Winterville Marine v. Patricia Jackson

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 03-3441, 03-3448, 03-3470, 03-3566
___________
In the Matter of: The American Milling *
Company, Limited; In the Matter of: * Appeal from the United States
H & B Marine, Inc.; In the Matter of: * District Court for the Eastern
American Milling, LP, a Limited * District of Missouri.
Partnership, for exoneration from or *
1
limitation of liability. *
___________
Submitted: December 13, 2004
Filed: May 17, 2005
___________
Before MELLOY, BRIGHT, and BENTON, Circuit Judges.
___________
MELLOY, Circuit Judge.
This admiralty case involves numerous appeals and cross-appeals from two
district court rulings. In the first ruling, the district court determined that the value
of a towboat, the M/V Anne Holly, was $2.2 million. In the second ruling, the district
court addressed liability issues surrounding allisions that occurred in the St. Louis
harbor when barges from the M/V Anne Holly’s tow allided with a pier of the Eads
Bridge and a moored gambling vessel, the Admiral. The district court determined
that the owner of the M/V Anne Holly and the employer of its crew were entitled to
1
The complete caption for these consolidated cases is available from the clerk’s
office.
limit their liability to $2.2 million under the Limitation of Liability Act, 46 App.
U.S.C. § 183 et seq. (the “Act”). The district court also determined that the captain
of the M/V Anne Holly was competent in general but negligent in this instance and
that the allisions resulted from his spontaneous navigational error. Finally, the
district court determined that the owner of the Admiral, President Riverboat Casinos,
Inc., (“President Casino”), was partially at fault due to its failure to shield or move
the Admiral after repeated past allisions at the same location. We reverse the district
court’s grant of limited liability to the employer of the ship’s crew, Winterville
Marine Services, Inc. (“Winterville”), because Winterville was not an “owner” as
required under the Act. We affirm in all other respects.
I. Facts
A. The Parties and Background Information
American Milling Co., UN Ltd., H & B Marine, Inc., and American Milling,
LP (collectively “American Milling”) owned the M/V Anne Holly at the time of the
allisions. The crew, including the ship’s captain, Captain John O. Johnson, were
employees of Winterville. Winterville provided the crew for the M/V Anne Holly for
$2050 per day under a renewable written contract with American Milling that
Winterville and American Milling orally extended each year.
Winterville paid the crew members’ salaries and withheld their taxes.
Winterville also transported the crew to and from the M/V Anne Holly and provided
a telephone, side-band radio, food, and personnel-related supplies. Winterville’s crew
performed maintenance and repairs as required while the M/V Anne Holly was in
service. Winterville did not provide ship-related supplies, parts for repairs, or fuel.
Winterville generally made the hiring decisions for the crew but consulted with
American Milling before hiring a pilot. American Milling reserved the right to ask
Winterville for crew changes or to have crew members removed. American Milling
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provided insurance for the vessel and paid for medical expenses associated with crew
injuries as well as employee-related maritime maintenance and cure obligations.
Prior to the shipping season, American Milling personnel met with the
Winterville crew to discuss repairs and maintenance that American Milling had
performed during the off-season. American Milling personnel informed the
Winterville crew of navigation conditions, Coast Guard bulletins, and policies and
procedures to follow in the operation of the M/V Anne Holly. During the shipping
season, American Milling personnel boarded the M/V Anne Holly to talk to the crew
and check on the vessel’s condition. Also, American Milling personnel were
available for the crew to call twenty-four hours a day. American Milling had its own
mechanical crews for major overhauls, and between 1997 and 1998 American Milling
paid $287,000 for repairs. At least one member of the Winterville crew worked for
American Milling during the off-season and helped American Milling with off-season
repairs on the M/V Anne Holly. American Milling paid Winterville separately for
workers’ non-crewing, dry-dock services.
At the time of the allisions, a charter existed between East Side River
Transportation (“East Side”) and American Milling under which East Side paid
American Milling $4000 per day for use of the M/V Anne Holly and its crew. East
Side was responsible for all fuel costs, and East Side instructed the crew of the M/V
Anne Holly where to pick up and deliver barges. The crew of the M/V Anne Holly
maintained event logs to record the time and location of pick-ups and drop-offs as
well as any incidents worthy of note. The crew faxed these event logs to Eastside,
Winterville, and American Milling on a daily basis. In addition, the crew maintained
engine logs that it faxed to American Milling on a daily basis. Notwithstanding these
frequent reports, day-to-day navigational decisions rested solely with the crew (other
than the selection of destinations to pick up and drop off barges and/or the contents
of barges). Eastside and Winterville, like American Milling, were available twenty-
four hours a day to take calls from the crew.
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President Casino owned the Admiral. Prior to 1985, the Admiral had been an
entertainment ship with engines and steering ability. Since 1985, however, the
Admiral had been without these capabilities and had been moored at the Missouri
shore just downstream of the Eads Bridge. Other vessels or barges had struck the
Admiral at least four times at this mooring location between 1985 and 1998.
The Army Corps of Engineers had recommended that President Casino build
a protective cell to shield the Admiral from allisions with runaway barges. The
district court and parties other than President Casino characterize this
recommendation as an order and a condition upon the Admiral’s mooring permit from
the Corps. President Casino characterizes the recommendation as merely a
suggestion. President Casino also argues that the Corps revoked the recommendation
after President Casino challenged the recommendation and after the Corps consulted
with Coast Guard safety experts. It is undisputed, however, that prior to the accident
and prior to the purported revocation of the protective cell recommendation, President
Casino represented to the Coast Guard and the Corps that it intended to move the
Admiral from its mooring location to a safer area. In fact, the Coast Guard referred
to this representation in a letter to the Corps in which the Coast Guard stated that no
protective cell was necessary. At a minimum, then, it is clear that the Corps
recommended that President Casino build a protective structure and that the absence
of official action to follow up on this recommendation was due, at least in part, to
President Casino’s representation that it would move the Admiral.
