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.

The recent ruling in Double J. Marine, LLC v. Matthew Nuber, No. 13-5825 (E.D. La. Dec. 11, 2013) serves as a key reminder that employers need to be mindful that courts scrutinize release agreements as seamen are the wards of the admiralty court, whose rights federal courts are duty-bound to jealously protect.

Double J. Marine, LLC employee Matthew Nuber, a seaman, injured his back on March 8, 2013, while working, and was brought to the emergency room. The emergency room physician diagnosed Nuber with a pulled muscle, and told him not to work, and to follow-up in a week. Nuber returned to the emergency room approximately a week later, where a different emergency room physician re-examined him, determined he was able to return to work, and discharged him. Importantly, neither physician was a specialist, such as an orthopedist or a neurologist, nor did the physicians perform or order any diagnostic testing.

The same day Nuber was discharged, he met the claims adjuster retained by Double J at a nearby gas station, who presented Nuber with a Receipt, Release, and Hold Harmless Agreement. The adjuster read and explained the terms of the Release to Nuber, who had only a 10th grade education. Nuber said he understood and agreed with the terms, and executed the Release without consulting an attorney or another physician.

Nuber returned to full duty work the next day, but a month later he started experiencing back pain again. Double J placed him on light duty and offered for him to be examined by an orthopedic surgeon. That surgeon diagnosed Nuber with herniated discs related to the March 8 incident and recommended surgery. Soon after, Nuber made demand on Double J for maintenance and cure benefits.

Double J filed a declaratory judgment to determine the enforceability of the Release, and later filed a summary judgment seeking an order to enforce the Release. However, Judge Martin Feldman denied the motion. Nuber was able to raise issues of material fact indicating he did not execute the Release freely with a full understanding of his rights. Judge Feldman pointed out that Nuber did not undergo any diagnostic testing at the hospital, and the emergency room physicians did not refer him to a specialist. Accordingly, Judge Feldman determined that Nuber may not have been informed or understood his rights in the nature of the legal and medical advice available to him. See also Garrett v. Moore-McCormack Co.; Borne v. A&P Boat Rentals No. 4 Inc.

This point is one that is important for employers to take into account when trying to settle claims — has the seaman received adequate medical advice for the type of injury sustained so that he is informed and understands the consequences of signing a Release?

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.”

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

 

Supreme Court of the United States
The Supreme Court of the United States may soon be deciding the definition of a vessel.

The very question of what makes a structure a “vessel”  under Section 3 of the Rules of Construction Act, 1 U.S.C. §3 is before the United States Supreme Court in City of Riviera Beach v. That Certain Unnamed Gray, Two-Story Vessel Approximately Fifty-Seven Feet in Length, 649 F. 3d 1259 (11th Cir. 2011). In Part 1 of this blog post, we looked at the position of the owner of the alleged vessel, who argued that use and intention should be considered and that a watercraft like his floating house should not be considered a vessel. The Eleventh Circuit, however, ruled otherwise.

In determining that the floating house was a vessel, the Eleventh Circuit distinguished and disagreed with jurisprudence from the Fifth and Seventh Circuits. According to the Eleventh Circuit, the Fifth and Seventh Circuits “focus on the intent of the ship owner rather than whether the boat has been ‘rendered practically incapable of transportation or movement.’” Compare Board of Commissioners of the Orleans Levee District v. M/V Belle of Orleans, 535 F.3d 1299 (11th Cir. 2008) with Pavone v. Mississippi Riverboat Amusement Corp., 52 F.3d 560 (5th Cir. 1995); Tagliere v. Harrah’s Ill. Corp., 445 F.3d 1012 (7th Cir. 2006). The Eleventh Circuit submitted that by injecting the owner’s intention into determining whether a floating structure was a vessel, the Fifth and Seventh Circuits have deviated from the United States Supreme Court’s decision in Stewart v. Dutra Construction Company, 543 U.S. 481 (2005).

In the amicus briefs filed by the National Marine Bankers Association and numerous maritime plaintiff attorneys, it was argued that the Eleventh Circuit’s decision should be upheld, and they too criticized the jurisprudence of the Fifth and Seventh Circuits. As argued by National Marine Bankers Association, under the Fifth and Seventh Circuits’ jurisprudence, “a once-valid marine security could at a later date be adversely affected because the craft is no longer deemed a vessel” by its owner, which would create uncertainty for lenders and banks. The plaintiff’s attorneys also supported the Eleventh Circuit’s decision as it potentially could expand admiralty jurisdiction to include, among other things, floating casinos, and other floating offshore installations.

The outcome of this case may have far reaching implications likely broader than those briefed, including whether the courts would revisit whether certain floating offshore installations used in the petroleum industry are vessels. That is, if the matter is decided at all. The U.S. Solicitor General has argued that the case is moot as the floating houseboat at issue has already been destroyed, and the Supreme Court has requested the parties further brief that issue. Stay tuned.

A feisty dachsund and its owner, Fane Lozman, have stirred up troubled waters regarding the definition of a “vessel” in City of Riviera Beach v. That Certain Unnamed Gray, Two-Story Vessel Approximately Fifty-Seven Feet in Length, 649 F. 3d 1259 (11th Cir. 2011). That case, which is now before the 2012–2013 session of the United States Supreme Court, started out with the City of Riviera Beach, Florida, attempting to evict Mr. Lozman and his floating home from the city’s marina because, among other things, he refused to keep his dog—a small Dachshund—muzzled.

The case may have far reaching implications. It has attracted interest and amicus briefs from the federal government, numerous floating home owners and their associations, lawyers, law professors, the Marine Bankers Association, carpenters, and owners and operators of riverboat casinos, all of whom claim they will be affected by the Supreme Court’s decision. In a two-part blog post, Offshore Winds will look at both sides of this argument over the definition of “vessel.”

The City of Riviera Beach claims Mr. Lozman’s structure is a vessel and brought an in rem proceeding against it. Mr. Lozman disputed that claim. The position of Mr. Lozman, along with the American Gaming Association, the carpenters, certain lawyers, and the floating homeowners, was that in determining whether a structure was a “vessel” under Section 3 of the Rules of Construction Act, 1 U.S.C. §3, the Court must take into account practical considerations such as historical use, its current use, and its reasonable intended use for the future. The matter is being watched closely within the Fifth and Eleventh Circuits, where employees of semi-permanently moored riverboat casinos are subject to workmen’s compensation laws, not federal maritime law. Additionally, floating homeowners argue that expanding the definition of vessel to include their floating homes would subject them to new federal laws, including maritime liens, which would frustrate certain local regulations. They argue that practically their homes are a mere extension of the land, and should be treated as such in the courts.

The United States Court of Appeals for the Eleventh Circuit agreed with the City of Riviera, disagreeing with jurisprudence from the Fifth and Seventh Circuits defining what is a vessel. In Part 2, we will look at why that Court held Mr. Lozman’s floating home was a vessel.