September 2010
Notes From Your Updater - As I noted in the July 2010 Longshore Update, John A. Chamberlain, the current Chief, Branch of Financial Management, Insurance and Assessments, OWCP National Office, has announced that he will be retiring in December of this year. OWCP National Office is now looking for a candidate to try and fill John’s shoes. OWCP/DLHWC has recently announced the opening of this critical senior management position - Branch Chief for Insurance and Financial Management. Detailed information about the job, salary and benefits, qualifications, and the application process can be found here. This is a well-paid senior management position in National Office, opened by the retirement of a valued employee. National Office anticipates bringing the successful candidate on by mid-November with time to enjoy sufficient overlap with the incumbent to ease the transition. The vacancy announcement will only be posted for three weeks, ending on or about Sept 10, after which applications will not be accepted. So if any of my readers are interested in this challenging senior management position, you need to act quickly.
On Wednesday, September 29, 2010, Loyola University New Orleans College of Law In Cooperation with The United States Department of Labor, will be presenting, “A Day with the DOL-Basics to Expert. The seminar is designed to provide participants with a chance to go one on one with the OWCP and OALJ on Longshore Questions. The seminar will run from 8:30 a.m. to 2:00 p.m. at the Pan American Life Center, 601 Poydras Street, 11th Floor (Orleans Room), New Orleans, LA. To register online go to http://www.law.loyno.edu/cle.
The US Department of Labor's Office of Workers' Compensation Programs (OWCP) has announced that it will adhere to the recent decision by the Center for Medicare and Medicaid Services (CMS) that was announced in MLN Matters, #MM6740. Effective March 1, 2010, OWCP will no longer accept the use of the AMA/CPT Consultation codes ranges 99241-99245 and 99251-99255 for outpatient and office settings. Any line items submitted with date of service on or after March 1, 2010 will be denied and returned stating “The requested procedure is not a covered service.”
On July 21, 2010, the 1st Circuit Court of Appeal of Louisiana denied a rehearing in the case of Graham v. Offshore Speciality Fabricators, Inc., 2010 La. App. LEXIS 1055. See the February 2010 Longshore Update for the review of this case.
On August 17, the Department of Labor, Office of Workers’ Compensation Programs, published proposed rules at 75 FR 50718, implementing amendments to the LHWCA made by the American Recovery and Reinvestment Act of 2009, relating to the exclusion of certain recreational-vessel workers from the LHWCA’s definition of ‘‘employee.’’ These regulations purportedly would clarify both the definition of ‘‘recreational vessel’’ and those circumstances under which workers are excluded from LHWCA coverage when working on those vessels. The proposed rules also codify the Department’s longstanding view that employees are covered under the LHWCA so long as some of their work constitutes ‘‘maritime employment’’ within the meaning of the statute.
On August 13, 2010, the Department of Labor, Office of Workers’ Compensation Programs published a substantive proposed rule change at 75 FR 49596. Although the proposed rules primarily affect FECA claims, the rules also propose amendments to the medical fee schedule used under the Longshore Act. Additionally, other changes, such as the proposal increasing the reasonable distance of travel up to a round trip distance of 100 miles, because of situations where employees no longer had doctors within the old distance of 25 miles, may eventually be applied to Longshore claims as well.
OFFICE OF ADMINISTRATIVE LAW JUDGES
RECENT SIGNIFICANT DECISIONS
Digest #223
The Office of Administrative Law Judges has posted its newest RECENT SIGNIFICANT DECISIONS - MONTHLY DIGEST #223. Although you get great up-to-date information as a subscriber to the Longshore Update, you can use this excellent resource to keep your Judges’ Benchbook up to date. Just follow the above link to the OALJ web site.
PERMANENT AND TOTAL DISABILITY UPHELD IN ASBESTOSIS CASE
LA INSURANCE GUARANTY ASSOC., ET AL. V. DIRECTOR, OWCP, ET AL. [HARVEY]
Circuit Court Opinion
BRB Decision
ALJ Decision
Robert Harvey worked as a longshoreman from 1965 to 1977. His primary employer during that time was Baton Rouge Marine Contractors (“BRMC”). For a large part of the 1960s, Harvey’s primary job was to unload bags of asbestos from the holds of ships. In 1970, Harvey began working as a crane operator and remained in that position until changing employers and facilities in 1977. As a crane operator, Harvey no longer directly handled bags of asbestos, but he continued to pass through warehouse facilities where asbestos was stored in order to access BRMC’s cranes. In 1977, Harvey began working for the State of Louisiana until his retirement in 2005. He never again worked with asbestos. Harvey was first diagnosed with pulmonary asbestosis in 1998 and later filed a claim for benefits under the LHWCA. The ALJ conducted a formal hearing and awarded compensation for the injuries flowing from Harvey’s asbestosis, finding that: 1) Harvey’s asbestosis was causally related to his work for BRMC; 2) Harvey’s injuries constituted permanent and total disability; 3) Harvey’s retirement in 2005 was involuntary insofar as it was at least partially caused by his medical condition; 4) the “last injurious exposure” related to Harvey’s asbestosis occurred in 1977; 5) BRMC bore full liability under the LHWCA’s “last responsible employer” rule; and 6) Louisiana Insurance Guarantee Association (LIGA), as the substitute party for BRMC’s insolvent insurance company, was the responsible carrier. The ALJ also awarded Harvey all reasonable and necessary medical care for services related to his asbestosis, including reimbursement for any past asbestosis-related medical expenses. The parties cross-appealed the ALJ’s decision and the BRB affirmed. LIGA appealed the BRB’s ruling, contending the ALJ erred in finding that 1977 was the “last injurious exposure;” that Harvey involuntarily retired; and that Harvey was totally disabled. LIGA also raised two questions of law: (1) did the ALJ and BRB err in assigning full liability to LIGA by extension of the “last responsible employer” rule; and (2) did the ALJ err in awarding medical costs related to Harvey’s asbestosis without awarding a credit for unknown and unproven payments from another source? The appellate court concluded that, based on the record evidence, the BRB correctly found that all three of the ALJ’s challenged factual findings were properly supported by substantial evidence. Next, the appellate court found that under the LHWCA, the applicable law of allocation would have assigned all liability to BRMC’s now defunct insurance carrier as the last responsible carrier. LIGA took full responsibility for that comprehensive liability when it appeared as the replacement party for that carrier. Hence, the court concluded that the BRB and ALJ correctly determined that Harvey was under no obligation to exhaust any coverage provided by BRMC’s previous insurers. Finally, the appellate court noted that LIGA conceded that it did not offer evidence regarding Harvey’s health insurance coverage or any other information demonstrating that Harvey’s medical costs related to his asbestosis were paid or payable by another source. Thus, the court held that LIGA failed to demonstrate that its contention necessitates reversal of the BRB’s award of medical costs. The petition for review of the decision of the BRB was denied. (5th Cir, August 10, 2010) 2010 U.S. App. LEXIS 16516
PRESUMPTION THAT DEATH WAS NOT WILLFUL DOES NOT CONTROL
EYSSELINCK V. DIRECTOR, OWCP, ET AL. [RONCO CONSULTING]
Circuit Court Opinion
BRB Decision
ALJ Decision
Birgitt Eysselinck’s husband, Timothy A. Eysselinck, committed suicide while home on a leave of absence from his civilian job as a Task Leader for demining operations in Iraq. She sought death benefits under the LHWCA, as extended by the Defense Base Act. At the formal hearing on the case, the ALJ heard competing experts. Each expert reviewed records and witness interviews. Neither had interviewed the decedent, nor were there any contemporaneous medical treatment notes or records by a mental health care professional. Thus, each expert was making a retrospective diagnosis of whether the decedent suffered PTSD. The expert for the claimant stated the opinion that the decedent must have suffered from PTSD related to his working conditions because he could find no other cause. The other expert believed the available evidence failed to establish that the decedent suffered from PTSD. Rather, the decedent’s act was due to a combination of non-work related stressors, including alcohol consumption. The ALJ concluded that the expert who found insufficient support for a diagnosis of PTSD was more persuasive. The decedent was found to have willfully committed suicide, and benefits were denied. The Benefits Review Board affirmed. The district court subsequently denied the petition for review of the BRB decision. On further appeal, Eysselinck argued that the record contained substantial evidence to prove that the decedent suffered from PTSD causing an irresistible impulse to commit suicide, and the ALJ erred in finding the doctor it relied upon was more credible. The appellate court declined to reweigh or reevaluate the evidence considered by the ALJ. Eysselinck also argued that she was not granted the statutory presumption that the decedent’s death was not willful. The appellate court acknowledged that while there is such a presumption, the ALJ had was presented with a voluminous record and thoroughly reviewed all of the testimony and expert opinions and found that the presumption did not control. (5th Cir, August 16, 2010) 2010 U.S. App. LEXIS 17227
Updater Note: As my readers know, I don’t make it a practice of reviewing Defense Base Act cases; however, it is so rare that the §903(c) is invoked to deny benefits under the Act, that I thought this decision was worth sharing.
