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A Legal Perspective A Controversial Legal Tactic in Boating Accident Lawsuits – Part II

February 3, 2017

In the previous issue, I started to examine a controversial element of boating accident law known as limitation of liability. Let’s pick up where we left off. We saw how the wrongdoer in a boating accident could possibly succeed in paying no more than the post-accident value of his vessel to the poor folks he injured. So if his boat was a 15-foot aluminum outboard with leaky rivet holes worth all of $800, the victims could possibly be limited to that figure in suing for injuries and other damages they suffered under the operation of limitation law.

 

One could say that this kind of unconscionable outcome seems to be in line with the dark days of the Industrial Revolution, when children worked long hours in textile mills and laborers who lost fingers in boiler factories were blamed for their own carelessness. And they wouldn’t really be that far off the mark. The concept was established by a mid-nineteenth century law called the Limitation of Shipowners’ Liability Act of 1851.

 

The 1851 legislation emerged during an age when horse-drawn carriages greeted clipper ships in the nation’s ports. The purpose of the law had nothing to do with enabling careless boat operators to cut their losses in an accident on the water. It was based on fostering mercantile growth. Congress realized that expansion of the nation would depend upon a strong merchant fleet. But it also realized that shipping was a dangerous venture.

 

If the government wanted shipowners to build magnificent tea clippers, collect crews willing not to see their families for months on end, and send those ships around Cape Horn and other dangerous waters, those shipowners were going to need incentives. After all, picture this scenario. A shipowner loads up a vessel with valuable cargo. The ship sinks in a winter storm. Not only is the owner out a vessel, but he now faces lawsuits for millions from the good folks who entrusted their gold, silver, and diamonds for a safe passage. So the shipowner loses a $500,000 vessel and is also sued for $10 million in precious cargo. The idea of limitation law was to prevent such an outcome.

 

But there’s more to it. Under the law, shipowners must essentially show that the things causing a loss were not under their control if they stood to succeed in limiting their liability. In part one of the article, I mentioned that the City of New York attempted to limit its losses to $14.4 million following the tragic 2003 Staten Island Ferry accident. That figure represented the post-casualty value of the ferry Andrew Barberi. But I hadn’t delved into the outcome. The City did not succeed in its efforts. This was because the National Transportation Safety Board presented serious legal obstacles as a result of its investigation. The NTSB blamed the accident on the City’s poor oversight of its ferry fleet and a failure to provide effective safety measures (Report of Ferry Crash Strikes Blow to City’s Bid to Limit Civil Damages, Tom Perrotta, New York Law Journal, March 9, 2005).

 

Although the law was meant to protect shipping and foster economic growth, it didn’t always result in usage that would endear it to the public. Vessel interests for the Titanic attempted to limit liability when they were sued following its tragic sinking in 1912. Since Titanic rested on the cold dark seafloor two miles beneath the shimmering waters of the North Atlantic, its post-accident value amounted to a sad string of lifeboats brought to New York Harbor by the Cunard liner Carpathia a few days after the sinking. Titanic’s owners were able to limit their liability to about $92,000, the value of those lifeboats (Oceanic Steam Navigation Co. v. Mellor, 233 U.S. 718 (1914); Titanic, 209 F. 501, 502 (S.D.N.Y. 1913).

 

Despite its goal of encouraging the mercantile growth of a young nation, limitation law came to be used as a knee-jerk litigation tactic in modern day boating accidents. And this stirs considerable controversy, with legal critics arguing there is little connection between the legislative intent of lawmakers in the 1800s and a personal watercraft accident today. They argue that limitation law has simply become a tactic automatically thrown at victims of boating accidents to minimize their monetary compensation.

 

History shows that in many maritime accidents, including those involving pleasure boats, the defense team will attempt to invoke limitation law in an effort to cut losses. However, things can become contentious very quickly when the limitation card comes out. It might be one thing for a Massachusetts shipowner in the 1800s to say he didn’t have control over the actions of a captain involved in a collision on the English Channel. But it could be a different matter when the owner of a pleasure boat is on board as the operator at the time of an accident. It largely comes down to the degree of control and knowledge a court will deem the owner had.

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