Petition — Duncanson-Harrelson Co. v. Director, Office of Workers' Compensation Programs

Supreme Court brief1983

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Supreme Court, U.S.

892 FILED

at |

I I 3 "JAN 3 1983

No.

. aes AS

J CLERK

IN THE

Supreme Court of the United States

OcTOBER TERM, 1982

DUNCANSON-HARRELSON COMPANY

and

EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF

WAUSAU

Petitioners,

Vv.

DirecTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,

and

NANCY A. Freer, Wipow oF Davip W. Freer,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

B. JAMES FINNEGAN*

KAREN KISSLER

KIERNAN & FINNEGAN

1990 Lombard Street, Suite 300

San Francisco, CA 94123

Counsel for Petitioners

*Counsel of Record

QUESTIONS PRESENTED

1. Whether the inclusion of employer contributions to

union pension and welfare funds within an employee's “aver-

age weekly wage” under the Longshoremen’s and Harbor

Workers’ Compensation Act (“LHWCA™) would defeat the

clear intent of the Act to ensure prompt and certain recovery for

industrial iniuries, and result in endless litigation of earnings

issues on a case by case basis.

> Whether the Court of Appeals’ judicial expansion of the

definition of wages should be reversed as contrary to both

legislative history and prior judicial interpretation.

3. Whether compensation benefits in excess of actual take-

home pay would be contrary to the Act's purpose of both

encouraging return to productive status and maintaining a

similar standard of living after injury.

— =

LIST OF PARTIES*

The parties in case No. 79-7093 before the Court of

Appeals for the Ninth Circuit were Nancy A. Freer, widow of

David W. Freer, as claimant/real party in interest, Duncanson-

Harrelson Company (‘*Duncanson-Harrelson”) and Employers

Mutual Liability Insurance Company of Wausau (“Employ-

ers”) aS petitioners and Director, Office of Workers’ Com-

pensation Programs, U.S. Department of Labor as respondent.

The parties in case no. 79-7094 were Nancy A. Freer as

petitioner and U.S. Department of Labor, Office of Workers’

Compensation Programs as respondent.

* Petitioner. Duncanson-Harrelson Company, reports, pursuant to Rule

28( 1) of the Rules of this Court, that Duncanson-Harrelson Company is the

Parent company, with no subsidiaries. Affiliate companies not wholly-owned

include: $.D.M. Associates, a partnership, and Strike and Blackmer Com-

pany, a partnership.

Employers Insurance of Wausau, a Mutual Company, owns Wausau

Service Corporation which is the parent company with subsidiary companies

with are all wholly-owned. Affiliate companies which are not wholly-owned

include: Wausau County Mutual Insurance Company and Wausau Lloyds,

Texas Lloyds Association.

TABLE OF CONTENTS

PRS e PaP Eee © PROS BED verssiscrcensvensrecniscasaséoivistresnyes

Te ENING WOMEN ih wsieenttenndovenccassnvvoxssveendicciernsinstssichipsss

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SRO IE RU TOI URE ORD vpn nvecscsenisvassnssenesstesssensensenyisc

PE TT sisiccceencssxprsevasssvuvsedsstzifracsseniniintsccinivupsacieh

PUTS RPA CIO rcrkcvnacipsratnisranecdsdssscieredenriaaiigense

DOPE S IC WIE WII CPM ceesvesegesisereijarssasssisessneuibienss

STAGES AT WHICH THE FEDERAL wie ESTIONS

WERE RAISED AND PRESERVED 0.00.

BASIS FOR FEDERAL JURISDICTION oo...

PDE HU TOM -scmrirctaceices chaveitasaiclasansss eaacibNiasstancigmptiivateicons

1. Awarding Compensation Benefits in’ Excess of

Take-Home Pay Would be Contrary to the Act's

Purpose of Both Encouraging Return to Produc-

tive Status and Maintaining a Similar Standard

OE EROS ATI PRION iiriscssctecsrssicscavercenecsnoneasnctss

Inclusion of Union Trust Fund Contributions as

Wages Would Result in Double Recovery...........

. Inclusion of Fringe Benetits in Average Weekls

Wages Would Cause an Administrative Night-

mare and Result in Unequal Treatment of

Workers Under the LHWCA..............cccccccseeseeees

4. The Court of Appeals’ Judicial Expansion of the

Definition of Wages Should be Reversed as

Contrary to Both Legislatuve History and Prior

SUGIGIRE EMICTTORRTION 0. o.ccccsesssoesscnscseoceessvasssvassvxess

Se RY chats iaatiapuaddnslcknarcncaedulasasliernipebemen etka

FRR ee OR esas sasscsisasecbocaacdesatecasaiemancuipucdeusante vaddoias

APPENDIX A—Court of Appeals decision

denying Petition for

PRIN cacscnstecacdcaceasensesias

APPENDIX B~— Court of Appeals decision ...

APPENDIX C— The Benefits Review Board

Si iiristdnssdivadsthccsentsessessoas

APPENDIX D—The Administrative Law

Judges decision...

APPENDIX E— Relevant statutes.......0.000......

—_,

[ABLE OF AL THORITIES

CASES Pact

Alahama Power Company v. Davis, 431 US S81 61977)... 16

Callins v. Todd -smaesiees vorporation, 5 BRBS 334

SET Fira sktdoncsescas rreaacee al ne 4

Duncanson- Harrelson € saulais and Employers Mutual

Liability Insurance Company of Wausau Director,

OWCP, U.S. Department of Labor and Nancy, Freer, 686

Fee Bae C WUE MAE OE D secncsevcopsxendecennces 9-10

Hiher v. Morrison-Knudsen Construction Co. and Argonaut

Insurance Company, 670 F.2d 20% (D.C. Cir, 19¥1) >. 6

Intercount, Construction Company vo Walter, 422 LS. 4

hee ae lasvcarvodean rt 12

J. W. Bateson y. United States ex rel Board of Trustees, 434

Rs MCN PONT OED rescvcsvesurricersaces 16

Joint Industry, Board vy. United States, 391 LS. 224

CROOS TS ssieuico, : La at . 17

Northeast = raed Terminal [ Compa \ Vv prin 432 US

DOE F Be sivesturtcistasseteniatss seaasseeysl 14

Potomac eas Power Company v. Director, OW CP, 449

sana MAE ALO UDB dis vacosiaaceseeasbarsindooaas i AT

United States v. Embassy Restaurant, Inc, 359 US. 29

CTO59 >... Piles NE POPE SET OPER REED Ere rane 16

STATUTES

11 U.S.C. $1040a)(2)............ acs ae 16. 17

Bs EERIE BPs cs iccstncccersacencsi tos tivecsis 2.6

33 U.S.C. §§901 et seq. (1976) ....... aele 3

eR I Desa cokasacorcccareerisetoreivie ioost Be oe O @ 44, 18

Ns eB vnsias si secsicncusavcsviveasnasesceears 3

ee NMG MME DB axsnsnroarsecssoradekcncerecattcoatsonnces sualedvadintitores 3

Prt trs UM bichak cespipssnassintncts consocisikersncadoces neat tidus ae

nics Ba PINTO cavixicessnsuckssccreecess cokseusisescucvecs PRD er Sa ae 16

ats ON CONS MED aserisssentcecisonciinodentocecsvocushemocesducasotnes 14

MISCELLANEOUS Pact

| Larson, Workmen's Compensation Law $2.50

atin arintndsubaaitsteciketidkcbvnvedopsdivensasventesssissnaxassasis 7.8.9

Brief of Amicus Curiae of Master Contracting Stevedore

Association of Pacitic Coast filed in Duncanson

Harrelson Company and Employers Mutual Liahility In-

surance Company of Wausau v. Director, Office of Work.

ers’ Compensation Programs, U.S. Department of Labor

and Nancy A. Freer, 686 F.2d 1336 (9th Cir. 1982)... eo

Chamber of Commerce of the United States, Employee

I I IE Dc cacskesdnavesecovncnescessseceveesescscs 7

Comptroller General’s Report at 5: U.S. Department of

Labor. 1983. Budget justification of Appropriation Estu-

mates for the Committee on Appropriation (January

1982). ESA— 33. (Table I of Longshorememn’s and

Harbor Workers’ Compensation Act workload statistics.

i aOEs Ws WUE Paisseccesesevscensvsvscasscouscscrsssconcousse 7

Hearings Before the Sub-Committee on Labor of ‘the

Committee on Labor and Public Welfare. US. Senate.

92nd Congress. Second Session. U.S. Government Print-

Ms W7L, CMOS FEC IO oc ccnvessnscvsessevencnesessscccsessacconss 15

Longshore Act! Average Weekly Benetit Received Under

Current Method and Alternative Methods. Expressed as

a Percentage of Take-Home Pay for Selected Wage

Intervals of Employees with 2.5 Federal Exemptons in

State with Graduated Income Taxes. closed cases...

Longshore Procedure Manual. Ch. 1-700, Part | Claims

Determination of Average Weekly Wage. October 15

NMR ain ssids hleice Siduda sabbiesundessassdnsexncvinevonens ccc TL 16

S. Rep. No. 963. 88th Cong.2d Sess.2 61964) 0... 16

IN Tue

Supreme Court of the United States

Ocroper Ties. 1982

DUNC ANSON-HARRELSON COMPANY

and

Euproyvers Mcurcat Liasmary INserance Company oft

Watsat

Petitioners.

Direc ror. Ortict OF Workers’ Comprssa tion

PROGRAMS. UNTIED STATES DEPARIMENT OF Lawor.

and

Nancy A. Feter. Wipow of Davin W. beter.

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioners Duncanson-Harrelson Company (Duncanson-

Harrelson”) and Employers Mutual Liability Insurance Com-

pany of Wausau (“Employers”) pray that a Writ of Certioran

issue to review a judgment of the U.S. Court of Appeals for the

Ninth Circuit which included employer contributions to union

pension and welfare funds as “wages” for purposes of calcu-

laung compensation due as death benetits under the

Longshoremen’s and Harbor Workers’ Compensation Act

OPINIONS BELOW

The Decision and Order of the Administrative Law Judge

(No. 76-LHCA-266) issued July 14, 1976. is not reported but

appears as Appendix D (App. 32a) hereto. The Order of the

Benefits Review Board ( Nos. 76-314, 314A) dated January 31,

1979, 1s reported at 9 BRBS 888 and appears as Appendix C

(App. 19a) hereto. The opinion of the U.S. Court of Appeals

for the Ninth Circuit ( Nos. 79-7093, 79-7094 ) dated September

14. 1982. from which Certiorari is sought. 1s reported at 686

F.2d 1336 and appears as Appendix B (App. 24) hereto. The

order of the Court of Appeals denying a Petition for Rehearing.

dated November 12. 1982, is not reported but appears as

Appendix A (App. la) hereto.

JURISDICTION

The Court of Appeals’ decision in these cases was rendered

on September 14, 1982 (App. 2a). A tumely Petition for

Rehearing was filed on September 27, 1982. and denied on

November 12, 1982 (App. la). The jurisdiction of this Court is

invoked under 28 U.S.C. § 1254(1).

RELEVANT STATUTES

The relevant statutory provisions are set forth as Appendix

E (App. 53a) hereto.

STATEMENT OF THE CASE

The appeal by petitioners and cross-appeal by respondent

were consolidated in the U.S. Court of Appeals for the Ninth

Circuit. The issue presented herein arises by virtue of respond-

ent’s cross-appeal.

The case arises from the death of David W. Freer during

the course of his employment with petitioner Duncanson-

Harrelson Company (“Duncanson-Harrelson™). At the time of

his death. Freer was covered by the provisions of the

Longshoremen’s and Harbor Workers’ Compensation Act. 33

U.S.C. §§ 901 et seg. ("LHWCA”). Under Section 9¢¢) of the

LHWCA [33 USC. § 9090e)] CApp. $34). death benetits are

computed by reference to the “average weekly wage” of the

deceased employee on an annualized basis. The Administrative

Law Judge determined Freer’s average weekly wage pursuant

to Section 10(c) of the Act by reference to his previous

earnings. The Ninth Circuit Court of Appeals affirmed the

Administrative Law Judge's application of § otc). Freer was

a member of Local 34 of the Piledrivers. Carpenters. Bridge.

Wharf and Dock Builders Union of Northern California. The

collective bargaining agreement between that union and Freer’s

employer required. among other things. that the employer pay

certain sums of money into four union trust funds for each hour

worked by each employee: namely. a health and welfare fund

received 60 cents before September |. 1975 and 74 cents

thereafter: a vacation and holiday plan received 75 cents per

hour effective May |. 1972: an apprenticeship plan received 2

cents per hour which was increased to 4 cents per hour effective

on and after September |. 1974 and a 6 cents per hour on and

after January |. 1976.

Sections VIEA & C of the collective bargaining agreement

referring to the Health and Welfare Plan and the Pension Plan

state that “For the purposes of interpreting and applying this

Section. such Trust Fund contributions shall not be considered

as Compensation.”

Respondent Freer argued before the Administrative Law

Judge that these payments to the Union Trust Funds should be

included in the determination of “average weekly wages” for

the purpose of calculating death benefits to be paid by

Duncansen-Harrelson. Stating that there is no legal precedent

for the inclusion of fringe benetits in determining average

weekly wages, the Administrative Law Judge ruled that pension

trust fund benefits. by their nature, were not capable of being

converted to the immediate advantage of the employee and

were not a “similar advantage” to “board. rent. housing.

lodging” within the meaning of Section 2013) (App. 48a. 49a

& 53a). The Benetits Review Board affirmed the Adminis-

trative Law Judge's decision and rejected Freer’s contentions

that employer contributions to Union Trust Funds should be

included in the calculation of the employee's average weekly

wage. (App. 234-244)

In so ruling. the Board reaffirmed its holding in Collins v

Todd Shipyards Corp., 5 BRBS 334. BRB No. 76-177 (January

5, 1977). wherein it concluded the employer's contributions to a

union trust fund were not considered in determining the

employee's average weekly wage. The Board in Freer, supra,

stated:

Unlike payments for overtime and for vacations. which are

payments that the employee haus already carned and 1s

entitled to enjoy. the benefits from payments to health and

pension funds are directly contingent upon the occurrence

of a future event that may or may not happen. Until the

occurrence of this event. the employee has no entitlement

to these benefits. Furthermore. should the event that

triggers the enutlement to health or pension benetits never

occur, it depends upon the particular benetit plan and the

terms of the applicable labor contract whether the employ-

ce receives any amounts from the plan. Thus such “fringe

benefits” as health and pension plans are too speculative to

be included in a computation of one’s average wage.

(App. 23a)

In so finding. the Board observed that.

[I }nclusion of benefits, such as health and pension, in the

computation of average weekly wage may result in the

payment of excessive benefits to the employee. With many

benefit programs. an employer only contributes and an

employee is only qualified to participate in the programs so

long as the employee is employed with the employer.

(App. 23a)

The Board also noted that if the employee was not injured,

the entitlement to amounts in a benefit program would only

have continued unul his or her reurement or death. If fringe

benefits were included within the determination of average

weekly wage after the point when the employee would have

retired or died. the employee or his survivors would receive

workers’ compensation benefits which included amounts to

which the employee would not have been entitled had the

injury not occurred,

Respondent’s proposal to include fringe benefits would

result in compensation benefits far in excess of workers’ com-

pensation levels. If employer contributions are added to salary

and the employee is injured after be becomes eligible for fringe

benefits, he will receive fringe benetits as well as workers’

compensation payments which have already included the fringe

benefits. Thus, he receives a double recovery. The resulting

duplication of benefits would encourage employers to bargain

for reduced pension benetits. This virtually eliminates an

employee's pension rights despite years of contribution.

Claimant appealed this ruling to the &. S. Court of

Appeals for the Ninth Circuit. which reversed the BRB and

held in accordance with Hiher v. Morrison-Knudsen Construc-

tion Company, 670 F.2d 208 (D.C. Cir, 1981). that “the Act's

definition of ‘wages’ iicludes the values received from the

employer that are easily identifiable and calculable” and that

Congress intended a flexible definition of “wages” under the

Act. (App. 15a). In so ruling. the Court purported to interpret

“wages” which is defined as follows in Section 2(13) of the

LHWCA. [33 U.S.C. § 902(13)]:

(13)*Wages” means the money rate at which the service

rendered is recompensed under the contract of hiring

in force at the ume of the injury. including the

reasonable value of board. rent. housing. lodging or

similar advantage received from the employers. and

gratuities received in the course of employment from

others than the employer.

STAGES AT WHICH THE FEDERAL QUESTIONS

WERE RAISED AND PRESERVED

Both Duncanson-Harrelson and its insurer. petitioner km-

ployers Mutual Liability Insurance Company of Wausau ("Em-

ployers”). opposed the definition of “wages” adopted by the

Court of Appeals before the Administrative Law Judge. the

Benefits Review Board and the Court of Appeals. All three

bodies specifically ruled upon the issues raised in this Pettion

(App. 48a-49a, 234-244. 13a-18a),

BASIS FOR FEDERAL JURISDICTION

his Court has jurisdiction under 28 USC. § 125401) to

pass upon the Court of Appeals’ interpretation of Sections

2(13) of the LHWCA,

ARGUMENT

In contradiction to the plain meaning of 33 USC.

§ 902113) and despite 54 years of consistent administrative

interpretation. the District of Columbia Circuit in Miher vy.

