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On March 14, 2016, the Fifth Circuit Court of Appeals entered an Opinion in United States of America v. Matthaios Fafalios, 15-30146, vacating the judgment of conviction against the chief engineer of the TRIDENT NAVIGATOR and remanding the matter to the District Court for the Eastern District of Louisiana for entry of a judgment of acquittal in accordance with Fed. R. Crim. P. 29.    Matthaios Fafalios, a Greek seafarer, was wrongfully charged and convicted in December 2014 for the crime of “failing to maintain an oil record book aboard a foreign-flagged merchant sea vessel, in violation of 33 U.S.C. § 1908(a) and 33 C.F.R. § 151.25.”   At the close of the government’s evidence at trial, Mr. Fafalios moved for judgment of acquittal pursuant to Fed. R. Crim. P. 29 on the grounds that the government failed to prove beyond a reasonable doubt that he was the “Master or other person in charge” of the Vessel and therefore he was not legally required under the Coast Guard’s regulations to maintain the Oil Record Book while in United States waters in accordance with 33 C.F.R. § 151.25(j).   The District Court for the Eastern District of Louisiana denied the motion for judgment of acquittal, and Fafalios sought appellate review of the conviction by the Fifth Circuit Court of Appeals.

In a decision that was openly critical of the government, the Fifth Circuit carefully reviewed the language contained in the applicable statutes and regulations, confirming that where the language is unambiguous, the Court should not look beyond the plain language of the statute or regulation.  The Court stated unequivocally that “under the plain language of the regulations, only the ‘master or other person having charge of the ship’ is responsible for maintenance of the oil record book.”  Notwithstanding, the government attempted to offer several reasons for why the conviction should be upheld, all of which were addressed and rejected by the Fifth Circuit.  First, the government challenged the applicability of Rule 29, arguing that Fafalios should have moved to dismiss the indictment before trial allowing the government an opportunity to correct any insufficiency.  The Court disagreed.

In addition, the Fifth Circuit rejected the prosecutor’s argument that the Chief Engineer’s responsibility to sign and record bilge water operations in the Oil Record Book was a “continuing obligation.”  The Court held that any failure by Fafalios to make a required entry occurred while he (and the Vessel) were still in international waters and therefore the United States did not have jurisdiction over such an offense, as the “failure to sign an oil record book while in international waters, standing alone, is not a violation of either APPS or its attendant regulations.”  In addition to relying on its own past precedents, the Court concluded that the regulation’s requirement for the record book to be signed “without delay” implied that the offense was committed as soon as the book was not signed, and that different language would have been used by the drafters if a continuing obligation was intended.  The Court further rejected the government’s alternative argument that Fafalios was obligated, as the Vessel’s Chief Engineer, to comply with the regulations’ requirement for the ship, itself, to “maintain” an oil record book, finding that such argument was “foreclosed by traditional rules of statutory construction, not to mention common sense.”  The Fifth Circuit criticized the government’s “strained reasoning” as to why this duty should extend to Chief Engineers, finding that there was “no convincing explanation” as to why the ship’s duty (to maintain an accurate oil record book in U.S. waters) should be delegated to a chief engineer, especially when the applicable statutes permit an in rem cause of action against the ship.

Recognizing the lack of merit to the case, the government’s argument that the Coast Guard had a well-known practice of enforcing oil record book regulations against chief engineers which was rejected out of hand by the Fifth Circuit as “being without merit.”  The Court of Appeals highlighted that the Coast Guard’s past practices did not provide a reason to deviate from the regulation’s plain language.

Finally, in rejecting what it referred to as an “unusual” policy argument, the Fifth Circuit stated that it was unpersuaded by the government’s concerns that reading the regulation to impose the duty to maintain the record book only on the vessel’s master would cause chief engineers to falsify records and conceal their falsification from the master.  In addition, the Fifth Circuit found the government’s argument to be nothing more than a “contrived hypothetical.”

George M. Chalos, George A. Gaitas, and Briton P. Sparkman represented Mr. Fafalios during his criminal trial in the Eastern District of Louisiana.  George M. Chalos presented the oral argument to the panel for the Fifth Circuit on December 4, 2015.  To listen to the oral argument, click here.

