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 UNITED STATES DISTRICT COURT 

 EASTERN DISTRICT OF MICHIGAN 

 SOUTHERN DIVISION 

JEFFREY TODD KNUDSON, 

 

 Plaintiff, 

 Case No. 14-CV-14854 

vs. 

 HON. GEORGE CARAM STEEH 

M/V AMERICAN SPIRIT, et al., 

 Defendants. 

_____________________________/ 

ORDER GRANTING PLAINTIFF’S MOTION FOR PARTIAL 

SUMMARY JUDGMENT REGARDING ENFORCEABILITY 

OF CONTRACTUAL MAINTENANCE RATE [ECF NO. 133] 

 This matter arises out of personal injuries allegedly sustained by 

Plaintiff Jeffrey Todd Knudson in the service of his employer, defendant 

Liberty Steamship Company (“Liberty”), while serving aboard a Great 

Lakes freighter owned by defendant American Steamship Company 

(“American”). The case is before the court on plaintiff’s motion for partial 

summary judgment regarding enforceability of the contractual maintenance 

rate of $8 per day. The court heard oral argument on plaintiff’s motion on 

January 9, 2019. For the reasons given below, plaintiff’s motion for partial 

summary judgment is GRANTED. 
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FACTUAL BACKGROUND 

 Mr. Knudson was hired by Liberty as a permanent replacement 

worker on March 10, 2011 after Liberty’s negotiations with the union 

representing Liberty’s unlicensed seamen failed to reach a collective 

bargaining agreement. Knudson was not a member of any union. The 

terms of Knudson’s employment were stated in a letter (“Employment 

Offer”), which referred to the terms and conditions contained in a document 

entitled “ASC American Steamship Company Liberty Steamship Company 

Implemented Terms and Conditions of Employment” (“Terms & Conditions 

of Employment”). In accepting the Employment Offer, Knudson 

acknowledged that Liberty explained the Terms & Conditions of 

Employment, that he understood such terms, and that he accepted the 

offer of employment. (Employment Offer, p. 2) 

The Terms & Conditions of Employment is a 111 page document. It 

is a revised version of a previous collective bargaining agreement between 

United Steel Workers Local 5000 and defendant Liberty from 2006. (“2006 

CBA”) The 2006 CBA was a modified version of the 2004 CBA, which itself 

was a modified version of the 1999 CBA. Liberty and the union were not 

able to agree on a new collective bargaining agreement once the prior one 
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expired on August 1, 2009. The union and Liberty reached an impasse in 

their negotiations, and as a result, Liberty hired non-union permanent 

replacement workers, including plaintiff. The Terms & Conditions of 

Employment in Mr. Knudson’s Employment Offer were purportedly based 

on the last offer Liberty made to the union. 

Section 21 of the Terms & Conditions of Employment, addressing 

“Medical Examinations”, provides: 

B. Maintenance and cure, when payable under maritime law, 

shall be paid, at the rate of Eight Dollars ($8.00) per day, upon 

application by the employee and submission of medical 

evidence of disability. 

(Section 21, p. 78) By comparison, Section 9 of the Terms & Conditions of 

Employment, addressing “Allowances and Subsistence”, provides that 

uninjured employees who are not provided with room and board on the 

vessel where they are working are paid $77.25 per day. (Section 9, p. 23) 

On January 11, 2012, Mr. Knudson was serving as a General Vessel 

Utility, or deckhand, aboard M/V AMERICAN INTEGRITY. While 

performing his duties of employment, Knudson was accidentally dropped 

30 feet in a lowering chair from the deck to the paved surface of a pier at 

the Soo Locks. One of the issues in this litigation is whether defendants 
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have fulfilled their legal obligation to pay Mr. Kundson a reasonable 

maintenance during his period of recuperation from his injuries. 

 After the incident, American paid Knudson at the rate of $8 per day, 

as provided in the Employment Offer. When Mr. Knudson complained that 

$8 was not enough to live on, defendants offered him a Claims Arbitration 

Agreement (“CAA”) whereby defendants would increase his maintenance 

payment by $88.59 per day as an advance on an eventual settlement if 

Knudson relinquished his right to a jury trial. (Montante dep. pp. 72-75) 

Mr. Knudson refused to sign the CAA. 

