Source: http://www.law.cornell.edu/supremecourt/text/451/596
Timestamp: 2013-05-24 11:56:28
Document Index: 385706288

Matched Legal Cases: ['§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', '§ 33', 'art 2', '§ 33', '§ 33', '§ 33']

Frederico RODRIGUEZ, Luis Perez, and Srecko Barulec, Petitioners, v. COMPASS SHIPPING CO., LTD., et al. | Supreme Court | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews Frederico RODRIGUEZ, Luis Perez, and Srecko Barulec, Petitioners, v. COMPASS SHIPPING CO., LTD., et al.
451 U.S. 596 (101 S.Ct. 1945, 68 L.Ed.2d 472)
Frederico RODRIGUEZ, Luis Perez, and Srecko Barulec, Petitioners, v. COMPASS SHIPPING CO., LTD., et al.
Argued: Jan. 12, 1981.
Decided: May 18, 1981.*
[HTML] See 453 U.S. 923, 101 S.Ct. 3160.
Syllabus Section 33(b) of the Longshoremen's and Harbor Workers' Compensation Act provides that a longshoreman's acceptance, pursuant to an award in a compensation order, of compensation from his employer for injuries incurred in the course of employment "shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against a person other than the employer unless the longshoreman shall commence an action against such third person within six months after such award." Petitioner longshoremen, who had been injured aboard ship in the course of their employment, accepted compensation under such an award from their respective stevedore employers. More than six months after the awards, each petitioner commenced an action in Federal District Court against the shipowner involved, alleging that the shipowner had negligently caused his injury. The District Courts granted summary judgments for the shipowners (respondents) on the ground that, because petitioners failed to bring suit within six months of the compensation awards, their causes of action had been assigned to their employers who thereafter had the exclusive right to pursue the third-party claims. The Court of Appeals affirmed.
(b) Nothing in the legislative history shows any intent by Congress to preserve the employee's right to commence a third-party suit after the 6-month period expires. To the contrary, the history indicates that once that period expires, the employer possesses complete control of third-party claims. Moreover, the history forecloses the argument that Congress did not intend an assignment of a third-party claim to be effective unless there was an absence of any potential conflict of interest between the assignee and the longshoreman. The simple standard set forth in § 33(b)exclusive control of the cause of action in the employee for six months and in the employer thereafter protects the interests of both employees and employers and is consistent with the Act's general policy of encouraging the prompt and efficient administration of compensation claims. Pp. 604-612.
is whether a longshoreman may prosecute a personal injury action against a negligent shipowner after his right to recover damages has been assigned to his employer by operation of § 33(b) of the Longshoremen's and Harbor Workers' Compensation Act (Act), 33 U.S.C. 901 et seq.
The District Courts granted motions for summary judgment filed by the respondent shipowners on the ground that, by reason of the longshoremen's failure to bring suit within six months, their causes of action had been assigned to the stevedores who thereafter had the exclusive right to pursue the third-party claims.
and we granted certiorari to resolve the conflict with the contrary holding of the Court of Appeals for the Fourth Circuit in Caldwell v. Ogden Sea Transport, Inc., 618 F.2d 1037 (1980). 449 U.S. 818, 101 S.Ct. 69, 66 L.Ed.2d 20.
There is no dispute about the parties' respective interests in either (a) a claim asserted by a longshoreman against a shipowner within the 6-month period following acceptance of a compensation award, or (b) a claim asserted by the stevedore against the shipowner after the 6-month period has elapsed. In the former situation, the longshoreman has exclusive control of the action; any recovery in excess of the amount required to pay the cost of litigation and to reimburse the employer for the statutory compensation paid pursuant to the award belongs entirely to the longshoreman.
In the latter situation, the stevedore has exclusive control of the litigation; any net recoveryafter the compensation award and the litigation costs have been recoupedmust be shared 80% by the longshoreman and 20% by the employer.
The question presented by these cases is what right, if any, the longshoreman has against the third-party shipowner if he does not sue within the 6-month period and the employer fails to do so thereafter. Both the plain language of the statute and the history of its amendments dictate the same answer.
