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Inland River Seminar Draws Attorneys, Insurers, Operators

The St. Louis Inland River Seminar, held September 18-19, drew an attentive audience of maritime attorneys, insurers and brokers, barge operators and fleet managers to the downtown Missouri Athletic Club. More than 80 attendees—compared to 50-plus last year—filled the conference room near the St. Louis waterfront.

Expert panels of top maritime attorneys, insurance brokers and forensic specialists led attendees through the labyrinths of issues raised by a hypothetical scenario. In the scenario, a tow breaks up after a bridge pier allision and, in turn, the tow’s barges knock barges out of a fleet. Some of the fleet barges strike and become lodged in a lock and dam, one deckhand is killed and another injured, and the chief engineer files a false injury report during the incident. The captain tests positive for alcohol, and it later emerges he is an alcoholic who has recently returned to drinking after a long dry spell, although no one on the boat noticed any changes in his behavior.

Each panel guided attendees through different aspects of the scenario. They covered the language of contracts between the various parties (fleeter, towing company, barge operator, insurers); how to handle the investigation of the incident; whose responsibility it is to remove the wrecked barges; investigating the chief engineer’s fraudulent claim; and finally, the under-appreciated art of preparing witnesses to give depositions.

Ron Fox, founding partner at Fox Smith LLC and a maritime law veteran with more than 40 years of practicing in all areas of maritime law, introduced the scenario and moderated the sessions. He encouraged attendees to ask questions at any time.

The first panel featured Ted Lucas, a Fox Smith partner, and Baxter Southern, president of commercial insurance brokerage McGriff, Seibels & Williams of Missouri. Lucas discussed the contract language that should have been in place in the contract between the barge operator and fleeter. This language  included “hold harmless” clauses that, he said, should be backed up by insurance coverage with the proper exclusions. He discussed “knock for knock” clauses, in which two parties to an agreement (in this case, the harbor service and terminal operator) indemnify each other for any negligence by employees of either party. If the language in such clauses is not clear, he said, it could result in long, expensive litigation determining degrees of fault.

Southern, insurer of the fleeter in the scenario, discussed how that coverage should be structured. He also covered how the parties should communicate with each other about the insurance coverage. The topic of insurance certificates was covered; Southern noted that these are warrants that a party is covered by insurance, but they are “snapshots” that only apply at a certain moment in time. Parties who are entitled to certificates of insurance should probably ask to see the policy if they have questions about what is covered. If a party promises to provide a service such as fleeting but neglects to get insurance coverage, it could expose itself to a breach of contract lawsuit. They should also be notified about any changes in coverage.

Separate from insurance is a presumption in maritime law that fleet operators have a “bailment” duty or responsibility for a vessel. In the scenario, the fleeter had too many barges that extended beyond the fleet’s boundaries detailed in the Corps of Engineers permit, which triggered the “Pennsylvania rule,” assigning fault to the fleeter.

Several operators in the audience noted that a lot of towing companies simply drop barges off at fleets without a contract. Southern noted that some fleets are “open”—accepting all barges—while others are “closed,” accepting only those barges from companies with contractual arrangements with the fleet. Open fleets tend to be concentrated in areas of heavy traffic such as important river junctions.

Maintenance And Cure

Stanislav “Stas” Levchinsky, a partner at Fox Smith LLC and a former St. Louis city prosecutor, presented on the essentials of maintenance and cure, a staple of maritime law seminars. Maintenance and cure is a duty of payments by Jones Act employers to injured or sick employees without regard to fault. The maintenance portion is supposed to replace lost income, while the cure payments are supposed to be paid toward a medical cure of the injury or illness, until such time as improvement is no longer possible. Palliative care (i.e., pain relief) is not usually covered, although case law on this question is in flux.  A calculation of living expenses relative to geography—where the employee lives—is a part of most maintenance and cure determinations.

