Opposition Brief — Matheny v. Tennessee Valley Authority Authority (No. 09-222)

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2 BEE io v OCT 23 2009

be p, No. 09-222 OFFICE OF THE CLERK

In the Supreme Court of the Gnited States

BECKY MATHENY, INDIVIDUALLY AND AS SURVIVING

SPOUSE OF RONALD MATHENY, DECEASED, ET AL.,

PETITIONERS

Vv.

TENNESSEE VALLEY AUTHORITY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE TENNESSEE VALLEY AUTHORITY

IN OPPOSITION

EK LENA KAGAN

MAUREEN H. DUNN Solicitor Generat

General Counsel Counsel of Record

Department of Justice

EDWIN W. SMALL Washington, D.C. 20530-0001

Assistant General Counsel (202) 514-2217

THOMAS A. ROBINS

Sevvor Attorney

Tennessee Valley Authority

Knoxville, Terri. 37902

QUESTION PRESENTED

Whether the court of appeals erred in holding that

the Limitation of Liability Act, 46 U.S.C. 30505, applies

to a claim seeking damages from the Tennessee Valley

Authority (TVA) for an accident caused by a momentary

navigational error of a boat captain employed by the

TVA.

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

American Car & Foundry Co. v. Brassert, 289 US.

ENS 6k:s:005 0a baa G 3d es Wk SE ee ee i)

American Milling Co., In re, 409 F.3d 1005 (8th Cir.

oo acca sake dee a eee 7,10

Bristerv. A.W.I., Inc., 946 F.2d 350 (5th Cir. 1991) ...... 6

Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365

(Ee I 4 5 ook pe See aes eee ees 7,8

Hellenic Inc. v. Bridgeline Gas Distrib.

(In re Hellenic), 252 F.3d 391 (Sth Cir. 2001)......... 8

Gateway Tugs, Inc. v. American Commerical Lines

(In re Kristie Leigh Enters., Inc.), 72 F.3d 479

Cr SE 6 oe wc ee a eee ae renee 5, 6, 8, 10

Lawrenson v. Belterra Resort Ind., LLC lu re MO

Barge Lines, lic.), 360 F.3d 885 (8th Cir. 2004) ..... 7,8

Lewis v. Lewis & Clark Marine, fiic., 531 U.S. 488

Es oo a oak chee AT ee eee bee ye 3

Omega Protein, Inc. v. Samson Contour Energy

BE& PLLC Un re Omega Protein, Inc.), 548 F.3d

en Vee Ce, I ok oe cee race ee eae ewan 6

IV

Cases—Continued: Page

Suzuki of Orange Park, lic. v. Shubert, 86 F.3d 1060

CU et Gh win a oak bec ea wae eee 5

The G. K. Wentworth, 67 F.2d 965 (9th Cir. 1983) ....... 10

Statutes:

Limitation of Liability Act, 464 U.S.C. 30505 .......... 2.3

ee gor ony eo ay oh ac tala kee 3

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Se ne St hl en ee Ce a eon ee 3

SS i a ER etry A ee eae ea RiGee Aa Re as, oy: 3

Miscellaneous:

H.R. Rep. No. 170, 109th Cong., Ist Sess. (2005) ........ 2

Jn the Supreme Court of the Gnited States

No. 09-222

BECKY MATHENY, INDIVIDUALLY AND AS SURVIVING

SPOUSE OF RONALD MATHENY, DECEASED, ET AL.,

PETITIONERS

Vv.

TENNESSEE VALLEY AUTHORITY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE TENNESSEE VALLEY AUTHORITY

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-22)

is reported at 557 F.3d 311. The district court opinions

finding liability and damages (Pet. App. 23-97) and re-

vising the damages findings (Pet. App. 98-104) are re-

ported at 523 F. Supp. 2d 697 and 247 F.R.D. 541.

JURISDICTION

The judgment of the court of appeals was entered on

kebruary 19, 2009. A petition for rehearing was denied

on May 22, 2009 (Pet. App. 105-106). The petition for

a writ of certiorari was filed on August 20, 2009. The

(1)

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

1. a. The Tennessee Valley Authority (TVA) oper-

ates a coal-fired electric power generating plant on the

south bank of the Cumberland River in northwest Ten-

nessee. As part of its operations at the plant, TVA owns

tugboats that are used to move coal barges along a short

stretch of river to be unloaded at the plant and then re-

turned empty for pickup by towing companies. Pet.

App. 3.

b. At around 5:30 p.m. on June 5, 2005, petitioners

Thomas Lawrence and Ronald Matheny went fishing in

Lawrence’s 14-foot boat in the portion of the river tra-

versed by TVA tug boats. Later that evening, a boat

captain employed by TVA, Captain Ralls, and his two

person crew started their shift on one of the TVA tug

hoats, the Patricia H. At approximately 7:50 p.m., when

the Patricia H traveled downstream to obtain a loaded

barge, its wake swamped Lawrence’s boat. Both Law-

rence and Matheny were thrown overboard. The crew

of the Patricia H was able to rescue Lawrence, but

Matheny drowned. Pet. App. 3-4.

