Montgomery McCracken Attorneys Lead Greek Ship Owners to Victory in 2004 Oil Spill Litigation

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Following an 8-week trial in the U.S. District Court for the Eastern District of Pennsylvania, Montgomery McCracken partners, John J. Levy, Alfred J. Kuffler, Eugene O’Connor, Timothy J. Bergère and Tricia J. Sadd, won a $71.5 million judgment against CITGO Asphalt Refining Co. and related companies in connection with a 2004 oil spill in the Port of Philadelphia. The firm represented the Frescati Shipping Co., Ltd. and Tsakos Shipping & Trading, S.A., the Greek owners and operators of the M/V Athos I, a tanker chartered by CITGO to transport oil from CITGO facilities in Venezuela to a CITGO asphalt refinery in Paulsboro, NJ, across from the Philadelphia airport.

On November 26, 2004, while the Athos I was attempting to dock at CITGO’s Paulsboro refinery on the Delaware River, her hull was punctured by a 9-ton anchor abandoned on the river bed. The anchor punched a hole in a cargo tank allowing over 264,000 gallons of heavy crude oil to spill into the river, closing the Port while emergency responders scrambled to contain the spill under difficult tidal and weather conditions. The oil spill response took nearly 6-months, involved over 1,100 oil spill response workers on both sides of the river across three states, at a cost in excess of $143 million. The vessel also suffered millions of dollars in damages and was out of commission for many months. The vessel owners sued CITGO for breach of a maritime “safe berth” warranty, and for negligence in failing to clear the approach to its berth of dangerous obstructions like the anchor.

This was the vessel owners’ third major legal victory arising from the incident. Early in the case, the vessel owners requested that the U.S. Coast Guard take over the oil spill cleanup, which it agreed to do in 2005, thereby saving the owners about $60 million in additional costs. The owners then petitioned the U.S. Coast Guard’s National Pollution Fund Center for reimbursement of certain of the response costs under provisions of the Oil Pollution Act of 1990. In 2006, those efforts paid off when the Fund allowed the vessel owners to limit their liability, and reimbursed nearly $88 million of the vessel owner’s spill response costs. Gene O’Connor, with support from Fred Kuffler, was instrumental in pursuing the limitation action before the Fund. According to O’Connor, “this was a major oil spill, one of the most expensive in the country after the Exxon Valdez, and until the Deepwater Horizon incident in the Gulf, was one of the largest reimbursements from the Fund. The Coast Guard took great care reviewing the supporting documentation and the vessel’s petition for limitation, and we were gratified by the outcome.”

Kuffler was also impressed with the way the vessel owners conducted themselves from the moment of the spill. “Oil spill response in a busy port like Philadelphia, in winter weather, poses great challenges. Here, the vessel owners and their response contractors did an exemplary job on the spill response, working seamlessly with the Coast Guard in one of the best managed and most successful oil spill responses in this country. I believe this is one of the only spill responses to ever receive a commendation from the Coast Guard, and the vessel owners should be very proud of that recognition. I know Montgomery McCracken is proud to have played a role in assisting the vessel owners achieve that exceptional outcome.”

A second victory for the vessel owners was obtained in 2013 when the U.S. Court of Appeals for the Third Circuit reversed an earlier trial court ruling in favor of CITGO. In that decision, the appellate court determined that the vessel owners were entitled to pursue their safe berth warranty and wharfinger negligence claims, and that CITGO, as the terminal operator, had a duty to assure the safety of the approach to its berth, as well as the berth itself. The case was remanded to the trial court, where it was assigned to the Honorable Joel H. Slomsky, following the retirement of the original trial judge. The vessel owners then proceeded to trial against the CITGO companies for reimbursement of the remainder of their losses, amounting to just over $55 million.

The most recent victory came on July 25, 2016, when, after hearing a battery of fact and expert witnesses on maritime safety, vessel navigation, ship drafts, ballasting procedures, metallurgy, tides, and response cost control, Judge Slomsky handed the vessel owners a complete victory, awarding all of the requested damages, plus prejudgment interest over a period of 11 years, which added $16 million to the judgment. The final award was just over $71.5 million. John Levy, who led the successful trial team, said “when every issue is so vigorously challenged at trial, as CITGO’s lawyers did here, it is difficult to predict an outcome. But we had a high degree of confidence in the credibility of our witnesses and the soundness of our theory about how this casualty occurred. At the end of the day, the Court agreed with our experts and our theory of the case. We are especially pleased that the Court accepted all of the evidence on damages, resulting in a complete recovery for our clients.”

