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No. 09-222

 

In the Supreme Court of the United States

BECKY MATHENY, INDIVIDUALLY AND AS SURVIVING SPOUSE OF RONALD MATHENY, DECEASED, ET AL., PETITIONERS

v.

TENNESSEE VALLEY AUTHORITY

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

BRIEF FOR THE TENNESSEE VALLEY AUTHORITY IN OPPOSITION

ELENA KAGAN
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

MAUREEN H. DUNN
General Counsel
EDWIN W. SMALL
Assistant General Counsel
THOMAS A. ROBINS
Senior Attorney
Tennessee Valley Authority
Knoxville, Tenn. 37902

QUESTION PRESENTED

Whether the court of appeals erred in holding that the Limitation of Liability Act, 46 U.S.C. 30505, applies to a claim seeking damages from the Tennessee Valley Authority (TVA) for an accident caused by a momentary navigational error of a boat captain employed by the TVA.

In the Supreme Court of the United States

No. 09-222

BECKY MATHENY, INDIVIDUALLY AND AS SURVIVING SPOUSE OF RONALD MATHENY, DECEASED, ET AL., PETITIONERS

v.

TENNESSEE VALLEY AUTHORITY

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

BRIEF FOR THE TENNESSEE VALLEY AUTHORITY IN OPPOSITION

 

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-22) is reported at 557 F.3d 311. The district court opinions finding liability and damages (Pet. App. 23-97) and re vising the damages findings (Pet. App. 98-104) are re ported at 523 F. Supp. 2d 697 and 247 F.R.D. 541.

JURISDICTION

The judgment of the court of appeals was entered on February 19, 2009. A petition for rehearing was denied on May 22, 2009 (Pet. App. 105-106). The petition for a writ of certiorari was filed on August 20, 2009. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. a. The Tennessee Valley Authority (TVA) oper ates a coal-fired electric power generating plant on the south bank of the Cumberland River in northwest Ten nessee. As part of its operations at the plant, TVA owns tugboats that are used to move coal barges along a short stretch of river to be unloaded at the plant and then re turned empty for pickup by towing companies. Pet. App. 3.

b. At around 5:30 p.m. on June 5, 2005, petitioners Thomas Lawrence and Ronald Matheny went fishing in Lawrence's 14-foot boat in the portion of the river tra versed by TVA tug boats. Later that evening, a boat captain employed by TVA, Captain Ralls, and his two person crew started their shift on one of the TVA tug boats, the Patricia H. At approximately 7:50 p.m., when the Patricia H traveled downstream to obtain a loaded barge, its wake swamped Lawrence's boat. Both Law rence and Matheny were thrown overboard. The crew of the Patricia H was able to rescue Lawrence, but Matheny drowned. Pet. App. 3-4.

2. a. Petitioners filed this admiralty action in the United States District Court for the Middle District of Tennessee, seeking damages from TVA for Matheny's death and Lawrence's injuries. TVA defended the ac tion by asserting, inter alia, the protections of the Limi tation of Liability Act (Limitation Act), 46 U.S.C. 30505. That statute, which Congress recodified without sub stantive amendment in 2006, see H.R. Rep. No. 170, 109th Cong., 1st Sess. 2 (2005) provides that "the liabil ity of the owner of a vessel" for "any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner" shall "not exceed the value of the vessel and pending freight." 46 U.S.C. 30505. The Limitation Act thus al ters the normal rules of vicarious liability and "allows a vessel owner to limit liability for damage or injury, occa sioned without the owner's privity or knowledge, to the value of the vessel or the owner's interest in the vessel." Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446 (2001). On the basis of the Limitation Act, TVA conten ded that, even if it were held liable for the accident, its liability could not exceed $420,000, the stipulated value of the Patricia H. Pet. App. 3.

