Respondents Brief — Metropolitan Stevedore Co. v. Rambo

Supreme Coust. U.S.

(, D F I L E D

\ FEB 11 1997

No. 96-272 CLERK

In The

Supreme Court of the United States

October Term, 1996

°

METROPOLITAN STEVEDORE COMPANY,

Petitioner,

Vv.

JOHN RAMBO and DIRECTOR, OFFICE OF WORKERS’

COMPENSATION PROGRAMS, UNITED STATES

DEPARTMENT OF LABOR,

Respondents.

+

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

. = +

RESPONDENT RAMBO’S BRIEF ON THE MERITS

>

THomas J. Perry Il

Counsel of Record

Tuomas J. Prerry

: PrerRY AND MoorHEAD

Attorneys at Law

301 North Avalon Boulevard

, Calif. 90744-5888

(714) 636-2970

Attorneys for Respondent John Rambo

Seen N Oe CALL COURT (ait) 3881

BE

QUESTIONS PRESENTED

1. Is a nominal continuing award an appropriate mecha-

nism under the Longshore and Harbor Workers’ Compen-

sation Act to incorporate the possible future effects of a

medical disability where an injured employee's actual

earnings do not fairly and reasonably represent the

employee’s wage-earning capacity?

2. If a nominal continuing award is authorized by the

Act, was the decision of the Court of Appeals in this case

to remand for entry of such an award within its statutory

authority?

TABLE OF CONTENTS TABLE OF AUTHORITIES

Page Page

QUESTIONS PRESENTED .....--.--.0+000ee0e0 000 i | Cases |

STATUTORY PROVISIONS INVOLVED.........-+-- 1 ; Avondale Shipyards, Inc. v. Vinson, 632 F.2d 1117

RE 22

STATUDGIINT ...<<ccocesscddcusscscpacseeasvaseee 2 eich ilies Cites af Weeks

v. Director, ce orkers’ Compensation

SUMMARY OF ARGUMENT........---+++++00e008: 6 Programs, 41 F.3d 1555 (D.C. Cir. 1994). at 25

ARGUMENT .......--s0eeeeeeeeeeeeeeeeeeeereeeeee 9 Chevron, U.S.A., Inc. v. Natural Resources Defense

A. WHERE THE ACTUAL, POST-INJURY EARN- Connell. Ine., 467 UD. GO7 (ISBE)... cc ccccccccccess 21

INGS OF AN INJURED EMPLOYEE DO NOT Demarest v. Manspeaker, 498 U.S.

FAIRLY AND REASONABLY REPRESENT 608, 111 S. Ct. 599 a. eet. os

THE EMPLOYEE’S WAGE-EARNING CAPAC- Bi! i

ITY, A CONTINUING NOMIN AL AWARD IS Devillier v. National Steel Shipbuilding Co., 10 BRBS

A REASONABLE AND JUST MECHANISM ST cbeseeeeeekeGGheenesoucecocccceccccces 23

TO FIX THE WAGE-EARNING CAPACITY OF Estate of Cowart v. Ni i

THE EMPLOYEE WITH DUE REGARD FOR (1992)....... tenn a, rreaane 13

ae TORS SET FORTH BY CONGRESS IN nsnenteveasenersntenssserersersersrete seer.

53 U.S.C. COBMA).....cecccccescsnwcccseseness 9 “s - _—. “yeti Corporation, 640 F.2d 769

B. A CONTINUING NOMINAL AWARD IS CON- otal a hprtagapaaaags 5, 6, 10, 11, 15

SISTENT WITH THE INTENT OF CONGRESS Janusziewicz v. Sun Shipbuilding & Dry Dock Co.,

AS EXPRESSED IN THE LANGUAGE AND 677 F.2d 286 (3d Cir. 1982) ..... 2.6... c ce cccecnnes 22

LEGISLATIVE HISTORY OF THE LHWCA LaFaille v. Benefits Revier

AND IS NOT IN CONFLICT WITH THE LIM- Cir. 1989) : 20> pendinmuhnmpeleadany 5 2

ITATIONS PERIOD OF 33 U.S.C. 922 ......-- 13 sini tie man ; * of oi eee tah » aI

ropolitan St lore Co. v. Rambo, 515 U.S. ___L

C. IN THIS CASE THE COURT OF APPEALS 115 S. Ct. 2144, 132 L. Ed. 2d 226 (1995).... 3, 10, 13

PROPERLY CONDUCTED AN INDEPEN- 7 9,

DENT REVIEW OF THE RECORD TO DETER- Rambo v. Director, Office of Workers’ Compensation

MINE IF THE ALJ’S DECISION TO | Programs, 81 F.3d 840 (9th Cir. 1996)...... 5, 6, 12, 22

TERMINATE BENEFITS WAS SUPPORTED BP? | Randal

SUBSTANTIAL EVIDENCE ......+-+++ +0000 22 | ok ott

D. THE DECISION OF THE COURT OF rr

APPEALS TO REMAND FOR ENTRY OF A < ni heaton nds dteteaictan

APRA Te er Taras svnossrsreessneceseseeesesseee 22

CISE OF ITS AC THORITY PURSUANT TO 33 Todd Shipyards v. Allan, 66 F.2d 399 (9th Cir. 1982) ..... 6

