In re the Complaint of the City of New York (475 F. Supp. 2d 235, 2007)

MEMORANDUM & ORDER

KORMAN, Chief Judge.

On the afternoon of October 15, 2003, the Staten Island Ferry Andrew J. Barberi (the “Barberi” or “Ferry”) crashed into a maintenance pier near the Staten Island Ferry Terminal. The collision came without warning. The Ferry had been making its regularly scheduled trip from Whitehall Terminal, Manhattan, to St. George, Staten Island. Until only a few moments before the crash, nothing appeared to be out of the ordinary. The assistant captain, Richard Smith, who was at the controls in the pilothouse, was an experienced, licensed captain, and the crew had no reservations about his abilities. The weather, though very windy, was otherwise not a matter of concern. There were no signs of mechanical failure or impairment. And despite the fact that the Barberi had been off course before the accident occurred and was proceeding at full speed toward the Staten Island Ferry Terminal, the only evidence in the record that any crew member noticed that something was amiss is the affidavit of the deckhand, Joseph Selch, which stated:

I was untying a door in preparation for docking, I looked up and saw that the ferry was proceeding past the slips and on what appeared to be a collision course with a nearby pier. I took immediate action to guide passengers away from the Staten Island end of the ferry. Moments later the ferry hit the pier.

Selch Aff. ¶ 8.

When the Ferry struck the maintenance pier, it was traveling at its full speed of 14 to 16 knots, or 16 to 18 miles per hour. The speed, however, does not convey the force of the impact. The Barberi weighs more than 8,000 tons, and its momentum was enough to destroy roughly 1,500 square feet of the maintenance pier and tear a 210-foot-long gash in the main deck of the boat. The passengers who happened to choose the port, or Brooklyn-facing, side of the vessel generally escaped injury. Those who awaited arrival on the starboard, or New Jersey-facing, side found themselves in grave danger. The impact with the pier shattered seats, tore metal,. destroyed support stanchions, and collapsed a stairway and a bulkhead. The collision had an even more devastating effect on the passengers on that side; it instantly killed ten passengers and left scores of others with injuries that varied from minor to severe. One of the seriously injured passengers later died from injuries sustained in the crash.

This case was tried before me on the issue of liability. The trial without a jury was based on a record stipulated to by the City of New York and the respondents who seek redress for their injury and loss. The record provides a reasonably clear picture of the events leading up to the collision. As the Barberi left Whitehall Terminal, Assistant Captain Smith was accompanied in the pilothouse by Selch, the deckhand who was the assigned lookout on the passage. Selch Aff. ¶ 4. Somewhere near the midpoint of the voyage, Senior Mate Robert Rush joined Smith and Selch in the pilothouse and took a seat on a low-slung bench near the rear of the pilothouse known as the “settee.” Rush Aff. ¶¶ 8-9. Rush, however, had no assigned responsibilities in the pilothouse with respect to piloting the boat or serving as a lookout. Instead, he “had planned to ride out the balance of the 15:00 [minute] run in the Staten Island pilot house where [he] could organize [his] thoughts regarding [] various work orders and then proceed to the Saloon deck for docking.” Id. ¶ 8. Moreover, the height and position of the settee made it impossible for him to monitor the Ferry’s position or to take notice of the circumstances leading up to the impending disaster.

As the Barberi passed the Kill Van Kull Buoy (“KV Buoy”), which is a little more than half of a mile from the St. George Terminal, Selch asked for and received Smith’s permission to leave the pilothouse so that he could prepare the exit doors for docking. Selch Aff. ¶ 6. As Selch left the pilothouse, Smith stood up, as was his custom, apparently to better guide the Barberi into the ferry slip at the St. George Terminal. Id. ¶ 7. At this point things began to go wrong. Smith remembers nothing from the time Selch left the pilothouse until the moment when the Bar-beri collided with the maintenance. dock. Rush, who was on the settee in the pilothouse throughout this period, noticed nothing unusual. Rush Aff. ¶¶ 11-13. He recalls that Smith stood at the controls, but did not notice anything amiss. Id. ¶¶ 11-12. In fact, however, Smith had lost conscious or situational awareness due to fatigue, a condition Dr. David Dinges, a sleep expert, described as follows:

You lose your awareness of the time where you’re at and time and space and what you’re supposed to do next. You don’t completely lose it in the sense that you don’t know that you’re on the water in a vessel or in a car or in a truck but you lose the sense of what you’re supposed to do next in what timely order. And that is common as a result of fatigue.

Smith Fatico Hr’g Tr. 40:20-41:1, June 14, 2005. Smith remained in the state described by Dr. Dinges for approximately two minutes until the Barberi collided with the maintenance pier.

