Pacific Maritime Magazine - Marine Business for the Operations Sector

Investigations and Litigation Follow SS El Faro Tragedy

 


Two weeks after the tragic loss of the SS El Faro and her crew of thirty-three during Hurricane Joaquin, attorneys representing families of the crew began filing claims against the vessel’s owner and charterer, both part of the Saltchuk/TOTE family. In response, TOTE initiated a federal Limitation of Liability Act action. The media response to TOTE’s decision to file for limitation was immediate, overwhelmingly negative, and generally ill-informed. Two writers even sought to blame the tragedy on the Jones Act’s cabotage provisions. While the loss is indeed tragic, some of the post-casualty commentary calls for a more measured response.

The Foundering and Search for Survivors

On her final voyage from Jacksonville, Florida to San Juan, Puerto Rico, El Faro was carrying 391 containers, 294 trailers and cars, and a crew of 33 (28 Americans and 5 Polish nationals, who were aboard as riding crew). According to National Transportation Safety Board (NTSB), the vessel departed Jacksonville at about 2015 (all times EDT) on September 29, 2015. Her track to San Juan would take her east of the Bahamas, where weather services were monitoring Tropical Storm Joaquin. At the time of El Faro’s departure, the most recent National Hurricane Center (NHC) forecast (issued at 1700 on September 29), reported that Tropical Storm Joaquin was generating winds of an estimated 55 knots, and would build to a maximum of 80 knots over the next 72 hours. Six hours later (2300) – and three hours after El Faro departed – the NHC updated its prediction, forecasting that Joaquin would build to hurricane strength within 12 hours and produce maximum wind speeds of 90 knots within 72 hours.

At 1312 on September 30, El Faro’s master notified the company safety official that he intended to set a course that would take the ship south of the predicted path of Joaquin, passing about 65 miles from the storm’s center. However, news of trouble came shortly after 0700 the next day, October 1, when the master reported to the company’s emergency call center that the vessel had lost its main propulsion unit and the engineers had been unable to restart it. One of the ship’s scuttles had come open, allowing water to enter cargo hold number 3, but the scuttle had been secured and the water was being pumped out of the hold. The master reported seas at the time were running 10 to 12 feet. That was the last contact with anyone aboard the vessel.

At 0730 on October 1, the Coast Guard’s Atlantic Area Command Center received electronic distress signals from three separate El Faro sources: the Ship’s Security Alert System (SSAS), the Inmarsat-C Alert, and an Emergency Position Indicating Beacon (EPIRB). The devices indicated the vessel’s position was approximately 36 nautical miles northeast of Acklins and Crooked Islands, Bahamas. A week-long air and surface vessel search for the vessel and her crew by the Coast Guard, with the assistance of the Air Force, Air National Guard, and Navy, and covering more than 183,000 square nautical miles, discovered only debris, a damaged lifeboat, two damaged life rafts, and a single body in a survival suit. El Faro was formally declared sunk on October 5 and the search for survivors was called off at sunset on October 7. That same day, President Obama issued a statement, pledging the full support of his government in the coming investigations.

Wreck Located

The NTSB contracted with Naval Seas Systems Command to locate the sunken ship, assist in the sea floor documentation of the wreckage, and recover the voyage data recorder. On October 31, using side-scan sonar equipment, the Navy tug USNS Apache located what was believed to be the El Faro wreckage roughly 35 miles northeast of Crooked Island, Bahamas, in 15,000 feet of water. Apache deployed an embarked CURV 21 deep ocean remotely operated vehicle (ROV) to confirm the identity of the wreck. Images from the ROV revealed that the wreck was indeed El Faro and that the vessel was sitting upright with her stern buried in 30 feet of sediment. The vessel’s navigation bridge and the deck below had separated from the rest of the vessel. On November 11, the Navy search team found the missing bridge deck—one mile from the main wreckage, suggesting that a massive structural failure is one possible explanation for the abrupt sinking before the crew would transmit a Mayday. Despite subsequent search efforts, the team was unable to locate the vessel’s voyage data recorder (VDR). On November 16, the NTSB declared that the Navy had completed its survey of the wreck site and terminated its search for the VDR.

The Vessel and her Owner

El Faro (formerly, the Northern Lights) was a United States-flag, 790-foot, 31,515 gross ton, steam turbine powered cargo ship, built in 1975 by Sun Shipbuilding and Drydock Company. She operated as a combination roll-on/roll-off (loaded through side doors) and lift-on/lift-off container carrier. She was owned by Sea Star Lines (which does business as TOTE Maritime Puerto Rico) and operated under demise charter to TOTE Services. TOTE, a member of the Saltchuk Resources family, operates Jones Act liner services between the continental United States and Alaska and Puerto Rico. The company typically employs two vessels on the weekly service between Jacksonville and Puerto Rico.