To read a copy of the Fifth Circuit’s Opinion, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.

On March 3, 2016, the Florida Supreme Court quashed the decision by Florida’s Fourth District Court of Appeals in Mlinar v. United Parcel Service, Inc., which had dismissed all of the Plaintiff’s claims against United Parcel Service, Inc. (“UPS”).  The Florida Supreme Court held that UPS could not use the Carmack Amendment to shield itself from its intentional misconduct in misappropriating a shipment of paintings by artist Ivana Vidovic Mlinar.

In 2005, Ms. Mlinar created two (2) valuable oil paintings that were shipped via UPS to New York by a third party retailer, Pak Mail.  When the container used to ship the paintings arrived at its intended destination, the paintings were not there and it became clear the paintings had been stolen.  The loss was reported by Ms. Mlinar to UPS and to Pak Mail.  Months after the paintings were stolen, Pak Mail offered Ms. Mlinar $100 for the missing contents of the package.  Shortly thereafter, it was determined that UPS sold the paintings to Cargo Largo, a lost goods contractor.  Cargo Largo later auctioned off the paintings.  One of the paintings was purchased at the auction by an individual named Aaron Anderson.  Two years after the loss of her paintings, Ms. Mlinar was contacted by Anderson who asked her about the value of the paintings.  Anderson later also acquired the second painting.

In 2008, Ms. Mlinar brought an action against UPS, Pak Mail, Cargo Largo and Aaron Anderson alleging conversion, profiting by criminal activity, unauthorized publication of name or likeness, and a claim under Florida’s deceptive and unfair trade practices act.  The trial court dismissed all of Ms. Mlinar’s claims against UPS, ruling that the claims were preempted by the federal Carmack Amendment.  On appeal, the Fourth District Court of Appeals agreed with the trial court that Ms. Mlinar’s state law claims were preempted by the Carmack Amendment, reasoning that the allegations asserted all flowed from the carrier’s conduct in failing to deliver the paintings and were thus preempted.

The Carmack Amendment to the Interstate Commerce Act governs the liability of domestic common carriers for losses of or damage to goods en route.  It was enacted to establish uniform guidelines designed to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment.  Specifically, the statute recognizes the right of a shipper and carrier to limit the carrier’s liability to a stipulated value only if there are reasonable circumstances surrounding the transportation.  It has been well-established that the statute “broadly” preempts state law claims arising from failures in the transportation and delivery of goods.  In this case, The Florida Supreme Court recognized that Florida case law embraces two (2) competing tests for assessing Carmack Amendment preemption: the first is based on alleged harm to the shipper; and the second is based on the carrier’s conduct.

The Florida Supreme Court noted that there is no compelling reason to adopt one test over the other as the exclusive standard for assessing Carmack Amendment preemption in Florida.  Instead, the Court held that, in general, the Carmack Amendment preempts state law or common law claims against an interstate carrier of goods unless the claim alleges conduct or harm that is separate and distinct from the loss or damage to the goods transported.  In the case at hand, the Court found that the causes of action raised by Ms. Mlinar were separate and distinct from the loss of the goods during the interstate shipment process and the claims were not preempted.  UPS sought to argue that the Carmack Amendment preempted the state law actions because the actions stemmed from its loss of Mlinar’s package.   However, the Court disagreed and found that that UPS and the other defendants were attempting to evade liability arising not from the loss of the property, but from the defendants’ intentional misconduct. Specifically, the Court pointed out that this is a case where a common carrier itself has adopted or ratified a dishonest practice and that to allow preemption to apply to the type of case where a plaintiff seeks to hold a carrier liable for larcenous misconduct would be repugnant.

To read a copy of the Florida Supreme Court’s Opinion click here.

On February 16, 2016, the U.S. District Court for the Eastern District of Louisiana granted motions for summary judgment filed by spill responders: O’Brien’s Response Management, LLC, National Response Corporation, Marine Spill Response Corporation, Dynamic Aviation Group, Inc., Airborne Support, Inc., Airborne Support International, Inc., DRC Emergency Services, LLC, International Air Response, Inc., Lynden, Inc., Lane Aviation, Inc., Tiger Rentals, Ltd., The Modern Group, Ltd., and The Modern Group GP-SUB, Inc. (collectively referred to as the “Clean-Up Responders”).

