Is it a Vessel: Fifth Circuit Employs Reasonable Observer Test For Vessel Status In Recent Limitation Action
In re Southern Recycling, L.L.C., 982 F.3d 374 (5th Cir. Dec. 7, 2020).
By: Dylan Hoke
The Fifth Circuit recently weighed in on the issue of a vessel’s status in a limitation action stemming from an appeal from the United States District Court for the Southern District of Texas[1]. Southern Recycling sought to limit its liability under the Limitation of Liability Act[2] after an explosion occurred killing one worker and injuring another. The vessel, DBL 134, was an oceangoing tanker barge that Southern Recycling had begun shipbreaking operations on. The district court, relying on photos of the vessel, concluded that DBL 134 was a dead ship. Therefore, because parties cannot rely on the Limitation of Liability Act to confer jurisdiction to federal courts[3], and DBL was not a vessel, the district court granted Claimants’ motion to dismiss for lack of subject matter jurisdiction.
On appeal, the Fifth Circuit affirmed the district court’s decision that DBL 134 was not a vessel at the time of the accident. Applying the reasonable observer test[4] to photographs of the vessel at the time of the accident, the circuit court found that a large portion of the bow had been severed, leaving a large hole that visibly extends below the barges fully loaded waterline. Southern Recycling argued that despite the large hole, DBL 134 was still a vessel because it still could float and had been moved on the ship channel. However, the Fifth Circuit pointed to the fact that a structure’s capability of floating is not the sole factor in determining vessel status, and that the structure must give a reasonable observer evidence that it is capable of transporting persons or things over water. The court also found that the cargo tanks had been cut open leaving the barge unable to hold the liquid cargo it was designed for. Additionally, Southern Recycling alleged in a motion for preliminary injunction against a third party that DBL 1343 is so unsafe that it had to immediately evacuate all personnel from the DBL 134.
The Fifth Circuit found that the Claimants presented sufficient evidence to show major structural changes had been made to the vessel. A reasonable observer would not see a floating structure with a raked hull, bow, deck, and cargo tanks as Southern Recycling argued, but rather a structure with much of its deck removed, a severed bow and hull with a gaping hole that prevented the barge form being loaded, cargo tanks that can’t hold cargo, and a structure so unsafe that people cannot board. In sum, a reasonable observer would see a dead ship. Furthermore, Southern Recycling failed to show that the DBL could still serve a useful purpose by being able to transport anything over water, which would have allowed DBL 134 to retain its vessel status despite the structural changes.
Ultimately, the Fifth Circuit’s opinion demonstrates how fact intensive it is to determine when a vessel is withdrawn from navigation. Additionally, it should remind practitioners that a vessel’s status is not concrete but rather fluid and can change over the course of time, and that practitioners need to be sure of the vessel’s status at the time of the incident.
[1] In re Southern Recycling, L.L.C., 982 F.3d 374 (5th Cir. Dec. 7, 2020).
[2] 46 U.S.C. § 30501, et seq.
[3] Guillory v. Outboard Motor Corp., 956 F.2d 114, 114 (5th Cir. 1992).
[4] Lozman v. City of Riviera Beach, 568 U.S. 115 (2013).
