March 6, 2009
Welcome to the March 6, 2009, issue of Admiralty Update, the copyrighted and trademarked e-newsletter on developments in U.S. Coast Guard regulations and state and federal court decisions of interest to commercial and recreational mariners.
It is written, edited, and produced by Frederick B. Goldsmith
and E. Richard Ogrodowski of Goldsmith & Ogrodowski, LLC, based in Pittsburgh, Pennsylvania, U.S.A.
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This issue's photo depicts a southern California surfer enroute to the beach just north of San Diego a few months ago. Just imagine the relative costs for this vessel owner
versus the typical tugboat, towboat, OSV, or tanker owner, in terms of initial acquisition, maintenance, bunkering, insurance, crewing, and, of course, repositioning.
News from G&O:
New G&O Website
We have just revised and updated our website to highlight our practice areas (in addition to admiralty & maritime law):
- Commercial & Consumer Litigation (including high-stakes contingent-fee commercial litigation)
- Personal Injury & Death
- Insurance Coverage (opinions and litigation)
- Business Formation & Contracts (including drafting and analysis of critical indemnity and insurance specification provisions)
We have also added a video to the home page of our site,
in case you ever wondered what we look and sound like (or in case
you suffer from insomnia):
http://www.golawllc.com
G&O Personnel News
Fred Goldsmith will be co-moderating a continuing legal education seminar on April 2, 2009, at the U.S. Courthouse in Pittsburgh on “Choosing the Best Venue for Your Civil Case: Strategy Considerations Between Litigating in Federal Versus State Courts in Western Pennsylvania.” Panelists for the program include The Hon. Nora Barry Fischer, U.S. District Judge, Western District of Pennsylvania, The Hon. Amy Reynolds Hay, U.S. Magistrate Judge, Western District of Pennsylvania, The Hon. Christine A. Ward, Allegheny County Court of Common Pleas, and The Hon. C. Gus Kwidis, Beaver County Court of Common
Pleas.
Rich Ogrodowski was recently elected Second Vice President and Continuing
Legal Education Chair for the Federal Bar Association, Western Pennsylvania Chapter.
On March 13, 2009, Rich Ogrodowski
will be moderating a CLE program, “The New Local Rule's Duty to Investigate and the Top 10 Things that You and Your Client Must Do to Comply With This New Duty,” with speakers The Hon. Nora Barry Fischer, U.S. District Judge, Western District of Pennsylvania, and Richard N. Lettieri, Esq., Electronic Evidence Legal Consultant, Kroll Ontrack.
The members of the Pittsburgh Legal Administrators Association recently elected G&O Office Manager and Legal Assistant,
Heather L. Trainer, to the position of Secretary-Elect.
Recent U.S. Coast Guard Notices in the Federal Register
MERPAC to Meet in Buzzards Bay, MA, April 16-17, 2009
The Coast Guard’s Merchant Marine Personnel Advisory Committee will meet at the Bay State Conference Center at the Massachusetts Maritime Academy, 101 Academy Drive, Buzzards Bay, Massachusetts, to discuss various issues relating to the training and fitness of merchant marine personnel, including Task Statement 70 which concerns the Apprentice Mate/Steersman training program. The meeting notice appears in the
March 4, 2009, Federal Register.
Recent State & Federal Court Maritime Decisions
Missouri Federal District Court: Communications between Insurance Broker and Client’s Attorney Can Be Protected by Attorney-Client Privilege
In Navigators Management Co. v. St. Paul Fire & Marine Insurance Co., 2009 WL 465584 (E.D. Mo. Feb. 24, 2009), the underwriters of a bumbershoot policy filed a complaint for declaratory judgment, seeking a declaration that neither the captain nor the employer of the crew of the M/V ANNE HOLLY, which allided with the Eads Bridge in St. Louis, were entitled to coverage under the policy. The employer and captain
served a subpoena for the documents on the Crane Agency, the insurance broker for American Milling, which owned the M/V ANNE HOLLY. The court held the Crane Agency was acting as American Milling’s representative
to the extent its communications involved American Milling’s attorneys and were done to facilitate legal services, and, as such, those communications were not discoverable. Nevertheless, the court ordered the Crane Agency to provide sufficient information in its privilege logs to enable the court to properly assess the Crane Agency’s claims of privilege as to specific documents under Federal Rule of Civil Procedure 45(d)(2)(A).
