage, Judge Sutton did not have to address the effect of the incorporation of the American Institute Cargo Clauses, which exclude loss, damage, or deterioration arising from delay, except where the policy affirmatively includes such loss.
Derek Paul Smith worked as a clean-up worker and boom decontaminator in connection with the Macondo/DEEPWATER HORIZON blowout in April 2010. In July 2014, Smith was diagnosed with Congestive Heart Failure, Unspecified Fibrillation, and Persistent Atrial Fibrillation that his physicians told him was caused by his weight and difficulty breathing. Smith did not receive notice of the Medical Benefits Class Action Settlement Agreement as he did not read the newspaper or listen to the radio. The Settlement required those seeking compensation for a Later-Manifested Physical Condition (diagnosed after April 16, 2012) to submit a Notice of Intent to Sue to the Settlement Administrator within four years after the first diagnosis of the physical condition (or within four years after the effective date of the settlement, if later). As Smith was unaware of the terms of the settlement, he did not submit his Later-Manifested claim until January 28, 2022, more than seven years after his diagnosis. Smith filed a Back-End Litigation Option suit against BP on November 4, 2022 in federal court in Louisiana, and BP moved to dismiss the suit as untimely (more than four years after his diagnosis in 2014). Magistrate Judge Currault recommended that the complaint be dismissed with leave to amend, and Judge Barbier adopted the recommendation. Smith filed an amended complaint, and Magistrate Judge Currault again recommended dismissal, but this time with prejudice. Judge Barbier adopted the recommendation, and Smith appealed to the Fifth Circuit, arguing that, under the discovery rule, the four-year limitation period did not begin running in 2014 because the “first directly relevant study” reporting a causal connection for his cardiovascular symptoms and his exposure to crude oil and dispersants was published in 2021. BP argued that the discovery rule did not apply to the medical settlement, but the Fifth Circuit did not have to reach that issue as the appellate court agreed that, even if the discovery rule applied, Smith did not allege a basis for its application. The court of appeals also did not have to decide whether to apply the maritime, Texas, or Louisiana discovery rule, as they are similar, and Smith failed to allege sufficiently that he could not have reasonably known of his cause of action before January 2018 (four years before he filed his notice). The appellate court stated that Smith did not allege sufficient facts to indicate that a reasonable person in his position would not have investigated the cause of his conditions before January 2018. In his affidavit, Smith stated that he developed skin issues, shortness of breath, and other pulmonary conditions within weeks of his exposure, and he suspected the conditions were caused by exposure to oil and dispersants. Smith asserts that he relied on the representations of BP that his exposure was not harmful and the statements of his doctors that it was his weight and breathing problems that caused his cardiovascular conditions. However, Smith suspected that he was suffering from adverse health effects as a result of the exposure and was capable of researching whether his health problems were caused by his work and the spill. The appellate court also rejected the argument that a reasonable investigation would have been fruitless before the 2021 article, reasoning that plaintiffs “are not entitled to wait to sue until they are certain of what and/or who caused the injury.” The fact that the article was the “first directly relevant study does not indicate that a reasonable investigation would not have put Smith on notice that his exposure during the oil-spill clean-up could have caused his [Later-Manifested Physical Condition].” The court noted that Smith had found medical support linking his heart conditions with the chemicals in the Summer of 2020. Finally, Smith had to concede that the medical class action complaint recognized that the dispersants were known to cause chest pain, breathing difficulties, respiratory system damage, hypertension, cardiac arrythmia, cardiovascular damage, and increased severity of chronic obstructive pulmonary disease. Therefore, the appellate court held that a reasonable inquiry by Smith at the time of his diagnosis would likely have revealed a causal connection between his exposure and symptoms, and he did not plausibly assert that a reasonable inquiry would not have revealed the causal connection. The court dismissed the complaint for failing to “raise some basis” for application of the discovery rule.
When Hurricane Harvey made landfall near Corpus Christi, Texas as a Category 4 hurricane, the drillship DPDS1 was docked with two tug boats helping to keep the drillship in place. Nonetheless, the drillship broke free from its moorings, propelling the two tugs (ENTERPRISE and ARCTURUS) into adjacent semisubmersible rigs (owned by Noble) 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, seeking a ruling 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 with 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%. See September 2022 Update.
Signet then sought recovery of attorney fees, expenses, and costs from Paragon in connection with the Noble and Paragon claims and costs in connection with the Signet claim. Signet argued that, with respect to the Noble claim, that it was the prevailing party as Judge Rodriguez held that Paragon was 100% responsible for the allision of the Signet tugs with Noble’s rigs and the tariff required that Paragon indemnify Signet to the extent of Paragon’s negligence. Additionally, the tariff provided for recovery of attorney fees, expenses, and costs by the prevailing party. Although Paragon argued that Signet could only recover amounts incurred after the entry of judgment (which made it the “prevailing party”), Judge Rodriguez agreed with Signet that the natural construction of the provisions allowed Signet to recover the fees, expenses and costs for litigating the claim. With respect to Signet’s fees, expenses, and costs for defending against Paragon’s claim for damages to the drillship, Paragon argued that Signet did not recover indemnity from Paragon so as to invoke the indemnity clause. Judge Rodriguez noted that Paragon did not recover indemnity because Paragon did not prove its entitlement to recover from Signet. If Paragon had proven it was entitled to recover, the tariff would have required Paragon to indemnify Signet. Therefore, Signet was the prevailing party and entitled to fees, expenses, and costs, As Signet was the prevailing party with respect to its claim, it was entitled to recover taxable court costs. Judge Rodriguez then addressed the request of Signet for $1,515,842.75 in attorney fees. Paragon challenged over 4,600 billing entries, and Signet accepted some of the objections, reducing the request by $109,593.75. Judge Rodriguez overruled the challenges based on block billing, clerical functions, travel time, and work on claims/issues that were part of the common issues but also related to issues upon which it did not prevail or claims involving other parties; however, Judge Rodriguez did sustain objections to work that was solely devoted to the Gulf Copper claim, the UT claim, or the American Club and to work that was on issues not pursued in the litigation. He awarded $1,362,042.84 in fees, non-taxable expenses of $353,499.48, and taxable costs of $60,072.48. As no appeal had been taken, Judge Rodriguez declined to rule on Signet’s request for appellate attorney fees and costs (without prejudice), stating that it was an issue to be addressed “following the resolution of an appeal.” See April 2023 Update.
Paragon appealed to the Fifth Circuit, arguing that the court should apply a “towage law” standard of duty to Signet’s provision of services to Paragon, that the court should reverse Judge Rodriguez’s determination that a force majeure defense was not available, and that the court should reverse his determination on the contract governing the services. Writing for the Fifth Circuit, Judge Higginson rejected all of the arguments. Paragon argued that Judge Rodriguez erred when he applied general maritime negligence law rather than towage law (that would shift to Signet a duty to keep the drillship from harming others’ property). Judge Higginson noted that Judge Rodriguez rejected the argument on the ground that Signet never undertook the tow of the drillship and that Paragon did not relinquish custody of the drillship to the tugs (reasoning that helping keep the drillship moored to the dock during the storm did not constitute a tow). Paragon cited cases that it claimed stood for the proposition that towage law did not require a tug’s provision of motive power to a vessel in transit. Judge Higginson agreed with Signet, however, that the cited cases involved an actual or contemplated voyage or movement, rather than an assist designed to keep a vessel from moving, and that they did not apply to the situation where the tugs could not hold a drillship at the dock when the drillship’s mooring system failed. Paragon next challenged the holding that Paragon could not rely on a force majeure defense because its “delayed decision and inadequate mooring system represented unreasonably deficient actions,” arguing that Judge Rodriguez held Paragon to a standard of perfection rather than reasonability (using a “nautical rear view mirror”). The parties did not dispute that Hurricane Harvey was an Act of God that was sufficient to activate the force majeure defense, but Judge Rodriguez concluded that Paragon did not take reasonable actions considering what it knew about the deficiencies in its mooring system and under the circumstances that were reasonably anticipated. Judge Higginson noted that the Paragon drillship was the only one of five that did not successfully evacuate from Port Aransas before the storm. Finally, Judge Higginson agreed with Judge Rodriguez that that the services provided by Signet were governed by the Tariff. He reasoned that maritime law permits oral agreements to incorporate the terms of a written document, such as a tariff, and he held that the course of dealing between Paragon and Signet satisfied that standard: “Signet provided services, Signet invoiced under the Tariff, and Paragon paid without complaint.” Although the Tariff excluded assistance to a dead ship or services during heightened port conditions, Judge Higginson answered that the exclusion was for the benefit of Signet, and Signet could waive the provision. Accordingly, the Fifth Circuit affirmed the rulings of Judge Rodriguez.
From the federal district courts
Opinion not available on Pacer
The tug M/V ST. BARTHOLOMEW, owned by Marquette Transportation, was pushing a tow of barges on the Tennessee River near Saltillo, Tennessee, when the tow collided with a recreational craft. Three passengers on the recreational craft were killed. Marquette brought this limitation action in federal court in Kentucky, and the administrators of the estates of the deceased passengers brought claims in the limitation action. The claimants jointly moved to lift the stay with stipulations to the jurisdiction of the limitation court over all limitation issues, waiving res judicata and issue preclusion with respect to the issues reserved to the limitation court, agreeing not to enforce any judgment in excess of the limitation fund pending adjudication of the limitation issues, and stipulating to a pro rata distribution of the limitation fund in the event the claimants obtained recovery in excess of the limitation fund (the claimants also agreed to file their lawsuits in the same state court and to move to consolidate the actions to alleviate concerns about inefficiency and inconsistent judgments). Concluding that the stipulations eliminated the need for the concursus of claims, Judge Beaton dissolved the stay so that the claimants could file lawsuits in state court (and stayed the limitation action pending the outcome of the state litigation).
Ezequiel Caraballo-Pache worked as a clean-up worker from July 2010 to October 2010, seven days a week, on the spill from the Macondo/DEEPWATER HORIZON blowout, housed on a floating platform/flotilla near Hopedale and Venice, Louisiana. Eight years later he was diagnosed with pancreatic cancer that ultimately led to his death. The personal representative of his estate brought this Back-End Litigation Option suit, and she submitted the opinion of Dr. Alfred I. Neugut on medical causation. BP moved to exclude the testimony with respect to general and specific causation and for summary judgment in the absence of expert testimony on causation. As to general causation, Judge Mizelle held that Dr. Neugut’s report was defective at step one of the epidemiological method because a majority of the cited studies did not show a statistically significant association between petroleum and other hydrocarbons with pancreatic cancer. Judge Mizelle also found that Dr. Neugut’s methodology was unreliable, as his conclusions overstated what the studies established, warranting exclusion of his opinion as unreliable. Thus, Judge Mizelle held that the opinion on general causation was not admissible (Judge Mizelle added that Dr. Neugut could not rely on the dose-responsive method to establish general causation because the report did not identify the dose exposure that was capable of causing pancreatic cancer in the general population). Although Judge Mizelle did not have to analyze specific causation when general causation was not established, she held that Dr. Neugut’s opinion was inadmissible for specific causation because Dr. Neugut failed to determine the decedent’s level of exposure and failed to account for other potential causes of his pancreatic cancer. Having excluded the expert opinion, Judge Mizelle granted summary judgment to BP for lack of expert evidence on causation.
Kevin B. Dammeyer was employed as captain of the commercial recreational excursion vessel, OCEAN QUEST, owned and operated by Sea Sport Cruises. The vessel had just returned from an excursion and was docked at Lahaina Boat Harbor in Hawaii when Dammeyer was advised by an engineer/mechanic that there was a fuel leak in the engine room of the vessel. Captain Dammeyer slipped and fell while investigating the leak and brought this suit against Sea Sport Cruises in federal court in Hawaii, asserting claims as a seaman that included unseaworthiness and maintenance and cure. Dammeyer moved for summary judgment on his unseaworthiness claim, and Sea Sport Cruises moved for summary judgment on the maintenance and cure claim. With respect to the unseaworthiness claim, Dammeyer claimed that he stepped on the exhaust/muffler manifold that had a well-worn yellow colored non-slip strip with some fuel/liquid on it. His foot slipped, driving his leg down between the muffler manifold and riser where a hose clamp on the exhaust manifold with excess metal (like a rod) projecting past its tensioning screw, entered his left leg. Dammeyer argued that there were three unfit conditions, the well-worn non-slip strip, the protruding hose clamp, and the fuel on the exhaust/muffler manifold. Sea Sport argued that the momentary presence of liquid on the manifold did not render the vessel unseaworthy, and there was no evidence that the conditions were unusual or unfit under the circumstances. Judge Smith agreed that a fact finder could draw inferences that the conditions were not reasonably fit, but, in a motion for summary judgment, he had to draw the inferences in favor of non-movant Sea Sport. Therefore, he denied Dammeyer’s motion. Turning to maintenance and cure, Dammeyer agreed that he had reached maximum cure with respect to the laceration of his leg, but he argued that he injured his knee while climbing out of the engine room. That condition was not noted by his treating physician (who “appears to have concluded” that it was not caused by the incident on the vessel) and was discovered nine months after the injury on the vessel, when Dammeyer was no longer in the service of the ship, when it was diagnosed by Dammeyer’s retained expert, Dr. McCaffrey (who opined that the knee injury was causally connected to his service on the ship). Sea Sport argued that Dammeyer could not rely on expert opinion to establish facts to which the expert was not a percipient witness, and Judge Smith agreed that Dammeyer could not create a fact question on causation by relying on Dr. McCaffrey’s opinion that the twisting and banging caused his injury. However, Judge Smith noted that Dr. McCaffrey opined that Dammeyer developed knee pain due to asymmetric weight bearing after the injury to his leg, and he believed that was sufficient to create a fact question whether Sea Sport owed maintenance and cure for the knee pain (rejecting Sea Sport’s argument that the opinion of the treating physician should be conclusive).
