Fifth Circuit: Offshore Supply Vessel Faces Liability for “Towing Vessel” Classification

In Shell Offshore, Inc. v. Tesla Offshore, L.L.C.No. 16-30528, 2018 WL 4844687 (5th Cir. Oct. 5, 2018), Fifth Circuit ruled on liability based on the classification of the vessel.

Shell Offshore, Inc. v. Tesla Offshore, L.L.C. Background

A vessel in the Gulf of Mexico was pulling an underwater sonar device to survey the ocean floor when the device accidentally struck the mooring line of an offshore drilling rig, causing substantial damage. The rig owner sued both the vessel owner and the vessel charterer in federal court. A jury returned a verdict in favor of the rig owner, finding the vessel charterer 75% at fault and the vessel owner 25% at fault. The rig owner then settled with the vessel charterer.

A separate round of litigation ensued with the charterer claiming contribution against the vessel owner. The District Court sided with the charterer, finding the vessel owner owed contribution to the settlement.

ON Appeal Owner Argues Vessel Not classified as a “Towing Vessel”

On appeal, the vessel owner argued that its vessel, the M/V INTERNATIONAL THUNDER, was not a “towing vessel” and was therefore not subject to the Coast Guard’s towing regulations. The THUNDER was an offshore supply vessel and its captain did not possess a towing license, as is required for all towing vessels.

At trial, the Court instructed the jury that the THUNDER was in fact a towing vessel and its captain lacked a towing certification. The vessel owner argued this instruction was erroneous and led the jury to deny its limitation of liability defense.

In reviewing the appeal, the Fifth Circuit sought guidance from the U.S. Solicitor General on whether the THUNDER’s captain was required to possess a towing license. The government filed an amicus brief supporting the argument that the THUNDER was a towing vessel and its captain should have had the requisite certification.

The Court then looked to the statutory definition of “towing vessel” as “a commercial vessel engaged in or intending to engage in the service of pulling, pushing, or hauling along side, or any combination of pulling, pushing, or hauling along side.” The vessel owner conceded that the THUNDER was chartered to pull a sonar device, but argued that a literal reading of the statute would lead to absurd results, such as a fishing vessel being classified as a “towing vessel” because it was pulling fish on a line.

The Court then looked to the intended function of the THUNDER in an approach analogous to long line of cases defining a “vessel” as something practically capable of being used as a means of transportation on water. The Court pointed out that even the vessel owner acknowledged the THUNDER’s intended purpose was to pull the sonar device. The THUNDER was therefore “in the service of pulling” and was properly classified as a towing vessel.

The Fifth Circuit held that the District Court did not err in instructing the jury that the THUNDER was a towing vessel.