July 2024 Longshore/Maritime Update (No. 302)
Notes from your Updater:
On May 13, 2024, Judge Robart of the United States District Court for the Western District of Washington approved the Consent Decree for the settlement of the claims of the National Oceanic and Atmospheric Administration, the United States Department of the Interior, the Washington State Department of Ecology, the Suquamish Indian Tribe of the Port Madison Reservation, and the Muckleshoot Indian Tribe against Crowley Marine Services, 8th Avenue Terminals, and the Washington State Department of Transportation, pursuant to CERCLA, the Model Toxics Control Act, the Clean Water Act, and the Oil Pollution Act of 1990, with respect to releases of hazardous substances into the Lower Duwamish River and Elliott Bay in and near Seattle, Washington. See United States v. Crowley Marine Services, Inc., No. 2:24-cv-307, 2024 U.S. Dist. LEXIS 86150 (W.D. Wash. May 13, 2024).
We have previously reported that Judge Wu of the United States District Court for the Central District of California approved a settlement of the class action brought by dock workers at the Los Angeles-Long Beach Port Complex who were seeking to recover for waiting time at and travel time from a dispatch hall to their work location (after Judge Wu had granted summary judgment to the employer defendants). See Andrikos v. APM Terminals Pacific, LLC, No. 19-cv-10421, 2024 U.S. Dist. LEXIS 14768 (C.D. Cal. Jan. 25, 2024). On May 23, 2024, Judge Wu ruled that employers must reimburse the workers for the cost to obtain “TWIC Cards” (Transportation Worker Identity Cards). See Andrikos, 2024 U.S. Dist. LEXIS 92911 (C.D. Cal. May 23, 2024).
On May 24, 2024, Judge AliKhan of the United States District Court for the District of Columbia addressed the request of the plaintiffs in the suit by the Committee for a Constructive Tomorrow, the Heartland Institute, Craig Rucker, the National Legal and Policy Center, and Peter Flaherty for a preliminary injunction enjoying construction of the Coastal Virginia Offshore Wind Commercial Project until there is an updated Biological Opinion from the National Marine Fisheries Service that includes an analysis of the cumulative effects of other offshore wind projects on the endangered North Atlantic Right Whale. Judge AliKhan held that the plaintiffs had shown that at least one plaintiff, Mr. Rucker, had standing to seek a preliminary injunction or administrative stay, but that the plaintiffs had not demonstrated that they would suffer irreparable harm in the absence of a preliminary injunction or administrative stay (concluding that the evidence that the adverse impact of the project together with other wind projects “may cause this highly endangered species . . . to disappear” fell “short of showing an injury that is ‘certain’ or ‘actual’ for purposes of a preliminary injunction or stay.” Committee for a Constructive Tomorrow v. United States Department of the Interior, No. 24-cv-774, 2024 U.S. Dist. LEXIS 93089 (D.D.C. May 24, 2024).
Judge Ho of the United States District Court for the Southern District of New York declined to order an interlocutory sale of the superyacht AMADEA that was seized by the United States in a forfeiture action, ruling that monthly expenses of at least $743,750 were not out of the order for a yacht like the AMADEA. See United States v. THE M/Y AMADEA, No. 23-cv-9304, 2024 U.S. Dist. LEXIS 104690 (S.D.N.Y. June 11, 2024).
We have continued to update you on the constitutional issues with the authority of administrative law judges after the decision of the Supreme Court in 2018 in Lucia v. Securities and Exchange Commission. We reported that the Supreme Court granted the writ of certiorari in Securities and Exchange Commission v. Jarkesy, to again address the constitutionality of the adjudicatory role of Administrative Law Judges. On June 27, 2024, the Court held that the adjudication of civil penalties sought by the Securities and Exchange Commission before administrative law judges, rather than before a jury in federal court, violated the Seventh Amendment. See Securities and Exchange Commission v. Jarkesy, No. 22-859, 2024 U.S. LEXIS 2847 (June 27, 2024) (Roberts). The reasoning of the Court raises the question whether administrative law judges may constitutionally adjudicate claims by longshore and harbor workers against employers when Article III, Section 2 of the United States Constitution provides: “The judicial power shall extend to . . . all cases of admiralty and maritime jurisdiction . . . .”
We previously reported that the United States Supreme Court granted a writ of certiorari in Loper Bright Enterprises v. Raimondo, No. 22-451, challenging the authority of the National Marine Fisheries Service to require fishing vessels to carry federal observers. The questions presented to the Supreme Court included the application of Chevron deference, and the Court granted the writ limited to the second question:
The Magnuson-Stevens Act (MSA) governs fishery management in federal waters and provides that the National Marine Fisheries Service (NMFS) may require vessels to “carry” federal observers onboard to enforce the agency’s myriad regulations. Given that space onboard a fishing vessel is limited and valuable, that alone is an extraordinary imposition. But in three narrow circumstances not applicable here, the MSA goes further and requires vessels to pay the salaries of the federal observers who oversee their operations—although, with the exception of foreign vessels that enjoy the privilege of fishing in our waters, the MSA caps the costs of those salaries at 2-3% of the value of the vessel’s haul. The statutory question underlying this petition is whether the agency can also force a wide variety of domestic vessels to foot the bill for the salaries of the monitors they must carry to the tune of 20% of their revenues. Under well-established principles of statutory construction, the answer would appear to be no, as the express grant of such a controversial power in limited circumstances forecloses a broad implied grant that would render the express grant superfluous. But a divided panel of the D.C. Circuit answered yes under Chevron on the theory that statutory silence produced an ambiguity that justified deferring to the agency. The questions presented are: 1. Whether, under a proper application of Chevron, the MSA implicitly grants NMFS the power to force domestic vessels to pay the salaries of the monitors they must carry. 2. Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.
On June 29, 2024, the Court overruled Chevron and remanded the case to the D.C. Circuit to consider the validity of the rule requiring Atlantic herring fishermen to bear the cost of observers.
On the LHWCA Front . . .
From the federal district courts
Ronald Marcella died from mesothelioma that his beneficiaries claim was caused by exposure to asbestos when he worked at Avondale’s shipyard and at his family’s restaurant near the shipyard that was frequented by Avondale employees who carried asbestos fibers on their clothing. Marcella’s beneficiaries brought this suit in state court in Orleans Parish, Louisiana against Avondale and other defendants, and Avondale removed the case to federal court based on the Federal Officer Removal Statute, asserting a Boyle government contractor immunity defense and a Yearsley derivative sovereign immunity defense. The beneficiaries moved to remand the case for two reasons. They cited the Eleventh Circuit’s Meadows decision that the federal statute only applies to current, not former federal officers (so as to prevent States from interfering with ongoing federal operations). Judge Ashe disagreed, noting that Meadows was not binding in the Fifth Circuit, was a criminal case that did not involve claims against private entities performing work under the direction of federal officers, had been rejected by another court, and was contrary to the result in the Fifth Circuit’s Latiolais decision that applied to asbestos exposure from decades earlier. The beneficiaries next argued that Avondale’s federal defenses were not colorable because they had been rejected by some courts at the summary-judgment stage. Judge Ashe answered that the issue for removal is only whether the defense is colorable, not whether it will survive a motion for summary judgment. Finding that Avondale had raised a colorable Boyle federal defense, Judge Ashe denied the motion to remand.
James Sarjeant, who suffers from mesothelioma, brought this suit in the Superior Court of Alameda County, California against asbestos suppliers and vessel defendants in connection with exposure to asbestos that included work at Todd Shipyard. The case was removed by Foster Wheeler under the Federal Officer Removal Statute, and American President Lines moved to dismiss the claims for loss of consortium and punitive damages on the ground that they are not available to harbor workers and because the LHWCA limits damages to pecuniary losses. Judge Chhabria responded that Section 5(b) of the LHWCA is silent on the damages that are available, and the parties claimed that the court should look to federal maritime law to fill the gap. Thus, under Batterton, Judge Chhabria believed the issue was whether punitive damages and damages for loss of consortium were available under the general maritime law prior to the enactment of the statute. Judge Chhabria then stated that neither party had provided the court with sufficient legal analysis or historical context to answer the question. As it was the defendant’s burden for a motion to dismiss, he denied the motion without prejudice to raising the issue in a motion for summary judgment.
Torio Holmes and Brian Brown applied for employment through a staffing company to work for Gunderson Marine, a marine barge manufacturer in Portland, Oregon, which is owned by Greenbrier Co. They were hired as carpenters to erect and take down scaffolding so that other workers could access areas on the inside and outside of vessels that were being constructed. Holmes and Brown both complained of headaches, nausea, and respiratory problems from industrial chemicals and fumes, and they asked to be provided respirators. Although they were approved for respirators, they never received respirators during their employment for disputed reasons. There was a surprise OSHA inspection while Holmes and Brown were employed, and the inspection found that Gunderson did not provide a fit test before allowing employees to wear respirators, but the inspection did not find any hazardous substances or air quality levels in excess of exposure limits. Holmes and Brown both brought LHWCA claims against Gunderson, and an administrative law judge denied Holmes’ claim. Holmes filed suit in federal court in Louisiana against the compensation carrier, American Equity Underwriters, and the court dismissed that complaint. Brown’s LHWCA claim is still pending. Holmes and Brown filed this suit in federal court in Oregon against Gunderson, alleging discrimination, retaliation, defamation, negligence, and violations of OSHA. Gunderson moved for summary judgment that the LHWCA provides the exclusive remedy for the negligence cause of action in which the workers claimed injuries from exposure to hazardous substances in the workplace, and Judge Beckerman agreed. She reasoned that Gunderson borrowed the plaintiffs from Fugue and that their work was under the direction and control of Gunderson. Therefore, the exclusive remedy provision of the LHWCA barred the negligence claim. Judge Beckerman rejected the claim that Gunderson discriminated against Holmes and Brown as African Americans for requiring that they work inside the vessel while White employees worked outside the vessel and for not providing them with respirators as lacking evidence of a discriminatory motive and for lack of evidence of disparate treatment (adding that a one-time assignment to a less desirable location did not qualify as an adverse employment action). Judge Beckerman also rejected the claim that Gunderson retaliated against the workers by not helping them with their workers’ compensation claim, noting that Gunderson directed the workers to Fugue to resolve the claim as Fugue provided the LHWCA coverage. The workers also claimed retaliation because of allegations make during the EEOC mediation and defamation from statements and claims in the EEOC mediation, but Judge Beckerman answered that statements made during compromise negotiations are not admissible and did not subject the plaintiffs to hatred, contempt, or ridicule and did not tend to diminish the esteem and goodwill in which the plaintiffs were held. Finally, Judge Beckerman dismissed the claim that Gunderson violated OSHA, because OSHA does not provide a private cause of action.
From the state courts
Frederick Louis Gethers died from mesothelioma that his beneficiaries alleged was the result of exposure to asbestos while Gethers was employed as a longshore worker in the Port of New Orleans from 1947 to 1979. His beneficiaries brought suit in state court in Orleans Parish, Louisiana against several stevedoring companies, and Ports America Gulfport moved for summary judgment on the ground that the LHWCA was the exclusive remedy of Gethers’ beneficiaries against Ports America Gulfport. Judge Johnson denied their motion, and Ports America Gulfport then brought a suit against Judge Johnson in federal court in Louisiana seeking an injunction and declaratory relief that the state tort remedies sought by the beneficiaries were preempted and supplanted by the LHWCA. In her first opinion, Judge Vance declined to issue a preliminary injunction for several reasons. She did not find a likelihood of success on the merits as the relief was likely precluded by the Anti-Injunction Act and was not expressly authorized by Congress (under TEIA v. Jackson’s holding that even an unmistakably clear claim of federal preemption does not authorize an injunction of state court proceedings). Additionally, Judge Vance reasoned that enjoining enforcement of an adverse judgment against Ports America Gulfport would fall within the abstention doctrine of Younger v. Harris and that Ports America Gulfport had not demonstrated a substantial threat of irreparable harm if an injunction were not issued (noting that Ports America Gulfport could appeal an adverse judgment and request certiorari from the Supreme Court). Finally, Judge Vance found a public interest in the correct application of the law, but she held that this interest could be protected by continuing to litigate the legal point in state court. In a second opinion, Judge Vance addressed Ports America Gulfport’s request for a prospective declaratory judgment that Gethers’ beneficiaries’ state tort claims are preempted by the LHWCA. Concluding that the declaratory judgment claim was also precluded by the Fifth Circuit’s decision in TEIA v. Jackson, Judge Vance dismissed the claim for prospective declaratory relief. See April 2022 Update.
One of the defendants in the state suit is SSA Gulf (successor to Ryan Stevedoring and Ryan Walsh Stevedoring). SSA Gulf employed Gethers from 1957 to 1969 and from 1972 to 1978. The relevant period for a suit against the stevedore/employer ended on September 1, 1975, when mesothelioma became a covered occupational disease under the Louisiana Workers’ Compensation Act (as discussed by the Fifth Circuit in its Barrosse opinion, see July 2023 Update). The beneficiaries alleged that SSA Gulf was insured for workers’ compensation and employer’s liability by American Mutual Liability Insurance Co. and Employers National Insurance Co., which had become insolvent. Accordingly, the Louisiana Insurance Guaranty Association assumed the defense of SSA Gulf under a reservation of rights. LIGA asserted a defense that the policies issued to SSA Gulf contained a 36-month tail, requiring an occupational cancer claim to be filed within 36 months of the expiration of the policies. LIGA intervened in the suit to assert its coverage defense and filed a motion for summary judgment on the ground that the suit was not filed within 36 months of the expiration of the policies. LIGA could not produce copies of the policies, so it relied on circumstantial evidence that American Mutual and Employers National were members of the National Council on Compensation Insurance, and the standard NCCI form for a workers’ compensation/employer’s liability policy at the time contained a 36-month tail. The trial court denied the motion, finding a fact question whether the policies contained the tail. SSA Gulf later filed a motion for summary judgment on the same ground but also arguing that if the exclusion barred coverage for the employer’s liability claim (Coverage B of the policies), then the workers’ compensation coverage under Coverage A should be interpreted to cover the claims and the exclusion could not be enforced to bar the claim under Coverage A because it was an impossible or unenforceable condition due to the long latency for mesothelioma claims. LIGA answered that Coverage A does not provide “fallback” tort coverage and only applies to workers’ compensation claims (the beneficiaries did not file a workers’ compensation claim). The lower court ruled in favor of SSA Gulf on both arguments, concluding that LIGA did not sustain its burden to show that the policies contained the tail, that Coverage A provided coverage for the occupational disease claims, and the tail was an impossible condition that did not preclude coverage. Writing for the Court of Appeal Judge Herman cited the circumstantial evidence produced by LIGA, a policy containing the tail issued by American Mutual to another insured and an affidavit from the former Vice President and General Counsel of NCCI from 1972 to 1986 that, as members of NCCI, American Mutual and Employers Mutual would have been required to use the 1954 Standard Form Policy that contained the tail. LIGA also submitted the affidavit of its claims examiner who examined records and declared that documentation demonstrated that the standard form policy (with the tail) was in use by both American Mutual and Employers Mutual from 1957 to 1984. Both witnesses admitted that LIGA had accepted approximately 60 to 83 cases for SSA Gulf in similar occupational disease situations. Herman concluded that the evidence demonstrated that SSA Gulf carried its burden to establish the existence of coverage, and that LIGA failed to carry its burden to demonstrate the existence of the tail. That conclusion mooted consideration of the argument that the tail should be considered an impossible or unenforceable condition.
And on the maritime front . . .
From the federal appellate courts
John F. Curran, III, was hired by Okie Moore Diving, a subsidiary of Wepfer Marine, to serve as a salvor on the STEPHEN FOSTER in an effort to raise and salvage equipment of a barge in the Mississippi River near Greenville, Mississippi. After the barge was successfully raised, it was transported to a staging area, and a worker was struck by the handle of a winch. Curran acted quickly to provide immediate trauma care to the worker. Senior management at Wepfer Marine recognized Curran’s effort as the reason that the injured worker recovered quickly and was able to return to work, and Curran was given additional responsibility as a safety officer for Okie Moore but with no additional pay. Curran brought this action in federal court in Tennessee against Okie Moore and Wepfer Marine seeking an award for the life-saving services he performed that were outside of the scope of the work he was hired to perform. The amount sought by Curran was a third of the $12 million that he claimed would have been spent for the care of the injured worker without Curran’s efforts. The defendants moved to dismiss the salvage claim, and Magistrate Judge York recommended that the salvage claim be dismissed. In adopting the recommendation, Chief Judge Anderson noted that maritime salvage law contains two principles in connection with saving of human life. When a person saves both life and property, the court may consider the act of saving the life to enhance the award for saving property. Additionally, if a set of salvors saves property while another set of salvors saves a life, the court may allow the life salvors to share in the award for property salvage. Otherwise, life salvors are not entitled to a salvage award. As there was no indication that Curran protected property while preserving the worker’s life or that his providing of medical aid was concurrent with a third-party’s property salvage, Chief Judge Anderson held that Curran was “out of luck on his claim.” [On December 9, 2021, Chief Judge Anderson reaffirmed his decision after noting that he had mistakenly stated in the opinion on December 2 that there was no objection to Magistrate Judge York’s recommendation.] In the interim, Magistrate Judge York imposed nonmonetary sanctions against Curran for failing “to make a reasonable inquiry into maritime law before filing his Complaint” which would reveal that “his salvage claim is frivolous.” Magistrate Judge York recommended that Curran must obtain express permission of the Court before accepting further filings and that a magistrate judge must certify that such filings are not frivolous.” On December 20, 2021, Chief Judge Anderson adopted the recommendation. See January 2022 Update.
Curran appealed to the Sixth Circuit, which noted that life salvage is a “creature of statute” and that it not an independent cause of action but a derivate claim from a property salvage award. The appellate court reasoned that Curran did not allege that any vessel was damaged or exposed to danger contemporaneous with his act of life salvage, and he did not cite authority that a salvage claim can be based on saving the defendants’ assets from future peril (liability for a more serious injury claim had he not attended the injured worker). Accordingly, the Sixth Circuit affirmed the denial of the life salvage claim.
Puerto Rico Fast Ferries entered into a Master Time Charter Agreement with Puerto Rico Maritime Transportation Authority to provide ferries (along with personnel and deckhands) for the Transportation Authorities’ route between the main island of Puerto Rico and the island municipalities of Culebra and Vieques. Puerto Rico Fast Ferries contracted with Mr. Cade, LLC to subcharter the vessel MR. CADE, entering into a Master Time Charter Agreement that permitted Puerto Rico Fast Ferries to charter vessels by entering into a Short Form Time Charter Agreement. The Master Time Charter Agreement with Mr. Cade, LLC, contained a requirement for mediation in Lafayette, Louisiana and a forum-selection agreement for the United States District Court for the Western District of Louisiana, Lafayette-Opelousas Division. There was an initial charter of the MR. CADE, and Mr. Cade, LLC’s affiliate, SeaTran Marine operated the vessel. That charter expired in April 2020, and the vessel was returned to its home port in Louisiana. In 2021, Puerto Rico Fast Ferries discussed with Mr. Cade, LLC, a recharter of the vessel, and Puerto Rico Fast Ferries submitted a bid to the Puerto Rico Maritime Transportation Authority that was based on use of the MR. CADE. However, the owner of Mr. Cade, Inc. entered into an agreement for the charter of the MR. CADE with HMS Ferries, a direct competitor of Puerto Rico Fast Ferries. Puerto Rico Fast Ferries then brought this suit in federal court in Puerto Rico against Mr. Cade, LLC and SeaTran Marine, alleging breach of contract and liability pursuant to culpa in contrahendo (fault in negotiating). The defendants moved to dismiss the complaint, asserting that there was no contract because no Short Form had been executed and because the Master Agreement contained mediation and forum-selection clauses. Judge Garcia-Gregory concluded that the Master Agreement was in place and dismissed the case based on the mediation and forum-selection clauses (without addressing Puerto Rico Fast Ferries’ argument that SeaTran was not a signatory to the Master Agreement. Puerto Rico Fast Ferries appealed, presenting the First Circuit with the questions of whether the Master Agreement was in effect and whether the Master Agreement applied to SeaTran as a non-signatory. As the Master Agreement provided that the maritime law of the United States applied, Judge Montecalvo, writing for the First Circuit, agreed that maritime law would control. He then considered the argument of Puerto Rico Fast Ferries that the Master Agreement only works in connection with a Short Form, that the Short Form prevails in the event of any inconsistency, and that the Master Agreement and Short Form terminated when the Short Form expired in 2020. Judge Montecalvo disagreed, reasoning that the Master Agreement does not have a predetermined duration or termination, and that the Short Form only addressed the duration of the charter for a specific vessel. Therefore, the appellate court looked to the Master Agreement to determine if the Master Agreement and its resolution/forum provisions were in effect. Considering the Master Agreement to govern the relationship of the parties beyond the terms of individual charters, Judge Montecalvo addressed the issue of whether the Master Agreement was perpetual in light of the absence of a termination provision, and he held that the maritime law makes such contracts terminable at will by either party. As the Master Agreement had not been terminated, Judge Montecalvo agreed that Judge Garcia-Gregory correctly dismissed the complaint with respect to Mr. Cade, LLC. Judge Montecalvo then addressed whether the claims against non-signatory SeaTran Marine were sufficiently intertwined with the claims against Mr. Cade, LLC so as to apply the contractual mediation and forum-selection clauses under the doctrine of equitable estoppel. As the evidence established that the claims derived from Puerto Rico Fast Ferries’ effort to charter the MR. CADE, Judge Montecalvo held that Puerto Rico Fast Ferries was equitably estopped from avoiding the mediation and forum-selection clauses with respect to SeaTran Marine, and the Third Circuit affirmed the dismissal of the suit.
