Amicus Curiae Brief — Harbor Tug & Barge Co. v. Papai

‘% Supreme Cours

y) FIL . i 7

YUL 26

No. 95-1621 | ; wns

In The

Supreme Court of the United States

October term, 1995

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HARBOR TUG AND BARGE COMPANY, INC.,

Petitioner,

JOHN PAPAI AND JOANNA PAPAL

Respondents.

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On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

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MOTION FOR LEAVE TO FILE AND

BRIEF OF INDUSTRIAL INDEMNITY COMPANY

AS AMICUS CURIAE IN SUPPORT

OF THE PETITION FOR CERTIORARI

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Rocer A. Levy

Counsel of Record

]. Marx Fo ey

LAUGHLIN, Fatso, Levy & Moresi

Two Embarcadero Center, Fifth Floor

San Francisco, California 94111

(415) 781-6676

ooo OOOO

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

MOTION FOR LEAVE TO FILE BRIEF

OF INDUSTRIAL INDEMNITY COMPANY

AS AMICUS CURIAE IN SUPPORT

OF THE PETITION FOR CERTIORARI

Industrial Indemnity Company respectfully move for

leave to file the attached brief amicus curiae in support of

the petition for certiorari in this case. The consent of the

attorney for petitioners has been obtained. The consent of

the attorney for respondent was requested but refused.

Industrial Indemnity Company is a major underwrit-

er of employer risk insurance in west coast markets.

Among other things, it insures state workers’ compensa-

tion risks, United States Longshore and Harbor Workers’

Compensation Act! (hereinafter “LHWCA”) risks, and

the various employer risks attendant to the Jones Act?

and the general maritime law of the United States. Indus-

trial Indemnity Company has a strong interest in promot-

ing the swift, fair, and consistent resolution of employee

claims brought against its insured employers.

This case presents two questions, the answers to

which are determinative of employee status vis-a-vis the

Jones Act and the LHWCA. The first concerns application

of ‘mutual exclusivity’ to employee injury claims made

under both the Jones Act and the LHWCA. The second

concerns the ‘fleet seaman’ doctrine. The Ninth Circuit

answered both in its own unique way. In short, the Ninth

Circuit held that a prior determination of employee status

made by an Administrative Law Judge in an LHWCA

1 33 U.S.C. §§ 901 et seq.

2 46 U.S.C. § 688.

trial is not binding on the parties in subsequent litigation.

The Court also held that, in determining seaman status,

the trier of fact shall examine, if necessary, the

employee’s work for any number of pre-injury

employers. In so holding, the Ninth Circuit embarked, in

the first instance, on a course reciprocal from that taken

by this Court and the Fifth Circuit; and, in the second

instance, on a course tangential to that taken by this

Court just last year.

We submit that the Ninth Circuit has strayed well off-

course in both instances. In electing to stand into danger,

it has declined to follow well reasoned decisions of the

Second and Fifth Circuits . It has relegated administrative

decisions to a backwater existence. It has also suggested

that seamen now carry their status on their backs, regard-

less of the nature of their employment at the time of

injury.

These issues are important to amicus curiae because

they affect both underwriting and claims handling prac-

tice for hundreds of its insureds. At best, maritime

employers will now be forced to litigate these claims in

two forums with the full knowledge that claimants get a

free swing under the LHWCA. This can only increase the

cost per claim. At worst, all employers in the Ninth

Circuit will be forced to purchase insurance that will

respond to Jones Act claims, simply out of fear that they

might unknowingly hire a seaman. Or, on the other hand,

employers will face a different liability if they refuse to

hire seamen.

The course taken by the Ninth Circuit in this case

will increase the cost of doing business for both under-

writers and employers affected by its decision. At the

same time, the Ninth Circuit has invoked a rule that has

no effect on the injured worker's net recovery. The Ninth

Circuit’s course is counterproductive, wasteful of judicial

resources and contrary to law.

Amicus curiae therefore submits that the Court should

grant the petition and resolve both the intercircuit con-

flict and the conflict with decisions of this Court by

adopting the approach of the Second and Fifth Circuits

regarding the preclusive effect of LHWCA proceedings

and by reaffirming this Court’s seaman status test

announced just last year.

Respectfully submitted,

Rocer A. Levy

Counsel of Record

]. Marx Fotey

LAUGHLIN, Faso, Levy & Mores

Two Embarcadero Center, Fifth Floor

San Francisco, California 94111

(415) 781-6676

July 26, 1996

TABLE OF CONTENTS

Page

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Bbewass GE Aamias Cartes onc ccc ccccccccccccescccess 1

kg ge ee 1

Reasons for Granting the Writ..................... 3

Il. This Court Should Act to Preserve the Mutual

Exclusivity of the Respective Remedial Regimes

and resolve the Conflict Between the Circuits. .

