II. Case Law Developments
A. U.S. Circuit Courts
1. First Circuit
The First Circuit, in Curtis v. Galakatos, reversed the dismissal of a personal injury suit brought by two U.S. citizens seeking damages arising from a marine crash that occurred in Greece. The plaintiffs, married couple Cindy Curtis and Demetre Cambouris, were on a small boat, the M/V Marina when another boat, the M/V Galani, owned by another U.S. citizen Nicholas Galaktos, hit the Marina and sunk it. The crash occurred in the Paraos Antiparos Strait in Greece and resulted in serious personal injuries for Ms. Curtis, who was struck by the Galani’s hull and propellers. Nearby vessels rescued the passengers as the Marina sunk. Ms. Curtis was hospitalized in the ICU in Athens for a month, and subsequently in New York City when she returned home. More than a year after the accident, Curtis still required the use of a walker.
Following the crash, thirteen individuals provided sworn declarations and the driver of the Galani was arrested and charged with the provocation of a shipwreck and causing serious personal injury. Six months following the crash, Curtis and Cambouris filed suit against the Galani’s owner, Galaktos, in U.S. District Court. The suit made claims for maritime negligence, loss of consortium, and property damage. The defendant, Galakatos, argued that Greece, not Massachusetts, was the “most appropriate venue” and moved to dismiss the plaintiffs' complaint on forum non conveniens grounds. The district court agreed, and the plaintiffs appealed to the First Circuit.
The First Circuit reversed the district court’s dismissal, finding that the district court abused its discretion. Reviewing the standard, a plaintiff’s choice of forum is afforded heavy deference and should only be overridden when the chosen forum is “so inconvenient that transfer is needed to avoid serious unfairness.” The defendant bears the burden to demonstrate that the plaintiff’s forum choice meets this criteria. To prevail, the defendant must establish that (1) an “adequate alternative forum exists” and (2) the balance of public and private interest factors “strongly favor litigating the claim” in the alternative forum.
Although the First Circuit held that the public interest factors weighed somewhat in favor of dismissal—as the crash had limited nexus to Massachusetts and the court was unfamiliar with Greek law—the First Circuit disagreed with the district court’s analysis of the private factors. Specifically, the First Circuit held that Galakatos failed to meet his burden of showing that the witnesses to the crash were unavailable to testify in the United States. The First Circuit also held that the district court gave inadequate consideration to the convenience of the plaintiff’s witnesses, particularly Ms. Curtis herself. The First Circuit highlighted the physical and emotional burden on Ms. Curtis of returning to Greece. Based on the totality of the circumstances, the court ultimately concluded that while the fact that some of the physical evidence was located in Greece weighed in favor of litigating there, “this factor alone cannot weigh ‘strongly’ in favor of a Greek forum.”
2. Third Circuit
Nederland Shipping Corporation v. United States of America arose after the vessel M/V Nederland Reefer (“Nederland”) was held in a port in Delaware after the Coast Guard found evidence of illegal discharge of bilge water. Nederland subsequently entered into a contract with the U.S. government allowing for its release in exchange for a surety bond, which it delivered. However, Nederland sat detained for another two weeks. During the detainment, the ship's perishable cargo spoiled.
Nederland brought claims related to the detainment in the U.S. District Court for the District of Delaware. In response, the United States argued that the suit was barred for lack of subject matter jurisdiction. Specifically, the government argued that Nederland's breach of contract claim did not “invoke the Court’s admiralty jurisdiction” and that the statutory cause of action in question—the Act to Prevent Pollution from Ships (the “APPS”)—failed because “the APPS did not waive the government’s sovereign immunity.” While the District Court agreed, the Third Circuit reverse and remanded. On appeal, the Third Circuit found that Nederland was able to prove both that “Congress provided for subject matter jurisdiction in the district courts over the claims at issue and that Congress waived sovereign immunity.”
First, the Court determined that the contract between Nederland and the United States was maritime in nature and thus invoked the district court’s admiralty jurisdiction. Notably, the Court stated that the vessel does not need to be directly involved in the dispute for admiralty jurisdiction to attach. Instead, the Court focused on a two factor test asking first if the contract under review is maritime, and second if the contract deals with an inherently local dispute such that federal law should not apply. As the dispute involved the APPS, a federal law, the issue was not local. Moreover, the main purpose of the contract was to allow the Nederland to leave the Delaware port and pursue other maritime commerce. The Court emphasized that without the underlying agreement, the vessel could have sailed away “scot-free.” The Court also cited to other cases in which contracts “providing security in exchange for a vessel’s freedom to continue on its journey” were determined to fall within admiralty jurisdiction.
