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PACIFIC VEGETABLE OIL CORP. v. S/S SHALOM

July 20, 1966

PACIFIC VEGETABLE OIL CORP., et al., Libelants,
v.
S/S SHALOM, her engines, etc., and Zim Israel Navigation Co., Ltd., Respondents, and v. M/V STOLT DAGALI and A/S Ocean, Respondent-Impleaded (and five consolidated causes)



The opinion of the court was delivered by: EDELSTEIN

EDELSTEIN, District Judge.

 In an opinion reported at 249 F. Supp. 503 (S.D.N.Y.1966) this court ruled that the Zim Israel Navigation Co., Ltd. could not discontinue without prejudice, as of right, merely upon payment of statutory costs, but rather that Zim could discontinue without prejudice only upon the terms and conditions imposed by this court. That opinion, however, expressly reserved decision on the issue of what terms and conditions ought to be imposed. Thereafter extensive hearings were held and oral argument presented. The court is, therefore, now in a position to decide what terms and conditions should be imposed upon Zim.

 In its prior decision, handed down on January 12, 1966, this court read into the old Admiralty Rules the equitable principles incorporated in Fed.R.Civ.P. 41(a)(2). Subsequent to that decision the Supreme Court merged the Civil and Admiralty Rules, effective July 1, 1966, by making the Federal Rules of Civil Procedure applicable in admiralty cases (with certain exceptions not here relevant). Paragraph 2 of the Supreme Court's promulgating order states that the new rules are effective July 1, 1966, and applicable "in all further proceedings in actions then pending, except to the extent that in the opinion of the court their application in a particular action then pending would not be feasible or would work injustice * * *." U.S. Code Cong. & Ad. News, 89th Cong.2d Sess. 903, 941 (April 5, 1966, advance sheet). *fn1" In the instant case the application of the recent merger of the civil and admiralty rules is feasible and would work no injustice. Pursuant both to this court's decision of January 12, 1966, and to Paragraph 2 of the Supreme Court's order promulgating the amended Rules of Procedure, the equitable principles of Fed.R.Civ.P. 41(a)(2) are applicable to this motion.

 The basic facts are set forth in the January 12, 1966, opinion and Footnote 1 thereto. Additional information, however, has become available during the course of these hearings.

 The first suit arising out of the November 26, 1964, collision was actually a personal injury claim filed in this court on December 1, 1964, against both A/S Ocean and Zim Israel. After the subsequent filing of the Pacific Vegetable and Bunge Corporation cargo libels against Zim, but prior to Zim's impleaders here, A/S Ocean arrested the Zim Vessel NAHARIYA when it entered the port of Gothenburg, Sweden. The NAHARIYA was not involved in the November 26, 1964, collision and the Swedish forum's only contact with the collision was the arrest and subsequent release bond posted for the NAHARIYA.

 Many of the problems in this case arise because there are two main suits in two jurisdictions between the same parties to the same collision. A/S Ocean urged, at least initially, that Zim should not have impleaded it in the cargo suits after A/S Ocean had already sued Zim in Sweden. Rather, Zim should have, it was urged, promptly settled the cargo claims (which it was ultimately required to do anyway), and counterclaimed or countersued in Sweden. Thus, it was alleged, Zim was to blame for the problems arising out of dual jurisdiction. Zim urges, on the other hand, that the cargo suits and a personal injury suit had already been filed here, prior to A/S Ocean's suit in Sweden. Moreover, because the collision occurred just off the New Jersey coast (although in international waters) most of the investigation had to be done here and many of the witnesses and exhibits, including the remains of the STOLT DAGALI, were located in or near New York. Zim urges that A/S Ocean had no business commencing suit in Sweden since that forum's only contact with the parties or the collision was that a different Zim vessel, the NAHARIYA, happened to put into a Swedish port. Thus, Zim urges, A/S Ocean was to blame for the problems arising out of dual jurisdiction.

 By arresting the NAHARIYA in Sweden, A/S Ocean obtained at least two tactical advantages. In order to obtain the release of the NAHARIYA Zim was required to post substantial security in Gothenburg, Sweden, against which A/S Ocean would be able to claim. Second, the arrest of the NAHARIYA gave A/S Ocean a forum in which it could be certain that the applicable law would be the Brussels Collision Convention. Thus, assuming that both vessels were to blame for the collision but that the SHALOM was more at fault than the STOLT DAGALI, A/S Ocean would fare better under the Brussels Collision Convention rule of proportional fault than it would under the American rule of equal division of damages. The cargo interests, however, had an important interest in suing Zim in the United States. Under United States law there is, between colliding ships, joint and several liability to cargo, the innocent third party. Apparently as a result of its carriage agreements with the STOLT DAGALI interests, cargo could not collect for negligent shiphandling but could only collect from the STOLT DAGALI if the STOLT DAGALI was unseaworthy. Cargo would, therefore, fare better in the United States, since under joint and several liability cargo might theoretically collect its entire loss from Zim here. In Sweden Zim's liability to cargo, under the Brussels Collision Convention, would be limited to Zim's proportional share of the fault. The cargo suits were thus commenced in this jurisdiction. Zim, finally, had been able to obtain security when it arrested the foresection of the STOLT DAGALI in this jurisdiction and also had the advantage that under American law any payments it made to cargo in settlement would be includable in its claim for collision damages against A/S Ocean. In Sweden, on the other hand, Zim would, it appears, be precluded from including payment to cargo in its collision claims. Moreover, if the SHALOM were more than fifty percent to blame for the collision, (although not solely at fault), Zim would fare better under the American equal division of damages rule, than it would under the Brussels Collision Convention rule of proportional fault, which is applied in Sweden.