Initial findings by the NTSB indicated that El Faro met all applicable rules and regulations for a vessel of her class. The vessel was last surveyed by the American Bureau of Shipping (ABS) on February 13, 2015, and inspected by the US Coast Guard on March 6, 2015. In June of 2015, an ABS surveyor found the vessel’s main, auxiliary and emergency systems to be in satisfactory condition. Longshore workers confirmed that the El Faro’s cargo had been secured in accordance with the lashing plan and the vessel’s terminal manager confirmed that the vessel met stability criteria when it departed Jacksonville. The NTSB report indicated that work had been done on one of the vessel’s two boilers in September and that work was planned on both boilers during a drydocking scheduled to begin on November 6.

US Coast Guard and NTSB Investigations

The Coast Guard declared the El Faro sinking with multiple loss of life a major marine casualty and convened a Marine Board of Investigation, the most formal marine casualty investigation conducted by the service. In addition, the National Transportation Safety Board began an investigation on October 6, and issued a Preliminary Report on October 15. Like the Coast Guard, the NTSB conducts casualty investigations not to fix civil liability, but rather to determine the causes of the casualty and recommend appropriate remedial measures. That said, evidence developed in the course of Coast Guard and NTSB investigations is often relied on in preparing for post-casualty litigation.

Media Reaction

Much of the media reaction to litigation spawned by the sinking relied on information provided by attorneys representing or seeking to represent claimants. One attorney criticized TOTE for filing for limitation “too soon,” ignoring the fact that four claims totaling in excess of $100 million had already been filed against the company. Another convened a press conference where he declared “war” on TOTE, which he characterized as “greedy people,” who put profit before safety. Had the attorney done his research, he might have discovered that, to the contrary, the parent company, Saltchuk, was recognized last year as the one of world’s most ethical transportation and logistics companies, that TOTE had been named by Lloyd’s List as oceangoing operator of the year for 2015, and that TOTE’s president and CEO was recently honored by the White House for his “exemplary leadership” and environmental responsibility.

In fact, TOTE’s commitment to modern and environmentally responsible shipping is setting the standard for US flag operations. In 2012, TOTE announced plans to convert its maritime fleet to operate on liquefied natural gas (LNG). In December 2012, the company entered into a contract with National Steel and Shipbuilding Company (NASSCO) in San Diego to construct two Marlin-class LNG-powered container vessels, to serve TOTE Maritime Puerto Rico. The first vessel, the 764-foot long, 3,100-TEU Isla Bella, was delivered to TOTE Maritime on October 23, 2015, and arrived in Jacksonville on November 3, where it was to replace the El Faro. The second vessel, Perla del Caribe, which is also destined for service on the Puerto Rico route, will be delivered in early 2016. The White House applauded TOTE’s move to LNG-fueled vessels, predicting the move “will have long-lasting and far-reaching positive effects on the health and safety of citizens along the US coastline, particularly in Washington, Alaska, Florida, and Puerto Rico where TOTE ships are part of the critical domestic supply chain.”

Two commentators seized on news of the El Faro tragedy to condemn the Jones Act, which restricts maritime trade between US ports to US flag vessels. The authors labeled the act a “monstrous piece of legislation.” Apparently unaware of TOTE’s enormous investment in the Marlin class LNG-fueled ships under construction in US shipyards, the authors complained that the Jones Act has “strangled domestic construction, to the point that it’s nearly impossible to build a vessel in the United States.”

Crewmember Claims and TOTE’s Response

On October 7, following news the Coast Guard was suspending its search for survivors, TOTE president and CEO Anthony Chiarello characterized the tragedy as “the darkest days of TOTE’s years as an organization, and indeed, the darkest days in the memory of most seafarers.” He reaffirmed TOTE’s promise of support for the crewmembers’ families and urged patience as the Coast Guard and NTSB investigations got underway, pledging TOTE’s “full and open participation” in those investigations. On October 9, TOTE Maritime established a relief fund for families of the crew, to be administered through the Seamen’s Church Institute of New York and New Jersey, and announced further plans to establish an education fund for the children of the El Faro crew members. Five days later, a $100 million lawsuit was filed against TOTE Maritime, TOTE Services, and the estate of the vessel’s master by an attorney representing a family member of one of the crewmembers. Three other suits soon followed, and more crewmember and cargo claims were expected.

In response to the claims, TOTE initiated a limitation of liability action in federal court in Jacksonville, the vessel’s last port of call. As is typical in post-casualty shipowner limitation actions, the complaint requests exoneration from or limitation of liability and an injunction requiring claimants to present their claims in the Jacksonville district court. The complaint asserts that the loss of the El Faro was not due to any fault or negligence by TOTE. Alternatively, it asserts that if such fault is established, the company is entitled to limit its liability under the terms of the Limitation of Liability Act.

