contents congressional failure to enact page in the event of … · will go into effect on january...
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M A I N B R A C E
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PAGE
Congressional Failure to Enact Maritime ............................... 1 Legislation and the Fiscal Cliff
Maritime … Or Not? ..................................................................... 3
The Doctrine of Judicial Estoppel—Alive, Well, ..................... 5 Expanding, and Still Devastating
Congratulations to Jeremy Harwood: ..................................... 5 Selected as One of the Top Five Maritime Lawyers by TradeWinds 2012
Chambers 2012 Honors Blank Rome ...................................... 6 Maritime Attorneys
Don’t Risk an Expensive Run-In with the ............................... 9 U.S. Federal Maritime Commission
Obtaining Evidence in the United States for Use ................ 10 in Foreign Proceedings—An Update
Blank Rome Maritime Emergency Response Team ............. 12
CONTENTS
July 2012 No. 2
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Congressional Failure to Enact Maritime Legislation and the Fiscal CliffBY JOAN M. BONDAREFF AND JONATHAN K. WALDRON
As the November election draws closer, the main ques-tions on everyone’s lips in Washington, DC—other than whowill win the election itself—are whether Congress can enactany maritime legislation and are we about to fall off a “fiscalcliff”?Congresshasforthemostpartdemonstratedaninabilitytoenactsubstantivemaritime legislation, includingspill legisla-tion following Deepwater Horizon. With regard to the phrase“fiscalcliff,” thiswascoinedbyFederalReserveChairmanBenBernanke to describe the perfect storm of economic eventsfacing thenation. Thequestions for themaritime industry arewhen will Congress be able to accomplish anything in themaritimespace,andwhatimpactwillthefiscalcliff,alsocalled“Taxmaggeddon,”haveontheirbusinesses?
TaxmaggeddonThe“fiscalcliff”consistsoftwomajorcomponents:“seques-
tration” and the expiring Bush tax cuts. other componentsincludetheneedto raise thedebtceiling—estimatedtooccurthis fall or later; the expiration of the payroll tax holiday; theextension of unemployment benefits; the Medicare “Doc Fix”;
theAlternativeMinimumTax (“AMT”)patch; and taxextenders(includingtheproductionTaxCreditforthewindindustry).
Forthosewhohaven’tfollowedthebudgetdebatesclosely,“sequestration”isthetermCongressusedintheBudgetControlActof2011(p.L.112-25)todescribetheimpositionofauto-maticacross-the-boardcuts intheamountof$1.2trillionoverten years to help balance the budget. Sequestration was trig-geredbecausetheJointSelectCommitteeonDeficitReductioncouldnotreachadealonhowtobalancethebudget.Thecutswill go into effect on January 2, 2013, unless Congress cannowcomeupwithanalternative.ThecutsareequallydividedbetweentheDepartmentofDefense(“DoD”)andthecivilianagencies. (Social Security, Medicaid, assistance to low-incomefamilies,andtheDepartmentofVeteransAffairsareexempt.)
Todate,mostofthefocushasbeenontheimpactonthedefenseindustry,andmajordefensecontractorshavebeenvery
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JOAN M. BONDAREFF OF COUNSEL
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vocal intheiroppositiontosequestration.LockheedMartin,forexample,hasannouncedtheywillsend lay-offnoticestotheiremployeesintheSeptember-octobertimeframetoprovidetherequired60-daynotice.TheiralliesontheHillarealsoveryvocalintryingtoforestallmorecutstoDoD.
Recently, Congress has begun to focus on the impact ofthese cuts on the non-defense world. Senators patty Murray(D-WA) and John McCain (R-AZ) joined forces to add anamendment to the farmbill,whichpassed theSenate64-35,calling on the obama Administration’s office of ManagementandBudget(“oMB”)toreport“assoonaspracticable”onhowthecutswouldimpact boththemilitaryandcivilianagencies.
oMBhasbeenreluctanttoprovidethesedetailssofarinthehopethatCongresswilldoitsjobandavertthecrisis.Butonce
thefarmbillisenacted,theAdministrationwillhavetoprovidethisinformationtoCongressandperhapsthen,seeingthedra-maticimpactsthecutswillhave,Congresswillact!
In the meantime, Congress is working on the FY2013budget for theyearbeginningonoctober1,2013.Sofar,noappropriationsbillshavebeenenactedforanydepartmentandsome observers are predicting that we will have yet anotherContinuingResolutiontokeepthegovernmentopenthoughallorpartof2013.The lackofcertaintyover funding,alongwiththefearofsequestration,hasledtoagencies’holdingbackonawardingnewcontracts.
Wehavealreadyseenadeclineinbudgetsforthemaritimeagencies.Forexample, theMaritimeAdministrationbudget forFY2013wascutsignificantlyintheHouse-passedbill.Nonewfundingwas provided for the title XI loan guarantee program,theshortseashippingprogram,or thepopularsmall shipyard
grantsprogram.TheHousehasalsozeroedoutfundingin2013for the also popular TIGeR grant program, which allows portstoqualifyforinfrastructurefunding.TheCoastGuardhasfaredsomewhatbetterwitha46percentincreaseinfundingforshipconstruction; but funding for aircraft purchases was reducedby30percent,andshorefacilitiesandaidstonavigationwerereducedby39percent.However,eventheCoastGuardwouldnotbeexemptfromsequestration.
TheBushtaxcutsareslatedtoexpireattheendof2012,butformerpresidentBillClintonhasalreadysuggestedthattheymayneedtobeextendedforawhilelongertoavoidafurtherhit to the economy. president obama has proposed allowingthecutstoexpireonthewealthiesttaxpayerswhilestillprotect-ing the middle class. Among the other provisions expiring onDecember 31, 2012, the two percent employee payroll tax
deduction, the current estate tax regime,andvariousenergyprovisionswillallcometo anend ifCongressdoesnot act.Manyoftheseprovisionswillbeconsidereddur-ing the lame duck session following theNovemberelection,althoughthelegislativecalendarisalreadylookingquitefullforthatshort timeframe, leadingmanytosuspectthat Congress will favor short-term exten-sionsratherthanfundamentalreform.
Tax reform continues to be on every-one’s lips, too, but serious reform is likelytobepushedbackuntil2013.TheHouseisconsideringamechanismtofast-tracktaxreformin2013,butwhethertheDemocratsagreetoitdependsonwhetheritistiedtoincreased revenues. At a minimum, sig-nificanttaxreformdiscussionswillcontinuein 2012, and a multitude of hearings areexpected on the subject. In addition, both
theHouseWaysandMeansCommitteeandtheSenateFinanceCommitteearedevelopingdiscussiondrafts toaddresscorpo-ratetaxreformandotherfundamentalreformstothetaxcode.
Failure to Enact Substantive Maritime LegislationItisanunderstatementtosaythatthe112thCongresshas
notproducedalotofsubstantivelegislation.Asofthisdate,theonlytransportation-relatedlegislationithasbeenabletoagreeonhasbeenreauthorizationofthehighwaybillonJune29.Thisbillincludedlanguagethatestablishedatrustfundtobeknownasthe‘‘GulfCoastRestorationTrustFund’’inwhich80percentofalladministrativeandcivilpenaltiespaidbyresponsiblepar-ties in connection with Deepwater Horizonwill be placed forusetohelprestoretheGulfofMexicofollowingtheincident.
Further, progress on the Coast Guard and MaritimeTransportationActof2011(H.R.2838)continuestobeslowin
Congressional Failure (continued from page 1) SupremeCourt didnot explicitly determinewhether a foreignprivate arbitration is a “foreign or international tribunal” underSection 1782; however, the Supreme Court’s reasoning anddicta strongly indicate that private arbitral tribunals fall withintheStatute.
Since Intel, the majority of courts that have consideredwhetherforeignprivatearbitraltribunalsfallwithinthescopeofSection1782haveconcludedthattheydo.Aminorityofcourts,however,havefollowedtheSecondandFifthCircuit’spre-Intel decisionsandhaveheldthatforeignprivatearbitrationsremainoutsidethescopeoftheStatute.Whilethepre-InteldecisionsintheSecondandFifthCircuitsremainonthebooks,anargumentcan be made that those decisions should be reconsideredin light of the Intel case. To date, the SecondCircuit has notreexamined the issue and theFifth Circuit has maintained itspre-Intelposition.
Another interesting ques-tion under this requirementis whether there is a distinc-tion between a “foreign” tri-bunal and an “international”tribunal. An argument can bemade that the term “foreign”tribunal refers to any tribunallocated abroad, whereas thephrase “international” tribunalrefers to any arbitral tribunalcreated pursuant to a treatyor interstateagreement regard-less of location, including theUnitedStates.4The Intelcaseisinstructiveinthisregard.In Intel,theSupremeCourtobservedindicta that “[Section] 1782 is aprovisionforassistancetotribunalsabroad.”5Todate,however,nocasehasdefinitelyaddressedthisissue.
Section1782isapowerfultoolforforeignlitigantsbecausediscovery is much broader in the United States than in mostother legal systems. Notably, the discovery available under§1782isnotlimitedbythescopeofdiscoveryavailableinthejurisdictionwherethemainactionispending.
If thestatutory requirementsaresatisfied, thedistrict courtmayalsoconsiderfourdiscretionaryfactorsindecidingwhethertograntorlimittherequesteddiscovery.Thesefactorsinclude:(1) whether the person from whom discovery is sought is aparty in the foreign proceeding; (2) the nature of the foreigntribunal, the character of the proceedings underway abroad,and the receptivityof the tribunal toU.S. federal-court judicialassistance;(3)whethertheSection1782petitionconcealsanattempttocircumventdiscoveryrulesoftheforeigncountryorthe United States; and (4) whether the discovery request is
unduly intrusive or burdensome. The decision of whether tograntaSection1782application,andthescopeoftherelief,ifgranted, iswithin thediscretionof the federaldistrict inwhichtheapplicationisfiledandismadeonacase-by-casebasis.
properlyutilized, apartymayobtain testimony froma keywitnessor criticaldocuments thatmightotherwisebebeyondthe jurisdiction of a foreign court. Based on the plain mean-ingof theStatuteand theSupremeCourt’sexpansive readingofSection1782, in Intel, anargument canbemade that theStatuteshouldbeavailabletoforeignprivatearbitrationsseatedoutside of the United States. However, the question will onlybe definitively answered when the Supreme Court explicitlyaddresseswhether foreignprivatearbitrationsconstitute“tribu-nals”undertheSection1782.Untilthen,anydecisiontoseek
discoveryintheUnitedStatesforuseinaforeignprivatearbitra-tionshouldbeconsideredonacase-by-casebasisinconsulta-tionwithUnitedStatescounsel. n
1. See“obtainingevidenceintheUnitedStatesforUseinForeignprivateArbitra-tions”byW.CameronBeardpublishedintheAugust2010editionofInterna-tional Litigation & ADR Updateand“GatheringevidenceintheUnitedStatesforUseinForeignproceedings:28U.S.C.§1782”byW.CameronBeardpublishedintheoctober2008editionof Mainbrace.
