Eliezer et al v. Caribbean Petroleum Corporation et al

Filing 1114

ORDER. The next status conference in this case is scheduled for November 7, 2014. No later than October 24, 2014, the parties shall submit a proposed trial structure in which they outline the exact issues to be resolved during the LOL proceeding. In order to organize and manage this complex litigation as efficiently as possible, the Court will subsequently issue a series of pretrial orders. Signed by Judge Francisco A. Besosa on 07/14/2014. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ELIEZER CRUZ-APONTE, et al.,
Plaintiffs,

CIVIL NO. 09-2092 (FAB)
(Lead Case)

v.
CARIBBEAN PETROLEUM CORPORATION,
et al.,

This order relates to all
cases.

Defendants.

ORDER
BESOSA, District Judge.
In response to the submissions and suggestions of counsel in
the status conferences held on February 21, 2014 and June 20, 2014,
as well as the briefs submitted at Docket Nos. 1069, 1070, 1091,
and 1094, the Court issues the following order.
I.

Extent of the Injunction at Docket No. 343
The Court first addresses the contention repeatedly made by
defendants1

many

that

the

monition

order

filed

pursuant

to

Supplemental Rule F stays all actions outside of the limitation of
liability (“LOL”) proceeding against both the vessel parties and

1

See, e.g., Docket No. 945 (motion filed by AOT Limited and Astra Oil
Company, contending that “response to the complaints . . . is precluded by the
Court’s injunction of May 10, 2010 . . . .”). The defendants are: Antares Oil
Services LLC; AOT Limited; Astra Oil Company LLC; BP Products North America Inc.;
Cape Bruny Tankschiffarhts GmbH and Co. KG and Cape Bruny Shipping Company Ltd.
(collectively, the “Vessel Defendants”); Harbor Bunkering Corp.; Intertek USA,
Inc.; Navigators Insurance Company and Navigators Insurance Group; Shell Trading
(U.S.) Company; and Total Petroleum Puerto Rico Corp. (Docket No. 1091.)

Civil No. 09-2092, lead case (FAB)
all

other

defendants.

Plaintiffs

2
claim

that

the

monition

injunction applies only to the vessel parties and therefore that
all claims in the nine putative class actions, ten non-class mass
joinder cases, and at least two other individual cases may proceed
against all non-vessel defendants.

Defendants make the blanket

statement that plaintiffs’ argument is “wrong as a matter of law,”
(Docket No. 1091 at p. 2), yet fail to provide any legal authority
supporting that contention.
Applicable

statutes

and

case

law

in

this

arena

favor

plaintiffs’ position that the monition injunction reaches only the
vessel parties.

The Limitation of Liability Act permits a vessel

owner to limit its liability to the value of its interest in the
vessel and the vessel’s then-pending freight.

46 U.S.C. App. §

183(a) (2012). Once a shipowner facing liability invokes the Act’s
protection, “all claims and proceedings against the owner or the
owner’s property with respect to the matter in question shall
cease.”

Fed. R. Civ. P. Supplemental Rule F(3)2; see also In re

Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina
B.V., 836 F.2d 750, 754–55 (2d Cir. 1988) (“[T]he district court is
empowered to issue a restraining order or an injunction staying all
other proceedings against the shipowner arising out of the same
mishap.”).

2

Courts have emphasized that in “both the statute and

“The procedure for a limitation action is now found in Supplemental
Admiralty and Maritime Claims Rule F.” Lewis v. Lewis & Clark Marine, Inc., 531
U.S. 438, 448 (2001).

Civil No. 09-2092, lead case (FAB)

3

the rule, reference is made repeatedly and uniformly to the owner
of a vessel and not to any other class of individual or entity.”
In re Kirby Inland Marine, L.P., Case No. 13-0319, 2013 U.S. Dist.
LEXIS

110288

*5,

2013

WL

4013430

(S.D.

Ala.

Aug.

6,

2013)

(surveying various circuit court of appeals and Supreme Court
decisions on whether to enjoin claims against non-owners); Zapata
Haynie

Corp.

v.

Arthur,

926

F.2d

484,

485

(5th

Cir.

1991)

(declaring that the benefits of the Limitation Act — including the
cessation of all claims and proceedings — “are, by their plain
terms, conferred on ship owners only”) (emphasis in original);
Metro. Redwood Lumber Co. v. Doe, 223 U.S. 365, 371 (1912) (“[T]he
very nature of the proceeding is such that it must be exclusive of
any other separate suit against an owner on account of the ship.”).
Without any legal authority supporting the interpretation that the
monition order stays the non-LOL cases as to all defendants, the
Court rejects defendants’ contention that the injunction issued at
Docket No. 343 extends as a matter of law to all parties in the
non-LOL proceedings.
Nevertheless,
concurrently

with

the

complexity

the

LOL

and

and

burdens

consolidated

of

suits

proceeding
in

these

proceedings leads the Court to stay the consolidated cases until
the LOL proceeding concludes.

