Failing to Participate in Proceedings Justified Dismissal With Prejudice

Plaintiffs, Atlantic Sounding and Weeks Marine, filed a declaratory judgment action seeking a declaration that they did not owe Maurice Fendlason, an injured seaman-employee, maintenance and cure benefits.  Fendlason answered and filed a counterclaim for damages, as well as maintenance and cure.  But then Fendlason’s participation in his case stopped.  He failed to appear for proceedings, failed to comply with court orders, failed to attend multiple scheduled depositions, and failed to participate with his (original) attorney.  After four months of these shenanigans, Plaintiffs filed a motion to dismiss.  The district court offered Fendlason an opportunity to show cause why his case should not be dismissed, but Fendlason failed to appear for the hearing.  Accordingly, the district court dismissed Fendlason’s action with prejudice.

The Fifth Circuit affirmed, even though alternative lesser sanctions were available.  Fendlason’s actions showed a “clear record of delay or contumacious conduct” sufficient to warrant dismissal.  He was given multiple opportunities to avoid dismissal, and he failed to take advantage of either.  Here, the “district court did not abuse its discretion when, after adequate warning, it dismissed the action with prejudice.

Atlantic Sounding Co., Inc. v. Fendlason, No. 13-30885 (5th Cir. Feb. 14, 2014).

Eleventh Circuit Affirms Lifting of Limitation Injunction for Single Claimant

In October 2011, Lisa Lynch was allegedly injured on a 26-foot luxury vessel owned and maintained by Offshore of the Palm Beaches, Inc. (“Offshore”).  Lynch’s attorney sent a letter of representation to Offshore and asked for its liability insurance information.  Offshore subsequently sought exoneration or limitation of liability pursuant to the Limitation Act.  All other causes of action against Offshore were enjoined by the district court.

Lynch answered the limitation complaint and asserted a claim for personal injury.  She later moved to dismiss, stay or lift the injunction under the single claimant exception so she could pursue her claim in state court.  Lynch stipulated that Offshore had the right to litigate its entitlement to limitation in the limitation proceeding, that the federal court would determine the limitation fund, that she would not seek determination of theses issues in state court and that she would not seek to enforce a judgment in excess of the limitation fund until these determinations were made.  When it was apparent that Lynch was the lone claimant, the district court lifted the injunction.  Offshore appealed.

Finding that it had jurisdiction under 28 U.S.C. § 1291(a)(1) to review the district court’s order modifying or dissolving an injunction, the United States Court of Appeals for the Eleventh Circuit considered whether the district court abused its discretion in lifting the injunction.  The court went through the well-established limitation procedures and noted that the exclusivity of admiralty jurisdiction in this arena is at odds with the “saving to suitors” clause in 28 U.S.C. § 1333.  The United States Supreme Court has eased this tension in some cases by crafting the single claimant exception.  This exception recognizes that in single-claim scenarios, the specialized admiralty procedure is not necessary.  A district court has discretion to stay the limitation case and allow the claim to proceed in another forum subject to stipulations that protect the vessel owner from judgments in excess of the limitation fund.

Offshore argued on appeal that it was the “suitor” under § 1333 and when it filed its limitation action, its choice of forum was secured.  The court quickly rejected this argument, explaining that Lynch, the limitation claimant, was the suitor whose remedies were saved in § 1333, not the vessel owner.  The court further reasoned that this first-to-file rule advocated by Offshore would expand the Limitation Act from a protection of the vessel owner’s right to limit its liability to a choice of forum to defend claims.  The court also rejected Offshore’s argument that Lynch submitted to federal jurisdiction by filing a claim in the limitation.  Lynch made no Rule 9(h) election and premised her claims on Florida common law.  Accordingly, she was not precluded from having her claim heard in an alternate forum.

Offshore attempted to raise other arguments for the first time on appeal but these arguments were deemed waived by the court as they were not raised at the district court level.  After disposing of the issues properly on appeal, the Eleventh Circuit affirmed the district court’s order lifting the limitation injunction.

Offshore of the Palm Beaches, Inc. v. Lynch, — F.3d —-, 2014 WL 350826 (11th Cir. Feb. 3, 2014).

Fourth Circuit Addresses “Fraud on the Court”

In one of the first published opinions by the Fourth Circuit in the new year, the appellate court ruled against Claimant/Appellant, holding that an Employer had not committed a “fraud on the court.”  Instead, to commit “fraud on the court,” Employer would have to have concealed medical records with an “intentional design aimed at undermining the integrity of the adjudicative process.”  The case arose out of a coal miner’s claim for benefits under the Black Lung Benefits Act (BLBA).  To establish a claim for benefits under the BLBA, the claimant must demonstrate to the Director that he has pneumoconiosis arising out of his employment as a coal miner, he is totally disabled, and the pneumoconiosis substantially contributed to his disability.  In this case, Claimant made a claim for benefits under the BLBA in 1998 after he was diagnosed with an “inflammatory pseudotumor,” but was not diagnosed with pneumoconiosis.  The Director found Claimant eligible for benefits, and Employer requested a hearing before the ALJ.  In preparation for trial, Employer provided Claimant’s 1998 pathology results to two pathologists of Employer’s choosing who wrote reports summarizing their conclusions.  Employer then requested opinions from several radiologists and submitted them, along with the 1998 pathology results, to four pulmonary specialists, but did not submit the reports of the two pathologists.  The four pulmonary specialists concluded that, based on the evidence available to them, Claimant likely did not have coal worker’s pneumoconiosis.  On January 5, 2001, after a hearing where Claimant represented himself pro se, the ALJ denied Claimant’s claim for benefits, finding Claimant failed to show he had pneumoconiosis or that he was totally disabled due to pneumoconiosis.

