Petition for Writ of Certiorari — American Commercial Lines, LLC, Petitioner v. United States

No. 17In the

Supreme Court of the United States

american commercial lines llc,

Petitioner,

v.

united states of america,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

Glenn G. Goodier

Richard D. Bertram

Jones Walker LLP

201 St. Charles Avenue,

50th Floor

New Orleans, LA 70170

(504) 582-8000

John A.V. Nicoletti

Counsel of Record

Terry L. Stoltz

Nicoletti Hornig & Sweeney

Wall Street Plaza

88 Pine Street, 7th Floor

New York, NY 10005

(212) 220-3830

jnicoletti@nicolettihornig.com

Counsel for Petitioner

278558

A

(800) 274-3321 • (800) 359-6859

i

QUESTION PRESENTED

Congress passed the Oil Pollution Act of 1990 (“OPA”)

in response to the Exxon Valdez oil spill to “streamline

federal law so as to provide quick and efficient cleanup of

oil spills, compensate victims of such spills, and internalize

the costs of spills within the petroleum industry.” Rice v.

Harken Expl. Co., 250 F.3d 264, 266 (5th Cir. 2001). OPA

authorized the use of the Oil Spill Liability Trust Fund

(“OSLTF”), funded through taxes and penalties assessed

on the petroleum industry, to fund uncompensated

removal costs and damages resulting from an oil spill. 26

U.S.C. § 9509; see also Great American Ins. Co. v. United

States, 55 F. Supp. 3d 1053, 1059 (N.D. Ill. 2014). Under

OPA, a responsible party is entitled to limit its liability

to a specified dollar amount based on the tonnage of the

vessel from which oil is spilled, unless the United States

can establish an exception to the general limitation of

liability applies. 33 U.S.C. § 2704(a)-(c).

The question presented is whether the courts below

erred when they denied American Commercial Lines

LLC (“ACL”), the owner of the inland tank barge DM

932, limitation of liability under section 2704(c) of the

Oil Pollution Act of 1990. The lower courts held that the

secret, illegal acts of third-party towing company, DRD

Towing Company, LLC (“DRD”) and DRD employees

Terry Carver and John Bavaret which led to the collision

between the barge DM 932 and the M/V TINTOMARA,

were actions that were taken “pursuant to” to the charters

between ACL and DRD.

ii

PARTIES TO ACTION IN THE FIFTH

CIRCUIT COURT OF APPEALS

The parties to the proceeding are listed in the caption.

iii

RULE 29.6 CORPORATE DISCLOSURE

STATEMENT

Petitioner American Commercial Lines LLC is a

privately held limited liability company wholly owned by

Commercial Barge Line Company.1 There is no publicly

traded company that owns 10% or more of its stock or

ownership interests.

1. American Commercial Lines LLC has changed its name

to American Commercial Barge Line LLC, but it remains the

same company under the same ownership.

iv

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO ACTION IN THE FIFTH

CIRCUIT COURT OF APPEALS . . . . . . . . . . . . . . ii

RULE 2 9.6 CORPOR ATE DISCLOSURE

STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . . vi

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . vii

CITATIONS TO THE CASE BELOW . . . . . . . . . . . . . . 1

JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 1

REASONS FOR GRANTING THE PETITION . . . . . 7

v

Table of Contents

Page

POINT I

THE SU PREME COURT NEEDS TO

GRANT CERTIORARI TO EXERCISE ITS

SUPERVISORY POWER TO CONFIRM

T H AT I N T H IS CASE OF FIRST

IMPRESSION ACL IS ENTITLED TO

LIMIT ITS LIABILITY UNDER OPA FOR

THE CLEAN UP COSTS AND DAMAGES

RESULTING FROM THE OIL SPILL

CAUSED BY THE SECRET, ILLEGAL

ACTS OF DRD, CARVER AND BAVARET

W H IC H LED TO T H E COLLISION

BETWEEN THE BARGE DM-932 AND THE

M/V TINTOMARA . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Burden of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ACL is Entitled to Limitation of Liability

Under OPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

POINT II

THE SU PREME COURT NEEDS TO

GRA NT CERTIORARI IN ORDER TO

RESOLVE THE CONFLICT BETWEEN

THE CIRCUITS AS TO WHAT MORE

TH A N THE MERE EX ISTA NCE OF

THE CHARTERS BETWEEN ACL AND

DRD IS REQUIRED TO PREVENT ACL

FROM LIMITATION UNDER OPA . . . . . . . . . . . 16

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

vi

TABLE OF APPENDICES

Page

App e n di x A — o p i n ion o f t h e

United States Court of Appeals

for t h e Fi f t h Circu i t, Filed

November 7, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

APPENDIX B — FINAL JUDGMENT OF

THE UNITED STATES DISTRICT COURT

FOR T H E EASTER N DISTRICT OF

LOUISIANA, FILED OCTOBER 26, 2016 . . . . . . 19a

A P P E N DI X C — E X CER P T FROM

TRA N SCRI P T OF T H E U N ITED

STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF LOUISIANA,

FILED MARCH 10, 2015 . . . . . . . . . . . . . . . . . . . . . 22a

vii

TABLE OF CITED AUTHORITIES

Page

Cases

Bean Dredging, LLC v. U.S.,

773 F. Supp. 2d 63 (D.D.C. 2011) . . . . . . . . . . . . . . . . . 8

Buchanan v. Stanships, Inc.,

744 F.2d 1070 (5th Cir. 1984) . . . . . . . . . . . . . . . . . . . 15

Buffalo Marine Sevs. Inc. v. U.S.,

663 F.3d 750 (5th Cir. 2011) . . . . . . . . . . . . . . . . . 17, 18

Dresser Indus., Inc. v. First Travel Corp.,

1989 WL 87599 (W.D.N.Y. Aug. 2, 1989) . . . . . . . . . 13

Emerson Enterprises, LLC v.

Kenneth Crosby Acquisition Corp.,

2004 WL 1454389 (W.D.N.Y. June 23, 2004) . . . . . . 19

Gabarick v. Laurin Maritime, Inc.,

900 F. Supp. 2d 669 (E.D. La. 2012) . . . . . . . . . passim

Great American Ins. Co. v. U.S.,

55 F. Supp. 3d at 1061 (N.D. Ill. 2014) . . . . . . . . . . . 8, 9

In re Frescati Shipping Co.,

No. 16-3470 (3d Cir. August 31, 2016) . . . . . . . . . . . . 10

In re Frescati Shipping Company, Ltd.,

2016 WL 4035994 (E.D. Pa. July 25, 2016) . . . . . . . .10

viii

Cited Authorities

Page

Inland Trucking Corp. v. U.S.,

281 F.2d 457 (Fed. Cl. 1960) . . . . . . . . . . . . . . . . . 13, 14

Internat’l Marine Carriers v.

Oil Spill Liability Trust Fund,

914 F. Supp. 149 (S.D. Tex. 1995) . . . . . . . . . . . . . . . . 18

Palestina v. Fernandez,

701 F.2d 438 (5th Cir. 1983) . . . . . . . . . . . . . . . . . 13, 14

Seaboats, Inc. v. Alex C Corp.,

2003 WL 203078 (D. Mass. Jan. 30, 2003) . . . . . . . . 18

United States v.

American Commercial Lines, L.L.C.,

875 F.3d 170 (5th Cir. 2017) . . . . . . . . . . . . . . . . passim

Water Quality Ins. Syndicate v. U.S.,

632 F. Supp. 2d 108 (D. Mass. 2009) . . . . . . . . . . . . . . 8

Westwood Pharm., Inc. v.

Nat. Fuel Gas Distrib. Corp.,

964 F.2d 85 (2d Cir. 1992) . . . . . . . . . . . . . . . . . . . 18, 19

Statutes and Other Authorities

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

33 U.S.C. § 2701 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ix

Cited Authorities

Page

33 U.S.C. § 2702(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

33 U.S.C. § 2702(d)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 18

33 U.S.C. § 2703 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

33 U.S.C. § 2703(a)(3) . . . . . . . . . . . . . . . . . . . . . . 11, 16, 17

33 U.S.C. § 2704 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 10, 12

33 U.S.C. § 2704(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

33 U.S.C. § 2704(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 16

33 U.S.C. § 2704(c)(1) . . . . . . . . . . . . . . . . . . . . . . . 8, 16, 20

33 U.S.C. § 2751(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

42 U.S.C. § 9607(b)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1

CITATIONS TO THE CASE BELOW

The District Court opinion (Appendix C, pp. 22a-58a)

is not reported. The opinion of the Court of Appeals is

reported at United States v. American Commercial

Lines, L.L.C., 875 F.3d 170 (5th Cir. 2017); (Appendix A,

pp. 1a-18a).

JURISDICTIONAL STATEMENT

The Court of Appeals for the Fifth Circuit affirmed

the judgment of the District Court on November 7, 2017.

A judgment was entered on the same day. This Court has

jurisdiction to review the opinion by a writ of certiorari

under 28 U.S.C. § 1254(1).

STATEMENT OF THE CASE

From no later than January 1, 2007, D.R.D. Towing

Company, LLC (“DRD”) had engaged in systemic

practices of: (i) manning its tugs with unlicensed and/or

improperly licensed crews in violation of the laws, statutes,

and regulations of the United States, and (ii) allowing its

tugs to be operated for unsafe, extended periods without

proper relief crews in violation of the laws, statutes, and

regulations of the United States (Appendix A, p. 5a;

ROA.1039-1042, pp. 3 – 6). DRD “knowingly assigned,

or caused to be assigned, employees without appropriate

licenses and qualifications to critical positions to operate

certain vessels as the master or mate” (ROA.1042-43, pp. 6

– 7). DRD’s management “engaged in the practice of using

unlicensed crew members aboard its vessels . . . prior to

[the] collision,” Gabarick v. Laurin Maritime, Inc., 900 F.

Supp. 2d 669, 677 (E.D. La. 2012), and were aware that for

“a few months prior to [the] collision that its vessels were

2

being operated by crew members in excess of 12 working

hours.” Id. at 678. The captain who was assigned to the

MEL OLIVER, but absent from the tug at the time of

the collision, “was acknowledged by DRD to have been

working excessive hours aboard the M/V PAM D at the

time of that tug’s collision with another vessel.” Id. at 678.

Unaware of this ongoing illegal activity (ROA.2812:82813:6, Bryan Christy, T.Tr. VII (PM), pp. 85 – 86;

ROA.2853:1-23, Hecht Depo., March 24, 2011, p. 80;

ROA.2826:5-12, Sellers, T.Tr. Vol. VII (AM), p. 75), ACL

negotiated with DRD for the bareboat charter of ACL

tugs, or suitable substitutes, to DRD which DRD would,

in turn, time charter back to ACL to tow ACL’s barges

as directed (ROA.2857, Munoz Aff., ¶ 3).

During those negotiations, ACL proposed terms for

the charters which required DRD to operate and man the

tugs with a properly licensed crew and in accordance with

all applicable laws and regulations (Appendix A, pp. 2a-3a;

ROA.2857, Munoz Aff., ¶ 4). Furthermore, the proposed

time charter contained Performance Standards that made

DRD 100% responsible for insuring that the tugs were

“fully crewed with appropriate wheel-house personnel”

and that “crewmembers have the skills necessary to meet

all operational and technical requirements…” (Appendix

A, p. 3a; ROA.1233, nos. 2, 3).

The executed versions of the Charters1 (ROA.11961121; ROA.1122-37) contained identical Clauses 7 entitled

“Compliance with Laws and Regulations,” pursuant to

1. The Bareboat and Fully Found Charters are collectively

referred to as “the Charters.”

3

which DRD agreed to comply with all applicable laws and

regulations with respect to the manning and operation

of the chartered tugs or any substitute tugs. The Fully

Found Charter also contained Performance Standards

making DRD solely responsible for properly manning the

tugs (ROA.1233, Performance Standards 2 and 3).

The crewing and operation of the chartered tugs with

a properly trained and licensed crew and in compliance

with all applicable laws and regulations were material

elements of the Charters and ACL would not have entered

into the Charters without those provisions (ROA.2857-58,

Munoz Aff., ¶ 5-6). Had ACL known that DRD was not

going to comply with those requirements, ACL would not

have entered into the Charters (ROA.2835:5-17, Masters,

T.Tr. Vol. IX (AM), p. 35; ROA.2853:1-2855:4, Hecht Depo.,

March 24, 2011, pp. 80 - 82; ROA.2858-59, Munoz Aff.,

¶¶ 6, 14).

In May 2008, DRD’s management, although fully

aware, concealed from both the Coast Guard and ACL

that at the time of a collision between the PAM D and the

M/V LOUISIANA STAR, DRD had been operating the

tug PAM D for more than 12 hours with only one licensed

navigating officer aboard (Appendix A, p. 5a). See also

Gabarick v. Laurin Maritime, 900 F. Supp. 2d at 679.

Unaware of DRD’s illegal activities, on June 19,

2008, ACL entered into an Amendment to the Charters

(ROA.1238-39) allowing DRD to substitute the tug

MEL OLIVER for the tug PAM D (Appendix A, p. 2a;

ROA.2858, Munoz Aff., ¶ 9).

4

On the same day DRD entered into the Amendment,

John Bavaret was serving as the mate of the crew which

took possession of the MEL OLIVER for DRD. Bavaret

had been fired previously by the captain, Terry Carver,

for sleeping while either on watch or at the control of

a DRD tug, but this decision was overruled by DRD’s

management. Gabarick v. Laurin Maritime, 900 F.

Supp. 2d at 677. “[D]espite not being a properly licensed

operator,” Bavaret “was designated the relief [captain]

and was serving in the position of mate” of the MEL

OLIVER at the time of the collision and was “the only

person onboard, licensed or unlicensed, to operate the Mel

Oliver from July 20, 2008 to July 23, 2008” (Appendix A,

p. 3a; ROA.1185-86).

On July 23, 2008, the ACL barge DM 932, while

pushed by the tug MEL OLIVER under the command

of Bavaret, collided with the M/V TINTOMARA. As a

result of the Collision, some 300,000 gallons of oil were

spilled into the Mississippi River (Appendix A, pp. 3a-4a).

As the owner of the DM-932, ACL was designated as

a potential Responsible Party under OPA. In compliance

with its obligations under OPA, ACL promptly contracted

with several Oil Spill Response Organizations (“OSROs”)

to clean up the spill and published a notice to all possible

claimants who may have suffered damages as a result of

the spill to file their claims with ACL’s claims adjustor,

Worley Catastrophe. ACL paid over $70 million in cleanup costs and damages incurred by innocent third parties.

Limitation of liability actions were filed by ACL, DRD

and the owner of the M/V TINTOMARA. A non-jury

trial was held in those consolidated actions in which the

5

District Court entered an Opinion finding that collision

was caused by the sole fault of DRD and its employees

Carver and Bavaret. The District Court found that ACL

had acted properly in vetting DRD in connection with the

Charters and ACL was exonerated from any liability for

the collision. Gabarick, 900 F. Supp. 2d at 679.

The United States Attorney for the Eastern District

of Louisiana opened a criminal investigation into the

operations of DRD which resulted in a guilty plea by DRD

on September 8, 2010. The factual basis for the guilty

plea of DRD confirmed that before the Bareboat and

Fully Found Charters were executed, DRD had systemic

practices of: (i) manning its tugs with unlicensed and/or

improperly licensed crews in violation of the laws, statutes,

and regulations of the United States, and (ii) allowing its

tugs to be operated for unsafe, extended periods without

proper relief crews in violation of the laws, statutes, and

regulations of the United States (ROA.1179-87; ROA.2959,

Munoz Aff., ¶ 13).

During discovery in the limitation actions, ACL

learned of the United States criminal actions against DRD,

Carver and Bavaret, who all pled guilty, and that DRD had

been engaging in criminal activity by using improperly

licensed personnel to act as navigation officers aboard

its tugs and by allowing properly licensed personnel to

work hours in excess of the safe working hours provided

by the governing statutes. ACL filed an action to have

the Charters declared void ab initio. Because DRD had

largely gone out of business, the United States intervened

in the action to assert that the Charters should not be

voided. ACL’s motion for summary judgment declaring

the Charters void was denied on the basis that ACL was

6

judicially estopped from voiding the Charters because

it had relied on the Charters in avoiding liability in the

collision action. This decision was upheld in the Fifth

Circuit and the petition for certiorari was denied.

The United States also filed a complaint to recover

costs and expenses incurred in responding to the oil spill.

After the nullification action was concluded, the United

States filed an amended complaint followed by a motion

for Partial Summary Judgment, seeking an order holding

ACL strictly liable to the United States2 and denying

ACL all defenses or limitations of liability under OPA

(ROA.1138-1279). Over ACL’s opposition (ROA.12921332), the District Court granted the motion for Partial

Summary Judgment (ROA.1377-78).

After the completion of discovery, the United States

and ACL entered into a stipulation providing that the

recoverable removal costs and damages of the United

States were $20 million (ROA.2691-94), and the District

Court entered final judgment (Appendix B, pp. 19a-21a;

ROA.2697-99). ACL filed a timely Notice of Appeal

(ROA.2700-01). After briefing and oral argument, the

Fifth Circuit affirmed the decision below on November 7,

2017 (Appendix A, pp. 1a-18a). United States v. American

Commercial Lines, L.L.C., 875 F.3d 170 (5th Cir. 2017).

2. ACL does not dispute the District Court’s finding that,

subject to the OPA provisions on defenses from liability, 33 U.S.C.

§ 2703, and limitation of liability, 33 U.S.C. § 2704, ACL as a

responsible party is strictly liable under OPA. 33 U.S.C. § 2701.

7

REASONS FOR GRANTING THE PETITION

POINT I.

