ISSUE: Situs: High Seas, Foreign Territorial Waters

Jack_crop 72dpiThere is one current Longshore Act coverage question that I don’t feel comfortable with.

The question is usually along the lines of, “We’re sending workers overseas to do ship repair work (or some other work that meets Longshore Act ‘status’). Will the Longshore Act apply?” So, it’s a “situs” question, involving overseas work.

Things used to be uncertain enough with regard to this issue. Now the federal Ninth Circuit Court of Appeals has issued an opinion that clarifies the issue in the Ninth Circuit (states of WA, OR, MT, ID, CA, NV, AZ, AK, HI) but emphasizes the open nature of the question everywhere else.

Before the Ninth Circuit’s decision in Joseph Tracy v. Keller Foundation, Inc./Case Foundation Co. and ACE USA/ESIS v. Global Offshore Int’l, Inc. and Liberty Mutual Insurance Co.; and Director, Office of Workers’ Compensation Programs, the issue of whether the Longshore Act applied on the high seas and the territorial waters of other countries was difficult but manageable; there was just enough doubt to justify the opinion that an employer with Longshore Act workers on the high seas and in foreign territorial waters and adjoining areas should get Longshore coverage just to be safe.

It was a safe bet that the Longshore Act applied on the high seas, subject to conditions such as contacts with the United States and the temporary nature of the work assignment. And with regard to foreign territorial waters, although no federal circuit court had ruled on the question, we did have the Benefits Review Board’s decision in Weber v. S.C. Loveland Co. (28 BRBS 321 (1994)) for the proposition that Longshore Act coverage extended to the territorial waters of foreign countries. The Board’s rationale was based on the language of Section 39(b) of the Longshore Act, which authorizes the Secretary of Labor to establish “compensation districts, to include the high seas” and provides for judicial jurisdiction for proceedings involving injuries occurring on the high seas. Also the Board cited what it perceived as the trend in admiralty law to extend jurisdiction into foreign waters to provide uniform coverage for American workers, especially when all contacts, except for the site of the injury, are with the U.S. and the duration is temporary.

But now we have the Ninth Circuit’s decision in Tracy. The Court accepts the proposition that the Longshore Act applies on the high seas, but states, “… we hold that foreign territorial waters and their adjoining ports, and shore based areas are not the ‘navigable waters of the United States’ as the Act defines that phrase.” (Sorry, the Act does not define that phrase.) The Ninth Circuit also said that, “A determination that the Act applies to the high seas, where no single nation is sovereign, cannot compel the conclusion that Congress also intended the Act to apply to the territorial sea, internal waters, and adjoining land of other nations, ….” The Ninth Circuit cited the “strong presumption that enactments of Congress do not apply extraterritorially.”

So, now we know that at least for the Ninth Circuit the Longshore Act will not apply in foreign territorial waters, since the “situs” requirement for coverage is not met.

But how will this question be decided in the other Circuits? And the Board’s last word on the issue is Weber, which applies the Longshore Act in foreign territorial waters. In the Ninth Circuit, the Board will follow Tracy, but what will the Board do everywhere else, and what will the other circuits do? Who knows at this point?

While we have a clear decision in the Ninth Circuit, we have increased uncertainty with regard to injuries occurring within the jurisdiction of the other federal circuits. And it’s not easy to explain how, under a law which derives its rationale from the Admiralty and Commerce clauses of the federal Constitution and the need for uniformity in maritime matters, you will possibly get different answers to the same question in the different federal circuits (not that this situation is unique to this issue).

What’s the best answer today?

In the Ninth Circuit, the Longshore Act applies on the high seas subject to conditions, but not in the territorial waters of other countries.

In circuits outside of the Ninth, the Longshore Act probably applies on the high seas subject also to conditions, but we don’t know about the issue of foreign territorial waters. Will the other circuits follow the rationale of the Benefits Review Board in Weber, or will they follow the Ninth Circuit’s rationale in Tracy, or will they split?