Eric Ewing was sitting on the lower bed in his room on the CARNIVAL ECSTASY when the upper stowed bunk bed deployed, striking him on the top of the head. He brought this suit against the cruise line in federal court in Florida and asserted a claim of direct negligence of the cruise line for failing to lock the bunk or to check that the bunk was locked prior to the passenger’s injury. He also claimed that the cruise line was vicariously liable for the negligence of the cabin steward and that it was not necessary that he prove that the cruise line was on notice of the dangerous condition. He also brought a claim of res ipsa loquitur. Based on the decision of the Eleventh Circuit in Everett v. Carnival Cruise Lines, Magistrate Judge Goodman held that there was no exception to the notice requirement for “a created-by-defendant or active-negligence-by-employee or vicarious-liability theory.” Thus, regardless of how Ewing pleaded his negligence case, he still had to establish actual or constructive notice of the condition by the cruise line. As the cruise line had a procedure for the cabin steward to check bunk beds and make sure that the locking mechanism was activated, it was aware of the danger created by upper bunk beds. Combined with the fact that the ship’s carpenter had previously repaired the locks on two upper bunk beds, there was “adequate (although barely) evidence to withstand summary judgment” on the notice issue. Magistrate Judge Goodman did reject the claim of res ipsa loquitur as Ewing could not establish that the accident would not ordinarily occur in the absence of negligence (screws which loosen over time could have caused the bed to fall). See August 2020 Update. The case was tried to a jury before Magistrate Judge Goodman, and the jury returned a verdict on October 28, 2021, finding that the cruise line and cabin steward were not negligent. Magistrate Judge Goodman entered a final judgement on the verdict on November 19, 2021. See December 2022 Update.
Ewing filed a motion for new trial that asserted several errors during the trial, and, admitting he made a mistake during the trial, Magistrate Judge Goodman ordered a new trial. Ewing’s expert, forensic engineer Dr. Srinivas Kadiyala, testified that the bunk would not have fallen on Ewing’s head if it was locked and latched and that he believed the bunk was not locked. He did not believe that Ewing had opened the lock because it had a tamper-resistant key. Magistrate Judge Goodman allowed the cruise line to cross-examine Kadiyala with a cell phone video showing a burly security guard prying open a lock, but there was no evidence authenticating the video or explaining when, where, or how it was made. Reasoning that the video essentially accused Ewing of perpetrating a fraud (a defense that was not pleaded) with no evidence to support the accusation and no evidence of similarity of the video to Ewing’s bed and considering that the video was unfairly prejudicial to Ewing and that an adequate curative instruction was not given, Magistrate Judge Goodman felt compelled to correct his error by ordering a new trial. See May 2022 Update.
A second jury trial was held before Magistrate Judge Goodman. The jury returned a verdict that the cruise line was directly negligent, that the cabin steward was negligent (for which the cruise line was vicariously liable), that Ewing was not negligent, and that Ewing was entitled to $275,000 for past non-pecuniary damages and $400,000 for future non-pecuniary damages. See December 2022 Update. The cruise line then filed a renewed motion for judgment as a matter of law. The cruise line challenged the vicarious liability theory of negligence (based on the employee failing to check the locked status of the bed). The employee testified that he properly locked the bed and performed a pull-down test on it, and the cruise line argued that absent direct evidence to the contrary, the jury had to believe the crewmember’s testimony. Magistrate Judge Goodman disagreed. He cited the expert testimony from Dr. Kadiyala that it was more likely than not that the bed was not locked, which was supported by cellphone video showing that both bunks in the room were unlocked. Thus, a jury was permitted to conclude, based on evidence-based inferences, that the bed was not locked (and that the crewmember did not use a pull-down test to make sure the bed was locked). The cruise line also argued that there was insufficient evidence to establish constructive notice of the risk-creating condition on the claim of direct liability. There was a warning sign on the bed that only authorized personnel may operate the bed and to seek assistance. The cruise line argued that the notice did not establish that the sign was connected to the specific danger. The cruise line argued that the sign related to opening the bed, but Magistrate Judge Goodman noted that the warning was to seek assistance to “operate” the bed, which included opening and closing, and that closing may involve the greater risk as the bed may not be locked into position. Thus, Magistrate Judge Goodman concluded that there was sufficient notice based on the warning sign. Magistrate Judge Goodman also rejected the argument that three prior incidents were not sufficiently similar to establish constructive notice, concluding that it was up to the jury to determine whether the incidents were substantially similar. Finally, Magistrate Judge Goodman cited the cruise line’s policy that bunk beds must be inspected during regular stateroom cleaning, and the inspection required that “beds close properly and are secure when locked.” As Magistrate Judge Goodman reasoned that the jury could infer that the policy was a corrective measure, designed to protect against a purportedly locked bunk from unexpectedly deploying because the lock had not been properly engaged, he held that there was sufficient evidence of constructive notice to support a finding of direct liability. Therefore, he denied the motion for judgment as a matter of law. See March 2023 Update
The cruise line appealed, arguing that Magistrate Judge Goodman abused his discretion in granting a new trial because his “late-breaking qualms about the video” did not apply to its use as impeachment evidence, and the curative instruction was sufficient to prevent or cure any prejudice to Ewing. The Eleventh Circuit agreed with Magistrate Judge Goodman that there was a potential for significant prejudice and confusion, reasoning that the video could be considered by the jury as “key” substantive evidence without it being authenticated or validated as demonstrative evidence, injecting the notion that Ewing had caused the bed to fall on his head by using a knife or other object to jimmy open the lock. In comparison, the appellate court did not consider the probative value of the impeachment of Dr. Kadiyala to be high. Therefore, it did not matter that the video was introduced as impeachment evidence. The Eleventh Circuit agreed that the court normally presumes that juries follow curative instructions, but the appellate court applied the same reasoning to the instruction that it used with respect to the evidentiary ruling, stating that if the court reasonably found that the video injected the notion of tampering into the hotly contested fact question about how the bunk fell, then it follows that the court had discretion to consider its jury instruction insufficient to cure the prejudice. Concluding that Magistrate Judge Goodman did not abuse his discretion in granting a new trial, the Eleventh Circuit affirmed the judgment in favor of Ewing.
Serendipity at Sea owned the yacht M/Y SERENDIPITY that was damaged by Hurricane Dorian while docked in The Bahamas. The beneficial owner and manager, Sean Oakley, obtained insurance for the vessel under a SeaWave Yacht Insurance Policy that contained a Captain Warranty by which the owner “[w]arranted a full time licensed captain is employed for the maintenance and care of the vessel and is aboard while underway.” After Oakley brought the vessel to Treasure Cay in The Bahamas, he docked the yacht behind a residence known as the “Pink Paradise” and departed The Bahamas. He planned to leave the yacht in that location with no captain for a year; however, the hurricane resulted in the constructive total loss of the yacht. The vessel’s insurer, Lloyd’s, denied the claim based on a breach of the Captain Warranty in the policy, and Serendipity brought this suit against the insurer in state court in Broward County, Florida. The insurer removed the action to federal court, and the parties filed cross-motions for summary judgment. Magistrate Judge Strauss first addressed the choice of law. As the policy contained a Florida choice-of-law clause that was enforceable in admiralty, Magistrate Judge Strauss held that Florida law was applicable. Magistrate Judge Strauss concluded that Serendipity breached the Captain Warranty in the policy because it did not employ a full-time licensed captain. Although an earlier policy provided that Oakley could operate the vessel without the captain aboard, that provision was not in the policy that was effective at the time of the loss, and even if it were, it would not have created any ambiguity as it only applied while the vessel was under weigh with someone other than Oakley (or the captain) operating the vessel. However, Florida law only allows denial of the claim if the breach of warranty “increased the hazard by any means within the control of the insured.” As the insurer’s motion failed to establish that the risk was increased by the failure to employ a full-time captain for the vessel, Magistrate Judge Strauss recommended that the increased-hazard issue be addressed at trial. See March 2021 Update.
Lloyd’s engaged Thomas E. Danti as an expert for his experience as a seaman, officer in the merchant marine, commander in the Navy Reserve, yacht captain, professor of marine science, and instructor/dean at the Chapman School of Seamanship. He opined that the failure to employ a full-time licensed captain contributed to the loss of the vessel, that there were favorable hurricane protection features in the agreed mooring location for the vessel in Port Canaveral, Florida, that Automatic Identification System tracking showed numerous vessels departing The Bahamas before the Hurricane, that the SERENDIPITY was not prepared for hurricane season, and that lack of preparation contributed to the loss. The owner moved to exclude Danti’s opinions for lack of qualification, reliability, and helpfulness. With respect to Danti’s qualifications, the owner argued that Danti is not an insurance expert; however, Magistrate Judge Strauss responded that Danti’s testimony is with respect to seamanship, for which he is qualified. As to reliability, Magistrate Judge Strauss cited Danti’s extensive experience and knowledge on the subject matter that made his opinions reliable together with the significant information and explanation that supported his opinions with respect to the business of being a vessel captain and preparing vessels for hurricanes. Finally, the matters on which he gave his opinions were beyond the purview of an average lay person and were, therefore, helpful. Consequently, Magistrate Judge Strauss denied the motion to strike. See April 2021 Update.
The court ordered further briefing on the issue of whether breach of the Captain Warranty increased the hazard within the control of the insured, and Serendipity responded to the testimony of Captain Danti’s opinion about the increased hazard by rehashing issues that had already been decided, asserting that the warranty was ambiguous and had not been breached. Reasoning that the hazard issue was not disputed, Judge Ruiz granted summary judgment in favor of the insurer. Serendipity appealed to the Eleventh Circuit, and neither the defendants, Lloyd’s and USI Insurance Services, LLC, nor the insured, Serendipity, objected to appellate jurisdiction (appeal from the judgment entered in a diversity case). The Eleventh Circuit noted that, with respect to syndicates of Lloyd’s underwriters, the plaintiff must plead the citizenship of each member. The pleading against Lloyd’s was sufficient in this case as it described each of the subscribers as a citizen of the United Kingdom. However, Serendipity and USI are limited liability companies, and the pleadings did not allege the citizenship of the members of both limited liability companies (laws under which they were created and their principal place of business). Accordingly, the Eleventh Circuit remanded the case to the district court to determine the citizenship of Serendipity and USI. See February 2022 Update.
On remand, Judge Ruiz found that there was complete diversity, and the Eleventh Circuit then addressed the merits of the appeal of the summary judgment in favor of Lloyd’s on Serendipity’s claim for breach of contract based on the owner not employing a full-time licensed captain in violation of the policy’s Captain Warranty and the breach increasing the hazard posed to the vessel as set forth in the opinion of Captain Danti. The owner continued to argue on appeal that the Captain Warranty was ambiguous and vague, and, applying Florida law, Judge Marcus examined the language that warranted “a full time licensed captain is employed for the maintenance and care of the vessel and is aboard while underway.” Judge Marcus was persuaded that the warranty was ambiguous because there was more than one reasonable way to interpret the language of the warranty that “a full time licensed captain is employed.” One interpretation was that the owner must hire a person to work on the vessel exclusively as a full-time captain. Alternatively, however, Judge Marcus stated that a reasonable interpretation was that the owner was required to hire a person whose full-time profession was that of a captain but who only worked for the owner part-time. Nonetheless, the ambiguity did not save the owner because, under either interpretation, the owner violated the warranty as it did not hire a licensed captain either full-time or whose full-time job was as a licensed captain. Consequently, Judge Marcus held that there was a breach of the Captain Warranty. Judge Marcus then addressed the issue of whether the breach increased the hazard and the insurers’ argument on appeal that the owner forfeited the argument by not properly raising it in the district court. Judge Marcus noted that the owner disputed the opinion in Captain Danti’s report because he relied on a meteorological fact of which he did not possess any particular expertise. Although the owner raised the argument in connection with the claim that it did not breach the warranty, Judge Marcos held that the argument (although placed in the wrong section) was adequately raised and did not require the district judge to “scour the record” to find the owner’s argument on whether the breach increased the hazard. Turning to the merits, Judge Marcus concluded that Captain Danti’s testimony contradicted weather reports that existed at the time and that Judge Ruiz could not conclude that the owner did not produce evidence to rebut Captain Danti’s testimony. Accordingly, the appellate court held that there was a fact issue to be determined on the issue of whether breach of the warranty increased the hazard to the vessel posed by Hurricane Dorian and reversed the summary judgment to the insurers. See February 2023 Update.
Judge Ruiz held a bench trial, and he found that Oakley did not create a hurricane evacuation plan for the SERENDIPITY and did not reserve a haul-out spot for the yacht. Instead, he engaged Captain Trevor Lightbourne to occasionally check on the vessel. As the storm approached in the category as a tropical storm, Oakley and Captain Lightbourne believed that it was best to leave the boat in its relatively safe location. However, when the storm approached as a major hurricane, the lack of a hurricane evacuation plan and a captain at the location who could take the vessel away from the storm became critical. There were only two people who could have navigated the vessel from danger, Oakley and Captain Scott Connelly, who did not even know where to take the vessel in view of the absence of a hurricane evacuation plan. As neither was located in Treasure Cay, and either would have to fly in at a time when the storm was strengthening to at least Category 3 and later to Category 5, Oakley decided to leave the SERENDIPITY tied up to the dock. Based on these findings, it became clear to Judge Ruiz that the failure to hire a full-time licensed captain increased the hazard that the yacht would be destroyed by Hurricane Dorian. That captain would have created a detailed hurricane evacuation plan and would have evacuated the area in advance of the storm making landfall. Judge Ruiz agreed that the progression of the storm was, to an extent, unpredictable. However, a “full-time captain would have prepared for and worked around the unpredictability of a hurricane rather than simply failing to act.” Having determined that the insured’s breach of the Captain Warranty increased the hazard in this case, Judge Ruiz entered a final judgment in favor of the insurer. See October 2023 Update.
Lloyd’s then requested that it be awarded attorney fees and non-taxable costs based on Florida’s offer-of-judgment statute. Serendipity objected that Florida’s statute did not apply in maritime cases. Magistrate Judge Strauss agreed that the Florida law did not apply in most maritime cases. However, he answered that this is a marine insurance case where there is no established federal maritime policy as to awards of attorney fees. Thus, Magistrate Judge Strauss followed Eleventh Circuit authority that state law should apply to the applicability of attorney fees. As the Florida statute is substantive, Magistrate Judge Strauss recommended that the court grant attorney fees to Lloyd’s. Serendipity did not object, and Judge Ruiz entered judgment in favor of Lloyd’s, awarding $50,000 in attorney fees and $1,196 in non-taxable costs. See April 2024 Update.
Serendipity appealed to the Eleventh Circuit from the judgment entered by Judge Ruiz, challenging the finding that the insurer proved that the breach of the Captain Warranty increased the hazard. Whether the breach increased the hazard is a fact question, and Judge Ruiz resolved that question based on disputed testimony, primarily based on the testimony of Captain Danti, whom the judge found credible. The appellate court held that the testimony supported the findings that the damage to the vessel would have been avoided with a full-time captain who would have had a hurricane evacuation plan with options to haul out, remove, or evacuate the vessel. Consequently, denial of coverage under the Captain Warranty was appropriate (the Eleventh Circuit also held that Judge Ruiz did not abuse his discretion by rejecting Serendipity’s motion to permit disclosure of an expert witness out of time).
This litigation involves a shipment of plywood, consigned to importer Hawthorne Industrial Products, from Qingdao, China to Baltimore, Maryland on the M/V TAC IMOLA, owned by Ratu Shipping. The bills of lading incorporated a Booking Note contract of charter that contained a mandatory Hong Kong arbitration clause. Hawthorne claimed that there was damage to the cargo during the carriage, and it brought this action in federal court in Maryland against the vessel (the owner’s P&I Club issued a letter of undertaking to release the arrest). The owner then sought a stay of the in rem claims in favor of arbitration, but Judge Bennett declined the stay as he found disputed facts about what charter party the bills of lading sought to incorporate and whether Hawthorne had notice of the arbitration clause. The vessel owner appealed the denial of the stay, and the Fourth Circuit disagreed with Judge Bennett, citing the provision in the Federal Arbitration Act that if the making of the arbitration agreement is in issue, the court “shall proceed summarily to the trial thereof.” As the FAA requires the district court to decide the fact disputes regarding the making of the arbitration agreement before ruling on the motion to stay, the Fourth Circuit vacated the denial of the stay and remanded the case for trial to determine whether the parties agreed to arbitrate the claims in the suit.
Mary Rodgers-Rouzier, a bartender on steamboats operated by American Queen, signed an arbitration agreement with American Queen that provided it was “governed by the Federal Arbitration Act” under rules and procedures of the American Arbitration Association. Rodgers-Rouzier filed this suit as a collective action against American Queen in federal court in Indiana, seeking overtime under the Fair Labor Standards Act. American Queen moved to compel arbitration under the FAA, but Judge Barker denied the motion on the ground that the FAA excludes contracts of employment of seamen. Accepting that the FAA did not apply, American Queen then moved to dismiss or stay the litigation based on the Indiana Uniform Arbitration Act. Judge Barker agreed to apply Indiana law to the agreement and compelled Rodgers-Rouzier to arbitrate as the Indiana statute did not contain an exemption for seamen’s contracts. Rodgers-Rouzier appealed, and, writing for the Seventh Circuit, Judge Rovner concluded that the district court had authority to enforce the arbitration agreement under Indiana law, which led to the question whether American Queen could compel arbitration under Indiana law. In light of the contractual provisions, Judge Rovner answered that the parties did not agree to arbitrate in the abstract but agreed to arbitrate subject to the FAA (in effect a choice-of-law provision). As the FAA would not permit American Queen to compel arbitration because of the seaman exclusion, Judge Rovner ruled that Indiana law would also not compel arbitration under this agreement. Therefore, Rodgers-Rouzier’s individual case could proceed in federal court, opening the possibility that the case could proceed as a collective action (although the court noted that American Queen had filed a bankruptcy petition and that the bankruptcy judge had held that the workers could pursue their claims only in the bankruptcy action).
Darryl Cole alleges that he was working as a crane operator for Oceaneering on its vessel, the M/V OCEAN PATRIOT. He was supplied to Oceaneering by Huisman North America pursuant to a Purchase Order by which Huisman was to supply a crane operator to Oceaneering. Cole began feeling dizzy, light-headed, and nauseated while on the vessel; he vomited; he felt pain and numbness from his neck to his eyes; and he became delusional and fell in and out of consciousness. He was eventually evacuated from the vessel by helicopter and was determined to have suffered a stroke. He brought this suit against Oceaneering in federal court in Louisiana under the Jones Act, general maritime law, and state law, and he added Huisman as a defendant in an amended complaint, seeking maintenance and cure. Oceaneering brought a claim for indemnity against Huisman pursuant to the terms of the Purchase Order, and Huisman argued that the terms of the Purchase Order were preempted by a prior Mutual Indemnity and Waiver Agreement that provided for indemnity only for an injury or illness that arises out of or is incident to the services provided by Huisman (crane operations). Claiming that Cole’s stroke did not arise out of or relate to the crane operations, Huisman argued that it did not owe indemnity to Oceaneering. Oceaneering countered that the Purchase Order provided that its terms superseded all agreements and, alternatively, that Cole’s stroke arose out of or related to the services provided by Huisman because it occurred while Cole was on the vessel to perform the services. Judge Vitter did not have to decide which document governed as they contained the same limiting language in their indemnity agreements—that the injury or illness arise out of or as a result of the services provided by Huisman. She then concluded that Cole’s stroke did not arise out of the services. Judge Vitter recognized that the Fifth Circuit interprets the term “arising under” broadly, but she did not find any evidence suggesting that a stroke is an activity reasonably incident to or anticipated by the provision of crane operation services. She rejected the argument that the Fifth Circuit’s Fontenot case only requires the worker’s presence on the vessel for an injury to arise under a contract, holding that there had to be a causal connection between the stroke and the services provided by Huisman (also rejecting the argument that Huisman could not “avoid its contractual responsibilities simply because [Cole] was not performing the specific services contemplated by the Purchase Order at the moment of injury”). Consequently, Judge Vitter granted summary judgment to Huisman on Oceaneering’s indemnity claim.
Oceaneering filed a motion for summary judgment that Cole was not a seaman, seeking a dismissal of his seamen’s claims against Oceaneering. Cole was employed by Huisman as a crane operator from November 2017 until February 2021, working 23 hitches. His first 19 hitches were for Hornbeck Offshore Services, and his last four hitches were scheduled for Oceaneering on the OCEAN PATRIOT. Cole claims that he spent 100% of his time working on vessels during his employment by Huisman; however, Oceaneering countered that only 48 days of that time were spent on the vessel owned by Oceaneering, and 462 days were spent working for Hornbeck. Oceaneering argued that Cole did not satisfy the duration element of the connection test for seaman status because he spent less than 10% of his employment with Huisman working on the Oceaneering vessel (48 days out of 510 days). Cole responded that he spent 100% of his time with Huisman (and Oceaneering) working on vessels. Judge Vitter turned to the en banc decision of the Fifth Circuit in Sanchez, noting that the worker would have to spend at least 30% of his total employment aboard the vessels owned by his Jones Act employer in order to satisfy the duration element. Although Cole argued that he satisfied the 30% rule-of-thumb for the duration element because he spent 100% of his working time on the OCEAN PATRIOT in service of the vessel, Judge Vitter answered that Cole’s argument failed to address the holding in Sanchez that the court had to consider the substantiality of the duration in terms of his entire employment with Huisman. As his work on the OCEAN PATRIOT was less than 10% of that time, Judge Vitter ruled that Cole was not a seaman, and she dismissed the seaman’s claim against Oceaneering. See May 2023 Update.
