Non-US Citizen Crew May Be Unable to Sue for Injury If Bill Becomes Law

On October 28, 2011, Lloyd's List reports that a draft provision in upcoming US legislation would bar non-US citizen crew on foreign-flag passenger vessels from seeking damages for injury or death in US courts. Of course, this legislation has sparked outrage among seafarer rights advocates, while others note that the provision — whose main effect will be on cruise line employees — sets a different standard for this category of mariners as compared with crewmembers on cargoships or containerships, or any other merchant vessel.

The House of Representatives’ version of the new US Coast Guard Authorization Act contains a section that stipulates that a seafarer who is not a US national or permanent resident, and who suffers injury or death outside US territorial waters, be barred from bringing a damages lawsuit before a US court, so long as the mariner has a right to seek compensation under the laws of his homeland or in the ship’s flag state. The Bill, introduced by Republican Congressman Frank LoBiondo in September, has been voted out of the Transportation and Infrastructure Committee. It is now before the Republican-controlled House for a full vote. This may take place before Christmas.

The Senate version of the USCG Authorization Act does not contain this provision. Experts have reportedly said the Democratic-controlled Senate is not expected to vote on its own Bill until next year, and questioned whether such a provision would find favor with the Democratic majority.

The House provision would benefit top cruise lines, which are based in the US and carry a predominantly American base of passengers, but whose ships are foreign-flagged and employ mainly foreign crew. It is well known that foreign injured crew invariably bring their lawsuits in the US, rather than take their chances back home, as legally awarded damages in many foreign jurisdictions are derisory or non-existent. Some of this has been remedied by foreign jurisdictions putting in place employment tribunals that hear cases and award compensation, but there are many jurisdictions that do not have such infrastructure. The best example of countries to which such infrastructure is non-existent is China, Myanmar or Russia. If the legislation were to become law, many suggest that these poor seafarers would have to travel to a flag state like Liberia, and file their claim for an injury.

If you are interested in receiving a complete copy of the Lloyd's List article or the proposed legislation, please feel free to contact me at miamipandi@comcast.net or motero@houckanderson.com.

Overlawyered Insurance Dispute Sheds Light on Attorney's Fee Issue

On October 18, 2011, the Miami-Dade Daily Business Review reports on the case of DeLeon v. Great American Assurance Co., where the Third District Court of Appeals held that a truck driver is entitled to attorney's fees after an attorney for his insurance carrier improperly questioned him during an examination under oath, thereby making judicial intervention necessary to resolve the claim.

The facts are as follows--the truck driver's tractor-trailer was stolen while parked at an interstate trucking company. When the police found the truck, it was damaged and nine tires were  missing. The trucker filed a claim with his insurer. The insurer required the trucker to submit to an examination under oath ("EUO"), as part of its investigation. Like many insurance policies, the trucker's required him to provide the statement before initiating a lawsuit. However during the EUO, the bulk of the questioning pertained to the trucker's unrelated criminal conviction and who he was living with at the time. The trucker refused to answer these questions. In response, the insurance company attorney threatened the trucker that he was jeopardizing his insurance coverage and invited him to withdraw his claim in lieu of responding. The trucker walked out of the EUO before its conclusion and subsequently filed suit.

The appellate court found that it was necessary for the trucker to resort to litigation in order to resolve his claim. The appellate court reasoned that the insurance company "decided to use the usual policy provision requiring a sworn statement as a license to make unwarranted and intrusive inquiries into the personal life of any insured who has the termerity to make a claim against it." The appellate court's concurring opinion broadened the exhortation to all counsel practicing within the state and warned that it will not tolerate improper conduct by attorneys in the handling of disputes, whether inside or outside of the courtroom. This is yet another decision cautioning insurers and their attorneys on how insureds should be treated.

If you are interested in receiving a full copy of the DBR article or of the opinion, please feel free to contact me at miamipandi@comcast.net or motero@houckanderson.com.

