Reino De España v. American Bureau of Shipping, Inc.

10-3518-cv
Reino de España v. American Bureau of Shipping
United States Court of Appeals
FOR THE SECOND CIRCUIT
August Term 2011
(Argued: November 14, 2011 Decided: August 29, 2012)
No. 10-3518-cv
_____________________________________
REINO DE ESPAÑA, on its own behalf, and as trustee,
Plaintiff–Counter-Defendant–Appellant,
-v.-
THE AMERICAN BUREAU OF SHIPPING, INC., ABSG CONSULTING INC.
f/k/a ABS MARINE SERVICES, INC., ABS GROUP OF COMPANIES,
AMERICAN BUREAU OF SHIPPING,
Defendants–Counter-Claimants–Appellees.
_____________________________________
Before: WALKER, RAGGI, and LIVINGSTON, Circuit Judges.
Appeal from a judgment of the United States District Court for the
Southern District of New York (Swain, J.), holding that Defendants–Counter-
Claimants–Appellees (“Defendants”) were entitled to summary judgment
because, in the circumstances presented, Defendants, American Bureau of
Shipping (“ABS”) and its subsidiaries, did not owe Plaintiff–Counter-
Defendant–Appellant Reino de España (“Plaintiff”) a duty in tort in connection
with ABS’s inspection of the tanker Prestige. Without reaching that issue, we
conclude that even if such a duty were owed, Plaintiff did not introduce evidence
sufficient to create a genuine dispute of material fact as to whether Defendants
recklessly breached that duty, and therefore AFFIRM.
ABRAHAM D. SOFAER, Palo Alto, CA (Juan A.
Anduiza, Brian D. Starer, Samuel Spital, Corrine
Irish, Squire, Sanders & Dempsey LLP, New
York, NY, on the briefs), for Plaintiff–Counter-
Defendant–Appellant.
JEFFREY R. COLEMAN (Norman C. Kleinberg,
Steven A. Hammond, Daniel H. Weiner, Peter A.
Sullivan, Jason C. Benton, Hughes Hubbard &
Reed LLP, John E. Grimmer and Brad Gandrup,
Jr., John Grimmer & Associates, New York, NY,
on the brief), for Defendants–Counter-
Claimants–Appellees.
THOMAS A. TELESCA, Ruskin Moscou Faltischek,
P.C., Uniondale, N.Y. (on submission), for Amici
Curiae Oceana and the Natural Resources
Defense Counsel.
LIVINGSTON, Circuit Judge:
In November 2002, the oil tanker Prestige sank off the northwestern coast
of Spain, releasing large quantities of oil into the ocean. Plaintiff–Counter-
Defendant–Appellant Reino de España (“Spain” or “Plaintiff”) alleges that this
oil, on washing up on the Spanish coastline, caused serious environmental and
economic damage to Spain and its citizens. Spain, in reaction to the alleged
effects of this marine casualty, brought suit against Defendant–Counter-
Claimant–Appellee American Bureau of Shipping (“ABS”) and its subsidiaries
(collectively, “Defendants”).
ABS is a classification society—an organization that, as relevant to the
present appeal, is contracted by shipowners regularly to survey their vessels for
compliance with ABS’s requirements on, inter alia, structural soundness. ABS,
one of the world’s leading classification societies, is engaged to inspect (or
2
“class”) thousands of vessels worldwide. One such vessel was the ill-fated tanker
Prestige, which was classed by ABS for its entire working life until its casualty.
Spain alleges that by virtue of the surveys it conducts, ABS (like other
comparable classification societies) forms a crucial link in the “maritime safety
chain,” by which a range of parties, from individual sailors all the way to the
world’s coastal nations as a whole, are protected against accidents, shipwrecks,
pollution, and the like. In particular, Spain alleges that it and other nations like
it are not in a position to inspect the seaworthiness of every vessel passing
through their waters, and rely on classification societies to ensure the
seaworthiness of those vessels. More precisely, Spain argues that ABS owes a
duty in tort to perform its classification surveys with due care not simply to the
vessel’s owner who contracted for the survey (or to the insurers of the vessel and
its cargo), but to third-party coastal nations generally.
Though this Court has previously suggested that “a shipowner is not
entitled to rely on a classification certificate as a guarantee to the owner that the
vessel is soundly constructed,” Sundance Cruises Corp. v. Am. Bureau of
Shipping, 7 F.3d 1077, 1084 (2d Cir. 1993), we there distinguished the situation
of “a suit brought by an injured third party who relied on the classification . . .
certificate[],” id. We have not decided the question whether a classification
society can be held liable to a third party for negligent conduct in connection
3
with a classification survey. That said, Spain concedes in the present appeal
that the “policy interests” described by the Sundance Cruises Court “justify[] an
exemption for classification societies from the general rule of negligence
liability,” Appellant’s Br. 39; see also id. at 30 (same). Spain maintains,
however, that such interests “do not . . . extend to reckless conduct,” id. at 39
(emphasis added). Thus, Spain argues, because the claim here is that ABS was
not simply negligent but reckless in its actions that led to the wreck of the
Prestige, ABS is not shielded from liability to third parties such as Spain who
putatively suffered harm as a result of those actions. T h e d i s t r i c t c o u r t ,
however, did not agree. Rather, applying U.S. maritime law, the court concluded
first that Spain was outside the (quite limited) set of parties to whom a
classification society might normally be liable in tort for conduct relating to its
surveys. Moreover, it held that reckless conduct such as alleged here would still
not give rise to tort liability to a third party such as Spain, absent a preexisting
specific relationship between Spain and the society of a sort not present here.
The district court therefore granted summary judgment to Defendants, from
which Spain now appeals.
