Liability Waivers and Statutory Interpretation

Image by Art Lashbrook from Pixabay

In 1936, Congress passed a law to prevent companies in the business of transporting people across the ocean from writing liability waivers into their contracts. That law, currently codified at 46 U.S.C. 30527(a), reads as follows:

The owner, master, manager, or agent of a vessel transporting passengers between ports in the United States, or between a port in the United States and a port in a foreign country, may not include in a regulation or contract a provision limiting . . . the liability of the owner, master, or agent for personal injury or death caused by the negligence or fault of the owner or the owner’s employees or agents.

The purpose of this statute is straightforward—to ensure that passengers who are injured or killed as a result of the transporting company’s negligence are able to recover regardless of the fine print in the contract of carriage.

In enacting this statute, Congress made clear that it only applies when the ship stops at a U.S. port. When a ship sails from Miami to Boston, for example, the statute is triggered. When a ship sails from Miami to Nassau, the statute is likewise triggered. When a ship sails from Rome to Barcelona, by contrast, the statute does not apply because the ship never stops at a U.S. port.

What happens, however, when the ship departs from a U.S. port and then returns to that very same port? Is that a voyage “between ports in the United States” for purposes of the statute? Or do passenger contracts relating to such a voyage fall outside of the statute’s scope?

This question was put to the Ninth Circuit earlier this year in Ehart v. Lahaina Divers, Inc. Before you read any further, I would suggest that you read 46 U.S.C. 30527(a) again and ask yourself if you think it applies to voyages that begin and end at the same U.S. port. Once you have your answer, read on to learn what the Ninth Circuit had to say.

Facts

The facts of Ehart are tragic. While vacationing in Hawaii, the plaintiff and his wife booked a day-long scuba and snorkeling experience at the Molokini Crater. Before the boat departed from Lahaina Harbor, they were required to sign an agreement containing the following language:

THIS IS A RELEASE OF YOUR RIGHTS TO SUE LAHAINA DIVE & SURF, LLC, AND/OR LAHA[I]NA DIVERS INC. (LDS/LDI), AND ITS OWNERS, EMPLOYEES, AGENTS AND ASSIGNS FOR PERSONAL INJURIES OR WRONGFUL DEATH THAT MAY [OCCUR] DURING THE FORTHCOMING DIVE ACTIVITY AS A RESULT OF THE INHER[ENT] RISKS ASSOCIATED WITH SCUBA DIVING AND/OR SNORKE[LI]NG OR AS A RESULT OF NEGLIGENCE.

The boat carried sixteen passengers and three crew members. After arriving at the crater, the plaintiff’s wife went snorkeling with two other passengers. Although her companions returned the boat safely, the plaintiff’s wife did not. The crew searched for her to no avail. The Coast Guard continued the search without success. Her body was never found.

The plaintiff filed an admiralty action against the tour company (and related persons and entities) in federal district court in Hawaii. He alleged simple negligence, gross negligence, and wrongful death, among other claims. The defendants invoked the waiver in the passenger contract as an affirmative defense. The plaintiff replied that the waiver was void due to 46 U.S.C. 30527(a). The defendants responded that the statute did not apply here because the boat had departed from and then returned to the same port—Lahaina Harbor—and the statute only applied when a boat travels between two different ports.

The district court held that the waiver was void. The Ninth Circuit reversed. The majority opinion—authored by Judge Carlos Bea and joined by Judge Kenneth Lee—held that the invalidating statute was not applicable and that the waiver was enforceable. A dissenting opinion authored by Judge Daniel Collins argued that the invalidating statute was applicable and that the waiver was void.

The Majority

The majority took the position that 46 U.S.C. 30527(a) is inapplicable when a boat departs from a port and then later returns to that same port. It based this interpretation of the “plain meaning” of the statute:

The plain meaning of the term “transporting passengers between ports” is transporting passengers from one port to another port (Port A to Port B), not transporting passengers away from and back to a single port (Port A to Port A). This meaning stems from the combination of the word “between” and the plural form of “ports.” The use of the plural “ports” is not determinative on its own because in determining the meaning of any Act of Congress, unless the context indicates otherwise, words importing the plural include the singular. But here, the word “between” suggests that the plural “ports” does not include the singular “port.” Further, the use of the word “ports” when referring to ports in the United States and “port” when referring to a port in the United States and a port in a foreign country in the same sentence of the Act imports the meaning that “ports” is not used to denote the singular.