New York Federal District Court: Primary Insurer Retains Duty to Defend Despite Tendering Policy
Limits
In Barber v. RLI Insurance Co., 2008 WL 5423106 (N.D.N.Y. Dec. 24, 2008), the court held the excess insurer of a 1997 Cobalt 22-foot open bow which ran aground, severely injuring several passengers, has a duty to defend the owners and operator of the boat only if the primary insurer was not obligated to do so. Under New York law, however, the primary insurer’s duty to defend can survive the exhaustion of its policy limits. The primary insurer’s tendering of its policy limit did not relieve the primary insurer of its duty to defend, since the policy clearly established that defense costs were in addition to the policy limit.
New York Federal District Court: Retention of Counsel without Prior Approval of Insurers in Hurricane Katrina Cases Deemed Reasonable
In New York Marine & General Insurance Co. v. LaFarge North America, Inc., 2009 WL 418276 (S.D.N.Y. Feb. 19, 2009) (Haight, J.), the court held LaFarge’s retention of the Washington, D.C. firm Goodwin Procter LLP to handle LaFarge’s potential mass tort liability, and LaFarge’s retention of the New York firm Holland & Knight to handle marine investigation, was reasonable despite LaFarge’s failure to first seek approval from its insurers. LaFarge retained the firms in September 2005, immediately upon receiving a call from a reporter for the Wall Street Journal seeking comment on a story it was preparing to publish about Barge ING 4727 and its potential involvement in the breach of a levee when Hurricane Katrina made landfall. Accordingly, LaFarge’s insurers were responsible to pay the
significant defense costs incurred by these firms. The court found LaFarge’s subsequent retention of a local
New Orleans law firm, Chaffe McCall LLP, rather than one of the six firms approved by LaFarge’s primary insurer, was not proper under the primary and excess policies, and accordingly, LaFarge would be responsible for Chaffe McCall’s fees and costs.
Ohio Federal District Court: $350 Per Hour is Reasonable Rate for Terminated Maritime Plaintiff’s Attorney
The court in Eichenlaub v. Superior Marine, 2009 WL 367531 (S.D. Ohio Feb. 12, 2009), approved a quantum meruit award of $80,000 to maritime plaintiff’s attorney Meredith Lawrence, whom the plaintiff had terminated prior to retaining Christopher Kuebler of O’Bryan Baun Cohen Kuebler, who later settled the case. The magistrate judge held a fairness hearing following the settlement, during which the plaintiff objected to Lawrence’s fee. The magistrate judge found that $350 per hour was a reasonable sum for an attorney with Lawrence’s skills and experience: “Mr. Lawrence does not provide us with his lodestar amount, but it is clear that his practice is dominated, if not limited, to representing plaintiffs in maritime cases wherein contingency fees are the norm. A lodestar amount for an attorney with like skills and experience of $350 per hour would not strike us as unusual or on the fringe. Mr. Kuebler concedes as much, probably because his hourly rate is similar. The Court regards Mr. Kuebler as possessing similar skills and experience. In other words, one would expect both to have attained the AV rating by Martindale Hubbell.”