Levchinsky discussed several recent cases in which courts have extended the maintenance and cure triggers even further. In Stevens v. McGinnis, the Sixth Circuit ruled that an undiagnosed brain tumor whose symptoms manifested during a period of Jones Act employment qualified as triggering the maintenance and cure obligation. Another court decision, Ramirez v. Carolina Dream, went even further when it ruled that the illness merely had to have been present — even if undiagnosed or showing no symptoms—during the employment period.

In general, it’s a good idea for Jones Act employers to pay maintenance and cure rather than deny or contest it, Levchinsky said.  The maintenance and cure duty is not unlimited. In a so-called McCorpen defense, maintenance and cure payments can be successfully denied if it is shown that the claimant is making a fraudulent claim or willfully concealing relevant medical facts. For that reason, medical disclosure forms that ask the right questions are key.

However, maintenance and cure “is the only remedy for which employers may be sued for punitive damages,” Levchinsky said. If an employer denies and loses in court, they could be raising the stakes significantly. He reminded attendees that the maintenance and cure obligation is not fault-based. “Close calls or ‘ties’ will always favor the injured mariner,” he said.

During the Q&A period, Levchinsky noted that several recent cases raised the question of whether some courts may be ready to move away from the old “ward of the court” presumptions about mariners. The maintenance and cure duty derives from the old presumption of maritime law that mariners are wards of the admiralty court. This presumption stems from a time when social welfare laws were non-existent in most countries, and mariners could be away for months or years at a time and were at the employer’s mercy.

Retaining Evidence

The immediate response to the incident was the focus of the next panel. Lucas discussed company policies that should govern responses to an incident. The captain should verbally remind all crewmembers not to take photos with their phones, nor to communicate with anyone about the incident via text or other means. Crewmembers should also wait to file incident reports, even if asked to by the Coast Guard or other authorities. The company should notify its insurance broker, attorney and surveyor as well as the Coast Guard (which they are obliged to do by statute).

Fox Smith partner Ryan Mohr, a technology and evidence recovery expert, and Scott Shaeffer, chief information security officer at Blade Technologies, guided the audience through how to collect evidence. All third parties should be notified of the duty to preserve evidence. “Don’t be afraid if they issue you the same notices back,” said Mohr. Follow up, and don’t make your requests too broad. Penalties for “spoliation” of evidence can be extreme, however.

Electronic evidence to be collected may include AIS and Rose Point chart evidence. Some systems overwrite data after 30 days. In older shipboard computer systems, crewmembers may share the same password, making it hard to learn who sent what when. “Deleted” information can usually be recovered, especially on iPhones. Schaeffer said many companies have a mobile device management system for company data. Companies may issue their own (monitored) phones or equipment to employees, or may have them sign waivers that allow the company to access any devices that connects to company data. A procedure called a “lit hold” (for litigation hold) preserves the current state of a computer and all its data; Microsoft Office has a function that does that with a single command, without alerting users.

Salvage Of Wreck

The next panel dealt with a less familiar topic at maritime law seminars: who is responsible for wreck removal at federal locks and dams. Neal Settergren, an attorney at Goldstein & Price LC, walked audiences through the history of the Rivers and Harbors Act. It was originally passed in 1899 and allowed only government claims against maritime wrecks, not private ones. Owners had to mark the site of a wreck. The loophole was that if the owners decided it wasn’t worth it to salvage the wreck, they simply abandoned that expensive duty to the taxpayers.

In 1986, the act was amended to create a strict liability scheme that removed fault or negligence. The scope was broadened to include lessees and operators as well as owners. Provisions were added to certain sections requiring owners to pay the excess costs of removal or destruction beyond the sale price of the salvaged vessel. Settergren noted that when government removes a wreck, the cost is usually many multiples of what a private salvor would charge.

A 1996 amendment allowed the government to add administrative expenses to those costs, inflating them even further. “Courts have allowed this,” he said, meaning that it is in the interest of everyone involved in an incident to avoid having the government involved in any way. “The bill for lock and dam damages is very different from salvage costs,” which is perhaps why Fox titled his hypothetical lock “HitItYaBuyIt.” And the government doesn’t have to prove fault or negligence on anyone’s part.