Cole moved for reconsideration of Judge Vitter’s decision on seaman status, arguing that he satisfied the duration prong of the substantial connection test. Cole argued that the 30% analysis only applies to workers who perform work on land and on vessels and that it does not apply in this case where Cole worked 100% of the time for Huisman in service of vessels. Cole also claimed that he was permanently assigned to the OCEAN PATRIOT because he was scheduled to work for four hitches on that vessel. Judge Vitter was persuaded by Judge Ashe’s analysis in Meaux v. Cooper Consolidated, LLC (see June 2022 Update) that considered for the duration element only the length of employment with the alleged Jones Act employer and not with the worker’s direct employer. [Interestingly, Judge Ashe ultimately held that Meaux was not a seaman because he failed the nature element for seaman status]. In this case, Cole worked two hitches for Oceaneering on the OCEAN PATRIOT from December 11, 2020 to February 21, 2021. Thus, after going to work for Oceaneering on the OCEAN PATRIOT, Cole only worked on that vessel and did no work on land or non-Oceaneering vessels. Although Huisman’s corporate representative testified that none of their workers are assigned to a vessel, he admitted that once the worker goes to work for a client, he “is theirs.” Oceaneering’s vessel log listed Cole as part of the crew and reflected that he was assigned to the vessel. As the evidence demonstrated that Cole worked exclusively aboard the OCEAN PATRIOT once the assignment began, Judge Vitter found that Cole was “permanently assigned” to the vessel and that he satisfied the duration element for seaman status. This finding then required that Judge Vitter address the issue of whether Cole satisfied the nature element of the seaman status test, as defined by the Fifth Circuit in Sanchez. Cole took his orders from the vessel (captain, chief mate, chief engineer, and dive crew), and Huisman’s corporate representative stated that Cole was to meld in and function as part of the crew. Thus, he owed his allegiance to the vessel and not to Huisman. His work was all sea-based, and he sailed with the vessel from location to location. Consequently, Judge Vitter found Cole satisfied the nature element and that he was a seaman as a matter of law, granting summary judgment to Cole.
Oceaneering and Cole then moved for summary judgment on the issue of whether Cole was a borrowed servant, arguing whether the Ruiz factors demonstrated that Cole was employed by Oceaneering or Huisman. Oceaneering argued that Huisman directed which employees would be sent offshore, but Huisman’s representative testified that its responsibility ended when the worker got on the boat to be transported to the Oceaneering vessel. Once on the OCEAN PATRIOT, Cole did what he was told to do by the captain, chief mate, chief engineer, or dive crew. Judge Vitter reasoned that the selection of the individual was not relevant to the determination of which party had control over the individual’s work once he was present on the vessel. Likewise, the requirement that Cole report to his supervisors at Huisman at the end of each day and submit a Daily Report with details of his work did not overcome the fact that if Cole had an issue on the vessel, he was to report it to the vessel. Judge Vitter found the direction/control factor and the factor about whose work was being performed weighed in favor of Cole’s status as a borrowed servant. Turning to the question of whether there was an agreement between the parties, Oceaneering cited the Purchase Order stating that Huisman was an independent contractor. However, the terms did not reference Huisman’s employees, and Judge Vitter concluded that this factor did not weigh in favor of either party. For the factor looking to whether the employee acquiesced in the new work situation, Oceaneering argued that Cole had only been working on the OCEAN PATRIOT for a short period of time compared to his employment with Huisman, but Judge Vitter considered this factor to weigh in favor of status as a borrowed servant because Cole complied with his role without objection, and the Fifth Circuit has held that a month is sufficient time for an employee to appreciate new work conditions (however, she found the factor that considered whether the new employment was over a considerable length of time to be neutral). Judge Vitter considered the factor looking to whether the original employer terminated its relationship with the employee to be neutral because Cole was required to maintain contact with Huisman while he was receiving instruction and supervision from Oceaneering. As Oceaneering supplied the tools and place for performance of the work and could remove Cole from the OCEAN PATRIOT, those factors weighed in favor of status as a borrowed servant. Finally, with respect to the obligation to pay Cole, Judge Vitter noted that the Fifth Circuit had held that when the funds used to pay the employee are received from the entity to which the employee is loaned, the borrowing entity, in effect, pays the employee. However, the parties submitted conflicting evidence on the issue, so Judge Vitter considered this factor to be neutral. As five of the factors favored Cole being a borrowed servant of Oceaneering and four were neutral, Judge Vitter found that Cole was Oceaneering’s borrowed servant, and she granted summary judgment to Cole.
The medic who treated Cole on the OCEAN PATRIOT, Keith Thompson, was provided pursuant to a contract between Oceaneering and Pharma-Safe Industrial Services. Oceaneering and Cole disagreed on the issue of whether the medic was an independent contractor, and they filed motions for summary judgment on the issue of whether Oceaneering was vicariously liable for any negligent treatment provided by the medic. Judge Vitter explained that there are two theories by which a Jones Act employer may be held vicariously liable–when it exercises operational control over the work and when the work is an operational activity (one that is necessary or vital to the employer’s operations)–so that, under Hopson v. Texaco, the employer is vicariously liable for the negligent acts of those who perform, under contract, the operational activities. As Oceaneering had a non-delegable duty to provide prompt and adequate medical care to its seaman (Cole), Oceaneering was vicariously liable for the conduct of the agent to whom it delegated the obligation to perform that duty (Thompson and Pharma-Safe). Accordingly, Judge Vitter granted summary judgment to Cole. See August 2023 Update.
Oceaneering then moved for summary judgment on its claim for defense, indemnity, and insurance coverage from Huisman based on the terms of the Purchase Order by which Huisman supplied Darryl Cole to work for Oceaneering as a crane operator (and Huisman cross-moved for summary judgment). Oceaneering relied on the 2021 Purchase Order stating that “these Terms and Conditions supersede all representations, understandings, or agreements and shall prevail notwithstanding any variance with terms and conditions of any order submitted prior. Acceptance of this Purchase Order is deemed acceptance of the terms and conditions.” Huisman relied on the 2013 Mutual Indemnity and Waiver Agreement between Oceaneering and Huisman and argued that the 2021 Purchase Order was not applicable because it only applied “unless otherwise agreed in writing” and the 2013 Agreement was such an agreement in writing. Judge Vitter noted that she previously decided that Oceaneering was not entitled to indemnity from Huisman. That left the issue for this opinion—whether Huisman breached its obligation under the 2021 Purchase Order by failing to obtain the required insurance to protect Oceaneering from the claims asserted against it by Cole (Huisman’s insurer, State National Insurance Co., declined to provide insurance coverage to Oceaneering). Judge Vitter accepted that both the Purchase Order and the 2013 Agreement were maritime contracts, and she initially concluded that the 2018 Purchase Order applied to the insurance obligations. However, the Purchase Order provided that when the Purchase Order was made under an existing written contract, the terms of that contract prevailed in the event of a conflict. Thus, Judge Vitter reviewed the terms of the 2021 Purchase Order (incorporating the terms of the 2018 Purchase Order) to determine whether the insurance clause conflicted with the obligation in the 2013 Agreement. The 2018 Purchase Order, relied on by Oceaneering, contained a broad insurance obligation in favor of Oceaneering; however, the 2013 Agreement limited Huisman’s insurance obligation to the defense and indemnity obligations that Huisman assumed in the Agreement. Therefore, Judge Vitter concluded that the provisions conflicted and that Huisman was only obligated to obtain insurance for Oceaneering to the extent of Huisman’s indemnity obligation. As Judge Vitter previously held that Oceaneering was not entitled to indemnity from Huisman, she held that Huisman had not breached its contract with Oceaneering by failing to provide insurance coverage. Finally, Judge Vitter rejected Oceaneering’s argument that the insurance and indemnity provisions were separate and that the insurance should not be limited by the indemnity agreement. She answered: “[S]imply because the duties to indemnify and maintain insurance may be separate and independent does not prevent them from also being congruent; that is, a contract may reasonably be construed as extending the insured’s additional insured status only to the extent of the risk the insured agreed to assume.” Therefore, Judge Vitter granted summary judgment to Huisman that it was not liable for failing to provide insurance to Oceaneering.
Judge Vitter then addressed the motion for summary judgment filed by Pharma-Safe (and the cross-motion filed by Huisman) that Pharma-Safe is entitled to defense and indemnity from Huisman pursuant to the 2013 Mutual Indemnity and Waiver Agreement between Oceaneering and Huisman that requires Huisman to defend and indemnify Oceaneering and its contractors and subcontractors (which include Pharma-Safe) in connection with employees of Huisman (such as Cole). Similar to the contention presented by Oceaneering when it sought defense and indemnity from Huisman, Pharma-Safe argued that but for the Purchase Order between Huisman and Oceaneering, Cole would not have been aboard the OCEAN PATRIOT. Consequently, Cole’s injury “arises out of or is incident to the services.” Huisman responded, as it did to Oceaneering, that there was no evidence showing a causal link between Cole’s stroke and the crane operation services that Huisman agreed to provide to Oceaneering. Judge Vitter agreed that the 2013 Agreement applied and that Pharma-Safe fell within the scope of the defense and indemnity owed by Huisman. However, she reiterated her conclusion that Cole’s injuries did not arise out of and are not incident to the crane operation services that Huisman agreed to provide to Oceaneering. Consequently, she granted summary judgment to Huisman and dismissed Pharma-Safe’s cross-claim against it.
Huisman brought a third-party action (both under Rule 14(a) and 14(c)) against Dr. Robert Davis, the on-shore physician who was alleged to be an employee or agent of Pharma-Safe, seeking contribution or indemnity (and direct liability to Cole) on the ground that, if Cole was injured as alleged, his injuries were the result of the negligence or gross negligence of Dr. Davis. Dr. Davis moved to dismiss the claims on the ground that the court lacked admiralty jurisdiction over the claims because the malpractice that was alleged did not satisfy the locality or nexus requirements for a maritime tort. Alternatively, Dr. Davis argued that the Louisiana Medical Malpractice Act supplemented maritime law and required dismissal of the claim. With respect to the locality test, Judge Vitter did not agree with Dr. Davis’ argument that Judge Vitter should apply the factors enunciated by the Fifth Circuit in 1973 in Kelly v. Smith, which was decided more than 20 years before the Supreme Court’s Grubart decision that declined to apply the Kelly factors. As Cole alleged that he suffered the stroke while he was on the vessel, and as Dr. Davis knew he was providing a medical consultation to the onboard medic for a crewmember on a vessel at sea, Judge Vitter concluded that Huisman’s claims against Dr. Davis satisfied Grubart’s locality test. Judge Vitter also held that rendering medical advice for crew members on a vessel at sea is a traditional maritime activity, quoting, “it is difficult to conceive of a tort more intimately related to maritime activities than causing illness to a seaman during the course of a voyage.” As Judge Vitter concluded that maritime law applied, she considered Dr. Davis’ argument that maritime law should be supplemented by state law due to a lack of traditional maritime regulation of medical malpractice and the strong state interest in regulating medical malpractice. Dr. Davis cited the Fifth Circuit’s Joiner opinion: “We can find absolutely no support for the proposition that an ordinary, onshore physician who treats an injured sailor has thereby submitted himself to the rules of maritime commerce.” Judge Vitter, however, found “a national interest in uniformity of law and remedies for seamen who seek medical treatment while aboard a vessel at sea,” agreeing with Cole that “subjecting medical malpractice claims like these, which stem from a shoreside physician rendering a medical consultation to a seaman aboard a vessel at sea, to the law of whatever state in which the onshore physician happens to be located at the time of consultation, could result in inconsistent, and even contradictory, results depending on the location of the onshore physician.” Judge Vitter declined to supplement the general maritime law where the alleged malpractice was committed by a shoreside physician who knew that he was consulting for crew members aboard a vessel at sea. See September 2023 Update.
Pharma-Safe filed an interlocutory admiralty appeal under Section 1292(a)(3) from Judge Vitter’s decision that Huisman was not obligated to indemnify Pharma-Safe on the ground that Cole’s injury did not arise out of the services provided by Huisman to Oceaneering because Cole’s stroke was not caused by his crane operator duties. Applying maritime law, the Fifth Circuit noted that the term “arising out of” is read broadly and is not limited to incidents involving the active performance of job duties. Quoting the Fifth Circuit’s Fontenot decision, the panel stated that, “in the maritime context, a worker’s presence at the scene—if ‘attributable to or . . . reasonably . . . anticipated by his employment responsibilities’—is enough to trigger an indemnification clause.” As Cole claimed that his stroke was caused or exacerbated by the medic’s failure to evacuate him once he displayed stroke symptoms, the Fifth Circuit agreed with Pharma-Safe that the claim arose out of/was incident to Huisman’s services. The panel distinguished cases in which the injury/damage was sustained by a non-party, concluding that Fontenot governed the allocation of responsibility for injury/death “according to the identity of the injured employee rather than according to which party’s fault or negligence caused the injury.” Accordingly, the Fifth Circuit rendered summary judgment for Pharma-Safe against employer-Huisman on the scope of the indemnity agreement.
This dispute arose on Lost Lake, across the Atchafalaya River from Butte Larose in St. Martin Parish, Louisiana. Devin Thibodeaux, a commercial crawfisherman, was harvesting his crawfish traps in water over property owned by Kenneth Bernhard, whose son Adam Bernhard manages the property, when Bernhard intercepted and collided with the skiff occupied by Thibodeaux. Bernard declared that Thibodeaux was trespassing, and ordered him to retrieve his traps, exit the property, and never return. Bernard then summoned a sheriff’s deputy who issued a citation to Thibodeaux for criminal trespass. Thibodeaux brought this action in federal court under the court’s admiralty jurisdiction, asserting a conversion claim under Louisiana state law. Bernhard moved to dismiss the case for lack of admiralty jurisdiction, claiming that Thibodeaux did not sufficiently allege the location of the incident for the locality portion of the test for admiralty jurisdiction, nor did he allege how the actions of the defendant had a connection to traditional maritime activity. Magistrate Judge Whitehurst agreed that the allegations were insufficient, but she gave Thibodeaux an opportunity to amend the complaint to provide more specific allegations on the elements of the test for admiralty jurisdiction. See October 2021 Update.
After Thibodeaux filed an amended complaint and Bernhard again moved to dismiss the complaint for lack of admiralty jurisdiction, Magistrate Judge Whitehurst classified the incident as interference with the plaintiff’s ability to harvest crawfish from their traps with the potential to disrupt maritime commerce, but she recommended that the case be dismissed because the general character of the activity giving rise to the plaintiff’s claims (described as harassment, verbal accosting, declaration of trespass, and ordering the plaintiff to leave the property) was not sufficiently related to traditional maritime activity. Judge Joseph found the characterization to be deficient in two important respects—it failed to encompass the allegation that the plaintiff was forcefully intercepted and stopped, an alleged intentional obstruction of a navigable vessel, and it failed to account for the reason for the conduct—impeding the plaintiff from freely navigating in the waterway while conducting commercial crawfishing. Judge Joseph instead described the defendant’s activities as “alleged physical obstruction of a navigable vessel, verbal threats, and other intimidating actions designed to impede commercial fishing and navigation. Accordingly, Judge Joseph concluded that the maritime connection test was satisfied and remanded the matter to Magistrate Judge Whitehurst to make factual findings on whether the locality test was satisfied. See July 2022 Update.
Magistrate Judge Whitehurst then held an evidentiary hearing and found: Lost Lake is a perched lake (a perched lake is one in which the bottom of the lake is above the mean level of water in the surrounding river channels) situated in a crook of undeveloped swampland between the Atchafalaya River and the Butte LaRose Cutoff Channel. Lost Lake’s bottom is perched 1 to 2 feet above mean river stage at Butte La Rose. When the Atchafalaya River is at high stage (19 feet), Lost Lake is accessible in various routes through the woods. Otherwise, access to Lost Lake is only through a 10- to 20-foot-wide drainage channel from the Atchafalaya River. The Lake is accessible through flooding and/or the ditch about 30%, or about 110 days in the crawfish season, annually. Magistrate Judge Whitehurst summarized: “Lost Lake, a privately owned, non-state claimed, flood-prone area, which standing alone, without the seasonal access provided by [a] drainage ditch, is not navigable.” That raised the question: “But what of the drainage ditch, which has permitted limited navigation relatively recently?” Rather than determining the difficult question whether the Lost Lake was navigable for admiralty jurisdiction, Magistrate Judge Whitehurst ruled that there was a sufficient possibility of a federal navigational servitude that the court could exercise federal question jurisdiction with supplemental jurisdiction over the plaintiffs’ state-law claims. Judge Joseph, however, chose to supplement the lengthy factual findings of Magistrate Judge Whitehurst and concluded that Lost Lake was navigable-in-fact and that the case fell within the court’s admiralty jurisdiction. The defendants argued that Lost Lake did not form an interconnected highway of commerce because it only seasonally “communicates” with the Atchafalaya River, but Judge Joseph answered that the Fifth Circuit had found that seasonal accessibility does not preclude a finding of navigability. Judge Joseph agreed with Magistrate Judge Whitehurst’s finding that Lost Lake was accessible to the Atchafalaya River about a third of the year through the short ditch, which “wholly coincides with crawfish season,” and is “commercially significant” for that Basin. Judge Joseph concluded: “Lost Lake is navigable-in-fact, and therefore a navigable body of water for the purposes [of] this Court’s admiralty jurisdiction.” See August 2023 Update.
The Bernhard appealed to the Fifth Circuit, which described the Atchafalaya Basin as “our nation’s largest floodplain swamp,” offering “picturesque scenery of bottomland forests, swamps, bayous, and backwater lakes.” Bernhard did not contest on appeal the connection element of the test for admiralty jurisdiction, but the Fifth Circuit began by considering that element as the court had to ensure that it had authority over the case. The court agreed that the actions of the defendant disrupted maritime commerce by preventing Thibodeaux from freely navigating his vessel in the Lost Lake area of the Atchafalaya Basin. The court added that the detention of Thibodeaux’s vessel and traps resulted in his inability to engage in commercial fishing, a traditional maritime activity. Therefore, the court considered the connection element to be satisfied. Turning to the “more hotly contested issue,” the navigability of Lost Lake, the court considered the accessibility of the Lake through the twenty-foot drainage canal that coincided with the crawfish season. Bernhard cited the Fifth Circuit’s Parm v. Shumate case addressing a privately owned lake that received runoff from the flooding of the Mississippi River. The court distinguished Parm, however, because Lost Lake has a direct, seasonal connection to a navigable river via the canal; Lost Lake has historically supported commercial fishing activity; and Parm involved the navigational servitude and not admiralty jurisdiction. Based on “the unusual facts shown before us,” the Fifth Circuit held that Judge Joseph did not err in holding that Lost Lake was navigable for purposes of admiralty jurisdiction. Thanks to Michael F. Sturley, Fannie Coplin Regents Chair at the University of Texas School of Law, for bringing this decision to our attention.
From the federal district courts
Brad and Ronalda Angasan own the fishing vessel NOVARUPTA (Brad is the captain). Just prior to the 2022 Bristol Bay salmon season, they lost one of their crew and sought a replacement. Gracie Bodo responded, and the Angasans agreed to hire her. Bodo requested a contract, but Ronalda Angasan was unable to send one, claiming that the failure was in part due to a lack of sufficient internet/wireless connection. Bodo requested a crew share of 10%, but the Angasans’ policy was to offer 5% to the lowest-ranking crew member and 10% for the highest-ranking crew (for the NOVARUPTA, 10% was paid to crewmembers with at least 10 years of fishing experience). Bodo claimed that she had received 10% in her last two years as a deckhand, but Ronalda Angasan did not agree to that figure, and Brad Angasan told her she would be the lowest-ranking crewmember. The parties did not agree to the share, and Bodo went to work on the vessel with no written contract. Bodo worked on the vessel for just over two weeks, and the Angasans claimed that she lacked the skills to even receive a 5% share. Alleging that she was harassed and threatened by the owners and essentially forced off the vessel and constructively discharged, Bodo brought this suit in federal court in Alaska against the Angasans and the vessel, seeking to recover wages and punitive damages and attorney fees. She moved for partial summary judgment that she should recover at least the “undisputed” 5% crew share plus attorney fees. She argued in her motion that the Angasans had sent two checks for $10,000 to Bodo, but one check was not processed and the other was returned for insufficient funds (claiming that these purported payments and the failure to pay even 5% demonstrated bad faith). Judge Gleason did not consider the attempted payments or emails regarding the payment to be summary judgment evidence of Bodo’s entitlement to a share, and the evidence was disputed whether she was entitled to at least 5%. Accordingly, Judge Gleason declined to grant summary judgment to Bodo on the wage claim and the claim for attorney fees. See September 2023 Update.
Judge Gleason held a bench trial on February 13, 2024, concluding that the parties had not agreed, either orally or in writing, on the percentage crew share that Bodo would receive. Although the Anagasans argued that the actual gross tonnage of the NOVARUPTA was 17 tons according to a marine surveyor, the registered tonnage is 25 gross tons, invoking 46 U.S.C. Section 10601’s requirement that a crew share agreement be in writing when the vessel is at least 20 gross tons. As there was no written contract, Bodo was entitled to the highest rate of wages at the port in which the seaman was engaged (for seamen of the same rating or similar duties), which Judge Gleason found to be 10%. Accordingly, Judge Gleason ordered payment of the 10% crew share after deducting the period before which Bodo was hired. Judge Gleason also held that the Alaska Wage and Hour Act was not applicable to this maritime claim for unpaid wages.
Perry Lartigue claims that he developed cancer from exposure to several carcinogens during his employment by the U.S. Army Corps of Engineers from 1969 to 2006 to work on vessels involved in dredging operations. He brought this suit against the United States in federal court in Louisiana under the Jones Act and general maritime law, and the United States responded that, as he was a civilian employee, his right to benefits under the Federal Employees’ Compensation Act had to be resolved by the Department of Labor before his claims under the Jones Act and general maritime law could proceed. Agreeing that there was a substantial question whether there was coverage under the FECA, Chief Judge Brown agreed to stay the federal litigation until the Department of Labor determined whether there was coverage under the FECA.