Second, the Court determined that the APPS explicitly waived the government’s sovereign immunity. The Court evaluated the plain text of the statute and concluded that “Congress provided ‘an explicit provision for money damages’ by allowing for ‘compensation for any loss’ caused by the Secretary [of Homeland Security]’s unreasonable detention of a ship.”
3. Fifth Circuit
In Tango Marine S.A. v. Elephant Grp. Ltd., the Fifth Circuit held that defendant Nigerian export businesses, Elephant Group Limited and Elephant Group, P.L.C. (collectively, “Elephant Group”), did not waive their defenses to personal jurisdiction under the Supplemental Rules for Admiralty or Maritime Claims, by making certain appearances in the litigation, but that personal jurisdiction nonetheless existed over the defendants.
In the underlying lawsuit, plaintiff Tango Marine, a Grecian shipping company, alleged that after Elephant Group chartered one of its vessels to deliver cargo to Nigeria in 2016, Nigerian port authorities prevented unloading of the cargo and subsequently detained the vessel for two and a half years. Tango alleged that the Elephant Group was at fault for failing to obtain required entry permissions for the cargo, and thus was liable for damages related to demurrage, supply, and maintenance charges. After Elephant Group made various filings at the early stages of the litigation but failed to file an answer, Tango moved for default judgment, which the court ordered. The district court denied Elephant’s motion to set aside the default, and Elephant appealed.
On Appeal, Elephant argued, in relevant part, that the district court had no personal jurisdiction because it was based in Nigeria; had no continuous or systematic contacts with the forum state, Texas; and did not waive its defense based on personal jurisdiction by making several filings in district court. The Fifth Circuit only considered the waiver issue. In doing so, the court considered whether each of Elephant Group’s filings constituted an unrestricted general appearance which could amount to waiver, or a restricted appearance in which its personal jurisdiction defense would be preserved. The court noted that while the Federal Rules of Civil Procedure had abolished the distinction between general and special appearances in litigation, the Supplemental Rules for Admiralty or Maritime Claims continued to recognize such a distinction.
The court considered Elephant’s various filings. With respect to the motion to set aside the default judgment, the court noted that the motion contained language restricting the purpose of Elephant’s appearance “to defend[ing] against the claim underlying the attachment or arrest,” which the court found inconsistent with waiver. Likewise, with respect to Elephant Group’s application for admission pro hac vice, motion for extension of time, and “Joint Notice of Appearance,” the court explained that while such filings did not constitute general appearances where the defendant is “seeking, taking, or agreeing to some step or proceeding in the cause beneficial to himself or detrimental to the plaintiff, other than one contesting only the jurisdiction.” Rather, the court determined that each filing was “best viewed as early maneuvering prior to any answer or motion,” none of which were sufficient to waive Elephants right to contest personal jurisdiction.
Despite holding that Elephant Group had not waived its personal jurisdiction defenses, the court nonetheless found that the district court had personal jurisdiction. The court noted that Rule B of the Supplemental Rules “establishes a quasi in rem proceeding” which “allows a district court to take jurisdiction over a defendant in an admiralty or maritime action by attaching property of the defendant,” so long as the attachment is based on plaintiff’s “good-faith allegation in the complaint that the res is present within the geographical jurisdiction of the court.” Observing that the district court approved writs of attachment against Elephant Group’s assets that Tango believed in “good faith” were within the district, the court found that the personal jurisdiction existed.
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Neptune Shipmanagement Services PTE v. Dahiya dates back to the fall of 1999, when Vinod Kumar Dahiya was working as an engine cadet for Singapore-based Neptune Shipmanagement Services ("Neptune"), a ship crewing agency. Dahiya joined the crew on the Eagle Austin, an oil tanker that sailed along the Gulf Coast. In late 1999, while the vessel was en route to Louisiana and in international waters, Dahiya was severely burned while operating the Eagle Austin's garbage incinerator. He was treated for second and third-degree burns, as well as an infection, in Baton Rouge, Louisiana. Upon recovery, he sued several parties in Louisiana state court including the owner of the Eagle Austin, its insurance company, the company to which Eagle Austin was chartered, and Neptune (collectively, the "Vessel Interests").
