William H. Rehnquist: We'll hear argument next in No. 95-1081, Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs, Department of Labor. Mr. Salloum, you may proceed whenever you're ready.
Richard P. Salloum: Mr. Chief Justice, and may it please the Court: If the opinion and judgment of the Fifth Circuit in this case is allowed to stand, it would defeat the purpose that Congress enacted section 33(g) of the Longshoremen and Harbor Workers' Compensation Act which was to protect an employer from increased compensation liability when a worker, or those claiming through him, settle a third party case for less than the compensation they would be entitled under the Longshore Act. It would also defeat the purpose for which Congress passed section 33(f) of the Longshore Act which is the give an employer credit to the extent of net third party recoveries received by a worker or those claiming through him. The facts of this case are that Jefferson Yates, between 1953 and 1967, worked as a ship fitter for Ingalls Shipyard. He left Ingalls in 1967 and worked several land-based jobs for other employers. 14 years after he left Ingalls, he was diagnosed with asbestosis in March of 1981. In April of 1981, he filed a claim against Ingalls for compensation and medical benefits under the Longshore Act. In May of 1981, his lawyers, who are the same lawyers that represent him in the compensation claim against Ingalls, filed a products liability suit in Federal court in Biloxi, Mississippi, seeking $6 million in actual and punitive damages against 23 asbestos manufacturers who he claimed made the asbestos to which he was exposed at Ingalls. Less than a year after his compensation claim was filed against Ingalls, Ingalls wrote the district director for the Sixth Compensation District and accepted his claim, voluntarily accepted his claim, under the Longshore Act and agreed to pay him medical benefits and tendered to him all benefits under the Longshore Act. In May of--
Sandra Day O'Connor: Mr. Salloum, may I get you to... Salloum, may I get you to clarify for me how the employer is injured here? Now, I assume the employer could file suit against those third parties who were at fault for the employee's injuries to recover payments that you... the employer made... may have made.
Richard P. Salloum: --If a Burnside action was filed separate and apart from the Longshore Act, the employer would be faced... if the employer sued the 23 asbestos manufacturers directly, the employer would be faced with certain common law defenses in the Burnside tort action, tort indemnity action, that the employer would not be faced in a direct action by the worker against those defendants under the Longshore Act. For example, if the employer filed a direct suit outside the Longshore Act under the Burnside tort indemnity theory, the defendants, the asbestos manufacturers, could assert certain contributory negligence features of coworkers of Mr. Yates which would serve to reduce Ingalls' recovery against those asbestos manufacturers. More important than that... and this Court made it clear in Bloomer... that an employer is entitled to receive back 100 percent of his compensation and medical benefits plus its attorney's fees. That's provided by Congress under section 933 of the Longshore Act. If an employer is required, because of some wrongful act of a worker, to file a separate Burnside tort indemnity lawsuit, the employer, in addition to being faced with common law defenses which would reduce its recovery in the Burnside action, would also be faced with having to bear its own attorney's fees and cost in the Burnside action which Congress has made it clear in section 933(e), as interpreted by this Court in Bloomer, that the employer has its inviolate right to have 100 percent of its compensation and medical benefits--
Sandra Day O'Connor: So, you say you might not be made whole or as whole as you would be otherwise. How about recovering monies that you pay to Mrs. Yates out of the post-death settlements? Yes, ma'am. Your Honor, Ingalls approved the post-death settlements. And I think the classic example of that and why section 933(g) and section 933(f) are so important is that after Ingalls accepted Mr. Yates' claim in June of 1992 and agreed to pay him lifetime benefits under the Longshore Act, Mr. Yates and Mrs. Yates between 1982, when Ingalls accepted the claim, and 1986 when he died, entered into four settlements with asbestos manufacturers in that third party case which Mrs. Yates released her wrongful death claims for Mr. Yates during his lifetime. A classic example of that is that those four settlements that were entered into between the time Ingalls accepted the claim and the time Mr. Yates died where she released her wrongful death claims totaled $30,000, which were much less-- --And that money is not recoverable by the employer.
Richard P. Salloum: --That's correct, Your Honor. But... that's exactly right, Your Honor, but the comparison that I'm making... and the reason why Congress felt it so important for an employer to have a right to consent to a third party settlement is that after Mr. Yates died, Mrs. Yates and her adult children... the next three settlements that they entered into after Mr. Yates died were for $105,000.
Sandra Day O'Connor: Well, you know, what you're basically saying is that the rule should kick in once the employer starts making payments, but that's not... it's not consistent with our holding in Estate of Cowart which said a person satisfies the prerequisites attached to the right and thus becomes a person entitled to compensation at the moment the right to recovery is vested, that is, at the time of the injury.
Richard P. Salloum: Your Honor, that's exactly what we're saying.
Sandra Day O'Connor: But I think we've kind of decided Cowart and relatively recently. Are you asking us to reverse that?
Richard P. Salloum: No, I'm not, Your Honor. I'm asking this Court to follow Cowart. I'm asking this Court to find--
Sandra Day O'Connor: Well, I would think if we followed Cowart, we would have to say that Mrs. Yates was not entitled or qualified for a benefit until her husband's death.
Richard P. Salloum: --That I think, Your Honor, is a source of confusion for the Fifth Circuit. What this Court, as I understand Cowart, said was the right of Mr. Cowart to recover compensation arose at the time of his injury, not at the time that the employer acknowledged liability under the act and not at the time that he was found entitled to adjudication under the act. This Court found in Cowart, as I understand Cowart, that his right to recover compensation arose when his injury arose. And we are simply saying that that principle should hold true for those claiming through Mr. Cowart, that the right of the worker and the right of those claiming through the worker arising... arises at the time of the worker's injury.
Sandra Day O'Connor: But do you think that Cowart would make Mrs. Yates a person entitled to compensation as soon as he knew he had been exposed to asbestos?
Richard P. Salloum: I am, Your Honor.
Sandra Day O'Connor: Because they might divorce. She might predecease him. I didn't think that was consistent with Cowart, but you think it is.