We conclude that we need not resolve the question whether a classification
society may be held liable in tort to a third party such as Spain for reckless
4
conduct in connection with the classification of vessels.1 Rather, we assume
arguendo for purposes of this appeal that Defendants did owe the claimed duty
to Spain. In our view, Spain has nonetheless failed to adduce sufficient evidence
to create a genuine dispute of material fact as to whether Defendants recklessly
breached that duty such that their actions constituted a proximate cause of the
wreck of the Prestige. We therefore AFFIRM the district court’s grant of summary
judgment to Defendants, albeit on alternative grounds.
BACKGROUND
I. Facts
A. Classification Societies and Classification Surveys
The Prestige was an 800-foot long, 40,000-gross-ton oil tanker, first
launched in 1976.2 From that time until it sank in November 2002, the Prestige
was classified (or “classed”) by ABS, a not-for-profit corporation founded in 1862
and one of the leading classification societies in the world. Classification
societies such as ABS, inter alia, establish rules for the design, construction, and
continued structural and mechanical fitness of vessels that they class, and
certify that, at minimum, a vessel is “in class,” or in compliance with the
1
Because Spain does not argue that classification societies may be held liable
to third parties for negligence, we do not address that question either. See Norton v.
Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998).
2
The facts set out here, drawn largely from the parties’ evidentiary submissions
in the district court, are undisputed except where otherwise noted.
5
applicable rules and requirements of the society. Such a certification is
embodied in a “classification” (or “class”) certificate.3 ABS is paid for these
services by the vessel’s owner.
As relevant here, ABS typically classes vessels on a five-year survey cycle.
This cycle, broadly speaking, consists of one survey performed every five years
(the “Special Survey”), an “Intermediate Survey” halfway through the cycle, and
“Annual Surveys.” The Special Survey, unsurprisingly the most extensive,
includes direct inspection of the interior of a ship’s structure (especially, in an
oil tanker, the vessel’s ballast and cargo tanks) for corrosion and fatigue. The
inspection involves examination of the structure both visually and through
ultrasonic measurement of the thickness of the hull and interior bulkheads
(known as “gauging”). ABS directs the owner to make repairs to the vessel as
required to satisfy ABS requirements. If these repairs are completed to the
surveyor’s satisfaction, and the vessel otherwise meets the applicable
requirements of ABS rules and international conventions, the surveyor
recommends the renewal of the class and statutory certificates. ABS reserves
3
ABS, like other classification societies, also inspects vessels for their
compliance with the requirements of various international agreements on maritime
safety and the prevention of pollution. ABS performs these inspections (or surveys) on
behalf of the nation that holds the registration of the vessel in question (the “flag
state”), and issues various “statutory certificates” to vessels that satisfy the inspection
requirements. Class and statutory surveys are typically performed at the same time.
6
the right to reconsider, cancel, or suspend classification for noncompliance with
its rules.
2. SafeHull
At relevant times, in addition to these ABS surveys, a for-profit subsidiary
of ABS, known at one point as ABS Marine Services (“Marine Services”) and
eventually as ABSG Consulting Inc.,4 offered an additional service to owners of
marine vessels—the structural modeling of a computer program known as
SafeHull. SafeHull was used, inter alia, to assess a given vessel’s structure and
predict areas in which structural fatigue and corrosion were likely to develop
over time, given the vessel’s design and age combined with pre-set parameters
for characteristics such as cargo, trading patterns, and the like.
Marine Services offered to undertake SafeHull analyses of vessels at the
request of their owners, for a fee, as an optional supplement to the classification
and statutory surveys performed by ABS. As relevant to this case, Marine
Services performed SafeHull modeling runs in 1996 and 1998, respectively, on
oil tankers (the Alexandros and Centaur) built at the same time to essentially
the same plans as the Prestige. The Prestige’s owners, however, never purchased
a SafeHull analysis, and ABS did not communicate the results of the Alexandros
and Centaur analyses to the surveyors examining the Prestige.
4
We refer to this entity as Marine Services for convenience; the name change
is not material here.
7
In 2000, after the oil tanker Erika sank, ABS proposed that it and other
leading classification societies amend their rules to make the type of analysis
performed by SafeHull a mandatory part of each classification Special Survey.
3. The Erika and Castor Casualties
The Erika, which had been classed by the Italian classification society
RINA, was an older, single-hulled oil tanker (like the Prestige, albeit much
smaller). When the Erika sank off the French coast in December 1999, the
resultant oil spill attracted significant attention to the potential safety problems
posed by such aging tankers. In February 2000, ABS proposed that it and other
leading classification societies enact a series of classification rules changes,
which—according to an accompanying ABS press release—were “immediately”
necessary to adopt in the wake of the Erika casualty.5 As discussed in further
detail in our merits analysis below, some of these changes, including the
proposal regarding SafeHull, might well have affected the conduct of the final
Special Survey of the Prestige (which occurred in April and May 2001) had they
been adopted prior to that survey; ABS did not, however, secure agreement from
the other classification societies to adopt, or adopt and implement, the relevant
5
ABS claimed in a related feature on the Erika, published in March 2000 in
ABS’s trade magazine, that it was engaging in a systematic review of the survey
records of the 900 vessels it classed that were over twenty years old, to ensure that
serious problems with those vessels would not go overlooked. It is undisputed that
ABS did not ultimately conduct this review in any meaningful way.
8
proposed changes on that timetable, and did not implement any of its proposals
unilaterally.
