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When In Doubt, File the Limitation Complaint (Part III): The Test Is Reasonable Possibility

Posted in Maritime Law

File the Limitation ComplaintOn December 3, 2014, the Fifth Circuit, in In re:  RLB Contracting, Inc., No. 14–40326 (5th Cir. Dec. 3, 2014), concluded that an ongoing exchange of correspondence between counsel for a dredge involved in a maritime casualty and counsel for the wrongful death and personal injury claimants satisfied both prongs of the “reasonable possibility” test for written notice of a claim and thereby began the six month statutory period for the dredge owner to have filed its complaint for exoneration and/or limitation of liability. These issues have been previously explored in this Blog in 2012 and in 2013.

To satisfy the “reasonable possibility” test sufficiently to start the six month period, the correspondence to the vessel owner (or its counsel) must convey a “reasonable possibility” that a potential claim exists and a “reasonable possibility” that the amount of the claim might exceed the value of the vessel. The court observed that no magical language is necessary and that the vessel owner, not the dead or injured claimants, bears the risk in the event of a wrong guess or a tactical error.

It should be noted that from a procedural perspective, the Fifth Circuit affirmed the district court’s judgment of dismissal under the de novo standard. The failure to timely file the Limitation Complaint is a jurisdictional defect, subject to de novo review, even though the “reasonable possibility” inquiries are fact–intensive and based on the circumstances of the case. Because the district court considered matters outside of the pleadings, it had applied a summary judgment procedure in its analysis of the correspondence exchanged between counsel. Summary judgments likewise are subject to a de novo standard. For good measure, the Fifth Circuit concluded that its review of the record did not reveal any dispute of material fact and thus summary judgment was procedurally proper.

Vessel owners should take note: the correspondence from claimants’ counsel is sufficient to start the six month period to file a limitation complaint, regardless of when the claimants ultimately decide to file suit. Once more, we stress what by now should be obvious – when in doubt, file the complaint for limitation.

Fifth Circuit: No Overtime Pay for Crewmember Tankermen

Posted in Maritime Law

Coffin v BlesseyOn November 13, 2014, the U.S. Fifth Circuit Court of Appeals held in Coffin v. Blessey Marine Services, Incorporated, Case No. 13-20144, that individuals who loaded and unloaded tank barges as part of their duties as crew of a unit tow were seamen exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). The case is important insofar as it distinguished the Fifth Circuit’s previous ruling in Owens v. SeaRiver Maritime, Inc., 217 F.3d 698 (5th Cir. 2001), in which the Court held that a tankerman who was not a crewmember and not tied to a particular vessel was entitled to overtime under the FLSA. The plaintiffs in Coffin argued that the Owens decision foreclosed any factual inquiry into the nature and character of loading and unloading duties and compelled the conclusion that loading and unloading a vessel was in and of itself, without regard to attachment to a specific vessel as seamen for other purposes, non-seaman work as a matter of law.

Finding this reading of Owens to be erroneous, the Fifth Circuit found instead that Owens left open the question of loading and unloading duties for vessel-based employees, and expressly rejected a categorical rule such as that argued by the plaintiffs. Instead, the Court found its decision in Gale v. Union Bag & Paper Corp., 116 F.3d 27 (5th Cir. 1940), in which the Court recognized that vessel-based barge tenders who maintain and service a barge are exempt seamen under the FLSA, also controlled the situation in Coffin. The Court found to be of particular significance the undisputed facts that the plaintiffs ate, slept, lived and worked on the Blessey towboat that comprised a part of the unit tow; that they were members of the crew and worked at the direction of the captain; and that improper loading and unloading could compromise the seaworthiness of the barge. The Court stated: “Critically, the context in which work is done can affect whether it is seaman or non-seaman work.” The Court stated further:

Naturally, when an individual lives aboard the vessel that he or she loads or unloads, this living situation will affect the character of his or her duties. In Owens, the tankerman duties were divorced from the subsequent navigation of the barge. See 272 F.3rd at 704 (noting that the plaintiff did not move or moor the barge and only prepared it for navigation. By contrast, the Plaintiffs here recognized that their loading and unloading duties were integrated with their many other duties. Indeed, the plaintiff in Owens chose not to sue for the time he was a tankerman in navigation. Id. at 700.

