# Petition for Writ of Certiorari — Rationis Enterprises Enterprises, Inc. v. Hyundai Mipo Dockyard Co., Ltd. (No. 06-180) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1279%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2006 ## Text Supreme Court | U.S 27 ae 06-180 JUL 2 7 2006 wo_°-__ OF FIGE OF THE CLERK IN THE Supreme Court of the United States RATIONIS ENTERPRISES INC. OF PANAMA, et al., Petitioners, V. HYUNDAI MIPO DOCKYARD CO., LTD., et al., - Respondents. On PETITION FOR A Writ OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT PETITION FOR A WRIT OF CERTIORARI Macuate A. MILLER Counsel of Record MiLcer & WILLIAMSON, LLC 3150 Energy Centre 1100 Poydras Street New Orleans, LA 70163 (504) 525-9800 Attorneys for Petitioners (Additional Counsel Listed on Signature Page) 202256 ce) COUNSEL PRESS (800) 274-3321 + (800) 359-6859 i QUESTIONS PRESENTED FOR REVIEW - This matter involves a maritime disaster causing massive damages to numerous parties domiciled in the United States and around the world (“Petitioners”) when an ocean-going containership broke in half on a transatlantic voyage en route to the United States due to negligent lengthening of the vessel by a Korean shipyard. Applying United States general maritime law, the United States District Court for the Southern District of New York entered judgment holding the Korean shipyard liable for Petitioners’ losses. The United States Court of Appeals for the Second Circuit (“Panel’’) reversed the District Court’s judgment on choice-of-law grounds, finding that Korean law governed Petitioners’ claims. Rather than remand the action to the District Court for adjudication of all Korean-law issues, including the threshold issue of whether the claims were time-barred under Korean law, the Panel in its decision, sua sponte, summarily ruled Petitioners’ claims time-barred and dismissed the action. After Petitioners sought rehearing to show inter alia that the time-bar ruling nullified Korean law by disregarding controlling decisions of the Korean Supreme Court, the Panel denied rehearing, without explanation, in a one-sentence order. As a result, the Panel acted as a court of first instance to decide sua sponte a controlling question of Korean law and then by denying rehearing effectively denied an appeal from its own time-bar ruling. This fundamentally unfair and erroneous result presents the following questions for review: li I. Did the Panel violate 28 U.S.C. § 47, which provides that “[n]o judge shall hear or determine an appeal from the decision of a case or issue tried by him” (emphasis supplied), thereby depriving Petitioners of the right of appeal conferred by the Judiciary Act and Federal Rule of Appellate Procedure 3, when it (a) first acted as court of first instance to decide, sua sponte, a controlling tssue of Korean law, and then (b) by denying rehearing, effectively determined an appeal from its own decision? Il. Did the Panel by disregarding controlling Korean Supreme Court decisions, violate not only the choice-of-law principles prescribed by this Court in Lauritzen and Romero, but also this Court’s rule that lower federal courts, when applying the chosen law of the relevant state or nation, are bound by Erie and West to adhere to the decisions of that state’s or nation’s highest court?! fil. Did the Panel wrongly apply the New York “settlor bar rule” as Substantive Law to bar petitioner timely indemnity claim contrary to its pending that Korean substantive law applied to the action? 1. Lauritzen v. Larsen, 345 U.S. 571 (1953); Romero v. International Terminal Operating Co., 358 U.S. 354, 382-3 (1959); Erie and Co. v. Tompkins, 304 U.S. 64 (1938); West v. American Telegraph & Telephone Co., 311 U.S. 223, 236 (1940). lil PARTIES TO THE PROCEEDING AND RULE 29.6 STATEMENT See Appendices H & I iv TABLE OF CONTENTS Page Questions Presented for Review ................ i Parties to the Proceeding and Rule 29.6 Statement . 11 GEER oh ohn 3 89 ee odo VS ed os eas 1V Fabre Of Cited Autores... cc ccc e eas vi Table of Appendices et einebtisoue aes xi I SN ib oe nis oa Freee ohee ne l SEPP ey eee Per rer peer l Statement of the Case ......... isa cu I bee SOUND oe ee is reo cso ] 2. Trial Court Pukecdinan EEEKEERE ERA a 2 3. Appellate Court Proceedings ............ 4 Reasons for Granting the Petition .............. 9 I. The Panel’s Adjudication of This Case in Violation of 28 U.S.C. § 47 Deprived Petitioners of Their Statutory Right of Appeal and of the Fundamental Fairness Required by the Tous Process Cee . woos cc ews eves. 9 Contents Page A. The Panel Violated 28 U.S.C. gga? and Deprived Petitioners of Their Statutory Right of Appeal ......... eer 9 B. The Panel’s Handling of This Matter Lacked the Fundamental Fairness Required by the Due Process Clause... 11 ll. By Disregarding Controlling Korean Supreme Court Decisions the Panel Failed to Follow United States Supreme Court Decisions Controlling Application of Another ee ALC CPC eee ee eee we 14 A. The Panel’s Blatant Nullification of Korean Law Warrants Review ........ 14 B. The Panel Blatantly Ignored and Nullified Korean Law .............., 17 Se Sy TN Br Pig oe oat Re aE pes 26 lil. The Panel Wrongly Dismissed NOE’S Indemnity Claim on the Basis of New York Re ee Gara ae es saitele viwkin ok a wa 4s af: Conclusion > tof 5 els or 9 4 52 RAN Sk WORE Oe TMG MRE OTR ag ORE 28 vi TABLE OF CITED AUTHORITIES Page FEDERAL CASES American Intern. Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254 (Sth Cir. 2003) ...... 7 Bankers Trust Co. v. Lee Keeling & Associates, Inc., or Foes Be COUR Ue, TOG). ooo vik cnc cee ens 27 Belmac Hygiene, Inc. v. Belmac Corporation, big a” bg e 2 es) Seep enieemeras 25, 26 Black v. Acme Markets, Inc., 564 F.2d 681 (Sth Cir. RPT TE ek wake ds bo 50K hues cs eee 22 Bowen v. Georgetown University Hospital, 488 U.S. CEE, oo use k ba koe bcos 19 Carbotrade S.P.A. v. Bureau Veritas, 99 F.3d 86 ees PE os io ce cx wwe oe 6, 10 Cedric Kushner Promotions, Ltd. v. King, 533 U.S. i Et BREE Sry Bateran egret Eee Mem RS tae ee: 18 In re Complaint of Rationis Enterprises, Inc. of Panama, 210 F. Supp. 2d 421 (S.D.N.Y. 2002) ... 3 In re Complaint of Rationis Enterprises, Inc., 2000 WL 1015918, 2000 U.S. App. LEXIS 10226, 2000 AMC 2613 (S.D.N.Y. 2000) ............ 3 Vii . § 4 7 Fogel v. Zell, 221 F.3d 955 (7th Cir. 2000) ....... 22 Griffin v. Illinois, 351 U.S. 12 (1956) ........... 1] Landgraf v. USI Film Products, 511 U.S. 244 bi a) EE EEE PE ee Pe COE Dm rhe 19 Lauritzen v. Larsen, 345 U.S. 571 (1953) ....... passim Leavitt v. Jane L., 518 U.S. 137 (1996) ......... 14, 15 vill - Cited Authorities Page Meyer v. Holley, 537 U.S. 280 (2003) ........... 18 Minpeco, S.A, v. Conticommodity Services, Inc., O77 ©. eae. 191 (5. Y.19CS) .. wees 27 N.L.R.B. v. Amalgamated Clothing Workers of America, 430 F.2d 966 (Sth Cir. 1970) ........ 12, 13 Niehus v. Liberio, 973 F.2d 526 (7th Cir. 1992) .... 22 Plummer v. Lederle Laboratories, 819 F.2d 349 “ EE Ee 25 In re Rationis Enterprises, Inc. of Panama, 261 F.3d~ I Pe ED. cose vec ccesvecevers 3 In re Rationis Enterprises, Inc. of Panama, 325 F. eae ay | Ape Rationis Enterprises Inc. of Panama v. Hyundai Mipo Dockyard Co., Ltd., 426 F.3d 580 (2d Cir. 2005) ESS OS Spats l Raytheon Co. v. Hernandez, 540 U.S. 44 (2003) ... = 18 Romero v. International Terminal Operating Co., de saw ee cee seeeeeces passim U.S. v. Jimenez Recio, 537 U.S. 270 (2003) ....... 18 ix Cited Authorities Page Vimar Seguros y Reaseguros, S.A. M/V Sky Reefer, SES ik DOI OOEE 445550 sGeuee es eeeeeeenas 25 West v. American Telegraph & Telephone Co., FES a BAW LEE kek caw nieces ene il STATUTES FRA RE i 0ek deb ekae ats eee 6, 19 PRE © ddd cokse rack kee 94 e REASONED 11 Be rT 66s ed bdo See ee kke ree 11, 8, 9, 10, 11 2 Shi i oo sna ea aces eee l BP hi 8 NOOR. 44 808 68 eee 9 SOUSA Oe Sr bbs 6 inc es sicne es 2 Pee Goon. Cee, Caw © 1S 0G oie ce che idee edes 27 SECONDARY AUTHORITIES RESTATEMENT (SECOND) OF THE LAW OF ConrfLICTS § 6 ~ Korean Products Liability Act (2000) Art.7 ...... 7,17 Rosees Ciwe Coes Aat. FOO oon 6s cco wh cedcus 28 x Cited Authorities Page Korean Civil Code Art. 766(2) ................ passim Korean Supreme Court Judgment, Case no. 78 Da. beet 5. | nee Pt cuaaenae ene 20 Korean Supreme Court Judgment, Case no. 1A Da. Bae Os Beds ED hin rn we eke ecsceueseer 20 Korean Supreme Court Judgment, Case no. 81 Da. DFS (OOM, 2G, SPOT ccc cen cds tevecdstenads 20 Korean Supreme Court Judgment, Case no. 85 Da. gt AE Sa ae re moe 20 Korean Supreme Court Judgment, Case no. 97 Da. ee Es SOE ec tee eed cai ees 20 Korean Supreme Court Judgment, Case no. 77 Da. eC, Es PETE oe cornice eine obs cereus 20 Korean Supreme Court Judgment, Case no. 743 ey OER ce seer che eee ean eran 20 xi TABLE OF APPENDICES Appendix A -— Opinion Of The United States Court Of Appeals For The Second Circuit Decided I I a org ee ae ee eect Appendix B — Opinion And Order Of The United States District Court For The Southern District Of New York Dated July 9, 2004 ................ Appendix C — Order Of The United States Court Of Appeals For The Second Circuit Denying Petition For Rehearing Dated And Filed February vo RSE ye pray rte Sie Di perde ss ari er rae erm Appendix D — Letter From Machale A. Miller Of Miller & Williamson LLC To Clerks Of The United States Court Of Appeals For The Second Circuit Dated January 19, 2005 .............. Appendix E — Declaration Of Byung-Suk Chung ... Appendix F — Supplemental Declaration Of Byung- EE ce renwa Guba anu x oie cede ea Appendix G — Excerpts Of Brief Of Appellants Hyundai Mipo Dockyard Co., Ltd. And Hyundai Corporation (Pages 14-21) 2... cc cece eee Appendix H — List Of Petitioners .............. xii Appendices Appendix I — Rule 29.6 Corporate Disclosure WIE sv cnc vr cuytecesecesse¥eeeeeenein eeesee4evueveeveeseeceeseseeedécernsrnrese eee 2 ee ee 6 see esevatrteerrtFr @eaereswreae € Oe ee.f- e828 eo @e eee ee ee a eS Appendix L — Letter From Vincent M. Deorchis Of Deorchis & Partners, LLP To Clerk Of The United States Court Of Appeals For The Second Circuit ENE POURED TG, DOGO cosa vce scene nv de-wae Appendix M — Letter From Edward C. Radzik Of Donovan, Parry, et al. To Clerk Of The United States Court Of Appeals For The Second Circuit ees FONG OF, ROOe <6 0c 00s esc tuedens ] OPINIONS BELOW The published Order of the Panel denying rehearing is reproduced at Appendix “A”. The Opinion and Order of the Panel in Rationis Enterprises Inc. of Panama v. Hyundai Mipo Dockyard Co., Ltd., 426 F.3d 580 (2nd Cir. 2005) was decided on October 17, 2005, and isrep »duced as Appendix “B”. The published Opinion and Order of the United States District Court for the Southern District of New. York (“District Court”) in /n re Rationis Enterprises, Inc. of Panama, 325 F.Supp.2d 318 (S.D.N.Y. 2004), was filed on July 9, 2004, and is reproduced as Appendix “C”’. JURISDICTION The Panel denied a timely petition for rehearing on February 27, 2006. On May 18, 2006, Petitioners filed an application to extend the time to file this petition for a writ of certiorari. The application was granted on May 22, 2006 by Justice Ginsburg extending the time to file until July 27, 2006. This Court has jurisdiction pursuant to 28 U.S.C. §1254(1). STATEMENT OF THE CASE 1. Factual Background This matter arises out of losses sustained on November 17, 1997 by over 700 cargo owners, most of which are domiciled in the United States, when the fully-laden container ship MSC CARLA split in half during a voyage from Europe to the United States. The casualty occurred when a circumferential fracture developed in the deck structure near a defective weld joining a newly-fabricated 15-meter midbody section to the old body of the vessel when it was 2 lengthened in Korea.’ That critical weld was negligently performed by Hyundai Mipo Dockyard, an affiliate and subcontractor of Hyundai Corporation (collectively “Hyundai”), when joining the old forebody to the forward end of the new midbody. None of the Hyundai-created defects was visible. Neither the vessel owner and operator nor vessel personnel had reason to anticipate that the vessel would fail.’ The cargo owners were insured by various American and foreign cargo insurers, who paid their insureds for the losses resulting from the casualty, thereby becoming subrogated to the rights of their insureds. 2. Trial Court Proceedings Rationis and MSC commenced a proceeding on December 9, 1997, in the District Court seeking exoneration from or limitation of liability pursuant to the Limitation of Liability Act (46 U.S.C. §§ 180 et seg.). The owners and insurers of the hundreds of shipments carried on the MSC CARLA (“Cargo Interests”) filed claims against Rationis and MSC. In 1998 Cargo Interests also filed third-party complaints against Hyundai seeking recovery based on negligence, strict liability and products liability under 2. MSC CARLA was built in 1979 as a containership. On February 20, 1984, Hyundai Corporation contracted with Brostrom Shipping Co., then the owner of the vessel, to lengthen the M/V Nihon (later sold and renamed MSC CARLA) to carry more containers. Hyundai Corporation subcontracted the work to its shipyard, Hyundai Mipo Dockyard, who fabricated the new midbody, cut the Nihon in half,nserted-the-new 15-meter midbody and welded the three pieces together. /n re Rationis Enterprises, Inc. of Panama, 325 F.Supp.2d at 321. In 1997 the vessel was owned by Rationis Enterprises, Inc. (“Rationis”), a Panamanian company, and operated by Mediterranean Shipping Co. (“MSC”), a Swiss company. 3. 325 F.Supp.2d at 327. 