Morrison-Knudsen Construction Company and Argonaut Insur-

ance Company, 670 F.2d 20% (D.C. Cir. 1981). and now the

Ninth Circuit in the case at Bar, have decided that an employ-

er’s payments into union trust funds, which may or may not

accrue to the benefit of a particular employee. are readily

identifiable and calculable and should be included in the

calculation of an employee's average weekly wage. The

potential confusion and complexity involved in determining the

types and amounts of applicable benefits will have a catastro-

phic impact upon the Department of Labor's administration of

the LHWCA and the federal courts. The result will be to

entirely defeat a primary goal of the workers’ compensation

system, to affect a prompt and certain recovery of benetits in the

case of deceased employees and to compensate a surviving

spouse so that he or she may maintain the standard of living

lost by reason of the employee's death.

1. Awarding Compensation Benefits in Excess of lake-

Home Pay Would be Contrary to the Act's Purpose of

Both Encouraging Return to Productive Status and

Maintaining a Similar Standard of Living After Injury.’

The Comptroller General demonstrated that most workers

now receive benetits averaging about 8&7 of pre-injury take-

home pay.? The Ninth Circuit Court of Appeals’ decision below

involved pension contributions of between $.80 and $1.25 per

hour, 10% to 15% of Mr. Freer’s apparent hourly wage. The

pension and health and welfare contributions required by the

contracts governing longshore labor now exceed $4.00 per

hour. more than one-third of the “straight-trme™ hourly wage

The average worker's “voluntary fringe benefits” package

equals about 287 of actual payroll?

Phe Department of Labor estimates that by 1981, 905.000

employees were covered by the Act. an increase of over 100.000

since 1972. The number of reported injuries has increased from

roughly 72.000 in 1972 to 238.000 in fiscal year 1980 and

251.000 in 1981. with numbered cases in which employees have

actually lost ume from work because of disability increasing

from over 17.000 in 1972 to $9.000 and 61.000 in 1980 and

IY]. respectively.4

It has been estimated that nearly 200 million dollars were

paid as compensation in death benetits during 1980. Inclusion

of pension contributions and othe’ similar tringe benefits as

“wages” would have increased the total by nearly 20 millon

‘ Larson, Workman's Compensation Law § 2.50. page 11-12 (1964)

Longshore Act: Average Weekly Benetit Keceived Under Current

Method and Alternative Methods. Expressed as a Percentage of Take-Home

Pay for Selected Wage Intervals of Employees with 2.§ Federal Exemptions

in State with Graduated Income Taxes. closed cases

3Chamber of Commerce of the United States. Employee Benefits, 1980,

p. & (1981). Payments Required by Statute (FICA, unemployment com-

pensation fund, etc.) were excluded from this figure.

4*CompreoiieR Genewat’s Rerort at §; United States Department of

Labor, 1943, Budget Justification of Appropriation Estimates for the Com-

mittee on Appropriation (January 1942), ESA-33, ( Table I of Longshore-

men's and Harbor Workers’ Compensation Act Workload Statistics. FY 1981-

FY 1943)

dollars for that year alone and will force a similar increase in

the estimates of future exposures and the costs of providing

LHWCA protection in all future years.®

It is staggering to realize that potentially workers would

likely receive compensation benefits which exceed actual take-

home pay. This will effectively eliminate any economic in-

centive to resume productive employment. Benefit levels which

approach or equal full take-home pay minimize return-to-work

incentives and delay the return to productive employment.

Benetit levels which exceed take-home pay encourage exagger-

ation and malingering.®

The impact of including fringe benetit contributions equal-

ling 15% and 30% of “gross pay” Is shown on the following

table:

Percent of Take-Home Pay

Replaced by Compensation

Average Percent ng

Wage of 15% Fringe Wt Fringe

(Selected Total Benefit Benefit

mervate) Canes Package Package

$ 1— S50 ().38 129% 146%

S1—100 2.48 127% 143%

1O1—150 11.26 131% 1487

151200 12.02 100% 113%

201 —250 16.60 9S% LO8G

251 —300 18.51 QR ae es

301 —350 12.40 100% 113%

351 —400 10,31 102% 116%

401 —450 4.96 LOSG 118%

451 —S00 3.24 107% 121%

501 —550 2.86 110% 125%

551-600 1.91 113% 127%

601 —650 1.34 115% 130%

651. —700 0),57 117% 133%

701—750 0.76 120% 135%

751-—800 ),.38 122% 138%

® Brief of amicus curiae of Master Contracting Stevedore Association of

the Pacific Coast, representing twenty-six stevedore companies filed in

Duncanson-Harrelson Company and Employers Mutual Liability Insurance

Company of Wausau vs, Director, Office of Workers Compensation Programs,

U.S. Department of Labor, and Nancy A. Freer, 686 Fd 1336 (9th Cir.

1982).

® Larsen, Workmen's Compensation Law § 2,50, page 11-12 (1964).

The table proves that inclusion of fringe benetits as

“wages” will vastly increase the number of workers who receive

more for not working than for labor performed. For all but a

relatively few workers, all economic incentive to resume em-

ployment will be erased. Inclusion of fringe benetits will

increase the typical workers’ compensation award to a level

nearly 20% greater than the amount taken home for a full week

of productive work,

In essence, when the predicted trust fund contributions

cause the average weekly wage to exceed take-home pay. the

benetits received will more closely resemble a tort recovery than

the receipt of workers’ compensation benefits. While a tort

recovery seeks to reimburse the plainutf on a dollar for dollar

basis, the goal of the Workers’ compensation system is to allow

an injured worker to maintain his standard of living while

encouraging him to return to productive work. Larsen has

stated that. “Tt was never intended that compensation payments

should equal actual loss. for the reason, if no other, that such a

scale would encourage malingering.”? This result is unjust

fiable.

The purpose of the LHWCA ts to maintain the surviving

spouse's standard of living which was lost by reason of the

death, In order to continue the pre-death standard of living,

only tangible items, such as wages. board. and lodging. may be

considered. The LHWCA has included within the definition of

“wages” such tangible commodities as board. rent. housing.

lodging and similar advantages. 33 U.S.C. $902013) (App

S3a) It could hardly have been an oversight that contingent

Interests such as union fund benetits were deleted trom this list

when the value of such benefits far exceeded the named

benetits,

As the Benetitsy Review Board held in) Duncanson-

Harrelson Company and Employers Mutual Liability Insurance

Company of Wausau vy. Director OWCP, U.S. Department of

Labor and Nancy Freer, 686 F.2d 1336 (9th Cir, 1982):

Unlike payments for overtime and for vacations, which are

payments that the employee has already earned and ts

entitled to enjoy, the benefits from payments to health and

pension funds are directly contingent upon the occurrence

’ Id. at $2.50, page 11-12

<< rl hh”

of a future event that may or may not occur. Until the

occurrence of this event, the employee has no entitlement

to these benefits. Further, should the event that triggers

the entitlement to health or pension benefits never occur, it

depends upon the particular benefit plan and the terms of

the applicable labor contract whether the employee re-

ceives any amount from the plan. Thus, such “fringe

benefits” as health and pension plans are too speculative to

be included in a computation of one’s average wage. /d. at

6-7,

The benetits paid by Duncanson-Harrelson into the union

trust fund were not “lost” up n the employee's death. Mr.

Freer had no right to tell his union how to use the funds nor did

he have a vested interest in the funds. Given his lack of control

and interest in the fund, Mrs. Freer should not be entitled to

recover such benetits.

2. Inclusion of Union Trust Fund Contributions As Wages

Would Result in Double Recovery.

The decision below, if upheld, will result in double recov-

ery by the surviving spouse. In the case at bar, the pension plan

bought life insurance. Mrs. Freer is receiving the proceeds of

the life insurance policy paid by employer contributions. She

also claims that employer contributions to the union pension

plan should be added to the wage computation to determine

average weekly wage. She therefore claims life insurance

proceeds and increased workers compensation benetits based

upon the single employer contribution to the pension. As in

cases Where an employer is allowed a lien against an employ-

ee’s third party recoveries, would the employer receive a lien

against amounts paid under the life insurance policy? Would

the employer then become no more than a trustee and/or

administrator for the employee's life insurance, seeing that

payments were timely made and receiving reimbursement upon

the employee's death? The inclusion of amounts paid for

health and welfare benefits raise similar problems. Should an

employee receive union health and welfare benetits in kind,

paid for by the employer, while at the same time receive health

and welfare contributions in the form of workers’ compensation

benefits?

In the case of an injured employee who ts injured after he

is eligible to receive retirement benetits., he or she could receive

both pension benefits and workers’ compensation benefits. If

he receives workers’ compensation benetits based upon pension

plan contributions by the employer, he would be receiving a

double recovery, Le.. increased Workers’ Compensation ben-

efits based upon pension plan contributions by the employer.

He therefore effectuates a double recovery tor the identical

employer contribution.

3. Inclusion of Fringe Benefits in Average Weekly Wage

Would Cause an Administrative Nightmare and Result in

Unequal Treatment of Workers Under the LHWCA,

If the inclusion of pension contributions as “wages” Is

made retroactive. it will require the re-calculation of benetits

payable in hundreds of thousands of cases “closed” since 1972

causing enormous disruption of the LHWCA’s administrative

system, The amount of “wages” ts central to nearly every

LHWCA proceeding. Except in those cases involving workers

with current annual incomes exceeding $38.000.00, the com-

pensation rate is tied directly to the employee's own weekly

“wages”.

Administrative determinations of accurate “wages” and

the calculation of the appropriate benefit rate are handled in

accordance with the Department of Labor’s Longshore Proce-

dure Manual. The manual specifically directs the exclusion of

pension contributions. About 96 percent of all longshore

claims are “resolved” by Deputy Commissioners and their

S Longshore (LHWCA) Procedure Manual. Chapter 1-700, Part |

Claims/ Determination of Average Weekly Wage, October 15, 1976

1-703. Annual Earnings. The average weekly wage ts set at one fifty-

second part of the employee's average annual earnings so computed

Any one or combination of the following are included in the term wages

1) Cash wages and salary

2) Anything of value received as consideration for the work

A) Tips and bonuses

B) Room and Board.

C) Car allowance (if it exceeds actual travel expense ).

(Contributions by the employer to pension and health plans are

not included as wages. Refer to LS/HW Program Memo-

randum No. 32, dated June 17, 1968).

claims examiners. Since 1972. the Deputy Commissioners have

had no authority to make fina/ determinations of disputed

issues, Claims resolved by Deputy Commissioners remained

forever open. The amount of “wages” upon which initial

compensation rates are based remain forever subject to re-

determination, /ntercounty Construction Company v. Walter,

422 US. 1 (1975).

Even those claims in which purportedly final orders have

been entered remain subject to the Act's “modification” provi-

sions and eligible for re-opening at any time within one year

following the date of the last compensation payment in order to

permit correction of any “mistake” in a determination of fact.

33 U.S.C. § 922. The Deputy Commissioner's determination of

a compensation rate pursuant to an erroneously restricted

definition of “wages” would certainly qualify as a “mistake”.

A broadening of the traditional definition of “wages” will

require the re-opening and re-calculation of the bencats pay-

able in hundreds of thousands of post-1972. cases The

Department of Labor simply cannot perform the tasks involved

in that massive effort. The number of injuries has nearly

quadrupled since 1974. The Department’s claims processing

staff has grown by only 47 percent to a total of 147 persons.

This staff barely manages its current case load. The adminis-

trative staff and structure will collapse under the weight of

thousands upon thousands of revised claims. Many companies

will fail under the burden of litigation and the subsequent

multimillion dollar liabilities.

Compounding the economic impact. insurers will be forced

to pay benefits for which no premiums have been collected.

Insurers, who had no reason to suspect such an increase in

benefits, would have to set new rates in premiums while

increasing present reserves. If losses must be paid out of

reserves, this could effect the insurer’s ability to provide work-

ers’ compensation insurance. Rates are currently set based

upon payroll, ie., actual salaries paid. How would insurance

companies estimate the costs of various benefits if such benefits

are included as wages? The effect of such soaring costs on the

national economy, although unknown at this time, can not be

minimized.

The Department of Labor will be forced to determine. tor

each and every day of employment, the exact employer contri-

butions made on that date. Where contributions were increased

under a union agreement, the administration would have to

calculate the different relevant rates for inclusion into the

average weekly wage. Neither the Department of Labor nor

claimants can afford the time and expense of hiring actuaries to

determine benetit levels.

The decision would also result in disparate awards to

workers performing the same jobs but represented by different

unions, A teamster’s union member and a longshore union

member working side by side would receive significantly ditfer-

ent benefits for an identical injury. The LHWCA utilizes a

schedule which provides for equal benetits for similar work-

related injuries. The inclusion of fringe benetits in “wages”

would lead to favored treatment of workers represented by

more powerful unions, And how would benefits for those not

represented by unions be calculated? Although unwilling,

would such employees be indirectly forced to Jorn unions?

Another foreseeable result is that employers would struc-

ture collective bargaining agreements which would effectivels

delete pension benefits. For example. a coilective bargaining

agreement could provide for a pension reduction equal to any

workers’ Compensation benetits received during the same tume

frame. While not reducing workers’ compensation benefits, this

would force an employee to forego receiving pension benefits

earned over years of employment.

4. The Court of Appeals’ Judicial Expansion of the Detini-

tion of Wages Should be Reversed As Contrary to Both

Legislative History and Prior Judicial Interpretation.

Hundreds of millions of dollars have been paid to hun-

dreds of thousands of workers since the LHWCA’S benetit

structure Was reformed in 1972. These monies were paid on the

basic premise. shared by all throughout the LHWCA’s history,

that the “wages” on which the proper rate of compensation

depends do not include employer contributions to trust funds.

It is highly significant that Congress has modified various

aspects of the LHWCA since its passage in 1927 but has never

seen fit to change the original definition of “wages” in 33

U.S.C. § 902(13).

Interpreting the plain language of the Act. the Court, in

Potomac Electric Power Company v. Director, OWCP, 449 US.

268 (1980) stated that the LHWCA was never intended to

provide “complete compensation for the wage earner’s econom-

ic loss”. /d, at 281. Rather, the purpose was to have “detinite”

limits assuring a “prompt and certain recovery”. /d. at 281,

282. The Court stressed that the LHWCA was patterned after

the law then in existence in New York. 1922 N.Y. Laws, Ch.

615. The addition of union trust fund payments to the concept

of wages was never asserted. attempted, or accomplished under

the New York statute. New York case law. as well as federal

law, supports the “plain language” approach to legislative

Interpretation,

The history of the 1972 amendments offers strong proof

that the parties to the process were aware of the distinction

between included “wages” and excluded “fringes”. Indeed, it

is clear that the parties based their debate about appropriate

benetit levels and their ultimate agreement on the definitional

premise that “wages” did not include contribution to pension

funds. In Northeast Marine Terminal Company v. Caputo, 432

U.S. 249 (1977), the Supreme Court identified the three groups

whose interest Congress sought to accommodate in 1972.

The main concern of the Amendments way not with the

scope of coverage but with accommodating the desires of

three interested groups: (1) shipowners who were dis-

content with the decisions allowing many maritime work-

ers to use the doctrine of “seaworthiness” to recover full

damages from shipowners regardless of fault: (2) employ-

ers of the longshoremen who, under another judicially

created doctrine, could be required to indemnify ship-

owners and thereby lose the benefit of the intended

exclusivity of the compensation remedy; and (3) workers

who wanted to improve the benefit schedule deemed

inadequate by all parties. /d. at 261. (Emphasis added. )

The dispute was between workers and employers and was

limited to finding a mutually acceptable ceiling to an increase in

the benefit structure for which all acknowledged substantial

need.

In reforming the benefit structure. Mr. Ralph Hartman

represented the shipbuilding industry and Mr. Howard

McGuigan was spokesman for the AFL-CIO. Both representa-

tives thought that besefits should be increased to a level more

accurately reflecting “wage™ loss. Both distinguished between

“wages” and “fringe benetits” in testimony closely pre-dating

the Amendments themselves. Mr. McGuigan argued that the

current $70 weekly maximum was inadequate when compared

to prevailing “wage” levels. Tables specifically excluded

contributions to pension plans as part of the “wage” base.?

Mr. Hartman’s tesumony and his exclusion of those same

contributions from “wages” was equally explicit,

... Currenty. the reported average weekly wage in the

shipbuilding and ship repair industry approximates S165,

which rate covers straight time, overtime, shift work differ

entials, vacation and holiday allowances.

It must be recognized. of course. that there are

additional weekly employer costs approximating $25 per

week covering other contract related henefity such as non-

industrial health and accident insurance. pensions, and

statutory costs, such as Social Security. and state and

federal unemployment compensation. These costs contin-

ue during disability. (1972 Hearings. supra note ¥ at 1X2-

183. emphasis added )

The Ninth Circuit decision violates the plain language of

the statute. “Wages” are expressly detined in the LHWCA as

“the money rate at which the service rendered ts

recompensed ... including the reasonable value of board. rent.

housing, lodging. or similar advantage received from the

employer, and gratuities...." The plain meaning of this

definition does not encompass employer contributions to benetit

9 Hearings before the Subcommittee on Labor of the Committee on

Labor and Public Welfare. United States Senate, 92nd Congress. 2nd Session.

LS. Government Printing Office, 1972. pages 99-110

funds but is restricted to actual payments made directly to the

employee or more traditional wage subsiitutes provided to him,

such as room and board.

Fundamentally. it should be understood that when Con-

gress wished to include union fund contributions tn the concept

of “wages”. it has written legislation to accomplish the task.

