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Delaware River & Bay Authority v. Kopacz

September 25, 2009


Appeals from the United States District Court for the District of Delaware (D.C. Civil No. 07-cv-00008) District Judge: Honorable Sue L. Robinson.

The opinion of the court was delivered by: Rendell, Circuit Judge


Argued May 21, 2009

Before: RENDELL, STAPLETON and ALARCÓN*fn1, Circuit Judges.


In this appeal from the District Court's award of declaratory judgment in favor of defendant Jan Kopacz, and against plaintiff Delaware River & Bay Authority ("DRBA"), we are called upon to decide two issues of admiralty law:

(1) whether commuter seamen, who eat and sleep on land, are entitled to "maintenance and cure"-payment from a shipowner to a seaman to cover medical, food, and lodging expenses during the seaman's recovery from illness or injury; and (2) if so, whether a shipowner is relieved of its maintenance and cure obligation when the injured seaman receives Social Security disability benefits and long-term disability payments provided by the shipowner. Relying on our opinions in Barnes v. Andover Company, L.P., 900 F.2d 630 (3d Cir. 1990), and Shaw v. Ohio River Company, 526 F.2d 193 (3d Cir. 1975), the District Court concluded that commuter seamen are entitled to maintenance and cure, independent of other benefits paid to the seaman. Accordingly, the District Court awarded Kopacz maintenance of $50,790.00, plus prejudgment interest of $2,204.29, but denied Kopacz's claim for consequential damages, including lost wages, pain and suffering, and attorney's fees and costs. Both parties timely appealed.

DRBA's central contention on appeal is that payment of maintenance would produce a "double recovery," because Kopacz's wages already enabled him to procure food and housing on land, and because Social Security disability and long-term disability payments made to Kopacz adequately covered his living expenses. DRBA argues, further, that the award of prejudgment interest was punitive and thus impermissible. The sole argument advanced in Kopacz's cross-appeal is that consequential damages were improperly denied. Finding no error in the District Court's thoughtful resolution of these issues, we will affirm its order.

I. Background

Maintenance is the payment by a shipowner to a sailor for the sailor's food and lodging costs incurred while he is ashore as a result of illness or accident. Barnes, 900 F.2d at 631. A common law remedy, maintenance, derived from medieval maritime codes, was incorporated into American jurisprudence nearly two centuries ago. Harden v. Gordon, 11 F.Cas. 480, 482-83 (C.C.D. Me. 1823) (No. 6,047); see The Osceola, 189 U.S. 158, 175 (1903). Its original purpose was clear and compelling-to ensure injured seamen funds adequate to cover basic living expenses during their recovery. The imposition of such a duty, it was felt, would benefit both shipowners and seamen, by encouraging shipowners to implement appropriate safeguards to protect sailors, and by encouraging seamen to undertake hazardous voyages:

Seamen are by the peculiarity of their lives liable to sudden sickness from change of climate, exposure to perils, and exhausting labour. They are generally poor and friendless, and acquire habits of gross indulgence, carelessness, and improvidence. If some provision be not made for them in sickness at the expense of the ship, they must often in foreign ports suffer the accumulated evils of disease, and poverty, and sometimes perish from the want of suitable nourishment. . . . If these expenses are a charge upon the ship, the interest of the owner will be immediately connected with that of the seamen. The master will watch over their health with vigilance and fidelity. . . . Even the merchant himself derives an ultimate benefit from what may seem at first an onerous charge. It encourages seamen to engage in perilous voyages with more promptitude, and at lower wages. It diminishes the temptation to plunderage upon the approach of sickness; and urges the seamen to encounter hazards in the ship's service, from which they might otherwise be disposed to withdraw.

Barnes, 900 F.2d at 633 (quoting Harden, 11 F.Cas. at 483).

