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January 5, 2006
Welcome to the January 5, 2006, issue of AdmiraltyUpdate, the copyrighted and trademarked e-newsletter on developments in U.S. Coast Guard regulations and state and federal court decisions of interest to the commercial and recreational marine communities, written, edited and produced by Frederick B. Goldsmith and E. Richard Ogrodowski, members of the firm of Goldsmith & Ogrodowski, LLC, based in Pittsburgh, Pennsylvania, U.S.A.
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This issue's photo captures the M/V JOSEPH L. BLOCK, a Great
Lakes self-unloading bulk carrier built by Bay Shipbuilding Company
for Inland Steel Company, Chicago, Illinois. The ship was built
specifically for the Lake Michigan iron ore trade, to transport ore
from Escanaba, Michigan, to Inland’s mills on the southern Lake
Michigan shores. The ship was christened on June 29, 1976, and named
for Joseph Leopold Block. Born in Chicago October 6, 1902, Block
joined Inland Steel in the 1920s, rising to Assistant Vice President
in 1927, President in 1953, and CEO in 1956. He served as Chairman
of the Board until May 1, 1975. Block died November 17, 1992.
Following the purchase of Inland Steel by the Netherlands-based
Ispat International N.V., the three vessels of the Inland Steel
fleet were sold in July 1999 to a newly-established U.S. firm,
Indiana Harbor Steamship Company, to comply with the Jones Act's
cabotage provisions. A second newly-formed company, Central Marine
Logistics, based in Highland, Indiana, was created to manage the
fleet. The other two fleetmates sold to the new company were the
EDWARD L. RYERSON and the WILFRED SYKES. Following the sale, the
“Inland Steel” name was removed from the sides of the hulls. The
trade routes for the fleet with Ispat Inland Inc. remain essentially
unchanged.
We extend our thanks for the photo and the excellent background
sketch on the ship to the "Great Lakes and Seaway Shipping" website,
known throughout the lakes simply and affectionately as "Boatnerd" (http://www.boatnerd.com)
and the following individuals: Mark Shumaker (the photographer who
captured the fine image appearing above) and George Wharton, who
authored the extensive background sketch on the M/V JOSEPH L. BLOCK,
from which the above sketch is excerpted. You can read the full
sketch and see more photos of the ship here:
http://www.boatnerd.com/pictures/fleet/jlblock.htm. We also
thank the vessel's operator, Central Marine Logistics, Inc. (http://www.centralmarinelogistics.com),
and its President, Mr. Parker Mellinghausen, for permission to use
the image of their ship.
Recent U.S. Coast Guard Notices in the Federal Register
Coast Guard Amends Marine Casualty Reporting Requirements
In the
December 16, 2005, Federal Register, the Coast Guard provides notice
of a final rule, effective January 17, 2006, which amends its regulations
governing marine casualty reporting to add "significant harm to the environment"
as a reportable marine casualty, and requires certain foreign flag vessels, such
as oil tankers, to report marine casualties which occur in waters subject to
U.S. jurisdiction, and beyond U.S. navigable waters, when those casualties
involve material damage affecting the seaworthiness or efficiency of the vessel,
or significant harm to the environment. The pre-existing reportable
casualties under
46 U.S.C. § 6101 and implementing regulations were (1) death of an individual,
(2) serious injury to an individual, (3) material loss of property, and (4)
material damage affecting the seaworthiness of a vessel.
Coast Guard to
Require Alcohol Testing Within Two Hours Following Serious Marine Incident
In the
December 22, 2005, Federal Register, the Coast Guard provides notice
of a Final Rule revising its requirements for post-accident alcohol testing of
employees involved in a serious marine incident, requiring such testing within
two hours. The rulemaking also requires that most commercial vessels have
alcohol testing devices on board, and authorizes the use of saliva as an
acceptable specimen for alcohol testing. The rulemaking also sets forth a
32-hour time limit for collection of specimens for drug testing following a
serious marine incident.
