A potentially dangerous case reasonably settled

Dee O' Leary explains how a prompt and efficient investigation by Tom Nork, a partner at Holman, Fenwick and Willan, saved a foreign shipowner from a potential million-dollar claim. Although it was a Covid claim, don't stop reading - the moral of the story is applicable to most cases.

We all know how litigious the United States can be and we have all heard about the enormous verdicts being rendered, especially by Harris County, Texas juries.

On 16 August 2021, a 64-year-old chief engineer (‘CE’) of a tanker vessel died from Covid-19 in a Mexican hospital. Two months later, his surviving wife ("Plaintiff") filed suit against the vessel owner/employer in State Court in Houston, Texas, and requested a jury trial. Several months after that, prior to the vessel owner/employer filing its Answer to the Complaint and without formal, costly discovery, the case settled for a very reasonable figure at mediation. This result was achieved because of Tom’s immediate, thorough investigation of the facts, as well as some favorable legal circumstances.

Factual background

The tanker flew the Bahamian flag, had a Swedish owner and a German operator, and was under a time charter. The CE was Polish, as was the Plaintiff. The CE had signed a collective bargaining agreement in Poland, which did not include an arbitration clause or a choice of law/forum clause. The Plaintiff alleged that the CE was exposed to Covid-19 while the vessel was at a layberth in Galveston, Texas, for repairs. Indeed, the CE worked beside a shore-based contractor for a full day, who as it turned out, had Covid-19.

Several days later, while the vessel was awaiting a berth at Corpus Christi, the CE reported not feeling well and a doctor was contacted, who advised him to “self-quarantine”. After the vessel departed Corpus Christi, the CE’s symptoms worsened, and the decision was made to disembark the CE as soon as possible. The CE was disembarked via launch to Cozumel, Mexico, and he was admitted to the American Hospital there, where he died 25 days later.

The law

The facts were aggressively gathered very early in the case, with excellent cooperation from the vessel operator, and as a result, various legal defenses became obvious.

Personal jurisdiction

The Plaintiff faced a risk of dismissal for lack of “general” personal jurisdiction of the Texas court over the Swedish owner and German operator, because neither “purposefully availed” themselves of conducting business in Texas. The vessel had been ordered to Texas by her charterers. As well, the court’s “specific” personal jurisdiction was questionable. Arguably, neither the owner nor operator committed a tort against the CE in Texas, which, had such occurred, would have triggered the Texas “long-arm” jurisdictional reach to Sweden and Germany. The Plaintiff alleged that the CE’s contact with the contractor was negligent. However, and very fortunately for the vessel owner/operator, in June 2021, Texas had passed legislation which protected employers from claims by employees arising from exposure to Covid-19. The Plaintiff's allegation that the owner/operator was vicariously liable for the Corpus Christi doctor not providing better care was similarly barred by the legislation.

Forum non conveniens (FNC)

With a Polish plaintiff, Swedish owner, German operator and Mexican hospital, it was difficult for the Plaintiff to credibly argue that Houston was the most convenient forum. The basic FNC analysis looks at: (1) is there an adequate, alternative forum, and (2) what do private factors (where are witnesses/evidence) and public factors (burden on a local jury to decide a foreign dispute) determine? The factors in this case weighed in favour of an alternative forum and the result was that Poland would likely be found to be the most convenient forum.

Choice of law

If the Texas court had decided that it was the most convenient forum, it would still have had to decide which law to apply. Texas follows the “most significant relationship” choice-of-law test. The seven-factor balancing test would very likely have resulted in the application of Polish law. Under Polish law, the Plaintiff could have recovered pecuniary loss and de minimis non-pecuniary damages. The CE was near retirement age and the pecuniary loss matched the collective bargaining agreement death benefit quantum. In short, the Plaintiff’s potential trial award under Polish law would have been very modest.

Mediation

The parties agreed to an early, pre-discovery mediation. At mediation, the facts and law were clearly stated to the Plaintiff’s Houston and Polish counsel, and the case was settled for a very reasonable figure.

Lessons learned

This was a potentially very dangerous case. It involved a sympathetic plaintiff, a prolonged death far away from loved ones, a highly skilled Houston plaintiff’s lawyer, a plaintiff-friendly judge, in a liberal jurisdiction. However, a thorough and immediate investigation helped to develop critical facts and a credible timeline. This, coupled with conducting early legal research and a bit of luck on the side of the law, gave the mediator the tools he needed to make the Plaintiff realize that her demands were unrealistically high and helped to settle the case.