Hicks v. Vane Line Bunkering, Inc.

13-1976-cv

Hicks v. Vane Line Bunkering, Inc.

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3

4 August Term, 2014

5

6 (Submitted: January 15, 2014 Decided: April 17, 2015)

7

8 Docket No. 13-1976-cv

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10

11 CIRO CHARLES HICKS,

12 Plaintiff-Appellee,

13

14 v.

15

16 TUG PATRIOT, In Rem,

17 Defendant,

18

19

20 VANE LINE BUNKERING, INC.,

21 Defendant-Appellant.

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24

25 Before WINTER, STRAUB, and HALL, Circuit Judges.

26

27 Appeal from a denial by the District Court for the Southern

28 District of New York (Katherine B. Forrest, Judge) of appellant’s

29 motion to set aside a jury verdict. The jury found that

30 appellant willfully breached its maritime law maintenance and

31 cure obligations and awarded both compensatory and punitive

32 damages to appellee. Further, based on the jury’s finding of

33 willful misconduct, the district court granted appellee’s motion

34 for attorney’s fees. On appeal, we consider whether the district

35 court abused its discretion in finding that the record supported

36 the jury’s pain-and-suffering award, and whether a court may

1

1 award both punitive damages and attorney’s fees in an action for

2 maintenance and cure.

3 Affirmed.

4 Paul T. Hofmann, Hofmann &

5 Schweitzer, New York, NY, for

6 Plaintiff-Appellee.

7

8 Michael D. Wilson, John J. Sullivan

9 and Caspar F. Ewig, Hill Rivkins

10 LLP, New York, NY, for Defendant-

11 Appellant.

12

13 WINTER, Circuit Judge:

14 Vane Line Bunkering, Inc. appeals from a money judgment for

15 Ciro Charles Hicks following a jury trial before Judge Forrest.

16 The jury found that appellant breached its maritime law duty of

17 providing maintenance and cure1 following a shoulder injury Hicks

18 sustained while working on board the Tug PATRIOT. It awarded

19 Hicks the unpaid maintenance and cure and damages for pain and

20 suffering caused by the breach. Further, the jury found that

21 appellant’s conduct was willful and awarded punitive damages.

22 Finally, based on the jury’s finding of willfulness, the district

23 court granted Hicks’s motion for reasonable attorney’s fees.

24 Appellant argues that the evidence that appellant’s acts and

1

“Maintenance and cure” refers to the well-settled doctrine of maritime

law that a seaman “injur[ed] in the performance of his duty is entitled to be

treated and cured at the expense of the ship.” The Osceola, 189 U.S. 158, 173

(1903), superseded by statute on other grounds, The Jones Act, 46 U.S.C. §

30104 (creating a statutory cause of action for negligence). Maintenance

includes a seaman’s living allowance and unearned wages. Gilmore & Black, The

Law of Admiralty § 6–12, at 267–68 (2d ed. 1975).

2

1 omissions caused Hicks’s pain and suffering was insufficient as a

2 matter of law. Although it arguably waived the argument,

3 appellant also objects to the award of punitive damages in

4 addition to and/or in excess of the amount of attorney’s fees.

5 We affirm.

6 BACKGROUND

7 In light of the jury verdict for appellee, we view the trial

8 record in the light most favorable to him. See Kosmynka v.

9 Polaris Indus., Inc., 462 F.3d 74, 77 (2d Cir. 2006).

10 Hicks was employed by appellant as a deckhand on the Tug

11 PATRIOT. On April 21, 2009, while on deck handling heavy towing

12 gear, he injured his shoulder. Two days later, an orthopedist

13 diagnosed a possible rotator cuff tear. The doctor injected

14 Hicks with cortisone to relieve the pain and gave him a fit-for-

15 duty slip. Prior to returning to work, Hicks was required to see

16 a company doctor, who determined that Hicks was not fit for duty.

17 Subsequently, appellant confirmed in writing its obligation under

18 maritime law to pay sums for Hicks’s maintenance and cure,

19 reasonable medical expenses and maintenance costs until his full

20 recovery, maximum improvement, or until his condition was

21 declared permanent.

22 On July 1, 2009, Hicks underwent surgery on his shoulder.

23 He experienced significant discomfort before and after the

24 surgery. For several months following the procedure, he received

3

1 in-office and at-home physical therapy while continuing to

2 experience significant pain. In December 2009, he informed his

3 treating physician that he still had significant limitations of

4 range of motion of his arm.

