Cozen O’Connor: U.S. Supreme Court Takes Another Look at Maritime Punitive Damages [Alert]

U.S. Supreme Court Takes Another Look at Maritime Punitive Damages

Alert

December 18, 2018

On December 7, 2018, the Supreme Court granted a petition for writ of certiorari on whether punitive damages may be awarded to a seaman if the vessel’s unseaworthiness is the cause of such injuries. In order to understand the significance of this decision, a brief review of the case and certain maritime legal concepts will be helpful to the reader.

Pecuniary or compensatory damages are supposed to compensate a claimant for those losses or damages suffered as a result of negligence or breach of a duty. Punitive damages, however, are supposed to punish a tortfeasor, thereby deterring future egregious conduct similar to that which caused the prior calamity. Punitive damages are controversial in that their assessment by juries can often appear to be arbitrary. For example, in Exxon Shipping Co. v. Baker, the jury awarded $287 million in compensatory damages and $5 billion in punitive damages. At trial, the jury heard eyewitnesses testify that they observed Captain Hazelwood drink at least five double vodkas at waterfront bars the night before the grounding of the Supertanker Exxon Valdez. The jury held Exxon responsible for its failure to properly police its own employees and the $5 billion punitive damage award was designed to prevent such an incident from occurring again. The Ninth Circuit Court of Appeals found the $5 billion award to be excessive in comparison to the enormity of Exxon’s conduct and reduced the punitive damages to $2.5 billion. After Exxon appealed to the Supreme Court, the highest court in the land considered the $2.5 billion award to still be too high and ultimately concluded that punitive damages should be in the range of a 1:1 ratio with compensatory damages.

In the case of Dutra, Christopher Batterton worked as a seaman aboard various vessels owned and operated by The Dutra Group. While aboard one of Dutra’s vessels, Batterton suffered grievous injuries to his left hand. Batterton filed suit against Dutra in federal district court in California alleging various causes of action, including the right to recover punitive damages due to an alleged unseaworthy vessel. Under common law, vessel owners and operators have a non-delegable duty to provide a seaworthy vessel for its officers and crew. “Seaworthiness” is an amorphous concept that is dependent on the facts and exact circumstances of the vessel, as well as the manner in which the vessel and its equipment are being used. Generally speaking, however, commercial shipboard operations have traditionally been seen as dangerous and for this reason, vessel owners and operators are generally required to provide a reasonably safe working environment under the circumstances.

Dutra moved to dismiss the punitive damages claim, arguing that punitive damages are not recoverable even if the vessel was found to be unseaworthy. The district court denied Dutra’s motion but agreed to certify the issue for interlocutory appeal. The Ninth Circuit accepted the appeal and affirmed, finding that punitive damages are “awardable to seamen for their own injuries in general maritime unseaworthiness actions.”

The Ninth Circuit affirmed in large part based upon the 1990 Supreme Court decision in Atlantic Sounding Co. v. Townsend that held that punitive damages can be awarded for claims based on “maintenance and cure.” Under common law, maintenance and cure is another maritime doctrine whereby a shipowner has a duty to provide “wages, food and lodging” for injured seamen. Since maintenance and cure arose under common law, and punitive damages have previously been held to be recoverable under common law, the Supreme Court ultimately concluded that punitive damages could potentially be awarded in a personal injury action based on unseaworthiness. From the Ninth Circuit’s perspective, there was sufficient case law to support allowing the recovery of punitive damages for vessel unseaworthiness claims.

The Ninth Circuit’s reasoning in Dutra, however, directly contradicts the 2014 Fifth Circuit decision in McBride v. Estis Well Service LLC that explicitly ruled punitive damages are not recoverable for vessel unseaworthiness claims. The Supreme Court could have chosen to not accept certiorari and let Dutra remain in place. By granting certiorari, the Supreme Court will revisit the issue of maritime punitive damages and resolve the conflict between the Ninth and Fifth Circuit on this issue. 


Authors

David Y. Loh

Member

dloh@cozen.com

(212) 908-1202

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Should you have any questions regarding the issues discussed in this Alert, please do not hesitate to contact a member of Cozen O’Connor’s Transportation & Trade Department.