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Sign at Larnaca International Airport, Larnaca Cyprus October 13, 2022

Worldwide, there are signs and placards throughout airports, train stations, seaports, and bus stops offering assistance to individuals who may be experiencing being held against their will.  They often pose a series of questions along the lines of the following:

 “Is someone . . . holding your passport or personal documents; threatening you or your family; controlling your movements; and/or forbidding you to go anywhere or speak with anyone you want.” 

 These are tale-tell warning signs of human trafficking, involuntary servitude, and modern-day slavery.  The posted signs are jarring, but they are not just for individuals to reach out for help, but to raise awareness for the public to be on the lookout for distressed individuals in need. There is no dispute that the persons being held against their will is a bad thing and has no place in the modern world.

However, in the United States, there is a government sanctioned regime whereby foreign seafarers are routinely held against their will as involuntary detainees and material witnesses in MARPOL/APPS prosecutions.  Pursuant to 33 U.S.C. §1908(e), the Coast Guard (and Customs and Border Protection acting at the Coast Guard’s instruction) can revoke and refuse to reinstate a foreign flagged vessel’s departure clearance until surety satisfactory to the Secretary is posted.  Such “surety” takes the form of an “Agreement on Security,” which requires not only the posting of a financial undertaking by the Vessel’s Owners and Operators, but also requires the removal of seafarers from the Vessel.  It is standard for the Coast Guard to insist that the Captain and the entire Engine Room Department be disembarked from their shipboard home, turnover their passports/travel documents, and remain in a hotel within the federal district where the matter is pending  for an unknown and unlimited amount of time during the government’s investigation.

The seafarers are not parties or signatories to the “Agreement on Security.” When a seafarer asks to go home or to have his passport returned to him, the government denies those requests. When a seafarer applies to the Court to have his travel documents returned or to have his deposition taken so he may leave the United States, the government opposes the requests.  Typically, the government will implement some combination of the following procedure to block a seafarer’s right to departure: 1) claim that the crewmember is in the United States voluntarily; 2) argue that there is no right to a deposition because criminal charges are not yet pending; and 3) if all else fails, obtain a material witness arrest warrant pursuant to 18 U.S.C. § 3144 to ensure that a seafarer remains for trial. The purpose of the material witness statute is to secure the presence of a witness who possesses information material to a criminal proceeding.

Some district courts have found that seafarers held pursuant to an Agreement on Security and/or material witness warrants in MARPOL/APPS cases were functionally detained as a result of this arrangement, even if not formally incarcerated, and therefore entitled to have their deposition taken so that they could return to their jobs and families abroad.  See, e.g.  In re Zak, 2017 U.S. Dist. LEXIS 222937, *17 (D. Me. 2017); United States v. Dalnave Navigation, Criminal No. 09-130, 2009 U.S. Dist. LEXIS 21765, 2009 WL 743100, at *2 (D.N.J. Mar. 18, 2009); Mercator Lines Ltd. (Sing.) PTE Ltd. v. M/V GAURAV PREM, 2011 U.S. Dist. LEXIS 153429, *28-31 (SDAL 2011).  However, even in those matters, the seafarers had to complain of detention for many months before the Court took action.

In two (2) recent cases, U.S. Magistrate Judges in the Eastern District of Louisiana and Southern District of California have refused to order depositions, instead finding that the government’s interests in completing charging decisions and live testimony of witnesses was of greater interest than the rights and liberty of the individual seafarers.  See, e.g., In re Joanna, 2021 U.S. Dist. LEXIS 114281, (ED La. 2021)(finding that the prosecutors’ subjective intent of the use of the material witness warrant was not reviewable, so long as the warrant was facially valid)(citations omitted). In another recent case, United States v. Evridiki Navigation, et al., in the District of Delaware, the Court finally ordered Rule 15 depositions after the crewmembers were detained for several months by government officials on the basis their testimony would be significant to the investigation and prosecution.  When the crewmembers returned for trial six (6) months later, the government shockingly did not call any of the seafarers as witnesses in the case.

