UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of The Complaint of
ROSS ISLAND SAND & GRAVEL, as
Demise Charterer of ANCHOR SCOW
for Exoneration from or Limitation
of Liability

                                                     No. 99-16031

ROSS ISLAND SAND AND GRAVEL                           D.C. No.
COMPANY, owner pro hac vice, dba                      CV-98-02279 GEB
Bare Boat Charterer of the vessel
                                                     OPINION
Anchor Scow,
Plaintiff-Appellee,

v.

JAMES MATSON,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of California
Garland E. Burrell, Jr., District Judge, Presiding

Argued and Submitted
June 14, 2000--San Francisco, California

Filed September 12, 2000

Before: Donald Lay,* Dorothy W. Nelson, and
Sidney R. Thomas, Circuit Judges.
_________________________________________________________________

*The Honorable Donald Lay, Senior Circuit Judge of the Eighth Circuit
Court of Appeals, sitting by designation.

                               11663
 

Per Curiam Opinion,
Concurrence by Judge D.W. Nelson

_________________________________________________________________
 
 

COUNSEL

John R. Hillman, McGuinn, Hillsman and Palefsky, for the
defendant-appellant.

B. James Finnegan and Pia A. Angelikis, of Finnegan, Marks
and Hampton, for the plaintiff-appellee.

_________________________________________________________________

OPINION

PER CURIAM:

James Matson appeals the district court's denial of his
motion to dissolve a stay of parallel state court proceedings
regarding a personal injury suit brought by a former
employee. Matson's suit, brought in state court under the

                               11665
 

Jones Act, stemmed from injuries suffered while working on
the "Anchor Scow," a vessel owned by Ross.

Ross Island, as owner pro hac vice of the Anchor Scow,
brought this federal proceeding in admiralty to limit its liabil-
ity under the Limitation of Liability Act, 46 U.S.C.SS 181 et
seq. The district court found that Matson had failed to make
the necessary stipulations to dissolve the injunction on paral-
lel proceedings, and denied Matson's motion. Matson now
appeals, arguing that: (1) the Limitation of Liability Act is to
be applied very narrowly; (2) that a single claimant should not
be required to stipulate to the adequacy of its opponent's
bond. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This action involves a dispute regarding parallel state and
admiralty proceedings. On March 16, 1997, James Matson, an
employee of Ross Island, was injured while aboard the "An-
chor Scow" vessel. On March 18, 1998, Matson filed suit in
San Joaquin Superior Court against Ross Island (the Anchor
Scow's owner pro hac vice) for his injuries under the Jones
Act, alleging negligence and unseaworthiness.

On November 25, 1998, Ross Island filed a "limitation of
liability" action in federal court. A limitation of liability
action is a proceeding in admiralty for vessel owners that per-
mits them to limit their liability (if any) to their interest in the
vessel and its freight, provided that the loss was incurred
without their privity or knowledge. See 46 U.S.C. S183.

To take advantage of this provision, owners must first file
a complaint in the district court, and then deposit an amount
with the court that is the equivalent of their interest in the ves-
sel. See Fed. R. Civ. P. Supp. R. F(1). The district court then
notices all potential claimants and requires them to file claims
with the court within a specified time, and issues an injunc-
tion that prevents the filing of any other actions against the

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owner if it involves related claims. See Supp. R. F(3) & (4).
However, when the owner reserves the right to litigate its lim-
itation of liability in district court, then the district court can
dissolve the injunction and allow the single claimant to pursue
a jury trial instead. See Anderson v. Nadon, 360 F.2d 53, 57
(9th Cir. 1966).

Following this procedure, Ross Island filed a stipulation for
the value of the ship in the sum of $20,000, and the district
court enjoined proceedings and ordered all claimants to file its
claims within its court. Matson appeared and filed a claim in
district court, but then later filed a motion to dissolve the stay
of his parallel state court proceedings on the basis that he was
a single claimant. Ross Island responded by pointing out that
Matson had failed to make the necessary stipulations for a sin-
gle claimant to proceed.

Apparently, Matson failed to stipulate to the adequacy of
the limitation fund, which is expressly required before the
stay can be lifted under Newton v. Shipman, 718 F.2d 959,
962 (9th Cir. 1983). Following Newton, the district court
denied Matson's motion to dissolve the stay without preju-
dice. Matson now appeals.

