hawaiioceanlaw.com

SCOTUS to Hear Maritime Bill of Lading Case

The Supreme Court has agreed to hear the Kawasaki case regarding "through" bills of lading and the interplay between the federal statutes governing cargo shipped by rail vs. cargo shipped by sea.  My earlier post explaining the lower court decision is here.  The Supreme Court order granting certiorari is here.

This case in a nutshell:  federal law allows parties to a bill of lading different rights and remedies when the cargo is shipped by sea or by rail.  But, what happens when cargo is shipped by sea AND rail.  In this case, the parties chose (as allowed by the Carriage of Goods at Sea Act) to have Tokyo be the forum for any dispute.  Such a provision would not be permitted in a rail shipping contract.  So, when cargo gets damaged on the rail portion of the shipment, does the rail law trump the parties' express forum selection?

Stay tuned and we shall see.

Happy Birthday Hawaiioceanlaw

Well, it was last week, but who is counting. 

Two years ago, following the very successful model of my partner Robert Thomas, I decided to become a blogger.  Nearly 300 posts later, with topics ranging from Somali piracy, SONAR and whales, to Antarctic whaling and forum non conveniens, I still consider myself learning about society and its attempts to harness, regulate, use and protect our ocean resources. 

My day to day practice is more landbound dealing with land use and commercial disputes, but after my time in the Coast Guard, I don't think my heart will ever be far from the sea.  To my followers, thank you for following.   I hope that my blog helps you keep track of the issues affecting the ocean and the maritime trade thereon.

Aloha.

From a few year's ago, supervising helicopter operations onboard the Coast Guard Cutter CONFIDENCE.

Supreme Court Review Sought for Ninth Circuit Cargo Case

The Supreme Court is considering whether to hear an appeal fo the Ninth Circuit's decision in Kawasaki Kisen Kaisha v. Regal Beloit Corporation and Union Pacific Railroad Company v. Regal-Beloit Corporation.  The issue before the court is to what extent do statutory rules governing shipments by rail or motor carrier apply to a shipment of cargo that was made on a maritime bill of lading.  Or, as the Ninth Circuit put it, this is a maritime case about a train wreck.

The case involves a shipment of cargo from China to the United States by sea and then by rail.  The bill of lading was a "through" bill of lading which covered the shipment from origin to destination.  Federal law allows parties to contract different terms for maritime contracts than it allows for rail contracts.  One provision at issue was a forum selection clause.  Under the Carriage of Goods at Sea provisions of federal law, parties to a bill of lading could select, by contract, a forum for any dispute.  In this case, the parties chose Tokyo.  However, under federal law governing rail contracts, venue must be in accordance with that law and Tokyo could not be used.  The trial court found that maritime and not rail law covered the dispute and applied the forum selection clause.

The Ninth Circuit reversed in its decision here.  It found that the bill of lading did not apply during the rail portion of the shipment. 

This is an interesting case involving a conflict between two statutory schemes with different policy issues at stake.

The Petition for a Writ of Certiorari (Union Pacific's Petition/Kawasaki's Petition) and Brief in Opposition are available at SCOTUSBLOG, here.  Union Pacific's Reply and Kawasaki's Reply are also available there. 

The Ninth Circuit opinion acknowledged a circuit split regarding this issue and apparently, the Supreme Court earlier agreed to hear a case with this issue, but the case was settled before decision. 

I don't gamble, but I think the odds are pretty good for granting the cert petition in this one. 

Admiralty News Flash - Winter Storm Decision Overturned

Admiralty practitioners note:  Winter Storm has been overturned. A panel of the 2nd Circuit Court of Appeals issued this noteworthy decision today, with the consent of all active judges for that circuit.  Decision here. Everyone else can stop reading now. 

This issue relates to Rule B attachment under the Federal Rules of Civil Procedure and New York state law regarding the definition of "property."  In Winter Storm Shipping Ltd. v. TPI, 310 F.3d 263 (2nd Cir. 2002), the court of appeals found that electronic funds transfers between two parties outside of New York, but which funds transferred through "intermediary banks" in New York, were subject to prejudgment attachment in New York. 

