2013 Winter Newsletter - ABA Admiralty & Maritime Law Committee

CommitteeNews
Admiralty and Maritime Law Committee

By: James Jones Jr.1 By now we have all heard about the January 13, 2012 Costa Concordia incident. The media has extensively covered the unfortunate incident. Interviews have been conducted of the passengers and crewmembers aboard the ship at the time of the incident as well as nearby residents and business owners who claim to have been affected by the incident. Lawsuits have been brought by a host of plaintiffs in courts located in countries ranging from the United States to Italy. And the lawsuits filed contain numerous allegations, some of which appear to be targeting the cruise industrys safety policies. For example, in Giglio Sub v. Carnival Corp., No. 12-21680, 2012 WL 4477504 (S.D. Fla. Sept. 26, 2012), the Plaintiffs, over 1,000 residents and businesses on Giglio Island2, sued Defendants Carnival Cruise Lines, Costa Cruise Lines, Inc., and Costa Crociere, S.P.A., alleging, among other things, that the Defendants failed to develop, implement, and monitor policies that would
1 James Jones Jr. is the founder and managing member of the Jones Firm, PLLC in Miami, FL. Mr. Jones specializes in maritime law, travel, and tourism law. Contact James Jones Jr. at The Jones Firm, PLLC, 701 Brickell Avenue, Suite 1550, Miami, FL 33131, www.thejonesfirmpllc.com, jjones@thejonesfirmpllc.com. 2 The Costa Concordia came to its final resting place in the Italian waters off the coast of Giglio Island. 3 Giglio Sub, 2012 WL 4477504, at *1.
Winter 2013
THE CRUISE INDUSTRY POST-CONCORDIA: IMPROVED SAFETY AND OTHER CONSEQUENCES

have prevented the incident and that the Defendants failed to conduct safety drills.3 Not only have the
Continued on page 14
IN THIS ISSUE:
The Cruise Industry Post-Concordia: Improved Safety and Other Consequences . . 1 Message From The Chair . . . . . . . . . . . . . . . . . . . 3 Trade Talk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Direct Action Against Liability Insurers In Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 U .S . Fifth Circuit Defines In The Course Of Employment For Jones Act Cases . . . . . . . . . . 10 Patching The Corporate Veil: How Effective Corporate Social Responsibilities Programs Can Shield Corporations And Its Officers From Criminal Liabilities In Maritime Negligence . . . 11 Luxury Yachting At A Crossroad: Market Strategies Within a Global Financial-Legal Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2013 TIPS Calendar . . . . . . . . . . . . . . . . . . . . . . 23
Uniting Plaintiff, Defense, Insurance, and Corporate Counsel to Advance the Civil Justice System
Admiralty and Maritime Law Committee Newsletter Winter 2013

Chair
Harmony Iris Loube Jones
Holland & Knight LLP 800 17th Street, 1100 Washington, DC 20006 (202) 469-5175 harmony.loube@hklaw.com
Riker Danzig et al 1 Speedwell Ave, Headquarters Plaza Morristown, NJ 07960-6838 (973) 451-8534 Fax: (973) 451-8763 lsands@riker.com
Laurie J Sands
Scope Liaison
George Washington Univ Law Schl 2000 H St NW Washington, DC 20052-0026 (202) 994-7040 Fax: (202) 994-9817 jschaf@law.gwu.edu
Fisher & Fisher Law Offices LLC 1200 Route 940 Mount Pocono, PA 18344-1324 (570) 839-8690 Fax: (570) 839-7675 joseph.kulesa@pocono-lawyers.com 147 Bunny Trail Rd Stroudsburg, PA 18360-7693 anne.kulesa@gmail.com Troutman Sanders LLP 150 W Main St, Ste 1600 Norfolk, VA 23510-3400 (757) 687-7706 jessica.martyn@troutmansanders.com Morris Polich & Purdy LLP 1055 W 7th St, Ste 2400 Los Angeles, CA 90017-2550 (213) 891-9100 Fax: (213) 488-1178 ppalmer@mpplaw.com Horizon Lines, Inc. 4064 Colony Road, Ste 200 Charlotte, NC 28211 (704) 973-7089 kendoka1998@gmail.com Fowler White Boggs PA 501 E Kennedy Blvd, Ste 1700 Tampa, FL 33602-5239 (813) 228-7411 Fax: (813) 229-8313 scott.richards@fowlerwhite.com Severson & Werson 1 Embarcadero Ctr, Fl 26 San Francisco, CA 94111-3745 (415) 677-5627 Fax: (415) 956-0439 pls@severson.com Skanska USA Civil Inc 295 Bendix Rd, Ste 400 Virginia Beach, VA 23452-1295 (757) 578-4165 Fax: (757) 420-4089 dawn.serafine@skanska.com Phelps Dunbar LLP 365 Canal St, Ste 2000 New Orleans, LA 70130-6534 (504) 679-5509 waidr@phelps.com
Joseph Kulesa
Joan E Schaffner
Anne L Kulesa
Robins Kaplan Miller & Ciresi 2049 Century Park E, Ste 3400 Los Angeles, CA 90067-3208 (310) 229-5443 Fax: (310) 229-5800 jpkoelzer@rkmc.com
James P Koelzer
Chair-Elect
Jessica Link Martyn
Technology Vice-Chair
3531 Helms Ave Culver City, CA 90232-2414 (502) 299-2116 jeffersonpoole@gmail.com
Jefferson Poole
Council Representative
Drew Eckl & Farnham LLP PO Box 7600 Atlanta, GA 30357-0600 (404) 885-6320 Fax: (404) 876-0992 hmckinley@deflaw.com
Hall F McKinley III
Pamela Annette Palmer
James Wilson Bartlett III

Semmes Bowen & Semmes 25 S Charles St, Ste 1400 Baltimore, MD 21201-2400 (410) 539-5040 Fax: (410) 539-5223 jbartlett@semmes.com
Vice-Chairs
Immediate Past Chair

Holland & Knight LLP 31 W 52nd St, Fl 11 New York, NY 10019-6111 (212) 513-3307 Fax: (212) 341-7237 chris.nolan@hklaw.com
Wayne Parker
Christopher Nolan
Law Student Vice-Chair

1483 Tobias Gadson Blvd, Ste 105 Charleston, SC 29407-4795 ocpalmer@charlestonlaw.edu
The Law Office of Lili Beneda LLC 523 Hudson St, Apt 2Fs New York, NY 10014-6119 (718) 759-8715 lili@benedalaw.com Pierce Atwood LLP 10 Weybosset St, Fl 4 Providence, RI 02903-2818 (401) 588-5113 mdaly@pierceatwood.com Deehl & Carlson PA 501 NE 1st Ave, Ste 301 Miami, FL 33132-1960 (305) 448-9111 Fax: (305) 442-0441 david@deehl.com Jones Walker et al 201 Saint Charles Ave, 50th Fl New Orleans, LA 70170-1000 (504) 582-8000 Fax: (504) 589-8224 ghurley@joneswalker.com
Lili Fay Beneda
Scott A Richards
Olivia Calhoun Palmer
Michael J Daly
Membership Vice-Chair
Holland & Knight LLP 31 W 52nd St, Fl 11 New York, NY 10019-6111 (212) 513-3570 Fax: (212) 385-9010 blythe.daly@hklaw.com
Pamela L Schultz
Kathryn Blythe Daly
David Lee Deehl
Dawn L Serafine
Newsletter Vice-Chairs
Hamilton, Miller & Birthisel, LLP 100 South Ashley Drive, Ste 1210 Tampa, Florida 33602 (813) 223-1900 FAX: (813) 223-1933 chamilton@hamiltonmillerlaw.com
Christopher F. Hamilton
Grady S Hurley
Raymond Timothy Waid
MESSAGE FROM THE CHAIR

