Stevedoring Services of America, Inc. v. Eggert

• Decision Date: 18 April 1996
• Docket Number: No. 62695-2,62695-2
• Court: Washington Supreme Court
• Parties: STEVEDORING SERVICES OF AMERICA, INC., formerly Seattle Stevedore Company, a California corporation, Petitioner/Cross-Respondent, v. Edward M. EGGERT and Jodi Eggert, husband and wife, and the marital community composed thereof, Respondents/Cross-Petitioners.

Page 17

129 Wn.2d 17

914 P.2d 737

STEVEDORING SERVICES OF AMERICA, INC., formerly Seattle

Stevedore Company, a California corporation, Petitioner/Cross-Respondent, v. Edward M. EGGERT and Jodi Eggert, husband and wife, and the

marital community composed thereof,

Respondents/Cross-Petitioners.

No. 62695-2.

Supreme Court of Washington,

En Banc.

April 18, 1996.

Appeal from Superior Court, Snohomish County; Honorable David Hulbert, Judge.

Jay A. Williamson, Seattle, Thomas S. Williamson, Jr., Carol A. De Deo, Joshua T. Gillelan, II, Washington, DC, Amicus Curiae, for Director Office of Workers Compensation.

Williams, Kastner & Gibbs, Richard M. Slagle, Mary H. Spillane, Seattle, for Petitioner.

James R. Walsh, Lynnwood, Craig R. Elkins, Bellevue, for Respondents.

MADSEN, Justice.

At issue is a claim for overpayment made under the Federal Longshore and Harbor Workers' Compensation Act, 33 U.S.C. § 918 (LHWCA). The Court of Appeals held that the LHWCA preempts state law remedies for overpayment. We reverse.

FACTS

In February 1980, Respondent Edward Eggert (Eggert), a longshoreman in the employ of Appellant, Stevedoring Services of America (SSA), filed a claim for benefits under LHWCA for workplace injuries sustained on January 26, 1980. On March 28, 1980, Eggert was released to return to work. He did not do so, however, because a nonwork-related auto injury occurring on March 30, 1980, resulted in Eggert being placed in a full body cast. Eggert recovered from that accident and was again released to return to work when he suffered another nonwork-related accident (he fell from a pickup truck sustaining head, shoulder, and back injuries). Eggert did return to work on July 15, 1980, but stopped working on December 6, 1980, because of back pain. SSA paid Eggert benefits from January 26, 1980, until April 6, 1980. It then ceased payments and disputed Eggert's right to any further compensation. Eggert's claim was heard by an administrative law judge (ALJ) pursuant to 33 U.S.C. § 919(d). On July 14, 1981, SSA was ordered to pay benefits from December 6, 1980, until Eggert could complete retraining and a determination regarding permanent disability could be made.

SSA complied with the order to pay benefits but appealed to the Benefits Review Board (BRB). The Board reversed concluding that the ALJ had erred by applying the "last employer doctrine" to a traumatic injury case. Clerk's Papers vol. II, at 118. On July 12, 1985, the BRB vacated the order and remanded for the ALJ to make a proper allocation of liability, stating that the "[e]mployer is liable for claimant's entire disability only if the subsequent non work-related injuries caused no disability or were the natural and unavoidable result of the prior work-related injuries." Clerk's Papers vol. II, at 119.

On remand, the ALJ found that SSA was liable for benefits from January 26, 1980, through April 15, 1980. At that point, SSA had been paying benefits for seven years. The ALJ gave SSA credit for those payments. SSA also requested an award of costs, under 33 U.S.C. § 926, which provides that if "a claim or order has been instituted or continued without reasonable ground, the costs of such proceedings shall be assessed against the party who has so instituted or continued such proceedings." Clerk's Papers vol. II, at 129. The ALJ found that Eggert had misrepresented his income and his condition, and had lied during testimony regarding whether he performed work while receiving benefits. The ALJ declined to award costs, however, because he concluded that there was some legitimacy to Eggert's claim for benefits and that it would be impossible to segregate costs which related to the legitimate portions of Eggert's claims.

Neither side appealed the order. SSA filed the present action in Snohomish County Superior Court, seeking recoupment of overpayment in the sum of $106,464.73. SSA asserted claims of unjust enrichment, conversion, fraud, and intentional or negligent misrepresentation. It also claimed an implied right to recover overpayment under the LHWCA. Contemporaneously, SSA filed a complaint in federal district court to recover these same overpayments. The Snohomish County action was continued pending the outcome in federal court.

Both SSA and Eggert moved for summary judgment in federal court. The district court concluded that SSA's claim was essentially an action to enforce an administrative order, thus conferring federal question jurisdiction pursuant to 28 U.S.C. § 1331. The court also found that nothing in the LHWCA precluded reimbursement for overpayment and found that construing the act to find such an implied remedy reflected the drafters' intent. The court entered an order against Eggert requiring him to repay $96,651.55.

