storm

By Michael J. O’Brien

A. Introduction to Punitive Damages

Pecuniary damages are awards designed to restore “material loss which is susceptible of pecuniary valuation.” Michigan Central Railroad. Co. v. Vreeland, 227 U.S. 59, 71, 33 S.Ct. 192, 57, L.Ed. 417 (1913). Punitive or exemplary damages do not compensate for a loss; instead, they are imposed to punish the wrongdoer and “deter by virtue of the gravity of the offense.” [1]  Molzof v. U.S., 502 U.S. 301, 112 S.Ct. 711, 116 L.Ed.2d 731 (1992). The availability of punitive damages as an avenue of potential recovery can drastically alter a Jones Act personal injury case.

For example, if punitive damages are “on the table,” one can expect that counsel for the injured seaman will insert a demand for punitive damages into the lawsuit and, thereafter, consistently beat the drum throughout the litigation that punitive damages are warranted. This, in turn, inquires defense counsel to change its evaluation of the case and recommend higher reserves to its clients to cover the potential for an award of punitive damages. The availability of punitive damages can also affect settlement negotiations when counsel for the injured seaman demands a higher settlement amount for even the most basic slip and fall by alleging liability for punitive damages.

The issue of whether punitive damages are available to the Jones Act seaman, was, until recently, a well settled question—they are not available. The calm waters of punitive damages were stirred with the 2009 decision in Atlantic Sounding Co. v. Townsend, 557 U.S. 404 (2009),where the U.S. Supreme Court firmly established that punitive damages were available to an injured Jones Act seaman for the willful and wanton failure of the ship-owner to pay maintenance and cure.

Since Townsend, the Plaintiffs’ bar has been attempting to expand the availability of punitive damages to an injured seaman’s negligence and unseaworthiness claims. To this end, the Plaintiffs’ bar proclaimed a partial victory on October 2, 2013, when Judge Higginson, of the U.S. Fifth Circuit held that punitive damages were available to seaman as a remedy for the general maritime law claim of unseaworthiness. McBride v. Estis Well Service, 731 F.3d 505 (5th Cir. 2013). However, eleven months later, the Fifth Circuit, sitting en banc, reversed the original panel’s decision and held that punitive damages are not recoverable for either negligence or unseaworthiness. Let us now examine how we have arrived at this point.

B. The High Point—In re Merry Shipping

If the availability of punitive damages to an injured seaman can be imagined as a wave, the peak of that wave would be In re Merry Shipping, Inc., 650 F.2d 622 (5th Cir. Unit B 1981). In Merry Shipping, it was firmly established that punitive damages were recoverable under the General Maritime Law when the shipowner had violated the duty to furnish and maintain a seaworthy vessel. The Merry Shipping Court acknowledged that the shipowner’s duty stemmed from the recognition of “the hazards of marine service that unseaworthiness places on the men who perform it and their helplessness to ward off such perils.” As such, the theory was that punitive damages would serve to deter and punish owners whose reckless acts increased the hazards of marine service. It must also be noted at this juncture that punitive damages were also available at this time for the willful and wanton failure to pay maintenance and cure.

C. The Wave Falls—Miles v. Apex Marine Corp.

Nine years later, the punitive damage wave began to fall with the Fifth Circuit’s opinion in Miles v. Apex Marine Corp., 498 U.S. 19, 111 S.Ct. 317, 112 L.Ed.2d 275 (1990). The Miles Court noted that in 1920, Congress enacted the Jones Act, 46 U.S.C. § 30104, and the Act extended to seamen the same negligence remedy for damages afforded to railroad workers under the Federal Employers’ Liability Act (“FELA”). FELA only allowed for the recovery of pecuniary damages. Accordingly, the Miles Court reasoned that Jones Act claimants’ remedies were limited to pecuniary losses alone. As discussed above, punitive damages are separate and apart from pecuniary damages. After Miles, punitive damages would be unavailable to the Jones Act seaman in a Jones Act negligence action and an unseaworthiness action. Merry Shipping had been effectively overruled. [2]

D. The Wave Bottoms Out—Guevera v. Maritime Overseas Corp.

The low point of the punitive damage wave was marked by the Fifth Circuit’s decision in Guevera v. Maritime Overseas Corp., 59 F.3d 1496 (5th Cir. 1995). Guevera was a maintenance and cure case that, for a time, eliminated the availability of punitive damages for the willful and wanton failure to pay maintenance and cure. Citing the reasoning of Miles, the Guevera court held that the punitive damages were not available for failure to pay maintenance and cure, even if willfulness was demonstrated. Guevera, 59 F.36 at 1504. Thus, as of Guevera, punitive damages were simply not an available avenue of recovery for the Jones Act Seaman in an action for either Jones Act negligence, unseaworthiness, or maintenance and cure. Punitive damages had effectively disappeared from maritime law. This was to be the case for the next 14 years.

