BRB: Employer’s “Stock Vessels” Retained Their “Recreational Vessel” Status

In a case of first impression concerning the amended version of Section 2(3)(F) of the Longshore and Harbor Workers’ Compensation Act, and its implementing regulation, 20 C.F.R. § 701.501, the Benefit Review Board reviewed the Decision and Order and the Supplemental Decision of the Administrative Law Judge holding Claimant, who worked at Employer’s sport-fishing and recreational yacht facilities, engaged in commercial services within the meaning of the regulation and the Act, the vessels Claimant worked on were non-recreational, and Claimant was a longshoreman entitled to benefits under the Act.  The Benefit Review Board reversed the ALJ, finding Claimant repaired only recreational vessels, he is covered by Florida state workers’ compensation law, and he is excluded from coverage under Section 2(3)(F) of the Act.

The facts on appeal were not in dispute.  Claimant worked for Employer at its two Riviera Beach, Florida facilities repairing recreational yachts ranging from 42 to 82 feet in length.  Services at the Florida facility included general repairs and maintenance of sport-fishing yachts manufactured and sold by employer’s New Jersey division, as well as other sport-fishing boats and private motor yachts.  Employer’s Florida facilities also maintained and repaired the stock vessels the new Jersey division used in boat shows and sea trials to entice customers to purchase the yachts.  On February 2, 2010, Claimant suffered a forehead contusion while working on a 63.5 foot yacht.  Employer paid Claimant medical and disability benefits for the injury under Florida state workers’ compensation law, but Claimant filed a claim contending his injuries should be covered under the Longshore and Harbor Workers’ Compensation Act.  The Administrative Law Judge accepted Claimant’s assertion that because he repaired and maintained some vessels that were used by Employer’s New Jersey division for boat shows and sea trials (which included taking passengers out on the water), those vessels were “commercial,” not “recreational,” as those vessels were used for the commercial purpose of promoting sales for the New Jersey division.

Section 2(3)(F) of the Act states, in pertinent part, “the term ‘employee’ … does not include individuals employed to build any recreational vessel under 65 feet in length, or individuals employed to repair any recreational vessel … if individuals described  are subject to coverage under a State workers’ compensation law.  The term “recreational vessel” is defined by 20 C.F.R. § 701.501(a) as a vessel (1) being manufactured or operated primarily for pleasure; or (2) leased, rented, or chartered to another for the latter’s pleasure.  Section  701.501(b)(2) states, in pertinent part, “a vessel being repaired … is not a recreational vessel if the vessel had been operating, around the time of its repair in one or more of the following categories on more than an infrequent basis: (1) passenger vessel;  (2) small passenger vessel; (3) uninspected passenger vessel; (4) vessel routinely engaged in commercial service, or (5) vessel that routinely carrier passengers for hire.”

Employer contended it used vessels at the New Jersey facility to move passengers, but it had no license to do so and was merely showcasing the boat’s primary purpose as a recreational vessel for pleasure.  Employer argued, the ALJ erroneously extended the definition of “commercial service” to convert its stock vessels to non-recreational status when the purpose of the promotional vessels is non-commercial in nature.  In resolving the tension between Sections 701.501(a) and (b), the regulations note, “occasional non-recreational use does not alter the vessel’s core recreational purpose and should not take the vessel outside of the ‘recreational vessel’ definition.  To clarify this point and to resolve the tension, the final rule provides that a vessel remains recreational unless it falls within the designated Coast Guard vessel categories on a more than infrequent bases during the time the vessel is in operation.”  The BRB further clarified the definition of recreational as “any unchartered passenger vessel used for pleasure carrying no passengers-for-hire (i.e. paying passengers); and any chartered passenger vessel used for pleasure with no crew provided and with fewer than 12 passengers, none of whom is for hire.  All other passenger -carrying vessels fall into one of the following three non-recreational categories: uninspected passenger vessel, small passenger vessel, and passenger vessel.”   In the case at hand, Employer’s vessels were primarily for sale as recreational sport-fishing yachts.  Their occasional use at boats shows or to bring passengers out on the water did not alter their primary recreational use, thus could not alter their classification to the category of commercial vessels.