 Knudson lived with his father both before and after his injury. After 

receiving the $8 per day maintenance and cure for two years, Knudson 

supplied defendants with proof of his shared living expenses and 

demanded a maintenance rate of $45 per day. Defendants agreed to pay 

$45 per day, retroactive to the date of the incident. 

 American’s chief operating officer, Kevin McGonagle, acknowledged 

that the Terms & Conditions of Employment were not approved or agreed 

upon by any union representing Mr. Knudson. (McGonagle dep. pp. 33-

34). He further stated that he did not believe a person could secure clean, 

safe and wholesome room and board for $8 a day (id. at p. 43). Mr. 
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McGonagle agreed that an allowance of $77.25 per day was a reasonable 

allowance for room and board (id. at pp. 36-37). Defendant’s claims 

representative handling Knudson’s claims, Laurie Montante, assumed that 

one could not secure room and board for $8 per day. (Montante dep. pp. 

10, 15, 62, 63) 

LEGAL STANDARD 

Federal Rule of Civil Procedure 56(c) empowers the court to render 

summary judgment "forthwith if the pleadings, depositions, answers to 

interrogatories and admissions on file, together with the affidavits, if any, 

show that there is no genuine issue as to any material fact and that the 

moving party is entitled to judgment as a matter of law." See Redding v. St. 

Eward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has 

affirmed the court's use of summary judgment as an integral part of the fair 

and efficient administration of justice. The procedure is not a disfavored 

procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); 

see also Cox v. Kentucky Dept. of Transp., 53 F.3d 146, 149 (6th Cir. 

1995). 

The standard for determining whether summary judgment is 

appropriate is "'whether the evidence presents a sufficient disagreement to 
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require submission to a jury or whether it is so one-sided that one party 

must prevail as a matter of law.'" Amway Distributors Benefits Ass’n v. 

Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The evidence and all 

reasonable inferences must be construed in the light most favorable to the 

non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 

475 U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001). "[T]he 

mere existence of some alleged factual dispute between the parties will not 

defeat an otherwise properly supported motion for summary judgment; the 

requirement is that there be no genuine issue of material fact." Anderson 

v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original); 

see also National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 

(6th Cir. 2001). 

If the movant establishes by use of the material specified in Rule 

56(c) that there is no genuine issue of material fact and that it is entitled to 

judgment as a matter of law, the opposing party must come forward with 

"specific facts showing that there is a genuine issue for trial." First Nat'l 

Bank v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also McLean v. 

988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations 
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or denials in the non-movant's pleadings will not meet this burden, nor will 

a mere scintilla of evidence supporting the non-moving party. Anderson, 

477 U.S. at 248, 252. Rather, there must be evidence on which a jury 

could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing 

Anderson, 477 U.S. at 252). 

ANALYSIS 

 United States maritime law provides that the shipowner has the duty 

to provide “maintenance” to a seaman who becomes ill or injured while in 

the service of the ship. Vaughan v. Atkinson, 369 U.S. 527, 531 (1962). 

The right to maintenance includes food and lodging of the kind and quality 

which the seaman would receive aboard the ship. Calmar S.S. Corp. v. 

Taylor, 303 U.S. 525, 528 (1938). The duty to provide maintenance is thus 

imposed by common law and the right cannot be abrogated by contract. 

Cortes v. Baltimore Insular Line, 287 U.S. 367, 371 (1932); Al-Zawkari v. 

American S.S. Co., 871 F.2d 585, 588 (6th Cir. 1989). The rate of 

maintenance, however, can be “defined by contract.” Al-Zawkari, 871 F.2d 

at 588 (citing Gardiner v. Sea-Land Service, Inc., 786 F.2d 943, 949 (9th 

Cir. 1986)). 
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All the maintenance rate cases relied on by the parties involve either 

union employees covered by CBAs, or non-union employees where there is 

no contractual maintenance rate. Therefore, when the opinions discuss a 

rate of maintenance being defined by contract, they are referring to bona 

fide collective bargaining agreements arrived at through genuine collective 

bargaining. See, e.g., Skowronek v. American Steamship Co., 505 F.3d 

482, 485-86 (6th Cir. 2007); Gardiner, 786 F.2d at 949. 

 In this case, Mr, Knudson was not a member of any union, nor was 

he represented by any union. Mr. Knudson was hired because Liberty was 

at an impasse with the union and the parties could not agree to the terms of 

a new collective bargaining agreement. Liberty implemented the Terms & 

Conditions of Employment, which was the last offer it made to the union, 

and unilaterally made them part of the Employment Offer it extended to Mr. 

