IN RE: EXONERATION FROM OR LIMITATION OF LIABILITY

Filing 81

MEMORANDUM OPINION. Because the Court concludes that there is not a substantial ground for difference of opinion regarding the Order and Opinion, and that an interlocutory appeal would not materially advance the termination of the litigation, U.S. Steel's Motion for certification for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) is denied. An appropriate Order will issue. Signed by Judge Mark R. Hornak on 12/13/12. (bdb)

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

COMPLAINT OF IMPERIAL TOWING
INC., as Owner Pro Hac Vice and
Charterer of the Motor Vessel Carl L.
Johnson, FOR EXONERATION FROM OR
LIMITATION ON LIABILITY

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Civil Action No. 11-1371
Judge Mark R. Hornak

MEMORANDUM OPINION

Mark R. Hornak, United States District Judge

Pending before the Court is U.S. Steel Corp.'s ("U.S. Steel") Motion for Certification of
Interlocutory Appeal Pursuant to 28 U.S.c. § 1292(b), ECF No. 72, wherein U.S. Steel requests
that this Court amend its November 6, 2012 Order ("Order"), ECF No. 70, and accompanying
Opinion, ECF No. 69, In re Imperial Towing Inc., CIV.A. 11-1371, 2012 WL 5409831 (W.D.
Pa. Nov. 6,2012) ("Opinion") to include the requisite statement required by 28 U.S.C. § 1292(b)
to certify this matter to our Court of Appeals. Having considered U.S. Steel's Motion and Brief
in Support, ECF No. 73, and Imperial Towing, Inc.'s ("Imperial") Response, ECF No. 75, and
Memorandum of Law in Opposition, ECF No. 74,1 for the reasons that follow, U.S. Steel's
Motion is denied.
I. BACKGROUND

The facts of this case are relayed in detail in the Opinion. Imperial was the owner pro
hac vice and bare boat charterer of the towboat MN Carl L. Johnson. On April 27, 2011, certain

barges that the MN Carl L. Johnson was towing broke free, including one which carried steel
1 Two other parties to the litigation, Campbell Transportation Company, Inc. (and its affiliates) and American
Commercial Lines, LLC have filed documents indicating their joinder in Imperial's Opposition to the Motion, ECF
Nos. 76,79.

coils owned by U.S. Steel, causing the coils to sink to the bottom of the Ohio River. U.S. Steel
has estimated that 1,566.49 tons of steel coils were lost, purportedly valued at amounts ranging
from $991 to $1,212 per net ton, with a total loss of approximately $1.8 million. 2 See Opinion, at
*9. On May 29, 2012, Imperial filed a Motion for Partial Summary Judgment, seeking to limit
Imperial's liability to U.S. Steel for any damages U.S. Steel had suffered to the terms of a
Valuation and Limitation on Liability Clause contained in a Contract of Affreightment that U.S.
Steel and another party, American Commercial Barge Lines, Inc. ("ACBL") had signed. See
ECF No. 61 Ex. B.

During those proceedings, the parties represented to the Court that

approximately $640,000 in salvage value for the steel coils had been recovered by ACBL. See
Opinion, at *9. On November 6, 2012, this Court's Order and Opinion granted that motion,
holding that the provisions of the Contract of Affreightment applied equally to Imperial, and that
[1] Imperial's liability to U.S. Steel is limited to $700 per ton of cargo lost or
damaged multiplied by the actual weight in tons or fraction of tons.
[2] U.S. Steel may not recover from Imperial beyond the above limitation,
whether by receipt of any salvage proceeds or otherwise. However, Imperial's
liability to U.S. Steel may not be reduced by salvage proceeds that have been
recovered and retained by any entity other than U.S. Steel.
Order; see Opinion, at *11. U.S. Steel now requests that this Court certify part (2) of that Order
for interlocutory appeal.

II. DISCUSSION
Under 28 U.S.C. § 1292(b), a District Court may certify for interlocutory appeal a nonfinal order if the order [1] "involves a controlling question of law [2] as to which there is
substantial ground for difference of opinion and [3] ... an immediate appeal from the order may
materially advance the ultimate termination of the litigation." Id.; see Simon v. United States, 341
2 The parties have not stipulated to the exact weight of the steel coils or their original value, and the Court does not
find these facts here. Rather, the Court finds it helpful to state the approximations given by the parties as of this date
to illustrate roughly the amount of money implicated in this action.

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F.3d 193, 199 (3d Cir. 2003). The certification decision rests in the sound discretion of the
District Court, which may decline such request even if the criteria are present. Bachowski v.
Usery, 545 F.2d 363,368 (3d Cir. 1976). Section 1292(b) operates as an exception to the general

rule that only final decisions of a District Court may be appealed, and thus is to be applied "only
sparingly and in exceptional circumstances." In re Chocolate Conftctionary Antitrust Litig., 607
F. Supp. 2d 701, 708 (M.D. Pa. 2009) (internal quotation omitted); see also L.R. v. Manheim
Twp. Sch. Dist., 540 F. Supp. 2d 603, 608 (E.D. Pa. 2008) (certification appropriate only if

"exceptional circumstances justify a departure from the basic policy against piecemeal
litigation"). Here, the Order involves a controlling question of law because its "incorrect
disposition would constitute reversible error if presented on final appeal." Chocolate
Conftclionary, 607 F. Supp. 2d at 705. Therefore, the issue now turns to a consideration of the

remaining factors under 28 U.S.C. § 1292(b).