Richard P. Salloum: I think it's very consistent with Cowart, Your Honor. I think what's... what the argument that the Director has posed in the courts below and I think the source of confusion is to take the vesting language out of Cowart, take it in vacuo, and ignore this Court's holding that Mr. Cowart became a person entitled to compensation at the time of his injury. The fact that a wife of a worker may divorce, the fact that a wife of a worker may die before her husband becomes an irrelevant fact, if that happens, insofar as the employer is concerned because if the wife divorces or if the wife predeceases the husband, then her unapproved third party settlements for less than a compensation she would be entitled against the employer would not prejudice the employer because she would not have a claim against that employer. But the fact of the matter here is that Mrs. Yates entered into these unauthorized third party settlements.
John Paul Stevens: Yes, but the question that... I'm still not sure I understand your answer because the question is, when did she become a person entitled to compensation?
Richard P. Salloum: Your Honor, she became a person entitled to compensation at the same time that her husband became a person entitled to compensation.
John Paul Stevens: Even if the next day she died.
Richard P. Salloum: Yes, Your Honor, because the prejudice to the employer would not be there if she died. She would not have the death claim against the employer. Her third party--
John Paul Stevens: She would... there would be no prejudice to the employer unless she later became a person entitled to compensation.
Richard P. Salloum: --No, sir. There would be no prejudice to the employer until she claimed compensation by virtue of the occupational disease to her husband. She became a person entitled to compensation at the same time as her husband when he was diagnosed with an occupational disease.
John Paul Stevens: No, but supposing she did get a settlement of her contingent claim later on and then she died before he did but she had that money, you know, tucked away. She got a settlement with the third party. Would the employer be prejudiced at all in that circumstance?
Richard P. Salloum: No, that's exactly right, Your Honor, because--
John Paul Stevens: She wasn't a person entitled to compensation.
Richard P. Salloum: --Well, the purpose... if these questions are asked without consideration to the reason that 33(g) was enacted by Congress--
John Paul Stevens: You sound like you're arguing the dissent in Cowart.
Richard P. Salloum: --No, Your Honor. I'm arguing the majority opinion in Cowart and that is--
John Paul Stevens: It's a very plain language, strictly literal interpretation.
Richard P. Salloum: --That is the plain language. The plain language that was... I believe the Court was referring to in Cowart was not the phrase, person entitled to compensation. The plain language that the Court was referring to in Cowart, as I understand Cowart, was the 1984 amendments where they... where Congress added the language that if you don't... if a worker does not receive an employer's consent to a third party settlement, then he is bound by the forfeiture provisions of 33(g) regardless of whether or not the employer has paid compensation or whether or not the employer has acknowledged liability.
Anthony M. Kennedy: Well, but the operative clause there was again a person entitled to compensation.
Richard P. Salloum: That operative clause I believe was considered by this Court in the context of the addition by Congress in 1984 that they are barred regardless of whether the employer makes the payments or acknowledges liability.
Anthony M. Kennedy: Let me ask you something about the Burnside action or actions like that. If the employer... if there's a settlement with a third party, and the employer then sues the third party, does the employer have a cause of action on the grounds that the settlement was somehow inadequate, or is it it just seeks indemnity based on the fault of the--
Richard P. Salloum: Your Honor, I believe it would be strictly based on tort indemnity.
Anthony M. Kennedy: --And that's a State law cause of action?
Richard P. Salloum: It's a State law cause of action, Your Honor. It's been recognized by the Federal courts in Burnside to be a tort indemnity.
Anthony M. Kennedy: In other words, the third party has no duty to make an adequate settlement, no duty that runs to the employer? It's just a strict indemnity.
Richard P. Salloum: That's correct, as I understand it, Your Honor.
Anthony M. Kennedy: There's no breech by entering into a settlement that deprives the employer of--
Richard P. Salloum: I think that representing a third party asbestos manufacturer that settles out from under an employer without that employer's consent runs the risk of paying twice.
Anthony M. Kennedy: --Well, but if that's true, then the act does have a policing mechanism. It's not without teeth.
Richard P. Salloum: Well, but, Your Honor, I believe the policing mechanism would be the Burnside--
Anthony M. Kennedy: And the policing will be I guess the third party. The third party would be well advised to seek approval.
Richard P. Salloum: --The third party and the worker would be well advised to seek approval. That's correct, Your Honor. I--
David H. Souter: Mr. Salloum, I'll ask what may be an embarrassing question but it goes to the reason that I'm not following your argument. You say that the... in effect, for purposes of the statute, the wife becomes entitled or the spouse becomes entitled at the same time as the injured party, and you say that's the moment of injury. I thought the distinction was that, in essence, the claim of the immediately injured party arises because the injury is physical, whereas the claim of the spouse arises later because the injury is economic and it does not occur until the support or the right to support is eliminated in this case by the death. Am I... do I misunderstand the nature of the spousal claim here?
Richard P. Salloum: --Your Honor, I believe you're absolutely right on the nature of the spousal claim, but I believe that you will see under the Longshore Act that a claim for disability by a worker is purely economic. He can have an occupational disease that's progressive in nature and continue to work where that disease does not--
David H. Souter: I see. So, you're saying if one economic injury arises at the moment of physical injury, the other one does too.
Richard P. Salloum: --That's correct, Your Honor.
David H. Souter: I see.
Richard P. Salloum: That's correct. And the Ninth Circuit in Cretan found just that. They recognized that the phrase, quote, person entitled to compensation, was not defined by Congress in the Longshore Act. They recognized that person entitled to compensation was capable of several different interpretations, but the interpretation that the courts must give to the phrase is in the context of the reason that the statute is there in the first place.
David H. Souter: All right. With that in mind, what if... taking the earlier example in which the spouse dies or is divorced before the injured party's date... the primary injured party's date of death, if the injured party marries again, does the new spouse have any claim following death?
Richard P. Salloum: No, Your Honor, and that's a very important point. That's why we say that the rights of both the worker and those claiming through the worker arises at the time of his injury.
David H. Souter: What's your authority for that answer?
Richard P. Salloum: It's section... it's the dependency provision of the Longshore Act that says that it's only the dependents of the worker at the time of his injury--
David H. Souter: At the time.
Richard P. Salloum: --that are entitled to recover under the Longshore Act. And that's why the Longshore Act is all based on the... all rights of the injured worker and his family, as well as all liabilities of the employer, begin at the moment of the injury not when he's... the worker is adjudicated entitled to compensation and not when he dies before his wife. The Longshore Act states that the worker's rights and his average weekly wage upon which his compensation is based occurs at the time of his injury. It says that all questions of dependency, that is, those who are ultimately entitled to recover under the Longshore Act in the event the worker dies from an employment-related problem... those rights of dependencies are determined at the time of his injury not at the time of his death.
