McMichael v. Falls City Towing Co.

• Decision Date: 02 May 2002
• Docket Number: Civil Action No. 3:01CV-278-H.
• Citation: 199 F.Supp.2d 632
• Parties: Jason McMICHAEL, et al., Plaintiffs, v. FALLS CITY TOWING COMPANY, et al., Defendants.
• Court: U.S. District Court — Western District of Kentucky

199 F.Supp.2d 632

Jason McMICHAEL, et al., Plaintiffs, v. FALLS CITY TOWING COMPANY, et al., Defendants.

Civil Action No. 3:01CV-278-H.

United States District Court, W.D. Kentucky, at Louisville.

May 2, 2002.

Dennis M. O'Bryan, O'Bryan Baun Cohen Kuebler, Birmingham, MI, for Plaintiffs.

Dana E. Deering, Parry, Deering, Futscher & Sparks, Covington, KY, for Bray Marine.

W. Scott Miller, Jr., Stephanie R. Miller, Miller & Miller, Louisville, KY, for Falls City Towing.

MEMORANDUM OPINION

HEYBURN, Chief Judge.

Plaintiffs, deck hands on harbor boats that traverse the Ohio River between Kentucky and Indiana, filed this action in federal court seeking overtime compensation under Kentucky's overtime wage law, KRS § 337.285.¹ The case comes to federal court in an unusual context. The Kentucky Labor Cabinet, which is responsible for administering the wage and hour laws, has determined not to apply or enforce KRS § 337.285 as to seamen such as Plaintiffs. Operations Handbook of the Employment Standards Division of the Kentucky Labor Cabinet, Section 5e.² Normally one would go to state court to seek enforcement of a state statute. However, the Cabinet's hostility to this remedy may be the reason that Plaintiffs brought their claims in federal court. Regardless, in doing so, they have created a jurisdictional quandary which subsumes the substantive issues in the case.

The jurisdictional issues rise to the forefront because the parties in this action are not diverse, and Plaintiffs do not state a claim arising under the Constitution, laws or treaties of the United States. Thus, this Court may hear this case only under its admiralty jurisdiction. See 28 U.S.C. §§ 1331-33. For the reasons that follow, the Court concludes that this action is not a case of admiralty jurisdiction within the meaning of Article III, Section 2 of the Constitution and 28 U.S.C. § 1333, and consequently must be dismissed for lack of subject matter jurisdiction. Additionally, the Court observes that Kentucky law limits the ability of this Court — indeed, any court — to fashion a remedy under KRS § 337.285.

Both sides have moved for summary judgment and submitted excellent memoranda.

I.

The Constitution extends federal judicial power "to all Cases of admiralty and maritime Jurisdiction." U.S. Const. art. III, § 2. Congress has vested federal district courts with original jurisdiction over all civil admiralty and maritime cases. See 28 U.S.C. § 1333(1). However, admiralty is a limited jurisdiction, and not every claim comes within its reach merely because of some attenuated connection to travel upon the water. See, e.g., Atlantic Transport Co. v. Imbrovek, 234 U.S. 52, 60-61, 34 S.Ct. 733, 58 L.Ed. 1208 (1914) (questioning whether maritime jurisdiction would extend to a suit for defamation which occurred on a ship).

Admiralty jurisdiction is a somewhat nebulous concept, and its "precise scope ... is not a matter of obvious principle or of very accurate history." Id. at 61, 34 S.Ct. 733 (quotation marks, citation omitted). The Framers of the Constitution, mindful of English and colonial common law precedent, intended federal admiralty law to "embod[y] the principles of the general maritime law, sometimes called the law of the sea, with modifications and supplements adjusting it to conditions and needs on this side of the Atlantic." Panama R.R. Co. v. Johnson, 264 U.S. 375, 386, 44 S.Ct. 391, 68 L.Ed. 748 (1924). Congress may modify and supplement admiralty law, and clarify, if not dramatically alter, the boundaries of admiralty jurisdiction. See id. Typically, it alters these boundaries in two ways: indirectly, by creating maritime causes of action, see, e. g., 46 U.S.C. Appx. § 10313 (Seaman's Wage Act);³ or directly, by extending admiralty jurisdiction to common law claims, see, e. g., 46 U.S.C. Appx. § 740 (Admiralty Extension Act). Historically, the principal subjects of admiralty jurisdiction have been maritime contracts and maritime torts. See The Belfast, 74 U.S. 624, 637, 7 Wall. 624, 19 L.Ed. 266 (1868). Specifically, admiralty courts may hear maritime contract disputes, and tort actions in which injury occurred on navigable waters, even if those claims are stated in state tort law. See Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 116 S.Ct. 619, 133 L.Ed.2d 578 (1996). Our case does not fit within any of these criteria.

