Seaman Denied Recovery for Stress-Related Health Claim

Anyone who has ever worked in the marine industry knows that the physical requirements are demanding and the pressure to perform can be intense.  Regrettably, the nature of the business means that accidents, injuries and property damage are inevitable, no matter how well workers do their jobs.  Usually, the remedies available under the maritime law when such casualties occur are fairly well defined.  However, a recent case out of the U. S. 11th Circuit Court of Appeals confirmed that such remedies are not without limits.

The case of Skye v. Maersk Line involved a claim for money damages by the chief mate of the SEALAND PRIDE for heart disease and deteriorated health which he attributed to the excessive duties and prolonged work hours required of him by his employer.  Skye served on the SEALAND PRIDE for approximately eight years, during which he sometimes worked between 90 and 105 hours a week for 70 to 84 days at a time.  These demands of his job purportedly caused him fatigue, stress and lack of sleep, which resulted in hypertension and eventually disabling heart disease.

Skye sued Maersk Line for negligently imposing unreasonable working conditions that caused his failing health.  While a jury concluded that Skye could recover damages from Maersk Line under these circumstances, the Court of Appeals reversed the judgment and found that Skye was not entitled to any award at all.

In reaching this conclusion, the appeals court noted that not all work related injuries are compensable under the Jones Act, the federal statute that provides a seaman legal recourse against a negligent employer.  It explained that in order to prevail on such a claim, seamen’s injuries must be caused by the “negligent conduct of their employers that threatens them imminently with physical impact.”  The appeals court further determined that a seaman cannot recover for injuries caused only by work related stress because such stress is not a “physical peril.”  It acknowledged that Skye did, in fact, suffer physical harm; but the cause of that harm was not a recognized physical peril for which the employer could be held liable.  Consequently, the court found that Skye had no right of recovery against Maersk.

This important decision was rendered by a divided panel of judges on the 11th Circuit, which may signal further appeals of this claim or lead to more legal challenges in other cases where a maritime worker is injured on the job notwithstanding the absence of some perilous physical cause.

This article first appeared in Work Boat magazine.  It was also posted on September 1, 2014, at Work Boat’s website.

Jones Act Employees Could Not Sue a Dual-Listed Company

On August 12, 2014, the Eleventh Circuit published a decision discussing jurisdiction and business entity structure in the context of a Jones Act lawsuit.  The plaintiffs were three injured sea workers, each of whom collected maintenance and cure.  Those were the benefits that the injured sea workers and other employees agreed to in their contracts with Cunard Celtic Hotel Services, Ltd.  The plaintiffs became unsatisfied with the extent of their maintenance and cure, believing that the contracts impermissibly limited their compensation.  So, they filed a class action against Carnival Corporation and Carnival PLC.

The Defendants’ corporate structure was particularly important here.  Cunard operated “under the corporate umbrella of Carnival Corporation & PLC–the dual-listed company (“DLC”) comprised of Carnival Corporation (a Panamanian corporation headquartered in Miami, FL) and Carnival PLC (a British corporation headquartered in Southampton, England).” 

The district court dismissed the plaintiffs’ lawsuit, determining that the court did “not have personal jurisdiction over the dual-listed corporation Carnival Corporation and PLC.”  The plaintiffs appealed, asking the Eleventh Circuit to determine whether, under the laws of Florida, the Carnival Corporation & PLC, a dual-listed company, was subject to suit as a corporation, according to the doctrine of estoppel, or under a joint venture theory of liability.  It was not.

The Eleventh Circuit first explained the structure of a DLC:

A dual-listed company (DLC) is a corporate structure that binds two separate corporations into a unified economic enterprise, but allows the participating entities to maintain their individual legal identities.  The arrangement is established through the execution of an equalization agreement, a contract that defines and governs the relationship between the two companies.  Such a structure bears many merger-like qualities, such as common ownership of assets and integrated management, but also exhibits some hallmarks of corporate independence, such as separate stock exchange listings.  Almost always utilized by corporations of disparate national origin, DLCs are employed for a variety of reasons, including the advantages they potentially offer in the areas of tax, investor/public relations, and regulatory oversight.

But is a dual-listed company suable as a corporation?  No.  “Indeed, regardless of whether an entity exhibits qualities common to corporations, it is not properly subject to treatment as a corporation absent incorporation, the fundamental act of corporate creation and the dividing line between corporations and non-corporations.”

