January 2017 HAPPY NEW YEAR!!!
Notes From Your Updater - On November 30, 2016, Representative Pallone (D-NJ) introduced the Big Oil Bailout Prevention Unlimited Liability Act of 2016 (H.R. 6412) to amend the Oil Pollution Act of 1990 to require oil polluters to pay the full cost of oil spills, and for other purposes. The bill was referred to the Committee on Transportation and Infrastructure.
On December 6, 2016, a merit brief on a petition for certiorari was filed with the U.S. Supreme Court in the case of Bulk Juliana Ltd. v. World Fuel Servs. Singapore PTE, Docket No. 16-26 [see May 2016 Longshore Update]. The question presented to the Court is: “whether a foreign supplier can use a contractual choice-of-law clause to bind a nonparty vessel owner to a maritime lien that would otherwise not arise by law. First, the courts of appeals differ as to whether contracting parties may use a choice-of-law clause to bind a nonparty to a lien. Second, the courts disagree as to whether the Commercial Instruments and Maritime Liens Act (FMLA) can be invoked by foreign suppliers in foreign transactions.”
On December 28, 2016, the General Services Administration published it’s Noticeof the 2017 Privately Owned Vehicle (POV) Mileage Reimbursement Rates at 81 FR 95614. The actual rates may be found here. Also see the notification of the IRS published rates below.
The US Coast Guard has issued a noticeto US merchant mariners stating that due to a greater-than-usual volume of mariner credential applications being received, the Coast Guard National Maritime Center may be unable to process all Merchant Mariner Credential applications prior to the expiration of current documents. In an effort to address this issue, the Coast Guard is exercising its authority under 46 USC §7507, and is granting an extension of national endorsements for any mariner whose MMC expires on or after December 1, 2016. This extension is effective immediately and will be valid until September 30, 2017.
The Solicitor has filed a briefin the case of Stewart v. Riverside Technology, Inc. and Transportation Insurance, et al., which is currently pending before the Fourth Circuit Court of Appeals, presenting the Director’s argument that, because the claimant was deemed a federal employee for purposes of workers' compensation under FECA, and because the Longshore Act specifically excludes employees of the United States from coverage, he is not entitled to compensation under the Longshore Act.
Save the Date: The Signal 2017 Maritime Conference will be held May 22nd-24th, at the Westin Cleveland Downtown Hotel, in Cleveland, Ohio.
ARE OUR ADMINISTRATIVE LAW JUDGES PROPERLY APPOINTED?
BANDIMERE V. U.S. SECURITIES AND EXCHANGE COMMISSION, ET AL.
This is not a Longshore case, but I thought it raised an interesting question regarding the authority of administrative law judges under the Longshore program . . . so I offer this case to my readers as food for thought. The U.S. Securities and Exchange Commission (SEC) brought an administrative action against David Bandimere, a Colorado businessman, alleging he violated various securities laws. An SEC ALJ presided over a trial-like hearing. The ALJ's initial decision concluded Bandimere was liable, barred him from the securities industry, ordered him to cease and desist from violating securities laws, imposed civil penalties, and ordered disgorgement. The SEC rejected Bandimere's argument that the ALJ presided over his hearing in violation of the Appointments Clause. In rejecting Bandimere's Appointments Clause argument during agency review, the SEC's opinion concluded the ALJs are not inferior officers because they cannot render final decisions and the agency retained authority to review ALJs' decisions de novo. An appeal was taken to the 10th Circuit Court of Appeals. In his petition, Bandimere raised his Appointments Clause argument and challenged the SEC's conclusions regarding securities fraud liability and sanctions. The appellate court considered the issue of whether the five ALJs working for the SEC were employees or inferior officers. The appellate court began its analysis by noting that when the framers of our Constitution drafted the Appointments Clause in 1787, the notion of administrative law judges presiding at securities law enforcement hearings could not have been contemplated. Nor could an executive branch made up of more than 4 million people, most of them employees, some of them qualifying as "Officers of the United States," including principal and inferior officers, who must be appointed under the Appointments Clause. U.S. Const. art. II, §2. Based on Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991).The SEC conceded in its underlying opinion that its ALJs are not appointed by the President, a court of law, or the head of a department. The appellate court concluded the SEC ALJ who presided over an administrative enforcement action against Bandimere was an inferior officer, and was not appointed by the President, a court of law, or a department head. The appellate court noted that its holding served the purposes of the Appointments Clause. The current ALJ hiring process, whereby the OPM screens applicants, proposes three finalists to the SEC, and then leaves it to somebody at the agency to pick one, is a diffuse process that does not lend itself to the accountability that the Appointments Clause was written to secure. The current hiring system would suffice under the Constitution if SEC ALJs were employees, but the appellate court noted its holding under Freytagthat they are inferior officers who must be appointed as the Constitution commands. The appellate court also noted that the fact that the SEC could reverse its ALJs did not mean they were employees rather than inferior officers. Because the SEC ALJ was not constitutionally appointed, he held his office in violation of the Appointments Clause. The appellate court recognized that its holding potentially implicated other questions, but noted that nothing in its opinion should be read to answer any but the precise question before the court. Questions about officer removal, officer status of other agencies’ ALJs, civil service protection, rule making, and retroactivity, were not issues on appeal. Having answered the question before it, and thus resolving Bandimere's petition, the appellate court left for another day any other putative consequences of its conclusion. Notwithstanding a strong dissenting opinion from Judge McKay, the appellate court held that the SEC ALJ held his office unconstitutionally when he presided over Bandimere's hearing and set aside the SEC's opinion. (10th Cir, December 27, 2016) 2016 U.S. App. LEXIS 23308
Updater Note: I’d truly welcome any informed opinions as to the answer to the question posed by the caption for this case, which is way beyond my pay grade. As the dissent notes, under the majority's reading of Freytag, all federal ALJs are at risk of being declared inferior officers. As Ken Engerrand, of Brown Sims, Houston, TX pointed out, the Bandimere decision is in direct conflict with the DC Circuit’s August decision in Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016) which squarely held the appointment of ALJs does not violate the Appointments Clause, as the ALJs aren’t inferior officers because they don’t have the authority to issue a final decision. Only the commission has that power. The table is set for the Supreme Court to grant a writ. My thanks to John Walker, of Schouest, Bamdas, Soshea & BenMaier, Houston, TX, for sharing this very interesting case with me.
APPELLATE COURT UPHOLDS §906(B)(1) CAP ON COMPENSATION RATE
NAVALO V. COCHISE CONSULTANCY, INC, ET AL.
Ari Navalo was allegedly injured while working for Cochise Consultancy, Inc. under a contract covered by the LHWCA. An ALJ awarded Navalo compensation under the Act. For each period of disability, the ALJ found Navalo's average weekly wage, and then stated that Navalo was entitled to two-thirds of the difference between that wage and his stipulated pre-disability wage. Although, for two periods of disability, that calculation would output a figure exceeding the Longshore Act's maximum cap on compensation, the ALJ did not expressly state that the cap applied. The ALJ also did not award a specific amount of compensation. Rather, it ordered the district director to calculate one based on the ALJ's findings and conclusions. The district director initially failed to apply §906(b)(1), and calculated that Cochise owed more than the maximum allowed by the Longshore Act. When Cochise paid at the maximum rate notwithstanding that error, Navalo complained to the district director, who issued an amended calculation that applied §906(b)(1). Navalo maintained that the initial calculations were final and binding, and asked for an order finding Cochise in default. The district director denied that request, and on appeal, the Benefits Review Board affirmed. Navalo petitioned for review of the BRB's decision. The appellate court began its review by noting that Navalo had it wrong when he frames his case in terms of Cochise's failure to timely appeal the ALJ's decision to the BRB. This case was not before the appellate court as an attack on the ALJ's now-final compensation order. Rather, the appellate court was reviewing the district director's refusal to issue a default order. The appellate court noted that if the ALJ had decided the question of §906(b)(1)'s applicability, that would end the case and the ALJ's now-final ruling would control, and inconsistent action by the district director would be ultra vires. However, the ALJ did not rule § 906(b)(1) inapplicable. Navalo argued that the ALJ did so sub silentio when it awarded two-thirds of his lost wages without expressly stating that compensation was limited by §906(b)(1). The appellate court noted that prudence and common sense cautioned against reading an ALJ decision to say the opposite of what the law intended unless that was clearly its intended meaning. The ALJ gave no indication that it was ruling §906(b)(1) inapplicable; indeed, it only referenced the cap at all to note that Navalo had appeared to agree to its application. The appellate court noted that it need not parse the ALJ's order further, because any other construction required the court to deny the petition. Obviously, if the ALJ ruled that §906(b)(1) does apply, then the district director and the parties were bound by that finding, not by the district director's initial mistaken calculations. And if the ALJ made no ruling one way or another, the district director's own application of §906(b)(1) would still have been proper as a purely ministerial act. Notwithstanding a ridiculous dissent by Judge Kleinfeld, the majority of the panel denied Navalo’s petition and affirmed the BRB’s decision. (9thCir, December 1, 2016,UNPUBLISHED) 2016 U.S. App. LEXIS 21489
APPELLATE COURT RULES ON LHWCA & SHIPOWNER’S LIMITATION OF LIABILITY
SEABOARD SPIRIT LTD, ET AL. V. HYMAN, ET AL.
