Metropolitan Stevedore Co. v. Rambo

• Decision Date: 19 June 1997
• Docket Number: 96272
• Parties: METROPOLITAN STEVEDORE COMPANY, Petitioner, v. John RAMBO, et al
• Court: U.S. Supreme Court

521 U.S. 121

117 S.Ct. 1953

138 L.Ed.2d 327

METROPOLITAN STEVEDORE COMPANY, Petitioner,

v John RAMBO, et al.

No. 96-272.

Supreme Court of the United States

Argued March 17, 1997.

Decided June 19, 1997.

Syllabus ^*

Respondent Rambo, injured while doing longshore work for petitioner Metropolitan Stevedore Company, received a compensation award under the Longshore and Harbor Workers' Compensation Act (LHWCA or Act), based on the parties' stipulation that he had sustained permanent partial disability. After Rambo acquired new skills as a longshore-crane operator and began making about three times his pre-injury earnings, Metropolitan moved to modify his LHWCA award. Despite an absence of evidence that Rambo's physical condition had improved, the Administrative Law Judge (ALJ) ordered his benefits discontinued because of his increased earnings. The Benefits Review Board affirmed, but the Ninth Circuit reversed on the ground that LHWCA §22 authorizes modification of an award only for changed physical conditions. This Court in turn reversed in Metropolitan Stevedore Co. v. Rambo, 515 U.S. 291, 115 S.Ct. 2144, 132 L.Ed.2d 226, holding that the Act's fundamental purpose is economic, to compensate employees for wage-earning capacity lost because of injury; where that capacity has been reduced, restored, or improved, the basis for compensation changes and the statutory scheme allows for modification, id., at 296-298, 115 S.Ct., at 2147-2148, even without any change in physical condition, id., at 301, 115 S.Ct., at 2150. On remand, the Ninth Circuit again reversed the order discontinuing compensation. It recognized that when a worker suffers a significant physical impairment without experiencing a present loss of earnings, there may be serious tension between §8(h)'s mandate to account for disability's future effects in determining wage-earning capacity (and thus entitlement to compensation), and §22's prohibition against issuing any new order to pay benefits more than one year after compensation ends or an award denial is entered. The court reconciled the two provisions by reading the Act to authorize a present nominal award subject to later modification if conditions should change. It held that the order discontinuing benefits was based on the ALJ's overemphasis on Rambo's current status and failure to consider his permanent partial disability's effect on his future earnings, and remanded the case for entry of a nominal award.

Held:

1.A worker is entitled to nominal compensation under the LHWCA when his work-related injury has not diminished his present wage-earning capacity under current circumstances, but there is a significant potential that the injury will cause diminished capacity under future conditions. The Act refers to compensable economic harm as "disability,'' defining that term as the measure of earning capacity lost as a result of work-related injury, §2(10). Section 8(c)(21) sets compensation for permanent partial disability due to unscheduled injuries at a percentage of the difference between the worker's average weekly pre-injury wages and his wage-earning capacity thereafter, while §8(h) explains that such capacity is to be determined by the worker's actual earnings if they fairly and reasonably represent that capacity; if not, the factfinder may, "in the interest of justice,'' fix such capacity as shall be "reasonable,'' having due regard for, inter alia, "the effect of disability as it may naturally extend into the future.'' A problem in applying these provisions arises in the situation here at issue, where a worker presently earning at least as much as before his injury, but having a basis to anticipate that a future combination of the injury and job-market conditions will leave him with a lower earning capacity, must nevertheless file his disability claim within a year of the injury under §13(a). If the worker is awarded no compensation, §22 will bar him from seeking a modification in response to future changes in condition after one year. To implement §8(h)'s mandate in this class of cases, "disability'' must be read broadly enough to cover loss of capacity not just as a product of the worker's injury and present job market conditions, but as a potential product of injury and market opportunities in the future. Thus, a potential disability is treated as a present disability, albeit a presently nominal one. It is "reasonable'' and "in the interest of justice'' (to use §8(h)'s language) to reflect merely nominal current disability with a correspondingly nominal award. Ordering nominal compensation holds open the possibility of a modification upward under §22 if in the future circumstances so warrant. This approach is consistent with the wait-and-see approach the Act adopts generally with respect to benefits modification questions, and is the best way to reconcile §8(h)'s mandate to consider future effects with the requirements of §§13(a) and 22. The Court's view on this point coincides with, and is reinforced by, the position of the Director of the Office of Workers' Compensation Programs (OWCP), who is charged with administering the Act. It would be imprudent for the Court to attempt to resolve for all time the question of how high the potential for disability need be to be recognized as nominal, since that issue was not addressed by the parties. Those lower courts to have dealt with the matter have required a showing of a significant possibility of a future decline in wage-earning capacity, and, in the absence of rulemaking by the OWCP on the point, the Court adopts that standard. Pp. ____-____.