S.D. Florida Finds For Vessel Owner Against Necessaries Provider

In DELTA NOVEMBER, LLC. vs. BAKER, 23 Fla. L. Weekly Fed. D44a (S.D. Fla. August 22, 2011), a vessel owner entered into oral repair contract with a repairer and brought the action against the repairer alleging breach of maritime contract/warranty of workmanlike performance and breach of marine bailment, after vessel sank at its berth causing damages to its hull, machinery, appurtenances, and plaintiff's personal property. The repairer moved to dismiss for lack of jurisdiction, improper venue, and failure to state a claim.

The facts of the case are as follows. Plaintiff Delta November, LLC (“Plaintiff”) entered into an oral contract with Defendant Richard Baker (“Defendant”) to repair the starboard engine of Defendant's vessel, the M/Y CJ, a 33-foot Chris-Craft fly bridge sportfish vessel. At the time, the vessel was docked at its home dock, Worldwide Sportsman, and connected to shore-side power. The Defendant began the repairs at Worldwide Sportsman, which is located in Islamorada, Florida, wherein the Defendant then requested permission to move the vessel from Worldwide Sportsman to a berth behind Defendant's house in Tavernier, Florida. The Plaintiff granted permission for the Defendant to shift the vessel to his own house. However, instead of moving the vessel to his own house, the Defendant shifted the vessel to a berth located behind his neighbor's house. When the Defendant shifted the vessel, he failed to reconnect shore-side power. The Defendant also failed to monitor the vessel.

While docked at the Defendant's neighbor's house, the vessel began taking on water from the shaft's packing gland. The vessel's onboard bilge pumps kept up with the intruding water until the battery life died. If the Defendant had connected the vessel to shore-side power or if he had monitored the vessel, he could have saved the vessel. Instead, the vessel sank at its berth causing damage to its hull, machinery, appurtenances, and Plaintiff's personal property. The Plaintiff also alleges that the Defendant damaged the packing gland by improperly removing the starboard engine and failed to confirm the packing gland's integrity after removing the starboard engine.

The court found that the complaint falls within admiralty jurisdiction under 28 U.S.C. section 1333 because the vessel was technically capable of being used in navigation and qualifies as a vessel where it was capable of floating when defendant took possession of it, and there is no allegation that its navigation system was damaged. The court also found that venue is proper where plaintiff has alleged that damage occurred in the district where complaint was filed. The court further found that venue is proper in southern district of Florida, because this is in personam admiralty action, and defendant was properly served in the district. 

Moreover, the court found that the claim for breach of warranty of workmanlike performance in an oral contract for repair should not be dismissed for failure to state claim. The court reasoned that there was no merit to the arguments that the complaint fails to state a claim because the plaintiff failed to plead that its principal or agent entered into oral contract with defendant and secondly, because oral contracts are unenforceable in admiralty. The court found that the claim for breach of marine bailment should not be dismissed for failure to state a claim where complaint, contrary to defendant's assertion, specifically alleges that defendant had exclusive possession of vessel and property to exclusion of the plaintiff.

If you are interested in receiving a full copy of this decision, please feel free to contact me at miamipandi@comcast.net or motero@houckanderson.com.

Crewmember Claims Not Falling Within Arbitration Clause

In DOE v. PRINCESS CRUISE LINES, LTD., 23 Fla. L. Weekly Fed. C439a (11th Cir. September 23, 2011), the Eleventh Circuit held that the trial court did not err in holding that a crewmember's claims for false imprisonment, intentional infliction of emotional distress, spoliation of evidence, invasion of privacy, and fraudulent misrepresentation do not fall within scope of arbitration provision, where those claims contain allegations that do not arise from, do not relate to, and are not connected with parties' crew agreement or services performed by plaintiff as bar server. The Eleventh Circuit reasoned that such claims are not the immediate, foreseeable result of performance of parties' contractual duties or plaintiff's services as cruise line employee and are not within scope of arbitration clause, where claims involve factual allegations about how cruise line and its officials treated plaintiff after learning that she had been raped, including allegations that she was kept on the ship against her will, that she was prevented from getting medical attention off the ship, that her rape kit was destroyed in incinerator, and that her confidentiality as rape victim was intentionally violated. 

