Opinion · Supreme Court of the United States
Bloomer v. Liberty Mutual Insurance
63 L. Ed. 2d 215
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1980-03-03
- Topic
- general
providing a detailed description of the history and purposes of the LHWCA | stevedore's lien is not reduced by its proportional share of the costs of litigating the negligence suit | stevedore’s lien is not reduced by its proportional share of the costs of litigating the negligence suit | “Congress abolished the unseaworthiness remedy for longshoremen, recognized in Seas Shipping Co. v. Sieracki, 328 U.S. 85 (1946)” | "Congress abolished the unseaworthiness remedy for longshoremen, recognized in Seas Shipping Co. v. Sieracki, 328 U. S. 85 (1946)" | "the present version [of] the Act ... [does] not make provision for the distribution of amounts recovered from the third party in a suit brought by the longshoreman" | employer’s right of recoupment is so absolute that it may not even be required to contribute to the legal fees of an employee who himself recovers from the third party | “the present version [of] the Act ... [does] not make provision for the distribution of amounts recovered from the third party in a suit brought by the longshoreman” | § 933(a) was amended in 1959 to overrule prior case law holding that an employee electing to receive compensation from an employer lost the right to sue a third person for negligence | compensation insurer’s reimbursement from proceeds of third-party action by longshoreman not reduced by proportionate share of his costs, including attorney’s fees, under equitable “common fund” doctrine, which must yield to attorney’s fee allocation scheme embodied in Longshoremen’s Act | no such obligation under Longshoremen's and Harbor Workers' Compensation Act
Citator
- Cited by
- 49 opinions
delivered the opinion of the Court.
Under the Longshoremen’s and Harbor Workers’ Compensation Act, 44 Stat. 1424, as amended, 33 U. S. C. § 901 et seq., a longshoreman is entitled to receive compensation payments from his stevedore for disability or death resulting from an injury occurring on the navigable waters of the United States.
I
Petitioner William E. Bloomer, Jr., was injured during the course of his employment on board the vessel S. S. Pacific Breeze. He received $17,152.83 in compensation from respondent Liberty Mutual Insurance Co., the designated carrier of workers’ compensation for petitioner’s employer, Connecticut Terminal Co.1 Thereafter petitioner brought this diversity action against the owner of the vessel. He alleged that the shipowner had negligently created hazardous conditions on board the vessel, that the ship’s deck was slippery and dangerous, and that as a result he had fallen and incurred severe injuries.
During settlement negotiations, petitioner’s counsel gave respondent notice of the pending action and requested it to reduce its lien by a share of the costs of recovery. That share would be computed as an amount bearing the same ratio to the total cost of recovery as the compensation payments bear to the total recovery. Respondent refused petitioner’s request, asserted its right to full reimbursement, and successfully moved to intervene in the action. Soon thereafter petitioner settled with the shipowner for $.60,000. He moved for sum
The District Court denied petitioner’s motion,2 and the United States Court of Appeals for the Second Circuit affirmed. Bloomer v. Tong, 586 F. 2d 908 (1978). The Court of Appeals concluded that a stevedore should not be required to pay a share of the longshoreman’s legal expenses in a suit
II
Petitioner’s argument amounts to an appeal to the equitable principle that when a third person benefits from litigation instituted by another, that person may be required to bear a portion of the expenses of suit. He invokes cases establishing that in certain circumstances, courts should exercise their equitable powers to charge beneficiaries with a share of the expenses of obtaining a “common fund” through litigation. See Boeing Co. v. Van Gemert, 444 U. S. 472 (1980); Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 257-259 (1975); id., at 275-280 (Marshall, J., dissenting); Mills v. Electric Auto-Lite Co., 396 U. S. 375 (1970); Sprague v. Ticonic National Bank, 307 U. S. 161 (1939). When measured against the language, structure,, and history of the Longshoremen’s and Harbor Workers’ Compensation Act. however, petitioner’s argument must fail.