LHWCA §8(I) SETTLEMENT COVERS ALL CLAIMS AGAINST EMPLOYER
COOPER V. INTERNATIONAL OFFSHORE SERVICES, LLC., ET AL.
Circuit Court Opinion
Charles Cooper was carrying supplies aboard a docked vessel, when a wake from an unidentified passing ship allegedly caused the gang plank he was standing on to shift. This shift reportedly caused his lower right leg to become caught between the gang plank and the vessel, resulting in his injury. Cooper underwent surgery to repair a ruptured Achilles tendon, but was unable to make a full recovery. Cooper and his employer, International Marine, agreed to a Section 8(i) settlement of Cooper’s compensation claims under the LHWCA. Three days later, the District Director approved the settlement and entered a compensation order. Neither party appealed the compensation order to the Benefits Review Board, so it became final thirty days later. Approximately two months after the compensation order became final, Cooper filed a complaint in federal court asserting negligence claims arising out of the injury incident. He alleged violations of the LHWCA, the Jones Act, general maritime law, and Louisiana law and sought damages, maintenance, and cure from International and the unidentified vessel that created the wake. International filed a motion for summary judgment. It argued that Cooper’s negligence claims were barred by res judicata, because one of the findings of fact in the compensation order stating that International was relieved from liability for “any and all claims of whatsoever nature” arising out of the accident. The district court noted that Cooper agreed to dismiss the claims under the Jones Act and general maritime law, and that his complaint did not identify the specific Louisiana statutes he claims were violated. International’s motion for summary judgment was granted. The district court construed Cooper’s claim that the language in the compensation order did not reflect the actual agreement between the parties as being a challenge to the District Director’s findings of fact. The district court held that it lacked jurisdiction over such a challenge. In addition, the district court held that res judicata barred Cooper’s claims. Cooper filed a timely appeal challenging the district court’s grant of summary judgment and arguing that the District Director’s order was ambiguous. Cooper alleged that such a broad release was not what he bargained for in settling the case. The appellate court initially noted that there may well be a serious question about whether the District Director went further than the parties intended, but noted further that the court could not address the question. If Cooper believed the District Director’s order did not reflect the agreement the parties reached in the settlement agreement, he could have sought reconsideration by the Director. Failing that, he had the option to appeal the order to the Benefits Review Board. The appellate court held that the district court properly found that it did not have jurisdiction over such a challenge. The appellate court also found that the district court correctly held that res judicata precluded Cooper from re-litigating his claim against International. (5th Cir, August 3, 2010, UNPUBLISHED) 2010 U.S. App. LEXIS 16133
DISTRICT COURT IMPROPERLY ANALYZED APPORTIONMENT UNDER LHWCA
JOWERS V. LINCOLN ELECTRIC COMPANY, ET AL.
Circuit Court Opinion
Robert Jowers worked as a shipfitter and, later, as a supervisor and foreman for Ingalls, a U.S. Navy shipbuilding contractor. Though he was never a full-time production welder, one of Jowers' primary tasks was mild-steel welding. He used "stick" and "wire" welding consumables during his career, both of which emit fumes containing manganese in the welding process. Prior to bring suit against multiple manufactures Jowers was diagnosed with manganese-induced Parkinsonism (MIP), allegedly due to his exposure to welding fumes on the job. After filing suit, Jowers moved for summary judgment on the manufacturers’ joint tortfeasor defense, which the district court granted, finding that apportionment of fault to Jowers’ employer, Ingalls, who had paid him compensation under the LHWCA, was barred as a matter of law. The jury found in favor of Jowers on his failure-to-warn claim and awarded him $1,200,000 in compensatory damages and $1,700,000 in punitive damages. The jury apportioned 40% of the fault to Jowers, thereby reducing the compensatory award to $720,000. The manufacturers appealed on a number of grounds, only one of which will be covered in this review. The manufacturers contended that the district court erred in refusing to permit the jury to apportion fault to Jowers' employer, Ingalls, and that therefore the compensatory verdict must be vacated. Specifically, the manufacturers argued that the district court erred in finding that Jowers' eligibility for benefits under the LHWCA precluded the ordinary operation of Mississippi's joint tortfeasor law. The appellate court initially noted that in Fontenot it had held that allocation of fault between an employer and a third-party defendant under LHWCA depends on whether the third party is a vessel or is a non-maritime entity. If the third party is a “vessel,” then LHWCA provides that the employee may bring a third-party cause of action against the vessel based on negligence and the employer shall not be liable to the vessel for such damages directly or indirectly. However, the court noted, if the third-party defendant is a "non-maritime entity" (anything other than a "vessel"), the LHWCA is silent on the question of allocation of fault and the employee's claim against a non-maritime entity necessarily depends on the relevant state law's allocation of fault. The appellate court found that the district court improperly analyze the allocation of fault issue under federal law, holding that "federal maritime standards govern" even though no vessels were involved. This interpretation was incorrect under Fontenot since Mississippi state permits apportionment of liability not only to settling defendants, but also to immune defendants. The appellate court affirmed the jury's finding of liability against the manufacturers, vacated both the compensatory and punitive damages awards, and remanded the case for a new trial on damages that included a jury instruction permitting allocation of fault to the employer, Ingalls. The appellate court also vacated plaintiffs' fees award, which rested exclusively on the punitive damages verdict. (5th Cir, August 26, 2010) 2010 U.S. App. LEXIS 17862
LHWCA IMMUNITY ISSUE NOT APPEALABLE FROM NON-FINAL ORDER
INTERNATIONAL SHIP REPAIR & MARINE SERVICES, INC. V. ALEMAN
Appellate Court Opinion
Anibal Aleman, as personal representative of the estate of Wilfredo Morales-Montalvo, alleged that the decedent suffered a heat injury and death while working on a dry dock owned by International Ship Repair & Marine Services, Inc. International’s president and employee sought summary judgment alleging that they had immunity under the LHWCA. The trial court found that the decedent was a borrowed servant of International, but that International, its president, and employee did not have immunity. International sought review of the trial court’s non-final order, which denied their motion for summary judgment with regard to the wrongful death action against all of them and vicarious liability action against the company. Upon review, the appellate court found that the order was not reviewable as a non-final order pursuant to Fla. R. App. P. 9.130(a)(3)(c), because it did not state that an immunity defense based on the Act was not available to International, its president and employee as a matter of law. Technically they could still ask a jury to decide whether the personal representative's remedy was limited to LHWCA benefits under the Act because the trial court did not resolve the issue as a matter of law. The court converted the appeal to a petition for writ of certiorari but determined that it did not have certiorari jurisdiction to review the order as it did not depart from the essential requirements of the law. The court dismissed the appeal. (Fla. 2nd App, June 18, 2010) 2010 Fla. App. LEXIS 8723
COURT EQUATES EMPLOYER’S ACTIONS TO AN INTENTIONAL TORT
VAN DUNK V. RECKSON ASSOCIATES REALTY CORPORATION, ET AL.
