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Yesterday the Third Circuit released a unanimous precedential opinion in Reedy v. Evanson:

While working as a cashier at a convenience store, nineteen-year-old Sara R. Reedy was sexually assaulted and robbed at gunpoint by a serial sex offender. She reported the crime to

As The Legal Intelligencer reported,

The Muffin Man ImageWhen a top-level executive suddenly quits to take a job at a competing firm, the courts have the power to block the start of the new employment if the evidence shows that such an injunction is needed to prevent a likely misappropriation of trade secrets, the 3rd U.S. Circuit

Today’s The Legal Intelligencer includes an article titled, "Limited Liability Law May Apply in Duck Boat Accident" about the effect of the Limitation of Liability Act of 1851 on claims arising from last’s weeks collision between a tugboat and a duck boat on the Delaware River.

The Limitation Act — which nominally limits the liability of a ship owner to the value of the ship itself — is a fascinating relic from a turbulent time in the United States, when whispers of war were beginning and the young agrarian nation was painfully converting to a steam-powered industrial society. The world’s first commercial oil well would not be built, in Poland, and the world’s first union railway station would not be built, in Indianapolis, for another two years.

With a lot of output, a big country, and not much transportation infrastructure, we needed investment in shipping, and lots of it.

Hence the Act.

Few would disagree that the Act has outlived its purpose, but it’s still on the books.

It’s just as well that the Legal article is subscription only, since it doesn’t tell us much other than that defense lawyers think the tugboat and duck boat are free and clear while plaintiff’s lawyers believe there are ways around it.

The press did a similar dance a few weeks ago, after Transocean invoked the same act to limit its liability following the catastrophic oil leak caused by the sinking of the Deepwater Horizon oil rig. Transocean’s use of the Act so bothered Congress that they’re trying to get the entire Act repealed; if that happens, this entire discussion will be rendered moot in the near future, as it should be: in our modern world of insurance, re-insurance, global finance, and limited liability companies, there’s no need to give vessel owners special treatment. Ships will still be built and used, regardless of the Act.

But the Act is still on the books. I’m with the plaintiff’s lawyers; there’s plenty of ways to get around the Act and get these types of maritime accidents back in the state courts where they belong.

First, the Act doesn’t apply if the liability of the vessel owner isn’t actually at issue:

In construing the Limitation Act, this Court long ago determined that vessel owners may contest liability in the process of seeking limited liability, and we promulgated rules to that effect pursuant to our "power to regulate . . . proceedings." The "Benefactor," 103 U. S., at 244; Supplementary Rule of Practice in Admiralty 56, 13 Wall., at xiii; Supplemental Admiralty and Maritime Claims Rule F(2). Thus, we agree with respondent that a vessel owner need not confess liability in order to seek limitation under the Act. The Act and the rules of practice, however, do not create a freestanding right to exoneration from liability in circumstances where limitation of liability is not at issue. In this case, petitioner stipulated that his claim for damages would not exceed the value of the vessel and waived any claim of res judicata from the state court action concerning issues bearing on the limitation of liability. The District Court concluded that these stipulations would protect the vessel owner’s right to seek limited liability in federal court. Then, out of an "abundance of caution," the court stayed the limitation proceedings so that it could act if the state court proceedings jeopardized the vessel owner’s rights under the Limitation Act. 31 F. Supp. 2d, at 1170-1171. We believe nothing more was required to protect respondent’s right to seek a limitation of liability.

Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438 (2001). Here, it’s already been reported that K-Sea had an insurance policy* in excess of $100 million; if the plaintiffs stipulate their damages don’t exceed that (which they reasonably could), then the Act’s purpose has been met.

Second, even where the Act applies, there are plenty of exceptions:

The Limited Liability Act allows a vessel owner to limit its liability for any loss or injury caused by the vessel to the value of the vessel and its freight.[6] "Under the Act, a party is entitled to limitation only if it is `without privity or knowledge’ of the cause of the loss."[7] If the shipowner is a corporation, "knowledge is judged by what the corporation’s managing agents knew or should have known with respect to the conditions or actions likely to cause the loss."[8] Once the claimant establishes negligence or unseaworthiness, the burden shifts to the owner of the vessel to prove that negligence was not within the owner’s privity or knowledge.[9]

In re Hellenic Inc., 252 F.3d 391 (5th Cir. 2001)(footnotes omitted, but they’re worth reading if you’re looking for more cases).

For anyone interested in the subject, the Admiralty and Maritime Law Guide has a couple cases on the Act. For anyone really interested, yesterday I went to a CLE on Boating Law and Liability — hosted, coincidentally, by Ride The Duck’s maritime lawyer — that included a thick book of materials on maritime law that can be purchased, even after the CLE.

As noted by those materials, "the knowledge of a corporation necessarily is measured by the knowledge of the corporation’s employees and agents." A clever plaintiff’s lawyer would point out that the knowledge and negligence of the mate — the one who took the Fifth and refused to testify — is imputed back to the owners of the vessel.

All of which is to say: as nice as the Act sounds on its face to defense lawyers, that tugboat company and its insurer aren’t going to just walk away from this tragedy.

If you have been seriously injured, contact a personal injury lawyer.

Continue Reading The Duck Boat / Tugboat Crash And The Limitation of Liability Act

Via Howard Bashman, whose client won, comes the Third Circuit’s Sullivan et al. v. De Beers et al. ruling reversing the District of New Jersey’s approval of a massive, nationwide settlement of antitrust claims brought by diamond purchasers against the De Beers cartel. As The Legal Intelligencer put it:

In its 75-page opinion

Tomorrow, July 15, 2010, I’m giving the plaintiff’s perspective in a webinar CLE titled: Pleadings Standards Post-Iqbal: Meeting Tougher Plausibility Standards in Commercial Litigation.


If you’ve not yet had the pleasure of litigating the heck out of Iqbal v. Ashcroft, this CLE is a good opportunity to get some case cites and perspective.


The Supreme Court released its opinion in Bilski v. Kappos this morning, which tested the sufficiency of a "business method" patent relating to the hedging of risk in investments.

Four Justices wanted to scrap "business methods" patents altogether. Five wanted to scrap just the patent at issue here.

Given the complexity of the issues involved, I’m

As widely reported last week, the local Boy Scouts won a partial victory against the City of Philadelphia from a federal jury in the Eastern District of Pennsylvania:

A federal jury on Wednesday declared that the city of Philadelphia had violated the First Amendment rights of the local chapter of the Boy Scouts of America

The University of Chicago Law School Faculty Blog is hosting a debate over a new paper, Ambiguity About Ambiguity: An Empirical Inquiry Into Legal Interpretation written by Ward Farnsworth, Dustin F. Guzior, and Anup Malani.

As the paper’s abstract says:

Most scholarship on statutory interpretation discusses what courts should do with ambiguous statutes. This paper