Petition — Rothmann v. M.V. Resolute

83-1707

Office - Supreme Court, U.S

FILED

In the Supreme Court

OF THE

“APR 19 1984

r'YMALEXANDER L. STEVAS.

CLERK.

United States

Ocroser Term 1983

R. Rorumany, J. Wacner, A. Peterson, G. VaLentine,

J. O’Loveuuay, S. Vear, B. Peres, S. Baunsen,

J. Auavexios, T. Curtis, J. Fernanpez, K. Forster,

W. Buss, L. Harnon, S. DePersis, D. Diaz, C. Ketty,

E. Reep, W. E. Jonnsox, S. F. Lirrierorp,

R. B. Tuomas, J. Watxer, R. Wurte, and

Masters, Mates anp Prrots Trust Funps,

Petitioners,

vs.

M.V. Reso.ute, im rem, and Coast Line Associares,

in personam, West Winps, Inc., Nauticat Exectrric Inc.,

and Scuouv-Gauus Co., Lap.

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NORMAN LEONARD

Counsel of Record

Of Counsel 1182 Market Street

LEONARD & CARDER San Francisco, CA

RicHARD S. ZUCKERMAN Tele: (415) 626-3077

San Francisco, CA Counsel for Petitioners

ProskaveRr, Rose,

Gortz & MENDELSSOHN

New York, NY

SeHaM, KLEIN & ZELMAN

New York, NY

BOWE OF GAN FRANCISCO, INC. * 190 NINTH OT. * S.F., CA 84108 © (415) 864-8800

=*

QUESTIONS PRESENTED

1. Does the employment of seamen aboard a vessel cre-

ate a preferred maritime lien for the contributions the ship-

owner is contractually required to make as a result of such

maritime employment to the seamen’s collectively-bargained

and jointly-administered pension, welfare, vacation and

training funds?

2. Are the contributions which the shipowner is con-

tractually required to make as a result of the seamen’s em-

ployment aboard the vessel compensation for their services

for which the seamen or their trust funds may assert a pre-

ferred maritime lien under the Ship Mortgage Act?

ii

TABLE OF CONTENTS

Neen aa cocnsiennntinntcasinbensenes i

Neen enc nsrsseemanercnctnsssnsteninednensnsereees 1

Teen eT caedsthihsnnhncicnnannennensneneneneee 1

Neen ecenenaseueneenees 1

Se 1

Reasons for granting the writ... 4

1. The importance of the questions presented ........ 5

2. The historical lien priority of seamen’s wages

a 5

3. The broad scope of the term “wages of the

crew” in admiralty law and under the Ship

a teciniaiatensnsecsnentnncneesenonsnnens 6

4. Contributions to seamen’s trust funds as “wages

Nee cenerninswectounces *

5. Failure to make contributions to seamen’s bene-

fit funds as loss of benefits to the seamen ............ 9

6. This court may and should re-examine the hold-

ESE 11

7. This court’s decision in Morrison-Knudsen Con-

struction Co. v. Director, OWCP, 461 U.S.......,

76 L.Ed.2d 194 (1983) is not controlling ............ 13

8. This court has the power and responsibility to

fashion controlling rules of admiralty and mari-

time law ae

Conclusion 19

iii

TABLE OF AUTHORITIES CITED

Cases

Page

Arizona Governing Committee v. Norris, ...... Wes conaes

We RAMU NCI hic Sten eernseitite a Laktedsatecnenieieneenstbarecaaaee 14

Barnouw v. S.S. Ozark, 304 F.2d 717 (5 Cir. 1962) _...... 11

Brandon v. S.S. Denton, 302 F.2d 404 (5 Cir. 1962) ... 11

Calbeck v. Travelers Insurance Co., 370 U.S. 114

(RBIS ees “EA Lae iiceaaikialeceaiaitamnioisas acai 5

Conley v. Gibson, 355 U.S. 41 (1957) .............22........-.- 3

Crabtree v. S.S. Julia, 290 F.2d 478 (5th Cir. 1961) .. 6

Cross v. S.S. Kaimana, 401 F.2d 182 (Sth Cir. 1968)

ne ee 4

Czaplicki v. S.S. Hoegh Silvercloud, 351 U.S. 525

CUDUNIUTE :ceisiessnssipsnicssscaiasthcsscncpamesssaidalesnbictilaiiasaabapaniedsddendiidinds 5

Duncan-Harrelson Company v. Director, 686 F.2d 1336

(9th Cir. 1982) reversed ...... U.S. ....... 77 L.Ed.2d

UT cccthinsstvintsetqrinneadinthatanansaantnemilaiguigieaiedeanaales 13

E.V. Moore of California, Inc., 447 F.2d 1106 (9th

Cir.) cert. denied, sub. nom., Bowman v. Bay Area

Painters Trust Fund, 404 U.S. 995 (1971) 0000000... 10

Glandzis v. Callinicos, 140 F.2d 111 (2d Cir. 1944) _...... 6

Hilyer v. Morrison-Knudsen Construction Co., 670

F.2d 208 (D.C. Cir 1981), reversed sub nom. Morri-

son-Knudsen Construction Co. v. Director, OWPC,

ies CE, 0g FO Eee 800 CI) chine

Huge v. Long’s Hauling Co., Inc., 590 F.2d 457 (3d Cir.

1978), cert. den. 442 U.S. 918 (1979) 2. 13

In re E.V. Moore of California, Inc., 447 F.2d 1106

(9th Cir.), cert. den., sub. nom., Bowman v. Bay

Area Painters Trust Fund, 404 U.S. 995 (1971)... 11

International Paint Co. Inc., v. M/V Mission Viking,

687 F.2d 382 (5th Cir. 1981) 6

iv

TaBie or AvcTHorittes CITED

Cases

Page

Lakos v. Saliaris, 116 F.2d 440 (4th Cir. 1940) 00000... 6

Lewis v. Benedict Coal Corp., 361 U.S. 459 (1960) -....... 9

Long Island Tankers Corp. v. S.S. Kaimana, 265

F.Supp. 723 (N.D. Calif. 1967) -.............. 3, 4, 7, 8,9, 11, 12

Morales v. Galveston, 370 U.S. 165 (1962) ....... Seas 5

Morrison-Knudsen Construction Co. v. Director,

OWCP 461 U.S. ....... 76 L.Ed.2d 194 (1983) .............

Nr RE Se RARE IE Ra hee N LER 13, 14, 15, 16, 17

National Labor Relations Board v. Bildisco & Bildisco,

oP U.S. ....... 79 L.Ed.2d 482 (1964) ..............................4, 12

Pacific SS Co. v. Peterson, 278 U.S. 130 (1928) ............ 6

Pratt v. United States, 340 F.2d 174 (1st Cir. 1964) ... 6

Putnam v. Lower, 236 F.2d 561 (9th Cir. 1956) —.......... 6

Salem v. United States Lines, 370 U.S. 31 (1962) _...... 5

Smith v. Atlas Off-Shore Boat Service, Inc., 653 F.2d

1057 (5th Cir. 1981) ............ PAOD PER TE 19

Sulmeyer v. Southern California Pipe Trades Trust

Fund, 301 F.2d 768 (1962) ’ ll

The Herbert L. Rawding, 55 F.Supp. 156 (EDSC.

1944) a saa

The John G. Stevens, 170 U.S. 113 (1898) 00... ain

Tuvia Convalescent Center v. National Union, 717

F.2d 726 (2d Cir. 1983) 9

United States v. Carver, 260 U.S. 482 (1923) 0000... 12

Williams v. Great Lakes Dredge & Dock Co., 726 F.2d

278 (6th Cir. 1984) 6,7

v

TaBLz or AvuTHorittes CITED

Statutes

Page

Acts of June 25, 1948, c. 646, 62 Stat. 931 and May 24,

1949, c. 139 § 79, 63 Stat. 101, codified in 28 U.S.C.

eee siinddiieneapeleatinenebeaniel . 38

Labor Management Relations Act, 301(b), 29 U.S.C.

a a nae I aL 9

Longshore & Harbor Workers Compensation Act:

Section 2(3), 33 U.S.C. Section 902(3) —.................. 14

Section 2(13), 33 U.S.C. Section 902(13) _......2.... 15

Ship Mortgage Act of 1920, section 30. sub-section M,

By ID CRO saniectctncntieececacscnesstetaantiuinacisasinadais 1,4

Se Sa WE. MI RGD eects 1

Rules

Federal Rules of Civil Procedure:

Rale 8 ........ 3

Rule 9(h) ........ 3

Rule 24(a) 3

Other Authorities

Employee Benefits, 1981, Survey Research Center,

Economic Policy Division, Chamber of Commerce

of the United States, p. 27 8

Pension Facts, American Council of Life Insurance,

Information, Reference and Statistical Sources,

1981, pp. 33-35 8

S.Rep. No. 573, 66th Cong. 2d Sess. 9 (1920) —........... 18

2A, Moore’s Federal Practice, J 8.13 3

In the Supreme Court

OF THE

United States

Ocrosper Term 1983

R. RoruMann, J. Wacner, A. Peterson, G. VALENTINE,

J. O’Lovenutan, S. Veat, B. Peter, S. BAHNseEn,

J. Avavexios, T. Curtis, J. Fernanpez, K. Fortster,

W. Buss, L. Hatnon, S. DePersis, D. Diaz, C. Ketty,

E. Reep, W. E. Jounson, S. E. Litruerorp,

R. B. Tomas, J. Wacker, R. Wuire, and

Masters, Mates and Pivots Trust Funps,

Petitioners,

vs.

