Punitive Damages Not Recoverable

In 1990, the U.S. Supreme Court held that a seaman who brings a claim for personal injury against his employer pursuant to the Jones Act for negligence, or under the general maritime law for unseaworthiness of the vessel, is not entitled to recover punitive damages.  (Miles v. Apex Marine Corp., 489 U.S. 19 (1990)).  Employers and insurers embraced the decision, and for close to twenty years the maritime community thought the matter was settled.  However, in the last eight to ten years this prohibition has been increasingly challenged by plaintiffs’ attorneys in courts across the country.  As a consequence there have been some judges who have held that the injured seaman may, in the appropriate circumstances, recover punitive damages for the employer’s willful, wanton and capricious refusal to pay maintenance and cure, and for gross disregard of its obligation to provide the seaman with a seaworthy vessel.  But there has been no consistency between the courts in their rulings, resulting in uncertainty.

On September 25, 2014 the Fifth Circuit Court of Appeals added its voice to the fray in the matter of McBride v. Estis Well Service, L.L.C. (Case:12-30714).  This case’s odyssey to the Court of Appeals began when a truck-mounted drilling rig, part of a barge owned by Estis, toppled over. One crew member was killed, three others injured.  Lawsuits were filed on behalf of each.  Each prayed for recovery of punitive damages.  Estis moved for dismissal of the punitive damage claims as not being recoverable as a matter of law. The federal District Court in Lafayette granted the Motion and held that punitive damages are not available to the injured seaman for unseaworthiness, and that his recovery is limited to pecuniary losses.  The decision was based, in part, on the theory that since Congress had included in the Jones Act (the law that provides the seaman with a remedy against his employer) the prohibition of recovery of punitive damages, the principle of uniformity dictated that the courts should not expand the seaman’s rights of recovery.  The plaintiffs appealed to the Fifth Circuit.

On October 2, 2013 the Court of Appeals reversed the District Court and held that punitive damages may be recovered by the seaman injured due to an unseaworthy condition of the vessel which is the consequence of the employer’s gross breach of its duty to provide a seaworthy vessel. In its lengthy decision, the three-judge panel essentially held that because the seaman’s right to recover punitive damages under the general maritime law was well-established prior to the enactment of the Jones Act, and because the Jones Act does not address unseaworthiness or limit its remedies, the crew of the Estis barge would be entitled to maintain their punitive damage claim.

Estis applied for a re-hearing and on February 24, 2014 the Court of Appeals ordered re-hearing before the entire Court.  This time the Court saw matters in a different light and reversed its earlier ruling.  Judge Davis, writing for the Court, ruled that the historical judicial and legislative record suggested that when the Jones Act limits the seaman’s recovery to pecuniary damages and prohibits recovery of punitive damages the “seaman may not use a general maritime claim to recover damages that would be unavailable under the Jones Act”.  Judge Davis went on to note that “on the subject of recoverable damages in a wrongful death case under the Jones Act and general maritime law, [the Supreme Court] has limited the survivor’s recovery to pecuniary losses” and that these plaintiffs suggested no reason why this analysis would not also apply to their asserting claims for personal injury.  Because punitive damages are designed to punish the wrongdoer and not to compensate the victim, by definition are not pecuniary losses.

But, chances are that this is not the end of this debate.  The plaintiffs will likely appeal to the higher court.  The decision written by Judge Davis was fifteen pages long; the dissent authored by Judge Higginson, and joined by five of his colleagues, measures thirty-seven pages.  Expect this issue to be the center of attention of other appellate courts resulting in contradictory decisions which will again draw the attention of the U.S. Supreme Court.  However, for the time being, at least within the venue of the Fifth Circuit Court of Appeals the seaman cannot recover punitive damages.

Recent Development of Interest: Watervale Marine v. U.S. Dept. of Homeland Security

In July the U.S. District Court for the District of Columbia, in a case of first impression, considered whether the U.S. Coast Guard had authority to impose non-financial conditions for the release of a foreign flag vessel that it had detained at a United States port due to suspected violations of federal and international environmental law.  (Watervale Marine Co., LTD v. U.S. Department of Homeland Security, et al.)

The plaintiff is owner of four foreign flagged merchant vessels that the Coast Guard detained for investigation of criminal violations and later released, but only after plaintiff had posted a bond and executed a “security agreement” that contained various non-financial obligations.  Plaintiff challenged the non-financial security agreements that it had been required to execute in order to gain release of the vessels on the grounds that the Coast Guard lacked statutory authority to require any such condition prior to releasing the vessels.

