Pino v. Protection Maritime Ins. Co., Ltd., No. 78-1418

• Decision Date: 30 May 1979
• Docket Number: No. 78-1418
• Citation: 599 F.2d 10
• Parties: 4 Fed. R. Evid. Serv. 1469 John PINO et al., Plaintiffs, Appellees, v. PROTECTION MARITIME INSURANCE COMPANY, LTD., et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 10

599 F.2d 10

4 Fed. R. Evid. Serv. 1469

John PINO et al., Plaintiffs, Appellees, v. PROTECTION MARITIME INSURANCE COMPANY, LTD., et al Defendants, Appellants.

No. 78-1418.

United States Court of Appeals First Circuit.

Argued Jan. 4, 1979.

Decided May 30, 1979.

Carroll E. Ayers, Wakefield, Mass., with whom Bernard Michael Ortwein, III, and John E. Sutherland, Wakefield, Mass., were on briefs, for defendants, appellants.

Morris D. Katz, Boston, Mass., with whom Ronald B. Horvitz, Boston, Mass., was on brief, for plaintiffs, appellees.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

This admiralty case involves allegations that the defendant maritime insurance companies, ¹ owned and operated by Ernest Enos, were "blacklisting" plaintiff-appellees (a group of seamen working, at one time or another, out of Gloucester, Massachusetts) by demanding higher insurance premiums from the owners of vessels on which they worked. The plaintiffs claimed, Inter alia, that the higher premiums were unjustified and that the defendants had tortiously interfered with their employment rights. ² Their suit was alleged to be within the admiralty jurisdiction of the federal courts, and both injunctive relief and damages were sought.

The case was tried to a judge sitting in admiralty in the district of Massachusetts. The court found that defendants insured 70% To 75% Of the Gloucester fishing fleet at regular annual premiums of, in 1971 The court adopted the Restatement (First) of Torts § 766 (1939), as a rule of decision. It found that defendants' economic pressure exerted on the boat owners was "a purposeful inducement and cause . . . to disrupt or abort the relationships of employment at will existing between the fishermen and the boat owners," and held that, "defendants' intentional tortious interference with plaintiffs' employment relationships was not privileged." See Restatement (First) of Torts §§ 767, 769 (1939).

                $650 to $800 per crewman.  These rates were comparable to those of defendants' competitors.  The court also found, however, that defendants required the owners of vessels to send them a "settlement sheet" containing the name and address of every member of the crew after all fishing trips completed by vessels they insured.  These sheets were reviewed by Enos in part to learn whether any seamen who allegedly created a "special risk of loss" had been aboard.  When such seamen were identified, the vessels owners were told that they would have to pay higher premiums sometimes as much as an additional $6,500 to cover these men.  As a result, the named seamen encountered great difficulty finding employment.  The court also found that the practice of requiring settlement sheets began after defendants, as a result of prior litigation, were enjoined from using an exclusionary endorsement system, under which specific seamen were excluded from coverage under insurance policies.  3  It held that eight of the fourteen plaintiffs had been designated high-risk seamen under the added premium system not for legitimate risk-related reasons, but because they had filed personal injury claims against the defendant insurance companies and had prosecuted their claims to judgment, instead of settling them to Enos' satisfaction
                

The court awarded interim injunctive relief pending a hearing on the issue of damages. That injunction enjoined defendants from:

"1. charging any additional premium to the owner of any commercial fishing vessel because he has signed on as a crewmember any one or more of (the eight prevailing plaintiffs); and

2. demanding as a condition for the issuance, maintenance, or continuation of any insurance policy that the owner of the fishing vessels make available to any of the three defendants . . . a settlement sheet which contains the names of any crewmember."

It is from this judgment and temporary injunction that defendants appeal. See 28 U.S.C. § 1292(a)(1).

Defendants challenge the admiralty jurisdiction of the court and argue that, even if the court did have jurisdiction, it was not empowered to grant injunctive relief. Alternatively, they argue that the injunction exceeds the scope of the court's authority that it is punitive, overbroad, harsh and disproportionate to the tortious conduct on which it is based. In respect to the finding of liability, they argue that the court erred in finding that their acts were not privileged business conduct and in relying on certain evidence.

