Opinion
Civ. No. 79-0316-B.
May 14, 1981.
David de C. Robles, DeCastro Robles, Panama, Republic of Panama, for plaintiff.
Frank J. Violanti, U.S. Atty., D. Canal Zone, Balboa, Panama, William H. Beatty, Asst. U.S. Atty., Miami, Fla., for defendant.
This matter came on trial before the Court. All material facts are stipulated by the parties. The only question of law presented to the Court is whether, under the circumstances of this case certain sections of the Canal Zone Code operate to raise the doctrine of sovereign immunity to thereby bar recovery of certain damages by Plaintiff, the owner of the M/V STRAAT HONG KONG, against Defendant, the Panama Canal Company. The Court finds that it does not.
(i) Stipulated Facts
On June 7, 1977 Plaintiff's vessel, STRAAT HONG KONG, came into the Panama Canal from its anchorage in the Pacific Basin and collided with the M/V ORIENTAL COMMANDER, which was just leaving the Canal, causing damage to both vessels. At the time of the collision, both vessels were being conned by Panama Canal pilots. Soon after the collision, ORIENTAL COMMANDER dropped off its pilot and proceeded on to sea, even though she was informed that if she wanted to take any action for recovery of damages against the Government or against the Panama Canal Company she would have to remain for investigation by the Board of Local Investigators. STRAAT HONG KONG made its transit and, unlike ORIENTAL COMMANDER, anchored and remained for the BLI investigation.
A BLI investigation of the collision was conducted at which both the pilot of STRAAT HONG KONG and the pilot of ORIENTAL COMMANDER testified. Save for the fact that crew members of ORIENTAL COMMANDER did not testify the circumstances of the collision were thoroughly investigated. As a result of the investigation it was determined that neither the vessels nor crews, of either STRAAT HONG KONG or ORIENTAL COMMANDER, were responsible in any particular for the collision. The sole cause of the collision was found to be the fault of the pilot of STRAAT HONG KONG for navigating the vessel into the Canal at an excessive speed.
Subsequent to the BLI investigation, STRAAT HONG KONG became subject to an in rem action brought in England by the owners of ORIENTAL COMMANDER. This action was ultimately settled for $42,000, consistent with the traditional maritime rule that a vessel is liable in rem for the fault of its compulsory pilot.
The present action was initiated by Royal Interocean Lines, as owner of STRAAT HONG KONG, against the Panama Canal Company seeking recovery for damages sustained by STRAAT HONG KONG in the collision and further recovery for sums paid in settlement of the claim by ORIENTAL COMMANDER against STRAAT HONG KONG. The Canal Company has offered to settle the STRAAT HONG KONG vessel damage claim for $52,736.80. The Canal Company declines, however, to reimburse STRAAT HONG KONG for sums paid in settlement of the claim asserted by ORIENTAL COMMANDER, arguing that under the circumstances of this case, STRAAT HONG KONG is not entitled to these damages.
At this point, very little is disputed by the parties. The Canal Company agrees, consistent with the BLI investigation findings, that it is liable to the owner for the damages which STRAAT HONG KONG itself sustained in the collision. The Canal Company further expressly agrees that the settlement was prudent and that the $42,000 paid by STRAAT HONG KONG to ORIENTAL COMMANDER is fair and reasonable. As made clear in the colloquy between Court and all Counsel the effect of the position of the Canal Company is that it agrees that it is 100% liable to M/V STRAAT HONG KONG for all legally recoverable damages which includes specifically her own damages of $52,736.80 and the amount of $42,000 paid by her to ORIENTAL COMMANDER if, but only if, the Court rules that such amount is legally recoverable from the Canal Company. Thus the only issue facing the Court is whether under the circumstances of this case the owner of STRAAT HONG KONG is barred, as a matter of law, from obtaining recovery from the Canal Company for sums paid in settlement of the claim asserted by ORIENTAL COMMANDER against STRAAT HONG KONG.