A. Substantial Ground for Difference of Opinion
A substantial ground for difference of opinion exists when there is genuine doubt or
conflicting precedent as to the correct legal standard. Knipe v. SmithKline Beecham, 583 F. Supp.
2d 553, 599 (E.D. Pa. 2008). Conflicting and contradictory opinions can provide substantial
grounds for a difference of opinion, as can the absence of controlling law on a particular issue,
id., although the fact that an action raises a question of first impression is not alone sufficient to

support certification, Cuttic v. Corzer-Chester Med. Ctr., 806 F. Supp. 2d 796, 805 (B.D. Pa.
2011) (quoting Shaup v. Fredrickson, No. 97-72260, 1998 WL 800321, at *3 (E.D. Pa. Nov. 17,
1998) ("If questions of first impression alone were sufficient to warrant certification for an
immediate appeal, our Court of Appeals would be besieged with piecemeal interlocutory
appeals.")).

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The Contract of Affreightment stated:
15. CARGO VALUATION: In consideration of the bargained for and agreed
rates set forth herein, it is expressly agreed that the cargo described herein is
hereby valued at not in excess of $700.00 per ton. Carrier [ACBL] shall not be
liable for and Shipper [U.S. Steel] hereby agrees to ... hold harmless Carrier ...
for any loss or damage to or expense in connection with any article shipped in an
amount exceeding the per ton valuation set forth above multiplied by the actual
weight in tons (2,000 lbs.) or fraction of tons. In no case shall Carrier's liability
exceed the actual value ofthe article shipped.
ECF No. 61 Ex. B ~ 15 (emphasis added); Opinion, at'" 1. U.S. Steel argues that this Court erred
in interpreting the contract to hold that Imperial's liability to U.S. Steel would be $700 per ton of
cargo lost minus any salvage actually recovered by U.S. Steel, rather than $700 per ton plus
salvage.
In reaching its conclusion, the Court reasoned that the general rule in maritime law is that
in a total loss or constructive total loss situation, damages are calculated by market value of the
property lost less salvage. See The Anna Maria, 15 U.S. 327 (1817); DiMillo v. Sheepscot Pilots,

Inc., 870 F.2d 746, 751 (1 st Cir. 1989). This is a corollary of the general rule of compensatory
damages in contract law

to 'make whole' the party who was injured. See Paper Magic Group,

Inc. v. JB. Hunt Transp., Inc., 318 F.3d 458,463 n.3 (3d Cir. 2003). But here, U.S. Steel agreed
by contract to do more than limit the amount it could recover in seeking to be made whole, as
might be the case in a more common limitation on liability clause. Rather, it stipulated to the

value of the cargo itself, marking that agreed-upon value instead as the point at which U.S. Steel
would be "made whole." This is supported by the title of the paragraph, "CARGO
V ALUATION," and its plain language, "it is expressly agreed that the cargo described herein is
hereby valued as not in excess of $700.00 per ton." ECF No. 61 Ex. B

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15. As the Court

explained in the Opinion, the parties established their "express understanding that whatever the

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value of a ton of cargo outside the contract is, for the purposes of the contract, it is not more than
$700." Opinion, at *10. 3
Therefore, to give effect to the limitation on liability clause, the proper calculation of
damages and liability in this case must be based on the agreed contractual valuation (no more
than $700 per ton), less any salvage actually received by U.S. Steel. Neither the Court nor the
parties was able to locate any case law directly supporting or contradicting this proposition.
However, the Court reasoned that this result was dictated by a plain reading of the contractual
language, by principles of contract law, and by common sense. Id. To rule otherwise would
grant U.S. Steel a windfall by allowing recovery in excess of the specifically bargained-for $700
per ton valuation when salvage is present, or would encourage waste by incentivizing Imperial
not to recover the coils. Id

In contrast, U.S. Steel has not offered any reason grounded in case law, precepts of
contract law, or public policy to advance its argument. First, it asserts the absence of legal
precedent as dispositive of this matter. See U.S. Steel Br. SUpp. at 4, 6. Second, it reasserts its
prior argument that because the limitation on liability clause states, "In no case shall Carrier'S
liability exceed the actual value of the article shipped," ECF No. 61 Ex. B ~ 15, the contract (and
the Court's interpretation of it) provides "evidence ... that there is a distinction between market
value and the contractual limitation." U.S. Steel Br. SUpp. at 5.

