Commonwealth of Puerto Rico v. The Ss Zoe Colocotroni, Her Engines, Appurtenances, Etc.

In the early morning hours of March 18, 1973, the SS ZOE COLOCOTRONI, a tramp oil tanker, ran aground on a reef three and a half miles off the south coast of Puerto Rico. To refloat the vessel, the captain ordered the dumping of more than 5,000 tons of crude oil into the surrounding waters. An oil slick four miles long, and a tenth of a mile wide, floated towards the coast and came ashore at an isolated peninsula on the southwestern tip of the island-a place called Bahia Sucia. The present appeal concerns an action in admiralty brought by the Commonwealth of Puerto Rico and the local Environmental Quality Board (EQB) to recover damages for harm done to the coastal environment by the spilled oil. 1

Defendants 2 have raised numerous objections to the district court’s judgment awarding plaintiffs $6,164,192.09 in damages for cleanup costs and environmental harm. The primary objections are that the district court: (1) abused its discretion in striking defendants’ pleadings on the issue of liability as a sanction for defendants’ conduct during the discovery process; (2) *657 erred in considering depositions of the ship’s master and crew on the issue of liability and in making findings as to liability after that issue had been removed from the case; (3) lacked personal jurisdiction over the underwriters West of England-Luxembourg and West of England — London; (4) erred in finding plaintiffs had standing to sue for environmental damages; (5) applied the wrong standard in measuring damages; (6) made certain erroneous findings of fact on damages; and (7) erred in denying defendants’ Rule 60 motion for relief from judgment. 3 The facts and circumstances of the oil spill and its aftermath are set forth in detail in the district court’s opinion, Commonwealth of Puerto Rico v. SS Zoe Colocotroni, 456 F.Supp. 1327 (D.P.R. 1978). After a brief review of these facts and of the trial testimony, we will address defendants’ contentions in turn.

I.

The following facts found by the district court are not in serious dispute. On March 15, 1973, the ZOE COLOCOTRONI departed La Salina, Venezuela, carrying 187,670 barrels of crude oil en route to Guayanilla, Puerto Rico. For the first two days of the voyage, the vessel proceeded by celestial navigation. The last star fix, however, was taken at 1859 hours on March 17. For the next eight hours, the ship proceeded by dead reckoning. As the vessel approached the south coast of Puerto Rico, it was, the district court stated, “hopelessly lost.” At 0300 hours on March 18, the ship grounded on a reef. Efforts to free the tanker by alternately running the engines in forward and reverse were unsuccessful. After ten minutes, the captain ordered the crew to lighten ship by emptying the cargo of crude oil into the sea. 4 By the time the vessel refloated, some 1.5 million gallons of crude oil-5,170.1 tons-had poured into the surrounding waters.

The oil floated westward from the site of the spill throughout the daylight hours of March 18, and began coming ashore after nightfall. Bahia Sucia is a crescent-shaped bay facing southeastward from the Cabo Rojo peninsula, which forms the southwest tip of Puerto Rico. The oil entered Bahia Sucia, washed onto the beaches, and penetrated the mangrove forests that line the western edge of the bay. The oil was particularly thick in three areas: around the rocky tip of the peninsula, in a section of mangroves known as West Mangrove between a point called “Hermit One” and an inlet called “Dogman’s Cove,” 5 and on the open beach area stretching along the northern edge of the bay. In addition, as the tide ebbed and flowed, oil entered the tidal flats behind the mangrove fringe, coating the roots of mangroves growing deeper in the forest and soaking into the sediments.

*658 A massive cleanup operation, coordinated by the United States Coast Guard and several Commonwealth agencies, commenced on the morning of March 19. Cleanup crews, hampered to some extent by variable winds that blew oil back and forth across the bay, used booms to attempt to contain oil floating on the surface. Much of this oil was pumped out, either directly from the water or from large holes dug in the beach into which oil was channeled by the cleanup crews. By March 29, approximately 755,000 gallons of oil, or about half the amount spilled, had been recovered. On several occasions during the cleanup, oil was driven by winds and currents into the eastern edge of the bay in an area known as East Mangrove. This thin layer of oil was difficult to remove, but, according to the district court’s findings, it caused little or no harm to the East Mangrove forest.

By April, cleanup activities had switched from large-scale removal of oil to small-scale activities such as manual beach cleanup and bailing of oil from tidal pockets with buckets and small boats. Large amounts of contaminated sands-totalling about 4,500 cubic yards-were removed from the beach area by bulldozer and by hand. At the end of April, the major remaining cleanup efforts were halted, and all further efforts were discontinued after September 24. Despite the cleanup, oil continued to be present in Bahia Sucia, especially in the stand of mangroves on the west side of the bay.

One of plaintiffs’ expert witnesses, Dr. Ariel Lugo Garces, a wetlands specialist, testified that the ecological functions of a mangrove forest such as that at Bahia Sucia included: (1) protecting the shoreline from erosion, storms, tides, and high winds; (2) providing a habitat for wildlife, especially birds; (3) providing a protected breeding ground for fish and shellfish; and (4) acting as a food source for aquatic creatures of all kinds. Dr. Roger D. Anderson, a marine biologist who testified for defendants, agreed with Dr. Lugo that tropical mangroves are an important link in the food chain that supports fisheries and other marine resources.

The district court described the Bahia Sucia mangroves as follows:

“The mangrove that borders on the ocean fringe throughout Bahia Sucia is a species referred to as red mangrove (Rhizophora mangle). This mangrove has both main and prop roots, in which are located lenticels or pores for gas exchange. These lenticels facilitate root respiration. Various epibenthic species such as tree oysters, snails, crabs, sponges and molluscs dwelled in these root systems. In the waters surrounding these roots, communities of fish, shrimp and similar floating or swimming organisms throve. The bottom around the roots was inhabited by various benthic infauna. The bottom near the red mangrove was covered with both turtle grass . and manatee grass

Further inland from the fringe, as the interstitial salinity rises, the red mangrove is supplanted by the black mangrove (Avecennia nítida). This mangrove inhabits a zone systematically flooded by the tide, and rather than prop roots, it has fingerlike breathing tubes (called neumatafors) which rise from the ground to above high water level. This area provided a habitat principally for crustaceans such as crabs and barnacles, and algae grazing snails, bees and reptiles. There were also benthic infaunal communities similar in nature to those in the bottom surrounding the red mangrove fringe.”

456 F.Supp. at 1338 (footnotes omitted). 6 The district court noted that the configura *659 tion of Bahia Sucia, together with the prevailing winds and currents, made the bay a natural trap for floating debris, including small quantities of petroleum and tar. 7 Nevertheless, the court found that, at the time of the ZOE COLOCOTRONI oil spill, “Bahia Sucia was a healthy, functioning estuarial ecosystem, typical of those found in the Southern coast of Puerto Rico and similar tropical environments.” 456 F.Supp. at 1339.

A.

The Commonwealth of Puerto Rico and the EQB instituted the present action on March 19, 1973, invoking the admiralty jurisdiction of the district court. A six-week trial, addressed solely to damages, commenced on November 7, 1977. 8 Plaintiffs first introduced testimony by expert witnesses on the impact of the oil spill on Bahia Sucia, the toxic effects of the oil, and the extent to which oil was still present four years after the spill. Other experts then presented proposals for restoring the area and testified to the costs that would be involved. Rafael Cruz Perez, an engineer, presented a proposal to remove and replace a total of 164,600 square meters (approximately 40 acres) of oil-contaminated sediments in the West Mangrove and East Mangrove areas to a depth of one meter. While the details of the Cruz Perez plan were somewhat sketchy, the geographic areas to be affected by the plan apparently consisted of the following. Of the 40 acres of contaminated sediments to be removed, about 15 acres were on the west side of the bay in the vicinity of West Mangrove and about 25 acres were on the east side in the vicinity of East Mangrove. Of the 15 acres on the west side, about 3.5 acres contained mangroves, approximately half of which were alive notwithstanding the polluted sediments. Of the 25 acres to be removed on the east side, about 16.5 acres contained mangroves. Cruz Perez thus estimated his plan for removal of 40 acres of contaminated sediments would necessarily entail the clearing of some 20 acres of existing mangroves. Furthermore, Cruz Perez testified, three additional acres of mangroves in uncontaminated areas would have to be cleared to provide access for heavy machinery. 9 An engineering report submitted by Gabriel Fuentes, a contractor, estimated the cost of removing the sediments and mangroves to be $7,176,363.71. Charles Pennock, a San Juan nurseryman, submitted an estimate of $559,500 for the replanting of 23 acres of mangroves from container-grown plants (approximately 5,500 trees per acre) and a five-year maintenance plan.

Dr. Roger J. Zimmerman, a marine biologist from the University of Puerto Rico, testified concerning a study he conducted in late 1976 and early 1977 comparing the number of living organisms found at Bahia Sucia with the number found in a comparable control area. Dr. Zimmerman’s study established no significant differences in number or type of organisms-either plants or animals-in the seagrass beds or on the prop roots of the mangroves. The study did, however, show a substantial disparity in the number of organisms living on or under the sediments. In particular, Dr. Zimmerman stated that the number of molluscs (e. g., clams, snails) in the Bahia Sucia area was very small in comparison to the control area. On the other hand, samples *660 taken in Bahia Sucia found a far larger number of polychaete worms, especially a genus known as capitella which often proliferates in areas of acute environmental distress.

Dr. Zimmerman also testified that, subsequent to this first survey, a second study was undertaken at the behest of the Environmental Quality Board. This study, again relying on core samples taken in Bahia Sucia and at a control site, concentrated on the sediments, where the first survey had found the greatest impact from the oil. Dr. Zimmerman stated that the surveyors took their samples primarily from the vicinity of a small lagoon in the West Mangrove area where previous studies and visual observation indicated the oil was heavily concentrated. This study revealed a marked difference between the two sites in the numbers of infaunal and epibenthic creatures, according to Dr. Zimmerman.

Dr. Ariel Lugo Garces, the wetlands expert, testified to studies he had made indicating the presence of oil in the mangrove sediments correlated with dead or dying mangrove trees. The mangroves would not grow back, Dr. Lugo said, as long as the oil remained in the sediments. Dr. Lugo also presented a compilation, prepared by him, of the data gathered by the other Bahia Sucia surveyors, summarizing the extent of damage to twelve different'components of the Bahia Sucia ecosystem. Dr. Lugo stated that he considered his figures conservative, since little data was available on many other environmental components.

Finally, Dr. Philip E. Sorenson, an economist specializing in natural resources, discussed the economic theory that shippers of oil should be required to bear such external social costs as oil spill damages in order to prevent underpricing of their product. “If the producers and consumers of oil are able to conduct their affairs in such a way as to transfer to society a large part of the real cost of producing and consuming their product,” Dr. Sorenson said, “we’ll be in an inefficient economic situation: one in which the market price of the commodity will be less than the full social cost of producing it.” Dr. Sorenson also presented a summary of plaintiff’s claims for damages, including inter alia the Commonwealth’s uncontested claim for cleanup expenses of $78,-108.89, the $7.5 million for sediment removal and mangrove replanting, and Dr. Sorenson’s own estimate of $5,526,583 as the replacement value of the invertebrate organisms killed by the oil spill.

Dr. Sorenson testified he arrived at the latter figure by way of the following calculations. Dr. Lugo’s report had compiled the results of earlier studies together with the second Zimmerman survey to provide a table of environmental harms. Concentrating only on the figures from the Zimmerman study, Dr. Sorenson extrapolated the differences in number of organisms found in the ten-centimeter core samples over a square meter area to determine the net difference in creatures per square meter. Since six samples were .taken at each of the four “stations” in Bahia Sucia and in the control area, he determined this involved multiplying the results of each set of six samples by 21.22. Results from one of the four stations, where more animals were found at Bahia Sucia than at the control area, were not included. The net difference was calculated to be 1,138 creatures per square meter. This figure in turn yielded the sum of 4,605,486 creatures per acre, and a total of 92,109,720 creatures of the 20 acres of mangroves allegedly impacted by oil. Dr. Sorenson testified that he took the 20-acre figure from “the survey and the map created by Mr. Cruz Perez” and that the 20 acres included a substantial area in East Mangrove.

To arrive- at an estimate of damages, Dr. Sorenson testified he consulted catalogs from biological supply houses. From these catalogs he determined that “[m]any of these species sell at prices ranging from $1 to $4.50” and “that no animal on the list sold for less than 10 cents.” 10 Dr. Sorenson *661 assigned an average replacement value to each creature, regardless of species, of six cents. Multiplying 92,109,720 times .06 resulted in an estimate of $5,526,583 as the replacement value of the organisms “missing” from the Bahia Sucia sediments. Dr. Sorenson also estimated the cost of a ten-year scientific monitoring program at $1,393,200. His total estimate of the damages was thus $14,733,755.60, consisting of $7,176,363.71 for mangrove and sediment removal, $559,500 for mangrove replanting, $5,526.583 for the replacement value of organisms, $1,393,200 for monitoring, and $78,108.89 for cleanup costs.

B.

Plaintiffs’ witnesses were thoroughly cross-examined by defendants’ counsel. In addition, defendants presented considerable expert testimony of their own. The primary thrust of this testimony was that the oil originally present in Bahia Sucia had “weathered” through the action of wind, waves, sunlight and the elements and was no longer having major toxic effects on the environment. Defendants’ experts also testified that some of the damaged mangroves were victims of pre-existing high salinity in West Mangrove rather than oil pollution. Further testimony indicated that, in the opinion of defendants’ experts, there were substantial signs of natural regeneration among the mangroves. Dr. Edward S. Gilfillan testified, for example, that he expected the area to be restored by natural processes within ten to fifteen years, if not less. He estimated the size of the area of “continuing damage” in West Mangrove at two and a half to three acres.

Defendants also offered alternative restoration or reforestation programs of their own that were less extensive or less costly than plaintiffs’ proposals. Dr. Howard Teas, a biologist, testified that, in his opinion, it would be possible, though not necessarily desirable, to remove oil from the sediments without destroying existing vegetation by using “an airlift or vacuum such as divers use in unearthing treasure ships.” A preferable alternative, Dr. Teas said, would be to offset damage to the oil-impacted mangroves by replanting trees at a nearby location where the mangrove forest had existed several years before. This proposal would not carry with it the same risk of totally destroying the environment in the contaminated areas in order to save it, Dr. Teas said. He suggested that construction of a canal system to provide sufficient “flushing” action would permit reforestation of the area west of Bahia Sucia and north of the Cabo Rojo lighthouse where excess salinity had apparently killed the mangroves. Dr. Teas testified that the cost of replanting 15 acres of mangroves through methods with which he was familiar would be approximately $75,000 ($5,000 per acre), and that the cost of a ten-year monitoring program would be about $200,-000.

Dr. Roger D. Anderson, a marine biologist testifying for defendants, attacked Dr. Sorenson’s theory of replacement value as the measure of damages for small, commercially valueless invertebrate animals. Dr. Anderson offered as an alternative his own methodology, based on studies conducted in Georgia. Citing work done by some of plaintiffs’ experts as well as other scientists, Dr. Anderson estimated the value of an acre of tropical mangrove swamp to be $50,000, based on a complex analysis of the potential significance of such land to food supply, energy supply, fisheries, wood products, aesthetics, recreation and similar factors. From his analysis of other evidence produced at trial, Dr. Anderson testified he considered about three acres of the West Mangrove area to be a total loss, thus producing a damage figure of $150,000. He stated, however, that his estimate of $50,-000 was a “yardstick” which could be applied to any number of acres of mangroves that plaintiffs could show had been substantially damaged. Dr. Anderson pointed out that plaintiffs' expert Dr. Lugo had written a paper, on which Dr. Anderson *662 partly relied, putting a more conservative valuation of $35,000 to $40,000 per acre on the mangroves of Bahia Sucia.

Dr. Anderson also offered to testify in behalf of defendants’ proposal that, as an alternative to massive replanting in the West Mangrove area, reforestation of the Cabo Rojo peninsula could be attempted. He stated that he was familiar with this technique of alternate-site restoration, and that it had been used in several states as a condition for permitting activities that would result in destruction of certain areas of marshland. Dr. Anderson’s testimony on this point was excluded on grounds of irrelevancy. “I am involved here, solely, with establishing a dollar amount of damages,” the court said. “[Wjhether as an alternate remedy in the settlement, the restoration of other mangroves, or of these mangroves . could be proposed is outside the scope of this case; unless I am shown something to the contrary.”

Finally, defendants presented testimony by David R. Stith, a marine contractor with experience in oil spill cleanup operations, including the Bahia Sucia cleanup. Stith testified he had prepared an estimate of the cost of removing the oil-contaminated sediments from 2.6 to 2.9 acres of the West Mangrove area using a suction device mounted on a floating barge. His estimate for this work totaled $396,859. Stith also offered to testify he had estimated the cost of constructing a channel system as proposed by Dr. Teas for replanting at the Cabo Rojo lighthouse. This estimate was $152,310. As with Dr. Anderson’s, the district court excluded this testimony as irrelevant since it did not concern the damaged area. The total of defendants’ proposed remedial measures was just under $1 million.

C.

The district court made the following findings on the issue of damages:

“1. Plaintiffs’ proven claim of damage to marine organisms covers an approximate area of about 20 acres in and around the West Mangrove. The surveys conducted by Plaintiffs reliably establish that there was a decline of approximately 4,605,486 organisms per acre as a direct result of the oil spill. This means that 92,109,720 marine animals were killed by the COLOCOTRONI oil spill. The uncontradicted evidence establishes that there is a ready market with reference to biological supply laboratories, thus allowing a reliable calculation of the cost of replacing these organisms.42 The lowest possi42 As explained previously, the affected flora and fauna were part of a trust held for the people by the Commonwealth of Puerto Rico. See, Lacoste v. Department of Conservation, 263 U.S. 545, 549, 44 S.Ct. 186, 68 L.Ed. 437 (1924); Geer v. Connecticut, [161 U.S. 519, 16 S.Ct. 600, 40 L.Ed. 793], supra. Perforce, the Commonwealth must have the ability to have the corpus of said public trust reimbursed for the diminution attributable to the wrongdoers. State Dept. of Environmental Protection v. Jersey Central Power & Light Co., supra, [124 N.J.Super. 97, 308 A.2d 671], at 673-674. We recognize that no market value, in the sense of loss of market profits, can be ascribed to the biological components of the Bahia Sucia ecosystem. The Court will thus refer to market cost as the most reliable evidence of the quantum of damages actually sustained, i. e., what is required to make the Plaintiffs whole. This will compromise the cost of restoring the affected areas to the condition in which they were before the occurrences. See Feather River Lumber Co. v. United States, 30 F.2d 642, 644 (C.A. 9, 1929).”

ble replacement cost figure is $.06 per animal, with many species selling from $1.00 to $4.50 per individual. Accepting the lowest replacement cost, and attaching damages only to the lost marine animals in the West Mangrove area, we find the damages caused by Defendants to amount to $5,526,583.20.

2. The evidence is overwhelming to the effect that the sediments in and around the West Mangrove continue to be impregnated with oil. The solutions proposed by Plaintiffs to this problem are unacceptable in that they would bring about the total destruction of this environment without any real guarantee of ultimate success. Furthermore, there is substantial scientific evidence to the effect that much of the undesirable effects *663 of the oil in the sediments will be corrected in time by the weathering processes of nature. The most affected spots in the West Mangrove cover an area of approximately 23 acres. It is the Court’s opinion that these areas can best be reestablished by the intensive planting of mangrove and restoration of this area to its condition before the oil spill. The evidence shows that the planting of mangrove runs at about $16,500 per acre, thus bringing the cost of replanting 23 acres to $379,500. The evidence further demonstrates that the planting will require a five year monitoring and fertilizing program which will cost $36,000 per year or $180,000 for the five years. The total damages thus suffered by Plaintiffs by reason of the pollution of the mangrove in the West Mangrove amount to $559,-500.

3. Plaintiffs incurred in cleanup costs in the amount of $78,108.89 which were not reimbursed from any source, and they are entitled to recover said damages from Defendants.

456 F.Supp. 1327, 1344-45 & n.42 (D.P.R. 1978).

The judgment of the district court was entered August 22,1978. During the pend-ency of their appeal from this judgment, defendants filed a motion for relief from judgment pursuant to Fed.R.Civ.P. 60(b) 11 and for correction of the record pursuant to Fed.R.Civ.P. 60(a). These motions were denied in the district court by order dated August 10, 1979. Defendants’ appeal from this order has been consolidated with the pending appeal of the original judgment. 12

II.

Defendants first contend the district court abused its discretion by striking their pleadings on the issue of liability and their petition for exoneration from and limitation of liability. 13 Defendants argue that this sanction — which amounted to a default judgment on liability and left open only the question of damages — was an unreasonably harsh penalty for any pretrial misconduct they may have engaged in.

The district court acted pursuant to Fed. R.Civ.P. 37(b), which provides that where a party has failed to obey a discovery order, the court “may make such orders in regard to the failure as are just, and among others the following:

“(A) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;

(B) An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting him from introducing designated matters in evidence;

(C) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party; . ” (Emphasis added.)

The Supreme Court has stated that the appropriate standard of review for orders of this nature “is not whether this Court, or whether the Court of Appeals, would as an original matter have dismissed the action; *664 it is whether the District Court abused its discretion in so doing.” National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642, 96 S.Ct. 2778, 2780, 49 L.Ed.2d 747 (1976) (per curiam); see also Luis C. Forteza e Hijos, Inc. v. Mills, 534 F.2d 415, 419 (1st Cir.1976). The question is whether the district court’s findings “are fully supported by the record.” 427 U.S. at 642, 96 S.Ct. at 2780.

In the present case, the district court found that defendants had exhibited “bad faith and a callous disregard of their responsibilities in this litigation.” Defendants’ conduct, which the district court characterized as “an affront to this Court’s dignity,” was found to have severely prejudiced plaintiffs’ preparation of their case as well as the court’s attempts to ensure that the trial proceeded as scheduled. These conclusions were based on the following facts, which appear in the record.

On June 7,1977, the magistrate convened a status conference at which it was agreed by all parties that discovery in this long-pending case would be completed by August 1 in contemplation of a September 7 pretrial conference and a November 7 trial date. Depositions of the defendant corporations were scheduled to be taken in Puerto Rico on July 5, 6 and 7. A further status conference was slated for August 17. The depositions were duly noticed on June 13.

On July 5, 1977, without prior notice, defendants’ corporate officials failed to appear for the scheduled deposition sessions. At plaintiffs’ request, the magistrate convened an in-chambers conference the same day to consider what response to make. At that meeting, counsel for defendants stated that, contrary to the earlier agreement, his clients were only willing to be deposed in England in August. The court ordered defendants’ counsel to ascertain by July 11 whether his clients would be amenable to appearing in Puerto Rico for depositions during the week of July 26. A second magistrate’s hearing was set for July 11, at which time counsel for plaintiffs, if they so desired, were to move for sanctions and attorneys’ fees. 14

On July 11, 1977, the court was informed that the parties had agreed to reschedule the aborted depositions for August 3, 4 and 5, 1977, and that they would be conducted in Puerto Rico. The magistrate’s hearing was cancelled and two days later the district court extended the discovery deadline to August 31, indicating that no further alterations in the pretrial schedule would be allowed. At the request of the United States, the depositions scheduled for August 3, 4 and 5 were eventually moved, with the consent of all parties, to August 17, 18 and 19. Appropriate notices were served August 10, and the court gave formal approval to the change on August 15.

On August 16, counsel for defendants, A. Santiago Villalonga, phoned counsel for the Commonwealth of Puerto Rico to inform him that defendants’ witnesses did not intend to appear the next day. The witnesses’ appearances would be superfluous, he said, because defendants intended to admit liability. This concession was repeated to the magistrate on the 17th of August by Francisco Bruno, who was substituting for Santiago as defendants’ counsel at the status conference previously slated for that day. Like Santiago, Bruno asserted that the admission of liability obviated the need for taking further depositions.

At this time, counsel for the United States raised, among others, the question whether defendants’ admission of liability extended to a waiver of defendants’ petition to limit liability to the value of the vessel and cargo. When defendants’ substitute counsel was unable to provide a clear answer, the magistrate ordered defendants to file a written admission of liability within fifteen days. The magistrate also agreed to reschedule the pre-trial conference from September 7 to October 25 and confirmed, that the trial-now thought to be limited to the damages issue-would still commence on November 7.

*665 Defendants did not file a written admission of liability within fifteen days, as ordered, nor did they file any paper explaining their behavior. When the magistrate learned that no admission had been filed, he ordered a Some Disposition Conference for October 7, 1977 to determine the present status of the matter. At the conference, defendants’ counsel stated, for the first time, that the August 17 admission of liability was neither authorized by all the defendant companies nor unlimited as to amount. Rather, said Santiago, the admission was intended to extend only to the amount of the bond for the vessel-$650,000. The magistrate thereupon ordered each defendant either to admit liability without limit as to amount-except for the limits of applicable insurance policies-by October 14, or to produce witnesses for deposition on October 17. 15 Defendants were explicitly warned that failure to comply with this order could result in the striking of their pleadings and of the petition for limitation of liability.

On October 14,1977, instead of admitting liability, defendants moved for a postponement for one week of the depositions set for October 17, and a rescheduling of the pretrial conference slated for October 25. On October 17, plaintiffs moved the court to strike defendants' pleadings on liability, and a hearing before the magistrate was held the same day. After reviewing the facts recited above in detail, 16 the magistrate recommended that defendants’ pleadings on liability be stricken, or in the alternative that defendants pay $21,000 to the affected parties plus $500 for each day trial would be delayed by postponing the depositions, originally scheduled for July 5, to October 24. Following a hearing on October 20, the district court adopted the magistrate’s recommendation that defendants’ pleadings, and their petition for limitation of liability, be stricken.

We believe the record supports the district court's finding that defendants’ conduct was inexcusably recalcitrant and that it materially prejudiced plaintiffs’ trial preparation and the court’s legitimate efforts to keep this protracted lawsuit moving forward. The fulcrum upon which this course of conduct turned was defendants’ attempt at the August 17 status conference to avert the scheduled depositions by purporting to admit liability so as to make the depositions unnecessary. Had plaintiffs known the admission of liability was not meant to exceed the $650,000 already deposited in court, they plainly would not have acceded to the cancelling of the depositions. All the parties clearly understood that the “privity and knowledge” of the owners would be a major issue when plaintiffs sought to break defendants’ petition for limitation of liability. The manifest pur *666 pose of the depostitions scheduled for July 5, and later for August 17, was to explore the question of privity, and to try to establish defendants’ knowledge of various alleged defects in the ZOE COLOCO-TRONE’s navigational and safety equipment. If defendants intended to admit liability only within the limits of 46 U.S.C. § 183, even though they did not so state, then their assertion that further depositions would be unnecessary was highly misleading. plaintiffs sought to break defendants’ petition for limitation of liability. The manifest purpose of the depositions scheduled for July 5, and later for August 17, was to explore the question of privity, and to try to establish defendants’ knowledge of various alleged defects in the ZOE COLOCOTRONI’s navigational and safety equipment. If defendants intended to admit liability only within the limits of 46 U.S.C. § 183, even though they did not so state, then their assertion that further depositions would be unnecessary was highly misleading. It had the effect of lulling plaintiffs into a false sense that the issue of liability was settled, at the same time the approaching trial date made it increasingly unlikely that sufficient time would be available later for full discovery to be conducted.

Nothing in defendants’ conduct subsequent to August 17 in any way cured or mitigated the misleading effect of their purported admission of liability. Order to produce a written admission of liability, spelling out the details of their concession, within fifteen days, defendants made no formal response. Ordered again, following the Some Disposition Conference, either to admit liability in writing or to produce witnesses for deposition, defendants did neither, but instead at the last moment requested yet another delay. As we said under similar circumstances in affirming the dismissal of a case for want of prosecution, “There comes a point when the question arises who is running the court-counsel, or the judge. To this there can be but one answer.” Higuera v. Pueblo International, Inc., 585 F.2d 555, 557 (1st Cir. 1978).

Defendants insist the district court exceeded its discretion in striking their pleadings and preventing their defenses from becoming considered on the merits. They point out that the enforcement of procedural rules through punitive default judgments may offend the standards of due process. See Societe Internationale v. Rogers, 357 U.S. 197, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958); Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215 (1897). But the district court’s response here was not purely punitive-or “mere punishment” in the words of Hammond Packing Co. v. Arkansas, 212 U.S. 322, 351, 29 S.Ct. 370, 380, 53 L.Ed. 530 (1909); its actions bore a direct and reasonable relation to the prejudice defendants’ irresponsible conduct had already created. See 4A Moore’s Federal Practice 137.03[2.-l] at 37-56. Whether defendants planned all along to limit their unqualified admission of liability, or whether this idea arose as an afterthought, they gained a considerable strategic advantage by their misrepresentations. The district court could protect plaintiffs only by either further delaying trial or by holding defendants to their counsel’s original unqualified admission of liability. The latter course, which the court adopted, was somewhat analogous to the imposing of an equitable estoppel. In the circumstances we see no violation of due process nor any abuse of the court’s discretion. See National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 643, 96 S.Ct. 2778, 2781, 49 L.Ed.2d 747 (1976); Hammond Packing Co. v. Arkansas, 212 U.S. 322, 350-51, 29 S.Ct. 370, 379-80, 53 L.Ed. 530 (1909); Luis C. Forteza e Hijos, Inc. v. Mills, 534 F.2d 415, 419 (1st Cir.1976); cf. Note, The Emerging Deterrence Orientation in the Imposition of Discovery Sanctions, 91 Harv.L.Rev. 1033, 1044 — 45 (1978).

III.

Defendants next argue that the district court’s attitude toward them was “poisoned” by the court’s unwarranted reliance on depositions of the crew and master of the ZOE COLOCOTRONI to make unnecessary findings on the issue of liability, see 456 F.Supp. at 1333-36. Defendants con *667 tend that the depositions, which were taken immediately after the vessel docked in Puerto Rico, were not properly introduced as evidence, and that they represented an attempt by the crew and captain to shift blame for the accident from themselves to the owners. Moreover, defendants argue, it was unnecessary for the court to make any findings on liability once it had stricken defendants’ pleadings. The only purpose served by such findings, according to defendants, was to prejudice the court on the issue of damages.

We agree that the findings on liability were redundant. It would have been enough if the allegations in the complaint pertaining to liability had been taken as established. The depositions, moreover, had been received only in support of plaintiffs’ claim for punitive damages, which was thereafter abandoned. But we are not persuaded that the court’s consideration of extraneous liability matters caused undue prejudice or prevented it from fairly deciding the damages issue. As we sustain the court’s striking of defendants’ pleadings, nothing more favorable to defendants could have been found than was found on the issue of liability, and we do not think the record displays a judicial attitude that was “poisoned” against the defendants with respect to the issues that remained. 17

IV.

The West of England defendants, insurers of the ZOE COLOCOTRONI, argue the district court erred in asserting personal jurisdiction over them. The insurers maintain they are outside the reach of the District Court of the District of Puerto Rico because they have no office, sell no insurance, and purportedly transact no business in Puerto Rico. To sustain in personam jurisdiction over a foreign corporation, the court must find