The wreck of the Erika was not the only marine casualty in this period
that prompted ABS to evaluate classification survey procedures, both generally
and with particular application to oil tankers. In late December 2000, the
Castor, a small tanker classed by ABS, suffered a major structural failure that
ultimately required the ship to be abandoned and towed to the nearest port by
salvors. ABS, after conducting an extensive inquiry into the causes of the Castor
casualty, ultimately concluded, in a report issued in October 2001, that certain
additional changes in the rules and conduct of ABS classification surveys were
required. Specifically, ABS determined that ballast tanks and cargo/ballast
tanks on certain older tankers, like the Prestige, should be carefully inspected
annually. Those changes, as relevant here, were not implemented prior to the
Prestige’s final annual survey in April 2002.
4. The Final Surveys (and Casualty) of the Prestige
The Fifth (and final) Special Survey of the Prestige occurred in Guangzhou,
China, from April 2, 2001, to May 19, 2001. The surveyors who conducted the
Fifth Special Survey concluded that the Prestige, upon the completion of
required repairs, satisfied all applicable ABS requirements. Spain’s position,
which ABS hotly contests, is that these surveyors in fact conducted an
9
inadequate examination of the Prestige, and that the inadequacies of the survey,
resulting from reckless policy decisions made by senior ABS decision-makers in
the United States, ultimately led to the wreck of the Prestige in 2002.
We discuss this dispute further below. See Sections II.A-B, infra.
Regardless, on May 23, 2001, ABS’s regional Hong Kong office faxed summaries
of the various reports documenting the findings of the Special Survey, and
recommending that the Prestige’s class certificate be re-issued for another five
years, to ABS headquarters in Houston; on May 24, 2001, ABS Houston formally
re-issued the class certificate.
The final Annual Survey of the Prestige occurred in the United Arab
Emirates, from May 15, 2002, to May 25, 2002. Upon the completion of certain
required repairs, the ABS surveyor in attendance was satisfied that the Prestige
should be retained in class, and so indicated on the Prestige’s class certificate.
It is undisputed that between May and November 2002, ABS surveyors
had no further contact with the Prestige. Spain contends (and ABS disputes),
however, that in August 2002, ABS received, and ignored, a fax message from
the Prestige’s then-master, alerting ABS to grave structural and mechanical
problems aboard the Prestige. See Section II.D, infra.
On November 13, 2002, the Prestige suffered a severe internal structural
failure that ultimately led to its sinking on November 19, 140 miles off the
10
Spanish coast. The wreck of the Prestige, which led to the release of fuel oil into
the ocean and thence onto beaches and coastline in Spain, resulted ultimately
in the instant lawsuit.
B. Procedural History
The procedural history that has led to the present appeal is complex, and
we summarize for economy only those events relevant here. On May 16, 2003,
Spain filed this suit against ABS, alleging violations of Spanish law and breach
of a duty of care under U.S. law. Defendants moved for summary judgment on
both jurisdictional and merits grounds, which the district court granted,
concluding that it lacked subject-matter jurisdiction, on January 2, 2008, Reino
de España v. Am. Bureau of Shipping, Inc., 528 F. Supp. 2d 455 (S.D.N.Y. 2008).
That grant of summary judgment was vacated by this Court by summary order
on June 12, 2009, Reino de España v. Am. Bureau of Shipping, 334 F. App’x 383
(2d Cir. 2009). Defendants renewed their motion for summary judgment, and
on August 6, 2010, the district court again granted summary judgment to
Defendants, applying U.S. maritime law and holding that, in the circumstances
present here, Defendants did not owe a tort duty to Spain, Reino de España v.
Am. Bureau of Shipping, Inc., 729 F. Supp. 2d 635 (S.D.N.Y. 2010). The present
appeal followed.
11
DISCUSSION
On appeal, the parties contest the district court’s determination that U.S.
federal maritime law governs the merits adjudication of Defendants’ motion for
summary judgment, and the court’s grant of summary judgment to Defendants.6
We review a district court’s choice-of-law determination de novo. Rationis
Enters. Inc. of Pan. v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 585 (2d Cir.
2005). Our review of the grant of a motion for summary judgment is also de
novo, and considers whether, drawing all inferences and taking all facts in the
light most favorable to the non-moving party, a genuine dispute exists as to any
material fact. Carbotrade S.p.A. v. Bureau Veritas, 99 F.3d 86, 89 (2d Cir. 1996).
We begin with choice of law.
I. Choice of Law
As an initial matter, we agree with the parties that maritime choice-of-law
rules apply to the tort claims before us. Spain alleged in its complaint that it
was seeking redress for vast harm to the marine and coastal environment of
northwestern Spain caused by the release of oil that occurred when the Prestige
sank on the high seas. As such, Spain’s complaint satisfies the traditional
“locality” requirement for admiralty tort jurisdiction. See Jerome B. Grubart,
6
Defendants pursued counterclaims in the district court, but withdrew those
counterclaims without prejudice following the district court’s grant of summary
judgment to Defendants; the counterclaims are not at issue on appeal.
12
Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 531-534 (1995); East River
S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 863-864 (1986).7 “With
admiralty jurisdiction comes the application of substantive admiralty law.” East
River, 476 U.S. at 864. And this “general maritime law, as developed by the
judiciary,” id., includes maritime choice-of-law rules, Romero v. Int’l Terminal
Operating Co., 358 U.S. 354, 382-383 (1959).
Maritime choice of law, the Supreme Court teaches, involves eight possible
factors (the “Lauritzen factors”), to be considered in an interest analysis:
(1) the place of the wrongful act; (2) the law of the ship’s flag; (3) the
domicile of the injured party; (4) the domicile of the shipowner;
(5) the place of the contract; (6) the inaccessibility of the foreign
forum; (7) the law of the forum; and (8) the shipowner’s base of
operations.