The Davis-Bacon Act. 40 U.S.C. 276 et seq.. provides that

wages paid on federally funded construction projects should

accord with prevailing local wages. In 1964, the Davis-Bacon

Act was amended by inserting a definiuon of “wages” to

establish that benetit fund contributions would be considered

“wages” for the purposes of the Act. 40 U.S.C. 276a(b).

Congress specifically noted that such fringe benetits were rare

when the Davis-Bacon Act was enacted in 1931. (S. Rep. No.

963. 88th Cong. 2d Sess. 2 (1964)). Hence. the existing statute

did not include fringe benefits and congressional action was

necessary to provide for the inclusion of trust fund contribu-

tions,

The LHWCA was enacted in 1927 when Congress was

cognizant of the rarity of fringe benefits. Congress’ failure to

amend the LHWCA as part of the 1972 amendments. as i did

the Davis-Bacon Act, suggests that employer contributions were

not intended to be LHWCA “wages”. This conclusion ts

supported by the longstanding administrative interpretation

excluding fringe benefits from the average weekly wage.'® See

J. W. Bateson v. United States ex rel Board of Trustees, 434

U.S. 586 (1978).

In another context, the court in U.S. v. Embassy Restau-

rant, Inc, 359 U.S. 29 (1959) held that employer contributions

to trust funds for the benefit of employees were not enutled to

the priority given by the old bankruptcy act. Il USC.

104(a)(2) The Court acknowledged that, “Not all types of

obligations due employees from their employers are regarded

by Congress as being within the concept of wages, even though

having some relation to employment”. /d. at 32. See also

Alabama Power Company v. Davis, 431 U.S. 581 (1977).

‘0 Longshore Procedure Manual, supra, Footnote 8

(pension benetits are not like wages for purposes of veterans’

seniority rights); Joint Industry Board v. United States, 391

U.S. 224 (1968) (unpaid contributions to annuity plans are not

“wages” under 11 U.S.C. 104¢a)(2)).

Practical considerations must be taken into account in

evaluating congressional intent under the LHWCA. Potomac

Electric Power Company v. Director, OWCP, supra, 449 US, at

290. The disruptive effect upon the administration of the

LHWCA would be enormous in fulfilling the Act’s goal of

prompt and certain disposition of benefits. Certainly the fact

that a disabled employee or a deceased employee's spouse

would receive disability benetits exceeding take-home pay. and

the fact that many awards would result in double recovery.

could not have been intended by Congress.

Moreover, as in the case of employer training contri.

butions. it makes no sense to include certain benefits in the base

for computing post-injury benefits. For example. Duncanson-

Harrelson paid 2-6 cents per hour into a union apprenticeship

employee plan which was intended to help train new union

members and in no way benefitted the injured employee or

dependent. As Freer was not an intended beneticiary of this

fund. neither he nor his surviving spouse should be entitled to

receive its %enetits. Further. health and welfare trust tunds

were used to purchase life insurance. Mrs. Freer ts receiving the

full benefit of these contributions as the beneficiary of the life

insurance policy: there is no need to carry those trust contribu-

tions over to LHWCA death benefits because the beneticiars

does not have to bear the expense of paying premiums on an

insurance policy on David Freer’s life.

EEE

CONCLUSION

Congress did not intend fringe benefits or contributions to

union trust funds to be included within calculation of an

employee's average weekly wage under the Longshoremen’s

and Harbor Workers’ Compensation Act. In 1972, Congress

had the opportunity to re-detine 33 U.S.C. § 902013) and chose

not to expand the definition of “wages” to include fringe

benetits. The judiciary should decline to act where Congress

has clearly had the opportunity to change the law and has

refused to do so. Contrary to the Act’s express purpose,

inclusion of fringe benefits within average weekly wages would

confuse. complicate and delay the awarding of benetits under

the Act. We respectfully urge the Court to reverse the result

below.

Respectfully submitted.

B. James FINNEGAN*

KAREN KISSLER

KIERNAN & FINNEGAN

1990 Lombard Street. Suite 300

San Francisco. Calitornia 94123

Counsel for Petitioners

* Counsel of Record

—>

APPENDICES

APPENDICES. ..0ccsseresecense

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

Court of Appeals decision

denying Petition for

PIU NI ss inc scticsecasssvssciacets

Court ot Appeals decision ...

The Benefits Review Board

ee NV CART Aaa PNG LAB as, le

The Administratuve Law

Judges decision...

Relevant statutes...

sla

APPENDIX A

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DUNCANSON-HARRELSON COMPANY

and Employers MUTUAL LIABILITY

INSURANCE COMPANY OF WAUSAU,

Petitioners,

vs.

Director, Orrick OF WORKERS’

COMPENSATION PROGRAMS,

UNITED STATES

DEPARTMENT OF LABOR,

Respondent,

and

NANCY A. FREER,

Claimant.

NANCY A. FREER,

Petitioner,

Vs.

UNITED STATES DEPARTMENT OF

LaBor, OrFiCt OF WORKERS’

COMPENSATION PROGRAMS,

Respondent.

FILED

NOVEMBER 12, 1982

PHILLIP B. WINBERRY

C_ERK, U.S. COURT

OF APPEALS

No. CA 79-7093

No. BRB 76-314

No. CA 79-7094

No. BRB 76-314A

The petition for rehearing of Appellant and Claimant

Nancy A. Freer is denied.

APPENDIX B

Nos. 79-7093, 79-7094,

UNITED STATES COURT OF APPEALS,

NINTH CIRCUIT.

DUNCANSON-HARRELSON COMPANY

and EMPLOYERS MUTUAL LIABILITY INSURANCE

COMPANY OF WAUSAU,

Petitioners,

Vv,

Director, Orrick OF WorKERS’ COMPENSATION PROGRAMS,

UnNitep STATES DEPARTMENT OF LABOR

Respondent,

and

NaANcY A, FREER,

Claimant.

NANCY A, FREER,

Petitioner,

Vv.

UNITED STATES DEPARTMENT OF LABOR,

Orrict OF WORKERS’ COMPENSATION PROGRAMS,

Respondent.

PETITION TO REVIEW A DECISION OF THE

BENEFITS REVIEW BOARD

UNITED STATES DEPARTMENT OF LABOR

Argued Dec. 10, 1980.

Submitted April 6, 1982.

Decided Sept. 14, 1982.

B. James Finnegan, San Francisco, Cal.. argued. for

Duncanson-Harrelson Co,, et al: Kiernan & Finnegan, San

Francisco, Cal., on brief.

Lee H. Cliff, San Francisco. Cal., argued. for Freer; W.

Martin Tellegen, Hall, Henry, Oliver & McReavy. San Fran-

cisco, Cal., on brief.

Mark C. Walters, Washington, D.C., for Director; Mary A.

Sheehan, Washington, D.C.., on brief.

Petition to Review a Decision of the Benetits Review

Board United States Department of Labor.

Before TRASK and ANDERSON, Circuit Judges, and STEPH-

ENS,* District Judge.

TRASK, Circuit Judge:

Claimant Freer challenges the amount of compensation

awarded her under the Longshoremen’s and Harbor Workers’

Compensation Act, 33 U.S.C, §§ 901-950 (1976) (Act or

LHWCA), by the Benetits Review Board (BRB). Freer’s

husband (the decedent) was employed as a pile driver and was

killed over navigable waters while cutting pilings for the

construction of a pier. Freer asserts that the Administrative

Law Judge (ALJ) and the BRB erred in determining the

amount of compensation by applying the wrong subsection of

33 U.S.C. § 910 and by failing to include employer contribu-

tions to the union pension and health funds as part of dece-

dent’s wages.

Defendants Duncanson-Harrelson Company and its liabi-

lity insurer (collectively D-H) also appeal urging that the

decedent was not covered by the Act. D-H argues alternatively

that decedent did not meet the Act’s test of coverage or that he

belonged to a class of employees specifically excluded.

* Honorable Albert Lee Stephens, Jr. Senior United States District

Judge for the Central District of California, sitting by designation.

I. FACTS

David W. Freer, the decedent, was killed while working as

a pile butt or pile driver on the expansion of the oil tanker

docking facilities operated by Pacitic Gas & Electric Company

in Pittsburg, California. The dock extends ihto Suisun Bay, a

body of navigable water, and D-H was expanding the facilities

at the Pittsburg dock to accommodate a rising volume of fuel

oil deliveries. Decedent was employed by D-H and was fatally

injured when the top of a dolphin piling he was cutting tell on

him. The dolphin was located in 35 feet of water, approxt-

mately 25 feet from the nearest dock.'

Decedent’s wife was awarded death benefits by the ALJ

who found that the decedent was killed over navigable waters.

that he was engaged in maritime employment and was there-

fore an employee within section 2(3) of the Act. The ALJ also

found that decedent was not a member of the crew of the crane

barge on which he worked. The ALJ applied section 1l0C¢) of

the Act to determine decedent’s average weekly wage in the

amount of $368.64,

Both D-H and the claimant appealed the decision of the

ALJ to the BRB. D-H challenged the tindings that decedent

was engaged in mariume employment and that he was not a

member of the crew of a vessel. The claimant sought review of

the average weekly wage computation arguing that the ALJ

erred in applying section 10(¢¢) rather than section 10(a) of the

Act in determining the amount. Claimant also urged that the

ALJ erred in failing to include certain fringe benetits in the

computation of decedent's earnings. The BRB affirmed the

decision of the ALJ. The parties press the same arguments in

their appeal to this court.

il. STANDARD OF REVIEW

The Findings of Fact of the ALJ are reviewed by the BRB

under the “substanual evidence” standard. 33. «CU.S.C.

§$ 921(b)(3). The courts have held that the BRB must accept

the ALJ's determinations unless they are contrary to the law,

‘A dolphin is a free standing pier consisting of metal, concrete or

wooden pilings which support a concrete deck. Dolphins are used as

temporary docks and as abutments.

irrational, or unsupported by substantial evidence. L.g¢., Direc-

tor (OWCP) v. Campbell Industries, 678 F.2d 836, 838 (9th

Cir. 1982). We must review BRB decisions for’ ‘errors of law

and for adherence to the statutory standard governing the

Board’s review of the administrative law judge's factual

determinations.’ /d., citing Bumble Bee Sea Foods vy. Director

(OWCP), 629 F.2d 1327, 1329 (9th Cir. 1980). In Duncanson-

Harrelson Co. v. Director (OWCP), 644 F.2d 827. %30 (9th

Cir. 1981), this court indicated that the BRB’s determinations

should be given deference since an administrative agency's

interpretation of the statute which it administers ts deserving of

considerable respect. 644 F.2d at 830. See. e.g. &. 1. duPont de

Nemours & Co. v. Collins, 432 U.S. 46, 56-57, 97 S.Ct. 2229,

2235, 53 L.Ed.2d 100 (1977), quoting. S.E.C. v. Chenery Corp.,

332 US, 194, 209, 67. S.Ct. 1875, 1883, 91 L.Ed. 1995 (1947).

The Supreme Court. however, has noted that because the BRB

does not make policy, its interpretations of the LHWCA are not

entitled to any special deference. Potomac Llectric Power Co. v.

Director (OWCP), 449 U.S. 268, 278 n. 18. LOL S.Ct. S09, 514

n.18, 66 L.Ed.2d 446 ( 190),

Hl. COVERAGE OF DECEDENT UNDER THE ACT

A. Maritime Employment

Before the 1972 amendments to the Act. a single geogra-

phic test (the “situs” requirement) governed coverage. An

employee was entitled to benetits if he was injured while

working on or over navigable waters of the United States. even

though his occupation was not “maritime.” P.C. Pfeiffer Co. v.

Furd, 444 US. 69, 72, 100 S.Ct. 328, 351. 62 L.Ed.2d 225

(1979). There was also a requirement that the worker's

employer have at least one employee. not necessarily the

injured one, engaged in maritime employment. Northeast

Marine Terminal Co. v. Caputo, 432 U.S. 249, 264, 97 S.Ct.

2348, 2357, 53 L.Ed.2d 320 (1977). Because most of those

who employ workers for jobs on or over navigable waters also

employ someone in a traditional maritime capacity, this second

requirement was nearly always met, leaving the situs test as the

only operative limitation on coverage.

The 1972 amendments expanded the definition of “navi-

gable waters” to include “any adjoining pier. wharf. dry dock.

terminal. building way, marine railway, or other adjoining area

customarily used by an employer in loading, unloading. repair-

ing or building a vessel... . 33 U.S.C. § 90304), See Caputo,

432 US. at 260-64, 97 S.Ct. at 2355-57, But an injury sustained

in this expanded area ts covered only if the employee was

engaged in “maritime employment” which includes “any

longshoreman or other person engaged in longshoring oper-

ations, and any harborworker including a ship repairman,

shipbuilder. and shipbreaker™ but not “a master or member of

any vessel or any person engaged by the master to load or

unload or repair any small vessel under eighteen tons net.” 33

U.S.C. § 90203).

In Weyerhaeuser Co. vy. Gilmore, S28 &.2d 9S7 (9th Cir

1975). cert. denied. 429 U.S, 86%. 97 S.Ct. 179, 80 Le bd.2d 148

(1976), this court held that in order for an injured employee's

work to be considered “maritime.” it “must have a realistically

Significant relationship to ‘traditional maritime activity

involving navigation and commerce on navigable

waters.’ ".... dd. at 961, quoting Executive Jet Aviation, Inc. v.

City of Cleveland, 409 U.S. 249, 272, 93 S.Ct. 493. 506, 34

L.Ed.2d 454 (1952).2 Although D-H argues that the dece-

dent’s employment as a pile driver on a marine construction

? We note that the Fifth Circuit in a recent enhanc decision reexamined

the Weyerhaeuser interpretation of “maritime employment” and, based on the

legislative history of the 1972 amendments to the Act. rejected the view that

Congress intended to withdraw coverage from workers who previously were

enutled to benefits based on the “situs” test alone ie, workers injured on

navigable waters whose employment was not maritime in nature Boudreaux

v. American Workover, Inc., 680 F.2d 1034 (Sth Cir, 1982). The result in this

appeal would be the sume regardless of whether the Ninth or the Fifth

Circuit’s interpretation ts applied: we tind decedent's employment to be

“maritime” even under the narrower Weyerhaeuser standard. The debate

over the scope of “maritime employment” will be resolved when the Supreme

Court reviews the Second Circuit's decision in Churchill y. Perini North River

Associates, 652 F.2d 288 (2d Cir. 1981), cert. granted sub nom. Director

(OWCP) v. Perini North River Associates, — US. . 102 S.Ct. 1425,

71 L.Ed.2d 647 (1982). In Perini, the Second Circuit denied compensation

under the Act to workers injured over navigable waters who were engaged in

the construction of a sewage treatment plant. The court held that the work on

the sewage treatment facility did not constitute “maritime employment.”

project fails to satisfy the Weyerhaeuser test for “maritime

employment,” we recently stated that the Act covers workers

involved in construction related to maritime activities.

Schwabenland v. Sanger Boats, 683 F.2d 309 at 311 (9th Cir.

1982). In Duncanson-Harrelson Co. v. Director (OWCP), 644

F.2d 827, 830 (9th Cir, 1981), a case involving facts very

similar to the present appeal. we upheld the finding of the BRB

that two employees, injured while constructing an off-shore

dock for the unloading of oil from tankers. were engaged in

maritime employment. One of the claimants was constructing a

dolphin when his injury occurred. Similarly. the decedent in

the present case was killed when the top of a dolphin piling he

was cutting fell on him.

B. Member of a Crew of a Vessel

D-H argues that decedent was a crew member as detined

by section 2(3) of the Act, 33 U.S.C. § 902(3). Section 2(3)

provides that “the term ‘employee’ means any person engaged

in maritime employment... .. but such term does not include a

master or member of a crew of any vessel... .°° To tind that

an employee is a member of a crew excluded from coverage.

the court must conclude that the vessel is in navigation, that the

worker had a permanent connection with the vessel and that

the employee was aboard the vessel primarily to aid in naviga-

tion. Griffith v. Wheeling Pittsburgh Steel Corp.. 521 F.2d 31.

36 (3d Cir. 1975). cert. denied, 423 U.S. 1054, 96 S.Ct. 785, 46

L.Ed.2d 643 (1976); accord, Burks vy. American River Trans-

portation Co., 679 F.2d 69, 75-76 (Sth Cir. 1982). Whether the

decedent was a master or crew member is primarily a question

of fact. Longmire v. Sea Drilling Corp., 610 F.2d 1342. 1345

(Sth Cir. 1980); Wilkes v. Mississippi River Sand & Gravel Co.,

202 F.2d 383. 389 (6th Cir.). cert. denied, 346 U.S. 817, 74

S.Ct. 29, 98 L.Ed. 344 (1953). Thus, the tindin: of the ALJ

that decedent was not a member of a crew must be affirmed if it

is supported by substantial evidence. South Chicago Coal &

Dock Co. v. Bassett, 309 U.S. 251, 257, 60 S.Ct. 544, 547, 84

L.Ed. 732 (1940); Hardaway Contracting Co. v. O'Keeffe, 414

F.2d 657, 660-61 (Sth Cir. 1968). The Supreme Court in

Bassett stated that the question turns upon the employee's

actual duties and held that the claimant's employment did not

aid in navigation except for the incidental task of throwing the

ship’s rope or securing the line — duties which could be per-

formed by any harbor worker. 309 U.S. at 260, 60 S.Ct. at 549.

