$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.

Future Lost Wages Based on Statistical Work-Life Expectancy

A rigger on a crane barge was injured when he fell from a makeshift scaffolding.  He sued the vessel owner for negligence under the Jones Act, as well as his employer for cure (the cost of a back surgery) under general maritime law.  After a bench trial in the U.S. District Court for the Eastern District of Louisiana, the Court entered a judgment against the vessel owner and the employer.  Both appealed to the U.S. Fifth Circuit.

The vessel owner alleged several errors on appeal, including the calculation of future lost wages.  The Court held that future lost wages must be based upon a seaman’s statistical average work-life expectancy unless there was evidence that a particular person, by virtue of health or occupation, was likely to live and work shorter or longer than average.  In assigning future lost wages, the District Court simply adopted an age somewhere in the middle of the high and low work-life expectancies presented by the two expert economists.  Because there was no evidence that the plaintiff might live and work longer than average, the Fifth Circuit applied the statistical retirement age presented by the plaintiff’s expert, thus reducing future lost wages by nearly $100,000.00.

The Court also affirmed the employer’s responsibility for payment of the lumbar laminectomy and fusion surgery.  The employer’s physician contested the medical necessity of the surgery, but the Court found the procedure relieved the plaintiff’s pain and was therefore curative in nature and required under the employer’s maintenance and cure obligations.

Barto v. Shore Construction

Statute of Limitations in Maritime Cases not Limited to Vessels Engaged in Commerce

Plaintiff was injured while aboard Defendant’s pleasure yacht on October 25, 2011.  On January 29, 2015, Plaintiff filed a negligence based lawsuit in federal court in Florida.  Defendant then filed a motion to dismiss on the grounds that the statute of limitations for a maritime tort barred the claim.  Plaintiff argued that the maritime statute of limitation did not apply because his case was not maritime in nature since he was aboard a pleasure yacht rather than a seagoing vessel.

The court found that Defendant satisfied both the locality and nexus tests, and because admiralty jurisdiction was established, the three year statute of limitation under 46 U.S.C. § 30106 attached.  The court held that although certain vessels are excluded from certain limits on liability, the definition of ‘vessel’ in maritime law was not limited to those engaged in commerce.  Defendant’s motion to dismiss was granted.

Parker v. Darby

Maritime Worker Not Entitled to Damages under 905(b) or Warranty of Seaworthiness

Section 905(b) of the LHWCA permits an injured maritime worker to bring suit against a vessel owner for negligence. In Scindia Steam Navigation Co. v. De Los Santos, the United States Supreme Court annunciated that a vessel owner owes three narrow duties to a maritime worker for purposes of 905(b). These duties include the: (1) turnover duty, (2) active control duty, and (3) duty to intervene.

In Willis v. McDonough Marine Service, the Plaintiff was injured when he tripped and fell on a temporary stair set that was used to access an offshore module from a barge. He subsequently filed a 905(b) action against the barge owner and bareboat charterer. In addition, plaintiff sought an unseaworthiness remedy on the grounds that he was a “Sieracki seaman.” The defendants filed a motion for summary judgment asserting that they did not breach the Scindia duties as a matter of law because they were not responsible for the placement of the stair set on the barge. They further contended that plaintiff was barred from an unseaworthiness remedy because he was a covered by the LHWCA.

The Eastern District of Louisiana held that the owner and bareboat charterer did not breach the Scindia duties because the defendants did not place the stair set on the barge and were not responsible for keeping it in a safe condition. The court also noted that the “active control duty” did not come into play because the barge was turned over to plaintiff’s employer, which was not a party to the case. Finally, the defendants did not owe a “duty to intervene” because there was no evidence that they had actual knowledge of the stair set’s placement on the barge.

The court also held that the plaintiff satisfied the status and situs tests for LHWCA coverage and, therefore, could not seek damages for unseaworthiness as a “Sieracki seaman.” While “Sieracki seamen” are entitled to an unseaworthiness remedy, the court explained that this is narrow class of persons who are excluded from coverage by the LHWCA and perform traditional seaman’s duties aboard vessels.  The court further opined that an unseaworthiness remedy would not have been available because the temporary stair set did not constitute an appurtenance to the barge.

Willis v. McDonough Marine Service