June 24, 2009
Welcome to the June 24, 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 Crowley tractor tug at dock at the Embarcadero in San Francisco.
G&O Investigations
G&O is investigating possible price-fixing by the three
largest helicopter operators in the Gulf of Mexico which service
offshore rigs and platforms. The companies in question received subpoenas from the U.S. Department of Justice last week. For more
on this, see Lagniappe, below.
G&O is also investigating what appears to be a deceptive and
potentially illegal magazine subscription sales practice whereby
people receive magazines they never subscribed to, then receive bills
and, when they understandably don't pay the bills, threatening
collection notices. The companies behind this appear to be National
Credit Audit Corporation, or NCAC, and its parent, ChoicePoint, Inc.,
now owned by the parent of Lexis-Nexis, Reed Elsevier. If you have been
the victim of a magazine or other deceptive sales or marketing scheme,
or have had what you believe to be a deceptive or unlawful experience
with a collection firm, please contact Fred Goldsmith at
fbg@golawllc.com, (412) 281-4340,
or (toll free) (877) 40-GO-LAW (877-404-6529).
G&O Personnel News
On July 14, 2009, Fred Goldsmith will co-moderate a continuing legal education seminar entitled, "PLAIN TALK ON DEPOSITIONS: Four Judges Speak to State and Federal Court Deposition Practice and Strategy in Discovery and Trial in Western Pennsylvania." Sponsors of the program are the Allegheny County Bar Association’s Federal Court Section, the Judges of the U.S. District Court for the Western District of Pennsylvania, and the Pennsylvania Bar Association's Federal Practice Committee.
The June 2009 issue of MarineNews magazine includes a column by Fred Goldsmith on class actions in the maritime industry.
Rich Ogrodowski recently moderated two federal court continuing legal education seminars presented by the Western Pennsylvania Chapter of the Federal Bar Association in conjunction with the U.S. District Court for the Western District of Pennsylvania, each focused on new Electronic Discovery rules and procedures: on May 29, 2009, "Outside Counsel, Corporate Counsel, and E-Discovery Consultant: Roles and Responsibilities of Each - Working Together to Solve the E-Discovery Puzzle"...and on March 13, 2009, "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."
Russ Giancola, on May 21, 2009, was one of five lecturers on "Pennsylvania Personal Injury Practice for Paralegals," a continuing legal education seminar. Russ's presentation focused on all aspects of investigating and evaluating a personal injury claim.
Fred Goldsmith was recently elected Vice Chair of the Federal Court Section of the Allegheny County Bar Association.
Recent U.S. Coast Guard Notices in the Federal Register
Coast Guard Establishes and Seeks Members for Merchant Mariner Medical Advisory Committee
The new Committee will advise, consult with, report to, and make recommendations to the Secretary of Homeland Security on matters relating to the medical evaluation process and evaluation criteria for medical certification of merchant mariners. Details on the Committee and membership criteria appear in the
June 10, 2009,
Federal Register.
Recent State & Federal Court Maritime Decisions
U.S. Supreme Court: Punitive Damages Available for "Willful
and Wanton" Failure to Pay Maintenance and Cure
In Atlantic Sounding Co. v. Townsend, 2009 WL 1789469 (U.S.
June 25, 2009), the court concluded: "Because punitive damages have long
been an accepted remedy under general maritime law, and because nothing
in the Jones Act altered this understanding, such damages for the
willful and wanton disregard of the maintenance and cure obligation
should remain available in the appropriate case as a matter of general
maritime law. Limiting recovery for maintenance and cure to
whatever is permitted by the Jones Act would give greater pre-emptive
effect to the Act than is required by its text, Miles [v. Apex
Marine Corp., 498 U.S. 19 (1990], or any of this Court's other
decisions interpreting the statute."
(Ed. Note: added 6/26/09)
Wrongful U.S. Ninth Circuit Court of Appeals: Exxon Must Pay 12 Years’ Worth of Interest on Punitive Damage Award
On remand after the Supreme Court’s landmark holding that the maximum ratio of punitive damages to compensatory damages is 1:1 under maritime law, the Ninth Circuit in Exxon Valdez v. Exxon Mobil Corp., 2009 WL 1652256 (9th Cir. June 15, 2009), held that interest must accrue on the punitive damages award from September 1996 (the date of the original verdict against Exxon), not 2008, when the final punitive damages award was fixed. Therefore, interest ran at a rate of 5.9% (the average accepted auction price in September 2006 for 52-week Treasury bills) on the $507.5 million punitive damages award since September 24, 1996. The Ninth Circuit also held that each party must bear its own costs for the protracted appeals; Exxon had sought to have the plaintiffs bear all, or at least 90%, of Exxon’s appellate costs, since it had successfully reduced the original punitive damages award of $5 billion to $507.5 million.