B. Conditions and Navigation on the Mississippi River in St. Louis
The Mississippi River in St. Louis presents many navigational challenges.
There are numerous bridges, including the Eads Bridge, that present limited
clearance. The river runs generally from north to south, with Illinois on the left
descending bank and Missouri on the right descending bank. The river experiences
a gradual curve through the area such that vessels moving upstream must turn slightly
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to the west as they travel north. The current, which runs down-channel
predominantly from north to south, also includes a cross current that moves generally
from Missouri toward Illinois. The cross current is more dramatic during times of
high water and varies in strength and direction at different locations along the river
in St. Louis.
Moving a large tow of barges upstream through St. Louis and under the bridges
is somewhat of a balancing act. The downstream current may force a tow of barges
that is directed upstream toward either Missouri or Illinois depending on the angle of
attack that the pilot presents to the current and the degree to which the generally
downstream force of the moving river catches the leading port or starboard edge of
the tow. Accordingly, while it might seem logical to assume that a cross current that
runs generally toward Illinois would push all tows toward Illinois, this assumption
is an oversimplification. Tows of barges are large (in the present case over 1100 feet
long); cross currents vary, especially around obstacles such as bridge piers; the river
bends slightly near the Eads Bridge; and tows moving upstream at all times face
strong resistance from the force of the downstream movement of the water. In other
words, although there is a cross current, the water is ultimately moving
downstream—not from an origination point in St. Louis, Missouri, to a final
destination in East St. Louis, Illinois. The simple fact, as explained below, that the
barges from the broken tow in this case drifted toward Missouri rather than Illinois
(counter to the direction of the prevailing cross-current) illustrates this phenomenon.
C. The Accident
Early in the morning on April 4, 1998, Captain John O. Johnson, an
experienced river boat captain and employee of Winterville, piloted the M/V Anne
Holly southbound on the Mississippi River beneath the Eads Bridge in St. Louis,
Missouri. He spent most of the day building a tow of fourteen barges, twelve of
which were loaded and two of which were empty. The tow measured 1154 feet long
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and 105 feet wide. The towboat, the M/V Anne Holly, measured 154 feet long and
40 feet wide. The Mississippi River in St. Louis was above flood stage and there was
drift (floating debris) present in the river. The M/V Anne Holly was in proper
working condition, other than a faulty tachometer, and had sufficient horsepower to
push the tow of barges upstream through the bridges of St. Louis.
At 6:30 p.m., Captain Johnson proceeded northbound. On this trip, Captain
Johnson piloted the M/V Anne Holly under two bridges before he reached the Eads
bridge. The current is stronger at these downstream bridges than at the Eads bridge,
and the M/V Anne Holly had no difficulty at either of these bridges. Captain Johnson
spoke on the radio to the captain of a southbound vessel, Captain Simmons of the
M/V Frances, and arranged a port to port passing. Captain Simmons observed the
M/V Anne Holly, noted nothing unusual, saw that its lights were functioning, and
observed that it was moving at a reasonable speed along a reasonable course.
It is undisputed that Captain Johnson’s northbound approach to the Eads bridge
was proper at least until the M/V Anne Holly was 400 feet downstream of the bridge.
Experts who testified at trial disagreed as to the precise manner in which a riverboat
pilot should proceed from this distance onward, however, at least six seasoned
riverboat pilots agreed that Captain Johnson’s approach from 400 feet onward was
proper. Captain Johnson approached the Eads Bridge between the center of its center
span and the left descending (Illinois side) pier of its center span. Captain Johnson
turned five to ten degrees to port downstream of the Eads Bridge to bring the tow into
a position generally perpendicular with the bridge and to drive the tow generally into
the current. At least one expert recommended softer, more gradual, steering at a
distance farther downstream from the bridge to more gently bring the tow of barges
in line with the current for passing under the bridge.
The President Casino’s expert attacked the entirety of Captain Johnson’s
approach. This expert opined that it was necessary to approach the bridge nearer to
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the right descending (Missouri side) pier of the bridge’s center span. This expert also
presented an exhibit that showed dramatic cross currents in the area of the Eads
Bridge. Other experts, riverboat pilots who relied on personal experience, discredited
the approach that President Casino’s expert recommended. They also discredited his
characterization of the cross currents near the Eads Bridge.
According to Captain Johnson, as he steered the M/V Anne Holly under the
Eads Bridge, the vessel and its tow began to experience a vibration. He felt the
vibration grow worse and noted that the tow had begun to slow down. He asked his
chief engineer to take engine readings using a manual tachometer, as was the general
practice in light of the ship’s faulty tachometer. The chief engineer did so, and the
readings indicated rpms in the appropriate range, which indicated that the engine was
generating sufficient horsepower. As a third tier of barges in the M/V Anne Holly’s
tow passed under the Eads Bridge, the tow stopped its upstream progress entirely and
began to move toward the pier on the Missouri side of the bridge’s main channel
span. Recognizing that an allision with the pier was imminent, Captain Johnson
attempted to minimize the impact by landing the tow gently on the pier.
Nevertheless, impact occurred with sufficient force to break the tow apart and cause
individual barges to top around and float downstream.
Captain Johnson broadcast a “May-Day” signal and radioed the Coast Guard.
He also tried to radio the Admiral, but received no response. Captain Simmons, who
was farther downstream by this time, heard the distress signal and turned north. As
Captain Simmons approached the area, he saw that a barge had allided with the
Admiral, the Admiral’s moorings had broken loose, and the Admiral had started to
move away from the Missouri shore. Captain Simmons radioed Captain Johnson to
notify him of the Admiral’s condition. Captain Johnson then released the remaining
barges from his tow and maneuvered the M/V Anne Holly to secure the Admiral
against the shore. The crew of the M/V Anne Holly then boarded the Admiral and
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assisted as passengers disembarked the Admiral. Captain Simmons used his own ship
to assist with the capture of barges from the M/V Anne Holly’s tow.
Following the accident, the National Transportation Safety Board conducted
an investigation, and the Coast Guard charged Captain Johnson with negligence.
