Top 5 Longshore Cases of 2011

Although “best of” lists tend to be completely subjective, we could not help ourselves.  As such, here is Navigable Waters’ first annual write up of the year’s ”Top 5 Longshore Cases.”

1. Boroski v. Dyncorp Int’l, — F.3d —-, 2011 WL 55555686 (11th Cir.  2011):

In Boroski, the Eleventh Circuit determined that the maximum compensation rate for a claimant receiving “newly awarded compensation” for permanent total disability benefits pursuant to the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) was governed by reference to the national average weekly rate in effect on the date when he received his award.  Boroski must be compared to Roberts v. Director, OWCP, 625 F.3d 1204 (9th Cir. 2010), cert. granted, 132 S.Ct. 71 (2011).  In Roberts, the Ninth Circuit held that the claimant was “newly awarded compensation,” for purposes of determining which fiscal year’s national average weekly wage to apply, when he first became disabled, and that the claimant was “currently receiving compensation for permanent total disability” when he was entitled to receive benefits.  The Supreme Court agreed to review Roberts and it will no doubt discuss Boroski when it decides whether the date of injury or the date of an award controls particular claimant’s compensation rates.

2.  Wheeler v. Newport News Shipbuilding and Dry Dock Co., 637 F.3d 280 (4th Cir. 2011):

In Wheeler, the Fourth Circuit addressed the meaning of the term “compensation,” as used in Section 22 of the LHWCA.  The Fourth Circuit concluded that “interpreting ‘payment of compensation’ in Section 22 [and all other uses of the term “compensation” in Section 22] to exclude an employer’s payment of medical benefits is most harmonious with the purpose of both the statute’s limitations period and the Act as a whole.”  In other words, “compensation” in Section 22 does not include the payment of medical benefits.

 3. Dyncorp Int’l v. Director, OWCP, 658 F.3d 133 (2d Cir 2011):

In Dyncorp Int’l, the Second Circuit was called upon to determine whether Claimant timely filed a psychological injury claim.  The key for the Second Circuit was whether Claimant knew or should have known that the injury would permanently impair her earning power. Employer argued that substantial evidence supported its denial. For instance, Claimant (1) changed assignments for Employer; (2) sought psychological counseling from the Army; (3) obtained a prescription for sleeping and anti-anxiety medication from a psychiatrist; (4) submitted to a psychological evaluation ordered by Employer and even sought an independent psychological evaluation; and (5) was experiencing symptoms of PTSD. The Second Circuit disagreed, determining that while Claimant may have recognized she was psychologically distressed, her work was largely unaffected for one year after the shooting. Therefore, Claimant timely filed a claim within one year of the time when she knew or should have known that she had suffered a permanent impairment of her earning power.

4. Luttrell v. Alutiiq Global Solutions, BRB No. 10-0555 (2011):

In Luttrell, the Benefits Review Board (“BRB”) added another piece to the puzzle that is average weekly wage determinations for a Defense Base Act employees.  The BRB upheld an Administrative Law Judge’s (“ALJ”) average weekly wage calculation. The ALJ refused to include Claimant’s wages from an earlier job, which were higher, because Claimant’s earlier job was performed under drastically different conditions. Whereas Claimant’s earlier job was performed in a hostile environment, the job on which he was injured was not. Thus, the ALJ found that this case represented “the mirror image” of war zone cases. Claimant voluntarily left the higher-paying jobs in the Middle East for the lower-paying jobs in the Bahamas and the South Pacific. Further, at the time of the injury, Employer was not paying Claimant a premium for any hazardous duty. It was appropriate to calculate Claimant’s average weekly wage using only the wages Claimant earned in the South Pacific, a non-combat zone.