The intermediary bank is how foreign banks will exchange currency for dollars by way of Electronic Funds Transfer or ETF.  The court uses this example:

To more concretely illustrate the circumstances of the instant case, consider the following example: ABC Shipping wants to transfer $100 to XYZ overseas. ABC has an account at India National Bank, and XYZ has an account at Bank of Thailand. India National Bank and Bank of Thailand do not belong to the same consortium, but each has an account at New York Bank. To begin the transfer, ABC instructs India National Bank to transfer $100 to XYZ’s account at Bank of Thailand. India National Bank then debits ABC’s account and forwards the instruction to New York Bank. New York Bank then debits India National’s account and credits Bank of Thailand’s account. Bank of Thailand then credits XYZ’s account, thereby completing the transfer.

The New York banks were certainly not happy with Winter Storm.  According to this opinion (citing amicus brief):

from October 1, 2008 to January 31, 2009 alone “maritime plaintiffs filed 962 lawsuits seeking to attach a total of $1.35 billion. These lawsuits constituted 33% of all lawsuits filed in the Southern District, and the resulting maritime writs only add to the burden of 800 to 900 writs already served daily on the District’s banks

ETF's are not property subject to Rule B attachment in New York any longer.  I'll try to get the briefs to post later.

New Hawaii Lawsuit - Constitutional Challenge to Jones Act

Several Hawaii residents and businesses have brought suit against the federal government challenging the constitutionality of the "Jones Act."  The complaint can be downloaded here.

The suit notes that because the Jones Act requires cargo to be transported on U.S. flagged ships between U.S. ports, Hawaii residents pay more for their goods.  It purports to be class action on behalf of all persons impacted by the Jones Act's application to Hawaii maritime trade.

The complaint alleges claims under Art. I, Section 8 of the Constitution; 42 U.S.C. 1983 and Federal Rule of Civil Procedure 57.  There may be some jurisdictional problems with these claims, so it will be interesting to see if the plaintiffs can survive the government's inevitable motion to dismiss.

We'll stay tuned and keep you posted.

New 9th Circuit Admiralty Case - Forum Non Conveniens and Death on the High Seas Act

The Ninth Circuit Court of Appeals just issued a decision relating to a scuba-related death in Mexico.  The decision is Loya v. Starwood Hotel & Resorts Worldwide, Inc., and can be downloaded here. 

Facts:  the plaintiff's husband died during a scuba trip in the waters off the Baja peninsula, Mexico.  The plaintiff brought suit in Washington state court alleging state law causes of action relating the regulation of timeshares (they were staying in one) and consumer protection (relating to advertising of scuba activities).  The plaintiff sued the resort where they were staying.  The resort removed the case to federal court, citing diversity and admiralty jurisdiction.  The resort sought to dismiss the complaint, citing forum non conveniens and the trial court dismissed the complaint.

Issue on appeal:  is the doctrine of forum non conveniens available under actions arising under the Death on the High Seas Act, 46 U.S.C. 761, et seq. (DOHSA).

Decision:  The DOHSA created a wrongful death cause of action for water areas beyond the territorial sea.  The doctrine of forum non conveniens is a doctrine well-accepted in admiralty law that favors a convenient forum to an inconvenient one.  The Jones Act, 46 U.S.C. 30104, which governs injuries to seamen, could not be so dismissed because it has a specific venue provision.  But, the plaintiff in this case was not a Jones Act seaman.

A defendant seeking to dismiss on these grounds must show: the existence of an adequate alternative forum and that the balance of public and private interests favors dismissal of the plaintiff's claim.  Private interest factors include access to proof, compulsory process to obtain testimony of hostile witnesses, access to the premises for viewing, all other factors which make trial more expeditious and inexpensive.  Public interest factors include the court's docket, imposition of jury duty on people of a community with no connection to the litigation, "local interest," the need for a tribunal familiar with the law that governs the dispute, and avoiding conflict of law issues. 

The court acknowledged that damages available in Mexican courts were less than those in U.S. courts.  The court then reviewed the other factors, including the Mexican court's docket, the location of the witnesses for both sides, and the Mexican government's interest in regulating businesses in Mexico.  Ultimately, the court decided that the trial court weighed the relevant factors and deferred to the lower court's dismissal.

Judge Kleinfeld dissented noting that the remedy available in Mexican courts was not adequate (damages would be capped at $17,000 and attorneys did not work on contingency fee basis) and that the lower court applied the doctrine of forum non conveniens "overly aggressively."  The dissent did not disagree with the court as to the legal issues, to wit: whether the forum non conveniens doctrine applied to the Death on the High Seas Act, but did disagree with the application of the doctrine to the facts of the case.