ISSUE: Situs – Walking In and Out of Coverage

Jack_crop 300dpiI don’t like the phrase “walking in and out of coverage”.  It’s an artifact of the Longshore Act, pre-1972 Amendments version.  The original 1927 statute had a single coverage requirement.  An injury had to occur over the navigable waters of the United States or on any dry dock.  There was no status test, no problems trying to define landward adjoining areas, and no enumerated sites.  Under those conditions, walking in and out of coverage at the water’s edge was a fact of life.

Now, the phrase is often used in a confused manner in connection with the concept of status as a basis of Longshore Act coverage.  There shouldn’t be any confusion.  If an analysis of a worker’s overall duties reveals that any part of those duties is maritime then he is a maritime employee.  There is no moment of injury test.  He is covered even if performing non-maritime duties at the moment of injury.  There is no walking in and out of status.

The situs issue is much more complicated than it was in the days when crossing back and forth over the water’s edge was walking in and out of Longshore Act coverage.

You can still walk in and out of a covered situs, but there is no bright line, water’s edge boundary marking a maritime situs from a non-maritime situs. Careful analysis is required.

Speaking of situs, the federal Fifth Circuit Court of Appeals has just issued an interesting situs decision involving the “operational realities of a sophisticated multi-tier facility”, (BPU Management, Incorporated/Sherwin Alumina Company; Liberty Mutual Insurance Company v. Director, Office of Workers’ Compensation Programs; David Martin.

This decision by an influential federal court of appeals (that is in the process of narrowing its views on the issues of situs and status) involves important situs concepts.

Before looking at the Martin case, here are several General Principles of Situs:

  1.  Situs is determined as of the time of the injury;
  2. The phrase ‘navigable waters of the United States” means waters that carry or are capable of carrying interstate or international commerce, and includes the high seas;
  3. The location of the injury must satisfy both a geographic and a functional nexus test to meet situs;
  4. You can meet situs three ways:
    a. Injuries over navigable waters,
    b. Injuries on an enumerated site (pier, wharf, dry dock, terminal, building way, or marine railway),
    c. Injuries in an “other adjoining area”;
  5. Generally, in the case of a shipyard, the entire facility is a covered situs;
  6. In the case of a non-shipyard that is a multi-use facility, there are often areas of maritime activity and areas of non-maritime activity.  Areas of non-maritime activity are not covered sites, as they do not meet the functional nexus test;
  7. An enumerated site such as a pier will probably be considered to be a covered site even if not customarily used for traditional maritime activity, but this may vary among the federal circuits;
  8. All of the intermediate activities in the chain of transferring cargo from vessel to land transport occur on a covered situs.

The Martin case involved a multi-use, ore processing facility.  The U.S. Department of Labor’s Administrative Law Judge and Benefits Review Board had found coverage based on the fact that the entire facility was interconnected in the processes of the unloading and storage of bauxite and the manufacture of alumina.

The facility included loading/unloading operations, storage, and manufacturing operations.  Bauxite was removed from vessels to a storage area (where it could remain from a few weeks to years).  When it was needed from storage the bauxite was moved to an underground area where it was sorted and moved along further on a conveyor system.  It was eventually pulverized in the alumina manufacturing process.  The claimant was injured underground shoveling spilled bauxite back on to the conveyor system.  At the point of injury, the claimant was four locations removed from dockside.

In this case, the facts were not in dispute so it was a de novo review of a question of law by the appeals court.

The Court had to decide where the unloading ended and the manufacturing process began.  It found that the delivery of the bauxite into the storage bins was the functional equivalent of the surrender of the cargo for land transport.  Since that was where the unloading ended, the manufacturing processes beyond that point were not covered since they did not occur in an “other adjoining area used for maritime activity”.  It lacked the necessary functional nexus with navigable waters.  The movement of the bauxite in the various steps in the manufacturing process beyond the initial dump into the storage bins was non-maritime manufacturing, not continuing intermediate steps in the unloading process.

In an earlier decision this year (New Orleans Depot Services, Inc. v. Director, Office of Workers’ Compensation Programs (Zepeda),  the Fifth Circuit, reversing its precedents, adopted the Fourth Circuit’s view on situs, namely, that “adjoining” in section 3(a) means touching or contiguous with navigable waters.   The decision also contained language narrowing status.

In the Martin case, the Fifth Circuit follows the Eleventh Circuit’s situs analysis in Bianco v. Georgia Pacific Corp., 304 F.3rd 1053 (11th Cir. 2002), where the sheet metal production department in which the worker was injured was not an “other adjoining area” because it was not an area customarily used for maritime purposes even though it adjoined navigable waters.  The Bianco court rejected the proposition that an entire facility is a covered situs simply because one part is used for maritime work.  There were distinct areas for maritime and non-maritime purposes.

So, the lesson is that situs is not met simply because the injury occurs adjacent to navigable waters.  In a multi-use facility, you must determine where loading/unloading activity ends and non-maritime activity begins.

Whether it’s a cargo terminal where you trace the cargo to the point at which it enters land commerce, or a coal loading dock where you separate traditional railroad transportation activities from unloading activity, or a manufacturing facility next to the water, you must determine where activity changes from maritime to non-maritime.  This Martin case and the Bianco case mentioned above are good examples of why and how this is done.

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