"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 party. 33 U.S.C. 933(b). If he fails to seek relief within that period, the acceptance of the compensation award operates as an assignment to the stevedore of the longshoreman's rights against the third party." Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 77-78, 100 S.Ct. 925, 927-928, 63 L.Ed.2d 215.
The language of § 33(b) is both mandatory and unequivocal. It provides that the acceptance of compensation under an award "shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award." 33 U.S.C. 933(b) (emphasis supplied).
The statutory assignment encompasses "all right" of the employee to recover damages from a third party. These words preclude the possibility that the assignment is only a partial one that does not entirely divest the employee of his right to sue, or that the employee and the employer possess concurrent rights to sue in the post-assignment period. When the § 33(b) assignment occurs, it transfers the employee's entire right to commence a third-party action to the employer.
In an attempt to avoid the conclusion mandated by its plain language, petitioners contend that the Act should be construed either to include an unexpressed condition precedent to any effective assignmentnamely, the absence of any possible conflict of interest between the employer-stevedore and the employeeor to grant the employee an implicit right to have the third-party claim reassigned if the employer fails to sue. Normally, these contentions would be foreclosed by the lack of any ambiguity in the statutory language. But the statutory language was also unambiguous in 1956 when this Court held in Czaplicki v. The Hoegh Silvercloud, 351 U.S. 525, 76 S.Ct. 946, 100 L.Ed. 1387, that § 33(b) contained a limited exception. It therefore is appropriate to evaluate petitioners' contentions in the light of the relevant legislative history. In making this evaluation, however, we adhere to the rule that, "absent a clearly expressed legislative intention to the contrary, the statutory language must ordinarily be regarded as conclusive." Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766.
Under the original Act, the longshoreman could pursue either remedy but not both, and nothing more than the acceptance of compensation was required to evidence the employee's election. See, e. g., Toomey v. Waterman S. S. Corp., 123 F.2d 718, 721 (CA2 1941).
In 1938, Congress amended the Act to provide that the acceptance of compensation would operate as an assignment only if the payment was "under an award in a compensation order filed by the deputy commissioner."
In that case, both the employer and the third party allegedly responsible for the unseaworthy condition that had caused the employee's injury were insured by the Travelers Insurance Co. Because the stevedore had no interest in recovering the compensation payments that had been made by its insurance carrier,
The Court did not hold that no assignment had occurred; rather, it held that under "the peculiar facts" of the case, the election and consequent assignment did not bar the employee's action.
Two years after Czaplicki, in Johnson v. Sword Line, Inc., 257 F.2d 541 (1958), the Court of Appeals for the Third Circuit held that a different sort of conflict of interest would also preserve the longshoreman's right to sue a third party after accepting compensation from his employer. This Court had previously held, in Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, that a shipowner who was liable to a longshoreman could assert a claim for indemnity against the employer-stevedore. That holding inevitably created a conflict between the stevedore's interest in recouping the compensation awarded to the longshoreman and its interest in avoiding the risk of a substantially larger liability as an indemnitor. The Court of Appeals reasoned that the stevedore's potential liability under the indemnity claim authorized by Ryan Stevedoring had the practical effect of enlarging the conflict-of-interest rationale of Czaplicki, which had narrowly rested on the peculiar facts of that case, to encompass substantially every case in which a stevedore failed to bring a third-party action.
The impact of Ryan Stevedoring upon third-party claims assigned to employers by operation of § 33(b) was brought to the attention of Congress as well. In 1956, a House Subcommittee conducted hearings on proposed legislation that ultimately evolved into the 1959 amendments to the Act.
One of the bills considered by the Subcommittee was H.R.5357, which provided, among other things, that an employee could commence a third-party suit within six months after accepting compensation, and that an employer who successfully pursued an assigned third-party claim was entitled to keep one-third of any net recovery. As explained by Congressman Zelenko, the bill's author, these provisions were designed to mitigate the problems identified in Justice Black's dissenting opinion in Ryan Stevedoring.
Other witnesses appearing before the Subcommittee also expressed concern about the conflict-of-interest problem created by Ryan Stevedoring and endorsed H.R.5357 as an effective solution to that problem.
