Reporting a Marine Casualty: When is it Necessary?

Since 1986 those in the maritime industry have been required by law to submit to the US Coast Guard a Report of Marine Casualty, commonly known as a “2692,” when a marine casualty or accident occurs.  The regulations broadly define “marine casualty or accident” in order to capture a wide variety of occurrences. These occurrences provide the Coast Guard with the appropriate authority and jurisdictional latitude to investigate a wide range of occurrences irrespective of reporting requirements.  These occurrences include both commercial and recreational vessel activities.  Casualty reporting criteria for state registered vessels is found in 33 CFR Part 173 and  for federally registered vessels in 46 CFR Part 4.

Historically, the Coast Guard has relied upon the language found in Part 4 to assist regulated industry stakeholders in determining if an occurrence is a reportable marine casualty.  Information and data collected by the Coast Guard during marine casualty investigation are used by a wide audience for many purposes from enforcement of laws to enhancement of prevention activities (i.e. safety alerts and standards).  However, since inception there has been confusion in the industry as to when exactly submission of a 2692 report is necessary.  This becomes problematic for those in the maritime industry since civil penalties can be levied against the vessel owner/operator should the Coast Guard later conclude that a report should have been submitted when none was.

The Coast Guard has finally officially recognized that in order to achieve consistency and to assist industry time has come to address the problem.  The Coast Guard has issued a Notice of Availability and Request for Comments (Notice) on January 14, 2014 on a draft Navigation and Vessel Inspection Circular to provide guidance for the identification and reporting of marine casualties and provide clear policy interpretations to facilitate compliance with marine casualty reporting requirements.  79 Fed. Reg. 2466 (January 14, 2014).  The Notice is available at http://www.gpo/fdsys/pkg/FR-2012-01-14/pdf/2014-00443.pdf.  The draft NVIC is available at!documentDetail;D=USCG-2013-1047-0002.  Specifically, the draft NVIC assists responsible parties in the proper evaluation of occurrences that constitute a reportable marine casualty and subsequently require action by both Coast Guard and Industry.

The NVIC contains the existing regulations and provides amplifying information to assist reporting parties to determine whether an occurrence is a reportable marine casualty.

The proposed interpretations are extensive and comprehensive and cannot be reviewed in the space of this article.  They are helpful and are an improvement to the regulations as they presently exist.  For instance, the regs currently state that an injury needs to be reported if it “requires professional medical treatment (treatment beyond first aid).  In an attempt to provide clarification the suggested interpretation suggests that such is damage or harm caused to the structure or function of the body as a result of an outside physical agent or force.  The Coast Guard considers injuries and illnesses as separate types of occurrences.  As such, damage or harm caused by illness, including but not limited to communicable illness, food poisoning, heart attack, stroke or other pre-existing medical condition is not considered an injury and does not fall within the definition of the regulation.  To assist in determination of what constitutes “professional medical treatment” the Coast Guard has adopted the definitions of medical treatment and first aid established by OSHA in 29 CFR 1904.7(b)(5) as well as the explanation regarding medical treatment provided therein.  This regulation can be viewed online at www.ecfr.cov.

Those with a stake in this should take time to read the NVIC and referenced OSHA regs.  With this clarification comes the recognition that the Coast Guard is increasing its expectations of industry and will step up enforcement of its reporting requirements.

International Safe Container Act

The International Safe Container Act (ISCA, 46 U.S.C. 80501-80509), signed into law in 1977, details the requirements for application and compliance with the International Convention for Safe Containers signed in 1972 in Geneva.  The Convention was motivated by the need to maintain a “high level of safety of human life in the handling, stacking and transporting of containers, to facilitate international container transport and the recognition of the advantage of formal, uniform common international safety requirements.

