In re: ARAMARK SPORTS AND ENTERTAINMENT SERVICES, LLC, a Delaware limited liability company, as owner of a certain Baja Islander 202 for exoneration from or limitation of liability, Plaintiff - Appellant.
from the United States District Court for the District of
Utah (D.C. No. 2:09-CV-00637-TC-PMW).
R. Lund (Alan S. Mouritsen, with him on the briefs), Parsons
Behle & Latimer, Salt Lake City, Utah, for Appellant.
Benchoff, (M.E. "Buddy" Rake, Jr., with him on the
brief) Rake Law Group, P.C., Phoenix, Arizona, for Appellees.
HARTZ, PHILLIPS, and MORITZ, Circuit Judges.
suit arose out of a recreational boating accident on Lake
Powell that claimed the lives of four adults. The boat had
been rented from Aramark Sports and Entertainment Services,
LLC. Because the accident occurred on navigable waters, the
case falls within federal admiralty jurisdiction. See
Foremost Ins. Co. v. Richardson, 457 U.S. 668 (1982).
Anticipating that it would be sued for damages, Aramark filed
in the United States District Court for the District of Utah
a petition under the Limitation of Liability Act, 46 U.S.C.
§§ 30501-12, which permits a boat owner to obtain a
ruling exonerating it or limiting its liability based on the
capacity or value of the boat and freight. The district court
denied the petition, leaving for further proceedings the
issues of gross negligence, comparative fault, and the amount
of damages. Aramark appeals the denial. After determining
that we have appellate jurisdiction, we hold that the
district court erred in its application of admiralty
principles of duty and remand for further proceedings.
rents boats out of the Wahweap Marina on Lake Powell, near
the Utah-Arizona border. In April 2009 three married
couples-the Bradys, the Prescotts, and the Tarantos-went on
vacation to Lake Powell. On Friday, April 24 the Bradys and
Prescotts went to Aramark's boat rental office at Wahweap
to procure a boat for the next day. Mr. Prescott signed a
contract to rent a Baja 202 Islander, which is classified in
the owner's manual as a Design Category C boat based on
its limited "ability to withstand wind and sea or water
conditions." Aplee. Supp. App., Vol. 4 at 417. For
Category C boats the manual lists a "Maximum wind
speed" of 27 knots (31 miles per hour). The manual
The wind speed and wave height specified as the upper limit
for your category of boat does not mean that you or your
passengers can survive if your boat is exposed to these
conditions. It is only the most experienced operators and
crew that may be able to operate a boat safely under these
conditions. You must always be aware of weather conditions
and head for port or protected waters in sufficient time to
avoid being caught in high winds and rough water. Do not take
Id. The boaters were never informed of the
Baja's Category-C classification.
the contract was signed, the National Weather Service (NWS)
forecast for the next day on Lake Powell called for breezes
from 15-23 miles per hour and gusts up to 37 miles per hour.
That forecast was based on data collected at 3:44 a.m. that
morning. Before the boaters left, Aramark rental agent
Phyllis Coon gave that forecast to Mr. Prescott and told him
that he would be given an updated forecast the next morning
when they picked up the boat.
Saturday morning the NWS updated its Lake Powell forecast for
noon to 6 p.m. on Saturday to call for sustained winds of 25
to 35 miles per hour and gusts as high as 55 miles per hour.
When the three couples arrived on Saturday morning to begin
their trip, Aramark's boat-rental instructor, who told
the boaters about the weather channel on the boat's
radio, did not inform them of the updated forecast, nor did
they request it. He asked Mr. Brady if he knew how to use the
radio and Mr. Brady said he did.
group left Wahweap at about 8 a.m. and safely arrived at
their planned destination, Rainbow Bridge. On their return
trip to Wahweap, they stopped to refuel at Dangling Rope
Marina, also operated by Aramark. Aramark employee Scott
Bergantz spoke with some of them during the stop. He
testified by deposition that because the water was rough he
invited the couples to stay at Dangling Rope if they were
uncomfortable. This testimony is disputed, and the district
court made no findings concerning any offer of hospitality.
Brady testified that after his group left Dangling Rope the
water was "bumpy" and then "got rough" as
they entered a small bay. Aplt. App. at 103. The boat
proceeded through a "small opening" and then into
"a larger bay, which turned out to be Padre Bay, "
at which point "the wind came up like unbelievable. It
was ruthless." Id. at 104. At one point Mrs.
