RECENT
DEVELOPMENTS IN THE COURTS - PART VI
(Published April
2002)
The following survey represents some of the more significant recent court rulings around the nation affecting shipping lines generally.
Contract Limitation Not Enforceable When Passenger Ticket Collected Minutes After Purchase
Ward v. Cross Sound Ferry, 273 F.3d 520 (2nd Cir 2001); 2002 A.M.C. 428
Plaintiff passenger slipped and fell on the gangway as she was boarding defendant operator's ferry boat. Defendant's tickets included a contractual time limitation mandating suits be filed within one year of an injury. In the instant case, the tickets were purchased and issued within two to three minutes prior to boarding the vessel and the defendant collected the ticket from passengers upon boarding. Plaintiff filed her action for personal injuries after the expiration of the contractual period. The district court granted operator's summary judgment pursuant to the ticket contract and dismissed the complaint. Plaintiff appealed challenging the reasonable notice of the time bar provision. The court of appeals agreed with plaintiff and noted that the brief window of time the passenger actually possessed the tickets was insufficient to serve as reasonable notice of contract terms and reversed the judgment.
Dangers Which Are Maritime In Nature Create Jury Question Regarding Shipowner's Duty Of Care
Kalendareva v. Discovery Cruise Line Partnership, et al., 798 So.2d 804 (4th Fla. Dist. Ct. App. 2001)
While sitting on the third deck of defendant's cruise ship, a passenger was injured by a rope which was overthrown while the ship was docking. Plaintiff brought suit for negligence against both the cruise line and the port, whose employees actually threw the rope. After plaintiff's case in chief, the trial court granted a directed verdict for the shipowner on the ground there was no evidence the defendant had notice or should have known of the danger.
The appellate court reversed, holding that the issue of whether the shipowner knew or should have known of a danger to passengers on the third deck, was sufficiently unique to maritime travel and created a question for the jury and remanded the case for a new trial. The court relied on the general principles that a cruise line has no higher degree of care for those dangers a passenger may encounter in daily life which he ordinarily protects himself from as explained in Rainey v. Paquet Cruises, Inc., 709 F.2d 169 (2nd Cir. 1983). In Rainey, the court stated "[t]he extent to which the circumstances surrounding maritime travel are different from those encountered in daily life and involve more danger to the passenger, will determine how high a degree of care is reasonable in each case." In the instant case, the injury resulted from port employees dockside throwing a rope too high, striking plaintiff on the open third deck. The appellate court cited Florida case law finding when the shipowner owes a higher duty of care because of the maritime nature, it is only an expansion of the general rule that reasonable care includes the duty to warn passengers of dangers which are not open and obvious.
State Statute Governing Wages Does Not Apply To Foreign Seamen Employed On Foreign-Flag Ship
Rathje, et al. v. Scotia Prince Cruises, 2001 U.S. Dist. LEXIS 21266 (D.C. Me. 2001)
Seamen plaintiffs sued their former employer on the grounds of breach of contract and damages under the Maine Wage Statute. The Swedish crewmembers were hired under a contract for their service aboard the ferry SCOTIA PRINCE. SCOTIA PRINCE, which operated seasonally between Portland, Maine and Yarmouth, Nova Scotia, was registered in Panama and operated by a Bermuda-operated corporation. The defendant employer moved for summary judgment on all claims and the court agreed as to inapplicability of a state wage statute to foreign seamen employed on a foreign-flag ship.
The district court noted that disputes over wage issues involved the internal affairs of the ship and cited to the United States Supreme Court's decision in McCulloch v. Sociedad Nacional, 372 U.S. 10, 21 (1963). The Supreme Court described the law of the flag as a "well-established rule of international law that the law of the flag state ordinarily governs the internal affairs of a ship." McCulloch declined to apply the federal National Labor Relations Act to a Honduran-flag vessel with foreign crew, concluding that labor relations issues were within the internal affairs of the ship.