The actions of the government is all the more egregious compared to how the material witness warrant statute is routinely used in other criminal matters in the United States.  For example, in U.S. v. Whited, the Court found that Christopher Cambron had material information relevant to a pending criminal matter in which the defendant was accused of armed robbery of at least seven (7) businesses.  Due to Mr. Cambron’s history of drug and alcohol abuse, the government sought a material witness warrant to keep him in custody to ensure his availability for trial. United States v. Whited, 3:21-cr-29, 2022 U.S. Dist. LEXIS 230521 (E.D. Tenn. 2022). The Court agreed and ordered Mr. Cambron detained.  However, the District Court directed his deposition to be completed within a week and Mr. Cambron’s deposition was completed the day after Christmas on December 26, 2022. He was released the next day after spending less than seven (7) days in custody. Similarly, in U.S. border cases, material witnesses are often detained, deposed, and then released within a matter of days. See, e.g., W.D. Tex. Local Criminal Rule 15b (setting out the procedure for deposition and release of material witnesses and requiring release within 24-hours of deposition or 45 days of first appearance in Court, whichever occurs sooner).

So why are seafarers, who are historically recognized as ‘wards of the Court’ to be afforded special treatment and protection, abused by the system in MARPOL/APPS cases. The reason is simple: the crewmembers are pawns utilized by the government as an additional pressure point on the Owner and Operator in these prosecutions.  The expense of paying for the total wage salary, per diems, hotel costs, and local travel expenses for the crewmembers detained in the district can reach $30,000 – $50,000 per month (or more).  Meanwhile, seafarers who most times have done nothing wrong, are forced miss important life events: births, deaths, anniversaries, family obligations, etc; a result that is all the more inhumane and disproportionate when considering that the US Courts routinely utilize remote appearances and/or video recorded deposition testimony in lieu of live, in-person testimony.

For more information on the US investigation and prosecution of suspected Marpol/APPS violations and/or the unfair treatment of foreign seafarers in the United States, contact: info@chaloslaw.com.

In Powers v. United States, 2:21-cv-00517-TSZ, a case from the Western District of Washington, has been full of dramatic twists and turns over the past two (2) weeks.  The matter involved the Plaintiff Michael Powers’ action against the United States pursuant to the Suits in Admiralty Act (“SIAA”) to recover for injuries suffered on May 2, 2019, when his boat, a 20-foot Duckworth Navigator, sank in navigable waters approximately 1.2 miles west of Deception Pass Bridge.  The Plaintiff alleged that his vessel was hit by a rogue wave, shattering the windshields, which caused the vessel to quickly fill with water.  His cousin died 20 to 30 minutes after being thrown from the Vessel. Plaintiff was pulled from the water approximately 8 hours later by the crew of the MACY RAE.

The Plaintiff alleged that his rescue was substantially delayed and his injuries worsened by the negligence of the Coast Guard and he sued under a “worsened the situation” theory of rescuer liability.  A third party called 911 to report what he believed to be an outbound boat disappear and capsize in rough seas.  The Coast Guard issued an Urgent Marine Information Broadcast and an unrelated vessel reported seeing a 22-24 hardtop boat inbound and not in distress.  From there, the Coast Guard negligently determined that it was a ‘false alert’ and issued directives to other agencies with assets in the water, the media, and the public that no vessel was in distress, effectively terminating third-party efforts to find and rescue Mr. Powers.

The government sought to dismiss the lawsuit on the grounds that the “discretionary function” exception applies to the Coast Guard’s conduct and therefore the court lacked subject matter jurisdiction over the claim.  The discretionary function exception, which has been held in the Ninth Circuit to be an implied exception to the waiver of sovereign immunity under the SIAA, applies if: 1) the conduct was discretionary (and not merely adherence to a mandatory statute, regulation or directive); and 2) if it was discretionary, whether the governmental decision was “of the kind the exception was designed to shield.”  The purpose of the doctrine is to protect governmental agencies from judicial second guessing when acts or omissions are based on “considerations of public policy.”