Captain Johnson pleaded no contest to the charges.2 Four days after the accident,
with no repairs or adjustments made to any equipment on the M/V Anne Holly and
with river conditions almost identical to those on the night of the allisions, the M/V
Anne Holly successfully pushed a tow of twelve loaded and three empty barges
upstream through St. Louis and under the Eads bridge. On this post-accident run,
conducted by Captain Harvey, tachometer readings showed that the engines were
operating at the same rpms as on April 4 and that the M/V Anne Holly followed an
approach course almost identical to Captain Johnson’s April 4 approach. A videotape
of the post-accident run was admitted into evidence.
In November 1998, American Milling received a firm offer of $2.2 million for
the M/V Anne Holly from a buyer in the South American inland river towboat
market. In February 1999, ten months after the allisions, American Milling and the
buyer closed on the sale of the M/V Anne Holly. We discuss additional information
regarding the value of the M/V Anne Holly below.
D. Procedural History
On April 6, 1998, American Milling filed a complaint in the district court under
the Act asking for exoneration from or limitation of liability against claims that
resulted from the allisions. Normal tort principles of fault and proximate cause apply
2
The District Court excluded certain evidence and testimony that the NTSB and
the Coast Guard generated during their investigations. No parties appeal the district
court’s evidentiary rulings.
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in the maritime setting such that liability requires a showing of fault. Even if a vessel
or its crew are negligent or at fault, however, the Act permits owners, owners pro hac
vice, and certain charterers to limit their liability to the value of their vessel. 46 App.
U.S.C. §§ 183, 186. To enjoy a limitation of liability under the Act, such parties must
have fulfilled their maritime duty of providing a seaworthy vessel (including a
competent crew) and they must not have had knowledge of the negligence or have
been in privity with the persons whose negligence or fault actually caused the
damage. Id. at § 183. Accordingly, the issues involved in a proceeding under the Act
are two-fold. “The court must determine (1) whether negligence or unseaworthiness
caused the accident, and (2) whether the shipowner was privy to, or had knowledge
of, the causative agent.” In the Matter of: MO Barge Lines, Inc. v. Belterra Resort
Indiana, LLC, 360 F.3d 885, 890 (8th Cir. 2004).
In its attempt to cap liability under the Act, American Milling asserted that the
value of the M/V Anne Holly was $1.25 million. American Milling filed an “Ad
Interim Stipulation” which provided that American Milling and its surety would pay
into the court or provide a bond for $1.25 million within ten days of the court’s entry
of a valuation order. President Casino challenged the $1.25 million figure, claimed
that the sale price of $2.2 million reflected the appropriate value, requested that the
court make findings as to the value of the M/V Anne Holly, and requested that the
court require President Casino to pay into the court or post a bond of the value
determined.
Winterville later joined American Milling to seek exoneration from or
limitation of liability, claiming the status of owner pro hac vice due to the level of
control that Winterville exercised over the M/V Anne Holly. President Casino later
filed a negligence action against Captain Johnson. Winterville, Captain Johnson, and
American Milling counterclaimed and alleged that President Casino was at least
partially at fault due to its failure to protect or move the Admiral after past allisions
with other vessels at the same mooring location. Various other parties including
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barge owners and patrons of the Admiral raised property damage and personal injury
claims. Because the issue of limited liability under the Act necessarily required
analysis of negligence and fault, the district court consolidated the complaints. The
district court separated personal injury claims from property damage claims and
addressed only property damage claims in the rulings now on appeal.3
In an opinion dated January 9, 2001, following a “due appraisement” hearing,
the district court determined that the value of the M/V Anne Holly was $2.2 million.
125 F. Supp. 2d 981 (E.D. Mo. 2001). In reaching this figure, the district court
considered the actual sale, contemporaneous sales of similar vessels, prior appraisals
of the M/V Anne Holly, and the insured value of the M/V Anne Holly. After arriving
at this figure, the district court ordered American Milling to pay $2.2 million into the
court’s registry or to post a corporate surety bond in that amount.
In a detailed, published opinion dated June 12, 2003, the district court set out
the extensive facts of this matter and addressed liability issues. 270 F. Supp. 2d 1068
(E.D. Mo. 2003). The district court concluded under numerous legal theories that
Captain Johnson, although a competent and experienced riverboat captain, was
negligent on the night in question and at fault for the accident. The district court
applied the Oregon rule to reach this conclusion. The Oregon rule is a rebuttable
presumption that a moving vessel is at fault if it allides with a stationary object.
See The Oregon, 158 U.S. 186, 197 (1895). The district court found this presumption
not rebutted. The district court also found under the general negligence principle of
res ipsa loquitur that, without negligence on Captain Johnson’s part, the accident
would not have occurred. The district court also applied the Pennsylvania rule.
Under the Pennsylvania rule, if there is a violation of a statute or regulation designed
to prevent collisions, the burden shifts to the violator to prove that the violation was
Although we refer only to President Casino throughout, numerous other
3
claimants adopted President Casino’s arguments on appeal.
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not a contributing cause of the accident. See The Pennsylvania, 86 U.S. (19 Wall.)
125, 129 (1873). The district court found that Captain Johnson violated Inland
Navigation Rule 2 by failing to properly consider the strength of the flood-level
current under the Eads Bridge. The district court found this presumption unrebutted.
Finally, the district court found that Captain Johnson’s failure to properly consider
the strength of the current comprised negligence under a traditional analysis of duty
and breach because failure to properly consider the current fell below the duty of care
required of a prudent seaman.
The district court’s finding that Captain Johnson was negligent prevented any
owner from enjoying exoneration from liability under the Act. The district court
determined that Winterville was an owner due to the level of control that the
Winterville crew exercised over the M/V Anne Holly. The district court found,
however, that the M/V Anne Holly was in good working order, Captain Johnson was
competent to pilot the M/V Anne Holly, and neither American Milling nor corporate
personnel at Winterville had privity or knowledge regarding Captain Johnson’s
negligence. In this regard, the district court found that Captain Johnson and the rest
of the crew were not sufficiently high in the hierarchy of Winterville’s company
structure to be considered managing agents whose negligence could be imputed to the
company. Accordingly, the district court found that Winterville and American
Milling satisfied their duty under the Act by providing a seaworthy vessel and
competent crew and found them entitled to limit their liability under the Act.