This case arose from a fatal accident aboard a cargo ship. Ossie Hyman was a 47-year-old longshoreman who worked for a stevedore, Eller-ITO, and was helping to unload the Seaboard Spirit, when a shipping container slid sideways crushing Hyman to death. The owners of the Seaboard Spirit brought an action seeking exoneration from liability arising out of this accident. On the other hand, the personal representatives of Hyman's estate filed a negligence claim against the owners of the Seaboard Spirit under §§905(b) and 933 of the LHWCA. Hyman's estate, Antwon Hyman and Sieshia Neshay Reid (collectively, "the claimants"), responded by arguing against exoneration. The parties both filed motions for summary judgment. In claimants' motion, they argued for the first time that Seaboard was subject to duties beyond the three §905(b) duties that apply to vessel owners. They asserted that because the Seaboard Spirit's crew secured cargo in the Bahamas, Seaboard also acted as, and assumed the duties of, an on-loading stevedore. The District Court granted Seaboard's motion and denied the claimants' motion. In doing so, the district court rejected the claimants' argument that Seaboard had duties beyond the three owner-specific duties imposed by §905(b) and concluded that Seaboard had not breached any of those three duties as a matter of law. The claimants then filed a Rule 59(e) motion to alter or amend the summary judgment order, arguing again that Seaboard should be subject to more than the three owner-specific §905(b) duties. The court reversed its earlier position and accepted this argument, partially granting the claimants' Rule 59(e) motion. It found that Seaboard acted as both on-loading stevedore and the vessel owner, and held that Seaboard should not be allowed to escape liability for its actions as an on-loading stevedore merely because of its status as vessel owner. After a three-day bench trial, the district court ruled against the claimants on their only §905(b) claim. The court rejected each of the claimants' theories of liability, finding, as fact, that none of Seaboard's challenged actions-stowing the chassis on the ramp, over-tightening the lashing chain, and failing to use wheel chocks-proximately caused Hyman's death. Instead, the court found that the proximate cause of Hyman's death was Hyman's decision to position himself in the pinch point when giving the mule driver the order to move forward-a decision which even his fellow longshoremen found inexplicable. Alternatively, the court found that if Hyman didn't tell the mule driver to move forward, then it was some miscommunication between the mule driver and Hyman, coupled with Hyman's position in the pinch point, that caused Hyman's death. But the district court also reiterated its prior holding that its ruling did not limit any future causes of action brought against Seaboard in its role as on-loading stevedore. The district court entered final judgment against the claimants. Both parties appealed. The issue on appeal concerned the owners' liability under the LHWCA. The appellate court was called upon to decide whether the district court correctly limited the effect of its judgment to allow Hyman's personal representatives to bring a new set of negligence claims against the ship owners. The claimants argued that the appellate court lacked jurisdiction over this issue because Seaboard did not file its notice of appeal in time. Contrary to the claimants' argument, the appellate court held that Seaboard timely filed its notice of appeal because the district court's original order was not a final judgment. The district court did not enter a final judgment resolving all claims against all parties until June 8, 2015, and Seaboard filed its notice of appeal twenty-three days later, on July 1, 2015. Because Seaboard filed its notice of appeal within thirty days of the final judgment, the appellate court ruled that it had jurisdiction to hear their arguments on appeal. Even though the district court ruled in favor of Seaboard as an owner, it explicitly left open the possibility for claimants to bring a separate set of general maritime law negligence claims against Seaboard as an on-loading stevedore under 33 U.S.C. §933. Seaboard argued that the district court was wrong to limit the effect of its judgment in this way. The appellate court relied on precedent interpreting the LHWCA, observing that as it stands today, the LHWCA holds an injured longshoreman's stevedore-employer strictly liable for a capped amount of workers' compensation benefits, while it holds a vessel owner liable only for injuries caused by that owner's own negligence. Seaboard argued that because §905(b), by its own terms, provided the exclusive means of relief against vessel owners, the district court could not properly preserve general maritime law claims against Seaboard under §933. The appellate court recognized that vessel owners can act as stevedores by having their crews handle tasks typically done by longshoremen and assumed arguendothat Seaboard acted as a stevedore in this way. Even making that assumption, however, nothing allowed a vessel owner to be sued under both §905(b), as a vessel owner, and §933, as a stevedore. Instead, when crew members have negligently mishandled tasks normally performed by longshoremen, and that negligence causes injury to other longshoremen, courts have held the vessel owners to the heightened standard of care of a stevedore. But they have done so within the longshoremen's §905(b) actions against the owners. Because there was no precedent for subjecting a vessel owner to separate and independent liability under both §905(b) and §933, the appellate court decline to do so. The appellate court reversed the district court's ruling that its resolution of the case did not foreclose causes of action that the claimants may bring against Seaboard in its role as an on-loading stevedore. In light of this ruling, the claimants' cross-appeal on the district court's finding that Hyman was the proximate cause of the accident was moot, the appellate court did not decide it. (11th Cir, December 5, 2016, UNPUBLISHED) 2016 U.S. App. LEXIS 21597
REMOVAL ACTION UNDER OCSLA UPHELD AS PROPER
HAMMER, ET AL. V. PHI, INC., ET AL.
Norman M. Hammer, David A. Loupe, Norris L. Webb and Carol Guidry Webb (collectively "the plaintiffs") were passengers in a Bell 407 helicopter, owned and operated by PHI, Inc. The plaintiffs alleged that while in flight the helicopter began to shake and spin violently, and the pilot lost control of the aircraft and the helicopter crashed, instead of reaching its intended destination, an airport in Louisiana. As a result, they claimed to have suffered personal injuries and sued both PHI and the pilot, Andrew Ford, who is an employee of PHI, in state court. At the time of the crash, plaintiffs alleged that PHI, Ford and the Bell helicopter were engaged in a traditional maritime activity, traveling over the high seas from land in Louisiana to and from offshore platforms. Accordingly, plaintiffs alleged that they were entitled to maintain their cause of action under the general maritime law in state court pursuant to the Savings to Suitor's Clause, 28 U.S.C. §1333. The defendants removed the case to federal court, alleging in their notice of removal that the helicopter was flying inbound from a fixed platform on the Outer Continental Shelf. The passengers were all employees of a natural gas services company known as Kinetica Partners, LLC, which operated jurisdictional gas meters for natural gas pipeline facilities throughout the Gulf of Mexico on the OCS. The operation and maintenance of jurisdictional natural gas pipelines is regulated under 49 C.F.R. 192 which specifically includes pipeline facilities and transportation of gas on the OCS. Alternatively, the defendants assert federal question jurisdiction under 28 U.S.C. §1331 because the plaintiffs' claims required the resolution of substantial questions of federal law, namely, the field of aviation safety including questions of in-air operational negligence which were pre-empted under federal law, and original jurisdiction under 28 U.S.C. §1333 and §1441 over plaintiffs' putative general maritime law claims. Plaintiffs contended that federal jurisdiction under OCSLA was not present because the situs requirement for the exercise of such jurisdiction is lacking. They additionally contend that federal question jurisdiction under 28 U.S.C. §1331 was not present because the field of aviation safety is not completely preempted by federal law. Plaintiffs therefore moved to remand their case to state court. The court initially observed that, while the plaintiffs did not invoke OCSLA, it was well-settled that because jurisdiction is invested in the district courts by the OCSLA jurisdictional statute a plaintiff does not need to expressly invoke OCSLA in order for it to apply. The court found that the actions of PHI, and more particularly the pilot, engaged in ferrying passengers to and from offshore platforms on the OCS, can and has been considered to be an operation conducted on the OCS that furthers mineral exploration and development activities.
Contrary to the position offered by the plaintiffs, the statute provides exclusive federal question jurisdiction in cases and controversies arising out of, or in connection with any operation conducted on the outer Continental Shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf. Based on the foregoing, the removing defendants were found to have carried their burden of establishing that original federal jurisdiction existed in the case under OCSLA and that removal was proper. Further discussion of whether the aviation rules are so preemptive as to create federal question jurisdiction was pretermitted. (USDC WDLA, October 14, 2016) 2016 U.S. Dist. LEXIS 166938
ANOTHER REMOVAL ACTION BITES THE DUST
GONZALEZ V. RED HOOK CONTAINER TERMINAL LLC
This case arises out of an alleged injury sustained by Leonardo Gonzalez, while working on property operated and managed by Red Hook Container Terminal, LLC. Gonzalez alleged that he fell 10 to 15 feet off a splitter that was being hoisted by a crane. Gonzalez sued for negligence, arguing that Red Hook was negligent, reckless, and careless in not having a functional safety cage that could be used for such activities, also asserting state-law causes of action sounding in common-law negligence and violations of various New York labor laws. Red Hook argued that it was Gonzalez’s employer at the time of the accident, and is therefore immune from liability under LHWCA. Gonzalez disputed Red Hook’s allegation that the parties had an employment relationship. Red Hook removed the case from state court to federal court pursuant to 28 U.S.C. §§1331, 1333(1), 1441, and 1446. Gonzalez moved to remand the case back to state court. Red Hook argued that the action was properly removed because the case involves a federal question relating to the LHWCA. The court found, however, that Red Hook’s anticipated defense based on the LHWCA was insufficient to create federal question jurisdiction. Red Hook also contended that the court had admiralty subject matter jurisdiction. In the Second Circuit, however, federal courts have declined to exercise jurisdiction over admiralty cases absent some additional federal basis. Finding none, the court granted Gonzalez’s motion to remand. The court further finds that Gonzalez was not entitled to an award of fees and costs under 28 U.S.C. §1447(c). (USDC EDNY, December 15, 2016) 2016 U.S. Dist. LEXIS 173946
COURT FINDS RECORD BEFORE IT WOULD NOT SUPPORT SUMMARY JUDGMENT
FETTER V. MAERSK LINE, LIMITED, ET AL.
Jason Fetter was allegedly injured while performing a maintenance project, in the engine room of a Maersk Line, Limited vessel, while it as in port. Because there were various maintenance projects going on that day, Maersk hired 3MC Mobile & Mechanical Repair LLC to directly supervise the day engineers' work. Following his alleged injury, Fetter filed suit in Texas state court and the suit was subsequently removed to the Southern District of Texas and transferred to New Jersey District Court. The complaint alleged that Fetter was injured as a result of negligence on the part of Maersk and 3MC, and both Maersk and 3MC filed crossclaims against each other for indemnity and contribution. Prior to the completion of expert discovery, Maersk moved for summary judgment on the issue of whether it was immune from liability under the LHWCA. Maersk's sought summary judgment that Fetter was its employee at the time of his injury, but was not a Jones Act seaman. Thus, Maersk maintained that the LHWCA provided Fetter's exclusive remedy and that his negligence action must be dismissed. Fetter, a day engineer and member of the MEBA union hall, successfully bid on a job on the Maersk vessel while the ship was in port. Onboard and directly supervising Fetter's work was Greg Higgs, who was employed by 3MC. Shortly after boarding, Fetter was tasked by Higgs with removing a stuck injector in the main engine. While he was removing the injector at Higgs's direction, the chain/eyebolt apparatus that Fetter was using to dislodge the injector snapped, striking him near his left eye and allegedly caused his injury, that required emergent medical care. Against this scenario, Maersk brought the instant motion, identifying Higgs, the supervising vendor, as its delegee, and characterizing Higgs as a supervisory engineer—effectively working as Maersk's agent—akin to any other crew member in the engine department. In opposition, Fetter argued that multiple issues of fact existed as to whether Maersk was Fetter's employer under the LHWCA. Specifically, Fetter argued that his own testimony and the investigative report all showed that 3MC was controlling, directing, and supervising the work. The court found that the record before it was by no means definitive on the issue of Maersk's employer-employee relationship with Fetter, as it would need to be for a summary judgment ruling in Maersk's favor. The court found that Maersk was not entitled to judgment as a matter of law on this record, and its motion was denied. (USDC DNJ, December 29, 2016, UNPUBLISHED)2016 U.S. Dist. LEXIS 179923
BORROWING EMPLOYER ALLEGATION DENIED ON SUMMARY JUDGMENT
IN RE: COOPER MARINE & TIMBERLANDS CORPORATION
Juan Nieves and Nicolas Perez Hernandez were killed while working on a barge. Pursuant to a contract with Steel Dynamics, Logistic Services loaded steel coils on two barges for shipment from its facility to the Kinder Morgan. The barge was loaded with a total of 46 coils, each of which weighed more than thirty tons. A Cooper tug took custody of the barges and delivered them to a Kinder Morgan. The first barge was unloaded without incident. During the unloading of the second barge, however, the barge suddenly rolled to the inshore side and sank. Nieves and Perez Hernandez were on the barge when it sank and were both killed. Both workers were temporary employees provided to Kinder Morgan by staffing agencies. Nieves was employed through Temps Plus, while Perez Hernandez was employed through Dawson. Cooper Marine & Timberlands Corporation and GATX Third Aircraft, LLC, initially brought an action for exoneration from or limitation of liability pursuant to 46 U.S.C. § 30511. Representatives of the decedents then commenced separate actions against Cooper, Logistic Services, Inc., and Steel Dynamics Columbus, LLC. Through discovery, the representatives in both actions determined that Kinder Morgan Bulk Terminals, Inc., Kinder Morgan Energy Partners, L.P., and Kinder Morgan Marine Services, LLC, could be liable and amended their respective complaints to include these entities as defendants. Cooper, Logistic Services, and Steel Dynamics then made cross-claims against the Kinder Morgan entities. Additionally, Cooper, Logistic Services, and Steel Dynamics, as third-party plaintiffs, sued Temps Plus, Inc., and Dawson Employment Service, Inc., alleging that these non-parties may be liable to them for all or part of the claims against them. Because the actions involved common questions of law and fact, the court granted the parties' joint motion to consolidate the three actions for discovery purposes only. The Kinder Morgan entities moved for summary judgment, arguing immunity from liability under the LHWCA and that they played no role in the deaths of decedents. Cooper, Logistic Services, and Steel Dynamics opposed the motion. The court noted that the staffing contracts between Kinder Morgan and Temps Plus and Dawson explicitly provided that nothing in the agreement was intended to create an employer-employee relationship between Kinder Morgan and employees of Temps Plus and Dawson. The contracts required Temps Plus and Dawson to furnish and pay for the workers' salary, compensation, benefits, and training and supplies. Under the contracts, Temps Plus and Dawson were also responsible for handling disciplinary actions, training, job evaluations, and other supervisory tasks. Additionally, Temps Plus and Dawson remained liable for all damages caused by the performance of their employees. The contracts also required Temps Plus and Dawson to carry insurance, such as employer's liability insurance and workers' compensation insurance compliant with the Longshore Act. Kinder Morgan argued that it was a borrowing employer of Nieves and Perez Hernandez and entitled to tort immunity under the Longshore Act. Additionally, Kinder Morgan Energy Partners argues that because it was not involved in unloading the barges, it played no role in the deaths of Nieves and Perez Hernandez. After hearing the evidence, the district court considered all nine Ruiz factors and found that some factors supported the finding of a borrowed-servant relationship while others did not. Viewing the evidence in the light most favorable to the non-moving parties and giving them the benefit of all reasonable inferences, the court declined to hold that the evidence indisputably established that Kinder Morgan was a borrowing employer under the Fifth Circuit test. As to Kinder Morgan Energy Partners’ argument that it should be granted summary judgment, because it played no role in unloading the barges, he court found that it was reasonable to infer from the workers' original classification and position as cutting torch operators that Kinder Morgan Energy Partners should have known they were not trained to work as stevedores. Additionally, questions of causation remained undetermined. The motion for summary judgment was denied. (USDC EDAR, December 14, 2016) 2016 U.S. Dist. LEXIS 172703
COURT REFUSES TO RULE ON EMPLOYER’S MCCORPEN DEFENSE
RINEHART V. NATIONAL OILWELL VARCO L.P., ET AL.