5 Appellant hired a private investigator to videotape Hicks

6 surreptitiously. The video captured him on videotape planting a

7 small tree and playing with his grandson. When Hicks’s doctor

8 requested funding for an additional MRI scan, he was shown this

9 footage and a document detailing the physical requirements of

10 Hicks’s job. Based on this video and the suggestion -- which

11 appellant now admits was false -- that Hicks’s job required only

12 light lifting, the doctor determined that Hicks was fit for duty.

13 Appellant accordingly informed Hicks that it would terminate

14 maintenance and cure payments effective May 9, 2010.

15 Beginning in August 2010, Hicks sought continuing care from

16 a second doctor, who diagnosed a recurrent rotator cuff tear. In

17 February 2011, this doctor recommended another surgery plus six

18 months of rehabilitation to repair the additional damage. Under

19 financial pressure caused by the meager maintenance and cure

20 appellant had paid him -- $15 per day compared to actual costs of

21 $69.67 per day for food and lodging -- and had now terminated,

22 Hicks returned to work while still injured. Severe financial

23 difficulties caused him to miss some of his physical therapy

24 appointments. During this time, his house was put into

4

1 foreclosure, and he was unable to pay for health insurance.

2 In November 2011, Hicks brought the present action. His

3 claims were based on negligence under the Jones Act and the

4 maritime doctrines of unseaworthiness and maintenance and cure.

5 The jury found that appellant had not been negligent and the

6 PATRIOT was seaworthy, but that appellant had breached its

7 obligation of maintenance and cure by paying Hicks an

8 insufficient per diem and prematurely ceasing payments.

9 The jury awarded $77,000 in compensatory damages for past

10 maintenance and cure from April 22, 2009 to the date of the

11 verdict; $16,000 in future maintenance and $97,000 in future cure

12 through April 2013; and $132,000 in compensation for past pain

13 and suffering. The jury also found that appellant’s failure to

14 pay maintenance and cure was unreasonable and willful and awarded

15 $123,000 in punitive damages. Based on the finding of

16 willfulness, the district court, upon a motion under Fed. R. Civ.

17 P. 54(d), granted Hicks an additional $112,083.77 in attorney’s

18 fees.

19 Appellant moved, unsuccessfully, for judgment as a matter of

20 law or a new trial under Fed. R. Civ. P. Rules 50(b) and 59

21 respectively. This appeal followed.

22 DISCUSSION

23 We review a denial of a Rule 50(b) motion de novo and the

24 denial of a Rule 59 motion for abuse of discretion. See Fabri v.

5

1 United Techs. Int’l, Inc., 387 F.3d 109, 119 (2d Cir. 2004);

2 Devlin v. Transp. Commc’ns Int’l Union, 175 F.3d 121, 131-32 (2d

3 Cir. 1999). With respect to attorney’s fees, because “resolution

4 of the district court’s grant of attorney’s fees implicates a

5 question of law, our review is de novo.” Garcia v. Yonkers Sch.

6 Dist., 561 F.3d 97, 102 (2d Cir. 2009).

7 We, therefore, consider: (i) the evidence underlying the

8 award of pain and suffering damages, and (ii) the award of both

9 punitive damages and attorney’s fees.

10 a) Pain and Suffering Damages

11 An injured seaman may recover damages if the shipowner’s

12 failure to pay maintenance and cure caused pain and suffering by

13 prolonging or aggravating the initial injury. See Vaughan v.

14 Atkinson, 369 U.S. 527, 539 (1962) (Stewart, J., dissenting);

15 Cortes v. Baltimore Insular Line, Inc., 287 U.S. 367, 371 (1932);

16 Williams v. Kingston Shipping Co., 925 F.2d 721, 723 (4th Cir.

17 1991) (discussing availability of “money damages for any

18 prolongation or aggravation of the physical injury”); accord

19 Hines v. J. A. LaPorte, Inc., 820 F.2d 1187, 1190 (11th Cir.

20 1987) (per curiam) (pain and suffering damages awarded where

21 failure to pay maintenance “aggravated Hines’ condition,

22 prolonged his pain and suffering, and lengthened the time

23 required for him to reach maximum cure”).

24 In arguing that the evidence was insufficient as a matter of

6

1 law to support an award for pain and suffering, appellant relies

2 heavily on statements by Hicks that his condition did not

3 significantly improve after the initial injury. Appellant argues

4 from these statements that Hicks’s pain and suffering were

5 entirely attributable to the original injury and not to

6 appellant’s failure to fulfill its maintenance and cure duties.

