RECENT
DEVELOPMENTS IN THE COURTS - PART II
(published December
1999)
The following survey represents some of the more significant recent court rulings around the nation affecting cruise lines and other shipping interests:
DOHSA Exclusive Remedy - No Supplementation By Survival Statutes
Jacobs v. Northern King Shipping Co., Ltd, et al., 180 F.3d 713, 1999 AMC 2341 (5th Cir. 1999)
Plaintiff filed suit as the surviving spouse of her husband under the "Death on the High Seas Act" ("DOHSA"), and under the General Maritime law and State law as the Administratrix of her husband's estate. The General Maritime and State law claims sought damages for pre-death pain and suffering, in addition to DOHSA damages for loss of support. The action was governed by DOHSA but plaintiff argued the DOHSA remedies could be supplemented by the general maritime law survival action or, alternatively, the Texas Survival Statute. The District Court accepted these arguments and awarded $200,000 in pre-death pain and suffering.
After the District Court's decision, the U.S. Supreme Court decided Dooley v. Korean Airlines Co., 524 U.S. 116, 1998 AMC 1940 (1998), which determined that DOHSA provides the exclusive remedy and that general maritime remedies cannot be used to supplement DOHSA. The Supreme Court in Dooley did not, however, address whether state remedies may supplement DOHSA and the Supreme Court's earlier decision in Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 1986 AMC 2113 (1986), had expressly left open the question "whether the DOHSA recovery for the beneficiary's pecuniary loss may be 'supplemented' by recovery for the decedent's pain and suffering before death under the survival position of some conceivably applicable state statute that is intended to apply on the high seas." Tallentire, 477 U.S. at 215, 1986 AMC at 2119, n. l .
The Fifth Circuit concluded that the Supreme Court's rationale in Dooley excludes any supplementation because "Congress, in DOHSA, has spoken on the availability of a survival action and has chosen not to authorize one." Jacobs, 1999 AMC at 2349.
No Recovery For Injury While Rushing To Address Unseaworthy Condition
Hernandez v. Trawler MISS VERTIE MAE, Inc., 187 F.3d 432, 1999 AMC 2491 (4th Cir. 1999)
Bruce Hernandez was the Captain of a trawler. He struck his head on the pilot-house doorframe while rushing to respond to a problem with the ship's winch. He forgot to duck while running to the vessel's stern and consequently hit his head on the doorframe. He had previously complained to the shipowner about the winch. He filed suit after the injury contending the winch was unseaworthy and this unseaworthiness was a cause of his injury.
The District Court granted summary judgment for the shipowner and dismissed the claim, concluding the head injury was not within the scope of foreseeable risks from the defective winch. The Court first stated: "The mere fact that an accident occurs or that an injury is sustained does not prove negligence" and then concluded "a seaman's failure to duck is no more a foreseeable risk from a defective winch than is a seaman's biting his tongue or stubbing his toe. The Court noted that the causation burden under the unseaworthiness doctrine is "more demanding" than the Jones Act and, on this basis, the plaintiff failed to prove that the defective winch was the "proximate or direct and substantial cause" of his injury. Hernandez, 1999 AMC at 2498.
Settlement Agreement Prohibiting Future Employment With Shipowner Enforceable Under Maritime Law
Sea-Land Service, Inc. v. Sellan, 64 F.Supp.2d 1255, l999 AMC 2171 (S.D.Fla. 1999)
Sea-Land sued a former crewmember, who had previously recovered $364,500 following an injury aboard the SEA-LAND EXPEDITION, to enforce an "assumption of risk" clause in the settlement agreement. The settlement itself was based, in part, upon the seaman's physician's testimony that the injury resulted in a permanent total body disability of 56%. The settlement agreement included, as a condition, that the plaintiff not sail or work aboard any SeaLand vessels. The settlement agreement further provided, if the seaman breached this condition, that the work would be solely at the seaman's own risk and Sea-Land would bear no liability for any illness or injury which arose from the service.
Less than a year after the settlement was executed, the seaman was declared fit for duty at his union's medical clinic and was subsequently dispatched to the SEA-LAND CRUSADER. Rather than pass that job assignment, the seaman reported to the vessel and shortly thereafter allegedly injured his back.
The Court concluded the seaman was equitably estopped from seeking any damages from Sea-Land for the second injury "because Sea-Land has already paid these damages under the first settlement on the representation that Sellan could never return to work as a seaman." Furthermore, the District Court concluded that the seaman was "judicially estopped" from contending the subsequent injury caused any disability, since he had contended in the first proceeding that the first injury caused "a permanent, total disability" such that he was "physically incapable of working as a seaman ever again." Sea-Land, 1999 AMC at 2180. The Court quickly dispatched with the case, concluding the seaman "cannot be further disabled after suffering a total disability."