The district court also found that President Casino failed to comply with a
requirement included in the Admiral’s mooring permit that called for a protective
structure to be built near the bow of the Admiral. Accordingly, the district court
found under the Pennsylvania rule that President Casino was partially at fault for
allisions that involved the Admiral. Further, the district court found, by applying
traditional negligence principles, that President Casino had actual knowledge of four
prior allisions between runaway barges and the Admiral at the same mooring location
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and that President Casino’s failure to take protective action comprised negligence
under the circumstances. Finally, the district court assessed President Casino’s fault
at 20%.
On appeal, American Milling, Winterville, and Captain Johnson contest the
district court’s valuation determination. Winterville and Captain Johnson contest the
finding that Captain Johnson was negligent. President Casino contests the district
court’s determination that Winterville was an “owner” with standing to seek limited
liability under the Act and the determination that Winterville and American Milling
were entitled to limited liability under the Act. In this regard, President Casino
specifically contests: (1) the finding that Captain Johnson was competent and that
provision of a competent crew entitled owners to limited liability under the Act; (2)
the finding that Captain Johnson was not a managing agent for Winterville; and (3)
the finding that American Milling and Winterville were without negligence and did
not have privity or knowledge concerning Captain Johnson’s negligence. Finally,
President Casino contests the district court’s assessment of 20% fault for failure to
protect the Admiral.
II. Jurisdiction and Standards of Review
28 U.S.C. § 1292(a)(3) provides our jurisdiction over interlocutory appeals in
admiralty cases. No party disputes our jurisdiction over appeals from the district
court’s June 12, 2003 liability determination. President Casino, however, argues that
we are without jurisdiction over appeals from the district court’s earlier, January 9,
2001 valuation determination because no party filed a notice of interlocutory appeal
within thirty days of the court’s entry of that order. In this regard, President Casino
correctly notes that 28 U.S.C. § 2107(a) permits only thirty days for the filing of a
notice of appeal. Id. (“no appeal shall bring any judgment, order or decree . . . before
a court of appeals for review unless notice of appeal is filed, within thirty days after
the entry of such judgment, order or decree”).
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In this instance, however, because there had been no finding of liability, the
valuation determination by itself was not appealable at the time of entry. Without a
later determination as to liability, the valuation determination was strictly a finding
by the district court regarding the amount to be paid into the court’s register or to be
posted as bond. Such an order is not independently appealable. City of Fort
Madison, Iowa v. Emerald Lady, O.N. 972894, 990 F.2d 1086, 1089 (8th Cir. 1993),
(there must be “a decision on the merits of the claims or defenses underlying the
dispute as a predicate for jurisdiction.”). The finding of liability in the June 12, 2003
order made the earlier order appealable. Accordingly, the notice of appeal was timely
and jurisdiction is proper.
Because jurisdiction is proper, we may review the merits of the claims raised
on appeal. We review the district court’s factual findings following a bench trial in
admiralty for clear error. McAllister v. United States, 348 U.S. 19, 20 (1954).
Findings of negligence in admiralty are findings of fact. Lone Star Indus. v. Mays
Towing Co., 927 F.2d 1453, 1456 (8th Cir. 1991). In admiralty as in other contexts,
however, we review purely legal determinations de novo. In re: MO Barge Lines,
Inc., 360 F.3d at 889; Union Pacific R.R. Co. v. Kirby Inland Marine, Inc., of Miss.,
296 F.3d 671, 674 (8th Cir. 2002).
III. Discussion
A. Winterville’s Status as an Owner
The Act provides limited liability to the “owner” of a vessel who does not have
privity or knowledge regarding the negligent acts that caused damage. 46 App.
U.S.C. § 183. The Act also applies to a charterer who “shall man, victual, and
navigate such vessel at his own expense, or by his own procurement.” Id. at § 186.
The Act, however, specifically excludes from coverage a ship’s crew and master,
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even if the crew or master happens also to be an owner. Id. at § 187. Section 187
provides:
Nothing in sections . . . 183 . . . and 186 of this title shall be construed
to take away or affect the remedy to which any party may be entitled,
against the master, officers, or seamen, for or on account of . . . any
negligence . . . or other malversation of such master, officers, or seamen
. . . nor to lessen or take away any responsibility to which any master or
seaman of any vessel may by law be liable, notwithstanding such master
or seaman may be an owner or part owner of the vessel.
Courts have expanded the definition of owner or charterer to encompass parties in
analogous situations who exercise dominion and control over a vessel and are
therefore owners pro hac vice even if not technically charterers. See Petition of the
United States, 259 F.2d 608, 609 (3d Cir. 1958) (noting that the words “charter” or
“charter party” need not be present in a contract in order for the person taking over
the operation of the ship to be considered a charter party or temporary owner); see
also In re Complaint for Exoneration From or Limitation of Liability of Shell Oil Co.,
780 F. Supp. 1086, 1089-90 (E.D. La. 1991) (“The rule that emerges from all of the
cases interpreting ownership pursuant to Section 183 is that if the plaintiff in
limitation may be held liable because of his ownership or control of the vessel, then
he can maintain a limitation action.”). The question in general, then, is whether a
party who claims the status of owner exercised sufficient dominion and control over
the vessel to be an owner pro hac vice even though neither technically a title-holding
owner nor a charterer. Section 187 makes clear that, when conducting this analysis,
we should not ascribe owner status to a party merely based on the fact that it
performed functions of master or crew.
