Category: Maritime Law

The Supreme Court Rejects Punitive Damages in Unseaworthiness Claims

Keith B. Letourneau, William R. Bennett III, John D. Kimball, and Zachary J. Wyatte

A recent United States Supreme Court ruling held that a plaintiff may not recover punitive damages on a maritime claim of unseaworthiness. This new ruling has resolved a split among the circuits and has essentially reinforced an otherwise long-standing precedent.

On June 24, 2019, the United States Supreme Court decided Dutra Group v. Batterton, holding 6-3, that a plaintiff may not recover punitive damages on a claim of unseaworthiness. Justice Alito delivered the opinion of the Court in which Justices Roberts, Thomas, Kagan, Gorsuch, and Kavanaugh joined. Justice Ginsburg filed a dissenting opinion in which Justices Breyer and Sotomayor joined.

This case arose from a personal injury incident aboard a vessel. Christopher Batterton was working as a deckhand on the vessel, which The Dutra Group owned and operated, when a hatch cover blew open and severely injured his hand. Batterton sued Dutra, asserting a variety of claims, including unseaworthiness, and sought general and punitive damages. Dutra moved to dismiss the punitive damages claim, arguing that such damages were not available on claims for unseaworthiness. The District Court denied Dutra’s motion, and the Ninth Circuit affirmed. But the Supreme Court reversed.

The Court noted that the overwhelming historical evidence suggests that punitive damages are not available for unseaworthiness claims and that the lack of punitive damages in traditional maritime law cases is “practically dispositive.” The Court said, “because there is no historical basis for allowing punitive damages in unseaworthiness actions, and in order to promote uniformity with the way courts have applied parallel statutory causes of action, we hold that punitive damages remain unavailable in unseaworthiness actions.”

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The Supreme Court Adopts a Middle of the Road Approach When Deciding a Manufacturer’s Duty to Warn in the Context of Maritime Tort Asbestosis Cases

John D. Kimball and Noe S. Hamra

 

On March 19, 2019, the U.S. Supreme Court in Air & Liquid Systems Corp. v. Devries held that, under maritime law, a product manufacturer has a duty to warn of asbestos or other hazardous parts when its own product, although not containing such hazardous parts, requires its later incorporation, and the manufacturer knows or has reason to know that the integrated part is likely to be dangerous for its intended use. The Supreme Court’s decision settles a longstanding conflict between federal and state courts regarding the applicable rule in maritime tort cases. Manufacturers of such products must take this ruling into account when evaluating product warnings.

Background

For years, federal and state courts have struggled to find consensus on the applicable rule regarding a manufacturer’s duty to warn of the danger of its products when those products later had dangerous parts added to them. Prior to Devries, courts generally applied one of three approaches.

The first approach, viewed as plaintiff-friendly, relied on mere foreseeability. Under this approach, if it was foreseeable that the manufacturer’s product would be used with another product or part, even if the manufacturer’s product did not require use or incorporation of that other product or part, then the manufacturer could face liability for failure to warn.

The second approach, viewed as defendant-friendly, relieves manufacturers of any liability if they do not make, sell, or distribute the dangerous part or incorporate the dangerous part into the product, even if the product requires incorporation of the part and the manufacturer knows that the integrated product is likely to be dangerous for its intended use (this is also known as the “bare-metal defense”).

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Has the Ground Shifted under the Law Concerning When a Party Is “Found within the District” for Purposes of Rule B?

Thomas H. Belknap, Jr., and Noe S. Hamra

It has long been the law in the Second Circuit that when a foreign party registers with the New York Department of State to conduct business in New York and designates an agent within the district upon whom process may be served, it will be “found within the district” for purposes of Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the “Admiralty Rules”). This precedent was clearly established in STX Panocean (UK) Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 133 (2d Cir. 2009), where the Second Circuit unequivocally held that “a company registered with the Department of State is ‘found’ [within the district] for purposes of Rule B… .”

Recent developments in the law concerning the constitutional scope of a court’s personal jurisdiction, however, combined with the absence of clear legislative statements in New York’s registration statute, raise fresh questions about the continuing viability of STX Panocean’s holding, and the extent to which a party can seek to immunize itself against Rule B attachment in a state by registering there. Continue reading “Has the Ground Shifted under the Law Concerning When a Party Is “Found within the District” for Purposes of Rule B?”

Jeffrey Moller Elected to the Maritime Law Association’s Board of Directors

Blank Rome Partner Jeffrey S. Moller has been elected to the board of directors of the Maritime Law Association of the United States (“MLA”) for a three-year term. A member since 1988, Jeffrey has also served as chairman of MLA’s Committee on Regulation of Vessel Operations.

Founded in 1899, the MLA is the primary maritime law organization in the United States with over 3,600 members. The objectives of the MLA are to advance reforms in U.S. maritime law; furnish a forum for discussion of problems affecting maritime law and its administration; participate as a constituent member of the Comité Maritime International and affiliated organization of the American Bar Association; and act with other associations in efforts to bring about a greater harmony in the shipping laws, regulations, and practices of different nations.

For more information, please visit mlaus.org.

The Future of the “Safe Port” Warranty: Smooth Sailing or Murkier Waters?

Emma C. Jones

In an age when cybersecurity breaches regularly make headlines, and autonomous vessels are appearing on the not-so-distant horizon, it’s important to consider how age-old contracts like maritime charter parties will fare in the face of rapidly changing technology and the security risks that come with it.