Of note, although the number of stock vessels in the facilities fluctuated, at the time of Claimant’s injury, only nine of the forty vessels being serviced were stock vessels, thus it would be interesting to know if the outcome of the case might have been different had the ratio of stock boats to purely recreational sport-fishing vessels been different.  The BRB’s decision was published on January 28, 2014, and counsel for Claimant has indicated he does not intend to appeal the decision even though he disagrees with the BRB’s final adjudication.

DeJesus v. Viking Yacht Co., Inc., — Ben. Rev. Bd. Serv. (MB) —-, 2014 WL 352618 (2014) (published).

5th Circuit Rules That Offshore Floating Oil and Gas Platform Moored on the OCS Floor Is Not a Vessel and Not Subject to Maritime Lien

A recent “unpublished”  decision from the U.S. Fifth Circuit addressed the issue of whether a maritime lien can attach to on offshore floating production platform.  In Warrior Energy Services Corp. v. ATP Titan M/V, Action No. 13-30587 (5 Cir. 2014), several oilfield contractors, Warrior and others, contracted with ATP Oil & Gas to provide certain services and supplies to the ATP TITAN M/V (”TITAN”), a floating oil and gas production facility owned by ATP Titan, LLC.  The TITAN is moored on the Outer Continental Shelf, miles offshore from Louisiana.

ATP Oil & Gas filed for bankruptcy and did not pay the contractors for their services.  Warrior and the other contractors then filed a USDC action against platform owner ATP Titan and asserted a maritime lien against the TITAN.  ATP Titan filed a motion to dismiss the USDC action as well as the maritime lien on the basis the TITAN was not a vessel and the court lacked jurisdiction.  Warrior et al conceded that its claims before the court were dependent upon the TITAN’s status as a vessel.  On motion for summary judgment, Judge Sara Vance ruled the TITAN was not a vessel and she dismissed the contractors’ lawsuit on jurisdictional grounds.

Addressing the issue of vessel status, the 5th Circuit panel looked to the U.S. Supreme Court’s vessel status decisions in Stewart v. Dutra and Lozman v. City of Riviera Beach. The dispositive question was whether the TITAN’s “use as a watercraft as a means of transportation on water is a practical possibility or merely a theoretical one.” (citing Dutra). The court went on to note that the TITAN is moored to the OCS floor by 12 mooring chains connected to 12 anchor piles imbedded over 200 feet into the seafloor. It is further immobilized by “an oil and gas production infrastructure”.  The TITAN has not been moved since it was installed in 2010 and it has no means of self-propulsion, apart from the ability to reposition itself within a 200 foot range by manipulating its mooring lines.  Moreover, moving the TITAN would require 12 months of preparation, at least 15 weeks for its execution and would cost more than $70-million.  Based on these factors, the 5th Circuit ruled that the TITAN was not practically capable of transportation on water and, therefore, as a matter of law, was not a vessel.

Editor’s Note: The contractors complained to the 5th Circuit that Judge Vance relied on its unpublished opinion in a similar case: Mendez v. Anadarko Petroleum Corp.  By way of a footnote, the panel acknowledged that Mendez was not “controlling precedent” but could be cites as “persuasive authority” given its factual similarity with the subject ATP case.

Top 5 Longshore Cases of 2013

In this year’s annual list of the top Longshore and Harbor Workers’ Compensation Act (“LHWCA”) cases of 2013, we address situs, settlement standards, average weekly wage, intoxication, and vessel status.

1. New Orleans Depot Servs., Inc. v. Dir., OWCP, 718 F.3d 384 (5th Cir. 2013):

In New Orleans Depot Servs., an en banc Fifth Circuit addressed the meaning of the term “adjoining” as used in Section 3 of the LHWCA.  Pursuant to Section 3, LHWCA coverage extends to “disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel).”  See 33 U.S.C. § 903(a).

The Fifth Circuit abandoned its own prior precedent, see Texports Stevedore Co. v. Winchester, and adopted the Fourth Circuit’s ruling in Sidwell v. Express Container Services, Inc., 71 F.3d 1134 (4th Cir. 1995).  Now “adjoining” navigable water means “border on” or “be contiguous with” navigable water.