E. The Wave Rises—Atlantic Sounding v. Townsend

The punitive damage wave began surging upward again with the U.S. Supreme Court’s decision in Atlantic Sounding Co. v. Townsend, 557 U.S. 404, 129 S.Ct. 2561, 174 L.Ed.2d 382 (2009). The Townsend Court revisited the issue of a seaman’s claim for punitive damages for the willful failure to pay maintenance and cure. In an opinion hailed by injured workers (and their counsel), everywhere, the Townsend Court abrogated Guevera and ruled that a seaman may seek punitive damages associated with a claim for maintenance and cure. In reaching its ultimate decision, the Townsend Court acknowledged that punitive damages had long been available at common law, that the common law tradition of punitive damages extended to claims arising out of maritime law, and that nothing in maritime law undermined the applicability of this general rule in the maintenance and cure context. Furthermore, nothing in the Jones Act eliminated pre-existing remedies, such as punitive damages for maintenance and cure available to seaman.

As is often the case after U.S. Supreme Court decisions, the impact of Townsend differed greatly depending on which side of the “v.” a party found itself. Injured workers read Townsend to either overrule or severely undermine Miles. Employers and ship owners read Townsend to carefully distinguish its facts from Miles, and more importantly, reaffirm that Miles remained “good law.” To be sure, Townsend began to “toss” the once peaceful waters of punitive damages. Smelling blood in the water, counsel for injured workers began routinely adding claims for punitive damages to their Jones Act negligence, unseaworthiness, and maintenance and cure claims. It did not matter if the case was the most basic unwitnessed slip and fall or the most serious case of loss of life and limb—each case came with a punitive damage claim. With the above context in mind, we now turn to McBride which, for a short time, brought punitive damages back to the high point of Merry Shipping.

F. Storm Tossing the Waters — McBride v. Estis Well Service, LLC

i. The Facts

On March 9, 2011, the barge Estis Rig 23 was operating in Bayou Sorrell, a navigable waterway in the State of Louisiana. The Estis 23 was a keyway barge containing a truck mounted drilling rig. There is no way to “sugarcoat” the fact that on March 9, the day of the tragedy, the vessel was in incredibly poor condition. The deck contained numerous holes covered with sheets of plywood. The hull contained several holes that allowed the influx of water causing the barge to list to the port side. The crew inserted rags and pieces of wood into the holes in the hull to slow the sinking. Each morning, when the crew arrived at the barge, they had to pump water out of the barge’s hull to level it before they could start working.

On top of the issues related to the daily sinking of the barge, the truck needed to be attached to the barge by at least 5 cables and the derrick should have been attached to the barge with a minimum of 4 cables. However, the truck was only connected to the barge by a single cable and no cables whatsoever attached the derrick to the barge.

On March 8, the Estis 23’s crew pulled and racked vertically approximately 12,000 feet of pipe weighing approximately 90,000 lbs. Overnight, the barge again flooded and listed to the port side. The racked pipe fell towards the port side of the barge causing the monkeycboard to twist. [3]  The pipe hung outside of the derrick with the twisted monkey board as the only thing preventing the pipe from toppling over.

When the Estis 23 crew returned on March 9 and saw the situation first hand, they conducted a safety meeting and decided that the safest possible method was to use a crane and additional barge to remove the pipe. Specifically, the crane would hold the top of the derrick to prevent it from falling over while the crew moved the pipe onto a second barge. A request was made for a crane and second barge. This request was denied by the home office due to time and cost concerns. Instead, the crew was ordered by the onsite supervisor to straighten the monkey board and pipe manually using ratchets and cables. However, the crew was only able to shift the pipe and monkey board a few inches.