Louisiana Federal District Court: Nonseamen Cannot Recover Punitive Damages
In Ostrowiecki v. Aggressor Fleet, Ltd., 2008 WL 5234391 (E.D. La. Dec. 11, 2008), the court held that, in the post-Miles v. Apex Marine era, a nonseaman (here, Lilith Rubin) cannot recover punitive damages on a claim pursuant to the general maritime law. The court was not persuaded by the plaintiff’s attempt to distinguish her emotional distress claim from the bodily injury and wrongful death claims at issue in Miles and its progeny: “Rubin contends that the cases cited by defendants-and the Miles doctrine generally-apply only to wrongful death or personal bodily injury actions. However, Rubin does not point to any authority holding that general maritime claims for emotional distress torts should be treated differently from those for personal injury or wrongful death.”
New York Federal District Court: Plaintiff Must Have “Reasonably Definite Plans” to Pursue Its Claim to Obtain Rule B Attachment
In Inter Ocean Ship Repairs, L.L.C. v. Aries Ship Management, 2009 WL 363876 (S.D.N.Y. Feb. 13, 2009), the court denied the plaintiff’s application for an order of maritime attachment and garnishment because the plaintiff’s complaint did not specify when litigation over the defendant’s alleged failure to fully pay for ship repairs would commence, and plaintiff’s counsel admitted to the court the plaintiff was unsure when litigation would begin. The court found implicit in the Rule B requirement that a plaintiff must show it has a valid prima facie admiralty claim against the defendant,
the requirement the plaintiff demonstrate it possesses “definite plans to pursue its claim within a time certain.” The court cited the “severe nature of the Rule B remedy” and constitutional issues relating to Rule B’s application to parties with no connection to this country as bases for requiring strict adherence to Rule B’s procedural requirements.
Illinois Appellate Court: Former Employee’s State Whistleblower Act Claim Not Preempted by Federal Law
In Zuccolo v. Hannah Marine Corp., 900 N.E.2d 353 (Ill. App. Ct. Dec. 16, 2008), the court reversed the trial court’s entry of summary judgment in favor of Hannah Marine, finding the plaintiff’s claims for retaliatory discharge under the Illinois Whistleblower Act and Illinois common law were not preempted by federal law. Specifically, the appellate court held the state’s Whistleblower Act merely provided a concurrent remedy that was neither hostile to the uniformity of maritime law nor inconsistent with the federal Seaman’s Protection Act, 46 U.S.C.A. § 2114 (which establishes a civil cause of action for seamen who have been discharged or discriminated against for reporting in good faith to the Coast Guard a violation of a maritime safety law or regulation). The appellate court also found an “absence of a well-established body of precedent” supporting Hannah Marine’s claim that the Illinois common law retaliatory discharge claim would conflict or otherwise unduly interfere with the uniformity of federal maritime law.
Texas Supreme Court: Use of Multiple-District Litigation Court and Heightened Expert Report Requirements Not Preempted by Jones Act
In In re Global Santa Fe Corp., 2008 WL 5105257 (Tex. Dec. 5, 2008), the court held the
(federal) Jones Act does not preempt a Texas statute requiring consolidation of all silica-related cases in a multiple-district litigation court for pretrial disposition. Likewise, the Jones Act did not preempt the statute’s requirement of a detailed expert report early in the litigation. The court held neither of these components of the Texas statute interfered with a plaintiff’s substantive rights under the Jones Act. The court did find, however, the statute’s requirement that a plaintiff suffer a minimal threshold of physical impairment inconsistent with the Jones Act and thus
that this requirement could not apply in Jones Act cases.
Louisiana Federal District Court: Non-Medical Expert Cannot Render Medical Opinions
In Leija v. Penn Maritime, Inc., 2009 WL 211723 (E.D. La. Jan. 23, 2009), the plaintiff’s sole causation expert in a toxic tort case was a toxicologist with a Ph.D. in genetics. The court held the plaintiff’s expert was not qualified to render a medical opinion that the decedent’s workplace exposure to polycyclic aromatic hydrocarbons was a more likely cause of the decedent’s cancer than smoking and alcohol. The court further found there was insufficient evidence concerning the decedent’s level of occupational exposure to toxic chemicals. The court therefore granted the defendant’s motion for summary judgment for the plaintiff’s failure to create an issue of fact as to specific causation.