Eggert appealed to the Ninth Circuit Court of Appeals, which reversed, finding no federal question jurisdiction. Stevedoring Services of Am., Inc. v. Eggert, 953 F.2d 552 (9th Cir.), cert. denied, 505 U.S. 1230, 112 S.Ct. 3056, 120 L.Ed.2d 922 (1992) (Eggert I). The Court of Appeals noted that the ALJ order on which the district court based, in part, its claim of jurisdiction provided only for a credit to SSA for payments already made, not for repayment to SSA. Since the district court was not enforcing an administrative order for repayment, it lacked jurisdiction under the Act. Id. at 555. Further, the Ninth Circuit rejected the district court's assertion that a repayment remedy is implied in the LHWCA. It reviewed a number of the Act's provisions relating to recovery of overpayment and concluded that "Congress did not intend to permit an employer a federal cause of action against a claimant for repayment of alleged overpayments of compensation." Eggert I, 953 F.2d at 557. The court vacated the summary judgment order awarding reimbursement of overpayment. Id. at 558.

The appellate court also dismissed SSA's state common law claims without prejudice, finding an insufficient connection between SSA's federal claims and its state common law claims for recoupment to justify the exercise of pendant jurisdiction. Id. at 558. The court stated that "[a]lthough the question is not before us, it appears likely that Congress has expressed its intent to preempt state common law claims by employers against claimants for repayment of alleged overpayments of disability compensation." Id. at 558 n. 7.

Following the decision by the Ninth Circuit, both parties moved for summary judgment in Snohomish County Superior Court. The court entered judgment in favor of SSA on its claims of unjust enrichment, conversion and fraud, and intentional or negligent misrepresentation for $96,651.55, plus prejudgment interest. ¹ Eggert appealed directly to this court, which transferred the matter to the Court of Appeals, Division One. The Court of Appeals reversed the trial court, holding that the LHWCA preempts state law because Congress intended to occupy the field of payments between the employer and employee in claims brought pursuant to the Act. Stevedoring Services of Am., Inc. v. Eggert, 76 Wash.App. 614, 621, 886 P.2d 1174, review granted, 126 Wash.2d 1022, 896 P.2d 64 (1995) (Eggert II). This court granted discretionary review.

I

The primary issue presented in this case is whether the LHWCA preempts state law remedies for the recovery of overpayments made under the Act.

Federal preemption is a defense which may be asserted to actions filed in state court. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 13, 16, 103 S.Ct. 2841, 2848, 2849-50, 77 L.Ed.2d 420 (1983). Preemption may occur if (1) Congress passes a statute that expressly preempts state law, (2) Congress occupies the entire field of regulation, or (3) state law conflicts with federal law, making compliance with both an impossibility or state law presents an obstacle to the accomplishment of the federal purpose. Progressive Animal Welfare Soc'y v. University of Washington, 125 Wash.2d 243, 265, 884 P.2d 592 (1994).

The doctrine of preemption is based in the supremacy clause of the United States Constitution. Goodwin v. Bacon, 127 Wash.2d 50, 57, 896 P.2d 673 (1995). "Consideration under the Supremacy Clause starts with the basic assumption that Congress did not intend to displace state law." Building & Constr. Trades Council v. Associated Builders & Contractors, 507 U.S. 218, 223-24, 113 S.Ct. 1190, 1194, 122 L.Ed.2d 565 (1993) (quoting Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2129, 68 L.Ed.2d 576 (1981)). There is a strong presumption against preemption and "[s]tate laws are not superseded by federal law unless that is the clear and manifest purpose of Congress." Id. at 265, 884 P.2d 592 (quoting Washington State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wash.2d 299, 327, 858 P.2d 1054 (1993)).

The goal in a preemption analysis is to determine congressional intent. Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). Congress' intent may be "explicitly stated in the statute's language or implicitly contained in its structure and purpose." Id. at 516, 112 S.Ct. at 2617 (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604, reh'g denied, 431 U.S. 925, 97 S.Ct. 2201, 53 L.Ed.2d 240 (1977)).

(A) Express Preemption

Before the Court of Appeals, and in this court, SSA argues that §§ 905(a) and 933(i) of the LHWCA are express preemption clauses. Section 905(a) is entitled "Exclusiveness of liability" and provides in part that:

The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee ... at law or in admiralty....

Section 933(i) is entitled "Right to compensation as exclusive remedy" and provides in part that:

The right to compensation or benefits under this chapter shall be the exclusive remedy to an employee when he is injured....

These clauses, SAA argues,...