RECENT
DEVELOPMENTS IN THE COURTS - PART III
(published June 2000)
The following survey represents some of the more significant recent court rulings around the nation affecting shipping lines generally.
Supreme Court Re-asserts Federal Supremacy In Tanker Safety Matters
United States and Intertanko v. Locke, 120 S. Ct. 1135 (2000)
Intertanko, a trade association that represented operators of oil tanker ships brought suit in the United States district court for the Western District of Washington seeking declaratory and injunctive relief against state and local officials responsible for enforcing certain Washington rules that imposed tanker design, equipment, reporting, and operating requirements. Environmental groups intervened in defense of the rules. The district court, after hearing Intertanko's arguments that the rules invaded areas long occupied by the Federal Government and imposed unique requirements in an area where national uniformity was mandated, upheld Washington's ability to enforce the rules. After the United States intervened on the trade association's behalf at the appeal stage, the U. S. Court of Appeals for the Ninth Circuit determined that the state could enforce all of the rules except one that required tankers to install certain navigation and towing equipment.
The United States Supreme Court reversed. In a unanimous opinion, the Court held three of the state rules - one that required a comprehensive training program for tanker crews, one that imposed English language proficiency requirements on tanker crews, and one that imposed certain navigation watch requirements - were pre-empted by 46 U.S.C. § 3703(a). That statute required the United States Coast Guard to issue regulations for the design, construction, alteration, repair, maintenance, operation, equipping, personnel qualifications, and manning of tankers. A fourth state rule, which required tankers to report certain marine casualties, was pre-empted by other sources of federal regulation of the same subject.
The Court noted that the real issue was one of political responsibility, not adequate regulation. The Court further noted it is for Congress and the Coast Guard to confront whether their regulatory scheme, which demands a high degree of uniformity is adequate. States, local governments and environmental groups will participate in that process.
Foreseeability Of Coco Loco Injury Is Question Of Fact, Not Subject To Summary Judgment
McDonough v. Celebrity Cruises, Inc., 2000 A.M.C. 257 (S.D.N.Y. 2000)
Plaintiff was a passenger aboard a cruiseship, for a oneweek cruise during which she attended a shipboard Island Night function where specialty beverages known as Coco Locos were served inside green, unhusked coconuts weighing in excess of four pounds. During Island Night, plaintiff was struck on the top of her head by an object that apparently fell from the deck above. Evidence suggested that the object was a Coco Loco. Plaintiff sued to recover for various personal injuries. Defendant moved for summary judgment, arguing that the injury to plaintiff was unforeseeable as no one had ever been injured by a falling Coco Loco. The court acknowledged, "there is, of course, a connection between notice and foreseeability, in that the absence of any coconut-related incidents despite defendant's hosting of a great number of Island Night buffets would tend to indicate that an accident such as the one alleged by plaintiff was not necessarily foreseeable, or that the operator took reasonable care under the circumstances." In denying the summary judgment motion, however, the court held that the mere absence of similar incidents in the past did not establish as a matter of law that the cruise line had exercised reasonable care under the circumstances.
Traditional Letter Of Undertaking Requires Appearance In Rem
Siberla Marine Limited v. Western Team, 2000 A.M.C. 79 (E.D. La. 1999)
The compulsory Panama Canal Commission Pilot on board WESTERN TEAM, while attempting to maneuver through a cluster of anchored vessels, caused a collision with M/V TOGO BEAUTY. The underwriters for TEAM then issued a letter of undertaking which, in consideration of the vessel not being arrested, agreed to pay amounts due to the owner of BEAUTY to be determined by agreement of the parties or by a final judgment. TEAM's underwriters further agreed to file an appearance in any action filed in a tribunal of competent jurisdiction. BEAUTY's owners filed suit, and moved for an order requiring TEAM's owners to file a claim against the vessel and requiring TEAM to appear in rem.
