The opinion of the court was delivered by: Francis, United States Magistrate Judge.
In July 1994, passengers on a pleasure cruise aboard the M/V
Horizon contracted Legionnaires' Disease, a potentially serious
or even fatal form of pneumonia, as the vessel was sailing
between New York and Bermuda. Many of the victims (the "Passenger
Plaintiffs") subsequently sued Celebrity Cruises, Inc. and
Fantasia Cruising, Inc. (collectively, "Celebrity"), the owners
and operators of the Horizon. They asserted claims of negligence,
fraud, and breach of contract.
The Passenger Plaintiffs also sued Essef Corp., Pac-Fab, Inc.,
and Structural Europe N.V. (f/n/a SFC) (collectively referred to
as "Essef" or the "Essef Defendants"), who had manufactured and
distributed the filter used in the whirlpool spa system on the
Horizon where the disease originated. The Passenger Plaintiffs'
claims against Essef were based on negligence, strict products
liability, and breach of warranty.
Celebrity, in turn, filed a complaint and cross-claims against
the Essef Defendants. Celebrity sought indemnification and
contribution with respect to the claims of the Passenger
Plaintiffs, as well as damages based on products liability and
breach of warranty claims. In addition, Celebrity has asserted
fraud and negligent misrepresentation claims on the theory that
the Essef Defendants falsely represented that the filter at issue
met the standards of the National Sanitation Foundation.
These actions were all consolidated for discovery, and in each
of them the parties subsequently consented to my presiding over
all proceedings including trial pursuant to 28 U.S.C. § 636(c).
One of the cases, Silivanch v. Celebrity Cruises, Inc., 95 Civ.
0374(BSJ)(JCF), is currently being tried as a bellwether case,
together with the claims asserted by Celebrity against Essef. The
Silivanch plaintiffs included in their complaint a demand for
punitive damages against both Celebrity and Essef; other
Passenger Plaintiffs did not. These other plaintiffs now move
pursuant to Rule 15 of the Federal Rules of Civil Procedure to
amend their complaints to add claims for punitive damages. The
Essef Defendants oppose these motions on the grounds that they
are untimely and that punitive damages are unavailable under
admiralty law. They also cross-move to strike the punitive
damages claims asserted against them by the Silivanch plaintiffs
and by Celebrity. Not surprisingly, Celebrity takes the position
that while its demand for punitive damages against Essef is
viable, the punitive damages claims of the Passenger Plaintiffs
Resolution of these issues turns primarily on a twofold
analysis. First, it must be determined to what extent the claims
in these cases are governed by general maritime law. Then, to the
degree that they are, I must decide whether punitive damages are
available under that law.
A. Admiralty Jurisdiction and Maritime Law
The threshold question is whether the claims at issue fall
within the admiralty jurisdiction. This is significant because
"[w]ith admiralty jurisdiction comes the application of
substantive admiralty law." East River Steamship Corp. v.
Transamerica Delaval, Inc., 476 U.S. 858, 864, 106 S.Ct. 2295,
90 L.Ed.2d 865 (1986) (citation omitted); see also Yamaha Motor
Corp., U.S.A. v. Calhoun, 516 U.S. 199, 206, 116 S.Ct. 619, 133
L.Ed.2d 578 (1996); Friedman v. Cunard Line Ltd., 996 F. Supp. 303,
305 (S.D.N.Y. 1998). With respect to any claim as to which
admiralty jurisdiction is unavailable, state law would
In order to ascertain whether admiralty jurisdiction exists,
courts previously utilized a test that focused exclusively on
Determination of the question whether a tort is
"maritime" and thus within the admiralty jurisdiction
of the federal courts has traditionally depended upon
the locality of the wrong. If the wrong occurred on
navigable waters, the action is within admiralty
jurisdiction; if the wrong occurred on land, it is
Executive Jet Aviation, Inc. v. City of Cleveland, Ohio,
409 U.S. 249, 253, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972). However, in
response to borderline situations that the locality test did not
directly address as well as in reaction to cases where that test
led to anomalous results, the Supreme Court adopted the
additional requirement that the tort be related to a traditional
maritime activity in order for admiralty jurisdiction to apply.