The Navigable Waters post addressing New Orleans Depot Servs. can be found here.

2. Richardson v. Huntington Ingalls, Inc., 2013-LHC-01317 (OALJ 2013):

Perhaps no other Section 8(i) settlement approval Order in the history of the LHWCA has generated as much attention as the Administrative Law Judge’s [“ALJ”] approval Order in Richardson v. Huntington Ingalls.  The Richardson Order was a topic of discussion at both “Day With the DOL” conferences hosted by Loyola University New Orleans College of Law.   Further, a few enlightening articles were posted by industry experts on personal blogs and on LexisNexis’ Workers’ Compensation Law Community website.

In Richardson, the represented parties submitted a settlement to the District Director, who disapproved the settlement on the grounds that it was not reasonable.  The parties then referred the case to the Office of Administrative Law Judges, added $500 to the total settlement amount, and requested the ALJ to issue an Order.  A dispute then arose between the parties and the Solicitor of Labor.

Ultimately, the ALJ sided with the represented parties.  Recognizing the “tension between the paternalistic role taken by the Department and the normal assumption that counsel advising claims are competent and ethical,” the ALJ determined that the injured worker’s “grown-up” decision to accept the settlement offer was reasonable.  Presently, this case is on appeal at the Benefits Review Board [“BRB”]–and if anyone has the BRB briefs, we would love to see them.

The Navigable Waters post about Richardson is here.  John Chamberlain’s post entitled, “When is a settlement adequate?” is available here.  Stephen Embry’s LexisNexis post entitled, “The Fog of Adequacy,” is available here.

3. Service Employees Int’l, Inc. v. Dir., OWCP, No. H-11-01065 (S.D. Tex. Mar. 11, 2013):

In 2009, the Benefits Review Board [BRB]  issued one of the most important Defense Base Act [“DBA”] decisions of the past few years: K.S. [Simons] v. Service Employees Int’l, Inc., 43 BRBS 18 (2009), aff’d on recon. en banc, 43 BRBS 136 (2009).  In K.S., the BRB disapproved of the administrative law judge’s [“ALJ”] use of a “blended” average weekly wage determination (i.e. blending together stateside and overseas earnings when the employee had not worked overseas for a full year prior to the accident).

In Service Employees Int’l, Inc. v. Dir., OWCP, the Southern District of Texas vacated the BRB’s decision and remanded the case, effectively bringing an end to K.S.‘s reign in the Fifth Circuit.  The BRB did “not have the authority to engage in a de novo review of the evidence or substitute its views for those of the ALJ” especially where the ALJ used the calculation method set forth in the LHWCA, 33 U.S.C. § 910(c).  Further, ALJs are not mere calculators required to blindly apply prior BRB precedent–precedent with no statutory, regulatory, or common-law support–to determine an injured worker’s AWW because “[i]t is within the ALJ’s discretion to determine whether or not the facts of two cases are similar enough to merit similar outcomes . . . .”

The prior Navigable Waters post about the Southern District of Texas’ decision is here.  Further, the Southern District’s opinion was also referenced in an Update from the Benefits Review Board article posted at LexisNexis.

4. Schwirse v. Dir., OWCP, 736 F.3d 1165 (9th Cir. 2013):

The LHWCA bars compensation if a claimant’s “injury was occasioned solely by” intoxication of the employee.  In Schwirse v. Dir., OWCP, the Ninth Circuit was asked to determine the scope of the phrase “occasioned solely by” as it relates to an intoxication injury.  Here, Schwirse drank eight bears and half a pint of whiskey before falling over a railing an injuring himself.  Whether Schwirse’s employer owed benefits depended on whether the claimant’s intoxication was the “legal cause” of the injury.  To avoid liability, the employer must establish: (1) “that the employee was drunk at the time of the accident;” and (2) that the employee “fell owing to his drunkenness and was injured.”