3 Adherence to this valuation might present a thornier issue in a situation where the value of the coils as salvaged
exceeded $700 per ton, which might result in the carrier profiting from the loss of the coils if it has obtained the
salvage value (i.e., if the contractual value is X, and the salvage value is X + 1). However, that contingency is not the
case here, and so the Court need not address its consequences. It is also certainly possible that in that case, there
would not be a "total loss" or "constructive total loss" that is ordinarily present when the salvage rule cited by u.s.
Steel is invoked. See The Anna Maria, 15 U.S. at 335; DiMillo, 870 F.2d at 751; Paper Magic, 318 F.3d at 463 n.3.
Here, it is clear that the salvage value of the coils (approximately $640,000) is far below the valuation/limitation of
approximately $1.1 million, and so no such windfall is generated to Imperial or any other salvaging entity who
might be liable to U.S. Steel under the provisions of the Himalaya Clause.

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There is a distinction. That is the purpose of a contract setting a specific, agreed-upon
valuation and limitation. But as the Court noted in its Opinion, the only reasonable meaning of
that sentence, read along with the valuation of the cargo as "not in excess 0/$700 per ton" is that
actual value will serve as the proper valuation and limit of Imperial's Jiability if, and only if,
"actual" market value is less than $700 per ton. Opinion, at '" 10 (emphasis added). But when, as
here, market value is allegedly in excess of $700 per ton, the contract is clear that that
benchmark becomes the valuation of the coils and the upper limit of Imperial's liability, whether
or not salvage is present. U.S. Steel has offered no principled or normative reason why this
should not be the case.
Whether or not this Court has erred in its interpretation of the contract, U.S. Steel has not
demonstrated that there is an alternate interpretation with the kind and level of support such that

it can serve as a substantial ground for a difference of opinion.

Because U.S. Steel has

demonstrated only that it disagrees with this Court's analysis, see Chocolate Conftctionary, 607
F. Supp. 2d at 706, and not that there is a "substantial ground for a difference of opinion," this
factor is not met.

B. Materially Advances the Termination of the Litigation
Even if there were a substantial ground for difference of opinion, certification for
interlocutory appeal would still be inappropriate because the resolution of that issue would not
materially advance the ultimate termination of the litigation.

Factors that a Court should

consider in determining whether an immediate appeal would materially advance the outcome of
the litigation include "(1) whether the need for trial would be eliminated; (2) whether the trial
would be simplified by the elimination of complex issues; and (3) whether discovery could be
conducted more expeditiously and at less expense to the parties." Knipe, 583 F. Supp. 2d at 600

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(internal quotation omitted). "When litigation will be conducted in substantially the same manner
regardless of [the Court of Appeals'] decision, the appeal cannot be said to materially advance
the ultimate termination of the litigation." White v. Nix, 43 F.3d 374, 378-79 (8th Cir. 1994).
U.S. Steel argues that what it contends is the unclear status of the salvage money in the
damage calculus at issue, approximately $640,000, "risks creating a logjam in any potential
settlement negotiations" and affects the recovery of other parties involved in the litigation who
will receive less or more of Imperial's overall limitation on liability (i.e., the value of the MN
Carl L. Johnson) based on U.S. Steel's recovery.4 U.S. Steel Br. SUpp. at 5-6. In so arguing, U.S.
Steel has failed to demonstrate how any of the factors listed above are met. What is at stake in
the ruling challenged here is the dollar amount of U.S. Steel's recovery, which mayor may not
affect the dollar amount obligations (by proportionately smaller numbers) of other claimants.
The adjudication of this issue by the Third Circuit would not in any way affect or alter the
necessity of trial, the trajectory of discovery, the claims and defenses at issue, or the participation
of any parties in the action. The added time and cost of an appeal would delay, rather than
expedite, the advancement of the litigation in this case. U.S. Steel's assertion that settlement
negotiations might proceed more smoothly if this issue were resolved by the Court of Appeals,
standing alone, does not demonstrate that litigation would be materially advanced. See Ashmore
v. Ne. Petrol. Div. a/Cargill, Inc., 855 F. Supp. 438, 440 (D. Me. 1994) ("increased probability
of settlement" alone does not materially advance outcome of litigation). Because almost any
material decision made by a tribunal in the course of litigation in some way alters the calculus of
settlement negotiations between parties, a finding otherwise would convert the interlocutory

It is noteworthy that two of the four other Claimants in this case have opposed U.S. Steel's Motion, and therefore
have seemingly rejected the contention that an interlocutory appeal will facilitate settlement discussions.

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appeal of orders from being the exception to being the rule. It no longer would be a measure
reserved for exceptional circumstances.
Because the Court concludes that there is not a substantial ground for difference of
opinion regarding the Order and Opinion, and that an interlocutory appeal would not materially
advance the termination of the litigation,

u.s.

Steel's Motion for certification for interlocutory

appeal pursuant to 28 U.S.C. § 1292(b) is denied. An appropriate order will issue.

Mark R. Hornak
United States District Judge

Dated: December
cc:

r~-, 2012

All counsel of record

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