U.S.C. G21(C) oc ccccccccccccivccceeesecsecess 24 Young v. Todd Pacific Shipyards Corp., 17 BRBS 201

CONCLUSION ...cccccccccccsmccsecccsseccsedeess 25 EE Ve eee TTT TTT TTTT TTT CLT TTT TTT ee 4

iv

TABLE OF AUTHORITIES - Continued

Page

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Orner AUTHORITIES:

H.R. Rep. No. 1945, 75th Cong. 3d Sess. 5-6 (1938) ..7, 18

S. Rep. No. 1988, 75th Cong. 3d Sess. 5-6 (1938) ..7, 18

i iil aia

1

STATUTORY PROVISIONS INVOLVED

Section 8(h) of the Longshore and Harbor Workers’

Compensation Act (LHWCA or Longshore Act) provides

as follows:

(h) The wage earning capacity of an injured

employee in cases of partial disability under

subdivision (c)(21) of this section or under sub-

division (e) of this section shall be determined

by his actual earnings if such actual earnings

fairly and reasonably represent his wage-earn-

ing capacity: Provided, however, That if the

employee has no actual earnings or his actual

earnings do not fairly and reasonably represent

his wage-earning capacity, the deputy commis-

sioner may, in the interest of justice, fix such

wage-earning capacity as shall be reasonable,

having due regard to the nature of his injury, the

degree of physical impairment, his usual

employment, and any other factors or circum-

stances in the case which may affect his capacity

to earn wages in his disabled condition, includ-

ing the effect of disability as it may naturally

extend into the future.

33 U.S.C. 908(h).

Section 21(c) of the LHWCA states in pertinent part:

c) Any person adversely affected or aggrieved

by a final order of the Board may obtain a

of that order in the United States Court

Appeals for the Circuit in which the injury

t the order be modified or set aside... . Upon

filing, the court shall have jurisdiction of

and shall have the power to give

decree affirming, modifying, or setting aside,

~_-

fF

2

in whole or in part, the order of the board and

enforcing same to the extent that such order is

affirmed or modified. . . .

33 U.S.C. 921(c).

°

STATEMENT

The Respondent, John Rambo, (“Rambo”) a long-

shoreman, injured his back and leg within the course and

scope of his employment on September 9, 1980, while

employed by Petitioner, Metropolitan Stevedore Com-

pany (“Metropolitan”).

Rambo filed a claim with the United States Depart-

ment of Labor and trial was set before an Administrative

Law Judge (“ALJ”) in 1983. At the trial the parties stipu-

lated among other things:

“That the employee sustained an over-all cur-

rent permanent partial disability equivalent to

22 1/2% of the whole person which the parties

recognize as an ‘economic disability’ producing

a weekly wage loss of $102.24 per week with an

equivalent compensation rate of $80.16 per week

tor permanent partial disability.”

On November 28, 1983 the ALJ issued a Decision and

Order awarding benefits to Rambo ait the rate of $80.16

per week for permanent partia! disability.

Om October 30, 1989, Metropolitan filed with the

Department of Labor an “Employer’s Application For

Modification, Section 922.”

A Formal Hearing on the Modification was convened

on October 15, 1990 by the AL].

At the outset of the proceeding Claimant moved to

dismiss on the grounds that the Petition was unsupported

by evidence of a change in Rambo’s physical condition. In

reliance on existing case law and this Motion, Rambo

presented no evidence. In support of its Petition Metro-

politan offered only Rambo’s post injury earnings. Metro-

politan called Rambo as the only witness.

Rambo’s testimony was uncontroverted that his

physical condition had not changed since the Stipulated

Award issued in 1983; and, that his permanent partial

disability reduced his ability to perform his pre-injury

work. Rambo also testified that he was presently

employed as a longshore crane operator, was earning

more than he had before his injury and that he did not

know how long the crane job would last.

The ALJ ruled that Rambo’s new job was a “change

in conditions” that supported modification and termi-

nated Rambo’s benefits. The Benefits Review Board

(“BRB”) affirmed. Rambo appealed to the Ninth Circuit

Court of Appeals.

The Court of Appeals reversed the BRB in the belief

that the “change in conditions” requirement for an award

modification under Section 922 required proof that

Rambo had undergone a change in his physical condition.

This Court reversed, holding “that a disability award

may be modified under Section 22 . . . withowt any

change in the employee's physical condition.” Metro-

politan Sitevedore Co. v. Rambo, 115 S. Ct. at 2150. This

Court then remanded the case “(b)ecause Rambo raised

other arguments before the Ninth Circuit that the panel

did not have the opportunity to address.” Id. Emphasis

added.

The two issues raised by Rambo and not decided

were:

(1) Should the employer be estopped from fil-

ing a 33 U.S.C. Section 922 Petition for Modifica-

tion because of the representation of its attorney

to “Rambo” that the award would be paid for

life?

- (2) Given the 1983 Stipulated Decision and

Order of Permanent Disability Benefits, “in the

interest of justice”, should this case be

remanded for the entry of a nominal award of

loss of wage earning capacity?

The Court of Appeals reviewed the entire record. In a

split decision, the Court held that Metropolitan could

seek modification of the prior award of permanent partial

disability benefits because, “ . . . reliance on Metropolitan

to Rambo’s detriment” was not established by the record.

In a unanimous decision the Court of Appeals stated

that the propriety of a nominal award was properly

before it on appeal. The Court cited Young v. Todd Pac.

