It's here! The argument in Batterton!

https://www.supremecourt.gov/oral_arguments/argument_transcripts/2018/18-266_3d9g.pdf

Credit to Justice Sotomayor for her perceptive questioning.

It is probably a fool’s game to predict the outcome based on the transcript, at least in this case. It seems likely that it won’t be unanimous, though it might be a little bit of an odd decision: Justice Kagan refers to the Jones Act as a “flashing yellow light,” warning the Supreme Court not to expand remedies for unseaworthiness, which tends to suggest she’s against a more expansive remedy, a little surprisingly. Then again, Miles was unanimous.

We should know the answer before long - June-ish or before.

Edit: It remains a fool’s game to predict the outcome, but fools rush in where angels fear to tread, so here goes: 6-3 ruling that punitive damages are unavailable. Roberts, Kavanaugh, Kagan, Gorsuch, Thomas, Alito for the majority; Sotomayor, Breyer, Ginsburg for the dissent. (Note that this is wild, wild speculation.)

How to pay M&C and not get it back

You’re a boat owner. You employ crewmembers. You’re minding your business - say you’re sitting at the dock - when some other boat comes by and runs into you, or its wheel wash swamps you, say, or anyway somehow or another, your crewmember gets hurt, or says he gets hurt.

You start paying maintenance and cure, because of course you do - it’s the right thing to do, and if you don’t you face a punitive damages claim.

A year, and $150k in M&C later, your crewmember files suit against the malefactor, and you join in to get your money back. “But wait” says the tortfeasor, a year into litigation: "this whole thing is rotten, and this crewmember had an undisclosed, untreated back for a decade and now he’s trying to pawn it off on me.” And wouldn’t you know it - it’s right. The judge even says so. No recovery. You’re out $150k - or maybe more now - even though you didn’t do anything wrong. Who should pay that? You or the third-party tortfeasor?

You, says the Fifth Circuit just recently. Which . . . mostly makes sense. If you’re a tortfeasor, you only owe the damages you cause. If somebody else is perpetrating an elaborate fraud, it doesn’t follow that you should have to pay it. After all, if it were health insurance with a subrogation claim instead of an M&C reimbursement claim, the health insurer couldn’t get money back if there wasn’t an accident or an injury. M&C should be no different.

when lawyers are like journalists

From Robert Caro:

Finally, he raised his head. “I didn’t know someone from Princeton could do digging like this,” he said. “From now on, you do investigative work.”

I responded with my usual savoir faire: “But I don’t know anything about investigative reporting.”

Alan looked at me for what I remember as a very long time. “Just remember,” he said. “Turn every page. Never assume anything. Turn every goddam page.” He turned to some other papers on his desk, and after a while I got up and left.

From the New Yorker

Supreme Court!

The US Supreme Court granted certiorari in its first maritime case in some time: The Dutra Group v. Batterton. At issue: whether there’s a cause of action under general maritime law for punitive damages in the event of, for lack of a better term, wanton / gross unseaworthiness. The Fifth Circuit says “no.” The Ninth Circuit says “yes.” The Supreme Court will decide.

But if you’re reading this, you want to know the answer. What’s the Supreme Court going to do? The safe money is on “side with the Fifth.” First, +/- 65% of Supreme Court cases reverse the appellate court - otherwise, why take the case in the first place? Second, you have a pretty conservative Court here, and “no punitive damages” is the more conservative position, along with “defer to Congress.” It gets spotty, though, because limits on punitive damages are couched in due process, and it is not often considered a conservative position to have an expansive definition of due process.

More analysis: it used to be that there were two and a half pillars of federal maritime common law. First: uniformity. Second: Congress is presumed to legislate knowing what the law is. The half: deference to Congress.

That gives you Miles v. Apex, where the Court said "Congress did not allow punitive damages in the Jones Act, and we sail in occupied waters (lol). We won’t go beyond what Congress allowed for Jones Act negligence, or for general maritime law unseaworthiness.” All two-and-a-half objectives accomplished.

Then Exxon v. Baker: in a pure general maritime law claim, there is a claim for punitive damages because Congress hasn’t said “no.” One point away from uniformity, because it’s weird to give everybody with a general maritime law claim a shot at punitive damages except for Jones Act seamen (and others, like Longshoremen, whose remedies are creatures of statute.)

