by Tod J. Everage

On February 12, 2017, a fishing charter boat, the M/V SUPER STRIKE, carrying several paying customers collided with an offshore service boat, the M/V MISS IDA, during a fishing trip. Claims were asserted by the passengers against both vessels and operators in their respective limitation suits. Recently, dispositive motions were filed against the claims asserted by two passengers – whose only alleged damages were for emotional distress resulting from the collision – claiming they were within the “zone of danger.” See In re TK Boat Rentals, (Civ. No. 14-1545) (E.D. La. March 21, 2018).

According to the U.S. 5th Circuit, the “zone of danger” rule permits a plaintiff to recover for emotional injuries that “result from the witnessing of peril or harm to another if the plaintiff is also threatened with physical harm as a consequence of the defendant’s negligence.” Plaisance v. Texaco, Inc., 966 F.2d 166, 168 (5th Cir. 1992). This rule extends to Jones Act seaman for fear of physical injury to themselves as well. Naquin v. Elevating Boats, LLC, 744 F.3d 927, 938 (5th Cir. 2014). Like many similar issues, the Jones Act extension was borne out of a FELA case from the U.S. Supreme Court. See Consol. Rail Corp. v. Gottshall, 51 US 532, 548 (1994). In order to recover though, the plaintiff must show that he suffered actual injuries.

The U.S. 5th Circuit has not yet recognized recovery under the “zone of danger” rule for passengers under the general maritime law. See Barker v. Hercules Offshore, Inc., 713 F.3d 208, 224 (5th Cir. 2013). In TK Boat Rentals, the district court commented that the “zone of danger” rule was merely a threshold requirement for a plaintiff to recover for emotional injuries. Because the plaintiffs could not prove they suffered any objective injuries, the Court dismissed their claims without having to make the determination of whether the “zone of danger” rule even applied to them.

One plaintiff, Nick Siria, admitted that he did not suffer any personal injuries as a result of the collision and that he had not and did not plan to seek any medical or psychological treatment as a result of the collision. He claimed he had a few “tense” moments and reactions when he returned to the water and later dealt with a car pulling out in front of him, but he did not elaborate any further. The Court found these statements to be too vague and conclusory to demonstrate an emotional injury and dismissed his claims. The second plaintiff, Tracy Edwards, argued he should recover damages because he too was in the “zone of danger” of the collision. Edwards similarly offered a vague affidavit wherein he alleged he suffered emotional and physical injuries, but provided no description of either injury. Looking to his deposition, the Court could only find testimony that Edwards jumped into the river at the time of the collision and that he found the water to be cold. He sought no medical or psychological treatment. Edwards testified that he now has a fear of the water and could not participate in a snorkeling trip because of the collision; he had no problems fishing from a boat though. The Court was not persuaded that Edwards could support his claims with such limited evidence and dismissed his emotional injury claims as well.

The idea of a physical or real manifestation of injuries is a common one among the courts. While a physical injury (in the traditional sense of the word) is not necessarily needed, there must be some evidence that the plaintiff suffered an injury sufficient to be compensated for it. For example, emotional distress may “physically” manifest itself as a psychological disorder or condition – so long as it is capable of objective determination. See, e.g., Haught v. Maceluch, 681 F.2d 291, 299 n.9 (5th Cir. 1982). It seems that a threshold point would be to show that the plaintiff sought some sort of treatment for his complained of “injuries.” Self-serving affidavits and vague testimony will not cut it. Given the fact-intensive question, courts will evaluate these claims on a case-by-case basis.

The U.S. 1st Circuit more recently commented on this issue in Sawyer Brothers, Inc. v. Island Transporter, No. 16-2470 (1st Cir. April 3, 2018). Though the U.S. 5th Circuit hasn’t yet extended the “zone of danger” rule to passengers under the general maritime law, the U.S. 1st Circuit officially took that step. “Given its application to seaman, we see no principled basis for imposing the more restrictive physical impact test upon passengers alleging NIED under the general maritime law.” In so doing, the 1st Circuit joined the 11th Circuit (Chaparro v. Carnival Corp., 693 F.3d 1333, 1338 (11th Cir. 2012) (per curiam) and the 9th Circuit (Stacy v. Rederiet Otto Danielsen, A.S., 609 F.3d 1033, 1035 (9th Cir. 2010), affirmatively allowing such claims. This is not to say that the U.S. 5th Circuit would not join these Circuits, they simply have not yet been forced to pick a side.

The Sawyer Brothers Court dropped a notable footnote in its opinion – the Court would not extend the prohibition of bystander claims set forth in Gottshall to general maritime claims. The Court reasoned that the likelihood of witnessing a death or serious injury of a family member is far greater on the water than on a railroad. In other words, a maritime plaintiff in the 1st Circuit may be allowed to recover if he/she suffered an objective emotional injury as a result of witnessing a death or serious bodily harm to a close family member. Such claims are forbidden under FELA. The 1st Circuit went on to analyze the scope of the “zone of danger” and the provided examples of sufficient physical manifestations of emotional injuries. The plaintiffs in Sawyer Brothers suffered gastrointestinal distress, limb and chest pain, stress-induced shingles, and high fever – all of which were deemed satisfactory to maintain a claim.

While the U.S. 5th and 9th Circuits disagree often on major issues, it remains to be seen if the 5th would disagree with the aforementioned Circuits who have extended “zone of danger” rule to passengers under the general maritime law.

by Michael J. O’Brien

In 2016, District Judge Sarah Vance ruled that the heirs of a self-employed commercial fisherman who died while fishing in state territorial waters could recover non-pecuniary damages.  In Re: Marquette Transp., 182 F.Supp. 3d 607 (E.D. La 2016) (citing Yamaha Motor Corp USA v. Calhoun 516 U.S. 1999 (1996)). [Editor’s Note: See blog post on In re Marquette here]. Judge Vance first reiterated that a non-seafarer is someone who is neither a seaman covered by the Jones Act nor a longshore or harbor worker covered by the LHWCA. Based on this reasoning, the In re Marquette decedent was found to be a non-seafarer. Further, his survivors could pursue state law remedies and recover non-pecuniary damages under state law. Two years later, Judge Vance recently revisited Yamaha to address a separate but similar issue:  whether the spouse of an injured non-seafarer can recover damages pursuant to state law claims for loss of society and consortium.

