Energetic Tank, Inc. v. Unknown

Background

The case arose from an August 21, 2017 collision in the Singapore Strait between the United States Navy warship U.S.S. JOHN S. MCCAIN and the oil tanker M/V ALNIC MC, owned by Energetic Tank, Inc. Energetic Tank filed the action seeking exoneration from liability or limitation of liability. The United States and injured or deceased sailors asserted tort claims for damages against Energetic Tank.

The court divided the case into two phases. Phase I addressed liability for the collision. After a bench trial, the court found Energetic Tank 20% at fault and the United States 80% at fault. The court determined that Energetic Tank owed the United States $37 million for its share of damage to the Navy vessel, less $353,956 representing the United States’ share of stipulated damage to Energetic Tank’s vessel, plus interest. Both sides filed interlocutory appeals from the Phase I ruling.

Phase II concerns the individual sailors’ damages claims against Energetic Tank. Before entering the final Phase I judgment, the court considered whether Energetic Tank could seek contribution from the United States if Energetic Tank paid damages to the sailors.

Whether the proceedings should be stayed

The court held that no stay was warranted. An interlocutory appeal from the Phase I liability ruling removed the liability issue from the district court’s control, but it did not prevent the court from addressing the unresolved damages issues. The court also concluded that continuing with Phase II was in the interest of justice because a potentially years-long delay could lead to stale evidence and postpone resolution of the sailors’ personal-injury and wrongful-death claims. No party had requested a stay.

Choice of law and jurisdiction

The court had previously ruled that Singapore law governed substantive issues of liability and damages. It concluded, however, that United States federal law governed the separate jurisdictional question whether the United States was immune from Energetic Tank’s contribution claim. Sovereign immunity means that the United States generally cannot be sued without its consent, and the terms of any consent define the court’s jurisdiction.

The court treated the Feres-Stencel doctrine as a limit on federal sovereign immunity and jurisdiction. Under that doctrine, the United States is generally immune from certain claims arising from servicemembers’ service, including third-party claims for contribution or indemnity connected to servicemembers’ injury claims.

Contribution claim

Energetic Tank relied on the Public Vessels Act and the Suits in Admiralty Act. Those statutes waive sovereign immunity in certain circumstances, including some claims involving damage caused by a public vessel or claims that could have been brought against a private vessel owner or operator. The court explained that those waivers allowed Energetic Tank to assert its Phase I claim concerning damage to the ALNIC caused by the MCCAIN.

The court held that the waivers did not permit Energetic Tank’s Phase II contribution claim. The sailors’ claims arose from their military service because they were serving aboard the MCCAIN during a deployment when the collision occurred. Under Stencel, the Feres doctrine extends to third-party claims seeking contribution or indemnity for service-related injuries. The Second Circuit had also held that the Feres bar applies to claims under the Public Vessels Act and the Suits in Admiralty Act.

The court rejected Energetic Tank’s argument that the military-discipline rationale behind Feres was absent because military decisions had already been examined during the Phase I trial. It relied on precedent holding that the doctrine may still apply after a collision trial involving a United States vessel. The court also discussed the doctrine’s rationales involving the federal nature of the military relationship, the government’s service-related compensation system, and the potential effect of litigation on military discipline.

Disposition

The court held that the United States had not waived sovereign immunity for Energetic Tank’s contribution claim and that Energetic Tank had not proved otherwise. It concluded that the court lacked jurisdiction over the contribution claim and dismissed it. The court did not stay the Phase II proceedings, which were permitted to continue despite the pending interlocutory appeals.