Court cases and RMS Titanic Inc

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Bunky

Guest
Thought some of you might find this information interesting. Many people think that if Dr. Ballard would have obtained salvage rights, the ship would not have been salvaged. But as you can see from the court cases, he would have been in a catch-22 situation. If he chose not to salvage the ship, he would have lost those rights. The following is a summary of the three major cases regarding R.M.S. Titanic, Inc. and thier salvage rights.

What led to the first case (taken from the first case)

On August 23, 1993, RMST asked the court to declare it to be the sole owners of anything salvaged from the Titanic. Notice to other potential salvors was given by way of publication. The court granted salvor-in-possession status to RMST on June 7, 1994.

1994 - RMST successfully completes a salvage expedition

August 10, 1994 - RMST presented its Periodic Report of Salvor in Possession on the Progress of Recovery Operations to the court. (At this time, the court also noted that RMST had completed successful salvage operations in June of 1987 and June of 1993.)

RMST filed a second periodic report while the following case (R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel (Titanic I)) was pending.


First case

R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel
924 F.Supp2d 714 (Titanic I)

(May 10, 1996)

What is at issue is a challenge to the order of June 7, 1994, granting salvor-in-possession status to R.M.S. Titanic, Inc.

On February 20, 1996, John Joslyn filed a motion asking the court to rescind the salvor-in-possession status it had granted RMST. He claimed that this statuts should be rescinded because "it (meaning RMST) has failed to diligently salvage the Titanic, has evidenced no intention to salvage it in the future, and, at this time, is financially incapable of utilizing its rights." (Why he made these specific claims will be apparent when reading the analysis of the law.) An evidentiary hearing was held from April 29 to May 1 - the court received evidence and heard testimony related to RMST's salvage operations.

II. Findings of fact -

A. R.M.S. Titanic, Inc.

George Tulloch testified that since its inception, RMST has lost 9.8 million. (The November 1995 10Q form submitted to the Securities and Exchange Commission stated that at present, RMST has 2.1 million in liabilities and 160,000 in assets.) A Virginia law firm has a lien against two artifacts for legal services rendered. RMST also owes 70,000 to the conservator of the 1987 artifacts. RMST has an agreement with this company - the agreement gives the company the right to exhibit fifteen artifacts for ten years in lieu of collecting the 70,000. In additon to this, RMST has numerous other outstanding debts. His testimony was uncontradicted.

The court concluded that, although it does not have cash on hand, RMST is still a "financially viable entitly." (The exhibits, sale of coal, videos, cruises to the wreck site.) The court went on to say that it was not surprised at RMST's financial difficulties (high expedition costs and a highly speculative salvage operation).

B. RMST's Salvage-Related Activities

RMST (and its predecessor in interest) have conducted salvage operations in 1987, 1993, and 1994 and 3,600 artifacts have been recovered. (Two of these remain in the geographic area of the Eastern District of Virginia). The court also talked about RMST's on-shore activities (such as exhibits).

The court talked about how RMST has fulfilled its role as "caretaker" of the artifacts. LP3 is conserving the artifacts - also, artifacts are safely stored and preserved until they can be worked on. Mr. Pennec, director of LP3, is a trained conservationist. He is highly skilled and reputable. For the foregoing reasons, inter alia, the court concluded that RMST has kept its promise to maintain and preserve the Titanic artifacts.

C. Future plans

The court noted that RMST has planned an expedition for August of 1996. They also talked about how RMST (along with IFREMER) is planning to raise a "small piece" of the hull that is "detached from the vessel." (We know this now, of course, as "The Big Piece" that was at the Chicago exhibit.) The court talked about the cruises and how people could witness the salvage operation in addition to viewing the two hour documentary detailing the salvage operation. The court also said that the salvage operation would ". . . utilize new technology to illuminate the site, which should give scientists and historians an increased visual understanding of the wreck site." The court then talked about how RMST was planning to display the recovered hull fragment (again, what we know as "The Big Piece") and how Pierre Henri Nargeolet is the expert technician who will be supervising the dives.


III. Conclusions of law

A. Applicable salvage law (generally there are 2 types of cases - "recision of exclusive salvage rights once they've already been granted" and "the granting of exclusive salvage rights to one salvor and preventing its rivals from interfering with the wreck site" cases)

The underlying policy reason for salvage law is ". . . the complete salvaging of a distressed vessel." The primary purpose is for the preservation of property. "Salvage law is primarily concerned with the successful recovery of the vessel." The court cited numerous cases that explained the policy reasons for the salvage laws. Because of these reasons, the courts that sit in admirality have the authority to grant exclusive salvage rights to anyone who has ". . .the intention and the capacity to save the property." ("Intention" and "capacity" are the key words here.)

