In Re City of New York

07-1251-cv
In re City of New York

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

August Term, 2007
Argued: January 23, 2008 Decided: March 27, 2008

Docket No. 07-1251-cv
____________________

In re: CITY OF NEW YORK, as owner and operator of the
M/V ANDREW J. BARBERI,

Petitioner-Appellant,

—v.—

SHIRAM AGNI, et al.,

Respondent-Third-Party-Plaintiffs-Appellees,

—v.—

IRIS WEINSHALL, et al.,

Third-Party-Defendants-Appellants.

____________________

Before:

SACK, KATZMANN , and RAGGI,
Circuit Judges.

Appeal from February 26, 2007 judgment following a bench trial on a stipulated record
denying the City of New York’s petition for limitation of liability stemming from a crash involving
the Staten Island Ferry (E.D.N.Y., Korman, J.). Because we conclude that the standard of reasonable
care requires at least two crewmembers on watch in or near the pilothouse and that the City failed
to enforce a policy that would meet this standard of care, the judgment of the district court is
affirmed and the case is remanded.
____________________
 WAYNE D. MEEHAN (Gina Venezia, of counsel) Freehill
Hogan & Mahar LLP, New York, New York, for
Petitioner-Appellant.

JAMES E. RYAN , Dougherty Ryan Giuffra Zambito &
Hession, New York, NY (John J. Hession, Jeffrey S.
Moller, Anthony Bisignano, of counsel), for Respondents-
Third-Party-Plaintiffs-Appellees.
____________________

KATZMANN , Circuit Judge:

This case arises out of the Staten Island Ferry’s crash into a maintenance pier on October

15, 2003. It calls on us to determine whether the City of New York’s practice of allowing the

Staten Island Ferry to be operated with only a single pilot in the pilothouse necessarily meets the

standard of reasonable care as a matter of law. The City, as owner and operator of the ferry,

appeals from a decision of the district court for the Eastern District of New York (Korman, J.),

rendered after a bench trial, finding the City negligent and denying limitation of liability. For the

reasons stated below we affirm, holding that the City did not act with reasonable care when it

allowed a single pilot to operate the Staten Island Ferry without at least one other person in or

near the pilothouse, aware of the navigational circumstances, and ready to render or summon

assistance in the event of an emergency.

I

The M/V Andrew J. Barberi was one of several large passenger ferries owned and

operated by the New York City Department of Transportation between Whitehall Terminal at the

southern tip of Manhattan and St. George Terminal, Staten Island. The ferry was 310 feet long

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and displaced 2712 long tons.1 It could carry up to 6000 passengers, but on the day of the

accident it was carrying an estimated 1500 people. The ferry’s typical speed at full ahead was 16

knots (about 18 miles per hour) and sea trials revealed that it could come to a full stop from that

speed in about 420 feet and within 43 seconds. The Barberi was a double-ended ferry with a

pilothouse containing steering and throttle controls at each end. The ferry was equally suited to

traveling in either direction, thus avoiding the need to turn around after leaving or before entering

its slip.

On October 15, 2003, at about 3:00 p.m., the Barberi left Manhattan on its regularly

scheduled 22-minute trip across New York Harbor’s Upper Bay to Staten Island. Although it

was windy (about 25 to 30 knots), the weather was clear and presented no problems for the ferry.

The ferry was under the command of Captain Michael Gansas, but for this trip Assistant Captain

Richard Smith was at the helm. In addition to being licensed captains, both the captain and

assistant captain were certified as first-class pilots, as required by Coast Guard regulations. Both

had more than a decade of experience with the Staten Island Ferry and had consistently received

good performance reviews. Gansas, who had no reservations about Smith’s abilities to pilot the

ferry, was not in the operative pilothouse for this trip; he spent the trip in the aft pilothouse

preparing for an upcoming Coast Guard inspection. Smith was accompanied in the operative

pilothouse by a deckhand, Joseph Selch, who was assigned as a lookout for the trip. Selch later

told investigators that he noticed no problems with Smith and they had a normal conversation

during the trip. Senior Mate Robert Rush was also in the pilothouse for the second half of the

1
One long ton equals 2240 pounds, so the ferry displaced 6,095,040 pounds or 3047 short
(or U.S.) tons.

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trip, but he had no assigned duties with respect to navigating the ship on this trip and was seated

on the settee, a low-slung bench at the rear of the pilothouse, where he had no view of the

navigational situation out the pilothouse windows.

As the ferry reached the Kill Van Kull Buoy off the north end of Staten Island, about

1000 yards (or half a mile) from the St. George Terminal, Smith released Selch from his lookout

duties so that he could go assist in preparations for docking. As Selch left the pilothouse, Smith

stood up at the controls, as was his custom. The ferry was traveling at its normal speed,

approximately 14-16 knots, as it passed the buoy. At this speed, it would take about two minutes

to reach the slip at St. George Terminal. On typical trips, the ferries would begin to slow down

at the buoy, but on this trip the crew and passengers told investigators that they did not hear the

engines slow down.

