Punitive Damages - Punishing Times
November 2013
updated February 2014
An October 2013 decision by the U.S. Fifth Circuit has extended the findings in Atlantic Sounding Co Inc v Townsend U.S. 404 [2009] in holding that a seaman may recover punitive damages for their employer’s wilful and wanton breach of the general maritime law duty to provide a seaworthy vessel. In Haleigh J McBride, et al v Estis Well Service, LLC ,2012 A.M.C. 1674 (W.D. La., May 16,2012), the Western District of Louisiana refused to allow a claim for recovery of punitive damages for unseaworthiness. The Fifth Circuit reversed that decision.
The case arose from an incident aboard a barge owned by Estis, which was operating in Bayou Sorrel in Louisiana. While crew members were attempting to straighten a catwalk that had twisted the previous night, a derrick pipe shifted, causing a rig and truck that were mounted on the barge to topple over, killing one seaman and injuring three others. The estate of the deceased and the three surviving seamen brought a claim against Estis for negligence under the Jones Act and unseaworthiness under general maritime law. They also sought punitive damages as a result of their injuries.
Estis asserted that the US. Supreme Court’s decision in Miles v Apex Maritime Corp, 498 U.S. 19 (1990) prevented the plaintiffs from recovering non-pecuniary damages. In this case the Court held that the representative of a seaman killed in US territorial waters could not recover for loss of society, a form of non-pecuniary damage under the general maritime law. Estis argued that the Court reasoned that the Jones Act was enacted in 1920 as an extension of the Federal Employer’s Liability Act (FELA); the Jones Act did not specify the type of damages seamen can recover from their employers, but stated that it incorporated all rights and remedies available under FELA, and FELA did not prescribe remedies either. However, it argued that pre-1920 common law (the Jones Act was enacted in 1920) held that FELA only allowed plaintiffs to recover for pecuniary damages.
In Miles, the U.S. Supreme Court held that in enacting the Jones Act, Congress intended to adopt the pecuniary damages limitation and in an attempt to ensure uniformity throughout U.S. seaman’s personal injury claims, ruled that non-pecuniary damages should not be recoverable in a parallel cause of action for the wrongful death of a Jones Act seaman under general maritime law. Uniformity is the principle upon which this decision was predicated.
The Miles decision led to an understanding that a seaman’s remedies were restricted to pecuniary damages. This belief was largely maintained until June 2009 when the US. Supreme Court ruled in Atlantic Sounding Co v Townsend 557 U.S 404 [2009]. The decision allowed a seaman to recover non-pecuniary damages in the form of punitive damages for a wilful and wanton failure by their employer to pay for maintenance and cure. Having changed the landscape and as the evolution of the subject is studied, this case can be seen to have opened the door to the finding in Estis.
The plaintiffs in Estis argued that the decision in Atlantic Sounding left the question as to whether seamen can recover non-pecuniary damages in Jones Act negligence and/or general maritime law unseaworthiness claims unresolved. In Atlantic Sounding, the U.S. Supreme Court reasoned that punitive damages are a longstanding remedy under general maritime law, that the remedy pre-existed the enactment of the Jones Act in 1920 and that: “nothing in the Jones Act altered this understanding” while also noting that: “[the Jones Act]…did not eliminate pre-existing remedies available to seamen for the separate common-law cause of action based on a seaman’s right to maintenance and cure.” The door was ajar and the availability of such remedies would prove central to the Court’s consideration in Estis and to its decision that punitive damages remain available as a remedy in general maritime law. As the Fifth Circuit noted in Estis: “The crux of this dispute lies in the parties’ competing theories of statutory displacement of general maritime law.”
The District Court had previously ruled that Miles remained the controlling precedent and a motion to dismiss filed by Estis was granted. The Fifth Circuit, recognising that the issues presented were of national importance, allowed the plaintiffs to proceed with an interlocutory appeal of the decision. The crux of the plaintiff’s argument, as the Fifth Circuit recognised, was that although a federal court cannot authorise a more expansive remedy for a general maritime cause of action than that which exists for a parallel statutory cause of action if at the time at which the statutory cause of action was enacted the parallel cause of action or remedy did not exist under general maritime law, if the parallel cause of action was established at the time the statutory cause of action was enacted, it should remain available as a remedy. Recognising this, the Court noted that its task was: “…to assess whether Congress in passing the Jones Act and the Death on the High Seas Act (DOHSA), intended to displace pre-existing maritime remedies or foreclose them going forward.”
