District Court Allows Jones Act Matter to Proceed

Plaintiff filed a Jones Act complaint in United States District Court, Northern District of Mississippi. Plaintiff alleged that he was severely injured during a personnel basket transfer while working in his capacity as a barge-loading supervisor for Defendant, his employer. Defendant filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), alleging that Plaintiff was a Longshoreman whose exclusive remedy was benefits under the Longshore & Harbor Workers’ Compensation Act (“LHWCA”).

 

The court, in applying Chandris, Inc. v. Latsis, 515 U.S. 347 (1995), looked to the four corners of Plaintiff’s complaint to see if he had sufficiently pleaded: (1) that his duties contributed to the function of a vessel or to the accomplishment of its mission; and (2) that Plaintiff had a connection to a vessel in navigation or to an identifiable group of vessels. As to the first factor, Plaintiff alleged in his complaint that he was regularly loading fracking sand and that his job responsibilities required him to board and remain aboard inland river barges; thus Plaintiff alleged that his actions contributed to the mission of the barge fleet. As to the second factor, Plaintiff alleged that he was assigned to perform work aboard an identifiable fleet of barge vessels and that he was required to work “every morning” on those barges. In denying the 12(b)(6) motion, the court held that Plaintiff had sufficiently alleged that he had status under the Jones Act.

 

Defendant also argued that it could not be a Jones Act employer because it was not a vessel owner. However, the court found no merit to this argument, citing Barrios v. Louisiana Construction Materials Co., 465 F.2d 1157 (5th Cir. 1972), which held that a Jones Act claim only requires proof of an employment relationship with an employer who assigns the worker to a task creating a vessel connection. Thus, it was not necessary for Defendant to be a vessel owner or operator to incur Jones Act liability.

 

Welch v. Prop Transport & Trading, LLC, et al

Eastern District of Louisiana Excludes Pre-Trial Surveillance for Failure to Disclose

Plaintiff filed a Jones Act claim against several defendants, including barge drilling contractor, Baywater Drilling, LLC (“Baywater”) and oil services company Frank’s International, LLC (“Frank’s”).  The matter was initially set for trial in April 2015, but was continued several times.  The final continuance, granted in August 2016, set the trial for October 31, 2016 with an order that “no further discovery shall be conducted and no motions shall be filed without leave of Court.”

 

On October 2, 2016, Baywater and Frank’s conducted targeted surveillance that revealed Plaintiff working on his truck, using a handheld jack to jack up his truck, and physically lying under his truck.  This video was produced to Plaintiff on October 19, 2016, which prompted Plaintiff to file a Motion to Exclude.  At no time was the court provided with the surveillance video prior to Plaintiff’s motion.  Further, at no time did the defendants move to amend the pretrial order to include the videographer as a witness or the video itself as an exhibit.  The court granted Plaintiff’s motion to exclude.

 

In granting Plaintiff’s motion, the court cited Chaisson v. Zapata Gulf Marine Co., 988 F.2d 513 (5th Cir. 1993), which held that surveillance evidence is considered substantive evidence that is subject to discovery and that failure to timely disclose it can lead to its exclusion.  The court held that inclusion of the surveillance footage would be highly prejudicial to Plaintiff constituting the type of surprise that Chaisson was intended to prevent.

 

Smith v. Baywater Drilling, LLC, et al

OWCP Announces Staff Changes

On November 16th, OWCP announced that effective November 27, 2016, there will be a change in leadership in the Divisions of Longshore and Harbor Workers’ Compensation and Federal Employees’ Compensation. On that day, the current DFEC Director, Doug Fitzgerald, will assume the role of Longshore Director. Tony Rios, the current Longshore Director, will become the DFEC Director.

It was also announced that Rholanda Basnight is serving as the Acting District Director in the Second District Office (New York).

The Maritime Lien

The August 31, 2016, bankruptcy of container shipper giant Hanjin Shipping Co. Ltd. has thrown ports and retailers around the world into confusion.  With its fleet of more than 100 container ships, Hanjin is South Korea’s largest container carrier, seventh largest in the world, and accounts for eight percent of trans-Pacific trade volume for the U.S. Market.  Worldwide ports and companies that provide necessary services and supplies to its ships have denied them access for fear of not being paid.  This has stranded billions of dollars of cargo at sea.  On September 9, 2016 courts in South Korea and the United States cleared the way for Hanjin to spend $10 million to unload four ships headed to the U.S. west coast.  The ships will be allowed to dock and unload their cargo without fear of seizure by creditors. However, Hanjin ships have been seized in in ports in China and Singapore.

