United States Steel Corporation v. Fuhrman

• Decision Date: 07 March 1969
• Docket Number: No. 18481.,18481.
• Citation: 407 F.2d 1143
• Parties: UNITED STATES STEEL CORPORATION, Appellant, v. Barbara J. FUHRMAN, Administratrix of the Estate of Arthur J. Fuhrman, Deceased, et al., Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

407 F.2d 1143 (1969)

UNITED STATES STEEL CORPORATION, Appellant, v. Barbara J. FUHRMAN, Administratrix of the Estate of Arthur J. Fuhrman, Deceased, et al., Appellees.

No. 18481.

United States Court of Appeals Sixth Circuit.

March 7, 1969.

Lucian Y. Ray, Cleveland, Ohio, for appellant; Roman T. Keenen, McCreary, Ray & Robinson, Cleveland, Ohio, on brief.

Abraham E. Freedman, Philadelphia, Pa., and Arthur Roth, Miami, Fla., for appellees; Freedman, Borowsky & Lorry, Philadelphia, Pa., J. Harold Traverse, Cleveland, Ohio, on brief for Fuhrman, and others; Pressman & Scribner, New York City, on brief for Harry Bey and Rita Radtke, Administratrix of Estate of Reinhold Radtke; Frederick C. Stern, New York City, of counsel; Ned R. Phillips; Pressman & Scribner, New York City, Elmer L. Radka, Louis G. Jarboe, Rogers City, Mich., Victor G. Hanson, Kenneth C. Davies, Detroit, Mich., on brief for other appellees.

Before WEICK, Chief Judge, and PHILLIPS and PECK, Circuit Judges.

PHILLIPS, Circuit Judge.

In the Straits of Mackinac on May 7, 1965, the Steamship Cedarville, owned by the appellant (United States Steel) and the Norwegian Ship Topdalsfjord collided in a heavy fog. After approximately forty minutes the Cedarville sank, ten of her crewmen were lost and other crew members sustained personal injuries. Subsequently United States Steel filed a petition in the District Court for exoneration from or limitation of liability against the claimants, including the personal representatives of the deceased seamen. Similar petitions were filed by the owners of the Topdalsfjord and the Weissenburg, a German ship which was in close proximity to the collision.

After a period of extended pre-trial activity the parties agreed by stipulation that United States Steel and the Norwegian owner would accept liability for the compensatory damages and would pay full compensatory damages to all claimants, either by settlement or by award of a special commissioner. It was further stipulated that punitive damages, if any were found, would be adjudged against United States Steel alone. The unsettled claims for compensatory damages were submitted to a commissioner and the issue of liability for punitive damages was determined by the District Court. Compensatory damages have been settled or are in the process of being awarded completely independent of the appeal now presented to this Court.

After a rather lengthy trial the District Court held that United States Steel was liable to the claimants for punitive damages. The opinion of the District Court is published at Petition of Den Norske Amerikalinje A/S, 276 F.Supp. 163 (N.D. Ohio). For the reasons herein set forth, we cannot agree with this decision and accordingly reverse the judgment of the District Court.

The only question before the District Court and before this Court is whether or not punitive damages should be assessed against United States Steel as owner of the Cedarville. Reference is made to the published opinion of the District Judge for a detailed statement of facts, which will not be repeated in this opinion except to the extent necessary to dispose of the issues presented on appeal.

United States Steel operated a radio network from its offices in Pittsburgh, Pennsylvania, to all the vessels in its entire fleet on the Great Lakes, known as the Bradley Fleet. Almost immediately after the collision the master of the Cedarville, Captain Joppich, contacted the Pittsburgh offices by radio advising that a collision had taken place. In turn Captain Parrilla, the manager of the Bradley Fleet, was informed that the Cedarville had been involved in a collision and was seriously holed and taking water. The manager, Captain Parrilla, did not contact the Cedarville by radio.

Immediately after the collision Captain Joppich of the Cedarville sounded a general alarm and sent a May Day. Within a very few minutes he made a decision to beach the vessel rather than abandon ship. This proved to be a disastrous error in judgment, since the ship capsized during its attempted run for the beach and ten crewmen were drowned and others injured.

