LLF attorney Richard Martin recently published this article in the Louisiana Association for Justice publication, “Louisiana Advocates,” June 2019 edition. This is Part 1 of a 2 part series. Part 2 will focus on service under Louisiana law and how to turn a vessel’s master into an employee of the foreign management company.
Can a vessel master be served with process as a “managing agent” of a foreign vessel operator?
Can a vessel master be a “borrowed employee”?
Louisiana maritime trial lawyers often encounter an overseas management company that operates “blue water” vessels which visit our local ports. Typically, the vessel is the subject of a bare boat charter between the “title owner” and the operating company, which then supplies a crew employed by a corporate cousin manning company. The vessel is then time sub-chartered by the operating company to a third-party (e.g., an oil company with a refinery on the Mississippi River).
If a negligence claim arises under the Jones Act or Section 905b, several questions present themselves. First, how is personal jurisdiction obtained over the foreign vessel management company which has no officers, employees, or agents for service in the United States? Second, is a vessel’s master fair game for service as the operator’s “managing agent”? Third. If the vessel’s master is not the operator’s managing agent, is he and can he be served as its “borrowed employee”?
I. FEDERAL RULE OF CIVIL PROCEDURE 4(h)(1)(B).
Fed. R. Civ. P. 4(h)(1)(B) can be the basis for service upon foreign corporations.1 This Rule requires that service on the foreign defendant be made in a judicial district of the United States. I suggest that this requirement is satisfied by going aboard the foreign corporation’s vessel while it is anchored or wharf-side in U.S, waters and hand-delivering copies of the summons and the complaint to directly to the captain.
II. SERVICE BY THE U.S. MARSHAL.
You can ordinarily use your office investigator to serve process, but what if he balks at climbing a long accommodation ladder to the deck of a vessel anchored in the Mississippi River? Or the vessel’s crew won’t let him aboard? Fortunately, there is a solution.
If plaintiff has brought his civil action as a seaman and invokes 28 U.S.C. § 1916,2 he is entitled to have the U.S. Marshal effect service under Fed. R. Civ. P. 4(c)(3).3
Thus, begin by asking the court to order that service be made by a U.S. Marshal or Deputy Marshal or by a person specially appointed by the court. Appointment of a special process service is discretionary, “unless the plaintiff is proceeding in forma pauperis or is a seaman…”4 Service by a U.S. Marshal is mandatory in § 1916 seamen’s suits.5
III. WHEN THE RULE 12(b)(5) MOTION TO DISMISS FOR INSUFFICIENT SERVICE OF PROCESS IS FILED, ARGUE THAT THE VESSEL MASTER IS THE OPERATOR’S “MANAGING AGENT”.
“Managing agent” in a former Rule 43(b) context.
Two pre-1972 amendment cases hold that vessel masters are “managing agents”.6 In both of these cases, the U.S. Fifth Circuit dealt with old Federal Rule of Civil Procedure 43, which concerned trial testimony.
However, even though the Federal Rules of Evidence replaced the old Rule 43 in 1972, it does not alter the fact that these two cases both held that vessel masters are “managing agents.”
In Sanford Bros., the Fifth Circuit considered whether the captain qualified as a ‘managing agent’ under Rule 43(b). There, the employer-appellant assigned as error the trial judge permitting cross-examination of its vessel master as a “managing agent.” The Fifth Circuit found this argument “without merit”. In so holding, the court wrote:
Rule 43(b) provides, inter alia, that “A party may call an adverse party or an officer, director, or managing agent of a public or private corporation or of a partnership or association which is an adverse party, and interrogate him by leading questions and contradict and impeach him in all respects as if he had been called by the adverse party * * *.” emphasis added. A captain of a vessel, even one so small as the D. A. LITTLE, has transcendent powers over his ship and qualifies as a “managing agent” under Rule 43(b). June T., Inc. v. King, 5 Cir. 1961, 290 F.2d 404, 406, n. 1. While Sanford Bros. does not disagree with this general proposition, it argues that in this instance Captain Ammon should not have been classified as a “managing agent” because the Captain as no longer in Sanford Bros.’ employ at the time of trial.