Ruth Bader Ginsburg: But they have to be dependent at both times, don't they?
Richard P. Salloum: That's correct. They have to be primarily... well, solely. The operative part is dependent at the time of his injury. If he were to die and he had other dependents that were not dependents of his at the time of the injury... for example, if he divorced his existing wife at the time of the injury and then remarried immediately prior to his death, that wife, that surviving wife, would not be entitled to benefits under the Longshore Act.
Ruth Bader Ginsburg: Neither spouse would benefit.
Richard P. Salloum: That's correct, Your Honor.
David H. Souter: Now, is your answer or is the dispositive character of your answer affected by the fact that the claim against the third party is not or need not be purely economic? Or let me put it this way. The claim... if the harbor worker brought a claim against the third party, it would not be limited to economic.
Richard P. Salloum: That's exactly right.
David H. Souter: Whereas if the spouse later brings one, it would be limited to economic. And is the... does the statute... when the statute refers to entitlement, is it talking about entitlement as against the third party as opposed to entitlement as against the employer?
Richard P. Salloum: You know, last night, Your Honor, I was thinking about that, and looking at the purpose for which that statute is there, that same thought occurred to me because Congress could well... Congress speaks in terms of 933(a) which says a person entitled to compensation need not elect his remedy. He can sue both in tort and he can seek compensation benefits provided those benefits, those compensation benefits, are for more than what he's recovered under the third party.
David H. Souter: But if the entitlement refers to, in effect, a general tort law entitlement, then your argument would fail, wouldn't it?
Richard P. Salloum: Well, no, Your Honor. I think, as I read the statute, as I understand the statute, the person entitled to compensation... the status of a person entitled to compensation under the Longshore Act would make that person responsible for meeting the employer approval requirements of section 933(g).
David H. Souter: Well, that's right, but if entitlement to compensation is really... or if the entitlement that the statute speaks of is making reference to the tort liability, then there would be no entitlement on the part of the spouse prior to the death of the harbor worker. And therefore, you would lose.
Richard P. Salloum: Well, I'm really... I'm not sure I follow you, Your Honor. It may be just because I've lost your question, but I think--
Antonin Scalia: Well, you said you were thinking the same thing--
Richard P. Salloum: --Well, I was thinking the same thing in the context that a person entitled to compensation... I think Congress was looking at it in the context--
Antonin Scalia: --You don't mean... when you refer to the person entitled to compensation, you mean just compensation under the act, not compensation in a tort action. Isn't that what you mean?
Richard P. Salloum: --Well, I mean the section 933(g) speaks in terms of a person entitled to compensation having to comply with the employer approval requirement.
Antonin Scalia: I know, but what does a person entitled to compensation mean? Does it mean a person entitled to compensation under the act, or does it mean a person entitled to compensation in a separate tort action?
Richard P. Salloum: It means a person entitled to compensation under the act.
Antonin Scalia: I think that's clear, isn't it, from 933(a) which says... which distinguishes between compensation and damages? It ends... is liable... he need not elect whether to receive such compensation or to recover damages against such persons.
Richard P. Salloum: It is clear, Your Honor, and you're correct. And I believe that if the Court... the Court has to apply the same interpretation to a person entitled to compensation under 933(a), 933(g), and 933(f).
Stephen G. Breyer: Can I ask you a couple of technical, very general questions that are... probably have a clear answer? Is it... suppose you're a covered employer and I'm a covered employee and I'm exposed to a cancer-causing substance that might or might not cause cancer 10 years hence. Now, if I leave your employ later on and I do get the cancer, I'm covered. Right? From you, not from some other person.
Richard P. Salloum: That's correct, Your Honor. If it is shown--
Stephen G. Breyer: Thank you. My second question is that in the language in question, I would have thought reading it naturally, though I don't... this I guess is decided... that it seems to apply to an employer who is paying out to an employee some money under this statute and they have 6 months, the employee, to go and sue, and then thereafter you have 90 days to bring your own lawsuit if I don't. And it says as to... and I'm trying to get an idea of the purpose of that under that incorrect interpretation. But that being so, the purpose of... why do I have to go to the employer to get his approval because, after all, if I settle for $1, what difference does it make? You, the employer, can go bring you own lawsuit against the third party and get all the money back that you had to pay me, can't you?
Richard P. Salloum: --No, sir.
Stephen G. Breyer: Or is that your answer to Justice O'Connor?
Richard P. Salloum: That's correct, Your Honor.
Stephen G. Breyer: Okay, I got that one. All right. Now, then the next thing that... and I take it you're arguing this, that once we reject the interpretation of the natural reading of the words, that we're thinking of the pay-out case. Then I can't find any basis hypothetically... I'm not saying really... but I can't... what is the basis for distinguishing between everybody in the world who might be hurt working for you? That is, why does a person... what's the... how would you interpret these words? Once you say the person entitled to compensation is not the person who has passed the starting gate, i.e., the starting gate when you start to pay me, then is it your view that then covers anyone who ever will be, will be, or is now entitled to compensation?
Richard P. Salloum: That's correct, Your Honor.
Stephen G. Breyer: And you're saying your view is there's no way of drawing a line short of that. The dissent in Cowart, which was I take it the position I said wasn't the law, which I take it... is that right, the dissent in Cowart is focusing on those people who are the people you're actually beginning to pay?
Richard P. Salloum: That was the dissent in Cowart.
Stephen G. Breyer: Yes.
Richard P. Salloum: That's correct, Your Honor.
Stephen G. Breyer: And once you're past that position, once you're saying that's no good anymore, then it must encompass anybody who's hurt--
Richard P. Salloum: It must encompass--
Stephen G. Breyer: --working for you I mean, you know, who might eventually be entitled to compensation.
Richard P. Salloum: --If the purpose of section 33 is to be accepted by this Court, 33(g) would apply to every worker and those claiming through that worker who file a claim for compensation under the Longshore Act, if they settle for less than the compensation they're entitled third party without the consent of the employer, they come within the requirements and allegations of section 33(g).
