ISSUE: Update – Top Ten Longshore Act Questions – Question Number 4 – What Is a Vessel? – What Is a Crewmember?

Jack_crop 72dpiLongshore Act question number 4 was discussed on the AEU Longshore Blog back on March 31, 2010.  It’s finally occurred to me that the previous discussion needs to be updated.

What is a vessel?

Neither the Longshore and Harbor Workers’ Compensation Act nor the Jones Act defines exactly what a vessel is, although the question is central to key issues under both laws.

The Longshore Act’s definition in section 2(21) (33 U.S.C. 902(21)) states, “Unless the context requires otherwise, the term ‘vessel’ means any vessel upon which or in connection with which any person entitled to benefits under this Act suffers an injury or death arising out of or in the course of his employment ….”

Parenthetical Note:  Section 2(21) quoted above refers to an injury or death “arising out of or in the course of employment….”  Section 2(2), which defines “injury”, states “arising out of and in the course of employment….”  Usually the distinction between “and” and “or” is significant.  But in this context is it a distinction without a difference?  Is it just a case of careless phrasing?  That’s for an other day.

So, “vessel” is defined in the Longshore Act as “any vessel”.  That’s no help.

We do know from the case law that whatever “vessel” means, it means the same thing under both the Longshore Act and the Jones Act and general maritime law.

Back on March 31, 2010, I mentioned the then recent U.S. Supreme Court case of Stewart v. Dutra Construction Co., a vessel status case involving the Super Scoop dredge at work digging a tunnel in Boston Harbor.  The Court found that the dredge was a vessel, by a broad application of 1 U.S.C. section 3 (1873), which defines a vessel as, ‘every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”.  The decision seemed to suggest that anything that floats and is not permanently affixed to land was a vessel.

There has been new case law on the vessel question from the U.S. Supreme Court, and thus the need for this update.

On January 15, 2013, the Supreme Court decided the case of Lozman v. City of Riviera Beach, Florida.  The issue was whether Mr. Lozman’s floating home was a vessel, subject to Admiralty jurisdiction.  The federal Eleventh Circuit Court of Appeals had held that it was a vessel, using Stewart’s reasoning.  The Supreme Court reversed, holding that the floating home was not a vessel, interpreting the language of 1 U.S.C. section 3 through the eyes of a reasonable observer looking at the practical characteristics of the craft or contrivance.  As a result, we have a new vessel status test based on this case.

The test is whether, through the eyes of a reasonable observer, the contrivance is practically, not theoretically, designed as a means of transportation of people or things over water.  Of course, this is a case by case test.

The Court itself recognized the nature of the test.  It admitted that its approach “is neither perfectly precise nor always determinative….  Nonetheless, we believe the criterion we have used, taken together with our examples of its application here, should offer guidance in a significant number of borderline cases….  Moreover, borderline cases will always exist.”

So, good luck with the Lozman reasonable observer looking for practical capability based on design characteristics test.

What Is a Crewmember?

For the issue of crewmember status, we’re still using the test from the Supreme Court’s 1995 Chandris v. Latsis, Inc. decision.  There hasn’t been anything more recent.

To qualify as a crewmember, the employee must:

  1. Contribute to the function of the vessel or to the accomplishment of its mission, and
  2. Have an employment connection to a vessel in navigation (or to an identifiable group of such vessels) that is substantial in terms of both duration and nature.

For the “duration” part of the second prong of the test, there is a 30% rule of thumb.  If you spend less than 30% of work time “in the service of a vessel” then you are probably not a crewmember.

The substantial “nature” part of the employment connection test is more problematic.  This test has not worked too well.

In spite of language in Chandris paying lip service to the necessity of separating land based workers from those sailors who go to sea, in the judicial language, the “perils of the sea” has been replaced by the watered down “perils of the maritime work environment” or similar terminology as a necessary element for seaman status.

We’ve certainly seen many examples of live at home “seamen” qualifying for the seamen’s remedies under the Jones Act and the general maritime law.  Construction workers on all manner of special purpose vessels, ship repair and maintenance workers, and even cargo handlers, all of whom in no sense of the word are exposed to the “perils of the sea”, can qualify as daily commuting crewmembers.

There is a recent example of this from the federal Fifth Circuit Court of Appeals (states of TX, LS, MS).  In the case of Larry Naquin v. Elevating Boats Inc. a ship repair supervisor was determined by the jury in district court to be a seaman, and this finding was affirmed by the appellate court.  The injured worker’s job was ship repair and he worked nearly exclusively on moored vessels in a shipyard canal.  He rarely went to sea.