The employment contract that Dahiya signed did not mention any parties other than Neptune, and only Dahiya signed it. The contract contained an arbitration clause that stated all disputes were subject to arbitration in either Singapore or India and were governed by Indian law. Though Dahiya received an award from the Louisiana state court of over US$579,000, the Vessel Interests sought to compel arbitration under the contract, and after some litigation, were victorious. After several long delays, Dahiya obtained an Indian arbitral award in early 2020 of approximately US$130,000 against Neptune. The other Vessel Interests were not named as respondents—Dahiya believed he was not bound by the arbitration clause with respect to them since they didn't sign the employment contract.
Dahiya did not accept payment following the award, and instead sought to reinstate the US$579,000 award from the Louisiana court or obtain a new trial. The Vessel Interests removed to federal court, and filed a new lawsuit to confirm the Indian arbitration award and to enjoin Dahiya from pursuing further litigation. The federal district court agreed with the Vessel Interests and held that the Indian arbitration enjoined further litigation. The court also rejected Dahiya's argument that since the Vessel Interests other than Neptune were not signatories to the employment contract, they were beyond the scope of the arbitration clause.
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In Bonvillian Marine Service v. Dana Lebouef Pellegrin & Ors., the Fifth Circuit overturned its previous decision in In re Eckstein Marine Service L.L.C. and held that the limitations period set forth in Section 30511(a) of the Limitation of Liability Act (46 U.S.C. §§ 30501, et seq.) (“Act”) is a claim-processing rule that does not impact a district court’s subject matter jurisdiction. In arriving at its decision, the Fifth Circuit followed the U.S. Supreme Court’s decision in United States v. Kwai Fun Wong, which “fundamentally change[d]” the Fifth Circuit’s analysis in Eckstein (which had held that the time limitation under § 30511(a) forms a part of the court’s subject matter jurisdiction).
In this case, Bonvillian Marine’s vessel collided with the Miss Sadie Elizabeth, a crew boat, resulting in personal injuries to the plaintiff Pelligren, who subsequently sued Bonvillian in Louisiana state court. In response, Bonvillian filed a limitation action in U.S. district court, which, pursuant to § 30511(a), must be brought within six months after the claimant gives the vessel owner written notice of a claim. Baywater LLC, the owner of Miss Sadie Elizabeth, sought to dismiss Bonvillian’s limitation action on the grounds that it was asserted more than six months after Bonvillian received written notice of plaintiff’s action. The Eastern District of Louisiana held that (1) Bonvillian’s claim was untimely under § 30511(a); (2) the Fifth Circuit’s rule in Eckstein was the controlling decision; and (3) the court thereby lacked subject matter jurisdiction over Bonvillian’s limitation action.
On appeal, the Fifth Circuit analyzed the rule in Eckstein, which had categorized the Act’s limitations period under § 30511(a) as a jurisdictional statutory filing deadline. In arriving at its decision, the Fifth Circuit in Eckstein drew support from In Re FEMA Trailer Formaldehyde Products Liability Litigation. However, in Kwai Fun Wong, the U.S. Supreme Court held that the time limit under the Federal Torts Claims Act (“FTCA”) is non-jurisdictional and that a “clear statement rule” should be followed to interpret statutory and procedural rules. In other words, a court’s power can be limited only if Congress has clearly stated as such. The Supreme Court reiterated that claim-processing rules seek to promote the orderly process of litigation but do not deprive a court of authority to hear a case. In doing so, the Supreme Court directly abrogated FEMA Trailer, which had deemed the FTCA’s similar filing deadline jurisdictional in nature.
After considering the tension between Eckstein and Kwai Fun Wong, the Fifth Circuit held that the Supreme Court’s conclusion in Kwai Fun Wong fundamentally changed the analysis necessary to determine whether § 30511(a)’s requirement imposes a jurisdictional barrier or merely a claim-processing rule. According to the Fifth Circuit, because § 30511(a) speaks only to a claim’s timeliness, and not to the court’s powers, the Eckstein ruling runs afoul of Supreme Court precedent. Thus, because 46 U.S.C. § 30511(a) is a mere claim-processing rule, which has no bearing on the district court’s subject matter jurisdiction, the Fifth Circuit reversed the lower court’s dismissal based on lack of subject matter jurisdiction and remanded for further proceedings.
