Vicarious liability

   An explosion and fire on the containership MSC Flaminia in the middle of the Atlantic Ocean on July 14, 2012, resulted in the deaths of three crewmen and injuries to several others.
   In addition to extensive damage to the vessel and cargo, “an enormous number of entities and issues have been implicated by the accident,” noted a recent court decision. (In re M/V MSC Flaminia. U.S. District Court, SDNY. No. 12-CV-8892. Aug. 19.)
   In the decision, the court denied a motion by Mediterranean Shipping Co., which chartered the ship, to dismiss two cross claims and allowed them to proceed.
   The court said, “Although the source of the explosion and fire remains unknown, the investigation has focused on three containers of divinylbenzene (DVB) that were loaded onto the vessel” at New Orleans Terminal (NOT).
   In May 2013, MSC asserted cross claims against Deltech and Stolt relating to their respective roles as the manufacturer and shipper, respectively, of the DVB.
   Subsequently, Deltech and Stolt each asserted what the court said were two virtually identical amended cross claims against MSC.
   The first cross-claim was brought by a group of companies related to Deltech Corp. and its subrogee, National Fire Insurance Co. of Pittsburgh, and the second was brought by a group of Stolt Tank Containers-related companies and the same insurer/subrogee. The court termed these the “agency cross claims.”
   MSC had contracted with NOT to provide exclusive stevedoring services for all MSC ships docking at that location.
   The agency cross claims concerned MSC’s corporate relationship to NOT and its liability for the terminal’s contribution to the accident.
   MSC moved to dismiss the cross claims under rule 12(b)(6) of the Federal Rules of Civil Procedure. The court said in deciding such a dismissal motion it must accept factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff’s favor.
   It said MSC’s sole argument was that the agency cross claims were insufficient to support piercing NOT’s corporate veil to reach MSC.
   But Deltech and Stolt denied any interest in piercing the terminal’s corporate veil and contended they instead sought to hold MSC liable for NOT’s conduct under theories of “vicarious liability” and “imputation of knowledge.”
   The court said MSC took “an unduly restrictive view of what Rule 12(b)(6) requires. MSC suggests that because the agency cross claims allege facts that overlap with the test for whether to pierce a corporation’s veil, the agency cross claims necessarily fail unless they assert sufficient facts regarding this theory of liability.”
   It said MSC’s argument misconstrued the Rule 12(b)(6) threshold and “to proceed beyond the motion to dismiss stage, a complaint’s factual allegations need only offer a basis for relief under any possible theory.”
   The court said precedents showed it was well established that traditional vicarious liability rules ordinarily make principals or employers vicariously liable for acts of their agents in the scope of their authority.
   When stating a claim for vicarious liability, plaintiffs have to allege sufficient facts to show that the principal manifested an intent to grant the agent authority, the agent agreed, and the principal maintained control over key aspects of the undertaking.
   While a principal-agent inquiry is fact-specific, the court said in this instance, the agency cross claims were more than adequate to assert a principal-agent relationship between MSC and NOT, through which MSC may be held vicariously liable for NOT’s role in the accident.
   “The agency cross claims allege a number of facts pertinent to these possible considerations, including that at all relevant times, MSC held a majority stake in NOT,” it said. MSC also oversaw NOT’s general manager with respect to his budgeting, accounting, and purchasing duties, as well as approved NOT’s operating budgets. Five MSC employees were on the terminal’s board and one was chairman. NOT board meetings were also held at MSC offices.
   The court said, “These facts plausibly establish, as Deltech and Stolt characterize it, a ‘relationship between MSC and NOT [that] extended far beyond an ordinary arrangement between a carrier and an independent terminal facility.’”
   As to imputation of knowledge, the court cited precedent that said, “In general, when an agent is employed to perform certain duties for his principal and acquires knowledge material to those duties, the agent’s knowledge is imputed to the principal.”
   The court said “the agency cross claims satisfy Rule 12(b)(6)’s standard for imputing to MSC any knowledge about the DVB containers that NOT acquired in the course of its agency. Imputation of an agent’s knowledge to its principal requires the existence of an agency relationship and that the information at issue concerned matters within the scope of the agency relationship.”
   MSC’s motion to dismiss for failure to state a claim was denied.

This column was published in the November 2015 issue of American Shipper.