The majority also consulted the eleven different definitions of the word “between” in the Merriam-Webster Dictionary to interpret the statute. It reasoned that the definition of “between” that best fit the statutory context “necessarily implies at least two locations.”

In light of this conclusion, the court held “the plain language of § 30527 limits its application to vessels transporting passengers between at least two ports and does not apply to vessels transporting passengers away from and back to a single port.” Since the defendants here were transporting passengers away from and then back to a single port—Lahaina Harbor—it concluded that the invalidating statute did not apply.

The Dissent

As a threshold question, the dissent observed that two things needed to be true for the statute to apply: (1) the vessel needed to be “transporting” passengers between ports, and (2) at least one of the ports had to be located in the United States. If a person was visiting the Queen Mary at its permanent mooring in Long Beach, the dissent reasoned, the statute would not apply because that ship was not transporting anybody anywhere. If a passenger booked travel on a cruise going from Rome to Barcelona, the statute would not apply because neither port was located in the United States. Since the boat at issue in Ehart was “transporting” passengers, and because the travel involved at least one U.S. port, the dissent took the position that the statute was applicable.

The dissent took issue with the majority’s view that the word “between” necessarily implied two locations:

It simply is not true that “between” always connotes two different reference points, as a few counter-examples will demonstrate. A runner halfway through a 400-meter race on a 400-meter oval running track is “between” the starting line and the finish line, even though they are the same line. Someone halfway through Finnegans Wake is “between” the beginning and the end of the novel, even though it ends where it began. And Benjamin Harrison, like every past President except Washington, served “between” Presidents, even though in Harrison’s case, those Presidents were the same person (Grover Cleveland).

The dissent also argued that the majority’s approach could produce “distinctions that make no conceivable rational sense.” To illustrate this point, it offered the following hypothetical:

Two ships leave the Port of Long Beach for identical day-long whale-watching trips off the California coast. The first is scheduled, upon its return, to dock at a different berth in the Port of Long Beach. The second is scheduled, upon return, to dock at a nearby berth that is technically in the adjacent Port of Los Angeles. On the majority’s view, the passengers on the second ship are protected by § 30527(a), while the passengers on the first ship are not.

The absurdity of such a result, to the dissent, suggested that the majority’s interpretation was inconsistent with what Congress intended:

As noted above, the self-evident objective of the statute—like the maritime rule it partly codified—is to preclude operators of vessels that carry passengers into the “perils of the sea” from disclaiming their responsibilities to exercise due care towards those passengers. Viewing the statute in that light, it makes no sense to say that the vessel operator’s duty to protect against such perils turns on whether the ship touches a distinct port. Congress, of course, is free to enact seemingly irrational statutes, subject to minimum constitutional limits. But we should not lightly assume that Congress has chosen that route—particularly where a perfectly rational alternative construction is available, compatible with the statutory text and context, and supported by the maritime-law principles underlying the statute.

In light of the foregoing, the dissent would have held that 46 U.S.C. 30527(a) applied and that the liability waiver was therefore void and unenforceable.

Conclusion

When I teach choice-of-law and forum selection clauses to my students, I always emphasize that there are two phases to the analysis. The first is how to interpret the clause. The second is whether the clause is enforceable. The same framework applies to liability waivers.

In Ehart, the Ninth Circuit was understandably focused on phase two—whether the contractual waiver was enforceable—because that was the question presented to it. On remand, however, the plaintiff has a strong argument at phase one. The waiver, as drafted, seemingly does not cover his claims for “gross negligence.” It only refers to “negligence.” If the court applies the doctrine of contra proferentem to interpret the language in the contract against the drafter, at least some of the plaintiff’s gross negligence claims against the defendants seem likely to survive. Even though the plaintiff lost at phase two of the analysis, he may yet prevail at phase one.

In the meantime, professors who kick off the fall semester with the classic “no vehicles in the park” hypothetical should be aware that there is a new game in town. This is the soon-to-be-classic “between ports in the United States” hypothetical. This new option is likely to have special appeal to students aspiring to careers in admiralty.