TABLE OF CONTENTS I. Introduction 206 II. Limitation of Liability of Shipowners--to Stimulate Investment in U.S. Shipping 211 III. The Ebb and Flow of Admiralty Jurisdiction 218 A. The Locality Test for Admiralty Tort Jurisdiction 218 B. The Admiralty Extension Act and Abandonment of the Pure Locality Test 224 IV. Limitation for Vessels on Non-Navigable State Waters? 226 V. Shipowners Limitation of Liability Act as an Independent Basis of Federal Jurisdiction 230 VI. Conclusion 236 I. INTRODUCTION
Having posed the titular question to several very experienced maritime attorneys, it was not surprising to have most respond with a resounding "NO." Some though, were more reflective and withheld an opinion. A few even ventured an affirmative response. The answer to the inquiry is not all that obvious and remains in a state of limbo as there is precedent from the United States Supreme Court that the Shipowner's Limitation of Liability Act (1) provides an independent basis for federal jurisdiction even if the underlying tort is not within admiralty jurisdiction. If the Act is an independent basis for federal jurisdiction, the next question is . obviously whether it is federal question jurisdiction or admiralty jurisdiction.
The issue was most recently raised in the landmark admiralty jurisdiction decision of the United States Supreme Court in Sisson v. Ruby. (2) The complainant's vessel was docked at a marina on Lake Michigan (3) and caught fire resulting not only in the vessel's destruction but also substantial damage to the marina and other vessels. (4) The owner, Sisson, sought injunctive and declaratory relief invoking the court's admiralty jurisdiction and also sought limitation of liability under the Shipowner's Limitation of Liability Act. (5) The district court dismissed for want of admiralty jurisdiction. (6) On a Motion For Re-Consideration, Sisson maintained that the Limitation Act provided an independent statutory basis for admiralty jurisdiction. (7) Ultimately, the trial court denied the Motion for Re-Consideration and held that the Limitation Act did not serve as an independent basis of federal admiralty jurisdiction. (8) On appeal, the Seventh Circuit affirmed the trial court's ruling that admiralty jurisdiction was lacking; (9) it also affirmed the trial court's decision that the Limitation Act did not provide an independent basis of federal admiralty jurisdiction. (10)
The Supreme Court granted writs on two issues: first, to review whether the incident sufficiently invoked federal admiralty jurisdiction. (11) The second issue was whether the Limitation of Liability Act alone supported federal jurisdiction. (12) The Supreme Court reversed the appellate court on the first question and held that the incident was within federal admiralty jurisdiction. (13) This made the second issue moot. (14)
Due to the Supreme Court's refusal to rule on this issue in Sisson v. Ruby, current precedent rests with a 1911 decision of the Court in Richardson v. Harmon (15) which has been cited as support for the proposition that the Limitation Act is an independent basis for federal jurisdiction. (16) In that case, the vessel struck an abutment to a railroad bridge on the Maumee River which empties into Lake Erie. (17) After the owner of the bridge filed suit in state court to recover damages from the vessel, the owners of the offending vessel filed to limit liability of the vessel in federal court asserting they had no privity or knowledge and were thus entitled to the benefits of the Limitation Act. (18) The trial judge sustained the bridge owner's objection to admiralty jurisdiction of the federal court on the basis that the incident was not a maritime tort cognizable in admiralty and that "the limited liability act of Congress did not extend to any such right of action." (19) The Supreme Court restated this precedent in Just v. Chambers. (20)
While several U.S. appellate courts have addressed the issue since Sisson v. Ruby, these have all reached the conclusion that the Limitation Act is not an independent basis of admiralty or federal question jurisdiction. However, the answer remains in limbo as no Court of Appeals can overrule a Supreme Court decision, and the Supreme Court has clearly expressed an interest in revisiting the issue by granting writs in Sisson v. Ruby. The Courts of Appeals which have confronted the issue only briefly address the precedent of Richardson v. Harmon or merely mention the potential constitutional conundrums raised which could not have been foreseen by the Supreme Court in the first decade of the Twentieth Century when the case was decided. (21) Another Court of Appeals has only stated that Richardson is an anomaly. (22) Others sidestep the question on the basis that the Admiralty Extension Act (23) implicitly overrules Richardson by extending admiralty jurisdiction to torts on land when caused by vessels on navigable waters.