M.V. Reso.vurte, in rem, and Coast Line ASsoctaTEs,

in personam, West Winps, Inc., Navticat Execrric Inc.,

and ScnHovu-Gautus Co., Lap.

Respondents.*

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

‘This caption of the case contains the names of all of the parties

the proceeding in the court below except the M.V. Pvt. Peters,

not involved in this petition. U.S. Sup. Ct. Rule 21.1(b),

to

is

US.C.

cf

Petitioners, R. Rothmann and the other individuals whose

names are listed in the caption hereof and the Masters,

Mates and Pilots Trust Funds, respectfully pray that a

writ of certiorari issue to review the judgment and opinion

of the United States Court of Appeals for the Ninth Circuit

entered in the above entitled proceedings on November 21,

1983.

OPINION BELOW

The opinion of the Court of Appeals is reported at 720

F.2d 1097 and is printed in Appendix A. The Order of the

Court of Appeals denying a rehearing is printed in Ap-

pendix B. The unreported Memorandum and Order of the

District Court is printed in Appendix C.

JURISDICTION

The opinion of the Court of Appeals was filed and entered

on November 21, 1983 and its order denying petitioners’

timely petition for rehearing was filed and entered on Feb-

ruary 10, 1984. This Court has jurisdiction pursuant to

§ 1254(1) of Title 28 of the United States Code.

STATUTES INVOLVED

This case involves, in addition to questions of maritime

lien priorities under historic admiralty precepts, the inter-

pretation, construction and application of the Ship Mort-

gage Act of 1920, section 30, sub-section M, 46 U.S.C. 953

(1976) which declares that a lien “for wages of the crew of

the vessel” is a “preferred maritime lien” having priority

over all other liens. That statute is printed in Appendix D.

STATEMENT OF THE CASE

Petitioners are individual seamen and the Trust Funds

created as a result of collective bargaining between the em-

ployers of the seamen and the International Organization

of Masters, Mates and Pilots (MMP), a labor organization

which represents the seamen. The Trust Funds provide

2

pension, welfare, vacation, training and similar benefits to

the seamen and are financed by employer contributions in

accordance with the collective bargaining agreements be-

tween the employers and MMP.

The facts out of which this case arose are correctly stated

by the Court of Appeals:

West Winds, Inc., Nautical Electric, Inc., and Schou-

Gallis Co., Ltd., filed an admiralty complaint against

the M/V RESOLUTE, in rem, and Coast Line Associ-

ates, the owner and operator of the vessel, in personam,

under 46 U.S.C. § 971 (1976), to recover the costs of

repairs, supplies, and other necessaries furnished to

the vessel. The 23 seamen appellants were employed

by Coast Line Associates between January and June

1982. Under the provisions of its collective bargaining

agreement with the Internationa! Organization of Mas-

ters, Mates and Pilots, Coast Line was required to con-

tribute to trust funds that provide health, retirement,

pension, training, vacation, and similar benefits to the

seamen. Coast Line failed to make the contributions for

the 23 seamen as required by the collective bargaining

agreement. To protect their interest in procuring the

payment of the delinquent trust fund contributions,

the trustees and the seamen sought to intervene of

right in the underlying action under Fed. R. Civ. P.

24(a)(2). 720 F.2d at 1098; Apendix A, p. A-2.

In their complaint, petitioners alleged that the seamen’s

employment as crew members aboard the M.V. Resolute gen-

erated an obligation on the part of respondent Coast Line

Associates, the owner and operator of the vessel, to “make

contributions in the nature of wages to [the] .. . trust funds

for the benefit of [petitioner crew members]” and that such

contributions “in the nature of wages” in the total sum of

3

$83,410.83 were not made and were due and owing to the

trust funds.’

The basis for invoking the admiralty and maritime juris-

diction of the District Court was the Acts of June 25, 1948,

c. 646, 62 Stat. 931 and May 24, 1949, c. 139 § 79, 63 Stat.

101, codified in 2° U.S.C. 1333, and Fed. Rules Civ. Proc.,

Rule 9(h), 28 U.S.C.

The District Court denied petitioners’ motion to inter-

vene. It held, solely in reliance upon Long Island Tankers

Corp. v. S.S. Kaimana, 265 F.Supp. 723 (N.D. Calif. 1967)

(Long Island Tankers), that a claim that a ship owner owes

contributions to seamen’s benefit funds does not entitle

either the seamen or the funds to a preferred maritime lien

against the vessel upon which the seamen rendered mari-

time services. It concluded that therefore petitioners could

not claim an interest in the action as required for interven-

tion under Fed. Rules Civ. Proc., Rule 24(a), 28 U.S.C.;

Appendix C, p. A-17.

*Had the District Court granted the motion to in*ervene and per-

mitted the development of a factual record, petitioners would have

demonstrated a pattern of collective bargaining whereby the em-

ployers agree to pay a certain amount of money which is thereupon

divided up between “direct wages” and pension, welfare, vacation

and similar contributions for seamen benefits. Thus, petitioners

would have proven that contributions to the various funds are part

of the total wage package. To the extent that monies are paid to the

funds, an equal amount is subtracted from wage increases.

It was not necessary to plead the above “facts” or “evidence” in

the proposed complaint-in-intervention. The proposed complaint

fully satisfied the “notice” requirements of Fed. Rules Civ. Proc.,

Rule 8, 28 U.S.C. All that is required is “a short and plain statement

of the claim that will give the respondents fair notice of what the

petitioner's claim is and the grounds upon which it rests.” Conley v.

Gibson, 355 U.S. 41, 47 (1957). See 2A, Moore's Federal Practice,

8.13. The proposed complaint certainly gave respondents fair

notice of the claims asserted so that they could answer and prepare

for trial. No one has contended to the contrary.

4

The Court of Appeals stated that “(t]he sole issue on

appeal is whether contributions to trust funds created

for the benefit of the employees are ‘wages of crew’ that

may serve as a preferred maritime lien under 46 U.S.C.

§ 953 (1976)”. 720 F.2d at 1098; Appendix A, p. A-2.

Actually, the issue is somewhat different. This case deals

with crew members, not with employees generally. The

issue is whether maritime employment of seamen creates

a preferred maritime lien for contributions the shipowner

is contractually required to make to the seamen’s benefit

funds as a result of such employment. The ultimate ques-

tion here presented is: Which shall have prior access to the

limited funds available on the forced sale of a vessel, the

trust. funds created for the benefit of the crew members or

the general creditors of the vessel.’

The Court of Appeals affirmed the decision of the

District Court solely because it was “compelled by

precedent in this circuit” to do so, 720 F.2d 1098; Appen-

dix A, p. A-2. The “precedent” was its earlier per curiam

affirmance of Long Island Tankers. (Cross v. 8.S. Kaimana,

401 F.2d 182 [9th Cir. 1968] cert. den. 393 U.S. 1095 [1969]).

REASONS FOR GRANTING THE WRIT

The writ should be granted in this case because the

Court of Appeals has decided two important questions of

federal law which have not been, but should be decided

by this Court:

(a) whether contributions required by collective bar-

gaining contracts to be made to trust funds created for

the benefit of crew members are wages of the crew for

maritime lien purposes pursuant to the Ship Mortgage Act;

*The vessel has been sold and the proceeds of the sale are in the

custody of the Clerk of the District Court. Therefore this case does

not involve any bankruptcy “rehabilitation” issue such as was pre-

sented in National Labor Relations Board ov. Bildisco & Bildisco,

U.S. . , 79 L.Ed.2d 482 (1984).

5

(b) whether under general admiralty and maritime law

the employment of seamen creates a preferred maritime

lien for contributions which the shipowner, as a result of

such employment, is required to make to the seamen’s

benefit funds.

1. The Importance of the Questions Presented

This case thus presents “a seemingly significant question

of admiralty law” warranting the grant of certoriari.

(Morales v. Galveston, 370 U.S. 165, 167 (1962) ). The reso-

lution of this question can be expected to have a great

impact on collective bargaining in the maritime industry

and upon the rights of tens of thousands of American

seamen.‘ It also presents a question of statutory inter-

pretation important in the administration of the relevant

statute, which is further warrant for granting the writ.