Superseding Cause Must Arise Independently And Unforeseeably
Farr v. NC Machinery Co., 186 F.3d 1165, 1999 AMC 2409 (9th Cir. 1999) [petition for cert. filed 11/8/99 (no. 99-808)]
Captain Farr hired defendant NC Machinery to repair an engine aboard a fishing vessel in Dutch Harbor, Alaska. NC Machinery sent a mechanic to the ship to perform the repairs with the assistance of the ship's crew. While the NC mechanic attempted to lift the engine out of the vessel, Captain Farr was at the bottom of the stairs guiding the engine through the hatchway. When the engine was raised approximately six feet above Captain Farr, a bolt sheared off, causing the engine to fall onto Captain Farr. It knocked out a tooth, broke a rib, and crushed his foot. Captain Farr sued NC Machinery, asserting the mechanic should have used a safer means of lifting the engine. The District Court tried the case and rendered a defense verdict, concluding "plaintiff's actions in stepping immediately adjacent to the engine block while it was being lifted could not have been anticipated and were the sole proximate cause of the accident."
The majority of the Ninth Circuit panel reversed the District Court's determination that Captain Farr was solely liable. The Ninth Circuit reasoned "but for the way the engine was lifted out of the ship, the accident would not have occurred, and if negligence in the means used allowed the engine to fall, that negligence was a substantial factor in causing the accident . . ." Id. at 2411. The Ninth Circuit went on to conclude that Captain Farr's negligence occurred at approximately the same time as the defendant's and, "a superseding cause generally has to happen after the negligence of the defendant."
Judge Rymer dissented, arguing the District Court's finding of superseding cause was entitled to more substantial deference under the "clearly erroneous" standard of review instead of the "'de novo' review . . . [which] the majority appears to assume."
Wage Settlement Enforced Despite Shipowner's Failure To Wire Funds; Greek Law Applied To Occurrence In U.S. Port
Haruna v. M/VSTAR B, 1999 AMC 2330 (D.S.C. 1998)
Plaintiffs were crewmembers aboard M/V STAR B and were injured in the Port of Charleston, South Carolina during a U.S. Coast Guard lifeboat inspection. Plaintiffs sued the shipowner asserting both personal injuries and wage claims for past due wages. The crewmembers alleged that after joining the ship, while at sea, the Master coerced them to sign a second contract, at a lower monthly wage, and deducted the cost of their airfare to the ship from their wage payments. Plaintiffs settled the wage claim for $2,625 in cash and executed a release. Plaintiffs contended the release was void because they believed certain wages had been wired to their bank accounts, but in fact, at the time each executed the release, the wages had not been wired and were not subsequently paid.
The Court acknowledged "the policy that favors protecting the rights of seamen . . . [and] emphasized that a seaman's release or settlement of his rights is subject to careful scrutiny by the Court." Haruna, 1999 AMC at 2331, citing Garrett v. Moore-McCormack Co., 1942 AMC 1645, 317 U.S. 239 (1942). The Court applied the standard articulated by the Supreme Court in Garrett, requiring that the release be "executed freely, without deception or coercion, and that it was made by the seaman with full understanding of his rights . . ." , citing Garrett, 1942 AMC at 1651-52, 317 U.S. at 248.
The Court, however, rejected plaintiffs' argument that they were "tricked" into signing the releases, concluding "there is no support for such fraud or deception . . . plaintiffs had appropriate legal advice concerning the release . . . and [t]he fact that their counsel signed in their names as power of attorney is quite unlike the situation where a seaman is persuaded without advice of counsel to sign a release."
After denying the motion to void the settlement, the Court dismissed the personal injury claims on the basis of forum non conveniens, despite the fact the injuries occurred in the Port of Charleston. The Court concluded Greek law applied to the claims and ruled that the only two factors favoring U.S. law "the place of the accident and the law of forum - carry the least weight in the Lauritzen balancing test." Id. at 2337, citing Lauritzen v. Larsen, 345 U.S. 571, 583-84 (1953). Plaintiffs were not Greek seaman but citizens of Ghana and, after receiving one month of medical care in Charleston, they were repatriated to Ghana where they received "a significant amount of medical care." The shipowner's base of operations was Greece and STAR B was a Cypriot-flagged vessel. The Court concluded "at first glance there may appear to be a melange of countries represented in the Lauritzen factors, [but] by narrowing the fore to Greece, Cyprus (a Greek isle), the United States, and Ghana, it is much more clear that the balance favors a Greek forum."
The Court continued its analysis to conclude that Greece was an adequate alternative forum and, after considering the public / private interests set forth in Gulf Oil v. Gilhert, 330 U.S. 501 (1947), the Court concluded "[n]one weigh so heavily as to require this court to retain jurisdiction."