In summation, the Court concluded that Blessey’s tankermen were seamen while loading and unloading the vessel because these duties were integrated within their many other duties. Accordingly, the Court saw no basis for distinguishing the tankermen’s loading and unloading duties from the many other duties the vessel-based barge tender performed in Gale.

Greece Initiates Offshore Oil and Gas Tender Process

Posted in Energy

Greek Offshore Hydrocarbon Bid MapGreece has initiated its tender process for offshore oil and gas (hydrocarbons) exploration as of August 26, 2014. The Greek Ministry of Environment, Energy and Climate Change is seeking bid applications for its offshore oil and gas exploration in 20 block areas in the Ionian Sea and south of Crete. The Greek government is hoping this will aid the Greek economy by encouraging an influx of investment capital.

Greece is utilizing a licensed-based system where applicants will have to acquire certain licenses in order to qualify as operators. Successful bidders will be awarded exploration and development rights for a primary term of eight years which will be subject to extensions. The Greek government has made several concessions with the objective of making the process more attractive to investors and international oil and gas companies. Paramount among these is a substantial decrease in its corporate tax rate from 40% to 25%. The 25% consists of a 20% income tax and a 5% regional tax.

The submission deadline ends six months after the date of initial publication (August 26, 2014), which will be February 27, 2015. The Ministerial Decree calling for tenders is available online.

New Orleans Attorney Joanne Mantis

 

Guest blogger Joanne Mantis is a multilingual attorney in the New Orleans office of King, Krebs & Jurgens. She is a member of both the Louisiana and Greek Bar, and represents a variety of clients both domestically and internationally.

 

UPDATE: Punitive Damages for Jones Act Seamen are not “Pining for the Fjords, they’re Dead”!

Posted in Jones Act

On September 25, 2014, the en banc Fifth Circuit, in McBride v. Estis Well Serv., L.L.C., No. 12-30714 (5th Cir. Sept. 25, 2014), concluded in a brief opinion that the Supreme Court’s decision of Miles v. Apex Marine Corp., 498 U.S. 19 (1990), and its limitation on recovery to pecuniary damages, precluded Jones Act seamen from recovering punitive damages either for Jones Act negligence or general maritime law unseaworthiness. Six judges dissented from the en banc decision, which was supported by nine judges for reversal of the previous panel decision.

This reporter previously commented on the panel decision here, with the observation that punitive damages were not dead yet. The majority en banc opinion has now clarified that punitive damages have “expired and gone to meet their Maker.”

A petition for certiorari to the Supreme Court is an almost certainty. Whether this issue obtains the interest of the requisite four Justices remains to be seen.

Don’t Stress, You’re Not Covered: Court Denies Recovery Under Jones Act for Work-Related Stress

Posted in Jones Act

NOTE: This post was authored for the firm by Spencer Sinclair, a Tulane Law School student who spent part of his summer working at King, Krebs & Jurgens. — JAD

Stress and the Jones Act

The Eleventh Circuit in Skye v. Maersk Line, Ltd.
held seamen cannot recover for work-related stress under the Jones Act.

Is work-related stress starting to take its toll? If you are a seaman, you better relax—according to the United States Court of Appeals for the Eleventh Circuit, you have no claim under the Jones Act. In Skye v. Maersk Line, Ltd. Corp, No. 12-16433 (11 Cir. May 15, 2014), the appellate court rejected a seaman’s Jones Act claim for damages related to heart problems allegedly attributable to stress at work.