In rejecting the government’s motion, the Court found that evidence in the record showed the Coast Guard had failed to satisfy its own standard of care as a Search and Rescue Mission Coordinator, before determining the report was a false alert and ceasing search and rescue efforts.  As such, the Court ruled the exception did not apply because the decisions in the matter were discretionary and not based on considerations of public policy.  The Court ruled that it was an open factual question reserved for trial as to whether the Coast Guard’s actions or omissions were negligent.

On February 9, 2023, Powers’ attorneys filed a twenty-two (22) page motion for sanctions supported by a declaration and nineteen (19) exhibits, alleging that the government had improperly withheld key evidence in discovery and abused the discovery process. Most critically, the Plaintiff alleged that the government withheld documents and evidence which related to and conclusively refuted the government’s claim of discretionary function immunity, including a powerpoint presentation from Coast Guard personnel regarding the case in 2019 which included as section entitled “what the Coast Guard did wrong,” identifying key issues such as: anchoring bias, groupthink, status quo bias, attribution error and introspection illusion.  The outstanding discovery was not produced by the government until February 7, 2023, five (5) days after the motion to dismiss was denied and less than a month before trial was set to begin. Other allegations in the motion include that the government withheld: “’alignment’ emails discussing how to frame the facts of what occurred in the Case Study, emails discussing changes to the Coast Guard’s formal timeline of events (the MISLE log), communications between the Coast Guard and [third-party] agents regarding the case, and additional unproduced Coast Guard logs (“situation reports”). The documents also revealed that the government [allegedly] did not disclose at least ten people with knowledge of the incident, and demonstrate that certain Coast Guard witnesses had a much greater understanding of the case and its subsequent investigation than they testified to under oath.”

District Judge Zilly promptly held a conference on the motion earlier this week (February 13, 2023).  At the conference, the government announced that a settlement had been reached. On February 15, 2023, the Court entered the parties’ Consent Judgment directing the United States to pay Mr. Powers $875,000, with each party to bear its own costs and fees.

To read a copy of the District Court’s Order denying the Motion to Dismiss, please click here.

If you have any questions about this case or the Suits in Admiralty Act, please contact us at info@chaloslaw.com.

In a move identified by the U.S. Coast Guard as a necessary reflection of the substantial increase in the Consumer Price Index (CPI) since 2019, a new regulatory rule has been issued by the agency to increase the limits of liability for vessels, deepwater ports, and onshore facilities under the Oil Pollution Act of 1990 (“OPA 90”).  The new limits take effect March 23, 2023.

Pursuant to OPA 90, the responsible parties for any vessel or facility from which oil is discharged, or which poses a substantial threat of discharge of oil, into or upon the navigable waters (or adjoining shorelines/exclusive economic zone) of the United States, has strict liability for removal costs and damages that result from such an incident. OPA 90 places statutory limits on liability for a responsible party, except in cases of gross negligence, willful misconduct, and/or a violation of an applicable federal safety, construction, or operating regulation.

Regulatory inflation increases to the limits of liability are statutorily required by OPA 90 and the Coast Guard has explained that such increases are necessary to preserve the deterrent effect and “polluter pays” principle contained in OPA 90.  The rule change is nondiscretionary for the Coast Guard and the calculation of the increase in the liability limits is a ministerial task reflected by the change in CPI and the need to respond to inflation.  The Coast Guard followed 33 CFR 138.240 in setting the methodology and formula for the increase.  In short, the agency calculated an applicable annual percent increase in the CPI of 7.91, percent which has been applied uniformly across all types of vessels, deepwater ports, and onshore facilities to increase the maximum limit of liability.  For vessels, the adjusted limits are as follows:

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Source Category	Previous Limit	New CPI-Adjusted Limit
For a single-hull tank vessel greater than 3,000 gross tons.	The greater of $3,700 per gross ton or $27,422,200.	The greater of $4,000 per gross ton or $29,591,300.
For a tank vessel greater than 3,000 gross tons, other than a single-hull tank vessel.	The greater of $2,300 per gross ton or $19,943,400.	The greater of $2,500 per gross ton or $21,521,000.
For a single-hull tank vessel less than or equal to 3,000 gross tons.	The greater of $3,700 per gross ton or $7,478,800.	The greater of $4,000 per gross ton or $8,070,400.
For a tank vessel less than or equal to 3,000 gross tons, other than a singlehull tank vessel.	The greater of $2,300 per gross ton or $4,985,900.	The greater of $2,500 per gross ton or $5,380,300.
For any vessel other than those listed above, including for any edible oil tank vessel and any oil spill response vessel.	The greater of $1,200 per gross ton or $997,100.	The greater of $1,300 per gross ton or $1,076,000.