THE SUPREME COURT NEEDS TO GRANT

CERTIORARI TO EXERCISE ITS SUPERVISORY

POWER TO CONFIRM THAT IN THIS CASE

OF FIRST IMPRESSION ACL IS ENTITLED TO

LIMIT ITS LIABILITY UNDER OPA FOR THE

CLEAN UP COSTS AND DAMAGES RESULTING

FROM THE OIL SPILL CAUSED BY THE

SECRET, ILLEGAL ACTS OF DRD, CARVER AND

BAVARET WHICH LED TO THE COLLISION

BETWEEN THE BARGE DM-932 AND THE

M/V TINTOMARA

ACL, as a responsible party, is strictly liable under

33 U.S.C. § 2702(a) which provides that:

…subject to the provisions of this Act, each

responsible party for a vessel … from which

oil is discharged … into or upon the navigable

waters or adjoining shorelines … is liable for

the removal costs and damages … that result

from such incident.

In spite of this strict liability, OPA provides a

presumption that ACL is entitled to limit its liability.

However, there is an exception to that right to limitation

under OPA when

the incident was proximately caused by –

(A) gross negligence or willful misconduct of, or

8

(B) the violation of an applicable Federal safety,

construction or operating regulation by,

… a person acting pursuant to a contractual

relationship with the responsible party….

33 U.S.C. § 2704(c)(1).

Burden of Proof

The burden is on the United States to prove that an

exception to limitation applies. See Great American Ins.

Co. v. United States, 55 F. Supp. 3d 1053 (N.D. Ill. 2014).

As the court stated in Great American Insurance Co.,

If Congress had intended for a responsible

party to establish, by a preponderance of

the evidence, that it was entitled to limit its

liability, and to disprove the applicability of the

exceptions to limitation, wouldn’t it have done

so by expressly including that language, as it

did in § 2703? However, ‘Congress did not write

the statute that way’, suggesting that it views

a responsible party’s burdens with respect to

complete defenses and limitations of liability

differently.

Id. at 1062. (internal citation omitted); but see Bean

Dredging, LLC v. U.S., 773 F. Supp. 2d 63 (D.D.C. 2011);

Water Quality Ins. Syndicate v. U.S., 632 F. Supp. 2d 108

(D. Mass. 2009). 3 The court in Great American Insurance

Co. stated3

3. “However, neither decision discusses or reconciles the

difference between § 2703 which explicitly imposes the burden of

9

C om mon s en s e a l s o sug g e st s t h at a n

interpretation which essentially asks the

responsible party to disprove the exceptions –

that is, to prove the multitude of ways in which

they were not grossly negligent or did not

violate federal statutes – would not have been

the intention of Congress, particularly where

Congress explicitly provided for a limitation of

liability as the ‘general rule.’

Great American Ins. Co. v. U.S., 55 F. Supp. 3d at 1061

(N.D. Ill. 2014). Indeed, the United States admitted in its

reply memo of law in support of its motion in the District

Court that “it bears the burden of proof in showing an

exception to limitation under § 2704(a)”… (ROA.1343,

n.4), and the District Court agreed that the burden of

proof with respect to ACL’s right to limitation was on the

United States (Appendix C, p. 50a). The United States

did not carry its burden to prove that an exception to

limitation applies.

ACL is Entitled to Limitation of

Liability Under OPA

Again, the premise of the United States’ assertion and

the District Court’s decision, is that “in connection with”

and “pursuant to” “mean much the same thing” (Appendix

C, pp. 32a-33a), and that ACL is not entitled to limitation

under § 2704(a) of OPA because the mere existence of the

Charters is sufficient to deny ACL limitation (Appendix

proof on the party seeking a complete defense, and §§ 2704 and

2708, which do not discuss burden of proof.” Great American Ins.

Co. v. United States, 55 F. Supp. 3d at 1064 (N.D. Ill. July 9, 2014).

10

C, pp. 33a-34a, 54a). As shown in Point II below, the mere

existence of the Charters does not require a denial of

ACL’s right to limitation.

Indeed, the National Pollution Funds Center4 (“NPFC”)

does not apply the third-party limitation provision in the

manner contended for by the United States. In the claims

arising out of the grounding of the ATHOS I, which involved

a spill of 263,000 gallons of heavy oil into the Delaware

River, the NPFC allowed the owner of the vessel to limit

its liability under section 2704 of OPA and reimbursed the

owner for all removal costs and damages paid in excess

of the limitation amount even though the owner had a

contractual obligation to CITGO, which was ultimately

held at fault for the grounding, requiring the vessel owner

to deliver a cargo of oil to the terminal owned by CITGO.

The NPFC made this decision while litigation was ongoing,

and is still ongoing, as to whether the owner and/or a party

with whom it had a contractual relationship, CITGO, had

violated numerous safety and operating regulations which

may have led to the Delaware River spill. In re Frescati

Shipping Company, Ltd., 05-civ-305-JHS, 08-2898-JHS,

2016 WL 4035994, at * 4, * 7-8 (E.D. Pa. July 25, 2016),

appeal filed In re Frescati Shipping Co., No. 16-3470 (3d

Cir. August 31, 2016).

For the exception to apply, the United States had to

show not merely that DRD’s actions were “in connection

4. The National Pollution Funds Center is the Federal agency

tasked with adjudicating, inter alia, claims by a responsible

party for exoneration or limitation of liability under OPA. In the

underlying action, the United States sought a judicial, rather than

agency, declaration of ACL’s rights under OPA.

11

with” the Charters, but rather that the actions were

“pursuant to” the Charters. 5

The Court of Appeals acknowledged this was a case

of first impression and that OPA did not define “pursuant

to” so they looked to ordinary meaning of those words

(Appendix A, p. 14a). Specifically, the Court of Appeals

noted

Black’s Law Dictionary defines “pursuant to”

as “[i]n compliance with; in accordance with,”

“[a]s authorized by,” or “in carrying out.”

BLACK’S LAW DICTIONARY 1431 (10th

ed. 2014). Webster’s Third similarly defines

“pursuant to” as “in the course of carrying

out; in conformance to or agreement with;

[or] according to.” WEBSTER’S THIRD

NEW INTERNATIONAL DICTIONARY

1848 (2002). See also OXFORD ENGLISH

DICTIONARY 887 (2d Ed. 1989) (defining

“pursuant to” as “following upon, consequent

and conformable to, [or] in accordance with.”

5. In the courts below, ACL contended that it was entitled

to both exoneration and limitation of its liability because the acts

of DRD and its employees were not taken either “in connection

with” (33 U.S.C. § 2703(a)(3)) or “pursuant to” (33 U.S.C. § 2704(c)

(1) the Charters with DRD. However, unlike the District Court,

the Fifth Circuit acknowledged that the standards were different

and that “pursuant to” was less encompassing that “in connection

with” (Appendix A, p. 14a). United States v. American Commercial

Lines, L.L.C., 875 F.3d 170, 177 (5th Cir. 2017). Therefore, ACL is

only seeking review in this Court of the Fifth Circuit’s holding that

ACL was not entitled to the statutory presumption of limitation

of its liability.

12

Accordingly, and as ACL contends, “pursuant

to” has a narrower meaning that “in connection

with.” While the latter encompasses any conduct

that is logically related to the contractual

relationships in the sense that it would not have

occurred but for the third party’s contractual

relationship with the responsible party, the

former contemplates compliance or conformity.

(Appendix A, p. 14a). United States v. American

Commercial Lines, L.L.C., 875 F.3d at 177. The Court of

Appeals specifically noted that section 2704’s language

“contemplates [a contracting party’s] compliance or

conformity [with the contract]” (Appendix A, p. 14a).

United States v. American Commercial Lines, L.L.C.,

875 F.3d 170, 177 (5th Cir. 2017). Nevertheless, despite

acknowledgement that the statutory language expressly

requires a finding that the actions of the contracting party

be pursuant to and in conformance with the contract, the

opinions of the district court and the Fifth Circuit give

little to no meaning to the statutory language.

The Fifth Circuit indicated that ACL “goes too far

when it indicates that the specific acts of omissions must

be authorized by the contract” (Appendix A, p. 14a). Id.

ACL has never argued, nor does the statute require,

that the violation of an operating or safety regulation

be “authorized” by the contract. Certainly, ACL

acknowledges that regulatory violations, gross negligence

and/or willful misconduct can and does occur while a party

is acting pursuant to a contract, and a responsible party

would not be entitled to limitation under OPA.

13

Here, however, the criminal actions of DRD and

its employee Bavaret were wholly not in compliance or

conformity with the Charters and therefore were not

taken “pursuant to” the Charters. Despite the terms in

the Charters requiring DRD to comply with all laws and

regulations and to properly man the tug, DRD engaged

in the deliberate, criminal act of improperly manning

the MEL OLIVER. It cannot be contended that such

deliberate, criminal acts were taken “pursuant to” the

Charters. Criminal conduct is never pursuant to a legal

contract.

Where an agent’s criminal activities are outside the

scope of his employment, the principal is not responsible

for such action. Inland Trucking Corp. v. U.S., 281 F.2d

457, 459 (Fed. Cl. 1960). “An employer is not responsible

for the criminal acts or the intentional torts of their

employees outside the scope of their employment unless

the employer was negligent in some way – e.g., in hiring

the employee.” Dresser Indus., Inc. v. First Travel Corp.,

No. Civ. 88-581E, 1989 WL 87599, at *4 (W.D.N.Y. Aug.

2, 1989) (internal citations omitted). “It is axiomatic that

an employer is not liable for the acts of an employee

when those acts are undertaken outside the scope of

employment.” Palestina v. Fernandez, 701 F.2d 438, 440

(5th Cir. 1983). “The torts of an employee committed for

motives personal to the employee which are unrelated

to the furtherance of the employer’s business, especially

when serious in nature, may not be found to be within the

scope of the employee’s employment.” Dresser Indus., Inc.,

1989 WL 87599, at *4.

In Palestina, the defendant worked as a fisherman for

the owner of a boat rental facility. Palestina, 701 F.2d at

14

439. One day after work, without the authorization of his

employer, the defendant took one of his employer’s boats

for a pleasure ride. Id. During this unauthorized ride, the

defendant struck another vessel, killing the other driver.

Id. The trial court held the defendant’s employer liable

but the Fifth Circuit reversed, finding that the employer

could not be held liable for the acts of an employee taken

outside the scope of employment. Id. at 440.

In Inland Trucking Corp., plaintiff, a Philippine

trucking company, sued to recover money owed under a

government contract for transportation of army cargo.

Inland Trucking Corp., 281 F.2d at 458. The United States

withheld payment to reimburse it for cargo lost while in

transit in the company’s trucks. Id. The plaintiff claimed

that despite a clause to the contrary, it was not liable

under the contract because its own negligence did not

cause the losses. Rather, the army cargoes that were being

transported were robbed by hijackers, made possible in

part by the cooperation between the robbers, the military

policemen that were employed by the United States, and

the drivers that were employed by the plaintiffs. Inland

Trucking Corp., 281 F.2d at 459. The court explained that

“it is true that defendant’s agents, the military policemen,

were in part responsible for the thefts, but of course

criminal activities of this nature are outside the scope

of the agent’s employment, and it is well settled that the

principal is not responsible for such action. There is no

evidence in the record which would indicate the defendant

was negligent in selecting its guards, and it, therefore,

cannot be clothed with liability.” Inland Trucking Corp.,

281 F.2d at 459.

15

In Buchanan v. Stanships, Inc., the decedent was

an illegal alien found in the ballast tank of a bulk cargo

carrier. Buchanan v. Stanships, Inc., 744 F.2d 1070 (5th

Cir. 1984). His mother commenced an action under the

Jones Act and general maritime law for damages for the

wrongful death of her son. Id. The district court granted

summary judgment to the defendants, finding that the

owner and operator of the vessel could not be liable for

the unlawful acts of their employees, i.e., accepting money

to smuggle the decedent into the United States, nor could

the companies be liable for the tortious acts of employees

who violated the company policy forbidding its vessel to

carry passengers for hire because this conduct fell beyond

the scope of their employment. Id. This Court reversed,

explaining that it was up to the trier of fact to determine

whether the employees were acting within the scope of

their employment.

John Bavaret admitted in his guilty plea that he

lost situational awareness and that this resulted in the

collision with the TINTOMARA and the resulting oil

spill (ROA.1191). DRD Towing Company, LLC admitted

in its guilty plea that the negligence of Bavaret, who was

acting within the scope of his employment for DRD, was

a cause of the July 23, 2008 collision and conceded that it

was liable for the faults of Bavaret (ROA.1187).

DRD may not have known that Carver left the MEL

OLIVER on July 20, 2008. Nonetheless, by paying

apprentice mates/steersmen extra to serve a watch by

themselves and by paying properly licensed operators

extra money to work more than 12 hours in a 24-hour

day, DRD and its management knowingly created an

atmosphere that allowed such illegal and unsafe conduct

to occur (See, e.g. ROA.1181-82).

16

Since ACL was not held liable for the criminal acts of

DRD and its employees, the United States did not carry

its burden of proof to establish that those criminal acts

were performed “pursuant to” the Charters. Therefore,

ACL is entitled to limitation of its liability for removal

costs and damages under OPA.6

This Court should grant the petition for certiorari and

reverse the decision of the lower courts and direct that

ACL be granted limitation of liability under OPA.

POINT II.

THE SUPREME COURT NEEDS TO GRANT

CERTIORARI IN ORDER TO RESOLVE THE

CONFLICT BETWEEN THE CIRCUITS AS TO

WHAT MORE THAN THE MERE EXISTANCE

OF THE CHARTERS BETWEEN ACL AND

DRD IS REQUIRED TO PREVENT ACL FROM

LIMITATION UNDER OPA

The assertion of the United States was that the “mere

existence” of the Charters was sufficient (Appendix C, pp.

32a-34a). The premise of the District Court’s decision,

adopting the argument of the United States, was that ACL

cannot rely upon the third party defense from liability

under OPA, 33 U.S.C § 2703(a)(3), or the right to limitation

under OPA, 33 U.S.C. § 2704(c)(1), because ACL entered

6. There has never been any suggestion that ACL did not

promptly report the collision or provide all reasonable cooperation

requested by the Unified Command in connection with the cleanup of the spill. Therefore, ACL is not precluded from limiting its

OPA liability under 33 U.S.C. § 2704(c).

17

into the Charters with DRD who the District Court

found solely at fault for the collision and resulting oil spill

(Appendix C, pp. 54a-55a). The error in this premise is

that the mere existence of the Charters does not prevent

ACL from relying upon the third party defense.

The Fifth Circuit Court of Appeals had occasion to

apply § 2703(a)(3) in Buffalo Marine Sevs. Inc. v. U.S., 663

F.3d 750, 755 (5th Cir. 2011), where the OPA responsible

party (i.e. the owner of the vessel from which the oil was

spilled) had not entered into a contract with the party

whose actions were the sole cause of the oil spill. The Court

noted that the definition of “contractual relationship” in

OPA “replicates the definition of ‘contractual relationship’

in” the Comprehensive Environmental Response,

Compensation, and Liability Act (“CERCLA”), id. at

756, and that under CERCLA the third party defense

“does not apply where the third party’s ‘act or omission

occurs in connection with a contractual relationship,

existing directly or indirectly, with the defendant.’”

Id. at 755 – 56 (emphasis in original). According to the

court, “[g]iven the common purposes and shared history

of CERCLA and the OPA, the use of the phrases ‘any

contractual relationship’ and ‘a contractual relationship,

existing directly or indirectly’ in parallel, similarly worded

provisions is particularly significant.” Id. at 756 (footnotes

omitted). The Fifth Circuit concluded that “[t]he fact that

no contract exists between two parties does not preclude

the parties from having a ‘contractual’ relationship”, id.

at 755, and denied the responsible party the right to avoid

liability under the third-party defense. Id. at 759.

Very few courts have had to decide when OPA’s thirdparty complete defense or right to limitation were available

18

to a responsible party. Two district courts have indicated

that OPA “requires only that ‘any contractual relationship’

exist to deny a third-party defense to liability.” Internat’l

Marine Carriers v. Oil Spill Liability Trust Fund, 914 F.

Supp. 149, 152 (S.D. Tex. 1995); see Seaboats, Inc. v. Alex

C Corp., Nos. Civ.A 01-12184-DPW, Civ.A 01-12186-DPW,

Civ.A 00-12500-DPW, 2003 WL 203078, at *4 (D. Mass.

Jan. 30, 2003) (citing 33 U.S.C. § 2702(d)(1)(A)). However,

these courts did not address the statutory requirement

that the acts or omissions of the third party had to occur

“in connection with” the contractual relationship to deny

the responsible party exoneration or be “pursuant to” the

contractual relationship to deny the responsible party

limitation of liability.

CERCLA’s third party defense provision, which the

Fifth Circuit has held to be similar to OPA’s provisions,

Buffalo Marine, 663 F.3d at 755, similarly contains the

“in connection with” requirement, 42 U.S.C. § 9607(b)(3).

Several courts, including the Court of Appeals for the

Second Circuit, have discussed the “in connection with”

requirement under CERCLA.

In Westwood Pharm., Inc. v. Nat. Fuel Gas Distrib.

Corp., 964 F.2d 85 (2d Cir.1992), the Court of Appeals for

the Second Circuit held that

the phrase “in connection with a contractual

relationship” in CERCLA § 107(b)(3) requires

more than the mere existence of a contractual

relationship between the owner of the land

on which hazardous substances are or have

been disposed of and a third party whose act

or omission was the sole cause of the release

19

or threatened release of such hazardous

substances into the environment, for the

landowner to be barred from raising the thirdparty defense provided for in that section. In

order for the landowner to be barred from

raising the third-party defense under such

circumstances, the contract between the

landowner and the third party must either

relate to the hazardous substances or allow the

landowner to exert some element of control over

the third party’s activities.

