By Lawrence J. Bowles and S. Nina Gellert*
| Private
Sector Producers Of Electronic Charts And Equipment: Potential Exposure
To Liability
By Lawrence J. Bowles and S. Nina Gellert* |
|
Contents
As the conventional paper nautical chart is being supplemented, if not replaced, by sophisticated electronic charting systems, maritime products liability law finds yet another application. This paper will 1) provide an overview of United States maritime products liability law, 2) sketch out the possible nature and scope of the liabilities of producers of electronic charting system equipment, software and databases, 3) offer some direction to the producer in shielding itself from liability, and 4) suggest possible defenses to the producer who is faced with a claim.1 Primary consideration is given to the manufacturers of electronic charting equipment with less emphasis placed on the risk faced by chart database producers.2 With respect to producers of equipment, this analysis primarily considers their liabilities and defenses for claims arising out of manufacture and sale of the products and does not specifically address possible claims arising out of negligent installation of the products.
An overview of the products and the risks faced by producers
A quick glance at any major marine equipment catalogue will reveal the scope of electronic charting products currently on the market. Very simply, an electronic nautical chart is a digitized version of a government-issued, conventional paper chart. The chart can serve both as a plotting device and as a navigation device when combined with a positioning instrument such as a Global Positioning System ("GPS") or Loran. When used for navigation, the system permits the navigator to see on a display screen a representation of his vessel's current position and intended future positions relative to the channel, aids to navigation and hazards thereto.
Several configurations of electronic charting systems are currently produced. A system may consist of charting software installed on a laptop computer or other CRT to which chart database cartridges from one of the major database producers are added for the geographical area desired. Electronic charting units are also sold to connect to existing radar devices, sounding devices, gyro compasses, video monitors, etc. which will combine chart data from database cartridges with the main device's usual display. Simple flat-panel-display systems with a combination of pre-installed charts and cartridges are available to function independently or in conjunction with a positioning device. Finally, there are combination electronic chart and GPS displays for use with chart cartridges which may also include a limited number of pre-installed charts.
In the event of an accident allegedly caused by a defect in the electronic charting system, therefore, claims may be directed against the producers of the hardware, software, and/or chart database. Claims might relate, inter alia, to the presence of an unknown physical defect in the product, to the producer's failure to warn the user of a known defect or its failure to instruct the user in its proper use and handling, or to inaccuracies in the underlying data.3
Claims arising out of defective navigation systems of whatever kind have the potential to be quite large as they may arise out of groundings or collisions. When electronic charting is used on larger vessels as part of integrated navigation systems combining not only GPS, radar, and autopilots but also other sophisticated instruments, the potential for minor malfunctions to trigger large-scale damages increases. To complicate matters, the range of equipment combinations possible in integrated navigation systems could make it difficult to pinpoint the "defect" which caused the malfunction. Litigation may involve crossclaims among a variety of manufacturers, each denying that its device or component part was the source of the breakdown.
While the size and complexity of claims may easily be imagined, however, the lack of judicial precedent considering the liability of the electronic charting system producer is unfortunately coupled with an absence of clear industry standards for design and manufacture, making it difficult to evaluate the producer's potential exposure with accuracy.
Overview of Maritime Products Liability Law4
While a variety of nuances remain subject to future judicial analysis, the foundation of maritime products liability law was solidified by the Supreme Court 1986 decision in East River Steamship Corp. v. Transamerica Delaval, Inc.5 There, the Supreme Court officially recognized products liability, including strict liability, as part of the general maritime law. In so doing, the Court joined the Courts of Appeals who had "overwhelmingly" come to the same conclusion, generally incorporating the conventional shoreside products liability principles of the Restatement (Second) of Torts § 402A (1965) ("Section 402A"). In East River, the Supreme Court was specifically asked to consider, in the context of a charterer's claim for damages surrounding a turbine malfunction, whether the admiralty law would permit a claim in strict products liability, i.e., recovery without regard to negligence. By answering in the affirmative, the Court merely ratified what had already become the common law of a majority of federal and state jurisdictions.6
While Section 402A does not have the force of a statute, its language is instructive to an appreciation of the principles to be considered by all admiralty courts since the East River decision:
Sec. 402 A. Special Liability of Seller of Product for Physical Harm to User or ConsumerThe plaintiff seeking to recover in strict liability must prove, therefore, that 1) the defendant is a commercial seller or manufacturer, 2) the defendant sold or manufactured the allegedly defective product, 3) the product was "unreasonably dangerous", i.e., defective, at the time it left the defendant's hands, and 4) the defective condition was the proximate cause of the plaintiff's injury. A claim in strict liability may lie without negligence on the part of the defendant, "even though he has exercised all possible care in the preparation and sale of the product."8(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) the seller is engaged in the business of selling such a product, and(2) The rule stated in subsection (1) applies although(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
(a) the seller has exercised all possible care in the preparation and sale of his product, and(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.7
A plaintiff may also have a claim in tort under a negligence theory, on the ground that the manufacturer breached a duty owed to him, e.g., to test, investigate dangers or inspect the product for defects9 or to warn of risks of which it is or should be aware,10 and that the breach of that duty was the proximate cause of the plaintiff's damages. Under both the strict liability and negligence theories, a claim may be predicated on an allegation that 1) the product was defectively designed, i.e., that all of the products sold were unreasonably dangerous or defective in this way, and/or 2) the particular product which caused the injury was defectively manufactured although there may have been nothing wrong with its design.11
The primary limitation on recovery in either strict liability or negligence is that a claim may not be stated in tort for injury to the product itself.12 In other words, where the defective product malfunctions and is destroyed or damaged, causing mere economic loss, there can be no recovery in tort but the plaintiff, if in privity of contract with the defendant, may sue for breach of the contract on a warranty theory. Where the defect in the product causes damage to "other property" or causes personal injury or death, the claim is properly stated in tort. In so holding, the Court reasoned that damage to the product itself means "that the product has not met the customer's expectations, or in other words, that the customer has received 'insufficient product value'".13
A plaintiff seeking lost profits or repair costs attributable to a defective product will be able to recover subject to the limitations he bargained for in the contract of sale and will naturally be limited by the terms of any disclaimers, express warranties and time limitations.14 As the Court noted in East River, the "manufacturer can restrict its liability, within limits, by disclaiming warranties or limiting remedies."15 Even where not barred by the terms of the contract, recovery will be limited by the doctrine of foreseeability.16