The Act provides a comprehensive scheme governing an injured longshoreman’s rights, against the stevedore and shipowner. The longshoreman is not required to make an election between the receipt of compensation and a damages action against a third person, 33 U. S. C. § 933 (a). After receiving a compensation award from the stevedore, the longshoreman is given six months within which to bring suit against the third
The Act does not expressly provide for the distribution of amounts recovered in a suit brought by the longshoreman. The unambiguous provision that the stevedore shall be reimbursed for all of his legal expenses if he obtains the recovery does, however, speak with considerable force against requiring him to bear a part of the longshoreman’s costs when the longshoreman recovers on his own. There is no reason to believe that Congress intended a different distribution of the expenses of suit merely because the longshoreman has brought
Ill
As originally enacted in 1927, the Act required a longshoreman to choose between the receipt of a compensation award from his employer and a damages suit against the third party. Act of Mar. 4, 1927, § 33, 44 Stat. 1440. If the. longshoreman elected to receive compensation, his right of action was automatically assigned, to his employer. In 1938, however. Congress provided that in cases in which compensation was not made pursuant to an award by a deputy commissioner (appointed by the Secretary of Labor, see 33 U. S. C. § 940), the longshoreman would not be required to choose between the compensation award and an action for damages. Under the 1938 amendments, no election was required unless compensation was paid pursuant to such an award. See Act of June 25, 1938, ch. 685, §§ 12, 13, 52 Stat. 1168.
Like the present version, the Act as amended in 1938 did not make provision for the distribution of amounts recovered from the third party in a suit brought by the longshoreman. The lower courts, however, interpreted the Act to require that the stevedore be reimbursed for his compensation payment out of the sum recovered from the third party. Congress was understood not to contemplate double recovery on the longshoreman’s part, and the stevedore did not, therefore, lose the right to reimbursement for its compensation payment. See, e. g., The Etna, 138 F. 2d 37 (CA3 1943); Miranda v. Galveston, 123 F. Supp. 889 (SD Tex. 1954); Fontana v. Pennsylvania R. Co., 106 F. Supp. 461 (SDNY 1952) (Weinfeld, J.), aff’d on opinion below sub nom. Fontana v. Grace Line, Inc., 205 F. 2d 151 (CA2), cert. denied, 346 U. S. 886 (1953).
In 1959, Congress amended the Act to delete the election-of-remedies requirement altogether. Act of Aug. 18, 1959, 73 Stat. 391. Existing law was felt to “wor[k] a hardship on an employee by in effect forcing him to take compensation under the act because of the risks involved in pursuing a lawsuit against a third party.” S. Rep. No. 428, 86th Cong., 1st Sess., 2 (1959). The result was that an injured employee “usually elects to take compensation for the simple reason that his expenses must be met immediately, not months or years after when he has won his lawsuit.” Ibid.; see H. R. Rep. No. 229, 86th Cong., 1st Sess. (1959).
Responding to this inequity, the 1959 amendment provided that even when compensation was paid pursuant to an award of the deputy commissioner, the longshoreman’s right of action would not be assigned to the stevedore until six months from the date of the award. The legislative history demonstrates that Congress did not intend to alter the rule allowing the stevedore to recover the full amount of its lien from the long- .
In 1972, Congress enacted more extensive Amendments to the Act, see Edmonds v. Compagnie Oenerale Transatlantique, 443 U. S. 256, 262 (1979), and it is these Amendments that according to petitioner, justify a change in the rule with respect to attorney’s fees. Concerned that compensation benefits had been far too low, Congress altered the benefit structure of the Act so as to increase both maximum and minimum
Witnesses also brought to the attention of Congress the longstanding rule9 that an employer could recover the full amount of its compensation award from the longshoreman’s recovery against the shipowner.10 Congress did not, however, enact any legislation concerning that rule.
Petitioner argues that the 1972 Amendments so altered the equities as to compel a holding that a stevedore must pay a proportionate share of the longshoreman’s expenses in a third-party action brought against the shipowner. He observes that before the Amendments, the longshoreman and the stevedore had adverse interests in the third-party action: if the longshoremán were successful in that suit, the shipowner frequently would attempt to require the stevedore to make payment of amounts due the longshoreman. With the abolition of the shipowner’s cause of action, the stevedore and the
In light of the Act and its legislative history, however, we are unable to accept petitioner’s argument. It is of course true that the stevedore and longshoreman now have a common interest in the longshoreman’s recovery against the shipowner, but it does not follow that the stevedore should be required to pay a share of the longshoreman’s legal expenses. Congress has not modified 33 U. S. C. §933 (e), providing that the stevedore is not required to pay its legal expenses in cases in which it has recovered against the shipowner pursuant to an assignment from the longshoreman. Moreover, in 1972 Congress was informed of, but did not alter, the uniform rule that the longshoreman’s legal fees would be paid by the longshoreman alone. In these circumstances we are reluctant to take steps to change that rule on our own. See Edmonds v. Compagnie Generole Transatlantique, 443 U. S., at 273.
