When U.S. bankruptcy law converges with federal admiralty law, complex jurisdictional conflicts and constitutional issues arise. This Article explores the history of how courts have treated the intersection of these two complex bodies of federal law, with a particular focus on Article III of the United States Constitution in the wake of the United States Supreme Court’s decision Stern v. Marshall. Because this fundamental issue regarding the power of bankruptcy courts to adjudicate admiralty matters may have a significant practical effect on maritime creditors, it is important that maritime practitioners be cognizant of the principles of bankruptcy jurisdiction. The Article further discusses certain aspects of complex commercial bankruptcy that are relevant to maritime practitioners, providing explanation of the impact of various bankruptcy issues in the maritime context.
Navigating the Rogue Waters of Inland Marine Transportation and the Impact of the Use of Third-Party Logistics Providers on Recovery for Cargo Loss and Damage
More and more, shippers of freight are engaging third-party logistics providers to arrange the movement of cargo instead of speaking with the motor carriers directly. In cases of lost cargo, the claimant must determine among the carriers, brokers, and third-party logistics providers—some of whom may be unknown to the shipper—which party carries the liability. The Carmack Amendment to the Interstate Commerce Commission Termination Act establishes a national application of strict liability to motor carriers and preempts all state law relating to carrier liability. The Carmack Amendment unquestionably applies to motor carriers, thus limiting their liability, but while the Amendment does not apply as to brokers and logistics providers, whether these entities qualify as carriers, despite never having physical control of the cargo, is unclear. This Article first analyzes whether claims about third-party logistics providers are preempted by the Carmack Amendment, then continues to determine what liabilities apply and what remedies are available and whether the Carmack Amendment should apply.
Breach of Warranty and Misrepresentation—USA
Warranties in marine insurance policies can take varying forms, from a common survey warranty to a unique provision inserted at the whim of a particular underwriter. Depending on the type of provision and the law applicable to the interpretation of the clause, the breach of a warranty may void or suspend a policy altogether. Alternatively, in certain jurisdictions or in certain cases, the breach may void the policy only if the breach is causally related to the loss or the breach increases the risk. In other situations, the provision may be unenforceable under state statute or under state law rules of contractual interpretation. This Article provides an overview of the treatment of a breach of warranty by various courts, beginning with an overview of various courts’ treatment of particular clauses and concluding with a discussion of a recent case example regarding a breach of an express seaworthiness warranty in a protection and indemnity policy.
Direct Actions, Declaratory Actions, Abstention, Interpleaders, and Other Practical Considerations
Marine practitioners must be aware of the issues that may arise when dealing with potential claims in the marine insurance context. In some jurisdictions, both in the United States and abroad, plaintiffs may join the insurer in the lawsuit and seek recovery directly, rather than only through the insured. In most jurisdictions, the plaintiff will likely prefer to have the case heard in state court, but the defendant will seek to have it in federal court. To do this, the defendant may seek to remove the case once it is filed or to seek a declaratory action before the claim is made. Additionally, when dealing with multiple potential claimants, the insurer may wish to file and interpleader and deposit the funds with the court. This Article discusses these practical issues, and others, that may arise in a marine insurance claim.
The Central Role of P&I Insurance in Maritime Law
When a ship proceeds to sea, it is beset by danger on all sides. The scope of risks involved is just as vast as the ocean. They range from the most minor to the catastrophic. The focus of this Article is protection and indemnity (P&I) insurance, a form of coverage under which shipowners and charterers are protected against the risk of liability to third parties and which plays a central role in maritime law. This Article considers the extent to which courts in the United States enforce and give effect to P&I insurance, especially in situations where the shipowner is unable to meet its financial obligations or has gone into bankruptcy.
Offshore Energy Construction Insurance: Allocation of Risk Issues
The legal fallout from major offshore events such as the DEEPWATER HORIZON spill, PIPER ALPHA, and the grounding of the EXXON VALDEZ has resulted in extreme stress testing of liabilities allocation in upstream oil and gas project contracts. The risks inherent in the offshore oil and gas industry are very large. This Article examines how liability is shared during offshore construction projects, the standard insurance policy that is commonly used in respect of such risks, and a number of topical issues that parties engaged in such activity might bear in mind when they are negotiating contracts and insurance arrangements to protect their position.
