Reply Brief — Su v. M/V Southern Aster

No. 92-1521

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1992

he ont i Botan baie niniigl dane «hips

M/V PINE FOREST, et al,

Cross-Petitioners,

NELSON R. RABY, et al.,

Cross-Respondents.

a,

On Cross-Petition for Wnt of Certiorart to the

United States Court of Appeals for the Ninth Circuit

REPLY BRIEF OF CROSS-PETITIONERS

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ROBERT I. SANDERS

KIM JEFFERIES

WOOD TATUM WONACOTI

& LANDIS

1001 S.W. Fifth Avenue

Suite 1300

Portland, Oregon 97204

(503) 224-5430

EGE LEM PLT RE EAS

Counsel of Record

WILLIAM R. BISHIN

1111 Third Avenue

Suite 1865

Seattle, Washington 9810]

(206) 682-1584

Apnl 19, 1993 Attorneys for Cross-Petitioners.

Po Tat Fa Se ag tala Peart ee ea

Washington, 0.C. * THIEL PRESS © (202) 328-3286

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TABLE OF CONTENTS

I. Because of Congress’s Extensive Regulation of

the Seaman’s Contractual Action for Wages,

Attorneys’ Fees Should Not Be Awardable in

Such Actions in the Absence of Legislation

DO FUGUES 6c ccc cco cca snes ensecusecan oe

Il. The Extension of Vaughan v. Atkinson to Wage

Claims Creates a New Exception to the Amer-

ican Rule Against Fee Shifting That Should Be

Addressed by This Court................4.. a oe

CRIPPS 06 6686866 o Ree RENO OEDO OR EHR 6

APPENDIX:

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TABLE OF AUTHORITIES

Cases:

Chambers v. Nasco, _— U.S. ——, 111 S.Ct. 2123,

LED Elbe BE LADUE 6-6 0.6664 44 0 50 ew ee ee 4

Miles v. Apex Marine Corp., 498 U.S. 19 (1990)......... 7,2

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618 (1978). ...... 3

Sanchez v. Rowe, 870 F.2d 291 (5th Cir. 1989) ........... 5

Shimman v. International Unton of Operating Engin-

eers, Local 18, 744 F.2d 1226 (6th Cir. 1984)

| PCR EWEP TEE Te CSOT ETC CTEEL ECTS.

Vaughan v. Atkinson, 399 U.S. 527 (1962) .......... 1, 4,5

Woods v. Barnett Bank of Ft, Lauderdale, 765 F.2d

See CER Gas BOE 6 vce sb 6a eek oes 8 ee we Oe Oe

Statutes:

46 U.S.C.

46 U.S.C.

46 U.S.C.

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da oe Ae eee Un a ge RNC ee

STE og oe ee ole We ee ee ee ee

10315..

REPLY BRIEF OF

CROSS-PETITIONERS FOR CERTIORA RI!

I.

BECAUSE OF CONGRESS'S EXTENSIVE REGULATION

OF THE SEAMAN’S CONTRACTUAL ACTION FOR

WAGES, ATTORNEYS’ FEES SHOULD NOT BE AWARD-

ABLE IN SUCH ACTIONS IN THE ABSENCE OF LEGIS-

LATION SO PROVIDING

The plaintiffs mischaracterize defendants’ attack on

the attorneys’ fee award. Defendants do not argue that

the fees were awarded pursuant to 46 U.S.C. § 10313 and

that they were therefore improper because that section

does not provide for such fees. We fully acknowledge

that the fees were awarded under asserted general mari-

time principles supposedly set down in Vaughan v. Atkin-

son, 399 U.S. 527 (1962). We also acknowledge that

plaintiffs’ claim for back wages stated a cause of action

for breach of a maritime contract as well as for violation

of subsection (f) of the Seaman’s Wage Act. What we

argue, however, is that in determining whether a partic-

ular remedy is available in an action for wages, one may

not look only at traditional maritime contract principles,

but must also look at and follow the explicit and implicit

requirements of the Wage Act.

What is meant by the Seaman’s Wage Act vanes from

context to context and speaker to speaker. For present

| Cross-petitioners will not generally address assertions of fact

in the Brief in Opposition which they contest, since such factual

issues need not be resolved to determine whether to grant certior-

ari. However, the Court should be aware that the only evidence at

trial as to who devised the practice of double bookkeeping was

from the manning agent in this case, Noim) Zabala, who testified

that he, along with a manning agentin Tokyo, was its creator. Ir.