On November 8, 2006, Claimant again filed a claim for benefits under the BLBA.  The Director found him eligible for benefits, and Employer requested an evidentiary hearing.  This time, Claimant hired counsel, who conducted rigorous discovery.  Employer was forced to hand over the reports of its two pathologists it previously withheld, and claimant moved to set aside the January 5, 2001, judgment on the grounds that Employer had committed fraud on the court because it did not disclose the reports of the two pathologists to its four pulmonary specialists or the court at the previous hearing.  Claimant won; the ALJ ruled Employer had committed fraud on the court, set aside the 2001 judgment, and awarded claimant benefits dating back to January 1997.

On appeal, the Benefits Review Board accepted the ALJ’s factual findings, but held Employer’s “conduct did not rise to the level of fraud on the court” because Employer “did not engage in a deliberate scheme to directly subvert judicial process.”  The Benefits Review Board held Claimant was entitled to benefits beginning in June 2006.  Claimant’s wife appealed the Benefit Review Board’s decision to the Fourth Circuit Court of Appeals, asking the court to set aside the ALJ’s 2001 judgment, which would have the effect of moving her entitlement to benefits from January 1997 to June 2006.   Finding the issue presented to be one of law, the Fourth Circuit found that a showing of fraud on the court must involve not only an intentional plot to deceive the judiciary, but it must also touch on the public interest in a way that fraud between individual parties generally does not.   The court stressed that fraud on the court should be construed very narrowly and only be invoked when the parties attempt egregious forms of subversion of the legal process, not allegations involving a “routine evidentiary conflict.”  To hold otherwise would “seriously undermine the principle of finality” by permitting “parties to circumvent the Rule 60(b) (3) one-year time limitation.”

Further, the court noted, the APA contained no requirement that a party present the most probative evidence in its possession; instead a party is permitted to offer any evidence it would like so long as that evidence is relevant.  Here, Employer did not share the reports of two expert pathologists with Employer’s four expert pulmonologists.  While the ALJ found the reports of the expert pathologist more probative, Employer was under no obligation to advance those reports as evidence because someone else may believe them superior.  In fact, the Supreme Court has recognized cross-examination as “the greatest legal invention for discovery of the truth.”  Claimant had the right to cross examine Employer’s experts and present contradictory medical opinions; that he didn’t was not a failure of the system but Claimant’s failure to avail himself of it.   The court gave little consideration to Claimant’s appearance pro se, noting the narrow confines of fraud on the court have not permitted claimants to relitigate old claims they have lost merely because legal representation may have resulted in better success.

Interestingly, the Eleventh Circuit dealt with a similar issue just nine months prior when Employer concealed its medical expert’s report received four days before trial, and the ALJ admitted the report into evidence post- trial after it fell into the hands of another party to the litigation.  Under the circumstances, the Eleventh Circuit held, Employer knowingly concealed the medical report and the ALJ did not abuse its discretion when it admitted the report post-trial.   The effect of the report was that if Claimant’s surgeries and disabilities resulted from the natural progression of her work-related injury, and would have occurred notwithstanding subsequent work, then liability would rest with Employer.  In Employer’s expert’s report that was concealed, he opined he did not believe Claimant’s work aggravated or worsened her condition or contributed to the need for surgery; the Claimant would have needed the surgery for persistent symptoms regardless of her occupation.   After receipt of the concealed report, the ALJ ruled against Employer and found that the relevant disabilities and complications suffered by Claimant were the natural progression of her injury, not an aggravation of her original injury caused by subsequent employment.

Fox v. Elk Run Coal Company, Inc., et al. (4th Cir. 2014); Ceres Marine Terminals, Inc., v. Director, OWCP (11th Cir. 3/19/13) (unpublished).

Southern District of Texas Finds Spar Platform Was Not A Vessel

A federal judge in the Southern District of Texas recently ruled that the oil and gas spar platform on which plaintiff Jerry Riley was injured was not a vessel.  Riley alleged injury to his spine while testing one of the platform’s life vessels.  He brought claims against his employer and the owner of the spar under the Jones Act and general maritime law.  The defendants moved for summary judgment, arguing that Riley’s Jones Act claims were barred because the platform was not vessel.  The court analyzed the characteristics of the platform, noting that it was assembled onsite, had no steering mechanism, no system of self-propulsion, and no raked bow.  It was intended to be used at its location for 25 years and was moored to the seabed by eleven mooring lines.  The platform was connected to two pipelines that transport natural gas and oil.  It was capable of limited movement within an approximately 200-foot radius but had not moved in four years.

The court held that the platform was a permanent structure attached to the seabed and was not practically capable of transportation.  It was, therefore, not a vessel and Riley was not a seaman under the Jones Act.  Riley’s general maritime law claims of unseaworthiness and negligence against the platform owner were also foreclosed because the platform was not a vessel and construction work on fixed offshore platforms does not bear a significant relationship to traditional maritime activity.  Finally, Riley’s claims against his employer were also barred as the LWHCA provided his exclusive remedy.

Riley v. Alexander/Ryan Marine Servs. Co., 3:12-CV-00158, 2013 WL 5774872 (S.D. Tex. Oct. 24, 2013).