Time will tell. In the meantime, maritime employers outside of the Ninth Circuit who are sending Longshore workers to foreign territorial waters or adjoining areas should get Longshore Act coverage for those workers. Where there’s any doubt at all, get coverage.

ISSUE: Situs and Status in the Fifth Circuit

Jack_crop 72dpiA significant event in Longshore Act jurisprudence has just occurred.

The federal Fifth Circuit Court of Appeals issued a decision on April 29, 2013, in the case of New Orleans Depot Services, Inc. v. Director, OWCP, et al. (Zepeda). The Fifth Circuit (states of Texas, Louisiana, and Mississippi) overruled its own long standing, often cited, and influential precedent (Textports Stevedore Co. v. Winchester) on the issue of Longshore Act situs.

In reversing the decision of the Benefits Review Board that had awarded benefits to Mr. Zepeda and which was affirmed by the Fifth Circuit’s appellate panel, the en banc Fifth Circuit reinterpreted language in Section 903(a) of the Longshore Act. “Adjoining” as in “… other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel”, no longer means “neighboring” or “in the vicinity of” navigable water.

Now in the Fifth Circuit, the interpretation of “adjoining” means “to lie next to” or “to be in contact with”. The Fifth Circuit has adopted the “plain language of the statute” interpretation as used by the Fourth Circuit (states of Maryland, Virginia, West Virginia, North Carolina, and South Carolina) as analyzed in Sidwell v. Express Container Services, Inc.

The scope of Longshore Act situs in the Fifth Circuit has significantly narrowed.

The claimant in this case worked repairing and performing maintenance on cargo containers and chassis used in land, rail, and vessel transportation. He did not pick up or deliver the empty containers or fill them with cargo. He worked at a facility located about 300 yards from the water with a (non-maritime) bottling company located between his employer’s premises and the water. The property was not contiguous with the water at any point.

The issue was whether his job location met the situs requirement for Longshore Act coverage as an “other adjoining area” under Section 903(a).

The Administrative Law Judge, Benefits Review Board, and the Fifth circuit panel on appeal agreed that under the Fifth Circuit’s precedent in Winchester the location met the situs requirement as being close to or in the vicinity of navigable waters. Then the Fifth Circuit agreed to review the case en banc, i.e., by all the judges in the circuit as opposed to the usual 3 judge panel that hears appeals.

Note: in order to be covered by the Longshore Act an injured worker must meet a status and a situs requirement. These are separate elements and both must be satisfied separately.

Meeting the situs requirement for coverage involves satisfying two components – geographic and functional, i.e., where are you in relation to the navigable water and are you engaged in appropriate maritime activity in relation to that navigable water.

While recognizing that other circuits, such as the Ninth (states of Washington, Oregon, California, Alaska, Hawaii, etc.), Third (states of Pennsylvania, New Jersey, Delaware, and U.S. Virgin Islands), and First (states of Maine, New Hampshire, Rhode Island, Massachusetts, and Puerto Rico) (and other circuits as well) still use a more expansive interpretation of “adjoining”, the Fifth Circuit in Zepeda has now belatedly (Winchester was decided in 1980) recognized that its precedents had set up vague instructions and provided little guidance to other courts or litigants on how to determine whether a claimant satisfies the situs test. Now, in the Fourth and Fifth federal circuits an “other adjoining area” must touch the water.

Note: This new interpretation of “adjoining area” does not refer to the point of the injury, but to the employer’s overall facility or premises.

So, the geographic element of situs just got simpler in the Fifth Circuit.

If the en banc court had stopped there the ruling would have been sufficient to reverse the Board’s decision, since if either situs or status is not met then there is no entitlement. But the first of two Concurring opinions discusses the status element in this case to produce an alternative holding that the status element is also not met.

