Opinion ID: 689218
Heading Depth: 2
Heading Rank: 1

Heading: the inclusion of tips in the measure of unearned wages under admiralty law

Text: 12
13 Under general maritime law, Flores is entitled to bring an action for maintenance and cure, a remedy available to compensate seamen who fall ill or become injured during their employment. The cause of action for maintenance and cure includes three specific items of recovery: (1) maintenance, which is a living allowance; (2) cure, which covers nursing and medical expenses[;] and (3) wages. Herbert R. Baer, Admiralty Law of the Supreme Court 6 (3d ed. 1979); see 1B Benedict on Admiralty Sec. 43 (Aileen Jenner ed., 7th ed. 1994); Grant Gilmore and Charles L. Black, Jr., The Law of Admiralty 309 (2d ed. 1975). Unearned wages are measured from the time of the seaman's incapacity until the end of his employment contract. See Archer v. Trans/American Serv., Ltd., 834 F.2d 1570, 1575 (11th Cir. 1988). 14 Although the recovery of unearned wages technically is a separate element of recovery from those for maintenance expenses or cure expenses, it is settled law that wages is a basic component of an award of maintenance and cure. Id. at 1574. For that reason, our references to maintenance and cure are meant to include the wages remedy. Maintenance and cure is a remedy with roots in the medieval sea codes; 1 it is a remedy designed to protect seamen from the perils of living and working at sea. To recover in a maintenance and cure action, the seaman need not suffer from illness or injury that is causally related to his duties, Calmar S.S. Corp. v. Taylor, 303 U.S. 525, 527, 58 S.Ct. 651, 653, 82 L.Ed. 993 (1938), as long as the seaman's incapacitation did not result from his own wilful misconduct. Garay v. Carnival Cruise Line, Inc., 904 F.2d 1527, 1530 (11th Cir.1990), cert. denied, 498 U.S. 1119, 111 S.Ct. 1072, 112 L.Ed.2d 1178 (1991). 2 15 The seaman's right to maintenance and cure was firmly endorsed in Harden v. Gordon, a famous circuit opinion by Justice Story: 16 Seamen are by the peculiarity of their lives liable to sudden sickness from change of climate, exposure to perils, and exhausting labour. They are generally poor and friendless, and acquire habits of gross indulgence, carelessness, and improvidence. If some provision be not made for them in sickness at the expense of the ship, they must often in foreign ports suffer the accumulated evils of disease, and poverty, and sometimes perish from the want of suitable nourishment. Their common earnings in many instances are wholly inadequate to provide for the expenses of sickness .... 17 11 F.Cas. 480, 483 (C.C.D.Me.1823) (No. 6,047). The Supreme Court has noted that [i]t has been the merit of the seaman's right to maintenance and cure that it is so inclusive as to be relatively simple, and can be understood and administered without technical considerations. Farrell v. United States, 336 U.S. 511, 516, 69 S.Ct. 707, 709-10, 93 L.Ed. 850 (1949). 18 The traditional breadth of the remedy, as well as its nature and purpose, support Flores's contention that the measure of his unearned wages should include the tips he would have earned had he not become disabled. The Supreme Court has repeatedly declared that the shipowner's liability for maintenance and cure was among 'the most pervasive' of all and that it was not to be defeated by restrictive distinctions nor 'narrowly confined.'  Vaughan v. Atkinson, 369 U.S. 527, 532, 82 S.Ct. 997, 1000, 8 L.Ed.2d 88 (1962) (quoting Aguilar v. Standard Oil Co., 318 U.S. 724, 730, 735, 63 S.Ct. 930, 933, 936, 87 L.Ed. 1107 (1943)). Moreover, [w]hen there are ambiguities or doubts, they are resolved in favor of the seaman. Vaughan, 369 U.S. at 532, 82 S.Ct. at 1000. The purposes of the maintenance and cure remedy include protecting poor and friendless seamen, encouraging shipowners to guard the safety and health of working seamen, and inducing seamen to accept duty at sea. Calmar, 303 U.S. at 528, 58 S.Ct. at 653. 19 The remedy has served its purposes well over the centuries. Until recently, no luxury cruise ships, no cabin stewards, and no system of compensation through tips from passengers existed to complicate the disabled seaman's simple right to recover wages. It is altogether fitting, however, that an ancient remedy born of the reality of the seaman's position should be applied to fit the reality of our modern times. That reality is reflected in the contract between Carnival and Flores, which acknowledges that the bulk of Flores's compensation would come not from the mere pittance of $45 a month that Carnival agreed to pay, but from the hundreds of dollars in tips Flores would receive each week from Carnival's passengers, at Carnival's urging. The contract itself stated the shipowner's own expectation that Flores's tips could be as much as twenty times more than his salary, which amounted to less than two dollars a day. That is the reality of the situation.