(ii) Conclusions Of Law
With respect to STRAAT HONG KONG's claim for the amount paid in settlement, the Canal Company seeks to don the armor of sovereign immunity. Immunity in this case, the Company contends, arises from C.Z. Code Tit. 2, § 297 which provides:
Notwithstanding any other law, a claim may not be considered under this subchapter, or an action for damages lie thereon, unless, prior to the departure from Canal Zone waters of the vessel involved:
(1) the investigation by the competent authorities of the accident or injury giving rise to the claim has been completed; and
(2) the basis for the claim has been laid before the Panama Canal Company. 76A Stat. 25.
Although the Court concedes some difficulty in grasping the true purport of the Canal Company's argument, it appears to run as follows: Because ORIENTAL COMMANDER refused to remain for the BLI investigation, it thereby failed to comply with § 297. Accordingly, pursuant to § 297, the Canal Company became absolved from any liability for damages which might be asserted in a subsequent direct action by ORIENTAL COMMANDER against the Canal Company. Furthermore, and of particular significance to the present controversy, the Canal Company thereby became absolved from any liability for damages which might be asserted in a subsequent "indirect" action by ORIENTAL COMMANDER — here the action by STRAAT HONG KONG against the Canal Company to recover sums paid in settlement of the claim asserted by ORIENTAL COMMANDER against STRAAT HONG KONG.
At the outset the Court emphasizes that the damages sought by the owners of STRAAT HONG KONG, both for vessel damage and settlement payments, arose directly out of the negligence of the Canal Company pilot in conning STRAAT HONG KONG, they represent losses actually sustained by the shipowner as a direct result of the collision. There is no doubt that recovery of such damages against the Canal Company is specifically authorized by C.Z. Code, Tit. 2, § 293 which provides in pertinent part:
In determining the amount of the award of damages for injuries to a vessel for which the Panama Canal Company is determined to be liable, there may be included:
(1) actual or estimated cost of repairs;
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(4) other expenses which are definitely and accurately shown to have been incurred necessarily and by reason of the accident or injuries.
To the extent there was ever any question, Gulf Oil Corporation v. Panama Canal Company (Gulfspray I), 407 F.2d 24, 29-30 (5th Cir. 1969) settled conclusively that with the creation of the Panama Canal Company, which gave the Canal Company the authority to "sue and be sued in its corporate name," 2 C.Z.C. § 65(a)(3), and §§ 291, 292, 293 et seq., Congress waived in sweeping fashion the barrier of sovereign immunity. The Canal Company was to function as a business entity and be exposed to the usual incidents of business operation — including the traditional liability of being sued for its wrongs. This sweeping waiver of liability, the Court found, was not intended to be blithely withdrawn by a restrictive application of § 297. Id. at 32.
The findings of Gulfspray I were more recently echoed by the Fifth Circuit in Svendborg v. Panama Canal Company, 612 F.2d 968, 1980 A.M.C. 2852 (5th Cir. 1980) in which the Court, citing Gulf Oil, stated: "§ 297 should not be construed to undercut the sweeping waiver of sovereign immunity present in the Code which effectively imposes traditional liabilities on the Company." Id. at 970. In Svendborg the Court rejected the Canal Company's argument that Plaintiff shipowner's failure to submit an administrative claim to the Canal Company was fatal to its claim. In so doing, the Court refused to follow a District Court case which held that presentation of an administrative claim was a jurisdictional prerequisite to filing suit against the Canal Company. See, Empresa Hondurena de Vapores, S.A. v. Panama Canal Co., 414 F. Supp. 363, 1976 A.M.C. 1619 (D.C.Z. 1976). Said the Court: "Because strict construction of the waiver of sovereign immunity as to the Company was expressly rejected by this Court in [Gulf Oil], we decline to adopt the reasoning of Empresa Hondurena." Id. at n. 2.
Bearing in mind these judicial admonitions against ready withdrawal of the waiver of sovereign immunity, the Court concludes that sovereign immunity imposes no barrier to the claims asserted by Plaintiff shipowner in the instant case. The Court finds that STRAAT HONG KONG faithfully complied in all material respects with the two requirements of § 297.