Calbeck v. Travelers Insurance Co., 370 U.S. 114, 116

(1962). See also Salem v. United States Lines, 370 U.S.

31, 32 (1962) ; Czaplicki v. 8.S. Hoegh Silvercloud, 351 U.S.

525, 528 (1956).

2. The Historical Lien Priority of Seamen’s Wages in

Admiralty Law

The priority of the lien for seamen’s compensation,

expressed in the Ship Mortgage Act as “wages of the

crew”, is deeply rooted in maritime history. Because of

the seaman’s need for special protection he has been

deemed a ward of admiralty and his wages, “. . . according

to the favorite saying of Lord Stowell and Mr. Justice

Storey, are sacred liens, and as long as a plank of the ship

remains the sailor is entitled, against all other persons,

6

to the proceeds as a security for his wages.” The John G.

Stevens, 170 U.S. 113, 119 (1898) (emphasis supplied).

There are several reasons for this “sacred lien”. The

ship may be the only valuable security on which the

seaman can rely. The seaman is the traditional ward

of the admiralty court. Finally, without the seaman’s

efforts in bringing the ship safely to port, there would

be no res against which other creditors could assert

claims.

International Paint Co. Inc., v. M/V Mission Viking, 637

F.2d 382, 385 (5th C’r 1981) (emphasis supplied).

That is, of course, true here. If petitioners-crew members

had not brought the Resolute into port, there would have

been no res against which West Winds, Inc. or any of the

other complainants-respondents could have asserted their

claims.

3. The Broad Scope of the Term “Wages of the Crew”

in Admiralty Law and under the Ship Mortgage Act

Admiralty courts have traditionally taken a broad view

of what constitutes seamen’s compensation. Maritime com-

pensation includes not only the wages provided for in the

ship’s articles, but such items as maintenance and cure

(Pratt v. United States, 340 F.2d 174, 179 n.11 [ist Cir.

1964]; Crabtree v. S.S. Julia, 290 F.2d 478 [5th Cir. 1961]

{reversing an order denying intervention to assert a claim

for maintenance and cure]; cf. Pacific SS Co. v. Peterson,

278 U.S. 130 137 [1928]); reasonable allowances for time

and service (Putnam v. Lower, 236 F.2d 561 [9th Cir.

1956]) ; bonuses (Williams v. Great Lakes Dredge 4 Dock

Co., 726 F.2d 278 [6th Cir. 1984] ; Glandzis v. Callinicos, 140

F.2d 111 [2d Cir. 1944) ; Lakos v. Saliaris, 116 F.2d 440 [4th

Cir. 1940) ; The Herbert L. Rawding, 55 F.Supp. 156 [E.D.

S.C. 1944]); travel allowances (Williams v. Great Lakes

Dredge & Dock Co., supra).

7

Indeed, as the instant Court of Appeals acknowledged:

Wages of seamen are given such a protected status

that the owner of a vessel delinquent in paying wages

is liable for double the amount owed to the seaman.

See 46 U.S.C. § 596 (1976). That penalty payment

has itself long been treated as wages of the crew for

the purposes of the assertion of a preferred maritime

lien under 46 U.S.C. § 953. See, e.g., Collie v. Fergus-

son, 281 U.S. 52, 54, 50 S.Ct. 189, 190, 74 L.Ed, 696

(1930); Gerber v. Spencer, 278 F. 886, 889 (9th Cir.

(1922).

720 F.2d at 1102 , n.4; Appendix A, p. A-13, n.4.

See, also, Williams v. Great Lakes Dredge & Dock Co.,

supra.

The District Court whose decision in Long Island Tank-

ers was the basis of the instant holding itself recognized

that

Admiralty courts have not limited the seaman’s lien

claim to those for ordinary wages. On the contrary, the

Courts have recognized the seaman’s lien claim for

compensation for maritime services regardless of the

form of the compensation provided only that the claim

is reducible to money. See Harden v. Gordon, 11 Fed.

Cas. p. 480, No. 6,047 (C.C. Me. 1823). From the

earliest period of maritime commerce the test in

admiralty courts for determining whether there is a

seaman’s wage lien has been: Has a maritime service

been performed? If such service has been performed,

then whatever constitutes the compensation for the

service, if reducible to money, may be enforced by a

maritime lien against the vessel upon which those

services were performed. (emphasis supplied)

265 F.Supp. at 726."

*Despite this, the Long Island Tankers court denied preferred

maritime lien status to seamen’s benefit funds contributions for

reasoas which, as this petition demonstrates, are unsound.

8

4. Contr.outions to Seamen’s Trust Funds as “Wages of

the Crew”

Given the foregoing considerations, the Court of Appeals

recognized that there were “compelling reasons why em-

ployer contributions to trust funds should be afforded some

form of priority treatment for maritime lien purposes.”

720 F.2d at 1102, Appendix A, p. A-12.

It acknowledged that “[d]emands for contributions to

trust funds providing benefits to employees increasingly

serve as substitute for wage demands in collective bargain-

ing negotiations”, that “[fJor this reason alone contribu-

tions to seamen’s trust funds would warrant some form of

priority treatment similar to that afforded to ‘wages of the

crew’ ” and that “affording priority treatment to trust fund

contributions would further the purpose of the preferred

maritime lien to protect the compensation given seamen”

Ibid. at 1102, Appendix A, p. A-12-13. (Emphasis supplied.)

Finally, the Court of Appeals recognized that there is “an

anomaly in the fact that money given by an employer di-

rectly to an employee to spend on benefits is treated as

‘wages’, but the same funds, if given to trust funds that be-

stows identical benefits upon the employees, are not”, Ibid.

at 1103, Appendix A, p. A-13.*

Nonetheless, because it felt “compelled” to do so by Long

Island Tankers, the Court of Appeals held that the contri-

butions in issue were not to be given priority status. It held

that since the seamen had not alleged that the failure to

*According to industry sources employee benefits as a percentage

of payroll in American industry grew from 25.5% in 1961 to 41.2%

in 1981. Emp.tovee Benerrrs, 1981, Survey Research Center, Eco-

nomic Policy Division, Chamber of Commerce of the United States,

p.27. The number of workers covered by private pension plans

increased from some 2.7 million in 1930 to 38.4 million in 1975.

Pension Facts, American Council of Life Insurance, Information,

Reference and Statistical Sources, 1981 pages 33-35.

9

make the trust fund contributions resulted in a loss of

benefits, they fell within the Long Island Tankers rule.

The Court of Appeals then “reserve[d] to another day

the question whether seamen may assert a preferred mari-

time lien for loss of benefits caused by the employer’s fail-

ure to make contributions.” 720 F.2d at 1099; Appendix

A, p. A-5.

In both its holding and its “reservation” the Court of Ap-

peals, as we show in the next section of this petition, was

plainly wrong.

5. Failure to Make Contributions to Seamen’s Benefit

Funds as Loss of Benefits to the Seamen

Any distinction between a loss of contributions owed

the seamen’s Funds and a loss of benefits due the seamen

is illusory. Both represent losses in compensation owed

seamen for maritime services performed. Accordingly, the

focus should be not on individual seamen and their loss of

benefits but on the loss to the Funds, which are a pool of

compensation created for the benefit of all participating

seamen by virtue of their services to the employing

shipping companies.

In Tuvia Convalescent Center v. National Union, 717

F.2d 726 (2d Cir. 1983), the court held that an employer

could not maintain an action against employee trust funds

under Section 301 of the Labor-Management Relations Act,

29 U.S.C. § 185 (1976). The court reasoned that Section

301(b), which provides that a judgment against a labor

organization shal! not be enforceable against individual

members, barred the employer’s action because “a judg-

ment against the Funds would effectively be a judgment

against the individual members of the union that the Funds

benefit.” (at 731; emphasis supplied). See also Lewis v.

Benedict Coal Corp., 361 U.S. 459, 470 (1960) (section

301(b) serves to protect beneficiaries of employee welfare

10

trust funds by providing that the union, and not its mem-

bers, should be the sole source of recovery).

By analogy, it is clear that a loss of contributions sus-

tained by the Trust Funds is effectively a loss of compensa-

tion justly owed to seamen whom the Funds benefit. The

fact that seamen in a given case cannot claim a current

loss of benefits due to a given employer’s failure to make

required contributions is not determinative. The employer’s

failure to make contributions decreases the value of the

funds. It thereby increases the likelihood that seamen-

petitioners will fail to receive their benefits, thus depriving

them of compensation for the maritime services rendered

to respondent-shipowner.

Moreover, with respect to one of the funds involved in

this case, the Masters, Mates and Pilots Individual Retire-

ment Account Plan (I.R.A.P.), the loss of contributions

has directly resulted in a loss of deferred wages to the

individual crew members.

The I.R.A.P. is a defined contribution Plan. It provides

that each shipping company shall pay to the Plan, for the

direct benefit of each of its crew members, an amount equal

to a stipulated percentage of each seaman’s hase wages.