Since Harden was decided almost 200 years ago, the lot of the "poor and friendless" seaman has improved considerably. As we noted in Barnes, union contracts may guarantee sailors a host of benefits, including overtime and premium pay, vacation allowances, disability pensions, and various amenities, including televisions and washers and dryers. 900 F.2d at 637. The emergence of these contractually-guaranteed benefits, however, has not diminished our historic solicitude toward seamen, who continue to be viewed by the law as "wards of the admiralty." Id. at 636-37. Accordingly, maintenance, a duty that is "annexed to the employment contract," that "attaches once the seaman enters the service of the ship," and that "no private agreement is competent to abrogate," has retained its vitality in the modern era. Id. at 636.

DRBA guarantees many of the benefits discussed above to its seamen. The interaction of these benefits and the maintenance obligation lies at the heart of this appeal.

A permanent full-time employee of DRBA who suffers an injury on the job is entitled to full wages for the first 90 days of disability. Thereafter, the employee is entitled to benefits equivalent to 60% of his wages, which are paid through a long-term disability ("LTD") policy funded wholly by DRBA, and administered by Hartford Insurance Company ("Hartford").*fn2

The personnel manual provided to Kopacz sets forth the purpose of LTD benefits-to "provide a continuing income should the employee's ability to earn a living be interrupted or terminated by a prolonged disability." A. 6-7.

The duty to provide LTD benefits stems from a provision in the collective bargaining agreement between DRBA and its marine employees, providing that, "Employer agrees to continue to provide all permanent full-time employees long-term disability plans that are offered to . . . employees generally." A. 7. The agreement makes no mention of maintenance payments, and DRBA does not maintain an insurance policy specifically to cover its maintenance obligation to seamen.

In the event of a delay in the payment of LTD benefits, an injured sailor also receives the value of his sick and annual leave. According to DRBA's risk manager, Bonnie Miller, the payment of annual leave is distinct from maintenance and is merely a stop-gap to enable an injured seaman to cover his living expenses during the pendency of his LTD application.

Kopacz suffered a debilitating back injury in December 2004 and was subsequently deemed unfit to return to duty by DRBA. As a full-time permanent employee, Kopacz received his full wages for 90 days following the date of his disability, equivalent to approximately $9,900. Kopacz also received the value of his sick and annual leave, equivalent to approximately $4,600. Thereafter, Hartford paid Kopacz monthly LTD benefits of $2,192 for 17 months, beginning in April 2005 and ending in September 2006.*fn3 DRBA did not make separate maintenance payments to Kopacz, nor did Kopacz request them.

Because Hartford also required injured seamen to apply for Social Security disability ("SSD") benefits, which, if approved, would be deducted from monthly LTD benefits, Kopacz submitted an application for SSD benefits in October 2006. After approval of Kopacz's application, the Social Security Administration transmitted a check to him in the amount of $17,142.00, representing his total benefits retroactive to July 2005, and thereafter provided monthly payments of $1,167.00.

Upon discovering the payment of $17,142.00, Hartford demanded reimbursement of slightly less than this sum*fn4 and advised Kopacz that his LTD benefit would thereafter be reduced by the amount of his monthly SSD payment. After Kopacz refused to reimburse Hartford, it suspended payment of LTD benefits. Shortly thereafter, Kopacz advised DRBA that it, not he, was required to reimburse Hartford for this sum; when DRBA declined to do so, this suit followed.

DRBA sued Kopacz in the United States District Court for the District of Delaware, seeking a declaratory judgment that DRBA did not owe Kopacz maintenance and cure. After a oneday bench trial, the District Court concluded that Kopacz was entitled to maintenance in the amount of $50,790.00, plus prejudgment interest of $2,204.29. However, the District Court denied Kopacz's claim for consequential damages, including lost wages, pain and suffering, and attorney's fees and costs.*fn5 Both parties timely appealed.*fn6

DRBA contends that commuter seamen, who eat and sleep ashore, are ineligible for maintenance. It also argues, in the alternative, that the District Court should have deducted other payments made to Kopacz, including LTD and SSD, from the amount of maintenance owed to Kopacz -- a result that, DRBA maintains, is necessary to avoid double recovery. Further, DRBA contends that the award of prejudgment was punitive, rather than compensatory, and thus impermissible. Kopacz's cross-appeal urges that the District Court improperly denied his claim for consequential damages.