William H. Rehnquist: Mr. Salloum, your petition for certiorari presented two questions, and the second of them was, does the Director of the Office of Workmen's Compensation Programs have standing to respond in the court of appeals in opposition to a private party? Are you going touch on that in your argument?
Richard P. Salloum: Thank you, Your Honor. I was.
John Paul Stevens: Before you do, could I ask one other question?
Richard P. Salloum: Sure.
John Paul Stevens: In a pre... when the wife settles before the husband dies and asks for approval of the settlement, how does... how do you decide whether she must ask for approval? Because it's only if the settlement is for less than the amount she's entitled to, right?
Richard P. Salloum: That's correct, Your Honor.
John Paul Stevens: How can you say that she's entitled to anything more than zero at that time when she asks for the settlement to be approved?
Richard P. Salloum: Well... I'm sorry, Your Honor?
John Paul Stevens: I mean, how... what is the standard by which you know the duty to ask for approval of the settlement arises? In other words, it's less than she's entitled to.
Richard P. Salloum: Well, if it... the effect would be the same if it's... I guess the criteria would be based upon her age, her husband's age, his average weekly wage, other factors that enter into the compensation liability for both the husband and the wife. When it's all said and done, when the injury to the worker occurs, that employer's compensation liability is fixed at that point.
John Paul Stevens: Even to... even as to the wife.
Richard P. Salloum: Even as to the wife. That's correct. The only difference is is that when the husband dies, the payments to him stop and the employer starts paying the wife. I mean, that's the only change that's occurred. There's some difference in the amount that's paid, but the employer's obligations is fixed at the time.
John Paul Stevens: But the difference is that the wife gets less than the husband?
Richard P. Salloum: Yes, depending on the number of children that there are. That's correct, Your Honor.
John Paul Stevens: What if she's... it seems to me there are variables in there. Well, anyway, I don't want to prevent you from addressing the other issue.
Richard P. Salloum: Thank you, Your Honor.
John Paul Stevens: But I'm very much puzzled by that, exactly what is the standard that determines her duty to seek approval of a settlement that arguably is less than she might become entitled to.
Richard P. Salloum: Yes. There are different factors such as age, the compensation rate that's being paid, the number of children she has, that sort of thing. Very quickly... and I'd like to reserve the balance of my time for rebuttal. Very quickly, the second issue upon which certiorari was granted. It was our position, in follow-up to this Court's opinion in the Newport News case, is that the Director of Office of Workers' Compensation Programs has no standing to participate actively in this appeal. We would submit that section 921(c) of the Longshore Act only vests into persons who are adversely affected or aggrieved by a decision the right to appeal a case to the United States courts of appeals. Congress has defined person in the Longshore Act as not to include the Director or the Secretary of Labor. The Director and Secretary of Labor have no financial stake in this case. There is no regulation of the Director... there's no function of the Director that's at issue in this case. It's strictly a private dispute involving a private compensation claim between a worker and his family and the employer. If there are no further questions at this time, I'd like to reserve the balance of my time for rebuttal.
William H. Rehnquist: Very well, Mr. Salloum. Ms. Brinkmann, we'll hear from you.
Beth S. Brinkmann: Mr. Chief Justice, and may it please the Court: Two questions are before the Court in this case. We believe that the first question concerning the correct interpretation of section 33(g) is answered by the text and this Court's interpretation of that text in the Estate of Cowart case. The Court there held that under the plain language of section 33(g), the term person entitled to compensation means a person who satisfies the prerequisites attached to the right to Longshore Act compensation.
Antonin Scalia: Ms. Brinkmann, just last week we had a case involving the word employee in which the Government was arguing that the word employee sometimes in the statute can mean current employees and sometimes can mean current or past employees. Now, why can't that principle be applied here, that in some provisions here, the person entitled to such compensation means the worker who was injured, but in other provisions where it makes eminent sense, it can mean him or a person who will later be entitled to compensation, not the person now, but the one who may later be entitled to it?
Beth S. Brinkmann: Well, Your Honor, we believe that in this particular case, when you look at the structure of 33(g), there are many reasons why this cannot be interpreted to someone who has a potential entitlement. First of all, there are many prerequisites that Mrs. Yates would have to meet in order to become eligible. And I think this is what Justice Stevens was getting at. This is one of the reasons that a person who's actually entitled to compensation is in a very different situation than Mrs. Yates for example. In order to determine whether or not she would be entitled, not only would her husband have to die, she would have to outlive him, they would still have to be married at that time, and his death would have to be caused by the work-related injury.
David H. Souter: And will the timing of his death affect the amount of her entitlement?
Beth S. Brinkmann: Yes. They--
David H. Souter: Which is what I think Justice Stevens was getting at. How could we figure it?
Beth S. Brinkmann: --Exactly. In fact, when you project out a... what a person entitled to... what a person would be entitled to under the act, you can project out on an actuarial table the life expectancy of the worker, but for someone not yet entitled, you would also have to find some way to project the likelihood of the employee's death resulting from the work-related injury, the likelihood--
Ruth Bader Ginsburg: Ms. Brinkmann, if we said, or may be entitled to compensation, she would fit in that category. If we... if the words meant person now or in the future, that would be a finite group because, as just was brought out in the colloquy, you must be a dependent at the time of the death, otherwise you're out. So, everyone who's a dependent at the time of death is one who may be entitled. Right?
Beth S. Brinkmann: --Actually, the widow... the wife does not have to be dependent in fact if she's married and living with--
Ruth Bader Ginsburg: Yes, but she does have to be the wife at that time.
Beth S. Brinkmann: --That's correct.
Ruth Bader Ginsburg: So, we know all... the entire universe of people who may be entitled we know at the time of injury.
Beth S. Brinkmann: No, Your Honor. I'd have to say no, and I really want to correct I think a premise that was underlined in the earlier argument. The worker's right to entitlement is based on disability, not injury. So, at the time of the injury, that is not a person entitled to compensation. It's only when that injury becomes disabling, it affects the worker's urge--
Ruth Bader Ginsburg: Wage earning.
Beth S. Brinkmann: --wage earning... thank you... capacity does that person become entitled to compensation. So, under that interpretation, any employee that was ever injured might be entitled to compensation if they're eventually disabled by that. I think that there are--
Ruth Bader Ginsburg: I was just making the point that we're talking about derivative liability and all the people who are derivative of the worker are known. So, we're not dealing with the question of, well, you really can't tell until death who those dependents might be or who the spouse might be.