Following the Deepwater Horizon incident in April 2010, various responders were tasked by the Federal On-Scene Coordinator (FOSC) with performing clean-up activities to minimize the impact of the event.  The initial response effort included a variety of Federal and State entities and officials, BP Exploration and Production, Inc., and its affiliated entities, and several other commercial entities and individuals who were engaged specifically to respond to the oil spill.  The other entities tasked with assisting in the clean-up efforts included the thirteen (13) Clean-Up Responders.

In August 2010, the Multidistrict Litigation Judicial Panel transferred each of the cases that arose from the Deepwater Horizon incident to the U.S. District Court for the Eastern District of Louisiana for consolidation and coordinated pretrial proceedings.  Claims relating to the cleanup efforts post explosion, including personal injury claims, were bundled together and brought against the Clean-Up Responders by various Plaintiffs.  The Complaint against the Clean-Up Responders alleged that the Plaintiffs were exposed to oil and other chemicals as a result of various acts or omissions on the part of the Clean-Up Responders.  The Complaint further alleged that the Defendants “failed to use reasonable safe chemicals in their attempts to respond to the Oil-Spill and failed to supply workers with appropriate equipment, thereby exacerbating the Plaintiff’s injuries.”

The Clean-Up Responders and the manufacturer of the dispersants used, Nalco, initially moved to dismiss the claims asserted in the Complaint, however, the Court denied the parties motion.  Following discovery, the Clean-Up Responders filed individual motions for summary judgment arguing that they were entitled to dismissal because they performed their acts in response to the Deepwater Horizon incident and pursuant to the authorization, direction, and ultimate control of the federal government.  Further, they asserted that the claims should be dismissed because they conflict with the federal response scheme set forth in the Clean Water Act (CWA), Oil Pollution Act of 1990 (OPA), and the National Contingency Plan (NCP), which by law, required the Clean-Up Responders to obey the directives issued by the federal government.  In January 2016, the Court issued an Order to Show Cause, indicating that it was prepared to dismiss certain Plaintiffs’ claims with prejudice if they failed to show cause in writing why the court should not dismiss their claims.

Ultimately, the Court found that the Clean-Up Responders were entitled to derivative immunity under the CWA, as the FOSC directed all oil spill response efforts on navigable waters of the United States.  This evidence made clear that the federal government directed and led the Deepwater Horizon response in the exercise of its legitimate authority.  In addition to being entitled the derivative immunity under the CWA, the Court found that the Clean-Up Responders were entitled to discretionary function immunity under the Federal Tort Claims Act (FTCA).  The Court stated that the evidence was clear that the decisions made by the federal government during the clean-up effort “involved an element of judgment or choice” and “were based on considerations of public policy.”  The Court recognized that critical objectives of the CWA and NCP are to ensure “effective and immediate removal of a discharge” and “efficient, coordinated, and effective action to minimize damage from oil spill.”  Based on this, the Court found that Plaintiff’s claims stood as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress and that permitting Plaintiff’s claims to proceed against the Clean-Up Responders would cause private commercial responders to not participate in future clean-up efforts.  While the Court dismissed a majority of the claims against the Clean-Up Responders, eleven (11) Plaintiff’s submitted responses to the Court as to why their specific claim should not be dismissed.  For the moment, the Court has reserved judgment on those claims.

To read a copy of the Eastern District of Louisiana’s Opinion, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.

In Nguyen v. American Commercial Lines, L.L.C., the United States Court of Appeals for the Fifth Circuit affirmed in part and reversed in part a judgment by the United States District Court for the Eastern District of Louisiana denying American Commercial Lines’ (ACL) motion for summary judgment relating to claims made under the Oil Pollution Act of 1990 (OPA) by various fishermen and other parties.