Washington (State) Federal District Court: Degree in Economics Not Necessary to Provide Expert Testimony Regarding Economic Loss
In Speicher v. Union Pacific Railroad, 2009 WL 279063 (W.D. Wash. Feb. 5, 2009) (a case brought under FELA, which statute the Jones Act expressly incorporates by reference), Union Pacific objected to the plaintiff’s use of a vocational rehabilitation counselor, who not only offered opinions about the plaintiff’s prospects for future employment, but also calculated the plaintiff’s claimed losses. The court rejected Union Pacific’s arguments that the plaintiff’s expert lacked the requisite knowledge, skill, experience, training, or education to testify about the plaintiff’s alleged economic loss, finding that the calculations involved were sufficiently complicated to warrant expert testimony “but not nearly so complex as to require a doctorate in economics.” Similarly, the court found the expert’s testimony was sufficiently reliable, and the expert’s failure to reduce his calculations for taxes, present value, and business expenses that will not be incurred was based on “sound judgment,” not incompetence or ignorance.
West Virginia Supreme Court of Appeals: Whitewater Rafting Incident Does Not Invoke Admiralty Jurisdiction
In River Riders, Inc. v. Steptoe, 672 S.E.2d 376 (W. Va. Dec. 10, 2008), the court held a whitewater rafting accident in which one rider died and thirteen others were injured did not invoke admiralty jurisdiction. Although the trial court had found that, despite average depths of only two feet, the Shenandoah River was a navigable body of water—thus satisfying the location test under Grubart, Inc. v. Great Lakes Dredge & Dock Co.—the lower court failed to consider whether the incident satisfied the “nexus” test. Thus, West Virginia’s highest appellate court found the whitewater rafting incident did not have a potentially disruptive impact on maritime commerce and did not bear a substantial relationship to traditional maritime activity.
Texas Federal District Court: Right to Jury Trial Accrues in Government’s Claim for Natural Resource Damages under Oil Pollution Act
In United States v. Viking Resources, Inc., 2009 WL 365682 (S.D. Tex. Feb. 11, 2009), the district court held that although there is no right to a jury trial in actions to recover removal costs under the Oil Pollution Act
of 1990, at least one component of natural resource damages—the diminution in value of those natural resources pending restoration—is legal in nature, thereby implicating the Seventh Amendment right to a jury trial.
Lagniappe
There’s Something About “Admiralty & Maritime” Law That Seems to Attract Nontraditional Marine Litigants
We’ve previously reported on efforts by some creative, often pro se, litigants to extract money from others or obtain debt relief by, in contorted manners, invoking admiralty and maritime jurisdiction.
Here’s a website we stumbled upon which seems to fall under this rubric: (presenting a form for a “Petition for Agreement and Harmony within the admiralty in the Nature of a NOTICE OF INTERNATIONAL COMMERCIAL CLAIM IN ADMIRALTY ADMINISTRATIVE REMEDY”). Some entrepreneurial, if not criminal, folks have presented similar forms to corporations and banks seeking large sums. I received a call a few years ago from an attorney here in Pittsburgh who represents a large Pittsburgh-based bank which had received such a “Claim.”
In recent months, the courts have had the “pleasure” of confronting similar “creative” invocations of admiralty and maritime law.
In United States v. Richard Lee Mellor, 2009 WL 35341 (N.D. Iowa Jan. 6, 2009), Mellor was under indictment for tax evasion and related crimes and headed for trial, when the government asked the court to order Mellor to undergo a psychiatric examination to determine his competency to stand trial and/or represent himself at the proceeding. The government specifically cited “unusual pleadings” filed by Mellor.
On September 22, 2008, Mellor filed an 83-page single-spaced document, purportedly invoking admiralty law, which included this signature block:
RICHARD LEE MELLOR © ™ by
Richard Lee of the Mellor family
Authorized Agent, UCC 3-402(b)(1)
Mellor also filed a document entitled “Truth Affidavit in the Nature of Supplemental Rules for Administrative and Maritime Claims Rules C(6),” which included a copyright in Mellor’s name.