Coast Guard
Continues 50% Random Drug Testing Rate
In the
December 28, 2005, Federal Register, the Coast Guard sets the
calendar year 2006 minimum random drug testing rate at the same rate as last
year, 50%. The notice informs that the purpose of setting a minimum random
drug testing rate is to establish a measure of deterrence for the illegal use of
controlled substances. Marine employer MIS reports of their drug program
testing data are due to the Coast Guard by March 15, 2006.
Recent State & Federal Court Maritime Decisions
U.S. Fifth Circuit Court of
Appeals: Jones Act No Bar to Employer’s Negligence and Indemnity Suit Against
Seaman Employee for Property Damage
In Withhart v. Otto Candies,
L.L.C., 2005 WL 3243933 (5th Cir. December 2, 2005), the court
held, deciding an issue of first impression in all the federal circuit
courts, the Federal Employers' Liability Act (“FELA”), and thus the Jones Act
(which incorporates the former by reference), does not prevent a
shipowner-employer from bringing a general maritime law negligence and indemnity
claim against its seaman-employee for property damage. Sea Mar employed
Withhart as a mate aboard its vessel, which was involved in a collision with a
vessel operated by Otto Candies. Withhart was injured and sued his employer and
the owner of his vessel, Sea Mar, under the Jones Act (for negligence) and
under the general maritime law (for unseaworthiness). Otto Candies sued Sea Mar
for damages to its vessel caused by the allision. Sea Mar then, in the same
suit, counterclaimed against Withhart to recoup the $26,310 it paid Otto Candies
to settle Otto Candies’ property damage claim. The trial court (the District
Court for the Western District of Louisiana) dismissed Sea Mar’s claims against
Withhart, but allowed Sea Mar to take an interlocutory appeal to the Fifth
Circuit, which accepted the appeal and reversed. It held Sea Mar’s action
against Withhart would be subject to a pure comparative fault scheme, citing
United States v. Reliable Transfer Co., 421
U.S. 397 (1975). The Fifth Circuit
found that Sea Mar’s claim against its employee was not an illegal “device”
under Section 5 of FELA to exempt itself from liability to Withhart, because Sea
Mar was only seeking to recoup from Withhart its own damages; it was not seeking
to insulate itself from its liabilities to Withhart under the Jones Act. Also
contrary to Withart’s defensive efforts, the Fifth Circuit held Sea Mar’s action
against Withhart did not violate FELA’s Section 10; that the claim was not a
“device” which was impliedly barred by Section 10.
U.S. Fifth Circuit Court of
Appeals: In Post-Dutra Decision, Floating Dormitory Barge Not Vessel
Under Jones Act**
In Holmes v. Atlantic
Sounding Co., 429 F.3d 174 (5th Cir. October 25, 2005), the court
held—in a post Stewart v. Dutra Construction Co. case—that cook Addie
Holmes was not a member of a crew of a vessel in navigation, and thus could
not bring a Jones Act claim against her employer, Atlantic Sounding, and alleged
borrowing employer, Weeks Marine, because the unpowered barge, the Weeks
quarterbarge BT-213, on which she was working when injured, was not a “vessel.”
The BT-213 is a deck barge upon which is mounted a quarters package, which is a
two-story, 50-bed dormitory, which Weeks moves from site to site to house and
feed employees during dredging projects. The BT-213’s regular “crew” consists
of two cooks and two janitors and there was no evidence they remain aboard the
barge when it is towed by tugs from site to site. At the time of her alleged
injury (which occurred on Holmes’ first day of work), the BT-213 was moored in a
private boat slip at Holly Beach in Cameron Parish, Louisiana, state waters,
while the crew of Week’s dredge worked separately in the Gulf of Mexico. The
BT-213 had arrived at this slip the month before Holmes’ alleged accident.