2. a. Petitioners filed this admiralty action in the

United States District Court for the Middle District of

Tennessee, seeking damages from TVA for Matheny’s

death and Lawrence's injuries. TVA defended the ac-

tion by asserting, ivter alia, the protections of the Limi-

tation of Liability Act (Limitation Act), 46 U.S.C. 30505.

That statute, which Congress recodified without sub-

stantive amendment in 2006, see H.R. Rep. No. 170,

109th Cong., lst Sess. 2 (2005) provides that “the liabil-

ity of the owner of a vessel” for “any act, matter, or

3

thing, loss, damage, or forfeiture, done, occasioned, or

incur“ed, without the privity or knowledge of the owner”

shal} “not exceed the value of the vessel and pending

freight.” 46 U.S.C. 30505. The Limitation Act thus al-

ters the normal rules of vicarious liability and “allows a

vessel owner to limit liability for damage or injury, occa-

sioned without the owner’s privity or knowledge, to the

value of the vessel or the owner’s interest in the vessel.”

Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446

(2001). On the basis of the Limitation Act, TVA conten-

ded that, even if it were held liable for the accident, its

liability could not exceed $420,000, the stipulated value

of the Patricia H. Pet. App. 3.

b. Following a four-day bench trial, the district court

awarded petitioners damages of approximately $3.5 mil-

lion. The court found that the accident was caused by

the negligence of Captain Ralls, and in particular by his

operation of the Patricia H at an excessive speed when

passing Lawrence’s fishing boat. Ralls’s conduct, the

court concluded, violated two Inland Navigational Rules,

which are statutory “Rules of the Road” that apply to all

vessels upon the inland waters of the United States. 33

U.S.C. 2001; Pet. App. 45; see id. at 6 (finding that Cap-

tain Ralls violated Inland Rule 2 (Responsibility), which

states that “due regard shall be had to all dangers of

navigation and collision,” and Inland Rule 6 (Safe

speed), stating that “lelvery vessel shall at all times pro-

ceed at a Safe speed so that she can take proper and ef-

fective action to avoid collision and be stopped within a

distance appropriate to the prevailing circumstances and

conditions.”). 33 U.S.C. 2002(b), 2006.

The district court also held that TVA was not entitled

to the protections of the Limitation Act. The court

found that “Captain Ralls had proved himself, up to the

a

time of the accident, to be a perfectly competent cap-

tain,” Pet. App. 75; that he had been tested on the statu-

tory “Rules of the Road” under the Inland Navigational

Rules, “specifically regarding passing, crossing situa-

tions, risk of collision, safety, and good seamanship”;

and that he had received training in collision avoidance,

which Captain Ralls understood to include the wake of

his boat hitting another, zd. at 45. Despite these find-

ings, the court reasoned that the TVA had failed to

prove that it lacked “privity or knowledge of the risks

posed by tugboats being operated too fast, creating po-

tentially dangerous wakes for nearby fishing boats.” /d.

at 75. “[Ajlthough TVA was aware of [such] risk,” the

court explained, “it did not take any steps to reduce” it

by “informing its tugboat captains not to operate at a

little to no wake speed when in the presence of fishing

boats.” Jd. at 76; see id. at 82-86.

3. The court of appeals reversed the district court’s

ruling on the Limitation Act. The court concluded that,

by focusing on TVA’s “knowledge of the risks posed by

Captain Ralls’s negligent operation of the Patricia H at

an excessive speed,” the district court had incorrectly

framed the inquiry. Pet. App. 9. “[T]he Limitation of

Liability Act speaks in terms of acts, not risks,” the

court of appeals explained, and therefore the Act’s

protections do not disappear simply “because TVA was

aware of the fact that if a tugboat operates at an exces-

sive speed it may create a dangerous wake for nearby

recreational boats.” /d. at 10. The court reasoned that

the dispositive question was instead whether TVA had

“privity or knowledge” of “the specific negligent acts or

unscaworthy conditions that actually caused or contrib-

uted to the accident.” /bid. (quoting Suzuki of Orange

5

Park, Inc. v. Shubert, 86 F.3d 1060, 1064 (11th Cir.

1996).

The court concluded that “[t]here is no evidence in

this record to justify imputing knowledge to TVA about

the specific conditions that led to” the swamping of Law-

rence’s boat. Pet. App. 10. The court noted that “it is

well-settled that under the Limitation of Liability Act,

‘an owner may rely on the navigational expertise of a

competent ship’s master.’” /d. at 11 (quoting Gateway

Tugs, Inc. v. American Commercial Lines, (In re

Kristie Leigh Enters., Inc.), 72 F.3d 479, 482 (5th Cir.