Further, Carnival & PLC was not estopped from denying that it was a corporation, even if it had publicly promoted itself as a single entity.  The plaintiffs lodged an interesting argument called “corporation by estoppel,” which the state of Florida codified:

No body of persons acting as a corporation shall be permitted to set up the lack of legal organization as a defense to an action against them as a corporation, nor shall any person sued on a contract made with the corporation or sued for an injury to its property or a wrong done to its interests be permitted to set up the lack of such legal organization in his or her defense.

The Eleventh Circuit reasoned that “the doctrine of corporation by estoppel is most appropriately used to maintain the expectations of parties to a contract, allowing a ‘corporation [to] sue and be sued as if it exited if the parties to the contract behaved as if it existed.’”  But here, the plaintiffs had employment contracts with Cunard, not Carnival & PLC.  The plaintiffs never alleged that they believed they were contracting with Carnival & PLC, or that Carnival & PLC was a legal entity capable of being sued.  Accordingly, the doctrine of corporation by estoppel was not applicable.

The court also determined that Carnival & PLC was not suable as a joint venture.  The plaintiffs sought to liken DLCs to “a joint venture on steroids.”  Not so.  A joint venture is “an association of persons or legal entities to carry out a single business enterprise for profit.”  Even though DLCs and joint ventures are collaborative in nature, “the scopes of the two structures are diametrically distinct, thereby rendering inappropriate the application of Florida’s joint venture laws to Carnival Corporation & PLC.”

Finally, the Eleventh Circuit concluded its opinion with a zinger–essentially stating that the plaintiffs outfoxed themselves:

Our ruling today–that Carnical Corporation & PLC is not properly suable in this action–may appear, at first glance, to produce a harsh and unfair result.  However, the Seafarers could have pressed their claims against another entity.  Indeed, it seems abundantly clear that the Seafarers could have brought an action against Carnival PLC (the Cunard Line’s parent company), but chose not to, instead making a tactical decision to pursue potentially broader claims against Carnival Corporation & PLC.  The Seafarers rolled the dice in targeting Carnival Corporation & PLC exclusively in this case; unfortunately for them, that roll did not pay off.

Sabo v. Carnival Corp., — F.3d —- (11th Cir. 2014).

Brief in Opposition Filed in Dize, a Jones Act “Seaman Status” Case

The Brief in Opposition has been filed in Dize v. Association of Maryland Pilots, the case concerning seaman status for maritime workers who spend time in the service of a moored vessel.  The Brief in Opposition is a good read that questions the existence of the circuit split advanced by Ms. Dize in her petition.  Here is the Introduction to the Brief in Opposition (with internal citations omitted where possible):

In Chandris, Inc. v. Latsis, 515 U.S. 347 (1995), this Court held that, to qualify as a “seaman” under the Jones Act, an employee “must have a connection to a vessel in navigation (or an identifiable group of such vessels) that is substantial in terms of both its duration and its nature.”  With respect to the “duration” element of that requirement, the Court endorsed “an appropriate rule of thumb”: “A worker who spends less than about 30 percent of his time in the service of a vessel in navigation should not qualify as a seaman under the Jones Act.”  Such a worker is not “regularly expose[d] . . . to the perils of the sea”; is “land-based,” not “sea-based”; and has “only a transitory or sporadic connection to a vessel in navigation.”

The petition seeks review of a single, narrow question: whether a court applying Chandris‘s 30-percent rule of thumb “may . . . consider” time spent “in the service of a vessel in navigation that is moored, dockside, or ashore,” or “must” instead “categorically exclude” such time.  That question is not presented here.  Notwithstanding the petition’s assertions, the Court of Appeals of Maryland rejected a categorical rule that an “employee must spend at least 30 percent of [his] time actually at sea” to qualify as a seaman.  It expressly recognized that “a variety of other circumstances” may count toward Chandris‘s 30-percent threshold.  Petitioner effectively prevailed below on the sole question actually posed by the petition: Under the decision below, courts “may . . . consider” time in service of moored, dockside, and ashore vessels in determining whether an employee is a seaman. Petitioner’s real complaint seems to be that the decision below erred in not counting the particular services William Dize performed for moored, dockside, and ashore vessels.  The petition does not seek review of that fact-specific determination, which does not warrant preview in any event.

The petition’s misreading of the decision below also permeates its claimed conflict among lower courts.  The petition alleges a conflict between the decision below and an unpublished Eleventh Circuit decision, on the one hand, and decisions of the Third, Fifth, Sixth, and Ninth Circuits, on the other.  But the decision below rejected the very Eleventh Circuit decision the petitioner characterizes it as having “followed.”  And the decision below embraced decisions of the Fifth and Ninth Circuits (among others).  The purported decision in the circuits thus rests entirely on an unpublished decision of a single federal court of appeals–a decision that does not even bind that court–and dictum within the decision at that.  That “conflict” does not warrant this Court’s review.