Although the letter of undertaking contained no express language that TEAM's owner or underwriters would file a claim against the vessel, it specifically preserved any rights or defenses of TEAM and its owners. The court held that, due to the reservation of rights language in the letter of undertaking, TEAM's owners executed the document as both defendant and claimant. As a result, the letter of undertaking was sufficient to preserve the in rem jurisdiction of the court.
Jones Act Does Not Bar Foreign Nationals From Suing In The U.S. Under Maritime Laws Of Other Nations
Jackson v. North Bank Towing Corporation, et al., 201 F.3d 415 (5th Cir. 2000)
Plaintiff, a nonresident alien from Honduras, alleged he was injured when he fell aboard an American vessel while it was engaged in oil and gas exploration off the coast of Mexico. He asserted negligence claims pursuant to the Jones Act, 46 U.S.C. § 688. Plaintiff also alleged tort, maintenance and cure, and unseaworthiness claims under, alternatively, the laws of Mexico, Honduras, the United States, and the international lex maritime. The defendant, arguing for dismissal, noted § 688(b)(1) provides that no action may be maintained under the Jones Act or any other U.S. maritime law unless the seaman was a citizen or resident alien of the U.S. at the time of the incident giving rise to the action. § 688(b)(2) creates an exception to this rule where the seaman can show that no remedy is available under the law of the seaman's home country or the nation asserting jurisdiction over the incident. Plaintiff made no showing of the unavailability of remedies in either Honduras or Mexico. The lower court dismissed on the grounds that the Jones Act bars foreign law claims by foreign nationals.
The court of appeals reversed, holding that nothing within § 688(b) bars a foreign national from bringing suit in the United States under the laws of a foreign state. That section simply makes it more difficult for a foreign seaman to sue in the U.S. under American law. The court's opinion included references to the legislative history of the relevant code sections. The court noted that Congress may have intended that all claims of foreign seamen would be barred from U.S. courts absent a showing of no other available remedy. However, despite the legislative history, § 688(b) makes no mention of foreign law claims and cannot act as a bar against them. The case was remanded, and plaintiff was permitted to continue his suit in the U.S. District Court under the applicable foreign law theories.
Florida Asserts Jurisdiction Over Crimes Committed On Passenger Ships
State v. Stepansky, 2000 Fla. LEXIS 769 (Flat 2000)
Defendant, a former crewmember, was charged under Florida law with burglary and attempted sexual battery of a 13 year-old aboard a cruise ship approximately 100 nautical miles from the Atlantic coast of Florida. The Liberian flagged ship departed from and resumed to Port Canaveral, Florida. Defendant and the alleged victim were American citizens, but neither was a Florida resident.
The state court of appeal granted a writ of prohibition in favor of defendant, finding that Florida's special maritime criminal jurisdiction statute violated the U.S. Constitution's prohibition against states entering into treaties. The writ prevented the trial court from prosecuting defendant under the Florida criminal statue. The Florida Supreme Court reversed, finding that the structure of Florida's statute ensured that it did not violate the Constitution, that it did not conflict with the exercise of jurisdiction by federal courts, and that it did not interfere with the uniform working of the maritime legal system. The court held that because neither the United States, any other state, nor the flag state had attempted to prosecute the crimes at issue, Florida was allowed to prosecute defendant as a different result would allow defendant to go unpunished (notwithstanding the fact that he had not yet been found guilty).
DOHSA Applies To Injury On High Seas Even When All Negligent Activities Occur On Shore
Motts v. M/V GREEN WAVE, 200 U.S. App. LEXIS 9140 (5th Cir. 2000)
Plaintiff, a chief engineer, was pinned under a 3,000-pound cylinder head during engine repairs sustaining a crushed pelvis and hip. The severity of his injuries was not realized until the vessel reached port two weeks later, having been towed there by a Coast Guard cutter. During that two week period, the vessel received operations instructions from the defendant shoreside management company, but did not request medical assistance or helicopter evacuation from the Coast Guard. Plaintiff elected to have his hip replacement performed in Houston. Shortly after the surgery, plaintiff died of a heart attack.
