General Maritime Law

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Hurricane Katrina, vessel collisions and letters of undertaking.  All the makings of a great case!

This is a new admiralty case from the Fifth Circuit Court of Appeals.  The case is Crescent Towing & Salvage Co. v. Chios Beauty Mv., 2010 U.S. App. LEXIS 13963 and the original decision can be found  here.

Facts are brief:  The master of the CHIOS BEAUTY decided to moor in New Orleans, just ahead of the landing of Hurricane Katrina.  The vessel’s mooring lines parted in the storm and caused damage to a neighboring vessel.  That vessel’s owners brought suit against the CHIOS BEAUTY in remand against the pilot of the vessel the owners of the CHIOS BEAUTY obtained a Letter of Undertaking that allowed for the release of the arrested CHIOS BEAUTY.

Issues:  should a deferential, extremis standard of care govern the decision to moor in New Orleans just ahead of the hurricane (Translation:  should the law expect masters to make the right decision during extreme events).  Second, did the language of the Letter of Undertaking constitute a waiver of post-judgment interest?

STANDARD OF CARE IN EXTREMIS

The court set forth the principles behind the standard of care in extreme situations:

“It has long been the law that errors in judgment committed by a vessel put in sudden peril through no fault of her own are to be leniently judged. . . .Courts are not supposed to second guess parties in peril and expect from them the most precise judgments.” Union Oil Co. of Cal. v. Tug Mary Malloy, 414 F.2d 669, 674 (5th Cir. 1969). “[W]here, without prior negligence, a vessel is put in the very center of destructive natural forces and a hard choice between competing courses must immediately be made, the law requires that there be something more than mere mistake of judgment by the master in that decision in extremis.” Employers Ins. of Wausau v. Suwannee River SPA Lines, Inc., 866 F.2d 752, 771 (5th Cir. 1989) (quoting Boudoin v. J. Ray McDermott & Co., 281 F.2d 81, 84 (5th Cir. 1960)). However, the in extremis standard of care should not be applied to the actions of a captain who had ample time to avoid the peril. See Boudoin, 281 F.2d at 84-86 (in extremis standard does not apply to captain who
had time to choose a safer berth before hurricane struck).

The court found that under the circumstances, the master of the CHIOS BEAUTY had other options and could have sailed to a safer port, in light of the weather information he had access to.

LETTERS OF UNDERTAKING

Letters of Undertaking are akin to a surety bond that will secure a claimant’s lawsuit and allow a vessel that has been arrested to be released. 

In disputes over the interpretation of such letters, the court said:

Considering how common letters of undertaking are in the vessel seizure context, there are surprisingly few cases interpreting them. The few that do apply standard contract principles and specifically enforce their provisions.

See, e.g., Chiquita Int’l Ltd. v. Liverpool & London Steamship Prot. & Indem. Ass’n Ltd., 124 F. Supp. 2d 158 (S.D.N.Y. 2000).

The Letter in this case said:

This letter provided that the American Owners Mutual Protection and Indemnity Association, Inc. (“the Association”) undertook to pay Plaintiffs any sum . . . which either may be agreed between the parties and approved by the Association, or which is adjudged to be due . . . in the matter pending in the . . . District Court . . . from the Vessel, in rem, and/or its Owner by final judgment . . . provided that the total of our liability hereunder shall not exceed the sum of US$3,750,000.00 . . . inclusive of interest and costs.

At issue was whether the letter included post-judgment interest (and therefore would deny such recovery if it exceeded the letter amount), or whether it would provide payment in the amount specified PLUS post-judgment interest.  The court found that it was the latter. 

This case takes us back to the first year of law school.  (I didn’t go to a silk purse school, so we’ll add clerking for Justice Scalia to the jobs I won’t have).

Under maritime law, do near-miss accidents give rise to a claim of negligent infliction of emotional distress (NIED)?  A new case from the Ninth Circuit Court of Appeals says: Yes, they do.  The case is Stacy v. Danielsen, 2010 U.S. App. LEXIS 13222 and the court’s original opinion can be found here.

The facts are straightforward.  Plaintiff was on a fishing boat near San Francisco in dense fog.  The boat he was on has a near miss with a freighter which subsequently collides with a different fishing vessel.  Unbeknownst to the Plaintiff, a person onboard the other fishing vessel was killed.  Several days later, Plaintiff discovers of the death and suffers emotional distress as a result.