3 U.S. law. Hyundai answered the pleadings alleging that unidentified foreign law applied and denying liability. Additionally, Hyundai commenced two declaratory judgment actions in Korea seeking exoneration from liability. On July 21, 2000, the District Court issued an anti-suit injunction ordering Hyundai to suspend the Korean actions. In re Complaint of Rationis Enterprises, Inc., 2000 U.S. App LEXIS 10226, 2000 AMC 2613 (S.D.N.Y. 2000). The Second Circuit vacated the injunction and directed the trial court to determine, as a threshold consideration, whether it had personal jurisdiction over Hyundai. /n re Rationis Enterprises, Inc. of Panama, 261 F. 3d 264 (2d Cir. 2001). On remand, after a special hearing, the District Court concluded that it had jurisdiction. /n re Complaint of Rationis Enterprises, Inc. of Panama, 210 F. Supp. 2d 421 (S.D.N-Y. 2002). When discovery was completed and the matter was awaiting trial, Hyundai moved for summary judgment contending that under the laws of Korea, Sweden or Panama Cargo Interests could not prevail on any of its liability theories. On January 27, 2003, the District Court concluded that Hyundai had waived the right to invoke foreign law because it had waited too late to specify what foreign law applied and had identified three different jurisdictions whose law might apply without selecting any particular one as to any particular issue. Having found waiver, no choice -of- law analysis was required. The District Court concluded that United States law governed all legal issues. Cummins Engine Co. v. Hyundai Mipo Dockyard Co., 2003 WL 203210 (S.D.N.Y. 2003). In the meantime, North of England Protection and Indemnity Association (“NOE”), the liability insurer of Rationis and MSC, and the Cargo Interests partially settled the cargo damage claims. NOE in turn filed its own third- 4 party claim against Hyundai in the limitation proceeding seeking indemnification for the amounts paid to Cargo Interests. Thereafter, Cargo Interests and NOE, as partial assignee and subrogee, (collectively “Petitioners”) jointly proceeded against Hyundai to recover the full value of the damage claims. In April 2003, the case was bifurcated, and the liability issues proceeded to trial. On July 12, 2004, after a two-week trial, the District Court, applying United States general maritime law, issued its findings of fact and conclusions of law, finding that Hyundai had defectively lengthened the vessel and were liable to Petitioners based on theories of negligence, strict liability and products liability. Jn re Rationis Enterprises, Inc., 325 F.Supp.2d 318 (S.D.N.Y. 2004). 3. Appellate Court Proceedings Hyundai appealed the District Court’s finding of liability, specifying eight issues for appeal. One issue questioned whether Hyundai had waived its right to invoke foreign law; another what law should apply. No issue designated time- bar under Korean law.’ Petitioners did not address that topic in their appellate briefs because Korean time-bar was not a designated issue. Their arguments were confined to the issues 4. Hyundai’s only designated issue on appeal dealing with foreign law stated: “Whether the District Court improperly applied United States law to the claim against HMD and HC in violation of choice-of-law principles.” Hyundai’s Original Appellate Brief at p. 6. Hyundai, nevertheless, in its appellate brief at p. 19 briefly mentioned that under Korean law the case was time-barred, citing only excerpts from English translations of two Korean statutes, neither of which actually functioned to time-bar the case (See Appendix “G”). 5 designated by Hyundai, including waiver and choice of law. During oral argument, the Second Circuit panel (hereinafter “Panel”) concentrated on the waiver and choice-of- law issues, and even instructed the parties to submit post-hearing and supplemental letter briefs regarding choice of law. Both parties complied.° The Panel did not request Korean law authorities for the time-bar issue. Because the parties had not litigated the application of any of these foreign law doctrines in the district court and because time-bar had not been raised as an issue on appeal, Petitioners reasonably believed they were not required to address the proper effect of the Korean statutes of limitations or Hyundai’s myriad other substantive foreign law issues in their brief to the panel. The central issue framed on appeal was simply whether the District Court erred in its choice-of- law analysis. Petitioners could not have been expected to respond with complete rebuttals and supporting declarations to the various and sundry substantive issues of four foreign laws invoked by Hyundai, or its amicus, which were casually 5. Petitioners wrote two supplemental letter briefs on this issue — De Orchis & Partners’ letter dated January 10, 2005 (Appendix “L”) and Miller & Williamson LLC’s letter dated January 15, 2005 (Appendix “D”). The latter’s footnote 3 referred to the Declaration of Korean attorney, Byung-Suk Chung, which stated that the case was not time-barred. (Appendix “E”) The Chung Declaration was included in the Cargo Claimants’ Opposition to Motion for Stay Pending Appeal of the Antisuit Injunctions against Hyundai Mipo Dockyard Co., Ltd. aad Hyundai Corporation dated November 19, 2004, as Attachment “B” as well as in Donovan Parry McDermott & Radzik’s letter brief dated February 17, 2005 (Appendix “‘M”) as Attachment E. Mr. Chung’s declaration ar? his Supplemental Declaration (Appendix “F”) were included in *»« Special Appendix to North of England and The Cargo Interests’ Petrmon for Rehearing. 6 inserted into Hyundai’s brief.° Accordingly, Petitioners did not address the two sentence topic of time-bar under Korean law but instead confined their arguments tothe designated appellate issues which included waiver and choice of law. The Panel issued its opinion, holding that Hyundai had complied with its FRCP 44.1 obligation to timely provide notice of foreign law and reversing the district court’s conclusion that Hyundai had waived the right to invoke foreign law. The Panel then conducted the interest analysis mandated by Lauritzen and Romero, concluding that Korean law applied. Ignoring the approach used earlier by the Second Circuit in Carbotrade S.P.A. v. Bureau Veritas, 99 F.3d 86 (2d Cir. 1996), to determine foreign law, the Panel elected not to remand the case to the District Court for a determination of Korean law. Instead, without inviting the parties to submit materials on Korean time-bar or otherwise conforming to the procedures recommended by the Advisory Committee Notes to Rule 44.1, the Panel, serving as a de facto court of first instance, erroneously dismissed the cargo damage claims totaling over $80 million on the ground that under Korean law the claims were time- barred three years before the MSC CARLA sank and the cargo losses occurred. The Panel devoted a solitary, conclusory sentence devoid of any explanation or analysis to this outcome- determinative issue citing only two Korean statutes. The Panel said nothing about the timeliness of NOE’s indemnity claim. Judgment was then entered against NOE and the Cargo Interests in favor of Hyundai. 6. For instance, consistent with their longstanding insistence that Swedish law applies to this case, Hyundai argued that (i) Swedish law requirements as to establishing causation in tort were not met, (ii) that Sweden did not recognize products liability claims before 1993, and (iii) that Swedish vicarious liability law precluded NOE’s recovery. 7 The Panel’s opinion failed to mention that the Korean Supreme Court on seven separate occasions during the past 27 years had resolved the time-bar issue diametrically opposite to the Panel’s ruling and that there were no contrary decisions by Korea’s highest court .’ The only legal authority cited by the Panel to support its conclusion was the reference at footnote 3 of its opinion to unofficial English translations of extracts from the two Korean statutes, namely Article 7 of the Korean Products Liability Act and Article 766 (2) of the Korean Civil Code. These articles establish time-bar periods for products liability and negligence (tort) causes of action, respectively. On its face one statute is inapplicable 7. Hyundai contended that because Korea is a civil law jurisdiction, stare decisis is inapplicable. Hyundai’s argument is ill- founded because: (1) Korean statutes recognize precedent — Art. 7(1)(3) of the Korean Court Organization Act provides that “a prior holding of the Supreme Court (Grand Bench or Petty Bench) may be overruled or modified only by plenary decision of the Grand Bench; (2) Korean decisions cite Korean Supreme Court decisions; and (3) the Second Circuit in Usatorre v. The Victoria, 172 F. 2d 434, 439 (1949), recognized that “in all civil-law countries, despite conventional protestation to the contrary, much law is judge-made, and-the courts are by no means unaffected by judicial precedents....” Moreover, Korean Supreme Court Justice Kim stated that although Korea is a civil-law country “decisions of the Korean Supreme Court are given great deference, and ... are virtually binding on the subsequent judgment of the Supreme Court and the decisions of lower Korean courts. Kim Dec. at SPA-2-4-5. Curley v. AMR Corp., 153 F. 3d. 5 (2d. Cir. 1998), and Finance One Public Company v. Lehman Brothers Special Financing, Inc., 414 F. 3d. 325 (2d. Cir. 2005); decree that precedent should be treated in the same manner the foreign country in question does so. See also American Intern. Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 261 (Sth Cir. 2003) (Appellate decisions from civil law jurisdiction will not be ignored without “persuasive data... that the highest court would decide otherwise....”) 8 due to its effective date, and the other (as a result of a faulty English translation) is ambiguous as to the event which triggers the running of the limitation period. Petitioners filed a petition for rehearing and supplemented the record with a special appendix concerning Korean time-bar law, consisting of declarations from a Korean law professor and a Korean lawyer, to which were attached controlling Korean Supreme Court decisions and commentary. Those materials establish that Petitioners’ claims are not time-barred because (1) the Korean Products Liability Act was not in effect when the casualty occurred; (2) the Korean Supreme Court repeatedly has held in negligence actions with conceptually identical facts to those of this case that tort claims filed, as these were, within ten years of the date of the casualty-related damage are not time- barred; and (3) a textual analysis of Art. 766(2) confirms the Korean Supreme Court’s ruling that the codal article’s ten- year prescriptive period commences to run when damage occurs, not when negligence is committed. Hyundai then submitted an answer and a supplemental appendix containing declarations from a Korean lawyer, commentators and a retired Korean Supreme Court Justice. At the Panel’s request, Petitioners submitted a reply accompanied by another special appendix containing supplemental declarations from the Korean law professor and the Korean lawyer as well as declarations from two retired Korean Supreme Court Justices, one of whom presided over one of the seven controlling Korean Supreme Court decisions. The petition for rehearing was declined-in a single word (“DENIED”) (App. C) without a written opinion even though (1) the Panel had ruled on time-bar as a de facto court of first instance and then, in violation of 28 U.S.C. § 47, served as its own review body, effectively depriving Petitioners of 9 their statutorily-conferred right of appeal; (2) the rehearing petition was the first and only time Petitioners had presented extensive and in-depth materials on Korean law; (3) denial of rehearing signifies that “appellate review” was not conducted; and (4) the Panel elected to rule diametrically opposite to the Korean Supreme Court’s resolution of the time-bar issue as delineated in Petitioners’ special appendices. REASONS FOR GRANTING THE PETITION I. Tue PANEL’S ADJUDICATION OF THIS CASE IN VIOLATION or 28 U.S.C. § 47 Depriveo PETITIONERS OF THEIR STATUTORY RIGHT OF APPEAL AND OF THE FUNDAMENTAL FAIRNESS REQUIRED BY THE DuE Process CLAUSE A. The Panel Violated 28 U.S.C. § 47 and Deprived Petitioners of Their Statutory Right of Appeal As reflected in FRAP. 3, which is grounded in the Judiciary Act, 28 U.S.C. § 1291, the parties to a civil action may appeal as a “matter of right” from the judgment of the District Court as court of first instance. In accordance with 28 U.S.C. § 47 — which provides that “[n]o judge shall hear or determine an appeal from the decision of a case or an issue tried by him” — federal judges cannot decide appeals from cases or issues tried by them. Here, the Panel denied Petitioners their statutory right to have disinterested judges decide their appeal by (a) first deciding, sua sponte, the Korean time-bar issue, and (b) then denying rehearing without explanation, thereby affirming its own decision in violation of 28 U.S.C. § 47. In sum, (1) the District Court did not address much less decide the Korean time-bar issue; (2) the Panel, foregoing remand, itself acted as the court of first instance by summarily deciding that issue; and (3) no independent appellate panel, 10 composed of disinterested judges not involved with initially deciding the Korean time-bar issue, has ever reviewed that decision. As to the first two points, the Panel, after determining that the District Court should have applied Korean law, did not remand the action for a thorough examination of the contested issue of Korean time bar, as other panels have done in similar circumstances. See, e.g., Carbotrade, 99 F.3d at 86, and Ferrostal, Inc. v. MV SEA PHOENIX, 447 F.3d 212 (3d Cir. 2006). Instead, the Panel, sua sponte, applied what it believed to be Korean time-bar law to summarily dismiss the action. The Korean-time bar issue, however, had not been decided by the District Court and it had not been an issue on appeal since it was not any part of the District Court judgment under review. As to the third point, and far worse, when Petitioners petitioned for rehearing and demonstrated that the Korean Supreme Court, in seven consecutive decisions over 27 years, had resolved this very time-bar issue in accordance with Petitioners’ submissions delineating Korean law, the Panel denied rehearing without explanation.