Admiralty Outline – Fall 2003 Overview Admiralty is federal law, originating in Article III, SS 2 of Constitution. i. First Congress included Cases of Admiralty/Maritime in Judiciary Act. ii. Supremacy Clause. b.
If say that case is admiralty / maritime case, governed by admiralty law, is to say that substantive admiralty law applies. i. Differences: statute of limitations, comparative laws for recovery, etc. a.
Main: trial by judge. From very beginning, admiralty cases are w / o juries. May be why someone brings suit in admiralty – to avoid the jury. ii.
Admiralty cases can’t be removed from state to federal courts. a. but most admiralty cases can be brought in state courts unless qualify under diversity. b. But federal admiralty law will be applied.
iii. Jurisdiction arises under: a. 28 USC 1331: federal question. 28 USC 1332: diversity c. 28 USC 1333: admiralty & maritime. iv.
BUT, Congress didn’t choose to enact substantive law in the statutes – left to courts. v. Courts mainly address three issues: a. what is an admiralty case? b. if it is, what is the admiralty rule? c. construing the savings to suitors clause – eg, what types of cases does Congress mean to say that we only want federal courts sitting in admiralty to have jurisdiction over? Basics of Admiralty Requires: Locality + maritime nexus- Executive Jet decision.
– DeLo vio v. Boat (1815): Maritime insurance policies are within admiralty & maritime jurisdiction of US b / c maritime contracts include charter parties, , marine bonds, Ks for repairing, supplying & navigating ships, Ks between part owners – etc – AND insurance. Historical limitations: – Could only sue in rem- Forbade actions in personal vs. shipowner, master. – Rules precluding admiralty court from hearing matters arising w / in body of the country.
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– Forbidding admiralty jurisdiction where no influence of tide. – Forbidding admiralty jurisdiction involving building or sale of ship. – The Thomas Jefferson (SCOTUS, 1825): Action arising on Ohio to Missouri river is not in admiralty, because no influence of tide. Great Lakes Act (1845): extends jurisdiction to G. Lakes. o Becomes almost superfluous after Genesee Chief, but – still allows saving to suitors the right of jury trial if wanted.
o Possible to have an equal protection argument – why in GL, but not other inland navigable waters. But no case law. The Genesee Chief v. Fitzhugh (SCOTUS, 1851): overrules the TJ. Holds that GL Act is Constitutional. o Lakes are inland sea so Hostile fleets have been encountered on them, prizes made, reason to have admiralty jurisdiction.
o Nothing particular in the tide that makes waters suitable for admiralty. o Limiting admiralty in country with so many inland navigable waters is impracticable. (Policy).
Post Genesee Chief admiralty jurisdiction: o Public navigable water On which commerce is carried on o Between different states or nations The Eagle (SCOTUS, 1868): Tug towing brig & barge, tug caused collision. o Issue: since GL Act limited admiralty on GL to contract & tort where vessels are over 20 tons, since Genesee Chief, is there general jurisdiction over all vessels on GL? o Holding: Yes. GL is pretty much obsolete – can use regular admiralty rules.
Admiralty Jurisdiction in Contract Cases: North Pacific Steamship v. Hall Brothers Marine (SCOTUS, 1919): in personal action for unpaid repair bill. Repairs at dry dock count as admiralty claims. Doesn’t matter if dry docked or afloat.
o Contract for building ship isn’t maritime. o Contract for repairing ship is maritime. Once ship is launched, issues about the ship are maritime. Kossick v. United Fruit (SCOTUS, 1961): Seaman who made oral agreement with master about medical treatment has claim in admiralty – to say not maritime is too narrow. o Note: in maritime law, oral contract is valid under statute of frauds.
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The answer of the jurisdiction issue will lead to a different result, depending. Exxon Corp. v. Central Gulf Lines, Inc. (SCOTUS, 1991): Admiralty jurisdiction extends to claims arising from agency contracts – here, a contract for providing fuel. o Case overturns Min turn on narrow grounds.
Lower courts should look at the subject matter of the agency contract to determine if the services were maritime in nature. (Supplying fuel to a ship was. ) Preliminary Ks: o some Ks that lead up to a maritime K aren’t maritime, like a K to procure a maritime insurance policy – though the policy itself is. o Lease of vessel is maritime, but sale is not. Mixed Ks: o K will not be within admiralty jurisdiction unless wholly maritime. Exceptions: if maritime & non maritime elements are separable, admiralty court will exercise jurisdiction over the maritime part.