2. See In re Gemeinshcaftspraxis Dr. Med. Schottdorf,No.Civ.M19-88(BSJ),2006 U.S. Dist. LEXIS 94161,at*16-17(S.D.N.Y.Dec.28,2006).TwoothercourtshavecitedtotheIn re Gemeinshcaftspraxisdecisionwithapproval,butwithoutfurtherdiscussionoranalysisofthesplitofauthority.SeeIn re Eli Lilly & Co.,No.3:09MC296(AWT),2010U.S.Dist.LeXIS59121,at*13(D.Conn.June15,2010); Minatec Finance S.A.R.L. v. SI Group Inc.,No.1:08-CV-269(LeK/RFT),2008U.S.Dist.LeXIS63802,at*14n.8(N.D.N.Y.Aug.18,2008).
3. See NBC.v. Bear Stearns & Co., 165F.3d184(2dCir.1999)andRepublic of Kazakhstanv. Biedermann Int’l,168F.3d880(5thCir.1999).
4. See NBC,165F.3d, supranote3,at189-190(“[T]helegislativehistoryrevealsthatwhenCongressin1964enactedthemodernversionof§1782,itintendedtocovergovernmentalorintergovernmentalarbitraltribunalsandconventionalcourtsandotherstate-sponsoredadjudicatorybodies.”)
5. See Intel Corp.v. Advanced Micro Devices, Inc. 542U.S.241,263(2004).
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2012.TheHousepasseditsCoastGuardAuthorizationlastyear.TheSenateCommerceCommitteefileditsreportandversionofthisbill(CoastGuardAuthorizationActforFiscalYears2012and2013) in Januaryof this year (S.1665)afterhaving reporteditmonthsearlierattheendoflastyear.Reportedly,theSenatecontinues to sort through the bill to fend off any problems(earmarksandothercommitteejurisdictionalclaims)andgetitscheduledforSenatefloorconsiderationorevenconsiderationofaConferencewiththeHouse.
InordertokeepthingsmovingontheHouseside,Congress-man LoBiondo introduced the Coast Guard Authorization billof 2012 (H.R. 5887) on June 1, 2012, which was markeduponJune7 intheHouseCommitteeonTransportationandInfrastructure. With regard to specific spill-related legislation,there appears to be little—if any—movement until after theelectionsin2013.
ConclusionsWithsomanyissuesbeingpuntedtothislameducksession,
thereareonlyalimitednumberofdaysforCongresstoacttoavoid the“fiscalcliff”orenactsubstantivemaritime legislation.The Senate will continue to try and find floor time to moveits Coast Guard bill, S.1665. It remains unclear if it will reallyhappen before the summer recess or even this year. If theyaresuccessful, then theHouseandSenateConferencewouldlikely move forward to work on mutually agreeable language.Withregardto“Taxmaggeddon,”withthefateoftheeconomyinitshands,andapossiblereportfromoMBontheeffectsofsequestrationonpopular programs,Congressmay focus theirmindsandallowadealtobestruckonatleastavoidingseques-trationin2013andextendingallorsomeoftheBushtaxcuts.More likely,Congresswillmove the January effectivedate forsequestrationtosometimeinMarch2013.n
Maritime … Or Not?BY THOMAS H. BELKNAP, JR.
Here is a multiple choice question:which of the following contracts is con-sideredtobea“maritimecontract”underU.S.law?(a)ashipbuildingcontract,(b)aship-sale contract, (c) a ship-repair con-tract,and/or(d)ashipmortgage.
You will be forgiven if you simplytried to apply logic in answering thisquestion and guessed that all four aremaritime contracts. If you know your
maritimelaw,however,thenyoushouldhaveansweredthat“c”and“d”aremaritimecontractswhereas“a”and“b”arenot.or,atleast,thatisthecurrentstateofthelaw.
Why might this matter? In the first place, it may impactwhetheraclaimcanbebroughtinthefederalcourtsorwhetheritmustbeasserted instatecourt.Federalcourtspossessonly“limited” jurisdiction, meaning they can only hear cases thatare within the scope of their constitutionally defined jurisdic-tion.Ifthedisputeinvolvesamaritimecontract,aclaimmaybebroughtinthefederalcourtunderits“admiraltyandmaritime”jurisdiction. If it is a non-maritime contract, however, then itmayonlybebroughtinthefederalcourtifthe“diversity”rulesaremet,meaningthattheclaimmustexceedacertainamountandbebetweencitizensofdifferentstates.Importantly,claimsbetween non-U.S. citizens do not meet the diversity require-ment,whereas thecourt’sadmiralty jurisdictionhasnosimilar“citizenship”limitations.
A second important issue is that the maritime law hasrelativelypermissiverulesallowingforpre-judgmentattachmentofassetsinsupportofa“maritimeclaim,”whicharenotavail-able to claimants on non-maritime claims. This right is princi-pallydefinedbyRuleBoftheFederalRulesofCivilprocedure,Supplemental Rules for Admiralty or Maritime Claims. Underthatrule,apartymayobtainanattachmentofthedefendant’spropertylocatedinadistrictwherethedefendantisnotother-wise“found”merelybyassertingaprima facie maritimeclaim.Thisisalowpleadingthreshold,andRuleBcanbeaverypow-erfultool—particularlyusefulinanindustrywherethebusinessisinternationalandassetsaretransitory.
Athirdandrelatedissueiswhethermaritimelienscanariseout of a breachof a contract. Such liens can create powerfulpriorityandenforcementrightsbothasagainstthevesselownerandthird-partyclaimantswhomaybeseekingtoenforcetheirownclaimsagainstthesameassets.Nomaritimeliencanarisefromthebreachofanon-maritimecontract.
Howdid thishappen?How is it thatacontract tobuildorsellashipisnotamaritimecontractwhereasacontracttorepairor mortgage a ship is a maritime contract? The answer goesbackatleastasfaras1857,whentheUnitedStatesSupremeCourtdecidedPeople’s Ferry Company of Bostonv.Beers1andsaid this about a shipbuilding contract: “So far from the con-tractbeingpurelymaritime,andtouchingtherightsanddutiesappertainingtonavigation,(ontheoceanorelsewhere,)itwasacontractmadeonland,tobeperformedonland.”2In1918,theCourtofAppealsfortheSecondCircuit(encompassingNewYork,Connecticut,andVermont)held in The ADA3 thatashipsale contractwas not amaritime contract. The court cited noauthorityfortherulenorarticulatedanyrationalfortheholding;nevertheless, theholdingstuckandhasbeenwidely followed,intheSecondCircuitandelsewhere.
Forwhatever their originalmerit, commentators have longcriticizedtheserulingsasdefyinglogicandasbeinginconsistentwith international practice. As the eminent admiralty author
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it determines suchaction isnecessary toprotect the shippingpublic from fraud and unfair practices. Although revocation oftradingprivilegesisanavailableoption,theFMCusuallyresortstomonetarypenalties.IftheFMCdeterminesthataviolationhasbeencommittedunknowingly,thepenaltycanbeupto$8,000per violation. In most cases, each bill of lading constitutes aseparateoffense. If theFMCdeterminesthattheviolationwascommitted knowingly and willfully, that penalty increases to$40,000perviolation.Takeaminutetoconsiderthemagnitudeof these potential penalties. For example, if a carrier was tounintentionallycommitasingletypeofviolationduringthetermofaservicecontractfor2,000TeUswitheachTeUcarriedonaseparatebilloflading,thepotentialpenaltieswouldtotal$16million(i.e.$8,000x2,000billsoflading).Ifeachoftheviola-tions in our example were committed knowingly and willfully(such as deliberately mis-rating cargo), the potential penaltiesskyrocketto$80million.
TheseextremepenaltieswouldbeverydifficultfortheFMCtocollect,so it isunderstandable that theFMCrarelyseeks toimposethemaximumpenaltyallowableundertheShippingAct.In fact, the FMC and the alleged violator almost always enterinto what is known as a “compromise agreement.” once theFMC’sBureauofenforcementcompletesitsinvestigation,itwilloftennegotiateasettlementwiththeallegedviolator.Typically,theallegedviolatoragreestopayamitigatedpenalty—onethatisfarlessthanthemaximumstatutorypenalty—inexchangefora release from further action by the FMCwith respect to anyallegedviolationsuncoveredduringtheFMC’sinvestigation.Noadmissionofguiltismadeonthepartoftheallegedviolatorinexchangeforthepenaltymitigation.Whilethemitigatedpenal-tiesarefarlessthantheallowablepenaltiesundertheShippingAct,theyarestillsteepenoughtoencouragetheallegedviolatortochangeitssuspectpractices.
With the FMC’s stepped up monitoring and enforcementprograms, Shipping Act violators may find themselves payingheftypenalties.Justtwomonthsago,theFMCenteredintocom-promiseagreementswitheightNVoCCsandrelatedcompaniesfortotalof$490,000inpenalties.ThreeoftheNVoCCspaidacombinedtotalof$235,000.WhiletheFMCappearstobecur-rentlyfocusedonNVoCCs,therehavebeensignificantpenaltiesassessedagainstvesseloperators, includinga$1.2millioncivilpenaltyagainstamajorcarrier in2011. In theannouncementmade by the FMC in connection with this penalty, the FMC’sChairmansaid,“Thesepenaltiesshouldserveasareminder…Ifyou’reviolatingthelaw,soonerorlater,wewillfindyou,andtheconsequencescanbeserious.”
This article first appeared in Maritime Professional on May 22, 2012. To learn more about Maritime Professional, please visit www.maritimeprofessional.com.n
Obtaining Evidence in the United States for Use in Foreign Proceedings—An Update1
BY LAUREN B. WILGUS
Title28,Section1782oftheUnitedStatesCode can be a fruitful source ofdiscoveryforforeignlitigants.TheStatuteisalegaldevicethatauthorizesaUnitedStates federal court to order a person“residing” or “found” within the court’sgeographical jurisdiction to provide tes-timony or documents for use before a“foreignorinternationaltribunal.”
Inseekingevidenceforuseinafor-eignlegalproceedingunderSection1782,adistrictcourtmay,butisnotrequired,toorderapersontoproducediscoveryifthefollowingthreestatutoryrequirementsaremet:(1)theapplica-tion must be made by a “foreign or international tribunal” or“anyinterestedperson;”(2)thepersonorentityfromwhomthediscoveryissoughtmustresideorbefoundinthefederaldistrictinwhichtheapplicationisfiled;and(3)thediscoverymustbeforuseinaproceedingina“foreignorinternationaltribunal.”
Under the first requirement, the term “any interested per-son” isnot limited toparties ina foreignproceeding,butalsoincludes a non-party who has an interest in obtaining judicialassistanceinaforeignproceeding.
