APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before Weis and Higginbotham, Circuit Judges, and Debevoise, District Judge.*fn*
This action is the result of a collision that occurred early on the morning of January 31, 1975 on the Delaware River in Marcus Hook, Pennsylvania. The collision took place when the chemical carrier S.S. EDGAR M. QUEENY (QUEENY), an American steamship, struck the crude oil tanker S.T. CORINTHOS (CORINTHOS), a Liberian steam tanker (owned and operated by Villaneuva Compania Naviera S.A. (Villaneuva), as the CORINTHOS discharged a cargo of crude oil at the B.P. Oil Inc./Sohio Petroleum Company Terminal (BP/Sohio).*fn1 It resulted in the loss of 26 lives as well as other personal injuries, extensive damage to the terminal, the destruction of the CORINTHOS, oil pollution in the Delaware River, minor damage to the QUEENY, and damage to neighboring properties. The owners and operators of each vessel subsequently brought suit in admiralty, claiming that the other vessel was exclusively at fault and that they should be exonerated from liability or, in the alternative, that their liability should be limited.
The issues on appeal concern whether the district court erred with respect to the following: first, its denial of the petitions for limitation of liability filed by the owners and operators of the QUEENY (Bankers Trust Company (Bankers Trust), Monsanto Company (Monsanto) and Keystone Shipping Co. (Keystone Shipping ) (collectively the QUEENY INTERESTS or Keystone)); and, secondly, its ruling that under the preemption doctrine, federal legislation precluded it from holding the owners and operators of either the CORINTHOS or BP/Sohio liable. We will reverse each of those holdings, 503 F. Supp. 337. We find that Keystone's management was not privy to the cause of the accident and that the district court was not preempted from considering the liability of the CORINTHOS and BP/Sohio. Moreover, we rule that the alternative finding of the trial court that the CORINTHOS was unseaworthy was in error.*fn2
The parties have saturated us with thousands of pages of transcript, hundreds of exhibits, a plethora of expert testimony and extensive briefs. This inundation of evidence may have been necessary for the trial court to make proper findings, but a landlubber's analogy might be more appropriate to put this case in context.
Every novice automobile driver knows that, by the laws of physics, when one seeks to make a U-turn in a small area where the space is less than the circumference required for the full turning arc of the car, the turn can be successfully maneuvered only with a series of forward and backward motions. On a river, where the area is not wide enough for a turn in one maneuver, a 180 degree turning process is an even more complex maneuver. The "roadbed" of the ship moves with the momentum of the tide. Ships have no brakes which can keep an unanchored vessel at a permanent standstill so as to avoid drifting and possible collisions. Thus, even an experienced captain of a ship must rely on professional pilots whose function on the ship is to aid the captain in making intricate turns, maneuvers and docking. In nautical terminology, we say that the pilot conns*fn3 the vessel. Tugs are also often used to assist him in this process.
The instant case arises because in the process of making a 180 degree turn on the Delaware River, the purportedly experienced pilot of the QUEENY who conned the vessel made tragic errors of judgment. He failed to back and fill*fn4 enough and to use efficiently the tug that was assisting him in the turn.
Clearly the collision was attributable primarily to the pilot's and the captain's negligence in executing the 180o turn. On this appeal, the parties have not questioned the trial court's finding that the collision was also caused in part by the failure of the owners to correct a purportedly defective astern guardian valve a vital component of the ship's engine mechanism. The question we must consider is whether the owners have privity or knowledge of this deficiency in the valve.
The QUEENY is a single screw, steam powered tank vessel of 19,046 gross tons. It is 660.2 feet in length, 90 feet in breadth, and powered by a 15,000 horsepower steam turbine. It was designed and built during the late 1960's as a multiproduct chemical tanker by the Bethlehem Steel Corporation (Bethlehem) for Monsanto and it was delivered to Keystone as an operator in September of 1970. Pursuant to a subcontract with Bethlehem, its turbine set and controls were supplied by the General Electric Company (GE). GE subcontracted with the William Powell Company (Powell) for the manufacture of a marine astern guardian valve a valve to be used in the turbine. As will be noted later, the functioning of this valve is of great importance in this litigation.
The CORINTHOS was a single screw, steam powered tank vessel of 30,705 gross tons. It was 723.7 feet in length, 106 feet in breadth and powered by a 17,000 horsepower steam turbine. On January 30, 1975, the CORINTHOS was moored at the BP/Sohio refinery dock on the Delaware River where it was discharging a cargo of crude oil. Across the river, the QUEENY was moored in Bridgeport, New Jersey in order to discharge part of its cargo.
On January 31, 1975, the QUEENY left port headed for the next discharge facility in Paulsboro, New Jersey. She was under the command of Captain Fay Kellog. Pilot Sverre Sorenson was at the conn of the ship. Both Captain Kellog and Pilot Sorenson had performed docking and undocking maneuvers on many occasions aboard the QUEENY. To proceed upstream to the next facility, they knew she had to make a 180o starboard turn. Visability was clear from eight to ten miles. The eastern half of the Marcus Hook channel was closed for dredging operations reducing the channel width from its standard 800 feet to 400 feet and, therefore, making turning in the river considerably more difficult.
The captain and pilot were on the bridge at the time of the undocking maneuver. To undock, the QUEENY used its main engine and bow thruster, and its rudder was hard left. The Tug Tanda 12, which had been engaged to help with the undocking, was located on the port bow. Pilot Sorenson was at the conn and in radio communication with the tug.
When the vessel had cleared the dock, the QUEENY began backing and filling. To do this, it used a series of astern and ahead maneuvers in conjunction with the vessel's rudder, the bow thruster, and the tugboat. This facilitated the starboard turn of the vessel and positioned her to go upstream. Both the captain and pilot knew the eastern half of the channel was closed.