Shortly after Selch left the pilothouse, Smith “lost conscious or situational awareness.”

The ferry went off course and crashed at full speed into a concrete maintenance pier about 600

yards south of the slip at the St. George Terminal. Smith remembers nothing from the time Selch

left the pilothouse until the crash. Doctors later determined that his condition was caused by

fatigue. Rush, who was still seated on the settee, recalled Smith standing up at the controls, but

did not notice anything amiss until he felt the ship crash and then heard Smith exclaim, “Jesus.”

The impact tore a 210-foot-long gash in the starboard side of the hull on the main-deck level and

destroyed about 1500 square feet of the pier. Ten passengers were killed. Nineteen passengers

were seriously injured, one of whom died two months later. Fifty-seven passengers suffered

minor injuries.

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 Smith was 55 years old and was on several prescription medications for high blood

pressure, high cholesterol, insomnia, and chronic back pain. On the day of the accident Smith

reported to work exhausted. The day before he had been working around the house and

babysitting for his grandchildren. His chronic back problems were causing him difficulty

sleeping and during that night he took some prescription drugs for his back pain. At work the

next morning, he failed to report his fatigue or any of his medical conditions or medications to

Gansas (or anyone else), and, in fact, had previously falsely stated on a required Coast Guard

form that he had no medical conditions and did not take any medication.

On August 4, 2004, Smith pleaded guilty to eleven counts of seaman’s manslaughter in

violation of 18 U.S.C. § 1115, for negligently causing the deaths of passengers, and to one count

of making false statements to the Coast Guard in violation of 18 U.S.C. § 1001(a)(2). In his

allocution, Smith admitted that he was criminally negligent in operating the ferry without

reporting his poor physical condition and the medications that he had taken that morning. Smith

was sentenced primarily to 18 months’ imprisonment.

Patrick Ryan, the City’s director of ferry operations at the time, was also indicted on

eleven counts of seaman’s manslaughter and several counts of making false statements and

obstruction of justice. On April 25, 2005, he pleaded guilty to seaman’s manslaughter for

allowing the ferries to be operated in a criminally negligent manner by not enforcing the City’s

internal “two-pilot rule” that “generally required the captain and assistant captain to be together

in the operating pilot house while the [ferry was] underway,” and to making false statements to

the Coast Guard about his practices when he was a ferry captain. Ryan was sentenced to one year

and one day in prison.

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 On December 1, 2003, the City initiated an action seeking to limit its liability as owner

and operator of the ferry pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 30505, 30511.

All other actions were enjoined and over 175 claimants (including the appellees) asserted

personal-injury and wrongful-death claims against the City in the limitation action. After the

district court denied the claimants’ motion for summary judgment, the parties agreed that the

limitation issue would be decided by Judge Korman based on a stipulated record and without a

live trial.

In a detailed opinion dated February 26, 2007, the district court denied the City’s petition

to limit its liability. In re City of New York, 475 F. Supp. 2d 235 (E.D.N.Y. 2007). The district

court found that the cause of the accident was that the assistant captain, Smith, who was piloting

the ferry, lost conscious or situational awareness in the brief period after he had released the

lookout, but before docking the vessel, and that the accident could have been avoided if the

captain, Gansas, had been present in the pilothouse with Smith. The district court also found that

Ryan, the City’s director of ferry operations, was negligent for failing to enforce a two-pilot rule

or otherwise to guard against the foreseeable risk of pilot incapacitation, and that his negligence

was a substantial cause of the accident. The City was therefore not entitled to limit its liability

because the negligent acts that caused the casualty were within the City’s privity or knowledge.

This appeal followed.

II

It has long been the rule in this circuit that we review a district court’s factual findings for

clear error, but we review its ultimate conclusion of negligence de novo. Payne v. United States,

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359 F.3d 132, 134-35 (2d Cir. 2004); Ching Sheng Fishery Co. v. United States, 124 F.3d 152,

157-58 (2d Cir. 1997).

A panel of this Court recently questioned our Circuit’s continued adherence to the de

novo standard of review for questions of negligence in the face of nearly unanimous

disagreement by the other circuits and commentators, all of whom would apply a more

deferential standard. Payne, 359 F.3d at 135-36. But the panel in Payne declined to refer the

issue to the Court en banc because the outcome of that case did not turn on the standard of

review. Id. at 135. Likewise in this case, because we would affirm the district court’s finding of

negligence on either a de novo or clear error standard of review,2 we do not deem this case to be a

suitable one to consider calling for en banc reconsideration.