He met the 30% test, because as a ship repair worker he obviously spent most of his time on the ships he was repairing.  To find that ship repair work meets the “substantial nature” employment relationship requirement of the Chandris test, however, for a worker who rarely goes to sea, seems very broad.  Clearly a worker has an employment relationship with a vessel that he is building or repairing, just as an airplane mechanic has a relationship with the airplane he is repairing, but that doesn’t make the mechanic a pilot.

So, it seems to me that Lozman may have somewhat narrowed the application of the vessel status test, or at least didn’t expand it; some things that float may not be vessels.  But the test for crewmember status is becoming more broadly interpreted.

Paradoxically, the Supreme Court’s rejection of the “voyage test” for seaman status, and the Chandris requirement for a substantial employment relationship in terms of duration have prevented workers who actually do go to sea in ships from achieving crewmember status.  Workers such as harbor pilots, divers, and oilfield industry service contractors who typically work on successive short contracts on different vessels often have trouble meeting the 30% test with a single vessel or group of vessels under common ownership.

Maybe one of these days we’ll have a better test for crewmember status.

John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance and Financial Management, and the Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

ISSUE: Circuit Conflicts – Continued

Last time I listed my Top Ten Longshore Act issue conflicts among the federal circuit Courts of Appeal.Jack_crop 72dpi

This time I’d like to list my Top Three conflicts that have recently been resolved, or at least clarified.

1. OCSLA – The Outer Continental Shelf Lands Act is an extension of the Longshore Act, providing Longshore benefits “with respect to disability or death of an employee resulting from any injury occurring as the result of operations, conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources, of the subsoil and seabed of the outer Continental Shelf ….” (43 U.S.C. Section 1333(b)).

The issue that had been the occasion of conflict among several circuit courts was whether OCSLA had a situs of injury requirement. In other words, did the injury have to occur on the outer continental shelf (ocs) in order to be covered.

The U.S. Supreme Court’s decision in Pacific Operators Offshore, LLP v. Valladolid on January 11, 2012, resolved the situs of injury issue.

According to the U.S. Supreme Court, an injury does not have to occur on the ocs in order to be covered by OCSLA. The injury can occur anywhere. The test for coverage under the “result of operations” phrase in 43 U.S.C. Section 1333(b) is that there must be a “substantial nexus” between the injury and the employer’s extractive operations on the OCS.

We still have to see how “substantial nexus” will be interpreted and applied going forward, but at least the situs issue has been resolved. And some employers may have picked up a new OCSLA exposure for their landside operations.

2. What Is a Vessel? – We also have a new test for addressing the issue of what constitutes a vessel that is so important in the areas of property and liability insurance coverage.

On January 15, 2013, the U.S. Supreme Court decided the case of Lozman v. City of Riviera Beach, Florida. The issue was whether Mr. Lozman’s floating house was a vessel, subject to Admiralty jurisdiction. The Eleventh Circuit Court of Appeals had ruled that it was a vessel, emphasizing a circuit conflict on the question of to what extent the owner’s subjective intent determined the status of the “watercraft”.

The Supreme Court looked at the language of 1 U.S.C. Section 3, which defines a vessel as including “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”, through the eyes of a “reasonable observer”, and this is our new test: “We believe that a reasonable observer, looking to the home’s physical characteristics and activities, would not consider it to be designed to any practical degree for carrying people or things on water.”

So, while the 2005 decision in Stewart v. Dutra seemed to broaden the definition of vessel along the lines of “anything that floats”, we now have what looks to be a narrower approach considering the transportation function of the contrivance, and whether it is used, or capable in a practical sense of being used, to transport people or things over water.

But we will all be using the “reasonable observer” test going forward.

3. Deference – In the same Price v. Stevedoring Services of America, Inc. decision in which the Ninth Circuit approved the use of compound (as opposed to simple) interest for past due compensation under the Longshore Act, the Ninth Circuit also joined the other circuits on the issue of the proper level of deference due the litigating position of the Director of the Office of Workers’ Compensation Programs.

Although it had previously accorded so-called “Chevron” level deference to the Director’s litigating positions, the Ninth Circuit overruled its precedents to that effect in Price. In the Ninth Circuit going forward, the Director will no longer be afforded “substantial” deference. The Court cited the fact that the Director does not adopt litigating positions through any “relatively formal administrative procedure”, but rather through internal decision making not open to public comment or determination.