The “safe port” warranty is a tenet of charter party language, and an unsafe port or berth is often asserted in commercial negotiations as justification for damages resulting from delays or damage at port. While there is not a great deal of case law analyzing the warranty in the context of modern technological risks and threats, the cases and arbitration awards that we do have provide an interesting background against which to con­sider the potential for an expansion of the definition of the safe port warranty in an increasingly tech-based world. Continue reading “The Future of the “Safe Port” Warranty: Smooth Sailing or Murkier Waters?”

Gulf Coast Update: The Fifth Circuit Establishes a New “Maritime Contract” Test

David G. Meyer

Whether a particular contract is “maritime” is a legal question that can often arise in disputes subject to potential adjudication in the U.S. court system. There can be several reasons for this. One reason concerns determining whether a civil action can be heard in federal court versus state court. If a maritime contract is at issue, a case might be litigated in federal instead of state courts, and/or a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant.

Knock for Knock Defense and Indemnity Clauses

Another area where the issue regularly arises concerns con­tracts connected to oil and gas exploration and drilling activities in both inshore and offshore waters of the Gulf of Mexico. By way of background, oilfield services contracts in the Gulf of Mexico region routinely contain what are known as “knock for knock” defense and indemnity clauses. In a typical knock for knock scheme, each company on a job agrees to indemnify, defend, and provide additional insured coverage to the others so that each is liable for injury to its own employees, regardless of fault. The intent underlying this is to apportion the insurable risk each contracting party bears to their relative size and role in the venture. Theoretically, this allows smaller companies to compete for jobs without potentially cost-prohibitive insurance premiums, and costs are further reduced by a decreased need to litigate the issue of liability among multiple defendants, as liability is assumed irrespective of fault or negligence of any other party. Continue reading “Gulf Coast Update: The Fifth Circuit Establishes a New “Maritime Contract” Test”

A Bump in the Road for the Collection of Evidence for Use in Foreign Legal Proceedings

Mainbrace | March 2018 (No.1)

W. Cameron Beard and Lauren B. Wilgus

As discussed in prior issues of Mainbrace, parties to for­eign legal proceedings can collect evidence in the United States for use abroad by invoking a U.S. statute, 28 U.S.C. § 1782 (“section 1782”). Section 1782 is a powerful tool, and allows either foreign courts or foreign litigants to seek orders directly from U.S. federal district courts for the taking of testimony or the disclosure of documents in this country. Notably, litigants can often obtain section 1782 relief quickly and without undue burden or delay, because the statute can be invoked independently of, and does not require prior resort to, the Hague Evidence Convention.

Various disputes regarding the proper scope of section 1782 have arisen over the years. Some of the major disputes have been conclusively resolved. For exam­ple, in 2004 the U.S. Supreme Court resolved a significant conflict among the lower federal courts, and ruled that under section 1782 a foreign party may obtain broad dis­covery of the kind generally available in U.S. litigation, even if such discovery would not be allowed under the laws of the foreign forum where litigation is pending. Other vexing issues, however, remain unresolved. For example, the ques­tion of whether section 1782 may be used for the collection of evidence for purely private arbitrations remains unsettled. We have discussed these and other issues previously. Continue reading “A Bump in the Road for the Collection of Evidence for Use in Foreign Legal Proceedings”

NY Bankruptcy Courts Grapple with Territorial Limits

Mainbrace | March 2018 (No.1)

Rick Antonoff, Michael B. Schaedle, Bryan J. Hall, and Matthew E. Kaslow

In a pair of recent opinions from the U.S. Bankruptcy Court for the Southern District of New York, two judges took varying approaches to the issues of 1) their ability to assert personal jurisdiction over foreign defendants, and 2) applica­tion of U.S. laws to transactions that occur, at least in part, outside of the United States.

The first opinion, from Judge Sean H. Lane, denied the defendants’ motion to dismiss a lawsuit seeking to avoid and recover money initially transferred to correspondent bank accounts in New York designated by the defendants, before being further transferred outside of the United States to complete transactions under investment agreement executed outside of the United States and governed by foreign law. On remand after a district judge ruled that the defendants’ use of correspondent banks in the United States was sufficient for the bankruptcy court to have personal jurisdiction over them, Judge Lane held that the doctrine of international comity and the presumption against extra­territoriality did not prevent application of U.S. law to avoid transfers under the Bankruptcy Code. The second opinion, from Judge James L. Garrity, Jr., dismissed a bankruptcy trustee’s claims to avoid and recover transfers under U.S. bankruptcy law that occurred entirely outside the territory of the United States. Continue reading “NY Bankruptcy Courts Grapple with Territorial Limits”

The Courts Strike Down Oilfield Contractor Penalty Liabilities

On December 18, 2017, the U.S. Court of Appeals for the Fifth Circuit dismissed the U.S. government’s appeal regarding a Bureau of Safety and Environmental Enforcement (“BSEE”) Notification of Incident of Noncompliance (“INC”) civil penalty issued against an oilfield contractor. This development brings closure to the long-standing question of whether BSEE has authority to enforce civil and criminal penalties against offshore contractors.

Continue reading “The Courts Strike Down Oilfield Contractor Penalty Liabilities”

Enforcement in the United States of Foreign Judgments that Incorporate Monetary “Penalty” Provisions

Mainbrace | October 2017 (No.4)

W. Cameron Beard

While the United States is a party to an international convention on the enforcement of foreign arbitral awards,  it is not a party to any similar instrument regarding the enforcement of foreign court judgments. Nevertheless, foreign court judgments providing civil as opposed to criminal relief can be enforced in the United States, generally pursuant to the laws of individual states where judgment enforcement is sought. Continue reading “Enforcement in the United States of Foreign Judgments that Incorporate Monetary “Penalty” Provisions”