Relying on McCulloch, the district court noted the presumption that Congress (and in the case of a state statute, the state legislature) does not intend for a statute to have extraterritorial application absent a clear expression to the contrary. The remaining question identified by the court was whether the Maine Wage Statute was clearly intended to have extraterritorial reach. Finding no such extraterritorial expression within the statute's language, the district court refused to apply the Maine Wage Statute to a foreign-flag ship.
Ninth Circuit Refuses To Exercise Jurisdiction
Estigoy v. OSG Car Carriers, Inc., 2002 U.S. App. LEXIS 2538
Estigoy, a seaman, sued OSG under the Jones Act for unseaworthiness, negligence and maintenance and cure in the U.S. District Court of Hawaii. The district court dismissed the seaman's claims against the employer for lack of personal jurisdiction and the seaman appealed.
On appeal, the Ninth Circuit considered two questions: (1) whether Hawaii's long arm statute authorized the exercise of jurisdiction over OSG; and (2) whether the exercise of that jurisdiction comported with constitutional notions of due process. The court answered the first question in the affirmative. As to the second question, the court considered its own notions of due process and determined there was no basis to exercise either general or specific jurisdiction.
As OSG had no agent, office or property in Hawaii, did not advertise and was not authorized to do business in Hawaii, the court refused to exercise general jurisdiction, citing the axiom that to do so would "offend traditional notions of fair play and substantial justice."
The court next considered the three-prong test inherent in any exercise of specific jurisdiction: (1) the nonresident defendant must have purposefully availed itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) plaintiff's claim must arise out of or result from the defendant's forum-related activities; and (3) exercise of jurisdiction must be reasonable. The court only reached the first prong of the test before declining to exercise specific jurisdiction. It stated that to find purposeful availment, the defendant would have to perform some type of affirmative conduct which allows or promotes the transaction of business within the forum state. The court held that neither paying for the seaman's airfare to Hawaii nor the arbitration of potential grievances under a collective bargaining agreement constituted sufficient contacts to establish purposeful availment. The Ninth Circuit noted that the defendant may foresee that a Hawaiian seaman who responded to the port agent's posting of an ad for employment with OSG might be hurt on the defendant's vessel. However, the court further noted that this type of foreseeability was specifically rejected in the seminal case, Burger King v. Rudzewicz, 471 U.S. 462, 475, 85 L.Ed.2d 528, 105 S.Ct. 2174 (1985) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 62 L.Ed.2d 490, 100 S.Ct. 559 (1980)).
The court further rejected the seaman's argument that the port agent was the agent of the defendant. Based on the fact that the port agent decided where to advertise and who to hire, the court determined there was no principal/agent relationship.
Claim For Punitive Damages Dismissed For Airline Crash Occurring In Foreign Territorial Waters
In Re Air Crash Disaster Near Pegg's Cove, Nova Scotia on September 2, 1998, 2002 U.S. Dist. LEXIS 3309
Swissair Flight No. 111 departed from John F. Kennedy Airport in New York, en route to Geneva, Switzerland and crashed off the coast of Nova Scotia. The precise location of the crash was undetermined, but the defendants stipulated that the accident site was within the 12-mile territorial waters then claimed by the Canadian federal government, but was outside the 3-mile limit of the territorial waters claimed by Canada at the time the U.S. Congress passed the Death on the High Seas Act (hereinafter "DOHSA") in 1920. Plaintiffs, the heirs of passengers killed in the plane crash, filed several actions against the defendants. The cases were transferred to the United States District Court for the Eastern District of Pennsylvania for coordinated and consolidated pretrial proceedings. The defendants moved to dismiss the punitive damages claims under DOHSA.
Defendants argued that DOHSA must be applied at least as to all U.S.-domiciled decedents. In response, plaintiffs argued that DOHSA could not apply because the crash occurred in Canadian territorial waters which, they contend, are not included in the internationally accepted scope of the term "high seas." Plaintiffs further contended that for accidents occurring in foreign territorial waters, general maritime law, in conjunction with state law, provides sufficient guidance as to appropriate legal remedies. The court stated that if the term "high seas" is defined as waters to which no sovereign could lay a claim, then plaintiffs' argument might be valid. On the other hand, if the term "high seas" was viewed as including all navigable sea waters "beyond 12 nautical miles from the shore" of the United States, then defendants' interpretation would be more accurate. The court ultimately concluded that given the canons of statute interpretation, the defendants' argument was the only valid one. Accordingly, defendants' motion to dismiss all claims for punitive damages was granted.
