UNITED STATES of America, Plaintiff-Appellee v. AMERICAN COMMERCIAL LINES, L.L.C., Defendant-Appellant
No. 16-31150
United States Court of Appeals, Fifth Circuit.
November 7, 2017
170
John A. V. Nicoletti, Esq., Terry L. Stoltz, Nicoletti, Hornig & Sweeney, New York, NY, Richard David Bertram, Esq., Glenn G. Goodier, Jones Walker, L.L.P., for Defendant-Appellant.
Before SMITH, OWEN, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:
On July 23, 2008, nearly 300,000 gallons of oil spilled into the Mississippi River
The United States initiated this action in 2014, seeking a declaration that ACL is liable for all removal costs and damages resulting from the spill and to recover the costs that it incurred. The United States moved for partial summary judgment on its claims that ACL was not entitled to any defenses to liability under OPA. The district court granted that motion, and later entered final judgment ordering ACL to pay the United States $20 million. ACL appealed. We AFFIRM.
I
In 2007, ACL, a marine-transportation company that operates a fleet of barges and tugboats, contracted with DRD Towing, another marine-transportation company, to operate some of its tugboats. ACL and DRD entered into two charter agreements. Under the “Master Bareboat Charter,” ACL chartered several tugboats, including the M/V MEL OLIVER, to DRD for one dollar per day.1 Under the “Master Fully Found Charter,” DRD agreed to crew the tugboats and charter its services back to ACL. Both agreements required compliance with “all applicable laws and regulations [with] respect to the registration, licensing, use, manning, maintenance, and operation of the Vessel(s).”
The MEL OLIVER‘s crew consisted of Captain Terry Carver, Steersman John Bavaret, and two deckhands. Captain Carver was the only crewmember with a valid United States Coast Guard Master of Towing Vessels license, which authorized him to lawfully operate tugboats on the lower Mississippi River. Steersman Bavaret held only an Apprentice Mate (Steersman) license, which authorized him to serve as an apprentice mate under the direct supervision of a properly licensed master. He was not authorized to operate the vessel without continuous supervision. See
On July 20, 2008, Captain Carver left the MEL OLIVER to go on shore, leaving Steersman Bavaret in control of the vessel. Two days later, while—unbeknownst to ACL—Captain Carver was still on shore, ACL directed the MEL OLIVER to tow an ACL barge, the DM-932, to pick up fuel from a facility in Gretna, Louisiana. At that time, Steersman Bavaret had worked for 36 hours with only short naps, in violation of Coast Guard regulations. See
As the MEL OLIVER pushed the DM-932 along the Mississippi River, it began travelling erratically. At about 1:30 a.m., it turned to cross the path of an ocean-going tanker, the TINTOMARA, owned by a third party. The TINTOMARA‘s pilot and the Coast Guard‘s New Orleans Vessel Traffic Service staff attempted to hail the MEL OLIVER by radio, but no one answered. The TINTOMARA also sounded its alarm whistle. Unable to change course, the TINTOMARA collided with the DM-932. The DM-932 broke away from the MEL OLIVER and sank downriver, spilling approximately 300,000 gallons of oil into the Mississippi River. Immediately after the collision, a crewmember on the MEL OLIVER found Steersman Bavaret slumped over the steering sticks and non-responsive.
Following the spill, the government prosecuted DRD, Captain Carver, and Steersman Bavaret for criminal violations of federal environmental law. DRD and Steersman Bavaret each pleaded guilty to one count of violating the Ports and Waterways Safety Act,
In the course of the criminal investigation, DRD admitted that it knowingly allowed its crewmembers to work without appropriate licenses or qualifications and to work more hours than were permitted under Coast Guard safety regulations and that it failed to report those “manning deficiencies” to the Coast Guard, also in violation of Coast Guard regulations. Captain Carver and Steersman Bavaret admitted to knowing that Bavaret was not licensed to act as captain in Carver‘s absence.
In addition to the criminal prosecution, the government sued ACL and DRD under OPA to recover clean-up costs resulting from the spill.2 DRD promptly declared bankruptcy and later dissolved its LLC. The government moved for summary judgment against ACL on the issue of liability under OPA. The district court granted summary judgment in favor of the government, and later issued a final judgment ordering ACL to pay the government $20 million. This appeal followed.