As one of two major bases for awarding punitive damages the District Court found the failure of the officials of the Bradley Fleet to intervene and countermand the order of Captain Joppich to beach the Cedarville was in callous disregard of the duty of United States Steel to the crewmen. The second major basis for punitive damages was the finding that it was common practice for the officials of the Bradley Fleet to order its ships to proceed at full speed ahead in the fog and to deviate from recommended courses published by the United States Coast Guard for ship traffic in the Straits of Mackinac.

United States Steel argues that the clearly erroneous standard as set out in Rule 52(a) of the Fed.R.Civ.P. is inapplicable where the entire record in the trial court consisted of depositions, the reading of various portions of Coast Guard investigation records and other written evidence and there was no testimony by live witnesses. The reasoning urged in support of this view is that since the trial judge did not see the witnesses testify and observe their demeanor, he is in no better position to judge their credibility than the reviewing court. It is argued that this Court therefore should not be bound by the clearly erroneous standard in reviewing the findings of fact of the trial judge.

There is authority for this contention. See, e.g., Kuhn v. Princess Lida of Thurn and Taxis, 119 F.2d 704 (3d Cir.) and Frazier III v. Alabama Motor Club, Inc., 349 F.2d 456 (5th Cir.). Our research reveals a split of authority among Circuits on this point as well as a conflict in some of the earlier decisions of this Court. This Court was faced with an analogous situation in the case of Commissioner of Internal Revenue v. Spermacet Whaling and Shipping Co., 281 F.2d 646 (6th Cir.), where the conflict among earlier decisions is discussed. The late Judge Shackelford Miller, with the concurrence of Judge O'Sullivan, said at page 651:

"We recognize that there are a number of decisions in several of the circuits, including our own, which hold that where the subsidiary facts are undisputed and no question of credibility is involved, the Court of Appeals is as well qualified as the trial judge to draw inferences and conclusions therefrom, and such inferences and conclusions of the trial judge can be reviewed by the Court of Appeals free of the limitation of the `clearly erroneous\' rule. Seagrave Corp. v. Mount, 6 Cir., 212 F.2d 389, 394; E. H. Sheldon & Co. v. Commissioner of Internal Revenue, 6 Cir., 214 F.2d 655, 658. However, in Rich v. Pappas, 6 Cir., 229 F.2d 308, 313, we concluded that in view of the ruling of the Supreme Court in United States v. United States Gypsum Co., supra, 333 U.S. 364, 394, 68 S.Ct. 525, 92 L.Ed. 746, the conclusions of the trial judge, even though drawn from undisputed facts, were findings of fact which were not to be set aside unless clearly erroneous. We followed this new ruling, with one judge dissenting, in Dixie Sand & Gravel Corp. v. Holland, 6 Cir., 255 F.2d 304, 308, 314, and again in Commissioner of Internal Revenue v. Consolidated Premium Iron Ores, Ltd., supra, 6 Cir., 265 F.2d 320, 326. However, some members of the Court have been of the opinion that the rule as stated in the earlier Seagrave Corp. and E. H. Sheldon & Co. cases was the correct and better rule and have followed it in recent cases. Yunker v. Commissioner of Internal Revenue, 6 Cir., 256 F.2d 130, 133; Gudgel v. Commissioner of Internal Revenue, 6 Cir., 273 F.2d 206, 209-210."

In the present case the District Judge conducted a trial extending over a period of approximately four weeks and heard voluminous testimony in the form of depositions, Coast Guard records, and other written material. Upon the basis of this evidence he made findings of fact. We adhere to the conclusion stated by Judge Miller, speaking for the majority in Spermacet, supra, and hold that the findings of fact of the District Judge are not to be set aside by this Court unless they are clearly erroneous. We conclude that Rule 52(a) applies to the findings of fact of the District Judge in the present case notwithstanding that he heard no live testimony at the trial. Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 4 L.Ed.2d 1218; United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L. Ed. 746.

In reviewing the record in the present case we accordingly apply the clearly erroneous standard. In United States v. United States Gypsum Co., supra, the Supreme Court said:

"A finding is `clearly erroneous\' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." 333 U.S. at 395, 68 S.Ct. at 542.

After a careful review of the record, we hold that the findings of the District Judge to which we have referred above and upon the basis of which the District Court awarded punitive damages against United States Steel are clearly erroneous.

The record fails to disclose evidence to the effect that it was standard procedure for United States Steel to order its vessels to ignore the recommended courses of navigation in this area. Nor do we find support in the record that United States Steel, as a matter of general...