The chief mate on board the SEALAND PRIDE alleged that he worked tirelessly to perform his arduous duties, regularly working over 90 hours a week for up to 84 days at time. After eight long years on the job, he began to experience headaches, a sore back, and a burning sensation in his chest. His cardiologist diagnosed him with left ventricular hypertrophy, a thickening of the heart wall of the left ventricle. The doctor attributed the condition to continued physical job-related stress with long hours and lack of sleep. A few years later, the chief mate filed a Jones Act claim against his employer alleging that unreasonable working conditions were the cause of the physical damage to his heart. The jury agreed—it awarded the chief mate almost $600,000 after taking into account his own comparative fault.

On appeal, the Eleventh Circuit was not so sympathetic. Pointedly, the court held that “[t]he Jones Act does not allow a seaman to recover for injuries caused by work-related stress because work-related stress is not a ‘physical peril.’” Relying on the Supreme Court case, Consolidated Rail Corp. v. Gottshall, 512 U.S. 532 (1994), the court reasoned that for an employer to be liable under the Jones Act, the employee’s injuries must be caused by negligent conduct that threatens imminent physical impact. Indeed, the “central focus” on assigning liability to an employer under the Jones Act is on “physical perils.” A strenuous work schedule and an irregular sleep schedule, the court concluded, are not such perils.

The court, however, was far from unanimous. Of the three judge panel, each offered their own two cents. Judge Fay regretfully concurred with the majority opinion only because he thought the court was bound by the Supreme Court precedent established in Gottshall. Showing signs of sympathy toward the plaintiff, the concurring judge urged the Supreme Court to revisit its decision in Gottshall to find a suitable remedy for workers who have been subjected to “outrageous hours.” In contrast, a dissenting judge denied that Gottshall was dispositive to the outcome of the case. He loosely declared that this case dealt with physical injury, whereas Gottshall dealt with injury from emotional distress.

The Skye decision raises an important issue: should stress-related conditions merit recovery under the Jones Act; or would allowing stress-related claims open the floodgates for trivial suits and fraud? Keep an eye on this one—the Supreme Court may hear the concurring judge’s pleas.

New Definition of Waters Protected Under the Clean Water Act Proposed

Posted in Marine Pollution

The Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) have proposed a new rule defining the scope of waters protected under the Clean Water Act (CWA). The proposal sets forth several categories of waters to be included in the definition as well as established waters that are subject to the Act. This proposed rule was made in light of the Supreme Court cases in U.S. v. Riverside Bayview, Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers and Rapanos v. United States -- regarding the determination of which streams and which wetlands were subject to the Clean Water Act protection.

The goal behind the proposed rule is to minimize the number of case-by-case determinations of which waters are protected under the Act; namely on the category of waters referred to as “other waters.” The agencies propose to define waters of the United States to mean:

  • All waters which are currently used, were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters which are subject to the ebb and flow of the tide;
  • All interstate waters, including interstate wetlands;
  • The territorial seas;
  • All impoundments of a traditional navigable water, interstate water, the territorial seas or a tributary;
  • All tributaries of a traditional navigable water, interstate water, the territorial seas or impoundment;
  • All waters, including wetlands, adjacent to a traditional navigable water, interstate water, the territorial seas, impoundment or tributary; and
  • On a case-specific basis, other waters, including wetlands, provided that those waters alone, or in combination with other similarly situated waters, including wetlands, located in the same region, have a significant nexus to a traditional navigable water, interstate water or the territorial seas.

The proposed rule states that the term “significant nexus” means that a water, including wetlands, either alone or in combination with or similarly situated waters in the region, significantly affects the chemical, physical, or biological integrity of a jurisdictional water body. For an effect to be significant, it must be more than speculative or insubstantial. Other waters, including wetlands, are similarly situated when they perform similar functions and are located sufficiently close together or sufficiently close to a “water of the United States” so that they can be evaluated as a single landscape unit with regard to their effect on the chemical, physical, or biological integrity of a protected water.

