Articles by Will Bland, III

$23 Million Punitive Damage Award Upheld by Louisiana Appellate Court

On June 29, 2016, the Louisiana Third Circuit Court of Appeal affirmed a jury’s award of $23 million in punitive damages to the family of a young man fatally injured in a boating accident. The accident occurred on May 7, 2005, on the navigable waters of Louisiana, on a former channel of the Calcasieu River. Derek Hebert was a passenger on an open hull fishing boat manufactured by Champion, owned by Mr. Vamvoras and operated by his son. The Champion’s steering system failed while the boat was on a plane. The boat went into a spin, throwing Derek overboard. The boat’s propeller struck him 19 times, causing his death. His parents brought suit against the Vamvorases, various marinas, and three manufacturers, including Teleflex, manufacturer of the boat’s hydraulic steering system.


Litigation continued for nine years. By the time of the trial the only remaining defendants were the Vamvoras father and son and Teleflex. The Louisiana Department of Wildlife and Fisheries investigated the accident and determined that the boat, which had been purchased pre-owned by Vamvoras, lost its steering because of a hydraulic oil/fluid leak in one of the steering system’s lines at a hose/nut coupling assembly. The Department of Wildlife and Fisheries (and other experts) found that a leak in the hydraulic system can result in total failure of the steering system. Teleflex manufactured and supplied the hydraulic steering system, but one of the original Teleflex hoses had been replaced in the past with a non-Teleflex hydraulic hose. The remaining claim against Teleflex was not for construction or design defects. The claim asserted was that the steering system is defective because it contains an inherent danger unknown to users, and Teleflex breached its duty to warn unsuspecting users of a dangerous risk in using its product.


The case was tried twice to juries. In the first trial the trial judge dismissed the Vamvorases, holding that there was insufficient evidence to support a finding that they knew or should have known that loss of hydraulic fluid could result in catastrophic steering failure. According to testimony if enough fluid is lost the control of the boat is taken from the driver. The motor goes into a free spin, kicking completely to one side. The boat then suddenly turns on its own axis, referred to in the industry as a “kill spin”. Occupants are often ejected and are immediately in danger of being run over. Apparently the evidence showed that Teleflex, a sophisticated boating industry manufacturer, was well aware of this phenomenon. He also found that the warnings that were on the system were not positioned so as to be readily apparent to the operator. The judge also found that the warnings failed to advise the user that loss of fluid could result in system failure leading to ejection or death. In his opinion it was not foreseeable to the owner/driver that the system could fail and that Derek would be ejected from the boat. Thereafter the jury found in favor of Teleflex. However, the judge granted plaintiff’s motion for new trial holding that prejudicial error had occurred. The second trial was held. This time a jury awarded $125,000 compensatory damages and $23 million in punitive damages. There were numerous issues appealed by both the plaintiff and Teleflex.


The Court of Appeal recognized that because Derek was not a seaman or maritime worker his survivors were able to make a claim for punitive damages under the general maritime law. The Court noted that while punitive damages are rarely imposed they have long been recognized as punishment where a defendant’s actions are found to be intentional or so wanton and reckless to amount to a conscious disregard for the rights of others.


The Court noted that the evidence revealed that Teleflex not only knew about the steering loss, but had tested the system as early as 16 years before the accident and was aware of the consequences if there was loss of fluid and thereafter loss of control of steering. The Court concluded that the jury was influenced by this testimony and concluded that Teleflex was wanton and reckless to ignore such results when “an inexpensive stick-on warning costing thirty ($.30) cents could have saved a life”. Based on this and other evidence the Court of Appeal did not disturb the finding that the evidence reasonably supported the jury’s finding that the award of punitive damages was appropriate.


The Court then addressed the amount of the punitive damage award. Teleflex contended that it was grossly excessive as matter of federal maritime and constitutional law. Judge Ulysses Thibodeaux, writing for the Court, launched into a thorough review of U.S. Supreme Court cases where the propriety of the amount of the punitive damage award was at issue, and where the amount of the award was so grossly excessive as to violate the Due Process Clause of the 14th Amendment. The Supreme Court has recognized three guideposts for determining whether an award is grossly excessive: (1) the degree of reprehensibility of the misconduct; (2) the ratio, or disparity between the punitive damage award and the harm, or potential harm, suffered by the plaintiff; and (3) the difference between this remedy and the civil penalties authorized or imposed in comparable cases.