II
We review a district court‘s grant of summary judgment de novo, applying the same legal standards as the district court. Robinson v. Orient Marine Co., 505 F.3d 364, 365 (5th Cir. 2007). Summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
III
A
OPA was enacted in 1990 in response to the Exxon Valdez oil spill. It “was intended to streamline federal law so as to pro-
OPA holds statutorily-defined “responsible parties” strictly liable for pollution-removal costs and damages associated with oil spills. See Buffalo Marine Servs. Inc. v. United States, 663 F.3d 750, 752 (5th Cir. 2011) (stating that OPA “creates a ‘strict-liability scheme for the costs of cleaning up oil spills‘“). It provides that “each responsible party for a vessel or a facility from which oil is discharged ... is liable for the removal costs and damages ... that result from such incident.”
OPA generally limits the liability of a responsible party to a specified dollar amount based on the tonnage of the vessel from which oil was discharged.
the incident was proximately caused by—(A) gross negligence or willful misconduct of, or (B) the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party....
In addition to the general limits on liability, OPA provides for a complete defense to liability under four enumerated circumstances. It provides that:
[a] responsible party is not liable for removal costs or damages ... if [that] party establishes, by a preponderance of the evidence, that the discharge ... of oil and the resulting damages or removal costs were caused solely by—(1) an act of God; (2) an act of war; (3) an act or omission of a third party, other than an employee or agent of the responsible party or a third party whose act or omission occurs in connection with any contractual relationship with the responsible party ... or (4) any combination of paragraphs (1), (2), and (3).
ACL contends that it is entitled to the third-party defense under
ACL contends that it is entitled to a complete defense to liability under
The meaning of
“Connection” is therefore a capacious term, encompassing things that are logically or causally related or simply “bound up” with one another. It is, however, not so capacious as to be rendered meaningless. Conduct does not automatically occur “in connection with” a contractual relationship by the mere fact that such a relationship exists. See Westwood Pharm., Inc. v. Nat‘l Fuel Gas Distrib. Corp., 964 F.2d 85, 89 (2d Cir. 1992) (interpreting virtually identical language in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA“) and holding that “[t]he mere existence of a contractual relationship ... does not foreclose the owner of and from escaping liability“). Rather, the conduct must be causally or logically related to the contractual relationship. Accordingly, the third party‘s acts or omissions that cause a spill occur “in connection with any contractual relationship” between the responsible party and the third party whenever the acts or omissions relate to the contractual relationship in the sense that the third party‘s acts and omissions would not have occurred but for that contractual relationship.
This reading of the ordinary meaning of “connection” is consistent with OPA‘s purpose. See Buffalo Marine Servs., 663 F.3d at 757 (“To determine the meaning of a statute, ‘we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy.‘” (quoting Crandon v. United States, 494 U.S. 152, 156-58 (1990))). The legislative history shows that, in enacting OPA, Congress wanted not only to quickly contain and clean up spills, but also to prevent spills from occurring in the first place by
ACL‘s proposed definition of “in connection with” is contrary to both the statute‘s text and its purpose. ACL contends that we should adopt the Second Circuit‘s interpretation of similar language CERCLA.4 In Westwood, the Second Circuit held that the “in connection with” language in CERCLA‘s third-party defense requires that “the contract between the landowner and the third party must either relate to the hazardous substances or allow the landowner to exert some element of control over the third party‘s activities.” 964 F.2d at 91-92 (emphasis added). Even though that test is met here factually in light of the parties’ contract to transport oil, we decline to adopt that approach because its additional requirements go beyond what is required by OPA‘s plain text.
ACL also contends that DRD‘s acts and omissions cannot be “in connection with” their contractual relationship because those acts and omissions directly violated the terms of their contracts. The charter agreements specifically required DRD to comply with all applicable laws and regulations, but the acts and omissions that caused the spill did not. But “in connection with” does not mean “in compliance with,” and the meaning of “connection” is broad enough to encompass acts that are not specifically contemplated, or even acts that are specifically not contemplated, in a contract. A contrary reading would permit responsible parties to circumvent OPA by easily contracting out of liability, a result Congress specifically sought to avoid. See S. REP. NO. 101-94 at 13 (stating that the contractual-relationship exception from the third-party defense is intended to “preclude defendants from avoiding liability” through contractual relationships); see also Buffalo Marine Servs., 663 F.3d at 757 & n.36 (citing to United States v. LeBeouf Bros. Towing Co., 621 F.2d 787, 789 (5th Cir. 1980) and rejecting interpretation of “contractual relationship” that would enable defendants to easily avoid liability).