With respect to the licensed seamen employed by Coast

Line Associates, the amount was 5% of base wages; for

the unlicensed seamen it was 10%. Each such 5% or 10%

paid is directly credited to the seaman’s account, and

an annual printout is sent to him from the Fund, indi-

cating the total amount in his accrued account. When a

shipping company does not make such payment, as is the

case here with respect to Coast Line Associates, the sea-

man’s account suffers a loss of the moneys due. The other

shipping companies which are also contributors to

I.R.A.P. for the benefit of their crew members do not make

11

payments to cover the losses sustained by any seaman

whose own company fails to make its I.R.A.P. payments.’

In order to protect the vitality of seamen’s fringe benefit

funds, this Court should allow the maritime lien to attach at

the time the delinquency occurs. Such judicial protection

will afford seamen the priority sanctioned by admiralty

law and by the policy of the Ship Mortgage Act. Seamen

should not be called upon to wait until the funds have be-

come so depleted by an employer’s failure to make con-

tributions that a “loss of benefits” to the seamen will not

be recoverable.’

6. This Court May and Should Re-examine the Holding

Below

Petitioners submit that whatever may be the validity of

the Court of Appeals’ conclusion that Long Island Tankers

"The Court of Appeals itself had previously ruled that contribu-

tions to vacation funds (and the MMP Vacation Fund is also one

of the petitioners here) were entitled to “priority status as wages”

under the pre-1978 Bankruptcy Act. In re E.V. Moore of California,

Inc., 447 F.2d 1106 (9th Cir.) cert. denied, sub. nom., Bowman ov.

Bay Area Painters Trust Fund, 404 U.S. 995 (1971). See also Sul-

meyer v. Southern California Pipe Trades Trust Fund, 301 F.2d

768 (1962). But it refused so to read the Ship Mortgage Act be-

cause of Long Island Tankers and Barnouw v. S.S. Ozark, 304 F.2d

717 (5 Cir. 1962); 720 F.2d at 1101; Appendix A, p. A.9.

Barnouw relied exclusively upon Brandon vo. S.S. Denton, 302

F.2d 404 (5 Cir. 1962) which went off on the rather strange propo-

sition that contributions to seamen’s benefit funds “must be con-

sidered also as made for the best interests of the employer rather

than as a part of the seamen’s wages”. 302 F.2d at 416.

*Coast Line Associates is not alone in becoming delinquent to the

MM&P Trust Funds. The court is respectfully requested to take

judicial notice of the recent bankruptcies of two large shipping com-

panies on the West Coast—Pacific Far East Lines (Ninth Circuit

Case No. 82-4039) and States Steamship Company (Ninth Circuit

Case Nos. 82-4224, 82-4225, 82-4105) and of the bankruptcy of

12

“compelled” it to reach the result below,’ this Court is not

so bound.” It is free to, and should, examine the issues

posed by this petition. We therefore examine the problem

de novo.

As already noted, supra page 7, there are two questions

involved in determining whether there is a basis for a

seamen’s lien: I’as a maritime service been performed?

Is the compensation for that service reducible to money?

Each of these questions can be answered only in the affirm-

ative in this case.

First, it is the maritime service performed by the in-

dividual petitioners, the crew members, which gave rise to

the obligation to make contributions to the Trust Funds.

Depending on the terms governing the particular Fund, con-

tributions are based on either the number of hours for which

a crew member is entitled to pay or a percentage of the

wages paid for hours worked. If there is no maritime

service performed, no contributions are due.

Waterman Steamship Company on the East Coast (Southern Dis-

trict of New York, No. 83-B-11732-HCB ). Cf. National Labor Rela-

tions Board vo. Bildisco & Bildisco, ... U.S. .., 79 L.Ed.2d 482,

510 n.16 (1984) ( Brennan, J., concurring and dissenting).

We are advised by Martin E. Segal Company, the Funds’ ac-

tuaries, that the actuarial present value of the MMP Pension

Fund's accumulated benefits as of January 1, 1983 was in excess of

$280,000,000.00. If individual shipping companies fail to make

their contributions, this sum may never be realized, so that the

individual crew members will indeed suffer a “loss of benefits”.

*The Court of Appeals considered, but rejected, petitioners’ argu-

ment that Long Island Tankers was distinguishable because in this

case, unlike Long Island Tankers, the seamen themselves—the direct

beneficiaries of the Trust Funds—are parties to the suit. 720 F.2d

1099; Appendix A, p. A-5.

“This Court's denial of certiorari in Long Island Tankers was not,

of course, a reflection of its views on the merits. United States v.

Carver, 260 U.S. 482, 490 ( 1923).

13

Second, compensation for these services in the form of

contributions is clearly reducible to money—indeed the

amount of contributions per man hour of maritime services

or as a percentage of wages earned is specified in the col-

lective bargaining contract.

It is now universally recognized that such trust fund

contributions are “an important part of the employee’s

total compensation” (Duncan-Harrelson Company v. Dt-

rector, 686 F.2d 1336, 1345 [9th Cir. 1982, vacated and re-

manded on other grounds for reconsideration in the light of

Morrison-Knudsen Construction Co. v. Director, OWCP,

461 US. ....., 76 L.Ed.2d 194 (1983), ...... US. ....... 77 L.Ed.

2d 1329]) and are “in reality, indirect or deferred compen-

sation, earned by the employee with each hour or day

worked”. Huge v. Long’s Hauling Uo., Inc., 590 F.2d 457,

464, (3d Cir. 1978) (Adams, J. concurring) cert. den. 442

U.S. 918 (1979).

The beneficiaries of such contributions are the maritime

employees—the crew members.

The funds are no more than a channel; they are merely

a means by which the company provides life insur-

ance, health insurance, investment benefits and career

training for its employees. Hilyer v. Morrison-

Knudsen Construction Co., 670 F.2d 208, 211 (D.C.

Cir. 1981) reversed on other grounds, sub nom. Mor-

rison-Knudsen Construction Co. v. Director, OWCP,

461 US. ....., 76 L.Ed.2d 194 (1983).

7. This Court’s Decision in Morrison-Knudsen Construc-

tion Co. v. Director, OWOCP, 461 US. ...... , 76 L.Ed.2d

194 (1983) Is Not Controlling

Morrison-Knudsen was reversed and vacated by this

Court because of its construction of section 2(13) of the

Longshore and Harbor Workers Compensation Act, 33

U.S.C. 902 (13).

14

It must be noted at the very outset that Morrison-K nud-

sen did not involve the employer’s failure to make the re-

quired contributions to trust funds. The contributions had

been made and the question was whether they fell within

the statutory definition of wages of shoreside workers for

the purpose of computing compensation benefits. In decid-

ing that they did not, this Court did not disagree with the

foregoing analysis of trust fund contributions. Indeed it

found that “[t]here is force to this argument” 461 U.S.

nas , 76 L.Ed.2d at 203.

Even after Morrison-Knudsen this Court recognized

that

There is no question ... that retirement benefits con-

stitute a form of ‘compensation’. Arizona Governing

Committee v. Norris, ...... U.S. ......, 77 L.Ed,2d 1236,

1245 (1983).

And that is what we are dealing with in this case: sea-

men’s compensation for maritime services rendered.

The determination of whether contributions already

made to shoreside workers’ trust funds were to be treated

as wages for workers’ compensation purposes presented

this Court with entirely different considerations from those

involved in determining maritime lien claim priorities in

the case of a shipowner which failed to make contributions

to the Trust Funds established to benefit seamen. Since

the compensation statute involved in Morrison-Knudsen

specifically excluded seamen from its coverage," maritime

and admiralty considerations such as are presented by the

instant case were plainly not involved there.

In Morrison-Knudsen the question was whether con-

tributions to non-maritime workers’ trust funds are a

“The term ‘employee’ . . . does not include a master or member

of a crew of any vessel . . .” Longshoremen’s and Harbor Workers’

Compensation Act, § 2(3), 33 U.S.C. § 902(3).

15

“similar advantage” to “board, rent, housing or lodging”

within the meaning of § 2(13) of the Longshore & Harbor

Workers Compensation Act, 33 U.S.C. §902(13). This

Court held that such contributions were not a similar ad-

vantage because, while board, rent, housing or lodging

“are benefits with a present value that can readily be con-

verted into a cash equivalent on the basis of their market

values[,] [t]he present value of these trust funds is not,

however, so ea ‘ly converted into a cash equivalent” 461

US. ......, 76 L.Fd.2d at 199.

While it may be necessary in a workers’ compensation

case to convert the value of the trust funds to cash equiva-

lents if they are to be treated as wages for the purpose of

computing compensation henefits under the Longshore Act,

sich a conversion is not necessary here. Petitioners do not

request that the value of the Trust Funds be translated

into a cash equivalent and be now awarded to the seamen.