Il. Seaman Status is not Portable .................

SS SEEPS P RO EID LE RE POEL LOE OTE OOD

ii

TABLE OF CITATIONS

Cases Crrep:

Barrett v. U.S.A. Chevron, Inc., 781 F.2d 1067 (5th

Ss Ce Cs SD cv ecccccccecsccssessetdesesecees 7

Chandris, Inc. v. Latsis, __ U.S. __, 115 S.Ct. 2172

es cccccccnccennescace seen seeansenteneneedoe nse 7

SPEED s weccecccctcoccccccsnccevecsscccececseusedoess 4

McDermott International, Inc., v. Wilander, 498 U.S.

Se Ge cnkkcdecdncebnansaculeesdcuesabaceumeatd 2

Offshore Co. v. Robison, 266 F.2d 769 (5th Cir. 1959) ..... 7

Sharp v. Johnson Bros. Corp., 973 F.2d 423 (5th Cir.

POEs be ce ccccccecccscocedscescousdscesesenesoceces 4

Southwest Marine, Inc., v. Gizoni, 502 U.S. 81 (1991) ...2, 7

Statutes Crrep:

33 U.S.C. §§ 901 et seq. (LHWCA)............... passim

SD DK, © Te occ vccdcvccevedovccsceseseensene 2

BP Bie © Cv eecescccccccsevectcesnschetetckepnest 5

A PT ree 5

46 U.S.C. § 688 (Jones Act) ...... 2.2.6.6 c cee eee. passim

BRIEF OF INDUSTRIAL INDEMNITY COMPANY

AS AMICUS CURIAE IN SUPPORT OF THE

PETITION FOR CERTIORARI

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INTEREST OF THE AMICUS CURIAE

The interest of the amicus curiae is as set forth in the

motion accompanying this brief.

°

STATEMENT OF THE CASE

This case arises out of a maritime personal injury.

John Papai was a day worker hired by Petitioner Harbor

Tug & Barge Co. to work for one day painting its tug

POINT BARROW while she lay alongside at Alameda,

California. Mr. Papai was injured when he fell from a

ladder while painting the vessel.' He subsequently filed a

claim with the United States Department of Labor, Office

of Worker Compensation Programs, seeking benefits

available under the United States Longshore and Harbor

Workers’ Compensation Act? (hereinafter “LHWCA”).

Mr. Papai also decided to seek recovery for his injuries

1 See the opinion below, Papai v. Harbor Tug & Barge Co., 67

F.3d 203 (9th Cir. 1995) and Decision and Order of the United

States Department of Labor, August 27, 1992, Case No. 92-

LHC-403, reprinted as Appendix G to Petition for Writ of

Certiorari (Papai’s LHWCA case) (Pet. App. G).

2 33 U.S.C. §§ 901 et seq.

under the Jones Act® and the general maritime law* by

filing suit in the United States District Court. In order to

pursue these seaman remedies, Mr. Papai had to claim

that he was, in fact, a seaman.

As has been repeatedly noted by this Court, recently

in McDermott International, Inc., v. Wilander,5 (Wilander),

and in Southwest Marine, Inc., v. Gizoni,© (Gizoni), and

most recently in Chandris, Inc. v. Latsis,” (Latsis), and as

was intended by Congress when it excluded masters and

members of the crew from coverage under the LHWCA,*

the two remedial schemes pursued by Mr. Papai are

mutually exclusive. The problems herein arose when,

after an LHWCA trial before an Administrative Law

Judge, it was determined that Mr. Papai was not a sea-

man,® and therefore eligible for LHWCA benefits. In Mr.

Papai’s companion District Court case, Judge Legge

reached the same conclusion and dismissed Mr. Papai’s

seaman causes of action. The Ninth Circuit, in reversing

the District Court, reinstated Mr. Papai’s seaman causes.

In the interim, Mr. Papai received LHWCA benefits and

the decision of the Administrative Law Judge became

3 46 U.S.C. § 688.

* These include claims for maintenance and cure (benefits

paid regardless of fault) and claims against PT. BARROW and

her owner for unseaworthiness.

5 498 U.S. 337 (1991).

® 502 U.S. 81 (1991).

7 ___ US. __, 115 S.Ct. 2172 (1995).

8 33 U.S.C. § 902(3)(g).

% Pet.App. G, pp. 34a-37a.

final. To date, there has been no appeal from the Decision

of the Administrative Law Judge.