In Van Horn, et al. v. Chubb Ins. Co., et al., No. 1711969, (E.D. La 4/03/18). The injured Plaintiff, Muriel Van Horn, was a race official for sailing regattas on Lake Pontchartrain. On the day in question, Mrs. Van Horn boarded a boat for transport to her official’s position. While traveling on Lake Pontchartrain, the boat operator suddenly accelerated his vessel over the swells of the lake. The boat left the water’s surface, assumed a nearly vertical position in the air, and violently slammed down on the water. As a result, Mrs. Van Horn fractured her right tibial plateau. She required major surgery and ongoing medical care. Mrs. Van Horn and her husband sued the boat operator and others for damages under the General Maritime Law as well as Louisiana Law in supplement to General Maritime Law. Specifically, Mr. Van Horn asserted Louisiana state law claims for loss of consortium and society as a result of his wife’s injuries. Defendants took exception to Plaintiffs’ claims and moved to dismiss all claims for loss of consortium and society.

In support of their claims, the Van Horns argued that claims for loss of consortium and society are available to the spouse of a non-seafarer injured in territorial waters when authorized by state law per Yamaha. Note that Yamaha’s “non-seafarer” and “territorial waters” requirements were met as it was undisputed that Mrs. Van Horn was a non-seafarer injured in Louisiana’s territorial waters. Further, Louisiana law permits the spouse of an injured person to recover damages for loss of consortium and society. As such, the Van Horns alleged that they were well within their rights to maintain these non-pecuniary claims.

Alternatively, the Defendants suggested that Yamaha was limited solely to wrongful death actions.  Defendants cited the Eleventh Circuit’s decision in In Re: Amtrak “Sunset Limited” Train Crash, 121 F.3d 1421 (11th Cir. 1997), where that circuit held that Yamaha does not extend to personal injury actions because state wrongful death actions had a historical basis in admiralty. The Eleventh Circuit’s rationale was that no General Maritime cause of action for wrongful death existed prior to 1970; thus, admiralty courts looked to state law to provide a remedy for the deaths of non-seamen in territorial waters.  By contrast, the General Maritime Law has long recognized a personal injury cause of action, such that admiralty courts did not need to rely on state law for remedies in cases of personal injury.  As such, according to Defendants (and the Eleventh Circuit), Mr. Van Horn should be unable to maintain his loss of consortium and society claims.

While Judge Vance admitted that the Eleventh Circuit’s argument had “some force,” she was not persuaded that the Yamaha Court endorsed separate remedies for personal injuries and wrongful deaths of non-seafarers in territorial waters.  Indeed, given the absence of conflict between state remedies and federal law as well as the “clear trend toward consistent treatment of maritime personal injury and wrongful death actions”, Judge Vance found that Yamaha was applicable to personal injuries within territorial waters. As such, Louisiana laws governing loss of consortium damages may supplement General Maritime Law with regard to personal injuries of non-seafarers in territorial waters. Accordingly, Judge Vance held that Mr. Van Horn claims of loss of consortium and society could proceed.

by Michael J. O’Brien

It is now well settled in the United States Fifth Circuit Court of Appeals that a seaman cannot recover punitive damages on an unseaworthiness claim. McBride v. Estis Well Service, 768 F.3d 382 (5th Cir. 2014) (en banc). Specifically, the U.S. Fifth Circuit has held that punitives are non-pecuniary losses and therefore may not be recovered under the Jones Act or General Maritime Law. However, this opinion is not shared by the Ninth Circuit Court of Appeals.  Indeed, in the matter of Batterton v. Dutra Group, 880 F.3d 1089 (9th Cir. 2018), the Ninth Circuit held that the opposite was true and allowed a seaman to pursue punitive damages on his unseaworthiness claims.

In a prior case, Evich v. Morris, 819 F.2d 256 (9th Cir. 1987), the Ninth Circuit held that punitive damages were available under General Maritime Law for claims of unseaworthiness and for failure to pay maintenance and cure.  Dutra relied on the Fifth Circuit’s line of cases as well as the Supreme Court’s decision in Miles v. Apex Marine Corp. that Evich had been overruled.

The sole question before the Ninth Circuit in Dutra was whether punitive damages were an available remedy for unseaworthiness. While noting that the Fifth Circuit’s leading opinions in McBride are “scholarly and carefully reasoned” the Ninth Circuit found that McBride’s dissenting opinions, which argue that punitive damages are available on unseaworthiness actions, were more persuasive.  In forming its opinion, the Ninth Circuit chose to adopt a broad interpretation of the U.S. Supreme Court’s decisions in Atlantic Sounding Co. v. Townsend, 557 US 404, 129 S.Ct. 2561 (2009).

In Townsend, the Supreme Court held that punitive damages were available to Jones Act seamen for the willful failure to pay maintenance and cure. The Townsend Court held that “historically, punitive damages have been available and awarded in general maritime actions” and “nothing in Miles v. Apex Marine or the Jones Act eliminates that availability.” The Fifth Circuit in McBride interpreted Townsend to only apply to maintenance and cure. The Ninth Circuit in Dutra took a far more expansive interpretation. Relying on the Townsend Court’s notation that punitive damages had historically been available and awarded in general maritime actions, the Ninth Circuit found no persuasive reason to distinguish maintenance and cure actions from unseaworthiness actions with respect to the damages awardable. Accordingly, a seaman may bring a claim for punitive damages if he falls within the jurisdiction of the Ninth Circuit.