Winterville notes correctly that Congress passed the Act to provide an
organized mechanism for distributing limited funds among numerous victims, to
encourage investment in shipping, to promote shipping as a means of commerce, and
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to level the playing field between domestic and foreign shippers by giving domestic
shippers the same protections that other nations provided to their own merchant
fleets. Coryell v. Phipps, 317 U.S. 406, 411 (1943); American Car & Foundry Co.
v. Brassert, 289 U.S. 261, 263 (1933); Flink v. Paladini, 279 U.S. 59, 62 (1929).
Winterville argues that these underlying purposes should cause us to interpret the Act
liberally in favor of finding owner status. See Coryell, 317 U.S. at 411 (“That
construction stems from the well settled policy to administer the statute not with a
tight and grudging hand but broadly and liberally so as to achieve its purpose to
encourage investments in shipbuilding and to afford an opportunity for the
determination of claims against the vessel and its owner.”) (internal citations and
quotation marks omitted).
The Act, however, is an abrogation of the common law, and it forces individual
victims, rather than society in general, to bear the cost of promoting shipping. The
Court so noted when it stated:
While, from the universal habit of insuring vessels, the application of
the statute probably results but rarely in an actual injustice to the owner
of the injured vessel, yet, being in derogation of the common law, we
think the court should not limit the right of the injured party to a
recovery beyond what is necessary to effectuate the purposes of
[C]ongress.
The Main v. Williams, 152 U.S. 122, 132-33 (1894) (emphasis added). See also
Hercules Carriers, Inc. v. Claimant State of Florida, 768 F.2d 1558, 1564-65 (11th
Cir. 1985). In Hercules Carriers, the Eleventh Circuit noted that the state of affairs
of the shipping industry in 1851, when Congress passed the Act, was not necessarily
the same as it is today. Hercules Carriers, 768 F.2d at 1564. Further, rather than
pushing costs onto individual victims, it is common today for Congress to provide
public subsidies when it wishes to aid industries. Id. We must, therefore, be cautious
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in our application of the Act to ensure that we honor Congressional intent without
unduly limiting victims’ recovery.
A number of cases provide examples of when courts have and have not found
sufficient control for there to be statutory “ownership.” In Petition of the United
States, 259 F.2d at 610, the Third Circuit found owner status for a contractor who not
only provided a crew, food, and personnel-related supplies for a government-owned
vessel, but who also provided fuel, controlled navigation, insured the vessel, and
agreed to return the vessel to the government in a certain condition. The contractor
who sought a limitation of liability did not merely hire the crew, but rather exercised
complete dominion over the vessel as evidenced by the fact that the contractor was
ultimately responsible for the vessel’s condition.
Similarly, in Chesapeake Shipping, Inc. v. Gleneagle Ship Mgmt. Co., 803 F.
Supp. 872, 873-75 (S.D. N.Y. 1992), the court found “owner” status for a company
that “took over the full management and operation of the vessels.” Id. at 873. The
company that sought limited liability not only provided the crew and crew-related
supplies, but also provided engine supplies, controlled maintenance and repairs, and
provided parts. Also, the company had entered an agreement with the owner that
provided, “To the extent permitted by applicable law, [the] [o]wner shall have no
liability for personal injury claims relating to the [v]essels . . . [and the company]
shall process all personal injury claims relating to the [v]essels.” Id.
Again, in Complaint of B.F.T. No. Two Corp., 433 F. Supp. 854, 871-73 (E.D.
Pa. 1977), the court found owner status for a contractor that, under oral agreement,
provided a crew and insurance and also arranged for business on behalf of the owner
to ensure that the vessel remained gainfully employed and in service. The contractor
received a fee from the owner based on the income generated by the vessel during the
period of the agreement. These facts described a contractor that was more similar to
a charterer than to a company that merely provided crewing services. Because the
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contractor was responsible for insurance as well business, it was clear the contractor
was responsible for making decisions above and beyond those normally entrusted to
a captain or pilot.
In contrast, the court in Oil Spill By The AMOCO CADIZ, 954 F.2d 1279,
1302 (7th Cir.1992), denied owner status to a management company that assisted
with the maintenance and operation of a vessel but was not ultimately responsible for
operation, maintenance, or repair of the vessel or responsible for the training of the
crew. In this Seventh Circuit case, the vessel’s titled owner entered a “Consulting
and Chartering Agreement” with the management company under which the
management company was designated as an agent of the titled owner and under
which “[o]nly the titled owner had the requisite degree of possessory, managerial, and
operational control of [the vessel].” Id. at 1302-03 (internal quotation marks
omitted).
Similarly, in Birmingham Southeast LLC v. M/V Merchant Patriot, 124 F.
Supp. 2d. 1327, 1338-39 (S.D. Ga. 2000), the court found that a contractor did not
qualify as an owner where there was an oral management agreement, the contractor
hired and managed the crew, but the contractor did not pay the crew’s wages or the
expenses of operation and maintenance of the vessel. In Birmingham Southeast, the
contractor was in constant contact with the vessel’s titled owner regarding all aspects
of operation including the crew and the vessel and oversaw maintenance and prepared
maintenance budgets, but the title owner approved and paid for maintenance
expenditures. Also, the contractor “was not a charterer of the vessel and was not
involved in the commercial aspects of which ports the vessel called at and what
cargoes she carried.” Id. at 1330.
Turning to the present case, we find that the district court’s factual
determinations are supported by the record. We believe, however, that these facts
establish that the present case is more akin to Birmingham Southeast and Oil Spill By
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The AMOCO CADIZ than to the previously cited cases. Accordingly, we are
compelled to find that Winterville does not enjoy ownership status under the Act. As
explained below, Winterville’s role under the crewing agreement was limited and
kept in check by American Milling’s retention of substantial control over decisions
related to the operation and control of the vessel, selection of the crew, and
maintenance of the vessel.
Regarding operation and control of the vessel, Winterville left daily navigation
decisions to the crew and captain. Such decisions included how to arrange the barges
within the tow, when to use helper tugs, and judgment calls regarding the safety of
proceeding in light of river conditions. Winterville transported the crew to and from
the vessel, provided the crew with radio equipment, food, and personnel-related
supplies, and was available for the crew to contact while the vessel was in service.