® Doing so effectively affirmed the Panel’s own decision on the time-bar issue, thereby violating 28 U.S.C. § 47 and depriving Petitioners of their statutory right to have disinterested judges decide 8. See footnote 7. Hyundai, in responding to the rehearing petition, advanced the flawed contention that Petitioners had waived the right to contest time-bar under Korean law because they had not submitted materials on that issue. The contention fails because: (1) Hyundai neglected to designate time-bar as an issue while raising eight other ones; (2) appellees (Petitioners) are not obliged to designate issues on appeal; and (3) Petitioners submitted a declaration from Korean attorney Byung Suk Chung (App. E) and alerted the Panel to its existence in a post-hearing letter requested by the Panel. (App. D) 11 whether the Panel’s initial Korean time-bar ruling was correct. Moreover, by denying Rehearing, the Panel deprived Petitioners of their statutorily-granted right of appeal. The short of the matter is that the Panel improperly acted as court of first instance by summarily deciding the disputed Korean time-bar i8sue and then as appellate judges by prohibitedly reviewing their own decision by denying rehearing without explanation. Certiorari is necessary because only this Court can step in to guarantee Petitioners the disinterested appeal that the Judiciary Act, FRAP. 3, 28 U.S.C. § 47, and fundamental fairness demands, either by reviewing the Korean time-bar issue on the merits or by remanding the action to the Court of Appeals with appropriate directions consistent with Petitioners’ statutory and due process rights. B. The Panel’s Handling of This Matter Lacked the Fundamental Fairness Required by the Due Process Clause The Due Process Clause requires that if the legislature has created a statutory right of appeal, that appeal must be conducted in accordance with principles of fundamental fairness. Evitts v. Lacey, 469 U.S. 387 (1985); Griffin v. Illinois, 351 U.S. 12 (1956). The manner in which the Panel conducted this appeal was fundamentally unfair and deprived Petitioners of due process. The problem is two-fold. The Panel first decided the time-bar issue on a woefully incomplete record without notice to the parties. It then worsened matters by disregarding 28 U.S.C. § 47 and denying rehearing in an unexplained one-sentence order. The Panel, in its capacity as de facto court of first instance, violated another due process safeguard of fundamental fairness by failing to write a reasoned opinion 12 with citations to appropriate Korean authorities explaining why Petitioners’ claims were time-barred under Korean law. Admittedly, appellate court panels are not obliged to write opinions when disposing of a case. But that rule arose in the context of panels acting as courts of appeals — not as courts of first instance. Indeed, Chief Justice Brown for the Fifth Circuit cautioned that an appellate court should refrain from writing a well-reasoned opinion only after careful consideration because a written opinion is a vital safeguard of fundamental fairness: A most important function is the writing of opinions. Opinions are to serve a number of purposes at least two of which are highly significant. One is that an articulated discussion of the factors, legal, factual or both, which lead the Court to one rather than to another result, gives strength to the system, and reduces, if not eliminates, the easy temptation or tendency to ill- considered or even arbitrary action by those having the power of almost final review. The second, of course, is that the very discursive statement of these articulated reasons is the thing out of which law — and particularly Judge-made law — grows.’ (Emphasis supplied) 9. N.L.R.B. v. Amalgamated Clothing Workers of America, 430 F.2d 966, 972 (Sth Cir. 1970). Similar thoughts are expressed in the treatise, Carrington, D. Meador, M. Rosenberg, Justice ON APPEAL (1976) at pp. 8-10. where the authors, in discussing due process issues in connection with an appeal, list as “process imperatives” the need for the appellate judges to “inform themselves fully on... the law on which decisions are to be made; and announce their reasons for decisions,” explaining that (1) the latter imperative serves as an “essential demonstration that the court did in fact fix its mind on the (Cont'd) 13 Judges of first instance are more likely to reach erroneous results than reviewing appellate judges because the issues are more finely honed the second time around on appeal as counsel and judges have additional opportunity to fully explore the legal issues. Conversely, an appellate court, precisely because it has the benefit of the trial court’s written opinion, has a distinct advantage over the court of first instance which must start from scratch. The instant case underscores the importance of reasoned opinions. Here, the Panel was caught in the very snare that the N.L.R.B. (National Labor Relations Board) case inveighs against, falling prey to the tendency to an “ill-considered or even arbitrary” decision that nullified controlling Korean law. The fact the Panel allowed the parties to submit extensive materials on Korean law after Petitioners had requested rehearing makes no difference when the Panel by denying rehearing effectively affirmed its own time-bar decision as a court of first instance. What is more, rehearing is not a de facto appeal. The factors leading a court of appeals to decide whether or not to grant rehearing differ markedly from those determining the merits on rehearing. Here, the reasons why the Panel denied rehearing are wholly unknown. What is known is that the Panel should not have acted both as court of first instance and judges reviewing their own decision and that the Panel should not have disregarded the controlling Korean law authorities holding that Petitioners’ claims are not time-barred. (Cont'd) case at hand,” (2) “an unreasoned decision ... is difficult or impossible to accept as an act reflecting systematic application of legal principles,” and (3) “the necessity of stating reasons not infrequently changes the results by forcing the judges to come to grips with nettlesome... issues which “heir normal instincts would otherwise cause them to avoid.” 14 Il. By DisREGARDING CONTROLLING KOREAN SUPREME Court DECISIONS THE PANEL FAILED TO FOLLOW UNITED STATES SUPREME Court DECISIONS CONTROLLING APPLICATION OF ANOTHER STATE’S LAw A. The Panel’s Blatant Nullification of Korean Law Warrants Review : Supreme Court review of federal appellate court decisions addressing issues of foreign law is required whenever a lower court has disregarded and thereby nullified the foreign law selected as having the most significant relationship to the case. As noted in Leavitt v. Jane L., 518 U.S. 137 (1996), while this Court ordinarily does not grant certiorari to review decisions involving solely state law issues,'° it has an obligation to do so when federal-court “nullification” has transpired: We have summarily set aside unsupportable judgments involving only individual claims... Much more is that appropriate when what is at issue is the total invalidation of a state-wide law... To be sure, we do not normally grant petitions for certiorari solely to review what purports to be an application of state law; but we have done so ... and undoubtedly should do so where the alternative is allowing blatant federal-court nullification of state law. '' As recognized in Leavitt, Supreme Court review of blatant federal-court nullification of governing substantive 10. Leavitt was a diversity case thus requiring the lower court under the Erie-West rule to choose the governing substantive law and then faithfully apply it. That principle, of course, is equally applicable when the lower court chooses foreign law. 11. 518 U.S. at 144-45. (Citations omitted; emphasis supplied) 15 rules of law — whether federal law, Erie-West selected state law or Lauritzen-Romero selected foreign law — is vital to the integrity of the American legal system. In Leavitt this Court also dispelled any suggestion that a Second Circuit panel is better poised than the Supreme Court to decide a Korean-law issue: Our general presumption that courts of appeals correctly decide questions of state law reflects a judgment as to the utility of reviewing them in most cases, ... not a belief that courts of appeals have some natural advantage in this domain..." That general presumption is obviously inapplicable where the court of appeals’ state- law ruling is plainly wrong.... (emphasis supplied). Courts of appeals certainly have no “natural advantage” especially when the appellate panel is composed of judges who are not residents of the state or foreign country whose law is being applied. As observed in Leavitt: Finally, the dissent’s appeal to the supposed greater expertise of courts of appeals regarding state law is particularly weak (if not indeed counterindicative) where a Court of Appeals panel consisting of judges from Oklahoma, Colorado, and Kansas has reversed the District Court of Utah on a point of Utah law." Leavitt emphasizes the vital importance of reviewing federal appellate court decisions that disregard the law those courts are obliged faithfully to apply, especially when the 12. Citations omitted; emphasis supplied. 518 U.S. at 145. 13. 518 U.S. at 145 16 disregarded rule of law has widespread effect, such as a tort statute of limitations. In responding to the dissent’s plea for Supreme Court restraint when asked to review federal appellate court decisions involving state law, the Leavitt majority stated: “[B]ut it is an odd notion of judicial restraint that would compel us to cast a blind eye on overreaching by lower federal courts.” '* Like the facts in Leavitt, the Panel decision here presents this Court with an “extraordinary case worth [its] effort of summary review” because the Second Circuit’s “[Korean] law ruling is plainly wrong,” and “not sustainable.” 518 U.S. at 145-46. The Panel nullified a controlling Korean statute of limitation by rewriting the triggering event from “damage” to “negligent act.”'° The Panel did so without even referring to any Korean Supreme Court decisions or providing any analysis whatsoever of Korean law in its opinion. The Panel’s refusal to acknowledge the manner in which the Korean Supreme Court, Korea’s highest court, applies its country’s time-bar law is so complete that it denied Petitioners’ rehearing petition in a single word “DENIED,” without explanation. In one stroke of the pen, the Panel obliterated nearly three decades of Korean Supreme Court precedent. And so we are left with the anomalous, indeed bizarre, result that Petitioners would have prevailed on the time-bar issue had a Korean court applied Art. 766(2), but have lost when a United States Court did so. 14. Id. at 145. Judicial restraint undoubtedly undcrlies the principle articulated in Supreme Court Rule 10(c) informing the Bar that misapplying state law rarcly serves as a basis for review. Leavitt, however, teaches that restraint is not appropriate when an appellate court blatantly nullifies the law. 15. See text at page 20 infra and note 22. 17 Supreme Court review of blatant federal-court nullification of governing substantive rules of law, whether federal law, Erie-West selected state law or Lauritzen-Romero selected foreign law, is, as recognized in Leavitt, vital to the integrity of the American legal system. Ours is a country of laws. Our judges solemnly swear to uphold and apply the law. If federal Courts of Appeals blatantly disregard the law, we cease to be a country of laws. The very foundation of our legal system — and its integrity — is undermined. Once the infection of disregard resulting in blatant nullification is left unchecked, the public will lose confidence in the Judicial Branch. This is not mere rhetoric. If the Supreme Court allows just a single instance of blatant disregard of law to go uncorrected, the signal is sent. Slowly but surely, as the rains erode the mountains, the integrity of our legal system will collapse as one court after another rules however it sees fit. The process may take years or even decades but it will take place, perhaps transparently but more likely imperceptibly, until momentum is gained and legal chaos sets in. B. The Panel Blatantly Ignored and Nullified Korean Law The Panel’s decision to apply Korean law devoted a solitary sentence of text and a single footnote to the determination that Petitioners’ suit was time-barred: Because Korean law bars the Petitioners and NOE from recovery against Hyundai due to statutes of repose, we reverse the District Court’s finding of liability. '® The footnote quoted unofficial English translations of two Korean statutes of limitation — Art. 7 of the Korean Products Liability Act (2000) and Art. 766(2) of the Korean Civil Code. 16. 426 F.3d at 588. Appendix “B.” 18 No Korean cases were cited. No analysis or explanation was provided. The English translations of both statutes quoted in the Panel’s footnote raise glaring red flags signaling that something was amiss. The first red flag consists of the fact that Korea’s Products Liability Act is dated 2000 — three years after the MSC CARLA casualty. The Panel, rather than applying a post-dated statute, should have investigated whether the statute was retroactive. The Panel neglected to do so and instead erroneously declared an $80 million case time-barred on the basis of a statute inapplicable on its face. The second red flag consists of the fact that the translation of Art. 766(2) supplied by Hyundai identified “unlawful act” as the trigger for its 10-year limitation, a term not ordinarily applicable to a defendant’s acts or omissions in a negligence- based tort action.'’ Terms such as “negligent act”, “wrongful act” or “intentional act” normally are used in the context of a negligence action. Even if the Panel assumed that the English phrase “unlawful act” means “wrongful act,” its members disregarded a third red flag. The phrase “wrongful act” does not necessarily signify when the negligent act transpired but instead can signify when the negligent act became unlawful by causing the damage.'* The Panel was required to determine the intent of the Korean legislature by consulting Korean 17. “Unlawful act” usually describes criminal acts or violations of statutes regulating conduct. See Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (2001) (RICO violation); Raytheon Co. v. Hernandez, 540 U.S. 44 (2003)(American Disabilities Act); Meyer v. Holley, 537 U.S. 280 (2003)(Civil Rights Act); U.S. v. Jimenez Recio, 537 U.S. 270 (2003)(conspiracy). 18. See introductory notes to Chapter 7, Topic | of Restatement (Second) of the Law of Conflicts at p. 412. 19 Supreme Court decisions and Korean law experts and, pursuant to the Advisory Committee Notes to FRCP 44.1, by seeking input from counsel. But the Panel wholly failed to do so. The Panel disregarded those red warning flags. Instead, as a de facto court of first instance, it dismissed the case without citing any decisions (Korean or otherwise), offering any textual analysis of the Korean statutes, or affording Petitioners’ counsel an opportunity to present Korean law materials. Fundament fairness sank to its nadir when the Panel, acting as court of appeals denied rehearing in one stroke of the pen, notwithstanding that the extensive Korean- law materials submitted by Petitioners when applying for rehearing demonstrated beyond doubt that: 1. The Korean Products Liability Act is not retroactive and thus is inapplicable. That statute was enacted on January 12, 2000 — three years after Petitioners’ claims arose — and does not state or imply that it is retroactive. To the contrary, addendum (1) to the statute states, “This act shall enter into force on July 1, 2000,” indicating prospective application. Not even Hyundai suggested that the Korean Products Liability Act was retroactive. In reaching the erroneous conclusion that the Korean Products Liability Act time-barred Petitioners’ claims, the Panel ignored Bowen v. Georgetown University Hospital, 488 U.S. 204, 208 (1988) (“Retroactivity is not favored in the law”), and Landgraf v. USI Film Products, 511 U.S. 244, 280 (1994) (A statute presumptively has only prospective effect). 2. This case is not time-barred. Commencing in 1979 and extending through 2004 the Korean Supreme Court in seven consecutive decisions consistently has held that the 10-year time- bar of Art. 766(2) commences to run only upon the manifestation of damage (the cargo damage occurring when the MSC CARLA 20 broke in half) and not when the negligent act occurred (Hyundai’s faulty welds).'