47;see also Tr. Ex. 8.

nurposes, defendants will use the term to cover not only

subsections (e) and (f), but the entirety of Section 10313

plus Sections 10314 and 10315. These are set out in the

Appendix. The reason all of these provisions are refer-

enced is that they all limit and control a seaman’s wage

remedy, irrespective of what his contract may say.

Thus, for example, Section 10313(a) determines when

the employment of a seaman on a foreign vessel com-

mences for purposes of calculating any wages due him,

even if his contract stipulates a different date. Subsec-

tion (b) gives him a right to wages whether or not the ves-

sel earns freight or if the vessel is lost, again, irrespective

of the terms of his contract. Subsection (c) is especially

interesting. It gives the seaman a right to one month’s

wages in addition to wages earned if his employment

never begins or is terminated before he could have

worked for one month. On the other hand, by necessary

implication the subsection denies. him additional dam-

ages, even if under traditional contract principles he has

suffered them. He is not permitted to receive damages

for any longer period of employment that he was prom-

ised, even though he cannot obtain substitute employ-

ment.

The remaining provisions of Section 10313 are of simi-

lar effect. They all impose terms of employment on the

seaman, the vessel or both, irrespective of their contract.

So, too, do Sections 10314 and 10315. Section 10314,

for example, does not allow a seaman and a vessel to con-

tract to pay the staman any of his salary in advance of

his earning it, even though this might in many circum-

stances be to the seaman’s benefit — especially where he

is covered by a collective bargaining contract and rep-

resented by a union.

3

Of course, there are important historical reasons for

these statutory restrictions on the ability to contract and

the remedies available for breach. But the critical point is

that for whatever reasons, Congress decided to regulate

the remedies for breach of a seaman’s employment con-

tract extensively. In so doing, it has given the seaman

many benefits — e.g., the penalty for failing to promptly

pay wages after termination of employment — and

deprived him of others.

Plaintiffs now want the courts, even though none of

the legislation dealing with the seaman’s action for wages

so provides, to grant the seaman an additional benefit — a

benefit that amounts to an additional penalty for failing

to promptly pay a wage claim. Surely, this is tu invade

an area in which Congress has substantially occupied the

field and in which Congress should decide what addi-

tional regulation is required. In sum, although we agree

that plaintiffs stated a claim for wages under a maritime

contract, the substantial regulation of such contracts by

Congress precludes the courts from granting an additional

remedy for their breach without Congress’s approval. See

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) (general

maritime remedies may not supplement Jones Act reme-

dies); Mobil Onl Corp. v. Higginbotham, 436 U.S. 618

(1978) (general maritime remedies may not supplement

Death on the High Seas Act remedies). Accordingly, the

Court of Appeals erred in awarding attomeys’ fees.

4

Il.

THE EXTENSION OF VAUGHAN vy. ATKINSON TO

WAGE CLAIMS CREATES A NEW EXCEPTION TO THE

AMERICAN RULE AGAINST FEE SHIFTING THAT

SHOULD BE ADDRESSED BY THIS COURT

Plaintiffs quote from the trial court findings that the

defendants engaged in malicious and oppressive miscon-

duct. Bv doing so, they hope to support the attomeys’

fees award under Vaughan. The record, however, does

not support the findings quoted. This is reflected in the

Court of Appeals decision, which emphasizes the lack of

record support for the mental distress, outrage, and fraud

claims.

More importantly, Vaughan does not apply because

this is not a maintenance and cure claim. If plaintiffs’

characterization is accepted, it is a contract claim for

breach of the shipping articles.* By extending Vaughan

to a contract case, the Ninth Circuit did here exactly

what Justice Kennedy in Chambers v. Nasco said the fed-

eral courts cannot do: It punished the defendants for

breach of contract and forced them to litigate the terms

of the contract at their peril. Yet the American Rule is

meant to protect “each person’s right to go to federal

court to define and vindicate substantive nghts.” /d.,

een Wh eee « RAL Gh. Zhee, 119: ieee 27, St

(1991). That this case was pursued by seamen within

2 Defendants have not sought review of the Ninth Circuit’s

holding that the articles and not the individual employment con-

tracts set the wage rates. The record establishes, however, that no

party ever viewed the articles as the agreement. The defendants

paid the plaintiffs the amount they had in fact been promised and

to which they had in fact agreed in the individual employment

contracts. In no ordinary sense, then, can it be said that defend-

ants acted in bad faith by failing to pay a wage that plaintiffs never

expected to receive.

