Court Opinion

ID: 9471622
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:37:08.893298+00
Date Added: 2024-06-11T17:42:29.773048
License: Public Domain

WISDOM, Circuit Judge,
dissenting:
I respectfully dissent. The majority opinion reflects a thoughtful and conscientious effort to come to grips with a difficult problem. I cannot concur, however, because I find the result irreconcilable with the Supreme Court’s interpretation of the Act in Bloomer.
As the majority recognizes, Bloomer held that “the stevedore’s compensation lien cannot be taxed to pay part of the longshoreman’s attorney’s fees”. 724 F.2d at 1174. In Bloomer, the Supreme Court repeatedly stressed that Congress intended that the *1179stevedore should recover “the full amount” of its lien from the third-party recovery and that the longshoreman’s legal fees should be borne by the longshoreman “alone”.1 Yet the unavoidable result of the majority’s approach is to defeat a full recovery by the stevedore by effectively forcing it to pay part of the longshoreman’s attorney’s fees. Under the majority’s approach, Mr. Ochoa’s attorney will recover $22,318 (subject to equitable adjustment) and ENI will recover $33,477. If ENI had been granted priority, however, it would have recovered the full amount of its compensation lien—$42,025. By granting priority to the attorney’s fees, the majority in effect compels ENI to pay $8548 of those fees. This amount is 38 percent of the fees; if the district court decreases the attorney’s fees under its power of equitable adjustment, the percentage paid by ENI will increase even further. I cannot reconcile this result with Bloomer.
As the Second Circuit did in Incorvaia, the majority finds support for its position in the legislative history of the 1959 amendments to the Act. See 724 F.2d at 1175-1176; Incorvaia, 668 F.2d at 652. Such reliance is misplaced, for the 1959 amendments were designed specifically to facilitate third-party suits. See Bloomer, 445 U.S. at 80, 100 S.Ct. at 929. This congressional purpose was modified in the 1972 amendments, the primary purposes of which were to reduce litigation and to conserve stevedores’ resources so that the stevedores would be better able to pay the substantial increases in compensation benefits mandated by the 1972 amendments:2
“The legal expenses incurred by stevedores in connection with third-party actions were understood to be a major obstacle to the funding of increased compensation payments. Numerous witnesses testified that third-party actions frequently inured to the benefit of lawyers, depleting the stevedore’s resources and congesting the courts without aiding the injured employee.”
Bloomer, 445 U.S. at 85, 100 S.Ct. at 931; see also id. at 82-86, 100 S.Ct. at 930-932; Johnson, 629 F.2d at 1249.
The majority acknowledges these purposes behind the 1972 amendments, but responds by arguing that its approach will ultimately aid stevedores by encouraging third-party suits and thus making it more likely that stevedores will receive reimbursement for the compensation payments. See 724 F.2d at 1176. The exact same argument was made, and rejected by the Supreme Court, in Bloomer. See 445 U.S. at 86 & n. 12, 100 S.Ct. at 932 & n. 12. As the Seventh Circuit has noted, the Act has its own incentive scheme regarding negligence suits against shipowners:
*1180“In the event the longshoreman does not bring suit against the shipowner within six months — presumably because there is little potential for substantial recovery over and above the compensation award — the stevedore, using its own attorneys and making its own assessment of the likelihood and amount of recovery, can bring suit. That statutory mechanism encourages the stevedore to sue when the negligence claim appears meritorious but the longshoreman’s potential incremental recovery is small. Thus, [giving the attorney’s fees priority over the compensation lien] encourages litigation brought nominally on behalf of the longshoreman in cases where the stevedore’s interest is relatively greater than the longshoreman’s. Such reflexive litigation brought on behalf of a party with minimal interest in the outcome is inconsistent with the Act’s ‘special incentives designed to encourage the stevedore to bring suit on its own if the longshoreman elects not to do so.’ Bloomer, 445 U.S. at 86 n. 12 [100 S.Ct. at 932 n. 12]. Congress, we believe, intended that the stevedore pursue those cases rather than the longshoreman’s attorney, who may be motivated by an artificially inflated contingent fee.”
Johnson, 629 F.2d at 1249 (citations omitted).
As the Supreme Court noted in Bloomer, a principal concern underlying the recognition of the stevedore’s compensation lien has been the prospect that the longshoreman would receive a “double recovery”—a total recovery in excess of the amount he would have received solely through his third-party action—while the stevedore would not receive full reimbursement. See 445 U.S. at 79, 100 S.Ct. at 928. That prospect was a principal concern in the Bloomer opinion itself. See id. at 80, 87, 100 S.Ct. at 929-932. In any insufficient-recovery case, such as the present one, the longshoreman has already received compensation benefits in an amount greater than the net recovery he would have obtained in his negligence action alone.3 To grant the longshoreman’s attorney’s fees priority over the compensation lien, and thus effectively to tax the stevedore for part of the attorney’s fees, flies in the face of Bloomer. The Supreme Court stated in that case:
“To force the stevedore to [pay part of the longshoreman’s legal expenses], ... would guarantee the longshoreman a total recovery in excess of the amount he received in his third-party action. Solely by virtue of the compensation scheme, then, the longshoreman would receive a greater sum than would be possible in an ordinary suit for damages. At the same time the stevedore would be prevented from recovering the full amount of its compensation payment. The courts concluded that these results would violate legislative purposes ... . ”
445 U.S. at 80, 100 S.Ct. at 929 (emphasis added). The effect of the majority’s decision is precisely the result avoided in Bloomer.4
I believe that the better result would be to follow the approach of the Seventh Circuit in Johnson: allow the stevedore to recover first against the longshoreman’s judgment, then assess a reasonable attorney’s fee in the light of the amount remaining. This approach is consistent with the Supreme Court’s interpretation of the Act. The majority’s approach is not.

