* District Judge of the Western District of Louisiana, sitting by designation. United States Court of Appeals

Fifth Circuit



## FILED

March 10, 2004

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________

No. 03-40418

________________________

Stavros E. Fanos, on behalf of himself

and those similarly situated,

Plaintiff-Appellant

-vsMaersk Line, Ltd., Maersk Sealand,

A. P. Moller Group, Maersk, Inc., Wilmington

Trust, Expander Transport Corporation,

Expediter Transport Corporation, Expresser

Transport Corporation, Exporter Transport

Corporation, and Extender Transport Corporation,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Texas

Before DAVIS and EMILIO M. GARZA, Circuit Judges, and LITTLE * , District Judge.

LITTLE, District Judge:

Stavros E. Fanos, a former radio electronics officer and member of the American Maritime

Officers Union (“the union”), appeals an adverse summary judgment in his action seeking wages and

penalty wages. The district court made three holdings i n the alternative: (1) the vacation pay at issue

is not a seaman’s wage within the meaning of 46 U.S.C. § 10313, (2) even if the vacation pay were1 The five E companies are the following defendants: Expander Transport Corporation, Expediter

Transport Corporation, Expresser Trans port Corporation, Exporter Transport Corporation and Extender

Transport Corporation.

2 a wage, the wage penalty claim would fail because the pay was not wrongfully withheld, and (3) this

claim is barred by laches. The district court, therefore, granted defendants’ motion for summary

judgment, which resulted in a dismissal with prejudice. The district court concluded correctly that

pay was not wrongfully withheld. The judgment of the district court is AFFIRMED.

I. Factual & Procedural Background

In 1982, the United States Department of Navy, Military Sealift Command (“MSC”) awarded

defendant Maersk Line, Ltd. (“Maersk Line”) a contract for the construction and operati on o f five

Maritime Preposition Ships (“MPS”). Following the award of the contract, Maersk Line created five

so-called E companies 1 to be designated contractors for purposes of performing the MPS contract.

Under financing arrangements for the vessels, defendant Wilmington Trust Company (“WTC”) was

and remains the owner trustee of each vessel. WTC bareboat chartered each vessel to one of the E

companies. Each E company, in turn, time chartered each vessel to the MSC. The ships were placed

in operation in 1984 and 1985.

In 1982, Maersk Line and each of the E companies entered preliminary collective bargaining

agreements with the union for the employment of licensed deck and engine room officers on the MPS

vessels. In 1984, prior to the vessels being placed in service, each E company entered an amended

collective bargaining agreement with the union. The vacation pay section of the collective bargaining

agreement provided the following: “For all days of covered employment, officers shall receive fifteen

(15) days of paid vacation for each thirty (30) days of such employment.” This provision has changed

several times and now entitles officers to nineteen (19) days of paid vacation for each thirty (30) days3

wor ked. The collective bargaining agreements require employers of union members to join the

various union benefit plans and to contribute to the plans. These plans are independent ent it ies

governed by trustees.

In 1985, the E companies and t he unio n signed a memorandum of understanding which

eli minated the employers’ duplicate benefits contributions. Duplicate benefits contributions

previously occurred on “overlaps days,” days when two officers are aboard a ship to perform one job.

Paragraphs II(A) and II(B) of the 1985 memorandum of understanding eliminates duplicate benefits

contributions with the following language:

(A) There shall not be any duplication of contributions to the various [union] plans,

Committees or Services. (B) When processing a vacation benefit application the

[union] Vacation Plan shall deduct one day of covered employment before calculating

the benefit payable. Such deduction shall be for employment commencing on or after

March 1, 1985 and per non-continuous pay periods.

The union agreed to this amendment in order to prevent the loss of jobs.

T he defendants are not required to pay the vacation benefit directly to the employees

.

Defendants are merely required to make contributions to the Ameri c an Maritime Officers Union

Vacation Plan (“the Plan”). The Plan, in turn, manages and distributes these funds. Fanos does not

allege that defendants di d no t make proper contributions to the Plan. Fanos argues that the

withholdings pursuant to the 1985 memorandum of understanding were improper.

Fanos bottom s his suit on two main arguments: (1) that the vacation benefit is a seaman’s

wage under 46 U.S.C. § 10313, and (2) that the 1985 memorandum of understanding, which reduced

the benefit, was an illegal agreement under 46 U.S.C. § 10317. Fanos also alleges that the

memorandum of understanding is unenforceable because he was nev er info rmed of its existence.2 It is uncontested that plaintiff’s claim, which includes actual los t wages and the double penalty

mandated by 46 U.S.C. § 10313(g), exceeds $4 million. Plaintiff brought the suit as a class action. Although

the case was not certified as a class action, it is further uncontested that the class claim, including the statutory

penalty, would exceed $2 billion.

4 Plaint iff, therefore, seeks the amount allegedly wrongfully withheld as well as the statutory penalty. 2

Both appellant and appellees provide extensive arguments for and against a finding that the

vacation benefits at issue are “wages” within the meaning of 46 U.S.C. § 10313. For purposes of this

opinion, it is unnecessary to make such a determination. Without deciding, this court herein assumes

that the vacation benefits at issue are “wages” within the meaning of 46 U.S.C. § 10313. Also due

to the analysis that follows, it is unnecessary to determine the applicability of the equitable doctrine

of laches.