Jones Act Case Dismissed For Lack Of Subject Matter Jurisdiction
Amanquinton v. Peterson, 2002 Fla. App. LEXIS 1402
Seaman was injured aboard a ship owned by his employer and sued under the Jones Act. The complaint against the employer was served on a Miami corporation that had chartered the ship from the employer. After a jury awarded the seaman $900,000, the employer raised the issue of subject matter jurisdiction. Specifically, the employer argued that the trial court lacked jurisdiction to award damages to a Filipino seaman, employed by a German national, as a seaman upon a German-flag vessel, employed under a Philippine Overseas Employment Administration contract, for an injury in Jamaica. The trial court granted the employer's motion to dismiss on grounds of defective service and lack of jurisdiction under the Jones Act and entered final judgment in favor of the employer. The appellate court concluded that the trial court had not abused its discretion in determining there was no basis for exercising subject matter jurisdiction.
Louisiana Appellate Court Affirms Jury Verdict After Seaman Fails To Show Reversible Error
Preatto v. Tidewater Marine, Inc., 2002 La. App. LEXIS 246
Plaintiff seaman sued for maintenance and cure and negligence under general maritime law and the Jones Act after sustaining an on-the-job injury. Defendant moved to exclude certain testimony by the seaman that defendant's employee, the captain of the vessel, made racial slurs on two separate occasions within plaintiff's earshot, but not directed at plaintiff. One such incident occurred during the O.J. Simpson trial. The trial court granted defendant's motion and excluded the testimony. After trial, the jury found for plaintiff seaman on his claim under the Jones Act and for defendant on the claim for unseaworthiness. The jury also found plaintiff seaman to be 75% at fault. The trial court denied plaintiff's motion for new trial or judgment notwithstanding the verdict. Plaintiff appealed arguing that the trial court erred in excluding the testimony about the captain's racial slurs, and that the exclusion of that testimony prejudiced the jury, thereby requiring a de novo review by the Court of Appeal. The Court of Appeal determined that in light of seaman's lies to various doctors and the jury about prior injuries, the jury's award was not an abuse of discretion.
Appellate Court Determines Crewmember Not So Wicked As To Deem Vessel Unseaworthy
Torres v. Caribbean Fishing Company, Inc., 2002 U.S. App. LEXIS 2220
Crewmember sustained injuries after defending himself against a knife attack by another crewmember and sued for maintenance and cure. The trial court made extensive findings of fact regarding the injured crewmember's prior conduct which showed specific instances of fighting, however, determined that these prior instances did not reflect an "unduly vicious and wicked nature." The 9th Circuit further found it significant that the alleged crewmember assailant was acting in self-defense during the incident that formed the basis of the complaint. Thus, the crewmember was not of a "wicked disposition" and did not render the vessel unseaworthy by his mere presence.
U.S. Coast Guard And OSHA Share Jurisdiction Over Uninspected Vessels
Chao, Secretary of Labor v. Mallard Bay Drilling, Inc., No 00-927 (January 9, 2002)
Rig 52, a barge used for oil and gas exploration, exploded in Louisiana's territorial waters and killed four of its crew. Pursuant to its statutory authority, the U.S. Coast Guard conducted an investigation of the incident. The resulting report made factual findings, but did not charge the respondent, Mallard Bay Drilling, Inc., with violating any Coast Guard regulations due to the fact the barge was an "uninspected vessel" and not subject to comprehensive Coast Guard regulations as defined by 46 U.S.C. § 2101(43).