In any event, the decision below is correct.  This Court has emphasized that “Jones Act coverage is confined to seamen, those workers who face regular exposure to the perils of the sea.”  The Maryland Court of Appeals faithfully applied that directive, counting towards the 30-percent threshold all duties that expose a worker to the perils of the sea, whether or not he is in transit over the water.  And it properly ruled that, on the facts of this case, Mr. Dize’s routine maintenance of vessels ashore did not expose him to such perils.  The petition does not challenge that fact-bound conclusion.  Instead, it seeks a categorical rule requiring courts to count all duties in service of a vessel, wherever and however performed.  That rule would make seaman of workers who are never, exposed to the perils of the sea, obliterating the Jones Act’s “fundamental distinction between land-based and sea-based maritime employees.”

Finally, this case is an exceptionally poor vehicle.  The “question presented” is not presented here, and the petition fails to challenge the actual basis for the decision below.  This Court’s ability to offer meaningful guidance would thus be severely hampered.  And while the petition asks whether time spent in service of a vessel that is “moored” or “dockside” may count toward seaman status, . . . Mr. Dize’s claim below rested on “shoreside support tasks.”  Accordingly, Mr. Dize’s claim depends on the sort of routine, land-based “maintenance work” this Court has held to be not “substantial for seaman-status purposes.”  The total circumstances here make clear that Mr. Dize was a land-based worker who only sporadically performed launch operator duties and would not qualify as a seaman under any conceivable standard.

Tip of the hat to SCOTUSBlog.



Rhode Island Addresses the Scope of a Seaman’s Entitlement to Unearned Wages

In a lengthy decision, the Supreme Court of Rhode Island addressed a number of Jones Act-related issues, ultimately holding:

(1) that the trial justice’s unearned wages jury instruction, which was part of his instructions to the jury with respect to the plaintiff’s claim for maintenance and cure, was erroneous and resulted in prejudice to the defendant; (2) that the trial justice overlooked and misconceived material evidence in the course of granting the plaintiff’s motion for a new trial on his claims for negligence under the Jones Act and breach of the warranty of seaworthiness; and (3) that the trial justice erred in applying Rhode Island’s prejudgment interest statute, rather than following federal maritime law, which would have required the plaintiff to request an instruction whereby the issue of awarding prejudgment interest (vel non) would be submitted to the jury.

As to the unearned wages jury instruction, the court stated (with internal citations omitted):

Our review of the relevant case law make it abundantly clear that the unearned wages instruction given by the trial justice was erroneous.  For vessels like the Persistence, which are “ocean going ships, the rule is said to be that wages are recoverable for the balance of the voyage . . . .”  However, it is possible for a seaman and his or her employer to extend the period of recovery of unearned wages by contract.  Such a contract would have to provide a definite right to employment for a fixed period of time.  Accordingly, “[t]he period as to which unearned wages must be paid is determined by reference to the contractual relationship.  When a seagoing employee has no contractor has a contract with no enforceable term of duration, she only is entitled to unearned wages from the time she becomes unfit for duty to the end of that voyage.  Thus, we hold that Mr. King was only entitled to recover unearned wages as part of his claim for maintenance and cure for either (1) the duration of the voyage on which he was injured (which is not relevant here since the Peristence was docked when Mr. King’s injury occurred); or (2) for the duration of an employment contract between Mr. King and defendant, if there was such a contract.

. . .

We are of the opinion that the trial justice’s jury instruction with respect to unearned wages was given in error in that it was an incomplete and insufficient statement of the law.  The trial  justice stated that, if the jury awarded maintenance and cure, it “should also award . . . unearned wages . . . when [Mr. King] was serving the ship.”  The trial justice was correct that plaintiff was entitled to be compensated under maintenance and cure for the duration of his employment contract; i.e., when “he was serving the ship.”  However, the trial justice failed to explain that plaintiff was “serving the ship” only if he was on a voyage or had an employment contract for a specified duration.  The lack of clarification of the jury instruction with respect to unearned wages illustrates the fact that the trial justice did not “fram[e] the issues in such a way that the instructions reasonably set forth all of the propositions of law . . . .”  It is further our view that, because the unearned wages jury instruction was somewhat ambiguous in the eyes of this Court it is probable that it was even more so for the lay jurors.

King v. Huntress, Inc., — A.3d —- (R.I. 2014).