This case arose out of injuries allegedly sustained by Donald Rinehart while he was employed as a Jones Act seaman, in his capacity as an engineer aboard a vessel operated by the bareboat charterer Starfleet Marine Transportation, Inc. Rinehart alleged that he was ordered by the vessel’s captain to assist with loading pallets aboard the ship. National Oilwell Varco, L.P. (NOV) owned the mobile crane and hook which were used in loading the pallets and also employed the crane operator directing the crane. Rinehart claimed that he was injured when a pallet fork slipped from NOV's crane's hook onto the back of his head while loading pallets onto the vessel's deck. Rinehart was flown by helicopter for emergency medical treatment and has since suffered multiple surgical procedures allegedly resulting in headaches with substantial neurological deficits, including memory loss and a diminished reading ability and the inability to swallow normal food, so that he must eat through a feeding tube which has been surgically implanted into his stomach. Rinehart filed suit under the Jones Act and General Maritime law, requesting a jury trial and seeking recovery for the damages he sustained. Starfleet answered, admitting that it owned the vessel, and asserting a number of defenses, including that Rinehart’s injuries were caused by his own negligence or by third parties, that his claims were prescribed, and that Starfleet was entitled to limited liability pursuant to 46 U.S.C. §30501. NOV answered asserting a number of defenses, including that Rinehart’s injuries were caused by his own negligence or by third parties, that Rinehart failed to mitigate his damages, and that his claims were barred by prescription or by either the LHWCA or the provisions of the Louisiana Workers' Compensation Act. Starfleet moved for partial summary judgment on the maintenance and cure claim, arguing that Rinehart failed to disclose a preexisting condition, providing Starfleet with a conclusive defense under McCorpen. Starfleet detailed Rinehart’s preexisting lumbar condition and his failure to seek necessary treatment, and argued that had Rinehart disclosed his lumbar condition Starfleet would not have hired him. Starfleet paid for Rinehart’s two-level lumbar laminectomy and fusion at L4-S1 under its maintenance and cure obligation, but averred that because Rinehart had a preexisting condition, the court should dismiss his maintenance and cure claims related to his lumbar spine, should find Starfleet is relieved of its duty to pay maintenance and cure for injuries or treatment related to Rinehart’s lumbar spine, and that Starfleet was entitled to a reimbursement and/or credit for the amounts already paid under maintenance and cure for injuries and treatment related to Rinehart’s lumbar spine. Rinehart opposed Starfleet's motion, arguing that Starfleet does not merit summary judgment on maintenance and cure claims because maintenance and cure is an unpled claim. Further, Rinehart points out that Starfleet did not make a counterclaim for maintenance and cure. Because nobody had pled claims for maintenance and cure, Rinehart argued Starfleet could not seek summary judgment on that issue. The court found that Starfleet sought summary judgment on an unpled claim and therefore sought an inappropriate advisory opinion on the topic of maintenance and cure. Because maintenance and cure was an unpled claim, the court lacked subject matter jurisdiction over the issue. Accordingly, because neither Rinehart nor Starfleet had introduced the issue of maintenance and cure into the case, this court could not rule on the issue, and Starfleet’s motion is denied. (USDC EDLA, December 15, 2016) 2016 U.S. Dist. LEXIS 173278
MEDICAL TRAVEL REIMBURSEMENT RATE DECREASED
IRS DECREASES MILEAGE REIMBURSEMENT RATE EFFECTIVE 1/1/17
On December 13, 2016, the Internal Revenue Service released the optional standard mileage rates to use for 2017 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. Beginning January 1, 2016, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
•53.5 cents per mile for business miles driven
•17 cents per mile driven for medical or moving purposes
•14 cents per mile driven in service of charitable organizations
The charitable standard mileage rate is set by law. The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. The rate for business miles driven during 2017 decreased a half cent per mile, and the medical and moving expense rates decrease 2 cents per mile from the 2016 rates.
Updater Note: You can check out the revised IRS mileage rates here. The Office of Government-wide Policy, GSA also sets mileage reimbursement rate for use of a privately owned automobile (POA) on official travel. GSA has not yet published their 2016 rates. You may review the latest GSA bulletin here. However, by law, GSA may not exceed the standard mileage reimbursement rate for a privately owned automobile (POA) established by the Internal Revenue Service (IRS).Which rate should you be using to reimburse travel under the Longshore Act? That is a question you may want to consult with your attorney on.
And on the Admiralty front . . .
FIRST CIRCUIT ADOPTS BOUDREAUX’S MAINTENANCE & CURE RECOVERY RULE
BLOCK ISLAND FISHING, INC. V. ROGERS
Jamie Rogers, a seaman, was allegedly injured on board a Block Island Fishing, Inc. fishing vessel. Having made some maintenance and cure payments to Rogers and believing it had overpaid, Block Island brought this suit against Rogers to dispute the duration and amount of maintenance and cure payments that it owed. Block Island then moved for summary judgment on the ground that its maintenance and cure duties had been terminated, supporting its motion with record evidence showing that Rogers had returned to work as a commercial fisherman on another fishing vessel. The district court rejected July 31 as the proper date of termination. But it went beyond the issue raised by Block Island's summary judgment motion and found November 18, 2014 as the date on which Block Island's obligations ended. That was the date on which a doctor, but not Rogers' primary care physician, found that Rogers no longer needed follow-up care. The district court also noted that injured seamen are generally entitled to maintenance and cure payments only in the amount of their actual living expenses, but it reserved for a jury to determine the exact sum that Block Island owed Rogers, along with other issues not resolved at the summary judgment stage. Relatedly, the district court held on summary judgment that Block Island had overpaid Rogers by calculating its maintenance and cure payments using figures that overestimated Rogers' actual living expenses. It further ruled that Block Island could offset the sum of overpayment against any damages award that Rogers might win at trial. Block Island took a timely interlocutory appeal of the district court’s judgment, arguing that the district court erred in replacing its proposed termination date with the later November date. The appellate court agreed, finding that the district court erred by sua sponte replacing Block Island's proposed date (July 31) with its own (November 18) without giving Rogers sufficient notice or opportunity to make his case against the new date, holding that a summary judgment order was premature where the non-moving party lacked notice and a reasonable time to respond to the grounds on which that motion would be granted. The appellate court agreed with the district court's implicit recognition that injured seamen like Rogers can generally recover only reasonable expenses through maintenance and cure payments, and that it will be the factually exceptional case where the seaman's actual expenses are not reasonable. Whether this case presented such exceptional circumstances was an issue for the jury. Finally, as a matter of first impression, the appellate court adopted the ruling of the Fifth Circuit in Boudreaux v. Transocean Deepwater, Inc., and held that Block Island may offset any overpayment against Rogers' potential damages award, but may not sue for the sum in an independent action. The appellate court affirmed the district court's ruling that Block Island may offset any overpayment that occurred against any damages that Rogers may win at trial, but vacated the ruling that Block Island's maintenance and cure obligations terminated on November 18, 2014, and remanded for further proceedings, finding that the district court did not provide Rogers with sufficient notice and opportunity to contend otherwise before entering summary judgment. (1st Cir, December 23, 2016) 2016 U.S. App. LEXIS 23200
APPELLATE COURT THROWS OUT CRIMINAL CONVICTION ON ISSUE PRECLUSION
UNITED STATES OF AMERICA V. EGAN MARINE CORPORATION, ET AL.