However, the Eleventh Circuit also found that the district court erred by denying the cruise line's motion to compel arbitration on remaining five claims which fall under either Jones Act or general maritime law applicable to seamen, or Seaman's Wage Act, because those claims arise directly from plaintiff's undisputed status as a “seaman” employed by cruise line and the rights that she derives from that employment status, and as a result fall within scope of arbitration provision.

If you are interested in receiving a complete copy of this decision, please feel free to contact me at Houck Anderson at mailto:mmotero@houckanderson.com or miamipandi@comcast.net.

The Key to Arbitration Clause Provisions is Careful Handling

Businesses often insert an arbitration clause in a contract based on the expectations that arbitration is cheaper and faster than a lawsuit. Unfortunately, a poorly drafted arbitration clause can lead to a messy legal dispute that is neither cheaper nor faster. Transaction-oriented lawyers have their strengths, and litigation is generally not one of them. As a result, they may not anticipate all of the ramifications of the provisions they insert in an arbitration clause. Sometimes an attorney borrows from a well-crafted contract that is ill-suited to the needs of the current client. In a sincere but misguided effort to cover all bases, an attorney may insert language that is overly expansive, overly restrictive or just plain impractical. This is particularly true in maritime matters.

In my years as a claims executive ultimately paying for arbitration proceedings, a lawyer appearing before arbitrators and advising clients on contracts that other lawyers have drafted, I have learned to analyze arbitration clauses in the same way that a coach may watch videotapes of games. Because there are various nuances to drafting arbitration clauses, it is good to highlight the most important questions when reviewing a proposed contract.

Set Goals

• What do you want to accomplish? One reason for arbitration is to achieve a private resolution out of the eye of the public and competitors. The other main reasons are to avoid costly trials and drawn-out disputes.
• What will be arbitrated and what will not? When asked, courts generally rule broadly regarding what is covered by arbitration. All issues in a construction contract should be--but tort claims, probably not.
• Are provisions for arbitration consistent and harmonious with other provisions of the contract? If not, resolving conflicts and confusion within the document may protract and complicate the proceedings.
• Is the arbitration nonbinding? If the answer is yes, then clearly, somebody was not thinking when writing the contract. If an arbitration ruling cannot be enforced, the two sides will still end up in court after going through a time-consuming and potentially expensive set of hearings or reluctantly unsatisfactorily reach a result that is less then satisfactory.

Choose Players

• How many arbitrators? Base the number on the size of the contract. If it is a simple dispute, one arbitrator will do. If the agreement has complex issues and involves considerable money, you may want a panel of three. Remember that costs rise with the number of arbitrators.
• Who chooses the arbitrators? Independent groups such as the American Arbitration Association, the Judicial Arbitration & Mediation Services and the Society of Maritime Arbitrators offer qualified individuals.
• Who pays the arbitrators? The cost could be split between the two sides or paid by the loser in the dispute.
• What are the roles of the arbitrators? A contract may say that each side picks one arbitrator and those two pick the third who manages the arbitration. If the clause fails to state that the first two arbitrators should act in a neutral fashion, they may be advocates and engage in a tug-of-war over the third to gain a 2-to-1 victory. This is less than ideal.
• Can there be independent communication with the arbitrators? Yes, when the advocate arbitrators are not neutral. The two sides argue the case before the arbitration panel and separately talk to their arbitrator--not a good situation.

Keep Score

• Will attorneys fees be awarded for the prevailing party? Not unless there is a provision for it in the contract.
• What type of award may be made? Both sides should know ahead of time what they might gain or lose and why. There are multiple types of awards: standard (amount and breakdown), reasoned (arbitrator gives reasons) and findings of fact and conclusions of law (arbitrator makes findings). The more complicated and detailed the award, the more expensive. The type of award should be specified in the contract.
• Does the winner take all? Use the legal standard of preponderance of the evidence in weighing how much to award to each side.
• What rules apply? In the contract, pick rules of arbitration, either AAA, SMA or some other rules designated specifically for arbitration.

