Opinion
Civil Action No. 96-4099 c/w, 96-4047, 96-4048, 96-4077, 96-4090, 96-4097, 96-4098, 96-4193, 97-89, Section "J" (1)
August 22, 2002
MEMORANDUM AND ORDER
Background
This admiralty proceeding arises from the allision of the M/V BRIGHT FIELD with a portion of the New Orleans riverfront known as the New Orleans Riverwalk. On December 14, 1996, the M/V BRIGHT FIELD was traveling downriver on the Mississippi River, en route to Japan with a cargo of approximately 60,000 metric tons of grain that had been loaded in Reserve, Louisiana. After the M/V BRIGHT FIELD passed underneath a bridge over the river known as the Crescent City Connection, it struck and damaged parts of a wharf including the Riverwalk shopping center, One River Place condominium, the New Orleans Hilton Riverside Hotel, and other nearby structures.
Within a few days of the allision, claimants began to file lawsuits in state and federal courts, seeking damages for alleged personal injury and property damage. On December 18, 1996, Clearsky Shipping Corporation ("Clearaky"), as owner, and COSCO (H.K.) Shipping Company, Ltd. ("COSCO H.K."), as manager of the M/V BRIGHT FIELD, filed a petition for exoneration from or limitation of liability in this district, pursuant to 46 U.S.C. § 183, et seq., and Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims ("Admiralty Rules").
On December 19, 1996, U.S. District Judge Morey L. Sear issued an order restraining the commencement or further prosecution of any other proceedings against limitation plaintiffs, Clearsky and COSCO H.K., arising out of the allision. Subsequently, over 1500 claims were filed in the limitation proceeding. Additionally, separate actions were filed in this forum against the vessel and other entities, and these actions were consolidated with the limitation proceeding. By order entered on May 14, 1997, Judge Sear supplemented the December 19, 1996 injunction order, by requiring any claimant who desired to allege a cause of action against a nonvessel to join that non-vessel individual or entity in the limitation proceeding, or to wait until determination of the limitation proceeding to prosecute the cause of action.
In December, 1997, lead counsel for claimants moved to modify the May 14, 1997 order to allow the filing of actions in state court solely for the purpose of interrupting prescription of potential state law claims. The moving claimants desired to preserve their potential state law claims by filing them in state court pursuant to the Savings to Suitors Clause, 28 U.S.C. § 1331 (1), prior to the one-year anniversary of the allision. At that time, Judge Sear advised the moving claimants that he did not interpret the Savings to Suitors Clause to guarantee them a nonfederal forum and that he considered it within his equitable power to adjudicate all claims, cross-claims and third-party claims arising out of the allision. Nevertheless, Judge Sear modified the stay as requested by the moving claimants because they agreed to stipulate that upon filing the actions in state court, the prosecution of those actions would be enjoined, restrained and stayed pending the determination of the limitation proceeding.
Memorandum and Order of December 11, 1999 (Rec.Doc. No. 1270).
Subsequently, numerous actions were filed in state court, many of which named as defendants only non-vessel entities such as The New Orleans Riverwalk Associates, Rouse-New Orleans, The Board of Commissioners of the Port of New Orleans, The International Rivercenter, NORC Riparian Properties Corporation, The Queen of New Orleans at the Hilton Joint Venture (d/b/a The Flamingo Casino), New Sulzer Diesel, and others. Those defendants then impleaded Clearsky and COSCO H.K. as third party defendants.
In early 1998, the vessel interests removed to this court over forty state court actions in which they were named as defendants and/or third party defendants, alleging federal jurisdiction pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602-1611 and its removal statute, 28 U.S.C. § 1441 (d). Numerous claimants filed motions for remand. By minute entry entered on November 10, 1999, Judge Sear granted the remand motions, finding that COSCO H.K. could not satisfy the definition of a foreign state or agency or instrumentality of a foreign state under § 1603(b)(3). Subsequently, the vessel interests re-removed these actions, once again alleging federal jurisdiction under the FSIA. No rulings have been made on the remand motions filed subsequent to the second removals.