This case involved a barge that exploded, while under way between Joliet and Chicago with a cargo of clarified slurry oil. The blast threw deckhand, Alex Oliva, into the water and he did not survive. Contending that Dennis Egan, master of the tug that had been pushing the barge, had told Oliva to warm a pump using a propane torch, the United States obtained an indictment charging Egan and the tug's owner, Egan Marine Corp., with violating 18 U.S.C. §1115, which penalizes maritime negligence that results in death, plus other statutes that penalize the negligent discharge of oil into navigable waters. After a bench trial, the court found that the prosecution had established, beyond a reasonable doubt, that Egan gave the order to Oliva, that the torch caused the explosion, that Oliva died as a result, and that the barge released oil as a further result. That such an order, if given, was negligence (or worse) no one doubted; open flames on oil carriers are forbidden by Coast Guard regulations and normal prudence. The court sentenced Egan to six months' imprisonment, a year's supervised release, and restitution of almost $6.75 million. Egan Marine was placed on probation for three years and ordered to pay the same restitution, for which it and Egan are jointly and severally liable. The criminal prosecution was the second trial of these allegations. Two years before the grand jury returned its indictment, the United States had filed a civil suit against Egan Marine seeking damages on the same theory: that Egan directed Oliva to warm the pump using a torch, whose flame caused an explosion, a death, and an oil spill. That case, too, went to a bench trial. The judge who heard the evidence, determined that the United States had not proved its claim by a preponderance of the evidence, that Alex Oliva was using a propane torch on the cargo pump of the barge at the time of the incident. The United States did not appeal from that adverse decision but instead pressed forward with this criminal prosecution. Egan and Egan Marine sought the benefit of issue preclusion (collateral estoppel), arguing that the United States should not be allowed to contend that they were guilty beyond a reasonable doubt after the first judge found that the proof did not show culpability even by a preponderance of the evidence. But the court trying the criminal case rejected this contention. On appeal, the appellate court ruled that issue preclusion prevented the criminal prosecution of parties following a marine casualty where the federal government had pursued and lost a civil suit on the same issue in the same casualty. The appellate court reversed the convictions, holding that issue preclusion (collateral estoppel) prevented the government from criminally prosecuting a defendant where the crucial issue has been litigated and lost in a civil action by the government against the same party. The criminal conviction was reversed and case remanded for the entry of judgments of acquittal. (7th Cir, December 12, 2016) 2016 U.S. App. LEXIS 21991
PLAIN UNAMBIGUOUS WORDING OF THE CONTRACT DEFEATS DELAY CLAIM
LLOG EXPLORATION COMPANY, LLC V. SIGNET MARITIME CORPORATION
LLOG Exploration Company, LLC filed suit against Signet Maritime Corporation in federal district court seeking a declaratory judgment that it did not owe delay damages under the parties' maritime towing contract. LLOG had made arrangements for Signet and Crowley Maritime Services, to tow its large offshore production facility to a worksite in the Gulf of Mexico. Signet was hired to perform the short 17-mile inshore tow from the Kiewet Offshore Services shipyard in Ingleside, Texas to the Aransas Pass sea buoy. Crowley was hired for the longer offshore tow from the sea buoy to the Gulf of Mexico where the worksite was located. The tow date was delayed, and Signet sent LLOG an invoice for a postponement fee in the amount of $650,496. LLOG refused payment of the invoice. Because the tow did not commence until four days after the nominated sail date, LLOG paid Signet for the four-day minimum tow charges, plus the charge for the actual day of the inshore tow, which totaled $912,096. LLOG's complaint sought a declaration that it did not owe the postponement fee as invoiced by Signet in the amount of $650,496. Signet filed an answer and counterclaim generally denying the allegations of LLOG's complaint and asserting a counterclaim for standby damages under the contract in the total amount of $3,322,368, accounting for the days comprising the alleged tow delay. After a two-day bench trial, the district court concluded that Signet had failed to carry its burden of proving by a preponderance of the evidence that LLOG had breached the contract. The district court concluded that LLOG was entitled to declaratory judgment that it did not owe Signet a postponement fee or standby charges under the contract. It further provided that Signet was not entitled to recover under its counterclaim for the postponement fee or standby charges. The district court then ruled that LLOG was entitled as the prevailing party in the litigation to recover attorney's fees, court costs, and other expenses from Signet. Signet timely filed this appeal. The appellate court’s review of the record evidence and the applicable law indicated that the district court did not clearly err in holding that LLOG did not breach the terms of its contract resulting in an obligation to pay delay damages to Signet. As acknowledged by the district court, the contract between LLOG and Signet was not ambiguous and undisputedly required that LLOG provide seven days' notice of a sail date to Signet, which it did. Additionally, Signet failed to produce evidence at trial that it had actually prepared its tug vessels in anticipation of sailing on the originally agreed date. Although Signet claimed to have interpreted certain communications as providing seven days' notice of a sail date, the appellate court found Signet's argument in support of its position was unpersuasive given the plain, unambiguous wording of the parties' contract as well as the plain and unambiguous wording of the referenced email. Accordingly, the appellate court upheld the district court's declaratory judgment concluding that LLOG did not breach the terms of the contract and consequently, had no obligation to pay Signet delay damages. Finally, as noted by the district court, the parties stipulated in the contract that the prevailing party would be entitled to attorney's fees, court costs, and expenses. However, in its award of fees and costs to LLOG, the district court did not set a specific amount. The appellate court observed that an order awarding attorney's fees or costs is not reviewable on appeal until the award is reduced to a sum certain. Because it did not have jurisdiction to review the district court's award of attorney's fees, costs, and expenses, the appellate court dismissed without prejudice Signet's appeal of that issue. (5th Cir, December 23, 2016, UNPUBLISHED) 2016 U.S. App. LEXIS 23247
FORUM SELECTION AGREEMENT FOUND TO BE VALID ON APPEAL
IN RE: OSG SHIP MANAGEMENT, INC.
Rasheed Lawal allegedly sustained an injury in the course and scope of his employment as a steward with OSG on a products tanker operating in the Bahamas. Lawal notified the vessel's master of his injury the next day, and he was immediately sent ashore for medical attention. Lawal was evaluated and then returned to the vessel. After a follow-up medical appointment three days later, Lawal was declared unfit for duty. Lawal was employed under a collective bargaining agreement. Pursuant to the CBA, OSG commenced maintenance and cure payments of $16 per day to Lawal the day after he signed off the vessel. OSG later wrote Lawal that it was offering him the opportunity to participate in a Post Incident Payment Plan. Under the Plan, OSG would pay Lawal $2,500 per month until Lawal reached maximum medical cure or the amount paid totaled $10,000. In exchange for participating in the Plan, Lawal agreed to limit the forum in which Lawal could file suit to a federal or state court located in Hillsborough County, Florida, which Lawal signed off on and agreed to, and he received and accepted the $10,000. Lawal later filed suit against OSG in Texas state court, seeking personal injury damages under the Jones Act and general maritime law. OSG filed a motion to dismiss the suit based on the forum-selection agreement contained in the Plan, which required Lawal to file suit in a federal or state court located in Hillsborough County, Florida. In a response and sur-response, Lawal argued that the Plan contained an unenforceable venue-selection agreement, the Plan was void for lack of consideration, enforcement of the Plan would be unreasonable because Lawal was not represented by legal counsel at the time he signed the Plan, and the Plan was not enforceable because a union representative did not represent Lawal at the time he signed the Plan. The trial court held a hearing on OSG's motion to dismiss and denied the motion. OSG filed a petition for mandamus to the appellate court, contending that the trial court abused its discretion by denying its motion to dismiss because the Plan was a forum-selection rather than a venue-selection agreement, it was supported by consideration, attorney representation was not necessary under the Texas Arbitration Act because that Act does not apply to forum-selection clauses, and union representation was not necessary because the Plan was not part of an employment agreement. The appellate court concluded that the agreement at issue contained a clause selecting a Florida forum, that it was supported by consideration and not invalid under the Federal Employers Liability Act or on public policy grounds, and that its execution without the involvement of a union representative did not violate the parties' collective bargaining agreement. The appellate court concluded that the trial court abused its discretion by denying OSG's motion to dismiss based on an enforceable forum-selection clause, and OSG did not have an adequate remedy by appeal. Accordingly, the appellate court conditionally granted OSG's petition for writ of mandamus and direct the trial court to vacate its order denying OSG's motion to dismiss and dismiss the case, noting that a writ would issue if the trial court failed to comply. (Tx. 14th App. Ct., December 29, 2016) 2016 Tex. App. LEXIS 13785
COOK TRIES TO COOK UP NEGLIGENCE AND UNSEAWORTHINESS CLAIMS
ATLANTIC SOUNDING CO. V. SMITH
Jessica Smith, a former employee of Atlantic Sounding Co., Inc., claimed that she was owed maintenance and cure and damages for a back injury that she allegedly sustained while working as a cook aboard a dredge vessel owned by Weeks Marine, Inc. Atlantic Sounding sought a declaratory judgment that they did not owe Smith maintenance and cure benefits. Smith countersued, seeking maintenance and cure benefits and damages under the Jones Act and general maritime law for her injuries, alleging that she slipped and fell down a poorly maintained small staircase while working on the dredge, injuring her back. Smith claimed that she escorted a new employee from the galley to the captain's office, which was upstairs from where Smith was working. On her return from the captain's office, Smith had to walk down a four-step staircase to return to the galley to continue her work, and she slipped and fell on the stairs. The court found that deck above the stairs upon which Smith slipped was coated with a non-skid additive. The steps on which Smith slipped were made of an open bar grading, which is an excellent non-skid material, and the nosing of each step contained a diamond plating. The area where Smith fell had recently been pressured washed to remove bugs and was still wet, but the non-skid surfaces make it difficult to slip, even if wet. The safety officer transported Smith for medical treatment immediately after she reported her fall. Smith was examined, x-rays were performed, and Smith was released to return to work without restriction. Smith continued to complain of back pain, and was sent for an MRI four days later, which revealed no disc herniation or any other traumatic pathology. After leaving the facility where the MRI was performed, Smith informed the safety officer that her mother and brother had arrived to pick her up, and went home despite being found fit for duty. Smith was subsequently terminated for desertion. After Smith returned home, Atlantic Sounding refused maintenance and cure, and refused to pay for any of Smith's subsequent medical care. The court found that Smith reached maximum medical improvement when her MRI revealed no abnormalities in her spine other than degenerative changes. No abnormalities were ever identified by any physician. All of the subsequent care that Smith had received had been palliative. The court found as a matter of law that Atlantic Sounding exercised ordinary prudence and took reasonable care in providing Smith with a safe place to work. The decking and stairs in the area at which Smith slipped were non-skid and although the non-skid was worn in some areas, Smith failed to establish where she slipped. Smith did not carry her burden of proof establishing that Atlantic Sounding was negligent or that such negligence was the cause of the accident. Atlantic Sounding was therefore held not liable to Smith under the Jones Act. The court also found as a matter of law that the dredge was a seaworthy vessel at the time of Smith's accident and that Smith did not carry her burden to show that a condition of the vessel played a substantial part in her accident. The area at which Smith slipped was non-skid. Even if the area was wet, the non-skid surfaces were designed to prevent Smith from slipping. The court found for Atlantic Sounding on the Jones Act and unseaworthiness claims. It also held that Smith was entitled to four days of maintenance and cure. (USDC EDLA, December 22,2016) 2016 U.S. Dist. LEXIS 177296
Updater Note: Thanks to Matt Popp and our entire team at Waits Emmett, Popp & Teiche, New Orleans, for their expert and aggressive defense against these frivolous claims.
PILE DRIVER WANTS TO BE CONSIDERED A SEAMAN (CONT.)
WARD V. EHW CONSTRUCTORS, ET AL.