Distinguishing between the "product" and "other property"
The holding in East River limiting recovery in tort to property other than the product itself has sparked judicial debate as to the line to be drawn between the "product" and "other property". This inquiry is potentially significant to claims against producers of electronic charting systems which are generally comprised of multiple component parts or which may be sold as part of the vessel itself in the original shipbuilding contract. To determine what is the "product", the Supreme Court directs the courts to look at the identity of the product as it was sold:
In the traditional "property damage" cases, the defective product damages other property. In this case, there was no damage to "other property". Rather, [plaintiffs] allege that each supertanker's defectively designed turbine components damages only the turbine itself. Since each turbine was supplied by Delaval as an integrated package . . . each is properly regarded as a single unit.17
Shortly after the Supreme Court's decision in East River, the Fifth Circuit Court of Appeals, usually a leading circuit in paving new maritime law, considered the scope of the "other property" exception.18 In Shipco 2295, the purchaser of several vessels, each containing defective components, sued the builder-seller for economic loss arising out of damage caused by the defective components to other components of the vessels. The court barred recovery in tort under the East River doctrine reasoning as follows:
In attempting to identify the product, our analysis leads us to ask what is the object of the contract or bargain that governs the rights of the parties? The completed vessels were obviously the objects of the contract. Shipco did not bargain separately for individual components of each vessel. We are persuaded that those same vessels that were the object of the contract must be considered "the product" rather than the individual components that make up the vessels.19
The Fifth Circuit also noted that allowing a purchaser to assert a tort claim against a component part manufacturer or seller would invite a claim for indemnity by that defendant against the seller of the assembled product which would "nullify the objective of East River to limit the seller's liability in this type case to that assumed by contract."20
The Fifth Circuit revisited the question in the context of damaged seismic equipment placed on board the vessel by the charterer where the vessel itself had been the object of the contract of sale between the shipowner and the defendant shipbuilder.21 The court permitted recovery for damage to the equipment as it was placed on board subsequent to purchase and was to be removed from the vessel at the termination of the charter because it was clearly not part of the "object of the bargain".22
In a case where one piece of electronic charting equipment malfunctioned and damaged another, the court would be obligated to inquire whether the whole unit or merely the defective device had been the object of the contract between the shipowner and the manufacturer. If the parts were purchased separately, the owner may be able to recover in tort for damage to the other device(s).23 Similarly, if an electronic charting system forms a part of a larger integrated navigation system which was purchased as separate, individual devices, the owner may be able to recover in tort for damage caused by the electronic chart to the integrated radar, GPS, autopilot, etc. If the vessel was purchased with the electronic charting system completely installed, without a separate contract of sale for the components, there would probably be no recovery in tort for damage to the vessel itself. In each scenario where tort claims are disallowed, recovery will be limited to that permitted by the terms of the relevant contract, supplemented by any applicable warranties implied at law.
Potential Claims Against Producers of Electronic Chart Systems
As noted above, it is important to be aware of the differences in the positions of the various electronic charting systems producers when facing claims, whether in strict liability, negligence or contract. The manufacturer of electronic hardware designed as the main device or as a component part to a larger integrated system will be subject to different claims, and will have different possible defenses, than the producer of either the software program which manipulates the electronic chart (and other data) or the producer of the chart database itself. In some cases, of course, one entity may be responsible for multiple roles in the manufacturing and marketing process. This section will describe some of the possible claims faced by the producers generally and the scope of the damages which might be awarded.
Although actions in contract will, with minor exception,24 be brought by the purchaser of a charting product, the scope of claimants for damages in strict liability or negligence is not so limited.25 Taking a worst-case scenario of a collision between two vessels attributable to a defect in an electronic charting system causing physical damage to both ships, loss of their use, loss of cargo, loss of life, damage to property on shore and environmental damage, the manufacturer of the defective product must anticipate claims from a number of injured parties.
First, the shipowner whose charting system caused the accident could claim 1) in contract, if its terms permit, for damage to the defective product itself, 2) in tort, for physical damage to the ship and loss of its use under a strict liability and/or negligence theory,26 and 3) in indemnity for his liability to persons claiming against him for damages suffered as a result of the accident and for his liability to the U.S. Coast Guard or other federal or state authority for pollution cleanup costs.
Second, along with claims against the shipowner whose system caused the accident, the other shipowner, the owner of property on shore and the cargo owners could each claim in tort for their damages. Third, claims could be brought on behalf of dead or injured crew members on either ship in tort. Finally, the charterer of the ship on which the system failed may have a claim in contract under a third-party beneficiary theory, or in tort, for damage to his property on board.
Bases for claims against producers of electronic charting systems
It will be recalled that in order to recover in strict liability from the manufacturer or seller of the electronic charting system or any of its components, a plaintiff must prove that the product was unreasonably dangerous at the time it left the defendant's hands and that the unreasonably dangerous condition was the proximate cause of the plaintiff's injury.27 The threshold question then becomes, when is a product such as an electronic charting system "unreasonably dangerous"? The comments to Section 402A offer some guidance. Comment i states that Section 402A "applies only when the defective condition of the product makes it unreasonably dangerous to the user or consumer." Comment h explains that a "product is not in a defective condition when it is safe for normal handling and consumption". The Fifth Circuit, in considering allegations of a defect in compressor design, shed some light on the issue:
We hold that in admiralty cases, the 'normal' use of a product includes all reasonably foreseeable uses, including foreseeable misuse. This is the virtually universal rule in all states.28
Generally, a claim may be stated in strict products liability for a manufacturing defect, a design defect, or the failure to warn of a known dangerous condition. It takes little imagination to conceive of the various manufacturing "defects" in an electronic charting device which could cause damage. Anything from a warning alarm for shallow water or proximity to a navigational hazard which fails to sound,29 to a chart which inaccurately represents depth, to a poor display which the navigator misreads, to a defective power supply could become the "unreasonably dangerous" condition that causes the calamity. With adequate proof that the electronics, software or data was not altered subsequent to leaving the manufacturer's hands, each of these would form an adequate foundation for a claim in strict products liability.