This decision has yielded a clear split between the Ninth Circuit and Fifth Circuit on the issue of whether punitive damages are available in an unseaworthy action. Splits in circuit courts of appeals are typically addressed by the United States Supreme Court. As such, it will ultimately fall to the highest court in the land to resolve this compelling issue.

By Daniel Stanton

On September 28, 2017, President Trump granted a ten day waiver of the Jones Act for the island of Puerto Rico, a U.S. territory, in an effort to facilitate the island’s recovery from Hurricanes Irma and Maria.  The waiver went into effect immediately and alleviates the Jones Act’s restriction against the transport of passengers and cargo between U.S. ports, which includes Puerto Rico, by foreign flagged, foreign owned, or foreign crewed vessels.   A similar waiver was issued for the states of Texas and Florida in response to Hurricanes Harvey and Irma.

The Merchant Marine Act of 1920, commonly known as the Jones Act, was developed to afford protections to the then fledgling U.S. maritime industry.  In an effort to foster U.S. shipbuilding, shipping, and seafaring, the Jones Act required vessels transporting passengers and goods between U.S. ports to be built in the U.S., to be owned by U.S. individuals or entities, and to be U.S. flagged.  The Jones Act also required all licensed crewmembers serving aboard vessels engaged in trade between U.S. ports to be U.S. citizens.  The Jones Act also established a system of legal rights, remedies, compensation benefits, and procedural requirements for injured American seaman, much like state and federal workers’ compensation schemes.

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By Zoe Vermeulen

In the recent case of Halle v. Galliano Marine Service, L.L.C., No. 16-30558, 2017 WL 1399697 (5th Cir. Apr. 19, 2017) the U.S. Fifth Circuit addressed for the first time whether ROV technicians, who are traditionally Jones Act seamen, qualify as seamen under the Fair Labor Standards Act (“FLSA”). The Court found that the plaintiff, an ROV technician assigned to an ROV support vessel, was not an FLSA seaman. In reaching its decision, the Court reiterated the important difference between a Jones Act seaman and a seaman for purposes of the FLSA.

Under the Jones Act, the term “seaman” is construed broadly to provide protection for a larger group of individuals. Seamen are exempt from the FLSA, so the term is construed narrowly, to ensure that more workers enjoy the benefits granted by the FLSA. The Court was clear that “the definition of ‘seaman’ in the Jones Act is not equivalent to that in the FLSA.”

The FLSA requires employers to provide overtime pay to any employee who works more than forty (40) hours in a workweek, unless the employee is subject to an exemption. Again, “seamen” are exempt from the FLSA’s overtime requirements. Under the FLSA, an employee is a “seaman” if: (1) the employee is subject to the authority, direction, and control of the master; and (2) the employee’s service is primarily offered to aid the vessel as a means of transportation, provided that the employee does not perform a substantial amount of different work. These criteria are very fact specific.

In Halle, there was a dispute as to whether the plaintiff was subject to the authority, direction, and control of the master of the ROV support vessel. Thus, the first factor was not dispositive. In analyzing the second factor, the Court found that the ROV technician plaintiff lived on the ROV support vessel and operated the ROV, which was attached to the support vessel, to perform industrial tasks in the water. He occasionally communicated GPS coordinates to the captain of the support vessel, but did not otherwise help ensure that the support vessel navigated safely or in any particular manner from point A to point B. The plaintiff did not control the vessel’s path to its intended target, steer, anchor, make any navigational decisions, or take any navigational actions. The plaintiff, and other ROV technicians, could not even see if there were navigational issues affecting the support vessel. Under these facts, the Court found that the plaintiff’s service was not “primarily offered to aid the vessel as a means of transportation.” As the plaintiff – a Jones Act seaman – could not meet the second prong of the test, he could not be a seaman for FLSA purposes.

This case provides valuable guidance to maritime employers in classifying employees for FLSA purposes. Employers should never assume that because a worker qualifies as a Jones Act seaman, he or she will automatically be exempt from the overtime requirements of the FLSA. While both the Jones Act and the FLSA employ the term “seaman,” Halle underscores the different tests for seaman status under these Acts. Litigants are cautioned not to borrow an analysis of this term under one Act for use in the other.

Misclassifying an employee as “exempt” can expose employers to back pay, liquidated damages, and attorneys’ fees. And with a recent increase in FLSA claims, correct employee classification is as critical now as ever.

Close-up close-up shots of the tracks

By Michael J. O’Brien

In the recent case of BNSF Railway Co. v. Tyrrell, the U.S. Supreme Court rejected a blatant forum shopping attempt by two railway employees and limited future lawsuits against out-of-state railroads. In BNSF Railway Co., Robert Nelson of North Dakota and Kelli Tyrrell of South Dakota filed separate suits against BNSF Railroad in a Montana State Court pursuant to the Federal Employer’s Liability Act (“FELA”) 45 U.S.C. §51 et sec. which makes railroads liable for on-the-job injuries to their employees. Nelson allegedly injured his knee while working for BNSF in the State of Washington. Tyrrell claimed that her husband died of cancer he contracted after being exposed to chemicals while working for BNSF in South Dakota, Minnesota, and Iowa. Despite the fact that neither Plaintiff resided in Montana, nor sustained any injuries in Montana, they filed their lawsuit against BNSF in that state based upon BNSF’s alleged contacts in Montana.

BNSF was incorporated in Delaware and it maintained its principle place of business in Texas. It operates railroad lines in 28 states, however, it maintained less than 5% of its workforce and approximately 6% of its total track mileage in Montana. Nelson and Tyrell claimed that these contacts with Montana were sufficient for them to sue the railroad in Montana. BNSF disagreed.