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REASONS FOR GRANTING THE WRIT

I. THIS COURT SHOULD ACT TO PRESERVE THE

MUTUAL EXCLUSIVITY OF THE RESPECTIVE

REMEDIAL REGIMES AND RESOLVE THE CON-

FLICT BETWEEN THE CIRCUITS

Both the Jones Act’? and the LHWCA are remedial

regimes designed to affect compensation for injured

workers. When coupled with the various state workers’

compensation programs, they provide coverage for

employees ashore, at sea and while on the waterfront. As

was noted most recently by this Court in Latsis,"' Jones

Act remedies and the remedies available under the

LHWCA are mutually exclusive. One can be a Jones Act

seaman or one can be a maritime worker covered under

LHWCA, but not both. The question presented herein is

“what event triggers the mutual exclusivity between

these regimes?”

The Ninth Circuit has approached this issue with

20-20 hindsight. That is, mutual exclusivity is triggered

10 Hereinafter, the term “Jones Act” will be used

generically, describing the panoply of remedies available to

seamen. These include the payment of maintenance, cure and

unearned wages, remedies available regardless of fault, and the

fault based civil remedies of negligence and unseaworthiness.

1! “As the Court has stated on several occasions, the Jones

Act and the LHWA are mutually exclusive compensation

regimes...” at 115 S.Ct. 2183.

only after a Court of competent (general) jurisdiction

makes a final determination of status. All else is prelude.

The Ninth Circuit's facile response to this issue is that

there is mutual exclusivity as long as there is no double

recovery. In other words, as long as Mr. Papai’s potential

Jones Act verdict can be reduced by the LHWCA benefits

previously paid, all is well. Amicus curiae would urge this

Court to grant the writ in order to adopt the views

expressed by the Fifth and Second Circuits on this issue.

In Sharp v. Johnson Bros. Corp.'? and in Hagens v. United

Fruit Co.,3 both Circuits concluded that a determination

by an Administrative Law Judge of coverage under the

LHWCA is dispositive of the claimant's status as a non-

seaman and that such determination precludes the pur-

suit of a Jones Act case. This is a more reasoned approach

to the issue. It gives effect to the administrative proceed-

ings and promotes judicial economy. Further, it provides

incentive to the parties to the LHWCA proceeding to

bring the matter to conclusion in a timely manner.

It is doubtful that Congress considered mutual exclu-

sivity to be reducible to an arithmetic calculation. Rather,

it is more likely that Congress was mindful of the trade-

off made between employer and employee in the

LHWCA and virtually every other workers’ compensa-

tion regime. Maritime workers covered by the LHWCA

were granted no-fault benefits in exchange for bestowing

on employers immunity from suits for damages. The

Ninth Circuit’s opinion below in effect allows a claimant

12 973 F.2d 423 (5th Cir. 1992).

3 135 F.2d 843 (2d Cir. 1943).

to collect no-fault compensation while pursuing a suit for

damages.

Amicus curiae is in the business of insuring employers

for risks imposed by the compensation regimes discussed

above. It has, through its insurance policies, contractual

relationships with its insureds. Its business livelihood

depends, in part, on its ability to administer and adjust

employee injury claims in an efficient and economic man-

ner. This ability is adversely impacted by the rule

imposed by the Ninth Circuit in this case. This rule

imposes unnecessary overhead on the compensation sys-

tem, an obvious example of which is the cost associated

with Mr. Papai’s Jones Act claim. In order to protect their

insureds, amicus curiae must litigate all Ninth Circuit

LHWCA claims that present the possibility of a subse-

quent Jones Act case. Below, the employer and employee

herein were forced to take opposite positions in each

forum, simply in order to put status in issue. This is

wasteful.'* It is far more sensible to accord finality to a

determination of LHWCA coverage as made by the

Administrative Law Judge.

Presently, the LHWCA provides a maximum weekly

compensation rate of $782.44.!5 In practice, LHWCA car-

riers (amicus curiae) and employers often reach lump sum

settlement agreements with LHWCA claimants.’© With

this high compensation rate, these settlements frequently

* As the Appendices to the Petition reflect, both employer

and employee were forced to retain different counsel, from

different firms, for the LHWCA and Jones Act actions.

1S 33 U.S.C. § 906.

16 33 U.S.C. § 908(i).

involve large sums. It is now quite difficult to secure such

settlements in the Ninth Circuit, as any such payment

would not produce a final disposition of all claims

between the parties. In fact, such a settlement would have

the opposite effect. It would fund the Jones Act litigation.

Further, LHWCA employers are frequently insured by

multiple carriers, with different carriers on the LHWCA

and Jones Act risks. While application of credit may be as

routine as the Ninth Circuit suggests, reimbursement

between the carriers may not be. Rather, this duality of

insurance fosters conflict, dispute and even more litiga-

tion, rather than automatic reimbursement. What sounds

simple in theory is actually quite complex in practice.