II. Discussion

A. Commuter Seamen

DRBA asks the Court to adopt a per se rule denying maintenance to commuter seamen. DRBA observes that the rationale for maintenance-to provide seamen compensation equivalent to food and lodging received at sea-is inapplicable to commuter seamen, who eat and sleep ashore. DRBA argues, further, that the wages of commuter seamen are already computed with the expectation that they will pay for their own food and housing expenses on land and, therefore, an award of maintenance would produce an unjustified windfall. DRBA maintains that, based on these concerns, we left "open the question" of whether commuter seamen are entitled to maintenance in Barnes, 900 F.2d at 643.

Our inquiry begins with Barnes. There, we considered whether a blue water seaman, who maintained a home ashore, was entitled to include in his calculation of maintenance expenses incurred in connection with his permanent lodging, or whether he was solely permitted to recover the incremental costs attributable to his presence on land, including food, laundry, and gas. In approving Barnes's recovery of costs associated with his permanent lodging, we cited precedents awarding maintenance to commuter seamen:

Many of the reasons given by the courts for awarding maintenance to land-based seamen who, by definition, ordinarily incur their own expenses for food and lodging are also applicable to inclusion in maintenance of the prorated costs of permanent lodging by a blue water seaman: the status of seamen as wards of the admiralty, Weiss, 235 F.2d at 313; DuPlantis, 298 F.Supp. at 14-15 & n. 3; consistency with maritime tradition, Weiss, 235 F.2d at 313; DuPlantis, 298 F.Supp. at 14-15[;] and the need to provide support to those who are ineligible for workman's compensation or other means of support. Weiss, 235 F.2d at 313.

Id. at 642.

Despite our reliance on these precedents in Barnes, DRBA insists, "This Circuit has left open the question of whether a commuter seaman, such as Kopacz, is even entitled to maintenance in the first place." Appellant's Br. at 14. Although Barnes acknowledged that there was "some logic" in denying maintenance to shore-based seamen, the court stressed that the "life of the law" is "experience," not "logic." Id. at 643. Barnes then reiterated Congress and the Supreme Court's "long-established solicitude" to seamen, the "liberal attitude" regarding the scope of maintenance, and the interpretative canon requiring that ambiguities in regard to maintenance be "resolved in favor of the seaman"-all considerations that, Barnes concluded, supported an expansive understanding of the right to maintenance. Id. at 637, 643 (citing Vaughan v. Atkinson, 369 U.S. 527, 532-33 (1962)). Barnes also quoted at length from an opinion rejecting a position identical to that urged by DRBA:

To deny [maintenance to a seaman] because he does not receive lodging and meals aboard ship raises problems that would distort the simple lines of the maintenance remedy. . . . Indeed, the rationale that maintenance is allowable only when meals would have been served aboard challenges the now well settled doctrine that the disabled seaman is entitled to be paid maintenance beyond the end of his voyage, for were maintenance to be allowed only for those days during which the ship would have served him meals, it would end when the voyage was over.

Id. at 642 (quoting Hudspeth v. Atlantic & Gulf Stevedores, Inc., 266 F.Supp. 937, 943 (E.D. La. 1967)); see Smith v. Del. Bay Launch Serv., Inc., 972 F.Supp. 836, 849 (D.C. Del. 1997); see also Crooks v. United States, 459 F.2d 631, 634-35 (9th Cir. 1972) ("[T]he maintenance remedy should be kept simple, uncluttered by fine distinctions which breed litigation, with its attendant delays and expenses.") (internal citation omitted). Hence, Barnes strongly suggested that commuter seamen are also entitled to maintenance.

Today, we make explicit what was implicit in Barnes: commuter seamen enjoy the same right to maintenance as their blue water counterparts. Although DRBA's concerns relating to other payments have merit, we do not write on a blank slate. Id. at 637 (noting the Court's "clear and frequent pronouncements" that seamen remain wards of the admiralty). Rather, our analysis is informed by nearly two centuries of jurisprudence "consistently expand[ing] the scope of the right [to maintenance]." Id. at 633. In Vaughan, decided over one hundred years after the introduction of maintenance into admiralty law, the Supreme Court stressed the continued status of seamen as "wards" of admiralty and the need for "liberal" interpretation of the maintenance obligation. 369 U.S. at 532.