The second requirement that the witness must reside orbefoundinthefederaldistrictwheretheapplicationisfiledisstraightforward;however, thereare limitationsonthescopeofdiscoverypermittedunderthisrequirement.TheprevailingviewisthatSection1782doesnotauthorizediscoveryofdocumentsheldabroad.Thus,evenifawitnessislocatedinthefederaldis-trictwheretheapplicationisfiled,thewitnesscannotbeforcedto produce documents located outside of the United States.oneNewYorkdecision,however,hasheldthatSection1782doesnot require that thedocumentssought tobediscoveredbe found in thedistrictand, instead,heldsuchconsiderationsshould be weighed on a case-by-case basis along with otherdiscretionaryfactors.2
Themeaningof theterm“foreignor international tribunal”under the third requirementhas led tomany conflictingdeci-sions.SincetheStatutedoesnotdefineanyofitsexplicitterms,courts are left todecide their propermeaning, oftenwithdif-fering views. one recurring conflict is the question of Section1782’sapplicabilitytoforeignprivatearbitrations.priorto2004,several federal courts, including the Second and FifthCircuits,determinedthatforeignprivatearbitrationswerenot“foreignorinternationaltribunals”withinthemeaningoftheStatute.3Ina2004decision, Intel Corp.v. Advanced Micro Devices, Inc.,542U.S. 241 (2004), the United States Supreme Court providedguidanceforcourtsinterpretingandapplyingSection1782.The
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CharlesL.Black,Jr.wrotein Admiralty Jurisdiction: Critique and Suggestions,4regardingthedeterminationofwhatcontractsaremaritime: “The attempt to project some ‘principle’ is best leftalone.Thereisaboutasmuch‘principle’asthereisinalistofirregular verbs.”others havedescribed the analysis as “incon-sistent even in its artificiality,”5 as “produc[ing] bizarre results,outcomesthatwarpthefabricofadmiraltyjurisdiction,”6 or,moretothepoint,assimply“unfortunate.”7
MorerecentdecisionsfromtheSupremeCourthaveraisedsomehope among scholars that these rulings are susceptibleto being overruled. In Exxon Corp v. Central Gulf Lines, Inc.,8theSupremeCourtreversedalongstandingbrightlinerulethatagencycontractscouldneverbemaritimecontracts.Thatcourtruled that “the ‘nature and subject-matter’ of the contract atissueshouldbethecrucialconsiderationinassessingadmiraltyjurisdiction.”9AndinNorfolk Southern Railway Co.v.James N. Kirby, Pty. Ltd.,10 the Supreme Court held that a multi-modalbill of lading involvingocean carriagewas amaritime contractgovernedbytheCarriageofGoodsbySeaActevenastodam-age occurring on the over-land legs of the voyage. Accordingto the Kirby court, the inquiry was whether the contract hadreference tomaritimeserviceormaritimetransaction—insum,wasitsufficiently“salty”innaturetoinvolvethecourt’smaritimejurisdiction?
In2008,aUnitedStatesDistrict judge inNewYork feltsuf-ficiently emboldened by these rulings to conclude that ExxonandKirby “support thedemiseof theholding inTheADA”andruled that a ship sale contract was a maritime contract and,consequently,thataclaimthereunderwouldsupportamaritimepre-judgmentattachment.11That courtwrote “acontract for thepurchaseofa launchedship…hasadistinctly ‘saltyflavor,’ forthesolepurposeofashipistosail”and“[maritime]commercerequires a vessel, sailors, and ship fuel, and there is simply nojustificationforincludingcontractsforthelattertworequirementsinadmiraltyjurisdictionwhileexcludingcontractsfortheformer.”12
other judges in the Southern Districtof New York declined to follow the newcoursechartedby Kalafrana,however,find-ing instead thatnothing in Kirbyand ExxonsupportedtherulingthatThe ADAhadbeenreversed sub silentio.13 And in December2009,in Primera Maritime Ltd.v.Comet Fin. Inc.,14 theSecondCircuit thwartedasimilarassault on the ship-construction contractrule, though perhaps not without providingaglimmerofhopeforthoseaspiringsome-daytochangetherule:“[plaintiff] iscorrectto point out that the conceptual approachtaken in [Exxon and Kirby] suggests thatmodernprinciplesdisfavor per seadmiraltyrulesbasedonthesiteofthecontract’sfor-mation or performance.” Still, the Second
Circuitconcludedthat itshandsweretied:“Until theSupremeCourtdeclaresthatcontractsforshipconstructionaremaritimeinnature,disputesarisingfromsuchcontractwillnotgiverisetothefederalcourts’admiraltyjurisdiction.”
ConclusionItisprobablyjustamatteroftimebeforetherightcasegets
before the SupremeCourt thatwill allow it to reassess thesejurisdictional questions in light ofmodern developments. Andonemightsurmisethat if theSupremeCourt iswillingtotakeacritical lookat itsearlier rulings, itwouldbehard-pressed todefendtheminlightofitsrulingsin Exxonand Kirbyandinlightof thewidespreadcriticismof thecurrentdoctrine.ofcourse,aswelearnedjustrecentlywithregardtoitsrulingontheheathcare legislation, theSupremeCourt is fullof surprises.So,wewillhavetowaitandseewhathappens.
This article first appeared in the August 2012 edition of Maritime Reporter. To learn more about Maritime Reporter, please visit www.maritimereporter.com. n
1. 61U.S.393(1857).
2. Id.at402.
3. 250F.194(2dCir.1918).
4. 50Colum.L.Rev.259,264(1950).
5. Gilmore&Black, The Law of Admiralty(2ded.1975),p.26,n.28.
6. DavidJ.Bederman,The Future of Maritime Law in the Federal Maritime Courts: A Faculty Colloquium: Admiralty Jurisdiction, 31J.Mar.L.andCom.189,204(2000).
7. 1BenedictonAdmiralty§185at12-26.
8. 500U.S.603(1991).
9. Id.at611.
10. 543U.S.14(2004).
11. Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd.,591F.Supp.2d505(S.D.N.Y.2008).
12. Id.at509.
13. See e.g., Polestar Mar. Ltd. v.Nanjing Ocean Shipping Co.,631F.Supp.2d304(S.D.N.Y.2009).
14. 355Fed.Appx.477,2009U.S.App.LeXIS26331(2dCir.2009).
Don’t Risk an Expensive Run-In with the U.S. Federal Maritime CommissionBY TARA L. LEITER
For the first time in years, theU.S. Federal Maritime Commission(“FMC”)hasafullcomplementoffiveCommissionersandarenewedcom-mitment toenforce theShippingActof1984(asamended,the“ShippingAct”).Asamaritimelawyerrepresent-ingclientsbeforetheFMC,Iamoftenasked,“WhatistheFMC,whatdoesitdo,andwhyshouldIcare?”TheFMC
isrampingupitseffortstofindandpenalizethosewhoviolatetheShippingAct, so it isagood idea tohaveat leastabasicknowledgeof theenforcementpowerof theFMCandhow itcanaffectyourbusiness.
The FMC and What It DoesTheFMCistheregulatoryagencyresponsibleforadminister-
ing and enforcing the Shipping Act, the Controlled Carrier Act(“CCA”), and the Foreign Shipping practices Act (“FSpA”). TheFMC’sjurisdictionextendstoallvesseloperatingcommoncarriers(“VoCCs”), non-vessel operating common carriers (“NVoCCs”),freight forwarders, and marine terminal operators (“MTos”)operating in theU.S. foreigncommerce.Thisarticleonlybrieflydiscusses the CCA and FSpA as the Shipping Act is the mostcommonlycitedstatutebytheFMCinitsenforcementactions.
Inshort,theCCAallowstheFMCtoensurethatacontrolledcarrier’sratesarenotunjustlyandunreasonablybelowmarket,which could disrupt trade or harm privately-owned carriers. Acontrolledcarrier isone that isownedorcontrolledbyagov-ernment as opposed to an individual or privately or publiclyheldcompany.TheFSpAauthorizestheFMCtoinvestigatethetreatment of U.S. carriers by foreign governments. If the FMCdetermines thatU.S. carriers are subject to certain discrimina-torypracticesinaforeigncountry,butthecarriersofthatforeigncountryarenotsubjecttothesamediscriminatorypracticesintheUnitedStates, theFSpAallowstheFMCto issuesanctionsagainstthecarriersofthediscriminatingforeigncountry.
TheprimarystatuteadministeredandenforcedbytheFMCistheShippingAct,whichregulates,amongstotherthings,com-mon carriage in the foreign commerce of the United States.Theprincipalpurposesof theShippingActare: (1) toprotectshippers from “unfair or unreasonable” discrimination by car-riers, (2) to protect shippers from disreputable or unqualifiedNVoCCsandfreightforwarders,and(3)toenablecarriersandMTostoenterintoagreementsbetweenoramongthemselvesthatmight otherwise run afoul of theU.S. anti-trust laws pro-videdthattheyarenotsubstantiallyanti-competitive.
TheShippingActaccomplishesthefirstpurposebyrequiringthatVoCCspublishatariffsettingforththeirrates,charges,andtermsofservice,andfilewith theFMCanyprivatelynegotiated“servicecontracts” theyenter intowith their shippercustomers.The Shipping Act then requires that carriers charge either theapplicable tariff rate or the rate contained in a service contractfiledwiththeFMC.TheShippingAct’ssecondpurposeisaccom-plishedbyrequiringNVoCCsandfreight forwarders,dependingon their location, to either register with or be licensed by theFMC,demonstratetheirqualifications,andarrangefinancialsecu-rity(usually intheformofasuretybond).Thethirdpurpose isaccomplishedbyrequiringthatallcarrieragreementsbefiledwiththeFMCforreviewtodetermineiftheagreementis“substantiallyanti-competitive.”Afterreviewingthefiledagreement,iftheFMCfinds that theagreement is substantially anti-competitive, it canseektoenjoinoperationsunderthatagreement.IftheFMCdoesnotseektoenjoinoperationundertheagreementonthegroundsthat the agreement is substantially anti-competitive and theagreement becomes effective, the parties are granted anti-trustimmunitywithrespecttoactivitiesauthorizedbytheagreement.
Why You Should CareTheavailablemonetarypenaltiesforviolationsoftheShipping
Actcanbesignificant.Inadditiontomonetarypenalties,theFMChastheabilitytorevoketradingprivilegesif
TARA L. LEITER ASSOCIATE
(continued on page 10)
M A I N B R A C E
BLANK ROME LLP • 8
M A I N B R A C E
BLANK ROME LLP • 5
The Doctrine of Judicial Estoppel—Alive, Well, Expanding, and Still DevastatingBY JEFFREY S. MOLLER AND JAMES J. QUINLAN
Thedoctrineof“judicialestoppel”isaliveandfullyapplicabletomaritimepersonalinjuryclaims.Infact,recentcaselawsug-geststhatthedoctrineisexpandingsomewhat.Judicialestoppelcanhaveadevastatingeffectonaplaintiff’sdamagescalcula-tionandcansometimesbeacompletebartoalawsuit,leavinga longshoremanorJonesActseamanwith littlemorethananorder of dismissal in their pocket. It is for these reasons that
BlankRome’smaritimelitigationteamregularlydivesdeeplyintoaplaintiff’spastforrecordscontainingcontradictorystatementsthatcouldlimitorsinkapendingclaim.