As for subsection (1) of § 297 (the investigation requirement) subsequent to the collision STRAAT HONG KONG remained in the Canal for the express purpose of participating in the BLI investigation. A thorough investigation was in fact conducted at which testimony was heard from the two individuals with the best first-hand knowledge of the facts surrounding the collision — the Canal Company pilots of both STRAAT HONG KONG and ORIENTAL COMMANDER. The Canal Company was given full opportunity to participate in the investigation in an adversarial capacity. The Court is unable to find that the investigation was materially affected by the failure of ORIENTAL COMMANDER, which was fully exonerated, to participate — a circumstance which, at any rate, was completely beyond the power of STRAAT HONG KONG to bring about.
As for subsection (2) of § 297 (the notice requirement) the Court also finds full compliance. "The basis for the claim" was adequately presented to the Canal Company through the BLI investigation which completely exonerated both STRAAT HONG KONG and ORIENTAL COMMANDER and adjudged the Canal Company wholly at fault. See, Svendborg, 612 F.2d at 970, n. 1. The Court interprets the requirement of establishing a " basis for the claim" to mean precisely what it says. This provision does not require a claimant to establish the full measure of the claim with particularity. Thus, the Court rejects the Canal Company's suggestion that § 297 was breached because it was not given the opportunity, immediately following the collision, of surveying the damage sustained by ORIENTAL COMMANDER. It is often the case in maritime collisions that the full extent of damage cannot be immediately and precisely ascertained. We deem it sufficient for § 297 purposes that the Canal Company be timely apprised of (i) the facts from which operational liability of the Canal Company can be ascertained, (ii) that damage has occurred, which undeniably was the case here, and (iii) that the precise extent of damage will be later established with particularity. The Court places great weight on the fact that the settlement between STRAAT HONG KONG and ORIENTAL COMMANDER for damage sustained by ORIENTAL COMMANDER was effectuated pursuant to an in rem action in England, a country with extensive experience in maritime matters. Nor can we ignore the fact that the Canal Company now agrees that the settlement was prudent, fair and reasonable.
The upshot is that the Canal Company knows everything it would have known had ORIENTAL COMMANDER tarried in the zone for the BLI investigation. And of greatest significance the problem is not one of allowing ORIENTAL COMMANDER to recover damages against the Canal Company. Rather it is a loss sustained or incurred by STRAAT HONG KONG directly as a result of the flagrant and sole fault of the Canal Company's agent, the pilot. Most important is that Gulfspray III, 481 F.2d 561, 569 (5th Cir. 1973) recognizes that in creating liabilities of the Canal Company under §§ 291, 292, 293, 296:
Congress must have meant that, except for a few very rare situations, it was establishing, by a code, a recovery of damages substantially parallel to that accorded by the general maritime law, and certainly that of England and the United States.
The Court there went on to say:
For damage arising out of the operation of the Canal the objective was to subject the Government to the liabilities of a private person. The substantive standard for maritime cases is unquestionably the general maritime law subject only to specific regulations of the Canal Zone.
* * * * * *
Indeed reading § 293 . . . one might conclude that it came right out of a hornbook on admiralty.Id. at 570.
The goal of § 293 was then summed up:
Except for these very insignificant little items, what § 293 seeks to achieve is what the maritime law seeks to achieve. The principle is broadly symbolized — restitutio in integrum.
* * * * * *
And broadly translated and broadly applied it means to make good the total losses suffered by the shipowner for the casualty inflicted by the fault of another. Such losses are not confined to out-of-pocket expenses such as repair bills. They include the loss of the use of the vessel. With this approach the peculiar words of § 293 are not to be given a construction which ignores the goal of making the victim whole.
Id.