Maximo Sequera was injured when he was thrown out of a personnel basket while transferring from an offshore platform to a vessel on the outer Continental Shelf in the Gulf of Mexico off the coast of Louisiana. He brought suit in state court in Harris County, Texas against his employer, Danos, the platform owner/operator, Genesis Energy, and the vessel operator, L&M Botruc Rental, asserting claims as a Jones Act seaman. Danos removed the case to federal court based on the jurisdiction of the Outer Continental Shelf Lands Act, arguing that removal was proper because Sequera was not a Jones Act seaman. Genesis Energy moved to strike Sequera’s jury demand, arguing that the petition filed in state court did not assert claims under the OCSLA, and the maritime claims that Sequera brought did not afford the right to a jury trial. Judge Eskridge agreed that Sequera did not plead claims under the OCSLA “by name;” however, the case was removed to federal court, with the consent of Genesis Energy, under the OCSLA, and “all Defendants understood OCSLA to have been pleaded when they consented to removal on that basis.” Moreover, the well-pleaded complaint rule does not apply in removal of OCSLA cases. The pleadings and the record made it clear that the case involved transfer from a production platform on the OCS. Accordingly, Sequera stated a claim under the OCSLA, and Sequera was entitled to a jury trial. See April 2024 Update.
Genesis Energy sought defense and indemnity in connection with Sequera’s suit against Danos pursuant to the terms of the contract by which Danos agreed to provide repair to the platform. The repair work required a vessel to house the workers and equipment and to transport them to the platform. That vessel was supplied by L&M Botruc, and Sequera was injured while transferring from the platform to the vessel. Whether the indemnity provision in the contract was valid depended on whether the contract was maritime or not, as the indemnity was not valid under the Louisiana Oilfield Indemnity Act. Applying the Doiron test, the dispute centered on whether the contract provided, or the parties expected, that a vessel would play a substantial role in the completion of the repairs. Judge Eskridge noted that the contract set forth the scope, objectives, and requirements of the work that Danos was to perform on the platform, and it referenced the vessel only with respect to housing and transferring the workers to the platform. The parties also understood that the vessel was for initial transportation and mobilization and then to serve as living quarters. Judge Eskridge reasoned that the limited purposes of providing transportation and living quarters did not establish that the vessel played a substantial role in the contract. He did note that it was out of the ordinary that the vessel would maintain a position alongside the platform for the duration of the project, but the activities performed on the vessel were not more substantial than in the ordinary repair project. As the evidence did not clearly establish that the platform repair involved substantial use of a vessel, Judge Eskridge considered the actual work performed under the contract. The crew ate and slept on the vessel, and Danos did not charge for the time on the vessel except when the workers could not work because of weather or travel. Equipment was transferred back and forth from the vessel and stored on the vessel for some of the time. However, no fabrication or use of equipment occurred on the vessel. Judge Eskridge reasoned that a vessel does not play a substantial role if it is used only for transportation or for loading and unloading of items, which are not considered in determining whether the contract is maritime. The vessel may have been indispensable to work on a platform in the middle of the Gulf of Mexico, but there was no vessel-based work. Thus, Judge Eskridge concluded that the contract was not maritime and that the indemnity provision was unenforceable under Louisiana law.
Magnolia Fleet and River Tug are the owners of a fleeting facility located at mile marker 122 on the Lower Mississippi River, and they own and operate the M/V LOUISIANA (their fleet boat). Magnolia Fleet and River Tug brought this limitation action in federal court in Louisiana after vessels broke free from the fleet during Hurricane Ida in August 2021, causing property damage and one injury. There were numerous claims for property damage in the limitation action along with cross-claims, counterclaims, and third-party claims. 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. See September 2022 Update.
On October 31, 2022, the limitation plaintiffs filed a Rule 14(c) tender and third-party demand against Vopak Industrial, which was alleged to own the barge that allided with Entergy’s facility. Vopak answered that it owned the barge, but the breakaways involved vessels owned, operated, or in the custody of Magnolia Fleet and others. On April 17, 2023, Entergy sought leave to file an amended cross-claim (after the deadline had passed in the court’s scheduling order, and leave was denied because the motion did not argue that there was good cause to amend as required by Rule 16. Entergy then refiled the motion, alleging that it had good cause because it did not receive confirmation that the barge was under the care, custody, or control of Vopak until after the expiration of the pleading deadline. Several parties opposed the amendment, asserting that Entergy had been informed before the deadline and that other parties had previously pleaded the theory that Entergy was asserting, and that allowing a claimant to amend over eight months after the deadline would open the floodgates to additional amendments. Magistrate Judge Currault sided with Entergy that it had established good cause, noting that it could not be faulted for ensuring that it had a good faith basis in law and fact before making assertions, rather than simply relying on claims pleaded by others in the limitation action. Additionally, Magistrate Judge Currault did not find prejudice as the theories had already been raised by other parties. Therefore, she gave leave for the amended cross-claim. See July 2023 Update.
The only injury claim in the limitation action was filed by Rocky Hickman, Captain of the M/V NANCY SONIER, a tug that broke away along with a tier of barges. Hickman allegedly attempted to guide the tier of barges away from other vessels, but the crew eventually evacuated, and he jumped into the Mississippi River and sought shelter within a barge. He presented a claim for PTSD, depression, and anxiety in the limitation action as well as a third-party claim under the Jones Act and general maritime law against his employer, LeBeouf Brothers Towing. LeBeouf and Magnolia/River Tug filed claims against each other, and LeBeouf tendered Hickman to Magnolia/River Tug, alleging that if LeBeouf had any liability to Magnolia/River Tug, then Hickman was liable for tort indemnity or contribution. LeBeouf filed motions for partial summary judgment on Hickman’s Jones Act and unseaworthiness claims, arguing that the mental harms he alleged were not foreseeable and that LeBeouf did not cause or contribute to the breakaway. Magnolia/River Tug also filed a motion for summary judgment, claiming that Hickman was not entitled to recover for emotional injuries and that Magnolia/River Tug owed him no duty. In a case of this complexity that was “fraught with factual questions,” Judge Fallon was not prepared to grant the motions, noting that the fact finder would need to determine what was known to LeBeouf (and when), how the parties understood the storm and fleet conditions, and the reasonableness of everyone’s actions, including Hickman. Magnolia and River Tug also moved for summary judgment that they were entitled to exoneration from liability because they undertook reasonable precautions in advance of Hurricane Ida and they had passed all Coast Guard inspections. After discussing bailment law applicable to a fleeting company, the act of God defense, the presumptions from THE OREGON Rule, THE LOUISIANA Rule, and THE PENNSYLVANIA Rule, Judge Fallon found “numerous questions of fact” that precluded summary judgment, including compliance with permits and statutory frameworks, issues about who knew which conditions and when, adequacy of protocols undertaken, and the reasonableness of the actions taken. Therefore, he declined to grant summary judgment to Magnolia Fleet/River Tug. [Judge Fallon also denied summary judgment sought by American River Transportation Co. (operator of two fleets near the Magnolia/River Tug fleet that also suffered breakaways), but he granted summary judgment dismissing claims brought by Vopak, whose facility was located too far upriver to have been affected by this incident]. See October 2023 Update.
After several settlements, Judge Fallon tried the claims of Entergy, owner of the Waterford Facility, a power generating facility on the Mississippi River, for damage to its fuel dock, against Vopak, owner of two docks on the Mississippi River that are located downriver from the Entergy Waterford Facility. Vopak used the Kirby 17225 as a deflector barge at its facility, permanently moored to three monopiles (its purpose was to deflect vessels, debris, or flotsam from alluding with the Vopak facility). A number of vessels broke free when Hurricane Ida made landfall in Louisiana in August 2021, flowing upriver with the reverse surge in the River because of the hurricane winds. After the storm, the Kirby 17225 and several other barges were found grounded upriver from the Entergy Waterford Facility, and the frames used to secure the Kirby barge were either missing or damaged. There was extensive damage to the Entergy fuel dock, and Entergy’s surveyor examined the Kirby barge and opined that it sustained damage from contact with the Entergy fuel dock (based on observation of the color of rust on the damaged barge). However, the surveyor did not examine the other barges, and no one witnessed the damage to the Entergy fuel dock. Finding that the surveyor’s opinion was insufficient to prove that the Kirby barge was the cause of the damage to the Entergy fuel dock by a preponderance of the evidence, Judge Fallon requested the parties to address the applicability of THE PENNSYLVANIA Rule. In determining whether Vopak was negligent, Judge Fallon began with the presumption from THE LOUISIANA in connection with the allegation that the Kirby barge broke free and drifted into the Entergy fuel dock. However, Judge Fallon noted that the parties had “introduced evidence to dispel the vacuum” that the presumption was designed to fill, and he concluded that Vopak was negligent for failing to exercise reasonable care to ensure that the moorings were adequate. He also found that the failure was a violation of the regulation in 33 C.F.R. Section 165.803 for mooring practices in the Mississippi River and that THE PENNSYLVANIA Rule applied. Therefore, there was a rebuttable presumption that Vopak’s inadequate mooring and violation of the regulation caused the damage to Entergy’s property. As Vopak could not show that the violation of the regulation could not have caused the damage to the Entergy fuel dock, Judge Fallon held that Vopak was liable for the damage to the Entergy fuel dock. Judge Fallon found that it was reasonable for Entergy to perform temporary repairs to prevent the structure from posing a threat to River traffic, and he awarded $380,199.06 for the repairs. Judge Fallon agreed that the estimate of $995,000 was reasonable for the repair to the dock, and he declined to depreciate that expense because the repairs were only to parts of the facility and did not affect the life of the facility as a whole. Finally, Judge Fallon awarded $125,000 in anticipated repair costs to the torn rubber fender on one of the breasting dolphins.
This case initially presented the legal question of first impression: Does the Oil Pollution Act of 1990 displace the federal government’s waiver of sovereign immunity in the Suits in Admiralty Act when the negligence of the United States is alleged to have caused an oil spill from a vessel? The spill occurred when the M/V SAVAGE VOYAGER, which was pushing two tank barges containing oil on the Tennessee-Tombigbee Waterway in Mississippi, entered the Jamie Whitten Lock, a boat lift operated by the U.S. Army Corps of Engineers. The owner of the tug alleged that the lock master began de-watering the lock chamber without notice before the tug and tow were in the correct position, resulting in damage to one of the barges and a release of oil into the water. The owners performed the required cleanup/removal under OPA and brought this suit against the United States under the Suits in Admiralty Act, seeking to recover the cleanup/removal costs plus damage to the barge, loss of use, and lost cargo, based on the negligence of the United States under the general maritime law. Although the United States admittedly waived sovereign immunity in the SAA to the extent a private citizen would be liable, the United States argued that the waiver in the SAA was displaced by the comprehensive scheme enacted for cleanup/removal costs in OPA, which does not provide for liability for the United States. District Judge Steele dismissed the claim for reimbursement of cleanup/removal costs (but not the claim for damage to the vessel/loss of use/loss of cargo), and the owner appealed to the Eleventh Circuit. Writing for the appellate court, Judge Altman (district judge from the Southern District of Florida sitting by designation), affirmed the decision of Judge Steele. Judge Altman noted the difference between the provision of the Clean Water Act (which affords a complete defense to the vessel in the event the spill is caused solely by the negligence of the United States), and OPA, which affords a complete defense to the vessel in the event the spill is caused solely by an act or omission of a third party. OPA also creates a contribution action against “any other person who is liable or potentially liable under this Act or another law.” A “person” is defined in OPA as “an individual, corporation, partnership, association, State, municipality, commission, or political subdivision of a State, or any interstate body.” After reviewing OPA in detail, Judge Altman concluded that OPA did not create a cause of action against the United States, noting that the definition of “person” did not include the United States and noting the omission of the fault of the United States in the defenses available to the Responsible Party. Judge Altman then considered the effect of the comprehensive provisions of OPA on the waiver of immunity in the Suits in Admiralty Act and the liability of the United States for negligence under the general maritime law. Finding the language of OPA to be unambiguous that the owner had no right of recovery against the United States, he concluded that OPA displaced the waiver of sovereign immunity and maritime remedy in the SAA. Thus, the owner had no right of recovery for the cleanup/removal costs but could proceed on its claims for damage to the barge and cargo. See March 2022 Update.
Back in the district court, the owner moved for summary judgment on its property damage claim, seeking a ruling that the negligence of the United States was the sole cause of the accident. The owner submitted the testimony of the lock operator and argued that his commencement of the de-watering while the tug and tow were not in correct position was the sole cause of the accident. Judge Steele assumed, without deciding, that this failure was negligent. However, the motion sought to establish that it was the sole negligence. Reasoning that the “universe of ways in which a party may be negligent is vast,” and that the owner had failed to “identify all the myriad ways in which they might have performed negligently,” Judge Steele declined the owner’s motion. After noting that it seemed reasonable that the owner had a duty of reasonable care to properly position the tow to avoid its becoming caught on the miter in the event of a normal 1- to 2-foot surge and noting the experience of the tug’s pilot who had transited the lock at least 250 times, Judge Steele concluded that there was a fact question whether the vessel owner was negligent. See October 2022 Update.
