Removal of a General Maritime Claim

A recent amendment to the widely-utilized removal statute, 28 U.S.C § 1441, now allows for removal of a general maritime law claim to federal court absent diversity of citizenship between the parties. And, the amendment doesn’t stop there- even with the inclusion of a Jones Act claim [statutorily non-removable thanks to 46 U.S.C. § 30104 and 28 U.S.C. § 1445(a)], a general maritime claim can now proceed to be heard in a federal court.

Prior to January 1, 2012, the removal statute only allowed for removal of a general maritime claim if diversity of citizenship was present between the parties. As it was written, the statute permitted removal of claims over which the district court had original jurisdiction,1 except as otherwise expressly provided by Act of Congress.” Such an Act was found in Section (b) of the statute, which limited removal to claims “founded on a claim or right under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1441(b) (West 2006). Though district courts historically have had original jurisdiction over general maritime law claims, such claims were not founded on a claim or right under the Constitution, treaties, or laws of the United States. They were, therefore, ineligible for removal pursuant to the statute, unless there was an independent basis for removal, such as diversity of citizenship.

Cue the amendment to 28 U.S.C § 1441. Congress removed the limitation provision which permitted removal only for claims “founded on a claim or right under the Constitution, treaties or laws of the United States. The only remaining limitation placed on removal was the criterion in Section (a) requiring the removed claim to be one which the district court had original jurisdiction, which according to 28 U.S.C. § 1333, includes any civil action of admiralty or maritime jurisdiction. So whether it was intentional or not, the amendment eliminated the statutory barrier to removal of general maritime law claims that didn’t have parties with diverse citizenship.

Courts within the purview of the 5th Circuit have already embraced the possibilities associated with the amendment. For instance, in the leading case of Ryan v. Hercules Offshore, Inc., 2013 WL 1967315 (S.D. Tex. May 13, 2013), Judge Miller allowed for, and agreed with, removal of the plaintiff’s general maritime law negligence claims based specifically on the amendment’s unambiguous language. His ruling has been followed by a growing line of cases, including Wells v. Abe’s Boat Rentals, Inc., 2013 U.S. Dist. LEXIS 85534 (S.D. Tex. June 18, 2013), which permitted removal of a general maritime law claim despite the inclusion of a non-removable Jones Act claim. The District Court for the Southern District of Texas was careful to instruct, however, that after removal, the district court “shall sever [the non-removable claims] and shall remand the severed claims to the State court from which the action was removed.” See also Bridges v. Phillips 66 Co., 2013 U.S. Dist. LEXIS 164146 (M.D. La. Nov. 18, 2013).

Despite the recent cases and decisions stemming from Texas and Louisiana courts, the amendment still stands vulnerable to interpretation. For now, however, one can safely and confidently pursue removal of general maritime claims, even in the presence of non-removable Jones Act claims.

1 Under 28 U.S.C. § 1333, district courts “have original jurisdiction, exclusive of the courts of the States, of . . . any civil action of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are entitled.”

Loyola’s Annual Longshore Conference 2014

The 2014 Annual Longshore Conference hosted by Loyola University New Orleans College of Law took place over 2 jam-packed days this past March 20-21, 2014. The Conference was held at the Hilton Riverside New Orleans, and as usual, attracted many members of the longshore community. Our very own, Alan G. Brackett, moderated the conference’s highly-informative panel discussions and presentations.

The Conference kicked off with a review of recent judicial decisions impacting the administration of the Act. Led by Lewis S. Fleishman, John Schouest, and Nicolas W. Earles, this particular discussion focused on recent 5th Circuit decisions addressing the Act’s situs requirement; New Orleans Depot Services, Inc. v. Director, OWCP, 718 F.3d 384 (5th Cir. 2013)(en banc), dealt with the scope of adjoining area, while BPU Managment Inc./Sherwin Alumina Co. v. Director, OWCP, 732 F.3d 457 (5th Cir. 2013) dealt with the questions of “customarily used.”

A particularly useful presentation, Important Considerations in Claims Handling, was led by David Duhon, District Director for the Seventh Compensation District, William J. Scheffler, IV, Senior VP and Director of Claims Service for The American Equity Underwriters, Inc., and Mark Reinhalter of the U.S. Department of Labor. The panel clarified  the newly-implemented administrative changes to the claims process and addressed concerns voiced by audience members.

Rob Popich of Mouledoux, Bland, Legrand & Brackett presented practical advice during a discussion aimed at the rules for practice and procedure before the OALJ and the Act itself. Along with the Honorable Patrick M. Rosenow and S. Scott Bluestein, Mr. Popich provided everyday insight into the practice of longshore work.

Taking a brief break from moderating, Alan G. Brackett of Mouledoux, Bland, Legrand & Brackett, along with David C. Barnett of Barnett, Lerner & Karsen, tested the audience with their knowledge of ethical guidelines and considerations. The discussion sparked quite a debate concerning the blurred lines of legal ethics.