Of no less importance to the vessel owners, Judge Slomsky found that there was no fault on the part of the vessel or its crew, ruling that at the time of the incident, the vessel was seaworthy and being competently navigated. Judge Slomsky’s ruling echoes earlier findings of the U.S. Coast Guard’s own investigation of the incident in 2006, which found no fault by the vessel or its Master. According to Levy, “winning the damages was of course important, but what was most gratifying was the Court’s vindication of the vessel, the Captain and his crew. The court found that the accident happened despite the reasonable actions of the Captain and his crew.” Judge Slomsky also rejected CITGO’s claims that the vessel was not seaworthy. “The vessel owners here have a well-earned reputation for operating seaworthy vessels with competent and professional crews, and that is just what the Court found,” said Levy.

Fred Kuffler led the team’s overall legal and trial strategy, and worked closely with Gene O’Connor and Coast Guard investigators in their investigation of the incident in 2004 and 2005. “The Coast Guard got it right in 2006 when they found the vessel not at fault, and Judge Slomsky, who was not permitted to rely on the Coast Guard’s findings, independently reached the same conclusion, so there really can be no doubt that the vessel owners were the victims, and were rightfully entitled to be reimbursed their costs.”

John Levy served as lead trial attorney, handling key fact and expert witnesses on issues such as the ship’s draft, under-keel clearance, tides, damage to the ship’s hull and the movement of the ship up to the time of its contact with the anchor, and immediately afterwards, all of which were contested by CITGO’s team of lawyers and experts. Levy was joined by admiralty veteran Gene O’Connor, who led the owner’s defense against CITGO’s attacks on the navigation and seaworthiness of the ship, putting on and defending key witnesses, such as the pilots, salvers, and expert witnesses on navigation. O’Connor was also pleased with the outcome. “Every trial presents different challenges, and this case was a logistical challenge from the start, with over 100 depositions taken on several continents, witnesses whose testimony required translation, dozens of experts and thousands of exhibits. Evaluating the many witnesses and that much information to be able to present a logical, cohesive case to the court took tremendous effort and technical coordination, and we had a great team from the start.”

Tim Bergère and Tricia Sadd took on the enormous task of successfully proving – to the penny – the millions of dollars in damages the owners sought from CITGO. “At trial we had to put on thousands of invoices and other documents to prove just over $150 million in damages, which included the $88 million we recovered earlier from the National Pollution Fund Center,” said Bergere. “We then had to defend virtually every spending decision against a concerted attack by CITGO’s cost control expert.” In the end, Montgomery, McCracken had the advantage of familiarity with the record from having worked with the response workers during the cleanup, and with the processing of the claims before the National Pollution Fund Center. “But we also had the benefit of the testimony of some very dedicated Coast Guard personnel from the Strike Team, and from the Fund Center, whose testimony and support was essential to this very favorable outcome,” said Bergere.

Bergère also handled complex expert testimony on side scan sonar, sediment characteristics on the riverbed, and forensic evidence related to sponge growth on the anchor, which helped to date the anchor’s residence time on the riverbed. Bergere’s and Levy’s work with experts in the use of sidescan sonar ultimately was accepted and adopted by the Court as the standard of care CITGO should have been following to search for hazards in the approach to its berth. “At the end of the day, we can only try the cases that come to us,” said Levy, “we were blessed here to have very committed clients, which included the tremendous support and resolve of their P&I Club. Favorable results like this help overseas shipping companies who visit our shores have confidence they will be treated fairly in our legal system.”

The Montgomery McCracken trial team also included Melanie A. Leney, a senior associate in the firm’s Maritime and Transportation Practice Group, who worked on all aspects of the case, Robert E. O’ Connor, an associate in the firm’s Maritime and Transportation Practice Group, who was instrumental in submitting the successful claim of $88M to the Fund, David F. Herman, an associate in the litigation department who assisted the presentation of evidence on damages, and Pamela Theisen, a senior paralegal who helped prepare witnesses, manage the exhibits for every witness who testified or was cross-examined, and expertly choreographed the electronic exhibits and evidence presented at trial. Over 60 witnesses testified live or by video in 2010, and over 20 of them were recalled to testify again at the remand proceeding in 2015.