Id. at 91 – 92. See also Emerson Enterprises, LLC v.

Kenneth Crosby Acquisition Corp., No. 03-CV-6530-CJS,

2004 WL 1454389, at *5 (W.D.N.Y. June 23, 2004) (“[T]he

Second Circuit has indicated that the mere existence of

a contractual relationship with another PRP [potentially

responsible party] is not sufficient to prevent a party from

qualifying for a defense. Rather, the statutory reference

to acts or omissions occurring ‘in connection with a

contractual relationship’ requires that there be a nexus

between the contract and the hazardous substances . . .”).

Similarly, OPA’s third-party limitation of liability

provision requires that the acts or omissions of the

third-party must be taken “pursuant to” the contractual

relationship.

While the Court of Appeals for the Fifth Circuit

acknowledged that the exoneration phrase “in connection

with” was

20

not so capacious as to be rendered meaningless.

Conduct does not automatically occur “in

connection with” a contractual relationship by

the mere fact that such a relationship exists.

(Appendix A, p. 10a); United States v. American

Commercial Lines, L.L.C., 875 F.2d at 175. However,

the Fifth Circuit specifically declined to adopt the test

established by the Second Circuit that the contract had to

relate to hazardous substances … or permit the responsible

party to control the third party’s activities (Appendix A,

p. 12a). United States v. American Commercial Lines,

L.L.C., 875 F.3d at 176.

The Fifth Circuit rejected the application of the

doctrine of respondeat superior on the grounds that the

doctrine was created by the common law and this was a

case of statutory construction (Appendix A, p. 17a). United

States v. American Commercial Lines, L.L.C., 875 F.3d

at 178. However, the doctrine is applied in admiralty and

maritime cases, see Point I above, and OPA specifically

“does not affect – (1) admiralty and maritime law….” 33

U.S.C. § 2751(e).

Limitation of liability under 33 U.S.C. § 2704(c)(1) is

not denied to a responsible party under OPA by the mere

existence of a contractual relationship. Therefore, this

Court should grant the petition for certiorari and then

resolve the conflict between the Fifth and Second Circuits

on what more is required to defeat a responsible party’s

right to limit its liability.

21

CONCLUSION

The courts below erred in denying A merican

Commercial Lines LLC limitation of liability under the

Oil Pollution Act of 1990 by holding that the secret, illegal

acts of DRD Towing Company, LLC, Terry Carver and

John Bavaret which led to the collision between the barge

DM-932 and the M/V TINTOMARA were “pursuant to”

to the Charters between ACL and DRD. Therefore, this

Court should grant a writ of certiorari to hear this matter.

Respectfully submitted,

Glenn G. Goodier

Richard D. Bertram

Jones Walker LLP

201 St. Charles Avenue,

50th Floor

New Orleans, LA 70170

(504) 582-8000

John A.V. Nicoletti

Counsel of Record

Terry L. Stoltz

Nicoletti Hornig & Sweeney

Wall Street Plaza

88 Pine Street, 7th Floor

New York, NY 10005

(212) 220-3830

jnicoletti@nicolettihornig.com

Counsel for Petitioner

APPENDIX

1a

APPENDIX A — Appendix

OPINIONAOF THE UNITED

STaTEs COuRT OF APPEaLs FOR THE FIFTH

CIRcuIT, FILED NOVEMBER 7, 2017

iN tHe united states court of

APPeals for the Fifth circuit

No. 16-31150

uNiteD stAtes OF AmeRicA,

Plaintiff-Appellee,

v.

AmeRicAN cOmmeRciAL LiNes, L.L.c.,

Defendant-Appellant.

Appeal from the united states District court

for the eastern District of Louisiana.

Before smitH, OWeN, and HiGGiNsON, circuit

Judges.

stePHeN A. HiGGiNsON, circuit Judge:

On July 23, 2008, nearly 300,000 gallons of oil spilled

into the mississippi River when a tugboat veered across

the river, putting the oil-filled barge it towed into the path

of an ocean-going tanker. the tugboat, the m/V meL

OLiVeR, was owned by American commercial Lines

(“AcL”) but operated by DRD towing company pursuant

2a

Appendix A

to a contractual agreement between the companies. As

the statutorily-defined responsible party under the Oil

Pollution Act (“OPA”), AcL incurred approximately $70

million in removal costs and damages. the united states

also incurred approximately $20 million in removal costs

and damages.

the united states initiated this action in 2014, seeking

a declaration that AcL is liable for all removal costs and

damages resulting from the spill and to recover the costs

that it incurred. the united states moved for partial

summary judgment on its claims that AcL was not entitled

to any defenses to liability under OPA. the district court

granted that motion, and later entered final judgment

ordering AcL to pay the united states $20 million. AcL

appealed. We AFFiRm.

I

in 2007, AcL, a marine-transportation company that

operates a fleet of barges and tugboats, contracted with

DRD towing, another marine-transportation company, to

operate some of its tugboats. AcL and DRD entered into

two charter agreements. under the “master Bareboat

charter,” AcL chartered several tugboats, including

the m/V meL OLiVeR, to DRD for one dollar per day.1

under the “master Fully Found charter,” DRD agreed to

crew the tugboats and charter its services back to AcL.

1. The Master Bareboat Charter specified three vessels, M/V

PAm D, m/V ReGiNA ANN, and m/V ceLeste mcKiNNeY.

When the PAm D suffered an engine failure, the meL OLiVeR was

substituted in its place by amendment to the initial charter.

3a

Appendix A

Both agreements required compliance with “all applicable

laws and regulations [with] respect to the registration,

licensing, use, manning, maintenance, and operation of

the Vessel(s).”

the meL OLiVeR’s crew consisted of captain terry

carver, steersman John Bavaret, and two deckhands.

captain carver was the only crewmember with a valid

united states coast Guard master of towing Vessels

license, which authorized him to lawfully operate tugboats

on the lower mississippi River. steersman Bavaret held

only an Apprentice mate (steersman) license, which

authorized him to serve as an apprentice mate under the

direct supervision of a properly licensed master. He was

not authorized to operate the vessel without continuous

supervision. See 46 c.F.R. § 10.107(b) (requiring that

steersman “be under the direct supervision and in the

continuous presence of a master”); 46 c.F.R. § 15.401

(prohibiting mariners from serving in any positions that

exceed the limits of their credentials).

On July 20, 2008, captain carver left the meL

OLiVeR to go on shore, leaving steersman Baravet in

control of the vessel. two days later, while—unbeknownst

to AcL—captain carver was still on shore, AcL directed

the meL OLiVeR to tow an AcL barge, the Dm-932, to

pick up fuel from a facility in Gretna, Louisiana. At that

time, steersman Bavaret had worked for 36 hours with

only short naps, in violation of coast Guard regulations.

See 46 u.s.c. § 8104(h) (“[A]n individual licensed to

operate a towing vessel may not work for more than

12 hours in a consecutive 24-hour period except in an

4a

Appendix A

emergency.”); 46 c.F.R. § 15.705(d) (stating that “a master

or mate (pilot)” may not work “more than 12 hours in a

consecutive 24-hour period except in an emergency”). still

under steersman Bavaret’s control, the meL OLiVeR

arrived at the Gretna facility around 2:00 p.m. on July 22,

2008. the Dm-932 was loaded with fuel, and the meL

OLIVER departed for its return trip, with the fuel-filled

barge in tow, at about 12:30 a.m. on July 23, 2008.

As the meL OLiVeR pushed the Dm-932 along

the mississippi River, it began travelling erratically. At

about 1:30 a.m., it turned to cross the path of an oceangoing tanker, the tiNtOmARA, owned by a third party.

the tiNtOmARA’s pilot and the coast Guard’s New

Orleans Vessel Traffic Service staff attempted to hail

the meL OLiVeR by radio, but no one answered. the

tiNtOmARA also sounded its alarm whistle. unable to

change course, the tiNtOmARA collided with the Dm932. the Dm-932 broke away from the meL OLiVeR and

sank downriver, spilling approximately 300,000 gallons

of oil into the mississippi River. immediately after the

collision, a crewmember on the meL OLiVeR found

steersman Bavaret slumped over the steering sticks and

non-responsive.

Following the spill, the government prosecuted DRD,

captain carver, and steersman Bavaret for criminal

violations of federal environmental law. DRD and

steersman Bavaret each pleaded guilty to one count of

violating the Ports and Waterways safety Act, 33 u.s.c.

§ 1232(b)(1), and one count of violating the clean Water

Act (“cWA”), 33 u.s.c. § 1319(c)(1)(A). captain carver

5a

Appendix A

pleaded guilty to one count of violating the Ports and

Waterways safety Act.

in the course of the criminal investigation, DRD

admitted that it knowingly allowed its crewmembers to

work without appropriate licenses or qualifications and

to work more hours than were permitted under coast

Guard safety regulations and that it failed to report

those “manning deficiencies” to the Coast Guard, also in

violation of coast Guard regulations. captain carver and

steersman Bavaret admitted to knowing that Bavaret was

not licensed to act as captain in carver’s absence.

in addition to the criminal prosecution, the government

sued AcL and DRD under OPA to recover clean-up

costs resulting from the spill. 2 DRD promptly declared

bankruptcy and later dissolved its LLc. the government

moved for summary judgment against AcL on the issue of

liability under OPA. the district court granted summary

judgment in favor of the government, and later issued a

final judgment ordering ACL to pay the government $20

million. this appeal followed.

II

We review a district court’s grant of summary

judgment de novo, applying the same legal standards

as the district court. Robinson v. Orient Marine Co.,

505 F.3d 364, 365 (5th cir. 2007). summary judgment is

2. Related litigation came to this court in United States v. Am.

Commercial Lines, L.L.C., 759 F.3d 420 (5th cir. 2014).

6a

Appendix A

appropriate only “if the movant shows that there is no

genuine dispute as to any material fact and the movant

is entitled to judgment as a matter of law.” Fed. R. civ. P.

56(a). Any reasonable inferences are to be drawn in favor

of the non-moving party. Robinson, 505 F.3d at 366.

III

A

OPA was enacted in 1990 in response to the exxon

Valdez oil spill. it “was intended to streamline federal law

so as to provide quick and efficient cleanup of oil spills,

compensate victims of such spills, and internalize the costs

of spills within the petroleum industry.” Rice v. Harken

Exploration Co., 250 F.3d 264, 266 (5th cir. 2001) (citing

s. ReP. NO. 101-94, reprinted in 1990 u.s.c.c.A.N.

722, 723). OPA’s cost-internalization measures, which

increased the financial consequences of oil spills, were

intended to “encourage greater industry efforts to prevent

spills and develop effective techniques to contain them.”

S. reP. no. 101-94 at 3. to that end, OPA redresses “gross

inadequacies . . . in the cWA’s provisions dealing with

spiller responsibility for cleanup costs” by extending the

cWA’s regime of strict, joint, and several liability; limiting

the available defenses to liability; increasing the applicable

limits to liability; and eliminating the liability limits

altogether under certain circumstances. Id. at 4-5, 12-14.

OPA holds statutorily-defined “responsible parties”

strictly liable for pollution-removal costs and damages

associated with oil spills. See Buffalo Marine Servs. Inc.

7a

Appendix A

v. United States, 663 F.3d 750, 752 (5th cir. 2011) (stating

that OPA “creates a strict-liability scheme for the costs of

cleaning up oil spills”). it provides that “each responsible

party for a vessel or a facility from which oil is discharged

. . . is liable for the removal costs and damages . . . that

result from such incident.” 33 u.s.c. § 2702(a). With

respect to vessels, the “responsible party” is “any person

owning, operating, or demise chartering the vessel.” 33

u.s.c. § 2701(32)(A).

OPA generally limits the liability of a responsible

party to a specified dollar amount based on the tonnage

of the vessel from which oil was discharged. 33 u.s.c.

§ 2704(a). However, the limits on liability do not apply if:

the incident was proximately caused by—(A)

gross negligence or willful misconduct of,

or (B) the violation of an applicable Federal

safety, construction, or operating regulation

by, the responsible party, an agent or employee

of the responsible party, or a person acting

pursuant to a contractual relationship with the

responsible party . . . .

33 u.s.c. § 2704(c)(1). Accordingly, under those

circumstances, there is no limit to the liability of the

responsible party.

in addition to the general limits on liability, OPA

provides for a complete defense to liability under four

enumerated circumstances. it provides that:

8a

Appendix A

[a] responsible party is not liable for removal

costs or damages . . . if [that] party establishes,

by a preponderance of the evidence, that the

discharge . . . of oil and the resulting damages or

removal costs were caused solely by—(1) an act

of God; (2) an act of war; (3) an act or omission of

a third party, other than an employee or agent

of the responsible party or a third party whose

act or omission occurs in connection with any

contractual relationship with the responsible

party . . . or (4) any combination of paragraphs

(1), (2), and (3).

33 u.s.c. § 2703(a). to be entitled to the third-party

defense, a responsible party must also establish that it

“exercised due care with respect to the oil concerned”

and that it “took precautions against foreseeable acts

or omissions” of the third party. 33 u.s.c. § 2703(a)(3)

(A)-(B). 3

AcL contends that it is entitled to the third-party

defense under § 2703(a)(3) or, in the alternative, that it is

entitled to limit its liability pursuant to § 2704(a). For the

reasons stated below, we disagree.

3. the district court concluded that AcL failed to present

suff icient evidence to establish that it satisf ied those two

requirements. Because we hold that AcL is not entitled to the

third-party defense on the ground that DRD’s conduct occurred “in

connection with” its contractual relationship with AcL, we do not

reach the issues of whether AcL exercised due care and took the

necessary precautionary measures.

9a

Appendix A

B

AcL contends that it is entitled to a complete defense

to liability under 33 u.s.c. § 2703(a)(3) on the ground that

the conduct of DRD, a third party, caused the spill. the

government responds that the third-party defense is not

available because DRD’s conduct occurred in connection

with a contractual relationship with AcL. the parties

agree that DRD’s acts and omissions were the sole cause

of the spill and that AcL and DRD had a contractual

relationship. they dispute only whether DRD’s acts and

omissions occurred in connection with that contractual

relationship.

the meaning of § 2703(a)(3)’s “in connection with”

language is a question of first impression. To determine

whether DRD’s conduct occurred “in connection with”

its contractual relationship with AcL, we begin with

the meaning of “connection.” See Taniguchi v. Kan Pac.

Saipan, Ltd., 566 u.s. 560, 566, 132 s. ct. 1997, 182

L. Ed. 2d 903 (2012). Because the term is not defined

in the statute, we must give it its ordinary meaning.

See id. (“When a term goes undefined in a statute, we

give the term its ordinary meaning.”). Webster’s third

New international Dictionary defines “connection”

as “relationship or association in thought (as of cause

and effect, logical sequence, mutual dependence or

involvement).” weBster’s T hIrd new I nternAtIonAl

DIctIonAry 481 (2002). the Oxford english Dictionary

defines it as “[t]he condition of being related to something

else by a bond of interdependence, causality, logical

sequence, coherence, or the like; relation between things

10a

Appendix A

one of which is bound up with, or involved in, another.” 3

Oxford EnglIsh DIctIonAry 747 (2d ed. 1989).

“connection” is therefore a capacious t er m,

encompassing things that are logically or causally

related or simply “bound up” with one another. it is,

however, not so capacious as to be rendered meaningless.

conduct does not automatically occur “in connection

with” a contractual relationship by the mere fact that

such a relationship exists. See Westwood Pharm., Inc.

v. Nat’l Fuel Gas Distrib. Corp., 964 F.2d 85, 89 (2d cir.

1992) (interpreting virtually identical language in the

comprehensive environmental Response, compensation

and Liability Act (“ceRcLA”) and holding that “[t]he

mere existence of a contractual relationship . . . does

not foreclose the owner of and from escaping liability”).

Rather, the conduct must be causally or logically related to

the contractual relationship. Accordingly, the third party’s

acts or omissions that cause a spill occur “in connection

with any contractual relationship” between the responsible

party and the third party whenever the acts or omissions

relate to the contractual relationship in the sense that the

third party’s acts and omissions would not have occurred

but for that contractual relationship.

this reading of the ordinary meaning of “connection”

is consistent with OPA’s purpose. See Buffalo Marine

Servs., 663 F.3d at 757 (“to determine the meaning of

a statute, ‘we look not only to the particular statutory

language, but to the design of the statute as a whole and

to its object and policy.’“ (quoting Crandon v. United

States, 494 u.s. 152, 156-58, 110 s. ct. 997, 108 L. ed.

11a

Appendix A

2d 132 (1990))). the legislative history shows that, in

enacting OPA, congress wanted not only to quickly

contain and clean up spills, but also to prevent spills from

occurring in the first place by using weighty financial

consequences to encourage responsible parties to take

all available precautionary measures. S. reP. no. 101-94

at 3. to give effect to that purpose, congress intended

to narrowly limit the third-party defense in order to

“preclude defendants from avoiding liability by claiming

a third party was responsible, when that third party had

a contractual relationship with the defendant and was

acting, in essence, as an extension of the defendant.” Id.

at 13. Accordingly, the third-party defense should not

be available where a spill is caused by third-party acts

or omissions that would not have occurred but for the

contractual relationship between the third party and the

responsible party.

ACL’s proposed definition of “in connection with”

is contrary to both the statute’s text and its purpose.

AcL contends that we should adopt the second circuit’s

interpretation of similar language ceRcLA. 4 in

Westwood, the second circuit held that the “in connection

with” language in ceRcLA’s third-party defense requires

that “the contract between the landowner and the third

party must either relate to the hazardous substances or

4. ceRcLA’s third-party defense provides for a complete

defense to liability where the release of a hazardous substance was

caused solely by “an act or omission of a third party other than an

employee or agent of the defendant, or than one whose act or omission

occurs in connection with a contractual relationship, existing directly

or indirectly, with the defendant.” 42 u.s.c. § 9607(b)(3).