If non-maritime portion is incidental, court will exercise admiralty over the whole thing. Admiralty Jurisdiction for Tort Claims Different test. Palumbo v. Boston Tow Boat Co (Court of Appeals, MA, 1986): Claim without direct damage (like economic damages stemming from loss of clientele after accident) is not appropriate for admiralty jurisdiction under Admiralty Extension Act. Admiralty Extension Act (1948): extends admiralty & maritime jurisdiction to include all cases of damage or injury to person or property caused by vessel on navigable water, notwithstanding that damage may be done or consummated on land. o Prior to act, ship to shore claims weren’t maritime, but common law.
Bridges, wharves were considered land. Locality factor: where the tort takes place. o at common law, when conduct on land causes injury on navigable waters was admiralty, but not when conduct on water caused injury on land. Nexus factor: wrong must bear relationship to admiralty, must have maritime nexus. (Since 1972) o almost anything occurring on navigable waters will meet the nexus test. Jerome B.
Grub art, Inc. v. Great Lakes Dredge & Dock Co. (SCOTUS, 1995): o Two pronged test for nexus developed. a.
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Was event disruptive to maritime commerce? b. Was it a maritime activity? Look up foremost & Sisson – determine exact jurisdictional tests for admiralty jurisdiction, differences in contract & tort. After Executive Jet must have: Incident out of which claim grew must have had disruptive influence on maritime commerce. Substantial relationship to maritime activity. o Navigable Waters Jurisdiction inquiries rely on issue of whether matters in the suit had sufficient involvement with navigable waters – the maritime nexus.
Navigable waters – classic definition in The Daniel Ball: waters navigable that are either navigable in fact or can do so in conjunction with other waters in which they flow. Leblanc v. Cleveland (2 nd Circuit, 1999): Navigable requires that the body of water be capable fo supporting commercial maritime activity now, not just historically. Can have seasonable non-navigability.
But if not normally navigable and just occasionally navigable, then no admiralty jurisdiction. o Vessels 1 USC: vessel includes every description of watercraft of artificial contrivance used, or capable of being used, as a means of transportation on water. (not very influential definition. ) Parsons: Erie canal boat is vessel (1903) Vessel issue arises in number of contexts: Tort caused by vessel Maritime lien or ship mortgage Jones Act Limitation of Liability act. Crew of vessel can’t recover under Longshore & Harborworkers’ compensation Act. Manuel v.
PAW Drilling & Well (5 th Circuit, 1998): Rig 3, with no navigation, propulsion, or crew quarters was a vessel for purposes of admiralty jurisdiction & applicability of Jones Act. Look at: o Purpose for which the craft is constructed o Business in which craft is engaged Exclusive Jurisdiction of Admiralty Courts & Concurrent Jurisdiction of Common Law Courts The Moses Taylor (SCOTUS, 1866): man sued for breach of K b / c of conditions on the ship. Sought damages in state court; owner of vessel argued he had no jurisdiction b / c cause of action was one in admiralty. SCOTUS: clearly admiralty b / c related exclusively to service to be performed on the high seas and pertained solely to the business of commerce & navigation. Not within saving to suitors clause. Need to make sure I get more about savings to suitors.
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Rounds v. Clover port Foundry & Machine Co (SCOTUS, 1915): Work for repairing & rebuilding steamboat is fine in common law; suit was in personal & attachment was in the suit; not other effect to proved security for payment of personal judgment. Admiralty Procedure since 1966 o FRCP 9 (h): pleading admiralty & maritime cases and separate claim: diversity or federal question. Places where it makes a difference if the claim asserted is an admiralty claim: Special imp leader (Rule 14 (c) ) No jury trial for admiralty (Rule 38 (e) ) Admiralty claim isn’t subject to venue requirements that govern other actions (Rule 82) Somewhat broader right to interlocutory appeal (28 USC SS 1292 (a) (3) ) Supplemental rules provide for separate procedures to be followed in distinctive types of proceedings – in rem, personal jurisdiction acquired through attachment, partition actions, actions for limited liability.
o Jury issue: Sphere Drake Insurance v. J. Shree Corp (SD of NY, 1999): insurance companies underwrite policies in London; D is merchant who insured gemstones, which were lost. Underwriters want declaratory judgment vs. Shree. Complaint is admiralty; compulsory counterclaims from D & demand of jury trial.
Split in authority about whether jury trial should be permitted. Argument for jury trial is strongest for compulsory counterclaim that falls outside of the admiralty jurisdiction. Even if filed in admiralty, court will likely try the whole thing to a jury. o Personal Jurisdiction United Rope v.
