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But I’m Not Dead Yet! Punitive Damages for Unseaworthiness Claims Live On

Posted in Jones Act, Maritime Accidents

The U.S. Fifth Circuit Court of Appeals recently concluded that Jones Act seamen can recover punitive damages for their employer’s willful and wanton breach of the general maritime duty to provide a seaworthy vessel, in McBride v. Estis Well Serv., L.L.C., No. 12 – 30714 (5th Cir. Oct. 2, 2013). The jurisprudential history behind this result resembles a slowly rebounding yo – yo that oscillates over a period of decades.

In 1981, the Fifth Circuit concluded that punitive damages may be recovered under the general maritime law upon a showing of willful and wanton misconduct by the ship owner in the creation or maintenance of unseaworthy conditions. In re Merry Shipping, Inc., 650 F.2d 622, 623 (5th Cir. Unit B 1981). However, the health of the Merry Shipping decision took a turn for the worse, starting with the Supreme Court’s 1990 decision of Miles v. Apex Marine Corp., 498 U.S. 19, 27 (1990), in which the Supreme Court concluded that the pecuniary damages limitations under both the Jones Act, 46 U.S.C. § 30104, and the Death on the High Seas Act (DOHSA), 46 U.S.C. § 30301 et seq., likewise limited the damages recoverable by the seaman’s estate for wrongful death caused by the unseaworthiness of the vessel under the general maritime law. Although the recoverability of punitive damages was not before the Supreme Court, a plethora of intermediate appellate court decisions seized on the pecuniary damages limitation of the Miles decision for general maritime law claims involving seamen to conclude that punitive damages, which were clearly non – pecuniary, were likewise not recoverable under the general maritime law for vessel unseaworthiness.

The death of Merry Shipping was initially reported by the en banc Fifth Circuit in Guevara v. Maritime Overseas Corp., 59 F.3d 1496 (5th Cir. 1995) (en banc), which concluded that Miles effectively had overruled Merry Shipping and that punitive damages were not available under the general maritime law for willful nonpayment of maintenance and cure. Id. at 1513. In light of the Guevara decision, those few remaining doubtful jurists ultimately concluded that punitive damages were not available to a Jones Act seaman in an action for unseaworthiness under the general maritime law.

Fourteen years after Guevara, the Supreme Court, in Atlantic Sounding Co., Inc. v. Townsend, 557 U.S. 404 (2009), restored the availability of punitive damages for maintenance and cure claims under the general maritime law. The Townsend Court reached this conclusion for two reasons:  (1) the general maritime cause of action for maintenance and cure preceded the enactment of the Jones Act and (2) punitive damages were an available remedy under the general maritime law when the Jones Act was enacted. Because the Jones Act did not expressly address either maintenance and cure or punitive damages, both remained available after its passage in 1920. Id. at 414 – 15. In so holding the Townsend court abrogated the Guevara decision.

Following the precedent of Townsend, the Fifth Circuit in McBride has completed this particular cycle of the punitive damages yo – yo and reinstated the holding of the 1981 Merry Shipping decision. Punitive damages are once again available to seamen who are injured or killed by the ship owner’s willful and wanton misconduct in creating an unseaworthy condition. McBride at 2 & 20. Or as the hapless villager tried to explain in Monty Python and the Holy Grail:  “But I’m not dead yet!”

Greek Tonnage Tax Imposed on Foreign-Flagged Vessels

Posted in Ports & Cargo Shipping

Greece has finally imposed a tonnage tax on foreign-flagged vessels operated by shipping companies in Greece. It already had been taxing Greek-flagged ships, and the nation’s debt crisis left the government with no other choice than to tax foreign-flagged ships in an attempt to help raise its revenues. The government is hoping it will raise at least $106 million from the levy.

The Greek state is targeting an estimated 762 managers with the new laws, which went into effect as of January 2013. Fortunately, ship owners and management companies’ ship earnings are excluded from the tax, as it only applies to the tonnage of their ships.