12a

Appendix A

allow the landowner to exert some element of control over

the third party’s activities.” 964 F.2d at 91-92 (emphasis

added). even though that test is met here factually in

light of the parties’ contract to transport oil, we decline to

adopt that approach because its additional requirements

go beyond what is required by OPA’s plain text. section

2703(a)(3) requires only two things: (1) that a third party’s

act or omission caused the spill at issue and (2) that that

act or omission did not “occur[] in connection with any

contractual relationship with the responsible party.” 33

u.s.c. § 2703(a)(3) (emphasis added). it does not condition

the applicability or inapplicability of the exception on the

nature of the contract between the parties. Accordingly,

the contract need not explicitly relate to hazardous

substances (here, oil) or permit the responsible party to

control the third party’s activities.

AcL also contends that DRD’s acts and omissions

cannot be “ in connection w ith” their contractual

relationship because those acts and omissions directly

violated the terms of their contracts. the charter

agreements specifically required DRD to comply with all

applicable laws and regulations, but the acts and omissions

that caused the spill did not. But “in connection with”

does not mean “in compliance with,” and the meaning

of “connection” is broad enough to encompass acts that

are not specifically contemplated, or even acts that are

specifically not contemplated, in a contract. A contrary

reading would permit responsible parties to circumvent

OPA by easily contracting out of liability, a result congress

specifically sought to avoid. See S. reP. no. 101-94 at

13 (stating that the contractual-relationship exception

13a

Appendix A

from the third-party defense is intended to “preclude

defendants from avoiding liability” through contractual

relationships); see also Buffalo Marine Servs., 663 F.3d

at 757 & n.36 (citing to United States v. LeBeouf Bros.

Towing Co., 621 F.2d 787, 789 (5th cir. 1980) and rejecting

interpretation of “contractual relationship” that would

enable defendants to easily avoid liability).

Given the broad meaning of “in connection with,”

AcL has failed to establish that it is entitled to the thirdparty defense. the conduct that caused the spill—captain

carver’s leaving the meL OLiVeR under the control of

an unlicensed steersman and Bavaret’s working more

consecutive hours than permitted under coast Guard

regulations, becoming unconscious while in command of

the vessel, and veering into the path of the tiNtOmARA

while transporting oil at AcL’s direction—occurred “in

connection with” DRD’s contractual relationship with

AcL. Pursuant to the charter agreements, DRD agreed

to crew the meL OLiVeR and charter DRD’s services to

AcL. But for those charter agreements, DRD would not

have been operating the meL OLiVeR and transporting

AcL’s fuel-filled barge, and the spill would not have

occurred.

C

AcL alternatively contends that it is entitled to

OPA’s general limit on liability. the government responds

that DRD’s conduct falls within the exception from

limited liability for spills proximately caused by “gross

negligence,” “willful misconduct,” or federal regulatory

14a

Appendix A

violations committed by “a person acting pursuant to a

contractual relationship with the responsible party.” See

33 u.s.c. § 2704(c)(1). We agree.

the parties dispute whether DRD was acting

“pursuant to” its contractual relationship with AcL

when it committed the regulatory and criminal violations

that caused the spill. Once again, the meaning of

§ 2704(c)(1)’s “pursuant to” language, which is not defined

in the statute, appears to be a matter of first impression.

As before, we turn to the ordinary meaning of the words.

Black’s Law Dictionary defines “pursuant to” as “[i]n

compliance with; in accordance with,” “[a]s authorized by,”

or “[i]n carrying out.” BlAck’s LAw DIctIonAry 1431 (10th

ed. 2014). Webster’s Third similarly defines “pursuant to”

as “in the course of carrying out; in conformance to or

agreement with; [or] according to.” weBster’s ThIrd new

InternAtIonAl DIctIonAry 1848 (2002). See also Oxford

EnglIsh DIctIonAry 887 (2d ed. 1989) (defining “pursuant

to” as “following upon, consequent and conformable to, [or]

in accordance with”). Accordingly, and as AcL contends,

“pursuant to” has a narrower meaning than “in connection

with.” While the latter encompasses any conduct that is

logically related to the contractual relationships in the

sense that it would not have occurred but for the third

party’s contractual relationship with the responsible

party, the former contemplates compliance or conformity.

However, AcL goes too far when it argues that the

specific acts or omissions that cause the spill must be

authorized by the contract. section 2704(c)(1) requires

only that the gross negligence, willful misconduct, or

15a

Appendix A

federal regulatory violations that cause the spill be

committed by the responsible party, its agent or employee,

or “a person acting pursuant to a contractual relationship

with the responsible party.” Accordingly, the “pursuant

to” language is satisfied if the person who commits the

gross negligence, willful misconduct, or regulatory

violation does so in the course of carrying out the terms

of the contractual relationship with the responsible

party. Reading the statute to require that the negligent

or wrongful act itself be “pursuant” to the contract

would be nonsensical; it would be a rare contract indeed

that specifically contemplated gross negligence, willful

misconduct, or the violation of federal safety regulations.

exceptions to statutes are to be construed narrowly, but

AcL’s proposed construction would read the exception

out of the statute altogether.

that the conduct that caused the spill here rose

to the level of a criminal violation does not take it out

of § 2704(c)(1). AcL contends that because § 2704(c)(1)

specifically mentions gross negligence, willful misconduct,

and the violation of federal regulations, but says nothing

of criminal violations, the exception from limited liability

must not apply to the latter. But that draws a false

distinction. As evidenced by the facts of this case, there

is considerable overlap between gross negligence, willful

misconduct, and violations of federal regulations, on the

one hand, and criminal violations on the other. there is

no principled basis on which to distinguish between the

negligent acts that would lift the general limits on liability

and the criminal acts that would not. Would the relevant

conduct simply have to be a criminal violation? that would

16a

Appendix A

seem to largely eviscerate the exception. Or would the

responsible actors have to be actually charged with a

criminal violation, or convicted, to take the conduct out of

§ 2704(c)(1) and reimpose the limits to liability?

Nor would such a distinction give effect to OPA’s

purpose. OPA increased the financial consequences of oil

spills in order to encourage responsible parties to take

precautionary measures to prevent such spills. section

2704(c)(1), in particular, encourages compliance with

the kinds of regulations that are themselves intended to

prevent oil spills—like the manning requirements violated

by DRD—by providing for unlimited liability where those

regulations are flouted. See S. reP. no. 101-94 at 14 (stating

that “where compliance [with federal regulations] perhaps

could have prevented or mitigated the effects of an oilspill

[sic], no such limits [to liability] will apply”). there is no

reason to think that congress intended to lift the limits

on liability for spills caused by conduct that is forbidden by

federal regulation but to reimpose those limits for spills

caused by conduct considered so dangerous or risky that

it is also subject to criminal penalties. such a distinction

would run counter to OPA’s purpose of encouraging

compliance with the very rules and regulations intended

to prevent oil spills in the first instance.

Finally, AcL’s reliance on the doctrine of respondeat

superior is inapposite. under that doctrine, employers

are not liable for the intentional torts or criminal acts

of their employees if those acts are committed outside

the scope of their employment. But that is of no help

to AcL. First, employer liability under the doctrine of

17a

Appendix A

respondeat superior is a creature of the common law

of agency. See restAtement (ThIrd) of Agency § 2.04

cmt. b (2006) (noting that the doctrine of respondeat

superior “has long been classified as an element of agency

doctrine”). the liability of a responsible party for oil spills

caused by the negligence or misconduct of a third party

under OPA is a creature of statute. second, even if the

doctrine of respondeat superior were applicable here by

analogy, it appears to support our reading of “pursuant

to.” employers are liable for the intentional torts of their

employees if committed by an employee “acting within the

scope of their employment.” Id. § 2.04. conduct may be

within the scope of employment, even if not authorized,

if it occurs “while performing work assigned by the

employer” and if it is “intended to further any purpose

of the employer.” Id. § 7.07 cmt. b. Accordingly, even if

the doctrine of respondeat superior were relevant here,

our reading of what it means to be “acting pursuant to a

contractual relationship” appears to be consistent with the

imposition of liability on employers for torts committed by

employees in the course of their employment.

Here, there is no dispute that the July 23, 2008 spill

was caused by DRD’s wrongful conduct and regulatory

violations, committed in the course of carrying out its

contractual obligation to transport ACL’s fuel-filled barge.

Accordingly, the spill was caused by the gross negligence,

willful misconduct or regulatory violations of “a person

acting pursuant to a contractual relationship with” AcL,

and AcL is therefore not entitled to limited liability.

18a

Appendix A

IV

For the foregoing reasons, we AFFiRm the district

court’s grant of summary judgment.

19a

Appendix

B

APPENDIX B — FINAL

JUDGMENT

OF THE

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF LOUISIANA, FILED

OCTOBER 26, 2016

uNited states district court

easterN district of louisiaNa

ciVil actioN

No. 11-2076

sectioN “B” – (2)

uNited states of america,

Plaintiff,

Versus

americaN commercial liNes, llc

aNd d.r.d. toWiNG comPaNY, llc,

Defendants.

JudGe lemelle

maGistrate JudGe WilKiNsoN

FINAL JUDGMENT

for reasons orally assigned (r.doc. 130 (transcript))

and in conjunction with the court’s order of January

21, 2015 (r.doc. 125), the court granted the motion for

Partial Summary Judgment filed by Plaintiff, United

states of america, pursuant to the declaratory Judgment

act, 28 u.s.c. § 2201 et seq., finding that:

20a

Appendix B

(1) defendant, american commercial lines llc

(“ACL”), is designated a “responsible party”

within the meaning of that term for purposes of

liability for removal costs and damages under the

oil Pollution act of 1990 (the “oPa”), 33 u.s.c.

§ 2702;

(2) ACL is not entitled to invoke the complete solefault third-party defense established under the

oPa at 33 u.s.c. § 2703 (a)(3) against the claims

of the Government in these proceedings; and

(3) ACL is not entitled to invoke the limitation of

liability defense established under the OPA

at 33 u.s.c. § 2704 against the claims of the

Government in these proceedings.

in accordance with the Parties’ stipulation, the united

States of America is entitled to recover from ACL removal

costs and damages as set forth in r. doc. 206. acl is

liable to, and shall pay to, the United States of America the

sum of $20 million dollars, inclusive of any prejudgment

interest, with each party to bear its respective costs of

court and attorneys’ fees. Post-judgment interest shall

be governed by statute, 28 U.S.C. § 1961.

In accordance with the previous stipulation regarding

Natural resource damage claims (r.doc. 107), all claims

of the United States of America against ACL seeking

damages related to injuries to, destruction of, loss of, or

loss of use of natural resources were dismissed without

prejudice, it being understood that this dismissal did not

21a

Appendix B

determine or conclude the merits of any claims made or

held by the United States for damages related to “injuries

to, destruction of, loss of, or loss of use of natural resources”

under the oPa or other law. the aforementioned natural

resource damage claims are thus preserved.

this Judgment is a final Judgment pursuant to 28

u.s.c. § 1291.

this __ day of __, 2016.

uNited states district

JudGe

22a

AppendixFROM

C

APPENDIX C — EXCERPT

TRANSCRIPT

OF THE UNITED STATES DISTRICT COURT FOR

THE EASTERN DISTRICT OF LOUISIANA,

FILED MARCH 10, 2015

uNited states district court

easterN district of louisiaNa

civil action

No. 11-2076

section B

uNited states of america

versus

americaN commercial liNes, llc, et al.

January 21, 2015

traNscriPt of ProceediNGs Before

tHe HoNoraBle iVaN l.r. lemelle

uNited states district JudGe

[2]PROCEEDINGS

(January 21, 2015)

THE COURT: Good morning. Be seated, please.

isidore, let’s call it.

THE DEPUTY CLERK: civil action 11-2076, united

states versus american commercial lines, llc, et al.

23a

Appendix C

THE COURT: counsel.

MR. DILAURO: Good morning, Your Honor. michael

dilauro for the united states, and i have with me Jessica

sullivan.

MR. BERTRAM: Your Honor, richard Bertram,

Jones Walker, counsel for acl. We wanted to apologize

to the court. We had a glitch on our calendaring. mr.

Nicoletti can be dialed in if the court -THE COURT: He is not on the phone yet? i thought

he was on the phone. let’s get him on.

MR. NICOLETTI: John Nicoletti.

MR. BERTRAM: Good morning, John. this is

richard Bertram. We are in court with Judge lemelle

now.

MR. NICOLETTI: Good morning, Your Honor.

THE COURT: Good morning, mr. Nicoletti. mr.

Bertram was explaining some, i’ll call it, mixup in terms

of whether or not you were required to be here today for

oral argument. as you all recall, i set this down for oral

argument. i don’t know whether or not it was done on my

own motion or on the [3]motion of the parties. after doing

that, there was a motion to continue, which i granted,

setting it for today.

24a

Appendix C

While that order continuing it until today was silent in

terms of oral argument or on the briefs, we never vacated

the order for oral argument. so be mindful that, at least

from my interpretation of our rules, if we don’t vacate any

part of a prior order, it’s still in effect.

as you know, under our local rules, we call the

hearing dates now submission dates. Perhaps there was

some confusion on your part or somebody’s part on what

that meant. it didn’t mean to vacate oral argument, which

i always intended on having in this case.

so with that, i don’t need any further explanation.

don’t worry. i’m not going to issue sanctions or anything

like that. i think that we need to go forward with oral

argument today. i have read the briefs from all parties.

i’ll just chalk this up as a miscommunication through no

fault of anyone and we will go from there.

We have present, mr. Nicoletti, local counsel, mr.

Bertram, as well as counsel for the government, mr.

dilauro, and -- is it ms. Keast?

MS. SULLIVAN: ms. sullivan, Your Honor.

THE COURT: thank you.

as you all know, this particular case involving [4]

oPa claims asserted by the united states against acl

as well as acl’s defenses to that action is a subject now

of a motion for partial summary judgment where the

government seeks the court to declare that the defenses

that acl seeks to urge here should be dismissed.

25a

Appendix C

in this case acl, as i understand their argument,

states that the united states has failed to show that the

acts and omissions of drd, the third-party tug operators

of the acl barge, satisfied the “in connection with”

standard of § 2703(a)(3) of title 33 of the united states

code. acl further argues that the government cannot,

therefore, satisfy the narrower “pursuant to” language

of § 2704 of the same codal title.

The United States has replied and cited basically five

propositions that they believe acl has not challenged:

(1) that two charter agreements were in existence

between acl and drd at the time of the maritime

collision here;

(2) that drd violated a host of federal safety and

operating regulations in proximately causing the July

2008 accident;

(3) that oPa claims are unaffected by the provisions

of the limitation of liability act;

(4) that acl’s counterclaim against the [5] united

states is not legally cognizable; and

(5) that the united states is entitled to judicial

declaration concerning acl’s liability to the united

states.

so the issue that i have before me, then, is whether

acl is precluded from invoking the complete defense

26a

Appendix C

of § 2703 or the limitation defense of § 2704 of the oil

Pollution act of 1990.

(5) that the united states is entitled to judicial

declaration concerning acl’s liability to the united

states.

so the issue that i have before me, then, is whether

acl is precluded from invoking the complete defense

of § 2703 or the limitation defense of § 2704 of the oil

Pollution act of 1990.

let’s go to movant for argument here. in this

particular matter, counsel, it seems as if you would agree

with acl that our laws here, the oPa laws, that is, require

this “in connection with” on the defense side and “pursuant

to” on the § 2704 side of the case. acl seems to argue

that because they were not found at fault in the limitation

action and the related actions arising from this maritime

collision and the court found the sole responsible party

in that action was drd that they should be provided with

the defenses that they assert here.

You argued that, well, no this court and the fifth

circuit have found that the contracts that acl had with

drd would establish their strict liability under oPa since

the actions here all occurred while these contracts were in

existence and pursuant to the voyage charter agreements.

they cite us to a second circuit case that says that

the existence of the agreements per se is insufficient for

[6]our purposes here. What’s your response to that?

27a

Appendix C

MR . DILAURO: Well, we disag ree w ith the

interpretation of the case, but we do not disagree that a

circle of precedent could be applied.

THE COURT: the fifth circuit, i think, pretty much

says that as well in Buffalo, i believe, as well as to some

extent in the appeal from our initial findings that were

affirmed by the Fifth Circuit, that ACL could not have

a right of action against the oil pollution cleanup people

that they selected.

MR. DILAURO: Yes, Your Honor. so we have this

language in § 2703 which requires a “connection with” and

in § 2704 the words are “pursuant to.” Both of those sets

of words refer to the contractual relationship.

so we see this as simply a plain language interpretation

of the oPa statute. We have no objection to cercla

informing that analysis. i think the cercla cases are

a little bit different because they are factually different.

they typically involve situations where a landowner has

passed a piece of real estate on to another landowner or

perhaps there is some operation of that real estate.

THE COURT: assuming that acl is arguing that

that’s basically what occurred here, our findings that DRD

was a pro hac vice owner, that that somehow falls within

the factual scenario of the second circuit case, which was

the [7]pharmaceutical case -MR. DILAURO: Westwood, Your Honor.

28a

Appendix C

THE COURT: -- Westwood, correct, what’s your

response to that? i’m playing devil’s advocate, so to speak.

MR. DILAURO: Yes, Your Honor.

THE COURT: sorry to characterize your client as the

devil, mr. Bertram or mr. Nicolleti. that’s not intended.

MR. BERTRAM: understood.

MR. DILAURO: What we would say is that it’s fair

to look to the facts of the Gabarick case which was tried

before this court. the government relies on those facts,

but the standard of liability in that case was different. it

was a negligence standard. that was a limitation case. so

one should look to the facts as they were developed in the

case, but they have to be viewed through the strict liability

prism or lens that’s part of the oPa regime.

