Following historic trends established by English Courts of Admiralty centuries ago, an exception is carved out for maritime matters to the U.S. Constitution’s Seventh Amendment right to trial by jury. The water carriage industry’s issues are just too specialized and complex for a salty dog’s landlubber peers to grasp, or at least that’s the theory. Lots of cases these days involve far more complicated stuff than why two vessels collided or a cargo of lobster tails warmed up above acceptable levels. Nonetheless, with certain exceptions – most notably, Jones Act personal injury suits – maritime cases are tried to a judge (or “to the bench” in law-speak).
Another maritime law feature derives from concerns two centuries ago that no one in his/her right mind would invest or do business in the ocean shipping industry. Nineteenth Century shipping was just too risky an enterprise, with stakes potentially high enough to sink a vessel owner. Run a wooden vessel manned by a crew full of injury-prone sailors through unchartered waters to unfamiliar ports? No thanks, at least if full liability for an accident or other misfortune might result. Thus was born the doctrine of Limitation of Liability, which was reduced to a federal statute called the Limitation of Shipowners’ Liability Act, a/k/a the Limitation of Liability Act of 1851 (“the Act”)(see November 2000 Legal Lookout article “Limitation of Liability: the Carrier’s Ace in the Hole”).
We’re not talking about that well-known $500/package liability ceiling for cargo lost/damaged in international shipping. Put very briefly, the Act empowers a vessel owner to limit its liability to claimants in a maritime mishap to the involved vessel’s value (which is “zero” if she sits on the bottom of the Pacific) plus pending freight. The caveat is that Mr. Vessel Owner cannot be “in privity and knowledge” of the circumstances causing the loss. This advantage to vessel owners is credited, at least in part, with the development of America’s merchant marine.
Limitation of Liability works in a fashion very similar to bankruptcy, and certain modern U.S. bankruptcy concepts are based on maritime precepts provided in the Act. When a vessel owner’s exposure becomes apparent, it files a petition (federal court only) which “stays” all claims brought against the owner so that a single proceeding, known as a “concursus,” can address the claims and pay out a fund in proportions commensurate with the claims. That fund is limited by the vessel’s value. Claimants are given a deadline to appear in the action, and after the proceeding concludes, the vessel owner walks free and clear – much like someone who receives a discharge in bankruptcy. Being admiralty proceedings, juries don’t hear petitions under the Act.
So what happens when a seaman gets hurt on duty, wants to try his claim to a jury, and gets his lawsuit stayed by a concursus proceeding? The U.S. District Court for the Eastern District of Pennsylvania recently took a look at that question. Pile driver Richard Kilroy, employed by Weeks Marine, allegedly was injured when a spring line snapped during a multi-vessel operation. He filed suit in a Pennsylvania state court against a series of vessel owners and service providers without stating a claim under the Jones Act. One defendant was Weeks Marine, which owned and operated a barge that was bring moved.
Weeks Marine filed a Complaint for Exoneration from and Limitation of Liability in the federal court, which promptly halted Kilroy’s state court action. A $750,000 Limitation of Liability fund was established in the proceeding, an amount Kilroy challenged as not accurately reflecting the value of Weeks’ barge plus pending freight. He probably didn’t want to be subject to that rather small pot.
As the concursus proceeding moved along, Kilroy began asking about his jury trial. You don’t get one, the federal court replied. The admiralty court has exclusive jurisdiction over Weeks’ Limitation of Liability proceeding, notwithstanding conflicts created with legal doctrines (such as the “Saving to Suitors Clause,” which reserves rights to admiralty litigants of which they are otherwise entitled). An exception is made for proceedings under the Act in which there is only one claimant (the law allows separate proceedings for such claims so long as the vessel owner’s rights under the Act are preserved), but that didn’t apply here.
But what about Kilroy’s right to a jury trial under the Jones Act? Whether or not Kilroy held seaman status entitling him to a Jones Act claim was an undecided issue, one he might prevail on. It didn’t help his cause that he didn’t even plead his state court claim as a seaman, but even if he had, that action had been stayed in favor of all proceedings before the federal court. Simultaneous actions are not allowed under the Act. Absent a stipulation of all parties, this Limitation of Liability action, including all of its subcomponents, proceeds without a jury just like any other matter in admiralty. A Limitation of Liability proceeding trumps other claims in admiralty, at least to the extent they might be subject to jury trials.
Ref: In the Matter of the Petition of Weeks Marine, Inc. as Owner of the Vessel “Weeks 573” for Exoneration from and Limitation of Liability, 2011 WL 3273611 (E.D. Pa. 2011); November 2000 Legal Lookout article “Limitation of Liability: the Carrier’s Ace in the Hole,” available at http://www.forwarderlaw.com/library/view.php?article_id=668; Limitation of Shipowners’ Liability Act, currently codified at 46 U.S.C. §§ 30501 – 30512.
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