Before his death, plaintiff filed suit against the management company for the vessel under Texas State law, and alternatively, general maritime law. The management company argued that DOHSA applied and moved for partial summary judgment on those grounds. The trial court determined that DOHSA was inapplicable because the negligent acts that brought rise to the action did not occur on the high seas, and awarded non-pecuniary damages which are available under Texas state law but not DOHSA. The trial court determined that the management company should have informed the consulting shoreside physician that the vessel was being towed by a Coast Guard cutter with medical facilities, and that the company should have evacuated plaintiff. The delay in medical treatment was found to have been the proximate cause of plaintiff's death. The appellate court reversed the ruling of the trial court, holding that it is the place where the injury is sustained, rather than where the alleged acts of negligence occur, which determines the application of DOHSA. Accordingly, the state law claim, along with its non-pecuniary damages, were preempted by DOHSA.
Bankruptcy Jurisdiction Defeats P&I Arbitration Clause
In re United States Lines, Inc., et al. v. American Steamship Owners Mutual Protection and Indemnity Association, Inc., et al., 197 F.3d 631 (2d. Cir. 1999) 2000 A.M.C. 784
Plaintiffs were 12,000 former employees who filed claims, mostly for asbestos related injuries allegedly sustained while sailing different ships in the fleet of the debtor shipping line over a period of years. Plaintiffs, debtors and their successor-in-interest trust, sought a declaratory judgment in bankruptcy court to establish the trust's rights under various P&I contracts. The bankruptcy court held that the action was within its core jurisdiction and denied the insurer's motion to compel arbitration.
The appellate court agreed, holding that the declaratory proceedings brought by plaintiff trust directly affected the bankruptcy court's core administrative function of asset allocation among creditors. The appellate court further held that it was within the bankruptcy court's discretion to refuse to compel arbitration after it had determined that arbitration would prejudice the trust's efforts to compensate claimants. The otherwise valid arbitration clause was annulled in favor of the ability of the bankruptcy court to administer the mass claims of the trust.
Plaintiff Bound By Foreign Forum Selection Clause Regardless Of Statute Of Limitations
Asoma Corp. v. M/V SOUTHGATE, 2000 A.M.C .399 (S.D. N.Y. 1999)
Plaintiff brought an admiralty action to recover for damage to its cargo transported aboard defendant vessel. Defendant moved to dismiss on the basis of improper venue, and to enforce the forum selection clause which designated the courts of South Korea as the exclusive jurisdiction for controversies. Plaintiff's claims were time barred under South Korean law. The court held that foreign forum selection clauses were presumptively valid and must be enforced unless they were unreasonable or the product of fraud or overreaching. Plaintiff was unable to identify any factors which would render the forum selection clause unreasonable. Plaintiff argued that any dismissal of its claim by the court in New York should be conditioned upon defendant's waiver of the Korean statute of limitations, as is normally done in forum non conveniens situations. The court rejected plaintiff's argument and dismissed the action pursuant to the forum selection clause in the bill of lading.
Present Navigability Of Waterway Is Test For Admiralty Tort Jurisdiction
LeBlanc, et al. v. Cleveland, et al., 198 F.3d 353 (2nd Cir. 1999), 2000 A.M.C. 609
Plaintiffs, invoking admiralty jurisdiction, sued in negligence to recover for personal injuries allegedly sustained on the Hudson River when a recreational motor boat owned and/or operated by individual defendants struck the kayak plaintiffs were paddling. Defendants moved to dismiss, arguing lack of admiralty subject matter jurisdiction because the presence of white water falls and man-made dams made the area incapable of supporting interstate commerce. Plaintiffs argued that historically, the portion of the Hudson River where the accident occurred was unobstructed by artificial dams and was used by the logging industry.