Judicial Estoppel: The BasicsThedoctrineofjudicialestoppelservestopreventalitigant
fromtakingapositionorassertingaclaiminacourtproceedingthatisdirectlycontrarytoastatementmadeorpositiontakeninapreviousproceeding.Theauthoritytoapplythedoctrinestemsfromthecourt’sinherentequitableauthoritytosanctionmalfea-sance.Thestatedpurposeofjudicialestoppelistoprotecttheintegrityofthecourtprocess,butthedoctrineisalsoappliedtopreventthecommissionofafrauduponadefendant.Generally,judicialestoppelbarsalitigantfromassertingapositionthat isinconsistentwithoneheorshepreviouslytookbeforeacourt,butprior inconsistent statementsmadeby the litigant innon-judicialproceedingscangiverisetojudicialestoppel,aswell.
Mostfederalcircuitshaveatest,framework,orrubricforthedoctrine’sapplication.ThelawintheThirdCircuit,forexample,setsoutatypicaltestconsistingofthreerequirements.First,thepartybeingestoppedmusthave taken twopositionsormade
(continued on page 8)
two statements that are irreconcilably inconsistent. Second,judicial estoppel shouldbeappliedonly if aparty changedoradaptedhisorherposition inbad faithorwith the intent “toplay fastand loosewith thecourt.”Third, the judicialestoppelremedymustbe“tailored toaddress theharm identified”andapplied only where a lesser sanction would not adequatelyredresstheharmdonebythelitigant’smisconduct.
Judicial Estoppel: A Broader Application then Commonly Understood
elements#2and3oftheThirdCircuittestarefairlystandard.Courtsregularlyrequireashowingofsomeconductsuggestiveofbadfaithorimpropermotivewithrespecttotheinconsistentstatements.Andjudicialestoppelwillusuallybeappliedinawaythatisnarrowlytailoredtoaddressthepotentialharmunderthefactual circumstances of the case. However, the requirementthatapartymusthavetakentwoirreconcilablyinconsistentposi-tionsislooselydefined,givingthecourtssomelatitudeindeter-miningthetypesofstatementsandcircumstancesthatqualify.
Courtshaveheld, forexample, that thetimingof the incon-sistent statements is not necessarily determinative. Therefore,both statements neednot have beenmadeduring the courseof the samepending lawsuit.Nor is it absolutely necessary forboth statements to have beenmade in court proceedings. Forexample,priorstatementsmadetolocal,state,andfederalagen-cies,ortoinsurancecompanies,ifsufficientlyinconsistentwithalaterpositionbeingtakenbeforeacourt,cangiverisetoajudicialestoppel.Thefact that theprior inconsistentstatementwasnotactuallymadeby theplaintiffhimself isnotaproblemeither, ifthestatementwasmadeathis/herdirectionoronhis/herbehalf.Forexample,astatementmadebytheplaintiff’sphysicianthattheplaintiffhasauthorizedorendorsedinsomefashion(bybehavioror practice) would qualify. Finally, it is not always necessary toprovethattheplaintiffactuallyobtainedsomesortofbenefitfrommakingthepriorinconsistentstatement.
A Recent Blank Rome Judicial Estoppel SuccessIn defending a multi-million dollar claim, we recently con-
vincedafederaldistrictcourtjudgeintheThirdCircuittoapplyjudicial estoppel against a Jones Act seaman. In that matter,a tug boat captain had filed a suit in which he alleged thatan unseaworthy condition aboard his employer’s tugboat hadcausedinjuriestohisshoulderandbackthatwouldpermanentlydisablehim fromall futuremaritimeemployment.Duringdis-covery, recordswereobtained fromvarioussourcespertainingto several previous Jones Act suits that the plaintiff had filedoverhiscareer.Inthosefiles,welocateda19-yearoldpretrialstatementinwhichtheplaintiff(viahiscounsel)hadallegedthathehadinjuredhisbacksoseverelythathewouldneveragainworkasamariner.Indeposition,theplaintiffadmittedtohavingsettledthatcaseforasignificantsum.
Wealsoobtainedtheplaintiff’sU.S.CoastGuardfile,whichcontained copies of applications for renewal of his license.eachof the license renewalapplicationswasaccompaniedbyadeclarationco-signedbytheplaintiffandhisfamilydoctortothe effect that the plaintiffwas currently physically capable ofperformingthedutiesofamariner.Notably,theplaintiff’smostrecent renewal application had been submitted ten months aftertheoccurrenceoftheinjuryatissueinthecurrentlawsuit,ata timewhenhewassubmittingUnfit forDutyslips to,andcollectingmaintenanceandcurefrom,ourclient.
Armedwith thisevidence,wefiledamotion for summaryjudgment asserting a two-pronged judicial estoppel argument.We first argued that the plaintiff could not have experiencedamaritimecareer-ending injury twice.Becausehehadfiledastatementwithanotherfederalcourtin1993claimingtohavebeenpermanentlydisabledfrommaritimework,heshouldbebarredfromseekingasecondrecoveryforhisfuturelostearn-ings.Inthealternative,wearguedthatthedeclarationofmedicalfitnessmostrecentlysubmittedtotheCoastGuardwasdirectlycontradictorytotheclaimofdisabilitybeingmadeinhiscurrentJonesActcase,soheshouldbeprecludedfromcollectingdam-agesforanyprospectivelostearningsafterthedateofhisCoastGuarddeclaration.
Though not willing to preclude the plaintiff’s entire claimbasedon the19-year oldpretrial statement (dueprimarily tosomepotential ambiguity thatwould require consideration bya jury), the court did apply judicial estoppel based upon theinconsistentmedicaldeclarationmadetotheCoastGuard.Thecourtfoundthattheplaintiffwaswellawareoftheinconsistencybetween his declaration to the Coast Guard and his positionin the lawsuit and had provided no reasonable explanation.Therefore,apresumptionofbadfaithwasappropriateandtheimposition of judicial estoppel was necessary to prevent theperpetrationofafrauduponourclientbymeansofthelawsuit.
A Practical Tip for Defending Jones Act and LHWCA Claims
Werecommenddiggingdeepduringdiscoverybyrequest-ingaccesstoanytypeofrecordsinwhichaplaintiffmayhavemadeastatementabouthisphysicalormentalcondition.Someareastoconsiderarethefilesofattorneysinvolvedinpriorlaw-suits,documentsinthepossessionofstateand/orfederalagen-ciesthatpertaintoaplaintiff’slicensure,andinsurancecompanyfilespertainingtoapplicationsforcoverageorclaimsfordisabilitybenefits.Thosesourcesof informationmaycontainproof thataplaintiffmadeastatementortookapositionthat iscontrarytoapositionbeingputforwardinhispendinglawsuit.Ifapastcontradictorystatementmadebyoronbehalfofaplaintiffcanbe locatedvia thorough,diligent,andcreativediscovery, itcanbethebasisofastrongmotionfortheinvocationofthedoctrineofjudicialestoppel.n
JEFFREY S. MOLLER PARTNER
[email protected] [email protected]
JAMES J. QUINLAN ASSOCIATE
The Doctrine of Judicial Estoppel (continued from page 5)
John D. Kimball,rankedasabandoneattorneyin
Chambers 2012,is“clearlyaleader”inthisspace
accordingtomarketsources.Theygoontodescribe
himas“atopnotchlitigatorandaformidableadversary.”
Inonehighlight,hedefendedCompanhiaSiderurgica
Nacionalina$53millionICCarbitration.
Jack A. Greenbaum,rankedasabandthreeattorney
in Chambers 2012,isaseniorlitigatorwhohasexten-
siveexperiencehandlingdifficultlitigation,including
complexoilspillcases.Sourcesremainimpressedwith
hisworkingstyle,saying:“Healwayshitsthenailon
thehead.”
Thomas H. Belknap, Jr.,rankedasabandthreeattorney
in Chambers 2012,isknownforbeing“alwaysprepared,
articulate,knowledgeableandpractical”inhisapproach
torunningcases.Hehasbeenworkingonnumerous
casesinthepastyear,including Pan Oceanic v. RSUSA,
LLC,whichconcernsa$1.45millionclaimregardingthe
failureofthecharterertopresentcargoattheloadport.
BLANK ROME LLP • 6 BLANK ROME LLP • 7
Key Individuals for Shipping Litigation
The quotes, commentary, and rankings referenced in this document are published in Chambers 2012.
The Firm: Thismarketleadingteamhas
thedepthandexpertisetohandlethemost
complexlitigation.Theteamadvisesonthe
fullrangeofdisputesfromthoseintheenvi-
ronmentalspheretocriminalandbankruptcy
cases.Italsoactsforabroadrangeofclients
whichincludesshipowners,operators,and
charterparties.NotableclientsincludeSteam-
shipMutualInsuranceServices,UKp&IClub,
andYasaShipping.
SHIPPING LITIGATION (NEW YORK)
BAND 1 BLANK ROME LLP
Jonathan K. Waldron,rankedasabandoneattorney
inChambers 2012,ishighlysoughtafterforadviceon
complexissuesarisingintheCoastGuardspace.Sources
notehisbreadthofexperience,saying:“Herepresents
awideswathoftheindustryandcanbringalotof
differentperspectivestobear.”
T. Michael Dyer,co-chairmanofthefirm,rankedasa
bandtwoattorneyinChambers 2012,continuesto
behighlyrespectedinthisarea.Sources“havetotal
confidence”inhim,describinghimas“extremelywell
preparedandthoughtful”andalsovaluinghis“wide
areaofexpertise.”
Duncan C. Smith,rankedasabandthreeattorneyby
Chambers 2012,isrecommendedbymarketsources
forhis“insightintothedraftingprocess.”Hehasexten-
siveexperienceintheCoastGuardarea,whichtiesin
wellwithBlankRome’sfocusonthisspace.
Brian P. Devineislistedin
Chambers 2012asakey
contactinBlankRome’s
NewYorkCityofficeforthe
firm’sshippingfinancepractice.
Key Individuals for Shipping Regulatory
SHIPPING FINANCE (NEW YORK)
The Firm: Thisteamcontinuestohaveasolidreputationinshippingfinance.
Althoughitmaintainsabroadpractice,ithasbeenparticularlyactivedealing
withissuessuchasshiprefinancing,restructuring,andbankruptciesarising
outofthefinancialcrises.ItsbroadportfolioofclientsincludesJpMorgan
Securities,CreditSuisse,HorizonLines,andHMSGlobalMaritime.Thefirm
alsoboastsimpressivelinksbetweenitsofficesintheU.S.andChina.
Client Service: “Theyareabsolutelygreatandarefullyresponsive24hours
aday.”
