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A Solution To The Single-Claimant Stipulation Problem – Roen Salvage Company v. Sarter – Marine/ Shipping


The stipulation preceding the district court’s stay of a
limitation proceeding involving a single claimant is both
simplistic formulism and the cause of prolonged headaches for
maritime attorneys and courts. Too often attorneys treat the
stipulation as being essentially outcome determinative, drafting
redlines with bloated language designed to avoid every imagined
loophole and seeking to reconfirm—or even invent—the
legal rights under dispute. As always, the victims of excessive
drafting and arguments aren’t attorneys, but their clients, who
pay for it directly through fees or indirectly through prolonged
delay.

This issue underscores Roen Salvage Company v. Sarter,
a recent Seventh Circuit decision authored by Judge
Easterbrook.2 In a refreshing analysis, the court
reasoned that the single-claimant
“stipulation”—itself considered a misnomer—is
simply unnecessary. It concluded that the parties’ respective
rights arise from and are constrained by federal statute. In other
words, through a “concession”—the court’s
preferred term—the single claimant can concede, for example,
that she will not invoke res judicata in an effort to recover more
than the limitation fund, but that concession is not the vehicle
preventing her from excess recovery. That vehicle is the Limitation
of Liability Act of 1851 (“LOLA”) itself,3 and
according to Judge Easterbrook, it’s up to the court, not the
parties, to secure the right.

Lewis & Clark Marine

The modern single-claimant stipulation stems from the Supreme
Court’s balance of two seemingly competing federal statutes in
Lewis & Clark Marine.4 The first statute is
the Judicial Act of 1789, which under its modern codification
states, in relevant part, that:

The district courts shall have original jurisdiction, exclusive
of the courts of the State, of:

(1) Any civil case of admiralty or maritime, saving to
suitors
in all cases all other remedies to which they are
otherwise entitled
.5

The savings-to-suitors clause means that a plaintiff may
preserve his right to a jury— a right not allowed in
admiralty—by commencing a lawsuit in state court, or in
federal court if there’s an independent basis for jurisdiction
like diversity.6 Most courts have also held that
admiralty jurisdiction does not present an independent basis for
removal from state court.7

The competing statute is LOLA, which provides a shipowner the
following right under federal law:

[T]he liability of the owner of a vessel for any claim, debt, or
liability … shall not exceed the value of the vessel and pending
freight.”8

The statute is competing because, as LOLA also dictates, a
shipowner may exercise its right in federal court through the
following federal jurisdiction clause:

The owner of a vessel may bring a civil action in a district
court of the United States for limitation of liability under this
chapter.9

Therein lies the rub. In a maritime accident involving a single
injured party with claims against a shipowner, both that claimant
and the shipowner have a statutory right to commence an action in
the forum of their choosing.10

The Supreme Court in Lewis & Clark Marine resolved
this conflict by holding that an injured party can adjudicate his
case in state court “so long as the vessel owner’s right
to seek limitation of liability is protected.”11
The holding is straightforward, with the takeaway being that both
statutes should be enforced if possible. At its narrowest, this
means that a single claimant is entitled to bring her claim in
state court if the district court stays the limitation
proceeding—and the dormant statutory right to
limitation—which the shipowner may lift if it must later
exercise that right. And there’s of course no need to lift the
stay if the plaintiff loses in state court or if the jury awards
less than the asserted limitation fund.

But unfortunately for future litigants, many courts have not
read Lewis & Clark Marine so narrowly. These courts
instead highlight the Supreme Court’s statement that, in the
case before it, the shipowner’s “rights were protected by
[the plaintiff’s] stipulation that his claim did not exceed the
limitation fund, [the plaintiff’s] waiver of any defense of res
judicata with respect to limitation of liability, and the District
Court’s decision to stay the Limitation Act proceedings pending
state court proceedings.”12 More directly, later
courts invoke the “stipulation” as a putative basis for
protecting the shipowner’s rights, even holding that certain
terms are necessary before the court will issue a
stay.13

This approach is inherently problematic because it requires
attorneys to work together and agree. Let’s be blunt.
That’s what “stipulation” means.14 There
is always that lawyer who argues something like, “sure, the
stipulation needs to say that, but my client requires that
it also say X, Y, and Z.” For example, a few years
after Lewis & Clark Marine, a shipowner argued that,
in addition to what the Court mentions in that decision, the
stipulation must also stipulate to the amount of the
limitation fund.15 The Fourth Circuit rejected this
argument, but only after what was undoubtedly extensive cost and
delay.16

Roen Salvage Company

Perhaps no case better exemplifies the problems of excessive
argument and waste over the single-claimant stipulation than
Roen Salvage Company v. Sarter. But the court also offers
a way forward. In Roen Salvange, a man tragically drowned
after being thrown from a vessel in rough waters on Lake Superior
near Duluth, Minnesota.17 After receiving notice of a
claim, Roen, the owner of the vessel, filed a limitation action in
federal court, which prompted the court to issue an
injunction.18 In response, the single claimant—the
decedent’s widow—filed a motion to lift the injunction
and stay the proceedings so she could sue in state
court.19 In doing so, she filed a proposed stipulation
that included the following terms:

Claimant further stipulates that she consents to waive any claim
of res judicata relevant to the limitation of liability issue based
on any judgment that the state court or any other court may
render.

