O'Neil v. Bunge Corp.

• Decision Date: 23 April 2004
• Docket Number: No. 02-71248.,02-71248.
• Citation: 365 F.3d 820
• Parties: Edward O'NEIL, Personal Representative of the Estate of Raymond O'Neil, Petitioner, v. BUNGE CORPORATION; Director, Office of Workers' Compensation Programs, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

365 F.3d 820

Edward O'NEIL, Personal Representative of the Estate of Raymond O'Neil, Petitioner, v. BUNGE CORPORATION; Director, Office of Workers' Compensation Programs, Respondents.

No. 02-71248.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 1, 2004.

Filed April 23, 2004.

Meagan A. Flynn, Preston Bunnell & Stone, Portland, Oregon, for petitioner Edward O'Neil.

Jay W. Beattie, Lindsay, Hart, Neil & Weigler, LLP, Portland, Oregon, for respondent Bunge Corporation.

On Petition for Review of an Order of the Office of Workers' Compensation Programs. OWCP Nos. BRB-01-0541, OWCP-14-57524, 99-LHC-1012.

Before: GOODWIN, McKEOWN and FISHER, Circuit Judges.

FISHER, Circuit Judge:

Edward O'Neil, as the personal representative of the estate of Raymond O'Neil ("O'Neil"), appeals the denial of O'Neil's claim for benefits by the Department of Labor Benefits Review Board ("BRB"). We must decide whether O'Neil and his former employer entered into an enforceable settlement even though O'Neil died before signing a settlement application prepared by the parties' attorneys. Settlement of O'Neil's benefit claim is governed by Section 8(i) of the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. § 908(i) [hereinafter § 908(i)], and its implementing regulations, 20 C.F.R. §§ 702.241 to 702.243. The LHWCA regulations make clear that approval of a settlement is contingent upon the submission of a signed settlement application. Because Raymond O'Neil did not sign the settlement application, there is no enforceable settlement agreement between O'Neil and Bunge.

Background

O'Neil suffered a work-related myocardial infarction on March 18, 1980, and began receiving permanent partial disability compensation pursuant to a compensation order issued on August 2, 1983. In 1998, O'Neil through his attorney began negotiations with the Bunge Corporation ("Bunge"), his former employer, for a settlement that would pay O'Neil a lump sum in lieu of the biweekly payments he had been receiving. On September 29, 1998, Bunge's attorney, William Tomlinson, forwarded to O'Neil's attorney, Donald Wilson, a proposed settlement in the form of an LHWCA settlement application, detailing the settlement's terms and providing for a $63,000 payment to O'Neil in settlement of all further liability for compensation and medical benefits. Wilson requested minor language changes, and Tomlinson subsequently sent a revised settlement application incorporating those changes.

According to Wilson's affidavit, O'Neil had informed him by telephone that he would sign the application when he returned from a hunting trip. O'Neil died on October 16, 1998, however, before signing the proposed settlement application. On October 30, Wilson advised the district director of O'Neil's death and that he was substituting Edward O'Neil, Raymond's brother and the representative of his estate, as beneficiary of the settlement agreement. Wilson submitted the settlement application — signed by Edward O'Neil — for the district director's approval. Tomlinson then informed the district director that Bunge considered the settlement unenforceable because Raymond O'Neil had not signed the application.

The administrative law judge ("ALJ"), relying on the Fifth Circuit's decision in Henry v. Coordinated Caribbean Transport, 204 F.3d 609 (5th Cir.2000), aff'g 32 B.R.B.S. 29 (Dep't of Labor Ben. Rev. Bd.1998), concluded that there was no enforceable settlement agreement and denied the claim for benefits. The BRB subsequently affirmed the ALJ's decision, also relying on Henry.

Standard of Review

We review de novo the BRB's interpretation of the LHWCA. See Metro. Stevedore Co. v. Crescent Wharf & Warehouse Co., 339 F.3d 1102, 1105 (9th Cir.2003). We grant no "special deference" to the BRB's construction of the LHWCA but "`must ... respect the [BRB's] interpretation of the statute where such interpretation is reasonable and reflects the policy underlying the statute.'" Gilliland v. E.J. Bartells Co., 270 F.3d 1259, 1261 (9th Cir.2001) (quoting McDonald v. Dir., OWCP, 897 F.2d 1510, 1512 (9th Cir.1990)).

Discussion

I.