Two days later, Mellor filed a demand for dismissal, in which he claimed the United States of America is a “fictitious foreign state,” and asserted that he was not subject to the Internal Revenue Code:
“All codes, rules and regulations are unconstitutional, lacking in due process.... Thus, Richard-Lee: Mellor is immune to all “Codes” and not subject to cause of action commenced and prosecuted under this ‘Code’, by a ‘FICTITIOUS FOREIGN CORPORATION.’”
Mellor attached to the above demand for dismissal a “Bill of Lading” which provided:
“To the ‘Public Vessel’ (Clerk of Court) you are instructed to deliver the attached ‘Cargo’ (Judicial Notice; Writ of Error Coram Nobis) to the ‘Public Vessel’ (Judge) Jon Stuart Scoles in his
'Admiralty Jurisdiction.' Liability is established by the ‘Bills of Lading Act’ against carriers that misplace of misdeliver our ‘Cargo’ (paperwork), 46 USC 781.”
The court granted the government’s motion and ordered a psychiatric evaluation by a psychologist or psychiatrist of the government’s choosing.
Similarly, in Diaz v. Diaz, 2009 WL 272870 (W.D. Va. Feb. 3, 2009), federal inmate Jerry Resto Diaz, also proceeding
pro se, sued himself, seeking release from federal custody, apparently by means of admiralty and maritime law (who knew).
Diaz wished to proceed in admiralty (and apparently non-jury), invoking Rule 9(h), and the Supplemental Rules, “specifically Rule C Special Provision to enforce a Maritime lien granted for salvage Service.” Diaz sought “certain procedural safeguards under the Admiralty Jurisdiction of the Court, Due Process and Equal Protection of law,” issuance of a “WARRANT FOR ARREST against bailed goods of ‘SALVOR’ [he] pledged as an exchange for the release of insolvent, Distressed U.S. Vessel JERRY RESTO DIAZ (ens legis) charged under….”
The court somehow sifted through Diaz’s admiralty and maritime legal gymnastics and concluded:
“In sum, it appears from his submissions that Diaz is arguing that he has a possessory interest in himself, and asks the court to release him from BOP custody and deliver him to himself.”
The court disagreed with Diaz’s arguments and dismissed his case:
“Diaz apparently seeks release from prison based on documents he created in reliance on his rather tenuous interpretation of the Uniform Commercial Code and other federal statutes and rules. The court finds that his claims are patently frivolous. Even liberally construed, the complaint does not state a viable federal legal claim upon which Diaz is entitled to have his federal criminal sentence of imprisonment vacated or set aside under 28 U.S.C. § 2255 such that the court could construe his pleading and transfer the instant action as a § 2255 motion to the district court where Diaz was sentenced. Nor does he assert any constitutional infirmity in the way in which his sentence has been calculated or executed such that the court could construe his pleading as a petition under 28 U.S.C. § 2241. Thus, to the extent that the present complaint seeks Diaz's release from custody based on civil financing documentation, it will be dismissed as legally frivolous, pursuant to § 1915(e)(2)(B)(i).”
Reader Feedback
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John A. C. Cartner
Cartner & Fiske, LLC
Washington, DC
“Many thanks. I use your updates to help me keep current as well as keep me up to date for my law school class, with my colleague Professor Joe Sweeney, at Fordham.”
Howard M. McCormack
Marlex Associates
Garden City, NY
Ed. Note: Mr. McCormack is a former President of the Maritime Law Association of the United States and a former partner in the noted admiralty law firm, Healy & Baillie, LLP (prior to its merger with Blank Rome LLP).
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Robinson & Son
Hudson Falls, NY
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Admiralty Update. Keep up the good work.”
Randy O’Neil
MOPS Marine License Insurance
Long Beach, NY
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