. “The legislative history [of the 1959 amendments] demonstrates that Congress did not intend to alter the rule allowing the stevedore to recover the full amount of its lien from the longshoreman’s third-party recovery.” 445 U.S. at 80-81, 100 S.Ct. at 929 (emphasis added).
“[I]n 1972 Congress was informed of, but did not alter, the uniform rule that the longshoreman’s legal fees would be paid by the longshoreman alone." Id. at 85, 100 S.Ct. at 931 (emphasis added).
“[T]he stevedore [sh]ould be reimbursed in full for his compensation payment.” Id. at 86, 100 S.Ct. at 932 (emphasis added).
“[0]ur review of the Act and its legislative history persuades us that Congress intended the stevedore to recover the full amount of its lien, regardless of who brings the action.” Id. at 87 n. 14, 100 S.Ct. at 932 n. 14 (emphasis added).
“[Under a contrary holding, the] stevedore would not obtain reimbursement for the full amount of its compensation payment, but would instead have that amount reduced by a possibly substantial legal fee.” Id. at 87, 100 S.Ct. at 932-933 (emphasis added).

. The majority’s concern for maintaining the logical symmetry of the Act is misguided. The majority finds it “incongruous to favor the compensation lien over the longshoreman’s attorney’s fee in distributing a longshoreman’s tort recovery when the Act specifically provides that, when the stevedore sues on the longshoreman’s claim, expenses, including a reasonable attorney’s fee, shall be reimbursed before the compensation lien is paid”. 724 F.2d at 1176. There is no incongruity in this result, because of the congressional policy of conserving stevedores’ resources. Any asymmetry is irrelevant. Cf. O. Holmes, The Common Law 1 (1886): “The life of the law has not been logic; it has been experience.”

. In the present case, Mr. Ochoa has received $42,025 in compensation benefits. His net recovery from a third-party suit alone would have been $33,477 — the amount of the judgment left after expenses and attorney’s fees are deducted.

. As the majority notes, the Bloomer opinion states that it does not address the issue of priority of liens in an insufficient-recovery situation. 445 U.S. at 86 n. 13, 100 S.Ct. at 932 n. 13. Such a footnote qualification cannot support a result contrary to the reasoning of the opinion.