EHW Constructors hired Perry Ward through Ward's local union for pile drivers. Ward had been a pile driver for 36 years. Ward was working on a skiff supporting a floating piece of equipment known as the Ringer II. Ward claimed that he suffered injuries that day as he was helping lift a generator from the skiff to the Ringer II. It is undisputed that neither Ward nor any other employee completed an injury report or a near-miss report. Moreover, the foreman's daily report for the date in question, which was initialed by Ward, states that Ward was not injured on his alleged injury date. The parties disputed the type of work Ward performed and whether he qualified as a seaman. Ward contended that his work was always completely out on the water, working on vessels doing the pile driving on piles out in the open, navigable waters. On the other hand, EHW contended that Ward was part of a construction crew instead of a seaman. Ward filed a complaint against EHW, American Bridge Company, JV, Nova Group, Inc., and Skanska USA Civil Southeast, Inc. (collectively "EHW") in rem and in personam for personal injury and for EHW’s failure to pay mandatory maritime benefits. Ward then moved for summary judgment on his claims for maintenance and cure and for dismissal of some of EHW's affirmative defenses. The court noted that Ward failed to recognize that EHW was not obligated to submit a declaration specifically contesting Ward's version of the events, and there was plenty of evidence to raise a reasonable inference that Ward was not hurt. Therefore, the court denied Ward's motion on the issue of whether Ward actually suffered an injury. Although there was evidence tending to show that Ward was a seaman, the court declined to consider it until EHW was afforded an opportunity to respond. Therefore, the court reserved ruling on the issue. Ward also moved for summary judgment on thirteen of EHW's affirmative defenses. The court granted in part and denied in part [see May 2016 Longshore Update]. Ward again moved or summary judgment on his status as a seaman. EHW opposed the motion, contending that Ward was part of a construction crew instead of a seaman. The construction crews were responsible for the actual construction of the wharf. The court initially found that Ward had shown that his duties contributed to the function and mission of the crane barge and its support skiffs and that the majority of Ward's work consisted of construction or setting piles aboard the vessel or a support skiff. Turning to the substantial connection test, the court found that, given the similarity of Gipsonand Scheuring to the case, it was unable to conclude that reasonable jurors could find other than for Ward. Therefore, the court denied Ward's motion for summary judgment on the seaman status issue [see June 2016 Longshore Update]. EHW challenged Ward’s continued maintenance and cure entitlement, as two different neurosurgeons recommended that Ward undergo spinal surgery for his condition, but told him he would have to quit smoking for three months before he could undergo the recommended surgical procedure. Perry allegedly made an effort to try to quit smoking, but months later Ward admitted he was still smoking one and a half packs of cigarettes each day. Two physicians determined that, without surgery, Ward was at maximum medical improvement. EHW moved to suspend voluntary maintenance and cure payments to Ward, on the basis that Ward had already achieved maximum recovery, or had forfeited his right to maintenance and cure by withdrawing from treatment. Although the court noted that it was sympathetic to the difficulties associated with confronting an addiction, it nevertheless found that Ward’s failure to quit smoking was tantamount to a voluntary rejection of treatment. Therefore, based upon the medical records in evidence, the court found that Ward’s withdrawal resulted in the forfeiture of any maintenance payments [see November 2016 Longshore Update]. The matter came before the court again on the summary judgment motions of Ward and defendants EHW, American Bridge, Nova, and Skanska. Defendants moved for partial summary judgment on the issue of punitive damages, arguing that Ward could not show that they engaged in a willful or wanton failure to satisfy obligations of maintenance and cure. Ward moved for summary judgment on the issue of his status as a seaman and some of defendants' affirmative defenses. Ward first claimed that he was entitled to maintenance and cure when he filed his complaint. EHW initially refused to pay maintenance and cure. To the extent that EHW contended it acted reasonably in delaying payment to investigate Ward’s claim, the court found that ward had presented sufficient evidence to suggest that EHW was excessively "lax" in its efforts to investigate his alleged injury. Therefore, if the legitimacy of Ward’s injury was the only ground on which EHW opposed maintenance and cure payments, the availability of punitive damages would properly be reserved for the finder of fact. However, maintenance and cure payments were also opposed on a theory that Ward is not a seaman. Refusal to pay maintenance and cure cannot be willful and wanton if it is based on a reasonable defense such as the seaman's concealment of his medical condition. Because reasonable minds could differ on whether Ward’s duties rendered him a seaman, no rational juror could find that the decision to withhold maintenance and cure was in bad faith. Therefore, the court granted the motion for partial summary judgment and found that punitive damages were unavailable for EHW’s allegedly wrongful refusal to pay maintenance and cure. The court continued to find that issues remain on the quantity of Ward’s work performed from the staging, the skiffs, or the barge, and what tasks should be considered "sea-based activity." Moreover, to the extent the court previously analogized Gipson to the present case, issues of fact remained on whether the Ringer II or the floating platforms from which Ward worked, although it is clear that they would move to some extent, should be considered vessels in navigation. Accordingly, the Court denied summary judgment on the issue of Ward’s seaman status, as reasonable minds could differ on whether he has a connection to a vessel in navigation that is substantial both in duration and in nature. Ward also moved for summary judgment on four of defendants' remaining affirmative defenses, including (1) third party fault, (2) limitation of liability, (3) willful misconduct of Ward, and (4) a McCorpen defense. Defendants stipulated to the withdrawal of its third party fault affirmative defense, so the court granted summary judgment on this issue. The court denied Ward’s motion for summary judgment on the limitation of liability defense, which was properly asserted as an affirmative defense in a responsive pleading. Ward argued that there is no evidence to suggest that any misconduct on his part contributed to his alleged injuries. However, evidence suggested that Ward delayed seeking treatment of his alleged injury for approximately several months, during which time he continued to perform the physical labor of his position despite experiencing pain. Accordingly, the court denied Ward’s motion for summary judgment on this defense. Finally, the court found that the evidence of a preexisting condition was sufficient to create a reasonable dispute of material fact that must be submitted to a jury on defendants’ McCorpen defense. Defendants' motion for summary judgment on the issue of punitive damages was granted. Ward’s motion for partial summary judgment was granted in part and denied in part. (USDC WDWA, December 22, 2016) 2016 U.S. Dist. LEXIS 177640
IT’S FUNNY HOW THOSE EXPENSES MAGICALLY APPEAR
MOODY V. NOBLE DRILLING (U.S.) LLC
Robert Moody was allegedly injured while working as a floorhand for Noble Drilling (U.S.) LLC on its drillship. In his complaint, Moody alleged that he was a Jones Act seaman, and he asserted various claims under the general maritime law including claims for maintenance and cure and for compensatory and punitive damages in the event that Noble breached its duty to provide proper maintenance and cure benefits. Noble move for partial summary judgment, seeking a ruling that Moody was not entitled to continued maintenance payments because he had not incurred any actual expenses for food or lodging since the accident. Noble also sought dismissal of Moody's claim for damages attributable to Noble's alleged failure to properly pay maintenance and cure. Noble had paid Moody $35 per day in maintenance since the accident. At his deposition, Moody testified that he had lived with his parents since the accident "free and clear" without paying rent or contributing to their utility bills. Noble argued this meant that Moody had not incurred any expenses for food or lodging since his accident. In response to Noble's motion, however, Moody submitted his own affidavit and that of his mother, establishing that he has incurred some expenses for food since the accident and that he has indicated to his parents that he intends to repay them for their generosity in providing for his food and lodging since the accident. The court concluded that this was important factual information that created a genuine issue of material fact concerning the proper amount of maintenance that Noble might ultimately be required to pay. However, the facts were insufficient to establish what Moody's actual expenses for food and lodging had been since the accident. Therefore, this information precluded summary judgment in Noble's favor and did not provide a basis for terminating maintenance, particularly since there was no evidence that Moody had reached maximum medical improvement. The court also found that there was no basis, at this time, for a claim that maintenance had not been properly paid. The possibility existed, however, that such a claim could arise in the future. Noble asked the court to dismiss Moody's claim for punitive damages and attorney fees based on maintenance payments to date while reserving the right to address claims for future maintenance, if asserted, at a later date. The court declined to take that action, noting that, until Moody had proven that he is entitled to recover maintenance, it could not be determined that maintenance had or had not been paid properly. The court found Noble's request for relief with regard to maintenance was premature. With regard to cure, the court could not determine whether the unpaid medical bills fell within the scope of Noble's cure obligation, nor had any evidence been presented with regard to why Noble had not paid certain bills. Thus, a genuinely disputed issue of material fact existed concerning whether Noble has satisfied its cure obligation. This dispute precluded summary judgment in Noble's favor. Accordingly, Noble's motion for partial summary judgment was denied. (USDC WDLA, November 28, 2016) 2016 U.S. Dist. LEXIS 164673
COURT HOLDS FRCP 14(C) THIRD-PARTY ACTION IMPROPER (CONT.)
SEEMANN V. COASTAL ENVIRONMENTAL GROUP, INC.
Johnny Seemann allegedly sustained injuries while working on a self-propelled barge owned by GSI Disaster Services, Inc. and leased to Coastal Environmental Group, Inc. for the purpose of removing debris caused by Superstorm Sandy from the Edwin B. Forsythe National Wildlife Refuge in New Jersey. Coastal employed Seemann as a deck hand. Seemann alleged that he sustained injury to his right shoulder and back when he was caused to slip and fall on snow/ice while working on the deck of barge. Seemann commenced his action against Coastal pursuant to general maritime law and the Jones Act seeking damages for the injuries he suffered on account of Coastal's alleged negligence and the alleged unseaworthiness of the barge. He also sought maintenance and cure benefits. Coastal filed a third-party complaint against GSI seeking indemnification and/or contribution from GSI in the event that Coastal was found liable for any damages arising out of Seemann's claims for unseaworthiness and maintenance and cure benefits. GSI moved to dismiss the third-party complaint pursuant to FRCP12(b)(6); and (ii) and moved for sanctions pursuant to FRCP 11 and an award of attorneys' fees in the amount of fees it had incurred in responding to Coastal’s action against it. Thereafter, GSI moved to dismiss the amended third-party complaint and, on July 2, 2016, the court dismissed the third-party complaint, basing its holding on the fact that the Coastal moved to implead GSI under Rule 14(c) instead of 14(a), but also determined that because Seemann did not designate his claims as an admiralty claim under Rule 9(h), impleader under 14(c) was unavailable to Coastal [see http://longshoreupdate.blogspot.com/2016_08_01_archive.htmlldrsltAugust 2016 Longshore Update]. Seemann moved to amend his complaint pursuant to FRCP 15 to add GSI as a defendant, alleging the same causes of action against GSI as he alleged against Coastal in the initial complaint. GSI filed a memorandum in opposition to Seemann’s motion to amend. Although GSI did not argue prejudice or bad faith, the court considered those matters sua sponte, and found that Seemann did not act in bad faith or with undue delay, and that there is no resulting prejudice to GSI. The court noted that GSI did not address Seemann’s negligence claim in any meaningful manner; however, the court concluded that Seemann’s proposed negligence claim under the Jones Act against GSI would be futile because GSI was not Seemann’s employer during the relevant period. The court found that if it accepted Seemann’s allegations as true, which it must do at this juncture, they plausibly suggest that the vessel was unseaworthy. The fact that Seemann allegedly slipped on ice or snow that had accumulated on the deck of the ship plausibly suggests that the vessel was unseaworthy. Accordingly, the court found that Seemann’s proposal to add an unseaworthiness claim against GSI would not be futile and him motion to add that claim to his complaint was granted. Accordingly, Seemann’s motion to amend his complaint pursuant to FRCP 15 was granted in part and denied in part. It was granted to the extent that he was permitted to add GSI as a defendant to the action and assert a claim against it of unseaworthiness under general maritime law. It was denied to the extent that he was not permitted to add claims of maintenance and cure or negligence under the Jones Act because those claims would be futile. (USDC EDNY, November 29, 2016) 2016 U.S. Dist. LEXIS 165137
COURT DISMISSES PUNITIVE DAMAGES CLAIM
KELCH V. SMITH MARITIME INC.