While Smith’s condition posed a serious hazard, it would have presented no threat to the safety of the Barberi’s passengers had the boat’s captain, Michael Gansas, been present with Smith in the pilothouse, as is required by the City’s internal regulations. In fact, because it foresaw the possibility of pilot incapacitation, the City’s rules required that the captain and the assistant captain both be in the pilothouse at all times while the Ferry was underway. This rule could have easily been complied with on the Barberi, because there were two pilots on the vessel at all times. Instead, Captain Gansas spent the entire voyage in the aft, or Manhattan-facing, pilothouse. Had Gansas been present, the disaster would have been avoided.

It is not surprising that the Staten Island Ferry’s rules were not followed given the haphazard way in which they were disseminated. At the time the accident occurred, the internal rules were neither well understood nor effectively enforced. The Staten Island Ferry had no formal safety management system. There was no single manual that was readily accessible to crew members. There was no mechanism to monitor who had received the procedures and at what time. And there was no system for ensuring that the rules were actually obeyed. Indeed, “there [were] no formal training programs at the Staten Island Ferry.” Gansas Aff. ¶ 5. Instead, according to Captain Gansas, “there was ‘on the job’ training and the policies and procedures were passed down from the senior Captains and Assistant Captains” by word of mouth. Id.

The blame for this laxity lies squarely on the shoulders of the City. The New York City Department of Transportation (and its predecessor, the Department of Docks and Ferries) has operated the Staten Island Ferry for more than a century. For most of that time, it has had some form of standard operating procedures to govern the crew’s behavior and to provide for the passengers’ safety. By the time of the collision in this case, however, what was once a concise manual had apparently become a diffuse series of practices and procedures issued by the director of ferry operations. Rush Aff. ¶ 5. These directives were assembled in a handout that was never properly distributed. See Ryan Plea Allocution 53:17-25, Apr. 22, 2005. In his plea allocution in the related criminal case, Patrick Ryan, the City’s director of ferry operations at the time of the accident, conceded that he knew that the Staten Island Ferry’s Standard Operating Procedures (“SOP”) were not being followed:

[W]hen I was the director of Staten Island Ferry operations, I understood ... that the ferry service had a written rule that generally required the captain and assistant captain to be together in the operating pilot house while the [ferry was] underway.

A rule that served to insure passenger safety by providing for at least two people in the operating pilot house aware of the navigational situation.

I knew that this rule was not always being observed by all captains and assistant captains in good weather. I drafted revised Staten Island Ferry Standard Operating Procedures between 2001 and 2002 that restated this rule- but did not take appropriate steps to insure — did not take adequate steps to insure that the ferry’s captains and assistant captains received the new document, trained them on the rule nor insured that they were complying with it.

As a result, this rule was not followed at the time of the accident involving the Barberi on October 15, 2003 and no crew member noticed in time that the boat was far off course.

Id. 47:2-48:4. Subsequently, Ryan further stated:

Your Honor, I knew the rules [were not] followed. I took measures to insure [that they were]. I drafted those SOPs. I didn’t adequately — I didn’t get them out ... the right way. I didn’t train people in it. I didn’t instruct people in it. I didn’t get it dissimulated [sic] the right way. I never, followed up and enforced that.

Id. 53:17-25.

Citing Ryan’s failure to enforce the rule requiring that there be two pilots in the pilothouse at all times, the respondents argue that the City’s negligence caused the collision. While the City contests this argument and seeks to avoid any legal liability, it also argues that the Limitation of Vessel Owner’s Liability Act (the “Act”), 46 U.S.C.A. § 30505 (2007) (formerly 46 U.S.C. § 183(a)), limits its liability to $14.4 million, the value of the vessel as assessed after the collision. See Hartford Accident & Indemnity Co. of Hartford v. S. Pac. Co., 273 U.S. 207, 214, 47 S.Ct. 357, 71 L.Ed. 612 (1927) (“[T]he owner [of a vessel] ... may ask that ... his liability as owner shall be limited to the value of the vessel as appraised after the occurrence of the loss ... ”) Congress passed the Act in 1851 “to encourage ship-building and to induce capitalists to invest money in this branch of industry.” Norwich Co. v. Wright, 80 U.S. (13 Wall.) 104, 121, 20 L.Ed. 585 (1872). This was necessary because:

Given the primitive vessels and the hazards of the sea, the potential common law liabilities of the shipowner as principal made the shipping industry an unattractive investment. Greater liability would result in greater cost. Leaving the United States shipowner without protection would put him at a competitive disadvantage in the world shipping market.