U.S. Fifth Circuit Court of Appeals: Whether Statute of Limitations Has Expired on Negligence and Unseaworthiness Claims Involves Questions of Fact Concerning Severity of Early Symptoms
In Pretus v. Diamond Offshore Drilling, Inc., 2009 WL 1637083 (5th Cir. June 12, 2009), Herbert B. Pretus, Jr. sued his employer, Diamond Offshore Drilling, in September 2006 for a lung disorder allegedly arising out of his employment on the OCEAN CONFIDENCE in 1999 and 2000. He asserted a negligence claim under the Jones Act and an unseaworthiness claim under the general maritime law. Despite treating with various doctors, Pretus was not diagnosed with hypersensitivity pneumonitis—which Diamond’s independent medical examiner admitted was difficult to diagnose—until 2005. Pretus claimed that prior to taking a leave of absence in 2004 due to his deteriorating health, he had merely suffered cold-like symptoms and respiratory problems. The district court granted Diamond’s motion for summary judgment, holding Pretus failed to sue before the applicable three-year statute of limitations ran. The Fifth Circuit reversed, holding that questions of fact existed as to the severity of Pretus’s pre-2004 symptoms and whether Pretus’s initial symptoms were mere “routine physical annoyances” that would not have triggered the statute of limitations.
Massachusetts Federal District Court: Whistleblower May Proceed with Retaliatory Discharge Claim Under General Maritime Law
In Baetge-Hall v. American Overseas Marine Corp., 2009 WL 1636600 (D. Mass. June 11, 2009), the court permitted Jocelyn Baetge-Hall to proceed with her claim for retaliatory discharge under the general maritime law for whistleblowing, but not for declaring her intent to seek legal remedies to address discriminatory treatment she allegedly received after not taking a vaccine required by her employer. The court held that under the general maritime law, retaliatory discharge claims may only be maintained when an employer terminates a seaman for exercising rights already existing under maritime law (such as the Jones Act), or where the discharge raises significant public policy concerns. Thus, Baetge-Hall established a prima facie case for retaliatory discharge by claiming that her employment was terminated when she expressed her intent to notify federal authorities about allegedly dangerous or harmful activities aboard her vessel, which the court held raised significant public policy concerns.
Michigan Federal District Court: Seaman’s Employer’s Cure Obligation Can Include Guaranteeing Payment to Physician
In Eldridge v. Star Line, 2009 WL 1513991 (E.D. Mich. May 29, 2009), Mark Eldridge claimed he injured his neck while lifting a flagpole on a dock. The parties agreed that Eldridge would consult a neurosurgeon to ascertain the extent of his injuries, to facilitate settlement discussions. Before examining Eldridge, the neurosurgeon required a letter guaranteeing payment for his services, which Eldridge’s employer refused to provide, arguing that it need only promptly pay for such services, that it wasn’t obligated to guarantee payment for such services. The court held the general maritime law’s cure obligation imposes on a seaman’s employer a duty to take reasonable steps to ensure its seaman employee receives proper medical treatment and care. Thus, the court required the defendant to issue a letter authorizing treatment
and guaranteeing payment. The court also permitted Eldridge to amend his complaint to include a claim for failure to provide maintenance and cure – that the delay caused by the employer’s conduct aggravated and prolonged Eldridge’s condition and increased his medical expenses.
Louisiana Federal District Court: Defendants’ Request to Sever Seaman’s Maintenance and Cure Claim Denied
In Lee v. Abdon Callais Offshore, LLC, 2009 WL 1649585 (E.D. La. June 11, 2009), the court rejected the defendants’ request to sever the plaintiff’s maintenance and cure claim. Mikel Lee allegedly injured his knee in an accident while assisting with the mooring of the M/V TINA CALLAIS. Lee later claimed he suffered a lower back injury in the same accident. The defendants contended Lee’s lower back injury was a pre-existing condition, and further sought to assert the McCorpen defense for Lee’s alleged intentional concealment of this condition. The defendants filed a motion to sever Lee’s maintenance and cure claim. The court denied the motion, finding Lee did not desire an expedited trial of his maintenance and cure claim. The court also found the medical evidence to be used in the maintenance and cure trial would be duplicative of that used in the Jones Act trial, causing significant and unnecessary increases in litigation time and expenses.