4. Eleventh Circuit
In Turner v. Costa Crociere S.P.A., the Eleventh Circuit upheld the district court’s dismissal of a putative class action against Costa Crociere S.P.A., an Italian cruise operator, and its American subsidiary, Costa Cruise Lines, Inc. The dispute arose out of an ill-fated cruise that began on March 5, 2020 and ended with several passengers contracting COVID-19 and being forced to quarantine and disembark. The plaintiff, Paul Turner, asserted claims based on general maritime law for negligence, negligent misrepresentation, negligent infliction of emotional distress, and intentional infliction of emotional distress, as well as a claim for misleading advertising under Florida State law. Turner, a resident of Wisconsin, brought the suit in Florida, arguing that fairness and U.S. public policy interests weighed against enforcing the forum selection clause in the cruise ticket contract (the "Contract"), which provided for an Italian forum and Italian law. The district court disagreed, and the Eleventh Circuit upheld the dismissal.
The Eleventh Circuit determined that Mr. Turner purchased a ticket for the cruise aboard the Costa Luminosa, departing from Fort Lauderdale, Florida, and in doing so agreed to the Contract. The Contract provided in relevant part: “[a]ny claim, controversy, dispute, suit, or matter of any kind whatsoever arising out of, concerned with, or incident to any Cruise or in connection with this Contract shall by instituted only in the courts of Genoa Italy…Italian law shall apply to any such proceedings.”
Mr. Turner’s dream trip turned nightmare after the Costa Luminosa passengers and crewmembers quickly began to show COVID-19 symptoms. An Italian couple disembarked in Puerto Rico and were hospitalized with COVID-19. The ship then continued across the Atlantic and the passengers were not informed or instructed to isolate. Several other passengers became ill and when the passengers finally disembarked in France on March 19, 2021, thirty-six of the seventy-five passengers, including Turner, tested positive for COVID-19.
The district court held that the forum selection clause required Turner to litigate in Italy, because the clause was enforceable, did not contravene public policy, and was not fundamentally unfair. The Eleventh Circuit reviewed the enforceability of the forum selection clause de novo, stating that such clauses “are presumptively valid and enforceable unless the plaintiff makes a strong showing that enforcement would be unfair or unreasonable under the circumstances.” Turner argued both unfairness and public policy exceptions applied; however, the court found that the inconvenience of the forum was “foreseeable at the time of contracting.” Thus, Turner could only meet this burden by showing “that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.” Turner argued that traveling to Italy would expose him and the other class members to significant risk of contracting COVID-19 again and put them under intense pressure from travel restrictions and risk of complicating lingering COVID-19 symptoms. The court rejected this argument because Turner failed to establish that he would need to travel to Italy to pursue his case. The Defendant, Costa provided an affidavit stating that Turner would not need to appear in person in Italy and if appearance was necessary, a special attorney or event could be arranged to take place in the U.S. As such, the forum selection clause was not found to be unfair by the Eleventh Circuit.
The Eleventh Circuit also rejected Turner’s argument that that the forum selection clause runs counter to U.S. public policy, relying on previous Eleventh Circuit and Supreme Court precedent establishing that “a routine cruise ship forum selection clause is a limitation on liability…even when it points to a forum that is inconvenient for the plaintiff.”
III. Other Notable Developments
A. Environmental and Regulatory Developments
1. New York Offshore Wind Leases
In January 2022, the Interior Department announced its largest ever offshore wind lease sale in the coastal waters outside New York City. The project is part of the Biden administration's plan to install 30 gigawatts of offshore wind energy in the U.S. by 2030. The effort to reduce carbon emissions in New York City is not without controversy, however, as groups from the fishing industry have filed suit against the Department's Bureau of Ocean Energy Management (BOEM), claiming that the agency failed to account for offshore wind's impacts on the industry. In an effort to avoid legal battles with the fishing industry and other maritime interests, BOEM reduced the amount of acreage for turbine installation by 70 percent from original plans. BOEM expects the project to result in 5.6 to 7 gigawatts of offshore wind capacity.
