Resolved: Is 46 U.S.C. [section] 30501(a) a Jurisdictional Statute of Limitations or a Mandatory Claims Processing Rule?

• Author: Burts, Gregory

Table of Contents I. The History of Marine Insurance and the Concept of Limited Liability 2 II. Legislative History of the American Limitation of Liability Act of 1851 4 III. Practice and Procedure Under the Modern Limitation of Liability Act 6 A. 28 U.S.C. [section] 1333(1)--The Saving to Suitors Clause 6 B. General Rules of Procedure Under the Act 7 C. What Constitutes "Written Notice?" 8 IV. Relevant Supreme Court Precedent 9 V. The Circuit Split 10 VI. Why Does this Circuit Split Matter? 12 A. Rule 12(b) 13 B. Rule 12(b)(1) Standard 13 C. Rule 12(b)(6) Standard 14 VII. Why a Jurisdictional "Hook" in 46 U.S.C. [section] 30501(a) is Unnecessary 15 A. If [section] 30501(a) is Non-Jurisdictional, Where Does that Leave Us Procedurally? 16 VIII. Conclusion 16 I. The History of Marine Insurance and the Concept of Limited Liability

Since the age of sail, traveling by sea has been "an inherently risky business." (2) It is not surprising then that intrepid voyagers have sought to insure against marine risk for millennia. Marine insurance is at least as old as the Code of Hammurabi, which contained provisions on general average and "bottomry." (3) Other forms of primitive marine insurance can be found in Ancient Rome, where a contract known as the foenus nauticum was commonly used by jurisconsults and advocates. The foenus nauticum, like the contract of bottomry, "allowed lenders to contract for certain return on money lent on large projects, such as voyages." (4) Over time, the foenus nauticum, general average, and bottomry contracts gradually evolved into the modern marine policy forms commonly encountered today, the origins of which can be traced back to the Ordinance of Florence of 1523. (5)

The Ordinance of Florence codified a number of ancient customary Italian rules of insurance, which were themselves based on earlier Roman principles such as the foenus nautilus, which pegged the "total loss rate" on an insurance contract for an "unclassified sailing vessel" embarking on a Mediterranean expedition at 12%, with 6% being interest and 6% being the "risk premium." (6) The influence of the Ordinance of Florence cannot be understated. In fact, most modern marine policy forms and cargo policy forms in particular, can be traced back to the Ordinance of Florence since its language was used extensively by early English underwriters such as Edward Lloyd of London. (7)

In its most basic form, a marine insurance policy is a contract of indemnity, "since the amount recoverable is measured by the extent of the insured's pecuniary loss." (8) The distinction between marine contractual indemnity and non-nautical forms of indemnity is that most marine indemnity policies are "valued." (9) That is, the value of the subject matter insured under the policy is mutually ascertained and agreed upon in advance of the subject matter's departure on its maritime adventure.

Given the risk involved in early nautical ventures, the idea of limiting a shipowner's liability curiously did not arise until thousands of years after man first sailed the seas. Indeed, this concept is "entirely due to modern invention. No trace of it is to be found in the Digest of the Roman Law, nor in the maritime legislation of the Eastern Empire, nor in the compilation which goes under the name of the Rhodian Law." (10)

It is clear from extant records that limitation of liability, at least at it is understood today, was an unfamiliar concept to Roman jurisconsults. Under Roman law, "the owner or exercitor (11) [of a vessel] was personally bound for all the acts of the [ship]master, falling within the range of his authority as master." (12) The exercitor was thus responsible for all acts, be they ex delicto or ex contractu. (13) If there were "several exercitors, each was bound in solido for the full amount of the obligations of the master, arising ex contractu." (14) However, each exercitor was bound for obligations ex delicto "only for his part, that is, in proportion with the interest he had in the ship." (15)

Following the collapse of Rome and the piecemeal reemergence of maritime commerce in the Middle Ages and beyond, the Roman rules on maritime liability were harshly condemned as "inequitable and injurious to the interest of trade." (16) As Hugo Grotius explained in 1625, "[m]en would be deterred from employing ships, if they lay under the perpetual fear of being answerable for the acts of their masters to an unlimited extent... [This would not] be conducive to the public good." (17)