The ALJ in this case made similar findings regarding decedent

Freer’s duties. The ALJ stated:

| Decedent] did not have a permanent connection with the

harge. He neither ate nor slept on the barge. In addition.

he was not aboard the barge primarily to aid in navigation.

See Ryan |v. McKie Co., | BRBS 221 (1975)]. Anything

he did in this regard was incidental to his primary work as

a pile butt. As the Court noted in South Chicago Coal &

Dry Dock Co. v. Bassett, 309 US. 281, 60 $.Ct. $44, 549

[84 L.Ed. 732] “The were persons serving on vessels. to be

sure, but their service was not of laborers and thus

distinguished from those employees on the vessel who are

naturally end primarily on board to aid in her naviga-

tion.” Moreover, it is not without significance that at the

time of his death Mr, Freer was not even aboard the barge

but instead was standing on the dolphin.

C.T.. Vol. Pat 19s. The determination of the ALJ that decedent

Was not a member of a crew was upheld by the BRB. We

affirm on the basis that findings of the ALJ are supported by

substantial evidence.

IV. APPLICATION OF SECTION 910(¢)

Claimant challenges the use of subsection (¢) of section

9IO of the Act and urges that subsections (a) or (b) should be

applied to compute the decedent's average annual earnings.3

S33 USC. § 91004). Cb). Co) provide in pertinent part

(a) If the injured employee shall have worked in the employment in

which he was working at the ume of the injury, whether for the same or

another employer, during substantially the whole of the year immedi-

ately preceding his injury, his average annual earnings shall consist of

three hundred times the average daily wage or salary for a six-day

worker and two hundred and sixty umes the average daily wage or salary

for a five-day worker, which he shall have earned in such employment

during the days when so employed.

(b) If the injured employee shall not have worked in such employment

during substantially the whole of such year, his average annual earnings,

if a six-day worker, shall consist of three hundred times the average daily

(footnote continued on following page)

The parties disagree on whether the issue is one of law or fact.

We consider the nature of the decedent's work and the details

of his employment to be factual findings. Whether particular

facts fit within the meaning of certain legal terms is a question

of law. Cf. Estate of Franklin vy. Commissioner, 544 F.2d 1045,

1047 n.3 (9th Cir. 1976) (characterisucs of transaction are

questions of fact. but whether such characteristics constitute a

“sale for tax purposes” is a question of law); K. Davis.

Administrative Law Treatise § 30.01 (3d ed. 1972) Ccircum-

stances of arrest are questions of fact. but whether such

circumstances amount to “probable cause” Is a question of

law). But cf. Parkside, Inc. v. Commissioner, 571 F.2d 1092,

1094-95 & n.§ (9th Cir. 1977) (two judges concurred in result.

no majority rationale) (whether realty was held “primatily for

sale in the ordinary course... of trade or business’ Is 4 question

of fact arguably mixed with law, subject to the “clearly

erroneous” standard of review ).

To determine whether the ALJ applied the correct subsec-

tion of section 910 in computing decedent's average annual

earnings, we must examine whether the employment in which

decedent was engaged at the time of his injury was permanent

and continuous, or seasonable and intermittent. O'Hearne v.

Manland Casualty Co., 177 F.2d 979, 980-81 (4th Cir, 1949),

Courts must consider the type of job the worker held when he

was injured, not his personal employment history. /d. Per-

manent and continuous jobs fall under subsections (a) or (b),

(footnote continued from previous page)

wage or salary, and, if a five-day worker, two hundred and sixty times

the average daily wage or salary, which an employee of the same class

working substantially the whole of such immediately preceding year in

the same or in similar employeent in the same or a neighboring place

shall have earned in such employment during the days when so

employed.

earnings of the injured employee can not reasonably and fairly be

applied, such average annual earnings shall be such sum as, having

regard to the previous earnings of the injured employee in the employ-

ment in which he was working at the time of the injury, and of other

employees of the same or most similar class working in the same or most

similar employment in the same or neighboring locality, or over

employment of such employee, including the reasonable value of the

services of the employee if engaged in self-employment, shall reasonably

represent the annual earning capacity of the injured employee.

whereas seasonal and intermittent jobs fall under (¢). Palacios

v. Campbell Industries, 633 F.2d %40, 842 (9th Cir, 1980):

Strand v. Hansen Seaway Service, Ltd. 614 &.2d $72, 575 (7th

Cir. 1980); Tri-State Terminals, Inc. v. Jessee, 596 F.2d 752.

754-55, 756 & n3 (7th Cir. 1979): O'Hearne vy. Manland

Casualty Co., 177 F.2d at 980-81: Marshall vy. Andrew F

Mahony Co., 56 F.2d 74, 76-78 (9th Cir, 1932). Thus, for the

ALJ to conclude, based on the decedent’s employment history,

that claimant's benefits should not be computed under either

subsections (a) or (b) was error. We find, however, tor the

reasons set forth below that this was not a reversible error,

Assuming that decedent’s job should have been classified

permanent and continuous, whether the decedent was em-

ployed for “substantially the whole of the year” immediately

preceding his injury determines which of subsections (a) or (b)

should be applied. Palacios v, Campbell Industries, 633 F.2d at

%42: O'Hearne v. Manland Casualty Co., 177 &.2d at 9X1-82:;

see California Ship Service Co. vy. Pillsbury, 175 F.2d 873. 876

(9th Cir, 1949). Compare 33 U.S.C. § 910Ca) Cort the injured

employee shall have worked... during substantially the whole

of the year”) with 33 U.S.C, § 9100b) Coif the injured employ-

ee shall not have worked ... during substantially the whole of

the year”). Subsection (a) computes an average daily wage

based on the claimant’s actual employment history, whereas

subsection (b) computes this figure using the hypothetcal

history of a typical worker engaged in similar employment in

the same general locality. Subsection (b) applies to claims in

which the injured worker has had too little time on the job to

permit an accurate and fair computation of average daily

wage: for example. the subsection would apply if a worker had

been recently hired after having been unemployed, or outof the

work force, or in a lower paying position, See OVWearne vy.

Manland Casualty, 177 F.2d at 982; California Ship Service

Co. v. Pillsbury, 175 F.2d at 876. In this case. the decedent has

been on the job for several years. and the evidence in the record

is sufficient to enable computation of his average daily wage

hased on his own employment record. Thus. the ALJ should

have found that decedent worked “substantially the whole of

the year.” and claimant’s benefits initially should have been

determined under subsection (a),

lla

We find. however, that the ALJ’s decision to compute

claimant Freer’s benefits under subsection (c) rather than

subsection (a) should be affirmed because the decedent's actual

employment history indicates that application of subsection (a)

would provide excessive compensation, Because subsections

(a) or (b) are premised on the injured employee having

worked the entire year without injury, computation of benefits

under either of these subsections for a worker in seasonal

employment would result in overcompensation, National Steel

& Shipbuilding Co. v. Bonner, 600 F.2d 1288, 1291 (9th Cir.

1979): Tri-State Terminals, Inc. v. Jesse, 596 F.2d at 757-58;

O'Hearne v. Maryland Casualty Co., 177 F.2d at 981; Marshall

v. Andrew F. Mahony Co., 56 F.2d at 76-78. Similarly, the

courts have held that even if the worker's employment ts

permanent and continuous, computation of the average annual

wage must be determined pursuant to subsection (c) if (a) or

(b) cannot “reasonably or fairly be implied.” 33 U.S.C,

§ 910(¢). Palacios vy. Campbell Industries, 688 F.2d at 842;

National Steel & Shipbuilding, supra, at 1291; Marshall, supra,

at 76-78: see Todd Shipyards v. Director (OWCP), 545 F.2d

1176, 1179 (9th Cir. 1976). This can occur when there ts

insufficient evidence in the record to enable the ALJ to make an

accurate computation under subsections (a) or (b), National

Steel & Shipbuilding, supra at 1291; Todd Shipyards, supra, at

1179. or when such computation results in excessive com-

pensation of the claimant in light of the injured worker's actual

employment record. Johnson v. Britton, 290 F.2d 355, 357-59,

(D.C. Cir.). cert. denied, 368 U.S. 859, 82 S.Ct. 99, 7 L.Ed.2d

56 (1961); Marshall, supra, at 78 (dicta); see Tri-State Termi-

nals, supra, at 756. Although both possibilities are present here,

we affirm the use of section 910(c) based on our finding that

computation of Freer’s benetits under subsections (a) or (b)

would result in overcompensation and we do not reach the

question of whether the evidence claimant introduced to show

the earnings of a typical pile butt was insufficient.

Both subsections (a) and (b) compute the average annual

wage of an employee working a five-day week by multiplying

the worker's average daily wage by 260 (5 days a week X 52

weeks). Thus, if a claimant has worked less than 260 days in

the year preceding his injury, he is overcompensated under

l2a

subsection (a) or (b). When Congress amended section 910 of

the Act in 1948 to reflect the five-day work week, it undoubt-

edly was aware that virtually no one in the country works every

working day of every week; there are many reasons including

illness. vacations, strikes. unemployment, family emergencies,

etc. We can infer that Congress knew that both subsections (a)

and (b) would result in some overcompensation, but retained

the 260-day factor for administrative convenience. See general

ly O'Hearne v. Maryland Casualty Co., 177 F.2d at 9&2. But in

Marshall v. Andrew F. Mohony Co., 86 F.2d 74, 78 (9th Cir,

1932). the court explained:

[I]t is not reasonable or fair to apply subdivisions (a) or

(b) when to do so would result in ascertaining a mere

theoretical earning capacity. having no regard to the actual

facts of the case. but which would award arbitrarily to an

injured laborer disability compensation in excess of what

he was able to earn if at work, as shown by earnings

Johnson v. Britton, 290 F.2d at 359.

Subsection (c) provides greater flexibility in determining

an injured employee's average annual earnings. Consideration

must be given to the previous earnings of the injured worker at

the job where the injury occurred. the previous earnings of

other workers in the locality employed in similar jobs, and other

employment of the injured worker. 33 U.S.C. § 9100): Pa

lacios v. Campbell Industries, 633 F.2d at 842: National Steel

and Shipbuilding Co. v. Bonner, 600 F.2d at 1292. The actual

wages earned by the employee are not conclusive. Palacios,

supra, at 843; National Steel and Shipbuilding, supra, at 1292

“It is manifest that the prime objective of § LOCC) Was to insure

that compensation awards would be based on accurate assess:

ments of the claimant's earning capacity.” Palacios, supra, at

843, citing Tri-State Terminals, Inc. v. Jesse, 596 F.2d at 756

We do not believe that Congress contemplated over-

compensation as large as that which would result in this case it

Freer’s benefits were to be calculated under subsections (a) or

(b). This is a question of line-drawing—when does the

disparity between the claimant's actual days worked and the

260-day factor become so large that computation of the average

l3a

annual wage under subsection (a) or (b) becomes unreason-

able or unfair? If Freer’s benetits are calculated under subsec-

tion (a), claimant receives benefits for sixty-five (or 33'%

percent) more days than decedent actually worked. Because

we find this disparity is large enough to justly application of

subsection (c) in order to avoid excessive overcompensation of

Freer. we uphold the ALJ’s use of subsection (c¢).

V. EMPLOYER CONTRIBUTIONS TO PENSION AND

HEALTH FUNDS.

The Act defines wages to include:

[T]he money rate at which the service rendered is recom-

pensed under the contract of hiring in force at the ume of the

injury, including the reasonable value of board, rent, housing,

lodging, or similar advantage received from the employer, and

gratuities received in the course of employment from others

than the employer.

33 U.S.C. § 902013) (emphasis added). Claimant Freer urges

that contributions to the union pension and health funds made

by D-H on behalf of the decedent are within the meaning of

section 902( 13) and should have been included in the ALJ's

calculation of the decedent’s average annual wage.4

The ALJ determined that these employer contributions are

not wages under the Act. Under the coilective bargaining

agreement, D-H paid its contributions directly to the trust fund,

not the individual employees, thus the ALJ reasoned that

“[t}his payment, which by its nature is not capable of being

converted to the immediate advantage of the employee, is not a

‘similar advantage’ to “board, rent, housing, lodging’ within the

meaning of section 2(13)." C.T., Vol. I at 202. The BRB

affirmed, stating that these benefits are too speculative to be

included in an employee's wages because “the employee has no

entitlement to these benefits.” /d. at 6-7. The BRB cited its

previous decisions in Collins v. Todd Shipyards Corp., 5 BRBS

4D—H agreed to pay pension fund benefits in the following amounts for

each hour that each covered employee worked or was paid for, whichever is

greater: 80 cents for work performed until September |, 1974; 85 cents for

work from that date until April 1, 1975; $1.15 for work from that date until

July 1, 1975; $1.23 for work performed thereafter.

l4a

334, BRB No. 76-177 (Jan. 5, 1977) and Hilyer v. Morrison-

Knudsen Co., 6 BRBS 754, BRB No. 76-410 (Sept. 30, 1977),

rev'd, 670 F.2d 208 (D.C. Cir. 1981), petition for cert. filed sub

nom. Morrison-Knudsen Construction Co. v. Director, (OWCP),

No. 18-1891 (April 13, 1982). In Hiler, the Director of the

Office of Workers’ Compensation Programs ( Director) success-

fully argued before the court of appeals that employer contribu-

tions to union pension plans should be included in computing

an injured employee’s average wage. 670 F.2d at 211-13.

Since that time, the Director has abandoned the position argued

in Hilyer and now urges this court to hold that such payments

are not wages. We do not find any of the Director's arguments

for rejecting Hiler persuasive.

The Director correctly argues that the court must consider

the language of the statute, guided by the plain and ordinary

meaning of the words Congress used. Richards v. United

States, 369 U.S. 1, 9, 82 S.CT. 585, 590, 7 L.Ed.2d 492 (1961).

But the Director insists we must apply a narrow definition of

wages which excludes fringe benefits because when Congress

enacted the statute in 1927 it would not have considered such

benefits to be part of an employee’s wages. The Director

further argues that only by congressional amendment could the

Act’s description of “wages” be expanded to include fringe

benefits.6 Although the concept of wages may have changed

5 The Director relies on the definition of “wages” provided in Webster's

New International Dictionary 2863 (2d ed. 1957): “pay given for labor,

usually manual or mechanical, at short intervals, as distinguished from

salaries or fees.” Webster's second edition, published orginally in 1934,

remained unchanged until the third edition, published in 1961. See Webster's

Third New International Dictionary 6a, 7a (1961). In contrast the third

edition states that “wages” often include “amounts paid by the employer for

insurance, pension, hospitalization, and other benefits.” /d. at 2569.

® The Director points to the legislative history of the 1964 amendment to

section | of the Davis-Bacon Act, 40 U.S.C. § 276a(b), as indication that only

by congressional amendment could the Act’s definition of “wages” be

expanded to include fringe benefits. While it is true that Congress’ 1964

amendment defined wages to include employer contributions to trust funds,

the Davis—Bacon Act is distinguishable because prior to the 1964 amend-

ment, the statute did not provide any specific articulation of “wages.” See Act

of March 3, 1931, c. 411, § 1, 46 Stat. 1494; Act of Aug. 30, 1935, c. 825, 49

Stat. 1011; Act of June 15, 1940, c. 373, § 1, 54 Stat. 399; Act of July 12, 1960,

P.L. 86-624, § 26, 74 Stat. 418. Because Congress envisioned the inclusion of

certain fringe benefits in its definition of “wages” under the LHWCA, we

disagree with the Director's argument that new legislation is required to

reflect modern concepts of wages.

lSa

since 1927, we do not find that Congress intended an inflexible

meaning of “wages” in the definition provided by section

902(13).? Examining the plain meaning of the language

Congress used, we note that several fringe benefits were listed

including “the reasonable value of board, rent. housing. lodg-

ing, or similar advantage received from the employer... .”° /d.

This language indicates a flexible definition encompassing other

fringe benefits not specifically mentioned by Congress that

provide the employee with a “similar advantage.” Moreover,

the standard of liberal construction of the Act in favor of

claimants suggests that Freer’s broader interpretation of

“wages” should be adopted to include employer contributions

to health and pension plans. See Voris v. kikel, 346 U.S. 328,

74 S.Ct. 88, 98 L.Ed. 5 (1953): Baltimore & Philadelphia

Steamboat Co. v. Norton, 284 U.S. 408, 414, 52 S.Ct. 187, 189,

76 L.Ed 366 (1932).

We agree with the court’s reasoning in Miler v. Morrison-

Knudsen Construction Co., 670 F.2d at 211-13. that the Act's

definition of “wages” includes the values received from the

employer that are easily identifiable and calculable. Although

not expressly mentioned in section 902(13). the BRB has

? The Director contends that the Supreme Court's decision in Potomac

Electric Power Co. v. Director (OWCP), 449 US. 268, 101 S.Ct. 509, 66

L.Ed.2d 446 (1980) ( PEPCO). supports the view that we must interpret the

term “wages” according to the definition that was commonly accepted in

1927. We disagree.

In PEPCO, the court of appeals had held that computation of the

employee's award under the Act's schedule benefit provisions was in-

appropriate because these provisions provided inadequate compensation for

claimant's permanent partial disability. But the Supreme Court rejected

computation under an alternative provision and reaffirmed the applicability of

the Act’s schedule benefit provisions as enacted in 1927 to determine the

claimant’s benefits. Although acknowlendging the “recent trend” in work-

men’s compensation decisions away from the position that scheduled benefits

are exclusive, the Supreme Court found such flexibility unsupported by the

statute and inconsistent with Congress’ intent. /d. at 276-80, LOLS Cr at $14-

516.