Atlantic Sounding and Weeks had removed Holmes’ state court Jones Act suit on
the basis of fraudulent pleading of Jones Act allegations and diversity
jurisdiction. The Fifth Circuit affirmed the trial court findings that the
BT-213 was not a “vessel” under the Jones Act, thus Holmes could not be a
“seaman,” thus she could not bring Jones Act claims against the defendants. In
reviewing the Supreme Court’s Stewart decision, the Fifth Circuit found
the high court intended in that decision to define the term “vessel” under both
the LHWCA and the Jones Act. The Supreme Court in Stewart, the Fifth
Circuit opined, held (a) that the primary purpose of a watercraft did not
have to be navigation or commerce for it to qualify as a vessel under the LHWCA
or the Jones Act and (b) the watercraft need not be in transit to qualify
as a vessel, under either statute.
The Fifth Circuit, in
concluding the BT-213 was not a “vessel,” focused on the facts (i) the BT-213
does not transport cargo, equipment, or personnel; (ii) the BT-213 does
not provide housing on the open seas; (iii) the BT-213 relies wholly on tugs to
move it (unlike the SUPER SCOOP in the Dutra decision which could
navigate short distances by manipulating its anchors and cables); (iv) the
BT-213 has never been registered with or inspected by the Coast Guard; (v) the
BT-213 was built and is only used for housing; and (vi) the BT-213 does
not transport anything, unlike the SUPER SCOOP in Dutra which
carries machinery, equipment, and crew over water. The Fifth Circuit found that
the appurtenances of the putative vessel itself (here the room and board
module), distinct from equipment that it is transporting to be offloaded and
used at a new location, cannot qualify as the “equipment” being transported to
satisfy the “transportation” function of the would-be vessel. The Fifth Circuit
found this “transportation of equipment” function of a “vessel” key to the
Supreme Court’s decision in Southwest Marine, Inc. v. Gizoni, 502 U.S. 81
(1991).
** Ed Note. On January 19, 2006, the Fifth Circuit withdrew its
above-described decision and issued a new decision, in which it holds "the
BT-213 is a vessel for purposes of the Jones Act. We therefore reverse the
district courts' judgments and orders adverse to Holmes and remand these cases
to those courts for further proceedings consistent with this opinion."
U.S. Fifth Circuit Court of
Appeals: Seaman Has No Unseaworthiness Action Against Owner of Vessel of Which
He Was Not Crewmember
In Coakley v. SeaRiver
Maritime, Inc., 2005 WL 1662036 (5th Cir. July 18,
2005)(unpublished), Coakely was employed as a seaman by SeaRiver aboard its
vessel which was towing a barge owned by Kirby Inland Marine pursuant to a
reciprocal towing agreement. Coakley slipped on ice on the Kirby barge and then
sued SeaRiver for this allegedly unseaworthy condition. The appeals court
affirmed the district court’s determination that since SeaRiver was not the
owner pro hac vice of the Kirby barge—the towing agreement between SeaRiver and
Kirby was solely for towage, it was not a charter agreement, SeaRiver “did not
assume the incidents of ownership necessary for the creation of a bareboat
charter or ownership pro hac vice,” and thus SeaRiver could not be liable for
any allegedly unseaworthy condition of the barges in its tow.
New Jersey Federal District
Court: Time Charterer of Ship Contractually Not Responsible for its Navigation
and Thus Not Liable For Ship’s Allision with Moored Barge
In Weeks Marine, Inc. v.
Hanjin Shipping, 2005 WL 1638148 (D.N.J. July 12, 2005), Weeks sued Hanjin,
the time charterer of the M/V HANJIN VANCOUVER, and others, after this vessel
allided with a stationary and spudded-down Weeks’ barge, the WEEKS 65, while the
ship was maneuvering with tugs near Port Elizabeth, New Jersey. Marecalma
Shipping Co. owned the ship and under its time charter with Hanjin Shipping Co.,
Marecalma remained responsible for navigation, acts of the pilot, tugboat, and
crew. Hanjin Shipping Co. argued it could not be liable for the allision
because as a matter of law a time charterer is not liable for damage resulting
from the navigation of a vessel, absent a showing of an independent act of
negligence. The court focused on the time charter, printed on the New York
Produce Exchange form, which provided:
“Nothing herein stated is to be
construed as a demise of the vessel to the Time Charterers. The owners to
remain responsible for the navigation of the vessel, acts of pilot and tugboat,
etc insurance, crew, and all other matters, same as when trading for their own
account.”