Appellate Court Opinion
Kenneth Van Dunk and his wife appealed from a court order, which granted summary judgment to James Construction Company and dismissed their complaint alleging serious injuries as a result of a trench collapse. The lower court found that workers’ compensation was Van Dunk’s exclusive remedy. Van Dunk argued that the workers' compensation bar does not apply, because the federal Occupational Safety and Health Administration ("OSHA") found that the accident was the result of a "willful violation" of its regulations, and therefore constituted an "intentional wrong" for State law purposes. Van Dunk further alleged that, because James’ superintendent sent him into the trench knowing the dangers he faced, the lower court erred in holding that an intentional wrong under N.J.S.A. 34:15-8 had not occurred. James responded that its superintendent’s actions did not amount to an "intentional wrong" because they do not meet the threshold established by case law. Van Dunk countered that the lower court judge erred in finding the conduct did not present a jury question, precluding summary judgment. The appellate court agreed with Van Dunk, finding the James’ had knowledge that allowing its employees to enter the trench without any safety device could lead to injury or death. Moreover, the court concluded that Van Dunk's safety was disregarded to increase profit and productivity. Facts regarding relocation of a sump pump and other facts supported a finding that Van Dunk’s safety was sacrificed for James’ benefit. After OSHA had finished its investigation, James’ was able to relocate the sump by using the trench box it had on site without harm to any of its employees. After giving ‘lip service” to the workers’ compensation exclusivity provision, by referring to this is a “close case,” the appellate court concluded, on the legal issue before it, that the Legislature would not have sanctioned the context within which this accident happened, or barred recovery from James. The court held that Van Dunk had satisfied his burden, warranting a reversal of the summary judgment. (NJ App, August 30, 2010) Docket No. A-3548-08T2
Updater Note: Although this is not a Longshore case, I thought it was important to share the opinion with my readership, as the court’s reasoning (or more appropriately, lack thereof) could be applied to any workers’ compensation statute. In my humble opinion, this is a horrible interpretation of the law.
EMPLOYER CHALLENGES JONES ACT STATUS OF INJURY-PRONE WORKER
SEPULVADO V. ALPHA DRILLING, LLC, ET AL
William Sepulvado began working for Axxis Drilling, Inc. as a floorhand. After sustaining several injuries and while recuperating from surgery, Axxis sent Sepulvado to crane operating school because working as a crane operator would be less strenuous than roughnecking. Sepulvado returned to work with Axxis as a crane operator and, while working as a crane operator for aboard a self-propelled drilling barge, his right lower extremity was crushed between a crane and the crane's door, allegedly resulting in injuries to his right lower extremity and lower back. Sepulvado eventually underwent a functional capacity evaluation and was released to medium work. Sepulvado’s previous job as a crane operator constituted medium level work, but Axxis assigned Sepulvado to work as a galley hand on one of its land rigs. While working as a galley hand on the land rig, Sepulvado allegedly injured his cervical spine while unloading a 148 quart cooler packed with ice and meat from the back of a flatbed truck. Sepulvado subsequently filed suit, seeking damages for both accidents. Thereafter, Axxis filed a motion for partial summary judgment arguing Sepulvado was not a Jones Act seaman at the time of the second accident sued and that recovery for his second accident, if any, is limited to compensation under the Louisiana Workmen's Compensation Act. Sepulvado argued that his position as a galley hand was not a permanent reassignment, and that Axxis continued to pay him the wages of a crane operator and only assigned him to land-based work temporarily, until a position for a crane operator became available. Axxis disputed the truth of Sepulvado’s allegations by affidavit from the company President. However, whether Sepulvado was transferred permanently, such that he lost seaman status, was found to be an issue in dispute by the court. The court pointed to Sepulvado’s deposition testimony, in which he testified: 1) it was his understanding his assignment to land-based work was only temporary, effective until a crane operator position became available "on the barge"; and 2) during the period he worked on land he was paid the same amount he had been paid as a crane-operator. The court decline to determine which interpretation of the facts was correct, by way of this motion for summary judgment, finding that it would usurp the role of the jury in this matter as the finder of fact. Since more than one conclusion could reasonably be drawn concerning Sepulvado’s seaman status from the facts of the case, the court held that partial summary judgment was not appropriate. Axxis’s motion for partial summary judgment was denied because the court found that a genuine issue of material fact existed as to whether or not Sepulvado was permanently reassigned to land duties, and thus lost his status as a Jones Act seaman. (USDC WDLA, August 2, 2010) 2010 U.S. Dist. LEXIS 78337
TYPE OF CHARTER MAKES ALL THE DIFFERENCE WITH RESPECT TO LIABILITY
LIMON, ET AL. V. BERRYCO BARGE LINES, L.L.C., ET AL.
Luis Limon, Manuel Olivarez, and Porfirio Montalvo, employees of Unit Texas Drilling, were on a work boat owned by Berryco, traveling to a drilling rig owned by Kaiser-Francis Oil Company. While traveling to the rig the work boat struck an unlit barge, bounced off the barge and struck an unmanned manifold platform owned by SL Production Company, L.L.C. and maintained by Kaiser-Francis. The plaintiffs allegedly sustained injuries as a result of the collision/allision. One of the defendants, Garber Brothers, Inc., sought summary judgment dismissing the claims asserted against it by the plaintiffs, and by third-party plaintiff, Berryco. The plaintiffs and Berryco allege that Garber was negligent in not placing required navigational lights on the barge that was struck by Berryco's work boat on which the plaintiffs were passengers. Garber Brothers moved for summary judgment on two grounds: (1) it bareboat chartered the barge to a third party, which is liable for any casualties resulting from the barge's operation; and (2) it did not operate a tugboat that moored the barge and would be responsible for lighting the barge. In response to Berryco's argument that Inland Barge Rentals, Inc., the barge owner, did not bareboat charter the barge to Garber in the first place, Garber argued that if that is correct, Inland Barge-not Garber-would bear any liability for injuries arising from the barge's operation. Garber argued that it did not own a tugboat or barge. The only barge in the area associated with Garber was a barge owned by Inland Barge and under charter or lease to Garber. The summary judgment evidence showed that Inland Barge "rented" the barge to Garber through an oral agreement. Inland Barge insured the barge, but that at the time of the incident, it neither operated nor controlled the barge. Garber subsequently sub-chartered the barge to Brammer Engineering. The court initially noted that neither a time charterer nor a voyage charterer has full possession and control of the vessel that it is chartering and therefore cannot bareboat charter that vessel to another. Berryco asserts that there is a fact issue as to whether Inland Barge bareboat chartered the barge to Garber. Additionally, if the agreement was not a bareboat charter, then Garber could not have bareboat chartered the barge to Brammer Engineering. The court found that the record evidence was insufficient to determine, as a matter of law, the precise nature of the charter agreement between Inland Barge and Garber for the barge. The court also found that the record showed that as a matter of law, Garber had a bareboat charter arrangement with Brammer Engineering, if Garber Brothers had bareboat chartered the barge from Inland Barge. Finally, the court found that the summary judgment record provided an inadequate basis to find, as a matter of law, that Garber could or could not be liable for the absence of lights on the barge when the incident occurred. Garber’s motion for summary judgment was denied. (USDC SDTX, August 5, 2010) 2010 U.S. Dist. LEXIS 78995
ANOTHER GREEN LIGHT FOR GENERAL MARITIME NEGLIGENCE SUITS
MORROW V. MARINEMAX, INC., ET AL.