The Greek Ministry of Finance has issued the following guidelines as to who is liable for this new tax and how to calculate it:

  • The tax is levied on ships managed by companies in Greece which own foreign-flagged vessels.
  • The tax will be calculated using the gross tonnage of the vessel and the age of the vessel.
  • The tax will be calculated in U.S. Dollars and converted into and paid in Euros.
  • The foreign ship owner and the ship management office will be jointly liable for payment of the tax.
  • The responsibility for filing the tax return lies with the ship owner, the ship manager and their representatives or their attorneys-in-fact.
  • The annual return must be filed by the end of February for the previous calendar year; 25% of the tonnage tax assessed must be paid at the time the return is filed (February) with the remaining 75% paid in three equal installments due in June, September, and December.

The first year the tax was implemented was for 2012, meaning to be in compliance with the new law, 2012 taxes should have been filed by the end of this past February, with additional payments made in June, this month and in December 2013. Ship owners or ship managers that have not yet filed their 2012 tonnage tax will accrue a 1.5% monthly penalty fee (interest) which will be added to their outstanding taxes for filing untimely. If Greek authorities feel that an owner cannot pay his taxes, they could revert to arresting the vessel, but this extreme measure is unlikely to be implemented. Those needing further guidance should contact their attorney and accountant.

The Union of Greek Ship Owners (EEE) informed its members that it had reached an agreement with the government to implement an extraordinary additional voluntary contribution to the tonnage tax, in addition to the mandatory amount owed, for the next three years. This voluntary tax applies to Greek-owned shipping companies, whether they have Greek- or foreign-flagged ships. This contribution is voluntary, but the Union hopes that many ship owners will participate to help increase the government’s revenues.

New Orleans Attorney Joanne Mantis

Guest blogger Joanne Mantis is an 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 maritime clients both domestically and internationally.

 

 

Don’t You Forget About Me . . . Include Insurers in List of Indemnified Groups

Posted in Maritime Contracts

Don’t forget to include insurers when negotiating members of indemnified groups in master service agreements.

How many insureds entering into a master service agreement (“MSA”) go to bat for their insurers when negotiating who will compromise the members of their respective indemnified “Groups?” Given a recent decision of the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”), Duval v. Northern Assurance Company of America, __ F.3d __, 2013 WL 3367483 (5th Cir. July 5, 2013) (“Duval”), parties to an MSA should add their insurers to the long list of third parties that make up the indemnified “Groups.” In Duval, the Fifth Circuit ruled that the insurers of a party to an MSA were not entitled to enforce their insured’s defense, indemnification, and/or insurance rights under indemnity provisions of the MSA at issue.

Duval arose from injuries sustained by Glenn Duval, an employee of Wood Group/Deepwater Specialists (“Wood Group”), during an offshore personnel basket transfer from a vessel owned by Deep Marine Technologies, Inc. (“Deep Marine”) to a tension-leg platform. Wood Group was a contractor of BHP Billiton Petroleum Deepwater, Inc. (“BHP”). The MSA between BHP and Deep Marine contained reciprocal indemnity obligations and required each party to support their respective indemnity obligations with liability insurance, self-insurance, or a combination thereof. Under the MSA at issue, BHP was the “Company” and Deep Marine was the “Contractor.” Plaintiff Duval filed suit against Deep Marine and others, but not BHP, in the U.S. District Court for the Western District of Louisiana (“District Court”).

After being served with the Complaint, Deep Marine sought defense, indemnity, and an additional insured status from BHP under the MSA. BHP accepted Deep Marine’s tender, as the Wood Group was a member of the “Company Group.” While the suit was pending, and more than one year after BHP accepted Deep Marine’s tender, Deep Marine filed a Chapter 11 Bankruptcy proceeding in the U.S. District Court for the Southern District of Texas. The plaintiff, Duval, moved to lift the automatic stay to proceed with his case against Deep Marine’s insurers, which was granted.  Plaintiff Duval amended the Complaint and named Deep Marine’s insurers as defendants under Louisiana’s Direct Action Statute. Deep Marine’s insurers then filed a Third-Party Complaint against BHP seeking defense, indemnity, and insurance coverage in accordance with the MSA. Cross-Motions for Summary Judgment were filed between Deep Marine’s insurers and BHP, and the District Court granted BHP’s Motion for Summary Judgment, and denied Deep Marine’s insurers’ Motion for Summary Judgment. The District Court ruled that BHP was not obligated under the MSA at issue to provide Deep Marine’s insurers with defense, indemnity, and insurance coverage because, among other reasons, Deep Marine’s insurers were not among the long list of parties compromising who was part of the “Contractor Group,” an indemnitee under the MSA at issue.