Eureka Cole, a passenger on the CARNIVAL CONQUEST, was injured when strong winds lifted two or three plastic container lids and struck her on the shoulder while she was seated on the outer Lido Deck of the vessel. Her husband saw a crewmember stacking and unstacking plastic containers in a cart or workstation directly behind where Cole was seated. He witnessed the wind pick up the lids that struck Cole. Cole brought this action against the cruise line in federal court in Florida, alleging a count for direct negligence of the cruise line and a count for vicarious liability. The cruise line moved for summary judgment on both counts. With respect to the direct liability claim, the cruise line argued that it lacked actual or constructive notice of the dangerous condition. Cole presented the testimony of a crewmember who testified that the crewmembers were trained to secure items in the event of high winds, and Judge Damian held that this evidence of corrective measures was sufficient (combined with testimony of the windy conditions) to present a triable issue of notice. As Cole testified that it was very windy during the two or three hours that she was out on the Lido Deck and that she had to walk forward so as not to fall, Judge Damian considered the dangerous condition had existed long enough to invite corrective measures (Judge Damian did not find the prior incidents presented by Cole to be sufficiently similar to provide constructive notice of the danger to the cruise line, and she also rejected the argument that the passenger did not have to establish notice because the cruise line created the dangerous condition). Turning to the claim for vicarious liability, the cruise line argued that there was no evidence that a crewmember violated any cruise line procedure or industry standard. However, Judge Damian cited the testimony of the crewmember with respect to the procedure to secure items on the ship in the event of windy conditions and held that there was a fact question whether the crewmember was negligent. A bench trial was completed on May 31, 2024, and the parties will submit proposed findings/conclusions in July.
American Commercial Barge Line and ACBL Transportation Services (ACBL) brought suit against Associated Terminals and Associated Marine Equipment (Associated) in state court in St. James Parish, Louisiana, asserting that Associated moored crane barges to ACBL’s Wash Dock (consisting of several barges moored at ACBL’s facility in Convent, Louisiana), and the vessels broke free during Hurricane Ida, taking the Wash Dock with them and causing injuries and damage. ACBL pleaded that Associated was liable for all of the damages and losses resulting from the breakaway, including damage to the Wash Dock and indemnity for any amounts ACBL may have to pay to third parties. Associated snap removed the case to federal court (before service), asserting that the federal court had jurisdiction under diversity and, alternatively, based on the court’s original admiralty jurisdiction. ACBL moved to remand the case to state court on the ground that Associate failed to carry its burden to show the citizenship of the parties for diversity. Associated sought leave to file amended notices of removal to set forth the citizenship to establish diversity. Judge Vitter agreed with ACBL that Associated had not properly pleaded the citizenship of the parties, but she disagreed with ACBL that case was removed based solely on diversity. Judge Vitter directed the attention of ACBL to the specific statement in the Notice of Removal that the federal court had both diversity and original admiralty jurisdiction over the case. She rejected “the utterly baseless Plaintiffs’ argument that the Court lacks subject matter jurisdiction over this case because Defendants failed to properly allege the citizenship of the parties in the Notice of Removal.” Therefore, as the court had admiralty jurisdiction, Judge Vitter denied the Motion to Remand (but she did give leave to Associated to file an amended notice of removal that properly pleaded the citizenship of the parties). See June 2024 Update.
ACBL moved for reconsideration, arguing that the case should be remanded because the Defendants failed to establish a separate basis for removal (diversity), asserting that the Notice of Removal failed to properly allege the citizenship of the parties. Judge Vitter rejected the argument, however, as the Amended Notice of Removal properly alleging the citizenship of the parties. ACBL also argued that the defendants could not remove the case because they are both citizens of the forum state, Louisiana, but the defendants responded that the snap removal was proper because the forum-defendant provision in the Removal Statute only applies when parties properly joined and served are citizens of the forum state. As the defendants removed the case before being served, Judge Vitter followed the decisions of the district courts approving snap removal by forum defendants. Therefore, she declined to reconsider her decision declining to remand the case.
The M/V JALMA TOPIC was traveling up the Mississippi River when its rudder stuck to port and the vessel allided with a barge and dock structure owned by Crescent Towing along with vessels owned by Cooper/T. Smith. The owner of the JALMA TOPIC filed a limitation action in federal court in New Orleans, and the owner notified everyone known to have a claim and provided notice to others in the New Orleans Times Picayune. Several claims were filed, and Judge Morgan entered a default against those who had not filed claims after the deadline passed for the filing of claims. Within two weeks of the default order, Gawain Schouest, port captain for Cooper/T. Smith, sought leave to file a claim for injuries he sustained while helping to secure the barge facility. Considering whether Schouest had shown cause under Rule F(4), Judge Morgan noted that discovery was ongoing and the parties would not be prejudiced by the late claim; that Schouest did not have actual notice of the proceeding until after the default; that Schouest was not a party who received written notice of the limitation action, did not subscribe to or read the Times Picayune on its website; and that his home had been damaged by Hurricane Ida, which disrupted his electricity, internet service, and cellphone service. Judge Morgan found that the equities weighed in favor of allowing Schouest to file a late claim. See January 2022 Update.
The owner and manager of the JALMA TOPIC filed a third-party complaint and Rule 14(c) tender against YDK Technologies, the manufacturer of the vessel’s autopilot system that was allegedly defective (claims for a defective condition, defective design, and failure to warn). YDK filed a motion to dismiss for lack of personal jurisdiction, and Judge Morgan granted the motion. YDK designed and manufactured the autopilot in Japan, and its stream of commerce ended outside the United States more than 15 years ago. There was no general jurisdiction against YDK, and there was no specific jurisdiction for the products liability claims under a stream of commerce theory. This left only a theory of specific jurisdiction with respect to the failure to warn claim. Judge Morgan noted the narrow body of law that the assertion of failure to warn does not, in and of itself, establish that the court has specific jurisdiction over a nonresident defendant, and she agreed that the allegation was insufficient to establish minimum contacts. Therefore, she considered the defendant’s contacts with the Louisiana forum. The vessel owner cited the fact that the JALMA TOPIC called at the Port of New Orleans in 2016 and had annual service on the autopilot by RadioHolland USA, which is part of the manufacturer’s network of service providers. And service calls were made on the autopilot systems on other vessels by members of the network of service providers. However, the vessel owner did not allege that YDK was involved in the service or that the owner called YDK to arrange the service. Thus, the question was whether RadioHolland, in servicing a vessel in New Orleans based on a direct request to it, was acting as YDK’s implied agent such that its contacts could be imputed to YDK to establish specific jurisdiction over YDK. Judge Morgan answered: “To hold RadioHolland to be YDK’s implied agent, even in the absence of an allegation that YDK arranged the service call . . . would be to stretch the boundaries of personal jurisdiction too far.” See February 2023 Update.
On September 8, 2023, all claimants in the limitation action settled their claims with the owner and manager of the JALMA TOPIC, except for Gawain Schouest, an employee of Cooper/T. Smith. Schouest moved the court to dissolve the stay as he was the single claimant, and Judge Morgan lifted the stay based on the stipulations filed by Schouest. Schouest then brought suit in Louisiana state court against Crescent Towing, Cooper/T. Smith, and the owner/manager of the JALMA TOPIC. Crescent Towing and Cooper/T. Smith then sought leave to lift the stay to bring claims for contribution and indemnity in the federal limitation action, and they declined to agree to be bound by the stipulations filed by Schouest. Schouest argued that the federal action should not be reopened because the quantum of damages for the claims of Schouest, Crescent Towing, and Cooper/T. Smith did not exceed the value of the limitation fund. Judge Morgan noted that the unilateral stipulation, without the agreement of Crescent Towing and Cooper/T. Smith was insufficient to protect the owner/operator, and she reinstated the stay to protect the limitation petitioners’ “absolute” right to limit their liability.
Kyle Rak was employed as a pilot technician of remotely operated vehicle systems by C-Innovation. He had just finished a hitch on the OSV ISLAND PERFORMER, a vessel owned by Island Ventures, which was located in Guyana. Rak was injured in an incident that occurred at the Sleepin Hotel and Casino in Georgetown, Guyana. Rak’s employment was terminated the next day, and Rak brought this suit in federal court in Louisiana against C-Innovation and Island Ventures, alleging injury claims as a Jones Act seaman together with a claim for retaliatory/wrongful discharge. The defendants moved for summary judgment that Rak was not a seaman, and the parties did not dispute that Rak satisfied the requirements that his duties contribute to the function or mission of the vessel and that his connection to a vessel or fleet of vessels was substantial in duration. Judge Morgan applied the Sanchez factors to determine whether Rak’s connection was substantial in nature and noted that the defendants did not dispute that the work Rak performed was sea-based. The defendants contested the other two factors, whether the worker owed his allegiance to the vessel or a shoreside employer and whether the worker’s assignments were limited to performance of discrete tasks after which his connection to the vessel ended (or did he sail with the vessel from location to location?). Finding that the facts in this case were similar to those addressed by the Fifth Circuit in the Santee case (see April 2024 Update), Judge Morgan held that Rak was not a seaman and dismissed all of his claims. Four days after her decision, the panel of the Fifth Circuit in Santee granted rehearing and withdrew the opinion on which Judge Morgan based her grant of summary judgment. See June 2024 Update. On June 17, 2024, Rak filed a motion for reconsideration in the district court and a notice of appeal to the Fifth Circuit.
Steel importer Thyssenkrupp purchased a cargo of steel from a Turkish company that contracted with Pegasus Denizcilik, charterer of the M/V DRAWSKO, to carry the cargo from Turkey to Illinois. Pegasus chartered the vessel from its owners, Polska Zegluga Morska and Erato Two Shipping, and that charter contained a London arbitration clause. The bills of lading issued on behalf of charterer Pegasus stated that they were to be used with Charter Parties, and the conditions of carriage provided that all terms and conditions “of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated.” The cargo arrived in Illinois with rust and water damage, and Thyssenkrupp brought this suit in federal court in Illinois against the vessel, the owners, the charterer, and the stevedore. The owners moved to dismiss the complaint based on the arbitration clause in the charter party, noting that the bills of lading referred to a charter party five times. Thyssenkrupp responded that there was no valid arbitration agreement between Thyssenkrupp and the owners because the bills of lading did not identify the date or other specific information about the charter party. Judge Coleman agreed, reasoning that it did not matter how many times the bills referred to the charter party as they did not provide sufficient notice of the charter party and its arbitration clause. She concluded that “Thyssenkrupp could not have agreed to arbitration they did not have proper notice of.” She also declined to allow limited discovery to determine whether Thyssenkrupp had actual or constructive notice of the charter party because she had held that there was no valid arbitration agreement.
This litigation arises from an incident in 2023 when a 31-foot Sea Ray 310 Sundancer that was co-owned by Michael William Rymer struck a break wall near Oak Street Beach in Chicago, Illinois. The vessel was being operated by Anthony Stofko, and Stofko, and the six passengers were thrown into the water. One passenger drowned. Rymer was not on the boat at the time of the incident. Three passengers filed complaints against Rymer in state court, and Rymer filed this limitation action in federal court in Illinois, seeking to limit his liability to $100. Two of the plaintiffs who filed suit in state court, Margaret Ayala and Amyn Aladin, filed motion to dismiss the limitation action on the ground that the Limitation of Liability Act was not applicable to their claims because the sole claim pleaded by the plaintiffs was that Rymer negligently entrusted the vessel to Stofko. Citing the Seventh Circuit’s Joyce opinion, Judge Jenkins agreed that a claim for negligent entrustment falls outside the protections of the Limitation Act because the owner can only be held liable if he knows or has reason to know that the person being entrusted is incapable of operating the vessel safely. Rymer sought to distinguish Joyce because one of the claimants sought to hold Rymer liable for the actions of Stofko as his agent. Judge Jenkins disagreed, rejecting the argument that the Limitation Act applies to an event and not to the individual claims arising from an event and the assertion that all claims must be kept in the limitation action if one is subject to limitation (Judge Jenkins also noted that the other claimant had answered the federal suit but had not filed a claim in it and was not a claimant). She also held that the potential for a contribution claim by Skofko did not change the resolution because Rymer was not subject to the protection of the Limitation Act. Concluding that the Limitation Act was “irrelevant” as to the claims of Ayala and Aladin, Judge Jenkins granted their motions to dismiss.
Jeremy Sessums, an employee of Helmerich & Payne, was injured while working as a roustabout on an offshore platform located on the outer Continental Shelf of the Gulf of Mexico off the coast of Louisiana. Shell Offshore Inc., which operated the platform for its owner, Shell Gas Pipeline Co., contracted with Helmerich & Payne to perform oil and gas drilling operations on the platform. The platform was used to service a pipeline of Shell USA, and Doye Sepulveda was the company man for Shell USA. Sessums was ordered to place chocks on the wheels of a helicopter by contractor Danos, LLC, and Sessums was injured in the process. Sessums brought this suit in federal court against all of the mentioned parties except his employer, Helmerich & Payne (as his exclusive remedy is the LHWCA). Shell USA and Sepulveda moved to dismiss the claims against them, and Judge Lemelle applied Louisiana law as the law of the adjacent state under the Outer Continental Shelf Lands Act. Judge Lemelle agreed that Sessums had not established that Sepulveda owed a duty to Sessums, holding that the allegation that he had the authority and duty to monitor the operations on the platform and pipeline and to stop unsafe practices was insufficient. Aside from being conclusory, the allegations did not assert that Sepulvado affirmatively assumed a workplace safety duty or created the helicopter hazard himself. And Sepulvado was removed from the incident because he was the company man of the pipeline owner, not the platform operator. Similarly, Shell USA was the owner of 320 miles of offshore pipeline and supervised pipeline projects. Sessums’ duties on the platform did not implicate any duty with respect to the operation of the pipeline. Accordingly, Judge Lemelle dismissed the claims against Sepulvado and Shell USA.
Nilsa Manaiza, a crewmember on the M/V OCEAN GLORY, was injured when she slipped and fell while going down the steps from the ship’s galley to the freezer. Manaiza brought this suit in federal court in Texas against the United States seeking to recover under the Jones Act, basing jurisdiction (and waiver of sovereign immunity) on the Suits in Admiralty Act and the Public Vessels Act. The United States moved for summary judgment on the ground that it time chartered the vessel under a “Dry Cargo Time Charter (DRYTIME—SPOT 13.5). Under that charter, the vessel owner provided the vessel—manned, trained, and equipped. Judge Rosenthal explained that the charterer was entitled to the use of the vessel, but the owner retained control of the operation of the vessel. As there was no allegation that the United States committed an independent act of negligence, it was not liable for the injury to the crewmember, and Judge Rosenthal granted summary judgment and dismissed the suit with prejudice.
Acciaierie D’Italia (ADI), which operates a steel-manufacturing business in Taranto, Italy, entered into contracts with XCoal Energy under which ADI purchased coal from XCoal and required delivery of the coal to ADI’s plant in Taranto. XCoal claimed that ADI breached the contracts, and XCoal initiated arbitration against ADI, seeking $3,437,552. Before it finished filing claims in the arbitration, XCoal brought this attachment action in federal court in Alabama, seeking damages of $38 million and attaching coal allegedly belonging to ADI on the MV BULK DESTINY. Claiming that the coal on the vessel was actually owned by Javelin Global Commodities, seller under a contract with ADI, and that the contracts between ADI and XCoal were not maritime contracts, ADI and Javelin moved to vacate the attachment. Although ADI had paid 25% of the purchase price for the coal to Javelin as a prepayment, the contract with Javelin provided that title would pass when both the prepayment and provisional payment were made. As the provisional payment had not been made, the title to the coal was still in the name of Javelin, and the coal did not belong to ADI. Therefore, Magistrate Judge Cassady held that ADI had no property right that would allow XCoal to maintain the attachment. Magistrate Judge Cassady also held that the attachment had to be vacated because the contracts between XCoal and ADI were not maritime contracts. Citing Kirby (contract involving transportation by ship and rail), XCoal argued that the contracts were maritime because they required that the coal would be shipped across the sea to Italy. Magistrate Judge Cassady disagreed, reasoning that the “primary objective” of the contracts was not transportation of goods (even though the damages would include demurrage), and the purchase/sale elements were the primary objective and were not “merely incidental.” As the court could not exercise maritime jurisdiction over the dispute, Magistrate Judge Cassady recommended that the attachment be vacated. See November 2023 Update.
There were “procedural twists and turns” after the recommendation. XCoal moved to vacate its attachment to avoid a ruling by Judge Moorer on the recommendation. Javelin and ADI objected, arguing that the motion was procedurally improper. Judge Moorer agreed that the motion was not a self-effectuating voluntary dismissal under Rule 41(a)(1)(A)(i), and he considered it pursuant to Rule 41(a)(2). Judge Moorer did not believe that the motion should be granted because the judge had warned XCoal that if the seizure was improper there might be significant financial consequences. Judge Moorer then considered Magistrate Judge Cassady’s recommendation and adopted it. He therefore granted the motions to vacate the attachment, reserving the issue of wrongful attachment for further proceedings. On June 5, 2024, Judge Moorer allowed Javelin Global Commodities, which claimed ownership, to file a complaint in intervention in the proceeding.
Khaled Ali, an employee of RWS & Associates Entertainment, was injured on the MSC SEASCAPE, owned/operated by MSC Cruises, when he slipped on a puddle of water in the crew mess hall. Ali brought this suit in federal court in Florida against RWS & Associates and MSC Cruises, seeking to recover for negligence under the Jones Act and for unseaworthiness and maintenance and cure under the general maritime law (including punitive damages for the failure to pay maintenance and cure). Ali claimed that he fell because of a combination of the tiles on the deck being unreasonably slippery and there being liquid spilled on the deck, and that he did not receive proper medical treatment because the defendants lacked proper procedures and policies for medical treatment. The defendants moved to dismiss all of the claims. Judge Singhal agreed that Ali had not sufficiently pleaded constructive notice of the danger of the slippery tiles because his allegation that the condition of the tiles existed for a sufficient length of time to provide notice was conclusory and because there were no facts to support that the tiles did not meet industry standards. Judge Singhal also agreed that the assertion that there were similar incidents in the past failed to satisfy pleading standards. Similarly, the assertion that there were no proper procedures for medical treatment was insufficient because the pleading did not say what was inadequate and did not specify better ones that should have been implemented. Judge Singhal declined to dismiss the maintenance and cure claim as the pleading that he was injured during his employment on the vessel and that RWS & Associates failed to timely and properly pay maintenance and cure was sufficient to satisfy his “light burden.” However, his pleading that the defendant’s failure to pay justified punitive damages was insufficient to plead a claim for punitive damages. Accordingly, Judge Singhal dismissed the claims for Jones Act negligence, unseaworthiness, and punitive damages for willful failure to pay maintenance and cure, but he did not dismiss the claim for maintenance and cure.
Three Fifty Markets sold and delivered bunkers to the vessel M/V ARGOS M at the request of AUM Scrap and Metals Trading, alleged to be the charterer of the vessel. AUM Scrap failed to pay for the bunkers, and Three Fifty brought suit against the vessel in federal court in New Orleans, resulting in the arrest of the vessel. Shortly thereafter, PMG Holding, another bunker supplier, filed suit against the vessel in federal court in New Orleans, resulting in another warrant for arrest of the vessel. Three Fifty and PMG Holding moved for interlocutory sale of the vessel after no claim was made, the crew had not been paid, and the costs to supply the arrested vessel were growing. The next claim was filed by ArcelorMittal, whose cargo of steel was aboard the vessel pursuant to a charter of the vessel to transport the steel to Costa Rica. Argos Bulkers finally filed a statement of interest in the vessel, challenging the maritime lien claims of Three Fifty and PMG Holding, and Three Fifty and PMG Holding filed motions for summary judgment seeking enforcement of their lien claims. Judge Fallon found fact questions on the issue of whether the fuel supplied by Three Fifty was purchased by an authorized agent of the vessel, and he denied summary judgment to Three Fifty. In that opinion, Judge Fallon addressed PMG Holding’s motion. PMG Holding argued that it sold the bunkers to AUM Scrap. When Argos Bunkers alleged that the charterer of the vessel was Shimsupa, PMG Holdings claimed that AUM Scrap was the agent of Shimsupa and that PMG Holdings sold the bunkers with the understanding that AUM Scrap had the authority to bind the vessel. Argos argued that although the master accepted delivery of the bunkers and the fuel was consumed by the vessel, no one with actual or apparent authority to bind the vessel purchased the bunkers. The parties did not dispute whether an individual with actual authority purchased the bunkers, and the dispute focused on whether an entity had apparent authority to bind the vessel. PMG Holdings argued that both the charterer (Shimsupa) and its agent (AUM Scrap) had apparent authority because they are majority owned and controlled by the same person and because it is recognized in the industry that AUM Scrap acts as an agent for Shimsupa. Unlike Three Fifty, PMG Holdings produced documents reflecting that the vessel was aware of the bunker sale. Argos responded that Shimsupa was responsible for purchasing the bunkers, but that the bunkers were purchased by AUM Scrap, as reflected in the documents for the sale that listed AUM Scrap as the charterer. Although Judge Fallon found that necessaries were procured for the vessel, there were broken links in the chain of apparent authority. He also found that there were fact issues with respect to the damages. Accordingly, he declined to grant summary judgment to PMG Holdings. See January 2024 Update.
