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New Admiralty Case - 2nd Circuit Clarifies "Oregon" Rule on Allisions

The Court of Appeals for the 2nd Circuit, based in New York, has recently decided a case which clarifies the plaintiff's burden of proof in allision cases.  An allision is a collision between a moving object and a stationary object.

In the case of Zerega Avenue Realty Corp. v. Hornbeck Offshore Transportation, LLC, a barge allided with a bulkhead or retaining wall on shore.   The property owner brought suit against the tug company responsible for the barge.  At trial, the property owner asserted that under the Oregon Rule (from the U.S. Supreme Court case, The Oregon), it was entitled to a presumption of fault shifting the burden from the plaintiff to the defendant-vessel owner to prove that it was NOT the cause of the damage.  The general rule in torts is that the claimant has the burden to show the defendant was the cause of damage.

The court found, however, that the presumption did not extend to whether the allision caused the damages alleged.  Because the trial court did extend the presumption, the case was reversed and returned to the trial court for such determination.

Side note for the trial bar:  Apparently, photographs were used as exhibits.  Counsel, during witness examination, did not ask if the photographs "fairly and accurately portrayed the area shown" in the picture.  The trial court sustained an objection to the admission of the photograph as lacking proper foundation.  The Court of Appeals, perhaps not appreciative of strict application of the Rules of Evidence, wrote: "It would have been preferable for the District Court, when discussing the foundation issue with counsel at sidebar, to have offered the helping hand of a properly framed follow-up question."  (emphasis added). 

Always nice to get a helping hand from the courts.

Exxon Valdez - Ninth Circuit Awards Post Judgment Interest , but....

Exxon Valdez litigation update:

The Ninth Circuit Court of Appeals, on remand following the Supreme Court's decision limited punitive damages to 1-1 ratio with compensatory damages, awarded post-judgment interest to the Plaintiffs in the amount of $507.5 million. Decision posted here.

But, per SCOTUSBLOG, Exxon has sought rehearing en banc, with regards to the denial of Exxon's costs of court.

Supreme Court Allows Punitive Damages for Seaman's Maintenance and Cure Case

The Supreme Court, in an opinion by Justice Thomas, has held that punitive damages are allowable for seaman's maintenance and cure claims, despite the argument that the Jones Act remedies (which don't include punitive damages) are exclusive.  The case is Atlantic Sounding Co., Inc. v. Townsend and the opinion is here.

Quick post, but more analysis to follow.  My earlier post on the case here.

Side note:  Justice Thomas was joined by Justices Stevens, Souter, Ginsburg and Breyer.  The dissent was written by Justice Alito, joined by Chief Justice Roberts and Justices Scalia and Kennedy. 

While ideologies can be a poor indicator of how a justice will cast their respective votes, I don't think I've ever seen such a split with Justice Thomas not just joining, but authoring, the opinion joined by the Court's "liberal" justices.  Per Supreme Court practice, Justice Stevens would be entitled to choose an opinion's author.  Perhaps he chose Justice Thomas to get the vote to allow punitive damages.

More Observations on the Tonnage Case - Justice Breyer "diss" on the More Obscure Provisions of the Constitution?

Per the Blog of Legal Times, Justice Breyer appeared sheepish at the the arcane-ness of today's opinion on the tonnage clause of the U.S. Constitution (here).

Per BLT:

At the end, Breyer told the audience, "You know now more about the tonnage clause than many."

Another observation - it appears as if the Justices are more comfortable disclosing their original research, not relying merely on the litigants' briefs.  This was an interesting cite:

We can find little, if any, other personal property that it taxes. According to the State of Alaska, Valdez specifically exempts from property taxation motor vehicles, aircraft, and other vehicles, as well as business machinery. See Dept. of Community and Economic Development, Division of Community and Business Development, Office of the State Assessor, Alaska Taxable 2001, p. 20 (Jan. 2002), (Table 4), online at http://www.commerce.state.ak.us/dca/Taxable/AKTaxable2001.pdf (as visited June 10, 2009, and available in Clerk of Court’s case file).

As visited June 10, 2009? 

This reminds me of the hubbub last year when a broad statement in a death penalty case was disputed in a military law blog (CAAFlog) post.  The Supreme Court's decision didn't change, but it appears as if the Court is not going to rely solely on the briefs to provide the applicable law.  Great post on social media and the Supreme Court here.

My earlier post on Polar Tankers case, including links to briefs and transcripts,  here.

Illegal Fees and the U.S. Constitution - 2nd Circuit Strikes Down Fee Under Commerce and Tonnage Clauses

Proponents of the Hawaii Invasive Species Assessment should monitor recent developments in tonnage and commerce clause litigation.  The Second Circuit Court of Appeals recently struck down a fee on passengers using an interstate ferry.  It cited the commerce and tonnage clauses as the basis for striking down the local regulation.