In the present appeal, we are not determining whether the provisions of

section 902(13) should be ignored in light of more modern concepts of

“wages” or decisions affording greater latitutde. We are interpreting a

definition of “wages” which by its terms provides some flexibility. Congress

specifically listed several fringe benefits in its definiiwon of wages and stated

that other benefits providing “similar advantage™ should also be considered.

See 33 U.S.C. § 902¢13).

l6a

included such values as vacation pay and overtime com-

pensation within the Act’s concept of “wages.” /d. at 211. In

Hiler, employer contributions to benefit funds were found to

be identifiable. calculable values and therefore included within

“wages” under the LHWCA. /d.

The court in Hiher attached little significance to the fact

that the employer’s contributions were made directly to the

union benefit funds, not the employees. or that the employee

exercised no control over the day-do-day management of the

funds. The court found that these payments provided substan-

tial economic value because if the employer did not provide

health and pension benefits. the employees would have to

spend their own money to acquire them. /d. at 211: see WOW,

Cross v. NLRB, 174 F.2d 875, 878 (Ist Cir. 1949). We agree

that these contributions represent “an important part of the

employees’ total compensation, and an equally important part

of the employer's labor costs.” Hiher, supra, at 212 n.7.

The Director argues that the Court’s treatment of employer

contributions in United States v. Carter, 353 U.S. 210.77 S.Ct.

793. | L.Ed.2d 776 (1957). should not be interpreted to

support claimant’s pesition that the payments are wages under

the Act. In Carter, the Court held employer contributions to a

union benefit fund were part of the “sums justly due” to

employees under the Miller Act. 40 U.S.C. §§ 270a e¢ sey.2 The

surety in Carter argued that employer contributions made

directly to trust funds were not “wages” owing to the employees

and that its obligation had been satisfied by payment of all

“wages” owed to them. /d. at 217. 77 S.Ct at 797. The Court.

however. construed the contributions to the health and pension

funds to be part of the consideration that the employer agreed

®Section 1(a)(2) of the Miller Act requires that before contracts above

$2.000 are awarded for construction involving public buildings, the contractor

Must post a payment bond with a satisfactory surety “for the protection of all

persons supplying labor and material.” 40 U.S.C. § 270a(.a)(2).

Section 2(a) provides that “[e]very person who has furnished labor or

material in the prosecution of the work provided for in the contract... and

who has not been paid in full therefor... shall have the right to sue on such

payment bond... for the sum or sums justh due him....” 40 USC

§ 270b( a) (emphasis added ).

= — Ss

17a

to pay its workers, id. at 217-18, 77 S.Ct. at 797. despite the

terms of the trust agreement which expressly stated that such

payments were not to be considered “wages” due the employ-

ees. /d. at 214, 77S.Ct. at 795. Thus. contract provisions which

purported to define pension fund contributions as something

other than employee compensation did not stop the Court from

finding the payments to be “sums justly due” the employees.

Applying a common sense approach, the Court in Carter

reasoned that if the collective bargaining agreement had speci-

fied that the employer would pay each employee a certain

amount above the prevailing wage. and if the employee had in

turn contracted with his union to forward this amount to the

pension fund. the contribution would be seen as part of the

employee's compensation. See id. at 217. 77S.Ct. at 797: Hiher

v. Morrison-Knudsen Construction Co., 670 F.2d at 212. Simi-

larly, we conclude that the employer’s payments in the present

case should not be excluded from the computation of an

employee's average weekly wage simply because D-H _ has

eliminated two unnecessary steps by agreeing to pay the

contributions directly to the union benefit funds. /d.

The Director relies on United States v. Embassy Restau-

rant, 359 U.S. 29, 79 S.Ct. 554, 3 L.Ed.2d 601 (1959). in which

the Court determined that benefit fund contributions were not

entitled to the priority given to “wages... due to workmen”

under the Bankruptcy Act. Although acknowledging that

unions bargain for these contributions as part of the employee's

total wage package and that decisions under the National

Labor Relations Act and the Social Security Act had treated

various fringe benefits as “wages,”’ the Court emphasized that

its construction of “wages... due to workmen™ must be

governed by the context of the Bankruptcy Act and by Con-

gress’ purpose in providing the priority. /d. at 33, 79 S.Ct. at

556. The Court expressed concern that the protection afforded

employees by the priority given to their wages might be

weakened if the workers had to share their recovery with the

benefits plan. /d. at 33-34, 79 S.Ct. at 556. Thus, the Court

construed “wages... due to workmen” narrowly and found

that Congress did not intend to include other forms of com-

pensation. /d. at 35, 79 S.Ct. at 557. Here. by contrast, the

LHWCA expressly includes several forms of compensation

within its definition of “wages.” Hier v. Morrison-Knudsen

Construction Co., 670 F.2d at 212. Moreover. in accordance

with the Act’s remedial purpose. we tind that Congress in-

tended to include all identitiable values provided to employees

in the formula for computing “wages” received in return for

their labor at the time of injury. /d.

In sum. we find that the contributions of D-H to the union

benefit plans must be included in the computation of the

decedent’s average weekly wage. Accordingly. the portion of

the BRB’s decision concerning employer contributions ts re-

versed and we remand to the BRB tor the computation of

claimant's benefits In a manner consistent with this hodling

The ruling of the Benetits Review Board ts AttinMip in

part. REVERSED in part. and REMANDED.

19a

APPENDIX C

LS. DEPARTMENT OF LABOR

Beneteits Review Boarp

Washington. D.C. 20210

Nancy A. FREER

( Widow of Davip W. Freer) Filed as Part

Claimant-Respondent of the Record

Cross-Petitioner Jan. 31, 1979

Vv,

DUNC ANSON-HARRELSON COMPANY L (Clerk)

and | Benefits Review Board

Evprovers Murcuar Liasiiry BRB Nos. 76-314

INSURANCE COMPANY & 76-3144

Lmplover/ Carrier-

DECISION

Petitioners

Cross-Respondents

Appeals from the Decision and Order of Fauster Vittone.

Administrative Law Judge. United States Department of

Labor.

B. James Finnegan ( Kiernan & Finnegan). San Francisco.

California, for the employer/carrier.

W. Martin Tellegen (Hall. Henry. Oliver & McReavy).

San Francisco, California. for the claimant.

Before: Smith. Chairman, MILLER and Kaaris. Members.

K ALARIS, Member:

These are appeals by the employer/carrier (hereinafter.

the employer) and the claimant from a Decision and Order

(76-LHCA-266) of Administrative Law Judge Fauster Vittone

pursuant to the provisions of the Longshoremen’s and Harbor

Workers’ Compensation Act. as amended. 33 U.S.C. $901 er

seq. (hereinafter. the Act).

20a

The facts in this case are not in dispute. On May 27, 1975,

the then twenty-six year old decedent was killed when the top

of a dolphin piling he was cuttung fell on him. The dolphin. a

free standing pier, was being constructed in 35 feet of water in

the Suisun Bay near Pittsburg. California, approximately 25

feet from the nearest land-based dock. The dock was being

constructed by Duncanson-Harrelson Company for Pacitic Gas

and Electric Company (P.G. & E.) in order to accommodate a

rising volume of fuel oil deliveries to P.G. & E. The decedent's

duties as a pile driver included removing old piling, acting as a

rigger for a crane on a barge. lining up piling preparatory to

this being driven into the floor of the bay. and cutting off the

tops of piles after they had been driven to the appropriate

depth. At the ume of his death. Mr. Freer was married and had

three dependent children.

The administrative law judge ruled that the decedent was

an employee within the meaning of Section 203), 33 U.S.C.

§902(3): that the injury occurred upon “navigable waters.”

within the meaning of Section 3(a). 33 U.S.C. $9034): that

the decedent was not a member of a crew: that the employer ts

an “employer” within the meaning of Section 2(4). 33 U S.C.

§902(4); that the decedent’s average weekly wage. computed

according to Section 10(c). 33 U.S.C. §910(c). was $36% 64;

and that the claimant's counsel ts entitled to attorney's fee in

the amount of $8,627. and costs of $136.40. Both the employer

and the claimant appeal.

The employer contends that the decedent is not an employ-

ee within the meaning of Section 2(3); that the decedent was a

“member of a crew”: and that death benefits under Section 9.

33 U.S.C. §909, should be subject to the same limitations for

maximum weekly compensation as provided by Section

6(b)( 1). 33 U.S.C. §906¢b)C 1).

We do not agree with employer's contention that claimant

is not an employee engaged in maritime employment within the

meaning of Section 2(3) of the Act: nor do we agree with

employer's alternate contention that claimant is a “member of a

crew,” and hence excluded from coverage under Section

2la

3(a)(1) of the Act.' This Board has previously held that

employees directly engaged in the construction of docks. piers,

wharves, etc. used in the loading, unloading. repair or construc-

tion of ships are “harbor workers” within the meaning of

Section 2(3). Stewart v. Brown & Root, Inc. 7 BRBS 356, BRB

No. 76-451 (Jan. 12. 1978); Silva v. Massman Construction

Co.. BRBS . BRB No. 78-341 (Jan. 31. 1979): Martin v.

Kaiser Steel Corp., BRBS . BRB No. 78-449 (Jan. 31.

1979): Crawford v. Trotti & Thomson, Inc.. BRBS . BRB

No. 78-490 (Jan. 31, 1979): Hed v. Duncanson-Harrelson Co.,

7 BRBS 821. BRB No. 77-260 (Feb. 24. 1978): Munier v.

Duncanson-Harrelson Co.. & BRBS 8&3. BRB No. 77-433

(March 30, 1978): Bakke v. Duncanson-Harrelson Co., & BRBS

36. BRB No. 77-259 (Feb. 24. 1978). Indeed. the facts

regarding claimant’s employment are similar to those in /led

wherein the same contentions were rejected. While the Board

no longer adheres to the additional basis for finding status

which was set forth in /ed, namely that claimant is also

covered because he was injured over navigable waters as that

term was detined pre-amendment, that case is otherwise con-

trolling.

The employer also argues that death benetits under Section

9 of the Act should be subject to the same limitations for

maximum weekly compensation as provided by Section

6(b)( 1). The Board has held that death benefits. unlike

compensation payments, are not subject to a maximum ceiling.

The Board’s view was recently affirmed by the U.S. Court of

Appeals for the Ninth Circuit. the Circuit wherein this case

arises. Director, Office of Workers’ Compensation Programs vy.

Rasmussen, 567 F.2d 1385, 7 BRBS 403 (9th Cir. 1978). aff'e

Rasmussen v. GEO Control. Inc., | BRBS 378. BRB Nos. 74-

204, 74-204A (April 3. 1975). In this connection. we note that

two other circuits have rejected this holding. see Director, Office

of Workers’ Compensation Programs v. O'Keeffe, 545 F.2d 337.

4 BRBS 563 (3d Cir. 1976). rev'y O'Keeffe v. Morris Boney,

Inc.. 2 BRBS 363. BRB No. 75-179 (Oct. 16. 1975) and

‘Section 2: 3) of the Act also excludes a member of a crew from the term

“cnployee™.

22a

Director, Office of Workers’ Compensation Programs v. Bough-

man, 54§ F.2d 210. § BRBS 30 (D.C. Cir. 1976). rev'g Edkar v.

Int'l Union of Operating Engineers, | BRBS 406, BRB No. 74-

209 (April 11. 1975), and that the Rasmussen case is currently

before the Supreme Court. Pending a ruling by that tribunal.

we continue to apply the rule that death benefits are not subject

to maximum ceiling. Richman v. Hudson River Dayline, Inc., &

BRBS 273. BRB No. 77-467 (April 27. 1978). Therefore. the

administrative law judge’s finding on this issue ts affirmed.

The administrative law judge awarded benefits based on

an average weekly wage of $368.64. pursuant to Section 10(c)

of the Act. 33 U.S.C. §9100c). The administrative law judge

did not apply Section i0(a) of the Act. 33 U.S.C. §910(a),

inasmuch as he concluded that decedent had not worked

substantially the whole of the year prior to his injury and that

decedent’s employment was discontinuous. Claimant appeals

this determinatio contending that the administrative law judge

erred in not aj plying Section 10(a) of the Act, 33 U.S.C.

§910(a), in failing to include pension plan contributions in

claimant's average weekly wage. in failing to include strike time

in claimant's average number of days worked per year, and in

failing to place heavier reliance in computation on the time

period between June 1973 and May 1974 as more representa-

tive of claimant’s earnings.

In the year prior to his injury, decedent lost tme when he

was on strike, when he left work to go on vacation, and when

he was unable to find work after returning from vacation.

Decedent's employment was, therefore, discontinuous. More-

over, there is no indication that the nature of claimant's work

provided year round employment. In light of this combination

of circumstances, we agree with the administrative law judge

that Section 10(a) of the Act was inapplicable.

Moreover, we conclude that the administrative law judge's

calculations pursuant to Section 10(c) of the Act. 33 U.S.C.

§910(c), yielded a reasonable approximation of claimant's

earning capacity at the time of injury and therefore must be

affirmed. Orkney v. General Dynamics Corp., 8 BRBS 543, BRB

No. 77-877 (June 30, 1978). The administrative law judge did

not include in this calculation time lost due to the strike.

23a

However. he did include in his calculation five percent more

man hours than actually worked in the year preceding the

injury taking into consideration the number of hours worked

between June 1973 and May 1974. In view of the factual

pattern presented in this case. we are not prepared to label the

average weekly wage arrived at by the administrative law judge

as unreasonable.

We also reject claimant’s contentions that employer's

contributions to the union pension fund whould be included in

the calculation of claimant's average weekly wage. In Collings vy.

Todd Shipyards Corp., 5 BRBS 334. BRB No. 76-177 (Jan. §.

1977), the Board concluded that such contributions were not

includible. See also Hilver v. Morrison-Knudsen Co.. 6 BRBS

754, BRB No. 76-410 (Sept. 30, 1977). Unlike payments for

overtime and for vacations, which are payments that the

employee has already earned and ts enutled to enjoy. the

benefits from payments to health and pension funds are directly

contingent upon the occurrence of a future event that may or

may not happen. Until the occurrence of this event. the

employee has no entitlement to these benefits. Furthermore.

should the event that triggers the entitlement to health or

pension benetits never occur. it depends upon the particular

benefit plan and the terms of the applicable labor contract

whether the employee receives any amounts from the plan.

Thus such “fringe benefits” as health and pension plans are too

speculative to be included in a computation of one’s average

wage.

Moreover, the inclusion of benetits. such as health and

pension, in the computation of average weekly wage may result

in the payment of excessive benefits to the employee. With

many benefit programs, an employer only contributes and an

employee is only qualified to participate in the program so long

as the employee is employed with the employer. = /hus,

assuming that nothing else occurs, the employee's entitlement to

the amounts in the benefit program would onh have continued

until his or her retirement or death. If one includes, within a

determination of one’s average weekly wage, the value of these

“fringe benefits” after the point in time when the employee either

would have retired or died, the employee or his survivors would be

BS ee aa

24a

receiving a compensation award that included amounts to which

the employee would not have been entitled had the injury not

occurred.

For example, compensation for permanent total disability

continues unul death and even beyond through the payment of

death benefits. The fact that a claimant may have eventually

retired is irrelevant to the continuation of compensation pay-

ments. However, if contribution to a pension fund were

includible in the average weekly wage. claimant after reaching

what would have been his retirement age where wages nor-

mally stop and pension begins would in effect receive com-

pensation in lieu of his wages plus any pension benetits. While

this is a permissible result where an injured claimant retires

because of his injuries and receives both compensation and a

pension he has fully earned. | Adkins v. Safeway Stores, Inc., 6

BRBS 513. BRB No. 76-317 (Aug. 23. 1977)]. this result

should not be mandated through an inclusion of pension

contributions in the calculation of average weekly wage.

The claimant also appeals the award of the $8,627.00

attorney's fee. The award reflected a fee for all hours worked

by both the attorney and his law clerks at their normal hourly

rate. However, claimant contends that this fee is inadequate

since the case is one of first impression under the 1972 Act

having broad ranging implications to the employer and the

marine construction industry in general, and since the increase

in benefits to the claimant was approximately $450,000.

if a claimant’s attorney or an employer objects to the size

of a fee award. he must show that it ts not in accordance with

law, or was arbitrary, capricious or an abuse of discretion.

Offshore Food Service, Inc. v. Murillo, | BRBS 9. BRB No. 141-

73 (May 15, 1974), aff'd sub nom., Offshore Food Service, Inc.

v. Benefits Review Board, 524 F.2d 967 (Sth Cir. 1975). In

setting the amount of the fee, the administrative law judge

should take into consideration the number of hours worked, the

result obtained, the complexity of the case, the quality of the

services, by whom the services were performed, and the

prevailing rate for attorneys in the area. See 20 C.F.R.

§702.132; Lindy Bros. Builders v. American Radiator & Stan-

dard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973); Palacios v.

25a

Campbell Industries, 3 BRBS 37, BRB No. 75-190 (Dec. 3.

1973). In the instant case. the Board is of the opinion that the

administrative law judge failed to give sufficient consideration

to the complexity of this case and the amount of benefits

gained. Normally, the Board would remand this case to the

Office of Administrative Law Judges for reconsideration by the

administrative law judge of the attorney's fee awarded, but the

administrative law judge assigned to this case has died since the

decision was rendered. In the interest of administrative econo-

my. the Board modifies the attorney's fee award to $10,500.