The United States designated Michael Berry as an expert to opine on the operating of the locks and the responsibilities of the United States as a lock operator. Savage Services objected that Berry was an inland water towboat mariner and did not have the qualifications to testify about operating a lock. The case was transferred to Judge Moorer, who disagreed and found Berry’s experience to be sufficient from work on towboats as a deckhand and Captain and from transiting locks hundreds of times, including transiting the lock in this case both as a pilot and as a deckhand. Savage also argued that Berry’s methodology, arriving at his opinion by making inferences from a process of elimination, was unreliable. Judge Moorer disagreed, answering that an expert may use his knowledge, experience, and training to make inferences. Finally, Judge Moorer noted that there was no risk of confusing the jury because the trial would be to the bench. See February 2023 Update. Judge Moorer did grant partial summary judgment to the United States on its counterclaim seeking reimbursement of $151,657.78 in costs associated with monitoring the spill cleanup based on the prior ruling that the United States cannot be held liable for removal costs.
After the conclusion of the bench trial, Judge Moorer issued his findings of fact and conclusions of law, finding in favor of the United States that the accident was caused solely by the tug’s crew’s mishandling of the tug and barges. The tug owner argued that, under the last clear chance doctrine, it was the duty of the lock operator to ensure that the vessels were properly positioned in the lock chamber prior to lockage. However, Judge Moorer noted that it could also be said that the last person who could have avoided the accident was the pilot who was at the controls for the tug. Judge Moorer also rejected the argument that the lock operator (to the exclusion of the crew of the tug) had the full authority of the lock and the duty to ensure that the rules and regulations related to the movement and mooring of vessels were followed (stating that “the pilot, tankerman, and deckhand of M/V SAVAGE VOYAGER did not tender their duties by entering the lock chamber, nor did they leave their responsibilities at the miter gate”). Judge Moorer then reasoned that it did not matter whether the tug/tow was moving of its own power or was drifting from wind or current as there were presumptions for the striking of the stationary object under THE OREGON or THE LOUISIANA. Concluding that the vessels were in the correct position when the lock operator began dewatering, that the lock was operating normally, and that the barge was under the control of the tug’s crew at the time of the incident, Judge Moorer held that the United States was not negligent. See May 2023 Update.
The tug owner moved for a new trial, complaining that Judge Moorer adopted virtually every important aspect of the United States’ “45-page wish list of conclusions of law and findings of fact” without giving the tug owner the opportunity to respond. Judge Moorer noted that it is standard practice to have the prevailing party submit proposed findings/conclusions, that the tug owner also provided proposed findings/conclusions that Judge Moorer considered, and that he declined to accept a number of proposed findings/conclusions that he considered to be an overreach. He concluded that he had not simply “uncritically” adopted every aspect of the United States’ proposal. The tug owner argued that Judge Moorer erred in applying the rules from THE OREGON and THE LOUISIANA because Judge Moorer found that the video of the locking procedure showed no discernible movement on the part of the tow or barges. However, Judge Moorer responded that the video was limited in duration because the tug owner did not preserve the video (only the Captain took a brief copy on his phone), and he concluded that the barge moved after it was in position. Judge Moorer rejected the argument that he misapplied THE PENNSYLVANIA Rule, answering that he did not apply it against the tug owner and that it did not apply against the United States because the tug owner’s “preferred reading” of the federal regulation was contradicted by the language that it did not affect the liability of owners and operators of floating craft for damage to locks or other structures. Judge Moorer did not consider the arguments on application of the Last Clear Chance Doctrine, admissibility of non-report evidence from the investigation of the NTSB/Coast Guard, additional evidence, or the attack on the expert tendered by the United States with respect to operation of locks to provide any new arguments. Accordingly, Judge Moorer declined to reconsider his prior decision.
International Auto Logistics was awarded a contract by the U.S. Department of Defense to transport vehicles. International Auto arranged with American Roll-On Roll Off-Carrier to transport the vehicles, and American Roll-On (charterer and operator of the M/V HONOR) issued a bill of lading for each vehicle for the transit from Bremerhaven, Germany to Baltimore, Maryland. During the voyage, a fire alarm sounded, and the fire was extinguished by discharging carbon dioxide into several decks. When the vessel returned to port, an inspection revealed that 16 vehicles were “completely burnt out.” The investigation revealed that the fire originated from a 2010 Nissan Rogue (owned by a service member) that was being shipped from Bremerhaven to Galveston, Texas. The owners of other vehicles that were damaged brought suit against American Roll-On and other vessel defendants and against International Auto, asserting claims for negligence and strict liability. The vehicle owners and the vessel defendants moved summary judgment, asserting that International Auto was strictly liable for the damages pursuant to Section 1304(6) of the Carriage of Goods By Sea Act, applicable to “Goods of an inflammable, explosive, or dangerous nature,” which provides that “the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment.” International Auto filed a cross-motion for summary judgment seeking dismissal of the claims against it. The vehicle owners and vessel defendants presented two arguments in favor of their interpretation of the COGSA provision. First, they cited several cases in which a fire in a cargo hold from spontaneous combustion was held to fall within Section 1304(6). Judge Wang answered that the cited cases involved chemicals, not vehicles. She added that the International Maritime Dangerous Goods Code did not list vehicles as dangerous goods. The vehicle owners and vessel defendants then argued that the court should apply Justice Stewart’s “I know it when I see it” analysis from obscenity cases for a case-by-case treatment of cars under Section 1304(6). Thus, a vehicle with a hidden defect which causes the vehicle to spontaneously combust is explosive, inflammable, or dangerous. Judge Wang disagreed, holding that the determination of what cargo is inflammable, explosive, or dangerous “cannot proceed as to each individual vehicle.” Instead, the question is whether vehicles fall within Section 1304(6), and she concluded that they do not. Additionally, Judge Wang noted that the strict liability under Section 1304(6) requires the carrier not consent to shipment with knowledge of the nature and character of the goods. All of the parties in this case were aware that a car may present a risk of fire. In fact, there was a vehicle fire on another American Roll-On vessel two years earlier. Therefore, Judge Wang held that the awareness of the fire risk precluded strict liability under Section 1304(6). Accordingly, Judge Wang granted partial summary judgment to International Auto and stated that what remained was a fact-intensive negligence claim.
On June 4, 2020, the M/V HOEGH XIAMEN, was being loaded with used/junked/wrecked vessels for international transport at a terminal in Jacksonville, Florida. The vessel caught fire shortly after the loading operations were completed, and firefighters were dispatched to extinguish the fire. The firefighters sought information from the crew about the fire, but the crew members spoke little English and were not able to provide meaningful information about the location of the fire or potentially hazardous conditions. This delayed the firefighters’ response for an hour and forty minutes, allowing the fire to grow. Eventually, the firefighters began their efforts, but an explosion occurred, causing several firefighters to be injured. The injured firefighters and their spouses brought this action in Florida state court against the bareboat charterer of the vessel and against entities that maintained and loaded the vessel that allegedly started the fire, and the case was removed to the federal court for the Middle District of Florida. The defendants moved to dismiss the claims of the firefighters on the ground that the defendants did not owe them any duty and to dismiss the claims of the spouses on the ground that loss of consortium is not recoverable under the general maritime law. Judge Howard began by agreeing that maritime law applied to the suits and noting that maritime cases involving professional rescuers are scarce. She concluded that when the firefighters arrived on the vessel, the crew had an obligation to inform the firefighters of known conditions that could be a danger to the firefighters. The claim that the crew failed to provide the firefighters with that information for nearly two hours while the risks associated with fighting the fire increased was sufficient to state a claim that the crew breached its duty of reasonable care. With respect to the defendants who were accused of negligently starting the fire, Judge Howard noted that many states have laws prohibiting firefighter recovery, and some of those states, like Florida, have abolished those laws. However, there is no comparable federal enactment. Considering Florida’s policy of allowing firefighters to sue those who negligently start a fire to be consistent with the maritime law’s policy enunciated in Kermarec that all who are on board a vessel for purposes not inimical to the vessel’s interest are owed a duty of reasonable care, and giving effect to the maritime policy encouraging rescue and salvage, Judge Howard held that if a party negligently starts a fire that requires rescue personnel to respond, the negligent party will be responsible for the injuries to all who are affected by it, including seamen or firefighters. Judge Howard also addressed the claims of the firefighters’ spouses for loss of consortium. Bound by the decisions of the Eleventh Circuit, she dismissed the claims for loss of consortium. See July 2021 Update.
The defendants then moved for bifurcation of the case with separate trials on the issues of liability and damages. The defendants argued that the bifurcation could potentially save the court, jury, and witnesses time and money if the jury returned a verdict for the defendants on liability and that the damage and liability phases did not overlap, allowing the two trials to provide an orderly presentation of evidence. A more important reason, however, was that the defendants argued that they would be prejudiced if the jury was presented with evidence of the burn-victim damage when considering whether the defendants were liable. Judge Howard was not impressed with the argument about saving time and money because “a civil case by its very nature almost always involves the dual issues of liability and damages,” and because bifurcation “often reduces the possibility of pretrial settlement.” She added that bifurcation would require some duplication, and that it would require the plaintiffs to have to testify twice. As bifurcation would require delay and additional testimony, that was sufficient for Judge Howard to deny the request. And Judge Howard did not believe that there was any special or unique risk of prejudice from the burn-victim damage evidence that outweighed the additional inconvenience or expense from bifurcated trials. Therefore, she denied the motion to bifurcate.
Santa Digna Cruz, a Type II diabetic, took her daily dose of insulin, checked her blood sugar (normal at 103), ate at approximately 10:00 a.m., and traveled to the Majestic Star Casino on Lake Michigan (two boats connected by a midway) for her weekly visit. The midway is a ramp that is carpeted except for a two-foot section in the middle with a metal strip on each side of the uncarpeted section. The uncarpeted section sits over Lake Michigan and is uneven because the incline varies based on the water level. There was a warning sign to watch your step because of uneven surfaces. Cruz arrived at about noon and decided to walk across the midway to the buffet at 5:17 p.m., using her cane. She had traversed the path weekly for over 30 years. She lost her balance and fell while crossing the uncarpeted section, causing her injury. She brought this suit against the operator of the casino in federal court in Illinois. At her deposition, Cruz testified that she felt something sticky on the ramp, and her shoe got stuck, causing her foot to turn over so that she fell on her side. She blamed the sticky substance, the metal strip, and the uneven surface. The security officers on the ship testified, however, that Cruz told them she had not eaten in several hours, that she felt dizzy, and that she fell due to low blood sugar. They brought her a glass of orange juice that she drank. She repeated her story to a medic who measured her blood sugar at 88, within the normal range of 80 to 120, but she had consumed the orange juice before her blood sugar was measured. The casino operator moved for summary judgment, arguing that it did not have actual or constructive notice of a dangerous condition, that there was no dangerous condition; and that her fall was caused by her improper foot placement/low blood sugar. Judge Blakey granted the motion and dismissed Cruz’s claims. The casino operator argued that it owed no duty because it did not have notice of the dangerous condition. Cruz countered that there was a warning sign on the midway: “Caution Please Watch Your Step Uneven Surfaces.” Judge Blakey considered the sign to establish notice of danger from an uneven surface (but not a sticky substance), and he proceeded to consider whether the uneven surface presented an unreasonable risk of harm. Cruz could only speculate that the tide may have caused an abrupt change in elevation, shifting the floor’s surface, and surveillance video showed that the transition in elevation was almost negligible at the time of the fall. Judge Blakey was also persuaded by the fact that Cruz had traversed the same midway for years without falling or any complaint (and there were no incidents of other incidents at the spot). He concluded that Cruz had failed to prove that the uneven flooring posed an unreasonable risk of harm and that the casino operator did not owe her a duty to protect her from the uneven flooring. He added that Cruz failed to establish any breach of duty in light of the large, double-sided warning sign with respect to uneven flooring. Finally, Judge Blakey held that Cruz could not establish causation from the uneven flooring. The casino operator argued that Cruz fell because of her foot placement in addition to being dizzy from her diabetes and not having eaten since the morning. Judge Blakey noted that Cruz answered that she did not know whether the uneven surface caused her to fall, initially blaming her dizziness and then the sticky substance. The expert for the casino operator explained that Cruz fell because she crossed her feet and lost her lateral stability, which was consistent with the video. In conclusion, Judge Blakely stated that there was a difference between “falling upon and uneven surface” and “falling because of it.”
Gigi Bryant was injured on High Tide Enterprises’ vessel, M/V PRIDE & JOY II, on Lady Bird Lake in Austin, Texas when the bathroom door of the vessel fell on her. The owner filed this limitation action in federal court in Texas, and the court ordered claims to be filed by February 12, 2024. The owner published notice in the Austin American Statesman and filed a Request for Clerk’s Entry of Default on March 4, 2024. Later that day, Bryant filed an opposition to the Request for Clerk’s Entry of Default and a motion for leave to file a late claim. Judge Pitman agreed that the owner had met the requirements for a default, including mailing and emailing the court’s notice to Bryant. Bryant argued that she believed she had put the owner on notice of her claim by sending a written demand to the owner, which advised that it was on notice in the limitation complaint. As Bryant’s failure resulted from a misunderstanding, as she took prompt action to remedy the mistake, and as the owner was not prejudiced except by the time and resources spent with respect to the current motions, Judge Pitman declined to enter a default and permitted filing of the late claim.