Happy New Year to all Committee Members The Committee will be conducting its strategic planning this year at the ABA Mid-Year meeting in February in Dallas. We welcome all Committee Members attending the Mid-Year meeting to participate in our strategic planning session. It is being held on Saturday, February 9, from 2013, 9:30 a.m. to 12:00 p.m. In this meeting, the Committee will chart the course for the upcoming years. If you are not attending the ABA Mid-Year meeting, I encourage you to send me any suggestions you have to assist with our strategic planning. My email address is lsands@riker.com. Once again the Committee is actively involved in many different programs and opportunities this year. We are co-sponsoring a Day at Lloyds, An Introduction to the Lloyds Market Structure and the Use of ADR to manage Disputes Involving Lloyds, being held on February 5 at St. Johns in New York; planning a webinar on the Jones Act; participating in regional student outreach programs; and providing a speaker for a panel on NTSB investigations scheduled for the ABA annual meeting in San Francisco. I am looking forward to a productive and fun 2013. One last thing, I would ask that if you have not taken the time to complete our Committees survey that you do so as soon as possible so that we can use the results at our strategic planning meeting. Enjoy the newsletter and dont forget to dial in to our monthly conference calls held on the third Thursday of each month. Our next call will be on February 21, 2013 at 12:30 p.m. Eastern. The call-in number is 866-646-6488 and the conference code is 1885350536. Warm Regards, Laurie Sands 2012-2013 Chair Admiralty and Maritime Law Committee
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2013 American Bar Association, Tort Trial & Insurance Practice Section, 321 North Clark Street, Chicago, Illinois 60654; (312) 9885607. All rights reserved. The opinions herein are the authors and do not necessarily represent the views or policies of the ABA, TIPS or the Admiralty and Maritime Law Committee. Articles should not be reproduced without written permission from the Tort Trial & Insurance Practice Section. Editorial Policy: This Newsletter publishes information of interest to members of the Admiralty and Maritime Law Committee of the Tort Trial & Insurance Practice Section of the American Bar Association including reports, personal opinions, practice news, developing law and practice tips by the membership, as well as contributions of interest by nonmembers. Neither the ABA, the Section, the Committee, nor the Editors endorse the content or accuracy of any specific legal, personal, or other opinion, proposal or authority. Copies may be requested by contacting the ABA at the address and telephone number listed above. Hypertext citation linking was created by application of West BriefTools software. BriefTools, a citation-checking and file-retrieving software, is an integral part of the Westlaw Drafting Assistant platform. West, a Thomson Reuters business is a Premier Section Sponsor of the ABA Tort Trial & Insurance Practice Section, and this software usage is implemented in connection with the Sections sponsorship and marketing agreements with West. Neither the ABA nor ABA Sections endorse non-ABA products or services. Check if you have access to West BriefTools software by contacting your Westlaw representative.
Listen to host and AMLC Immediate Past Chair Chris Nolan, Partner at Holland and Knight LLP, lead a discussion featuring Philip Brickman, Partner at Fowler Rodriguez Valdes-Fauli, and special guest Laurie Sands, AMLC Chair and Counsel at Riker Danzig Scherer Hyland & Perretti LLP. Phil chats about oil spill casualties and response, client experiences and expectations, and the New Orleans maritime practice in this 20 minute AMLC Inaugural Podsail Podcast.
Click Here for the Podcast!
TRADETALK
For our fifth Trade Talk piece, we are pleased to spotlight our first P & I Club lawyer, Betsy Bundy, Assistant Vice President, at Skuld North America, in New York. Skuld was established in 1897 in Oslo, Norway and some 40% of the tonnage entered with the club is Scandinavian-controlled, reflecting the clubs traditional balance between Scandinavian and non-Scandinavian business. Other big markets are Western European countries, Russia, Singapore, China including Hong Kong, and the United States. Greece and Asia are perceived as key growth areas. In addition to traditional P & I, Skuld also offers a wide range of marine and energy insurance products through its syndicate at Lloyds, Skuld 1897. Skuld is one of thirteen members of the International Group of P&I Clubs that work closely together in reinsurance and industry matters of common interest. The International Group insures approximately 90% of the worlds merchant fleet. Below are excerpts from our interview with Betsy which address her views on the maritime industry, issues concerning the hiring of outside counsel, and perhaps most importantly her devotion to the Kansas Jayhaws.
Q. Betsy, tell us what prompted you to get into the maritime legal industry? R . Luck, I guess! I am from the Midwest, primarily landlocked Kansas, and lack the type of marine background common to lawyers in this industry. I somewhat inadvertently landed a job as a law clerk with Holbrook and Murphy, a boutique maritime firm in Boston, while I was attending the New England School of Law. I really enjoyed working with Seth Holbrook and Bob Murphy and took an immediate shine to maritime law. I was especially drawn to the federal court practice along with the collegiality of the maritime bar. When moving to NYC, I specifically targeted maritime firms and have been fortunate enough to have worked at two of the best in the City, Freehill, Hogan & Mahar LLP and McDermott & Radzik LLP, in my humble opinion. Q. Can you describe your experience of working at a P&I Club? R . I am relatively new to the inside world of P&I. After working for many years at law firms, primarily involved in marine personal injury litigation, I have definitely had to adjust to this new role. Rather than 5
laboring over legal briefs involving incidents that happened years ago, I now have to opportunity to get involved in issues real time, which has been a fun and refreshing change for me. I am handling primarily personal injury, or people claims as my SKULD colleagues call them, which involves a whole range of different types of matters from dealing with stowaways to arranging for crew member medical care. My role also involves managing U.S. litigation along with providing general U.S. legal advice to our various syndicate offices and members. This aspect of my SKULD work is more familiar to me and similar to the kind of work I did in private practice. That being said, I am still getting used to my role as a client, which does pose a new set of challenges. In any event, I must admit, I do not miss keeping track of billable hours! In all seriousness, it is liberating to focus only on what needs to be done, with less emphasis on keeping track of time. All in all, this has been a great change for me and I have very much enjoyed working at SKULD. Q. What are your views on hiring outside counsel? R . To be honest, I am still working on developing my philosophy with respect to retaining counsel. I 5

certainly have some opinions based on my experience in private practice. I am interested in working with attorneys who will look for early resolution, but who are also willing to fight hard to defend our members interests when warranted. I also value counsel who understand the importance of reporting and communication as, given my background, I am keenly interested in defense strategy. And my history with the MLA Young Lawyers Committee gives me an overall interest and mission to endeavor to send work to younger lawyers and to develop direct relationships with younger partners and associates working on my cases. I think having this direct relationship and giving opportunities to young people in the industry is vital for the future of the maritime legal practice. Q. What legal issues are coming across your desk with some frequency these days? R . A lot of my personal injury claims now involve fishing vessels, namely crew injuries. A major part of these claims concern maintenance and cure and, and as anyone working in this area knows, you cannot mention maintenance and cure these days without bringing up the issue of punitive damages. Recent decisions in this area have clearly had an effect on the marine industry and have people a little on edge. P & I Clubs and vessel owners are very aware of the risk of punitive damages, but at the same time we need to work on keeping a balance in approaching these issues rather than paying more than is reasonable out of an unwarranted fear of punitive damages. Another issue that I see coming up a lot is forum selection and/or arbitration clauses in crew contracts. There seems to be a lot of uncertainty in this area, especially when you have both U.S. and foreign crew members, who are not always treated the same under the relevant case law, with respect to arbitration. From what I can tell, judges are inconsistently enforcing these provisions. I would like to see clarity in this area as it seems to me that a lot of time and expense are put into venue and forum arguments that could be better spent focusing on liability issues. Q. For our practitioners, which maritime event(s) do you get the most out of? R . I have to admit I am a bit of a MLA junky. I am the Chair of the Young Lawyers Committee and the Vice Chair of the CLE Committee. I have really enjoyed working with the MLA and it has been a wonderful networking vehicle for me. Now, more than ever, I am glad to have a network of lawyers across the country I know from the organization who I would trust to call for help on a number of issues. Q. In addition to the AMLC newsletter, of course, which maritime publication do you find most useful? R . I like to read Benedicts Maritime Bulletin. From a legal perspective, Benedicts typically covers relevant and current legal issues and is a good source for keeping up to date on developments in maritime law. I also like to review the new AMCs when they come out as they do a great job of compiling important recent maritime decisions. Q. Thank you for taking time to speak with us today. As a final question, which New York basketball team are you most rooting for to succeed this year? The Knickerbockers of Manhattan or the Nets of Brooklyn? R . It is hard for me to talk seriously about professional basketball as my loyalties lie with the NCAA, namely the Kansas Jayhawks. That being said, as I live a stones throw away from the new Nets arena in Brooklyn, I will definitely be rooting for them and hoping to catch a game or two in the spaceship-esque Barclays Center. 6 6
Benefits of AMLC Membership Opportunities to Become Involved

n Publication in the AMLC Newsletter or TIPS Law Journal n Networking Opportunities n CLE and Webinar Opportunities n Leadership Positions n Mentoring Relationships n Law Student Writing Competition
Join Subcommittees
n Plaintiff n Defense n Insurance n International n Law Students/Young Lawyers n Academic (Professors/Authors)
Additional Information
For more information regarding the benefits that membership in the AMLC can provide to you, check out our webpage at http://ambar.org/tipsadmiralty and join our group on LinkedIn. The Committee is open to all, including non-lawyer maritime professionals, law students and lawyers in every practice area who want to keep abreast of developments in the field.
DIRECT ACTION AGAINST LIABLITY INSURERS IN NORWAY

By: Christian Hauge1 and yvind Molven2
Introduction
Should third party plaintiffs be allowed to bring a lawsuit directly against a defendants liability insurer? In which jurisdiction shall the plaintiff commence proceedings? And what defenses are available to the insurer? These are some of the fundamental questions in direct action, an insurance law theme that has been long debated in jurisdictions world-wide. In this article some of the key aspects of direct action under Norwegian law are examined, with particular focus on direct action in the context of marine insurance. Norway is an important maritime nation as it is home to some of the worlds leading marine insurers, such as Gard and Skuld, making the topic interesting for all those working with admiralty law and marine insurance. This article will compare direct action rules under U.S. law with those of Norway in order to highlight some of the similarities and differences.
perhaps the most well known. In most states, however, direct action rights are very limited or non-existent.
Direct Action Against Liability Insurers in Norway