Claimant’s counsel requests a $3,000 fee for services

rendered defending against employer's appeal. and $2.000 for

services rendered prosecuting claimant's appeal. Of the $3,000

requested for defense of the appeal. actual billing hours account

for $1.827.00. However. claimant’s counsel contends that the

complexity of the case. the quality of the representation and the

amount of benefits obtained should also be considered. Sim-

ilarly. hourly billing accounts for only $1,871.80 of the $2,000

fee requested for time prosecuting claimant's appeal.

Claimant’s attorney is granted a fee in the amount of

$1.827.00 for services rendered in successful defense of the

appeal. Inasmuch as claimant's appeal was unsuccessful. no fee

for those services is warranted. 33 U.S.C. $928: 20 C.F.R.

§802.203, While we acknowledge that the instant case present-

ed at the time many issues that were not clear cut and involved

a large amount of benefits, it is Obvious that the bulk of the

work dealing with and clarifying these complex issues was done

at the administrative law judge level. The fee award at that

level now reflects the complexity of the case and the amount of

benetits obtained. We believe that a fee award at the appellate

level based solely on claimant's attorney's hourly billing rate

adequately compensates claimant's attorney considering the

posture of this case.

Accordingly, the Decision and Order of the administrative

law judge as modified is affirmed.

Oe eeRECEOCSOOCOSOOTCCOOOOOSOCOOOCOCOOOOOCCeOe Cee.

ISMENE M. KALaris, Member

26a

Smith, Chairman, concurring:

I concur in the result reached by the majority on all issues.

however, with respect to the jurisdiction issue my colleagues do

not carry their analysis far enough tn finding the work activities

of the deceased David W. Freer covered under the Act.

In finding that the deceased satisfied the “status” test of

Section 2(3) of the Act. the majority finds the relevant facts in

the instant case to be quite similar to those in Med vy.

Duncanson-Harrelson Co., 7 BRBS 821, BRB No, 77-260 ( Feb.

24, 1978) and concludes that case is controlling and dispositive

of the jurisdictional issue in this case. However, in /ed, supra,

in finding that claimant met the “status” test of Section 2(3) of

the Act. the Board in effect applied a “moment of injury test”

which I now believe to be in error. Furthermore, it appears to

me that the majority’s approach in this case ts not consistent

with previous Board decisions. See McNeil v. Prolerized New

England Co., 8 BRBS |, BRB No, 77-328, 77-328A ( March 20,

1978); Mildenberger v. Cargill, Inc., 2 BRBS 5, BRB No. 74-

224 (July 3. 1975); Coppolino v. International Terminal Oper-

ating Co., | BRBS 205. BRB No. 74-136 (Dec. 2. 1974). In

McNeil, supra, claimant was classified as a maintenance man in

a scrap yard adjacent to the Mystic River and his duties

involved the maintenance and repair of all employer's equip-

ment. Claimant’s duties also required that he go aboard ships

docked at employer's pier to repair equipment used in loading

ihe processed scrap metal, to assist in the loading operation

itself, and to man lines on the dock. Claimant was injured on

August 21, 1975 at a time when he was repairing equipment not

involved in the ship loading process. The administrative law

judge found that the claimant in McNeil. supra was not covered

under the Act because he did not meet the Section 2(3)

“status” test because claimant “was not engaged in maritime

employment at the time of the injury.” The Board, citing

Northeast Marine Terminal Co. v. Caputo, 432 U.S. 249. 97S.

Ct. 2348, 53 L. Ed. 2d 320 (1977), reversed the administrative

law judge and stated, “The Board has consistently rejected the

‘moment of injury’ test.” However, in Hed, supra, and in this

case after determining that construction of the offshore dock

upon which deceased was working at the time of his injury

27a

constituted maritime employment, the analysis stopped and we

made no attempt to look at the entire scope of the work

activiues of the deceased with this employer, or any other

employer. A claimant who at the moment of injury was not

involved in maritime employment ts entitled to have the trier of

the fact consider his entire work activity in determining cov-

erage. By the same token a claimant who was performing a

maritime function at the moment of his injury. must likewise

submit his entire work activity to the same scrutiny. In my view

the status test (Section 2(3) of the Act) does not allow a focus

on an employee's particular activity at the time of injury but

requires scrutiny of the employee's entire work activity and

duties related thereto. This of course can be accomplished only

on a case by case basis. We should apply the same standard to

all status test cases arising under Section 23) of the Act.

The record in this case reflects that the deceased David W.

Freer was employed by the employer Duncanson-Harrelson

Company. except for periods when he was laid-off, from the

Spring of 1973 until the date of his death on May 27. 1975.

During this period of time deceased worked: (1) in the

construction of a pier for Urich Oil at Martinez, California: (2)

work involving the locks in Del-Marin Keys near Novato,

California: (3) work on Pier 96 in San Francisco and (4) a job

somewhere in south San Francisco, Claimant had been work-

ing for employer at the Pacitic Gas & Electric fuel dock since

February 16, 1975. It appears clear to me that. although the

evidence 1s a bit sketchy, with the exception of the “south San

Francisco” job which was not elaborated on at all. all the other

jobs upon which the deceased worked for the employer were

maritime in nature. Since clearly a majority of claimant's work

activites and time involved maritime related work | would tind

that he has satisfied the “status” test pursuant to Section 2(3)

of the Act and ts thus entitled to benefits.

Samuen J. Smitu. Chairman

28a

Mitcek, Member. Concurring in Part and Dissenting in

Part:

For the reasons fully set forth in my dissenting opinion in

Sedmak v, Perini North River Associates, BRBS

BRB Nos. 77-896 ef al. (Jan. 12, 1979), I concur in the

affirmance of the administrative law judge's conclusion that

claimant was an employee under the Act. I also concur in the

affirmance of the conclusion that death benefits are not subject

to the maximum limitations provided by Section 6(b)( 1).

I respectfully dissent from the rejection of claimant's

contention that employer's contributions to the union pension

fund should be included in the computation of claimant's

average weekly wage. Section 2(13) of the Act. 33 U.S.C,

§902( 13), defines “wages” as:

{ T]he money rate at which the service rendered is recom-

pensed under the contract of hiring in force at the time of

the injury, including the reasonable value of board, rent,

housing, lodging or similar advantage received from the

employer. and gratuities received in the course of employ-

ment from others then the employer.

The reasons for excluding so-called “fringe benetits” from the

computation of average weekly wages, as set forth in the

majority opinion and the cases cited therein, are as follows:

|. The receipt by the employee of benetits from payments

to health and pension funds is directly contingent upon the

occurrence of some future event that may or may not

happen. Thus such fringe benefits are too speculative to be

included in a computation of one’s average weekly wage.

2. Unlike the value of payments for overtime and vacation

pay, the value o: fringe benefits is not includible in an

employee's gross income for income tax purposes.

3. The inclusion of such benefits as contributions to health

and pension funds in the computation of average weekly

wage may result in a windfall for the employee.

While it is true that an employee is not entitled to receive

payments from health or pension funds until the occurrence of a

29a

given event. the employee typically does have a contractual

right to have contributions made to those funds on his or her

behalf by the employer. That expenditure by the employer

relieves the employee of the burden of purchasing health and

retirement coverage. In the case of Harris v. Lambros. 56 F.2d

488 (D.C. Cir. 1932). the court reasoned in including in the

computation of average weekly wages the value of meals

provided to employees as a matter of custom, but not under the

contract of hiring. that:

| H Jere we have a case in which employees. by reason of

the nature of their employment are relieved of the burden

of providing food for themselves. and the money value of

that benefit ts fixed by stipulation so that we are not left to

speculation as to it... .{ T]he whole purpose of the Act is

to provide indemnity to an injured employee based upon

the wage loys sustained by him as a result of the injury. and

to an employee of this defendant the loss in such case

would not be his wages alone, but his wages and his food.

since cach was a henetit which he enjoyed while employed

and 1s deprived of when injured.

56 F.2d at 489. Similarly. the computation of the wage loss

sustained by an employee who has had the benetit of health

and pension coverage paid for by the employer should include

the value of employer's contributions for that coverage. If those

contributions are not included in the computation and the

employee or his or her survivors must deplete the compensation

received in order to obtain the benefits previously provided by

the employer, the compensation clearly would not provide

indemnity for the wage loss sustained as a result of the injury.

hus, refusal to include fringe benefits in the computation ts

contrary to the remedial purpose of the Act. The value of such

benefits should be relatively easy to ascertain from employer's

records or from the contract itself.

The includibility in the computation of an employee's wage

of the value of fringe benetits provided by the employer should

be determined without regard for the includibility of the value

of those benefits in the computation of gross income for tax

Purposes. There is no indication in the Act. or the legislative

30a

history of the Act, that Congress intended that items excluded

from gross income for tax purposes should also be excluded

from the computation of wages for compensation purposes. It

is notable that the values of meals or lodging provided by the

employer, which are specifically includible in the computation

of wages under the Act, are excluded from computation of gross

income for tax purposes under 26 U.S.C. $119. It is also

significant that the purpose of the Internal Revenue Code is to

raise revenues and that exclusions from gross income. which

provide some tax relief to taxpayers, are narrowly construed

against taxpayers. The Longshoremen’s and Harbor Workers’

Compensation Act, on the other hand, is a remedial statute and

is to be construed liberally to effectuate the purpose of com-

pensating employees for injuries arising out of an in the course

of employment. Voris v. Eikel, 346 U.S. 328 (1953).

The majority notes that with many benefit programs an

employer only contributes and an employee ts only qualified to

participate in the program as long as the employee is employed

with the employer and that inclusion of the value of fringe

benefits in the computation of average weekly wage after the

time when the employee either would have retired or has died

results in a windfall <o the employee or his or her survivors.

This is not an adequate reason for excluding the value of fringe

benefits. as the same reasoning could be applied to vacation

pay, overtime pay and even to the claimant’s hourly wage. all

of which are included in the computation of compensation

payable after the claimant would have retired or has died.

Several other reasons for including fringe benefits in the

computation of average weekly wages should be noted. First,

when contracts involving wage increases are negotiated, it is

common practice that once the amount of the hourly increase is

agreed upon, it is left to representatives of the employees to

determine what portions of the increase will be allocated to pay

and to various fringe benefits. It is also significant that the

guidelines proposed in the Wage and Price Standards pub-

lished by the Council on Wage and Price Stability on December

13, 1978, which recommend limiting annual wage increases to

seven percent, include the value of fringe benefits in that seven

3la

percent. These facts suggest that fringe benefits are con-

templated as constituting part of the remuneration paid ys

employer for services by employees.

Finally. | would note that when the Act was first enacted in

1927 few, if any. fringe benefits were provided by employers. It

is my opinion that Congress intended the detinition of “wages”

to be flexible by including in that definition the term “similar

advantage received from the employer.” Since provision hy

employers of such fringe benefits as contributions to health.

retirement, group legal insurance and other funds, education

benefits and child care has become a common, bargained-for

part of the employer's payment in exchange for work per-

formed by employees. payments for those benetits should be

construed as “similar advantage” in determining the amount of

an employee's wage.

Dated this 3st day of January 1979.

_ ———————<——< = LLmUmU,mlClUmTt™~—SC‘

32a

APPENDIX D

U.S. DEPARTMENT OF LABOR

Orrict OF ADMINISTRATIVE LAW JUDGES

Suite 700-LL 11 20th Street, N.W

Washington. D.C. 20036

In the Matter of

Davip W. Freer | Deceased |

NANCY A. FREER

Claimant

against

DUNCANSON-HARRELSON

Lmployer

EMprovers Muttuar LiaBiniry

INSURANCE

Carrier

Direcror, Orrick OF WorKERS’

COMPENSATION PROGRAMS

Party in Interest

W. MARTIN TELLEGEN. Esouirt

100 Bush Street. Suite 1200

San Francisco. California 94104

kor the Claimant

B. JAMES FINNEGAN, Esoutrt

16 California Street. Suite 800

San Francisco. California

For the Employer and Carrier

WILLIAM J. KinBerG. Esquire

Solicitor of Labor

Laurit M. STREETER. Esouiret

Associate Solicitor

ALrero D’AGOSTINI. Esquire

Regional Solicitor

DONALD F. Recor. ESOuIrt

U.S. Department of Labor

200 Constitution Ave..

Suite N-2716

Washington, D.C. 20210

For the Department of Labor

Before: FAuSsTER VITTONE

Administrative Law Judge

Case No. 76-LHCA-266

OWCP No, 13-34919

Filed as Part

of the Record

JUL. 14, 1976

| (Clerk)

r .

| Benefits Review Board

33a

DECISION AND ORDER

Statement of the Case

This is a claim for compensation made pursuant to the

provisions of the Longshoremen’s and Harbor Workers’ Com-

pensation Act (33 U.S.C. Section 901 ef seqg.). hereinafter

referred to as the “Act” and the rules and regulations issued by

the Secretary of Labor under authority therein contained (20

C.F.R. 702.331).

David W. Freer. the deceased. was employed by

Duncanson-Harrelson Company (hereinafter “D-H™) as a pile

butt on a contract being performed by D-H for Pacific Gas &

Electric Company (hereinafter PG&E) on and about PG&E's

fuel dock in Pittsburg. California. Mr. Freer was killed on May

25, 1975 when the top of a dolphin piling he was cutting fell on

him. The dolphin was located in thirty-five feet of water.

approximately twenty-five feet from the nearest dock. (A

dolphin is a free standing pier consisting of metal, concrete. or

wooden pilings which support a concrete deck. Dolphins are

used as temporary docks and as abuttments. )

The dock extended into Suisun Bay, a body of navigable

water. Fuel oil is transported to Pittsburg by ships which dock

at the PG&E fuel dock and unload their cargo. D-H was

expanding the docking facilities of the Pittsburg dock to

accommodate a rising volume of fuel oil deliveries. In addition

to driving pilings for a new barge dock, D-H had built other

dolphins in the area. It was to remove the existing dolphins and

construct new dolphins, dredge the dock site. modify and install

rubber fenders on the corner dolphins. construct a barge dock,

and do maintain repair of the existing dock and causeway.

On the PG&E dock job and on other jobs, D-H used

several water crafts, ¢.g., crane barges, a material barge. boats

with outboard motors, and a flexi-float. It also owns derrick

barges, flat barges, and skiffs. On occasion, it leases other water

craft such as additional barges. and tugs.

Approximately forty percent of all the work performed by

D-H in 1973, 1974, and 1975 consisted of marine jobs similar to

34a

the PG&E fuel dock job. and approximately sixty percent of its

gross income during those years was derived from approxi-

mately ninety-seven marine jobs.

Mr. Freer worked as a pile butt at the Pittsburg dock from

approximately February 16. 1975 until the date of his death.

During this period his duties included removing old piling.

acting as a rigger for the crane on the barge. lining up piling

preparatory to its being driven into the marine floor. and

cutting off the tops of piles after they had been driven to the

appropriate depth.

Mr. Freer was 26 years old at the time of his death. He

was married and had three dependent children. He was a

member of the Piledrivers. Carpenters. Bridge. Wharf and

Dock Builders. Local Union No. 34. The Respondents do not

dispute that he was employed by D-H at the ume of his death.

and there is no dispute that his death arose out of and occurred

in the course of his employment.

This case raises a number of issues which will be discussed

and decided as follows:

1. Did the injury occur on “navigable waters” within the

meaning of the Act?

Section 3(a) of the Act provides. in part. that benetits

are payable if the “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. or

building a vessel... .”

Respondents contend that the injury did not occur on

“navigable waters”: apparently because the dolphin was a

stationary object. located some thirty feet away from the

nearest dock. It was not floating in the water. and was not

connected to or part of a dock. pier or whart.' Respondents

* Respondents’ cross-examination attached some importance to the fact

that at the time of the injury. Mr. Freer’s body did not touch the water.

However, as noted in Dixon v. Oosting, 238 F.2d 25, 29 such contentions.

which would strictly construe this Section, “needs no citation of authority to

refute.”

35a

further contend that the injury did not occur on navigable

waters because it did not take place in an area customarily

used by an employer in loading. unloading. repairing or

building a vessel. Respondents’ latter point, even if it were

necessary to decide this issue, is contrary to the evidence

which shows that the area where the injury occurred was in

fact used to unload cargo from ocean-going vessels: and

that the D-H barge working on the dolphin had to be

moved periodically to permit the vessels to use the existing

docks.

Respondents’ former point rests upon a reading of

Section 3(a) which would set up two tests before the injury

could come within the purview of that section. One. the

injury would have to occur on navigable wate’s. Two. it

also would have to occur on an adjoining pier. wharf. dry

dock, etc. which was situated on navigable waters. Ido not

read the Act in such a manner, nor do I believe it can be

read that way. All that is required under this section is that

the injury occur on navigable waters or on an adjoining

pier. wharf, etc... While common sense dictates that this ts

the manner in which the Act ts to be construed it is enough

that in this instance common sense is supported by the

legislative history of the Act. In the Report of the House

Education and Labor Committee in the Longshoremen’s

and Harbor Workers’ Compensation Act Amendments of

1972 ( House Report No. 92-1441) the Committee specitic-

ally stated. in regard in the expansion of the area in which

federal compensation would henceforth be paid:

“The Committee believes that the compensation pay-

able to a longshoreman or a ship repairman or builder

should not depend on the fortuitous circumstance of

whether the injury occurred on land or over water.