Richy Acab, Sr. and Richy Acab, Jr. are citizens of The Philippines who worked out of the U.S. Port in Pago, Pago, American Samoa. After Acab Sr. performed work on the engine of the F/V EVELINA DA ROSA, he and Acab Jr. departed American Samoa on the vessel as crew members on a fishing voyage. The main engine broke down one day into the journey and the vessel was towed back to Pago Pago. The owner decided to tow the vessel to Honolulu for repair and then to leave immediately for the next fishing voyage. The Acabs agreed to stay on the vessel for the trip to Honolulu and the next fishing trip. The Acabs allege that they were provided their employment agreements on the first day after the vessel left Pago Pago for Honolulu and were instructed to date the document for the prior day while the vessel was in Honolulu. Several months later, the vessel was still in Honolulu, and Acab Sr. was assigned to empty the vessel’s diesel fuel tank of diesel sludge. Acab Sr. claims that he had to enter the tank and sweep the sludge into a bucket without protective equipment, resulting in damage to his heart from exposure to toxic fumes. The Acabs brought this suit in San Diego Superior Court against the owner, and the owner removed the action to federal court based on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). The Acabs moved to remand the case on the ground that the employment agreements are void, and the owner moved to compel arbitration, contending that the narrow jurisdictional analysis involved in removal and enforcement of an arbitration clause under the New York Convention does not encompass an inquiry into the enforceability of the agreements. Judge Benitez agreed with the owner that, for the purpose of determining jurisdiction, the limited inquiry does not include whether the agreement is valid and enforceable. Therefore, the motion to remand was denied. Acab Jr. also argued that his tort claim was for intentional infliction of emotional distress (pled as a claim for retaliatory discharge), and intentional torts are not foreseeable results of the performance of the contract between the parties. Judge Benitez disagreed, reasoning that a claim for wrongful discharge can relate to employment even though it is a tort action. Judge Benitez then decided whether to compel arbitration in the face of the Acabs’ arguments that the agreements violated federal statutes and that the Acabs had limited proficiency in English and did not understand the terms. Noting that the requirements for finding an agreement void under the New York Convention were limited, such as fraud, mistake, duress, and waiver, which can be applied neutrally on an international scale, Judge Benitez declined to hold that an agreement was unenforceable (as void for not comporting with U.S. law). He cited the reasoning from the Supreme Court in Scherk that we cannot have trade and commerce across the world exclusively on our terms, governed by our laws, and resolved in our courts. As the Acabs did not argue that their signatures were obtained by fraud, duress, or mistake, Judge Benitez compelled arbitration.
Roger Scaife, a passenger on the CARNIVAL LEGEND, claims that he was injured when a metal plumbing panel swung down and struck him as he was using a toilet in the vessel’s gym. Scaife brought this suit in federal court in Florida against the cruise line and moved to exclude the opinion of biomechanical engineering expert Dr. Tyler Kress. Dr. Kress opined about the biomechanical forces imparted onto Scaife’s hands from the plumbing panel. Magistrate Judge Goodman first ruled that Kr. Kress is qualified to provide an opinion about “the forces involved in Plaintiff’s alleged incident and whether they are consistent with the injuries he allegedly sustained.” He then addressed the arguments of the parties with respect to the scope of his opinions and specified the permissible and impermissible opinions that he could provide. Magistrate Judge Goodman held that Dr. Kress could testify about the forces involved in the fall of the panel, how those forces may affect a person, whether they were sufficient to cause his injuries, and whether the passenger’s chronic conditions were consistent with his injuries. However, Magistrate Judge Goodman held that Dr. Kress could not testify as to whether the passenger had a specific type of injury, whether the falling panel caused that injury, whether his chronic conditions caused the injury, and whether a major adrenaline rush could be the cause of soreness.
Fluence Energy sought to ship containers of dangerous goods (lithium batteries) from Vietnam to San Diego, California. BBC Chartering issued a Booking Note to Schenker, a non-vessel operating common carrier for the shipment on the BBC FINLAND. BBC Chartering then issued bills of lading which contained an exclusive forum-selection clause for the federal court for the Southern District of Texas. The bills listed Schenker as the consignee. During the voyage the vessel encountered heavy weather and there was damage to the cargo from the heavy weather and from a fire that broke out in one of the holds. Fluence arrested the BBC FINLAND when it arrived in San Diego, and the vessel was released on a bond of $8.85 million. The day after the in rem action was filed in California, BBC Chartering filed a complaint in federal court in the Southern District of Texas against Fluence Energy, seeking a declaratory judgment eliminating or limiting its liability. Fluence Energy moved to transfer the Texas suit to California based on the suit filed the day before in California (first-to-file rule). BBC Chartering responded that the litigation should remain in Texas based on the mandatory forum-selection clause. Judge Lake in the Southern District of Texas transferred the case, disagreeing that application of the first-to-file rule would re-write the parties’ agreement. Judge Lake explained that the issue of whether the forum-selection clause bound the parties did not need to be addressed by the court in the second-filed action. See January 2022 Update.
Judge Benitez in the California litigation then addressed the vessel owner’s motion to vacate the arrest and to dismiss the complaint. The vessel owner argued that Fluence Energy’s contract with the NVOCC required the NVOCC to book the cargo and prepare the necessary shipping contracts with the vessel interests. As those contract documents included the bills of lading with the Texas forum-selection clause, Fluence Energy was bound by the clause. Judge Benitez noted, however, that the NVOCC documents involving Fluence Energy did not specifically reference the bills of lading and that Fluence Energy was unaware of the clause. Accordingly, this was a case where enforcement of the forum-selection clause would be unreasonable or unjust. Having survived transfer by deflecting the application of the bills of lading issued by the vessel owner, Fluence Energy then had to thread the needle of establishing potential liability of the vessel, in rem, based on the Sea Waybills issued by the NVOCC to which the vessel owner was not a party. Fluence argued that the vessel was liable in rem to perform its obligations under the Sea Waybills issued by the NVOCC, and the vessel owner argued that it was not bound by the Sea Waybills to which it was not a party and was unaware. Judge Benitez considered this issue to be a factual dispute that was inappropriate for determination on a Rule E motion to vacate an arrest or dismiss the case. Additionally, reasoning that there is a lien for maritime torts and that Fluence Energy had sufficiently alleged a breach of duty by the vessel, Judge Benitez declined to dismiss the negligence claim or vacate the arrest for the negligence claim. See March 2022 Update.
The parties then filed motions for summary judgment, motions to strike, and a motion for adverse influence. Fluence Energy engaged Professor Martin Davies as a forensic maritime expert to set forth “rarely presented maritime legal issues related to contracts of private carriage,” distinguishing common carriers from private carriers. Professor Davies set forth legislative history of COGSA alongside other statutory legislation and instructed on how to apply cases cited by the parties. Reasoning that the expert report “reads more like a legal brief than expert opinions based on experience in the industry,” Judge Benitez held that he would not consider Professor Davies’ legal conclusions as evidence or fact in resolving the common versus private carriage distinction and would instead perform his own review of the law as it applies to the evidence. Judge Benitez then turned to the issue of whether the contract was for private or common carriage (an important issue because of the application of COGSA’s package limitation to common carriage and its application to private carriage only if properly incorporated). Judge Benitez answered that he could not decide the issue on motions for summary judgment. It appeared that the parties may have initially intended a common carriage before the parties increased the amount of cargo to almost a full load and that they may have intended a private carriage thereafter. Judge Benitez then addressed the application of the $500 package limitation from COGSA and found that the bills of lading and booking note contained language to incorporate the package limitation and provide an opportunity to declare a higher value. Accordingly, he held that Fluence Energy was bound by the package limitation (Judge Benitez found additional support that Fluence Energy chose not to opt out of the package limitation from its attempt to purchase insurance that would pay for claims in excess of the package limitation). BBC Chartering also sought protection of the package limitation pursuant to the Booking Note and the bills of lading issued by BBC Chartering, and Judge Benitez held that Fluence Energy was bound by the terms, even though it was not a party to the terms of the Booking Note, applying the reasoning from Kirby that BBC was a downstream carrier, akin to the railway in Kirby. Judge Benitez noted that the holding in Kirby was derived from common carriage, but the Supreme Court did not limit its application to common carriage. Therefore, although Fluence was not a party to the BBC bills of lading, the protection of the package limitation negotiated by Schenker in arranging for the carriage of the cargo extended to BBC. Fluence Energy argued that the package limitation did not apply because there was an unreasonable deviation that prevented application of the defense. Fluence Energy argued that the cargo was not secured in accordance with the cargo storing manual, but the captain chose to undertake the voyage because he thought he could make it safely across the ocean. The captain agreed at his deposition that BBC was pressing him to proceed as fast as he could, but he confirmed that he had the authority to make the safety-based decisions and he continued to sail at a low speed. It was the chief mate who was in charge of the stowage, and he believed that the stowage and stability were good. Judge Benitez could not find the culpable state of mind that the captain or mate believed that damage was substantially certain to occur, and he declined to find an unreasonable deviation. Fluence Energy also sought an adverse inference on the issue of deviation based on the fact that three different versions of the deck log were produced, information on the vessel’s Voyage Data Recorder (black box) was not preserved, and handwritten notes of the navigator were not preserved after they were used to create a statement of facts. With respect to the deck log, the second version contained two additional notes that were added after the original version, and the third version had appended to it a Sea Protest, Statement of Facts, and “training records.” The problem with the argument about the deck log is that all versions were produced. As nothing was missing, Judge Benitez held that there could be no spoliation. With respect to the Voyage Data Recorder, the captain recognized that it was his duty to download the recording, but he explained that the incident was intense; he was focused on the fire and rough sea; and he just forgot to download the recording before it was overwritten. Judge Benitez stated that the inference as to deviation would have to involve the understanding of the captain and mate at the time the vessel left port without properly securing the cargo. Both officers were deposed and testified as to their state of mind. It was unlikely that the recording at the time of the incident would include statements that the crew was substantially certain the cargo would be damaged when the vessel left port. Therefore, Judge Benitez declined to give an adverse inference with respect to the Recorder. The navigator notes were written on scratch paper and used to transcribe chronological notes in the Statement of Facts without alteration. They are then routinely discarded. The captain and mate were deposed with the benefit of the Statement of Facts, and Fluence Energy had not taken the deposition of the navigator to determine if there was any difference between the notes and the Statement of Facts. As Fluence Energy did not make a real attempt to figure out whether the notes differed from the Statement of Facts and the testimony regarding the notes, Judge Benitez declined to give an adverse inference with respect to the notes. Finally, Judge Benitez considered the liability of the defendants. Although there was damage to the cargo during the shipment, that did not establish the elements of a claim for breach of contract, negligence, or breach of a bailment obligation. As there were disputed issues on each of the theories, Judge Benitez declined to grant summary judgment to Fluence Energy.
In our April 2023 Update, we reported that the United States Supreme Court granted the petition for a writ of certiorari filed by Great Lakes Insurance in Great Lakes Insurance v. Raiders Retreat Realty Co., No. 22-500. The Supreme Court agreed to hear this question: Under federal admiralty law, can a choice of law clause in a maritime contract be rendered unenforceable if enforcement is contrary to the “strong public policy” of the state whose law is displaced? The Supreme Court considered the decision in which the Third Circuit reasoned that the principle of generally enforcing choice-of-law provisions in marine insurance contracts “is not altogether separate” from the regime for forum-selection clauses. Holding that the framework enunciated in Bremen and Shute extends to the choice-of-law provision in the policy issued by Great Lakes in that case, the Third Circuit remanded the case to the district court to consider whether Pennsylvania has a strong public policy that would be thwarted by application of New York law. Ultimately, the Supreme Court reversed the Third Circuit, holding that public policy of the state with the most significant interest in the transaction was not an exception to the enforceability of a choice-of-law provision. Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC, No. 22-500, 2024 U.S. LEXIS 996 (U.S. Feb. 21, 2024) (Kavanaugh). See March 2024 Update.
Contractual choice-of-law was an issue in the litigation between Martin Andersson and his vessel’s insurer, Great Lakes Insurance. Andersson, who lived in Massachusetts, purchased a marine insurance policy from Great Lakes for his catamaran, MELODY. The vessel sustained catastrophic damage when it struck a breakwater near the Port of Boca Chica in the Dominican Republic, and Great Lakes declined to pay for the cost of salvage or repair because Andersson had failed to keep the vessel in a seaworthy condition and had sailed outside the bounds of the policy’s navigational limits. Great Lakes brought its first action in federal court in Massachusetts seeking a declaratory judgment that it owed no coverage under the policy, and Andersson counterclaimed for breach of contract and for bad faith under Massachusetts law. Great Lakes moved to dismiss the bad faith count of the counterclaim, arguing that New York law, which does not afford a bad faith action, was applicable by a choice-of-law clause in the policy. The clause provided that “any dispute arising hereunder” would be adjudicated under entrenched principles of federal admiralty law, “but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.” Andersson argued that New York law applied to the contract claim, but Massachusetts law applied to extra-contractual claims (the bad faith claim). Judge Hillman rejected that argument, however, citing the cases holding that New York law applies to all claims arising from the performance under the contract and subsequent coverage disputes, which includes bad faith claims. He then addressed Andersson’s argument that Massachusetts public policy rendered the choice-of-law clause unenforceable and held that application of New York law, rather than Massachusetts law, would not conflict with any entrenched principle of maritime law and that New York did not lack a substantial relationship to the parties or transaction. Consequently, he applied New York law and dismissed the bad faith count of the counterclaim. See July 2021 Update.