b. Following a four-day bench trial, the district court awarded petitioners damages of approximately $3.5 mil lion. The court found that the accident was caused by the negligence of Captain Ralls, and in particular by his operation of the Patricia H at an excessive speed when passing Lawrence's fishing boat. Ralls's conduct, the court concluded, violated two Inland Navigational Rules, which are statutory "Rules of the Road" that apply to all vessels upon the inland waters of the United States. 33 U.S.C. 2001; Pet. App. 45; see id. at 6 (finding that Cap tain Ralls violated Inland Rule 2 (Responsibility), which states that "due regard shall be had to all dangers of navigation and collision," and Inland Rule 6 (Safe speed), stating that "[e]very vessel shall at all times pro ceed at a safe speed so that she can take proper and ef fective action to avoid collision and be stopped within a distance appropriate to the prevailing circumstances and conditions."). 33 U.S.C. 2002(b), 2006.

The district court also held that TVA was not entitled to the protections of the Limitation Act. The court found that "Captain Ralls had proved himself, up to the time of the accident, to be a perfectly competent cap tain," Pet. App. 75; that he had been tested on the statu tory "Rules of the Road" under the Inland Navigational Rules, "specifically regarding passing, crossing situa tions, risk of collision, safety, and good seamanship"; and that he had received training in collision avoidance, which Captain Ralls understood to include the wake of his boat hitting another, id. at 45. Despite these find ings, the court reasoned that the TVA had failed to prove that it lacked "privity or knowledge of the risks posed by tugboats being operated too fast, creating po tentially dangerous wakes for nearby fishing boats." Id. at 75. "[A]lthough TVA was aware of [such] risk," the court explained, "it did not take any steps to reduce" it by "informing its tugboat captains not to operate at a little to no wake speed when in the presence of fishing boats." Id. at 76; see id. at 82-86.

3. The court of appeals reversed the district court's ruling on the Limitation Act. The court concluded that, by focusing on TVA's "knowledge of the risks posed by Captain Ralls's negligent operation of the Patricia H at an excessive speed," the district court had incorrectly framed the inquiry. Pet. App. 9. "[T]he Limitation of Liability Act speaks in terms of acts, not risks," the court of appeals explained, and therefore the Act's protections do not disappear simply "because TVA was aware of the fact that if a tugboat operates at an exces sive speed it may create a dangerous wake for nearby recreational boats." Id. at 10. The court reasoned that the dispositive question was instead whether TVA had "privity or knowledge" of "the specific negligent acts or unseaworthy conditions that actually caused or contrib uted to the accident." Ibid. (quoting Suzuki of Orange Park, Inc. v. Shubert, 86 F.3d 1060, 1064 (11th Cir. 1996).

The court concluded that "[t]here is no evidence in this record to justify imputing knowledge to TVA about the specific conditions that led to" the swamping of Law rence's boat. Pet. App. 10. The court noted that "it is well-settled that under the Limitation of Liability Act, 'an owner may rely on the navigational expertise of a competent ship's master.'" Id. at 11 (quoting Gateway Tugs, Inc. v. American Commercial Lines, (In re Kristie Leigh Enters., Inc.), 72 F.3d 479, 482 (5th Cir. 1996). Citing the district court's findings about Captain Ralls's experience, unblemished record, and knowledge of navigational rules, the court concluded that that prin ciple controlled here. Id. at 11-12. The court thus held that "TVA was entitled to rely on a competent captain's navigational knowledge and cannot be deemed negligent because it failed to inform Captain Ralls or any of its other captains not to be negligent by creating excessive wakes near recreational boats." Ibid.; see id. at 19-21 (rejecting district court's conclusion that the Limitation Act did not apply to petitioners' "negligent supervision" theory of liability).

ARGUMENT

The decision of the court of appeals is correct and does not conflict with any decision of this Court or of another court of appeals. Further review is not war ranted.