Note: To meet status: An individual working on a covered situs will qualify as a covered employee only if he is engaged in maritime employment – an occupational test focusing on loading and unloading a vessel or building, dismantling, or repairing a vessel. His activities must be integral or essential to the vessel related activities.

In this case, the “determinative consideration” that the first Concurring opinion used is whether the loading process could not continue in the absence of the worker’s activities. As stated in the opinion, “… the proper question when defining the status of an employee under the Longshore Act is whether the task that the employee engages in is the type of customary maritime work that a dockworker or longshoreman would have to perform in order to successfully transfer cargo between ship and land transportation.”

The opinion notes that some tasks are integral, essential, or necessary, while some are only tangentially connected to the process. I think that we’re all still on board at this point. Then maybe the point begins to be made a bit too fine. It is stated that, “This standard makes the capacity to interrupt ongoing longshoring activities paramount.” It seems to me that this type of test applied too strictly could be trouble.

We know from the type of analysis used by the U.S. Supreme Court in its decision in Chesapeake & Ohio Ry. Co. v. Schwalb (493 U.S. 40 (1989)) that all sorts of incidental occupations meet the status test, such as janitors cleaning up around conveyor belts and changing air conditioning filters, carpenters erecting a scaffold, construction workers building, maintaining, or repairing the buildings in which loading and unloading or shipbuilding/ship repair takes place, mechanics repairing the tools and equipment used in these traditional maritime activities, security guards patrolling vessels, warehouse workers moving cargo around in intermediate steps between unloading and land transportation, and on and on.

By “clarifying” the status question I believe that the first Concurring opinion calls much of this into question. It suggests that all of these activities are only essential if they are performed while actual loading/unloading is in progress and an immediate work stoppage will occur if they are not immediately performed – “The determinative consideration is that the ship loading process could not continue”.

Since the claimant’s job in this case was the repair of empty containers that were not actually at that time involved in vessel loading/unloading, he does not meet status. I guess that the only way that container repair can meet status in the Fifth Circuit going forward is if it is performed dockside during the loading/unloading process.

Maybe I’m overstating it, but the opinion seems insistent. Before you know it, we’ll be making status distinctions between workers doing the same jobs in the same place. Coverage will be based on the timing of their work and what else is going on at the terminal or shipyard at that time. Talk about walking in and out of coverage. These workers will be moving in and out of status without changing their locations or their jobs. We’ll see.

Two conclusions: Longshore Act situs in the Fifth Circuit is now limited to the contiguous or “next to” definition of “adjoining” to match the approach that the Fourth Circuit takes. Also, status may also now be much more restrictive in the Fifth Circuit.

Two questions: What will the other Circuits do now, if anything, to modify their more expansive approaches? And when can we now expect a new and seemingly now inevitable Supreme Court ruling on situs and status?

ISSUE: SITUS

Jack_crop 72dpi

The situs coverage provision of the Longshore Act, Section 3(a) (33 U.S.C. 903(a)) has been discussed on several prior occasions here, and situs questions keep coming up. 
We’ll just have to keep talking about it.  This time, the subject is the phrase, “other adjoining area” as used in Section 3(a).

Review of Some General Principles

To be covered under the Longshore Act, (1) an injured worker must have status as a maritime employee, i.e., be engaged in maritime employment, and (2) the injury must occur on a covered maritime situs.

Under Section 3(a) a covered situs is either (1) upon the navigable waters of the United States, (2) an “enumerated site” such as an adjoining pier, wharf, dry dock, terminal, building way, or marine railway, or (3) an “other adjoining area” customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel.

Whether a site is an “other adjoining area” as that phrase is used in the Longshore Act depends on two tests: (1) a geographic nexus test based on location in relation to the navigable waterway, and (2) a functional nexus test measuring the site’s maritime functional relationship to that same navigable waterway.

Situs is determined by the nature of the place of work at the moment of injury. 

Situs does not mean the pinpoint spot of the injury, but the general surrounding area.