Floyd Morrow, a service department employee of MarineMax, Inc., was offered the opportunity to spend the workday on a company-owned yacht, to watch the annual Atlantic City Air Show, as part of an employee appreciation event. While Morrow was on the yacht, a fellow employee slipped and fell, falling from the yacht's flybridge area into the stern cockpit area. The employee fell directly onto Morrow, who, as a result, fractured his cervical vertebrae, causing paralysis. After the accident, Morrow filed a claim for workers' compensation benefits and MarineMax began making payments to Morrow, conceding that he was within the scope of employment when he was injured. Morrow and his wife subsequently filed this lawsuit seeking damages under the general maritime law for vessel owner negligence, unseaworthiness, and loss of services and consortium. MarineMax moved for summary judgment, contending that Morrow’s complaint must be dismissed because his causes of action were barred by the New Jersey Workmen's Compensation Act. The court observed that the question before it was one of first impression in the circuit, namely: may the exclusive remedy provision of a state's workers' compensation law bar a plaintiff's general maritime tort claim against his employer? The court reviewed the case law from the various courts that had addressed the issue, noting that Eleventh Circuit had recently held that a state's workers' compensation law could bar an injured employee's general maritime negligence claim. However, the Fifth and Ninth Circuits had reached the opposite conclusion. The Third Circuit has not addressed the issue. The court was of the opinion that, were it to allow a state's exclusive remedy provision to prevent a plaintiff from bringing a cause of action available under the general maritime law, it would be depriving the plaintiff of a substantive admiralty right. The court noted that there are limits on the extent to which state laws can modify or affect the general maritime law. Following its review of the case law, the court acknowledged that when a conflict exists between state law and the general maritime law, two analyses are possible. A court can look to see whether the plaintiff's cause of action exists under the general maritime law. If the Supreme Court has provided for this cause of action, and the otherwise applicable state law would bar such a claim, then the state law must yield. On the other hand, a court can resort to a traditional balancing test, weighing the equities between state and federal interests on a case-by-case basis. The court concluded that the first approach, as adopted by the Fifth Circuit and other courts, was most faithful to Supreme Court precedent, and must control in the instant matter. Morrow was injured in the course of employment, but is not covered either by the Jones Act or the LHWCA. Morrow’s claim is therefore a clearly defined cause of action in the general maritime law. The New Jersey Workmen's Compensation Act, if applied, would bar Morrow from bringing this claim. Thus, state law would deprive Morrow of a substantive admiralty right. Accordingly, the court held that Morrow’s general maritime negligence claim must be preserved, despite the exclusivity provision of the New Jersey Workmen's Compensation Act. MarineMax’s motion for summary judgment was denied. (USDC DNJ, August 17, 2010) 2010 U.S. Dist. LEXIS 83646
And on the Admiralty front . . .
CONTRIBUTION AND SETTLEMENT; AWASH IN MARITIME PRESUMPTIONS
COMBO MARITIME, INC. V. U.S. UNITED BULK TERMINAL, LLC, ET AL.
Circuit Court Opinion
In this barge breakaway case, Combo Maritime, Inc. sued U.S. United Bulk Terminal, LLC for damages sustained when a number of barges broke free of their moorings at United's barge fleeting facility and drifted downstream, alliding with Combo's vessel, which lay at anchor nearby. United filed a third-party complaint against Carnival Corporation, alleging that the barge breakaway was caused by the negligent navigation of Carnival's cruise ship when it navigated too close to the fleeting facility under full speed. United brought claims against Carnival for contribution and indemnity and damage to United's fleeting equipment and barges. Carnival moved for partial summary judgment on United's complaint based on the Louisiana Rule, which creates the rebuttable presumption that in collisions or allisions involving a drifting vessel, the drifting vessel is at fault. After reviewing the submitted evidence, the district court granted Carnival's motion for partial summary judgment. It further ordered that at trial between Combo and United, United could not present evidence that Carnival's alleged negligence contributed to the barge breakaway. Later, on a motion for reconsideration, the district court also ordered that United's third party complaint against Carnival be dismissed with prejudice. After the district court entered judgment for Carnival, United settled with Combo. As part of the settlement agreement, Combo specifically released all of its claims against all parties by name, including Carnival. Combo also assigned all of its claims against Carnival to United. United then appealed the district court's order on summary judgment and judgment on United's third-party claims. At this court's request, the parties submitted supplemental letter briefs regarding whether the appeal is moot in light of United's settlement with Combo. Notwithstanding a dissent by Judge Garza on the issue, The appellate court initially resolved a jurisdictional issue, holding that case law does not prevent an action for contribution for a settling tortfeasor who obtains, as part of its settlement agreement with the plaintiff, a full release for all parties. The appellate court then did a lengthy study of presumptions, noting that they shift the burden of production and persuasion on the issue of fault, but are only evidentiary presumptions designed to fill a factual vacuum. The court admonished that once evidence is presented, presumptions become superfluous because the parties have introduced evidence to dispel the mysteries that gave rise to the presumptions. 'In addition to the presumptions of fault placed on moving vessels in allisions, the court noted that maritime law also recognizes a presumption of fault on a passing vessel when its wake causes damage to a properly moored vessel. The appellate court found that the district court applied the Louisiana rule improperly when it (1) applied the presumption between co-defendants; (2) applied the wrong standard of proof for rebutting the presumption; and (3) interpreted the presumption as a presumption of sole liability. The appellate court noted further that, even assuming arguendo that the district court had properly applied the Louisiana rule to United relative to Carnival, and properly discarded the presumption against a passing vessel, United should still be entitled to present evidence of comparative fault at trial. The district court's grant of partial summary judgment in favor of Carnival, and its judgment against United on all of its claims against Carnival was reversed and the case was remanded. (5th Cir, August 23, 2010) 2010 U.S. App. LEXIS 17644
Updater Note: This opinion contains an excellent discussion of the many maritime presumptions and how they should be applied, especially when there a dueling presumptions. I commend it to my readers.
