September 2009
The dispute in Townsend v Atlantic Sounding arose from an incident in which Edgar Townsend a crewmember aboard a tugboat, sustained injury when he slipped and fell on the deck of the vessel. Townsend’s employer Atlantic Sounding, filed a declaratory judgement action arguing that it did not owe maintenance and cure benefits for Townsend’s injury. Townsend immediately responded by filing a counter claim for Jones Act negligence, unseaworthiness, wrongful termination and notably, an arbitary and wilful failure to pay maintenance and cure. Townsend sought the award of punitive damages for this failure.
Atlantic Sounding filed a motion for summary judgement at district court level arguing that Townsend was not entitled to punitive damages as a matter of law. The district court denied the motion holding that punitive damages are available in actions for maintenance and cure and certifying the question for interlocutory appeal. The district court’s denial of Atlantic Soundings motion was affirmed by the 11th Circuit. Atlantic Sounding filed a writ of certiori to the U.S Supreme Court.
The Supreme Court considered “whether an injured seaman may recover punitive damages for his employers wilful failure to pay maintenance and cure”. Atlantic Sounding argued that the earlier Supreme Court decision in Miles v Apex Marine ruled that seamen are only able to recover those damages that may be available under the Jones Act. The Supreme Court held that Miles did not limit recovery to the remedies available under the Jones Act and noted that punitive damages had long been an accepted remedy under general maritime law and because nothing in the Jones Act altered this understanding, punitive damages should remain available as a remedy for a wilful and wanton failure to pay maintenance and cure benefits.
Justice Clarence Thomas’ opinion considered that Miles v Apex Marine did not “…address either maintenance and cure actions in general or the availability of punitive damages for such actions.” The court held that the case concerned itself with the issue of a cause of action and not the availability of remedies for wrongful death actions brought under maritime law.
The Supreme Court decision considered that “punitive damages have long been an available remedy at common law for wanton, wilful or outrageous conduct.” The Court noted that “the common law punitive damages tradition extends to claims arising under federal martime law” and further noted that “nothing in maritime law undermines this general rule’s applicability in the maintenance and cure context.” Justice Thomas also noted that an owner’s failure to provide proper medical care for a seaman (i.e to comply with the requirement to provide the basic remedy available to a seaman) had previously led to the award of damages “…that appear to contain at least some punitive element.”
The decision of the Supreme Court in Townsend upholds a plaintiff’s ability to recover punitive damages for a wilful or wanton failure to pay maintenance and cure benefits in both tort based maintenance and cure claims and contract based claims too (claims relating to injury or illness sustained within the service of a vessel without a showing of fault). Drawing together the details of the ruling, a conclusion may be reached that the decision may have provided plaintiffs with the opportuntiy to argue that punitive damages are available as a remedy in pure Jones Act claims for negligence or unseaworthiness.
It is also perhaps to be expected that the 2008 ruling in Exxon Shipping Co v Baker will be challenged. Exxon v Baker capped the level of punitive damages to a one to one ratio with compensatory damages in an oil spill claim. The sums considered in a maintenance and cure claim can be expected to be relatively low. If Exxon is applied, the award of punitive damages for a wilful and wanton failure to pay maintenance and cure benefits amounting to $10,000 would be capped at $10,000. In reality, unpaid benefits could be much lower than that sum and the level of available damages may act to deter the pursuit of a claim even if plaintiff attorneys fees were to be awarded. The level of punitive damages awarded against an owner should act as a punishment and the punishment is expected to act as a deterrant against further wilful or wanton behaviour.
The Townsend decision has significant implications for shipowners when dealing with the intial stages of a crew injury or illness investigation and considering whether maintenance and cure benefits are to be paid. Numerous defences to the payment of benefits exist, including the wilful concealment of a disabling condition and wilful misconduct such as gross inebriation or fighting. A crewmember is also only entitled to benefits if the injury or illness arose in the service of a vessel. A decision to terminate or refrain from making maintenance and cure payments should be approached with caution. If a defence to the payment of benefits is to be used, the cirumstances relating to the conduct of the seaman and the nature of the injury or illness should be carefully and thoroughly investigated before any decision to terminate benefit payment is made. A decision to withold or terminate benefits should not be made simply because a suspicion or concern exists that a defence to the payment of maintenance and cure may exist. Such a suspicion may subsequently be proved to be without foundation. The failure to pay benefits might be claimed to be wilful or wanton and a claim for punitive damages could follow.
Update - June 2010
The issue of punitive damages in maintenance and cure cases, and the question of the appropriate ratio to be applied as between compensatory and punitive damages were reviewed in a more recent Steamship website article of June 2010 on Clausen v Icicle Seafoods.