Shipyards Corp., 17 BRBS 201, 204 n.2 (1985).

The Court next addressed the propriety of a nominal

award in a modification proceeding and stated that the

issue had not been determined by the Ninth Circuit. The

Court stated, “The Second, Fifth and District of Columbia

Circuits have ruled that nominal awards may be used to

—— mt =

preserve a possible future award where there is a signifi-

cant physical impairment without present loss of earn-

ings.” Rambo v. Director, Office of Workers’ Compensation

Programs, 81 F.3d 840, 843 (9th Cir. 1996).!

The Court reviewed 33 U.S.C. 922 and noted that it

provides that compensation cases may be reviewed and a

new compensation order issued which terminates, con-

tinues, reinstates, increases or decreases an award, at any

time prior to one year after the date of last payment of

compensation or the rejection of the claim.

In reviewing 33 U.S.C. Section 908(h), the Court

emphasized the statutory language that,” ... The deputy

Commissioner may, im the interest of justice, fix such

wage earning capacity as shall be reasonable, having due

regard to the nature of his injury, the degree of physical

impairment, his usual employment, and any other factors

or circumstances in the case which may affect his capacity

to earn wages in his disabled condition, including the

effect of disability as it may naturally extend into the

future.” Rambo v. Director, Office of Workers’ Compensation

Programs, 81 F.3d at 844.

' In Randall v. Comfort Control, Inc., 725 F.2d 791 (D.C. Cir.

1984) the District of Columbia Court of Appeals exhaustively

analyzed the interrelationship between Section 922 and Section

908(h), and autherized a nominal award.

In LaFaille v. B.R.B., 864 F.2d 54 (2md Cir. 1989) the Director,

OWCP, argued to the Court that Section 908(h) permitted de

minimus awards and the court agreed.

In Hole v. Miami Shipyards, 640 F.2d 769 (5th Cir. 1981), the

Court reviewed both Section 922 and Section 908(h) and held

that the statutory scheme permitted de minimus awards.

The Court noted that, “This section (908(h)) ‘allows

the (ALJ) to consider the future effect of a disability’.”

(citing Todd Shipyards v. Allan, 66 F.2d 399 (9th Cir. 1982),

cert denied, 459 U.S. 1034, 103 S. Ct. 444, 74 L. Ed. 2d 600,

Citing Hole v. Miami Shipyard Corp., 640 F.2d at 772.)

Rambo v. Director, Office of Workers’ Compensation Pro-

grams, 81 F.3d at 844.

After reviewing all of the evidence the Court HELD

that:

“Looking at the evidence as a whole, the AL]’s

Decision to terminate Rambo’s benefits is NOT

supported by substantial evidence and the BRB

erred in affirming the ALJ’s Order”. Rambo v.

Director, Office of Workers’ Compensation Pro-

grams, 81 F.3d at 844. (Emphasis added).

Finally, the Ninth Circuit Court of Appeals:

1. Concluded quoting the ALJ in Hole v. Miami

Shipyards Corp., 640 F.2d at 773 (5th Cir. 1981),

that, “ .. . a small award fashioned expressly for

the purpose of preserving (Rambo’s) right to

receive compensation should disability in an

economic sense ever visit him.” was appropriate

in this case; and,

2. Remanded for entry of a nominal award.

7

SUMMARY OF ARGUMENT

In order to determine whether or not an injured

employee suffers a permanent partial disability under

Section 8(c)(21) of the Longshore Act, it is first necessary

to determine the post-injury wage-earning capacity of

that employee. Section 22 of the Act concerns the subject

of Modifications of Awards and its language makes no

reference to and offers no guidance whatsoever in the

determination of wage-earning capacity. By contrast, Sec-

tion 8(h) of the Act deals exclusively with the determina-

tion of wage-earning capacity. The legislative history

demonstrates that Congress enacted Section 8(h) to

+ . Clarify the interpretation to be placed upon the

words ‘wage-earning capacity’ used in the Act in connec-

tion with partial-disability cases ...” because of

“... wasteful litigation...” regarding “ . . . the complex

question of the proper factors to be considered in connec-

tion with the determination of an employee's wage-earn-

ing capacity after injury.” H.R. Rep. No. 1945, 75th Cong.

3d Sess. 5-6 (1938); S. Rep. No. 1988, 75th Cong. 3d Sess.

5-6 (1938). The broad language of Section 8(h) clearly

displays Congress’ intent that the potential future effects

of an employee's injury, along with any other factors or

circumstances which may affect the capacity to earn

wages, be considered in this determination if actual earn-

ings do not fairly and reasonably represent the

employee's wage-earning capacity. The one-year time

limitation on modification requests contained in Section 22

is irrelevant to this determination except insofar as the

potentially harsh effect of this limitations period

prompted Congress to specifically include “forward look-

ing” language in Section 8(h).

Contrary to Petitioner’s assertions, benefit awards

based upon the possibility of future economic harm after

consideration of all relevant factors (medical and other)

are appropriate under the Act and authorized by the

language of Congress in Section 8(h) precisely because

such awards prevent the triggering of the one-year limita-

tions period. A continuing nominal award is, in fact,

perfectly suited to incorporate possible future economic

effects of an injury in furtherance of the goals of Section

8(h) and to allow for modification as conditions change as

envisioned by Section 922.