However, the crew was also in contact with American Milling and Eastside. All three
of these entities received daily pilot house logs, and American Milling also received
daily engine logs. Eastside, not Winterville, controlled the ship’s destinations and
provided the fuel. As such, Winterville was wholly uninvolved with “the commercial
aspects of which ports the vessel called at and what cargoes she carried.” Id.
American Milling personnel met with the crew before the start of the towing
season to inform the crew of navigation conditions existing in the area and bulletins
from the Coast Guard. American Milling also dictated aspects of operation when it
met with the crew to inform the crew of “any changes in operating policy and
procedures.” Further, American Milling reserved the right to board the vessel at any
time, and American Milling personnel historically had boarded the vessel during the
towing seasons to check on the crew and the condition of the ship.
American Milling also retained substantial control over hiring decisions.
Under a written management agreement that was orally extended each year,
Winterville selected the crew, paid the crew, and withheld taxes. American Milling,
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however, retained the right to demand crew changes and the right to approve or
disapprove the hiring of a captain. American Milling, therefore, retained ultimate
authority over selection of the captain and composition of the crew. Further,
American Milling agreed to bear responsibility for the cost of crew injuries and the
cost of maritime maintenance and cure obligations. In short, the record supports the
conclusion that Winterville was the employer of the crew. Winterville, however, was
not completely or solely responsible for hiring and managing the crew.
Regarding maintenance of the vessel, American Milling maintained insurance
on the vessel, Winterville did not agree to return the vessel in any certain condition,
and American Milling, not Winterville, was ultimately responsible for all repairs.
Although Winterville’s crew did perform maintenance as necessary while the vessel
was in service, American Milling had its own mechanical crews for major overhauls.
Between 1997 and 1998 American Milling paid $287,000 for repairs. There is no
evidence to support the conclusion that Winterville paid for any repairs, insured the
vessel, or agreed to return the vessel in a certain condition. The fact that American
Milling personnel met with the crew at the start of the shipping season to inform the
crew of maintenance and repairs that American Milling performed during the off-
season highlights this fact.
Participation by some Winterville employees in some of American Milling’s
drydock repairs does not lend support to a finding of owner status. Winterville’s
employees that assisted with drydock repairs did so outside the context of the crewing
agreement, and Winterville billed American Milling separately for these separate
services. We do not believe that a labor firm attains owner status under the Act by
contracting separately with the owner of vessel to have a laborer perform repair work.
In conclusion, we believe the district court’s factual findings regarding the
apportionment of duties between Winterville and American Milling, as set forth in
the district court’s express findings of fact, are supported by the record. See 270 F.
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Supp. 2d at 9-11. The ultimate conclusion of ownership status, however, must be
resolved against finding Winterville to be an owner, owner pro hac vice, or charterer.
Winterville’s role in the present case was limited in same manner that the contractor’s
role was limited in Birmingham Southeast. Winterville did not have an investment
in the ship, and Winterville contractually limited its obligations regarding the ship.
American Milling simply did not relinquish sufficient control to Winterville to impart
owner status.
B. Negligence of Captain Johnson and Privity with American Milling
As an initial matter we note that President Casino urges us not only to affirm
the district court’s finding that Captain Johnson was negligent in this instance, but to
hold that he was so incompetent that American Milling cannot be said to have met
their duty of fielding a competent crew. All arguments in this regard are without
merit. Captain Johnson had extensive experience on the Upper Mississippi River
under all conditions with the M/V Anne Holly and similar vessels. His career of more
than thirty years involved only one prior accident, and that accident was attributable
to mechanical failure. He had piloted the M/V Anne Holly and other vessels pushing
similarly sized tows both directions under the Eads Bridge without incident in high
water and in normal conditions. His approach to the Eads Bridge was consistent with
the approach recommended by a majority of the experts who testified at trial, and
whose testimony we find no reason to doubt. Further, Captain Johnson’s actions to
secure the Admiral following the allisions attest to his skill as a pilot. Captain
Johnson was not incompetent.
Turning, then, to the issues of negligence and fault, we first address the Oregon
rule. The Supreme Court stated that a moving vessel can rebut the Oregon rule
presumption “only . . . by clear proof of a contributing fault.” The Oregon, 158 U.S.
at 197. “The presumption derives from the common-sense observation that moving
vessels do not usually collide with stationary objects unless the vessel is mishandled
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in some way.” Wardell v. Nat’l Transp. Safety Bd., 884 F.2d 510, 512 (9th Cir.
1989). Other circuits have expanded upon the Supreme Court’s limited statement
regarding contributing fault to hold that a moving vessel may rebut the presumption
of negligence by proving that (1) the moving vessel used all reasonable care to avoid
the collision and was therefore without fault, (2) the stationary object was at fault, or
(3) the allision occurred because of an “inevitable accident.” Bunge Corp. v. M/V
Furness Bridge, 558 F.2d 790, 795 (5th Cir. 1977); see also Bunge Corp v. Freeport
Marine Repair, Inc., 240 F.3d 919, 923 (11th Cir. 2001).
In an attempt to rebut the presumption in this case, Winterville and Captain
Johnson argue that drift collected and built up in flanking rudders or struts forward
of the M/V Anne Holly’s propellers and caused the M/V Anne Holly to stall out.
Captain Johnson and Captain Simmons testified at trial that drift was present in the
river on the night of the allisions. There was no evidence, however, to suggest that
the drift they observed in the river obstructed the M/V Anne Holly or was the cause
of the M/V Anne Holly’s loss of forward progress. The district court determined that
Winterville and Captain Johnson had presented only a theory rather than evidence and
that their theory was insufficient to rebut the presumption under the Oregon rule. We
agree. As stated by the district court:
American Milling, Winterville and Capt. Johnson have failed to rebut
the Oregon rule presumption of negligence. They simply have failed to
put forth any affirmative evidence that drift caused the allision with the
Eads Bridge. It is a huge leap of speculation to go from sighting drift in
the river to the M/V Anne Holly’s engines stalling and the tow hitting
the bridge. Such speculation is not sufficient to carry the heavy burden
of proof necessary to show that the allision of the M/V Anne Holly with
the Eads Bridge was an “inevitable accident.”