In summary, while company owners and managers expect attorneys to know how to draft every page of a contract--reality can fall short of expectations. A business should choose an attorney that is experienced in arbitration and contract drafting in the particular area of law to undertake this very important task. Undertaking this step by step analysis before signing on the dotted line is the difference between signing a contract and crossing fingers that all will ultimately come out ok and signing a contract, knowing that the language chosen is well suited for the business and risks that comes with that business.

If you are interested in contact me, please feel free to do so at miamipandi@comcast.net or motero@houckanderson.com.

Glut of Ships Bad News for Supertanker Owners

Bloomberg News reports that owners of supertankers, losing money for a sixth consecutive quarter, will probably idle the most ships in more than two decades, as they contend with a glut that drove charter rates to the lowest in at least fourteen years. The combination of too many ships and slowing demand growth for oil means that about six percent of the fleet will be anchored in a year, according to Bloomberg's survey of eight brokers and analysts. However that may not be enough to end the slump. This is because it is reported that freight agreements, traded by brokers and used to bet on transportation costs, anticipate rates no higher than $13,819 a day through 2013.

While owners can cut operating costs to as little as $2,000 a day from $12,000 by anchoring ships, it also means no income. This was a statement made by Andreas Sohmen-Pao, CEO of the oil and gas shipping unit of BW Group, which is idling three ships of its own. The global fleet of VLCCs expanded about 9 percent to 570 ships in the past two years, the most since 1983, Clarkson data shows. Owners ordered the greatest number of new ships since the 1970s between 2006 and 2008, when charter rates surged to as much as $289,000. Demand for oil tankers will match fleet capacity by the Northern Hemisphere's next winter, lifting charter rates, stated Peter Evensen, the CEO of Teekay in an interview in London on October 6th.

If you are interested in contacting me,you may reach me at miamipandi@comcast.net or at Houck Anderson at motero@houckanderson.com.

Feds Cracking Down on Lobster Violations In the Florida Keys

The Miami Herald reports on Tuesday, October 11, 2011 that federal prosecutors have been fiercely cracking down against illegally harvested lobster. In 2009, a federal investigation dubbed Operation Freezer Burn resulted in the seizure of more than 2,000 pounds of lobster on Cudjoe Key and the arrests of six people, including ringleader David Dreifort, now serving time in federal prison. Under federal law, commercial lobster divers can harvest 250 lobster per day. However, amounts allegedly sold to a Stock Island man over the time period outlined in the indictment is more than double that amount.

That man, Scott Greager, has admitted that he bought and sold thousands of illegally harvested lobster in the most recent major federal fisheries case from the Lower Keys. Greager, the owner of a Key West business called Holiday Seafood, faced multiple federal counts of conspiring to purchase 5,435 pounds of lobster from two commercial divers over seven days at the opening of the regular lobster season in August 2008. As part of Greager's plea agreement, he will be sentenced to no more than 5 years in federal custody. Greager previously faced a sentence of 10 years.

Commercial fishermen reportedly support the recent actions to shut down illegal operations. The Florida Keys Commercial Fishermen's Association has urged state and federal marine officers to actively pursue lobster poaching. Enforcement officers with the Florida Fish and the Wildlife Conservation Commision and National Marine Fisheries Service have reportedly responded.

If you are interested in seeing the entire Miami Herald article or wish to reach me to discuss this case further, please feel free to reach me at miamipandi@comcast.net or at Houck Anderson, P.A. at motero@houckanderson.com.

Seaboard Exits Bahamas

On Tuesday, October 11, 2011, Lloyd's List reported that Seaboard Marine, the US liner major and subsidiary of Seaboard Corp, is closing its operations in Nassau in the Bahamas and exiting the trade, with the last port call to be made by ro-ro ship Seaboard Spirit set for this month. A search on the Seaboard Marine website today at http://www.seaboardmarine.com/SML/ does not show Nassau as a available port to originate or send shipments.