2.Although the Ninth Circuit adopted the correct legal standard, it erred in directing entry of a nominal award based on its own appraisal of the evidence, rather than remanding the case to the ALJ for further findings of fact. Since the ALJ is the factfinder under the Act, see §21(b)(3), (c), it is the ALJ's duty, not the Court of Appeals's, to consider whether a future decline in Rambo's earning capacity is sufficiently likely to justify nominal compensation. The ALJ failed to do so. Pp. ____-____.

81 F.3d 840 (C.A.9 1996), vacated and remanded.

SOUTER, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and STEVENS, KENNEDY, GINSBURG, and BREYER, JJ., joined. O'CONNOR, J., filed a dissenting opinion, in which SCALIA and THOMAS, JJ., joined.

Robert E. Babcock, Santa Ynez, CA, for petitioner.

Malcolm Stewart, Brookhaven, MS, for federal respondent.

Thomas J. Pierry, III, Wilmington, CA, for private respondent.

Justice SOUTER delivered the opinion of the Court.

This case under the Longshore and Harbor Workers' Compensation Act is before us a second time, now raising the question whether the Act bars nominal compensation to a worker who is presently able to earn at least as much as before he was injured. We hold nominal compensation proper when there is a significant possibility that the worker's wage-earning capacity will fall below the level of his pre-injury wages sometime in the future.

I

Respondent John Rambo injured his back and leg in 1980 while doing longshore work for petitioner Metropolitan Stevedore Company. Rambo claimed against Metropolitan for compensation under the Longshore and Harbor Workers' Compensation Act (LHWCA or Act), 44 Stat. 1424, as amended, 33 U.S.C. §901 et seq., and the parties stipulated that Rambo had sustained a 22 &1/2 permanent partial disability, which would normally reflect a $120.24 decline in his pre-injury $534.38 weekly wage. This, in turn, was reduced to an award of $80.16 per week under §8(c)(21) of the Act, 33 U.S.C. §908(c)(21), providing for compensation at the rate of 66 & 2/3 of the difference between an employee's pre-injury wages and post-injury wage-earning capacity. An Administrative Law Judge (ALJ) entered an order incorporating this stipulated award. App. 51; Metropolitan Stevedore Co. v. Rambo (Rambo I), 515 U.S. 291, 293, 115 S.Ct. 2144, 2146-2147, 132 L.Ed.2d 226 (1995).

Rambo was later trained as a longshore crane operator and got full-time work with his new skills, with occasional stints as a heavy-truck operator to earn extra pay. His resulting annual earnings between 1985 and 1990 were about three times what he had made before his injury. As a consequence, Metropolitan moved in 1989 to modify Rambo's earlier disability award, see §22, 33 U.S.C. §922, and a hearing was held before an ALJ. While there was no evidence that Rambo's physical condition had improved, the ALJ ordered the disability payments discontinued based on the tripling of Rambo's pre-injury earnings:

"After taking into consideration the increase in wages due to the rate of inflation and any increase in salary for the particular job, it is evident that [Rambo] no longer has a wage-earning capacity loss. Although [Rambo] testified that he might lose his job at some future time, the evidence shows that [Rambo] would not be at any greater risk of losing his job than anyone else. Moreover, no evidence has been offered to show that [Rambo's] age, education, and vocational training are such that he would be at greater risk of losing his present job or in seeking new employment in the event that he should be required to do so. Likewise, the evidence does not show that [Rambo's] employer is a beneficent one. On the contrary, the evidence shows that [Rambo] is not only able to work full time as a crane operator, but that he is able to work as a heavy lift truck operator when the time is available within which to do so.'' App. 55.

See also Rambo I, supra, at 293-294, 115 S.Ct., at 2146-2147.

The Benefits Review Board affirmed the modification order, App. 57, 61, but the Court of Appeals for the Ninth Circuit reversed on the ground that §22 authorizes modification of an award only for changed physical conditions, Rambo v. Director, OWCP, 28 F.3d 86 (1994). We in turn reversed in Rambo I, holding that " [t]he fundamental purpose of the Act is to compensate...