Archives for April 2011

Summary Judgment in “Failure to Rescue” Case

On April 4, 2011, Judge McNamara of the U.S. District Court, Eastern District of Louisiana, granted the defendant’s Motion for Summary Judgment in a Section 905(b) action for vessel negligence.  Under Section 905(b), “an employee may sue his employer ‘qua vessel’ if he was injured as a result of the vessel’s negligence,” or, in other words, “he may sue for negligence in the employer’s ‘owner’ capacity.’”

Here, the decedent was working as a crane operator on barges and on bridge decks.  On December 23, 2008, while he was engaged in work on the Twin Span Bridge across Lake Pontchartrain, the decedent’s crane tipped over a bridge deck and into the lake.  The decedent was unconscious for several minutes before his body slipped through the broken glass of the crane, and he became submerged in the water.  A rescue team was dispatched, but they were not able to pull the decedent into the defendant’s rescue boat.  The team dragged him to shore while keeping his head above the water.  Nonetheless, the decedent did not survive this accident.  The plaintiff, the deceased’s widow, argued that the life saving vessel was ill equipped, and because of its inadequacies, the rescue team was not able to resuscitate the decedent in time. 

The court held that only one accident occurred, and that it was on the bridge deck and not on a vessel.  The court further held that there was no competent evidence of vessel negligence.  For instance, there was no proof that dragging the decedent to shore with his head above the water instead of pulling him into the boat in any way decreased his chances of survival.  Further, the plaintiff had not pointed to any condition of a vessel that caused or contributed to the decedent’s injuries.  The court noted that its holding was in line with Bach v. Trident S.S. Co., Inc., 920 F.2d 322 (5th Cir. 1991), where the Fifth Circuit rejected a similar “failure to rescue argument,” and refused to import loss of chance of survival into the Section 905(b) context.  Finally, the court noted that its opinion closely followed Chaisson v. Hornbeck Offshore Services, Inc., No. H-09-0506, 2010 WL 1727043 (S.D. Tex., April 28, 2010), where the court refused to award benefits under Section 905(b) where there was a failure to identify any physical condition of a vessel or any activities undertaken by a crew member that caused the death.

Billot v. Boh Bros. Constr. Co, LLC, No. 09-7510, 2011 WL 1327040 (E.D. La. April 4, 2011).

Using the Worldwide Labor Market to Establish Suitable Alternative Employment

Once a claimant establishes a prima facie case for the entitlement to benefits, it becomes the employer’s and carrier’s burden to demonstrate the existence of suitable alternative employment.  The availability of suitable alternative employment requires consideration of the claimant’s age, background, physical and mental capabilities, and whether jobs exist in the relevant community for which the claimant could reasonably compete.  New Orleans (Gulfwide) Stevedores v. Turner, 661 F.2d 1031, 1042-43 (5th Cir. 1981).  While the Courts of Appeals may differ with respect to the scope of an employer’s obligation, the Fifth Circuit’s position is clear: “[t]he employer does not have to lead the claimant to water, only establish that water is nearby which the claimant may drink if he reaches for it.”  Id. at 1043. 

Further, an employer can meet its “burden of responding to a total disability claim by demonstrating the availability of specific jobs in a local market and by relying on standard occupational descriptions to fill out the qualifications for performing such jobs.”  Universal Mar. Corp. v. Moore, 125 F.3d 256, 265 (4th Cir. 1997).  Alternatively, an employer can meet its burden “by showing a suitable job that the claimant actually performed after his injury.”  Brooks v. Director, OWCP, 2 F.3d 64, 65 (4th Cir. 1993); 33 U.S.C. § 908(h)

The relevant labor market for a Defense Base Act (“DBA”) employee is debatable.  After all, the DBA employee has already demonstrated his ability to work at overseas work sites.  See 42 U.S.C. § 1651.  The Benefits Review Board (“BRB”) has recognized that typical suitable alternative employment factors may not completely satisfy a relevant labor market inquiry for DBA employees.  As such, it sometimes looks to “those cases wherein an injured worker relocates subsequent to the date of his work-related injury…”  Patterson v. Omniplex World Servs., 36 BRBS 149, *6-7 (2003).  The factors that are considered include: “claimant’s residence at the time he files for benefits, his motivation for relocating, the legitimacy of that motivation, the duration of his stay in the new community, his ties to the new community, the availability of suitable jobs in the community as oppose to those in his former residence, and the degree of undue prejudice to employer in proving suitable alternative employment in a new location.”  Id. at *7. 