The risk to the producer of electronic charting systems is not as predictable in the category of design defects. It is difficult to predict whether the current absence of clear industry standards or guidelines will work to the producer's favor.30 A plaintiff may show a defect in design through the use of circumstantial evidence without offering proof of a specific defect31 but the plaintiff will need to sufficiently negate all other possible causes for the damage.32 In evaluating a claim of design defect, the trial court may consider "how easily the manufacturer could have designed a safer alternative product."33
The comments to Section 402A also specifically provide that a product can be "unreasonably dangerous" for purposes of strict products liability if it lacks adequate directions or warnings.34 Citing to Section 402A comment j, the Fifth Circuit elaborated on this basis of strict liability:
It is a fundamental principle of the law of product liability in this Circuit that a manufacturer has a responsibility to instruct consumers as to the safe use of its product and to warn consumers of dangers associated with its product of which the seller either knows or should know at the time the product is sold. In assessing what hazards are foreseeable, a manufacturer is held to the status of an expert. The lack of adequate warnings renders a product defective and unreasonably dangerous even if there is no manufacturing or design defect in the product.35
Many courts have recognized the failure to warn as a type of "defect" upon which recovery in both strict liability and negligence may be grounded.36 Failure to warn has led to recovery when there was a complete absence of warning where one was needed to prevent the product from being unreasonably dangerous.37 The failure to warn theory has also been successful where the manufacturer provided a warning which was found to be inadequate.38
Plaintiffs claiming defects in electronic charting systems are likely to attempt a claim for failure to warn of a known danger, especially where the damage is proximately caused by human error in manipulating the system. For instance, users will need to be warned of the dangers of selecting an inappropriate display (choosing to view a geographic area that is too detailed or not detailed enough)39 as exercise of poor judgment in this area may cause the navigator to miss a navigational hazard.40 While the manufacturer may try to shift the blame to the user, it will face a claim for inadequate (or nonexistent) warning of the dangers of selecting an inappropriate display.
Where the producer provides a warning bell or other alarm to signal a dangerous use of the system and that signal does not sound properly, a plaintiff may similarly state a claim for failure to warn. A producer could also be found to have breached its duty to warn where a written warning, either provided on-screen as part of the display or on a separate document, e.g., in the user's manual, is not prominent enough, is too small or difficult to read, or does not otherwise appear legibly at the time it is needed.
There is some debate as to whether a manufacturer is relieved from liability for failure to warn of a known defect or danger when it warns its immediate purchaser, i.e., intermediary distributor.41 Generally, a manufacturer can be held liable for failure to warn when a defect comes to its attention after manufacturing and sales and it fails to notify the end user of the product.42 This is based on the premise that a manufacturer cannot delegate its duty to warn.
Shielding The Producer From Liability
Given the variety of possible claims in strict products liability, negligence and contract for damages arising out of a defective electronic charting system, the producer would be well advised to take steps to avoid liability in the first place as well as to prepare in advance for possible claims. When claims do arise, a variety of defenses may be available, including, where factually applicable, shifting the blame to the party actually responsible for the damage. The following section will sketch out some ways a producer may try to shield itself from liability, both at the manufacturing stage and as a defendant in a lawsuit.
Avoiding liability in the first place
In light of the East River doctrine which relegates claims for injury to the product itself to contractual theories of warranty, a producer should obviously limit and disclaim warranties43 in its contract of sale.44 Generally, courts will enforce such clauses in contracts between parties of relatively equal bargaining power.45 This should be the case in a commercial transaction involving a large shipowner and electronics supplier but would arguably not be the case where a large electronics supplier uses a mail-order catalogue to sell to small boat owners. The producer may include terms denying implied warranties of fitness or merchantability.46 In anticipation of tort-based claims, the producer may include a disclaimer relating to ordinary negligence but it may not disclaim liability for gross negligence as such clauses will not be upheld by the courts.47
The use of disclaimers and limited warranties may also be seen as a notice to the user of the physical limitations of the product. Comment c to Section 402A explains that the theory behind products liability without regard to fault stems from the responsibility owed by the seller to the consumer whose reliance the seller has induced:
On whatever theory, the justification for the strict liability has been said to be that the seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public which may be injured by it; that the public has a right to and does expect, in the case of products which it needs and for which it is forced to rely upon the seller, that reputable sellers will stand behind their goods.
