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Punitive Damages - US Eastern District Court HouseFollowing the Fifth Circuit’s opinion in McBride v. Estis Well Service, 768 F.3d 382, 391 (5th Cir. 2014), we reported that punitive damages had “expired and gone to meet their maker” when it comes to Jones Act seamen. As it turns out, they were only mostly dead. In Corey Hume et al. v. Consolidated Grain & Barge, Inc. et al., No. CA 15-0935, 2016 WL 1089349, at *1 (E.D. La. Mar. 21, 2016), Judge Zainey of the Eastern District ruled that punitive damages are still recoverable by Jones Act seamen against non-employer third parties.

The Plaintiffs, who were employees of defendant Consolidated Grain, were working aboard a vessel owned by defendant Quality Marine Services when a running wire of the vessel struck each of them in the face and head, resulting in brain injuries and facial disfigurement. The Plaintiffs sued Quality Marine for punitive damages under general maritime law. Quality Marine moved to dismiss, arguing that, pursuant to McBride v. Estis Well Service, 768 F.3d 382, 391 (5th Cir. 2014) (en banc), cert. denied, 135 S.Ct. 2310 (2015) (which held that an injured seaman cannot recover punitive damages against his employer), and Scarborough v. Clemco Industries, 391 F.3d 660, 668 (5th Cir. 2004) (which held that a seaman who invokes Jones Act status cannot recover punitive damages against a non-employer third party), Plaintiffs were not able under general maritime law to recover punitive damages from Quality Marine.

The court disagreed. Relying on another recent decision from the Eastern District, Collins v. A.B.C. Marine Towing, L.L.C., 14-1900, 2015 WL 5254710 (E.D. La. Sept. 9, 2015), the court declined to follow the Fifth Circuit’s holding in Scarborough, finding Scarborough had been “effectively overruled” by the Supreme Court in Atlantic Sounding Co. v. Townsend, 557 U.S. 404 (2009). The court held instead that the Jones Act forecloses a seaman’s recovery for non-pecuniary loss in maritime cases only with respect to his employer. With respect to a non-employer tortfeasor such as Quality Marine, to whom the Jones Act does not apply, no statutory regime exists that conflicts with general maritime law remedies, and thus punitive damages may be recoverable. In the end, the court held that the “takeaway from Townsend” was that a seaman may recover punitive damages under general maritime law if the Jones Act is not implicated, and denied Quality Marine’s motion to dismiss the punitive damages claim.

Helix
This ship may or may not have been a vessel in navigation while in dry dock for 20 months, according to a Texas court of appeals in the Jones Act case Gold v. Helix Energy Solutions Group.

A Texas court of appeals recently held that a drill ship undergoing a renovation for nearly two years in dry dock might still be a “vessel in navigation.” Gold v. Helix Energy Solutions Group, Inc., No. 14-15-00123-CV, (Tex. App. Dec. 15, 2015). The plaintiff, who had been hired to work as a seaman aboard the Helix, was working on the ship in dry dock when he began to experience neck pain and was diagnosed with a bulging disk. He sued the ship owner under the Jones Act for his injuries. The owner successfully moved for summary judgment on the basis that the worker was not a Jones Act seaman because the Helix, which was under conversion in the Jurong Shipyard in Singapore for a total of 20 months, was not a vessel in navigation. The Texas court of appeals reversed the grant of summary judgment, holding that fact issues existed as to vessel status despite the lengthy withdrawal from navigation.

The Supreme Court has held that a vessel does not cease to be a vessel simply because she is berthed for minor repairs. See, e.g., Chandris, Inc. v. Latsis, 515 U.S. 347, 374, 115 S. Ct. 2172, 2192, 132 L. Ed. 2d 314 (1995). However, there is a point the repairs become so significant, or the time out of the water so vast, that the vessel can no longer be considered “in navigation” for Jones Act purposes. For example, the Ninth Circuit held that a ship undergoing reconstruction over 17 months (three months less than the Helix) was not a vessel in navigation. McKinley v. All Alaskan Seafoods, Inc., 980 F.2d 567, 568 (9th Cir. 1992). The Fifth Circuit held that an extensive overhaul lasting only 77 days was enough to render a ship no longer in navigation. Hodges v. S. S. Tillie Lykes, 512 F.2d 1279, 1280 (5th Cir. 1975). And yet the Helix, laid up for repairs far longer than the ships in either of those cases and with no means of self propulsion, might nevertheless be “in navigation.”

