19th century maritime law could affect payout for Baltimore bridge disaster, expert says

SAN FRANCISCO -- Attorney John Hillsman has spent a legal lifetime learning about ships, boats, and nearly anything that floats. And he's seen his share of disasters, including representing Bay Area fisherman in the 2007 Cosco Busan oil spill on San Francisco Bay. But he says charting a legal course often begins with untangling an obscure maritime law that stretches back more than a century.

"The Ship Owner's Limitation Liability Act literally dates from gothic middle medieval concepts, but it was enacted in the United States in 1851 -- the same month that Moby Dick was first published," Hillsman said.

That's right, that Moby Dick. And like the famous novel, it's a twisted tale.

Hillsman says the law was originally intended to encourage investment in American Clipper ships, shielding owners from maritime disasters. In most cases, it limits liability to the value of the vessel and its freight. For the payout, owners are allowed to wrap all the claims against them into a single case and ship it to a special Maritime court where it's heard by a judge, but no jury.

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"They'll file that bond in federal court and say, here's the value of the vessel, please issue an injunction stopping all of the litigation against us and then establish what's known as a 'munition,' where the court says 'you claimants have until...' they'll pick a date -- 'July 1, 2024 to file any claims you may have against the owners of the Dali. This vessel in my courtroom. If you don't file, if you don't make that deadline, you can potentially lose your claim forever,'" Hillsman said.

In the famous sinking of the Titanic, all that was left were the lifeboats. And even after negotiations, the reported settlement averaged just $430 for each of the 1,500 estimated victims. And while recent disasters, like the deadly Conception dive-boat fire off Santa Barbara, have sparked calls to rework the law, it still shapes many maritime cases today. But Hillsman says there are other strategies left in incidents like the Baltimore disaster.

"So the plaintiffs in that situation will be looking for other people to sue. They'll probably try to go after the Coast Guard for certifying the vessel as safe. They may well go after the state, seeking defects in the bridge design," he said.

And like the massive Exxon Valdez oil spill, lawyers might try to prove the owners knew about problems with their ship or its crewmembers ahead of time. But with deaths involved, Hillsman believes many companies and their insurers want to avoid the lasting stigma of a court fight, and will chose to negotiate with victims' families instead.

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"This is going to create such a hue and cry that the owners are going to be very conscious of the optics of the situation once they get everybody in federal court by petitioning for a limitation. Then, I think, very quickly there'll be negotiations with the families to get them out of the picture as quickly as possible," Hillsman said.

But the broader damages are expected to be massive. And with estimates being floated in the billions, there is a chance that a century and a half of maritime legal history could once again, repeat itself.

Critics also point to one final irony. While the Limitation of Liability Act was meant to boost American shipping, just a small percentage of modern commercial vessels are U.S. owned, meaning the protections often benefit foreign companies.

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