Historical Background Anchors Judge Clement’s McBride Concurrence

On September 25, 2014, the Fifth Circuit Court of Appeals, sitting en banc, rendered its decision in the high-profile case McBride v. Estis Well Service, L.L.C.,12-30714, 2014 WL 4783683 (5th Cir. Sept. 25, 2014)McBride garnered national attention after the Fifth Circuit panel reversed the district court and held that punitive damages were available to seamen as a remedy for the general maritime law claim of unseaworthiness.  731 F.3d 505.  On rehearing, a majority of the Fifth Circuit judges determined that punitive damages were not available.  The majority opinion was about fifteen pages long and was followed by nearly sixty pages of concurring and dissenting opinions.

The first concurrence, penned by Circuit Judge Edith Brown Clement and joined by Circuit Judges Jolly, Smith, and Owen, took a closer look at the historical background that, in Judge Clement’s opinion, mandated the result reached by the majority.  Judge Clement dissected what she viewed as the three main points that McBride relied on and determined that, “[w]hen examined closely, none of these arguments establish McBride’s ultimate contention.”  Id. at *7.

Judge Clement first analyzed and concluded that United States Supreme Court jurisprudence does not require punitive damages in unseaworthiness cases.  The Judge noted that Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008), only addressed the narrow issue of whether punitive damages were preempted by the Clean Water Act and that this narrowness accounted for the Court’s need in Atlantic Sounding Co. v. Townsend, 557 U.S. 404 (2009), to even address the issue of punitive damages in maintenance and cure cases.  According to Judge Clement, this left McBride with “only the thin strand of Townsend.”  McBride at *7.  However, Townsend, a maintenance and cure case, was of little help in light of the “significant differences” between actions for maintenance and cure and unseaworthiness.  Judge Clement cleverly cited to the academic writings of McBride’s own counsel to underscore the well-recognized distinction between the two causes of action. The Judge concluded that “[t]he difference between maintenance and cure and unseaworthiness actions make maintenance and cure cases a poor guide for determining unseaworthiness remedies.”  McBride at *8.

Judge Clement went on to examine the Fifth Circuit’s pre-Miles case law approving punitive damages in unseaworthiness cases, starting with In re Merry Shipping, Inc., 650 F.2d 622 (5th Cir. Unit B 1981).  She concluded that, notwithstanding Merry Shipping and a handful of other cases, there is an absence of actual authority establishing that pre-Jones Act plaintiffs claiming unseaworthiness were entitled to punitive damages.  The Judge characterized the support for such entitlement to punitive damages the result of a “collective judicial ‘oh, hell, why not’ principle” equating the availability of punitive damages in other types of actions to the availability of punitive damages for unseaworthiness.  McBride at *9.

Finally, Judge Clement waded through pre-Jones Act unseaworthiness cases cited by McBride in support of the availability of punitive damages and found only one unseaworthiness case that arguably awarded punitive damages.  The Judge concluded that, even assuming that this case did award punitive damages, one “dust-covered” case should not provide the basis for the general availability of punitive damages in unseaworthiness cases.  This was particularly true when considering the Supreme Court decisions in The Osceola, 189 U.S. 158 (1903) and Pacific Steamship Co. v. Peterson, 278 U.S. 130 (1928) that recognized the remedy for unseaworthiness was an indemnity by way of compensatory damages.

Judge Clement concluded her concurrence by explaining the need for caution “before signing off on an aggressive expansion of punitive damages in the unseaworthiness context.”  McBride at *12.  This is a product of the varying availability of insurance for punitive damages and the direct and indirect impacts such an expansion would have on commercial shipping.  “In light of the potentially sizable impact, this court should not venture too far and too fast in these largely uncharted waters without a clear signal from Congress.”  McBride at *12.

McBride v. Estis Well Serv., L.L.C., 12-30714 (5th Cir. Sept. 25, 2014) (en banc).

Fifth Circuit Upholds Denial of Longshoreman’s Claim, Affirms MBLB Win

Today’s post provides us with an opportunity to brag on one of our own, Rob Popich, who successfully argued Hymel v. Dir., OWCP, for the Employer and Carrier.  The Fifth Circuit’s new, unreported Hymel decision is the third victory Mr. Popich earned in this case, having previously prevailed in front of an administrative law judge (“ALJ”), the Benefits Review Board (“BRB”), and now the Fifth Circuit.