Sea triumph Marine (7 th Circuit, 1991): United Rope asking to establish federal common law of personal jurisdiction (contrary to Omni case – held that personal jurisdiction may be created only by statute or federal rule with force of statute) Court: unless state or federal law authorize personal jurisdiction over the D, court must dismiss. State court has no jurisdiction under long arm statute. (never called on Wisconsin port).
Prof thinks this is narrow reading of due process. Subsequent change: if sue in state court, can sue in federal court. Nis sho Iwai v.
M/H Star Sapphire (SD of Texas, 1995): if no state jurisdiction in any state, may find federal jurisdiction – FRCP 4 (k) (2).
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Blue eye Navigation v. Ol tenia Navigation (SD of NY, 1995): Charter suing for attachment pending London arbitration – trying to reach bank accounts. (Object of maritime attachment doesn’t have to be maritime (unlike a suit in rem).
Attachment doesn’t prevail b / c couldn’t find bank accounts in any of the banks – basically asking for future jurisdiction to do so. Court says no. Now there is a provision in the supplemental rules for procedure that have to make an ex parte showing that have prima facie case in admiralty. Sources of Substantive Admiralty Law o Maritime Authority of Congress When conflict between federal legislation & state or common law, almost always SCOTUS will bow to Congress. o Non statutory federal maritime law vs. state law More difficult; Conflict between admiralty law as created by judges vs.
state law. o Ballard Shipping Co. v. Beach Shellfish (1 st Circuit, 1994): in federal admiralty court, state law is preempted if it interferes with the proper harmony & uniformity of maritime law. BUT, state courts are free to determine what the federal substantive admiralty law is. (Sometimes not clear.
) Kossick v. United Fruit (SCOTUS, 1961): Seaman / hospital K case. Issue here – whether the contract, while maritime, is “maritime and local” enough so that applying state law would not disturb uniformity of maritime law. SCOTUS: should be uniform, maritime law. Maritime Tort Law Seamen have three remedies for on-the-job injuries: Maintenance & cure: judicially created worker’s compensation. o Doesn’t require fault, or even causation.
o Only requires that injury / illness manifests itself while in the service of the ship. Exceptions: Willful conduct (intoxication, disobedience to orders) Maximum cure – no further benefits. Jones Acto Very liberally interpreted for seaman both to evidence & causation. Unseaworthiness Doesn’t matter how vessel became unseaworthy. o Even through not long enough for D to become aware.
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o Types: defects in crew, manning, defects in equipment, gear. Seaman Status Who is a seaman is hotly contested, given the rights conferred under the Jones Act, unseaworthiness, and maintenance & cure. o Criteria for seaman is the same for Jones Act, unseaworthiness, and M&C Judge Wisdom’s test led for decades Injured workman was permanently assigned to a vessel If capacity in which he was employed, or duties he performed, contributed to the function of the vessel or accomplishment of its mission, or operation or welfare of the vessel in terms of maintenance during movements or during anchorage. At time of Jones Act, definition was: All persons employed on board ships & vessels during the voyage to assist in their navigation and preservation, or to promote the purposes of the voyage. Effect of 1927 Longshore & Harbor Workers Compensation Act (LHWCA) Provided workers’ comp for workers hurt on navigable waters that excluded a master or member of a crew of any vessel (mutually exclusive from Jones Act. ) Difference between seaman / longshore benefits: o Seamen have better remedies o If have a weak claim, no fault, no unseaworthiness? Go for longshore benefits (since better than M&C).
o But if have a shot at claiming damages under Jones Act, unseaworthiness – go for the seamen’s remedies. o If case is doubtful – either / or – go for longshore benefits (start sooner), injured worker can collect compensation while lawyer investigates if he’s a seaman. If good case for seaman, the fact he’s accepted benefits under the longshore act isn’t prejudicial – can change mind & repay the longshore benefits after recovery as seaman. Cynical procedure. Chand ris v.
Lats is (SCOTUS, 1995): Definition of seaman. o Employee’s duties must contribute to the function of the vessel or the accomplishment of its mission. o Seaman must have connection to a vessel in navigation (or identifiable group of vessels) that is substantial in terms of duration & nature. Worker spending less than 30% of time in service of vessel in navigation should not qualify as seaman under Jones Act.
5 th C standard. Rejection of voyage test (if working on vessel while navigating / contributing to mission – you ” re a seaman. ) why not? Don’t want people walking in and out of coverage. o Vessel in navigation requirement precludes Jones Act coverage for workers assigned to vessels on non-navigable water (dry dock would be a jury question).