The Occupational Safety and Health Administration ("OSHA") charged respondent with three violations of the Occupational Safety and Health Act of 1970 ("OSH"). Respondent challenged OSHA's jurisdiction by arguing the Coast Guard had exclusive authority to prescribe and enforce standards concerning occupational safety and health on vessels in navigable waters. The Administrative Law Judge ("ALJ") rejected this argument, but the Fifth Circuit reversed the ALJ's holding by stating that it agreed with the respondent and that the preemption encompassed uninspected vessels as well as inspected vessels, thereby effectively preempting OSHA's jurisdiction.
On appeal, the U.S. Supreme Court reversed the Fifth Circuit holding because the Coast Guard's minimal exercise of some authority over uninspected vessels does not completely preempt OSHA's jurisdiction. "OSHA is only preempted if the working conditions at issue are the particular ones 'with respect to which' another federal agency has regulated, and if such regulations 'affect occupational safety or health'." U.S.C. ¤ 653(b)(1). Regarding uninspected vessels, the Supreme Court found that the Coast Guard regulates matters related to marine safety and certain specific working conditions on some types of uninspected vessels. These specific "working condition" regulations would preempt OSHA's regulations covering the same subject matter. The Coast Guard, however, does not regulate the occupational safety and health concerns of inland drilling operations on uninspected vessels. Accordingly, the Supreme Court found the Coast Guard regulations do not preempt OSHA's jurisdiction under § 4(b)(1) of OSH. The Supreme Court further noted that OSHA's regulations have been preempted with respect to "inspected vessels" because the Coast Guard has broad statutory authority to regulate the occupational health and safety of workers aboard same and the Coast Guard has exercised that authority.
Maintenance And Cure Claim Cannot Be Reduced Due To Seaman's Own Negligence
Boudreaux v. United States of America, No. 00-30705 (5th Cir., January 15, 2002)
Plaintiff seaman strained his right knee and cervical spine while attempting to repair an eight-inch eductor valve. As a result, plaintiff filed suit against the United States and the ship operator under the Jones Act, the Public Vessels Act and demanded maintenance and cure.
The trial court granted summary judgment in favor of the operator of the vessel and found the ship was seaworthy, but held that the government was negligent. The court did not address the maintenance and cure claim. The court reduced plaintiff's entitlement to damages, however, as the trial court found that the plaintiff was comparatively negligent to the extent of 70%.
Plaintiff then pursued his maintenance and cure claim, but the trial court stated the same had been rendered moot because plaintiff's damage award included future medical expenses. Plaintiff then filed a new lawsuit specifically seeking maintenance and cure and the United States moved to dismiss the complaint on the grounds of res judicata. The trial court granted the motion and plaintiff appealed to the Fifth Circuit.
The Fifth Circuit held the "obligation of maintenance and cure is independent of tort law, and the shipowner's duty to pay is not affected by the injured seaman's own negligence." See Bertram v. Freeport McMoran, Inc., 35 F.3d 1008, 1013 (5th Cir. 1994). However, a maintenance and cure award cannot duplicate tort damages. See Brister v. A.W.I., Inc., 946 F.2d 350, 361 (5th Cir. 1991). Since the district court had reduced plaintiff's damages by 70%, the Fifth Circuit found that a full duplication of future medical expenses would not occur. Therefore, plaintiff was entitled to maintenance and cure. The obligation to provide cure, however, would be offset by the past and future medical expenses portion of the tort award.
Longshore And Harbor Workers' Compensation Act Trumps Independent Credit Doctrine
Alexander v. Director, Office of Workers' Compensation Programs, 273 F.3d 1267 (9th Cir. 2001)
Plaintiff longshoreman developed emphysema, bronchiestasis, and asbestosis after being exposed to both asbestos and metal fumes over an approximately forty-year period during which plaintiff had worked for four separate employers. Three of these employers entered into separate settlement agreements with the plaintiff. Plaintiff brought a claim for disability against his fourth non-settling employer, Triple A.