Carbotrade, 99 F.3d at 90 (citing Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306,
309 (1970); Romero, 358 U.S. at 382; Lauritzen v. Larsen, 345 U.S. 571, 583-592
(1953) (footnote omitted)). Because Plaintiff here did not sue the
shipowner—but rather brought its action against a classification society and
subsidiaries—we also consider Defendants’ domicile and base of operations as
a factor. Carbotrade, 99 F.3d at 91. In addressing these factors, we emphasize
7
In East River, the Supreme Court reserved the question whether the additional
“maritime nexus” prerequisite for admiralty tort jurisdiction applies when a tort occurs
on the high seas. 476 U.S. at 864. We have not resolved that issue, nor need we do so
in this case; “[w]ere there such a requirement, it clearly was met here, for [the Prestige
was] engaged in maritime commerce, a primary concern of admiralty law.” Id.13
“choosing the law of the state with the most substantial and continuing contacts”
with the events giving rise to the claim. Id.In the circumstances of the present case, we consider the law of the flag,
the domiciles and bases of operations of the injured party, the shipowner, and
the defendant, and the place of the alleged wrongful act.8 It is undisputed that
the Prestige was flagged in the Bahamas; that the injured party is domiciled in
Spain, the shipowner domiciled in Liberia, and the ship operator domiciled in
Liberia but based in Greece; and that ABS and its subsidiaries are United States
corporations with headquarters in the United States. The “place of the wrongful
act is not where the vessel sinks, but where the negligence [or recklessness]
occurs,” Rationis, 426 F.3d at 587 (citing Carbotrade, 99 F.3d at 91)—here,
allegedly the United States. Thus, while several of the Lauritzen factors point
in several different directions, the domicile of defendants and the place of the
wrongful act clearly favor the application of American law; indeed, we have said
that “it is the state where the negligence occurs that has the greatest interest in
regulating the behavior of the parties.” Id.8
Here, since “no direct contractual relationship exists between the plaintiff and
the defendant . . . the place of the contract . . . is not involved in our analysis.”
Carbotrade, 99 F.3d at 91. Nor is there any contention that a New York court is
incapable of applying foreign law in this case, rendering any potential inaccessibility
of a foreign forum irrelevant. Rationis, 426 F.3d at 587. And “this Court has
considered the law of the forum generally of little relevance in United States courts.”
Id.14
Defendants argue that under these circumstances, the law of the flag
should control. But we said in Carbotrade that
Whatever significance law of the flag may have in cases where the
ship or its owner is a party and where other factors fail to point
clearly to another jurisdiction's law, we see no reason to apply the
law of the flag here in preference to that of another jurisdiction
whose ties are more pertinent to the dispute, especially given the
fact that neither the ship nor the owner is a party.
99 F.3d at 92-93. Here, of course, the shipowner is not a party to the case; and
Spain’s argument that it was Defendants’ wrongful conduct in the United States
that led to the sinking of the Prestige gives the United States ties to the
litigation that are both obvious and more pertinent than the fact that the
Prestige was Bahamian-flagged at the time that it sank.
Defendants argue that Spain’s focus on putative wrongful conduct in the
United States is a mere litigation tactic. Rationis makes clear, however, that the
place of the wrongful act, for choice-of-law purposes, is controlled by plaintiff’s
allegations in its complaint, see 426 F.3d at 587-588. And while there are
obvious tactical advantages for Spain if U.S. law applies, rather than the laws
of a jurisdiction with more restrictions on the potential liability of a classification
society in a case of this kind, there are risks too. As counsel for Spain stated at
argument on choice-of-law before the district court, “We’ll rise or fall on proving
15
. . . wrongful conduct in the United States, in [ABS] headquarters . . . .” J.A.
3343 (48:20-22).9
In light of all these considerations, we agree with the district court that
the Lauritzen factors indicate that this action should be governed by the
maritime law of the United States.
II. Merits
On the merits, the district court granted summary judgment to
Defendants because in the court’s view Defendants did not owe a tort duty to
refrain from reckless conduct, in performing classification services, to coastal
nations such as Spain, absent a pre-existing relationship between the parties not
present here. See 729 F. Supp. 2d at 642-646. As one might expect, the parties
on appeal hotly contest the merits of this holding; we, however, need not and do
not resolve the question. Even assuming arguendo that in the proper
circumstances ABS and its subsidiaries could be liable to a coastal nation like
Spain for reckless conduct, a matter on which we express no opinion, we hold
that Spain has not adduced sufficient evidence to allow a reasonable jury to
conclude that they should be held liable to Spain in this case. We therefore
affirm the district court’s grant of summary judgment to Defendants on this
alternative ground.
9
We note also that Spain itself is requesting that U.S. rather than Spanish law
apply in this case, and that it would be somewhat ironic to disregard this request in the
name of honoring the sovereign interests of Spain.
16
To prove recklessness, as characterized by Spain on appeal, a plaintiff
must show at least “that the defendant . . . disregarded[] an unjustifiably high
risk of harm to another caused by the defendant’s actions . . . that was obvious
and thus should have been known to the defendant.” Appellant’s Br. 35-36
(citing Farmer v. Brennan, 511 U.S. 825, 836 (1994)). In the Statement of Facts
of its opening brief on appeal, Spain discusses several categories of evidence that
it contends, in the final sentence of the body of that brief, “raise[] genuine issues
of material fact about whether ABS was reckless,” Appellant’s Br. 57. We
therefore consider whether the evidence in question could create a jury question
regarding recklessness, discussing each category in turn.