In addition, to the extent that the 1972 Amendments offer guidance, they strongly suggest that the rule for payment of attorney’s fees, was not intended to be altered. The legal expenses incurred by stevedores in connection with third-party actions were understood to be a major obstacle to the funding of increased compensation payments. Numerous witnesses testified that third-party actions frequently inured to the benefit of lawyers, depleting the stevedore’s resources and congesting.the courts without aiding the injured employee. It would be ironic indeed if statutory amendments designed to eliminate the stevedore’s liability in connection with third-party actions were interpreted to give birth to an entirely new liability in the form of a charge for the longshoreman’s legal expenses.11
Finally, we return to the original basis for the rule that a stevedore would not be required to pay a portion of the longshoremen’s expenses in his suit against the shipowner. The compensation award was intended to be an immediate and readily available payment to the injured longshoreman. By receiving this payment, the longshoreman was not foreclosed from pursuing an action against the shipowner. At the same time, he was not entitled to double recovery, and the stevedore would be reimbursed in full for his compensation payment,13
The judgment of the Court of Appeals is
Affirmed.
For convenience we shall use the term “stevedore” to refer to both the employer and its insurer.
The District Court’s distribution was as follows:
Recovery $60,000.00
less expenses (202.80)
balance for distribution 59,797.20
less attorney’s fee of one-third (19,932.40)
balance 39,864.80
less lien of respondent (17,152.83)
net to petitioner 22,711.97
Under this distribution scheme, petitioner received a total of $39,864.80 from the stevedore and shipowner, an amount equivalent to the full $60,000 recovery minus expenses.
Petitioner sought to have the fund distributed in the following manner:
Recovery $60,000.00
less expenses (202.80)
balance for distribution 59,797.20
less attorney’s fee of one-third (19,932.40)
balance 39,864.80
lien of respondent 17,152.83
less proportionate share of fees and expenses (.3355866 X $17,152.83) (5,756.26)
11,396.57 (11,396.57)
net to petitioner 28,468.23
Under this distribution, petitioner would receive a total of $45,621.06, $5,756.26 over and above the amount representing his $60,000 damages recovery minus expenses.
The Ninth and Fourth Circuits have held that the stevedore should be charged with a share of the longshoremen’s legal expenses, Bachtel v. Mammoth Bulk Carriers, Ltd., 605 F. 2d 438 (CA9 1979); Swift v. Bolten, 517 F. 2d 368 (CA4 1975). The First Circuit, like the Second, has disallowed apportionment, Celia v. Partenreederei MS Ravenna. 529 F. 2d 15 (1975), cert. denied, 425 U. S. 975 (1976). The Fifth Circuit has adopted a third approach calling for an individualized inquiry into whether apportionment is fair in the particular case, Mitchell v. Scheepvaart Maatschappij Trans-Ocean, 579 F. 2d 1274 (1978).
That section provides:
“Any amount recovered by such employer on account of such assignment, whether or not as the result of a compromise, shall be distributed as follows:
“(1) The employer shall retain an amount equal to—
“(A) the expenses incurred by him in respect to such proceedings or compromise (including a reasonable attorney's fee as determined by the deputy commissioner or Board);
“(B) the cost of all benefits actually furnished by him to the employee under section 907 of this title;
“(C) all amounts paid as compensation;
“(D) the present value of all amounts thereafter payable as compensation, . . . and the present value of the cost of all benefits thereafter to be furnished under section 907 of this title . . . ; and
“(2) The employer shall pay any excess to the person entitled to compensation or to the representative, less one-fifth of such excess which shall belong to the employer.”