The Court dismissed the argument that many of the witnesses to the accident were U.S. Coast Guard officers and other U.S. nationals, concluding "[r]egardless of the forum, parties and witnesses will have to travel long distances to be present at trial or their testimony will need to be presented through depositions." The Court further noted that the Coast Guard witnesses would in all likelihood be prohibited from testifying "due to a law prohibiting introduction of investigation reports in private civil actions."
Passenger Ticket Disclaiming Liability For Emotional Distress Enforced
Cummings v.'. Holland-America Line Westours, Inc., 1999 AMC 2282 (W.D. Wa. 1999)
This case involves the death of an 18-year-old passenger aboard the cruise ship M/S ROTTERDAM. The passenger drowned in the shipboard swimming pool. The plaintiffs were the decedent's parents and sister. The cruise line brought a motion to dismiss their claims for negligent infliction of emotional distress based upon a provision in the passage contract which read "[W]hether or not involving negligence or willful fault, neither the owner nor HALW will have any liability to you for infliction of emotional distress, mental suffering or psychological injury . . . [provided] this specific limitation of liability does not apply . . . to those situations in which a limitation of liability of this nature is not allowed under 46 U.S. Code app. ' 183c(b)."
The Court analyzed the exoneration clause under 46 U.S.C. ' 183c(b)(1)(a), which prohibits such disclaimer of liability when the emotional distress is intentionally inflicted by a crewmember, or a physical injury accompanies the emotional distress, or the passenger was subject to "actual risk of physical injury." Id. at 2284 discussing 46 U.S.C. App. ' 183c(b)(1). The Court concluded none of the three exceptions set forth in 46 U.S.C. App. ' 183c(b)(1) applied, enforced the ticket provision and dismissed the claims for emotional distress.
Longshoreman Sanctioned For Fraudulent Claim
A -Z Int'l. v. Michael Phillips, 179 F.3d 1187, 1999 AMC 1876 (9th Cir. 1999)
In Phillips, the administrative law judge ("ALJ") assigned to hear the case concluded that claimant Phillips had misrepresented the situs of the accident to be an offshore oil rig in order to assert a claim under the LHWCA. The ALJ concluded that the longshoreman had "filed a fraudulent claim in an effort to have his injury covered by the [LHWCA] and determined that such conduct was sanctionable as fraud against the administrative process . . ." Phillips, 1999 AMC at 1877. The sanction recommended by the ALJ was that the claimant be ordered to return $54,180.19 in benefits he had received; further, the ALJ's decision implied that attorneys' fees should be awarded if the amount of the employer's attorneys' fees and costs are introduced into evidence.
The claimant appealed the decision to the Benefits Review Board ("BRB") in an attempt to bypass the District Court, and the BRB reversed the award of sanctions. The Ninth Circuit, however, reinstated the ALJ's sanctions recommendation on the basis that the BRB lacked jurisdiction over that portion of the appeal, and remanded the matter to the District Court for further proceedings.
Bill Of Lading's Forum Selection Clause Superseded By Incorporation Of Sub-Bill Of Lading
Commercial Union v. BREMEN EXPRESS, 16 F.Supp.2d 403 (S.D.N.Y 1998)
In BREMEN EXPRESS, the ocean carrier's bill of lading contained a Tokyo forum selection clause, which is clearly enforceable under well-settled U.S. Supreme Court precedent, including M/S BREMEN v. Zapata Offshore Co., 407 U.S. 1 (1972) and the High Court's more recent decision in Vimar Seguras y Reaseguros S.A. v. SKY REEFER, 515 U.S. 528, 1995 AMC 1817 (1995).
However, in this case, cargo interests argued that the Tokyo forum selection clause was superseded because the bill of lading incorporated by reference any bills of lading issued by a connecting carrier and, more to the point, adopted the connecting carrier's bills of lading as the governing contract for any loss that occurred during the inland transportation under that connecting carrier's bill of lading.
The connecting carrier's bill of lading contained no forum selection clause and cargo interests argued that this lack of a forum selection clause superseded the Tokyo forum selection. The New York District Court agreed and concluded that the Tokyo forum selection clause was superseded such that jurisdiction was proper in New York.
Plaintiff Cannot Compel Shipowner ToDisclose Ship's Present Or Future Whereabouts For Purpose Of Arrest
Nassau Terminals, Inc. v. M/V BERING SEA, 1999 AMC 2134 (M.D. Fla.1999)
Plaintiff asserted maritime tort claims stemming from a collision between the M/V BERING SEA and plaintiff's shore-based crane. Plaintiff filed suit against BERING SEA and her owner in Jacksonville, Florida. Plaintiff immediately sought to obtain through discovery the location of BERING SEA and her future ports of call in order to perfect in rem jurisdiction over the vessel. The shipowner refused to provide the information and a motion to compel was filed.
