Pallas Shipping Agency, Ltd v. Duris

• Decision Date: 23 May 1983
• Docket Number: No. 82-502,82-502
• Citation: 76 L.Ed.2d 120,103 S.Ct. 1991,461 U.S. 529
• Parties: PALLAS SHIPPING AGENCY, LTD., Petitioner v. Joseph DURIS
• Court: U.S. Supreme Court

461 U.S. 529

103 S.Ct. 1991

76 L.Ed.2d 120

PALLAS SHIPPING AGENCY, LTD., Petitioner

v Joseph DURIS.

No. 82-502.

Argued April 25, 1983.

Decided May 23, 1983.

Syllabus

Under § 33(b) of the Longshoremen's and Harbor Workers' Compensation Act (Act), an injured longshoreman who accepts "compensation under an award in a compensation order filed by the deputy commissioner or [Benefits Review] Board" has six months in which to file a negligence action against a third party, after which time the longshoreman's cause of action is irrevocably assigned to his employer. Respondent was injured while working as a longshoreman aboard a vessel that had been chartered by petitioner's predecessor corporation. Respondent's employer (another company) did not contest his right to compensation under the Act and filed a form (Form LS-206) with the Labor Department indicating the employer's agreement to make payments to respondent. Approximately 23 months later, the employer terminated the payment of benefits by filing another form (Form LS-208) with the Department. Respondent subsequently filed suit in Federal District Court to recover for his injuries, alleging that they had been caused by the vessel charterer's negligence. The District Court dismissed the claim for lack of jurisdiction. The Court of Appeals reversed, holding that jurisdiction could properly be asserted over petitioner and that, in the absence of a formal compensation order or award entered by the Secretary of Labor, an employee's acceptance of compensation payments could not lead to an assignment of his right of action against third parties.

Held: Respondent's acceptance of voluntary compensation payments did not constitute acceptance of compensation "under an award in a compensation order" so as to give rise to the assignment of his claims against third parties under § 33(b). Pp. 532-539.

(a) Under the Act's comprehensive scheme governing the rights of an injured longshoreman, the term "compensation order" refers specifically to an administrative award of compensation. Here, no administrative proceedings ever took place. Although respondent's employer, as required by the Act, filed Forms LS-206 and LS-208 relating to voluntary payment of compensation, nothing in the Act suggests that the filing of the forms is equivalent to an "award in a compensation order." Pp. 532-535.

(b) The Act's history confirms that "a compensation order" does not include a document testifying to an employer's voluntary payment of compensation under the Act. The requirement of a formal award was designed to protect the longshoreman from the unexpected loss of his rights against a negligent third party by acceptance of voluntary compensation payments, and to permit him to make a considered choice among available remedies. Cf. Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 100 S.Ct. 925, 63 L.Ed.2d 215; American Stevedores, Inc. v. Porello, 330 U.S. 446, 67 S.Ct. 847, 91 L.Ed. 1011. Pp. 535-538.

(c) The requirement of a formal compensation order prior to the assignment of an injured longshoreman's claims does not frustrate the Act's aims of ensuring prompt payment to injured workers and of relieving claimants and their employers of the undue expense and administrative burden of litigating compensation claims. Under Labor Department regulations, employers who desire to seek indemnification from a negligent third party may make voluntary compensation payments and obtain a compensation order upon request if there is no disagreement among the parties. Moreover, even without a statutory assignment of the longshoreman's claims, an employer can seek indemnification from negligent third parties for payments it has made to the longshoreman. Thus, an employer who seeks to bring an action against a shipowner, charterer, or other third person has little to gain from contesting his liability to the longshoreman under the Act. Pp.538-539

684 F.2d 352 (6th Cir., 1982), affirmed.

Wm. D. Carle, III, Cleveland, Ohio, for petitioner.

Thomas W. Gallagher, Toledo, Ohio, for respondent.

Justice MARSHALL delivered the opinion of the Court.

Under § 33(b) of the Longshoremen's and Harbor Workers' Compensation Act, an injured longshoreman who accepts "compensation under an award in a compensation order" has six months in which to file a negligence action against a third party, after which time the longshoreman's cause of action is irrevocably assigned to his employer. This case presents the question whether a longshoreman's acceptance of voluntary compensation payments gives rise to an assignment under § 33(b).