Its solution was not to create or to define an exception to the assignment by operation of law. Rather, Congress substantially adopted the central provisions of the Zelenko bill by amending § 33(b) to postpone the assignment by operation of law until six months after the acceptance of compensation under an award, and by amending § 33(e) to allow an employer to retain one-fifth of the net proceeds of its successful third-party action.
The effect of the 6-month provision, of course, was to give the longshoreman an unqualified right to bring a third-party action during the 6-month period. If his financial circumstances made it imperative that he accept a prompt settlement of his compensation claim, he could do so without forfeiting his right to seek a more liberal recovery from a responsible third party. Moreover, by bringing his own action, the longshoreman could avoid the risk that his employer's potential conflict of interestor possibly erroneous evaluation of the merits of the claimmight result in its abandonment.
The amendment to § 33(e) provided an additional incentive to the employer to sue after assignment of the claim by giving him a share in any excess recovery.
Nothing in the 1959 amendments purports to preserve the employee's right to commence a third-party suit after the 6-month period expires. Although the amendments encourage employers to pursue assigned claims, they do not qualify the assignee's control of the cause of action after the assignment takes place. To the contrary, the legislative history indicates that once the 6-month period expires, the employer possesses complete control of third-party claims.
Congress unequivocally made the choice in favor of first giving the employee exclusive control of the cause of action for a 6-month period and then giving the employer exclusive control thereafter, instead of opting for any form of simultaneous joint or partial control. The simple standard set forth in § 33(b) protects the interests of both employees and employers, and is consistent with the general policy of the Act to encourage the prompt and efficient administration of compensation claims. See Potomac Electric Power Co. v. Director, Office of Workers' Compensation Programs, 449 U.S. 268, 282, 101 S.Ct. 509, 517, 66 L.Ed.2d 446.
To avoid the "practical problem" presented in such a situation, the court fashioned a "solution" that the Act "does not specifically provide." Id., at 1045. We are persuaded that the reason Congress did not specifically provide the solution which the court readily found is that Congress did indeed intend to require the employee either to act promptly or to accept the consequences of an assignment of his claim to the employer.
Finally, relying upon Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 99 S.Ct. 2753, 61 L.Ed.2d 521, petitioners argue that Congress' failure to amend § 33(b) in 1972, when the Act was thoroughly re-examined, evidences implicit congressional approval of the decision of the Court of Appeals for the District of Columbia Circuit in Potomac Electric Power Co. v. Wynn, 120 U.S.App.D.C. 13, 343 F.2d 295 (1965) (per curiam ). In that case, the court held that a longshoreman who has accepted compensation under an award may maintain a third-party action whenever it becomes evident that his employer has no intention to file suit on the assigned claim. Id., at 16, 343 F.2d, at 298. See also Joyner v. F & B Enterprises, Inc., 145 U.S.App.D.C. 262, 264, 448 F.2d 1185, 1187 (1971). The court construed the 1959 amendments as enlarging the employee's protection, and considered the rationale of Czaplicki to apply whenever a potential conflict of interest is present. In its judgment, the employer's failure to sue was sufficient evidence of a conflict to justify an independent action by the employee, notwithstanding the assignment provisions in the Act.
120 U.S.App.D.C., at 16, 343 F.2d, at 298.
It is true that Congress did not expressly disclaim that case in 1972, but that legislative inaction does not modify the plain terms of the 1959 amendments. Nor did Congress expressly endorse the Wynn decision. More importantly, the statutory interpretation announced in Wynn can hardly be compared to the well-established rule of maritime law at issue in Edmonds. There is no reason to believe that "Congress has relied upon conditions" that Wynn created. Edmonds, supra, at 273, 99 S.Ct., at 2763.
In fact, the statutory changes adopted in 1972 are entirely consistent with our interpretation of § 33(b). Moreover, those changes remind us that one of the purposes of the Act is to minimize the need for litigation as a means of providing compensation for injured workmen. SeeBloomer, 445 U.S., at 86, 100 S.Ct., at 932.
See generally Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156, 164-165, 101 S.Ct. 1614, 1620-1621, 68 L.Ed.2d 1. In making these changes, Congress necessarily balanced the conflicting interests of the vessel owner, the stevedore, and the longshoreman. As with other problems of interpreting the intent of Congress in fashioning various details of this legislative compromise, the wisest course is to adhere closely to what Congress has written.