In holding that punitive damages were available under the unseaworthiness cause of action, the Fifth Circuit stated that Townsend established a straightforward rule: that if a general maritime law cause of action and remedy were established before the passage of the Jones Act, and the Jones Act did not address that cause of action or remedy, then that remedy remains available under that cause of action unless and until Congress intercedes. In utilising that rule, the Court identified that Congress had not enacted legislation which departed from the common-law understanding that punitive damages were available as a remedy. It determined that their availability was well-established before the passage of the Jones Act as was the general maritime claim of unseaworthiness which was not limited by the Jones Act. The Fifth Circuit therefore concluded that the remedy of punitive damages pre-existed the Jones Act and that punitive damages remain available as a remedy to seamen for the general maritime law claim of unseaworthiness.
The cause of action for unseaworthiness has existed in some form since long before the Jones Act was enacted. The Court recognised that the claim of unseaworthiness has evolved over time and while it was established before the Jones Act, it did not become a strict liability claim until 1944. The Court did acknowledge that the history of unseaworthiness is different to that of maintenance and cure where punitive damages were available prior to the Jones Act. Neither party provided briefing to case law where punitive damages were awarded for unseaworthiness prior to the Jones Act. In the absence of such briefing, the Court took the view that the maritime courts took no position on the propriety of punitive damages in an unseaworthiness action prior to the Jones Act.
The Fifth Circuit’s decision is likely to have an impact that extends beyond Louisiana, Texas and Mississippi. It is to be anticipated that other courts in the U.S. will take note of the decision and at some point sooner or later, will consider the issues themselves (if they haven’t already done so). It is also to be expected that the plaintiff bar in the Fifth Circuit will look to incorporate a claim for punitive damages based on an allegation of a wilful and wanton failure to provide a seaworthy vessel by the defendant in many of the complaints they file against shipowner employers. The threat of such a claim may be used as leverage to attempt to force an employer defendant to pay more to settle if that party perhaps wrongly perceives that an award of punitive damages against it may follow at trial.
While a seaman is, as is well established, a ward of the court and unseaworthiness as a cause of action is a form of strict liability, the standard to prove wilful and wanton conduct on the part of the employer will remain high. It should be a rare instance that finds a shipowner employer to have been wilful and wanton in its conduct in allowing an unseaworthy condition not only to exist but perhaps to persist and which results in the award of punitive damages against it and in favour of the seaman. Punitive damages should exist as a means of punishing the wilful and wanton employer and therefore acting as a deterrent to poor conduct, as well as compensating an injured party. If the conduct of the employer is not wilful and wanton, an award really should not follow.
It is possible that this, or perhaps a future decision by another court, may be subject to appeal. Finality on the subject may realistically only be achieved if the issues considered find their way to the U.S. Supreme Court.
Updated
The Fifth Circuit has determined that the issue of recovery of punitive damages as a remedy for unseaworthiness is sufficiently important to warrant rehearing en banc (review by the entire Fifth Circuit bench). This follows petitioning by the rig–owner/employer and the filing of an Amici Curiae petition on behalf of the Offshore Marine Service Association and the International Association of Drilling Contractors. The parties argued that the panel’s decision should be reconsidered because it thwarts the purpose of unseaworthiness claims, departs from the congressional policy against punitive damages in maritime law, undermines the uniform application of maritime law and allows vessel owners to be exposed to differing levels of liability depending on the jurisdiction in which their vessel happened to sail on a particular voyage.
On 26 September 2014 the Fifth Circuit issued its en banc decision affirming the District Court's dismissal of plaintiff's punitive damages claim resulting from alleged Jones Act negligence and unseaworthiness claims. The Court determined that the Supreme Court's holding in Miles v Apex Marine was entirely on point and still good law; the Miles case specifically limited the types of remedies that are recoverable to only pecuniary damages under the Jones Act and precluded non-pecuniary damages such as punitive damages. The Fifth Circuit also held that the more recent Supreme Court decision in Atlantic Sounding Co. v. Townsend [2009], which allowed punitive damages for the wilful and wanton denial of maintenance and cure claims, is limited to maintenance and cure claims only.