The court found that since the
accident occurred while the ship was moving from one dock to another, this was
“navigation” and thus the ship was, legally, in the hands of the ship’s owner,
and thus that the time charterer, Hanjin Shipping, absent any evidence of its
independent negligence, could not be responsible for any acts or omissions
of the owner which may have caused the allision. The court found that although
Hanjin Shipping may have negligently originally directed the ship to a berth
that lacked bollards, requiring the subsequent movement during which the
allision occurred, the doctrine of superseding proximate cause “negates any
alleged prior independent negligence of Hanjin or its agents” (citing Exxon
Company U.S.A. v. Sofec, Inc., 517 U.S. 830 (1996)). The court disregarded
as insufficient to alter the terms of the time charter an unsworn, unsigned fax
from the ship’s manager to Hanjin Shipping stating that “[t]he vessel, for all
port/berthing/tugging/cargo operations is(was) in the hands of her [time
charters] and/or their local agents.”
Ohio Federal District Court: In
FELA Action, Plaintiff Law Firm’s “Policy” of Producing Only
Medical Records Must Yield to Defense’s Request for Signed Medical
Authorization
In Mirtes v. Norfolk
Southern Railway, 2005 WL 3527292 (N.D.Ohio December 22, 2005), the court
found the plaintiff’s firm’s policy “not recognized or justified in law” and
that “[c]ourts routinely direct plaintiffs to provide authorizations so that
defense counsel may obtain pertinent records directly from health care
providers.” To emphasize its point, the court concluded: “There is no
acceptable basis for refusing to provide medical authorizations to another party
when requested. In the future, sanctions will routinely be imposed where
counsel refuses without lawful justification to provide authorizations promptly
on request.”
New York Federal District
Court: No Coverage Under Named Perils Hull Policy When Assured Cannot Prove
Covered Peril Proximately Caused Vessel Sinking
In Miller Marine Services,
Inc. v. Travelers Property Casualty Ins. Co., 2005 WL 2334385 (E.D.N.Y.
September 23, 2005), the court found that neither the hull policy’s Perils nor
Inchmaree clauses covered the sinking because the vessel owner, Miller Marine,
could not prove the vessel sank
due to a covered peril. The court found the policy was a named perils, not all-risk, policy, thus requiring the assured to prove the proximate cause of
loss, and such falling within the policy terms, by a preponderance of the
evidence. The court hinted that incursion of water through a
negligently-left-open sea valve would not be a fortuitous event and thus not a
covered “peril of the sea.” While Miller Marine suspected its vessel sank
because it was scuttled by disgruntled former employees who opened the sea valve
or valves, the court found Miller Marine could not establish this cause with the
requisite certainty and thus could not meet its burden of proof as to causation
and thus coverage.
California Federal District
Court: Parties to Marine Insurance Policy May Contract Around Doctrine of
Uberrimae Fidei Only if Such is Not Against Law or Public Policy; Court
Holds Insurer Entitled to Void Policy For Application Misrepresentations Because
California’s Insurance Code Expressly Codifies Doctrine of Uberrimae Fidei
In New Hampshire Ins. Co. v.
C’est Moi, Inc., 2005 WL 3549429 (C.D.Cal. December 6, 2005), the marine
insurance policy included a “Concealment or Misrepresentation” clause allowing
the insurer to void the coverage if the insured “intentionally conceal or
misrepresent any material fact or circumstance relating to this insurance, or
your insurance application, before or after a loss.” After the insured vessel
sank in calm waters at dock, the insured attempted to defend against the
insurer’s efforts to rescind the policy on the basis that its policy application
misrepresentations were not “intentional” and that the policy only allowed
rescission in the event of intentional misrepresentation or concealment.
