Archives for March 2012

Judge Duval Dismisses Remaining Barge-Through-the Levee Katrina Cases – Interesting Twist on Res Judicata

The impact of Hurricane Katrina continues to be the subject of litigation in South Louisiana.  US District Judge Stanwood Duval of the United States District Court in New Orleans recently rendered a notable ruling that addressed a cause of substantial flooding in the city’s Lower Ninth Ward.

By way of background, Hurricane Katrina caused widespread and catastrophic flooding in Southeast Louisiana in August 2005, most notably in Orleans, Plaquemines and St. Bernard Parishes.  Much of the flooding resulted from a wind driven tidal wave from the Gulf of Mexico that preceded the onslaught of the storm.  However, most of the flooding in New Orleans was not caused by the tidal wave but resulted from a failure of the levee system at various locations throughout the city.  The levee failures allowed the waters of Lake Pontchartrain, the Mississippi River and other waterways to pour unrestrained into the low lying areas of the below-sea-level city. 

Some of the levee failures occurred on the Industrial Canal which cuts through the city along the western border of the Lower Ninth Ward.  As a result of the levee failures, the Industrial Canal flowed into and flooded thousands of homes, causing injuries and deaths and millions of dollars in property damage.  During the storm a barge floated out of the Industrial Canal and onto the land area immediately adjoining the location of one of the levee failures.  It was alleged by some that the failure was caused by such barge, contending that it had broken its moorings and floated free from a dock on the canal during the height of the storm and that such barge allided with the levee wall, causing the wall to fail.

Nearly a dozen lawsuits representing thousands of class-action type claimants were filed against the barge owner, the dock operator, fleeting and towboat operators.  Such lawsuits asserted that the barge should have been better secured or removed from the canal prior to the arrival of the storm.  The cornerstone of the suits was the allegation the barge knocked down the levee.  Eventually all claims relating to the barge were resolved with the exception of the claims directed to the dock owner which remained to be tried.

The first of the claims were tried as a non-jury “exemplar” trial in 2010 in which plaintiff counsel presented certain claims representing different categories of damages, i.e., homeowner, business owner, personal injury.  Judge Duval tried the selected representative claims on both liability and damages.  (Thousands of claims were held in reserve for future jury trials.  He ruled in favor of the dock owner following the trial.)   Prior to the exemplar trial, Judge Duval advised the parties that his findings would not be deemed res judicata and therefore nonbinding with respect to the remaining claims.

After a lengthy non-jury trial, Judge Duval ruled in favor of the dock owner.  He held that it would have been physically impossible for the barge to have caused the failure levee under the prevailing weather/wind conditions.  He concluded that the failure was caused by other forces.  Thus, even if the dock owner had negligently moored the barge and was legally responsible for its breaking loose during the storm, the dock owner could not be held responsible for the levee failure.  He therefore rendered a judgment in favor of dock owner. 

The recent ruling involves what happened next –

Although victorious at the initial trial, the dock owner still faced the prospect of numerous jury trials on the remaining claims that were not presented at the exemplar trial.

Having been unsuccessful in presenting its case in the non-jury trial before Judge Duval, plaintiff counsel hoped to achieve a different result in the jury trials that were to follow.  Counsel planned to use a different trial strategy and approach to the presentation of evidence to the jury. 

In order the head off the possibility of an adverse jury verdict in upcoming trials, the dock owner filed a preemptive motion for summary judgment.  In so doing, the dock owner cited much of the persuasive evidence that was presented at the 2010 trial.  Over the strenuous objections of the claimants, Judge Duval relied on much of the trial testimony that was presented to him at the earlier trial.  The claimant attorneys argued that the court was obligated to consider de novo all evidence that was to be presented at the upcoming jury trials without regard to the evidence presented at the earlier trial.  

In a very well written opinion, Judge Duval did not apply res judicata in addressing the summary judgment motion.  However, he deemed the previous trial testimony to be the equivalent of an affidavit that would be relevant for purposes of summary judgment – even if such testimony would not be equally admissible at a subsequent trial.   On that basis, Judge Duval found the previous testimony to be supportive of the dock owner’s position and granted summary judgment.

An appeal to the US Fifth Circuit is expected.

In re Katrina Canal Breaches, No. 05-1482 (E.D. La. Mar. 20, 2012).

Plaintiff Was Not a Seaman Because Oil Field Spar Was Not a Vessel

Plaintiff lodged a Jones Act suit against his employer, Anadarko Petroleum.   He was injured on the RED HAWK spar, which is a “floating gas-production platform moored in ocean water 5,000 feet deep approximately 210 miles from Sabine Pass, Texas.”  It is secure to the ocean floor by six anchor moorings.  The mooring lines are permanently taut top prevent lateral movement.  The employer intended that the RED HAWK spar would stay in place for the life of the oil field, but it has actually stayed in place longer.  Considering the nature of the RED HAWK spar, the employer moved for summary judgment, arguing that Plaintiff was not a seaman.  The district court agreed and the Fifth Circuit affirmed.