While it is perhaps "impossible" to identify precisely "when and where" maritime law's concept of limitation of liability originated, references to it can be found "in the Consolato del Mare, which in two separate chapters, expressly limit[ed] the liability of the part owner [of a vessel] to the value of his share in the ship." (18) Arnold Vinnius, a Dutch jurist and commentator of law writing in the mid-17th century, wrote, "that by the law of the land the owners [of a vessel] were not chargeable beyond the value of the ship and the things that were in it." (19) Johannes Loccenius, a German-Swedish contemporary of Vinnius, identified a similar rule in his own work, De Jure Maritimo & Navali. (20) Thus, although its exact origins may be mysterious, it suffices to say that the Italians, Dutch, and Swedish were among the first to codify the limitation of shipowner liability. (21)

One of the earliest surviving records of the explicit codification of this concept can be found in the Maritime Code of Charles II, which stated, "that if the owners chose to abandon the ship, the creditor can demand nothing more, nor touch their property unless they have specially bound themselves." (22) A similar rule is found in an even earlier statue enacted by the sovereign city-state of Hamburg in 1603, indicating that this concept was likely in customary use long before it was first evidenced in writing. (23) These Italian, Dutch, Swedish, and Hanseatic rules were consolidated and officially codified by France in 1681, whereby shipowners were given the right to discharge contractual and tort liability associated with a ship or its captain simply by abandoning the vessel and its freight. (24)

The English Parliament adopted the lion's share of France's 1681 codification, albeit with its own unique twist in 1734 by act of 7 Geo. 2, c. 15, (25) in which a shipowner's liability was limited to the value of his ship and her appurtenances and averaging any greater loss or damage that was incurred "among those who sustained it." (26) This law was subsequently revised by act of 26 Geo. 3 in 1786, and act of 53 Geo. 3 in 1813. (27) Statutes similar to these English laws were enacted by Massachusetts in 1818 and Maine in 1821. The early Massachusetts and Maine laws limited the liability of a shipowner to the value of the vessel and its freight. The Massachusetts and Maine rules also provided a remedy for losses in excess of the value of the ship and its cargo which could be enforced through a bill of equity.

2. Legislative History of the American Limitation of Liability Act of 1851

   While a review of the application of the Massachusetts and Maine statutes reveals their robust use in those states, (28) "[t]here was no federal limitation statute" in the United States of America prior to 1851. (29) Instead, American vessels owners, like their land-based counterparts, were generally "liable without limit." (30) Concerted efforts to pass a federal statute on the limitation of liability arose in the wake of the Supreme Court's holding in New Jersey Steam Navigation Co. v. Merchants' Bank of Boston, in which the Court imposed full liability on a vessel owner for a lost shipment of gold and silver specie despite a contractual provision limiting such liability. (31)

   It is clear from legislative commentary that the primary influence of the Limitation of Liability Act of 1851 were the English laws originally passed by 7 Geo. 2. c. 15. (32) Republican Senator Hannibal Hamlin of Maine, Charmain of the Senate Committee on Commerce at the time, stated the following,

   I desire to call the attention of the Senate to a single point--this bill is predicated on what is now the English law, and it is deemed advisable by the Committee on Commerce that the American marine should stand at home and abroad as well as the English marine. Senators who may be disposed to look into the provisions of the English law, will find in the 9th, 6th, and 30th volumes of the English Statutes the very principles contained in this bill. (33) Congressman John P. Hale of New Hampshire, then a Free-Soiler (34) who later become a Republican, agreed with Mr. Hamlin, but expressed his concerns with its scope announcing,

   I have looked at this bill and examined it, and it will be found that it cuts up the whole common law in regard to common carriers in this country. I will not say that it is not right; but I think a bill making such fundamental changes in the common law ought to have sanction of the Judicial Committee. I wish to make a single remark; though I do not wish to be understood as against the bill, I have examined it and the English statutes, and, as has been suggested, the bill is an abstract of the English law in regard to this subject. (35) Senator Hamlin dismissed Mr. Hale's anxieties toward the bill and effusing the typical Republican sentiment of distrust towards bureaucrats and appointed officials, replied:

   I am inclined to believe that our intelligent merchants and commercial men in this country understand quite as well what are the true wants and interests of commerce as any judicial officer in this country. I would rely on those men who are practical merchants, and who are engaged practically in commerce, for better information on this point than you can get from any of your judicial tribunals. Besides, this bill conforms our commercial marine upon equal footing with [England]." (36)

   After some horse-trading, the "bill...