Knudson. Consequently, Mr. Knudson is not a union employee with a CBA 

negotiated by the union on his behalf, nor is he a non-union employee 

operating without a contractual maintenance term. Rather, Mr. Knudson is 

a non-union employee with an employment contract that contains a 

maintenance term. That maintenance provision has its origin in a CBA that 

was previously negotiated between a union and shipowner in a bona fide, 
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genuine fashion. Whether these circumstances are a sufficient basis to 

render the contract provision enforceable has not been the subject of any 

known caselaw to date. 

 The Ninth Circuit considered the issue of whether an $8 per day 

maintenance rate in a CBA was enforceable when challenged by union 

seamen who were covered by the CBA but sought a higher maintenance 

rate under general maritime law. Gardiner, 786 F.2d at 945. The Ninth 

Circuit held that general maritime law is not preempted by federal labor 

legislation regarding maintenance because “it does not appear that 

Congress has ‘spoken directly’ to the question of a seaman’s traditional 

right to maintenance through the federal labor laws.” Id. at 948. That is, 

the policies underlying federal labor laws, such as “the policy of enforcing a 

collective bargaining agreement in order to promote stability in labormanagement relations, the policy that the terms of agreements are to be 

determined by the free play of economic forces, [and] the principle of selfgovernment by employees and the democratic process of union 

representation”, do not conflict with the common law requirement that a 

shipowner provide maintenance to a seaman who becomes ill or injured 

while in the service of the ship. Id. at 947-48 (internal citations omitted). 
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 The Gardiner court nevertheless concluded that “the broad polices 

which undergrid the labor laws, as well as the nature of the collective 

bargaining process, require . . . that the maintenance rate expressed in the 

collective bargaining agreement be enforced.” Id. Where a CBA includes 

an explicit rate of maintenance as one of its terms, and there is no reason 

to conclude that the rate was not a consequence of the normal give and 

take of collective bargaining, that term will be enforceable. Id. at 949. 

Where there is no allegation that the collective bargaining process was 

unfair or inadequate, the court cannot consider the rate of maintenance, or 

any other term of the CBA, in isolation. The court recognized that the CBA 

must be considered as a whole because the process of negotiating benefits 

is a “give and take” process and the “determination of its adequacy in 

relation to the whole scheme of benefits has already been made by the 

union and the seamen who voted for that contract.” Id. 

 It is even possible that an expired collective bargaining agreement 

will still control the maintenance rate as to union seamen so long as the 

employer still largely honors its terms. In Macedo v. F/V Paul & Michelle, 

868 F.2d 519 (1st Cir. 1989), the district court found that the contractual 

maintenance rate was no longer enforceable solely because the CBA had 
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expired. Id. at 521. The Court of Appeals held that the district court’s view 

was “oversimplistic.” Id. The court recognized that the terms of the CBA 

were interrelated, with the maintenance rate being just one part of a 

comprehensive wage and benefit agreement. Where the employer still 

followed the general interrelated terms, the maintenance rate set by the 

expired CBA was found to be enforceable. 

 The preceding discussion involves seamen who are represented by 

unions that negotiated and agreed to a rate of maintenance on the 

seamen’s behalf. In such instances courts presume that the maintenance 

rate was arrived at by negotiation. “[T]he burden properly rests with the 

plaintiff to produce evidence that a bona fide negotiation did not take place, 

that the CBA was unfair, or that he was not adequately represented.” 

Skowronek, 505 F.3d at 486 (quoting Al-Zawkari, 871 F.2d at 588). Absent 

a finding of an unfair collective bargaining process, courts decline to view 

one term in isolation and instead view all terms as a union-negotiated 

package of compensation and benefits that should be accorded deference. 

Several circuit courts have considered whether $8 per day in 

maintenance is adequate for nonunion seamen. The Second Circuit held 

that a seaman makes out prima facie case of a reasonable maintenance 
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rate by providing proof of his actual living expenses necessarily incurred 

during his recovery period. Incandela v. American Dredging Co., 659 F.2d 

11, 14 (2d Cir. 1981). The employer may introduce rebuttal evidence 

showing that the seaman’s expenditures were excessive. Id. Other circuit 

courts have adopted the burden-shifting test, further discussing how the 

district court should calculate reasonable maintenance: 

In determining the reasonable costs of food and lodging, the 

court may consider evidence in the form of the seaman's actual 

costs, evidence of reasonable costs in the locality or region, 

union contracts stipulating a rate of maintenance or per diem 

payments for shoreside food or lodging while in the service of a 

vessel, and maintenance rates awarded in other cases for 

seamen in the same region. 