THE COURT: Well, § 2703 states that “a responsible

party is not liable for removal costs or damages

under § 2702 if the responsible party establishes by a

preponderance of the evidence that the discharge or

substantial threat of a discharge of oil and the resulting

damages or removal costs were caused solely by,” and then

it lists a number of facts:

(1) act of God;

(2) act of war;

29a

Appendix C

(3) and perhaps pertinent for our purposes [8]here,

an act or omission of a third party other than an employee

or agent of the responsible party or a third party whose

act or omission occurs in connection with any contractual

relationship with the responsible party except where

the sole contractual arrangement arises in connection

with carriage by a common carrier by rail, which we

don’t have here, if the responsible party establishes by a

preponderance of the evidence that the responsible party:

(a) exercised due care with respect to the oil concerned;

(B) took precautions against foreseeable acts or omissions

against of any such third party and the foreseeable

consequences of those acts or omissions; or

(4) any combination of paragraphs 1, 2, and 3.

so wouldn’t that require, then, for acl to show

that drd’s acts or omissions were the sole cause of the

discharge, that no contractual relationship or sufficiently

attenuated contractual relationship existed between

acl and drd at the time of the discharge, and that

acl exercised due care and took precautions against

foreseeable consequences?

that later part, that acl exercised due care and took

precautions against foreseeable consequences, isn’t that

-- to the extent that the facts in this case, i think, have

already been established and affirmed to some extent by

the circuit, this issue of a strict liability in the context

of whether or not acl exercised this due care and took

precautions, that’s a legal conclusion, in my opinion, based

[9]upon facts that to me are not in dispute. How do i jump

30a

Appendix C

to that legal conclusion in view of the factual findings

already made?

i know you say -- and i agree with you -- that this is

a strict liability scenario, the limitation act and general

maritime laws are preempted by congressional intent

in enacting oPa and the language it shows. i’m just

wondering, however, though, in terms of the application

here, whether or not you are arguing solely the existence

of this contractual relationship between drd and acl

and does that draw it within (3)(a), (3)(B), or (4), or a

combination?

MR. DILAURO: Well, our position is that the court’s

focus should fall primarily on § 2703(a)(3), act or omission

of a third party, more importantly the language which

discusses “a third party whose act or omission.” and i

don’t think there’s any question but that drd committed

numerous acts or omissions, Your Honor, that led to that

collision on July 23, 2008. so there’s no question about the

acts or omissions.

We would submit also that on the record there’s

no question that they occurred in connection with a

contractual relationship and, in particular, the pair of

charter parties that existed at the time. the charters

were the mechanism that put drd in operation of the Mel

Oliver. When it entered into the charters, acl recognized

that drd would be operating the Mel Oliver, that it would

be using the Mel Oliver to push acl’s [10]barge dm-932.

that was the very purpose of the charter.

31a

Appendix C

THE COURT: so if drd is acting pursuant to its

contractual relationship with acl, you think that’s

sufficient?

MR. DILAURO: I do believe that’s sufficient, Your

Honor. I believe the Court could and, in fact, should find

in the united states’ favor based on this alone.

i think, however, beyond that the court can look

further to the two additional provisions, subsections (a)

and (B), which speak to the exercise of due care and the

taking of precautions. i don’t think that the court has to

do so, but i certainly think it may and that it would be

appropriate for the court to do so.

THE COURT: You don’t believe that our findings

in the related limitation actions -- i’ll use my exact

language here -- “that acl had neither actionable fault

for nor foreseeability into drd’s misdeeds that caused

the collision” -MR. DILAURO: Well, i think there are two aspects of

the court’s decision, one of them concerned with vetting;

and as i read the opinion, certainly the vetting was less

than perfect.

THE COURT: i acknowledge that it was an issue that

i found in that case. i think i pulled that as well and talked

about the evidence here that -- and i’m quoting -- “while

acl’s vetting of drd’s vessel operators for licensing,

accident [11]history, and compliance with the federal 12hour watch rule was imperfect and needs improvement,”

32a

Appendix C

i further found that there was evidence that acl acted

reasonably in that vetting process, albeit minimally here.

it draws into question, then, to what extent would oPa’s

strict liability standard somehow preempt that finding.

MR. DILAURO: right, and i’m not sure that we agree

that it has to preempt the finding. What we would suggest

is that under a strict liability standard, it’s a different law,

and so the court can reach a different conclusion based

on the same facts because oPa is a strict liability statute

and the standard that was at issue in the limitation actions

was a negligence standard.

THE COURT: in a sense, in this context at least, i

felt torn between the idea that establishing negligence

-- and i’ll say it in terms of a standard or a burden -- was

perhaps easier than establishing whether or not someone

is absolutely responsible under strict liability standards,

which i know may be contrary to what we typically have

understood over the years between the two.

it’s like the old premise liability theories which strict

liability kind of grew out of, for instance, slip-and-falls. i

don’t mean to oversimplify this, but you understand where

i’m going in terms of torn between what’s required in one

as opposed to the other.

[12]MR. DILAURO: Yes, Your Honor, i believe so.

THE COURT: in your argument you said that we

could still go beyond the mere existence of the contractual

relationship. could you expand upon that a little bit.

33a

Appendix C

MR. DILAURO: We think the mere existence of the

contractual relationship is sufficient. But our point is if

the court believed it appropriate to do so, it could also

look to the two prongs in (a) and (B). i don’t believe that

those are essential to the decision.

i believe that acl cannot carry its burden of proof

under § 2703. it does bear the burden of proof, and it

cannot because of the contractual relationship. it would be

sufficient to stop there, but it would also be appropriate,

we think, to look to those two prongs, the due care prong

and the taking of precautions prong.

THE COURT: in acl’s argument, it seems to draw a

distinction between the language in § 2703, “in connection

with,” and the language in § 2704, “pursuant to,” and says

that the “pursuant to” language of § 2704 is narrower than

the “in connection” language of § 2703. do you draw a line

between those two provisions?

MR. DILAURO: No, Your Honor, we do not. it’s

obviously different language, but i think it leads to the

same end.

In the first instance, § 2703, the conduct is [13]certainly

occurring in connection with a contractual relationship.

it seems to me somewhat a semantic distinction when

one moves to § 2704 and says that it’s pursuant to the

contractual relationship. they, to us, mean much the same

thing, and i don’t believe that there’s any case law that

elucidates it further. so we read it much the same way. i

certainly saw ACL’s argument, but I didn’t really find it

a profitable distinction.

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THE COURT: i thought it interesting, in reading

the Buffalo Marine v. U.S. case out of the fifth

circuit in 2011, where the court held, as i think both

parties acknowledge, that the common purposes and

shared history of cercla and oPa are such that

the similarly worded provisions relating to contractual

connections was particularly significant and indicated that

§ 2703(a)(3), which is what you are arguing here, of oPa is

to be interpreted consistently with the intended provisions

of cercla.

it went on to hold in that case, in the context of

oPa, congress’ use of “any contractual relationship”

emphasized the breadth of the contractual relationship

limitation. that seems to indicate that the fifth circuit

holds an expansive view of that congressional language,

particularly where it says “any contractual relationship.”

of course, i know it was talking about that you could

have various types of contracts and so forth, but i was

[14]struck by that language. it was done in 2011, and

there were two cases prior to that out of a district court

in texas in 1994, International Marine Carriers v. Oil

Spill Liability Trust Fund, and a district court case out of

massachusetts in January of 2003, Seaboats, Inc. v. Alex

C. Corp. in those two district court opinions, it appears

as if they have indicated that oPa requires only that “any

contractual relationship” exists in order to deny a thirdparty defense to liability. is that fifth circuit law?

law.

MR. DILAURO: i believe that that is fifth circuit

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Appendix C

THE COURT: even though the fifth circuit

obviously didn’t write those opinions, the question is: is

that controverted in any way by fifth circuit law?

MR. DILAURO: Not to my knowledge, Your Honor.

the focus -MR. NICOLETTI: Your Honor, may i be heard on

that?

THE COURT: No. i don’t do slip shots. You’ll get your

shot. calm down.

MR. NICOLETTI: thank you.

MR. DILAURO: the focus in Buffalo Marine -- and

admittedly i looked at the other cases more quickly, but

the focus in those cases was on whether there was or was

not a contractual relationship. i think our focus today is a

little bit different. there’s an admission that there was a

[15]contractual relationship. the issue or the focus here,

based on acl’s responsive brief, is on whether or not that

was “in connection with” or “pursuant to.”

so i don’t think that what we are talking about

today is inconsistent with those precedents. i think

those precedents counsel an expansive reading of those

sections of oPa, one that favors the government’s position.

so i don’t think that we are advising anything that’s

inconsistent with fifth circuit precedent, but neither do i

think that the fifth circuit precedent has spoken exactly

to the issue before the court today.

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Appendix C

THE COURT: let’s hear from your opponent and

then you will have a chance for rebuttal.

MR. DILAURO: thank you.

THE COURT: mr. Nicoletti.

MR. NICOLETTI: Your Honor, the government has

been accurate when it says the fifth circuit has not as yet

ruled on what constitutes “in connection with” the thirdparty contractor and that’s what we are focusing on. the

fact that there is criminal activity by drd which is the

proximate cause of the collision breaks the connectivity

between the contract and the conduct of the third party.

if congress and/or the courts wanted to focus solely on

any contract, they wouldn’t have put -- and if the existence

of that contract was in and of itself sufficient to [16]deprive

either the defense or the limitation, then in that context

it would have not put the words “in connection with” in

§ 2703 or “pursuant to” in § 2704.

Now, in regards to those two terms, “in connection

with” and “pursuant to,” we just received the government’s

brief on those two points. i think, again, the way the

statutory construction is, you look at the dictionary

definition of the word “connection” and the dictionary

definition of the word “pursuant.” You will see that there

is some distinction between the two terms, “connection”

being broader and “pursuant” being narrower.

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Appendix C

the main focus of acl’s argument is those two

terms, “in connection with” or “pursuant to,” that those

are broken and severed by the criminal activity. there

is no case law on point other than the cases we have

cited in regards to general maritime law, which is also

the law in most common law states, that a person cannot

be responsible for the criminal activities which are not

foreseeable, of course, of their employees, agents, or

servants.

Now, we are not saying that’s on all fours because we

are dealing with a statutory interpretation, but that gives

you the legal analysis as to why criminal activity breaks

the contractual relationship between drd and acl.

THE COURT: if that’s so, the fifth circuit certainly

was aware of all of that in the various appeals in this case,

[17]and they have found that the contract was in existence

at the time of this accident, as i found, and that it was not

void because of any of the arguments or positions taken

by acl in the underlying related proceedings.

So I’m having difficulty buying into that argument

that the prior findings of this Court and the Fifth Circuit

that found these contracts do exist, they existed at the

time of the collision and were not voided in any fashion,

as somehow now drawing into question, in my opinion,

that binding authority. it just seems that that would be

inconsistent and beyond my authority to do.

MR. NICOLETTI: We are not disputing the contracts

that exist. as far as the avoidance argument, that was

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Appendix C

never really heard by the court because of the adoption

of judicial estoppel.

We are making ourselves perfectly clear here. We

are not disputing the existence of the contracts. We are

saying that both § 2703 and § 2704 require more than the

existence of any contract or a contract. it requires the

activity of the responsible party, drd, here -- i should

say the liable party, drd, to have acted in connection

with that contract or pursuant to that contract. What we

are saying is contracts do exist, but the criminal conduct

was not pursuant to either contract or in connection with

either contract.

THE COURT: so if the court has previously found in

[18]those related proceedings -- and we did -- that drd

contracted with acl to perform towing operations of

acl’s barges in order to satisfy the transportation needs

of acl’s customers and discussing acl’s role in that

venture and ultimately for the dedicated purpose of that

mission, that is, acl’s economic gain, don’t we have that

extra set of facts that you argue we need in order to say

that you don’t have the benefit of these defenses?

obviously these charters were, indeed, related to the

movement of oil and further allowed acl to use drd for

those activities. isn’t that what was contemplated, as well,

in Westwood Pharmaceuticals, that is, a relationship to

hazardous substances and the exertion of the dedicated

purpose or control of the third-party activities?

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Appendix C

certainly i don’t come into this without some law out

there. and while to my readings of what we have in the

fifth circuit, the Buffalo case in the fifth circuit, to some

extent the fifth circuit’s opinions arising out of this case,

seem to suggest that these charter agreements executed

with acl and the resulting accident all arose from the

existence of that relationship.

even beyond that, there’s some cases, again parallel

provisions of cercla that i believe you may have

argued, but i’m not certain if they are that supportive of

acl’s position on the issue of the connection between the

[19]charter agreements and drd’s actions in the present

case.

for instance, in the State of New York v. Lashins

Arcade Company case from the second circuit, 1996,

there was a straightforward sale of contaminated property

that clearly did not relate to hazardous substances and

was not a defense-barring agreement. isn’t that case

not supportive of your position here, perhaps factually

distinguished?

then there is another case, i believe, out of the second

circuit, or a district court opinion from the Western

district of New York, Emerson Enterprises v. Kenneth

Crosby Acquisition Corp., where a lease, unlike a sales

contract in Lashins, contemplated third party’s operation

of a manufactured gas plant, and the lease was found,

quote, connected with handling of hazardous substances.

that sounds to me -- and convince me why this may be

wrong -- more supportive of the mover’s position than the

opponent here.

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Appendix C

MR. NICOLETTI: simply because in both of those

cases the contracts were executed in a legal fashion,

such as the contract to process the substances. Here we

have criminal activity, and none of the cases address the

criminal activity elements because they weren’t existent

in those cases.

if drd had been operating those tugs legally, with a

legal crew, and had they violated some statute, i would say

to you in that situation you have a civil violation, and that’s

what the statute contemplated when it said if you have a

[20]contractual relationship and your third party does a

civil liability, then you can’t avail yourself of the defense.

THE COURT: Well, i found, in part, reliance upon

the criminal liability of drd’s principals and employees

in the underlying limitation proceedings and found that

that further supported the finding of DRD’s fault. Here

i’m dealing with strict liability.

Wouldn’t your argument displace oPa’s strict liability

if i would simply rely upon what i would consider to be

the principles that we have in the limitation proceedings,

the principles that we have under common law?

I can see that it’s not difficult to think about situations

where the contractual relationship in and of itself would

not be sufficient to bar ACL’s use of a third-party defense.

for instance, if acl had sold the Mel Oliver outright

to drd and then you had this collision resulting in a

discharge and the collision had nothing to do with the

Mel Oliver’s condition at the time of sale, it would not be

41a

Appendix C

appropriate, then, for oPa purposes, from my perspective

at least, to characterize the acts of drd in transporting

oil on its own behalf as connected to the contract of sale

between the parties. that seems to be somewhat similar

to what may have happened in Westwood, although in a

different context.

MR. NICOLETTI: i would agree that would be one

type of way to break the connection.

[21]THE COURT: But you think the other type is

solely by the finding of criminal fault of the third party?

MR. NICOLETTI: Yes, and let me explain why.

the purpose of the strict liability was to make sure that

someone would pay, in the first instance, and ACL has

done that. then the statute goes on to give relief to an

innocent party who is found without fault, and the way it

is done is it is done by § 2703 and § 2704.

in both those instances, they say that the innocent

party can avail itself of the defense of limitation except

on certain enumerated issues, one being the contractual

relationship, but congress didn’t say “any contractual

relationship” without reference to a further term, which

was either “in connection with” or “pursuant to.”

in this situation drd itself had no knowledge that its

captain had abandoned the vessel to the unqualified mate,

and that’s what makes this even more of a case where the

criminal activity was even without the direct knowledge of

drd. although you properly found that they created that

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Appendix C

atmosphere, in this particular instance even drd didn’t

know about the criminal activity. that’s what breaks the

“pursuant to” or “in connection with” nexus which the

government needs to show in order to bar acl from these

defenses and from the limitation.

so that’s what the crux of this argument is, does the

criminal activity satisfy the purpose of the statute [22]in

breaking that “connection” or “pursuant.” and i would

say yes because, again, the statute was designed, one, to

have somebody pay up front, which was done here, but then

gives relief to those who are innocent. acl was found to

be innocent.

Now, i want to address the other part of the

government’s argument, which Your Honor did hear

something on, and that is whether or not acl acted with

due diligence and took the appropriate precautions. one,

as you found, although minimally, they did adequately

vet the activities of drd before entering into the charter

party and did quarterly reviews of their relationship and

how the tugs were being operated. that alone shows that

you have already found they exercised due diligence and

that they exercised the appropriate precautions.

Now, remember, you made those findings in the

context of limitation proceedings, which is not negligence.

it’s a high standard of lack of privity and knowledge. so

this court has already found that acl had no privity

and knowledge of the illegal manner in which drd was

operating those tugs.

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Appendix C

THE COURT: accepting your argument concerning

the criminal responsibility of drd as well as a violation of

other federal laws or regulations here, wouldn’t that lead

to exculpating similarly situated parties in every oil spill

incident involving a contract towboat operator’s violation

of a regulation or law, which it must be assumed include

many such [23]instances?

MR. NICOLETTI: No. if this was a mere civil

violation, then i would agree with you, but your opinion

was quite correct when it found that it was the criminal

conduct which was the actual cause of this particular

incident. it was the criminal conduct which protected acl

because it had no knowledge of that criminal conduct. it

had performed due diligence, which protected acl from

that liability.

so if we were talking civil violations only, i would

grant the court that that’s in connection with the contract.

once you add in the criminality, under all jurisprudence,

if it’s not foreseeable, the party is not responsible for the

acts of those who it may be in contract with.