The Court concluded that it "lacked jurisdiction to force the in personam defendant . . . to reveal the whereabouts of the in rem defendant BERING SEA for the sole purpose of effecting arrest of the vessel." The Court relied upon Rolls Royce Industrial Power (India) v. M/V FRATZISM, 1995 AMC 2151, 905 F.Supp. 106 (S.D.N.Y. 1995), wherein the Southern District of New York concluded that since the vessel was not presently a party to the litigation, "plaintiff's stretch of Rule 26(b), Fed. Civ. Proc., beyond its intended meaning when they asked the in personam defendant to tell them where the in rem defendant is so that in rem jurisdiction may be obtained here, there, or somewhere in the maritime world. I decline to order this discovery because I conclude that I lack subject matter jurisdiction to do so."
Deviation Does Not Vitiate Bill Of Lading's Foreign Arbitration Clause
Ferrostaal, Inc. v. M/V SERSOU, 1999 AMC 2352 (S.D.N.Y 1998)
Plaintiff purchased three shipments of wire rod to be transported from Poland to South Carolina, and three bills of lading were issued. All three bills of lading contained an exclusive clause mandating arbitration in Bremen, Germany. Shortly after the M/V SERSOU arrived in South Carolina, the U.S. Coast Guard evacuated the harbor due to an impending hurricane. Upon the vessel's return to the port, it was congested with the numerous vessels who were prohibited from discharging during the inclement weather. The shipowners' representative contacted cargo interests and advised them the vessel was considering discharging the cargo at an alternate South Carolina port. According to the shipowner, cargo interests expressed no objection to this plan. Cargo was subsequently discharged in Charleston, South Carolina and trucked to its intended destination at a cost of $42,650, which was paid by cargo interests. They then sued the shipowner to recover the trucking fees. Cargo interests sought to avoid the foreign arbitration clause by asserting that the vessel committed an unreasonable deviation.
The Court refused to rule on the deviation issue and dismissed the matter pursuant to the foreign arbitration clause, concluding "although an unreasonable deviation may vitiate a bill of lading, it is not for this court to decide whether the deviation was unreasonable," citing the Federal Arbitration Act and Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967), which required a claim for fraud in the inducement to be decided by the arbitrator unless the arbitration provision itself is shown to have been fraudulently induced.
Federal Claims Court Rejects Argument That OPA 90's Double Hull Requirement Constitutes A "Taking"
Maritrans Inc. v. United States, 43 Fed.CI. 86, 1999 AMC 2157 (Fed. Cl. Ct. Mar. 11, 1999)
The Federal Claims Court had previously found that the tanker owners possessed property rights in the tankers which could theoretically be subject to a government "taking" due to invasive federal regulation. The Claims Court therefore rejected the government's argument that plaintiffs' claims were subject to dismissal as a matter of law.
The Claims Court thus set about to evaluate the "economic impact" of the double hull requirement upon the claimants. Applying the applicable "reasonable investment backed expectation" standard, the Court considered the government's argument that "any investment-backed expectations on plaintiffs' pert were unreasonable, given the extensive amount of regulation in the shipping industry." Id. at 2158. The plaintiffs contended that their investment-backed expectations were based upon the regulatory environment at the time the vessels were built, and thus did not assume the risk of substantial economic loss which they asserted will result from the implementation of OPA 90's double hull requirement. The Court concluded that although plaintiffs "voluntarily operated in a regulated industry . . . that is not dispositive of an ad hoc takings analysis." 1999 AMC at 2158.
Plaintiff-shipowners established at trial that they "reasonably dismissed the notion that double hulls would be required during the vessel's working life . . . because [a]lmost without exception, officials within the Coast Guard, the maritime administration, the academic community and the entire maritime industry did not foresee the advent of double hulls." Id. at 2158, 2160. The Court rejected the governments' argument that the shipping industry is so heavily regulated that OPA 90 was "theoretically predictable" and instead reformulated the question to be whether OPA 90 was "reasonably foreseeable." Id. at 2161. The Claims Court concluded a double hull requirement was not reasonably foreseeable when the plaintiff-shipowners built or purchased the single hulled vessels.
However, the Claims Court denied the plaintiffs' claim as premature because the double hull requirement is not presently in effect and therefore "it does not impede plaintiffs' use of the vessel in any way." Plaintiff-shipowners argued an immediate economic detriment was "felt" when OPA 90 was passed because the value of the vessels immediately decreased. The Court concluded this present "economic detriment" did not rise to the level of a "taking."