A barge owned by ACL was designated by the United States Coast Guard as having been the source of an oil discharge after a collision with another vessel.  ACL was named the responsible party for any claims filed under OPA for damages arising from the spill. The Fifth Circuit was presented with two (2) issues to consider in this case: (1) whether the fishermen presented enough information to ACL to comply with OPA’s claim submission requirement, and (2) whether or not the fishermen had to comply with both the requirement to give the responsible party at least ninety (90) days to respond to a claim before filing a lawsuit and the bar from filing a lawsuit more than three (3) years after the oil discharge occurred.

On the issue of whether sufficient information was attached to the claim, the Fifth Circuit found for the fisherman, holding that they had submitted enough information with their claim letters to ACL to begin the ninety (90) day settlement clock. Most of the fishermen submitted applicable fishing licenses, selected dock receipts for seafood sold to wholesalers, and included federal tax returns.  ACL responded with a laundry list of additional documents it required to process their claims, which the fishermen declined to send.  ACL claimed it had the right to demand these documents because the separate OPA requirements for filing a claim for damages to a federally established fund could ask for such information, however, the Fifth Circuit said that these did not apply to claims against the responsible party. OPA’s only requirement is that the fishermen file a claim to the responsible party, and thus the claim and information provided was sufficient for ACL to decide whether or not to settle the case.

The Fifth Circuit then moved to the issue of the two (2) time restrictions imposed by the OPA. On this issue, the Court found for ACL, stating that a second group of fishermen who filed their claims within ninety (90) days of the end of the three (3) year period were barred from filing a lawsuit a few days after sending their claims to ACL. The Court said that the two (2) requirements work independently of one another, meaning that the fishermen were not able to use following one requirement to excuse not following the other. The fishermen tried to argue that the “spirit” of the law would be violated if they were not allowed to file their lawsuit for damages and since ACL had not responded to the previous fishermen, they assumed they would not respond to their claims either.  However, the Court said that they could not enforce the spirit of the law outside of the explicit rules in the law itself and an assumption that the claim would be denied by ACL was not enough to say that they had complied with the ninety (90) day requirement in OPA.  Accordingly, if a claimant does not submit a claim at least ninety (90) days before the expiration of the three (3) year statute of limitation period, then the claim is barred.

To read a copy of the Fifth Circuit’s decision, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.

On January 28, 2016, the Second Circuit Court of Appeals (Circuit Judges Carbanes, Parker and Lohier) decided on appeal two (2) Orders of the Southern District of New York (“SDNY”).  The first was whether the District Court erred in confirming an arbitration decision rendered by the Society of Maritime Arbitrators, Inc. (“SMA”).  The second was whether the party that prevailed in arbitration was entitled, by contract or statute, to recoup the fees and costs it incurred in seeking to confirm the arbitral award before the District Court.

The background of the Second Circuit’s decision begins in June 2008, when the appellant shipper chartered from the appellee carrier the M/T Siteam Explorer to move a large quantity of a chemical called acrylonitrile from Houston, Texas to Ulsan, South Korea.  Acrylonitrile is a raw material that is, in its most valuable form, colorless.  Contact with other chemicals can cause acrylonitrile to “yellow” which is evidence of a change in composition that reduces its value.  At the time of delivery, the acrylonitrile had not begun to yellow; however, upon testing six (6) weeks later, the material had yellowed beyond the appellant shipper’s quality standards.  Although testing of the samples kept aboard the Vessel also revealed yellowing, samples taken from the storage facility in Houston were of normal composition.

Pursuant to the parties’ charter agreement, the appellant shipper initiated arbitration before the SMA.  On August 26, 2013, applying the Carriage of Goods by Sea Act (“COGSA”),  the SMA panel majority held that the appellant shipper was not entitled to relief for three (3) reasons: (1), that the appellant shipper had not made out a prima facie case that the acrylonitrile had been damaged while aboard the Vessel; (2), that even had a  prima facie case been made, the appellee carrier had shown that it exercised due diligence in transporting the cargo; and (3), that the appellant shipper had in any event failed to prove damages.