1996). Citing the district court’s findings about Captain

Ralls’s experience, unblemished record, and knowledge

of navigational rules, the court concluded that that prin-

ciple controlled here. /d. at 11-12. The court. thus held

that “TVA was entitled to rely on a competent captain’s

navigational knowledge and cannot be deemed negligent

because it failed to inform Captain Ralls or any of its

other captains not to be negligent by creating excessive

wakes near recreational boats.” /bid.; see id. at 19-21

(rejecting district court’s conclusion that the Limitation

Act did not apply to petitioners’ “negligent supervision”

theory of liability).

ARGUMENT

The decision of the court of appeals is correct and

does not conflict with any decision of this Court or of

another court of appeals. Further review is not war-

ranted.

1. The court of appeals correctly concluded that the

Limitation Act applies to petitioners’ claims. As the

court of appeals recognized, it is “well-settled” that a

ship owner is entitled to the protections of the Limita-

tion Act when it relies upon the navigational competence

6

of a skilled master and lacks actual knowledge of the

specific negligent acts that resulted in the accident. Pet.

App. 11. The district court found that Captain Ralls was

a skilled and experienced tugboat operator, and there

was no evidence or basis for finding that any managing

agent of the TVA knew that, at the time of the accident,

Captain Ralls was negligently operating the boat at ex-

cessive speeds. The decision below therefore represents

a straightforward application of the Limitation Act.

That factbound ruling does not merit this Court’s atten-

tion.

2. There is no conflict among the courts of appeals

on the Limitation Act’s scope or meaning. Petitioners

contend (Pet. 15-20) that the Fifth and Eighth Circuits

would hold the Limitation Act inapplicable when the

owner “was in a position to exert control” over the ves-

sel, even if the evidence shows that the owner had no

contemporaneous privity or knowledge of a momentary

navigational error by a competent master. Pet. 16. That

argument lacks merit. The law of the Fifth and Eighth

Circuits is clear and consistent with the law applied in

the decision below: under the Limitation Act, a vessel

owner may rely on the navigational expertise of a com-

petent captain when the owner is not on notice of any

pattern of prior navigational errors. See Omega Pro-

tein, Ine. v. Samson Contour Energy EF & P LLC Un re

Omega Protein, Inc.), 548 F.3d 361, 371 (5th Cir. 2008)

(finding the Limitation Act applicable and holding that

“mere ‘mistakes of navigation’ by an otherwise compe-

tent crew do not bar limitation of liability”) (quoting

Brister v. A.W.1., Inc., 946 F.2d 350, 356 (5th Cir. 1991));

In re Kristie Leigh Enters., Inc., 72 F.3d 479 at 482

(“T]he well established rule [is] that, for limitation pur-

poses, an owner may rely on the navigational expertise

7

of a competent ship’s master.”); /n re American Milling

Co., 409 F.3d 1005, 1019 (8th Cir. 2005) (“|[S}pontaneous

or momentary errors by competent pilots cannot be im-

puted to owners.”); Lawrenson v. Belterra Resort Indt-

ana, LLC Un re MO Barge Lines, Inc.), 360 F.3d 885,

891 (8th Cir. 2004) (holding the Limitation Act applica-

ble because “[t]he record supports the district court’s

finding that Missouri Barge hired a licensed, competent

operator to navigate its vessel on the Mississippi River

* * * [and the plaintiff] produced no evidence showing

that Missouri Barge could be charged with notice that

[the captain] would operate the vessel negligently.”).

Contrary to petitioner's’ assertion, in circumstances

where the owner lacks actual contemporaneous knowl-

edge of a momentary navigational error and the vesse!]

is being piloted by a competent master, the government

is aware of no decision interpreting the Limitation Act

to require a separate inquiry into whether the owner

potentially could have exerted “control” over the ship

and denying limitation on that basis.

Petitioner’s assertion of a circuit conflict is based on

footnotes in two decisions, Continental Oil Co. v. Bo-

nanza Corp., 706 F.2d 1365 (5th Cir. 1983), and In re

MO Barge Lines, supra. But the statements in those

footnotes do not purport to establish “requirement|s]”