It was then the vessel’s turn to file a motion for summary judgment, arguing that the no-lien clauses in the charter with Shimsupa prevented Three Fifty from enforcing a lien on the vessel. The validity of the lien turned on whether it was reasonable for Three Fifty to believe that AUM Scrap had apparent authority to make the purchase of bunkers on behalf of the vessel. This was the same issue on which Judge Fallon found a fact question on the prior motion for summary judgment, and it continued to present a fact question that precluded summary judgment: “once it’s a question of reasonable[ness], that’s always a question of fact.” Judge Fallon did stress “that germane to resolving whether AUM—or any other entity authorized by the Vessel—made the fuel bunker purchase involves taking a closer look at the past practices between the parties, the customs in the industry, as well as the nature and extent of the charter and its agents’ authority.” See March 2024 Update.
Judge Fallon held a non-jury trial and found that AUM Scrap, who had presumptive authority to bind the vessel, transacted with Three Fifty, through a bunkering service, to purchase the bunkers. The order confirmation contained Three Fifty’s General Terms and Conditions of Sale that “will apply to this contract.” As the terms contained a provision that the laws of the United States, including the Commercial Instruments and Maritime Lien Act, would apply, Judge Fallon did not have to “delve into the ‘thorny inquiry’ of Lauritzen,” and he held that United States law applied (noting that the Fifth Circuit has routinely addressed the providing of bunkers through intermediaries). Turning to whether there was a lien on the vessel, Judge Fallon held that the vessel could overcome the presumptive authority of AUM to purchase the fuel by demonstrating that Three Fifty had actual knowledge of the no-lien clause in the charter party. As the vessel failed to make that showing, Judge Fallon upheld the lien against the vessel. He awarded Three Fifty the amount of the invoice, $629,600, plus prejudgment interest at the applicable state rate (declining to award the contract interest rate of 2% per month as it is greater than the amount necessary to compensate for the loss stemming from the unpaid balance) and custodia legis expenses of $31,530.79 (without interest on the expenses). Judge Fallon also agreed that the issue of attorney fees would be severed and a hearing set to address “the amount of attorneys’ fees to be awarded.” See June 2024 Update.
Three Fifty sought attorney fees of $280,281.75, arguing that Judge Fallon had found that the General Terms and Conditions of Sale governed the matter and that the Terms provided for the buyer to pay the seller attorney fees. Judge Fallon agreed that there is a contract that contains a provision for attorney fees. However, the question presented was whether the contractual provision for attorney fees was applicable to the in rem proceeding. He cited the “multiple courts” that have held that CIMLA liens do not cover all of the terms of the underlying contract, including the provisions for attorney fees, reasoning that in rem actions arise by operation of law and not by contract. Thus, attorney fees could only be recovered if they were necessaries and were provided to the defendant vessel. As the legal services for the collection of a debt were not necessaries for the benefit of the vessel, they were not recoverable in the in rem action despite the provision in the contract. Therefore, Judge Fallon declined to award attorney fees to Three Fifty.
Top Sealand, a non-vessel operating common carrier, received a cargo of 232 cartons of Forever 21 garments in Shanghai, loaded the cartons into an ocean container, and issued a bill of lading. The goods were shipped on the M/V NORTHERN PROMOTION and were discharged in Los Angeles, California. The goods were damaged from water, moisture, and mold in the container, and cargo insurer Atlantic Specialty paid $108,522.88 for the damage. Atlantic Specialty then brought this suit against Top Sealand in federal court in California under the Carriage of Goods by Sea Act and for negligence and breach of bailment. Atlantic Specialty moved for summary judgment that Top Sealand was liable for breach of contract under COGSA, and Judge Scarsi noted that the NVOCC was not the actual carrier of the cargo, but it was considered a carrier in its relationship with the shipper of the cargo. Top Sealand argued that Atlantic Specialty failed to establish a prima facie case because it did not prove that the cargo was damaged between Shanghai and the Port of Los Angeles as opposed to during the transit from the Port of Los Angeles to its final destination where it was rejected by Forever 21. Judge Scarsi rejected that argument, reasoning that the container would not be subject to the type of water damage during the inland transit, and there was no indication of rain during that period. Therefore, Judge Scarsi held that Atlantic Specialty made out a prima facie case for liability under COGSA. Top Sealand argued that it had not been timely notified of the damage, and that failure was prima facie evidence that the cargo was delivered in the same condition as described in the bill of lading. However, Judge Scarsi found evidence that the cargo was damaged prior to discharge, so the insurer was able to prevail on its claim under COGSA. Turning to damages, Judge Scarsi declined to grant summary judgment based on the invoice price of $108,552.88 that was used to pay the insurance claim, finding a fact question as to the fair market value when the shipper represented the value of the cargo as $25,195 to U.S. Customs. Top Sealand moved for summary judgment, arguing that the insurer lacked standing to bring the claim because it was not the shipper of the cargo. Judge Scarsi rejected that argument, concluding that the cargo insurer had a future (now present) interest in the goods within the definition of “Merchant” in the bill of lading (and was also subrogated to the cargo interest under the subrogation agreement when it paid for the damage). Judge Scarsi also rejected the (q) clause argument that Top Sealand could not be liable without proof of its fault as the carrier has the burden to explain the loss in order to invoke the (q) clause as the Fifth Circuit explained in the Quaker Oats v. TORVANGER decision. Finally, Judge Scarsi rejected Top Sealand’s argument that damages should be limited to $2 per kilogram of the gross weight of the cargo lost, concluding that the bill of lading did not provide for that limitation for a port-to-port shipment. See April 2024 Update.
The initial complaint by Atlantic Specialty contained a Rule 9(h) designation, invoked the court’s admiralty jurisdiction, and included a jury demand. The first amended complaint likewise pleaded admiralty jurisdiction and designated Rule 9(h) but did not include a jury demand. The case was set for a jury trial, and Atlantic Specialty moved for an amendment to the scheduling order that the case be tried to the court. Top Sealand objected, arguing that it did not consent to the withdrawal of the demand for a jury. Judge Scarsi rejected that argument because the requirement for consent to the withdrawal of the jury demand is not applicable in a case that is solely pleaded under the court’s admiralty jurisdiction. As Atlantic Specialty “had no right to make a jury demand to begin with,” Judge Scarsi held that Atlantic Specialty could retract the jury demand without the defendant’s consent.
Tammy Knieling was employed as a chef and mate on the sailing vessel SOMEWHERE HOT, owned by William Poston and captained by Don Fung Fook. Knieling claims that on July 3, 2021, Fook negligently instructed her to let out the dinghy line and that her hand became entangled between the line and the cleat. She sustained an injury to her left middle finger and rope burns on both hands, and a medical student who was a guest on the vessel cleaned the wound and wrapped it in a compression wrap. Knieling made an appointment at a medical center on July 9, 2021, the last day of the charter, and the doctor advised her to go to the emergency room where she was diagnosed with an avulsion fracture of her finger. She was given home exercises because she lives on a boat and is often out to sea, and she scheduled her follow-up appointment around her charter schedule. Her pain continued in 2023, and she had laser treatment and injections to improve the quality of the scar and pigmentation. Her doctor continued to order physical and occupational therapy. Knieling brought this suit in 2022 in federal court in the Virgin Islands against Fook and Poston, alleging Jones Act negligence, maintenance and cure, and unseaworthiness, seeking compensatory and punitive damages for each count. The defendants moved for summary judgment on the claim for maintenance and the claim for punitive damages for failure to pay maintenance and cure, and Knieling moved for summary judgment on her claim for maintenance and cure. The defendants argued that Knieling was provided food and lodging on the SOMEWHERE HOT until she was terminated in August 2021, she never requested maintenance or time off, she said she was “good to go” without limitations, and she continued to work on other vessels after she left the SOMEWHERE HOT. The defendants added that her doctor said that her fracture was healed in August 2021, she stopped attending physical therapy in September 2021, she stopped seeing a doctor for more than a year, and her doctor said her injuries were permanent. They argued that treatment thereafter was palliative, not curative. Knieling cited her testimony that she was precluded from performing certain tasks and was accordingly incapacitated. She argued that she had not reached maximum cure, had returned to work out of necessity, and was entitled to maintenance at the rate of $91.30 per day. Based on the conflicting argument and evidence, Magistrate Judge Miller held that there were fact questions that precluded summary judgment on the claim for maintenance and cure (Magistrate Judge Miller also noted that Knieling had resided in Florida since December 2021, and her attorney had not provided any evidence of her food and lodging expenses in Florida). As to the claim for punitive damages for willful failure to pay maintenance and cure, the defendants argued that they had immediately agreed to pay medical expenses and later declined to pay when the treatment was palliative. Reasoning that the defendants are entitled to investigate and require corroboration of the claim, Magistrate Judge Miller found no basis for an award of punitive damages and granted summary judgment with respect to that claim. Magistrate Judge Miller held a bench trial from June 3 to June 6, 2024.
Musashi AZ LLC is the owner of a 2021 47-foot Azimut Verve that it insured with Accelerant Specialty Insurance for an agreed value of $1,850,000. A fire broke out on the vessel while it was docked at MarineMax in Miami, Florida, and Musashi asserted that the fire resulted in a constructive loss of the vessel. Accelerant Specialty declined to pay for the loss, and Musashi brought this suit in federal court in Miami, alleging breach of contract. Accelerant responded with affirmative defenses that Musashi breached the duty of uberrimae fidei so that the policy was void ab initio and that Musashi breached general condition xiii of the policy (nondisclosure or misrepresentation of a fact material to acceptance or continuance of the insurance). Both defenses related to the representation that the vessel was purchased for $2 million when the sale price was $1,575,000. Accelerant Specialty also brought counterclaims seeking declarations that the policy was void for the same breaches. Musashi moved to dismiss the counterclaims on the grounds that they are duplicative of the affirmative defenses and fail to state a cause of action. Judge Smith noted that the court’s jurisdiction over a request for declaratory relief is discretionary and that he could dismiss the request if it was duplicative of the affirmative defenses. However, he answered that resolution of the affirmative defenses would not result in a declaration that the policy was void and save the insurer from future claims on the policy (the counterclaims also included a subscriber to the policy, Lloyd’s, that was not a defendant in the suit). Judge Smith then addressed Musashi’s argument that the counterclaims did not state a claim because they did not address a current controversy (only the past acts) and did not allege that the policy was ambiguous. Judge Smith easily rejected the first argument because Accelerant Specialty sought a declaration that the policy was void from its inception, which would provide relief as to past, current, and future liability under the policy. Therefore, Judge Smith considered the counterclaims to raise a currently justiciable controversy. Turning to the ambiguity argument, Judge Smith cited the case law from federal judges in the Southern District of Florida requiring that there must be an ambiguity in the contract in order for there to be a basis for declaratory relief under the federal or state declaratory judgment acts. As there was no argument that condition xiii of the policy was ambiguous, Judge Smith dismissed that counterclaim. However, the claim based on uberrimae fidei arose under the maritime law and not under the terms of the policy. Therefore, the issue of whether the policy was ambiguous was not relevant to that claim, and Judge Smith declined to dismiss it. See June 2024 Update.
Judge Smith then considered the merits of the uberrimae fidei counterclaim based on the misrepresentation in the application that the purchase price of the vessel was $2 million. When Musashi purchased the vessel, it applied for insurance with Clear Spring Property and Casualty, and the application contained the representation that the purchase price of the vessel was $2 million. At the end of the policy year, Clear Spring did not renew the policy, but renewal was available through Accelerant. The renewal questionnaire advised that if there were any changes since the original application, that the insured was to provide them and that Accelerant would rely on the original application. The principal for Musashi, Diego LePage, did not read the original or renewal applications before signing them. The Accelerant policy was written based on a purchase price of $2 million, and the underwriter testified that the vessel would have been insured for a lower agreed value and with a lower premium had the actual price been disclosed. The first issue to be addressed was the applicable law in light of the policy provision that New York law would apply in the absence of entrenched principles of admiralty law. As uberrimae fidei is an entrenched principle of maritime law (except in the Fifth Circuit), Judge Smith applied maritime law, specifically the law from the Eleventh Circuit in which the court is located, rather than decisions of the Second Circuit (New York). Musashi argued that it made no misrepresentation to Accelerant about the price of the vessel, and that materiality of any misrepresentation was a fact question for the jury. Judge Smith disagreed. He answered that materiality is a mixed question of law and fact and that the undisputed facts established that the purchase price was material as a matter of law based on the underwriting testimony and the procedures in the insurer’s underwriting manual. With respect to the misrepresentation, Accelerant argued that the insured had a duty to disclose the purchase price regardless of whether the insurer asked for it because it was a material fact. Therefore, Judge Smith held that Musashi had a duty to disclose the purchase price regardless of the identity of the party to whom the misrepresentation was made. Consequently, Judge Smith held that the policy was void ab initio.
Opinion experts, Flynt maintenance and cure, Harris negligence/unseaworthiness
Opinion Harris maintenance and cure
This litigation arises from the collision in the Lower Mississippi River between the M/V CAROL MCMANUS, owned and operated by Ingram Barge Co., and the M/V BIG D, owned by FMT Industries and operated by Florida Marine. Limitation actions were filed in federal court in Louisiana on behalf of both vessels, and injury claims were asserted by Dustin Harris, a deckhand on the BIG D (who was employed by PBC Management), and Robert Flynt, a cook on the CAROL MCMANUS. Flynt claimed that he was knocked from his bunk by the collision, and Harris claimed that he was in the deck locker of the BIG D when the collision occurred, and he hit his head on a pipe and fell down a set of stairs. Ingram moved for summary judgment on Flynt’s claim for maintenance and cure, asserting a McCorpen willful concealment defense. Ingram, Florida Marine, and PBC Management moved for summary judgment that Harris’ claims were fabricated and should be dismissed as baseless. Harris moved to exclude the testimony of the petitioners’ maritime safety expert, Captain Ronald Campana, as well as the testimony of orthopedic surgeon Dr. Neil Duplantier. Judge Africk first considered the motions to exclude the expert opinions. With respect to Capt. Campana, Harris argued that the report offered a “director’s commentary” of video footage from the BIG D, that the petitioners used to refute Harris’ injury claim. Judge Africk declined to exclude the expert’s discussion, however, because Capt. Campana was required to explain the basis for his opinion, and that explanation included the information from the video footage. Harris also objected that Capt. Campana is not an expert in accident reconstruction or biomechanics, but his opinion discussed whether the movement of the vessel would cause someone to stumble or lose his balance. Judge Africk reasoned that Capt. Campana’s extensive experience sailing vessels and investigating vessel accidents was sufficient that he could testify about acceleration and deceleration of the vessel and how that affected the workers on the vessel and whether the movement would cause a fall. Harris could object to testimony about the physics of his fall, whether a fall actually occurred, and whether Harris’ version was corroborated by the video. Harris sought to exclude the testimony of Dr. Duplantier, an orthopedist, with respect to Harris’ claimed head injury, because he is not a neurologist. The petitioners responded that Dr. Duplantier’s evaluation was primarily for lower back pain, but he did review the CT scan and MRI of Harris’ head and should be allowed to make observations with respect to his treatment of Harris as a whole. Noting that a physician’s medical training will generally be sufficient to allow him to testify in fields outside his specialty and considering that the case will be tried to the court and not to a jury, Judge Africk declined to exclude the opinions of Dr. Duplantier with respect to Harris’ head injury. Judge Africk then considered the McCorpen willful concealment defense to Flynt’s maintenance and cure claim. Ingram argued that Flynt had answered “no” to pre-employment questions whether he had been treated for back pain or back injuries but that there were multiple medical records and a statement from Flynt with respect to back problems. Flynt had reported backaches since 2014, had sought treatment for back spasms in 2019 and 2020, and a lumbar spine X-Ray in 2021 demonstrated severe L5-S1 degenerative disc disease with grade 1/2 anterolisthesis of L5 on S1. Flynt denied that he was aware of the results of the X-Ray as it was part of a pre-employment physical exam and was not from treatment for back pain, and he explained that the other records were not based on a physical examination of his back as the only reference to an actual examination of his back stated that his back was normal with a full and painless range of motion. Judge Africk was not convinced, concluding that Flynt had intentionally concealed medical information because he had been treated for back pain. Ingram also established that it would have required additional medical information because his history of back pain was material to his ability to safely perform his job duties, and it was clear to Judge Africk that the failure to disclose was material. As Flynt failed to disclose that he sought treatment for lower back pain and now complained of an injury to his lower back, Judge Africk granted summary judgment on the McCorpen defense to Flynt’s maintenance and cure claim. Both petitioners sought summary judgment on the negligence claims of Harris citing “irrefutable video evidence” from the BIG D that Harris was in the galley at the time of the collision, not in the deck locker where he claims to have hit his head before falling down a set of stairs. Harris responded that he was mistaken about the accident happening during the collision and that it actually happened during the evasive maneuver before the collision. Judge Africk was mindful of his discretion to strike the affidavit that was inconsistent with Harris’ earlier version of the accident, so he examined the details of the second version. Harris argued that his accident occurred in the 20 seconds between when the vessel was put in reverse and the time at which he could be seen returning to the galley. He stated that he heard a creaking sound just before his accident, which was recorded as occurring eight seconds before his entry into the galley. Judge Africk explained that during those eight seconds, Harris would have had to lose his balance, strike his head, fall down a flight of stairs, get up, walk back up the stairs, and walk approximately 15 feet to the galley. Although Harris stated that he quickly ran up the stairs and into the galley in the new version, that did not reconcile with the prior version that he could only make his way up the stairs by “leaning on the wall.” And Ingram presented evidence that the reversal of the boat did not cause it to rock or tip along with the video from the galley that objects did not move and a deckhand was not jostled. Finally, Judge Africk noted that Harris entered the galley with no visible signs of an injury even though he had just hit his head and fallen down the stairs. Accordingly, Judge Africk granted summary judgment on Harris’ negligence claims (he also granted summary judgment on the claim of unseaworthiness because the accident was caused by an isolated act of negligence).
Judge Africk then considered PBC Management’s motion for summary judgment that Harris was not entitled to maintenance and cure because he could not prove that his injury occurred in the service of the vessel. Harris responded that the video footage from the vessel showed that he was walking with a limp when he disembarked from the BIG D and that his claim was supported by medical records reflecting treatment after he disembarked. Judge Africk cited his prior analysis in which he concluded that Harris had not provided evidence that his injuries occurred during or right before the collision as Harris alleged and that his allegations were “plainly contradicted by the video evidence, his previous testimony, the vessel captain’s statements, and the petitioner’s expert report.” Accordingly, Judge Africk held that Harris did not present a material fact and that summary judgment was appropriate on the maintenance and cure claim.
GCC Supply agreed to sell bunkers to Handy Tankers, manager for the vessel OM BORNEO, owned by Maritime Borneo. Cargill International acted as agent for Handy Tankers. GCC sent a Sales Order Confirmation that stated that GCC’s Terms and Conditions applied and provided the website where the terms could be reviewed. GCC had previously signed an agreement with Cargill pursuant to Cargill’s Terms and Conditions for Purchase of Marine Fuel. There was a problem with the fuel, and GCC removed and replaced the fuel. Hardy Tankers then notified GCC that it suffered a substantial loss for damage from the contaminated bunkers and sought to arbitrate the dispute in London in accordance with the arbitration provision in Cargill’s Terms and Conditions. GCC then brought this suit in federal court in Texas against Maritime Borneo and Handy Tankers, seeking a declaration that the arbitration was instituted in the absence of a valid arbitration agreement and also seeking recover for breach of contract and unjust enrichment (citing the forum-selection clause for federal court in Harris County, Texas that was contained in GCC’s Terms and Conditions. Handy Tankers and Maritime Borneo responded that GCC’s terms did not apply under the Uniform Commercial Code, and GCC argued that it did not enter into an agreement with Handy Tankers or Maritime Borneo that required GCC to submit to arbitration. Judge Hoyt first ruled that the Cargill terms prohibited modifications to the terms unless agreed to in writing and that unilateral changes by reference to documents such as Order Confirmations were ineffective. He then addressed the argument that the Cargill terms did not apply to the dispute with Handy Tankers and Maritime Borneo and concluded that when GCC contracted with Cargill as agent for Handy Tankers, it was contracting with Handy Tankers. Accordingly, Judge Hoyt denied GCC’s motion to stay or enjoin the arbitration and instead stayed the federal suit, retaining jurisdiction pending the outcome of the arbitration.
Lee Ferguson, Perry Sandberg, and Mobile Fleet Service Welding and Repair filed this suit, pro se and in forma pauperis, against F/V THE PORN STAR and a number of named and unnamed defendants, asserting that the vessel was unlawfully repossessed. On sua sponte review, Judge Whitehead noted that the claims appeared to be time barred or failed to state a claim. Therefore, he issued a show-cause order for the plaintiffs to explain why the claims should not be dismissed.
This case involves damage to a shipment of lithium-ion batteries that ClearFreight contracted to carry from Kaohsiung, Taiwan to Chicago, Illinois (via Long Beach, California). The cargo insurer, Federal Insurance Co., brought this suit in federal court against ClearFreight in admiralty under the Carriage of Goods by Sea Act, and ClearFreight filed a third-party complaint against inland carrier R&M Freight and several unnamed inland carriers. R&M Freight moved to dismiss the third-party complaint, and Judge Almadani agreed that ClearFreight relied almost exclusively on threadbare recitals of the elements of a cause of action supported by conclusory statements. As the allegations did not permit the court to infer more than the mere possibility of misconduct, Judge Almadani granted R&M Freight’s motion to dismiss. The parties addressed the preemptive force of the Federal Aviation Administration Authorization Act of 1994 (deregulating interstate transportation industries), and Judge Almadani considered R&M Freight’s argument that the FAAAA preempted application of state tort liability. However, based on the limited factual allegations, Judge Almadani could not determine if ClearFreight’s negligence claim would fall within the scope of the statute’s preemption. Finally, ClearFreight argued that its third-party complaint should be construed as a Rule 14(c) claim to hold R&M Freight directly liable for Federal Insurance’s COGSA claim. However, ClearFreight did not explain how or why R&M Freight was directly liable in a manner that would permit R&M Freight to respond to Federal Insurance’s claims. As the claim did not unmistakably demand judgment in the plaintiff’s favor against the third-party defendant, Judge Almadani held that R&M Freight was not required to defend against the claim of Federal Insurance. Judge Almadani gave ClearFreight leave to file an amended complaint to cure the deficiencies.