I

On May 19, 1975, respondent Joseph Duris fell from a ladder and was injured while working as a longshoreman aboard the M/V Regent Botan at the Port of Toledo, Ohio. At the time of the accident, the vessel was chartered by Erato Shipping, Inc. Duris' employer, Toledo Overseas Terminal, Inc., did not contest his right to compensation benefits under the Longshoremen's and Harbor Workers' Compensation Act (LHWCA). On June 2, 1975, the employer filed Form LS-206, entitled "Payment of Compensation Without Award," with the Department of Labor. The document indicated the employer's agreement to commence payments to Duris in the amount of $149.14 every two weeks. Payments to Duris continued for nearly two years. On April 26, 1977, the company terminated the payment of benefits by filing Form LS-208, labelled "Compensation Payment Stopped or Suspended."

On February 19, 1980, Duris commenced this action in the District Court for the Northern District of Ohio to recover for injuries suffered as a result of the accident aboard the M/V Regent Botan. An amended complaint named petitioner Pallas Shipping Agency, Ltd., as a defendant. Petitioner is a successor of Erato Shipping, Inc., the company which chartered the M/V Regent Botan. Duris alleged that the dry boat charterer had been negligent in maintaining the ladder from which he fell. The District Court dismissed respondent's claim for failure to establish in personam jurisdiction.

The Court of Appeals reversed. 684 F.2d 352 (CA6 1982). After concluding that personal jurisdiction could properly be asserted over petitioner based on the acts of its predecessor corporation, the court considered the question whether the lapse of six months after Duris' acceptance of voluntary compensation payments triggered an assignment of his claim under § 33(b). The court held that, in the absence of a formal compensation order or award entered by the Secretary of Labor, an employee's acceptance of compensation payments cannot lead to an assignment of his right of action against third parties. In reaching this conclusion, the Court of Appeals declined to follow the decision of the Court of Appeals for the Fourth Circuit in Liberty Mutual Ins. Co. v. Ameta & Co., 564 F.2d 1097 (1977). We granted certiorari to resolve this inter-circuit conflict, --- U.S. ----, 103 S.Ct. 371, 75 L.Ed.2d --- (1982), and we now affirm.

II

The Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, as amended, 33 U.S.C. § 901 et seq., provides a comprehensive scheme governing the rights of an injured longshoreman. If, as is generally true in cases in which a longshoreman files a claim under the Act, his employer does not contest liability, the employer must pay compensation to the disabled longshoreman within two weeks of learning of his injury, 33 U.S.C. § 914; 20 CFR 702.231-702.232, and must file an appropriate form, Form LS-206, with the deputy commissioner in the Department of Labor. 33 U.S.C. § 914; 20 CFR 702.234.

When an employer controverts a compensation claim or the injured longshoreman contests actions taken by the employer with respect to his claim, the dispute may be resolved in administrative proceedings. 33 U.S.C. § 919. If the dispute cannot be resolved informally under procedures developed by the Department of Labor, 20 CFR 702.301-702.319, the contested claim will proceed to a formal hearing, which culminates in the entry of an order by the deputy commissioner "reject[ing] the claim or mak[ing] an award in respect of the claim." 33 U.S.C. §§ 919(c), 919(e).¹ An order making an award, referred to as "a compensation order," 33 U.S.C. § 919(e), is reviewable by the Benefits Review Board, 33 U.S.C. § 921(b), and enforceable in federal court. 33 U.S.C. § 921(d). An employer's failure to make timely payments under a compensation order results in a substantial penalty. 33 U.S.C. § 914(f).

Although workers' compensation generally constitutes a longshoreman's exclusive recovery from his employer, a longshoreman who accepts compensation does not thereby relinquish any claim against the shipowner, charterer, or other third party. 33 U.S.C. § 933(a). Under § 33(b) of the Act, however, a longshoreman who accepts "compensation under an award in a compensation order" must sue the third party within six months, or not at all. If the employee fails to bring suit within this period, his cause of action is irrevocably assigned to his employer. See Rodriguez v. Compass Shipping Co., 451 U.S. 596, 101 S.Ct. 1945, 68 L.Ed.2d 472 (1981). Section 33(b) provides in full:

"Acceptance of such compensation under an award in a compensation order filed by the deputy commissioner or [Benefits Review] Board shall operate as an assignment to the employer of all right of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within six months after such award." 44 Stat. (part 2) 1440, as amended, 33 U.S.C. § 933(b).

Petitioner contends that the voluntary payment of compensation benefits to Duris, along with the filing of Forms LS-206 and LS-208 with the Department of Labor, constituted an "award in a compensation order" which resulted in an assignment of Duris' claim to his employer when he failed to bring suit within the next six months.

We disagree. Section 33(b) triggers an assignment...