Rather, they simply seek payment to the Funds of the

agreed-upon contributions which were due as part of the

compensation for the maritime services that had been ren-

dered, and which the shipowner respondent has failed to

make. There is no uncertainty about the dollar amount of

those contributions. There is no need to “convert” the

contributions to anything else. The only thing sought is

that the contributions be made in the precise amounts and

in the precise manner agreed upon.

Thus the underlying premise upon which Morrison-

Knudsen was based is absent in this case.

This Court also noted that the structure of the Long-

shoremen’s Compensation Act lent further support to the

conclusion reached in Morrison-Knudsen. Since that Act

contained provisions requiring the Secretary of Labor to

determine “the national average weekly wage” in fixing

minimum and maximum levels of compensation benefits, the

inclusion of fringe benefit contributions as part of “wages”

16

would require the Secretary “to evaluate the provisions of

collective bargaining agreements throughout the nation”.

Any attempt to make this determination on a national

basis would involve deciding which benefits to include,

a subject on which different branches of the government

differ ... It would also require deciding how the bene-

fits should be evaluated. Evaluating benefits is not sim-

ple in “defined contribution” plans ... ; in “defined

benefit” plans, where the employer’s costs are actuarially

determined to provide a certain level of service, the cal-

culation is infinitely harder ... Without clear indication

from Congress that this approach with its attendant

problems is required, we decline to adopt it.

461 U.S. ......, 76 L.Ed.2d at 202.

None of these problems are present in the instant case.

The District Court was not called upon to evaluate the

benefits which crew member-petitioners would ultimately

receive from the Funds. It was asked only to determine

that the agreed upon and already fixed contributions to the

Funds, which resulted from the crew members’ maritime

employment, were entitled to a priority over the claims of

the vessel’s general creditors. No evaluation of benefits is

involved here.

Finally, in Morrtson-Knudsen this Court emphasized the

fact that the Longshore and Harbor Workers Compensa-

tion Act

was not a simple remedial statute intended for the

benefit of the workers. Rather, it was designed to strike

a balance between the concerns of the longshoremen

and harborworkers on the one hand and their employ-

ers on the other. Employers relinquished their defenses

to tort actions ir exchange for limited and predictable

liability. Employees accepted the limited recovery

17

because they receive prompt relief without the expense,

uncertainty and delay that tort actions entail

461 USS. ......, 76 L.Ed.2d at 203.

This Court held that, in those circumstances, to treat trust

fund contributions as wages “would significantly alter the

balance achieved by Congress.” 461 U.S. ......, 76 L.Ed.2d

at 203.

No such considerations are present here. The maritime

and admiralty law which give to seamen’s compensation a

preferred maritime lien and the Ship Mortgage Act which

confirmed that lien were not designed to strike any such

balance. On the contrary, the statute’s purpose was to

codify the admiralty law and practice that gave such wages

a priority over all other claims. There was no compro-

mise struck between the general creditors of the vessel on

the one hand and crew members on the other. Crew mem-

bers were given a clear priority. The effect of the decision

below, however, is to prefer general creditors over seamen

—a position directly contrary to traditional maritime law

and to the objectives of the Ship Mortgage Act.

8. This Court Has the Power and Responsibility to

Fashion Controlling Rules of Admirality and Maritime

Law

Finally, the Court of Appeals here suggested that

... Congress may, as it did in enacting the Bankruptcy

Reform Act, wish to “recognize[ ] the realities of

labor contract negotiations, where fringe benefits may

be substituted for wage demands.” S.Rep. No. 989, 95th

Cong., 2d Sess. 69 (1978) reprinted in 1978 U.S. Code

Cong. & Ad. News 5787, 5855.° Significant changes in

economic conditions suggest the inadequacies of the

present debt priorities in the Ship Mortgage Act—

priorities that have not been changed since the Act was

originally adopted in 1920. Amending 46 U.S.C. § 953

18

to bring the lien priorities in line with modern eco-

nomic reality would further the purpose of the section

and avoid anomalous results.

‘In making this suggestion, we recognize that “[o]ne of

the facts of legislative life . . . is that getting a statute

enacted in the first place is much easier than getting the

statute revised so that it will make sense in the light of

changed conditions.” G. Gilmore, supra, at 95; see Phelps,

supra, at 469,

720 F.2d at 1103, Appendix A, p. A-13-14 (footnote in

original).

It is s.:bmitted that the Court of Appeals misinterpreted

the applicable maritime law and the Ship Mortgage Act.

Nothing in that Act compels a holding that contributions

to trust funds established for the benefit of crew members

are not to be treated as wages for maritime lien priority

purposes. And the maritime law, as has been pointed out,

recognizes as seamen’s wages any form of compensation so

long as it is reducible to money—as these contributions are.

There are no “inadequacies” in the present priorities of

the Ship Mortgage Act. That Act makes crew wages a pre-

ferred maritime lien which is “superior to everything

else” (S.Rep. No. 573, 66th Cong. 2d Sess. 9 [1920]) and in

so doing merely confirms the general maritime law.

Furthermore, as this Court has said:

Article 3 of the Constitution vested in the federal

courts jurisdiction over admiralty and maritime cases,

and, since that time, the Congress has largely left to

this Court the responsibility for fashioning the con-

trolling rules of admiralty law. This Court has long

recognized its power and responsibility in this area and

has exercised that power where necessary to do so.

Fitegerald v. United States Lines, 374 U.S. 16, 20-21

(1963).

19

See also: Edmunds v. Compagnie Generale Transat-

lantique, 443 U.S. 256, 259 (1979) (“Admiralty law is

judge-made law to a great extent”).

CONCLUSION

This case presents important questions for American

seamen and their benefit funds. It concerns significant

questions regarding the lien priority of claims for seamen’s

compensation and the interpretation of the Ship Mortgage

Act.

To resolve those questions the writ should be granted.

San Francisco, California

April 16, 1984

Respectfully submitted,

NorMan LEONARD

Counsel of Record

Leonarp & CaRDER

Ricuarp S. ZucKERMAN

Proskaver, Rose, Goetz & MENDELSOHN

Senam, Kiew & ZeLMan

Of Counsel

(Appendices follow)

"The Fifth Circuit, noting the “admiralty court’s protective

attitude toward seamen”, has observed that

The judiciary’s leading role in fashioning controlling rules of

maritime law and in reshaping old doctrine to meet changing

conditions makes the admiralty court peculiarly sensitive to the

inequities inherent in the traditional rule.

Smith o. Atlas Off-Shore Boat Service, Inc., 653 F.2d 1057,

1063 (5th Cir. 1981) (footnote omitted ).

APPENDIX

Appendix A

West Winds, Inc., Nautical Electric,

Inc., and Schou-Gallis Co., Ltd.,

Plaintiffs-Appellees,

and

R. Rethmann, J. Wagner, A. Patterson,

G. Valentine, J. O’Laughlan, S. Veal, et al.,

Applicants-in-Intervention-Appellants,

vs.

M.V. Resolute, and M.V. Pvt. Peters,’

in rem, and Coast Line Associates, in

personam, Defendants-Appellees,

and

Coast Line Associates, Claimant-Appellee.

No. 82-4717.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted June 13, 1983.

Decided Nov. 21, 1983.

Appeal! from the United States District Court for the

Northern District of California.

Before ALARCON, CANBY, and REINHARDT, Circuit

Judges.

REINHARDT, Circuit Judge:

Appellants are 23 seamen and the trustees of their

union’s trust funds whose motion to intervene of right

‘The M. V. Pvt. Peters is not involved in this petition. [Our foot-

note].

=_*~

A-2

under Fed.R.Civ.P. 24(a)(2) was denied by the district

court. The sole issue on appeal is whether contributions

to trust funds created for the benefit of the employees are

‘wages of the crew” that may serve as the basis for a pre-

ferred maritime lien under 46 U.S.C. § 953 (1976). We are

compelled by precedent in this circuit to hold that they are

not, at least in the absence of a loss of benefits. Accord-

ingly, we affirm the district court’s denial of the motion

to intervene.

West Winds, Inc., Nautical Electric, Inc., and Schou-

Gallis Co., Ltd., filed an admiralty complaint against the

M/V RESOLUTE, in rem, and Coast Line Associates, the

owner and operator of the vessel, im personam, under 46

U.S.C. § 971 (1976), to recover the costs of repairs, sup-

plies, and other necessaries furnished to the vessel. The

23 seamen appellants were employed by Coast Line Asso-

ciates between January and June 1982. Under the provi-

sions of its collective bargaining agreement with the Inter-

national Organization of Masters, Mates and Pilots, Coast

Line was required to contribute to trust funds that provide

health, retirement, pension, training, vacation, and similar

benefits to the seamen. Coast Line failed to make the con-

tributions for the 23 seamen as required by the collective

bargaining agreement. To protect their interest in procur-

ing the payment of the delinquent trust fund contributions,

the trustees and tho seamen sought to intervene of right

in the underlying action under Fed.R.Civ.P. 24(a) (2).

