Court Opinion

ID: 2962956
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:04:09.148426+00
Date Added: 2024-06-11T15:01:27.395503
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1094                                   ROBERT B. REICH,                                 SECRETARY OF LABOR,                                Plaintiff, Appellant,                                          v.                             BATH IRON WORKS CORPORATION,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                       [Hon. Gene Carter, U.S. District Judge]
                                          ___________________                                 ____________________                                        Before                                Selya, Cyr and Boudin,                                   Circuit Judges.
                                   ______________                                 ____________________            Joshua T.  Gillelan II, Senior  Attorney, Office of the Solicitor,
            ______________________        Department of Labor, with whom Thomas S. Williamson, Jr., Solicitor of
                                       _________________________        Labor,  and Carol A.  De Deo, Associate  Solicitor, were  on brief for
                    ________________        appellant.            Robert H.  Koehler with whom Judith  Bartnoff and  Patton, Boggs &
            __________________           ________________      _______________        Blow were on brief for appellee.
        ____                                 ____________________                                  December 16, 1994                                 ____________________

                 BOUDIN, Circuit  Judge.  Bath Iron  Works, Inc. ("Bath")
                         ______________            is  a Maine corporation that has long engaged in shipbuilding            and the repair of ships.  It has employees who are covered by            the Longshore and Harbor  Workers Compensation Act, 33 U.S.C.                901-50 (the  "Longshore Act").   That  statute enacts  an            extensive   workers'   compensation  program   that  protects            longshore  and  other  specific   classes  of  workers  whose            injuries occur upon navigable waters of the  United States or            adjoining facilities like piers and dry docks.  Id.   903(a).
                                                            ___                 For  the  most part,  scheduled  payments  for death  or            disability are made either by the employer or under insurance            coverage;  Bath, as  it  happens,  is  a self-insurer.    But            Congress has also  included in the Longshore  Act a so-called            "special  fund,"  33  U.S.C.      944,  administered  by  the            Secretary of Labor ("the  Secretary").  The fund is  used for            various  purposes--most importantly,  for "second  injury" or            "section 8(f)"  payments made  under 33  U.S.C.    908(f),  a            provision  described below.   See  33 U.S.C.    944(i).   The
                                          ___            special fund is primarily funded by annual assessments levied            by the Secretary  on employers subject to  the Longshore Act.            Id.   944(c).1  
            ___                                
            ____________________                 1The  statute refers  to  contributions by  self-insured            employers  or  carriers;  but  for  simplicity  we  refer  to
                       __            "employers" throughout the opinion.                                         -2-
                                         -2-

                 In this case the Secretary brought  suit against Bath in            the  district court to  recover supplemental  assessments for            the special fund claimed to be due by the Secretary.  Because            the dispute  involves Bath's obligation to  the special fund,            the statutory  formula used to determine such obligations--33            U.S.C.     944(c)(2)--needs  to  be explained.    First,  the            statute  requires  the  Secretary   to  estimate  the  fund's            expected  obligations  for  the  forthcoming  year, including            expected  section 8(f)  payments.   Id.  Then,  the Secretary
                                                ___            estimates  other fund  income  (e.g., fines)  and levies  the
                                            ____            balance  by  assessing employers.    Id.   Specifically,  the
                                                 ___            Secretary fixes  and assesses  each employer's share  under a            formula that  takes the  average  of two  fractions, both  of            which use the prior year's experience as a base.  Id.
                                                              ___                 One fraction  is the ratio of  the individual employer's            workers'  compensation payments  "under  this  chapter"  [the            Longshore  Act] during the prior year to all such payments by            all  employers under the chapter during that year.  33 U.S.C.               944(c)(2)(A).   The  other fraction  is  the ratio  of the            section 8(f) payments attributable to the employer during the            prior year to all such  section 8(f) payments attributable to            all employers for that year.   Id.   944(c)(2)(B).  In brief,
                                           ___            the employer's obligation is  based in part on its  own prior            payment  experience  and  in   part  on  the  special  fund's                                         -3-
                                         -3-

