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Calhoun v. Yamaha Motor Corp.

filed: November 2, 1994; As Amended November 17, 1994. As Corrected November 17, 1994.

LUCIEN B. CALHOUN; ROBIN L. CALHOUN, INDIVIDUALLY AND AS ADMINISTRATORS OF THE ESTATE OF NATALIE K. CALHOUN, DECEASED
v.
YAMAHA MOTOR CORPORATION, U.S.A.; YAMAHA MOTOR CO., LTD.; PALMAS DEL MAR COMPANY; PALMAS DEL MAR, INC.; PALMAS YACHT CLUB, INC.; MARINA DE PALMAS YACHT CLUB, INC.; MAXXAM PROPERTIES, INC.; ABC CORPORATION; XYZ PARTNERSHIP(S); CANDELERO HOTEL CORPORATION; MARINA DE PALMAS SHIPYARD, INC. YAMAHA MOTOR CORPORATION, U.S.A. AND YAMAHA MOTOR COMPANY, LTD., APPELLANTS IN NO. 93-1736 LUCIEN B. CALHOUN; ROBIN L. CALHOUN, INDIVIDUALLY AND AS ADMINISTRATORS OF THE ESTATE OF NATALIE K. CALHOUN, DECEASED, APPELLANTS IN NO. 93-1737 V. YAMAHA MOTOR CORPORATION, U.S.A.; YAMAHA MOTOR CO., LTD.; PALMAS DEL MAR COMPANY; PALMAS DEL MAR, INC.; PALMAS YACHT CLUB, INC.; MARINA DE PALMAS YACHT CLUB, INC.; MAXXAM PROPERTIES, INC.; ABC CORPORATION; XYZ PARTNERSHIP(S); CANDELERO HOTEL CORPORATION; MARINA DE PALMAS SHIPYARD, INC.



On Appeal From the United States District Court For the Eastern District of Pennsylvania. (D.C. Civ. No. 90-04295).

Before: Becker, Mansmann and Scirica, Circuit Judges.

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

These consolidated interlocutory cross appeals before us pursuant to 28 U.S.C. § 1292(b) (1993) present an interesting and important question of maritime law: whether state wrongful death and survival statutes are displaced by a federal maritime rule of decision concerning the remedies available for the death of a recreational boater occurring within state territorial waters,*fn1 which are explicitly excluded from the reach of the Death on the High Seas Act, 46 U.S.C.A. § 761 (1975). The remedies at issue are loss of society, loss of support and services, loss of future earnings, and punitive damages.

This case arose when Natalie Calhoun, the twelve year old daughter of plaintiffs Lucien and Robin Calhoun, was killed in a boating accident in the waters off Puerto Rico. Natalie had been riding a "Wavejammer," a type of jet ski manufactured by Yamaha Motor Corporation, U.S.A., and its parent company, Yamaha Motor Company, Ltd. (collectively referred to as "Yamaha"). Plaintiffs sued Yamaha seeking recovery under the Pennsylvania wrongful death and survival statutes, 42 PA. CONS. STAT. ANN. §§ 8301-8302 (1982 & Supp. 1994). In granting partial summary judgment for Yamaha on the issue of available damages, the district court held that federal maritime law displaced both state remedies, and fashioned a federal common law rule applicable to cases involving the death of a non-seaman in territorial waters under which future earnings and punitive damages are not recoverable but damages for loss of society or support are. Each party sought certification to appeal the portion of the court's ruling that was unfavorable.

We do not reach the question whether the district court fashioned the proper federal common law remedy, however, because we conclude that the federal maritime law does not displace state wrongful death or survival statutes in this context. Rather, applying traditional admiralty choice of law principles, we hold that the appropriate rule of decision in this area should be supplied by state law. Our analysis of the Supreme Court's maritime wrongful death jurisprudence reveals that there is no federal substantive policy with which state wrongful death or survival statutes conflict here. In the absence of a clear conflict, state law rules of decision should apply. We will therefore affirm the district court's order denying Yamaha partial summary judgment, reverse the order granting Yamaha partial summary judgment, and remand the case for further proceedings consistent with this opinion. On remand, the district court will have to determine whether the plaintiffs' claims are governed by the laws of Pennsylvania or of Puerto Rico, and how the wrongful death and survival laws of those Commonwealths bear upon plaintiffs' damages.