In its affirmance, the Fifth Circuit considered whether Plaintiff could in any way establish seaman status.  He could not.  A seaman 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.”  Because the RED HAWK spar was not a vessel, Plaintiff was not a seaman.  Indeed, “[d]isconnecting the RED HAWK from the sea floor would make disconnecting a casino boat from the shore look as easy as unplugging a toaster.”

Mendez v. Andarki Petroleum Co., No. 11-20047 (5th Cir. 03/26/2012) (per curiam).

SCOTUS Decided Roberts v. Sea-Land Services, Inc.

This morning the Supreme Court decided Roberts v. Sea-Land Services, Inc.  In this employer-friendly decision, the Court held that “an employee is ‘newly awarded compensation’ when he first becomes diabled and thereby becomes statutorily entitled to benefits, no matter whether, or when, a compensation order issues on his behalf.”  The Court’s syllabus is reprinted below.  

The Longshore and Harbor Workers’ Compensation Act (LHWCA) creates a comprehensive scheme to pay compensation for an eligible employee’s disability or death resulting from injury occurring upon the navigable waters of the United States. Benefits for most types of disabilities are capped at twice the national average weekly wage for the fiscal year in which an injured employee is “newly awarded compensation.” 33 U. S. C. §906(c). The LHWCA requires employers to pay benefits voluntarily, without formal administrative proceedings. Typically, employers pay benefits without contesting liability, so no compensation orders are issued. However, if an employer controverts liability, or an employee contests his employer’s actions with respect to his benefits, the dispute proceeds to the Department of Labor’s Office of Workers’ Compensation Programs (OWCP) to be resolved, if possible, through informal procedures. An informal disposition may result in a compensation order. If not resolved informally, the dispute is referred to an administrative law judge (ALJ), who conducts a hearing and issues a compensation order.
In fiscal year 2002, petitioner Roberts was injured at an Alaska marine terminal while working for respondent Sea-Land Services, Inc. Sea-Land (except for six weeks in 2003) voluntarily paid Roberts benefits until fiscal year 2005. Roberts then filed an LHWCA claim, and Sea-Land controverted. In fiscal year 2007, an ALJ awarded Roberts benefits at the fiscal year 2002 statutory maximum rate. Roberts sought reconsideration, contending that the award should have been set at the higher statutory maximum rate for fiscal year 2007, when, he argued, he was “newly awarded compensation” by order of the ALJ. The ALJ denied his motion, and the Department of Labor’s Benefits Review Board affirmed, concluding that the pertinent maximum rate is determined by the date disability commences. The Ninth Circuit affirmed.
Held: An employee is “newly awarded compensation” when he first becomes disabled and thereby becomes statutorily entitled to benefits, no matter whether, or when, a compensation order issues on his behalf. Pp. 518.
(a) Roberts contends that the statutory term “awarded compensation” means “awarded compensation in a formal order,” while Sea-Land and the Director, OWCP, maintain that it means “statutorily entitled to compensation because of disability.” Although §906 can be interpreted either way, only Sea-Land and the Director’s interpretation makes §906 a working part of the statutory scheme. Under Roberts’ interpretation, no employee receiving voluntary payments has been “awarded compensation,” so none is subject to an identifiable maximum rate of compensation. That result is incompatible with the LHWCA’s design. Section 906(b)(1) caps compensation at twice the applicable national average weekly wage, as determined by the Secretary of Labor. Section 906(b)(3), in turn, directs the Secretary to determine that wage before each fiscal year begins, at which time it becomes the “applicable national average weekly wage” for the coming fiscal year. And §906(c), in its turn, provides that the Secretary’s determination shall apply to those “newly awarded compensation” during such fiscal year. Through a series of cross-references, the three provisions work together to cap disability benefits.  By its terms, and subject to one express exception, §906(b)(1) specifies that the cap applies globally, to all disability claims. Because all three provisions interlock, the cap functions as Congress intended only if §906(c) also applies globally, to all such cases. Roberts’ interpretation would give §906(c) no application in the many cases in which no formal orders issue.
Using the national average weekly wage for the fiscal year in which an employee becomes disabled coheres with the LHWCA’s administrative structure. An employer must be able to calculate the cap in order to pay benefits within 14 days of notice of an employee’s disability, see §914(b), and in order to certify to the Department of Labor whether the maximum rate is being paid. Similarly, an OWCP claims examiner must verify the compensation rate in light of the applicable cap. It is difficult to see how an employer or claims examiner can use a national average weekly wage other than the one in effect at the time an employee becomes disabled. Moreover, applying the national average weekly wage for the fiscal year in which an employee becomes disabled advances the LHWCA’s purpose to compensate disability, defined as “incapacity because of injury to earn the wages which the employee was receiving at the time of injury.” §902(10). It also avoids disparate treatment of similarly situated employees; Roberts’ reading would permit two employees who earn the same salary and suffer the same injury on the same day to receive different maximum compensation rates based on the happenstance of their obtaining orders in different fiscal years. Finally, applying the national average weekly wage for the fiscal year in which disability commences discourages gamesmanship in the claims process. If the fiscal year in which an order issues were to determine the cap, the fact that the national average wage rises each year with inflation would be unduly significant. Roberts’ rule would reward employees who receive voluntary payments with windfalls for initiating unnecessary administrative proceedings to secure a higher rate, while simultaneously punishing employers who have complied fully with their statutory obligations to make voluntary payments. Pp. 513.
(b) Roberts’ counterarguments are unconvincing. First, although the LHWCA sometimes uses “award” to mean “award in a formal order,” the presumption that identical words used in different parts of the same Act are intended to have the same meaning, readily yields whenever, as here, the variation in the word’s use in the LHWCA reasonably warrants the conclusion that it was employed in different parts of the Act with different intent. See General Dynamics Land Systems, Inc. v. Cline, 540 U. S. 581, 595.
Second, Roberts argues that, because this Court has refused to read the statutory phrase “person entitled to compensation” in §933(g) to mean “person awarded compensation,” Estate of Cowart v. Nicklos Drilling Co., 505 U. S. 469, 477, the converse must also be true: “awarded compensation” in §906(c) cannot mean “entitled to compensation.” But Cowart’s reasoning does not work in reverse. Cowart did not construe §906(c) or “award,” see id., at 478–479, and it did not hold that the groups of “employees entitled to compensation” and “employees awarded compensation” were mutually exclusive, see id., at 477.
Finally, Roberts contends that his interpretation furthers the LHWCA’s purpose of providing employees with prompt compensation by encouraging employers to avoid delay and expedite administrative proceedings.But his remedy would also punish employers who voluntarily pay benefits at the proper rate from the time of their employees’ injuries, because they would owe benefits under the higher cap applicable in any future fiscal year when their employees chose to file claims. The more measured deterrent to employer delay is interest that accrues from the date an unpaid benefit came due. Pp. 13–18.