BOEM has also performed environmental assessments of floating wind developments in the waters off the coast of California and turbine installation in the Gulf of Mexico. The agency stated that it would need to do a more extensive environmental impact study before any projects in those areas move forward.
2. Washington State Ban on Dumping
Washington State can proceed with prohibiting commercial and recreational vessels from dumping their sewage into the Puget Sound. The EPA originally permitted Washington State to move forward with its prohibition, finding that adequate sewage removal and treatment facilities were available in the area for the use of commercial and recreational vessels. However, the American Waterways Operators (“AWO”) challenged that finding.
In the initial challenge, the D.C. District Court remanded to the EPA finding that the EPA needed to consider costs accompanying prohibition of dumping. The EPA determined that there were enough sewage facilities to support the area in question. The AWO then challenged this determination again, claiming that the EPA needed to specifically consider the costs associated with attaching tanks to hold sewage on vessels, otherwise known as “retrofitting” vessels.
However, this argument failed as U.S. District Judge Amit P. Mehta found the EPA needed only to assess relevant costs and the court had “left it to the agency to determine which costs are relevant to the reasonable-availability analysis.”
3. Shipping Company Fined for Illegal Dumping
In September 2021, a Cypriot shipping company, Diana Wilhelmson Management Limited (“DWM”), agreed to pay US$2 million in fines imposed by federal courts in Louisiana and Virginia for illegally dumping bilge waste into the Atlantic Ocean and presenting false records to the U.S. Coast Guard. During a voyage that lasted from mid-April 2020 until June 2020 and included visiting ports in New Orleans and Newport News, Virginia, DWM illegally discharged oily bilge water in the Atlantic Ocean and falsified their oil discharge records to authorities.
In February 2021, DWM was charged with committing felony violations of the Act to Prevent Pollution from Ships (“APPS”), the U.S. statute implementing the provisions of the MARPOL 73/78 (International Convention for the Prevention of Pollution from Ships). In May 2021, the company pled guilty to these charges before the district courts of Louisiana and Virginia. According to the DOJ, the crewmembers purposefully falsified records and failed to record the discharge of the bilge water in the ship’s oil record books. The ship’s chief engineer also pled guilty to making false statements to the U.S. Coast Guard.
On September 23, 2021, DWM was fined US$2 million and placed on a four-year probation with directions to implement a comprehensive environmental compliance plan (“ECP”). The implementation of this ECP will be monitored and audited regularly by a compliance manager designated by the company. The chief engineer was separately fined US$3,000 and placed on a two-year probation.
4. Coast Guard Guidance on Floating OCS Facility
On February 10, 2022, the U.S. Coast Guard issued updated Guidance Documents providing policies that will guide Officers in determining whether a Floating Outer Continental Shelf Facility qualifies as a vessel. This guidance was issued following recent court rulings related to Outer Continental Shelf activities. These updated policies specifically address: (1) which floating OCS facilities (“FOFs”) are vessels and which are non-vessels and (2) the extent to which non-vessel FOFs are subject to vessel-manning requirements.
Under I U.S.C. 3, the term “vessel” is defined broadly as capturing every form of watercraft and artificial contrivance used, or capable of being used, as a means of transportation on water. In Lozman v. City of Riviera Beach, Fla., 568 U.S. 115 (2013), the Supreme Court held that a vessel under 1 U.S.C. 3 is defined by both a structure’s physical characteristics and activities such that a reasonable observer would “conclude that the structure was designed to a practical degree to carry ‘people or things’ on the water.” The structure’s capability to be used as a means of transport over water is key to this analysis. Therefore, in keeping with Lozman, “to determine if an FOF is a vessel or a non-vessel, OCMIs [Officers in Charge, Marine Inspection] must decide whether a particular FOF was designed to a practical degree for carrying people or things over the water.” Such a determination under the new guidance will be conducted on a case-by-case basis.
The policy letter provides the following factors to assist OCMIs when evaluating FOFs: (1) whether the FOF has a mode of self-propulsion, steering mechanisms, navigation equipment, dynamic positioning equipment, or operating station; (2) whether the FOF has a traditional hull; (3) whether the FOF was meant to be towed into place and ``securely and substantially'' moored to the seabed for a long period of time; and (4) whether it takes substantial monetary investment and a long lead-time to move the FOF from its anchored position or is capable of emergency disconnect allowing the FOF to float free or be underway.