? Indeed, in the Woo Am Shopping Center case, involving injuries sustained when a shopping center collapsed during a fire due to defective construction — a negligence case conceptually identical to the time-bar issue here ~— Korea’s highest Court stated: In cases of a claim for damages based on tort, where a period of time has lapsed between the commission of the unlawful act and the materialization of the resulting damages, the “date when the unlawful act was committed,” the triggering date for the statute of limitations, is when the potential damage, which had existed in an unmaterialized state, has actually materialized thereafter — in other words, the moment in time when the incurrence of damages becomes real.”° 19. Case no. 77 Da 1894 (Dec. 26, 1979); case no. 743 (July 26, 1974); case no. 78 Da 1192(Oct. 10, 1978); case no. 760 Da 2520 (Feb. 22, 1944); case no. 81 Da 1071 (Nov. 24, 1984); case no. 85 Daka 693 (Oct. 11, 1998); case 97 Da 36613 (May 18, 1998). Yune Dec. 4 110.4 and 5 and 4 12 in Petitioners’ Special App. to Petition for Rehearing; Yune Supp. Dec. § 17 and 18 in Special App. to Petitioners’ Reply to Hyundai’s Opposition to Petition for Rehearing; Chung Supp. Dec. 4 9 (SPA-11) in Special App. to Petition for Rehearing. Until 1979 a split of opinion existed in Korean law as to what event triggered the 10-year limitation period in Art. 766 (2). One view was that the occurrence of the negligent act is the trigger — the “Tortious Act or Time of Commission Theory,” which is the approach adopted by the Second Circuit. The opposite view was that manifestation of the damage giving rise to the claim is the trigger — the “Damage Theory”. The Korean Supreme Court in these decisions selected the latter. 20. 97 Da 36613 (May 8, 1998), the translation of which is found in Ex. 1 (SPA-2-39) to Yune Supp. Dec. (SPA 2-15) from Special App. to the Reply to Hyundai’s Opposition. 21 Woo Am is indistinguishable.”! And the principles enunciated there establish that the 10-year period of Art. 766(2) commenced to run on November 27, 1997 when Petitioners’ cargos became damaged as a result of the MCS CARLA’s splitting in two. 3. The unofficial English translation of Art. 766(2) is grievously inaccurate; a proper translation does not use as the trigger the term “unlawful act” but rather the term “tort,” a concept which, under the Korean Civil Code, consists of a negligent act causing damage.” 21. Hyundai, in opposing the rehearing petition, introduced a declaration from former Korean Supreme Court Justice Park that attempted to distinguish Woo Am as well as a similar lower appellate court holding on the remarkably in apropos ground that in both the owner or occupants of a structure attempted to recover damages from the negligent builder, whereas here the cargo owners attempt to recover damages from the negligent builder. Park Dec. | 15 of Ex. A of Hyundai’s Supp. App. The distinction is so unfathomable as to be embarrassing — a cargo owner’s property occupies a ship no less than a lessee’s property occupies the leased premises. Equally remarkable, Justice Park, after acknowledging that since 1979 the Supreme Court has adhered to the Damage Theory on six other occasions, tried to circumvent the devastating impact of those decisions with the cavalierly dismissive statement that “just as academic views can change .:. so can the case law. Likewise, such is the case with the Korean Supreme Court.” The obvious flaw in that statement is that for 2” years the Korean Supreme Court’s opinion has not changed — not - mention that Justice Park sat on the Woo Am panel and hence personally endorsed the Time of Damage Theory. Kim Dec.-4 8 at SPA 2-4. 22. The phrase “unlawful act” is an incorrect translation of the Korean word “bul-beop-haeng-wi” — the word used in the Korean text of Art. 766(2). Bul-beop-haeng-wi should have been transiated as “tort.” A” tort” is defined in Art. 750 of the Korean Civil Code, (Cont'd) 22 One conclusion is inescapable. The Panel, by disregarding these extensive Korean law materials, nullified Korean law, thereby undermining its decision to apply Korean law in the first place. It is one thing for an appellate court, after making a concerted effort to research the foreign law it has selected, to ultimately misunderstand that law and, as a consequence, reach the wrong result. It is quite another for the court to disregard 27 years of precedent expressed in seven consecutive opinions of a foreign country’s highest court, while relying on a demonstrably inaccurate English translation of a foreign statute to reach the opposite result. The Panel’s treatment of Korean law is a quintessential example of the nullification Leavitt prohibits. As unacceptable as state law invalidation was in Leavitt, so too Korean law invalidation is impermissible here. After conducting the requisite Lauritzen-Romero interest analysis, the Panel selected Korean law. Under Erie and West, a federal court, when applying another state’s law, is bound (Cont'd) which is entitled “Torts” (bu/-beop-haeng-wi), as consisting of an “unlawful act” (in Korean “wi-beop-haeng-wi”) that causes injury. The concept of a tort in the Korean Civil Code, as in American law, therefore, encompasses more than a mere isolated negligent or unlawful act but additionally requires damage, without which no ‘tort (bul-beop-haeng-wi) can occur. The trigger for Art. 766(2), namely, a bul-beop-haeng-wi, therefore, is not an unlawful act, namely, a wi-beop-haeng-wi, but a tort, namely, an unlawful act plus damage. Cremona v. R.S. Bacon Veneer Co., 433 F.3d 617, 621 (8" Cir. 2006); Niehus v. Liberio, 973 F.2d 526, 531-2 (7" Cir. 1992); Fogel v. Zell, 221 F.3d 955, 960 (7" Cir. 2000); Black v. Acme Markets, Inc., 564 F.2d 681, 685 (5" Cir. 1977) 23 by the decisions of the selected state’s Supreme Court. The Erie- West rule equally applies to the decisions of the foreign state law selected pursuant to the Lauritzen-Romero analysis. The Panel, however, completely disregarded controlling Korean Supreme Court decisions. Consequently, the Panel failed to follow four controlling Supreme Court decisions — Lauritzen, Romero, Erie, and West. What is more, conflict of laws is a body of law designed to ensure that disputes between parties of different states or countries are resolved under the appropriate body of substantive law. The modern approach, followed in Lauritzen and Romero, is based on interest analysis as prescribed in Restatement (Second) of the Law of Conflicts § 6 — the substantive law of the country having the greatest interest and most significant relationship with the parties and the controversy should apply. Lauritzen instructs that choice of law is designed to achieve “stability and order” with due respect for “comity, reciprocity and long-range interest.” 345 U.S. at 582. Comment (d) to § 6 (2) of the Restatement (Second).of the Law of Conflicts” emphasizes that proper choice of law is vital to harmonious international relations: Needs of the interstate and international systems Probably the most important function of the choice- of-law rules is to make the interstate and international systems work well. Choice-of-law rules, among other things, should seek to further harmonious relations between states and to facilitate commercial intercourse between them. In formulating rules of choice of law, a state should have regard for the needs and policies of other states and of the community of states. (Emphasis Supplied) 23. See also comment b to section 145 (1) of the Restatement. 24 These very considerations were embraced in Romero: [W]e must apply those principles of choice of law that are consonant with the needs of a general federal maritime law and with due recognition of our self-regarding respect for the relevant interests of foreign nations in the regulation of maritime commerce as part of legitimate concern of the international community.” Implicit in the due process, international relations, comity, and reciprocity considerations inherent in interest analysis is the requirement that the court, having chosen the appropriate foreign law, must then correctly apply rather than disregard the chosen law. Without a mechanism for ensuring that the chosen law is correctly applied, the entire field of conflict of laws along with Lauritzen and Romero would be rendered meaningless. Such a mechanism, however, does exist. A federal court exercising diversity jurisdiction, after selecting the appropriate substantive state law, must adhere to the decisions of the highest court of that state. As pronounced in West, when fashioning a corollary to the rule of Erie, “the highest court of the state is the final arbiter of what is state law” and when that highest court has spoken, “its pronouncement is to be accepted by federal courts as defining state law....” The goal of this rule is “to avoid the maintenance within a state of two divergent or conflicting systems of law, one to be applied in the state courts, the other to be availed of in the federal courts....” 311 U.S. at 236. Indeed, the federal court “is not free to apply a different rule however desirable it may believe it to be, and even though it may think that the state Supreme Court may establish a different rule in some 24. 358 US. at 383. 25 future litigation.” Jd. at 238. This controlling principle, as the Second Circuit is fully aware, is necessary to maintain the integrity of our legal system. See Plummer v. Lederle Laboratories, 819 F. 2d 349, 355 (2d Cir. 1987), cert. denied, 484 U.S. 898 (1987); Belmac Hygiene, Inc. v. Belmac Corporation, 121 F. 3d 835, 840 (2d Cir. 1997). The situation is no different when a federal court, deciding an international dispute, concludes that foreign law applies. And for precisely the same reasons that an Erie-West court is bound by controlling decisions of the chosen state’s highest court, a Lauritzen-Romero court is obliged to recognize that the highest court of the selected foreign country is the final arbiter of its country’s laws and that its pronouncements must be accepted and applied. Otherwise the lower court is merely paying lip service to Lauritzen and Romero.» Under Lauritzen, Romero, Erie, and West a federal court may not apply a different rule unless the rule of foreign law is contrary to United States public policy. Yet that is precisely what the Panel has done. The bottom line is that the Panel reached a result diametrically opposite to the Korean Supreme Court’s handling of the very same time-bar issue by disregarding seven Korean Supreme Court decisions unanimously holding that Art. 766(2) is triggered by manifestation of damage and not by commission of the negligent act. Indeed, the Panel’s decision creates the prohibited situation in which two divergent and conflicting systems of Korean law have been 25. In Vimar Seguros y Reaseguros, S.A. M/V Sky Reefer, 515 U.S. 528, 539 (1995), the court, upon referring the case to arbitration in Japan noted that if the Japanese tribunal did not correctly apply United States law this Court retained jurisdiction to overturn that maverick decision. By the same token this Court should overturn the Panel’s aberrant application of Korean Law. 26 created — one applicable when time bar is addressed by a Korean court and quite another when addressed by a Second Circuit panel.”* Yet, by virtue of Supreme Court fiat in Lauritzen, Romero, Erie, and West, the Panel must accept and apply those seven decisions.”’ C. Supreme Court Rule C Warrants Review The instant case is analogous to the situation described in Supreme Court Rule 10(c). The analogy arises in the sense that, pursuant to Rule 10(c), one of the compelling reasons for this Court to review an appellate decision occurs when “a United States court of appeals ... has decided an important federal question in a way that conflicts with relevant decisions of this Court.” In the present case the Panel, after deciding to apply Korean law, failed to decide the matter in accordance with the very law it selected even though it was duty-bound under Erie-West to act as a surrogate Korean court. Inasmuch as the Panel’s interpretation of Korean law is “irreconcilable with [the Korean Supreme Court’s] own 26. Counsel for Korean manufacturers with potential tort liability should flock to New York to file declaratory judgment actions so that the Second Circuit’s maverick rule of Korean law can be applied to time bar all claims where the negligent act occurred more than ten years ago. 27. Indeed, this Panel should have heeded the holding in Belmac where the Second Circuit, after acknowledging that the lower federal court “must follow the law directed by the Supreme Court of the state whose law is found applicable,” reversed the District Court because it “went its own way in restating Florida law.” 121 F. 3d at 841. Belmac admonished the District Court for following “so-called refinements” to a Florida Supreme Court decision adopted by lower Florida courts, observing that “it is not our prerogative to do so” inasmuch as “the highest court of the state is the final arbiter of what is state law”. 121 F. 3d at 840. 27 statement on the subject,” this petition for writ of certiorari should be granted and the Panel’s dismissal reversed.”* III. The Panel Wrongly Dismissed NOE’S Indemnity Claim on the Basis of New York Law NOE filed its third party complaint against Hyundai approximately two years after having settled with and paid the Cargo Interests. The panel, in its Order and Opinion (App. B), held in footnote 2 that NOE’s indemnity claim against Hyundai was barred under New York’s “settlor bar rule,” which provides that a co-defendant who is sued in tort may not recover contribution or indemnity from a co-tortfeasor after having settled with the claimants. New York’s settlor bar rule is a substantive statute that only governs claims subject to New York substantive law. See New York Gen. Oblig. Law Sec. 15-108; Bankers Trust Co. v. Lee Keeling & Associates, Inc., 20 F.3d 1092, 1095- 99 (10th Cir. 1994) (applying N.Y.Gen. Oblig. Sec. 15-108 only after conducting a choice of law analysis and determining that New York law applied); Minpeco, S.A. v. Conticommodity Servs., Inc., 677 F. Supp. 151, 153 n.3 (S.D.N.Y. 1988) (“The parties to this motion do not dispute that New York law, and thus N.Y. Gen. Oblig. Sec. 15-108, applies in this action”). Putting aside NOE’s contention that the New York settlor bar rule did not apply in this case because the underlying claims by the Cargo Interests against NOE were based on bill-of-lading contracts, and not in tort, the Panel ignored the fact that it had concluded that Korean law was the applicable substantive law in this case. Therefore, New York’s settlor bar rule was inapplicable to NOE’s indemnity claim. In its petition for rehearing, NOE provided a declaration from an expert on Korean law, which was never contested 28. 