FRANCISCO A. BESOSA, District Judge.
After consideration of the parties' briefs addressing the Rule 14(c) tender in the Limitation of Liability ("LOL") action,
On October 23, 2009, an explosion and fire occurred at the Gulf Oil Facility located in Bayamon, Puerto Rico. The facility was owned and operated by Caribbean Petroleum Corporation ("CAPECO"). The explosion occurred while a vessel named the M/T Cape Bruny — which was owned and chartered, respectively, by Cape Bruny Tankschiffarts GmbH and Co. KG and Cape Bruny Shipping Company Ltd. (collectively, "Cape Bruny") — was discharging its cargo of unleaded gasoline into storage tanks at the facility. One or more of the tanks overflowed, and the spilled fuel found a source of ignition, causing the explosion. The explosion and subsequent fire created a large plume of smoke and spread hazardous material over Bayamon, San Juan, and other neighboring municipalities.
In the immediate aftermath of the explosion, numerous lawsuits were filed in this Court: (1) nine putative class actions,
On April 22, 2010, Cape Bruny, which had been named as a defendant in several of the lawsuits, filed a complaint for exoneration from, or limitation of, liability pursuant to the LOL Act, 46 U.S.C. § 30501 et seq. The LOL Act allows a vessel owner to limit its liability to the value of the vessel plus pending freight, provided that the circumstances causing the damage were outside the owner's privity and knowledge. 46 U.S.C. § 30505.
The twenty-one lawsuits and the LOL action have been consolidated before the Court for the purpose of docket management, and all filings and orders are entered on the docket of Civil Case No. 09-2092.
In accordance with Supplemental Rule for Admiralty or Maritime Claims F(3)
On August 16, 2010, the Court stayed all claims against CAPECO in the consolidated actions after CAPECO filed for bankruptcy. (Docket No. 501.) On October 25, 2010, the Court extended this stay to all litigation in the consolidated cases. (Docket No. 533.) The Court modified the stay for the limited purpose of determining whether it had subject matter jurisdiction over the LOL action. (Docket No. 585.) On June 21, 2012, the Court found that it had admiralty jurisdiction over the LOL action. (Docket No. 663.)
On January 15, 2014, the Court vacated the bankruptcy stay. (Docket No. 809.) The Rule F(3) stay for all claims against Cape Bruny outside the LOL action, (Docket No. 343), however, remained in place.
On July 14, 2014, the Court found that "proceeding with the LOL action first will best achieve the orderly and expeditious disposition of issues arising out of the October 23, 2009 explosion." (Docket No. 1114.) Accordingly, the Court stayed all of the consolidated cases outside the LOL action. Id.
Thousands of claims have been filed in the LOL action. Most claims are by individuals who allege that they suffered personal injury and property damage as a result of the explosion and fire.
On March 28, 2014, Cape Bruny, as the petitioner for exoneration from or limitation of liability, filed a third-party complaint in the LOL action pursuant to Federal Rule of Civil Procedure 14(c) ("Rule 14(c)"). (Docket No. 910.) The complaint is against seventeen third-party defendants.
The parties in all consolidated actions submitted a proposed scheduling order that would govern "the determination of the liability of all defendants as to all of the plaintiffs' claims in all cases filed in relation to the explosion." (Docket No. 838.) The Court approved a modified version of that schedule on February 21, 2014. (Docket No. 858.) Pursuant to that order, discovery commenced on March 1, 2014, and concluded on May 15, 2015. Id. at pp. 2-3. Trial is set for February 1, 2016. Id. at p. 3.
Certain claimants in the LOL action challenge Cape Bruny's Rule 14(c) tender. These claimants are also plaintiffs in the nine putative class actions and ten "non-class mass-joinder" actions that have been stayed during the LOL proceeding. They contend that Cape Bruny's Rule 14(c) tender improperly forces them to prosecute claims against other parties within the LOL action. (Docket No. 1199 at pp. 5-8.) Rule 14(c)(1) provides as follows:
Fed.R.Civ.P. 14(c)(1). Claimants insist that Cape Bruny is the plaintiff in the LOL action because it initiated the action by filing the complaint for exoneration from, or limitation of, liability. (Docket No. 1199 at pp. 7-8.) Because Rule 14(c)(1) allows only defendants to implead third parties, claimants argue that Rule 14(c)(1) does not authorize plaintiff Cape Bruny to implead third parties in the LOL action. Id.