The list is neither exhaustive, nor dispositive; rather the factors are to be considered holistically. If a FOF is not determined to be a vessel, the Coast Guard will no longer issue a Certificate of Inspection (USG Form 841) to such FOFs. Instead a Floating OCS Facility Determination Letter and Floating OCS Facility Certificate of Inspection will be issued by OCMIs.
B. International Developments
1. Shipowner sues Lloyd's Insurance
As the COVID-19 pandemic raged on, one ship sat idle and its owners are now suing for damages. EBE NV, owners of the El Grasso, sued Lloyd’s Insurance this past August, claiming that the insurance company failed to pay out for damages incurred when the El Grasso missed out on scheduled repairs while quarantined due to the pandemic.
EBE NV asserted that Lloyd’s owes it US$471,262 for lost earnings, which accounts for 12 days the ship sat in the Philippines quarantined, as well as 16 days the ship had to undergo repairs. Notably, the ship was set to undergo repairs in February 2020 but those repairs did not move forward as COVID-19 took the world by storm. Instead, the repairs were pushed to July 2020, at a time when the ship was scheduled to be operating. EBE NV stated that the insurance policy in question explicitly covers quarantine; Llyod’s disagreed.
The claim comes at a time when the insurance sector in general has “seen a surge in claims linked to the pandemic.” Notably, insurers have paid out roughly US$778 million in full settlements to policyholders in the period from September 20, 2020 to July 5, 2021.
2. Big Payout in Pirate Ransom Case
On December 1, 2021, the Court of Appeal of England and Wales unanimously ruled that commodity trading company Gunvor International is liable, under the principle of “general average,” for part of a US$7.7 million ransom paid by the owners of the M/V Polar in securing the ship’s release from Somali pirates. The concept of “general average” is a longstanding principle of maritime law whereby all stakeholders in a voyage must share any losses incurred to save a jeopardized ship or its crew. As the owner of the cargo being carried by the M/V Polar at the time, Gunvor International would typically be subject to claims for general average contributions by the owners of the vessel, Herculito Maritime.
Gunvor International argued it should not be liable for the ransom payout because Herculito Maritime had separately taken out additional insurance policies that covered the risk, including a kidnap and ransom policy and a war risks policy. After an arbitral tribunal ruled in Gunvor International’s favor, Herculito Maritime sought to set aside the award in the Commercial Court under the English Arbitration Act of 1996. The court sided with Herculito Maritime and Gunvor then appealed.
In affirming the Commercial Court’s decision, the Court of Appeal found that no contractual agreement in any of the bills of lading held by Gunvor International prevented Herculito Maritime from seeking contribution under general average. The court further emphasized that because the risk of piracy was foreseen, Gunvor had the straightforward opportunity to include a provision that excluded it from liability. Gunvor failed to do so, and thus remained bound by the default principle of general average.
C. Other Developments
1. Crystal Cruises Shutters U.S. Offices
Crystal Cruises has accumulated US$4.6 million in unpaid fuel bills, and Peninsula Petroleum wants to get paid. The company sued Crystal Cruises for breach of contract, claiming over US$2.1 million in damages. After an arrest order was issued in late January in federal U.S. district court, U.S. Marshals seized two of Crystal Cruises' ships, the Crystal Symphony and the Crystal Serenity, in the Bahamas. A third ship, the Crystal Endeavor, was seized in Argentina. At the time of seizure and following the court’s order, the ships were heading for safety in international waters after abandoning the scheduled voyage and dumping all passengers to be ferried from the Bahamas to Fort Lauderdale, Florida. The passengers of the Crystal Serenity were kept on board a day longer than intended, and one of the passengers posted on Facebook that he was "abducted by luxurious pirates".
As a result of the seizure, Crystal Cruises shut down its U.S. operations and laid off all of its U.S. employees. The company is a Miami-based subsidiary of Genting Hong Kong, which has filed for bankruptcy. The cruise industry generally has faced numerous obstacles since the start of the pandemic and specifically following the surge of the omicron variant in late 2021/early 2022.