On appeal, Deep Marine’s insurers put forth several arguments in favor of their interpretation of the MSA at issue. The Fifth Circuit, however, did not find any of the insurers’ arguments compelling. The Fifth Circuit rejected each of the arguments advanced by Deep Marine’s insurers, and affirmed the judgment of the District Court, as follows:

  1. BHP did not waive defenses to Deep Marine insurers’ claims under the MSA by initially accepting Deep Marine’s tender prior to Deep Marine’s bankruptcy filing.
  2. Deep Marine’s insurers could not recover under the indemnity provisions of the MSA at issue because the Contractor Group did not include insurers. The Fifth Circuit reasoned that if the parties to the MSA at issue intended to include their insurers as beneficiaries of the indemnity provision of the MSA at issue, they could have expressly done so as other parties have done in other MSAs.
  3. Deep Marine insurers argued that they stepped into the shoes of the subrogor, Deep Marine, once payment is made. The Fifth Circuit disagreed because the insurers could not recover from BHP absent a loss by Deep Marine in Duval, and Plaintiff Duval’s claims against Deep Marine were stayed indefinitely due to the bankruptcy proceeding.
  4. Relying on Texas law, the Fifth Circuit also found that BHP’s primary million dollar “self-insurance” did not confer additional insured status to the insurers as “the term ‘self-insurance’ is a misnomer” because “in effect, a self-insurer does not provide insurance at all.”
  5. Although Deep Marine’s insurers were correct that Deep Marine’s bankruptcy does not discharge the debt of any third party, including BHP, as the Fifth Circuit noted, the Plaintiff Duval did not assert any liability against BHP.

The Fifth Circuit’s decision was based heavily on the language of the MSA at issue, and the posture of Duval. In order to attempt to avoid the same outcome, and to protect insurers, parties to an MSA need to include their insurers as members of the respective indemnified “Groups.” Parties drafting contracts should be familiar with Duval, so, during the negotiating phase, parties can support their rationale when drafting indemnity and insurance provisions of MSAs to include their insurers as members of the indemnified “Groups.”

Fifth Circuit Narrows “Adjoining Area” Definition in LHWCA Jurisdiction Test

Posted in LHWCA

On April 29, 2013, the Fifth Circuit issued an opinion for the en banc Court in New Orleans Depot Services, Inc. v. Director OWCP, 718 F.3d 384 (5th Cir. 2013) that effectively reformulated the 1972 situs jurisdictional requirement under the Longshore and Harbor Workers’ Compensation Act (LHWCA), 33 U.S.C. sec. 901 et.seq. The Court now will require that the situs upon which an employee is injured must border upon navigable waters for the employee to satisfy this prong of the dual jurisdiction test of the Act.

The reader will remember that prior to the amendments to the LHWCA in 1972, the Act’s jurisdiction applied over navigable water and ended at the water’s edge. In order to attune the coverage of the LHWCA to the changes in the shipping industry that increasingly drew stevedoring activities onto land, Congress in 1972 provided the following amendment to the act:

SEC. 3.(a) Except as otherwise provided in this section, compensation shall be payable under this Act in respect of disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel). (emphasis added)

In its latest restatement of the situs requirement, the majority of the court rejected its previous definition of “other adjoining area” provided in Textports Stevedore Co. v. Winchester, 632 F.2d 504 (5th Cir. 1980). In that case, Mr. Winchester was injured in a gear room located more than five city blocks from the water’s edge. After 30 years of a broader test of what “adjoining” meant, the Court has now adopted the more objectively reasoned and restrictive “bordering upon navigable waters” definition of the Fourth Circuit in Sidwell v. Express Container Services, Inc., 71 F.3d 1134 (4th Cir. 1995).

Status Prong of LHWCA Test Also Addressed

In addition to this holding, seven judges provided a concurring decision concerning the status of the plaintiff, Mr. Zepeda, as a maritime employee, thereby addressing the second prong of the dual test for LHWCA jurisdiction. Noting that Mr. Zepeda was not involved in the actual process of moving cargo between ship and land transportation and was solely tasked with repairing empty containers, the concurring judges would find that he was not engaged in the type of duties that longshoremen traditionally perform in transferring goods between ship and land transportation. Mr. Zepeda therefore would not have met the criteria for maritime status. Only in the instance where the repair of a container was immediately necessary to prevent a stoppage in the loading or discharge of a vessel would the concurring judges find that container repairer had sufficient maritime nexus to suffice for the test of maritime status.

