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The Shipping News

By Alexandra Brown | Apr. 2, 2008

Law Office Management

Apr. 2, 2008

The Shipping News

Litigation in the wake of a container ship's allision with the San Francisco-Oakland Bay Bridge is as messy as the oil spill it produced.

When the fogbound container vessel Cosco Busan allided-yes, landlubbers, that's the correct term-with a tower of the San Francisco Oakland Bay Bridge last November, it did more than dump 58,000 gallons of bunker oil on the water. The allision set off a flurry of investigations and lawsuits that opened a window on the ancient-and also the very modern-business practices of international shippers.
      The U.S. Coast Guard released a report on the spill and its environmental consequences in January. But reliable information about what actually happened at the controls of the Cosco Busan is still hard to come by. San Francisco bar pilot John Cota, who boarded the ship to assist the captain through the bay, won't appear before the state Board of Pilot Commissioners until late April, and the National Transportation Safety Board (NTSB) isn't expected to release its interim report before midyear.
      The captain and crew of the Cosco Busan were Chinese, but under international law a ship's officers and helmsmen are required to understand English. Yet a Coast Guard log shows that pollution investigators brought interpreters to "reinterview" the crew, and "used drawings, visual aids, and hand signals to help communicate."
      According to Cota's attorney-John Meadows of San Francisco's Jedeikin, Spaulding, Meadows & Schneider-Cota told the NTSB investigators that images on the vessel's radar screen were "distorted enough that he couldn't use it." Meadows confirms that Cota told them he had to rely on an electronic chart display "of a different type than he was used to," and that the captain pointed repeatedly to a spot on the display as the center of a bridge span when it was, in fact, the Delta Tower. According to Meadows, when a lookout saw the tower appear through the fog and rang a warning bell, Cota had the helmsman turn hard to the right to avoid hitting the tower head-on.
      Bob Couttie's Maritime Accident Casebook, an Internet blog that tracks shipping mishaps, noted shortly after the incident that "jockeying for innocence" had already begun. "Under a microscope," Couttie predicted, "will be whether the pilot gave the correct commands, whether the bridge officers correctly received those commands, whether the orders passed on to the helmsman were those of the pilot, and whether the helmsman correctly understood those commands and responded appropriately to them."
      As the cleanup got under way, the U.S. Department of Justice filed suit against the ship's owners, Regal Stone Ltd. and Fleet Management Ltd. of Hong Kong; and plaintiffs attorneys filed at least five federal and state class actions on behalf of commercial fishermen and crabbers harmed by the spill. William M. Audet, a principal in the San Francisco office of Audet & Partners, sued under maritime law as well as state law that makes owners and operators of vessels that discharge oil strictly liable for cleanup costs and actual damages (Chelsea v. Regal Stone, Ltd., No. C-07-5800-SC N.D. Cal. (2007)).
      San Francisco City Attorney Dennis J. Herrera filed suit under the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act (Cal. Gov't Code §§ 8670.172). (City and County of San Francisco v. Regal Stone, Ltd., No. C-07-469876, San Francisco Super. Ct. (2007)). Deputy City Attorney Thomas S. Lakritz says that as of mid-February none of the named parties had responded by filing the required documents with the secretary of state's office. "We are proceeding under a strict-liability theory," Lakritz says. "There was an oil spill in the bay, and that cannot be denied."
      Stuart G. Gross, a principal with Cotchett, Pitre & McCarthy in Burlingame, also filed suit under Lempert-Keene-Seastrand and state tort law (Tarantino v. Hanjin Shipping Co., Ltd., No. CGC-07-469379, San Francisco Super. Ct. (2008)). He is still seeking appearances from two of the named parties. "All the information we have gathered so far suggests a nesting-doll scenario," says Gross. "Shipping companies intentionally obscure their ownership of and responsibility for the vessels they own and operate so as to avoid liability for accidents in which those vessels are involved."
      Though the Hong Kongflagged Cosco Busan was chartered by Hanjin Shipping Co., Ltd. of South Korea, the vessel's insurance certificate lists the owner as Regal Stone, with "joint members" that include Fleet Management Ltd. (submanager), Synergy Management Services (agent to owners), Synergy Marine Ltd. (operator), Fleet Ship Management Inc. (manager), Fleet Management Europe Ltd. (technical manager), and Gold Fleet Shipping Co. Ltd. (crew manager). Fleet Management Ltd., a maritime-services company based in Hong Kong, lists crewing offices in China, India, and the Philippines.
      "Regal Stone appears to be a one-asset corporation, owning only the Cosco Busan," Gross says. "But it is named as a beneficiary of oil pollution insurance policies. Regal Stone appears to be owned by Fleet Management, which is wholly owned by the Noble Group, a diversified commodities-trading company. Regal Stone is located on the 16th floor of the MassMutual Tower in Hong Kong; Fleet Management is located on the 17th floor of the building; and the Noble Group is located on the 18th floor."
      John D. Giffin, senior maritime lawyer in the San Francisco office of Keesal Young & Logan, says that of the named parties, he represents only Regal Stone and Fleet Management. Giffin states that "proper service, in all respects, has not yet been made" in Tarantino and other suits. He adds that the named defendants would have to be re-served if plaintiffs attorneys file amended complaints, as they have in both CCSF v. Regal Stone and Tarantino.
      "Fleet was the technical manager of the vessel, and Synergy was the commercial manager," Giffin contends. "Hanjin Shipping was only a 'time charterer'-not the 'demise charterer'-and does not belong in the lawsuit."
      As for the officers and crew of the Cosco Busan, plaintiffs attorneys say they don't know where they are or whether they have been deposed. From testimony in district court in late February, it appears that six crewmembers have been detained in connection with the federal government's investigation. Gross says no crewmember has been deposed by any party pursuing civil litigation.
      Maritime insurers are watching the litigation with keen interest. The American P&I Club, a steamship owners mutual protection and indemnity association, recently produced a training DVD, Stranger on the Bridge, to help reduce the number of pilotage claims through improved bridge resource management. But cargo shippers are also under intense pressure to reduce turnaround time, and to cut costs by manning vessels with low-wage crews.
      "The owners and insurers are always looking for other people to blame," says plaintiffs attorney Audet. "Accidents like this don't happen every day, but they are bound to happen. The real question is, why didn't this happen earlier?"

Alexandra Brown

Daily Journal Staff Writer

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