Accordingly, the bill would amend the Act to provide

coverage of longshoremen, harbor workers. ship /:-

pairmen, ship builders, shipbreakers, and other em-

ployees engaged in maritime employment ( excluding

masters and members of the crew of a vessel) if the

injury occurred either upon the navigable waters of

the United States or any adjoining pier, wharf. dry

36a

dock, terminal, building way, marine railway, or other

area adjoining such navigable waters customarily used

by an employer in loading, unloading. repairing. or

building a vessel.” [Emphasis supplied] 3 U.S. Code

Cong. and Adm. News, 4698, 4707-08 (92nd Cong..

Q.O. Sess.) (1972).

In this instance, there is no question that the waters on

which the injury occurred, were. in fact “navigable.” The

depth of the water was approximately thirty to thirty-five

feet. deep enough to permit its frequent use by ocean going

vessels, and the dolphin in question was to aid said vessels

in unloading their cargo. Also see. Dixon vy. Oosting, supra,

and Traveler's Insurance Company v. McManigal, 139 F.2d

949.

2. The second issue to be decided is whether the decedent

was an “employee” as detined by the Act.

This is the most troublesome issue presented and its

determination is crucial to the Claimant’s case. All three

parties have presented excellent briefS on this issue which

deal at great length with the history of the Longshore Act.

its 1972 amendments. the legislative history. and the cases

It is a matter of record that the Benefits Review Board and

the courts are in disagreement as to the kinds and types of

employment the Act is intended to cover. See Bradshaw vy.

J. A. McCarty, Inc., 3 BRBS 195. In view of this it may be

helpful to set forth the factors which I believe are relevant

to understanding and deciding this issue.

Under the present Act. every individual engaged in

maritime employment, with narrow limited exceptions.? ts

entitled to compensation benefits for death or disability if

the injury causing the same occurred on the navigable

waters of the United States or specified adjoining struc-

tures which are customarily used in loading. unioading.

repairing or building a vessel.

Prior to the 1972 amendments to the Act. it was not

necessary that the employee be engaged in maritime

2 E.g.. Seamen.

37a

employment at the time of injury. It was necessary only

that the accident occur on navigable waters and that the

employer of the injured employee have other employees

who were engaged in maritime employment. — See.

Weyerhauser v. Gilmore, 3 BRBS 140: 17.0. Corp. vv.

Adkins, 3 BRBS &&: Benedict on Admiral, Vol. 1A.

Section 18, p. 2-6, (1973 ed.). However the 1972 amend-

ments changed the basis upon which an individual be-

comes entitled to compensation. Since 1972 the injured

individual must be engaged in maritime employment

(even if his employer has other employees who are

engaged in maritime employment) and the injury must

take place on navigable waters or on the adjoining areas

specified in the 1972 amendments. The effect of these

amendments was to extend the geographical location in

which the injury was compensable. However. it restricted

such compensability to those individuals who were actually

engaged, at the time of the injury. in a specified type of

employment. Le... maritime employment in the specified

location. See. Benedict on Admiralty, Weoerhauser vy.

Gilmore, and 1.1.0. Corp. v. Adkins, supra.

Thus, having found that Mr. Freer’s death occurred in

a geographical location covered by the Act. .e.. navigable

waters, it must now be determined if the work he was

doing in that area can be properly classified as maritime

employment. Section 2(3) of the Act states:

“The term ‘employee’ means any person engaged in

maritime employment. including any longshoreman or

other person engaged in longshoring operations, and

any harbor worker including a ship repairman. ship-

builder, and ship-breaker, but such term does not

include a master or member of a crew of any vessel. or

any person engaged by the master to load or unload

or repair any small vessel under eighteen tons net.”

Neither the Act nor its legislative history defines what

Congress meant by “maritime employment.” However. it

is clear that certain types of employment are clearly

included within this term. They are longshoremen. persons

38a

engaged in longshoring work even if they are not desig-

nated as longshoremen, harbor workers, ships repairmen,

shipbuilders and ship-breakers. If an individual is engaged

In one of these occupations at the time of the injury,

assuming it takes place in the specitied geographical

location, it is unnecessary to attempt to decide if such

employment is “maritime employment” since the Act

states that itis. See Benedict on Admiralty, supra. Section

16. p. 2-3. The Claimant's brief argues that | should find

that Mr. Freer’s duties as a pile butt. engaged in building

and extending a pier. made him a “harbor worker” under

the Act. I disagree. A reading of the history of the Act and

the cases indicates that the term “harbor worker” does not

include those individuals who, as here. are engaged in

Constructing a dock. pier wharf, building. railway, ete.. just

because it is on of adjoining navigable waters. The term

appears to be limited to those individuals whose work 1s

concerned with loading and unloading vessels or related

work. See. e.g. Merrit-Champman v. Willard. 189 F.2d

791. 792. In any event. it is unnecessary to find Mr. Freer

to be a “harbor worker” in order to decide this issue. and it

only results in confusing the issue of maritime employment

Respondents, on the other hand. cite the legislative

history of the Act and the . (0. and W everhauser Cases as

proof that Mr. Freer’s employment was not maritime in

nature and therefore not within the coverage of the Act

First. with respect to the legislative history. | believe that

reference to it to decide this particular point casts little light

on the subject. For example. in the Respondents’ opinion

one particular portion of the legislative history is all-

important. It states:

“| T]he Committee does not intend to cover employ-

ees who are not engaged in loading. unloading.

repairing or building a vessel. just because they are

injured in an area adjoining navigable waters used for

such activity. Thus. employees whose responsibility ts

only to pick up stored cargo for further transshipment

would not be covered nor would purely clerical em-

Ployees whose jobs do not require them to participate

39a

in the loading or unloading of cargo... . * Committee

on Labor and Public Welfare S. Rep. 92-1125 at 13.

92 Cong.. 2d Sess. (1972).

In addition, Respondents point out. and correctly so.

that the Court in Weyerhauser and 1.7.0. relied upon this

particular issue because it ts only concerned with Congres-

sional intention insofar as the amendments were designed

to extend coverage to employees on shoreside areas.

(“Dry” navigable waters as opposed to “wet” navigable

waters). Indeed the heading of this particular portion of

the history is entitled “Extension of Coverage [To Shoreside

Areas.”

The legislative history does not address itself to what

Congress meant was to constitute “maritime employment”

on navigable waters: it only expressed itself as to what it

meant by maritime employment on the extension of the

term to the adjoining shoreside areas. Thus. the legislative

history is helpful if one wishes to know if Congress

intended to cover certain types of employment on piers.

wharts, adjoining land areas, etc.. but it tells nothing about

what it meant to cover on “wet” navigable waters.? In the

absence of an explanation of Congress’ intention as to the

kinds of employment it intended to cover on navigable

waters | am constrained to follow the long history of cases

defining what constituted maritime employment on navi-

gable waters. See e.g., Benedict, supra, Section 19. p. 2-8:

2-10. A reading of these cases indicate that almost every

possible kind of employment is considered “maritime

employment” if it took place on navigable waters.

It is for these reasons that I do not believe the

Weyerhauser and 1.7.0. cases, supra, are in point. 1.7.0.

was concerned with forklift operators who were injured in

warehouses and piers as opposed to “wet” navigable

waters. The Court. relying upon the legislative history.

decided that this type of employment was not “maritime”

3 Webster's New Collegiate Dictionary, defines navigable as “Capable of

being navigated; specif: a. Deep enough and wide enough to afford passage

(o vessels.” 1951 Edition, p. S61.

40a

basing its decision on a “point of rest” theory. It is not

necessary to decide if the majority or minority opinion in

1.7.0. correctly interprets the statute with respect to the

shoreside extension of coverage under the 1972 amend-

ments for the reason that the majority opinion simply does

not address itself to the fact situation before me. Mr. Freer

was injured on navigable waters and not on a dock or

warehouse. and his duties did not involve unloading cargo.

As for Weverhauser, it appears from that decision, that the

employee may have been on navigable waters at the ime

of the injury, but the Court found that his duties as a pond

man, sorting logs and feeding them into the mill for

processing. did not constitute maritime employment. Once

again, this decision. based as it is on duties unlike those

performed by Mr. Freer. is not inconsistent with holding

that he was engaged in maritime employment at the ume

of his death.

After all. the fact that one is working on navigable

waters at the time of the injury does not mean that. ipso

facto. the employment is maritime. [tis possible that some

types of employment on navigable waters are not. in fact.

maritime employment: however. as Benedict points out

nothing ts more maritime than the sea or other navigable

waters and all employment thereon should be considered

or presumed to be maritime employment. See Benedict,

supra. Section 17, p. 2-4; 2-5. Also. see 1.7.0., supra. 3

BRBS &&. I11.

In Weverhauser, the Court apparently felt this consid-

eration or presumption was overcome by the very nature of

a pondman’s duties. In this case, the very nature of Mr.

Freer’s duties. ie.. building dolphins, which are used.

according to the Respondents, “to keep the ship tied up at

the dock physically away from the dock” ( Respondents’

Brief. p.5) would make his duties. since they are “directly

concerned with a maritime purpose.” maritime even in the

4la

absence of any presumption.* Peter v. Arried, 325 F. Supp.

1361, 1365; 463 F.2d 252. The Weyerhauser decision ts

further confused by the statement that before one ts

entitled to compensation his employment must subject him

to “the perils of the sea in an unseaworthy vessel recog-

nized under maritime law” and “must have a realistic

relationship to the traditional work and duties of ship

service employment.” If. in fact. this language, if binding.

would exclude Mr. Freer from the Act’s coverage. then the

Court’s holding that for one to be eligible for benefits one’s

work “must have a realistically significant relationship to

traditional maritime activity involving navigation and com-

merce on navigable waters” would place him squarely

back within the scope of the Act. I do not believe it is

necessary to pick one of the above contradictory para-

graphs in order to reach a decision on this issue. I find that

the duties Mr. Freer was performing at the time of his

death (building docking facilities for ocean-going ships)

constituted maritime employment.® and that he is an

“employee” under Section 2(3). See Sharp v. Pacific Gas

v. Electric Company, 2 BRBS 381, 384; Melson v. Bay State

Dredging & Contracting Co., 62 F. Supp. 482. 485 (D.

Mass. 1943): Morrison-Knudson Company v. O'Leary, 288

F.2d 542 (C.A. 9.1961): Travelers Insurance Co. vy.

McManigal, 139 F.2d 949 (C.A. 4, 1944); Ryan v. McKie

Co., | BRBS 221: Radcliff v. Henderson, 13% F.2d 549.

3. Is D-H an “employer” within the meaning of Section

2(4) of the Act?

4In 1.7.0., Judge Craven states employment is presumed to be maritime

under Section 20/4) of the Act. (3 BRBS 88, 114) I agree. In this case, the

application of the presumption is appropriate, but perhaps superfluous, since

the duties have been shown to be maritime in nature. I would note, however,

that Respondents have failed to introduce substantial evidence that Mr. Freer

was not engaged in maritime employment. As such, if the presumption were

necessary, Respondents’ evidence is not enough to defeat it.

5 The fact that on many other occasions Mr. Freer did not engage in

maritime employment is irrelevant. As the Court noted in 1.7.0, “[ T]he

status of his employment is to be determined as of the time of his

accident—not by what his previous duties may have been or by what his

duties are when he accepts sporadic overtime assignments.” 3 BRBS 88, 106.

424

The cases on this point are consistent and uniform. If

one is found to be an “employee” under the Act, it follows

that the individual or company he works for is an employ-

er. See Morgan v. Ingalls Shipbuilding Corporation, Dive

sion of Litton Systems, Inc., BRB No. 75-159 (March 19.

1976): Harris v. Maritime Terminals, Inc., BRB No. 74-

178 (Feb. 3. 1975): 1.0.0. Corp. v. Adkins, supra.

4. Are the Respondents’ subject to a ten percent penalty

for failure to file a notice of umely controversion”

D-H knew of Mr. Freer’s death as of May 27, 1974. A

notice of controversion was not tiled until October 31,

1975. Section 14¢e) of the Act provides that when any

installment of compensation payable without an award ts

not paid within fourteen days after it is due. there shall be

added a ten percent penalty unless the employer tiled a

notice of controversion pursuant to Section 14(d). or

payment ts excused by a showing that the payment could

not be made as a result of conditions beyond the employ-

er’s control. The Respondents’ belief. as in this case. that

they were not subject to the Act. even if in good faith, does

not excuse them from the application of 140¢). See Ryan

v McKie Co.. | BRBS 221 (Dee. 10. 1974). Salusdy v.

Army Air Force Exchange Service, 3 BRBS 22. 27) Raymus

sen v. Geo Control Inc. | BRBS 378: McCabe v. Gaull

Builders, Inc., | BRBS 290.

In view of Respondents’ failure to comply with Sec:

tion 14(d). a ten percent penalty against them ts manda-

tory under Section 14(¢). However, as noted in Joriaff v.

Triple A Machine Shop, \ BRBS 465, 471 (May 14, 1975)

and Caramagna vy. Campbell Machine, inc. and Leatherhy

Insurance Co., | BRBS 446 (May 2, 1975). the penalty

applies to the difference between the amount of com-

pensation paid and the amount of compensation found to

have been due on the specitied date.® In this case it ts

undisputed that since May 30, 1975 the Carrier has been

making payments to Mrs. Freer at the rate of $119.00 per

week.

6 In addition, a six percent interest charge 1s mandatory Ryan, supra, |

BRBS 221, 229

43a

The Claimant makes an additional argument con-

cerning the Respondents’ failure to file a notice of con-

troversion, It is that by Respondents’ failure to comply

with Section 14(d) it precludes notice to the injured

employees of their rights under the Act. The Claimant

argues that the conscious failure to file a notice under the

Act misleads employees into accepting lesser benefits un-

der State statutes. The Claimant states that the only

proper remedy tn this situation is to estop the Respondents

from denying jurisdiction. One, the record does not

support the assertion that Respondents’ failure to file a

notice of controversion was conscious and deliberate as

contended by the Claimant. Two, even if it were. I have

no authority to impose such a sanction nor does Claimant

cite any authority for this proposed action. Three. the issue

is academic since this decision holds that the Respondents

are subject to the Act.

5. Should death benefits uader Section 9 be limited by the

maximum weekly amount provided for disability ben-

efits in Section 6(b)( 1)?

The Benefits Review Board has previously held in

Rasmussen, supra, that death benefits are not limited by

the provisions of Section 6(b)( 1). The Respondents ask,

in order to avoid a multiplicity of litigation, that if I find for

the Claimant I reserve my decision on this issue since

Rasmussen is on appeal to the Ninth Circuit. I have no

such authority and would note that in Sharp, supra, which

was decided after Rasmussen, the Benefits Review Board

again applied the doctrine it set forth in the latter case.

6. Was the decedent a member of a crew of a vessel

under Section 3(a)(1) and thereby not entitled to

compensation?

Section 3(a)( 1) states:

No compensation shall be payable in respect of the

disability or death of —

(1) A master or member of a crew of any vessel, or

any person engaged by the master to load or unload

or repair any small vessel under eighteen tons net.

44a

Some of Mr. Freer’s work was performed on a crane

barge. The barge had no engines and was moved either by

tugs or by taking up anchor lines. The barge way moved

periodically to permit arriving vessels to use the docks. No

one stayed on the barge: there were no living quarters or

cooking facilities.

The test of whether an individual is a member of a

crew under the Act is whether (1) the vessel ts in

navigation; (2) the worker had more or less permanent

connection with the vessel: and (3) the worker was aboard

primarily to aid in navigation, Bellamy v. Union Concrete

Pipe Co., 297 F. Supp. 261 (S.D. W.Va. 1969), aff'd. 420

F.2d 1382 (4th Cir, 1970). cert. dented, 400 US 904, 91

Sup. Ct. 144 (1970); 400 US, 904, 91 Sup. Cr 144

(1970); Ryan v. McKie Co., | BRBS 221, 227

In my opinion Mr. Freer failed to meet two of these

tests. He did not have a permanent connection with the

barge. He neither ate nor slept on the barge. In addition.

he was not aboard the barge primarily to aid in navigation

See Ryan, supra. Anything he did in this regard was

incidental to his primary work as a pile butt, As the Court

noted in South Chicago Coal & Dn Dock Co. v. Basvett,

309 US, 28, 60 Sup. Ct. $44, $49, "They were persons

serving On Vessels, to be sure, but their service was that of

laborers ... and thus distinguished from those employees on

the vessel who are naturally and primarily on board to aid

in her navigation.” Moreover, it is not without significance

that at the ime of his death Mr. Freer was not even aboard

the barge but instead was standing on the dolphin.

7, What were Mr. Freer’s average weekly wages at the

time of his death?

The record shows that the decedent worked a total of

195 days in the year prior to his death. Mr. Freer was off

work for a three week period in June-July. 1974. when his

union went on strike and from December 22. 1974 through

February 15. 1975. In December 1974 he left his job with

D-H, went on vacation, and visited his relatives for two

weeks. After he returned from this visit he attempted to

48a

resume employment with D-H but it had no openings. In

late February 1975 he was hired for the Pittsburg job.

From January through February he attempted to obtain

employment through the union but no work was available.