Claimant stipulates that she will not seek any other federal or
state court to enter any judgment or ruling on the issue of
Petitioner’s right to limitation of liability and that this
court has exclusive jurisdiction to decide this issue.

This stipulation does not stipulate that Petitioner may bring
the exoneration issue back to this federal court after trying
issues of liability and damages in state court.

However, Claimant stipulates that she will not seek to enforce
any excess judgment or recovery in so far as it may expose the ship
owner, Roen, to liability in excess of the stated value in the
pending adjudication of the Complaint of Limitation of Liability,
until the limitation issue is decided by this
court.20

Most of this language should seem familiar because it mirrors
the stipulation blessed by the Supreme Court in Lewis &
Clark Marine
. But the third paragraphs suggests that Roen
demanded something more. Not only did Roen take the dubious
position that it had a right to litigate the issue of exoneration
in federal court after a state court judgment, but apparently Roen
also demanded that the claimant agree that it had such a
right. And Roen’s demands did not end there. For reasons that I
cannot understand, it also argued that the claimant must designate
the state court in which she plans to file.21

The district court correctly rejected Roen’s arguments and
granted the stay.22 But that’s not the full story.
Lost in the filings are why parties feel compelled to raise these
arguments within the context of a stipulation. Assuming it existed,
a shipowner’s right to “exoneration” in federal court
would stem solely from LOLA. It’s a statutory question. In what
other context do we ask a court to compel someone to
formally concede to an adverse party’s putative statutory right
by stipulation? The flaw becomes worse when you consider that Roen
Salvage argued the merits of its position through this motion, with
the remedy being that the court should compel the claimant
to formally agree to its decision on the merits. Why should a court
or adverse party care about that? The shipowner’s frivolous
argument about the claimant being required to identify the state
court only takes this flawed premise further down the line into
absurdity.

Roen’s flawed and wasteful motion could have been chalked up
to misplaced aggressiveness. But unfortunately, as we already know,
Roen appealed the district court’s decision to lift the stay to
the Seventh Circuit. In short, the issue of whether a claimant must
agree to a right that she has no authority to decide would now tie
this litigation down for another year, with only the costs and fees
of briefing in the meantime. It’s even worse than that. Before
noticing the appeal, Roen moved the district court to stay its
order while an appeal was pending.23 Another motion to
brief and argue. In the end, the district court swiftly denied that
motion because “Roen has little likelihood of success on
appeal.”24

Roen did not take the hint. But like with the district court,
the story from the Seventh Circuit’s opinion goes beyond the
inevitable outcome. There are four key takeaways. First,
there’s Judge Easterbrook’s reframing of the underlying
premise. When explaining the usual procedure, he writes that
“a would-be plaintiff often files a concession (sometimes,
though inaccurately, called a stipulation).”25
While he does not expand, this must be right. Only the claimant
must “agree” to anything in the common single-claimant
stipulation. Agreements, contracts, and stipulations—synonyms
for all practical purposes—require multiple parties and
consideration. The so-called stipulation in this scenario is merely
a formalized promise by the claimant that she won’t try to do
something that is already contrary to law—a concession.

Second, the court rejected Roen’s substantive argument that
it has an independent right to litigate “exoneration” in
the federal court.26 Like every prior court, the Seventh
Circuit correctly noted that, despite its title under Chapter 305,
nothing in LOLA provides for this right.27 And because
it’s a court rule, nothing in Rule F of the Supplemental Rules
can provide a basis for federal jurisdiction.28 Judge
Easterbrook could have went further and noted that the
shipowner’s position contravenes the savings-to-suitors clause
and the Supreme Court’s decision in Lewis & Clark
Marine
that solidified its application. The savings-to-suitors
clause becomes meaningless if the shipowner can nonetheless utilize
a federal court sitting in admiralty as a do-over on liability.