It is interesting to note that the author of the concurring opinion declared it to be an alternative ground to vacate the decision below and not to be considered as dictum. Practitioners may be hard pressed, however, to assert the concurring opinion as controlling precedent as it was adopted by less than a mathematical majority of the en banc Court. The concurring opinion is, however, noteworthy, as seven of the judges adopted its reasoning and these judges will be sitting on future panels of the Fifth Circuit.

File the Complaint for Limitation of Liability Part 2: Electric Boogaloo

Posted in Maritime Law

The scenario may be all too familiar. A vessel owner is involved in a commercial relationship with a valuable customer, when a marine casualty involving the vessel occurs. The customer makes a written demand on the vessel owner to pay the costs of repair plus consequential damages. Liability on the part of the vessel owner is not a lock, but fairly clear. The quantum of damages is substantial, but the potential consequential damages are uncertain. Settlement negotiations are ongoing, and partial payments are made. Moreover, there is always the commercial relationship to consider. At what point should the vessel owner file a complaint for limitation of its liability, pursuant to the Shipowners’ Limitation of Liability Act, or risk it being found untimely for failure to file within six months of receipt of a written claim?

In In re: Marquette Transportation Company, L.L.C., No. 12 – 31182 (5th Cir. May 31, 2013), the Fifth Circuit concluded that if the customer’s initial demand letter revealed a “reasonable probability” that the claim will exceed the value of the vessel, then the vessel owner must file the limitation complaint within six months of receipt of that letter. “When there is uncertainty as to whether a claim will exceed the vessel’s value, the reasonable possibility standard places the risk and the burdens associated with that risk on the owner.”  Id. at 4. As I have previously cautioned, “If in doubt, file the Complaint for Limitation of Liability.”

Under the particular facts of this case, Great Lakes’ dredge ran aground while under the tow of Marquette’s tug, requiring repairs that were not completed until 17 days later. On February 24, 2011, Great Lakes made a written demand on Marquette, stating Marquette was negligent and that Great Lakes would hold Marquette responsible for repairs in excess of $600,000, as well as consequential damages. The parties engaged in settlement negotiations, and reimbursement for certain repairs were made, but it was not until December 7, 2011, that Great Lakes finalized its calculations of its consequential damages, and made written demand on Marquette in excess of $4.5 million. Within six months of receipt of the December letter, Marquette filed its limitation complaint and posted a bond for the limitation fund in the amount of $2.1 million.

The district court and Fifth Circuit concluded that Marquette should have filed the limitation complaint within six months of receipt of the initial demand letter, even though the quantum of consequential damages was uncertain. As a result, Marquette’s limitation complaint was dismissed as untimely.

Gross Negligence the Focus of BP Oil Spill Post-Trial Briefing Order

Posted in Oil Spill

Gross negligence is a focus of post-trial briefing orders in the BP oil spill litigation.

After weeks of testimony, and dramatic “reveals” of newly discovered evidence that had been hiding in labs for years, the Phase One trial of the BP litigation finally came to an end late last month. Now the parties must submit their briefs and make their final arguments to the court by June 21, 2013.

At the conclusion of trial last month, Judge Barbier issued the post-trial briefing order, setting forth the usual information, such as page limits and deadlines for filing briefs and responses. However, he also provided some suggested topics of discussion for the parties to address in their briefs. Although not required, the court “believes it would be helpful” if the parties addressed these issues.

What is interesting, and perhaps telling, is the focus on gross negligence in proposed topics of discussion. The court would like for the parties to discuss, among other issues, the standards for finding “gross negligence” or “willful misconduct” under the Clean Water Act, 33 U.S.C. § 1321 (“CWA”), and the Oil Pollution Act of 1990, 33 U.S.C. §2704 (“OPA”); the standard for a finding of punitive damages under general maritime law, and how it may differ from the CWA or OPA; whether an act or omission that is not itself causal of the accident can still be considered in determining whether a party engaged in conduct constituting gross negligence; and whether compliance with applicable regulations preclude a finding of gross negligence, regardless of whether a defendant knew or should have known that its conduct or equipment was unsafe.