Ultimately, the Ninth Circuit held “that an injury ‘occasioned solely by’ intoxication means that the legal cause of the injury was intoxication, regardless of the surface material of the landing on which the intoxicated person fell.”  This holding rejected the claimant’s plea for a broader “all-encompassing definition of the term injury.”  As explained by the court, the claimant wanted to define the fall as an “accident” and the landing as an “injury.”  The Ninth Circuit wasn’t having it–hence the featherbed jab:

Further, there is no question that a foreseeable consequence of falling is that one may hit the pre-existing surface material.  It is also foreseeable that the surface material surrounding the dock was hard and would cause significant injury.  A preference that one may fall on more forgiving material (such as a featherbed or water) does not alter the “legal cause” of the injury.  Thus, absent evidence of the surface material being unforeseeably defective, the “legal cause” is limited to the reason for his fall and the foreseeable consequences of that fall.

The prior Navigable Waters post about Schwirse is here.

5. Lozman v. City of Riviera of Riviera Beach, 133 S.Ct. 735 (2013):

On January 15, 2013, the Supreme Court of the United States issued its opinion in Lozman v. City of Riviera Beach, wherein it addressed “vessel status.”  Fane Lozman owned a “house-like plywood structure with empty bilge space underneath the main floor to keep it afloat.”  A dispute arose regarding docking fees, and that dispute led to a question as to whether the house-like structure was a vessel.  It was not.

The term “vessel” is defined by the United States Code to include “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.”  See 1 U.S.C. § 3.  The Court applied a “reasonable observer” test to determine the proper classification of Lozman’s home.  A reasonable observer must look to the home’s physical characteristics and activities to consider whether it was designed to carry people or things over water.  Here, Lozman’s home fell woefully short of that description.

Navigable Waters posted a number of articles about Lozman.  The Court’s syllabus is here.  Will Bland, III’s post is here. Dan Hoerner’s post is here.  An interesting video where Chief Justice John Roberts discusses Lozman was posted here.

Additional posts about Lozman can be found at other blogs and law journals.  For instance, the LexisNexis Workers’ Compensation Law Community published “Supreme Court Rejects ‘Anything That Floats’ Test to Determine Vessel Status.”  And over at SSRN, readers can download scholarly articles about Lozman.

For those interested in judging for themselves whether the Lozman house should be considered a “vessel,” here is a picture:

Lozman

Honorable Mentions:

It was difficult picking our “Top 5″ LHWCA cases this year.  After all, there were a number of important federal appellate court decisions but our “Top 5″ included one case from the Office of Administrative Law Judges (“OALJ”) and another case from the Southern District of Texas.  Still, though, Richardson (the OALJ case) has dominated many industry discussions because of how prevalent settlements are in LHWCA claims.  And Service Employees (the Southern District of Texas case) is a game changer for average weekly wage determinations–not to mention that it is precedent for claims administered by the Division of Longshore and Harbor Workers’ Compensation in Houston, Texas.

Although the following cases did not make our Top Five, we must note them because of their importance to our industry.  Accordingly, the LHWCA Honorable Mentions for 2013 include: (1) Kealoha v. Dir., OWCP, 713 F.3d 521 (9th Cir. 2013) (compensating suicide claims “when there is a direct and unbroken chain of causation between a compensable work-related injury and the suicide attempt.”); (2) Ins. Co. of the State of Penn. v. Dir., OWCP, 713 F.3d 779 (5th Cir. 2013) (determining that a claimant bears the burden to link secondary conditions to employment without aid from the Section 20(a) presumption); (3) BPU Management, Inc./Sherwin Alumina Co. v. Dir., OWCP, 732 F.3d 457 (5th Cir. 2013) (the first Fifth Circuit case to apply New Orleans Depot Services); (4) Petitt v. Sause Bros., 730 F.3d 1173 (9th Cir. 2013) (determining that seniority raises do not reflect increased earning capacity); and (5) Eastern Associated Coal Corp. v. Dir., OWCP, 724 F.3d 561 (4th Cir. 2013) (determining that prior attorney’s fee awards “may serve as a ‘barometer’ of the [attorney’s] prevailing market rate.”).

Thanks for a great 2013, everybody!

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).