Time for Change? Wholesale Amendments to U.S. Maritime Law Proposed

Image

On 1st July 2010, the United States House of Representatives passed bill HR 5503 (also known as the “SPILL (Securing Potection for the injured from the Limitations on Liability) Act”) which proposes several amendments to the Jones Act and the Death on the High Seas Act (DOHSA). The bill also proposes the repeal of virtually the entire framework of the longstanding Limitation of Liability Act.

If passed by the Senate, these proposals will lead to significant alterations to the scope of the Jones Act, the exposure faced by ship owners and the method of dealing with claims which may be made against them.

The bill proposes that:

 

• The scope of the Jones Act is broadened to allow non-U.S. oilfield workers injured in oilfield operations in waters of a foreign state to claim pursuant to the Jones Act.
• Remedies available via DOHSA are extended to include non-pecuniary damages such as loss of care, comfort and companionship.
• The scope of potential DOHSA beneficiaries is broadened
• Remedies available via Jones Act “wrongful death” and “survival” actions are extended to include non-pecuniary damages such as loss of companionship etc.
• With a very limited exception, the repeal of the Limitation of Liability Act.

The United States Senate must pass the bill by simple majority before it is sent to the President to be signed into law. As at the time of writing, the bill has yet to be passed.

 

 

Background

The bill appears to be a reaction to the Deepwater Horizon disaster in April 2010. As has been well documented, an explosion on this semi-submersible offshore oil drilling rig caused a blowout which killed 11 individuals, led to the sinking of the rig and caused the largest offshore oil spill in U.S. history. As analysis will show, the intention of the bill appears to be to increase the levels of protection and extend the remedies available to those who work aboard vessels involved in the offshore industry and, to some extent, encourage the employers of these individuals to take every step to ensure that those working aboard these vessels do not sustain injury or loss. The effects of the bill will likely extend to all maritime risk in the United States, not only the offshore exploration and support industries.

 

 

Proposed Amendments to The Jones Act

 

A. The bill proposes that non-pecuniary damages be added as a remedy for Jones Act seamen in death claims.

It is proposed that the sentence: “In addition to other amounts authorised under such laws, the recovery for a seaman who dies shall include recovery for loss of care, comfort, and companionship” be included.

At present, the personal representative of the dependant relatives of an individual with Jones Act status (the most obvious example of which is a U.S. national serving aboard a U.S. flagged vessel as a crewmember) may pursue a Wrongful Death and/or Survival action pursuant to the Jones Act. These remedies are available for deaths occuring within U.S. territorial waters.

The damages available in a “wrongful death” action include:

i. Loss of Support

Broadly speaking, replacement of income the deceased would have brought into the household,

ii. Loss of Services

Includes the value of household services

iii. Funeral Expenses

iv. Loss of Nurture

Loss of “guidance of a parent in matters material, moral and spiritual of a definite practical and financial value and … subject to pecuniary estimate”.

Damages available in a general maritime law “survival” action include

i. Pre-death pain and suffering

Damages are awarded for the decedent’s conscious pain and suffering pre-death. This may include physical and psychological pain and anguish.

ii. Damages for medical expenses and loss of wages before death

Remedies are not currently available for non-pecuniary damages. Courts have generally construed the prescription against non-pecuniary damages of Miles v Apex Marine. The proposal contained within the bill would align general martime law death remedies more closely with state law remedies for land based employees which allow for non-pecuniary damages and it could perhaps be concluded that the proposal to extend the Jones Act remedies is not unexpected. Regardless, the possible repercussions for the maritime industry are significant and must be noted.

The nature of non-pecuniary damages is such that consdieration of the application of a value to, for example, a claim for loss of comfort or care is subject to interpretation. While it should of course be hoped that such consideration will be thoughtful, the prosposed amendment would introduce a very provocative aspect to any Jones Act trial. The trial of any matter involving serious injury or death is a potentially emotional environment, awards are often decided by juries and runaway jury awards in the U.S. are a bugbear which is recognised well beyond the boundaries of the U.S.. A compensation culture that sees the award of signficant sums of money for sometimes relatively minor injuries will continue to thrive if amendments such as this become law. It should be anticpated that if the amendment does indeed become law, Jones Act employers exposure in wrongful death and survival actions will increase, perhaps significantly.