Beth S. Brinkmann: --At the time of death, you would be able to tell whether or not she was the spouse at the time of death.
Sandra Day O'Connor: And the children presumably are not beneficiaries if they have reached majority at the time of death?
Beth S. Brinkmann: That's correct.
Sandra Day O'Connor: So, you wouldn't know at the time of exposure to asbestos whether the children would ever be eligible. Is that right?
Beth S. Brinkmann: I believe that's right, Your Honor. Also--
John Paul Stevens: Excuse me. Had you finished your answer?
Beth S. Brinkmann: --Yes.
John Paul Stevens: May I? What about the case in which the worker becomes entitled to compensation either because it's clear the injury is disabling or you fix the point of disability and he marries someone later? Does that later-acquired wife possibly get widow's benefits?
Beth S. Brinkmann: Yes, I believe so if that is the fact at the time of death.
John Paul Stevens: But then you wouldn't know... you wouldn't be able to identify the universe of people later entitled to compensation even at the time of injury.
Beth S. Brinkmann: That's correct. There are actually myriad examples, adopted children, children that are in utero. There are a multitude, and that's why the words person entitled to compensation have a fixed meaning we believe. And we believe it would be... we have every reason to believe that Congress would have wanted to distinguish people who were actually entitled to compensation from those who were not for two... at least three reasons. One is because of the calculus of the comparison of the amount of entitlement to the settlement. It's just an incredibly complex and very speculative determination. But in addition, the person settling the case is in a different position. If the person is entitled to compensation, they have an option and a right to file a claim for disability benefits under the act, and what section 933 addresses is a person who, on account of a disability or death, has a right to payment of some compensation under the act. And it addressed whether or not that person had to choose between the options. This person at the time of the settlement, Mrs. Yates, had no right to file a claim and indeed may never have one.
Stephen G. Breyer: Why is it that she could? If... suppose 33(f) and (g) don't apply because she's not a person entitled to compensation. Then how does she get any money? She just gets it directly under 7, 8, and 9... 907, 8, and 9, the basic requirement? Is that how she gets it?
Beth S. Brinkmann: Yes, under that--
Stephen G. Breyer: Why is she entitled to that, whereas the worker who... let's say the ordinary case. The worker is hurt. He's paid out his paycheck. Within 6 months, he wants to file a lawsuit. The classic, ordinary case. He goes to the employer. The employer says I'm not going to approve this settlement. Why is that worker not entitled to the basic compensation? The statute says if the worker won't approve the settlement under (g), that he's not entitled to the (f) compensation. It doesn't say a word about the basic compensation. So, that's what I... do you see... I'm having trouble understanding if we hold with you on this, are we certain these people are going to be compensated at all? And if they're compensated, why isn't the ordinary person compensated when the employer refuses to approve the settlement?
Beth S. Brinkmann: --Your Honor, I think if I'm understanding you correctly, my answer is that the person entitled to compensation does recover. Either they settle and get the settlement amount or they don't settle and they have their entitlement to rights under the act.
Stephen G. Breyer: So, everyone whom... if an employer refuses to sign, the employer has to pay the full amount of compensation anyway.
Beth S. Brinkmann: Yes, they have to pay the compensation that the person is entitled to under the act.
Stephen G. Breyer: Anyway, and that's with an ordinary worker who is hurt and they're paying out paychecks... paying out compensation checks.
Beth S. Brinkmann: Based on disability.
Stephen G. Breyer: Based on disability. They have to... either they sign and they get the reduction of 933, or they don't sign and they have to pay the full thing. That's the employer's choice.
Beth S. Brinkmann: There are many other choices, as people have already mentioned. There's, of course, the Burnside action that the employer can recover from a third party also. And I think it's important, Your Honor brings up the other point that I wanted to make about why it would be reasonable for Congress to have differentiated between these two situations. In the situation where the person is entitled compensation and pursues an action against the third party, the employer has a subrogation lien that this Court has recognized under Bloomer and other cases, and that then makes sense for that employer to have notice to be able to intervene in that action, to be able to have some input because they have a vested liability and a vested right to recoup.
Stephen G. Breyer: Can I ask you one final question and that is this. Given your answers to what I've asked, then what harm is done if you in fact interpret the statute the way your opponents want if you say it applies to everybody once they're hurt and could become entitled to compensation? Because then those people, whenever they sue, go and try to enter into a settlement. If the employer approves the settlement, the woman or man is fine. If the employer doesn't approve the settlement, the woman or man eventually will get their full compensation when the disability turns up and hurts them. So, what harm is done? And the good would be it makes sense administratively, you know, and so forth.
Beth S. Brinkmann: Mrs. Yates may never have gotten benefits. She may have been trying to enter into a settlement at a particular time before. For example, an employer was insolvent. Or she may have been trying to enter into a settlement for loss of consortium at a wrong... potential wrongful death action which she then is not entitled to any compensation because she divorces her husband or she predeceases her husband. But she doesn't have that option.
Antonin Scalia: What harm is done? I... what harm is done? That's what I don't understand.
Beth S. Brinkmann: She--
Antonin Scalia: The only harm I can see that's being done is that you're requiring her to go to the employer whereas in some situations that will be a vain act because she won't end up being the widow. But apart from that, how is she prejudiced?
Beth S. Brinkmann: --It's part of the problem I think, Your Honor, with what Congress looked at when they eventually decided to not require workers to elect remedies anymore. She's put in a situation of either taking a settlement that will forever preclude her from future potential compensation which she doesn't know if she's entitled to yet or being left... and being left empty-handed. But she's being forced into a choice at the time of the settlement that she can't make.
Stephen G. Breyer: Then I didn't understand your answer to my question. I don't understand. If she goes and tries to get the settlement, like any other worker, if the employer approves it, she gets the settlement. No problem. Suppose the employer disapproves it. At that point I thought you said that he or she or anyone would be entitled to ordinary compensation under 906, 7, 8, and 9, the rest of the act. Is that not so or is it so?
Beth S. Brinkmann: A person who's entitled to compensation would be because they have an entitlement, but if she is not yet entitled, she cannot go and file a claim, no. She only becomes entitled to compensation after her husband dies, and that's--
Sandra Day O'Connor: You know, that position is inconsistent, is it not, with the rule that was promulgated after the '84 amendments? Didn't the Director take the position at that time that coverage of a death claim does not turn on when death is sustained?