Gross negligence is particularly important in this litigation to the defendants, for a number of reasons. OPA provides for certain limits on liability depending on whether the instrumentality from which the oil is discharged is a “vessel” or an “offshore facility.” 33 U.S.C. § 2704(a)-(b). What could be detrimental for the defendants here is, if the incident was proximately caused by the gross negligence or willful misconduct of the responsible party, the limits of liability are not available. 33 U.S.C. § 2704(c). Under the CWA, the civil penalties are greater if the violation was caused by the gross negligence or willful misconduct of the owner, operator, or person in charge. 33 U.S.C. § 1321(b)(7)(D). Gross negligence should also play a part in a punitive damages analysis, which the court has already held may be available in this litigation. In Complaint of Merry Shipping, 650 F.2d 626 (5th Cir. 1981).

Although we don’t know how the judge will ultimately rule, gross negligence of one or more of the responsible parties certainly is at issue. The damages in this litigation will be very high, and the exposure for the responsible parties increases exponentially if the court finds gross negligence or willful misconduct. Briefing should be completed by July 12, 2013, and everyone in the Gulf South will be waiting on pins and needles to see not only how the court handles this complex trial, but the sums of money that will be awarded as a result of this tragic incident.

Disclosure: King, Krebs & Jurgens represents a number of private and public claimants in the BP litigation

Working Hard or Hardly Working? The Definition of “Rest” and Towing Vessel Work-Hour Limitations

Posted in Maritime Law

An often contentious issue in maritime litigation involving both personal injury and property damage is whether the wheelman in charge of a towing vessel that exceeds 26′ violated the so-called “twelve-hour rule.” According to 46 U.S.C. § 8104(h), “an individual licensed to operate a towing vessel may not work for more than 12 hours in a consecutive 24-hour period except in an emergency.” It is important for a company to make sure its wheelmen understand how investigators clock a 24-hour period, and what the courts consider “work.”

To provide guidance to summarize and clarify the work-hour limitations for licensed operators, the United States Coast Guard (“USCG”) issued a policy letter, G-MOC Policy Letter 4-00, Rev-1According to the USCG, except in emergencies, a licensed operator of a towing vessel “may not work in excess of 12 hours in any consecutive twenty-four (24) hour period.” The Federal District Court for the Eastern District of Louisiana, interpreting the language of the statute, as well as the USCG Policy Letter, has held that in determining whether the 12-hour rule was violated “the countdown starts from the time the injury occurred, going back 24 hours.” Mercer v. Chem Carriers LLC, 790 F. Supp.2d 478, 481 (E.D. La. 2011)(relying on language, i.e. “Up to the time of the collision”, used by the U.S. Fifth Circuit Court of Appeals in Archer Daniels Midland Co. v. M/V Freeport, 909 F.2d 809, 810-11 (5th Cir. 1990)).

Though the term “work” is not defined by statute or regulation, the term “rest” has been defined as “a period of time during which the person concerned is off duty, is not performing work (which includes administrative tasks such as chart corrections or preparation of port-entry documents), and is allowed to sleep without being interrupted….” 46 CFR § 15.1101(a)(4). Given the definition of “rest,” it might be difficult for companies to keep track of whether their wheelmen are adhering to the 12-hour rule. Most towing companies establish six hour watch-keeping policies aboard their vessels. That is, crew members work six hours on-watch and six hours off-watch. Most wheelmen record the times they go on-watch and off-watch in the vessel’s log. But what a wheelman does after his relief comes on watch could be just as important.

Indeed, if a wheelman spends his entire six hour watch behind the ”wheel” and then spends 30 to 40 minutes instructing or helping other crewmembers and/or tankering barges, one can see where the 12-hour rule might be violated. Another consideration to take in to account is whether travel time to and from the vessel would be included in the definition of “work.” Thus, all activities of a “licensed operator” could be considered by a USCG officer investigating an incident or a court in determining whether a wheelman is compliant with the “12-hour rule.” Because a wheelman’s “work” schedule may be different than his watch schedule, it may be wise for companies to implement policies that a wheelman mark down the time period he is off-duty, i.e., at “rest.”