Monica Scullion, a passenger on the CARNIVAL RADIANCE, had a massage on the vessel that was provided at the spa on the vessel, owned and operated by One Spa World LLC/One Spa World (Bahamas). During the massage, Scullion notified the masseuse that the maneuver being performed on her back was hurting her leg, but the masseuse ignored her request to stop, and Scullion’s leg went numb. Scullion asserts that she suffered a permanent injury that required surgery, and she brought this suit in federal court in Florida against the cruise line and the owner/operator of the spa. Scullion brought claims for negligence, negligent failure to warn, and vicarious liability for battery. The defendants moved to dismiss the claims for negligence and negligent failure to warn on the ground that Scullion failed to establish that the defendants had notice of the allegedly dangerous condition that caused her injury. Although Scullion pleaded that the dangerous condition existed for a sufficient period of time, Judge Moreno answered that the allegations were completely conclusory. The “meat of the argument” hinged on whether Scullion had pleaded substantially similar incidents based on four incidents involving One Spa World employees. Judge Moreno found it hard to imagine that the cruise line would be put on notice in light of the fact that One Spa World controlled the spa and it was not alleged that the incidents involved the same masseuse. The incidents involved different types of massages, and one did not involve this cruise line. The fact that passengers had been injured with a bamboo massage and hot-rock massage was not notice to the cruise line that a passenger would be injured during a Swedish massage. Judge Moreno was also not persuaded that the cruise line would be on notice based on policies and industry standards for crewmembers to abide by professional standards when rendering services and to warn of possible dangers. Therefore, Judge Moreno dismissed the negligence count against the cruise line. However, he reached a different conclusion whether One Spa World had constructive notice. The variables that the incidents occurred with different cruise lines and with different types of massages did not rise to the level of importance as with the cruise line because the spa had the direct oversight over the massages. Judge Moreno applied the same analysis to the count alleging failure to warn, but because it was a single count against both the cruise line and the spa, he gave leave for Scullion to replead the count against the spa.
Kevin Chenault brought this suit against several defendants, seeking to recover under the Jones Act and general maritime law because he was injured while suspended in a harness while painting the hull of the M/V TEXAS ENTERPRISE. The defendants moved to dismiss the complaint for failure to state a claim, and Judge Damian’s review of the complaint revealed no factual basis to understand what happened or to support a finding that the incident was the result of acts or omissions of the defendants. The complaint merely recited that Chenault was injured as a result of the negligence of the defendants and the hazardous nature of the activity while he was suspended in a harness to paint the hull of the vessel. Additionally, the complaint lumped together multiple theories of liability that were pleaded in a conclusory matter so that it was difficult to discern which theories were being pleaded on which facts. Accordingly, she dismissed the complaint without prejudice.
Jamie Collins, a passenger on the cruise ship SCARLET LADY, claims that she slipped on liquid while traversing an exterior area around the Athletic Club on Deck 16 of the vessel. She alleged that the liquid apparently accumulated due to a rainstorm that occurred before she walked onto the open deck. Collins brought this action against the cruise line in federal court in Florida, and the cruise line moved to dismiss the complaint for failing to sufficiently allege notice of the dangerous condition. Collins referenced two prior slip-and-fall injuries on the same ship, on the same deck, in the same area (near the Athletic Club) and with wet/transitory substances on the deck. The cruise line argued that the description of the prior incidents was insufficient because Collins did not include specific details of the circumstances of the falls, but Magistrate Judge Goodman disagreed, noting that the dangers do not have to involve the exact conditions. He answered that the allegations were sufficiently detailed to pass muster “at this early stage of litigation.” Accordingly, he recommended that the court deny the motion to dismiss.
Phillip Phillips was hired by Javeler Marine to work in its shop in Broussard, Louisiana as a mechanic. Phillips asserts that a year later he was assigned to work on a dredging project between an Exxon Mobil dock and the shore of the Mississippi River in Baton Rouge, Louisiana. Phillips was injured while moving a dredge discharge pipe on the dock when the “grading” of the dock broke below his foot. Phillips brought this suit in federal court in Louisiana against Javeler Marine and Exxon Mobil under the Jones Act and general maritime law (via the Admiralty Extension Act), and Javeler Marine filed a motion for summary judgment, arguing that Phillips was not a seaman. Chief Judge Dick considered the three watercraft owned by Javeler Marine that were involved in the dredging project (a 21-foot crewboat and two barges) were an identifiable fleet of vessels, and she addressed the issue whether Phillips connection to the fleet was substantial in duration and nature. Javeler Marine submitted a timesheet reflecting that Phillips spent approximately 70% of his time working in the landlocked shop and less than 25% of his time on navigable water. However, Chief Judge Dick excluded the timesheet because it was not produced prior to its submission with the motion for summary judgment. She also declined to consider it because it was not supported by evidence, was not authenticated, and did not include several months of Phillips’ work with Javeler Marine. As Phillips testified that he spent 50% of his time working in the shop and about 50% of his time performing dredging work, Chief Judge Dick held that Javeler Marine failed to establish that the connection was not substantial in duration. Chief Judge Dick then considered the Sanchez factors with respect to the nature element of the substantial connection. As Javeler Marine was Phillips employer and the owner of the vessels, Chief Judge Dick held that the factor involving allegiance to the vessels was satisfied. As to whether the work was sea-based and his duties took him to sea, Chief Judge Dick noted that Javeler Marine focused on the fact that Phillips was hired as a mechanic, and he was only sent to projects in the field when absolutely needed. This argument did not address whether the work on the dredging project was sea-based, and Chief Judge Dick held that Javeler Marine did not establish that the work performed by Phillips was not sea-based. Similarly, Javeler Marine did not address whether Phillips’ assignment included sailing with the vessels from location to location. Therefore, Chief Judge Dick held that Javeler Marine had not carried its burden, and she denied the motion for summary judgment.
Charles Hoelzel was a passenger on a Princess Cruise Lines vessel who claimed that he was required to disembark the vessel in Juneau, Alaska, rather than at the final destination in Vancouver, because his friend did not have his passport and they did not have time to make alternative travel arrangements. When he tried to leave the vessel with his belongings, Hoelzel claims that he was tackled, shredding his new jacket and injuring him. Hoelzel brought suit against the cruise line in federal court in California, alleging claims for battery and violation of civil rights for use of excessive force within the maritime and territorial jurisdiction. He premised the case on federal question and supplemental jurisdiction. The cruise line moved to dismiss the complaint, and Judge Marshall agreed that the cause of action for violation of criminal statutes did not provide a basis for civil liability. Turning to the battery claim, the cruise line argued that the judge should order Hoelzel to replead the case within the admiralty jurisdiction in light of the location of the incident (in port when the security personnel stood in front of the passenger and would not let him leave the ship). Judge Marshall agreed that the locality test was satisfied because the tort occurred on the cruise ship on navigable waters. She then addressed whether the incident had a potentially disruptive impact on maritime commerce for the nexus test, and she held that it did because “cruise ship business could potentially suffer if passengers become concerned about assault and battery by crew members.” She also held that the general character of a passenger attempting to disembark a cruise ship had a substantial relationship to traditional maritime activity. As there were sufficient facts to demonstrate that there was admiralty jurisdiction over the battery claim, and as the cruise line did not argue that Hoelzel did not plead facts to support a batter claim, Judge Marshall declined to dismiss the battery claim on the basis of failure to invoke federal admiralty jurisdiction.
Frank Kevin Kennedy was employed by Helmerich & Payne as a floor hand on its Rig 205 located on Shell Offshore’s spar, PERDIDO, on Alaminos Canyon Block 857 on the outer Continental Shelf offshore Texas. Kennedy alleges that he was being hoisted by a man rider above the monkey board when his secondary cable became hung up on the monkey board, which engaged the brake and caused him to be pulled violently by the man rider. Kennedy brought this suit in federal court in Louisiana against Helmerich & Payne, Shell, and company men Joseph Hollis and Allen Rollins under the Jones Act and general maritime law, and alternatively under the LHWCA and Outer Continental Shelf Lands Act. Shell and the company men moved to dismiss the complaint for failure to state a claim. As the PERDIDO is a spar located on the outer Continental Shelf, Judge Papillion held that the OCSLA applied, and he then addressed the question of what to apply. Citing Fifth Circuit decisions holding that spars are not vessels because they are anchored to the seabed and are not intended to be moved, Judge Papillion held that the maritime situs requirement was not met and that maritime law was not applicable. Therefore, he applied Texas law as the law of the adjacent state pursuant to the choice-of-law provision of the OCSLA. Shell, as owner of the PERDIDO, argued that Kennedy had not pleaded any claim of a defect in the spar for a premises liability claim and that the brake did its job when it engaged. It was the tangled cable that was the cause of the danger. Although “sparse,” Judge Papillion considered the allegations of a defect in the equipment, the failure to discover and warn of dangerous conditions, and the failure to intervene to be sufficient to state a claim for negligence and premises liability against Shell Offshore (but not other Shell entities). However, the allegations against the company men were dismissed because they did not allege any particular act or omission causally related to the injury. As Judge Papillion held that Texas law and not maritime law applied, he dismissed the claims under the Jones Act and general maritime law.
Casey Redmond, who was 22 years old, was working as a deck crewmember on Osage Marine’s tug M/V RAIN MAN and was assigned to help put a barge into a fleet that was being towed by the tug. Redmond’s supervisor stepped onto the barge, noticing that there was cornmeal on the deck that made it slippery. He then heard Redmond’s tools hit the deck, and he heard the splash from Redmond falling into the Mississippi River. The supervisor saw Redmond floating in the river, but his body submerged and was never found. Recovery crews found his life jacket, and the back plate was cut in half. There was nothing in the river that could have caused the cut other than the tug or its propeller. Osage Marine filed a limitation action in federal court in Missouri (with a letter of undertaking in the amount of $2 million) after it was presented with a death certificate from Candace Love, the only surviving parent of its employee Casey Redmond. Love filed a claim in the limitation action as Redmond’s parent and sought to lift the stay as the single claimant. Osage Marine objected that Love did not have standing to bring the claim because the only person entitled to assert the claim is the personal representative of the seaman. Therefore, she lacked standing to lift the limitation stay. Judge Sippel disagreed, stating that Osage Marine’s argument was addressed to the merits. As there was only one claim, Judge Sippel dissolved the stay and held that the entitlement of the claimant and the nature of relief to which she may be entitled could be addressed in the forum of her choosing. See August 2021 Update.
Love then brought a suit against Osage Marine in state court in St. Louis, Missouri, seeking damages of more than $51 million for Redmond’s conscious pain and suffering prior to his death and loss of his economic support and pecuniary services. Redmond lived with his mother in her home, and she testified that he helped keep the house clean, cut the grass, shoveled snow, fixed things around the house, and occasionally contributed $100 or so to help her with the bills. She also testified that he helped her take care of her Type I diabetes. Shortly before trial, Osage Marine declined to contest liability or the right to an award of the elements of damages that are available and proven under applicable law. Love asked the jury to award $31 million, and Osage Marine argued that the award should not exceed $1 million. The jury returned a verdict in the amount of $15 million, and Osage Marine challenged the verdict on appeal to the Missouri Court of Appeals. Writing for the court of appeals, Judge Stevens agreed that Love could recover for Redmond’s pre-death pain and suffering if she could establish that Redmond was conscious after he fell into the river. The evidence established that Redmond stepped onto the deck of the barge wearing a life vest. The supervisor heard his tools bounce on the barge and Redmond fall into the river. Another deckhand saw Redmond floating in the river, and Redmond then went underwater. Love argued that Osage Marine did not prove that Redmond was rendered unconscious or died instantaneously on falling, and Osage Marine’s vice-president of operations conceded that it was likely that Redmond hit the propeller while wearing his life jacket, which killed or maimed him. Osage Marine argued that Love failed to carry her burden of proof as there was a reasonable inference that Redmond simply collapsed and fell into the river unconscious. Judge Stevens agreed that Osage Marine may have a point (citing the rule that a jury may not infer pain and suffering from circumstantial evidence when the evidence gives rise to a number of inferences that are equally probable), except for its pre-trial admission that its negligence and failure to provide a safe workplace (as opposed to a sudden collapse) caused Redmond’s death. Therefore, Judge Stevens declined to set aside the award of pain and suffering. Osage Marine also challenged the award for loss of financial support, asserting that Love failed to adduce sufficient evidence for this element of damages. At trial, Osage Marine argued that Love was not financially dependent on Redmond, but Judge Stevens held that dependency was not required and that what was necessary was a reasonable expectation of pecuniary assistance. Love proved that with the evidence of the work that he performed around the house, the assistance he gave her with her diabetes, and the nominal monetary contributions. As to the amount of the award, Judge Stevens noted the broad discretion given to the jury and reasoned that the amount was not so excessive as to shock the conscience. Osage Marine’s other objections to the evidence, arguments, and submission to the jury were dismissed as multifarious or not preserved for appeal (including the argument that the judgment violated the federal limitation court’s prohibition of entry of judgment). The affirmance of the verdict of $15 million when there is a limitation fund of $2 million then brought the federal proceeding back into play. See June 2024 Update.
In the limitation proceeding, Love filed a motion for summary judgment that Osage Marine was not entitled to limitation because it could not disprove privity to the acts and conditions which caused Redmond’s death. Love argued that the admission of liability in state court eliminated any dispute regarding the issue of privity. Osage Marine responded that its admission in state court was not determinative in the limitation case and that the facts demonstrated that it lacked privity. Judge Sippel reminded Love that before he lifted the stay, Love stipulated that nothing from the state court proceeding “will serve as res judicata on matters relating to limitation of Petitioner’s liability.” Judge Sippel explained that “sometimes factual issues determined by the state court must be relitigated in federal court,” citing the Eleventh Circuit’s decision in Beiswenger, in which the court stated that “it is possible that several factual issues that were determined by the state court in resolving the negligence question would have to be relitigated in the admiralty court in resolving the privity or knowledge question.” Thus, the admissions in state court were not binding as to the issue of privity, but Judge Sippel held that they were admissible as evidence in the limitation action.
Lilliam Diego, a passenger on the cruise ship SEASHORE, was walking back to her room with friends from the cafeteria or Marketplace Buffet on the 16th Deck of the vessel when she claims her shoe got stuck because of something sticky and she fell on her face. The fall was captured on the closed-circuit television, reflecting that she began to stumble and took several stutter-steps before pitching forward onto her face. No puddles, stains, or substances were visible in the video. There were no warning signs or cones. There were no crewmembers or cleaning crew in the area. There was a fan or blower on the floor pointing in the direction of the sticky substance. Diego brought this suit against the cruise line in federal court in Florida with a single count of negligence, and the cruise line moved for summary judgment, asserting that it did not have notice of the alleged risk creating condition and for lack of evidence that “an alleged phantom sticky substance proximately caused her fall.” Judge Altman began with a finding that Diego had sufficiently established the presence of a sticky substance on the deck from her testimony and the testimony of her friend walking directly behind her who stated that she felt a sticky substance on the deck (the blower was also evidence of something on the deck). Although the CCTV footage did not show the substance on the floor, Judge Altman considered that to be irrelevant, answering that “because the cameras don’t tell us anything about whether the floor was (or wasn’t) sticky, we must take the Plaintiff and her friend at their word.” Judge Altman also rejected the argument that the plaintiff in a negligence action under the general maritime law who does not have a liability expert cannot survive a motion for summary judgment, stating that “we don’t need an expert witness to tell us something everyone already knows—which is that ‘liquids’ can cause falls.” Judge Altman then addressed the question whether there was evidence that the cruise line had constructive notice of the substance. He noted that constructive notice can be proven from circumstantial evidence, and he found that evidence from the presence of the blower and from the fact that, according to Diego, the substance was dirty and sticky. Judge Altman reasoned that when a substance has become dirty or sticky, there is a reasonable inference that it has been on the deck long enough to provide constructive knowledge. Judge Altman explained that when a juice, soda, or beer is spilled, it creates a wet puddle at first. However, after it has been sitting for some time, the water evaporates, leaving behind a sticky residue. He concluded: “We don’t need an expert witness to explain this phenomenon because it’s obvious to most (if not all) jurors.” Judge Altman added that, according to the cruise line’s procedure manual, there should be housekeeping personnel present in the lobby near the Buffet during its opening hours. He reasoned that if someone was present, the sticky substance should have been cleaned, and if the crewmember was not present, it raised a question as to why the worker was not present. Therefore, Judge Altman held that Diego had provided sufficient evidence for constructive notice, and he denied the motion for summary judgment.
International Cargo Loss Prevention, insurer of a cargo of frozen shrimp that was damaged during a shipment from Ennore, India to Chicago, Illinois, brought this suit in federal court in New York against the ocean carrier, Mediterranean Shipping Co., and Mediterranean Shipping Co. (USA), which signed the Sea Waybill as agent for the carrier. International Cargo Loss filed the complaint on February 15, 2023, the deadline agreed by the parties to file suit in an agreement to extend the statute of limitation in the Carriage of Goods by Sea Act. The next day, February 16, 2023, the clerk of court notified International Cargo Loss that the complaint was deficient because the attorney signature was incomplete, and the civil cover sheet lacked sufficient information. International Cargo Loss re-filed the complaint later that day, but the defendants moved to dismiss the complaint on the ground that it was filed outside the one-year limitation period in the Carriage of Goods by Sea Act. The defendants argued that the initial filing did not “comply with the rules,” and that the operative filing was on February 16. Judge Clarke disagreed, answering that the filing error did not void the date of the original filing for purposes of the statute of limitation. As International Cargo Loss did not unreasonably delay in the re-filing, the complaint was considered to have been filed on February 15 and was not time-barred. Mediterranean Shipping USA argued that it should be dismissed from the suit because it signed the Sea Waybill as agent of the carrier. International Cargo Loss argued that the case against Mediterranean Shipping USA should not be dismissed because the complaint alleged that Mediterranean Shipping USA was a party to the Sea Waybill and because it was charged with administering the loss and had the power to bind the carrier in accordance with the damage to the cargo. Judge Clarke responded that International Cargo Loss had not alleged any facts to support Mediterranean Shipping USA manifesting an intent to be bound by the Sea Waybill. The conclusory allegation that Mediterranean Shipping USA breached the contract of carriage was insufficient to state a claim against it, and Judge Clarke dismissed Mediterranean Shipping USA from the suit. See February 2024 Update.
Mediterranean Shipping moved for reconsideration, arguing that Judge Clarke erred in not considering the email exhibits that set for forth the extension to “February 15, 2023 – 1700 (CET time).” Mediterranean Shipping argued that CET time unambiguously referred to Central European Time, and International Cargo Loss responded that it reasonably interpreted the deadline as Central Time in the United States. Judge Clarke agreed with Mediterranean Shipping that CET has a definite and precise meaning—Central European Time. As 1700 CET was 11:00 a.m. Eastern Standard Time, and as the complaint was not filed until 5:32 p.m. Eastern Standard Time, the complaint was not filed within the extension and the suit was time-barred. Therefore, she dismissed the complaint.
Elsa J. Alonso-Roth was a passenger on the DISNEY WISH. She booked the Atlantis Aquaventure excursion at the Aquaventure waterpark at the Atlantis Paradise Island Resort in The Bahamas. After waiting in a long line to enter the waterpark, Alonso-Roth signed a document titled “Acknowledgment, Agreement, and Release” so that she could get an entry wristband. That document contained a choice-of-law provision and forum-selection clause for The Bahamas. Separately, the cruise ticket contained a “Himalaya Clause” that extended all of the defenses and limitations of liability in the cruise ticket to the contractors of the cruise line. Once in the waterpark, Alonso-Roth was injured when she slipped and fell while trying to ride the Red Heart Swing. Alonso-Roth brought this suit in federal court in Florida against the cruise line and excursion owner/operator, and the defendants both moved to dismiss the complaint. The excursion owner/operator argued that the forum-selection clause required that Alonso-Roth pursue her suit against the excursion owner/operator in The Bahamas, but Alonso-Roth responded that the Himalaya Clause bound the excursion owner/operator to suit in Florida in accordance the forum-selection clause in the passenger ticket. Judge Dalton began his analysis by holding that the forum-selection clause for The Bahamas was presumed to be valid, and he rejected the argument that Alonso-Roth did not have a meaningful opportunity to review the clause because she was in the hot sun and felt that she had to sign quickly, answering that no one impeded her from reviewing the clause. Judge Dalton then considered the argument that the Himalaya Clause provided for suit in Florida and held that Himalaya Clauses “are for the beneficiary’s use, not the contracting party’s.” Thus, the Himalaya Clause was for the excursion owner/operator to invoke, not Plaintiff.” As the clause did not bind the excursion owner/operator, Judge Dalton dismissed the complaint as to the excursion owner/operator without prejudice. Judge Dalton then addressed the cruise line’s motion to dismiss, applying maritime law to the claims “because she alleges torts occurring at offshore locations during her cruise.” Judge Dalton then addressed the counts against the cruise line. The first two claims were for misleading advertising and negligent misrepresentation. The cruise line argued that the representations made by the cruise line were unactionable puffery, and Judge Dalton noted the distinction between specific misrepresentations about excursions and general promises of a safe excursion. The claims on the website and in promotional material that the excursion had state-of-the-art slides and that the cruise line upholds high standards of safety fell on the side of unactionable puffery. Judge Dalton dismissed the counts without prejudice, advising Alonso-Roth to allege facts with particularity that tied her factual claims to legal claims. With respect to the count for negligent selection/retention, Judge Dalton explained that the elements are the same, but the timing differs between pre-hire of the contractor and subsequently during the employment of the contractor. As Alonso-Roth pleaded no facts about how the cruise line would have known of the unfitness of the excursion owner/operator, Judge Dalton dismissed the count without prejudice (adding that the passenger should separate the claims into two counts during her repleading). The cruise line objected to the counts for negligent failure to warn and general negligence because the complaint did not allege that the cruise line had notice of the dangerous condition of the Swing, only that if might have inspected it or should have. Therefore, Judge Dalton dismissed the counts to allege specific facts about what the cruise line knew or should have known. Finally, Alonso-Roth pleaded that the cruise line breached a non-delegable duty with oral representations to provide a reasonably safe excursion. As she did give details about what those representations were, Judge Dalton dismissed the claim to be repleaded with details of the representations.