We note only that the practice in our Circuit is not so different from that of the other

circuits. Because the determination of negligence is so bound up with the specific and complex

facts of each individual case, we have stated on more than one occasion that “the trial court’s

‘finding should ordinarily stand unless the court manifests an incorrect conception of the

applicable law.’” Esso Standard Oil S.A. v. S.S. Gasbras Sul, 387 F.2d 573, 580 (2d Cir. 1967)

(quoting Radovich v. Cunard Steamship Co., 364 F.2d 149, 152 (2d Cir. 1966)); see also Cleary

v. U.S. Lines Co., 411 F.2d 1009, 1010 (2d Cir. 1969) (per curiam). And even circuits that apply

the clearly erroneous standard to negligence findings will apply a de novo standard when

considering “whether the district court properly defined the standard of care used to evaluate the

conduct of the parties.” In re Paducah Towing Co., 692 F.2d 412, 422 (6th Cir. 1982); see, e.g.,

Clement v. United States, 980 F.2d 48, 53 (1st Cir. 1992) (noting in negligence case that de novo
2
Because we affirm the district court’s finding of negligence under the de novo standard,
it follows a fortiori that we would affirm under the clear error standard.

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review applies if district court applied erroneous legal standard to the facts); Miller v. United

States, 587 F.2d 991, 994 (9th Cir. 1978) (“Our review of what standard of conduct should have

been utilized in a negligence finding is a legal question.”). The ultimate determination of

negligence is a question that contains both factual and legal aspects, see 9 Moore’s Federal

Practice § 52.34(1)(a) (3d ed. 2007); although appellate courts may differ in their exact

formulations, most appear to take an approach that gives more deference to the trial judge when

the question is predominantly factual and less deference when the question is predominantly

legal. Cf. United States v. Selioutsky, 409 F.3d 114, 119 (2d Cir. 2005) (“We review . . . mixed

questions of law and fact either de novo or under the clearly erroneous standard depending on

whether the question is predominantly legal or factual.” (internal citations omitted)).

III

The Limitation of Liability Act limits the owner of a vessel’s liability for, among other

things, “any loss, damage, or injury by collision . . . done, occasioned, or incurred without the

privity or knowledge of the owner,” to “the value of the vessel and pending freight.” 46 U.S.C.

§ 30505(b). The statute therefore alters the normal rules of vicarious liability. Instead of being

vicariously liable for the full extent of any injuries caused by the negligence of the captain or

crew employed to operate the ship, the owner’s liability is limited to the value of the ship unless

the owner himself had “privity or knowledge” of the negligent acts. See, e.g., Carr v. PMS

Fishing Corp., 191 F.3d 1, 4 (1st Cir. 1999); Tug Ocean Prince, Inc. v. United States, 584 F.2d

1151, 1155, 1159 (2d Cir. 1978). Where the owner of a ship is a corporation, the corporation is

not entitled to limit its liability “where the negligence is that of an executive officer, manager or

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superintendent whose scope of authority includes supervision over the phase of the business out

of which the loss or injury occurred.” Coryell v. Phipps, 317 U.S. 406, 410 (1943). Thus the

City is not entitled to limit its liability if Director of Ferry Operations Patrick Ryan’s admitted

failure to enforce a “two-pilot rule,” requiring the captain and assistant captain to be in the

operative pilothouse while the ship is underway, constituted negligence that was causally

connected to the crash.

Under admiralty law, the owner of a ship in navigable waters owes a duty to its

passengers to exercise “reasonable care under the circumstances.” Kermarec v. Compagnie

Generale Transatlantique, 358 U.S. 625, 632 (1959). The City argues that reasonable care does

not require two pilots in the pilothouse at all times and therefore Ryan’s admitted failure to

enforce a policy requiring two pilots was not negligent. Counsel for the claimants conceded at

oral argument that reasonable care might not always require two pilots in the pilothouse, but the

claimants nevertheless argue that the City was negligent here because it took no steps to mitigate

the risk of sudden pilot incapacitation. Thus we must engage in the familiar common-law task of

determining the standard of reasonable care under the circumstances of this case. As we explain

below, we believe that strict enforcement of nothing less than a two-pilot rule, which essentially

requires two licensed captains to be in the pilothouse at all times, would exceed the standard of

reasonable care. But we find that the standard of care embodied in a Coast Guard regulation

applicable to similarly sized ships carrying a similar number of passengers, which essentially

calls for at least one person other than the pilot to be on watch in or near the pilothouse,

accurately reflects the minimum safety precautions that the City must take under the

circumstances of this case. Because Ryan failed to enforce not only a strict two-pilot rule but any

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policy that would meet even this minimum applicable standard of care, we find that the

negligence was within the privity or knowledge of the City.

In determining what the standard of reasonable care requires, we are mindful of the

formula first stated by Judge Learned Hand in United States v. Carroll Towing Co., 159 F.2d

169, 173 (2d Cir. 1947): whether the burden of adequate precautions (B) is less than the gravity

of the injury (L) discounted by the probability that the injury will occur (P), i.e., whether B