STANDARD OF REVIEW

A district court, as a general rule, enjoys broad discretion
to decide whether to dissolve an injunction under the Limita-
tion of Liability Act. Newton, 718 F.2d at 961. However,
where a single claim is involved, "the district court's decision
is narrowly circumscribed" and the injunction must be dis-
solved unless the owner can show that his right to a limitation
of liability will be prejudiced. Id.

DISCUSSION

[1] Under the "single claimant exception," if only one
claim has been filed and "nothing appears to suggest the pos-

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sibility of another claim," a district court is required to dis-
solve its injunction to permit the single claimant to pursue a
separate action and jury trial. Newton, 718 F.2d at 962. Before
the district court dissolves its injunction, however, a claimant
"must" stipulate to the following: (1) that the value of the lim-
itation fund equals the combined value of the vessel and its
cargo; (2) waive the right to claim res judicata  based on any
judgment rendered against the vessel owner outside of the
limitation proceedings; and (3) concede the district court's
exclusive jurisdiction to determine limitation of liability
issues. See id. Here, Matson satisfied two of these require-
ments, namely, he waived the res judicata effects of any inter-
vening state court judgment, and conceded the district court's
exclusive jurisdiction over all questions concerning the right
to limitation. However, presumably because he was dissatis-
fied with the amount in the limitation fund, he refused to stip-
ulate to its adequacy.

Both parties concede that Newton seems to impact this
case, but Appellant contends that the Newton requirements are
(variously) dicta, outdated and unfair. He proposes that pro-
vided a single claimant waives the res judicata  effects of any
intervening state court judgment, and concedes the admiral-
ty's exclusive cognizance over all residual limitation issues,
the district court must dissolve the state injunction and permit
parallel suits.

[2] Matson's reasoning is persuasive. He rightly points out
that federal courts have a very limited jurisdiction and should
only stay proceedings under clearly circumscribed circum-
stances. However, Newton is on point in directing that the
claimant must stipulate to the value of the limitation fund
before the stay can be lifted. 718 F.2d at 963. Newton
involved a single claimant who, like Matson, filed a motion
to dissolve the injunction in order to pursue a Jones Act claim
before a jury. Under Newton, a claimant must either stipulate
to the value of the limitation fund or object to the sufficiency
of the fund or its method of computation under Fed.R.Civ.P.,

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Supp. R. F(7). Newton, 718 F.2d at 963. Since Newton
remains the law of this circuit, Matson has failed to show that
the district court abused its discretion. Moreover, absent a
rehearing en banc, we are without authority to overrule its
directives. A three judge panel of this court cannot overrule
a prior decision of this court. See Morton v. De Oliveira, 984
F.2d 289, 292 (9th Cir. 1997).

CONCLUSION

Therefore, based upon the foregoing, we affirm the district
court in finding that it did not abuse its discretion in denying
Matson's Motion to Dissolve the Injunction.

AFFIRMED.

_________________________________________________________________

D.W. NELSON, Circuit Judge, Concurring:

I believe the rule in Newton v. Shipman, 718 F.2d 959
(1983) (per curiam), as it affects single-claimant cases stipu-
lating to the value of the vessel, is bad law and should be
reconsidered.

Newton's requirement of stipulating to the value of the ves-
sel and its cargo --in order to lift an injunction under the sin-
gle claimant exception -- does not have any statutory basis.
Neither 46 U.S.C. S 183(a) nor Fed. R. Civ. P. Supp. R. F
requires this stipulation. In following the Eighth Circuit's pre-
cedents, Newton conflicts with and made no attempt to distin-
guish prior Ninth Circuit precedent. Indeed, Anderson v.
Nadon, 360 F.2d 53 (1966) noted that stipulating to the value
of the vessel is not required in order to maintain a state court
action:

      Appellants have conceded the exclusive jurisdiction
      of the district court to determine this issue, but have

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      not agreed to appellee's valuation figure . . . . It is
      also true that it has apparently become a common
      practice to concede valuation when requesting disso-
      lution of such an injunction. However, these authori-
      ties do not support the proposition that such a
      concession is a necessary prerequisite to the mainte-
      nance of a state court action. We do not deem a con-
      cession of this nature essential to the protection of
      appellees' right to a federal limitation proceeding.
      The fact that appellants have reserved the right to
      contest the adequacy of the stipulation for value in
      the limitation proceeding does not bar them from ini-
      tiating a state court action.