“[T]he power to stay proceedings is

incidental to the power inherent in every court to control the
disposition of the cases on its docket with economy of time and

Civil No. 09-2092, lead case (FAB)

4

effort for itself, for counsel, and for litigants.”

Landis v. N.

Am. Co., 299 U.S. 248, 254 (1936); Acton Corp. v. Borden, Inc., 670
F.2d 377, 380 (1st Cir. 1982).

Defendants have consistently

pointed out that all parties to the consolidated cases have been
brought before the Court in the LOL action, and that all parties
may litigate their claims in that venue.

The LOL concursus

“compels all actions arising out of the casualty to be filed and
disposed of in a single proceeding,” Thomas J. Schoenbaum, 2
Admiralty & Mar. Law § 15-5 (5th ed. 2013), and “[t]he purpose of
a limitation proceeding is not merely to limit liability but to
bring all claims into concourse and settle every dispute in one
action.”

In re Complaint for Exoneration from or Limitation of

Liability of Shell Oil Co., 780 F. Supp. 1086, 1091 (E.D. La. 1991)
(citing The Quarrington Court, 102 F.2d 916, 918 (2d Cir. 1939))
(emphasis in original).

The LOL proceeding, therefore, is “an

adequate vehicle for completely resolving” issues between the
parties, Am. S.S. Owners Mut. Prot. & Indem. Ass’n. v. Lafarge N.
Am., Inc., 474 F. Supp. 2d 474, (S.D.N.Y. 2007), and the Court sees

Civil No. 09-2092, lead case (FAB)
little

prejudice

to

any

of

the

5
parties

in

handling

the

LOL

concursus before proceeding with issues in the non-LOL actions.3
Logic and efficient judicial administration require that
recovery against all parties at fault is as necessary to
the claimants as is the fund which limited the liability
of the initial petitioner. Otherwise this proceeding is
but a ‘water haul’ for the claimants, a result completely
out of character in admiralty practice.
British Transp. Comm’n. v. United States, 354 U.S. 129, 138 (1957).
Because proceeding with the LOL action first will best achieve the
orderly and expeditious disposition of issues arising out of the
October 23, 2009 explosion, the Court invokes its inherent power to

3

At the June 20 status conference, plaintiffs voiced an objection to the
Rule 14(c) tenders in the LOL proceeding. The Court has reviewed the transcript
of a hearing before the Delaware bankruptcy court, however, in which plaintiffs’
counsel explained:
And here is the important matter: When you do a 14(c) tender, the
parties that are brought in to the limitation action by the vessel
owner are tendered to the Plaintiff, and what that means, the
admiralty is as if I had sued the [defendants] directly, and they
must respond to the Plaintiffs, to the Tort Plaintiffs originally
within the admiralty limitation action as if I had sued them in the
limitation itself.
(Docket No. 1105-2 at pp. 5–6.) Federal Rule of Civil Procedure 14(c) supports
plaintiffs’ statements before the bankruptcy judge, but not those made at the
June 20 status conference:
The third-party plaintiff may demand judgment in the plaintiff’s
favor against the third-party defendant. In that event, the thirdparty defendant must defend under Rule 12 against the plaintiff’s
claim as well as the third-party plaintiff’s claim; and the action
proceeds as if the plaintiff had sued both the third-party defendant
and the third-party plaintiff.
Fed.R.Civ.P. 14(c)(2) (emphasis added).

Civil No. 09-2092, lead case (FAB)

6

hold any ruling in the consolidated actions in abeyance until the
conclusion of the LOL action or upon further notice.
II.

Jury Trial
The efficient handling of the liability and limitation issues

through

the

LOL

proceeding

implicates

plaintiffs’ right to a jury trial.

an

important

subject:

In an LOL proceeding, “a single

forum is provided for determining (1) whether the vessel and its
owner are liable at all; (2) whether the owner may in fact limit
liability to the value of the vessel and pending freight; (3) the
amount of just claims; and (4) how the fund should be distributed
to the claimants.”

Schoenbaum, 2 Admiralty & Mar. Law § 15-5.

“[T]he district court, sitting in admiralty without a jury,” makes
those determinations.
and citations omitted).