            experience in making section 8(f) payments to that employer's            employees.                 For example,  if Bath's compensation  payments under the            Longshore Act for 1988 represented three percent of all  such            employer payments for that year, and the special section 8(f)            payments for  Bath employees  represented one percent  of all            such section  8(f) payments for that  year, Bath's assessment            would be two percent of the (otherwise unfunded) special fund            obligations for 1989, as  estimated by the Secretary.   Under            such  a formula, every employer has an interest in seeing its            own  workers'  compensation  payments  "under  this  chapter"            represented by as small a figure as possible.   The lower the            figure,  the more the burden of financing the special fund is            shifted to other employers.                 The present  case arose because Bath  calculated its own            assessment  by excluding from  the formula  calculation under            section  944(c)(2)(A)  most  payments  it  made  to   injured            employees  who were covered both by the Longshore Act and the            Maine Workers Compensation Act.  Me. Rev. Stat. Ann. tit. 39,               1 et seq.  The Maine statute generally provides comparable
                 ______            payments,  and both  regimes encourage  the employer  to make            payment  without having  the  employee file  a formal  claim.            Where  both statutes  covered  the same  injury  in the  same            amount,  Bath said that it was making payment under the Maine                                         -4-
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            statute and filed a boilerplate denial of liability under the            Longshore Act.  See 33 U.S.C.   914(d).
                            ___                 An employer's  payment of workers'  compensation under a            state statute discharges  the employer's liability  pro tanto
                                                                _________            under  the Longshore  Act.   This was  well settled  by court            decision long ago and eventually Congress enacted a provision            to  this effect.   33 U.S.C.    903(e).   Thus,  in such dual            liability cases, Bath's payments--purportedly under the Maine            statute--erased  its liability under  the federal  statute as            well.  This erasure of federal  obligations led the Secretary            to recalculate Bath's formula  assessment on the premise that            such dual liability  payments should be treated  as ones made            "under" the Longshore  Act.  Bath  disagreed.  The  Secretary            brought suit.                 In the  district court,  the magistrate judge  entered a            recommended decision in favor of Bath, and the district court            approved  the recommendation  and  dismissed the  Secretary's            complaint.  The  gist of  the district  court's decision  was            that the language of the formula--specifically, its reference            to  an employer's  payments  made  "under this  chapter"--was            clear and unambiguous.  "The subsection [944(c)(2)(A)]," said            the  district  court,  "speaks  in  terms  of  payments,  not            liability";  and it  deemed  the dual  liability payments  in            dispute  to be ones made  under Maine law,  not the Longshore                                         -5-
                                         -5-

            Act.    The  court  also relied  secondarily  on  legislative            history and policy.                 On this  appeal, the  Secretary takes the  position that            his  own  reading  of  the  formula  language  is  at   least            permissible,  is a  reasonable one,  and is  entitled to  the            deference ordinarily  due to  the agency or  department under            the  Chevron doctrine.  Chevron v. NRDC, 467 U.S. 837 (1984).
                 _______            _______    ____            We  generally agree  with  the Secretary  that the  statutory            language permits  his reading, which is entitled to a measure            of  deference.   We  also  think  that  the  history  of  the            provision supports the  Secretary's reading.   Finally, there            is no clue anywhere that the distinction proposed by Bath was            ever considered, let alone adopted, by Congress.                 Starting with  statutory  language, the  parties  devote            many pages to the question whether the disputed payments are,            in a  literal sense  or by various  characteristics, payments            "under" the Longshore  Act.  We  do not  think that the  bare            words "under  this chapter" are precise enough to resolve our            case.   As a matter  of dictionary meaning,  the phrase could            (as  Bath claims) refer to  the statute invoked  by the payor            when making the payment--here, the Maine statute--or it could            (as the Secretary  claims) cover any  payment that erases  or            discharges  a  liability  that  otherwise  exists  under  the            federal  statute,  regardless of  what  the  payor says  when            handing over the money.                                         -6-
                                         -6-