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The maximum limit of liability for Deepwater Ports and Onshore Facilities was also increased by 7.91 percent to $725,710.800 (up from $672,514,900).   The estimated number of vessels affected by these increases is expected to be minimal (i.e. less than three (3) vessels per year are anticipated to have an OPA 90 incident which would exceed the existing limit of liability).  The Coast Guard also estimates that the CPI adjustments will not result in an increase in responsibility guarantor insurance premiums across the industry.

To read a copy of the final rule in Federal Register, please click here.

For more information on OPA 90, please see Chalos & Co, P.C.’s article entitled: U.S. Pollution Law, Regulation and Enforcement – OPA 90.

If you have any questions about OPA 90 and/or need assistance with an oil spill incident or response, please contact us at info@chaloslaw.com.

On Wednesday November 16, 2022, a twelve (12) person federal jury sitting in the U.S. District Court for the Eastern District of Louisiana returned a unanimous verdict in New Orleans, Louisiana; finding Chief Engineer Warlito Tan, Jr. NOT GUILTY on all four (4) felony counts against him. The government charged Chief Tan with violating the Act to Prevent Pollution from Ships (APPS), violating the Ports and Waterways Safety Act, Obstruction of Justice, and Obstructing a Coast Guard Investigation.  The jury heard testimony from fourteen (14) witnesses over the course of seven (7) days. Chief Tan testified in his own defense and explained passionately to the jury that at all times he believed he was properly operating the oily water separator on board the vessel and that he never knowingly made any inaccurate entries in the oil record book. He further explained that he fully cooperated with the U.S. Coast Guard, never lied to the port state investigators, and returned on two (2) separate occasions to the U.S. to defend the charges against him, despite having been permitted to return home to the Philippines to attend to family matters while the case was pending over the past eighteen (18) months.

The jury rejected the testimony and evidence of the Coast Guard inspectors, investigators, and the retained expert hired by the Department of Justice.  Chief Tan’s testimony was clearly compelling to the jury as they returned the NOT GUILTY verdict in less than three hours.

For more information about the case or MARPOL/APPS and Ports and Waterways Safety Act matters, please contact us at info@chaloslaw.com.

In the latest edition of Lloyd’s List weekly podcast, Tomer Raanan met with George Chalos to discuss “Magic Pipes and Whistleblowers” and the US government’s use (and misuse) of whistleblower rewards in its regulation and prosecution of the foreign Flag shipping industry. Additionally, George shares his experience and advice on the benefits of creating a culture of compliance and how vessel operators can be proactive in recognizing red flags and taking corrective action.

A link to the podcast can be found here:
https://lloydslist.maritimeintelligence.informa.com/LL1142837/The-Lloyds-List-Podcast-Magic-pipes-and-whistleblowers

For more information on the US law matters, please contact us at info@chaloslaw.com.

In a recent decision on September 1, 2022, District Judge Wu of the Central District of California dismissed the seaman’s manslaughter charge against Captain Jerry Boylan, the captain of the dive boat Conception which caught fire and sank off of Santa Cruz Island in September 2019 and killed 34 people.  In USA v. Boylan, the District Court dismissed the charge for Seaman’s Manslaughter, 18 U.S.C. § 1115, because the Indictment failed to allege “gross negligence” as an element of the charge, a fatal defect to the indictment.  Captain Boylan argued that Congress is presumed to have incorporated common law meanings in the terms it uses in the statutes, and therefore a showing greater than simple ‘negligence’ was a required element of the charge.