To assist in the turning maneuver, at the early stages, the Tug Tanda 12 pushed at the QUEENY's port bow. Before the attempt to turn was completed, the QUEENY backed and filled at least twice to prepare for it. Tug Tanda 12 was then released from the port bow and instructed to stand by in Paulsboro, New Jersey. Captain Kellog was on the starboard wing of the bridge and Pilot Sorenson was on the port wing.
When the tug was released the vessel's capacity to turn dramatically decreased, but Captain Kellog was not alarmed. He expected Pilot Sorenson to make additional back and fill maneuvers as he had done on many other occasions in similar situations. The QUEENY's forward acceleration, however, actually increased and, consequently, the captain grew apprehensive, feeling that the QUEENY might not clear the CORINTHOS due to the pilot's failure to continue to back and fill. He voiced his concern about the "closeness" of the situation, but the pilot replied, "Captain, she should make that o.k." Later, Captain Kellog again voiced his concern stating that they should go astern because they would be very close on the maneuver. When Pilot Sorenson did not respond, Captain Kellog became quite alarmed about the proximity of the QUEENY to the well lighted CORINTHOS and he gave a "full astern" order. The third mate rung up the order on the engine telegraph. It was promptly acknowledged and then executed by the first assistant engineer. Then, Pilot Sorenson ordered a "double jingle." This order was received and promptly acknowledged by the engine room, but it had no effect on the operation of the engines because the first assistant engineer had already opened the throttles as far as he felt they safely could be opened. Accordingly, the rate of the QUEENY's turn to the right was reduced as the propellor responded to the full astern order.
The bow of the QUEENY continued to ease closer to the CORINTHOS, and the pilot, as a result, recommended that the starboard anchor be dropped. It seems that Captain Kellog acquiesced to this recommendation, because he ordered it via his walkie-talkie. No response to Captain Kellog's order was received, however, because the bow lookout, Arvie Harris, stationed at the windlass anchor watch position, had fled the extreme bow in the face of the impending collision.
Shortly thereafter the QUEENY crashed into the CORINTHOS. The initial contact produced sparks as the two ships scraped one another. The shock of this contact caused both ships to roll and pitch, and the vessels collided intermittently. The port fluke anchor of the QUEENY punctured the port shell plating of the CORINTHOS's No. 4 and/or No. 5 cargo tanks, resulting in a series of explosions and then a fire.
The fires and explosions aboard the CORINTHOS were out of control throughout the early morning hours of January 31, 1975, and caused the ship to break in half and sink, which resulted in extensive damage to the dock, oil pollution in the Delaware River, damage to neighboring properties, and the loss of 26 lives as well as other personal injuries.*fn5
Keystone, the owners and operators of the QUEENY, and Villaneuva filed petitions for exoneration from or limitation of liability, Civil Action Nos. 75-364 and 75-2110, pursuant to the Limitations of Liability Act, 46 U.S.C. § 183 et seq. This act, in pertinent part, provides as follows:
The liability of the owner of any vessel ... for any ... loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned or incurred, without the privity or knowledge of such owner or owners, shall not ... exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.
46 U.S.C. § 183(a). Keystone and Villaneuva were damage claimants in each other's limitation proceeding, along with all those who suffered injury or loss.
On the second day of trial, the attorney for Keystone wisely admitted that his client no longer sought exoneration but merely pressed for the limitation of his liability. The district court, sitting without a jury, examined the issues raised in the limitation of liability petitions and the contrary claims made by the three major parties. The issue of damages was bifurcated with respect to the question of liability. In a memorandum opinion dated February 19, 1980, the trial court ruled that Keystone's petition for limitation of liability would be denied, and that Villaneuva's petition for exoneration from and limitation of liability would be granted.
III. THE QUEENY INTERESTS' PETITIONS TO LIMIT THEIR LIABILITY
Since March 3, 1851, federal legislation, under certain circumstances, has permitted a shipowner to limit his liability to the value of the specific ship involved in an accident.*fn6 Thus, "even where a ship or fleet of ships is owned by a corporation, the privilege of limitation will insulate the remaining corporate assets from claims to which they would otherwise be subject." See G. Gilmore & C. Black, The Law of Admiralty, 818 (2d ed. 1975) (Gilmore & Black). Many assert, as the QUEENY INTERESTS have, that the purpose of the limitation act is to promote competitive United States shipping by reasonably fixing investors' liability to the value of the vessel placed in trade and that "the Act was passed to encourage investment at a time when American shipping was struggling to become commercially competitive and that (that) condition is just as valid in the United States today as it was ... when the Act became law." Bankers Trust brief at 12.*fn7 Others assert that "since approximately 1930 the early enthusiasm, both legislative and judicial, for the limitation principle has cooled." Gilmore & Black at 821.*fn8
Whatever may be the long term trend, in this case, as in most major calamities, high stakes are involved in the granting or rejecting of Keystone's petitions for limitation of liability. Keystone placed a fund of $11,169,501 in the court representing the limitation value of the QUEENY while claims at that time were well above $40 million.
In support of its limitation of liability argument, Keystone asserts that the accident was caused solely by the negligent navigation of the QUEENY by Captain Kellog and Pilot Sorenson; that Keystone was without privity or knowledge of these negligent acts; and that, as a consequence, Keystone is entitled to limit its liability to the value of the vessel and freight on the ship at the time of the accident.
Villaneuva and BP/Sohio contend that Keystone is not entitled to have its liability limited because the QUEENY was unseaworthy and that its unseaworthy condition was a contributing cause of the collision. They maintain that the astern turbine on board the QUEENY was defective, and that it prevented the QUEENY from obtaining her full rated backing power prior to the accident. They submit that had the astern turbine functioned properly the QUEENY, ...