5. Langfitt v. Fed. Marine Terminals, Inc., 647 F.3d 1116 (11th Cir. 2011):

Last, but not least, the Eleventh Circuit’s decision in Langfitt, addressed the borrowed-employment standard for Longshore cases.  After a lengthy discussion of the common law origins of the borrowed-servant doctrine, the court noted that the common law tests for the doctrine must be tweaked for workers’ compensation claims. Based upon its prior case law, the court “distilled” the following standard for establishing whether a borrowed-employment relationship existed under the LHWCA:

“When a general employer transfers its employee to another person or company, the latter is the employee’s borrowing employer for purposes of the LHWCA, and thus is liable for the Act’s compensation and has the benefit of the Act’s tort immunity, if each of the following three criteria is satisfied:

“(1) Employee Consent to the New Employment Relationship. The employee must be shown to have given deliberate and informed consent to the new employment relationship with the borrowing principal. The test is objective, and the employee’s consent may be shown to have been given either expressly or impliedly.

“(2) Borrowing Principal’s Work Being Done. The work being performed by the employee at the time of the injury must be shown to have essentially been that of the borrowing principal–that is, that it was primarily the borrowing principal’s interests that were being furthered by the employee’s work.

“(3) Borrowing Principal Assumed Right to Control the Details of Employee’s Work. The borrowing principal must be shown to have received, from the employee’s general employer, the right to control the manners and details of the employee’s work. This might be evidenced by: (a) an express agreement between the general employer and the borrowing principal that directly evidences a transfer of control over the employee to the borrowing principal; (b) the borrowing principal’s actual exercise of control; (c) the borrowing principal’s furnishing of the equipment and space necessary for the employee to perform the work; (d) the borrowing princpal’s right to terminate the employee’s relationship with the borrowing principal; and (e) the method and obligation of payment for the employee’s services.”

 

Fifth Circuit Upholds NPFC Interpretation of OPA Third-Party Liability Defense

In August 2004, twenty-seven thousand gallons of heavy fuel oil spilled into the Neches River in East Texas when a barge and tug collided with a large tanker ship, rupturing the tanker’s hull and adjacent fuel tank.  The tug and barge, owned by Buffalo Marine Services, Inc. (“Buffalo Marine”), attempted to dock alongside the TORM MARY to deliver fuel ordered by the tanker interests (“Torm”).  Buffalo Marine, Torm and their insurers cleaned up the spill at a cost of $10.1 million.

As the vessel that spilled the oil, the TORM MARY was the responsible party under the Oil Pollution Act of 1990 (“OPA”).  Under OPA, a responsible party is strictly liable for removal costs and damages.  Liability is capped by statute based on the gross tonnage of the responsible party’s vessel.  In the event that cleanup costs exceed the statutory cap, the responsible party can make a claim for reimbursement from the Oil Spill Liability Trust Fund (“Fund”).

A responsible party may escape strict liability under OPA if it can satisfy the requirements of the third-party liability defense provided in 33 U.S.C. § 2703(a)(3).  The responsible party must establish that the oil spill was caused solely by an act or omission of a third party, “other than a third party whose act or omission occurs in connection with any contractual relationship with the responsible party.”

In March 2007, Buffalo Marine, Torm and their insurers jointly sought reimbursement from the Fund.  The claim submitted to the National Pollution Funds Center (“NPFC”) also sought to declare that Buffalo Marine was the sole third party cause of the spill, thereby exonerating Torm and substituting Buffalo Marine as the responsible party.  Pursuant to OPA, Buffalo Marine’s liability would be capped at $2 million, the approximate value of the barge, an amount that was significantly lower than the potential $36 million liability cap for the large tanker TORM MARY.

The NPFC denied the claim on the ground that it was not shown that Buffalo Marine’s acts were not in connection with any contractual relationship with the responsible party.  After a motion for reconsideration was denied, Buffalo Marine and its insurers asked a federal district court to review the NPFC’s decision.  On cross-motions for summary judgment, the district court ruled in favor of the government and Buffalo Marine and its insurers appealed.

The dispute between the parties centered on the interpretation of the phrase “any contractual relationship” in 33 U.S.C. § 2703(a)(3).  Because there were four parties involved—(1) Torm, the fuel purchaser; (2) the seller of the fuel; (3) the broker that worked with the buyer and the seller; and (4) Buffalo Marine, the delivery agent hired by the seller—Buffalo Marine argued that no contractual relationship existed between Buffalo Marine and Torm.  The government gave a much broader construction to the statute, arguing that Torm and Buffalo Marine had, at a minimum, an indirect contractual relationship and the spill was caused by Buffalo Marine’s actions taken in connection with that relationship.

