UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 5, No.2SPRING 1982
Admiralty Arrest Procedures Fail The Due Process Test: Alyeska Pipeline Service Company v. Vessel BAY RIDGE
Lance B. Nelson
Until recently the long-established procedures of the admiralty in rem arrest(fn1) had never faced a serious constitutional challenge. Federal courts began to question their constitutionality,(fn2) however, soon after the Supreme Court's expanded enunciation of due process standards in Sniadach v. Family Finance Corp.(fn3)Fuentes v. Shevin (fn4) and Mitchell v. W. T. Grant Co.(fn5) In Alyeska Pipeline Service Co. v. Vessel BAY RIDGE,(fn6) a federal district court in Alaska became the first admiralty court to hold the arrest procedures unconstitutional in an action purely in rem.(fn7) By applying the Supreme Court's due process standards to admiralty cases, the court protected the maritime property owner's rights. However, the holding does not protect the substantive rights of admiralty plaintiffs. In order to protect both parties' rights, the Supplemental Rules of Civil Procedure should be amended to provide judicial participation in the arrest, and immediate post-seizure hearing.
In Alyeska, an oil spill occurred during the loading of the tanker BAY RIDGE at the terminal of the Alyeska pipeline. Blaming the vessel and her crew for the mishap, the plaintiff pipeline company brought an in rem action to enforce a maritime lien(fn8) against the BAY RIDGE and secured the vessel's arrest pursuant to Supplemental Rule C of the Federal Rules of Civil Procedure.(fn9) The owners and charterers of the BAY RIDGE intervened as claimants and brought a motion to dismiss the complaint and vacate the arrest. The court granted the motion, holding that where arrest is initiated by a private party the procedures of Rules C and E violate basic concepts of due process as defined in the Sniadach and Fuentes series of recent United States Supreme Court decisions.
Seizure of a vessel under Rule C is a summary ex parte procedure. The court clerk issues a warrant for the arrest of the vessel upon the filing of a verified complaint.(fn10) The allegations must be sufficiently specific to allow the defendant or claimant to commence an investigation without moving for a more definite statement.(fn11) If the property is not released within ten days of the seizure, notice by publication is required; otherwise, the only notice required is execution of process upon the property by the United States Marshal.(fn12) The plaintiff need not post a preseizure bond for the protection of the owner, but is required to pay any costs involved in seizing and maintaining the arrested property.(fn13) Nothing in the rules assures the property owner a prompt postseizure hearing to test the validity of the plaintiff's claim.
The Rule C arrest is an in rem procedure, allowing the plaintiff to proceed directly against the seized property as the defendant.(fn14) The sole purpose of the in rem action is to carry the maritime lien into effect.(fn15)
A maritime lien arises from certain admiralty claims in contract, or tort,(fn16) and gives the aggrieved party a property interest in the res equal to the amount of the alleged liability.(fn17) The hen may arise even though the owner of the vessel is not personally liable on the underlying claim.(fn18) Enforcement of the lien through a judicial sale of the property gives the new purchaser a good title free from all other interests, including all maritime liens.(fn19) On the other hand, a maritime hen survives a private sale, even a sale to an innocent purchaser.(fn20) Generally, among maritime lienholders the latest lien has first priority to the proceeds of a judicial sale.(fn21)
The maritime lien plays an important role in facilitating the smooth operation of maritime commerce.(fn22) Suppliers and others who do business with vessels are more likely to extend credit to even a strange or foreign ship because the remedy of a maritime lien is available. Without the lien the vessel would no longer serve as security for any contractual or tort liability she might incur and some other form of security would be required prior to dealing with the vessel. Arranging for letters of credit or similar security could prove costly and in some instances delay the vessel.(fn23) Moreover, the importance of the maritime lien and in rem arrest is magnified by their universal acceptance in international maritime law. Because the lien is recognized throughout the world,(fn24) it is a critical part of admiralty jurisprudence, and in United States' territories the only way it may be enforced is by the procedures of the Rule C in rem arrest.(fn25)
The claimants in Alyeska argued that these procedures do not afford maritime property owners due process(fn26) as required by the series of Supreme Court cases beginning in 1969 with Sniadach v. Family Finance Corp.(fn27)In Sniadach, the Supreme Court struck down a Wisconsin wage garnishment statute that failed to provide the wage-earner with notice or an opportunity to be heard before the garnishment.
Forcing maritime lienholders to provide preseizure notice, however, would severely limit the effectiveness of the in rem action. Because of the extremely mobile nature of vessels and the necessity of a seizure to acquire in rem jurisdiction, prior notice would allow the owner to avoid or postpone suit by removing his vessel or other assets from the jurisdiction of the district court where the plaintiff brought the action. Delay in suit could effectively extinguish the plaintiff's remedy by increasing the chances that a later maritime lien will arise. If the value of a subsequent lien exceeded the value of the property, the earlier lienholder's interest in the property would disappear.(fn28) The argument against requiring preseizure notice would apply a fortiori to a preseizure hearing. No admiralty court has held that preseizure notice and hearing are strictly required by the Constitution.(fn29)
In Fuentes v. Shevin,(fn30) the Court extended the requirements of Sniadach to deprivations of any type of property, but also recognized an exception to the requirements of prior notice and hearing in certain "extraordinary situations." The Court listed three conditions which must be met for the exception to apply: first, the seizure must be directly necessary to secure an important governmental or general public interest; second, there must be a special need for very prompt action; and finally, a government official responsible for determining whether seizure is necessary or justified must be the one who initiates the seizure.(fn31)
Several admiralty courts have seized upon the "extraordinary situation" exception as justification for the procedures of admiralty arrest. Some have found the public interest requirement inherently satisfied by the jurisdictional nature of the in rem arrest. In Central Soya Co. v. Cox Towing Corp.,(fn32) a federal district court in Mississippi found that the acquisition of jurisdiction over a vessel is an important public interest and therefore a Rule C arrest meets the first Fuentes requirement. A district court in California reached the same conclusion in A/S Hjalmer Bjorges Rederi v. The Tug Boat CONDOR.(fn33) The courts in Central Soya and CONDOR relied heavily on the Fuentes Court's citation(fn34) of Ownbey v. Morgan(fn35) for the proposition that acquisition of jurisdiction is in itself an important public interest. Reliance on Ownbey, however, is misplaced. In Ownbey, the Court upheld an attachment statute that required a nonresident defendant whose property had been attached to post a special bail before he could appear and defend. The defendant challenged only the requirement that he post bail before he could defend. Thus, the issue was the validity of the bail requirement rather than the validity of the attachment to secure jurisdiction.(fn36) The Supreme Court, in Shaffer v. Heit-ner,(fn37) further weakened reliance on Ownbey by pointing out in a...