His review of each of the Supreme Court cases, in which all but one punitive damage award was reduced, led Judge Thibodeaux to conclude that each case must be judged on its particular facts. He decided that the Supreme Court’s finding in Exxon Shipping Company v. Baker (2008) that a 1:1 ratio between compensatory damages and the award of punitive was the appropriate measure in maritime cases was not binding. He then went on to find that the evidence supported the judgment and confirmed the 184:1 ratio. Although the Judge went to great pains to explain his reasoning, the author, having read the evidence and testimony cited by the Judge, sees nothing that separated this case from others. Certainly the loss of life is tragic. Legislators and judges across the country have, correctly so, found it in our society’s best interest to allow a tortfeasor to be punished for wanton, reckless and reprehensible conduct that results in injury and death. But there must be a balance. In the author’s opinion there is insufficient evidence to support an award for punitive damages that is 184 times the amount of damages the jury found the plaintiffs suffered. It is expected that Teleflex will appeal this decision to the Louisiana Supreme Court.


Warren v. Shelter Mutual Insurance Company, et al.

High Water and Duties of Barge Owners and Fleeters

High water is here, and it’s going to get higher before it starts dropping.  In response the U.S. Coast Guard has issued a number of river closures, restrictions and advisories.  With the Carrollton Gauge showing a stage of close to 16 feet and rising, the Captain of the Port has ordered that vessel-to-vessel transfers are prohibited unless specifically approved in advance by his office.  Further, unless moored to a shoreside facility or mooring buoys all deep draft vessels must have three means to hold position.  An example would be two fully functional operational anchors and the propulsion system in standby.  Also, vessels are prohibited from entering South Pass from the Gulf of Mexico if it has a speed of less than 10 miles per hour.  Safety zones and traffic control measures and high water safety advisories are in place.  Concurrently, high water regulations found at 33 CFR 165.803(m), which apply to fleet operations, are in effect once the Carrollton Gauge stands at 12 feet or more.  Depending on its size the fleet may be required to deploy additional standby boats in the fleet, additional surveillance, and doubling up on rigging.


Given these circumstances it’s a good time to review of the duties of barge owners and fleeters.


A barge owner has a duty to deliver a sound and seaworthy barge to its fleeter.  A fleeter is entitled to assume that a fixture on a barge delivered into its custody can withstand reasonable stresses.


These principles were discussed in Conagra, Inc. v. Weber Marine, 2000 WL 943198.  In that case, Conagra’s PV 5989 barge was delivered to Weber Marine, a fleet operator, during high water.  Weber inserted the barge into a group of barges and moored the group to the Mississippi River bank with a wire rope, or “shorewire”, attached to a deck fitting on the PV 5989 barge.  Subsequently, a Weber fleet boat repositioned the shorewire on the center bow kevel of the PV 5989.  Approximately 45 minutes later, the kevel failed.  The issue at trial was whether the resulting breakaway and damages were caused by the negligence of the fleeter, by a defect in the barge, or a combination of both.


In analyzing the liability of the respective parties, the Court noted the duty of a barge owner to supply a seaworthy barge.  The Court found that the PV 5989 had a latent defect in the kevel in that it was improperly and weakly welded at one point, which eventually caused it to fail.  The Court found that Conagra had breached its duty to provide a seaworthy barge.  At the same time, the Court found Weber Marine partially to blame due to its failure to comply with a Coast Guard regulation which requires a harbor tug to always remain within 500 yards of the barges in fleets.  In the end, the Court held Conagra to be 70% at fault and Weber to be 30% at fault.


On the other hand, the towing company’s responsibility for its tow ceases upon the proper mooring of the tow at the final destination of the tow pursuant to the towage agreement.  A fleeter is thereafter responsible for the care of barges in its custody, and that includes a duty to ensure that the barges are adequately moored.  Owners and operators of barges who leave their vessels with a fleeter can reasonably rely on the fleeter’s expertise.


Fleeters have a continuing obligation to exercise reasonable care in conducting their operations.  The fleet operator is legally responsible for ensuring proper mooring.  A fleeter who fails to take adequate precautions and to implement policies designed to prevent barges from breaking out of fleets, or from sinking within fleets, faces liability for such failures.


Courts have held that the law presumes a fleet breakaway results from the negligence of the fleeter.  Thus, the fleeter must be ready to prove that it at all times exercised reasonable care, acted in accord with the regulations and exercised due diligence.  This can often be a heavy burden.


The fleet owner or owner of mid-stream mooring systems utilizing multiple buoys has a duty to exercise reasonable diligence to furnish a safe berth and to avoid damage to the vessel.  This includes the duty to ascertain the condition of the berth, to make it safe or warn the ship of any hidden hazard or deficiency known to him or which, in the exercise of reasonable care and inspection, should be known to him and not reasonably known to the shipowner.  No such warning is required where the alleged condition is open and obvious to those in charge of the vessel’s management or where those in charge of the vessel’s management have actual knowledge.