                 The  surrounding  circumstances   seem  to  us   equally            uninformative.  It  makes no difference to any  known purpose            of Congress, or any  suggested policy underlying the statute,            that  Bath  did,  as  it claims,  file  repeated  boilerplate            notices of  contravention denying liability under the federal            statute.   Conversely,  it  does not  matter whether,  as the            Secretary claims, Bath reported  the accidents in question to            federal authorities,  as other provisions required  it to do.            These arguments are examples of fussing about inessentials.                 What matters, given that  the statute's language is open            to more than  one reading, is the history and  purpose of the            provision.    Congress adopted  an  earlier  version of  this            formula in 1972 when the assessment device was first  adopted            to  support the special fund.  Under the 1972 amendments, the            assessment  was based  on  the proportion  of the  employer's            prior  year "payments made on  risks covered by  this Act" to            "the total of such payments made by all" employers.  86 Stat.            1251, 1256.  This is a variation, of course, on the  language            now  comprising  the first  half  of  the statutory  formula.            Compare 33 U.S.C.   944(c)(2)(A).
            _______                 In  recent years, the main  use of the  special fund has            been to encourage employers to hire workers who have suffered            a  previous  partial  permanent  disability.     For  various            reasons,  employers feared that such a  worker who suffered a            new disability  might impose extra liability  on the employer
            ___                                         -7-
                                         -7-

            where the first  injury contributed  to the  severity of  the            second; a  good example is  the loss  of an eye  by a  worker            already blind  in one eye.   See  Lawson v. Suwannee  Fruit &
                                         ___  ______    _________________            Steamship Co., 336  U.S. 198 (1949);  2 A. Larson,  Workmen's
            _____________                                       _________            Compensation Law   59.31(a) (1994).   The section 8(f) regime
            ________________            was designed to lessen this discouragement.                 For some  years, section 8(f) has  accomplished this end            by making the special  fund, and not the employer,  liable in            certain    circumstances   for    so-called   "second-injury"            compensation payments, beginning after 104 weeks of  employer            payments.  33 U.S.C.   908(f).   In 1972, when Congress first            adopted the employer assessment device to support the special            fund,  it also  greatly  enlarged  the  scope of  the  fund's            liability  by  inter  alia  extending  the  fund's  liability
                           ___________            retroactively  to  provide  some  coverage  for  some  second            injuries  that  had  occurred  prior  to  the  new  statutory            amendments.                 What Congress  discovered between 1972 and  1984 is that            employers were "dumping"  as many  cases as  possible in  the            section 8(f) basket.   This meant that the employer  not only            avoided compensation liability to  the worker after 104 weeks            (as intended) but also (unexpectedly)  lowered the employer's            future formula payments  to the special fund  below the level            that  would otherwise  have applied.   The  lowering occurred            because the  original 1972  formula only counted  payments by                                         -8-
                                         -8-

            the employer as  increasing the employer's fraction;  section            8(f)  payments made by the fund, on account of the employer's            double-injury  employees,  did  not increase  the  employer's            assessment.                 Under the new section  944(c)(2) formula adopted in 1984            and in force  today, the payments by  the fund on account  of            these  double-injury  employees  is  now  attributed  to  the            employer  to  the  extent  that such  payments  increase  the            employer's assessment  under the second half  of the formula.            This  second  half represents  only 50  percent of  the final            assessment;  thus the employer  gets some help  when the fund            takes over compensation and, presumably, the employer retains            some incentive to hire the partly disabled.  But the employer            does see its future assessments rise somewhat as the employer            transfers responsibility to the special fund.                 As Congress saw it, "[t]his [new] formula will, at once,            dissuade  the dumping of cases  into the fund,  and will more            equitably  apportion  the responsibility  of  paying for  the            fund."            130  Cong. Rec.  25,904  (1984) (statement  of Mr.  Miller).2            Further, because  the employer  now has a  continuing (albeit            indirect) interest in  holding down  unjustified payments  to                                
            ____________________                 2The  statutory solution ultimately  devised by Congress            was adopted late in  the day by the Conference  Committee and            explained  only in floor statements.  Compare H. Rep. No. 98-
                                                  _______            570,  98th Cong., 1st Sess. 20-21 (1983), with Conf. Rep. No.
                                                      ____            98-1027, 98th Cong., 2d Sess. 31 (1984).                                         -9-
                                         -9-