Following the SMA panel decision, the appellant shipper petitioned the SDNY to vacate the award under the Federal Arbitration Act (“FAA”), and argued that the panel had manifestly disregarded COGSA.  Moreover, upon learning that the panel chairman had died during the arbitral proceedings as the result of a brain tumor, the appellant shipper argued that the undisclosed illness constituted “corruption” or “misbehavior” as defined under the FAA.   The District Court denied both of these arguments and, through  a provision in the charter agreement that provided that “[d]amages for breach of this Charter shall include all provable damages, and all costs of suit and attorneys [sic] fees incurred in any action hereunder,” awarded the appellee carrier the fees and costs it incurred in connection with the District Court proceeding.

On appeal to the Second Circuit, the appellant shipper argued that the District Court had erred on three (3) fronts: (1) in concluding that the arbitral panel did not manifestly disregard the law; (2) in concluding that the panel chairman had not been guilty of “corruption” or “misbehavior”; and (3) awarding attorney’s fees and costs to the appellee carrier.  The Second Circuit gave the first two arguments short shrift and affirmed the lower court’s holdings.

However, the three Circuit Judges reversed the SDNY Order awarding the appellee carrier fees and costs related to the SDNY proceeding.  In reversing the lower court, the Second Circuit interpreted the provision in the charter agreement – relied upon by the SDNY in granting an award for fees and costs –  to apply to the chartering of the Vessel itself, not the subsequent litigation which, in and of itself, the Court found was not a breach of the agreement.  In reaching this conclusion, the Second Circuit looked to the parties’ overall agreement to arbitrate in “any court of competent jurisdiction,” which it found granted a federal court the authority to confirm an arbitral award under the standards of the FAA.  A finding to the contrary, the Court stated, would be unenforceable, as it would at once authorize a federal court to confirm an arbitral award while effectively preventing that same court from ensuring that the award complied with the standards of the FAA.  Moreover, the Second Circuit also disagreed with the argument that the SDNY and Second Circuit proceedings initiated by the appellant shipper were made in bad faith and thus statutory liable for an award of costs and fees against its attorneys for unnecessarily extending the length of the proceedings.  The Court stated that, although the appellant shipper’s reasoning was flawed, its arguments were based in recognizable legal concepts and not a bad faith undertaking.  Finally, citing to the “American Rule” – i.e., that each litigant pay his own attorney’s fees, win or lose, unless a statute or contract provides otherwise – the Second Circuit reversed the order of the lower court that awarded the appellee carrier fees and costs.

To read a copy of the Second Circuit’s Opinion, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com

On January 16, 2016, the U.S. Office of Foreign Asset Control (OFAC) issued a notice stating that a number of economic sanctions imposed on Iran have been lifted in accordance with that country’s curtailment of nuclear activities under the Joint Comprehensive Plan of Action (JCPOA).  The planned lifting of Iranian sanctions under the JCPOA is known as “Implementation Day.”

Implementation Day under the JCPOA begins the partial lifting of U.S. primary sanctions to non-U.S. individuals and is limited to certain economic sectors.  For U.S. individuals, the sanctions remain in effect, except for three limited exceptions: (1) a case-by-case licensing policy for civil aviation exports and transfers by U.S.-individuals; (2) a general license for foreign entities controlled or owned by U.S. individuals; and (3) a general license for the importation of Iranian foodstuffs and carpets.  Moreover, the continuation of the U.S. primary sanctions against Iran will continue to impact the ability of U.S. insurers and reinsurers to provide cover to Iranian entities and for claims by Iranian entities or involving Iran trade.   U.S. secondary sanctions will also continue to apply to non-US individuals where they knowingly facilitate significant financial transactions with or provide material or certain other support to those Iranian or Iran-related persons that remain on the OFAC Specially Designated Nations (SDN) list.  Implementation Day under the JCPOA also puts into action the general lifting of EU sanctions.  However, in respect to certain economic sectors, which include amongst other areas maritime trade with Iran, the insurance of vessels engaged in such trade and the provision of insurance and reinsurance cover to Iranian vessels and entities, will continue to entail prior-authorization requirements.