7 However, under our caselaw, a plaintiff need not show an

8 additional discrete injury or illness resulting from the failure

9 to pay maintenance and cure. See Rodriguez Alvarez v. Bahama

10 Cruise Line, Inc., 898 F.2d 312, 314-15 (2d Cir. 1990) (duty to

11 furnish maintenance and cure continues until seaman fully

12 recovers). Rather, the prolonging or worsening of a condition as

13 a result of the employer’s breach will sustain a pain and

14 suffering damages award. See Messier v. Bouchard Transp., 688

15 F.3d 78, 84-85 (2d Cir. 2012) (duty to pay maintenance and cure

16 extends to aggravation of preexisting illness). And, in

17 maintenance and cure cases, “doubts regarding a shipowner’s

18 liability . . . should be resolved in favor of the seamen.”

19 Padilla v. Maersk Line, Ltd., 721 F.3d 77, 81-82 (2d Cir. 2013),

20 cert. denied, 134 S. Ct. 1309 (2014) (citing Atkinson, 369 U.S.

21 at 532).

22 In the present case, the jury could easily have found that

23 appellant’s discontinuation of maintenance and cure benefits

24 caused injuries to Hicks, both physical and otherwise. It could

7

1 also have found that the insufficient payments forced Hicks back

2 to work before physical therapy could render him fit. Indeed,

3 Hicks’s second doctor diagnosed a recurrent rotator cuff tear and

4 determined the need for a second surgery, which would have

5 required yet another long bout of physical therapy. Furthermore,

6 Hicks suffered emotional distress stemming from the loss of his

7 home and health insurance, both of which could have been found by

8 the jury to have been caused, at least in part, by appellant’s

9 inadequate payments and discontinuation of benefits. See, e.g.,

10 Sims v. U.S. of Am. War Shipping Admin., 186 F.2d 972 (3d Cir.),

11 cert. denied, 342 U.S. 816 (1951).

12 Although appellant attempts to cast the causation issue as

13 one of law, the causal link between the cessation of benefits and

14 the harms to Hicks for which damages are sought was for

15 determination by the jury. Based on the evidence, therefore, the

16 district court did not abuse its discretion in holding that the

17 jury acted reasonably in its award for pain and suffering.

18 b) Attorney’s Fees in Addition to Punitive Damages

19 In the district court, the parties did not squarely address

20 the issue of the amount of punitive damages recoverable in a

21 maintenance and cure action. However, because this issue is a

22 pure question of law, we may reach it regardless of waiver. See

23 Magi XXI, Inc. v. Stato della Città del Vaticano, 714 F.3d 714,

24 724 (2d Cir. 2013) (“[W]e have exercised our discretion to hear

8

1 otherwise waived arguments . . . where the argument presents a

2 question of law and there is no need for additional fact-

3 finding.”)(internal quotation marks and citations omitted).

4 We perceive a need to address the issue here. The judgment

5 of the district court here is inconsistent with a decision of

6 another district court in this circuit. McMillan v. Tug Jane A.

7 Bouchard, 885 F. Supp. 452, 466 (E.D.N.Y. 1995) (holding that

8 punitive damages in maintenance and cure cases are limited to

9 reasonable attorneys’ fees). The conflict is the result of our

10 decision in Kraljic v. Berman Enter., Inc., 575 F.2d 412, 415-16

11 (2d Cir. 1978). That decision held that, in maintenance and cure

12 cases, the amount of punitive damages is limited to the amount of

13 reasonable attorneys’ fees.

14 As a result, we examine the decision in Kraljic, and the one

15 by the Supreme Court, Vaughan v. Atkinson, 369 U.S. 527 (1962),

16 that spurred it, in some detail. We also examine developments

17 after Kraljic, including a Supreme Court decision, Atlantic

18 Sounding Co. v. Townsend, 557 U.S. 404 (2009), that undermines

19 Kraljic.

20 Kraljic, 575 F.2d at 416, reluctantly concluded that

21 limiting punitive damages in maintenance and cure cases to

22 reasonable attorney’s fees was required by Atkinson. Atkinson

23 was a cryptic decision embodied in an opinion written by Justice

24 Douglas. It involved a shipowner’s failure to pay maintenance

9

1 and cure, after which the ill seaman successfully sought damages

2 for the unpaid amounts and counsel fees for being forced to go to

3 court to remedy the owner’s breach.