Will the Rigs-to-Reefs Experiment Be Based on the “Best Scientific Information Available”?
Artificial reefs constructed from decommissioned oil rigs have been proposed as a tool to counteract declines in marine fish populations. There is so much uncertainty surrounding this relatively new proposition to deal with an inherently difficult-to-study problem, however, that it is not yet possible to tell whether these rigs-to-reefs will contribute to the recovery of fish populations or exacerbate the problem. The National Fishing Enhancement Act (NFEA), the statute authorizing the rigs-to-reefs program, requires that agencies implementing it base their decisions on the “best scientific information available” (BSIA). Although no court has yet addressed this provision in the NFEA, it has been the frequent subject of litigation in related statutes. This Comment explores how a Court would likely evaluate a challenge to agency action under the NFEA, based on comparisons to treatment of this provision under the Endangered Species Act (ESA), Marine Mammal Protection Act (MMPA), and Magnuson-Stevens Fishery Conservation and Management Act (MSA). Concluding that courts will not likely supply the pressure to advance scientific information about the effects of rigs-to-reefs, this Comment advocates for a targeted approach to closing the information gap.
“Reasons? We Don’t Need No Stinkin’ Reasons”: Why United States District Courts Should Be Required To Explain 18 U.S.C. § 3582(c)(2) Resentencing Decisions
A particular area of federal sentencing that remains problematic in the era of Sentencing Guidelines is resentencing. Whenever the Sentencing Guidelines are amended, convicted defendants whose “guideline ranges” are lowered by the United States Sentencing Commission can move for a reduction in their sentence under 18 U.S.C. § 3582(c)(2). However, district courts can deny motions for a sentence reduction. District court rulings are reviewed under an “abuse of discretion” standard and are rarely given a thoughtful explanation, leaving prisoners with no relief and no explanation. This Comment examines the problems that exist with district courts’ failure to explain their rulings during § 3582(c)(2) sentence-modification proceedings. Specifically, this Comment discusses how the failure to explain resentencing decisions hinders meaningful appellate review, decreases the public trust in the criminal justice system, and obstructs the Sentencing Commission’s ability to revise the Sentencing Guidelines. Additionally, this Comment describes a model for what explanations from district courts should look like and how to require courts to provide one. This Comment concludes by suggesting that if district courts adequately explained their rulings during § 3582(c)(2) sentence-modification proceedings, each of the problems discussed herein would be alleviated and the number of § 3582(c)(2) motions would decrease over time, lessening the burden on the judiciary and prosecutors.
Orellana-Monson v. Holder: The Fifth Circuit Accepts the BIA’s Particularity and Social Visibility Requirements for Defining Membership of a Particular Social Group in Asylum Claims
Facing death threats from the notorious Mara 18 gang, eleven-year-old José Orellana-Monson fled his home in El Salvador with his little brother Andrés in hopes of finding safety in the United States.[1. Orellana-Monson v. Holder, 685 F.3d 511, 515 (5th Cir. 2012).] Mara 18 operates with near impunity in El Salvador, recruiting children like José to work as drug dealers and murderers.[2. Id.] When a local member of Mara 18, known only as Juan, tried to recruit José, the young boy said he was unsure about joining, fearing the potentially deadly consequences if he refused outright.[3. Id.] Enraged by José’s response, Juan threatened to kill him.[4. Id.] One night when José was home alone, Juan went to José’s house and forced him at gunpoint to rob a jewelry store.[5. Id.] Fearing for her grandsons’ safety, José and Andrés’ grandmother arranged for them to flee to the United States, where their mother lived.[6. Id.] After swimming across the Rio Grande, José and Andrés waited next to a U.S. Border Patrol truck until they were found.[7. Id.] Once detained, they maintained that they were eligible for asylum under the Immigration and Nationality Act (INA) because they would be persecuted in El Salvador for their membership in a particular social group.