After discovery was closed and the deadline to amend pleadings had passed, Great Lakes sought leave to amend its complaint to add a claim that Andersson violated the policy’s Named Operator Warranty. Judge Hillman denied the motion as untimely and unfairly prejudicial to Andersson, and Great Lakes filed an interlocutory appeal that the First Circuit dismissed for lack of jurisdiction. After the denial of its motion to amend, Great Lakes brought a second action against Andersson, presenting the claim it sought to add by the late motion for leave to amend in the first suit. Andersson moved to dismiss the second suit based on res judicata, and Great Lakes responded that res judicata was not applicable because the denial of the motion to amend was not a final judgment on the merits of the claim sought to be presented in the amendment. Judge Hillman disagreed with Great Lakes, citing case law that denial of leave to amend constitutes res judicata on the merits of claims that were the subject of the proposed amended pleading. Reasoning that allowing the second suit would result in the same prejudice and inefficiency that were cited by the court in denying the amendment in the first suit, Judge Hillman dismissed the second suit (adding that the remedy for Great Lakes was an appeal of the denial of leave to amend in the first suit at the conclusion of that suit). Andersson also sought sanctions for filing the late motion to amend and the second suit, but Judge Hillman denied the motion without substantive discussion. See October 2022 Update.
Back in the original suit, Great Lakes moved for summary judgment on its claims for declaratory judgment, and Andersson moved for partial summary judgment on its claim for breach of contract. The issue presented by both motions was whether Great Lakes established that the MELODY was unseaworthy as required by maritime law and the policy. Judge Hillman cited Judge Brown’s Spot Pack case for the two warranties, the warranty of seaworthiness at the inception of the policy and the negative warranty that the owner will not knowingly send the vessel to sea after the policy inception in an unseaworthy condition. Great Lakes argued that the vessel was unseaworthy when the policy attached because it lacked updated maps. However, finding no cases holding that lack of current maps voided an insurance policy from its inception, Judge Hillman concluded that the first warranty was not breached. Great Lakes did cite cases in which a vessel was held unseaworthy because of deficient charts, but Judge Hillman noted that the cases required knowledge of the captain that the maps were not sufficient for the intended journey. The intended voyage in this case was from Aruba to Sint Maarten. However, weather and the seasickness of a crewmember took the boat near the Dominican Republic where it was decided that repairs should be made. Although the Dominican Republic was a potential point of refuge for the voyage, Judge Hillman did not believe it was reasonably foreseeable that the vessel would end up there. Consequently, he did not find that the vessel was unseaworthy for failing to have a current chart for the waters where the vessel grounded. Turning to the policy’s express warranty of seaworthiness “at all times,” Great Lakes argued that the failure to have current charts for Florida, a destination listed in the policy, rendered the vessel unseaworthy. However, Judge Hillman considered the seaworthiness warranty to require the vessel to be adequate for the voyage she undertakes, not for every area covered by the policy. Accordingly, he did not believe the policy warranty was breached, and he granted summary judgment to Andersson on his claim for breach of contract. See April 2023 Update.
Andersson filed an interlocutory admiralty appeal under Section 1292(a)(3) of Judge Hillman’s decision dismissing the bad faith count of Hillman’s counterclaim. Andersson argued that Great Lakes engaged in unfair claim settlement practices in violation of Massachusetts law, and Great Lakes argued that Massachusetts law did not apply because of the provision in the policy that “any dispute arising hereunder” would be adjudicated under entrenched principles of federal admiralty law, “but where no such well established, entrenched precedent exists, this insuring agreement is subject to the substantive laws of the State of New York.” Writing for the First Circuit, Judge Montecalvo noted the grant of certiorari with respect to the application of the public policy of the state whose law was displaced by the choice-of-law provision, but she did not delve into that issue as the question on appeal was whether to apply Massachusetts or New York law to the bad faith claim pursuant to the provision in the policy. Andersson did not contest that the provision was valid and enforceable, that his contractual claim was subject to the provision, or that entrenched principles of admiralty law would control the extra-contractual claim if such precedent existed. Instead, Andersson argued that the extra-contractual claim did not “fall within the ambit of the choice-of-law provision.” Thus, Judge Montecalvo addressed whether the bad faith claim under the Massachusetts statute was, in fact, extra-contractual. She noted that the statute applies to failure to adopt and implement reasonable standards for prompt investigation of claims and refusing to pay claims without conducting a reasonable investigation. Consequently, the insurer may be liable under the statute even though it pays the claim and honors the contract, and the allegations are not duplicative of the claim for breach of contract. Having established the nature of the bad faith claim as extra-contractual, Judge Montecalvo compared the claim to the policy provision. She reasoned that the provision on choice of law contains separate triggers. For “any dispute arising hereunder,” the dispute is adjudicated under entrenched principles of admiralty law. As there were no such entrenched principles, she turned to the language that, in the absence of entrenched maritime principles, “this insuring agreement is subject to the substantive laws of the State of New York.” Judge Montecalvo considered the language, “this insuring agreement,” to be ambiguous. Any “dispute” could mean contractual and extra-contractual claims, but, as the second clause is limited to “this insuring agreement,” it could be limited to contract-related claims that are subject to New York law and not the extra-contractual claims. As the provision is a “boilerplate” clause, Judge Montecalvo did not believe that extrinsic evidence was relevant and applied the rule that doubts as the intended meaning of the words would have to be resolved against the insurer. Therefore, she reached “the inescapable conclusion that only contract-related claims” were subject to the substantive laws of New York and that the extra-contractual claims were not within the scope of the provision. See June 2023 Update.
Great Lakes filed an interlocutory admiralty appeal of the summary judgment granted to Andersson on the contract claim (and the denial of Great Lakes’ motion for summary judgment). Great Lakes brought one argument for the appeal—that Judge Hillman erred by refusing to enforce the policy’s express definition of seaworthiness (requiring the vessel to have adequate “parts, equipment and gear” to be seaworthy. Writing for the First Circuit, Judge Gelpi reasoned that the argument required the court to decide whether the policy warranty or the implied warranty from Spot Pack required that the vessel carry up-to-date charts for all geographic areas covered by the policy in order to be considered seaworthy. Judge Gelpi began by considering the absolute implied warranty of seaworthiness, and he defined the warranty as concerning “whether the physical condition of the vessel and its equipment are sufficient for the vessel’s intended use.” Thus, he held that the warranty pertained to the physical condition of the vessel and that it did not require Andersson to keep up-to-date paper charts on board the vessel for every covered location from the inception of the policy. He reasoned that it would be difficult to predict, at the inception of the policy, exactly where his vessel would dock in every port covered by the insurance (he did note that the existence of up-to-date paper charts might be relevant to the breach of the ongoing warranty of seaworthiness, but that was not the issue in this case). Judge Gelpi then turned to the express provisions of the policy. He noted that charts were not specifically enumerated in the language of the warranty, and similar to the analysis for the implied warranty, he did not find precedent that charts constituted “parts, equipment and gear.” Judge Gelpi agreed that charts are arguably equipment normally required for the operation and maintenance of the vessel, but he answered that they are not normally sold with the vessel and, consequently, do not qualify as part of the scheduled vessel. Although the policy provided that the vessel must be seaworthy at all times during the duration of the insuring agreement, Judge Gelpi did not consider that language to support Great Lakes’ argument that paper charts were required at the inception of coverage for every area covered by the policy. Additionally, Judge Gelpi noted that the seaworthiness warranty required that the vessel be reasonably suited for its intended use, and that the intended use of the vessel could change daily depending on the journey or activities pursued. Giving a narrow construction of the language of the policy, Judge Gelpi affirmed Judge Hillman’s decision that the incident was covered by the policy. See January 2024 Update.
On remand, the parties filed cross-motions for summary judgment on Andersson’s claim for bad faith insurance claims settlement practices under Massachusetts law (that Great Lakes failed to reasonably investigate the claim. Judge Hillman concluded that Great Lakes took no action to investigate the facts of the claim beyond the vessel inspection and interview with Andersson. It did not attempt to retrieve the GPS units from the vessel, did not investigate the weather during the voyage, did not investigate whether the determination of the direction of the vessel in response to the storm was appropriate, and it closed its file (after consulting with counsel) despite knowing virtually nothing about events leading up to the accident. Judge Hillman concluded that Great Lakes’ decision to file the declaratory judgment action without making further inquiry into the underlying facts was a breach of its statutory duty under Massachusetts law (Judge Hillman added that the decision to file suit without first providing notice of the denial of the claim was motivated, in part, by the insurer’s desire to gain strategic advantage by winning the race to the courthouse so as to file the suit under admiralty law. Therefore, Judge Hillman held that Andersson was entitled to recover attorney fees and costs and double damages (he entered judgment in the amount of $375,594.30 for breach of contract).
William Tisdale was employed by Marquette Transportation as an uncovered steersman on the M/V ST. JOHN. While performing deckhand work on the vessel in a barge fleeting operation on the Houston Ship Channel, Tisdale picked up a lock line on the starboard side of a barge in tow of the ST. JOHN and felt a pop on the right side of his lower back/hip. He was initially diagnosed at an urgent care facility with a back strain, but, when he returned home to Mississippi, he underwent an MRI that reflected disc degeneration at L3-4 with a disc bulge and bulging discs at L4-5 and L5-S1. He was treated by neurosurgeon Donald Dietze, who opined that Tisdale’s disc herniation at L3-L4 was related to his accident and that the conditions at his L4-L5 and L5-S1 levels were aggravations of pre-existing disease (testifying that the aggravation of Tisdale’s spine at the L5-S1 level was caused by the accident). Dr. Dietze recommended that Tisdale undergo a lumbar fusion at L3-L4, but he recommended postponing the surgery as long as possible and that Tisdale undergo a radio frequency ablation procedure to relieve pain but not to treat the underlying condition causing the pain. Marquette did not approve the radio frequency ablation. Tisdale brought this suit in federal court in Louisiana against Marquette, seeking to recover under the Jones Act and under the general maritime law for unseaworthiness and maintenance and cure. Eventually, Dr. Dietze recommended that Tisdale undergo a three-level fusion from L3 to S1. In response to the recommendation for the multi-level fusion, Marquette Transportation retained neurosurgeon John Davis, IV to perform an examination on Tisdale (and review his records). Dr. Davis opined that Tisdale’s low back pain was causally related to the injury, and he recommended a L3-L4 minimally invasive procedure to decompress the L3 nerve root. He found no indication for the surgery at L4-L5 or L5-S1, because Tisdale had “modest age-appropriate degenerative changes” at those levels and there was “not so much as a hint of any nerve root compression at either of those levels” (nor was there any evidence of instability). After the competing opinions had been completed, Tisdale underwent an MRI on November 21, 2022, and Dr. Dietze concluded that there was a new paracentral disc herniation with right L5 and S1 nerve root compression (consistent with Tisdale’s complaint of new right foot weakness). Dr. Dietze opined that this was a failure of the injured disc superimposed onto a degenerative disc (to support his diagnosis of symptomatic progressive degenerative changes at L5-S1). Dr. Davis noted that the protrusion at L5-S1 was a “new finding” that was “not present” on the prior MRI scan. He stated that this new herniation was not related to the work injury and that his recommendation for an L3-L4 minimally invasion procedure remained unchanged. Marquette denied Tisdale’s request for the three-level fusion, and Judge Guidry held a trial on the issue of Tisdale’s entitlement to cure. Tisdale claimed that he was entitled to cure that included the radio frequency ablation procedure and the three-level fusion recommended by Dr. Dietze. Judge Guidry first ruled that the radio frequency ablation procedure was a “palliative treatment that will not serve to improve Tisdale’s back injury.” Therefore, he held that the procedure did not fall within the scope of Marquette’s cure obligation. With respect to the dispute over the extent of surgery, Judge Guidry found Dr. Davis to be more credible than Dr. Dietze, and he agreed with Dr. Davis’s opinion that the three-level fusion was not related to Tisdale’s accident on the vessel and with Dr. Davis’ recommendation for the minimally invasive transforaminal lumbar interbody fusion at the L3-L4 level. Therefore, Judge Guidry held that Marquette’s cure obligation did not encompass the three-level fusion recommended by Dr. Dietze. Finally, Judge Guidry held that Tisdale was not entitled to punitive damages because Marquette was under no obligation to pay for the palliative procedure and because its denial of the multi-level fusion was not arbitrary and capricious. See August 2023 Update.
Marquette then moved for summary judgment on the Jones Act and unseaworthiness claims. Marquette cited the testimony of Tisdale that he did not believe the task was unsafe or unreasonable; it was a one-man task that he had performed many times before; and he knew how to perform this routine task. Tisdale responded that there were crucial facts that he learned during discovery that support a claim that he was not provided with enough equipment, assistance, and manpower to do the assigned task and that Marquette was negligent in failing to warn him of non-apparent dangers. Tisdale argued that he was unaware of Marquette’s lifting limit of 70 pounds above a 60-inch height, yet the line was wet, weighed more than 100 pounds, and had to be carried above his shoulder because of the configuration of the barges. Although Marquette argued that Tisdale’s response to the motion contained a “sham affidavit,” Judge Guidry believed he created a fact issue in light of his unawareness of Marquette’s policy. Accordingly, Judge Guidry denied Marquette’s motion for summary judgment.