 It was not at all clear that this court would apply the same law as the Swedish court. Under the American conflict of law rules, the law applicable to a collision on the high seas is the law of the forum (American law) unless the law of the flag of each of the colliding vessels is the same. In the latter case, or where both vessels are of the same nationality, the law common to both vessels will be applied. Since there was reason to doubt whether or not Israeli and Norwegian law were in fact the same on any or all of the relevant issues there was at least some basis for doubt as to what law would be applied in this court. Zim challenged the jurisdiction of the Swedish court but did not obtain a resolution of that issue before the date trial was to commence in this court. *fn2" Zim was faced with the possibility that a decision here on the merits might be given res adjudicata effect against Zim in Sweden, in any counterclaim Zim brought there, but that the res adjudicata effect would not bar A/S Ocean's claim in Sweden since A/S Ocean had made no affirmative claim here but had merely defended against Zim's claim. Zim extricated itself by settling with cargo for approximately 90 percent of cargo's loss and moved to dismiss its own libel and impleading petitions here without prejudice.

 Whatever else can be said of this complex affair, it certainly appears that at the root of the dual jurisdictional problem was the substantial difference in American admiralty law and the Brussels Collision Convention which is applied in Sweden. Counsel for all of the parties chose forums and maneuvered in a manner which best served their respective tactical positions. No element of fault or wrongdoing can fairly be attributed to any of the parties by reason of their choice of forums.

 A/S Ocean urges that one of the terms and conditions to be imposed upon Zim should be that A/S Ocean be reimbursed for the reasonable attorney's fee and expenses incurred in the defense of Zim's libel and impleading petitions here. The total attorney's fee charged from November 26, 1964, (the date of the collision), through October 15, 1965, (the date of Zim's motion to discontinue), is $125,000. In addition it is urged that there were approximately $15,000 in general expenses and approximately $52,000 in disbursements. Pursuant to Fed.R.Civ.P. 41(a)(2) this court has the power to impose attorney's fees and expenses as a condition of a discontinuance without prejudice.

 There is no real question but that the attorney's fee sought is reasonable, as such. Extensive, accurate, and current records of work done and time spent were introduced at the hearings before this court. Those records showed an expenditure of 2,255 hours by partners and an expenditure of 953 hours by associates, or a total of 3,208 attorneys' hours. See, generally, In the Matter of General Economics Corp., Docket No. 30180, 2d Cir., May 24, 1966, 360 F.2d 762. This court, having been assigned to the instant case for all purposes pursuant to Rule 2 of the General Rules of this court, had an unusual opportunity over a prolonged period of time to observe counsel's services. The services were performed with professional competency and with great diligence. With the exception of a few items referred to below the reasonableness of the disbursements is also not subject to serious challenge.

 A/S Ocean does not claim, of course, that it is entitled to reimbursement for all of these items since it concedes that some of the attorney's fee and disbursements were related to work done before Zim ever impleaded A/S Ocean in the cargo suits. Similarly, it concedes, some of the factual investigation which was done here after the impleader and Zim's libel would have been done here in any event, (that is, even if the entire suit had taken place solely in Sweden). The proximity of the collision to these shores, the location of the wreck of the aft section of the STOLT DAGALI and the presence of witnesses such as pilots on duty in the vicinity of the collision, as well as numerous other factors, made such investigation here inevitable. The total reimbursement sought by A/S Ocean in its main brief filed at the conclusion of these hearings is $132,360.65. The claim for attorney's fee and disbursements may be divided, for convenience, into four basic categories, related to: (1) the arrest of the STOLT DAGALI; (2) the evaluation of cargo claims; (3) the taking of depositions of STOLT DAGALI, SHALOM, and third party witnesses; and (4) trial preparations.

 The amount allegedly expended in connection with the arrest of the STOLT DAGALI was $25,209.48. *fn3" It is the view of this court that no reimbursement whatever is appropriate in connection with this category. In its opposition to Zim's motion to dismiss without prejudice, which Zim urged was a matter of right, A/S Ocean contended, (and the court in its January 12, 1966, opinion agreed), that the Confiscation Cases, 74 U.S. (7 Wall.) 454, 456-458, 19 L. Ed. 196 (1868) were distinguishable from the instant case. This court noted that in the Confiscation Cases the Supreme Court had

 
"indicated that the common law rule [absolute right to discontinue without prejudice prior to verdict or judgment] would be applied in admiralty. That case, however, dealt only with actions in rem and it has been uniformly held that a vessel may be arrested only once on any cause of action, see The Gasconier, 8 F.2d 104 (E.D.N.Y.1924). Thus the dismissal referred to in the Confiscation Cases was, in effect, a ...

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