Dammers, 836 F.2d at 755 (quotation marks
“In exercising this equitable power, of

course, the admiralty court must necessarily deny the claimants
their right to pursue common law claims before a jury.

There is no

right to a jury in actions instituted in admiralty, and the
claimants are enjoined from pursuing common law actions in other
forums.”

Id. (internal citations omitted).

Courts have long struggled, however, with “a recurring and
inherent

conflict

in

admiralty

law:

the

apparent

exclusive

jurisdiction vested in admiralty courts by the Limitation of
Liability Act versus the presumption in favor of jury trials and
common law remedies embodied in the ‘saving to suitors’ clause of

Civil No. 09-2092, lead case (FAB)
28 U.S.C. § 1333 (1982).”

7

Dammers, 836 F.2d at 754 (also noting

that “[a]ttempts to resolve this tension have been troublesome for
the courts”) (internal quotations and citation omitted); see also
In re Great Lakes Dredge & Dock Co., 895 F. Supp. 604, 609
(S.D.N.Y. 1995) (“Courts have long wrestled with the conflict
between the saving to suitors clause, which reflects the value
placed on preserving a party’s right to sue in the forum and under
the procedure of her choice, and the deeply rooted tradition of
non-jury trials in admiralty cases.”).

Pursuant to the saving to

suitors clause, the exercise of admiralty jurisdiction does not
preclude suitors’ right to “all other remedies to which they are
otherwise entitled.”

28 U.S.C. § 1333.4

Of course, for suitors to

be entitled to a jury trial their non-admiralty claims must carry
an

independent

basis

of

federal

jurisdiction.

Luera

v.

M/V

Alberta, 635 F.3d 181, 188 (5th Cir. 2011) (“If a claim is pleaded
under diversity jurisdiction, the rules of civil procedure will

4

“As the leading treatise on admiralty law has explained, the so-called
‘saving to suitors’ clause means that:
[w]here the suit is in personam, it may be brought either in federal
court under the admiralty jurisdiction . . . or, under the saving
clause, in an appropriate non-maritime court, by ordinary civil
action . . . . The privilege of prosecuting maritime causes of
action in nonadmiralty courts, conferred by the ‘saving to suitors’
clause, has always been of particular importance in personal injury
and death actions in which the plaintiffs prefer to have the damages
assessed by a jury.”
In re Great Lakes, 895 F. Supp. at 608–09 (citing Grant Gilmore & Charles L.
Black, Jr., The Law of Admiralty, §§ 1-13, 6-62 (2d ed. 1975)).

Civil No. 09-2092, lead case (FAB)

8

apply, and the parties will be guaranteed, under the Seventh
Amendment, a right to have the claim tried by a jury.

If the claim

is pleaded under admiralty jurisdiction, however . . . there is no
right to a jury trial.”).

Citing In re Poling Transp. Corp., 776

F. Supp. 779 (S.D.N.Y. 1991), plaintiffs argue that the saving to
suitors clause entitles them to a jury in the LOL proceeding
because their suit arises on the “law side of the court,” not just
under

admiralty.

admiralty,

(See

supplemental,

Docket

Nos.

CAFA,

and

234

&

“related

1094)

(asserting

to”

bankruptcy

jurisdiction). Defendants dispute that subject matter jurisdiction
is grounded on anything other than admiralty, and therefore claim
that insofar as plaintiffs proceed in the LOL action, they are not
entitled to a jury.

(Docket Nos. 197, 262 & 1069.)

To the extent that the parties’ arguments reiterate those
contained in outstanding motions to dismiss in the consolidated
actions, the Court defers its ruling.

Evidence is necessary, for

example, for the Court to determine whether CAFA jurisdiction

Civil No. 09-2092, lead case (FAB)
exists.5

9

Once limited discovery is conducted as to that issue,6

5

Not enough evidence has been offered, for example, to determine the local
controversy exception to CAFA jurisdiction. Although the “significant relief”
requirement of the local controversy exception appears to be met — all class
members assert claims against the in-state defendants and seek the same damages
from all defendants, see, e.g., Coffey v. Freeport-McMoRan Copper & Gold Inc.,
623 F. Supp. 2d 1257, 1266-1267 (W.D. Okla. 2009), aff’d, 581 F.3d 1240 (10th
Cir. 2009) (finding that the in-state defendant was significant where all
putative
class
members
alleged
claims
against
it
and
sought
the
identical-injunctive and monetary-relief from all defendants) — nothing at this
time offers insight into whether CAPECO, Total, or Harbor Bunkering “played a
significant role in [the explosion], as opposed to a lesser role, or even a
minimal role” sufficient for the “significant basis” element.
See Evans v.
Walter Indus., 449 F.3d 1159, 1167 (11th Cir. 2006). All putative class members
do assert claims against the in-state defendants under a theory of joint
liability with all other defendants, but mere “joint liability[] does not convert
the conduct of others into conduct of [the in-state defendants] so as to also
satisfy the ‘significant basis’ requirement.” Evans, 449 F.3d at 1167 n.7.
6