In re Complaint of Tracey, 608 F.Supp. 263, 266 (D.Mass.1985). The protection afforded by the Act only applies if the loss is “done, occasioned, or incurred, without the privity or knowledge of [the] owner.” 46 U.S.C. § 183(a). The Supreme Court has ruled that, when a ship is owned by a corporation, liability may not be limited “where the negligence is that of an executive officer, manager or superintendent whose scope of authority includes supervision over the phase of the business out of which the loss or injury occurred.” Coryell v. Phipps, 317 U.S. 406, 408, 63 S.Ct. 291, 87 L.Ed. 363 (1943). The parties agree that any negligence attributed to Ryan in his capacity as director of ferry operations is sufficient to defeat the City’s effort to limit its liability to the value of the Barberi. Thus, if Ryan’s failure to enforce a two-pilot rule constituted causally related negligence, the City may not limit its liability.

Discussion

Before turning to the principal issue, I first address the City’s threshold argument that the two-pilot rule is an internal rule and such rules are not admissible as evidence when they provide for a standard of care higher than that set by law. There are two problems with this position. First, the Federal Rules of Evidence provide that “[a]ll relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court....” Fed.R.Evid. 402. There can be little doubt that the two-pilot rule is relevant for reasons that I discuss more fully below. The rule reflects the City’s recognition of the dangers of leaving one captain alone in the pilothouse. Moreover, while not decisive of the issue whether the City was negligent, it is relevant to the analysis of legal issues relating to that determination. See William L. Prosser, Law of Torts 168 (4th ed.1971) (rule made by defendant to govern the conduct of its employees “may be used against him as indicating his knowledge of the risk and the precautions necessary to meet it”). In addition, while there are exceptions to the general rule that relevant evidence is admissible, see, e.g., Fed.R.Evid. 407 (excluding evidence of subsequent repairs), none of these exceptions apply here. Under the circumstances, it would be inappropriate, if not inconsistent with Federal Rule of Evidence 402, for me to exclude this relevant evidence on the grounds argued by the City.

This consideration aside, I do not find persuasive the City’s argument that allowing internal rules into evidence will discourage employers from adopting safe practices. As one commentator has observed, “[w]hen a danger exists and the company knows or should know of it, the company must reckon with the possibility that the very failure to make rules may be used against it.” John M. Winters, The Evidentiary Value of Defendant’s Safety Rules in a Negligence Action, 38 Neb.L.Rev. 906, 932 (1959). A rational company, then, will be far more concerned with actually preventing accidents than with gaming future negligence actions by carefully crafting its safety manual. Indeed, in Bryan v. Southern Pacific Co., 79 Ariz. 253, 286 P.2d 761 (1955), the leading case in this area, the Supreme Court of Arizona rejected the argument that petitioners now press:

[W]e fail to understand why, as a practical matter, an employer will refuse to adopt such rules when by their adoption and enforcement the accident would not occur — at least through fault of the employer’s servants. To us the more likely result will be that an employer will require a stricter adherence to his rules.

Id. at 260, 286 P.2d 761. This reasoning reflects the majority rule, adopted by roughly three-fourths of the courts that have considered the question. See C.R. McCorkle, Admissibility in evidence of rules of defendant in action for negligence, 50 A.L.R.2d 16 § 3 (1956); see also Danbois v. N.Y. Cent. R.R. Co., 12 N.Y.2d 234, 239, 238 N.Y.S.2d 921, 189 N.E.2d 468 (1963).

Federal Rule of Evidence 407, which excludes post-accident remedial measures, has been subject to similar criticism. While the premise underlying the rule is that the admission of such evidence will discourage such remedial measures, “[a]ny person who is competently advised [and hence aware of this rule] will know too that taking no action poses serious countervailing risks, since inaction in the face of a known danger increases the chance of liability to future claimants.” 2 Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence ch. 4, § 128, at 29 (2d ed.1994). While I do not consider evidence of subsequent remedial measures taken by the City, I decline to adopt an exclusionary rule that is incompatible with the Federal Rules of Evidence.

