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Defeating limitation of liability
in maritime law

An anachronistic law can still prevent fair recovery for plaintiffs who
suffer losses on the waves

By Tim Akpinar


From the February issue of 2006 Trial magazine, the magazine of The Association
of Trial Lawyers of America. Posted with permission of Trial (February 2006)                                                    
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Before a Staten Island ferry struck a pier on October 15, 2003, killing 11 people and injuring more than 60, most of
the passengers were unaware of an arcane concept of maritime law known as limitation of liability. They soon saw how
a law meant to protect shipowners during the age of sail was invoked to prevent them from achieving a full and fair
recovery for their losses.

Under the Limitation of Shipowners’ Liability Act of 1851,1 a shipowner may limit liability for losses from negligence
or unseaworthiness arising without his or her privity (participation and involvement) and knowledge. Liability is
limited for loss of life, personal injury, and loss of or damage to cargo. The act can also limit liability to the value of
the vessel or the shipowner’s interest in the vessel and revenues earned from carrying passengers and cargo.2

After an investigation revealed that the pilot in the Staten Island ferry crash had passed out at the helm, the city of
New York, citing the act, filed a complaint seeking to limit its liability to $14.4 million, the postcasualty value of the
ferry.3 However, the National Transportation Safety Board introduced a formidable barrier to limiting liability when it
blamed the accident on the city’s poor oversight of its ferry fleet and its failure to provide the fleet with effective
safety measures.4

When the law was enacted, there was a compelling reason to limit liability. Going to sea was a venture filled with peril
and uncertainty. Wrongful death, personal injury, and cargo damage claims from a sinking or catastrophic fire could
expose a shipowner to liability far greater than the value of the vessel. This could discourage vessel owners and
investors from engaging in maritime commerce.

The law limits liability for things a shipowner cannot control, such as the negligent actions of an officer on the other
side of the world. It also limits liability for unseaworthy conditions of which the owner could not reasonably know.5
Limitation of liability was invoked in the loss of the Titanic, which in April 1912 struck an iceberg and sank, taking
more than 1,500 lives. In the wrongful death and injury lawsuits that followed, Supreme Court Justice Oliver Wendell
Holmes held that the Titanic’s British owner should be allowed to limit liability to the ship’s postcasualty value, which
amounted to about $92,000 for a cluster of its remaining lifeboats.6

The Titanic case demonstrated that U.S. courts would allow a foreign steamship line to invoke American limitation
law. Almost a century later, the issue raises concerns that owners of foreign liquid-natural-gas vessels could be
protected from liability following a catastrophic explosion in a U.S. port.

The act was amended in 1935 as a result of another maritime tragedy, the loss of the Morro Castle. The liner caught
fire off the New Jersey coast on September 9, 1935, and foundered on the beaches off Asbury Park. One hundred
thirty-seven passengers and crew died.

The success of the owners in limiting their liability to the $20,000 residual value of the ship’s charred remains
prompted passage of the Loss of Life Amendments.7 Applying to seagoing vessels only, the amendments provided that
if the salvage value of the vessel was insufficient to satisfy wrongful death and injury claims, a limitation fund of $60
per ton salvaged would be established. The limitation fund was increased in 1984 to $420 per ton.

Limitation of liability has even been applied in boating accidents. For instance, a boat owner raised limitation of
liability when his recreational boat caught fire at a Lake Michigan marina. The fire spread and damaged several of the
surrounding vessels.8

When the owner attempted to limit liability to the $800 salvage value of the boat, the federal trial court dismissed his
petition, finding that it lacked jurisdiction to hear the case. The circuit court affirmed, but the U.S. Supreme Court
reversed and remanded back to the trial court, finding that maritime jurisdiction is appropriate “when a ‘potential
hazard to maritime commerce arises out of activity that bears a substantial relationship to traditional maritime
activity.’”9

This means that if the steering cable snaps on a worthless outboard skiff, causing it to crash into a blameless vessel,
the owner of the skiff may limit a paralyzed passenger’s award to the $150 scrap value of the wrecked skiff. This
concept has even been extended to personal watercraft, with the Eleventh Circuit limiting recovery for injuries caused
by a Jet Ski accident.10

The act does not apply to every maritime mishap. The act cannot be invoked in environmental casualties involving the
Oil Pollution Act of 1990 (OPA 90),11 Rivers and Harbors Appropriation Act,12 or Wreck Act.13 However, OPA 90
establishes its own limitation guidelines, providing that with respect to each incident, the liability of a responsible
party shall not exceed:

1. for a tank vessel, the greater of $1,200 per gross ton;

or in the case of a vessel greater than 3,000 gross tons, $10,000,000;

or in the case of a vessel of 3,000 gross tons or less, $2,000,000;

2. for any other vessel, $600 per gross tons or $500,000, whichever is greater.