Foreign individuals and companies should continue to exercise caution when dealing with Iran.  While many activities are no longer sanctionable against non U.S. persons, activities that involve Iran still include an appreciable risk of U.S.-imposed sanctioned if any transaction involves individuals/entities on the SDN list, the Iranian Revolutionary Guard Corp., and U.S. financial institutions.  Furthermore, foreign financial institutions may still face special measures as a result of a 2011 FinCEN finding that Iran is a popular location for money laundering.  Therefore, it is still strongly advised to engage in due diligence protocols in respect to trade involving Iranian interests and to check the OFAC SDN list (available here).

A copy the January 16, 2016 OFAC notice related to the lifting of Iranian sections is available here .  For more information on how the lifting of certain U.S. sanctions against Iran could affect you or your business, please do not hesitate to contact us at info@chaloslaw.com.

Chalos & Co, P.C. – International Law Firm is proud to announce that George M. Chalos, founder of the firm, has been recognized by Who’s Who Legal: Transport 2016 as a standout practitioner in the field.

Who’s Who Legal: Transport 2016 is the culmination of months of research and analysis in which the opinions of clients and transport lawyers from around the world are analyzed to compile a compendium of practitioners in seventy-six (76) jurisdictions who are considered leaders in their area of expertise.  All nominees in Who’s Who are selected based upon a comprehensive, independent survey with both general counsel and transport lawyers in private practice worldwide, and only specialists who have met independent international research criteria are recognized.

Mr. Chalos’ specializes in maritime and transport matters, with a particular expertise in Marpol and other pollution related matters, including the defense of criminal allegations and complex third-party litigation which customarily arises in any significant pollution incident. Mr. Chalos has been a published author with respect to the presentation of claims to the Oil Spill Liability Trust Fund and the United States’ vessel initiative.  Mr. Chalos is a Proctor in Admiralty, which is the highest distinction and honor bestowed upon U.S. maritime lawyers by the Maritime Law Association and serves as a Member of the Board of the Federal Bar Association (“FBA”) Admiralty Section and the FBA Chapter for the Southern District of New York

For more information about Who’s Who Legal or to receive a full version of the 2016 publication focused on experts in the transportation industry, please visit http://whoswholegal.com/shop/product/889/transport-2015/

On November 30, 2015, the United States District Court for the Eastern District of Louisiana handed down the Findings of Fact and Conclusions of Law in the penalty phase of the civil case against Anadarko Petroleum Corporation (“Anadarko”) for its role in the 2010 DEEPWATER HORIZON incident.  Limiting its decision to the Government’s claim based on the Clean Water Act (“CWA”), the Court found Anadarko liable and imposed civil penalties of USD 159.5 million.

The DEEPWATER HORIZON incident remains the worst oil spill in U.S. history.  On April 20, 2010, an explosion on the offshore drilling rig caused a blowout of the underwater oil well Macando, approximately fifty (50) miles off the coast of Louisiana.  Eleven (11) of the one hundred twenty-six (126) people aboard the DEEPWATER HORIZON died in the explosion and subsequent fires; seventeen (17) more were seriously injured.  Fueled by hydrocarbons from the well, the DEEPWATER HORIZON burned continuously until it capsized and sank two (2) days later.  However, as the rig descended, piping that connected the rig to the seafloor collapsed and fractured, which resulted in the discharge of nearly 3.19 million barrels of oil into the Gulf over a four-month timespan.

It was not long after the blowout that lawsuits began to be filed, with over 3,000 cases and well over 100,000 plaintiffs filing claims.  Most of the federal cases that resulted from the DEEPWATER HORIZON incident were consolidated as Multidistrict Litigation 2179.  Part of that consolidated litigation included the case captioned United States v. BP Production, et al, which included BP Exploration and Production, Inc, MOEX Offshore 2007 LLC, various Transocean entities, and Anadarko.  As part of the Government’s complaint against these organizations, civil penalties where sought under the CWA and a declaratory judgment under the Oil Pollution Act of 1990.

The CWA itself prohibits the discharge of “harmful” quantities of oil into or upon statutorily covered waters or adjoining shorelines – in connection with activities under the Outer Continental Shelf Lands Act of 1953 or Deepwater Port Act of 1974 – or which may affect natural resources.  Certain persons (i.e., owners, operators, persons in charge of vessels, onshore facilities, and offshore facilities) who violate the CWA’s prohibition of oil discharged into U.S. waters are subject to civil penalties up to a statutory maximum of $1,100 per barrel of oil spilled.