A contractual provision (or even the language of a marketing brochure) may be constructed to put the user on notice that the product has limitations and that the user should reduce its reliance upon the product accordingly. In the case of electronic charting equipment, the need is obvious. Chart databases are based upon data usually supplied by government hydrographic offices which are often considerably outdated and to only a limited extent incorporate the revisions typically found in Notices to Mariners.48 The user of an electronic charting system should be made aware that the most complete (if still inaccurate) charting information available would be a conventional paper chart combined with Notices to Mariners. Although practically the electronic chart will likely be used without constant reference to paper charts and still less to periodic updates, the producer may wish to limit the user's reliance on its product through written disclaimers.49
The courts have consistently held that the language of such contractual disclaimers will be strictly construed and will only afford protection for negligence if it contains clear wording to that effect:
The producer should remember that contractual disclaimers, however effectively drawn to limit liability to the other contracting party, will be ineffective against nonparties to the contract. Thus, the disclaimers will not likely work to limit liability for personal injury claims made directly against the producer.The rationale [of the exception to the principle that a party may not contract out of its own negligence] presupposes that the contracting parties have in fact considered the relative costs of insuring against negligent design and manufacture and have incorporated their conclusions into the contract. For this reason, although a seller's disclaimer of negligence will be enforced where the contract specifically mentions "negligence", "tort" or cognates thereof, the courts will not enforce a disclaimer of negligent design and manufacture, even in a commercial context, unless the contractual language is clear and unequivocal.50
At the manufacturing level, a producer of electronic charting equipment should take into consideration the possible liability that it would face for a malfunction in its product caused by a defective component part and choose the manufacturers of component parts with special care. An assembler of products will generally be held liable for a defect in the component parts although it may be eligible for a claim over against the component part manufacturer in indemnity or contribution.51
An important aspect of risk control for the manufacturer of electronic charting systems is offering adequate warnings to the user in strategic locations on the system.52 At a minimum, the producer may wish to consult the guidelines offered in such publications as the IMO's Draft Performance Standards for Electronic Chart Display and Information Systems (ECDIS).53 The IMO Draft Performance Standards refer to the placement and type of warnings that a producer may incorporate into the systems as a safety (and liability) precaution. The document also includes a list of fifteen "Alarms and Indicators" which would warn of certain safety conditions or hazards as they arise in the use of the chart.54 Additionally, the producer should consider off-screen warnings of the limitations of the system generally. These should be legible and conspicuously placed.
In light of how recently electronic charting has become available, navigators are likely to be relatively unfamiliar with its use and may unwittingly choose displays or functions which eliminate data necessary to exercise sound judgment in maneuvering the ship. Even having provided adequate warnings, the producer should provide thorough instruction in the use of its equipment and/or post-sale support services to reduce the possibility of a claim for failure to warn or instruct.55
Finally, a producer who has created a safe, properly functioning device with adequate warnings and instruction as to safe use may still face tort claims if inaccurate data displayed by the device cause injury. This means that warnings should include a clear statement to the effect that the electronic chart is derived from the most recent (if this is true) government-issued paper chart data available, combined with relevant updates as issued in official Notices to Mariners (if this is true), but that it does not contain any updates issued subsequent to manufacture of the database cartridge. The most prudent approach, of course, would be to make updates readily available and to ensure that, upon installation, other necessary data is not removed from the charting system.
Affirmative defenses when faced with a claim
When faced with a claim for a defective electronic charting system or system component, the simplest legal path, while possibly the most complicated one factually, is to disprove the existence of the alleged defect. Evidence might consist of testimony from an engineering expert or from various employees in the chain of fabrication and distribution to negate the existence of the alleged physical defect at the time it was sold by the defendant.
A defendant manufacturer may attempt to show that despite the possibility of a physical defect or inadequate warning, the defect was not the cause of the plaintiff's loss. The most airtight causation defense would be an offer of affirmative evidence of the actual source of the injury. However, in order to disprove causation for the purpose of claims in strict liability or negligence, the products liability defendant must simply show that the product was not defective when it left its hands, i.e., that there was some superseding cause. If the defendant can prove that the loss or damage was attributable to a defect in the product that was caused by a third party subsequent to manufacture and distribution, e.g., that it was improperly installed, tampered with, damaged by another device on board, after it left the manufacturer's hands, the manufacturer may be able to avoid liability in tort and also in contract, depending on the cause of the defect and the warranty terms.56
When defending a claim of defect based upon a lack of warning or inadequate warning, the manufacturer should consider whether a warning was even necessary under the circumstances. It is well settled that there is no duty to warn the sophisticated or professional user of dangers of which they can reasonably be expected to be aware. The Fifth Circuit clearly stated the rule:
The duty to warn exists even though the product is not otherwise defective; failure to adequately warn is a defect. The manufacturer, however, need not warn of dangers that users know or should know of or dangers that are or should be obvious to ordinary users. In addition, manufacturers need not warn sophisticated users of dangers that they should know of.57
While the experienced and skilled navigator of an oceangoing cargo vessel or cruise ship equipped with an integrated navigation system may not need much warning, a newly assigned, inexperienced officer or small boat navigator will require at least a thorough user's manual, if not a course of instruction, including clear warnings of all potential dangers in using the system. Warnings should also be incorporated into the system to alert the user to dangers as they arise.
Similarly, inadequate warnings or a total failure to warn will not result in liability to the producer if he can prove that the warnings or instructions would not have been followed even if they had been available.58 Proof may be especially difficult in this defense, however.
A manufacturer may also have a "state of the art" defense available. This defense is based on the premise that a product cannot reasonably be found to have been "unreasonably dangerous" when it left the manufacturer's hands if its design conformed to the state of the art, i.e., the most current advancements in technology, at the time it was created and marketed.59 The state of the art defense has been codified in products liability laws of several states,60 which has permitted evidence as to the state of the art to be offered in defense of products liability claims made in negligence.61
Faced with claims in contract, the manufacturer should turn to the provisions of the contract of sale to determine the extent to which implied warranties have been eliminated and express warranties have been limited or have expired. Claims for consequential damages may be defended by use of the doctrine of foreseeability, as with any contract claim.62
The manufacturer defending a products liability claim may look to the party actually responsible for the defect or damage. The responsibility for the plaintiff's damages may be shifted to a third party, under theories of indemnity or contribution, or to the plaintiff himself, under the doctrine of comparative fault.
Although foreseeable misuse of the charting system by the user does not constitute a defense to the manufacturer, unforeseeable misuse does. The doctrine of comparative fault is used to reduce the plaintiff's recovery by his own fault's contribution to his damages.63 In cases where the plaintiff was the user of the electronic charting system, the producer may ask the court to reduce any award to the plaintiff by the plaintiff's percentage of fault.64 Examples of a user's fault might include the user's failure to follow instructions, his exercise of poor judgment in choosing an inappropriate level of display which then failed to indicate a hazard to navigation, his suppression of alarms (if this is a possibility), or perhaps even his failure to install an updated chart cartridge. If the plaintiff was fully at fault, i.e., his action or inaction was an intervening cause of his damages breaking the chain of causation, with or without a defect in the charting system, the manufacturer could theoretically defend on the theory of lack of causation or attempt to reduce its damages under the doctrine of comparative fault.