On appeal, the Fifth Circuit had to determine (1) whether the NPFC interpretation of § 2703(a)(3) was entitled to Chevron deference and (2) whether the NPFC’s determination was arbitrary, capricious, not in accordance with the law, or unsupported by substantial evidence.

In Chevron USA v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the United States Supreme Court utilized a two-step analytical framework for determining whether an agency’s interpretation of a statute should be given deference.  If Congress has addressed the precise issue, a court must give effect to Congress’ unambiguous intent, but if the statute is silent or ambiguous, a court must defer to an agency’s interpretation as long as that interpretation is based on a permissible construction of the statute.

The court first considered whether the NPFC interpretation of § 2703(a)(3) deserved deference and found that (1) Congress had not directly addressed the issue in the statute and that (2) the NPFC interpretation of “in connection with any contractual relationship with the responsible party” was based on a permissible construction.

The court noted that Congress could have simply used the phrase “in connection with a contract” rather than “in connection with any contractual relationship” but it chose not to do so.  The court cited a dictionary that defined “contractual” as “of, relating to, or constituting a contract.”  It reasoned that while some contractual relationships are the contracts themselves, there are contractual relationships that merely relate to contracts.  The court also observed that if the word “any” in the statute were given its ordinary meaning, the phrase “any contractual relationship” must necessarily include all varieties of contractual relationships.

The court found further support for its decision in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), another federal pollution statute with a similar third party defense to liability.  It explained that CERCLA’s third party defense does not apply where the third party’s act or omission is “in connection with a contractual relationship, existing directly or indirectly, with the defendant.”  The court found the similarity of these provisions significant in light of the “common purposes and shared history” of the statutes.

The court was also guided by OPA’s legislative history.  The version of OPA that originally passed the House of Representatives used the phrase “a contractual relationship” while the Senate version adopted the language from CERCLA’s parallel provision.  Although that language was not adopted verbatim, the court quoted the conference report’s explanation of the final language that ultimately appeared in the statute and reasoned that the adoption of CERCLA’s language, or what the conference viewed to be its functional equivalent, supported the NPFC’s interpretation.

The court reasoned that to require a direct contractual relationship to defeat a defense of third party liability would cause the exception to swallow the rule.  Indeed, the interpretation urged by Buffalo Marine would allow companies to avoid liability by simply adding more links to the contractual chain, a result that would run counter to OPA’s policy of strict liability.

Having concluded that the NPFC interpretation was entitled to Chevron deference, the court went on to find that the agency’s decision should be upheld because it was supported by substantial evidence and was not arbitrary, capricious, or otherwise not in accordance with law.

Buffalo Marine Services, Inc., et al. v. United States of America, — F.3d —-, 2011 WL 5865225 (5th Cir. 2011).

Fifth Circuit Addresses Both Vessel Owner and Time Charterer Liability Under Section 905(b)

In Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156 (1981), the Supreme Court defined a vessel’s duty to longshoremen, holding that the vessel owner must provide work space, equipment, and tools in a condition that allows a stevedore, acting with reasonable care, to carry on his operations with reasonable safety.  The stevedore must be warned of hidden dangers that the owner knows or should know about in the exercise of reasonable care, but the owner does not have to monitor the stevedoring operations for dangerous conditions that develop during the work relationship unless the vessel owner becomes aware of the danger.  Courts have outlined three instances where vessel owner liability may be established in favor of the longshoreman: (1) if the vessel owner fails to warn on turning over the ship of hidden defects of which he should have known; (2) for injury caused by hazards under the control of the ship; and (3) if the vessel owner fails to intervene in the stevedore’s operations when he has actual knowledge both of the hazard and that the stevedore, in the exercise of obviously improvident judgment, means to work on in the face of it and therefore cannot be relied on to remedy it.  E.g., Greenwood v. Societe Francaise De, 111 F.3d 1239, 1245 (5th Cir. 1997).