518 US. at 138. 28 by Hyundai, informing the Panel that Korea did not have any law similar to the settlor bar rule of New York (Appendix F 4 13). Moreover, the Korean expert declared that under Art. 766 of Korean law, indemnity actions are subject to a 10-year time bar period that begins only when the right to indemnity arises- in this matter when NOE settled with Cargo Interests (See Appendix F 4 13). The Panel ignored its own prescription for Korean law when it resolved to NOE’s indemnity claim. And the Panel denied rehearing even though all of the evidence on Korean law provided to the Panel, which was not contested, established that NOE had a valid and timely indemnity claim against Hyundai. A clear error on the law, uncontested by the opposition, is properly within the Court’s power to reverse. CONCLUSION For the foregoing reasons, a writ of certiorar: should issue. The decision of the Court of Appeals should either be reversed on the merits or vacated with directions to the Court of Appeals to ensure that the Korean time-bar and settlor bar - rule issues are properly adjudicated and the parties’ statutory rights of appeal are fully protected. Respectfully submitted, Vincent M. DeOrcuis MAcHALE A. MILLER Joun A. OrzeL Counsel of Record DeOrcuis & PARTNERS, LLP MILier & Wituiamse x, LLC 61 Broadway, 26th Floor 3150 Energy Centre New York, NY 10006-2802 1100 Poydras Street (212) 344-4700 New Orleans, LA 70163 (504) 525-9800 JOHN Eric OLSON THOMAS E. WILLOUGHBY Hit Rivkins & Haypen LLP 45 Broadway, Suite 1500 New York, NY 10006 (212) 669- 0640 EpwarbD C. RADZIK Rosert J. PHILLIPS WILLIAM R. Connor III McDermott & Rapzik, LLP WALL STREET PLAZA 88 Pine Street, 21st Floor New York, NY 10005 (212) 376-6400 JOHN T. LiLuis THOMAS Murpuy KENNEDY, LILLis, SCHMIDT & ENGLISH 75 Maiden Lane, 23rd Floor New York, NY 10038 (212) 430-0800 RICHARD W. STong, II Francis M. O’ REAGAN WaAESCHE, SHEINBAUM & O’ REGAN 111 Broadway, 4th Floor New York, NY 10006-1991 29 (212) 227-3550 RoMAN BaADIAK Bapiak, WILL & Ruppy 120 Broadway New York, NY 10271-0079 (212) 376-6767 STEPHEN H. VENGROW PaTRICK MICHAEL DeCuar-es, Il CICHANOWICZ, CALLAN, KEANE, VENGROW & TEXTOR 61 Broadway, Suite 3000 New York, NY 10006-2802 (212) 344-7042 JAMES M. KENNY KENNY, STEARNS & ZONGHETTI 26 Broadway 27th Floor New York, NY 10004 (212) 422-6111 CHRISTOPHER RALEIGH WILLIAM K. Broupy Cozen & O’ CONNOR 45 Broadway Atrium, 16th Floor New York, NY 10006 (212) 509-9400 Attorneys for Petitioners APPENDIX la APPENDIX A — OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT DECIDED OCTOBER 17, 2005 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2004 (Argued: January 4, 2005 Decided: October 17, 2005) Docket Nos. 04-4267-cv, 04-5572-cv(L), 04-6028-cv(CON) RATIONIS ENTERPRISES INC. OF PANAMA, MEDITERRANEAN SHIPPING CO., S.A. OF GENEVA, Counter-Defendant-Appellee, NORTH OF ENGLAND PROTECTING AND INDEMNITY ASSOCIATION, Consolidated-Plaintiff-Appellee, v. HYUNDAI MIPO DOCKYARD CO., LTD., Third-Party-Defendant-Appellant, HYUNDAI CORPORATION, _ Consolidated-Plaintiff-Appellant. 2a Appendix A B.D. PARKER Circuit Judge: Hyundai Corporation and Hyundai Mipo Dockyard appeal a judgment, entered following a trial to the United States District Court for the Southern District of New York (Owen, J.) arising from the loss of the containership MSC Carla. They advance a number of contentions, but we do not reach most of them since we conclude that one—that Korean law applies and precludes liability—is dispositive. ' BACKGROUND I. The Lengthening The evidence at trial established that the containership MSC Carla (originally called the Nihon) was built in 1972 in Sweden. A Swedish firm, Brostrom Shipping Co. Ltd. (“Brostrom’”’), initially managed the ship, sailing it under the Swedish flag. Brostrom used the classification society Lloyd’s Register (“Lloyd’s”) (an international risk management organization providing underwriters and merchants with information on the condition of vessels) to develop specifications to lengthen the vessel by adding a fifteen-meter midsection to provide an extra cargo hold. After receiving bids from several shipyards, Brostrom contracted with Hyundai Mipo Dockyard in Korea (collectively with Hyundai Corporation, “Hyundai’) to do the work. Brostrom and Hyundai agreed English law would govern the work. 1. Hyundai Corporation \and Hyundai Mipo Dockyard also appeal an anti-suit injunction prohibiting their participation in parallel litigation in Korea. Because we conclude they are not liable under the applicable Korean law, we vacate the anti-suit injunction as moot. 3a Appendix A Hyundai manufactured the midsection to Lloyd’s specifications prior to the Nihon’s arrival in Korea in September 1984. Just as a midsection is welded into a bisected car to construct a limousine, the Nihon was elongated. Lloyd’s inspectors observed the process. The - welded joints attaching the inserted midsection were visually inspected, as well as subjected to extensive radiographic tests. In May 1985, seven months after the ship resumed sailing, Lloyd’s discovered a fatigue crack and conducted ultrasonic testing of the welds. The ship returned to Korea. Hyundai furnished Lloyd’s with a report of certain defects in the welds and offered to repair them. Lloyd’s determined the repairs were unnecessary, but marked the Nihon ’s record with a “condition of class” to ensure that the welds would continue to be monitored. After subsequent surveys finding no defect, Lloyd’s reduced the condition of class. After 1985, Hyundai had no further involvement with the vessel. II. MSC’s Purchase The ship was sold four times before being purchased in 1995 by a Panamanian company, Mediterranean Shipping Co., S.A. (“MSC”), and subsequently was renamed the MSC Carla. MSC purchased the Nihon in 1995 “as is.” Prior to the purchase, a Lloyd’s inspector imposed three conditions of class due to cracks in the starboard tank and corrosion in the starboard and port tanks. A Lloyd’s work list called for new steel in several areas. In 1995, and then again in 1996, MSC requested postponements of the repairs and Lloyd’s agreed. It is unclear whether the repairs were performed. 4a Appendix A Nevertheless, in 1997, during a twenty-five year inspection of the ship, the conditions of class were removed. Ilf. The Casualty Voyage The MSC Carla departed France for the United States in November 1997. The containership was filled with cargo and there is conflicting evidence as to whether it was loaded properly. There were several storms in the North Atlantic, and it is also debated by the parties whether the MSC Carla might have been able to avoid them entirely. This sort of weather is usual for the season and containerships similar to the MSC Carla normally handle this weather without incident. During the voyage, water began splashing over the deck, possibly seeping into the boat’s front hatches. All three engines cut. One restarted. As the boat climbed a large wave, the captain testified that the ship “hogged,” with the front and aft sections sagging below the middle. The captain heard a breaking noise carry through the length of the hull and he noticed the bow light abnormally low. The ship broke along the weld lines. The crew was soon airlifted to safety. Six days later the buoyant, dry aft section was towed to Las Palmas, Canary Islands, where it was inspected and its cargo salvaged. The flooded front section sank. Sa Appendix A [V. Procedural History Rationis and MSC, the ship’s owner and operator, respectively, filed a limitation of liability proceeding in the Southern District of New York. The almost one thousand receivers of lost cargo (collectively, the “cargo interests”) brought third-party complaints against Hyundai based on the allegedly defective lengthening work. Rationis and MSC’s liability insurer, North of England Protecting and Indemnity Association (“NOE”), settled with the cargo interests in 2000 for $16.95 million. (NOE also settled with various cargo interests separately.) NOE joined the action against Hyundai, to recover the amounts paid in the settlement. In the pre-trial proceedings before the District Court, Hyundai argued, among other things, that the District Court lacked personal jurisdiction. Hyundai then commenced, in a Korean court, two declaratory judgments to establish non- liability. (The first action named and served three cargo interests and the second action named, but never served, most of the other nearly one thousand cargo interests). The District Court then issued an anti-suit injunction, requiring Hyundai to request a suspension of the Korean action. Hyundai requested the suspension, but appealed the injunction, arguing again that the District Court lacked personal jurisdiction. We vacated and remanded the anti-suit injunction, directing the District Court to conduct an evidentiary hearing as to whether the Court had personal jurisdiction over Hyundai. Rationis v. AEP/Borden Indus., 261 F.3d 264 (2d Cir.2001). We also directed the District Court, should it issue 6a Appendix A an anti-suit injunction, to heed China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33 (2d Cir.1987) and its progeny since it had failed to conduct such an analysis before initially enjoining Hyundai. On remand, the District Court conducted an evidentiary hearing on personal jurisdiction and concluded that it had jurisdiction. Hyundai subsequently moved for summary judgment, arguing, in part, that the plaintiffs could not prevail under the laws of either Korea, Sweden or Panama, the universe of jurisdictions whose laws potentially applied. The Court denied the motion, concluding that Hyundai had waived its choice of law defense by failing to select a particular foreign law until the summary judgment stage. The Court stressed that, although Hyundai had announced as early as their answer to the complaint that the “substantive law of a foreign country governs,” they had delayed through four years of litigation, until after the completion of discovery, ‘before precisely identifying the applicable foreign law. In Re Rationis Enters., Inc. of Panama, 2003 WL 203210, *] (S.D.N.Y.2003). The District Court reasoned that this alternative pleading style failed to provide the opposing party with the notice required by Fed. R. of Civ. Proc. 44.1.7 The Court concluded that Hyundai’s overly expansive formulation of foreign law prejudiced the plaintiffs. Finding waiver, the 2. Fed. R. of Civ. Proc. 44.1 provides: “A party who intends to raise an issue concerning the law of a foreign country shall give notice by pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rule of Evidence. The court’s determination shall be treated as a ruling on a question of law.” Ta Appendix A Court saw no need to conduct a choice of law analysis and proceeded to apply United States law. The District Court held a bifurcated bench trial. There Hyundai continued to maintain that it did not waive the choice of law argument and United States law did not apply. The major factual disputes centered on whether the deck broke first as a result of the allegedly faulty welding, or whether the allegedly corroded bottom collapsed first, as a result of MSC’s failure to maintain the ship. The parties also disagreed as to whether the lengthening contract was for the sale of goods or the provision of services, only the first of which implicates products liability doctrines. Hyundai, as a nominal party to the contract, contended that the District Court lacked personal jurisdiction and that NOE’s claims were barred under a contribution of settling parties theories. Following trial, the District Court found Hyundai liable in negligence and strict liability. Hyundai appeals, raising a host of issues. We reach only one—the choice of foreign law—because we conclude it is dispositive. We reverse. DISCUSSION I. Standard of Review The parties dispute the standard of review applicable to the District Court’s choice of foreign law ruling. Hyundai takes the position that all choice of law determinations, including the one presently before us, are questions of law to be reviewed de novo. NOE and the cargo interests maintain that, because the district court did not undertake a choice of 8a Appendix A law analysis, we should review for abuse of discretion the district court’s determination that the defense was waived. The District Court’s determination regarding what constitutes “reasonable ... notice” under Rule 44.1 and waiver of the foreign law issue falls within the discretionary powers of the District Court to supervise litigation. Therefore, we agree with NOE and the cargo interests that those threshold determinations should be reviewed for abuse of discretion. See Pierce v. Underwood, 487 U.S. 552, 558, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (explaining that matters of discretion should be reviewed for “abuse of discretion”). As the Ninth Circuit has explained, “[b]ecause Rule 44.1 grants the district court discretion in determining ‘reasonable’ notice, we review the district court’s application of this standard for abuse of discretion.” DP Aviation v. Smiths Indus. Aerospace & Defense Sys., Ltd., 268 F.3d 829, 846 (9th Cir.2001). However, once we move beyond the issue of “reasonable notice,” we will review any determinations concerning the appropriate choice of law de novo. Curley v. AMR Corp., 153 F.3d 5, 11 (2d Cir.1998). II. Pleading Alternative Bodies of Law Before we conduct the choice of law analysis, we must resolve whether Hyundai waived the foreign law argument by simultaneously pleading the applicability of English, Swedish, Korean, or Panamanian law, and not settling conclusively on one body of foreign law. We must determine whether the District Court’s determination that Hyundai waived this argument was proper. We now clarify that alternative theories may well suffice as reasonable notice 9a Appendix A when, as here, relevant events occurred in multiple foreign locations and legitimately point to several different applicable bodies of law. We therefore find that the parties gave proper Rule 44.1 notice and the applicability of foreign law was not waived. We hold that the District Court’s decision that notice was not proper and that therefore Hyundai waived the foreign choice of law argument exceeded its discretion. Congress passed Rule 44.1 in 1966 to avoid unfair surprise, to make uniform the permissibility of raising an issue of foreign law after pleadings where the choice of law issue became apparent later, and to put to rest the notion that foreign law is a question of fact that must be proved at trial and reviewed on appeal only for clear error. While the Rule requires that the parties give notice of the intent to raise foreign law, the Advisory Committee’s Notes make clear that Congress deliberately declined to provide “any definite limit on the party’s time for giving the notice of an issue of foreign law.” Fed. R. Civ. P. 44.1 advisory committee’s note, 39 F.R.D. 69, 118 (1966). Congress explained: “The stage which the case has reached at the time of the notice, the reason proffered by the party for his failure to give earlier notice, and the importance to the case as a whole of the issue of foreign law sought to be raised, are among the factors which the court should consider in deciding a question of the reasonableness of a notice.” /d. It is important to acknowledge that notice under Rule 44.1 differs from argument—notice merely called attention to the fact that the issue will be raised, whereas argument lays out, inter alia, the provisions of foreign law, the basis for its relevance, and the application of the foreign law to 10a Appendix A the facts of the case. Indeed, the Advisory Committee distinguished between notice and “presentation of material on the foreign law.” Jd. According to a prominent treatise, “(t]he function of the notice is not to spe)! out the precise contents of foreign law but rather to infcim the court and litigants that it is relevant to the lawsuit. Thus a high degree of specificity is not required.” Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2443, (2d ed.1994). Accordingly, a litigant must provide the opposing party with reasonable notice that an argument will be raised, but the litigant need not flesh out its full argument at the Rule 44.1 stage. In a maritime mass tort such as the case before us, the choice of law analysis is complex, as well as highly dependent on facts that may not be adduced until discovery has proceeded. Indeed, in international disputes involving parties of sundry allegiances, the eight-factor choice of law analysis discussed below is rarely well- managed by bright-line rules, uniform deadlines, or aggressive findings of waiver. Frequentiy, the proper determination of foreign law can be a complicated task. Rule 44.1 is intended to assist the court with its work and the court is, of course, free to enlist the parties in this effort. Ultimaiely, the responsibility for correctly identifying and applying foreign law rests with the court. The question here is not whether Hyundai failed to give any notice, but rather, whether its alternative pleading offended Rule 44.1. Although this may force the opposing party to conduct further research, such additional work in a maritime mass tort is hardly the undue surprise Rule 44.1 seeks to prevent. Perhaps it is even to be expected, when shipping goods from Europe to the United States, on a lla Appendix A Swedish ship, modified in Korea, currently owned and operated by Panamanians. We therefore recognize alternative pleading of choice of law issues as satisfying the notice requirements of Rule 44.1. For these reasons, we find Hyundai’s alternative notice reasonable under Rule 44.1 and that it is an abuse of the District Court’s discretion to have held otherwise. Ill. Choice of Law Analysis Lauritzen v. Larsen, 345 U.S. 571, 583-92, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), directs us to consider seven factors in conducting a choice of law interest analysis. Adding another factor, the Supreme Court announced in Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 309, 90 S.Ct. 1731, 26 L.Ed.2d 252 (1970), that the Lauritzen factors are “not intended as exhaustive.” We enumerated the Lauritzen factors in Carbotrade S.P.A. v. Bureau Veritas, 99 F.3d 86, 90 (2d Cir.1996): “(1) the place of the wrongful act; (2) the law of the ship’s flag; (3) the domicile of the injured party; (4) the domicile of the shipowner; (5) the place of the contract; (6) the inaccessibility of the foreign forum; (7) the law of the forum; and (8) the shipowner’s base of operations.” The law of the ship’s flag at the time of the welding was Sweden, but at the time of the casualty was Panama. Generally, we look to the law of the ship’s flag only if the shipowner is a party: Whatever significance law of the flag may have in cases where the ship or its owner is a party and where other factors fail to point clearly to another 12a Appendix A jurisdiction’s law, we see no reason to apply the law of the flag here in preference to that of another jurisdiction whose ties are more pertinent to the dispute, especially given the fact that neither the ship nor the owner is a party. Carbotrade, 99 F.3d at 92-93. Here, Brostrom, the shipowner at the time of the welding, is not a party and Rationis, the shipowner at the time of the casualty, is also not a party, having settled without asserting claims against Hyundai. We therefore do not consider the law of the flag a determinative factor. For the same reasons, the shipowner’s base of operations is not a determinative factor here. Another non- determinative factor is the place of the contract as this case arises in tort, not contract.? See Carbotrade, 99 F.3d at 91 3. The District Court explained, after finding liability on the basis of strict liability and negligence theories, that “these claims arise not in tort but in contract on the basis of bills of lading issued to the cargo interests.” In re: Rationis Enters., Inc. of Panama, 325 F.Supp.2d 318, 328-29 (S.D.N.Y.2004). The Court stated this as an explanation for the inapplicability of the Settlor Bar Rule. This is error because products liability sounds in tort. Cf International Ore & Fertilizer Corp. v. SGS Control, 38 F.3d 1279, 1284 (2d Cir. 1994); see also East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986) (distinguishing between strict liability claims in tort and warranty claims in contract). Appellees also argue that the claims were brought in contract under the Carriage of Goods by Sea Act (““COGSA”), 46 App. U.S.C.A. § 1304. This is not the case under Second Circuit law. Indeed, we have explicitly held that a COGSA claim may be a “mixed tort, contract and bailment cause of action.” Texport Oil Co. v. M/V (Cont'd) 13a Appendix A (“[N]o direct contractual relationship exists between the plaintiff and the defendant, so the fifth factor—the place of the contract—is not involved in our analysis.”). Inaccessibility of a foreign forum also is not relevant, because a New York court is fully capable of applying foreign law in this case. See Lauritzen, 345 U.S. at 590, 73 S.Ct. 921 (“There is not the slightest showing that to obtain any relief to which [they are} entitled under [foreign] law would require [their] presence in [a foreign forum] or necessitate [their] leaving New York.”). Finally, this Court has considered the law of the forum generally of little relevance in United States courts. Carbotrade, 99 F.3d at 91 (“[T]he seventh Lauritzen factor— the law of the forum—is irrelevant here because this litigation is in the courts of the United States.”). (Cont’d) Amolyntos, 11 F.3d 361, 367 (2d Cir.1993) (citation and internal quotation marks omitted), overruled on other grounds by Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). The Fourth, Fifth, Ninth, and Eleventh Circuits have similarly held. See Oriente Commercial, Inc. v. American Flag Vessel, 529 F.2d 221, 223 (4th Cir.1975); Associated Metals & Minerals Corp. v, Alexander's Unity MV, 41 F.3d 1007, 1013-14 (Sth Cir.1995); All Alaskan Seafoods, Inc. v. M/V Sea Producer, 882 F.2d 425, 430 (9th Cir.1989) (holding that “[i}f [a contracting party] breached its duty of care with respect to [another party to the contract] then that breach of duty can give rise to tort liability irrespective of contract obligations between the parties.”); Polo Ralph Lauren, L.P. v. Tropical Shipping & Construction Co., 215 F.3d 1217 (11th Cir.2000). As the Eleventh Circuit further explained, “COGSA affords one cause of action for lost or damaged goods which, depending on the underlying circumstances, may sound louder in either contract or tort.” Polo Ralph Lauren, 215 F.3d at 1221. 14a Appendix A The place of the alleged wrongful act that gave rise to the liability is Korea, where the welding was performed. The cargo interests contend that the place of the wrongful act is the location of the casualty, that is, the Atlantic Ocean. But we have held that the place of the wrongful act is not where the vessel sinks, but where the negligence occurs. See Carbotrade, 99 F.3d at 91. The reason for this rule is not difficult to discern because it is the state where the negligence occurs that has the greatest interest in regulating the behavior of the parties. See Curley, 153 F.3d at 15 (focusing on the location of the tort and choosing Mexican law, because Mexico has the greatest interest in regulating the behavior of the parties). The citizenship of the injured parties factor is complicated by incomplete discovery. A good portion of the cargo interests are United States citizens and a good portion are European, but the precise breakdown is disputed. It is clear that the citizenship of NOE, the insurer with the greatest share of the claims and also the insurer for the shipowner and ship operator, is the United Kingdom. Furthermore, the destination of the lost cargo does not dictate the governing body of law; according to Lauritzen, a nation has a compelling interest in protecting its nationals, not its imports. Lauritzen, 345 U.S. at 586, 73 S.Ct. 921. It is simply too variable and indeterminate to ground the choice of law analysis in the intended destination of the lost cargo. Even from the sparse record as to the cargo interests’ countries of citizenship, this factor steers toward “much of the globe.” Carbotrade, 99 F.3d at 90 (internal citation omitted). 15a Appendix A The citizenship of the defendants, Hyundai, is Korea. The presence of Hyundai Mipo Dockyard’s counsel and the affairs Hyundai Corporation conducts with United States businesses, while critical to a personal jurisdiction analysis, does not help determine the applicable body of law because those affairs are wholly unconnected to the events giving rise to the casualty. “The presence of an office of a defendant in a particular country might not always be sufficient to tip this factor in favor of applying the law of that country.” Carbotrade, 99 F.3d at 91-92 (giving weight to the location of the defendant’s office only because that office gave rise to the dispute). The citizenship of the defendants points without question to Korean law. Taking these factors together, we find Korean law applies. The allegiance of the injured parties does not point conclusively to United States law, because a significant portion of the injured parties are European. Even if we were to consider the allegiance of some of the cargo interests as favoring United States law to some degree, this is balanced by the allegiance of the defendants, which strongly favors Korean law. Ultimately, it is the place of the alleged wrongful act that tips the scale in favor of Korean law, for Korea, with its extensive shipbuilding business, possesses the greatest interest and responsibility in regulating the industry. See Curley, 153 F.3d at 15. Because Korean law bars the cargo interests and NOE from recovery against Hyundai due to statutes of repose, we reverse the District Court’s finding of liability.‘ 4. “The right to claim for damages resulting from an unlawful act shall lapse by prescription .. . if ten years have elapsed from the (Cont’d) l6a Appendix A CONCLUSION For the foregoing reasons, we reverse the judgment of the District Court, vacate the anti-litigation injunction as moot and remand with instructions to enter judgment in favor of Appellants. (Cont'd) time when the unlawful act was committed.” Korean Civil Act, No. 6591, Ch. V, Art. 766 (2002) (S.Korea). “The right for damages under {the Product Liability Act] shall be exercised within 10 years from the date on which a manufacturer supplies a product causing damage.” Product Liability Act, No. 6109, Art. 7. (2000) (S.Korea). 17a APPENDIX B — OPINION AND ORDER OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK DATED JULY 9, 2004 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 97 Civ. 9052 (RO) In the Matter of the Complaint of: RATIONIS ENTERPRISES, INC. OF PANAMA, as Owner, and MEDITERRANEAN SHIPPING CO. S.A. OF GENEVA, as Bareboat Charterer of the MSC Carla for Exoneration from or Limitation of Liability. OPINION AND ORDER OWEN, District Judge: On November 24, 1997, the MSC Carla, a fully-loaded 900 foot containership, was on a voyage from LeHavre to Boston following a recent month-long dry-docking with a “Special 25 Year” Survey by Lloyd’s Register at which time over 100 men did a lot of work on the vessel and Lloyds’ issued a clean certificate of class. _ The first days of the voyage were uneventful. The Carla had loaded cargo at various ports such as Hamburg, Bremerhaven and left LeHavre for Boston on November 21. The vessel was properly loaded and its stability was 18a Appendix B satisfactory. Captain Giuseppe Siviero, an experienced master, described the Carla as being in good to optimum condition. On November 24, however, weather conditions began deteriorating and wind speed increased steadily until by 4 o’clock that afternoon wind from the west reached force 10 or 11 on the Beaufort Scale, approximately 55 to 72 miles per hour, with wave heights of 11 to 12 meters. The vessel’s heading was 250 degrees with seas coming at its starboard bow at an approximately 20 to 40 degree angle and swells from a previous storm coming at its port bow from a southwesterly direction. Thus, approaching from different directions, the storm waves were confused. At 6 o’clock, the vessel suddenly rolled heavily—about 25 degrees—several times and then steadied somewhat. These several rolls, in addition to tossing and breaking all the dishes in the crew dining room, caused all three engines—the major center one and two side engines—to stop running because of lack of oil pressure. The engineer was shortly able to get the center engine going and the Carla continued on its 250 degree course but at minimal speed. Shortly after regaining power on its central engine, the Carla encountered the first of at least two large, steep waves. Captain Siviero (through an interpreter) testified as to what happed thereafter: Q. Now what happens after 1830 hours? * * * A. Well, of course the first thing we did was we tried to put a little bit of order because of everything 19a Appendix B having been thrown ail over the place, and to try to put the situation, the conditions was they were prior to that incident of rolling. And of course the engineer below was trying to get the two side engines started again. As we were adjusting and increasing the pitch, of course we were gaining a little bit more speed. . . . six maybe seven knots, because it’s only one engine. We started climbing a wave, and you could see that the bow light kept coming up and up and up and up, and I could see that the ship was going up this wave. . And then what happened? So I was trying to judge how big this wave was by the inclination of the ship, and I noticed that the bow light was lower than where one would expect it to be in relationship to the pitch of the ship. (Tr. 122- 23). Then as we started going down the other side of this wave, ... the ship made a very strange motion as if it had wanted to screw itself into the wave. . . I heard a very sharp hit, impact, and of course the noise had been carried through the hull, but a very sharp staccato noise, and then going up this second wave, and I noticed that there was something absolutely wrong. As a matter of fact my first officer, I noticed that the bow was going down. The ship was going up, the bow was going down, and the first officer was saying we’ ve broken apart, we’ve broken apart 20a Appendix B and I was able to see. I immediately ran out to the wing on the observation wing and what I noticed is that this part, the bow was actually separating itself to port, away from the rest of the ship. And we broke apart. (Tr. 123-24). Q. When did it break? A. On the first wave. Here is hogging started, to crack here. When it go down, the big shock break, go up again, split. (Tr. 130). * * * Q. What happened after that? A. The wave passed, the impact passed also, went away, of course. When we went—so, there was the impact. The impact stopped. The wave passed over us' but we started going up that wave and that’s when the ship broke. That’s when it separated, split. (Tr. 129). * * * Q. In your opinion, captain, based on being up on the bridge on November 24th at approximately 1830 hours, at what point did the ship begin to break in 1. The captain testified elsewhere that (“Heavy spraying reached right up to the glass of the cabin.”] 