Under the doctrine of privity of contract, a third party generally lacks standing to sue on an insurance contract to which it is not a party. This is true in both Norway and the United States, as a matter of general contract law. In order to directly sue the insurer, third parties need to be afforded standing, which is usually done by adopting legislation. For a long time, Norwegian law was restrictive when it came to conferring direct action rights to third parties. This changed with the enactment of the 1989 Norwegian Insurance Contract Act (the NICA). The NICA brought significant changes by providing wide direct action rights.3 The most important rights third parties have under the NICA are the following: a) third parties have a right to directly sue the liability insurer without any legal action against the insured first, meaning the plaintiff is not required to obtain a judgment against the insured first, unlike many U.S. jurisdictions where this is a pre-requisite;4 b) third parties have a right to directly sue the liability insurer without having to name the insured as a defendant; and, c) the insured and insurer have, upon the injured third partys request, a duty to disclose whether the insured has insurance covering the damages. This duty is activated the moment the third party sustains damage and, thus, imposes a pre-litigation disclosure duty on the insured and the insurer. In a direct action suit under Norwegian law, generally speaking, the insurer is entitled to invoke all the defenses
The Norwegian Legal System - an Overview

Norway is a unitary state in which all legislation is enacted by the central government. There are no separate state legislatures, as contrasted by the U.S. federal system. As a result of the unitary system, there is only one body of insurance law. As such, direct action law in Norway, and the rules governing such, are uniform throughout the entire country. In the United States, state law generally governs the question of direct action against marine insurers and the law varies considerably among the states. Some state legislatures have enacted legislation conferring broad direct action rights to third parties, with Louisianas direct action statute being
1 Christian Hauge is an attorney and partner with the Norwegian law firm Wiersholm. The Oslo based firm serves business clients in all industry sectors and has extensive experience and expertise within all fields of law related to the maritime industry. Mr. Hauges practice focuses on maritime law and maritime insurance and he regularly represents international clients in arbitration proceedings and in matters before the Norwegian courts. Christian can be contacted at Wiersholm, PO Box 1400 Vika, N-0115 Oslo, Norway, tel.: +47 210 210 00, email: chh@wiersholm.no. 2 yvind Molven is an associate attorney with Wiersholm. He holds a LL.M. degree from New York University. Mr. Molven has litigation experience from a wide range of matters related to the maritime industry. yvind can be contacted at Wiersholm, PO Box 1400 Vika, N-0115 Oslo, Norway, tel.: +47 210 210 00, email: omo@wiersholm.no. 3 The rules regarding direct action are found in the NICA 7-6, 7-7 and 7-8. 4 See generally http://www.mlaus.org/article.ihtml?id=576&committee=160.
Admiralty and Maritime Law Committee Annual Law Student Writing Competition
Let Your Writing Skills Shine!

The Admiralty and Maritime Law Committee is holding its annual writing competition to encourage law students to become involved in the Admiralty & Maritime Law Committee and the Tort Trial & Insurance Practice Section of the American Bar Association (ABA). The winning student will be eligible to receive (1) $500, (2) up to $500 in reimbursement for attending the TIPS Spring Meeting in Washington, DC or the ABA Annual Meeting in San Francisco, CA, and (3) may be published in an Admiralty and Maritime Law Committee newsletter or other Tort Trial & Insurance Practice Section publication. Please submit all essays to James Koelzer at jpkoelzer@rkmc.com no later than April 5, 2013. Current law and LLM students are eligible to enter the competition. Entrants must be a member of the ABA Law Student Division at the time of entry. All submissions should address a recent development in admiralty and maritime law. Essays will be judged on the clarity and significance of the topic, as well as the quality of the research and writing. All essays should be no longer than 20 pages, double-spaced, 12 point Book Antiqua (or similar) font, with footnotes and Bluebook formatting. Please refer to the Official Rules for a complete description of the competition terms and conditions. The Admiralty and Maritime Law Committee is the only committee in the ABA that is dedicated to maritime law issues. As part of the Tort Trial Insurance Practice Section, the committee brings together attorneys for plaintiffs and defendants, in house counsel, and academics to facilitate the exchange of information and ideas, and to be a primary resource for education and knowledge about admiralty and maritime law issues. To learn more about the Admiralty and Maritime Law Committee, or to join, visit: http://ambar.org/tipsadmiralty
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U.S. FIFTH CIRCUIT DEFINES IN THE COURSE OF EMPLOYMENT FOR JONES ACT CASES
By: Philip C. Brickman, Esq.1 The United States Fifth Circuit Court of Appeals recently clarified the meaning of the phrase acting in the course of employment when considering whether an employer is liable for the negligent acts or omissions of its employee that causes injury to a co-employee in tort cases filed under the Jones Act.2 In Beech v. Hercules Drilling Company,3 the Fifth Circuit dealt with an unfortunate situation onboard a jack-up drilling rig owned by Hercules Drilling Company (Hercules). Keith Beech (Beech) was a crane operator working onboard the jack-up rig owned by Hercules. Michael Cosenza (Cosenza) worked as a driller onboard the same rig. Cosenza accidently brought a firearm onboard the rig, which was a violation of the Hercules policy prohibiting weapons on its rigs. Both Cosenza and Beech were aware of the company policy against firearms. Cosenza did not discover that he had brought the firearm until he found out one evening while doing his laundry. Even though he discovered that he had the firearm, Cosenza did not report it and kept it hidden in his locker. Cosenzas failure to report the firearms presence onboard the rig was also a violation of company policy. One evening, Cosenza was assigned to work a night shift and was the only crewman on duty. That night he was supposed to monitor the rigs generator, check certain equipment and report any suspicious activity. For these duties, Hercules encouraged him to stay in the break room, watching television and talking with fellow crewmembers. Cosenza could watch television and monitor the generator at the same time because if there were generator problems, the television would turn off. Beech was not on duty that evening, but was subject to being called on duty at any time. Both men were watching television in the break room and also talking about firearms. Cosenza then left the break room and went to his locker to retrieve his firearm because he thought that Beech might be interested in purchasing one. Upon returning Cosenza showed the firearm to Beech. As Cosenza sat back down, his arm bumped a part of the couch somehow causing the firearm to accidently discharge and kill Beech. Beechs wife filed a wrongful death action against Hercules under the Jones Act. After a bench trial in the Eastern District of Louisiana, the district court granted judgment in favor of Mrs. Beech for a substantial sum of money. Hercules appealed, arguing that neither Beech nor Cosenza were acting in the course of their employment at the time of the accident and, therefore, the judgment in favor of Mrs. Beech must be reversed. The Fifth Circuit first addressed the question of which standard of review should be applied to the course of employment issue. Hercules argued that because all the relevant facts were undisputed, only a legal determination was necessary and, therefore, the proper standard was de novo. Beech argued that the issue of whether an employee acted within the scope of his employment was a question for the fact finder and the clear error standard should be utilized. The Fifth Circuit thoroughly reviewed past authority and concluded that where there are disputed questions of fact or mixed questions of law and fact, the clearly erroneous standard should be utilized if the factual questions predominate the issue. De novo review is to be applied if legal questions predominate the dispute. However, a court can also review the legal arguments de novo where the facts at issue are completely undisputed.4 The Fifth Circuit then proceeded to the course of employment question. The Court acknowledged that the basis for the Jones Act was to create a negligence cause of action for seamen against their employers. The Court also noted that the Jones Act extends the Federal Employers
1 Philip C. Brickman is a partner with Fowler, Rodriguez, Valdes-Fauli in New Orleans, Louisiana. Mr. Brickmans practice focuses on all aspects of maritime and environmental law with additional experience in general casualty defense litigation, representing major international and domestic marine, liability and energy underwriters, as well as vessel owners and energy companies. Contact at Fowler, Rodriguez, Valdes-Fauli, 400 Poydas Street, 30th Floor, New Orleans, Louisiana 70130, pbrickman@grvf-law.com. 2 46 U.S.C. 30101, et seq. 3 691 F.3d 566 (5th Cir. 2012). 4 Citing Hussaini v. Marine Transp. Lines, Inc., 158 F.3d 584 (5th Cir. 1998).
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PATCHING THE CORPORATE VEIL: HOW EFFECTIVE CORPORATE SOCIAL RESPONSIBILITIES PROGRAMS CAN SHIELD CORPORATIONS AND ITS OFFICERS FROM CRIMINAL LIABILITIES IN MARITIME NEGLIGENCE
By: Ngosong Fonkem1 On the evening of April 20, 2010, a gas release and subsequent explosion occurred on the Deepwater Horizon oilrig working on the Macondo exploration well for British Petroleum (BP) in the Gulf of Mexico. The explosion killed 11 workers, injured 16 others, and spewed 4.9 million barrels of oil into the Gulf of Mexico over 87 days, making it the largest offshore oil spill in the history of the petroleum industry.2 Blame for the explosion and its aftermath has been cast broadly, with BP, Transocean, and Halliburton all listed as the primary offenders. It has been said that these companies, through their executives, chose profits over workers safety and the environment.3 The ensuing public outcry led to renewed efforts to prosecute, as well as enact legislation to enhance penalties for corporations and their employees responsible for such environmental crimes.4 Given the nature of todays environmentally sensitive world and the threat of criminal prosecution of upper-lever corporate officers, the best way for corporations and their corporate officers to avoid and/or reduce the likelihood of such criminal liabilities is to incorporate within their mission statements and operational procedures mechanisms for not only complying with the regulatory laws, but also for operating in a socially responsible manner. these liability provisions are mirrored in state statutes. Environmental crimes can be perpetrated at any legal level. In international cases, U.S. attorneys prosecute violations of federal laws arising out of United States treaties with other nations. Regarding environmental criminal statutes pertaining to the maritime industry, the primary statute dealing with pollution of United States navigable waters is the 1973 International Convention for the Prevention of Pollution From Ships (MARPOL). Because MARPOL itself is not self-executing, Congress enacted Act to Prevent Pollution from Ships (APPS) in 1980 to incorporate MARPOL into the United States domestic legislation. It is also the statute most commonly used and cited by the United States government in its efforts to prevent pollution and secure convictions for international MARPOL violations.5 Violation of MARPOL can, and often times do, lead to severe penalties. Specifically, Section 1908(a) of APPS makes it a class D felony to knowingly violate any provision of MARPOL.6 Class D felonies in the United States are punishable by up to six years imprisonment and a fine of up to $250,000 for an individual and $500,000 for a corporation.7 Like MARPOL, another international environmental criminal statute is the Migratory Bird Treaty Act (MBTA). Like MARPOL, MBTA is also commonly enforced through APPS, and it is usually invoked when the pollution incident results in the death of a protected bird species.8 The statute makes it unlawful to, at any time and by any means, kill any migratory bird included in the terms of the treaties.9 Conviction under the statute is a
Most common environmental Statutes that impose criminal liabilities