Outside of the federal Fourth Circuit Court of Appeals (MD, VA, WV, NC, SC), where “adjoining” means touching, or contiguous to, the word “adjoining” is interpreted to mean “to be close to”, or “to be near”, “neighboring” or “in the vicinity of”.  An “other adjoining area” does not have to be right next to the water.

The area does not have to be exclusively, or even primarily, used for maritime purposes so long as it is customarily used for maritime activity.

While the status analysis under Section 2(3) is intended to minimize the problem of “walking in and out of coverage” by granting maritime employment status to any employee with any degree of regularly assigned maritime duties, you can come and go to and from a maritime situs and in the process “walk in and out of” Longshore Act coverage.

A situs analysis with regard to the meaning of “other adjoining area” involves consideration of a variety of factors, such as proximity to navigable water, nature of surrounding properties, nature of properties between the injury site and the water, site selection considerations, and functional connection with the navigable waterway.

Hypothetical

Let’s look at a situs analysis in a hypothetical situation that arguably could go either way.

An injury occurs at a business that devotes about one-half of its operation to repairing, constructing, and fabricating marine parts that come from and go to vessels at a navigable waterway about one mile away.  The parts are picked up, transported, and delivered by an independent trucking contractor.  The location obviously has no direct access to the water.  The non-maritime half of this employer’s business comes and goes over land from non-maritime customers.  All employees work on all projects at different times.

This business is not located within the jurisdiction of the federal Fourth Circuit Court of Appeals.

The business’ immediate neighbors are one half maritime and one half non-maritime commercial/industrial operations and there is a similar mix in the general commercial and industrial area between it and the navigable waterway.

One mile to the west and south of where the business is located is the navigable waterway.  Just beyond the business to the north and east is an interstate highway system with service roads and beyond that begins residential areas.  So, the overall area from the water out to the highway is commercial/industrial, with about one half of the businesses devoted to maritime activity.

The site was selected by the owners primarily because of the generally cheaper rents for property in the industrial part of town by the waterfront, because of the regular volume of marine work coming from the water, and also because of its convenient location near the highway.  We don‘t know whether the business could have found property closer to the water back when the lease was originally signed, but being close to the water was a factor in choosing the property.

Assuming that the employees meet the status requirement for coverage, is this a covered Longshore situs?

Geographic nexus test

Proximity to the water – We know that so long as the site is close to or in the vicinity of navigable waters, or in a neighboring area, it can be a covered Longshore situs.  As a general proposition the site does not have to be right next to the water.  And nearness to the water’s edge is one, but only one, of the factors considered in the geographic nexus test.  In our hypothetical, the issue is whether one mile is close enough for Longshore coverage if other factors lean toward establishing that the overall area is customarily used for maritime activity.

While discussing situs on October 19, 2012, I tried to make the point that there is no hard line in determining whether a site meets the geographic test.  No distance has been found to be automatically too far from the water.  One mile is definitely not too far as a factor standing alone.

The Character of surrounding properties – character of surrounding properties is another of the relevant factors in determining whether you have an “other adjoining area” under Section 3(a).  In our hypothetical, half of the businesses immediately surrounding the injury site are used for maritime activity, mostly vessel repair and fabrication and cargo container repair. 

Intervening properties – the area between the injury site and the water is mixed commercial use, also mostly ship repair, parts fabrication, and container repair, as well as non-maritime commercial operations.  The roads are full of trucks coming and going to and from the water with ship parts and cargo containers.

This degree of maritime activity could very well be sufficient to characterize the entire area between the water and the highway as an “other adjoining area”.  The area is not exclusively or primarily devoted to maritime use (50/50), but there is significant maritime activity throughout the area.

Whether it’s the “Herron” factors used by the Ninth Circuit, or the less formulaic but generally parallel analyses used by most of the other circuits, courts look at all of the facts in determining whether the area of the injury is part of an overall “other adjoining area” customarily used for maritime activity.