The court found that the parties could not contract around California’s public
policy, as expressed in its Insurance Code, to apply uberrimae fidei.
The court went on to find that the insurer was entitled to rescind the policy
due to the insured’s application misrepresentations concerning (a) the vessel’s purchase
price (“$450,000++” on application versus actual purchase
price of $292,001, and application specifically inquired as to “purchase price”
versus value, making “purchase price” material); (b) prior losses (application
requested loss history, and did not limit this to a finite number of years or a
particular vessel; the court found loss history “a material fact as a matter of
law”); and (c) its present insurer (the insured claimed on the application that
its present insurer was a prior insurer which had paid for a total loss of the
same vessel due to a previous fire; the vessel, however, was uninsured at the
time the instant application was submitted; the court found the identity of the
present insurer also a “material fact”).
Alaska Federal District Court:
Oil Pollution Insurer Entitled to Void Policy for Breach of Uberrimae Fidei,
Which it Termed Established Admiralty—Not State—Law Rule
In Certain Underwriters at
Lloyd’s, London v. Inlet Fisheries, Inc., 389 F.Supp.2d 1145 (D.Alaska
September 12, 2005), the court found the doctrine of uberrimae fidei
“established federal admiralty law,” that “trumps” contrary state law, and under
this doctrine the assured’s failure to disclose its prior pollution history,
condition of its vessels, and prior insurer’s cancellation of coverage, were
material facts entitling oil pollution insurer to void the policy from
inception.
Louisiana Federal District
Court: Expert Vocational Rehabilitationist Need not be Licensed to Testify
In Hebert v. Cannon,
2005 WL 3533695 (E.D.La. October 31, 2005), the court held “the question of who
can testify as an expert witness in federal court is not governed by state
licensure laws, but rather by federal law,” namely the Federal Rules of
Evidence. The court found no requirement in such rules or in the interpretive
Daubert jurisprudence requiring an expert to be state-licensed. The
court found that Federal Rule of Evidence 702 provides that an expert may be
qualified on the basis of experience and, additionally, that the pertinent
Louisiana statute regulates who may provide rehabilitation counseling services
in the state, not who may testify in federal court: “there is simply no legal
foundation for the proposition that an expert must possess a Louisiana license
to testify in this forum.” Finally, the court found the concerns of Daubert
“mostly moot” since the case was to be tried to the bench and that “Daubert
was preoccupied with the courts’ gatekeeping function vis-à-vis the jury.”
Michigan Federal District
Court: Under Special Great Lakes Statute, Defendant Laker Operator Entitled to
Jury Trial in Jones Act Case Despite Plaintiff’s Wish to Proceed Non-Jury
In Horton v. Andrie, Inc.,
2005 WL 1705000 (W.D.Mich. July 20, 2005), the court found 28 U.S.C. § 1873
allows a defendant to demand a jury trial, even where the plaintiff in a Jones
Act case wishes to amend his complaint to invoke Fed.R.Civ.P. 9(h). Section
1873 is a unique federal statute effecting vessels in the coastwise trade on the
Great Lakes. It provides:
In any case of admiralty and
maritime jurisdiction relating to any matter of contract or tort arising upon or
concerning any vessel of twenty tons or upward, enrolled and licensed for the
coasting trade, and employed in the business of commerce and navigation between
places in different states upon the lakes and navigable waters connecting said
lakes, the trial of all issues of fact shall be by jury if either party demands
it.