4 Atkinson’s discussion of the attorney’s fees issue was all

5 of three paragraphs long and conflated the issues of compensatory

6 and punitive damages. Atkinson noted that the seaman’s claim for

7 attorney’s fees did not concern taxable costs; rather, it

8 involved “necessary expenses” incurred as a result of the owner’s

9 breach of duty, 369 U.S. at 530, i.e. being “forced to hire a

10 lawyer . . . to get what was plainly owed him,” id. at 531.

11 However, after this language, which clearly sounds in

12 compensatory damages, Kraljic, 575 F.2d at 413 (“This might lead

13 one to conclude that the award of attorney’s fees was

14 compensatory . . . .”), the Atkinson opinion then noted that the

15 owner’s conduct involved both the lack of any investigation into

16 the seaman’s claim and silence as to the claim’s merits. 369

17 U.S. at 530-31. The Atkinson opinion described this conduct as a

18 “recalcitrance” that was “callous,” “willful,” and “persistent.”

19 Id. This language was deemed by us to sound in punitive damages.

20 Kraljic, 575 F.2d at 414 (“Recovery of [attorney’s] fees is

21 therefore based upon the traditional theory of punitive

22 damages.”)

23 The dissenters in Atkinson argued that there was no basis

24 for an award of counsel fees as compensatory damages but that the

10

1 conduct of the owner might support an award of “exemplary damages

2 in accord with traditional concepts of the law of damages.” 369

3 U.S. at 540. The dissent noted, however, that punitive damages

4 “would not necessarily be measured” by counsel fees but might

5 provide “indirect compensation for such expenditures.” Id.

6 Our decision in Kraljic read Atkinson to authorize punitive

7 damages in maintenance and cure cases but to limit such damages

8 to an award of reasonable attorney’s fees. Kraljic, 575 F.2d at

9 416. We did so reluctantly, believing that we were “constrained”

10 by Atkinson. Id. However, our rationale for reading Atkinson to

11 impose such a limit, as best we can determine at this distance in

12 time, was that Atkinson authorized an award of attorney’s fees

13 only where the owner’s conduct was sufficiently egregious to

14 justify a punitive award. Based on the Atkinson dissent’s view

15 that a punitive award, but not one measured by fees, was

16 available and our view in Kraljic that “[t]he seaman surely is

17 not entitled to separate awards of both [punitive damages and

18 fees],” id. at 414, we inferred that the Atkinson majority

19 authorized an award of punitive damages but limited it to

20 attorney’s fees.

21 Lost in this chain of reasoning was the fact that the seaman

22 in Atkinson sought only counsel fees and not punitive damages.

23 The Supreme Court majority, therefore, had no reason to consider,

24 much less discuss, the availability of punitive damages in excess

11

1 of, or in addition to, counsel fees. While the dissenters did

2 mention punitive damages and the fact that they are not measured

3 by attorney’s fees, as described above, the majority ignored the

4 dissent. The inference that we appeared to have drawn from the

5 dissent, based in part on our view that separate awards of both

6 punitive damages and counsel fees would be impermissible, id.,

7 was certainly not an inescapable interpretation of the cryptic

8 opinion in Atkinson. Indeed, Kraljic’s limitation of punitive

9 damages to counsel fees is an outlier, expressly rejected by some

10 courts, e.g., Hines, 820 F.2d at 1189, simply ignored by others,

11 e.g., Robinson v. Pocahontas, Inc., 477 F.2d 1048, 1051-52 (1st

12 Cir. 1973), and adopted by no one outside this circuit. We

13 conclude that it is no longer governing law in this circuit for

14 two reasons.2

15 First, the landscape of Supreme Court caselaw has been

16 substantially altered since Atkinson and Kraljic. In Atlantic

17 Sounding, the Supreme Court held that punitive damages, as

18 traditionally available under the common law, are available in

19 claims arising under federal maritime law, including claims for

20 maintenance and cure. Atlantic Sounding, 557 U.S. at 424. It is

21 incontestable that traditional punitive damages are not limited

2

We have circulated this opinion to all active members of this Court

prior to filing. See Shipping Corp. of India v. Jaldhi Overseas Pte Ltd., 585

F.3d 58, 67 & n.9 (2d Cir. 2009); see also Kramer v. Time Warner Inc., 937

F.2d 767, 774 (2d Cir. 1991).