Of the more than 1500 claims that have been filed in this limitation proceeding, all but approximately 183 claims have been settled or otherwise resolved or dismissed. The limitation plaintiffs have offered to have the remaining claims tried here in federal court, before district judges and magistrate judges pursuant to random allotment. Under this offer, the trials would be non-jury trials, the limitation plaintiffs would not contest liability or allege comparative negligence, and the limitation plaintiffs would have no right of appeal from the district court judgment. Judgments would be paid within thirty days.
The trial of the limitation proceeding has been scheduled for March 24, 2003. This trial was previously scheduled for the Spring of 2002, but by consent of the parties the trial was continued without date in order to make further attempts at settling the remaining claims. Settlement conferences were then held before Judge Sear. Subsequent to the completion of the settlement conferences, Judge Sear held a status conference attended by lead counsel, in order to discuss a procedure by which the remaining injury claims could be resolved.
On June 24, 2002, after considering the discussions and written proposals of the parties, the length of time that claimants have been required to wait for resolution of their claims as a result of the complexity and size of this litigation, and the interests of justice and judicial economy, Judge Sear ordered that any claimant who desired to opt out of trying his or her personal injury claim in federal court under the procedure described therein must affirmatively do so by filing a notice of intent to opt out, with a supporting memorandum providing the legal ground(s) alleged for the right to do so. Under the procedure set forth in the order, each claim will be tried before one of a panel of judges and magistrate judges who volunteered to participate, and who will be randomly selected. All of the panel members agreed to use their best efforts to set the cases for trial within ninety days of allotment to their docket. The trials will be held without a jury, and COSCO will not contest liability or allege comparative negligence. The issued to be tried are: (1) presence at the scene; (2) zone of danger; (3) medical treatment; (4) medical causation; (5) recoverability of damages; (6) amount of damages; and (7) mitigation. The judge or magistrate judge may decide the validity of the claim and the amount of damages, if any, without written reasons, and COSCO will pay any damages awarded within thirty days of ruling, with no right of appeal by COSCO. (See rec. doc. 2405).
The order further required that, by July 26, 2002, lead counsel was to provide to Magistrate Judge Shushan a list of those claimants who had not opted out, and those cases would be randomly allotted to the Panel and promptly set for status conferences to set trial dates. Id.
Before the Court for resolution are the motions of fifty-nine claimants who seek to opt out of the procedure provided in Judge Sear's order, and preserve their alleged right to pursue their claims in state court.
Claimants who have filed motions or notices of intent to opt out are: Michael Roberts; Darlene Ellision; Lucille Barre Clark; Brandy Romain; Lisa Baham; Margaret Sims; Ella Roberts; Howard Roberts; Estate of and/or Wendell Oliver; Wayne Dubeau; Wendy Dubeau; Maureen Green; Michael Green; Linda Tipp; Rachel Gifford; Marilyn Oliver; Ronald Christy; Laura Evans Porter; Harold Pajeaud; Russell Ham; William Scott Riddle; Louis A. Velez; Glen Haisley; Donald Harris; Andwell Jones; Marshall Jones; Melvin Homes through the Estate of Melvin Holmes and/or the appropriate Representative; Heidi Bayer; Ethel Monson; Oneka Bates; Jamal Carter; Angela Byrd; Alfred Long, Jr.; Richard Nigel Davis; Loyce Farria; Shonice Farria; Rhonda Gray; Xienet Sheere Miller; Kevin Miller; Serilla Jackson; Anita Johnson; Marva J. Kent; Kennisha Mathis; Maria Morgan; Rennie Morgan; Lisa Press; Yvonne Richards; Sharon Richards; Tammy Robertson; Majorie Rubin; Marnika Farria; Marcel Porter; Thomas Gray; Larry Jones; Nicole Torregano; Marion Varnado; Leonard Warren; Murphy Watson, III; and Cheryl Young.