The proposed rule also excludes specified waters from the definition of “waters of the United States.” Some of these exclusions are:

  • Waste treatment systems, including treatment ponds or lagoons, designed to meet the requirements of the Clean Water Act.
  • Prior converted cropland. Notwithstanding the determination of an area’s status as prior converted cropland by any other Federal agency, for the purposes of the Clean Water Act the final authority regarding Clean Water Act jurisdiction remains with the EPA.
  • Ditches that are excavated wholly in uplands, drain only uplands, and have less than perennial flow.
  • Ditches that do not contribute flow, either directly or through another water, to a traditional navigable water, interstate water, the territorial seas or a jurisdictional impoundment;
  • Groundwater, including groundwater drained through subsurface drainage systems

Some believe the proposed rule simplifies the process of determine what waters are considered jurisdictional waters, and thereby protected by the CWA. However, others believe the proposed rule could potentially broaden what types of “other waters” next to “waters of the U.S.” are considered jurisdictional. Perhaps the more important question is, will federal courts suddenly be over flooded with new CWA cases? This debate will only be settled over time.

 

Guest blogger Krystin Frazier is an attorney in the New Orleans office of King Krebs & Jurgens focusing on environmental, toxic tort, and oil & gas matters.

 

A Beach Vacation from the Longshore Act

Posted in LHWCA

Global Management Enterprises v. Commerce & Industry Insurance Co. clarifies whether oil spill clean-up injuries are covered under LHWCA.

In an unpublished per curiam decision, Global Management Enterprises, LLC v. Commerce & Industry Insurance Company, No. 13-31249, filed June 23, 2014, Judges Davis, Benavides and Prado determined that a worker who was injured while assisting with Deepwater Horizon oil spill clean-up efforts on an island in the Gulf of Mexico was not covered under the Longshore and Harbor Workers’ Compensation Act (LHWCA). Mr. De La Cruz was allegedly injured on the beach of an unnamed Gulf island while lifting a bag of oil-contaminated sand that would later be loaded onto a truck and eventually transferred to a vessel for removal from the island. 

Mr. De La Cruz was employed by Global Management Enterprises (Global), a temporary employment agency that was insured for workmen’s compensation payments by Chartis under a policy that excluded coverage for claims under the LHWCA. Due to the fact that De La Cruz had filed, but later withdrew, a Longshore Act claim while receiving state workmen’s compensation benefits, Chartis ceased workers’ compensation payments citing their policy’s LHWCA exclusion. Global then sued Chartis seeking the state workmen’s compensation coverage that they had purchased. 

The determinative situs issue for coverage under the LHWCA was whether the site of injury was an “other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel” 33 U.S.C. § 903(a). According to the decision by the Fifth Circuit in Depot Services v. Workers’ Compensation Programs, 714 F.3d 384 (5th Cir. 2013)(en banc), a work site, to be covered by the LHWCA, must (1) adjoin navigable waters and (2) customarily be used by an employer to facilitate one of the listed maritime activities. There was no dispute that the incident occurred at a site adjoining navigable waters. The remaining question was whether the beach was a location customarily used by an employer for covered activity. The panel concluded that the site of the injury was not. There was no evidence that any loading or unloading of vessels or repair of vessels transpired at the site where the claimant was injured. 

Interestingly, Chartis argued that the beach and pier where the crew would load the oil-laden sand aboard a vessel should be considered a single area, asserting that under Coastal Production Services, Inc. v. Hudson, 555 F.3d 426 (5th Cir. 2009) the site should be seen as interconnected with the longshoring activities. The Court in examining the material facts rejected this argument, finding that the proximity of the site of injury to the vessel loading activities was not sufficient to establish it as a component of the general area used for the overall loading process. 

While some had thought that the en banc decision in Depot Services v. Workers’ Compensation Programs had completely overruled Winchester and Hudson, this panel of the Fifth Circuit indicated that Winchester and Hudson were only overruled where they are inconsistent with the adjacency standard established in Depot Services. Citing a discussion in Winchester of the functional “customary use” component of situs they indicated the previous discussion remained binding precedent.