Deference to this principle has impelled the recognition that “courts, in determining who is a `managing agent’ within the terms of Rule 43(b) should not be too technical or literal in their approach * * *.” Skogen v. Dow Chemical Company, 8 Cir. 1967, 375 F.2d 692, 701. “The courts should view each case on an ad hoc basis and liberally apply the Rule to reach the demands of justice * * *.” Id.
June T was another “old Rule 43(b)” case where the Fifth Circuit agreed that a vessel master was considered a “managing agent” and went into great detail explaining why:
While the matter is not directly presented, the examination of the Master, called to the witness stand by the plaintiff, hardly makes the plaintiff ‘bound’ by all he said as the Owner somewhat obliquely contends. The Trail Court did not rule precisely, nor are we called on to do so as such, on whether the Master was a ‘Managing Agent’ under F.R.Civ.P. 43(b), see also 26(d)(2), 28 U.S.C.A. Some of the Judge’s rulings were restrictive, others approached permitting cross examination by the plaintiff. A ship master certainly meets the determinative standards set out in Newark Ins. Co. v. Sartain, D.C.N.D.Cal.1957, 20 F.R.C. 583, 586, of one who ‘1. Acts with superior authority and is invested with general powers to exercise his judgment and discretion in dealing with his principal’s affairs * * * 2. Can be depended upon to carry out his principal’s directions to give testimony at the demand of a party engaged in litigation with his principal; and 3. Can be expected to identify himself with the interests of his principal rather than those of the other party.’ Element No. 3 was regarded as a probable factor of relevance in Pan-American Casualty Co. v. Reed, 5 Cir., 1957, 240 F.2d 336, 340 in applying the principle announced in Maryland Casualty Co. v. Kador, 5 Cir., 1955, 255 F.2d 120. Many cases cited in Newark indicate that the managing agent relates to management of the field of activity concerned in the litigation.
A ship master by necessity and legal tradition is, of course, one having transcendent powers as an agent. See United Geophysical Co. v. Vela, 5 Cir., 1956, 231 F.2d 816, 819, 1956 AMC 745; Ionion S.S. Co. of Athens v. United Distillers of America, Inc., 5 Cir., 1956, 236 F.2d 78, 82. He has a duty not to sail unless the ship is seaworthy. Once she is underway he is, and must be, the sole commander. With respect to the injuries occurring aboard, especially at sea, he is the topmost authority in the hierarchy of management. A Master likewise satisfies the element of being a partisan for his ship. This testimonial disposition of seafarers is notorious. Ohio Barge Line, Inc. v. Oil Transport Co., 5 Cir., 1960, 280 F.2d 448, 451. These unique circumstances suggest a status for a vessel master quite different from a crew chief on a land-based activity. So, Dowell, Inc. v. Jowers, 5 Cir., 1950, 182 F.2d 576, does not necessarily foreclose the matter.
“Managing agent” in a limitation of liability context.
In Continental Oil Co. v. Bonanza Corp.,7 the Fifth Circuit looked to The Erie Lighter 1088 for guidance in defining “managing agent”. Finding that the vessel master was a “managing officer”, the Fifth Circuit held that a vessel owner was prevented from limiting its liability when the negligence at issue was that of a manager whose scope of authority included supervision over the activity out of which the loss or injury occurred.
“Managing agent” in a present Rule 32(a) context.
U.S. District Judge Susie Morgan determined that vessel masters are “managing agents” in the context of present Fed. R. Civ. P. 32(a)(3). In Howard,9 the defense filed a motion to exclude deposition excerpts for witnesses who were available and would testify live at trial. Plaintiffs relied upon Rule 32(a)(3) as authority for using the depositions.10
Judge Morgan noted that in determining whether a particular employee is a “managing agent” within the meaning of Rule 32, courts have looked to the following general factors:
1. Whether the agent’s interests are identified with those of the principal;
2. The nature and extent of the agent’s functions, responsibilities, and duties;
3. The extent of the agent’s power to exercise judgment and discretion; and
4. Whether any person or persons higher in authority than the deponent were in charge of the particular matter or possessed all of the necessary information.
