905 F.3d 915
5th Cir.2018Background
- On Nov. 2, 2012, Tesla Offshore contracted International to provide the vessel M/V INTERNATIONAL THUNDER to tow a submerged sonar "towfish" during a deep-tow survey; Tesla provided and controlled the survey equipment and personnel aboard THUNDER.
- The towfish struck a submerged mooring line of Shell’s mobile rig DEEPWATER NAUTILUS, damaging the rig; Shell sued Tesla and International.
- A jury awarded Shell >$9M, apportioning fault 75% to Tesla and 25% to International, and found International had privity/knowledge (defeating limitation of liability).
- While appeals were pending, Tesla and Shell settled for $8,771,918.99; International had earlier paid Shell $244,918.99. District court awarded Tesla contribution from International (25% of settlement minus International’s earlier payment).
- International appealed the legal question whether THUNDER was a “towing vessel” (requiring its master to hold a towing license). Tesla cross-appealed allocation of fault and the contribution calculation. The Fifth Circuit affirmed on all issues.
Issues
| Issue | Plaintiff's Argument (Tesla/Shell) | Defendant's Argument (International) | Held |
|---|---|---|---|
| Whether THUNDER is a "towing vessel" under 46 U.S.C. § 2101 | THUNDER functioned to pull the towfish at Tesla’s direction; therefore towing-vessel rules apply | A literal/overbroad reading would make many non-towing commercial craft (e.g., fishing boats) into towing vessels; sonar survey towing isn’t traditional towing | THUNDER is a towing vessel: statute means vessels "in the service of pulling, pushing, or hauling," excluding only incidental pulling tied to a different primary commercial purpose |
| Whether jury instruction that THUNDER was a towing vessel (and master lacked credential) was erroneous and affected limitation defense | Instruction was proper; THUNDER performed towing service and master needed towing license | Instruction was erroneous because towing regs/training don’t fit submerged-object survey towing | Instruction was proper; no reversible error; privity/knowledge finding stands |
| Whether jury’s 75/25 fault allocation was unsupported | Tesla: evidence demanded at least 50% fault for International due to captain’s inattention, lack of survey experience, and violations | International: Tesla controlled survey, withheld rig/mooring information, and controlled towfish operations | 75/25 allocation upheld—ample record support; deferential review to jury credibility and weighing of evidence |
| Proper contribution calculation after settlement and prior payment by International | Tesla: International’s earlier payment was conditional (pending appeal) and should not reduce International’s contribution; alternatively, credit should be shared | International: actually paid $244,918.99 and settlement treated that as part of resolution; credit reduces amount owed | District court properly credited International’s prior payment; Tesla received benefit; contribution calculation affirmed |
Key Cases Cited
- Janvey v. Dillon Gage, Inc. of Dall., 856 F.3d 377 (5th Cir. 2017) (standard for reviewing jury instructions involving statutory construction)
- Jowers v. Lincoln Elec. Co., 617 F.3d 346 (5th Cir. 2010) (reversal standard for prejudicial jury instructions)
- In re OmegaProtein, Inc., 548 F.3d 361 (5th Cir. 2008) (Limitation of Liability Act and privity/knowledge discussion)
- Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) (avoid interpreting statutes to produce absurd results)
- Demarest v. Manspeaker, 498 U.S. 184 (1991) (refusal to substitute policy preferences for statutory text)
- Lewis v. City of Chicago, 560 U.S. 205 (2010) (give effect to the law enacted by Congress)
- Lozman v. City of Riviera Beach, 568 U.S. 115 (2013) (functional test for what qualifies as a vessel or an object "under tow")
- Continental Ins. Co. v. L & L Transp., Inc., 882 F.3d 566 (5th Cir. 2018) (distinguishing what constitutes a tow in a contractual context)
- Evansville & Bowling Green Packet Co. v. Chero Cola Bottling Co., 271 U.S. 19 (1926) (structure moved under tow may not be a vessel)
- Sacramento Navigation Co. v. Salz, 273 U.S. 326 (1927) (towage vs. affreightment distinction)
- Boh Bros. Constr. Co. v. EEOC, 731 F.3d 444 (5th Cir. 2013) (deference to jury verdicts and standard for JMOL)
- Baisden v. I'm Ready Prods., Inc., 693 F.3d 491 (5th Cir. 2012) (JMOL review standard)