After Tyrrell and Nelson filed suit, BNSF moved to dismiss both of their lawsuits for lack of personal jurisdiction. The Montana Supreme Court ultimately denied the motion allowed these cases to move forward holding that Montana Courts could exercise general personal jurisdiction over BNSF because §56 of FELA authorizes State Courts to exercise personal jurisdiction over railroads “doing business” in the state. The Montana Supreme Court further observed that Montana law provides for the exercise of general jurisdiction over “all persons found within the state.” Thus, because of BNSF’s many employees and miles of track in Montana, the Montana Supreme Court concluded that BNSF was both “doing business” and “found within” the state such that both FELA and Montana law authorized the exercise of personal jurisdiction.

The U.S. Supreme Court granted certiorari to resolve whether §56 of FELA authorizes State courts to exercise personal jurisdiction over railroads that do business in states but are neither incorporated, nor headquartered in that state. The Supreme Court also examined whether the Montana Court’s exercise of personal jurisdiction in these cases comported with constitutional due process.

A solid majority of the Court rejected the two theories upon which Nelson and Tyrrell had relied on to justify jurisdiction over BNSF in Montana. First, the Court held that FELA does not itself create a special rule authorizing jurisdiction over railroads simply because they happen to be doing business in a particular place. Next, the Court ordered that an exercise of jurisdiction over BNSF must still be consistent with due process. Thus, the Montana rule that allowed Courts in the state to exercise jurisdiction over “persons found” in Montana did not help the Plaintiffs as it violated due process.

The Supreme Court repeatedly mentioned that BNSF was not incorporated in Montana, and it did not maintain its principle place of business in that state. Further, BNSF was not so heavily engaged in activity in Montana “as to render it essentially at home” in that state. The Supreme Court noted that a corporation that operates in many places can “scarcely be deemed at home in all of them.” Thus, the business that BNSF did in Montana may be sufficient to subject the railroad to specific personal jurisdiction in maritime for claims related to the business activity in Montana. However, simply having in state business did not suffice to permit the assertion of general jurisdiction over claims like Nelson’s and Tyrrell’s that were completely unrelated to any activity occurring in Montana.

Last, it is important to note that this holding is also relevant in maritime cases. Indeed, since FELA case law is applicable to Jones Act cases, BNSF Railway Co.’s holding will, by extension, also limit forum shopping by Jones Act seaman under the same reasoning.

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By Tod J. Everage

Until the U.S. 5th Circuit gets an opportunity to directly address the continued viability of Scarborough v. Clemco Industries, 391 F.3d 660 (5th Cir. 2004) in the wake of Atlantic Sounding v. Townsend, 557 U.S. 404 (2009), we are likely to see a lack of harmony among the district court judges considering this issue. Scarborough specifically protects third parties (see oil and gas companies) against punitive damage exposure (see uninsured) from injured seamen employed by their contractors (see vessel companies). We have been following the EDLA commentary on Scarborough as its erosion would significantly raise the potential liability of those companies who contract for the use of vessels. See previous posts here and here for more background on the Scarborough fight in the Eastern District of Louisiana. Recently, one of the two EDLA Judges holding the view that Scarborough was no longer good law reversed his course, resulting now in a 7-1 score in favor of Scarborough, further reducing concern for an unpredictable judicial roulette on this issue.

In a nutshell, Scarborough was the legal consequence of a long line of jurisprudence in the 5th Circuit holding that punitive damages were not available under the Jones Act or General Maritime Law (“GML”) that began with Miles v. Apex Marine, 498 U.S. 19 (1990). Where Miles protected the Jones Act employers from punitive damages, Scarborough protected all other third party defendants, such as oil and gas companies who had hired those Jones Act employers. In 2009, Townsend reined in the expanding prohibitions on punitive damages by finding that they could be awarded under GML for the employer’s willful and wanton failure to pay maintenance and cure. Townsend very directly and explicitly abrogated Guevera v. Maritime Overseas Corp., 59 F.3d 1496 (5th Cir. 1995) which had previously held just the opposite. That abrogation is relevant here because the Scarborough court cited Guevera favorably and extensively in its analysis.

Though Townsend definitely overruled Guevera, it also re-affirmed Miles, which remains a pillar of maritime jurisprudence in this area. Plaintiff attorneys view Townsend as a means to reverse the expansion of Miles and have renewed their attack on those judge-made roadblocks to the availability of punitive damages. With oil and gas companies being viewed as the “deep pockets” in lawsuits, Scarborough’s protection of those companies has become a popular focus.

After Townsend, several judges re-affirmed Scarborough with little more than lip service, as it seemed clear that Townsend was limited to maintenance and cure issues and the district courts could not “assume the Fifth Circuit has changed its position on personal injury claims falling outside the scope of Townsend.” See In re: Deepwater Horizon, 2011 WL 4575696 (E.D. La. 9/30/11) (Barbier, J.); see also O’Quain v. Shell Offshore, Inc., 2013 WL 149467 (E.D. La. 1/14/13) (Berrigan, J.); In re: International Marine, LLC, 2013 WL 3293677 (E.D. La. 6/28/13) (Lemmon, J.); Bloodsaw v. Diamond Offshore Mgmt. Co., 2013 WL 5339207 (E.D. La. 8/19/13) (Vance, J.); Ainsworth v. Caillou Island Towing Co., 2013 WL 3216068 (E.D. La. 10/21/13) (Brown, J.). Despite the perceived clarity, Judge Barbier foresaw the potential dispute that could arise on this issue given the underlying reasoning in Townsend. (“Though this conclusion is not without doubt given the Supreme Court’s recent decision in [Townsend]…”). In Todd v. Canal Barge Co., 2013 WL 5410409 (E.D. La. 9/25/13), Judge Fallon provided the first true analysis of the continued validity of Miles and its progeny after Townsend. Therein, Judge Fallon acknowledged the limitations of Townsend and the re-affirmation of Miles, and dismissed the plaintiff’s claims for punitive damages for negligence and unseaworthiness. This opinion makes his later decision in Collins all-the-more anomalous.