So far, we’ve looked at distance from the water and the character of surrounding and intervening properties.  Other factors to be considered are suitability of the site for maritime uses and whether the adjoining site is as close to the water as “feasible”.

Suitability of the site for maritime uses – in our hypothetical, the site was chosen, in part, because one half of the employer’s business consists of repairing and fabricating parts for vessels on the water that is one mile away, easily accessible by truck.  This rationale for choosing the site is relevant in favor of finding that the site of the injury is an “other adjoining area.”  Maritime business considerations played at least a part in the selection.  It is also possible that at the time that the business owner was selecting his location there was nothing available closer to the water.

Feasible? – is it as close to the water as feasible?  This element doesn’t lend itself to straightforward analysis.  I think that “feasible” is a difficult word.  It doesn’t even fit this type of maritime centered analysis.  It involves consideration of cost, convenience, availability, suitability, timing, economic considerations, labor, and any number of other business and personal considerations.  The “feasible” question is “will it work”.  This involves many factors other than maritime considerations.  But, the courts have used this word, and so will we.  Clearly, this site works because a successful business uses the water as the source for one half of its business.  

Based on the facts in our hypothetical, the overall area, not the pinpoint spot of the injury, is about fifty-fifty commercial maritime and non-maritime.  This includes the area between our employer and the water, as well as the employer’s immediate neighbors.  Access to the water is convenient by truck.  Even at a distance of one mile, a reasonable person could conclude that the overall area is one customarily used for significant maritime activity.  Remember, it doesn’t have to be exclusively, or even primarily, maritime use.

After considering the proximity to the water, the suitability of the site for maritime purposes, the use of the adjoining properties and the properties between the injury site and the water, and whether the site is as close to the water as feasible, I think that there is enough “substantial evidence” to support a conclusion that the injury site passes the geographic nexus test.

Functional Nexus Test

In our hypothetical, I think that this is the easy part.  Fifty percent of the employer’s business comes from and goes to vessels on the navigable water one mile away.  Half of its business depends on its relation to that particular waterway.  I think that this passes the functional nexus test.

Adjudication

In the federal circuit courts of appeal from which most Longshore cases arise, situs and status determinations by administrative law judges are considered to be findings of fact.  This is important because an administrative law judge’s findings will be affirmed if supported by substantial evidence, which as we know is a lesser burden than by a preponderance of the evidence.

NOTE:  Substantial Evidence is usually defined as “… relevant evidence – more than a scintilla but less than a preponderance – that would cause a reasonable person to accept the fact finding.” 

An appellate reviewer will defer to and affirm the findings of the ALJ if they are supported by substantial evidence even if the reviewer would have reached a different conclusion on the same facts.

This in turn is important because of the approach taken by the ALJs in evaluating coverage issues.  As expressed in often quoted language from the U.S. Supreme Court, “The language of the (1972) amendments is broad and suggests that we should take an expansive view of the extended coverage.  Indeed, such a construction is appropriate for this remedial legislation.  The Act ‘must be liberally construed in conformance with its purpose and in a way which avoids harsh and incongruous results’” (Northeast Marine Terminal Company, Inc. et al. v. Ralph Caputo et al., also quoting from Voris v. Eikel).  The adjudicators are liberal on coverage issues.

Two comments on the issue of situs from the dissenting opinion in a recent Fifth Circuit case are illuminating (New Orleans Depot Services, Inc. v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; New Orleans Marine Contractors; Signal Mutual Indemnity Association Ltd. (Zepeda):

“… our previous cases have implicitly eliminated any meaningful, independent proximity based requirement from the statute’s situs provisions.”

“As long as each case is only incrementally more expansive than the last, it is bound to be upheld.  Accordingly, the LHWCA is gradually swallowing every employer in the vicinity of a port.”

Draw your own conclusions.  The lesson is clear.  If you’re anywhere near a navigable waterway, don’t take any chances.  Apply your own presumption of coverage.  Get insurance under the Longshore Act.