The trial court dismissed plaintiffs' claims for lack of admiralty subject matter jurisdiction. The U.S. Second Circuit Court of Appeals affirmed the dismissal. The court held that whether the waterway where the accident occurred was "navigable" for purposes of admiralty jurisdiction depended upon the current state of the river, not its historical state. The court concluded that at the site of the accident, the Hudson River could be used for recreational boating, but could not be used for commercial shipping, and as such was not navigable so as to invoke admiralty jurisdiction.
Owner's Involvement In Stowage Plan Used By Foreign Stevedore Does Not Create Liability For Injury In Discharge
Clay v. Daiichi Shipping, et al., 74 F. Supp. 2d 665 (E.D. La. 1999), 2000 A.M.C. 407
During unloading operations aboard defendant's vessel, a 40" steel pipe came loose and struck plaintiff, amputating his leg. Plaintiff filed suit under the Longshore and Harbor Workers' Compensation Act ("Act"). Plaintiff alleged that the cargo was stowed in such a manner as to create an unreasonably dangerous condition that could not be discharged with reasonable safety. Plaintiff further alleged that defendants should be held liable based on their supervision of the foreign stevedores who originally loaded the steel pipes. Defendants moved for summary judgment arguing that vessel owner's duties under § 905(b) of the Act included (1) a turnover duty, (2) an active control duty, and (3) a duty to intervene. The court held that defendants did not breach the first duty because the injury-causing condition was open and obvious. Defendants did not breach the second duty because defendants showed they did not assume the role of loading stevedore. With regard to the third duty, plaintiff failed to show that defendants should have known the actions of plaintiff, who in the past employed the same methods to unload cargo, were so hazardous as to be "obviously improvident" and in need of intervention. Consequently, defendants' summary judgment motion was granted.
Cruise Line Summary Judgment For Exercising Proper Care Affirmed On Appeal**
In Re Complaint of Royal Caribbean Cruises, Ltd., 55
F. Supp. 2d. 1367 (S.D. Fla. 1999), Aff'd. per curium affirmance (11th Cir. 2000)
As reported in the August 1999 Cruise & Carrier Legal Update, this action stemmed from a collision between two rental jet skis in the waters of Coco Cay, Bahamas. The cruise line owned both Sea-Doo vessels, and was sued for negligence in the operation and supervision of its watercraft rentals. Royal Caribbean filed for exoneration from or limitation of liability, and, the Miami Federal Court granted summary judgment for the cruise line, finding that it was entitled to limitation of or exoneration from liability. The Court found such on the grounds that the claimant was unable to offer any evidence that Royal Caribbean's safety training or supervision was inadequate, and that claimant failed to put forth any evidence that any individual in the corporate hierarchy had knowledge of any alleged negligence sufficient to charge the company as a whole with alleged negligence. Recently, the Eleventh Circuit Court of Appeals affirmed the district court's opinion per curium. Plaintiff accepted an offer to forego all further appeals and to voluntarily pay the cruise line a portion of its costs in exchange for the cruise line's agreement not to execute on the full amount of costs.
Statute of Limitations Enforced In Bill Of Lading
Fireman's Fund v. Sea-Land Service, Inc., (N.D. Cal. 1999)**
A shipment valued at approximately US $220,000 was hijacked at gunpoint in Honduras in June 1996. The shipment originated in China. The claimant is the subrogated insurer of the cargo.
Sea-Land moved for summary judgment on the grounds that the claimant did not file a timely claim within the one year period specified in the bill of lading contract. The court granted Sea-Land's motion in a 10-page opinion. Of note was the court's discussion on what constitutes a claim. There was a good amount of communication, both written and oral, between the ocean carrier and the claimant throughout the first year after the loss. Nevertheless, the court held that a claimant must specifically demand reimbursement in same amount in writing. The claimant failed to do so, and by the time they finally submitted a legitimate claim, more than one year had passed.
**Denotes cases handled by Kaye. Rose & Partners, LLP