The Act applies to an owner of a container used in international transport if the owner is domiciled or has its principal office in the United States.  The Act provides the United States Coast Guard with authority to examine and inspect containers used in international transport not only to make sure that they are sound, but also to ensure that they are in compliance with the Federal Hazardous Materials Transportation Law (49 U.S.C. 5101-5127) and ISCA.  The Act authorizes the Coast Guard to issue a detention order removing or excluding a container from service until the owner shows that the container meets the standards of the Convention.  It may also require the container to be moved to another location for repair or other disposition.  It may require unloading and special handling necessary to ensure safety.  (The Coast Guard is charged with inspection of general cargo to ensure hazardous materials are not being shipped illegally as undeclared hazardous materials are a leading cause of transportation accidents.)  The order will remain in effect until the container is found to be in compliance with the standards of the convention or is permanently removed from service. The owner of a container involved in such an action is required to reimburse or pay for the expenses arising from issuance of the detention order.

Additionally, the owner who has been notified of a detention order and fails to take reasonable and prompt action to prevent or stop a container subject to an order from being moved is liable for a civil penalty of not more than $5000 per day for each such container moved.  Each day the container remains in service in violation of the order is a separate offense.   The owner does have the right to appeal and seek review of the order.  The Coast Guard will then appoint an independent surveyor to inspect the container.  Once the survey is reviewed the Coast Guard may affirm, set aside or modify the order. It should be noted that the owner is liable for the costs incident to the petition for review including the cost of the survey and any other costs incident to or resulting from the detention.

Importantly, the Act also provides whistle blower protection to employees who bring to the attention of their employers containers in violation of the standards, and specifically states that any retaliatory act against a person is strictly prohibited and the employer may not discharge or discriminate against an employee because the employee has reported the existence of an unsafe container or a violation of a regulation found in the Act.  The employee alleging to have been the victim of retaliatory acts must file his complaint with the Secretary of Labor within sixty days of the violation.  After investigation, if the Secretary finds there has been a violation, he may bring a civil action in federal court to restrain the wrongful conduct and order “appropriate relief, including reinstatement and back pay.”  This could include payment of attorney’s fees and costs.  Retaliatory acts can include assigning to undesirable shifts, demoting, disciplining, intimidating, reducing hours or pay, or reassignment.

Course & Scope of Employment

By its terms the Jones Act, which provides seamen with their right to bring suit against their employer for injuries sustained, the injury must be suffered in “the course and scope of his employment”.  Similarly, the Longshore and Harbor Workers’ Compensation Act provides relief to those workers whose injury or death “arises out of and in the course of employment”.  As you might imagine there have been a number of cases in which the courts have been tasked with determining if the seaman or longshoreman was in the course of his employment when injured.

In the case of the injured seaman this issue most often arises when the seaman is injured while on land. For instance, a seaman who has just been hired through his union, and was on his way to his assigned vessel in a taxi selected by his employer, was found to have been injured in the course of his employment.  The court found that he was in the service of the ship while en route to take up his assignment.  Generally the test the courts apply is whether the seaman was on a mission for or engaged in a task that furthered the mission of the vessel.  Thus, the seaman who is assigned the task of purchasing supplies and is injured while on land will be found to have capacity to sue his employer.  It is the nature of the work he is performing, at whose behest or instruction he is working, and for whose benefit he is performing the work that are critical in the analysis, not the site of the accident or injury.  Generally if the seaman is injured while conducting his personal business he is not afforded the right to sue his employer.  However, if he is temporarily assigned to shore duty when injured he does not lose his remedies under the Jones Act.

Interestingly, the courts have made a distinction between “blue water” seamen and “brown water” seamen. With respect to traditional “blue water” seamen serving on ships that call on foreign ports and are at sea for extend tours of duty, the courts have considered shore leave as well as travel to and from the ship as part of the seaman’s service to the vessel.  Thus, even if not explicitly engaged in ship’s business when injured on leave, he retains his remedy.  The courts have determined that even if on shore leave the “blue water” seaman is still answerable to the call of his ship and thus within the course and scope of his employment.

The distinction becomes a bit blurred in the case of the “brown water” seamen who return home every night, and travel to and from work.  Generally, but not all, courts have found that such seamen if injured going to and from work will not be in the course and scope of their employment at such times.  However, if the seaman can show that he was subject to be called at any time, he may be considered within the course and scope of his employment.