See Hearings on Bills Relating to the Longshoremen’s and Harbor Workers’ Compensation Act before a Special Subcommittee of the House Committee on Education and Labor, 84th Cong., 2d Sess., 51-58 (1956) (discussing difference between New York law, which allowed an employer to receive full reimbursement of its workmen’s compensation payment, and New Jersey law, which required proportionate payment of expenses); see also id,., at 38. Indeed, the 1959 bill was largely modeled after the New York workmen’s compensation provisions, see S. Rep. No. 428, 86th Cong., 1st Sess., 3 (1959), and under New York law it was well established that the longshoreman would be required to pay his own legal fees. See Kussack v. Ring Constr. Corp., 1 App. Div. 2d 634, 153 N. Y. S. 2d 646 (1956) , aff’d, 4 N. Y. 2d 1011, 152 N. E. 2d 540 (1958); Hobbs v. Dairymen’s League Co-op Assn., 258 App. Div. 836, 15 N. Y. S. 2d 694 (1939), appeal dism’d, 282 N. Y. 710, 26 N. E. 2d 823 (1940).
That rule was expressly approved on the floor of the Senate:
“Mr. BUTLER. ... I understand that the bill merely amends section 33 of the Longshoremen’s and Harbor Workers’ Act, so as to permit an-employee to bring a third-party liability suit without forfeiting his right to compensation under the act. It is my further understanding that the courts have consistently held that the present section 33 of the act gives the employer a lien on the employee’s third party recovery for the compensation and benefits paid by the employer.
“Is it the Senator’s understanding, then, that the passage of this measure would'in no way affect the present construction of the act with respect to the employer’s lien on the employee’s third-party recovery for compensation and benefits paid by the employer?
“Mr. BARTLETT. The distinguished Senator from Maryland is correct.
“In further explanation on this point, I ask unanimous consent to have*82 printed at this point in the Record a brief statement from the Committee on Labor and Public Welfare . . . :
“ ‘There is no necessity for a provision giving the employer a lien on the employee’s third-party recovery for the compensation and benefits paid by the employer, inasmuch as the courts have construed the present section 33 as providing such lien. In addition, as a result of judicial construction of the existing section, the employee is entitled to deduct his expenses incurred in third-party proceedings,”' 105 Cong. Rec.'12674 (1959) (emphasis added).
The express statement that the employee should deduct his expenses from the recovery is, of course, a plain indication that those expenses would not be borne' by- the stevedore. Cf. n. 13, infra.
The House version of the amendment would have provided: “[T]he carrier liable for the payment of . . . compensation shall have a lien on the proceeds of any recovery from [a] third person, whether by judgment, settlement, or otherwise, after the deduction of the reasonable and necessary expenditures, including attorney’s fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded under, or provided, or estimated, by this Act . . . .” H. R. Rep. No. 229, 86th Cong., 1st Sess., 6 (1959). The House passed this version of the amendment, 105 Cong. Rec. 5561-5562 (1959), but later concurred in the Senate version on the evident assumption that the Senate version also adopted existing judicial practice. See id., at 15343.
Before the Amendments, the maximum weekly compensation payment was $70; after the Amendments, the maximum is 200% of the national average weekly wage, to be determined annually by the Secretary of Labor. Before the Amendments, the minimum weekly payment was $18; the Amendments provide for a minimum in the amount of the lesser of the employee’s full average weekly wage or 50% of the national average weekly wage. The Amendments increased or improved benefits in other ways not material here. See 33 U. S. C. §§ 906-910.
See Hearings on S. 2318 et al. before the Subcommittee on Labor of the Senate Committee on Labor and Public Welfare, 92d Cong., 2d Sess., 33, 38-39, 244, 258, 263, 271, 290, 304, 416, 431, 621-623, 632, 642, 661,
Contrary to Mr. Justice BlackmuN’s suggestion, see post, at 92, that the somewhat divergent rationales adopted by the lower courts demonstrate that there was no settled rule prior to the 1972 Amendments, we have been unable to find a single case, and none is cited in the dissenting opinion, in which a court held that a stevedore would be required to pay a share of the longshoreman’s legal expenses. The uniform rule was to the contrary, and it is that rule of which Congress was informed in 1959 and 1972 and which it approved in 1959. See n. 6, supra.
See Hearings on S. 2318 et al., supra n. 8, at 160, 371, 720; Hearings on H. R. 247 et al., supra n. 8, at 119, 157-158, 295.