Almost all major environmental regulations in the United States contain provisions establishing criminal liability under certain circumstances, and most of
1 Ngosong Fonkem is a 2012 LLM graduate from Tulane Law School, Admiralty & Maritime Law program. He is currently licensed to practice law in Wisconsin. The full-length version of this article will be published soon. Contact Ngosong Fonkem at nfonkem23@gmail.com. 2 See BP leak the worlds worst accidental oil spill, Telegraph, 2010-08-03, Retrieved 2010-08-15, http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7924009/ BP-leak-the-worlds-worst-accidental-oil-spill.html. 3 See Weissman, Robert, Opposing view on disaster in the Gulf: Send a message, USA Today, Published 6/23/2010 7:39 PM. http://www.usatoday.com/news/opinion/ editorials/2010-06-24-editorial24_ST1_N.htm. 4 Fowler, Tom, Criminal Charges Are Prepared in BP Spill, Dec. 29, 2011, http://online.wsj.com/article/SB10001424052970203899504577126871591624572.html. See also Leahy Introduces Bill To Boost Penalties For Environmental Crimes, February 15, 2011, http://www.leahy.senate.gov/press/press_releases/release/?id=42722f38-3877-4746-8abed22f2c945163. 5 Chalos, Michael & Parker, Wayne, The Criminalization of Maritime Accidents and MARPOL violations in the United States, 23 U.S.F. Mar. L. J. 206. (2010-2011) 6 33 U.S.C. 1908(a) (2006). 7 18 U.S.C. 3581(b)(4) (2012); 18 U.S.C. 3571 (b)(3) (2012); 18 U.S.C. 3571 (c)(3) (2012). 8 Migratory Bird Treaty Act, 16 U.S.C. 703-712 (2012). 9 Id. 703(a).
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Editors Note: Committee member Giuseppe Lorenzo Rosa attended the Monaco Superyachts Show last September. We are pleased to include in this newsletter some of Giuseppes observations on the superyacht industry inspired by his attendence therein.
LUXURY YACHTING AT A CROSSROAD: MARKET STRATEGIES WITHIN A GLOBAL FINANCIAL-LEGAL CONTEXT

By: Giuseppe Lorenzo Rosa1 Events like the Monaco Boat Show can hardly be perceived by anyone even among the most expert business attendees of such exhibitions as part of everydays life: the scenario of superyachts ( which the business commonly defines being yachts in excess of 25 mt length) leaves you breathless, no matter what you think about yachting in general. Having realized that the parade of superyachts sharing the Monaco marina and bay is nothing short of the very essence of the notion of luxury, one may just find it a little difficult to understand what that scenario has to do with the status of the wealth effect nowadays. As a matter of fact entire regions like Europe and China are not showing data which a reasonable analyst could consider indicative of a trend supportive of a wealth effect there. Wealth effect is said to be temporarily absent in Europe, and declining in China, to say the least. The only area which analysts consider still viable for luxury products (i.e. cars, bags, yachts and superyachts, for that matter) is the U.S.A., to the extent that wealth effect has lately become more and more U.S centric. Grey clouds are nevertheless looming ahead also in such a vast and wealthy area, considering that, for example, the inevitable rise of taxes is eroding personal spending even within the most affluent households. When rewieving current scores of data /charts flowing from countries like China (obviously not including Hong Kong for the time being) - where yachting is still regarded as a marginal aspect of living standards and patterns - shipyards CEOs ( and consequently architects and stylists) are necessarily wondering what that means, basically: will China ever become a market for superyachts (or yachts, for that matter?). According to figures made available only recently, it appears that thirty shipyards located in China have the capability of manufacturing also superyachts, with three such large boats already being in the pipeline. The immediate question raised: who would purchase a Chinese made superyacht? It is limited to domestic takes or could it have wider appeal? Assuming that Chinese millionaires become more and more attracted by yachts or superyachts (considering nevertheless that the maximum tag price of any current Chinese would-be purchaser of such luxury goods is currently reported as being below US $ 900,000.00), would their notion of luxury be spurred by design, quality, reliability offered by western well established shipyards, architects, stylists, or would it instead tend to settle for more affordable though efficient and reliable local products ? Some Italian top shipyards are hinting at the necessity that larger concerns be created among manufacturers in
1 M.A. Business Law, is a member of the Milan (Italy) Bar practicing international business law at large, focusing upon commercial contracts, JVs, M&A, commercial litigation, arbitration before the I.C.C. and CCPIT (PRC), and representation of domestic and overseas clients. He can be reached at glrosa@tiscali.it. Giuseppe shared the observations contained in this piece with the International Ship Registry Review, which published his article on October 11, 2012, with the proviso that the ABA TIPS Admiralty Committee would also be publishing his work.
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this trade, possibly as a reaction to limitations which average size shipyards in Italy and other European countries are facing particularly in their business relationship with bankers, leasing companies, investors. On the other hand, small is still regarded as ...beautiful by other players in the business. As a matter of fact, Chinese risk takers have already differentiated their scope of investment, making Italian luxury yachting shipyards a viable target for M&A deals. Licensing agreements, technical assistance agreements, joint ventures ( not necessarily only corporate, but also contractual) could offer multiple, varied solutions to the needs of an industry which despite wealth effect absent or decreasing in most regions of the world does not look doomed to collapse at all, particularly as far as large superyachts are concerned. Lawyers poised with global insight and vision are in an excellent position to counsel the next generation of luxury yacht owners, whereever they may come from. When giving this guidance, it is in the best interests of all advisors that uniformity be sought in contractual undertakings. Transparency at all levels, legal and financial interplay of contracts and other techniques ( not only in the business relationships among shipyards /owners and stylists) should, in my opinion, become standard in the yachting industry, irrespective of the size of each project, or the very cost and price figures involved, in a mutual effort to make yachting look more interesting to bankers and leasing companies, particularly after amplified risks and disasters which real estate investment has shown around the world over the past decade.
www.ababooks.org
A PRACTITIONERS GUIDE TO CLASS ACTIONS

Marcy Hogan Greer
Complete with a state-by-state analysis of the ways in which the class action rules differ from the Federal Rule of Civil Procedure 23, this comprehensive guide provides practitioners with an understanding of the intricacies of a class action lawsuit. The book is divided into three parts: Anatomy of a Class Action; Special Issues in Class Actions; and Jurisdictional Survey of Local Requirements Governing Class Actions. Product Code: 5190453 | 1300 pages | 7 x 10 | Paperback | Regular Price: $299.95 | TIPS Member Price: $275.95
A M E R I CAN BA R A S S O C I AT I ON
www.ababooks.org Phone: 1-800-285-2221 Fax: 1-312-988-5568 Publications Orders P.O. Box 10892 Chicago, IL 60610-0892
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THE CRUISE INDUSTRY...
Continued from page 1
Plaintiffs in Giglio Sub faced legal hurdles4, but it also remains to be seen whether the Plaintiffs can overcome factual hurdles.5 But rather than taking a wait-and-see approach and placing its fate in the hands of the courts, the cruise industry has been proactively implementing or enhancing safety policies to ensure that an incident like the Costa Concordia does not happen again and to ensure that safety of passenger and crew continues to be the cruise industrys highest priority.6
passengers and crew on board. Prior to this new policy, cruise ships only had to have enough lifejackets for every cruise passenger and crewmember on board. In practice, however, cruise ships carried additional life jackets for passengers and crew. In November 2012, an additional policy, the stowage of life jackets, was implemented and requires excess life jackets to be placed close to muster stations or lifeboats on ships contracted to be built in July 2013 or later.
Bridge Access and Harmonization

Also in April 2012, a new policy was adopted to ensure that when a ship is limited in its ability to navigate, access to bridge was limited to crew with operational functions, such as staff captains. In November 2012, a new policy required that bridge operating procedures be harmonious within cruise companies and their fleet of ships.
Launching of the Global Cruise Industry Operational Safety Review