The Court agrees with claimants that Cape Bruny is the plaintiff in the LOL action and that, accordingly, Rule 14(c)(1) does not expressly allow Cape Bruny to implead third parties. Nonetheless, courts routinely allow a party that initiated a LOL action to bring in additional parties that it asserts may be liable for the claims against it. 6 Charles Alan Wright, et al., Federal Practice and Procedure § 1465 (3d ed.2015); accord 3-14 Richard D. Freer, Moore's Federal Practice § 14.52 (3d ed. 2015) ("[W]hen a petitioner files for exoneration or limitation of liability, after one claimant has answered and has made its claim for full recovery, the petitioner may implead a third-party defendant to the claim."); see, e.g., In re Motor Ship Pac. Carrier, 489 F.2d 152, 153-57 (5th Cir.1974); In re Oil Spill by Oil Rig "Deepwater Horizon" in Gulf of Mexico,
Claimants retreat in their response and reply briefs on this issue, arguing that Rule 14(c)(1) "could possibly be read" to allow Cape Bruny to implead third parties, but that Cape Bruny's Rule 14(c)(2) tender of the third parties to claimants is "clearly improper." (Docket No. 1206 at p. 3; see Docket No. 1212 at p. 2.)
Rule 14(c)(2) provides as follows:
Fed.R.Civ.P. 14(c)(2). Claimants fail to present a developed argument (or any legal authority) that explains why Rule 14(c)(2) is unavailable in LOL proceedings.
The purposes of Rule 14(c)'s "unique liberal joinder policy" are to "expedite and consolidate admiralty actions by permitting a third-party plaintiff to demand judgment against a third-party defendant in favor of the plaintiff," to "reduce the possibility of inconsistent results in separate actions, [to] eliminate redundant litigation, and [to] prevent a third party's disappearing if jurisdiction and control over the party and his assets [are] not immediately established." Texaco Exploration & Prod. Co. v. AmClyde Engineered Products Co., 243 F.3d 906, 910 (5th Cir.2001). All of these purposes are served by allowing Rule 14(c)(2) tenders in LOL actions.
Here, claimants allege in the various consolidated cases that multiple parties are liable for causing the explosion and fire. The current scheduling order calls for a determination of liability of all of these defendants. (Docket Nos. 838, 858.) The most efficient way to determine which parties are liable for causing the explosion and fire, and the best way to avoid inconsistent liability findings through piecemeal litigation, is to bring all potentially liable parties into a single action. This is exactly what Cape Bruny's Rule 14(c) tender does: it brings all claimants and all potentially liable parties into the LOL action.
The Court finds that Cape Bruny's Rule 14(c) tender in the LOL action, (Docket No. 910), is proper.
Having found that Cape Bruny's Rule 14(c) tender is proper, the Court is now in a position to determine the structure for the LOL trial scheduled for February 1, 2016.
LOL proceedings traditionally involve a two-part analysis. "First, the court must determine whether negligence or unseaworthiness caused the accident. Second, the court must determine whether the shipowner was privy to, or had knowledge of, the causative agent (whether negligence or unseaworthiness)." Carr v. PMS Fishing Corp., 191 F.3d 1, 4 (1st Cir.1999) (internal citations omitted). Claimants bear the initial burden of proving negligence or unseaworthiness. Id. The burden then shifts to the shipowner to
As set forth below, the Court modifies this structure to account for the participation of third-party defendants brought into the action by Cape Bruny's Rule 14(c) tender.
The case scheduling order calls for discovery and trial solely on liability. (Docket Nos. 838, 858.) Accordingly, the trial will address all issues of liability that have not been resolved by settlement, summary judgment, or stipulation. Specifically, the following issues will be resolved at trial:
1. Whether Cape Bruny's negligence or its vessel's unseaworthiness caused the explosion and fire.
2. If Cape Bruny was negligent or its vessel was unseaworthy, then whether Cape Bruny had privity or knowledge of the negligence or unseaworthiness.