Id. at 58 n.8 (citations omitted). If Newton truly established a
new Ninth Circuit rule, it should have addressed Anderson.
An intracircuit conflict is grounds for en banc review. See
Atonio v. Wards Cove Packing Company, 810 F.2d 1477,
1478-9 (9th Cir. 1987)(en banc) ("the appropriate mechanism
for resolving an irreconcilable conflict is an en banc decision.
A panel faced with such a conflict must call for en banc
review, which the court will normally grant unless the prior
decisions can be distinguished.").

Newton may have failed to address Anderson because New-
ton's stipulation requirement appears to be dicta. In Newton,
the appellant "did not object to the sufficiency of the fund or
the method of computing it." Newton, 718 F.2d at 959. Thus,
Newton's requiring a stipulation of the value of the vessel was
unnecessary to the holding in that case. Indeed, Newton found
that the district court erred in failing to lift the injunction.
Newton's failure to address Anderson suggests that the court
did not intend to create a new rule and that Newton is factu-
ally distinguishable from this case.

Furthermore, the standard of review in Newton  places the
burden on Ross Island to show prejudice. Newton  says:
"Where, however, a single claim is involved . . .`the court's

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discretion is narrowly circumscribed' and the injunction must
be dissolved `unless the owner can demonstrate that his right
to limit liability will be prejudiced.' " Newton, 718 F.2d at
961 (citations omitted). Ross Island contends that it will be
prejudiced by allowing Matson to "proceed to state court with
the hope of returning to the admiralty court with a large jury
verdict in hand as leverage in the limitation action. That lever-
age would be used not only to challenge the owner's entitle-
ment to limitation but also to attempt to influence the court as
to the amount of the fund." This argument is flawed because
it assumes: (1) that the state jury's verdict will exceed the
value of the vessel and cargo; and (2) that a federal district
court will be unable to assess the value of the vessel and cargo
in an objective fashion. This argument has little faith in the
Article III power of federal judges to remain objective and
does not illustrate any prejudice to Ross Island. Given that
Matson has stipulated that the federal court has the ultimate
authority in limiting liability, it is inconceivable how Ross
Island could be prejudiced by lifting the injunction.

As a matter of policy, these stipulations are intended to pro-
tect vessel owners such as Ross Island from enormous liabil-
ity stemming from multiple claimants who prey off the res
judicata effect of a single claimant's judgment. Therefore, in
some multiple claimant cases, the courts have required claim-
ants to stipulate to the maximum amount of liability based on
the value of the vessel and its cargo. This a single claimant
case. Matson has stipulated that the state court judgment has
no res judicata effect and that the federal court has final
authority over limiting liability (including the valuation of the
vessel and its cargo). In a single claimant case, there is no
need to determine the value of the vessel and its cargo before
the culmination of a state court lawsuit. In fact, Matson argues
that no court has ever found in a single claimant case that the
failure to stipulate to the value of the vessel and its cargo pre-
vents lifting a federal injunction.

As a practical matter, arguments about efficiency are rela-
tive. Matson has a statutory right to a jury trial under the

                               11671
 

Jones Act. See 46 U.S.C. S688(a). Ross Island has a statutory
right to limit its liability in federal court. Neither right trumps
the other. If our goal is to conserve federal  resources, how-
ever, then efficiency compels us to reverse the district court.
Why force a federal court to determine the value of the vessel
and its cargo under Supp. R. F(7) in the absence of a state
court judgment? If a state jury awards Matson less than
$20,000, then this valuation would have been totally unneces-
sary. Thus, if we are trying to conserve federal resources, we
should allow Matson to proceed in state court and then deter-
mine if federal intervention is ultimately necessary.

By relying on Ninth Circuit dicta and by following Newton,
we will be making it more difficult for single claimants to file
in state court. This was not the intent of the rule. Our decision
is not compelled by statute, is not supported by a showing of
actual prejudice to Ross Island, does not respond to policy
concerns about enormous judgments by multiple claimants,
and wastes federal resources. I think Newton is overly broad
and should be reevaluated.

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