Admiralty jurisdiction over state labor law claims is, at best, uncertain. Outside the tort context, courts have been reluctant to find admiralty jurisdiction in cases where interpretation of a state statute is necessary for resolution. For example, in Temple Drilling Co. v. Louisiana Ins. Guar. Ass'n, 946 F.2d 390 (5th Cir.1991), the Fifth Circuit Court of Appeals vacated the decision of the court below after concluding that it had lacked subject matter jurisdiction to hear an insurance indemnification case. Because resolution turned on interpretation of Louisiana insurance law rather than the maritime contract itself, the Court found that admiralty jurisdiction had been improper. Id. at 395. Relying on Temple Drilling, a district court in Marina Entertainment Complex, Inc. v. Hammond Port Authority, 842 F.Supp. 367 (N.D.Ind.1994), dismissed an action for lack of jurisdiction although it involved a contract to lease a vessel on navigable waters. The central issue had been not the proper interpretation of the lease, but rather of an Indiana statute which governed the contract for the lease. See id. at 369-70. In the instant case, too, the controlling issue is not the interpretation of any maritime contract, but rather the application of a state statute which establishes certain rights and duties.⁴

Plaintiffs bear the burden of establishing this Court's subject matter jurisdiction over their claim. See Whittle v. United States, 7 F.3d 1259, 1262 (6th Cir. 1993). Their complaint does not state a basis for federal jurisdiction. It merely contains a statement identifying it as one in admiralty under Federal Rule of Civil Procedure 9(h), and a declaration, in anticipation of Defendants' counter-argument, that federal maritime law does not preempt KRS § 337.285 as applied to seamen. However, "[a] defense that raises a federal question is inadequate to confer federal jurisdiction." Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). Plaintiffs have not persuaded the Court that their claims, as pleaded together with Defendants' assertion of the Fair Labor Standards Act as a defense, create jurisdiction in these circumstances.⁵

The unusual context here creates the admiralty version of a "Catch-22." However, the particular nature and context of Plaintiffs' claim is primarily responsible for this quandary and, in the final analysis, Plaintiffs' claim of admiralty jurisdiction cannot withstand scrutiny. The presumptive basis for admiralty jurisdiction over their claim is that the Fair Labor Standards Act, as applied to seamen, preempts state regulation in that arena. That Act is not a maritime statute, nor does it create maritime jurisdiction. Nevertheless, should it preempt state laws such as KRS § 337.285 that would otherwise regulate seamen's wages, then Plaintiffs would be without a remedy under state law. On the other hand, if the Act does not preempt, then Plaintiffs are without an argument that Congress has created admiralty jurisdiction by preempting the field. Under either scenario, the Court can see no grounds for admiralty jurisdiction as to Plaintiffs' state law claims in these circumstances.

This is not to say that a court may not consider the issue whether federal maritime law — or, for that matter, any federal law — bars the states from regulating the wages of seamen. The court in Pacific Merchant Shipping Ass'n v. Aubry, 709 F.Supp. 1516 (C.D.Cal.1989), rev'd on other grounds, 918 F.2d 1409 (9th Cir.1990), cert. denied, 504 U.S. 979, 112 S.Ct. 2956, 119 L.Ed.2d 578 (1992), addressed this very question. Jurisdiction in Aubry, however, was premised upon a federal question, not upon admiralty. The plaintiff shipping companies sought federal injunctive relief on the grounds that the Fair Labor Standards Act preempted California wage and hour law as applied to seamen. See 709 F.Supp. at 1521-22. The district court noted that the existence of federal question jurisdiction permitted it to sidestep the question whether admiralty jurisdiction existed. See id. at 1522, n. 6. A few years later, in Fuller v. Golden Age Fisheries, 14 F.3d 1405 (9th Cir.1994), the Ninth Circuit noted admiralty jurisdiction where plaintiffs made a Seaman's Wage Act claim for unpaid wages. Apparently, the Court considered the plaintiffs' state wage and hour law claims under its supplemental jurisdiction, though the Court did not discuss it. In the instant case, had Plaintiffs also claimed breach of a maritime wage contract, or had Defendants brought suit to enjoin the Labor Cabinet from enforcing KRS § 337.285 as to seamen, or, if after Plaintiffs filed suit, Defendants had counterclaimed with a request for injunctive relief, this Court would have jurisdiction over the KRS § 337.285 claims. Needless to say, those are not our present circumstances.

II.

Even if this Court had jurisdiction to hear Plaintiffs' claims, it is doubtful that the Court could grant them the remedy they seek. The General Assembly of the Commonwealth of Kentucky has limited jurisdiction over enforcement of KRS 337.285. KRS § 337.310, as amended in 1996, states that:

All orders or decisions of the secretary [of the Labor Cabinet] issued or made under KRS 337.020 to 337.405 may be appealed, and upon appeal an administrative hearing shall be conducted in accordance with KRS Chapter 13B.

Before that 1996 amendment, the statute read as follows:

(1) All questions of fact arising under KRS 337.020 to 337.405 except as provided in this section, shall be decided by the secretary. There shall be no appeal from...