JURISDICTION

Defendants argue that plaintiffs' tort claims are not within the admiralty jurisdiction of the federal courts, See U.S. Const. art. III, § 2;28 U.S.C. § 1333, and ask us to overrule our decision to the contrary in Carroll v. Protection Maritime Insurance Co., 512 F.2d 4 (1st Cir. 1975). In Carroll we directly confronted the question presented here: whether admiralty jurisdiction extends to allegations by seamen that an insurance company coincidentally the same company involved here has tortiously

                interfered with their maritime employment rights.  We held that it does.  Id. at 5-9; See Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 259-60, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972).  Defendants cite no conflicting legal authority that has emerged since then.  Nor do they present any arguments not there considered.  4  We decline to depart from a position taken only four years ago.  See Gavin v. Chernoff, 546 F.2d 457, 458-59 (1st Cir. 1976)
                

LIABILITY

Defendants challenge the finding of liability on two grounds: one, that the court admitted and considered evidence that should have been excluded, and two, that it misapplied the governing substantive legal principles.

Admission of Evidence: Defendants object to the admission of hearsay statements of a deceased, Eugene Marshall. The court apparently viewed one of these as a "statement of fact by the decedent . . . made in good faith before the case" under Mass.Gen.L. c. 233, § 65. Defendants correctly point out that the Federal Rules of Evidence should have been the governing standard. See Fed.R.Evid. 101. ⁵

One of the challenged statements was to the effect that Marshall, an insurance broker working at least in part for Enos, told plaintiff Powers that he could not pay Powers' hospital and doctors bills incurred after Powers sustained a hernia after a fire. There was also Marshall's purported statement, when discharging Powers as skipper of a vessel Marshall owned, that he was doing so because Powers was on the "boat 'blacklist.' " ⁶

Plaintiffs argue that, if the Massachusetts rule was not applicable, these nevertheless were statements against interest and therefore were admissible under Fed.R.Evid. 804(b)(3), in that they were:

"at the time of (their) making so far contrary to the declarant's pecuniary or proprietary interest, or so far tended to subject him to civil or criminal liability . . . that a reasonable man in his position would not have made the statement(s) unless he believed (them) to be true."

We think Rule 804 inapplicable to the first statement. It in no way implicated Marshall as a possible tortfeasor. Nor did it threaten Marshall's business relationship with Enos. In stating that he could not pay Powers' medical expenses, however, Marshall was speaking in his capacity as a broker for Enos. This was therefore an admission by a party opponent and admissible under Fed.R.Evid. 801(d)(2)(D). The second statement, referring to the blacklist, was admissible as a statement against interest under Fed.R.Evid. 804. It tipped Enos' and Marshall's hand by acknowledging that a blacklist existed and that Marshall's action was taken because Powers' name was on it.

Defendants also object to the admission of allegedly hearsay statements attributed by plaintiffs to various boat owners and captains, not all of whom were named defendants. One instance cited is Powers' testimony that he was turned down for jobs on twenty boats because the owners would have had to pay an additional $1,000 in insurance premiums to cover him. Enos himself testified, however, that he required an additional $1,500 to cover Powers, and various boat owners testified that the added premium deterred them from hiring Powers. Assuming, without deciding, that the testimony was inadmissible, no prejudice Defendants' remaining objections are not set forth with enough specificity to warrant detailed consideration. Our review of the record reveals no likelihood of prejudice from any of the allegedly erroneous evidentiary rulings. Nor have defendants met their burden of showing that the district court's findings of fact, including its findings on the credibility of the witnesses, were clearly erroneous. Fed.R.Civ.P. 52(a).

could have resulted. The same is true as to similar hearsay testimony by plaintiff Vaiarella similar corroborating evidence was introduced as to the premium charged and its effect on the boat owners. That some of Powers' and Vaiarella's testimony was "layered hearsay" statements as to what various boat owners and captains told plaintiffs they had been told by the insurers leads to no different result.

Application of Substantive Law : The district court adopted the Restatement (First) of Torts § 766 (1939) as "a recognized national standard from which to fashion a controlling principle of substantive federal maritime law." That section provides in pertinent part:

"(O)ne who, without a privilege to do so, induces or otherwise purposely causes a third person not to

(a) perform a contract with another, or

(b) enter into or continue a business relationship with another

is liable to the other for the harm caused thereby."

This standard has been applied in similar cases by the Massachusetts state courts. E. g., Pino v. Trans-Atlantic Marine, Inc., 358 Mass. 498, 265 N.E.2d 583, 587 (1970). We find no error.

Defendants argue that because plaintiffs did not work under long-term employment contracts, any...