3. Whether any third-party defendant is liable for causing or contributing to the explosion and fire.
4. If two or more parties are liable for the explosion and fire, then the apportionment of liability between the parties.
First, claimants will present factual and expert evidence in support of their claims against Cape Bruny and third-party defendants.
Second, Cape Bruny will present factual and expert evidence in support of its exoneration, limitation, and liability defenses as well as its claims against third-party defendants.
Third, third-party defendants will present factual and expert evidence in support of their defenses to all claims against them as well as their claims against Cape Bruny and other third-party defendants.
Fourth, claimants will present rebuttal evidence.
At the conclusion of trial, the Court will order the parties to submit proposed findings of fact and conclusions of law.
Finally, the Court must determine whether the LOL trial scheduled for February 1, 2016, will be a bench or jury trial.
At the core of this question is the tension between the LOL Act and the saving to suitors clause of 28 U.S.C. § 1333. See Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 448, 121 S.Ct. 993, 148 L.Ed.2d 931 (2001). The LOL Act allows shipowners to seek to limit their liability in an admiralty court proceeding. See id. Because there is no right to a jury trial in admiralty actions,
Nonetheless, the same claimants who challenged Cape Bruny's Rule 14(c) tender (who are also plaintiffs in the nine putative class actions and ten "non-class mass-joinder" actions) demanded a jury trial when they filed claims in the LOL action. See Docket No. 391 at p. 15; Docket No. 915 at p. 14. The parties submitted briefs on this issue
On July 14, 2014, the Court deferred its ruling on the jury trial issue. (Docket No. 1114 at p. 8.) The Court explained that it lacked sufficient evidence to determine whether claimants' non-admiralty claims against third-party defendants carry an independent basis of federal jurisdiction, and that it would allow limited discovery to determine whether jurisdiction under the Class Action Fairness Act ("CAFA") exists. Id. at pp. 7-10.
More than three months later, claimants requested another opportunity to "fully brief" the jury trial issue. (Docket No. 1156 at p. 6.) The Court granted this request on November 13, 2014, ordering the parties to submit simultaneous memoranda, oppositions, and replies on the issue in February and March 2015. (Docket No. 1177 at p. 2.) The parties complied, and now before the Court are claimants' briefs in support of a jury trial (Docket Nos. 1232, 1239, 1253), Cape Bruny's briefs in support of a bench trial (Docket Nos. 1229, 1236, 1250), and certain third-party defendants'
Claimants' opening brief is surprisingly brief; they repeat the same cursory arguments that they made nine months previously without any new development. Compare Docket No. 1232, with Docket
Devoting less than a page of argument to establish that their claims carry independent bases of federal jurisdiction, claimants argue that they have a jury trial right for their claims against third-party defendants in the LOL action (1) because the Court has admiralty and supplemental jurisdiction over their claims against those defendants in the nine putative class actions, and (2) because the Court has diversity jurisdiction over their claims against two of the defendants — Intertek USA, Inc. and Antares Oil Services, LLC
Claimants' first argument is based on a flawed premise. There is no right to a jury trial in federal court for claims based solely in admiralty and supplemental jurisdiction. Churchill v. F/V Fjord, 892 F.2d 763, 769 (9th Cir.1988) (holding that plaintiffs were not entitled to a jury trial on claims based in admiralty and supplemental jurisdiction, reasoning that "to hold otherwise would contravene the manifest purpose of Federal Rule of Civil Procedure 38(e) by allowing jury trials in admiralty cases in which plaintiffs allege a pendent state law claim"); Tallentire v. Offshore Logistics, Inc., 754 F.2d 1274, 1287 (5th Cir.1985), rev'd on other grounds, 477 U.S. 207, 106 S.Ct. 2485, 91 L.Ed.2d 174 (1986). Thus, claimants have not established that their claims in the nine putative class actions have an independent basis of federal jurisdiction that would give them right to a jury trial.