Consistent with Gulfspray III what M/V STRAAT HONG KONG seeks here are damages sustained by her as a direct result of the gross fault of the Canal Company and which are, moreover, the sort of damages traditionally allowed by the admiralty whether by notions of indemnity, set-off or otherwise. A ready illustration is the handling of damage claims in a mutual fault collision. The non-carrying vessel, compelled to pay 100% of the loss sustained by cargo on the carrying vessel, includes this payment in her damage claim before striking the balance. So too would be payments made by one vessel for judgments (or established prudent fair settlements) of claims for death of personal injury asserted by crew members (or heirs) of the other ship. The same would go for damage to property of third parties such as damage to piers or bridges (especially under circumstances where, because of compulsory pilotage the property owner would have, and could assert, no claim against the offending vessel). The same principles work with respect to sole fault situations. The maritime approach is to make the victim whole for all losses sustained or incurred caused directly by the fault of the tortfeasor. That is precisely what § 293(4) does. "Prison administrators . . . should be accorded wide-ranging deference in the adoption and execution of policies and practices that in their judgment are needed to preserve internal order and discipline and to maintain institutional security." Id. at 547, 99 S.Ct. at 1878.6 We are convinced that the restrictions limiting receipt of books, magazines and newspapers from publishers only in a prison, which contains persons convicted of crimes, who do not possess the presumption of innocence that pretrial detainees do, is also a rational and reasonable response to security problems confronting state officials charged with the responsibility of managing the North Carolina prison system.
See also Mathiesen v. Panama Canal Co., 551 F.2d 954, 1977 A.M.C. 981 (5th Cir. 1977), in which the Fifth Circuit, while not specifically citing § 293, found damages of the type sought by STRAAT HONG KONG in this case to be recoverable.
The Fourth Circuit recently considered a challenge to the publisher only rule in the Virginia prison system by one in a similar status to that of the plaintiff. Zaczek v. Hutto, 642 F.2d 74 (1981). It was recognized in that case that the constitutional validity of a publisher only regulation as declared in Wolfish applied to persons convicted and sentenced to prison as well as to pretrial detainees.
Earlier a federal district court in Arkansas had reached a like conclusion in a challenge by a convicted prisoner to a publisher only regulation of the prison system. Cotton v. Lockhart, 476 F. Supp. 956, 957 (D.Ark. 1979), aff'd., 620 F.2d 670 (8th Cir. 1980). The rule, in that case, pertained to books, magazines and newspapers. That court, however, limited its opinion to the procurement of books only. Id. at 958, n. 4. The court held that the rule did not violate the prisoner-plaintiff's First Amendment rights, thereby sustaining the validity of the rule. The court said, "simply because prison inmates retain certain constitutional rights does not mean that these rights are not subject to restrictions and limitations." Id. at 960.
The district court in Cotton, as characterized later by the Eighth Circuit on review, determined that "(1) the rule operates in a neutral fashion regulating source rather than content of expression; (2) receipt of soft cover as well as hard cover books poses a substantial security problem . . . (4) inmates have access to reading materials through the prison library, . . ." 620 F.2d at 672. These findings are equally operative in the instant case and assisted the court in arriving at its conclusion.
In the instant case, prison officials, through their affidavits and depositions, demonstrated to the satisfaction of the court that the publisher only rule, as it exists in North Carolina, was promulgated to further a function of security within the state's prison system. Concern exists about the need to prevent the flow of drugs and weapons into prisons in North Carolina. The rule is, we believe, a rational response to a well recognized problem. It constitutes a valid state objective carried out in a not unconstitutionally restrictive manner. Therefore, we do not feel constrained in finding that the holding of the Supreme Court in Wolfish, with respect to the publisher only rule, is applicable to this case, where prison officials use the rule in dealing with persons convicted of crimes and sentenced to the North Carolina state prison system.
Accordingly the plaintiff is not entitled to the relief he seeks and the complaint is dismissed, and
IT IS SO ORDERED.
I respectfully dissent.
The majority would take bad law (the "publishers only" decision in Bell v. Wolfish, 441 U.S. 520, 99 S.Ct. 1861, 60 L.Ed.2d 447 (1979), cautiously announced by a badly divided court, and limited to a narrow situation), and would extend it into new territory. They cite Zaczek v. Hutto, 642 F.2d 74 (4th Cir. 1981), which is not binding on this court, and which did not decide the question at all, but merely accepted the appellant's erroneous concession that the case was controlled by Wolfish. The majority do not in their opinion recognize the numerous ways in which this case differs in significant fact from Wolfish and in which the result they reach far outdoes Wolfish in unjustified and apparently inadvertent repressiveness. I am unable to concur.
