Big Win For Vessel Owners In Supreme Court Decision

On June 24, the Supreme Court resolved a split between two judicial circuits by ruling in The Dutra Group v. Batterton that punitive damages are not available in Jones Act cases involving claims of unseaworthiness. The decision, which had been closely watched by the maritime industry, marine insurers and maritime attorneys, was a major win for vessel owners and operators. Several maritime attorneys spoke with The Waterways Journal about the impacts of the Dutra decision.

The 6-3 decision was written by Justice Samuel Alito. Justice Ginsburg filed a dissenting opinion in which Justices Breyer and Sotomayor joined.

The case began when deckhand Chris Batterton, working aboard a dredge owned by the Dutra Group, had his hand crushed when a hatch cover blew open due to a pressurized buildup of air. Batterton sued his employer, seeking maintenance and cure and remedies under the Jones Act but also alleging negligence and seeking punitive damages with a claim of unseaworthiness.

In explaining the court’s decision, Alito gave a brief history of maritime law, including how the Supreme Court itself helped contribute to the ambiguity expressed in two conflicting interpretations of punitive damages by the Fifth and Ninth circuits

In dealing with maritime matters, the Supreme Court inherits two bodies of law: general maritime law—much of which, like the common law, predates the Constitution and is interpreted and extended by further court decisions; and acts of Congress that bear on maritime matters.

In two decisions in the 1940s, Alito said, the Supreme Court expanded unseaworthiness claims from a requirement for “due diligence” into a strict liability claim. In other words, exercising due diligence was no longer enough to protect an owner from claims of unseaworthiness.  The new remedy and its supporting doctrine were completely judge-created, and, according to Alito, based on flawed analysis. Even so, it did not negate the insistence of the court in another case, Miles v. Apex Marine, that courts applying remedies for seamen should look first to acts of Congress and conform existing maritime laws to them.

In 2009, in Atlantic Sounding Co. v. Townsend, the court said punitive damages could be recovered for failure to provide maintenance and cure, which are payments to injured seamen made under maritime law without regard to fault. Although that ruling did not involve unseaworthiness claims, the Townsend decision led plaintiff lawyers to seek other areas where punitive damages might be sought under maritime law—including claims of unseaworthiness.

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Maritime attorney Grady Hurley—a partner in and leader of the Maritime Litigation and Arbitration Team and co-chair of the Energy, Environmental & Natural Resources Industry Sector at Jones Walker—said the Dutra decision closes that door definitively. Hurley noted that Justice Thomas wrote the majority opinion in Townsend and Justice Alito wrote the dissent, but they joined in the 6-3 Dutra majority.  Alito wrote in Dutra that the Townsend decision was a “gloss” to Miles and did not disturb that Court’s reasoning or holding in Miles, which was the basis of his dissent in Townsend and also the backbone of the Dutra decision.

Alito wrote, “The overwhelming historical evidence suggests that punitive damages are not available for unseaworthiness claims” and added that “allowing punitive damages on unseaworthiness claims would…create bizarre disparities in the law.” It would also “place American shippers at a significant competitive disadvantage and discourage foreign-owned vessels from employing American seamen.”

Hurley said the decision “foreshadows how this court will approach cases where it is asked to fashion common-law remedies.” While the vast majority of injury cases settle before trial, the threat of possible punitive damages was an “X-factor” that plaintiff attorneys could use in settlement negotiations. That “X-factor” can no longer be used. The Dutra ruling signals that this current court will not create remedies not explicitly provided by Congress, Hurley said.

Attorney Gino Zonghetti, chair of the maritime practice group at Kaufman Dolowich & Voluck, said: “The case of The Dutra Group v. Christopher Batterton is a significant decision, which brings much needed closure on the issue of punitive damages in general maritime cases involving claims of unseaworthiness.  In a rather forceful decision, the Supreme Court made clear that it was confirming what should have been well settled law, that punitive damages were never available under the general maritime law in cases involving claims for unseaworthiness and the Jones Act.”

Attorney John Kimball, a partner at Blank Rome and an adjunct instructor in maritime law at New York University, said that while the Dutra decision didn’t necessarily completely remove all possible claims for punitive damages in all maritime cases, its impact will be significant.

“In holding that seafarers may not recover punitive damages for personal injuries caused by unseaworthiness, the Supreme Court issued a decision which is a great relief to ship owners and operators,” Kimball said. “Although punitive damages were rarely awarded even before Dutra, there are thousands of pending asbestos cases against shipowners in which the threat of being held liable for punitive damages has now been removed.”

Kimball added, “The [Dutra] decision will not affect the availability of punitive damages in other maritime cases in which the Supreme Court has recently upheld their availability. The right to recover punitive damages will remain available to seafarers if there is a wrongful failure to pay maintenance and cure, as was decided in Townsend, and in oil spill cases as was decided in the Exxon Valdez case.”

“Justice Alito’s opinion for the majority breathed new life into Miles, however, in stating that while the court has power under the Constitution to decide maritime law, it ‘should look primarily to…legislative enactments for policy guidance.’ Having determined that the ‘overwhelming historical evidence’ cautions against allowing punitive damages, the court determined there is no valid policy reason to chart a different course with respect to claims caused by unseaworthiness,” said Kimball.