There does not appear to be any official comment from Seaboard Marine on their website.

If you are interested in contacting me, you may reach me at miamipandi@comcast.net or motero@houckanderson.com.

Single Act of Negligence Does Not Render a Cruise Ship Unseaworthy

In FLUERAS vs. ROYAL CARIBBEAN CRUISES, LTD., 36 Fla. L. Weekly D2131a (Fla. 3d DCA Sept. 28, 2011), the Third District Court of Appeals of Florida held that a single act of negligence by an otherwise competent crew member does not render ship unseaworthy. The Plaintiff, individually, and as the personal representative of the Estate of Diana Elena Flueras (“Ms. Flueras” or “Crew Member”), appeals from a final summary judgment entered in favor of defendant Royal Caribbean Cruises, Ltd. (“RCCL” or “Shipowner”) in an action alleging the unseaworthiness of RCCL's vessel, the Explorer of the Seas, arising out of the alleged negligence of the vessel's medical crew. Ms. Flueras was employed by Image Corp., The Image Group, or Image (collectively, “Image”), not by RCCL, as a photographer on the Explorer of the Seas. On October 10, 2005, Ms. Flueras visited the ship's infirmary complaining of back and abdominal pain.

On October 20, 2005, Ms. Flueras underwent an outpatient abortion procedure performed in St. Thomas, Virgin Islands. The doctor sent a letter to the “Ship's Doctor” advising that the amount of tissue removed during the procedure was inconsistent with her gestational age and that she should submit to further testing to rule out an ectopic pregnancy. The ship's doctor did not complete this testing and after Ms. Flueras worsened on board the vessel, she was disembarked shoreside where the Ship's Doctor received a letter from the port agent indicating that Ms. Flueras had a ruptured ectopic pregnancy and intra-abdominal bleeding. Ms. Flueras died at the shoreside hospital on October 24, 2005. The primary cause of death was septic shock and a ruptured ectopic pregnancy.

Mr. Flueras filed an action for unseaworthiness, alleging that RCCL's vessel was unseaworthy because: (a) the vessel was unsafe and unfit as a consequence of RCCL's conduct; (b) the vessel was manned by a medical crew that was not properly trained, instructed or supervised; (c) the vessel's medical crew was unfit; (d) the vessel lacked adequate manpower for the tasks being performed; and (e) “[o]perational negligence existed in defendant's inadequate medical care provided to Ms. Flueras; incompetent medical care provided to Ms. Flueras, and unfit medical crew caring for Ms. Flueras.” Subsequently, RCCL moved for summary judgment on the ground that the Ship Doctor's negligent conduct could not render the vessel unseaworthy because Mr. Flueras failed to put the Ship Doctor's competence at issue. In response, Mr. Flueras argued that the crew members' conduct and incompetency, as well as the absence of or failure to follow shipboard policies and procedures rendered RCCL's vessel unseaworthy. Mr. Flueras also argued that the necessity for additional discovery precluded the entry of summary judgment. The trial court heard the motion on October 18, 2007, reserved ruling, and ordered the parties to submit supplemental memoranda of law. The trial court subsequently granted RCCL's motion for summary judgment.

The appellate court found that heart of the analysis in these cases is the crew member's specific knowledge, degree of skill, sufficiency of experience, and/or adequacy of licensure, and the affidavits produced by Mr. Flueras fail to directly challenge these aspects of the Ship Doctor's qualifications. Because the Ship Doctor's Harris's licensure, experience, knowledge, and skill remain unrebutted by the affidavits, the appellate court affirmed the trial court's entry of summary judgment on this issue.

This case addresses other issues related to the sufficiency of the discovery undertaken by Mr. Flueras and thus, the case was remanded for further proceedings. The case is lengthy and instructive and thus, if you are interested in obtaining a copy of this decision, please feel free to contact me at miamipandi@comcast.net or motero@houckanderson.com.