Similarly, the defendant producer may shift the liability to a third party under the doctrines of indemnity (total shift of liability) or contribution (like comparative fault, each party bears its of the damages according to percentage of fault). For example, depending on which component of the system contained the injury-causing defect, blame may be apportioned among the manufacturers of the electronic device itself, the running program, the chart cartridge or a linked piece of equipment such as the GPS, Loran or autopilot.65 A manufacturer may equally have a valid claim over in contribution or indemnity against an intermediary seller, e.g., retailer, shipbuilder, if that seller was actually responsible for the defect causing the loss.
Finally, if inaccurate data in the chart itself is the source of the problem, the same principles of indemnity and contribution apply. Even a claim over against NOAA/NOS would be appropriate since the United States government has been held to have a duty to provide accurate chart data when gathered as a part of a non-discretionary government function.66 The Fifth Circuit based its reasoning on the reliance of prudent shipowners on nautical charts and Notices to Mariners:
These charts are published by the Government with the certain knowledge that their (i) will be disseminated through reliable channels to ships and crews and (ii) will be relied on as accurate portrayals of the waters covered. . . . What the maritime law exacts of shipowner [sic] through decisions of admiralty courts may hardly be ignored by the Executive Agency responsible for such charts. The Government must therefore bear the burden of using due care in the preparation and dissemination of charts and notices.67If the data provided by the government agency were altered in a manner relevant to the inaccuracy causing the damage, however, there can be no claim against the government because the chain of causation would have been broken.
As with every other advance in modern technology, the development of electronic chart systems presents producers and suppliers not only with new opportunities for profit, but also with new and/or expanded potentials for liability. One producer the authors spoke with is resigned to the fact that after any substantial casualty, his company will be sued if there is the slightest link between his equipment and the casualty. His company's position is that the costs of insurance and litigation are simply part of the cost of doing business. These costs, undoubtedly, are passed along to the purchasers.
In this paper, we have outlined the applicable law and the limited legal protections available to the producers and suppliers of electronic chart systems. The U.S. Congress is reportedly working on legislation to set limits on product liability suits and on punitive damages. Perhaps some relief will become available this way, but it cannot be counted upon.
In the meantime, the producer should continue to do what he reasonably can to ensure that his product is not defective and will not fail at an inopportune time or be misused. Accident avoidance remains the best defense.
* The authors gratefully acknowledge the research assistance of Ian L. Kelley, second-year law student, Fordham University School of Law.
1 To the extent that state law may be applicable and is discussed, this analysis will look to the common denominator of state sales law, the Uniform Commercial Code ("UCC"), without considering individual state's variations on or additions to the UCC. Finally, given the lack of judicial precedent directly addressing this issue, reference will be made to caselaw which may be instructive by analogy, such as actions involving manufacturers of steering systems, ship engines and radar.]
2 The two primary producers of database charts are C-Map and Navionics and most of the devices on the market today require the chart cartridges of one of these two companies.
3 Data cartridges generally consist of scanned, digitized versions of the paper charts issued by the National Ocean Service ("NOS") branch of the National Oceanic and Atmospheric Administration ("NOAA"), the Defense Mapping Agency, the Canadian Hydrographic Service, or other governmental hydrographic offices.
4 The domain of maritime products liability law has been treated by several articles written both before and after the Supreme Court's 1986 landmark decision in East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986). Although the subject appears not to have been treated in depth since the late 1980s, the following references are useful to an understanding of maritime products liability law: D. Thomas McCune, Maritime Products Liability, 18 Hastings L.J. 831 (1967); Paul S. Edelman, An Overview of Products Liability Law in a Maritime Context, 5 Mar. Law. 159 (Fall 1980); Charles E. Lugenbuhl, Contemporary Problems in Maritime Products Liability, 45 La. L. Rev. 859 (March 1985); Robert Force, Maritime Products Liability in the United States, 11 Mar. Law. 1 (Spring 1986). For a history of damages in this area, see Ed Bluestein, Jr., Damages in Maritime Products Liability Cases, 62 Tul. L. Rev. 511 (February 1988). For an overview of the liability of shipbuilders, the reader is referred to Paul N. Wonacott, Products Liability of Shipbuilders and Repairers, 62 Tul. L. Rev. 465 (February 1988).
5 476 U.S. 858 (1986).
6 See Pan-Alaska Fisheries, Inc. v. Marine Construction & Design Co., 565 F.2d 1129, 1134-35 (9th Cir. 1977) (review of jurisdictions having adopted the principles of strict products liability as set forth in Section 402A).
7 Section 402A.
8 Id. at comment a.
9 See, e.g., McKee v. Brunswick Corp., 354 F.2d 577, 582-83 (7th Cir. 1965) (duty of manufacturer to properly test coil).
10 See pages 16-19, infra, for a discussion of liability for failure to warn.
11 See, e.g., Jig The Third Corp. v. Puritan Marine Insurance Underwriters Corp., 519 F.2d 171 (5th Cir. 1975) (action in negligence and strict liability based alternatively on defective design or construction of shaft assembly), cert. denied, 424 U.S. 954 (1976).
12 East River, 476 U.S. at 871.
13 Id. at 872.
14 Conflicts of laws principles govern which state's contract law will apply to a warranty claim. While Article 2 of the UCC has been adopted in some form by all states except Louisiana, there are some variations on the extent to which warranties not expressly written into the contract may be implied at law, for example the implied warranties of merchantability (UCC Sec. 2-315) and of fitness for a particular purpose (UCC Sec. 2-314).