270 F. Supp. 2d at 1091.
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On appeal, Winterville and Captain Johnson rely on a Third Circuit case, Pa.
R.R. Co. v. S.S. Marie Leonhardt, 320 F.2d 262, 264 (3d Cir. 1963),which held that
the Oregon rule relates merely to the burden of persuasion such that the presumption
disappears as a matter of law when both parties present evidence regarding events
prior to the allision. Reliance on Pa. R.R. is misplaced in this case. Even if the Third
Circuit’s approach is correct, it remains necessary for the moving vessel to present
evidence, not merely speculation to counter the presumption. As noted by the
Seventh Circuit, whether we treat the presumption of the Oregon rule as one related
to the burden of proof or the burden of persuasion, it “must be applied in a ‘common
sense’ manner that is rooted in ‘logic and experience.’” Folkstone Marine Ltd. v. CSX
Corp., 64 F.3d 1037, 1050 (7th Cir. 1995) (quoting Bunge Corp., 558 F.2d at 794).
Common sense application of the rule demands that rebuttal entail, at a minimum,
evidence sufficient to establish some cause other than negligence by the crew. The
district court did not clearly err by finding that Captain Johnson was presumptively
at fault under the Oregon rule.
In the context of this complaint under the Act, our analysis does not end with
application of the Oregon rule. Instead, it is necessary to identify with more
particularity the negligent acts that proximately caused the allisions. This is
necessary because we must determine whether such acts may be imputed to the
American Milling as the owner of the M/V Anne Holly due to privity or knowledge,
or whether the negligent acts were attributable only to the crew.
In addition to Captains Johnson and Simmons, several other seasoned riverboat
pilots testified that, based on their own experience, Captain Johnson employed a
proper approach to the Eads Bridge. The district court reviewed this testimony,
evidence surrounding the physical condition of the M/V Anne Holly prior to the
allisions, evidence surrounding Captain Johnson’s communications with other vessels
prior to the allisions, and the tape of the post-accident run under the Eads Bridge.
The district court determined, as a factual conclusion, as follows:
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The preponderance of credible evidence at trial was that Capt. Johnson
underestimated the strength of the current as he headed under the bridge,
the tow began to move too far toward the left descending pier and he
was unable to compensate for it. The strength of the current and the need
to steer properly to compensate for it is clearly shown in Exhibit 80 (the
video of the M/V ANNE HOLLY’s April 8, 1998 northbound voyage
through the St. Louis Harbor). The Court concludes that the allision of
the M/V ANNE HOLLY was the result of a navigational error by
Captain Johnson. As such, Capt. Johnson has failed to overcome the
presumption of fault pursuant to the Oregon rule.
270 F. Supp. 2d at 1096.
The only arguments offered to attack this finding fall far short in light of the
applicable, clear error standard. President Casino argues, essentially, that Captain
Johnson completely misunderstood the nature of the currents near the Eads Bridge
and that the district court was wholly mistaken regarding the flow of water in the
Mississippi River in St. Louis. There is simply a dearth of evidence to support this
or other alternative theories. As already noted, the theory of collected drift relied on
speculation. The ship was in good working order. Also, experts whom the district
court accepted as credible all attested to the general propriety of Captain Johnson’s
approach and the general impropriety of the approach recommended by President
Casino. The district court dismissed President Casino’s description of currents at the
Eads Bridge because President Casino’s expert did not form his opinion based on
personal experience whereas the balance of experts testified based on years of
experience surrounding the same river location. Because the district court’s findings
in this regard clearly rest on credibility determinations and on assessments of the
relative merits of the parties’ opposing theories as to the cause of the accident, we do
not lightly inject our own views into the mix. We find no clear error.
As to the issue of privity, we also find no clear error. “Privity generally means
some personal participation of the owner in the fault or negligence that caused or
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contributed to the loss or injury.” In the Matter of: MO Barge Lines, Inc., 360 F.3d
at 890-91. There is no evidence to suggest that American Milling personnel
controlled the manner in which Captain Johnson maneuvered the M/V Anne Holly
on April 4, 1998, nor that it was their duty to do so. Because we hold that Winterville
is not an owner, we need not address the issue of privity between Winterville and
Captain Johnson.
In its brief, President Casino itself recognized that spontaneous or momentary
errors by competent pilots cannot be imputed to owners. See President Casino’s Brief
at 56-57 (“In other words, if the pilot was well-trained and competent, and, for some
reason that could not have been anticipated by the shipowner, made a maneuvering
error or some other mistake that was tantamount to a momentary error, the shipowner
might have a legitimate claim to limitation of its liability.”). President Casino
contends, however, that American Milling failed to prove a lack of knowledge or
privity because it failed to adequately train Captain Johnson and failed to take
adequate steps to educate Captain Johnson concerning currents in the river. This
argument rests entirely on the presumption that Captain Johnson was incompetent and
that the district court erred when it found that he merely committed a spontaneous
navigational error. Because we hold that this earlier finding was not error, President
Casino’s arguments regarding privity necessarily fail.
C. Negligence of President Casino
When multiple parties bear responsibility for damages that result from an
allision, it is proper to allocate liability according to fault. United States v. Reliable
Transfer Co., 421 U.S. 397, 411 (1975); Ark. State Highway Comm’n v. Arkansas
River Co., 271 F.3d 753, 759 (8th Cir. 2001). Here, the district court determined that
when President Casino received its permit from the Army Corps of Engineers to moor
the Admiral to the Missouri bank at the location downstream of the Eads Bridge, a
condition of the permit required President Casino to build a protective cell. The
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district court further determined that since President Casino failed to build such a cell
for the Admiral, President Casino was in violation of a safety requirement of the
permit and therefore presumptively at fault under the rule. See The Pennsylvania, 86
U.S. (19 Wall.) at 129.