The City contends that, even if its two-pilot rule is relevant and admissible, its “internal policy does not establish the appropriate standard of care and does not create duties to third parties beyond what is required by law or ordinary care.” Petr.’s Mem. of Law on Limitation of Liability Issues (“City Mem.”) 18. This argument is correct as far as it goes. Nevertheless, the law is clear that, where the City has a duty to exercise due care, the City’s internal rules are relevant to determining what constitutes due care. Thus, in de Kwiatkowski v. Bear, Stearns & Co., 306 F.3d 1293 (2d Cir.2002), the Second Circuit said that “noncompliance with internal standards could be evidence of a failure to exercise due care, assuming ... a duty as to which due care must be exercised.” Id. at 1311. Unlike de Kwiatkowski, upon which the City relies, where no duty was owed to the plaintiff, here the City owed a duty to its passengers to exercise reasonable care. Indeed, it was once the rule that a common carrier had a higher duty — a duty of extraordinary care. This rule was justified because the common carrier “has a comparative advantage in accident prevention (indeed, passengers are normally helpless to avert an accident) and because a collision ... (like a plane crash today) is likely to kill or seriously injure them.” Richard A. Posner, A Theory of Negligence, 1 J. Legal Stud. 29, 38 (1972). While the duty of extraordinary care has been rejected as a standard, its underlying premise is reflected in the traditional reasonableness standard, which “necessarily takes into account the circumstances with which the actor was actually confronted when the accident occurred, including the reasonably perceivable risk and gravity of harm to others and any special relationship of dependency between the victim and the actor.” Bethel v. N.Y. City Transit Auth., 92 N.Y.2d 348, 353, 681 N.Y.S.2d 201, 703 N.E.2d 1214 (1998).

Although the City’s duty as shipowner was to exercise “reasonable care under the circumstances,” Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 631, 79 S.Ct. 406, 3 L.Ed.2d 550 (1959), an objective standard, this duty is calibrated to the precise information available to the shipowner. “The theory is that a person who knows or should know of a danger is under a duty to be more careful than the one who, through no fault of his own, lacks such knowledge.” Winters, supra, at 909; see also Toth v. Cmty. Hosp. at Glen Cove, 22 N.Y.2d 255, 263, 292 N.Y.S.2d 440, 239 N.E.2d 368 (1968) (Keating, J.) (“It is not unreasonable to impose upon a physician, who believes that added precautions are necessary, the obligation that he act diligently in taking the necessary safety measures.”). While the City argues that it could not foresee the cause of the assistant captain’s- disability, namely, “that Smith would withhold critical information about his physical condition and fall asleep at the wheel,” City Mem. 28, its argument misses the point. The issue is not whether the City could foresee each of the possible causes of the pilot’s disability, it is whether the City could foresee the possibility that the pilot would become disabled. The City’s promulgation of the two-pilot rule is evidence that it perceived the risk to the passengers “[sjhould the Captain suffer any sudden disability preventing him from exercising his duty....” City of. New York Department of Marine and Aviation, Rules and Regulations Ashore and Afloat at 6 (1958); see also Ryan Plea Allocution 47:2-48:4. Indeed, the City concedes that “[it] did perceive the risk.” Petr.’s Reply Mem. of Law on Limitation of Liability Issues 13.

Moreover, as already suggested, this is not the only purpose for which the two-pilot rule is relevant. In Danbois, the New York Court of Appeals held that the violation of internal rules “is not negligence in itself but under certain circumstances may be regarded by the trier of the fact as some evidence of negligence.” 12 N.Y.2d at 239, 238 N.Y.S.2d 921, 189 N.E.2d 468. Consistent with this principle, the Court of Appeals approved an instruction informing the jury that:

[The defendant] was to be judged by a standard of reasonable care, in conjunction with which they might consider [the internal] rule 103 as “a standard that the railroad sets itself for its employees” [to follow], but that violation of the rule ... “is not in and of itself negligence” and that whether or not a violation would be negligence depended upon whether they found that it set a standard which reasonable prudence required. If the rule set a higher standard than that, the jury were told that the rule would not avail the plaintiff.

Id. at 237, 238 N.Y.S.2d 921, 189 N.E.2d 468. Of course, as Danbois holds, the mere failure to comply with the two-pilot rule is not, on its own, a basis for finding the City negligent. Whether it provides a basis for such a finding depends “upon whether ... [the rule] set a standard which reasonable prudence required.” Id.

Judge Learned Hand spoke to this issue in United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir.1947), which focused on the obligation of the owner of a barge to have “a bargee or other attendant” in place in the event that the barge broke away from its moorings. Id. at 173. Judge Hand observed that:

Since there are occasions when every vessel will break from her moorings, and since, if she does, she becomes a menace to those about her; the owner’s duty, as in other similar situations, to provide against resulting injuries is a function of three variables: (1) The probability that she will break away; (2) the gravity of the resulting injury, if she does; (3) the burden of adequate precautions.

Id. In order “to bring this notion into relief,” he stated the formula “in algebraic terms” as follows: “[I]f the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P: i.e., whether B