Side note:  Thanks to my partner, and fellow blogger, Robert Thomas for passing this case to me.  I'm sitting at Lake Stevens, Washington enjoying the beautiful Seattle weather and the sights, but when a federal appeals court hands down a decision on a pretty arcane maritime law issue, even one based on an even more obscure provision of the Constitution, it warrants a quick post. 

A duty of tonnage is presently before the U.S. Supreme Court in the Polar Tankers case (here), but the Court of Appeals for the Second Circuit had occasion to review a fee imposed on ferry-borne passengers in the case of Bridgeport and Port Jefferson Steamship Company v. Bridgeport Port Authority.

In this case, the operator of a passenger ferry that runs between New York and Connecticut brought suit to enjoin the collection of a fee imposed on passengers who use the Port Authority's terminal to embark or disembark. The fee had been in place since 1993 and comprises the significant bulk of the Port Authority's operating budget.

The passenger ferry operator challenged the passenger fee on two bases:  commerce clause and tonnage clause.

As to the commerce clause challenge, the operator asserted that the while the fee was not discriminatory between the citizens of different states, because it was a fee that touched interstate commerce, it had to be proportionally related to a benefit conferred upon the fee-payer.  In this case, the district court reviewed, line by line, the expenditures of the Port Authority and found that the passenger fee was not proportional to the benefit to the passengers noting unrelated Port Authority expenditures on roads, development, even a foreign trade zone.

As to the tonnage clause challenge, the operator asserted that the fees violated the tonnage clause of the Constitution and were similarly defective.  The Court was brief in this part of the opinion, and on its face, I don't see the passenger fee as an explicit duty of tonnage which brings to mind local taxes on the weight of imports or exports.  But, the Court, relying on earlier precedent, focused on the disparate impact between passengers and other users of the terminal.  It found:

In addition, the passenger fee offends the Tonnage Clause because the BPA’s non-ferry services are not available to ferry passengers; they were “completely unrelated and unavailable to the fee payers.” Charging the fee-payers for services that are not available to them is impermissible under the Tonnage Clause, even if not all fee payers actually use them.

The Polar Tankers case should not directly inform the Bridgeport case because the governmental fees are so different.  In the Polar Tankers case, the municipality was assessing fees based on the resale value of the vessel.  In this case, the fee was per person.

Certainly, Hawaii's invasive species assessment fee runs more afoul of the tonnage clause than these fees do (my post on that subject here). 

Supreme Court Nominee Judge Sotomayor and Maritime Law

Taking a page from my partner and fellow blogger, Robert Thomas, I thought it would be interesting to see what Supreme Court nominee Sonia Sotomayor's record was at it relates to admiralty or maritime law.  My search was hardly comprehensive and was strictly focused at the opinions she expressly authored (no per curiam opinions) while a Circuit Court judge.

In no particular order:

American Stevedoring Limited v. Marinelli (April 26, 2001):This is a case to determine the extent a union official ("shop steward") was in "maritime employment" for the purposes of the Longshore and Harbor Workers' Compensation Act (33 U.S.C. 901 et seq).  The case was before the 2nd Circuit Court of Appeals on appeal from the Benefits Review Board of the Department of Labor.  Judge Sotomayor noted that the test for maritime employment was at the company, and not individual employee level.  In a footnote, Judge Sotomayor indicated her view of the limits of judicial deference to agency interpretation of law when she questioned the Labor Department's interpretation of a court opinion vs. its organic statutory mandate.  She seems to indicate that agency interpretation of case law is not entitled to the same deference as statutes.

Senator Line GMBH & CO v. Sunway Line, Inc. (May 17, 2002): This is a cargo damage case arising from the spontaneous combustion of chemical cargo aboard a ship.  At issue was whether strict liability was appropriate for the shipment of inherently dangerous goods when neither shipper nor carrier had knowledge of the nature of the cargo.  This question turned on interpretation of the Carriage of Goods at Sea Act, 46 U.S.C. 1304(6)(COGSA).  Noting the relation of the domestic law and its genesis in international law, a point some conservative Senators may raise - but silly in light of modern maritime law with its pervasively international flavor, Judge Sotomayor found strict liability to be warranted by the text of COGSA.