The meaning of § 33(b) is plain and should be respected.
In sum, we conclude that the Court of Appeals in these cases correctly held that § 33(b) precludes petitioners from pursuing their third-party claims. Whatever the continued validity of our decision in Czaplicki, a question we need not and do not decide today,
these cases do not involve "the peculiar facts" on which Czaplicki was based. Rather, petitioners essentially have relied upon conflicts inherent in the statutory scheme and in the relationships among longshoremen, stevedores, and shipowners. The notion adopted in some post-Czaplicki decisions that a conflict of interest may be presumed whenever an employer does not sue on an assigned claim is simply untenable in light of the plain statutory language and the history of the 1959 and 1972 Amendments. We leave for another day the question whether an assignment under § 33(b) will bar a longshoreman's third-party action if there is specific evidence of a serious conflict of interest Congress could not have foreseen when it enacted and amended § 33.
"Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner or [Benefits Review] Board shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award." 44 Stat. (part 2) 1440, as amended, 33 U.S.C. 933(b).
The Act expressly provides that the employee is not required to elect between his right to compensation from his employer and his claim for damages against a third party. Section 33(a), as set forth in 33 U.S.C. 933(a), provides:
Section 5(b) of the Act, as set forth in 33 U.S.C. 905(b), provides:
Section 33(f) of the Act, as set forth in 33 U.S.C. 933(f), provides:
Section 33(e) of the Act, as set forth in 33 U.S.C. 933(e), provides:
"(1) The employer shall retain an amount equal to
Section 33(i) of the Act as it read in 1956 provided that a stevedore's compensation insurer was subrogated to the stevedore's rights in the assigned claim. "Travelers, therefore, was the proper party to sue on those rights of action." 351 U.S., at 529, 76 S.Ct., at 948. The subrogation provision is now § 33(h), 33 U.S.C. 933(h).
"[T]he injured employee has an interest in his right of action even after it has been assigned. Normally, this interest will not be inconsistent with that of the assignee, for presumably the assignee will want to recoup the payments made to the employee. Since the assignee's right to recoup comes before the employee's interest, and because the assignee is likely to be in a better position to prosecute any claims against a third party, control over the right of action is given to the assignee, who can either institute proceedings for the recovery of damages against a third person, 'or may compromise with such third person either without or after instituting such proceeding.' § 33(d), 33 U.S.C. 933(d). In giving the assignee exclusive control over the right of action, however, we think that the statute presupposes that the assignee's interests will not be in conflict with those of the employee, and that through action of the assignee the employee will obtain his share of the proceeds of the right of action, if there is a recovery. Here, where there is such a conflict of interests, the inaction of the assignee operates to defeat the employee's interest in any possible recovery. Since an action by Travelers would, in effect, be an action against itself, Czaplicki is the only person with sufficient adverse interest to bring suit. In this circumstance, we think the statute should be construed to allow Czaplicki to enforce, in his own name, the rights of action that were his originally." 351 U.S., at 531, 76 S.Ct., at 950.
"Respondents contend that since Czaplicki did not, under § 33(a), 33 U.S.C. 933(a), elect to proceed against third parties, but rather chose to accept compensation, he can in no event revoke this election and maintain this suit. But, as this Court has already pointed out, 'election not to sue a third party and assignment of the cause of action are two sides of the same coin.' American Stevedores, Inc. v. Porello, 330 U.S. 446, 455, 67 S.Ct. 847, 852, 91 L.Ed. 1011. Czaplicki can bring suit not because there has been no assignment, but because in the peculiar facts here there is no other procedure by which he can secure his statutory share in the proceeds, if any, of his right of action. For the same reason, we hold that the election to accept compensation, as a step toward the compensation award, does not bar this suit." Id., at 532-533, 76 S.Ct., at 950-951.
In addition, where, as is often the case, the stevedore's insurer is subrogated to the stevedore's interest in an assigned claim, see 33 U.S.C. 933(h), this potential conflict probably will not be of much significance. The insurer is unlikely to sacrifice a meritorious claim for fear of antagonizing a customer of the stevedore.