The underlying facts were not in dispute.  Whistleblowers on board each ship had reported to the Coast Guard alleged violations of the Act to Prevent Pollution from Ships (“APPS”, 33 U.S.C. 1901-1915), which was passed with the intent to “achieve complete elimination of intentional pollution of the marine environment by oil and other harmful substances…”.  APPS was enacted by Congress because the United States had entered into a treaty with other foreign nations called the International Convention for the Prevention of Pollution from ships, commonly known as MARPOL.  As a signatory to the MARPOL, the U.S. was required to enact laws to administer and enforce MARPOL.  Thus APPS was conceived.

Under APPS the Coast Guard is authorized to board and inspect ships that call on U.S. ports in order to detect violations of APPS and other environmental laws.  Before departing a U.S. port a foreign flag ship must obtain departure clearance from Customs and under APPS the government can withhold clearance for established or suspected APPS violations.  APPS also provides that a ship that has been so detained and which may be liable for a fine or civil penalty may be granted clearance upon filing of a bond or other satisfactory surety.

The “non-financial” obligations imposed on Watervale to gain release of its vessels were exacting.  It required the crew to remain in the jurisdiction until the investigation was complete, that Watervale had to pay the crew their wages and provide housing and a per diem, keep the crew on as employees, encourage the crew to cooperate with the Coast Guard, arrange for repatriation of the crew, stipulate to authenticity of documents and items seized, help the government serve subpoenas on crew located abroad, waive objections to the jurisdiction and enter an appearance in federal court.  Faced with the prospect of serious financial loss if its vessels were not released Watervale signed the agreement.  This was in addition to a surety bond paid out to the United States if the government prevailed in subsequent prosecution and a judgment entered against Watervale.

In a lengthy decision the Court concluded that APPS, as written, did not put constraints on the power of the Coast Guard to determine the conditions to which a vessel owner must agree to gain release of its vessel.  It found that with passage of APPS, Congress places the question of whether, and under what circumstances, departure clearance is to be granted entirely within the Coast Guard’s discretion.  Put another way, even if Watervale was correct that a bond or other “financial” surety is a necessary prerequisite for release by the Coast Guard, the statute makes clear that the Coast Guard “may” release the vessel upon posting of such a bond, and does not provide any statutory standards by which to assess the circumstances under which the Coast Guard may or may not grant clearance.  Thus, the Coast Guard was free to impose any other conditions is thought appropriate in the exercise of its discretion.

Of perhaps more relevance to the day to day operation of our Port, after a long delay the Transportation Security Administration began nationwide implementation of the TWIC OneVisit program.  This program, the result of years of urging by industry and certain members of Congress, reforms the process of procuring a TWIC card so that the applicant does not have to make two in-person visits to an enrollment center to retrieve his card.  Now, the applicant can apply for his card at an enrollment center and then have his card mailed to him.  For many mariners this is significant given the time and expense they have had to incur making this extra trip.  As stated by Rep. Don Young, (R-Alaska), this reform was necessary so that “thousands of transportation workers across the nation can spend less time traveling to TWIC offices and more time working to put food on their families’ tables”.  Visit www.tsa.gov for more information

OSHA’s Proposed Electronic Recordkeeping Proposal

In November, 2013 the Occupational Safety Health Administration issued a proposed rule to improve workplace safety and health through improved tracking of workplace injuries and illnesses.  The announcement followed the Bureau of Labor Statistics’ release of its annual Occupational Injuries and Illnesses report, which estimates that three million workers were injured on the job in 2012.  The proposal is currently under review by the public.  Public comments were recently taken.

“Three million injuries are three million too many,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels.  “With the changes being proposed in this rule, employers, employees, the government and researchers will have better access to data that will encourage earlier abatement of hazards and result in improved programs to reduce workplace hazards and prevent injuries, illnesses and fatalities.  The proposal does not add any new requirement to keep records; it only modifies an employer’s obligation to transmit these records to OSHA.”

As stated by OSHA, the proposed rule was developed following a series of stakeholder meetings in 2010 to help OSHA gather information about electronic submission of establishment-specific injury and illness data.  OSHA is proposing to amend its current record-keeping regulations to add requirements for the electronic submission of injury and illness information employers are already required to keep under existing standards, Part 1904.  The first proposed new requirement is for establishments with more than 250 employees (and who are already required to keep records) to electronically submit the records on a quarterly basis to OSHA.

OSHA is also proposing that establishments with 20 or more employees, in certain industries with high injury and illness rates, be required to submit electronically only their summary of work-related injuries and illnesses to OSHA once a year.  Currently, many such firms report this information to OSHA under OSHA’s Data Initiative (ODI).

OSHA plans to eventually post the data online, as encouraged by President Obama’s Open Government Initiative.  Timely, establishment-specific injury and illness data will help OSHA target its compliance assistance and enforcement resources more effectively by identifying workplaces where workers are at greater risk, and enable employers to compare their injury rates with others in the same industry.  Additional information on the proposed rule can be found at https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=FEDERAL_REGISTER&p_id=24002 and www.osha.gov/recordkeeping/proposed_data_form.html.