Jessica Howard Ltd v. Norfolk Southern Rwailway Co. (January 10, 2003): This is a cargo (underwear) damage case presenting the issue of where should damaged cargoes value be determine - the place of origin or destination.  Historically, the destination was used to measure the "actual loss" valuation.  The carrier used "circulars"  to modify its bills of lading.  The court disagreed with the lower court who found that the circulars limited damage to property value at origin.  Judge Sotomayor disagreed and found that the circulars did not, as a matter of contract interpretation, act to thwart the law of damages.  The law of damages required a trial to determine the facts as to the appropriate measure of the value of the damaged cargo.

Wills v. Amerada Hess Corp. (August 11, 2004): This is a personal injury case involving a seamen who died of cancer complications allegedly caused by exposure to hazardous chemicals while employed on vessels.  The seaman's estate argued that the shipowner had to disprove causation, rather than the traditional obligation of any plaintiff to show the defendant's conduct caused plaintiff's damage.  The estate argued that an admiralty doctrine called the Pennsylvania rule applied to Jones Act personal injury claims.  Per Judge Sotomayor, the rule "shifts the burden of proving causation from plaintiffs to defendants to show not merely that their fault might not have been one of the causes of the injury, or that it probably was not, but that it could not have been."  The rule arose in the vessel collision context which Judge Sotomayor concluded made sense.  She declined to extend it to a personal injury case where a plaintiff could not establish the necessary causation between defendant's actions and plaintiff's injuries.

Universal Oil LTD v. Allfirst Bank (August 11, 2005):  This is a bankruptcy case which presented a clash between bankruptcy law and admiralty as it related to the court's power to extinguish maritime liens.  Finding that the lienors had submitted their dispute to the bankruptcy's court's powers, Judge Sotomayor wrote that the bankruptcy court did have the power to extinguish the liens.

Cassidy v. Chertoff (November 29, 2006): This case is a Fourth Amendment challenge to Coast Guard regulations relating to searches of passengers onboard ferries in Lake Champlain.  Judge Sotomayor thoroughly analyzed the regulations and the applicable precedent relating to searches and ultimately found the regulations to be permissible under the Fourth Amendment. 

Given her background on the Court of Appeals based in New York City, Judge Sotomayor should have a broad understanding of admiralty and maritime law.  Because admiralty is still very much common law based, vs. statutory, the Supreme Court sits at the crux of the creation or resolution of this judge-made law.

New Admiralty Case - In Rem Defendants Covered by Himalaya Clause

The Court of Appeals for the Ninth Circuit just issued its opinion in the case of Mazda Motors of America, Inc. v. M/V Cougar Ace (opinion here).

The legal issue is whether a defendant in rem can assert a contract right despite being a non-party to the contract.  The clause in question was a forum selection clause.

This case arises out of the M/V Cougar Ace mishap (depicted here)

 

The bills of lading for the cargo had a forum selection clause requiring that disputes be resolved in Tokyo, Japan.  The ship itself was not a party to the bills of lading, but was named as a defendant in a proceeding brought in Portland, Oregon.  The bills of lading had a Himalaya clause which provided:

The Merchant undertakes that no claim or allegation shall be made against any servant, agent or Sub- Contractor of the Carrier which imposes or attempts to impose upon any of them, or upon any vessel owned or operated by any of them, any liability whatsoever in connection with the Goods, and, if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all consequences thereof. Without prejudice to the foregoing, every such servant, agent and Sub-Contractor shall have the benefit of all provisions herein benefiting
the Carrier as if such provisions were expressly for their benefit; and in entering into this contract, the Carrier, to the extent of those provisions, does so not only on its own behalf, but also as agent and trustee for such servants, agents and Sub-Contractors.

The Himalaya clause contractually allows non-parties to assert rights under the contract.  The Ninth Circuit's opinion seemed compelled by the Supreme Court's 2004 decision in the Norfolk Southern Railway Co. v. Kirby decision.  The unanimous decision required an expansive view of Himalaya clauses (which theretofore had been construed narrowly).  Justice O'Connor stated:

The Court of Appeals' ruling is not true to the contract language or to the intent of the parties. The plain language of the Himalaya Clause indicates an intent to extend the liability limitation broadly — to "any servant, agent or other person (including any independent contractor)" whose services contribute to performing the contract. App. to Pet. for Cert. 59a, cl. 10.1 (emphasis added). "Read naturally, the word `any' has an expansive meaning, that is, `one or some indiscriminately of whatever kind.'" United States v. Gonzales, 520 U. S. 1, 5 (1997) (quoting Webster's Third New International Dictionary 97 (1976)). There is no reason to contravene the clause's obvious meaning. See Green v. Biddle, 8 Wheat. 1, 89-90 (1823) ("[W]here the words of a law, treaty, or contract, have a plain and obvious meaning, all construction, in hostility with such meaning, is excluded"). The expansive contract language corresponds to the fact that various modes of transportation would be involved in performing the contract. Kirby and ICC contracted for the transportation of machinery from Australia to Huntsville, Alabama, and, as the crow flies, Huntsville is some 366 miles inland from the port of discharge. See G. Fitzpatrick & M. Modlin, Direct-Line Distances 168 (1986). Thus, the parties must have anticipated that a land carrier's services would be necessary for the contract's performance. It is clear to us that a railroad like Norfolk was an intended beneficiary of the ICC bill's broadly written Himalaya Clause. Accordingly, Norfolk's liability is limited by the terms of that clause.