The LHWCA superimposes a statutory and regulatory regime over the contract law principles that would normally govern this agreement. Typically, "`[t]he construction and enforcement of settlement agreements are governed by principles of local law which apply to interpretation of contracts generally.'" United Commercial Ins. Serv., Inc. v. Paymaster Corp., 962 F.2d 853, 856 (9th Cir.1992) (quoting Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir.1989)). In Oregon, where the settlement negotiations occurred in this case, settlement agreements are enforceable once agreed upon, unless the parties intend their agreement to become enforceable only after it is reduced to writing. See Hughes v. Misar, 189 Or.App. 258, 76 P.3d 111, 115 (App.2003) ("When parties agree on the essential terms of a contract and there is nothing left for future negotiations, the fact that they also intended there to be a future writing that expresses their agreement more formally does not affect the immediately binding nature of the agreement."); see also id. at 115 n. 6 ("Our holding is consistent with the general rule of contract law that parties may intend a writing simply as a memorial to express their already consummated contract. If they fail to agree on the writing the contract is still valid." (citing Arthur Corbin, 1 Corbin on Contracts, § 2.9, at 156 (Joseph M. Perillo rev. ed.1995))); 1 Samuel Williston, Williston on Contracts § 4:8, at 300 (4th ed. 1990) ("[W]here it was understood that the contract should be formally drawn up, and put in writing, the transaction is nevertheless complete and binding, absent a positive agreement that it should not be binding until so reduced to writing and formally executed.").¹

Thus, were the settlement between O'Neil and Bunge not subject to the LHWCA, the lack of a signed document setting forth the parties' agreement would not necessarily preclude enforcing their agreement. However, the regulations make clear that parties may not settle LHWCA claims except in accordance with the statute — in this case, under § 908(i). See 33 U.S.C. §§ 915(b), 916.

Section 908(i)'s main purpose "clearly is protection of the claimants', and the public's, interest in preserving them and their families from destitution and consequent reliance on the taxpaying public." Oceanic Butler, Inc. v. Nordahl, 842 F.2d 773, 781 (5th Cir.1988). Section 908(i) achieves its purpose through substantive and procedural safeguards. Substantively, "the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress." § 908(i)(1). Essentially, this provision assigns to the LHWCA's administrators "the statutory responsibility of second-guessing the claimant" even when the claimant is represented by counsel and believes a settlement to be in his best interest. Nordahl, 842 F.2d at 781.

Procedurally, "[w]henever the parties ... agree to a settlement," they must submit the settlement to the deputy commissioner or an ALJ for approval. § 908(i)(1). Thus, § 908(i) contemplates that LHWCA settlements will be enforced only after (1) the parties agree to a settlement, and (2) an administrator approves that settlement. The statute and regulations refer to the document that is submitted as an "application." Id.; 20 C.F.R § 702.243(a). An employer's or insurance carrier's liability is not discharged "unless the application for settlement is approved by the deputy commissioner or administrative law judge." § 908(i)(1).

The required contents of a "complete application" are set forth in regulations promulgated by the Department of Labor, however, rather than in the LHWCA. 20 C.F.R. § 702.243(a). They provide that the settlement application "shall be in the form of a stipulation signed by all the parties." Id. § 702.242(a) (emphasis added). Further, it "shall contain a brief summary of the facts of the case," id., and a variety of other information. See 20 C.F.R. § 702.242(b).² The guiding principle for these requirements is that "[t]he settlement application shall be a self-sufficient document which can be evaluated without further reference to the administrative file." Id. § 702.242(a) (emphasis added).³ Both "[t]he interest of the employee and administrative convenience are served by these `paternalistic' regulations." Henry, 204 F.3d at 611.

The regulations make "a proper settlement application ... the trigger for administrative approval." Henry, 204 F.3d at 613. "Failure to submit a complete application shall toll the thirty day [approval] period" set forth in § 908(i). 20 C.F.R. § 702.243(a). Further, the adjudicator will consider a settlement's substantive fairness only after receiving a completed application. See 20 C.F.R. § 702.243(f). Thus, without a complete settlement application, "[t]he adjudicator can do nothing to approve or disapprove settlements." Henry, 204 F.3d at 613. And absent approval of a settlement application, there is no enforceable settlement agreement. Cf. Norfolk Shipbuilding & Drydock Corp. v. Nance, 858 F.2d 182, 186 (4th Cir.1988) ("The terms of the [§ 908(i)] settlement agreement, in conjunction with the statutes and regulations that govern its effect, prohibit enforcement of any verbal agreement by [the employee] to leave his job not included in the settlement terms...."); Towe v. Ingalls Shipbuilding, Inc., 34 B.R.B.S. 102, 2000 WL 1133564, *3 (Dep't of Labor Ben. Rev. Bd.2000) ("The failure to provide a complete application prevents the district director or the administrative law judge from ruling on the application, 20 C.F.R. § 702.243(b), and also prevents the application from being automatically approved 30 days after its submission, 20 C.F.R. § 702.243(a).").

II.

Here, we must decide whether the regulatory requirement of a "stipulation...