Patrick J. Perih piloted his vessel through the waters of Coconut Grove, Florida toward Aventura, passing through Haulover Inlet and under the Haulover Inlet Bridge. After passing the Bill Bird Marina, Perih passed another vessel travelling in the opposite direction. Vessels owned by Isabella Marine, Ocean Resort, and Peter Jachim Albano that were moored at the marina and a fuel dock were allegedly damaged by a wake, and an officer of the Florida Fish and Wildlife Conservation Commission investigated but there were no witnesses to the vessel that caused the wake, and he did not issue a citation. The vessel owners then brought this suit against Perih in federal court in Florida, alleging that he recklessly operated his boat, damaging the docked vessels. In his deposition, Perih testified that he may have caused the damage, and the investigating officer testified that it was possible that another vessel could have caused the damage. As the evidence only established that a passing vessel may have caused the damage, and it did not establish that it was Perih’s boat that caused the damage, Judge King granted summary judgment to Perih based on lack of causation. Judge King also noted that temporary repairs were performed, but that the temporary repairs and any future repairs did not or would not impact the functioning of the vessel and were cosmetic. Judge King reasoned that the damaged party in a collision case is only entitled to an award that will give him a boat as seaworthy and practically serviceable as before the incident. As the damage to the vessels was cosmetic and was not necessary to make the boats as seaworthy as before the incident, Judge King held that summary judgment was likewise appropriate for lack of evidence of recoverable damages.
Janita Mathis was a passenger on the MARGARITAVILLE AT SEA PARADISE. She took a shower in her cabin in the small basin surrounded by a shower curtain, and she noticed that the water was not draining properly. When she finished the shower, she stepped out onto the floor and slipped. As she lay on the floor, she noticed that the floor was wet with soapy water that had flowed out of the shower basin. Mathis brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint. The cruise line argued that Mathis failed to plead a plausible claim that the cruise line had notice of the shower drainage problem and related slipping hazard. Mathis cited her pleading that before the cruise, an unknown crewmember was required to clean the cabin, including running water in the shower to clean the basin. The crewmember should have known that the water was not draining properly, creating a hazard. Additionally, Mathis pleaded that she and her husband had talked to other passengers after the accident, and they advised that their showers were not draining properly. Mathis’ cousin stated that a crewmember on a subsequent cruise on the same vessel admitted that drainage was a constant problem. Magistrate Judge McCabe believed that these assertions were sufficient to support notice to the cruise line and denied the motion to dismiss the direct liability counts. The cruise line sought dismissal of the vicarious liability counts because they were based on the same conduct of the crewmember who cleaned the cabin before the cruise and who should have corrected the condition of the shower or warned of it. Magistrate Judge McCabe questioned how, if the pleadings of the first two counts were true, the crewmember could be responsible for a ship-wide problem. However, Mathis asserted that the vicarious liability counts were pleaded in the alternative and assumed that the problem was a one-time drainage problem confined to Mathis’ cabin. Therefore, there was plausible negligence of the crewmember for failing to make sure that the shower was properly working or to report it for maintenance (or failure to warn of that drainage problem). Accordingly, Magistrate Judge McCabe recommended that the motion to dismiss be denied.
Lauri Schaff, a passenger on the CARNIVAL VALOR, slipped on condensation while stepping onto the deck of the ship from the gangway in Costa Maya, Mexico. She brought suit in federal court in Florida, and Count III of her complaint alleged that the cruise line negligently failed to train its crewmembers to inspect, clean, dry, and warn passengers of dangerous conditions on the ship. The cruise line moved to dismiss the count, presenting to Magistrate Judge Goodman the question whether the court should “permit a plaintiff to fill in some facts later (after discovery provides information to use as merits meat placed onto the litigation bone) or if a plaintiff is obligated to allege in the Complaint facts for each and every element of the claim, before receiving discovery).” In recommending denial of the motion to dismiss, Magistrate Judge Goodman reasoned that the plausibility standard “‘calls for enough fact to raise a reasonable expectation that discovery will reveal evidence’ of the defendant’s liability.” Magistrate Judge Goodman did caution, however, that if the allegations are more conclusory than factual, the court does not have to assume their truth. Magistrate Judge Goodman added that the allegations will be put to the test at the summary judgment stage after the opportunity to pursue discovery. The cruise line did not object to the recommendation and filed its answer and affirmative defenses to the complaint. [Compare Magistrate Judge Goodman’s recommendation (discussed below) in Miranda v. NCL Bahamas Ltd., No. 1:23-cv-24871, 2024 U.S. Dist. LEXIS 66415 (S.D. Fla. Apr. 11, 2024)].
William Jones, an employee of FDF Energy Services, claims that he was injured when he was struck by a crane stinger while he was working in the Gulf of Mexico offshore Louisiana on the jack-up rig, ENTERPRISE 205, owned and operated by Enterprise Offshore Drilling. Enterprise Offshore Drilling was working for the oil and gas lease owner, Cantium, which hired FDF Energy, an oilfield contractor, to provide rig and vessel cleaning services (cleaning tanks on the ENTERPRISE 205). Jones filed a suit in Louisiana state court against Enterprise (and two of its employees), seeking to recover for negligence and unseaworthiness, and Enterprise tendered its defense and indemnity to Cantium pursuant to the drilling contract between Enterprise and Cantium. Cantium tendered the defense/indemnity of Enterprise to FDF Energy pursuant to the terms of the master service agreement between Cantium and FDF, which required FDF to defend and indemnify Cantium and the members of Cantium’s “Company Group” including the subcontractors of Cantium (such as Enterprise). FDF Energy’s insurer, Hartford, declined the tender of the defense/indemnity of Enterprise, asserting that the obligations were void under the Louisiana Oilfield Indemnity Act. Cantium then brought this suit in federal court in Louisiana against FDF Energy, arguing that the MSA was governed by the general maritime law under which the defense and indemnity provisions were valid. Cantium amended its complaint to seek defense and indemnity for its employees who were sued by Jones in the state suit, and moved for summary judgment that the MSA was governed by the general maritime law. Judge Fallon set the stage for the determinative choice-of-law issue by stating that the reciprocal indemnity provisions were valid under the general maritime law but were voidable under Louisiana law as Cantium had not paid for a Marcel Endorsement to bypass the effect of the LOIA. Judge Fallon applied the decision of the en banc Fifth Circuit in Doiron to determine whether the MSA is a maritime contract. FDF Energy argued that it did not expect a vessel to play a substantial role in the services it provided because the jack-up ENTERPRISE 205 was not a vessel in navigation when it was jacked up. Looking at the MSA together with the work order that provided for the tank cleaning on the jack-up, Judge Fallon rejected the argument. He answered that the ENTERPRISE 205 was a vessel and remained a vessel while it was jacked up. Consequently, the contract work contemplated a substantial role for a vessel, and the contract was a maritime contract. FDF Energy then presented a “unique twist” on the Doiron analysis, arguing that its incorrect belief that the work was not going to be performed on a vessel in navigation “transforms the contract.” Judge Fallon rejected the argument that “a party’s belief or expectation that is contrary to established law ought to negate the existence of a maritime contract.” FDF Energy also argued that the Fifth Circuit’s Corbitt decision, holding that an indemnity provision did not extend to the indemnitee’s contractual liability under a separate contract, demonstrated that the indemnity owed by FDF Energy only extended to Cantium and did not require that FDF Energy also defend and indemnify Enterprise Offshore. Judge Fallon easily rejected that argument because the language of the defense/indemnity obligation in the MSA (pass-through indemnity) extended directly to Cantium and its subcontractors, which included Enterprise Offshore. As FDF Energy was required to indemnify both Cantium and Enterprise, Judge Fallon held that Cantium was entitled to the defense costs it expended to defend Enterprise. And, as the contract provided for the recovery of attorney fees to enforce the indemnity, Judge Fallon held that Cantium could recover attorney fees for bringing the suit against FDF Energy (he also rejected the argument that Cantium did not have the right to bring the claim for attorney fees because they were paid by Cantium’s insurer). Finally, Judge Fallon held that FDF Energy was required to name Cantium and Enterprise Offshore as additional insureds based on the brief parenthetical addition to the insurance section: “including obtaining waivers of subrogation, adding Company Group as additional insured, and being primary).” Thanks to Matthew H. Ammerman of Houston, Texas for bringing this opinion (and others in this Update) to our attention.
Dexter Douglas suffered an electrical shock while performing repair work on the MEGAN BEYEL, a towing vessel owned by Beyel Brothers. Beyel Brothers’ insurer began paying maintenance and cure, and Douglas’s attorney sent a letter to Beyel Brothers notifying it of Douglas’s Jones Act claim for injuries and requesting preservation of evidence. The letter noted that Douglas suffered multiple injuries, including a concussion, PTSD, migraines, changes in vision, fever, nausea, light sensitivity, headaches, post-concussion syndrome, tinnitus, and neuropathy from his neck into his right upper extremity. Over a year later, Douglas filed suit against Beyel Brothers in Florida state court, including claims for Jones Act negligence and unseaworthiness. Beyel Brothers then brought this action in Florida federal court seeking exoneration/limitation of liability, and Douglas moved to dismiss the action for lack of subject matter jurisdiction because it was not filed within six months of the notice letter. Judge Byron found that argument “misguided and unpersuasive” as the Eleventh Circuit has held (In re Orion Marine Construction) that the six-month deadline to file a limitation action is “a non-jurisdictional claim-processing rule, and a shipowner’s failure to meet it does not deprive the district court of subject matter jurisdiction but rather provides a basis on which to dismiss the owner’s limitation action on the merits.” As a dismissal for lack of subject matter jurisdiction would “directly conflict with Eleventh Circuit precedent,” Judge Byron denied the motion to dismiss. [Compare the sua sponte dismissal (discussed below) of the limitation action in In re Interstate Navigation Co., No. 1:24-cv-53, 2024 U.S. Dist., LEXIS 63675 (D.R.I. Apr. 8, 2024) (McElroy)].
Carole S. Rafie was a passenger on the SPIRIT for a cruise around the South Pacific. She was injured while descending stairs outside the Stardust Theater on the ship. Attributing her fall to the vessel navigating through an area of rough seas or adverse weather, she brought this action against the cruise line in federal court in Florida with a single negligence count. The cruise line moved to dismiss the suit, arguing that Rafie did not allege any facts to establish that the cruise line was on notice of the dangerous condition that caused her fall. Rafie did not respond to the motion, but Judge Scola reviewed the complaint and agreed that it only contained conclusory, boilerplate allegations that the cruise line knew or should have known of the dangerous condition of the stairs when the ship navigated through rough seas/weather. As Rafie did not request leave to amend, Judge Scola dismissed the complaint with prejudice. See February 2024 Update.
Rafie moved for reconsideration, and Rafie’s counsel argued that the lack of response was caused by a failed attempt to update his email address. Judge Scola rejected the excuse, noting that the motion did not cite case law to support the argument and that the Local Rule requires attorneys to maintain current contact information with the Clerk with the warning that “failure to comply shall not constitute grounds for relief from deadlines imposed by Rule or by the Court.” Judge Scola reiterated that he had reviewed the complaint and it failed to state a claim. Therefore, he declined to reconsider the dismissal.
This case arises from a fire at Lighthouse Marine’s shipyard in Port Bolivar, Texas. The fire started on the S/V NINO and spread to the M/V MS MONICA, owned by Boat Services of Galveston and chartered to Rodi Marine. Boat Services and Rodi Marine brought this suit in federal court in Texas against Lighthouse Marine, and they added Peninsula Marine as a defendant. They brought the suit under the court’s admiralty jurisdiction, and they added that the court had supplemental jurisdiction over state law claims in their amended complaint. The plaintiffs sought punitive damages under maritime law and Texas law. Believing that the fire was started by unknown arsonists, the defendants, Lighthouse Marine and Peninsula Marine, sought leave from the court to designate John Doe as a responsible third party under Texas law. Such a designation would, under Texas law, result in reduction of the damages for the fault of the John Doe defendant. The designation by Peninsula Marine was in accordance with Texas law, the plaintiffs did not object, and Magistrate Judge Edison granted leave for the designation by Peninsula Marine. The plaintiffs objected to the designation by Lighthouse Marine, because it was not filed within 60 days of its original answer, and Lighthouse Marine answered that the first time that the plaintiffs added state claims was in the amended complaint. Therefore, Lighthouse Marine filed the designation in its original answer to state claims. It was not necessary, however, for Magistrate Judge Edison to “wander down” the road to address this “fascinating academic debate on the meaning of the phrase ‘original answer,’” as he held that a person designated as a responsible third party by one defendant is available for apportionment of fault by any other defendant. Therefore, he denied the request of Lighthouse Marine to designate John Doe as a responsible third party as moot.
