## Facts

- Hellenic, Inc., through its marine construction division (Athena Construction), owned and operated the spud barge *Athena 107* in Texaco’s Rabbit Island Field in Atchafalaya Bay, Louisiana.
- A spud barge anchors by lowering “spuds” into the seabed to hold position.
- On February 7, 1997, the *Athena 107* was spudded down in the field.
- In the early morning of February 8, 1997, wind and sea conditions moved the barge, causing it to strike and rupture a submerged twenty-inch natural gas pipeline owned by Bridgeline Gas Distribution LLC.
- Bridgeline spent $250,959.90 to repair the pipeline.
- Athena’s construction superintendent, Dana Lee, decided to leave the barge unmanned and anchored by its spuds; the parties agreed this decision was negligent.
- Lee controlled day-to-day operations for the project and had authority over the operation of four vessels on the job, supervised contract divers, and coordinated with Texaco inspectors on operational matters.
- Lee lacked authority to make binding contracts, set prices, hire or fire employees, or make general business decisions for the company; he consulted the company president only when proposed work appeared outside project scope.
- Hellenic filed a federal admiralty action seeking exoneration from or limitation of liability under the Limitation of Liability Act.
- The district court denied limitation, concluding Lee’s status and authority brought the negligence within Hellenic’s “privity or knowledge,” and Hellenic appealed.

## Issues

1. Whether a corporate vessel owner is barred from limiting liability when the casualty was caused by the negligence of a field superintendent with substantial operational control but no authority to make corporate business decisions.
2. How “privity or knowledge” under the Limitation of Liability Act applies to a corporate owner where negligence arises from an on-scene operational decision.

## Decision

- The Fifth Circuit reversed the denial of limitation and remanded.
- The court held Hellenic lacked the requisite “privity or knowledge” because Lee was not a sufficiently high-level managing agent whose negligence or knowledge is treated as that of the corporation for Limitation Act purposes.
- The court distinguished Lee’s project-level operational authority from corporate managerial authority over business policy and decisionmaking.
- The record did not show corporate officers knew or should have known of a company-level unsafe practice or policy that caused the casualty; instead, it showed field-level negligence in leaving the barge unmanned under the conditions.

## Legal Principles

- Under the Limitation of Liability Act, a vessel owner may limit liability unless the loss occurred with the owner’s “privity or knowledge.”
- For corporate owners, “privity or knowledge” generally turns on the fault or knowledge of officers, directors, or managing agents whose responsibilities make their acts and knowledge attributable to the corporation.
- Significant operational control at a jobsite does not, by itself, make an employee a corporate managing agent for limitation purposes; authority to bind the company and make core business decisions is central to the inquiry.
- Limitation is not defeated merely because an on-scene supervisor was negligent, absent proof that corporate management participated in, knew of, or should have known of the causal unsafe condition or practice.

## Conclusion

The Fifth Circuit concluded that a construction superintendent’s negligent operational decision to leave a spud barge unmanned was not corporate “privity or knowledge” where the superintendent lacked corporate business authority, so the vessel owner was entitled to limitation of liability and the case was remanded for further proceedings.


In re Hellenic Inc., 252 F.3d 391 (5th Cir. 2001)