Dylan Kelch allegedly sustained injuries while he was employed by Callaway Barge Lines, Inc. as a Jones Act seaman, aboard a vessel owned or operated by Smith Maritime Inc. Kathleen Kelch, as curator of Dylan Kelch, also brought a direct action against New York Marine and General Insurance Company and XL Specialty Insurance Company, as they provided coverage to defendants at the time of the incident. Plaintiff claims Kelch suffered injuries while performing his duties as a deckhand on a towing vessel, which was attempting to pull a barge off the bank and a welded "d-ring" attached to the tug failed under pressure and came loose, striking Kelch in the head. Kelch incurred traumatic brain injury, facial and skull fractures, and spinal injuries, for which he has required continuous hospitalization since the date of the accident. Plaintiff sought damages for Kelch's lost wages, pain and suffering, medical expenses, physical disability, and his need for constant assistance, as well as maintenance and cure benefits, punitive damages, attorneys' fees, and costs. Defendants initially denied plaintiff's allegations and asserted a number of affirmative defenses, including that the vessels were seaworthy and that Kelch's injuries were not caused by defendants' negligence. Defendants also averred plaintiff was not entitled to maintenance and any reasonable cure obligations had been satisfied. Defendants initially invoked a limitation of liability defense, asserting the barge and tug were valued at $4,475,000 at the time of the incident. Plaintiff moved for partial summary judgment on the issues of unseaworthiness, liability limitations, comparative fault, lack of standing, failure to mitigate, and third-party negligence. In their response, defendants proposed several stipulations resolving these issues but reserving their right to pursue actions against third parties for contribution and/or indemnity and opposed the portion of plaintiff's motion regarding their failure to mitigate defense. Defendants also moved for partial summary judgment, arguing that they are entitled to summary judgment on plaintiff's claims for maintenance, cure, and punitive damages. In her response, plaintiff stipulated that Kelch was not entitled to maintenance, and agreed to dismiss all claims relating to maintenance payments. Further, plaintiff stipulated that defendants had paid all medical bills which had been presented for payment. While plaintiff reserved the right to re-assert claims for cure payments in the future, the court found it was not necessary to address the claim. Thus, the only issue which remains in defendants' motion is plaintiff's claim for punitive damages. Defendants argued their conduct was not arbitrary or capricious such that punitive damages were warranted. In the event that plaintiff argued she was entitled to punitive damages because of defendants' possible future behavior, defendants argued that plaintiff could not recover based on speculations about future arbitrary conduct. Further, Defendants contended that their maintenance and cure obligations end when the seaman reaches maximum medical improvement and that at least one doctor has opined that Dylan Kelch has reached maximum medical improvement. Plaintiff opposed the motion, averring that some bills were erroneously sent to Dylan Kelch and subsequently placed in collection. Plaintiff contended that the fact the bills went into collections demonstrates defendants handled their cure obligations in an arbitrary and capricious manner. After reviewing the motions and relevant responses, the court concluded that the only remaining issues in plaintiff's motion for partial summary judgment were defendants' failure to mitigate defense and negligence claims against third parties. The only remaining issue in defendant's motion for partial summary judgment was plaintiff's claim for punitive damages. The court pointed out the fact that Dylan Kelch had been hospitalized since the day of his accident. He receives around-the-clock medical care, and his family has made every effort to ensure he reaches the best possible medical outcome. There were absolutely no facts to suggest he had done anything to fail to mitigate his damages. Thus, plaintiff's motion was granted with respect to defendant's failure to mitigate defense. In light of defendants’ stipulations, the remaining issues in plaintiff’s motion was dismissed as moot. Finally, the court addressed defendants motion for summary judgment on plaintiff's claims for punitive damages. While plaintiff argued that some of the delays in paying these bills were unreasonable, the court found that defendants made payments within a reasonable time in light of the complex nature of medical billing and the volume of expenses in the case. Based on these facts, the court found that there was no genuine issue regarding whether defendants had satisfied their maintenance and cure obligations in a reasonable manner. Thus, plaintiff was not entitled to punitive damages and defendant's motion for partial summary judgment regarding punitive damages was granted. (USDC EDLA, November 29, 2016) 2016 U.S. Dist. LEXIS 164776
IF YOU NEVER SAW THE DEFENDANT, HOW CAN I FIND YOU CREDIBLE?
MATTHIEWS V. CROSBY TUGS, LLC
Troy Matthiews, a Daigle Towing Service, LLC tugboat captain, brought a personal injury claim for general maritime negligence against Crosby Tugs, LLC, alleging that he was injured, when a tug owned and operated by Crosby passed Matthiews' tug at an unreasonably high speed, causing excessive wave wash. The wave wash allegedly caused Matthiews to fall and injure himself while stepping between two vessels. Pursuant to a suggestion by the parties, the court bifurcated trial in this matter into separate liability and damages phases. The court held a bench trial on the issue of liability and after hearing the testimony of witnesses and reviewing all the evidence, found that there was ample evidence to support, and Crosby does not dispute, that its tug pushed an empty barge past the Daigle facility on Harvey Canal on the afternoon of November 30, 2014. Aside from Matthiews' testimony, however, there was no evidence in the record supporting Matthiews' assertion that The Crosby tug traversed the Canal at an unreasonable speed, or that wave wash produced by the tug caused Matthiews' injury. Matthiews' account of the incident was also unsupported by the witnesses he called at trial. Matthiews conceded that no one saw him fall. Crosby, by contrast, presented significant evidence at trial tending to contradict Matthiews' account. The court found that Matthiews failed to prove by a preponderance of the evidence that the Crosby tug negligently transited the Harvey Canal in a manner that produced unusual swells or suction. In reaching this conclusion, the court relied primarily on the unrebutted AIS data presented by Crosby’s tug captain showing that the Crosby tug passed the Daigle tug at a speed of 3.2 knots. The court found the testimony of Crosby’s experts, that 3.2 knots is reasonable speed for a tug pushing an empty barge on the Harvey Canal, to be persuasive. Even if the court were to credit Matthiews' assertion that his fall was caused by a passing vessel traveling at an unreasonable speed, his testimony was not credible evidence that this vessel was, in fact, the Crosby tug, which he admittedly never saw. The Coast Guard incident report that Matthiews completed ten days after the incident stated that Matthiews' injury occurred between 2:00 and 3:00 p.m. AIS data, however, confirmed that the Crosby tug passed the Daigle tug at 4:29 p.m., and that another tug, also pushing a barge, passed the Daigle tug less than thirty minutes earlier, traveling twice the speed of the Crosby tug. Even assuming that excessive wave wash contributed to Matthiews' injury, the Court finds that Matthiews' evidence, taken as a whole, could not meet his burden to show that the offending vessel was the Crosby tug. For these reasons, the court entered judgment in favor of Crosby Tugs. (USDC EDLA, December 9, 2016) 2016 U.S. Dist. LEXIS 170557
DEFENDANT ORDERED TO ATTEND DEPOSITION AND PAY COSTS
ABRAM V. ASHLAND SERVICES, LLC, ET AL.
Fletcher Abram III filed his seaman's complaint under the Jones Act, .alleging that he suffered an injury while in the course and scope of his employment aboard a vessel with Ashland Services LLC. Abram supplemented and amended his complaint to other defendants, including Environmental Equipment, Inc., Rodney Boudreaux, R&R Boat Rentals, LLC, Mickey Carmouche, Environmental Safety & Health Consulting Services, Inc. and Ultimate Swamp Adventures, LLC. Abram sought $750,000 in addition maintenance and cure, attorney's fees, non-pecuniary damages, punitive damages and interest. In preparation for trial, the parties scheduled the deposition of Mickey Carmouche for June 16, 2016; however, on that date Carmouche's counsel informed the other parties that he had informed Carmouche of the scheduled deposition for that date, but Carmouche had not confirmed the date and was not taking his attorney's telephone calls. Abram’s counsel retained a process server to serve a deposition subpoena on the defendant re-noticing the deposition for September 22, 2016. Service was effectuated on Carmouche at his mother's house on August 24, 2016. Again, on September, 22, 2016, Carmouche failed to appear. Notably, Carmouche's attorney was present for the deposition and indicated that his client had again not contacted him to confirm the date of the deposition. Abrams then filed a motion to compel the deposition of Carmouche, also seeking an order finding Carmouche in contempt and for sanctions to be levied against him for his failure to appear at his deposition after being legally served with a subpoena for his appearance. Given Carmouche's failure to attend either deposition being properly noticed, the court first ordered Carmouche to appear for a deposition no later than thirty days from the issuance of the order. Carmouche did not oppose Abram’s motion and offered no reason for his failure to appear. The court therefore found that his failure to appear was not substantially justified and awarded Abram’s counsel expenses for his failure to attend. Moreover, because the Carmouche's failure to attend appeared to be of his own choosing and not Carmouche's counsel, the court held Carmouche responsible for paying these costs. The court denied Abram’s motion to the extent it sought sanctions. Abram’s motion to compel deposition, for contempt of court and for sanctions was granted in part and denied in part. The motion was granted to the extent that Mickey Carmouche was ordered to appear for his deposition within thirty (30) days and to the extent that Abram was awarded the reasonable expenses, including attorney's fees, caused by Mickey Carmouche's failure to attend his September 22, 2016 deposition. The motion was denied to the extent that Mickey Carmouche was not found in contempt. (USDC EDLA, December 7, 2016) 2016 U.S. Dist. LEXIS 169066
COURT USES TREJOFACTORS TO DISMISS DJ ACTION BASED ON DISCRETION
GULF OFFSHORE LOGISTICS, LLC, ET AL. V. NORRIS, ET AL.