It is possible that the Director may merit so-called Skidmore deference (generally, some added persuasive force) in particular cases going forward, although not in this case on the issue of simple versus compound interest. But there is no more Chevron deference for the Director.


So while tests such as “substantial nexus” and “reasonable observer” are essentially to be applied on a case by case basis, and the outcomes of the cases will be determined by the analysis and interpretation of the facts of each case, at least some elements of these issues have been resolved.

ISSUE: What Is a Vessel?

Jack_crop 72dpiThe U.S. Supreme Court decided the case of Lozman v. City of Riviera Beach, Florida on January 15, 2013. The issue was whether Mr. Lozman’s floating home was a vessel, subject to Admiralty jurisdiction. The federal Eleventh Circuit Court of Appeals had ruled that it was a vessel. The U.S. Supreme Court disagrees, by a 7 to 2 margin. Mr. Lozman’s floating home was not a vessel (the reason I’m using the past tense is that the floating home was purchased at auction by the City and destroyed. Mr. Lozman still has a claim, however, against a bond posted by the City, so the issue of vessel status was not moot).

This case has been the subject of a great deal of interest in the maritime and admiralty communities, since a comprehensive answer to the important question of “What is a Vessel” has been elusive, and, in fact, is answered differently among different courts.

The Supreme Court took a very close look at the language of 1 U.S.C. Section 3, which defines a vessel as including “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”. The Supreme Court interpreted these words through the eyes of a reasonable observer looking at the practical attributes of the watercraft or contrivance, and in this context evaluated Mr. Lozman’s contrivance.

The “reasonable observer” standard, of course, is a case by case approach, but the Lozman decision does offer some general principles and some guidance in applying the reasonable observer method in a vessel status case.

1. Any determination based simply on the fact that the object floats is overly broad and incorrect. “Anything that floats is a vessel” is the wrong approach.

2. The owner’s subjective intent as to the status or use of the watercraft or contrivance is not part of the analysis. It is the view of the “reasonable observer” that will determine vessel status.

3. The watercraft or contrivance does not have to be used primarily for transportation; regular use in transporting people or things over water is sufficient.

4. A watercraft does not have to be in motion to qualify as a vessel; it may be temporarily attached to land or to the ocean floor and still qualify as a vessel.

5. A contrivance’s use and physical characteristics may change over time.

I think that there will be those in the admiralty community that will be disappointed with this decision. Anticipation and expectation had been raised by the fact that the Supreme Court agreed to hear this case and because the issue is so important.

In this case, the Court stated, “We believe that a reasonable observer, looking to the home’s physical characteristics and activities, would not consider it to be designed to any practical degree for carrying people or things on water.”

“Transportation” in the statutory definition of vessel means the conveyance of persons or things from one place to another, in a practical way. Except for the fact that it floated, and contained his personal possessions, Mr. Lozman’s home was not designed for transportation over water. In view of its physical characteristics it was not used, or “capable” of being used in any practical way for water transportation.

Although none of these characteristics alone were dispositive, the Court noted that the floating home had no rudder or other steering mechanism, no self-propulsion, its hull was unraked, it had a rectangular bottom 10 inches below water, no capacity to generate or store electricity, and all of its interior space was ordinary non-maritime living space. Nothing about it was designed for maritime transportation. It was not practically capable of such transportation.

The Court is aware that its approach in the Lozman case “is neither perfectly precise nor always determinative…. Nonetheless, we believe the criterion we have used, taken together with our example of its application here, should offer guidance in a significant number of borderline cases …. Moreover, borderline cases will always exist.”

The goal is a comprehensive equation where you plug in factors such as self-propulsion, movement, navigation, shore connections, regular use, configuration, maritime commerce, contents, perils of the sea, etc., and the calculation either equals “vessel” or “non-vessel”. We still don’t have such a simple calculation.

Mr. Lozman’s floating home was not a vessel by characteristics, by activity, or in any practical sense. This is a reasonable conclusion.

The Court pointed out that its decision in the Lozman case is consistent with its holding in Stewart v. Dutra Construction Company, since the Super Scoop dredge in that case, determined to be a vessel, “ordinarily served a waterborne transportation function” in that it regularly (not primarily) carried machinery, equipment, and crew over water.

I think that the Lozman case does narrow the holding in Stewart, in requiring the practical consideration of many factors in the determination of vessel status.