In 2014, the U.S. 5th Circuit decided McBride v. Estis Well Service, LLC, 768 F.3d 382 (5th Cir. 2014), wherein the en banc panel also held that Townsend was narrowly limited to maintenance and cure claims. McBride acknowledged the continued vitality of Miles to preclude all other forms of punitive damages claims under GML or the Jones Act, though it did not directly mention Scarborough. Judge Fallon then got another opportunity to address Scarborough in light of both Townsend and McBride. See Collins v. ABC Marine Towing, LLC, 2015 WL 5254710 (E.D. La. 9/9/2015). Therein, Judge Fallon distinguished Miles and McBride and was persuaded by Townsend’s abrogation of Guevera, which he felt served as the foundation for Scarborough. Judge Fallon held that Scarborough was “effectively overruled” by Townsend, finding that it was “inconsistent with current Supreme Court precedent.” He did not cite to his prior ruling in Todd just a year prior. This decision served as the first major blow to formerly-protected third party, non-Jones Act employers in the EDLA.

Shortly thereafter, Judge Morgan joined the majority, issuing two opinions upholding Scarborough. See Howard Offshore Liftboats, LLC, 2015 WL 7428581 (E.D. La. 11/20/15); Lee v. Offshore Logistical and Transports, LLC, 2015 WL 7459734 (E.D. La. 11/24/15). A few months later though, Judge Zainey issued an opinion against Scarborough, relying heavily on Judge Fallon’s reasoning in Collins. See Hume v. Consolidated Grain & Barge, Inc., 2016 WL 1089349 (E.D. La. 3/21/16). Judge Morgan again re-affirmed her confidence in Scarborough in Lewis v. Noble Drilling Services, 2016 WL 3902597 (E.D. La. 7/19/2016).

Heading into the 2017, only Judges Fallon and Zainey had rejected the continued viability of Scarborough and its punitive damages prohibition, while at least six of their colleagues held differently. Then, unexpectedly, Judge Fallon changed his mind and joined the majority. See Wade v. Clemco Indus., No. 16-00502 (E.D. La. 2/1/2017). Wade presented Judge Fallon with yet another opportunity to directly address Scarborough; but, this time his analysis and holding were fundamentally different. Wherein Collins, he focused on Scarborough’s reliance on Guevera, in Wade, he instead focused on Miles. Judge Fallon was also persuaded this time by McBride: “It has become clear since the en banc opinion in McBride that in wrongful death cases brought under general maritime law, a survivor’s recovery from employers and non-employers is limited to pecuniary losses.” Quite differently than holding that Scarborough was “effectively overruled,” this time he noted that McBride gave it “clarity and vitality.” As a consequence, Judge Fallon dismissed the plaintiff’s punitive damages claims against the third parties who were not the plaintiff’s Jones Act employer. This is good news for third party defendants finding themselves on the wrong end of a Jones Act lawsuit in the EDLA, as there is now only one judge’s opinion in favor of (and seven against) allowing punitive damage claims to proceed against them. Since these decisions are interlocutory in nature, they do not get appealed by right, and all prior cases have settled before the 5th Circuit could comment. Nevertheless, we will keep an eye out for any further developments, hoping that the remaining judges who get an opportunity to consider this issue fall in line with the legally-sound majority.

Tugboat sailing in a stormy day off the Portuguese coast during its activity of oil tankers and other ships support

By Michael J. O’Brien

The doctrine of maintenance and cure mandates that an employer pay an injured seaman a per diem living allowance for food and lodging comparable to what the seaman was entitled to while at sea. The injured seaman is also entitled to payment of medical expenses incurred in treating an injury or illness. The duty to pay maintenance and cure extends until the seaman has reached maximum medical improvement (MMI). However, the point at which a seaman reaches MMI can be a thorny issue, particularly since punitive damages are available to a seaman whose employer has arbitrarily and capriciously terminated maintenance and cure benefits. Many employers will request an independent medical examination (IME) to assist in the investigation of whether the seaman has reached MMI. Quite often, an employer will terminate maintenance and cure based on the opinions of the IME physician, expecting that its reliance on the medical opinion of the expert medical professional would not be arbitrary or capricious. Unfortunately, a recent decision by Judge Carl Barbier of the Eastern District of Louisiana demonstrates that an employer that terminates maintenance and cure benefits simply because an IME physician opines that a seaman has reached MMI does so at its own peril.

In Weeks Marine, Inc. v. Rodney Watson, 2016 WL 3027430 (E.D. La. May 27, 2016), Watson claimed to have been injured on September 24, 2014, when he was struck by a large steam table that toppled over in the galley in rough seas. On September 27, 2014, Watson was taken to a North Carolina physician with complaints of left hip and knee pain. Next, Watson was evaluated by an orthopedist on October 2, 2014. An MRI was recommended to investigate possible knee ligament or meniscus damage. His employer refused to authorize or pay for this diagnostic test. Thereafter, on October 16, 2014, Watson returned home to Louisiana and began treating with a local orthopedic surgeon. An IME was performed on January 15, 2015 by a physician chosen by Watson’s employer. The IME physician opined that there were no objective findings or a need for additional medical treatment. The IME physician also found Watson to be at MMI. Based on the opinions of the IME physician, Weeks terminated Watson’s maintenance and cure benefits on January 15, 2015.