Additionally, some states may extend warranty coverage to persons not in privity of contract with the defendant, e.g., charterers, on the ground that the plaintiff is an intended third party beneficiary of the owner's contract with the seller or manufacturer. See, e.g., Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 380-84 (1960)(due to unequal bargaining position with respect to manufacturer, implied warranty of merchantability extended to ultimate purchaser in non-maritime case).
15 East River, 476 U.S. at 873.
16 Id. at 874; Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 15 (1854); China Union Lines, Ltd. v. A.O. Andersen & Co., 364 F.2d 769, 797 (5th Cir. 1966) (Brown, J. dissenting), cert. denied, 386 U.S. 933 (1967) (describes scope of foreseeability with regard to manufacturer‰s liability for dangerous chemical).
17 East River, 476 U.S. at 867.
18 Shipco 2295, Inc. v. Avendale Shipyards, In.., 825 F.2d 925 (5th Cir. 1987), cert. denied, 485 U.S. 1007 (1988).
19 Id. at 928.
20 Id. at 930; see also Mays Towing Co. v. Universal Machinery Co., 755 F. Supp. 830, 833 (S.D. Ill. 1990) (court denies recovery in tort for damage to engine where engine was object of the contract between plaintiff and defendants).
21 Nicor Supply Ships Assoc. v. General Motors, 876 F.2d 501 (5th Cir. 1989).
22 Id. at 505.
The "object of the bargain" test was further refined by the Fifth Circuit in subsequent cases where it held that the identity of the "product" was a question of law, not of fact. Petroleum Helicopters, Inc. v. AVCO Corp., 930 F.2d 389, 393 n.9 (5th Cir. 1991). See also Exxon Shipping Co. v. Pacific Resources, Inc., 835 F. Supp. 1195, 1199 (D. Haw. 1993).
More recently, the Fifth Circuit held that the test could be broadly applied to include, as "object of the bargain", subsequent spare and replacement parts. McDermott, Inc. v. Clyde Iron, 979 F.2d 1068, 1070 (5th Cir. 1992), rev'd on other grounds sub nom. McDermott, Inc. v. AmClyde, 114 S.Ct. 1461 (1994).
23 There is some conflict among the district courts as to whether a plaintiff may recover in tort for damage to an existing product where a significant new product is added later. Compare Mays Towing, 755 F. Supp. at 833 (plaintiff may recover for damage to vessel caused by defective new engine) and Exxon Shipping, 835 F. Supp. at 1201 n.4 with McConnell v. Caterpillar Tractor Co., 646 F. Supp. 1520, 1525-26 (D.N.J. 1986)(no recovery in tort for damage to engine caused by new crankshaft).
24 See footnote 14, supra.
25 Note that it may possible for a plaintiff in a noncommercial relationship with the manufacturer to avoid the limitations of East River and sue in tort for injury to the product itself, i.e., for pure economic losses arising out of a defective electronic charting system or defective component part thereof, although the holdings of East River and its progeny are less than clear on this point. Karshan v. Mattituck Inlet Marina & Shipyard, Inc., 785 F. Supp. 363, 366 (E.D.N.Y. 1992)(expressly holding that a private yacht owner and his insurer could not avoid the limitations of East River: "The Supreme Court in East River did not, however, confine its rationale to commercial transactions."); Lewinter v. Genmar Industries, Inc., 26 Cal. App. 4th 1214, 1221 (Cal. App. 2d Dist, 1st Div. 1994)("[W]e join the group which concludes that the East River doctrine is equally applicable in the consumer context."); Somerset Marine, Inc. v. Forespar Products Corp., 1994 A.M.C. 1577 (C.D. Cal. 1994)(East River applies to noncommercial vessels). But see Sherman v. Johnson & Towers Baltimore, Inc., 1991 A.M.C. 458, 462-63 (D. Md. 1990)(n.o.r.)("The Court in East River expressly limited its holding to commercial situations . . . . It is the corporations and not consumers which the Court had in mind when issuing the ruling in East River.")
26 Recovery for damage to the ship would not be allowed if the "product" causing the damage were found to be a component of the ship itself, e.g., where the electronic charting system was part of the ship as delivered to the owner/purchaser. See discussion at pages 9-12, supra.
27 Section 402A.
28 Vickers v. Chiles Drilling Co., 822 F.2d 535, 538 (5th Cir. 1987).
29 Some devices also offer a man overboard (MOB") positioning option which may, in some cases, be lined to an alarm. A producer should anticipate a claim for personal injury or death if the device fails to mark the MOB position accurately, or if the alarm fails to sound when activated and needed.
30 See, e.g., Wolff v. Whittaker Marine & Manufacturing Co., Inc., 484 F. Supp. 1021, 1029 (E.D. Mo. 1979)(court looked to compliance with safety standards as set forth by the American Boat & Yacht Council and the National Fire Protection Association as evidence that the boat's design was not defective).
While it would be premature to speculate what weight evidence of performance standards may carry in design litigation, one may easily anticipate that future claims will be based upon the failure of electronic chart systems producers to follow guidelines set up by such respected entities as the International Maritime Organization ("IMO") whose Maritime Safety Committee has already published draft Draft Performance Standards for Electronic Chart Display and Information Systems (ECDIS), IMO circular MSC/Cir.637 (May 27, 1994) ("IMO Draft Performance Standards"). These performance standards were designed to "permit Administrations to consider ECDIS as a legal equivalent to the charts required by regulation V/20 of the 1974 SOLAS [Safety of Life at Sea] Convention." Id.
For a discussion of compliance with guidelines as evidence in a "state of the art" defense, see page 28, infra.
31 Ocean Barge Transport v. Hess Oil Virgin Islands, 726 F.2d 121, 124 (3d Cir. 1984) (citing cases); Wolff, 484 F. Supp. at 1029.
32 Lindsay v. McDonald Douglas Aircraft Corp., 460 F.2d 631, 638-40 (8th Cir. 1972), aff‰d, 485 F.2d 1288 (8th Cir. 1973).