At this point, the crew again requested a crane and additional barge to perform this job. This second request was again denied by Estis’s president and owner. The onsite supervisor instructed his crew to find more cables. The Estis 23’s crew was sent to the nearby Estis Rig 68 to retrieve additional cables and additional man power in the form of Skye Sonnier – an Estis deckhand assigned to Rig 68.

The crew connected the additional cables to the monkey board and pipe. While using the ratchets, the crew heard several loud pops. The derrick and all of the pipes began falling. The crew ran for their lives in an attempt to evacuate the barge. Prior to the arrival of Mr. Sonnier, the Estis 23’s crew had discussed an evacuation plan to be implemented at the first sign of trouble. As the derrick and pipe began falling, the rig 23’s crew implemented the evacuation plan.

Unfortunately, Mr. Sonnier was never advised of the evacuation plan. Sonnier evacuated in the wrong direction. He became trapped between two tanks, and he was struck by the side of the truck. He was pinned between the truck and one of the tanks. Sadly, Mr. Sonnier died while pinned beneath the weight of the truck. His injuries were severe, and they included compressive blunt force injuries of the thorax, multiple rib fractures, punctured lungs due to rib chards, and a ruptured heart.

The facts of this matter are chilling. The accident was entirely preventable. As such, it is easy to see how the McBride case would become the battleground to revisit the prohibition on punitive damages in both Jones Act negligence and unseaworthiness cases.

 ii. Round 1 –  McBride v. Estis Well Service, L.L.C., 872 F. Supp. 2d 511 (W.D. La. 2012)

The McBride Plaintiffs asserted claims for punitive damages due to Estis’s alleged gross, willful, wanton, and/or reckless conduct that allegedly constituted the callous disregard of or indifference to, the safety of the Estis crewmembers. Estis filed a Motion for Summary Judgment to dismiss the punitive damages claims.

Estis claimed that the Jones Act only permitted recovery of pecuniary losses whether for personal injury or wrongful death. Since punitive damages are not pecuniary in nature, Estis argued that punitive damages could not be recovered on Jones Act claims. Further, under the reasoning of Miles v. Apex Marine Corp, the McBride Plaintiffs could not recover punitive damages because their unseaworthiness claims overlap their Jones Act claims. Hence, the punitive damage claims should be dismissed.

In opposition, the McBride Plaintiffs argued that Townsend left open the question whether punitive damages were available under the Jones Act. The Plaintiffs also contended that the U.S. Supreme Court’s ruling in Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008) suggested that they could recover punitive damages via their General Maritime Law claims. Finally, they contended that the Supreme Court’s ruling in Townsend, which abrogated Guevara v. Maritime Overseas Corp., 59 F.3d 1496 (5th Cir. 1995), reinstated the holding of Merry Shipping as the controlling precedent in the U.S. Fifth Circuit. As discussed above Merry Shipping stood for the proposition that punitive damages were in fact available to a Jones Act Seaman.

On May 16, 2012, Magistrate Judge Hanna of the United States District Court for the Western District of Louisiana – Lafayette Division – issued his memorandum ruling addressing whether punitive damages were available to a seaman under the Jones Act and/or General Maritime Law who was killed or injured in Louisiana territorial waters after Townsend. In his 22 page opinion, Magistrate Judge Hanna ultimately reasoned that nothing in Townsend made punitive damages available to the McBride Plaintiffs. He found that the reasoning of Miles was to promote uniformity between the statutes and the General Maritime Law. DOHSA did not allow for non-pecuniary damages. The Jones Act did not allow for non-pecuniary damages based on the jurisprudential interpretation of FELA. In promoting uniformity, the Supreme Court decided that the same rule would apply to the General Maritime Law that was applicable to a wrongful death/survival action under the Jones Act, and nothing in the holding of Townsend altered that result.

The McBride Plaintiffs moved to certify the Judgment for an immediate interlocutory appeal. Judge Hanna granted this motion as the issues presented were “the subject of national debate with no clear consensus.”

iii. Round 2 – McBride v. Estis Well Service, LLC 731 F.3d 505 (5th Cir. 2013)

The Fifth Circuit accepted Plaintiffs’ interlocutory appeal. Briefs were filed, and oral argument was heard. A decision was published on October 2, 2013. Judge Higginson, writing for the three person panel, addressed the “narrow issue” of whether a seaman may recover punitive damages for his employer’s willful and wanton breach of the General Maritime Law duty to provide a seaworthy vessel.