The PAMINA is a 2003 Grand Alaskan Trawler equipped with marine diesel engines and electronic engine controls (manufactured by Glendinning). Brian and Laurie Pickering (the owners of Pamina, LLC) bought the vessel in 2018 in Maryland. While the vessel was being prepared for shipment to the Pacific Northwest, Atlantic Yacht Services in Fort Lauderdale, Florida recommended installation of the Dockmate wireless remote-control system. The system was installed, and the vessel logged more than 500 hours of engine runtime in the Pacific Northwest without any problems. Work was performed on the engines and engine systems from September 2021 to April 2022, and the vessel departed the marina in Seattle for Poulsbo via the Ballard Locks. The Dockmate remote control system did not work properly, so the Pickerings used the engine controls in the pilothouse instead of the remote system. As the west gates of the locks opened to Puget Sound, Brian Pickering felt the boat jolt into reverse (the control levers were in neutral), and he ran from outside the pilothouse to turn off the engines. The PAMINA allided with other vessels, resulting in damage to the PAMINA and the other vessels. Pamina, LLC filed this limitation action in federal court in Washington, and third-party complaints were filed against Glendinning, Dockmate, and others. Glendinning moved for summary judgment, and Judge Evanson agreed that the claims under the Washington Consumer Protection Act should be dismissed (without opposition). Glendinning argued that the other claims should be dismissed because the inspection revealed that the Glendinning controls were operating properly and that the cause of the incident was a faulty Dockmate cable with two wires shorted together. The claimants in the limitation action answered that the declaration of the expert from the inspection did not rule out all other contributing causes. The claimants emphasized that there was evidence that Glendinning and Dockmate made an effort to ensure compatibility of their products, resulting in a fact dispute about Glendinning’s involvement. Additionally, the experts provided evidence that there was a defect in the Glendinning system because it did not have a fail-safe that would have rendered the system inoperable when it was in a fault state due to the Dockmate cord. Based on these disputes, Judge Evanson declined to grant summary judgment to Glendinning.
Mary Jane Beck was a passenger on the CARNIVAL HORIZON. The vessel was docked at the disembarkation Port of Miami. She was on the gangway to disembark when a crewmember approached from the opposite direction carrying a folded wheelchair. Beck stepped to the side to avoid the crewmember, and her foot hit the ramp’s raised edge, causing her to fall. Beck brought this suit in federal court in Florida against the cruise line, alleging negligence, negligent maintenance of a hazardous condition, negligent failure to warn, and vicarious liability. The cruise line moved to dismiss the direct liability claims for failure to plead notice, and Beck responded that other crewmembers were in the same area and were aware of the crowd on the gangway when the crewmember “plowed through and against the exiting passengers.” She also included a photo of the gangway that she claims demonstrated that the elevated rise and lip of the gangway did not comply with the cruise line’s internal policies or industry standards. Judge Moreno disagreed, reasoning that the fact that crewmembers were in the same area and were aware did not establish notice to the cruise line and that Beck did not plead the specific policy or standard that put the cruise line on notice of the dangerous condition. Accordingly, Judge Moreno dismissed the direct liability counts because they only contain “fact-free, wholly conclusory, boilerplate allegations” that the cruise line should have known of the dangerous condition.
Kristin Birdsey executed an agreement with Z&G Boat and Jet Ski Rentals (Blind Pass) to rent a power boat. Two days later, Birdsey had an accident while piloting the boat, resulting in an injury to her hand. Birdsey brought a suit against Blind Pass for negligence in state court in Pinellas County, Florida. Accelerant insured Blind Pass under a liability-only commercial yacht insurance policy, and Blind Pass notified Accelerant of the suit. Accelerant then brought this suit in federal court in Florida, seeking a determination that its policy did not cover the incident and that it did not have a duty to defend or indemnify Blind Pass in connection with the suit. Blind Pass counterclaimed for a declaratory judgment and for breach of contract, and Accelerant moved to dismiss the declaratory judgment claim and to strike the demand for a jury trial and for attorney fees. Accelerant argued that the dueling declaratory judgment claims were duplicative, but, as Accelerant did not move to dismiss the counterclaim for breach of contract, as the dueling claims would not expand the scope of discovery, and as it was not clear that relief was wholly duplicative, Judge Mizelle declined at this stage to dismiss the counterclaim for declaratory judgment. Judge Mizelle then addressed whether Blind Pass was entitled to a jury trial on its counterclaims. Accelerant brought the suit under the court’s admiralty jurisdiction with a Rule 9(h) designation. Blind Pass argued that it was entitled to a jury trial under the Saving-to-Suitors Clause and the 7th Amendment, citing decisions from the Fourth and Ninth Circuit. Judge Mizelle answered that the Eleventh Circuit was aware of contrary decisions when it held in the Lago Canyon case that the insured cannot demand a jury trial on a counterclaim for breach of contract. Although Judge Mizelle acknowledged that Blind Pass had raised “weighty questions” regarding its right to a jury trial, she was bound by the decision of the Eleventh Circuit and held that Blind Pass was not entitled to a jury trial. Judge Mizelle likewise denied the request for an advisory jury, finding no compelling reason to do so in light of the additional time and expense that would be required. Finally, Accelerant argued that Blind Pass was not entitled to attorney fees under New York law based on the choice-of-law provision in the policy (New York law in the absence of entrenched maritime law). Blind Pass argued that the clause was unenforceable because New York had no substantial relationship to the parties and that application of maritime choice-of-law rules would result in application of Florida law. Judge Mizelle noted that the argument that there is no reasonable basis for the selected law was narrowly interpreted by the Supreme Court in the Raiders Retreat case (see March 2024 Update) and that lack of a substantial relationship to New York is not enough to void the contractual provision, explaining that the parties may choose the law of a jurisdiction whose law is well developed, well known, and well regarded. She concluded that it was “anything but irrational” for the parties to contract for the benefit of New York’s “well-known and highly elaborated commercial law.” Accordingly, Judge Mizelle held that Florida law did not apply and that Blind Pass was not entitled to seek attorney fees under Florida law.
Holcim Canada (formerly LaFarge North America) distributes building materials across the West Coast of the United States and Canada through the use of barges. In order to satisfy the Jones Act, LaFarge, a Canadian company, contracted with Barge Eagle, a Washington corporation, to purchase the T/B LAFARGE EAGLE and time charter it to LaFarge for use. Barge Eagle borrowed the purchase money from Bank of America, and LaFarge made the charter hire payments directly to Bank of America. However, the first payment to Bank of America was made by a withdrawal directly from Barge Eagle’s account. Ten years later, Barge Eagle demanded payment of $722,208.03, the initial payment plus ten years’ interest. Barge Eagle then began claiming funds collected on third-party subcharters of LaFarge. LaFarge brought this suit in federal court in Washington, asserting that Barge Eagle breached the time charter by taking payment of hire in an amount that exceeded the amount due under the charter, and the parties filed motions for partial summary judgment. Judge Martinez did not believe that LaFarge demonstrated its claim as a matter of law or that Barge Eagle had not ratified the arrangement or waived its claim to inadequate performance based on ten years of inaction, although he did agree that there was no fact issue as to the payment of the basic hire by LaFarge in 2009.
Trailer Bridge, owner of the deck barges, ATLANTA BRIDGE and MEMPHIS BRIDGE, time chartered the barges to Work Cat Florida using a BIMCO Standard Barge Charter Party Agreement with a no-lien and indemnity provision. Work Cat Florida entered into two BIMCO Supplytime 2005 time charters with Louisiana International Marine for the use of the LA COMMANDER and the LA INVADER to tow the ATLANTA BRIDGE and the MEMPHIS BRIDGE. Work Cat did not pay for the towage and filed for bankruptcy. Louisiana International Marine filed a claim for $1,364,214.17 in the bankruptcy, and it also filed lien claims with the National Vessel Documentation Center against the ATLANTA BRIDGE and the MEMPHIS BRIDGE, for necessaries for towage. When Trailer Bridge sought to sell the work barges, Louisiana International Marine sent a demand to the purchaser, which sought defense and indemnity from Trailer Bridge. Trailer Bridge then brought this action in federal court in Louisiana, seeking a declaratory judgment that the liens asserted by Louisiana International Marine were invalid, and Louisiana International Marine filed a counterclaim seeking recognition of the liens. Before addressing the arguments on the merits, Chief Judge Brown initially declined to hold that Trailer Bridge was collaterally estopped (issue preclusion) from contesting the validity of the liens because it had repeatedly acknowledged the validity of the liens in the Work Cat Florida bankruptcy proceeding. She cited the documents from the bankruptcy reflecting that the liens were referenced, but their validity was not litigated. Turning to the validity of the lien under the Commercial Instruments and Maritime Liens Act, Chief Judge Brown easily concluded that towage services are necessaries, but Trailer Bridge argued that the towage services were not provided “for” the barges and that the barges did not benefit from the towage services, adding that “it was not necessary for the barges to be towed to effectuate their function – to stay afloat.” Chief Judge Brown disagreed, reasoning that the barges could not have provided their services without the towage provided by the tugs. Chief Judge Brown declined to extend the lien to the fuel that was provided to the tugs for the towage. The fuel was necessary to keep the tugs going, but it was not furnished to the barges, which do not require fuel. Therefore, Louisiana International Marine did not have a lien for the fuel costs. As Chief Judge Brown found that Louisiana International Marine furnished towage services to the barges that were necessaries, there was a presumption that it relied on the credit of the barges. However, Trailer Bridge presented the testimony of the corporate representative for Louisiana International Marine that it did not extend credit to the barges and that the invoices were addressed to Work Cat Florida. Chief Judge Brown did not find the invoicing to be dispositive as it only showed that Louisiana International Marine relied first on the charterer, not that it did not intend to rely on the credit of the barges. Although the Fifth Circuit considers corporate testimony on the reliance issue to be almost conclusive, Chief Judge Brown noted that it was unclear from the testimony whether the corporate representative understood the question about working on the credit of the barges and that he intended to forego the lien. Therefore, Chief Judge Brown found fact issues remained that needed to be resolved.
Cashman Equipment/Cashman Scrap and Salvage emerged from a bankruptcy reorganization with requirements to make specific monthly installment payments to WM Capital Partners for its secured claim as an assignee of Cashman loans. Cashman made payments of millions of dollars but did miss some payments. WM Capital then brought this suit and filed a motion to compel specific performance of ship mortgages, including an assignment of charter revenue. Cashman pleaded that it was paying in good faith and that the relief sought would culminate in a total liquidation. Judge Saylor noted that a business solution might be more beneficial to the parties in the long run, but that was not the issue before him. The mortgages gave broad remedies to WM Capital in the event of default, including the right to take possession of the vessels and to sell them and the right to take the charter revenue. The mortgages also gave WM Capital the right to seek relief in a suit in equity or other appropriate proceeding (including an injunction in aid of the exercise of any power granted in the mortgages). As the mortgages afforded the relief sought, Judge Saylor compelled specific performance of the ship mortgages and charter assignment, compelled turnover of charter revenue, and ordered a vessel sale process.
This litigation involves insurance coverage on insurance policies issued by Clear Spring Property and Casualty Co. and Certain Underwriters at Lloyd’s to Seychelles Limited. Seychelles owned and operated two vessels, the M/Y TRIPLE NET (MONTE FINO) and the Tender to that vessel. The first incident involved an incident that occurred when the Tender struck a large wake, resulting in injuries to passengers on the Tender. The second claim arises from the discovery that the Tender’s center console was missing while the Tender was being towed behind the TRIPLE NET. We discussed the first incident in our March 2024 Update. On a family vacation, Tammy Fisher chartered the vessel TRIPLE NET and its tender from Seychelles Ltd. Fisher invited Sandra Caldwell and Nancy Newbold to accompany her on the vessel. The vessel was captained by Hayden Smith, and Robert Muller was a crew member. After a trip to Key Biscayne on the tender, Muller was piloting the tender back to the TRIPLE NET with Fisher, Caldwell, and Newbold. The tender slammed into the wake of a large yacht, and Caldwell and Newbold were thrown into the air and landed on the deck. Caldwell and Newbold filed this suit in federal court in Florida against Seychelles and Fisher, in personam, and the TRIPLE NET and it tender, in rem. Seychelles argued that the complaint should be dismissed because it bareboat chartered the vessels, and that the vessels should be dismissed because they are not within the district. Although the Recreational Bareboat Charter Agreement provided that it was a demise charter in which Fisher accepted full possession, command, and navigation of the vessels and would provide the crew and operating costs, the plaintiffs argued that the agreement was not really a bareboat charter because Seychelles agreed to insure Fisher as an additional insured under Seychelles’ insurance and that Fisher would not be liable for damage to the vessel or third party unless she or her guests acted in a way to void or limit coverage under the insurance. Magistrate Judge Augustin-Birch disagreed, noting that insurance provisions do not change the primary consideration of which party has control and possession of the vessel. Although the plaintiffs pleaded that Seychelles employed and controlled the crew, the allegations were not plausible because they contradicted the charter. With respect to the failure to allege that the in rem defendants were present within the district, the plaintiffs asked for leave to amend their complaint so that they could arrest the vessels. Therefore, Magistrate Judge Augustin-Birch recommended that the dismissal of the in rem defendants be without prejudice. Finally, Seychelles moved to dismiss the cross-claim for common-law indemnity and contribution filed by Fisher against Seychelles. Fisher made the same argument for her indemnity and contribution claims that the plaintiffs made against Seychelles—that Seychelles was responsible for the acts of the crew, and for the same reason that Magistrate Judge Augustin-Birch gave in rejecting the plaintiffs’ claim, she also denied the indemnity and contribution claims as not plausible in light of the clear language of the charter.
Clear Spring and Lloyd’s brought this action in federal court in Florida against Seychelles, seeking a declaration that the policies were void from the inception and that there was no coverage for the injury claims or the hull claim. Seychelles filed a counterclaim, seeking a declaratory judgment and damages for breach of contract and breach of the covenant of good faith and fair dealing. The insurers moved to dismiss the counterclaim for breach of the covenant of good faith and fair dealing as duplicative of the count for breach of contract based on New York law. Judge Dimitrouleas first addressed whether New York law governed based on the policy provision that New York law would apply in the absence of entrenched maritime law. The parties did not dispute the application of New York law, and Judge Dimitrouleas agreed that New York law applied. He then noted that New York does not recognize a separate cause of action for breach of the implied covenant of good faith and fair dealing when a claim for breach of contract is pleaded based on the same facts. Seychelles argued that the two counts did contain some overlapping facts but that the bad faith count was based on the handling of the hull claim and the breach of contract count was based on the failure to pay. Judge Dimitrouleas agreed that the bad faith count pleaded conduct different than what was asserted for the breach of contract count. However, he pointed out that the relief sought in the two counts was the same. Therefore, Judge Dimitrouleas dismissed the count for breach of the covenant of good faith and fair dealing as duplicative; however, he gave Seychelles the opportunity to replead the count.
The owner and owner pro hac vice of the M/V AIDEN’S ARRIVAL, a 22-foot Bennington pontoon vessel, brought this limitation action in federal court in Florida in connection with an incident involving the vessel in the navigable waters of Hillsborough County, Florida, near Gandy Bridge and Interstate 275 that resulted in injuries to Sonia Nunez. The petitioners filed an ad interim stipulation in the amount of $21,744 and stated that they were prepared to give a bond or stipulation if requested by any claimant or ordered by the court. The Petitioners then moved for approval of the ad interim stipulation and issuance of the monition. Magistrate Judge Adams denied the motion, noting that it was not backed up by assurance from the vessel’s insurer, such as a letter of undertaking. The stipulation suggested that the vessel was insured, but it did not even identify the insurer. As the stipulation was not “approved security” under Rule F, Magistrate Judge Adams declined, without prejudice, to issue the monition.
This decision arises from the breakaway of barges from American River Transportation Co.’s fleets on the Mississippi River after Hurricane Ida made landfall in Louisiana in August 2021. Capt. Nicholas Currault, Andre Currault, Troy Currault, and Capt. Sidney Freeman used Lower River Ship Service’s tug SHELL FUELER to catch the breakaway barges and run them aground to create holding places that acted as anchors to hold the barges in place on the bank of the river. The individual salvors and Lower River filed a salvage complaint against American River Transportation and the barges in federal court in Louisiana, seeking an award of salvage under the general maritime law and the International Convention on Salvage, 1989. The claims were tried to Judge Vitter, who found that the salvors were entitled to an award because they had acted voluntarily and had successfully saved 23 barges from marine peril. She then considered the factors under the Convention and general maritime law (THE BLACKWALL case) for the amount of the award. She found that the barges had a fair market value of $18,807,500, and that the salvage efforts were successful with respect to both the barges and other property, but she believed that the evidence of environmental damage that was prevented was too speculative. Considering the danger, the skill exhibited, and the value of the saved property, Chief Judge Brown believed that a substantial salvage award was merited. However, she reasoned that an award of 50% ($9.4 million) as requested by the salvors (the old moiety rule) would be a windfall. Instead, she awarded 20% of the fair market value of the barges, $3,761,500, together with prejudgment interest.
Penn Warehousing leases several piers from the Philadelphia Regional Port Authority for use in trans-shipping maritime cargoes. One of the piers it leases is Pier 82, an older general cargo pier that has been inactive for years except for use as a lay-up pier. The SS UNITED STATES, which operated as a luxury ocean liner in the 1950s and 1960s was decommissioned in 1969, and commercial entities sought to redevelop it. The redevelopment efforts were unsuccessful, and the non-profit SS United States Conservancy purchased the ship in 2011 and entered into a berthing agreement with Penn Warehousing at a rate of $850 per day, continuing until removal of the vessel from its location. In 2020, the Port Authority expressed concern that the ship was causing damage to Pier 82 and demanded that the ship be moved. Penn Warehousing relayed the concerns to the Conservancy but did not demand removal of the ship. In 2021, Penn Warehousing decided to force the removal by increasing the daily berthing fee to $1,700. In March 2022, Penn Warehousing filed suit in the Pennsylvania Court of Common Pleas, seeking damages and ejectment of the vessel. The Conservancy removed the case to federal court in Pennsylvania, and Judge Brody held a bench trial, after which she found that the berthing agreement did not contain any basis for Penn Warehousing to increase the rate to $1,700. Therefore, she held that the Conservancy’s continued payment of $850 per month was not a breach of contract. As to the duration of the agreement, Judge Brody noted that courts disfavor contracts of perpetual duration (absent clear and unequivocal intent), and she found that the parties understood that the ship was an inoperable, mammoth vessel that could not be removed without at least a few months for planning and obtaining approvals. Judge Brody concluded that Penn Warehousing would not have to provide berthing services in perpetuity, and that the contract could be terminated with reasonable notice. Judge Brody deemed the agreement would be terminated as a matter of law effective September 12, 2024 (90 days) and held that the Conservancy must remove the vessel before that date.
Rhonda C. Hebert was hired by EPS Medical Solutions as a COVID tech to do land-based COVID testing and then began working as a medic on the M/V HOS WARLAND, operated by Hornbeck Offshore. EPS only provided her with minimal training before her offshore assignment as she had previously worked offshore and knew more about working offshore than anyone. On February 23, 2022, Hebert was in the shower with the exterior door to the infirmary locked when the door handle rattled incessantly. Hebert assumed that someone was hurt and needed her services. She stepped out of the shower and her ankle rolled, resulting in her striking her shin on the toilet. Hebert testified that she did not rush to get out of the shower and that there was no water or other substance on the floor that caused her ankle to roll. She discovered that there was no injury or emergency in connection with the rattling of the door handle, just a man who needed to ask a question about maritime laws. A year later, Hebert brought this suit in federal court in Louisiana against her employer EPS and vessel operator Hornbeck, asserting claims under the Jones Act and general maritime law. She then filed a motion for summary judgment seeking rulings that she was not comparatively at fault because her accident was caused by a sudden emergency and that EPS was at fault for failure to train her. EPS filed a cross-motion for summary judgment on the Jones Act negligence claim. Chief Judge Doughty cited the decisions of the Fifth Circuit that recognized an employer’s obligation to train its employees; however, Hebert was a highly qualified medic who had many years of experience working offshore. Chief Judge Doughty did not believe that it was negligent for EPS to assume that Hebert knew how to perform routine tasks like stepping out of the shower. As there was no issue with respect to a defect in the shower or substance that caused her to slip, Chief Judge Doughty granted summary judgment on the negligence of EPS. Chief Judge Doughty then considered Hebert’s argument that she was not at fault as a result of the sudden emergency doctrine—that the worker is not negligent if she fails to adopt a better or safer method in response to position of imminent peril or emergency. Chief Judge Doughty answered that there were fact questions that precluded summary judgment, as Hebert stated that she was not rushed when she stepped out of the shower. Accordingly, he denied Hebert’s motion.