One district court in Massachusetts held steadfast to the holding of Richardson that the Limitation Act is an independent basis for a federal court to exercise admiralty jurisdiction. In In re: Bernstein, (24) Chief Judge Young stated that until the U.S. Supreme Court overrules its precedent he is bound to apply it. He criticized the contemporary decisions for failing to address Richardson directly, save one (25) which merely stated that Richardson was a "historically flawed decision" (26) and further stated that "the doctrine of stare decisis ought not be so lightly discarded." (27) Thus, he was bound by the decision but acknowledged that "the manifest history of the Act demonstrates its inapplicability to the circumstances of this case...." (28) A commentator in the Michigan Law Review also has expressed support for the proposition that the Limitation Act is an independent basis of admiralty jurisdiction. (29) Taken to its logical conclusion, then, where the Limitation Act exists as an independent basis of federal jurisdiction (either federal question or admiralty), then one is confronted with the absurd proposition that the owner of rowboats used in a lake in Central Park in New York could seek limitation of liability in a federal court. Certainly, neither Congress nor the courts intend such a result.
Nonetheless, the question remains whether the precedent of Richardson v. Harmon continues to be valid law or not. Are there situations in which a federal court can exercise admiralty jurisdiction in a limitation proceeding even though the underlying claim would not otherwise be within admiralty jurisdiction? If not, does the Limitation Act, nonetheless, provide an independent basis for federal question jurisdiction? If federal question jurisdiction exists, then is the right of the vessel owner to seek limitation a "cause of action?" Are there situations in which issues of federalism may be infringed were the Court to hold that the Act does provide an independent basis of either admiralty or federal question jurisdiction? If the Act is the basis for federal question jurisdiction, does this raise other constitutional issues such as right to trial by jury?
The first section of this paper--Part I--will discuss the Limitation of Liability Act including a brief review of the historical roots of the right of the vessel owner to limit liability and the purpose for the legislation. In addition, Part I will discuss the jurisprudence prior to Richardson v. Harmon. Then, the decision of the Supreme Court in Richardson v. Harmon will be reviewed and this section will offer
a suggestion as to why the court decided as it did.
Part II will address the development of admiralty jurisdiction pursuant to Article III, Section 2 of the United States Constitution and as interpreted by the United States Supreme Court.
Part III will briefly examine: the development and rise of man-made reservoirs used for agricultural and recreational purposes; the limitation of admiralty jurisdiction to torts occurring on those lakes; and the tension between state versus federal jurisdiction over torts on such man-made lakes if the limitation act supports independent federal admiralty or federal question jurisdiction. This section will also address the conflict between the Seventh Amendment right of trial by jury if the Limitation Act does provide an independent basis for admiralty jurisdiction.
The next section--Part IV--will discuss the question whether the act creates federal question jurisdiction and whether the right of the vessel owner to seek limitation of liability under the act is a "cause of action."
Part V will discuss whether the Act satisfies the requirements for federal question jurisdiction.
Finally, in Part VI, a suggestion to resolve the issue will be made.
LIMITATION OF LIABILITY OF SHIPOWNERS--TO STIMULATE INVESTMENT IN U.S. SHIPPING
Whether limitation of liability began as far back as the Rhodians, the Romans, the Corpus Iuris Civilis, or to the High Middle Ages of the Twelfth Century, (30) the right of shipowners to limit liability spread throughout Western Europe into the North Sea and Baltic area in the Sixteenth and Seventeenth Centuries as commerce increased, with the exception of the British Isles. (31) The Hanseatic League, the City of Hamburg, Sweden, the Dutch, and the French, over the course of nearly three quarters of a century, adopted laws which limited the liability of shipowners. (32) In 1734, the British Parliament enacted a statute which permitted a vessel owner to limit liability for the acts of the master and crew without the "privity or knowledge" of the owner of the vessel. (33) The avowed purpose was to place English vessel owners on equal footing with other nations--particularly with their Dutch counterparts--increase the merchant marine, and encourage investment in shipping. (34)
The concept to limit the liability of a vessel owner was adopted in the United States first by the State of Massachusetts and then the State of Maine in 1819 and 1821...