Liability cannot be limited if the environmental incident was caused by gross negligence, willful misconduct, or the
violation of applicable federal safety, construction, or operating regulations. Also, if the responsible party fails or
refuses to report the incident, provide reasonable cooperation and assistance, or comply with an order under §1321(c)
or (e) of OPA 90 or the Intervention on the High Seas Act,14 limitation of liability would be denied.

A shipowner also cannot limit liability for crew wages, maintenance, and cure. Maintenance and cure cover a seaman’s
living and medical expenses, respectively, and constitute economic damages. Therefore, a seaman does not need to
demonstrate the negligence of the employer or the unseaworthiness of the vessel to qualify for them.
Owner’s complaint

According to the Federal Rules of Civil Procedure,15 a vessel owner may file a complaint to limit liability in the
appropriate district court no later than six months after receiving a written claim of loss. The complaint should include
the date and place of the incident, the vessel’s current location and value, the amount of freight received and
recoverable, and the amount of all demands by injured parties.16

The complaint may be filed in any district where the vessel has been attached, arrested, or sued or, if not in a suit, in
any district where the vessel is physically present. If the vessel sank in any navigable water, any district may be
named.17

The shipowner may also invoke limitation by pleading it as an affirmative defense in his or her answer to a lawsuit.18
By invoking limitation with a complaint rather than waiting to answer, however, the shipowner exercises control over
venue (although venue can be transferred by the plaintiff’s motion). Another benefit to the shipowner of invoking
limitation with a complaint is that it consolidates all claims stemming from a marine casualty. The court then enters
an injunction barring claimants from pursuing their claims outside the limitation action.19

For merchant mariners and commercial fishermen, the Saving to Suitors Clause20 favors the plaintiff who acts first.
Commercial mariners recognized as “seamen”21 enjoy special remedies under the Jones Act.22 A Jones Act case
brought in state court is generally not removable to federal court because of the Saving to Suitors Clause. However, a
defendant shipowner can file a motion to remove the case to federal court.

If the shipowner acts first and files a limitation complaint, the case goes to federal court. By moving first and filing a
lawsuit in state court, the plaintiff can preempt the shipowner from selecting venue. If the shipowner doesn’t act
within six months of receiving written notice of the claim, the plaintiff is free to initiate an action in the forum of his
or her choice.

When the defendant shipowner files the complaint for limitation of, or exoneration from, liability, he or she should
expect it to be challenged by the plaintiff’s motion to lift the limitation stay. Before the district court will dissolve the
injunction, the plaintiff must stipulate that the value of the limitation fund equals the combined value of the vessel
and its cargo; waive the right to claim res judicata based on any judgment rendered against the vessel owner outside
of the limitation proceedings; and concede the district court’s exclusive jurisdiction to determine limitation of liability.
23

As the Titanic and Morro Castle cases showed, the value of a severely damaged ship can be meager. Even with the act’
s amendments, insurance carriers are protected from large wrongful death and injury claims. And because the
proceeds of hull insurance do not enter the limitation fund—even though owners are compensated for their losses—
that money remains out of the reach of marine casualty victims.

Sink or swim
To defeat limitation of liability, either as a complaint or an affirmative defense, the plaintiff attorney must
demonstrate the vessel owner’s privity and knowledge of negligent operations or dangerous conditions that resulted in
the loss. This can include the owner’s knowledge that personnel failed to follow prudent practices or standard
operating procedures—that is, they failed to comply with necessary training, properly qualify officers and crew for
standing watch, properly verify backgrounds of crew members, or take action after learning of alcohol or drug abuse.

The focus is on the shipowner’s knowledge, actual or imputed, of negligent conduct. If the shipowner had no reason to
know of the crew’s negligence—for example, an errant navigational error—liability could be limited. The shipowner
has the burden of demonstrating that he or she did not have privity or knowledge of the negligence or
unseaworthiness giving rise to the loss.

If a shipowner argues that he or she exercised proper care in discovering conditions that rendered a vessel
unseaworthy, the ship’s records and logs will help verify that claim. If Coast Guard inspections reveal, for instance,
boiler safety valves that failed to lift during tests, emergency-fire-pump diesel engines that failed to start on demand,
watertight doors that failed to operate remotely, or lifeboat davits that failed to descend, the shipowner will find it
difficult to argue that he or she did not have knowledge of these problems.