5

the admiralty jurisdiction of the court does not alter

the American Rule against fee shifting. In Miles v. Apex

Marine Corp., a seaman’s case also asserting statutory and

general maritime law claims, this Court noted that the fed-

eral courts “are not free to expand remedies at will

simply because it might work to the benefit of seamen

and those dependent upon them.” 498 U.S. 19 (1990).

Plaintiffs argue that this case does not fit Rule 10

guidelines because there is no conflict in the Circuit

Courts on the issues raised. Defendants point out that if

the judgment is viewed as punishment for prelitigation

bad faith as plaintiffs contend, then several Circuit Courts

that have considered the issue conflict with the Ninth

Circuit’s decision in this case. The Fifth, Sixth and Elev-

enth Circuits have all held that prelitigation bad faith

does not support an award of attorneys’ fees. See Sanchez

v. Rowe, 870 F.2d 291 (5th Cir. 1989) (attorneys’ fees

not recoverable despite viciousness of the assault that

formed the basis of the claim); Shimman v. International

Union of Operating Engineers, Local 18, 744 F.2d 1226

(6th Cir. 1984) (en banc) (attorneys’ fees premised on

bad faith in the act underlying the substantive claim rev-

ersed as inconsistent with the American Rule); Woods v.

Barnett Bank of Ft. Lauderdale, 765 F.2d 1004 (11th

Cir. 1985) (to support attorneys’ fees, the bad faith must

be part of the litigation process itself). These cases are

not maritime cases but they are applications of the Amer-

ican Rule against fee shifting.

This case presents a new exception to the American

Rule. Extension of Vaughan v. Atkinson to wage claims

is contrary to the remedies for breach of the shipping

articles mandated by Congress in the Seaman’s Wage

Act. The award also violates the prohibition against fee

shifting for prelitigation conduct recognized by at least

6

three other Circuit Courts of Appeal. This case presents

an important question of federal law that should be set-

tled by this Court.

CONCLUSION

The Cross-Petition should be granted so that the Court

can decide whether the new exception to the American

Rule recognized below should be upheld.

Dated: Apmil 19, 1993

Respectfully submitted,

WILLIAM R. BISHIN ROBERT I. SANDERS

WILLIAM R. BISHIN, P.S. KIM JEFFERIES

1111 Third Avenue WOOD TATUM WONACOTT

Suite 1865 & LANDIS

Seattle, Washington 98101 1001 S.W. Fifth Avenue

(206) 682-1584 Suite 1300

Portland, Oregon 97204

(503) 224-5430

Counsel of Record

Attorneys for Cross-Petitioners

la

APPENDIX

46 U.S.C. §10313

Wages

(a) A seaman’s entitlement to wages and provisions

begins when the seaman begins work or when specified

in the agreement required by section 10302 of this title

for the seaman to begin work or be present on board,

whichever is earlier.

(b) Wages are not dependent on the earning of freight

by the vessel. When the loss or wreck of the vessel ends

the service of a seaman before the end of the period con-

templated in the agreement, the seaman is entitled to

wages for the period of time actually served. The seaman

shall be deemed a destitute seaman under section 11104

of this title. This subsection applies to a fishing or whal-

ing vessel but not a yacht.

(c) When a seaman who has signed an agreement is dis-

charged improperly before the beginning of the voyage or

before one month’s wages are earned, without the sea-

man’s consent and without the seaman’s fault justifying

discharge, the seaman is entitled to receive from the mas-

ter or owner, in addition to wages earned, one month’s

wages as compensation.

(d) A seaman is not entitled to wages for a period dur-

ing which the seaman —

(1) unlawfully failed to work when required, after

the time fixed by the agreement for the seaman to

begin work; or

(2) lawfully was imprisoned for an offense, unless

a court hearing the case otherwise directs.

2a

(e) After the beginning of the voyage, a seaman is

entitled to receive from the master, on demand, one-half

of the balance of wages earned and unpaid at each port

at which the vessel loads or delivers cargo during the voy-

age. A demand may not be made before the expiration

of 5 days from the beginning of the voyage, not more

than once in 5 days, and not more than once in the same

port on the same entry. If a master does not comply

with this subsection, the seaman is released from the

agreement and is entitled to payment of all wages earned.