33 Vickers, 822 F.2d at 539 (citing cases).
34 Section 402A, comment j. See also Martinez v. Dixie Carriers, Inc., 529 F.2d 457, 465 (5th Cir. 1976) ("[L]ack of an adequate warning in itself renders a product defective or unreasonably dangerous within the meaning of products liability law.").
35 Pavlides v. Galveston Yacht Basin, Inc., 727 F.2d 330, 338 (5th Cir. 1984) (citations omitted).
36 See, e.g., Martinez, 529 F.2d 457 (failure to warn sounds in negligence and strict products liability); Ionmar Compania Naviera, S.A. v. Olin Corp., 666 F.2d 897 (5th Cir. 1982)(duty to warn of foreseeable hazards of which users could not reasonably have been expected to be aware); Pavlides, 727 F.2d at 338-41 (extensive discussion of adequacy of warning necessary to avoid strict products liability); Miller Industries v. Caterpillar Tractor Co., 733 F.2d 813 (11th Cir. 1984)(recovery available in negligence theory for failure to warn adequately), reh'g en banc denied, 738 F.2d 451 (11th Cir. 1984); McConnell, 646 F. Supp. 1520 (recovery available in negligence theory for failure to warn); In re Incident Aboard D/B Ocean King on August 30, 1980, 813 F.2d 679, 686-87 (5th Cir. 1987)(describing scope of duty to warn); White v. Amoco Oil Co., 835 F.2d 1113 (5th Cir. 1988)(describing scope of duty to warn where product not otherwise defective). See also Nicor, 876 F.2d 501 (possible to avoid limitations of East River doctrine in claim for failure to warn); Mays, 755 F. Supp. 830.
37 See, e.g., Incident Aboard D/B Ocean King, 813 F.2d 679.
38 See, e.g., Miller, 733 F2d 813 (mere sending of letter to dealer insufficient warning to consumer of potential danger in installing product on vessel). Accord Pavlides, 727 F.2d 330.
39 This is known as "overscaling" or "underscaling".
40 Additionally, some charting systems offer the capability of zooming so far in on a geographic area that the display becomes more magnified than the original paper chart causing the data to become distorted and inaccurate. The need for warnings to the user is obvious.
41 See Pan-Alaska Fisheries, 565 F.2d at 1136-37 (held that the manufacturer "cannot escape liability under the theory of strict products liability just because it warned . . . its immediate purchaser and dealer.").
42 Miller, 733 F.2d 813 (holding manufacturer of defective engine liable for failure to warn where it discovered defect after the sale); Mays, 755 F. Supp. 830 (court permits tort claim for post-sale failure to warn). But see Nicor, 876 F.2d 501 (claim for post-sale failure to warn dismissed). See also Victor Schwartz, The Post-Sale Duty to Warn: Two Unforunate Forks in the Road to a Reasonable Doctrine, 58 N.Y.U.L. Rev. 892 (1983).
43 These contract terms are known as "red letter clauses" in the context of contracts to build and ships. For a discussion of the uses and limitations of "red letter clauses", see generally Howard M. McCormack, Warranties and Disclaimers, 62 Tul. L. Rev. 549 (February 1988).
44 It should be remembered that state law generally governs contracts of sale, especially where admiralty jurisdiction is not implicated, e.g., in contracts for the construction of, or supply of materials to, a vessel. East River, 476 U.S. at 872 n.7. See generally G. Gilmore & C. Black, The Law of Admiralty Sec. 1-10 (2d ed. 1975).
45 See, e.g., Jig The Third Corp. v. Puritan Marine Insurance Underwriters Corp., 519 F.2d 171 (5th Cir. 1975) ("The general rule is that parties of relatively equal bargaining power may contract for the sale of a chattel whereby the seller disclaims any liability for commercial damage to the product which may result from negligent design or manufacture."); M/V American Queen v. San Diego Marine Construction Corp., 708 F.2d 1483, 1489 (9th Cir. 1983).
46 For examples of disclaimers which have been upheld as validly denying liability for implied warranties of fitness and merchantability as well as for ordinary negligence, see Lykes Bros. S.S. Co., Inc. v. Waukesha Bearings Corp., 502 F. Supp. 1163 (E.D. La. 1980).
47 Id. at 1172. See also McCormack, 62 Tul. L. Rev. at 554-56.
48 The electronic chart will only be as good as the data it contains and much of this source material is considerably out of date. A recent article in Ocean Navigator reported that "roughly half of the survey data for U.S. coastal charts is more than 50 years old and was gathered with leadline and sextant. . . . Budget cutbacks at the National Ocean Service have not only eliminated funds for new surveys, but have extended the schedule for correcting and reprinting the charts based on old surveys." Tim Queeney, Crisis in Nautical Charting, 65 Ocean Navigator January/February 1995, at 5. The article also notes that "NOS has more than 30,000 Notice to Mariners chart corrections outstanding." Id. While 20,000 new changes are revealed per year, the recent budgetary constraints faced by NOS will permit the publication of only about 11,000 per year. Id.
49 One commentator reported that "each and every manufacturer cautions the user with strong language that the chart plotter [electronic charting system] is not intended to be used as a primary navigation tool, but is rather an accessory to the standard paper chart." Marine Electronics: Lowrance, Garmin Best in LCD Chart Plotters, 20 Practical Sailor, no. 23/24, December 1994, at 17.
Examples of clauses currently in use in brochures advertising the sale of chart cartridges include: "WARNING: THE ELECTRONIC CHART IS AN AID TO NAVIGATION DESIGNED TO FACILITATE THE USE OF AUTHORIZED GOVERNMENT CHARTS, NOT TO REPLACE THEM. ONLY OFFICIAL GOVERNMENT CHARTS AND NOTICES TO MARINERS CONTAIN ALL INFORMATION NEEDED FOR THE SAFETY OF NAVIGATION, AND AS ALWAYS, THE CAPTAIN IS RESPONSIBLE FOR THEIR PRUDENT USE." (Navionics Seamless Electronic charts brochure, 1994) and "Of course, electronic charting displays are meant to complement, not replace, paper charts" (C-MAP USA brochure, n.d.).