The Administrative Law Judge ("ALT") found Triple A to be plaintiff's last responsible employer and therefore, under the aggravation rule, ordered that it was liable for all of plaintiff's injuries and would not be entitled to a credit for plaintiff's settlements with the other three employers. Triple A appealed the ruling to the Benefits Review Board ("BRB"). The BRB remanded and instructed the ALJ to consider the "independent credit doctrine," an equitable doctrine created by the BRB, when making its decision. The ALJ once again denied the credit and the BRB reversed the decision by holding that the independent credit doctrine applied and therefore Triple A was entitled to a credit for the previous settlements. Plaintiff appealed this decision to the Ninth Circuit.
The Ninth Circuit held that 33 U.S.C. § 903(e) of the LHWCA was controlling. The statute states that a "credit for benefits paid under other laws . . . shall be credited against any other liability imposed by this chapter." Therefore, the Ninth Circuit held that the statute does not provide a credit for settlements made under the statute itself. "To hold otherwise, would be to make the injured longshoreman risk a settlement in which his last employer would get all the benefit."
Limitation Act Does Not Apply To Claims Under The Park System Resources Protection Act
Tug Allie-B, Inc. v. United States, 273 F.3d 936 (11th Cir. 2001)
While towing a barge owned by Allied Towing Corporation, the tugboat ALLIE-B ran aground and collided with a coral reef in the vicinity of Ledbury Reef in Biscayne National Park. The collision and subsequent removal of the tug caused significant distress to the natural resources in the park. After the collision, the owner and the operator ("appellants") of the tug boat both filed a petition for exoneration or limitation of liability pursuant to the Limitation of Vessel Owner's Liability Act ("Limitation Act"), 46 U.S.C. § 181. The Limitation Act limits a vessel owner's liability for any damages arising from a maritime accident to the post-accident value of the vessel and its pending freight. The United States responded to this petition by stating that it was entitled to all damages due to injuries to resources in the national park under the Park System Resources Protection Act ("PSRPA"), 16 U.S.C. § 19jj et seq. The district court agreed with the government and held that the Limitation Act did not apply to suits filed under the PSRPA and that the United States would be entitled to a complete recovery of damages, if proven.
On appeal at the Eleventh Circuit, appellants argued that the Limitation Act and the PSRPA did not conflict and that the district court should have held the government's entitlement to damages was subject to the Limitation Act. The government argued that there is a clear conflict between the two statutes and since the PSRPA is the later-enacted statute, it must control. Because "a newer statute will not be read as wholly or even partially amending a prior one unless there exists a positive repugnancy between the provisions of the new and those of the old that cannot be reconciled," the court reviewed the language of both statutes to see if an actual conflict existed. The court determined that the statutes' provisions were inconsistent on their face and were based on conflicting concepts of liability and damages. Since Congress enacted the Limitation Act 140 years before the PSRPA and because the PSRPA was a more specific statute, the court held that the PSRPA controls in this context.
A Seaman May Recover Damages Under The Jones Act For Sexual Harassment
Ballance v. Energy Transportation Corp., 2001 U.S. Dist. LEXIS 16763 (S.D.N.Y. Oct. 18, 2001)
In response to a fellow seaman placing his hands upon her buttocks and untying her apron while she was on duty, plaintiff seaman filed suit against her employer for sexual harassment under the Jones Act, 46 U.S.C. § 688, common law principles of maritime law including unseaworthiness and maintenance and cure, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq. and New York Human Rights Law. Her employers filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) or in the alternative, for summary judgment pursuant to Rule 56. The district court analyzed each claim under both standards.
Under the Jones Act, a seaman who sustains personal injury during the course of employment may bring an action for damages against his or her employer. The injury does not have to be of a purely physical nature. The Jones Act incorporates the Federal Employee Liability Act ("FELA") by reference and FELA allows claims for negligent infliction of emotional distress. However, only those plaintiffs within the "zone of danger" may pursue such claims. The plaintiff must either "sustain a physical impact as a result of a defendant's negligent conduct or . . . be placed in immediate risk of physical harm by that conduct." Whether a plaintiff sustained a "physical impact" turns on whether he/she was physically injured. Mere touching will not suffice. Plaintiff seaman was not directly physically injured so the court looked to the second prong of the "zone of danger." Because there was no information on the record as to whether plaintiff feared an immediate risk of physical harm due to the sexual harassment, the court denied defendant's motion as to this cause of action. Further, the court stated that plaintiff may be entitled to maintenance and cure for any physical injuries that resulted from the alleged sexual harassment.