In-between panel discussions and networking, the attendees had the opportunity to venture into the French Quarter and around the New Orleans’ Central Business District, both full of spectacular cuisine and entertainment. The Conference was undoubtedly a huge success, yet again. We are already looking forward to what next year’s Conference has in store.

Florida Court Strikes Award of Attorney’s Fees to a Seaman Under Florida’s Offer of Judgment Statute

Plaintiff worked for Employer and made a claim for Jones Act negligence, failure to treat, maintenance and cure, unearned wages and unseaworthiness.  Prior to trial, Plaintiff served an offer of judgment on Employer.  Employer objected to the propriety of the offer of judgment and moved to strike.  Nonetheless, following a trial on the merits, a jury found in favor of Plaintiff and awarded attorney’s fees and costs pursuant to the state’s offer of judgment laws.  Employer appealed.

The sole issue on appeal was whether the award of attorney’s fees was permissible.  The Court of Appeal determined that it was not, as such an award under Florida’s offer of judgment statute conflicts with maritime law.  The Court,  thus, overruled the state court on the award of attorney’s fees, and receded from prior precedent finding the contrary.

In doing so, the Court of Appeal noted that federal maritime law follows the American Rule with respect to awards of attorney’s fees.  Under the American Rule, attorney’s fees are permitted only when 1) there is an exception provided for under federal statute, 2) there is an enforceable contractual obligation providing for fees, or 3) the non-prevailing party engaged in bad-faith.

The Court noted that state courts could entertain maritime causes of action, but that state law may only supplement federal maritime law if the state law does not conflict with federal law or interfere with uniformity.

Citing to First Circuit, Third Circuit, and Fifth Circuit decisions, the Florida Court of Appeal noted that application of state fee-shifting statutes such as the Florida offer of judgment statute, conflicts with maritime law and violates the important principle of uniformity.  The Florida Court of Appeal, therefore, declined to uphold the lower court’s award of attorney fees to a seaman under Florida’s offer of judgment laws.

Royal Caribbean Cruises, Ltd. v. Cox, — So.3d —- (Fla. 3d DCA 2014)

BRB: ALJs are Not Required to Use K.S. to Calculate Average Weekly Wage

The Benefits Review Board (“BRB”) recently discussed average weekly wage calculations in an unpublished Defense Base Act decision.  In Hamidzada v. Mission Essential Personnel, the Employer and Carrier appealed an administrative law judge’s (“ALJ”) average weekly wage decision.  The ALJ calculated Claimant’s average weekly wage using only the wages Claimant earned overseas during his employment for Employer in Afghanistan.  Employer appealed, arguing that the ALJ erred in relying on the BRB’s K.S. decision–which used to be the seminal average weekly wage decision for DBA claims–because a federal court vacated K.S.

Why was K.S. so important?  For years, K.S. was used in connection with Proffitt v. Serv. Employers Int’l to more or less bar ALJs from blending together overseas and stateside earnings to determine an injured worker’s average weekly wage.  Instead, K.S. wanted average weekly wage calculations to be based on only overseas wages when the employee was paid “higher wages for more dangerous work under at least a one-year contract….”  After K.S. was appealed to the Southern District of Texas, the federal court vacated the decision in Service Employees Int’l, Inc.  The court reasoned that ALJs are not mere calculators required to blindly apply prior BRB precedent–precedent with no statutory, regulatory, or common-law support–to determine an injured worker’s AWW.

In the present case (Hamidzada), the Employer raised a legitimate issue with the ALJ’s average weekly wage calculation.  The BRB (in a footnote) conceded that it was “without any published precedent on the [average weekly wage] issue,” and it chose to vacate the ALJ’s calculation of Claimant’s average weekly wage.  As stated by the BRB (with internal citations omitted):

We agree with employer that the administrative law judge believed that he was compelled to apply [K.S.], based on his statements about “controlling” law and that claimant’s average weekly wage “must be based on what [Claimant] earned in Afghanistan” given his findings of fact.  Given the district court’s order vacating [K.S.], we vacate the administrative law judge’s average weekly wage finding, and we remand this case for findings of fact under Section 10(c).  In its decision, the district court based its holding on the administrative law judge’s “wide discretion,” specifically noting, “[I]t is within the administrative law judge’s discretion to determine whether or not the facts of the two cases [K.S. and Proffitt] are similar enough to merit similar outcomes.”  On remand, the administrative law judge must determine the facts pertinent to the average weekly wage calculation, apply relevant case precedent, and calculate an average weekly wage that represents claimant’s wage-earning capacity at the time of injury.

Hamidzada v. Mission Essential Personnel, BRB No. 13-0312 (Mar. 21, 2014).