Under current OSHA regulations, construction industry employers with more than ten employees must record work-related injuries and illnesses using specific OSHA forms.  These employers are required to keep an injury and illness log and post a summary of work-related injuries and illnesses in the workplace for all employees to review (former employees also have the right to access these records upon request).  Currently, OSHA only collects this information if a facility is inspected, or a workplace is part of the OSHA Data Initiative.  In these instances, OSHA accepts the documents electronically or in paper format.

OSHA’s proposal would alter current practice by making submission of these forms mandatory and exclusively electronic for most employers, regardless of whether they have been inspected.  The agency intends for the first time to make this information publicly available on the internet through a new, searchable online database.  OSHA has indicated it will also for the first time use the data for enforcement purposes.

At first glance, this proposal appears to be of little consequence as it only requires reporting of data electronically.  However, OSHA’s plan to make this data available online has garnered considerable response, favorable, but mostly unfavorable.  For instance, Associated Builders & Contractors, Inc., a national trade association, opposed the proposal for a number of reasons.  It fears that OSHA’s announced intention to collect and publicize confidential business information—including but not limited to employer-, location-, and incident-specific injury and illness data—will lead to misuse and abuse by the agency itself, and by those outside the agency (including labor unions, competitors, plaintiff’s attorneys, etc.);  the injury and illness data that OSHA is planning to post on the internet is an unreliable measure of any individual employer’s safety record;  OSHA’s proposed database will likely be misused by those aiming to threaten or disrupt the security and overall operations of merit shop employers, resulting in improper assumptions and conclusions;  OSHA’s proposed rule does nothing to achieve the agency’s stated goal of reducing injuries, illnesses and fatalities; OSHA’s proposal reverses the agency’s commitment to a “no-fault” recordkeeping system; and once recordkeeping data is used against employers (by the agency or other entities), many companies will rethink how (and to what extent) injuries and illnesses should be recorded.  Even if employers are fully compliant with OSHA’s recordkeeping and reporting requirements, the agency’s proposal could lead to widespread underreporting of injuries and illnesses.

On the other hand, the American Industrial Hygiene Association President Barbara J. Dawson, CIH, CSP, released a statement supporting the proposal: “While much depends on the details of the proposed rule, AIHA supports OSHA’s efforts to protect workers by making employee injury and illness records public, as this will more effectively prevent workplace accidents and illnesses.  The proposal will increase the focus of senior managers on injury and illness data and encourage employers to do the right thing for their workers.  We will closely review the proposed rule and seek input from our members and other stakeholders as we put together formal comments on the proposal.”

However, my research appears to show that more oppose the proposal.  Sheena Harrison, writing for Business Insurance (www.businessinsurance.com/article/20140706) noted, “While OSHA thinks the reporting requirement would improve corporate safety information tracking, groups such as the American Society of Safety Engineers, the Risk & Insurance Management Society Inc. and the U.S. Chamber of Commerce say they want OSHA to scrap the proposal—or at least eliminate the plan to post employer safety data online.

“‘This isn’t about trying to abrogate requirements by OSHA or anyone else,’ said Richard Rabs, chairman of RIMS’ external affairs committee.  ‘This is really just saying when you’re going to put information out there in the public domain, we need to make sure that everyone’s playing with the same rules and everyone interprets things the same way.’”

The most prevalent concern is the public access to such data.  As noted by Ms. Harrison, “RIMS, the U.S. Chamber and ASSE submitted comments to OSHA earlier this year requesting that the agency withdraw or revise the rule.  They cited concerns over potential underreporting of injuries and illnesses; the possibility that OSHA, unions or other groups could target companies based on their public safety data; and worries that the new reporting standard would increase costs for employers.

“In particular, Des Plaines, Illinois-based ASSE is concerned that requiring companies to submit public data to OSHA will cause many firms to focus only on OSHA compliance rather than being proactive in trying to reduce workplace safety hazards, said Dave Heidorn, ASSE’s manager of government affairs and policy.  While companies with strong safety programs probably would report accurate injury and illness data to OSHA, Mr. Heidorn said companies with weak safety track records likely would underreport accidents to avoid appearing unsafe.  ‘It’s going to incentivize not reporting, which is not good safety at all,’ Mr. Heidorn said.

“Marc Freedman, executive director of labor policy at the U.S. Chamber of Commerce in Washington, said OSHA’s proposal would make companies susceptible to harassment by unions and ‘activist groups.’  In comments to OSHA, the chamber argued that OSHA’s rule would lead to ‘unjustified shaming of employers’ rather than increased safety.

“‘We see it as putting out information that doesn’t accurately reflect the employers’ safety program and safety record,’ Mr. Freedman said.