Resources: 46 U.S.C. § 8104 - Watches G-MOC Policy Letter 4-00, Rev-1

 

Offshore Fairness Act Proposes Extending States’ Offshore Jurisdiction

Posted in Offshore Jurisdiction

The offshore jurisdiction of states in the southeastern U.S. could triple in the relatively near future. Two Louisiana Congressmen, U.S. Sen. David Vitter and U.S. Rep. Bill Cassidy, recently introduced companion bills styled as the Offshore Fairness Act (OFA), which would extend the offshore jurisdictions of Louisiana, Mississippi, Alabama, Florida (partially), Georgia, South Carolina, North Carolina and Virginia to three marine leagues (nine nautical miles) from their respective coastlines. That amounts to an expansion of approximately six nautical miles from their current jurisdictional limits of approximately one marine league or three nautical miles.

At present, two states in the Union – Texas and Florida (in part) – already have offshore jurisdictions extending 3 marine leagues from their coastlines. The Supreme Court of the United States has held that, upon Texas’s admission into the Union in 1845, Congress affirmed Texas’s boundary of three marine leagues, as established by Texas’s First Congress in 1836, through the Annexation Resolution of 1845. U.S. v. States of La., Tex., Miss., Ala. & Fla., 363 U.S. 1, 80 S. Ct. 961, 4 L. Ed. 2d 1025 (1960), supplemented sub nom., U.S. v. Louisiana, 382 U.S. 288, 86 S. Ct. 419, 15 L. Ed. 2d 331 (1965). The Supreme Court similarly has held that Congress’s approval of Florida’s Constitution in 1868, which was done as part of the implementation of the Reconstruction Act of 1867, affirmed the three league boundary along Florida’s Gulf Coast as set forth in that Constitution. Id. However, Florida’s boundary on its Atlantic/eastern boundary was not defined as extending three marine leagues from its coastline in its Constitution, so its offshore jurisdiction extends only three nautical miles off of that coast.

The major hurdle the OFA will face certainly will be its impact on rights to the massive amount of revenue, actual and potential, generated from resources derived from the submerged lands between the existing and potential boundaries. In its current form, the OFA expressly excludes the Outer Continental Shelf Lands Act (43 U.S.C. § 1443, et seq.) and the Gulf of Mexico Energy Security Act of 2006 (43 U.S.C. § 1331 note; Public Law 109-432) from its reach, and it would not impact federal oil and gas leases in affected areas on the date of the transfer of jurisdiction from the federal government to the states. However, the proposed bill expressly provides that it “shall not apply to any interest in the expanded submerged land that is granted by the State after the date on which the land is conveyed to the State” by the federal government. It also provides that the states in question may exercise all sovereign powers of taxation over interests in the expanded submerged lands acquired or created after the date the lands are transferred to the states.  Whether the states or the federal government should receive the tax revenues generated by such future interests certainly will be a point of contention.

In its present form, the OFA also would grant the subject states exclusive management over the red snapper fish, the lutjuanus campechanus, within 200 miles from their coastlines consistent with the U.S.’s exclusive economic zone. At present, the National Oceanic and Atmospheric Administration (NOAA) is responsible for conducting scientifically based fishery stock assessments for the red snapper fish. However, NOAA’s assessments have recently come under increased criticism from states and special interest groups.  If passed, the states would remain in charge of red snapper management until each state’s governor certifies to the Secretary of Commerce, in writing, that NOAA’s stock assessments are accurate and based on sound science.

UPDATE: New Orleans CityBusiness has reported that on Monday, April 22, Texas and Louisiana sued to block federal fishery officials from regulating the length of the red snapper recreational fishing season in federal waters off their coasts.

Other resources:
http://www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/Outer-Continental-Shelf/Index.aspx
http://www.gpo.gov/fdsys/pkg/BILLS-113hr1430ih/pdf/BILLS-113hr1430ih.pdf (House bill)
http://www.gpo.gov/fdsys/pkg/BILLS-113s681is/pdf/BILLS-113s681is.pdf (Senate bill)

Termination for Misconduct Does Not Reopen LHWCA Claim, Fifth Circuit Follows Fourth Circuit in Deciding

Posted in LHWCA

The Fifth Circuit has followed the Fourth Circuit’s lead in deciding today that an employee’s termination for misconduct will not reopen a disability claim under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