Bell v. Wolfish was tried on a skimpy record; this case was tried on a fully developed record, in which all the premises accepted by a slender majority of the Wolfish court were sharply repudiated by strong testimony. That fact makes a difference to me.
Wolfish and his fellow litigants were short-term prisoners; they were inmates at a New York City detention center which ordinarily housed only pre-trial detainees and persons awaiting sentencing; more than half of the inmates were kept there less than ten days, while sixty days was about the maximum duration for anyone. The Wolfish court said that
". . . we are also influenced in our decision by the fact that the rule's impact on pretrial detainees is limited to a maximum period of approximately sixty days." 441 U.S. at 552, 99 S.Ct. at 1881 (emphasis added).Wolfish also relied on the short duration of stay in the New York institution to uphold its challenged "double bunking" practice (requiring an inmate to share toilet facilities and a small sleeping space with another person). By contrast, plaintiff in this case and the class he represents are all the persons serving active sentences in institutions of the North Carolina Department of Correction. Their sentences range from a few months to life imprisonment. Those facts make a difference to me.
The rule of Wolfish was limited to hardback books, and it allowed such books to be received from book stores and book clubs as well as from publishers. By contrast, the North Carolina rule under attack applies to all books and magazines, and makes no distinction between hard cover and soft cover publications. In the majority opinion in Wolfish, Justice Rehnquist carefully pointed out that when the case was before the Court of Appeals, which affirmed the District Court's injunction against enforcement of the rule, it applied to all books and magazines. 441 U.S. at 549, 99 S.Ct. at 1879. Before the case was argued in the Supreme Court, however, the rule was amended to permit inmates to receive books and magazines from book stores as well as from publishers and book clubs and, at the time of the Supreme Court decision, there was an amendment under consideration which would allow soft cover materials to be received from any source. Those facts make a difference to me.
Wolfish and his fellows had additional means of obtaining reading materials. Among the sources specifically mentioned in the majority opinion of Rehnquist were: (1) Soft bound books and magazines could be received from any source, and hard back books could be received from book stores and book clubs as well as from publishers. North Carolina permits prisoners to receive no publications except from the publisher. (2) The New York prison offered for sale to inmates four daily newspapers and certain magazines, 441 U.S. 551, 552, 99 S.Ct. 1880, 1881. No comparable availability of newspapers and magazines in North Carolina prisons is shown. (3) The single New York City facility involved in Wolfish had a prison library containing over eight thousand volumes! North Carolina offers no such wealth of access to information in its various prisons. Those facts make a difference to me.
Wolfish was pointedly restricted to its own facts, with caution against unwarranted extension to other fact situations. The Supreme Court's statement, at 441 U.S. 552, 99 S.Ct. 1881, was that
in sum, considering all the circumstances, we view the rule, as we now find it, to be a "reasonable `time, place and manner' regulation that is necessary to further significant governmental interests. . . ." [Citations omitted, emphasis supplied.]
The Supreme Court's warning limitation on its own decision makes a difference to me.
In Wolfish there was " simply no evidence in the record to indicate that MCC officials have exaggerated their response to this security problem and to the administrative difficulties posed by the necessity of carefully inspecting each book mailed from unidentified sources. Therefore, the considered judgment of these experts must control in the absence of prohibitions far more sweeping than those involved here." 441 U.S. at 551, 99 S.Ct. at 1880 (emphasis added). By contrast, the weight of the evidence before us shows that the "publishers only" rule can not be justified by "security risks." And this panel is faced with a situation in which the prohibitions are indeed "far more sweeping."
The strong showing by the plaintiff's witnesses is that:
(a) Abrogation of the rule would not increase security problems. In the absence of such a rule, the actual experience has been that security problems are minimal. In fact, North Carolina has no security problems in the minimum custody units, where the rule does not apply.
