The legal recourse available to injured seafarers — and the liability assumed by shipowners — could be in for a big change thanks to a case set for the US Supreme Court.
On 25 March, the court will hear oral arguments in Dutra Group v Christopher Batterton, on which justices will be asked to decide whether or not punitive damages can be awarded in personal injury suits alleging unseaworthiness.
The case will settle a split between two lower courts — and could strike a blow to the economics of the US maritime industry, according to industry groups.
"It's created a lot of excitement," Grady Hurley, a partner at Jones Walker and secretary of the Maritime Law Association, said.
Hoping for clarity
“It’s probably a once in a decade opinion, because everyone is hoping it brings some uniformity to the whole issue of punitive damages and when they are available.”
According to court papers, Batterton was a deckhand onboard a Dutra-owned scow working off California in 2014, when a hatch cover blew open and crushed his left hand.
His injury lawsuit in the Los Angeles federal court alleged his injuries were caused by pressurised air that Dutra “negligently allowed to build up in the compartment below”.
The Dutra Group moved to strike Batterton’s punitive damages claim.
When denied, the California-based company filed an appeal before the case was settled, which was denied by the Ninth Circuit Court of Appeals.
Both courts said it was not settled law that seafarers are barred from recovering punitive damages.
Simply put, it is often impossible for a maritime defendant to know with any degree of certainty whether its particular case will be one of the unlucky ones that result in an arbitrary award of massive punitive damages
International Group of Protection and Indemnity Clubs
However, while the Ninth Circuit Court appeared to accept that seafarers could seek punitive damages in such cases, the Fifth Circuit Court of Appeals in New Orleans has held that punitive damages are only allowed when maintenance and cure — payments for lost wages and medical costs — is not paid.
'Irreconcilably divided'
The two circuit courts, Dutra's lawyers wrote in its August 2018 petition to the Supreme Court, hear the most admiralty cases and are “irreconcilably divided” on the issue of punitive damages.
“Only this court can resolve the conflict,” the lawyers for the California-based construction companywrote.
Boriana Farrar, an experienced maritime attorney who also serves as the senior claims executive at the American Club, said the Ninth Circuit Court’s decision to accept seafarers' claims for punitive damages “has certainly surprised us”.
“That is not backed up by precedent,” she said. "Per maritime law, a seaworthy ship is a ship that is fit for a particular purpose. That's a very relaxed standard... The unseaworthiness standard is closer to negligence."
In an amicus brief, the International Group of Protection and Indemnity Clubs, which counts the American Club as a member, and the US Chamber of Commerce argued that siding with Batterton would pose “stifling” and “multimillion dollar” risks for the industry. Further, they said, insurance is barred from covering those damages in some jurisdictions.
The result would be more expensive waterborne transport as shipping companies spend on extensive, economically inefficient safety measures.
“Simply put, it is often impossible for a maritime defendant to know with any degree of certainty whether its particular case will be one of the unlucky ones that result in an arbitrary award of massive punitive damages,” the group wrote.
Seafarers have argued that the stakes are high for those working onboard ships, too.
Bad behaviour
In a separate brief filed with the court, a group of mariners with pending injury claims argue shipowners would be able to get away with behaving badly.
They say the punitive damages are allowed “in an extreme case when the defendant employer has been guilty of sufficiently egregious misconduct”.
“The extreme rule would apply even if a shipowner made a deliberate, callous decision to send a doomed — but over-insured — rust-bucket to sea because the anticipated insurance proceeds would exceed the compensatory damages payable to any injured sailors who survive the inevitable sinking.”