The United States Court of Appeals for the Fifth Circuit in an unpublished opinion issued on March 19, 2013, addressed the employer’s burden under the LHWCA to show suitable alternative employment where an employee is left with a residual disability to a nonscheduled portion of his body after a work-related injury (Cox v. Dir., OWCP, et al., No. 12-60180). In rebuffing the claimant’s appeal of the denial of his benefits by the Administrative Law Judge, the court reiterated its holding in Darby v. Ingalls Shipbuilding, Inc., 99F.3d 685 (5th Cir. 1996), that an employer can discharge its burden of showing suitable employment when an injured employee is disabled from returning to his pre-injury job by offering a different but suitable job at his current place of work. The court also cited Fourth Circuit case law, Brooks v. Dir, OWCP, 2F.3d 64,65 (4th Cir. 1993), that if the claimant thereafter losses the substitute employment due to his own misconduct, any subsequent loss in his wage earning capacity is not compensable under the Act as it does not result from a work-related accident.

In this instance the employer had sent a written offer of a job suited to the claimant’s limitation to medium duty work with restrictions on lifting, pushing and pulling to both the claimant and his attorney by certified mail. Although the claimant failed to claim the certified letter, it was delivered to his attorney. When the claimant failed to report to work as required in the offer he was terminated in accordance with the employer’s policy and the applicable union contract.

I’ll Take “Not a Vessel” for $600, Alex: What Is a Tension Leg Platform?

Posted in Jones Act, LHWCA, Offshore Oil

In the wake of the revisited tests of vessel status by the Supreme Court in Stewart vs. Dutra Construction Company, 543 U.S. 481 (2005) and Lozman v. City of Riviera Beach, Fla., 133 S.Ct. 735 (2013), it remains to be seen whether floating oil and gas production structures, such as SPARS and tension leg platforms (“TLP”), retained their non-vessel status. In Mooney v. W&T Offshore, Inc., No. 2:12-cv-969 (E.D. La. Mar. 3, 2013), District Judge Lance M. Africk recently concluded that the MATTERHORN SEASTAR, a TLP secured to the Outer Continental Shelf off the coast of Louisiana, was not a vessel as a matter of law. The plaintiff had filed suit against W&T Offshore, Inc., the owner and operator of the MATTERHORN SEASTAR, under the Jones Act, the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), and general maritime law for alleged personal injuries he claimed to have received while working on the MATTERHORN SEASTAR. The plaintiff’s potential recovery against W&T under the foregoing statutes and general maritime law depended on whether the MATTERHORN SEASTAR is a vessel. 

The MATTERHORN SEASTAR is a floating oil and gas production structure that has been secured to the seabed since 2003 by six mooring tendons, seven casing production risers, and two export pipelines, and it will remain in that moored location until at least 2020. Its buoyant hull had been towed to the moored location, where it was secured to the seabed by the mooring tendons, which tendons in turn were affixed to suction pilings driven hundreds of feet below the seafloor. Subsequently, the oil and gas production and processing equipment that comprised the top-sides of the TLP was installed on top of the hull. Thereafter, the production risers and pipelines were connected to the top-sides equipment. It would take W&T several months of preparation and activities, including the removal of the topsides from the hull, before the hull could be ready for towage away from the moored location. Lastly, the MATTERHORN SEASTAR has no system of self-propulsion, no raked bow, and is not intended to be towed or moved except as part of the initial positioning and ultimate removal of the hull from its moored location. 

Under the Rules of Construction Act, 1 U.S.C. § 3, as expanded by the Stewart and Lozman decisions, the current tests for whether a structure qualifies as a vessel is whether the structure is practically capable of being used as a means of transportation on the water, including whether a reasonable observer would consider the structure to be designed to a practical degree for carrying people or things over water. Based on the undisputed evidence, Judge Africk concluded that no reasonable observer would consider the MATTERHORN SEASTAR to be designed to a practical degree for carrying people or things over water. Moreover, it was only theoretically possible, and thus not practically possible, for the TLP to participate in maritime transportation. As a result, the MATTERHORN SEASTAR was not a vessel, and the plaintiff’s claims against W&T under the Jones Act, the LHWCA, and general maritime law were dismissed with prejudice. King, Krebs & Jurgens, including the author, represented W&T in its successful motion for partial summary judgment.