B. The bill further proposes the broadening of the scope of workers protected by the Jones Act.

The Jones Act currently restricts the remedies available to certain foreign workers in that an individual may not generally assert a claim pursuant to the Jones Act if he is working on a vessel involved in oil or gas operations off the coast of a nation other than the U.S. unless he is a U.S. citizen or permanent resident alien of the U.S. at the time he sustained injury.

The bill proposes that this prescription be deleted entirely. Should the bill pass into law, this will potentially allow non-U.S. nationals injured outside U.S. territorial waters to claim Jones Act status and to pursue a claim via U.S. maritime law. One would imagine that if Jones Act status is prescribed to i.e. an Angolan national working abaord a U.S. flagged platform or support vessel invovled in oil exploration off the coast of West Africa, the injured worker would potentially have a valid claim for maintenance and cure as well as a Jones Act remedy in tort in the U.S..

In practice, the deletion of the prescription may not mean that every claim pursued in the U.S. will be governed by the Jones Act,. The choice of law will likely still need to be considered and it is entirely feasible that while a claim brought by e.g. an Angolan national may be heard in the U.S., the remedies available to the individual will be governed by the laws of Angola.

While the deletion of the prescription will mean that an employer could not rely upon the prescription to obtain dismissal of a case based upon an argument that the Jones Act is not an appropriate remedy, the law of a nation other than the U.S. may still apply based upon application of factors defined by the U.S Supreme Court in Lauritzen v Larsen. The court will apply an eight factor test in determining international choice of law issues:

1. Place of the wrongful act
2. Law of the flag
3. Allegiance of domicile of the injured party
4. Allegiance of the defendant vessel owner
5. Place of contract
6. Inaccessability of foreign forum
7. Law of the forum
8. Vessel owner’s base of operations

The court will consider the significance of each factor within the particular context of the claim and the national interest that might be served by the application of U.S. law (Chiazor v Transworld Drilling Co).

This framework should be expected to persist.

Proposed Amendments To The Death On The High Seas Act

Like the Jones Act, the Death On the High Seas Act was passed by U.S Congress in 1920. While the Jones Act “wrongful death” and “survival” remedies apply only to seamen, DOHSA is a “wrongful death” statute that currently applies to all deaths which occur more than three miles from the shore of a U.S. state. Deaths involving e.g. a passenger aboard an ocean bound vessel may be subject to DOHSA. Recovery pursuant to the Act is currently limtied to pecuniary damages only and sustained by certain close or dependant relatives of the decedant.

A. The bill proposes that the personal representative of the estate be permitted to bring an action “in admiralty” (a bench trial, i.e. before a judge and without a jury) or “at law” (i.e. before a jury).

This amendment is of obvious benefit for the plaintiff. If passed into law, it will extend the choices available to the plaintiff and will provide the personal representative of an estate with the opportunity to elect to have the case heard by a potentially liberal/generous jury which in turn may allow for recovery of increased damages. Similarly, if a more conservative judge is assigned to a case, a plaintiff with a perhaps less certain claim may elect to have the case heard by a jury who may be perceived as providing a more plaintiff-friendly audience. This practice is quite common in Jones Act cases and if it is followed in DOHSA cases, will further stregthen the position of the party bringing a claim while making life more difficult for the defendant.

B. DOHSA actions may currently be brought only by a decedent’s personal representative for the exclusive benefit of: “…the decedent’s spouse, parent, child or a dependent relative”.

 

 

The Bill proposes that this reference is deleted. While deletion of the language will likely broaden the scope of potential beneficiaries, it is hard to imagine how a court could determine that any other party could have a valid claim. An individual who is not related to the decedent but can prove dependency may perhaps be deemed to be in a position to bring a claim via the personal representative but beyond this obvious examples of other potential beneficiaries are difficult to envisage. The possible inclusion of non-pecuniary damages as a DOHSA remedy (see below) may allow for the extended family of the decedent to perhaps claim for compensation for loss of love and affection.