Id. at 255-61, 93 S.Ct. 493; see also Foremost Insurance Co.
v. Richardson, 457 U.S. 668, 673, 102 S.Ct. 2654, 73 L.Ed.2d 300
(1982). As the Second Circuit characterized it, the two-pronged
test required an analysis of "situs" and "status." Keene Corp.
v. United States, 700 F.2d 836, 843 (2d Cir. 1983).
Whether the status requirement applies at all to a tort
occurring on the high seas has not finally been decided. In East
River Steamship, the Supreme Court noted that this "additional
requirement of a `maritime nexus' — that the wrong must bear `a
significant relationship to traditional maritime activity'" — had
been developed in the context of torts occurring on navigable
waters within the United States. East River Steamship, 476 U.S.
at 864, 106 S.Ct. 2295 (citations omitted). The Court declined to
decide "whether a maritime nexus also must be established when a
tort occurs on the high seas." Id.; see also Friedman, 996
F. Supp. at 307.
The substantial relationship requirement has been refined by
two Supreme Court cases postdating Executive Jet and
Foremost. First, in Sisson v. Ruby, 497 U.S. 358, 110 S.Ct.
2892, 111 L.Ed.2d 292 (1990), the Court held that the federal
district court had admiralty jurisdiction over claims arising out
of a fire caused by a washer/dryer on board a pleasure yacht when
the fire spread to other vessels docked at the same marina. Id.
at 360, 110 S.Ct. 2892. In reaching this conclusion, the Court
identified two critical inquiries: whether the alleged wrong
created a potential hazard to maritime commerce and whether it
arose out of an activity that bears a substantial relationship to
traditional maritime activity. Id. at 363-64, 110 S.Ct. 2892.
In the second case, Jerome B. Grubart, Inc. v. Great Lakes
Dredge & Dock Co., 513 U.S. 527, 115 S.Ct. 1043, 130 L.Ed.2d
1024 (1995), the Court found that claims arising out of the
flooding of a freight tunnel were subject to admiralty
jurisdiction where the flood allegedly resulted from the driving
of piles into a riverbed. The Court reasoned that whether there
is potential impact on maritime commerce should be analyzed "at
an intermediate level of possible generality"; the appropriate
inquiry is "whether the incident could be seen within a class of
incidents that posed more than a fanciful risk to commercial
shipping." Id. at 538-39, 115 S.Ct. 1043. Then, in order to
determine whether there is a significant relationship to maritime
activity, it is necessary to "ask whether a tortfeasor's
activity, commercial or noncommercial, on navigable waters is so
closely related to activity traditionally subject to admiralty
law that the reasons for applying special admiralty rules would
apply in the suit at hand." Id. at 539-40, 115 S.Ct. 1043.
In applying these tests to this case, it is clear that the
claims of the Passenger Plaintiffs against Celebrity fall within
the admiralty jurisdiction of the Court. As noted above, the
locality test is met since the tort occurred on the high seas.
This is true notwithstanding the fact that the victims did not
exhibit symptoms until they had come ashore. Pursuant to the
Extension of Admiralty Jurisdiction Act, 62 Stat. 496, "[t]he
admiralty and maritime jurisdiction of the United States shall
extend to and include all cases of damage or injury, to person or
property, caused by a vessel on navigable water, notwithstanding
that such damage or injury be done or consummated on land."
46 U.S.C.App. § 740. As the Supreme Court has observed, the purpose
of the Act was to invest the admiralty courts with "jurisdiction
over `all cases' where the injury was caused by a ship or other
vessel on navigable waters, even if such injury occurred on
land." Grubart, 513 U.S. at 532, 115 S.Ct. 1043. ...