Then Atlantic Sounding v. Townsend: Jones Act seamen do have a claim for punitive damages: not for negligence or unseaworthiness, but for arbitrary and capricious denial of maintenance and cure. The rationale for the 5-4 decision: there were punitive damages before the Jones Act for arbitrary and capricious denial of M&C, so that survives after. Another point away from uniformity.

Now Batterton. If gross unseaworthiness isn’t materially different from gross negligence under the Jones Act, then the nearly-discredited uniformity idea comes roaring back and there’s no cause of action for gross unseaworthiness. This makes sense: maintenance and cure are real different from Jones Act negligence or GML unseaworthiness, but unseaworthiness and negligence are real close. It makes sense to treat them as overlapping in remedies. But if unseaworthiness is materially different from negligence, then there’s every reason to have different remedies, and a gross unseaworthiness remedy survives. This also makes sense, because they have, among other things, different causation standards. What about hoary history? That cuts both ways, as described in elaborate detail in the Fifth Circuit’s McBride decision.

So at last, the prediction: I don’t think it’s accidental that the most conservative judges on the Fifth Circuit found no punitive damages for wanton unseaworthiness. I don’t think it’s accidental that the less conservative judges dissented. I also don’t think it’s accidental that the Ninth Circuit panel that found wanton unseaworthiness was mostly liberal (a Clinton appointee from Montana, a George HW Bush appointee from Alaska, and an Obama appointee from California). Furthermore, the Batterton decision is narrow. It doesn’t say that “we like punitive damages.” It just says “Miles isn’t completely on point, so our precedent survives Miles.” TheSupreme Court is conservative, with a libertarian bent. My money, if I were a betting man, would be on the conservative side winning out. There are three easy votes for “no punitives:” Roberts, Alito, and Kavanaugh. Everybody else is a maybe, and two maybes out of six isn’t a lot.

How far does arbitration extend?

You enter into a contract that contemplates future performance. Say it’s an installment contract. You buy my land - a grapefruit orchard, let’s say, but you don’t know a lot about farming it. I do. I agree to sell you all my grapefruit, and you agree to pay me the market rate for my grapefruit. But I’m worried the floor is going to fall out from the market and you won’t pay me enough to cover my costs; you’re worried I’m not going to grow enough grapefruit anyway. We agree to arbitrate that part of the contract. But only that part of the contract.

We disagree and we arbitrate. The arbitrator decides who should pay what to whom, but she does more on top of that. She decides that there was mutual mistake in part of the contract and reforms that part of the contract, say to my benefit. You’re not happy, but arbitration is generally not appealable.

What do you do? The Fifth Circuit says you file a federal lawsuit. Though courts, broadly, favor arbitration, the Fifth Circuit says that’s only a rule to apply in the case of ambiguity, which, like all the other rules, falls to the wayside in the face of clear language.

SCF Waxler v. ARIS T - 1292(a)(3) jurisdiction

Maritime law is mostly like the rest of common law, but there are some fun quirks here and there. One of those is 28 U.S.C. § 1292(a)(3), which provides: 

Interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed.

Ordinarily, with some important exceptions, a case has to be over before you can appeal in federal court. 1292(a)(3) provides an exception for admiralty causes of action too. But how broad is it? To answer that, you have to answer another question: how do we interpret statutes? Going by the plain language, you'd think it's any judgment that determines the rights and liabilities of the parties - i.e. all of them. But if you look at purpose, it's much narrower than that - the original idea is that often a special master will determine liability and damages are determined by separate process, and the goal is to allow appeal of the former before the latter is determined. 

So we find the dilemma in SCF Waxler Marine LLC v. ARIS T (5th Cir. 2018). Judge Zainey had ruled that an insurance carrier was allowed to limit its liability along with its insured if its insured won limitation.* However you want to call it, this is something that determines some of the rights and liabilities of the parties, but it isn't a final adjudication of much of anything except that narrow issue. The other side appealed. The Fifth Circuit said "no right of appeal." 1292(a)(3) appeals are only for final adjudication of an entire part of a claim. "We have clarified that appellate jurisdiction is generally appropriate whenever an order in an admiralty case dismisses a claim for relief on the merits," says the Court. If one plaintiff is dismissed, there's a final adjudication, for instance. If the insurer had been dismissed (say, on the argument it didn't provide coverage at all), same thing. No need to wait for the entire case to be over. But finding that the insurer is entitled to make an argument to limit its liability? Not so much. 

