Fifth Circuit Roles Back Seaman’s Entitlement to Punitive Damages

3367543296_1470ef5247_zThis article originally appeared in WorkBoat Magazine.

The December 2013 Legal Talk column addressed the very significant ruling a three judge panel of the Fifth Circuit Court of Appeals in McBride v. Estis Well Service. That case signaled a major expansion in the law regarding semen’s entitlement to recover punitive damages under the general maritime law.  The availability of punitive damages had been extremely limited since the 1990 Supreme Court case of Miles v. Apex, which held that non-pecuniary damages, which would include punitive damages and similar non-economic type losses, were not recoverable by seamen, whose legal remedies are largely governed by the Jones Act.

Courts have chipped away at the scope of the Miles ruling since then, most notably by the Supreme Court itself in 2009 when the Townsend case recognized that a seaman could get punitive damages for his employer’s willful failure to pay maintenance and cure.  The McBride case took that holding a huge step further by allowing seamen to recover punitive damages for unseaworthiness claims arising under the general maritime law.

The McBride case, however, was recently reconsidered by the entire Fifth Circuit en banc, which reversed the previous ruling by the three judge panel.  Now, the rule in the Fifth Circuit is that Jones Act seamen have no cause of action for punitive damages for either negligence or unseaworthiness. The latest McBride ruling is in keeping with the general pronouncement of the Supreme Court’s Miles v. Apex case regarding the unavailability of non-pecuniary damages in Jones Act cases.

While this significant ruling reflects a trend followed by other federal appeals courts, this issue remains unsettled in some jurisdictions. The Supreme Court may once again have to take up the punitive damages issue to establish uniformity among all courts on this important aspect of maritime law.

Excellent image courtesy of Flickr user Andrew Magill.

Fifth Circuit Addresses Definition of Seaman Under the Fair Labor Standards Act

3338710223_a1ba090d11_zUnder the Fair Labor Standards Act, for every hour that an employee works beyond 40 hours in a seven day work week, that employee must be paid overtime, that is, one and a half times his normal hourly rate. However, if the employee meets the statutory definition of a “seaman,” then he is not entitled to overtime pay.

29 C.F.R. § 783.32 lays out the criteria for being a seaman: An employee will ordinarily be regarded as a seaman, (1) If the employee is a master or subject to the authority of a master (2) aboard a vessel (3) performing service primarily as an aid to the operation of the vessel as a means of transportation, and (4) does not perform a substantial amount of different work.

In Coffin v. Blessey Marine Services, Inc., No. 12-20144 (5th Cir. 11/13/14), the Fifth Circuit addressed whether or not vessel-based tankermen were ‘seamen’ under the statute.

The dispute in Blessey arose when the plaintiffs – vessel-based tankermen – sought to collect overtime pay from their employer under the FLSA. The seamen-non-seamen distinction was crucial because the plaintiffs – working an average 84 hours in a seven day period – would not be entitled to recover if they fell within the seamen exclusion under the FLSA.

Blessey is a company that transports liquid cargo by vessels throughout inland and coastal waterways. The plaintiffs in Blessey worked as tankermen as part of a crew aboard a “tow-unit.” The tow-unit consists of one towboat and two tank barges that are connected through a system of cables. Each member of a tow-unit crew has specific responsibilities. A “wheelman,” (captain), and a deckhand are customarily recognized as seamen. A tankerman’s status as a seaman is less clear.

Tankermen’s duties include many of the same duties that deckhands perform. Some of these duties include: cleaning, handling lines, changing engine filters, tying off to docks, painting, troubleshooting engine problems and handling running lights. As deckhand duties, these tasks are recognized as seamen work. In addition to these traditional seamen tasks, tankermen are responsible for loading and unloading the tank barge’s liquid cargo. Some of these tasks include: oiling grease-fittings on barges, cleaning oil spots on barges, performing barge readiness inspections, and making sure all hatches and dogs are tightly secured.

Plaintiffs argued that the tasks exclusively required for tankermen – loading and unloading – determined their status as non-seamen under the statute. Plaintiffs principally relied on Owens v. SeaRiver Maritime, Inc. 272 F.3d 698 (5th Cir. 2001). In Owens, the court held that loading and unloading duties while part of a “land-based Strike Team,” did not meet the statutory seaman definition. In this case, plaintiffs argued that Owens stood for the principle that loading and unloading a vessel is always non-seaman work.

The court disagreed. First, the plaintiff in Owens only sought overtime for his employment as part of the land-based Strike Team, not as a tankerman. Second, the language in Owens did not foreclose the possibility that any employee who performed loading or unloading operations was categorically a non-seaman. Owens acknowledged that performing these operations was not dispositive of status. Instead, the general character of the work is determinative.

Considering the seamen factors in 29 C.F.R. § 783.32, the parties agreed that the plaintiffs were under the authority of a master and that they were members of a crew of a vessel. The parties disagreed as to whether or not the plaintiff’s performed service in operating the vessel for transportation.

The court acknowledged many situations in which loading and unloading operations were merely incidental to the vessel’s operation, and such employees were not seamen under the statute. For example, employees who only loaded and unloaded the vessel at the beginning and end of a voyage and had little other seamen-related duties would not be seamen.

In this case, the court found that the tankermans’ duties were intertwined with the safe operation of the vessels themselves. Namely, safe loading and unloading affects a tank-barge’s seaworthiness and navigational integrity. Further, the plaintiffs’ conceded that their regular duties such as keeping watch and making sure the barge is level were supposed to ensure a safe operation. Finding that the loading and unloading duties in this case could not be separated from the traditional seamen duties, the court did not have to address the question of ‘substantial different work.’

Thus, the court reversed the district court and held that in this case the vessel-based tankermen were in fact seamen under the FLSA.

Excellent image courtesy of Flickr user greeblie.

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.