The Government argued that the charge need only allege simple negligence to establish the elements of the crime based on the plain language of the statute, which holds: “Every captain, engineer, pilot, or other person employed on any steamboat or vessel, by whose misconduct, negligence, or inattention to his duties on such vessel the life of any person is destroyed . . . shall be fined under this title or imprisoned not more than ten years, or both.” 18 U.S.C. § 1115 (emphasis added).  The district court acknowledged that there was no specific precedent from the Ninth Circuit Court of Appeals on the issue and then performed a comprehensive comparative analysis of other decisions from the Ninth Circuit Court of Appeals and Fourth Circuit Court of Appeals which had reviewed and defined the required elements under 18 U.S.C. § 1112, i.e. the Involuntary Manslaughter statute. In the historical review of decisions, the Court relied on the Ninth Circuit’s comments that the Circuit had “consistently held that involuntary manslaughter” requires gross negligence. United States v. Garcia, 729 F.3d 1171 (9th Cir. 2013).

The district court summarized, “it is difficult for this Court to understand why gross negligence would be required for an involuntary manslaughter conviction under Section 1112 but not for a conviction under Section 1115. Neither statute facially requires gross negligence, but common-law understandings incorporate that requirement into an involuntary manslaughter charge under Section 1112. The Government itself has described its charge against Defendant under Section 1115 as “Seaman’s Manslaughter,” but has been unable to convincingly explain why a similar incorporation of common-law understandings should not occur under that statute.” See p. 7.

Judge Wu found that based on applicable Ninth Circuit and Supreme Court cases involving interpretation of legislative text, there must be a requirement for ‘gross negligence’ as an element of conviction under Section 1115 (even though not expressly stated in the statute), and therefore it must be a required element of the charging indictment.  Accordingly, the Court dismissed the charge against Captain Boylan without prejudice.  The government filed an appeal of the decision to the Ninth Circuit Court of Appeals on September 7, 2022 and the matter has been assigned appellate number 22-50198.

To read a copy of the opinion, please click here.

If you have any questions about the Seaman’s Manslaughter Act, please contact us at info@chaloslaw.com.

On June 21, 2022, Magistrate Judge Gorenstein of the Southern District of New York (S.D.N.Y.) issued an Opinion & Order in Navigators Insurance Company v. Goyard, Inc., 20-cv-6609, striking Plaintiff’s expert on the basis that his opinion was an impermissible legal conclusion interpreting the insurance contract at issue.

In 2019, Navigators Insurance Company (“Navigators”) issued a marine cargo insurance policy to Goyard.  The policy provided coverage for goods during shipping and when held in certain specified locations.  In June 2020, various goods were damaged and/or stolen from Goyard’s NYC location.  Goyard submitted a claim under the policy seeking to recover losses associated with damage and theft of the goods.  Navigators denied the claim and sought declaratory relief for a finding that the losses were not covered under the policy because of a “strikes, riots and civil commotion” exclusion.

Navigators expert prepared a report opining on the meaning and effect of various provisions of the policy as they applied to the claim and concluded that Goyard’s stolen goods were not covered, as they were taken by looters participating in riots.  In turn, Goyard moved to strike the expert opinions on the grounds that it would not help the trier of fact as required by Fed. R. Evid. 702(a).

The Court granted the motion to strike the report, holding that the expert report was an impermissible legal analysis of the policy which usurps the trier of facts role in finding the facts and applying those facts to the law.  In support of the decision, the Court performed a detailed analysis of Fed. R. Evid. 702(a), focusing on the fact that an expert’s primary function is to help the trier of fact and while an expert may opine on an issue of fact within the jury’s province, he/she may not give testimony stating ultimate legal conclusions.

To read the full opinion, please click here.

For more information, please do not hesitate to contact us at info@chaloslaw.com.

In the latest edition of The Maritime Risk Podcast, Shoreline CEO Captain Thomas Brown sat down with George Chalos to discuss MARPOL detentions and prosecutions in the United States.  Specifically, the discussion centered around the question: “Why are MARPOL prosecutions in the US as prevalent today as they were 25 years ago?”  The podcast can be accessed and listened to here:  https://www.shoreline.bm/podcasts/marpol-prosecutions-us/, as well as Apple and Spotify.

