954 F.2d 1279 (7th Cir. 1992), 90-2832, Matter of Oil Spill by Amoco Cadiz Off Coast of France on March 16, 1978

Docket Nº:90-2832 to 90-2841, 90-2857 and 90-2946 to 90-2954.
Citation:954 F.2d 1279
Party Name:In the Matter of OIL SPILL BY THE AMOCO CADIZ OFF THE COAST OF FRANCE ON MARCH 16, 1978.
Case Date:January 24, 1992
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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954 F.2d 1279 (7th Cir. 1992)

In the Matter of OIL SPILL BY THE AMOCO CADIZ OFF THE COAST

OF FRANCE ON MARCH 16, 1978.

Nos. 90-2832 to 90-2841, 90-2857 and 90-2946 to 90-2954.

United States Court of Appeals, Seventh Circuit

January 24, 1992

Argued June 12, 1991.

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Frank Cicero, Jr., Richard C. Godfrey, Roger L. Taylor, Kirkland & Ellis, Chicago, Ill., for Amoco parties.

T. Barry Kingham, Curtis, Mallet-Prevost, Colt & Mosle, New York City, for Cotes-du-Nord parties.

Hill, Betts & Nash, Christopher B. Kende, Holtzmann, Wise & Shepard, New York City, for Republic of France.

Warren J. Marwedel, Keck, Mahin & Cate, Chicago, Ill., for Republic of France and Cotes-du-Nord parties.

Jeffrey D. Colman, Jenner & Block, Chicago, Ill., Joseph C. Smith, Burlingham, Underwood & Lord, New York City, for Petroleum Ins., Ltd. (Shell).

Michael J. Murphy, Lord, Day & Lord, Barrett Smith, New York City, Gerald G. Saltarelli, Butler, Rubin, Newcomer, Saltarelli & Boyd, Chicago, Ill., for American Bureau of Shipping.

Joseph Keig, Jr., James E. Betke, McDermott, Will & Emery, Chicago, Ill., for Astilleros Espanoles, S.A.

Elizabeth W. Walker, Christopher Heckman, Sterns, Smith & Walker, San Francisco, Cal., Paul McCambridge, Keck, Mahin & Cate, Chicago, Ill., for S.A. Les Grand Viviers de Porsguen: Yves-Marie Gac (d/b/a Sport Mer).

Charles Krause, Speiser, Krause & Madole, San Antonio, Tex., Susan P. Malone, John J. Kennelly, Chicago, Ill., for Hotel claimants.

Michael A. Snyder, Michael A. Snyder & Assoc., Chicago, Ill., for Bugsier Reederei und Bergungs, A.G.

Frank J. McGarr, Special Master, Phelan, Pope & John, Ltd., Chicago, Ill.

Before BAUER, Chief Judge, EASTERBROOK, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.

PER CURIAM.

On the morning of March 16, 1978, the supertanker AMOCO CADIZ broke apart in a severe storm, spewing most of its load of 220,000 tons of Iranian crude into the seas off Brittany. The wreck resulted in one of the largest oil spills in history, damaging approximately 180 miles of coastline in one of the most important tourist and fishing regions in France. The clean up took more than six months and involved equipment and resources from all over the country. The disaster has had lasting effects on the environment, the economy, and the people of Brittany, and has resulted in numerous lawsuits. Thirteen years later, the matter is before us. In this consolidated appeal, we are asked to resolve a myriad of issues involving jurisdiction, liability, and damages. Before we begin, a brief history of the litigation and its cast of characters is in order.

I.

A.

The origins of the AMOCO CADIZ are not difficult to trace. The vessel was born of discussions that began in Madrid, Spain in May 1970 between Astilleros Espanoles, S.A., the shipbuilder who constructed the fleet in which Columbus voyaged to the New World, and Standard Oil Company of Indiana ("Standard") (now called Amoco), an Indiana corporation having its principal office and place of business in Chicago, Illinois. The latter was represented by Robert S. Haddow, vice president in charge of marine operations at Amoco International Oil Company ("AIOC") and chairman of Amoco Tankers and Amoco Transport. (For simplicity's sake, we generally will refer to Amoco and its various subsidiaries--Amoco Tankers, Amoco Transport, and AIOC--as "the Amoco parties" or "Amoco.") Astilleros previously had contracted to build two megatankers for Amoco; Haddow wanted two more. The Madrid meeting covered all the essentials: technical specifications, delivery date, and price. Further negotiations took place in New York and Chicago. On May 30, Astilleros confirmed the content of the negotiations

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and submitted a bid to build two ships, the AMOCO CADIZ and the AMOCO EUROPA. Amoco accepted the bid by letter on June 18, and the parties signed off on the final contract and ship specifications in Chicago on July 31, 1970.

