• U.S. Maritime Law Applies to Product Liability and Punitive Damage Claims, But State Law Determines Measure of Punitive Damages
  • September 19, 2006 | Author: Kimbley A. Kearney
  • Law Firm: Clausen Miller PC - Chicago Office
  • Facts

    In Linda Szollosy v. Hyatt Corp., 396 F. Supp. 2d 159 (D. Conn.), plaintiff brought suit on behalf of her minor son seeking recovery for injuries suffered while riding on a small personal watercraft on vacation at a Cayman Islands resort.  Plaintiff’s complaint alleged five counts: negligence and breach of warranty by defendant Hyatt Corporation; and negligence, breach of warranty and strict products liability against defendants Watersports Administration (“WAI”) and Red Sail Cayman Ltd.  The parties asked the court to conduct a choice-of-law analysis as to what body of law should govern the plaintiff’s negligence, breach of warranty, products liability and punitive damage claims.  Plaintiff argued that Connecticut law should govern, while defendant argued that Cayman Islands law was more appropriate.

    Analysis

    The court concluded that it had admiralty jurisdiction over the case and that the choice-of-law determination required a two-prong analysis.  First, the court had to determine under Lauritzen v. Larsen, 345 U.S. 571, 1953 AMC 1216 (1953), which body of law should govern the action.  Second, the court had to determine, should federal maritime law be chosen, whether Connecticut law should serve as a supplementary rule of decision on any of plaintiff’s claims or whether Connecticut law is pre-empted because it would disrupt the uniformity of federal maritime law.

    The Lauritzen court established seven factors to be considered in deciding whether U.S. law or a foreign country’s law should apply in a case of maritime tort: 1) the location of the wrongful act; 2) the law of the flag of the vessel involved; 3) the domicile of the injured party; 4) the national allegiance of the defendant shipowner; 5) the place of contract; 6) the relative accessibility of a foreign forum, and 7) the law of the forum chosen.  In this case, the court found the Lauritzen test supported the application of general maritime law.  The location of the wrongful act was the Cayman Islands.  The remaining factors, however, weigh heavily in favor of applying federal maritime law.  The law of the flag of the vessel was not compelling because the injury occurred on a wave runner intended for tourist use and not on a vessel doing business in international waters.  The domicile of the injured party was the United States.  The national allegiance of the defendant shipowner did not favor either body of law because it had ties to both the United States and the Cayman Islands.  The place of contract was not applicable and the final two factors weighed in favor of general maritime law because the plaintiffs were United States citizens who would be greatly inconvenienced by having to litigate in the Cayman Islands and the defendants had related corporations with ties to the United States, lessening the difficulty of litigating in the United States.  After considering these seven factors, the court decided to apply federal maritime law to the action.

    Next, the court analyzed each of the plaintiff’s claims to determine whether any state rules of decision or remedies were available to supplement the federal maritime law to be applied to the case.  With regard to plaintiff’s negligence counts, the court held that general maritime law incorporates common law negligence principles, and since the parties made no showing that Connecticut law provided any necessary supplementary rule or remedy pertaining to common law negligence, plaintiff’s negligence counts should be governed by general maritime law.  However, since breach of warranty actions are grounded in contractual disputes and do not lie within admiralty jurisdiction, Connecticut law applied.  The court ultimately found that the contract between the parties was formed in Connecticut because the plaintiffs made their travel reservations with a Connecticut travel agent and the reservations with Hyatt were made through a Connecticut telefax.  The court also held that general maritime law applied to the products liability claim since the Supreme Court recognized “products liability, including strict liability as part of the general maritime law.”  See, East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 1986 AMC 2027 (1986).

    Plaintiff asked for punitive damages on her products liability claims against the defendants.  Plaintiff pled three counts under the Connecticut Product Liability Act, two of which were founded upon common law negligence and breach of warranty and one which alleged strict products liability against the vessel owner and WAI.  In Connecticut, punitive damages may be awarded when a claimant proves the harm suffered was due to the product seller’s “reckless disregard for the safety of product users, consumers or others who were injured by the product.”  Under admiralty law, punitive damages are allowed “where defendant’s intentional or wanton and reckless conduct amounted to a conscious disregard of the rights of others.”  CEH, Inc. v. F/V Seafarer, 70 F.3d 694, 699, 1996 AMC 467 (1st Cir. 1995).  The Szollosy court determined that admiralty law would govern defendants’ liability for punitive damages but state law would govern the measure of damages recoverable.

    Learning Point: 

    Even in cases falling under a federal court’s admiralty jurisdiction and governed by the general maritime law, state law may supplement the elements of damages available to plaintiffs, including the measure of punitive damages.