INDEMNIFICATION CLAUSE WITHSTANDS APPELLATE REVIEW
IN RE: FITZGERALD MARINE & REPAIR
Circuit Court Opinion
This case arises out of the sinking of a tugboat operated by Ingram Barge Company. Ingram and Fitzgerald Marine & Repair, Inc. have a longstanding contractual relationship, pursuant to which Fitzgerald performs repair and maintenance of Ingram’s boats and barges. Fitzgerald employee, Mike Jenkins, was a crew member aboard Fitzgerald’s vessel that responded to the distress call of Ingram’s tug that sank. While aiding the tug, Jenkins was allegedly injured, and he subsequently brought suit against both Fitzgerald and Ingram. Ingram filed a cross-claim against Fitzgerald for contractual indemnity. Fitzgerald filed a cross-claim against Ingram, asserting common law contribution and indemnity. Ingram and Fitzgerald filed cross-motions for summary judgment. The district court granted summary judgment for Ingram and denied Fitzgerald’s motion, holding that Fitzgerald was contractually obligated to indemnify Ingram. Jenkins’s claims against both Fitzgerald and Ingram were settled. Ingram sought, and was awarded, attorney’s fees and costs of $217,162.61, the entire amount of its fees and expenses related to all parts of this litigation. Fitzgerald appealed the grant of summary judgment to Ingram on its cross-claim for contractual indemnity, the denial of summary judgment to Fitzgerald on its common law indemnity and contribution claims, and the award of attorney’s fees and costs to Ingram. The appellate court affirmed, holding: 1) the contract at issue was not ambiguous; 2) the clause at issue required Fitzgerald to indemnify Ingram for all injuries to Fitzgerald’s employees that arose in connection with a 2001 Service Agreement; and 3) there was no error of law in the district court's award of the entire nonsegregated category to Ingram. The district court’s judgment was affirmed in all respects. (8th Cir, August 11, 2010) 2010 U.S. App. LEXIS 17000
SOVEREIGN IMMUNITY WAIVER OF SAA SHOULD HAVE BEEN APPLIED
URALDE V. UNITED STATES OF AMERICA
Circuit Court Opinion
Augustin Uralde, a Cuban national, sued the United States on behalf of himself and of the estate of his deceased wife, Anay. Uralde alleged his wife died as a result of the Coast Guard's failure to provide her access to timely medical treatment after she was injured during the Coast Guard's interdiction of their vessel. The district court dismissed the case for lack of subject matter jurisdiction, finding that Uralde was unable to meet the prerequisites for the waiver of sovereign immunity found in the Public Vessels Act (PVA), 46 U.S.C. §31101 et seq., because he failed to demonstrate reciprocity. Uralde appealed the dismissal of his case by the trial court, contending that the applicable sovereign immunity waiver was under the Suits in Admiralty Act (SAA), 46 U.S.C. §30901 et seq., which contained no reciprocity requirements.. On review, the appellate court reversed because the case fell under the SAA immunity provision of 46 U.S.C. §30903(a), rather than the PVA's provision under 46 U.S.C. §31111. The alleged negligence did not occur in the operation of the public vessel under 46 U.S.C. §31102(a)(1), as required under the PVA. All of the negligence theories were based on decisions of the Coast Guard regarding whether and how to provide proper and timely medical treatment to a passenger on the interdicted private vessel. These decision were distinct from the operation of a public vessel, and the claims fell within the SAA. The reciprocity obligation of the PVA was not required. The district court thus had subject jurisdiction over the case based on the immunity waiver provided in the SAA. The appellate court reversed the dismissal of the case and remanded for further proceedings. (11th Cir, August 19, 2010) 2010 U.S. App. LEXIS 17283
SEAMAN IS NOT ENTITLED TO STATE WORKERS’ COMPENSATION (CONT.)
TOOMER V. WEEKS MARINE, INC.
Reginald Toomer, a former crewman of a Weeks Marine, Inc. tugboat, allegedly sustained a right knee injury when he jumped from the tug to a barge, allegedly slipping on ice in the process. An MRI of the knee following the fall revealed a lateral meniscus tear, but Toomer was eventually was released back to work without surgical intervention. Toomer subsequently returned to his treating physician with further right knee complaints, after already having been found to be at maximum medical improvement, and eventually underwent arthroscopic surgery on his right knee. Toomer did not immediately return to work with Weeks Marine, but instead started working as a hotel security guard. Weeks eventually discharged Toomer based on its determination that Toomer had concealed his prior back and left knee injuries during his pre-employment physical. The weather was cold on the date of the incident; it had snowed the day before, and patches of ice and snow on the deck of the barge were visible to all of the tug’s crewmembers, including Toomer. Upon hiring, Weeks Marine presented Toomer with an "Employee Safety Handbook" that warned that jumping of any nature was a violation of the Company safety policy. Toomer had previously sustained a left knee injury, which he failed to disclose when hired by Weeks. Following his fall on the barge, Toomer filed a state workers’ compensation claim in his home state of South Carolina, where he was hired. The Commission denied the claim holding that Toomer was limited to the benefits and remedies made available to him under the Jones Act [see July 2008 Longshore Update]. Toomer subsequently brought suit under the Jones Act for negligence, unseaworthiness, maintenance and cure and punitive damages. At a bench trial, Weeks argued the there was no negligence or unseaworthiness and that Toomer was not entitled to additional maintenance and cure due to concealment and the fact that he had already been found to be at MMI prior to his subsequent surgery. Despite medical testimony to the contrary, the court held that Toomer’s prior back and left knee injuries did not contribute to his right knee injury. The court noted that while Weeks’ medical expert testified that Toomer's prior left knee injury "may have led to a higher likelihood of tearing the meniscus on the right knee," this testimony alone was insufficient to carry Weeks’ burden of demonstrating a causal connection between Toomer's prior left knee injury and his right knee injury. Although the court acknowledged that the mere presence of an accumulation of ice and snow on a vessel does not constitute negligence, the court nevertheless held that Toomer had proven by a preponderance of the evidence that Weeks Marine acted unreasonably when it failed to ensure that rock salt was placed at the point of transition to and from the barge because a shipowner has a duty to provide its employees with a safe means of boarding and de-boarding the vessel. While the court found that Toomer had shown that the failure to place rock salt at the point of ingress and egress contributed to his injury, the court also found that Toomer bore a significant amount of the responsibility for his injuries, assigning him 50% contributory negligence. The court held that Toomer had failed to establish that Weeks violated its duty to provide him with a seaworthy vessel. The court awarded Toomer Jones Act damages totaling $41,272.77, reduced by 50% comparative fault to $20,636.39. In addition the court awarded Toomer $1,700.00 in additional maintenance. The court denied Toomer’s request for punitive damages for failure to pay the additional maintenance and cure. (USDC SC, August 3, 2010)
MAINTENANCE & CURE CLAIM DISMISSED ON EMPLOYER’S DJ ACTION
ATLANTIC SOUNDING COMPANY, INC. V. OLIVER
Patrick Oliver was employed with Atlantic Sounding as a crew member on a dredge, when he allegedly fell from a bunk bed. Oliver alleged that he hurt his back when he fell from the bed . There were no witnesses present at the time of the alleged fall. Oliver was transported to the local medical facility, was examined at the hospital and x-rays of his back were performed. After the examination, he was returned to work without restrictions. However, Oliver chose not to return to work and instead went to his home in Mississippi. Atlantic Sounding filed a declaratory judgment action asking the court to hold that it had no maintenance and cure obligation to Oliver, noting that Oliver had deserted the vessel and failed to provide any medical records or documentation as to any disabling condition which would prevent his return to work. Summons was issued and Oliver was served with the Summons and Complaint. In the meantime, Oliver filed suit against the dredge owner, Weeks Marine, in two other venues. Oliver then filed a Motion to Dismiss the Atlantic Sounding’s declaratory judgment action. The court denied the
Motion to Dismiss. After Oliver failed to file a timely Answer to the declaratory judgment action, Atlantic Sounding filed a motion for default judgment against Oliver. After Oliver’s initial attorney withdrew from the case, the court suspended the deadlines and granted Oliver twenty days to have his new counsel enter an appearance and/or obtain the appropriate admission pro hac vice. Oliver failed to comply with the court’s new deadline and, instead, filed his own pro se motion seeking dismissal of Atlantic Sounding’s declaratory judgment action because his lawyers purportedly advised a court, in another forum, that he does not wish to pursue a claim for maintenance and cure against Atlantic Sounding. The court found that, for all practical purposes, Oliver’s Motion to Dismiss confessed the Complaint for Declaratory Judgment of Atlantic Sounding. Atlantic Sounding argued that dismissal of the case was not the proper remedy asserting that a dismissal of the pending action without granting the relief sought by Atlantic Sounding would not resolve the questions which led to the filing of its Complaint for Declaratory Judgment in the first place. The court agreed that there was a justiciable issue presented by Atlantic Sounding’s complaint and the court had the authority to grant declaratory relief. The court also took judicial notice that Oliver had in fact stipulated to the relief requested by Atlantic Sounding. The Motion to Dismiss filed by Oliver was denied and the maintenance and cure matter was dismissed with prejudice. (USDC SDMS, August 10, 2010) 2:10-cv-00003
Updater Note: Thanks to Richard Salloum, of Franke & Salloum, Gulfport, MS, for his artful handling of this case on our behalf. Legal skill and tenacity doesn’t come any better.