Plaintiff brings suit for NIED.  On a defense motion to dismiss the suit for failure to state a claim, the trial court finds that because Plaintiff was not in the “zone of danger” when he suffered his psychic injury (to wit: emotional distress), he could not recover under a NIED theory.

A divided Ninth Circuit reversed that decision and found that:

Under this test, applicable in the maritime jurisdiction of the United States, a tort is committed by a defendant subjecting a plaintiff to emotional harm within “the zone of danger” created by the conduct of the defendant. Id. In Gottshall, the Supreme Court held that “the zone of danger” test allowed recovery for “those plaintiffs who sustain a physical impact as a result of a defendant’s negligent conduct, or who are placed in immediate risk of physical harm by that conduct.” Id. The Supreme Court went on to quote a law review article’s exposition:“That is, ‘those within the zone of danger of physical impact can recover for fright, and those outside of it cannot.’” Id. at 548 (quoting Richard N. Pearson, Liability to Bystanders for Negligently Inflicted Emotional Harm, 34 U. Fla. L. Rev. 447, 489 (1982)).

Finding that the Plaintiff had alleged that he was in the zone of danger and that he suffered emotional distress as a result, the majority found that he did state a claim that was cognizable under general maritime law and reversed the trial court’s dismissal of his claim.

The dissenting judge disagreed finding that as a matter of law, the Plaintiff was not in the zone of danger (he didn’t see or hear the collision, nor did he see or hear the fatality), ergo he failed to state a claim and his suit was properly dismissed.

I think a petition for rehearing en banc or a cert petition is likely on this one.

The Ninth Circuit just issued an unpublished decision in a Jones Act case.  Not precedential, and pretty sparse analysis, but it does set out the standards for surviving summary judgment motions for Jones Act seamen.  The case is Ili v. American Seafoods Co., LLC and can be found  here.

Facts:  seaman on a fishing vessel is injured near the end of his sixteen hour shift.  He claims unseaworthiness under common law and Jones Act negligence.

Issue:  were there issues of disputed fact warranting a jury trial on the seaman’s claims?  As is the case in all civil litigation in federal courts, claims cannot be summarily decided upon disputed facts.  Facts are found by juries (or judges) after a trial.

Jones Act Claim

Ili’s Jones Act claim has four elements: (1) the employer’s duty to provide a safe work environment to its seaman employee; (2) breach of that duty; (3) the employer’s awareness of the unsafe condition; and (4) a causal link, however slight, between the breach and the seaman’s injury.

The parties did not dispute that Ili was a Jones Act seaman and that we was injured after working sixteen hour shifts, seven days a week for months on end, rather seaman’s employer challenged whether shift length can be a condition amounting to unseaworthiness and whether the long shift caused seaman’s injury.

Employer put on evidence that fishing industry custom is 12, 14 and 16 hour shifts.  Custom, citing to the great Learned Hand, does not show a LACK of negligence and the court found that such long shifts could be negligence.  As such, the issue needed to be tried, not summarily disposed.

Unseaworthiness Claim

Ili’s unseaworthiness claim has four elements: (1) seaman status triggering the warranty of seaworthiness; (2) an injury arising from the condition of the ship or its crew; (3) the unseaworthiness of that condition; and (4) proximate causation between the unseaworthy condition and the injury.

The court stated that lack of adequate crew can give rise to an unseaworthiness claim.  Unseaworthiness has a higher standard for claimants to show causation, but the court found that the same facts (long shift) that defeated employer’s summary judgment motion on the Jones Act claim applied to the unseaworthiness claim.

Let a trial be had.

New developments in the antitrust, class action lawsuit pending in Seattle:  an Amended Complaint was filed. (My earlier post on why the court dismissed the original complaint).  The Amended Complaint is available for download here.  (H/T to Joe the Plumber for the tip).

This case stems from the criminal convictions of several officials of a shipping …

If it walks like a duck, talks like a duck (Donald, friend of Mickey?…Ok, just go with it), and quacks like a duck…it must be a duck.

So, if it looks like a yacht, sounds like a yacht, but doesn’t have engines and is in a dry-dock, is it a vessel for the purposes of the maritime lien statute, and more importantly, for in rem jurisdiction?