LA First Circuit Recognizes Right to Bring Vessel Owner Limitation Defense in State Court Actions

The Louisiana First Circuit Court of Appeal recently ruled that state courts have jurisdiction over a vessel owner’s limitation defense based on the federal Shipowner’s Limitation of Liability Act defense.

In Graham v. Offshore Specialty Fabricators, Inc., 09-0117 (La. App. 1 Cir. 1/8/10); 37 So. 3d 1002, the court ruled that a barge owner was entitled to present a limitation defense to limit its liability to the value of its vessel.  Interestingly, the limitation defense was presented to the jury for determination at trial.  After allocating fault 60% to the barge owner, 25% to a second defendant (Jones Act employer) and 15% to plaintiff, the jury awarded total damages of $414,700.00.  However, the jury also granted limitation to the barge owner.  A judgment was rendered by the district court consistent with the jury verdict and such judgment limited the award against the barge owner to the limitation value of its vessel – $160,000.00.  On appeal, the appellate court affirmed the award of damages but reversed the jury finding that allowed the vessel owner to limit its liability.  One issue that was raised in the appeal was whether a state court has jurisdiction to grant a limitation defense when the vessel failed to institute a federal court limitation suit.  The appellate court ruled that state courts have such jurisdiction:

At oral arguments, the parties questioned whether the state court had jurisdiction over the limitation of liability defense raised by [vessel owner].  After researching this issue, we conclude that the state court did have subject matter jurisdiction, because [vessel owner] did not institute a separate limitation of liability procedure in the federal district court under 46 U.S.C. § 30511(a), thus distinguishing this case from the majority of those questioning the state court’s jurisdiction.  We agree with the Fourth Circuit’s thorough analysis of this issue in Howell v. American Cas. Co. of Reading, Pennsylvania, 96–0694 (La.App. 4th Cir.3/19/97), 691 So.2d 715, 730–32, writs denied, 97–1329, 1379, and 1426 (La.9/5/97), 700 So.2d 512, 515, and 518.

Therefore, the state court had jurisdiction over this issue, and this court has jurisdiction over the appeal of this issue.