Christopher Lawrence Parachini and his spouse, Jennifer A. Blumin (now deceased) granted a preferred ship mortgage to USAlliance Federal Credit Union for the S/V HELICORNE II in the amount of $162,500 in 2015. The vessel was moored at the Moonbeam Gateway Marina in Brooklyn, New York from 2021 to 2024. On April 24, 2024, the Marina delivered a notice of lien and sale to USAlliance, advising that the Marina was now in possession of the vessel and entitled to a garageperson’s lien over the vessel in the amount of $379,616.09 for winterization and storage charges and that the Marina would sell the vessel at auction on May 20, 2024 if the lien was not satisfied. USAlliance then brought this suit in federal court in New York against the vessel, in rem, and Parachini and the Marina, in personam, asserting that Parachini owed a principal balance on the loan of $87,490.19 and seeking a declaratory judgment of the priority of its mortgage against the defendants. USAlliance moved for a temporary restraining order and preliminary injunction to prevent the sale of the vessel, and Judge Merchant first analyzed whether USAlliance had satisfied the prerequisites for a preliminary injunction. Judge Merchant reasoned that USAlliance had established irreparable harm because the purchaser could easily move the vessel outside of the court’s jurisdiction and frustrate the effort to enforce the lien on the vessel (an arrest of the vessel in this in rem action would do the same). She also held that there was a likelihood of success on the merits because the preferred mortgage would be superior to a garageperson’s lien arising out of state law. Finally, Judge Merchant held that the balance of equities and the public interest favored granting the injunction as the cost of delay was comparatively slight to the Marina, the harm to USAlliance was significant, and the legal battle in which a purchaser would be embroiled would be avoided. As USAlliance was likely to succeed on the merits, Judge Merchant granted the preliminary injunction and exercised her discretion to issue the injunction without requiring USAlliance to post a bond. She enjoined the Marina from selling, moving, transferring, or disposing of the vessel except as authorized by the court.
Winifred Spitza, a passenger on the CARNIVAL MARDI GRAS, tripped and fell on an unmarked bulge or change in the elevation of the carpeted floor surface of a passenger walkway on Deck 9 on the vessel. She brought this action against the cruise line in federal court in Florida seeking to recover for negligent maintenance, negligent failure to correct, and negligent failure to warn, and the cruise line moved to dismiss the complaint on the basis that Spitza had not sufficiently pleaded notice of the risk-creating condition. Spitza pleaded seven prior incidents involving tripping and falling on bulges or uneven carpeted surfaces on ships owned by the cruise line. The cruise line argued that none of the incidents occurred on the MARDI GRAS; that the recitations did not describe the configuration of the other ships, the location of the incidents, the material on the floor of those ships, or the conditions of the walkways; and that only two of the incidents occurred within a year of Spitza’s fall. Judge King cited the rule in the Eleventh Circuit that substantial similarity does not require identical circumstances and allows for some “play in the joints;” however, he did not believe the prior incidents were similar enough from the conclusory descriptions of the incidents or in time to allow the jury to draw a reasonable inference concerning the cruise line’s ability to foresee Spitza’s trip and fall. Spitza also alleged that there was notice of the hazard because a number of agencies have developed safety standards and regulations for passenger walkways related to changes of elevation as a result of the high traffic nature of the walkway. As the allegation only referred in a conclusory way to the safety standards and regulations, Judge King did not believe that the pleading was sufficient, and he dismissed the complaint without prejudice.
Mickel White, a passenger on the HARMONY OF THE SEAS, claims that she slipped and fell in a wet foreign substance while exiting the Central Park café on Deck 8 of the vessel. She brought this suit in federal court in Florida against the cruise line (alleging negligent failure to warn, negligent maintenance, negligent design, and general negligence), and the cruise line moved to dismiss the complaint on the ground that White did not sufficiently plead notice to the cruise line of the dangerous condition. White responded that she had pleaded that the condition existed for a sufficient length of time that the cruise line should have learned of the condition and corrected it, but her conclusory allegation did not state how long the condition existed. Her allegation that crewmembers were standing within a close distance and were monitoring the area for slipping hazards was inadequate because she did not assert how the crewmembers could have observed the hazard (for example, she did not provided facts about where the crewmembers were stationed, whether there were obstructions in the line of sight, or what duties they had). Her allegation that there were video cameras to monitor the area did not state facts that would establish how the cruise line had constructive notice, and her allegations of policies and procedures did not explain what the policies and procedures were or how they put the cruise line of notice of a hazard. Her allegation of similar incidents included only one on the HARMONY OF THE SEAS, and that involved an injury on a different deck in front of a different café. Judge Becerra recognized that substantial similarity does not require identical circumstances, but White failed to provide detail about the cases or explain how the cases were similar. Therefore, Judge Becerra dismissed the complaint for failure to plausibly allege that the cruise line had notice of the dangerous condition, with leave to amend the complaint (Judge Becerra added that the count for general negligence contained allegations of both direct liability and vicarious liability and should be redrafted to plead only the claim for direct liability).
Leigh Small, owner of the M/V PACIFIER, engaged Yacht Management South Florida to perform repairs on the vessel at its facility in Fort Lauderdale, Florida. Small was not satisfied with the repairs and refused to pay for them. Yacht Management then brought this action in federal court in Florida against Small and the vessel (to enforce its lien for the repairs), seeking $116,947.72, and Small counterclaimed for breach of contract, breach of the warranty of workmanlike performance, and deceptive and unfair trade practices. Yacht Management moved for summary judgment on Small’s counterclaims, citing the limited warranty and release provisions in the Service Agreement signed by Small. Yacht Management agreed that if there were any defects in the workmanship and materials within 60 days, Small would notify Yacht Management, and Yacht Management would correct the work and any damage. The parties agreed there were no other express or implied warranties. The Service Agreement also contained a release of claims for damage to the vessel unless the damage arose from the gross negligence or willful misconduct of Yacht Management. Magistrate Judge Reinhart reasoned that the counterclaim for breach of the warranty of workmanlike performance would have to be dismissed if the clause limiting warranties was enforceable. Small argued that the limitation could not be enforced because of the gross and incompetent work of Yacht Management, but Magistrate Judge Reinhart disagreed, concluding that the limitation satisfied the requirements of the Eleventh Circuit for clauses limiting liability. The Agreement excluded other express or implied warranties, but it did not absolve Yacht Management of all liability as it allowed the 60-day limited warranty and allowed claims for liability caused by gross negligence or willful misconduct. Mr. Small had 40 years of experience in the construction industry and had an opportunity to review the Service Agreement and to propose changes (there was no evidence of unequal bargaining power or overreaching). Therefore, Magistrate Judge Reinhart recommended dismissal of the counterclaim for breach of the warranty of workmanlike performance. As to the counterclaims for breach of contract and deceptive/unfair trade practices, Magistrate Judge Reinhart answered that the claims were barred unless there was gross negligence or willful misconduct. After reviewing the evidence presented by both parties, Magistrate Judge Reinhart believed that there was enough evidence of gross negligence to create a fact question on the enforceability of the release provision. He noted that the repairs were ongoing for more than two years with repeated complaints of flawed workmanship that were not corrected. Therefore, he recommended that the counterclaims for breach of contract and deceptive/unfair trade practices should not be dismissed. As a final matter, Magistrate Judge Reinhart pointed out that Small did not plead gross negligence in his counterclaims; however, that did not affect the summary judgment analysis. The issue of release was pleaded as an affirmative defense by Yacht Management to the counterclaim brought by Small. Small was not required to anticipate that defense and plead gross negligence in anticipation of the defense.
Sea Queen Shipping Corp., owner of the M/V BRIGHTEN TRADER, received a letter from the Florida Department of Environmental Protection, alleging damages in the amount of $106,744.32 to a coral reef at Port Everglades, Florida from the anchor of the vessel and proposing to settle the claim. Sea Queen responded by filing this suit against the Department in federal court in Florida, seeking a declaratory judgment that it did not cause the damage. The Department filed a motion to dismiss based on sovereign immunity, and Judge Damian first noted, sua sponte, that the suit was not an appropriate use of the Declaratory Judgment Act, reasoning that the anticipation of defenses against a suit by a government agency is not an independent basis for a declaratory judgment proceeding. Nonetheless, Judge Damian added that a state agency, such as the Department of Environmental Protection, is entitled to sovereign immunity under the Eleventh Amendment and that the state had not clearly and unequivocally waived its immunity. Therefore, Judge Damian dismissed the complaint with prejudice.
These consolidated cases from the allision between the crewboat M/V MR. CADE (chartered by Alliance Offshore) and Southern Oil’s fixed platform located in Main Pass Block 45 on the outer Continental Shelf offshore Louisiana. Jeremy Turner, a passenger on the vessel, was injured. Southern Oil brought suit in federal court in Louisiana against Alliance Offshore for damages to its platform, and Alliance Offshore brought a limitation action in Louisiana federal court. Southern Oil and Jeremy Turner brought claims in the limitation action, and Turner filed a motion to bifurcate so as to preserve his right to proceed in state court before a jury. He asked the limitation court to divide the litigation into three phases: 1) negligence of the vessel; 2) privity or knowledge of the bareboat charterer followed by the apportionment of liability or dismissal of the limitation proceeding and allowing Turner to proceed in the forum of his choice; and 3) stay the federal proceedings to allow Turner to try his damages to a jury. Magistrate Judge Currault noted that bifurcation had been denied in complex cases but that this case was more similar to cases in which judges found bifurcation to be appropriate. Balancing the interest of Turner under the saving-to-suitors clause with judicial economy and expediting the proceedings, Magistrate Judge Currault held that the court would try the issues of liability, limitation, and apportionment in a bench trial, and Turner’s personal injury damages would be tried separately. See June 2023 Update.
Alliance Offshore and others alleged that Southern Oil’s platform was not properly lighted, and Southern Oil added Sabik Oy as a defendant, alleging that Sabik Oy designed and sold a defective lantern that was placed on the platform by Southern Oil (the installer obtained the lantern from another platform, and there was no evidence that Southern Oil was the purchaser). Sabik Oy moved for summary judgment, which was initially opposed by Alliance, but Alliance withdrew its opposition, leaving Southern Oil arguing that there were material fact disputes whether the light was defective in design or construction–primarily the use of an ineffective bird deterrent and premature power depletion of the battery. Southern Oil also argued that although there had been extensive discovery, depositions were ongoing, including the deposition of Sabik Oy’s non-retained expert and the deposition of Southern Oil’s expert. Magistrate Judge Currault was not convinced by the argument on discovery as the deadline for discovery had passed, there was no motion to extend the deadline, and Southern Oil did not identify any facts to be obtained that might influence the summary judgment motion. As to the merits, Magistrate Judge Currault noted that Southern Oil had brought a claim based on maritime products liability as well as a redhibition claim under Louisiana law (akin to a claim for breach of implied warranty but without a requirement of privity). Magistrate Judge Currault explained that application of maritime law does not necessarily preclude application of state law, and that the only reported decision addressing application of redhibition in a maritime case held that redhibition supplemented maritime law to the extent it did not conflict with maritime products liability principles derived from the Restatement. Based on the evidence produced, Magistrate Judge Currault held that Southern Oil had created a fact dispute whether there was a product defect related to a higher output draw on the battery that caused premature depletion as well as an issue whether Southern Oil was a buyer for purposes of redhibition. Therefore, she denied the motion for summary judgment.
From the state courts
Matthew Aird, a seaman employed by Washington State Ferries (a division of the Washington State Department of Transportation), slipped in the parking lot at his employer’s office in 2017 and sought maintenance and cure for the injury to his back. WSDOT paid maintenance and cure until Aird’s treating physician determined that Aird had reached maximum cure in January 2020. Aird brought suit against WSDOT in the superior court of King County, Washington, alleging failure to provide a safe workplace and negligent administration of his maintenance and cure, asserting that he was permanently and totally disabled. In 2021, the parties entered into a stipulation for the dismissal of the claim that WSDOT failed to properly administer maintenance and cure. In September 2022, Aird’s surgeon testified that Aird could benefit from further care and had not reached maximum cure, and Aird moved to reinstate his claim for maintenance and cure. WSDOT moved for summary judgment, asserting laches, willful misconduct, and claim preclusion, but Judge Phelps denied the motion and granted Aird’s motion to reinstate maintenance and cure, reasoning that WSDOT had not established that Aird had reached maximum cure with unequivocal evidence. WSDOT argued on appeal that the trial court applied the incorrect legal standard in ordering reinstatement of maintenance and cure, seeking to distinguish the decision of the Washington Supreme Court that the employer must prove maximum cure by unequivocal evidence in order to terminate maintenance and cure. Writing for the appellate court, Chief Judge Smith stated that an employer who unilaterally decides to stop paying benefits based on its own determination of maximum cure must prove maximum cure with unequivocal evidence. This case did not involve a unilateral termination of benefits. The employer terminated benefits three years earlier based on the opinion of the seaman’s treating physician. The issue, three years later, was whether to reinstate benefits, and there was a fact dispute that required resolution by the jury. Therefore, the appellate court remanded for the superior court to vacate the reinstatement of benefits pending trial.
Eric Wheeler experienced neck and back pain while working on a drillship for Noble Drilling. Noble paid Wheeler maintenance at a rate of $35 per day and paid for medical treatment; however, a disagreement ensued because Wheeler’s choice of physician was not in network, and another doctor apparently cleared him to return to work with no restrictions. Wheeler brought suit against Noble Drilling in state court in Fort Bend County, Texas, asserting claims as a seaman under the Jones Act and general maritime law, including maintenance and cure. Wheeler moved to compel Noble Drilling to increase the maintenance rate, and the lower court issued a series of temporary injunctions, ending with an injunction requiring Noble Drilling to pay Wheeler maintenance at the rate of $121.21 per day until maximum medical recovery and requiring payment of all reasonable and necessary medical expenses. Noble Drilling appealed, and, writing for the Court of Appeals, Justice Bourliot noted that the lower court had corrected the procedural flaws in the injunction by setting a trial and a bond. She then addressed the argument that Wheeler failed to satisfy the elements for issuance of a temporary injunction. She explained that an injunction requires a clear and compelling presentation of extreme necessity to prevent irreparable injury or extreme hardship. Wheeler argued that he would suffer irreparable harm because the benefits Noble was paying were not enough to meet his daily living expenses, which risked the loss of his home, and that he could not pay the expenses for his out-of-network choice of physician, even though he was cleared to return to work by another physician. Justice Bourliot noted that these “circumstances are likely commonplace in cases involving Jones Act and maintenance and cure claims, and yet, there are no Texas appellate cases in which a temporary injunction was used to require or increase the payment of maintenance and cure benefits.” She answered that the reason for this may lie in the fact that the maritime law provides a remedy when maintenance and cure is wrongly withheld or deemed inadequate. In explaining that the case did not contain a clear and compelling presentation of extreme necessity or hardship, Justice Bourliot added that Noble had been paying “a not insubstantial” amount of maintenance before the order and only balked at paying cure for the out-of-network provider because Wheeler had been cleared to return to work. Justice Bourliot found the situation similar to that faced by the Fifth Circuit in Tate v. American Tugs, in which the seaman complained that he was receiving inadequate maintenance and requested an injunction to compel the employer to pay a higher daily rate as he would suffer irreparable injury. The Fifth Circuit affirmed the denial of a preliminary injunction but left the door open for an injunction in “an extreme case where the seaman is destitute and his employer refuses to pay anything.” Justice Bourliot noted that it had been 23 years since that decision, and the Fifth Circuit had not encountered such a case. She concluded that the injunction was inappropriate “because Wheeler did not establish an extreme necessity or hardship and maritime law provides methods of compensation for this very circumstance.”
The American Club insured the M/V ADAMASTOS, registered to Adamastos Shipping, an entity allegedly owned and controlled by George and Efstathios Gourdomichalis, who were also officers in Phoenix Shipping and Trading, which managed and operated the vessel. Great Lakes brought this suit in New York state court, alleging that Great Lakes also issued policies insuring the vessel and that the American Club, Shipowners Claims Bureau, Adamastos Shipping, Phoenix Shipping, and George and Efstathios Gourdomichalis negligently failed to comply with the requirements of a terminal in Brazil where the vessel was to be loaded (requiring that the vessel be detained in Brazil). Great Lakes also alleged that the defendants conspired to abandon the vessel in Brazil so that the defendants could avoid millions of dollars in claims resulting from the failure of the vessel to complete the voyage. Great Lakes also argued that the defendants then wrongfully terminated the vessel’s coverage with the American Club, leaving Great Lakes with the liability for all claims. As the American Club transferred the handling of the matter to its New York office, and as communications among the defendants about the matter were with the New York office, the appellate court held that the allegations were sufficient to establish personal jurisdiction over the defendants in New York. The court also held that Great Lakes stated a cause of action for negligence against the Gourdomichalis defendants by alleging that they had a duty to ensure that the vessel was seaworthy and breached that duty, and the claim was timely because the three-year statute of limitations was equitably tolled because of the allegation that the defendants concealed the scheme and failed to notify Great Lakes of the incident. However, the appellate court held that Great Lakes did not state a negligence cause of action against the American Club and Shipowners Claims Bureau, finding no duty under the insurance contract (although the lower court permitted Great Lakes to replead its claims based on fraud). See May 2023 Update.
The vessel was chartered by Pacific Gulf from Adamastos Shipping, and Pacific Gulf sub-chartered the vessel to Integris, which sub-charted the vessel to Marubeni, which arranged for a cargo of soybeans to be transported by the vessel. Marubeni filed a cargo claim for $32,650,000 against Integris, and Integris commenced an arbitration against Pacific Gulf, which commenced an arbitration against Adamastos Shipping. An arbitrator found that Adamastos Shipping must indemnify Pacific Gulf for its losses, and Marubeni settled its arbitration for $18 million. Great Lakes Insurance, on its behalf (it funded the settlement pursuant to its charterer’s liability insurance for Integris) and as subrogee of Pacific Gulf asserted a negligence claim against the defendants. George Gourdomichalis moved to dismiss the complaint against him for lack of personal jurisdiction, and Judge Crane noted that Great Lakes, as plaintiff, had the ultimate burden of proving personal jurisdiction. However, George had the initial burden to establish a prima facie case that he was not subject to jurisdiction, and he did not proffer admissible evidence to do so. Judge Crane found that the record established that George procured the vessel’s insurance policy from the American Club on behalf of Phoenix and Adamastos and corresponded with the American Club and Shipowners Claims Bureau in New York in connection with the events in Brazil. There was also evidence that George had meetings in New York as a board member of the American Club. Therefore, she declined to dismiss the case against George for lack of personal jurisdiction. Judge Crane then considered George’s motion for summary judgment that he owed no duty, there was no breach, that the plaintiff’s claim was barred by the economic loss rule, and the claim was time barred. The evidence established that Adamastos Shipping, not George, owned the vessel, that Phoenix Shipping managed the vessel, and that Phoenix procured the insurance policy with the American Club. However, George did not produce admissible evidence to establish that, as a corporate officer, he was not personally liable for his participation in the alleged commission of the tort by the corporation. As to the economic loss rule, Judge Crane held that it did not apply in this context, citing a New York case for the proposition that the economic loss rule does not apply beyond the context of products liability. Accordingly, the complaint against George was severed, and Judge Crane held that it would continue to trial. See February 2024 Update.
On appeal the Appellate Division agreed that Gourdomichalis was not entitled to dismissal of the negligence claim due to lack of personal jurisdiction as the evidence demonstrated that he facilitated the procurement of the insurance, notified the American Club of the claim, and communicated with the American Club after it transferred the matter to its New York office. The appellate court agreed that Gourdomichalis was not entitled to summary judgment dismissing the negligence claim as time barred but noted that the judge had improperly referred to the doctrine of equitable tolling as the applicable doctrine to a state action was equitable estoppel (for which a fact question was raised). On the merits, the appellate court agreed that the lower court properly determined that Great Lakes raised fact questions whether Gourdomichalis acted negligently by participating in a scheme to avoid liability for vessel’s registered owner, operator, and P&I insurers on the cargo claim.
Kenneth G. Engerrand
President, Brown Sims, P.C.
Houston
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Quote:
Magistrate Judge Auld recommended dismissal of the complaint in Andrews v. Lower, LLC, No. 1:23-cv-871, 2024 U.S. Dist. LEXIS 57279 (M.D.N.C. Mar. 29, 2024) due to its frivolousness for want of subject matter jurisdiction. Magistrate Judge Auld quoted from the complaint:
The American people were deceived into thinking they were declaring lawful independence from the Crown . . . . [T]he hospitals here in America[] operate on British Maritime Law, thus making each child born[] property of the Queen. [T]he United State is controlled by the Knights Templar ‘Crown,’ who are controlled by the Roman Pope, who himself is controlled by the quote on quote Illuminati, better known as the Banking Families. If you really wanted to get technical with it, you would discover the . . . Mother of All Harlots known as the Roman Catholic Church [] own[s] the United States, Canada, and all countries and Bar Associations . . . .
In response to the recommendation, Andrews filed a “Petition to Compel Magistrate Judge, In Re Memorandum Opinion and Recommendation of the United States Magistrate Judge” and a “Sworn Notice in the Form of a Commercial Affidavit of Truth.” Treating these documents as objections, Chief Judge Eagles adopted Magistrate Judge Auld’s recommendation on April 22, 2024, reasoning: “After a de novo review, the Court agrees with the Magistrate Judge that the complaint is frivolous and full of nonsensical and delusional allegations.” Chief Judge Eagles dismissed the action sua sponte.
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© Kenneth G. Engerrand June 28, 2024; redistribution permitted with proper attribution.