Gulf Offshore Logistics, LLC and JNB Operating, LLC filed a declaratory judgment action concerning a choice of law issue critical to a labor dispute. Gulf Offshore and JNB are limited liability companies operating in the maritime industry and headquartered in Raceland, Louisiana. Specifically, Gulf Offshore contracts and brokers vessels for JNB, a marine transportation business. In turn, JNB employs the crews and operates the vessels to provide offshore marine transportation services, such as supplying oil platforms, in domestic and international waters. The defendants, Claude Norris, Douglas Kwaw, and James Musgrove (collectively the "mariners") worked as crew members for JNB aboard a number of vessels in the Gulf of Mexico and Pacific Ocean. JNB had terminated its employment of the last of the three mariners, for economic reasons extraneous to the litigation. Several months after the final termination, the mariners notified Gulf Offshore and JNB, as well as the California Labor and Workforce Development Agency, of potential wage claims related to their work aboard a common vessel, while assigned to waters off the coast of California. The letter also stated that the Mariners intended to pursue the claims, all under the California Labor Code, should the California LWDA decline to investigate. Gulf Offshore and JNB responded by filing the instant declaratory judgment action, which sought a judicial determination of whether Louisiana law applied to the employment contracts and relationships between the mariners and the plaintiffs, and that the compensation provided to the mariners complied with Louisiana law, regardless of the portable nature of the mariner’s jobs. The mariners moved to have the declaratory judgment action dismissed pursuant to FRCP 12(b)(1)-(2). In support of their motion, the mariners contended that their contacts with the State of Louisiana were insufficient to support the court's exercise of personal jurisdiction, primarily because none of the mariners resided in Louisiana and their in-person appearances in the State were limited. Second, and alternatively, the mariners urged the Court to abstain from deciding the action, out of deference to a parallel lawsuit filed by the mariners in the State of California. It was undisputed that an actual controversy existed, given the California lawsuit currently pending. The court therefore turned to the issue of whether it had authority to issue declaratory relief. The court observed that when a parallel lawsuit is pending in state court, Fifth Circuit precedent views a declaratory judgment as tantamount to an injunction. Accordingly, the district courts are to abstain from considering the merits of a declaratory judgment action when a declaratory defendant has previously filed a cause of action in state court against the declaratory plaintiff and the district court is prohibited from enjoining the state proceedings under the Anti-Injunction Act. The court noted that Gulf Offshore and JNB filed the declaratory judgment action during the pendency of a statutorily-required waiting period, which appeared to have manipulated the filing sequence of the two actions. The court expressed its concern that a strict filing sequence requirement for mandatory abstention failed to account for circumstances such as these. However, the point was ultimately moot, as the court dismissed the action for discretionary reasons. After weighing all of the Trejo factors, reflecting comity and efficiency concerns, the court found that the overwhelmingly majority of the factors supported a discretionary dismissal of the declaratory judgment action. The mariner's motion to dismiss was granted. (USDC EDLA, December 5, 2016) 2016 U.S. Dist. LEXIS 168034
PUTATIVE SEAMAN SHAKEN UP BY HELICOPTER TRIP
GEBBIA V. ART CATERING, INC. ET AL.
Donald Gebbia allegedly suffered injuries while he was employed as a Jones Act seaman by Art Catering, Inc. aboard a drill ship, owned and operated by non-party Pacific Drilling, Ltd. Gebbia claimed he suffered serious injury that has rendered him unfit for returning to work while being transported onto the vessel by a helicopter owned or operated by Bristow Group, Inc. Gebbia alleged that the turbulence during the helicopter transfer caused injury to his lower back and hip. Gebbia sought damages for lost wages, pain and suffering, medical expenses, and physical disability, as well as maintenance and cure benefits from the date of injury until maximum cure is achieved, punitive damages, attorney's fees, and additional compensatory damages because Art Catering unreasonably refused to pay maintenance and cure. Bristow answered Gebbia’s complaint and stated that Bristow Group, Inc. is the parent company of Bristow U.S., LLC, which should be the proper party. Bristow denies Gebbia’s allegations and asserted a number of affirmative defenses, including that Gebbia’s injuries were either pre-existing or were caused by his own contributory negligence or the fault of third parties. Art Catering answered, demanding a jury trial, and denies all allegations. Art Catering also argued that Gebbia was not entitled to any relief, including attorney's fees or punitive damages and asserted a number of affirmative defenses, including that Gebbia’s injuries were either pre-existing or were caused by his own contributory negligence or the fault of third parties. Both defendants moved for summary judgment, arguing that there are no genuine issues of material fact and arguing that Gebbia had failed to allege a theory of recovery under the Louisiana Products Liability Act and had not submitted sufficient evidence to support his claim that defendants were negligent. Defendants averred that the claim was subject to the LPLA because it was based on the helicopter and its function. Gebbia opposed the motion, arguing that genuine issues of material fact still existed and summary judgment was inappropriate. Gebbia contended that his claims were not subject to, nor did he seek any relief under, the LPLA. He argued that he did not make any allegations regarding the functioning of the helicopter, but rather its negligent operation. Accordingly, products liability is not the appropriate remedy. Further, Gebbia argued that he adequately and specifically pled the issue of negligence. This Court found that a genuine issue of material fact still existed regarding the nature and details of the alleged accident. The court found the case to be a matter of Gebbia’s word against the word of other witnesses and family members. Accordingly, a finding of summary judgment at would be inappropriate. Further, while it appeared that Gebbia may fail to support a claim under the LPLA, there was no indication in the pleadings that Gebbia sought relief under the LPLA. Accordingly, defendants' LPLA arguments bear no weight. Defendants’ motion for summary judgment was denied. (USDC EDLA, November 30, 2016) 2016 U.S. Dist. LEXIS 164775
THE PARTIES ARE IN THE RIGHT COURT. THE CASE IS NOT GOING ANYWHERE.
IN RE: WALTER A. STOKES AND WAS MARINE SERVICE, INC.
This case arose out of a collision between an offshore supply vessel and an offshore crewboat, collided in the navigable waters of the State of Louisiana. Walter A. Stokes, a citizen of Texas, owned the M/V CAPT STOKES, and WAS Marine Service, Inc., a corporation that is organized under the laws of and maintains its principal place of business in Texas, is the owner pro hac vice of the M/V CAPT STOKES. Abe's Boat Rentals, Inc., a corporation organized under the laws of and that maintains its principal place of business in Louisiana, owns the M/V MISS WYNTER. Tony Galindo sued WAS and Abe's in Texas state court, seeking damages for injuries he allegedly sustained during the collision. Galindo is a citizen of Texas. Abe's sued WAS in Louisiana federal court alleging that WAS was at fault for accident and seeking damages incurred as a result. Brian Vanbuskirk sued WAS and Abe's in the Texas state court seeking damages for injuries he allegedly sustained in the accident. In that compliant, Vanbuskirk alleges that he is a citizen of Mississippi and was a passenger on the M/V MISS WYNTER at the time of the collision. Stokes and WAS filed the instant limitation of liability proceeding in Louisiana federal court. Galindo, Vanbuskirk, Abe's, Continental Insurance Company, and Trinity Liftboat Services, LLC all filed claims in the limitation action. Continental is Abe's insurer. Trinity is Vanbuskirk's Jones Act employer. It is organized under Louisiana law and maintains its principal place of business in New Iberia, Louisiana. Abe's also filed a limitation of liability action in the Louisiana federal court. Galindo and Vanbuskirk filed motions arguing that Stokes' and WAS's limitation of liability proceeding should be dismissed or transferred, respectively, because the United States District Court for the Eastern District of Texas, Beaumont Division was the proper venue for this proceeding under Rule F(9) of the Supplemental Rules for Admiralty and Maritime Claims and it was a more convenient forum under 28 U.S.C. §1404(a). Stokes and WAS argued that the current court was a proper venue under Rule F(9) and transfer was not warranted because it is also a convenient forum. The court observed that the proper venue for a limitation of liability proceeding was dictated by Rule F(9) of the Supplemental Rules for Admiralty or Maritime Claims, which indicates that the vessel owner must or should file the limitation petition in the venue where the first suit was filed. When Stokes and WAS filed the instant limitation petition, two suits regarding accident were pending against WAS in Texas state court and one suit was pending against it in Louisiana federal district court. Thus, under Rule F(9), venue was proper in the Louisiana federal district court, and Galindo's motion to dismiss was denied. When venue is "properly laid" under Rule F(9), the court may transfer the action to any district if doing so is in the interest of justice for the convenience of the parties and witnesses. After the court reviewed the private and public interests factors to determine whether transfer was warranted, it found that two of the private interest factors and two of the public interest factors weighed against transfer, and two of the private interest factors and two of the public interest factors were neutral. There were no factors weighing in favor of transfer. Therefore, the court held that Vanbuskirk had not sufficiently shown that a balancing of the private and public interest factors weighed in favor of transfer to the United States District Court for the Eastern District of Texas, Beaumont Division for convenience of the parties and interests of justice. Therefore, Vanbuskirk's motion to transfer was denied. (USDC EDLA, December 1, 2016) 2016 U.S. Dist. LEXIS 165997
SEAMAN’S MOTION TO REMAND CASE TO STATE COURT IS DENIED
SHAH V. BLUE WAKE SHIPPING
Ali Imam Shah allegedly lost his footing while laboring on a ship which is owned by Blue Wake Shipping (BWS). Shah allegedly sustained injuries as a result of the fall and filed suit in Louisiana state court under the Jones Act and general maritime law. BWS removed this matter from state court on the basis of federal question jurisdiction, arguing that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards applied to the case because of language in the employment contract that was signed by Shah and an agent of BWS. The court found that the employment contract incorporated the CBA, which included the arbitration agreement. Shah argued that the only contract between him and BWS was the Ship's Articles, and the articles did not mention the CBA or any arbitration agreement. However, the court found that the employment contract signed by Shah and an agent of BWS was also a signed agreement between the parties. Second, Shah argued that the employment contract terms were non-binding because the ship owner failed to incorporate the CBA in to the Ship's Articles. The court found this argument to be unavailing. The plain terms of the employment contract did not suggest that the CBA's incorporation depended on its inclusion in the shipping articles. Third, Shah argued that the arbitration agreement within the CBA only covered disputes between the ship owner and the union, and that the particular article could not be incorporated into the employment contract. However, again the court found that the employment contract did not qualify the incorporation of the CBA to any particular terms or conditions. Finally Shah argued that the CBA cannot be incorporated into the employment contract because the Industrial Arbitration Court (IAC) did not have jurisdiction over personal injury cases, and its jurisdiction was restricted to disputes between a ship owner and the union. However, the documentation provided by BWS suggested that the IAC has a procedure under which the president of the IAC can appoint referees to resolve disputes of this kind, and that any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. As such, the arbitration agreement was governed under the Convention, and the court had federal question jurisdiction. Therefore, the court denied Shah’s motion to remand. (USDC WDLA, November 30, 2016) 2016 U.S. Dist. LEXIS 165561
EMPLOYER’S CELL PHONE RECORD SUBPOENA GETS QUASHED
HOWARD V. SEADRILL AMERICAS, INC.
Kenric Howard alleged that he was employed by Seadrill Americas, Inc. as a roustabout assigned to a deepwater semi-submersible drilling vessel, when he allegedly sustained injuries, including injuries to his lower back, right ankle, and left knee. Howard further alleged that his injuries were the result of the negligence of Seadrill and the unseaworthiness of the vessel and its appurtenances, particularly the vessel's riser bay decking and grating. During discovery in the case, Seadrill issued a subpoena to AT&T Mobility, LLC for all cell phone usage records, including inbound and outbound calls, text messages available for Kenric Tyrone Howard covering the period of June 15, 2015 to June 23, 2015. Howard moved to quash the subpoena duces tecum, arguing that the request sought information implicating his privacy interest and which was irrelevant to the case. Moreover, Howard averred that the information might also be protected by the attorney-client privilege to the extent the search involved text messages and phone calls between Howard and his attorneys. Seadrill argued that the Howard’s motion to quash should be denied, arguing that Howard lacked standing to challenge the subpoena under FRCP 45(d)(3) because the subpoena did not seek the disclosure of any privileged or other protected matter. Seadrill also argued that the subpoena sought relevant information because it planned to present evidence to the court that Howard had taken unnecessary steps and medical treatment because of the possibility of litigation and that it was relevant to determine when Howard first contacted counsel, directly or through a third party. The court initially found that Howard had standing to challenge the subpoena. While Howard was not the person to whom the subpoena was served nor in possession or control of the requested information, Howard did have a sufficient personal interest in the information to have standing to challenge the subpoena. Howard argued that Seadrill was attempting to make a fraud argument which was unfounded based solely on Howard’s decision to obtain counsel and seek another medical opinion. Howard also suggested that Seadrill’s attempt to obtain the cell phone records were a veiled attempt by Seadrill to discover the "mole" that was referring injured employees of Seadrill to counsel. Finally, Howard argued that to whatever extent the information may be relevant, Seadrill already had the information sought - namely when Howard first contacted counsel - from the Plaintiff's deposition testimony and other discovery. Discovery of the cell phone records might provide the exact timing of that call, but the exact timing is likely not important to resolving the dispute. Moreover, given Howard’s privacy interest in his phone records, the burden of having those records produced likely outweighed the benefit of knowing the exact timing of Howard reaching out to counsel. The court noted that if Seadrill wanted to know the exact timing of Howard’s contacting counsel, then there was still time for Seadrill to pursue some other source of that information that was more convenient and less burdensome than having Howard’s cell phone records produced. Howard’s motion to quash was granted and the subpoena duces tecum issued to AT&T Mobility, LLC was quashed by the court. (USDC EDLA, December 1, 2016) 2016 U.S. Dist. LEXIS 165799
SOVEREIGN IMMUNITY NOT PRECLUDED IN STATE COURT MARITIME CLAIMS
PRIDEMORE V. HRYNIEWICH, ET AL.