In this specific case, the court needs to decide two things - 1) whether RMST's status as salvor in possession should be rescinded and 2) what standard should be used to decide this.

The court goes on to say that many courts will rescind a salvor's exclusive possessory rights if he fails to " . . . exercise due diligence and be reasonably successful in his attempts." In most of these cases, the issue was the salvor's right to an injunction against rival salvors. Not many cases involve the rescinding of the salvor of possession status once it has been granted (which is the case here - John Joslyn is claiming that RMST should lose its exclusive salvage rights altogether).
Regarding the rescision of exclusive salvage rights, the First Circuit (which is a federal APPEALS court - the next stop would be the U.S. Supreme Court), has stated that a salvor must demonstrate that its efforts are "1) undertaken with due diligence 2) ongoing, and 3) clothed with some prospect for success" to maintain its rights. This is what is called a "three-pronged" test. The court will determine if the salvor (in this case, RMST) has met each one of these "prongs."

The court went on to say that, even though this case was about the rescision of salvor in possession (as opposed to the granting of exclusive salvage rights to one salvor and preventing its rivals from interfering with the wreck site), that nevertheless, cases that involved the latter were relevant here and that the standard was very similar. (They then went on to explain that standard and that, no court to date has distinguished the two standards - they are so similar.) Therefore, the factors the courts consider are generally the same (whether the case is about the "recision of salvor in possession status" or the "granting of exclusive rights to one salvor while stopping rivals from interfering with the wrecksite"). (In coming to this conclusion, the court cited cases involving the Lusitania and the Andrea Doria.) The factors are numerous and include - "the time when each group began their labors, the duration of each groups' tangible salvaging activity, the comparative skill and quality of the competing groups, the salvors' investments in capital and labor, and the likelihood of success of each of the parties." Also, the historical nature of any given wreck is taken into consideration. "In sum, not only do courts consider the time, effort, and money that parties have invested in the salvage operation as well as their chances of success, but, where the vessel is of historic importance, they also weigh the salvor's archaeological preservation efforts."

In this case, Joslyn claims that RMST should lose its salvor in possession status because they cannot demonstrate that their efforts have been "undertaken with due diligence, are ongoing, and are clothed with some prospect for success." (Remember, this is the three-pronged test.) His arguments are based on - 1) RMST's failure to mount an expedition during 1995 2) their present financial situation 3) the archeological preservation activities of RMST (which, according to the court, Joslyn downplays). If you look at the three-pronged test, you can see why he made these claims.

The court considers each prong of the test.

1) due diligence - the "test" for this is the salvors past operations. This is what the court looks at when considering if the "due diligence" prong of the test has been satisfied. The court starts out by explaining that, because it is one of the most famous shipwrecks in history, that the " . . . archaeological preservation of the wreck itself as well as the recovered artifacts is of extreme importance to this court." They consider the fact that the wreck is 2 ½ miles down and not easily accessible. Partly for this reason, the cost is going to be "exorbitant" and the recovery of artifacts slow. They say that the lack of an expedition in 1995 does not constitute a lack of diligence on the part of RMST. They talk about how a temporary absence from the wrecksite does not constitute a "lack of dominion" over the wrecksite. They compare RMST's activities to those of other salvors and point out that RMST (and its predecessors) have organized expeditions in 1987, 1993, and 1994 and have recovered over 3,600 artifacts. They talked about the capital investments RMST has made and the fact that they have hired "extremely skilled" divers to do the actual salvaging. In addition, the court found that RMST has been " . . . dedicated to the preservation of the archaeological integrity of the wreck site as well as the preservation of the retrieved artifacts." They point out that RMST has worked with a number of organizations to establish an International Advisory Committee whose purpose is to determine how to best safeguard the Titanic and the artifacts. RMST has hired a "highly-qualified" conservation company to preserve the artifacts. They also noted that ". . . RMST has done more than merely preserve the site and the artifacts" - it has made them available to the public. The court said that this benefits the public more than the ". . . requisite at-site archaeological preservation could do." In these cases, the court also looks at, basically, the promises made by the salvor at the time it was given the rights and the court's expectations. (The court granted RMST exclusive salvage rights because it believed that it would lead to the actual salvaging of the Titanic and prevent a free-for-all. The court WANTS RMST to salvage the artifacts - they don't do it begrudgingly - it's the purpose behind salvage laws.) The court felt that RMST has kept its promise to the court to keep the artifacts together and ". . . preserve them for the public." (They talk mostly about the exhibitions in coming to this conclusion.) The court feels that RMST has ". . . maintained the duties expected of it as salvor in possession of the Titanic." The court concludes that the "due diligence" of the three-pronged test is satisfied.