Vigor Marine sold its three-section drydock, constructed in 1956, to a shipyard in Mexico to be scrapped. Vigor then contracted with Western Towboat to tow the drydock from Seattle, Washington to Ensenada, Mexico, using the tug OCEAN RANGER. A surveyor noted significant corrosion but opined that the drydock was appropriately prepared and rigged for the tow in an extended configuration with the bow and stern sections attached. The surveyor did require that the tow avoid heavy head or beam seas to avoid pitching or rolling. The Navy operating manual for the drydock provided that the bow and stern sections should be detached and docked on the center section, and Vigor’s sales contract required that the three sections be detached and carried on a heavy-lift ship. During the tow the drydock began taking on water and listing, and the tug headed toward San Francisco Bay to seek assistance. After communicating with the Coast Guard, the tug concluded it was unsafe to enter San Francisco Bay in the event the drydock sank. The Coast Guard approved the tow entering Monterey Bay where the drydock sank .92 miles inside the Monterey Bay Marine Sanctuary. The National Oceanic and Atmospheric Administration informed Vigor, Western Towing, and the Mexican shipyard of their liability under the National Marine Sanctuaries Act for damages from the sinking in the sanctuary, and Western filed this action against Vigor, seeking recovery for its services under its towing agreement and a declaratory judgment against the United States exculpating it of liability in any forthcoming enforcement action under the NMSA. Chief Judge Martinez first held that the court lacked subject matter jurisdiction, based on lack of ripeness and standing, of the action against the United States as NOAA has not taken any final action against the parties. Chief Judge Martinez then turned to the claims between Western and Vigor. He denied Vigor summary judgment that Western had breached the towing agreement by failing to adequately perform its duties when it proceeded into Monterey Bay and stood by while the drydock sank in a marine sanctuary as the contract did not contain a requirement that the tug keep the tow in a safe place to sink. Chief Judge Martinez then addressed the knock-for-knock indemnity provisions in the towing agreement and held that claims arising out of or relating to damage to a party’s own property could not be recouped (such as Vigor’s loss of the drydock); however, that did not bar Vigor from recouping costs incurred as a result of Western’s negligent injury to third parties. With respect to Vigor’s claim that Western was negligent, Chief Judge Martinez declined to find that the last clear chance doctrine or THE PENNSYLVANIA Rule applied; however, he concluded that Western breached its duty of prudent seamanship as a matter of law when it allowed the drydock to sink in the marine sanctuary. Although Western objected that its crew was unaware that the drydock was inside the sanctuary and was unaware of the legal, environmental, or economic consequences of the sinking in the sanctuary, Chief Judge Martinez held Western was negligent as a matter of law with respect to its lack of cognizance of the vessel’s position in relation to the sanctuary. Western moved for reconsideration of the decision on the awareness of the tug’s crew of the sanctuary. Chief Judge Martinez recognized that there were factual disputes about whether the crew knew that the tug had entered a sanctuary, but it was their failure to be aware of the hazards presented by the sanctuary to a tug, together with their lack of positional awareness, that led to the finding of negligence. Additionally, Western argued that it was not negligent for the tug to release the line on the drydock while it was in the sanctuary as it was necessary to save the life of its crew in the emergency presented by the sinking drydock. Chief Judge Martinez responded that it was not the response to that emergency that was the source of the fault but the failure to exercise prudent seamanship in entering the sanctuary with a sinking drydock. See July 2021 Update.
Chief Judge Martinez conducted a bench trial of the case, and on the final day of trial, Western argued that Vigor was not entitled to recover damages on its counterclaim against Western because Vigor’s insurers paid for a portion of the damages Vigor incurred from its exposure to liability under the NMSA. After holding that Vigor was a real party in interest and could maintain the counterclaim, Chief Judge Martinez addressed the question of whether the collateral source rule applied when Vigor had been partially reimbursed for its losses and there was a waiver of subrogation in the towing agreement. Concluding that the payments were not “benefits from a wholly independent source which Vigor had the foresight to arrange,” Chief Judge Martinez held that the collateral source rule did not apply and that Vigor could not recover to the extent it had been paid by its insurers. See November 2021 Update. On December 16, 2021, Chief Judge Martinez issued his findings of fact and conclusions of law from the bench trial on the cross-motions of Western and Vigor for breach of contract and Vigor’s counterclaim for maritime negligence from the sinking of the drydock in the sanctuary. Chief Judge Martinez concluded that neither party could prevail on the claims for breach of contract, allocated fault for the sinking of the drydock as 60% to Vigor and 40% to Western, and awarded Vigor 40% of the $100,000 expended by Vigor to cooperate with NOAA. Western’s argument that it was entitled to recover the hire under the Tow Agreement was subject to an exception for loss arising from the negligence of Western. As Western’s negligence contributed to the sinking of the drydock, Chief Judge Martinez held that Western was not entitled to recover the contractual hire. Chief Judge Martinez denied Vigor’s counterclaim for breach of contract based on Western’s failure to render reasonable assistance when the drydock became disabled, rejecting the argument that the entry into the sanctuary with the sinking dock breached the contract, noting that the contract only required that Western either proceed to the nearest safe port or stand by the tow, and the standing by could occur in the sanctuary. Comparing the fault of the parties, Chief Judge Martinez found Western to be negligent in voyage planning and navigating into the sanctuary with the sinking drydock. However, he considered that Vigor’s fault saddled Western with a nearly impossible task of managing the unwieldy drydock that should not have been certified as suitable for tow under the circumstances. Consequently, he reduced Vigor’s recovery by 60%. See January 2022 Update.
After the six-day bench trial that resulted in Chief Judge Martinez dismissing Western’s claim for breach of contract and awarding Vigor $40,000 on its counterclaim for maritime negligence, Western and Vigor filed motions for attorney fees, each arguing that it was the prevailing party under the Tow Agreement (the “substantially prevailing party” was entitled to recover its reasonable legal fees and costs). Western argued that it was the “substantially” prevailing party because the court found Vigor was 60% comparatively negligent on its maritime negligence claim. Vigor argued that it was the “substantially” prevailing party because Western took nothing on its claims and Vigor received judgment in its favor of $40,000. Judge Martinez agreed with Vigor because it defeated all of Western’s claims and received a significant judgment in its favor and because Western did not prevail except to the extent that damages were not as high as prayed for. Thus, Vigor was entitled to recover reasonable attorney fees under the Tow Agreement. See July 2023 Update.
Both parties appealed, and Judge Fletcher, writing for the majority of the panel of the Ninth Circuit, first addressed the grant of summary judgment that Western was negligent in allowing the drydock to sink in the Sanctuary. Agreeing with Chief Judge Martinez that it was undisputed that the captain failed to understand the hazards presented by the Sanctuary to a tug towing a sinking drydock, Judge Fletcher affirmed the grant of partial summary judgment to Vigor on liability. Judge Fletcher then addressed Vigor’s argument that the collateral source rule allowed it to recover all of its mitigation damages ($415,441.67) even though it had been reimbursed by its insurance carrier for all but $100,000 of the expenditures. Judge Fletcher agreed with Chief Judge Martinez that the insurance policy was not a wholly independent source because Western had required Vigor to purchase insurance, and Western determined its fee based, in part, on Vigor purchasing insurance. Judge Fletcher did not disturb the allocation of fault, finding no clear error in Chief Judge Martinez’s findings, and he declined to address Western’s argument that the parties agreed in the Tow Agreement not to seek a negligence recovery for any insurance deductible, reasoning that the argument had been waived. Judge Fletcher did reverse the award of prejudgment interest against Western as it ran from the date that the drydock sank rather than from the date of the expenditures. Judge VanDyke dissented from the holdings that Western waived its argument that under the Tow Agreement the parties agreed to hold each other harmless for any portion of the other’s insurance deductible and would have concluded that the agreement held Western harmless for the portion of the deductible awarded by Chief Judge Martinez for Western’s negligence. See December 2023.
Back in the district court, Judge Martinez entered his award for attorney fees and costs. Vigor requested $1,461,393.90 in fees and $111,063.13 in costs. Western first argued that there were no fees to award because Vigor’s underwriters paid everything above $100,000. Western reasoned that the insurance procured was agreed upon by the parties, and that Vigor was only entitled to recover its deductible less its 60% negligence because of the agreement on insurance. Vigor responded that clause in the agreement limiting recoverable damages to the deductible did not apply to the separate provision allowing the prevailing party to recover attorney fees and costs, and Judge Martinez agreed, reasoning that Western could have included attorney fees and costs in the limitation, but it did not do so with a separate agreement for fees and costs to the prevailing party with no limitation. Western next argued that the claimed fees were “wildly disproportionate” because the case was “only a $187,000 contract claim” that Vigor overworked and overstaffed. Judge Martinez did impose a 10% reduction for block billing, redundant work, and failure to segregate fees related to NOAA liability, and he assessed an additional 20% reduction for the disproportionality between the fee request and the damages awarded. Vigor agreed that a charge for the Washington Athletic Club, a dinner charge during trial, and $5,050 in fees for preparing the notice of appeal documents should be removed. Therefore, Judge Martinez awarded a total of $959,100.98 to Vigor.
Richard C. Murphy, III chartered a Cessna 402B from Airway Air Charter for a flight from Opa Locka, Florida to Chub Cay, The Bahamas. The aircraft is owned by Venture Air Solutions and was operated by Airway Air Charter. Atlantic Aviation provided supplies and fuel. Murphy was the sole passenger, and the plane was piloted by Alex Gutierrez. The plane ran out of fuel during the flight, causing it to crash into the ocean. Murphy and his wife brought this suit in state court in Miami-Dade County, Florida, against Airway Air Charter, Venture Air Solutions, and Gutierrez, asserting claims under Florida law. The defendants moved to dismiss the case, arguing that the claims were governed by the Warsaw Convention (as updated by the Montreal Convention), not Florida law, and the plaintiffs filed an amended complaint based on the Warsaw Convention. The plaintiffs added Atlantic Aviation in a third amended complaint, and Atlantic Aviation removed the case based on federal question jurisdiction from the Warsaw Convention and admiralty jurisdiction. In federal court, the plaintiffs filed a fourth amended complaint, attaching the Charter Agreement. Airway Air Charter and Gutierrez moved to dismiss the fourth amended complaint, citing the liability waiver for injuries in the Charter Agreement. The plaintiffs responded that Airway Air Charter and Gutierrez had waived their right to raise the waiver as a defense by repeatedly failing to raise it as an affirmative defense in their answers to the previous complaints filed by the plaintiffs against them. Alternatively, the plaintiffs argued that the waiver was unenforceable under the Warsaw Convention. Airway Air Charter and Gutierrez argued that they did timely raise the waiver defense because they raised it in their first response to the fourth amended complaint, which was the operative pleading at the time. Judge Bloom rejected that argument as the Eleventh Circuit has held that an amended complaint does not automatically revive all defenses or objections that the defendant may have waived in response to a prior complaint. She held that Airway Air Charter and Gutierrez waived reliance on the waiver by failing to raise it as an affirmative defense when answering the complaint in state court. Judge Bloom also addressed the argument that the waiver was unenforceable and the defendants’ argument that the Warsaw Convention does not prevent the parties from entering into a different agreement limiting liability. Judge Bloom agreed that the parties can enter into agreements for different limitations on liability, but the agreements may only provide a limitation in excess of the cap on liability of $75,000. As the waiver in this case provided for a release of all liability, Judge Bloom held that it was unenforceable under the Warsaw Convention.
There was a large-scale violent altercation involving the P/V CAROL JEAN, a ferry, after a Reggae Fest on Block Island, Rhode Island on August 8, 2022. The owner of the ferry received a letter from counsel from several claimants on August 19, 2022, asserting that there was a massive physical altercation at the Festival on Block Island that “spilled over onto the docks and your vessel.” The letter claimed that the claimants were trapped on the vessel for the hour-long trip back to the mainland, witnessing a traumatic course of events and causing them to suffer emotional and physical injuries. The letter requested the preservation of evidence and that the letter be forwarded to the vessel’s insurer to be handled properly. The letter threatened a lawsuit for failure to do as requested. Ten persons filed suit in federal court in Rhode Island on August 8, 2023, and they later amended the complaint to add eight additional plaintiffs. On February 7, 2024, within six months of the filing of the suit (and five days after the addition of plaintiffs in the amended complaint) the owner of the ferry filed this limitation action in federal court in Rhode Island. Judge McElroy declined to issue the order restraining suits, noting that the complaint stated that it was filed within six months of service of the first suit, but it did not state when the owner first received written notice of a claim. The owner then filed a supplemental motion for an order restraining claims and submitted the August 19 letter. The owner did not argue that the letter was not a written notice of a claim and instead asserted that the letter did not render it “reasonably possible” that the total amount of the claims would exceed the value of the vessel ($5.25 million). Judge McElroy noted that this assertion was supported by decisions outside of the First Circuit, but she did not have to decide if the requirement was applicable because she concluded that the claim letter met that standard. She reasoned that the letter identified nine people who claimed emotional and physical injuries from a massive physical altercation and that in some cases the injuries were severe with ongoing medical treatment. The owner argued that the initial letter involving only 9 injuries was not enough and that it was when nine more claims were added in the complaints that there was a reasonable possibility that the claims would exceed the vessel’s value. Judge McElroy disagreed, answering that nine people making a claim for serious injury presented a reasonable possibility of liability in excess of $5.25 million. Accordingly, she sua sponte dismissed the limitation action.