Similarly, in a case involving crew fatigue, relevant evidence would include time sheets, watch schedules, and medical
records. If a claimant could show that excessive overtime, absence of relief personnel, or known medical conditions
led to crew fatigue, the owner would be responsible.
In fighting liability limits, do not overlook the limitation fund. If you represent a seriously injured claimant and the
ship is valued at $15,000, the $420 per ton allowance in the Loss of Life Amendments would apply. For a 10,000-ton
ship, the fund would be $4.2 million.

Case law
One recent case testing the scope of liability limits was brought by a cruise ship passenger who was injured while
operating a Jet Ski when she was struck by another Jet Ski.24 Both vehicles had been rented from the cruise line.
The injured passenger argued that the cruise line failed to properly train and supervise the operators, allowed too
many vessels to operate in a restricted area, failed to enforce safety rules, and failed to check operators for
intoxication.25
The district court found that because the passengers had received instructions from the cruise line, the cruise line was
not liable. The court also found that even if the cruise line were liable, it could have limited its liability to the $7,200
value of the Jet Skis, as none of the line’s owners or senior management was present or had knowledge of negligence.
26

In a Fifth Circuit case, two work boats collided in fog on the Mississippi River in Louisiana.27 The captain of the
defendant’s vessel had not used a lookout or turned on his running lights. Although the vessel had radar, the captain
had not been aboard the day it was installed and was not trained in its use (other than being given a manual to read on
his own). Because the vessel had been running at full speed, engine noise made it difficult to hear the radio or fog
signals of other vessels.

The Fifth Circuit affirmed the district court’s decision to deny limitation of liability. It found several failures that
attributed privity and knowledge of unseaworthiness to the vessel owner, including failure to use a lookout, to train
the captain in the use of radar, to evaluate the vessel’s unseaworthiness (which became relevant with the engine
noise), to inspect vessel logs, to employ a safety manager, and to provide safety training and safety manuals.28
In a federal district court case, deckhands on a passenger ferry were preparing the vessel for debarkation shortly
after docking. A gate became dislodged from its track and fell on one of the deckhands, fracturing his hip and three
foot bones.29

The court held that the deckhand’s own negligence, together with the negligence of another deckhand, had
contributed to his injuries. But the court also found the ferry to be unseaworthy and denied limitation of liability. It
concluded that if the gate had been equipped with a locking device, it would have opened fully and locked in place
rather than being knocked off its tracks. The court noted that such a device was called for in the vessel plans and that
the owner installed one after the deckhand was injured, showing that this safety measure was economical and feasible.
Industry changes

Technology and vessel management have evolved tremendously since the liability limitation act was adopted in 1851.
Satellite communications, global positioning systems, reliable power plants, and modern construction have minimized
many perils of going to sea. In addition, strict requirements for inspection, classification, underwriting, and personnel
standing watch have made it less plausible for owners to assert lack of privity and knowledge of vessel and crew
deficiencies.

Passenger vessels of U.S. registry must meet Coast Guard safety regulations and be inspected annually.30 These
regulations cover hull structure, watertightness, structural soundness to minimize fire hazards, lifesaving and
firefighting equipment, vessel control, and requirements pertaining to the safe navigation of the ship. Any U.S.-
registered ship that passes the Coast Guard’s annual inspection must display its certification where passengers can
see it.31

Many passenger vessels in U.S. ports are registered under foreign flags. Although the owner may be headquartered in
the United States, foreign registry allows the owner to avoid U.S. taxes and labor laws. However, foreign vessels that
pick up passengers in the United States are subject to inspection because the Coast Guard enforces the International
Convention for the Safety of Life at Sea.32 The Coast Guard examines foreign passenger ships when they first go into
service at U.S. ports and conducts quarterly inspections thereafter. The Coast Guard observes lifeboat drills and
conducts tests on other safety equipment.

U.S.-registered passenger vessels can comply with Coast Guard inspection requirements by submitting to surveys
performed by an authorized classification society, such as the American Bureau of Shipping. Classification societies
set technical standards for ship design and construction. To ensure compliance, these organizations use professional
surveyors who specialize in various aspects of a ship, such as the hull, machinery, or piping.
Crew competence is critical to safe vessel operation. The International Convention on Standards of Training,
Certification, and Watchkeeping for Seafarers (STCW) sets qualification standards for masters, officers, and watch
personnel on seagoing merchant ships.33

As amended in 1995, STCW requires rest periods of 10 hours in any 24-hour period for crews keeping watch. It also
requires crews to be trained in basic firefighting, elementary first aid, survival techniques, safety, and social
responsibility. STCW also requires an understanding between the master and deck officers of bridge teamwork
procedures and, for vessels with these systems, training for automatic-radar-plotting aids and the global maritime-
distress safety system.34