CONTRIBUTORY NEGLIGENCE FOR FAILURE TO DISCLOSE PRIOR INJURIES (CONT)
RAMIREZ V. AMERICAN POLLUTION CONTROL CORPORATION
Orlando Ramirez had a long history of injuries and medical care relating to his back and neck and had made workers’ compensation claims for those injuries at least three times. Ramirez filled out an application to work for American Pollution Control Corporation (APCC) as a deckhand, failing to disclose any of these prior claims, despite being specifically asked if he had prior worker’s compensation claims. Ramirez also denied a prior medical history involving the back or neck. Less than a month after being hired, Ramirez allegedly slipped and fell, claiming injuries to the neck, shoulder, elbow and wrist. Ramirez filed suit against APCC, asserting claims for unseaworthiness and negligence under the Jones Act. After a bench trial, the court entered a judgment for Ramirez in the amount of $1800, after reducing the injury award by 40% for contributory negligence, because of Ramirez’s concealment. The court’s judgment was upheld on appeal [see March 2010 Longshore Update]. Ramirez subsequently brought this suit for maintenance and cure, which was originally filed in state court and removed to federal court by APCC, who also filed a motion for summary judgment based upon concealment. Ramirez himself did not dispute that the intentional concealment element of McCorpen had been met. Instead, he argued that the historical medical information was not material. The court disagreed. Given that the position Ramirez applied for would require physical labor, that Ramirez concealed information from APCC in his application, and that the information Ramirez concealed was pertinent to his ability to perform physical labor, the court found that the materiality requirement had been met. As Ramirez did not dispute that a connection existed between the withheld information and the injury complained of in the lawsuit, the court concluded that even viewing the evidence in the light most favorable to Ramirez, APCC had met its burden to establish the McCorpen defense. The court granted APCC’s motion for summary judgment and dismissed Ramirez’s claim. (USDC SDTX, August 13, 2010) 2010 U.S. Dist. LEXIS 82757
Update Note: Congratulations to my friends at Brown Sims, in Houston, TX, for another well-deserved victory in this case.
THIS SEAMAN SEEMS TO BE SUFFERING FROM A CREDIBILITY INFIRMITY
KOHLHAAS V. U.S. UNITED BARGE LINE
Nathan Kohlhaas reported experiencing a "popping" sensation in his right shoulder while tossing a line, while working as a deckhand for US United Barge Line. According to Kohlhaas, he was lifting and about to pitch a ratchet, when an unidentified deckhand stepped into his way and into his line of sight. To avoid striking the deckhand with the ratchet that was being pitched, Kohlhaas "arrested" his toss by suddenly changing the movement and direction of his arms and shoulders. Kohlhaas had a history of injuring the same shoulder while playing football in college. In a subsequent incident, Kohlhaas got his right hand got caught between a pipe and the coaming of the vessel. Following the hand incident, Kohlhaas filled out an incident report documenting the hand and shoulder incidents, but continued to work his regular duties without apparent difficulty. Kohlhaas eventually sought out medical treatment, lawyered up and underwent arthroscopic surgery to his shoulder. Kohlhaas sued his employer, United (formerly Teco) , for injuries he allegedly sustained on board their vessel. The suit alleged Jones Act negligence, unseaworthiness and failure to satisfy the cure obligation. At his bench trial, Kohlhaas gave varying and inconsistent accounts of the two incidents and his injuries that were at odds with his own in-court testimony, his prior deposition testimony, and his statements to medical providers and United. The court concluded that Kohlhaas' claims were suspect and failed because of credibility infirmity on liability, causation and damages. During his deposition, Kohlhaas denied suffering any subsequent injuries to his right hand. In fact, just three weeks before his deposition, Kohlhaas had gone to the emergency room after striking his right hand on a metal object. With respect to the shoulder incident, Kohlhaas asserted six theories of how his employer negligently caused his injury. The court rejected all six theories of liability finding, more likely than not, none of the events he alleges in fact occurred, so they could not have played a part in producing the injury that Kohlhaas seeks recovery. In the unlikely event they did occur as Kohlhaas claimed, the court held the employer was not negligent. Instead the court found that Kohlhaas failed to use reasonable care under the circumstances and was the sole cause of the shoulder incident. Regarding the hand incident, Kohlhaas claimed he injured his right hand because he was using his left hand (non-dominant) in order to protect his injured right shoulder. Again, the court found that Kohlhaas failed to use reasonable care under the circumstances and this was the sole cause of the hand incident. The credible evidence did not support any finding of negligence on the part of his employer with respect to the hand incident. Nor did the vessel breach its warranty of the seaworthiness of the vessel with respect to either injury. Finally, the court found that the record supported its holding that the employer Fulfilled its duty to maintain Kohlhaas and provide for his cure while he was injured. Due to its conclusions, the court held that Kohlhaas was not entitled to any relief from United and directed the clerk to enter judgment in favor of United and against Kohlhaas. (USDC SDIL, August 13, 2010) 2010 U.S. Dist. LEXIS 82416
JOINT TORTFEASOR OBLIGATED TO REIMBURSE EMPLOYER’S M&C PAYMENTS
BARKER V. McALLISTER TOWING OF PHILADELPHIA, INC., ET AL.
Walter Barker allegedly sustained an injury while working as a member of the crew aboard McAllister Towing of Philadelphia, Inc.’s tug. At the time of the incident, the McAllister tug was assisting a Tasman Mermaid Schiffahrts’ vessel in undocking. Since the time of Barker’ injury, McAllister had provided payments in the amount of $233,027.03 for maintenance and cure. Barker later filed a Jones Act and general maritime law asserting claims for maintenance and cure against McAllister, and claims for negligence and unseaworthiness against McAllister, Tasman, and a third defendant. McAllister filed an answer and cross-claims for indemnification or contribution against Tasman. Baker ultimately settled his claims against McAllister and Tasman, with each party paying half of the total settlement. In connection with the settlement, McAllister and Tasman entered into a stipulation that each defendant was "50% percent at fault for causing the injury to Walter Barker." McAllister and Tasman further stipulated that McAllister's cross-claim against Tasman, for fifty percent of the maintenance and cure paid to or on behalf of Barker was an issue to be decided by the court upon motion. Following the settlement, McAllister moved for an order granting summary judgment on its cross-claim for indemnification or contribution against Tasman for fifty percent of the maintenance and cure payments it made to Barker, citing the stipulations between the parties in the settlement. In opposition, Tasman contended that McAllister had a contractually-based legal duty to pay maintenance and cure benefits to an employee who becomes injured or sick while in the service of the vessel, regardless of any fault or negligence on the part of the shipowner. Because McAllister's duty to pay maintenance and cure is owed irrespective of any negligence on its part, Tasman argued that as a matter of equity it should not be required to reimburse McAllister for the contractual obligation McAllister owed by law to its employee. The court began by noting that the legal issue before it was whether an employer like McAllister may obtain contribution from a third-party tortfeasor. Citing Jones v. Waterman S.S. Co., 155 F.2d 992, 999 (3d Cir. 1946) the court noted that the Third Circuit, applying Pennsylvania law, had previously held that an employer has the right to recover maintenance and cure from a third-party tortfeasor whose negligence caused the seaman's injury. Tasman argued that Jones was not controlling because it dated back more than sixty years and because the court in Jones looked to Pennsylvania law, not maritime law. The court rejected both arguments, observing that Jones has not been limited to cases in which Pennsylvania law controls, had not been overruled, and has been followed by several courts that have articulated the same principle. Although Jones did not address whether such right to reimbursement extends to cases in which the employer is partially responsible for the injury to its employee, the court noted that the Fifth Circuit in Adams concluded that an employer is entitled to reimbursement under such circumstances. Accordingly, the court found that McAllister was entitled to contribution from Tasman for maintenance and cure payments made to or on behalf of Barker, notwithstanding that McAllister was fifty percent liable for Barker’s injury. McAllister’s motion for summary judgment was granted and judgment was entered against Tasman. (USDC DNJ, August 16, 2010) 2010 U.S. Dist. LEXIS 83573
NON-NAVIGABLE BAYOU DOES NOT A SEAMAN MAKE
CHAMBERS V. WILCO INDUSTRIAL SERVICES, LLC.