It will be very interesting to watch the courts apply the “reasonable observer” test to the vessel status question to other contrivances in the wake of the Lozman decision.

ISSUE: 2012 Was an Interesting Year – Part Two

Jack_crop 72dpiA couple of weeks ago in “Interesting Year – Part One” we noted that with regard to jurisprudence, 2012 was an interesting year for those who follow developments under the Longshore Act. Several cases were decided (or are in the process of being decided) at the U.S. Supreme Court, several old questions received presumably final answers, and several perennial issues received new attention. There was even some good news for maritime employers in the state of Virginia.

Part One covered only those cases that came out of the federal Ninth Circuit Court of Appeals (CA, OR, WA, AZ, MT, ID, NV, AK, HI). Here are the rest of what, in my opinion, were the Longshore high points of 2012.

Bernard D. Boroski v. Dyncorp International, Insurance Company of the State of Pennsylvania/AIG Worldsource, Director, Office of Workers’ Compensation Programs, United States Department of Labor

Following the Supreme Court’s decision in Roberts (see Part One), on October 30, 2012, the other Section 906(c) shoe dropped as the Eleventh Circuit (AL, GA, FL) issued its decision on remand in the Boroski case. The Eleventh Circuit followed the Supreme Court’s holding in the Roberts case on the interpretation of “newly awarded” and also decided a previously unresolved issue in the Boroski case, namely, that the phrase “currently receiving” in Section 906(c) has the same meaning as “newly awarded”. In other words, both terms refer to the time of entitlement to benefits.

For example, if an ALJ issues a compensation order in 2007 awarding PTD benefits beginning during the 10/1/2002 to 9/30/2003 period, and the worker is not actually paid until the 2007 Order, the maximum rate in effect on 10/1/2002, controls his weekly rate, as that is when he was found to be “newly awarded” and “currently receiving” his benefits.

Concurrent Jurisdiction – Virginia

In April 2012 the State of Virginia enacted legislation changing the State from “concurrent” state act/Longshore Act coverage to “exclusive” coverage. Effective July 1, 2012, if an injured worker is covered by the Longshore Act (or the Jones Act) then he is not covered by Virginia’s workers’ compensation law.

This (concurrent jurisdiction) is an old problem. In 1980, the U.S. Supreme Court in Sun Ship v. Pennsylvania had confirmed that the Longshore Act did not supplant state workers’ compensation laws, it supplemented them. Maritime workers’ compensation claims can be covered simultaneously by both state workers’ compensation laws and by the federal Longshore Act. This obviously leads to inefficiencies and extra costs for maritime employers and their insurance carriers, who must insure workers under both laws, comply with two sets of regulations, deal with two different medical fee schedules, satisfy two regulators, pay occasionally redundant benefits and attorney fees, and so on. Those who deal with the problem at first hand could extend the list of inefficiencies and higher costs.

Many maritime states have amended their workers’ compensation laws to eliminate concurrent jurisdiction. So called “exclusive” states include Florida, Louisiana, Maryland, Mississippi, New Jersey, Texas, Washington, and now Virginia.

There are still many maritime states that are “concurrent”. These include Alabama, California, Connecticut, Georgia, New York, Pennsylvania, Rhode Island, North Carolina, Delaware, and South Carolina.

There is a solution to the concurrent jurisdiction problem. The remaining “concurrent” states can amend their insurance laws to provide for exclusive Longshore coverage in maritime cases just as Virginia has done. The fix can also come from the U.S. Congress by means of an amendment to the Longshore Act.

Ceres Gulf, Inc. v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Norris Plaisance, Sr.

The federal Fifth Circuit Court of Appeals (LA, TX, MS) issued a very interesting hearing loss decision in June 2012. The case of Ceres Gulf, Inc. v Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Norris Plaisance, Sr., may be a breakthrough decision for employers, or it may simply be a case where the Fifth Circuit was of the opinion that the Benefits Review Board had gone too far in its zeal for entitlement, fascination with the Aggravation Rule, and chronic misapplication of the evidentiary burden for rebutting the Section 20(a) presumption of causation. So maybe it’s too early to assess the importance of Plaisance.

Mr. Plaisance was a longshoreman from the 1950s until he retired in 1988, last working for Ceres. He filed a hearing loss claim against Ceres under the Longshore Act in 2006, when he was 80 years old.

In the original decision in this case the ALJ found that the employer rebutted the Section 920(a) presumption of causation and that the claimant, based on the preponderance of the evidence in the record as a whole, failed to establish that his hearing loss was caused by his employment with Ceres. He denied the claim. In reaching his decision, the ALJ considered defense expert testimony regarding causation based on sound level surveys and generalized population information regarding loss of hearing.