Claimant, a longshoreman, filed a claim after he alleged injury as a result of a work-related incident wherein he was struck by a forklift. In accordance with the Longshoremen and Harbor Workers’ Compensation Act, a claimant is entitled to a presumption of application if he can establish 1) he suffered harm and 2) conditions existed at work, or an accident occurred at work, that could have caused, aggravated, or accelerated the condition. (See 33 U.S.C. § 920.)  The employer then has the opportunity to rebut the presumption by presenting substantial evidence establishing the absence of a connection between the injury and the employment.

Through his presentation of evidence to the ALJ, Mr. Popich successfully rebutted the presumption in favor of the Claimant: the ALJ determined Claimant’s credibility was questionable, and his testimony was inconsistent. Based on this evidence, the ALJ found in favor of Employer and Carrier. The Claimant appealed to the BRB hoping to convince it that the ALJ’s finding of facts were not supported by substantial evidence or consistent with the law. However, the BRB affirmed the ALJ’s determination in favor of Employer and Carrier. Claimant then appealed to the Fifth Circuit.

The Fifth Circuit, being limited in its scope of review to consideration of errors of law, had to determine if the BRB adhered to its statutory standard review of factual determinations made by the ALJ.

Claimant first argued the ALJ’s characterization of witness testimony was improper; the ALJ had determined Claimant did not provide a medical provider with all of information necessary for a diagnosis when Claimant neglected to reveal he was previously injured due to an unrelated incident.  The Fifth Circuit held that the ALJ did not, in fact, mischaracterize witness testimony, as the ALJ was in the best position to assess credibility and conflicting evidence.  Second, Claimant argued the ALJ incorrectly found his testimony inconsistent.  Again, the Fifth Circuit noted the ALJ was in the proper position to weigh the testimony of various witnesses, more than one of which recalled the work incident differently than Claimant.  Third, Claimant alleged the introduction of personnel files were improper.  In disagreeing with this argument, the Fifth Circuit noted the ALJ did not abuse their discretion in admitting this evidence, as it was not bound by traditional rules of evidence.

In reaching its conclusions, the Fifth Circuit looked to dicta of Avondale Indus., Inc. v. Dir., OWCP, 977 F.2d 186 (5th Cir. 1992) which stated that “[T]he ALJ’s decision need not constitute the sole inference that can be drawn from the facts . . . . As fact finder, the ALJ determines questions of credibility of witnesses and of conflicting evidence.”  The ALJ had simply weighed the evidence and made a credibility determination, which the ALJ is entitled to do.  Further, the Fifth Circuit noted the ALJ is not bound by formal rules of evidence; admissibility of evidence can depend solely on whether it is such evidence as a reasonable mind might accept as probative.  In conclusion, the Fifth Circuit held that the BRB did not err in finding the ALJ’s determinations supported by substantial evidence and in accordance with the law.

Fortuity Doctrine Prevented Coverage for Known Loss Following Boating Accident

The Fifth Circuit recently issued an unpublished decision discussing the application of the “fortuity doctrine” under Texas Law.  The underlying lawsuit involved a boating injury.  Plaintiffs suffered serious injuries when their fishing boat collided with a utility boat in a canal near Venice, LA.  In the lower court, the defendants won on summary judgment, with the court concluding that coverage was not available under two Marine Protection & Indemnity policies issued in 2006 and 2008.  On appeal, the Fifth Circuit affirmed the grant of summary judgment, and the district court’s straightforward application of the fortuity doctrine:

Fortuity is an inherent requirement of all risk insurance policies.  “The concept of insurance is that the parties, in effect, wager against the occurrence or non-occurrence of a specified event; the carrier insures against a risk, not a certainty.”  “The fortuity doctrine precludes coverage for two categories of losses: known losses and losses in progress.”  The “known loss” aspect of the fortuity doctrine precludes coverage “where the insured is, or should be, aware of . . . [a] known loss at the time the policy is purchased.”  “A ‘known loss’ is one that the insured knew had occurred before the insured entered into the contract for insurance.”

The 2008 policy provided coverage from May 18, 2008, until May 18, 2009.  The accident in this case occurred on May 1, 2008, more than two weeks before the effective date of the policy.   The fortuity doctrine bars coverage for the accident in this case because it was a known loss at the time the policy took effect.

Sosebee v. Certain Underwriters at Lloyds London, No. 13-30738, slip op. (5th Cir. Apr. 30, 2014).

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.”