The CWA provides eight (8) factors a court must consider in determining the actual amount of a civil penalty: (1) the seriousness of the violation(s); (2) the economic benefit to the violator, if any, resulting from the violation; (3) the degree of culpability involved; (4) any other culpability form the same incident; (5) any history of prior violations; (6) the nature, extent, and degree of success of any efforts of the violator to minimize or mitigate the effects of the discharge; (7) the economic impact of the penalty on the violator; and (8) any other matters justice may require.

In addressing the above factors in Anadarko’s role as a 25% stakeholder in the DEEPWATER HORIZON, the Court found as follows:  First, the Court found the seriousness of the discharge to be unprecedented in scale and damage.  Second, in extrapolating the “economic benefit” of the spill to Anadarko, the Court found that, although the entire DEEPWATER HORIZON enterprise saved USD 13.5 million in preventative expenses that may have forestalled the disaster (with Anadarko’s share being USD 3.375 million), this figure was ultimately offset by the USD 4 billion Anadarko eventually paid to settle compensatory claims arising from the spill.  Third, the Court held that as a non-operating minority owner in the DEEPWATER HORIZON – in contrast to BP, who was the operator and 65% owner – Anadarko was not directly culpable for the spill.  Fourth, the Court found that, to date, Anadarko had not paid penalties for the spill, unlike the other parties which had paid billions to various charitable organizations pursuant to a plea agreement.  Fifth, the Court found that Anadarko had at least ten (10) prior CWA violations in the six (6) years preceding the spill.  Sixth, the Court found Anadarko’s effort to mitigate the damages were “at best, adequate,” as it “did not shirk its responsibilities, but it could hardly be called a willing participant in the response.”  Seventh, Anadarko itself admitted that the statutory maximum, in this case USD $3.5 billion, would not be ruinous to it, although it did contend that any penalty would have a negative economic impact on its business. Finally, in deciding the eighth factor, the Court looked to the CWA’s purpose as a deterrent and weighed the amount of penalty in light of its possible effect on the investment of other non-operators in similar ventures.

Ultimately, the Court struck a balance, citing Anadarko’s lack of direct culpability over the remedial and regulatory purposes of the CWA.  In the end, the Court determined that Anadarko should be assessed a penalty of USD 50 per barrel – well below the maximum of USD 1,100 per barrel – for a total of USD 159.5 million.

To read a copy of the Court’s decision, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.

Michelle Otero Valdés, with the assistance before trial of Melissa Russo, successfully defended Mobro Marine, Inc. (“Mobro”) in a bench trial before the Honorable James Cohn in the United States District Court for the Southern District of Florida. Judge Cohn issued his decision on October 6, 2015, finding that third-party defendant, Mobro, had no fault for the loss of twenty-one (21) containers which fell from the barge, Atlantic Trader,off the coast of Key Biscayne, Florida.

The Plaintiff, Transatlantic Lines, LLC (“Transatlantic”) had chartered and operated the Atlantic Trader, a barge which was found to have experienced substantial corrosion and which lacked a full complement of container sockets and D-rings, to replace another vessel for its regular cargo transport from Jacksonville, Florida to Guantanamo Bay, Cuba. Three (3) days prior to the Atlantic Trader’s incidental voyage, Transatlantic hired Mobro to install a crane and weld approximately thirty (30) D-rings to the Atlantic Trader’s deck. Transatlantic purchased the D-rings and placed them on the deck wherever old D-rings were missing. Employees of Transatlantic and Defendant Portus Stevedoring, LLC (“Portus”), discussed how to approach the problem of the Atlantic Trader’s missing container sockets. Portus suggested that 4×4 wood dunnage would be used to level the deck and accommodate the shipping containers. Transatlantic agreed. During the voyage, the wooden dunnage compressed under the weight of the shipping containers and created slack in the lashing. The slack, in turn, subjected the lines to extraordinary force while the Atlantic Trader was underway. As a result, twenty-one (21) shipping containers fell into the waters off of the coast of Florida, causing Transatlantic a loss of $517,942.03.