12

1 to the amount of attorney’s fees. Nowhere in the Atlantic

2 Sounding opinion is there the slightest hint that such damages

3 are limited to counsel fees. While Atlantic Sounding cited

4 Atkinson, id. at 417 -- seemingly relying more on the dissenting

5 than on the majority opinion -- it never stated or implied that

6 such a limit was contemplated, or was even an open issue left to

7 the future. We believe, therefore, that Kraljic’s holding did

8 not survive Atlantic Sounding.

9 The landscape has changed in another way that undermines

10 Kraljic. While that opinion relied heavily upon the

11 incompatibility of an award of punitive damages and a separate

12 award of counsel fees, see 575 F.2d at 414, the availability of

13 both punitive damages and attorney’s fees awards in the same

14 case, albeit for statutory violations but often on common law

15 grounds with regard to punitive damages, is today not uncommon.

16 See, e.g., Stanczyk v. City of New York, 752 F.3d 273, 275 (2d

17 Cir. 2014) (in Section 1983 case, the jury awarded plaintiff

18 compensatory damages and punitive damages, and the court

19 subsequently awarded attorney’s fees); Kolstad v. Am. Dental

20 Ass’n, 527 U.S. 526, 529 (1999) (“[P]unitive damages are

21 available in claims under Title VII of the Civil Rights Act of

22 1964.”); Farias v. Instructional Sys., Inc., 259 F.3d 91, 101-03

23 (2d Cir. 2001) (under Title VII, a plaintiff may be entitled to

24 reasonable attorney’s fees and punitive damages) (citing Kolstad,

13

1 527 U.S. at 529); Feltner v. Columbia Pictures Television, Inc.,

2 523 U.S. 343, 346 (1998) and 17 U.S.C. §§ 504, 505 (under the

3 Copyright Act, a court may “increase the award of statutory

4 damages to a sum of not more than $150,000" and may “award a

5 reasonable attorney’s fee”); Fort v. White, 530 F.2d 1113, 1118

6 (2d Cir. 1976) (under the Fair Housing Act, a plaintiff may be

7 awarded actual as well as punitive damages and attorney’s fees);

8 35 U.S.C. §§ 284, 285 (under the Patent Act, the court “may

9 increase the damages up to three times the amount found or

10 assessed” and may award “reasonable attorney fees”); accord

11 Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383

12 F.3d 1337, 1347 (Fed. Cir. 2004) (in a patent infringement case,

13 under 35 U.S.C. § 285, “[t]hat there were not actual damages does

14 not render the award of attorney fees punitive. Attorney fees

15 are compensatory, and may provide a fair remedy in appropriate

16 cases.”); cf. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1573 n.4 (Fed.

17 Cir. 1996) (“As a general rule, attorneys fees under [35 U.S.C.

18 §] 285 may be justified by any valid basis for awarding increased

19 damages under section 284. However, conduct which a court may

20 deem ‘exceptional’ and a basis for awarding attorneys fees may

21 not qualify for an award of increased damages. Even where

22 damages are increased under section 284, a court may decline to

23 award attorneys fees under section 285.”) (internal citations

24 omitted).

14

1 Therefore, Atkinson’s holding that an award for attorney’s

2 fees may be made where the refusal to pay maintenance and cure

3 was “callous,” “willful,” and “persistent” is not inconsistent

4 with a punitive award. We also perceive no reason why Atkinson’s

5 holding that counsel fees are available for a willful breach of

6 an employer’s maintenance and cure obligations is not settled

7 law. Indeed, as noted, Atlantic Sounding cited Atkinson without

8 any hint of reservation as to the award of fees. 557 U.S. at

9 417. Moreover, Atlantic Sounding also cited, seemingly with

10 approval, a court of appeals decision affirming awards of both

11 punitive damages and fees in maintenance and cure cases. Id. at

12 408 (citing Hines, 820 F.2d at 1188). Pending further

13 developments in the Supreme Court, we follow those cases.3

14 CONCLUSION

15 We therefore affirm.

16

17

18

3

We note one small departure from Atkinson. We believe that an award of

punitive damages is for the jury while attorney’s fees must be awarded under

Fed. R. Civ. P. 54(d), which was promulgated in 1993. This departure aligns

the award of fees in maintenance and cure cases with post-Atkinson practices

regarding fees. See Incandela v. Am. Dredging Co., 659 F.2d 11, 15 (2d Cir.

1981) (trial court assesses attorney’s fees after a jury finding that

defendant’s behavior was “callous” or “recalcitrant”).

15