In its first step to further ensure passenger and crew safety after the Concordia incident, two cruise industry organizations, the Cruise Lines International Association (CLIA) and the European Cruise Council (ECC) launched the Global Cruise Industry Operational Safety Review in January 2012. The outcome of the Operational Safety Review was the recommendation, implementation, and incorporation of several new safety policies or the expansion of already-existing safety policies.7 In some cases, the safety policies also exceeded international regulatory requirements already in place8.
Securing of Heavy Objects

In November 2012, CLIA and the ECC made it mandatory for its members to secure heavy objects on their ships. For example, heavy objects such as fitness equipment and slot machines must be either permanently secured or secured during severe weather. Further, members are required to perform inspections of its ships to make sure that heavy objects are secured properly.
Mandatory Pre-Departure Muster of Passengers From Port

Despite most of the major cruise lines already having a policy of conducting muster drills prior to departure, the cruise industry announced in February 2012 that the pre-departure muster of passengers from port would be a mandatory policy. The International Maritime Organization (IMO) subsequently approved incorporating the policy into the Safety of Life at Sea (SOLAS) convention.
Consequences of the Safety Policies

One consequence of these safety policies is the improvement of passenger and crew safety. After all, passenger and crew safety is the cruise industrys highest priority. However, the safety policies also may have another consequence: rendering allegations with regard to safety on board cruise ships in future lawsuits meritless. Pre-departure muster drills are now mandatory. As such, an allegation such as the one made by the Plaintiffs in Giglio Sub, that Defendants failed to conduct safety drills9 would be meritless at best or difficult if not impossible to prove at worst. Similarly, allegations such as failing to develop and implement policies that would have prevented the incident would have no merit. Notwithstanding the lack of specificity in
Life Jackets
In April 2012, a new life jackets policy was implemented to ensure that the amount of life jackets aboard cruise ships exceeded the total number of
4 On May 3, 2012, Plaintiffs filed their complaint in the United States District Court in the Southern District of Florida, despite most of the Plaintiffs being Italian residents, the incident occurring in Italian waters, the ship sailing under the Italian flags and despite the ships crew being mostly Italian. On September 26, 2012, Judge Robin S. Rosenbaum dismissed Plaintiffs complaint based on the doctrine of Forum Non Conveniens. As a consequence, the Plaintiffs must re-file their complaint in Italy should they choose to do so. 5 For example, the Plaintiffs in Giglio Sub allege that Defendants failed to conduct safety drills although they were not on board the Costa Concordia at the time of the incident. 6 After conducting a comprehensive safety study on the cruise industry in 1996, the U.S. Coast Guard concluded that the cruise industry was the safest mode of commercial transportation. http://www2.cruising.org/industry/safety.cfm. 7 The new safety policies: http://cruising.org/regulatory/cruise-industry-policies. 8 Cruise ship safety regulations are contained in the International Safety Management (ISM) Code: http://www.imo.org/OurWork/HumanElement/SafetyManagement/Pages/ ISMCode.aspx. 9 Giglio Sub, 2012 WL 4477504 at *1.
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such an allegation, policies have been developed and will have to be implemented if they have not been already since the policies are now mandatory. If the allegation is based on the lack of available life jackets, life jackets that exceed the total amount of passengers and crew onboard a ship are now mandatory. If the allegation is based on unauthorized crew or passengers on the bridge when the ship is restricted in its navigability, limiting access to the bridge when the ship is unable to freely navigate to only bridge crew is now mandatory policy. If the allegation is based on the lack of policies in place on the bridge, harmonious bridge operating procedures are now mandatory. If the allegation is based on shifting heavy objects, it is now mandatory for heavy objects to be properly secured permanently or during bad weather. In sum, the cruise industrys new policies, which are designed to continue to ensure that passenger and crew safety remain the highest priority, should be welcomed by all in the spirit of having a fun but safe cruising experience and in making the Concordia incident an unfortunate one-time exception to the rule. This is one of the consequences of the Concordia incident. The other consequence, making plaintiffs allegations with regard to ship safety meritless is just a bonus. In practice, plaintiffs will continue to make allegations similar to the ones made by the Giglio Sub plaintiffs despite the cruise industrys mandatory safety policies. But at least now the allegations will face a merit problem. This is especially important if the cruise industry finds its fate in the hands of the courts in the future.
DIRECT ACTION AGAINST...
he would have had against the insured and the insured may invoke all the defenses the insured would have had against the plaintiff. But there are some exceptions, the most important being that the insurer cannot invoke acts or omissions on the part of the insured that affect coverage if they occurred after the claim arose. As an example, in a direct action suit the insurer cannot invoke as a defense against the third party plaintiff that the insured breached his duty to notify the insurer of the incident. This is similar to Louisianas direct action statute under which insurers cannot invoke defenses that are personal to the insured.5 The provisions in the NICA are mandatory in most insurance contracts. Consequently, if the insurance contract contains provisions that put the insured (or a third party) in a position that is less favourable than under the NICA, then the NICA rules prevail. However, in the context of marine insurance, a crucial exception is that insurers have a right to contract out of the NICA as the rules are not mandatory for insurance contracts relating to ships, offshore installations, and the carriage of goods internationally. For these types of insurance contracts, which notably include P&I and hull insurance, insurers can opt out of the NICA by adding simple wording into the insurance contract protecting themselves from direct actions suits.
Unsurprisingly, Norwegian marine insurers avail themselves of this possibility. For example, the Gard and Skuld club rules (terms of insurance) state that their insurance is governed by Norwegian law, but the NICA shall not apply. See Gard rule 90 and Skuld rule 47.3. Thus, third parties are prevented from directly suing these insurers under Norwegian law, unless they have a basis for a direct action claim outside of the NICA.6 Why did the Norwegian legislator give marine insurers the right to contract out of the NICAs direct action provisions, thereby favouring them over insurers who were not given the same opportunity? The underlying considerations appear to be similar to those motivating New York law. New York excludes marine insurance policies from its direct action law in an effort to not place a competitive disadvantage on New York marine insurers.7 The NICA was crafted under similar considerations as a result of the shipping and insurance industrys lobbying efforts. There is, however, one important exception from the principle that marine insurers are free to contract out of the NICAs direct action rules. Pursuant to the NICA section 7-6 and 7-8, if the insured becomes insolvent, third parties have a right of direct action irrespective of any conflicting provisions in the insurance contract. As such, Gard rule 90 and Skuld rule 47.3, which as previously stated bar direct action
5 Nicolas R. Foster, Marine Insurance: Direct Action Statutes and Related Issues, 11 U.S.F. Mar. L.J. 261, 278 (1999). 6 The 1992 International Convention on Civil Liability for Oil Pollution Damage (CLC ) and the 2001 International Convention on Civil Liability for Bunker Oil Pollution Damage, which have been incorporated into Norwegian law through the Norwegian Maritime Code are examples of legislation that gives direct action rights to third parties outside of the NICA. 7 Alexander, Richard,Admiralty, Federalism, and the New York Direct Action Statute: Seamens Rights to Enforce Jones Act Judgments, 49 Brook. L. Rev. 179. (1982-1983).
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suits from third parties, are without effect if the insured becomes insolvent. Since insolvency triggers the right to direct action under the NICA, the definition of insolvency is important. In Norwegian law, the traditional definition of insolvency is a two-prong test: the debtors assets must be less than his liabilities, and he must be unable to pay his debts as they become due. Although the definition in itself is relatively straightforward, applying the test could involve both legal and factual difficulties, especially if the insured is a company incorporated in a foreign jurisdiction where very little corporate or financial information is publicly available. Under the NICA, it is the plaintiff who has the burden of proving all the relevant components of his claim. In direct action cases against marine insurers, this burden includes proving the insured is insolvent. In a scenario like the aforementioned, where evidence about the insureds corporate and financial status is scarce or unavailable, proving the insured is insolvent may turn out to be a nearly impossible task. In light of such difficulties, it seems unreasonable to hold plaintiffs to such a high standard of proof, especially if the plaintiff can demonstrate the insured shows signs of financial distress (e.g. by producing evidence that the insured has ceased trading). Also, it seems unreasonable to place a high burden on the plaintiff because the insurer usually has more readily accessible information about the insured. Although we believe a court would have sympathy with the plaintiff in such circumstances, it must be emphasized these burden of proof issues have yet to be ruled upon by Norwegian courts. A related issue is the following: many jurisdictions world-wide allow a debtor to file for bankruptcy protection without being insolvent. Such proceedings may lead to an automatic stay in proceedings, thus preventing the injured third party from commencing or continuing recovery actions against the insured for the duration of the bankruptcy proceedings. An example of this is the U.S. Chapter 11 bankruptcy rules, which do not require insolvency and lead to an automatic stay. The question arises then: does it trigger a right to direct action against the insurer if the insured files for Chapter 11 bankruptcy? As stated above, the wording of the NICA specifically requires the insured to be insolvent before a direct action suit can be commenced. As such, a Norwegian court would most likely require a plaintiff to show that the insured is in fact insolvent. Simply showing that the insured has filed for Chapter 11 bankruptcy is most likely not sufficient to commence a direct action suit.
Arbitration Clauses in the Insurance Contract