BAND 3 BLANK ROME LLP
Key Individual for Shipping Finance
BAND 1 BLANK ROME LLP
SHIPPING REGULATORY (OUTSIDE NEW YORK)
The Firm: Thisteamprovidesexpertadvice
onawholehostofregulatoryissuesand,
althoughstrongacrosstheboard,itisheldin
particularlyhighesteemforitsexpertiseinthe
CoastGuardarea.Aswellasbeingbusyin
thisspace,followingtheDeepwater Horizon
incidenttheteamhasalsobeenadvisingon
amendingresponderimmunitylawsunderthe
oilpollutionActof1990.
Client Service: “Ifsomethinghappensat2
a.m.andIneedananswer,theyarealwayson
callandabletopitchinonamoment’snotice.”
John D. Kimball,rankedasabandoneattorneyin
Chambers 2012,is“clearlyaleader”inthisspace
accordingtomarketsources.Theygoontodescribe
himas“atopnotchlitigatorandaformidableadversary.”
Inonehighlight,hedefendedCompanhiaSiderurgica
Nacionalina$53millionICCarbitration.
Jack A. Greenbaum,rankedasabandthreeattorney
in Chambers 2012,isaseniorlitigatorwhohasexten-
siveexperiencehandlingdifficultlitigation,including
complexoilspillcases.Sourcesremainimpressedwith
hisworkingstyle,saying:“Healwayshitsthenailon
thehead.”
Thomas H. Belknap, Jr.,rankedasabandthreeattorney
in Chambers 2012,isknownforbeing“alwaysprepared,
articulate,knowledgeableandpractical”inhisapproach
torunningcases.Hehasbeenworkingonnumerous
casesinthepastyear,including Pan Oceanic v. RSUSA,
LLC,whichconcernsa$1.45millionclaimregardingthe
failureofthecharterertopresentcargoattheloadport.
BLANK ROME LLP • 6 BLANK ROME LLP • 7
Key Individuals for Shipping Litigation
The quotes, commentary, and rankings referenced in this document are published in Chambers 2012.
The Firm: Thismarketleadingteamhas
thedepthandexpertisetohandlethemost
complexlitigation.Theteamadvisesonthe
fullrangeofdisputesfromthoseintheenvi-
ronmentalspheretocriminalandbankruptcy
cases.Italsoactsforabroadrangeofclients
whichincludesshipowners,operators,and
charterparties.NotableclientsincludeSteam-
shipMutualInsuranceServices,UKp&IClub,
andYasaShipping.
SHIPPING LITIGATION (NEW YORK)
BAND 1 BLANK ROME LLP
Jonathan K. Waldron,rankedasabandoneattorney
inChambers 2012,ishighlysoughtafterforadviceon
complexissuesarisingintheCoastGuardspace.Sources
notehisbreadthofexperience,saying:“Herepresents
awideswathoftheindustryandcanbringalotof
differentperspectivestobear.”
T. Michael Dyer,co-chairmanofthefirm,rankedasa
bandtwoattorneyinChambers 2012,continuesto
behighlyrespectedinthisarea.Sources“havetotal
confidence”inhim,describinghimas“extremelywell
preparedandthoughtful”andalsovaluinghis“wide
areaofexpertise.”
Duncan C. Smith,rankedasabandthreeattorneyby
Chambers 2012,isrecommendedbymarketsources
forhis“insightintothedraftingprocess.”Hehasexten-
siveexperienceintheCoastGuardarea,whichtiesin
wellwithBlankRome’sfocusonthisspace.
Brian P. Devineislistedin
Chambers 2012asakey
contactinBlankRome’s
NewYorkCityofficeforthe
firm’sshippingfinancepractice.
Key Individuals for Shipping Regulatory
SHIPPING FINANCE (NEW YORK)
The Firm: Thisteamcontinuestohaveasolidreputationinshippingfinance.
Althoughitmaintainsabroadpractice,ithasbeenparticularlyactivedealing
withissuessuchasshiprefinancing,restructuring,andbankruptciesarising
outofthefinancialcrises.ItsbroadportfolioofclientsincludesJpMorgan
Securities,CreditSuisse,HorizonLines,andHMSGlobalMaritime.Thefirm
alsoboastsimpressivelinksbetweenitsofficesintheU.S.andChina.
Client Service: “Theyareabsolutelygreatandarefullyresponsive24hours
aday.”
BAND 3 BLANK ROME LLP
Key Individual for Shipping Finance
BAND 1 BLANK ROME LLP
SHIPPING REGULATORY (OUTSIDE NEW YORK)
The Firm: Thisteamprovidesexpertadvice
onawholehostofregulatoryissuesand,
althoughstrongacrosstheboard,itisheldin
particularlyhighesteemforitsexpertiseinthe
CoastGuardarea.Aswellasbeingbusyin
thisspace,followingtheDeepwater Horizon
incidenttheteamhasalsobeenadvisingon
amendingresponderimmunitylawsunderthe
oilpollutionActof1990.
Client Service: “Ifsomethinghappensat2
a.m.andIneedananswer,theyarealwayson
callandabletopitchinonamoment’snotice.”
M A I N B R A C E
BLANK ROME LLP • 8
M A I N B R A C E
BLANK ROME LLP • 5
The Doctrine of Judicial Estoppel—Alive,Well, Expanding, and Still DevastatingBY JEFFREY S. MOLLER AND JAMES J. QUINLAN
The doctrine of “judicial estoppel” is alive and fully applicable to maritime personal injury claims. In fact, recent case law sug-gests that the doctrine is expanding somewhat. Judicial estoppel can have a devastating effect on a plaintiff’s damages calcula-tion and can sometimes be a complete bar to a lawsuit, leaving a longshoreman or Jones Act seaman with little more than an order of dismissal in their pocket. It is for these reasons that
Blank Rome’s maritime litigation team regularly dives deeply into a plaintiff’s past for records containing contradictory statements that could limit or sink a pending claim.
Judicial Estoppel: The Basics The doctrine of judicial estoppel serves to prevent a litigant
from taking a position or asserting a claim in a court proceeding that is directly contrary to a statement made or position taken in a previous proceeding. The authority to apply the doctrine stems from the court’s inherent equitable authority to sanction malfea-sance. The stated purpose of judicial estoppel is to protect the integrity of the court process, but the doctrine is also applied to prevent the commission of a fraud upon a defendant. Generally, judicial estoppel bars a litigant from asserting a position that is inconsistent with one he or she previously took before a court, but prior inconsistent statements made by the litigant in non-judicial proceedings can give rise to judicial estoppel, as well.
Most federal circuits have a test, framework, or rubric for the doctrine’s application. The law in the Third Circuit, for example, sets out a typical test consisting of three requirements. First, the party being estopped must have taken two positions or made
(continued on page 8)
two statements that are irreconcilably inconsistent. Second, judicial estoppel should be applied only if a party changed or adapted his or her position in bad faith or with the intent “to play fast and loose with the court.” Third, the judicial estoppel remedy must be “tailored to address the harm identifi ed” and applied only where a lesser sanction would not adequately redress the harm done by the litigant’s misconduct.
Judicial Estoppel: A Broader Applicationthan Commonly Understood
Elements #2 and 3 of the Third Circuit test are fairly standard. Courts regularly require a showing of some conduct suggestive of bad faith or improper motive with respect to the inconsistent statements. And judicial estoppel will usually be applied in a way that is narrowly tailored to address the potential harm under the factual circumstances of the case. However, the requirement that a party must have taken two irreconcilably inconsistent posi-tions is loosely defi ned, giving the courts some latitude in deter-mining the types of statements and circumstances that qualify.
Courts have held, for example, that the timing of the incon-sistent statements is not necessarily determinative. Therefore, both statements need not have been made during the course of the same pending lawsuit. Nor is it absolutely necessary for both statements to have been made in court proceedings. For example, prior statements made to local, state, and federal agen-cies, or to insurance companies, if suffi ciently inconsistent with a later position being taken before a court, can give rise to a judicial estoppel. The fact that the prior inconsistent statement was not actually made by the plaintiff himself is not a problem either, if the statement was made at his/her direction or on his/her behalf. For example, a statement made by the plaintiff’s physician that the plaintiff has authorized or endorsed in some fashion (by behavior or practice) would qualify. Finally, it is not always necessary to prove that the plaintiff actually obtained some sort of benefi t from making the prior inconsistent statement.
A Recent Blank Rome Judicial Estoppel Success
In defending a multi-million dollar claim, we recently con-vinced a federal district court judge in the Third Circuit to apply judicial estoppel against a Jones Act seaman. In that matter, a tug boat captain had fi led a suit in which he alleged that an unseaworthy condition aboard his employer’s tugboat had caused injuries to his shoulder and back that would permanently disable him from all future maritime employment. During dis-covery, records were obtained from various sources pertaining to several previous Jones Act suits that the plaintiff had fi led over his career. In those fi les, we located a 19-year old pretrial statement in which the plaintiff (via his counsel) had alleged that he had injured his back so severely that he would never again work as a mariner. In deposition, the plaintiff admitted to having settled that case for a signifi cant sum.
We also obtained the plaintiff’s U.S. Coast Guard fi le, which contained copies of applications for renewal of his license. Each of the license renewal applications was accompanied by a declaration co-signed by the plaintiff and his family doctor to the effect that the plaintiff was currently physically capable of performing the duties of a mariner. Notably, the plaintiff’s most recent renewal application had been submitted ten monthsafter the occurrence of the injury at issue in the current lawsuit, at a time when he was submitting Unfi t for Duty slips to, and collecting maintenance and cure from, our client.
Armed with this evidence, we fi led a motion for summary judgment asserting a two-pronged judicial estoppel argument. We fi rst argued that the plaintiff could not have experienced a maritime career-ending injury twice. Because he had fi led a statement with another federal court in 1993 claiming to have been permanently disabled from maritime work, he should be barred from seeking a second recovery for his future lost earn-ings. In the alternative, we argued that the declaration of medical fi tness most recently submitted to the Coast Guard was directly contradictory to the claim of disability being made in his current Jones Act case, so he should be precluded from collecting dam-ages for any prospective lost earnings after the date of his Coast Guard declaration.
Though not willing to preclude the plaintiff’s entire claim based on the 19-year old pretrial statement (due primarily to some potential ambiguity that would require consideration by a jury), the court did apply judicial estoppel based upon the inconsistent medical declaration made to the Coast Guard. The court found that the plaintiff was well aware of the inconsistency between his declaration to the Coast Guard and his position in the lawsuit and had provided no reasonable explanation. Therefore, a presumption of bad faith was appropriate and the imposition of judicial estoppel was necessary to prevent the perpetration of a fraud upon our client by means of the lawsuit.