Beth S. Brinkmann: --No, Your Honor. We addressed that point I believe and it was raised in amicus briefs and in our brief. What the Director said was interpreting which employer would be liable for the compensation benefits, and under that it's the employer who was the employer at the time of the death or the injury. But that doesn't mean that the--
Sandra Day O'Connor: At the time of the injury.
Beth S. Brinkmann: --That doesn't mean that the person... Mrs. Yates' entitlement to compensation vested at that time. There was all the other prerequisites that would have to occur before she could become entitled to it.
Anthony M. Kennedy: Is it clear that if we rule, as you suggest, and the wife in this case is not a person entitled to compensation at the time she makes the settlement... is it true that when she does become a person entitled to compensation and brings a suit against the employer, that the employer cannot offset under 33(f)? We don't have to decide that here, but it seems to me that that's at least an open question.
Beth S. Brinkmann: You don't have to decide that, Your Honor, and we do think that that's an open question. I should say that once Mrs. Yates became entitled to compensation after her husband's death, she did obtain prior written approval from the employer for--
Anthony M. Kennedy: But I was talking about offset for the previous--
Beth S. Brinkmann: --Yes. That's not before the Court in this case. Petitioners do not seek an offset in this case, and it--
Ruth Bader Ginsburg: --But you did take a position in your brief on it. You said that they should... the words should be interpreted the same way in both sections.
Beth S. Brinkmann: --Yes, Your Honor, we did. We think in light of the Court's holding in Cowart, that that is required.
Ruth Bader Ginsburg: Let me ask you a very simpleminded question. It was one that was brought up in the brief on the other side, and that is, if you try to envision what Congress was doing here, why would Congress want to say to the widow or the potential widow who settles shortly before the death, you can, in effect, recover twice, but to the one who settles after the husband dies, you can recover only once? What rationality is there to such a scheme?
Beth S. Brinkmann: I think that it would be reasonable for Congress to have distinguished between someone who already has a vested right to compensation, a known alternative remedy, vis-a-vis a person who only has a potential, perhaps entitlement at a later point in time. And weighing that against an employer in the first situation which also has a vested liability and a vested lien and entitlement to recoup, giving that employer a right to prevent a settlement or to participate in that settlement, as opposed to in the latter situation where the employer has no liability nor lien at that point in time. And we also think again because of the very different nature of the determinations of what compensation the person would be entitled to under the act, in the one instance, when the person is entitled, it's a reasonably, generally knowable calculation that may involve actuarial tables, but in the other situation, it involves much more than actuarial tables, a lot of eventualities about outliving another person that... expectancy of the duration of a marriage. If I could, Your Honor, I'd like to turn to the second question presented, whether or not the Director is entitled to participate as a party respondent in a court of appeals. We believe that the Director is entitled to participate under rule 15(a) of the Federal Rules of Appellate Procedure which states that in each case the agency must be named respondent. The Secretary--
William H. Rehnquist: That's simply a procedural rule, isn't it, almost a pro forma type of rule?
Beth S. Brinkmann: --That's correct, Your Honor. I think that would be--
William H. Rehnquist: Why would that control the outcome of something like this?
Beth S. Brinkmann: --Because Federal Rule of Appellate Procedure 15 addresses specifically the situation where courts of appeals are reviewing agency actions, and that rule envisioned that someone from that agency would be in the court of appeals as a party respondent. It's different than Article III standing, Your Honor. It--
William H. Rehnquist: Well, do you think that, say, the rules... a rule could confer standing on a respondent party such as the Director here even though Congress had not... had indicated not?
Beth S. Brinkmann: --It's not standing, Your Honor. I think it's just like a rule about intervention. There are rules for parties to intervene and the Federal rules permit that. That's to bring someone who isn't a party. But that's not giving somebody a right to petition or Article III standing to seek judicial review. That's a very different scenario. I would also point out--
Antonin Scalia: Excuse me. You can intervene when you don't have standing?
Beth S. Brinkmann: --Under... in the district court, under Federal Rule of Civil Procedure 24, there are different provisions... situations--
Antonin Scalia: Surely you can't intervene in a suit unless you have standing.
Beth S. Brinkmann: --I guess it depends on how you describe standing, Your Honor. I think in the sense of Article III standing that you're bringing a case to the court where there's a case of controversy, I don't think that's required for intervention. A intervenor has to show an interest in the--
William H. Rehnquist: You don't think Article III standing is required for... on the part of the intervenor?
Beth S. Brinkmann: --I think under the Federal Rules of Civil Procedure, it depends. There's varying levels of interest and it may be that one person is entitled to intervene as of a right because there's a particular--
William H. Rehnquist: Well, surely the Rules of Civil Procedure can't confer standing in the face of the Article III requirement.
Beth S. Brinkmann: --We agree with that, Your Honor. That's correct. But we think here the idea of having the Federal agency before the court of appeals when an agency action is being reviewed makes eminent sense. And in the Court's opinion in Caputto, it talked about when it did not reach expressly this issue... it talked about the lower court opinion in that case. And Judge Friendly's opinion there had pointed out that it would be a novel form of review of an agency action which did not include the Government as a party in the court of appeals.
Sandra Day O'Connor: Well, what about the Newport News case? It surely points in the other direction.
Beth S. Brinkmann: Newport News addressed the question of whether or not within the statutory definition of a person adversely affected or aggrieved. The Director in that particular case came within that. I think that all the parties in that case agreed, in fact, and the Court reserved the question. Even under that definition, the Director could well have Article III standing to petition for review under some situations.
Sandra Day O'Connor: Is the Tax Court... when we get cases that originated in the Tax Court, is the Tax Court a party before us?
Beth S. Brinkmann: I don't--
Antonin Scalia: I mean, surely it's different when the agency is set up as an adjudicator. I mean, if you have a legislative court, an Article I court, is that court a party to any proceeding of the private parties who then come before us to challenge what that Article I court did?
Beth S. Brinkmann: --Your Honor, we believe that the board, for example, would not be an appropriate party for that very reason. The board does not have a vested right to defend it. The situation here in that the Department of Labor is very unusual. It is not a unitary scheme as is the normal scheme under most agencies where rulemaking, adjudication, and policymaking are all in the same entity.