An important question in direct action is to what extent the plaintiff is bound by an arbitration clause in the insurance contract. It is an obvious disadvantage to the direct action plaintiff if he is compelled to arbitrate his claim. Under Norwegian law, direct action plaintiffs are not bound by arbitration clauses in the insurance contract. The NICA is seen as creating a cause of action separate from the insurance contract. The direct action plaintiff may commence proceedings in a regular court unrestricted by what the insurance policy says about arbitration. In the United States, the enforceability of arbitration clauses in maritime insurance contracts is generally governed by state law. In a few recent cases concerning Louisianas direct action statute, the Fifth Circuit and Louisiana District Courts have held that third party plaintiffs are bound by arbitration clauses in the insurance contracts. In these cases, the plaintiff was compelled to arbitrate the claim according to the terms of the insurance contract, which, in both cases, was arbitration in London under English law.8
Time Limitation
In marine direct action cases, it is particularly important to pay careful attention to time limitation rules because of the multiple parties, claims, and, sometimes, the multiple jurisdictions involved. Usually there are two claims involved in a direct action case: the plaintiffs underlying claim against the insured upon which the direct action claim is based, and the direct action claim itself. Under Norwegian law, if the underlying claim becomes time-barred before the direct action claim arises (which under the NICA occurs at the insureds insolvency), the plaintiff not only loses his claim against the insured, but he also loses his direct action claim. As for the direct action claim itself, the time limitation rules under Norwegian law are somewhat uncertain as a result of the ambiguity of the relevant statutes and the lack of guiding case law on several key points. The following observations should be sufficient for the present purposes: legal scholars have argued that the
8 See Todd v. S.S. Mut. Underwriting Association, 601 F.3d. 329, 336, 2010 AMC 1143, 1152-53 (5th Cir. 2010); Todd v S.S. Mut. Underwriting Association, No. 08-1195, 2011 WL 1226464 (E.D. La. Mar. 28, 2011); and Edward Authement III v. Ingram Barge Co. et al., Case No. 10-2107 (E.D. La. July 13, 2012).
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insolvency of the insured the point in time when the insured becomes insolvent is when the direct action limitation period commences. It could also be argued that the limitation period starts to run when the plaintiff should have become aware of the insureds insolvency, which could be at a point in time later than the actual insolvency. The length of the limitation period for direct action claims created by the insureds insolvency is also uncertain and has yet to be decided by Norwegian courts. Usually, these uncertainties about the starting point and the length of the time limitation period are dealt with by requesting a time extension, to which Norwegian P&I Clubs regularly agree. If the insurers consent cannot be obtained, the plaintiff can stop time from running by filing a complaint with the Norwegian conciliation board (which is essential a small claims court) or district court. insurer wants to move the case to a different state court or to federal court. In Norway, and in the other Scandinavian countries, such strategic battles are virtually non-existent because there is only one court system within each country, all the courts apply the same law, each court is identically composed, and there are no juries in civil cases. Direct action cases, like most other civil cases in Norway, begin in the district courts. In certain cases the plaintiff is required to, or has the right to, have the case heard before a conciliation board before he takes it to the district court. But, most commercial disputes go straight to the district courts. Proceedings in the district court are commenced by filing a complaint. The district court usually hears the case within six to twelve months after the initial complaint is filed and typically delivers a judgment within a few weeks after the hearing is concluded. Most district court cases are argued in front of one judge who decides the case. The parties are entitled to appeal the district courts judgment to the Court of Appeals and, after that, in limited circumstances, to the Norwegian Supreme Court.
Legal Proceedings in Direct Action Cases

In marine direct action cases in the United States it is not uncommon to see legal battles about forum and choice of law for purely strategic reasons. The plaintiff may wish to have the case heard in state court because it entitles him to a jury trial, whereas the defendant the
U.S. FIFTH CIRCUIT...

