Firm Defeats Punitive Damage Claim, Leading to Favorable Settlement

When the Supreme Court confirmed the availability of punitive damages in a maritime tort case in Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008), it dramatically changed the landscape of maritime casualty litigation. After Exxon Shipping, every alleged error was not only negligent, it was egregious misconduct that entitled the claimant to punitive damages. The Firm helped its clients defeat just such a claim in Cox Operating , LLC v. ATINA M/V, 667 F. Supp. 3d 209 (E.D. La. 2023).

The M/T ATINA allided with Cox’s SP 57-B offshore platform in the Gulf of Mexico in the early morning hours of October 17, 2020, while attempting to re-anchor in the Southwest Pass Anchorage just after exiting the Mississippi River. The allision damaged the platform, but fortunately, no one was injured and there was no pollution.

Cox filed suit against the vessel and its owners in the U.S. District Court in New Orleans, claiming $225 million in actual damages, and also seeking more than $200 million in punitive damages. The owners and manager of the ATINA, the Firm’s clients, filed for limitation of liability, seeking to limit their liability to the value of the vessel plus pending freight, which was about $40 million.

After substantial discovery, the parties filed cross-motions for partial summary judgment on the punitive damages claim. Cox moved for a declaration that the owners’ conduct was so egregious that punitive damages were warranted. The owners argued that when considering all the evidence, no reasonable factfinder could find that the owners’ handling of the circumstances that lead to the allision met the high bar of outrageous conduct required for a punitive damage award.

At first glance, Cox’s punitive damage claim appeared to have some merit. Initial evidence revealed that the Captain of the ATINA had traveled from Turkey to Louisiana and immediately took command of the vessel, and that he supposedly had not slept for more than 50 hours when the allision occurred. Cox argued that putting a fatigued captain in command of a large tanker without giving him a chance to rest violated the Company’s Safety Management System (“SMS”) and was so egregious as to warrant punitive damages.

But the Firm was able to help the owners present the full story, which cast the circumstances that lead to the allision in a much different light. Further investigation revealed that the existing master had a very sudden, inexplicable emotional crisis while the ATINA was discharging cargo in the Mississippi River. In response, the Company immediately convened its Emergency Response Team (“ERT”) and dispatched a superintendent from its office in Turkey to Louisiana to investigate the situation. The superintendent recommended immediately hiring a new captain for the vessel, and the existing captain resigned, although he agreed to take the vessel out of the Mississippi River and anchor it in the Gulf of Mexico following the discharge of the cargo.

Within a day, the owners hired a qualified Turkish captain and immediately dispatched him to New Orleans to join the vessel and relieve the departing captain. The new captain arrived in Louisiana as the ATINA was proceeding downriver toward the Gulf. Then, although the existing captain had agreed to take the vessel to an anchorage in the Gulf, he suddenly changed his mind and demanded to get off the vessel before it left the river. As the new captain boarded the vessel near the mouth of the river, the departing captain left, leaving the newly arrived master to take the vessel into the Gulf and anchor it.

In addressing the cross-motions on the punitive damage claim, the court first noted that the bar for awarding punitive damages in a maritime case is extremely high, requiring a showing of misconduct so egregious and outrageous that it amounts to the civil equivalent of a crime. The court then observed that the owners in Turkey were presented with a command crisis for a vessel that was more than 6,000 miles from their office, for which they had to find and hire a qualified tanker captain and transport him to Louisiana on very short notice. And despite his long journey, the owners could not have known that the new captain would be unable to sleep on the long flight between Europe and the U.S. The court therefore concluded that the owners did the best they could in a very difficult situation, and whether their handling of the matter was in all respects perfect, it was certainly not so egregious and outrageous that it amounted to the civil equivalent of a crime.

The court therefore granted the vessel owners’ motion for partial summary judgment and dismissed Cox’s punitive damage claim. The dismissal of the punitive damage claim, among other things, allowed the Firm’s clients to settle the case on terms they considered very reasonable.