THE
WORLD OF WASHINGTON - A SUMMARY OF THIS YEAR'S FEDERAL LEGlSLATlVE CHANGES
AFFECTING SHIPOWNERS
(published January
2001)
This
past year several legislative initiatives were considered by the U.S. Congress,
which adjourned for the year just before the Christmas Holiday. This article
highlights the course and ultimate outcome of three legislative initiatives
of particular importance to cruise operators and other vessel interests.
Proposal to Amend Federal Death on the High Seas Act ("DOHSA") Defeated
As most vessel operators and marine underwriters are well aware, since 1920 the statutory scheme known as DOHSA has been applied by U.S. courts to deaths arising from any alleged wrongful act or negligence occurring more than a marine league (three nautical miles) from the U.S. or its territories. 46 U.S.C. sec. 761 et. seq. Generally, the Act has been applied to all such torts, even if the death ultimately occurred at some later time, on land, in the U.S. or in a foreign port. Thus, to a great extent the "Death on the High Seas Act" has always been a misnomer, since neither the death nor wrongful act need occur on the high seas per se.
The most significant aspect of DOHSA is that it limits recovery of damages in all cases to pecuniary loss only, i.e. Out of pocket economic losses such as loss of support, services and inheritance. A limited "survival" remedy (an added claim that can be asserted on behalf of the decedent's estate for losses sustained just prior to death) is also included within DOHSA. The survival remedy is likewise limited to pecuniary loss of the decedent, such as pre-death medical or other actual expenses incurred.
Under DOHSA, no recovery is permitted for non-pecuniary loss, such as pre-death pain and suffering or emotional distress of the decedent, loss of consortium or emotional distress of the surviving spouse or other relatives, grief or sorrow. Thus, in most cases covered by DOHSA the amount of potential recovery, even assuming liability, can typically be calculated and is fairly predictable. This high degree of predictability, in turn, fosters settlements of most cases without costly litigation. Under other schemes, including those of some states which permit recovery of emotional distress and pre-death pain and suffering of the decedent, high priced litigation often ensues as trial lawyers clamor into court, gambling that juries will award large sums based on sympathy, passion, prejudice, or the deep pockets of the named defendants.
In recent years, courts began to disagree whether, in cases arising beyond a marine league from the U.S., DOHSA should be the "exclusive" remedy, or whether the pecuniary losses permitted under DOHSA could be supplemented by more liberal recoveries allowed by state laws. This debate among the courts often resulted in forum shopping by lawyers, with suits being filed in those jurisdictions offering the highest awards. Several cases involving airline crashes over the high seas (which are also governed by DOHSA), brought the judicial debate to the forefront of the legal arena. For example, in one U.S. lawsuit arising from the infamous crash of the Korean Air Lines flight shot down over the Sea of Japan, the recovery allowed under DOHSA was supplemented by state law, resulting in an added award of $1.5 million for the estimated 12 minutes of emotional distress an expert speculated was suffered by two decedents between the time the plane was hit by the missile and crashed into the sea. Another litigant's decedent in the same case was awarded only $100,000 for the same twelve minutes. See, Saavedra v. Korean Air Lines, 93 F.3d 547 (9th Cir. 1996). Others were denied any recovery beyond pecuniary loss. These inconsistencies resulted from claims being brought in different jurisdictions or before juries who were more or less generous than others after hearing the same evidence.
The battle over whether DOHSA's measure of pecuniary loss could be supplemented by state or general maritime law was finally resolved in 1998 by the United States Supreme Court in Dooley v. Korean Air Lines, 524 U.S. 116 (1998), in which the nation's highest court held DOHSA is indeed an exclusive remedy and that it is for Congress, not the courts, to decide whether the remedy should be expanded.
At about the same time, TWA flight 800 crashed just beyond a marine league of New York on take off, tragically killing all aboard. Among the decedents were a class of school children whose parents could assert little actual pecuniary loss resulting from their unfortunate deaths. In response to the public outcry and media attention focused on airline safety, Congress soon undertook the task of amending DOHSA to allow recovery for loss of consortium, care and companionship in all cases of "commercial aviation accidents." This measure passed the U.S. Congress and became law in April, 2000.
Soon thereafter other lawmakers on Capitol Hill, with considerable prompting by the Association of Trial Lawyers of America ("ATLA"), one of the nation's most powerful lobbying groups, argued that similar changes should be made in all cases involving deaths arising on the high seas, including those on ships. Bills were quickly introduced in both the House of Representatives and the Senate to lift the limit on recovery of non-pecuniary loss for all deaths arising on passenger and recreational vessels. These measures were viewed by most as a logical first step toward abolishing DOHSA altogether for all deaths arising on ships, including fishing vessels, cargo ships, tankers and others.
Over the past three years Kaye, Rose & Partners has assisted the shipping industry in evaluating the various proposals, and provided substantive advice to the industry's lobbyists in Washington on the impact of the proposed mar itime initiatives regarding DOHSA. In 1998, San Francisco partner Eric Danoff testified before the Senate Subcommittee studying the proposed changes to DOHSA, offering numerous reasons why the present statutory scheme should not be changed. In 1999 and again in 2000, the firm was asked to prepare position papers to circulate among lawmakers in Washington, explaining the historical underpinnings of DOHSA and the profound differences between the shipping and airline industries. Still later, Kaye, Rose was asked to propose compromise language, with help and input from many leading shipping lines knowledgeable about the statutory scheme, to place reasonable limits on any amendments to "level the field" between the treatment of airline and maritime disasters.
At first blush, one would certainly believe the death of a shipboard passenger should not be treated any differently than that of an airline passenger. However, the reality is that few, if any deaths have actually occurred as a result of "maritime accidents" as compared to "aviation accidents." Indeed, more than 95% of deaths occurring in aviation accidents have been the result of dramatic plane crashes, usually caused by pilot error or aircraft defect. Thousands of airline passengers have perished in such aviation accidents in recent decades.
By stark contrast, very few, if any deaths of U.S. passengers have occurred from marine accidents, such as collisions, fires, groundings, sinkings or the like. In fact, the most recent marine disaster involving substantial loss of life that was litigated in the Unites States was the sinking of the TITANIC some 87 years ago. In truth, the passenger vessel industry has a remarkably good safety record, particularly when compared to the airline industry. This fact, among others, prompted the US Coast Guard to conclude in a 1996 formal study that the passenger cruise industry is among the safest modes of transportation available. The conclusion is especially true when considering the remarkably low number of fatalities aboard passenger vessels from marine accidents.
Nonetheless, the number of deaths coincidentally occurring aboard ships or during cruise vacations from other causes,such as heart attacks, strokes, cancer or other illnesses, is nodoubt far greater than those occurring on aircraft. There aremany reasons for this disparity. First, the average cruiseship passenger tends to be significantly older than the average airline passenger. Second, and more importantly, cruiseship passengers actually live aboard the vessels for days or weeks, unlike airline passengers who remain aboard only for hours at a time. Third, airline passengers generally travel toless remote destinations with faster access to major shoreside hospitals. Fourth, passengers on cruise ships and recreational vessels engage in farmore rigorous activities,including sports, exercise,swimming, shore excursionsand related city and island tours, whereas airline passengers generally remain seated with their seatbelts fastened for the duration of each flight. As a result, history proves the causes of most fatalities among cruise ship passengers and airline passengers are markedly different. Nonetheless, the courts' long-standing, liberal interpretation of DOHSA dictates that all these deaths would likely be treated the same if the statute were broadly amended in the marine context. For example, DOHSA has been applied against shipowners to deaths of passengers who were mugged or attacked in foreign ports. DOHSA has been applied to shore tours, such as horseback riding or snorkeling, when the tour was merely offered for purchase on board a ship. It has been applied to heart attacks, strokes and other deaths from natural causes, based on allegations that a shipowner should have evacuated an elderly, infirm passenger sooner. DOHSA has even been applied to shoreside traffic accidents involving mopeds, based on allegations the shipowner did not warn passengers of the dangers of renting them. Any broadly-worded change to DOHSA would thus apply in all these contexts, which are only tangentially related to maritime activity but, because of the wide application of DOHSA to such claims, would now be governed by any amendment. These cases could all result in jury trials for amorphous and unpredictable sums, vastly increasing the number of lawsuits filed and reducing the number of cases settled, due to the huge potential "up-side" for contingentfee plaintiffs' lawyers.