Watson continued to treat with his choice of his physician who never found him to be at MMI. Eventually, Weeks contacted Watson and ordered him to return to the vessel and resume his duties. Watson refused due to his ongoing physical symptoms and he was terminated. Watson then retained an attorney and began treating with a Houston, Texas orthopedic surgeon. MRI studies revealed possible injuries to the left knee as well as to the cervical and lumbar spine. At his employer’s request, Watson returned to the IME physician on June 15, 2015, for his own MRI. The MRI was reported as normal, and Weeks declined to reinstate either Watson’s maintenance or cure.

As of Watson’s last medical appointment with his Houston orthopedist, it was recommended that he undergo a two-level cervical disc fusion, left knee arthroscopy, a radio frequency neurotomy procedure, and continued observation. The Houston physician further related the need for this treatment and surgery to the September 24, 2014 vessel incident. As of the date of trial, Weeks had not paid any medical bills since January 15, 2015 (the date of the first MMI opinion by the IME physician). Unpaid medical expenses were $56,582.00. The parties stipulated that accrued maintenance was payable at $20 per day and totaled $9,340 as of May 17, 2016.

Procedurally, Weeks filed a Complaint for Declaratory Judgment declaring that it was not obligated to make maintenance and cure payments beyond January 15, 2015. Watson responded by filing a Complaint for Damages alleging negligence under the Jones Act, unseaworthiness of the vessel, and compensatory and punitive damages for Weeks’ willful failure to pay maintenance and cure. The two Complaints were consolidated for a bench trial.

Following the bench trial, Judge Barbier held that Weeks was negligent and the vessel unseaworthy. There was no comparative negligence on the part of Watson. Judge Barbier further found that there was credible medical evidence that Watson required a two-level cervical fusion at the cost of $125,000, as well as a left knee arthroscopy and lumbar radiofrequency neurotomy.

In deciding the issue of punitive damages, Judge Barbier reiterated that the maintenance and cure duty must be liberally interpreted for the benefit and protection of the seaman. Any ambiguity or doubt related to maintenance and cure must also be resolved in favor of the seaman. He highlighted that the ship owner bears the obligation to investigate a seaman’s maintenance and cure claim and examine all medical evidence in determining whether maintenance and cure is owed. Further, if a ship owner unilaterally decides to stop paying maintenance and cure and the seaman reasserts his rights by bringing action against the ship owner, the ship owner meets his burden of proof only by providing “unequivocal evidence” that the seaman has reached MMI. See Johnson v. Moreland Drilling Co., 893 F.2d 77, 79 (5th Cir. 1990). Critically, Judge Barbier held that a second opinion contrary to the treating doctor’s opinions regarding diagnosis or prognosis of an injured seaman does not provide the unequivocal evidence required for termination of maintenance and cure benefits. This is in contrast to the existing case law out of the EDLA that has found a Jones Act employer was not arbitrary or capricious when it terminated maintenance in cure based upon its IME doctor’s MMI opinion that conflicted with the treating physician’s opinion. See Great Lakes Dredge and Dock Co. v. Martin, 2012 WL 3158870 (E.D. La. 2012) (Lemelle); Lodrigue v. Delta Towing, LLC, 2003 WL 22999425 (E.D. La. 2003) (Vance). That being said, each case must be evaluated on its own facts.

Based on this rationale, Judge Barbier found that the employer arbitrarily terminated Watson’s maintenance and cure benefits on January 15, 2015. Indeed, Judge Barbier put no faith in the opinion of the IME physician and rejected the physician’s “incredible and biased testimony at trial.” Thus, in addition to his other damages, Watson received $100,000 in punitive damages for willful failure to pay maintenance and cure as well as $50,000 in attorney’s fees incurred for his maintenance and cure claim.

This decision will be well known in the maritime plaintiff’s bar and used to threaten similar claims for punitive damages when a Jones Act employer relies heavily on its IME physician’s opinion in terminating maintenance and cure benefits. While specific circumstances in this case certainly affected the analysis, Jones Act employers should proceed with caution before terminating benefits on the basis of their own IME in light of this decision.

Commercial shrimp fishing boat

By Michael J. O’Brien

In the recent case of In re Marquette Transp., No. 13-5114, 2016 WL 1695109 (E.D. La. 4/26/16), Judge Sarah Vance offered the latest comment on how a “seafarer” is defined by the landmark U.S. Supreme Court case of Yamaha Motor Corp. U.S.A. v. Calhoun, 516 U.S. 199 (1996).

In re Marquette arose out of a 2013 vessel collision in the territorial waters of Texas between a towing vessel owned and operated by Marquette and a vessel owned by John Tran, a self-employed commercial fisherman. As a result of the collision, Tran was killed; his fishing vessel was destroyed. Litigation began when Marquette filed a Limitation action under 46 U.S.C § 30501, et seq. Thereafter, the family of John Tran filed a claim against Marquette under the General Maritime Law and the survival and wrongful death laws of Texas.

After extensive litigation, in April 2016, the Tran claimants filed a Memorandum of Law addressing the issue of whether they could supplement remedies available under the General Maritime Law with State Law remedies provided by Texas’s wrongful death and survival statutes. They argued that because the decedent was neither a Jones Act seaman nor a maritime employee covered by the Longshore and Harbor Workers Compensation Act (“LHWCA”), Tran was a “nonseafarer,” such that his survivors could pursue state law remedies as allowed by Yamaha. Marquette opposed contending that because Tran earned his living as a fisherman, he was a “person engaged in maritime trade.” According to Marquette, Tran was a “seafarer” as defined by Yamaha; thus, his survivors were precluded from recovering non-pecuniary damages under Texas law.

Note that it was undisputed that Tran was neither a Jones Act seaman nor an employee covered by the LHWCA. At issue was whether the Tran claimants could supplement remedies available under General Maritime Law with state law remedies, including the remedies provided by Texas’s Wrongful Death and Survival Statute.

