The tragic loss of the Duck Boat with 17 persons, including children, will trigger investigations by the National Transportation Safety Board and the Coast Guard. Civil litigation will follow, likely including a pro-active filing of the owner of the Duck Boat under the controversial Limitation of Liability Act (LOLA) 46 U.S.C. § 30506. This statute allows a vessel owner to petition a federal court to limit its liability to the post-accident value of the vessel. In this case the value of the Duck boat is zero. In such cases, the LOLA triggers a statutory floor increasing the amount of recovery to $420.00 per ton. To put this in perspective, the sinking of the 30,000-ton container ship EL FARO during Hurricane Joaquin resulted in a fund amount to about 13 million dollars. Since the tonnage of duck boats is relatively small, perhaps no more than 10 tons, the value of the limitation fund would be about $4,200.00 – a ridiculously insignificant amount to be shared by all the claimants.
Enacted in 1851, the Limitation of Liability Act coincided with the burgeoning shipping industry of the United States. In an age without technological advancements in communication, the owners of vessels remained unaware of the conditions of their vessels, and as such, were left to be taken by surprise when claims were levied against them, with little power to prevent the causes of such claims, therefore leading Congress to pass the Act. The Limitation of Liability Act created a test for limiting one’s liability; namely, vessel owners could seek the limiting of their liability when damages occurred aboard their vessels without their privity of knowledge. Despite the seemingly good intentions behind Congress’ rationale, the Act immediately came under scrutiny.
In 1965, a concerted effort to repeal the Act unfolded, ultimately fizzling despite support. The effort purportedly had strong support from a myriad of federal agencies. Following the Deepwater Horizon explosion in 2010, Congress again sought to repeal the Limitation of Liability Act, as victims of the oil rig disaster were severely hindered in attaining appropriate damages. Although the bill seeking to repeal the Act passed through the House of Representatives, the bill ultimately died while stagnating in the Senate. Criticisms of the Limitation of Liability Act have permeated American jurisprudence as well, with criticism appearing as early as 1871, a mere two decades after the institution of the Act, as the United States Supreme Court struggled to grapple with the “imperfect, fragmentary and ambiguous” nature of the Act. The Second Circuit contextualized these issues, explaining that the protection afforded to vessel owners stands unparalleled as compared to other industries, and overall the Limitation of Liability Act is “neither warranted nor consistent with current reality.” These calls for reinterpretation have persisted, as the Eleventh Circuit has also called for action from Congress to address the “antiquated” nature of the Act
The origins of the Limitation of Liability Act, at the time of its institution, were derived from reason and good intent; unfortunately, the Act has not aged well, becoming obsolete and subsequently condemned, having been plagued with issues since its inception. The Limitation of Liability Act should be discontinued.