Barnes v. Sea Hawaii Rafting, LLC, 889 F.3d 517, 540 (9th Cir. 2018) 

(quoting Hall v. Noble Drilling (U.S.) Inc., 242 F.3d 582, 590 (5th Cir. 

2001)1). 

 

1 The Fifth Circuit establishing a three step test to determine a maintenance award: 

First, the court estimates the seaman’s actual costs of food and lodging and the 

reasonable cost in the locality of the plaintiff. Second, the court compares the two 

figures. The general rule is that seamen are entitled to maintenance in the amount of 

their actual expenses up to the reasonable amount for their locality. Third, if the court 

concludes that plaintiff’s actual expenses were inadequate to provide him with 

reasonable food and lodging, the plaintiff is entitled to the reasonable cost of food and 

lodging. This insures that the plaintiff's inability to pay for food and lodging in the 

absence of maintenance payments does not prevent him from recovering enough to 

afford himself reasonable sustenance and shelter. Hall, 242 F.3d at 590. 
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 This case does not involve a union seaman who himself was 

represented in bona fide negotiations with his employer. Furthermore, 

although the contract terms came from the last offer the employer made to 

the union, the union did not accept those terms. As such, labor law policies 

which promote stability in labor-management relations and self-government 

by employees are not furthered by enforcing the maintenance term 

contained in the Terms and Conditions of Employment that make up Mr. 

Knudson’s Employment Offer. Of course, Mr. Knudson accepted the 

Terms and Conditions of Employment, but there is no presumption that the 

maintenance rate was arrived at by bona fide negotiation. 

What this case does involve is a non-union seaman working under a 

contract that included a maintenance rate of $8 per day. As discussed 

above, general maritime law provides that parties may agree to a rate of 

maintenance, but that rate must be reasonable. The burden shifting test 

employed by the Second, Fifth and Ninth Circuits provides the court with a 

method for determining a reasonable rate of maintenance when a seaman 

is not covered under a collective bargaining act. The burden is initially on 

the seaman to document his actual living expenses reasonably and 
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necessarily incurred during his convalescence, or to provide other evidence 

demonstrating reasonable costs in the location at issue. 

In this case we know that Mr. Knudson informed his employer that $8 

a day was insufficient maintenance and that he was offered a daily rate of 

$96.59 on the condition that he waive his right to a jury trial. We also know 

that Knudson’s contract provided that uninjured seamen received $77.25 a 

day for room and board when not provided on the vessel. After receiving 

$8 a day for two years, Mr. Knudson supplied defendants with evidence 

showing that his living expenses were $45 a day and defendants agreed to 

pay that amount, retroactive to the date of his injury. Finally, plaintiff offers 

the testimony of American’s chief operating officer and a claim’s 

representative who both agreed that a person could not secure room and 

board for $8 a day. 

Mr. Knudson has met his burden of proving his prima facie case that 

$8 a day is an unreasonable rate of maintenance and that $45 a day is 

reasonable. Defendants have not submitted any evidence to rebut this 

proposition. Therefore, the court finds that the $8 per day maintenance 

rate stated in the Terms & Conditions of Employment is unenforceable as 

to Mr. Knudson. 
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At oral argument plaintiff’s counsel agreed that once his maintenance 

payment was increased to $45 a day, he was no longer entitled to seek 

punitive damages based on the payment of unreasonable maintenance 

under general maritime law. Therefore, the potential availability of punitive 

damages is limited to the two-year period beginning immediately following 

plaintiff’s accident and ending when defendants began paying plaintiff $45 

a day. 

CONCLUSION 

For the reasons stated above, plaintiff’s motion for partial summary 

judgment regarding enforceability of the contractual maintenance rate is 

GRANTED. 

Dated: January 17, 2019 

 s/George Caram Steeh 

 GEORGE CARAM STEEH 

 UNITED STATES DISTRICT JUDGE 

CERTIFICATE OF SERVICE 

Copies of this Order were served upon attorneys of record on 

January 17, 2019, by electronic and/or ordinary mail. 

s/Marcia Beauchemin 

Deputy Clerk