Plaintiffs argued that two of defendant’s captains qualified as “managing agents” under Rule 32(a)(3), noting that one captain (1) was the master of one of the vessels on the night of the incident in question; (2) he had to ensure the safety of the crew to the best of his ability; and (3) he was the person with the most authority on the ship.
Similarly, the other captain was (1) supervisor of the vessel; (2) supervisor of the crew; and (3) the liaison for defendant’s management on its vessels.
Observing that other courts have held under similar circumstances that a vessel captain can qualify as a “managing agent” for purposes of Rule 32, Judge Morgan agreed with plaintiffs and found that the two captains qualified as “managing agents.”
“Managing agent” in the context of a salvage claim.
In Jackson Marine Corp. the U.S. Fifth Circuit found a vessel master to be a “managing agent” in the context of a salvage claim.11 It held:
It is well established in the general maritime law that the master of a vessel is the agent and representative of the owner and as such can bind the owner by acts performed within the scope of the agency. Massachusetts Lobstermen’s Ass’n, Inc. v. United States, 554 F.Supp. 740, 742 (D.Mass.1982); Farmer v. The O/S Fluffy D, 220 F.Supp. 917, 920 (S.D.Tex.1963); 3A M. Norris, Benedict on Admiralty, Sec. 178 (7th ed. rev. 1987). This agency relationship makes the owner responsible both for contracts made by the captain as well as the captain’s torts, so long as the torts are committed within the scope of the captain’s normal duties and employment. Domar Ocean Transp. v. Independent Refining Corp., 783 F.2d 1185, 1190 (5th Cir.1986); The Rising Sun, 20 F.Cas. 828 (D.Me.1837) (No. 11,858); see also M. Norris, supra, Sec. 108 n. 2 (listing cases).
“Managing agent” in the context of owner’s agent.
The status of a vessel master as agent of an owner is revealed by the authority “to bind” which a vessel master enjoys:12
A captain’s ability to bind the owners by his statements and acts arises from the captain’s status as an agent of the owners. See Jackson Marine, 845 F.2d at 1309-1310 (basing master’s ability to bind on his authority as agent and representative of owner). Indeed, federal maritime law embraces the principles of the law of agency. Naviera Neptuno S.A. v. All Int’l Freight Forwarders, Inc., 709 F.2d 663, 665 (11th Cir.1983); Hoechst Celanese Corp. v. M/V Trident Amber, 1992 WL 179219, *4 (S.D.Ga.1992); West India Industries, Inc. v. Vance & Sons AMC-Jeep, 671 F.2d 1384, 1387 (5th Cir.1982). To resolve questions of agency law, which “is a matter of federal common law[,] … the Court should first look to general principles of agency.” Global Towing L.L.C. v. Marine Tech. Servs., 2000 WL 351531, *2 (E.D.La.2000).
“Managing agent” in the context of service of process under Rule 4.
Service of process upon a vessel master in his capacity as a “managing agent” is not a new concept. It is under-reported.
Almost seventy years ago, Neset13 featured a motion to vacate service of summons and complaint upon a vessel’s master.14 The District Court, reasoning that service of process on a defendant is effective only if the court acquired jurisdiction of the person of the defendant, noted that “Therefore, the question for determination on this motion is whether such service is sufficient to confer jurisdiction over the corporate defendant.”15
In resolving this question in the affirmative, the district court wrote:16
“Finally, there remains for determination the question whether service upon Christensen constitutes a valid service so as to subject the defendant corporation to the jurisdiction of the court. Subsection d(3) of Rule 4 of the Federal Rules of Civil Procedure, 28 U.S.C.A.,17 provides that service may be made on a foreign corporation by service of process on “* * * an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process * * *.”
* * * * *
Christensen is not an officer of defendant corporation, nor is he an agent authorized by express appointment to accept service of process; but plaintiff contends that Christensen is a managing agent of the defendant corporation.
In Butler v. Boston & Savannah Steamship Co., 1889, 130 U.S. 527, page 544, 9 S.Ct. 612, page 618, 32 L.Ed. 1017, it was stated: “By virtue of his office, and the rules of maritime law, the captain or master has charge of the ship and of the selection and employment of the crew * * *.”