This writer successfully defended a case in which a mate on an inland towboat was killed in a motor vehicle accident while returning to his home in Arkansas.  The mate had allegedly been on duty 30 straight hours prior to departing the vessel for home on his regular crew change in Memphis, Tennessee. Approximately six hours later he was killed when his vehicle wrecked.  The evidence showed that the seaman lived but 110 miles from the dock where he disembarked.

Applying the rule in the Supreme Court case of Braen v. Pfeifer Oil Transport Co., 361 U.S. 129, the trial court employed two factors to determine whether a seaman is in the course and scope of his employment when injured: (1) the degree of control the employer-vessel owner had over the seaman at the time of the injury; and (2) whether the seaman, at the time of the injury, was on personal business or on a mission for the benefit of his employer or attending to the business of his employer.  Making the distinction between blue water and brown water seamen, the courts have found that the brown water seaman’s employment is arranged into definite, equal periods on shore and on the vessel.  As such they maintain to a large extent the home life of ordinary shore dwellers.  When they are off the vessel, they are replaced by another seaman. Thus, when they leave the vessel they are not subject to the call of duty.

In the subject case the Court found that at most it would have taken the seaman four hours to return home. His blood alcohol level showed that he had been drinking in the interim from the time he departed to the time of his wreck.  Finding that the decedent did not drive straight home but instead engaged in personal activities, there was no evidence that his actions after he left his vessel were motivated by an intent, desire or obligation to benefit his employer.  Thus his widow’s lawsuit was dismissed.

In these type cases the “course and scope” determination will depend on the particular facts of the case.  When faced with this issue the employer must investigate promptly and preserve all evidence and contact information with potential witnesses.


Lowering the Bar for Punitive Damages

Punitive damages are recoverable in maritime property damage claims.  Based on decades of jurisprudence it has been widely accepted that in order to award punitive damages the negligent conduct must be more than mere negligence; the defendant must be guilty of “gross negligence, or actual malice or criminal indifference which is the equivalent of reckless and wanton misconduct”.

In Graham v. PCL Civil Constructors, Inc. 11-0056 (S.D. Texas – Dec. 23, 2013) the judge awarded punitive damages because the defendant did “not realize or appreciate the high degree of risk involved when a reasonable (company) in its position would do so.”  In doing so, he made it easier for plaintiffs to carry the burden of proof necessary to justify an award for punitive damages.

In this case, Graham owned a fishing vessel that was damaged when two barges broke free from their moorings during a storm, drifted downriver and hit it.  PCL, the owner of the barge, settled with Graham his claim for repairs.  The case went to trial on Graham’s claims for punitive damages, lost profits and attorneys’ fees.

PLC was engaged in replacing a bridge spanning the Brazos River in Freeport.  When the barges arrived in Freeport, they were moored to H-beam pilings by a single loop of a two-inch thick mooring line.  In particular, Barge M-8028, a 195-foot steel barge that was loaded with two 350-ton bridge counterweights and several other tower sections, was moored to two steel H-beam pilings.  Barge M-304, which carried part of the tower of the bridge, was tied alongside and outside of Barge 8028.  The two mooring lines that attached Barge 8028 to the two H-beam pilings thus held the combined load of the counterweight barge and the tower barge.

The evidence indicates that PCL moored the H-beam pilings in a navigable waterway without obtaining a permit, which is required by federal law.  Grady, PLC’s superintendent, testified that he received oral permission from the Coast Guard to place the pilings in the waterway, but Graham argued that this informal “comment in passing” did not satisfy the statutory requirement to obtain a permit from the Army Corps of Engineers.

Grady decided how to moor the barges, taking into consideration various factors when making the decision.  He considered that this was expected to be a short-term mooring, that the area where the barges were being moored was in fairly protected waters with very limited boat traffic, that the tide action in the area was minimal, and that the area had protection from the wind due to a levee near the riverbank.  Based on the foregoing considerations and determinations, Grady concluded that his planned mooring system would be adequate for the task at hand.

Grady testified that the PCL employees performed “visual inspections [of the moorings] while they were on the barge,” but there was no standard protocol for the frequency of these inspections, nor specific consideration given to “how the H-beams would cause the rope lines wrapped around them to wear.”  The mooring lines were not changed during the two to four weeks that the barges were in place prior to the breakaway.