Although there is no settled expiration date for “in navigation” status for vessels under repairs, the weight of authority in the Fifth Circuit and admiralty courts elsewhere suggests that a ship undergoing a major conversion over the course of nearly two years is definitely not a vessel in navigation for Jones Act purposes. Thus, the Texas court of appeals’ decision in the Helix case is a bit of an outlier. Still, the decision is worth noting as a demonstration of how far some courts are willing to go to find Jones Act seaman status.

The U.S. Fifth Circuit recently reversed and rendered a District Court’s finding of future lost wages so that it was based on statistical work life expectancy rather than Social Security retirement age. In the recent unpublished Fifth Circuit opinion, Mark Barto vs. Shore Construction, LLC; McDermott Inc., No. 14-31326, the Court affirmed a finding of Jones Act negligence against a derrick barge owner, an award for future general damages, and the award for cure against the plaintiff’s nominal employer. However, with regard to the plaintiff’s future lost wages, the decision focused on the District Court’s adoption of the plaintiff’s economist’s supposition that the plaintiff would work until his Social Security retirement age of 67 was reached rather than to an age supported by statistical work life expectancy. The Fifth Circuit reversed the District Court’s finding of future lost wages and reduced the amount as would be appropriate in determining that the plaintiff would have only worked until the age of 55.8 rather than 67.

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.

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.

In Chenevert v. Travelers Indemnity Co., No. 13-60119 (5th Cir. March 7, 2014), the Fifth Circuit formally recognized the right of an insurer providing and making voluntary payments to an injured employee under the Longshore and Harbor Workers’ Compensation Act (LHWCA) to recover its payments from a recovery of Jones Act damages obtained by the employee for the same injury.

Mr. Chenevert was injured while an employee of GC Constructors (GC) in May of 2007. At the time of his injury, Travelers Indemnity Co. (Travelers) provided coverage to GC for Chenevert’s injury under the LHWCA. The Travelers policy excluded coverage for bodily injuries to a master or a member of crew of any vessel. Between May 2007 and May 2010, Travelers paid benefits under the LHWCA in excess of $275,000. In May of 2010, Chenevert sued GC in federal court alleging Jones Act Status. Based upon Chenevert’s claim to be a seaman, Travelers stopped making payments under the LHWCA. Travelers then put Chenevert and GC on notice that it would seek reimbursement of the amounts paid under the LHWCA from any recovery Chenevert received in his Jones Act suit. The matter was eventually settled with an amount equal to that paid by Travelers in benefits under the LHWCA placed into the registry of the Court pending a determination of whether it had a legal right to recover said amounts.

Basing his decision on the legal tenet that no right of subrogation can arise in favor of an insurer against its own insured, the Magistrate to whom this issue was assigned denied Travelers right to recoup its payments. On appeal to the Fifth Circuit, the Court felt that this rule would not apply in this factual setting as Travelers did not insure GC against Jones Act liability.

The panel cited its previous holdings in Peters v. North River Ins. Co., 764 F.2d 306 (5th Cir. 1985) (recognizing the employer/insurer’s compensation lien in a third party suit), Taylor v. Bunge Corp., 845 F.2d 1323 (5th Cir. 1988) ( recognizing insurer’s right to recovery in 905(b) claim against the employer as a vessel owner) and Massey v. William-McWilliams, Inc.. 414 F.2d 675 (5th Cir. 1969), which recognized a ship owner-employer’s right to a credit for amounts paid under the LHWCA that bear reasonable relation to the items of loss compensated under a Jones Act claim. The Court felt the right to assert a lien by Travlers as a logical extension of this line of cases and it saw no difference between the insurer in the Massey case and Travelers in the instant case asserting a lien against a 905(b) recovery as opposed to a lien against a Jones Act recovery.

Fifth Circuit Affirms Jury Finding for Land-Based Worker to be Covered by Jones Act but Reverses Award of Emotional Damages in Naquin v. Elevating Boats LLC, No. 12-31258 (5th Cir., 3/10/14)

Plaintiff, Larry Naquin, Sr., a vessel repair supervisor employed by Elevating Boats, LLC, was injured on November 17, 2009, when a shipyard crane he was operating suddenly failed, causing the boom and crane housing to separate from the crane pedestal. In addition to Mr Naquin’s injury, a relative of his was killed when the crane boom landed on a structure in which the relative was working.

Although Mr. Naquin was not assigned to any particular vessel but oversaw the repair of a number of vessels manufactured and/or owned by his employer, he was found, by a jury, to be a Jones Act seaman and was awarded significant damages, including $1,000,000 for past and future physical pain and suffering, $1,000,000 for past and future metal pain and suffering, and $400,000 for future lost wages.