The Limitation of Liability Act

Congress originally enacted the Limitation of Liability Act in 1851. As might be expected, admiralty’s limitation of liability rules are complex. In some casualties the complexity is compounded by disputes over which nation’s limitation laws apply. No such dispute should arise in the El Faro cases, given the flag of the ship and the location of the loss outside any other nation’s territorial waters.

As codified by Congress in 46 U.S.C. § 30505, the US limitation act provides a shipowner or demise charterer with a qualified right to limit its liability following a marine casualty to the value of the vessel and pending freight, but only for losses or injuries incurred “without the privity or knowledge of the owner” (or charterer). The “value” of the owner’s interest under the act is to be calculated at the end of the voyage. Thus, where the vessel is lost, its “value” is zero and the limitation fund will be limited to the vessel’s pending freight earnings (reportedly, just over $2 million in this case), unless increased under the loss of life amendments described below.

Some media accounts regarding the litigation demonstrated a serious lack of understanding regarding the limitation act. For example, one account quoted an attorney who claimed that the owner’s liability would be limited to no more than $1 million. In fact, the loss of life amendments to the original 1851 limitation act, which were enacted in 1936 in response to the Morro Castle tragedy, lead to a substantially larger figure. The amendments raise the limits of liability for claims involving seagoing vessels like the El Faro with respect to claims for personal injury or death to $420 per gross ton ($13,236,300 in this case). That fund is reserved for claims for personal injury or death. An important second provision in the 1936 amendments is the rule that in claims for personal injury or death, the privity or knowledge of the master (or the owner’s superintendent or managing agent), at or before the beginning of each voyage, is imputed to the owner. That imputation rule could prove to be critical in this case.

The limitation act imposes a shifting burden of proof. In the first step, claimants bear the burden of proving that fault attributable to the vessel owner (or charterer) was a cause of the casualty. In personal injury and death claims, seamen typically rely on both negligence and unseaworthiness theories to establish fault. If the claimants are unable to carry that burden, the owner is exonerated. If they succeed, liability is established. In the second step, to determine if the owner is entitled to limit the liability established in step one, the court must determine if one or more of the causative faults were within the privity or knowledge of the owner. In this second step, the burden of proving that any causative fault was not within the owner’s privity or knowledge is on the owner. If the owner fails, limitation of liability will be denied. If the owner succeeds, liability will be limited to the amount calculated in accordance with the provisions of 46 U.S.C. §§ 30505 and 30606.

Next Steps

In the months ahead, Coast Guard and NTSB investigators will pore over the relevant records and take testimony from the available involved parties. However, without the critical information stored on the vessel’s VDR, investigators will face a much more difficult task in trying to reconstruct the vessel’s critical last hours. NTSB chairman Christopher A. Hart confessed the board’s disappointment over the missing VDR, but went on to explain that over the years the NTSB has completed many investigations without the aid of recorders.

As the government’s casualty investigations move forward, the federal district court in Jacksonville will consolidate the El Faro litigation. On November 4, the court ruled that TOTE had met the legal prerequisites to commence a limitation of liability action and approved a limitation fund amount of $15.3 million, while acknowledging that the claimants may contest the amount of the fund and request that the court increase it. At the same time, the court issued an order restraining prosecution of any claims outside of the limitation action and directed that all claims against TOTE arising out of the incident be filed with the court by December 21, 2015. The court will next determine whether the owner and/or charterer are entitled to exoneration – an unlikely outcome given the searching inquiries that are certain to be conducted by the Coast Guard and NTSB. If the court denies exoneration, it must then determine whether the owner is entitled to limited liability under the act, calculate the amount of the limitation fund, and distribute the fund among the claimants. Assuming shippers eventually bring claims for their cargo losses, the causative fault and privity or knowledge analyses for those cargo claims will differ from the analysis of claims for the crew deaths. The analysis for Sea Star Lines/TOTE Maritime Puerto Rico, as owner, will likely also differ from the analysis for TOTE Services, as demise charterer.

The loss of SS El Faro and her crew of thirty-three will surely rank among the worst maritime casualties in the modern era. The fact that she was a US-flagged vessel under the command of a US licensed master, inspected by the US Coast Guard and surveyed by the American Bureau of shipping compels the maritime community to closely scrutinize our vessel safety system. As President Obama declared in pledging his commitment to a thorough investigation into this tragedy, the grieving families of the El Faro deserve answers and “we have to do everything in our power to ensure the safety of our people, including those who work at sea.”

 
 

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