II. Standard of Review

This is an appeal from the district court’s grant of summary judgment. “A summary judgment

is reviewed de novo

, using the standard applied by the district court.” G overnor and Co. of Bank of

Scotland vs. Sabay

, 211 F.3d 261, 265 (5t h Cir. 2000). The record is viewed in the light most

favorable to the non-movant and summary judgment is proper only when the sum m ary judgment

record reveals that there is no genuine issue as to any material fact and the moving party is entitled

to judgment as a matter of law. Forsyth v. Barr , 19 F.3d 1527, 1533 (5th Cir. 1994), cert. denied

,

513 U.S. 871, 115 S.Ct. 195 (1994).

III. Analysis

Given the assumption that the vacation benefits are wages, this court must determine whether

defendants’ actions were proper. The pertinent part of the wage penalty statute, 46 U.S.C. § 10313,

states the following:5

(f) At the end of a voyage, the master shall pay each seaman the balance of wages due

the seaman within 24 hours after the cargo has been discharged or within 4 days after

the seaman is discharged, whichever is earlier. When a seaman is discharged and final

payment of wages is delayed for the period permitted by this subsection, the seaman

is entitled at the time of discharge to one-third of the wages due the seaman.

(g) When payment i s no t made as provided under subsection (f) of this section

without sufficient cause, the master or owner shall pay to the seaman 2 days’ wages

for each day payment is delayed.

The United States Supreme Court in Griffin v. Oceanic Contractors, Inc.

, 458 U.S. 564, 570, 102

S.Ct. 3245, 3249 (1982), explaine d t he two prongs used to determine the application of the wage

penalty statute: (1) whether the master or owner refused to pay wages within the specified period,

and (2) whether this failure to pay was without sufficient cause. See also 46 U.S.C. § 10313. The

wage penalty statute is inapplicable to the instant scenario under both prongs.

The first prong asks whether the withholding was conducted by the “master or owner,” not

merely whether the withholding occurred. T he defendants acknowledge that the one-day deduction

occurred. The defendants, however, argue that the Plan, not the defendants, was responsible for the

withholding. Furthermore, Fanos does not allege that defendants did not make proper contributions

to the Plan. Pursuant to the collective bargaining agreements, the defendants are required to make

contributions to the Plan, but the distribution of the vacation pay is an obligation of the Plan, not the

employer. Any alleged withholding or non-payment of vacation pay, therefore, cannot form the basis

of a claim against defendants. The first prong of the Griffin case is not satisfied and, therefore, the

wage penalty statute is inapplicable.

Even if the first prong were satis fied, the second prong is not satisfied. The second prong

asks whether the failure to pay was without sufficient cause. Whereas the plaintiff argues that the

failure to pay was w it ho ut sufficient cause, the defendants argue that the 1985 memorandum of

understanding signed by the union and the E companies provides sufficient cause.

In Co llie v. Ferguson

, 281 U.S. 52, 55, 50 S.Ct. 189, 191 (1930), the United States Supreme

Court characterized “without sufficient cause” as “either conduct which is in some sense arbitrary or6

willful, or at least a fa i lure not attributable to impossibilit y of payment.” A union is its members’

exclusive bargaining agent in the negotiation and administration of a collective bargaining agreement.

See Humphrey v. Moore , 375 U.S. 335, 342, 84 S. Ct. 363, 368 (1964); cf. Cactus Pipe & supply

Co. v. M/V Montmartre

, 756 F.2d 1103, 1111 (5th Cir. 1985) (stating that “[m]aritime law embraces

the principles o f agency”). Although an employer cannot rely on a bargaining agent’s apparent

authority when the employer has knowledge to the contrary, see Goclowski v. Penn Cent. Transp.

Co.

, 571 F.2d 747, 759 (3d Cir. 1978), plaint iff has shown no evidence indicating that the union was

no t authorized to negotiate the terms of its members’ employment. The 1985 memorandum of

understanding, therefore, provides sufficient cause for the withholding of the vacat ion benefits.

Because sufficient cause exists, the wage penalty statute is certainly inapplicable.

On a final note, Fanos further argues that 46 U.S.C. § 10317 makes the 1985 amendments

to the collective bargaining agreement void. 46 U.S.C. § 10317 states as follows:

A master or seaman by any agreement other than one provided for in this chapter may

not forfeit the master’s or seaman’s lien on the vessel or be deprived of a remedy to

which the master or seaman otherwise would be entitled for the recovery of wages.

A stipulation in an agreement inconsistent with this chapter, or a stipulation by which

a seaman consents to abandon a right to wages if the vessel is lost, or to abandon a

right the seaman may have or obtain in the nature of salvage, is void.

As indicated by the district court below, this statute is inapplicable to the instant situation. The 1985

memorandum of understanding did not deprive Fanos of any “remedy.” The memo randum of

understanding between the union and the employers modified the payment of vacation benefits. The

modification of a benefit is not a modification of a remedy.

IV. Conclusion

The district court concluded correctly that pay was not wrongfully withheld. The plaintiff

received all compensation to which he was entitled. The judgment of the district court, therefore, is

AFFIRMED.