The Continued Vitality of the Shipowner's Limitation of Liability Act of 1851.

AuthorHaycraft, Don K.

Table of Contents I. DEEPWATER HORIZON 2 II. THE SINKING OF THE EL FARO 4 III. DIVING VESSEL CONCEPTION 5 IV. SEACOR POWER 6 V. CONCLUSIONS 7 "SEC. 3. The liability of the owners of any ship or vessel, for any... act, matter or thing, loss, damage or forfeiture, done, occasioned or incurred, without the privity or knowledge of such owner or owners, shall in no case exceed the amount or value of the interest of such owner or owners, respectively, in such ship or vessel, and her freight then pending." (1) These words written into federal statutory law by Congress on March 3, 1851, remain largely unchanged today, 171 years later. Although no case concerning the Limitation Act reached the United States Supreme Court until 20 years later in Norwich Co. v. Wright, (2) in recent decades not only the Supreme Court but maritime courts throughout the United States regularly grapple with the Limitation Act. Indeed, the Limitation Act remains more alive and well today than ever. Twenty-first century maritime disasters and accompanying Limitation Actions dominate the admiralty legal seascape. Deepwater Horizon (11 lives lost), El Faro (33 lives lost), Conception (34 lives lost), Seacor Power (13 lives lost)--the shipowner in each tragedy availed itself of this remarkable and recurrent feature of maritime law.

Not that long ago any law student who dreamed of becoming an admiralty lawyer read the standard admiralty treatise updated in the 1970s. Grant Gilmore and Charles Black, Jr., wrote "The Law of Admiralty" in 1957 and issued a revised edition in 1975. Gilmore and Black were the admiralty gurus of their time! Here is a quote from page 823 of the 1975 edition:

The Limitation Act itself has so far managed to survive unscathed but its future prospects cannot be described as bright. One more large-scale maritime disaster, following which the shipowners petition to limit their liability to a fund of $50, should suffice to bring the whole structure tumbling down. If a third edition of this book is called for, the present chapter will in all probability be of no more than historical interest. (3) Unfortunately, Messrs. Grant and Gilmore did not live long enough to collaborate on a third edition. Professor Black's obituary in the New York Times noted that the admiralty treatise "was widely regarded as the definitive text on the subject." (4) However authoritative, these authors did not see particularly well into the future when it comes to Limitation Actions, as this paper will demonstrate.

The unpredictable seas of the future instead brought the Limitation Action into the vanguard of maritime law. Although statistics from the Administrative Office of U. S. Courts are hard to come by, Westlaw searches on Limitation Actions reveal no diminishment in the number of Limitation Act filings by shipowners in recent years. Dozens upon dozens continue to be filed in federal district courts each year. The continued vitality of the Limitation Act, despite a bad press, is best demonstrated through examination of the major marine catastrophes of the past decade or so and the litigation course each disaster charted.

To the extent the lay public learns about the statute after any maritime casualty involving the death of multiple seafarers or passengers, the press consistently alludes to the sinking of the Titanic in 1912, after which White Star Line filed a Limitation Action in the Southern District of New York seeking to limit its liability to $92,000, the value of the 14 remaining lifeboats and freight money earned on the voyage. (5) After this requisite nod to the seemingly anachronistic Limitation Act, press reports at later dates after litigation or settlements rarely mention any salutary aspects of the Limitation Act. These features, unmentioned by legal reporters, include of course the required concursus of claims and the case management employed by the single federal judge, features that routinely propel the case to resolution. Perhaps the initial astonishment of reporters and readers at the possibility of a shipowner achieving limitation (or exoneration) fades away in time when it inevitably fails to happen. The paucity of actual limitation or exoneration conclusions perhaps explains the failure of attempts to repeal the Limitation Act. (6) Most recently, immediately after the burning and sinking of the Deepwater Horizon drilling vessel in April 2010, an attempt at repeal was made while crude oil still gushed from the broken riser pipe at the bottom of the Gulf of Mexico. (7) Despite the singular national focus on that tragedy and massive oil spill, the repeal bill never made it out of the Senate Committee on Commerce, Science, and Transportation.

The continued vitality of the Limitation Act will be shown in this paper through examination of four maritime tragedies and ensuing limitation proceedings. In Deepwater Horizon, the Limitation Action filed by shipowner Transocean ultimately "failed" in that Transocean neither limited its liability nor was exonerated. (8) Similarly, Tote Maritime, the operator of the S/S EL FARO, settled the dozens of wrongful death suits and hundreds of cargo claims in short order following the filing of its Limitation Action. (9) More recently, the owner of the dive boat Conception filed a Limitation Action but the federal judge lifted the restraining order against the presumption of various state court actions once appropriate limitation-protection stipulations were reached by all claimants. Finally, in another ongoing limitation case, Seacor Liftboats and the claimants have begun discovery and settlement talks are underway.


    On the evening of April 20, 2010, while the Transocean drill crew was pulling out of the Macondo well, on the Outer Continental Shelf offshore Louisiana, a blowout, explosion, and fire occurred aboard the Deepwater Horizon. (10) Eleven Transocean crewmembers died. (11) The "blowout preventer" (BOP) failed to stem the ensuing gush of oil and ultimately millions of gallons of oil discharged into the Gulf of Mexico over the 87 days of the disaster before the well was sealed. (12) The Deepwater Horizon, owned and operated by Transocean, was a "MODU," a...

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