THE COURT: Bring me back into the context over

the action between your client and the united states. the

united states is seeking recovery here for monies that

it paid out of the oPa fund to some contractors hired by

acl that acl paid substantial funds to but withheld some

sums, claiming that those contractors it hired either didn’t

show a right to the extra funds or that it was excessive. is

that basically what we have here ultimately on the merits,

if we have to go to full trial on the issues, on whether or

44a

Appendix C

not the decision here to pay those cleanup providers was

capricious or not by the coast Guard and the government?

is that ultimately what we [24]have here?

MR. NICOLETTI: No, we actually don’t, Your Honor.

let me make one or two points.

even if you were to grant them summary judgment,

the fifth circuit, in dismissing the third-party claims,

said that we can defend against the government on three

grounds; not just solely capricious, but it also said if they

negligently paid or didn’t pay in accordance or failed to

pay -THE COURT: right. i saw that.

MR. NICOLETTI: so you have multiple levels here

to go through yet. so even if you would grant summary

judgment,we would still have to determine whether or

not the government paid negligently or not because that

was one of the standards that the fifth circuit put when

it dismissed the third-party claims.

THE COURT: it’s interesting, in the context of

that case, that the circuit discussed -- and again i think

it’s interesting in the context of what i would call the

underlying action, the limitation action -- the thought that

-- i’m not trying to insult anyone, but it sort of seems as

if acl is again taking some inconsistent positions here.

You acknowledge now the contract existed, which

again is binding conclusions from the circuit as well, but

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Appendix C

that somehow the binding nature of those contracts can be

ignored because of the criminal wrongdoing of the third

party, drd, and [25]also in that context create another

exception that’s not in the statute against the imposition

of strict liability. am i misinterpreting your argument?

MR. NICOLETTI: You are, Your Honor. We are

being consistent with -- since we were precluded from

arguing the contracts are void ab initio, we have accepted

the existence of the contracts. What we are saying is the

statute doesn’t say the mere existence of any contract. it

says the conduct of the liable party, the third party, must

be under § 2703 “in connection” with the contract or under

§ 2704 “pursuant to” the contract. i don’t think anybody

can reasonably argue that criminal activity is performed

pursuant to a contract.

THE COURT: rebuttal.

MR. DILAURO: Your Honor, the key is the existence

of the contractual relationship at the time of the accident.

that’s what oPa requires.

Now, mr. Nicoletti just said that acl was found to

have been an innocent party. those are his words. But, in

fact, that doesn’t matter under the oPa regime because

it is a strict liability regime.

another point i would make is that although mr.

Nicoletti admits to the existence of a contract, it does

feel as if we are moving back towards these void ab

initio arguments. In other words, in the first breath, the

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Appendix C

contracts existed, but they didn’t exist because of this socalled [26]criminal activity. Well, that is kind of trying to

have it both ways. again, the fundamental point is that

there was a contractual relationship in place when the

accident occurred.

another point i would make, in the Westwood case

there were two elements, and i don’t think i was perfectly

clear in my brief. i dealt with them. i said we met both,

and i think we do, but in fact meeting either one would

be sufficient.

in other words, Westwood spoke to a relationship to

hazardous substances. Well, “hazardous substances” are

a cercla term. oPa’s term is “oil,” but that’s what was

happening on the day of the accident. it was an oil spill.

so we meet that prong.

then the other one was allowing the landowner to

exercise control, and I think certainly this Court’s findings

in the Gabarick case demonstrated that acl exercised

a fairly significant degree of control over DRD’s actions.

Now, it also found that that degree of control was

insufficient to interrupt the pro hac vice status on drd’s

part, but again we are under different law here, Your

Honor.

THE COURT: thank you.

MR. DILAURO: thank you.

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Appendix C

THE COURT: in this particular action, the united

states seeks to recover damages and removal costs under

the oil Pollution act of 1990, which i will refer to as oPa

[27]further in these proceedings, found at 33 u.s.c.

§§ 2701-61.

the facts underlying the subject lawsuit and the

subject oil spill have spawned significant amounts of

litigation with which this court and the parties are

intimately familiar. those facts are set forth in particular

detail. and for a full discussion of those facts see, for

example, the Gabarick v. Laurin Maritime case at 900

f. supp. 2d 669, 678, from september of 2012, along with

to some extent the subsequent fifth circuit opinions in

these proceedings and related proceedings.

acl is a maritime transportation company that

contracted in 2008 with drd towing company to operate

a towboat, the Mel Oliver. Pursuant to two charters with

acl, drd was to transport fuel oil owned by acl on

the mississippi river.

on July 23, 2008, the Mel Oliver pushed the aclowned barge the dm-932, laden with acl-owned fuel

oil, across the mississippi river and into the path of the

oceangoing vessel the Tintomara. the Tintomara and Mel

Oliver/dm-932 convoy collided, causing approximately

419,286 gallons of fuel oil to spill into the mississippi river.

Several lawsuits were filed in the wake of that collision

and this case was stayed during their pendency. relevant

for our purposes here, acl brought a declaratory [28]

48a

Appendix C

judgment action, civil action No. 09-4466, asking this

Court to find the two charter agreements referenced above

to be void ab initio. this court denied that request. see

No. 09-4466 from this court in 2014, record documents

1530 (order and reasons) and 1531 (Judgment). that

ruling was affirmed on appeal to the United States Fifth

circuit court of appeals on may 21, 2014, in the fifth

circuit opinion found at 753 f.3d 550 (5th cir. 2014).

of further relevance to this particular action between

the united states and acl, related proceedings arising

out of the accident resulted in a determination that drd

personnel had violated a number of federal safety and

navigational regulations and criminal laws. see record

document 113-3 and 113-5 as well as the factual bases

in related criminal proceedings. in the wake of the spill,

extensive removal and cleanup costs were undertaken,

resulting in costs alleged to total approximately

$93,180,790.68. see record document 123-1.

the united states specifically requests in this

particular motion:

(1) a declaration that prima facie elements of

strict liability for response costs and damages have

been established under OPA, confirming that ACL is a

responsible party;

(2) a declaration under oPa, at § 2717(f)(2), [29]and

the declaratory Judgment act that none of the statutory

defenses to liability under oPa are available to acl;

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Appendix C

(3) a declaration under those authorities that acl’s

liability to the united states under oPa is limited only by

proof and not by a monetary cap, statutory or otherwise;

and

(4) dismissal of acl’s counterclaim against the

united states because oPa displaces other law and does

not allow acl to sue the united states in this particular

case.

the pertinent statutory provisions at issue are found

at 33 u.s.c. §§ 2703 and 2703(a)(3), which deals with the

complete third-party defense, along with § 2704, the

limitation defense found under the same title.

under § 2703(a)(3), a successful showing of the

complete defense under that section would require acl

to show:

(1) drd’s acts or omissions were the sole cause of the

discharge;

(2) No contractual relationship or a sufficiently

attenuated contractual relationship existed between acl

and drd at the time of the discharge; and

(3) acl exercised due care and took precautions

against foreseeable consequences.

see, in comparison, International Marine Carriers

v. Oil Spill Liability Trust Fund, a southern district of

texas opinion from 1994 at 903 f. supp. 1097.

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Appendix C

the limitation of liability provision at [30]§ 2704(a)

provides a tonnage-based cap to liability of a responsible

party. the exception to that rule is set forth at § 2704(c),

which states that subsection (a) of this section, the

limitation provision, does not apply if the incident was

proximately caused by gross negligence or willful

conduct of, or the violation of an applicable federal safety,

construction, or operating regulation by the responsible

party, an agent or employee of the responsible party, or

a person acting pursuant to contractual relationship with

the responsible party.

there’s an exception made to that latter party dealing

with carriage by common carrier by rail, which doesn’t

apply here. the key language here is “a person acting

pursuant to contractual relationship with the responsible

party” under § 2704.

the united states bears the burden of establishing

that the discharge was proximately caused by the gross

negligence and/or violations of federal safety, construction,

or operating regulation by drd, which entity was acting

pursuant to a contractual relationship with acl.

as i stated earlier at the beginning of oral argument

here today, the issues before the court concern acl’s

potential entitlement to the complete third-party defense

afforded by § 2703(a)(3) and the limitation defense of

§ 2704.

as to the complete third-party defense under

§ 2703(a)(3), the parties dispute whether the acts and

51a

Appendix C

omission [31]of drd may properly be said to have

occurred in connection with the charter agreements

between drd and acl.

as i already noted, this court has found in related

proceedings drd caused the discharge at issue and

included: improperly placing an unlicensed steersman

in control of the Mel Oliver, violating statutory and

regulatory caps on maximum work hours in a 24-hour

period, various radio and inland navigational rules, as

well as reliance to an extent as well on the criminal factual

basis findings in the related criminal charges against DRD

owners, principals, and personnel. see record document

110 at 5-9 and authorities cited in that case.

in Buffalo Marine Services, Inc. v. United States,

a fifth circuit opinion from 2011 found at 663 f.3d 750,

specifically at pages 755 through 756, the Fifth Circuit

held that the common purposes and shared history of

cercla and oPa are such that the similarly worded

provisions relating to contractual connections was

particularly significant and indicated that § 2703(a)(3) of

oPa is to be interpreted consistently with the attendant

provisions of cercla. to that end, the fifth circuit held,

in the context of oPa, congress’ use of “any contractual

relationship” emphasized the breadth of the contractual

relationship limitation.

in the context of this motion, acl argues that the “in

connection with” language of § 2703(a)(3) requires some

[32]nexus between the contracts relied upon and the acts

or omissions of the responsible party. i have already noted

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Appendix C

there were two district court opinions which we found, one

out of the southern district of texas in 1994 and another

from the district of massachusetts in January of 2003,

that appear to have indicated that oPa requires only that

“any contractual relationship” exists in order to deny a

third-party defense to liability. acl, however, argues that

it is insufficient merely to show the existence of charter

agreements between acl and drd. instead, acl argues

that it must be shown that drd’s acts and omissions

occurred in connection with those charter agreements.

acl cites us to decisions of the second circuit

interpreting parallel provisions of cercla. in Westwood

Pharmaceuticals v. National Fuel Gas Distribution

Corporation from 1992, found at 964 F.2d 85, specifically

at page 89, the second circuit held that a responsible

party is precluded from raising the third-party defense

only if the contract between the responsible party and

the third party somehow is connected with the handling

of hazardous substances or if the contract allows the

responsible party to exert some control over the third

party’s actions so that the responsible party can be held

liable for the release or threatened release of hazardous

substances caused solely by the actions of the third party.

the court went on to state that the mere existence of a

[33]contractual relationship between such parties without

more was insufficient to preclude the third-party defense.

the united states argues basically, in reply, that the

charter agreements between acl and drd satisfy the

requirements of Westwood Pharmaceuticals.

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Appendix C

this court previously found in related proceedings that

drd contracted with acl to perform towing operations

of acl’s barges in order to satisfy the transportation

needs of acl’s customers. see the Gabarick opinion from

this court in 2012 found at 900 f. supp. 2d 669, page 673.

this court also discussed acl’s constructive role in

directing the captain where to take the vessel, the reason

for the assigned voyage, and ultimately the dedicated

purpose of that mission, acl’s economic gain. Because the

charters at issue are related to the movement of oil and

further allow acl to exert some degree of control over

drd’s activities, it would appear that the united states’

argument has some basis in fact and law for the scenarios

contemplated by Westwood Pharmaceuticals, that is, a

relation to hazardous substances and exertion of control

over third-party activities as being present. accordingly,

we find that DRD’s acts and omissions arose in connection

with the charter agreements it executed with acl.

additional cases on the issue of the parallel [34]

provisions of cercla are further unsupportive of acl’s

position on the issue of the connection between the charter

agreements and drd’s actions in the present case. i

have noted earlier in oral argument the Lashins Arcade

case from the second circuit in 1996, found at 91 f.3d

353, concerning a straightforward sale of contaminated

property that clearly did not relate to hazardous

substances was not a defense-barring agreement; as

well as the Emerson case from the Western district of

New York in June of 2014, found at 2004 Wl 1454389,

specifically at Sections 6 through 7, where a lease, unlike

54a

Appendix C

a sales contract in Lashins, contemplated third party’s

operation of a manufactured gas plant, and the lease

was found to be connected with handling of hazardous

substances.

i have given an example of a circumstance where a

contractual relationship at issue would not be sufficient

to bar acl’s use of the third-party defense, the examples

being, as in the cases i have just cited, an outright sale of

the Mel Oliver to drd and a subsequent collision resulting

in a discharge, which collision had nothing to do with the

Mel Oliver’s condition at the time of the sale and would not

be appropriate for oPa purposes to characterize the acts

of drd in transporting oil in its own behalf as connected

to the contract of sale between the parties. However,

where as here, the charter agreements contemplated

that drd would transport oil on behalf of acl, drd’s

activities while transporting that oil, [35]which ultimately

caused the discharge, clearly occurred in connection with

the charter agreements. accordingly, the united states’

motion for summary judgment is granted by declaring

that acl is not entitled to raise the § 2703(a)(3) defense

under oPa.

as to the § 2704 limitation defense, the united

states does not dispute that it bears the initial burden of

establishing that preclusion of the defense, which is the

exception to the general rule allowing limitation, applies.

However, for many of the same reasons set forth already,

it seems clear that the united states has established

that the acts of drd occurred pursuant to the charter

agreements with acl.

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Appendix C

to the extent acl argues that the actions of drd fell

beyond the scope of the charter agreements for purposes

of either § 2703 or § 2704 based upon criminal conduct of

drd and other acts that this court found against drd,

these claims by acl are unpersuasive. first, congress

elected to apply strict liability under the provisions of

oPa. accordingly, the authorities cited by acl, which

rely primarily on exceptions to employer vicarious liability

and arose under the general maritime law or even under

the common or criminal laws, are inapposite.

the fifth circuit recently explained in an earlier

appeal from this case:

[36]”When congress enacts a carefully calibrated

liability scheme with respect to specific remedies, the

structure of the remedies suggests that congress intended

for the statutory remedies to be exclusive. indeed, we are

to conclude that federal common law has been preempted

as to every question to which the legislative scheme spoke

directly and every problem that congress has addressed.”

see the fifth circuit’s 2014 opinion at 759 f.3d 420,

specifically at pages 424 to 425.

thus where congress has enumerated specific

statutory defenses and attendant exceptions to those

defenses, the statutory provisions must be interpreted

to be the exclusive mechanisms governing liability or the

lack thereof under the act. as such, acl’s arguments

that language requiring regulatory compliance, including

compliance with civil and criminal laws, in the charter

56a

Appendix C

agreements was sufficient to bring DRD’s conduct beyond

the scope of those agreements for purposes of oPa liability

are unpersuasive.

the government correctly points out that accepting

acl’s argument would be to exculpate similarly situated

parties in every oil spill incident involving a contract

towboat operator’s violation of a regulation or law, civil

or criminal, which it must be assumed include many such

incidents.

see in comparison the Buffalo Marine Services [37]

case, which i quoted earlier, from the fifth circuit in

2011, where the fifth circuit stated, “the interpretation

advocated by appellants would allow contracting parties in

cases such as this to avoid liability by the simple expedient

of inserting an extra link or two in the chain of distribution

and is inconsistent with the strict liability policy at the

center of the statutory scheme enacted by congress.”

Because the position advocated by acl would

effectively allow the exception to swallow the strict

liability rule contemplated by oPa through a simple

inclusion, for example, of contractual language relating to

regulatory or other laws’ compliance, this court grants

the government’s motion for summary judgment and we

declare that acl is not entitled to invoke the limitation

defense under § 2704 of oPa.

the government has argued here that acl is further

not entitled to the complete defense under § 2703(a), the

issues of connection to contract aside, because acl did not

57a

Appendix C

satisfy the requirements of exercising due care and taking

precautions against foreseeable acts and consequences of

drd. Withholding judgment on whether or not the united

states’ arguments in this respect are correct, which

arguments rely on statements in related proceedings

that acl turned the Mel Oliver over to drd without

conducting proper 100-point inspections and by completing

“imperfect” vetting, the united states is entitled to prevail

on this issue for other [38]reasons.

33 u.s.c. § 2703(a)(3) provides that the responsible

party may invoke the complete defense “if” -- and i

emphasis if -- “the responsible party establishes by a

preponderance of the evidence that the responsible party

(a) exercised due care with respect to the oil concerned,

taking into consideration the characteristics of the oil and

in light of all relevant facts and circumstances; and (B)

took precautions against foreseeable acts or omissions of

any such third party and the foreseeable consequences of

those acts or omissions.” thus acl bears the burden of

establishing this component of the § 2703(a)(3) defense.

the united states placed acl’s ability to carry its

burden in this respect at issue by asserting the arguments

referenced above. acl has failed to come forward with

anything to the contrary and, therefore, in my opinion has

failed to satisfy its burden in the context of the instant

summary judgment motion and the attendant rules of

summary judgment proceedings under Celotex, etc., of

the supreme court.

58a

Appendix C

accordingly and in conjunction with the reasons

articulated in section a above, the court grants the

government’s motion for summary judgment, declaring

that acl is precluded from raising the § 2703(a)(3) defense

under OPA; finding, therefore, that ACL has failed to

raise genuine issues of material fact sufficient to prevent

entry of summary [39]judgment as to its entitlement to

the statutory defenses as already noted. acl raises no

challenge to its designation as the responsible party for

purposes of this act. the united states is entitled to the

relief requested and the motion for summary judgment

is granted. in that connection, the court will follow up

with the necessary written paperwork to satisfy this

particular record.

****

APPENDIX

1a

APPENDIX A — Appendix

OPINIONAOF THE UNITED

STaTEs COuRT OF APPEaLs FOR THE FIFTH

CIRcuIT, FILED NOVEMBER 7, 2017

iN tHe united states court of

APPeals for the Fifth circuit

No. 16-31150

uNiteD stAtes OF AmeRicA,

Plaintiff-Appellee,

v.