Grady Howell Tumlin, Jr., and Debra Jean Robinson, owners of the S/V ZAZIE, contracted with B&G Charter Management to perform repairs on the vessel. B&G invoiced the owners $320,456.40, and the owners paid $226,955.11 (claiming the repairs were not satisfactory, were not performed in a timely matter, and included items that were not authorized). B&G then brought this suit in federal court in the United States Virgin Islands against the vessel, in rem, and the owners, in personam, seeking to foreclose a lien for necessaries and for breach of contract. The vessel was arrested, and its owners filed a verified claim and a counterclaim against B&G for breach of contract (requesting countersecurity). B&G moved to dismiss the counterclaim, citing the forum-selection clause in the Terms and Conditions of Service, providing for exclusive jurisdiction in the courts of the British Virgin Islands, except in the event of default by the owners, in which case B&G reserved the right to pursue an action in the owners’ country of residence or the vessel’s country of registration. The owners did not dispute the forum-selection clause; however, they argued that because B&G chose to bring the suit in the United States Virgin Islands, that selection by B&G governed the entire action, and the owners could bring the counterclaim in that forum. Judge Molloy disagreed, reasoning that the forum-selection clause only provided for one exception—the claim by B&G asserting a default by the owners. The owners also argued that the counterclaim was compulsory, but Judge Molloy cited the appellate decisions that a party to a forum-selection clause may not raise a dispute within the scope of that clause in a different forum, even as a compulsory counterclaim. Finally, Judge Molloy did not find the clause to be ambiguous because it did not address counterclaims specifically. Therefore, he found that the proper forum for the owners’ claim was in the British Virgin Islands, and he dismissed the counterclaim.
Royal White Cement chartered the M/V WECO HOLLI from charterer/operator Pegasus Denizcilik to transport 14,009 bags of cement from Port Said, Egypt to Houston, Texas, with a stop in New Orleans, Louisiana to discharge 30,119 bags of cement. The bill of lading issued in conjunction with the Houston shipment incorporated the terms of the charter party, including its arbitration clause. Royal White claims that the stevedoring companies in New Orleans unloaded the bags without regard to whether the cement was supposed to be discharged in New Orleans or Houston, resulting in the Houston cargo not being properly supported and shifting and collapsing during the voyage from New Orleans to Houston. Royal White then brought this suit in federal court in New Orleans against Pegasus, the vessel, and the stevedoring companies. Pegasus and the owner of the vessel, Ocean Green, moved to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) based on the London arbitration clause in the charter party. The charter party provided that any dispute arising out of the charter “shall be referred to arbitration in London.” As Royal White Cement brought a claim for breach of contract against Pegasus, that claim was subject to the arbitration clause. Ocean Green also argued that the in rem claim against the vessel was subject to the arbitration clause, and Judge Long agreed, reasoning that the vessel was bound by the bill of lading, ratifying its terms when it set sail from Egypt with the cargo onboard. The bill of lading incorporated the charter, and the charter’s arbitration clause was broad enough to cover the in rem claim as the claim was for damage to cargo being transported on the vessel in accordance with the charter. Therefore, Judge Long stayed the lawsuit with respect to the claims against Pegasus and the vessel, but he declined to stay the claims against the remaining defendants.
Wilfredo Collazo was a passenger on the CARNIVAL BREEZE. He slipped and fell on water or a wet, slippery substance on the Lido Deck (where the Tides Pool is located) and brought this suit against the cruise line in federal court in Florida. The cruise line moved to dismiss the negligence claims for insufficient pleading of constructive notice and to dismiss the claim of failure to warn on the basis that Collazo did not allege that the danger was not open and obvious. Collazo alleged constructive noticed based on prior falls on the Lido Deck of the BREEZE and its sister-class vessel MAGIC. Although the cruise line argued that the allegations were conclusory and formulaic, Collazo identified four accident report numbers for falls on the exterior portion of the Lido Deck of the BREEZE and nine accidents on the Lido Deck of the MAGIC. Judge Scola reasoned that the identification of these accidents was sufficient to “plausibly” plead constructive notice. With respect to the failure to warn claim, Judge Scola stated that the issue of whether a dangerous condition is open and obvious is “a heavily factual question” that is inappropriate for a motion to dismiss. However, the plaintiff must allege that the dangerous condition was not open and obvious to state a claim for failure to warn. As Collazo failed to allege that the condition was not open and obvious, Judge Scola dismissed the count without prejudice.
William Ollerton brought this action in California state court against National Steel and Shipbuilding Co. and a number of product suppliers alleging that he was exposed to asbestos during his service as a machinist mate in the Navy while serving on the USS DULUTH that was undergoing repairs at National Steel’s shipyard in California. The allegations against National Steel were carefully limited to negligent exposure to asbestos dust, and National Steel was excluded from Ollerton’s strict liability claims. National Steel removed the case to federal court based on the Federal Officer Removal Statute, and Ollerton moved to remand, asserting a legal defense that National Steel could not establish a federal contractor defense under Boyle because that defense is limited to claims against defendants who design and manufacture military equipment, or under Yearsley because that defense is limited to property damage resulting from public works projects. Ollerton asserted a factual defense that the evidence did not establish that National Steel’s conduct was the result of the Navy’s reasonably precise specifications under Boyle or that the Navy exercised significant control over National Steel’s actions under Yearsley. Judge Fitzgerald disagreed and held that all of the elements for removal under the Federal Officer Removal Statute were satisfied, reasoning that, although the allegations were vague, the defendant established that the Navy exerted and directed detailed control over the inspection, installation, and repair of its vessels such as the DULUTH (which included the protocols to protect and warn workers about asbestos). Therefore, he denied the motion to remand. See May 2023 Update.
After Ollerton passed away, Judge Fitzgerald granted leave for Ollerton’s siblings to pursue survival and wrongful death claims (under California law). National Steel then moved to dismiss the amended complaint for lack of standing, failure to state a claim, and for seeking non-pecuniary damages. National Steel argued that the siblings were not entitled to recover under the Jones Act or under the Death on the High Seas Act, but Judge Fitzgerald rejected the argument because National Steel was not Ollerton’s employer under the Jones Act, and DOHSA did not apply to the exposure at National Steel’s facility in San Diego. National Steel also argued that, as the Supreme Court advised in Batterton [and Moragne], DOHSA and the Jones Act should guide the court’s decision as to beneficiaries in the maritime wrongful death/survival actions. Judge Fitzgerald disagreed, citing the Ninth Circuit’s pre-Batterton decision in Evich v. Connelly (permitting non-dependent brothers to maintain a maritime survival action as personal representative) and citing California’s survival statute. National Steel also argued that the siblings sought damages that were not recoverable under the general maritime law. As in its standing argument, the siblings argued that they could recover punitive damages because the Jones Act and DOHSA are not applicable. They argued that the court should look to California law, which permits recovery of punitive damages. In contrast to the ruling on standing, Judge Fitzgerald found “Batterton’s teachings” to be persuasive with respect to damages, noting the judicial restraint in light of “the increased role that legislation has taken over the past century of maritime law.” Therefore, he held that punitive damages were not recoverable. Similarly, Judge Fitzgerald held that Batterton foreclosed recovery for loss of society. He also held that loss of future income was not recoverable in the survival action, but that the siblings could recover for Ollerton’s pain and suffering.
Michael Kozak was employed by Liberty Maritime as a seaman on the M/V LIBERTY GLORY. He was injured in the mess hall pantry on an assignment from the captain to clean under the vessel’s salad bar. Kozak asserts that the assignment was improper because the vessel was experiencing heavy weather and severe rolling as it passed through a monsoon. Kozak alleges that he advised the captain that the salad bar was not in compliance with the food service code because it was installed too close to the floor and had to be moved in order to clean under it. He asked that the cleaning be deferred, but the captain denied the request. Kozak ruptured his biceps tendon when the ship rolled toward him as he tried to move the salad bar. Kozak brought this suit against his employer and the owner of the vessel under the Jones Act and for unseaworthiness under the general maritime law. Shortly before trial, Magistrate Judge Henry ruled on a host of pretrial matters with respect to experts, records, testimony on the claims, and safety regulations and standards. The case was then tried to a jury, which found negligence of the defendants, unseaworthiness of the vessel, no negligence on the part of Kozak, past lost earnings of $130,000, future lost earnings of $300,000, past pain and suffering of $75,000, and future pain and suffering of $75,000.
Jessica Camacho Miranda, a passenger on the NORWEGIAN EPIC, brought this suit against the cruise line in federal court in Florida seeing to recover for an injury suffered when she fell on a wet and slippery substance on deck No. 15 of the vessel. She brought a single count of negligence that included claims for negligent design and construction, negligent maintenance, and negligent failure to warn. The cruise line moved to dismiss the complaint as a shotgun pleading, and Magistrate Judge Goodman agreed. Reasoning that each theory is a separate cause of action that must be asserted independently with supporting factual allegations, Magistrate Judge Goodman recommended that the complaint be dismissed without prejudice. The cruise line also argued that Miranda’s allegation of constructive notice was conclusory and insufficient: “The negligent condition was known to Defendant or existed for a sufficient length of time so Defendant should have known of it.” Citing the Holland and Newbauer decisions of the Eleventh Circuit in which more specific allegations were held to be insufficient, Magistrate Judge Goodman recommended dismissal without prejudice for failure to properly plead constructive notice. Miranda argued that other federal judges in the district have held that “it is unreasonable to require a plaintiff, before discovery, to pinpoint an exact interval of time a dangerous condition has existed in order to sufficiently allege notice as needed for a negligence claim.” Magistrate Judge Goodman did not believe the decisions were binding in light of the holdings of the Eleventh Circuit in Holland and Newbauer, stating: “It seems that the Eleventh Circuit, in the two recent published opinions discussed in this Report, did not find these arguments persuasive (in affirming orders dismissing complaints).
Martin Guerra, a passenger on the MSC SEASHORE, slipped and fell on a wet and slippery condition after exiting an elevator near the hand sanitizer stand on Deck 8 of the vessel. Guerra brought this suit against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint for failure to plead constructive notice. Guerra argued that he had sufficiently pleaded notice based on a permanent sign on the wall near the sanitizer stand that said, “floor slippery when wet,” and from a similar accident less than a year earlier on the same ship. Judge Scola could not tell whether the prior incident was substantially similar as the pleading in the other case did not provide details other than the passenger in that case slipped on a wet and slippery floor while exiting an interior elevator. Therefore, he held that the pleading of the prior incident was insufficient to put the cruise line on notice of the condition that caused Guerra’s injury. Judge Scola disagreed with the cruise line with respect to the effect of the warning sign, stating that the court could “reasonably infer from the allegations that the placement of the ‘slippery when wet’ sign close to a hand sanitizer stand reflected MSC’s awareness that hand sanitizer sometimes spilled onto the floor, creating a slippery hazard. Therefore, Judge Scola declined to dismiss the complaint for failure to plead constructive notice.
This case involves a dispute between the owner of offshore drilling rigs (Ensco) and the operator of offshore oil and gas platforms (Cantium). Ensco filed the suit in federal court in Louisiana seeking to recover for unpaid invoices. The complaint alleged subject matter jurisdiction in two paragraphs. One paragraph stated: “This Court has original jurisdiction over this action as it arises out of a maritime contract governed by federal maritime law. 28 U.S.C. § 1331(1) [sic].” The second allegation stated: “Additionally, or alternatively, this Court has federal question jurisdiction over this action pursuant to 28 U.S.C. § 1333 [sic], as the action arises out of the laws of the United States. Specifically, this action arises out of the Outer Continental Shelf Lands Act . . . .” The complaint did not contain a specific designation with respect to Rule 9(h) and did not demand a jury. Cantium filed an answer and counterclaim, alleging that Ensco was liable for failing to provide adequate equipment and personnel and failing to perform operations in a workmanlike manner. Cantium included a jury demand in its answer and counterclaim. Ensco then filed an amended complaint with a Rule 9(h) designation and a motion to strike Cantium’s jury demand. In assessing whether to strike the jury demand, Judge Ashe only considered the original complaint because the amended complaint was filed after Cantium had answered and demanded a jury. Judge Ashe noted that when the complaint does not expressly cite Rule 9(h), the courts look to the totality of the circumstances to determine if the plaintiff made the required statement to invoke the court’s admiralty jurisdiction under Rule 9(h). Cantium relied on the decision of the district court in LeBlanc v. Panther Helicopters in which Judge Barbier held that the complaint’s allegation that the court had jurisdiction over the case pursuant to admiralty jurisdiction and pursuant to LHWCA Section 5(b) and that the claimant brought suit pursuant to the OCSLA was not a sufficient identification of the claims under Rule 9(h). Judge Ashe was persuaded, however, by the Fifth Circuit’s T.N.T. decision in which the court held that the allegation that the suit was “for breach of contract, civil and maritime, and for maritime tort” was a sufficient “simple statement asserting admiralty or maritime claims under the first sentence of Rule 9(h).” As in T.N.T., the allegation that the action “arises out of a maritime contract governed by federal general maritime law” constituted a Rule 9(h) designation. Therefore, Judge Ashe struck Cantium’s jury demand.
Kenneth G. Engerrand
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This month’s quote involves the Admiralty Extinction Act:
Plaintiff is currently incarcerated at the St. Louis County Justice Center. She files a twenty-two page complaint titled “(Removal) Civil Rights (1964).” The entire document is a disjointed, stream of consciousness narration that forms no legal theory and seeks no appropriate relief. Subjects of the narrative include the Admiralty Extinction Act, plaintiff being a bounty of war captured for a war debt, sovereign immunity, autonomous state, the Territory of Insula, Island Commonwealth Soil, “res accessoria sequitur rem principalem,” the Alien Enemies Act, kidnapping, and forced servitude.
Muthoka v. Missouri, No. 4:23-cv-1460, 2024 U.S. Dist. LEXIS 44233 (D. Mo. Mar. 13, 2024) (Autrey).
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© Kenneth G. Engerrand, April 30, 2024; redistribution permitted with proper attribution.