In this case the Court of Appeals properly conducted

an independent review of the entire record to determine

if the decision of the ALJ was supported by substantial

evidence. It concluded that there was not substantial

evidence to support complete termination of the claim-

ant’s benefits based upon this review. The Court cited to a

number of facts contained in the record including the

uncontroverted evidence that Rambo’s permanent partial

disability reduced his ability to perform his pre-injury

work, that Rambo’s physical condition remains

unchanged, and that he didn’t know how long his current

higher paying job would last. Given these facts, the Court

of Appeals concluded that a nominal continuing award

was appropriate, especially in a modification proceeding

such as Rambo’s where the claimant has already been

given an award based on a finding of permanent partial

disability. The decision of the Court of Appeals in this

case epitomizes the type of forward looking award autho-

rized by Section 8(h). Despite the Director’s claim to the

contrary, the decision to remand for entry of a nominal

continuing award was also well within the authority of

the Court of Appeals. Congress expressly conferred upon

the Circuit Courts the “ .. . power to give a decree

affirming, modifying, or setting aside, in whole or in

part...” the orders which they are bound to review and

the power of “ .. . enforcing same to the extent that such

order is affirmed or modified . . .” Therefore, the decision

of the Court of Appeals to remand for entry of a nominal

continuing award was soundly within its statutory

authority. (33 U.S.C. 921(c)).

s

ARGUMENT

A. WHERE THE ACTUAL, POST-INJURY EARN-

INGS OF AN INJURED EMPLOYEE DO NOT

FAIRLY AND REASONABLY REPRESENT THE

EMPLOYEE’S WAGE-EARNING CAPACITY, A

CONTINUING NOMINAL AWARD IS A REA-

SONABLE AND JUST MECHANISM TO FIX

THE WAGE-EARNING CAPACITY OF THE

EMPLOYEE WITH DUE REGARD FOR THE

FACTORS SET FORTH BY CONGRESS IN 33

U.S.C. 908(h).

In enacting 33 U.S.C. 908(h), Congress recognized

that actual post-injury earnings may not always fairly

and reasonably represent the wage-earning capacity of an

injured employee. In such cases, 33 U.S.C. 908(h) clearly

expresses the intent of Congress that wage-earning capac-

ity may be fixed or set by considering factors such as the

nature of the injury, the degree of physical impairment,

the usual employment of the employee, and any other

factors which may affect the capacity to earn wages by

the injured worker in his or her disabled condition,

including the effect of disability as it may naturally

extend into the future. Realizing that consideration of

these types of factors could never yield a precise, mathe-

matical calculation of wage-earning capacity, Congress

further instructed that the wage-earning capacity may be

10

set “in the interest of justice” and “as shall be reason-

able.” 33 U.S.C. 908(h). The broad language of Section

908(h) plainly creates a liberal and benevolent approach

which may be used for setting the wage-earning capacity

of an injured employee.

Thus, although disability under the LHWCA may be,

“.., in essence an economic, not a medical concept... ”

(Metropolitan Stevedore Co. v. Rambo, 1155 S. Ct. 2144, 2147

(1995), in cases where the actual post-injury earnings do

not fairly and reasonably represent wage-earning capac-

ity, Congress intended that medical factors such as cur-

rent and anticipated future physical impairment may be

used as a guide to approximate wage-earning capacity

over a claimant's lifetime. This is obviously no easy task.

As the District of Columbia Court of Appeals stated:

“ ... we recognize the onerous burden placed

on the ALJ by the Act. The Act requires omnis-

cience. The ALJ must divine whether the claim-

ant will suffer any injury-related reduction in

wage-earning capacity at any time during his

lifetime. Often, as in this case, the ALJ will be

asked to make this determination at a time when

the existence and degree of any reduction in

earning capacity is not evidenced by a tangible

reduction in current wages paid.”

Randall v. Comfort Control, Inc., 725 F.2d 791, 799 (D.C. Cir.

1984).

In grappling with this “onerous burden”, every Cir-

cuit Court that has considered this issue has approved

the use of nominal or de minimis continuing awards. In

the cases of Hole v. Miami Shipyards Corp., 640 F.2d 769

(5th Cir. 1981) and Randall v. Comfort Control, Inc., supra,

11

the claimants suffered a serious medical disability but

had actual post-injury earnings which were higher than

their pre-injury earnings. In Randall, supra, the ALJ termi-

nated benefits and the Benefits Review Board affirmed

this decision. The District of Columbia Court of Appeals

reversed, finding that the ALJ's decision to terminate was

not supported by substantial evidence on the record as a

whole because the ALJ’s opinion focused almost entirely

on the fact that the claimant had higher post-injury wages

and because the ALJ did not make explicit findings on all

relevant aspects of the wage-earning capacity determina-

tion or respond to uncontroverted evidence submitted by

the claimant. The Circuit Court then indicated that it

adopted the approach of the Fifth Circuit in Hole v. Miami

Shipyards Corp., supra, and stated:

“When it is clear that a claimant has suf-

fered a medical disability and there is a signifi-

cant possibility that the claimant will at some

future time suffer economic harm as a result of

his injury, but present circumstances make the

extent of the economic injury unknowable, the

beneficent purposes of the Act, and the mandate

that due concern be given to ‘the effect of dis-

ability as it may naturally extend into the

future’, 33 U.S.C. Sec. 908(h), are furthered by

granting a ‘small award, fashioned expressly for

the purpose of preserving a claimant's right to

receive compensation should disability in an

on”

economic sense ever visit him’.

