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In re Complaint of Mission Bay Jet Sports

September 2, 2008


The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge


Mission Bay Jet Sports, LLC and Robert Adamson, individually and doing business as Mission Bay Jet Sports (collectively "Movants") move to stay enforcement of this courts June 30, 2008 Order Dismissing the Action for Lack of Subject Matter Jurisdiction ("Order") pending appeal. The Order dismissed Movants' Limitation of Liability Act action for lack of subject matter jurisdiction. Claimants Haley Colombo and Jessica Slagel (collectively "Claimants") oppose the motion.

In seeking to stay a judgment pending appeal, the "party must ordinarily move first in the district court" before seeking relief from the appellate court. Fed.R.App.P. 8. Whether to grant a stay pending appeal, the court consider four factors: "(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies." Stormans Inc. v. Selecky, 526 F.3d 406, 412 (9th Cir. 2008 (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). The likelihood of success and the irreparable injury factors are considered on "a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases. Where the stay applicant demonstrates a strong likelihood of success, the possibility of irreparable injury is sufficient to warrant a stay. On the other end of the sliding scale, where the stay applicant demonstrates that the balance of hardships tips sharply in its favor, the applicant must show only that it raises serious legal questions. The public interest factor is considered "separately from and in addition to whether the applicant for stay will be irreparably injured absent a stay." Id. (Citations omitted).

Success on the Merits

Movants argue that they have demonstrated a strong probability of prevailing on appeal. First, Movants correctly argue that the court misidentified the river at issue in Foremost Ins. Co. v. Richardson, 457 U.S. 688 (1982) as the St Lawrence River instead of the Amite River. The Amite River flows through Mississippi and Louisiana before discharging into Lake Maurepas, Lake Pontchartrain, and the Gulf of Mexico. This inadvertent misidentification in a parenthetical reference does not alter the court's analysis as binding legal precedent, as applied and set forth in the Order, is identified in Jerome B., Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 527 (1995) and Sisson v. Ruby, 497 U.S. 358 (1990). In Foremost the Supreme Court rejected the notion that "a substantial relationship with commercial maritime activity is necessary" to establish admiralty jurisdiction. Foremost, 457 U.S. at 674. Assuming that the accident between the two pleasure vessels at issue occurred in a navigable portion of the Amite River, id. at 680 n.2, the Supreme Court rejected the notion that admiralty jurisdiction required a "commercial use of a given boat." Id. at 677. Here, the court's analysis did not turn on the commercial or private use of the water craft at issue. Rather, the issue of admiralty jurisdiction turns on the application of the location and connections tests. See Grubart, 513 U.S. at 534.

Second, Movants contend that the court inappropriately "analyzed the location of the incident, rather than the incident itself in the 'nexus' test.'" (Motion at p.4:15-16). The critical inquiry requires the court to "assess the general features of the type of incident involved to determine whether such an incident is likely to disrupt commercial activity." Sisson, 497 U.S. at 358. Here, as set forth in the Order, the accident occurred in an isolated cul-de-sac area of Mission Bay. No commercial shipping activities occur in or near the Personal Watercraft Area ("PWA"). The court notes that the scope of admiralty jurisdiction has been refined over time. Prior to Executive jet Aviation Inc. v. City of Cleveland, 409 U.S. 249 (1972) admiralty jurisdiction was traditionally established "[i]f the wrong occurred on navigable waters." Foremost, 457 U.S. at 672. The court notes that many of the authorities cited by Movants pre-date the location and connection tests for admiralty jurisdiction set forth in Grubart and Sisson and did not occur on isolated bodies of water like the PWA. See e.g. Oliver v. Hardesty, 745 F.2d 317 (4th Cir. 1984); Souther v. Thompson, 754 F.2d 151, 153 (4th Cir. 1985); Hogan v. Government, 767 F.2d 1093 (4th Cir. 1985); Gebhard v. S.S. Hawaiian Legislator, 425 F.2d 1303, 1307 (9th Cir. 1970); St Hilaire Moye v. Henderson, 496 F.2d 973 (8th Cir. 1974); Complaint of Paradise Holdings, 795 F.2d 756 (9th Cir. 1986). Under the admiralty jurisdiction test applicable prior to Executive Jet, the incident at issue would likely have occurred within the scope of admiralty jurisdiction. See Foremost, 457 U.S. at 672 (admiralty jurisdiction was traditionally established "[i]f the wrong occurred on navigable waters").

One debatable issue raised by Movants is whether the general nature of the incident under Sisson properly includes a reference to the incident having occurred "in an area closed to commercial shipping." (Order at p.6:2). The area where the incident occurred is not just closed to commercial shipping, but inaccessible to commercial shipping. Seen in this light, the court concludes that this is an immutable and indispensable characteristic of the site of the incident. Without a reference to the general nature of the incident as occurring "in an area closed to commercial shipping," the court would effectively disregard the Supreme Court's instruction that "protecting commercial shipping is at the heart of admiralty jurisdiction" and "[n]ot every accident in navigable waters that might disrupt maritime commerce will support federal admiralty jurisdiction." Sisson, 497 U.S. at 362. To ignore the determinative feature of the incident - - the inaccessibility of the area to commercial shipping - - would disregard the focus of admiralty jurisdiction "to protect commercial shipping." Id.

In sum, the court concludes that Movants have not made a strong showing of success on the merits.

Irreparable Harm and Balance of Hardships

Movants argue that there is a "possibility," (Motion at p.6:11), of irreparable harm if the judgment is not stayed because entry of a state court money judgment against them may result in their inability "to recoup the money judgment if a federal court eventually finds that MISSION BAY JET SPORTS is entitled to limit its liability." (Motion at p.6:13-15). This speculative argument is insufficient to make a showing of irreparable harm. "The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weights heavily against a claim of irreparable harm." Adees Corp. v. Avis Rent A Car System, Inc., 2004 U.S. Dist LEXIS 27329, p.3-4 (C.D. Cal. 2004). Here, there is no indication that Movants would not be adequately compensated should they prevail in state court. Further, the court notes that this factor is difficult to fully assess as the potential harms requires an assessment of the claims and defenses in the state court action.

In balancing the hardships, both parties are harmed by excessive delays in resolving the limitation of liability claim as well as Claimants state tort claims. If stayed, a favorable resolution of the Limitation Act claim will reduce the costs to both Movants and Claimants. On the other hand, an unfavorable ruling on the limitation claim will delay resolution of the state court action and increase costs to both parties. Any delay also implicates the ability of the parties to conduct timely discovery as memories fade and evidence may become stale. Further, a delay would harm the Claimants ability to obtain timely compensation for their serious injuries. Finally, the court notes that the issue of delay is difficult to assess because it requires the parties and the court to anticipate the Ninth Circuit's schedule for resolving the underlying appeal.*fn1

In sum, these factors are neutral at best, neither favoring one party nor the other.

The Public Interest

Movants argue that there is a strong possibility that, absent a stay of the judgment, "competing adjudications could result if a state action is tried and concluded before the Court of Appeals" rules on the appeal. (Motion at p.7:4-6). Again, the weight given to the public interest prong depends on events yet to occur. Whether the appeal is resolved in a relatively short or long ...

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