There is pretty significant case law on this, so the decision is not really a surprise and the appeal was a long shot. 

*Louisiana allows the insurer to be named directly. The limitation of liability act allows the vessel owner to limit its liability to the value of the vessel + freight at the end of the voyage if the accident did not involve its privity or knowledge. The vessel's insurer can only avail itself of limitation if it has a Crown-Zellerbach clause. Whether this policy's language met the Crown Zellerbach question was the underlying question. The district court said "yes." 

Copyright and cheating

Is cheating in a video game a copyright violation? I dunno. But we might find out. 

https://www.theverge.com/2018/5/9/17333292/fortnite-cheater-lawsuit

From the same author who brought our attention to Uber's misdeeds. It's an interesting read. And if anybody reading on the west coast with an expertise in IP / copyright / DMCA and a giant bent for pro bono work wants to help . . . they don't have lawyers. 

UBER Redux

The last time Uber was in the news here at Barge and in Charge, it was about their abuse of the discovery process. Since then, they killed somebody. Since then, California ruled their drivers are employees, not independent contractors. 

Is this right or wrong? 

I suggest it depends on what you think the answer should be, because it's a close one. 

Reasoning: 

Defendants (i.e. Uber) hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that Defendants are involved in every aspect of the operation

What does Uber do? It vets drivers; it requires background checks and DMV checks; it controls the tools (cars must be newer than ten years old), and the driver doesn't negotiate the fee. It doesn't tell them when they can work. It does and doesn't tell them how to work. 

This is a policy question. Were I Uber, I would think the proper fight is in the legislature more than the courts. But I'm thankful I'm not Uber. 

 

At the intersection of bankruptcy and mineral liens

ATP (disclosure: represented them once forever ago in an unrelated matter) filed for bankruptcy. Before it did, it sold "term overriding royalty interests" in its oil and gas leaseholds to OHA Investment. But even before that, ATP hired service providers to, well, provide services. Under the Louisiana Oil Well Lien Act, those service providers had secured interests against ATP's leaseholds. 

ATP files for bankruptcy. The service providers want to collect on their secured debts, only to find out those are - maybe - owed by OHA, not ATP, because they've been transferred. So this amounts to the service providers going after OHA under the LOWLA. 

OHA argues it doesn't actually have an interest in the oil and gas; it only has an interest in the proceeds from their sale. Therefore, OHA further agues, the service providers don't actually have a secured interest - the security goes to the holdings, not the stream of profits from the holdings. Nuh-uh, says the Court - that's slicing the bologna a little too thin. 

So OHA is in bad shape. But the LOWLA has a safe-harbor: a bona fide purchaser without notice of the security interest is A-OK. OHA never had notice of the service providers' interests, or at least not before purchase. Result? OHA wins. 

Author of the opinion? Judge Reavley, who is now ninety-six years old. 

At the intersection of patents and offshore wells

Here I sit, patiently waiting for the phone call to argue this one in the Supreme Court. Kannon Shanmugam? Paul Clement? Nah, call me. 

You have a patent in the U.S. over let's say a drill bit. You license it to me. I negligently give it to a third party, overseas, who uses a part of it to build a drilling rig in oh, I don't know, the South China Sea. You sue me for patent infringement. How much am I liable for, and how much is the real infringer liable for? What's the extraterritorial effect of patent remedies? Does it matter if the use in the South China Sea by the real infringer wasn't infringing the patent law of that country? 

These are reasonably complicated issues, with an uncertain outcome. I won't hazard a prediction. The argument is available here:

An article too good to pass up

William Langewiesche writing about the El Faro. Just excellent stuff. 

One little bit though:

Add to that mystery this simple fact: the sinking of El Faro was the worst U.S. maritime disaster in three decades.

[thinks back to the Deepwater Horizon]

[Counts back to April 2010]

Second worst maritime disaster in three decades. 

9th Cir: does your sewage get into navigable waters? Then you're under CWA

What do you do with four million pounds of poo? If you're Hawaii, you dig really deep holes and flush it. What if it leaks into the Pacific Ocean? Then, my friend, you have a clean water act problem. 