Randall v. Comfort Control, Inc., supra, 725 F.2d at 800

(D.C. Cir. 1984) (citing Hole v. Miami Shipyards Corp.,

supra, 640 F.2d at 773).

12

Contrary to Petitioner’s assertions, a continuing

nominal award is not a fiction and does not award the

claimant compensation to which he is not entitled. Where

actual earnings do not fairly and reasonably represent

wage-earning capacity, Congress has stated that the

method used to determine wage-earning capacity may

take into account the nature of the injury and the degree

of physical impairment including the effect of disability

as it may naturally extend into the future. If it is deter-

mined that the nature of the injury and degree of physical

impairment have produced a serious medical disability

and that this medical condition may naturally tend to

degenerate or worsen over the course of a claimant's

lifetime so that there is a significant possibility of future

economic harm, a continuing nominal award is the only

reasonable mechanism available to comply with the “for-

ward looking” mandate of Section 908(h). Such an award

is not a fiction but rather an educated assumption of

future economic disability based upon known medical

facts. Thus, a nominal award is an appropriate mecha-

nism, especially in a modification proceeding such as

Rambo’s where the claimant has already been given an

award for loss of wage earning capacity based upon a

medically established permanent partia! disability.

Rambo v. Director, OWCP, 81 F.3d 840, 844 (9th Cir. 1996).

13

B. A CONTINUING NOMINAL AWARD IS CON-

SISTENT WITH THE INTENT OF CONGRESS

AS EXPRESSED IN THE LANGUAGE AND

LEGISLATIVE HISTORY OF THE LHWCA

AND IS NOT IN CONFLICT WITH THE LIM-

ITATIONS PERIOD OF 33 U.S.C. 922.

Petitioner attempts to convince this Court that any

reading of Section 908(h) which allows a continuing nom-

inal award “wrecks the statutory scheme” and conflicts

with other specific sections of the Longshore Act. In fact,

the language of Section 908(h) easily allows (and perhaps

encourages) continuing nominal awards :n appropriate

cases and such a reading does not conflict with the lan-

guage of the other sections cited by Petitioner. As this

Court has repeatedly stated, “ .. . When a statute speaks

with clarity to an issue judicia! inquiry into the statute’s

meaning, in all but the most extraordinary circumstances,

is finished.” Metropolitan Stevedore Co. v. Rambo, 115 S. Ct

2144, 2146 (1995) (Citing Estate of Cowart v. Nicklos Drill-

ing Co., 505 U.S. 469, 475, 120 L. Ed. 2d 379, 112 S. Ct. 2589

(1992); Demarest v. Manspeaker, 498 U.S. 184, 190, 112 L.

Ed. 2d 608, 111 S. Ct. 599 (1991)). Section 908(h) is quite

articulate regarding the issue of wage-earning capacity in

cases where the injured employee's actual earnings are

not fairly and reasonably representative. It coherently

expresses Congress’ intent that a “forward looking” per-

spective be used in the determination of wage-earning

capacity in such a case. In addition, the legislative history

demonstrates that a reading of Section 908(h) which

allows continuing nominal awards is perfectly consistent

with the comprehensive scheme of the Longshore Act.

Finally, if there is any doubt as to the clarity of the

14

statutory provisions in issue, the Director, OWCP, has

argued that continuing nominal awards are consistent

with the provisions of the Act and this interpretation is

entitled to deference.

As set forth above, the broad language of Section

908(h) allows the deputy commissioner (or an ALJ in

disputed cases) to fix or set the wage-earning capacity of

an injured employee “in the interest of justice” and “as

shall be reasonable” with due regard to medical factors

such as the nature of injury, the degree of physical

impairment and the effect of disability as it may naturally

extend into the future. To further emphasize the broad

discretion conferred by Section 908(h), Congress stated

therein that consideration could be given to “ . . . any

other factors or circumstances in the case which may

affect his capacity to earn wages in his disabled condi-

tion.” 33 U.S.C. 908(h). Congress did not add any proviso,

limitations or qualifications to this language. It did not

state that the determination of wage-earning capacity

(and therefore any award of benefits) must be based upon

any sort of formula or mathematical calculation. Even

Petitioner must admit that this language allows for a

continuing award of any dollar amount after consider-

ation of the proper factors so long as it is “reasonable.”

Once this analytical threshold has been crossed, Peti-

tioner’s argument is reduced to the assertion that a nomi-

nal award is somehow unreasonable because it is not a

particular dollar amount. Although the legislative history

will be reviewed below to demonstrate that Congress did

not consider such awards to be unreasonable, the Fifth

Circuit Court of Appeals provided perhaps the most tell-

ing response to such an argument when it stated:

15

“ ... we believe that a small award, fashioned

expressly for the purpose of preserving Claim-

ant’s right to receive compensation should dis-

ability in its economic sense ever visit him,

seems far less arbitrary than picking a ‘disabil-

ity’ figure out of thin air.” Hole v. Miami Ship-

yards, 640 F.2d 769, 773 (Sth Cir. 1981) (citations

omitted).