 

Given these circumstances, now is a good time for a brief review of the maritime lien which often is the only security that a provider of necessaries to a ship can rely upon.  Simply stated, the maritime lien is designed to furnish security to a creditor, and to enable the vessel to obtain goods and services even though it may be a world away from its home port.  The notion of the maritime lien arose in those long ago days when there did not exist technology that facilitated rapid communication and financial transactions.  Then suppliers of goods and services were reluctant to do business with vessels whose owners were unknown to them or located far away.  After receiving goods or services, the vessel could sail away leaving the owner unpaid.  To ensure payment, the master or vessel’s agent or representative was enabled to pledge the vessel as security.  In the United States the Federal Maritime Lien Act, 46 U.S.C. § 31301, et seq., first enacted in 1910, codified the maritime lien to all suppliers of “necessaries” to a vessel on the order of the owner, master, or charterer.  The lien, which is a non-possessory property right or privilege, attaches to the ship and its appurtenances.  It gives the aggrieved provider the right to seize the vessel, force its sale, and extract payment.  Maritime liens can attach to a vessel under a number of circumstances such as personal injury, property damage, preferred ship mortgages, seaman’s wages, or contractual disputes.  As a result, the courts have ranked the liens in order of priority, with those ranked first having first claim on assets realized from the sale.

 

The Act defines “necessaries” as including “repairs, supplies, towage, and the use of a dry dock or marine railway”. § 31301.  The courts have been more inclusive and recognized services of a marine surveyor, taxi fare for crew member to get to the vessel, insurance premiums, and gambling equipment furnished to a cruise ship.  Also included are pilotage, wharfage and dockage, stevedoring services, advances made by the ship’s agent, damage to cargo, and bills for unpaid bunkers or other necessaries.

 

The lien attaches when the supplies or services are provided.  While it is not necessary to record or file a maritime lien, it is recommended that the lien holder file a formal Notice of Lien with the U. S. Coast Guard Office of Vessel Documentation, if the vessel is documented.  The Coast Guard has General Instructions for Filing and Recording of liens that are easily accessible.  If not documented, the lien may be filed where the shipowner’s headquarters are located.  The benefit of filing is that it serves to notify the public of the lien.  The cost is negligible.  The lien follows the vessel, even if sold.  The lien is extinguished if the vessel is lost or destroyed.

 

The lien can be enforced only by filing a complaint in federal court, which has original jurisdiction, naming the vessel as a defendant and petitioning the Court to arrest the vessel pursuant to a warrant of arrest issued by the Court.  Acting on the warrant the U.S. Marshall is authorized to serve the Master and take custody and control of the vessel by placing a custodian aboard.  The vessel remains in the jurisdiction of the Court until ordered released by the Court.  This can be an expensive.  A deposit (as much as $10,000) is required to cover marshal costs, costs of custodian and insurance.

 

Once arrested in order to achieve its release, the vessel’s owner must file an answer and claim of ownership.  To secure its release, the owner must post security approved by the Court.  This may be a bond, cash, or letter of undertaking.  The amount is usually equal to the lien, plus interests and costs.  If no agreement as to the value can be agreed upon by the parties the Court may exercise its discretion and set the amount.  If security is not provided the Court may, after due process has run its course, order the vessel sold and the proceeds distributed to the lienholder.  If there are multiple lienholders, the funds are distributed by order of privilege.  Vessels may be seized wherever found and if not in a U.S. port will require the U.S. lienholder to access the courts in that country which has jurisdiction over the vessel.

 

It is important to note that there are circumstances where a lien may be lost or waived.  In charter agreements between the owner and bareboat charter there may be provisions that provide that any services furnished are for the account of the charterer, not the vessel.  This may not be binding on the provider if the provider has no knowledge of the provision.  A lien may be lost if the holder waits an unreasonable period of time to enforce it and the owner is prejudiced.  This is left to the discretion of the Court which will rule after hearing the evidence.  Prompt action is always the best course for the provider to set.

 

Thanks to Robert Jablon, Associated Press, and Lisa Richwine, Reuters, for their informative articles on the Hanjin bankruptcy.