C. HR5503 proposes that DOHSA be amended to allow for recovery for: “…loss of care, comfort and companionship.”

Damages currently available under DOHSA include:

i. Nurture to Children

Recovery for the value of care, guidance and training to children

ii. Support and Contributions

Recovery for the value of financial contributions the decedent would have made to his dependents.

iii. Funeral Expenses

iv. Loss of Services

Includes the value of household services

 

 

As with the proposals for amendments to the Jones Act, the proposed amendment to the DOHSA will potentially increase vessel owners claim exposure.

 

 

D. The bill proposes that a cause of action for recovery of pre-death pain and suffering be created.

DOHSA does not currently allow for recovery for a decedent’s pre-death conscious pain and suffering (unlike the Jones Act which does). Should the amendment successfully pass into law, exposure faced by shipowners in DOHSA cases will potentially increase signficantly. Exposure faced for pre-death pain and suffering can be significant and may be difficult to calculate. The pain and suffering of a decedent is inevitably an emotive issue and one which may provoke a jury. While a claim brought in respect of i.e loss of support may have a definite value which can be determined when a claim is considered, the value of a claim for pain and suffering is less certain and to some extent, the defendant shipowner employer may be at the mercy of a jury if the issue of quantum is tried.

E. The repeal of the Limitation of Liability Act has been proposed.

This long standing legisaltion allows a vessel owner to commence a complaint for exoneration from or limitation of liability following a marine casualty. An owner may file a limitation action in federal court. The value of the action is based upon the value of the vessel involved in the incident and any pending freight. To facilitate the filing of an action, an owner must post security to the value of the vessel (and pending freight). Upon filing the action, the court will order that the owner must notify all potential claimants that the action has been filed and place notice of filing in a newspaper identified by the court. Potential claimants then have a defined period of time in which to file their claim. Once all claimants have appeared, trial is scheduled to determine liability.

 

A limitation action will be defeated if the claimant can prove that the vessel owner had “privitiy or knowledge” of the condition which caused the incident. Failing this, limitation will likely hold and recovery will be limited to the amount of the posted security.

Notwithstanding the fact, that experience suggests that vessel values are such that limitation is rarely used pratically as a tool to limit an owner’s expsure, the Limitation of Liability Act is an exceptionally useful procedural tool. Repeal of the Act would represent a signficant blow to vessel owner’s ability to deal with claims in an efficient and cost effective manner.
 

When a limitation action is filed, the federal judge issues an Order enjoining all parties from filing suit elsewhere. All claims relating to an incident are therefore joined under the umbrella of the limitation action. In a case involving multiple claimants, the benefits are profound. The defendant will become aware of all possible claims within a certain and defined period of time. Rather than defending numerous separate cases, the defendant will be faced with a single amalgamated claim. The costs benefits are obvious and the practical benefits to the resolution of disputes are significant. Repeal of the Act would destroy these benefits and will almost certianly lead to an increase in the time and expense faced by owners in defending claims involving multiple claimants.

Other

 

Another bill known as the “Fairness in Admiralty and Maritme Law Act” has also been filed in the wake of the Deepwater Horizon incident. The proposals contained within this bill largely mirror those within the “SPILL Act”. Notably, the bill also seeks to remove the cap on punitive damages set in Exxon vs Baker in 2008 by the U.S Supreme Court which ruled that a ratio of no more than one-to-one between compensatory and punitive damages is generally appropriate in maritime claims. It is worth noting that a court may be disinclined to apply this cap anyway. This subject is considered in a report on Clausen v Icicle Seafoods, also on the Club’s website.

 

At the timeof wiritng, it remains to be seen whether bill HR 5503 will be signed into he law by the President. The bill must first be passed by simple majority by the U.S. Senate. While it is anticipated that President Obama will agree to sign the proposed changes into law, a variety of different parties are working to ensure that the voice of those who may be affected by these wide reaching amendments are heard. If the law is passed, the landscape of maritime law in the United States will change significantly. Whether the bill is passed, remains to be seen.

Article by Richard Allen