Moreover, the master of a vessel is presumed to have authority from the owner to procure supplies and other necessaries for the vessel. The Penza, 2 Cir., 1925, 9 F.2d 527; 46 U.S.C.A. § 972; see also The Kate, 1896, 164 U.S. 458, 465-466, 17 S.Ct. 135, 41 L.Ed. 512. As already noted, under the time charter the responsibility of proper navigation, crew, provisions and ship’s stores is with the owner. There is nothing here to negate the usual authority in the master to act for the owner. Paragraph 8 of the time charter provides: “The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; * * *.”
* * * * *
It would seem, therefore, that the activities which establish the defendant corporation’s “presence” are those within the usual authority of the master to act as managing agent for an absent principal. Consequently, under the rule established in the International Shoe Co. case, supra, service of process upon Christensen can be regarded as sufficient to confer jurisdiction over the corporate defendant.”
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1 (h) Serving a Corporation, Partnership or Association. Unless federal law provides otherwise or the defendant’s waiver has been filed, a ….. foreign corporation ….. must be served:
(1) in a judicial district of the United States:
* * * * *
(B) by delivering a copy of the summons and of the complaint to ….. a managing or general agent …..
2 “In all courts of the United States, seamen may institute and prosecute suits and appeals in their own names and for their own benefit for wages or salvage or the enforcement of laws enacted for their health or safety without prepaying fees or costs or furnishing security therefor.”
3 “At the plaintiff’s request, the court may order that service be made by a United States marshal or deputy marshal or by a person specially appointed by the court. The court must so order if the plaintiff is authorized to proceed in forma pauperis under 28 U.S.C. § 1915 or as a seaman under 28 U.S.C. § 1916.”
4 GMAC Real Estate, LLC v. Waterfront Realty Grp., Inc., 2010 WL 2465170, at *1 (M.D. Fla. June 15, 2010), report and recommendation adopted sub nom. GMAC Real Estate v. Waterfront Realty Grp., Inc., 2010 WL 2977973 (M.D. Fla. July 2, 2010)
5 Tejada v. DelBalso, 2018 WL 6268202, at *2 (M.D. Pa. Nov. 30, 2018); Fed. R. Civ. P. 4(c)(3); Pruitt v. Langer Transp. Corp., 2018 WL 3326847, at *1 (M.D. Ala. Jan. 23, 2018) (“…. the plain language of the Rule indicates that court appointment of a special process server is discretionary, unless the plaintiff is proceeding in forma pauperis or is a seaman…”).
6 Sanford Bros. Boats, Inc. v. Vidrine, 412 F.2d 958, 969 (5th Cir. 1969) and June T, Inc. v. King, 290 F.2d 404, 406 (5th Cir. 1961).
7 Continental Oil Co. v. Bonanza Corp, 706 F.2d 1385, 1376 (5th Cir. 1983).
8 The Erie Lighter 108, 250 F. 490, 494 (D.N.J. 1918) (“‘a managing officer’ is anyone to whom the corporation has committed the general management or general superintendence of the whole or a particular part of its business.”)
9 Howard v. Offshore Liftboats, LLC, 2016 WL 232251 (E.D. La., January 19, 2016 Order and Reasons).
10 “An adverse party may use for any purpose the deposition of a party or anyone who, when deposed, was the party’s officer, director, managing agent, or designee under Rule 30(b)(6) or 31(a)(4).”
11 Jackson Marine Corp. v. Blue Fox, 845 F.2d 1307, 1309-10 (5th Cir. 1988).
12 Alan, Sean, and Koule, Inc. v. The S/V “CORSTA V”, 286 F.Supp.2d 1367, 1374 (S.D. Ga. 2003).
13 Neset v. Christensen, 92 F. Supp. 78, 82-83 (E.D.N.Y. 1950).
14 The District Judge also found, pursuant to International Shoe Co. v. State of Washington, 326 U.S. 310 (1945), that the vessel’s repeated visits to New York conferred general personal jurisdiction over the foreign defendant. Neset, 92 F.Supp. at 81-82.
15 Id at 82.
16 Id at 82-83.
17 1950’s Rule 4(d)(3) is now 2019’s Rule 4(h)(1)(B).