20 Although we can find no admiralty cases on point, we do draw guidance from workers' compensation cases defining average weekly wage to include not only base salary but also average tip income. Employees in certain service professions have traditionally relied upon tips for a significant portion of their income. Waiters and waitresses, for example, might receive only the statutory minimum wage from their employer yet earn most of their income from tips. An overwhelming majority of the courts that have considered this question have determined that that tip income is recoverable as part of an individual's average weekly wage under workers' compensation laws. A recent annotation of state court opinions addressing the specific question of whether tips or gratuities should be included in average weekly wages for purpose of workers' compensation remedies notes: 21 Every court which has considered tip cases under statutes defining average weekly wage as the weekly wage earned by an employee at the time of his or her injury has determined that such tips constitute earnings and are to be factored into the calculation of compensation. 22 Jane Massey Draper, Annotation, Workers' Compensation: Tips or Gratuities as Factor in Determining Amount of Compensation, 16 A.L.R. 5th 191, 205 (1993). 3 The reasons given by an Arizona state court apply equally to Flores's situation: 23 [T]he loss of income from tips is as real as the loss of income from employer disbursements. The manifest injustice of compensating for the losses stemming from one source but not from the other has been a persuasive force in the development of [workers' compensation] law. 24 Scott v. Industrial Comm'n, 122 Ariz. 169, 171, 593 P.2d 919, 921 (Ct.App.1978). Just as it does not matter for maintenance and cure purposes whether Carnival had any hand in causing Flores's illness, so it should not matter whether Flores's income came directly from Carnival or indirectly, in the form of tips given by Carnival's passengers at Carnival's urging. 25 Carnival argues that the analogy to state workers' compensation laws is not apt, because of the differences between that system of compensation and the recovery rights of seamen. It notes that maritime labor unions have jealously guarded their basket of remedies--maintenance and cure actions, Jones Act negligence claims, and general maritime law claims of unseaworthiness--against legislative attempts to replace those remedies with a maritime equivalent to state workers' compensation schemes. Unlike seamen, who have remedies both for injuries completely unrelated to their employment and for those arising from negligence or other breaches of an employer's duties, employees under workers' compensation laws generally trade their ability to claim enhanced damages for the security of a no-fault liability system. Carnival contends that this Court therefore should not engraft the definition of wages from state workers' compensation schemes onto the maritime remedy of maintenance and cure. 26 We are not persuaded by Carnival's arguments. While different remedies apply in the workers' compensation and admiralty areas, the fact remains that the wage remedy in each seeks to compensate the injured or disabled employee for compensation lost because of absence from the job. Both measure the compensation due in terms of the worker's or seaman's lost wages. The two situations are analogous to that extent, and we find the reasoning of the workers' compensation cases persuasive. 4 Wages includes average tip income, at least where, as here, the employer and employee anticipate that tips will be a substantial part of the compensation received.
27 Carnival argues that its position finds substantial support in Griffin v. Oceanic Contractors, Inc., 664 F.2d 36 (5th Cir. Unit A June 1981), rev'd on other grounds, 458 U.S. 564, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982). In that case, the Court rejected Griffin's contention that, as a seaman, he was due a maintenance and cure remedy that included bonus and overtime pay. However, Griffin would have received bonus pay only upon completion of his term of employment, and he had forfeited any claim to such pay when, after recovering from his injury, he accepted employment elsewhere instead of returning to his ship. Id. at 39-40. By contrast, both parties in this case anticipated Flores would receive substantial tips each week he labored, and Flores was unable to return to his ships before his contracts expired. 28 The Griffin Court also denied overtime pay for the short period of time Griffin had worked on the ship, because the actual amount of overtime was uncertain, and hence any inclusion of such would have been purely speculative. Id. at 40 (citing Keefe v. American Pac. S.S. Co., 110 F.Supp. 853, 856 (S.D.Cal.1953) (denying overtime to seaman because [a]ctual earning of overtime was an event which might or might not occur. It depended upon many contingencies.)). Again, the present case is different. Flores worked long enough that the actual amount of tip compensation he would have received had he been able to continue working can be determined without undue speculation. 29 The decision in Lamont v. United States, 613 F.Supp. 588 (S.D.N.Y.1985), is closer to the case at hand. In Lamont, a seaman whose overtime earnings had amounted to ninety-one percent of his base wages was held to be entitled to include the amount of that overtime pay in the wage component of his maintenance and cure remedy. Looking at the custom and practice on the seaman's ship of paying overtime in amounts nearly equal to the amount received as base wages, the Lamont court noted:[T]he payment of unearned wages to an ill or injured seaman includes the full amount reasonably expected by the parties to be paid during the voyage .... The expectation of overtime amounting to almost 100 percent of the base rate has led the parties to the major collective bargaining contracts covering American seamen to provide that generally sailors will be aboard ship only six months out of each year. This [was] done because it is the common expectation of the parties that the seaman will be able to earn the annual base income when overtime is included in the six months pay. 30 Lamont, 613 F.Supp. at 593. The situation involving Flores's tip income presents an even more compelling case for inclusion than did the seaman's overtime claim in Lamont. The custom and practice and the expectation of the parties here was that the tip income Flores would receive would be as much as 2200% of his monthly salary.