The specific maritime amendment to DOHSA offered in Congress this past year also called for retroactive application of the change to 1995. The result would have been that all deaths occurring during the past five years could potentially have become the subject of suits for unlimited damages. The enunciated reason for this proposal was that the particular U.S. Senator offering the amendment represented a constituent whose husband and child were tragically killed in 1995 while when their small sailboat collided with a freighter off New Zealand. Arguing DOHSA precluded adequate recovery for their deaths, the Senator argued a change in DOHSA was essential to prevent such inequities. However, it was later revealed the widow had settled her case several years ago, notwithstanding the application of DOHSA, for several million dollars. She won the settlement despite her tragic admission that she left the boat without any lookout when it was her turn to keep watch. Regardless of any perceived "inequities," it became clear the 1995 retroactive date was intended to benefit a single claimant, at the expense of an entire industry, when her claim had already been fairly settled and released.
Compromise language offered by the shipping community would have permitted a change to DOHSA in cases of collisions, fires, groundings, strandings or sinkings. Indeed, such a change would have placed shipboard passengers on an equal footing with airline passengers in terms of the types of deaths that would not be subject to the DOHSA scheme. Unfortunately, for the very reason there are so few deaths from such marine accidents, ATLA members were dissatisfied and sought a change that would have affected all deaths even remotely connected with cruises or recreational vessels. In the end their demands were simply unreasonable, creating gridlock on Capitol Hill, and no maritime amendment to DOHSA was passed.
Last-Minute Amendment to Johnson Act Outlaws Gaming on Roundtrip Cruises from Hawaii
In
a true testament to the often shadowy tactics used on Capitol Hill to enact
new legislation that might not otherwise pass Congress if exposed to the light
of day, a few small words were added to a last-minute omnibus bill for "Appropriations
for the Department of Labor, Education, and Health and Human Services." The
effect was to immediately outlaw any type of shipboard gaming and arguably
even the presence of gaming equipment on board vessels offering even international
roundtrip voyages from the State of Hawaii or segments of voyages that begin
and end in that state. The bill was offered by Senator Daniel Inouye of Hawaii,
a long-time opponent of any type of shipboard gaming within that state, and
also a long-time supporter of the one U.S. flag cruise line that regularly
provides cruises of the Hawaiian islands. Ironically, under Hawaii's own state
laws, a ship cannot offer gaming during round trip cruises from Hawaii, except
during any international or interstate legs. See Hawaii Revised Statutes sec.
712-1222.5 (l)(b) and (3). In essence, Senator Inouye's amendment therefore
sought to make illegal an activity which is expressly legal in his own state.
In recent months at least one foreign flag cruise line had decided to offer roundtrip cruises from Hawaii with a stop in a foreign port. Such cruises are permissible under U.S. cabotage regulations, which permit foreign flag vessels to embark and disembark passengers in the same U.S. port if they make an interim stop at one or more foreign ports. This is precisely how cruises operated by foreign flag ships have become so prominent in Miami. Apparently, Senator Inouye and his constituents believed a foreign flag ship offering round trip cruises from Hawaii, with only incidental gaming on the foreign segment of the voyage, would somehow jeopardize Hawaii's long-standing prohibition on any type of shipboard gaming on cruises within Hawaii. Media and political speculation included allegations that Senator Inuoye sought the change in federal law in order to extinguish competition for the one U.S. flag carrier currently offering round trip cruises from Hawaii.
The rest of the cruise industry, along with ports up and down the West Coast of the United States, immediately took notice. They became concerned that Senator Inouye's measure purports to prohibit even the possession or transportation of gaming equipment aboard vessels sailing round trip from Hawaiian ports, even if the casinos are closed in Hawaiian waters. Indeed, for years many international cruise ships have offered cruises of the South Pacific which include multiple stops in Hawaii. Many of these ships offer cruises through Hawaii as part of repositioning voyages on their way to begin or end the Alaska cruising season, or as part of longer voyages which include stops in Fiji or Tahiti. Most or all of these vessels have casinos on board, which remain closed in Hawaiian waters. If Senator Inouye's amendment were applied to these ships, they could potentially be forced to physically remove all gaming equipment from their vessels, even though gaming is legal elsewhere, or they could be forced to by-pass Hawaii altogether.
Through the efforts of the West Coast Ports and the International Council of Cruise Lines and their Washington lobbyists, Senator Inouye agreed to engage in a formal colloquy on the Senate Floor when the amendment was passed, clarifying the bill's scope. In that colloquy he stated:
"...This amendment ensures that there is no ambiguity in the intent of the Johnson Act's application to the State of Hawaii by expressly preserving the Act's original prohibition of the transportation, possession, repair and use of any gambling devices aboard vessels that embark and disembark passengers in the State of Hawaii (as defined in [19] C.F:R. 4.80a(a)(4)[i.e. initial embarkation at the commencement of a cruise and permanent disembarkation at the end of the cruise]. (emphasis added).