On appeal, the Benefits Review Board ruled that the employer’s expert evidence was inadmissible as irrelevant, and remanded the case. On remand, the ALJ, following the BRB’s direction, excluded the employer’s expert evidence, found that without that evidence the employer failed to rebut the Section 20(a) presumption, and he awarded the claimant compensation for an 8.4% binaural hearing loss. In his decision, the ALJ found that because the claimant had not shown that most of his hearing loss, his non work related (bilateral conductive) hearing loss, pre-dated his work with Ceres, then that condition could not have been “aggravated” during employment.

On appeal this time around, the BRB affirmed the ALJ’s revised finding of work related compensable injury, but held that the ALJ erred in holding that the claimant must prove that his conductive (non-work related) hearing loss pre-existed his work related hearing loss. The BRB placed the burden on the employer to provide substantial evidence that it did not. The Board held that the entire hearing loss was work related (the approximately 8 % work related combined with the approximately 72% non-work related) and awarded payment for an 80.8% hearing loss. The Board’s decision was based on the Section 20(a) presumption and the Aggravation Rule as it applied to the claimant’s non-work related hearing loss.

The critical issue on appeal to the Fifth Circuit was whether the BRB properly required the ALJ to disregard a substantial portion of the reasoning used by the employer’s medical expert.

Not for the first time the Fifth Circuit belabored the Board. The Court noted that the Board had “placed a thumb on the evidentiary scale”. The Court emphatically found that the employer’s medical expert’s opinion was certainly relevant given his credentials, and at any rate it is for the ALJ to assess relevance and credibility. The question on exclusion was “relevance”, not sufficiency to persuade.

The Fifth Circuit has previously lectured the Board that it may not adopt standards requiring employer’s rebuttal evidence to “rule out”, unequivocally state, or affirmatively state their positions to the exclusion of the claimant’s case. All it must do is advance evidence to throw factual doubt on the prima facie case in order to rebut the presumption.

And so once again in the Plaisance case the Fifth Circuit noted that, “The Board evidently raised the employer’s burden of rebutting the Section 20(a) presumption from that of simply adducing substantial evidence to the more onerous task of disproving the claimant’s prima facie case” at the rebuttal stage.

At any rate, the testimony by the employer’s expert that the claimant’s hearing is better than the average person his age is intended as an alternative explanation of causation, that is, the hearing loss may have been caused by the normal process of aging. The BRB had no basis to exclude the testimony.

The Court found that the first ALJ decision denying benefits because the claimant’s hearing loss was not work related was based on admissible substantial evidence, and the decision denying benefits was reinstated.

Fane Lozman v. The City of Riviera Beach, Florida

In October 2012 the U.S. Supreme Court heard oral arguments in the case of Fane Lozman v The City of Riviera Beach, Florida.

What started out as an in rem action in admiralty alleging the maritime tort of trespass and to foreclose a maritime lien for unpaid dockage has advanced to the U.S. Supreme Court on the basis of Mr. Lozman’s argument that his “floating residential structure” is not a vessel subject to admiralty jurisdiction.

We are at the Supreme Court again on the issue of a vessel status test because there is a split among federal circuits on the question of what is a vessel. It is an important issue.

The “Jones Act” was enacted in 1920, providing a negligence remedy for crewmembers of vessels (and the general maritime law remedies of unseaworthiness of a vessel and maintenance and cure are much older). In 2012, we’re still looking for a uniform test to define what a vessel is.

The Fifth and Seventh Circuits (IL, IN, WI) consider the intent of the owner while in the Eleventh Circuit vessel status does not depend in any way on either the purpose for which the craft was constructed or its intended use. The Eleventh Circuit’s approach is based on its interpretation of Stewart v. Dutra Construction Company, 543 U.S. 481 (2005) and considers only whether the floating object is practically capable of transportation on water regardless of its purpose or the owner’s intent.

The vessel status question comes up all the time, is important in many contexts, and the hope is that the Lozman case, although it involves a unique structure, will yield a decision that advances toward the goal of a uniform vessel test, or at least clarifies the role of the owner’s intent in the vessel status determination. A decision is expected in the spring, 2013. Unfortunately, we will most likely still be left with a case by case approach in the many novel or unusual situations that arise.

So that’s what I call an interesting year, Part Two.