Appellants claim that the delinquencies give rise to a

preferred maritime lien as ‘wages of the crew” under the

Ship Mortgage Act of 1920, section 30, subsection M, 46

U.S.C. § 953 (1976). Under the Act, “a lien for... wages

of the crew of the vessel” is a “preferred maritime lien”

A-3

that has priority over all other claims and may be asserted

in any im rem proceeding brought against a vessel. /d.

Appellants maintain that, because contributions to the trust

funds are a form of compensation, they should be treated

as ‘“‘wages of the crew.” They do not allege, however, that

the failure to make contributions has caused or will cause

any loss of benefits.

The district court issued a memorandum and order

denying appellants’ motion to intervene. Relying upon Long

Island Tankers Corp. v. S.S. Kaimana, 265 F.Supp. 723

(N.D.Cal.1967), the district court held that the delinquent

trust fund contributions were not “wages of the crew” for

purposes of section 953 and that therefore there was no

basis for the assertion of a preferred maritime lien. Ac-

cordingly, the district court held that the applicants-in-

intervention did not allege “an interest relating to the prop-

erty or transaction which is the subject of the action” as

required for intervention of right under Fed.R.Civ.P. 24

(a) (2).

I

Intervention of right under Fed.R.Civ.P. 24(a)(2):

requires a timely showing that the applicant possesses

an interest relating to the property or transaction

which is the subject of the suit and is so situated that

the disposition of the suit may as a practical matter

impair the ability to protect that interest, and in addi-

tion that the applicant's interest is not adequately rep-

resented by the existing parties.

State of Idaho v. Freeman, 625 F.2d 886, 887 (9th Cir.

1980) (citations omitted); see Sagebrush Rebellion, Inc. v.

A4

Watt, 713 F.2d 525, 527 (9th Cir.1983) ; Smith v. Pangtli-

nan, 651 F.2d 1320, 1323-25 (9th Cir.1981) ; Blake v. Pallan,

554 F.2d 947, 951-55 (9th Cir.1977). Denial of a motion to

intervene of right is a final order and therefore appealable

under 28 U.S.C. $1291 (1976). See Sagebrush Rebellion,

713 F.2d at 527; County of Fresno v. Andrus, 622 F.2d 436,

438 (9th Cir.1980) (citing Blake v. Pallan, 554 F.2d at 951

n. 5). Because we agree with the district court that appli-

cants-in-intervention do not possess a cognizable interest

under 46 U.S.C. § 953, we need not decide whether the other

requirements of Rule 24(a) (2) are met.

II

As appellees argue, there is Ninth Circuit precedent di-

recily on point in this case. In Cross v. S.S. Kaimana, 401

F.2d 182 (9th Cir.1968) (per curiam), cert. dented, 393 U.S.

1095, 89 S.Ct. 879, 21 L.Ed.2d 785 (1969), in a one sentence

opinion, we adopted the reasoning of the district court and

held that contributions of employers to trust funds created

pursuant to collective bargaining agreements to provide

vacation, pension, and welfare benefits to seamen do not

constitute “wages of the crew” under 46 U.S.C. § 953. The

district court decision, Long Island Tankers Corp. v. S.S.

Kaimana, 265 F.Supp. 723 (N.D.Cal.1967), affirmed in

Cross, addressed a factual situation strikingly similar to

the one before us. In that case, as here, the employers were

required to make contributions to the trust funds based

upon the number of days and type of work performed by

their employees. In Long Island Tankers, after several

employers failed to make contributions the trustees of the

funds brought an action seeking to assert preferred mari-

time liens to recover the contributions as “wages of the

A-5

crew” under 46 U.S.C. § 953. The district court dismissed

the action and held that the contributions were not “wages

of the crew” that could serve as the basis of the trustees’

assertion of preferred maritime liens. See 265 F.Supp. at

726-27.

Appellants contend that we should distinguish Long Is-

land Tankers because seamen, as well as trustees of the

trust funds, seek to assert the lien here. We decline to do

so. Appellants correctly assert that Long Island Tankers

reserved a question regarding the right of seamen to assert

a preferred. maritime lien. The question reserved, how-

ever, was only whether seamen could assert a preferred

maritime lien for a loss of benefits caused by an employer’s

failure to make trust fund contributions. 265 F.Supp. at

727-28. The court did not reserve the question whether sea-

men could assert a preferred maritime lien for a failure

to make contributions when no accompanying loss of bene-

fits was claimed. In reserving the question it did, the court

expressly relied on the distinction between contributions

that merely serve to fund benefits and the benefits them-

selves. Jd. at 727-29. Because the seamen here do not allege

any loss of benefits due to Coast Line’s failure to make the

trust fund contributions, we hold that they fall within the

rule established in Long Island Tankers. However, like the

court in that case, we reserve to another day the question

whether seamen may assert a preferred maritime lien for

a loss of benefits caused by an employer's failure to make

contributions.

Appellants challenge the present-day validity of the rea-

soning of Long [sland Tankers. In Long Island Tankers

the court relied heavily upon the Supreme Court's decision

A-6

in United States v. Embassy Restaurant, Inc. 359 U.S. 29,

79 S.Ct. 554, 3 L.Ed.2d 601 (1959). Embassy Restaurant

held that employer contributions to trust funds were not

entitled to priority over other debts as “wages . . . due to

workmen” under the Bankruptcy Act. See 359 U.S. at 35,

79 S.Ct. at 558. Claiming that Embassy Restaurant was

“overruled” by Congress in the Bankruptcy Reform Act,

Pub.L. No. 95-598 § 507, 92 Stat. 2549, 2583-85 (1978), ap-

pellants argue that Long Island Tankers is no longer good

law. We disagree.

In the Bankruptcy Reform Act, Congress placed “con-

tributions to employee benefit plans” immediately below

“wages, salaries, or commissions” on the hierarchy of debt

priorities in bankruptcy proceedings. See 11 U.S.C. $507

(a)(3), (4). Although the legislative history of 11 U.S.C.

§ 507(a) (4) states that it “overrules” Embassy Restaurant,

see S.Rep. No. 989, 95th Cong., 2nd Sess. 69 (1978), re-

printed im 1978 U.S.Code Cong. & Ad.News 5787, 5855, the

statement is not entirely accurate. In Embassy Restaurant,

the Court declined to treat contributions as wages; when

Congress adopted the Bankruptcy Reform Act, it, too, re-

fused to treat contributions as wages. Instead, it created

a completely new category, with a lesser priority than

wages, for such claims. Under the Bankruptcy Reform Act,

if there are insufficient funds to pay both wages and con-

tributiona, the wages are paid and the contributions are

not. This type of lesser priority for contributions was not

considered by the Embassy Court.

In any event, Congressional action in response to a

court’s interpretation of a statute may not necessarily in-

dicate disagreement with the court’s analysis. See generally

A-7

1A J. Sutherland, Statutes and Statutory Construction ch.

22 (C. Sands 4th ed. 1972) (discussing judicial treatment

of amendments to a statute). In fact, Congressional amend-

ment of a statute may mean that Congress agrees with the

court’s interpretation of the existing statute, but believes

that changed circumstances require amendment. All that

can be said with certainty about the fact that a statute has

been amended is that the amendment presumably changes

legal rights under the statute. See 1A J. Sutherland, supra,

§ 22.30, at 178-79. Although the Bankruptcy Reform Act

changed the priority afforded to claimants like those in

Embassy, Congress did not “overrule” Embassy or even

reject its reasoning. Long Island Tankers therefore sur-

vives as precedent that is binding upon us.

Cross’ affirmance of Long Island Tankers does not stand

alone. Other courts addressing the issue have held that em-

ployer contributions to trust funds created to benefit em-

ployees are not “wages of the crew” under 46 U.S.C. § 953.

Barnouw v. S.S. Ozark, 304 F.2d 717, 719-20 (5th Cir.1962) ;

Brandon v. 8.S. Denton, 302 F.2d 404, 415-16 (5th Cir.1962) ;

Irving Trust Co. v. The Golden Sail, 197 F.Supp. 777, 778-

79 (D.Or.1961). Moreover, a recent Supreme Court decision

defining “wages” under another maritime statute suggests

the vitality of the holding in Long Island Tankers.

In Morrison-Knudsen Construction Co. v. Director, Office

of Workers’ Compensation Programs, —— US. , 103

S.Ct. 2045, 2049, 76 L.E.d.2d 194 (1983), the Supreme Court

held that employer contributions to union health, welfare,

pensions, and training trust funds are not “wages” for the

purpose of computing compensation ‘nefits under section

A-8

2(13) of the Longshoremen’s and Harbor Workers’ Com-

pensation Act, 33 U.S.C. § 992(13) (1976). The Court em-

phasized that, because contributions are not “benefits with a

present value that can be readily converted into a cash

equivalent on the basis of their market values,” they should

not be treated as “wages.” 103 S.Ct. at 2049. Rather than

constituting benefits convertible to a cash equivalent, con-

tributions generally accumulate in trust funds, which, after

investment, finance future benefits that are non-convertible,

and may vary according to an employee’s needs. See id.;

Long Island Tankers, 265 F.Supp. at 727."