U.S. Sixth Circuit Court of Appeals: Laches Did Not Bar Maintenance and Cure Claim Filed Almost 8 Years After Injury
In Cunningham v. Interlake Steamship Co., 2009 WL 1515497 (6th Cir. June 2, 2009), Andrew Cunningham injured his back in July 1998. His attorney timely filed suit in Ohio state court in July 2001, but voluntarily dismissed Cunningham’s Jones Act and maintenance and cure claims in July 2005 on the eve of trial. In July 2006, Cunningham’s attorney filed these claims in federal court. The Sixth Circuit affirmed the district court’s dismissal of Cunningham’s Jones Act and unseaworthiness claims as barred by the three-year statute of limitations, rejecting Cunningham’s arguments that Ohio’s saving statute tolled the statute of limitations and that Interlake was equitably estopped from asserting the statute of limitations defense. The Sixth Circuit further held that the three-year statute of limitations applies only to maritime torts, not claims for maintenance and cure, which is governed by laches. In applying the doctrine of laches, the appeals court found Cunningham had acted diligently by timely filing his claim for maintenance and cure in state court and actively pursuing the case for four years before voluntarily dismissing it. Although Cunningham waited nearly one year to refile the claim in federal court, the court found Interlake was not prejudiced by the delay. Nevertheless, the Sixth Circuit agreed with the district court that Interlake had satisfied its maintenance and cure obligations, since Cunningham’s doctor found he had reached maximum medical improvement in 2003, and there was insufficient evidence to raise a genuine issue of material fact as to any causal relationship between his 1998 injury and additional treatment he received in 2004 and 2005.
U.S. Supreme Court: Trial Court Must Give Jury Instruction on “Genuine and Serious” Standard for Fear-of-Cancer Damages at Defendant’s Request in FELA Case
In CSX Transportation, Inc. v. Hensley, 129 S. Ct. 2139 (June 1, 2009), Thurston Hensley, employed by CSX as an electrician, sought pain and suffering damages from CSX based on, among other things, his fear of developing lung cancer. He sued under the Federal Employers’ Liability Act, which the Jones Act expressly incorporates by reference. CSX proposed two jury instructions related to this claim, one stating that Hensley’s fear must be genuine and serious, see Norfolk & Western R. Co. v. Ayers, 538 U.S. 135, 123 S. Ct. 1210 (2003), the other outlining factors for the jury to consider in applying the Ayers standard. The trial court denied both of CSX’s requests, and the jury awarded Hensley $5 million. The Supreme Court held that the trial court’s refusal to give the requested instructions constituted “clear error,” and reversed and remanded the case.
Hawaii Federal District Court: Salvor Has Duty to Prevent Foreseeable Harm to Reef
In Cape Flattery Ltd. v. Titan Maritime LLC, 607 F. Supp. 2d 1179 (D. Haw. Mar. 19, 2009), the court held that a salvor owes a duty to prevent foreseeable harm while conducting its salvage efforts. The M/V CAPE FLATTERY had run aground on a submerged reef off Barbers Point, Oahu, Hawaii, and Titan Salvage agreed with the vessel’s owner to attempt to salvage it. The owner alleged that during the salvage, Titan Salvage acted with gross negligence when it used tugs with submerged heavy tow lines which damaged the coral reef. The U.S. Coast Guard designated the owner of the CAPE FLATTERY as the responsible party under the Oil Pollution Act for the costs and damages which arose in response to the oil spill threat resulting from the vessel running aground. The vessel owner also learned it may be liable for more than $15 million for restoring the reef. In resolving the issue of whether the owner’s claims against Titan for indemnity or contribution were subject to an arbitration agreement, the court found Titan, as salvor, owed a duty to the CAPE FLATTERY’s owner to prevent foreseeable damage to the coral reef, regardless of the arbitration agreement.
Lagniappe
U.S. Department of Justice Investigating Possible Price-Fixing by Gulf of Mexico Helicopter
Operators
Petroleum Helicopters, Inc., Offshore Logistics, Inc. and SEACOR Holdings, Inc. disclosed on June 15
and 16, 2009, receiving subpoenas from the United States Department of Justice relating to a grand jury investigation of potential antitrust violations by providers of helicopter services in the Gulf of Mexico.
G&O is also investigating a possible price-fixing conspiracy by these
same companies, the largest providers of offshore helicopter services in the Gulf. If you have any questions about the matter, contact Fred Goldsmith at
fbg@golawllc.com, (412)
281-4340, or toll free 877-40-GOLAW (877-404-6529).
For a backgrounder on class actions, see Goldsmith’s article in the June 2009 issue of MarineNews: http://www.scribd.com/doc/16657687/MARINE-NEWS-June-2009
Reader Feedback
“Thanks much for your good work, time, and effort. You provide ‘news I can use.’ It is extremely helpful in remaining current on the issues and trends important to my work. Please keep up the good work as professionals appreciate each time we read the newsletter.”
Captain Peter Squicciarini
Norfolk Tug Company
Norfolk, VA
* * *
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