In reversing Judge Hanna, the three judge panel concluded that punitive damages indeed remained available to seaman as a remedy for the General Maritime Law claim of unseaworthiness. Judge Higginson relied heavily on Townsend and reaffirmed the Fifth Circuit’s holding in Merry Shipping.

Recognizing the impact of Townsend, Judge Higginson advised that momentum in the direction towards the disappearance of punitive damages from maritime law had been “sea-tossed” with the abrogation of Guevara and the restored availability of punitive damages for maintenance and cure claims under General Maritime Law. Effectively, the panel claimed that Townsend established a straight-forward rule: if a General Maritime Law cause of action and remedy were established before the passage of the Jones Act, and the Jones Act did not address that cause of action or remedy, then that remedy remains available under the cause of action unless and until Congress intercedes. It cannot be disputed that the cause of action for unseaworthiness and remedy of punitive damages were both established long before the passage of the Jones Act. Further, the Jones Act did not address either unseaworthiness or its remedies. Thus, using Townsend’s “straight forward rule,” punitive damages are available for unseaworthiness. The Court itself acknowledged that it was “less clear” whether punitive damages were awarded for unseaworthiness prior to the passage of the Jones Act. Yet, the point is essentially moot as the panel held that its decision would be unchanged.

iv. Round 3 – McBride v. Estis Well Service, LLC 768 F.3d 382 (5th Cir. 2014)

Estis filed a Petition for Rehearing En Banc. On February 24, 2014, the Fifth Circuit granted the requested en banc rehearing based on the majority vote of the active judges. Keeping in mind that the granting of an en banc rehearing is appropriate only in “extraordinary” circumstances, it is obvious that the majority of the active Fifth Circuit judges felt the issue of punitive damages in maritime law was an issue of great importance. In addition to the requisite briefs of the parties, industry groups, including the Offshore Marine Service Association, the American Waterways Operations and the International Association of Drilling Contractors, filed amicus briefs to reverse the decision of the three judge panel.

Oral argument was conducted on May 14, 2014, and the Court issued its opinion on September 25, 2014. In a close 9-6 vote, the Fifth Circuit held that seamen cannot recover punitive damages for unseaworthiness. The reasoning of the majority opinion was simple yet effective. Writing for the majority, Judge Davis confirmed that Townsend did not alter the holding in Miles. Indeed, the majority opinion specifically noted that the Supreme Court in Townsend reaffirmed the holding in Miles. Miles, which “remains sound,” limited Jones Act seamen to pecuniary damages in negligence and unseaworthiness claims. Punitive damages are non-pecuniary; as such, they are not available. Thus, at present, the only punitive damages available to a seaman are for the willful and wanton non-payment of maintenance and cure.

v.  Final Round – McBride v. Estis Well Service, LLC

The “final round” in any lawsuit is whether the case will be heard and ultimately decided by the United States Supreme Court. The “word on the street” is that the McBride Plaintiffs will petition the U.S. Supreme Court for a Writ of Certiorari. Thus, the bell signaling the final round in McBride is about to be rung.

CONCLUSION

The wave of punitive damages has risen and fallen over the years. Since the peak of Merry Shipping, the availability of punitive damages to the Jones Act seaman had fallen so far that punitive damages were simply not available to the injured seaman after Guavera. Townsend signaled a surge in the wave. Yet, the wave has now crested, at least in the Fifth Circuit, with the decision in McBride. It will be interesting to monitor the other circuits and see if they will fall in line with the McBride decision. Only time, and perhaps a few crafty arguments advanced by counsel for injured seamen, will determine whether the punitive damage wave will rise again.

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[1]  There is no discernable difference between punitive and exemplary damages.

[2]  Anderson v. Texaco, Inc., 797 F. Supp. 531319 (E.D. La. 1993) (Miles compels the conclusion that a plaintiff who is statutorily barred from receiving a punitive award cannot recover punitive damages by couching his claim in the judge-made general maritime law of negligence and unseaworthiness.)

[3]  A monkey board is the platform on which the derrick man works when tripping pipe. It is mounted above the drill platform in the derrick.