The City of Norfolk hired Willard Marine Services to make repairs to the City's 27-foot patrol vessel, owned and used by the City's Police Department Harbor Patrol. Shortly after Willard's return of the vessel to the City, Richard J. Hryniewich, a city police officer, conducted sea trials of the vessel. Timothy Pridemore and David Glover, who were Willard employees, were onboard the vessel during the sea trials as Willard representatives. During a moderately hard turn at cruising speed, the Vessel capsized. As a result, everyone onboard was thrown from the vessel, allegedly resulting in injuries to Pridemore and Glover. Plaintiffs each filed suit against Hryniewich and the city. Defendants filed pleas in bar, asserting sovereign immunity as an absolute defense and asking that the cases be dismissed. Plaintiffs moved to strike the pleas in bar, contending that state sovereign immunity was not available in a maritime personal injury case filed in state court. The single issue before the court was whether a defendant in a maritime personal injury case, filed in state court pursuant to the federal admiralty "saving to suitors" clause, was precluded from asserting a municipality-based state sovereign immunity defense. Because the court found that general maritime law does not preempt state sovereign immunity, and that sovereign immunity therefore was potentially available to the defendants in state court despite not being available in federal court, the court denied plaintiffs' motions to strike defendants' pleas in bar. The Court observed that the Saving to Suitors Clause allows common law maritime actions to be brought in state court. The state court in which such an action is brought must, however, have jurisdiction to hear the case, and invocation of state sovereign immunity can preclude such jurisdiction under appropriate circumstances. (Cir Ct. Norfolk, VA, December 16, 2016, UNPUBLISHED) 2016 Va. Cir. LEXIS 195
CELL PHONE USE DEFEATS LIMITATION OF LIABILITY PETITION
HOLZHAUER V. GOLDEN GATE BRIDGE HIGHWAY & TRANSPORTATION DISTRICT
The ferry SAN FRANCISCO collided with a speedboat on the San Francisco Bay. The collision killed the driver of the speedboat, Harry Holzhauer, and seriously injured his fellow passenger and owner of the boat, David Rhoades. At trial, a jury found Golden Gate Bridge, Highway & Transportation District partially responsible for the accident. The District petitioned the court to limit its liability to the value of the ferry, arguing that it lacked privity or knowledge of the acts that caused the accident. Mary Holzhauer and David Rhoades disputed the District's contention. They further argued that, even if the District had proven a lack of privity and knowledge, it placed too low a value on the ferry. The court initially noted that both parties agreed that the most probable basis of the jury's finding that the District was negligent was the ferry captain’s use of a personal cell phone in the moments before the collision. This finding was supported by substantial evidence. On this evidence, the jury could easily conclude, and did conclude, that the cell phone use contributed to the accident, and was the basis for its finding of partial fault on the part of the District. The court found that the District failed to meet its burden of demonstrating a lack of privity or knowledge. The District had no policy regarding the use of personal cell phones by its captains. The District also knew that its captains carried personal cell phones while operating the District's ferries, and permitted their use. Therefore, the District could not claim that its own lack of training or policy regarding the foreseeable use of a cell phone was beyond its privity or knowledge. Accordingly, the Court found that the District failed to meet its burden of demonstrating a lack of privity or knowledge and declined to reach the issue of the ferry’s value.
The District's limitation of liability petition was denied. (USDC NDCA, December 15, 2016) 2016 U.S. Dist. LEXIS 173732
COURT HOLDS PARTY IMPROPERLY IMPLEADED IN LIMITATION ACTION
IN RE: SELECT OILFIELD SERVICES LLC
Spike Guidry allegedly sustained injuries while working as a captain aboard a spud barge owned and operated by Guidry's employer, Select Oilfield Services, LLC. Guidry asserted that he was a seaman entitled to damages under the Jones Act and general maritime law, blaming Select Services and third-party defendant Manti Exploration Operating LLC (the company to whom Select Services had contracted spud barge at the time of the accident) for his injuries. Manti moved for dismissal on the grounds that it was improperly joined and that the claims against it were time-barred. After Guidry filed a lawsuit against Select Services, Select Services filed its own action in the seeking to limit its liability pursuant to the Limitation of Liability Act. In his answer to that lawsuit, Guidry filed a third party demand against Manti pursuant to Rule 14(c) of the FRCP. The two lawsuits were consolidated. Manti argued that Guidry could not implead Manti as a defendant under Rule 14(c) because that rule does not allow the claimant in a limitation of liability proceeding to implead a third party. The court agreed, noting that Rule 14(c) only permits a defendant to implead a third-party defendant for two purposes: (1) to seek contribution or indemnification from the third-party defendant, and (2) to tender the third-party defendant to the plaintiff. Guidry was not a maritime defendant seeking contribution or indemnification from Manti; he was the plaintiff seeking to recover from both Manti and Select Services. While Select Services may have been able to implead Manti using Rule 14(c), Guidry clearly could not do so. Because Manti's first argument for dismissal was correct, the court did not address Manti's remaining arguments, and dismissed Manti from the lawsuit without prejudice. (USDC EDLA, December 20, 2016) 2016 U.S. Dist. LEXIS 175729
WQIS PREVAILS AGAINST THE GOVERNMENT ON REIMBURSEMENT CLAIM
WATER QUALITY INSURANCE SYNDICATE V. UNITED STATES OF AMERICA
Water Quality Insurance Syndicate (WQIS) brought this action against the United States of America challenging a decision by the National Pollution Funds Center of the United States Coast Guard, under the Administrative Procedure Act, which denied WQIS’s claim for reimbursement of the costs for cleaning up an oil spill in Cook Inlet, Alaska, that resulted from a supply vessel colliding with an offshore oil and gas production platform. The supply vessel was owned by Ocean Marine Services, Inc. and covered by an oil pollution insurance policy issued by WQIS. The allision with the platform pierced the vessel’s hull, damaging the vessel's fuel tanks and allowing water to pour into the vessel. Approximately 38,000 gallons of fuel, lube, and generator oil were released into Cook Inlet. OMSI subsequently began an oil spill response, which included recovering 12,445 gallons of oil. WQIS incurred $2,698,159.59 in expenses in removal costs and expenses, and issued a claim for $1,898,159.59 (the total expenses less the $800,000 limit on liability as set forth in 33 U.S.C. § 2704(a)(2)). The NPFC's denial decision turned on a finding that the oil discharge was proximately caused by the supply vessel captain's gross negligence, which was a statutory ground for denial of reimbursement. The USCG investigation identified two factors as the primary contributors to the sinking of the supply vessel: the Cook Inlet environmental conditions, which had strong current and ice conditions, and crew fatigue, stemming from the crew's difficulty getting sufficient rest during their 6 hours off-watch because when the vessel operated in ice, sleep was often unobtainable or interrupted. Following the investigation, the USCG filed administrative enforcement proceedings against the vessel captain, alleging misconduct because he allowed one or more watertight doors to remain open and negligence because, after he assumed navigational duties of the vessel he struck a fixed object, the oil platform, and then overturned and eventually sank next to the oil platform with diesel fuel and lube oil onboard. Both WQIS and the United States files cross-motions for summary judgment. WQIS contended that the NPFC's First Denial Decision must be set aside as arbitrary and capricious, challenging both the factual support for the NPFC's conclusion regarding gross negligence, complaining that this conclusion was based solely on speculation and conjecture, and was contrary to the comprehensive contemporaneous casualty investigation findings. WQIS demanded that the NPFC's Second Denial Decision be stricken from the administrative record due to the NPFC's failure to respond in a timely manner WQIS’s reconsideration request. The government does not dispute that the Second Denial Decision was untimely, but nonetheless objected to striking the Second Denial Decision. The court rejected the government’s arguments and held that the Second Denial Decision and the materials submitted by WQIS to the NPFC in connection with the reconsideration request should be stricken from the administrative record and not considered as part of this court's review of the First Denial Decision. Turning to the First Denial Decision, the court found that NPFC’s factual findings were flawed. The decision ignored critical context provided in the USCG investigative record and amounted to cherry-picking of evidence that, when considered as a whole, raised significant doubt about the ultimate conclusion reached. WQIS’s motion for summary judgment was granted in part and denied in part, and the government's cross-motion for summary judgment was denied. The NPFC's First Denial Decision denying WQIS’s claim for a limitation on liability was set aside. In addition, WQIS’s request that the NPFC's Second Denial Decision and the related reconsideration materials be stricken from the administrative record as untimely, was granted. The matter was remanded to the NPFC for consideration, a third time, of WQIS’s claim for reimbursement. (USDC DDC, December 22, 2016) 2016 U.S. Dist. LEXIS 177056
COURT REFUSES SEAMAN’S REQUEST TO IGNORE CASE SCHEDULING ORDER
SIMMONS V. GALLIANO MARINE SERVICE, LLC
This is a Jones Act personal injury action, in which Jordan Simmons alleged that he suffered shoulder injuries while working as a seaman on a vessel owned and operated by Galliano Marine Services, LLC. The case was set for trial on January 5, 2017. According to the scheduling order, the deadline for Simmons to submit witness and exhibit lists was January 18, 2016. Simmons requested that the court allow him to file an amended witness and exhibit list beyond the deadline specified in the scheduling order in order to include a new witness. After weighing the four Geisermanfactors, the court concluded that Simmons had not shown good cause for his request to modify the court's scheduling order to allow him to submit new witness and exhibit lists referencing a new witness. The court denied Simmons’ motion to amend the scheduling order. (USDC EDLA, December 28, 2016) 2016 U.S. Dist. LEXIS 179152
Quotes of the Month . . .“There are two ways of spreading light: to be the candle or the mirror that reflects it.”-- Edith Wharton
“If you believe in yourself and have dedication and pride - and never quit, you'll be a winner. The price of victory is high but so are the rewards.”-- Paul Bryant
“If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away.”-- Henry David Thoreau
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