Possibility – mothball fleets (like in Martinez) Recurring questions in Seaman litigation: Was apparatus or structure on which the work was done a vessel? Was the vessel in navigation? If seaman status is claimed on the basis of a work-connection with a group of vessels as opposed to a single on, was the group a fleet? Was the worker’s connection with the vessel or fleet substantial in duration? Was the worker’s connection with the vessel or fleet “substantial in nature?” Some courts require that worker’s duties must take him to sea (out of sight of land) – others require exposure to the perils of the sea. If not longshoreman or seaman, coverage under state workman’s compensation.
Longshore & Harbor Workers’ Compensation Act Enacted 1927, amended in 1972 & 1984 Pre 1972: longshoreman injured, immediately could get benefits through stevedore. If sue third party vessel owner (and the vessel in rem) on grounds of negligence or unseaworthiness of vessel. Implead the stevedore employer who caused unseaworthiness – get full indemnity – so employer pays compensation & also the third party vessel owner. Post 1972: Longshoreman injured, can only sue vessel owner for negligence, not unseaworthiness – but benefits are better.
o Contains two tests Situs Adjoining areas, after 1972 Status Longshoremen include ship repairers, ship construction workers, ship breakers – any person engaged in maritime employment including any longshoreman or long shoring operations & any harbor worker. Specifically excludes master or member of the crew of a vessel. o Sun Ship v. Pennsylvania (SCOTUS, 1980): state may apply its workers’ compensation scheme to land-based injuries that fall within the coverage of LHWCA. Establishes overlap between LHWCA and state workers’ comp. If worker injured in overlap area and litigates, doctrines of claim preclusion & issue preclusion frequently foreclose other suits.
o If non-seaman injured and excluded from LHWCA, look to maritime tort law. Maybe argue that the nexus requirement of Executive Jet and a maritime nexus. (Eg, motorboat injures. ) May qualify within the exclusions of the longshore act. o Northeast Marine Terminal Co. v.
Caputo (SCOTUS, 1977): injured workers (injured on waterfront) are entitled to compensation – in 1972 Congress extended coverage shoreward, broadening definition of navigable waters of the US to include “any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel.” But must be engaged in maritime employment. Addition now of status test. Eastern issue – RR workers covered by FELA & longshoremen covered by LHWCA. Which applies when train involved in unloading cargo? Wrongful Death & Survival Actions – Death on the High Seas Act Wrongful death: to compensate decedent’s dependents for losses suffered as a result of the death. Survival: allow an action the decedent had at the time of his death to survive and become an asset of the estate.
o Eg, loss of future wages, pain and suffering until time of death. Moragne v. States Marine Lines (SCOTUS, 1970): there is an action at maritime law for death caused by violation of maritime duties. o Overturns The Harrisburg, which had three anomalies in it. Within territorial waters, identical conduct violating federal law produced liability. Identical breaches provide liability outside three mile limit, but not in territorial waters.
A true seaman has no remedy for death caused by unseaworthiness within territorial waters while a longshoreman does have the remedy when allowed by state statute. o Heavily litigated decision – SoL left open. Use doctrine of laches. Laches: standard maritime law.
No SoL in maritime; if wait “too long” you ” re barred from bringing suit. o Gaudet case: loss of society damage & not just economic damages are recoverable under Moragne. o Fight becomes is there recover of non-economic damages (loss of society) as opposed to economic (loss of wages, income).
Miles v. Apex Marine Corp (SCOTUS, 1990): Jones Act precludes recovery for loss of society (applies when killed as a result of negligence), loss of future income isn’t recoverable in survival action, general maritime cause of action for wrongful death of seaman, but damages don’t include loss of society. Yamaha Motor Corp v.
Calhoun (SCOTUS, 1996): parents of teenager killed on jet ski in Puerto Rico can bring Moragne-type claim & state law claim (to get around Miles v. Apex), also want loss of society. o Court: state remedies remain when there’s no federally applicable statute. Death on the High Seas Acto Amended to cover commercial aviation accidents on the high seas; If within 12 nautical miles, act doesn’t apply. Then apply Yamaha, state wrongful death If beyond 12 miles out, no punitive damages.
Wrongful death analysis: o Who was the decedent & what was his status? Seaman, worker? o Where is the situs? High seas, territorial waters – if territorial, which state? Limitation of Liability Congress enacted in 1851, amended in 1930 s Carr v. PMS Fishing Corp (1 st C, 1999): o LOL provides that owner’s liability cannot exceed the value of its interest in the vessel & pending freight at end of voyage. If sinks, not necessarily no value. o Limitation applies only if shipowner lacked privity or knowledge in the act or condition that led to the injury. Can be actual or constructive knowledge.