[8. Id.at 515-16, 519.] José alleged that he faced persecution as a member of a social group consisting of Salvadoran young males, aged eight to fifteen years, who were recruited by Mara 18 but refused to join because of a principled opposition to gangs.[9. Id.at 516]. Andrés’ claim derived from that of his brother.[10. Id. Andrés’s proposed group was siblings of members of José’s group or, alternatively, José’s family member. Id.] The immigration judge found that the Orellana-Monsons did not belong to particular social groups subject to persecution, and the Board of Immigration Appeals (BIA) dismissed their appeal.[11. Id. A United States Court of Appeals for the Fifth Circuit panel vacated the BIA decision denying asylum and remanded the case to the BIA to explain its reasoning. Id.at 516-17. The court found it unclear whether the BIA had found that the petitioners were not members of a particular social group, that they did not fear persecution because of such membership, or both. Id.at 517. On remand, the BIA found that the petitioners’ groups did not possess the requisite particularity and social visibility and dismissed the appeal. Id. The Orellana-Monsons filed a petition for review. Id.] The Orellana-Monsons petitioned for review, claiming that the court erred by accepting this “drastic change” in the BIA’s standard for defining particular social groups, which now requires particularity and social visibility.[12. Id. at 516-17.] The United States Court of Appeals for the Fifth Circuit held that the BIA’s new particularity and social visibility requirements for defining membership of a particular social group for asylum claims are valid and entitled to deference. Orellana-Monson v. Holder, 685 F.3d 511 (5th Cir. 2012).
Hodges v. Reasonover: The Louisiana Supreme Court Balances Policy Goals of Binding Arbitration and Attorney- Client Fiduciary Duty
The plaintiff, Jacqueline Hodges, retained the defendant, Kirk Reasonover of the law firm Reasonover & Olinde, LLC, as counsel to represent her interests in a multimillion dollar business dispute—a decision she would later come to regret.[1. Hodges v. Reasonover, 2012-0043, p. 2 (La. 7/2/12); 103 So. 3d 1069, 1071.] Prior to commencing their relationship, Hodges signed a retainer agreement with Reasonover & Olinde that included a binding arbitration clause.[2. Id.] The arbitration clause mandated that the parties bring any dispute arising between them to the American Arbitration Association (AAA).[3. Id. The AAA imposes filing fees on a sliding scale, in which a plaintiff’s costs are proportionate to the damages sought. Hodges alleged that arbitration would cost her $18,800 because she claimed damages totaling $70 million. Id. at p. 7 n.1; 103 So. 3d at 1074 n.1.] The parties kept the arbitration clause intact despite later renegotiating the terms of their fee agreement.[4. Id. at p. 3; 103 So. 3d at 1072. The revised fee agreement set fees on a contingency basis. Id.] The revised fee agreement stated that Hodges should seek independent counsel before signing because her interests were adverse to the interests of the firm.[5. Id.] However, Hodges proceeded to sign the revised agreement, without consulting independent counsel.[6. Id.] Hodges sued Reasonover & Olinde alleging legal malprac-tice after her complaint in the underlying matter was dismissed on a motion for summary judgment.[7. Id.] Defendants filed declinatory exceptions in response to Hodges’s suit in Civil District Court for the Parish of Orleans, citing the binding arbitration clause as grounds for challenging venue and subject matter jurisdiction.[8. Id.] The district court found the arbitration clause void and refused the defendants’ exceptions, and the Louisiana Court of Appeal for the Fourth Circuit denied supervisory writ.[9. Id. at pp. 3-4; 103 So. 3d at 1072.] The Louisiana Supreme Court granted writs to review the case.[10. Id. at p. 4; 103 So. 3d at 1072.] The Louisiana Supreme Court held that courts may enforce mandatory arbitration clauses in attorney-client agreements when they are fair and reasonable, but the firm’s arbitration clause was unenforceable because the defendants did not make the specific disclosures about the effects of arbitration that were necessary for Hodges to consent. Hodges v. Reasonover, 2012-0043, p. 14 (La. 7/2/12); 103 So. 3d 1069, 1078.