31 In addition to those that we have disposed of in the course of our prior discussion, Carnival makes other arguments that merit a response. For one thing, Carnival contends that applying traditional principles of contract law to the contract in this case leads to the conclusion that Flores's claim should be rejected. The district court denied Flores's claim for that reason, but Flores's claim is not for breach of contract. It is for maintenance and cure. The Supreme Court has declared that the right to maintenance and cure differs from rights normally classified as contractual. Vaughan, 369 U.S. at 532, 82 S.Ct. at 1000. The shipowner's duty to provide maintenance and cure is contractual in the sense that it has its source in a relation which is contractual in origin, but, given the relation, no agreement is competent to abrogate the incident. Cortes v. Baltimore Insular Line, Inc., 287 U.S. 367, 371, 53 S.Ct. 173, 174, 77 L.Ed. 368 (1932); see Dowdle v. Offshore Express, Inc., 809 F.2d 259, 263 (5th Cir.1987) (the seaman's right to unearned wages also may not be contractually abrogated). Our analysis of Flores's claim is not confined to contract law. Instead, it is enough for our purposes that Flores's contract anticipated both that the seaman would receive tips, and that those tips would form the bulk of his employment income. 32 Carnival also argues that including tip income in the definition of wages for maintenance and cure purposes will lead to fraudulently inflated claims and leave ships at the mercy of unscrupulous seamen. Carnival points out that cabin stewards generally are not required to report their tip income and could easily inflate that which they had received in order to increase their recovery. 5 We reject this argument for three reasons. First, if the threat of fraudulent claims is sufficiently serious, Carnival can institute a system in which tips are reported, or even funnelled through a central point for bookkeeping purposes on the way to the recipients. Cruise lines have created the current system of tips as wages for their own economic benefit, and they are free to make such modifications as their interests require. 33 Second, courts are in the business of distinguishing valid from invalid claims. Disabled seamen are not the only individuals with an incentive to give less than truthful testimony. Criminal defendants have an even stronger incentive to lie, but the courts have not proven powerless to protect their judgments in criminal cases from the effect of false testimony. We have held, for example, that the jury as factfinder is not compelled to accept the uncontradicted testimony of a criminal defendant and can even infer that the opposite of that testimony is true. See United States v. Allison, 908 F.2d 1531, 1535 (11th Cir.1990), cert. denied, 500 U.S. 904, 111 S.Ct. 1681, 114 L.Ed.2d 77 (1991); see also United States v. Goggin, 853 F.2d 843, 846 (11th Cir.1988); United States v. Bennett, 848 F.2d 1134, 1139 (11th Cir.1988). Likewise, an admiralty court has authority, in proper circumstances, to reject as untruthful even uncontradicted testimony concerning the amount of tip income a seaman earned before becoming unable to continue work. Moreover, the court can consider the amount of tips the ship told the seamen he could expect as well as the amount of tips those who remained on board actually received. 34 Finally, we reject Carnival's possibility of fraud argument because it would be grossly unfair to deprive all seamen in Flores's position of any semblance of a fair recovery simply because some might attempt to recover more than the amount to which they are entitled. While it is not certain that some seamen will obtain more than they are entitled if we allow them to include lost tip income in the measure of unearned wages, it is certain that all seamen will receive less than they are entitled if we do not permit them to do so. 35