A Solution To The Single-Claimant Stipulation Problem ' Roen Salvage Company v. Sarter

• Published date: 08 September 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Transport, Corporate and Company Law, Marine/ Shipping, Trials & Appeals & Compensation
• Law Firm: Eckland & Blando
• Author: Mr Vince C. Reuter

The stipulation preceding the district court's stay of a limitation proceeding involving a single claimant is both simplistic formulism and the cause of prolonged headaches for maritime attorneys and courts. Too often attorneys treat the stipulation as being essentially outcome determinative, drafting redlines with bloated language designed to avoid every imagined loophole and seeking to reconfirm'or even invent'the legal rights under dispute. As always, the victims of excessive drafting and arguments aren't attorneys, but their clients, who pay for it directly through fees or indirectly through prolonged delay.

This issue underscores Roen Salvage Company v. Sarter, a recent Seventh Circuit decision authored by Judge Easterbrook.² In a refreshing analysis, the court reasoned that the single-claimant "stipulation"'itself considered a misnomer'is simply unnecessary. It concluded that the parties' respective rights arise from and are constrained by federal statute. In other words, through a "concession"'the court's preferred term'the single claimant can concede, for example, that she will not invoke res judicata in an effort to recover more than the limitation fund, but that concession is not the vehicle preventing her from excess recovery. That vehicle is the Limitation of Liability Act of 1851 ("LOLA") itself,³ and according to Judge Easterbrook, it's up to the court, not the parties, to secure the right.

Lewis & Clark Marine

The modern single-claimant stipulation stems from the Supreme Court's balance of two seemingly competing federal statutes in Lewis & Clark Marine.⁴ The first statute is the Judicial Act of 1789, which under its modern codification states, in relevant part, that:

The district courts shall have original jurisdiction, exclusive of the courts of the State, of:

(1) Any civil case of admiralty or maritime, saving to suitors in all cases all other remedies to which they are otherwise entitled.⁵

The savings-to-suitors clause means that a plaintiff may preserve his right to a jury' a right not allowed in admiralty'by commencing a lawsuit in state court, or in federal court if there's an independent basis for jurisdiction like diversity.⁶ Most courts have also held that admiralty jurisdiction does not present an independent basis for removal from state court.⁷

The competing statute is LOLA, which provides a shipowner the following right under federal law:

[T]he liability of the owner of a vessel for any claim, debt, or liability ... shall not exceed the value of the vessel and pending freight."⁸

The statute is competing because, as LOLA also dictates, a shipowner may exercise its right in federal court through the following federal jurisdiction clause:

The owner of a vessel may bring a civil action in a district court of the United States for limitation of liability under this chapter.⁹

Therein lies the rub. In a maritime accident involving a single injured party with claims against a shipowner, both that claimant and the shipowner have a statutory right to commence an action in the forum of their choosing.¹⁰

The Supreme Court in Lewis & Clark Marine resolved this conflict by holding that an injured party can adjudicate his case in state court "so long as the vessel owner's right to seek limitation of liability is protected."¹¹ The holding is straightforward, with the takeaway being that both statutes should be enforced if possible. At its narrowest, this means that a single claimant is entitled to bring her claim in state court if the district court stays the limitation proceeding'and the dormant statutory right to limitation'which the...