Randolph Chambers was employed by Wilco Industrial Services, LLC. as a deckhand and alleged that while on board Wilco’s dredge barge performing dredge work he sustained serious injuries when he was struck in the head by the backhoe or bucket of the dredge that was dredging the canal. Shortly thereafter, Chambers asserted claims against Wilco, pursuant to the Jones Act and general maritime law. Wilco moved for summary judgment, contending that Chambers could not show a maritime location because bayou where the dredging was being done is not currently capable of navigation in interstate travel or commerce. According to an affidavit of the dredge manager at Wilco, the bayou involved was approximately 40 to 50 feet wide, had an approximate depth of five to eight feet, and is crossed by six fixed bridges with an approximate of four feet of clearance under the bridges. Instead, Chambers simply argued that the presence of artificial obstructions does not render bayou legally non-navigable; because the bayou was capable of being used for commercial activity it is within the court’s admiralty jurisdiction; and the bayou is navigable because it unites with other navigable waters. Even assuming that, prior to his work on the bayou, Chambers was a seaman within the meaning of the Jones Act, Wilco had presented evidence that he was permanently assigned to a job on non-navigable waters at the time of his injury. Therefore, because he was not a Jones Act seaman at the time of his injury, Chambers could not recover under the Jones Act. Wilco’s motion for summary judgment was granted and Chambers’ claims were dismissed with prejudice. (USDC EDLA, August 2, 2010) 2010 U.S. Dist. LEXIS 78667
SEVERABILITY PROVISION SAVES ARBITRATION AGREEMENT
MATTHEWS V. PRINCESS CRUISE LINES, LTD.
Amanda Matthews, a Canadian seafarer, allegedly sustain injuries while employed aboard Princess Cruise Lines Ltd.'s (PCLL) Bermuda-flagged vessel. Matthews filed a three-count complaint in Broward County Circuit Court alleging Jones Act negligence, unseaworthiness, and failure to provide maintenance and cure. PCLL removed the matter to federal court and moved to compel arbitration pursuant to the agreement signed by Matthews, entitled "Acceptance of Employment Terms and Conditions" ("the Agreement"). The Agreement provided that "any and all disputes shall be referred to and resolved by arbitration as provided for in the Principal Terms and Conditions of Employment," which Plaintiff acknowledged that she had received, reviewed, and accepted at the time she signed the Agreement. The Agreement also contained a choice-of-law clause stating that any dispute arising shall be governed exclusively in all respects by the laws of Bermuda without regard to principles of conflicts of laws. Finally the Agreement contained a severability provision, which provided that if any of the terms of the Agreement was determined to be void or otherwise unenforceable by any court or tribunal of competent jurisdiction, then the remainder of the terms would remain in force. Matthews opposed PCLL’s motion, arguing that the arbitration clause is unenforceable for a number of reasons. Matthews argued that the arbitration provision was effectively void because a Bermuda arbitration was likely to be prohibitively expensive. The court rejected this argument and noted that Matthews had failed to cite a single case holding that the prospect of having to incur arbitration costs renders an arbitration agreement unenforceable. Matthews further argued that the Bermuda choice-of-law provision rendered the agreement to arbitrate unenforceable because the two clauses operated in tandem to impermissibly limit her U.S. statutory and common law remedies. After considering the relevant submissions and the applicable law, the court agreed with Matthews that the choice-of-law clause was void as a matter of public policy pursuant to Thomas. However, given the stand-alone nature of the choice-of-law clause and the severability provision, the court concluded that the arbitration clause remained enforceable. The court granted PCLL’s motion to compel arbitration, but ordered that the Bermuda choice-of-law provision be stricken and treated by the parties as null and void. Matthews’ motion for remand to state court was denied. (USDC SDFL, July 7, 2010) 2010 U.S. Dist. LEXIS 77300
YOU CAN GO TO ARBITRATION, BUT NOT IN BERMUDA
DUMITRU V. PRINCESS CRUISE LINES, LTD.
Bogdan Dumitru, a Romanian citizen, was employed aboard one of Princess Cruise Lines’ ships as a buffet steward. Dumitru alleged that he slipped on a wet surface and fell down a set of stairs on the ship, resulting in a broken ankle that has yet to heal. Shortly after the incident, Dumitru disembarked in the Cayman Islands and was treated at a hospital where he underwent surgery. Dumitru later returned to Romania, where he now resides. According to Dumitru, his ankle requires another surgery and the injury continues to prevent him from working. Dumitru brought suit against Princess alleging Jones Act negligence, unseaworthiness, maintenance and cure and unpaid and penalty wages. Dumitru initially filed in state court and Princess removed the case to federal court, requesting the court to compel arbitration, pursuant to Dumitru’s employment agreement. Dumitru cross-motioned to remand the matter to state court. The court initially noted that Dumitru had signed the employment agreement which provided that any and all disputes would be resolved by arbitration. The court found sufficient to satisfy the written agreement requirement of the Convention. Therefore, notwithstanding all of Dumitru’s remaining arguments, the court held that Dumitru and Princess entered an arbitration agreement that falls under the Convention. However, the court did find the Bermuda choice-of-law and choice-of-venue provisions unenforceable. Nevertheless, since the offending provisions were severable, and the core agreement to arbitrate is enforceable, the court concluded that Dumitru’s claims must be arbitrated. Dumitru’s motion to remand was denied and Princess’s motion to compel arbitration was granted in part and denied in part. This case was stayed pending resolution by arbitration in New York. (USDC SDNY, July 29, 2010) 2010 U.S. Dist. LEXIS 78424
YET ANOTHER ARBITRATION DECISION
MENESES V. CARNIVAL CORPORATION
Dwight Meneses was employed aboard several of Carnival Corporation’s cruise ships as a headwaiter. Prior to the commencement of his employment Meneses had signed a “Seafarer Agreement,” which set forth remedies in the case of injury and included an arbitration agreement that applied Bahamian law. While working in the ship’s dining room Meneses allegedly slipped and fell, sustaining a reported injury to his right knee, including a torn meniscus. Meneses eventually underwent surgery on his knee, after which he returned to duty aboard another Carnival ship. Over a year later, Meneses alleged that he injured his left knee while working in the galley and sustained a torn meniscus in his left knee, which required surgery. Meneses eventually sued Carnival, claiming that both injuries were a direct result of Carnival’s negligence and the vessel’s unseaworthiness. Meneses also alleged failure to provide prompt, adequate, and complete medical treatment. In response, Carnival filed a Motion to Dismiss and Compel Arbitration. Meneses argued that the choice of law and choice of forum provisions rendered the arbitration clause unenforceable because they operated in tandem to deprive him of his U.S. statutory remedy under the Jones Act. The court concluded that Thomas applies to Jones Act claims as it does to Wage Act claims, and that the choice of law and choice of forum clauses in the arbitration provision rendered it unenforceable with respect to the Jones Act claim. However, since the arbitration agreement also contained a severability provision and recognizing the strong federal interest in arbitration, the court concluded that severing the choice of law provision in the Seafarer's Agreement was the appropriate remedy. Carnival’s Motion to Dismiss and Compel Arbitration was granted in part. However, the choice of law provision requiring application of Bahamian law was stricken and order to be treated by the parties as null and void. The case was ordered to arbitration with application of U.S. law. The court retained jurisdiction for enforcement of the arbitral award, if appropriate. (USDC SDFL, August 4, 2010) 2010 U.S. Dist. LEXIS 83305
NOTICE OF CLAIM INADEQUATE FOR PURPOSES OF THE LIMITATION ACT
IN RE: MILLER'S LAUNCH, INC.