Brady noticed water at her feet inside the boat and then
heard her husband issue a mayday call. The boat sank shortly
thereafter. The Bradys were able to reach a rock pile from
which they were later rescued. The Prescotts and Tarantos
lost their lives.
law is not a commonplace in the Tenth Circuit, so a brief
introduction to some relevant law may be useful.
Admiralty and Maritime Jurisdiction
United States Constitution extends the "judicial power
to . . . all Cases of admiralty and maritime
Jurisdiction." U.S. Const. art. III, § 2. The first
Congress enacted a statute under that authority, stating:
"[T]he district courts shall have . . . exclusive
original cognizance of all civil causes of admiralty and
maritime jurisdiction; saving to suitors, in all cases, the
right of a common law remedy, where the common law is
competent to give it." Judiciary Act of 1789, ch. 20,
§ 9, 1 Stat. 73, 76-77. The second clause is often
referred to as the saving-to-suitors clause. The original
statute has been amended several times and now reads:
"The district courts shall have original jurisdiction,
exclusive of the courts of the States, of: (1) Any civil case
of admiralty or maritime jurisdiction, saving to suitors in
all cases all other remedies to which they are otherwise
entitled." 28 U.S.C. § 1333. The Supreme Court
has said that despite the change in language, the
"substance [of the saving-to-suitors clause] has
remained largely unchanged." Lewis v. Lewis &
Clark Marine, Inc., 531 U.S. 438, 443-44 (2001).
substance is quite broad. For the most part, the
saving-to-suitors clause has been construed to permit in
personam claims within federal admiralty and maritime
jurisdiction to be brought in state court as well as in
federal court. See Lewis, 531 U.S. at 445
("[T]he saving to suitors clause [is] a grant to state
courts of in personam jurisdiction, concurrent with
admiralty courts."); Grant Gilmore & Charles L.
Black, Jr., The Law of Admiralty § 1-13, at 40
(2d ed. 1975) ("Where the suit is in personam, it may be
brought either in federal court under the admiralty
jurisdiction . . . or, under the saving clause, in
an appropriate non-maritime court, by ordinary civil
action."). "The right of a common law remedy, so
saved to suitors, . . . . includes remedies in pais,
as well as proceedings in court; judicial remedies conferred
by statute, as well as those existing at the common law;
remedies in equity, as well as those enforceable in a court
of law." Lewis, 531 U.S. at 445 (internal
quotation marks omitted).
note that the saving-to-suitors clause preserves
"remedies" not "rights." See 28
U.S.C. § 1333(1) ("saving to suitors in all cases
all other remedies to which they are otherwise
entitled"). Federal maritime and admiralty law still
controls the applicable substantive law. The clause's
scope "does not . . . include attempted changes by the
States in the substantive admiralty law, but it does include
all means other than proceedings in admiralty which may be
employed to enforce the right or to redress the injury
involved." Lewis, 531 U.S. at 445 (ellipsis and
internal quotation marks omitted). One particular attraction
of proceeding under the saving-to-suitors clause is that
there is generally a right to trial by jury in state-court
proceedings but, absent some limited statutory exceptions,
there is no right to a jury in an action brought under
admiralty or maritime jurisdiction. See Romero v.
Int'l Terminal Operating Co., 358 U.S. 354, 363,
368-69 (1959); 2 Thomas J. Schoenbaum, Admiralty and
Maritime Law § 21-10, at 571- 74 (5th ed. 2011);
Fed.R.Civ.P. 38(e) ("These rules do not create a right
to a jury trial on issues in a claim that is an admiralty or
maritime claim under Rule 9(h).").