Petitioner's cursory attempt to create conflicts between

this reading of Section 908(h) and other sections of the

Act must likewise fail. Without setting forth the actual

text of the sections involved, Petitioner impliedly argues

that any reading of Section 908(h) which would allow

continuing nominal awards conflicts in some unspecified

way with 33 U.S.C. 902(10) and 33 U.S.C. 908(c)(21).

(Petitioner’s Brief on the Merits, p. 15). In fact, 33 U.S.C.

902(10) states:

“Disability means incapacity because of injury

to earn the wages which the employee was

receiving at the time of injury in the same or any

other employment.”

Importantly, the text of Section 902(10) does not further

define what factors should be used to determine if an

employee in fact has an “incapacity” to earn wages or

whether the determination should be made only with

regard to present wages or the anticipated future wages

of the employee. This is because Congress left the further

definition of wage earning capacity (and by inference

“incapacity”) to Section 908(h). Clearly, by the language

of Section 908(h), Congress intended the definition of

“incapacity” to earn wages to include future incapacity as

well as present.

16

The text of 33 U.S.C. 908(c)(21) states:

“In all other cases in this class of disability,? the

compensation shall be 66 2/3 per centum of the

difference between the average weekly wages of

the employee and the employee's wage-earning

capacity thereafter in the same employment or

otherwise payable during the continuance of

such partial disability. ... ”

Once again this section does not state what factors

should be used to define the terms “wage earning capac-

ity” or “during the continuance of partial disability”.

Once again, Congress further elucidated these terms in

the later Section 908(h) — specifically authorizing the con-

sideration of future effects of injury or disability in the

determination of wage-earning capacity. In this light,

“partial disability” obviously continues (despite the fact

that actual earnings may currently be the same or higher

than pre-injury earnings) if there is a significant possi-

bility that the nature of the injury or degree of physical

impairment will cause future economic loss. Although

Petitioner takes pains to distinguish between the terms

“injury” and “disability”, Petitioner, perhaps somewhat

disingenuously, fails to recognize that Congress has

stated that actual post-injury wages are not always equiv-

alent to wage-earning capacity. According to Petitioner's

reading of the Act, partial disability and incapacity to

earn wages automatically ends whenever an employee's

actual earnings meet or exceed pre-injury earnings. Peti-

tioner’s arguments regarding the inappropriateness of

2 By using the term “in this class of disability” Congress

was referring to unscheduled injuries such as Rambo’s back

injury.

17

nominal continuing awards must fail because they ignore

completely the “forward looking” language of Congress

in Section 908(h).

The legislative history of the Longshore Act provides

further support that such awards are consistent with the

comprehensive scheme of the Act. In fact, the pertinent

committee reports clearly show that Congress amended

the Act in 1938 to add Section 908(h) precisely because it

was concerned that the beneficent purpose of the Act

might be defeated by the one-year limitation period for

modification if the future effects of an industrial injury

were not taken into consideration. The Congressional

Report states that Section 908(h):

“ ... provides for consideration of the effects of

an injury causing permanent partial disability,

upon the employees future ability to earn. The

proposed changes have been made with the

view to having wage-earning capacity deter-

mined upon considerations which the courts

have found to be just and proper. Often an

employee returns to work earning for the time

being the same wages as he earned prior to

injury, although still in a disabled condition and

with his opportunity to secure gainful employ-

ment definitely limited. . . . It is clear that in

such a case the employee's ability to compete in

the labor market has been definitely affected;

and, though at present, the employee is paid his

former full-time earnings, he suffers permanent

partial disability which should be compensable

under the Longshoremen’s Act, considering not

only the present effect of the disability on the

employee's wage-earning capacity, but also the

future consequences of such disability on the

18

employee's capacity to earn as it naturally

extends into the future. The Longshoremen’s

Act should provide that the Deputy Commis-

sioner may consider all of the factors which the

more recent trend of decisions indicates are the

logical and proper factors in the determination

of wage-earning capacity.

In a case such as that referred to above where

the employee returns to employment without

apparent wage loss, notwithstanding impairment

of physical condition and probable impairment of

future wage-earning capacity an unscrupulous

employer might with profit to himself continue

the original wages, particularly if low, until the

limitations in the act with respect to the filing

of claim for compensation and right of review of

the case (§ 22) had run, after which time the

employee's right to compensation would be

barred and the employee if then cast adrift

would become and remain an object of charity. It

can be seen that an unscrupulous employer

might thus defeat the beneficent provisions of

the Longshoremen’s Act.”

H.R. Rep. No. 1945, 75th Cong. 3d Sess. 5-6 (1938); S. Rep.

No. 1988, 75th Cong. 3d Sess. 5-6 (1938). (Emphasis

added).