Antonin Scalia: But it is the decree of the board... of... it is not the decree of the Labor Department, is it--
Beth S. Brinkmann: No.
Antonin Scalia: --that entitles this person to compensation? It's the decree of essentially an Article I court.
Beth S. Brinkmann: Under section 921(c), Your Honor, the Longshore Act itself makes clear that the court of appeals under that provision, once the Benefits Review Board opinion is petitioned to the court of appeals, the court of appeals has the authority and power to modify, reverse, to act on that board's opinion. We think that's why it supports our view that it's not the board but the Director that is named the agency under Federal Rule of Appellate Procedure 15. Prior to the change in '72 where the structure of the appellate review changed, it used to be into the district court, and then the Director could of course participate. In '72 when it changed, it no longer identified who should be the respondent. It identified a court. Several courts have pointed out that they believe in light of the Federal Rules of Appellate Procedure enactment, it was no longer necessary to identify the respondent.
William H. Rehnquist: Thank you, Ms. Brinkmann. Mr. Clark, we'll hear from you.
Wynn E. Clark: Mr. Chief Justice, and may it please the Court: I am asking the Court to follow Cowart, a decision decided 4 short years ago, which we submit teaches us three things. One, in the words of Cowart, there's a basic and unexceptional rule that when a statute speaks clearly to a subject, judicial inquiry is no longer warranted, and that statute, section 33--
William H. Rehnquist: But judicial inquiry is warranted as to what the statute says I take it.
Wynn E. Clark: --Yes, sir, but interpretation beyond the clear meaning of the statute is what I'm referring to. Cowart teaches us two other things, and it's right there on page 2594 of the Supreme Court Reporter and page 2595. Cowart teaches us that a... the person entitled to compensation status must be measured at the time of the third party settlements, and in this case we're talking about settlements made before Mrs. Yates became a widow, at the time she had no right to invoke the administrative machinery of the Longshore Act to file a Longshore and Harbor Workers' Compensation claim for death benefits. Cowart teaches us a third thing, and it says this on page 2595. It says that person entitled to the compensation means this, that the person satisfies the prerequisites for the right. There are a couple of misstatements that I believe are just simply wrong that have made--
Ruth Bader Ginsburg: Mr. Wynn... Mr. Clark, one thing I think perhaps you can teach us, although if you think it's not relevant, let us know. Why wasn't approval sought? We had one person who was clearly a person entitled to compensation. The settlement wasn't approved for the worker or for his potential widow. Why not?
Wynn E. Clark: --With respect to the pre-death settlements, all parties were then operating under the Dorsey and O'Leary cases out of the Benefits Review Board, and they're cited in Cowart. And those cases said, which is something that Cowart made short work of, was that you have to be receiving compensation at the time in order to be a person entitled to compensation. That's why there was no problem at that time. I might add too--
Ruth Bader Ginsburg: All of these settlements were... I thought... then I'm confused. I thought one of the other counsels said that some of these settlements were made after the worker was... yes, I think that... was it... Mr. Salloum said that.
Wynn E. Clark: --Yes, but they're still under the category of pre-death settlements, settlements made during the lifetime of Mr. Cowart, the traumatically injured worker... excuse me... occupationally injured worker.
Ruth Bader Ginsburg: Yes, but there were... none of the settlements were approved although--
Wynn E. Clark: None of the pre-death settlements were approved.
Ruth Bader Ginsburg: --Yes, although some of those settlements postdated the time when the worker himself began to receive benefits.
Wynn E. Clark: That's correct.
Ruth Bader Ginsburg: And no approval was sought for those.
Wynn E. Clark: No approval was sought, and may I add that no--
Ruth Bader Ginsburg: Why not?
Wynn E. Clark: --No approval was required, and it's right there in the petitioners' appendix to the petition for certiorari, pages 49 and 48 and 62 and 63, is because 33(g)(1) only applies when the, quote, person entitled to compensation, end of quote, settles for an amount less than the compensation to which he was entitled. There was a section 8(i) settlement in May, May 5, 1983, which determined that the petitioner Ingalls paid Mr. Cowart... excuse me... Mr. Yates $15,000 and kept his medical benefits open. At that point he knew... every... all the parties knew... what he was entitled to under the act. The third party settlements... and we're talking about the pre-death settlements... netted $18,000 plus, and correctly the Benefits Review Board in the... at the pages I cite in the appendix noted that approval wasn't even required from Mr. Yates, much less Mrs. Yates who could never have invoked the administrative machinery of the act during the lifetime of her husband on--
Antonin Scalia: You have to make that evaluation at the time that the settlement is entered into. Right? And if it turns out that actuarially you were wrong and that in fact the worker gets more... was entitled to more from the employer, it's too bad. You just look to the time of the settlement to determine that issue?
Wynn E. Clark: --Justice Scalia, you look at the time of the settlement under Cowart to determine person entitled to compensation status. To determine actuarial--
Antonin Scalia: Yes.
Wynn E. Clark: --To determine actuarial for the claim that Mrs. Yates is advancing, which is a mix and match approach for the petitioners, you do it after the husband has died and she at that time files a claim for compensation.
Antonin Scalia: I hope we're talking about the same thing. I want to know what time you look to for purposes of determining whether the settlement is indeed less than what the person would be entitled to under this chapter.
Wynn E. Clark: You look at it when the person entitled to compensation makes a third party settlement.
Antonin Scalia: At the time of the settlement. So, you have to do actuarial calculations.
Wynn E. Clark: Correct, yes, sir. You have to be a person entitled to compensation first. Then there's the third party settlement, and then you look actuarial. And in this case--
Antonin Scalia: What happens if your actuarial calculations are wrong and the employer is in fact liable for more than what the settlement was? Does he end up coughing it up?
Wynn E. Clark: --Well, he... both the party... the actuarial determination would have to be made by the administrative judge in the formal hearing and if either party... yes, they can appeal.
Antonin Scalia: No, no. But it turns... in the event it is wrong, he lives longer and therefore is entitled to more money than we had guessed at the time of the settlement, what happens? The employer has to pay that additional amount. Right?
Wynn E. Clark: Yes.
Antonin Scalia: The risk is on the employer.
Wynn E. Clark: Yes, sir.