Michael Brown, of insurance broker Arthur J. Gallagher & Company, representing insurance brokers in the scenario, noted that a time window exists for responding to incidents. The company should call not only their underwriter, but their broker. Communication is OK, he said. In today’s social media environment, a company whose name may be emblazoned on stacks of the sides of vessels has a strong incentive to act quickly to resolve a situation before it goes viral.

Personal Injury And Death

Roy Dripps, an attorney with Armbruster Dripps Blotevogel LLC, representing the hypothetical engineer, Shifty, said his first strong advice to him is not to hide anything from his attorney. His next advice would be not to delete anything from his social media accounts—but not to post anything further.

Regarding Shifty’s drunk captain  (“Capt. Jack Daniels” in the scenario), his “privity and knowledge” of the captain’s state will have to be established. The fact that the captain blew positive on the alcohol breath test may not be a slam-dunk, said Dripps. Habitual drinkers may tolerate drinks better than non-drinkers, and no one noticed anything unusual about the captain’s behavior in the run-up to the incident.

Bobby Miller of Miller Hahn PLLC, representing “Pinball Towing” to the family of the deceased mariner in the scenario, began by mentioning the three Cs: compassion, candor and compensation. The family usually wants to know what happened to their loved one. Disclosure can be tricky in a matter under litigation, but he usually tells the family what he can. Establishing a relationship is key. “We reach out to the family as soon as possible in death cases,” he said. He also said it’s good policy to offer compensation regardless of fault and offer grief counseling. He avoids having the crew speak to the Coast Guard until they have had time to recover in death or extreme injury cases. Some states may require a coroner’s inquest.

Witness Preparation

The last presenter was given an entire hour. Dr. Bill Kanasky holds a Ph.D. in neuroscience and uses his knowledge in his successful jury consulting and witness preparation business. Among his many cases, Kanasky was the lead jury consultant in the Table Rock Lake Duck Boat case in which 17 people lost their lives in a freak storm.

Although he joked about his 2:45 starting time, everyone in the audience paid full attention as he laid out the reasons for “nuclear verdicts” and “nuclear settlements.” The first is rare, he said, but the second is more common. Kanasky spoke of how plaintiff attorneys often go for “first-round knockouts” by getting witnesses to say damaging things in depositions. “By the time you get to court, you’re in the fourth quarter, and the score is already 35 to 3 without you knowing it,” he said. Plaintiff attorneys do aggressive jury research, including using mock juries, to find the winning issues in the case.

The main cause of nuclear verdicts, he said, is company witnesses that make damaging admissions. Company documents and websites that over-promise or have vague, idealistic mission statements can also be damaging, as can policies that are not enforced. Emotional and/or cognitive breakdowns in company witnesses, fight-or-flight responses during questioning and poor listening or thinking skills in witnesses can all result in big verdicts or settlements.

The next most common cause is egregious behavior by the company itself, as in the infamous McDonald’s hot coffee lawsuit. Punitive jurors and so-called “judicial hellholes” (plaintiff-friendly venues) are the third- and fourth-most common causes.

Finally, plaintiff attorney aggressiveness and coordination can overwhelm an unprepared defense. Plaintiff attorneys talk to each other all the time and share all their secrets, he said. They may push ethical limits, bully witnesses, use “reptile theory” tactics to get emotional responses, or make excessive settlement demands. In one actual case, he said, jurors reduced a demand for a $150 million settlement to “only” $75 million – for a case that was worth no more than $20 million at best, he said.

Kanasky left the audience with a point to ponder. Everything he does to win cases is well known to plaintiff attorneys, he said. But they often conclude that it doesn’t matter, because companies are often reluctant to spend the up-front money to do jury and witness research and get out ahead of a case.

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