Hawaii concedes it digs holes and flushes effluent down those holes. It concedes the effluent reaches the Pacific Ocean. It admits the wells are a 'point source' under the CWA. But it argues the source doesn't directly convey the, uh, effluent into the water; it's only conveyed indirectly. And that's not without merit! The 9th Circuit held previously:

point source pollution occurs when "the pollution reaches the water through a confined, discrete conveyance," regardless of "the kind of pollution" at issue or "the activity causing it." (cleaned up)

Hawaii comes back. The CWA doesn't cover disposal into wells, by its own language. Not so, says the 9th Circuit; that's only if the wells are, in effect, self-contained. 

The result seems . . . mostly reasonable, no? If your process for getting sewage gone includes dumping it into the ocean, that seems like a CWA problem. That you have some intermediary steps doesn't make the problem go away. 

Now what's interesting is how closely this will be applied to fracking, and what the effects will be. It appears to be largely same/same. 

A little shift in 5th Circuit federal officer (1442) removal?

Under § 1442, an action “against or directed to . . . any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office” may be removed to federal court. 28 U.S.C. § 1442(a)(1). To remove, a defendant must show: “(1) that it is a person within the meaning of the statute, (2) that it has ‘a colorable federal defense,’ (3) that it ‘acted pursuant to a federal officer’s directions,’ and (4) ‘that a causal nexus exists between [its] actions under color of federal office and the plaintiff’s claims.’”

A woman dies of mesothelioma. Her heirs sue Avondale Shipyard in state court, alleging she got mesothelioma from her father, who worked at Avondale in the 1940s, building tugs for the US government. Avondale removes under 1442, saying it was doing US government work to US government spec under US government rules. Thus, 1442 removal. The district court reverses, saying Avondale was responsible for safety: 

1442 does not support removal where defendant government contractors “were free to adopt the safety measures the plaintiffs now allege would have prevented their injuries.” 805 F.3d at 174. The Legendres provide unrebutted evidence that although the government required Avondale to use asbestos in the construction of the tugs, the government did nothing to restrict Avondale’s safety practices. In Bartel, the government required the defendants to use ships containing asbestos, but did nothing to restrict the defendants’ safety measures. Between the two, the causal nexus analysis is, as highlighted by us in Savoie, "nearly identical."

But what's more interesting is at the end. Interpreting 2011 amendments to 1442, some courts have suggested that all you need is a nexus, not a cause. Under that theory, it could be that removal is appropriate under these circumstances. But what ho? A circuit split?? Supreme Court bound? We shall see.

My 2c: if I were Avondale I wouldn't take this to the Supreme Court. The Court, as currently constructed, jealously guards states' rights in such circumstances. See for instance this prior post about a 5-4 decision on an easy topic, with four votes saying "give more power to the states," despite seemingly clear statutory language. 1442 is a harder topic, and it seems likely you could get five+ votes to keep removal jurisdiction from growing significantly.  

Less-than-Careful insuring language => no summary judgment

I pass along this case because it's a little interesting. 

A person with an accidental-death insurance policy, which purports to cover him for accidental deaths, but not for lingering diseases, gets west nile virus and dies. Seems pretty accidental, no? Should be easy. 

But the policy has narrower language than all that. It requires either drowning or 'a visible contusion or wound,' Furthermore, the policyholder was morbidly obese, with diabetes, and the policy requires that the sudden / accidental death be the 'sole cause' of death. Finally, the policy expressly excludes disease. 

So it isn't a huge surprise that the district court granted summary judgment for the insurer. The Fifth Circuit reversed, finding that the insurer's position would render coverage illusory. The better reading, the Court held, is that a mosquito bite + west nile is amply sudden and accidental. A bite is also a wound or a contusion. Sure, but what about the exclusion of disease? Isn't WNE a disease? Yes it is, says the Fifth Circuit, but that's not enough: the Court says "yes, but that's only for disease existing when the accident happened; it doesn't exclude death from disease":

Gloria argues that a proper construction of Exclusion Four is the exclusion applies only “to conditions existing when the accident happened” and does not apply to “a condition caused by the accidental injury;” and we find that construction reasonable for purposes of this appeal.

So the case gets reversed and remanded. Fair result? I suppose it depends on whether you look at the type of policy or the specific policy language. 

 

 

Victory

And lo, as day follows night, every once in a while, victory follows defeat. 

