Up close and personal

A NUMBER of interesting developments have arisen recently in the personal injury area in the United States.

The US Court of Appeals for the Fifth Circuit, which covers Texas, Louisiana and Mississippi, recently ruled that the Death on the High Seas Act (DOHSA) applies based on where a fatal injury was incurred and not where the negligent act occurred. This means DOHSA can apply even where a defendant's negligence is entirely land?based and begins subsequent to the injury.

In the case decided, a mariner had suffered severe injuries aboard a ship on the high seas. The shipmanagement company was deemed negligent in failing to previously plan how it would evacuate injured crew members from the ship. The company was also found to be negligent in conveying information to the US Coast Guard and medical personnel who might have rendered assistance. This delay in providing medical treatment significantly lowered the injured mariner's chance of survival, and he later died ashore of his injuries. The court held that it was the site of the mariner's injury, and not of the shipmanagement company's negligence, which determines whether or not the Death on the High seas Act should apply.

In another significant recent case involving a fatal injury, the US Court of Appeals for the Fourth Circuit, which covers the Carolinas, the Virginias and Maryland, citing maritime law's flexibility, created a maritime wrongful death action for negligence. A crane operator negligently caused a sandblaster working on a ship to fall to his death. Recognition of a wrongful death action based on negligence is a direct challenge to the US Supreme Court, which has never directly stated whether a wrongful death action in negligence exists.

Dirty jacuzzis and cruises to nowhere

The federal court in New York City, meanwhile, has ruled that cruiseship passengers may recover punitive damages. This decision comes on the heels of historically conflicting opinions regarding the availability of punitive damage claims brought by passengers. Passengers on an Horizon Cruises ship contracted legionnaire's disease after using the ship's whirlpool spa. They sued the cruiseship owner and the manufacturer and distributor of the spa filter. While noting that punitive damage claims are barred in Jones Act and DOHSA cases, the court ruled that punitive damage claims should be allowed for cruiseship passengers in admiralty actions.

The cruise industry is increasingly finding itself subject to other types of claims as well. In a recent case in the Eleventh Circuit, which covers Alabama, Georgia and Florida, the court held that claims under the Americans with Disabilities Act (ADA) may be brought against foreign?flag cruiseships sailing in US waters. A woman confined to a wheelchair sued Premier Cruises for its ship's inaccessibility to wheelchairs. Despite Premier's defence that ADA does not apply to foreign-flag cruiseships, the court held that ADA applies to such ships sailing in US waters.

Premier Cruises has also faced other troubles lately. Four ships operated by Premier were recently arrested in Canada, the Bahamas, and Mexico as creditors of the cruise line lost confidence in its viability. Passengers were put ashore in each location, and later returned by air to their ports of embarkation. The Federal Maritime Commission, which holds surety bonds against the company to cover passenger claims, is investigating.

COGSA

Some other interesting developments have arisen in the more traditional cargo arena. Revisions to one of the key pieces of cargo legislation in the US, the Carriage of Goods by Sea Act (COGSA), continue to face delays. The proposed revisions include adopting higher limits on carriers' liability, reducing carriers' defences to liability, and nullifying a US Supreme Court decision allowing cargo disputes to be litigated or arbitrated outside the US. At last report, a new proposal was being cobbled together with hopes that it might be refined and passed next year.

While the future of COGSA legislation remains uncertain, some interesting cargo cases have surfaced. Recently, the Eleventh Circuit ruled that an owner of goods lost at sea can sue the carrier even though the owner is not named in the bill of lading if the bill makes clear reference to the Aowner of goods." The case involved Polo Ralph Lauren's suit against a carrier for fabric lost overboard in rough seas. Despite the carrier's claim that only the shipper could sue under COGSA, the court held that the bill of lading's repeated references to the Aowner of the goods" gave notice that the shipper was not the owner.

In another significant cargo case, a charterer and cargo supplier were recently held jointly and severally liable to a barge owner for failure to pay for clean-up costs arising from loading a cargo of spent lube oil that left a four-inch residue of heavy, tar-like sludge. The Fifth Circuit held that the cargo supplier's liability to the barge owner was not based on contract, but rather its negligent loading of shore tank bottom residue into the barge.

Gross negligence trumps contract exculpating clauses

The US District in New Orleans has held that the liability of an oilfield services firm for an offshore well blowout could not be limited by release and indemnity terms on the reverse of its printed form work ticket because of its gross negligence. Along the same lines, the Ninth Circuit, which covers California, Oregon, Nevada, Idaho and Washington, recently ruled that an exculpatory clause in a maritime contract could not shield against gross negligence. The enforceability of certain limitations on liability is also being questioned in the passenger cruise setting.

The federal court in New York City recently ruled that a ticket limitation period must explicitly waive the otherwise applicable limitation period, based on analogous state law, to bind the passenger. Limitations on liability in the maritime world will undoubtedly continue to be subject to scrutiny by the US courts. Interestingly, this year the US Supreme Court just agreed to hear argument on a case involving whether a seaman may bring suit in state court for personal injury even though the shipowner/employer has filed a motion to limit its liability in federal court.

No cover for Peeping Toms

Insuring various marine liability risks is also the subject of significant developments in US law. One recent case involved the extent to which vessel information must be disclosed to insurers. A tour boat operator had its marine insurer add a yacht to its pre-existing policy without telling the insurer that it had no charter or right of possession due to ongoing negotiations with the yacht's owner. The Eleventh Circuit ruled that the marine insurer had no duty to investigate, but that the insured has a duty to disclose all facts material to the decision to insure.

Just as a marine insurer is not required to investigate and seek out further information, the Second Circuit recently ruled that an insurance carrier is not obligated to defend for its insured's intentional and dishonest tort. In the underlying case, owners and operators of a marina had secretly made videos of female customers and employees, invading their privacy, and then showed the tapes at a local bar they owned. The court ruled that the acts in this case were clearly intentional and dishonest, and the insurance carrier therefore had no obligation to defend.

The Fifth Circuit recently ruled that a foreign insurer is not subject to personal jurisdiction simply because of its directing its insured's litigation activities. The case involved the sinking of several barges carrying the insured's cargo. After the cargo owner appeared in the litigation, the barge owner's insurance companies demanded that the cargo owner's foreign insurer be forced to appear in the lawsuit because it was directing the cargo owner's defence. The court disagreed, and ruled that supervising an insured in litigation does not make a foreign insurer subject to US jurisdiction.

Seaworthiness now a component of environmental compliance

No summary of recent developments in US maritime law would be complete without addressing some of the cases with significant environmental issues. The Second Circuit recently held that risk to the environment is a factor to be considered in determining whether a vessel is seaworthy to carry a particular cargo. The particular environmental risk in that case was lube oil being carried by a double?hulled freighter. In the context of a dispute over the vessel's seaworthiness, the court ruled that consideration of the potential environmental impact of a disaster comports with the modern view of what constitutes 'seaworthiness', and 'safe' transport includes a vessel's ability to transport cargo without threatening the environment. Thus, risk to the environment can be considered in determining a vessel's seaworthiness.

Maritime environmental risks continue to be a concern of federal law enforcement in the US as well. For example, the captain of a Norwegian tanker was recently arrested in Maryland for failing to notify the US Coast Guard of a leak in the tanker's hull before its arrival. The condition was not recorded in the tanker's Oil Record Book either.

Developments in US maritime law will undoubtedly continue with an increased focus on environmental issues.