President Casino argues that the requirement to build a cell was merely a
suggestion, as evidenced by letters from President Casino contesting the cell
requirement and as evidenced by the fact that the Corps never followed through to
demand construction of the cell after receipt of the letters. President Casino also cites
technical opinions from the Coast Guard in which the Coast Guard advised the Corps
that cells were not necessary. President Casino argues further that a single protective
cell would not have afforded meaningful protection from a runaway tow of barges.
Finally, President Casino argues that had it applied to the City of St. Louis for a
permit to build a cell, any such application would have been denied.
President Casino’s arguments in this regard are dubious at best. It is clear that
President Casino told the Coast Guard and the Corps that it intended to move the
Admiral from the dangerous location. The Corps referenced these representations as
reasons for not enforcing the cell requirement, and the Coast Guard referenced these
representations as reasons for not recommending installation of protective cells. In
essence, President Casino avoided full development, or enforcement, of the cell
requirement by promising to move. It is disingenuous for President Casino to now
argue that these authorities, which relied on such promises, felt no cells were
necessary. Further, President Casino never applied for a permit from the City of St.
Louis. Accordingly, there is no evidence of the claimed impossibility of obtaining
a building permit
Regardless, however, we need not resolve all disputes concerning the status of
the permit and the Pennsylvania rule. Normal principles of negligence as well as
maritime presumptions apply in the present context, and the district court also
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concluded that President Casino was at fault for failing to exercise ordinary care. As
noted by the district court:
Even if the Court were to view [the Corps’] letter as merely suggesting
the erection of a protective cell (which the Court does not), President
Casino was still obligated to assess the risk of allision with one or two
drifting barges in high water and give meaningful consideration to the
Army Corps of Engineers’ concerns. There is no credible evidence
before this Court that demonstrates that such a prudent review was ever
undertaken. . . . Ordinary standard of care dictates that the Army Corps
of Engineers’ “suggestion” of a protective cell should have been taken.
270 F. Supp. 2d at 1107.
In this regard, we note that runaway barges struck the Admiral four times
between 1985 and 1998, the Admiral was moored near a busy and dangerous shipping
channel, and the Admiral represented a substantial monetary investment. More
importantly, the Admiral carried a large number of passengers during peak hours,
making the potential harm of an accident extraordinary. Under such conditions, we
cannot say that the district court clearly erred by finding a duty to exercise ordinary
care, assess the risk of allision, and comply with “suggestions” for protective cells.
This is especially true in light of President Casino’s own recognition of the need to
move the Admiral, as represented to the Coast Guard prior to the April 4 allision.
The district court did not in its apportionment of liability to President Casino.
D. Value of the M/V Anne Holly
The district court’s valuation determination is a factual finding that we review
for clear error. Where credible evidence supports a range of values, it is not clear
error for a finder of fact to select a value at or near the top of that range. Here the
district court considered a great deal of evidence regarding value. American Milling
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had the M/V Anne Holly appraised in 1995, 1996, 1997, and 1998 for $800,000,
$800,000, $1.1 million, and $1.25 million, respectively. American Milling insured
the M/V Anne Holly for $1.1 million in 2001. American Milling personnel admitted
that the M/V Anne Holly was always for sale for the “right price” and that in 1997
and 1998, the asking price was $2.2 million. Evidence of sales of similar vessels
ranged from $1.2 million to $2.5 million between 1995 and 1999. The lower prices
from the comparable sales were for smaller vessels with less horsepower than the
M/V Anne Holly and the higher prices for comparable sales were for more
comparable vessels. Ultimately, American Milling sold the M/V Anne Holly to a
South American buyer for $2.2 million. The $2.2 million figure that the district court
adopted was adequately supported by this broad array of evidence.
American Milling argues that the $2.2 million sale price was not evidence of
value at the time of the allisions because the market for similar vessels changed
dramatically between the time of the allisions and the time of the sale. American
Milling argues that bumper crops in South America dramatically increased riverine
shipping demand in South America and caused South American interests to enter the
market for North American riverine vessels. American Milling argues that this
superheated South American riverine market drove prices higher in North America
such that the value of the M/V Anne Holly increased during the period of time
between the allisions, April 4, 1998, and the sale, February 3, 1999. In essence,
American Milling argues that the sale was too remote in time to be considered as
evidence and that the sale occurred in the context of a dramatically changed market.
While American Milling correctly notes that the value we must consider is the
value of the M/V Anne Holly following the accident, we reject American Milling’s
argument that the district court’s valuation of $2.2 million was clear error. First,
American Milling exaggerates the length of time that elapsed between the allisions
and the sale. American Milling characterizes the sale for $2.2 million as having taken
place on February 2, 1999. That date, however, was merely the date on which
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American Milling closed the sale to the South American buyer. The initial offer of
$2.2 million occurred in November 1998 when American Milling and the buyer
entered a $200,000 “offer to buy” contract. Informal discussions prior to that time
suggested a $2.2 million sale price. The fact that closing occurred ten months after
the allisions does not change the fact that a willing buyer, in an arm’s length
transaction, set the price much sooner.
Second, while there may be an outside time limit beyond which evidence of a
subsequent sale ceases to be evidence of value on a prior date, we need not identify
that limit in this case. For an item such as a ship, with substantial useful life
remaining for the production of income over many shipping seasons and, in fact,
many years, seasonal fluctuations in price are not as critical as for fungible, bulk
commodities, like grain or produce, that are traded widely on instant markets with
well established seasonable fluctuations in price.
Finally, and most importantly, even if we were to disregard evidence of the
actual sale price, the balance of the record is sufficient to support the district court’s
findings. In particular, the district court’s final determination of $2.2 million placed
the value of the M/V Anne Holly well within the range of values reported for
comparable sales.
IV. Conclusion
We hold that Winterville is not an owner entitled to limited liability under the
Act, but affirm the judgments of the district court in all other respects and remand for
further proceedings consistent with this opinion.
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