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08 May 2019
Whether a party should seek to apply general maritime law to an incident is not always obvious and the consequences can be even less apparent. Following a 2015 collision by a 'Ride the Ducks' vehicle into a tour bus on the Aurora Bridge in Seattle, a case was brought on behalf of Phuong Dinh and 42 other victims of the crash, which killed five and injured more than 60 people. Many of the cases had settled but for those that had not, the jurors awarded $123 million to the plaintiffs – some receiving as much as $25 million – and split liability between the duck boat owner and the company that had refurbished the World War II-era vehicles for use for public tours. Interestingly, the owners did not file a limitation action.
Many jurisdictions, including the United States, have long granted vessel owners the ability to bring an action to limit liability to the value of the vessel after a marine casualty, provided that the owner can prove that they lacked knowledge of the problem beforehand. In some cases, the value of the vessel is little, such as in the action filed following the sinking of the RMS Titanic. More recently, the value could be substantially more, although much less than potential liability for the loss and punitive damages, as in the case following the Deepwater Horizon oil spill, where limitation was sought but the court ultimately found that certain acts of the crew were within the owners' knowledge and thus declined limitation. Even so, the limitation action in that case provided the procedural advantages of concursus, bringing together all claims in a single forum while staying all other proceedings.
The US version of the Limitation of Liability Act is stipulated in Title 46 of the United States Code, starting at Section 30501. Enacted in 1851 – the same year that Moby Dick was published – the act was intended to promote the US merchant marine and investment in shipping.
Since then, the act's scope has adjusted to cover all kinds of vessels and circumstances.
A preliminary question when seeking to apply the act is what constitutes a 'vessel'. Section 3 of Title 1 of the US Code states that: "The word 'vessel' includes every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water." Accordingly, limitation has been invoked to apply to jet skis and watercraft smaller than may typically be expected. In fact, the US Court of Appeals for the Ninth Circuit is hearing a case on whether a paddleboard meets the definition.
The Supreme Court's most recent case relevant to defining a vessel attempts to create a more practical approach in articulating a "reasonable observer" test in "borderline cases where 'capacity' to transport over water is in doubt".(1) The basic difference as to when a watercraft is a vessel is determined by whether it was regularly but not primarily used (and designed in part to be used) for persons to go over water, while others are not designed (to any practical degree) to serve a transportation function and did not do so.
Title 46 of the US Code states: "The owner of a vessel may bring a civil action in a district court of the United States for limitation of liability under this chapter."(2)
Relative to this issue, a federal court may hear a limitation case. Section 30511 provides that a vessel owner may bring a civil action for limitation in a US district court. In general, invoking a federal court's admiralty tort jurisdiction is often satisfied in limitation proceedings where an incident involving a vessel would potentially adversely affect maritime commerce and have a substantial relationship to traditional maritime activity. However, in some cases it may be difficult to satisfy the test for such admiralty jurisdiction in order to file in federal court (eg, where the incident does not occur on navigable waters).
In this circumstance, the Supreme Court's 1911 decision on the issue supports that the act, as now stated in Section 30511, provides an independent basis for federal jurisdiction without having to meet the test for maritime torts, including being on a navigable body of water.(3) However, subsequent cases, including in the Ninth Circuit Court of Appeals in Seven Resorts, Inc v Cantlen(4) (collecting cases), hold that this may no longer be generally accepted even though the Supreme Court has not overruled Richardson.
As for the duck boat cases in Seattle, if the owners had filed for limitation, they would have had to demonstrate that the vehicle was a 'vessel' in that it was capable of being used for water transportation. As the crash occurred over water on a bridge, the owners also would have had to argue that the act provided an independent basis for federal jurisdiction, as the case may not have qualified as an admiralty tort, or found another vehicle for jurisdiction into federal court, such as diversity jurisdiction.
While limitation may have given them the opportunity to have the cases tried to the federal court without a jury, the owners may have thought that doing so would constitute a significant disadvantage by exposing them to punitive damages, which have been recognised under general maritime law in some cases. For example, a recent federal case in Seattle allowed punitive damages by an injured passenger to go to a jury; other courts have not permitted punitive damages to be awarded in maritime cases even under general maritime law, where such awards are not available in state court. Washington generally does not permit punitive damages awards under state law, and none were awarded in the duck boat case. Rather than take the chance, the owners stayed in the state court, which immunised them from any punitive damages award.
As in many cases involving potential maritime issues, this area of law has been recognised by the courts and attorneys as not being "waters for the inexperienced". Making an informed decision not only involves knowing all the facts but also requires evaluating the potential consequences of decisions made early on in a case, which could determine the outcome. While limitation offers an opportunity to limit liability, filing an action that applies general maritime law in federal court could create greater exposure. Evaluating the risks of both takes experience and know-how.
For further information on this topic please contact B Otis Felder at Wilson Elser by telephone (+1 213 443 5100) or email (email@example.com). The Wilson Elser website can be accessed at www.wilsonelser.com.
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