Third, Judge Easterbrook addressed the required contents of the
so-called stipulation. Here he cut to the chase:

The parties have spent many pages discussing exactly what
concessions (by the would-be plaintiff) or stipulations (by the
litigants jointly) are necessary to protect the vessel owner’s
rights. Our answer is: None.29

The court reasoned that Lewis & Clark Marine does
not stand for the proposition that a party must
stipulate/concede certain issues related to LOLA, only that the
parties in that case did.30 Returning to first
principles, Judge Easterbrook reasoned that a shipowner’s
limitation rights are already protected by statute, and that
litigants “do not need to concede or stipulate that federal
statutes will be observed.”31

Finally, the Seventh Circuit addressed an alternative to the
process where parties write “many pages” arguing over
supposedly necessary stipulation language. And that way is through
judicial orders that add teeth to the parties’ respective
statutory rights:

When lifting or modifying an injunction to permit litigation in
state court, a federal district judge should make any provisos that
are essential to safeguard the federal right under § 30505(a).
The judge could provide, for example, that, if the state court
awards damages exceeding the owner’s estimate of the
vessel’s worth, then the federal court will determine that
value without regard to the state judge’s
conclusion.32

This seems correct and is certainly more efficient. As shown in
Roen, Courts today typically incorporate the so-called
stipulation into their orders.33 But imagine a world
where the district court takes arguments under advisement and then,
after contemplating the applicable law, adds the relevant legal
protections into its order directly? That should sound familiar.
While admittedly it may take time, eventually attorneys will stop
hassling over precise stipulation language, knowing that it’s
not driving their clients’ rights or remedies. This eventuality
seems to be what Judge Easterbrook also had in mind:

In the future, district judges should choose appropriate
language that will obviate the sort of dispute the parties to this
case have had about exactly what words a would-be state-court
plaintiff must use in order to protect the vessel owner’s
rights.34

The Seventh Circuit put district courts on notice that they can
help prevent wasteful litigation over single-claimant stipulations
by overly cautious or argumentative counsel. Whether courts will
take his lead is, of course, another story. This stipulation has
undoubtedly become a customary part of LOLA, and traditions are
difficult to break. But Roen Salvage Company v. Sarter
offers a path forward to a simpler and more efficient process under
LOLA. The winners under such a change will be all future
parties.

Footnotes

1. Robert Dube and Adrian Kipp contributed to this
article.

2. Roen Salvage Co. v. Sarter, 17 F.4th 761 (7th
Cir. 2021).

3. 46 U.S.C. § 30501 et seq.

4. Lewis v. Lewis & Clark Marine, Inc., 531
U.S. 438 (2001).

5. 28 U.S.C. § 1333 (emphasis added).

6. See, e.g., Reliance Nat. Ins. Co. (Europe) Ltd. V.
Hanover
, 222 F. Supp. 110, 115 (D. Mass. 2002).

7. See Langlois v. Kirby Inland Marine, LP, 139
F. Supp.3d 804, 809-10 (M.D. La. 2015) (collecting cases on the
issue of whether the 2011 amendment to 28 U.S.C. § 1441 allows
for maritime jurisdiction to be an independent basis for removal
and concluding that the overwhelming number of jurisdictions say
no).

8. 46 U.S.C. § 30505.

9. 46 U.S.C. § 30511(a).

10. See Lewis, 531 U.S. at 448 (“Some
tension exists between the saving to suitors clause and the
Limitation Act. One statute gives suitors the right to a choice of
remedies, and the other statute gives vessel owners the right to
seek limitation of liability in federal court.”)

11. Id. at 455.

12. Id. at 452.

13. See, e.g., In re Tetra Applied Technologies L
P.
, 362 F.3d 338, 341 (5th Cir. 2004) (“Thus, if the
necessary stipulations are provided to protect the rights of the
shipowner under the Limitation Act, the claimants may proceed in
state court.”

14. See Stipulation, Black’s Law Dictionary
(11th ed. 2019) (“A material condition or requirement in an
agreement,” or “A voluntary agreement between opposing
parties concerning some relevant point.”)

15. Norfolk Dredging Co. v. Wiley, 439 F.3d 205
(4th Cir. 2006).

16. Id. at 210-11.

17. Matter of Roen Salvage Company, 20-c-915,
2020 WL 7393940 at *1 (E.D. Wis. 2020).

18. Id.

19. Id.

20. Id. at *1-2.

21. Id. at *2.

v22. The district court correctly reasoned that LOLA does not
provide an independent right to seek exoneration and that the Fifth
Circuit already decided this issue. Matter of Roen Salvage
Company
, 2020 WL 7393940 at *3. (citing In re Tetra,
362 F.3d at 341). The court also correctly reasoned that parties do
not need pre-notify their adversaries of their preferred forum
before service, and that issues regarding venue are nonetheless
matters of state law that Roen Salvage can always challenge.
Id.

23. Matter of Roen Salvage Company, 20-c-915,
2021 WL 6033689 (E.D. Wis. 2021).

24. Id. at *1.

25. Roen Salvage Company, 14 F.4th at
763.

26. Id.

27. Id.

28. Id.

29. . Id.

30. Id.

31. Id.

32. Id. at 763-64.

33. See Matter of Roen Salvage Company,
2020 WL 7393940 at *4 (ordering the parties to execute the proposed
stipulation and that the case will be stayed upon receipt of that
stipulation).

34. Roen Salvage Company, 17 F.4th at
764.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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