Transatlantic sued Portus under three (3) theories of liability: (1) breach of contract; (2) breach of implied warranty of workmanlike performance; and (3) negligence. Portus in turn brought Mobro into the suit by alleging that it was the Mobro’s negligence in welding a handful of D-rings that contributed to the loss. The Court concluded that although Transatlantic established Portus’s liability, Transatlantic itself was also partially liable for the loss in failing to exercise reasonable care when it approved Portus’s suggestion to use the wooden dunnage to secure the cargo, in providing Portus with a barge in a broken-down condition, in failing to provide Portus with the barge’s Trim and Stability Booklet, and in failing to monitor the barge’s cargo compression of the dunnage and to tighten the lashing at they required. As a result, the Court found that Transatlantic was sixty (60) percent at fault for the loss and Portus was forty (40) percent at fault for the loss.

Moreover, citing Federal Rule of Civil Procedure 14(c), which treats impleaded third-parties as though they had been sued directly by the plaintiff, the Court stated that Transatlantic and Portus bear the burden of proving that Mobro acted in a negligent manner. As neither party was able to prove that Mobro was negligent, the Court entered judgment in favor of Mobro and assigned it no liability.

To read a copy of the Court’s decision click here.

For more information about this matter, or how Chalos & Co, P.C. may be of assistance to you, please do not hesitate to contact us atinfo@chaloslaw.com.

In Nguyen v. American Commercial Lines, L.L.C., the United States Court of Appeals for the Fifth Circuit affirmed in part and reversed in part a judgment by the United States District Court for the Eastern District of Louisiana denying American Commercial Lines’ (ACL) motion for summary judgment relating to claims made under the Oil Pollution Act of 1990 (OPA) by various fishermen and other parties.

A barge owned by ACL was designated by the United States Coast Guard as having been the source of an oil discharge after a collision with another vessel.  ACL was named the responsible party for any claims filed under OPA for damages arising from the spill. The Fifth Circuit was presented with two (2) issues to consider in this case: (1) whether the fishermen presented enough information to ACL to comply with OPA’s claim submission requirement, and (2) whether or not the fishermen had to comply with both the requirement to give the responsible party at least ninety (90) days to respond to a claim before filing a lawsuit and the bar from filing a lawsuit more than three (3) years after the oil discharge occurred.

On the issue of whether sufficient information was attached to the claim, the Fifth Circuit found for the fisherman, holding that they had submitted enough information with their claim letters to ACL to begin the ninety (90) day settlement clock. Most of the fishermen submitted applicable fishing licenses, selected dock receipts for seafood sold to wholesalers, and included federal tax returns.  ACL responded with a laundry list of additional documents it required to process their claims, which the fishermen declined to send.  ACL claimed it had the right to demand these documents because the separate OPA requirements for filing a claim for damages to a federally established fund could ask for such information, however, the Fifth Circuit said that these did not apply to claims against the responsible party. OPA’s only requirement is that the fishermen file a claim to the responsible party, and thus the claim and information provided was sufficient for ACL to decide whether or not to settle the case.

The Fifth Circuit then moved to the issue of the two (2) time restrictions imposed by the OPA. On this issue, the Court found for ACL, stating that a second group of fishermen who filed their claims within ninety (90) days of the end of the three (3) year period were barred from filing a lawsuit a few days after sending their claims to ACL. The Court said that the two (2) requirements work independently of one another, meaning that the fishermen were not able to use following one requirement to excuse not following the other. The fishermen tried to argue that the “spirit” of the law would be violated if they were not allowed to file their lawsuit for damages and since ACL had not responded to the previous fishermen, they assumed they would not respond to their claims either.  However, the Court said that they could not enforce the spirit of the law outside of the explicit rules in the law itself and an assumption that the claim would be denied by ACL was not enough to say that they had complied with the ninety (90) day requirement in OPA.  Accordingly, if a claimant does not submit a claim at least ninety (90) days before the expiration of the three (3) year statute of limitation period, then the claim is barred.

To read a copy of the Fifth Circuit’s decision, click here.

For more information about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at info@chaloslaw.com.