Lastly, the Ninth Circuit has created a situation

where a bona-fide injured employee could lose on the

status issue in both the civil and LHWCA arenas and

thereby be deprived of any benefits for a clear work

related injury. In order to avoid this harsh result, certain

maritime workers will now file claims in yet a third

forum seeking state workers’ compensation benefits.'7

This will further increase the administrative and judicial

burden as well as the system overhead.

Il. SEAMAN STATUS IS NOT PORTABLE

Amicus curiae submit that the second prong of the

opinion below is sufficient, unto itself, to warrant grant-

ing the Petition. As noted by Judge Poole in his dissent in

the opinion below, the Ninth Circuit has modified this

17 In many cases, this will result in the retention of a third

set of lawyers in the case.

Court’s test for seaman status, as enunciated in Gizoni

and Latsis, to the extent that it no longer requires “an

employment related connection to a vessel in naviga-

tion.” As matters now stand, all that is required is a ‘prior

employment related connection to a vessel.’ This expan-

sion of the fleet seaman doctrine to include, within the

‘fleet’, vessels owned by prior, different employers has

the potential of exposing land-locked employers to Jones

Act liability.

The ‘fleet seaman’ doctrine finds its genesis in the

river trade of the Midwest, where short voyages allowed

owners to assign seaman to different tugs and towboats

on an almost daily basis. In order to avoid the harshness

of the “more or less permanent connection to a vessel in

navigation” test set forth in Offshore Co. v. Robison,’* the

Courts fashioned the fleet seaman test to accommodate

seamen who owed an allegiance to a fleet of vessels

rather than to one particular vessel. See Guidry v. Conti-

nental Oil Co.'* and Barrett v. U.S.A. Chevron, Inc.2° How-

ever, in each instance, the ‘fleet’ was under common

ownership or control.

Now, for the first time, the Ninth Circuit instructs

that plaintiff‘s employment with prior employers is

relevant to the seaman status test. The ‘fleet’ has

been redefined to include all the vessels owned by all

the different employers that hire workers from the

employee’s union. This leads to the conclusion that,

8 266 F.2d 769 (Sth Cir. 1959).

'% 640 F.2d 523 (5th Cir. 1981).

20 781 F.2d 1067 (5th Cir. 1986) (en banc).

unless a new employment situation amounts to a perma-

nent change of status, the seaman carries his seaman

status on his back from job to job. This regardless of the

nature of work performed for the new employer.

Around the turn of the century, employers and

employees bargained away certain rights in order to

bring about workers’ compensation regimes in most

states. Among the rights bargained away was the

employees’ right to sue the employer for damages for

work related bodily injury. In return, employers agreed to

compensate employees for work-related injuries, regard-

less of fault. The decision of the Ninth Circuit in this case

undermines the very core of this bargain, by restoring the

right to sue to certain employees. This new group of

favored employees are those who were once seamen and

who continue to work out of the same union.

Under this new ‘fleet seaman’ test, there is no

requirement that the employee have a work-related con-

nection to a vessel for his current employment. For exam-

ple, under the Ninth Circuit analysis, Mr. Papai would

still be eligible for seaman status if he had been employed

by a sub-contractor hired by Harbor Tug & Barge Co. to

paint PT. BARROW. To continue the example, if the paint-

ing sub-contractor hires day workers out of Mr. Papai’s

union, Mr. Papai would be eligible for Jones Act status.

The painting sub-contractor need not own or control a

single vessel, for, under the new Ninth Circuit rule, it

would be deemed to have some undefined form of own-

ership or control of the various vessels belonging to the

other employers that hire out of the same union.

Amicus curiae submit that this unwarranted expan-

sion of the fleet seaman doctrine can and will produce

harsh results. Employers will not hire seamen for short

duration non-seafaring jobs, jobs exactly like the one Mr.

Papai was doing for Harbor Tug & Barge Co., simply

because they will be unwilling to risk exposure to claims

in multiple forums. In this day and age, with the Ameri-

can Merchant Marine in decline and with the foreign

flagging and crewing of American vessels, the maritime

industry does not need a further burden to employment.

Nor does it deserve increased liability exposure.

¢

CONCLUSION

The Ninth Circuit, with its opinion below, is on a

different tack, sailing away from the rest of the fleet. For

the reasons set forth above, this Court should grant Har-

bor Tug & Barge Co.’s Petition for a Writ of Certiorari.

Dated: July 25, 1996

Respectfully Submitted:

Rocer A. Levy

Counsel of Record

J. Mark Fotey

LAUGHLIN, Fatso, Levy & Mores

Two Embarcadero Center,

Fifth Floor

San Francisco, California 94111

(415) 781-6676

Attorneys for Amicus Curiae