for application of the Limitation Act. Pet. 16. Rather,

in each passage the court simply cited a treatise on ad-

miralty law in observing that one of the rationales for

limiting liability in negligent navigation situations is

that, “when the owner is so far removed from the vessel

that he can exert no control over the master’s actions, he

should not be taxed with the master’s negligence.” Con-

tinental Orl, 706 F.2d at 1377 n.15; see /n re MO Barge

Lines, 360 F.8d at 891 n.5. Neither court applied that

8

observation as a controlling legal standard. To the con-

trary, both courts proceeded under the same well estab-

lished rule underlying the decision below: “[tJhe owner’s

duty is essentially satisfied when he properly equips the

vessel and selects competent crew to operate it.” /d. at

891; see Continental Oil, 706 F.3d at 1377 n.15 (recog-

nizing that “no court has previously denied a corporate

shipowner limitation of liability for a master’s naviga-

tional errors at sea when the owner has exercised rea-

sonable care in selecting the master”). Based on that

rule, the Eighth Circuit held the Limitation Act applica-

ble. Jn re MO Barge Lines, 360 F.3d at 891. And al-

though the Fifth Circuit held the Act inapplicable in

Continental Oil, its decision rested on the fact that the

negligent master was a managing agent of Bonanza, so

that the master’s “privity and knowledge was that of the

corporation.” Continental Oil, 706 F.2d at 1377. (Peti-

tioners disavow any contention that Captain Ralls was

a managing agent of TVA for purposes of limitation

analysis. Pet. 18.) The Fifth Circuit has more recently

confirmed its adherence to the “well established rule

that, for limitation purposes, an owner may rely on the

navigational expertise of a competent ship’s master.” Jn

re Kristie Leigh Enters., Inc., 72 F.3d at 482."

" Petitioners also cite the Fifth Circuit's decision in Hellenic Inc. v.

Bridgeline Gas Distrib. In re Hellenic), 252 F.3d 391 (20013, in support

of their position (Pet. 18), but it, too, is similarly inapposite. In that

case, the corporate owner of a spud barge sought limitation after its

“spudded down” barge was pushed by wind and seas into a gas pipeline,

causing the pipeline to rupture. /n re Hellenic, 252 F.3d at 393. The

district court denied limitation because it found the construction super-

intendent, who had made the alleged negligent decisions to leave the

barge unmanned and anchored only by its studs, to be a managing ag-

ent of the owner. On appeal, the Fifth Circuit held that the construction

9

2. There is no merit to petitioners’ contention

(Pet. 22) that, in rejecting the district court’s “negligent

supervision” basis for liability, the court of appeals con-

travened this Court’s holding in American Car & Foun-

dry Co. v. Brassert, 289 U.S. 261 (1933) (American Car).

The decision in American Car is not implicated here.

That case involved an effort by the manufacturer of a

vessel to limit its ability for injuries sustained when the

vessel exploded while being operated by the vessel’s

purchaser. The manufacturer had retained title of the

vessel solely for the purpose of securing the unpaid por-

tion of the vessel’s purchase price. The manufacturer

had no control over the vessel’s operation, did not man

or operate her, and had no right to do so; indeed, for all

purposes of use in navigation, the vessel belonged to the

purchaser. /d. at 264. In rejecting the manufacturer’s

effort to invoke the Limitation Act, this Court held that

the statute protects only ship owners gua ship owners;

the liability in American Car “arose, not because [the

defendant] reserved title, * * * but because it was

manufacturer and vendor.” /d. at 265. Here, there is no

dispute that the asserted lability of TVA arises in its

capacity as the owner of the tugboat. The holding in

American Car therefore does not apply.

The decision below correctly held that petitioners’

allegation of “negligent supervision” did not render the

Limitation Act inapplicable. As other courts of appeals

(including the Fifth and Eighth Circuits) have held, a

claimant cannot avoid limitation in a case such as

this, involving a momentary navigational error, by alleg-

ing that the owner negligently supervised the compe-

superintendent could not be considered a managing agent for limitation

purposes and remanded for further proceedings.

10

tent master. See, e.g., /n re Kristie Leigh Enters., Inc.,

72 F.3d at 481-482 (reversing a district court decision

holding that the owner “could not limit [liability] be-

cause it * * * did not provide better training and su-

pervision,” and concluding that because the record did

not support a finding that the captain was incompetent,

or that the owner was on notice of prior navigational

errors by the captain indicating that the captain needed

additional training or instruction, “the record presents

no justification for departing from the well established

rule that, for limitation purposes, an owner may rely on

the navigational expertise of a competent ship’s mas-

ter.”); Jn re American Milling Co., 409 F.3d at 1020 (af-

firming limitation and rejecting contentions that tow-

boat owner “failed to adequately train Captain Johnson

and failed to take adequate steps to educate Captain

Johnson concerning currents in the river’); The G.K.

Wentworth, 67 F.2d 965, 966 (9th Cir. 1933) (finding lim-

itation because the owner “had the right to rely upon the

fact that this competent master would observe the rules

of navigation, which he well knew”).

11

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ELENA KAGAN

M AURFEN H ; DUNN Solicitor General

General Counsel

EDWIN W. SMALL

Assistant General Counsel

THOMAS A. ROBINS

Senior Attorney

Tennessee Valley Authority

OCTOBER 2009