50 Jig The Third, 519 F.2d at 176-77 (citations omitted) (citing cases). See also Miller, 733 F.2d 813 (warranty must expressly disclaim negligence); Edward Leasing Corp. v. Uhlig & Assoc., Inc., 785 F.2d 877, 889 (11th Cir. 1986).
51 Sperry Rand Corp. v. Radio Corp. of America, 618 F.2d 319 (5th Cir. 1980) (indemnity claim of manufacturer of defective steering system against manufacturer of defective component part recognized as cognizable in admiralty).
52 See discussion of liability for failure to warn to pages 16-19, supra.
53 IMO circular MSC/Cir.637 (May 27, 1994). See also International Hydrographic Organization ("IHO"), Provisional Specifications for Chart Content and Display of ECDIS, Special Publication No. S-52 (2d ed. September 1992); International Electrotechnical Commission ("IEC"), Electronic Chart Display and Information System (ECDIS), IEC Publication 1174 (n.d.); Draft Performance Standards, Appendix 1 (listing other publications of interest).
54 IMO Draft Performance Standards, Appendix 5. The IMO defines "alarm" as "An alarm or alarm system which announces by audible means, or audible and visual means, a condition requiring attention" and defines "indicator" as "Visual indication giving information about the condition of a system or equipment." IMO Draft Performance Standards, Appendix 5, citing IMO, Code on Alarms and Indicators, IMO-867E (n.d.). See also IMO Draft Performance Standards, Appendix 4 "Areas for which Special Conditions Exist" (geographic areas and conditions for which alarms or indications are needed).
55 There are also liabilities associated with the provision of instruction but these are outside the scope of this paper.
56 Of course, if the manufacturer is also the installer of repairer, it may be liable under other legal theories, e.g., warranty of workmanlike performance, which are beyond the scope of this paper.
57 White, 835 F.2d at 1118. See also Martinez, 529 F.2d at 464 ("The great weight of authority supports the proposition that in an action for negligent failure to warn, there is no right to recover where the party to be warned is already aware of the danger"); Incident Aboard D/B Ocean King, 813 F.2d at 687 ("[T]he sophisticated user defense applies only when the user knew of the particular danger . . . .").
58 Section 402A, comment j; Harrison v. Flota Mercante Grancolombiana, S.A., 577 F.2d 968, 984 (5th Cir. 1978); Howard v. Teleflex (Canada), Ltd., 1990 U.S. Dist. Lexis 1378 at *19 (E.D. La. 1990), motion for new trial denied, 1990 U.S. Dist Lexis 4177 (E.D. La. 1990).
59 See, e.g., Norton v. Snapper Power Equipment, a Division of Fuqua Industries, Inc., 806 F.2d 1545, 1549 (11th Cir. 1987) (discussing the availability of a "state of the art" defense in strict liability actions), reh‰g en banc denied, 812 F.2d 1415 (11th Cir. 1987).
60 Since the Supreme Court‰s decision in East River officially recognized products liability law as a part of the general maritime law, federal courts have looked not only to Section 402A but also to state products liability laws where they are not inconsistent with the principles of Section 402A. See e.g., Sullivan v. Rowan Companies, Inc., 952 F.2d 141 (5th Cir. 1992) (applying Louisiana law which has been deemed not inconsistent with the principles of Section 402A).
61 See e.g. Iowa Code Sec. 668.12; Ind. Code Sec. 33-1-1.5-4(b)(4); Tenn. Code Ann. Sec. 29-28-105.
62 Hadley v. Baxendale, 9 Ex. 341.
63 Lewis v. Timco, Inc., 716 F.2d 1425 (5th Cir. 1983) (en banc) (extensive discussion of the appropriateness of the doctrine of comparative fault in maritime products liability law). See generally Owen and Moore, Comparative Negligence in Maritime Personal Injury Cases, 43 La. L. Rev. 942 (1983). See also Pan-Alaska Fisheries, 565 F.2d at 1137-39 (extensive discussion of the doctrine of comparative fault, holding that the doctrine may be applied to maritime strict products liability); Incident Aboard D/B Ocean King, 813 F.2d 679.
64 In cases of unforeseeable misuse, the courts have refused to hold the manufacturer liable for the claimant‰s injuries. See, e.g., Sullivan, 736 F. Supp. 722.
65 An electronic charting system manufacturer may be held initially liable for a defect in a component part. Pan-Alaska Fisheries, 565 F.2d at 1136 n.3. The manufacturer should then claim over against the manufacturer of the defective component part.
66 Claims against foreign government hydrographic offices for inaccurate chart information may be barred on sovereign immunity grounds.
67 De Bardeleben Marine Corp. v. United States, 451 F.2d 140, 148-49 (5th Cir. 1971). See also Afran Transport Co. v. United States, 435 F.2d 213, 215 (2d Cir. 1970)("For, in the absence of some suspicious circumstance or notice, navigators are entitled to rely upon the representations made in the Government charts relative to the location of the buoys.")(citing cases), cert. denied, 404 U.S. 872 (1971). Accord Richmond Marine Panama, S.A. v. United States, 350 F. Supp. 1210, 1218 (S.D.N.Y. 1972). Cf. Hamburger v. United States, 318 F. Supp. 103, 105 (D. Md. 1970) (duty of government to mark or remove destroyed shoal light carefully); In re Lloyd's Leasing Ltd., 764 F. Supp. 1114 (S.D. Tex. 1990)(government not liable for discretionary functions nor can it be held liable for the failure to chart or mark conditions it had no duty to do so), aff'd on other grounds, 902 F.2d 368 (5th Cir. 1990). See generally Liability of United States for Injuries and Damages Arising From Issuance to Mariners of Faulty Coast and Geodetic Survey Charts and Notices Thereof, 17 A.L.R. Fed. 995 (1994).