A. Proposed Changes to Classification Rules
We begin with the classification rules changes put forward by ABS in
February 2000, following the Erika casualty. ABS proposed that the major
classification societies jointly adopt a series of reforms to the classification rules,
especially those applicable to older tankers. Some of ABS’s proposed changes
were rejected by the other societies, or tabled for further discussion; some were
adopted in more limited form; and some were adopted and set for future phase-
in. No proposals were adopted and immediately implemented; Spain,
emphasizing that ABS, in its press release detailing the proposals, stated that
classification societies “need[] to immediately impose the following
17
requirements,” J.A. 881 (internal quotation marks omitted), implies that ABS
was reckless in failing to do so. Spain points to three proposed rules changes in
particular as relevant to the wreck of the Prestige.
1. Requiring Annual Inspections of Ballast Tanks
The first proposed change would have required an internal inspection of
all ballast tanks at each annual survey of a vessel after that vessel was fifteen
years old. This change was adopted only in part,10 and the parties do not dispute
that the structural failure aboard the Prestige that eventually led to the sinking
of the vessel began in a tank that was not inspected at the Prestige’s final annual
survey in 2002. The problem for Spain, however, is that even if fully adopted
and implemented prior to the 2002 survey, this rule change would not have
mandated an inspection of that tank.
As Spain admitted in its Response to Defendants’ Rule 56.1 Statement in
the district court, the Prestige had tanks for solely carriage of cargo, tanks
dedicated to saltwater ballast and tanks designated for the carriage of either
cargo or ballast (so-called “cargo/ballast tanks”). J.A. 2477. And as Spain
further noted in that same Response, J.A. 2487, the ABS survey rule definitions,
at all relevant times, expressly distinguished between ballast and cargo/ballast
tanks, see J.A. 2622.
10
The rule as adopted required annual internal inspection only of ballast tanks
that were adjacent to cargo tanks with heating coils.
18
The rule change at issue, as proposed by ABS, applied only to ballast
tanks, rather than cargo/ballast tanks, J.A. 882, 3311, and as adopted applied
only to a more limited subset of ballast tanks, J.A. 3311. Cf. J.A. 103 (Plaintiff’s
Amended Complaint) (alleging that after the Erika casualty, ABS instituted “a
requirement that water ballast tanks adjacent to tanks with heating coils”
receive annual internal inspections). But Spain’s theory of the Prestige casualty
is that the casualty ultimately resulted from the failure of the “longitudinal
bulkhead between the . . . No. 3 center cargo oil tank and No. 3 starboard
cargo/ballast wing tank.” Appellant’s Br. 7 (emphases added); see also J.A. 2488
(Spain Response to ABS 56.1 Statement) (same). We thus fail to see how a
requirement that dedicated water ballast tanks receive annual inspections, even
if fully in place at the time of the 2002 survey, would have made a causal
difference with respect to the sinking of the Prestige.11
To be sure, the final report of the ABS investigation into the Castor
casualty, issued in October 2001, concluded that ABS rules had erred in treating
11
Indeed, Spain contended in its Rule 56.1 Statement below that the surveyor
in 2002 conducted a faulty inspection because, (1) in certain circumstances ABS rules
required that a cargo/ballast tank be treated as if it were a ballast tank, and (2) in
those circumstances, such a tank was required to be inspected at an annual survey, but
(3) the surveyor failed to follow ABS rules and inspect that tank accordingly. J.A.
2487. It is undisputed that the 2002 survey occurred outside the United States; Spain
does not argue on appeal that any putative failure to follow ABS rules in the conduct
of that survey implicated a breach of duty on the part of ABS personnel within the
United States.
19
cargo/ballast tanks less stringently than dedicated ballast tanks, and
recommended that both types of tanks be inspected at each annual survey. J.A.
967-968. At minimum, however, we do not think that a reasonable jury could
conclude that ABS was reckless merely by failing to both adopt and implement
such a rule change between October 2001 and the final annual survey of the
Prestige in May 2002.
2. Requiring Two Surveyors at Special Surveys
Second, ABS proposed that two surveyors be present at all Intermediate
and Special Surveys, beginning with the Third Special Survey. It is undisputed
that this proposal was adopted with respect to tankers of the size of the Prestige,
and that the revised rule went into effect on July 1, 2001; it is also undisputed
that no more than one surveyor at a time was present for the Fifth Special
Survey of the Prestige, which occurred in May 2001. Spain implies that the
failure to adopt this rule change immediately (such that it would have been in
effect at the time of the 2001 Special Survey) was reckless. We are unpersuaded.
Spain has not advanced evidence, beyond the rule-change proposal itself
and the phrasing of the accompanying press release, that conducting
Intermediate or Special Surveys without a two-inspector requirement posed an
obvious and unjustifiable safety risk. Moreover, in this instance ABS adopted
and implemented the proposal at issue, which rather weakens any suggestion
20
that ABS disregarded such a risk if present. True, ABS did not implement the
rule-change for at least a year after adoption, but we do not think that any delay
in implementation of even a necessary change in safety rules is reckless per se;
and Spain points us to no evidence in this record (and we have found none) from
which a reasonable jury could conclude that the particular delay in
implementation at issue here was even wrongful, much less reckless.
3. Mandating Use of SafeHull (or its Equivalent)
Finally, ABS proposed mandating the inclusion of certain “Condition
Assessment Program” requirements, including a structural fatigue assessment,
at the Third Special Survey and each Special Survey thereafter. Spain asserts,
and ABS does not contest, that this change would have required that all existing
vessels receive a SafeHull analysis (or, presumably, that of an equivalent
program) once they reached fifteen years of age. This change, if immediately
adopted and implemented, would have applied to the Prestige when it underwent
its Fifth Special Survey in 2001. It is undisputed that the change was not
adopted.