I. FACTS, PROCEDURAL HISTORY, AND SCOPE

OF THE INTERLOCUTORY APPEAL

On July 6, 1989, while vacationing at Palmas Del Mar Resort, Humacao, Puerto Rico, Natalie Calhoun rented a Yamaha "Wavejammer." While she was riding the "Wavejammer," Natalie slammed into a vessel anchored in the waters off the hotel frontage and was killed. At the time of her death, Natalie was twelve years old. Her parents, Lucien and Robin Calhoun, individually and in their capacities as administrators for the estate of their daughter, sued Yamaha in the District Court for the Eastern District of Pennsylvania seeking recovery under the Pennsylvania wrongful death statute, 42 PA. CONS. STAT. ANN. § 8301 (1982 & Supp. 1994), and the Pennsylvania survival statute, 42 PA. CONS. STAT. ANN. § 8302 (1982). Their complaint invoked federal jurisdiction both on the basis of diversity of citizenship, 28 U.S.C.A. § 1332 (West 1993),*fn2 and admiralty, 28 U.S.C.A. § 1333 (West 1993). The theories of recovery alleged in the complaint included negligence, strict liability, and breach of the implied warranties of merchantability and fitness for purpose. The complaint sought damages for lost future earnings, loss of society, loss of support and services, and funeral expenses. It also requested punitive damages.

On November 27, 1991, Yamaha moved for partial summary judgment asserting that the damages recoverable in the action, if any, were governed by the federal admiralty law, and that under that law the plaintiffs were not entitled to lost future wages, loss of society, loss of support and services, or punitive damages.*fn3 In its decision on the motion, the district court: (1) agreed with Yamaha that the federal common law of admiralty governed the Calhouns' wrongful death and survival actions; (2) held that the general maritime wrongful death cause of action recognized in Moragne v. States Marine Lines, Inc., 398 U.S. 375, 90 S. Ct. 1772, 26 L. Ed. 2d 339 (1970), displaced the Pennsylvania wrongful death and survival statutes and hence that any available remedy was a function of federal common law; and (3) held that under this federal common law remedy, lost future wages and punitive damages could not be awarded but loss of society and loss of support and services could be. The court therefore granted Yamaha's motion for summary judgment on the loss of future earnings and punitive damages, and denied its motion respecting the claims for loss of society and loss of support and services.

Yamaha moved the district court to certify for immediate interlocutory appeal, 28 U.S.C.A. § 1292(b) (West 1993), the question whether the plaintiffs should be able to recover damages for the loss of Natalie's society. Believing that the question was extremely close, the district court granted the motion and certified the issue to this court.*fn4 Plaintiffs then requested that the district court amend its certification order to add the question whether future earnings and punitive damages were recoverable. The district court agreed, and certified the following question to this Court:

The questions of law certified to the Court of Appeals are whether, pursuant to [a federal] maritime cause of action, plaintiffs may seek to recover (1) damages for the loss of the society of their deceased minor child, (2) damages for the loss of their child's future earnings, and (3) punitive damages.

Both parties petitioned for permission to appeal pursuant to Federal Rule of Appellate Procedure 5(a). We granted both petitions and consolidated the appeals. We have jurisdiction pursuant to 28 U.S.C.A. § 1292(b) (West 1993).

The district court's statement in the certification order is limited to the question of what damages are available under a federal maritime cause of action. On appeal, however, the parties have also (properly) briefed the question whether federal maritime law displaced state wrongful death and survival statutes. As will appear, the answer to the certified question depends in large part on the resolution of the displacement question. We presume that the district court intended this important question of displacement to be considered. But even if such were not the case, it would not affect our jurisdiction.

As provided in section 1292(b), we have before us an appeal from the challenged order, not just the certified question. Section 1292(b) requires not that we answer the certified question, but that we decide an appeal from an interlocutory order. We therefore are not bound by the district court's formulation of the question, and may address any issue that is necessary to decide the appeal before us. See In re School Asbestos Litigation, 789 F.2d 996 (3d Cir. 1986). There the district court certified for appeal an order certifying a compulsory class under Federal Rule of Civil Procedure 23(b)(1)(A) and (b)(1)(B), but after taking jurisdiction we also reviewed the court's denial of certification under Rule 23(b)(3). Id. at 1002; see also Johnson v. Alldredge, 488 F.2d 820, 822-23 (3d Cir. 1973) (stating that appeals court is not bound by district court's statement of the issue on section 1292(b) appeal), cert. denied, 419 U.S. 882, 95 S. Ct. 148, 42 L. Ed. 2d 122 (1974); 9 JAMES W. MOORE ET AL., MOORE'S FEDERAL PRACTICE P 110.25[1], at 300 (2d ed. 1994) ("It is the order that is appealable, and not the controlling question identified by the district court. Thus, the court of appeals may address any issue necessary to decide the case before it.") (footnote omitted). The displacement question, which, in our view, is the critical question raised by this appeal, is therefore appropriately before us, and we turn immediately to it. The questions are ones of law and our review is plenary.