The employer appealed the jury’s finding to the Fifth Circuit, asserting that Mr. Naquin had failed to establish that he was a Jones Act seaman, that the evidence was insufficient to establish the employer’s negligence, and that the District Court erred by admitting evidence of Mr. Naquin’s relative’s death in regard to his claim for damages.

A split Fifth Circuit decision on the issue of status authored by Judge W. Eugene Davis affirmed the jury’s determination. The majority indicated that in accord with established precedent, Mr. Naquin could be considered to be assigned to and in the service of an identifiable fleet of vessels owned by his employer to which he spent approximately 70% of his time in the maintenance thereof. In dissent Judge Jones questioned how a land-based employee whose work was primarily on vessels docked for repair or maintenance could be exposed to the perils of the sea and be said to be in the service of a vessel in navigation. She suggested that under the majority’s rationale any land-based worker, even one hired to fuel the boats at the employer’s dock, could qualify as a seaman.

The employer also complained that the jury finding of negligence was one that was solely built upon circumstantial evidence and that there was no direct evidence indicating that the employer caused or could have foreseen the accident. The panel pointed out that the crane in question was manufactured, maintained and owned by the employer, and although Mr. Naquin could not prove precisely why a weld had failed, it was undisputable that the employer was the party who was responsible for the design of the crane and the integrity of the weld.

The panel however reversed the jury finding on damages on the basis that emotional damages are not recoverable under the Jones Act unless the plaintiff is considered to be within the “zone of danger.” While Mr. Naquin was within the “zone of danger” insofar as his own injuries were concerned, the Court questioned whether he could assert a claim for emotional harm arising from the injury to and death of his relative. In determining that this was not a recoverable element of damages under the Jones Act, the Court felt that the presentation of evidence with regard to the death of the relative so pervaded the other elements of damages that it reversed the complete damage award, remanding the matter for a trial on the sole issue of damages.

 

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!”

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.

This is not a vessel.

Jones Act status remains unavailable on SPAR Platforms, a type of deepwater floating oil drilling and production facility used in the offshore petroleum industry. While, as noted in the recent blog by Joseph Devall, Jr., the Supreme Court of the United States (SCOTUS) contemplates a further “clarification” of the term “vessel,” the Fifth Circuit has reiterated that, even in light of the previous decision of SCOTUS in Stewart vs. Dutra Construction Company, 543 U.S. 481, 125 S.Ct. 1118, 160 L.Ed.2d 932 (2005), addressing the definition of “vessel,” SPAR platforms that are practically immovable continue to not be vessels for Jones Act purposes.

The Fifth Circuit in Fields vs. Pool, 182 F.3d 353 (5thCir. 1999), in a case that was then one of first impression, evaluated the characteristics of SPAR platforms and determined they were not vessels due to the fact that they:

  1. were designed to be in place for the foreseeable future;
  2. were secured to the sea floor by elaborate systems insuring that movement would be difficult and a costly undertaking; and,
  3. had a tightly constrained area of movement on the sea surface limited by its anchor pattern to incidental movement.

Subsequent to the Fifth Circuit decision in Fields, SCOTUS in Stewart defined the term “vessel” for the maritime industry indicating that a vessel was “any watercraft practically capable of maritime transportation, regardless of its primary purpose or state of transit at a particular moment.” The court, however, went on to state that “a watercraft is not ‘capable of being used for maritime transfer’ in any meaningful sense if it has been permanently moored or otherwise rendered practically incapable of transportation or movement.”

A number of Federal district courts in Louisiana and Texas, subsequent to the Stewart decision, have been called upon to determine whether SPAR platforms should be considered vessels under the defining opinion in Stewart. All of the district courts that met this issue, but for one, felt that the Stuart decision did not overrule the earlier Fifth Circuit’s opinion in Fields.

Most recently, in Mendez vs. Anadarko, 466 Fed.Appx. 316 (5th Cir. 2012) (unpublished),  the Fifth Circuit again specifically addressed the status of SPAR platforms, but this time in light of the Supreme Court decision in Stewart and has reiterated its previous holding, finding that SPAR platforms do not qualify as vessels for Jones Act purposes. Applying this decision, Magistrate Hill, in the U.S. District Court for the Western District of Louisiana, Lafayette Division has recently, in Hefren vs. Murphy Exploration and Production Company, found that the Front Runner, a SPAR platform, was not a vessel for Jones Act purposes.