Notwithstanding a release signed by a seaman under sec-

tion 10312 of this title, a court having jurisdiction may

set aside, for good cause shown, the release and take

action that justice requires. This subsection does not

apply to a fishing or whaling vessel ora yacht.

(f) At the end of a voyage, the master shall pay each

seaman the balance of wages due the seaman within 24

hours after the cargo has been discharged or within 4

days after the seaman is discharged, whichever is earlier.

When a seaman is discharged and final payment of wages

is delayed for the period permitted by this subsection,

the seaman is entitled at the time of discharge to one-

third of the wages due the seaman.

(g) When payment is not made as provided under sub-

section (f) of this section without sufficient cause, the

master or owner shall pay to the seaman 2 days’ wages

for each day payment is delayed.

(h) Subsections (f) and (g) of this section do not apply

to a f{jshing or whaling vessel or a yacht.

(1) This section applies to a seaman on a foreign vessel

when in a harbor of the United. States. The courts are

available to the seaman for the enforcement of this

section.

3a

46 U.S.C. §10314

Advances

(a)(1) A person may not —

(A) pay a seaman wages in advance of the time

when the seaman has earned the wages;

(B) pay advance wages of the seaman to another

person; or

(C) make to another person an order, note, or

other evidence of indebtedness of the wages, or pay

another person, for the engagement of seamen when

payment is deducted or to be deducted from the

seaman’s wage.

(2) A person violating this subsection is liable t6 the

United States Government for a civil penalty of not more

than $500. A payment made in violation of this subsec-

tion does not relieve the vessel or the master from the

duty to pay all wages after they have been earned.

(b) A person demanding or receiving from a seaman or

an individual seeking employment as a seaman, remunera-

tion for providing the seaman or individual with employ-

ment, is liable to the Government for a civil penalty of

not more than $500.

(c) This section applies to a foreign vessel when in

waters of the United States. An owner, charterer, manag-

ing operator, agent, or master of a foreign vessel violating

this section is liable to the Government for the same pen-

alty as an owner, charterer, managing operator, agent, OF

master of a vessel of the United States for the same viola-

tion.

(d) The owner, charterer, managing operator, agent, or

master of a vessel seeking clearance from a port of the

4a

United States shall present the agreement required by sec-

tion 10302 of this title at the office of clearance. Clear-

ance may be granted to a vessel only if this section has

been complied with.

\e) This section does not apply to a fishing or whaling

vessel or a yacht.

on

x

46 U.S.C. §10315

Allotments

(a) Under prescribed regulations, a seaman may stipu-

late as follows in the agreement required by section

10302 of this title for an allotment of any part of the

wages the seaman may earn:

(1) To the seaman’s grandparents, parents, spouse,

sister, brother, or children;

(2) to an agency designated by the Secretary of the

Treasury to handle applications for United States sav-

ings bonds, to purchase bonds for the seaman; and

(3) for deposits to be made in an account for savings

or investment opened by the seaman and maintained in

the seaman’s name at a savings bank or a savings insti-

tution in which the accounts are insured by the Fed-

eral Deposit Insurance Corporation or the Federal Sav-

ings and Loan Insurance Corporation.

(b) An allotment is valid only if made in writing and

signed by and approved by a shipping commissioner. The

shipping commissioner shall examine allotments and the

parties to them to enforce compliance with the law. Stip-

ulations for allotments made at the beginning of a voyage

shall be included in the agreement and shall state the

amounts and times of payment and the person to whom

payments are to be made.

(c) Only an allotment complying with this section is

lawful A person falsely claiming qualification as an

allottee under this section is liable to the United States

Government for a civil penalty of not more than $500.

(d) The owner, charterer, managing operator, agent or

master of a vessel seeking clearance from a port of the

ba

United States shall present the agreement at the office of

clearance. Clearance may be granted to a vessel only if

this section has been complied with.

(e) This section applies to a foreign vessel when in

waters of the United States. An owner, charterer, manag-

ing operator, agent, or master of a foreign vessel violating

this section is liable to the Government for the same pen-

alty as an owner, charterer, managing operator, agent, or

master of a vessel of the United States for the same viola-

uon.