AmeRicAN cOmmeRciAL LiNes, L.L.c.,

Defendant-Appellant.

Appeal from the united states District court

for the eastern District of Louisiana.

Before smitH, OWeN, and HiGGiNsON, circuit

Judges.

stePHeN A. HiGGiNsON, circuit Judge:

On July 23, 2008, nearly 300,000 gallons of oil spilled

into the mississippi River when a tugboat veered across

the river, putting the oil-filled barge it towed into the path

of an ocean-going tanker. the tugboat, the m/V meL

OLiVeR, was owned by American commercial Lines

(“AcL”) but operated by DRD towing company pursuant

2a

Appendix A

to a contractual agreement between the companies. As

the statutorily-defined responsible party under the Oil

Pollution Act (“OPA”), AcL incurred approximately $70

million in removal costs and damages. the united states

also incurred approximately $20 million in removal costs

and damages.

the united states initiated this action in 2014, seeking

a declaration that AcL is liable for all removal costs and

damages resulting from the spill and to recover the costs

that it incurred. the united states moved for partial

summary judgment on its claims that AcL was not entitled

to any defenses to liability under OPA. the district court

granted that motion, and later entered final judgment

ordering AcL to pay the united states $20 million. AcL

appealed. We AFFiRm.

I

in 2007, AcL, a marine-transportation company that

operates a fleet of barges and tugboats, contracted with

DRD towing, another marine-transportation company, to

operate some of its tugboats. AcL and DRD entered into

two charter agreements. under the “master Bareboat

charter,” AcL chartered several tugboats, including

the m/V meL OLiVeR, to DRD for one dollar per day.1

under the “master Fully Found charter,” DRD agreed to

crew the tugboats and charter its services back to AcL.

1. The Master Bareboat Charter specified three vessels, M/V

PAm D, m/V ReGiNA ANN, and m/V ceLeste mcKiNNeY.

When the PAm D suffered an engine failure, the meL OLiVeR was

substituted in its place by amendment to the initial charter.

3a

Appendix A

Both agreements required compliance with “all applicable

laws and regulations [with] respect to the registration,

licensing, use, manning, maintenance, and operation of

the Vessel(s).”

the meL OLiVeR’s crew consisted of captain terry

carver, steersman John Bavaret, and two deckhands.

captain carver was the only crewmember with a valid

united states coast Guard master of towing Vessels

license, which authorized him to lawfully operate tugboats

on the lower mississippi River. steersman Bavaret held

only an Apprentice mate (steersman) license, which

authorized him to serve as an apprentice mate under the

direct supervision of a properly licensed master. He was

not authorized to operate the vessel without continuous

supervision. See 46 c.F.R. § 10.107(b) (requiring that

steersman “be under the direct supervision and in the

continuous presence of a master”); 46 c.F.R. § 15.401

(prohibiting mariners from serving in any positions that

exceed the limits of their credentials).

On July 20, 2008, captain carver left the meL

OLiVeR to go on shore, leaving steersman Baravet in

control of the vessel. two days later, while—unbeknownst

to AcL—captain carver was still on shore, AcL directed

the meL OLiVeR to tow an AcL barge, the Dm-932, to

pick up fuel from a facility in Gretna, Louisiana. At that

time, steersman Bavaret had worked for 36 hours with

only short naps, in violation of coast Guard regulations.

See 46 u.s.c. § 8104(h) (“[A]n individual licensed to

operate a towing vessel may not work for more than

12 hours in a consecutive 24-hour period except in an

4a

Appendix A

emergency.”); 46 c.F.R. § 15.705(d) (stating that “a master

or mate (pilot)” may not work “more than 12 hours in a

consecutive 24-hour period except in an emergency”). still

under steersman Bavaret’s control, the meL OLiVeR

arrived at the Gretna facility around 2:00 p.m. on July 22,

2008. the Dm-932 was loaded with fuel, and the meL

OLIVER departed for its return trip, with the fuel-filled

barge in tow, at about 12:30 a.m. on July 23, 2008.

As the meL OLiVeR pushed the Dm-932 along

the mississippi River, it began travelling erratically. At

about 1:30 a.m., it turned to cross the path of an oceangoing tanker, the tiNtOmARA, owned by a third party.

the tiNtOmARA’s pilot and the coast Guard’s New

Orleans Vessel Traffic Service staff attempted to hail

the meL OLiVeR by radio, but no one answered. the

tiNtOmARA also sounded its alarm whistle. unable to

change course, the tiNtOmARA collided with the Dm932. the Dm-932 broke away from the meL OLiVeR and

sank downriver, spilling approximately 300,000 gallons

of oil into the mississippi River. immediately after the

collision, a crewmember on the meL OLiVeR found

steersman Bavaret slumped over the steering sticks and

non-responsive.

Following the spill, the government prosecuted DRD,

captain carver, and steersman Bavaret for criminal

violations of federal environmental law. DRD and

steersman Bavaret each pleaded guilty to one count of

violating the Ports and Waterways safety Act, 33 u.s.c.

§ 1232(b)(1), and one count of violating the clean Water

Act (“cWA”), 33 u.s.c. § 1319(c)(1)(A). captain carver

5a

Appendix A

pleaded guilty to one count of violating the Ports and

Waterways safety Act.

in the course of the criminal investigation, DRD

admitted that it knowingly allowed its crewmembers to

work without appropriate licenses or qualifications and

to work more hours than were permitted under coast

Guard safety regulations and that it failed to report

those “manning deficiencies” to the Coast Guard, also in

violation of coast Guard regulations. captain carver and

steersman Bavaret admitted to knowing that Bavaret was

not licensed to act as captain in carver’s absence.

in addition to the criminal prosecution, the government

sued AcL and DRD under OPA to recover clean-up

costs resulting from the spill. 2 DRD promptly declared

bankruptcy and later dissolved its LLc. the government

moved for summary judgment against AcL on the issue of

liability under OPA. the district court granted summary

judgment in favor of the government, and later issued a

final judgment ordering ACL to pay the government $20

million. this appeal followed.

II

We review a district court’s grant of summary

judgment de novo, applying the same legal standards

as the district court. Robinson v. Orient Marine Co.,

505 F.3d 364, 365 (5th cir. 2007). summary judgment is

2. Related litigation came to this court in United States v. Am.

Commercial Lines, L.L.C., 759 F.3d 420 (5th cir. 2014).

6a

Appendix A

appropriate only “if the movant shows that there is no

genuine dispute as to any material fact and the movant

is entitled to judgment as a matter of law.” Fed. R. civ. P.

56(a). Any reasonable inferences are to be drawn in favor

of the non-moving party. Robinson, 505 F.3d at 366.

III

A

OPA was enacted in 1990 in response to the exxon

Valdez oil spill. it “was intended to streamline federal law

so as to provide quick and efficient cleanup of oil spills,

compensate victims of such spills, and internalize the costs

of spills within the petroleum industry.” Rice v. Harken

Exploration Co., 250 F.3d 264, 266 (5th cir. 2001) (citing

s. ReP. NO. 101-94, reprinted in 1990 u.s.c.c.A.N.

722, 723). OPA’s cost-internalization measures, which

increased the financial consequences of oil spills, were

intended to “encourage greater industry efforts to prevent

spills and develop effective techniques to contain them.”

S. reP. no. 101-94 at 3. to that end, OPA redresses “gross

inadequacies . . . in the cWA’s provisions dealing with

spiller responsibility for cleanup costs” by extending the

cWA’s regime of strict, joint, and several liability; limiting

the available defenses to liability; increasing the applicable

limits to liability; and eliminating the liability limits

altogether under certain circumstances. Id. at 4-5, 12-14.

OPA holds statutorily-defined “responsible parties”

strictly liable for pollution-removal costs and damages

associated with oil spills. See Buffalo Marine Servs. Inc.

7a

Appendix A

v. United States, 663 F.3d 750, 752 (5th cir. 2011) (stating

that OPA “creates a strict-liability scheme for the costs of

cleaning up oil spills”). it provides that “each responsible

party for a vessel or a facility from which oil is discharged

. . . is liable for the removal costs and damages . . . that

result from such incident.” 33 u.s.c. § 2702(a). With

respect to vessels, the “responsible party” is “any person

owning, operating, or demise chartering the vessel.” 33

u.s.c. § 2701(32)(A).

OPA generally limits the liability of a responsible

party to a specified dollar amount based on the tonnage

of the vessel from which oil was discharged. 33 u.s.c.

§ 2704(a). However, the limits on liability do not apply if:

the incident was proximately caused by—(A)

gross negligence or willful misconduct of,

or (B) the violation of an applicable Federal

safety, construction, or operating regulation

by, the responsible party, an agent or employee

of the responsible party, or a person acting

pursuant to a contractual relationship with the

responsible party . . . .

33 u.s.c. § 270 4(c)(1). Accordingly, under those

circumstances, there is no limit to the liability of the

responsible party.

in addition to the general limits on liability, OPA

provides for a complete defense to liability under four

enumerated circumstances. it provides that:

8a

Appendix A

[a] responsible party is not liable for removal

costs or damages . . . if [that] party establishes,

by a preponderance of the evidence, that the

discharge . . . of oil and the resulting damages or

removal costs were caused solely by—(1) an act

of God; (2) an act of war; (3) an act or omission of

a third party, other than an employee or agent

of the responsible party or a third party whose

act or omission occurs in connection with any

contractual relationship with the responsible

party . . . or (4) any combination of paragraphs

(1), (2), and (3).

33 u.s.c. § 2703(a). to be entitled to the third-party

defense, a responsible party must also establish that it

“exercised due care with respect to the oil concerned”

and that it “took precautions against foreseeable acts

or omissions” of the third party. 33 u.s.c. § 2703(a)(3)

(A)-(B). 3

AcL contends that it is entitled to the third-party

defense under § 2703(a)(3) or, in the alternative, that it is

entitled to limit its liability pursuant to § 2704(a). For the

reasons stated below, we disagree.

3. the district court concluded that AcL failed to present

suff icient evidence to establish that it satisf ied those two

requirements. Because we hold that AcL is not entitled to the

third-party defense on the ground that DRD’s conduct occurred “in

connection with” its contractual relationship with AcL, we do not

reach the issues of whether AcL exercised due care and took the

necessary precautionary measures.

9a

Appendix A

B

AcL contends that it is entitled to a complete defense

to liability under 33 u.s.c. § 2703(a)(3) on the ground that

the conduct of DRD, a third party, caused the spill. the

government responds that the third-party defense is not

available because DRD’s conduct occurred in connection

with a contractual relationship with AcL. the parties

agree that DRD’s acts and omissions were the sole cause

of the spill and that AcL and DRD had a contractual

relationship. they dispute only whether DRD’s acts and

omissions occurred in connection with that contractual

relationship.

the meaning of § 2703(a)(3)’s “in connection with”

language is a question of first impression. To determine

whether DRD’s conduct occurred “in connection with”

its contractual relationship with AcL, we begin with

the meaning of “connection.” See Taniguchi v. Kan Pac.

Saipan, Ltd., 566 u.s. 560, 566, 132 s. ct. 1997, 182

L. Ed. 2d 903 (2012). Because the term is not defined

in the statute, we must give it its ordinary meaning.

See id. (“When a term goes undefined in a statute, we

give the term its ordinary meaning.”). Webster’s third

New international Dictionary defines “connection”

as “relationship or association in thought (as of cause

and effect, logical sequence, mutual dependence or

involvement).” weBster’s T hIrd new I nternAtIonAl

DIctIonAry 481 (2002). the Oxford english Dictionary

defines it as “[t]he condition of being related to something

else by a bond of interdependence, causality, logical

sequence, coherence, or the like; relation between things

10a

Appendix A

one of which is bound up with, or involved in, another.” 3

Oxford EnglIsh DIctIonAry 747 (2d ed. 1989).

“connection” is therefore a capacious t er m,

encompassing things that are logically or causally

related or simply “bound up” with one another. it is,

however, not so capacious as to be rendered meaningless.

conduct does not automatically occur “in connection

with” a contractual relationship by the mere fact that

such a relationship exists. See Westwood Pharm., Inc.

v. Nat’l Fuel Gas Distrib. Corp., 964 F.2d 85, 89 (2d cir.

1992) (interpreting virtually identical language in the

comprehensive environmental Response, compensation

and Liability Act (“ceRcLA”) and holding that “[t]he

mere existence of a contractual relationship . . . does

not foreclose the owner of and from escaping liability”).

Rather, the conduct must be causally or logically related to

the contractual relationship. Accordingly, the third party’s

acts or omissions that cause a spill occur “in connection

with any contractual relationship” between the responsible

party and the third party whenever the acts or omissions

relate to the contractual relationship in the sense that the

third party’s acts and omissions would not have occurred

but for that contractual relationship.

this reading of the ordinary meaning of “connection”

is consistent with OPA’s purpose. See Buffalo Marine

Servs., 663 F.3d at 757 (“to determine the meaning of

a statute, ‘we look not only to the particular statutory

language, but to the design of the statute as a whole and

to its object and policy.’“ (quoting Crandon v. United

States, 494 u.s. 152, 156-58, 110 s. ct. 997, 108 L. ed.

11a

Appendix A

2d 132 (1990))). the legislative history shows that, in

enacting OPA, congress wanted not only to quickly

contain and clean up spills, but also to prevent spills from

occurring in the first place by using weighty financial

consequences to encourage responsible parties to take

all available precautionary measures. S. reP. no. 101-94

at 3. to give effect to that purpose, congress intended

to narrowly limit the third-party defense in order to

“preclude defendants from avoiding liability by claiming

a third party was responsible, when that third party had

a contractual relationship with the defendant and was

acting, in essence, as an extension of the defendant.” Id.

at 13. Accordingly, the third-party defense should not

be available where a spill is caused by third-party acts

or omissions that would not have occurred but for the

contractual relationship between the third party and the

responsible party.

ACL’s proposed definition of “in connection with”

is contrary to both the statute’s text and its purpose.

AcL contends that we should adopt the second circuit’s

interpretation of similar language ceRcLA. 4 in

Westwood, the second circuit held that the “in connection

with” language in ceRcLA’s third-party defense requires

that “the contract between the landowner and the third

party must either relate to the hazardous substances or

4. ceRcLA’s third-party defense provides for a complete

defense to liability where the release of a hazardous substance was

caused solely by “an act or omission of a third party other than an

employee or agent of the defendant, or than one whose act or omission

occurs in connection with a contractual relationship, existing directly

or indirectly, with the defendant.” 42 u.s.c. § 9607(b)(3).

12a

Appendix A

allow the landowner to exert some element of control over

the third party’s activities.” 964 F.2d at 91-92 (emphasis

added). even though that test is met here factually in

light of the parties’ contract to transport oil, we decline to

adopt that approach because its additional requirements

go beyond what is required by OPA’s plain text. section

2703(a)(3) requires only two things: (1) that a third party’s

act or omission caused the spill at issue and (2) that that

act or omission did not “occur[] in connection with any

contractual relationship with the responsible party.” 33

u.s.c. § 2703(a)(3) (emphasis added). it does not condition

the applicability or inapplicability of the exception on the

nature of the contract between the parties. Accordingly,

the contract need not explicitly relate to hazardous

substances (here, oil) or permit the responsible party to

control the third party’s activities.

AcL also contends that DRD’s acts and omissions

cannot be “ in connection w ith” their contractual

relationship because those acts and omissions directly

violated the terms of their contracts. the charter

agreements specifically required DRD to comply with all

applicable laws and regulations, but the acts and omissions

that caused the spill did not. But “in connection with”

does not mean “in compliance with,” and the meaning

of “connection” is broad enough to encompass acts that

are not specifically contemplated, or even acts that are

specifically not contemplated, in a contract. A contrary

reading would permit responsible parties to circumvent

OPA by easily contracting out of liability, a result congress

specifically sought to avoid. See S. reP. no. 101-94 at

13 (stating that the contractual-relationship exception

13a

Appendix A

from the third-party defense is intended to “preclude

defendants from avoiding liability” through contractual

relationships); see also Buffalo Marine Servs., 663 F.3d

at 757 & n.36 (citing to United States v. LeBeouf Bros.

Towing Co., 621 F.2d 787, 789 (5th cir. 1980) and rejecting

interpretation of “contractual relationship” that would

enable defendants to easily avoid liability).

Given the broad meaning of “in connection with,”

AcL has failed to establish that it is entitled to the thirdparty defense. the conduct that caused the spill—captain

carver’s leaving the meL OLiVeR under the control of

an unlicensed steersman and Bavaret’s working more

consecutive hours than permitted under coast Guard

regulations, becoming unconscious while in command of

the vessel, and veering into the path of the tiNtOmARA

while transporting oil at AcL’s direction—occurred “in

connection with” DRD’s contractual relationship with

AcL. Pursuant to the charter agreements, DRD agreed

to crew the meL OLiVeR and charter DRD’s services to

AcL. But for those charter agreements, DRD would not

have been operating the meL OLiVeR and transporting

AcL’s fuel-filled barge, and the spill would not have

occurred.

C

AcL alternatively contends that it is entitled to

OPA’s general limit on liability. the government responds

that DRD’s conduct falls within the exception from

limited liability for spills proximately caused by “gross

negligence,” “willful misconduct,” or federal regulatory

14a

Appendix A

violations committed by “a person acting pursuant to a

contractual relationship with the responsible party.” See

33 u.s.c. § 2704(c)(1). We agree.

the parties dispute whether DRD was acting

“pursuant to” its contractual relationship with AcL

when it committed the regulatory and criminal violations

that caused the spill. Once again, the meaning of

§ 2704(c)(1)’s “pursuant to” language, which is not defined

in the statute, appears to be a matter of first impression.

As before, we turn to the ordinary meaning of the words.