Who's an invitee? One with physical presence on the premises of another, for mutual benefit. You when you're in a store, or in a hotel. A vessel company tried to argue it was the invitee of a liftboat company because its vessel was working for the liftboat. What about 'on the premises?' It was close enough for a lift basket transfer. Why does it matter? If the company was an invitee, it's entitled to indemnity. If not, it is responsible for its own fault. 

Happily, the district court agreed that the company isn't an invitee because it doesn't have physical presence on the premises of another. Close isn't good enough. The Fifth Circuit, in a brief opinion, affirmed. 

Now for something completely different

When not fighting over marine or insurance or contract or transactions (!) or the like, your scribe takes outsized interest in the First Amendment and IP. Fun stuff. 

In that vein I pass along an excellent read on somebody else's problem: a $1.6 billion (!!) suit against Spotify for failure to send notice to songwriters that their songs are being used, as part of a compulsory license scheme. Payoff paragraph:

Legally speaking, the lawsuit isn’t about whether Spotify is supposed to pay “10.5% of revenue minus PRO payments” and whether it was willing to do so. It’s about whether it sent along a piece of paper to a songwriter’s last known address letting them know that they were going get paid. And because they supposedly didn’t, Wixen is asking for $150,000 in statutory damages per song. That’s an expensive piece of missing paper — totaled up, it’s why the lawsuit is for $1.6 billion.

The whole article is well worth a read. 

Defeat

I have had occasion to add a new loss to my list of failures. I convinced the district court, but the Fifth Circuit reversed. 

The good news: I told my client I wouldn't bill them if I lost, so they don't have to pay for the work. 

The bad news: I don't know why I lost, unless you take it the judges are just legal realists: you can't be a tug and a tow, so there's no need to parse the precise language of the complaint. Something I keep coming back to is how to contend with probability. I won in front of the district court. You'd think that would mean I'd have a great chance on appeal, for two reasons: first, district judges get some deference - particularly, those experienced in the subject matter; second and more importantly, federal judges usually get the right answer. Then I lost, and the panel didn't ask me a question. 

So this article about probabilities is significant. 

When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error, because we recognize the possibility that the decision might have been good but luck and/or incomplete information (and a sample size of one) intervened.

Maybe we made the best decision from a set of unappealing choices, none of which were likely to turn out well.

Maybe we committed our resources on a long shot because the payout more than compensated for the risk, but the long shot didn’t come in this time.

Maybe we made the best choice based on the available information, but decisive information was hidden and we could not have known about it.

Maybe we chose a path with a very high likelihood of success and got unlucky.

The problem, for which I don't have an easy answer: with such a small sample size, how do you figure out which is which? 

An outbreak of reason regarding discovery in New York

You get in a terrible accident. The other side is suspicious about your claims of recovery (or lack thereof). They want your instagram / facebook account information. You don't want to provide it - it's private, after all. What do?

The New York appellate division did something weird. It said the plaintiff must produce everything that the plaintiff is going to introduce at trial. That seems a terrible result, giving the plaintiff carte blanche to craft a narrative regardless of truth. Then the New York Court of Appeals (the highest state court in NY) fixed it. Complete disclosure isn't required, but neither is privacy: 

Rather than applying a one-size-fits-all rule at either of these extremes, courts addressing disputes over the scope of social media discovery should employ our wellestablished rules – there is no need for a specialized or heightened factual predicate to avoid improper “fishing expeditions.” In the event that judicial intervention becomes necessary, courts should first consider the nature of the event giving rise to the litigation and the injuries claimed, as well as any other information specific to the case, to assess whether relevant material is likely to be found on the Facebook account. Second, balancing the potential utility of the information sought against any specific “privacy” or other concerns raised by the account holder, the court should issue an order tailored to the particular controversy that identifies the types of materials that must be disclosed while avoiding disclosure of nonrelevant materials. In a personal injury case such as this it is appropriate to consider the nature of the underlying incident and the injuries claimed and to craft a rule for discovering information specific to each. Temporal limitations may also be appropriate – for example, the court should consider whether photographs or messages posted years before an accident are likely to be germane to the litigation. Moreover, to the extent the account may contain sensitive or embarrassing materials of marginal relevance, the account holder can seek protection from the court (see CPLR 3103[a]). Here, for example, Supreme Court exempted from disclosure any photographs of plaintiff depicting nudity or romantic encounters.

The next frontier: what happens when you have proof a plaintiff deleted her social media account? Does that lead to a spoliation charge? I'd have to think it would.