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Liability Acts (FELA) protections to seaman and thus, FELA case law applies to Jones Act cases.6 Further, the Jones Act should be liberally construed to accomplish its purposes to provide for the welfare of seaman. Despite the Jones Acts liberal construction, the Fifth Circuit cited to the U.S. Supreme Court and noted that liberal construction does not mean that FELA or the Jones Act should be construed as workers compensation statutes, as neither statute makes the employer the insurer of their employees safety while on duty. The basis for liability under the Jones Act and FELA is negligence, not merely the fact that an injury occurred.7 Under FELA and the Jones Act, an employer may be vicariously liable for its employees negligence under the doctrine of respondeat superior, so long as the negligence occurred in the course of employment. In Beech, the question the Fifth Circuit Court of Appeals
addressed is the meaning of the phrase in the course of employment, and specifically whether Cosenza and Beech were acting in the course of their employment when Cosenza accidently shot Beech. In order to hold an employer vicariously liable for one employees injury caused by the negligence of a co-employee under the Jones Act, a plaintiff must show that both employees were acting in the course of their employment at the time of the accident. The district court also concluded that Cosenza was acting in the course of employment because sitting down on the couch and watching television were part of his duties. The district court further concluded that Beech was acting in the course and scope of his employment because he was onboard the vessel and subject to the call of duty at the time he was shot. Therefore, when the accidental shooting occurred while he and Beech were talking, both men were in the course and scope of their employment. On Appeal, Hercules argued that because Cosenzas decision to show off the firearm did not further Hercules business
5 45 U.S.C. 51, et seq. 6 See Withhart v. Otto Candies, L.L.C., 431 F.3d 840. (5th Cir. 2005). 7 Consol. Rail Corp. v. Gottshall, 512 U.S. 532 (1994) and Morant v. Long Island R.R., 66 F.3d 518 (2d Cir. 1995).
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interests, Hercules cannot be liable under the doctrine of respondeat superior. Essentially, because the negligent act was not related to his job duties, he was not acting in the course and scope of his employment at the time of the accident. More importantly, Hercules argued that if this particular factual scenario did not bring a seaman outside the course and scope of his employment, no scenario could; and, thus the Jones Act would effectively place employers under a strict liability scheme. For the course of employment issue, the Fifth Circuit primarily focused on two opinions, Stoot v. D&D Catering Serv., Inc8. and Baker v. Baltimore & Ohio R.R. Co.9 In Stoot, a cook and another seaman onboard a vessel got into an argument that resulted in the cook slashing off several of the seamans fingers. The Fifth Circuit previously held in Stoot that the employer was not liable for the cooks actions because his tortuous conduct was not in furtherance of the employers business (i.e. cutting off a co-employees fingers). In Baker, one railroad worker accidentally shot a co-worker when a pistol fell out of the workers pocket. The Sixth Circuit held the employer liable because course of employment includes not only actual service, but also those things necessarily incident thereto. In Beech, the Fifth Circuit ultimately held that the test for whether a Jones Act employee was acting within the course and scope of his employment is whether his actions at the time of the injury were in furtherance of his employers business interests. Further, whether the underlying tortious conduct was negligent or intentional does not affect the applicable test. As such, Cosenza was not acting within the course and scope of his employment when he accidentally shot Beech. In fact, Cosenza violated two Hercules company policies with respect to having firearms onboard vessels. While it is true not every violation of a safety policy automatically casts an employee outside of the course of employment, it does not mean no violation of safety policy could ever take an employee out of the course and scope of his employment. The safety policy violation in this case is not dispositive of the course and scope of employment
8 807 F.2d 1197 (5th Cir. 1987). 9 502 F.2d 638 (6th Cir. 1974).
issue, but it is relevant because it gives some guidance regarding how one employees conduct furthers their companys business interests. Here, Cosenza left the break room to retrieve a loaded firearm when he was supposed to be monitoring the generator and watching for suspicious behavior. His own suspicious behavior took him outside the course and scope of his own employment. The Court also noted that if Cosenzas behavior with regard to the firearm did not take him out of the course and scope of employment, it is unclear as to what could have. The Fifth Circuit therefore avoided the situation where a claim for negligence under the Jones Act was treated as strict liability. The Court, again, noted that neither the Jones Act nor FELA makes an employer the insurer of its employees safety while they are on duty, but rather only for negligent acts and/or omissions. The Fifth Circuit held Cosenza was outside the course of his employment at the time of the accident and reversed the district courts judgment in favor of Beech, thus rendering judgment in favor of Hercules. In this case, the Fifth Circuit clearly defines how a Jones Act seamans course of employment is considered when attempting to recover from his employer for injuries caused by a co-workers negligence. Both parties must have been involved in an activity where they were undertaking some action in furtherance of the employers business interests. Whether the conduct was intentional or unintentional does not matter. The Fifth Circuit also rejected the boarder argument that things incident to an employees job duties are also within the course of employment. In other words, an employee cannot be liable for its employees negligence where the employee acts entirely of his own impulse, for his own amusement, and for no purpose of or benefit to the employer. In Beech, the Fifth Circuit narrowed the course of employment definition for injuries that occurred on the job as a result of a co-workers negligence under the Jones Act, thereby avoiding situations that could lead to the Jones Act being utilized as a workers compensation statute using a strict liability theory of recovery.
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PATCHING THE CORPORATE...
misdemeanor punishable by fines of up to $15,000 per violation and imprisonment for no more than six months.10 Similar to environmental regulations promulgated at the international level, several federal environmental statutes have the potential to form the basis of environmental criminal prosecutions. A brief analysis of these statutes and their implications on violators are provided in the following paragraphs. One of the most important environmental criminal statutes frequently used to regulate the pollution of U.S. waters is the Federal Water Pollution Control Act (the Clean Water Act) (hereinafter the CWA). The CWA makes it unlawful for any person to discharge any pollutant from a point source into navigable waters, unless a National Pollution Discharge Elimination System (NPDES) permit is obtained under the Act.11 Because of growing public awareness and concern for controlling water pollution, in 1977 Congress amended the statute to focus on toxic pollutants in U.S. waters.12 Furthermore, in 1987, the CWA was restructured to permit citizen suits.13 The CWA has evolved extensively since its enactment in 1948. The most significant amendments to the Clean Water Act are the amendments made pursuant to the federal Oil Pollution Act of 1990 (OPA 90). The U.S. Congress passed OPA 90 in reaction to the EXXON VALDEZ oil spill of 1989,14 which was the largest oil spill in American history at the time.15 OPA 90 sets forth requirements designed to prevent marine pollution, and to define and increase the parameters of civil liability for oil spills in the territorial waters of the United States. OPA 90 places liability only on responsible parties. The definition of responsible party for liability purposes under OPA 90 depends on the source of the discharge.16 Thus, where a discharge comes from a vessel, any person owning, operating, or demise chartering a vessel is the responsible party.17
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Similar to the CWA, another federal environmental statute imposing criminal liability on violators is the Refuse Act. Under section 407 of the Rivers and Harbors Appropriation Act of 1899 (Refuse Act), any discharge of refuse of any kind from a vessel into U.S. navigable waters is prohibited.18 A violation of the Refuse Act is a Class A misdemeanor, and a person guilty for violating the Act may be fined up to $25,000 per day or imprisoned for no less than thirty days, but no more than one year.19 The Resource Conservation and Recovery Act (RCRA) is another of environmental criminal statute imposing criminal penalties on violators. A violation of RCRA includes dumping hazardous waste in a manner inconsistent with the Act. Yet another act imposing criminal sanctions is the Endangered Species Act (ESA). In the context of maritime law, it is typically invoked in situation where an industrial accident causes the death of endangered species. The criminal penalties under the ESA may be a $50,000 fine, imprisonment for up to one year, or both.20 Additionally, the Sentencing Guidelines have placed an ESA offender with a base offense level of six under Federal Sentencing Guideline 2Q2.1. Specific offense characteristics add points to the offenders base offense level. Given the discretion Courts have in assessing or characterizing the base level of the Federal Sentencing Guideline, a violation of ESA could potential expose the responsible corporations and their officers to very severe criminal penalties if the courts decide to add points to the offenders base points. Although the aforementioned environmental statutes are the most common environmental criminals statutes used by the U.S. government to punish responsible offenders for illegal discharge of toxic chemicals into the environment, the list is not exhaustive. The U.S. government has the discretion to invoke other criminal statutes as well. Such statutes include: Marine Mammals Protection Act; Comprehensive Environmental Response, Compensation, and Liability Act; Park System Resource Protection Act; National Wildlife Refuge System Administration Act; Safe Drinking
Id. 707(a). Id. at Section 402. Id. at Section 311. Id. at Section 505. Force, Davies, & Force at 3. Cleveland, Cutler, Exxon Valdez oil spill, The Encyclopedia of Earth. (2010), http://www.eoearth.org/article/Exxon_Valdez_oil_spill. 42 U.S.C. 2701(32)(A); See, United States v. J.R. Nelson Vessel, Ltd., 1 F. Supp. 2d 172, 1998 AMC 2249 (E.D.N.Y. 1998). Force, Davies, & Force at 5. River and Harbors Appropriation Act of 1899, U.S.C. Vol. # 401, 403-405, 406-409, 411-118 (2012). Id. Id. at 1540(b)(1).
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Water Act; National Marine Sanctuaries Act (NMSA); Toxic Substances Control Act; and, many more. In situation where a corporation or its officers are criminally or civilly liable for violating an environmental criminal statute(s), the U.S. government not only seeks to prosecute the offenders for violating the specific statute, but also brings charges against the offenders if they make false or misleading statements to the investigating authorities during the investigation phase of the offense. The two primary federal statutes used by the U.S. government to press charges are the False Statement Act (FSA) and the Sarbanes-Oxley Act of 2002. The False FSA makes it a felony to knowingly or willfully make or use any false writing or document knowing the [document] to contain . . . materially false, fictitious, or fraudulent statement or entry.21 The responsible corporation and its officer may also be charged and convicted for falsity through concealment, where disclosure of the concealed information is required by statute or government regulation, and the responsible corporation and its officers fail to do so.22 Like the FSA, United States prosecutors have recently begun using the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) as an additional tool for prosecuting defendants suspected of violating environmental laws and regulations. SarbanesOxley includes a provision making it a Class A felony to knowingly alter, destroy, mutilate, conceal, cover up, falsify or make a false entry in any record, document or tangible object with an intent to impede, influence or obstruct any matter within the jurisdiction of any department or agency of the United States.23 and their executives and managers strictly liable for violating those environmental statutes. Because corporations and corporate executives and managers are increasingly facing criminal prosecution for violation of environmental statutes, the best way these corporations and their corporate officers to reduce the risk of criminal liability is to incorporate within their mission statements and operational procedures mechanisms for complying with the regulatory laws and operating in a socially responsible manner. The reasons for implementing such procedures are twofold. First, because corporate social responsibility (CSR) has become such an important part of corporate environment, a corporation operating in a socially responsible manner enhances its corporate goodwill among its stakeholders. Secondly, some environmental criminal statutes require a corporation implement some sort of compliance program. Although CSR programs might improve a companys goodwill and provide an economic benefit to the corporation in the long run, CSR is required in certain industries because federal law in such industry mandates corporations within those industries implement some sort of compliance program to meet federal standards. A corporate compliance program is a formal system designed to prevent, detect and appropriately respond to unethical and criminal conduct, as well as civil misconduct, by a corporation, its employees and other agents.24 Such programs involve identifying potential hazards and developing mechanisms to prevent such hazards from occurring.25 Furthermore, if wrongdoing does occur, corporate compliance programs facilitate the immediate and complete rectification of the hazard and reporting to the authorities.26 In addition to the preventative benefits of corporate compliance programs, the U.S. Sentencing Commission rewards companies that search out and report illegal activities within their own organizations.27 Companies and their executives and managers can avoid the most severe penalties by instituting a compliance program encouraging employees to monitor, detect and report any criminal wrongdoing. Companies and executives
Recommendations
Undeniably, the twin goals for Congressional enactment of environmental criminal statutes are to punish wrongdoers for polluting the environment and to deter others from engaging in similar conduct. Because of these reasons, in recent years, prosecutors are much more willing to take action against corporations and their officers for criminal offenses committed by their businesses. Furthermore, courts are more willing to interpret environmental statutes as public welfare legislation, and hold corporations
21 See 18 U.S.C. 1001 (2012). 22 Id. 23 Sarbanes-Oxley Act of 2002, 18 U.S.C. 1519 (2012). 24 See Romrell, Randall, Why Companies Should Be Concerned About Corporate Compliance, National Association of Credit Management Business Credit, (March 1997). 25 Id. 26 Id. 27 See U.S. Department of Justice, Factors in Decision on Criminal Prosecutions for Environmental violation in the Context of Significant Voluntary Compliance on Disclosure Efforts by the Violator, Pt. I (2012). http://www.justice.gov/enrd/3058.htm.
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blowing the whistle on themselves in a timely fashion can also find its fines and prison sentences significantly reduced. On the other hand, companies that do not comply with the guidelines may face a significant increase in sentence severity.28 Like the Department of Justice, the EPA also encourages voluntary compliance programs. The EPA Policy Statement, issued initially in 1995 and revised on April 11, 2000, attempts to provide an incentive to companies that voluntarily discover, disclose, correct, and prevent violations of federal environmental laws.29 Specifically, the EPA incentives for voluntary compliance provides, where violations are found through voluntary environmental audits or efforts that reflect a regulated entitys due diligence (i.e., systematic efforts to prevent, detect and correct violations, as defined in the policy), and all of the policys conditions are met, EPA will not seek gravity-based penalties and will generally not recommend criminal prosecution against the company if the violation results from the unauthorized criminal conduct of an employee.30 Unlike the EPA compliance recommendations and Sentencing guidelines that pertain to all industries, the following four programs pertain the most to maritime industry. These compliance programs are as follows: the International Safety Management code (ISM); the ISO Quality Management Standard (ISO 9000 Series); the ISO Environmental Management Standard (ISO 14001); and, A Compliance Program.31 The ISM Code was adopted by the International Maritime Organization (IMO) and was incorporated into the International Convention for the Safety of Life at Sea (SOLAS Convention) in 1994.32 In addition to the reducing human injury or loss of life at sea, the objectives of the ISM Code also includes minimizing environmental and property damage attributable to marine casualty.33The ISM Code seeks to accomplish these objectives by encouraging the implementation of safety management systems (SMS) by companies involved in the maritime industry.34 Like the ISM Code, the International Organization for Standards 9000 Series (ISO 9000 Series) also seeks to improve health, safety, environmental protection, and reduction of waste.35 Although ISO 9000 series is a voluntary compliance program with no governmental requirement for a company to achieve an ISO 9000 certificate, companies must adhere to ISO operational procedures before it can achieve an ISO 9000 certificate. Still within the ISO system, the ISO 14001 series addresses standards relating to environmental management, sustainable development, auditing and related investigations, performance, and other related topics.36 Like the ISO 9000 series, achieving an ISO 14001 certification is also voluntary and not required by law. However, since many environmental standards have been established by and are being enforced by the U.S. government, achieving an environmental management certificate through the ISO systems may reduce the likelihood of violation of government environmental standards. With regards to mandatory maritime compliance program, whereas the ISM Code, ISO 9000, and ISO 14001 are voluntary programs for companies engaged predominantly within the United States, U.S. law however requires companies that own or operate ships engaged in international commerce to develop and implement a safety management system in conformance with the ISM Code.37 Thus, a vessel without a safety management system required under the ISM Code is effectively barred from international trade. Similar to the mandatory compliance program required by the United States government for maritime companies engaged in international trade, the United States Department of Interiors Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) recently issued proposed rules for the implementation of Safety Environmental Management
28 Id. 29 See Environmental Protection Agency, http://www.epa.gov/region2/capp/cip/policy.htm. 30 Id. 31 Bryant, Dennis L, The Maritime Compliance Program: Foghorn protection for the shipowner, 24 Tul. Mar. L.J. 591, Pp 610 (2000). 32 See Conference of Contracting government to the 1974 SOLAS Convention, held in London in May 1994, reprinted in Benedict on Admiralty, Doc. No 14-2 (Frank L. Wiswall, Jr. ed., 7th ed. Rev. 1999). 33 Id. 34 Id. 35 Id. 36 See EPA position Statement on environmental Management Systems and ISO 14001, 63 Fed. Reg. 12,094 (1998); Code of Environmental Management Principles, 61 Fed. Reg. 54,062 (1996). 37 See 33 C.F.R. 96.210(b) (2010); ISM Code, Supra note 35, 1.2.1.
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Systems (SEMS) for offshore oil and gas operations under federal jurisdiction in the United States.38 Although, based on the Safety Environmental and Management Program (SEMP) as described in the American Petroleum Institutes Recommended Practice 75 (API RP 75), the new SEMS is more comprehensive than SEMP, the original proposed standard that was published in 2009.39 Essentially, the Proposed Rule introduces four new elements that operators must include in their SEMS programs. Generally, the new elements (1) authorize employees to stop any BOEMRE-regulated activity that may cause imminent danger or harm; (2) require the identification of the person with the ultimate authority for safety and decision making at a facility; (3) require an action plan showing the involvement of employees in the development of the SEMS program; and, (4) require guidelines for reporting unsafe work conditions.40 Additionally, the SEMSs proposed rule would require Outer Continental Shelf (OCS) lessees and operators of offshore oil and gas companies to have their SEMS program audited at least once every three years by either an independent third party or qualified personnel designated within the company.41 Such knowledgeable and experienced auditors would assess the companys SEMS program to determine if the OCS lessee and operator are complying with the SEMS plan. Thus, the auditors must qualify under the proposed SEMS rule.42The audits must be conducted in an office environment and/or in the field, and must either cover a broad range of activities or be focused on a particular area (e.g., records, gas compressors, blowout preventers, or documentation), as the auditor may deem appropriate.43
Conclusions
Over the last few decades, the public has become acutely aware of societys growing environmental problems, and the need to do something about them. In response to societal demands, the U.S. government has aggressively began to pursue and prosecute alleged offenders. Given the threat of such criminal prosecution, the best way for corporations and their corporate officers to avoid and/or reduce the likelihood of such criminal liabilities is to incorporate within their mission statements and operational procedures mechanisms for not only complying with the regulatory laws, but also for operating in a socially responsible manner. First, a corporation operating in a socially responsible manner enhances its corporate goodwill among its stakeholders. Secondly, some environmental criminal statutes, as well as federal law require corporations in certain industries to implement compliance programs. Even in spite of these reasons, the benefits a corporation and its officers might get from implementing a compliance program substantially outweigh the burden and cost of instituting such compliance programs. For example, if such a program were in place, the United States government may elect to forgo the prosecutorial. Similarly, if the enforcement actions were to go to trial, even though there was a compliance program, the judgment may likely be more favorable to the company than it would have been had no compliance program been in place. As such, compliance programs may be extremely valuable to corporations wishing to shield themselves, and their officers, from criminal liabilities in maritime negligence.
38 See U.S. Department of Interiors Bureau of Ocean Energy Management, Regulation and Enforcement. http://www.boemre.gov/SEMP/; http://www.stb07.com/downloads/ SEMS-Final-Rule.pdf. 39 Id. 40 http://www.crowell.com/NewsEvents/AlertsNewsletters/Environment-Natural-Resources-Law-Alert/BOEMRE-Proposes-Additional-SEMS-Program-Requirements. 41 See http://www.stb07.com/downloads/SEMS-Final-Rule.pdf. 42 Id. 43 Id.
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January 2013 23- 25 Fidelity & Surety Committee Midwinter Waldorf-Astoria Hotel Meeting New York, NY Contact: Felisha A. Stewart 312/988-5672 February 2013 6-12 ABA Midyear Meeting Hilton Anatole Contact: Felisha A. Stewart 312/988-5672 Dallas, TX Speaker Contact: Donald Quarles 312/988-5708 Arizona Biltmore Spa 14-16 Insurance Coverage Litigation Spring CLE Meeting Resort & Contact: Ninah Moore 312/988-5498 Phoenix, AZ March 2013 6-8 Transportation Megaconference Sheraton New Orleans Contact: Donald Quarles 312/988-5708 New Orleans, LA April 2013 4-5 Emerging Issues in Motor Vehicle Product Arizona Biltmore Liability Litigation National Program Resort & Spa Contact: Donald Quarles 312/988-5708 Phoenix, AZ 5-6 Toxic Torts Committee Midyear Meeting Arizona Biltmore Contact: Felisha A. Stewart- 312/988-5672 Resort & Spa Phoenix, AZ 13-17 TIPS National Trial Academy Grand Sierra Resort Contact: Donald Quarles 312/988-5708 Reno, NV 23-28 TIPS Section Spring Leadership Meeting JW Marriott Contact: Felisha A. Stewart- 312/988-5672 Washington, DC Speaker Contact: Donald Quarles 312/988-5708 May 2013 2- 4 Fidelity & Surety Committee Spring Meeting Walt Disney Contact: Donald Quarles 312/988-5708 World Swan Orlando, FL
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2013 Winter Newsletter - ABA Admiralty &amp; Maritime Law Committee