Miller's Launch Inc. is a part owner of two garbage scows, which were used to transport debris, garbage, and tree trunks from navigable water to large debris containers at a sewage treatment plant. Marcus Link, the plaintiff in this action, was an employee of Gaeta Interior Demolition, Inc., and was allegedly moving debris into Gaeta's garbage trucks when he was injured, on October 3, 2008, by a large log that the vessels had transported that day and which fell out of one of the containers. Three weeks later, Link’s attorney sent Miller’s Launch a letter of representation, in which he identified the wrong sewage treatment facility. Miller’s Launch responded two days later, letting Link’s attorney know that they had no knowledge of the alleged event, at the treatment facility identified in the attorney’s letter. On August 24, 2009, Link filed a personal injury lawsuit. On February 26, 2010, the Miller’s Launch commenced this proceeding for limitation or exoneration of liability under the Limitation of Liability Act and deposited the sums equal to the values of the owners' interests in the vessels. Link moved to dismiss the limitation proceeding for failure to file a complaint within the six months required by the Act after receiving Link's notices of claim. It was undisputed that the Link’s complaint served as proper written notice of a claim. The question before the court was whether Link's prior notice, sent to Miller's Launch was also sufficient to trigger the six-month limitation. The court noted that Link was a stranger to Miller’s launch and, by all indications, the accident itself was unknown to them. Because of that, any notices sufficient to alert them to the possibility of suit in excess of the value of their vessels, if not containing express statements of fundamental facts, had to contain at least enough information to allow them to make necessary inferences. The court found that the notice to Miller's Launch was insufficient to alert them to the possibility of suit in excess of the value of its vessels. It provided Link's name, the date of the accident, and the possibility of suit for an unspecified amount, but nothing further. Since Link was not an employee of Miller's Launch, Miller's Launch would be at sea in trying to determine who he was. More importantly was the absence of the name of the Miller's Launch vessel involved in the accident and identification of the wrong location of the accident. The court found that the later was no trivial detail; the place the accident happened may have been the most material fact necessary to put Miller's Launch on notice. The requirements of notice under the Act are minimal enough, but the written notice must be sufficient to allow the owner to investigate whether the amount of the claim or other claims likely to be the subject of litigation arising out of the same occurrence may exceed the value of his ship. The court held that the purported notice here did not do that, and Link's motion to dismiss was accordingly denied. (USDC EDNY, August 18, 2010) 2010 U.S. Dist. LEXIS 84774
PLAINTIFF’S STATE COURT PETITION PROVIDED SUFFICIENT NOTICE OF CLAIM
IN RE ECKSTEIN MARINE SERVICE
In this limitation of liability proceeding, the sole claimant, Lorne Jackson, moved to dismiss on the ground that the limitation plaintiff, Marquette Transportation Co. Gulf-Inland, LLC, did not file this limitation proceeding within six months after it received written notice of the claim in the form of the state-court lawsuit. Marquette responded that the documents in support of Jackson’s motion must be disregarded or the motion must be treated as one for summary judgment; and, if treated as a motion for summary judgment, Marquette contended there were fact issues precluding summary judgment . The court found that the state court petition did provide sufficient notice to Marquette to trigger the six-month period for filing the limitation proceeding. Since Marquette failed to file its limitation action within the six-month time frame, the court dismissed the limitation action under Rule 12(b)(1) of the Federal Rules of Civil Procedure. (USDC SDTX, August 19,2010) 2010 U.S. Dist. LEXIS 85197
PART OWNER IS NOT YOUR TYPICAL TIME CHARTERER
IN RE: SETTOON TOWING LLC
While pushing a barge, a tug owned by Settoon Towing LLC struck a well, owned and operated by ExPert Oil & Gas, LLC, which allegedly caused extensive damage to the wellhead and resulted in an uncontrolled spray of crude oil into the water. Settoon is a limited liability company, organized under the laws of Delaware. Plains Marketing, L.P. held a 50% membership interest in Settoon and was also the time charterer of the offending tug. After Settoon filed a Complaint for Exoneration from or Limitation of Liability, pursuant to the Limitation of Liability Act, ExPert was granted leave to file a third party complaint against Plains Marketing. ExPert alleges that Plains Marketing was negligent because it directed the vessel while it knew that it was understaffed and operating without proper equipment. Plains Marketing filed a motion for summary judgment arguing that it is not liable because it was the time charterer of the tug on the date of the incident, and did not have operational control over the vessel, did not assume any duties regarding the seaworthiness of the vessel, and had no involvement in Settoon's day-to-day operations. ExPert argued that Plains Marketing did not have a traditional time charter agreement with Settoon because Plains Marketing holds a 50% membership interest in Settoon. ExPert further contended that Plains Marketing was actively involved in controlling, staffing, dispatching, and directing the vessels and directed the vessels while knowing that the vessels were understaffed, over-worked, and running without proper equipment or crew, akin to the time charterer sending the vessels into a storm. The court found that Settoon retained operational control of the vessel, was responsible for furnishing the captain and crew and navigating the vessel, was responsible for ensuring that the vessel maintained all necessary certificates, and complied with all applicable laws. Thus, Plains Marketing was not liable for the negligence of the crew or unseaworthiness of the vessel. However, the court found that Plains Marketing may be liable for its negligence in directing the vessel's commercial activities. Since there was a genuine issue of material fact as to whether Plains Marketing was negligent in directing the vessel's commercial activities with knowledge that the vessel was understaffed, over-worked, and/or running without the proper crew, the court held that precluded summary judgment. Plains Marketing’s Motion for Summary Judgment was denied. (USDC EDLA, August 17, 2010) 2010 U.S. Dist. LEXIS 84693
HIRE OFF THE WEB AND AVOID PERSONAL JURISDICTION
SEYMOUR V. SCORPION PAYROLL, LTD., ET AL.
Richard Seymour claimed to have been injured while working as a seaman on a drilling rig owned by Scorpion Courageous Ltd. Seymour’s employer at the time was Scorpion Payroll, Ltd. Seymour asserted a claim under the Jones Act and a general maritime law claim for alleged vessel unseaworthiness. The defendants moved to dismiss, contending that neither of the Scorpion Companies involved in this case is incorporated or authorized to do business in Mississippi and neither has an office within the state; that both defendants, Scorpion Payroll, Ltd. and Scorpion Courageous, Ltd., are Bermuda companies which have their principal places of business in Houston, Texas; that neither of the Scorpion Companies have ever owned or leased any real property in Mississippi or ever constructed or produced anything in the State or maintained any kind of office or facility there. While they admitted to employing Seymour and other Mississippi resident, they denied directly soliciting employees in the State. Rather, they maintain that Scorpion, Ltd. utilized the services of a generic web site, Rigzone.com, to handle all of its employment needs. Thus, the defendants asserted that neither of the Scorpion Companies had any meaningful contact whatsoever with Mississippi, and therefore, there is no basis for the exercise of personal jurisdiction over them. The court found that personal jurisdiction did not exist and held that the mere fact the defendant-employer hired Mississippi residents, without more, did not support a finding that the defendant-employer was doing business in Mississippi. The court concluded that the Scorpion defendants were not subject to personal jurisdiction under Mississippi's restrictive long-arm statute under either the contract prong or the doing business prong thereof. The Motion to Dismiss filed on behalf of the defendants for lack of jurisdiction was granted and Seymour’s complaint was dismissed without prejudice. (USDC SDMS, August 13, 2010)
Quotes of the Month . . . “Cowardly dogs bark loudest.” - - John Webster
“Rudeness is the weak man's imitation of strength.”--Eric Hoffer
“Some of the biggest cases of mistaken identity are among intellectuals who have trouble remembering they are not God.”--Thomas Sowell
Tom Langan
Corporate Risk Manager
Weeks Marine, Inc.
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