For assistance or additional information regarding MARPOL and/or APPS, please contact us at info@chaloslaw.com.

Over the past twenty (20) years, there has been a split in the U.S. District and Circuit Courts as to whether 28 U.S.C. §1782, which permits district courts to order testimony or the production of evidence “for use in a proceeding in a foreign or international tribunal”, applies to private adjudicatory bodies such as foreign private arbitrations.   Our prior summaries of the legal tug of war which has taken place over the past thirty (30) months, can be accessed here.  Previously, the Sixth Circuit and Fourth Circuit Courts of Appeals had ruled that the answer was yes; while the Second, Fifth, and Seventh Circuits had all ruled that the statute did not cover private arbitrations.  District courts around the country came down on both sides.  Two (2) recent cases were consolidated so that the U.S. Supreme Court could resolve this disputed question.

Writing for a unanimous court, in ZF Automotive US, Inc., et al. v. Luxshare, Ltd., (consolidated with Alixpartners, LLP, et al. v. The Fund for Protection of Investors Rights in Foreign States), 596 U.S. __ (2022), Justice Barrett delivered the opinion of the U.S. Supreme Court this morning, Monday June 13, 2022.  In a short opinion, the Court held that the statute reaches “only governmental or intergovernmental adjudicative bodies, and neither of the arbitral panels involved in these cases fits that bill.” Although the lower courts had analyzed lots of different aspects of the statute and legislative history, the U.S. Supreme Court held that the “key phrase for purposes of this case is “foreign or international tribunal.’”  Id., p. 1. Justice Barrett points out that if, the word “tribunal” stood alone, that would be good reason to include private arbitral bodies as those types of bodies for which discovery could be ordered as the word is generally understood to be quite broad.  Id., at p. 6.   However, tribunal does not stand alone and when read in context with “foreign or international,” the U.S. Supreme Court held that tribunal, with those modifiers, “is best understood as an adjudicative body that exercises governmental authority.”  Id., at 7.  Comparing the definitions and meanings of the words, the Court summed up the phrase as follows: “So understood, “foreign tribunal” and “international tribunal” complement one another; the former is a tribunal imbued with governmental authority by one nation, and the latter is a tribunal imbued with governmental authority by multiple nations.” Id., at p. 9.

Although the U.S. Supreme Court resolved the question by simply reviewing and interpreting the statutory language, the remainder of the opinion explained that the Court’s holding and 1782’s focus on governmental and intergovernmental tribunals is further confirmed by both the statute’s history and the comparison to the Federal Arbitration Act (“FAA”), 9. U.S.C. §1, et seq.  The Court explained that the primary purpose of 1782 was comity with other nations; so why would Congress lend the resources of the district courts to aid purely private bodies adjudicating purely private disputes abroad, which by way of example could “include everything from a commercial arbitration panel to a university’s student disciplinary tribunal.” Id., at p. 10.  Finally, to allow broader discovery than the FAA allows domestically in the United State would place the statute in great tension and a “notable mismatch” between discovery available in foreign arbitrations compared to limited discovery available from district courts in domestic arbitrations. Id., at p. 11.

In assessing whether either of the bodies in the cases before it were “governmental or intergovernmental” the U.S. Supreme Court explained they were not.  The first case was a private arbitration and the opinion rejected the idea that simply because a private arbitration was subject to the laws which govern and enforce them, that does not turn the panel into a “governmental adjudicative body.” Id., at 12.  The ad hoc arbitration panel was a harder question for the Court to answer, though ultimately the ruling was that the ad hoc panel although involving foreign nations, it was not the intent of Russia and Lithuania for the panel to exercise governmental authority, rather it simply was the result of an agreed mechanism for the formation of an arbitration panel to resolve a private dispute, all of which occurred because of the parties voluntary consent to arbitration; not because “Russia and Lithuania clothed the panel with governmental authority.” Id., at p. 15. In closing, the opinion left open that future sovereigns may imbue an ad hoc arbitration panel with official authority.  Under such a limited case, 1782 would be available.

A copy of the U.S. Supreme Court’s Opinion may be read here.

For assistance or additional information, please contact us at info@chaloslaw.com.