Whether non-pecuniary damages are available in cases involving non-seamen killed or injured in state territorial waters was famously taken up by the U. S. Supreme Court in the aforementioned case of Yamaha. In that case, the parents of a child killed in a jet ski accident in state territorial waters asserted state law remedies. Drawing a distinction between “seafarers” and “nonseafarers,” the U.S. Supreme Court held that the General Maritime Wrongful Death Action does not preempt state remedies in cases involving the death of a non-seafarer in state territorial waters. Holding that Congress had not prescribed remedies for the wrongful deaths of nonseafarers in territorial waters, the Yamaha Court found no basis for displacing state remedies in cases of this nature.

Since Yamaha, courts have divided on the meaning of the critical term “non-seafarer.” The division between the two leading interpretations of “nonseafarer” is based on language found in the Yamaha opinion. In a footnote, the Yamaha Court explained that “by non-seafarers, we mean persons who are neither seaman covered by the Jones Act…nor longshore workers covered by the Longshore and Harbor Workers Compensation Act.” However, also in the Yamaha opinion, the Court described the scope of its holding noting that state remedies are not displaced in cases where the claimant “was not a seaman, longshore worker, or person otherwise engaged in maritime trade.” Seizing upon the “person otherwise engaged in maritime trade” language, several courts have concluded that a “person otherwise engaged in maritime trade” is a “seafarer” precluded from pursuing non-pecuniary damages under state law even though that person is neither a Jones Act seaman nor longshoreman covered by the LHWCA.

Marquette argued that Tran, a self-employed commercial fisherman, was “otherwise engaged in maritime trade at the time of the collision.” Based on this interpretation, Tran would be deemed a “seafarer” under Yamaha and the Tran claimants would be barred from supplementing their federal maritime law remedies with non-pecuniary damages provided by Texas law. Other Courts have explicitly rejected Marquette’s approach and simply defined a nonseafarer as one who is neither a seaman nor covered by the LHWCA.

In a well-reasoned opinion, Judge Vance found the Tran claimants’ arguments more persuasive and more consistent with Yamaha as a whole. She reasoned that it was clear that Jones Act seamen and Longshore workers covered by the LHWCA are “seafarers,” while individuals who are not covered by these maritime statutes are “nonseafarers.” In reaching the result, Judge Vance found that in defining the term “nonseafarer” in the aforementioned footnote, the Supreme Court expressly tied “seafarer” status to coverage under federal maritime statutes, such as the Jones Act and the LHWCA. Judge Vance further advised that it was reasonable to conclude that Yamaha’s reference to “persons engaged in maritime trade”, mainly refers to those maritime employees who are not longshore workers, but are, nonetheless, covered by the LHWCA. Section 902(3) of the LHWCA defines “employee” as “any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor worker including a ship repairman, ship builder, and ship breaker…” 33 U.S.C. § 902(3).

Based on this reasoning, Judge Vance joined those courts that have held, for purposes of Yamaha, a nonseafarer is someone who is neither a seaman covered by the Jones Act nor a longshore or harbor worker covered by the LHWCA. Accordingly, the decedent Tran was a nonseafarer and Yamaha did not preclude application of Texas statutes preventing recovery of non-pecuniary damages. While this case involved Texas law, Judge Vance’s ruling should not be narrowly read to apply only to Texas-based incidents as her ruling would be the same in Louisiana as well.

Close-up on a dollar sign.

By R. Chauvin Kean and Sean T. McLaughlin

On June 29, 2016, the Louisiana Court of Appeal, Third Circuit, affirmed a jury’s verdict of $125,000 in compensatory damages and $23,000,000 in punitive damages in a maritime products liability case, resulting in a damages ratio of 184:1! In Warren v. Shelter Mutual Ins. Co., 15-354, 15-838, & 15-1113 (La. App. 3 Cir. 06/29/16); — So. 3d —, the Third Circuit affirmed both the jury’s determination that punitive damages were warranted and the amount of punitive damages. This case is noteworthy for many reasons, but this article focuses on only two: (1) the Third Circuit’s decision that punitive damages are available to non-seafarers under the general maritime law; and (2) the Third Circuit’s finding that the amount of punitive damages did not violate the Due Process Clause of the Fourteenth Amendment, despite the 184:1 ratio.

On May 7, 2005, Derek Hebert was a passenger in a small boat operated by Daniel Vanvoras. They were in a former channel of the Calcasieu River traveling between Mr. Vanvoras’ home and the Lake Charles Country Club. While en route, the boat suffered a complete functional loss of its steering system. Mr. Hebert was ejected and struck by the boat’s propeller nineteen times. He was killed almost instantly. Following the accident, an investigation was performed into the boat’s steering system. It revealed that the loss of a relatively small amount of hydraulic fluid would result in a complete loss of steering. Mr. Hebert’s relatives filed wrongful death claims and a survival action against the several parties, including the manufacturer and designer of the boat’s steering system, Teleflex. The claim against Teleflex was simple: Teleflex failed to warn boat owners or their passengers about the potential catastrophic consequences of losing a very small amount of hydraulic fluid.

At trial, the evidence established that in 1989 Teleflex performed testing of its steering system. Their tests showed that the loss of mere teaspoons of hydraulic fluid resulted in a complete loss of steering. Prior to the complete loss, the steering on the boat was reported to “feel different.” Teleflex’s designer, Eric Fetchko, testified that Teleflex “assumed that the different feel in the steering response would alert users that they had a problem.” The evidence also established that Teleflex “received thousands of complaints regarding fluid loss.” At trial, Teleflex contended that those thousands of complaints “must be kept in context because Teleflex has sold millions of the [steering] systems.” Even though Teleflex knew that a minimal amount of fluid loss could end in the death of vessel operators and passengers, it believed “the frequency was not high enough to justify” a more specific warning because Teleflex “did not want to cause ‘mass hysteria.’”