But the failure to adopt and immediately implement this proposal,
however, could not be found, on this record, to constitute recklessness on the
part of ABS. As before, Spain has adduced no evidence, beyond the bare fact of
the proposal itself and its companion press release, that ABS proposed requiring
21
SafeHull for surveys of existing vessels because surveys without SafeHull posed
an obvious and unjustifiable safety risk. In such circumstances, a jury could
reach the conclusion that ABS acted in conscious disregard or indifference to
such risk only by acting “solely on its own conjecture or surmise.” Bryant v.
Maffucci, 923 F.2d 979, 985 (2d Cir. 1991).
We note that on appeal ABS asserts, and Spain does not contest, that as
of February 2000, when ABS’s proposal was made, no classification society then
used a program like SafeHull in classification surveys of built vessels, let alone
required the use of such a program. Conformity to industry custom and practice,
while not alone dispositive, is certainly relevant to a recklessness analysis, and
cuts strongly against Spain here. Spain rightly notes that, standing alone,
“[m]ethods employed in any trade, business or profession, however long
continued, cannot avail to establish as safe in law that which is dangerous in
fact.” Tug Ocean Prince, Inc. v. United States, 584 F.2d 1151, 1156 (2d Cir.
1978). But this merely begs the question of whether, at the relevant time, it was
obvious that the failure to require the use of SafeHull or its equivalent was
“dangerous in fact.” Since Spain has not introduced sufficient evidence to allow
a reasonable jury to conclude that it was, Spain’s claim on this point fails.
B. ABS’s Handling of SafeHull Information
22
Spain also contends that ABS acted recklessly in its handling of
information from the SafeHull modeling runs that were performed. Spain’s
(implicit) argument on this point seems straightforward: Marine Services, an
ABS subsidiary, did SafeHull modeling runs on two tankers (the Alexandros and
Centaur) built at the same time to the same plans as the Prestige, which
indicated that certain aspects of the structure of those vessels were especially
prone to fatigue and corrosion; yet ABS neither caused Marine Services to use
SafeHull to assess the Prestige itself, nor notified ABS surveyors of the results
of the SafeHull assessments of the Alexandros and Centaur. This failure,
according to Spain, deprived ABS surveyors of information necessary to conduct
a thorough and proper evaluation of the Prestige in 2001 and 2002, leading to the
vessel’s casualty in November 2002.
This simple argument founders on a simple problem—Spain has not
introduced evidence from which a reasonable jury could conclude that the
Alexandros and the Centaur were in fact sufficiently similar to the Prestige that
ABS had a tort duty to extrapolate from the results of Marine Services’ SafeHull
analyses in assessing the latter vessel.12 In the district court, Spain introduced,
and relied upon, excerpts from the deposition taken by Spain of Gus Bourneuf,
12
ABS does not dispute Spain’s assertion, see J.A. 737, that senior ABS
personnel reviewed and assessed the reports generated by Marine Services’ SafeHull
analyses of the Alexandros and the Centaur.
23
who at the relevant times was Chief Surveyor at ABS. J.A. 737, 841-845. In the
excerpt used by Spain, Bourneuf testified that ABS had concluded in the
mid-1990s that, even with regard to ships with the same design and built to the
same drawings, “what is found on one ship [with regard to structural fatigue]
may not, in fact, be found on a sister ship,” because fatigue analyses are affected
by “where the ship operates, the type of cargo she is carrying, the type of trade
she was in, the temperature of the water, and many other variables.” J.A. 844.
ABS therefore determined that SafeHull analyses would be regarded as ship-
specific, rather than extrapolable to sister ships. J.A. 843-844. Spain has not
disputed that these variables affect the structural fatigue actually experienced
by a given vessel.
Here, Spain has not introduced evidence that the Prestige had a service
history comparable along the variables listed by Bourneuf to that of the
Alexandros or Centaur. Nor could a reasonable jury conclude, on this
evidentiary record, that, notwithstanding potential differences in service history,
the SafeHull results as to the Alexandros and the Centaur were sufficiently
probative as to the Prestige that ABS was reckless in declining, or failing, to
include those results in the information regarding the Prestige that ABS
supplied to its surveyors or to the owners of the vessel.
24
C. The Gauging Report
Next, Spain suggests that decisionmakers in ABS’s Houston headquarters
acted recklessly in re-issuing the Prestige’s classification certificate on May 24,
2001, after the completion of the Fifth Special Survey but prior to receiving the
gauging report from that survey. As discussed above, gauging is the ultrasonic
measurement of the thickness of the steel in a vessel’s structure; Spain asserts
that having the report explaining the findings of the gauging process “is
necessary to evaluate the condition of the vessel’s steel,” Appellant’s Br. 20. If
ABS Houston had waited until its staff had the gauging report in hand, Spain
asserts, the staff would have noticed the putatively glaring deficiencies in that
report, been alerted to the underlying deficiencies in the gauging itself, and
declined to re-issue the class certificate.
It is undisputed, however, that on May 23, 2001, prior to re-issuing the
class certificate, ABS Houston received a summary of the gauging report (as well
as summaries of the other survey reports) from the ABS field office in Hong
Kong, which indicated that all required gaugings had been conducted and
reviewed. Spain’s argument, therefore, must be that ABS Houston in particular
had a tort duty to conduct a substantive review of the gauging report itself prior
to reissuing the class certificate, rather than leave the review to a field office,
and thus that it was reckless for ABS Houston to have failed to conduct such a
25
review in this case. But Spain has not put forward evidence from which a
reasonable jury could conclude that ABS, in its Houston office, acted recklessly
here.