(b) The main sources of contraband in prisons in descending order of frequency and importance are: (1) the institution itself with its kitchens, supply rooms, equipment and work and educational facilities; (2) a small number of corrupt, naive or opportunistic employees, delivery people or tradespeople who have access to the institutions; (3) inmates who are admitted or discharged or pass in and out as trustees, on work detail or on their way to and from court; (4) visitors; and (5) letter and package mail that is inadequately inspected. The reading materials which the rule prohibits are thus only a portion of the fifth most frequent source of contraband.
(c) A diligent inspection of an average book or magazine should take less than thirty seconds. Weapons and escape devices can be easily detected. Other implements which may not be so easily detected are readily available in the prison environment.
(d) An avowed original purpose of the "publishers only" rule was to censor and control the content of prisoners' reading material and not to control the introduction of contraband.
(e) There is no evidence and no reason to believe that employees of publishers are any more honest than employees of book stores, libraries and other distributors.
(f) Substantial quantities of drugs and money are already a problem in North Carolina prisons. These problems cannot be entirely eliminated without employing inhumane security measures.
Defendants' experts did not have any evidence of actual experience to the contrary. Defendants' claims are mainly assertions of economic and administrative inconvenience in searching for contraband in publications. Most of the supposed increased risk in security could be obviated by adequate inspection techniques. If the mass mailings they fear actually resulted from abolishing the rule, they could limit the number of mailings each prisoner could receive.
The great weight of the evidence in this case that the rule is not justified on "security" grounds makes a difference to me.
Wolfish reiterated the principle enunciated in Wolff v. McDonnell, 418 U.S. 539, 556, 94 S.Ct. 2963, 2974, 41 L.Ed.2d 935, that there must be a "mutual accommodation between institutional needs and objectives and the provisions of the Constitution that are of general application." 441 at 546, 99 S.Ct. at 1877 (emphasis added). Wolfish does not support a conclusion that a broad "publishers only" rule in any prison setting should be upheld as constitutional. The First Amendment rights of North Carolina prisoners outweigh the minimal security risks which might result from partial or even total abrogation of the "publishers only" rule. The restriction against all publications from any source other than publishers is an over-reaction by prison officials to potential security problems. The rule cannot be sustained as a reasonable time, place and manner regulation that is necessary to further a significant governmental interest. Though the government and all we citizens have a significant interest in the security of the prison system, and though restrictions and regulations are essential to maintaining a secure prison, the rule the majority is upholding today is unreasonably broad in scope and unconstitutionally infringes the First Amendment rights of North Carolina prisoners.
I cannot help musing on the advertised purposes of imprisoning people who have been convicted of crimes. The literature abounds with articles discussing the goals of retribution versus punishment versus rehabilitation versus protection of society. The prison department is titled the North Carolina "Department of Correction." If "correction" includes rehabilitating persons to live non-violent and non-criminal lives, then the "publishers only" rule runs totally counter to that goal.
One of the numerous epigrams which Pansy Howell (mother of Ida Friday, wife of Bill Friday, President of the University of North Carolina) taught my tenth grade English class at Lumberton High School in 1930 was that "Books are the windows through which the soul looks out." Rehabilitation, or correction, or retribution, may require imprisonment of the body; but is it also necessary, without demonstrated reason, to black out the windows of the soul? Prisoners as a group are impoverished; they can't afford to pay publishers' prices like $12.95 or $29.50 for new books from publishers when cheaper sources are available. The two books which were mailed to the plaintiff and were returned to the sender by prison officials were Great Short Works of Mark Twain and The Teachings of Don Juan: a Yacqui Way of Knowledge. The meager listing of books available through the prison system library does not include these titles nor the titles of many books through which prisoners, with nothing but time on their hands, can become motivated to complete their education or to learn a skill, or through which they can be provided with positive, non-debilitating prison experiences.
Breaking the cycles of poverty, ignorance, criminal behavior and recidivism is hard enough if it is done in an enlightened way. Protecting prisoners' First Amendment rights is mandatory if we are going to approach the task humanely and with any hope of success.
I respectfully, but emphatically, dissent.