Given the broad meaning of “in connection with,” ACL has failed to estab-
C
ACL alternatively contends that it is entitled to OPA‘s general limit on liability. The government responds that DRD‘s conduct falls within the exception from limited liability for spills proximately caused by “gross negligence,” “willful misconduct,” or federal regulatory violations committed by “a person acting pursuant to a contractual relationship with the responsible party.” See
The parties dispute whether DRD was acting “pursuant to” its contractual relationship with ACL when it committed the regulatory and criminal violations that caused the spill. Once again, the meaning of
However, ACL goes too far when it argues that the specific acts or omissions that cause the spill must be authorized by the contract. Section 2704(c)(1) requires only that the gross negligence, willful misconduct, or federal regulatory violations that cause the spill be committed by the responsible party, its agent or employee, or “a person acting pursuant to a contractual relationship with the responsible party.” Accordingly, the “pursuant to” language is satisfied if the person who commits the gross negligence, willful misconduct, or regulatory violation does so in the course of carrying out the terms of the contractual relationship with the responsible party. Reading the statute to require that the negligent or wrongful act itself be “pursuant” to the contract would be nonsensical; it would be a rare contract indeed that specifically contemplated gross negligence, willful misconduct, or the violation of federal safety regulations. Exceptions to statutes are to be construed narrowly, but ACL‘s proposed construction would read the exception out of the statute altogether.
That the conduct that caused the spill here rose to the level of a criminal viola-
Nor would such a distinction give effect to OPA‘s purpose. OPA increased the financial consequences of oil spills in order to encourage responsible parties to take precautionary measures to prevent such spills. Section 2704(c)(1), in particular, encourages compliance with the kinds of regulations that are themselves intended to prevent oil spills—like the manning requirements violated by DRD—by providing for unlimited liability where those regulations are flouted. See S. REP. NO. 101-94 at 14 (stating that “where compliance [with federal regulations] perhaps could have prevented or mitigated the effects of an oilspill [sic], no such limits [to liability] will apply“). There is no reason to think that Congress intended to lift the limits on liability for spills caused by conduct that is forbidden by federal regulation but to reimpose those limits for spills caused by conduct considered so dangerous or risky
Finally, ACL‘s reliance on the doctrine of respondeat superior is inapposite. Under that doctrine, employers are not liable for the intentional torts or criminal acts of their employees if those acts are committed outside the scope of their employment. But that is of no help to ACL. First, employer liability under the doctrine of respondeat superior is a creature of the common law of agency. See RESTATEMENT (THIRD) OF AGENCY § 2.04 cmt. b (2006) (noting that the doctrine of respondeat superior “has long been classified as an element of agency doctrine“). The liability of a responsible party for oil spills caused by the negligence or misconduct of a third party under OPA is a creature of statute. Second, even if the doctrine of respondeat superior were applicable here by analogy, it appears to support our reading of “pursuant to.” Employers are liable for the intentional torts of their employees if committed by an employee “acting within the scope of their employment.” Id. § 2.04. Conduct may be within the scope of employment, even if not authorized, if it occurs “while performing work assigned by the employer” and if it is “intended to further any purpose of the employer.” Id. § 7.07 cmt. b. Accordingly, even if the doctrine of respondeat superior were relevant here, our reading of what it means to be “acting pursuant to a contractual relationship” appears to be consistent with the imposition of liability on employers for torts committed by employees in the course of their employment.
Here, there is no dispute that the July 23, 2008 spill was caused by DRD‘s wrongful conduct and regulatory violations, committed in the course of carrying
IV
For the foregoing reasons, we AFFIRM the district court‘s grant of summary judgment.
STEPHEN A. HIGGINSON
UNITED STATES CIRCUIT JUDGE
UNITED STATES of America, Plaintiff-Appellee v. Earnest GIBSON, III; Earnest Gibson, IV, Defendants-Appellants
No. 15-20323
United States Court of Appeals, Fifth Circuit.
FILED November 7, 2017