On appeal, Spain relies on three pieces of evidence for the proposition that
ABS Houston had a duty to substantively review: (1) the putative knowledge of
ABS decisionmakers that “there were systemic deficiencies in the work of ABS’s
field surveyors”; (2) statements by ABS that it would conduct a review of the
survey records of all ABS-classed vessels aged 20 years or older; and (3) a
February 2000 directive by Chief Surveyor Bourneuf that copies of survey
reports for tankers aged 20 years or older be sent to him personally. Appellant’s
Reply Br. 17.
The evidence cited for point 1, however, is the memorialization of a
discussion among senior ABS surveyors, regarding quality control of field
surveys, that occurred in September 2001. We fail to see how this could be
evidence of a breach of duty by ABS in May 2001. Nor do we see how a
reasonable jury could conclude from ABS’s announcement that it would go back
over past survey reports that ABS Houston in particular, rather than a regional
ABS office, had a tort duty to substantively review gauging reports going
forward, and that it was reckless in failing to do so.
26
Spain’s argument based on the Bourneuf directive suffers from the same
shortcoming. We assume arguendo that (a) the directive applied to the report
from the 2001 Special Survey of the Prestige; (b) the purpose of the directive was
to ensure that ABS Houston conducted a substantive evaluation of each survey
report, including the full gauging report; and (c) the directive was still in force
in May 2001. These propositions without more, though, certainly do not allow
a reasonable jury to conclude that in issuing the directive, Bourneuf (and
through him ABS headquarters) thereby incurred a duty in tort substantively
to review gauging reports, such that reliance on a field office’s summary of the
gauging report would constitute recklessness per se.13
More broadly, even if such a duty were to exist, Spain has pointed to no
evidence in the record, and we are aware of none, that would shed light on the
circumstances surrounding ABS Houston’s putative failure to conduct such a
review in this case—for example, whether the failure was due to administrative
oversight, deliberate avoidance, or some other cause. That failure thus does not
constitute evidence from which a fact-finder could conclude that ABS Houston’s
13
Spain also asserts, based on other ABS internal reports and record-keeping
procedures, that “ABS headquarters was required to review [substantively] survey
reports, including gaugings.” Appellant’s Reply Br. 16. We are skeptical that this
assertion is correct; but even if it is, we again fail to see how ABS Houston’s failure to
comply with that requirement, on its own, creates a genuine dispute of material fact
as to whether ABS Houston recklessly breached a tort duty-to-review in this case.
27
conduct was not merely a negligent failure to exercise proper care, but rather a
“conscious disregard of a known or obvious risk of harm . . . shar[ing] more in
common with intentional torts than . . . with negligence,” Appellant’s Br. 36.
D. The Kostazos Fax
Spain additionally suggests that ABS was reckless in disregarding a fax
that was allegedly sent in August 2002 by the Prestige’s then-master (Captain
Efstratios Kostazos), alerting ABS to putatively grave mechanical and structural
problems aboard the vessel, and requesting that ABS conduct an emergency
inspection. The precise identity of the fax’s recipient, however, in fact
demonstrates a fundamental flaw in Spain’s argument. Spain’s theory of the
case here is that parent-company ABS is liable for the harms caused by the
Prestige casualty because high-level officials in ABS disregarded the
unjustifiably high risk of harm to parties such as Spain that was posed by the
Prestige. See, e.g., Appellant’s Br. 4, 8-9, 12-20; cf. J.A. 725-726, 735-736, 741-
743 (Affidavit of Brian D. Starer in Support of Spain’s Motion for Determination
of Choice of Law).14 But the fax was not addressed to any of those senior
executives, or indeed to anyone in ABS at all—it was addressed to ABS’s
subsidiary, Marine Services. J.A. 1390, 1401. And there is of course no evidence
14
While Spain’s Amended Complaint names certain ABS subsidiaries as
defendants in addition to the parent company, J.A. 89-90, Spain has not pointed on
appeal to any tortious conduct by these subsidiary companies in particular.
28
in the record that the fax, if and when it was received there, ever made its way
from Marine Services to ABS proper, much less to ABS decisionmakers.
Spain does not contend that Marine Services (or any successor thereto) in
particular was reckless in failing to respond properly itself to the fax, nor that
Marine Services recklessly breached a duty to convey the fax’s information to
officials at ABS so that they might respond. Thus, Spain’s argument must be
that knowledge of the fax’s contents should be imputed from subsidiary to
parent.
On standard agency principles, such imputation would require Spain to
establish both that an agency relationship existed between ABS and Marine
Services and that the information at issue here went to matters within the scope
of the agency. See Apollo Fuel Oil v. United States, 195 F.3d 74, 76 (2d Cir.
1999) (per curiam) (“In general, when an agent is employed to perform certain
duties for his principal and acquires knowledge material to those duties, the
agent’s knowledge is imputed to the principal.”) (emphases added); Mallis v.
Bankers Trust Co., 717 F.2d 683, 689-690 (2d Cir. 1983) (same); see also
Restatement (Third) of Agency § 5.03 & cmts. b, c, e (2006) (same).
Even if we were to assume that Spain has introduced evidence sufficiently
establishing that at relevant times, Marine Services (or its successor) was ABS’s
29
agent for certain purposes,15 evidence is lacking on the crucial question whether
the Kostazos fax came within the scope of Marine Services’ duties as ABS’s
agent.
Assuming arguendo that Marine Services was ABS’s agent with regard to
SafeHull, for example, it is undisputed that neither the owner nor operator of
the Prestige ever purchased a SafeHull analysis of the vessel. With respect to
other services, the record contains deposition testimony that Marine Services
“provide[s] certification services to marine and offshore clients as it relates to
fitness for purpose or certification to design specification,” J.A. 1579, and more
generally that Marine Services “provides risk management and engineering
support services to various third-party clients . . . as it relates to their
operational performance and compliance issues that they may have from a
certification standpoint of various regulatory or statutory entities,” J.A. 1581.