Discussion
1. Claimants' Rights Under the Savings to Suitors Clause
The personal injury claimants who have moved to opt-out of the federal court procedure contend, inter alia, that they are "entitled to have non-limitation of liability issues, i.e., issues other than owner's privity or knowledge tried in their choice of forum under the Saving to Suitors Clause of 28 U.S.C. § 1331 (1)." However, the limitation plaintiffs contend that this court has the discretion to try all issues in this litigation, even if limitation is ultimately denied. These opposing contentions bring before this Court the often-litigated tension between the Saving to Suitors Clause set forth in 28 U.S.C. § 1333 (1) and the Limitation of Liability Act, 46 U.S.C. app. § 181, et seq.
Lead Counsel's "Memorandum in Support of Right to Opt-Out of Plan for Trial of Injury Claims Pursuant to Order of June 24, 2002 Filed on Behalf of All Opt-Out Claimants," at p. 4.
Limitation Plaintiffs' Memorandum in Opposition to Motions to Opt-Out.
28 U.S.C. § 1333 (1) provides:
The district courts shall have original jurisdiction, exclusive of the courts of the States, of:
(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.
Under the Saving to Suitors Clause, state courts may exercise concurrent jurisdiction over certain maritime claims. See Linton v. Great Lakes Dredge Dock Co., 964 F.2d 1480, 1484-85 (5th Cir.), cert. denied, 506 U.S. 975, 113 S.Ct. 467, 121 L.Ed.2d 375 (1992) Therefore, a plaintiff typically has the choice of whether to pursue his claim in state or federal court. However, the Saving to Suitors Clause is not applicable to maritime claims which are recognized as falling exclusively within the federal courts' jurisdiction, such as an action by a vessel owner to limit its liability under the Limitation of Liability Act ("Limitation Act").
Under the Limitation Act, a vessel owner may file suit in federal court to limit his liability for damages or injuries arising from a maritime accident that occurred without the vessel owner's "privity or knowledge." 46 U.S.C. app. § 183(a). The vessel owner may be permitted to limit his liability to "the amount or value of the interest of such owner in such vessel, and her freight then pending." Id. However, in the case of a seagoing vessel, if the amount of the owner's liability under § 183(a) "is insufficient to pay all losses in full, and the portion of such amount applicable to the payment of losses in respect of loss of life or bodily injury is less than $420 per ton of such vessel's tonnage, such portion shall be increased to an amount equal to $420 per ton, to be available only for the payment of losses in respect of loss of life or bodily injury." 46 U.S.C. app. § 183(b).
Once a vessel owner initiates a proceeding under the Limitation Act, "the federal district court stays all related claims against the shipowner pending in any forum, and requires all claimants to assert their claims in the limitation court." Magnolia Marine Transp. v. Laplace Towing Corp., 964 F.2d 1571, 1575 (5th Cir. 1992) (citing In re Dammers Venderheide Scheepvaart Maats Christina B.V., 836 F.2d 750, 755 (2nd Cir. 1988)). However, recognizing the "`recurring and inherent conflict' between the saving-to-suitors clause, with its `presumption in favor of jury trials and common law remedies,' and the `apparent exclusive jurisdiction' vested in the admiralty courts by the Act," the courts have throughout the years "identified several exceptional circumstances in which a district court must permit a state action to proceed, even though a limitation action has been filed in federal court."
In the Matter of Port Arthur Towing Co., 42 F.3d 312, 315 (5th Cir. 1995) (quoting Magnolia Marine Transp., 964 F.2d at 1575.
Id., at 316.
The first "exceptional circumstance" identified by the United States Supreme Court, and clearly inapplicable here, is the circumstance in which there is only one claimant in the limitation proceeding. In Lagnes v. Green, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520 (1931), the Supreme Court held that the district court should allow the sole claimant, an injured employee, to proceed with his claim in state court, and retain jurisdiction over the petition for limitation if the state proceedings resulted in the necessity of further proceedings in federal court.
Since Lagnes, federal courts have consistently permitted sole claimants in limitation proceedings to litigate their damage claims in state courts, while retaining jurisdiction over the limitation issues. In a recent discussion of Lagnes, the Supreme Court stated that "the choice before the District Court was whether it should retain the limitation action and preserve the right of the vessel owner but destroy the right of the employee in state court to a common law remedy, or allow the action in state court to proceed and preserve the rights of both parties." Lewis v. Lewis Clark Marine, Inc., 531 U.S. 438, 448; 121 S.Ct. 993, 1001 (2001). In Lewis, the Supreme Court permitted a sole claimant to proceed in state court after he had stipulated that his claim for damages against the vessel owner would not exceed the value of the vessel and he waived any claim of res judicata arising from the state court action concerning limitation of liability issues.
