When Is a Dockside Casino Considered a Vessel?

"When I use a word, it means just what I choose it to mean – neither more nor less," said Humpty Dumpty to Alice in Lewis Carroll’s sequel to his 1865 masterpiece, Alice in Wonderland. Or, as a well-known elected official also known for his ability to parse words recently put it, "It depends on what the meaning of the word ‘is’ is."

A similar through the looking glass experience awaits those whose task it is to define what does and what does not constitute a "vessel" for the purposes of dockside casino gaming. The exercise is not just one of semantics; issues ranging from equipment financing to mortgage lending to the nature of the rights an injured worker may all depend to some extent on whether or not a dockside casino is considered a vessel.

Federal and State courts and the Coast Guard have occasionally found themselves at odds over this. A series of decisions in the United States Court of Appeals for the Fifth Circuit - and in District and Bankruptcy Courts located within that circuit - have held that for purposes of the application of various federal statutes, dockside casinos are not vessels.

The issue arose recently in two bankruptcy cases (the 1995 Biloxi Casino Belle, 176 B.R. 427 (S.D. Miss. 1995) and the 1997 Treasure Bay, 205 B.R. 490 (S.D. Miss. 1997)), in which the US Bankruptcy Court for the Southern District of Mississippi concluded that floating dockside casinos were not "vessels" for the purposes of determining the validity and priority of a ship mortgage. Yet the Mississippi Supreme Court in Thompson v. Casino Magic Corporation, 708 So.2d 878 (Sup. Ct. Miss. 1998) pointed out that gambling is Mississippi is legal under state legislation only on "vessels."

In the case of the Biloxi Belle, the court held that the dockside casino was not a vessel even though the Coast Guard had previously documented it as such. The court noted that the Biloxi Belle had very few of the attributes commonly associated with a vessel. For example, it was not capable of moving under its own power, was not seaworthy, had no master or crew concerned with vessel operations other than those activities relating to the casinos, and had no standard maritime equipment such as navigational lights or life saving equipment. The casinos themselves were constructed from "remnants" of two barges, which were cut and welded to form the platform base for the final structures. New superstructures were built to house the gaming operations.

In this instance, the court relied heavily on prior maritime cases, including a 1929 decision in a matter known as Hayford v. Doussony, 32 F.2d 605 (5th Cir. 1929). Here, the court found that the crux of the matter was whether the structure in question was engaged in commerce or navigation. The Hayford decision denied a plaintiff’s claim for wages as part of the crew of a "vessel." It was important in that under longstanding precedent, crew wage claims asserted as maritime liens are accorded the highest priority and crew members are given special consideration by the courts as "wards of the admiralty."

Hayford surfaced again in the Fifth Circuit 1995 Pavone v. Mississippi Amusement Corp., 52 F.3d 560 (5th Cir. 1995). This case involved a bartender and a waitress in a floating dockside casino (interestingly the same Biloxi Belle that was the subject of the bankruptcy decision described above) who brought personal injury claims under the Jones Act 46 U.S.C.A. §688(a).

Originally established in 1920, the Jones Act was designed among other things to provide specific protections to individuals who qualify as "seaman," a term the Act fails to define. Under the Jones Act, a shipowner is liable for compensatory damages to a seaman who was injured as a result of the shipowner’s negligence. Therefore, in addition to his priority status for wage claims, a seaman who is covered under the Jones Act and is killed or injured in the course of employment may bring a negligence action against his or her employer. Given the inherent restrictions on recovering large sums against one’s employer under state worker’s compensation laws, the provision is quite significant. Of course in order to qualify as a seaman, an individual must first be employed on a vessel. That brings us back once again to the Pavone case.

Examining the BILOXI BELLE, the Fifth Circuit found three attributes common to non-vessels: 1) the structure was built to be used primarily as a work platform; 2) the structure was moored at the time of the accident; and, 3) although the platform was capable of movement, and was sometimes moved across navigable waters in the course of normal operations, any transportation was merely incidental to its primary purpose. As a result, the court held that the BILOXI BELLE was not a vessel for purposes of the Jones Act or the general maritime law.

This would seem to have put an end to the matter, but unfortunately it did not. For example, the "navigation" issue surfaced again in a slightly different context, that of employees working on a dry-docked vessel, a situation somewhat analogous to that of a permanently moored dockside casino. The US Supreme Court addressed this issue in Chandris, Inc. v. Latsis, 515 U.S. 347 in 1995. The Court held that the Second Circuit Court of Appeals erred in directing a verdict on the issue of whether a vessel is or is not "in navigation." In a discussion of the relevant analysis the Court noted that a vessel in dry-dock can retain its status as a vessel if it remains ready for another voyage and is not going through major overhauls and renovations. In a like vein, a dockside casino might be considered to be removed from service, but still capable under certain circumstances of sallying forth in a limited way on a "voyage," if only from one docking location to another.

Another competing view of the situation was offered by Supreme Court of Mississippi in Thompson v. Casino Magic Corp. in March of this year. See, 708 So.2d 878 (Sup. Ct. Miss. 1998). There, the court pointed out that the inquiry into vessel status under federal law should not be automatic, but rather a carefully considered fact with the specific determination to be made on a case by case basis. The Thompson court pointed out that casinos built on barges are capable of moving on navigable waters and have been moved in inclement weather.

The court posited a hypothetical case in which a worker injured during such a move would be unable to recover under the Jones Act because the casino, although being moved at the time, was not a "vessel." "[T]o say that a casino barge is not a ‘vessel’ under federal maritime law in all circumstances is overly broad and incorrect," the court stated. "This would fly in the face of the very purpose of the Jones Act, namely to protect workers who do the ship’s work and are regularly exposed to the perils of the sea."

Yet another case in Mississippi state court managed to further muddy the waters. In King v. Grand Casinos of Miss., Inc., 697 So.2d 439 (Sup. Ct. Miss. 1997), plaintiff waitress’ counsel submitted a masterfully tautological brief arguing, in effect, that the dockside casino in question had to be a vessel because it was licensed as such under Mississippi state law. If it were not a vessel, counsel stated, it would not have been licensed. As such, the plaintiff must be a seaman and therefore covered under the Jones Act. Not so replied the court, which pointed out that the question of the vessel status under state statute did not determine the wholly different issue of vessel status under the federal Jones Act. In other words, the dockside casino might be considered a vessel under state law but not under federal law.

Similarly in February of this year in the case of Chase v. Louisiana Riverboat Gaming Partnership, 709 So.2d 904, the Court of Appeal of Louisiana, Second Circuit, found that a worker injured on a floating casino was not entitled to recovery under the Jones Act because the casino was not a "vessel" for Jones Act purposes. The court came to this conclusion despite the fact that the Louisiana Riverboat Economic Development and Gaming Control Act permits riverboat casinos to operate only on a "vessel." The court clearly stated that "[t]he determination of vessel status for purposes of invoking federal maritime law will not be influenced by a state’s legislatively induced licensing scheme."

It will take several more rounds in court before the matter is settled once and for all. In the meantime, all those who are involved in structuring and operating a gaming establishment on water should factor this uncertainty - and the many other peculiarities of maritime law - into their planning in order to avoid potential pitfalls.