‘Our judgment in Duncanson-Harrelson Co. v. Director, Office of

Workers’ Compensation Programs, 686 F.2d 1336 (9th Cir.1982),

was vacated and remanded in light of the Supreme Court's decision

in Morrison-Knudsen. See 46] U.S. ——, 103 S.Ct. 2446, 2447, 77

L.Ed.2d 1329 (1983). We subsequently vacated the part of our

original decision which held that contributions are “wages” for

purposes of the Longshoremen’s and Harbor Workers’ Compensa-

tion Act. See 713 F.2d 462 (9th Cir.1983).

"In one opinion holding that contributions are “wages of the

crew” under section 953, In re Bulk Food Carriers, Inc., No. 3-78-

0187 ( Bankr.N.D.Cal.1980), a bankruptcy court distinguished Long

Island Tankers because the collective bargaining agreement before

the bankruptcy court did not explicitly state that individual sea-

men had no right, title, or interest in the employer's contributions.

Although some language in Long Island Tankers, see 265 F.Supp. at

726-27, and in decisions interpreting the debt priorities under the

pre-1978 Bankruptcy Act, see, ¢.g., Sulmeyer 0. Southern California

Pipe Trades Trust Fund, 301 F.2d 768 (9th Cir.1962), suggests that

the specific language of a collective bargaining agreement may

determine whether disputed items are wages or contributions, such

distinctions seem inappropriate given the reasoning in Morrison-

Knudsen. Morrison-Knudsen makes it clear that the determinative

factor is the general nature of contributions and not the specific

nature of collective bargaining provisions covering right or title to

the contributions.

A-9

Despite Morrison-Knudsen, appellants argue that, be-

cause contributions to trust funds are increasingly given by

employers to employees as a form of compensation, “wages

of the crew” should be read to include such contributions.

Appellants point out that some courts interpreting other

statutes have held that “wages” includes contributions be-

cause they are, in fact, part of the total compensation for

employment. See, e.g., W.W. Cross € Co. v. NLRB, 174 F.2d

875, 877-78 (1st Cir.1949) ; Inland Steel Co. v. NLRB, 170

F.2d 247, 251 (7th Cir.1948), cert. denied, 336 U.S. 960, 69

S.Ct. 887, 93 L.Ed. 1112 (1949); Dunlop v. Tremayne, 62

Cal.2d 427, 431, 398 P.2d 774, 777, 42 Cal.Rptr. 438, 441

(1965). Although we are sympathetic to appellants’ argu-

ment, we are not free to accept it here. Part of the reason

lies in certain limits that we perceive to exist with respect

to the function of statutory interpretation.

It has long been recognized that:

increasingly as a statute gains in age... its language

is called upon to deal with circumstances utterly uncon-

templated at the tiiue of its passage. Here the quest is

In addition, although we have given contributions to vacation

funds priority status as wages under the pre-1978 Bankruptcy Act

because the amount due an employee is fixed, see In re E.V. Moore

of California, Inc., 447 F.2d 1106 (9th Cir.), cert. denied sub. nom.

Bowman o. Bay Area Painters’ Trust Fund, 404 U.S. 995, 92 S.Ct.

535, 30 L.Ed.2d 547 (1971); Sulmeyer vo. Southern California Pipe

Trades Trust Fund, 301 F.2d 768 (9th Cir.1962), Long Island Tank-

ers refused to treat contributions to vacation trust funds as “wages

of the crew” under 46 U.S.C. §953; the Fifth Circuit also has

refused to do so. See Barnouw ov. S.S. Ozark, 304 F.2d 717, 719-20

(5th Cir.1962). Given this authority, the fact that one of the claims

is that Coast Line failed to make contributions to vacation trust

funds does not permit us to reach a different conclusion with re-

spect to those contributions.

A-10

not properly tor the sense originally intended by the

statute, for the sense sought originally to be put into

it, but rather for the sense which can be quarried out of

it in the light of the new situation.

Llewellyn, Remarks on the Theory of Appellate Decision

and the Rules or Canons about How Statutes are to be Con-

strued, 3 Vand.L.Rev. 395, 400 (1950) (emphasis in origi-

nal); see H. Hart & A. Sacks, The Legal Process 1410-11

(tent. ed. 1958) (unpublished manuscript). For this reason,

generally, a court interpreting a statute should:

ask itself not only what the legislation means ab-

stractly, or even on the basis of legislative history, but

also what it ought to mean in terms of the needs and

goals of our present day society. This approach is re-

quired by the insuperable difficulties of readjusting

old legislation by the legislative process and by the

fact that it is obviously impossible to secure an om-

niscient legislature.

Phelps, Factors Influencing Judges in Interpreting Stat-

utes, 3 Vand.L.Rev. 456, 469 (1950); see In re Grand Jury

Subpoena of Persico, 522 F.2d 41, 64-65 (2d Cir.1975) ; see

also G. Calabresi, A Common Law in the Age of Statutes

163-66 (1982) (suggesting that courts explicitly turn to

common law principles to update statutes); Note, Jntent,

Clear Statements, and the Common Law: Statutory Inter-

pretation in the Supreme Court, 95 Harv.L.Rev. 892, 913

(1982) (proposing a “common law model of statutory inter-

pretation” that would allow courts to “view statutes as

statements of consensually agreed upon principles”).

Despite the general validity of this approach to statutory

interpretation, the judiciary is not the proper branch of

A-11

government to npdate complex statutes when legislative

decisionmaking is necessary. For example, in the case of the

Bankruptcy Reform Act’s creation of a new intermediate

level of debt priorities covering contributions, Congress

was the only branch of government capable of making the

necessary change; courts could only decide whether “wages”

includes contributions and could not create a new, separate,

and lesser priority category. See G. Calabresi, supra, at

158-62 (recognizing inherent difficulties in courts’ updating

of detailed and technica] statutes) ; G. Gilmore, The Ages of

American Law 96 (1977) (“[T]Jhe more tightly a statute

was drafted originally, the more difficult it becomes to ad-

just the statute to changing conditions without legislative

revision.” (footnote omitted)). Here, as with the bank-

ruptcy laws, in order to bring the Ship Mortgage Act up to

date, it may be necessary to create a new, separate, and

lesser priority category for contributions. That, as we have

already said, we cannot do.

We must reject appellants’ argument for another reason,

as well. The Supreme Court recently refused to define

“wages” as including contributions in another maritime

act despite its recognition of the changes that have occurred

in the methods of paying compensation. See Morrison-

Knudsen, 103 S.Ct. at 2051-53. It did so partly because the

legislative history and administrative practice under the

Longshoremen’s and Harbor Workers’ Compensation Act

did not reflect an intention to include contributions. See id.

at 2050-51. In light of this reasoning, we do not believe that

we are free to ignore the judicial history of the Ship Mort-

A-12

gage Act and Long Island Tankers simply because of those

same changes.’

In conclusion, Ninth Circuit precedent and other persua-

sive authority, as well as the complexities implicated by a

judicial restructuring of lien priorities, compel the conclu-

sion that contributions, at least in the absence of any actual

loss of benefits, are not “wages of the crew” under 46 U.S.C.

§ 953 and therefore cannot serve as the basis for the asser-

tion of a preferred maritime lien.

III

Although we are not free to afford appellants the relief

they seek, they have offered compelling reasons why em-

ployer contributions to trust funds should be afforded some

form of priority treatment for maritime lien purposes.

Demands for contributions to trust funds providing bene-

fits to employees increasingly serve as a substitute for wage

demands in collective bargaining negotiations. See S.Rep.

No. 989, 95th Cong., 2d Sess. 69 (1978), reprinted in 1978

U.S.Code Cong. & Ad.News 5787, 5855; H.Rep. No. 533,

93d Cong., 2nd Sess. 2-3 (1974), reprinted in 1974 U.S.Code

Cong. & Ad.News 4639, 4640-41; see also Employee Retire-

ment Income Security Act, Pub.L. No. 93-406, 88 Stat. 829

(1974) (extensively regulating the increasing number of

trust funds created pursuant to collective bargaining agree-

is no long history of administrative interpretation for this court to

rely upon, and because 46 U.S.C. § 953 has not been amended

since its enactment in 1920. Such distinctions cannot be determi-

native, however. when there is clear precedent in this circuit that

is contrary to appellants’ proposed interpretation.

A-13

ments). For this reason alone, contributions to seamen’s

trust funds would warrant some form of priority treatment

similar to that afforded “wages of the crew.” Moreover,

affording priority treatment to trust fund contributions

would further the purpose of the preferred maritime lien—

to protect the compensation given seamen. See S.Rep. No.

