Seattle Maritime Law Blog : Seattle Maritime Lawyers & Attorneys : Mikkelborg Broz Law Firm : Collision and Salvage, Fisheries, Jones Act : Seattle, Washington

On October 16, 2009, the Second Circuit Court of Appeals issued its decision of The Shipping Corporation of India v. Jaldhi Overseas PTE, Ltd., reversing its controversial 2002 decision of Winter Storm, Ltd. v. TPI. The Winter Storm court had held that electronic fund transfers (EFTs) could be seized under Admiralty Rule B as they momentarily pass through intermediary banks on the way to their final destination. Because this case applied to New York's intermediary banks, which handle the vast majority of international dollar transactions, the Winter Storm case caused an explosion of Rule B claims being filed in New York courts and against New York banks, attempting to seize funds being sent to and from defendants all over the world. This in turn gave rise to a large "cottage industry" within New York maritime firms, who quickly mastered this Rule B process and used the Winter Storm rule to great advantage for their clients and for themselves.

Although the Jaldhi Overseas court recognized that it should not reverse prior precedents lightly, the court found that (1) the Winter Storm court had incorrectly concluded that prior case law in the circuit supported the finding that EFTs were attachable and (2) in the absence of controlling admiralty law precedent, the court should have used New York state law, which says that EFTs are not the property of the transferor or transferee while in transit. The court also cited the significant and negative consequences of Winter Storm on New York courts and banks as justification for changing the law of the circuit.

Assuming this ruling stands, it is not an exaggeration to say that this case will send a shock wave through the maritime law community, particularly in New York City. Since 2002, hundreds of plaintiffs and their attorneys have used the Winter Storm rule to massively increase the Rule B practice in New York federal courts. This has obviously resulted in a significant new line of business for many New York maritime firms. The Second Circuit’s reversal of Winter Storm will not only change the legal landscape in the circuit, but will also likely deal a blow to the balance sheets and employment prospects of many New York attorneys and firms. In the current economic climate, that will hardly be welcome news for the admiralty bar in the Big Apple.

For a longer discussion and description of this decision, visit our firm website here.

A copy of the Jaldhi Overseas decision can be found here.

Lafcadio Darling specializes in maritime and commercial litigation, representing a wide variety of business and consumer clients. In addition to being licensed in Washington and California, Lafcadio also holds an LL.M. from University College London and is a licensed solicitor in England & Wales.

• Email This
• Print
• Comments
• Trackbacks

A few recent federal maritime decisions have shed further light on the boundaries of admiralty jurisdiction in the U.S. courts:

In Vasquez v. GMD Shipyard Corp., No. 08-4566 (2nd Cir., September 15, 2009), the Second Circuit Court of Appeals found that a tort claim arising out of a death at a shipyard "graving dock" was properly in admiralty, even though the dock had no water in it at the time of the incident.

In In re Complaint of Mission Bay Jet Sports, LLC, No. 08-56142 (9th Cir. June 24, 2009), the Ninth Circuit Court of Appeals found that a tort claim by passengers on a Sea-Doo watercraft who were injured while riding in San Diego's Mission Bay was subject to admiralty jurisdiction.

In New Hampshire Ins. Co. v. Home Sav. and Loan Co. of Youngstown, Ohio, No. 08-3902 (6th Cir. September 24, 2009), the Sixth Circuit Court of Appeals rejected the argument by an insurer that its policy, styled a "marine insurance policy," was sufficient to implicate federal admiralty jurisdiction in a declaratory judgment action, when a large number of the coverages in the policy were non-maritime.

Although none of these cases is ground-breaking or controversial, they do give lawyers valuable clues as to the positions the federal courts will take regarding admiralty jurisdiction with in certain common types of cases. 

Further description and commentary on these cases can be found here.

• Email This
• Print
• Comments
• Trackbacks

In a recent decision (MacDonald v. Kahikolu, 2009 U.S. App. LEXIS 20162 (9th Cir. 2009)), the Ninth Circuit Court of Appeals held that the Pennsylvania Rule--which effectively shifts the burden of proving fault from plaintiff to defendant in certain maritime collision cases--should not be applied to maritime personal injury claims.

Although prior case law had suggested this conclusion, the MacDonald case has made the Ninth Circuit's position clear.  However, the MacDonald court also recognized that other federal appeals courts, including the Second, Third and Fifth Circuits, have read the Pennsylvania Rule more broadly and applied it to non-collision cases.

A further discussion of this case and a link to the court's opinion can be found here.

Lafcadio Darling specializes in maritime and commercial litigation, representing a wide variety of business and consumer clients. In addition to being licensed in Washington and California, Lafcadio also holds an LL.M. from University College London and is a licensed solicitor in England & Wales.

• Email This
• Print
• Comments
• Trackbacks