The Claimant contends that the proper method to obtain

Mr. Freer’s average weekly wage is under Section l0(a) of

the Act. Section 10(a) applies only when the employee

works for “substantially the whole of the year immediately

preceeding his injury.” In this instance the decedent

worked thirty-nine out of a possible fifty-two weeks. This

is not “substantially the whole of the year” within the

meaning and purpose of Section 10(a). To adopt the

Claimant’s proposed method of deducting Mr. Freer’s

“average weekly wage” would be an injustice to the

employer. As stated in Gunther v. United States Employ-

ees’ etc, Comm., (C.C.A.) 41 F.2d IS and cited with

approval by the Court in Andrew FL Mahoney Co. vy.

Marshall, 46 F.2d 539, 541: “In these provisions [Sections

10(a). (b). (¢)] Congress had in view the protection of

both the employer and the employee, or the latter's beneti-

claries” (emphasis supplied), On the other hand, if Mr.

Freer had worked 360 days during the course of the year

prior to his death, it would be unfair to him to determine

his average weekly wage on the basis of Section l0(a):

which would reduce the number of work days to, at most,

three hundred, As the Court stated in Mahoney, supra, p.

544, "(Section 10(a)] cuts both ways: it cannot be applied

to the prejudice of an employee who has averaged substan-

tially more than three hundred days, nor to the prejudice

of an employer, where the service is substantially less.”

It is clear from a reading of the cases concerning

Section 10 that subsections (a) and (b) “cannot be

reasonably and fairly applied to an industry where em-

ployment is causual, irregular, seasonal, intermittent. and

discontinous, Surely it is not reasonable or fair to apply

subdivisions (a) or (b) when to do so would result in

ascertaining a mere theoretical earning capacity, having no

regard to the actual facts of the case, but which would

award arbitrarily to an injured laborer disability com-

46a

pensation in excess of what he was able to earn if at

work... Compensation acts, to be within constitutional

limits, must not be arbitrary, unreasonable or fundamentally

unjust or oppressive.” Mahoney, supra, 56 F.2d 355, 359.

O'Hearne v, Maryland Casualty Co., 177 F.2d 979, 982,

California Ship Service Co. v, Pillsbury, 175 F.2d 873, 876.

In this instance the record clearly shows that Mr

Freer’s work Was not of a continuous nature so as to bring

it within Section lOCa). Section LOCb) cannot be applied,

in addition to the reasons cited above, because there ts

nothing in the record to indicate other pile butts’ average

earnings in the year preceding Mr. Freer’s death. (The

copy of the collective bargaining agreement of his union

(Cl. Ex. 18]. does not disclose the average annual ear-

nings of pile butts, but only their hourly compensation, ¢/

employed).

This. then, 1s a fact situation which fally under Section

love), Under this section, “The amount of annual ear-

nings is not reached by multiplying the employee's daily

earnings by any arbitrary figure, but by ascertaining trom

the evidence what his earning capacity in fact was.”

Vahoney, supra, 46 &.2d $39, 543.) The Claimant urges

that the days that Mr. Freer was off work during the ume

his union struck and the ume he was on vacation and

unable to obtain work, should be counted in arriving at

Mr. Freer’s average weekly wages.

The decision as to whether the inclusion of these days

is reasonable and fair turns on what Section LOCe) means

by “earning capacity.” The cases are of one mind on this

issue, “Larning capacity means fitness and readiness to

work, considered in connection with opportunity to work,

and fitness and opportunity must go hand in hand.” Ma-

honey, supra, 56 F.2d 75,78, “The readiness, willingness

and fitness of the claimant for work does not require the

employer to insure work.” Mahoney, supra, Johnyon vy.

Britton, 290 F.2d 356, 358. Under this test. the time that

Mr. Freer was on vacation and unable to find work cannot,

under the circumstances of this case, be properly included

47a

in arriving at his annual earning capacity. In these

instances, he either lacked the willingness or the opportunity.

In regard to that period of time that his union was on strike

the precedent is a little less clear.

In Joriaff, supra, the claimant was employed from

1967 through 1972 as a machinist and had a long history of

regular work. In 1971 and 1972 there was a longshore

strike and the claimant was unable to work substantially

the whole of the year preceeding the date of his injury.

The respondents urged that Section 10(c) be used in the

computation and contended that the claimant's earnings

during 1971 and 1972 were an accurate and fair reflection

of claimant’s wage earning capacity. The Benefits Review

Board disagreed, and affirmed Judge Howder’s application

of Section 10(b). It held that Section 10(c¢) “would only

result in a distorted and unfair approximation of claimant's

probable future earning capacity since claimant's earnings

during the period of the strike were abnormally low.”

Toriaff, p. 470. 1 am in complete agreement with this

decision. However. I do not believe that it requires, that in

all cases, time lost by strikes must be used in computing

annual earning capacity. Obviously, where as in Joriaff,

the record indicates a long. regular work history. it would

be unfair to the claimant to use a period of time in which a

long strike occurred “to arrive at a fair and reasonable

approximation of claimant’s future wage earning capacity”

Toriaff, supra, p. 469.

Where. as here. a short strike occurs which. when

compared to the claimant's previous annual earnings. does

not distort the claimant's previous annual earning capacity.

I do not believe it should be used to compute such

capacity.” A strike. by its very nature. precludes an em-

ployee from having a “willingness to work.”

’ Mr. Freer’s earnings records are in the record as Claimant's Exhibit 21

Claimant's Exhibit 22 received on March 2. 1976, is herewith received into

evidence.

4Ka

If this is inconsistent with Toraiff. | can only repeat

what the Court stated in Mahoney, supra, 56 F.2d 75, 7% in

distinguishing its action from a prior decision. “But the

language of that case, like the language of all cases. must

he taken and understood in the light of the facts of the case

in which the language 1s employed.”

When the hours that Mr. Freer worked. for the two

year period prior to the accident, from April 1973 through

May 1975 are examined it Is apparent that in the time

period from June 1973 through May 1974 Mr. Freer

worked 1850.75 hours. [In the period from June 1974

through May 27. 1975 he worked 1667.50 hours. ( The

hours do not accurately reflect work days because of

overtime on some days and short hours on others.) Thus,

in 1973-74 he worked ten percent more hours than he did

in 1974-75. In my opinion. the only fair method to tind the

average annual earning capacity. based on this record. 1s to

average this difference (approximately) between the two

years and give Mr. Freer five percent more work days in

the year prior to his death. This amounts to two hundred

and tive work days.

The Claimant also contends that travel expenses and

pension payments should be included in determining aver-

age weekly wages. Section 2(13) defines wages as “the

money rate at which the service rendered 1» recompensed

under the contract of hiring in force at the ume of injury,

including the reasonable value of board. rent, housing.

lodging or similar advantage received from the employer.

and gratuities received in the course of employment from

others than the employer.”

The Claimant contends that travel pay and pension

payments are so closely akin to “board” and “lodging” as

to constitute “other similar advantage received trom the

employer.” I disagree. Travel pay is obviously reimburse-

ment for expenses: it is not payment for “the service

rendered.” For example. under the union contract. Mr.

Freer was compensated at a specified hourly rate when

performing specified duties at the job site. The contract

49a

did not specify any hourly rate of compensation for time

spent traveling to and from the job location: only mileage

expenses. Moreover, it is noted that the union contract on

travel expenses specifically states: “Such pay shall be

excluded from the wages of the employee and shall be

paid to him weekly by separate check.” (Cl. Exhibit 18. p.

21) Thus, it would appear that the intent was to exclude

this money from Mr. Freer’s wages: perhaps to reduce his

tax burden.

It is noted that this same agreement. in regard to

pension payments, directs the employer to pay such pay-

ments to the Carpenter’s Pension Trust Fund of California,

not the employee. (/hid., p. 26) This payment, which by

its nature is not capable of being converted to the :mme-

diate advantage of the employee, is not a “similar advan-

tage” to “board. rent, housing, lodging” within the mean-

ing of Section 2(13). The Claimant has cited no legal

precedent for so construing the section nor does researca

disclose any precedent.

Therefore. Mr. Freer’s average weekly wage is com-

puted as follows: Mr. Freer. was paid $20,543.61 from

May 28. 1974 through May 27. 1975. Of this sum,

$2,309.25 represents travel expenses. leaving a net sum of

$18,233.36. A division of this figure by 195 work days

gives $93.51 as his average daily wage. This figure is

multiplied by 205 to determine his “average annual ear-

nings”:; which is $19,169.55. Under Section 10(d) this

amounts to an average weekly wage of $368.64.

Claimant’s counsel has submitted an application for

an attorney's fee pursuant to 20 C.F.R. Section 702.132

and Section 28 of the Act. The application states 112.90

hours of attorney’s time was spent in the prosecution of this

claim. In addition, 50.65 more hours were expended by

legal and research assistants. The application asks for

compensation for the attorney’s time at $70.00 per hour

and $20.00 and $10.00 per hour for each of the assistants.

This amounts to $8,627.00. Further, it asks $136.40 for

various witness fees and mileage. Counsel contended,

50a

however, that a fair and reasonable fee in this case ts

$30,000.00 and that fee is requested. Counsel points out

that this is an important, difficult case, having far reaching

impact upon large numbers of construction workers. He

further states that if the decision ts favorable. Mrs. Freer

and her three children will receive approximately

$718,000.008 as compared to $45,000.00 under the Calitor-

nia statute. Thus, in his opinion, a fee of $30,000.00 ts

justified. The Respondents opposed the granting of the

requested fee stating the hours expended on this case

appear to be excessive. and that basing the requested fee

on the amount of compensation awarded is much like a

contingency fee which is not allowable in these proceed-

Ings.

While it is true that the total award will result in a

substantial sum, itis noted that such computations are not

enurely accurate. Unlike sums awarded for damages.

negligence, etc.. the compensation awarded ts conditioned

upon the widow and her children living to certain ages,

and in the case of the widow, further conditioned upon her

not remarrying. In short. itis not a lump sum payment to

which the parties take tide, but itis conditioned, to a large

extent. upon lite and death being both fair and pa-

tient— two attributes these fates seldom display.

I have taken into consideration the complexity of the

issues. the work performed. the result obtained. the quality

of the services performed. and the fees requested and

approved for cases similar to the instant matter, and I tind

the sum of $8,627.00 is a reasonable fee for the legal

services rendered: with an additional $136.40 to cover the

costs of witness fees and mileage.

® While Mrs. Freer’s claim is being allowed, the total amount should be

approximately $500,000.00

one

Sla

FINDINGS

Based on the evidence of record, my observations of the

witnesses and stipulations of the parties | make the following

findings of facts and legal conclusions.

1. On May 27, 1975, David W. Freer was employed by

Duncanson-Harrelson. On that date he died from an accident,

arising out of and in the course of his employment with

Duncanson-Harrelson. This accident occurred on the “navi-

gable waters” of the United States. Timely notice of the death

was given to Duncanson-Harrelson. A nouce of controversion

was not filed until October 31, 1975.

2. The work activity being performed by Mr. Freer at the

time of his death, was such, as to properly classify him as an

“employee” within the meaning of the Act. Mr. Freer’s duties

did not make him a master or member of a crew under Section

Bayel).

3. Duncanson-Harrelson is an “employer” within the

meaning of the Act. All of the captioned parties are subject to

the Act.

4. Nancy A. Freer and her three minor children Deborah

Ann, Stephanie Adele and David Andrew are properly classi-

fied as a widow and surviving dependent children under the

Act.

5. Since May 30, 1975 Employers Mutual Liability Insur-

ance has paid Mrs. Freer $119.00 per week.

6. At the time o his death Mr. Freer’s average weekly

wage was $364.64,

7. W. Martin Tellegen, Esquire. ts entitled to receive a

legal fee of $8,627.00, Said fees are the fair and reasonable

value of legal services provided to the Claimant. Mr. Tellegen’s

legal fee is to be supplemented by an award of reimbursable

expenses in the amount of $136.40,

52a

ORDER

1. Respondents shall pay the Claimant and her minor

children, subject to the provisions and limitations of the Act. a

death benefit based on an average weekly wage of $368.64.

2. The amount of death benefits due and payable trom

May 27, 1975 to the date of this Order shall be paid forthwith,

Interest on accrued payments due Claimant shall be paid at the

rate of six percent per annum computed from the date each

such payment became due and the total amount of such

payments as are due and owing, shall be paid forthwith.

3. Respondents shall pay the Claimant. pursuant to Sec-

ton I4fe) of the Act. an amount equal to ten percent of each

unpaid compensation installment that ts due and payable.

4. Respondents are enutled to credit. in paying the above

ordered death benefits. interest and penalty. for all payments

previously made to the Claimant,

5. Respondents shall pay directly to W. Martin Tellegen.

Esquire. the lump sum of $8,627.00 for legal services rendered

to the Claimant. Respondents shall rermburse Mr. Tellegen tor

expenses in the amount of $136.40.

FAUSTER VITTONI

Administrative Law Judge

Dated: May 27, 1976

Washington, D.C,

S3a

APPENDIX E

RELEVANT STATUTES

28 U.S.C. 125401) Cases in the courts of appeals may be

reviewed by the Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition of

any party to any civil or criminal case. before or atter

rendition of judgment or decree:

33 U.S.C. 902013). Longshoremen’s and Harbor Workers’

Compensation Act.

(13) “Wages” means the money rate at which the

service rendered is recompensed under the contract of

hiring in force at the tme of the injury, including the

reasonable value of board. rent. housing. lodging. or

similar advantage received from the employer. and grat-

uities received in the course of employment trom others

than the employer.

33 U.S.C. $909 COMPENSATION FOR DEATH

(¢) In computing death benefits the average weekls

wages of the deceased shall be considered to have been not

less than the applicable national average weekly wage as

prescribed in section 906¢b) of this title but the total

weekly benetits shall not exceed the average weekly wages

of the deceased,

33 U.S.C, $910. Determination of pay.

Except as otherwise provided in this chapter, the

average weekly wage of the injured employee at the time

of the injury shall be taken as the basis upon which to

compute compensation and shall be determined as follows:

(a) If the injured employee shall have worked

in the employment in which he was working at the

time of the injury, whether for the same or another

employer. during substanually the whole of the year

immediately preceding his injury, his average annual

earnings shall consist of three hundred times the

average daily wage or salary for a six-day worker and

S4a

two hundred and sixty times the average daily wage

or salary for a five-day worker. which he shall have

earned in such employment during the days when so

employed.

(b) If the injured employee shall not have

worked in such employment during substantially the

whole of such year, his average annual earnings, if a

six-day worker, shall consist of three hundred umes

the average daily wage or salary. and, if a tive-day

worker, two hundred and sixty umes the average daily

wage or salary. which an employee of the same class

working substantially the whole of such immediately

preceding year in the same or in similar employment

in the same or a neighboring place shall have earned

in such employment during the days when so em-

ployed.

ing at the average annual earnings of the injured

employee cannot reasonably and fairly be applied,

such average annual earnings shall be such sum as,

having regard to the previous earnings of the injured

employee in the employment in which he was working

at the me of the injury, and of other employees of the

same or most similar class working in the same or

most similar employment in the same or neighboring

locality, or other employment of such employee, in-

cluding the reasonable value of the services of the

employee if engaged in self-employment, shall reason-

ably represent the annual earning capacity of the

injured employee.

(d) The average weekly wages of an employee

shall be one fifty-second part of his average annual

earnings.

(e) If it be established that the injured employ-

ee was a minor when injured, and that under normal

conditions his wages should be expected to increase

during the period of disability the fact may be consid-

ered in arriving at his average weekly wages.

55a

(f) Effective October | of each year. the com-

pensation or death benefits payable for permanent

total disability or death arising out of injuries sus-

tained after October 27, 1972, shall be increased by a

percentage equal to the percentage (if any) by which

the applicable national weekly wage for the period

beginning on such October |. as determined under

section 906(b) of this utle, exceeds the applicable

national average weekly wage. as so determined, for

the period beginning with the preceding October 1.

40 U.S.C. 276a(b) Davis-Bacon Act.

the term “wages”.

(b) As used in sections 276a to 276a-8 of this ttle

ee ee a]

scale of wages”, “wage rates’. “min-

imum wages”. and “prevailing wages” shall include

(1)

(2)

the basic hourly rate of pay: and

the amount of

(A) the rate of contribution irrevocably made

by a contractor or subcontractor to a trustee or to a

third person pursuant to a fund, plan. or program: and

(B) the rate of costs to the contractor or subcon-

tractor Which may be reasonably anticipated in provi-

ding benefits to laborers and mechanics pursuant to an

enforcible commitment to carry out a financially re-

sponsible plan or program which was communicated

In writing to the laborers and mechanics affected. tor

medical of hospital care. pensions on reurement or

death, compensation for injuries or illness resulting

from occupational activity, or insurance to provide

any of the foregoing, for unemployment benetits, life

insurance, disability and sickness insurance. or acci-

dent insurance. for vacation and holiday pay. for

defraying costs of appreticeship or other similar prog-

rams. or for other bona fide fringe benetits, but only

Where the contractor or subcontractor is not required

by other Federal. State. or local law to provide any of

S6a

such benefits: PROVIDED. that the obligation of a

contractor or subcontractor to make payment in ac-

cordance with the prevailing wage determinations of

the Secretary of Labor. insofar as sections 276a to

276a-5 of this title and other Acts incorporating

sections 276a to 2746a-5 of this te by reference are

concerned may be discharged by the making of

payments in cash, by the making of contributions of a

type referred to in paragraph (2)(A), or by the

assumption of an enforcible commitment to bear the

costs of a plan or program of a type referred to in

paragraph (2)( B), or any combination thereof, where

the aggregate of any such payments, contribuuons,

and costs is not less than the rate of pay described in

paragraph (1) plus the amount referred to in para-

graph (2).

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.