Court must determine: Whether negligence or unseaworthiness caused the accident & Whether shipowner was privy to, or had knowledge of, the causative agent (whether negligence or unseaworthiness).
Claimant bears initial burden of persuasion for negligence and unseaworthiness. Burden shifts to shi power to establish lack of privity &knowledge. What’s eligible? o Seaman’s claims under Jones Acto Unseaworthiness claim so Wage claims are NOT subject to LOL – unjust to say that wages went down with the ship. First party insurance owner has on destroyed vessel is his to keep: law doesn’t compel shipowner to surrender his insurance in order to have limited liability.
o But third party insurance is protected. K reta Shipping, SA v. Preuss ag International Steel Corp (2 nd C, 1999): o Shipowner can post a bond rather than surrender vessel while LOL claims are proceedings. o After posting the bond, all claims & proceedings against owner with respect to the matter in question shall cease.
LOL analysis: o Is there liability? o Is the amount of damages greater than the alleged value of the vessel? Is the amount of the vessel disputed? Is owner entitled to LOL? In re Bethlehem Steel Corp (1981): determining the amount of the LOL fund is a matter or procedural law; courts can apply US maritime jurisdiction. Carriage of Goods: o Internationally: o Charter parties: traditionally used in tramp shipping by private carriers. Lease of a vessel. used to be for whole vessel. Now less than all the space in a vessel. Like moving company.
Parties thought to be equal bargaining powers. o Bill of lading: used in liner trades by common carriers that sail on fixed routes following announced schedules and that are prepared to carry general carlos. like UPS. Three functions it serves: Contract of carriage (or terms, or evidence of K) Document of title, enabling shipper to sell goods while in carrier’s possession by transferring to subsequent holder. o Not true normally of straight bills of lading, . o Negotiable bill of lading – person who holds it is entitled to the goods.
Must present at port of discharge to get control of the goods. o Why? Method of ensuring payment. Also goes with letter of credit. Made out to shipper who names self as consignee, but endorse over to bank. Operates like receipt of goods, providing evidence of carrier receiving cargo from the shipper. o Also, contact of towage: to tow barge & cargo, that’s a form of contracted voyage.
Or inland tow operator may operate barges, all inland. o p. 317, n 5: bills of lading in ocean carriage used to be issued just for ocean carriage, but now with containers, a whole new set of arrangement covers the whole transport. o The Harter Act Conceived as compromise between cargo and carrier interests.
Carrier’s liability for negligence of its agents and servants was at heart of compromise. Carrier can’t escape liability for negligence in care and custody of the cargo or for failure to use due diligence to furnish seaworthy vessel. But if use due diligence to furnish vessel it would not be responsible for damage or loss resulting from faults or errors in navigation or in management of vessel. What’s difference between due diligence to make vessel seaworthy and unseaworthiness? due diligence – due care, but not necessarily the absolute obligation. Unseaworthiness is strict liability.
(except for instantaneous unseaworthiness. ) Frequent issue: was damage to cargo caused by error in navigation or failure of carrier to keep vessel seaworthy or taking care of cargo. o Pre-COGSA, Harter Act: The Germanic (SCOTUS, 1905): Steamer reached pier heavily coated with ice, weight increased by snow. During unloading of cargo, the vessel sank and cargo damaged. Carrier argues that danger could not have been for seen and that there was no negligence, attributing loss to gale and special circumstances. Question: whether damage to cargo was “damage or loss resulting from faults or errors in navigation or in the management of said vessel” (and should liability be exempted.
) Court: ship not under management at the time of the unloading – if the primary purpose of the unloading was to affect the ballast of the ship, that would be management. Test: look at the primary purpose of the act. Here, the act was to remove the cargo, not to improve the ballast of the ship. o Negligent navigation & management: Carrier’s defense based on negligence in navigation or management of vessel; but trend in US has been against carriers who rely on this. Fine line exists between negligence in case and custody of the cargo & negligence in navigation or management of the vessel.
p. 319 o Relative application of Harter Act & COGSA after COGSA is adopted. originally, the Harter act covered both domestic & international ship. COGSA covers only international vessels (usually) by its own terms – to and from US and foreign port. Supercedes Harter to certain extent. When does COGSA coverage begin? Tackle to tackle.
Port to port – when it’s picked up to be loaded to the vessel and continues until it’s offloaded. Harter Act applies: P. 37 Section 190. “or proper delivery… .” Harter covers when carrier takes custody of the goods (can be before they ” re loaded) and ends at delivery. (COGSA starts and ends just when it’s on the vessel.