The contract required that the ship be built according to the American Bureau of Shipping's ("ABS") Rules for Building and Classing Steel Vessels. The ABS is a not-for-profit maritime classification society headquartered in New York that promulgates rules and sets standards for shipbuilding, design, and seaworthiness. The ABS's technical staff in London reviewed Astilleros's proposed plan for the AMOCO CADIZ to ensure that it complied with the ABS's Rules. The ABS examined the "general arrangement" plans--plans featuring the layout and list of components used in the various parts of the ship--as well as drawings related to the detailed design of the ship. (By "detailed design," we mean items as small as nuts and bolts.) The ABS stamped the plans and drawings with its Maltese cross emblem to signify its approval. The Amoco-Astilleros contract incorporated the general arrangement plans and required Astilleros to submit them to Amoco for acceptance prior to construction. Astilleros did so, but did not pass along to Amoco its detailed design drawings, calculations, or fabrication drawings showing the mechanical details of the steering mechanism's component parts. Amoco reviewed the design of the steering gear system and approved it on October 19, 1971. Amoco later made two modifications to the system: it designed a low fluid level alarm for the replenishment gravity tank and increased the size of the rudder. It chose not to include an optional hand charging pump. Astilleros's representatives came to Chicago for a two-day meeting in June 1972 to firm up technical details.

Pursuant to the contract, Astilleros built the behemoth at its shipyards in Cadiz, Spain. It took four years to complete the job. Throughout the construction process, both Amoco and the ABS had representatives on the scene at the shipyard. The Amoco representatives were concerned with deadlines and whether construction conformed to the contract specifications and general arrangement drawings. They also were present to witness tests of equipment and gear and to catch any problems that might have been missed in the plan approval process. The ABS representatives monitored the progress of the ship to ensure that construction was in conformity with the ABS's Rules. The Amoco representatives deferred to the ABS representatives' technical and engineering expertise in evaluating whether construction was proceeding as it should.

At long last, the vessel was finished. It measured 1095 feet long and 167 feet wide--the size of three football fields--and weighed 230,000 deadweight tons. It was powered by a 30,000 horsepower diesel engine driving a single screw and was equipped with a single rudder driven by a hydraulic steering engine. It had a hydraulic steering gear with movement of the rudder controlled by two pairs of rams contained in four cylinders that were filled with hydraulic fluid. The four rams were made of rolled steel and their heads were cast steel. Ram isolation valves controlled the flow of oil through the passages in the distribution block. These valves were a critical safety component. They could capture the remaining hydraulic fluid in the rams in the event of a rupture in the piping. The valves also could be closed to isolate the various lines from the rest of the system or to block the passage of oil to or from the cylinder.

The AMOCO CADIZ's steering system was supposed to work in the following manner. When the helmsman turned the steering wheel or when the ship operated on autopilot, an electronic signal was generated. In response to the signal, hydraulic fluid was moved by a series of pumps, which in turn moved the rams and, eventually, the rudder. The hydraulic fluid in the cylinders kept the rudder restrained and in the desired position by exerting pressure against the rams. There was no device aboard that could be used to steer the ship if the primary system failed. The ship was not equipped with twin screws, twin rudders,

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or bow thrusters that could be used to steer in an emergency. The anchor was underdesigned and could not be used as a stopping device in a crisis situation.

The ABS certified the ship--and its steering gear--as being in compliance with the ABS's Rules. Even after delivery, the ABS periodically conducted inspections of the AMOCO CADIZ to determine if it still was in seaworthy condition. Three times--June 1975, April 1976, and May 1977--the ABS inspected the steering gear and pronounced it in working order.

B.

Amoco Tankers ("Tankers"), a Liberian corporation all of whose stock was owned by Standard through a chain of wholly owned subsidiaries, took delivery of the AMOCO CADIZ on May 11, 1974. Two weeks later, Tankers sold the vessel to Amoco Transport ("Transport"), a Liberian corporation with its principal place of business in Bermuda. Transport was a subsidiary of AIOC. In June 1974, Transport entered into a consulting agreement with AIOC. The agreement provided that AIOC was responsible for the operation of the AMOCO CADIZ, including maintenance, repair, and training of its crew. Transport remained the owner of the vessel. Long after delivery, in August 1975, representatives from Astilleros met with Amoco in Chicago to discuss contract guarantee terms. Similar discussions were held in New York in 1976. Just like a home appliance, the AMOCO CADIZ came with a one-year guarantee. Astilleros agreed to repair or replace any defects in the ship or its equipment during its first year of operation, 1974-75. Consequently, during that first year, the ship always had on board an engineer from Astilleros...

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