ISSUE: Situs

“I’m three miles away from the water.  I can’t possibly need USL&H insurance!”

Don’t be too sure.  Let’s talk about situs, again (see previous discussions, for example, October 12, 2011, and March 29, 2011).

By way of introduction, AEU offers a 4 hour class in the Longshore Act which is approved for Continuing Education credits for producers and CSRs in many states.  During the class, the coverage concept of “situs” is discussed at length. 

In the process of discussing situs, a misconception occasionally arises to the effect that at a certain distance from the water there is a line where the  Longshore Act stops.  The distance varies, but for example the idea is that, “the Longshore Act stops 100 feet from the water.”  It should be so easy. 

The question can be framed as, “How far is too far?”  In other words, is there some distance that is automatically too far from navigable waters to even be considered as a possible “other adjoining area” under Section 3(a) of the Act?  Is there an invisible line at some point where the usual geographic and functional analyses are no longer necessary simply because of the distance involved?

Let’s start at the beginning.  Section 3(a) of the Longshore Act, the situs provision, states, “Except as otherwise provided in this section, compensation shall be payable under this Act in respect of disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel).”

In previous discussions, we’ve seen how various courts use their own versions of geographic and functional analyses to determine whether a location is an “other adjoining area”.  Typical are the so-called “Herron factors” used by the federal Ninth Circuit Court of Appeals.  These include consideration of the particular suitability of the site for maritime uses, whether adjoining properties are devoted primarily to maritime commerce, proximity of the site to the waterway, and whether the site is as close to the waterway as feasible given all of the circumstances in the case. 

The purpose is to determine whether the general location of the injury, not the pinpoint spot where it happened, but the surrounding area, is characterized by maritime activity, i.e., loading and unloading of ships and building, dismantling and repair of vessels.

And we’ve also seen that the federal Fourth Circuit Court of Appeals uses a different approach.  In the Fourth, “adjoining” means adjoining.  That is, to be considered an “other adjoining area”, a site has to be adjacent to or contiguous with the water.

So, everywhere except the Fourth Circuit, we are looking at a two part functional and geographic analysis which takes into account several factors, of which distance from the water is only one.  If the claimant is not injured on navigable waters or on an enumerated site (pier, wharf, dry dock, terminal, building way, or marine railway), the question is whether the injury occurred in an “other adjoining area” which is in the vicinity, neighborhood, or general area of navigable waters (geography) and is customarily used for maritime activity related to that navigable water (function).

Let’s assume for the rest of this discussion that the area in question has a functional connection with maritime activity, for example, a container repair yard or tool maintenance and storage facility.  Typically it seems that these types of operations are moved back from the water because of space limitations at the terminals (space needed for storing cargo).  So, we can consider the remaining test, geography.

Logically, at some point from each body of water the geographic analysis must become stretched to the breaking point.  You have maritime activity, performed by workers who meet the status test for coverage, in an area that is simply too far from the water to constitute an “other adjoining area”.  Simple rules are good.  Courts use them.  For example, if you spend less than 30% of your time working on board a vessel then you are probably not a Jones Act seaman.  If you worked 75% of the preceding year in your regular employment, then you get credit for 100% in your average weekly wage calculation.  So how about, three miles away is automatically not a covered situs under Section 3(a)?

It’s not so simple.  In a recent case involving a maritime facility over 3 miles away from the water, the Court engaged in a Herron type analysis of the area, including consideration of the use of surrounding properties and site selection considerations.  It would have been easy to say, “Three miles is too far – there is no geographic nexus.”  But we don’t have that automatic line.

Don’t take anything for granted.  A distance test, even one at the fringe or extreme, would be helpful, but distance from the water, any distance, is only one factor to be considered in a situs analysis.  Each case has its own specific facts, and each case must be analyzed on its own.  Always bear in mind that the courts interpret the Longshore Act liberally, and this extends to questions of coverage.