Claimants' second argument is that their claims against Intertek USA, Inc. and Antares Oil Services, LLC should be tried to a jury in the LOL trial because their claims against these defendants in the "non-class mass-joinder" cases are based in diversity. (Docket No. 1232 at p. 6.) For the purposes of argument, the Court assumes without deciding that diversity jurisdiction over those claims does exist in the "non-class mass-joinder" actions.
The practice of splitting a case between two fact-finders when the claims arise from one set of facts, as claimants encourage the Court to do here, has been condemned
In this regard, the Court finds persuasive the reasoning of the Fifth Circuit Court of Appeals in Powell v. Offshore Nav., Inc., 644 F.2d 1063 (5th Cir.1981). In Powell, the plaintiff brought maritime claims and invoked admiralty jurisdiction against non-diverse defendants and diversity jurisdiction against diverse defendants. 644 F.2d at 1065. The Fifth Circuit Court of Appeals upheld the district court's denial of the plaintiff's request for a jury trial as to the diverse defendants. Id. at 1071. The court first applied the reasoning of Fitzgerald, 374 U.S. at 18-19, 83 S.Ct. 1646, to reject the option of splitting the case by holding a jury trial as to the diverse defendants and a bench trial as to the non-diverse defendants. Powell, 644 F.2d at 1069.
The Fifth Circuit Court of Appeals then considered granting a jury trial with respect to all defendants. Id. at 1069-71. Although this approach would have been arguably consistent with that taken in Fitzgerald, in which the Supreme Court ruled that when an admiralty claim is joined with a Jones Act claim against the same defendant, both claims must be tried by the jury, the Fifth Circuit Court of Appeals distinguished Fitzgerald because there, the plaintiff's claim under the Jones Act carried an explicit jury trial right, so the only two options were splitting the case or trying the whole matter to the jury. Id. at 1070 n. 7. In Powell, in contrast, there was no cause of action that carried an explicit jury trial right, so the Fifth Circuit Court of Appeals "had the additional option of trying the whole matter to the court." Id. The Fifth Circuit Court of Appeals reasoned that sending admiralty claims to a jury solely because some defendants are diverse "would cause a far greater change in the number and type of claims cognizable only at admiralty but nevertheless tried to a jury." Id. at 1070. A huge exception would be created by which the no-jury rule in admiralty could be avoided any time there was a diverse defendant, "render[ing] diversity a very different concept in the maritime context than in other areas." Id. at 1069-71; see 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 21-10 (5th ed.2014) (stating that the decision in Powell to try all claims in a bench trial is "manifestly correct" because there was no independent statutory basis of jurisdiction carrying a jury trial right for the non-diverse claim). Here, given that claimants have not established a non-admiralty basis of jurisdiction as to the other third-party defendants, their invocation of diversity jurisdiction as to two third-party defendants cannot serve to bootstrap the entire LOL action and put it before a jury.
This bifurcation approach — deciding liability and limitation first in a bench trial and then lifting the stay to allow claimants to choose where to litigate the remaining issues, including damages — is common among courts as a way to ease the conflict between the saving to suitors clause and the LOL Act. See, e.g., Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 449-51 (4th Cir.1999) (explaining that a court sitting in admiralty without a jury must conduct the LOL action, but if the court denies limitation, claimants will be released to pursue their claims in the LOL action or revive their original suits wherein they demanded jury trials); In re Matter of Hill, 935 F.Supp. 710, 711-12 (E.D.N.C.1996) (holding that the court would hear and determine liability and limitation issues first, and if it denies limitation, it would lift the stay to permit the remaining issues, included damages, to be determined in state court by a jury); In re Complaint of Sheen, 709 F.Supp. 1123, 1126 n. 2 (S.D.Fla.1989) (explaining that the court's decision to bifurcate the LOL trial would not result in judicial inefficiency because the court's findings on negligence will be entitled res judicata effect in the subsequent trial).
For these reasons, the Court
Cape Bruny's Rule 14(c) tender in the LOL action, (Docket No. 910), is proper. The third-party defendants' motion for a bench trial, (Docket No. 1230), is