Stephen G. Breyer: Why... if there had never been a settlement, she was... would have been entitled to compensation under some provision of the act other than 933(f). Right?
Wynn E. Clark: I don't I think I follow your question.
Stephen G. Breyer: If there had never been any settlement at all, there never was a settlement offer, your client would have been entitled to compensation under the act, but not 933, some other provisions of the act.
Wynn E. Clark: My client would have been entitled to compensation under section 9 of the Longshore Act for death benefits.
Stephen G. Breyer: Yes, but not 933(f), some other thing.
Wynn E. Clark: Of course, not.
Stephen G. Breyer: Yes, of course, not.
Wynn E. Clark: Yes.
Stephen G. Breyer: Now, if there is a settlement and it requires approval--
Wynn E. Clark: Yes, sir.
Stephen G. Breyer: --and she didn't get it.
Wynn E. Clark: It requires--
Stephen G. Breyer: Suppose it did. Suppose you lost on that.
Wynn E. Clark: --May I be precise? It requires approval if settlement is less for the compensation--
Stephen G. Breyer: Yes, correct.
Wynn E. Clark: --for which she--
Stephen G. Breyer: Suppose that applied and she didn't get it. Why isn't she still entitled to compensation under those same other provisions since (g) only blocks compensation under (f)? (g) only applies to not getting compensation under (f). It doesn't apply to not getting compensation at all. So, why isn't she still entitled to compensation under all the other provisions? That's what I've been unable to figure out, and for whatever reasons I won't go into that would help me to understand that how the statute works.
Wynn E. Clark: --I believe the shorthand answer to that is, one is that section 33(g)(2) says that failure to obtain a prior written consent from the employer and carrier terminates or forfeits your rights to compensation and medical benefits. And number two, the answer is that Cowart decided that issue adversely to the position that I think the situation you're addressing.
Stephen G. Breyer: Thank you.
Wynn E. Clark: Basically in the dissent. The point is, if you look in... and it's right there in our briefs, pages 12 through 18. It basically says this, that even the Ninth Circuit in the Witthuhn case cited in our brief says... and they use the words vest... that a widow's claim for death benefits under section 9 vest at the time of the death of the worker on whom she is dependent. And to address Justice Ginsburg's question a moment ago with some of the other counsel, it is possible... and it's on page 21 of the Director's brief. It is possible for a wife to be living separate and apart under section 9 from her husband at the time of death as long as it's not due to her fault and not be dependent and still be entitled to section 9 benefits. Think of the things that could have prevented Mrs. Yates from ever being entitled to compensation: death. She may have predeceased Mr. Yates, and Mrs. Yates today is 88 years old.
Antonin Scalia: That can be figured out actuarially just as when he is going to die can be figured out actuarially. So, you could compute that into the calculation, couldn't you? No?
Wynn E. Clark: Yes, sir, you could. But what I'm referring to now is why, consistent with the cases cited in my brief on page 12 though 18, which go directly opposing... opposed to what the petitioner is advancing here. As I understood it, they said that her entitlement... entitlement... arose at the same time as Mr. Yates' diagnosis with asbestosis, which is--
William H. Rehnquist: Thank you, Mr. Clark. Mr. Salloum, you have 3 minutes remaining.
Richard P. Salloum: Thank you, Mr. Chief Justice. I think it's very important--
Ruth Bader Ginsburg: Mr. Salloum, Mrs. Brinkmann gave a different answer to the question about is... who is a potentially qualifying widow. She seemed to suggest that somebody who came into the picture after the injury could be a qualifying widow.
Richard P. Salloum: --Your Honor, that's the first thing I was going to address. I don't believe that's correct. The act provides that it's the wife of the worker at the time of his injury that is entitled to compensation at his death. If he was not married at the time of his injury or if he changed wives at the time... before the time of his death, that wife that married the worker after his injury would not be entitled to compensation. Only the wife married to him at the time of the injury would be entitled to compensation. If the Court holds, as the Government and as the respondents want the Court to hold, it would mean that no employer would be entitled to any credit for any third party recoveries made by a wife when she releases her wrongful death claims during the lifetime of her husband. They would not be entitled to any credit--
John Paul Stevens: Of course, that was the rule for 12 years prior to Cowart, wasn't it?
Richard P. Salloum: --I'm sorry, Your Honor?
John Paul Stevens: That was the rule that was generally applied for 12 years prior to Cowart, wasn't it, by the Benefit Review Board?
Richard P. Salloum: Yes, that's correct, Your Honor. And the Benefits Review Board since 1991 have changed their position on a person entitled to compensation four times: one in Force v. Director, one before the Fifth Circuit in Cowart. They again changed their position before this Court after certiorari was granted in Cowart, and now they change their position for the fourth time in this case. We think it's very important to call to the Court's attention, as we did in the briefing, that the Director has passed a regulation which is section 20 C.F.R. 702.281 that says that the employer approval requirements of section 33(g) and the employer credit entitlements under section 33(f) shall apply to every person claiming benefits under this act.
Stephen G. Breyer: Why can't the employer just say no? If the employer says, no, I won't approve the settlement... he says, no... then the woman never gets any money?
Richard P. Salloum: No, that's not correct, Your Honor. If the employer says, I won't approve the settlement, she is guaranteed compensation from the employer under the Longshore Act.
Stephen G. Breyer: That... if the employer says, no, I won't approve the settlement, the employer has to pay the whole thing.
Richard P. Salloum: The whole thing.
Stephen G. Breyer: Okay. So, if she notifies the employer, she just notifies the employer, and at that point the employer says, no, she gets all the money.
Richard P. Salloum: That's not correct, Your Honor.
Stephen G. Breyer: If the employer says, no, she gets ordinary compensation.
Richard P. Salloum: No, Your Honor. If she notifies the employer and says I have a third party settlement for less than the compensation I'm entitled, and the employer says no, and she settles regardless, under 33(g) she would be barred. But if she says, okay, I won't accept the third party settlement, then the very least she would get would be her full compensation under the Longshore Act. That's the least she would get. All they have to do is come to the employer and say, I have a third party settlement. It may be for more, it may be for less. Will you approve it? If the employer does not approve it and she does not accept the third party settlement, the very minimum she would get--
William H. Rehnquist: Thank you, Mr. Salloum.
Richard P. Salloum: --Thank you, Your Honor.
William H. Rehnquist: The case is submitted.