2la Appendix B half in events, over the series of waves that he has just talked about? A. I would say that the ship started breaking apart on top of the first wave. . . . That’s when I believe that the cracking started. Q. Captain, exactly why do you think it cracked at that particular moment, at the top of the first wave? A. Because we saw that the bow light had started to lower itself relative to the position where it should have been, and the line of containers, the surface of containers was not in line with the containers aft of them. They had shifted as though they had shifted position, because they were lower. (Tr. 124). * * * The hull of the Car/a broke apart roughly in a complete circle at or just in front of the welding at the back of a 15 meter elongation section defendant Hyundai Corporation (“HC”), had built and inserted in its mid section in front of the bridge some 13 years earlier. The front half of the vessel moved to port and fortunately the captain was able to turn the stern half of the vessel (with the rudders) to starboard and thus avoided hitting the separated forebody. The front half, over 5 days, slowly filled up with water and sank. The stern half was towed to Los Palmas Island, the cargo unloaded, then towed to Gijon, Spain, where it was scrapped. Going back those 13 years to February 20, 1984, HC, involved in the ship building services, entered into a ship 22a Appendix B elongation contract with the then-owner of the vessel, Brostrom Shipping Co., Ltd., under which HC, identified as the “contractor,” undertook to lengthen the NIHON, as the Carla was then named, by adding approximately 15 meters length in its middle in accordance with its plans and specifications annexed to the contract. Bostrom was to pay HC some $2,000,000 for the work with liquidated damages under the contract of $25,000/a day for failure to deliver the vessel by the 25th day delivery date. HC obtained the builders’ risk insurance. HC did not perform the work but delegated it to its shipyard, specifically Hyundai Mipo Dockyard (“HMD”). HMD fabricated the new midbody section in its shipyard in Ulsan, Korea. It cut the vessel in half, put in the new midbody which was then joined by welding to the old aftbody and forebody. In addition to the work on the NIHON, HMD was more or less simultaneously doing three other lengthening projects for the group of which Brostrom was a member, and as to one, the M/V JUTLANDIA, HMD’s work on that vessel overlapped with its work on the NIHON by approximately twenty days. Consequently, from the trial testimony, it appears that the many labor demands on HMD were causing the JUTLANDIA to be nine days behind delivery schedule and the NIHON (now named Carla) three days behind schedule. To avoid or minimize liquidated damages under the contract, HMD contracted with quite a number of outside welders to supplement HMD’s welding staff but their quality, as | conclude here, had disastrous consequences thirteen years later. 23a Appendix B Six months after the NIHON’s delivery, it was discovered that all 76 butt welds to the doubler straps on the deck of the Carla were deficient and HMD acknowledged to officials at Lloyd’s Register in early June of 1985 that the outside welders brought in had done a poor job. The doubler straps referred to, three on each side of the deck for much of its length, to be made continuous, were to be welded between each section with what is called fu// penetration welds. This requirement, imposed by Lloyd’s Register, was to provide adequate deck strength especially across the newly-installed midsection. Normally, it appears HMD’s welders did their work in the shop which would have made it easy to do a two-sided transverse butt weld bottom to top. Instead, here, HMD elected to install the doublers plate by plate onto the deck. As a result, the welders not being able to come up from the underside, failed to do “full penetration welds” which obviously markedly weakened the straps which were there to strengthen the deck while the vessel would be bending and turning in waves.’ It also appears that for the 60 HMD 2. At some point, during the warranty period, this problem soon came to light in an inspection in Pusan. As an HMD witness Man Jin Yoon testified: Q. What did you conclude from that inspection report? A. Well, that inspection report does say that there are lack of penetration and some slag inclusion. Q. What’s slag inclusion? A. Slag is a kind of unnecessary material inside the welding. . . . (Tr. 1674). . (Cont’d) 24a Appendix B (Cont'd) This problem, which was communicated somewhat to the shipowner, was apparently not emphasized, and was indeed played down and not followed-up by HMD. THE COURT: Mr. Yoon, I don’t know anything about building ships so you will forgive me for putting this question to you this way. But when you have a report of lack of penetration and slag inclusion do you think of that in terms of it being something that could put the ship at some risk of damage? Are you troubled when you see that? 4 THE WITNESS: That’s purely depends on the size or quantity. THE COURT: In this case you get a report that these two things- exist. Docs that make you say, uh-oh, we got a problem on our hands here? THE WITNESS: My personal, no, sir. THE COURT: No. OK. Because then if you said we did, and you tell the owner this is what we got and the owner doesn’t come back to you, you then might be saying to yourself, hey, owner, we called this to your atteation and you got to pay some attention to it. . Do you feel a duty on yourself to follow up and say why aren’t you doing anything? THE WITNESS: Well, as far as I know this matter has been discussed even before we are at Pusan inspection. So I believe they have some deep discussion between owners and Lloyd’s as professional organizations and we waited until they come up to us. THE COURT: But they don’t come up to you. So at some point you say well, if it doesn’t bother them it’s not going to bother us either, right? (Cont'd) 25a Appendix B welders Lloyd’s Register had only one hull surveyor present and he did not have the ability to observe every weld. One of HMD’s top vice-presidents acknowledged that HMD’s quality assurance department did not radiograph all of the welds to ensure they were of good quality. Instead it appears HMD decided to only perform random radiographic inspections which did not catch a number of faulty welds. How many were missed and unexplained is not clear. This, in addition to the new doubler joints not being staggered relative to the joints of the plates of old body part, made it even weaker (see, infra). Also, a substantial number of design and construction flaws were concentrated ‘n a relatively small area. The most significant of these was a cavity of an undetermined number of inches in length and irregular in shape where there should have been solid welding where the deck and the starboard topside joined at the rear of the inserted section. This should never have existed. And not only did the cavity increase the stresses in that area but welding irregularities—high and low points of welding material inside the cavity—also created additional points of stress.’ (Cont’d) THE WITNESS: Yes, at that time personal I was not as work as project manager and I left this project and returned to my original position. THE COURT: So you really don’t know the answer to what I am asking? THE WITNESS: No, sir. (Tr. 1676-78). 3. There was no such cavity left on the port side. 26a Appendix B Next there was a 7 mm gap from a misalignment of a sheer strake plate and the deck plate at one point. This misalignment was purportedly compensated for by the welders filling the gap with welding material but which, according to engineering testimony in fact increased stresses at that point. Further, as mentioned above, in a number of places there was a failure to have the doubler welds “bridge” the erection joint weld. In homely terms, this is like a bricklayer building a brick wall by putting one brick one exactly on top of another without alternating the bricks. In some cases there was insufficient beveling on the deck plate, meaning the HMD workers beveled at a 25 degree angle from the vertical where drawings specified 45 degrees, which made it impossible for welders thereafter to fully insert a welding tool into the crevice for a full penetration weld. Many butt welds also contained-stag-which. weakened their ability to bear loads that they were designed to carry. Joseph Winer testified as an expert for the plaintiffs’ interests and was personally involved in supervising the lengthening of a number of vessels over the years. He went aboard the Carla's aft section the moment it was towed to Los Palmas immediately after the break-up in December 1997 and visited it later four times over a one year period in Gijon, Spain. He concluded that quality assurance was lacking and that the inspection practices and procedures were inferior which permitted defective welds to go uncorrected. He faultea HMD’s planning, particularly as to the design and construction of the deck doublers. Winer, after being very specific about the defects in the workmanship by HMD’s welders, testified that from the 27a Appendix B observations and measurements he made aboard the vessel the ship failed on deck, and the fracture ran around the perimeter of the vessel’s hull. He testified: Q. Which of those two occurred first, crack in the starboard torsion box structure or failure at the bottom? A. The crack in the starboard torsion box structure. Because the crack under my conclusion traveled from the box girder, the torsion box down the side of the ship until it reached that heavy structure which extends up from the bottom of the ship to five meters above. That’s coincidental with the turn of the bilge. And looking at Exhibit 126A, the five meter above baseline is precisely where the heave structure starts. As we can see over the side, all the heavy structure is over here. The heavy structure goes up to this point here. So the fracture traveled easily down between the transverse frames. But when it got to this point it stopped, and I guess the initial hinging point was the entire lower structure. And then that separated and not in one motion but I think in several episodes the crushing of these lower port and starboard bilge regions occurred and occurred, and the final hinging caused the tank top to fracture in tension and the ultimate hinge with the separation of the hull at the bottom of frame P. (Tr. 774-75). 28a Appendix B Winer also testified, confirming the break at the deck, that the pivoting was at the bottom at the tank top plate; since across the bottom it was “folded down and broken. . .” whereas if the break had occurred at the bottom, it would have been “shoved under”. Dr. Charles Cushing, another expert witness for plaintiffs with a substantial background in naval architecture and marine engineering including supervising more than twenty conversions of ships by lengthening, personally examined the rear section of the Carla at Las Palmas and Gijon. He testified: So what we have at the outboard edge of the erection butt—where the two ships, the new midbody and the old forebody were attached—is an arrangement represented by this diagram that shows the fillet weld, a massive amount of welding as we show in the photograph, a massive amount of welding that extends over to the region and connects up with the heat-affected zones of the fillet welds. And then, of course, the concentrations that we have discussed so many times in the last— yes, the cavity. And then the stress concentrations that are also caused by the defective welding that include undercut, overlap, excessive crown, all of these are stress concentrations. And, in addition to that, because of the size of this particular weldment— and it’s pretty 29a Appendix B massive—taking the doubler at the top, the deck and the side, this is a lot of concentrated welding that creates residual stresses. When you, as you described earlier, your Honor, melt the steel and melt the electrodes to get them to bond together, and then they cool, in the cooling process they create a lot of internal stresses. Those are called residual stresses. And this whole corner where you have very heavy welding builds up these residual stresses. And there is no way of knowing the quantity of those stresses, but it’s known that it’s a high amount. Added to those residual stresses are the normal longitudinal bending stresses that a ship experiences that are in the deck and in the doubler. There are transverse stresses. The ship is twisting. There are torsional stresses, and there are shear stresses in the ship. So this corner, with all of these concentrations, are expected to carry all of these different stresses, not only the longitudinal but the other ones. And then finally, in this particular corner, because of the massive amount of material in there you have what are called triaxial stresses. (Tr. 963- 64). 