Enforcing Foreign Judgments in U.S. Admiralty Courts: Second Circuit Prefers Substance Over Form

Posted in Maritime Contracts, Offshore Jurisdiction

After protracted and expensive litigation overseas, you obtain a judgment against the defendant. There remains one series of hurdles left to cross: the defendant refuses to pay that judgment and has no assets in the country where the litigation was conducted. However, the defendant (or possibly one or more of its numerous alter egos) has assets in the United States. What should you do to collect on the judgment? If the underlying claim would be considered a maritime claim under U.S. law, one option is filing an enforcement action in federal district court under its admiralty subject matter jurisdiction, 28 U.S.C. § 1333.

In D’Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd., No. 11-3473-cv (2nd Cir. June 12, 2014), the Second Circuit concluded that U.S. district courts have admiralty subject matter jurisdiction over an action to enforce the judgment of a foreign tribunal where the underlying claim on which the judgment was rendered would be considered maritime under U.S. law. D’Amico and Primera executed a forward freight agreement (“FFA”), a futures contract (i.e., contractually enforceable wager) contingent upon the parties’ accurately predicting future market rates for the shipment of goods. Under the FFA, Primera was obligated to pay D’Amico and failed to do so. In accordance with the forum selection and choice of law provisions of the FFA, D’Amico filed suit in the Commercial Court of the Queen’s Bench Division of the English High Court of Justice, which rendered a substantial judgment against Primera.

When Primera failed to pay the English judgment, D’Amico filed suit to enforce that judgment in New York federal court under its admiralty jurisdiction. The district court granted Primera’s motion to dismiss for lack of subject matter jurisdiction because the English judgment was rendered by the Commercial Court and not the Admiralty Court and, additionally, English law would not consider D’Amico’s claim as being maritime.

On appeal, the Second Circuit concluded that the proper inquiry in an enforcement action brought under the district court’s admiralty jurisdiction was whether the underlying claim on which the judgment was based was a maritime claim under U.S. law. The Court recognized that many foreign tribunals do not have admiralty courts even though the foreign tribunals adjudicate maritime claims. Thus, whether a foreign judgment was rendered by a foreign admiralty court was of no moment. Additionally, after a review of various “theoretical and practical reasons”, the Second Circuit concluded that whether a claim is maritime should be determined under U.S. law and not the law of the foreign court that rendered the judgment that is the subject of the enforcement action.

PRACTICE NOTE:  The Second Circuit expressly distinguished its holding from the federal court’s subject matter jurisdiction over enforcement actions brought under the court’s “federal question” jurisdiction, 28 U.S.C. § 1331.  For enforcement suits based on “federal question” jurisdiction, the federal court must have a jurisdictional basis independent of the fact that the judgment was rendered by another federal court.

Offshore Acres and Leases Up for Grabs in the Atlantic Coast and Gulf Region

Posted in Offshore Wind

Bureau of Ocean Energy ManagementAs a part of President Obama’s Climate Action Plan to promote American leadership in renewable energy, and coupled with the Interior’s “Smart from the Start” wind energy initiative for the Atlantic Coast, the Interior has announced the Nation’s largest offshore wind energy area available for commercial development. The Interior and Bureau of Ocean Energy Management (BOEM) announced on 06/17/14 that more than 742,000 acres offshore Massachusetts will be available for commercial wind energy leasing. By far, this proposed area is the largest in federal waters and will nearly double the federal offshore acreage available for commercial wind energy projects.

The proposed Wind Energy Area is located approximately 12 miles offshore Massachusetts. The Bureau of Ocean Energy Management (BOEM) proposes to auction the Wind Energy Area as four leases. The proposed sale notice triggered a 60-day public comment period ending on August 18, 2014. The end of the comment period also serves as the deadline for any participating companies to submit their qualification packages. To be eligible to participate in the lease sale, the BOEM must first determine that the bidder is legally, technically and financially qualified before the Final Sale Notice is published. The BOEM strongly encourages potential bidders to submit a qualification package as early as possible during the comment period to ensure adequate time for processing.