) COGSA: ocean carrier cannot relieve self from liability stated in COGSA – can’t lessen it. BUT… Many bills of lading contain invalid clauses – doesn’t stop carriers from trying to lessen their liability. 1303: liability creating provision: 1304: immunity section – grounds for which a carrier is not liable. 1307, p. 55: nothing prevents shipper from entering agreement exempting liability of carrier for damage before loading and subsequent to discharge.
Bills of lading are often issued after goods loaded on the vessel; otherwise couldn’t be a receipt. Courts tend to look at bills of lading as if they were agreed to. “Coast-wise option” – doesn’t apply to goods shipped between two US ports, but Harter Act does. But parities can agree to COGSA applying. o Cargo Claimant’s Action Under COGSA When cargo has been lost or damaged, the shipper, the consignee, or another party will suffer a loss. If cargo not insured, injured party will seek compensation from the carrier under the contract of carriage.
If cargo was insured, the insurer typically seeks same sort of recovery. o Both COGSA & Harter Act include choice of law provisions calling for application of US law. So shipments to and from US are almost invariably covered as a matter of law. Harter Act: before goods loaded on vessel & after goods are discharged, upon delivery.
Major distinction between COGSA and Harter: $500/package limitation on COGSA, none in Harter. Usually the goods are in excess of $500 per package. Liability creating events, not caring for cargo properly, etc. : note 4, p. 320 – carriers want to show that they were negligent — but if do good enough job to show unseaworthiness, still liable. (Rarely find shi powers arguing strenuously about this.
Rather, they argue perilous sea. ) p. 321 – history of advent of regimes of law governing international carriage. Review definitions in COGSA, p. 51 “Carried on deck & so carried.” Hazards much greater on deck. But in modern container shipping, much of it is on deck.
carriers don’t say it’s on deck – want it covered by COGSA. Bally, Inc. v. M/V Zim America (US Court of Appeals, 2 nd Circuit, 1994): Bally engaged Odino to consolidate shipments of Italian leather goods. Odino booked cargo in question with Zim.
Cartons were weighted before loading into ship, 301 cartons were loaded into the ship, cargo was sealed. On arrival, found missing 65 cartons. Establish prima facie case when: o proving delivery of the goods to the carrier in question & o outturn by the carrier in damaged condition. Rare to see bill of lading with damage / shortage on the face of the bill, even if the carrier knew that. Why? Screws up the financing. Could write another type of receipt.
After proving prima facie case, burden shifts to carrier to show that damage or loss falls within a COGSA exception. Here, delivery with intact seal doesn’t conclusively prove that loss didn’t occur while the container was in the carrier’s possession, but there was insufficient evidence for court to conclude that the cartons were missing from the container. Didn’t provide written notice of missing cartons until 3 weeks later; even oral notice wasn’t until 8 days afterwards. If P doesn’t give timely notice, there’s a presumption that the carrier delivered the cargo in good order.
Also, outturn was when delivered when given to Bally’s agent – no proof it came off the vessel short. o Constructive delivery: at the end of the period before charging storage of goods. o Ocean carriers sometimes try to get around “good order & condition” with clause about metal products: just b / c they were received in good order doesn’t mean that they were free of rust. (9 th circuit thinks it’s OK.
) Notes, p. 337: describe burden of proof shifting: four states. P must establish prima facie case by proving delivery of gods to carrier in good condition and outturn by carrier in damaged condition. D must prove that loss or damage falls within COGSA exception set forth in SS 4 (2).
P must show that carrier’s negligence contributed to the damage or loss. D must segregate portion of damage due to excepted cause from that portion resulting from its own negligence.
o Schnell v. The Valles cura (1934).
If you can’t apportion it out, then have to pay the whole thing. o Excepted Perils: Nautical fault Error in navigation The Germanic Fire Not liable for fire damage unless fire caused by design or neglect of such owner. Westinghouse Electric Corp.
v. M/V “Leslie Lykes” o Famous admiralty judge in 5 th Circuit. o Fire made worse b / c of the way the ship was arranged to be loaded by the central office. o Court: defense of fire protects carrier from losses resulting from steps taken to extinguish the fire, provided there is no actual fault or privity of the owner concerning origin of firefighting evidence. o must have managerial level.
o Whenever dealing with ship-board fire, have special set of rules. o No liability, not just limited, but NO liability unless the cargo can show that the carrier had some privity of knowledge with the fault that caused the accident. Peril of the Sea Even if dealing with typhoon or hurricane, experts say that weather is foreseeable. Should have guarded against it. Sometimes see cases where it was totally unexpected. Almost always fail.
o Thyssen Inc. v. S/S Euro unity Warranted of vessel that free of defects, etc. But water entered cargo’s holds and testimony that sea water entry was inevitable b / c of perils of the sea vs. foreseeable b / c of negligent maintenance of hatches & seals. Court: storms in north Atlantic are foreseeable and winds, waves, and cross-seas were to be expected – not a peril of the sea.