“Experts say they think much of the opposition to OSHA’s proposed rule would lessen if the agency agreed to remove the portion that would make safety data publicly available online.

“RIMS noted that making OSHA data public would fail to include how accidents occurred or who was at fault.  For example, a fatal vehicle accident involving workers from two companies would be reported as a fatality for both companies, no matter which one was at fault, it said.  ‘Your record may not really reflect your safety standard,’ said Mr.  Rabs, who also is vice president of insurance and risk management at Veolia Environment North Carolina in Chicago.”

OSHA has responded stating that it will take into consideration these concerns as it works preparation of the final rule.

Longshoreman’s Claim Against Vessel Owner

Assume that you own a commercial vessel and decide that it is time to put her in drydock and have work done on the hull. While the work is underway a welder is injured and sues you for his injuries.  As vessel owner, what duties do you owe the welder? What defenses do you have? These were the issues that the court was recently called upon to sort out in a case filed in the federal court in New Orleans.

In Blanchard v. Weeks Marine, Inc., plaintiff was injured while working on a barge at Weeks shipyard in Bourg, La.  Plaintiff, a welder, was working alone and removing wasted steel from the stern of the barge.  He pulled on a steel plate that suddenly and unexpectedly “fell into his hands” injuring him.  As welder in a shipyard working on vessels, plaintiff was considered a longshoreman eligible for Longshore and Harbor Worker’s Compensation Act benefits from his employer.   In addition to providing the injured longshoreman the right to make a claim for benefits from his employer, the LHWCA also provides the injured longshoreman the right to bring a lawsuit, pursuant to the general maritime law, against the owner of a vessel for acts of negligence. Weeks moved to dismiss the claim for the reason that it did not violate any duty it owed Blanchard. The Court granted Weeks’ Motion and provided the following analysis.

Section 905(b) makes clear that the vessel owner may not be sued when the injury was caused by the negligence of those performing stevedoring services.  The primary responsibility for the longshoremen’s safety rests with the stevedore.  In 1981 the Supreme Court in the Scindia case recognized limited circumstances where a vessel owner may be liable to a longshoreman injured during stevedoring operations:

1) if the vessel owner fails to ward on turning over the ship of hidden defects of which he should have known. (turnover duty)

2) for injury caused by hazards under the control of the ship. (active control duty)

3) if the vessel owner fails to intervene in the stevedore’s operations when he has actual knowledge of both 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.  (duty to intervene)

The turnover duty requires a vessel owner to exercise due care under the circumstances to have the vessel and its equipment in such a condition that a worker can perform his duties with reasonable safety.  A vessel owner may be held liable for a breach of the turnover duty if the vessel owner fails to warn on turning over the ship of hidden defects of which it knew or should have known.  Here the Court made short work of this issue.  It found that the ship owner cannot be held liable merely because a condition of the ship that requires repair or inspection injures the person hired to inspect or repair that condition.  The ship owner has no duty to remove the hazards that are the intended object of the repairs or that are otherwise open and obvious.  The Court found that the steel plate that fell onto plaintiff was part of the agreed scope of repair and that Weeks had not violated its “turnover duty”.   To hold otherwise “would be manifestly unfair because it would hold Weeks responsible for risks that were inherent in carrying out the contract”.

The Court also found that Weeks had not violated the “active control duty”.  The active control duty makes a vessel owner liable for injuries that arise out of its attempts to “actively involve itself in the stevedoring operations”.  Blanchard argued that because Weeks’ supervisors were regularly involved in inspecting and reviewing the progress of repairs that they exercised sufficient control over the work area and thus were responsible.  The Court stated that to determine whether a vessel owner retains active control over the contractor’s work it needs to consider whether the area in question is within the contractor’s work area, whether the work area has been turned over to the contractor and whether the vessel owner controls the methods and operative details of the stevedore’s work.  The Court found that the fact that Weeks’ supervisors would check the progress of the work and designate additional repairs does not establish that they retained control of that portion of the barge.

In rejecting Blanchard’s claim that Weeks failed in its duty to intervene, the Court found no evidence that Weeks had knowledge of a hazard that posed an unreasonable risk of harm or that it could not rely upon Blanchard’s employer to protect him.  The Court found that the entire situation was controlled by Blanchard’s employer and to find a violation of the duty to intervene under these circumstances would essentially require Weeks be a guarantor of the safety of its contractor’s employees.   Thus Weeks was exonerated.

This is not a landmark decision. However it provides a comprehensive, step by step analysis of the vessel owner’s responsibilities to those non-seamen workers who may be injured while aboard.  For this reason it is worthy of review.

Blanchard v. Weeks Marine, Inc., No. 13-5089, slip op. (E.D. La. Apr. 11, 2014).