A second "exceptional circumstance" was identified in Lake Tankers Corporation v. Henn, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246 (1957), when the Supreme Court was confronted with the issue of whether a claimant could proceed in state court where there were multiple claimants in the limitation proceeding, but the "aggregate amount of all of the claims filed in the proceeding and for which the petitioner could be held liable if found at fault (was] . . . less than the value of petitioner's vessels and their pending freight." Id., 77 S.Ct. at 1270. All of the claimants had expressly relinquished their rights to any damages in excess of the amounts set forth in their claims. The vessel owner did not contend that there might be further claims. Further, the value of the vessels was undisputed and the claims were fixed.
The Court, in holding that these circumstances merited the claimant's right to a damages trial in the forum of her choice, explained that the Limitation Act "is not one of immunity from liability but of limitation of it and we read no other privilege for the shipowner into its language over and above that granting him limited liability." Id., 77 S.Ct. at 1272. To refuse plaintiff's request that she be permitted to proceed in state court "would transform the Act from a protective instrument to an offensive weapon by which the shipowner could deprive suitors of their common-law rights, even where the limitation fund is known to be more than adequate to satisfy all demands upon it." Id. However, the Court was careful to note that this ruling was not intended "to say that concursus is not available where a vessel owner in good faith believes the fund inadequate...." Id.
Claimants contend that the case now before this Court is a multiple claimant/adequate fund case as contemplated by Lake Tankers. They argue that since total claims clearly exceed the Section 183(a) fund of $16,096,949 plus interest at 6% per annum from December 18, 1996, the value of a 183(b) fund should be considered at this point in time in determining whether this is an adequate fund case.
The claimants' contention that the fund will be adequate to resolve all claims is purely speculative at this time. Further, and more to the point, the claimants have failed to submit, presumably because they are unable to obtain, stipulations from all claimants that the total claims in this docket will not exceed the value of the fund. Unlike the circumstances in Lake Tankers, the numerous claimants in this case have not relinquished their right to claims in excess of the limitation fund. Furthermore, they have not stipulated to any prioritizing of claims.
Of most significance, however, is the fact that the § 183(a) fund should in only limited circumstances be supplemented by § 183(b)prior to the trial on the limitation. In the Matter of Waterman Steamship Corp., 1999 WL 41714 (E.D.La. 1992). In Waterman, after a careful analysis of the applicable jurisprudence, the Court found that "[t]he clear preference is that § 183(b) should not be used until after trial on limitation.... Courts that have not waited have done so when the asserted claims greatly exceeded the limitation fund." Id., at *4. The Court in Waterman found that claims of $11.9 million did not greatly exceed the fund of $7.8 million. Accordingly, the Court denied a motion to increase security. Further, as a result of this ruling, the Court denied the claimants' request to lift the stay in order to proceed with their cases in state court, since the aggregate claims exceeded the value of the current fund.
Whether the total value of the claims in this case "greatly exceed" the value of the fund is a matter of speculation at this time. Although after the trial on limitation the Court may choose to consider a request that the fund be increased under § 183(b), only the § 183(a) fund can be considered at this time, and by the claimants' own admission it is inadequate to allow full payment of all claims.
In addition to the "single claimant" and "multiple claimants/adequate fund" exceptions, there have been instances in which federal courts have permitted multiple claimants asserting claims to an inadequate fund to proceed with their state court actions. However, in those cases all claimants have submitted stipulations that adequately protect the vessel owner's right to protection of his potential rights under the Limitation Act. See, e.g., In the Matter of American Commercial Lines LLC, 2002 WL 126637 (E.D.La.).
No stipulations whatsoever have been presented to this court for consideration, presumably because the claimants are unable to obtain such. Further, claimants' suggestion that they need only produce stipulations of those who have opted out of the trial procedure is misplaced. All claimants must sign stipulations adequate to protect the vessel owner.