What is a peril of the sea? o different standards. o English law is more generous. The Q Clause in Cogsa Requires that the carrier prove that neither its negligence nor the negligence of its agents or servants caused the loss to limit liability. o Quaker Oats Co. v. M/V Torvanger (US Court of Appeals, 5 th Circuit, 1984) Quaker Oats shipped five hundred metric tons of (white chemical) from Mitsubishi Corporation in Tokyo to Houston.
During the shipping process, one of the tanks was not full and peroxides formed. Sued carrier. Parties agree dispute governed by COGSA. DC found that Quaker had established prima facie case by producing evidence that the chemical was to specs on delivery to carrier and that part of it wasn’t in that condition on arrival. DC found that D rebutted by showing no negligence. Court of Appeals: If all evidence is true, the evidence shows no cause for peroxide formation, but the formation must have resulted from some defect in the chemical or its processing for shipment, for which carrier wouldn’t be responsible – which evidence doesn’t prove – or that contamination was b / c of some failure of officers of vessels, which also isn’t proved.
None of specific limiting exceptions applied, so fell back on the Q clause – carrier has the burden of proving that its fault didn’t contribute to the accident. For purposes of this exception, the presumption of fault is not rebutted by simple proof of the carrier’s own due diligence, evidence within its knowledge and control during the period of the shipment of the cargo entrusted to its care. Rather, to rebut, the carrier must further prove that damage was caused by something other than its own negligence. The Package Limitation Limiting the amount of damages per package to $500 Fishman & Tobin Inc. v. Tropical Shipping & Construction Co.
US DC, Southern District of Florida, 1999 COGSA doesn’t define package, but courts have construed term to mean the result of some preparation of the cargo for transportation which facilitates handling, but which does not necessarily conceal or enclose the goods. Shippers are the best people to determine if they should place risk of loss on carrier or third party insurer rather than gamble on the liability limitation. Henley Drilling Co. v.
McGee US Court of Appeals, First Circuit, 1994 D transported drilling equipment for P, P arranged cargo insurance with underwriter (McGee).
On return trip, rig disappeared. Question: fair opportunity of notice of limitation of liability? o Court: yes, actual and constructive notice is good enough. Question: limitation of liability under package limitation – limited to $500? o Court: yes. Underwriter has to pay up for the value of the rig; carrier is limited to $500. Deviation General Electric Co.
v. SS Nancy Lykes US Court of Appeals, Second Circuit 1983 Nancy Lykes deviated, got into storm, GE’s cargo was washed overboard. Court holds that this was not a reasonable deviation. Unreasonable deviations are breach of COGSA and contract of carriage. Unreasonable deviation is when in absence of significant countervailing factors, the deviation substantially increases the exposure of cargo to foreseeable dangers that would have been avoided if no deviation occurs. if just for fuel cost savings – that’s unreasonable.
But… carrier shouldn’t be held liable for losses following a deviation unless the deviation is the cause of the loss – some courts have accepted in dicta, but not others. (But, Burden is on the carrier to prove the lack of causal relationship to escape liability. ) Negligent Third Parties Extending the benefit of the package limitation Robert C Herd & Co. v. Kra will Machinery Corp SCOTUS, 1959 Goods to be transported to Spain; while loading a case, dropped into harbor and damaged it.
Whether provisions of COGSA SS 4 (5) or parallel provisions of ocean bill of lading can limit liability to $500 b / c of negligent stevedore. Petitioner contends that liability limiting provisions of COGSA and bill of lading should limit liability of stevedore & carrier AND that even if only limit liability of the carrier, it is protected by carrier’s limitation under theory and holding in Collins. Court: nothing in provisions, history or environment of the act should limit the liability of negligent agents of the carrier. AND that agent is liable for all damages caused by his negligence unless exonerated by statute or valid contract binding on the person damaged. And to the decision by including what came to be known as a Himalaya clause inc contracts / bills of lading. Wemhoener Presse n v.
Ceres Marine Terminals, Inc (Handout).