The dissenting opinion suggests that the “chief” purpose of the 1972 Amendments was to benefit longshoremen, and that the distribution we approve would disserve this purpose in favor of the merely “incidental”
Petitioner suggests that a requirement of proportional payment would ultimately aid stevedores by encouraging third-party suits and thus making it more likely that stevedores will receive reimbursement for the compensation payment. The Act, however, contains special incentives designed to encourage the stevedore to bring suit on its own if the longshoreman elects not to do so. See n. 4, supra.
Respondent does not challenge the approach adopted in Fontana v. Pennsylvania B. Co., 106 F. Supp. 461, 463-464 (SDNY 1952), aff’d on opinion below sub nom. Fontana v. Grace Line, Inc., 205 F. 2d 151 (CA2), cert. denied, 346 U. S. 886 (1953), under which the expenses of suit, including attorney’s fees, represent the first charge on the recovery against the third party. See S. Rep. No. 428, 86th Cong., 1st Sess., 2 (1959); n. 6, supra. Under this view, if the recovery against the shipowner is less than the sum of the lien and the expenses of suit, the longshoreman will receive the full amount of his expenses even if the remainder is in
See n. 2, supra, illustrating that petitioner’s distribution scheme would result in a recovery of $5,756.26 in excess of the amount he would receive if there were a simple negligence action and no compensation scheme.
The Act explicitly allows attorney’s fees in cases in which an employer declines to pay compensation, 33 U. S. C. § 628, and in cases in which the employer brings suit pursuant to an assignment from the longshoreman. These provisions reinforce the conclusion that if Congress had intended to allow proportionate sharing of legal expenses, it would have done so expressly.
Petitioner suggests that the distribution we approve will result in a $5,756.26 windfall to the respondent, since it is in effect permitted to recover its lien without contributing to the costs of the recovery. But as explained in the text, our review of the Act and its legislative history persuades us that Congress intended the stevedore to recover the full amount of its lien, regardless of who brings the action.
Nothing we say today is intended to affect the established power of a court of equity to charge beneficiaries with a proportionate share of the costs of creating a common fund through litigation. See Dawson, Lawyers and Involuntary Clients: Attorney Fees From Funds, 87 Harv. L. Rev. 1597 (1974). Nor are we presented the question whether that power would be properly exercised in the setting of a workers’ compensation scheme if the particular Act and its legislative history were ambiguous on the subject. For disparate results in the state courts, compare Burt v. Hartford Acc. & Indem. Co., 252 Ark. 1236, 483 S. W. 2d 218 (1972); Liberty Mut. Ins. Co. v. Western Cas. & Sur. Co., Ill Ariz. 259, 527 P. 2d 1091 (1974); Commercial Union Ins. Co. v. Scott, 116 Ga. App. 633, 158 S. E. 2d 295 (1967); Tucker v. Nason, 249 Iowa 496, 87 N. W. 2d 547 (1958), with Quinn v. State, 15 Cal. 3d 162, 539 P. 2d 761 (1975); Security Ins. Co. of Hartford v. Norris, 439 S. W. 2d 68 (Ky. 1969); Broussard, Broussard & Moresi, Ltd. v. State Auto & Cas. Underwriters Co., 287 So. 2d 544 (La. App. 1973), cert. denied, 290 So. 2d 908 (La. 1974); Carter v. Wooley, 521 P. 2d 793 (Okla. 1974). See generally 2A A. Larson, Workmen’s Compensation §74.32 (1976 and 1979 Supp.).
A number of States have required proportional sharing of legal expenses by statute. See, e. g., Idaho Code § 72-223 (1973); Ill. Rev. Stat., ch. 48, § 138.5 (1977); Mich. Comp. Laws Ann. § 418.827 (Supp. 1978); N. Y. Work. Comp. Law § 29 (McKinney Supp. 1979); Pa. Stat. Ann., Tit. 77, §671 (Purdon Supp. 1979); Va. Code §65.1-43 (1973); Wash. Rev. Code Ann. §51.24.010 (Supp. 1978). See generally Larson, supra; Atle-son, Workmen’s Compensation: Third Party Actions and the Apportionment of Attorney’s Fees, 19 Buffalo L. Rev. 515 (1970). That route, of course, remains available to Congress.