Congress obviously perceived that Section 922’s one-

year time limitation on modification could work an injus-

tice in cases where actual post-injury earnings do not

fairly and reasonably represent an injured worker's

wage-earning capacity. Thus, while Congress chose not to

generally discard Section 922’s time limitation it amended

the Act and added Section 908(h) to mitigate its effect and

to allow for the consideration of the future effects of

19

injury in appropriate cases. Contrary to Petitioner's

assertions, therefore, where the nature of the injury,

degree of physical impairment, or possible future effects

of an injury so warrant, a nominal cortinuing award

(which allows for modification as future events unfold) is

NOT in conflict with Section 922 and is fully consistent

with the intent of Congress. Petitioner mis-characterizes

the situation when it states, “To Rambo, the Director, and

the Ninth Circuit, Section 8(h) is a wild card which may

be played to trump Section 22's time limitation whenever

a court believes it appropriate to extend a claimant's right

to modification indefinitely.” (Petitioner’s Brief on the

Merits, p. 15). There is no inherent inconsistency in the

two sections. The legislative history shows that Congress

itself intended Section 908(h) to modify the method of

determining wage-earning capacity to account for the

anticipated future effects of injury and thereby prevent

the injustice that would otherwise result if the award was

based solely on actual earnings and modification was

time barred after one year due to Section 922.

In proposed amendments to the Act in 1983 and 1984

the Committee on Labor and Human Resources recom-

mended a new approach which would have eliminated

both the one-year time limitation on requests for mod-

ification of Section 22 and the phrase “as it may naturally

extend into the future” from Section 908(h). The resulting

statutory framework would have eliminated a need for

continuing awards running into the future because the

one-year limitations period would be eliminated. The

language in Report No. 98-81 (May 10, 1983) at Pg. 37

makes it clear that Congress was aware of the fact that

20

nominal continuing awards had been used by ALJ's for

some time:

“... This Amendment promotes equity permit-

ting all parties to apply for modification of

awards at any time after an award is entered.

The one-year limitation was unreasonably short

in light of the long term effects of the major

industrial injuries sustained by workers covered

by the Act. As a consequence, Administrative

Law Judges felt compelled to award benefits for

wage loss at the rate of one percent in cases

where rejection of the claim would have

required a request for modification within a

year, whether or not such a new claim was

justified. The new approach is far more realistic,

allowing claimants for example, to apply for

increased benefit for wage loss or for greater

physical disability at a time when full effects of

an injury may manifest themselves. Requests for

modification will no longer be necessary simply

to keep the statute of limitation from running.”

The Committee on Labor and Human Resources

Report No. 98-81 (May 10, 1983) p. 37.

Petitioner states that Rambo and the Director ignore

“ ... the fact that the legislative history offers no clue

about Congress’ reasons for rejecting the proposed repeal

of both provisions and the fact that the proposals them-

selves resulted from a perception that nominal wards

were a problem... ” (Petitioner’s Brief on the Merits, p.

15). It is respectfully asserted that Petitioner is incorrect

on both counts. It is Petitioner who ignores the logical

inferences from the language of the Committee’s Report

and the inaction of Congress. From that language it is

21

quite apparent that Congress knew of the fact that nomi-

nal continuing awards were being issued by ALJs as a

consequence of the one-year time limitation in Section 22.

If Congress considered nominal awards to be a problem

why then didn’t it make some amendments or changes to

the existing statutory framework forbidding such awards

- if not in 1983 then sometime in the thirteen years that

followed? Obviously, Congress did not perceive such

awards as a problem and did not want to encourage the

yearly filing of requests for modification” . . . simply to

keep the statute of limitation from running ... ” that

would inevitably follow if nominal awards were elimi-

nated. Id.

Finally, the Director, OWCP, has consistently argued

that continuing nominal awards are proper under the

Longshore Act. (See LaFaille v. B.R.B., 884 F.2d at 62 (2nd

Cir. 1989); Brief for the Director, Office of Workers’ Com-

pensation Programs, p. 16). The Director, OWCP, through

a delegation of powers from the Secretary of Labor, is the

Administering Agency for the LHWCA. As such, the

Director's interpretation of the Act is entitled to defer-

ence under the principles announced in Chevron, U.S.A.

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837,

842-843 (1984).

22

C. IN THIS CASE THE COURT OF APPEALS

PROPERLY CONDUCTED AN INDEPENDENT

REVIEW OF THE RECORD TO DETERMINE

IF THE ALJ’S DECISION TO TERMINATE

BENEFITS WAS SUPPORTED BY SUBSTAN-

TIAL EVIDENCE.

In performing its review function the Court of

Appeals is required to “. . . conduct an independent

review of the record to determine if the ALJ’S findings

are supported by substantial evidence.” Stevenson v.

Linens of the Week, 688 F.2d 93, 97 (D.C. Cir. 1982). See also

Janusziewicz v. Sun Shipbuilding & Dry Dock Co., 677 F.2d

286, 290 (3d Cir. 1982); Avondale Shipyards, Inc. v. Vinson,

623 F.2d 1117, 1119 n. 1 (5th Cir. 1980). After conducting

this independent review of the record the Court of

Appeals in this case stated:

“In ruling that Rambo no longer had a wage-

earning capacity loss and terminating his award,

the ALJ overemphasized Rambo’s current status

and failed to consider the effect of Rambo’s

permanent partial disability on his future earn-

ings. Looking at the evidence as a whole, the

ALJ's decision to terminate Rambo’s benefits is

not supported by substantial evidence and the

BRB erred in affirming the ALJ's order.”

Rambo v. Director, Office of Workers’ Compensation Pro-

grams, 81 F.3d 840, 844 (9th Cir. 1996). In support of its

finding that the ALJ's decision to terminate benefits was

not supported by substantial evidence, the Court of

Appeals set forth important evidentiary facts from the

record:

“Here the evidence is uncontroverted that

Rambo’s permanent partial disability reduced

23

his ability to perform his pre-injury work. This

wage-earning capacity loss was sufficient to

support a weekly benefits award. Rambo’s

physical condition remains unchanged.”