Apparently, there had never been a reported decision of an in rem defendant being protected by the Himalaya clause...till today. 

Coast Guard Report on Hawaii Catamaran Demasting Incidents

The Coast Guard has released its two marine casualty investigations into the facts and circumstances surrounding two separate de-masting incidents on Hawaii-based catamarans, Fourteenth Coast Guard District's news release here.

More to follow after I digest the findings. 

Kiele V Report

NaHoku Report

Supreme Court - Duty of Tonnage Case - Argument Transcripts and Briefs

Yesterday, the Supreme Court heard oral arguments in the Polar Tankers v. City of Valdez case.  The transcript is here.

In my earlier post, I suggested that the Court took the case not on the duty of tonnage issue but rather on discriminatory interstate tax schemes (think internet sales tax).  The amici briefs were virtually all in this camp.

Oral arguments, however, were ALL about the tonnage clause of the Constitution.  It suggests to me that the Court was NOT ready to wade into the interstate tax issue and the tonnage issue was a very, very clean way to strike down the tax, without creating precedent that would apply to the several states' ability to tax internet sales, etc. 

One great moment in the transcript which confronts, perhaps, a shortcoming of the Original Intent doctrine.  In short (and admittedly superficial) fashion, this doctrine or judicial philosophy calls for the interpretation of the Constitution, at the time it was drafted.  So, to define terms like "cruel and unusual" or "arms," Originalists will turn to the 1700's for clues as to meaning. 

So, does the tonnage clause include air or rail, invented long after the drafting of the Constitution?

CHIEF JUSTICE ROBERTS:  Well, but just on a -- maybe this doesn't matter. I have seen the capacity of cargo planes described in terms of tonnage. Does this clause apply to those?

MR. ROTHFELD: That -- that is an interesting question. It -- it was written to apply to ships simply because in the late 18th century, the only way of moving substantial amounts of cargo was by -- was by vessel. And I imagine that if the Framers had in mind airplanes and railroads -

CHIEF JUSTICE ROBERTS: It is that we have an evolving Constitution, after all.

MR. ROTHFELD: I will leave that one alone, Your Honor.

(Laughter.)

CHIEF JUSTICE ROBERTS: Well, then, do you know -- it's not an entirely frivolous point. I mean, do you know if States, localities where airports are located charge things that might be viewed as Tonnage Clauses on airplanes?

MR. ROTHFELD: I don't know a definitive answer to that. ..

Side note: As posted here, Hawaii's invasive species assessement fee does impose a tax on cargo, both on vessels and airplanes.  A per ton fee is tough to calculate on a parcel carried on an airplane for sure.

Background Materials on the case:

My posts: here, here.

The question presented is:

1. Whether a municipal personal property tax that falls exclusively on large vessels using the municipality’s harbor violates the Tonnage Clause of the Constitution, art. I, § 10, cl. 3.

2. Whether a municipal personal property tax that is apportioned to reach the value of property with an out-of-State domicile for periods when the property is on the high seas or otherwise outside the taxing jurisdiction of any State violates the Commerce and Due Process Clauses of the Constitution.

Polar Tankers Opening Brief is here.

City of Valdez Answering Brief is here.

Amici:  Broadband Tax Institute (brief here)(supporting the out-of-state tax argument); the Council on State Taxation (brief here)(out-of-state tax argument); Tropical Shipping and Construction Company, Ltd. (brief here)(tonnage argument); World Shipping Council and Cruise Lines International Assn. (brief here)(tonnage argument); the National Federation of Independent Business Small Business Legal Center (brief here)(out-of-state tax argument); Seventeen State Governments (brief here)(supporting Valdez); and the Multistate Tax Commission (brief here)(supporting Valdez). 

Polar Tankers Reply Brief here.

 

Law of the Sea Treaty Ratification Near?

While I have never heard the U.N. Convention on the Law of the Sea referred to as "LOST", FOX reports that the Senate may finally ratify the treaty, nearly 30 years after it was finalized.

In the past, some Senator from the South always stopped the treaty's ratification, so proponents should remain cautiously optimistic.

Hat tip to Steven M. Stancliff, Virginia admiralty attorney, for the story.