An individual or entity operating as a time charterer can also be subject to liability to a longshoreman.  See, e.g., Kerr-McGee v. Ma-Ju Marine Servs., Inc., 830 F.2d 1332, 1338-39, 1343 (5th Cir. 1987).  A time charter’s liability differs from a vessel owner’s liability in that the charterer is liable only for negligence in its time-charterer capacity.  Courts must look to the relationship between the time charterer and the vessel, which is generally determined by the charter agreement with the vessel.  Apart from the charter agreement, the time charterer will be liable for its responsibilities in the sphere of control over the commercial activities rather than the condition of the vessel.

In a recent unpublished case, the Fifth Circuit was called upon to determine whether a district court’s grant of summary judgment against an injured longshoreman was appropriate.  In Hudson v. Schlumberger Tech. Corp., No. 11-30076, 2011 WL 6089714 (5th Cir. Dec. 6, 2011) (unpublished), Plaintiff was injured as he was spooling seismic lines when he allegedly tripped in an uncovered “pad-eye” hole, injuring his knee.  He admitted that he knew that some of the pad-eyes were uncovered, but he could not identify the uncovered holes because of poor lighting and a film of sea water covering the deck.  Plaintiff filed suit pursuant to Section 905(b) of the Longshore and Harbor Workers’ Compensation Act against his employer, Schlumberger Technology Corporation (“STC”), the vessel owner, Alpha Marine Services, Inc. (“Alpha”), and its time charterer, BP Exploration and Production, Inc. (“BP”).

The Fifth Circuit determined that, with respect to Alpha, Scindia applied, rejecting Plaintiff’s argument that he was owed a duty of exercising reasonable care under the circumstances.  See Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625 (1959).  Under the Scindia analysis, Claimant could not prove any of the three instances where liability would attach to the vessel owner.  Alpha did not fail to warn Plaintiff about any hidden defects.  Plaintiff conceded that Alpha pointed out the pad-eye problem.  As for the second instance, Alpha did not have control of the area in which Plaintiff was working at the time of the injury.  Finally, Plaintiff could not establish that Alpha knew that he was exercising obviously improvident judgment by performing his work in lieu of the pad-eye issue; thus, Plaintiff could not satisfy the third instance of vessel owner liability.

Plaintiff could not prove time charterer negligence either.  The time charter agreement provided that the vessel owner would maintain superintendence over the day-to-day problems; would maintain control and command of the vessel; and shall be responsible for safe operation and navigation of the vessel.  Because Plaintiff could not prove any violation on the parts of the vessel owner or the time charterer, the Fifth Circuit affirmed the district court’s grant of summary judgment.

Hudson v. Schlumberger Tech. Corp., No. 11-30076, 2011 WL 6089714 (5th Cir. Dec. 6, 2011) (unpublished).

Permanently Moored Transfer Facility Is Not a “Vessel”

Plaintiff injured his arm while working at the Employer’s “Docksider” facility.  The Docksider was constructed as a deck barge in 1972.  Twenty-seven years later it was converted to a stationary floating transfer facility.  It receives electricity from a generator on shore.  Further, the Docksider is held in place by two welded I-beam brackets.  It can move vertically to account for the tide and waves, but it cannot transport people or materials.  Following his injury, Plaintiff instituted an action against the Employerunder the Jones Act, 42 U.S.C. § 30104, and the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), 33 U.S.C. § 905(b).

The Eastern District of Louisiana dismissed Plaintiff’s claims with prejudice.  It determined that the Docksider was not a “vessel” under the Jones Act or the LHWCA.  The Docksider’s use for transportation on water was only theoretical.  Since 1999, the Docksider has been permanently moored.  Considering the fact that Employer does not plan to move the Docksider, that it gets electricity from an on-shore generator, and that it would require an eight-man crew a full day to remove the Docksider from its moored position, the Docksider is not considered a “vessel.”

Poolson v. Malley Repairs, Inc., No. 09-7105, 2011 WL 6000873, slip op. (E.D. La. Nov. 30, 2011).