2. Lawyer Suspended For Concealing Shipwreck Gold
In January 2022, the Virginia Supreme Court rejected an appeal brought by Richard Thomas Robol, an attorney whose license to practice was suspended after he failed to disclose his client's inventories of gold recovered from an 1857 shipwreck. From the early 1980s through 2014, Robol represented a treasure hunter named Thomas Thompson and various entities controlled by Thompson, in connection with their search for and salvage of a sunken ship, the SS Central America. The SS Central America sank in 1857 during a hurricane off the coast of South Carolina. Hundreds of passengers and millions of dollars in gold the ship was carrying were lost at sea.
When Thompson located the ship in 1988 using a submersible robot, he removed millions of dollars' worth of gold coins, ingots and bars from the wreckage. The treasure's discovery spawned numerous lawsuits, in which Robol was heavily involved. In a 2014 case before an Ohio federal court, Robol was sanctioned and ordered to pay US$224,850 after a judge found that he committed a fraud upon the court by failing to turn over a complete inventory of the recovered treasure. Robol appealed the Ohio district court's rulings to the Sixth Circuit, which affirmed the imposition of sanctions.
In February 2020, a subcommittee of the Virginia State Bar certified multiple charges of misconduct against Robol, concluding that he had violated both Ohio and Virginia rules of professional conduct based on misrepresentations he made to the Ohio court and to the Sixth Circuit regarding the alleged absence of certain inventories listing the recovered gold coins and other treasure. After a two-day hearing in September 2020, the Virginia Bar's disciplinary board imposed a four-year suspension on Robol. Robol argued that he delayed turning over one inventory at issue because the accounting firm KPMG, which was handling documents for the Ohio case at the court's order, would not consent to be bound by a confidentiality order imposed by the Virginia district court, where that inventory was used in another case.
The Virginia Supreme Court rejected Robol’s contention that he was merely attempting to comply with that order and affirmed the disciplinary board’s holding that Robol (1) obstructed access to the inventory and (2) knowingly disobeyed the Ohio court's order to turn it over. The Court also rejected Robol’s argument that the disciplinary board lacked authority to discipline him because he was an associate member of the Virginia Bar, and not actively providing legal services in Virginia. As the court stated, "[f]ollowing Robol's argument to its conclusion reveals its absurdity. Despite findings by the Ohio district court and the Sixth Circuit that Robol engaged in bad faith and fraudulent conduct, the Bar would be without any power to regulate him because he was not an active member of the Bar." Robol would then be able to reactivate his membership and escape accountability for his actions while an associate member.
Robol is not the only culpable individual involved in the salvage of the SS Central America and her treasure. In 2015, Robol’s long-time client, Thomas Thompson, was arrested for contempt of court for refusing to disclose the location of 500 missing gold coins and is currently being held in a federal prison.
3. Felicity Ace Luxury Car Fire
On February 16, 2022, the Felicity Ace, a 650-foot-long specialist cargo ship carrying more than 4,000 Volkswagen AG luxury cars, including Porsche, Audi, Bentley and Lamborghini models, caught fire near the Azores in the Atlantic Ocean. The ship was travelling from Emden, Germany, where Volkswagen has a factory, to Davisville, Rhode Island. The vessel’s 22 crew members were safely evacuated, but the fire continued to burn for nearly a week.
Because there were no evident oil leaks when firefighting tugboats arrived from southern Spain and the Netherlands to assist in extinguishing the blaze, it was not apparent what was keeping the fire consistent for so long. However, the firefighters soon realized that the fire was flikely related to the lithium-ion batteries in various electric vehicles on board, and was being fueled by the liquid electrolytes used in the batteries and combustible material in the vehicles. Because extinguishing lithium-ion battery fires can take thousands of gallons of water—much more than what it would take to douse a typical combustion engine fire—it made the endeavor significantly more precarious and time-consuming. Ultimately, those efforts proved futile. On March 1, 2022, as the vessel was being towed 250 miles off the coast of the Azores, rough waters eventually caused the ship to sink, along with all of its luxury vehicles.
For an industry already reeling from global supply chain disruptions and reduced customer confidence, this incident represents another hurdle in restoring customer trust. Initial estimates put the total loss of goods close to US $438 million, with losses of at least US$155 million for Volkswagen, which owns Porsche, Audi, Bentley and Lamborghini.
Charles Patrizia is a partner at Paul Hastings LLP and Chair of the Maritime Committee. The Committee gratefully acknowledges the work of Adam Weiss, Casey Miller, James Brown, Paige Rinderer and Mary Rogers of Paul Hastings LLP, in the preparation of this report.