1. The court of appeals correctly concluded that the Limitation Act applies to petitioners' claims. As the court of appeals recognized, it is "well-settled" that a ship owner is entitled to the protections of the Limita tion Act when it relies upon the navigational competence of a skilled master and lacks actual knowledge of the specific negligent acts that resulted in the accident. Pet. App. 11. The district court found that Captain Ralls was a skilled and experienced tugboat operator, and there was no evidence or basis for finding that any managing agent of the TVA knew that, at the time of the accident, Captain Ralls was negligently operating the boat at ex cessive speeds. The decision below therefore represents a straightforward application of the Limitation Act. That factbound ruling does not merit this Court's atten tion.

2. There is no conflict among the courts of appeals on the Limitation Act's scope or meaning. Petitioners contend (Pet. 15-20) that the Fifth and Eighth Circuits would hold the Limitation Act inapplicable when the owner "was in a position to exert control" over the ves sel, even if the evidence shows that the owner had no contemporaneous privity or knowledge of a momentary navigational error by a competent master. Pet. 16. That argument lacks merit. The law of the Fifth and Eighth Circuits is clear and consistent with the law applied in the decision below: under the Limitation Act, a vessel owner may rely on the navigational expertise of a com petent captain when the owner is not on notice of any pattern of prior navigational errors. See Omega Pro tein, Inc. v. Samson Contour Energy E & P LLC (In re Omega Protein, Inc.), 548 F.3d 361, 371 (5th Cir. 2008) (finding the Limitation Act applicable and holding that "mere 'mistakes of navigation' by an otherwise compe tent crew do not bar limitation of liability") (quoting Brister v. A.W.I., Inc., 946 F.2d 350, 356 (5th Cir. 1991)); In re Kristie Leigh Enters., Inc., 72 F.3d 479 at 482 ("[T]he well established rule [is] that, for limitation pur poses, an owner may rely on the navigational expertise of a competent ship's master."); In re American Milling Co., 409 F.3d 1005, 1019 (8th Cir. 2005) ("[S]pontaneous or momentary errors by competent pilots cannot be im puted to owners."); Lawrenson v. Belterra Resort Indi ana, LLC (In re MO Barge Lines, Inc.), 360 F.3d 885, 891 (8th Cir. 2004) (holding the Limitation Act applica ble because "[t]he record supports the district court's finding that Missouri Barge hired a licensed, competent operator to navigate its vessel on the Mississippi River * * * [and the plaintiff] produced no evidence showing that Missouri Barge could be charged with notice that [the captain] would operate the vessel negligently."). Contrary to petitioners' assertion, in circumstances where the owner lacks actual contemporaneous knowl edge of a momentary navigational error and the vessel is being piloted by a competent master, the government is aware of no decision interpreting the Limitation Act to require a separate inquiry into whether the owner potentially could have exerted "control" over the ship and denying limitation on that basis.

Petitioner's assertion of a circuit conflict is based on footnotes in two decisions, Continental Oil Co. v. Bo nanza Corp., 706 F.2d 1365 (5th Cir. 1983), and In re MO Barge Lines, supra. But the statements in those footnotes do not purport to establish "requirement[s]" for application of the Limitation Act. Pet. 16. Rather, in each passage the court simply cited a treatise on ad miralty law in observing that one of the rationales for limiting liability in negligent navigation situations is that, "when the owner is so far removed from the vessel that he can exert no control over the master's actions, he should not be taxed with the master's negligence." Con tinental Oil, 706 F.2d at 1377 n.15; see In re MO Barge Lines, 360 F.3d at 891 n.5. Neither court applied that observation as a controlling legal standard. To the con trary, both courts proceeded under the same well estab lished rule underlying the decision below: "[t]he owner's duty is essentially satisfied when he properly equips the vessel and selects competent crew to operate it." Id. at 891; see Continental Oil, 706 F.3d at 1377 n.15 (recog nizing that "no court has previously denied a corporate shipowner limitation of liability for a master's naviga tional errors at sea when the owner has exercised rea sonable care in selecting the master"). Based on that rule, the Eighth Circuit held the Limitation Act applica ble. In re MO Barge Lines, 360 F.3d at 891. And al though the Fifth Circuit held the Act inapplicable in Continental Oil, its decision rested on the fact that the negligent master was a managing agent of Bonanza, so that the master's "privity and knowledge was that of the corporation." Continental Oil, 706 F.2d at 1377. (Peti tioners disavow any contention that Captain Ralls was a managing agent of TVA for purposes of limitation analysis. Pet. 18.) The Fifth Circuit has more recently confirmed its adherence to the "well established rule that, for limitation purposes, an owner may rely on the navigational expertise of a competent ship's master." In re Kristie Leigh Enters., Inc., 72 F.3d at 482.1