In addition to the change-of-address factors, the BRB would also consider “the significance of claimant’s overseas employment” for DBA cases.  The BRB has previously reasoned that “[a]s a Defense Base Act employee, [a] claimant is accustomed to working in locales away from his permanent residence, and excluding evidence of suitable jobs in these locales permits the incongruous result of potentially finding [the claimant] totally disabled based on a limited local market while he continues to work overseas.”  Id. at *8.  A caveat to this analysis, however, is that a labor market survey should not require a change in the claimant’s permanent residence.  Consequently, in certain qualifying DBA cases, one should consider the labor market in both the claimant’s local geographic region as well as the overseas market, while also keeping in mind that the relevant labor market is always based on the facts of each case, just as it was in Patterson.

Dock Leases: Can They Insulate the Landlord From Liability?

The Eighth Circuit Court of Appeal, in the matter of Sander v. Alexander Richardson Investments, 334 F. 3d 712 (8th Cir. 2003), was asked to address the issue of whether a lease which purports to release a dock owner from liability for damages to property or persons is enforceable.  In this case several vessels moored at a yacht club were destroyed due to a fire that originated aboard a vessel whose engine had been repaired by a yacht club employee.  The employee negligently installed a fuel pump which resulted in explosion and fire, which spread to neighboring vessels.  This occurred in St. Louis, Missouri.

The club defended by pointing to language on the owner’s slip agreement which it claimed exonerated it from liability for damages caused by the fire.  The clause stated, in part, that the landlord did not carry insurance covering tenant property, and that Ait will not be responsible for any injuries or property damage caused by or growing out of the use of the dock or harbor facilities and that the tenant releases the landlord from any and all liability.”  The trial court said no, the landlord cannot hide behind that language and was held liable.  The Eighth Circuit reversed and found that the landlord was protected by the exculpatory language in the lease and dismissed the owners claims.

In reaching this result the appellate court found that the lease was a maritime contract and controlled by admiralty law.  The admiralty law requires that the intent to release someone for liability for its own negligent acts must be clearly and unequivocally expressed.  The court reasoned that by stating it would be released from any and all liability that was enough to protect the yacht club.

The court also found that such exculpatory clauses in the context of dock leases did not contravene public policy by releasing a party from all liability

Last, the court found that the owners’ claims that they were required to sign the lease and that they were overreached were not substantiated.  The court found that the owners’ claims that they were less sophisticated than the landlord was not sufficient to void the lease.  It is not enough to assert that one party was less sophisticated than the other.  There must be some evidence that the party holding the superior bargaining power exerted that power in overreaching the less sophisticated party by, for example, engaging in fraud or coercion or by insisting on an unconscionable clause.

This case is important because of the general principals that it illustrates, that being that in the proper circumstances lessor can insulate itself from tort liability. However, be cautioned.  Had this case been decided by Louisiana courts it is likely that the owners would have succeeded.  The Federal (and State) courts in this district, whether applying Louisiana law or admiralty law, almost one hundred percent of the time require language much more explicit than “any and all liability” in order for the lessor escape liability.  In this District the language of the contract must explicitly state that the landlord is being released from the consequences of all acts, including its own acts of neglect.  If that explicit language is not included, Louisiana courts will not allow the landlord to escape liability.

Workers’ Compensation, Social Security Disability Benefits, and Taxation

Generally speaking, workers’ compensation benefits are not taxable.  26 U.S.C. § 104(a)(1).  This includes compensation benefits paid under the Longshore and Harbor Worker’s Compensation Act or Defense Base Act.  See, e.g., Willis v. Comm’r, T.C. Memo 1997-290.  In contrast, social security disability benefits “may be included in the taxpayer’s gross income pursuant to a statutory formula that takes into account a number of factors, including the amount of Social Security benefits received, the taxpayer’s other income, and the taxpayers filing status.”  Sherar v. Comm’r, T.C. Summary Opinion 2011-44; 26 U.S.C. § 86.

There is, however, a way for the United States government to tax workers compensation benefits.  When the claimant is receiving both workers compensation benefits and social security disability benefits, the social security benefits are reduced because of the receipt of workers compensation benefits.  This is known as an offset.  For tax purposes, this offset amount is treated as though it is a social security benefit (i.e. a taxable portion of a claimant’s gross income).

The example cited by courts and included in legislative history is: “if an individual is entitled to $10,000 of social security disability benefits but received only $6,000 because of the receipt of $4,000 of workmen’s compensation benefits, then, for purposes of the provisions taxing social security benefits, the individual will be considered to have received $10,000 of social security benefits.”

Accordingly, the tax due on the receipt of social security disability benefits is based upon the total amount of social security benefits to which a claimant is entitled, whether or not an offset causes a portion of that amount to be reduced because of the receipt of workers’ compensation benefits.  As such, when an offset exists, workers compensation benefits could be taxed as if they were social security benefits.

Note: Jones Act payments are not workers compensation, and they do not offset.