II. ADMIRALTY LAW AND DISPLACEMENT OF STATE LAW:

GENERAL PRINCIPLES

As we have noted, the plaintiffs' complaint alleged federal jurisdiction on the basis of both diversity of citizenship, 28 U.S.C.A. § 1332 (West 1993), and admiralty, 28 U.S.C.A. § 1333 (1993).*fn5 The Supreme Court has instructed us that "with admiralty jurisdiction comes the application of substantive admiralty law." East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 864, 106 S. Ct. 2295, 2298-99, 90 L. Ed. 2d 865 (1986). But knowing that substantive admiralty law applies does not really resolve the question whether federal or state law provides the relevant rule of decision. "Although the corpus of admiralty law is federal in the sense that it derives from the implications of Article III evolved by the courts, to claim that all enforced rights pertaining to matters maritime are rooted in federal law is a destructive oversimplification of the highly intricate interplay of the States and the National Government." Romero v. International Terminal Operating Co., 358 U.S. 354, 373-75, 79 S. Ct. 468, 480, 3 L. Ed. 2d 368 (1959); see also American Dredging Co. v. Miller, 127 L. Ed. 2d 285, 114 S. Ct. 981, 987 (1994) (recognizing the continued vitality of this principle from Romero).

State and federal authorities jointly exercise regulatory authority over maritime matters. Romero, 358 U.S. at 375, 79 S. Ct. at 481. As a result, state law can, and often does, provide the relevant rule of decision in admiralty cases. See, e.g., Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 321, 75 S. Ct. 368, 374, 99 L. Ed. 337 (1955) (state law determines the effect of breach of warranty in a marine insurance policy). Indeed, "in the field of . . . maritime torts, the National Government has left much regulatory power in the States." Id. at 313, 75 S. Ct. at 370.

Whether a state law may provide a rule of decision in an admiralty case depends on whether the state rule "conflicts" with the substantive principles of federal admiralty law. As Judge Aldisert explained in Floyd v. Lykes Bros. Steamship Co., 844 F.2d 1044, 1047 (3d Cir. 1988), "state law may supplement maritime law when maritime law is silent or where a local matter is at issue, but state law may not be applied where it would conflict with [federal] maritime law." See also Askew v. American Waterways Operators, Inc., 411 U.S. 325, 341, 93 S. Ct. 1590, 1600, 36 L. Ed. 2d 280 (1973) (courts in admiralty cases may reach beyond maritime precedents and apply state law "absent a clear conflict with the federal law"); Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 409-10, 74 S. Ct. 202, 205, 98 L. Ed. 143 (1953) ("States may sometimes supplement federal maritime policies . . . ."); Sosebee v. Rath, 893 F.2d 54, 56-57 (3rd Cir. 1990) (maritime law preempts territorial attorney fees provision that directly conflicts with federal law). Thus, in the context of this case, the Pennsylvania wrongful death and survival statutes (or the Puerto Rico death and survival actions) may apply unless they conflict with a substantive rule of federal admiralty law.

We view this question as being quite similar, if not identical, to the preemption analysis articulated in Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S. Ct. 573, 87 L. Ed. 838 (1943), and its progeny, see, e.g., United States v. Little Lake Misere Land Co., 412 U.S. 580, 594, 93 S. Ct. 2389, 2398, 37 L. Ed. 2d 187 (1973); United States v. Kimbell Foods, Inc., 440 U.S. 715, 728-29, 99 S. Ct. 1448, 1458-59, 59 L. Ed. 2d 711 (1979); Boyle v. United Technologies Corp., 487 U.S. 500, 507 n.3, 108 S. Ct. 2510, 2516 n.3, 101 L. Ed. 2d 442 (1988); O'Melveny & Myers v. F.D.I.C., 129 L. Ed. 2d 67, 114 S. Ct. 2048, 2053 (1994). These cases recognize that there are areas of unique federal interest which are entirely governed by federal law, but where federal law nevertheless "borrows," see Little Lake Misere, 412 U.S. at 594, 93 S. Ct. at 2398, or "incorporates" or "adopts," see Kimbell Foods, 440 U.S. at 728-30, 99 S. Ct. at 1458-59, state law except where a significant conflict with federal policy exists.