The breakaway occurred on March 5, 2011 during a storm with sustained winds of over 30 mph and wind gusts up to 43 mph.  The PCL superintendent on site at the time explained the normal PCL practice for checking the weather as “[u]sually it’s your own accord to listen to the weather or pull it up on the Internet if there’s a suspected front…[or if] it’s already raining [y]ou would go to the office or call somebody at the office and say, How long is this here for?  What’s it going to do?  What’s the forecast?”  Prior to the breakaway, the superintendent did not check the weather forecast himself, call the office to ask about the weather, nor receive any warning of the incoming storm from anyone else.  He described the weather at the time of the breakaway as “very, very windy, gusts…cloudy; and I believe it [had] started to sprinkle rain.”  PCL “did nothing specific” to change or strengthen any of the barge moorings despite the pending storm.

Graham’s expert testified that H-beam piles have square rather than rounded edges and that it is “common knowledge within the industry” that “anything other than a rounded edge would…create a sharp edge, a knife edge…that would cut your line or cable,” and that it is “basic safety” to “avoid any sharp edge on any type of mooring device.”  In his opinion, there are very limited circumstances where a mooring system with H-beam pilings and two-inch ropes would be acceptable to use—only “for a few hours…with almost constant supervision” and with a tugboat standing by—otherwise, “the barge is at serious risk of breaking loose.”

The expert also testified that—in contrast to PCL’s response to the pending storm—“the standard is somebody looks at the weather every day—every morning, and then determines, you know, wind velocity, river flow and so forth…[and] if there’s a strong wind coming…they send out boats to…go beyond the normal checking to check the lines and moorings to make sure they’re adequate, and if necessary, put out extra rigging to make sure that the equipment stays moored.”  (It does not appear that PLC called an expert on mooring practices in its own behalf.)

The judge conducted an analysis of the standards applied by state and federal courts when deciding if punitive damages are warranted.  The court relied heavily on the U.S. Supreme Court’s ruling in the Exxon Valdez case which defined “recklessness”.  It ruled that recklessness may consist of either of two different types of conduct.  In one the actor knows, or has reason to know…of facts which create a high degree of risk of…harm to another, and deliberately proceeds to act, or to fail to act, in conscious disregard of, or indifference to, that risk.  In the other the actor has such knowledge, or reason to know, of the facts, but does not realize or appreciate the high degree of risk involved, although a reasonable man in his position would do so.  In other words, if the defendant knew or should have known that his actions or inactions would create a high degree of harm to another, his behavior was reckless.

The judge held that “the evidence certainly does not establish that PCL acted with malice, or even that its conduct was outrageous or showed wanton indifference to safety concerns.  Nor does the Court conclude that PCL had actual knowledge of the extreme degree of risk yet proceeded with conscious indifference to the safety of others.  But PCL did ‘not realize or appreciate the high degree of risk involved’ when ‘a reasonable [company] in [its] position would do so.’  Furthermore, PCL’s failure to take easily available precautions demonstrates an indifference to the magnitude of risks involved.  That satisfies the Exxon Shipping recklessness standard for awarding punitive damages in maritime property damage cases.  The Court therefore concludes that PCL’s conduct with regards to its inadequate moorings and weather preparations was reckless.”

The problem with this decision is that it creates more uncertainty as to when conduct crosses the line from negligent to reckless.  Based on the faults recited it is not surprising that PLC recognized that its conduct evidenced neglect and thus chose to settle.  It could have done a better job in monitoring the weather and in securing the barges.  But was its conduct so misguided that it should be punished and made an example for the purpose of deterring future harmful conduct, which is the aim of punitive damages?  Using this standard gives the spark of life to any claim of punitive damages for property loss.  All the claimant need prove is that the defendant should have known that its conduct could cause harm.  But isn’t that the same test for negligent conduct, i.e.: but for the act, the damage would not have occurred?  Thanks to this decision the claims for punitive damages will continue to proliferate.