Duncanson-Harrelson Co. v. Director, Office of Workers' Compensation Programs, DUNCANSON-HARRELSON

• Decision Date: 08 May 1981
• Docket Number: 79-7572,DUNCANSON-HARRELSON,Nos. 78-1873,s. 78-1873
• Citation: 644 F.2d 827
• Parties: COMPANY and Employers Mutual Liability Insurance Company of Wausau, Petitioners, v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, United States Department of Labor, Respondents, and Per S. Hed and William Hatchett, Intervenors and Real Parties in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 827

644 F.2d 827

DUNCANSON-HARRELSON COMPANY and Employers Mutual Liability Insurance Company of Wausau, Petitioners, v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, United States Department of Labor, Respondents and Per S. Hed and William Hatchett, Intervenors and Real Parties in Interest.

Nos. 78-1873, 79-7572.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 11, 1980.

Decided May 8, 1981.

B. James Finnegan, Kiernan & Finnegan, San Francisco, Cal., for petitioners.

Mark C. Walters, Washington, D. C., John R. Hillsman, San Francisco, Cal., for respondents; Linda L. Carroll, Washington, D. C., Stanford L. Gelbman, San Francisco, Cal., on brief.

On Petition for Review of an Order of the Benefits Review Board, United States Department of Labor.

Before ANDERSON, ALARCON and POOLE, Circuit Judges.

ALARCON, Circuit Judge:

This is a consolidation of two separate appeals brought by Duncanson-Harrelson, a marine construction company, and its liability insurer (employer), involving the question whether two injured employees, Per S. Hed and William Hatchett, were engaged in "maritime employment" within the meaning of the 1972 amendments to the Longshoremen's and Harbor Workers' Compensation Act (the Act) at the time of their injuries.

BACKGROUND FACTS

Per S. Hed was injured while working as a pile driver on the construction of an oil tanker dock in Martinez, California. The dock was to be used for off-loading oil tankers following the completion of an adjoining oil refinery. Hed injured his lower back when he reached into the water from the floating raft upon which he was working to retrieve some plywood that had been torn loose from the raft as it was being turned by a crane.

William Hatchett sustained an inguinal hernia while working as a pile driver on a pier enlargement project in Pittsburg, California. An ocean swell lifted the raft on which Hatchett was working and thrust upon him the full weight of a timber he was guiding into place.

Both Hed and Hatchett applied for benefits under the Act, which were awarded by an administrative law judge after a hearing. Duncanson-Harrelson appealed the benefit awards to the Benefits Review Board, which upheld the administrative law judge's decision.

In its appeal to this court, the employer argues that neither employee was a "harborworker" nor was "engaged in maritime employment" within the meaning of § 2(3) of the Act, because the 1972 amendments to the Act limit recovery to persons loading, unloading, repairing, building or breaking a vessel.

Duncanson-Harrelson also appeals the manner in which Hatchett's award was calculated and the amount awarded. It argues that: (1) the wrong code section was used to determine the amount of Hatchett's average weekly wage, (2) the determination of Hatchett's earning capacity is not supported by substantial evidence, (3) the administrative law judge's determination that Hatchett suffered permanent total disability is not supported by substantial evidence, (4) Duncanson-Harrelson's liability should

have been prorated, and (5), the statutory ten percent penalty should not have been assessed against it. We disagree with all but the last contention.

DISCUSSION

Scope of Review

An award made by the Benefits Review Board pursuant to the Act will not be set aside by this court unless it is unsupported by substantial evidence, viewing the record as a whole, or unless it is predicated upon an erroneous view of the law. O'Leary v. Brown-Pacific-Maxon, Inc., 340 U.S. 504, 508, 71 S.Ct. 470, 472, 95 L.Ed. 483 (1951). Further, this court must give deference to the decision of the Benefits Review Board, because it rests "squarely in that area where administrative judgments are entitled to the greatest amount of weight by appellate courts. It is the product of administrative experience, appreciation of the complexities of the problem, realization of the statutory policies, and responsible treatment of the uncontested facts." E. I. duPont de Nemours & Co. v. Collins, 432 U.S. 46, 56-57, 97 S.Ct. 2229, 2235, 53 L.Ed.2d 100 (1977), quoting SEC v. Chenery Corp., 332 U.S. 194, 209, 67 S.Ct. 1575, 1583, 91 L.Ed. 1995 (1947).