A new admiralty case from the Eleventh Circuit Court of Appeals answers this question:  YES.  The case is Crimson Yachts v. Betty Lyn II Motor Yacht and can be found here.

Practitioners Note:  This case has a very comprehensive history of the Maritime Lien Act, 46 U.S.C. §§ 31341–31343.

The facts of this case are simple.  Yacht goes into dry-dock for extensive renovations.  After some time and repairs, the owner stops paying.  So, is a high and dry yacht, without engines, props, furniture, generators, etc still a vessel for the purposes of the maritime lien act and in rem jurisdiction?

The court explained the applicable test:

In deciding whether a watercraft is a vessel, “the focus . . . is the craft’s capability, not its present use or station.” Bd. of Comm’rs of the Orleans Levee Dist. v. M/V Belle of Orleans, 535 F.3d 1299, 1310 (11th Cir. 2008). The dispositive question is “whether the watercraft’s use as a means of transportation on water is a practical possibility or merely a theoretical one.” Id. (quoting Stewart, 543 U.S. at 496, 125 S. Ct. at 1118) (quotation marks omitted); Cain v. Transocean Offshore USA, Inc., 518 F.3d 295, 300 (5th Cir. 2008); see also Holmes v. Atlanta Sounding Co., 437 F.3d 441, 448 (5th Cir. 2006) (“Under § 3, a ‘vessel’ is watercraft practically capable of maritime transportation regardless of its primary purpose or state of transit at a particular moment(quotations omitted)).

So, despite removal of her engines and the renovations, the yacht remained a vessel.  Ergo, the Maritime Lien statute applied and the dry-dock was entitled to arrest the vessel in rem to satisfy its lien.

Hawaii’s Intermediate Court of Appeals just published an opinion regarding the applicability of Hawaii’s General Excise Tax to charter vessels.  The case is Reel Hooker Sportfishing, Inc. v.  State of Hawaii – Department of Taxation and can be viewed here.

The main legal issue in this case is to what extent Hawaii’s state taxes can reach commercial operations in the federal domain.  Ben Lowenthal has a great post on the legal issues here.

Federal law (33 U.S.C. s. 5(b)) provides:

No taxes, tolls, operating charges, fees, or any other impositions whatever shall be levied upon or collected from any vessel or other water craft, or from its passengers or crew, by any non-Federal interest, if the vessel or water craft is operating on any navigable waters subject to the authority of the United States, or under the right to freedom of navigation on those waters, except for (1) fees charged under section 2236 of this title; (2) reasonable fees charged on a fair and equitable basis that (A) are used solely to pay the cost of a service fo the vessel or water craft; (B) enhance the safety and efficiency of interstate and foreign commerce; and (C) do not impose more than a small burden on interstate or foreign commerce; or (3) property taxes on vessels or watercraft, other than vessels or watercraft that are primarily engaged in foreign commerce if those taxes are permissible under the United States Constitution.

When you read the statute, it seems to be explicit in its prohibition on what taxes a non-Federal interest may assess against vessels.  The ICA disagreed with this position and upheld the GET on these vessel operators.

My take on this case is from a broader context.  Under U.S. Constitutional law, the state’s ability to regulate commerce on navigable waters stems solely from the Submerged Lands Act.  Absent some delegated authority in the Submerged Lands Act, the State does not have the authority to regulate commerce.  To be sure, however, this principle is honored in the breach with states pushing their enforcement authority beyond their territorial land mass and into the ocean.  See my posts on shark tour bans (Honolulu here, Maui here).

This issue formed the crux of the argument in the UFO Chuting case (see my post here –  and the amicus brief we filed sets out the Submerged Lands Act issue). 

Conceptually, this case makes sense:  a Hawaii business, collecting revenue on Hawaii’s land mass, receiving the benefits of Hawaii’s legal system and government should pay taxes on the revenues obtained therein.  But, the revenue they are collecting are for services provided outside the State of Hawaii and outside of the authority delegated to it by the Congress in the Submerged Lands Act.  Has the Congress stated what ability states have to tax these vessel operations?  Yes, in the the statute excerpted above.

It’ll be interesting to see what happens next.  An application for certiorari to the Hawaii Supreme Court?  U.S. Supreme Court cert petition?  Stay tuned.