The Gulf Region will see new lease developments as well. The Gulf Region is preparing for several sales in the Gulf of Mexico occurring in the years 2014-2017 under the Five Year Outer Continental Shelf Oil and Gas Leasing Program. Lease Sale 238, covering the Western Gulf of Mexico, is set for August 2014. This will be followed by Lease Sale 235, covering the Central Gulf of Mexico, and Lease Sale 246, covering the Western Gulf of Mexico in 2015.

 

Guest blogger Krystin Frazier is an attorney in the New Orleans office of King Krebs & Jurgens focusing on environmental, toxic tort, and oil & gas matters.

 

That’s Not My Kid! Board Clarifies Definition of “Child” under the Longshore Act

Posted in LHWCA

Smith v. Mt. Mitchell clarifies the definition of “child” under the LHWCA.

On February 25, 2014, the Benefits Review Board rendered its decision in Smith v. Mt. Mitchell, LLC, ____BRBS____ (D.O.L. Ben. Rev. Bd. Feb. 25, 2014), which affirmed an Administrative Law Judge’s decision and order, clarifying the meaning of the term “child” under the Longshore and Harbor Workers’ Compensation Act (LHWCA). The inquiry central to the Board’s decision was whether the claimant was “wholly dependent” on his father at the time of his father’s death.

The claimant’s father, the decedent, worked over thirty years as a pipefitter and welder for several maritime employers. During the span of his career, the decedent was exposed to asbestos and eventually contracted lung disease, from which he later died. Following the decedent’s death, the claimant, an adult who suffered from multiple medical conditions including Crohn’s disease, filed a claim for death benefits as a wholly dependent, disabled “child.”

The administrative law judge (ALJ) considered all available evidence regarding the claimant’s dependency and found that he did not qualify as a “child” under Section 2(14) of the LHWCA. Additionally, the ALJ found that the claimant did not qualify as the decedent’s “dependent” under Section 9(d) of the LHWCA. The claimant’s claim for benefits was ultimately denied.

On appeal to the Benefits Review Board, the claimant argued that the ALJ erred in determining that he was ineligible to recover benefits as a “child” under Section 9(b) of the LHWCA. The term “child” is defined in Section 2(14), which provides, in pertinent part, a “child” . . . include[s] only a person who is under eighteen years of age, or who, though eighteen years of age or over, is (1) wholly dependent upon the employee and incapable of self-support by reason of mental or physical disability, or (2) a student . . .” The claimant was over the age of eighteen and not a student. As such, he would only qualify as a “child” under the Act if he was “wholly dependent” on the decedent and incapable of self-support by reason of mental or physical disability.

The Board agreed with the reasoning and findings of the ALJ. Evidence showed that the claimant received Social Security disability benefits at least three times greater than the monthly expenses he received from the decedent. He alleged that he received $200 to $300 per month from his parents, but acknowledged that he received $1,357.80 per month in Social Security benefits. Despite his contention that public benefits should not be included in determining whether or not a disabled relative is “wholly dependent,” he cited no precedent that supported his assertion. To the contrary, however, case law shows that welfare benefits and other forms of government funding have been considered in determining dependency in claims for benefits. See, Doe v. Jarka Corp. of New England, 21 BRBS 142 (1988); Mikell v. Savannah Shipyard Co., 24 BRBS 100 (1990). Thus, the Board found no error in the ALJ’s inclusion of the claimant’s disability benefits in the determination of “wholly dependent” status.

In sum, where a disabled adult child seeks death benefits under Section 9(b) of the Act, one should be cognizant that any income he or she receives, regardless of the source, likely will be considered to determine “wholly dependent” status. This determination is fact specific. Should the additional income the child receives exceed the amount received from the decedent, that “surviving child” may not be considered a “child” at all.

 

Guest blogger Kourtni Mason is an attorney in the New Orleans office of King Krebs & Jurgens. She practices primarily in the area of Admiralty & Maritime law.