In the M/V BELO HORIZONTE case, 2010 WL 936292, in which I represented the owner of a mid-stream ship mooring system, the ship arrived at the system at a time of high water.  It entered the berth with the assistance of three helper tugs.  Several hours after it was secure a severe weather front bringing high winds arrived.  The ship began to swing on its anchors and mooring lines.  Lines started to part.  The Master of the ship called for helper tugs to return to stabilize the ship.  The tugs arrived and began to assist.  Lines continued to part.  Tragically, one of those lines recoiled and struck the wheelhouse of one of the tugs.  A crew member stationed in the wheelhouse was killed.  His family filed suit claiming that the owner of the mooring system directed and/or allowed the ship to berth during dangerous flood stage river conditions, failed to provide assist tugs to hold her in place, and failed to properly advise the ship’s Master and its owners of the dangers presented by mooring the ship in the buoy system at such high river stage.


I moved to dismiss the owner of the mooring system.  The Court granted the motion and found that although the owner operated the system and provided the helper tugs, there was no evidence that it was responsible for the navigation and mooring of the ship.  The Court found that there was no evidence that the ship’s Master was not competent, incapable of obtaining and understanding weather forecasts, not aware of the river’s high water conditions and strong currents and would not realize that mooring a ship at a mid-stream buoy facility would bear some differences from docking at a stationary dock on the river’s bank.  The Court found that there was simply no evidence that the owner should have intervened or was legally obligated as a matter of law to call on behalf of the ship for a river pilot be summoned on an expedited basis or that additional helper tugs be called earlier.


In sum, even in less stressful conditions, barge fleeters and owners and operators of mooring facilities bear significant responsibilities and corresponding liabilities.  In severe high water conditions such as we are now experiencing, these burdens indeed weigh heavily on those who attend to the vessels that frequent our ports.

A Case of Sexual Harassment?

Plaintiff, Valerie Russo, sued her employer, APL Marine Services, Ltd. and Captain James Londagin for sexual harassment, sexual discrimination, retaliation, negligence and unseaworthiness after her employment was terminated. The case arose out of a failed romantic relationship between Russo and Capt. Londagin. The two met in 2004 when Russo was serving as chief cook aboard the M/V APL KOREA. Over the next eight years, Russo made eleven voyages aboard the APL KOREA. In 2011, while serving together, they began a consensual sexual relationship. On completion of the voyage, their relationship continued on land. In late 2012 Russo signed up to serve aboard the APL KOREA to be with Capt. Londagin for its December 4, 2012 voyage to Japan. At the beginning of the voyage, the romance continued. About ten days into the voyage, however, Russo ended the relationship over a dispute. Russo alleged that after she ended her relationship, he engaged in harassing behavior towards her. She alleged that he slapped her on her buttocks on at least one occasion, requested they have “make-up sex” on ten occasions, banged on her door at night on several occasions, lay on the deck outside her cabin, criticized her work performance, and denied her overtime pay.

On December 21, 2012, Capt. Londagin terminated Russo’s employment and she was escorted off the ship at Yokohama. Capt. Londagin alleged she threw a Sharpie pen at him. That same day, Russo received a letter from APL advising she was terminated “for exhibiting aggressive behavior towards a senior officer.”

In March 2014, she filed suit. Thereafter defendants moved for dismissal of all claims.

First, the Court dismissed all of Russo’s claims under California law as the acts complained of occurred in international waters. This included her claims for sexual harassment, sexual discrimination, retaliation, and wrongful termination. The Court recognized that state statutes are ordinarily not given extraterritorial effect. The Court found that application of the California laws hinged on the “situs of both employment and the material elements of the cause of action.” Residency, place of the employment contract, and place of termination are not themselves sufficient to overcome the presumption that state law will not apply when the tortious conduct and situs of employment are outside the state. Here plaintiff spent the vast majority of her time of employment on vessels overseas, as did the conduct about which she complained.

As for her unseaworthiness claim on the grounds that Capt. Londagin was unfit for duty, the Court stated that the Captain’s temperament and abilities “must be within the usual and customary standards of the calling.” The question was whether the behavior was “within the usual and customary standards of the calling” or whether it was “a case of a seaman with a wicked disposition, a propensity to evil conduct, a savage and vicious nature.” The Court dismissed the unseaworthiness claim noting that Capt. Londagin slapped her on the buttocks on only one occasion. Citing prior holdings, the Court found that “even unwelcome and harassing physical contact is insufficient to support a claim for unseaworthiness absent ‘a savage and vicious attack’.” A slap on the buttocks did not rise to that level.

The Court did keep intact Russo’s claim for negligent infliction of emotional distress under the Jones Act. The maritime law provides that negligent infliction of emotional distress occurs when a defendant subjects a plaintiff to emotional harm within the “zone of danger” created by the conduct of the defendant.