“Federal courts have disagreed on the question whether a district court
may look only to the complaint in determining whether the criteria of [the local
controversy exception] have been satisfied.” Coleman v. Estes Express Lines,
Inc., 631 F.3d 1010, 1019 (9th Cir. 2011); see also Lefevre v. Connextions, Inc.,
2013 U.S. Dist. LEXIS 169932, 2013 WL 6241732 (N.D. Tex. 2013) (comparing
Coleman, 631 F.3d at 1015 (“We hold that CAFA’s language unambiguously directs
the district court to look only to the complaint in deciding whether the criteria
set forth in § 1332(d)(4)(A)(i)(II)(aa) and (bb) are satisfied.”) and Coffey v.
Freeport McMoran Copper & Gold, 581 F.3d 1240, 1245 (10th Cir. 2009) (rejecting
that “Congress intended district courts to wade into the factual swamp of
assessing the financial viability of a defendant as part of [subsection (aa)’s]
preliminary consideration”) with Evans, 449 F.3d at 1167-68 (considering
extrinsic evidence in addressing subsection (bb)); Alig v. Quicken Loans, Inc.,
902 F. Supp. 2d 789, 794 (N.D. W. Va. 2012); Green v. SuperShuttle Int’l., Inc.,
2010 U.S. Dist. LEXIS 7456, 2010 WL 419964, at *3 (D. Minn. Jan. 29, 2010); Kurth
v. Arcelormittal USA, Inc., 2009 U.S. Dist. LEXIS 99126, 2009 WL 3346588, at
*10-12 (N.D. Ind. Oct. 14, 2009); Casey v. Int’l. Paper Co., 2008 U.S. Dist.
LEXIS 1298, 2008 WL 8854569, at *6-7 (N.D. Fla. Jan. 7, 2008)).
Legislative history demonstrates, however, that
jurisdiction fact-finding — albeit limited — under CAFA:

Congress

envisioned

The Committee understands that in assessing the various criteria
established in all these new jurisdictional provisions, a federal
court may have to engage in some fact-finding, not unlike what is
necessitated by the existing jurisdictional statutes. The Committee
further understands that in some instances, limited discovery may be

Civil No. 09-2092, lead case (FAB)

10

the Court will visit all of the jurisdictional arguments at once,
and make a determination regarding the plaintiffs’ right to a jury
trial.
III. Conclusion
The next status conference in this case is scheduled for
November 7, 2014.

(Docket No. 1104.)

No later than October 24,

2014, the parties shall submit a proposed trial structure in which
they outline the exact issues to be resolved during the LOL
proceeding.

In

order

to

organize

and

manage

this

complex

necessary to make these determinations.
However, the Committee
cautions that these jurisdictional determinations should be made
largely on the basis of readily available information. Allowing
substantial, burdensome discovery on jurisdictional issues would be
contrary to the intent of these provisions to encourage the exercise
of federal jurisdiction over class actions.
Coleman, 631 F.3d at 1017 (citing S. Rep. No. 109-14, at 44 (2005)). When a
defendant bears the burden of proving an exception to CAFA jurisdiction,
moreover, a requirement that the defendant prove its argument solely based upon
the complaint would unjustly allow the plaintiff to frustrate analysis of the
exception’s factors by purposely drafting a complaint with vague, non-specific
allegations as to each defendant’s individual and relative “significance.”
Indeed, plaintiffs in this case claim that the local controversy exception fails
not because the complaints affirmatively demonstrate that no in-state defendant
is significant, but rather because:
plaintiffs make no distinction between the relief being sought
against the in-state defendants and the relief being sought against
the out-of-state defendant and foreign defendants. In fact, the
complaints seek the same relief against all the defendants,
suggesting that at this stage of the litigation no one defendant is
more significant than any other.
(Docket No. 234 at pp. 26–27.)
Accordingly, the Court finds that limited
discovery is needed to determine whether the in-state defendants’ conduct forms
a “significant basis” for the plaintiffs’ claims and consequently divests the
Court of CAFA jurisdiction.

Civil No. 09-2092, lead case (FAB)

11

litigation as efficiently as possible, the Court will subsequently
issue a series of pretrial orders.
IT IS SO ORDERED.
San Juan, Puerto Rico, July 14, 2014.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE