Sure it does. You were just tending to ships duties down below including closely monitoring your electronic navigation equipment when the collision occurred...
Hard to argue that one person can be on deck and at the nav station at the same time, and according to the rules you need to use 'all available means' which necessitates visiting the nav station from time to time. You have ports you can look out right? But seriously.. if we are talking about accidents at sea there probably isn't going to be a day in court because you will sunk and dead, possible without the ship even noticing. Near shore you should not be sleeping no matter what anyway. Offshore you have the right of way as a sailing vessel regardless if you are violating rule 5 or not. Seems like moot points in the overall scheme of things. How many solo sailors end up in the world commerce courts for violating rule 5 resulting in damages? Its probably happened, but I haven't heard of it. Would be interested to hear of any real court cases.
Here is a investigation report of a sailing vessel (crew probably sleeping) that collided with a ship: Maersk Dunedin Collision report
Apparently this case, which resulted in damages to both vessels did not constitute a 'reportable incident' whatever that is.
If you read my post six which is primarily a quote from Farwell's Rules of the Nautical Road you'll see that there are no
ship's duties, not even navigation, that supercede the requirement for a lookout.
The collision cited was not between US vessels nor in US waters and is thus not a reportable incident as far as US Coast Guard goes. It's generally a matter of course to report any incidents upon the high seas at the next port of call. Had the Maersk Dunedin suffered any significant damage I'm sure we'd know rather a bit more about the origins of the Schooner Anne's documentation, if any, and I imagine that a case would have been filed in Denmark or the Hague. The ownership of the yacht, if proven to be US, could result in the case in US federal court. The USCG finding is not the final say on the matter, it is a report of lack of jurisdiction.
You are only partially correct in your assumption about right of way of the sailing vessel. (There is actually no such thing as right of way.) Even if the sailing vessel was the stand-on, or privileged, vessel she had a duty to act to avoid collision that was apparently not met. More importantly, as emphasized by Farwell, Admiralty is often about the assignation of contributory negligencies. Failure to maintain a lookout would be considered contributory negligence regardless of the sailboat's standing under the Rules.
From, The Kaga Maru (Wash 1927) 18 F (2d) 295,
"The strict performance of a vessel's duty to maintain proper lookout is required and failure to do so, especially when other craft are known to be in the vicinity, is culpable negligence".
From Farwell, citing The Tillicum (Wash 1914) 217 F 976,
"A lookout has been defined by the federal court as a person who is specially charged with the duty of observing the lights, sounds, echoes, or any obstruction to navigation with that thoroughness which the circumstances permit. The words specially charged
imply that such person shall have no other duties which detract in any way from the keeping of a proper lookout. Thus it has been held in numerous cases that because the lookout must devote his attention to this duty, the officer of the deck or the helmsman cannot properly serve as lookout." (with further citing of Kagu Maru as well as The Donau (Wash 1931) 49 F (2d) 799)
In The Twenty-One Friends, (PA 1887) 33 190 it was held that a seaman dividing his attention between reefing a sail and looking out was held to not constitute a vigilant lookout. In The Fannie Hayden, (Me 1905) 137 F 280 it was held that the only two seamen on deck at the time, who were taking down sail, did neither constitute a proper lookout and the schooner was held liable for colliding with another schooner having right of way.
The advent of radar produced a slew of cases in which it was alleged that the radar was an adequate substitute for a lookout. Countless court decisions have rejected that idea going so far as to say that either monitoring of the radar or performing other navigational duties in itself disqualifies the person as a proper lookout. Radar is viewed as an adjunct to the keeping of a proper lookout by the vessel.