The Court found that the “zone of danger” test allows recovery for those plaintiffs who sustain a physical impact as a result of defendant’s conduct or who are placed in an immediate risk of physical harm by that conduct. Russo did not allege that she suffered physical impact, but the Court found that there were material questions of fact as to whether she feared an immediate risk of physical harm by the alleged sexual harassment aboard the ship. Russo provided evidence that she feared for her safety so much that she kept a chair behind her stateroom door so that he could not enter. This allegation was sufficient to support her claim that she feared the “immediate risk of physical harm.” Thus, her claim for negligent infliction of emotional distress was preserved for trial. Russo v. APL Marine Services, Ltd., 2015 WL 5626638, U.S. District Court, C.D. Calif.

Investigation of Marine Casualties – Rights of Parties in Interest

Flickr Coast Guard InvestigationWhen a marine casualty occurs the U.S. Coast Guard is empowered to conduct an investigation to determine “as closely as possible” the cause of the casualty, cause of any death, whether an act of misconduct, incompetence, negligence, unskillfulness, or willful violation of law committed by any licensed or certified individual or member of the Coast Guard contributed to the cause of the casualty, whether there is evidence that an act subjecting the offender to a civil or criminal penalty has been committed and whether there is a need for new laws or regulations, or amendment or appeal of existing laws or regulations. 46 U.S.C. 6301.

But what about the rights of the parties to the casualty? What is the extent of their participation in the investigation?  46 U.S.C. 6303 provides that in such an investigation parties in interest (PII) shall be allowed to be represented by counsel, cross-examine and call witnesses.  PIIs include an owner, any holder of a license or certificate of registry, holder of a merchant mariner’s document, any person whose conduct is under investigation, and any other party in interest.  This has been expanded to include any person who the USCG finds to have a “direct interest” into the investigation.  However, in practice these guidelines do not provide much relief to the owner of a subject vessel when on-the-scene interviews and inspections by the Coast Guard are underway in the immediate wake of a significant marine casualty.  The degree that the PII could actively participate and be privy to interviews, statements and other discovered evidence was largely dependent upon the discretion of the investigating officers.

In 2010, in response to industry calls for more active participation, inclusion and transparency, the Coast Guard issued CG-545 Policy Letter 3-10. In it the Coast Guard made clear that PIIs have the right to participate in “all levels of investigation”, not just formal hearings.  This is important.  The PII has the right to immediate participation.  This includes the right to be present during interviews of all witnesses (not just those of its own crew or employees), to be present during on-scene inspections, to present evidence to the Coast Guard and request that particular witnesses be interviewed.

To be clear, however, the Policy Letter mandates that the Marine Board of Investigation or Investigating Officer (IO) are in charge of all aspects of the investigation. In order for an interested party to participate it must be recognized by the Board or IO as a PII.  The IO has the prerogative to formally designate PIIs during the course of the investigation.  But the party that believes it is a stakeholder in the casualty is best served by making formal application with the IO to be designated as a PII.  When application is made the IO must give it due consideration.  If the applicant meets the criteria found in Part 6303 and Part 2 of the Policy Letter it “shall” be given PII status.  The request for PII recognition may be made verbally, but needs to be followed in writing within 24 hours.  The IO’s initial designation may be verbal, but needs to be made in writing by the IO within 5 business days of receipt of the written request for PII designation.

The stakeholder needs to know that the IO is not required to designate PIIs. It is incumbent on the stakeholder to act early and promptly to contact the IO and make clear that it seeks PII status.  The IO is required to notify the PII when witnesses will be interviewed, but is not obligated to accommodate the schedule of the PII.  If the PII provides a witness the IO shall determine if the witness is relevant to the investigation.  If the IO finds that the witness is not relevant, the witness will not be interviewed.

During interviews the IO is in charge. When the IO has completed his portion of the interview, the PII then may ask questions.  The IO is empowered to determine if the questions the PII asks are relevant.  If he finds that a question is not relevant it will not be allowed and the witness informed not to respond.  Part 4e of the Letter provides that the rights of the PII apply only to conducting witness interviews.  The IO “may” allow the PII to review any or all evidence gathered during the fact-finding portion of the investigation.  The PII is not allowed to have its own copies (in any form) of any documentation (read: statements) with the exception of the names and work information of the witnesses.  Additionally the IO “may” allow the PII to review the findings of fact portion of the report of investigation, but the PII is prohibited from being involved in the development or review of analysis, conclusions or recommendations for a marine casualty investigation.  As is obvious, while the Policy Letter does provide for active PII participation, it does leave to the IO significant discretion what witness or evidence he will deem worthy of consideration.  Irrespective of this, the PII should take every opportunity to submit witnesses and evidence it believes is favorable to its interests.

While the language in Part 4c restricts access by the PII to third-party documents such as log books, photos, witness statements and other evidence and what witnesses will be deemed relevant, in practice I have found that the on-site Coast Guard investigators more times than not want to work with industry and will share documents, provide access to evidence that is developed, and will accommodate the work schedules of witnesses and company representatives or PIIs.

Excellent Flickr Photo courtesy of Jonathan James.