            employees even after 104 weeks, the legislators expected that            unjustified  disability claims would  be better  policed than            they  had  been  by the  fund  administrators.    Id.   Other
                                                              ___            explanations for  the change are consistent.   130 Cong. Rec.            26,297 (1984) (statement of Senator Nickles).                  In sum, prior to 1984 Congress intended the special fund            to  be paid for by employers primarily in proportion to their            experience in paying compensation  claims required to be paid            by the  federal statute ("payments  made on risks  covered by            [the] Act").  No reason is suggested to us why Congress might            have  wished in 1984 to lower an employer's share because, by            happenstance,  the  employer  was  located in  a  state  with            generous compensation laws of its own and the employer  chose            to  pin a  state label  on its  payment while  discharging an            obligation that existed under both federal and state law.  By            the  same  token,  no  legislative  evidence  indicates  that            Congress intended to make such a change in 1984.                 Bath  infers such  an  intent because  Congress in  1984            altered the 1972  phrase "payments made  on risks covered  by            [the] Act" to refer instead to payments "under this chapter."            As best we can tell, Congress happened by chance to alter the            wording of the original  1972 sentence when--in a last-minute            compromise (see note 2, supra)--it adopted the 1972 provision
                        ___         _____            as the first part of the new two-part formula.  To the extent            that the  1972  language  is slightly  more  helpful  to  the                                         -10-
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            Secretary,  it strengthens  the Secretary's  present position            slightly, rather  than  detracts from  it, precisely  because            there  is no  indication that  Congress meant  to change  the            substance of that part of the formula.                 There is only  one discrepancy that gives  us any pause.            In  1991, the  Secretary's Benefits  Review Board  rendered a            decision in a case entitled Stewart v. Bath Iron Works Corp.,
                                        _______    _____________________            25 B.R.B.S. 151  (1991).   There, it appears  that a  second-            injury  employee of  Bath withdrew  a claim  for compensation            under  the Longshore  Act when  Maine's benefits  proved more            generous.    Although the  Stewart  opinion  is difficult  to
                                       _______            decipher without  more information, the Board apparently took            the view that section  8(f) relief from the special  fund was            not  available to  Bath because  the payments  that Bath  was            making to the  employee were  required of Bath  by the  Maine            statute but not by federal law.                 Bath argued to the district court, and repeats here, its            claim that  "it would be  anomalous to base  [Bath's] special            fund  assessments on  state law  payments, when  special fund            relief  is not available to [Bath] from its obligations under            the  Maine  [compensation  law]."   The  technical  responses            offered in  the government's reply brief may  explain why the            district court saw some merit  in Bath's reliance on Stewart.
                                                                 _______            The  government's failure  either  to answer  Bath's  central                                         -11-
                                         -11-

            argument, or to concede the discrepancy, is not what we would            expect from government counsel.                 Bath's  argument  is  relevant   in  the  sense  that  a            construction that produces anomalous results is, by that fact            alone,  a  more  doubtful  reading  of  a  statute.    Public
                                                                   ______            Employees Retirement  Sys. of Ohio  v. Betts,  492 U.S.  158,
            __________________________________     _____            177-78  (1989).    Still,  nothing in  Stewart  is  literally
                                                   _______            inconsistent with the government's reading  of the assessment            formula; Stewart  turns on a  reading of other  provisions of
                     _______            the Longshore Act  that are  not centrally  involved in  this            case.  At worst, Stewart--assuming it was correctly decided--
                             _______            produces  an apparent possible inequity of a kind that is not            unknown  in  complex  statutory arrangements.    Puerto  Rico
                                                             ____________            Telephone Co. v. FCC, 553 F.2d 694, 700 (1st Cir. 1977).
            _____________    ___                 We  have far too little information  to assess fully the            dense and elliptical opinion  in Stewart.  The case  may have
                                             _______            been wrongly decided;  or the  anomaly may be  a rarity  that            carries   no  great   weight  in  interpreting   the  formula            provisions before us;  or it  may not be  an inequity at  all            (the Board  in Stewart  refers to the  possibility that  Bath
                           _______            could  seek relief  from Maine's  counterpart to  the special            fund  provision).   Bath gives  us no  information on  any of            these matters, so there is no reason to feel  distress on its            behalf in having to leave this dangling loose end.                                         -12-
                                         -12-

                 The judgment of  the district court  is vacated and  the
                                                         _______            case  remanded for further  proceedings consistent  with this
                  ________            opinion.                                         -13-
                                         -13-