A Practical Tip for Defending Jones Actand LHWCA Claims
We recommend digging deep during discovery by request-ing access to any type of records in which a plaintiff may have made a statement about his physical or mental condition. Some areas to consider are the fi les of attorneys involved in prior law-suits, documents in the possession of state and/or federal agen-cies that pertain to a plaintiff’s licensure, and insurance company fi les pertaining to applications for coverage or claims for disability benefi ts. Those sources of information may contain proof that a plaintiff made a statement or took a position that is contrary to a position being put forward in his pending lawsuit. If a past contradictory statement made by or on behalf of a plaintiff can be located via thorough, diligent, and creative discovery, it can be the basis of a strong motion for the invocation of the doctrine of judicial estoppel.
JEFFREY S. MOLLERPARTNER
[email protected] [email protected]
JAMES J. QUINLAN ASSOCIATE
The Doctrine of Judicial Estoppel (continued from page 5)
M A I N B R A C E
BLANK ROME LLP • 4
M A I N B R A C E
BLANK ROME LLP • 9
CharlesL.Black,Jr.wrotein Admiralty Jurisdiction: Critique and Suggestions,4regardingthedeterminationofwhatcontractsaremaritime: “The attempt to project some ‘principle’ is best leftalone.Thereisaboutasmuch‘principle’asthereisinalistofirregular verbs.”others havedescribed the analysis as “incon-sistent even in its artificiality,”5 as “produc[ing] bizarre results,outcomesthatwarpthefabricofadmiraltyjurisdiction,”6 or,moretothepoint,assimply“unfortunate.”7
MorerecentdecisionsfromtheSupremeCourthaveraisedsomehope among scholars that these rulings are susceptibleto being overruled. In Exxon Corp v. Central Gulf Lines, Inc.,8theSupremeCourtreversedalongstandingbrightlinerulethatagencycontractscouldneverbemaritimecontracts.Thatcourtruled that “the ‘nature and subject-matter’ of the contract atissueshouldbethecrucialconsiderationinassessingadmiraltyjurisdiction.”9AndinNorfolk Southern Railway Co.v.James N. Kirby, Pty. Ltd.,10 the Supreme Court held that a multi-modalbill of lading involvingocean carriagewas amaritime contractgovernedbytheCarriageofGoodsbySeaActevenastodam-age occurring on the over-land legs of the voyage. Accordingto the Kirby court, the inquiry was whether the contract hadreference tomaritimeserviceormaritimetransaction—insum,wasitsufficiently“salty”innaturetoinvolvethecourt’smaritimejurisdiction?
In2008,aUnitedStatesDistrict judge inNewYork feltsuf-ficiently emboldened by these rulings to conclude that ExxonandKirby “support thedemiseof theholding inTheADA”andruled that a ship sale contract was a maritime contract and,consequently,thataclaimthereunderwouldsupportamaritimepre-judgmentattachment.11That courtwrote “acontract for thepurchaseofa launchedship…hasadistinctly ‘saltyflavor,’ forthesolepurposeofashipistosail”and“[maritime]commercerequires a vessel, sailors, and ship fuel, and there is simply nojustificationforincludingcontractsforthelattertworequirementsinadmiraltyjurisdictionwhileexcludingcontractsfortheformer.”12
other judges in the Southern Districtof New York declined to follow the newcoursechartedby Kalafrana,however,find-ing instead thatnothing in Kirbyand ExxonsupportedtherulingthatThe ADAhadbeenreversed sub silentio.13 And in December2009,in Primera Maritime Ltd.v.Comet Fin. Inc.,14 theSecondCircuit thwartedasimilarassault on the ship-construction contractrule, though perhaps not without providingaglimmerofhopeforthoseaspiringsome-daytochangetherule:“[plaintiff] iscorrectto point out that the conceptual approachtaken in [Exxon and Kirby] suggests thatmodernprinciplesdisfavor per seadmiraltyrulesbasedonthesiteofthecontract’sfor-mation or performance.” Still, the Second
Circuitconcludedthat itshandsweretied:“Until theSupremeCourtdeclaresthatcontractsforshipconstructionaremaritimeinnature,disputesarisingfromsuchcontractwillnotgiverisetothefederalcourts’admiraltyjurisdiction.”
ConclusionItisprobablyjustamatteroftimebeforetherightcasegets
before the SupremeCourt thatwill allow it to reassess thesejurisdictional questions in light ofmodern developments. Andonemightsurmisethat if theSupremeCourt iswillingtotakeacritical lookat itsearlier rulings, itwouldbehard-pressed todefendtheminlightofitsrulingsin Exxonand Kirbyandinlightof thewidespreadcriticismof thecurrentdoctrine.ofcourse,aswelearnedjustrecentlywithregardtoitsrulingontheheathcare legislation, theSupremeCourt is fullof surprises.So,wewillhavetowaitandseewhathappens.
This article first appeared in the August 2012 edition of Maritime Reporter. To learn more about Maritime Reporter, please visit www.maritimereporter.com. n
1. 61U.S.393(1857).
2. Id.at402.
3. 250F.194(2dCir.1918).
4. 50Colum.L.Rev.259,264(1950).
5. Gilmore&Black, The Law of Admiralty(2ded.1975),p.26,n.28.
6. DavidJ.Bederman,The Future of Maritime Law in the Federal Maritime Courts: A Faculty Colloquium: Admiralty Jurisdiction, 31J.Mar.L.andCom.189,204(2000).
7. 1BenedictonAdmiralty§185at12-26.
8. 500U.S.603(1991).
9. Id.at611.
10. 543U.S.14(2004).
11. Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd.,591F.Supp.2d505(S.D.N.Y.2008).
12. Id.at509.
13. See e.g., Polestar Mar. Ltd. v.Nanjing Ocean Shipping Co.,631F.Supp.2d304(S.D.N.Y.2009).
14. 355Fed.Appx.477,2009U.S.App.LeXIS26331(2dCir.2009).
Don’t Risk an Expensive Run-In with the U.S. Federal Maritime CommissionBY TARA L. LEITER
For the first time in years, theU.S. Federal Maritime Commission(“FMC”)hasafullcomplementoffiveCommissionersandarenewedcom-mitment toenforce theShippingActof1984(asamended,the“ShippingAct”).Asamaritimelawyerrepresent-ingclientsbeforetheFMC,Iamoftenasked,“WhatistheFMC,whatdoesitdo,andwhyshouldIcare?”TheFMC
isrampingupitseffortstofindandpenalizethosewhoviolatetheShippingAct, so it isagood idea tohaveat leastabasicknowledgeof theenforcementpowerof theFMCandhow itcanaffectyourbusiness.
The FMC and What It DoesTheFMCistheregulatoryagencyresponsibleforadminister-
ing and enforcing the Shipping Act, the Controlled Carrier Act(“CCA”), and the Foreign Shipping practices Act (“FSpA”). TheFMC’sjurisdictionextendstoallvesseloperatingcommoncarriers(“VoCCs”), non-vessel operating common carriers (“NVoCCs”),freight forwarders, and marine terminal operators (“MTos”)operating in theU.S. foreigncommerce.Thisarticleonlybrieflydiscusses the CCA and FSpA as the Shipping Act is the mostcommonlycitedstatutebytheFMCinitsenforcementactions.
Inshort,theCCAallowstheFMCtoensurethatacontrolledcarrier’sratesarenotunjustlyandunreasonablybelowmarket,which could disrupt trade or harm privately-owned carriers. Acontrolledcarrier isone that isownedorcontrolledbyagov-ernment as opposed to an individual or privately or publiclyheldcompany.TheFSpAauthorizestheFMCtoinvestigatethetreatment of U.S. carriers by foreign governments. If the FMCdetermines thatU.S. carriers are subject to certain discrimina-torypracticesinaforeigncountry,butthecarriersofthatforeigncountryarenotsubjecttothesamediscriminatorypracticesintheUnitedStates, theFSpAallowstheFMCto issuesanctionsagainstthecarriersofthediscriminatingforeigncountry.
TheprimarystatuteadministeredandenforcedbytheFMCistheShippingAct,whichregulates,amongstotherthings,com-mon carriage in the foreign commerce of the United States.Theprincipalpurposesof theShippingActare: (1) toprotectshippers from “unfair or unreasonable” discrimination by car-riers, (2) to protect shippers from disreputable or unqualifiedNVoCCsandfreightforwarders,and(3)toenablecarriersandMTostoenterintoagreementsbetweenoramongthemselvesthatmight otherwise run afoul of theU.S. anti-trust laws pro-videdthattheyarenotsubstantiallyanti-competitive.
TheShippingActaccomplishesthefirstpurposebyrequiringthatVoCCspublishatariffsettingforththeirrates,charges,andtermsofservice,andfilewith theFMCanyprivatelynegotiated“servicecontracts” theyenter intowith their shippercustomers.The Shipping Act then requires that carriers charge either theapplicable tariff rate or the rate contained in a service contractfiledwiththeFMC.TheShippingAct’ssecondpurposeisaccom-plishedbyrequiringNVoCCsandfreight forwarders,dependingon their location, to either register with or be licensed by theFMC,demonstratetheirqualifications,andarrangefinancialsecu-rity(usually intheformofasuretybond).Thethirdpurpose isaccomplishedbyrequiringthatallcarrieragreementsbefiledwiththeFMCforreviewtodetermineiftheagreementis“substantiallyanti-competitive.”Afterreviewingthefiledagreement,iftheFMCfinds that theagreement is substantially anti-competitive, it canseektoenjoinoperationsunderthatagreement.IftheFMCdoesnotseektoenjoinoperationundertheagreementonthegroundsthat the agreement is substantially anti-competitive and theagreement becomes effective, the parties are granted anti-trustimmunitywithrespecttoactivitiesauthorizedbytheagreement.
Why You Should CareTheavailablemonetarypenaltiesforviolationsoftheShipping
Actcanbesignificant.Inadditiontomonetarypenalties,theFMChastheabilitytorevoketradingprivilegesif
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2012.TheHousepasseditsCoastGuardAuthorizationlastyear.TheSenateCommerceCommitteefileditsreportandversionofthisbill(CoastGuardAuthorizationActforFiscalYears2012and2013) in Januaryof this year (S.1665)afterhaving reporteditmonthsearlierattheendoflastyear.Reportedly,theSenatecontinues to sort through the bill to fend off any problems(earmarksandothercommitteejurisdictionalclaims)andgetitscheduledforSenatefloorconsiderationorevenconsiderationofaConferencewiththeHouse.
InordertokeepthingsmovingontheHouseside,Congress-man LoBiondo introduced the Coast Guard Authorization billof 2012 (H.R. 5887) on June 1, 2012, which was markeduponJune7 intheHouseCommitteeonTransportationandInfrastructure. With regard to specific spill-related legislation,there appears to be little—if any—movement until after theelectionsin2013.