2) ongoing - The "test" for whether the salvage operations are ongoing (that is, if this prong of the three-part test is satisfied) focuses not only on RMST's past activities, but also on their present intentions. The court concluded that it is "clear" that RMST plans to continue to salvage the wreck (RMST has said it plans to, they have an agreement with IFREMER, investors in the cruises, heavy bookings, the exhibitions, continued payment for conservation and preservation of artifacts). For these reasons, inter alia, the court concluded that this "prong" of the three-part test had been satisfied.

3) clothed with prospect of success - The court said that, given the number of dives to the wreck and the number of artifacts recovered, ". . . that these efforts have been ‘clothed with success' can hardly be denied." The court feels that the question is whether RMST can continue to finance future expeditions. The court acknowledged that RMST's financial position ". . . leaves much to be desired" but considered that it had a number of backers to finance the 1996 expedition along with the necessary contracts in place. The court said that because the artifacts are being presented to the public rather than sold to the "highest bidder" that it was difficult to raise money to go to the wreck site. The court concludes that this "prong" of the three-part test is satisfied.

Therefore, Joslyn's motion requesting that RMST's exclusive salvage rights be rescinded is denied (but they modified their previous order and required RMST to make more frequent reports, which is no big deal).

What led to the second case (Taken from the second case)

After the court found in favor of RMST, Joslyn (the party in the previous case) then expressed an intention to visit and photograph the wrecksite. A Temporary Restraining Order (issued August 9, 1996) was (on August 13, 1996) converted into a Preliminary Injunction Order (against Joslyn, Blackhawk Television, the R/V Akademic Mstislav Keldysh and others).

RMST learned of a commercial venture (by Deep Ocean Expeditions) that would allow people to go down to the wreck and photograph it. In their literature, they made it clear that no artifacts would be collected, only photographs. On May 4, RMST filed a motion for a preliminary injunction to stop it.

So, where did this guy Haver come in? (I spoke about him in the jurisdictional issues.) He filed a separate claim because he had paid to go down to the wreck site. There were a lot of jurisdictional issues and issues regarding privity - another "for the love of God, why don't you just poke my eyes out with a fork" subject. I don't think it has any relevance for this discussion.


Second case

R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel
9 F.Supp2d 624 (Titanic II)

(June 23, 1998)

The main issue in this case is whether to grant R.M.S. Titanic, Inc.'s request for a preliminary injunction prohibiting others from photographing the wrecksite.

The court notes that, to allow others to photograph the wrecksite would be to ". . . diminish the rights the court has granted." They said that it was "akin" to allowing others to invade the wrecksite and recover artifacts. They talked about how, since they were not selling the artifacts, RMST had to resort to "inventive marketing ideas" (television broadcasts, etc).

The court goes on to say that the salvaging activities of RMST have been "commendable." They point out that, even though the salvage operations are ". . . time consuming, dangerous, and expensive," RMST has nevertheless carried out their duties as salvor in possession with "considerable zeal." They go on to talk in considerable detail about the specifics of their expeditions. They then talk about how RMST's onshore activities have been "exemplary." They talk about how they cooperated with the Discovery Channel, they talk about the numerous places that the artifacts have been exhibited, etc.

George Tulloch (at the time president of RMST) testified that they planned to be salvaging the wreck during the entire month of August of 1998 (the expeditions by Deep Ocean Expeditions were also to take place in August of 1998 - this is a factor in the court's decision). Tulloch testified (and introduced evidence) to show that RMST was chartering a submersible from IFREMER (Institute of France for the Research and Exploration of the Sea). RMST had already paid IFREMER $200,000 of the $1,460,000 cost. Tulloch explained that they were planning to raise what we now know as "The Big Piece," salvage a newly discovered debris field, and recover the B deck door on the port side that has fallen into the debris field (I believe this is the door that I saw at the Las Vegas exhibit). He talked about the live "Dateline" special. Because it would be dangerous for two submersibles to be at the wreck at the same time, RMST would have to stop its operations if there were another submersible in the area (one that was outside of their expedition). IFREMER (and this is important) also expressed safety concerns. In fact, it would not allow one of their submersibles on the wreck at the same time as another submersible. Moreover, IFREMER would still expect ". . . charter hire to be paid." He (Tulloch) didn't try to hide the fact that this was a good time to capitalize on the 1998 expedition due to the public's interest.
He also explained that RMST is not itself charging tourists for tours of the site due to safety concerns (but they didn't rule out the possibility in the future).