the exclusive federal jurisdiction expressed at the
outset of 28 U.S.C. § 1333 does not live up to its
apparent promise. That is not to say, however, that the
promise is empty. There is exclusive federal jurisdiction to
hear an in rem action against a vessel or other maritime
property, "[a] procedure unique to American admiralty
practice" in which the "action is brought against
the vessel itself as defendant." 2 Schoenbaum,
supra, § 21-3, at 535; see Lewis, 531
U.S. at 444 ("[P]roceedings in rem were deemed
outside the scope of the [saving-to-suitors] clause because
an in rem action was not a common law remedy, but
instead a proceeding under civil law"). And state-court
proceedings are restricted by the statute employed by Aramark
here-the Limitation of Liability Act. We now turn to that
The Limitation of Liability Act
enacted the Limitation of Liability Act in 1851 "to
encourage shipbuilding and to induce capitalists to invest
money in this branch of industry." Lewis, 531
U.S. at 446 (internal quotation marks omitted). It was
following the lead of other nations. See Norwich &
N.Y. Transp. Co. v. Wright, 80 U.S. 104, 120 (1871). In
the seventeenth century the Dutch scholar Hugo Grotius had
written that "men would be deterred from investing in
ships if they thereby incurred the apprehension of being
rendered liable to an indefinite amount by the acts of the
master." Id. at 116. Various European nations
had therefore adopted laws limiting the owner's liability
to the value of the ship and freight. See id. at
116-17. In England, for example, once a ship owner confessed
liability and paid the value of the ship and freight into
court, his exposure would be limited to that sum and he would
have the right to stay any suit against him for damages.
See id. at 118.
current version of the Limitation of Liability Act was
codified in 2006 at 46 U.S.C. § 30501 et
seq. Its key provision limits the boat
owner's liability to the limitation fund-"the value
of the vessel and pending freight, " id. at
§ 30505(a)- provided that the acts giving rise to the
damage occurred "without the privity or knowledge of the
owner, " see id. at §
30505(b). The vessel's value is measured
"after the voyage on which the incident
occurred. Thus if the ship is lost, the value is zero."
Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 449
(4th Cir. 1999) (citation omitted) (internal quotation mark
omitted). Pending freight is "the total
earnings for the voyage, both prepaid and uncollected."
In re Caribbean Sea Transp., Ltd., 748 F.2d 622, 626
(11th Cir. 1984). If the limitation fund is insufficient to
pay all claims, it is divided by claimants "in
proportion to their respective losses." 46 U.S.C. §
30507. For personal-injury or death claims the cap on
liability may be increased to $420 times the tonnage of the
vessel; but this applies only to a "seagoing"
vessel, id. at § 30506-that is, one that
"does, or is intended to, navigate in the seas beyond
the Boundary Line in the regular course of [their]
operations, " In re Talbott Big Foot, Inc., 854
F.2d 758, 761 (5th Cir. 1988); see id. ("The
Boundary Line is that line which divides the high seas from
rivers, harbors, and inland waters.").
courts have exclusive jurisdiction to determine whether a
vessel owner is entitled to limited liability."
Lewis, 531 U.S. at 442. To govern procedures under
the Limitation Act, the Supreme Court promulgated rules a
century and a half ago. The current version of those rules is
found in Rule F (entitled "Limitation of
Liability") of the Supplemental Rules for Admiralty or
Maritime Claims and Asset Forfeiture Actions. Under Rule F a
ship owner seeking limitation must file a complaint
"set[ting] forth the facts on the basis of which the
right to limit liability is asserted and all facts necessary
to enable the court to determine the amount to which the
owner's liability shall be limited." Fed.R.Civ.P.
Supp. Admiralty Rule F(2). Necessary facts include a
description of the voyage, the amount of any pending demands
against the owner, and the present value of the vessel.
See id. Once the owner files the complaint and
deposits with the court or a trustee an amount equal to the
limitation fund (or security therefor), plus security for
costs and interest, "all claims and proceedings against
the owner or the owner's property with respect to the
matter in question shall cease"; and if moved to do so
by the ship owner, "the court shall enjoin the further
prosecution of any action or proceeding . . . subject to
limitation in the action." Id. at F(3). If the
court grants limitation, it then distributes the limitation
fund "pro rata, subject to all relevant provisions of
law, among the several claimants in proportion to the amounts
of their respective claims, duly proved." Id.
echoes much of the procedure under prior English law. See
generally Norwich, 80 U.S. at 117-20. But it is not
identical. One innovation has been in the rule since first
promulgated in 1871. Although English practice required the
owner to admit his liability at the outset, the Supreme Court
thought that such an admission "is, perhaps, not
necessary in an admiralty court." Id. at 124.
Under Rule F, "[i]n the process of seeking limited
liability, the owner [is] permitted to contest the fact of
liability, " Lewis, ...