The mere fact that the vast majority of the remaining claimants have not opted-out of the proposed federal court procedure suggests that they prefer to proceed in federal court. Further, there are several indemnity claims asserted by parties such as the Hilton, the Riverwalk, and the Queen of New Orleans, who have not indicated any interest in proceeding in state court. In the Fifth Circuit, parties seeking contribution and indemnity are "claimants" within the meaning of the Limitation Act, and as such must actually sign any stipulation purporting to protect the vessel owner and submitted in support of a request to lift a stay to litigate the claimants' cases in state court. Odeco Oil and Gas Co., et al. v. Bonnette, 74 F.3d 671 (5th Cir. 1996). See also In the Matter of ADM/Growmark River System, Inc., 234 F.3d 881 (5th Cir. 2000)
Since the claimants have failed to establish any circumstances which would support their argument that they should be allowed to proceed in state court as their forum of choice under the savings to suitors clause, their request to opt-out of the federal court procedure on this basis is denied.
2. Authority for the Proposed Procedure
Claimants also object to their inclusion in the procedure proposed for damages trials in Judge Sear's order, on the basis that there is no authority in law or under the local rules for "the assignment of cases for piecemeal trial of the issues therein to any judge not randomly selected initially." This argument has been asserted in other cases, and rejected. For example, in United States of America v. Stone, 411 F.2d 597 (5th Cir. 1969), a criminal defendant contended that a district judge could not transfer his arraignment calendar to another district judge without the defendant's consent. The Fifth Circuit, characterizing this contention as "patently frivolous," stated that "District Judges have the inherent power to transfer cases from one to another for the expeditious administration of justice." Id., at 598-99.
Claimants' Memorandum in Support of Right to Opt-Out, at p. 3.
Random re-allotment of cases to a federal judge other than to the one to whom the case was initially allotted is a common procedure, and there is nothing in the Federal Rules of Civil Procedure or the Local Rules that prohibits random re-allotment. It is a matter of common sense that initial random allotment is designed to protect standards of fairness, objectivity and propriety. A random re-allotment of all or part of a case, whether because of illness, conflicts, the appointment of a new federal judge or overcrowded dockets, does not lessen the protections provided in the initial allotment. Indeed, the very case before this Court was initially allotted to Judge Livaudais, and then reallotted to Judge Sear. It has only recently been re-allotted to this section.
The claimants are correct, however, and the limitation plaintiffs so concede, that a trial before a magistrate judge can only proceed with the consent of the claimant. 28 U.S.C. § 636 (c). Accordingly, any claimant's case in which the claimant does not consent to trial by magistrate judge will be randomly re-allotted to a district judge.
3. Right of Appeal
One of the claimants, Michael Roberts, seeks to opt-out for the reason that he believes the order denies him a right of appeal. However, as noted by the limitation plaintiffs, the order does not require the claimants to give up their right to an appeal. Only the limitation plaintiffs themselves have agreed to renounce their right to an appeal, and to pay any judgment rendered within thirty days of the ruling. Roberts, and any other claimant who desires to appeal a judgment in his or her case, may do so.
4. Merits of the Limitation Proceeding
Thirty personal injury claimants contend that they should be entitled to their forum of choice for the reason that they believe the facts of the case demonstrate that the limitation plaintiffs had "privity or knowledge" that would preclude them from protection under the Limitation Act. They have submitted a memorandum similar to one that might be used to support a motion for summary judgment, and attached various deposition extracts and exhibits. However, there is no motion for summary judgment pending, nor any other dispositive motion. As in Waterman, supra, "[t]his is a classic limitation case, in which the federal court is in a better position to determine whether there was negligence, whether it was without the privity and knowledge of the owner; and if limitation is granted, how the limitation fund should be distributed." Id., at *6.
Accordingly,
Considering the foregoing,
IT IS ORDERED, that the claimants' motions to opt-out of the procedure for the trials of damages claims in federal court as set forth in Judge Sear's order of June 24, 2002, are DENIED;
IT IS FURTHER ORDERED, that no party shall be required to try his or her case before a magistrate judge without the consent of all parties.