Charter Parties demise / bare boat charter charterer takes possession and operates ship during period of charter as his own. Can permit shipping company to expand base of operations temporarily. voyage charter arrangements made for length of the voyage. Owner provides the vessel’s master and crew and maybe pays normal operating expenses.
Charter typically specifies who pays costs of loading and discharge. In owner’s interest to ensure that every aspect of the operation proceeds expeditiously. Demurrage most commonly litigated issue: Charterer is permitted certain amount of time – lay time – for loading and unloading the vessel. If operations exceed the allowed time, then the charterer must pay demurrage at rate established by charter party as form of liquidated damages for the delay. time charter arrangements made for period of time. Owner provides the vessel’s master and crew and maybe pays normal operating expenses.
Charterer’s interest to proceed expeditiously. Charter party will contain a great deal more information about the vessel. Under lap & overlap Slot or space charter If only for certain part of the ship, not the whole ship. Maritime Liens and Ship Mortgages – if party has a maritime lien, can sue vessel in rem. – If party can sue vessel in rem, it means there’s a maritime lien. – Interchangeable terms.
– Suing in rem is one of hallmarks of admiralty practice. – If sue in rem -o Get jurisdiction over vessels Have bond posted in place of vessel. (Security) o (remedy, jurisdiction, security) – very practical significance. The personification theory Harmer v. Bell: “The Bold Bucchleugh” (Privy Council, 1852).
Scottish steamship ran down and sank the William. Suit brought in England, but ship left for Scotland before process could be served. Owners then sued in Scotland & attached. Vessel sold to Daniel Harmer; while action still pending, returned to England; arrested under High Court of Admiralty there. Owner protested and contested. Admiralty judge ruled that he had jurisdiction & that sale of the vessel hadn’t released it from responsibility for collision.
Harmer appealed; court directed parties to re argue question whether the sale of the vessel without notice to the purchaser discharged the vessel from liability. Court: maritime lien doesn’t include or require possession. o Maritime lien means a claim or privilege on a thing to be carried into effect by legal process, explains the process as in rem, when claim or lien is given, then Admiralty is only court to enforce it. o The claim or privilege travels with the thing into whoever’s possession vessel may come. o US courts have accepted this theory. (England has rejected).
o Maritime lien differs radically from liens in UCC or mechanic’s lien. Most maritime liens are based on judge-made law. Need not be recorded, except for ship mortgages. required to have only for this. Other than that, no recording requirement. Secret liens, order of priority is same type following inverse order – last in time, first in right.
In real property: two kinds. Possessory (like for work done on car, don’t release car), on mortgage – foreclose on the lien, action. Laches: most courts will say can’t let this go on forever – must bring it on in time not barred by laches. If haven’t brought required lawsuit within analogous SoL in foreclosure of mortgage, then barred by doctrine of laches… Maritime liens provide successful claimant with ability to have vessel sold free and clear of all liens, even those not before the court. By contrast, when court orders the sale of a vessel pursuant to an attachment in an in personal proceeding, the buyer acquires only the interest of the D, subject to all other interests and liens.
Having a maritime lien often means being able to prevail over claimants who don’t. But only in US court sitting in admiralty – if goes as far as sale. Maritime lien attaches to vessel and includes all of the components, accessories and appurtenances. Can be litigated to decide what’s part of it. Often questions, when talking about what’s a vessel. Commercial fishing gear, etc? Sometimes it is appurtenances, sometimes not.
Maritime lien may provide P with a claim against a vessel even though the P has no in personal claim against the current owner. o Cav car Co. v. M/V Suz dal (3 rd Circuit, 1983): Vessel can be liable in rem for breach of contract of carriage by operator of the vessel when the vessel’s owner is not personally liable in personal.
Owner holding bill of lading says breach of K in not delivering vessels. Can’t find them to sue in personal, but sues in rem for breach of carriage contract & recovers. Why weren’t they liable for what happened personally? Only the carrier would be liable – the issuer of the bill of lading. How to justify this by the doctrine? owner must have known that someone would be carrying cargo from Philadelphia to Iran. What if vessel sank? no one to sue in personal – but might be justifiable. COGSA contemplates that ships will be liable for breach of COGSA duties — SS 1303 (8) – also could be used as justification; contemplated as easy as 1936 Courts haven’t carried personification theory to logical extreme of regarding vessel as a separate person for all purposes.
Person in unlawful possession of liability doesn’t mean injured party can sue in rem. Other limitations: Dismissal or settlement of in rem claim will bar of in personal action on the grounds of res. (for same damage).
In rem actions can be transferred despite fact that vessel could not be arrested in transferee district.