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2013 Winter Newsletter - ABA Admiralty &amp; Maritime Law Committee

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CommitteeNews

Admiralty and Maritime Law Committee

THE CRUISE INDUSTRY POST-CONCORDIA: IMPROVED SAFETY AND OTHER CONSEQUENCES

Admiralty and Maritime Law Committee Newsletter Winter 2013

Jessica Link Martyn

Hall F McKinley III

Pamela Annette Palmer

James Wilson Bartlett III

Immediate Past Chair

Law Student Vice-Chair

Lili Fay Beneda

Olivia Calhoun Palmer

Kathryn Blythe Daly

David Lee Deehl

Raymond Timothy Waid

Admiralty and Maritime Law Committee Newsletter Winter 2013

MESSAGE FROM THE CHAIR

JOIN OUR LINKEDIN COMMITTEE PAGE

Admiralty and Maritime Law Committee Newsletter Winter 2013

Click Here for the Podcast!

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

Benefits of AMLC Membership Opportunities to Become Involved

Admiralty and Maritime Law Committee Newsletter Winter 2013

DIRECT ACTION AGAINST LIABLITY INSURERS IN NORWAY

Direct Action Against Liability Insurers in Norway

The Norwegian Legal System - an Overview

Admiralty and Maritime Law Committee Newsletter Winter 2013

Let Your Writing Skills Shine!

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

Most common environmental Statutes that impose criminal liabilities

Admiralty and Maritime Law Committee Newsletter Winter 2013

LUXURY YACHTING AT A CROSSROAD: MARKET STRATEGIES WITHIN A GLOBAL FINANCIAL-LEGAL CONTEXT

Admiralty and Maritime Law Committee Newsletter Winter 2013

A PRACTITIONERS GUIDE TO CLASS ACTIONS

Admiralty and Maritime Law Committee Newsletter Winter 2013

THE CRUISE INDUSTRY...

Continued from page 1

Bridge Access and Harmonization

Launching of the Global Cruise Industry Operational Safety Review

Securing of Heavy Objects

Mandatory Pre-Departure Muster of Passengers From Port

Consequences of the Safety Policies

Admiralty and Maritime Law Committee Newsletter Winter 2013

DIRECT ACTION AGAINST...

Continued from page 8

Admiralty and Maritime Law Committee Newsletter Winter 2013

Arbitration Clauses in the Insurance Contract

Admiralty and Maritime Law Committee Newsletter Winter 2013

Legal Proceedings in Direct Action Cases

U.S. FIFTH CIRCUIT...

Continued from page 10

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

PATCHING THE CORPORATE...

Continued from page 11

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

Admiralty and Maritime Law Committee Newsletter Winter 2013

VISIT US ON THE WEB AT:

Admiralty and Maritime Law Committee Newsletter Winter 2013

2013 TIPS CALENDAR

2013 Winter Newsletter - ABA Admiralty & Maritime Law Committee

2013 Winter Newsletter - ABA Admiralty & Maritime Law Committee