U.S. Seventh Circuit Court of
Appeals: Marine Employer Not Responsible Directly or Vicariously for Fellow
Crewman’s Unrequested and Unexpected Neck Tractioning
In Sobieski v. Ispat Island,
Inc., 413 F.3d 628 (7th Cir. June 29, 2005), the court resolved a
case involving circumstances it described as “decidedly odd.” While aboard the
M/V JOSEPH L. BLOCK [see "this issue's photo," above], underway on Lake
Michigan, Paul Sobieski, who was assigned to the ship’s engine department,
finished assisting the ship's coal loading operation, then headed to the
recreation room to drink a cup of coffee. Sobieski eased back in a chair to
relax and watch television. Then, “[u]nbeknownst to Sobieski, a figure silently
crept up behind him as he watched the television. Suddenly, before Sobieski
could react, the figure seized Sobieski’s head between its hands.” The figure
was Sobieski’s crewmate, Mike Barrett. As Sobieski alleged in his complaint,
Barrett “placed his hands on each side of Mr. Sobieski’s head, and forcefully
slammed it to the side against Mr. Sobieski’s own right shoulder causing his
neck to be injured.” Sobieski, writhing in pain, demanded to know from Barrett
why he did this. Barrett responded, “Look, I do it to myself all the time,”
something he proved by “’maneuvering his own head in the same manner.’”
Sobieski filed suit under the
Jones Act and the issue for the court was Barrett and Sobieski’s employer’s
liability for Barrett’s bizarre behavior. The court held the employer, Central
Marine Logistics, was not vicariously responsible for Barrett’s conduct
because Barrett was not acting within the course and scope of his employment,
that he was not furthering Central Marine’s business because “[i]t is undisputed
that Barrett had no express authorization to crack anyone’s neck, nor was such
neck-tractioning part of his official duties.” The court found there was no
evidence Central Marine knew or condoned Barrett’s massages. As for Sobieski’s
claim Central Marine was directly liable to he and his wife for the
injuries inflicted by Barrett, that Central Marine knew of Barrett’s neck
cracking but did nothing to stop it, the court found there was insufficient
evidence that Barrett frequently cracked necks of his fellow crewmen, or that he
had a reputation for doing so. The appeals court affirmed the trial court’s
granting of summary judgment on these issues to Central Marine.
Lagniappe
(And now for something completely disgusting, yet
maritime…) Illinois Federal District Court Upholds Lost Profits Claim
Despite Illinois State Economic Loss Doctrine Defense When Rock Band
Tour Bus Drains Human Waste Tank Through Bridge Grates Over Chicago
River Onto Passenger Excursion Vessel
In Mercury Skyline Yacht Charters v. The Dave Matthews Band,
Inc., 2005 WL 3159680 (N.D.Ilinois November 22, 2005), the Kinzie Street
bridge over the Chicago River, in the Windy City, was the scene of the
tort. On an otherwise pleasant Sunday afternoon in August, the
plaintiff’s vessel, CHICAGO’S LITTLE LADY, was northbound on the Chicago
River with 117 passengers, three crew, and a docent from the Chicago
Architectural Foundation aboard. As the tour vessel transited under the
bridge, the plaintiff vessel operator alleged in its Complaint, Stefan
Wohl, the tour bus driver, hit the toggle switch which drained the 80 to
100 gallon human waste tank’s “foul-smelling, brownish-yellow liquid”
through the bridge grates, drenching the passing tour vessel “and dozens
of its passengers, getting into passengers’ eyes, mouths, and hair and
soaking their clothing and personal belongings.”
The Complaint adds: “Many passengers experienced nausea and vomiting
from their exposure or proximity to the human waste,” prompting the
vessel’s captain to turn around and return to its landing. The court
denied the rock band’s motion to dismiss the vessel operator’s lost
profits claim despite the former’s invocation of Illinois’ economic loss
doctrine, which allows a claim to proceed around the defense if
plaintiff alleges a “sudden, dangerous or calamitous event” coupled with
personal injury or property damage. The court struck the vessel
operator’s punitive damage claim against the rock band, which was based
on the band’s vicarious liability for the driver’s actions, finding
insufficient allegations that the band—a corporation--participated in
the dumping.
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Very interesting cases in [the last issue]."
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