(The court then talks about three claims made by Haver which really have no bearing on this discussion.)

Remember in the first case I said there were generally 2 types of cases - "recision of exclusive salvage rights once they've already been granted" and "the granting of exclusive salvage rights to one salvor and preventing its rivals from interfering with the wreck site" cases? This would be the second type of case.

The court explains that RMST has the right not to have their operations interfered with. They then talk about how they might have to abort thier operations in the interest of safety if there were another submersible down there and how, to take pictures, the other submersible would have to get very close to the wreck. They then talk about their concerns about damage to the wreck itself. They then talk about how RMST has a right to ". . . at least recoup its investment in the salvage operations." "The court granted possession of the wreck site for monetary gain in order to compensate it for these efforts and to encourage their continuation." Because they are not selling artifacts, the court expands traditional salvage laws, that is, other means of obtaining income (this is where the Appellate Court will disagree).

What led to the third case

The decision was appealed. The Court of Appeals for the Fourth Circuit had to decide 8 issues. The only issue that is really of interest here are the photography rights. (The others have to do with the "j" word among other issues.)

The opinion is fairly long and a lot of it has already been said. They affirmed some of the District Court's opinion and they reversed some. As you know, they reversed the District Court's holding that RMST has exclusive rights to photograph the ship. You may be interested in their reasons. They said that the District Court erred in expanding salvage rights (remember I mentioned this briefly in the second case?) They talk a little bit about policy here. "The underlying policy of salvage law is to encourage the voluntary assistance to ships and their cargo in distress." (I know, I know.) But the policy regarding the salvaging of shipwrecks evolved out of this. The Appellate Court felt that to award the exclusive right to photograph a shipwreck would run counter to the policies of salvage law because a person might feel they could make more money by just photographing the items instead of salvaging them. They then talk about how property rights do not include the right to keep someone from viewing and photographing the property when it is in a public place. They offered what I thought was an interesting analogy. Just because an architect owns the copyright to the design of a building, doesn't mean he can keep persons from viewing it. (I suppose it could be argued as to whether the Titanic is in a "public place" or not.)

I hope the summaries of these cases help with understanding some of the issues regarding salvage law. This isn't the end of it. The United States is negotiating with other countries to declare the Titanic an international maritime memorial. (No one was interested when this all first started.) Madeleine Albright and William Daley are now claiming that the District Court in Virginia did not have authority to grant RMST salvage rights. This may end up in the Supreme Court as two sections of the Constitution are pitted against each other. (The government argues that the President is supreme in foreign affairs - RMST argues that, pursuant to Article III of the Constitution, their rights were properly granted.) This was from an article I ran across in June. I'm not sure where it stands as of now.

Bunky
 
Apr 11, 2001
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Bunky- nice summary! You might want to check out Ballard's original salvage statement which is about 20 files down under the Salvage/Exploration on the Tree View- rather revealing.
 

Mark Taylor

Member
Mar 18, 2005
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The reason Ballard cannot or could not lay claim to salvage rights is that he was under contract with the Navy at the time. Federal and case law does not allow government officials (or their agents & contractors) to make salvage claims.

Mark Taylor
 
Jan 29, 2001
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Yes Mr Taylor is quite correct. And unfortunately Dr. Ballard had had possesion of an artifact to amend said claim...a small section of wire rigging, snagged by the ARGO Camera sled in 1986.

As an aside, during his "Return to the Titanic" in 1986. Dr. Ballard & Co. had the honor of having the U.S. Navy stand guard while exploration procedures were undertaken!

Michael Cundiff
Carson City, NV
 
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Gavin Murphy

Guest
M&M,

This is interesting and new to me...not knowing the intricacies of US Navy contracts and laws, etc. and all.

However, I think another reason he could not stake a claim to the T was because he was not "salvor in possession". He did not make regular site visits to perfect his claim, although, of course, he did make several trips there. But not enough to stake a claim.......even if he wanted.

Comments?

G
 

Mark Taylor

Member
Mar 18, 2005
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Ballard could not make any claim on the wreck because legally he could not do so. Any attempt would have resulted in dismissal by the court rather quickly. And of course since now a legal salvage award is in place, overturning it would be very hard to do. It has been tried twice and failed both times.

Mark Taylor