I want to make clear to my colleagues that this provision would not effect any state other than Hawaii. Moreover, it would not prohibit current gambling operations on board cruise ships that, for example, begin or end their cruises on the mainland or in foreign countries, even if they call at multiple ports in Hawaii, so long as the gambling facilities are closed when the vessel is in Hawaii and the passengers do not begin and end their trip in the state. Passengers could either begin or end their trip in the state, but could not do both."
Notwithstanding the colloquy, not all U.S. Senators were pleased with the manner in which Senator Inouye's amendment was accomplished. Senator John McCain, for example, former Presidential candidate and current Chairman of the Senate Commerce, Science and Transportation Committee (the Committee to which Senator Inouye's amendment should have been referred for proper consideration prior to a vote) had this to say on the Senate Floor:
"Mr. President, we must also do our work in the open with due process and appropriate discussion. That is why, Mr. President, I must also object to a provision inserted by Senator Inouye, who has once again gone to great lengths to provide protectionist legislation to the lone U.S. operator of large cruise ships in Hawaii. In [Congress'] closing hours, the Senator has had a legislative provision inserted in the final [Labor, Education and Health] appropriations measure that will prohibit any cruise ship operator from allowing gaming on board any vessel that departs from and returns to Hawaii. This [provision will] keep other cruise ship operators who depend on gaming to attract passengers and provide an additional revenue stream from entering the Hawaii market and prohibit other vessels currently departing from other U.S. port cities from sailing among the Hawaiian islands. In the end, the American consumer is the loser. What is so amazing is this measure, like so many others in this bill, was never discussed publicly, with the administration, or with any Committee of jurisdiction in Congress. This type of closed door, special interest legislation should concern every Member. To deny the American public the freedom of choice in cruising vacations and restrict international trade without one moment of debate is very troubling."
New Bill Regarding Cruise Vessel Discharges
Also approved as part of the Appropriations Bill for the Department of Labor, Education, Health and Human Services was an amendment entitled "Certain Alaskan Cruise Ship Operations." This measure previously offered by Senator Murkowski is intended to ensure cruise vessels operating in the waters of the Alexander Archipelago and the navigable waters of the U.S. within the State of Alaska 1) comply with all applicable environmental laws, including the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq., the Act to prevent Pollution from Ships (33 U.S.C. § 1901 and others, 2) do not discharge untreated sewage, 3) regulate the discharge of treated sewage and graywater while in ports in the State of Alaska, and 4) ensure that discharges of sewage and graywater can be monitored for compliance with the requirements contained within the amendment.
The new law prohibits any person from discharging untreated sewage from cruise vessels in the waters of Alexander Archipelago and the navigable waters of the U.S. within the State of Alaska or within the Kachemak Bay National Estuarine Research Reserve. It also limits the discharge of treated sewage and graywater. Under the Act, no discharge of treated sewage or graywater is permitted unless 1) the vessel is underway and proceeding at a speed of six knots or more, 2) the vessel is not less than one nautical mile from the nearest shore, except for certain designated areas, 3) the discharge complies with applicable cruise vessel effluent standards established under the Act, and the vessel is not in an area where the discharge of treated sewage and graywater is prohibited. The Act provides for promulgation of supporting regulations permitting discharges where those discharges meet effluent standards determined to be appropriate. The Act contains safety provisions which allow discharges for the purpose of securing safety or saving life at sea.
The Act establishes an inspection regime which shall be incorporated into the commercial vessel examination program to verify compliance by vessels visiting ports in the State of Alaska. In an effort to encourage cruise vessels to develop new treatment technologies, the Act also provides for the promulgation of future effluent standards for treated sewage and graywater. These effluent standards will take into account the best available scientific information and availability of new technologies for wastewater treatment.
Discharge of untreated sewage or failure to comply with the limitations on discharge of treated sewage and graywater will result in a Class I penalty (which may not exceed $10,000 per violation or a total of $25,000 in penalty assessments) or Class II penalty (which may not exceed $10,000 per violation or a total of $125,000 in penalty assessments). The Act provides for public notice and a reasonable opportunity to comment before issuing a Class II civil penalty. A Class II violator is also permitted to a hearing and a reasonable opportunity to present exculpatory evidence. Any enforced civil penalty assessment is subject to judicial review. To assist in the enforcement of the Act, the government is empowered to subpoena witnesses and evidence to prepare its case.