In response to plaintiff's claim of unseaworthiness, the court stated that a seaman who is injured aboard a ship may only recover from its owner if the injuries were sustained as a result of a "savage and vicious" attack by a fellow seaman. One court further found mere sexual harassment did not rise to such a level and granted defendant's motion for dismissal as to this claim.
Punitive Damages For Oil Pollution Are Not Barred To Private Parties But Must Pass Muster Under Federal Due Process Analysis
In re Exxon, 270 F.3d 1215 (9th Cir. 2001).
Defendant, Exxon, appealed a $5 billion punitive damage award arising out of the EXXON VALDEZ oil spill. The award was for damage done to the economic expectations of commercial fisherman, not the resulting environmental harm from the oil spill. Exxon had already paid $900 million to the United States and the State of Alaska to restore the natural resources of the affected region. Exxon claimed these punitive damages should have been barred as a matter of law and that the award itself was excessive.
Exxon specifically argued that as a matter of due process, punitive damages could not be awarded since it had already been punished with criminal and civil sanctions, cleanup expenses, and other expenses associated with the spill. Therefore, no public purpose would be served by the award. Exxon also claimed that punitive damages are not traditionally allowable in admiralty law, that the claim was barred by res judicata since Exxon had previously come to a settlement with the State of Alaska and the United States, and that the common law punitive damages sought had been preempted by the remedies enumerated in the Clean Water Act. The court rejected all of these arguments and held that the prior settlement was compensatory in nature and not punitive, that the prior settlement only covered harm done to the environment and did not prevent the rights of private citizens to bring suit to recover for their commercial economic damages, and that the Clean Water Act does not preclude a private remedy for punitive damages.
Exxon then challenged the $5 billion punitive award as excessive. The court noted that it must consider whether the award was constitutional by examining the same "under [a] federal due process analysis" in addition to reviewing whether the evidence is sufficient as a matter of law to support the award. To ensure that defendant had fair notice that a severe award could be imposed, federal courts should look to three "guideposts:" (1) the reprehensibility of the defendant's conduct; (2) the ratio of the award to the harm inflicted on the plaintiff; and (3) the difference between the award and the civil or criminal penalties in comparable cases. See BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996). Because the district court did not do so in the instant matter, the Ninth Circuit applied this review and held that the award was too high. The court then vacated the award and remanded the case to the district court to determine a damage award that would withstand constitutional muster.
Appellate Court Affirms Trial Court's Dismissal Of Action Based On Plaintiffs' Commission Of A Fraud Upon The Court
Bradley v. Royal Caribbean Cruises, Ltd., 2002 Fla. App. LEXIS 3550 (March 20, 2002)
Plaintiffs filed two different suits against defendant cruise line in connection with the disappearance of their 23-year-old daughter, last seen aboard RHAPSODY OF THE SEAS during a trip between Puerto Rico and Curacao in 1998. One lawsuit alleged negligence by defendant in its handling of the girl's disappearance; the other lawsuit was for wrongful death (even though no evidence ever came to light that the daughter was dead). Both lawsuits were dismissed in October 2000 when the trial judge found the plaintiffs had "perpetrated a fraud on the court" by giving false answers to the defense in depositions. Specifically, the court concluded the Bradleys had intentionally concealed the existence of over 100 witnesses who reported seeing Amy living freely and under no duress at various times after her disappearance. During discovery the Bradleys had identified only three witnesses, all of whom believed they saw someone "looking like Amy" who might have been under possible duress.
The Bradleys appealed the dismissal and Florida's 3rd District Court of Appeal affirmed the lower court's ruling. While Florida's appellate court often takes several months to issue a ruling, the 3rd District issued its order affirming the dismissal less than one week after oral argument. Royal Caribbean was represented by Jeffrey Maltzman and Darren Friedman of KRM's Miami office and Miami appellate attorney Lauri Ross.