The case was tried to a jury twice. The first time, a jury ruled in favor of Teleflex. This ruling was overturned due to inaccurate information being provided to the jury. At the second trial, the jury ruled in favor of the plaintiffs, awarding $125,000 in compensatory damages and $23,000,000 in punitive damages against Teleflex.

Because the accident occurred upon the navigable waterways of the United States, admiralty jurisdiction and general maritime law applied to this case. The U.S. Supreme Court has recently affirmed that punitive damages are allowed under the general maritime laws unless Congress has statutorily prohibited a plaintiff from seeking such damages. See, Atlantic Sounding Co., Inc. v. Townsend, 557 U.S. 404, 414-15 (2009); see also, McBride v. Estis Well Service, LLC, 768 F. 3d 382, 389-91 (5th Cir. 2014) (en banc). [Editor’s note: click here for more discussion on McBride and maritime punitive damages]. The Jones Act and the Death on the High Seas Act (“DOSHA”) are such statutes, and expressly limit a seafarer’s recovery to pecuniary damages; whereas the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), for example, does not have the same limitations. Mr. Hebert, as a passenger on a recreational vessel, was not subject to an overlapping federal statute such as the Jones Act, the LHWCA, or the DOHSA. Due to this fact, punitive damages are available under the general maritime law. Although rare, where the plaintiff can prove the defendant’s intentional or wantonly reckless conduct amounted to a conscious disregard for the rights of others, he may be awarded punitive damages. See Poe v. PPG Indus., 00-1141, p. 6 (La. App. 3 Cir. 03/28/01); 782 So. 2d 1168, 1173.

Because he was not a member of the boat’s crew or deemed a worker covered under a federal statutory scheme, Mr. Hebert was classified as a non-seafarer and thus was entitled to all remedies under general maritime law – including punitive damages for the claims asserted against Teleflex for its failure to warn boat operators and passengers of the steering system’s hidden dangers.

On appeal, the Louisiana Third Circuit conducted a thorough analysis of U.S. constitutional law and the jurisprudential understanding of punitive damage award ratios compared to compensatory damages. Outlining the various concepts and guidelines announced by the U.S. Supreme Court, the court began with the notion that all punitive damage awards invoke some type of analysis under the Due Process Clause of the Fourth Amendment. The rationale is that where an award is grossly excessive, it furthers no legitimate state purpose and constitutes an arbitrary deprivation of property. See Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991).

To that end, the Third Circuit examined the excessiveness of the $23,000,000 punitive damages award under BMW of North America, Inc. v. Gore, 517 U.S. 559, 575-85 (1996). In BMW, the U.S. Supreme Court set out the standard for analyzing the gross excessiveness of a punitive damage award, which includes: “(1) the degree of reprehensibility of the misconduct; (2) the ratio, or disparity between the punitive award and the harm, or potential harm, suffered by the plaintiff; and (3) the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” The Supreme Court has consistently held that there is no-bright-line rule or rationale for determining what is an appropriate punitive damage award.

Applying the relevant guideposts from BMW, the Third Circuit first examined the reprehensibility of Teleflex’s alleged misconduct. Noting that Teleflex had actual and substantive knowledge of the defect in the steering system several years prior to the accident, the court found it reprehensible that Teleflex chose not to provide supplemental warnings to owners, operators, or their passengers of such defects or dangers simply to avoid causing “mass hysteria.” In fact, the court went on to note that unlike most cases where there was “hard-to-detect” wrongdoing by the liable party, here, Teleflex’s concealment of its own knowledge that its product could be defective or fail and cause occupants of the vessels to die was held to be egregious behavior. For these reasons, the court found the reprehensibility guidepost fully realized in this case, as opposed to Teleflex’s misconduct being merely reckless, as is most common in similar cases. Finding that Teleflex’s behavior was egregious rather than reckless allowed the Third Circuit to ignore the usually-accepted damage ratios and actual-damage findings of prior case law, and laid the foundation for the court’s novel approach in affirming the punitive damages awarded by the trial court.

With that finding already being made, the court reviewed the second guidepost – the ratio of punitive damages to compensatory damages – to determine if a 184:1 ratio was grossly excessive under the circumstances. This analysis was done without any consideration as to the potential harm factor to the plaintiff. Given the egregiousness of Teleflex’s conduct, the Third Circuit focused on the potential harm that could have occurred rather than the harm that actually occurred. The court noted that since Mr. Hebert died almost instantly, he experienced very brief, but extreme, pain and suffering. Had he not died – or died after months of treatment – the compensatory damages award would have been much, much higher – possibly over $10,000,000. Using the potential harm ($10,000,000) as the benchmark, the punitive:compensatory damage ratio was only 3:1. As the court noted, there is no mathematical formula for determining the reasonableness of a punitive damages award. Citing various opinions, the court highlights that the U.S. Supreme Court has consistently held that “low awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages.” BMW, 571 U.S at 582-83.

The final guidepost calls for a comparison of the civil penalties and remedy imposed in the present matter to comparable cases. As stated before, there are no statutory or codal authorities that impose monetary civil or criminal penalties for the deprivation of life of Mr. Hebert. Because of this, the guidepost did not offer any assistance to determine the gross excessiveness of the award. This finding further assisted the court is affirming that the punitive damages award was reasonable under the circumstances and did not violate the Due Process Clause of the Fourteenth Amendment.

With the high value of the punitive damages awarded in this case, and the relatively novel approach by the Court in reaching its opinion, we would expect this case to end up at the Louisiana Supreme Court soon, if not the U.S. Supreme Court thereafter. While this case was maritime in nature, the analysis in the Third Circuit’s review of an alleged grossly excessive punitive damage award has the potential to transcend legal subject matter, making this case one to watch. Stay tuned.