Even if these services, at relevant times, were offered by Marine Services as an
agent of ABS, Spain has not introduced evidence that either the owner or
operator of the Prestige was ever a client of Marine Services, such that a fax from
15
We note that an agency relationship was not created simply by virtue of
Marine Services having been a wholly-owned subsidiary of ABS, see Fletcher v. Atex,
Inc., 68 F.3d 1451, 1461-62 (2d Cir. 1995); nor has Spain introduced evidence from
which a reasonable jury could conclude that ABS exercised domination over Marine
Services notwithstanding the separate corporate statuses of the two companies, cf. id.
at 1458-61.
30
the crew of the Prestige would come within the scope of Marine Services’ duties
on behalf of ABS. Nor is there any other evidence in the record from which a
reasonable jury could conclude that information held by Marine Services
regarding conditions aboard the Prestige should be imputed to ABS.16 As such,
even if Marine Services did receive the Kostazos fax, the failure of ABS to
respond to the fax cannot form the basis of any liability of ABS to Spain on this
record.
E. Other Putative Evidence of Recklessness
In addition to the evidence discussed in Sections II.A-D, supra, the
Statement of Facts of Spain’s principal brief on appeal mentions three other
pieces of evidence that warrant at least some discussion: the inclusion of the
Prestige on a 1997 internal watch list of ABS-classed ships with multiple
detentions by port states; the failure of ABS to heed the 1998 recommendation
of one of its surveyors that the listed condition of certain of the Prestige’s water
ballast tanks be downgraded as a precaution to ensure that the tanks be
examined annually; and the failure of supervisors in ABS’s Dubai office to
support one of its surveyors in a conflict in 2000 between the surveyor and the
16
Spain has also not introduced sufficient evidence that the fax would have
served as a notification to Marine Services of conditions aboard the Prestige, see
Restatement (Third) of Agency § 5.01(1) (2006), much less that Marine Services had
actual or apparent authority to receive such a notification on behalf of ABS, see id. §
5.02.
31
operators of the Prestige over the vessel’s condition. We do not think any of this
evidence is sufficient to create a genuine issue of material fact on recklessness,
either separately or in the aggregate.
With regard to the conduct of ABS in the 2000 incident in Dubai, Spain
has failed to put forward any evidence that ABS officials in the United States—
as distinct from ABS Dubai and other ABS regional offices—had any
involvement in the decisions that Spain now criticizes on appeal. As such, the
incident, on its own, cannot create a material dispute of fact regarding
recklessness by U.S. officials in this case.
Next, on the 1998 surveyor’s recommendation that was not followed, we
note as an initial matter that, as Spain itself says in its brief, Appellant’s Br. 9-
10, the recommendation concerned the Prestige’s No. 2A water ballast tanks,
rather than the No. 3 starboard cargo/ballast tank identified by Spain as the
source of the casualty.17 Regardless, we assume arguendo that the ultimate
decision not to downgrade the condition of the tanks was made by ABS officials
in the United States. Spain still has not identified any evidence going to, for
example, when recommendations by line surveyors were (or were not) followed
17
Spain argues in its reply brief that “ABS’s assertion[] . . . that the No. 2 tanks
had no relationship to the No. 3 tanks . . . [is] unsupported by the record and raise[s]
[an] issue[] for the factfinder.” Appellant Reply Br. 14 n.10. But Spain itself has not
pointed to any evidence in the first place that the structural soundness of the No. 2
water ballast tanks was related to that of the No. 3 cargo/ballast tanks.
32
by supervisory staff; when ABS would (or would not) precautionarily alter the
listed condition of a given structural element of a vessel to ensure that said
element received additional survey attention; or indeed any other evidence from
which a reasonable fact-finder could conclude on this record that the decision not
to follow the particular recommendation at issue was reckless.
Finally, it is not clear to us how the inclusion of the Prestige on a watch list
in 1997, standing alone, provides evidence of recklessness on the part of ABS.18
Spain does not dispute that a notation regarding the presence of the Prestige on
this multiple-detention list was added to the information in ABS’s records
regarding the Prestige provided to each surveyor conducting an evaluation of the
vessel while that vessel was on the list, and that the notation urged extra care
in surveying a vessel on the watch list. This evidence is hardly probative of a
lack of care on the part of ABS.
Nor do we think that the pieces of evidence discussed in this section create
a genuine dispute of material fact as to recklessness when taken together.
Assume arguendo that ABS might, in certain circumstances, go above and
beyond its existing survey procedures, re-evaluate its assessment of a particular
vessel’s condition in light of other information that complicates that assessment,
18
Spain adduces no evidence as to how long the Prestige remained on the watch
list. On appeal, ABS asserts, and Spain does not contest, that the Prestige was not on
such a list at least by the end of 2000.
33
and then act on that altered assessment outside the normal survey cycle. Spain
fails to advance any argument, much less point to evidence in the record, as to
when ABS would, or would not, have a duty to undertake such extraordinary
action; nor do we think the information discussed in this section could implicate
that duty. Certainly we do not think that a reasonable jury could conclude on
the evidence presented here that the failure of ABS to take such action with
regard to the Prestige was reckless.
CONCLUSION
We appreciate the gravity of the injuries that Spain alleges it has suffered
here, and do not, by our opinion, mean either to diminish those injuries or speak
more broadly to the role of classification societies in maritime commerce and the
potential duties of classification societies to third parties. We hold only that, on
this evidentiary record, Spain has not satisfied its burden of establishing a
genuine dispute of material fact as to whether ABS and its subsidiaries
recklessly breached any duty that they might owe to Spain. As such, and for the
foregoing reasons, the judgment of the district court is AFFIRMED.
34