ConclusionsWithsomanyissuesbeingpuntedtothislameducksession,
thereareonlyalimitednumberofdaysforCongresstoacttoavoid the“fiscalcliff”orenactsubstantivemaritime legislation.The Senate will continue to try and find floor time to moveits Coast Guard bill, S.1665. It remains unclear if it will reallyhappen before the summer recess or even this year. If theyaresuccessful, then theHouseandSenateConferencewouldlikely move forward to work on mutually agreeable language.Withregardto“Taxmaggeddon,”withthefateoftheeconomyinitshands,andapossiblereportfromoMBontheeffectsofsequestrationonpopular programs,Congressmay focus theirmindsandallowadealtobestruckonatleastavoidingseques-trationin2013andextendingallorsomeoftheBushtaxcuts.More likely,Congresswillmove the January effectivedate forsequestrationtosometimeinMarch2013.n
Maritime … Or Not?BY THOMAS H. BELKNAP, JR.
Here is a multiple choice question:which of the following contracts is con-sideredtobea“maritimecontract”underU.S.law?(a)ashipbuildingcontract,(b)aship-sale contract, (c) a ship-repair con-tract,and/or(d)ashipmortgage.
You will be forgiven if you simplytried to apply logic in answering thisquestion and guessed that all four aremaritime contracts. If you know your
maritimelaw,however,thenyoushouldhaveansweredthat“c”and“d”aremaritimecontractswhereas“a”and“b”arenot.or,atleast,thatisthecurrentstateofthelaw.
Why might this matter? In the first place, it may impactwhetheraclaimcanbebroughtinthefederalcourtsorwhetheritmustbeasserted instatecourt.Federalcourtspossessonly“limited” jurisdiction, meaning they can only hear cases thatare within the scope of their constitutionally defined jurisdic-tion.Ifthedisputeinvolvesamaritimecontract,aclaimmaybebroughtinthefederalcourtunderits“admiraltyandmaritime”jurisdiction. If it is a non-maritime contract, however, then itmayonlybebroughtinthefederalcourtifthe“diversity”rulesaremet,meaningthattheclaimmustexceedacertainamountandbebetweencitizensofdifferentstates.Importantly,claimsbetween non-U.S. citizens do not meet the diversity require-ment,whereas thecourt’sadmiralty jurisdictionhasnosimilar“citizenship”limitations.
A second important issue is that the maritime law hasrelativelypermissiverulesallowingforpre-judgmentattachmentofassetsinsupportofa“maritimeclaim,”whicharenotavail-able to claimants on non-maritime claims. This right is princi-pallydefinedbyRuleBoftheFederalRulesofCivilprocedure,Supplemental Rules for Admiralty or Maritime Claims. Underthatrule,apartymayobtainanattachmentofthedefendant’spropertylocatedinadistrictwherethedefendantisnotother-wise“found”merelybyassertingaprima facie maritimeclaim.Thisisalowpleadingthreshold,andRuleBcanbeaverypow-erfultool—particularlyusefulinanindustrywherethebusinessisinternationalandassetsaretransitory.
Athirdandrelatedissueiswhethermaritimelienscanariseout of a breachof a contract. Such liens can create powerfulpriorityandenforcementrightsbothasagainstthevesselownerandthird-partyclaimantswhomaybeseekingtoenforcetheirownclaimsagainstthesameassets.Nomaritimeliencanarisefromthebreachofanon-maritimecontract.
Howdid thishappen?How is it thatacontract tobuildorsellashipisnotamaritimecontractwhereasacontracttorepairor mortgage a ship is a maritime contract? The answer goesbackatleastasfaras1857,whentheUnitedStatesSupremeCourtdecidedPeople’s Ferry Company of Bostonv.Beers1andsaid this about a shipbuilding contract: “So far from the con-tractbeingpurelymaritime,andtouchingtherightsanddutiesappertainingtonavigation,(ontheoceanorelsewhere,)itwasacontractmadeonland,tobeperformedonland.”2In1918,theCourtofAppealsfortheSecondCircuit(encompassingNewYork,Connecticut,andVermont)held in The ADA3 thatashipsale contractwas not amaritime contract. The court cited noauthorityfortherulenorarticulatedanyrationalfortheholding;nevertheless, theholdingstuckandhasbeenwidely followed,intheSecondCircuitandelsewhere.
Forwhatever their originalmerit, commentators have longcriticizedtheserulingsasdefyinglogicandasbeinginconsistentwith international practice. As the eminent admiralty author
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it determines suchaction isnecessary toprotect the shippingpublic from fraud and unfair practices. Although revocation oftradingprivilegesisanavailableoption,theFMCusuallyresortstomonetarypenalties.IftheFMCdeterminesthataviolationhasbeencommittedunknowingly,thepenaltycanbeupto$8,000per violation. In most cases, each bill of lading constitutes aseparateoffense. If theFMCdeterminesthattheviolationwascommitted knowingly and willfully, that penalty increases to$40,000perviolation.Takeaminutetoconsiderthemagnitudeof these potential penalties. For example, if a carrier was tounintentionallycommitasingletypeofviolationduringthetermofaservicecontractfor2,000TeUswitheachTeUcarriedonaseparatebilloflading,thepotentialpenaltieswouldtotal$16million(i.e.$8,000x2,000billsoflading).Ifeachoftheviola-tions in our example were committed knowingly and willfully(such as deliberately mis-rating cargo), the potential penaltiesskyrocketto$80million.
TheseextremepenaltieswouldbeverydifficultfortheFMCtocollect,so it isunderstandable that theFMCrarelyseeks toimposethemaximumpenaltyallowableundertheShippingAct.In fact, the FMC and the alleged violator almost always enterinto what is known as a “compromise agreement.” once theFMC’sBureauofenforcementcompletesitsinvestigation,itwilloftennegotiateasettlementwiththeallegedviolator.Typically,theallegedviolatoragreestopayamitigatedpenalty—onethatisfarlessthanthemaximumstatutorypenalty—inexchangefora release from further action by the FMCwith respect to anyallegedviolationsuncoveredduringtheFMC’sinvestigation.Noadmissionofguiltismadeonthepartoftheallegedviolatorinexchangeforthepenaltymitigation.Whilethemitigatedpenal-tiesarefarlessthantheallowablepenaltiesundertheShippingAct,theyarestillsteepenoughtoencouragetheallegedviolatortochangeitssuspectpractices.
With the FMC’s stepped up monitoring and enforcementprograms, Shipping Act violators may find themselves payingheftypenalties.Justtwomonthsago,theFMCenteredintocom-promiseagreementswitheightNVoCCsandrelatedcompaniesfortotalof$490,000inpenalties.ThreeoftheNVoCCspaidacombinedtotalof$235,000.WhiletheFMCappearstobecur-rentlyfocusedonNVoCCs,therehavebeensignificantpenaltiesassessedagainstvesseloperators, includinga$1.2millioncivilpenaltyagainstamajorcarrier in2011. In theannouncementmade by the FMC in connection with this penalty, the FMC’sChairmansaid,“Thesepenaltiesshouldserveasareminder…Ifyou’reviolatingthelaw,soonerorlater,wewillfindyou,andtheconsequencescanbeserious.”
This article first appeared in Maritime Professional on May 22, 2012. To learn more about Maritime Professional, please visit www.maritimeprofessional.com.n
Obtaining Evidence in the United States for Use in Foreign Proceedings—An Update1
BY LAUREN B. WILGUS
Title28,Section1782oftheUnitedStatesCode can be a fruitful source ofdiscoveryforforeignlitigants.TheStatuteisalegaldevicethatauthorizesaUnitedStates federal court to order a person“residing” or “found” within the court’sgeographical jurisdiction to provide tes-timony or documents for use before a“foreignorinternationaltribunal.”
Inseekingevidenceforuseinafor-eignlegalproceedingunderSection1782,adistrictcourtmay,butisnotrequired,toorderapersontoproducediscoveryifthefollowingthreestatutoryrequirementsaremet:(1)theapplica-tion must be made by a “foreign or international tribunal” or“anyinterestedperson;”(2)thepersonorentityfromwhomthediscoveryissoughtmustresideorbefoundinthefederaldistrictinwhichtheapplicationisfiled;and(3)thediscoverymustbeforuseinaproceedingina“foreignorinternationaltribunal.”
Under the first requirement, the term “any interested per-son” isnot limited toparties ina foreignproceeding,butalsoincludes a non-party who has an interest in obtaining judicialassistanceinaforeignproceeding.
The second requirement that the witness must reside orbefoundinthefederaldistrictwheretheapplicationisfiledisstraightforward;however, thereare limitationsonthescopeofdiscoverypermittedunderthisrequirement.TheprevailingviewisthatSection1782doesnotauthorizediscoveryofdocumentsheldabroad.Thus,evenifawitnessislocatedinthefederaldis-trictwheretheapplicationisfiled,thewitnesscannotbeforcedto produce documents located outside of the United States.oneNewYorkdecision,however,hasheldthatSection1782doesnot require that thedocumentssought tobediscoveredbe found in thedistrictand, instead,heldsuchconsiderationsshould be weighed on a case-by-case basis along with otherdiscretionaryfactors.2
Themeaningof theterm“foreignor international tribunal”under the third requirementhas led tomany conflictingdeci-sions.SincetheStatutedoesnotdefineanyofitsexplicitterms,courts are left todecide their propermeaning, oftenwithdif-fering views. one recurring conflict is the question of Section1782’sapplicabilitytoforeignprivatearbitrations.priorto2004,several federal courts, including the Second and FifthCircuits,determinedthatforeignprivatearbitrationswerenot“foreignorinternationaltribunals”withinthemeaningoftheStatute.3Ina2004decision, Intel Corp.v. Advanced Micro Devices, Inc.,542U.S. 241 (2004), the United States Supreme Court providedguidanceforcourtsinterpretingandapplyingSection1782.The
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vocal intheiroppositiontosequestration.LockheedMartin,forexample,hasannouncedtheywillsend lay-offnoticestotheiremployeesintheSeptember-octobertimeframetoprovidetherequired60-daynotice.TheiralliesontheHillarealsoveryvocalintryingtoforestallmorecutstoDoD.
Recently, Congress has begun to focus on the impact ofthese cuts on the non-defense world. Senators patty Murray(D-WA) and John McCain (R-AZ) joined forces to add anamendment to the farmbill,whichpassed theSenate64-35,calling on the obama Administration’s office of ManagementandBudget(“oMB”)toreport“assoonaspracticable”onhowthecutswouldimpact boththemilitaryandcivilianagencies.
oMBhasbeenreluctanttoprovidethesedetailssofarinthehopethatCongresswilldoitsjobandavertthecrisis.Butonce
thefarmbillisenacted,theAdministrationwillhavetoprovidethisinformationtoCongressandperhapsthen,seeingthedra-maticimpactsthecutswillhave,Congresswillact!
In the meantime, Congress is working on the FY2013budget for theyearbeginningonoctober1,2013.Sofar,noappropriationsbillshavebeenenactedforanydepartmentandsome observers are predicting that we will have yet anotherContinuingResolutiontokeepthegovernmentopenthoughallorpartof2013.The lackofcertaintyover funding,alongwiththefearofsequestration,hasledtoagencies’holdingbackonawardingnewcontracts.