Black’s Law Dictionary defines “pursuant to” as “[i]n

compliance with; in accordance with,” “[a]s authorized by,”

or “[i]n carrying out.” BlAck’s LAw DIctIonAry 1431 (10th

ed. 2014). Webster’s Third similarly defines “pursuant to”

as “in the course of carrying out; in conformance to or

agreement with; [or] according to.” weBster’s ThIrd new

InternAtIonAl DIctIonAry 1848 (2002). See also Oxford

EnglIsh DIctIonAry 887 (2d ed. 1989) (defining “pursuant

to” as “following upon, consequent and conformable to, [or]

in accordance with”). Accordingly, and as AcL contends,

“pursuant to” has a narrower meaning than “in connection

with.” While the latter encompasses any conduct that is

logically related to the contractual relationships in the

sense that it would not have occurred but for the third

party’s contractual relationship with the responsible

party, the former contemplates compliance or conformity.

However, AcL goes too far when it argues that the

specific acts or omissions that cause the spill must be

authorized by the contract. section 2704(c)(1) requires

only that the gross negligence, willful misconduct, or

15a

Appendix A

federal regulatory violations that cause the spill be

committed by the responsible party, its agent or employee,

or “a person acting pursuant to a contractual relationship

with the responsible party.” Accordingly, the “pursuant

to” language is satisfied if the person who commits the

gross negligence, willful misconduct, or regulatory

violation does so in the course of carrying out the terms

of the contractual relationship with the responsible

party. Reading the statute to require that the negligent

or wrongful act itself be “pursuant” to the contract

would be nonsensical; it would be a rare contract indeed

that specifically contemplated gross negligence, willful

misconduct, or the violation of federal safety regulations.

exceptions to statutes are to be construed narrowly, but

AcL’s proposed construction would read the exception

out of the statute altogether.

that the conduct that caused the spill here rose

to the level of a criminal violation does not take it out

of § 2704(c)(1). AcL contends that because § 2704(c)(1)

specifically mentions gross negligence, willful misconduct,

and the violation of federal regulations, but says nothing

of criminal violations, the exception from limited liability

must not apply to the latter. But that draws a false

distinction. As evidenced by the facts of this case, there

is considerable overlap between gross negligence, willful

misconduct, and violations of federal regulations, on the

one hand, and criminal violations on the other. there is

no principled basis on which to distinguish between the

negligent acts that would lift the general limits on liability

and the criminal acts that would not. Would the relevant

conduct simply have to be a criminal violation? that would

16a

Appendix A

seem to largely eviscerate the exception. Or would the

responsible actors have to be actually charged with a

criminal violation, or convicted, to take the conduct out of

§ 2704(c)(1) and reimpose the limits to liability?

Nor would such a distinction give effect to OPA’s

purpose. OPA increased the financial consequences of oil

spills in order to encourage responsible parties to take

precautionary measures to prevent such spills. section

2704(c)(1), in particular, encourages compliance with

the kinds of regulations that are themselves intended to

prevent oil spills—like the manning requirements violated

by DRD—by providing for unlimited liability where those

regulations are flouted. See S. reP. no. 101-94 at 14 (stating

that “where compliance [with federal regulations] perhaps

could have prevented or mitigated the effects of an oilspill

[sic], no such limits [to liability] will apply”). there is no

reason to think that congress intended to lift the limits

on liability for spills caused by conduct that is forbidden by

federal regulation but to reimpose those limits for spills

caused by conduct considered so dangerous or risky that

it is also subject to criminal penalties. such a distinction

would run counter to OPA’s purpose of encouraging

compliance with the very rules and regulations intended

to prevent oil spills in the first instance.

Finally, AcL’s reliance on the doctrine of respondeat

superior is inapposite. under that doctrine, employers

are not liable for the intentional torts or criminal acts

of their employees if those acts are committed outside

the scope of their employment. But that is of no help

to AcL. First, employer liability under the doctrine of

17a

Appendix A

respondeat superior is a creature of the common law

of agency. See restAtement (ThIrd) of Agency § 2.04

cmt. b (2006) (noting that the doctrine of respondeat

superior “has long been classified as an element of agency

doctrine”). the liability of a responsible party for oil spills

caused by the negligence or misconduct of a third party

under OPA is a creature of statute. second, even if the

doctrine of respondeat superior were applicable here by

analogy, it appears to support our reading of “pursuant

to.” employers are liable for the intentional torts of their

employees if committed by an employee “acting within the

scope of their employment.” Id. § 2.04. conduct may be

within the scope of employment, even if not authorized,

if it occurs “while performing work assigned by the

employer” and if it is “intended to further any purpose

of the employer.” Id. § 7.07 cmt. b. Accordingly, even if

the doctrine of respondeat superior were relevant here,

our reading of what it means to be “acting pursuant to a

contractual relationship” appears to be consistent with the

imposition of liability on employers for torts committed by

employees in the course of their employment.

Here, there is no dispute that the July 23, 2008 spill

was caused by DRD’s wrongful conduct and regulatory

violations, committed in the course of carrying out its

contractual obligation to transport ACL’s fuel-filled barge.

Accordingly, the spill was caused by the gross negligence,

willful misconduct or regulatory violations of “a person

acting pursuant to a contractual relationship with” AcL,

and AcL is therefore not entitled to limited liability.

18a

Appendix A

IV

For the foregoing reasons, we AFFiRm the district

court’s grant of summary judgment.

19a

Appendix

B

APPENDIX B — FINAL

JUDGMENT

OF THE

UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF LOUISIANA, FILED

OCTOBER 26, 2016

uNited states district court

easterN district of louisiaNa

ciVil actioN

No. 11-2076

sectioN “B” – (2)

uNited states of america,

Plaintiff,

Versus

americaN commercial liNes, llc

aNd d.r.d. toWiNG comPaNY, llc,

Defendants.

JudGe lemelle

maGistrate JudGe WilKiNsoN

FINAL JUDGMENT

for reasons orally assigned (r.doc. 130 (transcript))

and in conjunction with the court’s order of January

21, 2015 (r.doc. 125), the court granted the motion for

Partial Summary Judgment filed by Plaintiff, United

states of america, pursuant to the declaratory Judgment

act, 28 u.s.c. § 2201 et seq., finding that:

20a

Appendix B

(1) defendant, american commercial lines llc

(“ACL”), is designated a “responsible party”

within the meaning of that term for purposes of

liability for removal costs and damages under the

oil Pollution act of 1990 (the “oPa”), 33 u.s.c.

§ 2702;

(2) ACL is not entitled to invoke the complete solefault third-party defense established under the

oPa at 33 u.s.c. § 2703 (a)(3) against the claims

of the Government in these proceedings; and

(3) ACL is not entitled to invoke the limitation of

liability defense established under the OPA

at 33 u.s.c. § 2704 against the claims of the

Government in these proceedings.

in accordance with the Parties’ stipulation, the united

States of America is entitled to recover from ACL removal

costs and damages as set forth in r. doc. 206. acl is

liable to, and shall pay to, the United States of America the

sum of $20 million dollars, inclusive of any prejudgment

interest, with each party to bear its respective costs of

court and attorneys’ fees. Post-judgment interest shall

be governed by statute, 28 U.S.C. § 1961.

In accordance with the previous stipulation regarding

Natural resource damage claims (r.doc. 107), all claims

of the United States of America against ACL seeking

damages related to injuries to, destruction of, loss of, or

loss of use of natural resources were dismissed without

prejudice, it being understood that this dismissal did not

21a

Appendix B

determine or conclude the merits of any claims made or

held by the United States for damages related to “injuries

to, destruction of, loss of, or loss of use of natural resources”

under the oPa or other law. the aforementioned natural

resource damage claims are thus preserved.

this Judgment is a final Judgment pursuant to 28

u.s.c. § 1291.

this __ day of __, 2016.

uNited states district

JudGe

22a

AppendixFROM

C

APPENDIX C — EXCERPT

TRANSCRIPT

OF THE UNITED STATES DISTRICT COURT FOR

THE EASTERN DISTRICT OF LOUISIANA,

FILED MARCH 10, 2015

uNited states district court

easterN district of louisiaNa

civil action

No. 11-2076

section B

uNited states of america

versus

americaN commercial liNes, llc, et al.

January 21, 2015

traNscriPt of ProceediNGs Before

tHe HoNoraBle iVaN l.r. lemelle

uNited states district JudGe

[2]PROCEEDINGS

(January 21, 2015)

THE COURT: Good morning. Be seated, please.

isidore, let’s call it.

THE DEPUTY CLERK: civil action 11-2076, united

states versus american commercial lines, llc, et al.

23a

Appendix C

THE COURT: counsel.

MR. DILAURO: Good morning, Your Honor. michael

dilauro for the united states, and i have with me Jessica

sullivan.

MR. BERTRAM: Your Honor, richard Bertram,

Jones Walker, counsel for acl. We wanted to apologize

to the court. We had a glitch on our calendaring. mr.

Nicoletti can be dialed in if the court -THE COURT: He is not on the phone yet? i thought

he was on the phone. let’s get him on.

MR. NICOLETTI: John Nicoletti.

MR. BERTRAM: Good morning, John. this is

richard Bertram. We are in court with Judge lemelle

now.

MR. NICOLETTI: Good morning, Your Honor.

THE COURT: Good morning, mr. Nicoletti. mr.

Bertram was explaining some, i’ll call it, mixup in terms

of whether or not you were required to be here today for

oral argument. as you all recall, i set this down for oral

argument. i don’t know whether or not it was done on my

own motion or on the [3]motion of the parties. after doing

that, there was a motion to continue, which i granted,

setting it for today.

24a

Appendix C

While that order continuing it until today was silent in

terms of oral argument or on the briefs, we never vacated

the order for oral argument. so be mindful that, at least

from my interpretation of our rules, if we don’t vacate any

part of a prior order, it’s still in effect.

as you know, under our local rules, we call the

hearing dates now submission dates. Perhaps there was

some confusion on your part or somebody’s part on what

that meant. it didn’t mean to vacate oral argument, which

i always intended on having in this case.

so with that, i don’t need any further explanation.

don’t worry. i’m not going to issue sanctions or anything

like that. i think that we need to go forward with oral

argument today. i have read the briefs from all parties.

i’ll just chalk this up as a miscommunication through no

fault of anyone and we will go from there.

We have present, mr. Nicoletti, local counsel, mr.

Bertram, as well as counsel for the government, mr.

dilauro, and -- is it ms. Keast?

MS. SULLIVAN: ms. sullivan, Your Honor.

THE COURT: thank you.

as you all know, this particular case involving [4]

oPa claims asserted by the united states against acl

as well as acl’s defenses to that action is a subject now

of a motion for partial summary judgment where the

government seeks the court to declare that the defenses

that acl seeks to urge here should be dismissed.

25a

Appendix C

in this case acl, as i understand their argument,

states that the united states has failed to show that the

acts and omissions of drd, the third-party tug operators

of the acl barge, satisfied the “in connection with”

standard of § 2703(a)(3) of title 33 of the united states

code. acl further argues that the government cannot,

therefore, satisfy the narrower “pursuant to” language

of § 2704 of the same codal title.

The United States has replied and cited basically five

propositions that they believe acl has not challenged:

(1) that two charter agreements were in existence

between acl and drd at the time of the maritime

collision here;

(2) that drd violated a host of federal safety and

operating regulations in proximately causing the July

2008 accident;

(3) that oPa claims are unaffected by the provisions

of the limitation of liability act;

(4) that acl’s counterclaim against the [5] united

states is not legally cognizable; and

(5) that the united states is entitled to judicial

declaration concerning acl’s liability to the united

states.

so the issue that i have before me, then, is whether

acl is precluded from invoking the complete defense

26a

Appendix C

of § 2703 or the limitation defense of § 2704 of the oil

Pollution act of 1990.

(5) that the united states is entitled to judicial

declaration concerning acl’s liability to the united

states.

so the issue that i have before me, then, is whether

acl is precluded from invoking the complete defense

of § 2703 or the limitation defense of § 2704 of the oil

Pollution act of 1990.

let’s go to movant for argument here. in this

particular matter, counsel, it seems as if you would agree

with acl that our laws here, the oPa laws, that is, require

this “in connection with” on the defense side and “pursuant

to” on the § 2704 side of the case. acl seems to argue

that because they were not found at fault in the limitation

action and the related actions arising from this maritime

collision and the court found the sole responsible party

in that action was drd that they should be provided with

the defenses that they assert here.

You argued that, well, no this court and the fifth

circuit have found that the contracts that acl had with

drd would establish their strict liability under oPa since

the actions here all occurred while these contracts were in

existence and pursuant to the voyage charter agreements.

they cite us to a second circuit case that says that

the existence of the agreements per se is insufficient for

[6]our purposes here. What’s your response to that?

27a

Appendix C

MR . DILAURO: Well, we disag ree w ith the

interpretation of the case, but we do not disagree that a

circle of precedent could be applied.

THE COURT: the fifth circuit, i think, pretty much

says that as well in Buffalo, i believe, as well as to some

extent in the appeal from our initial findings that were

affirmed by the Fifth Circuit, that ACL could not have

a right of action against the oil pollution cleanup people

that they selected.

MR. DILAURO: Yes, Your Honor. so we have this

language in § 2703 which requires a “connection with” and

in § 2704 the words are “pursuant to.” Both of those sets

of words refer to the contractual relationship.

so we see this as simply a plain language interpretation

of the oPa statute. We have no objection to cercla

informing that analysis. i think the cercla cases are

a little bit different because they are factually different.

they typically involve situations where a landowner has

passed a piece of real estate on to another landowner or

perhaps there is some operation of that real estate.

THE COURT: assuming that acl is arguing that

that’s basically what occurred here, our findings that DRD

was a pro hac vice owner, that that somehow falls within

the factual scenario of the second circuit case, which was

the [7]pharmaceutical case -MR. DILAURO: Westwood, Your Honor.

28a

Appendix C

THE COURT: -- Westwood, correct, what’s your

response to that? i’m playing devil’s advocate, so to speak.

MR. DILAURO: Yes, Your Honor.

THE COURT: sorry to characterize your client as the

devil, mr. Bertram or mr. Nicolleti. that’s not intended.

MR. BERTRAM: understood.

MR. DILAURO: What we would say is that it’s fair

to look to the facts of the Gabarick case which was tried

before this court. the government relies on those facts,

but the standard of liability in that case was different. it

was a negligence standard. that was a limitation case. so

one should look to the facts as they were developed in the

case, but they have to be viewed through the strict liability

prism or lens that’s part of the oPa regime.

THE COURT: Well, § 2703 states that “a responsible

party is not liable for removal costs or damages

under § 2702 if the responsible party establishes by a

preponderance of the evidence that the discharge or

substantial threat of a discharge of oil and the resulting

damages or removal costs were caused solely by,” and then

it lists a number of facts:

(1) act of God;

(2) act of war;

29a

Appendix C

(3) and perhaps pertinent for our purposes [8]here,

an act or omission of a third party other than an employee

or agent of the responsible party or a third party whose

act or omission occurs in connection with any contractual

relationship with the responsible party except where

the sole contractual arrangement arises in connection

with carriage by a common carrier by rail, which we

don’t have here, if the responsible party establishes by a

preponderance of the evidence that the responsible party:

(a) exercised due care with respect to the oil concerned;

(B) took precautions against foreseeable acts or omissions

against of any such third party and the foreseeable

consequences of those acts or omissions; or

(4) any combination of paragraphs 1, 2, and 3.

so wouldn’t that require, then, for acl to show

that drd’s acts or omissions were the sole cause of the

discharge, that no contractual relationship or sufficiently

attenuated contractual relationship existed between

acl and drd at the time of the discharge, and that

acl exercised due care and took precautions against

foreseeable consequences?

that later part, that acl exercised due care and took

precautions against foreseeable consequences, isn’t that

-- to the extent that the facts in this case, i think, have

already been established and affirmed to some extent by

the circuit, this issue of a strict liability in the context

of whether or not acl exercised this due care and took

precautions, that’s a legal conclusion, in my opinion, based

[9]upon facts that to me are not in dispute. How do i jump

30a

Appendix C

to that legal conclusion in view of the factual findings

already made?

i know you say -- and i agree with you -- that this is

a strict liability scenario, the limitation act and general

maritime laws are preempted by congressional intent

in enacting oPa and the language it shows. i’m just

wondering, however, though, in terms of the application

here, whether or not you are arguing solely the existence

of this contractual relationship between drd and acl

and does that draw it within (3)(a), (3)(B), or (4), or a

combination?

MR. DILAURO: Well, our position is that the court’s

focus should fall primarily on § 2703(a)(3), act or omission

of a third party, more importantly the language which

discusses “a third party whose act or omission.” and i

don’t think there’s any question but that drd committed

numerous acts or omissions, Your Honor, that led to that

collision on July 23, 2008. so there’s no question about the

acts or omissions.

We would submit also that on the record there’s

no question that they occurred in connection with a

contractual relationship and, in particular, the pair of

charter parties that existed at the time. the charters

were the mechanism that put drd in operation of the Mel

Oliver. When it entered into the charters, acl recognized

that drd would be operating the Mel Oliver, that it would

be using the Mel Oliver to push acl’s [10]barge dm-932.

that was the very purpose of the charter.

31a

Appendix C

THE COURT: so if drd is acting pursuant to its

contractual relationship with acl, you think that’s

sufficient?

MR. DILAURO: I do believe that’s sufficient, Your

Honor. I believe the Court could and, in fact, should find

in the united states’ favor based on this alone.

i think, however, beyond that the court can look

further to the two additional provisions, subsections (a)

and (B), which speak to the exercise of due care and the

taking of precautions. i don’t think that the court has to

do so, but i certainly think it may and that it would be

appropriate for the court to do so.

THE COURT: You don’t believe that our findings

in th

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