30a Appendix B From personal observation Cushing stated: A. _ Well, I think that the most powerful evidence in the case is obviously the appearance of the fractured end of the ship. First the appearance of the vessel across the deck and down the sides, this somewhat clean break in the ship. The next would be that when the ship was on the beach in Gijon, the appearance of the bottom of the ship with the crushing that existed down at this hinge but very localized, the absence of this crushing damage in the open area between the two wing tanks, in the cargo hold there was an absence of crushing except for some cell guides which were I think— which I think can easily be explained by the fact that there were nearly 100 containers in that hold, each of them weighing anywhere up to 20 tons, collapsing. In making that statement, are you relying on the visual evidence seen in Plaintiff's Exhibit 213-1? Yes, sir. Go on please. I’m sorry. And then of course, the absence of what could be the characteristic of wrinkling or crushing along the sides of the ship in the various photos on the stern end, and then there were salvor’s photos that are available that also show a lack of this crushing or 3la Appendix B wrinkling up the side of the ship on the forebody. (Tr. 987-88). Cushing concluded: And then of course as you work your way around, there were very obvious defects as shown in this macro photograph of overlaps and excessive crowns which are all stress risers. The massive amount of welding is a stress riser. But the thing that was to me the most interesting about this corner here is that this is one of the crucial corners on the ship. You don’t play around with the top of the sheer stake. That’s the source of fracture on so many ships, is problems occurring in this connection and in this corner. THE COURT: How does that happen? Why is it? THE WITNESS: Well, this is supposed to be, if I can mark this, this is supposed to be right out to the side like this. THE COURT: I understand. Why if you fill it up with welding material does it become one of the weakest places in the vessel? THE WITNESS: Because there was an obvious misfit of this plate. What happens in shipyards— THE COURT: Where is this weakness conveyed to the vessel because of that? 32a Appendix B THE WITNESS: Because in this area, in this whole area is welding that should have been roll plate of homogenous characteristic, but instead somebody’s in there filling and filing and filling adding a lot of residual stress. THE COURT: But you say this has caused a lot of problems on a lot of vessels and where does it start breaking a lot of vessels? . THE WITNESS: Right here. (Tr. 933-34). * * * THE WITNESS: If somebody welds something onto here and leaves a stress concentration all the Liberty ships— 1 shouldn’t say all, many of the Liberty ships and the T2 tankers during World War II, that was a contributing factor. They had problems here. THE COURT: What kind of problem, pick up the weld? THE WITNESS: Because it is such a constrained and stressed area, if you had a stress concentration to what is already a constrained area it triggers the fracture. THE COURT: I understand, doctor—where does the fracture occur? ... THE WITNESS: It occurs usually where the defect is. If the defect is in the weld here, it will start there. If you have a sharp corner at the top it will start there. But it is right wherever the defect is and the concentration 1s. 33a Appendix B THE COURT: I’m sorry—I’m not, I can see from what I have heard from the witnesses so far that if you have bending and twisting of the vessel and there’s a hole that’s going to cause all kinds of problems around that hole. THE WITNESS: Yes, sir. (Tr. 935). Dr. Cushing concluded clearly that the welding defects of HMD added residual stresses to the starboard sheer strake and deck area, and that these “welding defects” were enough when added to other normal stresses so as to cause the ship to break in half: THE WITNESS: Because the process of welding adds residual stress that could be as high as 50 to 80 percent of the yield of the material. You are locking in very high stress. You only have to add another 20 percent to the ship before it leaves the shipyard in order to have it yield. So by putting massive amount of welding up here you are putting residual stresses in there that stay there, and those stresses are locked in. THE COURT: When it breaks where does it break? THE WITNESS: For wherever you put the additional problem, the additional stress concentration, such as a tip in the cavity would be stress concentration. Or these excessive crowns or some of the other welding defects are enough to add to all of these other things to cause it to fracture. (Tr. 936). 34a Appendix B Plaintiffs’ metallurgist, Dr. John E. Slater, testified as follows: Q. Dr. Slater, were there any other defects or flaws that you observed? A. Yes, there were, Mr. Olson. And this if you like is a sort of package. What J have discussed previously is the fact that there was a lack of penetration in the doublers that led to fatigue cracking in the doublers. Now, if you look at the fracture as it runs across the vessel on the starboard side we note that the deck fracture specifically in the weld area, which is shown in 228B, is very close to the fatigue fractures that occurred in the doublers. In other words, what we have is a very close juxtaposition between the doubler butt weld and the deck butt weld. Now, when we start looking at the deck butt weld in this failure area which extends a significant distance in this fracture we note that the weld itself has failed in a low ductility manner, in quite a brittle appearing manner, and that the fracture is associated with the heat effected zone of the weld. Now, this is an undesirable situation. When you put a weld in a component you do not want any type of fracture or anything else to occur actually in the weld or the weld heat affected zone. 35a Appendix B In fact, when a weld procedure is written it is typical for a tensile test to be performed right across the weld through inter-bas metal and you want the fracture to occur in the base metal. And the fact that we have here a problem with the weld which is allowing a fracture in a low ductility manner through the weld heat affected zone in my opinion is a significant problem here because it clearly is a plane of weakness the structure. What I am trying to say is we sort of got a level of three situations here. We have, first of all, the doublers that have a lack of penetration; we have the doublers that failed by fatigue; the doubler weld, which has now fatigued is very close to the deck plate weld which itself has a defect in it from the viewpoint of fracturing in the weld heat affected zone. So what you really have is this sort of unholy trinity if you like of three situations occurring: Bad welding in the doublers leading to fatigue, juxtaposition of the butt welds in the doublers, and the butt weld in the deck and failure of the deck probably due to stress transfer after the doublers have already failed in this weld heat affected zone. (Tr. 301-03). Of confirmatory significance to all of the above were the existence along the break at the point where the starboard topside and the deck met (see p. 7, supra) of certain 36a Appendix B “chevrons”—like private first-class chevrons—in the tear of the metal both leading up the topside to the hole and across the deck to the hole. A number of these chevrons not far apart from each other, both pointed at where the experts say the “brittle fractures initiated.” THE COURT: [interrogating Dr. Slater] You are in effect telling me that these chevrons are pointing and saying “he did it, he did it, he did it” right? * * * THE WITNESS: Yes. I’m saying that the chevrons are pointing to an area where those brittle fractures initiated. THE COURT: Where it started? THE WITNESS: Yes. (Tr. 318-19). * * * THE WITNESS: Well, we know that the chevrons point back towards the area where that brittle fracture in fact started. We know that this brittle fracture started on either side of this area which contains the weld cavity. (Tr. 321). * * * THE COURT: And that caused the chevrons? THE WITNESS: And then the brittle fractures arose and the chevrons formed. Which is why | call the cavity and the 37a Appendix B area around the cavity an initiating point for the fracture. (Tr. 322). Even HC’s metallurgist David Hughes acknowledged that a defect can cause a brittle fracture if the overloaded conditions are correct. Given all the foregoing, I am completely satisfied by more than a fair preponderance of credible evidence that this vessel broke apart starting at the point of the negligently created cavity where the starboard topside and the deck met at the juncture between the back of the HC insert and the forward edge of the rear section of the vessel. The break then ran across the deck and down both topsides. This is not only based on the first hand observations of the captain, but on all the—for lack of a better overall term—metallurgical “evidence” that the fracture left behind, i.e., the hole, the chevrons pointing to the hole, and the absence of wrinkles or accordion pleats in the topsides, both starboard and port.‘ Virtually none of these serious welding flaws were visible to anyone—neither metallurgist nor sailor—after the 4. I note that even the Hyundai people in an early {etter dated February 11, 1999, a senior design manager J.S. Kim stated: “Our opinion is that it is reasonable to think that the crack in the ship was initially on the upper part on the basis of above information and our checking the damaged structure.” [ further note that this opinion was later backed away from because the obvious consequence of its validity was that Hyundai was liable under a number of theories of law for faulty construction of the insert to the vessel. 38a Appendix B vessel left the Hyundai Dockyard in 1984. Obvisusly the hole in the starboard topside/deck joint was not visible. The absence of “full-penetration” welds in the deck doublers was not visible because the shortfall was below the joints and against the deck, and as to this, HMD had played it down. Then, there was duplicative and unnecessary welding filler and quality-damaging slag included in the welding material which was neither visible nor could it be discovered absent metallurgical testing, thus obviously not available to those in charge of operating the vessel. Accordingly this flawed lengthening insert met its grievously distressing end without any reason to anticipate it on the part of the owners, the captain, the mates or seamen, in which while a major storm— though not unusual—the vessel took a number of unexpected stresses of some very major rolling and climbing and falling in conflicting seas with a number of unusual! waves. The Hyundai defendants, relying mainly on computerized input from a “finite element analysis” assert the conclusion that the vessel failed first at the bottom. This is not only contrary to the captain’s personal observations from the bridge, see supra°® but, I conclude, had not taken sea 5. The Hyundai defendants, based on the captain’s testimony that the bow light was still lit when the vessel was going up the second wave, cuntend that it was the bottom that had come apart first, for they contend that the wires to light the bow light run under the deck, not along the bottom. This, however comes_ nowhere near overcoming all the balance of the captain’s testimony and the well- documented and photographed evidence of the hull condition thoroughly supporting the conclusion that the parting was at the deck first. And I conclude it is not at all unlikely that even if the light (Cont'd) 39a Appendix B conditions into consideration (see Tr. 1556) and completely disregards the absence of wrinkles, etc. I reject the Hyundai defendants’ suggestions that the master’s route was negligently inappropriate; that alleged flaws in the forward hatch covers were the cause of the eventual sinking of the bow;’ or that the vessel’s destruction was caused by its being overloaded. Under the circumstances, the Hyundai defendants are liable to the plaintiffs and third-party plaintiffs on principles of strict liability flowing from § 402A & § 400 of the Restatement, (Second) of Torts and its successor of § 14 of the Restatement (Three) for the faulty manufacture and sale of the lengthening insert in 1984. At the outset, I conclude that the addition of the insert to the Carla was clearly a “sale” (Cont'd) went out after the first wave, the captain, who, in the nerve-wracking seconds as the vessel was coming apart, was still able to see the light fixture itself and with this vessel already broken and coming apart under his feet and before his eyes, could well have remembered the light as “on” even though as to this detail he was mistaken. Alternatively it is not at all unlikely that with a 900 foot long vessel there was enough slack in the wire in the sub-deck conduit to keep it intact though stretched—and the bow light lit—until the bow section broke loose and the stern was turned to starboard to avoid hitting it. There is even some question of whether indeed the bow light wire ran along the bottom or under the deck. There may be other explanations in that frantic minute or two—who knows what happened! 6. The split tearing open the bottom, it is entirely understandable that over five days enough water would get into the bow sections to sink it. 40a Appendix B and not a repair. A repair generally is where something is broken and then is fixed. Here the contract was to manufacture a new elongation section of the vessel and place it in the vessel’s middle. Nothing was broken or repaired and such ship elongation was within the normal and continuing course of the Hyundai _ business calling for the creation of a new section and its installation. Given this, it was built for sale by Hyundai and was placed in position and attached in the regular course of Hyundai business for a given contract price—a sale price. The failure to properly fabricate the installment to this section is within this doctrine. Hyundai Corporation and its Hyundai Nipo Dockyard had a duty to use reasonable care in designing and manufacturing the product to enable it to avoid foreseeable risk of injury. Sprung v. MTR Ravensburg, Inc., 99 N.Y.2d 468, 758 N.Y.S.2d 271, 788 N.E.2d 620 (2003). The design and manufacturing defects cited above were such that in foreseeable normal use, even though a number of years later, the Hyundai defendants’ workmanship would fail with the obvious risk of damage to the vessel and its cargo. See Sears Roebuck and Co. v. American Presid [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1279%3A1. Public record. Not legal advice.