If a defendant asserts lack of knowledge about the unseaworthiness of a vessel, records of Coast Guard inspections,
classification society surveys, or other inspections may reveal otherwise. Advances in nondestructive testing are also
useful for proving privity and knowledge. Ultrasound testing, for example, is one of the tools available to the
shipowner for determining hull-plate thickness. If a corroded hull plate fails during a soft grounding that it should
have withstood, ultrasound records can suggest how imminent the failure was and how it might have been addressed.
If a ship breaks apart, X-ray imaging of welds can reveal defects that should have been discovered through due
diligence. If a ship’s engine fails to restart during a maneuver and a collision occurs, records of previous problems
with fuel pumps or compressed air supply could negate an owner’s contention that he or she was unaware of the
problem.

Limitation of liability was born of a desire to encourage maritime commerce, but in many situations it has become an
anachronism—or, according to some commentators, an instrument of tort “reform.” Modern technology and vessel
management protocols have resulted in greater control and less risk to shipowners and operators. As such, insurance
carriers appear to have emerged as the true beneficiaries of limitation of liability.

Tim Akpinar is a former merchant marine officer and practices maritime law in Little Neck, New York.


End Notes

1.    46 U.S.C. app. §§181-196 (2000).
2.    Id. §181.                                                                 
3.    See Susan Saulny & Mike McIntyre, Bid to Limit Ferry Liability Hits Raw Nerve, N.Y. TIMES, Dec. 4,
2003, at B3.
4.    See Tom Perrotta, Report on Ferry Crash Strikes Blow to City’s Bid to Limit Civil Damages, N.Y. L.J.,
Mar. 9, 2005, at 1.
5.    46 U.S.C. app. §183(a) (2000).
6.    Oceanic Steam Navigation Co. v. Mellor, 233 U.S. 718 (1914); see also Titanic, 209 F. 501, 502
(S.D.N.Y. 1913).
7.    46 U.S.C. app. §183(b)(f) (2000).
8.    Sisson v. Ruby, 497 U.S. 358 (1990).
9.    Id. at 362 (quoting Foremost Ins. Co. v. Richardson, 457 U.S. 668, 675 n.5 (1982)).
10.  See, e.g., Keys Jet Ski, Inc. v. Kays, 893 F.2d 1225 (11th Cir. 1990).
11.  33 U.S.C. §§2703-2761 (2000).
12.  33 U.S.C. §§401-467 (2000).
13.  33 U.S.C. §§409, 411, 414-415 (2000).
14.  33 U.S.C. §§1471-1487 (2000).
15.  FED. R. CIV. P., SUPP. R. FOR CERTAIN ADMIRALTY & MARITIME CLAIMS, R.F(1).
16.  Id. R.F(2).
17.  Id. R.F(9).
18.  See 46 U.S.C. app. §185 (2000); R.F(1), supra note 15.
19.  R.F(3), supra note 15.
20.  28 U.S.C. §1333 (2000).
21.  See Chandris, Inc. v. Latsis, 515 U.S. 347 (1995).
22.  46 U.S.C. app. §688 (2000).
23.  See In re Complaint of Ross Island Sand & Gravel, 226 F.3d 1015, 1017  (9th Cir. 2000).
24.  In re Royal Caribbean Cruises, Ltd., 55 F. Supp. 2d 1367 (S.D. Fla. 1999), aff’d, 214 F.3d 1356 (11th Cir. 2000).
25.  Id. at 1370.
26.  Id. at 1369-72.
27.  Trico Marine Assets, Inc. v. Diamond B. Marine Servs., Inc., 332 F.3d 779, 783-84 (5th Cir. 2003).
28.  Id. at 790.
29.  See In re Parish of Plaquemines as Owner of the M/V Pointe-A-La-Hache for Exoneration from or  Limitation of
Liability, 231 F. Supp. 2d 506 (E.D. La. 2002).
30.  See, e.g., U.S. Coast Guard, Cruise Ship Consumer Fact Sheet (July 1998), available at www.uscg. mil/ hq/g
-m/cruiseship.htm (last visited Jan. 4, 2006).
31.  See, e.g., id.
32.  International Convention for the Safety of Life at Sea (SOLAS), Nov. 1, 1974.
33.  International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW),
July 7, 1978; see also U.S. Coast Guard, STCW—What’s SCTW?, available at www. uscg.mil/stcw/stcw-
history.htm (last visited Jan. 4, 2006).
34.  see, e.g., U.S. Coast Guard, supra note 33.




























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