Notwithstanding our dissenting colleague's vigorous argument that the maintenance and cure obligation does not arise when the seaman is a commuter, we find no such limiting principle-or inclination to curtail this historic remedy-in the applicable jurisprudence.*fn7 As much as we might have expected the Supreme Court in 1962 to modify the traditional maintenance obligation to reflect changes in the modern seaman's lifestyle, it did no such thing. To the contrary, the Court, stressing the expansive nature of this right, declined to fashion exceptions to the shipowner's longstanding duty to provide maintenance and cure:

Admiralty courts have been liberal in interpreting this duty 'for the benefit and protection of seamen who are its wards.' We noted in Aguilar v. Standard Oil Co., that the shipowner's liability for maintenance and cure was among 'the most pervasive' of all and that it was not to be defeated by restrictive distinctions nor 'narrowly confined.' When there are ambiguities or doubts, they are resolved in favor of the seaman.

Id. at 531-32 (internal citations omitted).And, in fact, DRBA cites no authoritysupporting withholding maintenance from commuter seamen. See id. at 642 (quoting Weiss v. Central R.R. Co. of N.J., 235 F.2d 309, 313 (2d Cir. 1956) ("We know of no authority . . . for holding that a seaman is not entitled to the traditional privileges of his status merely because his voyages are short, because he sleeps ashore, or for other reasons his lot is more pleasant than that of most of his brethren.")); Bailey v. City of N.Y., 55 F.Supp. 699, 701 (S.D.N.Y. 1944), aff., 153 F.2d 427 (2d Cir. 1946) (awarding maintenance to land-based seaman after finding no authority for narrow construction of the right); see also Crooks, 459 F.2d at 633 ("Thus we find the obligation of maintenance enforced even where maritime compensation did not include board and lodging-where the seaman was expected to pay for his meals out of his wages. No matter what the terms of his maritime employment were, during the period of his disability he was entitled to be provided with maintenance as well as cure."); The City of Avalon, 156 F.2d 500, 501 (9th Cir. 1946) (holding that seaman could recover cost of food as element of maintenance, even where shipowner had not paid for his meals).

In short, "[t]he Supreme Court has shown no inclination to depart from its long-established solicitude for seamen," despite the protections afforded modern seamen. Barnes, 900 F.2d at 637. Until it does so, we decline to depart from the "uniformly enforced" rule entitling deep water and commuter seamen to maintenance. Weiss, 235 F.2d at 313.

B. Long-Term Disability Benefits

Having established Kopacz's general eligibility for maintenance, we turn to DRBA's alternative contention-that LTD payments satisfied its maintenance obligation. Shaw v. Ohio River Company governs when other payments received by an injured seamen satisfy a shipowner's maintenance obligation. 526 F.2d at 200. There, we considered whether benefits paid to a seaman under a disability policy funded by the shipowner, and administered by Prudential Insurance Company ("Prudential"), relieved the shipowner of its maintenance duty. Id. We attached primary importance to the "character" of the benefit conferred. Id. We explained that where a benefit is part of the seaman's wage package, it will be deemed separate and independent of the shipowner's maintenance obligation; accordingly, payment of the benefit will not relieve the shipowner of its maintenance duty. Considerations supporting characterization of a benefit as "wages" rather than maintenance include that: (1) the benefit is mandated under a wage agreement between the employer and the seaman; (2) the absence of any contractual provision indicating that the benefit is in lieu of, or in satisfaction of, the employer's maintenance obligation; (3) the purpose of the benefit is to replace lost wages; and (4) the benefit is recoverable, even where the seaman does not satisfy the maintenance requirements. Id. In Shaw, all four factors supported classification of disability benefits as a substitute for wages: (1) the benefits were guaranteed in a collective bargaining agreement governing employee compensation; (2) the shipowner did not specify that disability ...

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