2. There is no merit to petitioners' contention (Pet. 22) that, in rejecting the district court's "negligent supervision" basis for liability, the court of appeals con travened this Court's holding in American Car & Foun dry Co. v. Brassert, 289 U.S. 261 (1933) (American Car). The decision in American Car is not implicated here. That case involved an effort by the manufacturer of a vessel to limit its liability for injuries sustained when the vessel exploded while being operated by the vessel's purchaser. The manufacturer had retained title of the vessel solely for the purpose of securing the unpaid por tion of the vessel's purchase price. The manufacturer had no control over the vessel's operation, did not man or operate her, and had no right to do so; indeed, for all purposes of use in navigation, the vessel belonged to the purchaser. Id. at 264. In rejecting the manufacturer's effort to invoke the Limitation Act, this Court held that the statute protects only ship owners qua ship owners; the liability in American Car "arose, not because [the defendant] reserved title, * * * but because it was manufacturer and vendor." Id. at 265. Here, there is no dispute that the asserted liability of TVA arises in its capacity as the owner of the tugboat. The holding in American Car therefore does not apply.

The decision below correctly held that petitioners' allegation of "negligent supervision" did not render the Limitation Act inapplicable. As other courts of appeals (including the Fifth and Eighth Circuits) have held, a claimant cannot avoid limitation in a case such as this, involving a momentary navigational error, by alleg ing that the owner negligently supervised the compe tent master. See, e.g., In re Kristie Leigh Enters., Inc., 72 F.3d at 481-482 (reversing a district court decision holding that the owner "could not limit [liability] be cause it * * * did not provide better training and su pervision," and concluding that because the record did not support a finding that the captain was incompetent, or that the owner was on notice of prior navigational errors by the captain indicating that the captain needed additional training or instruction, "the record presents no justification for departing from the well established rule that, for limitation purposes, an owner may rely on the navigational expertise of a competent ship's mas ter."); In re American Milling Co., 409 F.3d at 1020 (af firming limitation and rejecting contentions that tow boat owner "failed to adequately train Captain Johnson and failed to take adequate steps to educate Captain Johnson concerning currents in the river"); The G.K. Wentworth, 67 F.2d 965, 966 (9th Cir. 1933) (finding lim itation because the owner "had the right to rely upon the fact that this competent master would observe the rules of navigation, which he well knew").

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ELENA KAGAN
Solicitor General

MAUREEN H. DUNN
General Counsel
EDWIN W. SMALL
Assistant General Counsel
THOMAS A. ROBINS
Senior Attorney
Tennessee Valley Authority

OCTOBER 2009

1 Petitioners also cite the Fifth Circuit's decision in Hellenic Inc. v. Bridgeline Gas Distrib. (In re Hellenic), 252 F.3d 391 (2001), in support of their position (Pet. 18), but it, too, is similarly inapposite. In that case, the corporate owner of a spud barge sought limitation after its "spudded down" barge was pushed by wind and seas into a gas pipeline, causing the pipeline to rupture. In re Hellenic, 252 F.3d at 393. The district court denied limitation because it found the construction super intendent, who had made the alleged negligent decisions to leave the barge unmanned and anchored only by its studs, to be a managing ag ent of the owner. On appeal, the Fifth Circuit held that the construction

 

superintendent could not be considered a managing agent for limitation purposes and remanded for further proceedings.