Wehavealreadyseenadeclineinbudgetsforthemaritimeagencies.Forexample, theMaritimeAdministrationbudget forFY2013wascutsignificantlyintheHouse-passedbill.Nonewfundingwas provided for the title XI loan guarantee program,theshortseashippingprogram,or thepopularsmall shipyard
grantsprogram.TheHousehasalsozeroedoutfundingin2013for the also popular TIGeR grant program, which allows portstoqualifyforinfrastructurefunding.TheCoastGuardhasfaredsomewhatbetterwitha46percentincreaseinfundingforshipconstruction; but funding for aircraft purchases was reducedby30percent,andshorefacilitiesandaidstonavigationwerereducedby39percent.However,eventheCoastGuardwouldnotbeexemptfromsequestration.
TheBushtaxcutsareslatedtoexpireattheendof2012,butformerpresidentBillClintonhasalreadysuggestedthattheymayneedtobeextendedforawhilelongertoavoidafurtherhit to the economy. president obama has proposed allowingthecutstoexpireonthewealthiesttaxpayerswhilestillprotect-ing the middle class. Among the other provisions expiring onDecember 31, 2012, the two percent employee payroll tax
deduction, the current estate tax regime,andvariousenergyprovisionswillallcometo anend ifCongressdoesnot act.Manyoftheseprovisionswillbeconsidereddur-ing the lame duck session following theNovemberelection,althoughthelegislativecalendarisalreadylookingquitefullforthatshort timeframe, leadingmanytosuspectthat Congress will favor short-term exten-sionsratherthanfundamentalreform.
Tax reform continues to be on every-one’s lips, too, but serious reform is likelytobepushedbackuntil2013.TheHouseisconsideringamechanismtofast-tracktaxreformin2013,butwhethertheDemocratsagreetoitdependsonwhetheritistiedtoincreased revenues. At a minimum, sig-nificanttaxreformdiscussionswillcontinuein 2012, and a multitude of hearings areexpected on the subject. In addition, both
theHouseWaysandMeansCommitteeandtheSenateFinanceCommitteearedevelopingdiscussiondrafts toaddresscorpo-ratetaxreformandotherfundamentalreformstothetaxcode.
Failure to Enact Substantive Maritime LegislationItisanunderstatementtosaythatthe112thCongresshas
notproducedalotofsubstantivelegislation.Asofthisdate,theonlytransportation-relatedlegislationithasbeenabletoagreeonhasbeenreauthorizationofthehighwaybillonJune29.Thisbillincludedlanguagethatestablishedatrustfundtobeknownasthe‘‘GulfCoastRestorationTrustFund’’inwhich80percentofalladministrativeandcivilpenaltiespaidbyresponsiblepar-ties in connection with Deepwater Horizonwill be placed forusetohelprestoretheGulfofMexicofollowingtheincident.
Further, progress on the Coast Guard and MaritimeTransportationActof2011(H.R.2838)continuestobeslowin
Congressional Failure (continued from page 1) SupremeCourt didnot explicitly determinewhether a foreignprivate arbitration is a “foreign or international tribunal” underSection 1782; however, the Supreme Court’s reasoning anddicta strongly indicate that private arbitral tribunals fall withintheStatute.
Since Intel, the majority of courts that have consideredwhetherforeignprivatearbitraltribunalsfallwithinthescopeofSection1782haveconcludedthattheydo.Aminorityofcourts,however,havefollowedtheSecondandFifthCircuit’spre-Intel decisionsandhaveheldthatforeignprivatearbitrationsremainoutsidethescopeoftheStatute.Whilethepre-InteldecisionsintheSecondandFifthCircuitsremainonthebooks,anargumentcan be made that those decisions should be reconsideredin light of the Intel case. To date, the SecondCircuit has notreexamined the issue and theFifth Circuit has maintained itspre-Intelposition.
Another interesting ques-tion under this requirementis whether there is a distinc-tion between a “foreign” tri-bunal and an “international”tribunal. An argument can bemade that the term “foreign”tribunal refers to any tribunallocated abroad, whereas thephrase “international” tribunalrefers to any arbitral tribunalcreated pursuant to a treatyor interstateagreement regard-less of location, including theUnitedStates.4The Intelcaseisinstructiveinthisregard.In Intel,theSupremeCourtobservedindicta that “[Section] 1782 is aprovisionforassistancetotribunalsabroad.”5Todate,however,nocasehasdefinitelyaddressedthisissue.
Section1782isapowerfultoolforforeignlitigantsbecausediscovery is much broader in the United States than in mostother legal systems. Notably, the discovery available under§1782isnotlimitedbythescopeofdiscoveryavailableinthejurisdictionwherethemainactionispending.
If thestatutory requirementsaresatisfied, thedistrict courtmayalsoconsiderfourdiscretionaryfactorsindecidingwhethertograntorlimittherequesteddiscovery.Thesefactorsinclude:(1) whether the person from whom discovery is sought is aparty in the foreign proceeding; (2) the nature of the foreigntribunal, the character of the proceedings underway abroad,and the receptivityof the tribunal toU.S. federal-court judicialassistance;(3)whethertheSection1782petitionconcealsanattempttocircumventdiscoveryrulesoftheforeigncountryorthe United States; and (4) whether the discovery request is
unduly intrusive or burdensome. The decision of whether tograntaSection1782application,andthescopeoftherelief,ifgranted, iswithin thediscretionof the federaldistrict inwhichtheapplicationisfiledandismadeonacase-by-casebasis.
properlyutilized, apartymayobtain testimony froma keywitnessor criticaldocuments thatmightotherwisebebeyondthe jurisdiction of a foreign court. Based on the plain mean-ingof theStatuteand theSupremeCourt’sexpansive readingofSection1782, in Intel, anargument canbemade that theStatuteshouldbeavailabletoforeignprivatearbitrationsseatedoutside of the United States. However, the question will onlybe definitively answered when the Supreme Court explicitlyaddresseswhether foreignprivatearbitrationsconstitute“tribu-nals”undertheSection1782.Untilthen,anydecisiontoseek
discoveryintheUnitedStatesforuseinaforeignprivatearbitra-tionshouldbeconsideredonacase-by-casebasisinconsulta-tionwithUnitedStatescounsel. n
1. See“obtainingevidenceintheUnitedStatesforUseinForeignprivateArbitra-tions”byW.CameronBeardpublishedintheAugust2010editionofInterna-tional Litigation & ADR Updateand“GatheringevidenceintheUnitedStatesforUseinForeignproceedings:28U.S.C.§1782”byW.CameronBeardpublishedintheoctober2008editionof Mainbrace.
2. See In re Gemeinshcaftspraxis Dr. Med. Schottdorf,No.Civ.M19-88(BSJ),2006 U.S. Dist. LEXIS 94161,at*16-17(S.D.N.Y.Dec.28,2006).TwoothercourtshavecitedtotheIn re Gemeinshcaftspraxisdecisionwithapproval,butwithoutfurtherdiscussionoranalysisofthesplitofauthority.SeeIn re Eli Lilly & Co.,No.3:09MC296(AWT),2010U.S.Dist.LeXIS59121,at*13(D.Conn.June15,2010); Minatec Finance S.A.R.L. v. SI Group Inc.,No.1:08-CV-269(LeK/RFT),2008U.S.Dist.LeXIS63802,at*14n.8(N.D.N.Y.Aug.18,2008).
3. See NBC.v. Bear Stearns & Co., 165F.3d184(2dCir.1999)andRepublic of Kazakhstanv. Biedermann Int’l,168F.3d880(5thCir.1999).
4. See NBC,165F.3d, supranote3,at189-190(“[T]helegislativehistoryrevealsthatwhenCongressin1964enactedthemodernversionof§1782,itintendedtocovergovernmentalorintergovernmentalarbitraltribunalsandconventionalcourtsandotherstate-sponsoredadjudicatorybodies.”)
5. See Intel Corp.v. Advanced Micro Devices, Inc. 542U.S.241,263(2004).
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PAGE
Congressional Failure to Enact Maritime ............................... 1 Legislation and the Fiscal Cliff
Maritime … Or Not? ..................................................................... 3
The Doctrine of Judicial Estoppel—Alive, Well, ..................... 5 Expanding, and Still Devastating
Congratulations to Jeremy Harwood: ..................................... 5 Selected as One of the Top Five Maritime Lawyers by TradeWinds 2012
Chambers 2012 Honors Blank Rome ...................................... 6 Maritime Attorneys
Don’t Risk an Expensive Run-In with the ............................... 9 U.S. Federal Maritime Commission
Obtaining Evidence in the United States for Use ................ 10 in Foreign Proceedings—An Update
Blank Rome Maritime Emergency Response Team ............. 12
CONTENTS
July 2012 No. 2
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Congressional Failure to Enact Maritime Legislation and the Fiscal CliffBY JOAN M. BONDAREFF AND JONATHAN K. WALDRON
As the November election draws closer, the main ques-tions on everyone’s lips in Washington, DC—other than whowill win the election itself—are whether Congress can enactany maritime legislation and are we about to fall off a “fiscalcliff”?Congresshasforthemostpartdemonstratedaninabilitytoenactsubstantivemaritime legislation, includingspill legisla-tion following Deepwater Horizon. With regard to the phrase“fiscalcliff,” thiswascoinedbyFederalReserveChairmanBenBernanke to describe the perfect storm of economic eventsfacing thenation. Thequestions for themaritime industry arewhen will Congress be able to accomplish anything in themaritimespace,andwhatimpactwillthefiscalcliff,alsocalled“Taxmaggeddon,”haveontheirbusinesses?
TaxmaggeddonThe“fiscalcliff”consistsoftwomajorcomponents:“seques-
tration” and the expiring Bush tax cuts. other componentsincludetheneedto raise thedebtceiling—estimatedtooccurthis fall or later; the expiration of the payroll tax holiday; theextension of unemployment benefits; the Medicare “Doc Fix”;
theAlternativeMinimumTax (“AMT”)patch; and taxextenders(includingtheproductionTaxCreditforthewindindustry).
Forthosewhohaven’tfollowedthebudgetdebatesclosely,“sequestration”isthetermCongressusedintheBudgetControlActof2011(p.L.112-25)todescribetheimpositionofauto-maticacross-the-boardcuts intheamountof$1.2trillionoverten years to help balance the budget. Sequestration was trig-geredbecausetheJointSelectCommitteeonDeficitReductioncouldnotreachadealonhowtobalancethebudget.Thecutswill go into effect on January 2, 2013, unless Congress cannowcomeupwithanalternative.ThecutsareequallydividedbetweentheDepartmentofDefense(“DoD”)andthecivilianagencies. (Social Security, Medicaid, assistance to low-incomefamilies,andtheDepartmentofVeteransAffairsareexempt.)
Todate,mostofthefocushasbeenontheimpactonthedefenseindustry,andmajordefensecontractorshavebeenvery
JONATHAN K. WALDRON PARTNER
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JOAN M. BONDAREFF OF COUNSEL