Id. 81 F.3d at 844.

Contrary to Petitioner’s assertions, Rambo and the

Court of Appeals can and do seriously argue that the

ALJ's determination that Rambo no longer has a wage

earning capacity loss is unsupported by substantial evi-

dence. Once again, Petitioner mistakes actual earnings for

wage-earning capacity and attempts to convince this

Court that because Rambo’s earnings are higher than

before his injury this means that his right to recover

benefits in the future should automatically be terminated.

This simply is not consistent with the “forward looking”

perspective and language of Section 908(h).

Further, the ALJ’s decision to terminate benefits can-

not be adequately defended on the assumption that he

simply determined that Rambo’s actual post-injury wages

do reasonably and fairly represent his wage-earning

capacity. First, nowhere in his opinion does the ALJ make

this statement. Second, the Benefits Review Board has

held that the same “forward looking” factors which must

be considered in setting the wage-earning capacity of a

worker whose actual earnings do not fairiy and reason-

ably represent his wage-earning capacity must also be

considered in the initial determination of whether or not

the actual earnings are representative. Devillier v. National

Steel & Shipbuilding Co., 10 BRBS 649, 660-661 (1979). This

holding by the Benefits Review Board Service was based

upon Section 8(b) of The Administrative Procedure Act, 5

24

U.S.C. 557(c) which requires an ALJ to make explicit

findings on all relevant aspects of a determination.

In the case at bar the ALJ failed to consider or make

explicit findings concerning the effect that the nature of

Rambo’s injury, the degree of his physical impairment, or

his reduced ability to perform his pre-injury work might

have on Rambo’s future capacity to earn wages. The ALJ's

decision contains no real explanation or analysis of what

the evidence demonstrated regarding the rate of inflation

or the salary increases for longshore workers during the

period in question.? The ALJ simply states that he took

these factors “. . . into consideration...” (J.A. 55). For

this reason, the Ninth Circuit correctly determined that

the decision of the ALJ to completely terminate benefits

was not supported by substantial evidence.

D. THE DECISION OF THE COURT OF APPEALS

TO REMAND FOR ENTRY OF A NOMINAL

AWARD WAS A PROPER EXERCISE OF ITS

AUTHORITY PURSUANT TO 33 U.S.C. 921(c).

Section 21(c) of the LHWCA states in pertinent part:

“Any person adversely affected or aggrieved by

a final order of the Board may obtain a review of

that order in the United States Court of

Appeals for the Circuit in which the injury

occurred, by filing . . . a written petition praying

3 In fact, the transcript of the Modification Hearing

demonstrates that the ALJ sustained the objection of Rambo’s

counsel to evidence submitted by Metropolitan in the form of

testimony in a prior, unrelated case regarding the yearly basic

longshore pay increases. (J.A. 22-23).

25

that the order be modified or set aside. ... Upon

such filing, the court shall have jurisdiction of

the proceeding and SHALL HAVE THE POWER

TO GIVE A DECREE AFFIRMING, MODIFY-

ING, OR SETTING ASIDE, IN WHOLE OR IN

PART, THE ORDER OF THE BOARD AND

ENFORCING SAME TO THE EXTENT THAT

SUCH ORDER IS AFFIRMED OR MOD-

IFIED ...” 33 U.S.C. 921(C) (Emphasis added).

The District of Columbia Court of Appeals has char-

acterized Section 21(c) as vesting “broad authority” in the

Courts of Appeals. Burns v. Director, OWCP, 41 F.3d 1555,

1564-1565 (1994).

The language of Section 21(c) allows an Appellate

Court to modify orders in whole or in part and to enforce

its decision “” . . . to the extent that such order is affirmed

or modified.”

In this case the Court of Appeals simply modified the

order to terminate benefits by granting a nominal award

and enforced this modification by remanding for entry of

that nominal award. Therefore, the decision was squarely

within the jurisdiction and authority granted to the Court

of Appeal by Congress in Section 921(c).

¢

CONCLUSION

The judgment of the Court of Appeals should be

affirmed. The language of Section 8(h) clearly expresses

the intent of Congress that the future effects of industrial

injuries should be taken into consideration when deter-

mining wage-earning capacity and issuing an award. The

one-year time limitation of Section 22 is inapplicable to

26

the determination of wage-earning capacity and is in no

way inconsistent with a continuing award of any size. A

continuing nominal award is the best method yet devised

to satisfy the important goals of both Section 8(h) and

Section 22. The legislative history establishes that Con-

gress intended the “forward-looking” perspective of Sec-

tion 908(h) to mitigate the potentially harsh effects of the

limitations period of Section 22 and that, at least as early

as 1983, Congress was aware of the practice of ALJs

issuing nominal continuing awards. Congress chose not

to amend the Act to forbid such awards and this Court

should likewise resist Petitioner’s invitation to do so.

Respectfully submitted,

THomas J. Prerry, Ill

Counsel of Record

THomas J. Prerry

Prerry AND MoorHEAD

Attorneys at Law

301 North Avalon Boulevard

Wilmington, Calif. 90744-5888

(714) 636-2970

Attorneys for Respondent

John Rambo