While it is clear that under certain circumstances the general maritime law -- including the wrongful death rule of Moragne -- may incorporate state law as its rule of decision, the Supreme Court has begun to view the distinction between federal law incorporating state law as a rule of decision and state law operating of its own force as of theoretical importance only. See O'Melveny & Myers, 114 S. Ct. at 2048 ("In any event, knowing whether 'federal law governs' in the Kimbell Foods sense -- a sense which includes federal adoption of state-law rules -- does not much advance the ball. The issue in the present case is whether the [state] rule of decision is to be applied . . . or displaced, and if it is applied it is of only theoretical interest whether the basis for that application is [the state's] sovereign power or federal adoption of [the state's] Disposition.") (citation omitted). More precisely, although drawing such a distinction identifies the sovereign "power" being exercised, it does not have any real bearing on the practical question whether the state law rule of decision will apply or be displaced. See id.*fn6 Thus, because it makes little practical difference as to whether the general maritime law has incorporated state law or whether state law provides a rule of decision of its own force, we simply refer to the problem as "displacement of state law."*fn7

In admiralty law, determining whether federal maritime law conflicts with and thus displaces state law has proven to be extremely tricky. Although we are told time and again under maritime preemption doctrine that a conflict exists where state law prejudices the "characteristic features" of federal maritime law, or interferes with the "proper harmony and uniformity of that law," Southern Pac. Co. v. Jensen, 244 U.S. 205, 216, 37 S. Ct. 524, 529, 61 L. Ed. 1086 (1917), the Jensen language is little more than a convenient slogan, providing little guidance on the question whether there is a conflict. See American Dredging, 114 S. Ct. at 991 (Stevens, J., Concurring) ("The unhelpful abstractness of [the Jensen language] leaves us without a reliable compass for navigating maritime pre-emption problems."). Indeed, the lack of a clearly delineated conflicts inquiry in this area has been problematic. The Supreme Court has consistently struggled with setting the boundary between conflicting and non-conflicting state regulation in the area of maritime affairs, and has recently admitted,

it would be idle to pretend that the line separating permissible from impermissible state regulation is readily discernible in our admiralty jurisprudence, or indeed is even entirely consistent within our admiralty jurisprudence. Compare [Kossick v. United Fruit Co., 365 U.S. 731, 81 S. Ct. 886, 6 L. Ed. 2d 56 (1961)] (state law cannot require provision of maritime contract to be in writing), with Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S. Ct. 368, 99 L. Ed. 337 [(1955)] (state law can determine effect of breach of warranty in marine insurance policy).

American Dredging, 114 S. Ct. at 987-88 (parallel citation omitted). See also GRANT GILMORE & CHARLES L. BLACK, THE LAW OF ADMIRALTY § 1-17, at 49 (2d ed. 1975) ("The concepts that have been fashioned for drawing [the line between state and federal law] are too vague, as we have seen, to ensure either predictability or wisdom in the line's actual drawing.").

In our view, however, the maritime preemption doctrine is not significantly different from the preemption doctrine applicable to non-maritime contexts. See American Dredging, 114 S. Ct. at 992 (Stevens, J., Concurring); Wilburn Boat Co., 348 U.S. at 324, 75 S. Ct. at 376 (Frankfurter, J., Concurring) (maritime preemption analysis factors "are not unlike those involved when the question is whether a State, in the absence of congressional action, may regulate some matters even though aspects of interstate commerce are affected"); id. at 333, 75 S. Ct. at 381 (Reed, J., Dissenting) ("Since Congress has power to make federal jurisdiction and legislation exclusive, the [preemption] situation in admiralty is somewhat analogous to that governing state action interfering with interstate commerce."). Therefore, resort to non-maritime preemption doctrine by way of analogy may help sharpen the focus of the inquiry.*fn8

Stated succinctly, in the absence of an express statement by Congress (express preemption), (implied) preemption could occur either where Congress intended that federal law occupy the field (field preemption) or where there is an actual conflict between state and federal law such that: (1) compliance with both federal and state law is impossible; or (2) state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. See California v. ARC America Corp., 490 U.S. 93, 100-01, 109 S. Ct. 1661, 1665, 104 L. Ed. 2d 86 (1989) (antitrust).*fn9

In non-maritime cases, the determination whether there is a conflict between state and federal law in large part turns on the interpretation of federal statutes. See Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68, 86 S. Ct. 1301, 1304, 16 L. Ed. 2d 369 (1966) ("Whether latent federal power should be exercised to displace state law is primarily a decision for Congress.").*fn10 In addition, non-maritime cases employ a presumption against preemption. That is, a court should construe a federal substantive rule in such a way that it does not conflict with a state rule in an area traditionally regulated by the states. See ARC America, 490 U.S. at 102, 109 S. Ct. at 1665. In admiralty law a similar presumption is incorporated in the case law by the requirement that there be a "clear conflict" before state laws are preempted. See Askew, 411 U.S. at 341, 93 S. Ct. at 1600; cf. Ballard ...


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