573, 66th Cong., 2nd Sess. 9 (1920).* Finally, there is some.

what of an anomaly in the fact that money given by an

employer directly to an employee to spend on benefits is

treated as “wages,” but the same funds, if given to a trust

fund that bestows identical benefits upon the employee, are

not. See Duncanson-Harrelson Co. v. Director, Office of

Workers’ Compensation Programs. 686 F.2d 1336, 1345 (9th

Cir. 1982), vacated and remanaed, 461 U.S. ——, 103 S.Ct.

2446, 77 L.F.d.2d 1329 (1983).

As these arguments strongly suggest, Congress may, as

it did in enacting the Bankruptcy Reform Act, wish to “rec-

ognize[] the realities of labor contract negotiations, where

fringe benefits may be substituted for wage demands.” S.

Rep. No. 989, 95th Cong., 2d Sess. 69 (1978), reprinted in

1978 U.S.Code Cong. & Ad.News 5787, 5855.° Significant

‘Wages of seamen are given such a protected status that the

owner of a vessel delinquent in paying wages is liable for double

the amount owed to the seaman. See 46 U.S.C. § 596 (1976). That

penalty payment has itself long been treated as “wages of the crew”

for the purposes of the assertion of a preferred maritime lien under

46 U.S.C. § 953. See, e.g., Collie v. Fergusson, 281 U.S. 52, 54, 50

S.Ct. 188, 190, 74 L.Ed. 606( 1930); Gerber o. Spencer, 278 F. 856,

889 (9th Cir.1922).

‘In making this suggestion, we recognize that “[o]ne of the facts

of legislative life .. . is that getting a statute enacted in the first

place is much easier than getting the statute revisec. so that it will

make sense in the light of changed conditions.” GC. Gilmore, supra,

at 95; see Phelps, supra, at 469.

A-14

changes in economic conditions suggest the inadequacies

of the present debt priorities in the Ship Mortgage Act—

priorities that have not been changed since the Act was

originally adopted in 1920. Amending 46 U.S.C. § 953 to

bring the lien priorities in line with modern economic real-

ity would further the purpose of the section and avoid

anomalous results.

IV

We conclude that, at least absent any loss of benefits,

seamen may not assert a preferred maritime lien for ‘“‘wages

of the crew” under 46 U.S.C. 4 953 based on an employer’s

failure to make contributions to trust funds. Therefore, the

district court’s denial of appellants’ motion to intervene of

right is

AFFIRMED.

A-15

Appendix B

United States Court of Appeals

For the Ninth Circuit

No. 82-4717

(Northern District, California)

West Winds, Inc., Nautical Electric, Inc., and

Schou-Gallis, Co., Ltd.,

Plaintiffs- Appellees,

and

R. Rothmann, J. Wagner, A. Patterson,

G. Valentine, J. O’Laughlan, S. Veal, et al.,

Applicants-in-Intervention-Appellants,

Vs.

M. V. Resolute, and M.V. Pvt Peters, in rem, and

Coast Line Associates, in personam,

Defendants-Appellees,

and

Coast Line Associates,

Claimant-Appellee.

[Filed Feb. 10, 1984]

ORDER

Before: ALARCON, CANBY, and REINHARDT,

Circuit Judges

The panei as constituted has voted unanimously to deny

the petition for rehearing and to reject the suggestion for

rehearing en banc.

The full court has been advised of the suggestion for en

banc rehearing, and no judge of the court has requested

a vote on the suggestion. Fed. R. App. P. 35(b).

The petition for rehearing is denied and the suggestion

for rehearing en banc is rejected.

A-16

Appendix ©

United States District Court

Northern District of California

C 82-2753 SAW

West Winds Incorporated, et ai.,

Plaintiffs,

vs.

M/V Resolute, et al.,

Defendants.

MEMORANDUM AND ORDER

Brady-Hamilton Stevedore Co. moves to intervene in this

action pursuant to Fed. R. Civ. Pro. 24(a). No party op-

poses this motion. Because their complaint in intervention

asserts that they hold a maritime lien on the M.V. Resolute

pursuant to 46 U.S.C. $971, their motion must be granted.

In addition, Brady-Hamilton Stevedore Co. moves the

Court to admit Gordon T. Carey, Jr., a member in good

standing of the Oregon State Bar, and who has been

admitted to the United States District Court for the

State of Oregon, to appear pro hac vice in this action. No

party opposes this motion. The Court grants this motion

pursuant to Northern District of California Local Rule

110-2(b).

R. Rothmann, J. Wagner, A. Peterson, G. Valentine, J.

O’Loughlan, S. Veal, B. Peter, S. Bahnsen, J. Alavekios,

T. Curtis, J. Fernandez, K. Forister, W. Bliss, L. Hathon,

S. DePersis, D. Diaz, C. Kelly, E. Reed, W. E. Johnson,

S. E. Littleford, R. B. Thomas, J. Walker, R. White, and

Masters, Mates and Pilots Trust Funds also move to inter-

vene in this action. J. Fernandez asserts in support of his

A-17

motion that defendant Coastline Associates (hereinafter

“defendant”) owes him unpaid wages as a result of his

serving as a seaman on the M.V. Resolute. This claim, if

true, would establish a maritime lien against the M.V.

Resolute pursuant to 46 U.S.C. § 953. Central States v. Old

Security Life Insur. Co., 600 F.2d 671, 679 (7th Cir. 1979)

(nonconclusory allegations supporting a motion to inter-

vene to be taken as true). J. Fernandez must therefore be

allowed to intervene in this action to assert his claim

against the M.V. Resolute.

Masters, Mates and Pilots Trust Funds, and the other

twenty-two seatnen listed above, however, fail to allege

facts sufficient to establish a maritime lien against the M.V.

Resolute. They allege that as a result of defendant’s em-

ployment of these seamen, defendant owes contributions to

various union trust funds pursuant to a collective bargain-

ing agreement between defendant and the International

Organization of Masters, Mates and Pilots. This claim does

not entitle either the seamen or the trust funds to a pre-

ferred maritime lien against the M.V. Resolute. See 46

U.S.C. § 953; Long Island Tankers Corp. v. S.S. Kaimana,

256 F.Supp. 723, 728-29 (N.D. Cal. 1967). Consequently,

they do not claim “an interest relating to the property or

transaction which is the subject of the action .. .” Fed. R.

Civ. Pro. 24(a). Their motion to intervene must therefore

be denied. Accordingly,

IT IS HEREBY ORDERED that Brady-Hamilton Ste-

vedore Company’s motion to intervene is granted.

IT IS HEREBY FURTHER ORDERED that Brady-

Hamilton Stevedore Company’s motion to admit Gordon

T. Carey to appear pro hac vice is granted.

A-18

IT IS HEREBY FURTHER ORDERED that the motion

of J. Fernandez to intervene is granted.’

IT IS HEREBY FURTHER ORDERED that the mo-

tions of R. Rothmann, J. Wagner, A. Peterson, G. Valen-

tine, J. O’Loughlan, S. Veal, B. Peter, S. Bahnsen, J.

Alavekios, T. Curtis, K. Forister, W. Bliss, L. Hathon, S.

DePersis, D. Diaz, C. Kelly, E. Reed, W. E. Johnson, S. E.

Littleford, R. B. Thomas, J. Walker, R. White, and Masters,

Mates and Pilots Trust Funds to intervene are denied.

Dated: November 1, 1982

/s/Weigel

Judge

*Fernandez’ motion was granted only to the extent it dealt with

wages directly due him. Although the District Court did not spe-

of his motion, its denial of the

motions of the other seamen and the Trust Funds was obviously

t to embrace Fernandez’ motion as far as concerned contribu-

A-19

Appendix D

46 U.S.C. § 953.

Preferred maritime lien; priorities; other liens

(a) When used hereinafter in this chapter, the term “pre-

ferred maritime lien” means (1) a lien arising prior in time

to the recording and indorsement of a preferred mortgage

in accordance with the provisions of this chapter; or (2) a

lien for damages arising out of tort, for wages of a steve-

dore when employed directly by the owner, operator, mas-

ter, ship’s husband, or agent of the vessel, for wages of the

crew of the vessel, for general average, and for salvage,

including contract salvage.

(b) Upon the sale of any mortgaged vessel by order of a

district court of the United States in any suit in rem in

admiralty for the enforcement of a preferred mortgage lien

thereon, all preexisting claims in the vessel, including any

possessory common-law lien of which a lienor is deprived

under the provisions of section 952 of this title, shall be

held terminated and shall thereafter attach, in like amount

and in accordance with their respective priorities, to the

proceeds of the sale; except that the preferred mortgage lien

shall have priority over all claims against the vessel, except

(1) preferred maritime liens, and (2) expenses and fees

allowed and costs taxed, by the court.

June 5, 1920, c. 250, § 30, Subsec. M, 41 Stat. 1004.