"Maritime Employment"

Before the 1972 amendments to the Act, an injured worker whose employer had at least one employee engaged in maritime employment was not entitled to benefits unless his injury was sustained upon navigable waters. Nacirema Operating Co. v. Johnson, 396 U.S. 212, 90 S.Ct. 347, 24 L.Ed.2d 371 (1969). In 1972 Congress expanded the definition of "navigable waters" to include "any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel ..." Section 3(a) of the Act, 33 U.S.C. 903(a). See Northeast Maritime Terminal Co. v. Caputo, 432 U.S. 249, 259-264, 97 S.Ct. 2348, 2354-2357, 53 L.Ed.2d 320 (1977) and the citations to the House and Senate Reports therein. An employee can recover for an injury sustained in the expanded area, however, only if he was "engaged in maritime employment" at the time of his injury. P.C. Pfeiffer Co. v. Ford, 444 U.S. 69, 78, 100 S.Ct. 328, 335, 62 L.Ed.2d 225 (1979); Fusco v. Perini North River Associates, 622 F.2d 1111, 1113 (2d Cir. 1980).

In Weyerhaeuser Co. v. Gilmore, 528 F.2d 957 (9th Cir. 1975), cert. denied, 429 U.S. 868, 97 S.Ct. 179, 50 L.Ed.2d 148 (1976), we held that in order for employment to be considered "maritime", it "must have a realistically significant relationship to 'traditional maritime activity involving navigation and commerce on navigable waters,' ..." Id. at 961, quoting Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 272, 93 S.Ct. 493, 506, 34 L.Ed.2d 454 (1972). The administrative law judge, in determining that Hatchett was engaged in "maritime employment" within the meaning of the Act, reasoned that Hatchett's work constructing a "dolphin" (a place for incoming ships to tie up off the dock) served the essential maritime purpose of mooring a ship when it comes alongside the pier. Furthermore, Hatchett's work exposed him to many of the "perils of the sea" associated with traditional maritime activity. Indeed, Hatchett's injury was caused by an ocean swell that lifted his work raft.

Similarly, the Board concluded that Hed was engaged in maritime employment at the time of his injury. Applying the Weyerhaeuser standard, the Board reasoned that Hed's work constructing an off-shore dock for the unloading of oil from tankers and barges was related to the traditional maritime activity of facilitating commerce on navigable waters.

Because the administrative law judge correctly determined that both Hed and Hatchett were engaged in "maritime employment" at sites covered by the Act at the time of their injuries, we agree with the Board's conclusion that each claimant is a covered employee under the Act.

We need not pass upon the Board's conclusion that Hed and Hatchett were "harbor worker(s)" within the meaning of section

2(3) of the Act. Because we agree that both injured men were "engaged in marine employment", it is unnecessary to decide whether or not the two pile drivers were also "harbor worker(s)." ¹

Earning Capacity

Before the ALJ, and through administrative appeal, the parties agreed that Hatchett's earning capacity should be determined under Section 10(c) of the Act, which provides:

"(c) If either of the foregoing methods of arriving at the average annual earnings of the injured employee cannot reasonably and fairly be applied, such average annual earnings shall be such sum as, having regard to the previous earnings of the injured employee in the employment in which he was working at the time of the injury, and of other employees of the same or most similar class working in the same or most similar employment in the same or neighboring locality, or other employment of such employee, including the reasonable value of the services of the employee if engaged in self-employment, shall reasonably represent the annual earning capacity of the employee. 33 U.S.C. Section 910(c).

The earning capacity of an employee has been described as his potential earning power. Hunter v. Duncanson-Harrelson Co., 8 BRBS 83, 91 (1978). The purpose of the award is to compensate the claimant for the effect of an injury has upon this potential. The employer has the burden of proving that the claimant's actual earnings in the twelve month period prior to his injury are not representative of his earning capacity. Palmore v. Washington Metropolitan Area Transit Authority, 9 BRBS 388, 22 (1978).

Proceeding under Section 10(c), the ALJ made a determination as to Hatchett's earning capacity. The Board reviewed the decision, but remanded to the ALJ in order to obtain a "clarification and/or modification with respect to claimant's earning capacity and average weekly wage." As stated in the Board's own words, this remand was necessitated because the Board was "unable to conclude that the ALJ's use of claimant's earnings for the preceding fifty two weeks was a fair and reasonable approximation of claimant's wage earning capacity pursuant to Section 10(c)" (emphasis added). On remand, the ALJ clarified his reasoning but did not modify the award. The Board subsequently upheld the clarified decision.

For the first time, in the briefs to this court, the employer has challenged the use of Section 10(c) as the method for determining earning capacity. It now argues that Section 10(b) should have been used on remand, because a wage study submitted by the employer was accepted into evidence by the ALJ. ²

This argument must be deemed waived because the employer failed to raise it below. Although the employer was successful in having the wage study entered into evidence on remand, it did not claim that a different statutory formula should be employed. " 'A reviewing court usurps the agency's function when it...